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773 F.Supp.2d 1217 (2011)
The FUNDAMENTALIST CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS, an Association of Individuals, Plaintiffs,
v.
Bruce R. WISAN, Special Fiduciary of the United Effort Plan Trust; Mark Shurtleff, Attorney General for the State of Utah; Thomas C. Horne, Attorney General for the State of Arizona; and Denise Posse Lindberg, Judge of the Third Judicial District Court of Salt Lake County, State of Utah, Defendants.
Case No. 2:08-cv-772.
United States District Court, D. Utah, Central Division.
February 24, 2011.
*1219 James C. Bradshaw, Brown Bradshaw & Moffat, Kenneth A. Okazaki, Ryan M. Harris, Stephen C. Clark, Jones Waldo Holbrook & McDonough, Richard A. Van Wagoner, Rodney R. Parker, Frederick M. Gedicks, Snow Christensen & Martineau, Salt Lake City, UT, for Plaintiffs.
Jeffrey L. Shields, Michael D. Stanger, Zachary T. Shields, Callister Nebeker & McCullough, Joni J. Jones, David N. Wolf, Joni J. Jones, Randy S. Hunter, Utah Attorney General's Office, Brent M. Johnson, Administrative Office of the Courts, Salt Lake City, UT, Mark Philip Bookholder, Arizona Attorney General's Office, Phoenix, *1220 AZ, Michael Henry Hinson, Arizona Attorney General's Office, Tucson, AZ, for Defendants.
MEMORANDUM OPINION AND ORDER
DEE BENSON, District Judge.
Before the court is the plaintiffs' Renewed Motion for Temporary Restraining Order and Preliminary Injunction. The issue presented by the motion and the case itself is straightforward: Are the defendants' actions in reforming and administering the United Effort Plan Trust ("UEP Trust" or the "Trust") in violation of the Establishment and Free Exercise Clauses of the First Amendment to the United States Constitution?
HISTORY
The plaintiffs are approximately 5,000 members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints ("FLDS"). The FLDS church has its origins in the teachings of Joseph Smith, Jr. who, after publishing The Book of Mormon in 1829, organized the Church of Christ with 6 original members in upstate New York in 1830. The Church of Christ later became known as The Church of Jesus Christ of Latter-day Saints, often identified as the Mormon church. The church left New York shortly after its founding, and after failed efforts at settlements in Kirtland, Ohio, Jackson County, Missouri, and Nauvoo, Illinois, eventually established itself in Salt Lake City, Utah Territory, in 1847.
Among the Mormon church's earliest tenets was a belief in the commingling of assets. This practice is described in a book of revelations received by Joseph Smith called The Doctrine and Covenants, which the Mormons regard as holy scripture. Section 42, verses 30-34 of The Doctrine and Covenants read as follows:
30 And behold, thou wilt remember the poor, and consecrate of thy properties for their support that which thou has to impart unto them, with a covenant and a deed which cannot be broken.
31 And inasmuch as ye impart of your substance unto the poor, ye will do it unto me; and they shall be laid before the bishop of my church and his counselors, two of the elders, or high priests, such as he shall appoint or has appointed and set apart for that purpose.
32 And it shall come to pass, that after they are laid before the bishop of my church, and after that he has received these testimonies concerning the consecration of the properties of my church, that they cannot be taken from the church, agreeable to my commandments, every man shall be made accountable unto me, a steward over his own property, or that which he has received by consecration, as much as is sufficient for himself and family.
33 And again, if there shall be properties in the hands of the church, or any individuals of it, more than is necessary for their support after this first consecration, which is a residue to be consecrated unto the bishop, it shall be kept to administer to those who have not, from time to time, that every man who has need may be amply supplied and receive according to his wants.
34 Therefore, the residue shall be kept in my storehouse, to administer to the poor and the needy, as shall be appointed by the high council of the church, and the bishop and his council;
This practice of community property sharing was generally referred to as the United Order or the Law of Consecration and was attempted with various amounts of sporadic success by the early Mormons in Ohio, Missouri, Illinois, and Utah. The southern Utah city of Orderville was originally *1221 settled by Mormon pioneers for the purpose of practicing strict adherence to the United Order. Orderville (population 608) is still a functioning city but any efforts to practice the United Order there were abandoned long ago.
One of the other 19th century characteristics of the Mormon church was the practice of polygamy. Much has been written about this aspect of early Mormonism and how it influenced the political and social aspects of the growth and development of the Territory of Utah in the second half of the 19th century. See Shayna M. Sigman, Everything Lawyers Know About Polygamy is Wrong, 16 CORNELL J.L. & PUB. POL'Y 101 (2006); Rex Sears, Punishing the Saints for their "Peculiar Institution": Congress on the Constitutional Dilemmas, 2001 UTAH L. REV. 581 (2001). Polygamy was, and remains, against federal law. Eventually, the Mormon church eliminated polygamy from its practices and in 1890 officially declared that its members were to no longer engage in polygamous relationships. Utah was thereafter granted statehood in 1896. Polygamy has been against the law in Utah ever since. The abandonment of the practice of polygamy by the mainstream Mormon church did not rest well with all people, leading some to continue the practice of polygamy, even though it was in violation of both federal and state law, and in some instances to form splinter groups of like-minded practitioners. The FLDS church is one of these.
According to the plaintiffs, they and their church have always believed in and attempted to practice the United Order or the Law of Consecration, as outlined in The Doctrine and Covenants. The fundamentalist movement that led to the creation of the FLDS church was formerly known as the "Priesthood Work." Its leaders (called the "Priesthood Council") formed a trust in 1942 in order to live the United Order. The trust was called the United Effort Plan and declared that its "purpose and object ... shall first be charitable and philanthropic" and its operations were to be "governed by the true spirit of brotherhood." Declaration of Trust, dated November 9, 1942, at 4. Membership in the 1942 trust was based on "the consecration of such property, real, personal or mixed, to the trust in such amounts as shall be deemed sufficient by the Board of Trustees." Id. at 7.
In the early 1990s, the trustees of the 1942 trust were sued by a group of trust residents who alleged breach of fiduciary duties and other claims. The state district court found the trust to be charitable in nature, which ruling was reversed by the Utah Supreme Court on Sept. 1, 1998. The Utah Supreme Court held that the 1942 trust was not "charitable" because it "benefitted specific individuals" and because "beneficiaries must consecrate property to benefit from the trust." Jeffs v. Stubbs, 970 P.2d 1234, 1252 (Utah 1998). At the time of this pronouncement in 1998, there was apparently only one remaining founder of the 1942 trust, Rulon T. Jeffs, who was at that time also serving as the President of the FLDS church.
In response to the 1998 decision of the Utah Supreme Court, Rulon Jeffs took steps to amend the trust to "ensure that his beneficial interest in the [trust] property be devoted to its intended charitable purpose." FLDS v. Lindberg, Memorandum of Points and Authorities in Support of Petition for Extraordinary Writ at 9. Hence, on November 3, 1998, Rulon T. Jeffs, Fred M. Jessop, LeRoy S. Jeffs, Warren S. Jeffs, Truman I. Barlow, Winston K. Blackmore, James K. Zitting, as Trustees, and Rulon T. Jeffs, President and Corporation Sole, for the FLDS church, executed the "Amended and Restated Declaration of Trust and the United Effort Plan."
*1222 The purpose for amending the trust was to make sure it qualified as a charitable trust under Utah law. Accordingly, its beneficiary class was expanded to include not just those who founded the trust, but all FLDS church members who "consecrate their lives, times, talents, and resources to the building and establishment of the Kingdom of God on Earth under the direction of the President of the [FLDS] church." Amended and Restated Declaration of Trust of the United Effort Plan Trust, dated November 3, 1998, at 3. The "Declaration of Trust" of the 1998 Restated Trust states that it "is a religious and charitable trust" and "a spiritual (Doctrine and Covenants 29:34) step toward living the Holy United Order." Id. at 1.
Prior to 1942, and continually to 1998, the Priesthood Work (the FLDS church) was headquartered in a community straddling the border of Utah and Arizona known originally as Short Creek. Today, although it still operates generally as one community, the section located in Arizona is known as Colorado City, Arizona and the section located in Utah is known as Hildale, Utah. The community presently consists of some 5,000 acres of land, comprising approximately 700 houses, and various farms, dairies, and other businesses and operations. Virtually all of this property is within the UEP Trust. By some estimates, it has a value of $100,000,000.00. Eric G. Andersen, Protecting Religious Liberty Through the Establishment Clause: The Case of the United Effort Plan Trust Litigation, 2008 UTAH L.REV. 739, 742 (2008).
The 1998 Amended UEP Trust is a relatively brief (4 page) document. The Trust specifically declares that it "exists to preserve and advance the religious doctrine and goals of the Fundamentalist Church of Jesus Christ of Latter Day Saints, previously known as `The Priesthood Work' and refers to the Holy United Order as a `central principle of the church.'" It further states that "the doctrines and laws of the Priesthood and the [FLDS] Church ... are the guiding tenets by which the Trustees of the United Effort Plan Trust shall act." Id. The Trust also declares that the trustees are to "administer the Trust consistent with its religious purpose to provide for Church members, according to their wants and needs, insofar as their wants are just (Doctrine and Covenants 82:17-21)." Id. at 3.
The plaintiffs claim in this lawsuit that the Trust is an important part of their religion and that all decisions regarding their "just wants and needs" are fundamentally religious determinations. (Willie Jessop Aff. ¶ 23.) They cite to the Trust itself as evidence that continued enjoyment of Trust participation is conditioned on living in accordance with the principles of the United Order as determined by those in ecclesiastical leadership. In the event of termination of the Trust, the Trust provides that "the assets of the Trust Estate at that time shall become the property of the Corporation of the President of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, corporation sole." Amended and Restated Declaration of Trust at 4.
Warren Jeffs and State Action
In 2002, Rulon Jeffs died. His son, Warren, replaced him as prophet and president of the FLDS church and as president of the board of trustees of the UEP Trust. Under its new leader, the FLDS church began moving some of its followers to a new site near Eldorado, Texas. As the first decade of the 21st century progressed, the church, its president and its members became embroiled in many legal disputes, both civil and criminal. In one of the most publicized of these, Warren Jeffs was charged with aiding and abetting rape, a first-degree felony, in Utah's Fifth District *1223 Court in 2005. This criminal charge stemmed from Jeffs' involvement in an arranged marriage between two members of the FLDS church, one of whom was a 14-year-old girl at the time, and who has since left the church.
In July and August of 2004, two tort lawsuits were filed against Warren Jeffs, the Trust, the FLDS church, and other defendants in Utah's Third District Court in Salt Lake County. The claims included allegations of child sexual abuse. Jeffs and the other trustees failed to defend these lawsuits, which exposed the Trust to possible default judgments. During this time, there is evidence to suggest Jeffs' decision to do nothing in defense of the lawsuits against the Trust was deliberate, possibly motivated by his belief that his followers should leave the Short Creek area and relocate to Texas. Whatever his motivation, however, it appears undisputed that he instructed his followers to "answer them (the state authorities) nothing and don't give them any testimony or witness." (Def. Wisan's Mem. Opp. at 10.)
In May, 2005, as a result of Mr. Jeffs' and the other trustees' actions in failing to defend against the tort lawsuits, the Utah and Arizona Attorneys General filed a petition in Utah's Third District Court seeking the removal or suspension of the trustees of the Trust. The Attorneys General based their decision to file the action on the belief that the trustees of the Trust, particularly Warren Jeffs, were violating their fiduciary duties by not appropriately responding to the tort lawsuits, which placed the beneficiaries of the charitable Trust at risk of being evicted from the Trust's homes and property. The petition was in the nature of a probate action pursuant to the Utah Uniform Trust Code and requested "an immediate order suspending the authority and power of the current trustees pending a final decision by the Court on their removal and appointing an interim special fiduciary for the limited purpose of preserving the assets of the trust," along with other relief. In the Matter of the United Effort Plan Trust, Case No. XXXXXXXXX, Utah Attorney General's Petition at 2.
Just as with the tort lawsuits, the trustees did not respond in any fashion to the probate action. Thereafter, the Third District Court granted relief. First, on June 16, 2005, Judge Deno Himonas entered an order suspending the trustees and appointing Mr. Bruce Wisan as a Special Fiduciary, as requested by the Utah Attorney General. Then, on September 2, 2005, Judge Denise Lindberg entered an "order on Procedure to Appoint Trustees and Expansion of Special Fiduciary's Authority." This order generally authorized Mr. Wisan to do what he deemed prudent and reasonable to manage the Trust property, to defend against the tort lawsuits and to see that property and other taxes were paid. See In the Matter of the United Effort Plan Trust, Case No. XXXXXXXXX, Order on Procedure to Appoint Trustees and Expansion of Special Fiduciary's Authority at 2-4.
During the next three months, various proposals were made to the state court seeking the appointment of substitute trustees and reformation of the Trust. These proposals came exclusively from persons who had sued the Trust, including former members of the FLDS church.
As these activities were taking place, and after having been criminally charged with aiding and abetting rape, Warren Jeffs' whereabouts were unknown. He was eventually found on August 28, 2006, in a Cadillac Escalade which was stopped on a Nevada highway for a traffic violation. He has been incarcerated on one charge or another ever since. During 2005 and throughout 2006, his followers, including the plaintiffs here, continued to do nothing *1224 to respond to either the tort lawsuits against the Trust or the probate action because that was what their prophet told them to do. As a result, it appears the only people the court was hearing from were the state Attorneys General and those who opposed the regime of Warren Jeffs.
After considering the various reform proposals, Judge Lindberg issued a rather lengthy Memorandum Decision on December 13, 2005, in which she determined that because of the malfeasance of its trustees, the UEP Trust should be reformed. At this point, the court clearly had three options pursuant to the Utah Uniform Trust Code. The district judge could (1) do nothing, (2) allow the Trust to be terminated pursuant to its own terms, or (3) reform the Trust and appoint new leadership to administer the Trust. She chose the last of these, apparently in an effort to protect the property and its beneficiaries.
In her Memorandum Decision, Judge Lindberg concluded that the 1998 Trust document is the "operative instrument" for the court to consider, and that it qualifies as a charitable trust. She further determined that the Trust should be modified "in a manner consistent with the settlor's charitable purposes."
The court also determined, consistent with its understanding of the United States Constitution, that it could not reform the Trust on the basis of religious doctrine or principles. The judge therefore stated that the reformation would avoid constitutional problems by applying "neutral principles of law" as explained in Jones v. Wolf, 443 U.S. 595, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979), and other United States Supreme court precedent. She stated: "courts must separate that which is primarily ecclesiastical from that which is primarily secular," and not enter the discussion of the former. In the Matter of the United Effort Plan Trust, Case No. XXXXXXXXX, dated December 13, 2005 at ¶ 35. She read the 1998 Trust as having a religious part (she called it "the Plan," which was essentially a reference to the United Order concept) and a secular part (which she called "the Trust"), and declared that the goal of the reformation process was to "create a clear division between the two." Id. at ¶ 39. Finally, in her Memorandum Decision, Judge Lindberg invited proposals for the final reformation of the Trust. Id. at ¶ 56.
On October 25, 2006, nearly a year later, the court created the Reformed Trust, replacing the original 4-page document, with its 17 paragraphs, with a new version of 175 paragraphs. The reformation significantly expanded the powers of the Special Fiduciary. Under his new authority, Mr. Wisan was to implement a "strategic plan to subdivide Trust property so that it can be conveyed to members of the beneficiary class in a religiously neutral manner in furtherance of the Reformed Trust's purpose to serve the `just wants and needs' (primarily housing) of all persons who consecrated to the Trust." (Def. Wisan's Reply Memorandum in Support of Motion for Approval of Sale of Trust Property dated October 27, 2008 at 2.)
Under the Reformed Trust, it became the responsibility of the state appointed Special Fiduciary to determine the "just wants and needs" of the people who live and depend on the Trust property. It is up to the Special Fiduciary and the "Advisory Board" of the Reformed Trust to decide who is entitled to live in which homes and when they need to move. Apparently in an attempt at humor, the Special Fiduciary initially introduced himself to the members of the FLDS church as the "State-ordained Bishop." (Willie Jessop Aff. ¶¶ 26-27.) What the members of the FLDS church formerly took to their church leaders regarding administration of *1225 Trust assets they are now supposed to take to the Special Fiduciary who is under order of the state court to decide such matters by "neutral principles" and may not rely on matters of faith or religion.
After the state court's reformation of the UEP Trust in December 2006, the Special Fiduciary assembled a team of people, including accountants, lawyers, and other professionals to administer the Trust property and determine the wants and needs of the people. With dozens, if not hundreds, of properties to manage, and a considerable number of disputes over who was entitled to what, the Special Fiduciary's expenses mounted. During 2007 and into 2008, the former trustees, and the members of the FLDS church, including the present plaintiffs, continued to remain largely uninvolved in the probate action in state court. In mid-2008, however, that changed for what appear to be 2 reasons. First, Warren Jeffs apparently had a change of opinion about asserting his and his church members' legal rights in court, and second, the Special Fiduciary announced an intention to sell certain Trust property that held special economic, historical and spiritual significance to the FLDS community, including, notably, the Berry Knoll Farm, which, according to the plaintiffs, is "a part of the prophetic vision and divine command that the Short Creek area will become a garden spot of the west, and is the location of a temple site as divinely revealed to church leaders." (Willie Jessop Aff. ¶ 39.)
The Special Fiduciary told the state court he needed to sell Trust property, including specifically the Berry Knoll Farm, to "resolve the current cash crunch problems," which referred to the multimillion dollar obligations owed to the Special Fiduciary's legal, accounting, and other functionaries.
This request by the Special Fiduciary caused the plaintiffs to do two things. First, they sought to intervene in the probate action for the purpose of asserting their rights. This was denied by Judge Lindberg on the ground that the plaintiffs did not have standing as parties in the probate action. Second, they filed this federal lawsuit on October 6, 2008, seeking a declaration that the state actors' conduct violates the United States Constitution.
At the outset of this federal case, the plaintiffs sought a Temporary Restraining Order halting the sale of the Berry Knoll Farm and all other actions of the Special Fiduciary. A hearing on the matter was held on November 12, 2008, with all parties present and represented. After a lengthy hearing, it was determined that the parties were willing to mutually agree that nothing would be done to proceed with the property sale or to otherwise affect the Trust property until the parties either reached a settlement or resumed the matter in court. Accordingly, this action was stayed pending further action of the parties.
During 2009, while this action was stayed, the parties engaged in extensive settlement efforts with former United States District Judge Paul Cassel, but were unable to reach a final settlement. Thereafter, the state court issued a decision authorizing the sale of the Berry Knoll Farm to the highest bidder. This caused the plaintiffs to file an action in the Utah Supreme Court, styled as a Petition for Extraordinary Writ, in which they sought virtually the same relief sought in this action: a declaration that the state district court's reformation and administration of the UEP Trust is a violation of the Constitution.
The Utah Supreme Court issued its decision on August 27, 2010, finding the action barred by laches. At that point, the plaintiffs renewed their motion for injunctive relief before this court. After briefing, a hearing was held on December 3, *1226 2010, with Rodney Parker, Frederick Gedicks, and Stephen Clark representing the plaintiffs and Jeffrey Shields, William Richards, and Jerrold Jensen representing the defendants. At the conclusion of the hearing, the court asked the parties to attempt to mutually agree on a preservation of the status quo pending a decision on the motion. They later reported to the court that they could not agree. Accordingly, this court entered a Temporary Restraining Order as of December 13, 2010, generally preserving the status quo until a decision can be rendered on the motion. Among other things, the Order prohibits any action on the sale of the Berry Knoll Farm and stays further action on any plans to subdivide the Trust property.
DISCUSSION
The Establishment Clause
The First Amendment declares that "Congress shall make no law respecting an establishment of religion ...." U.S. CONST. amend. I. From its passage by the First Congress in 1791, this clause, popularly known as the Establishment Clause, has been consistently interpreted as prohibiting the federal government from establishing a national church and, in more general terms, as keeping separate the spheres of church and state. The framers of the Constitution sought to keep the government out of the affairs of the churches of America, and vice versa. After the passage of the Fourteenth Amendment following the Civil War, the United States Supreme Court determined that the Establishment Clause is applicable to the states. See Everson v. Board of Education, 330 U.S. 1, 15-16, 67 S.Ct. 504, 91 L.Ed. 711 (1947).
Everson v. Board of Education was the first major Establishment Clause case. It involved a New Jersey state law that provided for the parents of students who attended private and Catholic schools in Ewing, New Jersey to be repaid for the bus fares they paid to get their children to and from school. A taxpayer challenged the law as unconstitutional because it benefitted the Catholic Church.
In an 18-page opinion for the 5-justice majority, Justice Hugo Black took considerable effort to explain the historical underpinnings of the Establishment Clause. After quoting from a letter Thomas Jefferson wrote to the Danbury Baptist Church, he wrote: "The First Amendment has erected a wall between church and state. That wall must be kept high and impregnable. We could not approve the slightest breach." Id. at 18, 67 S.Ct. 504.
After such strict wording, one may have thought the New Jersey bus fare law was doomed, but it was deemed not to violate the Constitution because the state involvement was so minimal. The Court found that "the State contributes no money to the schools. It does not support them. Its legislation, as applied, does no more than provide a general program to help parents get their children, regardless of their religion, safely and expeditiously to and from accredited schools." Id. at 19, 67 S.Ct. 504.
The next year in McCollum v. Board of Education, 333 U.S. 203, 68 S.Ct. 461, 92 L.Ed. 649 (1948), the Supreme Court repeated its Everson Establishment Clause analysis in a case involving a program in the public schools of Illinois that allowed for release time for students to receive religious instruction. The Court, this time unanimously, found the Illinois practice in violation of the Establishment Clause, stating:
This is beyond all question a utilization of the tax-established and tax-supported public school system to aid religious groups to spread their faith. And it falls squarely under the ban of the First Amendment (made applicable to the states by the Fourteenth) as we interpreted *1227 it in Everson v. Board of Education. There we said: `Neither a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another.'
Id. at 6, 67 S.Ct. 504.
The Supreme Court's Establishment Clause caseload increased significantly after McCollum, and as those two pioneering cases illustrated, the result depended on the unique facts of each case. Notable Establishment Clause cases followed including: Engel v. Vitale, 370 U.S. 421, 82 S.Ct. 1261, 8 L.Ed.2d 601 (1962), where the Court struck down as unconstitutional a state-written prayer required to be said at the beginning of the school day in the public schools in the state of New York; Lynch v. Donnelly, 465 U.S. 668, 104 S.Ct. 1355, 79 L.Ed.2d 604 (1984), in which a creche display was found to violate the Establishment Clause because of its primarily religious nature; and Wolman v. Walter, 433 U.S. 229, 97 S.Ct. 2593, 53 L.Ed.2d 714 (1977), in which the Court found that it was constitutionally permissible for a state to provide, among other things, funds to nonpublic schools including those operated by religious institutions to purchase secular textbooks for use by their students.[1]
After a number of these fact-intensive inquiries, the United States Supreme Court announced a three-part test in what has become perhaps the most cited Supreme Court Establishment Clause case, Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971). There the Court stated that for state action to pass constitutional muster it must meet each of the following three requirements:
(1) it must have a secular purpose,
(2) its principal or primary effect must be one that neither advances nor inhibits religion, and
(3) it must not foster excessive government entanglement with religion.
Lemon, 403 U.S. at 612-13, 91 S.Ct. 2105.
The Tenth Circuit Court of Appeals recently confirmed that the "purpose and *1228 effect prongs" of Lemon are to be interpreted "in light of Justice O'Connor's endorsement test." Weinbaum v. City of Las Cruces, N.M., 541 F.3d 1017, 1030 (10th Cir.2008). "Under the 'endorsement test,' the `government impermissibly endorses religion if its conduct has either (1) the purpose or (2) the effect of conveying a message that religion or a particular religious belief is favored or preferred.'" Id. (quoting Bauchman v. West High School, 132 F.3d 542, 551 (10th Cir.1997)).
Against this established Supreme Court and Tenth Circuit precedent, we turn to the question whether the states' actions in this case violate the Establishment Clause. The answer is an unqualified "yes." A better question would be how do they not? Virtually from its first step after it decided to reform the Trust, the state court was in forbidden territory. It not only had no authority to determine the "just wants and needs" of the members of the FLDS church, but it had no authority to interpret or reform the Trust at all.
In fairness to the state district court, it did not have anyone initially presenting an Establishment Clause challenge, but it is still difficult with the benefit of hindsight to see how the court that was in one respect so mindful of using "neutral principles" to avoid unconstitutional behavior could at the same time fail to recognize that in reforming the Trust as it did it was essentially taking over one of the central tenets of the FLDS religion. In so doing it violated the Establishment Clause. By reforming a religious trust and managing it without regard to religion, the state actors became impermissibly entangled with religion. While it is accurate to say the states' actions did not establish a religion, their actions certainly went a long way toward disestablishing one. No matter how one analyzes the states' action against the second and third prongs of the Lemon test, they come up lacking. The primary effect of the state court's decision to rewrite the Trust and administer it as a secular instrument was to inhibit religion. The resulting intrusion into the everyday life of the FLDS church and its members fostered not only "excessive government entanglement with religion," but was a virtual takeover by the state.
The court finds it interesting, and somewhat telling, that the defendants' responses to the plaintiffs' constitutional challenges are so tepid as to be nearly nonexistent. In extensive briefing in this case, the defendants cite no case that is even suggested to be remotely similar enough to the instant case to support their defense. This is because there isn't one. The defense amounts to nothing more than a repeat of why the state actors felt it was so important for them to take the action they took, as opposed to why it was constitutionally justified. The defendants speak at long length about how badeven criminalWarren Jeffs' behavior was, but they say little that is relevant to defend their own wholesale interference with an established church. The Arizona Attorney General's response to the plaintiffs' constitutional arguments is less than one-half of one page (see Arizona Attorney General's Opp. Mem. at p. 24-25) and cites no cases or other authority in support of its position.
The plainness of the state court's breaching of the wall of separation between church and state is found in an objective reading of the 4-page 1998 UEP Trust itself. One simply cannot read that document and fail to see that it is a religious document. As stated earlier, this document consists of only 17 paragraphs. It is straightforward and uncomplicated. Because a correct understanding of what it says is so important to a full appreciation of its religious nature, representative sections are reprinted below:
*1229 The United Effort Plan Trust is a religious and charitable trust. It is the legal entity of the United effort Plan. The Trust was created by Declaration of trust dated November 9, 1942, and was amended April 10, 1946.
The United Effort Plan Trust is a spiritual (Doctrine & Covenants 29:34) step toward living the Holy United Order. It exists to preserve and advance the religious doctrines and goals of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, previously known as "The Priesthood Work," or "The Work" (the "Church"). The United Effort Plan is under the direction of the President of the Church, who holds the keys of Priesthood authority (which keys have continued from Joseph Smith, Jr. To Brigham Young, John Taylor, John W. Woolley, Lorin c. Woolley, John Y. Barlow, Leroy S. Johnson, and Rulon T. Jeffs). The doctrines and laws of the Priesthood and the Church are found in the Book of Mormon, the Doctrine and Covenants, the Pearl of Great Price, the Holyl Bible, the sermons of the holders of the keys of Priesthood authority, and present and future revelations received through the holder of those keys; and are the guiding tenets by which the Trustees of the United Effort Plan Trust shall act.
* * *
Rulon T. Jeffs holds the keys of Priesthood authority and so serves as the President of the Church. President Jeffs is also the sole remaining original Trustee and subscriber of the United Effort Plan Trust, and President of the Board of Trustees of the United Effort Plan Trust. In those capacities he, and Fred M. Jessop, LeRoy S. Jeffs, Warren S. Jeffs, Truman I. Barlow, Winston K. Blackmore and James K. Zitting, as Trustees, hereby amend and restate the Declaration of Trust to more clearly set out its purposes and manner of operation. This document is a total restatement and amendment of the Declaration of Trust. It supersedes all previous documents, including all documents filed of public record in Utah and Arizona and with various courts. The Corporation of the President of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, a corporation sole, hereby ratifies this amendment. This Amended and restated Declaration of Trust has also been approved by the Priesthood and sustained by the Church membership. Because the Trust is a charitable trust, this Amended and Restated Declaration of Trust will be recorded in the public record but no future affidavits of disclosure will be recorded.
* * *
Since the original conveyance substantial additional real estate has been added as consecrations to the Trust Estate, and parcels have been purchased, traded, subjected to rights-of-way, and dedicated as roads and streets. It is anticipated that property will continue to be added as consecrations to the Trust Estate. Property has been conveyed as consecrations to the United Effort Plan Trust in the name of the United Effort Plan; as well as in the names of Trustees or of a single Trustee such as in the name of Fred M. Jessop, as Trustee. All properties now included or hereafter added to the Trust Estate are consecrated and sacred lands, dedicated to the United Effort Plan's religious purpose.
The United Effort Plan is the effort and striving on the part of Church members toward the Holy United Order. This central principle of the church requires the gathering together of faithful Church members on consecrated and sacred lands to establish as one pure people the Kingdom of God on Earth under the guidance of Priesthood leadership. *1230 The Board of Trustees, in their sole discretion, shall administer the Trust consistent with its religious purpose to provide for Church members according to their wants and their needs, insofar as their wants are just (Doctrine and Covenants, Section 82:17-21).
A consecration is an unconditional dedication to a sacred purpose. Consecration of real estate to the United Effort Plan Trust is accomplished by a deed of conveyance. Church members also consecrate their time, talents, money, and materials to the Lord's storehouse, to become the property of the Church and, where appropriate, the United Effort Plan Trust. All consecrations made to or for the benefit of the United Effort Plan Trust are dedicated to the sacred purpose of the United Effort Plan and without any reservation or claim of right and/or ownership. Improvements made by persons living on United Effort Plan Trust property become the property of the Trust and are consecrations to the Trust.
The privilege to participate in the united Effort Plan and live upon the lands and in the buildings of the United Effort Plan Trust is granted, and may be revoked, by the Board of Trustees. Those who seek that privilege commit themselves and their families to live their lives according to the principles of the United Effort Plan and the Church, and they and their families consent to be governed by the Priesthood leadership and the Board of Trustees. They must consecrate their lives, times, talents and resources to the building and establishment of the Kingdom of God on Earth under the direction of the President of the Church and his appointed officers. All participants living on United Effort Plan Trust property must act in the spirit of charity (Moroni 7:6-10, 45-48). They must live in the true spirit of brotherhood (Matthew 22:36-40) and there shall be no disputations among them (3 Nephi 18:34). The Trust is most firmly committed to these goals. People who are granted the privilege to live on United Effort Plan Trust property acknowledge by their presence upon the land their acceptance of the terms of this Trust.
Participation in the United Effort Plan and use of property owned by the United Effort Plan Trust is not and does not become a right or claim of anyone who may benefit in any way from the Trust. Use of Trust property must be within rules and standards set by the Board of Trustees. The Board of Trustees may require individuals and their families to relocate to different locations on United Effort Plan Trust property or to share a location with others. Participants who, in the opinion of the Presidency of the Church, do not honor their commitments to live their lives according to the principles of the United Effort Plan and the Church shall remove themselves from the Trust property and, if they do not, the Board of Trustees may in its discretion cause their removal. At such time as they reform their lives and the lives of their family members and are again approved by the Priesthood and the Board of Trustees they may again be permitted to participate in the United Effort Plan. The Board of Trustees shall have no obligation whatsoever to return all or any part of consecrated property back to a consecrator or to his or her descendants.
To carry out its religious mission and charitable purpose, the Trust shall be administered by a Board of Trustees consisting of not less than three nor more than nine Trustees appointed in writing by the President of the Church. Trustees shall serve at the pleasure of the President of the Church and may be removed or replaced at any time by the *1231 President. Dismissal of a Trustee shall be by a written notice, effective on the date the notice is executed. A trustee may resign by written notice to the President of the Church. Each successor Trustee shall have the same powers and authority, and shall be subject to the same duties and restrictions, as predecessor Trustees.
* * *
This Declaration of Trust may be amended at any time and from time to time by the President of the Church and a majority of the Trustees. The Trust is intended to be a charitable trust of perpetual duration; however, in the event of termination of this Trust, whether by the board of Trustees or by reason of law, the assets of the Trust Estate at that time shall become the property of the Corporation of the President of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, corporation sole.
Amended and Restated Declaration of Trust at 1-4.
As noted above, the state court found this 1998 Trust to be the "governing instrument" and that it constitutes a charitable trust. The state court judge then decided that in order to "protect and maintain the charitable nature of the trust," that the Trust needed to be reformed employing "neutral principles of law." The problem with this approach at the outset is that it involved the state court in the business of interpreting (that is, defining) a self-styled "religious" and "spiritual" Trust that by its own language "exists to preserve and advance the religious doctrines and goals of the Fundamentalist Church of Jesus Christ of Latter-Day Saints...." Id. at 1. This is forbidden by the Establishment Clause. See Everson, 330 U.S. at 16, 67 S.Ct. 504. To put it plainly, once the state court read the 1998 Trust it should have recognized that it is a religious document and done nothing further with it. Pursuant to the Establishment Clause, the court had no business doing anything at all with or to the 1998 Trust once it was recognized as a religious trust that is based on a fundamental tenet of the FLDS church. After reading it, the only thing the court could do with this Trust was to leave it alone. Due to the malfeasance of the trustees in not responding to the tort lawsuits, the court could revoke the Trust (as would be the case with any failed charitable trust, religious or otherwise) and allow the trust property to be distributed in accordance with the Trust's own terms, but the court was barred by the First Amendment from doing anything more than that.
Nevertheless, the state court judge decided she could reform the document by separating the religious parts of the text from the secular parts of the text, an act which, even if it wasn't forbidden, this court finds to be impossible. One may as well attempt to make Deuteronomy secular, or the Koran, or to eliminate football from the Super Bowl. The religious nature of the Trust is plain and obvious. To the extent there are aspects of the Trust that can be called secular, they are unquestionably inextricably intertwined with the religious.
Next, after the court's impermissible behavior in construing and reforming the Trust, the court continued its unconstitutional march into the realm of the religious by appointing a non-religious state functionary to manage and administer the newly interpreted trust in a new secular way which forbids any religious reasons from informing his decisions. This activity goes far beyond a government sponsored prayer (Engel), a state textbook program for religious-school students (Wolman), a graduation prayer at a public school (Lee), a stand-alone creche on government property *1232 (Lynch), or any other example of impermissible state behavior found in the growing body of Establishment Clause precedents.
Looking at this situation through the eyes of the plaintiffs, it is not difficult to see what happened and its obvious enormous impact on the religious lives of the members of the FLDS church. Before the court's reformation of the 1998 UEP Trust, before the appointment of the Special Fiduciary, the plaintiffs, 5,000 or so in number, resided in homes belonging to the Trust, worked in fields and factories and dairies belonging to the Trust, and had many of their personal wants and needs involving food and shelter provided by the Trust; and all decisions about these matters were made by their FLDS church leaders. And all of these decisions were based, consistent with the Trust's language, on a large number of factors including whether they had "commit[ted] themselves and their families to live" the United Order and the extent to which they "act[ed] in the spirit of charity," "live[d] in the true spirit of brotherhood," and had "no disputations among them." Amended and Restated Declaration of Trust at 3. In other words, factors based on their religion and their faithfulness to it.
For bad or good, anyone who had agreed to the plan was subject to these same rules and was bound to accept the decisions made by his or her religious leaders. There is no question plaintiffs' religious faithfulness played a significant role in the administration of the Trust.
The day the Special Fiduciary began his job, however, that was gone, replaced by a secular authority who decided the same matters of Trust property distribution not only based on an entirely new regime of secular criteria, but also on the express condition that religious reasons could not be controlling. One's faithfulness to the principles of the church was replaced by purely secular criteria such as caloric intake needs and whether more heat was needed for warmth in the winter.
The state court's reliance on Jones v. Wolf, 443 U.S. 595, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979), is wholly misplaced. Jones followed Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 89 S.Ct. 601, 21 L.Ed.2d 658 (1969), which recognized that neutral principles of law may be employed by courts to resolve church property disputes without running afoul of the Establishment Clause if such principles are the type "for use in all property disputes" and do not in any way require the court to interpret ecclesiastical questions. Id. at 449, 89 S.Ct. 601.
Indeed, as plaintiffs point out, in Jones the Supreme Court actually gave guidance to religious organizations about how to structure their property documents to cover otherwise non-justiciable contingencies:
Through appropriate reversionary clauses and trust provisions, religious societies can specify what is to happen to church property in the event of a particular contingency.... In this manner, a religious organization can ensure that a dispute over the ownership of church property will be resolved in accord with the desires of its members.
Jones, 443 U.S. at 603, 99 S.Ct. 3020.
The 1998 Trust was structured in just this fashion by providing that in the event the Trust failed, the Trust property would revert to the FLDS church. This would avoid the possibility of a non-justiciable contingency. But, rather than allow such a result, the state actors sought and obtained a reformation of the Trust, which required disregarding all religious aspects of the Trust and inventing what they called a secular instrument. Nothing about that process employed the neutral principles referred to in Jones v. Wolf.
*1233 First of all, the case before the state court did not present a property dispute at all; it was occasioned by an alleged breach of fiduciary duty by its trustees, not because of any property dispute over the property itself. Furthermore, even if the case involved that type of internal church property dispute and neutral principles were applicable, the practice did not give the state court the authority to revise or alter religious church documents. Yet that is precisely what the state court did.
No matter how much the state court attempts to label its actions as applying neutral principles and thereby avoid constitutional problems, what it did was an impermissible rewriting of the Trust document, where the religious and secular are inextricably intertwined. There was no proper use of the so-called "neutral principles."
In sum, from the unique facts of this case and consistent with the Establishment Clause and its interpretation by the United States Supreme Court and the Tenth Circuit Court of Appeals, the state actors had no authority to act as they did. Under the circumstances, given the trustees' failure to defend the trust against the tort lawsuits and their failure to defend against the claims of malfeasance against them in the probate court, the state court could have allowed the Trust to be revoked, but they had no authority, consistent with the United States Constitution, to redefine the Trust, reform the Trust, or administer the Trust. Such state action constitutes excessive involvement with religion in violation of the First Amendment. Accordingly, the plaintiffs have established that they are substantially likely to succeed on their Establishment Clause claims for purposes of the requested preliminary injunction.
Free Exercise Clause
In addition to declaring that "Congress shall make no law respecting an establishment of religion," the First Amendment forbids Congress from "prohibiting the free exercise thereof." Through the Fourteenth Amendment, the Free Exercise Clause is applicable to the states. Cantwell v. Connecticut, 310 U.S. 296, 303-304, 60 S.Ct. 900, 84 L.Ed. 1213 (1940).
The plaintiffs claim the defendants' actions violate their free exercise rights as well as the Establishment Clause. This aspect of their case has not been the plaintiffs' primary focus either in the written briefs or during oral argument. For purposes of the present motion for preliminary injunctive relief, the plaintiffs' emphasis has in the main rested on their claim that the Establishment Clause's structural bar has been violated.
The history of the Free Exercise Clause differs significantly from the Establishment Clause. The most recent seismic shift in Free Exercise jurisprudence occurred in 1990 with Employment Div., Dept. of Human Resources of Oregon v. Smith, 494 U.S. 872, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990), in which the United States Supreme Court held that state laws of general application may be applied to churches and their members even if the consequences of such application interferes to some extent with a persons's exercise of religion. The Smith case dealt with the state of Oregon's law against the use of peyote. Several members of the Native American Church claimed that peyote use was a necessary part of their religious ceremonies and that enforcement of the peyote law against them would prevent their freedom to fully practice their religion. The Court disagreed and announced the holding stated above.
In accordance with Smith, in the instant case it appears that the state Attorneys Generals' petitions to the Third District Court alleging malfeasance on the part of *1234 the UEP Trust's trustees was a proper application of a Utah law. The trustees had chosen not to respond to two tort lawsuits which put the Trust property in jeopardy. But that state action was not directed at the plaintiffs. Quite to the contrary, the state action was designed to protect the Trust property for the benefit of its beneficiaries, which included the plaintiffs.
The state action that did affect the plaintiffs was the decision to reform the Trust and turn over management of the Trust property to the state's Special Fiduciary. As explained above, this change in management completely altered the former way of dealing with the property, stripping away any and all matters of religion and faith, which had previously been an important and essential aspect of the property management system. The court recognizes there are differences between the two religion clauses and there may be defenses available to the state actors in relation to the plaintiffs' Free Exercise claims that are not available with respect to the Establishment Clause claims. Because the Free Exercise clause has not yet received the detailed attention of the parties, the court will at this point find only that under the present state of the record the plaintiffs' Free Exercise claims appear substantially likely to succeed, and therefore serve as additional support for preliminary injunctive relief to the plaintiffs. On the present state of the record it is difficult for this court to see how the states' action is not as violative of the plaintiffs' Free Exercise rights as it is of the Establishment Clause. Simply put, the plaintiffs' freedom to practice an important tenet of their religion (i.e. the sharing of their property on religious grounds under the direction of their religious leaders) was not only eliminated but was replaced by a state-run secular program. If desired, however, the parties will be afforded an opportunity to further develop the Free Exercise issues pending a final resolution of this case.
Jurisdictional and Preclusive Defenses
The defendants' primary defense is that this federal court either lacks jurisdiction or is precluded from exercising its jurisdiction because of any or all of a wide-ranging variety of legal doctrines that include (1) waiver, (2) res judicata, (3) the Full Faith and Credit Clause, (4) laches, (5) unclean hands, (6) in custodia legis, (7) the Barton-Porter doctrine, (8) Younger abstention, (9) absolute immunity, (10) qualified immunity, (11) standing and (12) the Rooker-Feldman doctrine. The court finds each of these to be either entirely inapplicable to the present case or sufficiently lacking as a defense to provide merit for defendants' position and to prevent this court from granting the plaintiffs' requested injunctive relief.
Most importantly, the majority of these doctrines are inapplicable because they depend upon an underlying activity by the state where the state had jurisdiction and the authority to act. As explained above, the plaintiffs' Establishment Clause claim is simply that the state court had no authority to reform the 1998 Trust and thereafter take over its management. This court agrees. The Constitution does not allow the state court of Utah or any other state into the realm of religion. Once that boundary is crossed, the court is in forbidden territory and must leave. Viewed in this way it is obvious the various preclusive doctrines mentioned above are not applicable here. Waiver is not at issue because the structural limitation set by the Establishment Clause cannot be waived. Such structural limitations cannot be waived by the government or private litigants. See e.g., INS v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983) (re: legislative veto); Lee v. Weisman, 505 *1235 U.S. 577, 112 S.Ct. 2649, 120 L.Ed.2d 467 (1992).
The In Custodia Legis, Barton-Porter, and Rooker-Feldman doctrines are inapplicable because each presupposes that the state court in a civil lawsuit has jurisdiction and authority over the matter at issue, including trusts (in custodia legis), the behavior of a fiduciary (Barton-Porter), or some other aspect of state court litigation (Rooker-Feldman). As explained above, due to its religious character, the state had no authority over the Trust, other than to allow it to be terminated. Furthermore, the Rooker-Feldman doctrine is inapplicable here because the plaintiffs were not parties to the state proceedings and because this action was commenced prior to the resolution of the state cases.
Younger abstention does not pertain to this case because the state court action in question not only was without authority but also because it could hardly be said that the state courts of Utah have an important state interest in enforcing their orders and judgments that are in violation of the United States Constitution. Younger abstention is not applicable to a federal court injunction suit involving allegations of state court proceedings in violation of the Bill of Rights. Walck v. Edmondson, 472 F.3d 1227 (10th Cir.2007).
With the exception of the state court judge's immunity, the immunity doctrines presented by the defendants have no relevance at this stage of the case where only declaratory and injunctive relief are sought. Under Ex Parte Young, all of the defendants are subject to such prospective relief.
As for standing, the plaintiffs have the right to bring and prosecute this action pursuant to Article III of the United States Constitution and, more specifically, Rule 17(b)(3)(A) of the Federal Rules of Civil Procedure. The plaintiffs clearly have presented facts sufficient to present a justifiable controversy that directly affects them in the conduct of their daily lives.
Laches and Res Judicata
With regard to laches and res judicata, the defendants claim the recent opinion of the Utah Supreme Court which dismissed plaintiffs' case on the ground of laches bars this court from further action. As an alternative, they claim that even if this court is not barred from addressing plaintiffs' case by the doctrine of res judicata, this court should nonetheless dismiss the case on the basis of its own independent finding of laches.
The court will first address whether it finds, independently, whether this action should be dismissed on the basis of laches. Laches is an equitable doctrine that essentially focuses on a party's untimeliness in bringing a claim and any injury that the delay caused to the other side. Angelos v. First Interstate Bank, 671 P.2d 772, 777 (Utah 1983). By its very nature, the inquiry is fact intensive and depends on the unique circumstance of each case. The doctrine is invoked relatively seldomly, primarily because of the existence of codified statutes of limitation, statutes of repose, and the like, all of which also deal in large part with the issues of timeliness and prejudice. In the end, basic fairness is the goal. If too many plans, decisions, contracts, adjustments, and changes have been reasonably made on a party's failure to challenge a certain action, at some point in time it is only fair and equitable to disallow the claim.
Although the doctrine focuses on lack of diligence, and the prejudice it causes, it is apparent that the nature and quality of the alleged violation of law also play a part in the laches analysis. The gravity of the offense, and the extent to which it was obvious or should have been *1236 obvious, to the alleged wrongdoer, are also considerations. As a practical matter a lesser slight may be dismissed more easily on laches than a greater one even if the delay and prejudice to others are the same in both cases. This is only right because the inquiry is one in equity, seeking to balance the various consequences felt by the affected parties. As the Utah Supreme Court stated in FLDS v. Lindberg, 2010 UT 51, ¶ 28, 238 P.3d 1054: "In determining whether to apply the doctrine of laches, we consider the relative harm caused by the petitioner's delay, the relative harm to the petitioner, and whether or not the respondent acted in good faith."
In the instant case, when these three factors are fully considered, there is on the present state of the record no basis for a finding of laches, especially with respect to the state's continuing administration of the Trust. As for the first consideration, the length of the delay, the plaintiffs' first filing asserting their constitutional claims was in October, 2008 before this court. That was shortly after the plaintiffs had been denied standing to intervene in the state probate action, approximately four years after the Utah Attorney General petitioned the state court and three years after the district court reformed the Trust. All of the reasons for the plaintiffs' delay until 2008 to assert their constitutional rights are not known but some of them have been asserted as part of the record in this case. They include: (1) after Warren Jeffs declared in 2004 "to answer them nothing," the members of his church (the plaintiffs here) took no legal action in response to the Attorney General's petition; (2) a belief at some point in that earlier period that the FLDS members, again following their prophet, might be abandoning their homes and property in Southern Utah and relocating to Texas or some other location; (3) a general lack of communication from the FLDS church leaders among themselves and their followers, and a good deal of confusion about how to deal with the unfolding situation, which included the fact that their prophet was facing serious criminal charges in Utah state court and that he and the Trust had been sued in two tort lawsuits in Utah state courts; (4) a belief based on the first two orders granted by the Utah court that the Special Fiduciary had relatively limited authority that focused primarily on seeing that taxes were paid and that the tort lawsuits were properly defended; and (5) the fact that the plaintiffs themselves were not parties in the proceedings and therefor under no obligation to do anything.
During the first three years after the state case was commenced, then, on the current state of the record, it appears the plaintiffs' failure to seek legal redress was based on following the counsel of their religious leaders and on the belief, or hope, that the actions of the state would not be sufficiently violative of their rights as to necessitate legal action in the courts. During this time it is also significant to recognize that the plaintiffs did not leave their homes or property. They did not relocate to Texas. They stayed on the Trust property in Hildale and Colorado City, while they watched the actions of the Special Fiduciary become a reality in their everyday lives.
When this case was filed in 2008, the circumstances had changed significantly for at least two interrelated reasons: (1) Warren Jeffs changed his position and apparently instructed his followers to get legally involved and (2) the Special Fiduciary had taken steps in administering the Trust to do things that the FLDS members felt could not be tolerated. These included the decision to sell the Berry Knoll Farm property, which many of the FLDS community felt had special spiritual importance, and the planned final subdivision of their homes and property. In addition, *1237 there were a variety of smaller actions that if allowed to happen would cause irreparable harm to the FLDS members.
Accordingly, the plaintiffs altered their course in 2008 by filing this lawsuit. Thereafter, this court is well aware of the details that have caused the case to proceed without any final action by the court on the motion for injunctive relief. The main reasons have been (1) an extensive effort at reaching a mediated settlement, and (2) a stay of this action while the plaintiffs' Petition for Extraordinary Writ was dealt with by the Utah Supreme Court.
These circumstances do not amount to the type of inexcusable delay that supports the dismissal of plaintiffs' claims of serious constitutional violations on the basis of laches. This is particularly the case with respect to the state's continuation of its administration of the Trust. While it is true the plaintiffs could have acted sooner, their reasons and actions under all the circumstances have not been sufficiently unreasonable to warrant a finding of laches.
Turning to the injury caused to the state actors and others by the plaintiffs' waiting until 2008 to file this case, the injury, if any, is also not sufficient to serve as a basis for applying laches, even if the plaintiffs failed to bring their case with appropriate diligence. The injury caused by the plaintiffs' delay in bringing their claims falls into three categories: (1) the Special Fiduciary's own unpaid bills; (2) the settlements that were reached in the two tort lawsuits; and (3) other (mostly unidentified) decisions made and positions taken based on the Special Fiduciary's actions. None of these equal the kind of obligations, expectations, and dependencies that warrant the extraordinary remedy of laches, a remedy which would place the payment of the Special Fiduciary's accountants and lawyers (from money earned from the sale of plaintiffs' own property) ahead of the plaintiffs' rights to receive a fair hearing on their constitutional claims.
The tort lawsuit settlements certainly can be dealt with by the same legal system that one would expect to be able to allow these plaintiffs to somewhere obtain a ruling on the merits of their constitutional claims.
If the plaintiffs had abandoned their property and moved to Texas, or if they had waited a considerably longer period of time before seeking redress of their constitutional rights, or even if the damages and injury to the state and third parties was irreparable or more extensive, laches may be an appropriate remedy, but on the current state of the record the case for laches is not made. This is especially true given this court's view, as expressed above, that the defendants' actions were, and continue to be, in clear violation of the Establishment Clause and most likely in violation of the Free Exercise rights of the plaintiffs. On the present state of the record, it would be inequitable in the extreme to dismiss this case in its entirety on the basis of laches and thereby allow these serious constitutional violations to multiply and get worse.
This court is aware of no case where laches has been found under circumstances similar to the instant case. This includes the critical fact that the unconstitutional violation is an everyday ongoing reality. Every passing day, the thousands of FLDS members who brought this case are experiencing the actions and decisions of a state appointed fiduciary regarding the property in which they live. The 1998 Trust may have been reformed three years ago but its illegal administration by the state is happening with every passing day. To apply laches in this situation would be to place the violation of the First Amendment *1238 behind the fees and expenses of the very state actors, and those of the (mostly) former, and now disaffected, members of the FLDS church who have encouraged the state actors to take over the Trust. If the defendants are in territory where they are constitutionally not permitted to be, the law should require their eviction, not sanction their continued presence just so they can be paid for the invasion.
Res Judicata
Regarding res judicata, the defendants claim this court is bound by the Utah Supreme Court's finding of laches and must dismiss the case. The plaintiffs agree that this remedy is required if the Utah Supreme Court's ruling is considered to be on the merits for res judicata purposes, but they contend it was not. Defendants, obviously, disagree. Both sides, however, agree that the law of the state of Utah on this point is not settled.
Nor do the parties agree on the general state of the law in other federal or state jurisdictions. They both claim support in a proper application of Rule 41(b) of the Federal and Utah Rules of Civil Procedure. They both insist that the cases cited by their opponent(s) are misrepresented and inapposite. They both contend the cases from other jurisdictions are strongly in their favor, and they insist a ruling not in their favor would be a serious miscarriage of justice.
Currently, there is no clear precedent from the Utah Supreme Court or any other Utah state court regarding whether laches always constitutes a "judgment on the merits" for res judicata purposes. Plaintiffs argue that Utah would not find laches to provide a basis for res judicata in the circumstances of this case because to do so would be inconsistent with Utah law that holds that dismissal of a claim on the basis of a statute of limitations violation is not a judgment on the merits. They also assert that Utah has "drawn its descriptions of Utah preclusion law from California," which has held that judgments on the basis of laches are not on the merits for res judicata purposes. See Searle Bros. v. Searle, 588 P.2d 689, 691 (Utah 1978); Plaintiffs' Opening Mem. at 43.
Furthermore, plaintiffs point to the Utah Supreme Court's decision in the recent FLDS case where the court stated "[w]e decline to reach the merits of these claims," 238 P.3d at 1066, as evidence that the decision was not on the merits for res judicata purposes.
Moreover, in supplemental briefing, the plaintiffs assert that because of the unique nature of the action before the Utah Supreme Courta Petition for Extraordinary Writ, which is discretionary in nature, as apposed to an appeal as of righta finding of res judicata would be improper. And, finally the plaintiffs argue that "the overwhelming majority of courts and commentators hold that a laches or limitations dismissal in state court does not preclude a subsequent action in a federal court or a different state court." (Plaintiffs' Supp. Reply Brief Regarding Res Judicata Issue at 3.)
Defendants, on the other hand, contend that the Utah Supreme Court's ruling is preclusive under the Full Faith and Credit statute, that it is "on the merits" for res judicata purposes pursuant to controlling Utah law, and they cite many policy reasons which should prevent this court from considering the instant case. The defendants recognize that there is no direct guidance from the Utah Supreme Court on this issue, but assert that Utah would be inclined to follow the law of Arizona in this area, citing Day v. Wiswall's Estate, 93 Ariz. 400, 381 P.2d 217 (1963), in which the Arizona Supreme Court held that laches constitutes a judgment on the merits for res judicata purposes.
*1239 A close inspection of the arguments of the parties and the underlying reasons supporting the doctrines of laches and res judicata leads this court to the opinion that in the circumstances of this case, the Utah Supreme Court's finding of laches was not a judgment on the merits for res judicata purposes. Accordingly, this court is not precluded from further action in this case.
To begin with, it is well to remember that general notions of fairness provide the basis for both the doctrines of res judicata and laches. They both recognize the essential fairness in the view that at some point litigation over a particular controversy must come to an end. The law recognizes that while every person is entitled to his day in court, that is, a full and fair opportunity to be heard, that person is not necessarily entitled to a second day, or a third. As one court aptly put it, "there is justice too in an end to conflict and the quiet of peace." Environmental Defense Fund, Inc. v. Alexander, 614 F.2d 474, 481 (5th Cir.1980). Accordingly, the common law of equity developed to deny opportunities to mount additional or collateral attacks on legal issues which already had an opportunity to be presented for resolution in a court with jurisdiction. This is the essence of the doctrines of res judicata and collateral estoppel. Initially, each of these doctrines strictly required a final judgment on the merits. Over time, however, "the meaning of the term `judgment on the merits' has gradually undergone change and has come to be applied to some judgments that do not pass entirely upon the substantive merits of a claim," 47 Am.Jur.2d Judgments § 540 (2010), and pursuant to various statutes and court decisions, some "judgments not passing directly on the substance of the claim" have nevertheless operated as a bar under res judicata and collateral estoppel rationales. Id.
The Arizona Supreme Court opinion in Day v. Wiswall's Estate, 93 Ariz. 400, 381 P.2d 217 (1963), is an example of one of these court decisions that recognized preclusive effect even when the earlier proceeding was technically not decided on the merits but rather on the basis of laches. The California Supreme Court's decision in Johnson v. City of Loma Linda, 24 Cal.4th 61, 99 Cal.Rptr.2d 316, 5 P.3d 874 (2000), also a case where the underlying litigation was dismissed on the basis of laches, comes to a different conclusion, finding that the laches ruling was not on the merits for res judicata purposes. Under the current state of the law, then, it is apparent there are times when laches is deemed to support the application of res judicata and there are also times when it is not. While all of the reasons for such different results are not entirely clear, and may vary from court to court, it appears that one common element, and one that makes the Arizona and California decisions consistent with each other, is whether the underlying case in which laches was found included a fair examination of the circumstances and merits of the suit. This principle was clearly an important factor in both the Arizona and California cases.
Day, the Arizona case, involved an action brought by a plaintiff seeking a declaration that portions of her stepmother's estate should be held in constructive trust for her benefit. 381 P.2d at 218-19. The plaintiff claimed to be an heir to 1/22nd of her father's California estate, and to one-half of her mother's California-based community property. The mother died in 1899 and the father in 1911. Some 50 years after the distribution of this property to her stepmother, the plaintiff claimed she could still trace the property.
The plaintiff brought suits against the same parties in both Arizona and California. While the Arizona case was pending *1240 appeal, a judgment was rendered in the Superior Court of Los Angeles County, California dealing with the same property, issues, and parties as those brought by the plaintiff in Arizona. At the conclusion of a trial "upon the facts," the California court made a finding of laches against the plaintiff, in pertinent part, as follows:
The separate and community interests [which plaintiff seeks to reach] * * * have been so intermingled over the period of approximately 56 years that it would now be inequitable to segregate and evaluate such interest separately, and for such delay plaintiff is guilty of laches insofar as she seeks relief under actions * * * No. 666,006 * * * [and] No. 714,004.
Id. at 220.
The plaintiff claimed that the Arizona court should not give preclusive effect to the California decision because it was on the basis of laches and therefore not "on the merits." In disagreeing with her, the Arizona Supreme Court stated, "the doctrine of laches is properly applied only after a consideration of the circumstances and merits of a suit," and that "[t]he judgment in the California suit was not one of dismissal, but, after a full hearing and consideration of evidence and a finding of laches as a fact, was that the plaintiff take nothing by reason of the actions. It was therefore a judgment on the merits." Id. at 220 (emphasis in original).
The California case, Johnson v. City of Loma Linda, stated that "a judgment denying a petition for writ of administrative mandate because of the defense of laches is not a judgment on the merits for purposes of res judicata." 99 Cal.Rptr.2d 316, 5 P.3d at 884. The court explained that "[a] judgment is on the merits for purposes of res judicata if the substance of the case is tried and determined," and that under California law "[t]he defense of laches has nothing to do with the merits of the cause against which it is asserted.... The telling consideration must be that laches constitutes an affirmative defense which does not reach the merits of the cause." Id. (internal quotations and citations omitted) (emphasis in original). The court concluded its opinion with the following:
The City notes that the doctrine of res judicata promotes the public policies of giving certainty to legal proceedings, preventing parties from being unfairly subjected to repetitive litigation, and preserving judicial resources. These public policies, the City argues, would be promoted if we were to hold that a trial court's ruling on the basis of laches is a judgment on the merits. What the City overlooks, however, is that the doctrine of res judicata also requires that the prior dispute be resolved on its merits. That requirement would not be satisfied if we were to adopt the City's argument.
Id. at 884 (internal citations omitted).
In the recent FLDS case, the Utah Supreme Court identifies the doctrine of laches in Utah as follows:
The length of what constitutes a lack of diligence depend[s] on the circumstances of each case, because the propriety of refusing a claim is equally predicated upon the gravity of the prejudice suffered... and the length of [the] delay. In determining whether to apply the doctrine of laches, we consider the relative harm caused by the petitioner's delay, the relative harm to the petitioner, and whether or not the respondent acted in good faith. Further, reasonable delay caused by an effort to settle a dispute does not invoke the doctrine of laches.
FLDS v. Lindberg, 2010 UT 51, ¶ 28, 238 P.3d 1054 (internal quotations and footnotes omitted).
Under this definition, the court recognizes an obligation to perform an assessment of the merits of the plaintiffs' case in *1241 addition to the factors of delay and prejudice to others. In this regard, the Utah Supreme Court takes the same view of the definition of laches as the Arizona Supreme Court, that is, laches requires the consideration of the circumstances and merits of a suit. In the FLDS case, however, aside from the Utah Supreme Court's bare statement that laches entails a consideration of "the relative harm to the petitioner," the court undertakes no assessment of any kind whatsoever as to whether the plaintiffs' claims of serious constitutional violations had any merit at all. There is no attention given to whether the state district court's reformation of the Trust was in violation of the First Amendment or whether the day-to-day administration and management of the Trust property constituted the ongoing serious constitutional violations on which the plaintiffs' case was based. Attention was devoted solely to discussing the delay and the alleged prejudice caused by the delay. Under these circumstances, the "merits" of plaintiffs' case were not considered. The "relative harm to the petitioner" (the plaintiffs) was not even mentioned. As a result, the plaintiffs have not yet had a forum in which their claims of serious constitutional violations have been entertained or addressed sufficiently to earn a finding that they were on the merits.
In the final analysis, it appears from the case law, and in particular the cases from Arizona and California cited by the parties, that laches is entitled to preclusive effect in some cases, namely where there is some appropriate attention paid to the merits, and not in others. In this regard Utah law is in accordance with both the Arizona and California decisions. The Utah Supreme Court announced in FLDS a definition of laches that is the same as the Arizona high court. (Compare Utah's "In determining laches ... we consider the relative harm caused by the petitioner's delay, the relative harm to the petitioner, and whether or not the respondent acted in good faith," with Arizona's "The doctrine of laches is properly applied only after a consideration of the circumstances and merits of a suit."). Accordingly, it would be expected that the Utah court would take a similar approach to finding laches as having preclusive effect only when, as in the Day case, there was a "full hearing and consideration of evidence" in the underlying action. If there is no such consideration of the merits, laches would not have preclusive effect.[2] That is unquestionably what happened in FLDS. Therefore, consistent with the Day case, there is no res judicata effect from Utah's decision in FLDS.
On the other hand, Utah law is also consistent with California's law, announced in the Johnson case, if a finding of laches is based only on a consideration of (1) delay by the plaintiff and (2) prejudice to the defendant (and third parties), and does not consider the merits of the plaintiff's suit. If that is the definition of laches, or if that is the way the doctrine is applied, then the result is a finding of no preclusive res judicata effect, as was the California court's holding in Johnson. Any reading of the FLDS case shows that the Utah Supreme Court focused solely on delay *1242 and prejudice (to the defendants) and nothing more.
Furthermore, the court finds merit in the plaintiffs' argument that the discretionary nature of the relief available under the Petition for Extraordinary Writ makes a finding of res judicata inappropriate here. See Plaintiffs' Supp. Brief Regarding Res Judicata Issue at pp. 4-9. In State v. Barrett, 2005 UT 88, 127 P.3d 682, the Utah Supreme Court recognized that a party seeking relief under such a Petition "has no right to receive a remedy that corrects a lower court's mishandling of a particular case. Rather, whether relief is ultimately granted is left to the sound discretion of the court hearing the petition." Id. at ¶ 23.
The Barrett court compared the decision whether to grant relief pursuant to a petition for extraordinary writ to a decision whether to grant a petition for a writ of certiorari. "The exercise of the court's discretion when deciding whether to grant rule 65B(d) extraordinary relief is akin to this court's exercise of its certiorari review powers. Rule 46 of the Utah Rules of Appellate Procedure states that `[r]eview by a writ of certiorari is not a matter of right, but of judicial discretion and will be granted only for special and important reasons.'" Id. at ¶ 24 (quoting Utah R.App. P. 46(a)). It was under these circumstances in which the Utah Supreme Court decided in its sole discretion not to grant the Writ in the FLDS petition. In doing so, the court specifically stated that "we decline to reach the merits of these claims." FLDS, 2010 UT 51, ¶ 43, 238 P.3d 1054. In this regard, pursuant to Fed. R. Civ. Proc. 41(b), it appears the Utah Supreme Court in its dismissal order was signaling that the decision was not operating "as an adjudication on the merits."[3]
For the above reasons and based on the other authorities cited in the plaintiffs' supplemental briefing, the court finds the Utah Supreme Court's decision in FLDS was not on the merits for the purposes of res judicata.
Other Issues/Defenses
As addressed above, the defendants have asserted many defenses arguing that this court lacks jurisdiction, or that even if this court has jurisdiction, it should not exercise it. And, as stated, the defendants also address, albeit sparingly and unconvincingly, the substance of the plaintiffs' constitutional claims. But, in addition to these assertions in defense of their actions, the defendants also devote large amounts of their briefs, and attention in oral argument, to addressing the bad character and alleged criminal wrongdoing of Warren Jeffs. The purpose of these pronouncements, as best the court can make of them, is to persuade this court that it should find the state action constitutionally proper because to find otherwise would allow Warren Jeffs (and presumably his followers) to obtain the Trust property and use it to carry out wrongful and criminal acts. The defendants point, in particular, to Mr. Jeffs' alleged sexual abuse of minors through illegal arranged marriages of young girls to older men and by other means.
The defendants assert that if the state court were to terminate the Trust, as opposed to reforming and managing it, and *1243 thereby allow it to be revoked according to its own terms, the Trust property would revert to Warren Jeffs, as president and corporation sole of the FLDS church. This result, they claim, cannot be allowed to happen because Jeffs would simply continue to use the Trust property for nefarious purposes. They point out that he and the Trust were sued in the tort lawsuits on claims of illegal sexual abuse of minors, and that he was prosecuted criminally for such activity in Utah and is currently facing similar charges in Texas. They also cite instances where Mr. Jeffs has made statements that show he is manipulating the Trust property to assist him in his illegal behavior.
The tort lawsuit claimants have sought to intervene in this case with similar rhetoric. They refer to Mr. Jeffs' criminal acts as "the elephant in the room" and argue that the Special Fiduciary must be allowed to continue his work in order to restrict Mr. Jeffs' ability to utilize the Trust and its property in aid of his criminal abuses against minors and other wrongful behavior.
All of these accusations and pronouncements are not lost on the court. But they lack relevance to the question whether the state actors violated the constitutionally established boundaries between church and state by their virtual remake and takeover of the 1998 Trust. The fact of the matter is that the state court based its decision to reform the Trust, and turn its administration over to the Special Fiduciary, on the malfeasance of Warren Jeffs and the other trustees in failing to defend the tort lawsuits and thereby subject the Trust property to possible default judgments. Although the defendants asserted in oral argument, and suggest in their briefs, that part of the reason for reforming the Trust was because of a legal determination by the state court that it was being used to facilitate illegal activity, there is no support for that assertion.
While it is true the state court judge in reforming the Trust recognized that the FLDS church practiced polygamy, which is illegal, and that the Special Fiduciary would not in any manner be allowed to make Trust administration decisions on the basis of polygamist practices, the state judge nowhere based her decision to reform or administer the Trust on a finding that it was being used to commit or support criminal activity. The state-judge's Memorandum Decision states:
The reasons for reformation are multiple. Earlier in these proceedings the Court determined that the suspended trustees had "committed [] serious breach[es] of trust," and demonstrated "unfitness, unwillingness, or persistent failure ... to administer the trust effectively" on behalf of the beneficiaries of the Trust. Specifically, the suspended trustees and, in particular, Warren Jeffs in his capacity as FLDS President and President of the Board of Trustees, violated various duties including the duties of loyalty and `prudent administration' of the Trust. To be sure, the Restatement granted the suspended trustees great discretion in managing the Trust. Nevertheless, the Code provides that even when the controlling trust instrument uses such terms as "`absolute,' `sole,' or `uncontrolled' [discretion,] the trustee shall exercise discretionary power in good faith in accordance with the terms and purposes of the trust and the interests of the beneficiaries."
While certain specific claims against the suspended trustees may be in dispute, there is no question that the suspended trustees failed to defend the Trust against various lawsuits to which the Trust is a party. By failing to defend the Trust, the suspended trustees *1244 violated the Utah Code, and allowed the Trust to be exposed to entry of default judgments against it. Entry of judgment in those cases would permit prevailing parties to seize Trust assets in satisfaction of the judgment. Additionally, the suspended trustees knowingly and willfully failed to comply with two Court orders: First, they failed to provide an accounting of Trust assets. Second, they failed to assist the Special Fiduciary by collecting and providing information about how the Trust has been administered.
... [I]n addition to the problems that have resulted from the trustees' administrative defaults, the Court's review of the Restatement has led it to conclude that various dispositive (i.e., substantive) provisions of that instrument are fundamentally flawed and unworkable. Accordingly, the Courtwith the help of interested partieswill need to address both types of issues as part of the Trust's reformation.
In the Matter of the United Effort Plan Trust, Case No. XXXXXXXXX, at ¶¶ 21-23.
If there is a case to be made by the states that the property within the FLDS Trust is being managed and distributed to facilitate sex crimes against minors, or to facilitate polygamy, or to discriminate against young males within the Church, then the state may wish to make such a case in the appropriate place and consistent with due process, and seek the appropriate remedies, which may include forfeiture and confiscation of the Trust property by the state, but there is no support in the record before the court that such a case was ever made in either Utah or Arizona.
Furthermore, even if such a proceeding had been held, and a decision had been reached that the Trust property was being used to facilitate crimes, the remedy cannot be one of remaking the Trust and administering it in the manner employed by the state actors in this case. Such action, even if it followed a finding of impropriety or criminality in the use of the Trust property, would still run afoul of the Establishment Clause. It would still improperly involve the state in taking over a religiously-based program and turning it into a secular one based on new non-religious rules recognized by the state. It would constitute the type of excessive entanglement between the state and religion not permitted under the Constitution. It is one thing for a state to tell a church and its members that they, just like all other residents of the state, may not smoke peyote, or commit child sexual abuse, or violate any other law of general application. And it is proper to prosecute the offenders and to seek all available legal remedies, such as property forfeiture. But it is quite another thing, altogether, to reorganize the religious activities of such churches and their members to make them conform to the states' version of appropriate secular behavior.
In sum, it is the method the states chose to utilize in dealing with the Trust that this court finds to offend the Constitution and to support preliminary injunctive relief. There may be other methods that could reach many of the goals the states seem to be pursuing, but they are of course not at issue here. The court has listened to the many complaints about Warren Jeffs and the allegations of his and some of his followers' criminal and tortuous misconduct, but finds that these allegations as a matter of law do not justify the constitutional infirmities of the state action.
CONCLUSION
For the foregoing reasons, the court GRANTS the plaintiffs' motion for a preliminary injunction, effective immediately, on terms identical to the present Temporary Restraining Order. A separate order *1245 will hereafter be entered further identifying the precise extent of the preliminary injunction. Defendant Utah Attorney General Mark Shurtleff's, defendant Arizona Attorney General Thomas C. Horne's, and defendant Denise Posse Lindberg's motions to dismiss are DENIED. The tort lawsuit claimants' motion to intervene is GRANTED.
IT IS SO ORDERED.
NOTES
[1] Other important Establishment Clause cases include: Wallace v. Jaffree, 472 U.S. 38, 105 S.Ct. 2479, 86 L.Ed.2d 29 (1985) (holding that mandatory moment of silence in schools for the purpose of private prayer violated the Establishment Clause); Allegheny County v. American Civil Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573, 109 S.Ct. 3086, 106 L.Ed.2d 472 (1989) (striking down a creche display in a county courthouse which contained the phrase Gloria in Excelsis Deo while upholding the display of a nearby menorah, which appeared with a Christmas tree and a sign saluting liberty); Lee v. Weisman, 505 U.S. 577, 112 S.Ct. 2649, 120 L.Ed.2d 467 (1992) (holding that offering of prayer before a voluntarily attended graduation was unconstitutional); Santa Fe Independent School Dist. v. Doe, 530 U.S. 290, 120 S.Ct. 2266, 147 L.Ed.2d 295 (2000) (holding that a vote of the student body could not authorize student-led prayer prior to school events); Zelman v. Simmons-Harris, 536 U.S. 639, 122 S.Ct. 2460, 153 L.Ed.2d 604 (2002) (upholding the constitutionality of private school vouchers); Van Orden v. Perry, 545 U.S. 677, 125 S.Ct. 2854, 162 L.Ed.2d 607 (2005) (holding that a Ten Commandments display at the Texas state capital capitol did not violate the Establishment Clause because of its secular purpose); McCreary County v. ACLU of Kentucky, 545 U.S. 844, 125 S.Ct. 2722, 162 L.Ed.2d 729 (2005) (striking down a Ten Commandments display in several courthouses because it was not integrated with a secular purpose); O'Connor v. Washburn University, 416 F.3d 1216 (10th Cir.2005) (recognizing that the Tenth Circuit uses Justice O'Connor's endorsement test to interpret the purpose and effect prongs of Lemon for Establishment Clause analysis); American Atheists, Inc. v. Davenport, 637 F.3d 1095, 2010 WL 5151630 (10th Cir.2010) (striking down the use of memorial crosses to commemorate fallen highway troopers in Utah); Trunk v. City of San Diego, 629 F.3d 1099 (9th Cir. 2011) (holding that a large Latin cross located on city property on top of Mount Soledad in San Diego violates the Establishment Clause).
[2] The defendants' brief supports this court's view that the merits of the claim must receive some consideration by a court before a laches finding will have preclusive effect. The Arizona Attorney General explains to the court on page 20 of his brief that "A statute of limitations bar looks only to the timing of the filing of the earlier action, whereas laches requires inquiry into the merits of the claim." He also refers the court to the Utah Supreme Court's definition of laches as requiring consideration of "the relative harm to the petitioner," (page 15 and again on page 20), to emphasize why this court should give res judicata effect to the Utah Supreme Court's opinion in the instant case.
[3] Rule 41(b) of the Utah Rules of Civil Procedure provides: "Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable party, operates as an adjudication on the merits." (emphasis added). Rule 41(b) of the Federal Rules of Civil Procedure is virtually identical to the Utah rule.
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184 Cal.App.3d 199 (1986)
228 Cal. Rptr. 798
THE PEOPLE, Petitioner,
v.
THE MUNICIPAL COURT FOR THE NORTH COUNTY JUDICIAL DISTRICT OF SAN DIEGO COUNTY, Respondent; THOMAS JOSEPH SANSONE, Real Party in Interest.
Docket No. D004797.
Court of Appeals of California, Fourth District, Division One.
July 31, 1986.
*200 COUNSEL
Edwin L. Miller, Jr., District Attorney, Peter C. Lehman and Thomas F. McArdle, Deputy District Attorneys, for Petitioner.
No appearance for Respondent.
Diane C. Campbell and Thomas J. Warwick for Real Party in Interest.
OPINION
LEWIS, J.
Real party, Thomas Joseph Sansone, was arrested December 28, 1985, for driving under the influence of alcohol. Pursuant to Vehicle Code section 13353, he chose and successfully completed the urine test and was charged with Vehicle Code section 23152, subdivisions (a) and (b). Sansone then brought a motion to exclude evidence of his blood alcohol content on the basis the urine test does not meet the Kelly-Frye (Frye v. United States (D.C. Cir.1923) 293 Fed. 1013 [54 App.D.C. 46, 34 A.L.R. 145]; People v. Kelly (1976) 17 Cal.3d 24 [130 Cal. Rptr. 144, 549 P.2d 1240]) criteria for admissibility of evidence. At the hearing, the People called one witness, Janet LaMott, who is forensic alcohol supervisor of the San Diego Regional Crime Laboratory. She explained the method used to determine blood alcohol content, the way to obtain proper samples and the system of converting urine alcohol results to blood alcohol percentages. LaMott also testified that in her opinion a urine test done properly will give accurate results, an opinion shared by many but not all scientists. At the close of the hearing, the court ruled to exclude the result of Sansone's urine test because the prosecution did not prove that urine tests are generally accepted as reliable within the scientific community. On defendant's motion, the court dismissed count two, a violation of Vehicle Code section 23152, subdivision (b).
*201 On the People's request, the municipal court granted a stay of trial which allowed them time to file a petition for writ of mandate or prohibition in the superior court. That petition was denied, the court granting a 10-day stay of trial until July 7, 1986, a stay which was continued by this court pending response and disposition of the matter.
(1) The People challenge the order excluding the urine test results on the basis the Kelly-Frye rule does not apply. They are correct because there is nothing new about the use of urine tests to ascertain the level of alcohol in the blood. In Frye, the prosecution objected to defendant's use of results from a lie detector. The court stated: "Just when a scientific principle or discovery crosses the line between the experimental and demonstrable stages is difficult to define. Somewhere in this twilight zone the evidential force of the principle must be recognized, and while courts will go a long way in admitting expert testimony deduced from a well-recognized scientific principle or discovery, the thing from which the deduction is made must be sufficiently established to have gained general acceptance in the particular field in which it belongs." (Frye v. United States, supra, 293 Fed. at p. 1014.) Likewise, in Kelly, where the evidence sought to be admitted was a voiceprint, the court repeatedly limited the application of the Frye test to new scientific methods of proof. There is nothing new about using the urine test to determine blood-alcohol content. It has been routinely used in California courts for over 20 years (see People v. Conterno (1959) 170 Cal. App.2d Supp. 817, 823 [339 P.2d 968]). The Legislature, some 20 years ago, incorporated urine tests into the implied consent law (Veh. Code, § 23157, see former Veh. Code, § 13353, added Stats. 1966, ch. 138, § 1). Urine, blood and breath tests are all carefully regulated to assure the accuracy of the test results (see Cal. Admin. Code, tit. 17, part 1, § 1215 et seq.). Real party argues that urine testing has been commonplace for many years but argues that this deals only with individual samples and not with the acceptability of the procedure itself. There is no appellate decision that establishes the general acceptance of urinalysis testing, says real party, and since the People failed to present any evidence on that point, the results must be excluded. However, were the procedure itself not acceptable, its use would not be commonplace; were the procedure not acceptable, the Legislature would not have included it as an alternative of testing for blood alcohol levels.
Real party suggests the procedure for collecting urine samples makes the results unreliable because one can never completely void one's bladder. However, the conversion factor derived after empirical studies takes this into account. The accuracy of a particular test may be compromised by the subject failing to completely void his bladder but this does not detract from the validity of the procedure itself.
*202 Real party points out that just because a procedure has been used for years should not place it beyond attack. But absent a showing of new information as to a particular scientific principle or discovery there is no reason to challenge an already established procedure. It is in such situations that it is appropriate for the court to take judicial notice (see Evid. Code, §§ 451, subd. (f), 452, subds. (g) and (h)). Here, real party presents no new scientific data concerning the reliability of urine testing.
When the court ruled that the urine test results were not admissible, it then granted the real party's motion to dismiss count two (Veh. Code, § 23152, subd. (b)). The People did not object and real party suggests that this was a waiver. However, in view of the ruling, the People had nothing to object to since absent the test results they could not prove Vehicle Code section 23152, subdivision (b). Since applying the Kelly-Frye rule to a long used, established scientific procedure was error, the ruling that the test results were inadmissible likewise was error as was the dismissal of count two.
An alternative writ or order to show cause would add nothing to the presentation. A peremptory writ is proper. (Code Civ. Proc., § 1088; United Nuclear Corp. v. Superior Court (1980) 113 Cal. App.3d 359 [169 Cal. Rptr. 827]; Goodenough v. Superior Court (1971) 18 Cal. App.3d 692, 697 [96 Cal. Rptr. 165].)
Let a peremptory writ issue directing the municipal court to vacate its orders excluding urine test results and dismissing count two. The stay issued by this court on July 3, 1986, is vacated.
Wiener, J., concurred.
STANIFORTH, Acting P.J.
I respectfully dissent. The People have the burden of showing the test used is valid which they failed to do in this case as a matter of proof. This does not mean the test is not valid but merely that the People failed to prove it here. I would deny the petition.
On August 29, 1986, the opinion was modified to read as printed above. The petition of real party in interest for review by the Supreme Court was denied October 30, 1986. Mosk, J., was of the opinion that the petition should be granted.
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS May 26, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 03-30815
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
WILLIAM SCOTT TATUM,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 02-CR-50086-ALL
Before JONES, BENAVIDES and CLEMENT, Circuit Judges.
PER CURIAM:*
William Scott Tatum appeals his guilty plea conviction
and sentence for possession of a firearm by a convicted felon in
violation of 18 U.S.C. § 922(g)(1).
Tatum contends that the district court clearly erred when
it applied the four-level adjustment under U.S.S.G. § 2K2.1(b)(5)
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
because there was no evidence that he used or possessed the firearm
in connection with another felony offense.
U.S.S.G. § 2K2.1(b)(5) provides for a four-level sentenc-
ing increase “[i]f the defendant used or possessed any firearm or
ammunition in connection with another felony offense.” The dis-
trict court’s determination of the relationship between the firearm
and another offense is a factual finding reviewed for clear error.
United States v. Condren, 18 F.3d 1190, 1199-1200 (5th Cir. 1994).
The district court did not clearly err when it found that
Tatum possessed the firearm in connection with the burglary.
Although there is no evidence that Tatum actually used the firearm
during the commission of the burglary, he admittedly possessed the
firearm, it was readily available to him, and it could have been
used to facilitate the burglary and his escape. See United States
v. Armstead, 114 F.3d 504, 512 (5th Cir. 1997); see also Condren,
18 F.3d at 1200. Accordingly, the district court properly applied
the four-level adjustment under U.S.S.G. § 2K2.1(b)(5).
Tatum contends that 18 U.S.C. § 924(e) constitutes a
separate criminal offense and, thus, the three predicate felonies
must be presented to a jury and proved beyond a reasonable doubt.
This argument is foreclosed by our decisions in United States v.
Stone, 306 F.3d 241, 243 (5th Cir. 2002) and United States v.
Affleck, 861 F.2d 97, 99 (5th Cir. 1988).
Tatum also contends that the district court erred when it
found that two burglary convictions entered on the same date
2
pursuant to a single bill of information under one docket number
for which concurrent sentences were imposed constituted two
separate convictions for purposes of 18 U.S.C. § 924(e).
This court reviews the application of a sentencing
enhancement de novo. United States v. Munoz, 150 F.3d 401, 419
(5th Cir. 1998). “Multiple convictions arising from the same
judicial proceeding but from separate criminal transactions
constitute multiple convictions for purposes of [18 U.S.C.]
§ 924(e).” United States v. Ressler, 54 F.3d 257, 259 (5th Cir.
1995); see also United States v. Herbert, 860 F.2d 620, 622 (5th
Cir. 1988). “Where . . . multiple offenses are not part of a
continuous course of conduct, they cannot be said to constitute
either a criminal spree or a single criminal transaction for
purposes of section 924(e).” United States v. Washington, 898 F.2d
439, 441 (5th Cir. 1990).
The district court did not err when it found that Tatum’s
two burglary convictions constituted two separate convictions and
sentenced him as an armed career criminal under 18 U.S.C. § 924(e).
Tatum pleaded guilty to the simple burglary of the inhabited
dwelling of Cynthia Jones on February 21, 1995, and to the simple
burglary of the inhabited dwelling of Danny Fuller on February 22,
1995. Tatum successfully completed the first burglary, safely
escaped, and the following day committed the second burglary.
Thus, his burglaries of two different residences on two consecutive
days arose out of separate courses of conduct and were crimes
3
“committed on occasions different from one another” for purposes of
18 U.S.C. § 924(e). See Washington, 898 F.2d at 441-42. The fact
that Tatum was convicted in a single proceeding from a single bill
of information under one docket number with sentences imposed to
run concurrently is not dispositive. See Herbert, 860 F.2d at 622.
Finally, Tatum contends that the district court erred
when it sentenced him beyond 15 years because he was not informed
at the guilty plea hearing that the maximum sentence to which he
could be exposed if 18 U.S.C. § 924(e) was found to apply was any
greater than the 15-year mandatory minimum. The Government
concedes that Tatum was not fully advised of the maximum sentence
to which he was exposed by his guilty plea and contends that the
188-month sentence imposed by the district court should be reduced
to the 180-month mandatory minimum of which Tatum was clearly
advised.
This court has held that when a sentence exceeds the term
of which the court has informed the defendant, the district court
may remedy any prejudice suffered as a result of the FED. R. CRIM.
P. 11 violation by reducing the term to conform to the maximum term
of which he was informed. United States v. Andrews, 918 F.2d 1156,
1161 (5th Cir. 1990); see also United States v. Lewis, 875 F.2d
444, 445 (5th Cir. 1989). Tatum does not contend otherwise.
Therefore, we modify the sentence to reflect the 15-year minimum
term that Tatum acknowledged to be applicable.
4
AFFIRMED AS MODIFIED.
5
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a1233n.06
No. 12-5060 FILED
Nov 28, 2012
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
JARROD MILLS, ) COURT FOR THE WESTERN
) DISTRICT OF TENNESSEE
Defendant-Appellant. )
BEFORE: MARTIN and GRIFFIN, Circuit Judges; BECKWITH, District Judge.*
PER CURIAM. Jarrod Mills appeals a district court judgment revoking his supervised
release. Because the thirty-six month sentence imposed by the district court is procedurally and
substantively reasonable, we affirm.
In 1998, Mills pleaded guilty to conspiracy to manufacture with the intent to distribute 132
grams of cocaine base in violation of 21 U.S.C. § 841(a)(1). He was sentenced to 121 months of
imprisonment, followed by five years of supervised release. That five-year period of supervised
release began on May 4, 2007.
On June 8, 2011, the probation office petitioned the district court to issue a warrant for
Mills’s arrest and recommended revocation of his supervised release. According to the petition,
*
The Honorable Sandra S. Beckwith, Senior United States District Judge for the Southern
District of Ohio, sitting by designation.
No. 12-5060
United States v. Mills
Mills had violated the conditions of his supervised release by committing the following offenses for
which he had been indicted by the State of Tennessee: (1) possession of cocaine with the intent to
manufacture, sell, and deliver; (2) possession of marijuana with the intent to manufacture, sell, and
deliver; and (3) possession of drug paraphernalia.
After an evidentiary hearing, the district court concluded that the government had established
by a preponderance of the evidence that Mills had violated the conditions of his supervised release.
The district court then proceeded to sentencing, noting that Mills’s advisory sentencing guidelines
range was twenty-four to thirty months of imprisonment, and that the statutory maximum sentence
was sixty months of imprisonment. Both parties recommended a sentence of twenty-four months
of imprisonment. In support of that sentence, Mills asserted that, because his original sentence was
imposed prior to the enactment of the Fair Sentencing Act of 2010 (FSA), Pub. L. No. 111–120, 124
Stat. 2372, he had served more time than someone would currently serve for the same offense. He
also asserted that the district court should consider the changes in the crack cocaine sentencing laws
since his original sentencing. After considering the relevant sentencing factors under 18 U.S.C. §
3553(a), see 18 U.S.C. § 3583(e), the district court concluded that a sentence of thirty-six months
of imprisonment was appropriate because of the similarity between Mills’s original drug offense, his
violation conduct, and “the fact that apparently not much was beneficially learned.”
In this timely appeal, Mills challenges his thirty-six month sentence. We review a sentence
imposed upon revocation of supervised release “‘under a deferential abuse-of-discretion standard,’”
-2-
No. 12-5060
United States v. Mills
for procedural and substantive reasonableness. United States v. Bolds, 511 F.3d 568, 578 (6th Cir.
2007) (quoting Gall v. United States, 552 U.S. 38, 41 (2007)).
Mills argues that his sentence was procedurally unreasonable because the district court failed
to adequately explain its deviation from the guidelines range. Mills actually complains about the
district court’s reason for the deviation rather than the adequacy of its explanation, asserting that
“upward variances are reserved for those who have inadequate criminal history scores, those who
received a downward adjustment in their original sentence, and those who repeatedly violate
supervised release.” While the guidelines’ policy statements specifically mention these justifications
for deviating from the guidelines range in imposing a sentence upon revocation of supervised release,
see, e.g., USSG § 7B1.4, cmt. nn.2 & 4, nothing restricts the district court’s discretion to these three
reasons.
The record reflects that the district court “adequately explain[ed] the chosen sentence” and
provided “an explanation for [the] deviation from the Guidelines range.” Gall, 552 U.S. at 51. After
discussing the relevant § 3553(a) factors, including the nature and circumstances of Mills’s original
offense and its similarity to the violation conduct as well as the need to afford adequate deterrence
and to protect the public, the district court gave a specific reason for deviating from the guidelines
range. Thus, district court complied with its duty to explain the deviation from the guidelines range
and imposed a procedurally reasonable sentence. See United States v. Johnson, 640 F.3d 195,
207–08 (6th Cir. 2011).
In support of his argument that his sentence was substantively unreasonable, Mills contends
that the district court rejected his policy argument regarding the FSA based on incorrect assumptions
-3-
No. 12-5060
United States v. Mills
and that the sentence imposed was therefore arbitrary. After the district court pronounced the thirty-
six month sentence, Mills reiterated his argument that he would have received a lower sentence
under the FSA, asserting that “it is called the Fair Sentencing Act because in the past, it was unfair.”
In rejecting Mills’s argument, the district court stated:
It is called the Fair Sentencing Act because somebody put that label on the statute.
It is not called the Fair Sentencing Act because crack cocaine is not a bad thing.
Crack cocaine destroys this community. If you want to see one substance that has the
greatest impact in destroying Memphis, Tennessee and the young people in
Memphis, Tennessee, it’s crack cocaine, and it’s hard to pick out one thing in
Memphis because you have got so many things competing for it. You know, we have
got a meth problem, we have got a new and rising heroin problem. We have all sorts
of problems with Oxycontin and all those materials, so those are bad, but the one
thing that seems to be absolutely the most pervasive is crack.
Mills argues that the district court’s statements are “outdated and incorrect,” but cites no data
regarding drug abuse in Memphis. The district court did not rely on the discredited assumptions
regarding the relative harmfulness of crack and powder cocaine which formed the basis of the
sentencing disparity between crack and powder cocaine offenses. See Kimbrough v. United States,
552 U.S. 85, 95–98 (2007). Given that the district court considered the relevant § 3553(a) factors and
addressed Mills’s policy argument, the district court’s sentencing determination was not arbitrary.
The district court’s judgment is affirmed.
-4-
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23 P.3d 650 (2001)
Mark A. EVANS, Appellant,
v.
STATE of Alaska, Appellee.
No. A-7474.
Court of Appeals of Alaska.
February 23, 2001.
*651 Marcia E. Holland, Assistant Public Defender, Fairbanks, and Barbara K. Brink, Public Defender, Anchorage, for Appellant.
Douglas H. Kossler, Assistant Attorney General, Office of Special Prosecutions and Appeals, Anchorage, and Bruce M. Botelho, Attorney General, Juneau, for Appellee.
Before COATS, Chief Judge, and MANNHEIMER and STEWART, Judges.
OPINION
MANNHEIMER, Judge.
Mark A. Evans was indicted on eleven counts of sexually abusing a minor. He ultimately pleaded no contest to one count of first-degree sexual abuse (Count I of the indictment), and the State dismissed the others.
A pre-sentence report was prepared by the Department of Corrections; this report included a lengthy description of the criminal investigation and details of the various alleged incidents of sexual abuse. At the sentencing hearing, Evans took the stand and denied that he had ever sexually abused the child. Based on this testimonial denial, Evans's attorney asked Superior Court Judge Richard D. Savell to strike the pre-sentence report's narrative of the investigation and its description of the various alleged offenses. Judge Savell refused to do this, but he did make a notation on the pre-sentence report that Evans "has denied under oath that the [alleged instances] of sexual misconduct occurred" and that "[e]vidence supports" many of Evans's denials.
Evans now appeals Judge Savell's refusal to redact the pre-sentence report. He concedes that Judge Savell was entitled to read everything in the report, but he argues that Judge Savell was obliged to redact the report after its allegations of sexual misconduct were challenged, so that the final copy of the reportthe copy that becomes a part of Evans's Department of Corrections filewould contain no unverified allegations of misconduct.
Evans's case is controlled by Criminal Rule 32.2(a)(3) and by our decisions in Hamilton v. State[1] and Ashenfelter v. State[2].
Evans's right to seek redaction of the pre-sentence report
Alaska law gives both the State and the defendant the opportunity to dispute "any information [contained] in the presentence report or in any other material [that] the judge or [the] opposing party has identified as a source of information to be relied on at sentencing".[3] When either party successfully challenges allegations contained in the pre-sentence report, or when the sentencing judge decides to leave one or more challenges unresolved because the disputed facts make no difference to the sentencing decision, Criminal Rule 32.2(a)(3) requires the sentencing judge to redact the pre-sentence report:
(3) Allegations that the judge finds are not established, or [allegations] that the judge determines will not be considered [in the sentencing decision], shall be deleted from the judge's copy of the presentence report. The judge shall enter on the judge's copy of the presentence report any corrections that [the judge] makes. The judge's corrected copy shall [then] be designated as the "Approved Version." The judge shall send a copy of the approved version to the Department of Corrections.
In the present case, Evans disputed essentially every allegation of sexual misconduct contained in the pre-sentence report. The State was therefore obliged to substantiate these allegations (with the exception of *652 the count to which Evans pleaded no contest). Under Criminal Rule 32.2(a)(3), if the State failed to substantiate the allegations, or, alternatively, if Judge Savell concluded that there was no need to resolve the disputed allegations, Evans was entitled to have those allegations removed from the pre-sentence report.
As explained above, Judge Savell tried to resolve these issues by annotating the pre-sentence reportadding handwritten comments that (1) the allegations of sexual misconduct were contested and that (2) there was evidence to support Evans's attack on some of these allegations. The judge's actions did not comply with Criminal Rule 32.2(a)(3).[4] Judge Savell was obliged to resolve the disputed allegations or expressly declare that he did not need to resolve them (and then order them removed from the pre-sentence report).
Litigation of the disputed allegations of sexual misconduct
The remaining questions in this appeal concern the procedural rules that govern the litigation of the disputed allegations of sexual misconduct. Our decisions in Hamilton and Ashenfelter articulate those rules.
In Hamilton, this court adopted a rule restricting the use of hearsay evidence at sentencing: when a defendant denies the State's hearsay allegations under oath and submits to cross-examination, the State is then obliged either to produce its witnesses in court or prove that the witnesses are unavailable and that the circumstances tend to confirm the witnesses' veracity.[5]
In Ashenfelter, we recognized a limitation on this rule: defendants are not entitled to deny their factual guilt of the charges to which they have pleaded guilty or no contest.[6] As explained above, Evans pleaded no contest to one count of first-degree sexual abuse of a minor (Count I of the indictment). Judge Savell could properly disregard Evans's claim of innocence regarding this count, even though that claim was made under oath.[7]
Because Evans took the stand and denied all wrongdoing, and because the State thereafter declined to present its witnesses in court, our decisions in Hamilton and Ashenfelter require the following result with respect to the allegations of sexual misconduct contained in the pre-sentence report: Judge Savell was still entitled to rely on the allegations specifically relating to Evans's guilt of Count I, but the judge could no longer rely on the hearsay assertions of out-of-court declarants to support the other allegations of sexual misconduct contained in the pre-sentence report.
The next question is whether Judge Savell heard anything but inadmissible hearsay assertions of out-of-court declarants. He did.
The victim's mother testified at the sentencing hearing, so Judge Savell could rely on her testimony. And, of course, Judge Savell could rely on Evans's own testimony.
We note, in particular, that during Evans's testimony at the sentencing hearing, he admitted making arguably incriminatory statements during an earlier taped telephone conversation with the victim's mother. In this telephone conversation, Evans stated that he had touched the victim and that the victim had touched him. (The victim's mother also described this telephone conversation during her testimony.) Because testimony was presented at the sentencing hearing to support the assertion that Evans made these statements, the Hamilton rule no longer barred Judge Savell from considering these out-of-court statements when he resolved Evans's challenges to the allegations of sexual misconduct contained in the pre-sentence report.
Moreover, the Hamilton rule did not bar Judge Savell from considering the mother's words during this earlier telephone conversation *653 with Evans so long as the mother's statements were not offered for the truth of any matters asserted, but rather to provide the context for interpreting the meaning of Evans's statements. Offered to provide the context for Evans's statements, the mother's statements were not hearsay.[8]
Of course, it was up to Judge Savell to determine what Evans's statements meant, and what events Evans was referring to. When Evans testified about these out-of-court statements, he insisted that he had been referring to innocent touchings that occurred during bathing. This was an issue of fact to be resolved by Judge Savell.
Conclusion: we remand this case to the superior court
Now that we have clarified the superior court's task and the law governing the superior court's accomplishment of that task, we remand Evans's case to Judge Savell. Governed by the rules announced in Hamilton and Ashenfelter, Judge Savell should decide whether the State has proved the disputed allegations of sexual misconduct or, alternatively, the judge should expressly find that the disputed allegations need not be resolved. He should then redact the pre-sentence report in accordance with Criminal Rule 32.2(a)(3).
This case is REMANDED to the superior court for further proceedings in conformity with this opinion. We do not retain jurisdiction of this case.
NOTES
[1] 771 P.2d 1358 (Alaska App.1989).
[2] 988 P.2d 120 (Alaska App.1999).
[3] Alaska Criminal Rule 32.1(d)(1)(B).
[4] See Cragg v. State, 957 P.2d 1365, 1368 (Alaska App.1998).
[5] See Hamilton, 771 P.2d at 1362-63; Ashenfelter, 988 P.2d at 125-26.
[6] Ashenfelter, 988 P.2d at 123 (citing Scott v. State, 928 P.2d 1234, 1238 (Alaska App.1996)).
[7] Id.
[8] See Linne v. State, 674 P.2d 1345, 1356 n. 8 (Alaska App.1983).
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Matter of Khadija J.K. (Kadijatu F.K.) (2018 NY Slip Op 03833)
Matter of Khadija J.K. (Kadijatu F.K.)
2018 NY Slip Op 03833
Decided on May 30, 2018
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on May 30, 2018
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
JOHN M. LEVENTHAL, J.P.
LEONARD B. AUSTIN
COLLEEN D. DUFFY
BETSY BARROS, JJ.
2017-02760
(Index No. B-3862-13)
[*1]In the Matter of Khadija J.K., etc., (Anonymous). SCO Family of Services, respondent; Kadijatu F.K. (Anonymous), appellant.
Eliot Green, Brooklyn, NY, for appellant.
Carrieri & Carrieri, P.C., Mineola, NY (Ralph R. Carrieri of counsel), for respondent.
Seymour W. James, Jr., New York, NY (Dawne A. Mitchell and John A. Newbery of counsel), attorney for the child.
DECISION & ORDER
In a proceeding pursuant to Family Court Act article 6, the mother appeals from an order of fact-finding and disposition of the Family Court, Richmond County (Arnold Lim, J.), dated December 19, 2016. The order, after a fact-finding hearing, found that the mother permanently neglected the subject child and, after a dispositional hearing, inter alia, terminated the mother's parental rights.
ORDERED that the order of fact-finding and disposition is affirmed, without costs or disbursements.
SCO Family of Services (hereinafter the petitioner) commenced this proceeding to terminate the mother's parental rights to the subject child on the ground of permanent neglect. After fact-finding and dispositional hearings, the Family Court found that the petitioner had established, by clear and convincing evidence, that the mother had permanently neglected the child and that the best interests of the subject child required that the mother's parental rights be terminated and the child be freed for adoption.
To establish that a parent has permanently neglected a child, an agency must establish by clear and convincing evidence that, for a period of one year following the child's placement with the agency, the parent failed to maintain contact with the child or, alternatively, failed to plan for the future of the child, although physically and financially able to do so, notwithstanding the agency's diligent efforts to encourage and strengthen the parent-child relationship (see Social Services Law § 384-b[3][g], [4][d], [7][a]; Matter of Star Leslie W., 63 NY2d 136, 142). In determining a petition alleging permanent neglect, the court's "threshold inquiry" must be "whether the agency exercised diligent efforts to strengthen the parental relationship" by "providing assistance to the parents to resolve or ameliorate the problems preventing discharge of the child to their care and advising the parent at appropriate intervals of the child's progress and development" (Matter of Star Leslie W., 63 NY2d at 142; see Matter of Hailey ZZ. [Ricky ZZ.], 19 NY3d 422, 429; Matter of Karina J.M. [Carmen Enid G.], 145 AD3d 893, 894). In providing appropriate services to a parent, an agency [*2]need not "guarantee that the parent succeed in overcoming his or her predicaments" (Matter of Sheila G., 61 NY2d 368, 385). "Parents must themselves assume a measure of initiative and responsibility; they have a duty to plan for the future of their child" (Matter of Jamie M., 63 NY2d 388, 393; see Matter of Elasia A.D.B. [Crystal D.G.], 118 AD3d 778, 779). "At a minimum, parents must take steps to correct the conditions that led to the removal of the child from their home" (Matter of Zechariah J. [Valrick J.], 84 AD3d 1087, 1087-1088 [internal quotation marks omitted]; see Matter of Nathaniel T., 67 NY2d 838, 840). An agency that has made diligent efforts to help a parent who is uncooperative or indifferent will be deemed to have fulfilled its duty (see Matter of Jamie M., 63 NY2d at 393; Matter of Elasia A.D.B. [Crystal D.G.], 118 AD3d at 779).
Here, the petitioner met its burden by establishing that, during the relevant period, the mother failed to complete parent skills training, failed to comply with mental health services such as individual counseling and medication management, and failed to consistently exercise visitation with the subject child, despite the petitioner's diligent efforts to strengthen and encourage the parent-child relationship (see Matter of Dayyana M. [Autumn M.], 122 AD3d 854, 855; Matter of Dustin H. [Patricia B.], 68 AD3d 1112). The mother's contention on appeal that the petitioner failed to refer her to mental health services specifically designed to address her diagnosis of paranoid schizophrenia is without merit.
LEVENTHAL, J.P., AUSTIN, DUFFY and BARROS, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1057
JULIO FREDY VILLAFUERTE PORTELA,
Petitioner,
v.
LORETTA E. LYNCH, Attorney General,
Respondent.
On Petition for Review of an Order of the Board of Immigration
Appeals.
Submitted: September 3, 2015 Decided: September 17, 2015
Before WILKINSON and MOTZ, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Petition denied by unpublished per curiam opinion.
Ronald D. Richey, LAW OFFICE OF RONALD D. RICHEY, Rockville,
Maryland, for Petitioner. Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Jennifer P. Levings, Senior
Litigation Counsel, Nancy K. Canter, Office of Immigration
Litigation, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Respondent.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Julio Fredy Villafuerte Portela, a native and citizen of
Guatemala, petitions for review of an order of the Board of
Immigration Appeals dismissing his appeal from the immigration
judge’s order denying his applications for asylum, withholding
of removal, and protection under the Convention Against Torture
(“CAT”). We have thoroughly reviewed the record, including the
various documentary exhibits, the transcript of Villafuerte
Portela’s merits hearing, and his supporting affidavit. We
conclude that the record evidence does not compel a ruling
contrary to any of the agency’s factual findings, see 8 U.S.C.
§ 1252(b)(4)(B) (2012), and that substantial evidence supports
the Board’s decision. * See INS v. Elias–Zacarias, 502 U.S. 478,
481 (1992).
Accordingly, we deny the petition for review for the
reasons stated by the Board. See In re: Villafuerte Portela
(B.I.A. Dec. 16, 2014). We dispense with oral argument because
the facts and legal contentions are adequately presented in the
* Villafuerte Portela failed to challenge before the Board
the denial of his application for protection under the CAT.
Accordingly, we are without jurisdiction to review that
decision. Tiscareno-Garcia v. Holder, 780 F.3d 205, 210 (4th
Cir. 2015).
2
materials before this court and argument would not aid the
decisional process.
PETITION DENIED
3
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740 F.Supp.2d 1 (2010)
UNITED STATES of America
v.
Rico Rodrigus WILLIAMS, Defendant.
Criminal No. 09-0026 (PLF).
United States District Court, District of Columbia.
August 11, 2010.
Debra L. Long-Doyle, U.S. Attorney, Washington, DC, for United States of America.
A.J. Kramer, Federal Public Defender, Jonathan S. Jeffress, Assistant Federal Public Defender, Phyllis Jones, Covington & Burling, Washington, DC, for Defendant.
MEMORANDUM OPINION AND ORDER
PAUL L. FRIEDMAN, District Judge.
This matter is before the Court on the government's motion in limine to introduce other crimes and bad acts evidence pursuant to Federal Rule of Evidence 404(b). The Court heard oral argument on the motion on February 18, 2010, and took it *2 under advisement. After carefully considering the parties' papers, the relevant case law, and the oral argument made by counsel both at the motions hearing on February 18, 2010 and at the motions hearing on July 29, 2010, where the Court heard argument on the defendant's motion to exclude the government's expert witness, the Court will grant the government's Rule 404(b) motion in part and deny it in part.
In considering the admissibility of evidence of other crimes, wrongs or acts under Rule 404(b) of the Federal Rules of Evidence, the Court must apply a two-step analysis. First, the Court must determine whether "the evidence [is] probative of some material issue other than character." United States v. Clarke, 24 F.3d 257, 264 (D.C.Cir.1994). Under Rule 404(b), evidence of other crimes, wrongs or acts is admissible as "proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident." FED. R. EVID. 404(b). This is not an exclusive list of relevant purposes, and any purpose for which such evidence is introduced is a proper purpose so long as the evidence is not offered solely to prove character or criminal propensity. See United States v. Mahdi, 598 F.3d 883, 891 (D.C.Cir.2010); United States v. Pettiford, 517 F.3d 584, 588 (D.C.Cir.2008); United States v. Miller, 895 F.2d 1431, 1436 (D.C.Cir.1990). Furthermore, in this circuit the Rule is viewed as one of inclusion rather than exclusion. United States v. Long, 328 F.3d 655, 660-61 (D.C.Cir.2003); United States v. Bowie, 232 F.3d 923, 930 (D.C.Cir.2000).
Second, if the Court determines that the other acts evidence is admissible for a legitimate purpose, the Court then must decide whether it nevertheless should be excluded under Rule 403 of the Federal Rules of Evidence because "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." FED. R. EVID. 403; see United States v. McCarson, 527 F.3d 170, 173-74 (D.C.Cir.2008); United States v. Clarke, 24 F.3d at 264 ("The second step requires that the evidence not be inadmissible under Rule 403"). Under Rule 403, the test is "unfair prejudice," not just prejudice or harm to the defense. See United States v. Pettiford, 517 F.3d at 590 (Rule 403 "does not bar powerful or even `prejudicial' evidence... [It] focuses on the `danger of unfair prejudice,'..."); United States v. Cassell, 292 F.3d 788, 796 (D.C.Cir.2002) ("Virtually all evidence is prejudicial or it isn't material. The prejudice must be unfair.").
The government asks the Court to admit nine categories of other crimes or bad acts evidence. The Court discusses each of these categories in turn and determines whether the government's proffer and the rationale for admission of each category of evidence meet the requirements for admission under Rules 404(b) and 403.
First, the government seeks to introduce testimonial evidence that on approximately ten occasions from 2003 through 2005, the defendant orchestrated, and in many instances directly participated in, assaults as part of gang initiation ceremonies that were very similar to the beating that resulted in the victim's death during a Gangster Disciple initiation ceremony on July 3, 2005. The government's theory is that like the gang initiation in which the victim was struck and killed on July 3, 2005, each of these earlier instances was a gang initiation orchestrated by the defendant and conducted in a similar manner. The Court agrees with the government that this evidence is admissible as proof of a common plan or scheme, motive, *3 intent, and possibly identity with regard to Count One of the Indictment, charging murder under 18 U.S.C. § 1111(a). The Court concludes that the prejudicial impact of this evidence does not substantially outweigh its significant probative value.
Second, the government seeks to introduce testimonial evidence that in 2004 and 2005, while in Germany, the defendant participated in the decision to initiate approximately four United States Army soldiers then deployed in Iraq into the Gangster Disciples in a manner similar to the initiation ceremonies that took place in Germany. The government argues that this evidence also shows a common plan or scheme, motive, and intent with regard to Count One of the Indictment. For the reasons just discussed, the Court is inclined to agree, but first requires a more detailed proffer from the government as to the defendant's actual "participat[ion] in the decision" and his specific conduct.
Third, the government seeks to introduce testimonial evidence that the defendant participated in several assaults involving individuals at a nightclub where the defendant was employed as a bouncer, including one in which he knocked out and injured an individual with one punch. The government argues that this evidence is admissible both because these assaults were intended to further the purposes of the defendant's gang and to show that the defendant had knowledge about the strength of his punches and the level of injury he could inflict. The Court agrees with the government on the second theory onlythis evidence is relevant to the defendant's mens rea with regard to Count One, and, conversely, to the absence of mistake or accident. When admitted for this purpose, the probative value of the evidence is not substantially outweighed by its prejudicial impact.
Fourth, the government seeks to introduce evidence that the defendant ordered gang members to strike fellow gang members in the face in order to further the purposes of the gang. The government also seeks to have several witnesses testify that in order to maintain discipline and loyalty within the structure of the gang, the defendant threatened individuals, either directly or through other gang members, in order to make them attend gang meetings and to ensure that they did not leave the gang. The government has proffered that some of the witnesses who would so testify are the same individuals identified by the letters A through H in Counts Two, Three, and Four of the Indictment, the counts charging witness tampering under 18 U.S.C. § 1512(b)(3). To the extent that this evidence relates directly to events on July 3 and 4 or shortly before those dates with respect to A through G, it may either be highly probative Rule 404(b) evidence or evidence directly relevant to prove knowledge, intimidation, and threatsall elements that must be proved under Counts Two and Three. It will be admitted. The Court requires a further proffer with respect to Count Four. The government also argues that this same evidence also may be relevant to the state of mind of the witnesses with whom defendant allegedly tampered. With respect to this last possibility, the Court will need a more detailed proffer before considering its admission in the government's case in chief.
Fifth, the government seeks to introduce evidence that the defendant continued to make threats, both direct and indirect, to members of the gang who remained in Germany after the defendant had left Germany for the United States following the victim's death. The government's proffered evidence also includes allegations that the defendant's threats involved the removal or concealment of gang related *4 tattoos and that the defendant had contact information for and may have contacted family members of certain gang members.[1] Any such evidence may be relevant to the state of mind of the witnesses with whom defendant allegedly tampered. It therefore may be admissible evidence in the government's rebuttal case.
Sixth, the government seeks to introduce evidence that members of the gang were involved in the possession, use and distribution of illegal drugs while in Germany. As the government itself notes, this evidence at most would serve the purpose of rebutting the possible defense that the group of individuals the defendant associated with in Germany was not a violent street gang involved in illicit activity but only a social club. While this seems somewhat attenuated, the Court will consider admitting this evidence in rebuttal but only if the defendant brings into question the alleged illicit and violent nature of the gang.
The seventh, eighth, and ninth categories of evidence are, respectively, that the defendant was carrying a concealed hand gun when he was arrested, that he possessed several assault-style weapons and ammunition in his residence in Virginia, and that in the same residence the defendant also possessed marijuana and digital scales. The Court concludes that there is no basis for admitting these categories of evidence under Rule 404(b) because the crimes with which the defendant is charged do not involve either guns or drugs and there is no other apparent relevance of this evidence.
For these reasons, the Court will grant in part and deny in part the government's motion. The various categories of evidence will be admitted under the parameters described above and with appropriate limiting instructions. Accordingly, it is hereby
ORDERED that the government's motion in limine to introduce other crimes and bad acts evidence pursuant to Federal Rule of Evidence 404(b) [24] is GRANTED in part and DENIED in part.
SO ORDERED.
NOTES
[1] The government clarified at oral argument on February 18, 2010 that its proffer with respect to threats involving the removal or concealment of gang-related tattoos is not really Rule 404(b) evidence at all but is directly relevant to proving Count Four.
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690 N.W.2d 696 (2004)
STATE v. SCHULTZ
No. 03-1163
Court of Appeals of Iowa
July 14, 2004.
Decision without published opinion. Affirmed in part; Reversed in part; Case Remanded.
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853 N.E.2d 435 (2006)
The ILLINOIS DEPARTMENT OF HEALTHCARE AND FAMILY SERVICES ex rel. Debbie STOVER, Petitioner-Appellee,
v.
Everett L. WARNER, Respondent-Appellant.
No. 4-05-0464.
Appellate Court of Illinois, Fourth District.
August 2, 2006.
*436 Justice COOK delivered the opinion of the court:
In March 1996, the trial court ordered respondent, Everett L. Warner, to pay child support for his two children. On October 24, 2002, his parental rights as to those children were terminated. On May 6, 2005, the court denied Warner's petition to vacate the child-support order. He appeals. Because section 17 of the Adoption Act relieves natural parents whose parental rights have been terminated of parental responsibility for their child (750 ILCS 50/17 (West 2004)), we reverse.
I. BACKGROUND
On February 29, 1996, the Illinois Department of Public Aid, now known as the Illinois Department of Healthcare and Family Services (Department), filed a petition on Debbie Stover's behalf to establish Everett Warner as the father of her children, C.S. (born December 12, 1993) and B.S. (born August 18, 1995). On March 28, 1996, the trial court found Warner to be the father of the children and ordered that he pay child support in the amount of $46.13 per week. The Department petitioned the court for modification of the child-support order, and on October 7, 1999, the court increased Warner's support obligation to $120 every two weeks. In a separate proceeding, Warner's and Stover's parental rights were terminated on October 24, 2002.
On February 2, 2005, Warner filed a pro se motion to terminate his child-support obligation and recover payments retroactive to October 24, 2002. At a hearing on February 10, 2005, the Department indicated *437 it would oppose any motion to cease support until the children were adopted and the State was no longer responsible for their support. The trial court continued the matter to allow Warner time to consult an attorney.
On March 3, 2005, Warner's attorney filed a petition to vacate the child-support order based upon section 17 of the Adoption Act, which provides:
"After either the entry of an order terminating parental rights or the entry of a judgment of adoption, the natural parents of a child sought to be adopted shall be relieved of all parental responsibility for such child and shall be deprived of all legal rights as respects the child * * *." 750 ILCS 50/17 (West 2004).
At the March 31, 2005, hearing on the petition, Warner and the Department stipulated, in relevant part, that (1) Warner continued to pay child support of $120 every two weeks even after his parental rights were terminated, (2) the children had been in the custody and guardianship of the Illinois Department of Children and Family Services (DCFS) since before the date of termination, and (3) the State had received Warner's child-support payments since the date of termination. The trial court also took judicial notice of the order in the cases terminating Warner's parental rights and the most recent order in those cases showing that the goal for the children remained adoption. The only issue before the court was whether section 17 of the Adoption Act (750 ILCS 50/17 (West 2004)) relieved Warner of his obligation to pay child support.
On May 6, 2005, the trial court entered an order denying Warner's petition pursuant to the "language in Illinois Supreme Court case In re M.M., 156 Ill.2d 53 [189 Ill.Dec. 1], 610 [619] N.E.2d 702 (1993)." This appeal followed.
II. ANALYSIS
Warner's sole contention on appeal is that section 17 of the Adoption Act requires that the trial court terminate his child-support obligation and that the court erred when, relying on M.M., it refused to do so. In response, the Department first claims that section 17 is inapplicable because the children are not in the process of being adopted. Alternatively, the Department argues that the Illinois Supreme Court has determined that section 17 does not eliminate a natural parent's common-law duty to support a child in times of need regardless of whether parental termination or adoption has severed other parental responsibilities and rights. Because both the applicability of section 17 of the Adoption Act and whether Warner owes his children a common-law duty of residual support present questions of law, our review is de novo. See In re Marriage of Rogers, 213 Ill.2d 129, 135-36, 289 Ill.Dec. 610, 820 N.E.2d 386, 389-90 (2004).
A. Applicability of Section 17
Section 17 of the Adoption Act provides that "the natural parents of a child sought to be adopted" are relieved of parental responsibility "[a]fter either the entry of an order terminating parental rights or the entry of a judgment of adoption." 750 ILCS 50/17 (West 2004). The Department urges that section 17 does not relieve Warner of his responsibility to pay child support because he is not the natural parent of "a child sought to be adopted," as no evidence before the trial court suggested that anyone was seeking to adopt either child.
Section 17 does not provide that natural parents are relieved of parental responsibility and deprived of legal rights only where their legal rights have been terminated and a specific person has expressed *438 interest in adopting their natural child. Rather, a fair reading of the statute includes situations where a child is available for adoption, whether or not someone is actively seeking to adopt that child, and where a child has been adopted.
In this case, the trial court took judicial notice that Warner's parental rights were terminated and that the goal for C.S. and B.S. was adoption. Therefore, section 17 applies to Warner.
B. Residual Duty of Support
The trial court denied Warner's petition to vacate the child-support order, stating "[p]ursuant to the clear language in In re M.M., 156 Ill.2d 53, 62, 189 Ill.Dec. 1, 619 N.E.2d 702, 708 (1993), termination of [Warner's] parental rights did not extinguish his obligation to support his children."
Generally, in the United States when an adoption occurs the adoptive parents replace the blood parents for all purposes. 2 H. Clark, Domestic Relations in the United States § 21.12, at 683 (2d ed.1987). The consequences of the adoption decree rest in the first instance upon the applicable state statute. A common form of statute in earlier days contained only a brief statement that the final decree of adoption divests the natural parents of their rights and duties. In some states, some aspects of the parent-child relationship between the adopted child and his natural parents were preserved. 2 H. Clark, Domestic Relations in the United States § 21.12, at 683 (2d ed.1987). More recent statutes, however, have generally spelled out the mandate that the adopted child will have no further rights and obligations with respect to his natural parents, with the single exception that if a stepparent adoption occurs, it does not affect the parent-child relationships between the child and his natural parent. 2 H. Clark, Domestic Relations in the United States § 21.12, at 683-84 (2d ed.1987). "[D]ifferent issues are involved in determining the best interest of the child in an adoption by strangers and in an adoption by a natural parent and a new spouse." Lingwall v. Hoener, 108 Ill.2d 206, 213-14, 91 Ill.Dec. 166, 483 N.E.2d 512, 516 (1985).
Illinois has followed the national pattern. The supreme court, in M.M., noted this history in a case holding the Adoption Act did not allow a court to condition an adoption on the adoptive parents' agreement to permit contact by the minors with their biological families.
"With the exception of the biological parents' residual duty to support their children (Dwyer v. Dwyer (1937), 366 Ill. 630, 633-34[, 10 N.E.2d 344, 346]), and the children's right to inherit from and through their biological parents (In re Estate of Tilliski (1945), 390 Ill. 273[, 61 N.E.2d 24]), adoption constitutes a complete and permanent severance of all legal and natural rights between such parents and children." M.M., 156 Ill.2d at 62, 189 Ill.Dec. 1, 619 N.E.2d at 708.
The support case, Dwyer, involved a situation similar to a stepparent adoption, a situation where the maternal grandparents adopted the child prior to the divorce, the grandfather died, and the natural mother readopted the child. The court ordered the natural father to pay child support despite the adoptions, noting the statute then in existence simply relieved the natural parents of their rights, not their duties: "`The natural parents of a child so adopted shall be deprived, by the decree, of all legal rights, as respects the child, and the child shall be freed from all obligations of maintenance and obedience as respects such parents.'" Dwyer, 366 Ill. at 633, 10 N.E.2d at 345-46, quoting Ill.Rev.Stat.1935, ch. 4, par. 8. As in other states, Illinois's statute has changed. The Adoption Act now specifically provides *439 that the natural parents are "relieved of all parental responsibility" in addition to being "deprived of all legal rights." (Emphasis added.) 750 ILCS 50/17 (West 2004). Section 17 makes it "grimly clear" that "[t]ermination of parental rights destroys the parent-child relationship." In re Adoption of Syck, 138 Ill.2d 255, 274-75, 149 Ill.Dec. 710, 562 N.E.2d 174, 183 (1990) (unfitness must be proved by clear and convincing evidence; child's best interests not relevant at this stage); see also In re C.B., 221 Ill.App.3d 686, 688, 164 Ill.Dec. 553, 583 N.E.2d 107, 108 (1991) (when parental rights are terminated, "[t]o be blunt, the situation is as if the parent has died").
The inheritance case, Tilliski, has experienced a similar history. That case held that, under the statute then existing, a child who had been adopted was entitled to inherit from her natural mother who died intestate. Tilliski, 390 Ill. at 285, 61 N.E.2d at 29. The statute has now been changed. "For purposes of inheritance from or through a natural parent and for determining the property rights of any person under any instrument, an adopted child is not a child of a natural parent, nor is the child a descendant of a natural parent or of any lineal or collateral kindred of a natural parent." 755 ILCS 5/2-4(d) (West 1998); In re Estate of Goodkind, 356 Ill.App.3d 607, 618, 292 Ill.Dec. 859, 827 N.E.2d 6, 16 (2005). Where parties are divorced, and the children are adopted by the mother's new husband, however, the children may inherit from their biological father under an exception to section 2-4(d). See In re Estate of Snodgrass, 336 Ill.App.3d 619, 621-22, 271 Ill.Dec. 213, 784 N.E.2d 431, 433 (2003).
The question before us must be decided by an examination of the existing statutes. See M.M., 156 Ill.2d at 72, 189 Ill.Dec. 1, 619 N.E.2d at 713 ("the issue before us, though steeped in policy considerations, turns solely on an interpretation and application of our Juvenile Court Act" (emphasis in original)). Section 17 provides that natural parents whose parental rights have been terminated "shall be relieved of all parental responsibility." 750 ILCS 50/17 (West 2004). This is such a situation. Warner's parental rights were terminated in October 2002. The obligation to pay child support is a parental responsibility. Therefore, Warner's support obligation should cease.
The trial court noted that section 17 of the Adoption Act was in effect when the supreme court decided M.M. That is correct but, as we have noted, the supreme court was considering historical context in M.M. and did not attempt to address the current viability of any residual duty of support. The supreme court mentioned the residual duty to support in the course of a "general discussion concerning proceedings to terminate parental rights and the legal effect of an adoption judgment" (M.M., 156 Ill.2d at 61, 189 Ill.Dec. 1, 619 N.E.2d at 707). See M.M., 156 Ill.2d at 63, 189 Ill.Dec. 1, 619 N.E.2d at 708 ("[t]he narrow issue presented * * * is whether the juvenile court * * * may condition the court-appointed guardian's power to consent to adoption"). Section 17 of the Adoption Act is not mentioned in the opinion. Other Illinois cases have cited Dwyer for the proposition that a natural parent has a residual duty to support his child. See, e.g. People ex rel. Bachleda v. Dean, 48 Ill.2d 16, 19, 268 N.E.2d 11, 13 (1971); Lingwall, 108 Ill.2d 206, 91 Ill.Dec. 166, 483 N.E.2d 512. None of those cases, however, presented a question regarding a natural parent's support obligation or examined the issue in light of changes in the language or effect of the Adoption Act.
*440 III. CONCLUSION
For the reasons stated, we reverse the trial court's judgment.
Reversed.
MYERSCOUGH and KNECHT, JJ., concur.
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18 F.3d 562
UNITED STATES of America, Appellant/Cross-Appellee,v.Virginia T. MORRIS, Appellee/Cross-Appellant.UNITED STATES of America, Appellant/Cross-Appellee,v.William T. HIGGS, Appellee/Cross-Appellant.
Nos. 93-1698, 93-1757, 93-1706 and 93-1755.
United States Court of Appeals,Eighth Circuit.
Submitted Nov. 8, 1993.Decided March 3, 1994.Rehearing and Suggestion for Rehearing En Banc Denied inNos. 93-1706, 93-1755 April 18, 1994.
1
Before McMILLIAN and MAGILL, Circuit Judges and JACKSON,* District Judge.
2
JACKSON, District Judge.
3
Following a jury trial, Virginia T. Morris ("Morris") and William T. Higgs ("Higgs") were found guilty of bank fraud and money laundering. The jury additionally found Morris guilty of making false entries in the books of a federally-insured bank and making a false material statement to a federal bank examiner. The United States appeals the sentences imposed by the district court. Higgs cross-appeals his conviction and Morris cross-appeals her conviction and sentence. We affirm the convictions but vacate the sentences and remand for resentencing.
I. BACKGROUND
4
Northwest National Bank was a financial institution located in Fayetteville, Arkansas, until its failure in 1991. Morris was an officer and director of Northwest National Bank and of its holding company, Northwest Bancorporation of Arkansas, Inc. Her husband, Joe Benton Morris, Sr., was a member of the board of directors of each entity.
5
Houston Taylor Motors, Inc. was an automobile dealership in Fayetteville, Arkansas. Morris, Joe Benton Morris, Sr. and Higgs, their nephew, were officers, directors and shareholders of Houston Taylor Motors, Inc. The dealership was operated by Joe Benton Morris, Sr. and Higgs.
6
On June 17, 1992 Morris, Higgs and Joe Benton Morris, Sr. were jointly charged in a seven-count indictment. Count One charged all three defendants with devising and executing a scheme and artifice to defraud Northwest National Bank during the period January 1, 1990 to January 17, 1991, in violation of 18 U.S.C. Secs. 1344 and 2. According to the indictment, the defendants' scheme included drawing insufficient funds checks on an account maintained in the name of Midwest Trading Co. ("Midwest Trading") at Northwest National Bank. At various times the defendants deposited into the Midwest Trading account insufficient funds checks drawn on Houston Taylor Motors' account at McIlroy Bank & Trust in order to make the Midwest Trading account reflect a positive balance and to conceal the overdraft status of the account from Northwest National Bank's board of directors. The defendants then "covered" the Houston Taylor Motors insufficient funds checks by depositing insufficient funds checks drawn on Midwest Trading's account at Northwest National Bank into the McIlroy Bank account. It was also part of the scheme that the defendants drew insufficient funds checks on Houston Taylor Motors' accounts at McIlroy Bank and at First State Bank and used them to obtain cashier's checks and other funds from Northwest National Bank. The issuance of the cashier's checks was approved by Morris.
7
Count Two charged Morris and Higgs with bank fraud, in violation of 18 U.S.C. Secs. 1344 and 2. According to the indictment, the defendants devised a scheme to defraud the First National Bank of Roland, Oklahoma by falsely representing to the bank that the purpose of a $200,000 loan to Higgs was for "Wholesale automotive trading stock, inventory and expansion" when, in fact, approximately $174,283.96 of the loan proceeds were to be used to cover overdraft checks that had been paid on the Midwest Trading account at Northwest National Bank.
8
Count Three charged Morris and Higgs with money laundering, in violation of 18 U.S.C. Secs. 1956(a)(1)(A)(i) and 2. It was alleged that on August 10, 1990 the proceeds of the $200,000 loan from the First National Bank of Roland were deposited in an account controlled by Higgs at Superior Federal Bank in Fayetteville, Arkansas and that $174,283.96 was thereafter withdrawn and transferred to Midwest Trading's account at Northwest National Bank. The indictment further alleged that Morris and Higgs conducted this financial transaction with the intent to promote the carrying on of a specified unlawful activity, i.e. bank fraud.
9
Counts Four, Five and Six charged Morris alone with causing false entries to be made in the books and records of Northwest National Bank, in violation of 18 U.S.C. Sec. 1005. Count Four related to Morris causing five checks totalling $155,848.41 to be issued on the bank holding company's checking account when there were insufficient funds in the account. Morris then caused the checks to be entered in the "Unposted Suspense Debits--DDA" account which resulted in a misstatement of the position of the bank holding company's account and, consequently, a misstatement of Northwest National Bank's financial position. Count Five related to Morris causing the purpose of a $100,000 loan made by Northwest National Bank to Vance Harp to be recorded on the bank's records as "property improvements" when the loan proceeds were actually used for the benefit of the bank holding company. Count Six related to Morris causing the purpose of a $300,000 loan from Northwest National Bank to Levoy Pat Demaree to be recorded on the bank's records as "balance refinancing loans, increase wattage, tower, bldg. etc.--(RLPD, Inc.) capital investment, equipment purchases, additional tax money" when two-thirds of the loan proceeds were actually used to buy stock in the bank holding company.
10
Finally, Count Seven charged Morris with making a false material statement to a bank examiner, in violation of 18 U.S.C. Sec. 1001. It was alleged that Morris falsely told the bank examiner that she did not know how the proceeds of the Demaree loan had been used.
11
The presentence report for Morris reflected a total offense level of 28 and a criminal history category of I, resulting in a guideline range with respect to imprisonment of 78 to 97 months. The district court exercised a downward departure, treating the money laundering charge in Count Three the same as bank fraud. The district court further reduced Morris' total offense level to 20 based upon the finding that she was not an organizer or a leader within the meaning of Sec. 3B1.1(c) of the United States Sentencing Guidelines (U.S.S.G.) (Nov. 1992). The district court's actions resulted in an imprisonment range of 33 to 41 months. Morris was sentenced to a thirty-six month term of imprisonment.
12
The presentence report for Higgs reflected a total offense level of 22 and a criminal history category of I, resulting in a guideline range with respect to imprisonment of 41 to 51 months. The district court exercised a downward departure with respect to Higgs, again treating the money laundering count the same as bank fraud. The district court found Higgs' total offense level to be 13, with a consequent guideline range of 12 to 18 months' imprisonment. Higgs was sentenced to a term of twelve months.
II. DISCUSSION
A. Ineffective Assistance of Counsel
13
Morris first argues that she was denied her Sixth Amendment right to effective assistance of counsel because her attorney: (1) failed to seek a separate trial from the co-defendants; (2) failed to object to the prosecutor's leading questions; (3) failed to object to inflammatory and prejudicial evidence; (4) failed to request specific instructions; (5) failed to file a motion for judgment of acquittal within seven days of the verdict; (6) failed to apprise the court of mitigating matters not included in the presentence report; and (7) failed to file certain written objections to the presentence report.
14
Morris' claim of ineffective assistance of counsel is not properly before us. The claim was neither presented to nor addressed by the district court. Consequently there has been no opportunity to develop an adequate record with respect to any of the issues Morris now raises. If the claim of ineffective assistance of counsel is to be pursued, it should be raised in the district court in a motion made pursuant to 28 U.S.C. Sec. 2255 and not in a direct appeal. United States v. Petty, 1 F.3d 695, 696-97 (8th Cir.1993); United States v. Davis, 882 F.2d 1334, 1345 n. 14 (8th Cir.1989), cert. denied, 494 U.S. 1027, 110 S.Ct. 1472, 108 L.Ed.2d 610 (1990); United States v. Gray, 464 F.2d 632, 634 n. 1 (8th Cir.1972).
B. Severance
15
Morris next argues that the district court erred by failing to grant her a severance from Higgs or, alternatively, by failing to give a cautionary instruction limiting the jury's consideration of certain evidence to only the co-defendant against whom it was properly admitted. Morris, however, did not file a motion for severance and she made no request for a cautionary instruction. Because this issue was not presented to the trial court, we review it for plain error. See United States v. Munoz, 894 F.2d 292, 294 (8th Cir.1990).
16
Because Morris and Higgs were alleged to have participated in interrelated bank fraud and money laundering offenses, their joinder was proper under Fed.R.Crim.P. 8(b). However, even when joinder is appropriate on the face of the indictment the district court may grant a severance where it appears that joinder would prejudice a defendant. Fed.R.Crim.P. 14.
17
Upon review of the record, we conclude that none of the reasons asserted by Morris establish the type of prejudice warranting severance. The fact that Higgs gave testimony implicating Morris did not constitute grounds for severance, particularly in light of the corroborating evidence presented by other witnesses. One defendant's efforts to exonerate himself at the expense of another is not sufficient to require separate trials. United States v. Jones, 880 F.2d 55, 63 (8th Cir.1989); United States v. Boyd, 610 F.2d 521, 526 (8th Cir.1979), cert. denied, 444 U.S. 1089, 100 S.Ct. 1052, 62 L.Ed.2d 777 (1980). Further, contrary to Morris' assertion, evidence that Higgs made a false statement to the Bank of Roland in furtherance of the scheme to defraud alleged in Count Two was not inadmissible as to her since the two defendants were charged with aiding and abetting each other. The admission of this evidence was neither prejudicial nor did it warrant the giving of a cautionary instruction. On the whole, we are satisfied that the district court's failure to sever the trials was not an abuse of discretion resulting in clear prejudice to Morris. See United States v. O'Meara, 895 F.2d 1216, 1219 (8th Cir.1990).
C. Jury Instructions
18
Morris next claims error in the district court's failure to give a cautionary instruction with respect to the testimony of her accomplice, Higgs. However, Morris did not offer an accomplice testimony instruction at trial, and such an instruction is mandatory only when the accomplice testimony is uncorroborated. United States v. Schoenfeld, 867 F.2d 1059, 1061-62 (8th Cir.1989); United States v. Roberts, 848 F.2d 906, 908 (8th Cir.), cert. denied, 488 U.S. 931, 109 S.Ct. 322, 102 L.Ed.2d 340 (1988); United States v. Shriver, 838 F.2d 980, 983 (8th Cir.1988). Upon review of the record in this case, we find that Higgs' testimony was corroborated by that of other witnesses and by the testimony of Morris herself. Thus, no error resulted from the absence of an instruction relating to the testimony of the accomplice.
19
Morris also contends that the district court improperly instructed the jury with respect to Count Three of the indictment. At trial, the jury was instructed as follows:It is the Government's allegation and contention in Count 3 that the $200,000 loan from the First National Bank of Roland, Oklahoma constituted 'proceeds of a specified and unlawful activity'. That is, that said funds were obtained by the Defendants Virginia Morris and William T. Higgs through a bank fraud as alleged in Count Two.
20
It is the further contention of the Government that the moneys obtained by bank fraud from the First National Bank of Roland, Oklahoma were used to carry out the bank fraud alleged in Count One of the Indictment. Neither defendant can therefore be found guilty of Count Three unless at least one of them has been found guilty of Count Two and at least one of them has been--and at least one of the defendants has been found guilty of Count One.
21
Morris argues that the district court erred in instructing the jury that the money laundering offense in Count Three was committed with intent to promote the bank fraud (relating to Northwest National Bank) charged in Count One because the indictment alleged that the money laundering offense was committed with intent to promote the bank fraud (relating to First National Bank of Roland) charged in Count Two. Morris did not object to this instruction at trial. Failure to make a timely and specific objection to an instruction results in a waiver of the objection on appeal. United States v. Watson, 953 F.2d 406, 409 (8th Cir.1992); United States v. Young, 702 F.2d 133, 136 (8th Cir.1983); Fed.R.Crim.P. 30. Thus, we review Morris' claim for plain error. United States v. McKnight, 799 F.2d 443, 447 (8th Cir.1986).
22
The bank fraud scheme charged in Count One continued for several months after the August 1990 financial transaction alleged in Count Three. Evidence presented at trial revealed that Morris and Higgs used part of the Bank of Roland loan proceeds to close out the Midwest Trading account at Northwest National Bank and that they did so to conceal the overdraft status of the account from bank regulators who were scheduled to conduct an examination in August 1990. Even after the Midwest Trading account was closed, Higgs continued to draw insufficient funds checks against the account with Morris' approval. In light of the evidence, the transaction alleged in Count Three was done "with the intent to promote the carrying on" of the bank fraud scheme charged in Count One. See United States v. Johnson, 971 F.2d 562, 566 (10th Cir.1992); United States v. Montoya, 945 F.2d 1068, 1076 (9th Cir.1991). The district court did not err in instructing the jury accordingly.
23
D. Sufficiency of the Evidence and the Indictment
24
Morris and Higgs argue that the district court erred in denying their motions for directed verdict of acquittal on Count Three. When a challenge is made to the sufficiency of the evidence, we are required to view the evidence in the light most favorable to the verdict, giving the prosecution the benefit of all inferences reasonably to be drawn in its favor from the evidence. United States v. Penn, 974 F.2d 1026, 1028 (8th Cir.1992). As discussed above, the evidence supports the jury's finding that Morris and Higgs used the Bank of Roland loan proceeds to further and continue their bank fraud scheme against Northwest National Bank. Viewing the evidence in the light most favorable to the verdicts, the trial court properly denied the motions for directed verdict of acquittal as to Count Three.
25
Higgs further argues that Count Three should have been dismissed because it did not give him adequate notice of the alleged "specified unlawful activity." In particular, Higgs complains that because Count Three incorporated by reference the substantive allegations of Count Two, he was led to believe that the "specified unlawful activity" alleged in Count Three referred to the bank fraud in Count Two. Higgs asserts that it was not until the sixth day of trial that he learned that the "specified unlawful activity" alleged in Count Three referred to the bank fraud charged in Count One. A "challenge to the sufficiency of the indictment is a question of law that we review de novo." United States v. Zangger, 848 F.2d 923, 924-25 (8th Cir.1988) (citing United States v. Givens, 767 F.2d 574, 584 (9th Cir.), cert. denied, 474 U.S. 953, 106 S.Ct. 321, 88 L.Ed.2d 304 (1985)). "[A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974); see also United States v. Mallen, 843 F.2d 1096, 1102 (8th Cir.), cert. denied, 488 U.S. 849, 109 S.Ct. 130, 102 L.Ed.2d 103 (1988); Fed.R.Crim.P. 7(c)(1). An indictment normally will be deemed sufficient "unless no reasonable construction can be said to charge the offense." United States v. Peterson, 867 F.2d 1110, 1114 (8th Cir.1989).
26
Applying the foregoing principles to the indictment in this case, we conclude that Count Three is legally sufficient. The allegations of Count Three clearly state that Bank of Roland loan proceeds were ultimately deposited into the Midwest Trading Company account at Northwest National Bank with the intent to promote the continued bank fraud being perpetrated by Higgs and Morris against Northwest National Bank. When Count Three is read in conjunction with the preceding counts it is apparent that the specified unlawful activity refers to the fraudulent scheme alleged in Count One. Therefore, Count Three should not have been dismissed.
E. Sentencing
27
The district court, adopting the presentence report, found that Morris had abused a position of trust and, therefore, increased her offense level pursuant to U.S.S.G. Sec. 3B1.3. In relevant part, Sec. 3B1.3 permits a two-level increase of the offense level "[i]f the defendant abused a position of public or private trust ... in a manner that significantly facilitated the commission or concealment of the offense...." A chief officer of a bank is in a position of trust, and when such an officer uses her position to facilitate the commission of a crime, it is proper to increase the offense level pursuant to Sec. 3B1.3. United States v. McElroy, 910 F.2d 1016, 1027 (2d Cir.1990). See United States v. Brelsford, 982 F.2d 269, 271 (8th Cir.1992) (a bank teller supervisor was subject to the offense level increase pursuant to Sec. 3B1.3).
28
At the time the offenses were committed Morris was chief executive officer and chairman of the board of directors of Northwest National Bank. As an officer and director, she occupied a position of trust at Northwest National Bank, and she used that position to commit the offenses charged in the indictment as well as to conceal her criminal conduct. Morris approved the payment of the insufficient funds checks drawn on the Midwest Trading account and, by reason of her position as chief officer, she was able to approve payment of these checks orally. Further, Morris used her position to keep the overdraft status of the account concealed from the board of directors by instructing her subordinates not to "close out" their work for the day until a deposit could be made to cure the overdraft.
29
Morris' contention that the offenses charged in Counts Two and Five through Seven could have been accomplished by other employees with loan approval is irrelevant. "An employer ... may place many employees in positions of trust.... The relevant inquiry under the guidelines is whether trust is inherent to the nature of the position." Brelsford, 982 F.2d at 272 (citations omitted). In any event, however, the evidence at trial established that Morris was the only person at Northwest National Bank who could have committed the fraud to such an extent. Accordingly, we conclude that the district court did not abuse its discretion by increasing Morris' offense level pursuant to Sec. 3B1.3.
30
The government argues, and we agree, that the evidence warranted the assessment of an additional two-level increase pursuant to U.S.S.G. Sec. 3B1.1(c) based on Morris' role as an organizer and leader. According to Application Note 3 of the Commentary to Sec. 3B1.1(c):
31
In distinguishing a leadership and organizational role from one of mere management or supervision, titles such as 'kingpin' or 'boss' are not controlling. Factors the court should consider include the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others. There can, of course, be more than one person who qualifies as a leader or organizer of a criminal association or conspiracy. This adjustment does not apply to a defendant who merely suggests committing the offense.
32
Section 3B1.1 employs a broad definition of what constitutes an "organizer or leader." United States v. Blumberg, 961 F.2d 787, 791 (8th Cir.1992) (citing United States v. Manuel, 912 F.2d 204, 207 (8th Cir.1990)); United States v. Harry, 960 F.2d 51, 54 (8th Cir.1992). A defendant need not directly control others in the organization to have functioned as an organizer. See Blumberg, 961 F.2d at 791. In the instant case, however, the evidence established that Morris did exercise direct control over the operations of Northwest National Bank, causing subordinate employees to perform acts designed to perpetuate and conceal her fraudulent activities. The evidence also established that Morris recruited Higgs to write insufficient fund checks and directed him in the opening and maintenance of an overdrawn account in a bank that she controlled. See United States v. Pedroli, 979 F.2d 116, 118 (8th Cir.1992) (where defendant recruited another to commit a bank robbery and provided a disguise and demand note, a two-level increase under Sec. 3B1.1(c) was proper). We believe that the district court's determination that Morris was not an organizer or leader for purposes of Sec. 3B1.1(c) was clearly erroneous.
33
The government next argues that the district court erred in not sentencing Morris and Higgs pursuant to U.S.S.G. Sec. 2S1.1, the guideline provision that applies to the offense of money laundering. The district court rejected Sec. 2S1.1 and departed downward based, in part, on its determination that the defendants' use of the fraudulently-obtained Bank of Roland loan proceeds to close out the Midwest Trading account had the effect of concluding, and was not done to further, the scheme to defraud Northwest National Bank. As discussed above, we believe that the evidence was sufficient to support the jury's determination that the financial transaction alleged in Count Three was intended to promote the carrying on of the Northwest National Bank fraud. The closing of the Midwest Trading account in August 1990 enabled the defendants not only to conceal their fraudulent activities but to continue them beyond that date into January 1991. See United States v. Montoya, 945 F.2d 1068, 1076 (9th Cir.1991) (defendant's deposit of bribery proceeds into his bank account was a transaction intended to promote the carrying on of a specified unlawful activity under 18 U.S.C. Sec. 1956(a)(1)(A)(i), as deposit allowed defendant to carry out the bribery by characterizing proceeds as legitimate funds).
34
The district court also determined that the money laundering offense was the same as the bank fraud offenses and that neither Congress nor the Sentencing Commission intended the former to be punished more severely than the latter as contemplated by Sec. 2S1.1. In interpreting the application of 18 U.S.C. Sec. 1956 to other illegal conduct, courts have held that it applies to the prosecution of financial transactions arising from the specified unlawful activities designated in the statute. See United States v. Skinner, 946 F.2d 176, 178 (2nd Cir.1991) (the language of 18 U.S.C. Sec. 1956(a)(1)(A)(i) "... in conjunction with the definitions provided in 18 U.S.C. Sec. 1956(c) (1988), demonstrate that Congress intended to make unlawful a broad array of transactions designed to facilitate numerous federal crimes...."). In enacting 18 U.S.C. Sec. 1956(d), Congress intended cumulative punishment for the specified unlawful activities and the money laundering violations. United States v. Lee, 937 F.2d 1388, 1397 (9th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 977, 117 L.Ed.2d 141 (1992). Thus, the district court erred in not sentencing Morris and Higgs pursuant to Sec. 2S1.1 on the money laundering conviction.
35
Finally, the United States and Morris separately challenge the district court's calculation of "loss" under the Sentencing Guidelines. At the sentencing hearing the government argued that the total loss attributable to Morris with respect to the bank fraud and false entries convictions was $826,000. Included in this figure was $156,000, representing the sum of the five insufficient funds checks referred to in Count Four. Evidence presented at trial revealed that the $156,000 was repaid at Morris' request by a Northwest National Bank employee, Dolores Lankford, in order to conceal the overdrafts from bank regulators. Because the repayment was made prior to any discovery of the overdrafts, the district court excluded the $156,000 from the loss computation under U.S.S.G. Sec. 2F1.1.
36
We review a district court's finding regarding loss under Sec. 2F1.1 under the clearly erroneous standard. United States v. Earles, 955 F.2d 1175, 1180 (8th Cir.1992). Section 2F1.1 of the guidelines provides that the base offense level for an offense level is either the actual loss resulting from the fraudulent conduct or the amount of loss the defendant intended to inflict, whichever is greater. United States v. Edgar, 971 F.2d 89, 93 (8th Cir.1992). "The focus for sentencing purposes under Sec. 2F1.1 should be on the amount of possible loss the defendant attempted to inflict on the victim." United States v. Prendergast, 979 F.2d 1289, 1292 (8th Cir.1992) (citations omitted). Thus, we have held that the loss calculation under Sec. 2F1.1 does not hinge upon "actual loss" or "net loss." Id. at 1291; United States v. Saunders, 957 F.2d 1488, 1494 (8th Cir.1992); United States v. Johnson, 908 F.2d 396, 398 (8th Cir.1990).
37
The district court based its decision to exclude $156,000 from the loss computation on the following portion of Application Note 7(b) of the Commentary to Sec. 2F1.1:
38
In fraudulent loan application cases and contract procurement cases, 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, ... (emphasis added)
39
The remainder of Application Note 7(b) reads as follows:
40
reduced by the amount the lending institution has recovered (or can expect to recover) from any assets pledged to secure the loan. However, where the intended loss is greater than the actual loss, the intended loss is to be used. (emphasis added).
41
We believe that the district court's exclusion of the $156,000 from the loss calculation resulted from an erroneous interpretation of Sec. 2F1.1 and our prior decisions. Accordingly, at resentencing this amount should be included in calculating the total loss attributable to Morris' fraudulent conduct.
42
Morris' challenges to the loss computation are directed to the district court's failure to consider the value of real property that had been mortgaged to secure the loans referred to in Counts Five and Six and the court's failure to adduce evidence to establish the amount of the loss sustained by Northwest National Bank. We find no merit to either challenge. Morris' offense level did not turn on whether Northwest National Bank recovered or could have recovered its potential loan losses by foreclosing on the pledged security. See Johnson, 908 F.2d at 398. Further, as the district court had the benefit of the evidence presented at trial that established the amount of Northwest's loss, it was unnecessary to present further evidence on the issue at sentencing.
III. CONCLUSION
43
We affirm the convictions of Morris and Higgs. However, we vacate their sentences and remand the case to the district court for resentencing in accordance with this opinion.
*
The HONORABLE CAROL E. JACKSON, United States District Judge for the Eastern District of Missouri, sitting by designation
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381 B.R. 594 (2008)
In re Donald J. McCORMICK, Debtor.
No. 07-37064 (cgm).
United States Bankruptcy Court, S.D. New York.
February 8, 2008.
*595 Ronald De Caprio, Attorney at Law, Garnerville, NY, for Debtor Donald J. McCormick.
*596 Gary M. Kushner, Joseph J. Haspel, Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn, LLP, Mineola, NY, for Joseph and Patricia Zwielech.
Connie Clark, Athens, NY, Pro se creditor.
MEMORANDUM DECISION DENYING DEBTOR'S APPLICATION TO EXTEND AUTOMATIC STAY TO HIS LIMITED LIABILITY CORPORATION
CECELIA G. MORRIS, Bankruptcy Judge.
Before the Court is an application filed by Donald J. McCormick (the "Debtor") requesting the automatic stay under 11 U.S.C. § 362(a) in his case be extended pursuant to the Court's powers under 11 U.S.C. § 105 to his limited liability corporation, Donald J. McCormick Construction, LLC ("LLC"), (hereinafter "Application"). Debtor requests this relief in order to "stay" actions and collections currently pending against the LLC. Joseph and Patricia Zwielech, who identify themselves as judgment creditors of both the Debtor and the LLC, filed opposition to the Application ("Zwielechs"). Connie Clark, a pro se creditor, orally opposed Debtor's application.
After reviewing the parties' submissions and considering the arguments presented at the January 31, 2008 hearing, the Court denied Debtor's Application. The Court's reasoning is the basis for this opinion.
JURISDICTION
This Court has subject matter jurisdiction pursuant to 28 U.S.C. Section 1334(a), 28 U.S.C. Section 157(a) and the. Standing Order of Reference signed by Acting Chief Judge Robert J. Ward dated July 10, 1984. The instant matter is a core proceeding, pursuant to 28 U.S.C. § 157(b)(2)(A) and (G).
BACKGROUND FACTS
Debtor is self-employed as a general contractor and the sole member of the LLC. On December 27, 2007, Debtor filed for relief under Chapter 13 of the Bankruptcy Code. Commensurate with the filing, Debtor also filed his chapter 13 petition and schedules ("Schedules"), a chapter 13 plan ("Plan") and a chapter 13 statement of current monthly income ("Income Statement"). On the first page of Debtor's petition, under the section "Type of Debtor," Debtor selected "Individual (includes joint debtors)" and the second option "Corporation (including LLC and LLP)" is not selected.
Debtor's Summary of Schedules list $536,545.00 in assets and $994,389.20 in liabilities. Debtor's unsecured debt is listed as $578,883.81 and each item is marked contingent, unliquidated and disputed. Debtor did not fill out the scheduled titled "Statistical Summary of Certain Liabilities and Related Data (28 U.S.C. § 159)" and instead indicated that his debts were not primarily consumer. Debtor lists various creditors in his Schedules D and F, including companies such as Big Top Portable Toilets, Inc., Bonded Concrete, Inc. and individuals such as the Zwielechs. Debtor indicates that many of these claims are shared with codebtors, identified in Schedule H as his spouse, Christine M. McCormick, "Donald J. McCormick Const." and "McCormick Construction, LLC."
Debtor's Income Statement shows an individual monthly income of $2,150.26 and a joint monthly income of $7,466.26. Debtor lists $11,022.30 in deductions on line 51 of the Income Statement for a total monthly disposable income of negative $4,255.31. Debtor's plan proposes a sixty-month term with $100 to be paid by Debtor each *597 month. Debtor's employer is listed as Donald J. McCormick Construction, LLC. Debtor's Statement of Financial Affairs indicates that four debts are not consumer. These are monthly payments of $1,894.75 to the Bank of Greene County, $2,746.41 also payable to the Bank of Greene County, $491 to "GMAC," and $16,500 to Joseph and Christine Caruso.
On January 14, 2008, Debtor filed the instant Application for an extension of the automatic stay to the LLC. The Court notes that the LLC identified in Debtor's Application is not named in Schedule H, although it appears that Debtor is referring to "Donald J. McCormick Const." when referencing the LLC. Debtor provided the Court with no information about the LLC, for example a copy of its articles of organization. Debtor only stated judgments were issued against both the LLC and himself. On January 28, 2007, the Zwielechs filed opposition to the Application ("Opposition"). A hearing was held on January 31, 2008 at which Joseph Haspel, counsel for the Zwielechs, Connie Clark, a pro se creditor, and Debtor's counsel all appeared ("Hearing").
DISCUSSION
It is, widely accepted, except as provided in 11 U.S.C. § 1301 infra, the automatic stay created upon the filing of a bankruptcy petition is limited to debtors and does not encompass nonfiling codefendants. See Teachers Ins. & Annuity Ass'n v. Butler, 803 F.2d 61, 65 (2d Cir. 1986). Several decisions have offered circumstances where a bankruptcy court, using its extraordinary powers under 11 U.S.C. § 105(a), may extend the automatic stay afforded to debtors under 11 U.S.C. § 362(a) to a nondebtor if the court foresees an adverse economic consequence that would negatively impact the debtor's ability to reorganize if the relief were not granted. Debtor argues the Court should apply this line of eases to his situation because the collection actions currently pending against the LLC will result in his inability to reorganize under chapter 13. See Application at ¶ 5 and ¶ 8.
A. Are limited liability companies eligible to be debtors or codebtors under chapter 13 of the Bankruptcy Code?
[1] A limited liability company may not be a debtor under chapter 13 of the Bankruptcy Code.
Unlike chapters 7 and 11 of the Bankruptcy Code which allow an individual or a business to be a debtor, chapter 13 limits the eligibility of debtors to individuals only. To elucidate, the word "person", which is defined under Code Section 101(41) as including "individuals, partnership[s] and corporation[s]", is employed in Section 109(a) which states a "person . . . may be a debtor under this title." 11 U.S.C. §§ 101(41) and 109(a). Under Section 109(b), "[a] person may be a debtor under chapter 7 of this title only if such a person is not [a railroad, an domestic or foreign insurance company or a domestic or foreign bank] . . ." 11 U.S.C. § 109 (emphasis added). Railroads, banks and persons entitled to file under chapter 7 of the code are also entitled to file under chapter 11. 11 U.S.C. § 109(d). But, Section 109(e) limits the eligibility of debtors entitled to file under chapter 13 to ". . . an individual with regular income[1] that owes, on the date of the filing the petition, noncontingent, liquidated, unsecured debts of *598 less than $336,900 and noncontingent liquidated, secured debts of less than $1,010,650, or an individual with regular income and such individual's spouse. . . ." 11 U.S.C. § 109.
Based on the Court's interpretation of Bankruptcy Code §§ 101(41) and 109, a limited liability company is not eligible to file under chapter 13 of the Bankruptcy Code because it is not considered to be an individual under the Code. See Collier on Bankruptcy (15th ed.2007) at ¶ 109.06.
[2] A limited liability company may not be a codebtor or a joint debtor under chapter 13 of the Bankruptcy Code.
Congress created a limited extension of the automatic stay for individuals with consumer debt under 11 U.S.C. § 1301 which is commonly referred to as the "codebtor stay." Section 1301(a), which is captioned "stay of action against codebtor," states "[e]xcept as provided in subsections (b) and (c) of this section, after the order for relief under this chapter, a creditor may not act, or commence or continue any civil action, to collect all or any part of a consumer debt of the debtor from any individual that is liable on such debt with the debtor . . ." 11 U.S.C. § 1301 (emphasis added). The Court notes the specific use of the terms "consumer debt" and "individual" by the Code. "Consumer debt" is defined as the "debt incurred by an individual primarily for a personal, family or household purpose." 11 U.S.C. § 101(8), Based on these definitions, the Court interprets the "codebtor stay" to be limited in scope and only available to individuals with consumer debts. As noted previously, Debtor did not fill out the schedule titled "Statistical Summary of Certain Liabilities and Related Data (28 U.S.C. § 159)" and instead indicated his debts were not primarily consumer. Therefore, by Debtor's own admission, even if this Court were inclined to extend the codebtor stay to the LLC, which it cannot because an LLC is not an individual, it would be prevented by that language of Code Section 1301(a) which narrows its applicability to consumer debts.
Debtor includes two limited liability companies in Schedule H of his petition: "Donald J. McCormick Const." and "McCormick Construction, LLC." Based on the Courts findings supra, the inclusion of these companies was improper and may not be "codebtors" this chapter 13 case.
Lastly, there is "[n]o provision in the Code [permitting] an individual and a business to file jointly. Thus, when an LLC and one of its members both seek to file a bankruptcy petition, they must do so separately." See In re Calhoun, 312 B.R. 380, 383 (Bankr.N.D.Iowa 2004) (denying the extension of the automatic stay to a chapter 7 debtor's limited liability company). For the reasons stated above only Debtor's spouse, Christine M. McCormick, as the only individual listed in Schedule H, may be a codebtor in this action. The LLC, McCormick Construction, LLC and Donald J. McCormick Const. are not entitled to this same privilege.
B. Can the automatic stay under 11 U.S.C. § 362(a) enjoyed by an individual chapter 13 Debtor be extended to his wholly owned limited liability company?
[1] The Court will not extend the protection of automatic stay created by Debtor's filing under chapter 13 of the Bankruptcy Code to his LLC under 11 U.S.C. 1304.
As Debtor explained in his Application and during the Hearing, he wishes to continue operating his LLC during the pendency of his bankruptcy case. Debtor's *599 concern is creditors will attack any monies earned by the LLC unless it is also protected. Debtor asks this Court to extend the automatic stay protection that arose upon the filing of his personal bankruptcy case under 11 U.S.C. § 362 to his LLC. Application at ¶ 5. Section 362(a) states:
Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;
(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property of the estate;
(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;
(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor; and
(8) the commencement or continuation of a proceeding before the United States Tax Court concerning a corporate debtor's tax liability for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.
11 U.S.C. § 362 (2007) (emphasis added).
Debtor offers several arguments as to why the automatic stay can be extended to the LLC. First Debtor references Bankruptcy Code Section 1304. Section 1304(a), captioned "debtor engaged in business," defines the phrase "engaged in business" in relevant part as a "debtor that is self-employed and incurs trade credit in the production of income from such employment. . . ." Section 1304(b) states "[u]nless the court orders otherwise, a debtor . . . may operate [his] business . . . [subject to limitations prescribed by the court and the trustee]." Lastly, Section 1304(c) states "[a] debtor engaged in business shall perform the duties of the trustee specified in section 704(a) of this title." 11 U.S.C. § 1304.
Debtor argues "Section 1304 . . . permits a debtor to continue to operate a business of a debtor [sic], as long as the purpose of the operation of the entity is consistent with the basic tenets of the Bankruptcy Code." Application at ¶ 6. The Court does not disagree that a debtor may continue to operate a business under this Code section, but the Court must point out that this section, by its terms, does not *600 extend the automatic stay of 11 U.S.C. § 362(a) to limited liability companies. Instead it allows a debtor who is self-employed in a sole proprietorship to continue in this capacity. See Collier on Bankruptcy (15th ed.2007) at ¶ 1300.40[3] (citing H.R.Rep. No. 95-595 (1977), U.S.Code Cong. & Admin.News 1978, p. 5963). A sole proprietorship is "a business in which one person owns all the assets, owes all the liabilities, and operates in his or her personal capacity." Black's Law Dictionary 1427 (8th ed.2004). An individual may form a sole proprietorship simply by "going into business." The state of New York does not require notice unless the sole proprietor plans to operate the business under a fictitious name. See N.Y. Gen. Bus. § 130 (2007). Because this business form offers no liability protection to the owner, the personal assets of the owner, including his home, investments and even automobile will be at risk if the assets of his business are insufficient to satisfy the debts of the business.
The Court recognizes that the Debtor is "self-employed," but unlike a sole proprietor, he has chosen to protect his personal assets from his business creditors by creating a limited liability company and registering it with the state.[2] See White on New York Business Entities (2004) at ¶ 609,01 ("No member, manager, or agent of an LLC . . . is personally liable for any debts, obligations, or liabilities of the LLC . . . whether arising in tort, by contract, or otherwise, solely by reason of being a member, manager, or agent . . . of the LLC. . . .") As a result, Debtor has excluded himself from the class of self-employed debtors contemplated by Code Section 1304. Therefore, for the reasons listed above, Debtor's automatic stay may not be extended to the LLC under Bankruptcy Section 1304.
[1] The Court will not extend the protection of automatic stay created by Debtor's filing under chapter 13 of the Bankruptcy Code to the LLC under either Calpine or Queenie.
Debtor also argues that the automatic stay should be extended to the LLC using the Court's extraordinary powers under 11 U.S.C. § 105(a) pursuant to the decisions Nevada Power Co. v. Calpine Corp. (In re Calpine), 365 B.R. 401 (S.D.N.Y.2007) and Queenie, Ltd. v. Nygard Int'l, 321 F.3d 282 (2d Cir.2003). Application at ¶ 8. If the Court does not extend the automatic stay, as allegedly allowed by these cases, Debtor predicts that there will be "imminent irreparable harm" to his LLC and his ability to reorganize in chapter 13. Debtor does not identify what harms will result but alludes to creditors pursuing collection actions against the LLC and these pursuits impacting his ability to reorganize under chapter 13. Id.
The Second Circuit has explained that the automatic stay pursuant to § 362(a) is generally limited to debtors and does not encompass nonbankrupt codefendants. Gucci, America, Inc. v. Duty Free Apparel, Ltd., 328 F.Supp.2d 439, 441 (S.D.N.Y.2004) (citing Teachers Ins. & Annuity Ass'n v. Butler, 803 F.2d 61, 65 (2d Cir.1986)). However, courts have extended the protection of the automatic stay to nondebtors who are officers, guarantors, sureties and/or directors of corporations where necessity so required. See Gucci at 441-442 (list of examples) and Calpine *601 Corp. v. Nevada Power Co. (In re Calpine Corp.), 354 B.R. 45, 49 (Bankr.S.D.N.Y. 2006). Because both the bankruptcy court's decision and the district court's affirmation of the bankruptcy court's decision in Calpine are widely known this Court will not offer an exegesis on either holding. Briefly, the district court in Calpine upheld the bankruptcy court's decision to extended the automatic stay under 11 U.S.C. § 362(a) using its Section 105 powers to preliminarily enjoin litigation pending against the Chapter 11 debtor's surety. The district court cited the decision A.H. Robins Co. v. Piccinin as support since the Fourth Circuit held the automatic stay could be extended to enjoin civil proceedings against nondebtors in "unusual circumstances." Calpine, 365 B.R. at 408 citing A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir.1986). The district court also cited to the Queenie Ltd. v. Nygard Int'l, supra, as support for the proposition that "the automatic say can apply to non-debtors, but normally does so only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor's estate." Id. (citing Queenie at 287).
The Second Circuits opinion in Queenie is of particular interest to this Court. As mentioned above, most, if not all courts consider the extension of the automatic stay under Code Section 362(a) to a nondebtor to be extraordinary relief. Because of this, this Court has found that when an extension is allowed it is in circumstances where the debtor is a corporation and the nondebtor is an individual or related corporation deemed necessary for the reorganization of the debtor corporation. See, generally, A.H. Robins Co. v. Piccinin, 788 F.2d 994 and In re Calpine Corp., 354 B.R. at 49. However in Queenie, the Second Circuit approved the extension of the automatic stay from an individual chapter 11 debtor's case to his wholly owned corporation. The Queenie case began as a trademark dispute filed in the Southern District of New York in 2002. Marc Gardner, one of four plaintiffs in the action, was the president and sole shareholder of Queenie, Ltd., which was also a plaintiff. After a jury trial, defendant Nygard was awarded punitive damages of $250,000 against Queenie and $500,000 against Gardner. 321 F.3d at 286. Plaintiffs' motion for a new trial was denied. Plaintiffs then filed an appeal. In the interim, Gardner filed for protection under chapter 11[3], which stayed the district court appeal as to him personally under 11 U.S.C. § 362(a). Id. at 287. Gardner also asserted the automatic stay should also be applied to Queenie, Ltd. The Second Circuit agreed and held that the "the automatic stay can apply to non-debtors, but normally does so only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor's estate." Id.
The Second Circuit listed several examples of immediate adverse economic consequences including: (1) a claim against a non-debtor for an obligation for which the debtor was a guarantor, (2) a claim against a debtor's insurer, and (3) actions where there is an identity between the debtor and third-party defendant that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor. Id. (citations omitted). But, courts have cautioned that extensions of the automatic stay are reserved for "special circumstances" and typically apply to those lawsuits that threaten serious risk to a reorganization of debtor's estate in the form of immediate adverse consequences. Gucci America, Inc. v. Duty Free Apparel, *602 Ltd., 328 F.Supp.2d at 441-442 (citing Queenie, 321 F.3d at 287-288).
While this Court does not reject Debtor's concerns that adverse consequences may result without the extension of the automatic stay to his LLC, the Court must first comply with the Bankruptcy Code and governing case law. The Court understands that Debtor is employed by the LLC, and any action against the LLC may impact his "employment" and ultimately his ability to reorganize under chapter 13. The Court does not find this argument persuasive. The Debtor has never provided this Court a satisfactory explanation for why he could not cause the LLC to file its own bankruptcy case which, as his counsel admitted during the hearing, would invoke the automatic stay on behalf of the company and thereby stay all pending collection actions against it.
Additionally, this Court notes that the debtors in both Queenie and Calpine filed for protection under chapter 11 of the bankruptcy code and not chapter 13 as Debtor has done. The Court also undertook its own case law research and found no examples, in any district, where a court extended the automatic stay in a situation such as the one presented by Debtor.[4] Given the Court's determination, supra, that a limited liability company cannot be a debtor or codebtor under chapter 13 of the bankruptcy code, under these circumstances, this Court cannot enlarge the holdings of Queenie and Calpine and extend the automatic stay to Debtor's LLC. As a result the Court must deny Debtor's request for this relief because the request is both extraordinary and contrary to the Bankruptcy Code.
C. Can the automatic stay under 11 U.S.C. § 362(a) be extended to a Debtor's wholly owned limited liability company under the theory that ownership of the LLC constitutes property of the estate?
During the Hearing, Debtor proposed that the automatic stay be extended to his LLC under what the Court will call the "property of the estate" theory. Under New York's Limited Liability Company statute, membership interest in a limited liability company is considered personal property. N.Y. Ltd. Liab. Co. § 601 (2007). Therefore, the Court agrees, under Code Section 541(a)(1), Debtor's interest in the LLC became property of the estate when he filed his petition on December 27,2007. 11 U.S.C. § 541 (2007).
However, the Court finds that Debtor's property interest in the LLC is confined to the intangible rights of ownership allowed under New York code. See generally In re Calhoun, 312 B.R. at 384. Although Bankruptcy Code Section 362(a) bars creditors from asserting control over the property of a debtor's estate without prior court approval, it is unclear what impact the collection actions briefly described in the Application will have on Debtor's "intangible rights of ownership" since Debtor's shares in the LLC have no value according to his petition and Debtor admitted during the Hearing that the LLC "was essentially a shell."
Furthermore, Debtor did not provide this Court with any evidence that the pending actions against the LLC will have an immediate adverse economic consequence *603 to the estate's interest in the LLC's stock.
CONCLUSION
Based on the forgoing, after a careful review of the totality of the circumstances presented, Debtor's Application to extend the automatic stay afforded him under 11 U.S.C. § 362 to his limited liability company is denied.
NOTES
[1] The term "individual with regular income" is defined as an "individual whose income is sufficiently stable and regular to enable such individual to make regular payments under a plan under chapter 13 of this title . . ." 11 U.S.C. § 101(30).
[2] According to the New York State Division of Corporation's website, the LLC was formed on January 22, 2002 in Dutchess County, New York. Debtor is listed as recipient for service of process upon the LLC. The Court also found a listing for McCormick Construction LLC, which is registered in Sullivan County and was formed on March 16, 2005. Source: http://ap psext8.dos.state.ny.us/corp_public/corpsearch.entity_search_entry.
[3] Gardner filed for relief under Chapter 11 of the Bankruptcy Code on November 14, 2002, Case No. 02-43420. His case was converted to Chapter 7 on March 14, 2003.
[4] The Court located one opinion where a court held the automatic stay afforded to an individual under chapter 7 of the code would not be extended to the limited liability companies he purportedly held an interest in and listed in his petition. See In re Calhoun, supra.
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
October 12, 2005
FOR THE TENTH CIRCUIT
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 04-4065
(D.C. Nos. 2:00-CV-912-S and
RONALD D. FISHER, 2:96-CR-103-S)
(D. Utah)
Defendant - Appellant.
ORDER AND JUDGMENT *
Before SEYMOUR, KELLY, and MURPHY Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Ronald Fisher, a federal prisoner appearing pro se, appeals the district
court’s denial of his 28 U.S.C. § 2255 motion. We affirm.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Fisher “concocted and executed a scheme to obtain money from various
federally insured financial institutions and private lenders by making false
representations about his past earning history, the amount of assets he currently
held, and his ability to repay loans made to him or his companies.” United States
v. Fisher, No. 99-4001, 1999 WL 622903, at **1 (10th Cir. Aug. 17, 1999). He
pled guilty to four counts, including making a false statement to a financial
institution in violation of 18 U.S.C. § 1344(1) and wire fraud in violation of 18
U.S.C. § 1343. Fisher was sentenced to 137 months imprisonment based in part
on the district court finding that the loss to Fisher’s victims totaled between $2.5
and 5 million. See U.S. Sentencing Guidelines Manual § 2F1.1(b)(1)(N) (1997)
(hereafter USSG). We affirmed. Fisher, 1999 WL 622903, at **5.
Fisher claims in his § 2255 motion that his plea was involuntary because
his trial and appellate counsels were constitutionally ineffective. The district
court denied his motion. We granted COA with respect to counsels’ investigation
of the facts relating to the losses suffered by two financial institutions, Provo
Finance, LLC (Provo), and Universal Campus Credit Union (UCCU).
To determine the loss amount used to calculate a sentence for a fraud
offense, courts use either the actual loss or the intended loss, whichever is
greater. USSG § 2F1.1, cmt. n. 7(b). Courts should, however, consider “the
contemporaneous exchange of security . . . in considering the economic reality of
-2-
the transaction and any intended loss in excess of the actual loss.” United States.
v. Nichols, 229 F.3d 975, 980 (10th Cir. 2000) (emphasis added); see also USSG.
§ 2F1.1, cmt. n. 7(b) (stating that amount of loss should be reduced by “any assets
pledged to secure the loan.” (emphasis added)).
Fisher claims the losses incurred by Provo and UCCU were “backed by
collateral,” Aplt. Br. at 10, and that the loss amounts determined at sentencing
should have been offset by the amounts recovered through the sale of this
collateral. He contends that his trial and appellate attorneys were constitutionally
ineffective for not investigating and informing the trial court of the true nature of
these losses, and that the total loss to his victims would be less than $2.5 million
if both the Provo and UCCU losses were properly determined. We have reviewed
“the district court’s legal rulings de novo and its findings of fact for clear error,”
United States v. Cockerham, 237 F.3d 1179, 1181 (10th Cir. 2001), and conclude
there is no factual or legal basis for Fisher’s claims.
The UCCU Fraud. Fisher deposited $1,657,722.85 in worthless checks
into his UCCU account to induce UCCU to issue him cashier’s checks totaling at
least $1,500,435.80. Fisher used the cashier’s checks to pay off loans at other
institutions, some of which were backed by collateral pledged as security. After
UCCU discovered Fisher’s fraud, it obtained assignments of this collateral from
the other lenders and recouped some losses by selling these assets. Fisher’s own
-3-
expert admitted at the sentencing hearing that there was never any loan, pledge or
security agreement between Fisher and UCCU, and that all of these collateral
assignments and recoveries occurred after Fisher had already defrauded UCCU
and only because of UCCU’s post-fraud litigation and other efforts. See Aplt.
App. at 256-60; see also Fisher, 1999 WL 622903, at **3 n.5 & n.6.
Fisher argued at sentencing and on direct appeal that the loss to UCCU
should be offset by these asset sales, but both the trial court and this court
rejected this argument because it ignores the clear requirement to use the higher,
intended loss of $1,657,722.85, rather than any lower actual loss. Fisher, 1999
WL 622903, at **3 (explaining that even if UCCU’s actual losses were zero, the
intended loss amount of $1,657,722.85 governs).
Fisher now argues that the UCCU “loan” was “backed by various pieces of
collateral,” Aplt. Br. at 14. Citing Nichols, 229 F.3d at 980, he claims UCCU’s
loss should be offset by this “liquidated collateral.” Aplt. App. at 13. His
evidence, however, is nothing more than the same asset sales that UCCU
recouped through the post-fraud collateral assignments. Compare id. at 200-01,
with id. at 243-44. Fisher presents no evidence that this collateral was
contemporaneously pledged to secure his indebtedness at the time UCCU issued
the cashier’s checks. See USSG 2F1.1, cmt. n. 7(b). Indeed, his § 2255 evidence
simply confirms that all of these collateral assignments and sales occurred after
-4-
UCCU discovered the fraud. Moreover, both his trial and appellate counsel did
argue that these asset sales should be used to offset the loss, and we rejected this
argument. Fisher, 1999 WL 622903, at **3, n.6. We also rejected his renewed
argument that UCCU’s loss should be its actual loss. Id. at **3. “The fact that a
victim has recovered part of its loss after discovery of a fraud does not diminish a
defendant’s culpability for purposes of sentencing.” Nichols, 229 F.3d at 979. In
short, Fisher has presented no new evidence, and his attorneys have already
asserted this same, flawed legal argument.
Provo. Fisher obtained a loan from Provo based on his false representation
that he had paid off the outstanding lien on the property he pledged to Provo as
security. The presentence report noted that Provo was in litigation at the time of
sentencing seeking to obtain rights in the fraudulently-pledged collateral. Fisher
presents evidence that Provo later succeeded in its litigation and recovered
proceeds from the sale of the pledged assets. He argues his attorneys were
ineffective for not seeking to offset Provo’s losses by these amounts. There is no
merit to Fisher’s claim that this impaired collateral should have been deducted
from the amount of loss. Where as here, a defendant provides false information
to a lender about the value of its pledged collateral, the defendant is properly held
liable for the higher intended loss. United States v. Schild, 269 F.3d 1198, 1202
(10th Cir. 2001) (citing United States v. Banta, 127 F.3d 982 (10th Cir. 1997)).
-5-
“[T]he mere presence of collateral securing an item that was fraudulently obtained
does not automatically reduce the loss calculation under § 2F1.1 where it can be
shown that the defendant intended to permanently deprive the creditor of the
collateral through concealment.” Nichols, 229 F.3d at 979. Provo was forced to
recover its impaired collateral through expensive litigation and had not recovered
any of it at the time of sentencing. Fisher’s trial and appellate attorneys were not
ineffective for failing to assert the meritless argument that Provo’s losses should
have been offset by this fraudulently-pledged collateral.
Because Fisher did not present any evidence that any collateral was validly
pledged to secure the indebtedness to Provo or UCCU, the district court did not
err in denying his § 2255 motion without an evidentiary hearing, and Fisher
cannot show that his counsels’ conduct was objectively unreasonable or that he
suffered the prejudice required to establish an ineffective assistance of counsel
claim under Strickland v. Washington, 466 U.S. 668, 687-89 (1984).
The judgment of the district court is AFFIRMED.
Entered for the Court
Stephanie K. Seymour
Circuit Judge
-6-
| {
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Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
4-23-2001
Eichorn v. AT&T Corp
Precedential or Non-Precedential:
Docket 99-5791
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Recommended Citation
"Eichorn v. AT&T Corp" (2001). 2001 Decisions. Paper 87.
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Filed April 23, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-5791
KURT H. EICHORN;
WILLIAM J. HUCKINS; T. ROGER KIANG;
EDWARD W. LANDIS; ORLANDO NAPOLIT ANO,
individually and on behalf of all others similarly situated;
GILBERT G. DALEY; SUSAN H. DIBONA;
BETH KING; MICHAEL S. ORATOWSKI;
THOMAS L. SALISBURY; LAWRENCE W ALSH,
individually and on behalf of all others similarly situated,
Appellants
v.
AT&T CORP; LUCENT TECHNOLOGIES, INC.;
TEXAS PACIFIC GROUP
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action Nos. 96-cv-03587 & 96-cv-04674
(Honorable Mary Little Cooper)
Argued December 12, 2000
Before: SCIRICA and AMBRO, Circuit Judges,
and POLLAK, District Judge*
(Filed: April 23, 2001)
_________________________________________________________________
* The Honorable Louis H. Pollak, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
NOEL C. CROWLEY, ESQUIRE
(ARGUED)
Crowley & Crowley
10 Park Place
Morristown, New Jersey 07960
Attorney for Appellants
JONATHAN E. HILL, ESQUIRE
(ARGUED)
KATHY A. LAWLER, ESQUIRE
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, New Jersey 07962
JAMES E. TYRRELL, JR., ESQUIRE
(ARGUED)
SCOTT L. WEBER, ESQUIRE
Latham & Watkins
One Newark Center, 16th Floor
P.O. Box 10174
Newark, New Jersey 07101
Attorneys for Appellees,
AT&T Corp. and Lucent
Technologies, Inc.
DAVID M. FABIAN, ESQUIRE
(ARGUED)
Traflet & Fabian
264 South Street
Morristown, New Jersey 07960
Attorney for Appellee,
Texas Pacific Group
2
OPINION OF THE COURT
SCIRICA, Circuit Judge.
In this appeal from the grant of summary judgment we
must decide whether defendants AT&T Corp., NCR Corp.,
Lucent Technologies, and Texas Pacific Group's agreement
to restrict the hiring of certain employees upon Lucent's
sale of Paradyne Corp. was a violation of S 1 of the
Sherman Antitrust Act. We also must decide whether this
no-hire agreement which effectively cancelled the plaintiff
employees' AT&T pension bridging rights violated S 510 of
the Employee Retirement Income Security Act. W e hold the
no-hire agreement was a valid covenant not to compete that
was reasonable in scope and therefor e not a violation of S 1
of the Sherman Act. But also we hold plaintif fs have
presented sufficient prima facie evidence of AT&T and
Lucent's specific intent to interfer e with an ERISA funded
employee pension fund to survive summary judgment on
the ERISA S 510 claim.
I.
In July 1995, AT&T, a long distance telephone and
wireless services provider, decided to sell one of its
affiliates, Paradyne Corp., a manufacturer of network
access products for the telecommunications industry.
Contemplating the sale, AT&T wanted to ensur e that
Paradyne remained a viable entity because A T&T and its
other affiliates, including Lucent Technologies, purchased
many of the network access products Paradyne
manufactured. To make Paradyne mor e attractive to buyers
as an ongoing business, AT&T adopted a human r esource
plan that placed restrictions on Paradyne employees' ability
to transfer to other divisions of AT&T ("the Preliminary
Net"). Specifically, the Preliminary Net precluded an
employee who voluntarily left Paradyne from being hired by
any other division of AT&T. The pr emise for the hiring bar
was AT&T's belief that one of Paradyne's most marketable
assets was its skilled employees. The retention of
3
Paradyne's employees, therefore, was considered essential
for the sale of Paradyne.
Shortly after adopting the Preliminary Net, A T&T
consummated a business reorganization plan resulting in
three independent companies: AT&T, Lucent Technologies,
and NCR Corp. (the "trivestiture"). As part of the
trivestiture, AT&T transferred ownership of Paradyne to
Lucent. Consistent with the Preliminary Net, the Paradyne
employees, now employed by Lucent, were pr ecluded from
seeking re-employment at any other AT&T division or
affiliate after the trivestiture.
On July 31, 1996, Lucent sold Paradyne to Texas Pacific
Group. Before closing, Lucent agreed, on behalf of itself and
the other former AT&T affiliates, that it would not hire,
rehire, retain, or solicit the services of any Paradyne
employee or consultant whose annual income exceeded
$50,000. This "Pre-Closing Net" was consistent with the
understanding that Texas Pacific Group's interest in
purchasing Paradyne was based on its desir e to acquire the
technical skills of Paradyne's employees for a sufficient
period of time to ensure a successful transition of
ownership.
Once the deal was closed, Lucent and Texas Pacific
Group entered a post-closing agreement ("Post-Closing Net")
in which Lucent warranted on behalf of itself and the other
AT&T affiliates that for 245 days (8 months) following the
sale and the expiration of the Pre-Closing Net, it would not
seek to hire, solicit or rehire any Paradyne employee or
consultant whose compensation exceeded $50,000. The
eight month no-hire agreement had the practical effect of
cancelling the Paradyne employees' accrued pension
benefits under their former AT&T pension plans. Under the
AT&T pension plan, employees were entitled to "bridging
rights" which allowed them to retain their level of accrued
pension benefits if they left AT&T and r eturned within six
months. After six months, the bridging rights expir ed.
Employees rehired after the six month period would need
five years of employment to regain their pr evious pension
levels. Because the Post-Closing Net barred Paradyne
employees from returning to an A T&T affiliate for eight
4
months, these employees automatically lost the bridging
rights they had acquired under their AT&T pensions.
Before the sale was consummated, Texas Pacific Group
hired an outside consultant to determine the benefit
package it could offer the Paradyne employees. Paradyne's
Vice-President of Human Resources, Sherril Claus Melio,
who had previously held the same position when Paradyne
was owned by AT&T and Lucent, assisted the consultant in
drafting various benefit plan proposals. The consultant
concluded that in order to make Paradyne financially
competitive, Texas Pacific Group could not offer the same
pension package AT&T had previously of fered its
employees. Although Melio's exact role in T exas Pacific
Group's decision is disputed, Texas Pacific Group
ultimately decided not to offer a defined pension benefits
program to its new employees.
The plaintiffs are former Paradyne employees who allege
the Preliminary Net, as well as the Pre and Post-Closing
Nets, collectively represent an unlawful group boycott in
violation of S 1 of the Sherman Act. Additionally, they
contend the defendants conspired to eliminate their
pension benefits thereby engaging in an illegal price fixing
scheme in violation of S 1 of the Sher man Act. Furthermore,
they allege the no-hire agreement, which effectively
cancelled Paradyne employees' bridging rights under their
AT&T pensions, violated S 510 of the Employee Retirement
Income Security Act.
In addressing these claims, the District Court held that
plaintiffs failed to prove a violation ofS 1 of the Sherman
Act and failed to produce sufficient prima facie evidence of
AT&T and Lucent's specific intent to inter fere with an
ERISA funded pension plan to support their S 510 claim.
The court, therefore, granted defendants' motion for
summary judgment. After the grant of summary judgment,
plaintiffs filed a discovery motion in connection with an
anticipated motion for class certification which the District
Court denied. This appeal followed.
II.
The District Court had jurisdiction under 15 U.S.C.S 26
and 29 U.S.C. S 1140 because plaintiffs' claims allege
5
violations of S 1 of the Sherman Antitrust Act and S 510 of
ERISA. We have jurisdiction under 28 U.S.C.S 1291. We
exercise plenary review over the District Court's grant of
summary judgment on plaintiffs' antitrust and ERISA
claims. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974
F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912
(1993). We exercise plenary review over the District Court's
legal determinations concerning class certification and
review its factual findings for abuse of discretion. Bogus v.
Am. Speech & Hearing Ass'n, 582 F.2d 277, 289 (3d Cir.
1978).
III.
Section 1 of the Sherman Act provides:
Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or
commerce among the several states, or with for eign
nations, is hereby declared to be illegal.
15 U.S.C. S 1 (1994).
Under S 1, unreasonable restraints on trade are
prohibited because they inhibit competition within the
market. Bus. Elecs. Corp. v. Sharp Elecs. Corp. , 485 U.S.
717, 723 (1988); United States v. Brown Univ., 5 F.3d 658,
669 (3d Cir. 1993). In order to assert a cause of action
under S 1, plaintiffs must prove they have suffered an
antitrust injury that is causally related to the defendants'
allegedly illegal anti-competitive activity. Brunswick Corp. v.
Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). Once
there is the finding of antitrust injury, courts examine the
alleged illegal conduct under one of two distinct tests: per
se violation or rule of reason. Under the per se test,
"agreements whose nature and necessary effect are so
plainly anti-competitive that no elaborate study of the
industry is needed to establish their illegality" are found to
be antitrust violations. Nat'l Soc'y of Pr of. Eng'rs v. United
States, 435 U.S. 679, 692 (1978). For those activities not
within the per se invalidity category, courts employ the rule
of reason test. Under this test, plaintif fs have the burden of
establishing that, under all the circumstances,"the
challenged acts are unreasonably r estrictive of competitive
6
conditions" in the relevant market. Standard Oil Co. of N.J.
v. United States, 221 U.S. 1, 28 (1911). "An analysis of the
reasonableness of particular restraints includes the
consideration of the facts peculiar to the business in which
the restraint is applied, the nature of the restraint and its
effects, and the history of the restraint and the reasons for
its adoption." United States v. Topco Assocs., Inc., 405 U.S.
596, 607 (1972).
A.
We hold the AT&T Preliminary Net was not a violation of
S 1 of the Sherman Act. The District Court found that "as
of . . . the date that the Preliminary Net was put into effect
. . . , Lucent was a wholly-owned subsidiary of A T&T, and
accordingly, the two companies were a singular entity that
could not conspire to violate the Antitrust laws." Eichorn v.
AT&T Corp., CA No. 96-3587, slip op. at *17 (D.N.J.
September 10, 1999). In Copperweld Corp. v. Independence
Tube Corp., 467 U.S. 752 (1984), the Supr eme Court held
the coordinated acts of a parent and its wholly owned
subsidiary cannot themselves give rise to S 1 antitrust
violations. The Court reasoned, "[a] par ent and its wholly
owned subsidiary have a complete unity of inter est. Their
objectives are common, not disparate; their general
corporate actions are guided or determined not by two
separate corporate consciousnesses, but one." Id. at 771.
Because the Preliminary Net was an inter nal restriction
between a single corporation, AT&T, and its wholly owned
subsidiaries, Lucent and NCR, and not an agr eement
between separate corporate identities, it was not a violation
of S 1 of the Sherman Act. Id. at 769 ("An internal
agreement to implement a single unitary fir m's policies does
not raise the antitrust dangers that S 1 was designed to
police."). Although plaintiffs assert A T&T and Lucent were
not motivated by a single "corporate consciousness"
because they were in the process of becoming separate
entities, we believe that during the effective time period of
the AT&T Preliminary Net, AT&T and Lucent retained a
unified corporate interest for the purpose of antitrust
analysis. It was not until AT&T divested all of its stock in
Lucent and after the lapse of the Preliminary Net that the
two companies became completely separate entities.
7
As Supreme Court and our precedent make clear, only
anti-competitive actions between competitors give rise to
Sherman Act liability. Copperweld, 467 U.S. at 771; Siegel
Transfer, Inc. v. Carrier Exp., Inc. , 54 F.3d 1125, 1132 (3d
Cir. 1995) ("The operations of a corporate enterprise
organized into divisions must be judged as the conduct of
a single actor."); Weiss v. Y ork Hosp., 745 F.2d 786, 813 (3d
Cir. 1984), cert. denied, 470 U.S. 1060 (1985). As a single
entity in a parent subsidiary relationship, the defendants in
this case were incapable of conspiring to violate the
antitrust laws through the Preliminary Net agreement.
Siegel, 54 F.3d at 1132.
We next turn to plaintiffs' claim that the Pre and Post-
Closing Nets, collectively referred to as the no-hire
agreement, represent an illegal gr oup boycott and a
horizontal price fixing conspiracy under S 1 of the Sherman
Act. Plaintiffs allege Lucent, AT&T and T exas Pacific Group
horizontally competed for the plaintiff employees' technical
skills and services. As competitors, they ar gue, the
defendants conspired to suspend competition for plaintiffs'
technical services with the purpose and the ef fect of locking
them out of the labor market. See Anderson v. Shipowners
Ass'n of the Pac. Coast, 272 U.S. 359 (1926) (agreement
between most shipowners on Pacific coast to deny
employment to any seaman who did not register with
association was violation of S 1 of Sher man Act); Law v.
Nat'l Collegiate Athletic Assoc., 134 F.3d 1010 (10th Cir.)
(NCAA rule limiting salary of basketball coaches was per se
violation of S 1 of Sherman Act), cert. denied, 525 U.S. 822
(1998). By locking them out and effectively cancelling their
entitlement to AT&T pension rights, plaintif fs argue the
defendants conspired to fix the cost of labor in the market.
In support, plaintiffs cite several Supr eme Court cases that
hold horizontal group boycotts and price fixing conspiracies
are per se violations of the Sherman Antitrust Act. See FTC
v. Super. Ct. Trial Lawyers Assoc., 493 U.S. 411, 422
(1990); Arizona v. Maricopa County Med. Soc'y , 457 U.S.
332, 344-45 (1982); Broad. Music, Inc. v. Columbia Broad.
Sys., Inc., 441 U.S. 1, 7-8 (1979).
But the facts here are substantially dif ferent from the
classic per se horizontal price fixing and gr oup boycott
8
conspiracies the Court has generally found to be per se
antitrust violations. Broad. Music, Inc. , 441 U.S. at 8 ("Easy
labels [like price fixing] do not always supply ready
answers."). Because of the fact specific inquiry required to
assess antitrust liability under the Sherman Act, we will
address each prong of the S 1 analysis.
B.
Private plaintiffs pursuing claims under S 1 of the
Sherman Act have standing when they suf fer an antitrust
injury that is causally related to the defendants' allegedly
illegal anti-competitive activity. Brunswick, 429 U.S. at 489.
The Supreme Court has described antitrust injury as injury
of
the type the antitrust laws were intended to pr event
and that flows from that which makes defendants' acts
unlawful. The injury should reflect the anti-competitive
effect either of the violation or of anti-competitive acts
made possible by the violation. It should, in short, be
the type of loss that the claimed violations . . . would
be likely to cause.
Id. (internal quotes omitted).
It is well established that an antitrust injury r eflects an
activity's anti-competitive effect on the competitive market.
Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328,
344 (1990) ("The antitrust injury requir ement . . . ensures
that a plaintiff can recover only if the loss stems from a
competition-reducing aspect or ef fect of the defendant's
behavior.") (emphasis in original). W e have consistently held
an individual plaintiff personally aggrieved by an alleged
anti-competitive agreement has not suffer ed an antitrust
injury unless the activity has a wider impact on the
competitive market. See, e.g., City of Pittsburgh v. West
Penn Power Comp., 147 F.3d 256, 266-67 (3d Cir. 1998)
(holding action that did not lessen competition in a
"marketplace" was not antitrust injury); Barton & Pittinos,
Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 182 (3d
Cir. 1997) (the determination of whether a party has
suffered an antitrust injury "depends on how the market is
defined"); Brader v. Allegheny Gen. Hosp. , 64 F.3d 869 (3d
9
Cir. 1995). While a plaintiff may have individually suffered
an injury as a result of defendants' actions, the antitrust
laws were designed to protect market-wide anticompetitive
activities. Atlantic Richfield, 495 U.S. at 338 (quoting Brown
Shoe Co. v. United States, 370 U.S. 294, 320 (1902) ("The
antitrust laws were enacted for the protection of
competition, not competitors.") (emphasis in original)); see
also Les Shockley Racing, Inc. v. Nat'l Hot Rod Ass'n., 884
F.2d 504, 508 (9th Cir. 1989) (holding plaintiffs must "plead
and prove a reduction of competition in the market in
general and not mere injury to their own positions as
competitors").
In dismissing plaintiffs' antitrust claims the District
Court stated,
Plaintiffs apparently argue that the injury to
competition is that they are prevented fr om providing
their services to AT&T, Lucent or its affiliates. Put
simply, the antitrust laws are not concer ned with
injury to competitors (here the plaintif fs), but with
injury to competition. That these plaintiffs are
prevented from working at AT&T , Lucent or their
affiliates for the limited time period during which the
pre-closing and post-closing nets were in effect is not
an injury to competition. In our view, plaintif fs'
allegations of economic injury to themselves
misperceive the nature of the injury which is required
to be established in order to sustain a claim under
Section 1 of the Sherman Act.
Eichorn, CA No. 96-3587, slip op. at *20-21 (internal
citations omitted).
While employees who are precluded fr om selling their
labor have not necessarily suffered an antitrust injury,
"employees may challenge antitrust violations that are
premised on restraining the employment market." Phillip
Areeda & Herbert Hovenkamp, Antitrust Law P 377a (rev.
ed. 1995) (footnotes omitted); see also Brian R. Henry,
`Sorry, We Can't Hire You . . . We Promised Not To': The
Antitrust Implications of Entering Into No-Hir e Agreements,
11-Fall Antitrust 39 (1996) ("Most courts considering the
issue have held that employees suffer `injury' recognized by
10
the antitrust laws when their employment opportunities are
restricted by a no-hire agreement between potential
employers, and thus have standing to sue the entity
imposing such a provision."). As a leading treatise on
antitrust states:
Antitrust law addresses employer conspiracies
controlling employment terms precisely because they
tamper with the employment market and thereby
impair the opportunities of those who sell their services
there. Just as antitrust law seeks to pr eserve the free
market opportunities of buyers and sellers of goods, so
also it seeks to do the same for buyers and sellers of
employment services. It would be perverse indeed to
hold that the very object of the law's solicitude and the
persons most directly concerned--per haps the only
persons concerned--could not challenge the r estraint.
* * *
An employee overcomes the primary hurdle to standing
when he shows that the alleged violation restrains
competition in the labor market. Of course, he must
still show injury-in-fact that was proximately caused
by the violation and, in damage cases, that can be
quantified without undue speculation.
Areeda & Hovenkamp, supra, at P 377c (footnotes omitted).
In Anderson, the Supreme Court held that a seaman, on
behalf of himself and other members of the seamen's union,
could sue an association of most of the shipowners in the
region when the shipowners' association adopted unduly
strict regulations governing employment. 272 U.S. at 359.
The Court found the shipowners' agreement violated the
antitrust laws because the regulations pr evented the "free
exercise of the rights" of the seamen to engage in trade and
commerce. Id. at 363 (quoting United States v. Colgate &
Co., 250 U.S. 300, 307 (1919)). Because unr egistered
seamen were precluded from working on any association
ship, which constituted the majority of the ships in the
region, they suffered an injury pr otected under the
antitrust laws.
While Anderson was decided many years befor e the
11
Supreme Court detailed the antitrust injury r equirement in
Brunswick,1 several courts since Brunswick have found that
no-hire agreements which preclude employees from seeking
employment from a third party employer can give rise to
antitrust injury. In Cesnick v. Chrysler Corp. , 490 F. Supp.
859 (M.D.Tenn. 1980), plaintiffs who wer e precluded from
seeking re-employment at Chrysler when their division was
sold to a third party suffered an antitrust injury. The Court
reasoned that it "must conclude that the market for
employee skills is a market subject to the pr ovisions of the
Sherman Act." Id. at 864.
More recently in Roman v. Cessna Air craft Co., 55 F.3d
542 (10th Cir. 1995), the Court of Appeals for the Tenth
Circuit held that a plaintiff precluded from seeking
employment as an airplane engineer with the Cessna
Aircraft Company because of an agreement between Cessna
and the Boeing Company not to hire each other's engineers
suffered an antitrust injury. The Court r easoned that
plaintiff
alleged that competition in the market for his services
as an employee had been directly impeded by
defendants' agreement not to compete for each other's
employees. He further alleges that he was injur ed by
_________________________________________________________________
1. Several other courts prior to Brunswick held that employees barred
from seeking employment from a thir d party employer because of a no-
hire agreement have standing to litigate aS 1 claim. See, e.g., Radovich
v. Nat'l Football League, 352 U.S. 445 (1957) (coach precluded from
working in National Football League because of agr eement among all of
the teams in the league had standing); Quinonez v. Nat'l Assoc. of Secs.
Dealers, Inc., 540 F.2d 824 (5th Cir. 1976) (plaintiff who was fired by
securities dealer and was unable to find employment with another
securities dealer because of agreement among dealer firms not to hire an
employee who was discharged by another fir m suffered sufficient injury
to proceed with antitrust claim); Tugboat, Inc. v. Mobile Towing Co., 534
F.2d 1172, 1176 (5th Cir.) ("Ther e can be little doubt that an employee
who is deprived of a work opportunity has been injur ed . . . because the
selling of one's labor is a commercial interest."), reh'g denied, 540 F.2d
1085 (5th Cir. 1976); Nichols v. Spencer Int'l Press, Inc., 371 F.2d 332
(7th Cir. 1967) (plaintiff prohibited from seeking employment at
competing employer because of agreement between employers in
industry not to hire each other's employees suf fered injury sufficient to
bring antitrust claim).
12
that agreement because it prevented him fr om selling
his services to the highest bidder . . . . W e believe this
is sufficient to allege antitrust standing.
Id. at 545; see also Law, 134 F .3d 1010 (coach whose
opportunities in employment market were impair ed by
agreement among members of NCAA to limit the maximum
compensation paid to coaches suffered antitrust injury).
In a similar manner, plaintiffs her e allege they have been
precluded from selling their services to three companies
within the industry, NCR, AT&T and Lucent, and that the
no-hire agreement interfered with their ability to attain
pension benefits. Because the no-hire agr eement directly
impeded plaintiffs' ability to sell their labor to at least three
companies within the competitive market and ef fectively
cancelled their AT&T pension benefits, we believe they have
standing to litigate their S 1 claims. Roman, 55 F.3d at 545.
To the extent the District Court held that plaintiffs did not
suffer an antitrust injury and lacked standing to litigate
their S1 claims, it was in error.
C.
Plaintiffs contend on appeal that the no-hir e agreement
was a group boycott and a horizontal pricefixing
conspiracy. See Klor's v. Broadway-Hale Stores, Inc., 359
U.S. 207, 211 (1959). As direct competitors for their labor,
plaintiffs argue, the defendants enter ed the no-hire
agreement as part of a concerted effort to lock them out of
employment and decrease labor costs by eliminating
pension benefits. See Nat'l Soc'y of Pr of. Eng'rs, 435 U.S. at
692 (quoting United States v. Container Corp. of Am., 393
U.S. 333 (1969) ("[A]n agreement that`interfere[s] with the
setting of price by free market forces' is illegal on its face.")).
Plaintiffs maintain that group boycotts and horizontal price
fixing schemes between competitors are per se violations of
the antitrust laws because these agreements ar e manifestly
uncompetitive and are "naked restraints of trade . . . [that
have] no purpose except stifling of competition." White
Motor Co. v. United States, 372 U.S. 253, 263 (1963); see
also N. Pac. Ry. Co. v. United States, 356 U.S. 1, 19-20
(1958). In support, they cite NCAA v. Bd. of Regents of the
13
Univ. of Okla., 468 U.S. 85, 100 (1984), wher e the Supreme
Court stated,
Horizontal price fixing . . . [is] or dinarily condemned as
a matter of law under an `illegal per se' appr oach
because the probability that these practices ar e anti-
competitive is so high . . . . In such circumstances a
restraint is presumed unreasonable without inquiry
into the particular market context in which it is found.
While plaintiffs contend the no-hire agr eement was per se
illegal because it was a horizontal group boycott and a price
fixing conspiracy, we can find no support within the
relevant case law for this label. Br oad. Music, Inc., 441 U.S.
at 8 ("Easy labels do not always supply r eady answers.").
The per se illegality rule applies only in those cases where
the business practice in question is one, which on its face,
has "no purpose except stifling of competition." White Motor
Co., 372 U.S. at 263; see also N.W. Wholesale Stationers,
Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 289-90
(1985) (per se rule confined to limited types of anti-
competitive practices); Larry Muko Inc. v. S.W . Pa. Bldg. and
Const. Trades Council, 670 F.2d 421, 429 (3d. Cir.)
("Generally the application of the per se rule has been
limited to those `classic' boycotts in which a gr oup of
business competitors seek to benefit economically by
excluding other competitors from the marketplace."), cert.
denied, 459 U.S. 916 (1982). The Supreme Court has been
cautious in extending the per se approach to claims that
fall outside certain previously enumerated categories of
liability. See, e.g., Bd. of Regents of the Univ. of Okla., 468
U.S. at 100 n.21 ("Judicial inexperience with a particular
arrangement counsels against extending the r each of the
per se rules."); Broad. Music, Inc. , 441 U.S. at 20 n.33 ("The
per se rule is not employed until after considerable
experience with the type of challenged restraint."); Maricopa
County Med. Soc'y, 457 U.S. at 344 ("Experience with a
particular kind of restraint enables the Court to predict
with confidence that the rule of reason will condemn it.").
Because of the fact specific inquiry involved in antitrust
analysis, the Supreme Court has recognized that claims not
within established categories of antitrust liability are more
appropriately analyzed under the rule of r eason where
14
courts can balance the effect of the alleged anti-competitive
activity against its competitive purposes within the relevant
product and geographic markets.
Acknowledging this judicial hesitance to extend the per
se rule to new categories of antitrust claims, we note there
are no Supreme Court cases nor any federal cases that
have applied the per se rule in similar factual
circumstances. The only two federal cases that have
analyzed similar group boycott and price fixing claims have
held that no-hire agreements executed upon the sale of a
corporation are analyzed under the rule of r eason. Coleman
v. Gen. Elec. Co., 643 F. Supp. 1229, 1243 (E.D. Tenn.
1986), aff 'd, 822 F.2d 59 (6th Cir. 1987); Cesnick, 490 F.
Supp. at 866-67. In Coleman, the 3M Corporation sold its
ceramics division to General Electric. 643 F . Supp. at 1243.
After closing, 3M and General Electric enter ed an
agreement in which 3M warranted that it would not rehire
any employee who voluntarily accepted a job with General
Electric. Several ceramic division employees br ought suit
alleging a group boycott that was per se invalid under S 1
of the Sherman Act. Disagreeing, the court reasoned that
"courts have refused to apply the `gr oup boycott'
designation where the effect is not to drive out competition
but to achieve some other goal, whether or not the goal
withstands the rule of reason analysis." Id. (citing Smith v.
Pro Football, Inc., 593 F.2d 1173, 1177-78 (D.C. Cir. 1979)).
Because the agreement only precluded the plaintiffs from
selling their services to one corporation, the court held it
only had a "de minimus impact on the employment market
in general," and the per se rule was "wholly inapplicable."
Id.
Similarly in Cesnick, former employees of Chrysler's Non-
Automotive Air Conditioning Division sued underS 1 when
Chrysler sold the division to the Fedders Corporation and
agreed not to rehire its employees. 490 F. Supp. at 866.
Although plaintiffs characterized the agr eement as a group
boycott and a per se violation of S 1, the court stated, "[i]n
the absence of any Supreme Court cases based on facts
similar to those of this case, this Court will not accept the
proposition that any conduct that can be characterized as
a group boycott is a per se violation." Id. The court
reasoned the Chrysler-Fedders'
15
agreement was designed to increase the likelihood that
Fedders would enjoy the services of the experienced
AirTemp employees, an obviously sound business
purpose. To the extent that the agreement effectively
restrained competition between Chrysler and Fedders
for employee services, a competition whose existence is
entirely conjectural, that effect was incidental as well
as de minimus.
Id. at 866-67.
Cognizant that there are no Supreme Court cases holding
no-hire agreements entered upon the legitimate sale of a
business to a third party are per se antitrust violations,2
and recognizing that the only two federal courts that have
addressed the issue have declined to apply the per se rule,
we hold the no-hire agreement here is more appropriately
analyzed under the rule of reason. As several courts have
recognized, the per se rules of illegality ar e the exception to
antitrust analysis and are only employed in certain
recognized categories. DeLong Equip. Co. v. Washington
Mills Abrasive Co., 887 F.2d 1499, 1506 (11th Cir. 1989),
cert. denied, 494 U.S. 1081 (1990).
The District Court properly characterized the no-hire
agreement as a common law covenant not to compete. As
we discuss, courts have uniformly found that covenants not
to compete should be examined under the rule of r eason.
See, e.g., McDonald v. Johnson & Johnson, 722 F.2d 1370
(11th Cir.), cert. denied, 469 U.S. 870 (1984); Consultants &
Designers, Inc., v. Butler Serv. Group, Inc. , 720 F.2d 1553
(11th Cir. 1983); Aydin Corp. v. Loral Corp., 718 F.2d 897
(9th Cir. 1983); Lektro-Vend Corp. v. Vendo Co., 660 F.2d
255 (7th Cir. 1981), cert. denied, 455 U.S. 921 (1982).
Therefore, we will analyze plaintif fs' claims under the rule
of reason so we can examine the effect of the defendants'
agreement within the wider context of its competitive
_________________________________________________________________
2. Similarly, we can find no cases in which a no-hire agreement entered
into upon the sale of a business to a third party that resulted in the
loss
of employee benefits was found to be a horizontal price fixing conspiracy.
See Broad. Music, Inc., 441 U.S. at 9-10 (quoting Topco Assocs., Inc., 405
U.S. at 607-08 ("It is only after considerable experience with certain
business relationships that courts classify them as per se violations.")).
16
purposes and its impact on the relevant pr oduct and
geographic markets.
D.
Under the rule of reason, we look at the totality of the
circumstances surrounding an alleged anti-competitive
activity, including facts peculiar to the relevant business, to
determine the "nature or purpose" of the allegedly illegal
restraint. Topco Assocs., Inc., 405 U.S. at 607. "The finder
of fact must decide whether the questioned practice
imposes an unreasonable restraint on competition, taking
into account a variety of factors, including specific
information about the relevant business, its condition
before and after the restraint was imposed and the
restraint's history, nature and ef fect." State Oil Co. v. Khan,
522 U.S. 3, 10 (1997) (citing Maricopa, 457 U.S. at 342). In
applying this test, we examine the competitive significance
of the alleged restraint to determine whether it has an anti-
competitive effect on the market and is an unr easonable
restraint on trade. Tunis Bros. Co. v. Ford Motor Co., 952
F.2d 715, 722 (3d Cir. 1991), cert. denied, 505 U.S. 1221
(1992). In this regard, covenants not to compete executed
upon the sale of a business to a third party ar e generally
not recognized as antitrust violations. See Bus. Elecs. Corp.,
485 U.S. at 730 n.4 ("The classic ancillary r estraint is an
agreement by the seller of a business not to compete within
the market."); Nat'l Soc'y of Prof 'l Eng'rs, 435 U.S. at 689;
Lektro-Vend Corp., 660 F.2d at 265 ("The recognized
benefits of reasonably enforced noncompetition covenants
are now beyond question."). As early as 1899, courts have
recognized that covenants not to compete ar e not violations
of S 1 of the Sherman Act because,
It [i]s of importance, as an incentive to industry and
honest dealing in trade, that, after a man ha[s] built up
a business with extensive good will, he should be able
to sell his business and good will to the best
advantage, and he could not do so unless he could
bind himself by an enforceable contract not to engage
in the same business in such a way as to prevent
injury to that which he was about to sell.
17
United States v. Addyston Pipe & Steel, 85 F . 271, 280 (6th
Cir. 1898), modified, 175 U.S. 211 (1899).
In this vein, courts have characterized covenants not to
compete executed upon the legitimate transfer of ownership
of a business as ancillary restraints on trade. Id.; see also
Bus. Elecs. Corp., 485 U.S. at 730 n.4; United States v.
Empire Gas Corp., 537 F.2d 296, 307 (8th Cir. 1976)
("Covenants not to compete executed in conjunction with
the purchase of a business allow the pur chaser to obtain
the value of the good will for which he has paid."), cert.
denied, 429 U.S. 1122 (1977). So long as these covenants
are reasonable in scope, there is no antitrust violation
under the rule of reason. See, e.g., Syntex Labs., Inc., v.
Norwich Pharmacal Co., 315 F. Supp. 45, 56 (S.D.N.Y.
1970) ("[I]t is hornbook law that a covenant not to compete
ancillary to the sale of a business (or part of a business),
when reasonably limited to time and territory, does not fall
within the prohibitions of the Sherman Act."), aff 'd, 437
F.2d 566 (2d Cir. 1971).
The District Court found,
In our view, the pre-closing and post-closing nets at
issue here are a subset of common law covenants not
to compete. Moreover, it is clear that the no-hire
agreements imposed restrictions which wer e "ancillary
to legitimate transactions," and thus properly
considered an ancillary restraint.
Eichorn, CA No. 96-3587, slip op. at *23 (internal citation
omitted).
We agree that the no-hire agr eement was not an
unreasonable restraint of trade underS 1 of the Sherman
Act. Frackowiak v. Farmers Ins. Co., Inc. , 411 F. Supp.
1309, 1318 (D.Kan. 1976) ("Numerous Courts have
recognized the general rule that agreements not to compete,
entered into in conjunction with the ter mination of
employment or sale of a business, do no offend the federal
antitrust provisions if they are r easonable in duration and
geographical limitation."). The primary purpose of the no-
hire agreement was to ensure that T exas Pacific Group, as
the purchaser of Paradyne, could retain the skilled services
of Paradyne's employees. Although the no-hir e agreement
18
precluded the employees from seeking employment at an
AT&T affiliate for 245 days, the primary purpose of the
agreement was not anti-competitive. Contrary to plaintiffs'
assertions, we can find no evidence to support their claim
that the no-hire agreement was executed for the improper
purpose of restraining trade and the cost of labor in the
telecommunications industry. The primary purpose of the
no-hire agreement was to ensure the successful sale of
Paradyne to Texas Pacific Group which r equired workforce
continuity.3 Any restraint on plaintiffs' ability to seek
employment at AT&T and any effect on their pension
bridging rights was incidental to the effective sale of
Paradyne.
Because the no-hire agreement was a legitimate ancillary
restraint on trade, we must determine whether the eight
month restriction from employment at an A T&T affiliate
was reasonable or whether it went further than necessary
to ensure the successful transition of ownership. Cesnick,
490 F. Supp. at 868 (quoting Syntex Labs. , 315 F. Supp. at
56) ("The question in every case [involving a covenant not to
compete ancillary to the sale of a business] is whether the
restraint is reasonably calculated to pr otect the legitimate
interests of the purchaser in what he has purchased, or
whether it goes so far beyond what is necessary as to
provide a basis for the inference that its real purpose is the
fostering of monopoly.").
We do not think the eight month restriction on re-
employment at an AT&T affiliate was unr easonably broad.
It is reasonable to believe Texas Pacific Group would
require the technical skills of these employees for at least
this eight month period, if not longer, to ensure a
successful transition of ownership from Lucent.
_________________________________________________________________
3. Plaintiffs contend the true motive of the no-hire agreement was not
work force continuity but eliminating pension benefits to reduce Texas
Pacific Group's costs. They argue that if work force continuity were
really
the motive, Texas Pacific Group could have offered enhanced benefits
packages to entice the work force to remain with Paradyne rather then
simply agreeing to cancel their AT&T pension benefits. But the existence
of alternative means to achieve a legitimate business goal does not in
itself mean the defendants' chosen course of action was uncompetitive
and improper.
19
Furthermore, the no-hire agr eement only precluded the
plaintiffs from working at Lucent or an A T&T affiliate. The
employees were free to leave Texas Pacific Group and seek
employment elsewhere within the telecommunications
industry. Significantly, there is no evidence in the record to
support plaintiffs' claim that AT&T was the only employer
in the market to whom they could sell their services. As the
District Court found, there are over twenty other
telecommunications firms that compete for plaintiffs'
technical services. Furthermore, the market for plaintiffs
with more generalized educational and work backgrounds
includes "a vast number of jobs" nationwide. Eichorn, CA
No. 96-3587, slip op. at *27-28 n.17.
Therefore, we hold the no-hire agr eement was not an
unreasonable restraint on trade. As an ancillary covenant
not to compete, the no-hire agreement was reasonable in its
restrictions on the plaintiffs' ability to seek employment
elsewhere. Nat'l Soc'y of Prof 'l Eng'rs, 435 U.S. at 689.
While the no-hire agreement essentially barred the
plaintiffs' ability to retain their desirable AT&T pension
benefits, S 1 of the Sherman Antitrust Act is not the
appropriate vehicle here for redr ess. In formulating their
claim in antitrust parlance, plaintiffs have argued their
inability to work at their former jobs was a manifestly
uncompetitive restraint on trade within the r elevant
market. We disagree. In order to advance their antitrust
claim, plaintiffs are forced to define narrowly the relevant
market affected by the defendants' activity as,
potential employers within a 35 mile radius of
Holmdel/Middletown with the capacity and capability
of employing or utilizing large numbers of persons with
specialized experience in high speed data
communications equipment of the sort Paradyne
develops and makes . . . who can provide continuity of
the pension benefits which have accrued to [plaintiffs]
under the AT&T and/or Lucent pension plans.
Eichorn, CA No. 96-3587, slip op. at *29-30 n.18.
We believe this narrow market definition is inappropriate.
As we recently stated, "[t]he outer boundaries of a product
market are determined by the reasonable interchangeability
20
of use or the cross-elasticity of demand between the
product itself and substitutes for it." Queen City Pizza, Inc.,
v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir.) (quoting
Brown Shoe Co., 370 U.S. at 325), r eh'g denied, 129 F.3d
724 (1997), cert. denied, 523 U.S. 1059 (1998). "The test for
a relevant market is not commodities [in this case technical
jobs] reasonably interchangeable by a particular plaintiff,
but `commodities [technical employees] r easonably
interchangeable by consumers [technology companies] for
the same purposes.' " Id. at 438 (quoting United States v.
E.I. DuPont Nemours and Co., 351 U.S. 377, 395 (1956)).
Additionally, we have said "the relevant geographic market
is the area in which a potential buyer may rationally look
for the goods or services he or she seeks." Pa. Dental Assn.
v. Med. Serv. Assn. of Pa., 745 F.2d 248, 260 (3d Cir. 1984),
cert. denied, 471 U.S. 1016 (1985); see also Brokerage
Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 515
(3d Cir. 1998). This geographic market must"conform to
commercial reality." Acme Mkts., Inc. v. Wharton Hardware
& Supply Corp., 890 F. Supp. 1230, 1239 (D.N.J. 1995)
(citing Brown Shoe Co., 370 U.S. at 336).
By defining the market so narrowly that it only includes
the defendants, plaintiffs' proffer ed geographic and product
markets are unrealistic.4 The market for the plaintiffs' labor
is much broader. We agree with the District Court that the
relevant market is not limited to AT&T and its affiliates but
rather includes all those technology companies and
network services providers who actively compete for
employees with the skills and training possessed by
plaintiffs.5
_________________________________________________________________
4. Plaintiffs argue they are under no obligation to define the relevant
product and geographic markets because the defendants' conduct per se
violated the antitrust laws. See Jefferson Parish Hosp. Dist. No. 2 v.
Hyde, 466 U.S. 2, 15 (1984). Because we find this case is governed
under the rule of reason, plaintiffs necessarily have the affirmative
burden of proving the relevant pr oduct and geographic markets affected
by the defendants' alleged uncompetitive activity. Ideal Dairy Farms Inc.
v. John LaBatt, Ltd., 90 F.3d 737, 743 (3d Cir. 1996) (holding plaintiffs
must present evidence from which rational person could conclude the
relevant markets are actually what plaintiffs allege them to be).
5. As previously noted, the District Court found there are over twenty
companies that compete for employees with plaintif fs' technical skills.
Additionally there are a "vast number of jobs" nationwide for plaintiffs
with more generalized work and educational experience. Eichorn, CA No.
96-3587, slip op. at *27-28 n.17.
21
Because market realities reflect that the no-hire
agreement did not have a significant anti-competitive effect
on the plaintiffs' ability to seek employment within this
broader telecommunications market nor that itfixed the
cost of labor in the industry, we conclude it was not an
antitrust violation under the rule of reason. 6 The antitrust
laws were not designed to protect every uncompetitive
activity, but rather only those activities that have anti-
competitive effects on the market as a whole. Broad. Music,
Inc., 441 U.S. at 23 ("Not all arrangements among actual or
potential competitors that have an impact on price are per
se violations of the Sherman Act or even unr easonable
restraints."). While plaintiffs' loss of their pension benefits
gives us pause, we believe they can seek redr ess through
other statutes more adequately suited to their injury than
S 1 of the Sherman Antitrust Act.7 Chambless v. Masters,
_________________________________________________________________
6. Plaintiffs also attempt to characterize defendants' activity as an
illegal
exercise of relational market power. See Sullivan & Grimes, The Law of
Antitrust: An Integrated Handbook S 2.4e2iv (2000); Warren S. Grimes,
Market Definition in Antitrust Claims: Relational Market Power and the
Franchisor's Conflict of Interest, 67 Antitrust L.J. 243 (1999). They
contend AT&T offered a unique pension benefits program that essentially
locked the plaintiffs into working for them. See Eastman Kodak Co. v.
Image Technical Services, 504 U.S. 451 (1992). Claiming that AT&T was
the only telecommunications company within the industry that offered
such an extensive benefits program, plaintif fs maintain they were
prevented from seeking employment at any other company, since to do
so would result in the loss of valuable pension benefits. According to
this
argument, the no-hire agreement that precluded plaintiffs from working
at an AT&T affiliate prevented them fr om working at the only company
within the industry where they could receive these unique benefits. See,
e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585
(1985); FTC v. Texaco, Inc., 393 U.S. 223 (1968). Central to plaintiffs'
argument is the contention that the AT&T pension benefits are unique
in the industry. We see no evidence for this in the record. Therefore, we
need not address whether to extend the r elational market power analysis
to the facts of this case.
7. Although the no-hire agreement ef fectively cancelled the plaintiffs'
AT&T benefits, these plaintiffs were free to seek employment elsewhere
in the industry where pension benefits may have been available. But
even though defendants' activity was not a pricefixing conspiracy under
the Sherman Act, it may give rise to liability under S 510 of ERISA where
a different analysis is involved.
22
Mates & Pilots Pension Plan, 772 F.2d 1032, 1042 (2d Cir.
1985) ("To the extent that the . . . [plaintiff 's antitrust
claim] is based on diminished retirement benefits, it is
essentially an ERISA matter."), cert. denied, 475 U.S. 1012
(1986).
IV.
We now turn to whether the no-hir e agreement, which
effectively cancelled plaintiffs' A T&T pension bridging
rights, violated S 510 of ERISA. Section 510 of ERISA
provides:
It shall be unlawful for any person to dischar ge, fine,
suspend, expel, discipline or discriminate against a
participant or beneficiary for exercising any right to
which he is entitled under the provisions of the
employee benefit plan . . . for the purpose of interfering
with the attainment of any right to which such
participant may become entitled under the plan.
29 U.S.C. S 1140 (1994).
Congress enacted S 510 "primarily to prevent
unscrupulous employers from discharging or harassing
their employees in order to keep them fr om obtaining
vested pension benefits." DeWitt v. Penn-Del Directory Corp.,
106 F.3d 514, 522 (3d Cir. 1997). W e have held an
employer violates S 510 when it acts with the specific intent
to interfere with an employee's right to benefits. DiFederico
v. Rolm Co., 201 F.3d 200, 204-05 (3d Cir . 2000). To prove
a prima facie case under S 510 a plaintif f must show (1)
that an employer took specific actions (2) for the purpose of
interfering (3) with an employee's attainment of pension
benefit rights. Gavalik v. Cont'l Can Co., 812 F.2d 834, 852
(3d. Cir.), cert. denied, 484 U.S. 979 (1987). We held in
DiFederico that once a plaintiff makes a prima facie
showing, the employer has the burden of articulating a
legitimate non-discriminatory reason for his conduct. Then,
the burden shifts back to the plaintiff to show that the
employer's rationale was not pre-textual and that the
cancellation of benefits was the "deter minative influence"
on the employer's actions. DiFederico, 201 F .3d at 205.
23
The crucial threshold issue in this case is whether
defendants AT&T and Lucent8 had the specific intent to
interfere with the Paradyne employees' pension benefit
rights or whether the cancellation of the bridging rights was
merely an incidental by-product of the sale of Paradyne.
DeWitt, 106 F.3d at 523 ("[E]mployee must show that the
employer made a conscious decision to interfer e with the
employee's attainment of pension eligibility or additional
benefits."). Plaintiffs allege the no-hir e agreement and its
eight month restriction on re-employment was enacted for
"the direct and immediate objective and with the singular
purpose of eliminating the Paradyne pensions." In support
of their claim, plaintiffs argue the eight month restriction
on re-employment is suspiciously close to the six month
vesting period of the AT&T pension plan and that this
temporal proximity provides circumstantial evidence that
the cancellation of the benefits was a motivating factor in
the timing of the no-hire agreement. Additionally, they
point to the role of Paradyne's Vice-Pr esident of Human
Resources in proposing Texas Pacific Group's ultimate
pension package for the Paradyne employees. Plaintif fs also
cite a confidential memorandum between Larry Knoch and
Linda Roussau of Lucent Technologies, which acknowledges
the eight month restriction in the no-hir e agreement had
the practical effect of cancelling the Paradyne employees'
pension rights. Finally, plaintiffs point to the economic
benefits that both Lucent and AT&T received from the no-
hire agreement, specifically that neither defendant was
required to pay for pension benefits, as evidence of specific
intent to interfere with an ERISA pension plan in violation
of S 510. Turner v. Schering-Plough Corp., 901 F.2d 335, 348
(3d. Cir. 1990) (savings to an employer that result from
employees' termination might be viewed as a motivating
factor sufficient to satisfy the intent element ofS 510
liability).
_________________________________________________________________
8. In their complaint plaintiffs did not allege that Texas Pacific Group
violated S 510 of ERISA. App. at 92a, 157a ("Plaintiffs demand judgment
. . . declaring the refusal of AT&T and Lucent to employ members of the
Class until after the expiration of their pension bridging rights to be in
violation of ERISA section 510, 29 U.S.C. S 1140.").
24
Although the District Court found this evidence
insufficient to support a finding of specific intent to
interfere with the plaintiffs' benefit plans,9 Eichorn, CA No.
96-3587, slip op. at *9-12, we believe at this stage of the
proceedings plaintiffs have presented sufficient
circumstantial evidence of intent to inter fere with their
pension rights to create a genuine issue of material fact.10
Turner, 901 F.2d at 347 ("Employee may show [a violation
of S 510] . . . by circumstantial evidence."). As we held in
DeWitt, "[i]n most cases, . . .`smoking gun' evidence of
specific intent to discriminate does not exist. As a result,
the evidentiary burden in these cases may also be satisfied
by the introduction of circumstantial evidence." 106 F.3d at
523 (quoting Gavalik, 812 F.2d at 851). Of course we
express no opinion whether plaintiffs will prevail at trial
under the preponderance of evidence standar d for S 510
claims. DiFederico, 201 F.3d at 205 ("[If] employer carries
its burden, the plaintiff then must persuade the court by a
preponderance of the evidence that the employer's
_________________________________________________________________
9. In its initial order granting summary judgment on the antitrust
claims, the District Court found plaintiffs pr oduced enough evidence to
survive a motion for summary judgment on the ERISA claim. Upon
reconsideration, the District Court reversed its position stating it
improperly relied on circumstantial evidence that the defendants
experienced an overall economic gain from the no-hire agreement and
sale of Paradyne. In re-examining the r elevant case law, the court said
the proper inquiry should focus on the r eduction in actual benefit
expenses caused by the termination of employees, rather than a broader
assessment of the overall financial impact of ter mination on the
employer's business. See Clark v. Coates & Clark , 990 F.2d 1217, 1224
(11th Cir. 1993) ("[M]easures designed to reduce costs in general that
also result in an incidental reduction in benefits expenses do not suggest
discriminatory intent."). We agree with the Eleventh Circuit. But we hold
that plaintiffs have produced sufficient evidence that both AT&T and
Lucent received a direct and substantialfinancial gain from the
cancellation of pension benefits, namely they wer e relieved from paying
large sums for the pension benefits of the several Paradyne employees
affected by the agreement.
10. We believe a genuine issue of material fact exists only with the Pre
and Post-Closing Nets' effect on the Paradyne employees' pension rights.
Because the Preliminary Net did not prohibit plaintiffs from receiving
their pension benefits as employees of Lucent T echnologies, it did not
violate S 510 of ERISA.
25
legitimate reason is pre-textual."). Because plaintiffs have
submitted sufficient prima facie evidence to withstand
defendant's motion for summary judgment, we will r everse
and remand for further proceedings.
V.
Plaintiffs contend the District Court err ed when it denied
their motion for additional discovery for a contemplated
motion for class certification on their ERISAS 510 claim. In
denying plaintiffs' motion the District Court stated, "[W]e do
not find that . . . Third Circuit[ ] . . . [precedent] requires
this Court to keep this matter open so that plaintif fs may
engage in discovery and motion practice on the issue of
class certification when the underlying claims have been
dismissed with prejudice." Eichor n, CA No. 96-3887, slip
op. at *18. Because we hold plaintiffs have submitted
sufficient prima facie evidence to support their ERISA S 510
claim, we believe they may be entitled to additional
discovery to pursue a possible motion for class certification.
Accordingly, we direct the District Court on remand to
address plaintiffs' motion for additional discovery and any
future motion for class certification under the requirements
of Fed. R. Civ. P. 23(c).
VI.
For these reasons, we will affirm the District Court's
dismissal of plaintiffs' antitrust claims. W e will reverse the
grant of summary judgment on plaintiffs' ERISAS 510
claims. We will also reverse the Court's order denying
plaintiffs' motion for additional discovery for an anticipated
class certification motion and, on remand, direct the
District Court to address this issue in accor dance with the
requirements of Fed. R. Civ. P. 23(c).
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
26
| {
"pile_set_name": "FreeLaw"
} |
37 A.3d 343 (2012)
Jonathan DOYLE
v.
COMMISSIONER, NEW HAMPSHIRE DEPARTMENT OF RESOURCES AND ECONOMIC DEVELOPMENT and another.
No. 2011-420.
Supreme Court of New Hampshire.
Argued: November 10, 2011.
Opinion Issued: January 13, 2012.
*345 NH Civil Liberties Union Foundation, of Concord (Barbara R. Keshen on the brief and orally), and Backus, Meyer and Branch, LLP, of Manchester (Jon Meyer on the brief), for the plaintiff.
Michael A. Delaney, attorney general (Matthew G. Mavrogeorge, assistant attorney general, on the brief and orally), for the defendants.
DUGGAN, J.
The plaintiff, Jonathan Doyle, appeals an order of the Superior Court (Smukler, J.) granting summary judgment to the defendants, the Commissioner of the New Hampshire Department of Resources and Economic Development and the Monadnock State Park Manager (collectively, DRED), and denying Doyle's motion for summary judgment. We reverse and remand.
The record supports the following facts. Mount Monadnock is a 3,165-foot mountain within Monadnock State Park, which is owned and managed by DRED. With 100-mile views to points in all six New England states, Mount Monadnock is said to be the second most climbed mountain in the world. Aside from hiking the mountain, visitors to Monadnock State Park may camp, picnic, Nordic ski and snowshoe. Mount Monadnock has been designated a National Natural Landmark.
On September 6, 2009, Doyle decided to film himself dressed as "Bigfoot" on Mount Monadnock. Bigfoot, also known as Sasquatch, is "a large, hairy humanlike creature believed by some persons to exist in the northwestern United States and western Canada." 10 The New Encyclopedia Britannica 464 (15th ed. 2010). "The British explorer David Thompson is sometimes credited with the first discovery (in 1811) of a set of Sasquatch footprints...." Id. Since then, "[v]isual sightings and even alleged photographs and filmings (notably *346 by Roger Patterson at Bluff Creek, Calif., in 1967) have also contributed to the legend." Id. However, "most scientists do not recognize the creature's existence." Id.
To execute his planned filming of Bigfoot, Doyle purchased a costume resembling an ape and then climbed the mountain with his girlfriend. At the top, he put on the Bigfoot costume and filmed conversations he had with other hikers. After about twenty minutes, he removed the costume and descended the mountain. On his way down, he encountered two park staff members, and persuaded them to write a note saying there had been a "Bigfoot sighting" on the mountain. The staff members later said they were just playing along with what they thought was a college project. After leaving the park, Doyle went to both the local police station and State Police in Keene to tell them that there had been a Bigfoot sighting on Mount Monadnock.
Pleased that his Bigfoot hoax resulted in hikers "interacting, laughing, and coming together as a community," Doyle decided to stage another Bigfoot event on the mountain. To raise awareness of his next appearance, he had a friend interview him about the first event and write a press release, which Doyle gave to the Keene Sentinel. The newspaper printed a story that said Doyle would again climb the mountain dressed as Bigfoot. Doyle also promoted this upcoming appearance on his website.
On September 17, 2009, the Monadnock State Park Manager, Patrick Hummel, sent an email to his supervisor, Brian Warburton, informing him of Doyle's activities. Hummel said that Doyle "never ran anything by [him]." He expressed annoyance over the fact that newspapers had called him to ask whether the Bigfoot story was legitimate. He also told Warburton that the Bigfoot party would soon return, and because he believed they had "stepped over the line" he would intercept them prior to their ascent.
On September 19, 2009, Doyle and five others returned to Mount Monadnock to stage another Bigfoot filming. They hiked up to the Halfway House, a trail junction, and prepared to perform. Doyle and two of his friends remained in plain clothes, while the others dressed up as Bigfoot, Yoda and a pirate. Doyle filmed a few scenes and interviewed passing hikers. Additionally, several people stopped to watch them filming.
Shortly thereafter, Hummel approached Doyle and asked him whether he had a special-use permit. Doyle said he did not, and Hummel told him that he had to leave the mountain. Doyle and his friends complied.
Under New Hampshire Administrative Rule, Res 7306.01(a), a person must obtain a special-use permit to use DRED properties for "[h]olding organized or special events which go beyond routine recreational activities." To obtain a permit, the applicant must apply for the permit at least thirty days prior to the event, pay a $100 fee and obtain a $2,000,000 insurance policy that covers the State of New Hampshire. N.H. Admin. Rules, Res 7306.01 to.04. Once these requirements are met, DRED "shall approve [the] application." N.H. Admin. Rules, Res 7306.04(a).
Doyle subsequently brought a declaratory judgment action against DRED, arguing that Res 7306.01(a) violates the right to free speech contained in both Part I, Article 22 of the New Hampshire Constitution and the First Amendment to the United States Constitution. Doyle also sought a permanent injunction, nominal damages, costs and fees. The trial court granted summary judgment in favor of DRED, ruling that Doyle failed to show that Res *347 7306.01(a) "is unconstitutional either facially or as applied." On appeal, Doyle argues the trial court erred because Res 7306.01(a) is void for vagueness, overbroad on its face and not narrowly tailored, and also overbroad as applied to Doyle's small-scale project.
I. Analysis
Part I, Article 22 of our State Constitution provides: "Free speech and liberty of the press are essential to the security of freedom in a state: They ought, therefore, to be inviolably preserved." N.H. CONST. pt. I, art. 22. Similarly, the First Amendment to the United States Constitution prevents the passage of laws "abridging the freedom of speech." U.S. CONST. amend. I. It applies to the states through the Fourteenth Amendment to the United States Constitution. Lovell v. Griffin, 303 U.S. 444, 450, 58 S.Ct. 666, 82 L.Ed. 949 (1938).
We first address Doyle's claims under our State Constitution, State v. Ball, 124 N.H. 226, 231, 471 A.2d 347 (1983), and cite federal opinions for guidance only. Id. at 232-33, 471 A.2d 347. We review the constitutionality of state regulations de novo. See N.H. Assoc. of Counties v. State of N.H., 158 N.H. 284, 288, 965 A.2d 1012 (2009).
The speech at issue here is unquestionably protected under our State Constitution. Even though Doyle's activities may have been nothing more than a playful hoax, "[w]holly neutral futilities ... come under the protection of free speech as fully as do Keats' poems or Donne's sermons." United States v. Stevens, ___ U.S. ___, ___, 130 S.Ct. 1577, 1591, 176 L.Ed.2d 435 (2010) (quotation omitted; alterations in original). Only narrow categories of speech, such as defamation, incitement and pornography produced with real children, fall outside the ambit of the right to free speech. See State v. Zidel, 156 N.H. 684, 686, 940 A.2d 255 (2008). Furthermore, expression by means of motion pictureswhich this plainly wasis protected speech, State v. Theriault, 158 N.H. 123, 127, 960 A.2d 687 (2008), as is performance art, see Schad v. Mount Ephraim, 452 U.S. 61, 65-66, 101 S.Ct. 2176, 68 L.Ed.2d 671 (1981). We must, therefore, determine whether the permit scheme regulating Doyle's speech violates the right to free speech.
We first address Doyle's facial challenge. See State v. Hynes, 159 N.H. 187, 200, 978 A.2d 264 (2009). To prevail, Doyle must either establish: (1) that no set of circumstances exists under which Res 7306.01(a) would be valid; or (2) that Res. 7306.01(a) is overbroad in that "a substantial number of its applications are unconstitutional, judged in relation to the [regulation's] plainly legitimate sweep." Stevens, 130 S.Ct. at 1587. Doyle focuses his challenge on the latter, overbreadth, and we thus limit our discussion accordingly.
To determine whether a substantial number of a regulation's applications are unconstitutional, we must scrutinize it under the applicable constitutional standard. As the Supreme Court has explained, "the standards by which limitations on speech must be evaluated differ depending on the character of the property." Frisby v. Schultz, 487 U.S. 474, 479, 108 S.Ct. 2495, 101 L.Ed.2d 420 (1988) (quotation omitted). Thus, at the outset, we must analyze the character of the government property at issue.
Government property generally falls into three categoriestraditional public forums, designated public forums and limited public forums. Pleasant Grove City v. Summum, 555 U.S. 460, 469-70, 129 S.Ct. 1125, 172 L.Ed.2d 853 (2009). A *348 traditional public forum is government property "which by long tradition or by government fiat [has] been devoted to assembly and debate." Cornelius v. NAACP Legal Defense & Ed. Fund, 473 U.S. 788, 802, 105 S.Ct. 3439, 87 L.Ed.2d 567 (1985) (quotation omitted). In such forums, the government may impose reasonable time, place and manner restrictions. Summum, 555 U.S. at 469, 129 S.Ct. 1125. If a restriction is content-based, it must be narrowly tailored to serve a compelling government interest. Id. If a restriction is content-neutral, it must satisfy a slightly less stringent testit must be narrowly tailored to serve a significant government interest. Ward v. Rock Against Racism, 491 U.S. 781, 791, 109 S.Ct. 2746, 105 L.Ed.2d 661 (1989). Content-neutral restrictions, however, must also leave open ample alternative channels for communication. Id.
A designated public forum is government property "that the State has opened for expressive activity by part or all of the public." International Soc. for Krishna Consciousness, Inc. v. Lee, 505 U.S. 672, 678, 112 S.Ct. 2701, 120 L.Ed.2d 541 (1992). Regulations of speech on this type of property are "subject to the same limitations as that governing a traditional public forum." Id.
Finally, a limited public forum is government property "limited to use by certain groups or dedicated solely to the discussion of certain subjects." Summum, 555 U.S. at 470, 129 S.Ct. 1125. Regulations of speech on this type of property are judged under a far more lenient standardthey need only be "reasonable and viewpoint neutral." Id.
During the superior court proceedings, DRED repeatedly asserted that Mount Monadnock is a traditional public forum. The trial court premised its ruling on DRED's representation, and Doyle relied on it. Operating on this assumption, neither party addressed the issue on appeal. We requested supplemental memoranda on the issue, and DRED now argues that Mount Monadnock is either a limited public forum or a nonpublic forum. Doyle argues that it is a traditional public forum, which has been his position throughout this litigation.
We have long held that "we will not consider issues raised on appeal that were not presented in the lower court." LaMontagne Builders v. Brooks, 154 N.H. 252, 258, 910 A.2d 1162 (2006) (quotation omitted). But see Sup.Ct. R. 16-A (plain error rule). However, we have also held that "where the trial court reaches the correct result on mistaken grounds, we will affirm if valid alternative grounds support the decision." State v. Nightingale, 160 N.H. 569, 575-76, 8 A.3d 136 (2010) (quotation omitted).
It is at least arguable that the trial court here reached the correct result based upon the mistaken conclusion that Mount Monadnock is a traditional public forum. See Boardley v. Dept. of Interior, 615 F.3d 508, 515 (D.C.Cir.2010) ("[M]any national parks include areaseven large areas, such as a vast wilderness preservewhich never have been dedicated to free expression and public assembly, would be clearly incompatible with such use, and would therefore be classified as nonpublic forums."). Thus, there may be a valid alternative ground to support its decision. Even so, we do not mechanically follow the "alternative grounds" rule. For example, in State v. Santana, 133 N.H. 798, 807-09, 586 A.2d 77 (1991), we declined to address an alternative ground for upholding the trial court's decision because the State did not raise the issue at trial and thus "the defendant ... never had the opportunity to consider that legal issue or the development *349 of facts that might or might not have supported [his] argument."
Here, there is equally good reason not to follow the alternative grounds rule. Because of DRED's representations at trial, Doyle had no reason to believe that there was any dispute as to whether Mount Monadnock is a traditional public forum, and thus no reason to develop the record to support such a ruling. Were we to now address DRED's argument, Doyle's reasonable reliance on DRED's representation would work to his detriment, while DRED's failure to address a legal issue at trial would now work to its advantage. Moreover, we prefer that issues like this be raised at trial "because trial forums should have a full opportunity to come to sound conclusions and to correct errors in the first instance." Tiberghein v. B.R. Jones Roofing Co., 151 N.H. 391, 393, 856 A.2d 21 (2004) (quotation omitted). Accordingly, based upon DRED's representations at trial, we assume, without deciding, that Mount Monadnock is a traditional public forum and decline to independently examine the issue. See Mahoney v. Doe, 642 F.3d 1112, 1117-18 (D.C.Cir.2011) (noting that the District of Columbia had conceded at trial that the 1600 block of Pennsylvania Avenue is a traditional public forum and that, absent exceptional circumstances, the court would not consider issues not raised at trial).
Traditional public forums are fundamental to the continuing vitality of our democracy, for "time out of mind, [they] have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions." Boos v. Barry, 485 U.S. 312, 318, 108 S.Ct. 1157, 99 L.Ed.2d 333 (1988) (quotation omitted). As such, "government entities are strictly limited in their ability to regulate private speech in [traditional public forums]." Summum, 555 U.S. at 469, 129 S.Ct. 1125. The parties here agree that the regulation at issue is content-neutral, and thus, as noted above, it must be narrowly tailored to serve a significant government interest. Ward, 491 U.S. at 791, 109 S.Ct. 2746. Therefore, we must first determine whether a significant government interest underlies Res 7306.01(a) and, if so, whether it is narrowly tailored to achieve that interest.
A. Significant Government Interest
DRED claims that the purpose of the regulation is to allow it to manage the varied and competing uses of park resources and to mitigate the impacts of commercial events. These interests are certainly significant. See Forsyth County v. Nationalist Movement, 505 U.S. 123, 130, 112 S.Ct. 2395, 120 L.Ed.2d 101 (1992) ("[I]n order to regulate competing uses of public forums, [the government] may impose a permit requirement on those wishing to hold a march, parade, or rally...."); Clark v. Community for Creative Non-Violence, 468 U.S. 288, 299, 104 S.Ct. 3065, 82 L.Ed.2d 221 (1984) ("[T]here is a substantial Government interest in conserving park property ...").
DRED also claims that it has a significant interest in protecting visitors from unwelcome or unwarranted interference, annoyance, or danger. It is unclear whether this constitutes a significant government interest. Compare F.C.C. v. Pacifica Foundation, 438 U.S. 726, 749 n. 27, 98 S.Ct. 3026, 57 L.Ed.2d 1073 (1978) ("Outside the home, the balance between the offensive speaker and the unwilling audience may sometimes tip in favor of the speaker, requiring the offended listener to turn away."), and Coates v. City of Cincinnati, 402 U.S. 611, 615, 91 S.Ct. 1686, 29 L.Ed.2d 214 (1971) ("The First and Fourteenth Amendments do not permit a State to make criminal the exercise of the right of assembly simply because its exercise *350 may be `annoying' to some people."), with Schaumburg v. Citizens for Better Environ., 444 U.S. 620, 636, 100 S.Ct. 826, 63 L.Ed.2d 73 (1980) (stating that the government has a substantial interest in protecting the public from "fraud, crime and undue annoyance"), and State v. Brobst, 151 N.H. 420, 424, 857 A.2d 1253 (2004) ("Certainly the State has a legitimate interest in protecting citizens from the effects of certain types of annoying or alarming telephone calls, such as the terror caused to an unsuspecting person when he or she answers the telephone, perhaps late at night, to hear nothing but a tirade of threats, curses, and obscenities, or, equally frightening, to hear only heavy breathing or groaning." (quotation omitted)). However, because we ultimately conclude that the regulation is not narrowly tailored, we assume, without deciding, that preventing such annoyance is a significant government interest.
B. Narrowly Tailored
Narrow tailoring is satisfied so long as the regulation promotes a significant government interest that would be achieved less effectively absent the regulation. Ward, 491 U.S. at 799, 109 S.Ct. 2746. The regulation may not burden substantially more speech than is necessary to further the government's interest, but it "need not be the least restrictive or least intrusive means" of doing so. Id. at 798-99, 109 S.Ct. 2746. Also, "[the] [g]overnment may not regulate expression in such a manner that a substantial portion of the burden on speech does not serve to advance its goals." Id.
To determine whether the regulation meets this standard, we must first establish its scope. We ascribe the plain and ordinary meaning to regulatory text. See Kenison v. Dubois, 152 N.H. 448, 451, 879 A.2d 1161 (2005). On its face, Res 7306.01(a) requires a permit for "organized or special events" that go "beyond routine recreational activities." These terms are not defined in the regulation and thus we look to Webster's Third New International Dictionary (unabridged ed. 2002) for guidance.
Webster's defines "event" as "something that happens." Id. at 788. It defines "special" as "distinguished by some unusual quality," id. at 2186, and "organize," in relevant part, as "to arrange by systemic planning and coordination of individual effort," id. at 1590. Thus, "organized or special events" are happenings that are either coordinated and planned or unusual.
Webster's defines "routine" as "of a commonplace or repetitious character." Id. at 981. As such, "routine recreational activities" are those activities that are commonly or repeatedly done at the park. According to DRED and Mount Monadnock's website, those activities include camping, hiking, picnicking, Nordic skiing and snowshoeing.
We thus interpret Res 7306.01(a) to require a permit when a person does something that is either unusual or planned and is not one of the listed activities. As interpreted, the regulation applies to a broad range of people and types of speech.
As to people, the text of Res 7306.01(a) applies without regard to the number of people attending an event. Indeed, DRED has admitted that the "amount of people participating in the event does not affect whether it is considered an `organized event.'" Therefore, the regulation applies equally to large groups, small groups and even one person. This is problematic because "[p]ermit schemes and advance notice requirements that potentially apply to small groups are nearly always overly broad and lack narrow tailoring." *351 American-Arab Anti-Discrimin. Committee v. City of Dearborn, 418 F.3d 600, 608 (6th Cir.2005); accord Berger v. City of Seattle, 569 F.3d 1029, 1037-40 (9th Cir.2009); Knowles v. City of Waco, Texas, 462 F.3d 430, 436 (5th Cir.2006); Cox v. City of Charleston, SC, 416 F.3d 281, 284-87 (4th Cir.2005); Douglas v. Brownell, 88 F.3d 1511, 1524 (8th Cir.1996); Community for Creative Non-Violence v. Turner, 893 F.2d 1387, 1392 (D.C.Cir.1990).
Here, requiring a permit for one personfor example, a lone protestor holding a sign at the top of the mountaindoes not further DRED's interests. A one-person event will not require the allocation of competing park resources, nor is one person likely to cause any unwarranted or unwelcome annoyance. See Boardley, 615 F.3d at 522 ("The most important function of a permit application is to provide park officials with the forewarning necessary to coordinate multiple events, assemble proper security, and direct groups to a place and time where interference with park visitors and programs will be minimized. These needs arise routinely with large-scale events, but only rarely with small ones."); Grossman v. City of Portland, 33 F.3d 1200, 1207 (9th Cir.1994) ("[W]e simply cannot agree that six to eight people carrying signs in a public park constituted enough of a threat to the safety and convenience of park users . . . to justify the [the permitting scheme at issue]."); see also American-Arab Anti-Discrimin., 418 F.3d at 608 ("In most circumstances, the activity of a few people peaceably using a public right of way for a common purpose or goal does not trigger the [government's] interest in safety and traffic control."). It is primarily large groups that are likely to implicate these interests, for by their sheer size they are likely to cause annoyance and to put a large burden on park resources. See Boardley, 615 F.3d at 522.
Perhaps requiring very small groups to obtain permits would be constitutionally permissible where "the public space in question [is] so small that even a relatively small number of people could pose a problem of regulating competing uses." Long Beach Area Peace v. City of Long Beach, 574 F.3d 1011, 1034 (9th Cir.2009). That is not, however, the case hereMount Monadnock is quite large, and the permit requirement applies to the entire park. Furthermore, even if requiring a single person to obtain a permit would occasionally serve DRED's significant interests, "it does so at too high a cost, namely, by significantly restricting a substantial quantity of speech that does not impede [DRED's] permissible goals." Community for Creative Non-Violence v. Turner, 893 F.2d at 1392.
As to types of speech, Res 7306.01(a) applies to a wide range of speech that has no relation to DRED's significant interests. For example, it would apply to a church group of just six people who organized a hike up the mountain to hold a short, private prayer service at the summit. This event would be unlikely to cause any disturbance or annoyance to park visitors. And, six people praying on the mountain would have a de minimis effect, if any, on park resources.
More troubling is that this regulation needlessly stifles political speech, an integral component to the operation of the system of government established by our Constitution. See Buckley v. Valeo, 424 U.S. 1, 14, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) (construing the Federal Constitution). For example, if a group of three people supporting a political candidate were to climb the mountain and walk around the summit with campaign signs, they would need a permit. This event is specialit is not every day that political supporters climb the mountain to spread *352 their message, and organizing on the mountain for a political purpose is plainly not a routine recreational activity. Requiring a permit for such an event is wholly unnecessarya group of three people carrying signs will hardly burden park resources and will not likely cause unwelcome or unwarranted annoyance. Res 7306.01(a), therefore, burdens substantially more speech than is necessary to serve DRED's interests. Ward, 491 U.S. at 799, 109 S.Ct. 2746.
Beyond the broad coverage of people and types of speech, Res 7306.01(a)'s thirty-day notice requirement raises additional constitutional concerns. Courts have held that similar (and shorter) notice periods violate the right to free speech. See, e.g., American-Arab Anti-Discrimin., 418 F.3d at 605-07 (striking down a thirty-day notice requirement because it was overly expansive and not narrowly tailored); Church of the Amer., Ku Klux Klan v. City of Gary, IN, 334 F.3d 676, 683 (7th Cir.2003) (holding that a "45-day period selected by the City of Gary and made applicable to all permit seekers whether or not any danger of violence is perceived is arbitrary" and, therefore, violates the right to free speech); Douglas, 88 F.3d at 1524 ("The five-day notice requirement restricts a substantial amount of speech that does not interfere with the city's asserted goals of protecting pedestrian and vehicle traffic, and minimizing inconvenience to the public. Accordingly, we conclude that the parade ordinance is not narrowly tailored."); N.A.A.C.P., Western Region v. City of Richmond, 743 F.2d 1346, 1357 (9th Cir. 1984) ("[W]e hold that the City of Richmond's requirement of 20 days' advance notice to receive a parade permit violates the First Amendment.").
Indeed, advance notice requirements for traditional public forums typically survive constitutional attack only when they require no more than several days' notice. See, e.g., Santa Monica Food Not Bombs v. Santa Monica, 450 F.3d 1022, 1045 (9th Cir.2006) (holding that a "two-day notice [requirement], on its face, is sufficiently narrowly tailored"); A Quaker Action Group v. Morton, 516 F.2d 717, 735 (D.C.Cir.1975) ("[W]e approve the existing provision requiring applicants to apply for a permit at least 48 hours in advance of a planned public gathering."); Loc. 32B-32J, Serv. Emp. Intern. v. Port Auth. of N.Y., 3 F.Supp.2d 413, 422 (S.D.N.Y.1998) (upholding a thirty-six-hour advance notice requirement). But see Thomas v. Chicago Park Dist., 227 F.3d 921, 925-26 (7th Cir. 2000), aff'd on other grounds, 534 U.S. 316, 122 S.Ct. 775, 151 L.Ed.2d 783 (2002) (upholding thirty-day notice requirement for general use of park and sixty-day requirement for use of special park facilities because "since thousands of permit applications are filed with the park district every year, it would be burdensome to require the park to process the applications in a significantly shorter time" and the park's policy also permitted "`spontaneous' rallies in reaction to current events").
Underpinning some of these holdings is the observation that because state officials are often deployed on short notice there is no reason to require long notice periods. See Douglas, 88 F.3d at 1524; City of Richmond, 743 F.2d at 1357. Mount Monadnock is no different. Park officials may need thirty days' notice to coordinate large events. See Boardley, 615 F.3d at 522. However, as evidenced by the facts of this case, park officials can respond to small incidents quite quickly. The thirty-day notice requirement is thus not narrowly tailored, for it requires thirty days' notice in many cases in which park officials could accommodate speakers on much shorter notice. See Vodak v. City of Chicago, 639 F.3d 738, 749 (7th Cir.2011) *353 ("[T]he time required to consider an application will generally be shorter the smaller the planned demonstration . . . ." (quotation omitted)); Boardley, 615 F.3d at 522.
The advance notice requirement is also problematic because it contains no exception for spontaneous expression. See Santa Monica Food Not Bombs, 450 F.3d at 1047 ("[T]o comport with the First Amendment, a permitting ordinance must provide some alternative for expression concerning fast-breaking events."); Church of the Amer., Ku Klux Klan v. City of Gary, IN, 334 F.3d at 682 ("[A] very long period of advance notice with no exception for spontaneous demonstrations unreasonably limits free speech."). Spontaneous expression may be vital to a speaker's message because "[a] spontaneous [event] expressing a viewpoint on a topical issue will almost inevitably attract more participants and more press attention, and generate more emotion, than the `same' [event] [3]0 days later." Vodak, 639 F.3d at 749 (quotation omitted).
Accordingly, Res 7306.01(a) is nothing more than "a blanket rule requiring [a] permit application to be made in all cases no fewer than thirty days prior to an intended [event]." Sullivan v. City of Augusta, 511 F.3d 16, 39 (1st Cir.2007). The right to free speech does not permit such a panoptic regulation because, far from being narrowly tailored, it applies in numerous circumstances that have no relation to DRED's significant interests.
II. Conclusion
The foregoing demonstrates that Res 7306.01(a) is unconstitutional in a substantial number of its applications and is thereby overbroad. Therefore, on its face Res 7306.01(a) violates the right to free speech guaranteed by Part I, Article 22 of our State Constitution, and we thus need not address Doyle's remaining arguments, including his arguments under the Federal Constitution. See Ball, 124 N.H. at 237, 471 A.2d 347.
Our holding today, however, is a narrow one. It rests on the assumption that Mount Monadnock is a traditional public forum, an assumption based upon the procedural posture of this case. We note that it is possible that the regulation at issue here could be permissible as applied to DRED properties that are not traditional public forums, and that in any event DRED may adopt regulations consistent with the right to free speech, which will require DRED to take into account the character of the property it regulates.
Reversed and remanded.
DALIANIS, C.J., and HICKS, CONBOY and LYNN, JJ., concurred.
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92 F.Supp. 968 (1950)
TAYLOR
v.
ATCHISON, T. & S. F. RY. CO.
No. 6381.
United States District Court W. D. Missouri, W. D.
August 14, 1950.
*969 Fred J. Freel, Kansas City, Mo., for plaintiff.
Lathrop, Crane, Sawyer, Woodson & Righter, Kansas City, Mo., for defendant.
REEVES, Chief Judge.
The defendant has filed its motion to strike all portions of the complaint which assert and demand punitive damages. This is done upon the theory that punitive damages as a general rule are not recoverable in actions for the breach of contracts. Such was the ruling in Young v. Main, 8 Cir., 72 F.2d 640, loc. cit. 643; Sadler v. Pennsylvania Refining Co., D.C., 31 F.Supp. 1, loc. cit. 2. However, there are exceptions to that rule. The Court of Appeals, this Circuit, in Peitzman v. City of Illmo, 141 F.2d 956, loc. cit. 961, by Judge Gardner the author of the opinion, said: "In Missouri the principle is recognized that where a covenant creates a duty, failure to perform that duty is the basis for an action in tort. Graff v. Lemp Brewing Co., 130 Mo.App. 618, 109 S.W. 1044. A tort is a wrong done independent of contract, but torts may be committed in the nonobservance of contract duties. Braun v. Riel, Mo.Sup., 40 S.W.2d 621, 80 A.L.R. 875. Liability in tort may indeed co-exist with a liability in contract toward the same person where, independently of the contract, there is a duty which has been violated."
Adverting to the complaint, it is noted that the action is for an alleged wrongful discharge as an employee of the defendant under a contract of employment. After the averment that the plaintiff "was wrongfully and unlawfully dismissed and discharged by the defendant", there appeared this allegation: "Plaintiff further states that he was not given a proper investigation and hearing according to the terms of Rule 33 (d), (e), and (f) of said agreement."
Whatever the proof or evidence may be, the complaint alleges the "non-observance of contract duties." Under such circumstances, the motion to strike should be and will be overruled.
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198 F.Supp.2d 1118 (2001)
Laura CLOUD, individually and as statutory representative of the Estate of Darren Baskins, Deceased, and on behalf of Elizabeth Cloud, her minor daughter and statutory beneficiary, Plaintiff,
v.
PFIZER INC., Defendant.
No. Civ 99-627-TUC-WDB.
United States District Court, D. Arizona.
November 21, 2001.
*1119 *1120 Gerald S. Maltz, Haralson Miller Pitt & McAnally PC, Tucson, AZ, Andy Vickery, Richard W. Ewing, Paul F. Waldner, III, Vickery & Waldner LLP, Houston, TX, for plaintiff.
John D. Everroad, John D. Everroad, Fennemore Craig PC, Phoenix, AZ, Malcolm E. Wheeler, James Ernest Hooper, Amy L. Padden, Wheeler Trigg & Kennedy PC, Denver, CO, for defendant.
ORDER
WILLIAM D. BROWNING, Senior District Judge.
Pending before the Court are the following motions filed by Defendant Pfizer:
1. Motion to Strike Declaration of Edwin Johnstone, M.D. (Doc. # 164),
2. Motion to Exclude Testimony of Dr. Edwin E. Johnstone (Doc. # 122),
3. Motion for Summary Judgment re: Causation (Doc. # 136), and
4. Motion for Partial Summary Judgment re: Punitive Damages (Doc. # 129).
For the reasons set forth below, the Motion to Strike (Doc. # 164) is DENIED, the Motion to Exclude (Doc. # 122) is GRANTED, the Motion for Summary Judgment (Doc. # 136) is GRANTED, and the Motion for Partial Summary Judgment is DENIED AS MOOT. Accordingly, the Clerk of the Court is ordered to enter judgment in favor of Defendant Pfizer and against Plaintiff Laura Cloud.
*1121 I. Brief Factual & Procedural History
In February 1996, Mr. Darren Baskins was originally prescribed Zoloft for treatment of his depression. In August 1997, Mr. Baskins committed suicide in Safford, Arizona. Mr. Baskins' widow, Laura Cloud, now brings this product liability and negligence action against Zoloft's manufacturer Pfizer Inc. for Pfizer's alleged failure to warn and/or provide proper instructions regarding the potential side-effect of suicide. She essentially claims that Zoloft caused Mr. Baskins to experience side-effects that resulted in his committing suicide, and that Pfizer knew of these side-effects yet failed to warn about the potential risks. On a previous motion for summary judgment, this Court rejected Pfizer's arguments that Plaintiff's claims were preempted by the federal Food, Drug, and Cosmetic Act (FDCA).
A. Brief History of Zoloft Before the Food and Drug Administration
On April 13, 1998, Pfizer submitted a New Drug Application to the Food and Drug Administration (FDA) seeking approval to market Zoloft for the treatment of depression. Zoloft is the registered trademark and brand name in the United States for sertraline hydrocloride. Sertraline hydrocloride is one of a class of medicines commonly referred to as "selective serotonin reuptake inhibitors" or "SSRIs." Prozac, Paxil, and Celexa are other popular SSRIs. In conjunction with its application, Pfizer submitted 117 volumes of safety data and later submitted a report on suicide attempts by patient who were prescribed Zoloft. After changes to Pfizer's proposed label, the FDA finally approved Zoloft on December 30, 1991.
FDA approved labeling must contain a number of specific sections. The sections relevant to Plaintiff's claim include: (1) contradindications, (2) warnings, (3) precautions, and (4) adverse reactions. See 21 C.F.R. § 201.56. Particular to this matter, the final approved label for Zoloft contained the following "precaution:"
SuicideThe possibility of a suicide attempt is inherent in depression. Close supervision of high risk patients should accompany initial drug therapy. Prescriptions for Zoloft should be written for the smallest quantity of tablets consistent with good patient management, in order to reduce the risk of overdose.
Under the "adverse reactions" section, Pfizer disclosed on its label as follows:
Psychiatric disordersInfrequent: abnormal dreams, aggressive reaction, amnesia, apathy, delusion, depersonalization, depression, aggravated depression, emotional liability, euphoria, hallucination, neurosis, paranoid reaction, suicide ideation and attempt, teeth-grinding, abnormal thinking; Rare: hysteria, somnambulism, withdrawal syndrome.
Subsequent to its approving Zoloft to treat depression, the FDA also approved Zoloft as safe and effective for the treatment of obsessive compulsive disorder (October 25, 1996), panic disorder (July 8, 1997), pediatric obsessive compulsive disorder (October 10, 1997), and post-traumatic stress disorder (December 7, 1999). In each of these approvals, the FDA ordered Pfizer to include the same notice about suicide in the "adverse reactions" section of the label.
B. Brief History of Other SSRIs Before the Food and Drug Administration
Before and after the FDA's approval of Zoloft, the FDA considered applications concerning other SSRIs, and claims that the SSRIs cause suicide.
In October 1990, the Church of Scientology filed a petition with the FDA claiming that Prozac caused suicide and asking the FDA to withdraw its approval. In May 1991, the Public Citizen Health Research *1122 Group requested that the FDA require the makers of Prozac to label the drug with a boxed warning indicating that Prozac may be associated with suicide in a small number of patients.
In July 1991, the FDA denied the Scientology petition noting that "[t]he data and information available at this time do not indicate that Prozac causes suicidality or violent behavior."
In September 1991, the FDA convened the Psychopharmacological Drugs Advisory Committee (PDAC) to investigate any link between pharmacological treatment of depression and suicidality. The PDAC unanimously found that there was no credible evidence to support a conclusion that antidepressant drugs cause the emergence or intensification of suicidality or other violent behaviors. The PDAC also unanimously found that there was no evidence to indicate that a particular drug or drug class poses a greater risk for the intensification of suicidal thoughts and/or violent behaviors. The PDAC also voted 6-3 not to recommend changing the labeling of anti-depression drugs.
In June 1992, the FDA denied the Public Citizen petition finding that the evidence was "not sufficient to reasonably conclude that the use of Prozac is possibly associated with suicidal ideation and behavior."
In 1997, the FDA denied a petition to expand the suicidality warning on Prozac noting that it had continued to monitor any links between Prozac and suicidality.
C. Brief History of Research Regarding the Link Between SSRIs and Suicide
Both parties have submitted volumes of medical research articles and cases studies to the Court. While not totally exhaustive, the following summaries are offered as a synopsis of the medical community's thoughts regarding the alleged causal link between SSRIs, particularly Zoloft, and suicide:
Pre-August 1997 Research[1]
In September 1989, Joseph F. Lipinski, Jr., M.D., et.al., published a study, based upon case reports, possibly linking akathisia[2] with fluoxetine (Prozac).
In February 1990, Harvard psychiatrists Teicher and Cole published an article concerning SSRIs and drug-induced suicidal ideation. The article described six patients who, during treatment with Prozac, experienced either the onset or intensification of suicidal ideation.
In 1991, Robert A. King, M.D., et.al., published a study in which self-injurious ideation appeared de novo or intensified during fluoxetine (Prozac) treatment of obsessive-compulsive disorder. Because of the nature of the study, King was not able to link fluoxetine *1123 with the self-injurious ideation but encouraged increased studies and vigilance.
In 1991, W. Creaney, et.al., published an article including two case reports of patients developing akathisia and suicidal ideation while taking fluoxetine.
In 1991, Anthony J. Rothschild, M.D., et.al., published an article listing their findings of three patients. The three patients had previously made serious suicide attempts while taking fluoxetine. When being reintroduced to the drug, they began to develop akathisia. Again, these researchers urged clinicians to monitor the development of akathisia in their patients.
In November 1991, Dr. John Mann and Dr. Kapur issued an article indicating that clinicians should warn patients of the possible occurrences of suicide while on antidepressants, but was unable to state whether such drugs could precipitate or worsen suicidality.
In 1991, Roger M. Lane, M.D. of Pfizer linked the administration of SSRI to rare cases of drug-induced akathisia in some patients.
An internal Pfizer 1992 study indicated no correlation between Zoloft and suicide attempts and suicidal ideation. Those results were published in May 1992 and presented at the Collegium International Neuro-Psychopharmnacologicum in June 1992.
In July 1992, Wirshing, et.al. reported the occurrence of suicidal ideation in five patients with fluoxentine (Prozac) induced akathisia and suggested a link between akathisia and suicidal ruminations.
In November 1992, Margaret S. Hamilton, et.al., published a report entitled "Akathisia, Suicidality, and Fluoxetine." They suggested that "`suicidal ideation' reported in the patients taking fluoxetine described in this article as well as in our own patient is really a reaction to the side effect of akathisia and not true suicidal ideation as is typically described by depressed patients experiencing suicidal ideation."
In February 1993, the American College of Neuropsychopharmacology's Council and Task Force issued a consensus statement in which it found that "[t]here is no evidence that anti-depressants such as the selective serotonin reuptake inhibitors ... trigger emergent suicidal ideation over and above rates that may be associated with depression and other antidepressants." However, the consensus statement also indicated that "patients should be warned that suicidal ideation may occasionally worsen in the course of treatment, as may overall depression, and that such an event would be a reason for immediately contacting their [the patients'] doctor. It should be recognized that such emergent suicidal ideation may be the consequence of the patient's illness, adverse changes in the life situation, or perhaps, in a few cases, because of an adverse effect of the antidepressant."
In June 1993, Lauren D. LaPorta, M.D. printed two case reports of sertraline-induced akathisia in their patients.
In August 1993, Seymour Fisher, Ph. D., et.al, published a study reviewing medical data on patients receiving fluoxetine and trazodone. The study reported cases of delusions, hallucinations, aggression, and suicidal ideation in patients receiving fluoxetine.
In August 1993, Teicher & Glod, et.al., summarized the literature in the area. They noted that akathisia, insomnia, as well as manic and mixed-manic states could result from the administration of *1124 anti-depressant drugs. The report emphasized the lack of reliable data and the need for additional research in these areas.
In September 1993, R. Balon published a case report of suicidal ideation with sertraline treatment.
In January 1994, in the American Journal of Psychiatry, there was published a case report of an unsuccessful suicide overdose attempt another report of a panic attack potentially linked to sertraline.
In 1994, Dr. David Healy reviewed the evidence linking fluoxetine with suicide. He summarized as follows:
In the opinion of this author, the volume of case reports and other studies is sufficient to demonstrate that antidepressants and antipsychotics may induce suicidal ideation in certain individuals under certain conditions. These reports must be set against a general recognition that the peak time for suicide attempts is shortly after individuals start treatment with a new antidepressant.... Suicidal ideation associated with fluoxetine is probably not a direct effect of fluoxetine, but is mediated through the induction of akathisia/ agitation/panic.... Such reactions to fluoxetine are rare, and undue concern over them may lead to more suicides by virtue of patients giving up treatment.
In 1995, Elaine Tierney, M.D., et.al., published a retrospective study finding some evidence of behavioral activation or mania in some patients.
In 1995, Susan S. Jick, et.al., reviewed a database of 495 general practitioners that indicated that fluoxetine (Prozac) might pose a higher risk for suicide.
In 1995, George M. Anderson, Ph.D., et.al., published an article in which they concluded as follows:
Pending a better understanding for the pathogenesis and risk factors for SSRI-linked adverse effects, several precautions appear prudent. Patients and their families should be alerted to the possibility of increased restlessness, disinhibition, agitation, or suicidal preoccupation and encouraged to report any signs of their occurrence.
In 1995, Roger Lane, et.al., reviewed the articles on point and believed that Teicher's 1990 article possibly linking suicide to SSRIs had "been shown to be without foundation in analyses of the clinical trial experience with several SSRIs."
In 1996, at a conference sponsored by the American Psychiatric Association a handout noted case reports linking akathisia-like syndrome with suicide.
In 1996, Pfizer reported 54 cases of suicidal thinking or behavior of patients on sertraline to the Irish Medicines Board.
In 1997, Arturo Olivera published an article entitled "Sertraline and Akathisia: Spontaneous Resolution." The article reports that 4 out of 25 individuals receiving sertraline developed akathisia
Post-August 1997 Research
In 1998, Richard Goldberg, M.D. published an article reviewing the scientific literature on the possible side effects of SSRIs. The article indicated that SSRIs may produce akathisia that "may be so intense that some patients have attempted suicide."
In 1998, Bonnet-Brillhault, et.al., published an article that included a case report of SSRI-induced akathisia. The article warned clinicians to recognize early symptoms of akathisia in patients that might be at a high risk for suicide.
*1125 In July 1999, Pfizer conducted a review entitled "Sertraline and Suicide-Related Events." Using its "early alert safety database" that included information reported to Pfizer, government agencies, and published literature, Pfizer noted 846 sertraline cases associated with suicidal events (death, attempt, gesture, and ideation events). Pfizer concluded that there was no basis for linking Zoloft with these suicide attempts.
In the 1999 publication of the Textbook of Psychiatry (3rd edition), the authors noted studies showing a possible link between SSRI-induced akathisia and suicide and also studies indicating that SSRIs may selectively decrease suicidality in some patients. The conclusion, however, was that the "literature to date is too preliminary to support the hypothesis that SSRIs are the antidepressants of choice in the suicidal patient because of neuro-transmitter action."
In 2000, the Diagnostic and Statistical Manual of Mental Disorders (4th edition) (DSM-IV-TR) noted that "serotonin-specific reuptake inhibitor antidepressant medications may produce akathisia that appears to be identical in phenomenology and treatment response to Neuroleptic-Induced Acute Akathisia." The latter was described as follows:
Subjective complaints of restlessness and at least one of the following observed movements: fidgety movements or swinging of the legs while seated, rocking from foot to foot or "walking on the spot" while standing, pacing to relieve the restlessness, or an inability to sit or stand still for at least several minutes. In its most severe form, the individual may be unable to maintain any position for more than a few seconds. The subjective complaints include a sense of inner restlessness, most often in the legs; a compulsion to move one's legs; distress if one is asked not to move one's legs; and dysphoria and anxiety. The symptoms typically occur within 4 weeks of initiating or increasing the dose of neuroleptic medication and can occasionally follow the reduction of medication used to treat or prevent acute extrapyramidal symptoms ...
In 2000, Ronald W. Maris, et.al., noted, in the Comprehensive Textbook of Suicidology, the literature possibly linking SSRIs with akathisia and resultant suicide.
In 2000, David Healy presented a paper on the "Emergence of antidepressant induced suicidaility." In a double blind study, Dr. Healy found that after giving sertraline to a group of twenty healthy volunteers, two volunteers became suicidal after experiencing akathisia and disinhibition. Dr. Healy concluded that one of the messages from the study was that "those who did not suffer from a psychiatric illness may have been at more risk from this drug than others."
In 2000, Stuart Donovan and Andrew Clayton, et.al., published an article entitled "Deliberate self-harm and antidepressant drugs." This naturalistic study used hospital records of patients who had been prescribed either tricyclic antidepressant (TCA) drugs, SSRIs, or other drugs. Using a baseline of amitriptyline, a TCA, that showed the lowest relative incidence of deliberate self harm, the authors found that sertraline (Zoloft) had a relative risk of 4.9 to amitriptyline, fluoxetine (Prozac) had a 6.6 relative risk, and all SSRIs combined had a 5.5 relative risk. However, the authors concluded by stating as follows:
It is difficult to attribute the cause of DSH [deliberate self harm] behaviour to *1126 antidepressant treatment when such behaviour can also occur spontaneously during the course of depressive illness. Establishment of cause and effect for the different apparent risks of DSH associated with different antidepressants seen in this study is therefore almost impossible.
In a 2000 report, the Irish Medicines Board issued a report on Lustral (the brand name of sertraline in Ireland). The report indicated a number of cases of suicide attempts and completed suicides related to the administration of sertraline.
In August 2000, the Medicines Control Agency (CSM) in Sandwich, United Kingdom noted that there was no "causal association between SSRIs and suicidal behaviour." Yet, based on continued anecdotal reports of suicidal behavior and general clinical evidence of increased suicidal behavior in the first few weeks of treatment, the CSM proposed the following update to patient information leaflets:
Occasionally, thoughts of suicide or self harm may occur or may increase in the first few weeks of treatment with sertraline, until the antidepressant effect becomes apparent. Tell your doctor immediately if you have any distressing thoughts or experiences.
In January 2001, Adrian Preda, M.D., et.al. published an article reporting their findings of a retrospective study of 533 psychiatric patients at Yale-New Haven Hospital. The study reported 43 cases of psychosis or mania (8.1%) related to the administration of anti-depressant drugs. However, the authors noted that the study had multiple limitations in proving causation and concluded that "we consider this report primarily a case series highlighting the issue of antidepressant-induced mania and psychosis, not a study of incidence or prevalence of this phenomenon."
On September 4, 2001, John Concato, M.D. and John M. Davis, M.D. submitted an independent experts report to Judge Kathryn H. Vratil, District Court Judge for the United States District Court for the District of Kansas, in the matter of Miller v. Pfizer Inc., Case No. 99-2326 KHV. In their report, Drs. Concato & Davis reviewed the proffered expert testimony of Dr. David Healy. Based upon the materials provided to them, the doctors found that the evidence did not show a "quantitatively or statistically significant association between sertraline use and suicide." They also rejected any causal link supposedly found in the 1995 Jick and 2000 Donovan studies. Regarding Dr. Healy's testimony, they concluded:
Dr. Healy's calculation of a relative risk of 2.19 for sertraline-suicide association has not been subject to peer review, and they could not replicate it.
Dr. Healy's methodology for determining causation has not been accepted in the relevant scientific community, and Dr. Healy's reliance on case reports is not an accepted methodology to determine causation.
They also rejected the proposition that American Psychiatric Press Textbook of Psychiatry and the articles contained therein support an association between sertraline and suicide.
Dr. Healy's approach of linking sertraline to akathisia to suicide is not a customary approach in the scientific community.
*1127 D. Darren Baskins' Background
Mr. Baskins & Plaintiff were married in August 1992 in Kansas, and they had one daughter, Elizabeth. Mr. Baskins had been married previously and had one son from that prior marriage. He also had little contact with that son. In 1997, Mr. Baskins and his family, including two of Plaintiff's children from another marriage, moved to Safford, Arizona from Lawrence, Kansas. Mr. Baskins was a heating and air conditioning technician.
Medical History
According to Plaintiff, in October 1995, Mr. Baskins suffered from some minor depression. In February 1996, Daniel T. Collins, M.D. prescribed him some Zoloft samples. After returning to Dr. Collins, the prescriptions were increased. In a March 15, 1996 report, Dr. Collins noted that Mr. Baskins "had a little bit of agitation but this has settled down." Pharmacy records indicate that Mr. Baskins refilled his monthly prescription of Zoloft from February 1996 until August 1997. Therefore, it appears that Mr. Baskins took Zoloft for 18 months until his death on August 30, 1997.
In addition to his treatment from Dr. Collins, Mr. Baskins also saw the family's pastor, Pastor Leslie Maloney, as well as a counselor/therapist Christine Hartzler, M.A., CPC. Mr. Baskins and Plaintiff were having problems with their marriage, and Plaintiff had recently threatened to leave him prior to his hospitalization in August 1997. Furthermore, there is testimonial and documentary evidence that Mr. Baskins consumed alcohol and also smoked marijuana.
Testimony Regarding Mr. Baskins' Behavior While He Was Taking Zoloft
Regarding Mr. Baskins' behavior while on Zoloft, the parties have submitted deposition testimony from various witness and answers to interrogatories including the following:
Plaintiff claims that while Mr. Baskins rarely drank prior to taking Zoloft, he had a "strong craving" for alcohol while on the medication.
Plaintiff has also testified that while on Zoloft, Mr. Baskins would pace back and forth, was extremely restless, had difficulty sleeping, and complained that his skin hurt from the inside out.
Ms. Nicolee Shandy, an employee of Plaintiff and Mr. Baskins, testified that she never saw Mr. Baskins pace, wring his hands, shake, in a manic or euphoric state, or complain that his skin hurt from the inside out.
Likewise, his son Michael Baskins did not see any similar actions while Mr. Baskins was on a trip to Kansas that he took not long before his suicide.
Mr. Baskins' step-son, Jacob, testified that he never saw Mr. Baskins have any trouble sitting still, pacing, or any other restless behavior. He did testify, however, that Mr. Baskins did experience difficulty sleeping.
The Week Leading Up To Mr. Baskins' Hospitalization & Suicide
In the week leading up to his suicide, Mr. Baskins dropped an air conditioner on his knee on August 25, 1997. On August 26, 1997, he cut off the end of his finger. Plaintiff then took Mr. Baskins to see Ms. Hartzler who diagnosed Mr. Baskins as being suicidal. Ms. Hartzler's August 27, 1997 note indicates that Mr. Baskins' mood was flat. From her records, it appears that Ms. Hartzler had seen Mr. Baskins on two prior occasions in January 1997 while she was counseling Plaintiff. In her deposition, Ms. Hartzler testified that she did not see any signs of akathisia in Mr. Baskins on August 27, 1997.
Based upon Ms. Hartzler's advice, Plaintiff then took Mr. Baskins to St. Mary's *1128 Hospital in Tucson, Arizona on August 27, 1997. The St. Mary's admitting physician does not believe that Mr. Baskins was suffering from akathisia when he admitted him on August 27, 1997. Some notes in the St. Mary's records indicate that Mr. Baskins reported problems with insomnia, and span of concentration. Dr. John Ely noted that these symptoms appeared to be psychomotor restlessness. Also St. Mary's employee Kevin Delmastro testified that Mr. Baskins "had some element of impaired concentration during the interview; that he had complained about difficulty sleeping." However, he did not observe any pacing or fidgety movements. On August 28, 1997 Mr. Baskins reported that his ability to think and concentrate had improved. Finally, Ms. Adrienne O'Hare testified that during her counseling visits with Mr. Baskins at St. Mary's Hospital, she did not see any agitation or pacing.
Mr. Baskins' records from St. Mary's reveal that he had cannabinoids and amphetamines in his system. The most likely scenario regarding the amphetamines is that they came from some diet medications (Mini Thins) that Mr. Baskins was taking. In his deposition, Plaintiff's expert, Dr. Edwin Johnstone, testified that he could not be certain that the Mini Thins caused the lab report to be positive for amphetamines but that he would need to check with a toxicologist.
On August 29, 1997, two days after being admitted, the hospital released Mr. Baskins, and Pastor Maloney drove him back to Safford. Pastor Maloney described Mr. Baskins as "down," "lethargic," and "quiet" while he drove him back to Safford. That evening, Plaintiff would not let him stay in their home. On August 30th, also the birthday of Plaintiff's daughter from another marriage, Mr. Baskins had various interactions with the family including giving some cards and gifts to the family. After a conversation with Mr. Baskins, Plaintiff left her home and took the children with her. Upon Plaintiff's request, Pastor Maloney went to the couple's residence and found Mr. Baskins was dead, having hanged himself in the outbuilding.
II. Pending Motions & Analysis
A. Motion to Strike Declaration of Edwin Johnstone, M.D.
In its motion, Pfizer argues that Dr. Johnstone's affidavit, submitted in support of Plaintiff's Response to Pfizer's Motion to Exclude, should be stricken because it was untimely filed in response to the Motion to Exclude and because it was untimely disclosed. In response, Plaintiff argues that its disclosure was timely filed in response to Pfizer's motions and that there were no new opinions set forth in the affidavit.
Pfizer's motion is denied for the following reasons. First, this Court has already deemed Dr. Johnstone's affidavit, as well as the rest of Plaintiff's exhibits, filed timely in response to the pending motions. See Doc. # 147. Second, after reviewing Dr. Johnstone's entire deposition testimony, expert report, and affidavit, the Court finds that any untimely disclosure of Dr. Johnstone's affidavit is harmless to Pfizer. See Rule 37(c)(1), Fed.R.Civ.P. Based upon the extensive questioning by Pfizer's counsel, Dr. Johnstone covered all the topic areas and opinions contained in his affidavit, as well as others, during his deposition. Therefore, the Court denies Pfizer's Motion to Strike.
B. Motion to Exclude Testimony of Dr. Edwin E. Johnstone
In its motion, Pfizer argues that Dr. Johnstone's testimony should be excluded because he fails to satisfy both the reliability and fit prongs of Daubert v. Merrell Dow Pharms., 509 U.S. 579, 113 S.Ct. *1129 2786, 125 L.Ed.2d 469 (1993). In response, Plaintiff argues that Dr. Johnstone's testimony is admissible, and that a jury should decide whether to accept or reject his opinions. For the reasons set forth below, Dr. Johnstone's testimony is excluded.
Federal Rule of Evidence 702 governs the admissibility of expert testimony. The rule provides as follows:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
Fed.R.Evid. 702.
In considering the admissibility of Dr. Johnstone's testimony, Plaintiff bears the burden of establishing the pertinent admissibility requirements are met by a preponderance of the evidence. See Bourjaily v. United States, 483 U.S. 171, 175, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987) (noting standard governing Rule 104(a), Fed.R.Civ.P.). Furthermore, this Court must exercise its "gatekeeping role" in determining whether Dr. Johnstone's testimony is admissible. See Daubert v. Merrell Dow Pharms., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). In exercising its "gatekeeping role," this Court is not required to conduct a separate evidentiary hearing on admissibility of Dr. Johnstone's proffered expert testimony. See U.S. v. Alatorre, 222 F.3d 1098, 1102 (9th Cir.2000).
Under the first prong of the Daubert's two-prong test for admissibility of expert testimony, "[t]he adjective `scientific' implies a grounding in the methods and procedures of science. Similarly, the word `knowledge' connotes more than subjective belief or unsupported speculation." Daubert, 509 U.S. at 590, 113 S.Ct. 2786. The trial court's obligation under Rule 702 and Daubert is to determine evidentiary reliability, or trustworthiness. See id. at 590 n. 9, 113 S.Ct. 2786. Scientific evidence is reliable if it is based on an assertion that is grounded in methods of science the focus is on principles and methodology, not conclusions. See id. at 595-96, 113 S.Ct. 2786. The Supreme Court listed four non-exclusive factors for consideration in the reliability analysis: (1) whether the scientific theory or technique can be (and has been) tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) whether a particular technique has a known potential rate of error; and (4) whether the theory or technique is generally accepted in the relevant scientific community. See id. at 593-94, 113 S.Ct. 2786. In addition, the United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") has also noted that a "very significant fact to be considered is whether the experts are proposing to testify about matters growing naturally and directly out of research they have conducted independent of the litigation, or whether they have developed their opinions expressly for purposes of testifying." Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1317 (9th Cir.1995) ("Daubert II"). If the evidence is not based upon independent research, this Court must determine whether there exists any "other objective, verifiable evidence that the testimony is based on `scientifically valid principles.'" Id. at 1317-18 (internal quotation marks omitted). Generally, peer review meets this requirement yet it may also be met by:
precisely [explaining] how [the experts] went about reaching their conclusions *1130 and point[ing] to some objective sourcea learned treatise, the policy statement of a professional association, a published article in a reputable scientific journal or the liketo show that they have followed the scientific method, as it is practiced by (at least) a recognized minority of scientists in their field.
Id. at 1319 (citing United States v. Rincon, 28 F.3d 921, 924 (9th Cir.1994)). As the United States Supreme Court recently reaffirmed in Kumho Tire, "the test of reliability is `flexible,' and Daubert's list of specific factors neither necessarily nor exclusively applies to all experts or in every case. Rather, the law grants a district court the same broad latitude when it decides how to determine reliability as it enjoys in respect to its ultimate reliability determination." Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141-42, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).
Rule 702's second prong concerns relevancy, or "fit." See Daubert, 509 U.S. at 591, 113 S.Ct. 2786. The scientific knowledge must be connected to the question at issue. In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 745 (3d Cir.1994), cert. denied sub nom., General Electric Company v. Ingram, 513 U.S. 1190, 115 S.Ct. 1253, 131 L.Ed.2d 134 (1995). The trial court "must ensure that the proposed expert testimony is `relevant to the task at hand,' ... i.e., that it logically advances a material aspect of the proposing party's case." Daubert II, 43 F.3d at 1315. "[T]he standard for fit is higher than bare relevance." In re Paoli, 35 F.3d at 745. Scientific expert testimony introduces special dangers to the fact-finding process because it "can be both powerful and quite misleading because of the difficulty in evaluating it." Daubert, 509 U.S. at 595, 113 S.Ct. 2786 (internal quotation marks and citation omitted). Therefore, federal judges must exclude proffered scientific evidence under Rule 702 unless they are convinced that it speaks clearly and directly to an issue in dispute in the case, and that it will not mislead the jury. Daubert II, 43 F.3d at 1321.
Finally, even under Daubert, this Court must still weigh the balancing factors of Fed.R.Evid. 403,
Rule 403 permits the exclusion of relevant evidence "if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury.... Expert evidence can be both powerful and quite misleading because of the difficulty in evaluating it. Because of this risk, the judge in weighing possible prejudice against probative force under Rule 403 ... exercises more control over experts than lay witnesses."
Daubert, 509 U.S. at 595, 113 S.Ct. 2786, quoting 138 F.R.D. 631, 632 (1991).
Dr. Johnstone's Training & Experience
Dr. Johnstone is a board certified psychiatrist in Texas. He has practiced for over 33 years. He also spent over twenty years on a committee at a psychiatric institute at which he was personally responsible for doing post-mortem, psychological autopsies. In his deposition, he testified that he serves only as a consultant or expert witness regarding psychiatry. Relevant to this case, he was also a clinical investigator in the pre-marketing clinical trials of Zoloft.
He claims to have some experience in suicidology,[3] yet he has not conducted any research in that area and does not hold himself to be an expert in that area. Dr. Johnstone does not have a degree in psychopharmacology,[4] and he does not claim *1131 to be a psychopharmacologist. However, he claims expertise based in part upon his experience conducting clinical trials of sertraline (Zoloft) between 1984 and 1986. Dr. Johnstone also does not consider himself an expert in the field of epidemiology, statistical analysis, FDA regulations of pharmaceutical drugs, and prescription drug labeling.
Regarding his experience with Zoloft, Dr. Johnstone has had no clinical experience with a patient committing suicide while on Zoloft. He also has not published any articles, given any testimony, or communicated to scientific organizations or government agencies that Zoloft or other SSRIs cause suicide. In this case, Dr. Johnstone expresses for the first time his opinion that Zoloft causes suicide.
Dr. Johnstone's Deposition Testimony & Affidavit
Regarding the general causal link between Zoloft and suicide, Dr. Johnstone, in his deposition, relied upon a declaration by Dr. Healy's analysis of a Pfizer clinical trial. In that declaration, Dr. Healy stated that the trial revealed "a relative risk of approximately 1.9 for sertraline versus placebo and a greater risk for sertraline than for comparator antidepressants." Dr. Johnstone, however, did not have the underlying information or Dr. Healy's work to verify the conclusions. Regarding the various studies that have been conducted, Dr. Johnstone testified:
He does not believe that uncontrolled case reports of suicide ideation by patients being treated with SSRIs are a reliable source of scientific information.
He also has not read any placebo controlled clinical trial showing a higher incidence of suicide in depressed patients taking Zoloft than those taking a placebo.
He claims that the 2000 Donovan naturalistic study cannot establish reliable causal proof but is "strongly suggestive" of a line between Zoloft and suicide.
He is not aware of any medical or scientific studies that Zoloft increases the risk of suicide in depressed patients or that demonstrate a casual relationship between the use of Zoloft, mixed manic states and suicide.
Regarding the 2000 published study by Healy, Dr. Johnstone notes the study's importance in demonstrating "a difference between a drug selected because it specifically is a booster of serotonin activity versus equally effective antidepressant that specifically does not boost serotonergic activity, boosts noradrenergic activity." He also testified that the study is not reliable scientific evidence that Zoloft causes suicide in depressed patients.
Regarding specific causation, Dr. Johnstone does not believe that Mr. Baskins developed akathisia from Zoloft. He stated clearly that "[i]t's not my opinion that he developed akathisia from Zoloft and that made himmaybe led to the suicide. No. That's not my opinion." Rather, his opinion is that the combined effects of Zoloft and the over-the-counter stimulant "together generated in him a dysphoric, manic state, with suicidal desperation and suicidal intent being a feature of that and maybe an additional influence of command hallucinations suggesting that he [commit] suicide." He has no specific articles, just general medical knowledge, regarding the toxic effects of combining diet pills and Zoloft. Relying upon a St. Mary's nurse's note indicating that Mr. Baskins was experiencing auditory hallucinations that he could not understand, Dr. Johnstone has testified that "more likely than not the presence of the auditory hallucinations was related to the Zoloft and very likely related to some kind of toxic effect of the *1132 combination of Zoloft and the over-the-counter stimulants."[5]
In his recently disclosed affidavit attached to Plaintiff's Response, Dr. Johnstone sets forth the following:
A "psychological autopsy," like he applied in this case, is the primary methodology used in determining the causes behind a person's suicide.
He believes that the 2000 Donovan study, in which "Zoloft showed a relative risk of inducing deliberate selfharm at a rate of 4.9 times the rate for Amitriptyline," has proven "on a sound scientific basis" that Zoloft can "induce suicide in patients at a substantially higher rate than previous types of drugs for depression."
"SSRI-induced suicides are commonly, but not invariably preceded and accompanied by dystonia and/or akathisia."
He also claims to have "seen several instances where SSRI antidepressants induced a craving for alcohol and stimulants in previously abstinent individuals."
He also links Mr. Baskins' suicide to Zoloft because Mr. Baskins had pledged not to drink alcohol yet after taking Zoloft began to drink. Further, he stated that "it is typical for patients with SSRI-induced manic psychosis to aggravate their condition further by beginning to drink and to take stimulants as Mr. Baskins did. Thus, in my opinion, more likely than not Mr. Baskins would have remained abstinent and would not have become manic but for the effects of the Zoloft."
The Reliability of Dr. Johnstone's Testimony
After reviewing the volumes of submitted materials, the Court finds that Pfizer's motion to exclude should be granted. As set forth more fully below, Plaintiff has failed to show that Dr. Johnstone's methodology and, therefore, his testimony are reliable. Even assuming he is qualified to speak about general causation, the medical and scientific articles, upon which he relies to support his opinion that Zoloft causes suicide, do not support his conclusion. Based upon relevant case law, the Court does not believe that Dr. Johnstone can jump from articles, that he testified are only suggestive of a link between Zoloft and suicide, to a reliable conclusion that Zoloft causes suicide. Regarding specific causation, Dr. Johnstone's conclusions are not supported by the medical literature or any admissible evidence. As a result, Dr. Johnstone's testimony regarding both general and specific causation is excluded as it is unreliable and, as a result, would likely mislead and confuse the jury.
In applying Daubert to Dr. Johnstone's proposed testimony, the Court finds it helpful to classify that testimony into two categoriestestimony regarding general causation (does Zoloft cause suicide) and specific causation (did Zoloft cause Mr. Baskins to commit suicide). This is helpful because in order to carry her burden of proof, Plaintiff must show both general and specific causation. See e.g., Raynor v. Merrell Pharmaceuticals, Inc., 104 F.3d 1371, 1376 (D.C.Cir.1997) (explaining the difference between specific and general causation in similar product liability cases).
Testimony Regarding General Causation
Regarding general causation, even if we assume that Dr. Johnstone has the *1133 expertise to give testimony on issues of epidemiology and psychopharmacology and disregard his deposition testimony denying his expertise in these areas, there is a missing link between the studies upon which he relies and his testimony in this case. Recently, the Ninth Circuit reaffirmed the principle that experts can rely upon the published research of others to support their findings; however, it also allowed the district court, on remand, to "plumb the depths of the precise relationship between the materials cited and the conclusions drawn." Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 845 (9th Cir.2001).
In this case, when the Court plumbs the depths of the relationship between the cited materials and conclusions drawn, Dr. Johnstone's testimony that Zoloft causes suicide appears unreliable. Essentially, Dr. Johnstone's own testimony brings into question whether the studies, upon which he relies, employed reasonably accepted methods of proving causation. For example, in his affidavit, he relies upon the 2000 retrospective naturalistic study done by Donovan, et.al. However, in his deposition, he testified that the Donovan study cannot establish reliable causal proof but is only strongly suggestive of a line between Zoloft and suicide. In his affidavit, Dr. Johnstone also relies on the 2000 Preda article; however, the authors of that article admitted the multiple limitations of the study in proving causation and concluded that "we consider this report primarily a case series highlighting the issue of antidepressant-induced mania and psychosis, not a study of incidence or prevalence of this phenomenon." In essence, the Preda article suffers from many of the same deficiencies regarding proof of legal causation as the Donovan article. Dr. Johnstone also relies on Dr. Healy's 2000 study in his affidavit, yet in deposition, he testified that he does not believe the Healy study is reliable scientific evidence that Zoloft causes suicide in depressed patients.[6] Additionally, Dr. Johnstone testified that he is not aware of any medical or scientific studies that show that Zoloft increases the risk of suicide in depressed patients or that demonstrate a casual relationship between the use of Zoloft, mixed manic states and suicide. Therefore, it is difficult to accept Dr. Johnstone' proposed testimony that Zoloft causes suicide when he, himself, has stated that the studies upon which he relies do not fully support that conclusion. Furthermore, at best, Dr. Johnstone has testified that the articles upon which he relies are only "strongly suggestive" of the fact that Zoloft causes suicide. In light of the Ninth Circuit's opinion in Daubert II, where it held that it was insufficient for the plaintiffs' experts to speak of possibilities without attempting to quantify those possibilities, Dr. Johnstone's testimony on general causation is insufficient and unreliable. See Daubert II, 43 F.3d at 1322.
In addition, it is also important to consider other evidence upon which Dr. Johnstone relies for his general causation testimony. For example, much of the literature in this area are merely retrospective case reports (or Adverse Experience Reports) of particular patients who had a suicidal event while taking Zoloft. As Dr. Johnstone admitted in his deposition, such case reports do not provide reliable scientific evidence of causation. Rather, they are merely compilations of occurrences, and have been rejected as reliable scientific evidence supporting an expert opinion that Daubert requires. See Jones v. United States, 933 F.Supp. 894, 899-900 *1134 (N.D.Cal.1996), affirmed 127 F.3d 1154 (9th Cir.1997), cert. denied 524 U.S. 946, 118 S.Ct. 2359, 141 L.Ed.2d 728 (1998) (anecdotal case reports are not derived through the scientific method and "fall short of the proven, cause and effect relationship that is necessary to satisfy the Daubert standard."). See also Casey v. Ohio Medical Products, 877 F.Supp. 1380, 1385-1386 (N.D.Cal.1995) (case reports are not reliable scientific evidence of causation and not sufficiently based on scientific reliability and methodology to be admitted into evidence under Fed.R.Evid. 702 and 703). Additionally, Dr. Johnstone relies upon Pfizer's report to the Irish Medicines Board as evidence of general causation. However, the Irish Medicines Board report, based upon Pfizer's clinical trials, lacks any reliability on the issue of general causation. See Smith v. Pfizer Inc., 2001 WL 968369 (D.Kan.2001) (setting forth both the Pfizer's report and the instructions given to the clinicians and rejecting Plaintiff's assertion that Pfizer had admitted general causation in the report).
Dr. Johnstone also has not provided sufficient epidemiological evidence of causation. "For an epidemiological study to show causation under a preponderance standard, the relative risk of [the harm caused] arising from the epidemiological data ... will, at a minimum, have to exceed 2." Daubert II, 43 F.3d 1311 at 1321 (quotation omitted). The Ninth Circuit did provide, however, that in a particular case, a relative risk under 2 might be sufficient if an expert can differentiate between the particular plaintiff and the subjects of the statistical studies. See id. at 1321, n. 16.[7] In this case, Dr. Johnstone relies upon the Donovan study to provide that Zoloft had a relative risk of 4.9 to the index drug, amitriptylene. However, in addition to the other problems with the Donovan study about which Dr. Johnstone has commented, the study did not evaluate the relative risk compared to unexposed population (i.e., a group that takes a placebo), which is the general method in which to produce an accurate relative risk. In addition, in his deposition, Dr. Johnstone relied upon Dr. Healy's work, yet admits in his affidavit that he has not reviewed the internal details of the study or Dr. Healy's data analysis. As a result, Plaintiff has not shown Dr. Healy's work to be reliable, nor could Dr. Johnstone explain Dr. Healy's findings to the jury. Finally, the Court notes that a physician cannot rely on general experience to give reliable statistical evidence. See e.g., Erickson v. Baxter Healthcare, Inc., 131 F.Supp.2d 995, 999 (N.D.Ill.2001). Therefore, Plaintiff has failed to provide sufficient epidemiological evidence supporting Dr. Johnstone's opinions.[8]
*1135 Further raising concerns about Dr. Johnstone's general causation testimony is the fact that he developed his opinion that SSRIs cause suicide expressly for the purpose of testifying in this case. See Daubert II, 43 F.3d at 1317. As he testified in his deposition, he had never voiced this position prior to this litigation.
Finally, Plaintiff argues that this Court should employ a relaxed standard in reviewing Dr. Johnstone's testimony since he is a psychiatric expert. Plaintiff argues that the pre-Daubert decision in Barefoot v. Estelle, 463 U.S. 880, 896-906, 103 S.Ct. 3383, 77 L.Ed.2d 1090 (1983) establishes that there is a different and relaxed standard applied to behavioral scientists. However, the Court's gatekeeping function remains the same. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ("We conclude that Daubert's general holdingsetting forth the trial judge's general `gatekeeping' obligation applies not only to testimony based on `scientific' knowledge, but also to testimony based on `technical' and `other specialized' knowledge"). In seeking to testify that "Zoloft causes suicide," Dr. Johnstone is not seeking to testify as a behavioral scientist; rather, he seeks to testify regarding psychopharmacology and epidemiology two fields in which he admits that he is not an expert. Therefore, even assuming that a more relaxed standard could apply post-Daubert & Kumho, the Court believes that Dr. Johnstone must still meet the standards set forth in Daubert II. As Plaintiff's counsel admitted at oral arguments, the proposition that "Zoloft causes suicide" is scientifically testable. Therefore, the fact that Dr. Johnstone cannot point to one scientific study that supports his conclusion on general causation results in his testimony and methodology being unreliable.
In summary, after reviewing the materials relied upon by Dr. Johnstone to establish his expert testimony regarding general causation, the Court does not believe that Dr. Johnstone's opinion that Zoloft causes suicide is supported by these materials. In particular, the Court finds that his reliance upon medical articles which he disavowed as providing evidence of general causation particularly disturbing and, in truth, the antithesis of a scientific method. In addition, as Dr. Johnstone has testified, case reports are not a recognized method of proving causation. Finally, the lack of significant epidemiological studies also undermines the reliability of Dr. Johnstone's testimony regarding general causation. As a result, any testimony that he would present to the jury would only confuse and mislead it.
Testimony Regarding Specific Causation
Regarding Dr. Johnstone's testimony that Zoloft caused Mr. Baskins to commit suicide, there are additional concerns about Dr. Johnstone's methodology. While Pfizer cites a law review article questioning the acceptance of psychological autopsies, these types of post-mortem autopsies appear to be generally accepted. Nonetheless, there is evidence that Dr. Johnstone came to his conclusion before reviewing all of Mr. Baskins' medical records and all of Pfizer's submissions to the FDA. Under Daubert, a court may consider whether an expert has reviewed relevant information before forming an opinion. See Claar v. Burlington Northern R. Co., 29 F.3d 499, 502-03 (9th Cir.1994) ("Coming to a firm conclusion first and then doing research to support it is the antithesis of this [scientific] method."). In this case, Dr. Johnstone issued his opinion before reviewing the autopsy report, the St. Mary's hospital records, and records of Mr. Baskins' prescribing physicians and *1136 therapist. As a result, his initial opinion was susceptible to error. For example, his initial opinion records Dr. Johnstone's mistaken belief that Mr. Baskins was taking caffeine pills, rather than the ephedrine that he was actually taking prior to his suicide. Likewise, Dr. Johnstone did not review all the materials that Pfizer had submitted to the FDA even though these materials were in the possession of Plaintiff's counsel. These facts raise significant concerns about his specific causation testimony.
Additionally troubling is the fact that Dr. Johnstone did not fully explore other potential causes of Mr. Baskins' suicide, including his alcohol use and family problems, and the role that ephedrine might have played in Mr. Baskins' suicide. Plaintiff's response that such issues are merely for the jury fails to address the issue that such omissions by its expert raise significant questions about his methodology. See Claar, 29 F.3d at 502-03. The process of assessing alternative and specific causes is one of the hallmark tasks of a physician. See Reference Manual on Scientific Evidence 468 (2000). See also Smith v. Pfizer Inc., 2001 WL 968369 (D.Kan.2001) (noting that Plaintiff's expert in that case considered the role of alcoholism in the suicide and rejected it and holding that the physician's "methodology is used time and again on a daily basis by medical doctors in diagnosing and determining the cause of illnesses in their patients"). In this case, Plaintiff has not produced evidence to show that Dr. Johnstone considered alternative explanations for the suicide, and as a result, Dr. Johnstone's testimony again appears to lack sufficient reliability to be admissible.
Similarly, there are analytical and scientific gaps between the treatises upon which Dr. Johnstone relies and his findings in this particular case. See General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) ("A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.") First, the medical articles upon which Dr. Johnstone relies suggest (but do not prove according to his own testimony) a Zoloftakathisia-suicide link. Likewise, the DSM-IV and DSM-IV-TR provide coding only for SSRI-induced akathisia. However, Dr. Johnstone has testified that Mr. Baskins did not suffer from akathisia. Therefore, his attempts to rely upon these texts to bolster his specific causation testimony are fundamentally flawed. Second, the treatises seem to indicate that if such reactions occur that they generally occur very early during the prescription. In this case, however, there was an 18 month period between the initial prescription and the suicide. Therefore, the gaps in Dr. Johnstone's testimony are simply too great for him to hurdle.
Finally, Dr. Johnstone has testified that the combined effects of Zoloft and the over-the-counter stimulant "together generated in him a dysphoric, manic state, with suicidal desperation and suicidal intent being a feature of that and maybe an additional influence of command hallucinations suggesting that he [commit] suicide." Additionally, he opines that Zoloft caused Mr. Baskins to return to drinking alcohol. Plaintiff has produced no reports or research on Dr. Johnstone's claimed interreaction between the over-the-counter stimulant and Zoloft, nor the proposition that Zoloft increases a patient's urge to drink alcohol. These opinions have not been peer-reviewed, have not been independently tested, and there is no evidence that any other physician or researcher has come to these same opinions.
Finally, in her brief, Plaintiff places great emphasis on S.M. v. J.K., 262 F.3d 914 (9th Cir.2001). In S.M., the Plaintiff's *1137 physician testified that Plaintiff had suffered from Post-Traumatic Stress Disorder even though the diagnosis varied from the DSM-III. See id. at 922. The district court allowed the testimony, and the Ninth Circuit affirmed noting that the physician's variance from the DSM did not compel exclusion of the testimony and also that the newly revised DSM-IV actually supported the physician's testimony. See id. Contrary to Plaintiff's arguments, S.M. is not a major development after Daubert II, rather it merely confirmed that physicians can testify contrary to the generally accepted diagnoses as long as they employ a reliable scientific and medical approach. In this particular case, Dr. Johnstone did not employ such an approach, and his opinions, therefore, should be excluded.
Therefore, for the foregoing reasons, Dr. Johnstone's testimony regarding general and specific causation is hereby excluded.
C. Motion for Summary Judgment re: Causation
For the reasons set forth below, Pfizer's motion for summary judgment is granted. On both of Plaintiff's claims, she must show, as an initial matter, that Zoloft causes suicide and that it particularly caused Mr. Baskins' suicide. As she has failed to present sufficient evidence upon which a reasonable jury could agree with both of those propositions, summary judgment in favor of Pfizer is appropriate.
Standard of Review Governing Motions for Summary Judgment
Summary judgment is appropriate where "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c). A genuine issue exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and material facts are those "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's claim is insufficient to defeat summary judgment. See id. at 252, 106 S.Ct. 2505. In determining a motion for summary judgment, all reasonable inferences from the evidence must be drawn in favor of the nonmoving party. See id. at 252, 106 S.Ct. 2505.
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. The nonmoving party may not simply rest upon its pleadings to satisfy its burden. See id. at 256, 106 S.Ct. 2505. Rather, the nonmoving party must "must set forth specific facts showing that there is a genuine issue for trial." Id. Finally, the Court notes that summary judgment is not a "disfavored procedural shortcut," rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).
*1138 Arizona Law Governs the Elements of Plaintiff's Claims
A federal court sitting in diversity jurisdiction over a product liability claim applies the substantive law of forum state to determine the elements of Plaintiff's cause of action. See Toner for Toner v. Lederle Laboratories, Div. of American Cyanamid Co., 779 F.2d 1429, 1431 (9th Cir.1986) (noting, however, that the question of the sufficiency of the evidence is a procedural matter governed by federal law). The parties do not dispute that Arizona law applies; therefore, the Court will look to Arizona law regarding the necessary elements of Plaintiff's products liability and negligence claims.
In order to prevail on both of her claims, Plaintiff must prove causation. In order to establish a prima facie case of strict products liability in Arizona, Plaintiff must show "(1) the product is defective and unreasonably dangerous, (2) the defective condition existed at the time the product left the defendant's control, and (3) the defective condition is the proximate cause of the plaintiff's injuries." Piper v. Bear Medical Systems, Inc., 180 Ariz. 170, 173, 883 P.2d 407, 410 (App.1993). A product may be unreasonably dangerous in the absence of adequate warnings. See id., 180 Ariz. at 173-74, 883 P.2d at 410-11. In order to establish a prima facie negligence case in Arizona, Plaintiff must show the existence of a duty, breach of that duty, causation, and damages. See Taeger v. Catholic Family & Cmty. Servs., 196 Ariz. 285, 294, 995 P.2d 721, 730 (App.1999).
Arizona views causation liberally. "To establish fault, a plaintiff must prove that the defendant's negligence proximately caused the plaintiff's injury." Stephens v. Bashas' Inc., 186 Ariz. 427, 431, 924 P.2d 117, 121 (App.1996). The proximate cause of an injury is defined in Arizona as "that which, in a natural and continuous sequence, unbroken by any efficient intervening cause, produces an injury, and without which the injury would not have occurred." Robertson v. Sixpence Inns of Am., Inc., 163 Ariz. 539, 546, 789 P.2d 1040, 1047 (1990) (citation omitted). "The defendant's act or omission need not be a `large' or `abundant' cause of the injury; even if defendant's conduct contributes `only a little' to plaintiff's damages, liability exists if the damages would not have occurred but for that conduct." Id. (citation omitted).
No Reasonable Jury Could Conclude that Zoloft Caused Mr. Baskins' Suicide
Even considering Arizona's liberal view of causation, Plaintiff has failed to raise a genuine issue of material fact regarding causation. First, Plaintiff has not provided sufficient evidence such that a reasonable jury could conclude that Zoloft causes suicide. As discussed above, the medical articles and diagnostic texts do not support a finding of legal causation. Likewise, individual case reports and retrospective medical articles summarizing individual case reports are not an adequate basis from which a jury could conclude that Zoloft causes suicide. Similarly, Pfizer's report to the Irish Medicines Board does not constitute an admission of general causation by Pfizer. See Smith v. Pfizer, 2001 WL 968369 (D.Kan.2001).
Furthermore, Plaintiff has failed to produce sufficient evidence such that a reasonable jury could conclude that Zoloft caused Mr. Baskins to commit suicide. In this regard, even assuming that the medical articles support general causation, the literature theorizes the following link: Zoloft causes akathisia that results in a suicidal event. In this case, Plaintiff has not presented any admissible evidence that Mr. Baskins suffered from akathisia. Furthermore, in the absence of Dr. Johnstone's testimony, Plaintiff cannot prove *1139 causation. See Lust By and Through Lust v. Merrell Dow Pharmaceuticals, Inc., 89 F.3d 594, 598 (9th Cir.1996). See also e.g., Matson v. Naifeh, 122 Ariz. 360, 362, 595 P.2d 38, 40 (1979) (requiring expert testimony if area of testimony is outside the common knowledge of laymen). Finally, the Court need not address Plaintiff's burden shifting argument under Arizona law regarding labeling because that shifting only occurs after Plaintiff has shown that Zoloft causes suicide and that Zoloft caused Mr. Baskins suicide. Since she cannot prove the underlying elements, the Court does not need to address the labeling issues. Accordingly, summary judgment in favor of Pfizer and against Plaintiff is required as no reasonable jury could conclude that Zoloft caused Mr. Baskins' suicide.
D. Motion for Partial Summary Judgment re: Punitive Damages
As the Court has already granted summary judgment to Defendant Pfizer, the pending Motion for Partial Summary Judgment re: Punitive Damages is denied as moot.
III. Conclusion
For the reasons set forth above, Dr. Johnstone's testimony regarding general and specific causation are unreliable and are therefore excluded. Furthermore, Plaintiff has failed to produce sufficient evidence upon which a reasonable jury could agree with her propositions concerning general and specific causation. As a result, summary judgment in favor of Pfizer and against Plaintiff is appropriate.
Accordingly, IT IS HEREBY ORDERED that:
1. Pfizer's Motion to Strike Declaration of Edwin Johnstone, M.D. (Doc. # 164) is DENIED;
2. Pfizer's Motion to Exclude Testimony of Dr. Edwin E. Johnstone (Doc. # 122) is GRANTED;
3. Pfizer's Motion for Summary Judgment re: Causation (Doc. # 136) is GRANTED; and
4. Pfizer's Motion for Partial Summary Judgment re: Punitive Damages (Doc. # 129) is DENIED AS MOOT; and
5. The Clerk of the Court shall enter judgment in favor of Defendant Pfizer and against Plaintiff Laura Cloud.
NOTES
[1] The Court has divided the research into pre-August 1997 and post-August 1997 research in order to clearly set forth the status of the medical literature before Mr. Baskins' suicide in August 1997.
[2] According to Plaintiff's expert, akathisia is a neurological term describing a person who "has a kind of unwished for, out-of-their control sense of being at the brink of moving." He testified that subjective complaints include a difficulty trying to sit for a great length of time or a sense of trembling. Akathisia is defined by the Diagnostic and Statistical Manual of Mental Disorders (DSM) as "subjective complaints of restlessness accompanied by observed movements (e.g. fidgety movements of the legs, rocking from foot to foot, pacing, or inability to sit or stand still) developing within a few weeks of starting or raising the dose of a neuroleptic medication (or after reducing a medication used to treat extrapyramidal symptoms.") Whereas, David Healy, M.D. defines it more broadly as an excited state of unrest.
[3] Suicidology is the study of human behavior and the phenomenon of suicide.
[4] Psychopharmacology is the science of drug-behavior relationships.
[5] The Court would note that in his drug and alcohol assessment at St. Mary's, however, Mr. Baskins denied any auditory hallucinations.
[6] Additionally, it should be recalled that Drs. Concato and Davis raised serious concerns about Dr. Healy's methodology in a September 2001 independent experts report to Judge Kathryn H. Vratil.
[7] In considering the importance of a 2.0 relative risk, the Court notes that Drs. Concato and Davis noted that "the magnitude of relative risk is a continuum; a threshold of 2.0 is an arbitrary cut-off value, often used to infer than an agent is `more likely than not' to cause disease." See also Reference Manual on Scientific Evidence 384 (2000). In addition, the Ninth Circuit has held that an expert may not be required to produce epidemiological studies when his opinion was based in part on peer reviewed literature. See Kennedy v. Collagen Corp., 161 F.3d 1226, 1230 (9th Cir.1998), cert. denied, 526 U.S. 1099, 119 S.Ct. 1577, 143 L.Ed.2d 672 (1999). Therefore, the Court considers the 2.0 threshold as a factor, not the dispositive factor, in determining the reliability of Dr. Johnstone's testimony on general causation.
[8] In her brief, Plaintiff also argues that she should not be required to produce epidemiological studies since Pfizer has not produced any such studies. Whether Pfizer has conducted any studies is irrelevant to the present motion as it is Plaintiff who bears the burden of establishing the admissibility of Dr. Johnstone's testimony regarding general causation.
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186 B.R. 904 (1995)
In the Matter of UPTON PRINTING COMPANY, Debtor.
Bankruptcy No. 89-11676B.
United States Bankruptcy Court, E.D. Louisiana.
June 5, 1995.
John M. Bilheimer, U.S. Dept. of Justice, Tax Division, Washington, D.C., for Internal Revenue Service.
Douglas S. Draper, New Orleans, Louisiana, for Debtor.
MEMORANDUM OPINION
THOMAS M. BRAHNEY, III, Chief Judge.
This matter came before the Court on a Motion to Determine Tax Liability filed by the Debtor, Upton Printing Company. The *905 Motion addresses the federal tax liability of the Debtor. A hearing was held on the Motion at which time the Court heard the statements of counsel and the testimony of witnesses and received documents into evidence. The hearing was continued in order for the attorney for the Internal Revenue Service ("IRS") to obtain certain documentation requested by the Court. That documentation was subsequently submitted. Upon consideration of the evidence offered at the hearing, the supplementary documentation submitted, the memoranda submitted, the record in the case and the applicable law, the Court enters the following Memorandum Opinion.
The Debtor is a commercial printing company located in New Orleans, Louisiana. The Debtor filed a Petition for Relief under Chapter 11 of the Bankruptcy Code on May 4, 1989. Subsequently, the Debtor filed this Motion pursuant to 11 U.S.C. § 505 seeking to have the Court determine the amount and priority of its state and federal tax liabilities, which the Debtor claimed it did not have the sufficient information to determine. The state tax liability was ultimately worked out between the Debtor and the Louisiana Department of Taxation and Revenue. Still at issue is the remaining federal tax liability.
Apparently, in August of 1990, prior to the hearing on this Motion, the Debtor's special tax counsel wrote a detailed letter to the IRS agent responsible for the Debtor's case in which he requested that the IRS abate the remaining unpaid portion of the assessment relating to FICA and FUTA taxes, penalties and interest owed by the Debtor. He requested this pursuant to Section 6404(a) of the Internal Revenue Code (26 U.S.C. § 6404(a)). At the hearing in this Motion, the IRS agent, Darlene Otterstetter, stated that she received the request, reviewed it with her supervisor, and denied it the next day. That denial was apparently based, at least in part, upon guidelines that do not allow abatement, especially of penalties, if the taxpayer has used funds which should have been earmarked for taxes to pay other creditors, which the Debtor had admitted had occurred. It was also brought out at the hearing that the IRS' computation of the Debtors' tax liability, as reflected in the first Proof of Claim submitted, did not properly allocate payments made by the Debtor and by a responsible party, the Debtor's president, Mr. William Bell. The IRS did file, prior to the hearing, an amended Proof of Claim which they assert reflects the appropriate amount and status of the tax liability. The Debtor still contested the computations. It was this dispute which prompted the Court to require support documentation for the IRS claim, as well as a summary of the taxes owed. This documentation has been provided. The Debtor, however, filed nothing in response to this documentation, apparently willing to let the evidence offered at the hearing support its position.
Section 6404(a) of the Internal Revenue Code, under which the Debtor seeks abatement of the remaining federal tax liability, provides for abatement of unpaid taxes or other liabilities which are "excessive in amount" or "assessed after the expiration of the period of limitation" or "erroneously or illegally assessed." With respect to the taxes and interest portions of the IRS claim in this case, the Court has reviewed the documentation provided by the IRS and finds it to be supportive of the IRS claim. The Debtor has offered no documentation to support a lesser figure for taxes and interest other than the abatement letter with its accompanying exhibits. Those exhibits included copies of the checks written by Mr. Bell and a schedule of federal taxes, interest and penalties apparently prepared by the Debtor, but with no supporting documentation. The Court can, therefore, not find any basis for the abatement of the taxes and interest portions of the IRS claim.
Regarding the penalty portion of the IRS claim, the Debtor is apparently basing its request for abatement on the provisions of 26 U.S.C. §§ 6651 and 6656. These statutes allow for the imposition of penalties for failure to file returns, pay taxes or make deposits of taxes unless "such failure is due to reasonable cause and not due to willful neglect. . . ." Reasonable cause sufficient to avoid these penalties "may be established if the taxpayer can make a satisfactory showing that it exercised ordinary business care and *906 prudence in providing for payment of the taxes but nevertheless was either unable to pay or would have suffered an undue hardship if it had paid on the due date." Brewery, Inc. v. United States, 72 A.F.T.R.2d 93-5420, 93-2 USTC ¶ 50,479, 1993 WL 367567 (S.D.Ohio 1993), aff'd, 33 F.3d 589 (6th Cir. 1994), citing 26 C.F.R. § 301.6651-1(c). The federal regulations do provide that, in determining whether the taxpayer used ordinary business care and prudence, "consideration will be given to all the facts and circumstances of the taxpayer's financial situation" and to the "nature of the tax which the taxpayer failed to pay. . . ." Treasury Regulation § 301.6651-1(c)(1) and (2) (26 C.F.R.) It is well settled that, in an action to abate a penalty assessment, it is the taxpayer's burden to prove the existence of the requisite reasonable cause. Estate of Geraci v. Commissioner, 502 F.2d 1148 (6th Cir.1974).
In this case, the Debtor asserts that its financial difficulties beginning in late 1984 and 1985, in part due to general economic hardship in the New Orleans area, were the reason that payment and depositing of the subject taxes would have been an undue hardship for the Debtor. Mr. Bell testified that, in what he considered was an exercise of ordinary business care and prudence, despite certain cost-cutting measures, the Debtor decided to keep current with payroll and supplier expenses rather than pay the taxes due. This was apparently done to keep the business operating in spite of decreased sales and cash flow problems. The Debtor relies heavily on two cases to support its argument that it had reasonable cause for its failure to file returns, pay taxes and make required tax deposits. In one of those cases, Glenwal-Schmidt v. United States, 78-2 USTC ¶ 9610, 1978 WL 4527 (D.D.C.1978), the taxpayer had a sizeable contract with the United States Navy. Due to contract disagreements, the Navy began to withhold contract payments. In order to continue with the project while the dispute was being resolved, Glenwal-Schmidt used its limited income to pay essential subcontractors and suppliers and failed to deposit certain withholding taxes. The court found that, since the taxpayer had a right to rely on the Navy contract and it could not foresee the noncompliance by the Navy, its failure to pay its tax liability was with reasonable cause.
The Debtor claims the second case, In re Pool & Varga, Inc., 60 B.R. 722 (Bankr. E.D.Mich.1986), is highly similar to the Debtor's case and should be followed here. In Pool, the debtor was also a printing business which, in part due to an economic recession in its geographic area, was undergoing severe financial hardship. The testimony was essentially that, despite taking certain steps to aid financial recovery, the debtor decided it had to pay those expenses necessary to keep the business running, instead of making timely tax payments. The debtor ultimately filed for Chapter 11 relief. The court found that "the debtor has made a sufficient showing that its financial situation was such that its business would have been irreparably injured or terminated had it paid or deposited the taxes in full on the due date, in other words, that it would have imposed an undue hardship. . . ." Id. at 728.[1]
These two cases have been criticized by other courts as anomalous and not well reasoned. See Brewery, supra and C.J. Rogers, Inc. v. United States, 66 A.F.T.R.2d 90-5831, 91-1 USTC ¶ 50,297, 1990 WL 255586 (E.D.Mich.1990). See also In re Hallock, 154 B.R. 297 (Bankr.D.Ariz.1993). Prior to the decision in Pool, the court in Wolfe v. United States, 612 F.Supp. 605 (D.Mont.1985), aff'd, 798 F.2d 1241 (9th Cir.1986) had found that economic difficulties do not constitute reasonable cause for failure to pay taxes. The court stated that "[a]lmost every non-willful failure to pay taxes is the result of financial difficulties. But to allow businesses to postpone filing returns and paying taxes until economic conditions improve would severely restrict the Service's ability to raise revenue for the operation of the federal government." Id. at 608. In an analogous situation regarding the penalties provided for in 26 U.S.C. § 6672(a), the Sixth Circuit had stated that "[i]t is no excuse that, as a matter of sound business judgment, the money was paid to *907 suppliers and for wages in order to keep the corporation operating as a going concern the government cannot be made an unwilling partner in a floundering business." Collins v. United States, 848 F.2d 740, 741-42 (6th Cir.1988). The court in C.J. Rogers, supra, found that this policy applied equally to penalties under §§ 6651 and 6656 and went on to find that "[a]dopting the broad reading of the term `reasonable cause' urged by [the taxpayer] would effectively enable failing corporations to self-execute government loans." C.J. Rogers, 1990 WL 255586, *2.
The court in Brewery, supra, noted that the "circumstances in which a taxpayer could establish reasonable cause for failure to pay withholding taxes are limited to situations in which the taxpayer has made reasonable efforts to protect the trust funds but those efforts have been frustrated by circumstances outside the taxpayer's control, such as the failure of a financial institution." Brewery, 1993 WL 367567, *3. That court held that financial difficulties can never be sufficient to constitute reasonable cause for not assessing penalties for nonpayment of withholding taxes. This Court agrees with the reasoning and the policy statements in the cases cited above. In so holding, the Court disagrees with the legal position taken by the court in Pool, even though that case appears to have facts similar to this case. Because the Debtor here has offered no showing of reasonable cause other than that related to its financial condition prior to the filing of this case, the Court must find that the Debtor has not shown reasonable cause sufficient to excuse the imposition of penalties under §§ 6651 and 6656 for failure to file, failure to pay and failure to deposit. Therefore, the Debtor's request for an abatement of those penalties is unwarranted.
The IRS Proof of Claim filed on August 22, 1990 set the tax liability at a total of $130,098.43. The most recent calculation by the IRS of their total claim was as of July 13, 1992 and was $133,772.36 (accounting for post-confirmation interest and plan payments made). Therefore, the Court does not have a current calculation of the amount of the IRS claim. Nevertheless, the Court will deny the Debtor's request for an abatement of taxes, interest and penalties in its entirety and will set the tax liability at a total of $133,772.36 as of July 13, 1992, with the current liability to be calculated and submitted to the Debtor by the IRS within two weeks from the entry of this Order.
NOTES
[1] The court in Pool did find that the debtor had not established reasonable cause for failure to file returns and allowed the assessment of the penalties for that failure.
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245 Ga. 757 (1980)
HOLMES
v.
BLOUNT.
36130.
Supreme Court of Georgia.
Submitted April 11, 1980.
Decided May 7, 1980.
Braun & Cavender, David L. Cavender, for appellant.
A. G. Wells, Jr., for appellee.
UNDERCOFLER, Chief Justice.
W. Clayton Blount filed a petition for processioning of land, Code Ann. Ch. 85-16, which was returned by the *758 processioners on January 23, 1979. Raymond Holmes is an adjacent landowner, who did not file a protest within 30 days, as required by Code Ann. § 85-1609. A motion to allow an appeal in the superior court was dismissed, as was a notice of appeal from the processioner's report in the probate court. In June, 1979, Holmes filed this independent suit for determination of the boundary lines and for trespass. The trial court dismissed this action as also constituting an untimely appeal. Holmes appeals. We reverse.
Under Code Ann. § 85-1609, "[a]ny owner of adjoining lands who may be dissatisfied with the lines as run and marked by the processioners and surveyor, may file his protest thereto with the judge of the probate court within 30 days after the processioners have filed their returns, specifying therein the lines objected to, and true lines as claimed by him ..." (Emphasis supplied.) We find this language is not mandatory.
Code Ann. § 85-1606 provides that the plat made under the Act by the processioners and county surveyor "shall be prima facie correct, and such plat, certified as aforesaid, shall be admissible in evidence without further proof." It is clear from Howland v. Brown, 92 Ga. 513 (17 SE 806) (1893), that where a protest is filed and a judgment is entered thereon in superior court, the judgment is binding on the protestant and his privies.
Here Holmes never made an effective protest, and the processioning thus acquired no res judicata effect. The trial court erred in dismissing this suit.
Judgment reversed. All the Justices concur.
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Case: 15-70017 Document: 00513564924 Page: 1 Date Filed: 06/24/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-70017 FILED
June 24, 2016
Lyle W. Cayce
RAYMOND DELEON MARTINEZ, Clerk
Petitioner - Appellant
v.
LORIE DAVIS, DIRECTOR, TEXAS DEPARTMENT OF CRIMINAL
JUSTICE, CORRECTIONAL INSTITUTIONS DIVISION,
Respondent - Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:13-CV-1994
Before JONES, DENNIS, and CLEMENT, Circuit Judges.
EDITH H. JONES, Circuit Judge:*
Raymond Deleon Martinez stands before us twice convicted of the 1983
capital murder of Herman Chavis and three times sentenced to death for that
crime. His case has seen three rounds of review on direct appeal, three rounds
of state habeas review, and is now on its second round of federal habeas review.
The district court in this round of federal habeas litigation denied his petition
and did not issue a Certificate of Appealability (“COA”). He seeks a COA from
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-70017
this court. We grant a COA on ineffectiveness claims concerning autopsy
reports and medical examiner testimony, deny a COA on Martinez’s other
claims, deny habeas relief, and affirm the district court’s denial of funds to
develop one of his claims.
I
The facts of Martinez’s crime have been well documented in numerous
state and federal courts. This court earlier summarized them as follows:
On July 13, 1983, Martinez, accompanied by two other men,
entered the Long Branch Saloon owned and operated by Herman
Chavis, the victim, and his wife, Pauline Chavis Smith. Smith
recognized the three men from the previous Monday and Tuesday
nights, when they came in, purchased beer, took only one sip, and
left. On this date, the men ordered three Miller Lite beers and
stood at the bar. Soon thereafter, one of the men locked the front
door, produced a revolver, and told everyone to “hit the floor.”
Martinez also brandished a revolver and threatened a patron. He
then grabbed the barmaid, shoved the revolver into her ribs, and
demanded the money from the cash drawer. Martinez was seen
reaching into the drawer, although it was later determined that he
took no money. A verbal exchange between Chavis and the men
ensued, after which Martinez pointed his gun at Chavis. Several
shots were fired. Chavis later died of a gunshot wound to the back
of the head and a gunshot wound through the back that lodged in
his right arm.
Martinez v. Dretke, 404 F.3d 878, 880-81 (5th Cir. 2005), cert. denied 546 U.S.
980, 126 S. Ct. 550 (2005) (footnotes and citations omitted).
Martinez was initially convicted on March 15, 1984 and sentenced to
death. See id. at 880 n.1. This conviction and sentence were subsequently
reversed and remanded on direct appeal due to jury-selection errors. Martinez
v. State, 763 S.W.2d 413 (Tex. Crim. App. 1988). A second trial resulted in
another guilty conviction and death sentence, which were affirmed on direct
appeal. Martinez v. State, 867 S.W.2d 30 (Tex. Crim. App. 1993) (en banc),
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reh’g denied, (October 20, 1993), cert. denied, 512 U.S. 1246, 114 S. Ct. 2765
(1994). Martinez’s state application for a writ of habeas corpus based on
ineffective assistance of counsel was rejected. See Martinez v. Dretke, 404 F.3d
at 882-83; Ex parte Martinez, No. 42,342–01 (Tex. Crim. App. 1999).
He then filed a § 2254 petition for a writ of habeas corpus in federal
district court in 2001.
On February 6, 2003, the district court held an evidentiary hearing
on the following issues: (1) whether Martinez was mentally ill at
the time of his offense; (2) whether his trial counsel was ineffective
for failing to present an insanity defense; and (3) whether there
was cause for any procedural default of these claims. At the
hearing, Martinez submitted evidence that he has a family history
of mental illness, was exposed to neurotoxins in utero and through
adolescence when he picked cotton as a migrant farm worker, was
physically abused by an older brother, was physically abused by
prison guards while in care of the Texas Youth Commission,
suffered untreated epileptic seizures, and was previously adjudged
not guilty by reason of insanity for an unrelated crime in 1967.
Martinez v. Dretke, 404 F.3d at 883 (footnote omitted). The district court
denied his petition and denied a COA.
On December 19, 2003, he asked this court for a COA, claiming
ineffective assistance of counsel by his counsel’s failure to:
(1) conduct an adequate investigation into his mental health
background; (2) introduce evidence of neurological impairment and
a prior adjudication of not guilty by reason of insanity as a
mitigating factor and assert an insanity defense during the
guilt/innocence phase of his trial; and (3) introduce evidence of his
neurological impairment as a mitigating factor during the
punishment phase of his trial.
Id. We denied a COA on the first issue and held that his counsel had conducted
an adequate investigation of his background, including his alleged exposure to
neurotoxins in utero and his use of anti-psychotic medications. Id. at 885-87.
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We invited additional briefing on the latter two issues and granted a COA. Id.
at 887. Nonetheless, we ultimately denied habeas as to all of his claims. We
held that his trial counsel’s failure to advance an insanity defense would
constitute a fraud on the court given psychological evaluations that concluded
Martinez did not suffer from any psychological disorders; testimony from his
own expert witness that his in utero and adolescent exposure to pesticides
would support only a post-hoc conjecture of a brain disorder; the lack of any of
his counsels’ personal experiences that would suggest their awareness of
potential disorders; and the availability of a viable alternative defense
supported by the record. Id. at 888-89. Further, we held that “counsel’s
decision not to introduce evidence of neurological impairment (i.e. organic
brain damage) as mitigating evidence at the punishment phase constituted
reasonable and protected professional judgment” because evidence of organic
brain injury is a “double-edged sword.” Id. at 889; see also Kitchens v. Johnson,
190 F.3d 698, 702-03 (5th Cir. 1999).
After we denied habeas relief, Martinez filed a subsequent state habeas
application, raising a claim he had argued at his second trial and 1993 direct
appeal, but not in his first state habeas application in 1997. Ex parte Martinez,
233 S.W.3d 319 (Tex. Crim. App. 2007). The state court held that because of
intervening case law, this was not an abuse of the writ, and granted habeas
relief. Id. at 322-23. Martinez received a new trial as to punishment only.
The third punishment trial was held in 2009, and Martinez was
sentenced to death a third time. At this trial, the jury heard the facts of the
Chavis murder as well as testimony regarding Martinez’s criminal history,
violence and dangerousness in prison, and gang affiliation. See Martinez v.
State, 327 S.W.3d 727, 731-35 (Tex. Crim. App. 2010), cert. denied 563 U.S.
1037, 131 S. Ct. 2966 (2011) (more completely summarizing the facts before
the 2009 jury).
4
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The 2009 sentencing jury heard about Martinez’s long and violent
criminal history. That history began when he was fifteen and was sent to
juvenile prison for statutory rape of a twelve-year-old girl. Within a few
months of his release, he was adjudicated delinquent and sent back to juvenile
detention. After his release at age eighteen, he was sentenced to a two-year
prison term for burglary in 1964. He attempted to escape in 1965. He
committed burglary in 1967, but was found not guilty by reason of insanity.
His sanity restored, he was released in 1969, but he went on to commit four
robberies (two armed), one theft of an automobile, and an escape from jail while
in custody. He received a total sentence of 20 years for these crimes. He lived
with his family after his parole in 1982. He terrorized them, bragged to them
about crimes he committed while in prison, and recounted robberies and
assaults he committed in the Fort Worth area.
The jury heard testimony about his crime spree that led to the deaths of
five people in 1983. In addition to the July 13 robbery of the Long Branch
Saloon and the murder of Herman Chavis for which he had been convicted, he
committed armed robbery of two other saloons in Houston on July 11 and
July 12. The July 11 armed robbery resulted in the death of Moses Mendez,
but it was never clearly established who shot Mendez. Martinez then went to
Fort Worth to stay with his sister, Julia Gonzales. On July 15, he shot her
dead on the side of the road and shot her boyfriend, Guillermo Chavez, seven
times in a car, then ransacked their home. Martinez returned to Houston,
where he met a prostitute named Traci Pelkey. On July 21, he killed her by
hitting her on the head with his gun and then shooting her three times. He
was arrested on July 23, 1983 and has been in custody ever since.
The 2009 sentencing jury also heard testimony that Martinez has been
a particularly dangerous and violent inmate. During his incarceration
beginning in 1969, he was violent toward other inmates, often stabbing them
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No. 15-70017
with homemade weapons or attacking them with little provocation. He was
paroled in 1982 and rearrested in 1983. Since then, he has 34 documented
disciplinary incidents between 1986 and 2005, which likely understates the
total number because it does not include incidents that may have occurred
while he was in county (as opposed to state) custody. Four of the incidents are
classified as minor, and 30 are classified as major. Sixteen are assaults on
correctional officers and two are assaults on inmates. In February 2002, he
encouraged other inmates to kill a prison guard they had taken hostage and
then interfered with the ability of other guards to free the hostage. In June
2002 he made a homemade spear and threw it at a prison guard. There are
numerous documented incidences in which Martinez spat upon or threw other
bodily fluids at correctional officers and threatened them with physical
violence. He managed to unlock his cell door in 2008 and attacked a fellow
inmate, then bragged about it. He also bragged to his niece, Laura Escoto,
during her visits, about assaults and rapes he committed while in prison and
asserted that he had “killed the wrong sister,” referring to his killing of
Gonzales. He then threatened Escoto when she decided she no longer wanted
to continue visiting him in prison. In 2008, he wrote several letters to family
members detailing his criminal exploits both in and out of prison. His family
members testified at trial that he showed little remorse and referred to himself
as a “psychopath.”
The sentencing jury heard testimony that Martinez is a known affiliate,
and indeed organizer and leader, of the Texas Syndicate prison gang. The jury
heard testimony that he killed those who opposed formation of the gang.
During his brief period out of prison between 1981 and 1983, Martinez’s father
attempted to help him find a job. Martinez was more interested in establishing
a methamphetamine or marijuana business to generate money for the gang.
To do so, he went to California, where he shot and killed the man who provided
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him with the chemicals needed to start “cooking” the drugs. In early 1983, he
checked himself into a mental hospital so he could stall until a friend and fellow
gang member was released from prison. He was discharged after assaulting
someone at the facility. In May 1983, he met a girlfriend named Mary Salazar
who was a teenage runaway. He attempted to recruit her to join the Texas
Syndicate and forced her to prostitute herself. She accompanied him on his
1983 crime spree and testified to that at his trial.
After hearing all of this evidence, the jury sentenced Martinez to death
for a third time. The sentence was affirmed on direct appeal. Martinez v. State,
327 S.W.3d 727 (Tex. Crim. App. 2010), cert. denied 131 S. Ct. 2966 (2011). His
state habeas application was denied. Ex parte Martinez, No. 42,342-03 (Tex.
Crim. App. June 26, 2013). He then filed the instant § 2254 petition with the
district court in 2013. It denied relief in all respects and denied a COA.
Martinez v. Stephens, 2015 WL 1282199 (S.D. Tex. 2015). He now seeks a COA
from this court.
The district court meticulously considered the following claims of
ineffective assistance of his 2009 trial counsel: (1) counsel did not investigate
whether Martinez was ineligible for execution under Atkins v. Virginia,
536 U.S. 304, 122 S. Ct. 2242 (2002), because he is intellectually disabled;
(2) counsel did not object under Crawford v. Washington, 541 U.S. 36,
124 S. Ct. 1354 (2004), to a medical examiner’s testimony about autopsies he
had neither performed nor witnessed, nor (3) to introduction of those autopsy
reports; 1 (4) counsel did not present evidence that Martinez suffered from
organic brain damage as a result of his exposure to organophosphate
1 The district court considered the two distinct Confrontation Clause claims as one,
referring at times in its analysis to the testimony and at times to the reports themselves.
These, however, are two distinct claims that we will refer to separately or as “autopsy
evidence.”
7
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pesticides; and (5) counsel did not object to allegedly improper questioning and
argument by the prosecutor regarding Martinez’s sexuality. Martinez raises
an additional claim to this court: (6) that the district court erred in denying
Martinez’s request for funds to develop his Atkins claim.
We will consider the first and sixth issues together; the second and third
issues together; and the fourth and fifth issues independently.
II
Since Martinez’s habeas petition complains of detention that “arises out
of process issued by a State court,” he must obtain a COA before we may hear
his appeal. 28 U.S.C. § 2253(c)(1)(a). A COA may issue “only if the applicant
has made a substantial showing of the denial of a constitutional right.”
28 U.S.C. § 2253(c)(2); see also Barefoot v. Estelle, 463 U.S. 880, 893, 103 S. Ct.
3383, 3394 (1983). A COA is a “jurisdictional prerequisite” such that “until a
COA has been issued federal courts of appeals lack jurisdiction to rule on the
merits of appeals from habeas petitioners.” Miller-El v. Cockrell, 537 U.S. 322,
336, 123 S. Ct. 1029, 1039 (2003). “Under the controlling standard, a petitioner
must show that reasonable jurists could debate whether (or, for that matter,
agree that) the petition should have been resolved in a different manner or that
the issues presented were adequate to deserve encouragement to proceed
further.” Id. (internal quotations and alterations omitted) (quoting Slack v.
McDaniel, 529 U.S. 473, 484, 120 S. Ct. 1595, 1603-04 (2000)); see also
Barefoot, 463 U.S. at 893, 103 S. Ct. at 3394. “This threshold inquiry does not
require full consideration of the factual or legal bases adduced in support of
the claims,” but instead “an overview of the claims in the habeas petition and
a general assessment of their merits.” Miller-El, 537 U.S. at 336, 123 S. Ct. at
1039. To obtain a COA where the district court reached the merits of the
constitutional claim, “[t]he petitioner must demonstrate that reasonable
jurists would find the district court’s assessment of the constitutional claims
8
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No. 15-70017
debatable or wrong.” Slack, 529 U.S. at 484, 120 S. Ct. at 1604. Where the
district court dismissed a claim on procedural grounds (such as failure to
exhaust in state habeas proceedings) without reaching the merits, then “a COA
should issue when the prisoner shows, at least, that jurists of reason would
find it debatable whether the petition states a valid claim of the denial of a
constitutional right and that jurists of reason would find it debatable whether
the district court was correct in its procedural ruling.” Id. In death penalty
cases, we resolve any doubts in favor of granting a COA. See Martinez v.
Dretke, 404 F.3d at 884.
Upon grant of a COA, we apply AEDPA standards to determine whether
the petitioner is entitled to habeas relief. Those standards will be discussed as
they apply to the various claims Martinez has raised.
III
We first consider Martinez’s Atkins claim, the only one he presented to
the state habeas court. We also consider the district court’s denial of funding
to develop that claim.
A
Martinez asserts that his counsel at his third sentencing hearing were
ineffective for failing to conduct a reasonable investigation into, and to present
evidence about whether he is intellectually disabled, 2 and therefore ineligible
for execution under Atkins v. Virginia, 536 U.S. 304, 122 S. Ct. 2242 (2002).
Because this claim was fully adjudicated and ruled on by the state habeas
court, § 2254(d) applies. See Williams v. Stephens, 761 F.3d 561, 566 (5th Cir.
2014). Under that provision, federal habeas relief may be awarded only if the
state court’s decision was “contrary to, or involved an unreasonable application
2 The Supreme Court used the term “mental retardation” in Atkins, but has since used
the term “intellectual disability” to describe the identical phenomenon. See, e.g., Hall v.
Florida, 134 S. Ct. 1986, 1990 (2014). We follow the same convention.
9
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of, clearly established Federal law, as determined by the Supreme Court,” or if
it “was based on an unreasonable determination of the facts in light of the
evidence presented in the State court proceeding.” 28 U.S.C. §§ 2254(d)(1)-(2).
The federal court’s review is limited to the state court record. See Cullen v.
Pinholster, 131 S. Ct. 1388, 1398-99 (2011). We presume the state court’s
factual determinations are correct; Martinez has the burden of rebutting them
by clear and convincing evidence. 28 U.S.C. § 2254(e)(1). Martinez has not
met his burden to show that jurists of reason could dispute the district court’s
rejection of this claim.
Martinez had to establish three elements to prove he is intellectually
disabled under Texas law: (1) significantly subaverage general intellectual
functioning; (2) accompanied by related limitations in adaptive functioning;
and (3) onset prior to the age of 18. See Lewis v. Quarterman, 541 F.3d 280,
283 (5th Cir. 2008); Gallo v. State, 239 S.W.3d 757, 769 (Tex. Crim. App. 2007).
His trial counsel submitted an affidavit to the state habeas court explaining
that this was not a viable defense given voluminous evidence that Martinez
was not intellectually disabled. The state courts rejected the Atkins claim, and
the district court upheld their conclusion pursuant to 28 U.S.C. § 2254(d).
A review of the state court record supports the courts’ conclusions. On
the intellectual functioning prong, the state court found that the results of six
psychological examinations over a twenty-two year period from 1966-1988
showed Martinez to be of average intelligence. The court cited various IQ tests
administered between 1967 and 2001 indicating that Martinez had scores of
79, 89, 93, and 107—all above the typical cutoff of an intellectual disability
under Texas law. See Blue v. Thaler, 665 F.3d 647, 658 (5th Cir. 2011)
(“[U]nder Texas law, the lack of a full-scale IQ score of 75 or lower is fatal to
an Atkins claim.” (citing Ex parte Hearn, 310 S.W.3d 424 (Tex. Crim. App.
2010)); Ex parte Briseno, 135 S.W.3d 1, 7 n.24 (Tex. Crim. App. 2004) (a person
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with an IQ above 70 is generally presumed to not have an intellectual
disability). Martinez’s most recent score is worth noting. It was conducted in
2001 and resulted in a Full Scale IQ Score of 107, a Performance IQ of 97, and
a Verbal IQ of 114, all of which place Martinez in the average to high-average
range. The test was conducted for purposes of an evidentiary hearing during
Martinez’s first trip through federal habeas review. The state habeas court
credited testimony at the 2009 sentencing trial by Martinez’s expert,
Dr. Lundberg-Love, that these results are accurate.
The state habeas court also found that Martinez had failed to establish
limitations in adaptive functioning. It looked to: testimony by Martinez’s sister
at his 1989 retrial and 2009 punishment trial that Martinez told her he
purposefully checked himself into a mental institution in 1983 for access to free
food, shelter, and women and to bide time until a friend’s release from prison;
testimony from Martinez’s brother regarding his purposeful decision to
establish a methamphetamine lab or marijuana business in order to further
his standing with the Texas Syndicate gang; his conduct in prison and at a
pretrial hearing; his own testimony coupled with documents describing his
enjoyment of various leisure activities; and his preference for earning money
selling drugs, coupled with past legitimate employment including as a barber
and assembly line worker.
The state habeas court next considered evidence concerning the seven
“Briseno factors,” which Texas factfinders may focus upon “in weighing
evidence as indicative of [intellectual disability] or of a personality disorder.”
Ex parte Briseno, 135 S.W.3d at 8-9. These factors help to explain how
subaverage intellectual functioning interacts with limitations in adaptive
functioning in order to make the required showing “that the two are linked—
the adaptive limitations must be related to a deficit in intellectual functioning
and not a personality disorder.” Ex parte Hearn, 310 S.W.3d at 428-29.
11
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No. 15-70017
Based on all of this evidence, the state habeas court found “that there is
no credible evidence of [intellectual disability] and no credible basis for
believing that [Martinez] is a[n intellectually disabled] person in terms of the
prevailing diagnostic standards.”
Nonetheless, Martinez argues that reasonable jurists could debate
whether this determination was unreasonable based on other evidence in the
record and his trial counsel’s ineffectiveness in failing to investigate further.
He relies heavily on one IQ test, administered by the Texas Department of
Corrections in 1965 when he was 18, that resulted in a score of 65. But see
Garcia v. Stephens, 757 F.3d 220, 226 (5th Cir. 2014) (four higher IQ scores
undermine accuracy of one lower IQ score). He also points to facts including
his repetition of first grade three times and fifth grade once; that he received
very little formal education while in juvenile custody; Dr. Lundberg-Love’s
testimony that he reads at a fourth grade level and has poor logical and
abstract thinking; that Texas Department of Corrections reports show the
same deficiencies in abstract reasoning and logic; and testimony from his
family that he would wake up screaming in the night as a child and also hit
himself. He further argues that the state habeas court’s decision was an
unreasonable application of Supreme Court precedents in Hall v. Florida,
134 S. Ct. 1986 (2014) and Brumfield v. Cain, 135 S. Ct. 2269 (2015), both of
which were decided after the state habeas court’s decision. As Martinez sees
it, the state habeas court was required to conduct an evidentiary hearing in
the face of the conflicting evidence before it.
The district court held that the state court made a reasonable factual
determination in light of all of the evidence before it that Martinez is not
intellectually disabled. Federal courts must defer to the state court’s fact
findings. See Brumfield, 135 S. Ct. at 2277; Blue, 665 F.3d at 654-55. The
court also concluded that the state habeas court’s decision does not contravene
12
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No. 15-70017
Supreme Court precedents in Brumfield—which involved an inmate who met
the standard for an Atkins evidentiary hearing—or Hall—which does not affect
Texas’s standards for evaluating Atkins claims, see Garcia, 757 F.3d at 226;
Mays v. Stephens, 757 F.3d 211, 218-19 (5th Cir. 2014). With this predicate,
the district court also rejected Martinez’s contention that there is a reasonable
probability that, but for his counsel’s alleged ineffectiveness in not
investigating the claim further, he would have been found ineligible for
execution under Atkins. See Mays, 757 F.3d at 216-17. Reasonable jurists
could not find the district court’s assessment of the Atkins-related
constitutional claims debatable or wrong. We therefore deny a COA.
B
Martinez also claims that the district court erred by denying funding to
develop his Atkins claim. See 18 U.S.C. § 3599(f). He does not need a COA to
appeal this denial, and we review the decision only for abuse of discretion. See
Smith v. Dretke, 422 F.3d 269, 288 (5th Cir. 2005). We have upheld the denial
of such funding when (1) a petitioner has failed to supplement his funding
request with a viable constitutional claim that is not procedurally barred;
(2) the sought-after assistance would only support a meritless claim; or (3) the
sought-after assistance would only supplement prior evidence. See id. The
petitioner must also show that the funding is “reasonably necessary,” which
means that there must be a “substantial need” for the requested assistance.
See Riley v. Dretke, 362 F.3d 302, 307 (5th Cir. 2004).
Martinez again relies on the IQ score of 65 when he was 18, and contends
that an expert is needed to reconcile it with his higher subsequent results. The
district court properly limited its review to the record compiled in the state
habeas court, see Cullen v. Pinholster, 131 S. Ct. 1388, 1398-99 (2011); Ward v.
Stephens, 777 F.3d 250, 266 n.5 (5th Cir. 2015). The court determined that
Martinez had not demonstrated why additional testing to supplement that
13
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No. 15-70017
already substantial record was reasonably necessary given the narrow federal
standard of review. Moreover, the state habeas court had allocated $5,000 to
develop Martinez’s claim, only to have that expert determine he was not
intellectually disabled. Further, Martinez was given an evidentiary hearing
on a related neurological impairment claim in an earlier round of federal
habeas review, and the testing for that claim led to an IQ test result of 107.
See Martinez v. Dretke, 404 F.3d at 883, 883 n.6. Any additional factual
development on Martinez’s intellectual disability claim would be at best
cumulative, see Smith, 422 F.3d at 288-89; Barraza v. Cockrell, 330 F.3d 349,
352 (5th Cir. 2003), or more likely would support only a meritless claim, see
Allen v. Stephens, 805 F.3d 617, 638 (5th Cir. 2015); Hill v. Johnson, 210 F.3d
481, 487 (5th Cir. 2000). See also Ward, 777 F.3d at 266-67. The district court
did not abuse its discretion to deny funds.
IV
A
Martinez raises four ineffective assistance of trial counsel claims that he
did not exhaust in state court. These unexhausted claims are therefore
procedurally barred under Texas law, see Garza v. Stephens, 738 F.3d 669, 675
(5th Cir. 2013), and 28 U.S.C. § 2254(b) prevents a federal court from granting
habeas relief unless the applicant makes one of two showings, neither of which
applies.
Procedurally defaulted claims can, however, be reviewed when “the
prisoner can demonstrate cause for the default and actual prejudice as a result
of the alleged violation of federal law, or demonstrate that failure to consider
the claims will result in a fundamental miscarriage of justice.” Coleman v.
Thompson, 501 U.S. 722, 750, 111 S. Ct. 2546, 2565 (1991). Ineffectiveness of
state habeas counsel is now a circumstance in which a prisoner may show
cause for procedural default of a federal claim. See Martinez v. Ryan, 132 S. Ct.
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No. 15-70017
1309, 1320 (2012). The Supreme Court has explicitly made this rule applicable
to Texas. Trevino v. Thaler, 133 S. Ct. 1911, 1915 (2013). “[T]o succeed in
establishing cause, the petitioner must show (1) that his claim of ineffective
assistance of counsel at trial is substantial—i.e., has some merit—and (2) that
habeas counsel was ineffective in failing to present those claims in his first
state habeas proceeding.” Garza v. Stephens, 738 F.3d 669, 676 (5th Cir. 2013)
(citing Martinez, 132 S. Ct. at 1318).
An ineffectiveness claim, in turn, requires the petitioner to make two
showings: (1) counsel’s performance was deficient, and (2) the deficient
performance prejudiced the petitioner. Strickland v. Washington, 466 U.S.
668, 687, 104 S. Ct. 2052, 2064 (1984). Failure to make either showing defeats
an ineffectiveness claim. See id.
Where, as here, a federal habeas petitioner brings a claim of ineffective
assistance of trial counsel, and that claim is procedurally defaulted, and he
asserts Martinez/Trevino to show cause for that procedural default, a court
must potentially perform two Strickland inquiries before considering the
underlying defaulted claim. See Beatty v. Stephens, 759 F.3d 455, 465-66 (5th
Cir. 2014) (performing alternative analyses). First, the petitioner must
demonstrate that the underlying ineffective assistance of trial counsel claim is
substantial—i.e., has some merit. Strickland’s prejudice prong in a death
penalty sentencing case requires a showing that there is a “reasonable
probability that the jury would not have imposed the death sentence in the
absence of errors by [trial] counsel.” Riley v. Cockrell, 339 F.3d 308, 315 (5th
Cir. 2003) (quotations and citations omitted). Second, the Strickland inquiry
also governs whether state habeas counsel was ineffective in failing to present
the trial court ineffectiveness claim in the state habeas proceeding. See
Martinez, 132 S. Ct. at 1318. Prejudice in this inquiry means that Martinez
must show a reasonable probability that he would have been granted state
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No. 15-70017
habeas relief had his habeas counsel’s performance not been deficient. See
Newbury v. Stephens, 756 F.3d 850, 872 (5th Cir. 2014). Upon satisfying both
prongs of this Martinez/Trevino inquiry, a petitioner has shown cause for the
procedural default and is entitled to have his claim reviewed on the merits in
federal court, see Newbury, 756 F.3d at 872; but even then, he is not necessarily
entitled to habeas relief, see Martinez, 132 S. Ct. at 1320.
With these standards in mind, and the COA standards layered on top,
we proceed to Martinez’s defaulted claims.
B. Confrontation Clause
The prosecution introduced evidence at Martinez’s 2009 sentencing trial
that he was responsible for the deaths of five people during his July 1983 crime
spree: Herman Chavis, Moses Mendez, Julia Gonzales, Guillermo Chavez, and
Traci Pelkey. He had only been convicted of the murder of Chavis, yet the
prosecution sought to demonstrate his future dangerousness through evidence
of the other killings. A finding of future dangerousness is necessary for the
imposition of the death penalty under Texas law. See TEX. CODE OF CRIM.
PROC. ANN. art 37.071 § 2(b)(1). In addition to live testimony tying Martinez
to the murders, the prosecution introduced autopsy reports performed in the
four extraneous homicides. The prosecution also called Albert Chu, an
assistant medical examiner at the Harris County Medical Examiner’s Office,
to testify about the reports. Chu had neither performed the autopsies twenty-
six years earlier nor witnessed them. Martinez asserts that admission of the
autopsy reports and admission of Chu’s testimony were each a violation of his
Confrontation Clause rights, see U.S. CONST. amend. VI, and that his trial
counsel were ineffective for not objecting to their admission.
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No. 15-70017
The district court held that Martinez could not overcome the procedural
bar on these claims 3 because he had not shown a reasonable probability of a
different result had trial counsel lodged a Confrontation Clause objection.
Martinez v. Stephens, 2015 WL 1282199 at *11. The court carefully chronicled
the status of the Confrontation Clause law in Texas at the time of the 2009
sentencing trial and when his state habeas petition was filed in 2010, and
concluded that Martinez had “not raised a strong claim of ineffective
representation by trial or habeas counsel.” Id. It went on to hold that even if
his attorneys should have raised the claims, he could not show actual prejudice
because removal of the autopsy evidence “would not significantly alter the
jury’s consideration of Martinez’s sentence” given the other evidence tying him
to the killings. Id.
We agree that Confrontation Clause jurisprudence relating to autopsy
reports was unclear in 2009 and 2010 (and remains so today). Because jurists
of reason could find it debatable whether the district court’s procedural bar
ruling was correct, we granted a COA on these two claims. 4 We therefore
conduct de novo Martinez/Trevino procedural analysis. See Gonzalez v. Thaler,
623 F.3d 222, 224 (5th Cir. 2010) (COA granted to review procedural grounds
and then stating “[w]e review the denial of a federal habeas petition on
procedural grounds de novo”), aff’d, 132 S. Ct. 641 (2012). Were we to find
cause under that doctrine for the procedural default of these claims, we could
then consider them on the merits and possibly grant habeas relief. See
3 Again, these are two distinct claims. We, like the district court, analyze them
together because of the overriding question of prejudice.
4 The district court alternatively ruled that even if Martinez could overcome the
procedural bar on his claims, the claims lack merit; for the same reason that state habeas
counsel did not provide deficient performance, trial counsel’s failure to object did not amount
to constitutionally inadequate representation, but in any case Martinez could not show
prejudice. Martinez v. Stephens, 2015 WL 1282199 at *16.
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No. 15-70017
Martinez, 132 S. Ct. at 1318. On close review, however, we agree with the
district court that, even assuming Martinez could show that either his trial or
habeas counsel was ineffective, he cannot show resultant prejudice. As a
result, his claims are procedurally barred and we must deny habeas relief.
We may assume, without deciding, that Martinez’s trial counsel were
ineffective for failing to object on either Confrontation Clause ground and that
his state habeas counsel was ineffective for failing to object to his trial counsel’s
ineffectiveness. 5 But on the ultimate merits of his claim, Martinez must still
establish prejudice. “[T]he question is not whether a court can be certain
counsel’s performance had no effect on the outcome or whether it is possible a
reasonable doubt might have been established if counsel acted differently.”
Harrington v. Richter, 562 U.S. 86, 111, 131 S. Ct. 770, 791 (2011). Rather,
“[t]he likelihood of a different result must be substantial, not just conceivable.”
5 Though we need not decide ineffectiveness, we are skeptical Martinez could establish
it as to trial or habeas counsel. At the time of his 2009 sentencing trial, the Supreme Court
had decided Crawford v. Washington, 541 U.S. 36, 124 S. Ct. 1354 (2004), which held that
admission of testimonial statements against a criminal defendant violates the Confrontation
Clause unless the witness is unavailable and was subject to a prior cross-examination. It
reaffirmed and clarified that decision in Davis v. Washington, 547 U.S. 813, 126 S. Ct. 2266
(2006). The Texas courts had by that time applied these decisions to prison disciplinary
reports in a capital case. See Russeau v. State, 171 S.W.3d 871, 880-81 (Tex. Crim. App.
2005). From just these three cases, it is hard to see how Martinez’s trial counsel should have
found an obligation to object to the autopsy evidence admitted in his trial. During the
pendency of Martinez’s direct appeal, and by the time of his 2010 state habeas petition, the
Supreme Court had extended Crawford to cover “testimonial” certificates of analysis sworn
by analysts at a state laboratory in Melendez-Diaz v. Massachusetts, 557 U.S. 305, 129 S. Ct.
2527 (2009). The district court recognized that courts have been split on whether Melendez-
Diaz applies to autopsy reports. See Martinez v. Stephens, 2015 WL 1282199 at *10 to *11.
It also noted that some Texas courts, in cases decided after Martinez’s 2009 trial, have held
autopsy reports are testimonial at least for some purposes. See id. Martinez relies heavily
on cases decided after his 2009 trial and 2010 habeas petition—most notably Burch v. State,
401 S.W.3d 634 (Tex. Crim. App. 2013) (lab reports indicating substance was cocaine are
testimonial)—but his reliance is misplaced. We look to the law at the time of counsel’s
allegedly deficient conduct, see United States v. Webster, 392 F.3d 787, 796 (5th Cir. 2004),
and counsel has no duty to anticipate changes in the law, see United States v. Fields, 565 F.3d
290, 296 (5th Cir. 2009).
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No. 15-70017
Id. at 112, 792. Martinez simply cannot establish prejudice given the
overwhelming evidence of his dangerousness.
First, the autopsy evidence was not the only evidence that linked
Martinez to the extraneous killings. Mary Salazar, the teenage runaway, was
present for each of the five murders and personally witnessed those of his sister
Julia Gonzales, 6 her boyfriend Guillermo Chavez, and prostitute Traci Pelkey.
She testified about how Martinez bragged about each of the killings. Other
witnesses identified Martinez as a robber of the saloons and placed him at the
scene of the murders of Herman Chavis and Moses Mendez, even if they could
not say definitively that he fired the fatal shots. Martinez’s argument that the
prosecution would not have been able to tie the five murders to him without
the autopsy evidence is simply not true.
Second, in addition to the 1983 crime spree, the prosecution still had a
compelling capital case to present to the jury. Martinez’s criminal history is
long and riddled with violence. From the time he was fifteen years old
Martinez has demonstrated his violent proclivities. This includes: numerous
armed robberies; assaults; burglaries; rapes in and out of prison (including of
a twelve-year-old girl); killings while setting up his drug business for the Texas
Syndicate; his overall gang involvement (including as a leader in the Texas
Syndicate); the terror he directed toward his family with regularity; and his
brutality toward prison guards and other inmates while in custody.
Throughout his lifelong criminal history, Martinez demonstrated no
willingness to reform, despite being given multiple opportunities to do so. He
regularly bragged about his criminal exploits and described himself as a
“psychopath” to his family.
6 Further, Martinez’s niece, Escoto, testified that he claimed to have “killed the wrong
sister” on one occasion and apologized to her for killing Gonzales (her mom) on another.
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No. 15-70017
In sum, Martinez cannot establish a reasonable likelihood that the jury
would have found he was not a future danger and spared his life. Any
Confrontation Clause error here was harmless because it did not have a
substantial and injurious effect or influence in determining the jury’s verdict. 7
See Dorsey v. Stephens, 720 F.3d 309, 318-19 (5th Cir. 2013); Clark v. Epps,
359 F. App’x 481, 485-87 (5th Cir. 2009).
We reached a similar conclusion when Martinez was last before us on his
first round of federal habeas review:
In addition to mitigating evidence presented by the defense,
the jury also had before it evidence of Martinez’s methodical
planning and execution of the crime of conviction. The state
propounded evidence that Martinez and his accomplices “cased”
Chavis’s bar in preparation for the robbery. On July 11 and
July 12, 1983, Martinez and one accomplice entered the bar,
ordered a beer, drank very little, and left. Martinez and two
accomplices returned on July 13, 1983, and shot and killed Chavis
in the process of robbing the bar. The jury also had before it
evidence of Martinez’s subsequent violent and murderous 1983
crime spree, and his numerous prior convictions for burglary,
robbery, jail-breaking, and theft. The evidence depicted a man
capable of planning and executing criminal acts and victimizing
anyone who would get in his way, which was more than sufficient
to belie any “tragic impulse” defense that Martinez could have
asserted.
Martinez v. Dretke, 404 F.3d at 890 (emphasis added). The 2009 sentencing
jury had the same evidence before it.
7 Martinez argues that the state has the burden of proving that the error is harmless
beyond a reasonable doubt. See United States v. Alvarado-Valdez, 521 F.3d 337, 341-42 (5th
Cir. 2008). That is the correct standard on direct review, but the substantial and injurious
effect standard is applied on collateral review. See Fratta v. Quarterman, 536 F.3d 485, 507-
508 (5th Cir. 2008).
20
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No. 15-70017
Given the state’s compelling case for the death penalty, we cannot find
that Martinez was prejudiced by his counsels’ alleged (and only assumed
arguendo) ineffectiveness. He has not shown cause under Martinez/Trevino for
his procedural default of his two Confrontation Clause claims, which are
therefore barred from federal review.
C. Organic Brain Damage
Martinez alleges that his trial counsel were constitutionally ineffective
for failing to present evidence of his organic brain damage. We considered and
rejected an identical claim in Martinez’s first round of habeas proceedings,
although we granted him a COA on the issue. See Martinez v. Dretke, 404 F.3d
at 887-90. We held that “counsel’s decision not to introduce evidence of
neurological impairment (i.e., organic brain damage) as mitigating evidence at
the punishment phase constituted reasonable and protected professional
judgment” because evidence of organic brain injury is a “double-edged sword.”
Id. at 889; see also Kitchens v. Johnson, 190 F.3d 698, 702-03 (5th Cir. 1999).
“[I]ntroduction of evidence that Martinez suffered from organic (i.e.,
permanent) brain damage, which is associated with poor impulse control and
a violent propensity, would have . . . increased the likelihood of a future
dangerous finding” that is necessary for the imposition of the death penalty
under Texas law, see TEX. CODE OF CRIM. PROC. ANN. art 37.071 § 2(b)(1). As
a result, “counsel’s decision not to introduce evidence of organic brain damage,
given the availability of other, less damaging, mitigating evidence, fell within
the bounds of sound trial strategy.” Martinez v. Dretke, 404 F.3d at 890. We
further held that even if counsel’s strategies did fall below professional norms,
they could not form the basis of an ineffective assistance of counsel claim
because Martinez could not show prejudice.
Martinez has not demonstrated that his claim is any more meritorious
now than it was then. All of the evidence he now presses in support of this
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No. 15-70017
claim was developed during the prior round of habeas review and was available
to his trial counsel at his 2009 resentencing. See id. at 889 (“Under the facts
as they existed at the time [in 2009], counsel’s decision was reasonable.”). The
law did not change between our 2005 opinion and his 2009 sentencing hearing;
the second edge of the double-edged sword remains as sharp as ever. Evidence
of organic brain damage could have been just as damaging to Martinez as
beneficial. Martinez argues that the second edge of the sword was already
before the jury, via the testimony of Dr. Lundberg-Love, and therefore not a
risk to be concerned with. She testified that he had difficulty controlling his
behavior and was impulsive. This does not negate the risk associated with
evidence of organic brain damage that his counsel made a strategic decision to
avoid. General statements about impulsiveness do not reduce the value of
specific, non-cumulative testimony regarding the aggression and permanence
of behavior associated with organic brain damage. There is no basis to second-
guess his counsel’s strategic decision, particularly in light of our prior opinion.
Moreover, along the lines already discussed, even if his counsels’ performance
was ineffective he cannot show prejudice to the outcome of his sentencing
retrial. See also id. at 890.
Martinez has not demonstrated that his underlying ineffectiveness claim
has some merit, and has accordingly not cleared the Martinez/Trevino
exception to the procedural bar on this claim. Jurists of reason would not find
the correctness of the district court’s procedural ruling debatable, nor could
they find that Martinez’s petition states a valid claim of a denial of a
constitutional right. We therefore deny a COA on this issue. See Beatty v.
Stephens, 759 F.3d 455, 466 (5th Cir. 2014) (denying COA on insubstantial
claim as procedurally barred).
22
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No. 15-70017
D
Martinez argues that his trial counsel were constitutionally ineffective
for failing to object to allegedly improper prosecution questions regarding his
homosexual activity. He claims these questions were designed to prejudice the
jury and deny him a fair trial. He protests five references.
First, the prosecution questioned Mary Salazar about why she ran away
from home at young age. During that line of questioning, she testified that she
met a man in Fort Worth who “had a relationship” with Martinez, without
further elaboration.
Second, during cross-examination of Martinez’s expert, Dr. Lundberg-
Love, the prosecution pointed out that homosexuality had previously been
classified by the psychological profession as a mental disorder. This statement
was made in the context of her discussion of changes made in the profession’s
diagnostic manual during Martinez’s long history of repeated mental health
evaluations. She also identified other changes such as mathematic disorder,
male erectile disorder, and caffeine induced disorder, but made clear that these
did not represent her diagnosis of Martinez.
Third, also during cross-examination of Dr. Lundberg-Love, the
prosecution used juvenile disciplinary records to emphasize Martinez’s acts of
misconduct during his years of incarceration. While reviewing those records,
the prosecution mentioned that the reports included “infraction of rules, details
of escapes, attempted escapes, homosexual acts, use of drugs, [and] security
treatment for mass escape involvement.”
Fourth, the prosecution elicited testimony from Martinez’s niece, Laura
Escoto, about his criminal history. Asked whether she had seen Martinez with
another man, she replied that she had seen him and a man named Casey
“together, gay.” Defense counsel immediately objected, to which the prosecutor
responded that it was being offered as proof of a past “bad act” since Martinez
23
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No. 15-70017
was “[c]omitting a crime in front of her.” 8 The prosecutor nonetheless conceded
that “it was not something that [he had] to put in,” and the trial judge
instructed the jury to disregard the answer.
Fifth, homosexuality was broached again during Escoto’s testimony
when the prosecution questioned her about the contents of a letter she had
received from Martinez. In the letter, which was introduced to the jury in its
entirety, Martinez wrote in “very” explicit detail about “consensual sex” with a
twelve-year-old girl that resulted in his juvenile incarceration. After
discussing the contents of the letter with her, the prosecutor asked Escoto if
Martinez had “discussed any sex acts he had in prison.” She responded that
he said that “he would force the prisoner for sex. . . . He would hold the knife
up to [the other prisoners’] neck and then he would tell them that blood on [his]
knife or shit on [his] ding-a-ling.” The prosecutor repeated this testimony
during his closing argument while summarizing Martinez’s significant
criminal history and emphasizing his future dangerousness.
We agree with the district court that “[f]or the most part, the State’s
questions about Martinez’s homosexuality were accurate, in light of the
evidence, and were relevant to the State’s case.” Martinez v. Stephens,
2015 WL 1282199 at *15. The first question from his ex-girlfriend did not
discuss or mention Martinez’s sexuality, and the comment was quite minor.
The second question during Dr. Lundberg-Love’s cross-examination provided
context for the jury to understand the psychological profession’s evolving
classification of mental disorders. The third brief mention of homosexuality
was actually related to Martinez’s criminal history, which is relevant to the
future dangerousness special issue. Such is also the case with regard to
8 Committing a homosexual act was a crime in Texas until 2003. See Lawrence v.
Texas, 539 U.S. 558, 123 S. Ct. 2472 (2003).
24
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No. 15-70017
Escoto’s testimony (and the prosecution’s repetition of it) regarding
homosexual prison rape, for which Martinez had a standard operating
procedure and catchphrase. During Escoto’s testimony, Martinez’s counsel did
object to the most objectionable prosecution question regarding Martinez’s
homosexual acts. The prosecutor withdrew the question and the trial judge
instructed the jury to disregard the comment. Jurors are presumed to follow
their instructions, see Richardson v. Marsh, 481 U.S. 200, 211, 107 S. Ct. 1702,
1709 (1987), and there is no reason to believe they did not in this case.
Moreover, even if it could be said that Martinez’s trial counsel should have
objected to the other testimony, we also agree with the district court that he
cannot establish prejudice given that the evidence established that he was a
violent sexual criminal, regardless of where he was or how old he was. See
Martinez v. Stephens, 2015 WL 1282199 at *15.
The district court’s procedural ruling was that “[t]he comments were an
incidental and sporadic factor in the punishment phase and not a decisive
consideration in the jury’s decision making,” state habeas counsel was
accordingly not ineffective for failing to raise the claim, and Martinez had
therefore not overcome the procedural bar against considering this claim.
Id. Because reasonable jurists would not find the correctness of this
procedural ruling debatable, nor could they find that Martinez’s petition states
a valid claim of a denial of a constitutional right, we deny a COA on this issue.
See Beatty v. Stephens, 759 F.3d 455, 466 (5th Cir. 2014) (denying COA on
insubstantial claim as procedurally barred).
V
Based on the foregoing discussion, Martinez’s motion for COA is
GRANTED IN PART, DENIED IN PART; and the judgment of the district
court denying habeas relief and denying funding is AFFIRMED.
25
| {
"pile_set_name": "FreeLaw"
} |
25 Cal.App.3d 1041 (1972)
102 Cal. Rptr. 449
THE PEOPLE, Plaintiff and Respondent,
v.
SANTO J. MANGIEFICO, Defendant and Appellant.
Docket No. 9703.
Court of Appeals of California, First District, Division One.
June 2, 1972.
*1043 COUNSEL
Norton Tooby, under appointment by the Court of Appeal, and Romines, Wolpman, Tooby, Eichner, Sorensen, Constantinides & Cohen for Defendant and Appellant.
Evelle J. Younger, Attorney General, Robert R. Granucci and H.F. Wilkinson, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
MOLINARI, P.J.
Defendant appeals from a judgment of conviction and sentence,[1] following a jury trial, for violation of Insurance Code section 556 (false or fraudulent insurance claim), and Penal Code sections 548 (defrauding an insurer), 450a (arson of personal property with intent to defraud an insurer) and 448a (arson of a private building other than a dwelling).
Defendant contends that his conviction must be reversed because it is based upon evidence admitted in violation of his constitutional rights in two respects. First, he argues that the testimony of George Berdan, a consulting fire investigator, and certain photographs taken by him were improperly admitted as they were the product of a search conducted without a proper warrant and without defendant's consent. Second, defendant asserts that a tape recording of his interview with Berdan was improperly admitted as the statements contained therein were procured without first advising him of his rights under Miranda v. Arizona, 384 U.S. 436, 444 [16 L.Ed.2d 694, 706, 86 S.Ct. 1602, 10 A.L.R.3d 974], which requires that an accused be advised prior to his being questioned that he has a right to remain silent, that any of his statements may be used against him, and *1044 that he has the right to the presence of an attorney, either retained or appointed. We have concluded that these contentions are without merit and, accordingly, that the judgment must be affirmed.
The instant case arose as a result of a fire which occurred on January 6, 1970, in the premises located in Santa Rosa used by defendant and Sol Kaye as a television and appliance store. A fire insurance policy insuring the contents of said premises was issued by Safeco Insurance Company. The fire was investigated by Alvis Austin, the local adjuster for Safeco, Michael Turnick, the fire marshal, and Berdan.
Berdan was a self-employed consulting fire investigator. He holds a private investigator's license and was hired by Safeco to determine the origin and cause of the subject fire. Berdan arrived in Santa Rosa on January 13 and he contacted Austin and Turnick. Several days later he contacted the police chief in order to inform him of the purpose of his presence. Berdan stated that he did not discuss the fire or its cause with anyone from the fire department prior to his investigation of the premises nor was he told anything prior to his investigation.
Berdan was at the scene of the fire on the 13th and 14th of January, and he returned for a few hours on the 21st, 22nd and 23d. At various times while Berdan was conducting his investigation of the fire at the insured premises Austin and Turnick were also present as were Battalion Chief Young and Captain Stedman of the fire department. After Berdan had determined the origin of the fire he discussed the fire department's fire extinguishing procedure with Turnick, Young and Stedman in order to determine the time at which the fire started.
On January 21 Berdan interviewed defendant and Kaye at the offices of Safeco. Austin was present during the interview. The conversation was recorded. Defendant stated in the conversation that he began closing the store around quarter to nine on the evening of the fire and that he left the building at approximately ten to nine.[2]
Berdan suggested that the fire department reenact what was done on the night of the fire so as to cross-check the conclusions reached as a result of their previous discussion. Young testified that after talking with Berdan and the fire chief he decided that it would be a good idea to "try to reconstruct it." By so doing, if he should be called to testify, he "would *1045 be more than just guessing." The reconstruction of the fire was conducted on February 4 under the supervision of Turnick.
Although Berdan may have taken some notes during his investigation, he no longer had them at the time of the trial. Berdan testified largely from numerous photographs he had taken. Berdan did not obtain laboratory analysis of any of the material he examined, nor did he retain the material for use as evidence. Upon completing his investigation, Berdan left the material which he had inspected at the scene of the fire. It was Berdan's opinion that the fire originated at two distinct places in the building. Berdan stated that in his opinion the cause was arson. He said that the fire ignited at both places at the same time and that paper products were used. Berdan had concluded from his examination that the fire started at 8:49 p.m. Berdan made a report and sent a copy to Turnick. Berdan received a copy of the report made by the City of Santa Rosa and he testified he "may have" sent a copy to Austin.
Adverting to defendant's primary contention, we perceive it to be that a private investigator, licensed by the state, is in essence a public law enforcement official. From this premise, defendant goes on to assert that a private investigator is subject to the restraints of the Fourth Amendment and that evidence which he obtains in violation of the Fourth Amendment must be excluded. Defendant argues that this is compelled by the necessity of deterring lawless conduct on the part of private investigators. Defendant further asserts that he had a reasonable expectation of privacy with respect to his place of business, and that he neither expressly nor impliedly consented to the search of the premises by the private investigator.
Defendant asks us to hold that a private investigator is, in essence, a law enforcement official. This contention has never been expressly ruled upon by the California Supreme Court. In Stapleton v. Superior Court, 70 Cal.2d 97, 100-101, footnote 3 [73 Cal. Rptr. 575, 447 P.2d 967], the court observed that it was "not called upon to decide whether searches by private investigators and private police forces should be held subject per se to the commands of the Fourth Amendment on the ground that one of their basic purposes is the enforcement of the law."[3] This statement suggests that the exclusionary rule should be applied to private investigators, if at all, only where they are in fact primarily engaged in law enforcement. If the goal of the private investigator is to obtain evidence for a criminal prosecution it could well be argued that he is primarily engaged in law enforcement *1046 since, as noted in Stapleton, searches and seizures to assert criminal prosecutions may achieve the status of an "inherently governmental task" so as to make the application of the exclusionary rule to such searches more of a deterrent than it would be in other cases of "`private' searches." (70 Cal.2d at p. 103, fn. 4; see Gambino v. United States, 275 U.S. 310, 315-317 [72 L.Ed. 293, 295-297, 48 S.Ct. 137, 52 A.L.R. 1381].)
We are persuaded that it cannot be concluded that all private investigators are engaged in procuring evidence so as to facilitate the enforcement of the law. It is a matter of common knowledge that many investigators do not have as their primary mission the enforcement of the law or the procuring of evidence in aid of criminal prosecutions. (See People v. Wright, 249 Cal. App.2d 692, 694-695 [57 Cal. Rptr. 781].)
Turning our attention to Berdan's role, we observe, initially, that he testified that there is no suspicion of arson in 90 percent of the cases which he is called to investigate. Here he was called to inspect the subject fire by the insurance company. He was not called into the case by any law enforcement officials. Neither his employer nor the local enforcement official told him anything about the origin or the cause of the fire prior to his investigation. Under the state of the record it may be assumed that the insurance company's primary concern was protection against liability, rather than the attainment of a criminal conviction. Berdan testified that insurance companies are interested in determining the origin and cause of fire in cases other than arson because if there is negligence on the part of someone there may be a subrogation right and because the information gathered is often useful in fire prevention programs. There is no indication in the record that Safeco requested that arson charges be brought against defendant, nor did it request that fraud charges be brought against him. In sum, the evidence is reasonably susceptible of the inference that the basic purpose of Berdan's investigation was to determine, as a private investigator, the cause of the fire as information for the benefit and use of Safeco, his employer, rather than for the enforcement of the law or the gathering of evidence for use in a criminal prosecution.
We are not unmindful that upon arriving in Santa Rosa Berdan contacted the fire marshal and, later, the police chief to advise them of his presence, that in the course of Berdan's investigation he requested a reenactment by the fire department of what was done on the night of the fire, and that after completing his report he sent a copy of it to the fire marshal. These actions do not per se require the inference that Berdan was basically engaged in law enforcement or in gathering evidence to assist a criminal prosecution. These activities are clearly consistent with *1047 the conduct of an independent investigation having for its objective the securing of information for the use and benefit of Safeco. The circumstance of the giving by Berdan of a copy of his report to the fire marshal, while it may have been of assistance to the local authorities, does not require the conclusion that Berdan was actively assisting a criminal investigation. Berdan was not requested to assist in the investigation, nor did he purport to do so. He had not agreed to furnish a copy of his report to the Santa Rosa officials nor was he under any compulsion to do so. Under the state of the record it appears that upon the completion of his independent investigation he gratuitously furnished a copy of his report to the fire marshal.
We perceive, moreover, that the record discloses that the criminal investigation was conducted by the fire marshal who, by his independent examination, had concluded prior to Berdan's arrival in Santa Rosa that the fire had been caused by an act of arson. Turnick, when advised by Safeco that Berdan was coming to investigate the fire, preserved the scene of the fire for Berdan. Turnick did not discuss his findings respecting the origin and cause of the fire with Berdan until the latter had completed his own investigation. No opinion as to the origin and cause of the fire was exchanged between Turnick and Berdan prior to the filing of the complaint against defendant. Turnick testified that, prior to the filing of the complaint, he had compared Berdan's report and concluded that the findings of his and Berdan's investigations were the same. Accordingly, although Berdan's report may have given Turnick comfort in that it coincided with his conclusions that circumstance does not require the conclusion that Berdan was assisting in gathering evidence for a criminal investigation.
In view of the foregoing we conclude that Berdan was acting in the capacity of a private investigator whose basic purpose was not the enforcement of the law and that, therefore, his actions and conduct were those of a private individual. (1) The Fourth Amendment does not apply to searches by a private individual unless such individual is acting as an agent of public officials or wilfully participating in a joint activity with a state agent who either requests the illegal search or has knowledge of it but fails to protect the third party's rights. (Stapleton v. Superior Court, supra, 70 Cal.2d 97, 100-101, 102; People v. Garber, 275 Cal. App.2d 119, 126-127 [80 Cal. Rptr. 214]; People v. Fierro, 236 Cal. App.2d 344, 347 [46 Cal. Rptr. 132]; People v. Evans, 240 Cal. App.2d 291, 302 [49 Cal. Rptr. 501]; see Burdeau v. McDowell, 256 U.S. 465, 475 [65 L.Ed. 1048, 1050, 41 S.Ct. 574]; People v. Randazzo, 220 Cal. App.2d 768, 770-775 [34 Cal. Rptr. 65]; People v. Katzman, 258 Cal. App.2d 777, 786 [66 Cal. Rptr. 319]; People v. Wolder, 4 Cal. App.3d 984, 994 [84 Cal. Rptr. 788]; People v. Tarantino, 45 Cal.2d 590, 595 [290 P.2d 505].)
*1048 (2a) The record discloses that Berdan was not acting as the agent of local enforcement officials. He was employed not by the local authorities but by Safeco. Berdan was not engaged in a joint operation with local authorities, but was conducting an independent investigation. There is no indication in the record that local enforcement authorities made any requests of Berdan during the course of his investigation or that they directed him in any way as to the extent or conduct of his investigation. The record discloses, moreover, that it was Berdan who made requests of the public officials in aid of his own investigation. There is nothing in the record to indicate that the local law enforcement officials were aware or had knowledge that Berdan had taken the photographs which defendant asserts were improperly admitted in evidence. Insofar as Berdan's report is concerned, no request for such report was made by the law enforcement officials but it was voluntarily sent to them by Berdan.
As observed in Fierro, "... the question is one of the extent of government involvement in an invasion conducted by the private citizen...." (236 Cal. App.2d at p. 348.) Here the degree of government involvement, if any, in Berdan's activities was minimal and was not such as to require the invocation of the exclusionary rule.
(3) "`There are no state standards for "search and seizure" by a private citizen who is not acting as an agent of the state or other governmental unit. Therefore, acquisition of property by a private citizen from another person cannot be deemed reasonable or unreasonable. [Citations.]'" (In re Donaldson, 269 Cal. App.2d 509, 511 [75 Cal. Rptr. 220].)[4] (2b) It is significant, moreover, to note that the contracts of insurance between defendant and Safeco provide that Safeco could inspect the insured property and audit the books of the insured business. It is reasonable to assume that these provisions were inserted to protect Safeco's interests. The fire insurance policies specifically provided that Safeco was not liable for loss resulting from "Any fraudulent, dishonest or criminal act done by or at the instigation of any insured, ..." In this context, it may also be noted that the record does not indicate that defendant was unaware of Berdan's presence or that he ever objected to the inspection of the building by Safeco's representatives. In any event, since Berdan was acting as a private citizen, we are not called upon to determine whether his investigation was reasonable within the context of the Fourth Amendment and the exclusionary rule.
*1049 (4a) Defendant's second contention is that it was error to have admitted the tape recording of his interview with Berdan as Berdan did not administer the Miranda warnings prior to questioning defendant. This contention must be rejected for reasons similar to those set forth above with respect to defendant's first contention.
(5) A private citizen is not required to advise another individual of his rights before questioning him. (People v. Cheatham, 263 Cal. App.2d 458, 463 [69 Cal. Rptr. 679]; People v. Wright, supra, 249 Cal. App.2d 692, 694-695; In re Donaldson, supra, 269 Cal. App.2d 509, 511-512.) Absent evidence of complicity on the part of law enforcement officials, the admissions or statements of a defendant to a private citizen infringe no constitutional guarantees. (People v. Price, 63 Cal.2d 370, 379 [46 Cal. Rptr. 775, 406 P.2d 55]; People v. Polk, 63 Cal.2d 443, 449 [47 Cal. Rptr. 1, 406 P.2d 641]; see People v. Montgomery, 235 Cal. App.2d 582, 590 [45 Cal. Rptr. 475].) (4b) In the instant case, as already discussed, there is no evidence that Berdan was acting as an agent of local enforcement officials.
Defendant apparently contends that we should adopt a per se rule for private investigators, requiring them to advise parties of their rights regardless of the circumstances of the particular case. The protection of individual rights does not require so sweeping a solution. In determining whether a private investigator should be required to give the Miranda warning the inquiry is directed to whether the investigator is acting as an agent of law enforcement officials or is primarily engaged in enforcing the law. If he is, then Miranda comes into play. We have already concluded that Berdan was not an agent of the local law enforcement officers and that he was not primarily engaged in law enforcement.
We observe, moreover, that in the instant case the Miranda rule would not come into play because there is absent the element of custodial interrogation. The Miranda exclusionary rule is applicable only to statements made after a person is physically deprived of his freedom of action in any significant way or is led to believe, as a reasonable person, that he is so deprived. (Miranda v. Arizona, supra, 384 U.S. 436, 444 [16 L.Ed.2d 694, 706]; People v. Arnold, 66 Cal.2d 438, 448 [58 Cal. Rptr. 115, 426 P.2d 515].) In the instant case defendant had not been placed under arrest or in any way deprived of his freedom at the time he was questioned by Berdan. He came to the office of the insurance company voluntarily. During the interview his partner and Austin were present. There is nothing to indicate that defendant was led to believe that he was in any way deprived of his freedom or that he was not free to go at any time. To all intents and purposes defendant *1050 was purporting to cooperate, as he was required to do under his insurance contract, with the representatives of his insurance carrier who were seeking to determine the origin and cause of the fire as well as the extent of the loss incurred by defendant and his partner.[5]
The judgment is affirmed.
Sims, J., and Elkington, J., concurred.
Appellant's petition for a hearing by the Supreme Court was denied July 26, 1972. Pages 1051 - 1056
HEARING GRANTED[*]
NOTES
[1] Under Penal Code section 1237 a sentence is deemed a final judgment of conviction.
[2] At the trial the tape of Berdan's interview of defendant was played. The jury made a request to listen to the tape again during their deliberations and the judge permitted them to take it into the jury room.
[3] The court observed, further, that "Searches by such well financed and highly trained organizations involve a particularly serious threat to privacy" and noted that California statutes "blur the line between public and private law enforcement." (70 Cal.2d at p. 100, fn. 3.)
[4] In this respect, it should be noted that defendant's reliance upon Swan v. Superior Court (8 Cal. App.3d 392 [87 Cal. Rptr. 280]) is misplaced. In Swan the arson investigator who entered the boarded residence was an employee of the sheriff's office. (At p. 394.)
[5] The record discloses that Austin, the local adjuster for Safeco, had obtained an inventory from defendant of the merchandise that was allegedly destroyed by the fire, that Austin had inspected the interior of the building in order to determine the origin of the fire and had photographed the interior in order to document the loss, that he took possession of the salvageable property, and that he and defendant were attempting to reconcile the differences in the inventory taken by defendant and that taken by Austin.
[*] See 8 Cal.3d 563 for Supreme Court opinion.
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104 F.3d 578
65 USLW 2536
James SUBER, Appellant,v.CHRYSLER CORPORATIONv.KONTINENTAL KOACHES, INC., a/k/a and d/b/a KontinentalKonversions, Third-party defendantChrysler Corporation, Third-party plaintiff.
No. 95-5735.
United States Court of Appeals,Third Circuit.
Argued July 25, 1996.Decided Jan. 16, 1997.As Amended Feb. 18, 1997.
Robert M. Silverman (argued), Cynthia M. Certo, Kimmel & Silverman, Blue Bell, PA, for Appellant.
Kevin M. Mckeon (argued), Marshall, Dennehey, Warner, Coleman & Goggin, Marlton, NJ, for Appellee.
Before: BECKER, STAPLETON, and MICHEL, Circuit Judges.*OPINION OF THE COURT
BECKER, Circuit Judge.
1
This appeal in a "Lemon law" case presents the question whether the district court erred in dismissing for lack of subject matter jurisdiction the claims of the plaintiff, James Suber, brought against Chrysler Corporation on account of alleged defects in the 1993 Dodge Ram 250 Conversion Van that he purchased from a Chrysler dealership, Cherry Hill Dodge. The district court held that Suber's claims failed to meet the $50,000 amount in controversy requirement of the federal diversity statute, 28 U.S.C. § 1332, inasmuch as: (1) the New Jersey Consumer Fraud Act was inapplicable, rendering Suber ineligible for the treble damages that are available under that statute; and (2) Suber's remaining claims did not satisfy the jurisdictional requirement.
2
We review the dismissal of Suber's complaint for failure to establish subject matter jurisdiction, hence we consider only whether plaintiff's claims, taken as true, allege facts sufficient to invoke the jurisdiction of the district court. Licata v. U.S. Postal Serv., 33 F.3d 259, 260 (3d Cir.1994). Because we find that the district court dismissed the complaint without properly evaluating Suber's claims under the prevailing standard of St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938), we vacate and remand for further proceedings.
I. Facts1
3
Suber purchased the Dodge van from Cherry Hill Dodge ("the dealership") on April 28, 1993.2 Prior to Suber's purchase, Kontinental Koaches, Inc., a third-party defendant, renovated the van, installing new seats, carpeting, upholstery, a sofa, and other accessories. The sticker price of the car, with these improvements, was approximately $29,895.00. Almost immediately after taking possession, Suber discovered problems with the van, especially its suspension. In particular, the van had a tendency to "bottom out," even on relatively smooth road surfaces.
4
Suber avers that he returned the van to the dealer at least four times over the course of several months. When he returned the van on May 10, 1993, he complained of the "bottoming out," as well as a harsh ride, steering drift, and other defects. One week later, on May 17, 1993, he complained about the van's suspension, steering, brakes, driver's seat, rear door handle, electrical system, and the running boards. The dealership told Suber that nothing was wrong with the van, but balanced the tires.
5
Because the problems with his van persisted, Suber returned to the dealership on June 9, 1993 with the same complaints. The dealership serviced the van, by aligning the front end and balancing the wheels, but again told Suber that there was nothing wrong. A few weeks later, on or around June 25, 1993, the van "bottomed out" so severely that it caused one of the front tires to go flat. Suber had the tire replaced on his own, without returning to the dealership.
6
On June 28, 1993, Suber filed a claim with the Customer Arbitration Board ("CAB"), an informal dispute resolution body established by Chrysler under the New Jersey Lemon Law, N.J.S.A 56:12-36. Pursuant to CAB procedures, a Chrysler representative, George Bomanski, and a dealership employee inspected and road tested the van. According to Suber, both men told him that there was a problem with the van's suspension. However, the official report filed by Bomanski stated that the suspension system was fine. By letter dated August 5, 1993, the CAB found that Suber's complaint regarding the suspension was groundless, and it denied Suber's request for a refund of the purchase price because "the use, value and safety of [the] vehicle has not been substantially impaired."3
7
According to Suber, the suspension problems persisted through July 1993. The van failed Pennsylvania motor vehicle inspection at that time because of its suspension, including "obviously compressed front springs." Additionally, Suber claims that he returned the van to the dealership on two occasions when the dealership did not supply him with a copy of the repair invoice.
8
On July 16, 1993, Suber again left the van with the dealership for service. This appears to be the same day that he met with Bomanski and the dealership employee for the CAB inspection. The dealership told him that it would contact him when the repairs were completed. On August 16, 1993, having heard nothing, he called and was informed that his van was not yet ready. He went to the dealership and found his van parked in the back lot. The dealership's repair invoices show that the last work on the van was performed on July 22, 1993.
9
Subsequent to Suber's last repair attempt, Chrysler sent to owners of 1993 and 1994 Dodge Ram Vans and Wagons, including Suber, a "Customer Satisfaction Notification." This notice informed these Dodge owners that the front coil springs on their vehicles needed to be replaced:
10
The service is needed to prevent the front suspension from bottoming out when traveling over rough surfaces. Without the service we are offering, the vehicle identified on the enclosed form may exhibit a harsh ride or suspension noises. We ask that you arrange for this important service without delay.
11
In conjunction with this notice, Chrysler sent to its dealers a "Technical Services Bulletin" dated September 3, 1993 that detailed the repair work necessary to correct suspension problems like those experienced by Suber.
12
Suber contends that his van's suspension is defective to this day, and that the van has never passed the Pennsylvania inspection. A mechanic retained by Suber's counsel inspected the car on March 2, 1995 and found that the suspension system was in an "extremely dangerous condition" and that the car was unsafe to drive. In response, Chrysler points out that Suber has continued to drive the van. At the time of the CAB inspection in July 1993, the van had 5057 miles on it. When a Chrysler representative road tested the van on March 13, 1995, it had 16,514 miles on it. The Chrysler representative concluded that the van has no suspension problems.
II. Procedural History
13
Suber filed a complaint against Chrysler in the District Court for the District of New Jersey, alleging violations of the New Jersey Automobile Lemon Law, N.J.S.A § 56:12-29 et seq.; the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.; the New Jersey Uniform Commercial Code, N.J.S.A. § 12A:1-101 et seq.; and the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq. ("NJCFA"). Suber alleged that the district court had subject matter jurisdiction under the diversity statute because the amount in controversy exceeds $50,000.4 Soon after the complaint was filed, the district court considered sua sponte whether it had subject matter jurisdiction and issued an Order to Show Cause. The plaintiff responded by letter, and the court withdrew the order. Chrysler then moved for summary judgment, asserting that the evidence could not support Suber's legal claims.
14
On September 5, 1995, the district court sua sponte dismissed Suber's complaint for lack of subject matter jurisdiction, Fed.R.Civ.P. 12(b)(1), holding that the amount in controversy did not exceed $50,000. Relying on a New Jersey Appellate Division decision, D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 501 A.2d 990 (App.Div.1985), the court held that the "New Jersey Consumer Fraud Act, which contains a mandatory treble damage provision, is inapplicable to the case at bar," Mem. Op. at 3-4, because Suber failed to "provide [the district court] with evidence of defendant's allegedly unconscionable conduct or 'substantial aggravating circumstances' surrounding defendant's alleged breach of the express warranties." Id. at 3. Under D'Ercole Sales, breach of warranty without substantial aggravating circumstances is not actionable as a NJCFA claim.
15
Having found that Suber could not rely on the treble damages available under the NJCFA to meet the amount in controversy requirement, the court stated that it was satisfied "to a legal certainty" that Suber's remaining claims could not exceed the $50,000 barrier. Id. at 4. It reasoned that the maximum amount that the plaintiff could recover under either the Magnuson-Moss Warranty Act or the Lemon Law is the full refund price of the vehicle if found defective, $29,895.00. The court noted that attorney's fees should be included, but stated that these fees would have to exceed $20,105.00 to get to the jurisdictional amount, which it held would be clearly excessive. Id.
16
Suber has filed a timely appeal, contending primarily that the district court failed to apply the proper test for determining the amount in controversy. Our review of the order dismissing the complaint is plenary. See Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1044 (3d Cir.), cert. denied sub nom. Upp v. Mellon Bank, N.A., 510 U.S. 964, 114 S.Ct. 440, 126 L.Ed.2d 373 (1993).
III. The Amount in Controversy Requirement
17
For a plaintiff to establish federal diversity jurisdiction, the amount in controversy must exceed $50,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The standard for determining whether a plaintiff's claims satisfy the amount in controversy requirement was set out by the Supreme Court in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938), as follows:
18
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.
19
Id. at 288-89, 58 S.Ct. at 590 (emphasis added) (footnotes omitted); see also Nelson v. Keefer, 451 F.2d 289, 292-93 (3d Cir.1971). In applying the "legal certainty" test established by St. Paul Mercury, this Court has stated that "dismissal is appropriate only if the federal court is certain that the jurisdictional amount cannot be met." Columbia Gas Transmission Corp. v. Tarbuck, 62 F.3d 538, 541 (3d Cir.1995); cf. Lunderstadt v. Colafella, 885 F.2d 66, 69-70 (3d Cir.1989) (holding in a federal question case that "a federal court may dismiss for lack of jurisdiction only if the claims are 'insubstantial on their face' ").
20
Once a good faith pleading of the amount in controversy vests the district court with diversity jurisdiction, the court retains jurisdiction even if the plaintiff cannot ultimately prove all of the counts of the complaint or does not actually recover damages in excess of $50,000. St. Paul Mercury, 303 U.S. at 288, 58 S.Ct. at 590. Accordingly, the question whether a plaintiff's claims pass the "legal certainty" standard is a threshold matter that should involve the court in only minimal scrutiny of the plaintiff's claims. The court should not consider in its jurisdictional inquiry the legal sufficiency of those claims or whether the legal theory advanced by the plaintiffs is probably unsound; rather, a court can dismiss the case only if there is a legal certainty that the plaintiff cannot recover more than $50,000. As we stated in Lunderstadt, the "threshold to withstand a motion to dismiss under Fed.R.Civ.P. 12(b)(1) is thus lower than that required to withstand a Rule 12(b)(6) motion." Lunderstadt, 885 F.2d at 70; Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir.1992).
21
The temporal focus of the court's evaluation of whether the plaintiff could conceivably prevail on its claim is on the time that the complaint was filed. While courts generally rely on the plaintiff's allegations of the amount in controversy as contained in the complaint, "where a defendant or the court challenges the plaintiff's allegations regarding the amount in question, the plaintiff who seeks the assistance of the federal courts must produce sufficient evidence to justify its claims." Columbia Gas, 62 F.3d at 541. We have also held that "the record must clearly establish that after jurisdiction was challenged the plaintiff had an opportunity to present facts by affidavit or by deposition, or in an evidentiary hearing, in support of his jurisdictional contention." Berardi v. Swanson Memorial Lodge No. 48 of the Fraternal Order of Police, 920 F.2d 198, 200 (3d Cir.1990) (quoting Local 336, American Federation of Musicians, AFL-CIO v. Bonatz, 475 F.2d 433, 437 (3d Cir.1973)); see also 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350, at 213-18 (2d ed. 1990).
22
The question whether there is a legal certainty that Suber's claims are for less than $50,000 depends on what damages Suber could conceivably recover under New Jersey state law, and we must therefore consider the applicable New Jersey statutes and Suber's allegations under them.
IV. The New Jersey Lemon Law
23
The New Jersey Lemon Law provides a remedy to consumers who purchase defective vehicles, as Suber claims he has. Under this law, if a consumer reports a "nonconformity" in a vehicle to the manufacturer or its dealer during the first 18,000 miles or within two years of the date of delivery to the consumer, the manufacturer must make, or arrange with the dealer to make, the necessary repairs "within a reasonable time." N.J.S.A. 56:12-31. The statute defines a "nonconformity" as a "defect or condition which substantially impairs the use, value or safety of a motor vehicle." Id. 56:12-30. According to the New Jersey courts, whether a defect rises to the level of an actionable nonconformity depends on whether it "shakes the buyer's confidence" in the goods. See Berrie v. Toyota Motor Sales, U.S.A., Inc., 267 N.J.Super. 152, 630 A.2d 1180, 1182 (App.Div.1993). Thus, if a "reasonable person" in Suber's position could conclude that the "bottoming out" "impairs the use and value of the car and shakes [his] confidence in it," then the suspension problems with Suber's van qualify as nonconformities. Id. 630 A.2d at 1183.
24
If the manufacturer or dealer is unable to correct the nonconformity within a reasonable time, the vehicle is a true "lemon" and the owner is entitled to damages. The law presumes that a manufacturer is unable to correct a nonconformity within a reasonable time if the owner has made three or more unsuccessful repair attempts or the vehicle "is out of service by reason of repair for one or more nonconformities" for a total of twenty days. N.J.S.A. 56:12-33.
25
We find that Suber has sufficiently alleged that the use and value of his van are impaired such that we cannot conclude that the alleged suspension problems could not conceivably be found to constitute nonconformities. Suber stated in his affidavit that the van has never passed the Pennsylvania inspection test, and a mechanic he hired has stated that it is unsafe to drive. Chrysler recalled all 1993 Dodge Ram vans and wagons for the same defect, even while the dealership contended that there was nothing wrong with the van. Suber has also alleged that his van presumptively cannot be fixed: in his affidavit, he stated that he has made more than three repair attempts and that the vehicle remained out of service for repairs for more than 20 days. When his complaint was filed, then, it was conceivable that Suber's van was a true "lemon" and that he was entitled to recovery.5
26
If successful on his Lemon Law claims, Suber could recover the full refund value of the car plus collateral damages, mainly finance charges. The statute provides:
27
The manufacturer shall provide the consumer with a full refund of the purchase price of the original motor vehicle including any stated credit or allowance for the consumer's used motor vehicle, the cost of any options or other modifications arranged, installed, or made by the manufacturer or its dealer within 30 days after the date of original delivery, and any other charges or fees including, but not limited to, sales tax, license and registration fees, finance charges ... less a reasonable allowance for vehicle use.
28
Id. 56:12-32 (emphasis added).
29
Moreover, in calculating the amount in controversy, we must consider potential attorney's fees. Although 28 U.S.C. § 1332 excludes "interest and costs" from the amount in controversy, attorney's fees are necessarily part of the amount in controversy if such fees are available to successful plaintiffs under the statutory cause of action. See Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 54 S.Ct. 133, 78 L.Ed. 267 (1933). They are here. See N.J.S.A. 56:12-42 ("In any action by a consumer against a manufacturer brought in Superior Court or in the division pursuant to the provisions of this act, a prevailing consumer shall be awarded reasonable attorney's fees, fees for expert witnesses and costs.").6
30
The district court began and ended its inquiry with the sticker price of the van, which was $29,895. Because we have concluded that it is conceivable that Suber's van is a total "lemon," we agree that Suber is entitled to include the entire sticker price of the van in the amount in controversy.7 Without considering potential collateral charges, however, the district court dismissed the complaint because the attorney's fees that would be available to Suber if he prevailed could not get him over $50,000. The district court erred, therefore, in not considering the collateral charges, particularly finance charges, as part of the amount in controversy.
31
The question before us, then, is how to calculate Suber's collateral charges for purposes of the amount in controversy inquiry. According to Suber, his total Lemon Law damages are $40,015.20. As stated on his contract with the dealership, sales tax and registration fees bring the cost of the van to $31,649. Once finance charges are added, Suber alleges that the total cost of the van is $41,404.20.8 As calculated by Suber, the reasonable allowance for use that is required to be deducted pursuant to the Lemon Law is $1,389.10, which brings the total to $40,015.20.9 If Suber's allegation is correct, attorney's fees necessary to get him above the $50,000 threshold might not be unreasonable.
32
However, in considering Suber's claimed amount in controversy, we are given pause by his contention that he is entitled to count the total finance charges stated in the financing agreement toward the amount in controversy. We find this unlikely. Suber would pay the total charges if it took him the entire finance period to pay for the van, but not if he paid off the car loan before that time. Under New Jersey law, a borrower may prepay a retail installment sales loan in full at any time and obtain a credit for unaccrued interest. N.J.S.A. 17:16C-43. If, for example, Suber had made his car payments for three months, and then decided to pay the remaining principal on his loan, the only finance charges he would pay would be the interest included in the three payments that he made. He would be entitled to a refund for the remaining, unpaid finance charges. Concomitantly, had Suber been awarded Lemon Law damages by the district court after making three car payments, his damages would include only those finance charges that he had paid. See, e.g., Gambrill v. Alfa Romeo, Inc., 696 F.Supp. 1047, 1048 (E.D.Pa.1988) (calculating damages under Pennsylvania Lemon Law).10 Accordingly, it seems to us that Suber will be entitled to recover in this action only those finance charges that he has paid at the time of the judgment.
33
The question of how to determine finance charges for the purposes of the amount in controversy requirement is thus a difficult one that involves a measure of speculation. We have held that the amount in controversy should not be "measured by the low end of an open-ended claim, but rather by a reasonable reading of the value of the rights being litigated." Angus v. Shiley Inc., 989 F.2d 142, 146 (3d Cir.1993). Because the district court failed to make this determination with respect to the finance charges that Suber can include in the amount in controversy, it erred in concluding that there is a legal certainty that Suber's claims are for less that $50,000.
34
We thus will vacate the district court's order and will remand the case so that the court can determine whether Suber's Lemon Law claim allows him to establish diversity jurisdiction. In making this determination, the district court should consider the purchase price of the van, all collateral charges, and potential attorney's fees. As Suber's van is conceivably a total "lemon," the district court should start with the purchase price, $29,895, and add to it sales tax and registration fees, which bring the total to $31,649. The district court must then determine the amount of any finance charges and attorneys' fees includable in Suber's amount in controversy.
V. New Jersey Consumer Fraud Act
35
We now turn to the New Jersey Consumer Fraud Act ("NJCFA") to determine whether Suber can satisfy the amount in controversy requirement under that law. The NJCFA allows private plaintiffs to bring suit if they are harmed by an unconscionable commercial practice. See, e.g., Cox v. Sears Roebuck & Co., 138 N.J. 2, 647 A.2d 454, 460-61 (1994). Under the NJCFA, the:
36
act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale ... or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.
37
N.J.S.A. 56:8-2. If a defendant is found to have committed an unconscionable commercial practice, the statute imposes mandatory treble damages and attorney's fees. Id. 56:8-19.
38
Suber also relies on the NJCFA to establish subject matter jurisdiction. He submits that he has sufficiently alleged that Chrysler committed unconscionable commercial practices within the meaning of the NJCFA and that he can, therefore, include possible NJCFA damages in the amount in controversy, in particular, the treble damages that are available under that statute.
39
The district court rejected this contention and held that there is a legal certainty that Suber cannot recover under the NJCFA. It concluded that Suber has not alleged any facts that could constitute a NJCFA violation because Suber's only claim is for breach of warranty, which is not actionable under the NJCFA. The court, relying on the New Jersey Appellate Division case, D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 501 A.2d 990 (App.Div.1985), held that Suber has failed to allege "substantial aggravating circumstances," which New Jersey law requires to recover for a breach of warranty.
40
Although the New Jersey Supreme Court has approved of certain language from D'Ercole Sales, see Cox, 647 A.2d at 462, it has never directly considered the issue before the D'Ercole Sales court and thus has never explicitly adopted its holding. In D'Ercole Sales, the court held that a truck assembler's failure to honor the warranty was not an "unconscionable consumer practice" within the meaning of the NJCFA. In so holding, the court stated that "a breach of warranty, or any breach of contract, is not per se unfair or unconscionable, and a breach of warranty alone does not violate a consumer protection statute." 501 A.2d at 998 (citations omitted). While acknowledging that a breach of warranty is unfair to the non-breaching party, it stated that:
41
"[i]n a sense, unfairness inheres in every breach of contract when one of the contracting parties is denied the advantage for which he contracted, but this is why remedial damages are awarded on contract claims. If such an award is to be trebled, the ... legislature must have intended that substantial aggravating circumstances be present."
42
Id. at 1001 (emphasis added) (quoting United Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985, 992 (4th Cir.1981)). Because this holding seems unexceptionable, uncontroversial, and altogether sensible, we predict that D'Ercole Sales would be followed by the New Jersey Supreme Court, and hence we find that the District Court correctly concluded that the NJCFA requires that substantial aggravating circumstances be shown when the basis for the NJCFA claim is breach of warranty.
43
Assuming, therefore, that a plaintiff needs to show substantial aggravating circumstances to prevail under the NJCFA with what is essentially a breach of warranty claim, we conclude that the district court incorrectly held that Suber has not alleged sufficient aggravating circumstances to prevail at the jurisdictional stage.11 Suber has made allegations that, if proven, could constitute substantial aggravating circumstances, such that we cannot find that recovery is precluded to a legal certainty. For example, in his affidavit, Suber states that George Bomanski, a Chrysler representative, told Suber that the van had suspension problems, but his official report, on which the CAB based its decision, noted that there were no suspension problems. Moreover, Suber's allegations that Chrysler knew of the problem are supported by the Technical Services Bulletin, which stated that all 1993 and 1994 Dodge Ram vans and wagons needed repair to correct the suspension problem about which Suber complained.
44
At all events, we find that Suber's NJCFA claim appears to be premised on more than mere breach of warranty. The Lemon Law has defined certain practices as per se unlawful within the meaning of the NJCFA. In particular, each time a motor vehicle is returned for examination or repair during the first 18,000 miles of operation or within two years of purchase, "the manufacturer through its dealer shall provide to the consumer an itemized, legible statement of repair." N.J.S.A. 56:12-34(b). Failure to comply with this provision constitutes an unlawful practice under the NJCFA. Id. 56:12-34(c). Suber testified in his deposition that he left the dealership without receiving repair invoices on at least two occasions.
45
It thus appears that Suber may not be precluded to a legal certainty from recovering under the NJCFA. Even though we have explained that the court should include the treble damages available under the NJCFA in calculating the amount in controversy, we are uncertain as to what his NJCFA damages would be. The New Jersey Consumer Fraud Act (NJCFA) allows private plaintiffs to recover for any "ascertainable loss" from an allegedly unconscionable practice, N.J.S.A. 56:8-2 & 56:8-19, and imposes mandatory treble damages and attorney's fees, id. 56:8-19. Suber contends that his Lemon Law damages of $40,015.10 are also his NJCFA damages and should be trebled to arrive at $120,045.30 in damages. That seems unlikely to us. Unfortunately, the New Jersey Supreme Court has provided little guidance about quantifying ascertainable loss under the NJCFA. Because we have already determined that a vacatur and remand is appropriate in this case, the remand will also permit the district court to calculate Suber's potential NJCFA damages and thus determine whether there is a legal certainty that the claim is for less that $50,000, once those damages are trebled.
46
On remand, the court must also determine whether Suber's claims can be aggregated. The general rule is that claims brought by a single plaintiff against a single defendant can be aggregated when calculating the amount in controversy, regardless of whether the claims are related to each other. Snyder v. Harris, 394 U.S. 332, 335, 89 S.Ct. 1053, 1056, 22 L.Ed.2d 319 (1969) ("Aggregation has been permitted ... in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant."); see also 1 James Wm. Moore, Moore's Federal Practice p 0.97, at 907-08 (2d ed. 1995); 14A Charles Alan Wright et al., Federal Practice and Procedure § 3704 (2d ed. 1985). Based on this general rule, we think that Suber's Lemon Law and NJCFA claims can probably be aggregated. We are given pause, however, by our understanding that these two claims could not be aggregated if Suber could not recover damages for both. That is, if these claims are alternative bases of recovery for the same harm under state law, Suber could not be awarded damages for both, and a court should not aggregate the claims to arrive at the amount in controversy.
47
We think it is likely that the harms sought to be remedied by the Lemon Law and the Consumer Fraud Act are, in fact, qualitatively different: the Lemon Law seeks to put a consumer in as good a position as he or she would have been in had he or she not purchased the "lemon," while the NJCFA remedies the particular "ascertainable loss" suffered by a consumer by reason of an unconscionable commercial practice. This understanding has also informed our conclusion, explained above, that Suber's potential "ascertainable loss," for purposes of the NJCFA, is probably not the value of the van. On the other hand, we are not entirely confident of these conclusions, and we were cited to no New Jersey courts addressing this question (nor have we found any). But this issue was not briefed by the parties, and they may find some cases. At all events, since we remand here, we leave the aggregation question in the first instance to the district court upon remand.
VI. Conclusion
48
For the foregoing reasons, we will vacate the judgment and remand this case to the district court to determine, applying the standard of St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938), whether there is a legal certainty that Suber's claims are for less than $50,000. Upon remand, the district court must give Suber the opportunity to develop the record in support of his jurisdictional claim, whether through affidavits, depositions, or an evidentiary hearing. In remanding this case to the district court, we note that the district court will also need to consider the availability of diversity jurisdiction under Suber's U.C.C. or Magnuson-Moss Act claims,12 as well as whether Suber's Lemon Law and NJCFA claims can be aggregated in calculating the amount in controversy.
49
For the foregoing reasons, the judgment of the district court will be vacated and the case remanded for further proceedings consistent with this opinion. The parties shall bear their own costs.
*
The Honorable Paul R. Michel, United States Circuit Judge for the Federal Judicial Circuit, sitting by designation
1
The facts are drawn from Suber's complaint, Suber's deposition testimony, and the briefs and accompanying exhibits submitted pursuant to Chrysler's motion for summary judgment
2
It is unclear from the record whether Cherry Hill Dodge is owned by Chrysler or is privately owned
3
The CAB did rule that Chrysler was responsible for repairing the door panel, handle, and exterior trim, and performing an oil usage test. It also ruled, however, that the other alleged defects either did not exist or were not the result of a Chrysler manufacturing defect. App. 305A
4
The Magnuson-Moss Warranty Act requires that the amount in controversy exceed $50,000 to establish federal jurisdiction, even though it is a federal provision. 15 U.S.C. § 2310(d)
5
There is evidence that shows that Suber's van has been driven for over 16,000 miles, calling into question Suber's claims that his car is valueless. However, considering such evidence is not proper at the jurisdictional stage, unless that evidence suggests that the amount in controversy allegations were not made in good faith. We conclude that this evidence does not make it certain that Suber could not prevail on his Lemon Law claim
6
N.J.S.A. 56:12-42 on its face authorizes attorneys' fees and costs only in actions brought in the New Jersey Superior Court or in the Division of Consumer Affairs in the Department of Law and Public Safety, and thus does not explicitly provide for payment of attorneys' fees and costs in an action brought in federal court. But Chrysler has not contended that attorneys' fees would not be available in this action, and we have not located any cases that so hold. The district court must also consider this question on remand
7
Under N.J.S.A. 56:12-32, the plaintiff must return the vehicle to the manufacturer in order to receive payment of any damages awarded. The parties have not briefed the question whether the amount in controversy should, accordingly, be reduced to account for the value of the vehicle when it is returned, nor have they presented any record evidence regarding the value of Suber's van, and so we leave this question to the district court upon remand
8
Suber financed $26,779.11. With an 8.5% interest rate, his total finance charges are $8595.21. Suber's down payment, which included cash, a rebate, and the value of his trade-in, was $6029.88. Added together, this brings the total price as stated in the Retail Sales Installment Contract to $41,404.20
The amount financed includes optional credit life insurance that totals $1085.99.
9
Under N.J.S.A. 56:12-30, the reasonable allowance for vehicle use is calculated by multiplying the purchase price by the mileage at the time the consumer first presents the vehicle to the dealer for repair of the nonconformity and dividing that number by 100,000 miles. In this case, if $41,404.20 is multiplied by 3,355 (the mileage at the time of the first suspension complaint), and then that is divided by 100,000, the result is $1,389.10
10
The same is true for the credit life insurance that Suber financed. He would be entitled to a refund of the unaccrued premiums upon prepayment of the loan. N.J.S.A. 17:16D-14
11
Because we cannot determine from the record whether Chrysler owns the dealership, we consider only those allegations of unconscionable practices made against Chrysler directly
12
Under the Magnuson-Moss Warranty Act ("Magnuson-Moss"), 15 U.S.C. § 2301 et seq., a consumer who is damaged by the failure of a dealer or manufacturer to comply with a warranty obligation can file suit to recover the purchase price plus collateral damages. Id. § 2310(d). Although it is a federal provision, federal jurisdiction under Magnuson-Moss is limited to those cases in which the amount in controversy exceeds $50,000. Id. § 2310(d)(3)(B)
Despite the similarities of this provision to the Lemon Law, whether a plaintiff satisfies the amount in controversy threshold is a different question under Magnuson-Moss. Section 2310(d)(3) expressly excludes "interests and costs" from the calculation of the amount in controversy. Unlike the federal diversity statute, the courts that have considered whether attorney fees are costs within the meaning of the statute have uniformly concluded that they are and thus must be excluded from the amount in controversy determination. See, e.g., Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1069 (5th Cir.1984); Saval v. BL Ltd., 710 F.2d 1027, 1033 (4th Cir.1983); Mele v. BMW of North America, Inc., No. 93-2399, 1993 WL 469124, at * 3 (D.N.J. Nov. 12, 1993).
Although Suber could therefore probably not establish jurisdiction with his Magnuson-Moss claim, we leave that question to the district court upon remand. If the district court finds that Suber has established diversity jurisdiction with his Lemon Law or NJCFA claim, the court can exercise supplemental jurisdiction over the Magnuson-Moss Act claim. 28 U.S.C. § 1367(a).
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UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted December 13, 2005*
Decided December 27, 2005
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. MICHAEL S. KANNE, Circuit Judge
Hon. ANN CLAIRE WILLIAMS, Circuit Judge
No. 05-1085
HUI ZHEN HUANG, Petition for Review of an Order of the
Petitioner, Board of Immigration Appeals
v. No. A97-324-008
ALBERTO GONZALES,
Respondent.
ORDER
Hui Zhen Huang, a native and citizen of China (Fujian Province), petitioned
for asylum, withholding of removal, and relief under the Convention Against
Torture, claiming a fear of persecution because of her political beliefs and activities.
An Immigration Judge denied Huang’s petition and the Board of Immigration
Appeals affirmed the decision. Rather than petition for review of the Board’s
decision, Huang filed a motion to reopen, which the Board denied. Huang now
petitions for review of the Board’s latest decision.
*
On December 1, 2005, we granted Hui Zhen Huang’s motion to waive oral arguments;
therefore the appeal is submitted on the briefs and the record. See Fed. R. App. P. 34(f).
No. 05-1085 Page 2
Huang arrived from China at O’Hare International Airport without any valid
entry documents so the Department of Homeland Security (“DHS”) initiated
deportation proceedings. Huang applied for asylum, claiming that the Chinese
government twice tried to arrest her because she distributed pamphlets for the
Chinese Democratic Party (“CDP”), an opposition group. She said that if she
returned she could be arrested. After a hearing, the IJ denied her application for
asylum and ordered her removed to China. The IJ acknowledged that the Chinese
government targeted CDP activists, but nonetheless ruled that Huang failed to
corroborate her claims or otherwise explain why the corroboration was unavailable.
The Board upheld the decision.
Huang moved to reopen, claiming that she had new evidence to substantiate
her fear of prosecution. First, she introduced affidavits from her father and a friend
corroborating her contention that the government tried to arrest her because she
was a member of the CDP. Second, she introduced a letter purportedly from the
“Villagers Committee” of her home village directing her to “go to the government to
surrender, and get the lenity from the government, otherwise, we will punish you
once we captured [sic] you.”
The Board denied the motion. The Board declined to consider the two
affidavits because Huang failed to adequately explain why they were not available
earlier at the hearing before the IJ. The Board also ruled that the village
committee’s letter did not warrant reopening. First, the letter was not
authenticated under 8 C.F.R. § 287.6. Also, according to the State Department’s
asylum profile for China, “documentation from China is subject to widespread
fabrication and fraud.” Finally, Huang failed to testify or otherwise present
evidence at the hearing to show that the authorities continued to look for her, and
she did not explain why the village sent her a letter fourteen months after she left
China.
Motions to reopen are “strongly disfavored,” and we review the Board’s denial
of a motion to reopen for an abuse of discretion. Fessehaye v. Gonzales, 414 F.3d
746, 751-52 (7th Cir. 2005) (quoting Selimi v. Ashcroft, 360 F.3d 736, 739 (7th Cir.
2004)). A motion to reopen should be granted only if the movant presents evidence
that was not available at the hearing before the IJ or could not have been
discovered earlier by the exercise of due diligence. 8 C.F.R. § 1003.2(c)(1);
Krougliak v. I.N.S., 289 F.3d 457,460 (7th Cir. 2002).
Huang disputes the Board’s conclusion that she could have obtained the
affidavits from her father and friend before the hearing. She argues that the Board
did not explain how she could have obtained the affidavits while in DHS custody.
But Huang, not the Board, faced the “heavy burden to reopen matters due to the
discovery of previously unavailable evidence,” Krougliak, 289 F.3d at 460. The
No. 05-1085 Page 3
record reflects that Huang was able to contact her family and attorney while she
was in DHS custody, yet she never explained why her detention prevented her or
her attorney from more promptly obtaining the affidavits.
Huang also argues that the Board abused its discretion by discounting the
significance of the village committee letter. Huang claims that the Board abused its
discretion by relying too heavily on the State Department asylum profile for China,
and cites Gramatikov v. I.N.S., 128 F.3d 619, 620 (7th Cir. 1997), for the proposition
that “[t]he advice of the State Department is not binding . . . on the courts.”
Gramatikov, however, goes on to note that State Department evaluations of the
likelihood of future prosecution are given “considerable weight,” and any alien
challenging such an evaluation “had better be able to point to a highly credible
independent source of expert knowledge” to contradict it. Id.; see Pop v. I.N.S., 279
F.3d 457, 461-62 (7th Cir. 2002). Huang has done nothing to rebut the State
Department’s profile, and the Board did not err by relying on it to support its
decision.
Huang further argues that she could authenticate the letter using procedures
other than those stated in 8 C.F.R. § 287.6, Georgis v. Ashcroft, 328 F.3d 962, 969
(7th Cir. 2003); see Kahn v. I.N.S., 237 F.3d 1143, 1144 (9th Cir. 2001) (per curiam).
But she never took any steps to do so. In any event, the Board did not rely solely on
Huang’s failure to follow the regulation; the Board’s decision was adequately
supported on other grounds. See Woldemskel v. I.N.S., 257 F.3d 1185, 1192 n.3
(10th Cir. 2001).
AFFIRMED.
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851 F.Supp. 184 (1994)
Calvin OGLETREE, III, Plaintiff,
v.
Amos BARNES, D.M.D., et al., Defendants.
Civ. A. No. 94-1278.
United States District Court, E.D. Pennsylvania.
April 29, 1994.
*185 Joseph F. Bouvier, Mattioni, Mattioni & Mattioni, Ltd., Philadelphia, PA, for plaintiff Calvin Ogletree, III.
Gary V. Gittleman, Margolis, Edelstein, Scherlis, Sarowitz & Kraemer, Philadelphia, PA, for defendant Amos Barnes, D.M.D.
Kathleen Chancler, Jonathan B. Sprague, Post & Schell, PC., Philadelphia, PA, for defendant Audrey Wright.
Lek Domni, Asst. City Sol., Philadelphia, PA, for defendants City of Philadelphia, Richard Neal, Police Com'r, Charles Lorenz, Lieutenant, Edward Sasse, Sergeant, City of Philadelphia Police Dept., Mitchell Yanak, Captain, Bruce Mays, Lieutenant, City of Philadelphia 16th Police Dist.
John O.J. Shellenberger, III, Office of Atty. Gen., Philadelphia, PA, for defendants PA Bd. of Probation and Parole, and Anthony DiBernardo, Eugene Harnak and Steven Mittan, Parole Supervisors, PA Bd. of Probation & Parole.
MEMORANDUM AND ORDER
YOHN, District Judge.
Pending before the court is plaintiff's motion to remand this action to the Philadelphia County Court of Common Pleas. For the reasons discussed herein, his motion will be granted.
BACKGROUND
On January 14, 1994, plaintiff Calvin Ogletree, III, formerly employed by the City of Philadelphia as a police officer, instituted this action in the Philadelphia County Court of Common Pleas against twelve defendants: Amos Barnes, plaintiff's dentist; Audrey Wright, Barnes' assistant; the City of Philadelphia and five individual members of the Philadelphia Police Department Police Commissioner Richard Neal, Captain Mitchell Yanak, Lieutenants Charles Lorenz and Bruce Mays, and Sergeant Edward Sasse (hereinafter collectively referred to as "the City defendants"); the Pennsylvania Board of Probation and Parole ("the Pa. Board"); and three individual members of the Pa. Board Anthony DiBernardo, Eugene Harnak, and Steven Mittan (collectively "the individual Pa. Board defendants"). The complaint, which asserts a rather sweeping array of claims running the gamut from medical malpractice to civil rights violations pursuant to 42 U.S.C. §§ 1981, 1983, and 1985, defies easy synopsis. Nevertheless, its central premise might perhaps be best described as follows: Barnes (and by extension Wright), motivated by a desire to cover-up his alleged malpractice, and the other defendants, motivated by their purported racial animus against Ogletree, conspired, through an interlocking chain of events, to cause Ogletree's termination as a police officer with the *186 City of Philadelphia and in the process violated a myriad of state and federal laws.
Defendants Barnes and Wright were served on January 24, 1994, the City defendants were served on January 26, 1994, the Pa. Board was served on January 31, 1994, and the individual Pa. Board defendants were allegedly served sometime thereafter.[1] On February 23, 1994, the City defendants filed a timely notice of removal alleging that removal was warranted pursuant to 28 U.S.C. § 1441(b) because the action "concerns and affects claims and rights arising under the Constitution and laws of the United States." (Notice of Removal ¶ 4.) The notice also stated that "[a]ll defendants to this action consent to its removal to Federal District Court." (Id. ¶ 7.)
On March 24, 1994 Ogletree filed a timely motion to remand this action to state court on the grounds that (1) the removal procedure was defective because not all of the defendants signed the notice of removal and (2) state law claims predominate over federal claims. Also presently pending before the court are motions to dismiss filed by Barnes, Wright, and the Pa. Board and a motion to quash service or, alternatively, to dismiss filed by the individual Pa. Board defendants. For the reasons discussed below, the court will remand the action on the ground that the removal procedure was defective and therefore does not reach the issue of whether remand is warranted because state law claims predominate. Moreover, because remand terminates this court's jurisdiction over the action, the court will not address the merits of any of the defendants' various motions.
LEGAL STANDARDS
Under 28 U.S.C. § 1446(a), a defendant or defendants desiring to remove any civil action from a state court to a federal district court shall file a notice of removal in the district court signed pursuant to Rule 11 of the Federal Rules of Civil Procedure. The notice of removal must be filed within thirty days after the removing defendant receives the initial pleading setting forth the claim for relief. 28 U.S.C. § 1446(b).[2] While a motion to remand an action based on a defect in removal procedure must be made within thirty days after the filing of the notice of removal under § 1446(a), if at any time before final judgment it appears that the district court lacks subject matter jurisdiction the action must be remanded. 28 U.S.C. § 1447(c); see also Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1215 (3d Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 302, 116 L.Ed.2d 245 (1991). The removal statutes "are to be strictly construed against removal and all doubts should be resolved in favor of remand." Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990) (citations omitted), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991).
While the removal statute does not explicitly so state, it is well-established that in cases involving multiple defendants all defendants must join in the notice of removal. See Gableman v. Peoria, D. & E. Ry. Co., 179 U.S. 335, 337, 21 S.Ct. 171, 172, 45 L.Ed. 220 (1900); Chicago, R.I. & P. Ry. Co. v. Martin, 178 U.S. 245, 20 S.Ct. 854, 44 L.Ed. 1055 (1900). Under this "rule of unanimity," all defendants must join in the notice of removal or otherwise consent to the removal within the thirty-day period set forth in 28 U.S.C. § 1446(b) in order to perfect removal.[3]*187 See Getty Oil, Div. of Texaco, Inc. v. Ins. Co. of North Am., 841 F.2d 1254, 1262-63 (5th Cir.1988); Lewis v. Rego Co., 757 F.2d 66, 68 (3d Cir.1985); Collins v. American Red Cross, 724 F.Supp. 353, 359 (E.D.Pa. 1989); McManus v. Glassman's Wynnefield, Inc., 710 F.Supp. 1043, 1045 (E.D.Pa.1989); Stokes v. Victory Carriers, 577 F.Supp. 9, 10 (E.D.Pa.1983); Balestrieri v. Bell Asbestos Mines, Ltd., 544 F.Supp. 528, 529 (E.D.Pa. 1982); Crompton v. Park Ward Motors, Inc., 477 F.Supp. 699, 701 (E.D.Pa.1979).
This unanimity requirement advances "the congressional purpose of giving deference to a plaintiff's choice of a state forum and of resolving doubts against removal and in favor of remand." See McManus, supra, 710 F.Supp. at 1045 (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 871, 85 L.Ed. 1214 (1941)). It does, however, have some exceptions, two of which are potentially relevant here: First, merely nominal parties may be disregarded for removal purposes and need not join in the notice of removal or otherwise consent to the removal. See Thompson v. Louisville Ladder Corp., 835 F.Supp. 336, 337 n. 3 (E.D.Tex.1993); Creekmore v. Food Lion, Inc., 797 F.Supp. 505, 508 n. 4 (E.D.Va.1992); Knowles v. American Tempering Inc., 629 F.Supp. 832, 835 (E.D.Pa.1985). And second, defendants who have not been served with the initial pleadings pursuant to 28 U.S.C. § 1446(b) at the time the notice of removal is filed are also not required to join in the notice of removal or otherwise consent to removal. See Pullman Co. v. Jenkins, 305 U.S. 534, 540-41, 59 S.Ct. 347, 350-51, 83 L.Ed. 334 (1939); Thompson, supra, 835 F.Supp. at 337 n. 3; Creekmore, supra, 797 F.Supp. at 508 n. 4; Moody v. Commercial Ins. Co. of Newark, N.J., 753 F.Supp. 198, 200 & n. 3 (N.D.Tex.1990); Knowles, supra, 629 F.Supp. at 835; see also Lewis, supra, 757 F.2d at 68.
DISCUSSION
Ogletree contends that the removal procedure in this action was defective because only counsel for the City defendants signed the notice of removal. Barnes and Wright counter that the removal statute does not require them to sign the notice of removal; all that is necessary is that they join in or otherwise consent to the removal. While this latter assertion is true insofar as it goes, it nevertheless begs the larger, and more germane, question of what type of act is necessary to evidence joinder in or consent to removal.
Barnes and Wright argue that the representation in the notice of removal that "[a]ll defendants to this action consent to its removal to Federal District Court," (Notice of Removal ¶ 7), is sufficient.[4] Apparently, no district court within the Third Circuit has ever squarely addressed this question.[5] The Fifth Circuit, however, has held that:
*188 [W]hile it may be true that consent to removal is all that is required under section 1446, a defendant must do so itself. This does not mean that each defendant must sign the original petition for removal, but there must be some timely filed written indication from each defendant, or some person or entity purporting to formally act on its behalf in this respect and to have authority to do so, that it has actually consented to such action. Otherwise, there would be nothing on the record to "bind" the allegedly consenting defendant.
Getty, supra, 841 F.2d at 1262 n. 11 (emphasis added).[6]
Not surprisingly, district courts within the Fifth Circuit while not demanding that each defendant actually sign the notice of removal, have required that there be "some timely filed written document from each served defendant or its official representative, indicating that it has consented [to removal]." Thompson, supra, 835 F.Supp. at 337 n. 3. See also Samuel v. Langham, 780 F.Supp. 424, 427 (N.D.Tex.1992); Luckett v. Harris Hospital-Forth Worth, 764 F.Supp. 436, 442 (N.D.Tex.1991). Likewise, district courts within the Fourth, Sixth, Seventh, and Eleventh Circuits have all endorsed similar requirements.[7]
Two of those cases are particularly relevant here. In Martin Oil Company v. Philadelphia Life Insurance Company, 827 F.Supp. 1236 (N.D.W.Va.1993), one of two defendants filed a notice of removal which represented that the other defendant "concurs with and joins in the decision ... to remove this civil action from state court to federal court." Id. The notice of removal was signed only by counsel for the removing defendant, and counsel for the other defendant filed neither a separate notice of removal nor a written joinder or consent. Id. There, the court held that the rule of unanimity is not satisfied when a notice of removal *189 signed by only one defendant represents that another defendant consents to removal:
[I]t is insufficient for a defendant who has not signed the removal petition to merely advise the removing defendant that it consents to removal and that the removing defendant may represent such consent to the Court on its behalf. Rather, the nonsigning defendant must voice such consent directly to the Court by filing a separate pleading which expresses consent to join.
Id. at 1239 (emphasis added).
Likewise, in Creekmore v. Food Lion, Inc., 797 F.Supp. 505 (E.D.Va.1992), one of three defendants filed a notice of removal which claimed that the other two defendants consented to the removal. Id. at 506-07. The other two defendants "never endorsed [the] notice of removal, never separately or jointly filed any removal pleadings, and never filed any affidavits of formal consent to the removal." Id. at 507. Consequently, the court held that:
[The removing defendant's] representations that the other defendants consented to removal ... do not satisfy the requirements of section 1446. The statute requires all defendants, individually, or through their counsel, to voice their consent before the court, not through another party's attorney.... [P]roper removal does not depend on the absence of [an] objection [to removal]. Rather, all defendants must affirmatively and unambiguously assert their desire to remove the case to federal court.
Id. at 509 (footnotes and citation omitted) (emphasis added).
In Creekmore, the removing defendant also contended that because its representations regarding the other defendants' consent to removal were governed by Rule 11 of the Federal Rules of Civil Procedure, see 28 U.S.C. § 1446(a), "the other defendants need not have voiced their consent to removal before [the] court." Id. at 508. The court rejected this argument as well, noting that while Rule 11 subjected the removing defendant to sanctions for unauthorized or false pleadings, it "[did] not authorize one party to make representations or file pleadings on behalf of another." Id. (footnote omitted). See also Moody, supra, 753 F.Supp. at 200 n. 6 ("While [Rule 11] may very well subject the signer of the pleadings to sanctions for failing to adequately investigate the factual allegations contained therein, [it] does little in the way of binding the allegedly consenting co-defendant to the removal action").[8]
While some courts have not required defendants who do not sign a notice of removal to file a formal written pleading indicating their consent to removal in order to satisfy the unanimity requirement, see, e.g., Colin K. v. Schmidt, 528 F.Supp. 355, 358 (D.R.I.1981) (unanimity requirement satisfied where defendants who did not sign the notice of removal orally voiced their consent to removal at a court conference within the thirty-day period), in this instance Barnes and Wright did nothing either formally or informally, written or oral to manifest their clear and unambiguous consent to removal within the thirty-day period.[9]
Moreover, even if the court were to view the motions to dismiss filed by Barnes and Wright as evidencing clear and unambiguous consent to the removal, such motions were filed after the thirty-day period mandated by 28 U.S.C. § 1446(b) had expired.[10]*190 Thus, although the court seriously doubts that the filing of a motion to dismiss in federal court is sufficient to constitute consent to removal, any consent possibly inferred therefrom was nevertheless untimely. While a few courts have allowed non-signing defendants to submit affidavits of consent after the thirty-day period had expired,[11] it is well-settled in this district that "[t]he thirty-day limitation is mandatory and the court is without authority to expand it." Collins, supra, 724 F.Supp. at 359 (citations omitted); see also McManus, supra, 710 F.Supp. at 1045; Balestrieri, supra, 544 F.Supp. at 529; Maglio v. F.W. Woolworth Co., 542 F.Supp. 39, 40 (E.D.Pa.1982); Crompton, supra, 477 F.Supp. at 701; Typh, Inc. v. Typhoon Fence of Pennsylvania, Inc., 461 F.Supp. 994, 996 (E.D.Pa.1978); Sun Oil Co. of Pennsylvania v. Pennsylvania Dept. of Labor & Industry, 365 F.Supp. 1403, 1406 (E.D.Pa.1973).
In Martin Oil, supra, the court noted that:
There is nothing unfair about requiring each defendant to either sign the notice of removal, file its own notice of removal, or file a written consent or written joinder to the original notice of removal. Such a policy, while ensuring the unanimity of removal, does not prevent any defendant from taking full advantage of the removal statute, and it is not a requirement which could be manipulated by plaintiffs to overcome the rights of defendants to remove.
Id., 827 F.Supp. at 1238-39. This court concurs. Without some sort of indication from each defendant that it either joins in or consents to the removal perhaps even an informal indication such as a letter to the court there is nothing on the record to bind that defendant to the removal.
Here, Barnes and Wright not only took no action to clearly and unambiguously bind themselves to the removal,[12] but Wright also continued to affirmatively litigate this action in state court, by obtaining subpoenas for the production of Ogletree's medical records, after the City defendants' notice of removal was filed. (See Plaintiff's Mem. Supp. Mot. to Remand at 3 & Ex. G.) Such action seriously undermines any representations regarding Wright's alleged consent to the removal. Moreover, because the removal statute limits the judicial power of the states and infringes upon their sovereignty, this court must construe its requirements strictly and resolve all doubts in favor of remand.[13] Consequently, the court concludes that because Barnes and Wright failed to clearly and unambiguously join in or otherwise consent to the City defendants' notice of removal within the thirty-day period mandated by 28 U.S.C. § 1446(b), the "rule of unanimity" was not satisfied and the removal of this action was thus defective. Therefore, as plaintiff has timely complained of this defect, the court, pursuant to 28 U.S.C. § 1447(c), will grant his motion to remand.
CONCLUSION
For the foregoing reasons, the court will remand this action to the Philadelphia County Court of Common Pleas. An appropriate order follows.
*191 ORDER
AND NOW, this 21st day of April, 1994, upon consideration of the plaintiff's motion to remand and the defendants' responses thereto, and for the reasons stated in the accompanying memorandum, it is hereby ORDERED that the plaintiff's motion is GRANTED and that this civil action is REMANDED to the Court of Common Pleas, Philadelphia County.
It is further ORDERED that, pursuant to 28 U.S.C. § 1447(c), the Clerk of the Court shall send a certified copy of this order to the Prothonotary for the Court of Common Pleas, Philadelphia County.
It is also further ORDERED that the Clerk of Court shall return the file in this action to the Prothonotary for the Court of Common Pleas, Philadelphia County.
It is also further ORDERED that this action be closed for statistical purposes.
NOTES
[1] The individual Pa. Board defendants deny that they were ever properly served and have moved this court to quash service.
[2] In full, the relevant provisions of 28 U.S.C. § 1446 state:
(a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.
(b) The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
[3] There is some dispute as to when the thirty day period begins to run in cases involving multiple defendants. Compare Getty Oil, Div. of Texaco, Inc. v. Ins. Co. of North Am., 841 F.2d 1254, 1262-63 (5th Cir.1988) (thirty-day period begins to run as soon as the first defendant is served) with McKinney v. Board of Trustees of Mayland Community College, 955 F.2d 924, 928 (4th Cir. 1992) (individual defendants have thirty days from the time each is served to join a valid removal petition). In this case, however, the dispute has no relevance because Barnes and Wright, two parties whose joinder in or consent to the notice of removal was required to perfect removal, were the first defendants served. Thus, as to them, the thirty-day period would be the same under either mode of measurement.
[4] The Pa. Board and the individual Pa. Board defendants also adopt this position. Additionally, both assert that they fall within exceptions to the unanimity requirement the Board because it is a nominal party and the individual defendants because they had not yet been served at the time the notice of removal was filed. In any event, the applicability of those exceptions in this case is of no import because all defendants must join in or consent to the removal. If Barnes and/or Wright failed to properly join in or consent to the removal, then the action must be remanded; whether or not the Pa. Board and the individual Pa. Board defendants fall within the exceptions to the unanimity requirement is simply irrelevant. Consequently, the court will confine its inquiry into an examination of Barnes and Wright's alleged lack of joinder in or consent to the removal.
[5] The parties' briefing of this issue is disappointingly limited. A cursory perusal of the notes of decision to 28 U.S.C.A. § 1446 would have uncovered many of the cases cited herein by the court.
[6] In an unpublished disposition, the Fourth Circuit has noted that "[b]ecause the filing requirements contained in 28 U.S.C. § 1446 are mandatory, there is no federal jurisdiction when one of the defendants fails to join in, file his own, or officially and unambiguously consent to, a removal petition within 30 days of service." Wilkins v. Correctional Medical System, 931 F.2d 888, 888 (table) (4th Cir.1991) (citations omitted) (emphasis added).
[7] Fourth Circuit: See, e.g., Martin Oil Co. v. Philadelphia Life Ins. Co., 827 F.Supp. 1236, 1237 (N.D.W.Va.1993) ("The rule of unanimity ... does not require that all of the defendants sign the notice of removal; however, it does require that each defendant officially and unambiguously consent to a removal petition filed by another defendant, within thirty (30) days of receiving the complaint") (citation omitted); Creekmore v. Food Lion, Inc., 797 F.Supp. 505, 508 (E.D.Va.1992) ("Although all defendants must join in the removal, the rule of unanimity does not require that all defendants sign the same notice of removal. Rather, section 1446 requires that each defendant file a notice of removal, either independently or by unambiguously joining in or consenting to another defendant's notice, within the thirty-day period following service of process") (citations omitted); Mason v. International Business Machines, Inc., 543 F.Supp. 444, 446 (M.D.N.C.1982) ("Section 1446(a) requires defendants to `file' a notice of removal. This provision clearly requires an official filing or voicing of consent") (footnote and citation omitted).
Sixth Circuit: See, e.g., Knickerbocker v. Chrysler Corp., 728 F.Supp. 460, 461-62 (E.D.Mich. 1990) (following "majority view," court holds that defendant's unsupported assertion that codefendant did not object to removal did not satisfy requirement of official joinder or consent to removal; although removal notice did not have to be signed by codefendant, codefendant had to join in or consent to removal by way of an official filing or voicing of consent); Godman v. Sears, Roebuck & Co., 588 F.Supp. 121, 124 (E.D.Mich.1984) (court remands action because the nonremoving co-defendant "failed to file an official consent or joinder within the statutory time period," even though the removing defendant had indicated in its removal notice that the co-defendant planned to join in the removal).
Seventh Circuit: See, e.g., Fellhauer v. City of Geneva, 673 F.Supp. 1445, 1447-48 (N.D.Ill. 1987) ("[E]ach defendant must communicate his consent to the court, either orally or in writing, within the thirty-day period.... The removal statutes require that all defendants communicate their consent to the court not to one another") (footnote and citations omitted) (emphasis in original).
Eleventh Circuit: See, e.g., Knowles v. Hertz Equipment Rental Co., 657 F.Supp. 109, 110 (S.D.Fla.1987) ("Defendants must manifest consent to removal either in writing or orally to the Court within the 30-day period") (citations omitted); Clyde v. National Data Corp., 609 F.Supp. 216, 218 (N.D.Ga.1985) ("unanimity must be expressed to the court within the thirty day period, whether by petition, written consent or oral consent") (footnote omitted).
[8] Like Martin Oil and Creekmore, Moody also held that "unsupported allegations in the defendants' notice of removal relating to a co-defendant's assent to the removal" are not sufficient "to properly join all defendants in the removal action." Id., 753 F.Supp. at 200.
[9] The court notes that counsel for the Pa. Board and the individual Pa. Board defendants filed entries of appearance in which those defendants explicitly joined the City defendants' notice of removal. (See Documents # 4 and # 8.) By contrast, the entry of appearance filed by Wright's counsel contains no indication of joinder in or consent to the City defendants' notice of removal. (See Document # 7.) Barnes' counsel has not filed an entry of appearance in this court; his state court entry of appearance, filed one day before the City defendants' notice of removal was filed, makes no mention of joinder in or consent to the removal.
[10] Both Barnes and Wright filed their motions to dismiss on February 28, 1994, (see Documents # 2 and # 3) thirty-five days after they were served with the complaint on January 24, 1994. Since Barnes and Wright were also the first defendants served, the alternate method of computing the thirty-day period yields the same result. See supra n. 3.
[11] See, e.g., Sicinski v. Reliance Funding Corp., 461 F.Supp. 649, 652 (S.D.N.Y.1978); Mechanical Rubber & Supply v. American Saw & Mfg., 810 F.Supp. 986, 989-90 (C.D.Ill.1990) (following Sicinski); but see Moody, supra, 753 F.Supp. at 202 (criticizing Sicinski).
[12] Apparently the Pa. Board and the individual Pa. Board defendants were aware of the requirement that each defendant must clearly and unambiguously join in or consent to the notice of removal within the thirty-day period. See supra n. 9.
[13] See Shamrock Oil Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941); Healy v. Ratta, 292 U.S. 263, 270, 54 S.Ct. 700, 703, 78 L.Ed. 1248 (1934); Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991); Steel Valley Authority v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987), cert. dismissed sub nom. American Standard, Inc. v. Steel Valley Authority, 484 U.S. 1021, 108 S.Ct. 739, 98 L.Ed.2d 756 (1988); Abels v. State Farm Fire & Casualty Co., 770 F.2d 26, 29 (3d Cir.1985); McManus v. Glassman's Wynnefield, Inc., 710 F.Supp. 1043, 1045 (E.D.Pa.1989).
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180 F.2d 255
WOODS, Housing Expediter,v.KOURMADAS.
No. 10985.
United States Court of Appeals, Sixth Circuit.
Feb. 14, 1950.
Benjamin Freidson, Washington, D.C. (Paul Marshall, Sanford S. Simms, Cleeveland, Ohio, A. M. Edwards, Jr., Washington, D.C., of counsel; Ed Dupree, Hugo V. Prucha, and Benj. Friedson, Washington, D.C., on the brief), for appellant.
Ralph E. Helper, Detroit, Mich. (Larry Middleton, Detroit, Mich., and Harold Helper and Ralph E. Helper, Detroit, Mich., on the brief), for appellee.
Before HICKS, Chief Judge, and MARTIN and McALLISTER, Circuit Judges.
PER CURIAM.
1
In this action instituted by the Housing Expediter, it appears that appellee is the owner of a three-story building, located in the business and hospital district of Detroit, which was heretofore leased to a single tenant, who, in turn, rented rooms and apartments to the public for living purposes. On January 1, 1947, the premises were vacated and appellee undertook to change them from rented rooms and apartments to a hotel through the expenditure of a considerable sum of money in repairing, remodeling, redecorating, and installing new plumbing and facilities for heating water. On February 3, 1947, appellee filed an application for a license to operate the premises as a hotel, in accordance with the ordinances of the city of Detroit, and thereafter, in keeping with the usual practice of the city, investigations were conducted by the fire department, police department, and various other departments of the city whose approval was required before a hotel license could be issued.
2
On May 5, 1947, the license to operate a hotel was granted by the city of Detroit. The regular hotel licenses issued by the city of Detroit expired on June 30, 1947, and thereafter, a new license was issued for the premises in question for the period ending June 30, 1948, and subsequently, for the period ending June 30, 1949. During the entire period in which the above mentioned remodeling and alterations were made, the premises were unoccupied. In July, 1947, the building was reopened as a hotel and guests received. The district court found that the rooms had hot and cold running water and combination bath and lavatory; that the apartments had kitchenettes, stoves, and mechanical refrigerators. Upon the opening of the hotel in July, 1947, and thereafter, appellee furnished complete hotel service, including maid service, the furnishing and laundering of linen, telephone service, and the use and upkeep of furniture and fixtures. When the premises were opened as a hotel, they were known as the Grace Harper Hotel, and were listed in the Detroit telephone directory as a hotel.
3
The Housing and Rent Act of 19471 provided that 'controlled housing accommodations' did not include housing accommodations 'in any establishment which is commonly known as a hotel in the community in which it is located, which are occupied by persons who are provided customary hotel services * * *.' The Housing Expediter contends that the above exception and exemption did not apply to appellee's premises inasmuch as they were not operated as a hotel on June 30, 1947, the effective date of the statute, and for the further reason that the accommodations were not commonly known as a hotel. However, as above mentioned, the premises had been vacant for six months before the enactment of the Housing and Rent Act. Five months before that time, appellee had applied for a hotel license, which had been duly granted him at least four months before the statute was enacted and before its effective date. For several months before that time, alterations and remodeling had been carried on with the express and sole purpose of making them a hotel.
4
Because of the long vacancy, the repairs and remodeling which were carried on to make the premises a hotel, and the issuance of a hotel license many months prior to the effective date of the Housing and Rent Act of 1947, we are not confronted with a situation where the change of premises was made subsequent to the effective date of the Housing and Rent Act, and it is, therefore, unnecessary to consider the cases cited in the briefs, in apparent conflict, as to the cut-off date, which excludes premises from the exemption from rent control within the intendment of the statute.
5
As to the contention that the premises were not exempt as a hotel because they were not commonly known as a hotel, this question is not to be determined on testimony of reputation. The premises were in fact intended for a hotel, and remodeled and furnished for this purpose. The usual services of a hotel were supplied, and the premises operated in the manner of a hotel and duly licensed as such. They were known as a hotel and used as a hotel. The district court found that the premises were commonly known as a hotel in the vicinity in which they were located and were occupied by persons who were provided customary hotel services; and the court's findings are supported by substantial evidence. The judgment is affirmed.
1
Section 202(c) of the Housing and Rent Act of 1947, 50 U.S.C.A.Appendix, 1881 et seq
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404 N.E.2d 1354 (1980)
Donald Wayne HARDIN, Appellant,
v.
STATE of Indiana, Appellee.
No. 979S255.
Supreme Court of Indiana.
June 3, 1980.
*1355 Robert C. Levinson, Indianapolis, for appellant.
Theodore L. Sendak, Atty. Gen., Richard Albert Alford, Deputy Atty. Gen., Indianapolis, for appellee.
*1356 PIVARNIK, Justice.
Appellant was convicted of voluntary manslaughter by a jury on February 8, 1979. He was sentenced to imprisonment for a determinate period of fifteen (15) years on March 5, 1979. Appellant's motion to correct errors was denied on June 25, 1979. He appeals this denial alleging that there was insufficient evidence to sustain the verdict, that the court erred in allowing a tape recording and transcript of his interrogation into evidence, and that he was incorrectly sentenced.
On May 3, 1978, the appellant, Donald Wayne Hardin was proceeding north on State Road 231 north of Jasper, Indiana, in his truck and picked up the victim, Ronnie Lee Campbell, who was hitchhiking. Campbell offered the appellant thirty dollars ($30.00) to take him to Fort Wayne. Hardin finally did agree to take Campbell to Indianapolis. They went to Hardin's home in Hilham, Indiana, where Hardin stopped to pick up a spare tire for his pickup truck. Hardin and Campbell left Hardin's home at approximately 6:30 p.m. and stopped for gas in French Lick. Campbell bought beer, which he drank. Hardin drank from a bottle Campbell had with him which Campbell claimed contained homemade whiskey.
Hardin testified that as they travelled north from Paoli, Indiana, the personality of the victim appeared to change and to alternate between aggressiveness and friendliness. Hardin said that Campbell told him that he had a gun in his duffle bag. Hardin stated that he never saw the weapon that Campbell claimed to have. Hardin said that at one point Campbell touched his knee and later touched his penis as they drove toward Indianapolis. Hardin testified that he was unable to tell whether Campbell's touching him was accidental or intentional. Hardin also testified that Campbell commented that Hardin had a nice truck and a nice CB radio and that he would just take it, but that then he would say that he was joking and that he just wanted to see what Hardin's reaction would be.
Hardin had a rifle in his truck which he had moved to the driver's side of the truck when he picked up Campbell. Hardin stopped his truck to urinate at the side of the road. As he got out of the truck he took his rifle with him. As Hardin stepped out of the truck he watched Campbell reach down toward his duffle bag on the floor and lean toward him. Hardin did not see Campbell take anything out of the bag, nor did he see any gun in Campbell's hands. He saw one of Campbell's hands move and Hardin said he presumed that Campbell was reaching for the gun that he had talked about. Hardin claims he is not able to recall whether his rifle had already been cocked or not. He was not able to recall whether or not he pulled the trigger. He testified that he turned around and pointed the rifle in Campbell's general direction to stop whatever he was trying to do and that the gun discharged. Hardin then pushed Campbell and the duffle bag out of the truck and headed back toward his home in southern Indiana. Hardin's description of how he removed Campbell from the truck and their positions at the time the gun discharged was not certain. Hardin did not examine Campbell to determine whether he was dead or alive.
Hardin next recalls being stopped by the Bloomington City Police for a traffic violation. When they asked for an explanation of the pool of blood on the seat of his truck, Hardin told them it came from a groundhog. He claims that he did not tell the Bloomington police about the shooting because he was uncertain that the events had actually happened, because he was afraid of the police, and because he just wanted to get home. After this stop and a brief examination by police to determine whether appellant was able to drive, he was allowed to proceed on to his home. He immediately called his common law wife and told her he might have shot someone.
Hardin testified that he threw some of Campbell's clothing into a trash dumpster near Haysville, Indiana. The following morning, May 4, 1978, Hardin went to work and cleaned up the inside of the truck and *1357 put other clothing belonging to Campbell into the trash dumpster at the Jasper, Indiana, Holiday Inn. He testified that he placed his rifle and shells in his common law wife's car when he picked her up earlier that morning.
Hardin then told his employers, Thomas Bocock, the Assistant Manager, and Jim Harris, the Inn Keeper of the Jasper Holiday Inn, that he had possibly shot someone the previous evening. As a result, Hardin then talked with Donovan Bare, a psychiatric social worker at the Southern Hills Mental Health Center. After listening to Hardin, Bare advised him to go to the police and to inquire whether any shooting had been reported. Hardin then went to the Dubois County Sheriff, Hochgesang, and made a statement which was disbelieved. However, the sheriff called in the State Police and Hardin gave a statement to Detective Carl Shaw which was tape recorded. Shaw began an investigation of the possible crime and began to recover evidence from Hardin with Hardin's help and voluntary consents to search and seize his boots, clothing, truck and rifle. Later during his investigation Shaw became aware that a body had been found along the roadside in Putnamville State Police jurisdiction which matched the description given to him by Hardin.
I.
Appellant contends that there is insufficient evidence to sustain his conviction for voluntary manslaughter. His main contention is that a conviction for voluntary manslaughter cannot stand under Ind. Code § 35-42-1-1 and Ind. Code § 35-42-1-3 (Burns Code Ed.Repl. 1979) without evidence of sudden heat. He claims that the current statute is sufficiently different from former statutes to make reliance on cases such as McDonald v. State, (1975) 264 Ind. 477, 346 N.E.2d 569 inapplicable to this issue.
A similar argument was presented in Wallace v. State, (1979) Ind. App., 395 N.E.2d 274 and was rejected. The court in Wallace, supra, upheld the long standing rule in Indiana that voluntary manslaughter is, in effect, a lesser included offense of murder and one of which one may be convicted if charged with murder.
The appellant here, as in Wallace, claims that the legislature has made sudden heat an element of voluntary manslaughter in the current statute. As was noted by that court, in Ind. Code § 35-42-1-3(b) the legislature specifically stated:
"(b) The existence of a sudden heat is a mitigating factor that reduces what otherwise would be murder under section 1(1) [XX-XX-X-X(1)] of this chapter to voluntary manslaughter... ."
Hardin argues that sufficient time had passed from the time of Campbell's touching of him and Campbell's comments about guns and taking Hardin's truck or CB radio that any "sudden heat" raised by Campbell's provocations should have subsided and that Hardin was acting out of fear in reaching for his gun.
Hardin did not testify that he was acting in self-defense. He continued to maintain that he was unclear on many of the details of the circumstances of the shooting. Hardin did testify that he did not see Campbell take anything out of his duffle bag and that he did not see Campbell with a gun. However, fear, terror or resentment can be sufficient to obscure reason. As we stated in Love v. State, (1977) 267 Ind. 302, 369 N.E.2d 1073, 1075:
"[A]ll that is required to reduce a homicide from murder to voluntary manslaughter is sufficient provocation to excite in the mind of the defendant such emotions as either anger, rage, sudden resentment, or terror as may be sufficient to obscure the reason of an ordinary man, and to prevent deliberation and premeditation, to exclude malice, and to render the defendant incapable of cool reflection."
The jury could have found from the evidence presented at trial that the above standard was met. There is no error on this issue.
Appellant additionally contends that Ind. Code § 35-42-1-1(1) incorporates within *1358 the element of an "intentional or knowing act" the concept of malice. He argues that there was no evidence of malice and that therefore the evidence is insufficient to support the jury's verdict.
The evidence showed that Hardin intentionally pointed the loaded gun in Campbell's direction and it discharged. He stated that he did this to "maybe perhaps stop whatever he was trying to do." Malice may be inferred from the intentional use of a deadly weapon in a manner reasonably calculated to cause death or great bodily injury. Sypniewski v. State, (1977) Ind., 368 N.E.2d 1359.
The evidence was sufficient for the jury to have returned a verdict of guilty to the charge of murder. The jury, therefore, could return a verdict of voluntary manslaughter. There is no error on this issue.
II.
Appellant next claims that the trial court erred in admitting a tape recording of his in-custody interrogation and the transcript of this recording. He objected to the admission of these exhibits at trial and a hearing was had outside the presence of the jury. At this hearing it was discussed that at a prior hearing the transcript had been corrected to identify speakers on the tape. It was noted that at one place on the tape several speakers spoke at once and that this part was unintelligible. Other parts of the recording were so faint, it required that one listen from within four to five inches of the tape speaker for the tape to be audible.
The objections of the appellant were that reference to psychiatric treatment should be deleted and the objection that if they were deleted the tape would not be accurate. The objection was made that all of the jurors could not hear every part of the tape at the same time because the recording was faint in parts. Appellant also objected because no explanation was given of the meaning of the word coercion in terms of the Miranda warning when defendant replied that he did not know what coercion meant.
The court found as a result of the evidence presented relative to the conversations of the defendant prior to and during the conversation recorded on the tape, the court's in camera hearing of the tape, and the court's examination of the transcript, that the tape recording was authentic and correct. The court also found that the testimony elicited was freely and voluntarily given, that all warnings were given and that the recording was of sufficient clarity to be intelligible. The court determined that the inaudible parts, if any, detracted little from the meaning of the conversation and admitted the exhibits. The tape was played to the jury and they were given the transcript for the limited purpose of assisting them in listening to the tape recording. The jury was so admonished. The judge did not delete the portion of the tape in which the defendant said he was under psychiatric care. Appellant requested that the judge make the deletion and then instruct the jury to avoid their speculation as to what the deletions were. The court denied his request.
Appellant cites Lamar v. State, (1972) 258 Ind. 504, 282 N.E.2d 795 for his claim that this court should substitute its judgment for that of the trial court's discretion as to the admissibility of the tape recording. We note at the outset of our consideration of this issue that the appellant has not included the tape recording in question in the record before this court for review.
From our examination of the transcript of the recording and the transcript of the trial court's hearings on the admission of these exhibits, it is clear there was no abuse of his discretion in admitting the exhibits. The transcript of the recording was determined to be authentic. No deletions or changes were made. The speakers were identified. Waivers were recorded on the tape and a written, signed Miranda form was also executed and noted on the tape. In Lamar, supra, it was suggested that the trial judge be furnished a typewritten transcription of the recording and that he listen to the recording to determine its admissibility. This was done. In the recent case of *1359 Pettit v. State, (1979) Ind., 396 N.E.2d 126 we explained that one of the main concerns in the admission of tape recordings is that they not confuse the jury and result in jury speculation. There is no evidence of such confusion here. In addition, witnesses Bocock, Harris, Bare, Hochgesang and Shaw all testified as to what Hardin had told them as to his belief that he had shot someone the previous evening. Prior to the time that any Miranda warnings were required to be given he had stated to these witnesses most of the details that were included in his in-custody interrogation. At trial, the appellant testified and restated everything that was in his original in-custody statement. There is no error on this issue.
III.
Appellant next alleges that the trial court erred in sentencing by not enumerating in the record the considerations under which it imposed a fifteen (15) year sentence. The appellant was convicted of voluntary manslaughter. The penalty for that crime is fixed by Ind. Code § 35-50-2-5 (Burns Code Ed.Repl. 1979) as follows:
"A person who commits a Class B felony shall be imprisoned for a fixed term of ten (10) years with no more than ten (10) years added for aggravating circumstances or not more than four (4) years subtracted for mitigating circumstances."
The defendant was sentenced to fifteen (15) years imprisonment. In Gardner v. State, (1979) Ind., 388 N.E.2d 513 this court stated:
"[W]hen a judge increases or decreases the basic sentence, suspends the sentence, or imposes consecutive terms of imprisonment, the record should disclose what factors were considered by the judge to be mitigating or aggravating circumstances."
388 N.E.2d at 517.
The appellant contends that the judge failed to enumerate the factors considered to be mitigating or aggravating factors throughout the sentencing hearing. The appellant further claims that because these factors were not enumerated the sentence cannot adequately be reviewed and that this cause must be remanded.
The appellant, his attorney, the prosecuting attorney and witnesses were present at the sentencing hearing. The judge questioned the appellant extensively prior to sentencing. He was apparently offering the appellant an opportunity to explain a conflict in the evidence and the defendant's version of the events that took place. Obviously, the appellant's version of those events was the only one available. The judge was troubled by the fact that the appellant had described exiting from the driver's side of the pick-up truck, wheeling and discharging the gun. The victim, who was on the passenger side of the vehicle was killed by a bullet that entered his head behind his right ear. The judge was concerned with giving the appellant an opportunity to explain further how the offense occurred in regard to whether or not the sentence should be increased or decreased. The judge stated that he felt that if he could not believe that the appellant was telling the truth about how this happened, he could not give great credence to the appellant's view of why it happened. The appellant responded that the decedent was reaching into his bag and leaning toward him and could possibly have turned his head.
Appellant's attorney commented at the sentencing hearing that the unanswered questions bothered everyone and that the appellant could not or would not "open up," that no one really knew what Hardin was like, and that he had not been of any value to the court in trying to determine what sentence to pronounce. However, he called to the court's attention that defendant had no prior criminal record and stated his belief that the appellant would not commit another similar crime.
The judge sentenced the appellant to the Indiana Department of Corrections for a period of fifteen years, recommending that he be confined under medium security. At this time the court did not enumerate any factors for aggravation of the presumptive sentence of ten (10) years. The appellant *1360 filed a motion to correct errors and a memorandum in support of his motion on May 9, 1979. Hearing was had on June 6, 1979, on the motion to correct errors. The court denied the motion to correct errors in all respects except it found that West's Ann. Ind. Code § 35-4.1-4-3 (1978) requires that the court make a record of the sentencing hearing including a statement of the Court's reasons for selecting the sentence that it imposes if the court finds aggravating circumstances or mitigating circumstances. In compliance with the statute, the court, at that time, made a statement of the reasons for selecting the sentence of fifteen (15) years. The court stated that in light of the evidence presented in the case, and the explanation offered by the defendant, the court believed that there was a risk that the defendant could commit another similar crime. The court commented that the nature and circumstances of the crime were of the most serious nature, being a crime against a person and one which resulted in the death of a human being. The court again commented that because of the questions regarding the credibility of the appellant, it could not conclusively state that the victim of the crime induced or facilitated the offense, or that there were substantial grounds tending to excuse or justify the crime. The court stated its belief that the appellant was in need of correctional or rehabilitative treatment that could best be provided by his commitment to a penal institution and that the imposition of a reduced sentence would depreciate the seriousness of the offense. The court also determined that the aggravating circumstances present in this case outweigh the mitigating circumstance of the defendant's having no significant past criminal record. The court adequately complied with the sentencing statute and the basic guidelines set out in Gardner v. State, (1979) Ind., 388 N.E.2d 513.
Judgment affirmed.
GIVAN, C.J., and DeBRULER, HUNTER and PRENTICE, JJ., concur.
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991 P.2d 549 (1999)
1999 OK CR 42
John S. DELFRATE, Petitioner,
v.
The OKLAHOMA DEPARTMENT OF CORRECTIONS, et al., Respondents.
No. PC-99-669.
Court of Criminal Appeals of Oklahoma.
November 17, 1999.
*550 ORDER AFFIRMING IN PART AND REVERSING IN PART PETITION SEEKING POST-CONVICTION RELIEF
¶ 1 Petitioner has appealed from an order of the District Court of Creek County dismissing his Application for Post-Conviction relief in Case Nos. CRF-83-118, CRF-83-121 and CRF-83-282. On September 26, 1984, Petitioner entered pleas of guilty in Case Nos. CRF-83-118 and CRF-83-121 to Robbery with Firearms and was sentenced to twenty-five (25) years imprisonment in each case. The sentences were ordered to run concurrently. Petitioner did not attempt to withdraw his pleas or otherwise appeal his convictions in either case.
¶ 2 On April 5, 1985, Petitioner was found guilty by the trial court in Creek County Case No. CRF-83-282 of Escape While Awaiting Trial, After Two or More Felony Convictions. Petitioner was sentenced to twenty (20) years imprisonment. Petitioner perfected an appeal of that conviction and this Court remanded for re-sentencing. Petitioner was re-sentenced to seven (7) years imprisonment.
¶ 3 In July 1992, Petitioner was paroled on all three cases. However, in July 1993, Petitioner was arrested in Ohio on an Oklahoma warrant for Escape From a Penal Institution. After being returned to Oklahoma, Petitioner's parole revocation hearing was held in a Department of Corrections facility located in Cleveland County. Petitioner's parole was subsequently revoked by the Governor and Petitioner was returned to the custody of the Department of Corrections.
¶ 4 On April 22, 1997, Petitioner filed a Petition for Writ of Habeas Corpus in Cleveland County District Court challenging, inter alia, his parole revocation and the alleged denial of earned credits which Petitioner claimed entitled him to immediate release. On January 27, 1998, the Cleveland County District Court filed an order denying relief. Regarding Petitioner's claim of earned credits, the District Court found Petitioner had not demonstrated entitlement to such credits under the law and therefore denied relief. In regard to Petitioner's claim he was denied due process in the revocation of his parole in Case Nos. CRF-83-118, CRF-83-121 and CRF-83-282, the District Court, relying on Twyman v. State Pardon and Parole Board, 1992 OK CR 53, ¶ 3, 837 P.2d 480, 481, held Petitioner's proper remedy was to file an application for post-conviction relief, not in Cleveland County, but in Creek County, the District Court where Petitioner's convictions arose.
¶ 5 Thereafter, Petitioner, through counsel, attempted to have this Court review the District Court's order denying habeas relief. However, on February 23, 1998, this Court entered an Order declining jurisdiction due to Petitioner's failure to appeal the District Court's order within thirty days from the date the District Court had denied relief. See Rule 10.1(C), Rules of the Oklahoma Court of Criminal Appeals, Title 22, Ch.18, App. (1998). No further appellate proceedings were pursued by Petitioner regarding the Cleveland County District Court's order.
¶ 6 On June 30, 1998, Petitioner, pro se, filed an Application for Post-Conviction Relief in Creek County District Court, in Case Nos. CRF-83-118, CRF-83-121 and CRF-83-282. Once again, Petitioner alleged denial of due process in his parole revocations. On April 16, 1999, the Creek County District Court dismissed Petitioner's application finding that under the Uniform Post-Conviction Act, 22 O.S.1991, § 1081, the county with jurisdiction to hear such a claim was not Creek County, but the county in which the parole or conditional release was revoked, i.e., Cleveland County. Petitioner perfected this appeal from that ruling.
¶ 7 In deciding Petitioner's appeal, we first find his claims regarding earned credits to be barred by the doctrine of res judicata. The Cleveland County District Court specifically addressed the merits of, and denied relief on this issue in its February 23, 1998, order. As explained above, Petitioner failed to timely seek appellate review of that order. Therefore, Petitioner's earned credit claims are res judicata. See Wells v. Sheriff, Carter County, 1968 OK CR 109, ¶¶ 7-28, 442 P.2d 535, 538-541 (subsequent habeas action in Court of Criminal Appeals res judicata where *551 county district court had granted habeas in previous proceeding).
¶ 8 However, Petitioner's due process claim regarding the revocation of his parole, and the dispositions by the two District Courts of this claim, warrants further discussion. We appreciate both District Courts' difficulty in determining which court has jurisdiction to hear claims attacking revocations of parole. Clearly, there is an ambiguity between 22 O.S.1991, §§ 1080 and 1081, regarding where challenges to revocation of parole or conditional release is to be brought. Moreover, a review of this Court's jurisprudence regarding the issue reveals a lack of clarity and guidance. It is time to resolve the ambiguity.[1]
¶ 9 In the case of In re Sanders, 1977 OK CR 248, 568 P.2d 331, the petitioner filed an application for habeas corpus relief in this Court seeking release from an order of the Governor revoking his parole. Therein, this Court acknowledged that proceedings challenging the validity of a parole revocation were governed by the provisions of the Uniform Post-Conviction Procedure Act. This Court specifically cited 22 O.S.1971, §§ 1080 and 1081. Section 1080 provided in relevant part:
Any person who has been convicted of, or sentenced for, a crime and who claims:
* * * * * *
(e) that his sentence has expired, his suspended sentence, probation, parole, or conditional release unlawfully revoked, or he is otherwise unlawfully held in custody or other restraint;
* * * * * *
may institute a proceeding under this act in the court in which the judgment and sentence on conviction was imposed to secure the appropriate relief.
22 O.S.1971, § 1080 (emphasis added). On the other hand, the pertinent part of § 1081 provided:
A proceeding is commenced by filing a verified "application for post-conviction relief" with the clerk of the court imposing judgment if an appeal is not pending. When such a proceeding arises from the revocation of parole or conditional release, the proceeding shall be commenced by filing a verified "application for post-conviction relief" with the clerk of the district court in the county in which the parole or conditional release was revoked.
22 O.S.1971, § 1081 (emphasis added).
¶ 10 Clearly there was in 1977 and, as will be discussed below, still remains, an ambiguity between §§ 1080(e) and 1081 regarding where a petition for post-conviction relief challenging the revocation of a parole or conditional release is to be filed. Because the petitioner in Sanders had not first sought post-conviction relief in the district court, this Court dismissed the application for habeas corpus relief. Moreover, while advising the petitioner of his appellate rights if post-conviction relief was denied by the district court, this Court did not address the aforementioned ambiguity or make clear within the opinion where the petitioner was to seek relief.
¶ 11 In McMahon v. State, 1987 OK CR 275, 747 P.2d 967, the appellant appealed from a Tulsa County District Court order dismissing his application for post-conviction relief upon a finding it lacked venue to hear or rule on the matter. The appellant had been granted parole on several Tulsa County cases but was subsequently returned to custody upon a violator's warrant. Both the probable cause hearing on the warrant and the revocation hearing were held in Tulsa County. The Governor eventually revoked the appellant's parole.
¶ 12 The appellant filed an application for post-conviction relief in Tulsa County seeking a review of his parole revocation. Relying on 22 O.S.1981, § 1081, the district court dismissed the application finding Oklahoma County had venue and jurisdiction of all such matters since the Governor's office is located *552 in Oklahoma County and that was the county where the final revocation order was issued.
¶ 13 While acknowledging the conflicting provisions of §§ 1081 and 1080(e), this Court resolved the appeal based on the facts of the case. The Court observed the appellant's warrant had been issued in Tulsa County and his probable cause and revocation hearings were both held in Tulsa County. Thus, the Court reasoned the county of the conditional residence of the parolee would be the proper venue because "in most instances" the parole violation would most likely occur where the parolee is living and working and that county would be the jurisdiction from which subpoenas would issue to any witness that might be called in processing the claim of a violation. Therefore, the Court held the venue and jurisdiction anticipated in the language of § 1081 is the same as the locus of the parole revocation proceedings.
¶ 14 While the intention of the Court in McMahon to simplify the matter is commendable, such holding obviously does not solve those "instances" where the facts are dissimilar. For example, in the case at bar Petitioner was located in the State of Ohio at the time of his arrest. Moreover, Petitioner had been paroled in 1992 to the State of Florida under the Interstate Compact Agreement. Clearly, Petitioner's conditional residence could not provide the appropriate venue for hearing challenges to his parole revocation. Moreover, as the State points out in its Response, Petitioner's executive revocation hearing was conducted at a Department of Corrections' facility in Cleveland County merely because such hearings are held in conjunction with the Pardon and Parole Board's monthly meetings.[2] Obviously, this venue occurs by happenstance and not because of any nexus to the alleged parole violation. Thus, McMahon did not resolve the issue.
¶ 15 Finally, in Twyman, 1992 OK CR 53, 837 P.2d 480, the Court addressed a petition for a writ of habeas corpus seeking release from an order of the Governor revoking his parole. The District Court of Alfalfa County denied the appellant's application for a writ of habeas corpus finding the relief appellant sought was governed by the Post-Conviction Procedure Act. The district court further found the Act required such actions be brought in the court in which Judgment and Sentence had been imposed and dismissed the matter since Alfalfa County was not the situs of the appellant's Judgment and Sentence. Without explanation, this Court agreed with the findings of the district court and dismissed the appellant's petition for writ of habeas corpus finding he had not followed the proper procedures for challenging his parole.
¶ 16 In resolving this issue, we initially hold that a challenge to the validity of a revocation of parole is to be brought, not in a petition for writ of habeas corpus, but as an application for post-conviction relief. See 22 O.S.1991, §§ 1080(e), 1081. Where such a matter is to be filed then becomes a matter of statutory construction.
¶ 17 Section 1080 has remained largely unchanged since inception and provides in pertinent part that any person who claims his parole was unlawfully revoked may institute a post-conviction proceeding to secure the appropriate relief in the court in which the Judgment and Sentence on conviction was imposed. On the other hand, § 1081 provides in pertinent part that when a post-conviction claim arises from the revocation of parole, the proceeding shall be commenced by filing a verified application for post-conviction relief with the clerk of the district court in the county in which the parole or conditional release was revoked.
¶ 18 It is true that when there is a conflict between various statutes applying to the same situation, the more specific of the two statutes governs, Lozoya v. State, 1996 OK CR 55, ¶ 17, 932 P.2d 22, 28-29. However, it is also true that Legislative acts are to be construed so as to reconcile their provisions, rendering them consistent and giving intelligent effect to each. State v. Ramsey, 1993 OK CR 54, ¶ 7, 868 P.2d 709, 711.
*553 ¶ 19 In its Response, the State contends that under § 1081, Oklahoma County is the proper venue for challenges to revocations of parole or conditional release because the Governor sits in Oklahoma County and makes the final determination regarding revocations. However, as demonstrated above, in most instances the only nexus Oklahoma County will have to a revocation is the Governor's domicile. To assign Oklahoma County as the proper venue for challenging all revocations on that fact alone does not make practical sense and would needlessly burden the already overcrowded docket of Oklahoma County.
¶ 20 Likewise, to assign challenges to parole revocations to the county in which the Pardon and Parole Board happened to meet makes no more sense. Such county would have a nexus to the revocation proceeding only because the roulette wheel of hosting a parole board hearing happen to fall on a facility in its county. We believe the process should be more reasoned than that.
¶ 21 This brings us back to § 1080(e) which allows a post-conviction proceeding seeking relief from a revocation to be brought in the court in which the Judgment and Sentence on conviction was imposed. We FIND this statute to provide the most logical venue for challenging a revocation. The county of Judgment and Sentence will have the original record regarding a person convicted of or sentenced for a crime. Moreover, it is the burden of a person challenging a revocation to file all relevant documents and exhibits regarding his post-conviction application. See 22 O.S.1991, § 1081. Finally, the district court has the authority to direct a response from the State and if necessary, conduct an evidentiary hearing and subpoena witnesses for a resolution of the application. See 22 O.S.1991, §§ 1083, 1084.
¶ 22 We therefore HOLD the proper venue to challenge a revocation of parole or conditional release to be the county in which the person's Judgment and Sentence on conviction was imposed. To the extent In re Sanders and McMahon are inconsistent with this holding, they are hereby OVERRULED.
¶ 23 Based on our holding, we find error in the Creek County District Court's order dismissing Petitioner's Application for Post-Conviction Relief for lack of jurisdiction. Thus, Petitioner's Application for Post-Conviction Relief is REMANDED to Creek County for further consideration of that claim.
¶ 24 IT IS SO ORDERED.
¶ 25 WITNESS OUR HANDS AND THE SEAL OF THIS COURT this 17th day of November, 1999.
/s/ Reta M. Strubhar
RETA M. STRUBHAR, Presiding Judge
/s/ Gary L. Lumpkin
GARY L. LUMPKIN, Vice Presiding Judge
/s/ Charles A. Johnson
CHARLES A. JOHNSON, Judge
/s/ Charles S. Chapel
CHARLES S. CHAPEL, Judge
/s/ Steve Lile
STEVE LILE, Judge
NOTES
[1] On July 16, 1999, this Court directed a response from the Attorney General regarding this issue. The Attorney General filed its response on September 23, 1999. On September 30, 1999, Petitioner filed a reply to the Attorney General's response.
[2] According to the Attorney General, the Pardon and Parole Board currently rotates its monthly meetings between three different counties.
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697 So.2d 451 (1997)
MidSOUTH RAIL CORPORATION
v.
CITIZENS BANK & TRUST COMPANY, INC.
No. 94-CA-00427-SCT.
Supreme Court of Mississippi.
July 24, 1997.
*452 Earnest G. Taylor, Jr., Michael T. Dawkins, Watkins Ludlam & Stennis, Jackson, for appellant.
Robert S. Murphree, Jackson, for appellee.
LeAnn Mercer, Dogan & Wilkinson, Jackson, Daniel L. Singletary, Heidelberg & Woodliff, Jackson, for amicus curiae.
Before SULLIVAN, P.J., and PITTMAN and BANKS, JJ.
PITTMAN, Justice, for the Court:
STATEMENT OF THE CASE
¶ 1. On June 13, 1989, Citizens Bank & Trust Company, Inc. ("Citizens Bank") filed a declaratory judgment action in the Chancery Court of Rankin County, Mississippi, against MidSouth Rail Corporation ("MidSouth"). The suit was filed to determine the liability of Citizens Bank to MidSouth for environmental clean-up costs incurred by MidSouth.
¶ 2. MidSouth removed the case to the United States District Court for the Southern District of Mississippi, basing its cause of action against Citizens Bank on the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). After Citizens Bank filed a motion to remand the case to the Chancery Court of Rankin County, to which the Federal Court complied because of lack of a federal claim, MidSouth responded with an answer and counterclaim asserting that Citizens Bank was liable to MidSouth for all of the clean-up costs and attorneys' fees, pursuant to the express terms of the lease assigned to Citizens Bank by the bankrupt sulphur processor, or, alternatively, that Citizens Bank was liable for a contribution of at least 50 percent of the costs under Mississippi environmental and contribution statutes.
¶ 3. The Rankin County Chancery Court dismissed MidSouth's lease assignment claims finding that the assignment was a collateral assignment not a general assignment, and therefore, Citizens Bank was not liable under the terms of the lease. The trial court also found that the bank was not the owner of the site or an operator of the business and, therefore, it was not liable for clean-up costs under Miss. Code Ann. § 49-17-43(d).
¶ 4. The trial court did rule for MidSouth under Count 3 of its counterclaim finding that Citizens Bank was responsible for creating the necessity for a clean-up as provided by Miss. Code Ann. § 17-17-29(4) and, therefore, was responsible for paying its pro rata share of the clean-up costs. However, the trial court found that $107,893.45 of MidSouth's claim, having been incurred before the effective date of the contribution statute, Miss. Code Ann. § 85-5-7, was barred and assigned only ten percent of the remaining guilt to Citizens Bank. The effect was to find Citizens Bank liable for $6,027.92 of the $161,000 claim.
*453 ¶ 5. After the lower court dismissed two of MidSouth's three counterclaim issues and allowed for a recovery of only $6,027.92, MidSouth filed an appeal to this Court. Citizens Bank has cross-appealed, asking this Court to rule that Miss. Code Ann. § 17-17-29(4) does not create the cause of action that the lower court indicated.
STATEMENT OF THE ISSUES
¶ 6. MidSouth raises four issues on appeal, but this Court will discuss only one, as the other issues were properly treated by the trial court and have no bearing on the decision.
I. DID THE TRIAL COURT ERR BY FINDING THAT CITIZENS BANK, AS THE LESSEE'S ASSIGNEE, WAS NOT LIABLE FOR THE BREACH OF ENVIRONMENTAL COVENANTS IN THE LEASE?
STATEMENT OF THE FACTS
¶ 7. On November 30, 1987, MidSouth executed a five-month lease for two acres of land bordering its railway line in Rankin County to Gulf Coast Sulphur Production, Inc. ("GCSP"), a Florida corporation. MidSouth was aware that GCSP sought to process raw sulphur on the site. The lease required GCSP to abide by all environmental laws and to reimburse MidSouth if the railroad had to pay for environmental remediation of the site. MidSouth, in addition to receiving a nominal rental fee of $150 monthly, expected to make money shipping the processed sulphur to GCSP's customers.
¶ 8. After obtaining the lease with MidSouth, GCSP shipped more than 5,000 tons of sulphur to the site for processing. It also set up processing equipment which would heat the sulphur, convert it to a liquid and remove dirt and other impurities. Then, it would ship the clean marketable sulphur to customers in Tennessee and other locations by rail.
¶ 9. Soon after dumping the raw sulphur at the site, GCSP mismanaged its capital and began experiencing financial difficulty while building the processing plant, prior to the beginning of operations. In early 1988, GCSP approached John McCaskill, a local businessman who had been constructing buildings on the site for GCSP. GCSP asked McCaskill about investing in the business. McCaskill conferred with Ralph Lord, his financial advisor, about investing in GCSP. Lord was a stockbroker at Kidder Peabody and a director of Citizens Bank. Lord researched the sulphur processing market and advised McCaskill concerning investment possibilities with GCSP.
¶ 10. At this point GCSP was still struggling financially, and McCaskill loaned $50,000 to the business. Due to a great deal of indebtedness, GCSP still needed cash. McCaskill approached Citizens Bank about making a loan to the company for $50,000. The loan was based on McCaskill's financial background, a net worth of more than $2,000,000, and his loan history, but the loan was in the name of GCSP. It was agreed that GCSP would repay the loan to McCaskill when it received a larger loan after securing its inventory at incorporation. Prior to making the loan to McCaskill for the use of GCSP, Citizens Bank asked for no assurances that the company was in environmental compliance, even though the raw sulphur was already at the site. McCaskill then secured three separate loans for approximately $50,000 each on March 11, March 22, and April 19, 1988. On each of these loans, McCaskill signed the note as GCSP's secretary/treasurer.
¶ 11. During this period, the Bank's loan officer, Bart Cannon, assembled the necessary lien documentation. Citizens Bank secured its position with the personal guaranty of John McCaskill, the guaranties of the other individuals in the company, and a lien on the equipment at the site. The Bank had an appraisal on the plant equipment showing a value of $734,904.93. GCSP assigned its lease to Citizens Bank and the bank requested and obtained a Landlord's Waiver from MidSouth. The Bank sought to protect its interest in the equipment in case of default. Guaranteed access to the site appeared to be the best way to secure the interest. Loan officer Bart Cannon made the decision to create a collateral assignment, and he sent a letter to MidSouth asking for this assignment *454 on March 23, 1988. MidSouth signed and returned the assignment on April 15, 1988.
¶ 12. By this time, McCaskill was directing the operation of the GCSP plant. McCaskill was concerned about the validity of the corporation, as it was not registered with the Mississippi Secretary of State. McCaskill proposed, and the other owners of GCSP agreed, that a new corporation be formed to take over the assets and liabilities of GCSP. McCaskill also negotiated to receive voting stock from the new corporation for himself as well as Ralph Lord.
¶ 13. The new corporation, Gulf Coast Sulphur Corporation ("GCS"), was formed in early April 1988, and the Articles of Incorporation were filed with the Secretary of State on April 11, 1988. The new corporation assumed both the assets and liabilities of GCSP. GCSP also assigned the remaining sixteen days of its lease of the plant site property with MidSouth to GCS on April 14, 1988.
¶ 14. GCS requested a $200,000 loan from Citizens Bank to refinance the $150,000 of indebtedness assumed by GCS from GCSP as well as cover an overdraft balance in its checking account. Citizens Bank did consider the possibility of the loan being an "insider" loan because of the involvement of Lord. McCaskill testified that Lord's stock was transferred to McCaskill without payment as part of an agreement to protect McCaskill's interests in the new corporation.
¶ 15. When the lease came up for renewal, MidSouth wrote to GCSP asking about a renewal, and GCSP indicated that it wanted the lease renewed. On May 2, 1988, Lee Hopper, president of GCS executed a rider extending the lease until April 30, 1989. The Bank prepared a new collateral assignment for Gulf Coast Sulphur, similar to the one the Bank had prepared for GCSP, and forwarded it to MidSouth on May 10, 1988. However, MidSouth never executed the new Assignment of Lease, nor was any new lease issued to GCS, specifically, after the first lease expired on April 30, 1988. The trial court held that the failure by MidSouth to execute a new assignment eliminated any liability of Citizens Bank for obligations under the lease.
¶ 16. GCS continued to lose money. In August of 1988, GCS filed a petition for bankruptcy in the United States Bankruptcy Court for the Southern District of Mississippi. GCS abandoned the processing site, leaving behind close to 5,000 tons of sulphur on the ground with no environmental protection in place to prevent drainage runoff or a fire. There is evidence that both MidSouth and Citizens Bank knew that leaving the sulphur on the ground could be a potential environmental hazard.
¶ 17. On April 25, 1989, the sulphur caught fire. The emergency branch of the Mississippi Department of Environmental Quality ("DEQ") responded to the fire, as did seven area fire departments. MidSouth employees were also on the scene. After the fire was extinguished, the DEQ requested that MidSouth, Citizens Bank and other interested parties attend a status conference at the DEQ. Bob Rogers, the DEQ's emergency coordinator at the site, explained what had happened and discussed the continuing danger that the open sulphur piles posed for creating acidic water runoff and fires.
¶ 18. The DEQ billed MidSouth, the landowner, for more than $7,000 in emergency costs incurred in putting out the fire and removing contamination from the site. MidSouth made efforts to find another processor to take over the site, but these efforts failed. The DEQ required MidSouth to remediate the abandoned sulphur piles and ordered MidSouth to remove the sulphur from the site. MidSouth effectively complied with the order from the DEQ and incurred more than $160,000 in expenses.
¶ 19. Since the clean-up, MidSouth has amassed attorneys' fees in an attempt to obtain reimbursement from Citizens Bank. This reimbursement is the central issue in the case at hand. MidSouth asserts that Citizens should be liable for at least half of the incurred costs based on Miss. Code Ann. § 85-5-7. MidSouth asserts that the cause of action is created by Citizens's violation of both Miss. Code Ann. §§ 49-17-43(d) and 17-17-29(4). In the alternative, MidSouth states that, as an assignee, Citizens Bank is liable for any breach of the covenants of the lease made with GCSP. If true, Citizens *455 would be liable for the entire amount of remediation and clean-up costs.
ANALYSIS
I. DID THE TRIAL COURT ERR BY FINDING THAT CITIZENS BANK, AS THE LESSEE'S ASSIGNEE, WAS NOT LIABLE FOR THE BREACH OF ENVIRONMENTAL COVENANTS IN THE LEASE?
¶ 20. The trial court dismissed Counts 1 and 2 of MidSouth's counterclaim at trial. Count 1 suggested that Citizens was liable for the clean-up costs because they took on the obligations of GCSP/GCS under the lease through a general assignment. Count 2 claimed that even if the assignment between Citizens and GCSP/GCS was collateral, rather than general, that the assignee was still responsible for performance of lease covenants that run with the land. The trial court found that there was no valid assignment in effect at the time of the fire.
¶ 21. The relevant sections of the assignment between Citizens Banks and GCSP are as follows:
I. Assignment: In consideration of sums loaned or to be loaned, Borrower assigns, transfers and conveys to Lender, subject to the terms of this Assignment, all Borrower's rights, title, and interest, including any extensions or renewals thereof, of Borrower's lease of certain real property owned by MidSouth Rail Corporation (Lessor) ...
II. Representations and consents: ...
.....
D. In the event of default, ... Lender shall have and may exercise all the rights and remedies afforded under the Uniform Commercial Code and all other applicable statutes to realize upon its security.
... any default ... and Lender shall have the option of demanding immediate payment of the Note .. . or in the alternative performing such obligation or curing such breach or default ...
III. Assignment as security: This Assignment is made solely as to security for the repayment of the Note or notes made at the execution hereof or any renewals or extensions thereof, and shall remain in full force and effect as long as such indebtedness remains unpaid. Upon repayment in full of such indebtedness, Lender shall convey all rights hereunder back to Borrower.
¶ 22. There are two questions before the Court on this issue. First, does the assignment, whether general or collateral, place liability on Citizens Bank, as assignee, through the obligations required of GCSP/GCS under the lease from MidSouth? Second, did the failure of MidSouth to expressly accept the new assignment following the creation of GCS eliminate any or all obligations of Citizens Bank under the lease?
¶ 23. As to the first question, both parties cite voluminous amounts of reference material regarding lease covenants, assignments of contracts, and landlord/tenant law, in an attempt to solidify a position regarding liability under the lease covenants. To clarify this vast cloud of legal rhetoric, a few rules should be set forth. First, under Mississippi law, an assignee of a contract does not incur the obligations of the assignor barring express agreement. Coggins v. Joseph, 504 So.2d 211, 213 (Miss. 1987); see also, 32 Am.Jur. § 370 Landlord & Tenant (1960). Both parties appear to be in agreement on that issue. The parties do not agree as to the effect of the assignment itself. The general rule is that, in cases of general assignments involving leases, the assignee takes on the obligations of the assignor when the lease covenants involved "run with the land," regardless of express agreement. Coggins v. Joseph, 504 So.2d at 214. Based on this Court decision, it can be inferred that if the assignment is considered a general assignment, the burden of GCSP/GCS's lease obligations is transferred from GCSP/GCS to the assignee, Citizens Bank, if the covenants "run with the land." Provisions of the lease which affect the use, condition and value of the land are said to "run with the land." 49 Am.Jur.2d § 452 Landlord & Tenant (1970). MidSouth goes to great lengths, citing case after case, explaining what the Court has held as covenants "running with the land." *456 MidSouth makes a valid argument that the environmental covenants in the lease "run with the land," because they enhance the value of the land, are incident to the surface estate, directly affect the land, and enhance the reversionary interest of MidSouth.
¶ 24. However, is the argument advanced by MidSouth applicable to the case at hand? All of the law cited by MidSouth involves a general assignment where the assignee assumes all the rights and obligations of the assignor. Citizens Bank claims that the lease at hand was collateral, serving only to secure its interest in the equipment on site and that it did not assume the rights or the obligations of the assignor.
¶ 25. MidSouth asserts that the language of the lease makes Citizens Bank a general assignee with all the rights and obligations of an assignee. They cite the following excerpt for the assignment between GCSP and Citizens Bank:
I. Assignment: In consideration of sums loaned or to be loaned, Borrower assigns, transfers and conveys to Lender, subject to the terms of this Assignment, all Borrower's rights, title, and interest, including any extensions or renewals thereof, of Borrower's lease of certain real property owned by MidSouth Rail Corporation (Lessor).
.....
(Emphasis added).
¶ 26. According to MidSouth, this language gives Citizens Bank all the rights and obligations of a general assignee, and therefore Citizens should be bound by the lease terms and covenants. Citizens Bank points to another section of the assignment:
III. Assignment as security: This Assignment is made solely as to security for the repayment of the Note or notes made at the execution hereof or any renewals or extensions thereof, and shall remain in full force and effect as long as such indebtedness remains unpaid. Upon repayment in full of such indebtedness, Lender shall convey all rights hereunder back to Borrower.
(Emphasis added.)
¶ 27. Citizens asserts that this language clearly indicates the purpose and intent of the parties with regard to the assignment.
¶ 28. Because of perceived ambiguity in the assignment, the trial court considered testimony regarding the intent of the parties. All parties involved, even those associated with MidSouth, testified that the assignment was made by Citizens Bank to assure itself of a right to enter the property and reclaim the equipment should there be a default on the loan. Citizens Bank and GCSP acted in accordance with the assignment being merely collateral. Citizens never took over the processing of sulphur. Rather, GCSP retained possession and continued to run the business as it pleased. Citizens also argues that the actions of MidSouth prove that there was never a doubt as to the intentions of the parties. MidSouth's corporate representative, W.O. Kelly, testified that MidSouth never sent lease bills to Citizens, sent the lease extension agreement to GCSP rather than Citizens, and never anticipated Citizens taking over the lease site and the sulphur processing facility.
¶ 29. The assignment itself seems to travel two distinctly separate paths. First, it grants full rights to the assignee, and then it states that it is only for security purposes. Citizens claims that MidSouth signed the assignment and, therefore, knew the intention of the parties. They also claim that there can be no complete assignment where the assignor is still required to perform. Finally, Citizens argues that it had an option rather than a duty to cure any breach. After reviewing the testimony of the parties, the actions of the parties, and the assignment itself, the trial court found that there was no assumption of obligations under the lease. However, the trial court wrote in its opinion that no lease existed, for reasons to be discussed shortly. One thing does appear to be clear. From the testimony and actions of the parties, it is obvious that the intent of the assignment was to secure Citizen's interest in the property of GCSP. The intent of the parties determines whether the assignment is an absolute assignment or only intended as a collateral security assignment. 6A CJS Assignments Section 82.
¶ 30. MidSouth insists that the ambiguity of the assignment is irrelevant and urges this *457 Court to require collateral assignees to assume the obligations of their assignors for covenants that run with the land, without the need for express agreement.
¶ 31. This Court rejects MidSouth's assertion for two reasons. First, it has been held that a mortgagee assumes no lease obligations from an assignment that is for collateral security. Kroger Co. v. Chimneyville Prop. Ltd., 784 F. Supp. 331, 340 (S.D.Miss. 1991). Kroger leased property from Sunflower Development Corp. Jefferson Standard Life Insurance Company (presently Jefferson-Pilot) ("JP") issued a loan to finance the property development secured by a deed of trust and further secured by an assignment. Kroger's business was unprofitable, and it left the premises. Kroger sought a new tenant but could not find one because of the condition of the property. Kroger sued Chimneyville and JP claiming that the lease was violated because the property was untenantable, uninhabitable, and unfit for the purpose for which it was leased. The Court held that JP's assignment was simply additional security for the loan. Id. at 339. Although JP had the right to collect rent, that provision was only invoked upon default, and JP had the option of proceeding with that course of action. Id. The Court held that this assignment was conditional, and where the assignee's rights were conditional, so were its obligations. Id. at 340.
¶ 32. Kroger is comparable to the case sub judice. In both cases, a wronged party seeks to recover from a deep-pocket who has done nothing to create direct liability. Much like the environmental compliance covenant in the present case, the covenant in Kroger did affect the physical use or enjoyment of the property. As MidSouth argued earlier, these types of covenants have been held to run with the land. In Kroger, the Court did not look to the type of covenants. The Court did not ask if the covenants run with the land. Instead, the Court decided the case purely on the fact that the assignment was collateral. Id.
¶ 33. Although the cases do have similarities, there is one distinguishable difference. The assignment provisions in Kroger, although not presented in the case, do not appear to have any character of a general assignment. The lease in the case sub judice does have characteristics of a general assignment, and this could be distinguishable from Kroger. The language used in the assignment attempting to protect the interests of Citizens Bank is over broad and could be read to convey the obligations of a general assignment. However, the actions of the parties involved clearly indicates that the intent of the agreement was to create a collateral assignment for security purposes only, despite the broadness of the language used.
¶ 34. The second reason for rejecting MidSouth's breach of contract assertion is public policy. In today's society, banks must secure their loans to insure payment. An assignment agreement allowing a bank to enter property to repossess secured items should not create liability arising from the action or inaction of the assignor. As pointed out by Citizens Bank and the Mississippi Bankers Association (MBA), a decision to hold Citizens Bank liable would have significant consequences. For example, many banks today buy loans from other banks across the country. Often, this is done by assignment. There could potentially be a series of assignments between banks. Following that line of thought, a lessor such as MidSouth could charge a bank with liability under the terms of the lease, when the bank's representatives have had no contact with the land or assignor in question, the bank and the land in question are in different states or countries, and the only involvement by the bank was to buy a group of loans from another lender. There is no culpability, no control of the enterprise in violation, and possibly no contact. This situation differs from an active assignment where a person takes possession, active control, and all the benefits of the assignment. A general assignee has a much closer nexus to the action which causes the breach.
¶ 35. The trial court ruled that there was no valid, executed assignment at the date of the fire. The trial court held that MidSouth's failure to sign the new assignment applying to the lease extension following the creation of GCS acted to void the agreement. This Court gives deference to *458 the finder of fact. Madden v. Rhodes, 626 So.2d 608, 616 (Miss. 1993).
¶ 36. MidSouth makes a strong argument as to this point. MidSouth argues that the assignment is enforceable because MidSouth waived its rights to object by its actions. In other words, MidSouth would be estopped from objecting to the assignment after its actions appeared to accept it. Acquiescence by a lessor to a provision specifically barred in the lease operates to estop the lessor from making a claim based on that provision if he is aware of the violation and takes no action. Adams v. Graham Stave & Heading Co., 160 Miss. 266, 135 So. 198 (1931). In Robertson v. Fuller, 212 Miss. 888, 56 So.2d 74 (1952), a lessee assigned its lease to another party and the lessor was aware of the situation and accepted rents. When the lessor attempted to declare the lease forfeited, the court held that the breach had been waived. Id. 56 So.2d at 76.
¶ 37. On the other hand, both of the cases, supra, involve lessors who accepted rents from the assignee. Citizens never paid any rent, as it was not in possession of the property. The record is unclear as to the actions of the parties between the creation of GCS and the fire.
¶ 38. In conclusion, MidSouth argues that the Court must decide whether an assignee assumes all liabilities arising from covenants that run with the land. This Court will not extend the general rule of assignments (assignee assumes obligations of covenants that run with the land) to collateral assignees. It appears clear from the record that Citizens Bank is not a general assignee based on the testimony and the actions of the parties involved. The trial court was correct in considering evidence to clarify the contradictions included in the assignment itself. As to a collateral assignee, the obligations of the lease are not enforceable. Kroger, at 340. Forcing the obligations of the lease onto a collateral assignee also violates public policy. The trial court concluded that there was not a valid assignment in effect at the time of the fire, and we give deference to the trial court's decision. Regardless of the status of the assignment, the collateral assignee should not be burdened with the obligations of the assignor.
CROSS-APPEAL
¶ 39. Citizens Bank asserts five points of error on cross-appeal. We find only one to be of merit.
ANALYSIS
IV. DID THE LOWER COURT ERR IN FINDING A LENDER HAS RESPONSIBILITY OR LIABILITY UNDER MISS. CODE ANN. § 17-17-29(4)?
¶ 40. Citizens argues that the trial court was in error both legally and factually by using Miss. Code Ann. § 17-17-29(4) to attach liability to Citizens Bank. The trial court found that Citizens Bank was liable under the statute as "any person creating, or responsible for creating, ... an immediate necessity for remedial or clean-up action." Miss. Code Ann. § 17-17-29(4). Citizens argues that this is manifest error.
¶ 41. The relevant portions of the statute are as follows:
(4) Any person creating, or responsible for creating, through misadventure, happenstance, or otherwise, an immediate necessity for remedial or clean-up action involving solid waste shall be liable for the cost of such remedial or clean-up action and the commission may recover the cost of the same by a civil action brought in the circuit court of the county in which venue may lie. This penalty may be recovered in lieu of or in addition to the penalties provided in subsection (1), (2) and/or (3) of this section.
Miss. Code Ann. § 17-17-29(4)
¶ 42. The trial court properly noted that the statute is penal in nature requiring that the statute be narrowly construed. It is a general rule of statutory construction that penal statutes are to be strictly construed. Mississippi Insurance Commission v. Savery, 204 So.2d 278 (Miss. 1967).
¶ 43. Citizens Bank argues that the lower court ignored this rule in its interpretation of the statute, by deciding that the Bank would be liable for clean-up costs. *459 Since Citizens Bank loaned money to the business creating the environmental problems and the loan enabled the business to operate, the trial court found Citizens Bank to be "responsible for creating ... an immediate necessity for remedial or clean-up action." Citizens Bank argues that the trial court's interpretation is an erroneous interpretation of the law and urges this Court to reverse the chancellor after reviewing the question of law de novo. A question of law is reviewed de novo by the Court, and the Court may reverse for an erroneous interpretation. Matter of the Estate of Mason, 616 So.2d 322 (Miss. 1993); Bank of Mississippi v. Hollingsworth, 609 So.2d 422 (Miss. 1992).
¶ 44. Citizens Bank asserts that a lender is not the type of person that the statute intended to be liable for "creating or responsible for creating, through misadventure, happenstance, or otherwise" the necessity for a clean-up by the commission. This broad application of the statute by the trial court could have serious ramifications. As stated by the Bank, if a lender can be considered under this statute, so can any other person or company whose actions make the business possible. Citizens Banks suggests that the truck drivers who brought in the raw sulphur, the company who leased GCSP the boiler, the power company who supplied electricity, and MidSouth would all be liable under the trial court's interpretation of the statute. "But for" the actions of all of the above-named parties, the sulphur processing business would not be able to function. All of these businesses "enabled" GCSP/GCS to operate, using the language of the trial court. Although some of the examples above are rather distant, they still show the broadness of the interpretation of the trial court.
¶ 45. The trial court felt that Citizens Bank "clearly enabled the operator of the facility to continue its business, and being motivated largely by its need for the operator to succeed so as to pay back earlier indebtedness, and being charged with knowledge of the hazardous nature of the enterprise, should incur liability under MCA § 17-17-29(4)." The trial court held that as a matter of public policy:
No one should be permitted to encourage or enable an enterprise (by infusion of capital or otherwise) which eventually results in immediate necessity for remedial or clean-up action involving solid waste and nevertheless be absolved of any responsibility, if the enabler knew or should have known of the hazardous nature (potential for solid waste problems) of the enterprise, and particularly if, as in this case, the enterprise would not have proceeded without such enabling action.
¶ 46. The trial court found this to be a matter of public policy without necessity for case precedent. MidSouth agrees. They argue that the trial court's ruling holds lenders accountable for environmentally irresponsible projects.
¶ 47. Citizens Bank suggests its own public policy, which was also considered by the trial court. Citizens Bank and the MBA assert that extending the scope of the statute would negatively impact lenders and their customers across the state. By placing liability on lenders for "enabling" business operations, banks would be subject to liability for environmental contamination to which they did not cause or contribute. The liability would arise not when the bank takes title to foreclosed property and takes possession, but rather the liability would arise when the financial transaction was closed. This liability would serve to discourage business development and to apply the consequences of one party's act to a more financially sound party with no fault. An innocent lender could become subject to liability in virtually any type of loan. The MBA uses many examples to prove its point that the scope of liability is too broad. Assuming the arguments of the MBA and Citizens Bank are valid, the only reasonable conclusions are an increase in the cost of loan transactions, a decrease in business capital due to stricter loan guidelines, and a corresponding decrease in business development.
¶ 48. In conclusion, the trial court's broad interpretation of Miss. Code Ann. § 17-17-29(4), holding Citizens Bank liable for "creating" an environmental hazard, violates the requirement that statutes be construed narrowly. Mississippi Insurance Comm'n v. *460 Savery, 204 So.2d 278 (Miss. 1967). By assigning liability to Citizens Bank, the trial court has opened the door, allowing a plethora of lawsuits to be brought against innocent lenders. As explained by the MBA, public policy prevents this Court from accepting the ruling of the trial court. The alleged public policy cited by the chancellor is subordinated to a contrasting public policy and vastly outweighed by the economic ramifications presented by the MBA. Therefore, it is the holding of this Court that Miss. Code Ann. § 17-17-29(4) does not impose liability on lenders as "any person creating, or responsible for creating, ... an immediate necessity for remedial or clean-up action."
¶ 49. AFFIRMED ON DIRECT APPEAL; REVERSED AND RENDERED ON CROSS-APPEAL.
SULLIVAN, P.J., and BANKS, JAMES L. ROBERTS, Jr,m SMITH and MILLS, JJ., concur.
DAN LEE, C.J., concurs in result only.
McRAE, J., dissents with separate written opinion.
PRATHER, P.J., not participating.
McRAE, Justice, dissenting:
¶ 50. In this case, Citizens Bank, as assignee, should be held responsible to perform all covenants included in the lease. The language within the lease makes Citizens Bank a general assignee with all the rights and obligations of any assignee. Further, under Mississippi's environmental responsibility statutes, Citizens is liable for the cost of cleanup of the site in question. Because the majority interprets the lease and our statutes differently, I dissent.
¶ 51. When it received the lease, Citizens Bank "stepped into the shoes" of Gulf Coast Sulphur Production, thus becoming a potentially responsible party. As an assignee, the bank became responsible for assuming liabilities arising from the environmental covenants that "run with the land." The covenants in the lease under review enhance the value of the land, are incident to the surface estate, directly affect the land, and enhance MidSouth's reversionary interest. Therefore, Citizens Bank is obligated to assume liability from these covenants.
¶ 52. Additionally, the loans from Citizens Bank allowed the operator of the site to continue business. It follows that Citizens Bank acquired an interest in seeing the site succeed so that the bank would receive its money back. In this case, Citizens Bank was clearly aware of the hazardous nature of the site's business, and it encouraged the enterprise to continue, even when financial ruin drew near. Under Miss. Code Ann. § 17-17-29(4), then, the bank must incur liability.
¶ 53. It is for these reasons that I dissent.
| {
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
03/29/2019 09:07 AM CDT
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Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
SMITH v. MEYRING CATTLE CO.
Cite as 302 Neb. 116
H arley Smith, appellant, v. Meyring
Cattle Company, L.L.C., appellee.
___ N.W.2d ___
Filed January 25, 2019. No. S-18-184.
1. Directed Verdict: Appeal and Error. In reviewing a trial court’s ruling
on a motion for directed verdict, an appellate court must treat the motion
as an admission of the truth of all competent evidence submitted on
behalf of the party against whom the motion is directed; such being the
case, the party against whom the motion is directed is entitled to have
every controverted fact resolved in its favor and to have the benefit of
every inference which can reasonably be deduced from the evidence.
2. Statutes: Appeal and Error. Statutory interpretation presents a ques-
tion of law, for which an appellate court has an obligation to reach
an independent conclusion irrespective of the decision made by the
court below.
3. Animals: Liability: Legislature: Words and Phrases. The meaning of
each term in the list of acts by a dog which subject its owner to liability
under Neb. Rev. Stat. § 54-601(1)(b) (Reissue 2010)—currently, “kill-
ing, wounding, injuring, worrying, or chasing”—is dependent on the
other in the context that the Legislature chose to place them.
4. Animals: Liability. The common-law basis for strict liability for the
acts of one’s dog depends upon establishing that the dog has dangerous
propensities or tendencies, because at common law, dogs are presumed
harmless.
5. Statutes. Statutes effecting a change in the common law should be
strictly construed.
6. Animals: Liability: Words and Phrases. “Injuring” under Neb. Rev.
Stat. § 54-601(1)(b) (Reissue 2010) is limited to bodily hurt caused by
acts directed toward the person or animal hurt.
Appeal from the District Court for Box Butte County: Travis
P. O’Gorman, Judge. Affirmed.
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Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
SMITH v. MEYRING CATTLE CO.
Cite as 302 Neb. 116
James R. Welsh and Christopher Welsh, of Welsh & Welsh,
P.C., L.L.O., for appellant.
Steven W. Olsen and Jonathan C. Hunzeker, of Simmons
Olsen Law Firm, P.C., L.L.O., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Freudenberg, J.
NATURE OF CASE
A ranch employee was injured, allegedly as a result of the
ranch’s herding dog nipping at a cow, causing the cow to
charge into the employee. The question presented is whether,
as a matter of law, such allegations fall outside the strict liabil-
ity statute, which states in relevant part that the owner or own-
ers of any dog or dogs shall be liable for any and all damages
that may accrue to any person, firm, or corporation by reason
of such dog or dogs killing, wounding, injuring, worrying, or
chasing any person or persons.
BACKGROUND
Harley Smith worked for the Meyring Cattle Company,
L.L.C. (Meyring), and was injured in an accident that occurred
in December 2011. He sued Meyring under negligence theories
and also under strict liability as set forth in Neb. Rev. Stat.
§ 54-601(1) (Reissue 2010), alleging damages accruing from
a Meyring herding dog “injuring” him. During a jury trial, the
following evidence was adduced.
On the day of the accident, Smith had been pouring a lice
control product on cows’ backs, while Jay Meyring, a co-owner
of Meyring, vaccinated them and another employee tagged
them. This process involved herding cattle into holding pens,
moving a few cows at a time into a “tub,” and then guiding
them from the tub into an alley that led into a chute.
Jerry Meyring, Jay’s father and co-owner of Meyring,
herded the cattle into the holding pens. He then spent most
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Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
SMITH v. MEYRING CATTLE CO.
Cite as 302 Neb. 116
of the day moving them in small groups into the tub and
then into the alley. From a platform outside the alley, Smith
poured the lice control product onto the cattle as they moved
in the alley toward the chute, where the tagging and vaccina-
tions occurred.
Occasionally, when Jerry had to move more cattle into the
holding pens from “the hill” where the herd congregated,
Smith was placed in charge of moving the small group of cows
from the tub into the alley. Smith was performing that task
at the time of the accident, which occurred near the end of
the workday.
According to Smith, there were two cows left in the tub.
Smith moved toward the alley to see how many cows were
inside. At that time, one cow moved past Smith from the tub
into the alley. The other cow was still near the gate opposite the
alley. Smith testified that he then saw the herding dog named
“Gunner” on the outside of the gate leading into the tub, “nip-
ping” or “snapping” at the remaining cow’s hooves through a
6-inch opening at the bottom of the gate. Smith stated the cow
immediately charged forward.
Smith was trampled by the cow and sustained extensive
injuries. Smith was found lying in the middle of the alley
with three cows in front of him and one behind. Smith did
not clearly describe how he got there but stated that it was
the result of being knocked down by the cow that Gunner
had nipped. Smith opined that the only reason the cow had
“charged” at him was that Gunner was “nipping on the bottom
of its foot.”
Jerry confirmed that the herding dogs at the ranch were
bred and trained to nip at the heels of cattle, which is designed
to make the cattle move away from the dog, or “escape” in a
“flight response.” Meyring’s herding dogs were not allowed to
be near cattle in enclosed areas. That, Jerry conceded, would
create a danger, especially if a person was in the enclosed
space with the cattle.
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Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
SMITH v. MEYRING CATTLE CO.
Cite as 302 Neb. 116
Gunner was trained to stay away from the enclosed tub/
alley/chute area and instead lie down by the “chute house”
some distance away. Jay testified that he had never had any
trouble with Gunner staying where he was supposed to be.
Jay, Jerry, and another employee who testified had never seen
Gunner around the tub area, and they did not see him there on
the day of the accident.
Both Jay and Jerry testified that Smith should have never
entered the alley and that there were several other avenues
of escape from an agitated cow in the tub. Evidence was pre-
sented that the cow in question did not appear agitated imme-
diately after the accident, and Jerry suggested that the tub was
not large enough for any cow to build up significant speed. Jay
testified that Smith should not have been near the alley, look-
ing in, because that was not part of the process.
Smith’s girlfriend at the time of the accident testified that
she and Smith had stayed up the night before the accident
“getting high on methamphetamine” and that Smith “smoked
another bowl of meth” on his lunch break. There was medical
evidence that Smith was under the influence of methamphet-
amine at the time of the accident.
The district court granted Meyring’s motion for a directed
verdict on the strict liability claim under § 54-601. Smith’s
negligence claims were submitted to the jury, which rendered a
verdict in favor of Meyring. Smith appeals the directed verdict
on the strict liability claim under § 54-601(1).
ASSIGNMENTS OF ERROR
Smith assigns that the district court erred in finding as a
matter of law that § 54-601 did not apply to the facts of this
case and in granting Meyring’s motion for partial directed ver-
dict on the issue of strict liability.
STANDARD OF REVIEW
[1] In reviewing a trial court’s ruling on a motion for
directed verdict, an appellate court must treat the motion as an
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302 Nebraska R eports
SMITH v. MEYRING CATTLE CO.
Cite as 302 Neb. 116
admission of the truth of all competent evidence submitted on
behalf of the party against whom the motion is directed; such
being the case, the party against whom the motion is directed
is entitled to have every controverted fact resolved in its favor
and to have the benefit of every inference which can reason-
ably be deduced from the evidence.1
[2] Statutory interpretation presents a question of law, for
which an appellate court has an obligation to reach an inde-
pendent conclusion irrespective of the decision made by the
court below.2
ANALYSIS
The question in this case is whether strict liability under
§ 54-601(1) encompasses the act of a herding dog nipping
at the heels of a cow, causing the cow to move forward, col-
lide with a ranch employee, and inflict “bodily hurt” on the
employee. Section 54-601(1) provides:
Dogs are hereby declared to be personal property for all
intents and purposes, and, except as provided in subsec-
tion (2) of this section, the owner or owners of any dog
or dogs shall be liable for any and all damages that may
accrue (a) to any person, other than a trespasser, by rea-
son of having been bitten by any such dog or dogs and (b)
to any person, firm, or corporation by reason of such dog
or dogs killing, wounding, injuring, worrying, or chasing
any person or persons or any sheep or other domestic ani-
mals belonging to such person, firm, or corporation. Such
damage may be recovered in any court having jurisdiction
of the amount claimed.
Smith argues that he presented evidence from which a jury
could have concluded that Meyring was liable by reason of
Gunner “injuring . . . any person” as stated in § 54-601(1)(b).
1
Jacobs Engr. Group v. ConAgra Foods, 301 Neb. 38, 917 N.W.2d 435
(2018).
2
Wisner v. Vandelay Investments, 300 Neb. 825, 916 N.W.2d 698 (2018).
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He points out that to “injure” has a broad definition of “‘to
inflict bodily hurt on [someone or something],’”3 that stan-
dard principles of proximate causation apply in strict liability
actions,4 and that an animal’s normal response to an action
is not a superseding cause in the chain of proximate causa-
tion.5 Regardless of the merits of these propositions in the
abstract, we agree with the district court that Smith misinter-
prets § 54-601.
[3] We have long strictly construed § 54-601, and the
Legislature has repeatedly acquiesced to our understanding
of its intent.6 In particular, we have held that the meaning
of each term in the list of acts by a dog which subject its
owner to liability under § 54-601(1)(b)—currently, “killing,
wounding, injuring, worrying, or chasing”—“is dependent on
the other in the context that the Legislature chose to place
them.”7 We have consistently explained that the relevant
context was the Legislature’s intent in enacting § 54-601 to
derogate from the corresponding strict liability common-law
action only by eliminating the need to prove that the owner
had knowledge of the dog’s dangerous propensities—and only
as to the acts and persons described in the statute.8 Under
the common-law strict liability action that was modified by
§ 54-601 for those to which § 54-601 applies, a plaintiff
had to demonstrate both (1) that the dog was vicious or had
3
Grammer v. Lucking, 292 Neb. 475, 478, 873 N.W.2d 387, 389 (2016),
quoting Merriam-Webster’s Collegiate Dictionary 601 (10th ed. 2001).
4
See, Staley v. City of Omaha, 271 Neb. 543, 713 N.W.2d 457 (2006);
Rahmig v. Mosley Machinery Co., 226 Neb. 423, 412 N.W.2d 56 (1987); 5
American Law of Torts § 18:36 (2016); 65 C.J.S. Negligence § 250 (2010).
5
See Brown v. Kaar, 178 Neb. 524, 134 N.W.2d 60 (1965).
6
See Underhill v. Hobelman, 279 Neb. 30, 776 N.W.2d 786 (2009).
7
Donner v. Plymate, 193 Neb. 647, 650, 228 N.W.2d 612, 614 (1975).
8
See, Guzman v. Barth, 250 Neb. 763, 552 N.W.2d 299 (1996); Paulsen
v. Courtney, 202 Neb. 791, 277 N.W.2d 233 (1979); Donner v. Plymate,
supra note 7.
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dangerous propensities and (2) that the owner knew the dog
to be vicious or dangerous.9
[4,5] The common-law basis for strict liability for the acts of
one’s dog depends upon establishing that the dog has danger-
ous propensities or tendencies,10 because at common law, dogs
are presumed harmless.11 The common law recognizes the right
of the owner to keep a vicious dog for the necessary protection
of life and property, but that one exercising the right to keep
an inherently dangerous dog must do so at his or her own risk
and be held strictly liable for any damage resulting to another.12
The vicious or dangerous nature of the dog is essential to
such a claim.13 Statutes effecting a change in the common law
should be strictly construed.14
Thus, we have held that the terms in the list of actions
described in § 54-601(1)(b) must be “read together”15 in light
of the context of the statute to provide for strict liability with-
out proof of the owner’s knowledge of the dog’s “‘dangerous
propensities.’”16 It is improper to read the words as “detached
and separated.”17 Instead, “the meaning of each is dependent
on the other.”18 And we have noted that many of the words
9
See Netusil v. Novak, 120 Neb. 751, 235 N.W. 335 (1931). See, also,
Paulsen v. Courtney, supra note 8; Lee v. Weaver, 195 Neb. 194, 237
N.W.2d 149 (1976); Fritz v. Marten, 193 Neb. 83, 225 N.W.2d 418 (1975);
7 American Law of Torts § 21:50 (2018).
10
See, e.g., 1 Restatement (Third) of Torts: Liability for Physical and
Emotional Harm § 23 (2010); 4 J.D. Lee & Barry A. Lindahl, Modern Tort
Law: Liability and Litigation § 37:4 (2d ed. 2006).
11
See 7 American Law of Torts § 21:52 (2018).
12
See Netusil v. Novak, supra note 9.
13
See, generally, id.
14
See Paulsen v. Courtney, supra note 8.
15
Donner v. Plymate, supra note 7, 193 Neb. at 650, 228 N.W.2d at 614.
16
Paulsen v. Courtney, supra note 8, 202 Neb. at 795, 277 N.W.2d at 235.
17
Donner v. Plymate, supra note 7, 193 Neb. at 650, 228 N.W.2d at 614.
18
Id.
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of this statutory list inherently entail violence or an intent to
harm. Thus, a “‘wound’” is “‘[a]n injury of a person or animal
in which the skin or other membrane is broken, as by violence
or surgery.’”19 To “‘worry’” is “‘to treat roughly as with con-
tinual biting’ or ‘to bite or tear with the teeth.’”20 To “‘chase’”
under the statute has been defined variously as “‘to follow
quickly or persistently in order to catch or harm,’” “‘to make
run away; drive,’” or “‘to go in pursuit.’”21 In other words,
the element that the dog be vicious or have dangerous pro-
pensities is implicitly part of the statute through these terms,
read jointly.22
Because the acts described in § 54-601(1)(b) were intended
to be understood as violent acts stemming from dangerous
propensities, we have held that playful and mischievous acts
of dogs directed toward the person sustaining bodily hurt
were not encompassed by § 54-601.23 In Donner v. Plymate,24
for example, we affirmed summary judgment in favor of the
dog owner on a § 54-601 claim when the plaintiff sustained
an injury after a dog collided with her knee in the course of
chasing her playfully as part of the dog’s exercise. Similarly,
in Holden v. Schwer,25 we held that acts of a puppy playfully
running after a three-wheeler and abruptly stopping in front
of it, causing the driver to sustain injuries when she veered to
avoid the puppy, were not encompassed by § 54-601. We have
explained that “[o]bviously the Legislature was fully aware
of the need for protection from the intentional, deliberate,
19
Id. (emphasis supplied).
20
Id. (emphasis supplied).
21
Id. (emphasis supplied).
22
See, Holden v. Schwer, 242 Neb. 389, 495 N.W.2d 269 (1993); Paulsen v.
Courtney, supra note 8; Donner v. Plymate, supra note 7.
23
See id. See, also, Underhill v. Hobelman, supra note 6.
24
Donner v. Plymate, supra note 7.
25
Holden v. Schwer, supra note 22.
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and purposeful acts of dogs and as a result restricted section
54-601 . . . to those acts manifesting such qualities.”26
We have also explained in relation to the meaning of the
language of § 54-601(1)(b) that “[t]he purpose of the original
statute was to protect domestic animals, which are ordinary
prey of dogs.”27 In fact, it was not until 1961 that the language
of this “nonbiting” subsection of the statute was amended to
apply to a “person or persons” “kill[ed], wound[ed], worr[ied],
or chas[ed]” by the dog.28 Before that time, the provision here
at issue encompassed only actions directed toward domestic
animals owned by the plaintiff and allowed recovery only for
damages caused by harm to such domestic animals.29 Before
1961, bodily hurt sustained directly by a person fell under
§ 54-601 only if such person had been bitten as described in
subsection (1)(a) of the statute.
When the Legislature added “any person or persons” as
an object of the dog’s acts described by § 54-601(1)(b), the
Legislature clearly meant to expand compensability under the
statute to harm to a person caused by acts other than biting,
acts which manifested the dangerous propensities that are the
historical foundation for the common-law strict liability claim.
Thus, after the amendment, people could bring strict liability
claims under § 54-601(1)(b) for injuries they sustained dur-
ing falls precipitated by dogs “worrying, or chasing” them;
whereas before, they could not.
That language, however, has never been understood as
encompassing bodily hurt to a person by way of a dog wor-
rying or chasing “any sheep or other domestic animals” that,
in turn, collided with the person. Such behavior toward the
dog’s “ordinary prey” has historically been compensable under
26
Donner v. Plymate, supra note 7, 193 Neb. at 649-50, 228 N.W.2d at 614.
27
Id. at 649, 228 N.W.2d at 614.
28
See 1961 Neb. Laws, ch. 268, § 1, p. 786. See, also, Donner v. Plymate,
supra note 7.
29
Id.
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§ 54-601 only if the owner of the “prey” sustained indirect
damages by virtue of the harm to the animal. And, as stated,
all the words of § 54-601(1)(b) must be read together in the
context that the Legislature chose to place them.
To understand the statute more broadly, as Smith sug-
gests, would vastly expand the scope of strict liability for
dog owners. In fact, Smith’s proposed interpretation of the
statute would effectively abrogate the common-law negligence
action that has traditionally coexisted with § 54-601 and with
the common-law strict liability action. A broad reading of
the statute limited only by proximate causation and without
any additional requirement that the dog’s behavior somehow
manifest dangerous propensities would eliminate any reason
for nontrespassing persons suffering bodily hurt to proceed in
negligence, where they would have the additional burden to
prove that the owner of the nonvicious dog should have rea-
sonably anticipated the occurrence.30
To accept Smith’s suggested interpretation of the statute
would make dog owners strictly liable for actions directed
toward “ordinary prey” whenever the prey’s inadvertent physi-
cal harm to a bystander was part of that animal’s normal
response to the dog. It would make cattle ranch owners suscep-
tible to strict liability whenever a herding dog’s normal behav-
ior directed toward a cow leads the cow to collide with and
injure a ranch employee. Based on the history of the statute
and the Legislature’s prior acquiescence to our understanding
of the statute’s limited scope in light of such history, we cannot
conclude that this was the Legislature’s intent. We have never
held that a dog’s actions directed toward another animal can
lead to strict liability under § 54-601 for bodily hurt to a person
by way of such animal instrumentality.
[6] Perhaps Gunner’s alleged act of nipping at a cow’s
heels is not properly characterized as “playful and mischie-
vous,” but it was nothing more than the normal behavior of
30
See Donner v. Plymate, supra note 7.
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a herding dog, which has never been considered vicious. In
this case, unlike the cases where we have concluded that play-
ful and mischievous acts do not fall under § 54-601(1)(b), the
dog’s acts were not even directed toward the entity suffering
the bodily hurt. Gunner had no direct contact with Smith, and
there is no evidence that Gunner’s actions were in any way
directed toward Smith. Indeed, this is our first occasion to
address the applicability of § 54-601(1)(b) in circumstances
where the dog’s acts were directed solely toward its “ordi-
nary prey” and harm to the animal is not the basis for the
plaintiff’s claim. Given that other words in § 54-601(1)(b)—
“worrying” and “chasing” “any person or persons or any sheep
or other domestic animals belonging to such person, firm,
or corporation”—entail action directed toward the injured
person or toward the injured animal owned by the dam-
aged plaintiff, we hold that “injuring” must also be limited
to bodily hurt caused by acts directed toward the person or
animal hurt.
Even resolving every controverted fact in Smith’s favor and
giving him the benefit of every inference that can reasonably
be deduced from the evidence,31 there was no evidence that
Gunner bit Smith, worried Smith, or chased Smith. And while
Smith allegedly was hurt by a cow that was put in motion by
Gunner, there was no evidence that Gunner’s actions were
directed toward Smith. There might be situations where a dog,
in an act manifesting aggression toward a person, utilizes an
instrumentality to cause the person bodily hurt, but this is not
that case.
Whether Meyring should have foreseen that Gunner would
attempt to herd cattle in an enclosed space and thereby injure
one of its employees was a question of negligence that was
properly presented to the jury. The district court did not err in
concluding that the evidence presented did not fall within the
purview of strict liability under § 54-601.
31
See Jacobs Engr. Group v. ConAgra Foods, supra note 1.
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CONCLUSION
For the foregoing reasons, we affirm the district court’s
order granting a directed verdict in favor of Meyring on
Smith’s statutory strict liability claim.
A ffirmed.
Miller-Lerman, J., concurring.
I do not read our opinion herein as necessarily endorsing the
majority opinion in Underhill v. Hobelman, 279 Neb. 30, 776
N.W.2d 786 (2009), regarding “injuring” under § 54-601(1)(b),
from which I dissented, and accordingly, I concur.
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974 F.2d 1342
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.Richard S. FELLRATH, Plaintiff-Appellant,v.Louis W. SULLIVAN, M.D., et al., Defendant-Appellee.
No. 91-15517.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted May 15, 1992.Decided Sept. 14, 1992.
Appeal from the United States District Court for the District of Nevada; No. CV-89-00837-PMP, Philip M. Pro, District Judge, Presiding.
D.Nev.
REVERSED AND REMANDED.
Before HUG, SKOPIL and RYMER, Circuit Judges.
1
MEMORANDUM*
2
Fellrath appeals from the district court order granting summary judgment in favor of the Secretary of Health and Human Services (Secretary) and denying him disability benefits under sections 216(i) and 223 of the Social Security Act. 42 U.S.C. §§ 416(i), 423. The district court exercised jurisdiction pursuant to 42 U.S.C. § 405(g). We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the decision of the district court de novo, and thus examine the decision of the Secretary to ensure that it is supported by substantial evidence. Fair v. Bowen, 885 F.2d 597, 601 (9th Cir.1989). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and it must be based on the record as a whole." Driver v. Heckler, 779 F.2d 509, 510 (9th Cir.1985). We reverse.
3
The ALJ relied on Rule 201.29 of the Medical Vocational Guidelines (Grids) in Appendix 2, 20 C.F.R. § 404.1501, to conclude that Fellrath was not impaired for purposes of the Social Security Act. However, when "a claimant's nonexertional limitations are in themselves enough to limit his range of work, the grids do not apply, and the testimony of a vocational expert is required to identify specific jobs within the claimant's abilities." Polny v. Bowen, 864 F.2d 661, 663 (9th Cir.1988).
4
Unlike the Polny case, where the ALJ concluded on his own that the claimant could perform a wide range of jobs that were not highly stressful, the ALJ in the instant case did rely upon the recommendation of Dr. Thomas Perrin, a vocational expert. Perrin opined that Fellrath could engage in sedentary semi-skilled labor, such as working as a dispatcher routing traffic. However, the record reveals that the ALJ did not pose any hypothetical questions to the vocational expert that acknowledged Fellrath's nonexertional impairments. Nonetheless, the record reveals much evidence that Fellrath indeed suffers from potentially disabling depression and anxiety.
5
Fellrath underwent a psychological examination by Dr. Kelly who wrote to the Secretary in a letter dated August 23, 1988 that Fellrath
6
is suffering from chronic pain; he is depressed; he is extremely anxious; his personal appearance is starting to deteriorate. He has difficulty concentrating and he is on a number of different medications. It appears very doubtful at this time that this man could function with other people....
7
The Secretary then ordered Fellrath to be examined by Dr. Cable, a neurologist, who wrote in a letter dated August 31, 1988 that Fellrath's "problems appear to relate to his chronic pain syndrome and anxious depression." Fellrath was then examined by Dr. Viele who, on October 19, 1988, wrote that Fellrath "will have difficulty maintaining attention to task for longer periods, due to the intrusion of pain and symptoms of depression. This will interfere with regular attendance and the regular work schedule...."
8
In addition, Fellrath's treating physician, Dr. Smith, wrote the Secretary on March 3, 1989 to advise that it was his opinion "that Mr. Fellrath is extremely unstable and should be granted SSI." None of Fellrath's nonexertional impairments were discussed with the vocational expert during the hearing. The Polny requirement that the ALJ must consult a vocational expert when a claimant has nonexertional impairments that are in themselves disabling would be meaningless if the ALJ were not obligated to actually discuss the mental disabilities during the consultation.
9
The medical evidence in the record indicates that Fellrath's nonexertional impairments are in themselves sufficient to limit his range of work. These impairments must be considered by a vocational expert when considering whether Fellrath is capable of engaging in any substantial gainful activity. The transcript of the Administrative hearing reveals that the vocational expert in the instant case did not discuss these impairments with the ALJ.
10
REVERSED AND REMANDED.
*
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
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37 N.J. 525 (1962)
182 A.2d 545
MARGARET C. COURTOIS, GUARDIAN OF THE PERSON AND PROPERTY OF CARROLL E. COURTOIS, AN INCOMPETENT, PLAINTIFF-APPELLANT,
v.
GENERAL MOTORS CORPORATION, A DELAWARE CORPORATION, DEFENDANT-RESPONDENT.
The Supreme Court of New Jersey.
Argued April 2, 1962.
Decided June 25, 1962.
*527 Mr. David I. Stepacoff argued the cause for plaintiff-appellant (Mr. Jay M. Hollander, on the brief).
Mr. Baruch S. Seidman argued the cause for defendant-respondent (Messrs. Burton, Seidman & Burton, attorneys).
The opinion of the court was delivered by FRANCIS, J.
Plaintiff, Margaret C. Courtois, brought this suit as guardian of her husband, Carroll E. Courtois, against defendant, General Motors Corporation, to recover damages *528 on account of serious head and other injuries suffered by him, which resulted in his mental incompetency. The claim against General Motors was predicated upon a charge of negligence in the manufacture of a certain tractor, and of breach of an implied warranty of merchantability of the tractor, a rear wheel of which came off and collided with a small truck being driven by Courtois. The trial court dismissed the cause of action based on warranty on the ground that Courtois was not a party to nor within the distributive chain created by the contract of sale between General Motors and the original purchaser of the tractor, and therefore could not sue for a breach of warranty arising from and incidental to that contract. In short, the injured man was regarded as a mere bystander, remote from the manufacturer of the tractor, who derived no rights from the contract of sale. The issue of General Motors' negligence was submitted to the jury, which returned a verdict for the defendant. We certified plaintiff's ensuing appeal from the adverse decision in both warranty and negligence claims before it was considered in the Appellate Division.
General Motors manufactures and distributes tractors. Between April and June 1951 it sold a new 1951 Diesel Tractor, Model 652, weighing approximately 10,000 pounds, to one Sam Coil of Washington Courthouse, Ohio. The tractor had large dual rubber-tired wheels on the rear. The wheel assembly consisted of the hub, the hub or axle flange into which 10 steel studs are pressed firmly so as to be immovable, the inner wheel disc and rim assembly, and the outer wheel disc and rim assembly. The wheels are placed so that the 10 studs project through 10 openings in the disc; then locking nuts are put on the 10 studs and tightened so as to produce a rigid, unitary assembly.
The locking nuts are tightened with a hand-manipulated wheel socket wrench, which is standard equipment for such a tractor. No one suggests that the tightening process is not easily accomplished by an ordinary individual. The "torque" (force applied) specification ranges from 260 foot *529 pounds to 350 foot pounds. The fact that such tightening is easily accomplished is emphasized by the Owners and Drivers Manual furnished with the vehicle, which says: "Always use regular wheel nut wrench to tighten wheel nuts or use torque wrench. Do not use an extension handle * * *." Use of an extension handle on the wrench magnifies the force applied in accordance with a scientific ratio, and the admonition against extending the handle obviously is to avoid the application of excessive tightening force to the nuts. Such excessive force, it is inescapably inferable, would have the tendency to adversely affect the threads and grooves on the nuts and studs. The warning against an extension handle is set forth in the Manual twice on the same page in different type print. Under the heading "Tightening Wheel Nuts," the following appears: "If regular wheel nut wrench equipment is used, do not use an extension handle * * *."
Tightening of the nuts anywhere within the range of 260 foot pounds to 350 foot pounds is satisfactory. Such tightening produces a high clamping force which holds the parts firmly together and causes the wheel and its associated parts to operate as an integral unit. The clamping force ranges from 18,000 to 27,000 pounds, depending on the degree of torque between 260 and 350 foot pounds that is applied to the stud nuts. That clamping force draws the wheel hub and drum into a single unit which will withstand "with ample reserve" any operational forces that may be applied in ordinary and expected use of the tractor.
Everyone conceded the importance of keeping the stud nuts properly tightened, within the range specified. A stud will break or fail only when a bending force is applied to it. If the nut on the stud is permitted to loosen (and it is undisputed that they do loosen with use of the tractor) the clamping force, which holds the wheel assembly in place as a unit, is lessened, thus allowing some foreign movement or oscillation which, in turn, permits the application of a bending force to the stud. The degree of the *530 bending force when the tractor is in operation, depends in large measure upon the extent of the looseness of the nut. And it is plain from the record that a nut could be loose enough to allow application of bending force to the stud without that looseness being observable on mere visual inspection. Proper maintenance requires regular testing and tightening with the standard torque wrench. If this abnormal bending force of varying degrees, depending on the looseness of the nut, is visited upon the stud constantly or at intervals during the life and use of the tractor, it will cause metal fatigue, and eventually an untimely and unnatural fracture of the stud. In other words, inadequate maintenance will cause the stud to wear out long before its time. According to one of defendant's experts, some tractors with proper maintenance have been known to last 10 years, and with such maintenance the studs should function as long as the tractor.
The importance of keeping the 10 stud nuts tight is emphasized in the Owners and Drivers Manual. It says in large type:
"WHEN TRUCK IS NEW OR AFTER EACH WHEEL REMOVAL."
Then in regular type:
"Tighten nuts DAILY for the first 500 miles of service to compensate for setting-in of clamping surfaces. * * *."
The necessity for maintaining proper stud nut tightness was fully recognized and accepted by plaintiff's principal expert. In speaking of such need whenever the wheels are removed, for a tire change for example, he said:
"Any time the entity is separated, where the two wheels have been taken from their original position and are reapplied, the roughness that had initially been compensated for by the tightening, subsequent tightening, is now reintroduced in the contact of the two members and just as in the initial production of the vehicle, the same situation again reappears and consequently must be taken into consideration by retightening after operation.
*531 Q. In other words, proper maintenance of a truck requires that after the wheels have been removed, let us say for the purpose of putting new tires on it that when the wheel is replaced that care and attention be given to the tightening of the nuts, isn't that so?
A. Yes, sir. That's absolutely correct.
Q. And if those nuts are not properly tightened that would be an indication of improper maintenance, would it not?
A. If the nuts are not tight, yes, I agree with you, sir.
Q. And it is a requirement, isn't it, in case of a truck of this nature that when the wheels are replaced after tires are changed, let us say, that specific care and attention be given to the tightening of the nuts?
A. That's an Interstate Commerce Commission requirement, sir.
* * * * * * * *
Q. And if you don't do that, what happens?
A. Well, if you don't do that, you can produce any type of failure ultimately.
Q. What kind of failure?
A. You can produce a failure in the nuts, you can produce a failure in the wheel.
Q. In the studs?
A. And in the studs, yes, sir.
Q. And why is that? Why do you produce a failure in the studs, if you don't maintain the vehicle properly?
A. If you don't maintain the vehicle properly, and you permit operation under conditions as you are now suggesting, sir, additional forces are introduced which will, and of greater magnitude than normal and these will produce failure at a much earlier period."
Defendant's expert said that when stud nuts become loose, a lessening of the clamping pressure occurs. This release of pressure permits a kind of gapping movement in the wheel assembly which may be very slight or even imperceptible. Such movement allows a repetitive dynamic bending or flexing force of much greater magnitude than normal to be imposed on the stud bearing the loose nut and that force induces and hastens metal fatigue. Thus, he asserted, there is a definite relationship between inadequate maintenance of wheel assemblies and failure of studs.
The necessity for proper inspection and maintenance of tractors engaged in interstate transportation is recognized by the Interstate Commerce Commission. Its regulations require elaborate reports by drivers of their inspection and of the condition of such vehicles after each trip, as well *532 as systematic inspections and maintenance by the owner. These reports specifically call for the speedometer reading, inspection and maintenance of the speedometer, axle and wheel alignment, wheels, rims and tires. Moreover, while on an interstate trip (exceeding a radius of 50 miles), the driver is required to keep a daily log on a prescribed form showing his driving hours (limited to 10 hours in the aggregate in any period of 24 consecutive hours) and the total mileage covered during each day. See, 49 C.F.R. §§ 195, 196.
As has been said, this tractor was sold between April and June 1951 to Sam Coil of Washington Courthouse, Ohio. He was called as a witness by plaintiff and testified that according to his records, during the first 45,000 miles of operation nothing was done to the tractor except oil change and greasing and change of the fuel filters and air cleaners twice. The only reason he gave for selecting the first 45,000 miles (about five months) of travel for discussion was that plaintiff's counsel had asked him to check his records for that mileage. So he came prepared to testify only with respect to his maintenance for that limited operation. When asked to describe his maintenance for the first 100,000 miles, all he could say was that he "didn't check it [presumably his record] real good." It may be noted that he did not say that the stud nuts had been tightened daily for the first 500 miles of travel. Nor did he assert that at intervals or, in fact, at any time during the period of his ownership and operation of the tractor, he inspected the stud nuts or had them tested as routine maintenance, in a manner which would reveal any loosening. This omission cannot be ignored, because it seems clear from the record that loosening of the stud nuts does occur as an incident of ordinary operation.
Coil owned and used the tractor until September 28, 1953, by which time it had accumulated mileage of 250,000 to 300,000 miles. In the intervening period, he had replaced the tires four times and relined the brakes once or twice. In *533 these instances, of course, the wheels were removed, which necessitated taking the stud nuts off and putting them back on when the work was completed. No testimony was offered to establish that on resumption of road operation after the relining of the brakes and replacement of the wheels, the stud nuts were checked daily for 500 miles to make certain they remained tight in their new clamping position and thus allowed no bending force to be imposed on the studs.
After the tractor had been driven 37,000 miles, one Arthur Brightman took over the driving, and he operated it exclusively until Coil sold it. He said that after new tires were put on he would check the studs with a wrench every 25 miles for 100 miles to see if they were tight, and "maybe twice after a tire was put on" he would have occasion to tighten the nuts. Except for that 100-mile travel, he would just look at the wheels and nuts whenever he "stopped for coffee or anything like that."
On September 28, 1953 Coil sold the tractor with its mileage of 250,000 to 300,000 miles to Arthur Reiber, who retained ownership thereafter until the accident in question. Just before the sale, the motor, transmission and read end were overhauled, and, according to Coil, the vehicle was in good condition. During his ownership, none of the wheel studs had been replaced or repaired.
Reiber, a resident of Washington Courthouse, Ohio, is in the interstate livestock trucking business. He, too, like Coil, was subject to the motor vehicle safety rules and regulations of the Interstate Commerce Commission. However, he never made or kept any of the required inspection and maintenance reports; nor did the driver of the tractor involved here, make or keep the inspection and maintenance reports required of him. Reiber said that after purchase from Coil, he inspected and maintained the tractor himself before it went out on a trip and upon its return. He would take a wrench and check the lugs on the studs. Every 15,000 miles or so he would engage in a preventive *534 maintenance inspection, including a check of the nuts on the wheel studs. This check would be made by using a lug wrench with a length of pipe extention of three to three and a half feet added to it. Use of such an extension, as has been indicated above, is advised against in the Owners and Drivers Manual, because of the sharp increase in tightening pressure that is generated thereby. Occasionally, Reiber would find the nuts sufficiently loose to require tightening. But in the more than three years of his ownership of the tractor before the accident, no studs had been replaced or repaired.
The evidence indicates that for almost two years at least before this accident, the mileage registration part of the speedometer had not been working. For that reason Fred Michael, Jr., who drove the tractor exclusively since early 1955, could not give the mileage on December 31, 1956, the date of the accident. Reiber estimated that he had added 250,000 to 300,000 miles between September 28, 1953 and the date of the accident, thus bringing the total mileage on December 31, 1956, to 500,000 to 600,000 miles at least. During Reiber's ownership, the tires were changed three or four times, of course necessitating removal and replacement of the wheels and stud nuts. In that period there was a time when steering of the tractor was difficult; another time there was too much play in the steering wheel; on occasion the front wheels had to be balanced to prevent vibration. In this connection, Reiber said, "lots of times the driver will say that it doesn't feel right," and then he would have the wheels checked, balanced and realigned. Three or four months before the present accident, the motor blew up on the road, making it necessary to have the tractor towed in and the engine overhauled. According to the driver, Michael, he had occasion to have some wheel studs cleaned by Byers Motor Sales, Columbus, Ohio. When this was done he did not know, nor did he say what studs were involved or what was done, or why it was necessary or why he could not have cleaned them himself. *535 In May 1956 the four rear tires were replaced, again necessitating removal of the wheels and stud nuts. Reiber testified that the tractor was in good condition on or about December 30, 1956, when it left his place in Ohio.
On December 30, 1956, at 1 A.M., Michael started out from Washington Courthouse, Ohio, for North Bergen, New Jersey. He was driving the tractor in question, which had attached to it a 34-foot Fruehauf tandem trailer weighing approximately 11,000 pounds. The trailer was loaded with 125 to 135 hogs weighing about 26,000 pounds. The gross capacity of the tractor was approximately 55,000 pounds. He reached Hamburg, Pennsylvania, at 3 A.M., December 31, and stopped for a 45-minute rest and coffee. Before proceeding, he kicked the tires to see if they were inflated and looked at the studs, noticing that all 10 of them were on each wheel of the tractor.
While proceeding at 40 to 45 miles per hour, along Route 22 in Greenbrook Township, Somerset County, New Jersey, about 85 miles from Hamburg, at about 6 A.M., he felt a vibration in the rear and applied his brakes. As the tractor and trailer slowed, the outside right rear wheel, which had become disengaged, rolled by, passed in front of his vehicle and across the roadway. It struck the center island, bounced in the air, and collided with the left front side of the Dugan Bros. bakery truck which was being driven in the opposite direction by Carroll E. Courtois. As a result, Courtois suffered severe injuries which ultimately produced such mental incapacity as required the appointment of his wife, Margaret C. Courtois, the plaintiff, as guardian.
A few days after the accident the tractor wheel was found on the side of the roadway. The Dugan Bros., Inc. truck maintenance superintendent was notified about the accident very shortly after it happened and drove to the scene. There, while examining his company's vehicle, he found under the seat pedestal part of one broken stud with the nut still affixed. It was identified as one of the 10 *536 studs of Reiber's tractor. This witness, whose occupation undoubtedly gave him some experience with studs and bolts and metal parts of motor vehicles, furnished a graphic description of the broken stud. He said it looked as if it was worn and shiny a third of the way through, as if something had been "working on it or rubbing on it." The shiny part extended from the outer circumference of the stud, down one-third of the way through. At the end of the shiny part, the metal had a step-like appearance and the fracture for the remainder of the stud seemed like a more or less clean break. The testimony in this respect is reasonably susceptible of the impression that the stud had been subjected to some foreign outside pressure which wore or cut one-third of the way at which time it was subjected to a bending force which it could not withstand and so caused a complete fracture.
After the mishap, the tractor was taken to a garage in New Brunswick, New Jersey. There it appeared that all 10 of the wheel studs had broken off. No broken outside fragment of any one of them, either with or without the locking nut, was found or recovered, except the one described above. Where or when, or for what reason, or in what sequence the other nine broke, has never been explained. A new wheel was put on the tractor, apparently at the New Brunswick garage. Ultimately Michael drove the tractor with the new wheel on it back to Washington Courthouse, Ohio, arriving there on January 3, 1957. What happened to the wheel assembly bearing the 10 broken studs was not shown. No one from the New Brunswick garage or connected in any way with Reiber was produced to explain what became of the part of the damaged wheel assembly which remained with the hub, or specifically what condition that part of the wheel was in, or the condition of the portions of the studs which remained affixed to the wheel unit, or whether the break of the nine studs was actually due to defective studs or to a defect in them traceable to the manufacturer, or to fatigue caused by improper *537 maintenance by an owner. The present suit against the manufacturer was not instituted until December 30, 1958, one day before the statute of limitations expired, and no one suggests that General Motors or any of its representatives ever saw or had the opportunity to examine and test this remaining part of the wheel assembly, or the portions of the broken studs still imbedded therein.
At this point it may be appropriate to note that in September 1957 suit was instituted in the Superior Court, Law Division, by Carroll E. Courtois, as plaintiff, against Arthur H. Reiber and Fred Michael, Jr., owner and driver of the tractor, as defendants, to recover damages for his injuries. Although the complaint was not received in evidence, manifestly the action had to be predicated on some default of Michael or Reiber, or both, in connection with the operation or maintenance of the tractor. The cause was transferred to the United States District Court because of the diversity of citizenship. Mrs. Courtois was appointed guardian ad litem on account of Courtois' incompetency, and subsequently she settled the case for $47,500, which settlement was approved by the Federal Court and judgment entered against Reiber and Michael. That judgment was paid.
At this trial the single piece of a broken stud with the nut attached was introduced in evidence, and plaintiff's case for recovery of damages rested entirely upon opinion evidence with respect to its condition. There is no dispute that certain elements are employed in the fabrication of steel for studs of this type: iron, nickel, manganese, sulphur, phosphorus, silicone, chromium, carbon and molybdenum. It is likewise undisputed that analysis of the broken stud showed that those elements in proper proportion had been used in its fabrication, and that such composition is standard for a high-strength, hardenable steel. Upon the completion of any steel fabrication process, the end product always contains some minute nonmetallic inclusions distributed throughout the finished metal. Such *538 inclusions are regarded as indigenous to the product and the steel is classified for use in accordance with the content of nonmetallic inclusions. The manual of the American Society for the Testing of Materials has established five grades of steel on the basis of inclusion content. Grade 4 is used in the automobile industry for the purpose of tractor wheel assembly of the kind involved here.
Although the experts on both sides of the case are in disagreement on a number of their conclusions, the basic controversy among them concerns itself not about the quantity of nonmetallic inclusions but rather about their diffusion in the one broken stud in evidence. Plaintiff's experts claimed their test (the manner of performance of which was challenged by defendant's experts) revealed that in the fabrication of the steel in the one stud they examined, the inclusions had become concentrated in too great quantity at the site of the fracture, rather than diffused in the normal Grade 4 pattern throughout the product. That condition, they said, weakened the stud and made it more susceptible to fatigue and early or easier fracture upon the application of bending forces.
Their further proof was to the effect that the break in the stud was in part a fatigue fracture resulting from "repeated stresses"; the rest was a shock fracture which came about when the fracture lines extended through the stud to the point where the metal was incapable of withstanding the stress load. When that point was reached, the break suddenly became complete and the stud separated into two pieces. These witnesses said also that a stud containing unduly localized inclusions would wear out sooner than a normal one, and if it were subjected to excessive operational bending stresses because of improper maintenance of the lock nuts, the fatigue fracture point would be reached at an earlier time.
Defendant's experts denied the undue concentration of inclusions at the site of fracture. They maintained that the inclusion content and diffusion thereof appeared normal, *539 that the fracture could not be charged to any such defect, and that, in fact, there was no defect at all in the stud. They said that in the normal operation of the tractor with maintenance of the proper range of tightness of the stud, it would not be subjected to any bending force which would cause it to break. But if its locking nut were permitted to relax beyond the low point of the torque specification, then in ordinary use of the tractor, bending forces would be applied to the stud causing it to suffer excessive metal fatigue and come to a premature end of its service life.
General Motors buys this type of wheel assembly from Motor Wheel Corporation. On delivery to General Motors, the studs are already impressed into the wheel hub. Motor Wheel buys the studs in sizable quantities from two manufacturing suppliers, Lundberg Screw Co. and Michigan Screw Co. Obviously, neither General Motors nor Motor Wheel Corporation would know whether the 10 studs in every wheel assembly were fabricated at the same time or from the same batch of materials. In any event, General Motors is under a duty to make a reasonable inspection for defective studs. Martin v. Studebaker Corp., 102 N.J.L. 612 (E. & A. 1926); Pabon v. Hackensack Auto Sales, Inc., 63 N.J. Super. 476 (App. Div. 1960). Proof was adduced to show that its inspection techniques were inadequate and the trial court concluded that a jury question as to its negligence in that respect was made out. Defendant criticizes this ruling as erroneous but, in view of the result we have reached, there is no need to consider the problem.
A long hypothetical question was put to plaintiff's experts, in which, among other things, the tractor and the accident were described; they were asked to assume also the alleged excessive concentration of nonmetallic inclusions at the site of fracture of the one stud, as disclosed by the tests, and that about 85 miles from the scene of the accident, the driver had checked the wheel in question and found it in "normal condition and all ten studs and the nuts *540 thereon * * * properly in place." The question concluded by asking if the witness had any opinion as to "what caused the wheel to come free from the tractor * * *?" The answer given was that the wheel came free as a result of the successive fracturing of the wheel studs until the last one let go and thereby released the wheel. The answers given were based upon a factual assumption which was not in evidence, i.e., that all 10 of the studs, or enough of them to make it impossible to sustain the operational tractor load, were defective, thus causing all 10 of them to fracture and permit the wheel to come off. In other words, because the witnesses' examination of the single fractured stud allegedly disclosed to them excessive nonmetallic inclusions at the site of fracture, they concluded that all 10 of the studs were likewise defective, or that a sufficient number of them were likewise infected with excessive inclusions, so as to cause their fracture and produce the disengagement of the wheel.
One of the plaintiff's experts appeared to recognize the weakness of their position. When the hypothetical question was put to him, he stated that "the excessive amount of inclusions in the stud caused the stud to break" and in turn caused the wheel "to come off." On cross-examination, the following inquiry indicates his difficulty:
"Q. Didn't I ask you the question as to whether you formed any conclusion as to what caused this wheel to come off this truck?
A. No. Then I think we went back and I asked you to rephrase the question to refer to the stud only.
Q. Well, I will ask you the question directly now?
A. Yes.
Q. Did you form an opinion based upon the hypothetical question as to what caused this wheel to come off the truck?
A. Yes. The breaking of the stud then would allow the wheel to come off.
Q. All right. The first step would be the breaking of the stud, is that correct?
A. Yes.
Q. What happened after the studs broke. What was the next sequence before the wheel came off?
A. The wheel just has to slide off.
*541 Q. Well, there are ten studs?
A. Yes.
Q. You have got one.
A. Yes.
Q. I want to know what happened after this stud broke.
A. Since this was the only stud that was given to me, and I understand further that the other studs were not available, that this was the only stud that was found, I would then have to incorporate in my thinking that this was one of the last studs. The others must have failed previously.
Q. But those studs you did not see?
A. That is correct.
Q. Those studs you did not examine?
A. That is correct.
Q. And what you are talking about is one of the last studs that broke?
A. That is correct.
Q. And that's all that you can say?
A. Yes."
Basically, the trial court decided there was a factual issue as to defendant's negligence for determination by the jury for two reasons: (1) plaintiff's expert testimony as to undue concentration of nonmetallic inclusions at the point of fracture of the single broken stud introduced in evidence, and (2) the expert testimony that the excessive inclusions could have been discovered if General Motors had made a reasonably careful inspection of it when received as part of the wheel assembly unit and before the unit was incorporated into and made part of the tractor. As has been indicated, the jury found in favor of the defendant, and no charge is made that the record does not support the verdict. It is argued that certain erroneous statements were made in the charge to the jury. Not only were no objections interposed by plaintiff, but in any event, since we have concluded that the matter should not have been submitted to the jury at all, it cannot be said that any prejudice was suffered.
The primary question on this appeal is whether the record contains sufficient proof of breach of an implied warranty of merchantability of the tractor, and that such breach was *542 a proximate cause of the detachment of the wheel, to create a factual issue for determination by the jury.
In order to establish a breach of such a warranty it is necessary, of course, to establish a defect indicating that the tractor was not reasonably fit for the general purpose for which it was sold. Obviously, if the studs, by means of which the heavy wheels were affixed to the tractor, contained nonmetallic impurities in such quantity or so localized as to make them susceptible to fracture, under normal operating conditions and in spite of due care in maintenance, in less than their reasonably expected service life, lack of merchantability would be indicated. Neither proof of negligence in manufacture or in inspection is necessary. Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 372 (1960). It is immaterial in connection with a claim of breach of implied warranty of merchantability that a manufacturer, such as General Motors, incorporates in the completed vehicle parts or assemblies which are purchased from another manufacturer. The warranty runs from the manufacturer who markets the completed unit. If the breach results from a defect in a constituent part made by someone else, the public interest can be served and protected only by holding the manufacturer who completes, assembles and markets the vehicle in final form for consumer use, and by leaving him to a remedy over against his supplier. Proof of a defect, however, is not alone sufficient to justify a recovery of damages; it must appear also that the defect was an efficient, producing cause of the mishap. Henningsen, supra, at p. 409; Gillam, Products Liability in the Automobile Industry (1960) 206. Plaintiff's burden, therefore, is to provide proof of a defect in the wheel assembly of this tractor of such influence or consequence as to be capable of constituting an efficient cause of the detachment of the wheel, and further that such defect was in fact an efficient producing cause thereof. In the absence of such evidence, the charge of breach of warranty is not sustained and the manufacturer cannot be held responsible.
*543 We are concerned here with a heavy 1951 tractor. It was about five and one-half years old at the time of the accident, and during that period had been driven from 500,000 to 600,000 miles, obviously on long, interstate runs. The mileage may well have been greater because it is known that for about two years at least before this accident, the mileage recording part of the speedometer had not been functioning. Moreover, the Interstate Commerce Commission requirements for inspection and maintenance reports were not complied with at any time during the life of the tractor, and there is serious doubt as to the quality of its maintenance, including the wheel assemblies, studs and nuts. It must be remembered that the implied warranty of merchantability means that the article is reasonably fit for the purpose for which it is sold. Absolute perfection is not implied. There is no duty on the part of a manufacturer to furnish a tractor which will not wear out. The knowledge is universal that manufactured articles which depend upon moving parts for their productive use, will eventually suffer fatigue and wear out. Further, as the proof here indicates beyond question, the length of service life of metal parts depends in some measure upon proper maintenance. Parts which are subjected to abnormal stresses and strains, such as bending forces in this case, because of inadequate maintenance, cannot be expected to live out their normal service life, that is, the length of time for which they are designed to be serviceable for the intended use, and for which they may reasonably be expected to be serviceable if properly made.
As has already been described, the rear wheel in question was made up of the outer wheel disc and rim assembly. When the wheel is attached the 10 studs, which are imbedded in the hub flange, project through the 10 openings in the heavy metal disc (the assembly, apparently without the tire, weighed 90 pounds). Then the nuts are tightened down on the studs, holding the disc and the wheel firmly in place, thus providing unitary operation of wheel, hub and axle, *544 and investing the assembly with a very substantial margin of safety for normal operational loads.
All the witnesses agreed that if the lock nuts were not kept within the proper range of tightness, bending forces would be exerted on the studs. It follows, of course, that the looser the nuts became, the greater the bending force; also, the longer the looseness persisted, the sooner metal fatigue would follow. So throughout the years of use and the very substantial mileage covered by the tractor, every time the nuts on this wheel became loose, and until the condition was rectified, abnormal fatigue-inducing forces were being applied. There is no doubt that recurring looseness was a concomitant of operation over the highways. The I.C.C. safety regulations for regular inspection and maintenance of tractor wheels obviously stem from recognition of that fact. Additionally, every time the tire was changed or the brakes relined, requiring removal and replacement of the stud nuts and wheel, it was not only necessary to tighten the nuts to the proper torque, but because (as the experts agreed) they were more susceptible to reloosening during the first 500 miles of operation thereafter, it was essential to retighten them daily. The proof revealed that the tire on this wheel was changed about eight times and the brakes relined at least twice between 1951 and the date of this accident. There is no specific proof that the 500-mile rule was observed. One driver said after tire changes he tightened the nuts every 25 miles for the first 100 miles. Obviously, if an operator could not be certain that the nuts had seated themselves sufficiently in the new position until after 500 miles of operation, frequent attention in the first 100 miles would fall short of satisfying the need which, according to experience and scientific knowledge, would be present and if not satisfied would result in bending force on the studs. And in this connection, defendant's expert's testimony stands undisputed that absence of proper degree of tightness could not be detected simply by looking at the nuts.
*545 One aspect of this problem is clear. No one can say what actually caused at least 9 of the 10 studs to shear off, or when or where, between Hamburg, Pennsylvania, and the place of accident, or how or in what sequence they broke. This deficiency in the proof cannot be charged to General Motors. Reiber's driver and the garage where the new wheel was installed apparently within a day after the accident, had possession of the hub flange with the remaining portions of the broken studs embedded in it. So far as the record shows, there was no lack of opportunity for study and analysis of them. Michael was asked if he bought the 10 new studs to replace the broken ones in the hub flange. He said he could not remember. Neither he nor anyone else offered any statement as to what happened to the damaged ones when they were removed in order to substitute the new ones. In fact, it is not clear whether they were removed and replaced by new ones, or whether an entirely new right rear wheel assembly was put on the tractor. In view of the serious nature of the injuries involved, it is difficult to accept the notion that no study of them was made by anyone immediately after the accident. But the plaintiff, who had Reiber's cooperation in the present suit, left the matter without explanation.
Thus, the plaintiff's case stands or falls on the evidence respecting the condition of the one nut-bearing piece of a broken stud. No one can say or has said when this stud broke in relation to the other nine. One of plaintiff's experts assumed, without explanation of his reason, that it was one of the last to fracture. But if that were so it would strongly militate against plaintiff's claim because no one would reasonably expect the last stud or last few studs, irrespective of their normalcy, to withstand the entire operational load of the tractor.
Although it may be said that a factual issue existed at the trial as to whether the one fractured stud was defectively fabricated, that proof, looked at in the most favorable light to the plaintiff, cannot be said to support an *546 inference that the other nine studs, or enough of them to be a producing factor in the disengagement of the wheel, were similarly defective. Such an inference would be founded on speculation or conjecture. As has been shown, Motor Wheel Corporation bought studs in substantial quantities, up to 500 at a time, from two manufacturers. After purchase and spot check for condition, 10 studs would be imbedded in each wheel disc in a "bolt circle" and thereafter the wheel assembly, already described, would be sold and delivered to General Motors. There is nothing to show or to suggest that the 10 bolts on the wheel involved in this case were fabricated at the same time or under the same conditions, or came from the same batch of components, or from the same sections or rolls or strips of finished steel. Under the circumstances, it would be pure supposition on the record before us to conclude that a deficiency in the composition of one stud would be representative or characteristic of the other nine studs in the bolt circle. For all the record reveals, the 10 studs in Reiber's wheel may have been made at widely variant times and from steel ingots or rolls made on different occasions.
The speculative nature of the inference advocated by plaintiff may be further explained. The one stud in evidence was said to be defective because of an excess concentration of nonmetallic inclusions at the place of fracture. There is agreement that some nonmetallic inclusions are native to all steel. However, in the fabrication process, these extremely minute impurities diffuse themselves naturally throughout the steel. Although the evidence is not entirely clear, it would appear that if materials, including some chemicals, in standard quantities go into the making of a certain grade of steel (and the stud in question shows standard components), the result would normally contain a certain amount of inclusions scattered throughout the product. If, by some fortuitous circumstance, an undue concentration of the inclusions occurs at some area of the product, it would seem to follow that the inclusions throughout *547 the remainder of that batch of steel would be less than usual. In any event, proof that somehow in the fabrication process an overconcentration of such nonmetallics inexplicably occurred at the site of fracture of one stud, would not support an inference that the same condition occurred throughout the steel from which the stud came, or from which the other nine studs were taken. And certainly, in the absence of evidence that the other nine studs came from the same steel, the condition of the one defective stud would have no probative value with respect to their inclusion content or its state of diffusion.
Our analysis of the record leads us to conclude that the evidence of the defective condition of one of the 10 studs on the tractor wheel is insufficient to create (1) an inference that it was an efficient producing cause of the detachment of the wheel, or (2) an inference that the other nine studs, or a sufficient number of them, were similarly defective and proximately caused the wheel to leave the tractor, or (3) that there was such a defect in the wheel assembly as to constitute an actionable breach of defendant's implied warranty of merchantability of the tractor. Under these circumstances, defendant was on sound ground in making the motion for judgment in its favor because of failure to create a jury question on the claim of breach of warranty. It follows also from all the foregoing that on the negligence count the proof with respect to inadequate testing by General Motors of the single stud in evidence (if accepted) was insufficient to make a jury question as to whether such lack of care was an efficient producing cause of the accident. Since the jury found for the defendant on that score, however, the error of the court was not prejudicial.
Our determination that no cause of action was established for breach of implied warranty removes from present consideration the problem whether a third person, situated as was Courtois, may maintain an action on the warranty. We agree that it was not specifically disposed of in *548 Henningsen, and it is reserved for disposition at an appropriate time.
Finally, we feel that comment should be made on the treatment in the trial court of the $47,500 settlement of Courtois' claim in the United States District Court against Michael and Reiber. General Motors was not a party to that action or judgment, nor was it referred to in any of the closing papers disposing of the matter. Mrs. Courtois testified she had no intention of releasing or discharging her husband's claim against General Motors. There was no countervailing proof or contrary inferences. In spite of this state of the record, the trial court submitted to the jury for determination the question whether she intended to accept the $47,500 in full settlement of her husband's case against all parties, including the manufacturer of the tractor. On the evidence adduced this was error. There was no factual dispute which permitted or required the intervention of the jury. The court should have dismissed the defense as a matter of law. See Daily v. Somberg, 28 N.J. 372 (1958). But in view of the absence of a cause of action against General Motors, as we have found, plaintiff suffered no harm by the trial court's action.
For the reasons stated, the judgment for the defendant is affirmed.
For affirmance Chief Justice WEINTRAUB, and Justices JACOBS, FRANCIS, PROCTOR, HALL, SCHETTINO and HANEMAN 7.
For reversal None.
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620 F.2d 41
14 ERC 1984, 52 A.L.R.Fed. 875, 10Envtl. L. Rep. 20,552
SIERRA CLUB, Plaintiff-Appellant,v.ABSTON CONSTRUCTION CO., INC., et al., Defendants-Appellees,State of Alabama ex rel., Intervenor-Appellant.
No. 77-2530.
United States Court of Appeals,Fifth Circuit.
June 23, 1980.
Edward Still, Birmingham, Ala., Ralph I. Knowles, University, Ala., John D. Hoffman, San Francisco, Cal., William J. Baxley, Atty. Gen., State of Alabama, James R. Cooper, Jr., Asst. Atty. Gen., H. H. Caddell, Asst. Atty. Gen., Montgomery, Ala., for State of Alabama.
John Philip Williams, Jacksboro, Tenn., for Save Our Cumberland Mountains, Inc.
Michael A. McCord, Atty., Sanford Sagalkin, Edmund B. Clark, Dept. of Justice, Washington, D. C., for United States.
John E. Grenier, Birmingham, Ala., for Mitchell-Neely.
Lloyd S. Guerci, Dept. of Justice, Alan W. Eckert, Deputy Assoc. Gen. Counsel, Environmental Protection Agency, Washington, D. C., for amicus curiae.
Appeal from the United States District Court for the Northern District of Alabama.
Before GODBOLD, RONEY and FRANK M. JOHNSON, Jr., Circuit Judges.
RONEY, Circuit Judge:
1
In this suit to enforce portions of the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C.A. §§ 1251-65, 1281-93a, 1311-28, 1341-45, 1361-76, against coal strip miners, the issue is whether pollution carried in various ways into a creek from defendant coal miners' strip mines is "point source" pollution controlled by the Act.
2
Sediment basin overflow and the erosion of piles of discarded material resulted in rainwater carrying pollutants into a navigable body of water. Since there was no direct action of the mine operators in pumping or draining water into the waterway, the district court by summary judgment determined there was no violation of the Act because there was no "point source" of the pollution. Deciding the district court interpreted too narrowly the statutory definition of the prohibited "point source" of pollution, and that there remain genuine issues of material fact, we reverse.
3
Defendants Abston Construction Co., Mitchell & Neely, Inc., Kellerman Mining Co. and The Drummond Co. (hereinafter miners) operate coal mines near Daniel Creek, a tributary of the Black Warrior River, in Tuscaloosa County, Alabama. They each employ the strip mining technique, whereby rock material above the coal the overburden is removed, thereby exposing the coal that is close to the land surface. When the overburden is removed, it is pushed aside, and forms "spoil piles." During the mining operations, and thereafter if the land is not reclaimed by replacing the overburden, the spoil piles are highly erodible. Rainwater runoff or water draining from within the mined pit at times carried the material to adjacent streams, causing siltation and acid deposits. In an effort to halt runoff, the miners here occasionally constructed "sediment basins," which were designed to catch the runoff before it reached the creek. Their efforts were not always successful. Rainfall sometimes caused the basins to overflow, again depositing silt and acid materials into Daniel Creek.
4
Plaintiff Sierra Club brought a "citizen suit" under the Federal Water Pollution Control Act Amendments of 1972 (the Act), Claiming defendants' activities were proscribed "point sources" of pollution. 33 U.S.C.A. §§ 1362(14), 1365(a)(1)(A), (f). The State of Alabama through its attorney general was allowed to intervene with similar claims. On appeal, amicus curiae briefs have been received from the United States and Save Our Cumberland Mountains, Inc.
5
The parties do not dispute the ultimate fact that these pollutants appeared in the creek due to excess rainfall. Nor is there any disagreement the activities would be prohibited if the pollutants had been pumped directly into the waterways. The parties differ only on the legal responsibility of the miners for controlling the runoff and the legal effect of their efforts to control the runoff.
6
Plaintiff may prevail in its citizen suit only if the miners have violated some effluent limitations under the Act. 33 U.S.C.A. § 1365(a)(1)(A). Those limitations, in turn, apply only to "point sources" of pollution, as defined in the Act.
7
The term "point source" means any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.
8
33 U.S.C.A. § 1362(14). Nonpoint sources, on the other hand, are not due to be controlled. See S.Rep.No.92-414, 92d Cong., 2d Sess., reprinted in (1972) U.S.Code Cong. & Admin.News, pp. 3668, 3744.
9
Thus, the issue is whether defendants' activities amounted to the creation of point sources of pollution. The district court ruled they did not. On the facts before it, the district court found the pollution had not resulted "from any affirmative act of discharge by the defendants." Instead, any water and other materials that were deposited in Daniel Creek were carried by natural forces, mostly erosion caused by rainwater runoff, even though such erosion was "facilitated by the acts of defendants of creating pits and spoil banks in the course of their mining operations."
10
A preliminary question here is whether the Act may be applied to mining activities at all. The district court, although holding the miners here did not create point sources of pollution, conceded, correctly, we think, that "some strip mine operations may involve the discharge of pollutants in ways which would trigger application of the Act's enforcement provisions."
11
The 1972 legislation was designed to eliminate "discharge of pollutants into the navigable waters" of the United States by 1985. 33 U.S.C.A. § 1251(a) (1). Under this mandate the Environmental Protection Agency was directed to promulgate regulations governing point source discharges. See Natural Resources Defense Council, Inc. v. Train, 510 F.2d 692 (D.C.Cir.1975); 33 U.S.C.A. §§ 1251, 1314(b). The miners argue that Congress, in section 304(e) (2)(B) of the Act, 33 U.S.C.A. § 1314(f)(2)(B), intended that mining activities not be subject to the Act's effluent limitations, but that the Environmental Protection Agency only study and propose methods of controlling pollution resulting from mining. The Government points out, however, that an amendment, proposed in the House of Representatives to provide a regulatory program specifically covering coal miners, was withdrawn because it appeared to be duplicative. See Environmental Policy Division, Congressional Research Service, Library of Congress, Legislative History of the Water Pollution Control Act Amendments of 1972, 530-35 (Comm. Print, Senate Committee on Public Works, 93d Cong., 1st Sess. 1973). The EPA has been held to be precluded from exempting from the Act's permit requirements two other categories of pollution originally designated for further study, agricultural and silvicultural activities. Natural Resources Defense Council, Inc. v. Costle, 568 F.2d 1369, 1377 (D.C.Cir.1977).
12
The district court correctly concluded that mining activities, although embracing at times nonpoint sources of pollution that were intended only to be studied by the EPA, may also implicate point sources of pollution, expressly covered by the Act's effluent limitations. See generally United States v. Earth Sciences, Inc., 599 F.2d 368, 372-73 (10th Cir. 1979).
13
As to whether the activities here fall under the definition of point sources of pollution, three positions are asserted: plaintiff's, defendants', and a middle ground presented by the Government. We adopt the Government's approach.
14
Plaintiff would merely require a showing of the original sources of the pollution to find a statutory point source, regardless of how the pollutant found its way from that original source to the waterway. According to this argument, the broad drainage of rainwater carrying oily pollutants from a road paralleling a waterway, or animal pollutants from a grazing field contiguous to the waterway, would violate the Act. Whether or not the law should prohibit such pollution, this Act does not. The focus of this Act is on the "discernible, confined and discrete" conveyance of the pollutant, which would exclude natural rainfall drainage over a broad area.
15
Defendants, on the other hand, would exclude from the point source definition any discharge of pollutants into the waterway through ditches and gullies created by natural erosion and rainfall, even though the pollutant and the base material upon which the erosion could take place to make gullies was created by the mine operation, and even though the miners' efforts may have permitted the rainwater to flow more easily into a natural ditch leading to the waterway. This interpretation, essentially adopted by the district court, too narrowly restricts the proscription of the Act because it fails to consider fully the effect the miners' activity has on the "natural" drainage.
16
The United States, which participated in the case as amicus curiae, takes a middle ground: surface runoff collected or channeled by the operator constitutes a point source discharge. Simple erosion over the material surface, resulting in the discharge of water and other materials into navigable waters, does not constitute a point source discharge, absent some effort to change the surface, to direct the waterflow or otherwise impede its progress. Examples of point source pollution in the present case, according to the Government, are the collection, and subsequent percolation, of surface waters in the pits themselves. Sediment basins dug by the miners and designed to collect sediment are likewise point sources under the Government's view even though the materials were carried away from the basins by gravity flow of rainwater.
17
We agree with the Government's argument. Gravity flow, resulting in a discharge into a navigable body of water, may be part of a point source discharge if the miner at least initially collected or channeled the water and other materials. A point source of pollution may also be present where miners design spoil piles from discarded overburden such that, during periods of precipitation, erosion of spoil pile walls results in discharges into a navigable body of water by means of ditches, gullies and similar conveyances, even if the miners have done nothing beyond the mere collection of rock and other materials. The ultimate question is whether pollutants were discharged from "discernible, confined, and discrete conveyance(s)" either by gravitational or nongravitational means. Nothing in the Act relieves miners from liability simply because the operators did not actually construct those conveyances, so long as they are reasonably likely to be the means by which pollutants are ultimately deposited into a navigable body of water. Conveyances of pollution formed either as a result of natural erosion or by material means, and which constitute a component of a mine drainage system, may fit the statutory definition and thereby subject the operators to liability under the Act.
18
The cases which were not decided until after the district court decision tend to support the view adopted here. In Consolidation Coal Co. v. Costle, 604 F.2d 239 (4th Cir. 1979), cert. granted sub nom. Environmental Protection Agency v. National Crushed Stone Association, --- U.S. ----, 100 S.Ct. 1011, 62 L.Ed.2d 750 (1980), 17 coal producers, among others, challenged regulations promulgated by the Environmental Protection Agency under the Act, claiming the regulations could have been interpreted to apply to surface runoff that does not fit within the point source statutory definition. Specifically, the regulations covered "discharges which are pumped, siphoned or drained from coal storage." 40 C.F.R. § 434.20 (1979); 604 F.2d at 250. The Fourth Circuit, noting only that the definition of point source "excludes unchanneled and uncollected surface waters," Appalachian Power Co. v. Train, 545 F.2d 1351, 1373 (4th Cir. 1976), refused to overturn the regulations on their face, delaying consideration of the issue "in the absence of a full factual background." 604 F.2d at 249-50.
19
United States v. Earth Sciences, Inc., 599 F.2d 368 (10th Cir. 1979), involved application of the Act to a gold leaching process. There, an unusually rapid melting of snow caused primary and reserve pumps, designed to catch excess runoff and gold leachate, to overflow, resulting in the discharge of a pollutant into a creek. The United States brought an enforcement action under the Act, charging the mine had discharged a pollutant into navigable waters from a point source. After disposing of defendant's argument that mining is strictly a nonpoint source of pollution, the Tenth Circuit considered whether overflows from Earth Science's operations were point sources, and whether there had actually been a discharge under the Act. Earth Sciences argued the reference to "conveyance" in the point source definition, 33 U.S.C.A. § 1362(14), requires a ditch or pipe, "or some instrument intended to be used as a conduit." In rejecting defendant's approach, the court found,
20
The undisputed facts demonstrate the combination of sumps, ditches, hoses and pumps is a circulating or drainage system to serve this mining operation.Despite the large capacity (168,000 gallons for the reserve sump) we view this operation as a closed circulating system to serve the gold extraction process with no discharge. When it fails because of flaws in the construction or inadequate size to handle the fluids utilized, with resulting discharge, whether from a fissure in the dirt berm or overflow of a wall, the escape of liquid from the confined system is from a point source. Although the source of the excess liquid is rainfall or snow melt, this is not the kind of general runoff considered to be from nonpoint sources under the (Act).
21
599 F.2d at 374.
22
The court also rejected defendant's contention that the Act covers only the intentional discharge of pollutants into navigable waters. Section 1362(12), the court noted, "defines discharge of pollutants as 'any addition of any pollutant to navigable waters from any point source.' " Id. (court's emphasis). Thus, the court held that even unintentional discharges of pollutants from a mine system designed to catch runoff during periods of excess melting met the statutory definition of a point source.
23
Under the view of the law adopted here, there remain genuine issues of material fact. Viewed in a light most favorable to Sierra Club, the party opposing the motion for summary judgment, Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970), the affidavits and depositions considered by the district court indicate that significant amounts of dirt, sand and other solid particles were transported from the spoil banks by rainwater to Daniel Creek. Earl Bailey, a Sierra Club vice president and a professor at the University of Alabama, testified by affidavit that he observed
24
gullies and ditches running down the sides of steep spoil piles created by Abston Construction Company. The sedimentation and pollutants are carried through these discernible, confined and discrete conveyances to Daniel Creek.
25
Bailey's observations of ditches and gullies were confirmed by Philip Abston, president of the Abston Construction Co., who noted that the gullies would carry water and sediment toward the creek.
26
Dwight Hicks, who served as defendant Drummond Co.'s manager of reclamation and environmental control, testified that in some areas, drainage basins were constructed to catch sediment flowing down the outer edges of the spoil piles. Hicks noted the basins were constructed along a "drainage course," by placing earthen material on the lower end of a slope. He described construction of the "B-21" dam as follows:
27
(T)hat's just the general type dam section that is put into the small drainage course with a standpipe and an emergency spillway.
28
The material is either pushed in or hauled in after residual vegetation is removed. It is compacted and a standpipe, the primary means of outflow, is installed, and then an emergency spillway is built around the side of it.
29
Hicks added that in the event of a measurable amount of precipitation, water and small amounts of sediment would drain through the sediment basin outflow.
30
An affidavit filed by Garry Drummond, president of defendant Drummond Co. in support of its motion for summary judgment, contains starkly contrasting language.
31
Neither company has engaged in the operation of any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation or vessel or other floating craft from which pollutants are or may be discharged.
32
Neither company has discharged any pollutant including surface water runoff into Daniel Creek or the tributaries of the same during the period of operation as noted hereinabove.
33
On some occasions, according to the various affidavits and depositions, severe rainfall caused some of the sediment basins to overflow, spilling out their contents, and again those materials flowed toward the creek. Rainwater trapped in the mine pits themselves also eventually percolated through the banks and flowed toward the creek, carrying with it acid and chemicals from the pit.
34
Thus, additional findings are necessary to determine the precise nature of spoil basins constructed by defendant Drummond. In light of Hicks's statement that a "standpipe and an emergency spillway" were constructed to guard against spoil basin overflow, we note that a "pipe" from which pollutants are discharged may be a point source of pollution. 33 U.S.C.A. § 1362(14). This design could likewise fit under the Earth Sciences finding that "the escape of liquid from (a) confined system is from a point source," 599 F.2d at 374, since the affidavits and depositions suggest that water and other materials escaped from the mines and sediment basins, eventually finding their way to Daniel Creek. Furthermore, factual findings are lacking insofar as the sediment basins and other devices may be characterized as encompassing "container(s), . . . from which pollutants are or may be discharged." 33 U.S.C.A. § 1362(14).
35
While defendants have denied taking any direct action resulting in the discharge of pollutants into Daniel Creek, Bailey described "(m)ine spoil pushed into Daniel Creek so as to block the waterway." Even under the district court's requirement that the alleged polluters take some "affirmative act" before a finding of point source pollution is warranted, the activity described by Bailey suggests a discharge of pollutants into the creek. In considering this issue, the district court should deem controlling § 502(12) of the Act, which, as pointed out by the Earth Sciences court, defines discharge as "any addition of any pollutant to navigable waters . . . ." 33 U.S.C.A. § 1362(12).
36
Although the point source definition "excludes unchanneled and uncollected surface waters," Consolidation Coal Co., 604 F.2d at 249; Appalachian Power, 545 F.2d at 1373, surface runoff from rainfall, when collected or channeled by coal miners in connection with mining activities, constitutes point source pollution.
37
The district court's decision is reversed and the case remanded for further proceedings consistent with this opinion.
38
REVERSED AND REMANDED.
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738 F.Supp.2d 1001 (2010)
David HARRIS, Plaintiff,
v.
VEOLIA TRANSPORTATION SEVICES, INC., and Kristen Marvel, Chief Administrative Officer, Defendants.
No. CV-09-01915-PHX-ROS.
United States District Court, D. Arizona.
September 3, 2010.
*1002 David Harris, Mesa, AZ, pro se.
Brian M. Oneal, James N. Foster, Jr., McMahon Berger PC, St. Louis, MO, Rosval Ardis Patterson, Patterson & Associates PC, Phoenix, AZ, for Defendants.
ORDER
ROSLYN O. SILVER, District Judge.
Before the Court is a Motion to Dismiss filed by Defendants Kristen Marvel and Veolia Transportation Services, Inc. (Doc. 12). Also before the Court is a Motion for Summary Judgment filed by Plaintiff David Harris. (Doc. 14). For the reasons discussed, the Motion to Dismiss will be granted and the Motion for Summary Judgment will be denied.
BACKGROUND
On September 15, 2009, Plaintiff filed a pro se Complaint asserting a 42 U.S.C. § 1983 claim that his constitutional rights were violated when he was terminated from his employment as a fueler in a bus yard after purportedly testing positive on a random drug test. Plaintiff also alleged intentional infliction of emotional distress. On October 26, 2009, Defendants filed a Motion to Dismiss the Complaint. On October 28, 2009, Plaintiff filed a Motion for Summary Judgment.
DISCUSSION
I. Motion to Dismiss
A. Section 1983 Claim
Defendants argue the Complaint fails to state a claim under 42 U.S.C. § 1983 because it does not allege Defendants were acting under color of state law, and does not allege sufficient facts to support an allegation that they were acting under color of state law.
To state a section 1983 claim, a plaintiff must allege the defendants' actions were committed "under color of state law." Price v. State of Hawaii, 939 F.2d 702, 708 (9th Cir.1991). Private parties are generally not acting under color of state law. Id. A conclusory allegation that private parties are acting under color of state law, unsupported by facts, is insufficient to state a claim under section 1983. Id. The Supreme Court has established a two-step analysis for determining whether an action by a private party is considered state action sufficient to establish liability for a constitutional tort: first, the court must consider whether the claimed deprivation resulted from the "exercise of a right or privilege having its source in state authority," and second, the court must consider whether it is appropriate to consider the parties state actors under the particular facts of the case. Villegas v. Gilroy Garlic Festival Ass'n, 541 F.3d 950, 954-55 (9th Cir.2008) (internal citation and quotation marks omitted). Regarding the second step, the essential inquiry is whether there is a sufficiently "close nexus between the State and the challenged action . . . [such that the] private behavior may be fairly treated as that of the State itself." Id. (internal citation and quotation marks omitted). To sufficiently plead that a private party's actions constitute state action, the relationship between the private party and the state must be plead with sufficient factual detail for the court to be able to be able to make that inference. See Glaros v. Perse, 628 F.2d 679, 684-85 (1st Cir.1980).
The Complaint alleges Defendants were "acting under color of law," and provides the following factual allegations in support: (1) Defendant Veolia Transportation Services, Inc. is a contractor for the Arizona DOT Regional Public Transportation Authority, *1003 and (2) Defendants categorized Plaintiffs job as safety-sensitive even though it does not qualify as such under federal regulations. These allegations are insufficient to support a finding that there is so close a nexus between Defendants' actions and the State of Arizona that Defendants' actions can fairly be considered state actions. The mere performance of a public contract to provide transportation services does not make the actions of the private contractor state action. See, e.g., Thomas v. Cannon, 751 F.Supp. 765, 768 (N.D.Ill.1990) (holding that a private corporation providing transportation services under a state contract was not a state actor) (citing Rendell-Baker v. Kohn, 457 U.S. 830, 841-42, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982)). Government regulation of private conduct does not make that conduct state action. See, e.g., Boudette v. Arizona Public Service Co., 685 F.Supp. 210, 213 (D.Ariz.1988).
In his response to the Motion to Dismiss, Plaintiff emphasizes that Defendant was acting under federal regulations that require recipients of federal transit funds to drug test transportation employees with safety-sensitive positions. In order to state a section 1983 claim, however, a plaintiff must allege a party acted under color of state law, not federal law. Lonneker Farms, Inc. v. Klobucher, 804 F.2d 1096, 1097 (9th Cir.1986). Even if the Court were to go beyond the language of the Complaint and treat it as alleging a claim under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), the result would be the same because Plaintiffs Complaint fails to contain sufficient allegations upon which it could plausibly be inferred Defendants were acting under color of federal law.
The section 1983 claim will be dismissed for failure to state a claim. Plaintiff will be given leave to file an amended complaint that adds factual allegations upon which it could plausibly be inferred that Defendants were acting under color of state law.
II. Intentional Infliction of Emotions Distress
Defendants move to dismiss the intentional infliction of emotional distress for failure to state a claim. In response, Plaintiff states that he did not intend to assert an intentional infliction of emotional distress claim, and he only alleged he was inflicted with emotional distress to further support his section 1983 claims. To the extent the Complaint asserts an intentional infliction of emotional distress claim, it is therefore dismissed.
III. Plaintiff's Motion for Summary Judgment
As Plaintiff's Complaint will be dismissed, Plaintiff's Motion for Summary Judgment will be denied as moot.
Accordingly,
IT IS ORDERED Defendants' Motion to Dismiss (Doc. 12) IS GRANTED. Plaintiff shall file an amended complaint that resolves the deficiencies discussed in this Order within two weeks from the date of this Order. If Plaintiff fails to do so, the Clerk of the Court shall close this case without further direction from this Court.
FURTHER ORDERED Plaintiff's Motion for Summary Judgment (Doc. 14) IS DENIED as moot.
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899 P.2d 544 (1995)
Daniel Delaney JONES, Appellant,
v.
The STATE of Nevada, Respondent.
No. 24720.
Supreme Court of Nevada.
June 27, 1995.
*545 Posin & Posin, Las Vegas, for appellant.
Frankie Sue Del Papa, Atty. Gen., Carson City; Rex Bell, Dist. Atty., and Rita F. Brookins, Deputy District Atty., Clark County, for respondent.
OPINION
ROSE, Justice:
FACTS
In the early morning hours of August 15, 1992, appellant Daniel Delaney Jones (Jones) and four male companions drove to the apartment of Steven M., ostensibly looking for a party. Upon arrival, these five individuals confronted Steven M. at the front door to his apartment. One of these individuals, Robert Morales, told Steven M. that he had lost his keys in Steven M.'s apartment when he was there earlier that evening drinking beer and smoking marijuana. Another companion, John Flanigan, brandished a pistol. Frightened by these events, Steven M. slammed the door and retreated to his bathroom to hide.
Steven M.'s front door was knocked open, and Jones and his companions entered the apartment. One of these companions, Gregory Turner (Turner), followed Steven M. to the bathroom and kicked the door down. Then, Turner pointed a pistol at Steven M. and demanded his marijuana. Steven M. retrieved some marijuana from a bathroom cabinet and gave it to Turner. Next, Turner held a gun to Steven M.'s back and walked him into the kitchen where Steven M. was made to kneel on the floor as Jones and the others were ransacking Steven M.'s bedroom, presumably looking for more drugs.
While Steven M. was being held in the kitchen area, Turner returned to the bedroom and ordered Steven M.'s houseguest, Jenny P., to disrobe. She began to comply, but started to pull her pants back up when Turner left the room. Jones then told her, "Did [Turner] tell you to do that? Did he tell you to do that?" Jenny P. then pulled her pants back down. Turner returned and ordered her to a closet where he sexually assaulted her while holding a gun to her head. After relieving the victims of their money and personal objects, Jones and his companions left the apartment together.
Steven M. and Jenny P. reported the night's events to the police. As a result, Jones and Turner were arrested and charged with three counts of first degree kidnapping with the use of a deadly weapon, three counts of coercion with the use of a deadly weapon, two counts of robbery with the use of a deadly weapon, and burglary. In addition, Turner was charged with sexual assault with the use of a deadly weapon.
A six-day jury trial commenced on February 2, 1993. The jury convicted Jones of one count of first degree kidnapping, three counts of coercion with the use of a deadly weapon, one count of robbery with the use of a deadly weapon, and burglary.
At sentencing, Jones moved the district court for an order of acquittal on the kidnapping conviction based on an insufficiency of the evidence. The district court granted that motion and sentenced Jones to the Nevada State Prison for his convictions on coercion, robbery, and burglary. In addition, Jones' sentences for robbery and coercion were enhanced by equal consecutive sentences for possessing a deadly weapon during the commission of a crime.
DISCUSSION
Penalty Enhancement
NRS 193.165(1) provides, in pertinent part:
[A]ny person who uses a firearm or other deadly weapon ... in the commission of a crime shall be punished by imprisonment in the state prison for a term equal to and *546 in addition to the term of imprisonment prescribed by statute for the crime.
This statute demonstrates the legislature's concern regarding the increased use of deadly weapons in the commission of crimes and its belief that such proscription will serve to deter persons from using weapons during the perpetration of certain crimes, in the hope that the possibility of death and injury will be reduced. Anderson v. State, 95 Nev. 625, 630, 600 P.2d 241, 244 (1979).
In the instant case, Jones' sentence for robbery and three counts of coercion were enhanced by equal consecutive sentences for possession of a deadly weapon during the commission of these crimes. Jones, however, contends that the penalty enhancements were improper because he never possessed a deadly weapon. Conversely, the State argues that Jones constructively possessed a weapon by aiding and abetting the actual user in the unlawful use of a weapon.
In Anderson, this court held that:
the participation of a defendant not actually in possession of the weapon by aiding and abetting the actual user in the unlawful use of the weapon, makes the former equally subject to the added penalty inflicted upon defendants who commit crimes through the use of deadly weapons.
Id. at 629, 600 P.2d at 243. Further, this court defined the requirements necessary to subject a defendant, who aides and abets the user of a deadly weapon, to an enhanced penalty:
[T]he possession necessary to justify statutory enhancement may be actual or constructive; it may be exclusive or joint. Constructive or joint possession may occur only where the unarmed participant has knowledge of the other offender's being armed, and where the unarmed offender has ... the ability to exercise control over the firearm.
Id. at 630, 600 P.2d at 244. In addition, we explained that:
When one of two robbers holds a victim at bay with a gun and the other relieves the victim of his properties, or ... the unarmed assailant has knowledge of the use of the gun and by his actual presence participates in the robbery, the unarmed offender benefits from the use of the other robber's weapon, adopting derivatively its lethal potential.
Id. (citing People v. Bush, 123 Cal. Rptr. 576, 582 (Ct. App. 1975)).
At trial, there was testimony that John Flanigan brandished a pistol at Steven M. before Jones and his four companions knocked Steven M.'s apartment door open. There was also testimony that Jones was present when Turner, with a pistol in his hand, ordered Jenny P. to disrobe. Thus, it is clear that Jones had knowledge that his companions possessed firearms. Moreover, while a companion of Jones controlled Steven M., holding him at bay with a pistol, Jones rummaged through Steven M.'s bedroom searching for drugs. Jones thereby benefitted from the weapon, adopting derivatively its lethal potential. Furthermore, following the completion of the crimes at Steven M.'s apartment, Jones exited with those same armed companions. We conclude that these actions permitted the jury to find the requisite knowledge and control necessary for constructive possession of a weapon.
While Jones cites Walters v. State, 106 Nev. 45, 786 P.2d 1202 (1990), for authority that he was not in constructive possession of the weapons, we find this argument unpersuasive. In Walters, we found that the possession of a deadly weapon by the co-defendant alone would not establish Walters' constructive possession or control of the weapon. Id. at 49, 786 P.2d at 1204. This case is factually different from Walters, especially in that Jones used the weapons brandished by others to accomplish the crimes for which he was convicted.
Severance
On November 5, 1992, Jones moved the district court for an order severing his trial from the trial of his co-defendant, Turner. Jones argued that severance should be granted or he would suffer guilt by association and that the jury would not be able to compartmentalize the evidence against Jones as opposed to the evidence against Turner.
*547 On December 23, 1992, the district court, in denying that motion, said:
Well, gentlemen, I don't see any legal reason to sever. I can certainly see the strategy of the reasons, but that's not my concern, and I don't intend to make two trials out of one just for the accommodation of strategy, and we don't have the judicial time to do that, so we are going to set this for trial.
We have held that "[t]he decision to sever is left to the discretion of the trial court." Amen v. State, 106 Nev. 749, 756, 801 P.2d 1354, 1359 (1990); see also Schaffer v. United States, 362 U.S. 511, 516 (1960). Moreover, it is well settled that where persons have been jointly indicted they should be tried jointly, absent compelling reasons to the contrary. United States v. Escalante, 637 F.2d 1197, 1201 (9th Cir.1980); United States v. Silla, 555 F.2d 703, 707 (9th Cir.1977).
The general rule favoring joinder has evolved for a specific reason there is a substantial public interest in joint trials of persons charged together because of the judicial economy involved. In United States v. Brady, 579 F.2d 1121, 1128 (9th Cir.), cert. denied, 439 U.S. 1074 (1978), the court stated:
we must be guided by our general rule that joint trials of persons charged with committing the same offense expedites the administration of justice, reduces the congestion of trial dockets, conserves judicial time, lessens the burdens upon citizens to sacrifice time and money to serve on juries and avoids the necessity of recalling witnesses who would otherwise be called upon to testify only once.
Ultimately, however, the question is whether the jury can reasonably be expected to compartmentalize the evidence as it relates to separate defendants. United States v. Kaplan, 554 F.2d 958 (9th Cir.1977); United States v. Campanale, 518 F.2d 352 (9th Cir.1975). While there are situations in which inconsistent defenses may support a motion for severance, the doctrine is a very limited one. United States v. Haldeman, 559 F.2d 31, 71 (D.C. Cir.1976). Under the Haldeman standard, a defendant moving for severance must show that:
"the defendants [have] conflicting and irreconcilable defenses and there is danger that the jury will unjustifiably infer that this conflict alone demonstrates that both are guilty."
Id. (quoting Rhone v. United States, 365 F.2d 980, 981 (D.C. Cir.1966)).
The United States Supreme Court has recently held that mutually antagonistic defenses are not prejudicial per se. Zafiro v. United States, ___ U.S. ___, 113 S.Ct. 933 (1993). The Court refused to adopt a bright-line rule mandating severance merely because defendants had conflicting defenses. Id. at ___, 113 S.Ct. at 938. Zafiro discusses a number of situations in which severance might be required and acknowledges that courts may find joinder prejudicial in other situations as well. Id.
In the instant case, we conclude that joinder did not prejudice Jones. Both Jones and Turner admitted to being at Steven M.'s apartment on the evening of August 15, 1992. Moreover, both testified that they did not commit any of the charged offenses and did not observe the other commit any of the charged offenses. Thus, Jones' and Turner's testimony did not conflict. Therefore, the district court properly denied Jones' motion for severance. Furthermore, it is obvious from the record that Jones was convicted because four eyewitnesses testified to his involvement in the crimes that took place at Steven M.'s apartment, not because he was tried together with Turner.
Coercion
Jones offers only three short sentences in asserting that the district court erred in failing to suppress a statement made by Jones to the police. Jones contends that these statements were the product of coercion by the police. Because Jones does not cite to any legal authority for this proposition, and because he does not make any reference to the record to support his contention, only limited consideration will be dedicated to this contention.
This court has consistently held that it will not consider assignments of error that are *548 not supported by relevant legal authority. Sheriff v. Gleave, 104 Nev. 496, 498, 761 P.2d 416, 418 (1988); Cunningham v. State, 94 Nev. 128, 130, 575 P.2d 936, 938 (1978); McKinney v. Sheriff, 93 Nev. 70, 560 P.2d 151 (1977); Williams v. State, 88 Nev. 164, 494 P.2d 960 (1972).
Secondly, the record refutes Jones' contention that statements that he made to the police were the product of coercion. Officer Garness testified that he gave Jones his Miranda warnings and asked him if he understood his rights. Jones responded affirmatively. Moreover, Officer Chavez testified that he was present when Jones was given his Miranda warnings and that he also asked Jones if he understood his rights and, again, Jones responded affirmatively.
Subsequently, Jones told Officer Chavez that his only involvement in the events at Steven M.'s apartment was that he followed Turner around when Turner had the gun in his hand. Jones also told Officer Chavez that Turner used the gun to penetrate Jenny P.'s vagina. Further, the record reflects that Officer Chavez told Jones that he would like to take his statement when they got to the jail. Jones declined and requested to see an attorney. Consequently, Officer Chavez ceased all questioning.
In view of the foregoing evidence, we conclude that Jones' statements to the police were voluntary.
CONCLUSION
There is substantial evidence in the record to support the jury's verdicts convicting Jones of coercion, robbery, and burglary. Moreover, there is sufficient evidence to support the jury's finding that Jones constructively possessed a deadly weapon during the commission of these crimes. Further, Jones and Turner were properly tried together. Lastly, we conclude that Jones' statements to the police were voluntary. Accordingly, the judgment of the district court is affirmed.
STEFFEN, C.J., and YOUNG, SPRINGER and SHEARING, JJ., concur.
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Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-15-00498-CR
EX PARTE Matthew Jamal JACKSON
Original Habeas Corpus Proceeding 1
PER CURIAM
Sitting: Karen Angelini, Justice
Luz Elena D. Chapa, Justice
Jason Pulliam, Justice
Delivered and Filed: August 19, 2015
PETITION FOR WRIT OF HABEAS CORPUS DISMISSED FOR LACK OF JURISDICTION
On August 7, 2015, relator Matthew Jamal Jackson filed two pro se petitions for writ of
habeas corpus challenging his indictment, arrest, and incarceration in the underlying criminal
proceeding. Relator also filed a motion requesting that he be allowed to review the video or audio
recording of the grand jury deliberation resulting in his indictment. Relator requests that this court
grant his petitions for writ of habeas corpus, order his release, and dismiss the criminal charge
pending against him. Relator is charged with the felony offense of aggravated robbery. See TEX.
PENAL CODE ANN. § 29.03 (West 2011). Relator’s pending criminal charge is currently scheduled
for trial in October 2015.
1
This proceeding arises out of Cause No. 2014CR0148, styled The State of Texas v. Matthew Jamal Jackson, pending
in the 379th Judicial District Court, Bexar County, Texas, the Honorable Ron Rangel presiding.
04-15-00498-CR
This court, as an intermediate court of appeals, is not authorized to grant the relief relator
seeks. Pursuant to section 22.221(d) of the Texas Government Code, in civil matters, a court of
appeals “may issue a writ of habeas corpus when it appears that the restraint of liberty is by virtue
of an order, process, or commitment issued by a court or judge because of the violation of an order,
judgment, or decree previously made, rendered, or entered by the court or judge in a civil case.”
TEX. GOV’T CODE ANN. § 22.221(d) (West 2004). In criminal matters, however, an intermediate
court of appeals has no original habeas corpus jurisdiction. Chavez v. State, 132 S.W.3d 509, 510
(Tex. App.—Houston [1st Dist.] 2004, no pet.); Watson v. State, 96 S.W.3d 497, 500 (Tex. App.—
Amarillo 2002, pet. ref’d); Dodson v. State, 988 S.W.2d 833, 835 (Tex. App.—San Antonio 1999,
no pet.). In criminal matters, the courts authorized to issue writs of habeas corpus are the Texas
Court of Criminal Appeals, district courts, and county courts. See TEX. CODE CRIM. PROC. ANN.
art. 11.05 (West 2015). Therefore, relator’s petitions for writ of habeas are dismissed for lack of
jurisdiction.
In addition, we note that relator has been appointed trial counsel to represent him in
connection with his currently pending criminal charge. We conclude that any original proceeding
on relator’s behalf should be presented by relator’s trial counsel. Relator is not entitled to hybrid
representation. See Patrick v. State, 906 S.W.2d 481, 498 (Tex. Crim. App. 1995). The absence of
a right to hybrid representation means relator’s pro se petition presents nothing for this court’s
review. See id.; see also Gray v. Shipley, 877 S.W.2d 806, 806 (Tex. App.—Houston [1st Dist.]
1994, orig. proceeding).
PER CURIAM
DO NOT PUBLISH
-2-
| {
"pile_set_name": "FreeLaw"
} |
797 F.Supp. 1452 (1992)
Jason NORRIS, a minor by next friends, Carolyn Norris and Gerald Norris, and Carolyn Norris and Gerald Norris, Plaintiffs,
v.
The BOARD OF EDUCATION OF GREENWOOD COMMUNITY SCHOOL CORPORATION, et al., Defendants.
No. IP 90-1340-C.
United States District Court, S.D. Indiana, Indianapolis Division.
May 1, 1992.
*1453 *1454 *1455 *1456 Michael S. Reed, Indianapolis, Ind., for plaintiffs.
Donald S. Smith, Riley Bennett & Egloff, Indianapolis, Ind., for defendants.
MEMORANDUM ENTRY DISCUSSING ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT, ENTERING JUDGMENT IN FAVOR OF DEFENDANTS ON COUNTS I THROUGH V, AND DISMISSING COUNTS VI THROUGH XIV
TINDER, District Judge.
Plaintiffs' Amended Complaint contains fourteen Counts stating claims for monetary *1457 damages for alleged wrongdoing by various combinations of the named Defendants. Defendants' Motion for Summary Judgment challenged the viability of each count. For the reasons discussed below, this Court will enter judgment in favor of Defendants on Counts I, II, III, IV and V. Counts VI, VII, VIII, IX, X, XI, XIII and XIV fail to state claims upon which relief can be granted and must be dismissed. Count XII must be dismissed because it states a claim over which this Court lacks subject matter jurisdiction. Defendants Clark Pleasant School Corporation's Motion for Summary Judgment will be denied as moot.
BACKGROUND
Plaintiffs' Amended Complaint names the following persons and entities as Defendants: Greenwood Community School Corporation ("GCSC"), Johnson County Special Services Cooperative ("JCSSC"), Dr. Donald Strobel ("Strobel") (Superintendent of GCSC), Dr. Roger Brenton ("Brenton") (Asst. Superintendent of GCSC), Elbert Martin ("Martin") (Director of JCSSC), Sue Rice ("Rice") (Asst. Dir. of JCSSC), Roger Kinsey ("Kinsey") (Principal of Southwest Elementary School), Theresa Mandery ("Mandery") (teacher at Southwest Elementary School), Paul Velez ("Velez") (Principal of Greenwood Middle School), Mary Boand ("Boand") (teacher at Greenwood Middle School), Donna Anders ("Anders") (teacher at Greenwood Middle School), Linda Begley ("Begley") (Guidance Chairperson at Greenwood Middle School), Kenneth Nierman ("Nierman") (Asst. Principal of Greenwood Middle School), Judy Shockley ("Shockley") (Asst. Dir. of Johnson County Special Education), Angela Hornsby ("Hornsby") (teacher's aide for Southwest Elementary School), Stephanie Westcott ("Westcott") (School Psychologist for Special Services for Johnson County), Mattie Alger ("Alger") (aide for Southwest Elementary School), Clark Pleasant School Corporation ("CPSC"), Franklin Community School Corporation ("FCSC"), Edinburg School Corporation ("ESC"), Ninehav Hinsley Jackson School Corporation ("NHJSC") and Center Grove Community School Corporation ("CGCSC").
Plaintiff Jason Norris ("Jason") is an emotionally handicapped minor; Carolyn and Gerald Norris (collectively "Norris'") are Jason's legal guardians. Jason attended classes at some of the Defendant school corporations and had direct or indirect contact with the natural persons named as Defendants. The Facts section of the Amended Complaint alleges that Defendants moved Jason between different programs and schools in a failed attempt to satisfy the requirements of the Individuals with Disabilities Education Act ("IDEA" or "the Act"), 20 U.S.C.A. §§ 1401 et seq. (West 1988 & Supp.1992).[1] Jason was diagnosed as having Attention Deficit Hyperactivity Disorder. Believing that the schools were not adequately or lawfully taking care of Jason's educational needs, the Norris' filed a request with the Indiana Department of Education, Division of Special Education; the request sought review of Jason's individual education plan ("IEP") and requested that a Hearing Officer review Jason's recent suspensions.
The type of hearing requested by the Norris' is called an Indiana Rule S-1 Hearing ("S-1 Hearing"), because it is provided by Rule S-1, which is located at 511 Ind.Admin.Code tit. 7-1, et seq. Plaintiffs allege that Defendants filed an Indiana Rule S-5 Application ("Rule S-5") in retaliation for Plaintiffs' request for the S-1 Hearing. Rule S-5 provides the procedures by which a minor is removed from his or her home and placed in a residential or institutional psychiatric facility. 511 Ind.Admin.Code tit. 7-5, et seq. Without Plaintiffs' knowledge or consent, four persons convened a Local Coordinating Committee ("LCC") to proceed with the Rule S-5 application; the LCC voted to submit a Rule S-5 application to the Indiana Department of Education.
*1458 The Rule S-1 hearing was held before a Hearing Officer, who determined that Jason was not a candidate for a residential or institutional placement. The Hearing Officer issued findings and a decision, which required the schools to change Jason's IEP to conform to the IDEA. Plaintiffs allege that Defendants made a "systematic effort to circumvent" that order. At the beginning of the 1989-90 academic year, Plaintiffs placed Jason in a hospital and then enrolled him in Indiana Public School # 31 two days later.
Plaintiffs' allegations and claims arise from the battle waged between the parties regarding Jason's education. Plaintiffs allege that Defendants failed to provide Jason Norris with the type of education required by State and federal law and by specific orders of the Hearing Officer. Plaintiffs also claim that Defendants improperly attempted to remove Jason from his guardians and attempted to force Jason from the school system. These acts were allegedly done in retaliation for Plaintiffs' lawful attempts to force Defendants to provide a proper education. Finally, Plaintiffs allege that Defendants violated State and federal law by communicating confidential information to other administrators and other students.
In resolving Defendants' Motion, the Court has examined the evidence submitted by the parties, which includes affidavits by John C. Ehrmann, Carolyn Norris, Gerald Norris, Betty Firth, Sue Rice and Paul Velez.
DISCUSSION
Defendants' challenges to Plaintiffs' Amended Complaint may be broken down into discrete sections. The subsections below discuss and determine the legal status of each claim stated in the Amended Complaint.
COUNT I STATE LAW TORT OF MALICIOUS PROSECUTION
Count I alleges that GCSC, JCSSC, Strobel, Brenton, Martin, Rice, Hornsby, Kinsey, Mandery, ESC, NHJSC, CPSC, FCSC and CGCSC are liable for committing the Indiana common law intentional tort of malicious prosecution. Plaintiffs allege that Defendants are liable under this tort theory because Defendants unlawfully initiated a Rule S-5 proceeding to remove Jason from the home of his grandparents in bad faith retaliation for Plaintiffs' request for a Rule S-1 hearing. (Pls.' Am. Compl., Count I ¶¶ 2, 5.)[2]
A claim of malicious prosecution requires proof of four elements: (1) that the defendant instituted or caused to be instituted a prosecution against the plaintiff; (2) defendant acted with malice in doing so; (3) prosecution was instituted without probable cause; and (4) the prosecution terminated in plaintiff's favor. Strutz v. McNagny, 558 N.E.2d 1103, 1106 (Ind.Ct.App.1990) (trans. denied); Lazarus Dept. Store v. Sutherlin, 544 N.E.2d 513, 519 (Ind.Ct.App.1989); F.W. Woolworth Co. v. Anderson, 471 N.E.2d 1249 (Ind.Ct. App.1984) (trans. denied). Defendants argued that even if Plaintiffs have stated a proper claim for this tort, the Defendants enjoy statutory immunity from liability for this kind of tortious conduct. As state governmental entities and state governmental employees, the Defendants are covered by sovereign immunity except for liability allowed expressly by statute. Indiana allows liability for some kinds of torts, but has expressly excluded liability for the tort of malicious prosecution. Ind. Code Ann. § 34-4-16.5-3(5) (Burns Supp. 1991) ("Tort Claims Act"). The Torts Claims Act provides that:
A governmental entity or an employee acting within the scope of his [or her] employment is not liable if a loss results from:
....
*1459 (5) The initiation of a judicial or administrative proceeding;
Id. This statute applies plainly to make the school corporation Defendants immune from liability for initiating a Rule S-5 administrative proceeding.
Plaintiffs argued that the Defendants ought not to enjoy immunity because Defendants brought the S-5 proceeding in bad faith. Bad faith, in the form of malice, is the very element of the malicious prosecution tort that makes the conduct wrongful. Board of Comm'rs of Hendricks County v. King, 481 N.E.2d 1327, 1331 (Ind.Ct.App.1985). Because the primary tort arising from initiating legal proceedings necessarily includes the element of bad faith, the presence of bad faith cannot remove the conduct from the very protection the Tort Claims Act envisioned. Jacobs v. City of Columbus, 454 N.E.2d 1253, 1261 (Ind.Ct.App.1983). The tortious conduct alleged in Count I is within the scope of immunity provided by Ind.Code Ann. § 34-4-16.5-3(5).
Vainly attempting to get around the Tort Claims Act, Plaintiffs argued that the natural person Defendants' acts were outside scope of their employment because the S-5 proceeding was not lawful and because they initiated the proceeding in bad faith.[3] This argument is incorrect; the employees' acts were well within the scope of their employment. The acts constituting the alleged malicious prosecution were referring Jason's case to the LCC and initiating the subsequent S-5 proceeding. The statute creating and governing LCCs makes plain that a school corporation has the privilege and duty of referring cases to the LCC. Ind.Code Ann. §§ 31-6-14-3(2) to XX-X-XX-X (Burns 1987). Thus, Indiana statutes provide specifically that school corporations, through their employees, may initiate LCC proceedings.
Plaintiffs seem to believe that because they have alleged that Defendants initiated the S-5 proceeding for retaliatory purposes, that the Defendants were acting outside the scope of their employment. This argument misconstrues the common law definition of "scope of employment." The scope of employment doctrine refers to a relationship between an employer and employee; that is, the employee's conduct is placed against the "template" created by the specific employer-employee relationship to determine whether the conduct was actuated by a purpose to serve the employer. Sharp v. Egler, 658 F.2d 480 (7th Cir.1981). Simply, an employee acts within the scope of employment if the employee acts with the intention of serving the employer's interests. Gomez v. Adams, 462 N.E.2d 212 (Ind.Ct.App.1984). Even if the ultimate purpose of the Defendants acts was not entirely savory, the Defendant employees initiated the LCC proceedings directly to further the interests of their employers.
School corporations, charged with a statutory responsibility regarding S-5 proceedings, must reasonably expect that their employees will initiate such proceedings; thus, although a school corporation would not necessarily approve of every S-5 proceeding, the employees' actions initiating them is within the "scope" of their employment. See Carrell v. City of Portage, 609 F.Supp. 314, 317 (N.D.Ind.1985) (citing Foster v. Pearcy, 270 Ind. 533, 387 N.E.2d 446, 449 (1979), cert. denied, 445 U.S. 960, 100 S.Ct. 1646, 64 L.Ed.2d 235 (1980)). The scope of employment tests, which usually encompass a very wide range of employee activity, are not to be altered in this instance merely because Plaintiffs are making the unusual claim that the employers *1460 are not responsible for the employees' tortious conduct. The conduct of all Defendants falls within the scope of the Tort Claims Act language providing immunity for malicious prosecution.
Defendants are entitled to judgment in their favor on Count I of Plaintiffs' Amended Complaint because the Indiana Tort Claims Act precludes liability for the claim of malicious prosecution.
COUNT II ABUSE OF PROCESS
Count II claims that GCSC, JCSSC, Strobel, Brenton, Martin, Rice, Hornsby, Kinsey and Mandery are liable for the Indiana common law intentional tort of abuse of process. This tort requires a finding that a defendant misused the judicial process for an end other than that for which it was designed. Voors v. National Women's Health Org., 611 F.Supp. 203 (D.C.Ind.1985); Archem, Inc. v. Simo, 549 N.E.2d 1054 (Ind.Ct.App.1990) (trans. denied). Abuse of process does not require a finding that a criminal proceeding terminated in favor of the plaintiff; instead, it requires a finding that the defendant used the power of the court other than for the purposes for which it is available. Dorrell v. State, 83 Ind. 357 (1882); Central Nat'l Bank of Greencastle v. Shoup, 501 N.E.2d 1090 (Ind.Ct.App.1986). A plaintiff must show that the ulterior motive and use of judicial process would not be proper in normal prosecution of a case. Shoup, 501 N.E.2d 1090.
Plaintiffs claimed that "certain proceedings were instituted and pursued by [Defendants] ... wherein said defendants sought to remove said plaintiff, Jason Norris[,] from the home of plaintiffs Gerald and Carolyn Norris for purposes of placement in a residential or institutional psychiatric facility...." (Pls.' Am.Compl. Count II ¶ 2.) Plaintiffs claimed that Defendants instituted this "John Doe" S-5 proceeding with the LCC without consent or notice, without the required current educational, medical, psychological testing and in bad faith for the "collateral purpose" of retaliation. (Id. ¶¶ 3-5.)
As with the mirror claim for malicious prosecution stated in Count I, this claim is subject to a summary judgment on the determinative basis of Defendants' Tort Claims Act affirmative defense. Although it appears that Plaintiffs have alleged a proper claim for abuse of process, the immunity from liability provided by Ind.Code § 34-4-16.5-3(5) applies to this claim also.[4] The inescapable thrust of this claim is that Defendants initiated an S-5 proceeding for a wrongful purpose; the other factual allegations are immaterial. The Tort Claims Act immunity applies with equal force of logic to claims for malicious prosecution and abuse of process. Defendants are entitled to judgment in their favor on Count II of Plaintiffs' Amended Complaint because the Indiana Tort Claims Act precludes liability for the claim alleged.
COUNT III ABUSE OF PROCESS; CRIMINAL PROCEEDINGS
Plaintiffs claim that Defendants GCSC, JCSSC, Strobel, Brenton, Martin, Rice, Shockley, Velez, Boand, Anders and Begley committed the tort of abuse of process by maliciously seeking to institute criminal assault proceedings against Jason. Jason allegedly physically assaulted his instructors and fellow students on more than one occasion; Defendants attempted to raise criminal charges, but the prosecutor's office exercised its discretion not to pursue the charges. The act of bringing a charge before a prosecutor plainly falls within the immunity provided by the Tort Claims Act. King, 481 N.E.2d at 1330. Defendants are entitled to judgment in their favor on Count III of Plaintiffs' Amended Complaint because the Indiana Tort Claims Act precludes liability for the claim alleged.
COUNT IV INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
This Count claims that Defendants GCSC, JCSSC, Strobel, Brenton, Kinsey, *1461 Mandery, Hornsby, Alger, Westcott, Martin, Rice, Shockley, Velez, Boand, Anders and Begley committed the Indiana common law tort of intentional infliction of emotional distress against the Plaintiffs. Plaintiffs allege that Defendants engaged in a long-term pattern and course of conduct with the intent of inflicting emotional distress; this alleged pattern includes the following acts:
1. Conspired to obtain confidential documents
2. Denied Jason educational services
3. Sought to obtain medical information without consent
4. Convened LCC for "John Doe" Rule S-5 proceeding
5. Submitted a Rule S-5 application containing stale and out of date information
6. Exerted undue influence on Jason to turn him against his grandparents
7. Circumvented Hearing Officer's Order
8. Discriminated against Jason by improper use of isolation and time out
9. Failed to follow behavior modification plan
10. Sought to have criminal charges filed against Jason for assaulting classmates
(Am.Compl., Count IV ¶¶ 4(a)-4(1) (paraphrased).)
Defendants incorrectly asserted the absolute position that Indiana law does not provide a cause of action for intentional infliction not connected with a physical impact. (Defs.' Reply Br. at 6-7.) Indiana law recognizes that the tort includes intentionally tortious conduct invading a legal right by its very nature likely to produce an emotional reaction. Cullison v. Medley, 570 N.E.2d 27 (Ind.1991) (adopting rule of Restatement (Second) of Torts § 46 (1965)); Charlie Stuart Oldsmobile, Inc. v. Smith, 357 N.E.2d 247, 254 (Ind.Ct.App.1976).
To support this kind of claim, a plaintiff must prove that "(1) there is a tort which invades a legal right of the plaintiff; (2) which is likely to provoke an emotional disturbance or trauma; and (3) the defendant's conduct is willful, callous, or malicious." Moffett v. Gene B. Glick Co., Inc., 621 F.Supp. 244, 285 (N.D.Ind.1985); see also Olsson v. A.O. Smith Harvestore Prod., Inc., 656 F.Supp. 644, 647 (S.D.Ind. 1987); Charlie Stuart Oldsmobile, 357 N.E.2d at 254. Plainly, intentional infliction of emotional distress requires a "host" intentional tort; that is, the defendant must commit a recognized intentional tort against a plaintiff in such a manner that the offense would likely cause emotional distress. Rogers v. R.J. Reynolds Tobacco Co., 557 N.E.2d 1045, 1056 (Ind.Ct.App. 1990).
Plaintiffs allegations of intentional wrongdoing fall into two categories, each requiring separate analysis. The first category of alleged wrongdoing involves Defendants' acts constituting malicious prosecution and abuse of process acts relating to initiating S-5 and criminal proceedings. The second category of alleged wrongful conduct contains all other acts not connected with initiating those proceedings.
Although the tort of malicious prosecution provides the kind of invasion that could support an intentional infliction of emotional distress claim, Lazarus Dept. Store, 544 N.E.2d at 516, such a claim is barred by the Tort Claims Act. Ind.Code Ann. § 34-4-16.5-3(5). Immunity provided by Tort Claims Act does not apply to specific torts but rather applies to specific conduct and logically to any liability that may arise from that conduct. Therefore, the conduct associated with initiating the Rule S-5 or criminal proceedings cannot form the basis for a viable intentional infliction of emotional distress claim. Defendants are immune from all tort liability arising from those kinds of acts. Therefore, this kind of alleged tortious conduct cannot make the Defendants liable under a theory of intentional infliction of emotional distress.
For different reasons, the second category of conduct also fails to support Plaintiffs' claim. Plaintiffs fail to allege other conduct that constitutes an intentional tort recognized in the State of Indiana; *1462 even if Plaintiffs have alleged facts sufficient to constitute some kind of tortious conduct, the conduct alleged does not constitute "an invasion of a right which by its very nature is likely to provide an emotional disturbance." Although many of Plaintiffs' allegations involve purported violations of statutory procedures or other unsavory conduct, these allegations fail to state recognized intentional torts. For example, allegations that Defendants circumvented the Hearing Officer's Order, held private conversations with Jason to turn him against his guardians, discriminated regarding discipline and solicited other parents for letters do not support any intentional tort claim. It is axiomatic that if there is no underlying intentional tort, then there can be no claim for intentional infliction of emotional distress. Rogers, 557 N.E.2d at 1056.
In sum, although Indiana law recognizes a claim for intentional infliction of emotional distress, the facts alleged by Plaintiffs either do not support such a claim or support a claim barred by the Tort Claims Act. Defendants are entitled to judgment in their favor on Count IV of Plaintiffs' Amended Complaint.
COUNT V DEFAMATION
Count V claims that Defendants Strobel, Brenton, Martin, Rice, Shockley, Velez, Boand, Anders, Mandery, Hornsby and Kinsey committed the Indiana common law intentional tort of defamation. Plaintiffs alleged that Defendants "communicated confidential information regarding [Jason] and his educational program and behavior to non-school personnel" and that these communications defamed Jason and damaged his reputation in the community. Apparently, this breach of confidentiality includes the allegation that Defendants informed teachers and students at Southwest Elementary that Jason had been hospitalized in a psychiatric unit. (Pls.' Am.Compl. ¶ 50.) Plaintiffs claim further that Defendants' alleged communications violated federal law. Plaintiffs have failed to state a claim under federal law and have failed to provide the necessary factual support for a claim under Indiana common law.
A disclosure of confidential information does not create a private cause of action for damages under federal law. Plaintiffs claim incorrectly that 20 U.S.C. § 1232g and 34 C.F.R. §§ 99.1 et seq. provide the legal basis for their claim. That statute does not provide a private cause of action. Girardier v. Webster College, 563 F.2d 1267, 77 (8th Cir.1977); Daniel B. v. Wisconsin Dept. of Public Instruction, 581 F.Supp. 585, 592 (E.D.Wis.1984), aff'd, 776 F.2d 1051 (7th Cir.1985), cert. denied, 475 U.S. 1083, 106 S.Ct. 1462, 89 L.Ed.2d 719 (1986); Price v. Young, 580 F.Supp. 1, 2 (E.D.Ark.1983). Any claim Plaintiffs have attempted to state under federal law must be dismissed.
Plaintiffs' state law defamation claim meets an equally determinative fate. Plaintiffs' two-paragraph response argument, interrogatory answers and affidavits fail to create an issue of fact whether Defendants defamed any of the Plaintiffs. Plaintiffs' interrogatory answers regarding this claim are disturbingly vague (Pls.' Interrog. Answers 19, 20, 21); affidavits submitted by Plaintiffs Carolyn and Gerald Norris in response to the summary judgment state merely that "Jason's day to day affairs regarding school became common knowledge throughout the Greenwood community due to defendant's [sic] improper discussions with non-school personnel." (Carolyn Norris Aff. ¶ 19; Gerald Norris Aff. ¶ 19.) Plaintiffs do not seem to understand that a summary judgment challenge requires them to state "specific facts" supporting their claim; a re-hash of general allegations about purported defamatory information does not state such facts. Fed. R.Civ.P. 56(c).
A claim requires specific facts from witnesses/affiants qualified to state them based upon personal knowledge, not third-party supposition about what might have transpired. Fed.R.Civ.P. 56(e). Plaintiffs' other submission completely fails to support a claim of defamation. An affidavit from Ms. Betty Firth stated that
I was informed by Mr. Velez that Jason Norris was being removed or had been *1463 removed from the school and that he would not need the letter which had been requested.
....
[Mr.] Velez made statements to me and my son concerning Jason that were both derogatory and untrue. I am also aware of other statements made by school personnel to myself and to my Terry concerning Jason that were untrue and derogatory, particularly a statement made by Terry's teacher to the effect that Jason "went crazy, probably on drugs and that he was in the hospital."
(Firth Aff. ¶¶ 5, 7.) The first sentence does not support the fact that Defendants made a defamatory statement; it merely recites a "true" fact. A person cannot be liable for defamation if the alleged statement is true. Ind.Code Ann. § 34-1-5-2 (Burns 1986); Bone v. City of Lafayette, Ind., 919 F.2d 64 (7th Cir.1990); Near East Side Comm. Org. v. Hair, 555 N.E.2d 1324, 1330 (Ind.Ct.App.1990); Elliot v. Roach, 409 N.E.2d 661, 681 (Ind.Ct.App.1980). The second sentence provides an unspecific, unsupported conclusion insufficient to support a claim. The third sentence is similarly conclusory and otherwise fails to state a fact based upon personal knowledge; a belief about a statement made to third party does not state a fact based on personal knowledge.
Thus, Plaintiffs have failed to produce specific facts supporting a statement whose falsity is further supported by other specific facts. When a summary judgment motion is opposed by allegations and not facts, the motion must succeed. Defendants are entitled to judgment in their favor on Count V of Plaintiffs' Amended Complaint.
COUNT VI EDUCATIONAL MALPRACTICE
Count VI claims that Defendants GCSC, JCSSC, Strobel, Brenton, Martin, Rice, Shockley, Velez, Kinsey, Mandery, Boand, Anders, Alger, Westcott and Nierman committed the Indiana common law tort of educational malpractice. Plaintiffs allege the Defendants breached their legal duty to provide Jason a "free appropriate public education" and thereby caused him harm, injury and deprived him of academic progress. Plaintiffs admit that no Indiana court has recognized the cause of action stated in this Count. (Pls.' Br.Resp. at 8.) In fact, no published Indiana appellate decision has even discussed the possibility of establishing this cause of action. This federal court must follow established Indiana law or predict what the Indiana Supreme Court would do were it to address an unsettled area. Creating a tort of this nature involves a policy decision this Court is not able to make. Count VI must be dismissed because it fails to state a claim upon which relief may be granted under Indiana law.
COUNT VII COMMUNICATION OF CONFIDENTIAL INFORMATION
Count VII claims Defendants GCSC, JCSSC, Strobel, Brenton, Martin, Rice, Shockley, Mandery, Hornsby, Anders, Boand, Velez, Kinsey and Nierman violated Plaintiffs' "right to privacy and confidentiality by certain acts." Plaintiffs allege the following acts violated their rights in a manner providing a cause of action to recover money damages:
1. Defendants communicated certain confidential information about Jason's educational records, psychological records and medical records to individuals not employees, agents or representatives of the school corporations;
2. Defendant Rice used an out-dated consent form to receive confidential information from Dr. George McAfee, who treated Jason;
3. Defendants communicated confidential information to the LCC under a "John Doe" submission;
4. Defendants communicated the records and information to the Indiana State Department of Education; and,
5. Defendant Velez communicated confidential information to other parents.
(Pls.' Am.Compl. Count VII, ¶ 2(a)-(e) (paraphrased).)
Defendants' initial argument seeking to dismiss this Count overestimates the burden on a party stating a claim in a *1464 pleading. Rule 8 of the Federal Rules of Civil Procedure makes plain that a party need only allege facts giving notice of the occurrence allegedly creating liability; a party need not state legal theories in its pleading. Fed.R.Civ.P. 8. Defendants' Interrogatory 30 does not provide a basis for Defendants' mistaken position that Plaintiffs limited their legal theories for relief to the answer provided to that interrogatory. The correct question is whether Count VII states a cause of action under any legal theory; if so, then the question is whether the colorable claim(s) is sufficiently supported to survive a summary judgment.
Plaintiffs have asserted two legal theories supporting their claim for damages because the Defendants "did violate the plaintiff's right to privacy and confidentiality." First, Plaintiffs claim Count VII states a § 1983 claim for damages; that is, a damage claim arising from a violation of federal law. Second, Plaintiffs claim that Defendants' conduct constitutes the Indiana common law intentional tort of invasion of privacy.
Defendants argued that Count VII does not state a sufficient § 1983 claim because the Count does not say "this is a § 1983 claim." A complaint need not state specifically that a particular claim arises under "42 U.S.C. § 1983." These "magic words" are not required to state a valid § 1983 claim; the substance of the allegations provides notice that the claim arises under the federal Constitution. As the Supreme Court stated:
By the plain terms of § 1983, two and only two allegations are required in order to state a cause of action under that statute. First, the plaintiff must allege that some person has deprived him of a federal right. Second, he must allege that the person who has deprived him of that right acted under color of state or territorial law.
Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980). Thus, the question is whether the procedurally-proper § 1983 claim alleges a proper substantive claim actionable under that procedural law.
Section 1983 does not define substantive injuries but rather provides a remedy for injuries defined by other federal laws. In essence, § 1983 was designed to open federal courts to private citizens to provide them a remedy from State actions that deprived the citizens of rights guaranteed by federal law. Mitchum v. Foster, 407 U.S. 225, 238-39, 92 S.Ct. 2151, 2159-60, 32 L.Ed.2d 705 (1972). The statute provides that
Every person who, under color of [state law], subjects, or causes to be subjected, any citizen of the United States ... 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.
42 U.S.C.A. § 1983 (West 1981). Plaintiffs properly allege that the Defendants' acts were intentional and were performed in bad faith. Daniels v. Williams, 474 U.S. 327, 330-31, 106 S.Ct. 662, 664-65, 88 L.Ed.2d 662 (1986). Thus, Count VII properly states a cause of action if the allegations could possibly support the claim that Defendants deprived Plaintiffs of a "right" provided by federal statutes or the federal Constitution.
Plaintiffs allege that Defendants violated Plaintiffs' "right to privacy and confidentiality." (Pls.' Am.Compl., Count VII ¶ 2.) This alleged federal "right" could have as its source federal statutes or the United States Constitution. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980); Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981); see also Wright v. City of Roanoke Redev. & Hous. Auth., 479 U.S. 418, 107 S.Ct. 766, 93 L.Ed.2d 781 (1987). Defendants attempted to ferret out Plaintiffs' legal theories with Defendants' Interrogatory Number 31. Plaintiffs replied that the federal statute providing the right of privacy and confidentiality of which Defendants deprived them was the Family Educational Rights and Privacy Act ("FERPA"), 20 U.S.C.A. § 1232g (West 1990) and connected federal regulations, 34 C.F.R. § 99.1 et seq. (1990). Plaintiffs *1465 (mis)cited Griswold v. Connecticut, 381 U.S. 479, 85 S.Ct. 1678, 14 L.Ed.2d 510 (1965), as their legal "theory" that Defendants' alleged conduct violated a right guaranteed by the Constitution.
The statutory basis alleged for Plaintiffs' claim is insufficient to support a § 1983 action for damages. The FERPA does not provide a private right of action. Tarka v. Franklin, 891 F.2d 102 (5th Cir. 1989), cert. denied, 494 U.S. 1080, 110 S.Ct. 1809, 108 L.Ed.2d 940 (1990); Klein Indep. Sch. Dist. v. Mattox, 830 F.2d 576, 579 (5th Cir.1987), cert. denied, 485 U.S. 1008, 108 S.Ct. 1473, 99 L.Ed.2d 702 (1988); Fay v. South Colonie Cent. Sch. Dist., 802 F.2d 21 (2nd Cir.1986); Girardier, 563 F.2d 1267. The FERPA provides expressly that the Secretary of Education is responsible for enforcing the provisions and protections of FERPA; Section 1983 does not create a private right of action for damages where the federal statute provides an exclusive administrative enforcement mechanism. Halderman, 451 U.S. 1, 101 S.Ct. 1531; Smith v. Robinson, 468 U.S. 992, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984); Klein Indep. Sch. Dist., 830 F.2d at 580; Fay, 802 F.2d at 33.
Note well the distinction between an interest in "confidentiality" and a privacy interest. As discussed by the Seventh Circuit in Pesce v. J. Sterling Morton High Sch., Dist. 201, 830 F.2d 789, 796-97 (7th Cir.1987), whether information is "confidential" or not is determined by statutory and common law. In contrast, whether capture or disclosure of information violates one's right to privacy is a matter of Constitutional law requiring a distinct analysis. See also Whalen v. Roe, 429 U.S. 589, 600, 97 S.Ct. 869, 876, 51 L.Ed.2d 64 (1977).
The next question is whether Count VII alleges properly that Defendants deprived Plaintiffs of a right guaranteed by the United States Constitution. Does the Constitution itself guarantee a "right of privacy" in a student's educational records? If so, is a person "deprived" of such a right by the conduct in which Defendants allegedly engaged?
Although the extent of the interest is not entirely clear, an individual has a constitutionally protected interest in avoiding disclosure of some personal matters. Whalen, 429 U.S. at 599, 97 S.Ct. at 876; United States v. Westinghouse Elec. Corp., 638 F.2d 570, 577 (3rd Cir.1980); see generally 1 Sheldon H. Nahmod, CIVIL RIGHTS AND CIVIL LIBERTIES LITIGATION, § 3.18 at 225 (1991). This interest may extend to a student's interest in his records; if it does, then the interest must be balanced against the government's interest in disclosure to determine whether the student has been "deprived" of a right. Detroit Edison Co. v. NLRB, 440 U.S. 301, 313-17, 99 S.Ct. 1123, 1130-32, 59 L.Ed.2d 333 (1979); Westinghouse, 638 F.2d at 578-79. Some cases dealt directly with the issue whether information in certain records may be disclosed for certain purposes. See e.g., Westinghouse, 638 F.2d at 578-79; Detroit Edison, 440 U.S. at 313, 99 S.Ct. at 1130. These cases make plain that the purpose and extent of disclosure are critical factors balanced against the individual's legitimate privacy expectation (if any). For example, even very personal information may be disclosed for a limited purpose if that purpose is of superior importance. See Schail by Kross v. Tippecanoe County School Corp., 864 F.2d 1309, 1322 n. 19 (7th Cir.1988) (inter-departmental disclosure of confidential medical information permissible because of limited use).
Count VII alleges that Defendants communicated confidential information from Jason's records to non-school corporation personnel. (Pls.' Am.Compl., Count VII ¶ 2(a), (c) & (d).) The Norris affidavits bear out that these disclosures were to the LCC regarding the S-5 hearing and to the Indiana Department of Education regarding the same. While the communications likely involved information over which Jason had a legitimate privacy interest, that interest was outweighed by the use of the information. Although the information was communicated to non-school personnel, it was within the State educational system as provided by State law. A student does not have a legitimate expectation that information *1466 potentially related to his educational needs will not be available within the educational system. Regardless whether the Defendants had a proper motive in bringing the S-5 proceeding, their communication of information from Jason's records was not so broad as to violate his right to privacy.
Count VII alleges further that Defendant Rice improperly used a release form to obtain psychological information from Jason's psychologist, Dr. George McAfee. Defendants denied this allegation. Neither party submitted evidence in support of or opposition to the factual sufficiency of this allegation. The constitutional right of privacy as elusive and amorphous as it is does not protect against the wrong alleged. As described in Whalen, the Constitution prohibits the disclosure of information over which one has a legitimate privacy interest. The methods used to obtain information are limited by the fourth amendment directly. Although obtaining psychological records allegedly under false pretenses could be prohibited by State or federal laws, that conduct does not deprive a person of a right guaranteed by the Constitution.
Plaintiffs contend that Defendant Velez "communicated confidential information regarding the education of Jason Norris to parents of other children in Jason Norris' class...." Affidavits from Defendant Velez and Betty Firth do not support a § 1983 claim that Defendants deprived Plaintiffs of their right to privacy. Ms. Firth states merely that Defendant Velez made statements that were "both derogatory and untrue"; her affidavit does not even support the minimally sufficient element that the information came from Jason's records. The Constitution does not prohibit disclosure of information learned during the ordinary course of instruction; if prohibited at all, it is a matter of state law (see below).
Defendants argue that Plaintiffs' State law claim demands a summary judgment because three of the four incidents occurred more than 180 days prior to the date Plaintiffs filed their tort claims notice, November 9, 1989. This is correct. The only alleged incident not subject to this affirmative defense is that Defendant Velez "communicated confidential information regarding the education of [Jason] to parents of other children in [Jason's] class...." As discussed in regard to Count IV, Ms. Firth's affidavit is the only viable source of facts supporting the allegation of invasion of privacy. Ms. Firth's affidavit states no specific facts supporting Plaintiffs' claims; in contrast, Defendants' submitted an affidavit from Mr. Velez stating that he discussed no confidential information with Ms. Firth. (Velez Aff. ¶ 5.) Because Plaintiffs failed to state specific facts supporting a reasonable finding that Defendants committed the alleged tort within the limitations period, Plaintiffs cannot recover under this theory.
Count VII will be dismissed.
COUNTS VIII THROUGH XIV
These seven counts state essentially the same factual allegations. Each count states a different cause of action (each purportedly predicated on a distinct legal basis) arising from the facts alleged. In short, Plaintiffs allege three factual events in support of these claims: (1) Defendants convened the LCC without providing notice or opportunity for a hearing as required by the IDEA; (2) Defendants submitted confidential, out-of-date information to the LCC and others; and, (3) Defendants instituted a Rule S-5 proceeding to retaliate against Plaintiffs for requesting a Rule S-1 hearing.
These factual allegations state causes of action that may be placed into three different general categories. These categories are described as follows:
(1) Defendants' conduct violated the IDEA because Jason's educational plan was not in substantive compliance with IDEA;
(2) Defendants' conduct violated the United States Constitution because Defendants failed to follow procedures required by IDEA;
(3) Defendants' conduct towards Plaintiffs constituted an independent violation of *1467 rights guaranteed by the United States Constitution.
Defendants' Motion for Summary Judgment argued that Counts VII through XIV, each of which states one or more of the types of claims listed above, should be dismissed on jurisdictional grounds. Defendants argue that Plaintiffs failed to exhaust their administrative remedies prior to filing this district court action seeking the relief requested in Counts VII through XIV. (Defs.' Br. Support Mot.Summ.J. at 20-25.) Defendants' overly-blunt argument attempts to roll over Plaintiffs' claims by ignoring half of the allegations and misconstruing others. Defendants seem to misunderstand that for a claim to be barred for failure to exhaust administrative remedies, the claim must actually state a cause of action seeking a remedy that could be obtained through the administrative process. If a count states a claim independent from any relief available under an administrative process, then it is irrelevant whether the plaintiff "exhausted" any administrative remedy. One cannot exhaust that which does not exist.
Category One: Claim Directly Under the IDEA (Count XII)
Count XII of Plaintiffs' Amended Complaint states a claim that is not actionable unless and until a statutorily-provided review process has been completed. This claim is based on substantive and procedural rights created by federal statute, 20 U.S.C.A. §§ 1401 et seq. (West 1990 & Supp.1992). A federal district court's jurisdiction over such claims is derived solely from § 1415(e)(1) & (2). Those sections require a plaintiff to seek the administrative review described by § 1415(b)(2) & (c), if applicable, prior to seeking review in a federal district court. Honig v. Doe, 484 U.S. 305, 312, 108 S.Ct. 592, 598, 98 L.Ed.2d 686 (1988); Doe v. Alabama State Dept. of Educ., 915 F.2d 651, 659 (11th Cir.1990); Cox v. Jenkins, 878 F.2d 414, 418 (D.C.Cir. 1989); Christopher W. v. Portsmouth Sch. Comm., 877 F.2d 1089, 1093 (1st Cir.1989); Mrs. W. v. Tirozzi, 832 F.2d 748, 756 (2nd Cir.1987); Riley v. Ambach, 668 F.2d 635, 640 (2d Cir.1981). Thus, to bring a district court action seeking redress for an alleged violation of a substantive or procedural right created by the IDEA, the plaintiff must prove that the administrative review provided by § 1415(b)(2) & (c) is no longer available to provide relief.
The type of review required by § 1415(b)(2) & (c) is available in Indiana by way of a Rule S-1 hearing (511 Ind.Admin.Code tit. 7-1-3(g)) and/or an appeal to the Board of Special Education Appeals ("BSEA") (Id. at 7-1-3(h)). Defendants argued that Plaintiffs failed to satisfy § 1415(e)(2) because Plaintiffs failed to use either of these options to seek further review of Jason's situation. Plaintiffs responded that there was no logic in further "review" because a previous Rule S-1 hearing resulted in findings and a decision favored by Plaintiffs. Plaintiffs admit they were not "aggrieved" by the Hearing Officer's findings and decision; in fact, they desired to have that order enforced.
The administrative review process prescribed by § 1415(b)(2) & (c) applies when a party is "aggrieved" by a decision of a hearing officer. A party "aggrieved" by a presumably adverse decision must then "appeal" that decision to the BSEA. If a party is aggrieved by the hearing officer's findings and decision, then the party cannot bring a federal district court action until the party has appealed to the BSEA. However, if a student is not "aggrieved" by a hearing officer's "findings and decision," but merely desired to have the resulting order enforced, does the student meet the jurisdictional requirements of § 1415(e)(2)?
This question discloses that there is more to jurisdiction than merely "exhausting" administrative remedies. The parties in this matter repeat the phrase "failure to exhaust administrative remedies" apparently without looking at the law applicable to this case. That phrase captures only one facet of jurisdiction; this Court's jurisdiction over IDEA matters is controlled strictly by § 1415(e) not by any single phrase. A hearing officer determines whether a student is receiving a "free appropriate *1468 public education." Section 1415(e)(1) provides that a hearing officer's decision will be final, except that it may be appealed to the BSEA. The party bringing the appeal need not have been aggrieved by the hearing officer's findings and decision. Any other type of review or action requires that some party be "aggrieved" by the hearing officer's findings and decision. Regardless whether the party is "aggrieved" or merely bringing an "appeal," the party must next seek review from the BSEA. This level of review cannot be side-stepped. This Court has jurisdiction only if a party is "aggrieved" by a decision of the BSEA any other situation requires further administrative review.
Plaintiffs incorrectly argue that they were in a "catch-22" situation because they were not "aggrieved" by any order but rather faced a school district unwilling to abide by a valid order. This is incorrect; an adequate remedy was plainly available. When a school district ignores a valid final order, the proper remedy is enforcement of that order. That remedy is available through the administrative process created by Indiana law, which allows private individuals to bring a complaint to the Division of Special Education that a public agency is taking action contrary to free appropriate public education. 511 Ind.Admin.Code tit. 7-1-7 (1988). The investigator's finding is binding on the public agency and may be appealed to the Commission on General Education; failure to comply with the finding may result in loss of State and federal funding. Id.
Plainly, a complaint that a school ignored a hearing officer's order may be remedied through the administrative process. Plaintiffs failed to seek this type of required remedy. If Plaintiffs did not receive a favorable response from the investigator, then they were required to appeal to the Commission on General Education. If Plaintiffs were "aggrieved" by the Commission's decision (for example, by a "finding" that the school district had properly implemented the order), then Plaintiffs would meet the requirement provided by § 1415(e)(2) and could bring a federal suit to force the school to comply with the IDEA.
Seemingly accepting the obvious conclusion that further administrative review was available when they filed this action, Plaintiffs argue they were excused from exhausting those avenues of potential relief. Citing Tirozzi, 832 F.2d at 750, Plaintiffs argue that exhaustion of administrative remedies is not required where it would be "futile, inadequate or impractical." (Pls.' Br.Opp'n Summ. J. at 21-22.) Plaintiffs' arguments addressing this issue patently disclose that Plaintiffs simply refused to seek out their available curative remedies. Instead, Plaintiffs had seemingly resolved that Defendants were not going to comply and thus Plaintiffs desired to make the Defendants pay for that act. The IDEA does not provide a mechanism to punish a school district through a monetary penalty imposed by a federal district court. When the administrative review process is used properly, an offending school district will either comply or lose valuable State and federal funding.
Plaintiffs failed to seek enforcement through an investigator and therefore cannot claim that exhausting the administrative review process would be "futile." Cox v. Jenkins, 878 F.2d 414 (D.C.Cir.1989) (noncompliance with order must be addressed through administrative process). A party seeking redress available under the IDEA bears the burden of showing why the party should be excused from exhausting all administrative review avenues available to achieve the desired remedy. Id. at 419. There is absolutely no evidence that further review by an agency entirely distinct from the Defendants would not provide an appropriate remedy.
Plaintiffs argue also that the monetary damages sought by Count XII are available under the IDEA and that by requesting this type of relief they were not required to exhaust their administrative remedies. (Pls.' Br.Opp'n Summ. J. at 24.) Plaintiffs seem to contend that because the "relief" of damages is not available through the administrative process, that they may proceed directly to a district *1469 court if that is the remedy they would prefer. This argument represents a profound misunderstanding of § 1415(e)(2) and Anderson v. Thompson, 658 F.2d 1205, 1213 (7th Cir.1981). The Anderson court held that § 1415(e)(2), which provides that a court "shall grant such relief as the court determines is appropriate," allows a district court to award limited damages when "appropriate." Such damages are not for general inconvenience and are not exemplary, but rather are limited to the cost of the alternative educational services purchased at the parents' expense. Anderson, 658 F.2d at 1214.
However, these damages are available only if the plaintiff meets the jurisdictional requirements of § 1415(e)(2). Before a district court may consider whether monetary damages are available, the plaintiff must have sought the review and relief available (compliance) through the administrative process. If that process fails, and the plaintiff can prove the elements set forth in Anderson, then and only then may a district court award these limited damages. Plainly, a plaintiff cannot avoid the jurisdictional requirements merely by requesting a form of relief available from the district court only.
In sum, any action claiming a violation of the IDEA or seeking to enforce a right created by the IDEA must be preceded by a complete exhaustion of the scheme of administrative review created by the Act. The IDEA required Plaintiffs to seek available, curative administrative remedies from the State of Indiana; Plaintiffs failed to do so without justifiable excuse and therefor failed to satisfy the jurisdictional requirements imposed plainly by the IDEA. Count XII must be dismissed for a lack of jurisdiction.
Category Two: Constitutional Due Process Claim for Failure to Follow Procedures Required By the IDEA
Plaintiffs claim that Defendants' failure to follow the hearing procedures required by the IDEA violates the Constitution and provides Plaintiffs with a cause of action for damages through the Civil Rights Act of 1871, 18 U.S.C. § 1983. This kind of claim demonstrates a fundamental misunderstanding of the nature of the Constitutional right to due process of law. That right is created and defined by the Fourteenth Amendment of the United States Constitution and is neither defined nor authoritatively interpreted by procedures established by federal statutes.
Even though a hearing may be called a "due process" hearing by a statute or regulation, it does not necessarily mean that failure to follow the procedures set for that hearing (or even failing to have a hearing) will violate the fourteenth amendment.[5] The procedural rights conferred by the Constitution are sui generis and are completely independent of any rights created by federal statute. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 534, 105 S.Ct. 1487, 1489, 84 L.Ed.2d 494 (1985) (although "entitlements" may be conferred by local law, "due process" is defined by the Constitution). A "right" to a particular hearing process conferred by the IDEA is not founded in the Constitution and therefore cannot be enforced or remedied through a claim based upon an entirely distinct constitutional right. A defendant can violate the Constitution only by violating a right created by the Constitution itself. See generally 2 Ronald D. Rotunda, et al., CONSTITUTIONAL LAW § 17.5 at 237 (1985).
To the extent that Counts VII through XII state a "constitutional" claim dependent upon a violation of the IDEA, these claims must be dismissed.
Category Three: Direct Violations of United States Constitution
Given the foregoing, there is but a single jurisdictional avenue available to Plaintiffs. *1470 To state an actionable § 1983 claim, Plaintiffs must allege that Defendants violated a constitutionally protected liberty interest that is, an interest arising solely under the Constitution. Austin v. Brown Local School Dist., 746 F.2d 1161, 1164 (6th Cir.1984). The Supreme Court has stated that "maintenance of an independent due process challenge to state procures would not be inconsistent with the [IDEA's] comprehensive scheme." Smith v. Robinson, 468 U.S. at 1014 n. 17, 104 S.Ct. at 3469 n. 17. A § 1983 claim based upon the Due Process Clause of the Fourteenth Amendment is distinct from any right or interest created by the IDEA. Therefore, the Plaintiffs must allege and prove all of the elements required for a "standard" violation of that amendment. Plaintiffs claim that Defendants' conduct deprived Plaintiffs of the their "right of privacy," their "due process rights" and their "First Amendment rights." These claims are addressed serially below.
Right of Privacy
Whether Defendants' conduct deprived Plaintiffs of their right to privacy has been discussed thoroughly in section VII above. Counts VII and IX state § 1983 claims alleging a violation of this constitutional right. For the reasons stated in section VII, these claims must be dismissed for failure to state a claim upon which relief can be granted.
Fourteenth Amendment Due Process
Counts VIII, XI, XIII and XIV each claim (with varying degrees of obscurity) that Defendants' alleged conduct deprived Plaintiffs of their due process rights. Before due process can become an applicable concept, a life, liberty, or property interest must be identified. See generally 1 Sheldon H. Nahmod, CIVIL RIGHTS AND CIVIL LIBERTIES LITIGATION, § 3.08 at 167 (1991). To be deprived of a due process right, one must be deprived of a liberty or property interest without the proper degree of legal process due for that deprivation. The issue here is whether Defendants' alleged conduct could possibly support a claim that Defendants deprived Plaintiffs of this constitutional right.
Plaintiffs claim that Defendants convened a LCC without observing proper statutory procedures, submitted confidential information to the LCC improperly and initiated a Rule S-5 hearing in retaliation for Plaintiffs' request for a Rule S-1 hearing. None of these allegations can support a claim that Plaintiffs were "deprived" of a liberty or property interest; at the most, these allegations assert that Defendants attempted to deprive Plaintiffs of certain interests. The fourteenth amendment is not a general "policing" provision through which federal courts assure that State agencies follow their own procedures and act with honorable intentions. A plaintiff is not "deprived" of a liberty or property interest when a State agency merely initiates a residential placement proceeding, even with the worst intentions. Even assuming that guardians have a constitutionally-protected interest in retaining control over their wards, a guardian is not "deprived" of that right unless the ward is actually removed without sufficient process.
Counts VIII, XI, XIII and XIV must be dismissed to the extent they claim violations of the Plaintiffs' due process rights; their allegations fail to state a claim upon which relief can be granted.
First Amendment
Asserting yet another legal basis for a claim based upon the same factual allegations, Plaintiffs argue that Defendants' conduct regarding the LCC and Rule S-5 proceedings deprived Plaintiffs of their first amendment rights. It is plain that convening a LCC "in reckless disregard of plaintiff's rights to due process" does not state a violation of the first amendment. Similarly, submitting records to the LCC "in reckless disregard of plaintiff's rights to due process" also does not state a violation of the first amendment. Plaintiffs allege further that Defendants convened the LCC and submitting the records for the purpose of retaliating against Plaintiffs for the "exercise of their rights to due process under federal and state law."
Does the first amendment prohibit state officials from convening "retaliatory" LCC *1471 proceedings in response to a student's request for a Rule S-1 hearing?[6] A request for a Rule S-1 hearing is a private act performed pursuant to State law and is not an exercise of "free speech"; Plaintiffs fail to state a colorable claim on that clause of the first amendment.
Plaintiffs' allegation may be based on the petition clause of the first amendment, which provides that "Congress shall make no law ... abridging ... the right of the people ... to petition the Government for a redress of grievances." U.S. Const. amend I. Plaintiffs may be asserting the theory that requesting a Rule S-1 hearing is an exercise of Plaintiffs' first amendment right to petition the government for redress. If the LCC proceeding were intended to deter Plaintiffs' from exercising that right, then the argument concludes that such conduct would be an impermissible burden on Plaintiffs' first amendment rights.
A properly-pleaded count may state a § 1983 claim for damages if a person acting under color of State law deprives another of his first amendment right to petition the government. The fourteenth amendment incorporates the first amendment's right to petition clause and thereby requires the States to abide by that constitutional standard. Hague v. CIO, 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423 (1939) (fourteenth amendment incorporates right to petition); Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961) (§ 1983 provides cause of action against State actors for violations of fourteenth amendment). The petition clause must be read together with the free speech clause; the right to petition overlaps and is an assurance of a particular freedom of expression. McDonald v. Smith, 472 U.S. 479, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985). The right to petition is subject to the same constitutional analysis as the right to free speech. Wayte v. United States, 470 U.S. 598, 105 S.Ct. 1524, 84 L.Ed.2d 547 (1985).
Thus, as with the distinction between statutorily-required procedures and constitutionally-required due process, there is a distinction between a statutorily-provided petition process and a constitutionally-required petition process. Merely deterring a person from petitioning a State entity for a hearing does not necessarily raise a constitutional issue. A plaintiff must prove that there are free speech concerns in addition to the act of petitioning the State for redress. Day v. South Park Indep. Sch. Dist., 768 F.2d 696, 701 (5th Cir.1985), cert. denied, 474 U.S. 1101, 106 S.Ct. 883, 88 L.Ed.2d 918 (1986). The petition must present a matter of public concern and not merely a private dispute between the parties. Id. at 701 n. 17. A request for a hearing on a matter of private concern is not protected by the petition clause or any other first amendment right. Rankin v. McPherson, 483 U.S. 378, 384, 107 S.Ct. 2891, 2896, 97 L.Ed.2d 315 (1987); Griffin v. Thomas, 929 F.2d 1210, 1215 (7th Cir.1991); Gray v. Lacke, 885 F.2d 399, 410 (7th Cir.1989), cert. denied, 494 U.S. 1029, 110 S.Ct. 1476, 108 L.Ed.2d 613 (1990); Belk v. Town of Minocqua, 858 F.2d 1258 (7th Cir.1988); Phares v. Gustafsson, 856 F.2d 1003 (7th Cir.1988); Day, 768 F.2d at 703; Vukadinovich v. Bartels, 853 F.2d 1387, 1390 (7th Cir.1988).[7]
A court must examine whether a petition touched upon a matter of public *1472 concern by looking at content, form and context of the petition. Connick v. Myers, 461 U.S. 138, 147-48, 103 S.Ct. 1684, 1690-91, 75 L.Ed.2d 708 (1983); Gray, 885 F.2d at 410; Hesse v. Board of Educ., 848 F.2d 748, 751 (7th Cir.1988), cert. denied, 489 U.S. 1015, 109 S.Ct. 1128, 103 L.Ed.2d 190 (1989). There are no firm standards by which the law can judge all first amendment deprivation cases; rather, the general principles cited above must be applied to the facts of each case. Gray, 885 F.2d at 410; Knapp v. Whitaker, 757 F.2d 827, 840 (7th Cir.), cert. denied, 474 U.S. 803, 106 S.Ct. 36, 88 L.Ed.2d 29 (1985).
Plaintiffs allege that Defendants' conduct deprived them by attempting to deter Plaintiffs from filing for a Rule S-1 hearing. Plaintiffs' request for a hearing was an attempt to resolve a problem between Plaintiffs and Defendants only. This is similar to the "petition" alleged in Gray, where the plaintiff/employee complained to her supervisor in an attempt to stop sexual harassment against the plaintiff. The Seventh Circuit held that the communication related solely to the resolution of a personal problem. 885 F.2d at 411. Similarly, in Griffin, the plaintiff's complaint about her teaching assignments state an unprotected private concern. 929 F.2d at 1215. In this matter, although Plaintiffs sought to redress a wrong against Jason Norris, their petition was solely of private concern Plaintiffs were not petitioning to change a law, but merely to have it applied in their particular case.
In sum, Plaintiffs have failed to state a colorable claim arising under the first amendment. Thus, Counts X, XIII and XIV must be dismissed to the extent they claim violations of the first amendment.
CONCLUSION
Each of Plaintiffs' claims is either legally or factually insufficient to provide relief. Although some of Plaintiffs' allegations may have stated colorable claims, relief for those claims was foreclosed by jurisdictional grounds or trumped by affirmative defenses. An Order accompanying this Entry will dismiss Counts VI through XIV and direct the Clerk to enter Judgment in favor of the Defendants on Counts I through V.
NOTES
[1] This Act was called the "Education of the Handicapped Act" prior to its amendment in 1990. See Pub.L. 101-476, § 901(a)(1).
[2] In support of their malicious prosecution claim, Plaintiffs also alleged that Defendants submitted confidential information to the LCC without Plaintiffs' consent. (Id. ¶ 4.) Unveiling the "kitchen sink" style of pleading manifest in the remainder of the Amended Complaint, Plaintiffs add just about any allegation of conduct that disturbed them, whether or not it is connected to the legal theory at issue.
[3] Note that the school corporation Defendants cannot be liable for this tort regardless whether the employees were acting within the scope of their employment. If the employees were acting within the scope of their employment a situation to which the principle of respondeat superior applies then the Tort Claims Act provides immunity for the school corporation Defendants. If the employees' actions were outside the scope of their employment, then the bridge of liability created by respondeat superior would be absent and the school corporations could not be liable for the employees' acts. Shelby v. Truck & Bus Group Div. of GMC, 533 N.E.2d 1296, 1298 (Ind.Ct.App.1989); Gomez v. Adams, 462 N.E.2d 212, 222-23 (Ind.Ct.App. 1984). In either of the two possible situations, the school corporation Defendants would not be liable for this type of tortious conduct.
[4] No published decision regarding the Indiana Tort Claims Act has addressed directly whether abuse of process liability falls within the Act's umbrella of immunity.
[5] There should be no mystery that § 1983 provides a cause of action for two distinct types of deprivations. First, that section provides a cause of action against State actors if they deprive a person of a right created by a federal statute. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980). Second, § 1983 provides a cause of action against State actors if they deprive a person of a right created by the United States Constitution.
[6] Note that this allegation is categorically different from a situation where a public employee is fired or discriminated against in retaliation for exercising his or her right to free speech or worship. See e.g., Rutan v. Republican Party of Illinois, 497 U.S. 62, 110 S.Ct. 2729, 111 L.Ed.2d 52 (1990); Pickering v. Board of Educ., 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968); Johnston v. Koppes, 850 F.2d 594 (9th Cir.1988). In those cases, a person's termination is directly linked to a fundamental exercise of free speech; there is no question that the speech is protected and that the employer's conduct would deter the exercise of that protected speech.
[7] This is distinguishable from a person's associational rights, which do not require that the person's associational activity relate to a matter of public concern. Shneider v. Indiana River Comm. Coll. Found., 875 F.2d 1537 (11th Cir. 1989). However, associations for commercial gain are not entitled to first amendment protection. Rothner v. City of Chicago, 725 F.Supp. 945 (N.D.Ill.1989), aff'd, 929 F.2d 297 (7th Cir. 1991).
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750 F.2d 703
36 Fair Empl.Prac.Cas. 883,35 Empl. Prac. Dec. P 34,824, 40 Fed.R.Serv.2d 1059,17 Fed. R. Evid. Serv. 495
Willard CRIMM, Appellant,v.MISSOURI PACIFIC RAILROAD COMPANY, a corporation, Appellee.
No. 83-2363.
United States Court of Appeals,Eighth Circuit.
Submitted June 11, 1984.Decided Dec. 19, 1984.
Louis Gilden, St. Louis, Mo., for appellant.
Richard E. Jaudes and Bradley S. Hiles, St. Louis, Mo., for appellee.
Before BRIGHT, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and McMILLIAN, Circuit Judge.
McMILLIAN, Circuit Judge.
1
Willard Crimm appeals from a final judgment entered in the District Court1 for the Eastern District of Missouri upon a jury verdict in favor of his former employer, Missouri Pacific Railroad Company (MoPac), in an action for damages under the Age Discrimination in Employment Act of 1967, 29 U.S.C. Sec. 621 (1982) (ADEA). For reversal appellant argues that the district court erred in (1) giving a verdict director instruction which confused and misled the jury and which was contrary to the law, (2) refusing to give a circumstantial evidence instruction, (3) limiting cross-examination about the female worker's shoplifting conviction and prior drug use, (4) refusing to admit evidence concerning MoPac's Senior Transition Program, (5) refusing to grant a mistrial after a juror disclosed during trial that he had been accused of sexual harassment, (6) refusing to admit into evidence appellant's deposition testimony, (7) taking judicial notice of an EEOC regulation on strict liability and presenting it to the jury as law, (8) admitting handwritten notes and an investigation report, (9) refusing to admit into evidence appellant's opinion testimony concerning the ultimate factual issue, and (10) refusing to allow appellant to argue or comment on certain admitted evidence. For the reasons discussed below, we affirm the judgment of the district court.
2
Appellant was 60 years old when he retired in April 1982 from the position of Superintendent of the St. Louis Terminal Division for MoPac. He claims that he was forced to resign because of his age. MoPac alleges that appellant was terminated because he sexually harassed a subordinate.
3
Appellant began working for MoPac in 1943 and worked his way up through the ranks to Superintendent of the St. Louis Terminal Division. Appellant had the ultimate authority to transfer, promote, and terminate the Division's 2,000 employees and personally participated in the hiring of all Division employees.
4
Appellant hired Diana Austin as a laborer in July 1980 and assigned her to the Division's Dupo, Illinois, train yard. From January 1981 to October 1981, Austin contacted appellant monthly by telephone concerning a transfer to a clerk's position. Following a telephone conversation on October 6, 1981, appellant visited Austin's home.
5
The events which took place at Austin's home are disputed. Appellant testified that he stood inside the door and talked to Austin for five to eight minutes regarding her complaint about her union chairman. Austin testified that appellant discussed the transfer to the clerk's position and following the conversation made sexual advances to her. He allegedly embraced her, kissed her, and attempted to put his hand under her sweater and to lead her into the bedroom. Austin resisted and appellant left.
6
Austin discussed the incident with her boyfriend, Joe Klaus, and her sister, Deborah Converse. Converse testified that she observed appellant holding Austin and that she answered the telephone when appellant later called Austin about the job. Klaus called appellant's house twice on the day of the incident and also contacted an attorney.
7
On October 8, 1981, Austin complained about the incident to her supervisor, Mike Middleton, to her union secretary, and to top union officials in her local. Middleton reported the alleged incident to his supervisor, Ben Wiggans, who reported the complaint to appellant. Appellant denied the incident and instructed Wiggans to discuss the matter with Austin.
8
Wiggans went to the Dupo train yard and talked with Austin, who told Wiggans about the alleged sexual harassment. Following Wiggans' conversation with Austin on October 8, 1981, appellant instructed Wiggans to give Austin the clerk's position. Austin began work as a clerk the following Monday.
9
Approximately one month later, a MoPac supervisor reported the incident to Arthur Shoener, MoPac's General Manager in Little Rock, Arkansas, and appellant's immediate supervisor. Shoener, assisted by a MoPac special agent, was authorized by K.D. Hestes, MoPac's Assistant Vice President of Operations, to conduct an investigation of the incident.
10
Shoener interviewed Wiggans, Middleton, Austin, Converse, Klaus, and appellant. Shoener took notes during the interviews and later added to them. He also prepared a typewritten investigative report, which was submitted to Hestes and J.W. Gessner, President of MoPac. After consulting with Mark Hennelly, MoPac's Senior Vice President of Law, Hestes and Gessner decided to remove appellant from the position of superintendent and keep him on the active payroll until his sixtieth birthday, at which time he could retire with an officer's pension.
11
Appellant's position was subsequently filled by a thirty-two year old man, who had been superintendent of MoPac's Palestine, Texas, Division for the previous four years.
12
On April 22, 1982, appellant filed a charge of age discrimination with the Equal Employment Opportunity Commission. He subsequently initiated this lawsuit on August 11, 1982. A jury trial commenced on September 14, 1983, and ended on September 20, 1983. The jury returned a verdict for MoPac and this appeal followed.
Motions in Limine
13
Appellant argues that the district court abused its discretion in granting MoPac's motion in limine which prevented appellant from cross-examining Diana Austin on her responses on her Initial Contact Interview Form completed in 1979. Austin stated on this pre-employment form that she had not been convicted of a violation of the law other than a minor traffic offense when in fact she had been convicted of the crime of retail theft under $150.00 one year earlier in 1978. Austin admitted during the deposition that she had answered "no" to the question of conviction because she believed that the shoplifting conviction had been expunged and appellant's secretary told her to answer that query in the negative. Appellant argues that the district court's granting of the motion in limine effectively eliminated the credibility of MoPac's key witness from consideration by the jury and thus the district court in effect directed a verdict in favor of MoPac.
14
We need not decide whether the evidence was admissible for impeachment purposes under Fed.R.Evid. 609(a) which prohibits the admission of conviction evidence unless the crime is "punishable by death or imprisonment in excess of one year" or "involves dishonesty or false statement" because the district court properly excluded the evidence under 608(b).
15
Fed.R.Evid. 608(b) grants the district court discretion to permit a witness to be cross-examined on specific instances of conduct probative of a witness' character for truthfulness or untruthfulness. The district court held that the alleged falsification of the application was not probative of Austin's truthfulness because the falsification occurred two years before the sexual harassment incident and Austin subsequently admitted the conviction on a MoPac employment application completed in 1980 and in the deposition. Further, Austin stated that she had answered "no" on the first application because she had mistakenly thought the conviction was to be expunged from her record and because appellant's secretary had said that this was correct in light of the expungement. The district court did not abuse its discretion in determining that this evidence was inadmissible.
16
Appellant next argues that the district court abused its discretion in granting defendant's motion in limine which prevented appellant from cross-examining Austin and her boyfriend concerning their use of marijuana two or three years before the sexual harassment incident. Appellant argues that the testimony of these two witnesses as to the periods during which they had smoked marijuana together was in conflict, that MoPac knew of Austin's use of marijuana, and that this evidence was related to pretext because prior drug use would indicate unreliability and untruthfulness.
17
The district court did not abuse its discretion in holding that "illegal drug use or transactions, without more, do not show untruthfulness." United States v. Hastings, 577 F.2d 38, 41-42 (8th Cir.1978). The district court under Rule 608(b) may determine if evidence is probative of truthfulness and under Rule 403 may exclude evidence, even though probative, if the probative value is outweighed by the prejudicial effect.
18
Appellant next argues that the district court abused its discretion in granting MoPac's motion in limine which prevented appellant from introducing evidence concerning MoPac's Senior Transition Program (STP). This program was initiated about one year after appellant resigned. Appellant argues that this program, which ostensibly was a voluntary retirement program, was actually a means of forcing out older employees and replacing them with younger employees, at a substantial savings to MoPac. Appellant argues that the STP is discriminatory and that this evidence is probative to show circumstantially that he too was the subject of discrimination. Appellant advised that he would offer 39 STP exhibits and call several witnesses. MoPac indicated that it would call numerous witnesses and introduce many exhibits because 197 persons had gone through the program.
19
The district court held that the evidence concerning the STP would result in extensive evidence on collateral issues and that the slight probative value of the proposed evidence justified its exclusion under Fed.R.Evid. 403. The court did not abuse its discretion in excluding this evidence.
20
Denial of a Motion for Mistrial Because of Juror Misconduct
21
Appellant argues that the district court erred in denying his motion for mistrial after a juror admitted that he had lied during voir dire. The juror, on the second day of trial, advised the district court that he "had had a sexual discrimination complaint filed against him" and as a result he had very "strong emotions" about sexual harassment and some "definite feelings" concerning "sex discrimination in general."
22
Appellant initially sought a mistrial, which was denied. Appellant, however, (contrary to his position on appeal) expressly agreed to the juror remaining on the jury and opposed having the juror replaced by the alternate. Appellant may not on appeal object to potential juror bias when he opposed a remedy which would have eliminated the bias. Delgado v. United States, 403 F.2d 208, 209 (9th Cir.), cert. denied, 394 U.S. 966, 89 S.Ct. 1320, 22 L.Ed.2d 568 (1968); see United States v. Verkuilen, 690 F.2d 648, 658 (7th Cir.1982). Moreover, the juror in question was, under the circumstances, probably biased in favor of appellant, rather than against him. The district court did not commit error.
Rejection of Deposition Evidence
23
Appellant argues that the district court erred in refusing to admit into evidence the deposition of MoPac's managing agent, Arthur Shoener. The district court sustained MoPac's objection because Shoener was to be called later in the trial. Appellant argues that the deposition should have been admitted as an admission of a party opponent to show the inconsistency of Austin's statements.
24
The district court erred in excluding the testimony of Shoener. Fed.R.Civ.P. 32(a)(2) states:
25
(2) The deposition of a party or of anyone who at the time of taking the deposition was an officer, director, or managing agent, or a person designated under Rule 30(b)(6) or 31(a) to testify on behalf of a public or private corporation, partnership or association or governmental agency which is a party may be used by an adverse party for any purpose.
26
Whether an individual has the status of managing agent depends on several factors, including whether the interests of the individual "are identified with those of his principal and on the nature of his functions, responsibilities and authority ...." Terry v. Modern Woodmen, 57 F.R.D. 141, 143 (W.D.Mo.1972), citing Tomingas v. Douglas Aircraft Co., 45 F.R.D. 94 (S.D.N.Y.1968). At the time of the deposition Shoener was a general manager for MoPac and had responsibility for 56,000 employees and 4,300 miles of track. Shoener had "sufficient power and discretion to be classified a 'managing agent.' " Colonial Capital Co. v. General Motors Corp., 29 F.R.D. 514, 518 (D.Conn.1961). Therefore, his deposition was admissible under Fed.R.Civ.P. 32(a)(2).
27
The district court, however, did not commit reversible error. Federal appellate courts have held that the exclusion of deposition evidence is harmless if the material matters covered in the deposition are covered, or could have been covered, at trial. "Even if the deposition was properly admissible under [Fed.R.Civ.P.] 32(a)(2) [pertaining to "managing agents"], we believe that any possible error was not prejudicial and was in fact harmless. The deposition contains no information that [the witness'] live testimony could not supply." Jackson v. Chevron Chemical Co., 679 F.2d 463, 466 (5th Cir.1982); see Fenstermacher v. Philadelphia National Bank, 493 F.2d 333, 338 (3d Cir.1974).
28
Admission of Shoener's Handwritten Notes and Internal Investigative Report
29
Appellant argues that the district court erred in admitting into evidence, as business records, handwritten notes and an investigative report prepared by Shoener, based on his observations and conversations with appellant, Austin, MoPac staff, and others because (1) the notes and report were not contemporaneously prepared, (2) the investigation report was prepared for use in litigation or an adversary proceeding, and (3) the statements contained therein were clearly hearsay.
30
Appellant's argument is without merit. The record does not support appellant's assertion that these documents are hearsay. MoPac offered the documents to demonstrate that MoPac had conducted an investigation and to disclose the information that MoPac had relied on in making its decision. The records were not offered to prove the truthfulness of the statements contained therein. See Moore v. Sears Roebuck and Company, 683 F.2d 1321, 1322 (11th Cir.1982).
31
Even if we accept appellant's argument that the records are hearsay, they are admissible under the business records exception. MoPac had a written policy requiring that in an investigation of sexual harassment the conversations of those interviewed "should be documented through written memoranda." Shoener was directed to conduct an investigation and to prepare such memoranda. Shoener took handwritten notes during the interviews and added to them shortly after the interviews. The typewritten report was prepared from the notes. Only six or seven days elapsed from the beginning of the investigation to the completion of the report. The notes and report were prepared nine months before any complaint or suit had been filed and the notes and report were maintained at the MoPac office. Fed.R.Evid. 803(6). See Gibbs v. State Farm Mutual Insurance Co., 544 F.2d 423, 428 (9th Cir.1976); Smith v. Universal Service, Inc., 454 F.2d 154, 157-58 (5th Cir.1972).
Judicial Notice of an EEOC Regulation
32
Appellant argues that the court erred (1) in taking judicial notice of an EEOC regulation on sexual harassment, 29 C.F.R. Sec. 1604.112 because violation of an EEOC regulation was not an issue in this case and (2) in incorrectly presenting the regulation as having the force of law and as imposing strict liability on an employer for the sexual harassment of its employees.
33
Appellant's arguments are without merit. The district court may take judicial notice of the Federal Register and the Code of Federal Regulations.3 44 U.S.C. Sec. 1507 (1982) (Federal Register may be judicially noticed); Wei v. Robinson, 246 F.2d 739, 743 (7th Cir.1957) (Code of Federal Regulations and the Federal Register are required to be judicially noticed); Kempe v. United States, 151 F.2d 680, 684 (8th Cir.1945). MoPac offered the regulation to show that MoPac could be liable for the action of its employees who sexually harass other employees. The district court did not abuse its discretion in admitting the evidence.
34
Appellant's other point of error is that the district court described the regulation to the jury as having the force of law and as imposing strict liability on employers. Appellant is correct in his assertions that EEOC regulations do not have the force of law, General Electric Co. v. Gilbert, 429 U.S. 125, 141, 97 S.Ct. 401, 410, 50 L.Ed.2d 343 (1976), and that the employer is not strictly liable for all types of sexual harassment. Katz v. Dole, 709 F.2d 251, 255 (4th Cir.1983); Henson v. City of Dundee, 682 F.2d 897, 909-10 (11th Cir.1982); Bundy v. Jackson, 641 F.2d 934, 943 (D.C.Cir.1981). This case, however, involves "quid pro quo" sexual harassment, i.e., a supervisor allegedly requested sexual favors in exchange for job benefits. Henson v. City of Dundee, 682 F.2d at 908 n. 18. Many cases have held that "quid pro quo" sexual harassment violates Title VII and that the employer is strictly liable. Katz v. Dole, 709 F.2d at 255 n. 6; Henson v. City of Dundee, 682 F.2d at 910; Bundy v. Jackson, 641 F.2d at 943; Miller v. Bank of America, 600 F.2d 211, 213 (9th Cir.1979); Barnes v. Costle, 561 F.2d 983, 993 (D.C.Cir.1977). Therefore, the district court did not misstate the law on sexual harassment as it pertains to this case.
35
Refusal to Permit Witness to Testify on the Ultimate Issue
36
Appellant argues that the district court erred in refusing to permit appellant's witness J.D. Boling to testify that he believed appellant's age was a factor in his termination while permitting Shoener and Hestes to testify. The district court did not abuse its discretion in excluding this evidence. Bohannon v. Pegelow, 652 F.2d 729, 732 (7th Cir.1981). Fed.R.Evid. 701(a) permits a lay witness to give opinion testimony only if his opinion is rationally based on his perception. Boling had been Assistant Superintendent under appellant for fifteen years, but he had no firsthand knowledge of the factors involved in MoPac's decision to remove appellant. Shoener and Hestes on the other hand were not asked to give opinion testimony but were asked to testify as to what they did, i.e., whether they considered appellant's age.
Denial of Argument Concerning a Photograph
37
Appellant argues that the district court erred in prohibiting comment and argument on a photograph of Austin's living room, which showed a wall-mounted picture of Zig-Zag paper4 and could suggest the possible use of marijuana. The district court prohibited any reference to the possible use of marijuana as having no probative value on the issue of truthfulness. The court did not abuse its discretion.
Verdict Director Instruction
38
Appellant argues that the verdict director instruction misled and confused the jury because it misstated the law, did not address material issues in the case, contained facts that had no factual or legal basis, and was biased in favor of the defendant.
39
The law in this and other circuits is clear on the standard of appellate review of jury instructions. Instructions must be "read as a whole and considered in light of the entire charge." Tribble v. Westinghouse Electric Corp., 669 F.2d 1193, 1197 (8th Cir.1982), cert. denied, 460 U.S. 1080, 103 S.Ct. 1767, 76 L.Ed.2d 342 (1983); King v. State Farm Life Insurance Co., 448 F.2d 597, 600, 601 (8th Cir.1971). When the charge is considered as a whole, it should state the "governing law fairly and correctly" and should not be "inflammatory or unfair or prejudicial" to either the plaintiff or the defendant. Hartman v. United States, 538 F.2d 1336, 1346 (8th Cir.1976). "Where the instructions, considered as a whole, adequately and sufficiently state the generally applicable law, the fact that the instructions are technically imperfect or are not a model of clarity does not render the charge erroneous." Tribble v. Westinghouse, 669 F.2d at 1197; see Garnatz v. Stifel, Nicholaus & Co., 559 F.2d 1357, 1362 (8th Cir.1977), cert. denied, 435 U.S. 951, 98 S.Ct. 1578, 55 L.Ed.2d 801 (1978). Each of the deficiencies claimed by appellant will be reviewed against this standard.
40
Appellant argues first that the district court erred in requiring him to prove as part of his prima facie case that he had complied with MoPac's rules and regulations. Appellant argues that the plaintiff need not anticipate and refute the employer's legitimate, nondiscriminatory reasons in order to establish his prima facie case. Appellant argues that such proof is inconsistent with the prima facie case set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973) (McDonnell Douglas ). We agree.
41
The indirect method of proof of discrimination approved by the Supreme Court in McDonnell Douglas and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 256, 101 S.Ct. 1089, 1095, 67 L.Ed.2d 207 (1981) (Burdine ), is but one way of establishing a case of employment discrimination. Halsell v. Kimberly Clark Corp., 683 F.2d 285, 290 (8th Cir.1982), cert. denied, 459 U.S. 1205, 103 S.Ct. 1194, 75 L.Ed.2d 438 (1983). "McDonnell-Douglas was never intended to be rigid, mechanized or ritualistic. Rather it is merely a sensible orderly way to evaluate the evidence in light of common experience as it bears on the critical question of discrimination." United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 75 L.Ed.2d 403 (1983).
42
In Halsell v. Kimberly Clark Corp., 683 F.2d at 290, this court adopted the First Circuit's modification of the McDonnell Douglas and Burdine formulas for discriminatory discharge claims set forth in Loeb v. Textron, Inc., 600 F.2d 1003, 1013-14 (1st Cir.1979). In the absence of direct evidence of discrimination, the plaintiff must "prove that he [or she] was in the protected age group, that he [or she] was performing his [or her] job at a level that met [the] employer's legitimate expectations, that he [or she] was nevertheless fired, and that [the] employer sought someone to perform the same work after he [or she] left." Id. at 1014. Unlike hiring cases in which the issue is whether the plaintiff was qualified for the job, the issue in discharge cases is whether the plaintiff was satisfactorily performing the job. As noted by the Ninth Circuit in Douglas v. Anderson, 656 F.2d 528, 533 n. 5 (9th Cir.1981), "[t]he issue of satisfactory job performance permeates the prima facie case as well as the rebuttal and pretext issues. In establishing a prima facie case, [the plaintiff] need only produce substantial evidence of satisfactory job performance sufficient to create a jury question on this issue." Thus, consistent with McDonnell Douglas and Burdine, we hold that in order to establish a prima facie case, the plaintiff need only prove that "he [or she] was doing his [or her] job well enough to rule out the possibility that he [or she] was fired for inadequate job performance." Loeb v. Textron, Inc., 600 F.2d at 1013.
43
For this reason, we hold that the district court erred in instructing the jury that appellant was required to prove compliance with MoPac's rules and regulations in order to establish a prima facie case. As discussed above, appellant produced substantial evidence that he had performed satisfactorily as superintendent, at least until the incident in question in October 1981. This evidence was sufficient to establish a prima facie case.
44
Appellant argues that this instruction error mandates reversal because the jury could have improperly found that appellant did not prove compliance with MoPac's rules and regulations and thus failed to establish a prima facie case. Ordinarily such an instruction error would be grounds for reversal. However, we think the instruction error was harmless in this case. In the present case, the evidence that appellant was discharged for a legitimate, nondiscriminatory reason is very strong and undermines any inference of discrimination.5 MoPac introduced uncontradicted evidence that it had received a complaint that appellant had sexually harassed a subordinate and that it had conducted an investigation of the complaint. Appellant attempted to demonstrate pretext by attacking the credibility of the complaining employee and by showing minor inconsistencies in the statements of MoPac's witnesses. None of appellant's evidence, even if accepted as true, establishes that MoPac discharged appellant because of his age. In the present case, we are concerned not with whether MoPac was correct in its determination that appellant sexually harassed a subordinate, but only with whether this was the real reason for the termination and not a pretext for age discrimination. Douglas v. Anderson, 656 F.2d at 533 n. 5.
45
Appellant next argues that the court failed to submit to the jury all the reasons offered by MoPac to justify appellant's termination. Specifically, the instruction did not include an alleged theft of cedar posts and a grain spill as reasons for termination. Appellant argues that the inclusion of these reasons would have permitted the jury to find that all of the reasons were pretextual.
46
The employer in an ADEA case must articulate a legitimate, non-discriminatory reason, which is specific and clear enough for the employee to address, Burdine, 450 U.S. at 255, 101 S.Ct. at 1094; Halsell v. Kimberly Clark Corp., 683 F.2d at 292, and legally sufficient to justify a judgment for the employer, Burdine, 450 U.S. at 255, 101 S.Ct. 1094. The employer must demonstrate reasonable factors other than age for discharge. Loeb v. Textron, Inc., 600 F.2d at 1011. The jury, in order to find for the defendant, must find that the articulated reasons are not pretextual.
47
In the present case appellant may not complain of error when his proposed instruction (No. 19) did not list the grain spill or theft as reasons for termination. In addition, appellant did not specifically object to the exclusion of these factors from the district court's instruction. Fed.R.Civ.P. 51; Goodman v. Heublein, Inc., 645 F.2d 127, 131 (2d Cir.1981). Furthermore, even if appellant had properly preserved this issue for review, there is no error because MoPac offered only one reason for appellant's termination. This reason--the sexual harassment of a subordinate--was the subject of the investigation, was stated in the service letter and was articulated at trial. The theft of cedar posts and the grain spill incidents occurred in 1974 (seven years before the sexual harassment complaint) and MoPac took no disciplinary action against appellant. Evidence of these incidents was offered by MoPac to impeach appellant.
48
Appellant next argues that the district court erred in stating that the reason offered by MoPac for termination was a good faith belief that plaintiff had sexually harassed an employee under appellant's supervision. Appellant argues that the district court in effect made a preliminary finding that MoPac had a good faith belief and took from the jury the task of deciding if MoPac articulated a legitimate, non-discriminatory reason. As a result appellant argues that he could not establish pretext.
49
An employer in an ADEA case must produce evidence that its action was based upon "reasonable factors other than age" or "good cause." 29 U.S.C. Sec. 623(f)(1), (3); Halsell v. Kimberly Clark Corp., 683 F.2d at 291; Smith v. Farah Manufacturing Co., 650 F.2d 64, 67-68 (5th Cir.1981). It is not "enough to offer vague, general averments of good faith--a plaintiff cannot be expected to disprove a defendant's reasons unless they have been articulated with some specificity." Loeb v. Textron, Inc., 600 F.2d at 1012-13 n. 5. The employer, however, "need not persuade the [trier of fact] that the proffered reason in fact justified the discharge because the issue is not whether the reason articulated by the employer warranted the discharge but whether the employer acted for a non-discriminatory reason." Halsell v. Kimberly Clark Corp., 683 F.2d at 291; see Loeb v. Textron, Inc., 600 F.2d 1014.
50
We have found no cases which specifically address the question whether an employer's "good cause" for discharge in an ADEA case may be based on "good faith" alone. We do not decide this issue because the resolution of the question is not essential to our decision.
51
The district court's instructions read as a whole in the context of this case are not prejudicially erroneous. MoPac presented substantial evidence that appellant was discharged for reasons other than age and that MoPac's action was not based on "good faith belief" alone. MoPac conducted a rather detailed investigation, prepared a formal investigation report, and sought advice from MoPac's legal staff. MoPac therefore had a reasonable basis for its action. MoPac did not have to prove that appellant in fact sexually harassed an employee.
52
Appellant next argues that the instruction was erroneous because it was written in the negative, was unbalanced in favor of the defendant, and incorrectly gave the impression that plaintiff's task was an onerous one. We have carefully reviewed the instructions and find these arguments to be without merit.
Circumstantial Evidence Instruction
53
Appellant argues that the district court erred in refusing its proposed jury instruction on circumstantial evidence. Appellant asserts that this instruction was necessary because a key element in appellant's case was the motivation of MoPac, which could only be proven by circumstantial evidence.
54
Appellant cites no authority and we have found none for the proposition that a court in a civil case must give a circumstantial evidence instruction if requested to do so. Movible Offshore Co. v. Ousley, 346 F.2d 870, 874 (5th Cir.1965). The district court instructed the jury that it was to consider all the evidence presented by both parties.6 The district court did not abuse its discretion in refusing the instruction.
55
Therefore, the judgment of the district court is affirmed.
1
The Honorable Stephen N. Limbaugh, United States District Judge for the Eastern and Western Districts of Missouri
2
29 C.F.R. Sec. 1604.11 reads in part as follows:
Harassment on the basis of sex is a violation of Sec. 703 of Title VII, [42 U.S.C. Sec. 2000e et seq.].
....
An employer ... is responsible for the acts of its supervisory employees with respect to sexual harassment regardless of whether the specific acts complained of were authorized or even forbidden by the employer and regardless of whether the employer knew or should have known of their occurrence.
3
29 C.F.R. Sec. 1604 was published in the Federal Register at 37 Fed.Reg. 6836 on April 5, 1972
The Code of Federal Regulations is a special or supplemental edition of the Federal Register, 44 U.S.C. Sec. 1510 (1982), and therefore may be judicially noticed under the Federal Register Act. 44 U.S.C. Sec. 1507 (1982).
4
A commercial product commonly used to roll marijuana cigarettes
5
Although the district court denied MoPac's motion for a directed verdict, the court indicated that appellant had a "very, very weak case" and that appellant had not produced any substantial evidence that the reason for his discharge was pretextual
6
Instructions No. 2 and No. 3 were taken from Vol. 3 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions Sec. 71.01 (Preponderance of the Evidence), and Sec. 72.01 (Credibility of Evidence) (3d ed. 1977)
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808 F.Supp.2d 634 (2011)
The SWATCH GROUP MANAGEMENT SERVICES LTD., Plaintiff,
v.
BLOOMBERG L.P., Defendant.
No. 11 Civ. 1006 (AKH).
United States District Court, S.D. New York.
August 30, 2011.
*635 Jess Michol Collen, Jeffrey A. Lindenbaum, Joshua P. Paul, Collen Ip, Ossining, NY, for Plaintiff.
John M. Dimatteo, Willkie Farr & Gallagher LLP, New York, NY, for Defendant.
ORDER DENYING MOTION TO DISMISS
ALVIN K. HELLERSTEIN, District Judge.
The motion of defendant Bloomberg L.P. ("Bloomberg") to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) is hereby denied.
On February 8, 2011, The Swatch Group Ltd. ("Swatch Group"),[1] parent company of plaintiff The Swatch Group Management Services Ltd. ("Management Services"), hosted a conference call by telephone from its Bienne, Switzerland, headquarters with a group of securities analysts who had been specifically invited to participate in the call.[2] Second Am. Compl. ¶ 8. Swatch Group's Chief Executive Officer and Chief Financial Officer and three of its other senior executives participated in the call on the company's behalf. Id. ¶ 9. Following the Chief Executive Officer's brief introductory *636 remarks, he and the other senior executives took questions from the invited securities analysts. Id. ¶ 14. In responding to questions, the senior executives talked at length about the company's "worldwide business performance, activities, opportunities and related matters." Id. The call lasted more than two hours. Id.
Swatch Group had engaged Chorus Call S.A., a Swiss company that provides international audio conferencing services, to set up, transmit, and simultaneously record the conference call. Id. ¶¶ 11-12. An operator informed participants at the beginning of the call that the call would be recorded, and she stated expressly that the call should not otherwise be recorded for publication or broadcast. Id. ¶ 13.
Unbeknownst to Swatch Group, and without invitation, authorization, or consent, Bloomberg tapped into the conference call. Id. ¶¶ 21-22. Bloomberg recorded the call in its entirety and, acting again without the knowledge, authorization, or consent of Swatch Group, created a written transcript from the audio recording. Id. ¶¶ 22-23. Later on February 8, 2011, Bloomberg made both its unauthorized audio recording and transcript of the conference call available online to paid subscribers of its "Bloomberg Professional" newsfeed service. Id. ¶ 24.
Swatch Group assigned all right, title, and interest in and to the United States copyright in the authorized audio recording of the conference call to its subsidiary, Management Services. See id. ¶ 16. Less than one week after the call, Management Services filed suit, alleging copyright infringement. Since this suit was filed, the United States Copyright Office has issued a Certificate of Registration for the authorized audio recording of the call,[3]id. ¶ 18; see also Second Am. Compl. Ex. 1, and Management Services has twice amended its complaint.
Bloomberg now moves to dismiss the Second Amended Complaint.[4] Because the authorized audio recording is entitled to copyright protection, and because the copyright claim is properly registered, 1 deny the motion in full.
By statute, "[c]opyright protection subsists ... in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 102(a), The "work of authorship"[5] at issue hereSwatch *637 Group's audio recording of its conference callfalls into a category of works known as "sound recordings." Id. § 102(a)(7). A "sound recording" is a "work[] that result[s] from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords,[6] in which they are embodied." Id. § 101.
Because the conference call was "transmitted" live to securities analysts whose participation Swatch Group had invited, and because the call was recorded simultaneously with its transmission, Swatch Group's audio recording of the call satisfies the requirement of fixation. "A work is `fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Id. When a "work consist[s] of sounds ... that are being transmitted"that is, when a work consists of sounds that are being "communicate[d] ... by [a] ... process whereby ... sounds are received beyond the place from which they are sent," id. the work is considered fixed "if a fixation of the work is being made simultaneously with its transmission." Id. This provision "creates a legal fiction that the simultaneous fixation occurs before the transmission" for purposes of an infringement claim. United States v. Moghadam, 175 F.3d 1269, 1280-81 (11th Cir.1999), In other words, the law treats the unauthorized recording of sounds that are transmitted live and recorded simultaneously as an infringement of the copyright in the fixed work (assuming the work otherwise qualifies for protection), notwithstanding that the alleged infringer does not copy the fixed version of the work but rather records the live transmission directly. Id. "It is as if one who was dictating live into a tape recorder were overheard and copied at the moment of dictation. At that moment, the material has become a `writing' even if copied simultaneously, rather than a moment later." 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 1.08[C][2] (Matthew Bender, rev. ed. 2011),
Swatch Group's sound recording also satisfies the requirement of originality to qualify for copyright protection. "Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity." Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). Bloomberg does not challenge the independent creation of Swatch Group's audio recording of its senior executives' extemporaneous commentary on the company's health and future prospects. And Swatch Group's audio recording easily satisfies the relatively low bar for creativity, as "even a slight amount will suffice." Id. Indeed, "[t]he vast majority of works make the grade quite easily, as they possess some creative spark." Id.
*638 Sound recordings do present an added layer of complexity when it comes to assessing creativity. As Congress noted when it amended the Copyright Act in 1976:
[t]he copyrightable elements in a sound recording will usually, though not always, involve "authorship" both on the part of the performers whose performance is captured and on the part of the record producer responsible for setting up the recording session, capturing and electronically processing the sounds, and compiling and editing them to make the sound recording. There may, however, be cases where the record producer's contribution is so minimal that the performance is the only copyrightable element in the work, and there may be cases (for example, recordings of birdcalls, sounds of racing cars, et cetera) where only the record producer's contribution is copyrightable,
H.R. Rep. No, 944476 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5669. I need not decide whether the manner in which the conference call was recorded contributes to the sound recording's copyrightability, as there can be no real doubt that the spoken-word contributions of Swatch Group's senior executives possess the requisite creativity to qualify for copyright protection. It is true that Swatch Group's senior executives relied upon unprotected facts and figures in responding to analysts' questions. See Feist, 499 U.S. at 344-45, 111 S.Ct. 1282 ("The most fundamental axiom of copyright law is that `no author may copyright his ideas or the facts he narrates.'" (quoting Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 556, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985))). However, the senior executives did not simply recite facts and figures without context or embellishment; rather, there are protectable, creative elements in the senior executives' "manner of expression, [their] analysis or interpretation of events, the way [they] structure[d] [their] material and marshal[ed] facts, [their] choice of words, and the emphasis [they] g[a]ve[ ] to particular developments." Wainwright Sec. Inc. v. Wall Street Transcript Corp., 558 F.2d 91 (2d Cir.1977), abrogated on other grounds by Salinger v. Colting, 607 F.3d 68 (2d Cir.2010); cf. Nihon Keizai Shimbun, Inc. v. Comline Bus. Data, Inc., 166 F.3d 65, 70-71 (2d Cir. 1999) ("The question, then, is not simply whether [defendant] copied from [plaintiff]'s articles, but whether they copied expression original to [plaintiff]." (emphasis added)). At a more basic level, the senior executives' unique pronunciation of words and their inflection and tone of voice, taken together, constitute "something irreducible, which is one man's alone," and that "he may copyright"at least in the form of a sound recording.[7]Bleistein v. Donaldson *639 Lithographing Co., 188 U.S. 239, 250, 23 S.Ct. 298, 47 L.Ed. 460 (1903) (Holmes, J.); see I Nimmer & Nimmer, supra, § 2.10[A][2][a] ("The emphasis or the shading of a musical note, the tone of voice, the inflection, the timing of a vocal rendition, musical or spoken, can all be original with the performer.").
Swatch Group alleges that Bloomberg recorded the live transmission of the conference call in its entirety and made the unauthorized audio recording available on-line to paid subscribers of its "Bloomberg Professional" newsfeed service. Second Am. Compl. ¶¶ 22, 24. Because Swatch Group fixed the call in a tangible medium of expression simultaneously with its transmission, because Swatch Group's sound recording was independently created, and because Swatch Group's senior executives' spoken-word contributions to the sound recording have the requisite creativity, Management Services has sufficiently pleaded a claim of copyright infringement.[8]See 17 U.S.C. §§ 106, 114. The motion to dismiss is denied in this respect.
Bloomberg next contends that the copyright infringement claim fails because Management Services has not alleged that Swatch Group fully complied with the prefixation notice requirement of 17 U.S.C. § 411(c). That subsection provides:
In the case of a work consisting of sounds, images, or both, the first fixation of which is made simultaneously with its transmission, the copyright owner may, either before or after such fixation takes places, institute an action for infringement ... if, in accordance with requirements that the Register of Copyrights shall prescribe by regulation, the copyright owner
(1) serves notice upon the infringer, not less than 48 hours before such fixation, identifying the work and the specific time and source of its first transmission, and declaring an intention to secure copyright in the work; and
(2) makes registration for the work, if required by subsection (a), within three months after its first transmission.
17 U.S.C. § 411(c). As a practical matter, because Swatch Group did not invite Bloomberg to participate in the conference call, but rather Bloomberg accessed the call surreptitiously and without authorization or consent, there is no way Swatch Group could have known to serve notice on Bloomberg forty-eight hours before the call was scheduled to take place.
In any event, a noted authority on federal copyright law has suggested that, even where an infringement action is based on a work that consists of sounds that are fixed for the first time simultaneously with their transmission, compliance with the more conventional registration requirement of *640 17 U.S.C. § 411(a) suffices, rendering compliance with § 411(c) unnecessary. Cf. id. § 411(a) ("[N]o civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title."). As that noted authority explains:
The question arises whether Section 411(c) is mandatory or merely permissive. That is, in the case of a work that is fixed simultaneously with its transmission, if the copyright owner elects not to bring an infringement action until after the work has been fixed and registered, is he nevertheless required to have served ... notice upon the defendant within the specified number of days prior to fixation as a condition to bringing the action? Read literally, Section 411(c) would seem to require such advance notice, regardless of whether the infringement action is brought "before or after such fixation" or before or after registration. It seems clear, however, that such a literal reading was not intended. Section 411(c) exists so that "where the infringer has been given advance notice, an injunction could be obtained to prevent the unauthorized use of the material included in the `live' transmission." Such an injunction, obtained prior to the transmission and therefore prior to the fixation of the work, necessarily envisages an action prior to registration, because registration is not possible without the deposit of copies, and copies cannot exist prior to fixation. In these unusual circumstances, without prior registration, it was thought that an injunction might be obtained only if the defendant has been given advance notice not to engage in the practice that is the subject of the injunction. But, to the extent that plaintiff does not seek an injunction in advance, and instead waits until after the transmission-fixation, then registers the copyright, and only thereafter brings an infringement action, it would seem that he may proceed under the general features of Section 411(a). In those circumstances, no purpose is served by requiring compliance with the difficult advance notice provisions of Section 411(c)regardless whether the infringing acts occur at the moment of transmission-fixation or at a later time.
2 Nimmer & Nimmer, supra, § 7.16[B][1][b][iii] (footnotes omitted). The United States Copyright Office appears to agree with this assessment. See General Provisions; Works Consisting of Sounds, Images, or Both: Advance Notice of Potential Infringement, 46 Fed.Reg. 28,846, 28,848 (May 29, 1981) (noting that § 411(c) (then codified as § 411(b)) "clearly establishes an alternative procedure to [§ 411(a)] for bringing a suit for copyright infringement").
Bloomberg does not argue that Management Services has not complied with the registration requirement of § 411(a). Indeed, Management Services obtained registration of its copyright claim effective March 2, 2011, before the filing of the Second Amended Complaint. Because Managements Services has complied with the registration requirement of § 411(a), I conclude that compliance with § 411(c) is not necessary and the motion to dismiss is denied.
Finally, Bloomberg contends that it prevails on the basis of "fair use." The Copyright Act provides that "the fair use of a copyrighted work, ... for purposes such as criticism, comment, [or] news reporting[]... is not an infringement of copyright." 17 U.S.C. § 107. "Whether such `fair use' exists involves a case-by-case determination using four non-exclusive, statutorily provided factors in light of *641 the purposes of copyright." Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 608 (2d Cir.2006). The statutory factors include the "purpose and character" of the challenged use; "the nature of the copyrighted work"; the "amount and substantiality" of the challenged use "in relation to the copyrighted work as a whole"; and "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107. At bottom, however, whether a particular use of a copyrighted work constitutes fair use depends on "`whether the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it.'" Bill Graham Archives, 448 F.3d at 608 (quoting Castle Rock Entm't, Inc. v. Carol Publ'g Group, 150 F.3d 132, 141 (2d Cir. 1998)). Whether Bloomberg's use was a "fair use" is not a determination I can make after reviewing only the pleadings. I decline to address such a fact-intensive issue before the parties have had an opportunity for discovery.
Because I deny Bloomberg's motion to dismiss in full, oral argument, scheduled for August 31, 2011, at 4:00 p.m., is hereby cancelled. The parties shall appear before me for an initial case management conference on September 16, 2011, at 10:00 a.m., in Courtroom 14D, to discuss how they intend to proceed in this matter.
The Clerk shall mark the motion (Doc. No. 16) terminated.
SO ORDERED.
NOTES
[1] Swatch Group "owns or controls more than two hundred subsidiary entities" through which it "produces and distributes watches for nineteen of the world's best known luxury and broader market watch brands." Second Am. Compl. ¶ 5. In addition, the complaint describes Swatch Group as "the world's leading producer of finished watches, watch parts, movements[,] and components"; "a key player in the manufacture and sale of electronic systems used In watch making and other industries"; and "a leader in the field of sports event timing." Id.
[2] For purposes of this motion to dismiss, I accept as true the factual allegations in the Second Amended Complaint. See Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 61 (2d Cir.2010).
[3] The Certificate of Registration expressly acknowledges that "[n]o claim of authorship is made to the performance of speakers not employees for hire of" Swatch Group or Management Services. Second Am. Compl. Ex. 1.
[4] Because Bloomberg's unauthorized transcript is attached to the Second Amended Complaint as an exhibit, see Second Am. Compl. Ex. 2, and because Bloomberg's unauthorized audio recording of the call, submitted in support of its motion to dismiss, is "integral" to the complaint, I may consider both in ruling on the motion to dismiss without converting it to one for summary judgment. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-54 (2d Cir.2002).
[5] As a general matter, under federal law, "[c]opyright in a work ... vests initially in the author or authors of the work." 17 U.S.C. § 201(a). Under the "work made for hire" doctrine, where "a work is prepared by an employee within the scope of his or her employment," id. § 101, the employer "is considered the author for purposes of" federal copyright law "and, unless the parties have expressly agreed otherwise in a written instrument signed by them," the employer "owns all of the rights comprised in the copyright," id. § 201(b). Because the senior executives who participated in the call were employees of Swatch Group, see Second Am. Compl. ¶ 10, Swatch Group was the author of, and owned the copyright in, the authorized audio recording of the conference call.
[6] The term "phonorecord" is defined broadly to include any "material object[] in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 101.
[7] Bloomberg cites several cases for the proposition that "interviews and question-and-answer sessions concerning factual matters are not protectable by copyright," but the facts of each of those cases are distinguishable from the circumstances presented here. In Estate of Hemingway v. Random House, Inc., 23 N.Y.2d 341, 296 N.Y.S.2d 771, 244 N.E.2d 250, 253-54 (1968), plaintiffs pursued a claim of common law copyright infringementnot a claim of infringement under federal statutory lawbased on defendants' publication of plaintiffs' decedent's oral expression. The court, on a motion for summary judgment, concluded that plaintiffs had not stated a claim of common law copyright infringement because plaintiffs' decedent had implicitly approved the publication of his oral statements. Id., 296 N.Y.S.2d 771, 244 N.E.2d at 255-56, Likewise, in Falwell v. Penthouse International, Ltd., 521 F.Supp. 1204 (W.D.Va.1981), the plaintiff had pleaded a claim of common law copyright infringement; the plaintiff was ultimately unsuccessful in his efforts to protect oral expression that he had not fixed in any tangible medium of expression, id. at 1207-08. In Taggart v. WMAQ Channel 5 Chicago, No. 00-4205-GPM, 2000 WL 1923322, at *3-5, 2000 U.S. Dist. LEXIS 19499, at *10-18 (S.D.Ill., Oct. 30, 2000), the court dismissed a pro se prisoner's copyright infringement claim because he had not sought to register his copyright; had not personally fixed, or directed the fixation of, his oral expression in any tangible medium of expression; and had not expressed anything more than unprotected ideas, without the expenditure of sufficient intellectual labor to render the form of their expression protectable. By contrast, here, Swatch Group states a federal copyright infringement claim based on a sufficiently creative work that is fixed in a tangible medium of expression and for which Management Services has obtained registration.
[8] Because Management Services has sufficiently pleaded a copyright infringement claim based on Bloomberg's unauthorized audio recording of the call, I decline to decide, without further briefing from the parties, whether the unauthorized transcript is an infringing derivative work.
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119 Ill.2d 169 (1987)
518 N.E.2d 128
TED SHARPENTER, INC., Appellant,
v.
THE ILLINOIS LIQUOR CONTROL COMMISSION et al., Appellee.
No. 64579.
Supreme Court of Illinois.
Opinion filed December 21, 1987.
Rehearing denied February 2, 1988.
*170 David S. Acker and James L. Long, of Chicago (Winston & Strawn, of counsel), for appellant.
Neil F. Hartigan, Attorney General, of Springfield (Roma Jones Stewart and Shawn W. Denney, Solicitors General, and William D. Frazier, Assistant Attorney General, of Chicago, of counsel), for appellee Illinois Liquor Control Commission.
*171 George W. Keeley, of Chicago (Halfpenny, Hahn & Roche, of counsel), for appellees Ronald Nichols et al.
John P. Ryan, Jr. and Steven B. Varick, of McBride, Baker & Coles, of Chicago, for amicus curiae Anheuser-Busch Companies, Inc.
Herman G. Bodewes and Bridget E. Madigan, of Giffin, Winning, Lindner, Cohen & Bodewes, P.C., of Springfield, for amicus curiae Associated Beer Distributors of Illinois et al.
Appellate court reversed; circuit court affirmed.
JUSTICE MORAN delivered the opinion of the court:
In November of 1983, Patrick Burke, Richard Ernzen, James McCue, Ronald Nichols and George Zobrest filed a complaint with the Illinois Liquor Commission (Commission) charging that Ted Sharpenter, Inc.'s, practice of offering preferential price discounts violated the Liquor Control Act of 1934 (the Act) (Ill. Rev. Stat. 1983, ch. 43, par. 93.9 et seq.). A hearing was subsequently held and the Commission found that Sharpenter's pricing policy violated sections 6-5 and 6-17 of the Act (Ill. Rev. Stat. 1983, ch. 43, pars. 122, 133). Thereafter, Sharpenter (plaintiff) filed a complaint for administrative review against the Commission and named individuals (defendants) in the circuit court of Kane County and the court reversed, holding that the plaintiff's pricing practices did not violate either section 6-5 or 6-17 of the Act. The appellate court reversed, holding that plaintiff's pricing practices violated section 6-5. (148 Ill. App.3d 936.) We granted leave to appeal. 107 Ill.2d R. 315.
Several issues are raised on appeal; however, because of our disposition of the case it is only necessary that we consider the following issue: whether plaintiff's practice of offering preferential price discounts violates section *172 6-5 of the Act, which prohibits distributors from giving "anything of value" to retailers.
Plaintiff is a wholesale beer distributor and the exclusive distributor of G. Heilman Brewing Company products within its designated four-county sales territory. Exclusive distributorships such as plaintiff's are permitted by statute (Ill. Rev. Stat. 1983, ch. 43, par. 301 et seq.). Any retailer located within plaintiff's sales territory who wishes to sell Heilman products must purchase them from plaintiff. Plaintiff, in turn, may not sell Heilman products to retailers located outside of its sales territory. Ill. Rev. Stat. 1983, ch. 43, par. 305(5).
Plaintiff has been the exclusive distributor of Heilman products for the past 50 years. Over the past 20 years, plaintiff has maintained a preferential discount system based upon the type of retail operation. Plaintiff divides its 350 retail accounts into three categories: "off-premise" accounts are retailers which sell beer for off-premise consumption such as liquor stores and packaged-goods stores; "on-premise" accounts consist of bars and taverns; and "combo" accounts are retailers which sell beer for both on- and off-premise consumption such as a tavern with an adjoining liquor store.
Under plaintiff's preferential discount system, off-premise retailers are offered larger and more frequent discounts than on-premise retailers. These large discount programs are only offered to off-premise retailers if they agree to both purchase a minimum quantity of beer and engage in "good faith" promotional efforts. Plaintiff broadly defines "good faith" promotional efforts to include such practices as newspaper advertising, in-store advertising or any other activity which might emphasize the discounted item. These discount programs are offered eight or nine times per year and are from one to two weeks in duration.
*173 Two or three times per year plaintiff offered a lesser discount to on-premise retailers. These discounts were not contingent upon a minimum purchase or promotional efforts. On-premise retailers received a discount of $.50 per case, while off-premise retailers received a $1.10-per-case discount. Retailers who operated combo stores generally received both types of discounts in relation to the percentage of their business which was on-premise and that which was off-premise.
Plaintiff's president, Robert Sharpenter, testified at the hearing before the Commission that he maintains his dual discounting system because of differences in the nature of on-premise and off-premise beer retailing. Sharpenter explained that off-premise retailers compete in a very price-sensitive market so that when discounts are given, they, in turn, lower the price of the item and this lower price, when coupled with promotional efforts, results in substantial increases in sales. Plaintiff therefore receives substantial volume increases by offering these discounts to off-premise retailers. Sharpenter stated that these discounts generate from 2 to 20 times the normal volume of sales. By contrast, Sharpenter explained, beer sales for on-premise consumption is not as price sensitive. On-premise beer consumers are motivated more by product loyalty than by price and, in addition, most brands of beer are sold at standard prices. Consequently, when on-premise retailers receive a discount they do not lower the price or promote the beer and as a result there is no increase in sales. Thus, as Sharpenter testified, "he gets the discount and we only get our normal volume." According to Sharpenter, the purpose of discounts to on-premise retailers is only to create good will.
Individual defendants are all on-premise and combo retailers located within plaintiff's sales territory. Each testified that they had attempted to obtain the greater *174 discount from plaintiff for on-premise sales but were refused. Each stated that they would be willing to buy the minimum quantity and promote the product in order to obtain the greater discount. Several testified that plaintiff was their only distributor who maintained a dual-discount policy based upon the type of retail operation; however, they also stated that other distributors offered varying discounts based upon volume.
Section 6-5 of the Act provides in pertinent part:
"Except as provided below, it is unlawful for any manufacturer or distributor or importing distributor to give or lend money or anything of value, or otherwise loan or extend credit (except such merchandising credit) directly or indirectly to any retail licensee or to the manager, representative, agent, officer or director of such licensee." (Emphasis added.) Ill. Rev. Stat. 1983, ch. 43, par. 122.
Defendants claim that plaintiff's dual-discounting policy constitutes a proscribed thing "of value" under section 6-5. They assert that the larger discounts given to off-premise retailers bestows a thing of value upon such retailers. They claim that while section 6-5 does not prohibit all discounts, it does prohibit those which do not operate equally upon all retailers since any special advantage given to a retailer or class of retailers would constitute a thing of value.
Plaintiff asserts that section 6-5 was not intended to reach the pricing policies of distributors. It argues that the phrase "anything of value," when read in context, was only meant to prohibit the giving of such things as equipment, money or credit since these things would permit a distributor to acquire an interest in the retail outlet and thereby exercise dominion over it. As so understood, it contends that section 6-5 was not violated here as there was no evidence that its discount policy led to the domination of any retailer.
*175 Section 6-5 was intended to remedy a competitive abuse in the beer industry referred to as the "tied house." By the granting of gifts and loaning of money to retailers, distributors could effectively "tie" themselves to retailers to the point of excluding all competitors. This form of vertical integration between beer distributing and retailing allowed the distributor to exercise almost complete control over the retailers. "The interest of a particular brewery in promoting its product in a given area went to the point of determining location, asserting control over the licensee, and, through the power of credit and the use of equipment, it was, in fact, in the practical retail sale of beer." (Weisberg v. Taylor (1951), 409 Ill. 384, 390.) Tied houses became associated with such evils as political corruption, intemperance and the irresponsible ownership of taverns (National Distributing Co. v. United States Treasury Department, Bureau of Alcohol, Tobacco, & Firearms (D.C. Cir.1980), 626 F.2d 997, 1009), and the legislature therefore sought to prohibit the gifts and loans which made them possible. "The evils of the `tied house' have long been recognized and most, if not all, of the States, including our own, have prohibited the furnishing by manufacturers or distributors of buildings, bars, equipment, or loans of money to a retailer." Weisberg v. Taylor (1951), 409 Ill. 384, 388.
Defendants contend that the phrase "anything of value" must be construed so as to prohibit plaintiff from offering differing discounts based upon the nature of the retail operation. They argue, in effect, that the phrase should be read so as to prohibit discriminatory pricing. We disagree. Nothing in the phrase indicates to us that it was intended to create a blanket prohibition against price discrimination. Rather, as previously noted, the legislature merely sought to proscribe the giving of things of value in order to prevent tied houses and all of their *176 attendant evils. While price discrimination in this context may not necessarily be desirable, section 6-5 simply does not proscribe it. (Accord Burger Brewing Co. v. Thomas (1975), 42 Ohio St.2d 377, 329 N.E.2d 693; cf. Lake County Beverage Co. v. 21st Amendment, Inc. (Ind. App. 1982), 441 N.E.2d 1008 (wherein the court interpreted an Indiana statute which provides: "It is unlawful for a permittee in a sale or contract to sell alcoholic beverages to discriminate between purchasers by granting a price, discount, allowance, or service charge which is not available to all purchasers at the same time." (Ind. Code 7.1-5-5-7 (1980))).) Moreover, we find it significant that while defendants urge that section 6-5 prohibits price discrimination, they do not argue that volume discounts should be proscribed even though such discounts are discriminatory in the sense that they disfavor retailers unable to purchase in large quantity.
In National Distributing Co. v. United States Treasury Dept. (D.C. 1980), 626 F.2d 997, the court construed similar language in the Federal tied house statute. That statute provides in relevant part:
"(b) `Tied house'
To induce through any of the following means, any retailer, engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce * * *.
* * *
(3) by furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value * * *." (Emphasis added.) (27 U.S.C. § 205(b) (1982).)
National, a wine distributor, had sold wine at below its own cost to retail outlets throughout a particular county. The Bureau of Alcohol, Tobacco and Firearms argued *177 that below-cost sales, without justification, constituted the furnishing of a "thing of value" as the difference between what the distributor paid and the price it was sold to the retailer. After thoroughly reviewing the legislative history, the court concluded that the "giving * * * [of] other thing [sic] of value, 27 U.S.C. § 205(b)(3), when read in the context of the statute as a whole, does not prohibit below-cost pricing." (National Distributing Co. v. United States Treasury Department, Bureau of Alcohol, Tobacco, & Firearms, 626 F.2d 997, 1020.) The court reasoned that "[i]n the absence of any indication that National's price cut had the purpose or effect of gaining control over retail outlets in Leon County, we doubt whether the Act can have any application." 626 F.2d 997, 1004.
Defendants point to certain language in National that only nondiscriminatory and unconditional below-cost sales do not constitute the giving of a thing of value. By inference, they argue that National is support for their position inasmuch as the plaintiff's discount policy discriminated against off-premise retailers and was conditioned upon the purchase of a minimum quantity and promotional efforts. A closer reading of National, however, indicates that the court was only referring to price discriminations and conditions which were instituted for the purpose of, or had the effect of, obtaining control over retail outlets. The court stated that "[p]rice cuts are prohibited by the Act only when they are coupled with an agreement or understanding that a retailer will buy other products of the wholesaler or producer to the exclusion of competitors, or when they lead to domination and control of a retail outlet by the wholesaler or producer." (626 F.2d 997, 1020.) As such, National cannot be read as authority for the proposition that preferential discount policies which are enacted, as here, solely *178 in order to increase sales, constitutes the giving of a thing of value.
Plaintiff contends that a distributor's pricing practices can never constitute a violation of section 6-5. We disagree. There is, in our view, always the potential that a distributor may offer a preferential discount in order to gain control over the advantaged retailers. A distributor might furtively grant large discounts to impermissibly influence retailers and therefore violate section 6-5. In this respect, we agree with the court in National that "[i]n some circumstances a pricing arrangement might be used as a `subterfuge' to disguise a grant of financial assistance given to create a tied house, or to obtain an exclusive sales agreement." (National, 626 F.2d at 1004.) Here, however, all of the testimony before the Commission indicates that plaintiff maintained its preferential discount policy for competitive reasons. There was no suggestion that plaintiff's discount policy was anything but an exercise of business judgment to increase sales. There was no evidence that a tied house relationship between plaintiff and any of its retailers had been either attempted or created. We therefore hold that section 6-5 is inapplicable here where plaintiff maintains a preferential discount policy not to create a tied house but only to increase the volume of sales. Accordingly, we reverse the judgment of the appellate court and affirm the order of the trial court.
Appellate court reversed; circuit court affirmed.
JUSTICE SIMON took no part in the consideration or decision of this case.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-7231
ALEX DAVE ALEXANDER,
Plaintiff - Appellant,
versus
TERENA RICE, Sergeant; ANDRE HUSKINS,
Lieutenant at McDowell County Jail; DEPUTY
SHERIFF CAMPBELL, at McDowell County Jail;
DEPUTY SHERIFF DUNCAN, at McDowell County
Jail,
Defendants - Appellees.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Graham C. Mullen, Chief
District Judge. (CA-04-180-1)
Submitted: November 22, 2005 Decided: December 7, 2005
Before MOTZ, TRAXLER, and GREGORY, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Alex Dave Alexander, Appellant Pro Se. Patrick Houghton Flanagan,
CRANFILL, SUMNER & HARTZOG, L.L.P., Raleigh, North Carolina, Julie
L. Kerr, CRANFILL, SUMNER & HARTZOG, L.L.P., Charlotte, North
Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Alex Dave Alexander seeks to appeal the district court’s
order dismissing his claims against defendant Campbell. This court
may exercise jurisdiction only over final orders, 28 U.S.C. § 1291
(2000), and certain interlocutory and collateral orders, 28 U.S.C.
§ 1292 (2000); Fed. R. Civ. P. 54(b); Cohen v. Beneficial Indus.
Loan Corp., 337 U.S. 541 (1949). The order Alexander seeks to
appeal is neither a final order nor an appealable interlocutory or
collateral order. Accordingly, we dismiss the appeal for lack of
jurisdiction. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before
the court and argument would not aid the decisional process.
DISMISSED
- 2 -
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290 F.2d 270
A. D. HERRING, Plaintiff-Appellant,v.KENNEDY-HERRING HARDWARE CO., Inc., Defendant-Appellee.
No. 14301.
United States Court of Appeals Sixth Circuit.
May 17, 1961.
William R. Weeks, II, Wagner & Weeks, Chattanooga, Tenn., on brief, for appellant.
Joseph F. Wheless, Chattanooga, Tenn., for appellee.
Before MILLER, Chief Judge, O'SULLIVAN, Circuit Judge, and THORNTON, District Judge.
PER CURIAM.
1
Plaintiff-appellant, A. D. Herring, brought suit against defendant-appellee, Kennedy-Herring Hardware Company, Inc. (hereinafter referred to as the company) for $58,300 which he claimed was owed to him by appellee for back salary as a former officer-employee of such company. The district judge, after trial without a jury, gave judgment for defendant company. Plaintiff, hereinafter referred to as Herring, and one L. L. Kennedy, hereinafter referred to as Kennedy, in 1947 organized the defendant company. They were its largest, and controlling, shareholders. Kennedy was its President and Herring its Vice-President. The corporate shares were owned, 500 by Kennedy, 400 by Herring, 140 by Robert K. Bell and wife, and 135 by Wright R. Ross. Kennedy, Herring, Bell and Ross constituted the Board of Directors. Bell and Ross were Secretary and Treasurer, respectively. The paid in capital stock totalled $117,500.
2
At all times from the formation of the corporation in 1947 until July, 1955, when the company acquired all of its issued shares except those owned by Kennedy, Herring and Kennedy, as managing officers, drew substantially the same salaries from the business. From 1950 through July, 1955, salaries actually paid to these men ranged from approximately $6,000 to approximately $8,000. In January, 1951, there was set up on the books of the company a new salary schedule (retroactive to include 1950) which fixed the salaries of Kennedy and Herring each in the annual amount of $20,000. Such amounts were never paid in full, but accrued on the company's books as owing to said officers. Upon audit by the Internal Revenue Department, these accruals were reduced to $18,000 for Kennedy and $10,000 for Herring. Herring, however, was, for a time, drawing an additional salary from a subsidiary of the company. The amounts accrued or paid to Kennedy and Herring from the company and its subsidiary continued to total substantially the same amount for each of them. At the time of setting up this schedule of salaries for Kennedy and Herring, salaries in lesser amounts were also set up for shareholders Ross and Bell, as Treasurer and Secretary of the company. No salaries were ever paid to these latter two.
3
The amount sued for by Herring in the case at bar represented the excess of Herring's book accrued salary over what was actually paid to him. The company, as defendant, claimed that such excess never became a legal obligation.
4
The evidence on the trial presented an issue of fact as to whether the large salaries for Kennedy and Herring were ever intended to be legal obligations of the company. There was evidence that they were set up on the books in anticipation of a "salary freeze" thought to be imminent because of the Korean war and that they were also set up "for tax purposes." While minutes purporting to record directors' resolutions authorizing such salaries were prepared and included in the corporate records, there was evidence from which it could be found that no such resolutions were ever adopted by such directors. Referring to the intent of the officers and directors in relation to such salaries, plaintiff Herring testified to his understanding that such salaries "should not be paid until it was definitely decided that it (the salaries) was able to be paid," and that "it was set up to be paid whenever we felt like we wanted to." An accountant for the company testified that, "when we first started them up, there was no thought about paying them because they didn't have any money." The minutes of alleged action by the directors recited that the meeting of January 3, 1951, fixing salaries for 1950 and the meeting of January 3, 1952, fixing salaries for 1951, were held, "before the date of freeze." The company's accountant, whose advice apparently brought about the writing of the above minutes, gave as the reason for setting up the larger salaries the possibility of a wage freeze, and said "I thought it was good advice to them to get that figure authorized and even if they didn't pay it, it didn't hurt anything." There was evidence that at no time while the salaries were being accrued on the books was the corporation able to pay them.
5
There were two directors besides Herring and Kennedy. One of these testified that there was no intention to pay the larger salaries to Herring and Kennedy. The other expressed his understanding that the intent of setting up such salaries was so that, "if the corporation ever became in a position to where they could pay those salaries, they could," and, "it was based on whether the corporation could earn those." At no time did the directors ever determine that the company was in position to pay the larger salaries involved.
6
In 1955, Herring and Kennedy fell out and each was seeking to buy control of the corporation. Negotiations for this purpose concluded in July, 1955, and Kennedy accepted an offer of all the other shareholders to sell their shares. He consummated the purchase by having the corporation buy such shares. During the negotiations leading to the offer to sell, shareholders Bell and Ross expressly waived any claim for salaries which had been set up for them as Secretary and Treasurer of the company. Herring did not join in such waiver.
7
There was evidence that in communicating the offer to sell their shares to Kennedy, Bell and Ross, at the instigation of Herring, wired Kennedy that an offer had been made by an undisclosed outsider for all of the shares of Bell, Ross and Herring at a price substantially above the book value of the stock. They had no such offer, but the claim persuaded Kennedy to buy at the demand price. After the shares of Herring and the others had been purchased, the instant suit was brought by Herring.
8
The large salaries set up for the officers were carried as accrued liabilities of the company and were claimed as deductions on its income tax returns. At the time of an audit by the Internal Revenue Department, Kennedy signed an affidavit stating the company owed the salaries claimed as deductions.
9
The factual issue presented by this evidence as to whether the salary claimed by Herring was an obligation of the company, was resolved against Herring by the district judge. In his Findings of Fact and Conclusions of Law he found, "These salaries were fictitious and the corporation was not firmly committed to pay them. Mr. Herring, as director and vice-president of the corporation, knew that the company had not committed itself to pay them at any time and that they were set up on the books for other purposes than salaries. Mr. Kennedy also knew the corporation was not committed to pay such salaries. * * * The resolution authorizing the payment of $20,000.00 each to Mr. Herring and Mr. Kennedy was not legally and properly passed upon by the directors of the corporation. * * * All the officers and directors of the corporation knew the salaries were fictitious."
10
We are satisfied that the district judge could, under the evidence, come to the factual conclusions thus expressed. The facts so found vitiated plaintiff's claim for recovery. Being of the opinion that these Findings were not clearly erroneous, we are not at liberty to set them aside (Rule 52(a), Federal Rules of Civvil Procedure, 28 U.S.C.A.).
11
Judgment is affirmed.
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
08/18/1999
THOMAS K. KAHN
No. 98-3671 CLERK
Non-Argument Calendar
________________________
D. C. Docket No. 98-00146-CR-ORL-18C
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
Cross-Appellee,
versus
JOHN BRADLEY DAVIS,
Defendant-Appellee,
Cross-Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Florida
_________________________
(August 18, 1999)
Before TJOFLAT, BLACK and HULL, Circuit Judges.
PER CURIAM:
Appellee John Bradley Davis pled guilty to possession of three or more images
of child pornography, in violation of 18 U.S.C. § 2252(a)(5)(B). At sentencing, the
district court determined Appellant’s offense level to be 16 but granted a downward
departure because of “extraordinary circumstances” including “the absence of the
victim” and “the fact that the defendant made no use of the pornographic material
other than for personal use” and sentenced Appellant to two years probation. The
Government appeals the sentence contending the district court erred in granting a
downward departure from the applicable Sentencing Guidelines range, U.S.S.G.
§ 5K2.0. Appellee cross-appeals contending the district court plainly erred in setting
his offense level at 16. Based upon our review of the record, we conclude the district
court improperly departed downward, and thus vacate and remand for resentencing.
Additionally, the district court should clarify the calculation of Appellee’s total
offense level on remand.
We review the district court's decision to depart downward from the Sentencing
Guidelines for abuse of discretion. United States v. Rucker, 171 F.3d 1359, 1361
(11th Cir. 1999). This abuse of discretion standard “includes review to determine that
the discretion was not guided by erroneous legal conclusions.” Id. (citation omitted).
Because Appellee failed to object to his total offense level, we review this claim for
plain error. United States v. Olano, 113 S. Ct. 1770, 1776-1779 (1993).
2
A sentencing court must impose a sentence within the applicable Guideline
range unless it finds there exists “a mitigating circumstance of a kind, or to a degree,
not adequately taken into consideration by the Sentencing Commission in formulating
the [G]uidelines that should result in a sentence different from that described.” United
States v. Willis, 139 F.3d 811, 812 (11th Cir. 1998) (quoting U.S.S.G. § 5K2.0). To
grant a departure, the court must first determine whether any factor makes a case fall
outside the “heartland” of typical cases embodying the conduct described in the
applicable guideline. See Koon v. United States, 116 S. Ct. 2035, 2046-2047 (1996).
If a case is found to be atypical, the court must consider whether the factor should
result in a different sentence. Id. To determine whether a factor should result in a
different sentence, a district court must first decide whether the factor is forbidden,
encouraged, discouraged, or unaddressed by the guidelines as a potential basis for
departure. Id. at 2045.
If a factor is forbidden, e.g., race, sex, national origin, creed, religion and
socio-economic status, a district court cannot use it to depart from the applicable
guideline. Id. at 2047. If a factor is encouraged, e.g., causing death, a court is
authorized to depart from the applicable guideline if the guideline does not already
take that factor into account. Id. at 2045. If a factor is discouraged, e.g., education
and vocational skills, or is an encouraged factor already taken into account by the
3
applicable guideline, a district court may depart only if the factor is present to an
exceptional degree or in some other way makes the case distinguishable from an
ordinary case where the factor is present. Id. at 2045.
Finally, a district court may depart on the basis of a factor not addressed by the
Sentencing Commission if it finds, “after considering the ‘structure and theory of both
relevant individual guidelines and the Guidelines taken as a whole,’” that the factor
takes the case out of the applicable Guideline’s heartland. Id. at 2045 (citation
omitted).
The district court granted a downward departure because of “extraordinary
circumstances” including “the absence of the victim” and “the fact that the defendant
made no use of the pornographic material other than for personal use.” These bases
for departure are not atypical and therefore the district court abused its discretion in
granting the departure. The district court sentenced Appellant pursuant to U.S.S.G.
§ 2G2.4(s) which addresses mere possession of child pornography. Cf. U.S.S.G.
§2G2.2(a) (providing for increased offense level for one engaging in trafficking,
transporting, shipping, or advertising of child pornography). We have recently
explained that the harm resulting from possession of child pornography occurs when
one sustains a market for such pictures. United States v. Miller, 146 F.3d 1281, 1285
(11th Cir. 1998). Therefore, it is not necessary for one to derive any benefit from the
4
child pornography or actively solicit the pornography, provided one’s actions play a
role in the distribution network. Id. Accordingly, the applicable Guideline adequately
takes into account Appellant’s mere possession of pornography. We therefore
conclude the district court erred in departing downward on these bases and vacate and
remand the case for resentencing.1
On remand, the district court should clarify the basis for its determination of
Appellee’s total offense level. The PSI calculated Appellee’s total offense level at 18,
representing the application of a three level reduction for acceptance of responsibility
and three sentence enhancements for use of a computer in obtaining child
pornography, possession of materials involving minors, and possession of ten or more
items containing visual depictions involving the sexual exploitation of a minor. The
district court stated at sentencing it was adopting the PSI’s application of the
Guidelines, except the sentence enhancements for possession of materials involving
minors, and possession of ten or more items containing visual depictions involving the
1
The district court may have also relied on Appellee’s lack of criminal history as a basis for
departing downward because the court noted he “never had any prior brushes with the law.” Such
a departure would be inappropriate because Appellee’s criminal history category fell within
Category I which adequately accounted for his lack of criminal history. See U.S.S.G. § 4A1.3
(stating that “a departure below the lower limit of guideline range for Criminal History Category I
on the basis of the adequacy of criminal history cannot be appropriate.”). Appellee further contends
other bases support the district court’s departure. However, “in reviewing downward departures,
[this Court only] considers the reasons for departure actually articulated by the sentencing court.”
United States v. Baker, 19 F.3d 605, 616 (11th Cir. 1994) (quotation and citation omitted).
5
sexual exploitation of a minor. Accordingly, Appellee’s total offense level should
have been set at 14. The district court, however, sentenced Appellee based on a total
offense level of 16. Upon remand, the district court should clarify its calculation of
Appellee’s total offense level.
VACATED AND REMANDED.
6
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821 F.2d 322
60 A.F.T.R.2d 87-5050, 87-1 USTC P 9345,23 Fed. R. Evid. Serv. 208
UNITED STATES of America, Plaintiff-Appellee,v.Richard D. REED (86-3379), Julia Ann Reed (86-3380),Defendants-Appellants.
Nos. 86-3379, 86-3380.
United States Court of Appeals,Sixth Circuit.
Argued April 2, 1987.Decided June 2, 1987.
Julia Ann Reed, pro se.
Charles E. McFarland, Newton Falls, Ohio, Denis H. Mark (argued), Waller, Mark & Allen, Denver, Colo., for defendants-appellants.
Robyn Jones, Asst. U.S. Atty., Columbus, Ohio, Patrick J. Hanley (argued), Asst. U.S. Atty., Cincinnati, Ohio, for plaintiff-appellee.
Before WELLFORD and NELSON, Circuit Judges, and COHN, District Judge*.
WELLFORD, Circuit Judge.
1
Appellants Richard and Julia Reed, husband and wife, were each charged with three counts of wilfully attempting to evade federal income taxes in violation of 26 U.S.C. Sec. 7201 in the years 1980, 1981, and 1982, and were jointly charged with one count of conspiracy to defraud the United States for the period of January 1, 1980 through April 23, 1983, in violation of 18 U.S.C. Sec. 371. These charges were based on appellants' failure to file federal income tax returns or pay federal income taxes for the years 1980 through 1982 and their falsely claiming exemption from withholding of federal tax from their wages.
2
Richard Reed, a somewhat sophisticated taxpayer who holds a degree in business administration, admitted to investigating IRS agents that the Reeds had not filed tax returns in 1980, 1981, or 1982. He told the agents, and still contends, that he studied the tax code and decided that filing a tax return was voluntary and that a taxpayer need not pay taxes until the IRS sent a bill and made a valid assessment. The Reeds also reported on their W-4 forms that they were exempt from withholding in the years 1980 through 1982.
3
The Reeds fought the Internal Revenue Service in this case every step of the way, including resistance to enforcement of the tax summons and proceedings for discovery information, and challenging the validity of the indictment. They also sought voluminous discovery, including eighty-five Treasury Department files, ten Justice Department files, eight sections of the Internal Revenue Manual, every IRS report related to the indictment, Government Accounting Office reports, and information on the jurors. The district court denied the Reeds' request for these materials. They also filed motions to suppress evidence, to dismiss for government misconduct, and to dismiss for vindictive selective prosecution. These motions were denied. At the close of the government's case, defendants moved for the acquittal of Julia Reed and the court denied this motion. At the end of the trial, the jury found both of the Reeds guilty as charged. The Reeds then filed another motion for acquittal of Julia Reed, alleging insufficient evidence to support her conviction. The district court denied this motion and sentenced both defendants. The Reeds now appeal, challenging the denial of the motions for acquittal, the district court's exclusion of certain evidence, and the denial of the motion to dismiss.
4
At trial the government presented evidence of the following gross wages for the years in question: Richard Reed earned $21,631.98 in 1980, $23,783.56 in 1981, and $15,584.22 in 1982; Julia Reed earned $9,126.88 in 1980, $7,035.35 in 1981, and $11,705.67 in 1982. In each of these years, the government conceded that the Reeds might properly claim certain deductible expenses and capital losses with respect to payments of home mortgage interest, real estate taxes, sales tax, interest and finance charges, management fees and losses on commodity investments, state income taxes, medical insurance premiums, and charitable contributions. Most of these expenses were incurred jointly or by Richard Reed individually. The only deductions apparently attributable solely to Julia Reed were for sales tax on the car registered in her name, interest and finance charges based on her Mastercard, and interest on a loan taken out in her name. The deductions apparently attributable solely to Richard Reed were interest and finance charges on loans and credit cards in his name and the management fees and losses on investments undertaken by him.
5
The evidence indicated that if the Reeds had filed joint tax returns, which they had done in years immediately before those in dispute, their taxable income and tax due, taking the deductions into account in a fashion consistent with their actions, would have been as follows:
6
YEARS TAXABLE INCOME: TAX DUE:
1980 $21,573.76 $3,277.05
1981 22,929.50 3,986.79
1982 24,841.97 4,107.17
----------
TOTAL $11,371.01
7
If the Reeds had filed separate returns, splitting the jointly held deductions and each deducting expenses and losses held in their own names, the taxable income and tax due would have been as follows:
8
TAXABLE
NAME: YEAR: INCOME TAX DUE
Richard Reed 1980 $14,771.69 $2,628.59
Richard Reed 1981 $18,127.89 $4,065.95
Richard Reed 1982 $18,888.90 $4,163.67
Julia Reed 1980 $ 6,790.07 $849.09
Julia Reed 1981 $ 4,800.61 488.92
Julia Reed 1982 $ 6,534.35 728.03
Total combined tax due on separate returns--
$12,924.25
9
Finally, appellant Julia Reed maintained and the evidence demonstrated that if she had taken all of the deductions available to both of the Reeds, she would have owed no taxes for the years in question. Both the Reeds' expert witness and the government's expert witness testified to this at trial. The government's witness also testified that if the Reeds had reported all of the deductions on a separate return for Julia Reed and none on Richard Reed's return, the taxes due from both would have been as follows:
10
YEAR TAX DUE FROM TAX DUE FROM
JULIA REED RICHARD REED
1980 -$29.32 (refund) $4,259.03
1981 0 $5,943.23
1982 0 $6,381.64
------------------------------
TOTAL: -$29.32 $16,583.95
11
This latter method, if utilized, would have resulted in a total tax liability for the Reeds of approximately $4,000-$5,000 more than other available methods shown above. The government's expert witness testified, moreover, that she could have claimed all of the deductions only if she could show that she paid them. The Reeds presented no evidence indicating that Julia Reed actually paid all of the deductible expenses; neither testified at trial. The evidence also failed to show that Julia Reed independently had the means and funds to make all of the payments that resulted in deductible expenses.
12
The first issue presented on appeal is whether the trial judge erred in denying Julia Reed's motions for acquittal. Denial of a motion for acquittal is error only if the evidence against the defendant is insufficient to support a conviction, giving the benefit of reasonable favorable inferences to the prosecution. United States v. Adamo, 742 F.2d 927, 934 (6th Cir.1984), cert. denied sub nom Freeman v. United States, 469 U.S. 1193, 105 S.Ct. 971, 83 L.Ed.2d 975 (1985). Appellants assert that the government's proof must "be such as will exclude every reasonable hypothesis except that of guilt." We have expressly rejected that argument, however, in United States v. Stone, 748 F.2d 361, 363 (6th Cir.1984). As indicated, the reviewing court must view the evidence and all reasonable inferences therefrom in the light most favorable to the government. United States v. Bavers, 787 F.2d 1022, 1026 (6th Cir.1985).
13
The elements of the tax evasion offense are (1) wilfulness, (2) existence of a tax deficiency, and (3) an affirmative act constituting evasion. United States v. Curtis, 782 F.2d 593, 595 (6th Cir.1986). Appellants claim that the government did not meet its burden of proving a tax deficiency, because the Reeds offered evidence of available tax deductions. While availability of deductions is clearly part of an effective defense to an alleged tax deficiency, see, e.g., Davis v. United States, 226 F.2d 331 (6th Cir.1955), cert. denied, 350 U.S. 965, 76 S.Ct. 432, 100 L.Ed. 838 (1956), a party claiming a deduction must ordinarily establish the right to claim a deduction or an exemption. We have ruled that although the burden of proof does not shift in a criminal case, once the government establishes a prima facie case, the defendant must present evidence to overcome the inferences reasonably drawn from the proven facts. See Curtis, 782 F.2d at 595 (quoting Davis, 226 F.2d at 335-36). The question here, therefore, is whether the government presented sufficient evidence to establish a prima facie case that a tax deficiency existed as to Julia Reed, and whether she presented evidence sufficient to overcome that inference through evidence that sufficient deductible items were actually attributable to her.
14
The Reeds do not dispute that they both earned taxable income and failed to file returns for the years in question. The only issue is whether available deductions might offset Julia Reed's income to the extent that no deficiency existed. Based on the evidence presented at trial, the most reasonable inference the jury would draw is that the Reeds would have chosen to minimize their tax liability by filing joint returns, or at least by splitting the joint deductions on separate returns, in which case they owed taxes for each year in question. Filing joint returns was the practice they had previously followed. This inference is also the most logical one considering the evidence in the light most favorable to the government. See Bavers, 787 F.2d at 1026. Thus, the government presented sufficient evidence for the jury to conclude that a tax deficiency would exist as to Julia Reed for each of the years in question.
15
The Reeds presented, through their expert witness, only one hypothetical situation in which Julia Reed would have conceivably owed no tax: by means of separate filings and Julia's legitimately claiming all of the deductions incurred by both of the Reeds. The evidence did not indicate, however, that all of the deductions were actually available to Julia Reed. Most of the deductions were jointly incurred and some of them appeared to be attributable only to Richard Reed. The jury, then, could reasonably determine that the Reeds failed to rebut the logical inference that a tax deficiency existed as to both defendants. Cf. Curtis, 782 F.2d at 596 (defendant presented no evidence to rebut the inference that money he received was income). The evidence was sufficient for the jury to find that a tax deficiency existed as to Julia, and we therefore conclude that the district court properly denied the motions for acquittal.
16
Appellants also argue that the trial judge erred in excluding certain evidence that appellants sought to introduce concerning activity that took place after the time frame set forth in the indictment (after April 23, 1983). The evidence defendants sought to introduce included W-2 Forms and payroll records showing taxes withheld in subsequent years, testimony regarding 1983 taxes and events, and correspondence between the Reeds and the government. Appellants argue that this evidence was relevant to the issue of wilfullness. See, e.g., United States v. Richards, 723 F.2d 646, 649 (8th Cir.1983) ("subsequent tax paying conduct is relevant to the issue of willfulness in a prior year."); United States v. Thiel, 619 F.2d 778, 781 (8th Cir.) (no abuse of discretion in admitting taxpayer's returns for prior or subsequent years), cert. denied, 449 U.S. 856, 101 S.Ct. 152, 66 L.Ed.2d 70 (1980).
17
The trial judge excluded the evidence on the basis of Rule 403, finding that any probative value of this information concerning subsequent years was outweighed by the dangers of unfair prejudice, confusion, and that it might be misleading to the jury. See Fed.Rule of Evid. 403. Appellants argue that this ruling was not only error, but was prejudicial to them in that the evidence they sought to introduce would have enabled them to make arguments in closing that they otherwise could not have made.
18
We find no error in the ruling. The exhibit concerning correspondence between the Reeds and the government was never actually offered as evidence. This correspondence, moreover, took place in 1985 while litigation against the Reeds was pending. The correspondence thus did not relate to their intent in not filing in 1980-82. The information appellants sought to introduce through the W-2 Forms and payroll records, namely that federal taxes were withheld from their salary in subsequent years, was introduced through the testimony of their employers and IRS personnel. This testimony, moreover, explained that the taxes were withheld only after the IRS instructed the employers to withhold taxes, and despite the protests of the Reeds. The W-2 Forms, standing alone, would not indicate whether the Reeds voluntarily submitted to withholding. The Forms alone were thus potentially misleading and also offered no information not otherwise presented through testimony of witnesses. Excluding evidence under Rule 403 is a matter within the broad discretion of the trial court. See, e.g., United States v. Zipkin, 729 F.2d 384, 389 (6th Cir.1984); United States v. Brady, 595 F.2d 359, 361 (6th Cir.), cert. denied, 444 U.S. 862, 100 S.Ct. 129, 62 L.Ed.2d 84 (1979). We conclude that the trial court acted within its reasonable discretion in this case.
19
The final issue in this case concerns the Reeds' motion to dismiss for vindictive prosecution. Defendants filed the motion and sought discovery relevant to that motion, but the court denied those materials. At trial, the evidence allegedly indicated that the government initiated the criminal investigation against defendants almost immediately after defendants had written letters to Congressmen. When this evidence came to light at trial, defendants renewed their motion to dismiss for vindictive prosecution. In addition to the evidence of timing, defendants offered a letter and a copy of the indictment indicating that the charges filed against them were raised at some juncture in the prosecution process from misdemeanors to felonies. The court considered all of this evidence and denied the motion to dismiss. The judge found that whatever the government's reason for changing the misdemeanor charge to a felony charge, no evidence suggested that the decision to prosecute or to charge defendants with a felony was based on improper or vindictive grounds.
20
Defendants have not shown any evidence of a reasonable likelihood of vindictiveness in this case. Accordingly, the district court properly denied defendants' motion. See United States v. Goodwin, 457 U.S. 368, 373, 102 S.Ct. 2485, 2488, 73 L.Ed.2d 74 (1982) (standard is reasonable likelihood of vindictiveness); United States v. Andrews, 633 F.2d 449, 453 (6th Cir.1980) (same), cert. denied, 450 U.S. 927, 101 S.Ct. 1382, 67 L.Ed.2d 358 (1981).
21
For the foregoing reasons, we AFFIRM the district court in all respects.
22
DAVID A. NELSON, Circuit Judge, concurring.
23
I concur in the judgment and opinion of the court, and write separately only to emphasize that under any hypothesis as to how the Reeds might have filed their returns, they failed to show that there would not have been a tax deficiency as to both of them.
24
An interesting question would have been presented if the evidence had shown that all of the deductions in question could legitimately have been claimed by Mrs. Reed on separate returns and that no tax would have been due from Mrs. Reed if the couple had chosen to handle the deductions in that manner. In point of fact, however, the record affirmatively shows that many of the deductions could not properly have been claimed by Mrs. Reed had separate returns been filed. Some of the expenditures in question were paid by checks drawn on a checking account maintained by Mr. Reed alone. Other expenditures consisted of interest payments on charge accounts maintained solely by Mr. Reed. Still other expenditures were for state and local taxes on Mr. Reed's income and for sales taxes that could have been attributed only to Mr. Reed had the couple filed separate returns. Finally, the Reeds' expert witness attributed to Mrs. Reed a sizable capital loss incurred in a commodities trading account maintained solely in the name of Mr. Reed. Mrs. Reed failed to demonstrate that she would have had no tax deficiency if she had filed separate returns claiming all of the deductions that she was legally entitled to claim, so this court need not decide--and, as I understand the opinion, does not purport to decide--whether Mrs. Reed could properly have been convicted if the facts had been shown to be otherwise.
*
The Honorable Avern Cohn, United States District Court for the Eastern District of Michigan, sitting by designation
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MEMORANDUM OPINION
No. 04-10-00853-CR
Edward Glen BYARS,
Appellant
v.
The STATE of Texas,
Appellee
From the 187th Judicial District Court, Bexar County, Texas
Trial Court No. 2010CR2649
Honorable Raymond Angelini, Judge Presiding
Opinion by: Catherine Stone, Chief Justice
Sitting: Catherine Stone, Chief Justice
Phylis J. Speedlin, Justice
Marialyn Barnard, Justice
Delivered and Filed: October 12, 2011
AFFIRMED
The sole issue presented in this appeal is whether the evidence is legally sufficient to
sustain a conviction for felony driving while intoxicated. Although Edward Glen Byars does not
challenge the sufficiency of the evidence to prove his intoxication, he asserts the evidence is
insufficient to show that he was operating a motor vehicle in a public place. We overrule
Byars’s contention and affirm the trial court’s judgment.
04-10-00853-CR
STANDARD OF REVIEW
In evaluating the legal sufficiency of the evidence to support a criminal conviction, “we
consider all the evidence in the light most favorable to the verdict and determine whether based
on that evidence and reasonable inferences therefrom, a rational juror could have found the
essential elements of the crime beyond a reasonable doubt.” Hooper v. State, 214 S.W.3d 9, 13
(Tex. Crim. App. 2007). We defer to the responsibility of the trier of fact to draw reasonable
inference from basic facts to ultimate facts. Id.
ANALYSIS
A person commits the offense of driving while intoxicated “if the person is intoxicated
while operating a motor vehicle in a public place.” TEX. PENAL CODE ANN. § 49.04 (West
2011). Section 1.07(40) of the Texas Penal Code defines a “public place” as “any place to which
the public or a substantial group of the public has access and includes, but is not limited to,
streets, highways, and the common areas of schools, hospitals, apartment houses, office
buildings, transport facilities, and shops.” TEX. PENAL CODE ANN. § 1.07(40) (West 2011)
(emphasis added).
Byars was arrested for driving while intoxicated after he was involved in an accident with
another car while backing out of his driveway. Byars argues that the evidence did not establish
that he operated his truck in a public place. Instead, Byars contends the evidence established that
he operated his truck in his own private driveway, which was not a public place. This argument
is unconvincing when the evidence is considered in the light most favorable to the jury’s verdict.
See Hooper, 214 S.W.3d at 13.
Jaime Silva, the driver of the other car involved in the accident, testified that at least half
of Byars’s truck was in the street at the time of the accident. Guadalupe Conchas-Rivera,
-2-
04-10-00853-CR
Byars’s neighbor who witnessed the accident, testified that the accident occurred in Byars’s
driveway. At the time of the accident, however, Conchas-Rivera told the investigating officer
that Byars backed the truck out of the driveway and into the other vehicle. The jury was free to
resolve any conflicts in the evidence. See id. Furthermore, Byars’s truck was parked on the
street when the investigating officers arrived at the scene. Because the truck was parked on the
street, the jury could reasonably infer that Byars drove the truck on the street in order to park it.
See id. Accordingly, the evidence is legally sufficient to support the jury’s finding that Byars
drove his truck on the street, which is a public place. See TEX. PENAL CODE ANN. § 1.07(40)
(West 2011).
CONCLUSION
Because the evidence is legally sufficient to support the jury’s verdict, the trial court’s
judgment is affirmed.
Catherine Stone, Chief Justice
DO NOT PUBLISH
-3-
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FILED BY CLERK
IN THE COURT OF APPEALS NOV -2 2005
STATE OF ARIZONA COURT OF APPEALS
DIVISION TWO DIVISION TWO
KELLY TISSICINO and KIRK )
NIELSON, individually and as wife and )
husband, ) 2 CA-CV 2005-0060
) DEPARTMENT A
Plaintiffs/Appellants, )
) OPINION
v. )
)
JUANITA PETERSON, a single woman, )
)
Defendant/Appellee. )
)
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY
Cause No. C20036794
Honorable Charles S. Sabalos, Judge
REVERSED AND REMANDED
Stompoly, Stroud, Glicksman & Erickson, P.C.
By Elliot Glicksman Tucson
Attorneys for Plaintiffs/Appellants
Hazlett Law Firm
By Carl E. Hazlett Tucson
Attorneys for Defendant/Appellee
E C K E R S T R O M, Judge.
¶1 In this action for the wrongful death of their teenage son, Zachary,
plaintiffs/appellants Kelly Tissicino and Kirk Nielson appeal from the grant of summary
judgment in favor of defendant/appellee Juanita Peterson on their claim of negligent
entrustment. Genuine issues of material fact exist as to (1) whether Juanita had the right to
control the gun she had provided to her adult son, Timothy, and which he used to shoot
Zachary, and (2) whether Juanita knew Timothy was incompetent to use it safely. A genuine
issue of material fact also exists as to whether Timothy’s shooting of Zachary was a
supervening cause of his death that was unforeseeable to Juanita. Accordingly, we reverse
summary judgment and remand this matter to the trial court for further proceedings.
¶2 In reviewing the trial court’s ruling, we view the facts in the light most
favorable to Tissicino and Nielson, the parties against whom summary judgment was granted.
See Great Am. Mtg., Inc. v. Statewide Ins. Co., 189 Ariz. 123, 124, 938 P.2d 1124, 1125
(App. 1997). Juanita’s husband, Don, originally had given the gun to Timothy about twenty
years earlier, and Don had re-taken possession of the gun because Timothy’s brother had
used it in a crime. At that time, Don had stated to Timothy, “I’m going to hang onto [the
gun] because you let your brother go into your room and take it.” For the next twenty years,
the gun remained in Don’s and Juanita’s possession. Juanita testified at her deposition that
Don had stored the gun in a drawer and had kept it for protection and that after Don had
moved to a nursing home, Juanita had placed the gun in a typewriter case in the closet in a
bedroom where Timothy stored clothes and other personal property.
2
¶3 Juanita testified that Timothy had never asked for the gun; rather, she had
eventually requested that Timothy take the gun because she did not like having a gun around
the house. Juanita also conceded she had been aware that Timothy had abused alcohol and
drank regularly at the time she had given him the gun, that she had consumed alcohol with
him in the four months preceding the shooting, and that Timothy accidentally had shot
himself with a gun on a previous occasion. Within one or two weeks after Juanita gave the
gun to Timothy, he shot Zachary accidentally. Timothy erroneously believed the gun was
unloaded and pulled the trigger while pointing the gun at Zachary. Timothy admitted at his
deposition that he was intoxicated at the time.
¶4 After Zachary’s death, Timothy pled guilty to manslaughter and was sentenced
to seven years in prison. Before sentencing, Timothy underwent a battery of intelligence and
proficiency tests. Those tests revealed that Timothy had a below average intelligence
quotient (IQ) of seventy-four, and his reading, spelling, and math skills were at a grade
school level. After testing, psychologists determined he also suffered from brain damage and
a cognitive disorder.
¶5 Juanita wrote a letter to the sentencing judge explaining that, while pregnant
with Timothy, she had been the victim of extreme domestic violence. She added that she
had used alcohol during that pregnancy. She stated that Timothy had suffered head trauma
resulting from a serious automobile accident in 1977 and numerous motorcycle accidents.
Juanita also maintained that Timothy had suffered from learning difficulties throughout his
3
school career and eventually had been placed into special education classes. She
acknowledged in the letter to the sentencing judge that she was aware that Timothy had
abused alcohol since the age of fourteen. Timothy’s lawyer asserted in a sentencing
memorandum that “Tim’s long history of alcohol abuse and the strong possibility that he
suffers from fetal alcohol syndrome . . . along with the extensively documented mental
deficiencies Tim suffers from, call into question Tim’s ability to reason right from wrong or
to conform his conduct to the requirements of the law.”
¶6 Tissicino and Nielson brought a wrongful death action against Juanita, but
Juanita moved for summary judgment, arguing, inter alia, that she owed no duty to
Tissicino, Nielson, or Zachary, because “a defendant [cannot] ‘negligently entrust’ property
to its lawful owner,” and Timothy was the undisputed owner of the gun. The trial court
agreed, finding that Restatement (Second) of Torts § 390 (1965), was inapplicable because
“in the cases under Restatement § 390, the liable party actually owned the chattel,” and
there was no genuine issue of material fact as to whether Juanita owned the gun. The trial
court also found that Tissicino and Nielson had presented insufficient facts to demonstrate
that Juanita knew or should have known her providing the gun to Timothy posed an
unreasonable risk of harm to others. “We review the propriety of summary judgment de
novo.” AHCCCS v. Bentley, 187 Ariz. 229, 231, 928 P.2d 653, 655 (App. 1996). A
motion for summary judgment should be granted when no genuine issues of material fact
exist so that the movant is entitled to judgment as a matter of law. Id.
4
¶7 Tissicino and Nielson argue there was a genuine issue of material fact as to
who owned the gun and whether Juanita negligently had entrusted the gun to Timothy
because she knew or should have known that providing a gun to him posed an unreasonable
risk of harm to others. Tissicino and Nielson claim Juanita’s duty arises under Restatement
(Second) § 390, which states:
One who supplies directly or through a third person a
chattel for the use of another whom the supplier knows or has
reason to know to be likely because of his youth, inexperience,
or otherwise, to use it in a manner involving unreasonable risk
of physical harm to himself and others whom the supplier
should expect to share in or be endangered by its use, is subject
to liability for the physical harm resulting to them.
¶8 At the outset, we disagree that plaintiffs were required to establish Juanita
owned the gun in order to maintain their claim against her for negligent entrustment pursuant
to § 390. Although Arizona courts have not yet squarely addressed this issue, there are
cases that suggest a defendant’s ownership of a chattel is not a prerequisite to liability for
negligent entrustment. See State Farm Auto Ins. Co. v. Dressler, 153 Ariz. 527, 529-30,
738 P.2d 1134, 1136-37 (App. 1987) (“[N]egligent entrustment liability is theoretically
possible in a case where the defendant neither owned, maintained nor used the vehicle in
question . . . .”); Lumbermens Mut. Cas. Co. v. Kosies, 124 Ariz. 136, 138, 602 P.2d 517,
519 (App. 1979) (“In order to prove negligent entrustment it is necessary for the plaintiff to
show . . . that the defendant owned or controlled the motor vehicle concerned . . . .”)
(emphasis added).
5
¶9 The plain language of § 390 does not make ownership a material element.
Section 390 is “a special application of the rule stated in [Restatement (Second) of Torts]
§ 308 [(1965)].” Restatement § 390 cmt. b. Section 308 provides as follows:
It is negligence to permit a third person to use a thing or
to engage in an activity which is under the control of the actor,
if the actor knows or should know that such person intends or
is likely to use the thing or to conduct himself in the activity in
such a manner as to create an unreasonable risk of harm to
others.
(Emphasis added.) In defining control, comment a to § 308 states that
[t]he words “under the control of the actor” are used to indicate
that the third person is entitled to possess or use the thing or
engage in the activity only by the consent of the actor, and that
the actor has reason to believe that by withholding consent he
can prevent the third person from using the thing or engaging in
the activity.
¶10 A majority of other jurisdictions have defined right to control the chattel as the
essential element of a negligent entrustment claim, rather than ownership. See, e.g., Mills
v. Crone, 973 S.W.2d 828, 831 (Ark. Ct. App. 1998) (“According to the Restatement, one
is not liable for negligent entrustment of a thing if he has no right to control its use.”);
Zedella v. Gibson, 650 N.E.2d 1000, 1003 (Ill. 1995) (defining entrustment under the
restatement “with reference to the right of control of the subject property”); Green v.
Harris, 70 P.3d 866, 871 (Okla. 2003) (acknowledging that, although negligent entrustment
usually involves ownership, possession and control is actual requirement).
6
¶11 We conclude that a genuine issue of material fact exists as to whether Juanita
had the right to control the gun. As noted, in assessing whether genuine issues of material
fact exist, we view the facts and all reasonable inferences therefrom in the light most
favorable to the party that opposed summary judgment. Wilson v. U.S. Elevator Corp., 193
Ariz. 251, ¶ 2, 972 P.2d 235, 236-37 (App. 1998). Summary judgment is only proper if the
facts produced in support of the claim have so little probative value that a reasonable jury
could not agree with the conclusion advanced by the proponent. Id. ¶ 5.
¶12 The parties do not dispute that Don, Juanita’s husband, had owned the gun
and had given it to Timothy. Nor do they dispute that Don reasserted control of the gun
after Timothy’s brother had used it to commit a crime and after Don had stated to Timothy,
“I am going to hang onto it because you let your brother go into your room and take it.”
Moreover, deposition testimony established that Don had possessed the weapon and had
kept it for protection for nearly twenty years without any effort by Timothy to claim it or
otherwise possess it. From these facts, a jury could infer that Timothy had abandoned his
ownership interest in it. See 1 Am. Jur. 2d Abandoned, Lost and Unclaimed Property § 3
(2005) (“[T]he term ‘abandonment,’ as applied to personal property . . . means the act of
voluntarily and intentionally relinquishing a known right . . . .”); see also Benjamin v.
Lindner Aviation, Inc., 534 N.W.2d 400, 406 (Iowa 1995) (“Abandoned property belongs
7
to the finder of the property against all others, including the former owner.”).1 Even
assuming Timothy still technically owned the gun after Don had reasserted control over it,
an owner forfeits the legal right to regain possession and control of personal property from
one who adversely controls it after the passage of two years. See A.R.S. § 12-542(5) (setting
forth two-year limitations period for bringing conversion action to recover possession of
personal property).
¶13 Juanita maintains that, after Don originally gave the gun to Timothy, he merely
continued to hold it for Timothy during the twenty years, thus creating a bailor/bailee
relationship wherein Timothy continued to possess a superior right to control the property.
See Nava v. Truly Nolen Exterminating of Houston, Inc., 140 Ariz. 497, 500, 683 P.2d
296, 299 (App. 1984) (“Where personal property is delivered . . . in trust for a specific
purpose, with the . . . implied agreement that the property will be returned or accounted for
when the purpose is accomplished, the transaction constitutes a bailment.”). But Don’s
reassertion of control over the gun, his statement implying that he was the arbiter of who
1
Juanita maintains that we should not address the common law doctrine of
abandonment in evaluating the question of ownership and control because Tissicino and
Nielson never raised that specific legal doctrine in their opposition to summary judgment.
However, they have squarely challenged, both on appeal and below, the trial court’s
conclusion that Timothy owned the gun and, in so doing, have emphasized Don’s prolonged
possession of the gun without objection by Timothy. Juanita further complains that she was
not provided an opportunity to address the law of abandonment in the context of this case
because we ordered no supplemental briefing on the topic. Yet, Juanita has declined to
specify how we have erred in applying the principles of abandonment, although she could
have done so in her otherwise comprehensive motion for reconsideration.
8
could possess it, and Timothy’s arguable acquiescence for twenty years, all contradict
Juanita’s theory that Don was holding the gun in trust for Timothy’s use. Therefore, a jury
reasonably could conclude that Timothy had abandoned any ownership interest he may have
had in the gun, that Don was not merely holding it for him as a bailee, and that Don and
Timothy both believed that Don had the legal right to control it.
¶14 Finally, a jury reasonably could conclude that Juanita’s continued possession
of the gun after her husband had moved to a nursing home, her act of hiding it in a
typewriter case, and her ultimate decision to give it to Timothy for reasons of her own all
indicated that the gun had been under her control when she had entrusted it to Timothy.
Thus, the court erred by granting summary judgment in favor of Juanita on the ground that
she was not the “owner” and therefore had no duty to refrain from providing the firearm to
Timothy. Rather, there existed a material issue of fact as to whether Juanita had the right
to control the gun to the extent she had the power to possess it, relocate it, and withhold her
consent to its use by Timothy.
¶15 The trial court also found that under “no reasonable interpretation of the facts
of this case” could a jury conclude Juanita “knew or should have known that providing the
firearm to her adult son presented an unreasonable risk of harm to Zachary.” The trial court
further observed that to find otherwise,
the Court would have to find that the law requires the owner of
a firearm to thoroughly examine and consider the constellation
of characteristics of an apparently competent person which may
potentially present an unreasonable risk of harm to others.
9
While this may be a salutary policy, it is not yet the policy or
the law of the state of Arizona.
We do not agree with the trial court that the “salutary policy” is not yet the law in Arizona.
Section 390 of the Restatement (Second) specifically requires the entrustor of a chattel to
consider the characteristics of the entrustee, such as “youth, inexperience, or otherwise” in
evaluating whether the latter might use the chattel in a manner that would pose “an
unreasonable risk of physical harm to himself and others.” See Martin v. Schroeder, 209
Ariz. 531, n.1, 105 P.3d 577, 579 n.1 (App. 2005) (equating § 390 with negligent
entrustment in Arizona).
¶16 Timothy’s “constellation of characteristics”—alcohol abuse, mental
impairment including cognitive dysfunction, and a prior accident with a gun—and Juanita’s
undisputed awareness of them, together created a genuine issue of material fact on the
question of whether Juanita should have known that an unreasonable risk of physical harm
would be created if she gave Timothy the gun. See id. ¶ 19 (suggesting that knowledge of
son’s contemporaneous marijuana use at the time parents bought him a gun would be a jury
question under § 390).
¶17 Juanita also argues that any negligence by her in entrusting the gun to Timothy
was not the proximate cause of Zachary’s death because Timothy’s criminal act in recklessly
shooting Zachary constituted a superseding cause. But, a superseding cause relieves an
original tortfeasor of liability only when “an intervening act of another was unforeseeable
by a reasonable person in the position of the original actor and when, looking backward,
10
after the event, the intervening act appears extraordinary.” Ontiveros v. Borak, 136 Ariz.
500, 506, 667 P.2d 200, 206 (1983). Moreover, the issue of causation is ordinarily a
question of fact for the jury to decide. Id. at 508, 666 P.2d at 208. Viewing the evidence
in the light most favorable to Tissicino and Nielson, a jury could reasonably conclude that
Timothy’s accidental shooting of Zachary was foreseeable to Juanita, given her awareness
that he was mentally impaired, abused alcohol, and had shot himself accidentally on a
previous occasion. Thus, Tissicino and Nielson raised a question of material fact on whether
Juanita’s negligent entrustment of the gun to Timothy was a proximate cause of Zachary’s
death.
¶18 Accordingly, we reverse the trial court’s order granting summary judgment in
favor of Juanita Peterson and remand for proceedings consistent with this decision.
____________________________________
PETER J. ECKERSTROM, Judge
CONCURRING:
____________________________________
JOSEPH W. HOWARD, Presiding Judge
____________________________________
J. WILLIAM BRAMMER, JR., Judge
11
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28 Mich. App. 399 (1970)
184 N.W.2d 547
CARPENTER
v.
ALBERTO CULVER CO.
Docket No. 7,039.
Michigan Court of Appeals.
Decided December 3, 1970.
Wisti, Jaaskelainen & Bourland, for plaintiff.
Humphrey & Weis, for defendant Alberto Culver Company.
Messner, LaBine & Vairo, for defendants Gardner and Janis.
Before: FITZGERALD, P.J., and McGREGOR and O'HARA,[*] JJ.
*401 PER CURIAM.
This is a damage suit brought against the above named defendants, arising from personal injuries claimed to have been caused by a hair-dyeing product manufactured by defendant Alberto Culver Company, and sold to plaintiff by defendants Gardner and Janis, doing business as City Drug Store. After a jury trial in circuit court, a verdict of no cause of action was found and judgment was entered accordingly. Plaintiff's suit charged negligence and breaches of implied and express warranties. The trial judge refused to submit the count of express warranty to the jury, and from this, plaintiff appeals.
This Court confines itself to the question of any express warranty made by the City Drug Store; since plaintiff makes no argument as to the liability of defendant, Alberto Culver Company, this issue is deemed to be abandoned.
Plaintiff entered defendants' drugstore with the intention of purchasing a hair dye; while she was viewing the various hair-dyeing products, of which there were more than 20, she was offered assistance by one of the sales clerks in the store. Plaintiff claims the clerk indicated that several of her friends had used the hair-dyeing product in question, and that her own hair came out "very nice" and "very natural." Plaintiff also testified that the clerk told her she "would get very fine results." This Court notes that evidence establishes that both the package containing the solution and the bottle had cautionary instructions[1] regarding the product.
Plaintiff claims that no instructions were enclosed and that she called the store for such instructions. *402 She did not inquire in regard to taking a preliminary test (commonly known as a "patch" test), as she was admittedly familiar with the necessity for so doing. Plaintiff contends that she performed such a patch test and alleges that there was no adverse reaction prior to the product's use. Plaintiff ultimately used the product and suffered an adverse skin reaction.
Testimony was introduced at trial which indicated that plaintiff had, on at least one previous occasion, used a hair coloring product (although not this one) and had also suffered an adverse reaction to it. No mention was made to the sales clerk at the time of the purchase concerning this previous adverse reaction, or at the time the plaintiff called the drug-store.
In determining whether a statement of the seller is to be deemed a warranty, it is important to consider whether in the statement the seller assumes to assert a fact of which the buyer is ignorant, or merely states an opinion or judgment upon a matter of which the seller has no special knowledge and on which the buyer may be expected also to have an opinion and to exercise his judgment. Representations which merely express the seller's opinion, belief, judgment, or estimate do not constitute a warranty. 67 ALR2d 619, § 2, p 625.
In the instant case, from all the factual evidence, we cannot agree that such statements made by the retail seller[2] can be considered that of express warranty *403 for use by this plaintiff. From the context in which such statements were made, coupled with the cautionary instructions printed on both the bottle and the box, warning against possible adverse reaction, nothing more existed than an implied warranty that the product was reasonably fit for use as a hair dye. 2 Frumer & Friedman, Products Liability, § 16.04[4]; Anno: 67 ALR2d 619; Anno: 17 ALR3d 1010; Olin Mathieson Chemical Corp. v. Moushon (1968), 93 Ill App 2d 280 (235 NE2d 263); See Hayes Construction Co. v. Silverthorn (1955), 343 Mich 421; but see also Graham v. Jordan Marsh Co. (1946), 319 Mass 690 (67 NE2d 404); Kaufman v. Katz (1959), 356 Mich 354. Plaintiff did not present sufficient evidence from which a jury could have inferred an express warranty and a breach thereof.
Plaintiff's next contention of error concerns the erroneous admission into evidence of a deposition, inasmuch as such deposition was allegedly taken without reasonable notice to plaintiff's attorneys, who were unable to cross-examine the deponent. GCR 1963, 308.1 provides that "all errors and irregularities in the notice for taking a deposition are waived unless written objection is promptly served upon the party giving the notice." The basic principle of the rule is that objections, to be curable for technical defects, must be made promptly or be lost. Enforcement of this principle will give the person in error an opportunity to correct curable mistakes promptly, while witnesses and attorneys are at hand, thereby saving the time and expense of a motion to suppress and having to cure technical defects long after the fact. It will also prevent the waste of time and money on needless interruptions to obtain rulings on other matters during the course *404 of taking the deposition which might better await the time of trial.
In the case cited by plaintiff, Drosdowski v. Order of Chosen Friends (1897), 114 Mich 178, the party opposing the deposition made proper objection before trial. There is no question in the instant case that plaintiff received notice of the taking of the deposition; plaintiff urges that the notice was unreasonable and that there was a short period of time between the notice of and the actual taking of the deposition. However, plaintiff made no objection until trial, and her failure to make objection sooner constitutes a waiver.
Affirmed. Costs to appellees.
NOTES
[*] Former Supreme Court Justice, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.
[1] "This product contains ingredients which may cause a skin irritation on certain individuals. A preliminary test according to the enclosed directions should first be made. Do not use for dyeing the eyelashes or eyebrows; to do so may cause blindness. Read enclosed directions carefully before using."
[2] "(1) Express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
* * *
"(2) It is not necessary to the creation of an express warranty that the seller use formal words such as `warrant' or `guarantee' or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty." Uniform Commercial Code, MCLA § 440.2313 (Stat Ann 1964 Rev § 19.2313).
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 16-1241V
Filed: May 31, 2016
Unpublished
****************************
TARA HEINE, *
*
Petitioner, * Failure to Prosecute; Failure to Follow
* Court Orders; Dismissal; Special
v. * Processing Unit (“SPU”)
*
SECRETARY OF HEALTH *
AND HUMAN SERVICES, *
*
Respondent. *
*
****************************
Edward M. Kraus, Law Offices of Chicago Kent, Chicago, IL, for petitioner.
Lara A. Englund, U.S. Department of Justice, Washington, DC, for respondent.
DECISION 1
Dorsey, Chief Special Master:
On September 30, 2016, petitioner filed a petition for compensation under the
National Childhood Vaccine Injury Act, 42, U.S.C. §§ 300aa-10, et seq., 2 alleging that
she “suffered chronic severe right shoulder and neck pain” as a result of receiving the
influenza vaccine on October 1, 2013. See Petition at preamble. The case was
assigned to the Special Processing Unit (“SPU”) of the Office of Special Masters.
I. Relevant Procedural Background
On October 4, 2016, petitioner was ordered to file required medical records and a
statement of completion by October 14, 2016. SPU Initial Order, issued Oct. 4, 2016
(ECF No. 5). Petitioner untimely filed documentation in support of her claim on October
1 Because this unpublished decision contains a reasoned explanation for the action in this case, the
undersigned intends to post it on the United States Court of Federal Claims' website, in accordance with
the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal Management and Promotion of
Electronic Government Services). In accordance with Vaccine Rule 18(b), petitioner has 14 days to
identify and move to redact medical or other information, the disclosure of which would constitute an
unwarranted invasion of privacy. If, upon review, the undersigned agrees that the identified material fits
within this definition, the undersigned will redact such material from public access.
2National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755. Hereinafter, for
ease of citation, all “§” references to the Vaccine Act will be to the pertinent subparagraph of 42 U.S.C. §
300aa (2012).
17, 2016, submitting medical records, a Walgreens informed consent form, an affidavit,
and a relevant medical article. Pet’r’s Exs. 1-7. Petitioner also filed an unopposed
motion requesting an extension to file additional records and a statement of completion.
Motion, filed Oct. 17, 2016 (ECF No. 8). The undersigned granted the request, setting a
new deadline of November 14, 2016, and postponing the initial status conference until
the record is complete. Order, issued Oct. 17, 2016 (Non-PDF).
Over the next three months, petitioner continued to seek extensions of the
deadline, and all requests were granted. See Orders, issued Nov. 15, 2016, Dec. 15,
2016, and Jan. 13, 2017 (Non-PDF). Additional evidence, however, was never filed.
On February 13, 2017, petitioner’s counsel filed an unopposed motion for status
conference. Motion, filed Feb 13, 2017 (ECF No. 12). The motion stated that additional
medical records were not forthcoming and counsel intended to withdraw from the case.
The motion further stated that petitioner’s counsel had attempted on several occasions
to contact petitioner concerning his intention to withdraw as her attorney, but his efforts
were unsuccessful. The conference was to discuss how to proceed.
The requested status conference was held on March 3, 2017, with Edward Kraus
appearing for petitioner and Lara Englund for respondent. During the discussion,
petitioner’s counsel stated that he had still not made contact with petitioner despite
multiple attempts by telephone, e-mail, and FedEx. He acknowledged that additional
evidence would be necessary for petitioner to prevail on her claim, and stated that
because such evidence had not materialized, he intended to withdraw. 3
On April 27, 2017, petitioner was ordered to show cause why her claim should
not be dismissed for insufficient proof and failure to prosecute. Order to Show Cause,
issued Apr. 27, 2017 (ECF No. 15). The deadline expired without response.
II. Failure to Prosecute and Statutory Requirements
It is petitioner’s obligation to follow court orders and non-compliance is not
favorably considered. Failure to follow court orders, as well as failure to file medical
records or an expert medical opinion, will result in dismissal of petitioner’s claim.
Tsekouras v. Sec’y of Health & Human Servs., 26 Cl. Ct. 439 (1992), aff’d, 991 F.2d
810 (Fed. Cir. 1993) (per curiam); Sapharas v. Sec’y of Health & Human Servs., 35
Fed. Cl. 503 (1996); Vaccine Rule 21(b).
In addition, a petitioner may not be awarded entitlement under the Vaccine Act
based on petitioner’s claims alone. Rather, the petition must be supported by medical
records or by the opinion of a competent physician. See 42 § 300aa-13(a)(1).
Petitioner bears the burden of proving a prima facie case by a preponderance of the
3On March 24, 2017, petitioner’s counsel submitted an application for interim attorneys’ fees and costs.
Motion, filed Mar. 24, 2017 (ECF No. 13). On April 6, 2017, respondent filed a response to the motion.
Response, filed Apr. 6, 2017 (ECF No. 14). The motion will now be considered an application for final
attorneys’ fees and costs.
2
evidence. See 42 U.S.C. § 300aa-13(a)(1)(A); see also Moberly v. Sec’y of Health &
Human Services, 592 F.3d 1315, 1321 (Fed. Cir. 2010).
Petitioner in this case does not allege, nor does the record support, an injury
covered by the Vaccine Injury Table (“Table Injury”). See 42 C.F.R. § 100.3. Thus,
petitioner must prove causation-in-fact by providing “preponderant evidence that the
vaccination brought about [the] injury by providing: (1) a medical theory causally
connecting the vaccination and injury; (2) a logical sequence of cause and effect
showing that the vaccination was the reason for the injury; and (3) a showing of
proximate temporal relationship between vaccination and injury.” Moberly, 592 F.3d at
1322 (citing Althen v. Sec’y of Health & Human Servs., 418 F.3d 1274, 1278 (Fed. Cir.
2005).
III. Conclusion
Petitioner has failed to support her claim with sufficient proof, including medical
records and the opinion of a medical expert. Further, petitioner has signaled that such
evidence is not forthcoming by her refusal to communicate with her attorney or assist
him in the prosecution of her claim, or to respond to the Order to Show Cause.
Accordingly, this case is DISMISSED for insufficient proof and for failure to
prosecute. The clerk shall enter judgment accordingly.
IT IS SO ORDERED.
s/Nora Beth Dorsey
Nora Beth Dorsey
Chief Special Master
3
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-4988
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
BRIAN DAVID MCCRAE,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of Virginia, at Abingdon. James P. Jones, Chief District
Judge. (1:06-cr-00025-JPJ)
Submitted: July 13, 2007 Decided: July 25, 2007
Before MOTZ and TRAXLER, Circuit Judges, and WILKINS, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Michael A. Bragg, BRAGG LAW, PLC, Abingdon, Virginia, for
Appellant. John L. Brownlee, United States Attorney, Zachary T.
Lee, Special Assistant United States Attorney, Abingdon, Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
A jury found Brian D. McCrae guilty of conspiracy to
commit robbery of controlled substances after traveling in
interstate commerce, in violation of 18 U.S.C. § 2118(d) and
(b)(1)(B)(2000), taking by force controlled substances after
traveling in interstate commerce and the use of a dangerous weapon,
in violation of 18 U.S.C. §§ 2, 2118(a), (a)(1) (2000), and
knowingly possessing with intent to distribute and distributing
oxycodone, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C)
(2000). McCrae was sentenced to three concurrent terms of 60
months’ imprisonment. On appeal, McCrae argues the district court
erred by denying his motion to suppress. We affirm.
This Court reviews the factual findings underlying the
denial of a motion to suppress for clear error and its legal
conclusions de novo. United States v. Johnson, 400 F.3d 187, 193
(4th Cir.), cert. denied, 126 S. Ct. 134 (2005). The evidence is
construed in the light most favorable to the prevailing party
below. United States v. Seidman, 156 F.3d 542, 547 (4th Cir.
1998). In determining whether probable cause existed for McCrae’s
arrest, the court must look at the totality of the circumstances
surrounding the arrest. Illinois v. Gates, 462 U.S. 213, 230-32
(1983); Taylor v. Waters, 81 F.3d 429, 434 (4th Cir. 1996).
Probable cause for a warrantless arrest is defined as “facts and
circumstances within the officer’s knowledge that are sufficient to
- 2 -
warrant a prudent person, or one of reasonable caution, in
believing, in the circumstances shown, that the suspect has
committed, is committing, or is about to commit an offense.”
United States v. Gray, 137 F.3d 765, 769 (4th Cir. 1998) (citations
omitted). Determining whether the information surrounding an
arrest is sufficient to establish probable cause is an
individualized and fact-specific inquiry. Wong Sun v. United
States, 371 U.S. 471, 479 (1963). Additionally, officers are
permitted to draw on their experience and specialized training to
make inferences from and deductions about cumulative evidence.
United States v. Arvizu, 534 U.S. 266, 273 (2002). “[E]ven
‘seemingly innocent activity’ when placed in the context of
surrounding circumstances,” can give rise to probable cause.
United States v. Humphries, 372 F.3d 653, 657 (4th Cir.
2004)(citation omitted).
McCrae does not challenge the constitutionality of the
officer’s pat-down search of his front pants pockets. Such a
challenge would be unavailing in any event because McCrae was
present during the arrest of his co-conspirator, Sean Osborne, who
was a suspect in the robbery of a pharmacy, and was observed to
have a large bulge in his left front pants pocket. McCrae argues,
however, that the police exceeded the permissible scope of the
search by manipulating the object inside of his pants to discern
that it felt like pills. He contends that the search should have
- 3 -
ceased as soon as it became evident the bulge was not created by a
weapon.
McCrae acknowledges that at the time the search was
performed, police knew a drug store had been robbed by an
individual meeting the description of Osborne; McCrae had returned
home with Osborne; Osborne had told his girlfriend that he had done
something illegal; Osborne’s girlfriend had discovered pill
bottles; and McCrae had a bulge in his front pants pocket. McCrae
ignores, however, the testimony of the officer who conducted the
pat-down search that when he felt the lump he immediately
recognized it to be a pocketful of pills. After reviewing the
totality of the circumstances, we find the police did not exceed
the scope of a permissible pat-down search, and that the evidence
lawfully found in the course of the search providing probable cause
to arrest McCrae. Accordingly, we find the district court properly
denied McCrae’s motion to suppress.
Based on the foregoing, we affirm the district court’s
judgment. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before
the court and argument would not aid the decisional process.
AFFIRMED
- 4 -
| {
"pile_set_name": "FreeLaw"
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/19/2018 08:13 AM CDT
- 770 -
Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. NEWMAN
Cite as 300 Neb. 770
State of Nebraska, appellee, v.
Terrell E. Newman, appellant.
___ N.W.2d ___
Filed August 17, 2018. No. S-17-842.
1. Appeal and Error. The purpose of an appellant’s reply brief is to
respond to the arguments the appellee has advanced against the errors
assigned in the appellant’s initial brief.
2. ____. An assignment of error raised for the first time in a reply brief is
untimely and will not be considered by an appellate court.
3. Postconviction: Constitutional Law: Appeal and Error. In appeals
from postconviction proceedings, an appellate court reviews de novo
a determination that the defendant failed to allege sufficient facts to
demonstrate a violation of his or her constitutional rights or that the
record and files affirmatively show that the defendant is entitled to
no relief.
4. Postconviction: Constitutional Law: Judgments. Postconviction relief
is available to a prisoner in custody under sentence who seeks to be
released on the ground that there was a denial or infringement of his or
her constitutional rights such that the judgment was void or voidable.
5. Postconviction: Constitutional Law: Proof. In a motion for postcon-
viction relief, the defendant must allege facts which, if proved, consti-
tute a denial or violation of his or her rights under the U.S. or Nebraska
Constitution, causing the judgment against the defendant to be void
or voidable.
6. ____: ____: ____. A trial court must grant an evidentiary hearing to
resolve the claims in a postconviction motion when the motion contains
factual allegations which, if proved, constitute an infringement of the
defendant’s rights under the Nebraska or federal Constitution.
7. Postconviction: Proof. If a postconviction motion alleges only conclu-
sions of fact or law, or if the records and files in a case affirmatively
show the defendant is entitled to no relief, the court is not required to
grant an evidentiary hearing.
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STATE v. NEWMAN
Cite as 300 Neb. 770
8. ____: ____. In a postconviction proceeding, an evidentiary hearing is
not required (1) when the motion does not contain factual allegations
which, if proved, constitute an infringement of the movant’s consti-
tutional rights; (2) when the motion alleges only conclusions of fact
or law; or (3) when the records and files affirmatively show that the
defendant is entitled to no relief.
9. Postconviction: Effectiveness of Counsel: Appeal and Error. A
motion for postconviction relief asserting ineffective assistance of trial
counsel is procedurally barred when (1) the defendant was represented
by a different attorney on direct appeal than at trial, (2) an ineffective
assistance of trial counsel claim was not brought on direct appeal, and
(3) the alleged deficiencies in trial counsel’s performance were known
to the defendant or apparent from the record.
10. ____: ____: ____. Claims of ineffective assistance of appellate counsel
may be raised for the first time on postconviction review.
11. Effectiveness of Counsel: Appeal and Error. When a claim of inef-
fective assistance of appellate counsel is based on the failure to raise
a claim on direct appeal of ineffective assistance of trial counsel, an
appellate court will first look at whether trial counsel was ineffective
under the test in Strickland v. Washington, 466 U.S. 668, 104 S. Ct.
2052, 80 L. Ed. 2d 674 (1984). If trial counsel was not ineffective, then
the defendant was not prejudiced by appellate counsel’s failure to raise
the issue.
12. Effectiveness of Counsel: Proof. To prevail on a claim of ineffective
assistance of counsel under Strickland v. Washington, 466 U.S. 668, 104
S. Ct. 2052, 80 L. Ed. 2d 674 (1984), the defendant must show that his
or her counsel’s performance was deficient and that this deficient per
formance actually prejudiced the defendant’s defense.
13. ____: ____. To show that counsel’s performance was deficient under
Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d
674 (1984), the defendant must show counsel’s performance did not
equal that of a lawyer with ordinary training and skill in criminal law in
the area.
14. Effectiveness of Counsel: Proof: Words and Phrases: Appeal
and Error. To show prejudice under the prejudice component of the
Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d
674 (1984), test, the defendant must demonstrate a reasonable probabil-
ity that but for his or her counsel’s deficient performance, the result of
the proceeding would have been different. A reasonable probability does
not require that it be more likely than not that the deficient performance
altered the outcome of the case; rather, the defendant must show a prob-
ability sufficient to undermine confidence in the outcome.
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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. NEWMAN
Cite as 300 Neb. 770
15. Effectiveness of Counsel: Proof. The two prongs of the ineffective
assistance of counsel test under Strickland v. Washington, 466 U.S. 668,
104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984), deficient performance and
prejudice, may be addressed in either order.
16. Attorneys at Law: Effectiveness of Counsel. A defense attorney has a
duty to make reasonable investigations or to make a reasonable decision
that makes particular investigations unnecessary.
17. Trial: Effectiveness of Counsel: Evidence. A reasonable strategic deci-
sion to present particular evidence, or not to present particular evidence,
will not, without more, sustain a finding of ineffective assistance of
counsel. Strategic decisions made by trial counsel will not be second-
guessed so long as those decisions are reasonable.
18. Rules of Evidence. Neb. Rev. Stat. § 27-901(1) (Reissue 2016) does not
impose a high hurdle for authentication or identification.
19. Rules of Evidence: Proof. A proponent of evidence is not required to
conclusively prove the genuineness of the evidence or to rule out all
probabilities inconsistent with authenticity. Rather, if the proponent’s
showing is sufficient to support a finding that the evidence is what it
purports to be, the proponent has satisfied the requirements of Neb. Rev.
Stat. § 27-901(1) (Reissue 2016).
20. Sentences. If there is a discrepancy between the oral pronouncement
of a valid sentence and the later written order, the oral pronouncement
controls calculation of the prison term.
21. Rules of Evidence: Juries: Testimony: Affidavits. Neb. Rev. Stat.
§ 27-606(2) (Reissue 2016) prohibits a juror from testifying as to any
matter or statement occurring during the course of the jury’s delibera-
tions. Thus, a juror’s affidavit may not be used to impeach a verdict on
the basis of jury motives, methods, misunderstanding, thought proc
esses, or discussions during deliberations.
22. Postconviction: Effectiveness of Counsel: Proof. A petitioner’s post-
conviction claims that his or her defense counsel was ineffective in fail-
ing to investigate possible defenses are too speculative to warrant relief
if the petitioner fails to allege what exculpatory evidence the investiga-
tion would have procured and how it would have affected the outcome
of the case.
23. Postconviction: Constitutional Law. A claim of actual innocence may
be a sufficient allegation of a constitutional violation under the Nebraska
Postconviction Act.
24. Postconviction: Evidence. The essence of a claim of actual innocence
is that the State’s continued incarceration of such a petitioner without an
opportunity to present newly discovered evidence is a denial of proce-
dural or substantive due process.
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STATE v. NEWMAN
Cite as 300 Neb. 770
25. Postconviction: Evidence: Presumptions: Proof. The threshold to
entitle a prisoner to an evidentiary hearing on a postconviction claim of
actual innocence is extraordinarily high. Such a petitioner must make a
strong demonstration of actual innocence, because after a fair trial and
conviction, the presumption of innocence vanishes.
Appeal from the District Court for Douglas County: Shelly
R. Stratman, Judge. Affirmed in part, and in part reversed and
remanded with directions.
Stuart J. Dornan and Jason E. Troia, of Dornan, Troia,
Howard, Breitkreutz & Conway, P.C., L.L.O., for appellant.
Douglas J. Peterson, Attorney General, and Stacy M. Foust
for appellee.
Miller-Lerman, Cassel, Stacy, Funke, and Papik, JJ., and
H all, District Judge.
Stacy, J.
A jury found Terrell E. Newman guilty of two counts of
first degree murder, three counts of use of a deadly weapon to
commit a felony, attempted intentional manslaughter, and pos-
session of a deadly weapon by a prohibited person.1 He was
sentenced to life imprisonment for the murders and to addi-
tional terms of years for the other offenses, the sentences to
run consecutively. We affirmed his convictions and sentences
on direct appeal.2
Newman then moved for postconviction relief, raising
claims of ineffective assistance of counsel and a claim of actual
innocence. The district court denied relief without conducting
an evidentiary hearing. Newman filed this timely appeal. We
affirm in part, and in part reverse and remand for an eviden-
tiary hearing.
1
State v. Newman, 290 Neb. 572, 861 N.W.2d 123 (2015).
2
Id.
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STATE v. NEWMAN
Cite as 300 Neb. 770
I. FACTS
Newman’s trial was consolidated with codefendant Derrick
U. Stricklin. The underlying facts are fully set forth in our
opinion affirming Stricklin’s convictions and sentences.3
Summarized, Newman’s convictions arose from the shoot-
ing deaths of Carlos Morales and Bernardo Noriega during
a drug transaction at an automobile body shop owned by
Morales. Jose Herrera-Gutierrez was also present during the
drug transaction and the shootings, and he was the State’s
primary witness at trial. Herrera-Gutierrez identified Newman
and Stricklin as the shooters and testified that he recognized
both men from prior visits to Morales’ shop. He had seen
Stricklin approximately four times at the shop, and he had seen
Newman approximately three times at the shop.
The State’s theory of the case was that Newman and
Stricklin committed the crimes together. Newman’s cell phone
records showed that Newman was in communication with both
Morales and Stricklin on the day of the shootings, and also
showed that Newman’s cell phone was in the area of the mur-
der scene during the relevant timeframe.4
A jury found Newman guilty of all the charges. He was sen-
tenced to consecutive sentences of life imprisonment for each
murder conviction, 15 to 25 years’ imprisonment for each use
of a deadly weapon conviction, 20 months’ to 5 years’ impris-
onment for the attempted manslaughter conviction, and 15 to
25 years’ imprisonment for the possession of a deadly weapon
conviction.5 The district court denied his motion for new trial,
and he filed a direct appeal.
On direct appeal, Newman was represented by different coun-
sel. Appellate counsel raised numerous assignments of error
challenging Newman’s identification by Herrera-Gutierrez, the
sufficiency of the evidence, the admission of certain evidence,
3
State v. Stricklin, 290 Neb. 542, 861 N.W.2d 367 (2015).
4
Id.
5
Newman, supra note 1.
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STATE v. NEWMAN
Cite as 300 Neb. 770
the exclusion of other evidence, limitations imposed on the
cross-examination of Herrera-Gutierrez, the overruling of a
motion for new trial based on juror misconduct, and the over-
ruling of a motion to withdraw his rest.
Newman’s appellate counsel also alleged trial counsel had
been ineffective in failing to (1) introduce certain testimony
at the hearing on the motion for new trial, (2) object to cer-
tain jury instructions, and (3) adequately investigate an alibi
defense. In the direct appeal, we concluded the files and
records affirmatively showed the jury instruction claim lacked
merit and we found the record was insufficient to address the
other two allegations of ineffective assistance of trial counsel.6
After we affirmed his convictions and sentences, Newman
filed the instant motion for postconviction relief. He alleges
his appellate counsel was ineffective in (1) failing to obtain
a complete record prior to Newman’s direct appeal and (2)
failing to raise on direct appeal claims that his trial counsel
was ineffective for (a) failing to investigate certain witnesses,
including alibi witnesses; (b) failing to object to certain jury
instructions; (c) failing to present evidence of third-party guilt
via a motion in limine; (d) failing to object to the authentica-
tion of cell phone records; (e) failing to object to the truth-in-
sentencing advisement; (f) failing to present certain evidence
at the motion for new trial; and (g) failing to hire a crime
scene investigator. Newman also alleges in his postconviction
motion, and argues in his brief, that he is actually innocent
of the crimes. The district court denied the postconviction
motion without conducting an evidentiary hearing. Newman
filed this appeal.
II. ASSIGNMENTS OF ERROR
Newman assigns the district court erred in (1) denying him
an evidentiary hearing on his motion for postconviction relief,
(2) finding he did not meet the threshold for actual innocence,
and (3) denying his motion for postconviction relief.
6
Id.
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STATE v. NEWMAN
Cite as 300 Neb. 770
Newman also attempts to raise additional assignments of
error in his reply brief, including that he was denied an oppor-
tunity to amend his postconviction motion and that additional
jury instructions were flawed. The State filed an objection,
arguing Newman could not raise new assignments of error in
his reply brief. We agree.
[1,2] The purpose of an appellant’s reply brief is to respond
to the arguments the appellee has advanced against the errors
assigned in the appellant’s initial brief.7 An assignment of
error raised for the first time in a reply brief is untimely and
will not be considered by the court.8 We therefore limit our
analysis to the assignments made and argued in Newman’s
original appellate brief. We note for the sake of completeness
that Stricklin properly raised nearly identical assignments of
error in his appeal from the district court’s denial of his motion
for postconviction relief, and we found those assignments
lacked merit.9
III. STANDARD OF REVIEW
[3] In appeals from postconviction proceedings, an appel-
late court reviews de novo a determination that the defendant
failed to allege sufficient facts to demonstrate a violation of his
or her constitutional rights or that the record and files affirma-
tively show that the defendant is entitled to no relief.10
IV. ANALYSIS
1. General Propositions
Governing Postconviction
[4,5] Postconviction relief is available to a prisoner in cus-
tody under sentence who seeks to be released on the ground that
there was a denial or infringement of his or her constitutional
7
Rodriguez v. Surgical Assoc., 298 Neb. 573, 905 N.W.2d 247 (2018).
8
See id.
9
See State v. Stricklin, post p. 794, ___ N.W.2d ___ (2018).
10
State v. Vela, 297 Neb. 227, 900 N.W.2d 8 (2017); State v. Watson, 295
Neb. 802, 891 N.W.2d 322 (2017).
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STATE v. NEWMAN
Cite as 300 Neb. 770
rights such that the judgment was void or voidable.11 In a
motion for postconviction relief, the defendant must allege
facts which, if proved, constitute a denial or violation of his or
her rights under the U.S. or Nebraska Constitution, causing the
judgment against the defendant to be void or voidable.12
[6-8] A trial court must grant an evidentiary hearing to
resolve the claims in a postconviction motion when the motion
contains factual allegations which, if proved, constitute an
infringement of the defendant’s rights under the Nebraska
or federal Constitution.13 If a postconviction motion alleges
only conclusions of fact or law, or if the records and files in a
case affirmatively show the defendant is entitled to no relief,
the court is not required to grant an evidentiary hearing.14
Thus, in a postconviction proceeding, an evidentiary hearing
is not required (1) when the motion does not contain factual
allegations which, if proved, constitute an infringement of the
movant’s constitutional rights; (2) when the motion alleges
only conclusions of fact or law; or (3) when the records
and files affirmatively show that the defendant is entitled to
no relief.15
[9] Here, Newman alleges he received ineffective assist
ance of counsel. A motion for postconviction relief asserting
ineffective assistance of trial counsel is procedurally barred
when (1) the defendant was represented by a different attor-
ney on direct appeal than at trial, (2) an ineffective assistance
of trial counsel claim was not brought on direct appeal, and
(3) the alleged deficiencies in trial counsel’s performance
were known to the defendant or apparent from the record.16
Newman was represented by different counsel on direct appeal
11
Vela, supra note 10.
12
Id.
13
Id.
14
Id.
15
State v. Thorpe, 290 Neb. 149, 858 N.W.2d 880 (2015).
16
State v. Williams, 295 Neb. 575, 889 N.W.2d 99 (2017).
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STATE v. NEWMAN
Cite as 300 Neb. 770
than at trial. He therefore cannot raise on postconviction any
claims of ineffective assistance of trial counsel that were not
preserved on direct appeal, as those claims would be procedur-
ally barred.17
[10,11] However, claims of ineffective assistance of appel-
late counsel may be raised for the first time on postconviction
review.18 When a claim of ineffective assistance of appellate
counsel is based on the failure to raise a claim on appeal of
ineffective assistance of trial counsel, an appellate court will
first look at whether trial counsel was ineffective under the test
in Strickland v. Washington.19 If trial counsel was not ineffec-
tive, then the defendant was not prejudiced by appellate coun-
sel’s failure to raise the issue.20
[12-14] To prevail on a claim of ineffective assistance of
counsel under Strickland v. Washington,21 the defendant must
show that his or her counsel’s performance was deficient
and that this deficient performance actually prejudiced the
defendant’s defense.22 To show that counsel’s performance
was deficient, the defendant must show counsel’s performance
did not equal that of a lawyer with ordinary training and skill
in criminal law in the area.23 To show prejudice under the
prejudice component of the Strickland test, the defendant must
demonstrate a reasonable probability that but for his or her
counsel’s deficient performance, the result of the proceeding
would have been different.24 A reasonable probability does
not require that it be more likely than not that the deficient
17
See id.
18
State v. Dubray, 294 Neb. 937, 885 N.W.2d 540 (2016).
19
Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674
(1984). See State v. Glass, 298 Neb. 598, 905 N.W.2d 265 (2018).
20
See Glass, supra note 19.
21
Strickland, supra note 19.
22
Vela, supra note 10.
23
See State v. Haynes, 299 Neb. 249, 908 N.W.2d 40 (2018).
24
Vela, supra note 10.
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STATE v. NEWMAN
Cite as 300 Neb. 770
performance altered the outcome of the case; rather, the defend
ant must show a probability sufficient to undermine confidence
in the outcome.25
[15] The two prongs of the ineffective assistance of counsel
test under Strickland, deficient performance and prejudice, may
be addressed in either order.26 We examine Newman’s allega-
tions under this standard.
2. Failure to Investigate
[16,17] A defense attorney has a duty to make reasonable
investigations or to make a reasonable decision that makes
particular investigations unnecessary.27 A reasonable strategic
decision to present particular evidence, or not to present par-
ticular evidence, will not, without more, sustain a finding of
ineffective assistance of counsel.28 Strategic decisions made by
trial counsel will not be second-guessed so long as those deci-
sions are reasonable.29
(a) Alibi Defense
Newman’s motion for postconviction relief alleges his appel-
late counsel was ineffective for failing to raise on direct appeal
that his trial counsel was ineffective for failing to preserve
and submit his alibi defense. But the record shows appellate
counsel did raise this claim on direct appeal, and we found the
record was insufficient to address it.30 Thus, Newman’s allega-
tion that appellate counsel was ineffective for failing to raise
the issue is without merit.
However, Newman’s postconviction motion also alleges his
trial counsel was ineffective for failing to preserve and submit
25
Id.
26
Haynes, supra note 23.
27
State v. Alarcon-Chavez, 295 Neb. 1014, 893 N.W.2d 706 (2017).
28
Id.
29
Id.
30
Newman, supra note 1.
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Cite as 300 Neb. 770
his alibi defense. Because he raised this claim in his direct
appeal and we found the record was insufficient to consider or
rule on that claim, it is not procedurally barred.31 We therefore
consider whether Newman has alleged facts sufficient to war-
rant an evidentiary hearing on this claim.
Newman’s postconviction motion alleges his trial counsel
failed to “independently interview, depose, or subpoena” four
witnesses whom he alleges would have established an alibi
defense. Newman alleges that Kevin Riley and Janet Mariscal
would have testified Newman “was either at Clayton’s BBQ
restaurant or on a run to Chubb[] Foods to purchase supplies at
or near the time of the shooting.” Newman further alleges that
two unnamed “Employees of Chubb[] Foods,” one working at
the customer service counter and the other at the cash register,
would have “confirmed Newman’s presence at Chubb[] Foods
at or near the time of the shooting.”
The district court denied an evidentiary hearing on this
claim. It reasoned that because the allegations were vague as
to time, they did not “definitively state that [Newman] was not
at the murder scene and merely suggest [Newman] may have
been at these other places at some point in the day.” Moreover,
the court found no prejudice could have resulted from coun-
sel’s failure to develop this evidence given the overwhelming
evidence of Newman’s guilt provided by Herrera-Gutierrez’
eyewitness testimony and cell phone records placing Newman
in the area at or near the time of the murders.
It is true Newman has not alleged a specific time he claims
he was at the restaurant or the grocery store. But in his brief,
Newman argues he used the general phrase “at or near the
time of the shooting” in his postconviction motion, because
there was uncertainty at trial about the exact time of the mur-
ders.32 He argues the allegations in his motion are sufficient
to show both deficient performance and prejudice, because
they show trial counsel failed to present testimony from four
31
See State v. York, 273 Neb. 660, 731 N.W.2d 597 (2007).
32
Brief for appellant at 10.
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Cite as 300 Neb. 770
witnesses who would have testified Newman was somewhere
else at the time of the murders. The State, in its response,
generally agrees with the district court’s conclusion that even
if trial counsel was deficient in this regard, there could be no
prejudice to Newman in light of the overwhelming evidence
of his guilt adduced at trial. Our de novo review persuades
us otherwise.
While we agree the eyewitness identification and corroborat-
ing cell phone records, in the context of the evidence admitted
at trial, provided overwhelming evidence of guilt, we can-
not overlook the fact that the alibi evidence Newman alleges
his attorney should have investigated could, if proved, have
contradicted the eyewitness identification. Newman alleges,
summarized, that four witnesses would have testified he was
at a specific location other than the crime scene at or near the
time of the murders. This testimony could have contradicted
Herrera-Gutierrez’ eyewitness testimony and, depending on the
location of the restaurant and the grocery store, may also have
affected the weight of the cell phone record evidence. Thus,
depending on the evidence actually presented and found credi-
ble, there may be a reasonable probability that if such evidence
had been presented at trial, the result of the proceeding could
have been different.
In Newman’s direct appeal, we found the record was insuf-
ficient to evaluate the substance of this particular claim of inef-
fective assistance. He presents the same claim on postconvic-
tion, and because the record is still insufficient to analyze the
claim, Newman is entitled to an evidentiary hearing.33
(b) Other Witnesses
Newman also alleges his appellate counsel was ineffective
for failing to assign as error that trial counsel was ineffective
33
See, State v. Nolan, 292 Neb. 118, 870 N.W.2d 806 (2015) (district court
erred in failing to grant evidentiary hearing on ineffective assistance claim
where claim was raised on direct appeal but record was insufficient to
analyze claim, and same claim was raised on postconviction); State v.
Seberger, 284 Neb. 40, 815 N.W.2d 910 (2012) (same).
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Cite as 300 Neb. 770
for failing to “independently interview, depose, or subpoena”
other potential witnesses “despite Newman’s request.”
Newman alleges two of these witnesses would have testified
that unnamed “Mexicans” or “Latino’s” killed Noriega and
Morales; one would have testified to hearing gunshots near the
crime scene around 1:15 p.m. on the day of the shootings; one
would have testified she observed two men standing in a park-
ing lot near the crime scene around 1 p.m. on the day of the
shootings; one would have testified she was afraid of Herrera-
Gutierrez and did not think his story “add[ed] up”; two would
have testified to observing Herrera-Gutierrez “acting crazy” on
the day of the shootings; and one would testify she thought the
murders involved drugs.
The district court addressed all of these allegations col-
lectively and concluded Newman had failed to allege how
deposing or subpoenaing any of these witnesses would have
produced a different outcome at trial. We agree that Newman’s
allegations regarding these other witnesses did not show a
reasonable likelihood that, absent the alleged deficiency, the
outcome at trial would have been different.
In Strickland, the U.S. Supreme Court addressed how a
court should approach the prejudice prong of an ineffective
assistance of counsel claim:
In making [the prejudice] determination, a court hear-
ing an ineffectiveness claim must consider the totality
of the evidence before the judge or jury. Some of the
factual findings will have been unaffected by the errors,
and factual findings that were affected will have been
affected in different ways. Some errors will have had
a pervasive effect on the inferences to be drawn from
the evidence, altering the entire evidentiary picture, and
some will have had an isolated, trivial effect. Moreover,
a verdict or conclusion only weakly supported by the
record is more likely to have been affected by errors
than one with overwhelming record support. Taking the
unaffected findings as a given, and taking due account
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Cite as 300 Neb. 770
of the effect of the errors on the remaining findings,
a court making the prejudice inquiry must ask if the
defendant has met the burden of showing that the deci-
sion reached would reasonably likely have been different
absent the errors.34
Considering the alleged testimony of these eight potential
witnesses in the context of all the evidence adduced at trial,
we conclude the alleged testimony would not have altered the
evidentiary picture and would, at best, have had an isolated
or trivial effect on the jury’s findings. We find no error in
the district court’s denial of this claim without an eviden-
tiary hearing.
In sum, we conclude Newman is entitled to an eviden-
tiary hearing on his claim relating to his alibi defense, but
is not entitled to an evidentiary hearing on any of his other
claims of failure to interview, depose, or subpoena potential
witnesses.
(c) Cross-Examination
Newman also alleges his appellate counsel was ineffective
for failing to raise, on direct appeal, that trial counsel failed to
adequately investigate existing files and prepare for the trial
testimony of Nelson Martinez-Reyes. This witness testified at
trial that he saw a man matching Herrera-Gutierrez’ descrip-
tion near the murder location at approximately 11 a.m. on the
day of the shootings, but he did not know the race of the male.
Newman alleges Herrera-Gutierrez is Hispanic, and claims his
trial counsel failed to cross-examine Martinez-Reyes about a
prior statement in which he reported seeing a white male near
the scene of the crime. We conclude this allegation of failure to
cross-examine a witness on a minor credibility issue is not suf-
ficient to demonstrate either deficient performance or resulting
prejudice. Newman was not entitled to an evidentiary hearing
on this claim.
34
Strickland, supra note 19, 466 U.S. at 695-96.
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3. Jury Instructions
Newman alleges his appellate counsel was ineffective for
failing to assert, on direct appeal, that trial counsel was inef-
fective for not objecting to “flawed” jury instructions Nos. 5, 6,
11, 12, and 18. Newman’s motion specifically alleges instruc-
tions Nos. 5, 11, and 12 were “flawed” because they did not
conform to the pattern Nebraska Jury Instructions.
The district court found the claim that trial counsel was
ineffective for failing to object to instructions Nos. 5, 11,
and 12 had been raised on direct appeal and rejected by this
court. It reasoned the factual allegations as to the other jury
instructions failed to specifically allege deficient performance
and prejudice. Our de novo review leads us to the same
conclusion.
Newman’s brief to this court generally concedes that the
argument he presents as to instructions Nos. 5, 11, and 12 was
resolved on direct appeal. His brief also generally concedes
that his postconviction motion did not include sufficient alle-
gations as to instructions Nos. 6 and 18. The district court did
not err in denying postconviction relief without an evidentiary
hearing on this issue.
4. Confidential Informant
Newman alleges his appellate counsel was ineffective for
failing to raise, on direct appeal, that trial counsel was inef-
fective for not doing more to secure the admission of testi-
mony regarding an out-of-court statement made by a con-
fidential informant. The confidential informant’s statement
related to the possible involvement of a man known as “Sip”
in the crimes.
Admissibility of the testimony regarding the confidential
informant’s statement was addressed in the direct appeal of
Newman’s codefendant Stricklin. Before trial, both Newman
and Stricklin filed motions in limine seeking a ruling on the
admissibility of testimony from a detective about statements a
confidential informant made to the detective. The statements
made to the detective were essentially that one of the murder
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victims, Morales, had attempted to buy two firearms from the
informant, telling the informant that he was “having problems
with two black males” and that Morales told the informant one
of the males was nicknamed “‘Sip.’”35 The detective showed
the informant photographs of Newman and Stricklin, and the
informant did not identify either as “Sip.”
The State objected to this evidence, arguing it contained
two levels of hearsay—Morales’ statements to the informant
and the informant’s statements to the detective. The district
court excluded the evidence on that basis, and we affirmed
on appeal.
Newman’s motion for postconviction relief generally
alleges that if trial counsel had done more, the statements
from the confidential informant would have been admitted.
But Newman’s motion does not identify any actions that
would have removed the hearsay issues we addressed on
direct appeal, and thus, we agree with the district court that
these allegations are insufficient to show ineffective assistance
of counsel. The district court properly found Newman is not
entitled to an evidentiary hearing on this claim.
5. Cell Phone Authentication
Evidence at trial showed a cell phone or phones associated
with Newman were used to contact Stricklin and Morales
on the date of the murders, and evidence showed Newman
received six calls between 11:42 a.m. and 12:36 p.m. using
a cell tower in the immediate vicinity of Morales’ shop.
Newman alleges his appellate counsel was ineffective for
failing to assign, on direct appeal, that trial counsel was inef-
fective for failing to require the State to “authenticate” who
was actually using the cell phones associated with his name.
His postconviction motion alleges that if trial counsel had
objected on authentication grounds, the State would have been
unable to prove he was actually using the cell phones, and the
35
Stricklin, supra note 3, 290 Neb. at 553, 861 N.W.2d at 382.
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substantial cell phone evidence linking him to the murders
would have been inadmissible.
The district court found this allegation was without merit,
reasoning that such an objection would not have been success-
ful. We agree.
[18,19] According to Neb. Rev. Stat. § 27-901(1) (Reissue
2016), “[t]he requirement of authentication or identification as
a condition precedent to admissibility is satisfied by evidence
sufficient to support a finding that the matter in question is
what its proponent claims.” Section 27-901 does not impose
a high hurdle for authentication or identification.36 Indeed, a
proponent of evidence is not required to conclusively prove
the genuineness of the evidence or to rule out all probabili-
ties inconsistent with authenticity.37 Rather, if the proponent’s
showing is sufficient to support a finding that the evidence is
what it purports to be, the proponent has satisfied the require-
ments of § 27-901.38
The files and records affirmatively show authentication was
established. Newman’s former girlfriend testified at trial that
she bought him a cell phone with a certain number and also
called him at a different cell phone number. Law enforcement
obtained the cell phone records associated with those two num-
bers, and the cell phone associated with the second number
was found on Newman at the time of his arrest. This cell phone
evidence was properly admitted at trial.39
The files and records affirmatively show that if Newman’s
counsel had objected on the ground the State had not “authen-
ticated” who was actually using the cell phones, such an objec-
tion would not have been successful. Newman’s counsel did
not perform deficiently in this regard, and the district court
36
State v. Elseman, 287 Neb. 134, 841 N.W.2d 225 (2014).
37
Id.
38
Id.
39
See Stricklin, supra note 3.
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correctly denied postconviction relief on this claim without an
evidentiary hearing.
6. Truth-in-Sentencing
A dvisement
Newman alleges his appellate counsel was ineffective for
failing to assign as error, on direct appeal, that trial counsel
was ineffective for failing to object to the truth-in-sentencing
advisement given by the trial court. His postconviction motion
alleges the truth-in-sentencing advisement, delivered in open
court, informed him he would be given credit for time served
of 405 days, but the written sentencing order gave him credit
for only 403 days. He argues the 2-day difference in the sen-
tences imposed is prejudicial.
[20] The district court found Newman’s claim lacked merit,
because he suffered no prejudice. It reasoned that in Nebraska,
if there is a discrepancy between the oral pronouncement of a
valid sentence and the later written order, the oral pronounce-
ment controls calculation of the prison term.40
Our de novo review of the record confirms this rule was
applied in Newman’s case. The commitment order entered
after Newman’s sentencing awarded him credit for 405 days
served. Thus, the files and records thus affirmatively show
that Newman has suffered no prejudice, and the district
court properly denied Newman an evidentiary hearing on
this claim.
7. Motion for New Trial
Newman’s postconviction motion includes several allega-
tions that his appellate counsel was ineffective for failing to
raise, on direct appeal, the ineffective assistance of trial counsel
related to the motion for new trial based on juror misconduct.
His brief to this court argues only two of those allegations.
40
See State v. Olbricht, 294 Neb. 974, 885 N.W.2d 699 (2016).
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We thus limit our review to those errors both assigned and
argued to this court.41
Before addressing these claims, we note that in our opinion
on Newman’s direct appeal, we found the record was insuf-
ficient to address Newman’s claim that his trial counsel was
ineffective for failing to timely offer an affidavit of a nonjuror
during the hearing on Newman’s motion for new trial. Newman
did not include such an allegation in his postconviction motion.
Instead, he alleges his appellate counsel was ineffective for
failing to raise other instances of ineffective assistance related
to the hearing on his motion for new trial. To understand his
claims, we briefly summarize the basis for Newman’s motion
for new trial.
Newman alleged he was entitled to a new trial because one
of the jurors had communicated with the juror’s brother, a
nonjuror, after the first day of deliberations and before a ver-
dict had been reached. A hearing was held on the motion for
new trial, and the juror testified that he telephoned his brother
and learned that their father was acquainted with Newman
and Stricklin. But the juror testified he did not know either of
them personally.
Newman’s postconviction motion alleges his appellate coun-
sel was ineffective for failing to raise, on direct appeal, that his
trial counsel was ineffective for (1) failing to object to certain
remarks by counsel and (2) conceding that portions of the
juror’s affidavit were inadmissible.
(a) Failure to Object
Newman’s postconviction motion alleges his trial counsel
should have objected when an attorney appointed to represent
the juror accused of misconduct made substantive representa-
tions to the trial court instead of eliciting such information
41
See State v. Hill, 298 Neb. 675, 905 N.W.2d 668 (2018) (alleged error
must be both specifically assigned and specifically argued to be considered
by appellate court).
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from the juror in question. Newman alleges his appellate
counsel was ineffective for failing to assign, on direct appeal,
that his trial counsel was deficient in failing to object to the
remarks of the juror’s attorney.
At the hearing on the motion for new trial, the parties dis-
puted the admissibility of the juror’s affidavit. Portions of that
affidavit averred that during trial, the juror
realized that I recognized people in the audience who
were familiar to me, then subsequently realized that I
knew both [Newman and Stricklin] and my family has
family relationships with them. In fact, at some point
I learned that . . . Newman had an altercation with my
father . . . and injured [my father’s] shoulder[.]
During the hearing, the juror’s attorney told the court the
juror had not actually learned of the altercation between
Newman and the juror’s father until after the verdicts were
returned. The court then asked the juror’s attorney whether the
juror recalled knowing Newman and Stricklin prior to return-
ing the verdicts, and the attorney responded, “No.”
Newman alleges that due to his counsel’s deficient perform
ance in not objecting to this colloquy, the juror’s attorney was
permitted to testify on behalf of his client and Newman was
deprived of the opportunity to cross-examine the juror. The
files and records affirmatively refute this claim.
The records shows that contrary to the allegations made in
Newman’s motion for postconviction relief, Newman’s trial
counsel did object to counsel’s remarks, arguing the juror’s
attorney should not be permitted to testify for his client. The
court agreed. Then both Newman and Stricklin were permitted
to call the juror as a witness and ask questions about the timing
and substance of the telephone conversation the juror had with
his brother.
Because the files and records affirmatively refute Newman’s
claim that his counsel failed to object to the complained-of
statements by the juror’s attorney, and also refute any claim
that he was denied an opportunity to question the juror directly,
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the postconviction court did not err in denying an evidentiary
hearing on this issue.
(b) Concession at Hearing
Newman also alleges his appellate counsel was ineffec-
tive for failing to raise, on direct appeal, that his trial counsel
was ineffective during the motion for new trial, because he
improperly conceded that a portion of the juror’s affidavit was
inadmissible.
The relevant portion of the affidavit averred, “During the
deliberations, the other jurors persuaded me to change my
vote to guilty primarily because [Newman and Stricklin] did
not testify and attempt to clear their names.” Newman alleges
his trial counsel was ineffective, because even though counsel
drafted the juror’s affidavit after interviewing the juror, coun-
sel “conceded and became submissive during the hearing on
the motion for new trial” and admitted that this paragraph of
the affidavit was not admissible under Nebraska law. The State
argues that trial counsel was not ineffective, because that por-
tion of the affidavit was plainly inadmissible under Nebraska
law and was properly stricken by the trial court.
Neb. Rev. Stat. § 27-606(2) (Reissue 2016) provides:
Upon inquiry into the validity of a verdict or indictment, a
juror may not testify as to any matter or statement occur-
ring during the course of the jury’s deliberations or to the
effect of anything upon his or any other juror’s mind or
emotions as influencing him to assent to or dissent from
the verdict or indictment or concerning his mental proc
esses in connection therewith, except that a juror may tes-
tify on the question whether extraneous prejudicial infor-
mation was improperly brought to the jury’s attention or
whether any outside influence was improperly brought to
bear upon any juror. Nor may his affidavit or evidence of
any statement by him indicating an effect of this kind be
received for these purposes.
[21] Section 27-606(2) prohibits a juror from testifying as
to any matter or statement occurring during the course of the
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jury’s deliberations. Thus, a juror’s affidavit may not be used
to impeach a verdict on the basis of jury motives, methods,
misunderstanding, thought processes, or discussions during
deliberations.42 Because the record shows counsel did not per-
form deficiently in conceding this point, the district court did
not err in denying postconviction relief without an evidentiary
hearing on this claim.
8. Crime Scene Investigator
Newman alleges appellate counsel was ineffective in fail-
ing to raise, on direct appeal, that trial counsel was ineffective
in failing to hire a crime scene investigator. He alleges vari-
ous items at the crime scene were inconsistent with Herrera-
Gutierrez’ testimony and that counsel should have hired an
investigator to rebut these inconsistencies.
Specifically, Newman alleges only one set of footprints
“‘with evidentiary value’” was found at the scene, but Herrera-
Gutierrez testified five people went in to the shop where the
murders occurred and only three came out. He alleges Herrera-
Gutierrez testified the victims were tied up and shot “‘real
fast,’” but blood splatter at the scene was on the ceiling and
the outside landing. He alleges Herrera-Gutierrez testified that
the victims were shot as they lay face down, but a shell casing
was found underneath one of their bodies.
Newman’s postconviction motion concedes that trial counsel
cross-examined the State’s witnesses on this evidence, and the
record confirms that Newman’s counsel presented evidence
regarding each of these issues either on direct examination or
through cross-examination at trial. But Newman alleges trial
counsel should also have hired a “crime scene investigator or
specialist” who “would and could have rebutted” this evidence.
Newman’s motion presents no allegations regarding what such
an investigator or specialist would have testified to if called, or
how such testimony would have rebutted the state’s evidence
or affected the outcome of the case.
42
See State v. Thomas, 262 Neb. 985, 637 N.W.2d 632 (2002).
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[22] A petitioner’s postconviction claims that his or her
defense counsel was ineffective in failing to investigate pos-
sible defenses are too speculative to warrant relief if the peti-
tioner fails to allege what exculpatory evidence the investiga-
tion would have procured and how it would have affected the
outcome of the case.43 The district court correctly concluded
that Newman’s conclusory allegations about the failure to
hire a crime scene investigator did not warrant an eviden-
tiary hearing.44
9. Failure to Obtain
Complete R ecord
Newman’s postconviction motion alleges appellate counsel
was ineffective for failing to obtain the complete record prior
to the direct appeal. He alleges the missing portion of the
record was a supplemental jury instruction not included in the
final instructions sent to the jury.
Newman’s motion does not allege how his lack of access
to that instruction affected his appeal or what assignment of
error was not raised on appeal due to the lack of access to that
record. The district court thus correctly found Newman did not
plead sufficient facts to necessitate an evidentiary hearing on
this claim.
10. Actual Innocence
Newman’s postconviction motion alleges he was actually
innocent of the crimes. He supports this allegation by ref-
erencing all of his alleged claims of ineffective assistance
of counsel, in addition to other unassigned errors during
trial. In his brief to this court, Newman contends the errors
of appellate counsel in failing to raise such issues on direct
appeal “taken as a whole establish that [he] was actually
innocent.”45 The trial court found Newman’s allegations of
43
State v. Edwards, 284 Neb. 382, 821 N.W.2d 680 (2012).
44
See id.
45
Brief for appellant at 20.
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actual innocence were insufficient to show a constitutional
violation. We agree.
[23-25] In State v. Dubray,46 we explained:
A claim of actual innocence may be a sufficient alle-
gation of a constitutional violation under the Nebraska
Postconviction Act. The essence of a claim of actual
innocence is that the State’s continued incarceration of
such a petitioner without an opportunity to present newly
discovered evidence is a denial of procedural or substan-
tive due process. The threshold to entitle a prisoner to
an evidentiary hearing on such a postconviction claim is
“‘extraordinarily high.’” Such a petitioner must make a
strong demonstration of actual innocence because after
a fair trial and conviction, the presumption of inno-
cence vanishes.
Newman has not met his extraordinarily high threshold of
alleging facts sufficient to show he is actually innocent of the
crimes. The district court did not err in denying an evidentiary
hearing on this claim.
V. CONCLUSION
For the foregoing reasons, we conclude the district court
erred in denying Newman an evidentiary hearing on his
claim that trial counsel was ineffective for failing to inves-
tigate and present alibi evidence from Riley, Mariscal, and
two employees of Chubb Foods, and we reverse the court’s
decision in part and remand the matter for an evidentiary
hearing limited to that claim. In all other respects, we affirm
the district court’s denial of postconviction relief without an
evidentiary hearing.
A ffirmed in part, and in part reversed
and remanded with directions.
Heavican, C.J., not participating.
46
Dubray, supra note 18, 294 Neb. at 947-48, 885 N.W.2d at 551, quoting
State v. Phelps, 286 Neb. 89, 834 N.W.2d 786 (2013). Accord Herrera v.
Collins, 506 U.S. 390, 113 S. Ct. 853, 122 L. Ed. 2d 203 (1993).
| {
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22 Cal.App.4th 786 (1994)
27 Cal. Rptr.2d 545
CITY OF SACRAMENTO, Plaintiff and Appellant,
v.
PUBLIC EMPLOYEES' RETIREMENT SYSTEM et al., Defendants and Appellants.
Docket No. C013994.
Court of Appeals of California, Third District.
February 16, 1994.
*789 COUNSEL
Sharon Siedorf Cardenas, City Attorney, William P. Carnazzo, Assistant City Attorney, Leslie R. Lopez and Catherine H. Brown, Deputy City Attorneys, for Plaintiff and Appellant.
Daniel E. Lungren, Attorney General, Robert L. Mukai, Chief Assistant Attorney General, Floyd D. Shimomura, Assistant Attorney General, Cathy Christian and Ramon M. de la Guardia, Deputy Attorneys General, for Defendants and Appellants.
OPINION
BLEASE, Acting P.J.
The City of Sacramento (Sacramento) appeals from a judgment which declares that a 1987 amendment to the Public Employees' Retirement Law, relating to enhanced pension benefits, applies to its employees without its election.
Sacramento, as an agency contracting with the Public Employees' Retirement System (PERS), is subject to the Public Employees' Retirement Law. Under that law employees classified as "local safety members" (§ 20019),[1] including "local firemen" (§ 20021), are entitled to enhanced pension benefits (§ 21252.01).
In 1987 the Legislature amended section 20021, expanding the class of "local firemen" from "active" firefighters to include those engaged in fire prevention, training, or investigation. (Stats. 1987, ch. 1411, § 2, p. 5198.) *790 The amendment did not condition its application upon the election of the contracting agency nor had the section ever been so conditioned. By contrast, another section, added in the same enactment, does condition the extension of safety membership to harbor and port officers upon the election of the contracting agency. (§ 20019.37.)[2]
PERS concluded that the 1987 amendment is binding upon Sacramento without its election. The trial court agreed. This appeal followed.
Sacramento claims that it is not subject to the 1987 amendment without its election. It concedes that the result it seeks is completely at odds with the statutory language. It relies upon the Legislative Counsel's digest, legislative staff digests and other extrinsic matter which mistakenly say that the firefighter amendment is conditional upon the election of the contracting agency. It argues that this matter evinces the Legislature's intent and that we should carry out that intent and "construe" section 20021 to include the omitted condition.
We are asked to employ legislative history in a manner beyond its capacity to shed light on the text of the statute. Because this would require that we amend the language of section 20021 to insert a provision it does not contain, a power we do not possess,[3] we decline the invitation.
The result which Sacramento would have us achieve was accomplished prospectively in 1989 in an enactment which removed the 1987 amendments to section 20021 and placed them in a new section 20021.01 made conditional on the election of the contracting agency. (Stats. 1989, ch. 1464, §§ 1 and 2, pp. 6534-6535, eff. Oct. 2, 1989; see fn. 9, post.) This provides no warrant to make these amendments retroactive by judicial fiat.
With exceptions to be noted we will affirm the judgment.
FACTS AND PROCEDURAL BACKGROUND
Under the Public Employees' Retirement Law municipalities and other local public agencies may contract with PERS to place their employees in the state retirement system. (§ 20450.) Sacramento has made such a contract.
*791 A contract with PERS subjects the contracting agency to the Public Employees' Retirement Law "and all amendments thereto applicable to members, local miscellaneous members, or local safety members except such as are expressly inapplicable to a contracting agency unless and until it elects to be subject to such provision." (§ 20493.)
Employees are classified as "local miscellaneous members" or "local safety members." (§§ 20013, 20018-20019.) The latter are entitled to enhanced pension benefits which require payment of a substantially higher employer contribution. (Compare, e.g., § 21251.13 with § 21252.01.) The term "local safety member" includes "all local ... firemen...." (§ 20019.)
Before its amendment in 1987, section 20021 defined "local firemen" as employees engaged in active firefighting and prevention: "`Local fireman' means any officer or employee of a fire department of a contracting agency, except one whose principal duties are those of a telephone operator, clerk, stenographer, machinist, mechanic, or otherwise and whose functions do not clearly fall within the scope of active fire fighting and prevention service even though such an employee is subject to occasional call, or is occasionally called upon, to perform duties within the scope of active fire fighting and prevention service, but not excepting persons employed and qualifying as firemen, hosemen or equal or higher rank, irrespective of the duties to which they are assigned." (Stats. 1945, ch. 1224, § 4, p 2330.)
This provision contains no language conditioning its application to employees upon the election of a contracting agency; its benefits are therefore mandatory.
The 1987 amendment to section 20021 was sponsored by PERS. It added the underlined matter and deleted the strikeover matter, as follows: "`Local fireman firefighter' means any officer or employee of a fire department of a contracting agency, except one whose principal duties are those of a telephone operator, clerk, stenographer, machinist, mechanic, or otherwise and whose functions do not clearly fall within the scope of active firefighting, and fire prevention, fire training, or fire investigation service even though such an that employee is subject to occasional call, or is occasionally called upon, to perform duties within the scope of active firefighting, and fire prevention, fire training, or fire investigation service, but not excepting persons employed and qualifying as firefighters firemen, hosemen or equal *792 or higher rank, irrespective of the duties to which they are assigned." (Stats. 1987, ch. 1411, § 2, pp. 5198-5199.)[4]
PERS informed the contracting agencies, including Sacramento, that the amendment effected the compulsory inclusion in the class of "local safety members" of fire department employees whose duties encompassed fire prevention, training, or investigation. It also informed them that the beneficiaries of the amendment are entitled to conversion of their prior local miscellaneous service credit to local safety service credit under section 20803.2.[5]
In 1989 Sacramento entered into a labor agreement with its firefighters union. Seven employees classified as fire prevention officers were granted "local safety member" status in accordance with PERS's view of the amended section 20021. The agreement reserved the right to seek declaratory relief to vindicate Sacramento's view that such status was conditional upon its election, and if it prevailed, to return the fire prevention officers to "local miscellaneous member" status, nunc pro tunc.
This declaratory relief action followed. Sacramento adduced evidence that some thought the provisions for an expanded class are inapplicable in the absence of an election by the contracting agency. This includes several legislative committee staff analyses which assert that the extension of local safety member status is dependent upon the election of the contracting agency. The author of the bill made similar assertions in a letter written to the Governor asking him to sign the bill. In addition, a Legislative Counsel Digest summarizes Assembly Bill No. 839 (1987-1988 Reg. Sess.), the vehicle by which section 20021 was amended, as follows: "This bill would authorize contracting agencies ... to include within the local firefighter category, fire department employees providing fire training or fire investigation services. These provisions would be inapplicable to a contracting agency unless and until it elects to be subject to these provisions."
*793 The trial court concluded that section 20021, as amended by Statutes 1987, chapter 1411, is unambiguous in conferring mandatory local safety member status on fire department employees whose functions fall within the scope of fire prevention, training, or investigation. It also concluded that section 20803.2 is applicable only where a reclassification of a position as a local safety position is effected by the local employing agency and not when "the reclassification was made by the Legislature."
A judgment embodying these rulings was entered and Sacramento and PERS each appeal from the parts of the judgment adverse to their position.
DISCUSSION
I
A.
(1a) Sacramento asks us to conform the language of the 1987 amendment to the legislative intent it views as manifested in the Legislative Counsel's Digest and other matter extrinsic to the statute. It argues that this intent "warrant[s] the correction of a legislative error...." It concedes that the result it seeks "is completely at odds with the language of the statute."
This view misconceives the nature of the judicial power to construe statutes; that which is construed is the statutory text. The employment of indicia of legislative intent to construe a statute, however derived, makes sense only in the pursuit of that enterprise.
(2) The quest for legislative intent is not unbounded: "[I]t still remains true, as it always has, that there can be no intent in a statute not expressed in its words, and there can be no intent upon the part of the framers of such a statute which does not find expression in their words." (Ex Parte Goodrich (1911) 160 Cal. 410, 416-417 [117 P. 451]; also see, e.g., Anderson v. I.M. Jameson Corp. (1936) 7 Cal.2d 60, 68 [59 P.2d 962].)[6] "[T]he meaning of a statute is to be sought in the language used by the Legislature." (In re Miller *794 (1947) 31 Cal.2d 191, 198 [187 P.2d 722].) "Words may not be inserted in a statute under the guise of interpretation." (Id. at p. 199, relying upon Seaboard Acceptance Corp. v. Shay (1931) 214 Cal. 361, 365-366 [5 P.2d 882].)
(1b) There is no semantically permissible reading of the Public Employees' Retirement Law by which to achieve the result sought by Sacramento. There is in fact no language in section 20021, as amended in 1987, to construe. It simply lacks the conditional language which Sacramento would have us insert. Moreover, as noted, a companion section, added in the same enactment, does condition the extension of safety membership to harbor and port officers upon the election of the contracting agency. (§ 20019.37; fn. 2, ante.)
To overcome this obstacle Sacramento relies upon the oft-repeated premise that the purpose of statutory interpretation is to ascertain and effectuate legislative intent. (E.g., Code Civ. Proc., § 1859 ["In the construction of a statute the intention of the legislature ... is to be pursued, if possible ...."], italics added; also see, e.g., City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 468 [14 Cal. Rptr.2d 514, 841 P.2d 1034]; People v. Woodhead (1987) 43 Cal.3d 1002, 1007 [239 Cal. Rptr. 656, 741 P.2d 154].)[7] It urges us to find the intent in the extrinsic aids upon which its claim is founded and implies that we derive the authority to amend the statute from this source. That is not the case for reasons which plumb the line which separates the judicial from the legislative power.
B.
The California Constitution declares that the "powers of State government are legislative, executive, and judicial" and that "[p]ersons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution." (Cal. Const., art. III, § 3.) "The legislative power of this state is vested in the California Legislature...." (Cal. Const., art. IV, § 1.) (3) The legislative power to make law may be exercised only by the enactment of a statute. "The Legislature may make no law except by statute and may enact no statute except by bill." (Id. § 8, subd. (b).) For these reasons "[t]he will of the Legislature must be determined from the statutes; intentions cannot be ascribed to it at odds with the *795 intentions articulated in the statutes." (People v. Knowles (1950) 35 Cal.2d 175, 182 [217 P.2d 1].)
This constitutional limitation on the mode of enacting law "means that not even the most reliable document of legislative history, such as a conference committee report, may have the force of law." (Dickerson, The Interpretation and Application of Statutes (1975) pp. 9-10.) Neither the Legislative Counsel nor the staff of the Legislature make utterances which constitute law.
If the meaning of a statute can be declared without the support of a statutory text, the law is not made "by" the statute, it is made by the courts in violation of the Constitution. This does not mean that legislative history may not be brought to bear upon the construction of the statutory text. Its utility, however, is confined to that task. (4) "The significance to be accorded extrinsic evidence of legislative intention (or purpose) depends upon its capacity to resolve ambiguities in statutory language...." (In-Home Supportive Services v. Workers' Comp. Appeals Bd. (1984) 152 Cal. App.3d 720, 739 [199 Cal. Rptr. 697].) As has been frequently said: "In construing the terms of a statute we resort to the legislative history of the measure only if its terms are ambiguous." (Title Ins. & Trust Co. v. County of Riverside (1989) 48 Cal.3d 84, 96 [255 Cal. Rptr. 670, 767 P.2d 1148] and cases cited therein.) An ambiguity arises only if "... there [is] more than one construction in issue which is semantically permissible, i.e., more than one usage which makes sense of the statutory language given the context and applicable rules of usage." (County of Sutter v. Board of Administration (1989) 215 Cal. App.3d 1288, 1295 [264 Cal. Rptr. 233].)
A claim of ambiguity cannot always be decided from the face of the statute. It may be latent. (See Mutual Life Ins. Co. v. City of Los Angeles (1990) 50 Cal.3d 402, 407 [267 Cal. Rptr. 589, 787 P.2d 996]; Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) 53 Cal.3d 245, 249 [279 Cal. Rptr. 325, 806 P.2d 1360] [constitutional provisions harmonized to avoid conflict]; Stanton v. Panish (1980) 28 Cal.3d 107, 115 [167 Cal. Rptr. 584, 615 P.2d 1372] [same]; Mosk v. Superior Court (1979) 25 Cal.3d 474, 495 [159 Cal. Rptr. 494, 601 P.2d 1030] [same].) A claim of latent ambiguity requires a provisional examination of extrinsic matters to make the judgment whether the claim is tenable.
(1c) In this case there is no tenable claim of ambiguity in the statutory text, latent or patent. Sacramento does not rest its claim on equivocal language; it simply claims the Legislature made a mistake in omitting language conditioning the enhanced benefits upon the election of the contracting agency when it amended section 20021 in 1987.
*796 C.
Sacramento correctly asserts that ambiguity is not the only ground upon which a court may assign a meaning at odds with the natural and ordinary signification of the words used in the statute. (See, e.g., Times Mirror Co. v. Superior Court (1991) 53 Cal.3d 1325, 1334, fn. 7 [283 Cal. Rptr. 893, 813 P.2d 240].) However, it is not every case in which the courts have the power to fashion such a remedy.
The leading case is the reapportionment case of Silver v. Brown (1966) 63 Cal.2d 841 [46 Cal. Rptr. 308, 405 P.2d 132] (Silver II). The court in a prior case had held that the existing legislative apportionments were invalid, that reapportionment must occur in time for the 1966 election, and that, failing the enactment of a valid plan, it would put in place its own reapportionment plan. (Silver v. Brown (1965) 63 Cal.2d 270 [46 Cal. Rptr. 308, 405 P.2d 132] [Silver I].) The court retained jurisdiction to review any such enactment.
The Legislature enacted a reapportionment statute which was considered in Silver II. The descriptions of some districts, if given literal effect, would have resulted in violation of the constitutional limits set forth in Silver I. (Silver II, supra, 63 Cal.2d at p. 844.) The Governor offered the aid of legislative history to show that the offending descriptions were ambiguous or erroneous. (Ibid.) The Supreme Court accepted this showing as a ground for construction of the statute, using descriptions contained in the legislative history presented, "to obviate the ambiguities and technical errors in its literal provisions." (Id. at p. 846.)
Silver II advances two grounds of authority for this action. The first is the established doctrine that: "[t]he literal meaning of the words of a statute may be disregarded to avoid absurd results or to give effect to manifest purposes that, in the light of the statute's legislative history, appear from its provisions considered as a whole." (63 Cal.2d at p. 845.) The second ground is the consideration that "[i]n construing legislative remedies for malapportionment enacted under the pressure of impending election deadlines, courts must also adopt flexible techniques to discharge the duty they share with legislatures to secure constitutional apportionments in conformity with decisions of the United States Supreme Court." (Id. at p. 846.)
Sacramento argues that Silver II and similar cases warrant the use of the extrinsic aids it proffers. It claims that we should derive from the Legislative Counsel's Digest and legislative committee staff reports a legislative intent to enact a statute making optional "local safety membership" for fire department employees whose function is fire training, prevention, or investigation *797 and embody that intent in a statutory gloss that finds no support in the language.
Neither Silver II nor any similar precedent extends so far. What Sacramento seeks is to use extrinsic aids to establish a mistake in the statutory language when there is no intrinsic indication of a mistake.
Unlike Silver II, the retirement system is not an area of the law where the courts have a constitutional or common law font of lawmaking power, permitting the judicial promulgation of law, using extrastatutory by-products of the legislative process, under the rubric of statutory construction. Unlike Silver II there is no tenable claim that the language in the 1987 amendment to section 20021, or in the other statutes of the Public Employees' Retirement Law, discloses a purpose that is inconsistent with the univocal plain meaning of the statutory text or that the plain meaning of the text leads to absurd results.[8]
D.
Sacramento also relies upon a 1989 enactment which deleted the 1987 amendments to section 20021, insofar as they extended to employees engaged only in fire prevention, fire training and fire investigation without a component of active firefighting,[9] and placed them in a new section 20021.01, which is made conditional upon the election of the contracting agency. (Stats. 1989, ch. 1464, §§ 1 and 2, pp. 6534-6535, eff. Oct. 2, 1989.) *798 An urgency declaration accompanying the enactment provides, in pertinent part: "In order that unintended potential consequences and confusion resulting from a recent revision of the definition of `local safety members' in the Public Employee's Retirement System may be remedied at the earliest possible time, ... it is necessary that this act take effect immediately." (Stats. 1989, ch. 1464, § 15, p. 6540.)
Sacramento suggests that this declaration shows the Legislature intended in 1987 to confer extended coverage at the option of the local agency. It relies upon the doctrine that "[a]lthough a legislative expression of the intent of an earlier act is not binding upon the courts in their construction of the prior act, that expression may properly be considered together with other factors in arriving at the true legislative intent existing when the prior act was passed." (Eu v. Chacon (1976) 16 Cal.3d 465, 470 [128 Cal. Rptr. 1, 546 P.2d 289].)
The urgency declaration affords no support for Sacramento. (5) The recognition of subsequent assertions of legislative intent is derived from cases where the meaning of the earlier enactment is "unclear." (See, e.g., Tyler v. State of California (1982) 134 Cal. App.3d 973, 977 [185 Cal. Rptr. 49].) It cannot rest upon the notion that the (subsequent) Legislature has authority to interpret the earlier statute for that is a judicial task. (See. e.g., Del Costello v. State of California (1982) 135 Cal. App.3d 887, 893, fn. 8 [185 Cal. Rptr. 582].)
The doctrine's legitimate ground is that, as to unsettled questions concerning rules of decision and absent a good reason to the contrary, the Legislature's subsequent resolution should receive deference. (See Mahon v. Safeco Title Ins. Co. (1988) 199 Cal. App.3d 616, 623 [245 Cal. Rptr. 103].) It presupposes a case in which the question of meaning is closely balanced, the views of reasonable persons might well diverge, and no private rights have clearly accrued under the earlier statute.
(1d) These preconditions are not satisfied here. The textual meaning of the 1987 amendment is transparently clear. The firefighters who were granted advantages by that amendment are entitled to judicial protection of the rights which accrued as a result of their continued, faithful employment in reliance upon the law during the period prior to the subsequent legislation. (See, e.g., California Teachers Assn. v. Cory (1984) 155 Cal. App.3d 494, 507-508 [202 Cal. Rptr. 611].)
Sacramento also argues that the 1987 amendment to section 20021 has been "rendered" retroactively ambiguous by the 1989 enactment. This argument displays a conceptual confusion. Language cannot be "rendered" retroactively ambiguous by subsequent events. The assertion in the urgency *799 declaration that the 1987 amendment had "unintended potential consequences" is a statement of legislative inadvertence, rather than legislative intent. Legislation often has unintended consequences. That affords no support for the construction of the 1987 amendments in a manner wholly unsupported by their text to avoid the "unintended" consequences.
E.
For all of the foregoing reasons, we find no cognizable reason to depart from the plain meaning of the Public Employees' Retirement Law as amended by Statutes 1987, chapter 1411. The trial court did not err in concluding that under that law "local safety membership" was conferred on all firefighters as defined in section 20021, as amended.
A fortiori, Sacramento's derivative contention that the trial court erred in concluding that such firefighters obtained a vested right to the continuance of this status so long as they remain so employed also fails. Having been accorded the more advantageous benefit status by statute during their employment, it cannot be diminished without offset by a comparable new advantage. (See, e.g., Betts v. Board of Administration (1978) 21 Cal.3d 859, 867 [148 Cal. Rptr. 158, 582 P.2d 614].)
II
(6) PERS contends the trial court erred in finding that section 20803.2, which governs the conversion of past service in the less advantageous classification of "local miscellaneous service" to "local safety service," is inapplicable to employees brought within the definition of firefighter by the 1987 amendment.
The trial court announced, without explanation, that the statute applies only where reclassification is made by a local agency pursuant to a statute which affords such an election. Thus, the trial court concluded that those engaged in fire prevention, training, or investigation who were brought within the definition of firefighting by the 1987 amendment effective on January 1, 1988, "don't get safety service credits for pre-1/1/88 service." The court held that such employees are not entitled to have their local miscellaneous service prior to January 1, 1988, converted to local safety service pursuant to section 20803.2 because, in the trial court's view, (1) "[t]here was no legislative intent in the 1987 legislation to apply safety service credits to pre-1/1/88 service," and (2) section 20803.2 applies only when "reclassification occurs by action of the employing agency, not by the Legislature."
As PERS notes, section 20803.2 contains no language regarding the manner of the reclassification and affords no suggestion that its application *800 is so limited. Sacramento makes no attempt to justify the trial court's rationale, and fails to address the application of section 20803.2 to the reclassification effected by statute.
As related, section 20803.2 (fn. 5, ante) by its terms applies if an employee's past service "[w]as rendered in a position that has subsequently been reclassified as a local safety position...." A position may be "reclassified" from miscellaneous to safety in a variety of ways, including by statutory enactment. (See, e.g., § 20017.986.) Applying a reclassification to an employee with prior miscellaneous service occasions the problem of melding the application of two different sets of provisions governing the respective classifications, regardless of the mode of reclassification. No reason appears why the solution provided for this problem in section 20803.2 should be limited to reclassifications occasioned by an election of a local agency under a statute permitting such an election.
If the term "reclassification" in section 20803.2 were ambiguous in this regard, we would be obliged to construe it liberally in favor of the employees. (See, e.g., County of Sutter v. Board of Administration, supra, 215 Cal. App.3d at p. 1295.) If the question of ambiguity were evenly balanced we would accord deference to the views of PERS, as the interpretation by the agency charged with administering the statutory scheme.
In sum, we find no plausible basis to sustain the ruling of the trial court that section 20803.2 has no application to employees in positions reclassified by Statutes 1987, chapter 1411.
DISPOSITION
The judgment is modified by striking out the words in paragraph 6 of the trial court's order following trial as follows:
"6. Government Code section 20803.2 is only applicable in cases where a position is reclassified by the local employing agency and does not apply in this case because the reclassification was made by the Legislature."
As so modified, the judgment is affirmed. PERS shall recover its costs of this appeal.
Sims, J., and Scotland, J., concurred.
NOTES
[1] A reference to a section is to the Government Code unless otherwise indicated.
[2] Section 20019.37 in pertinent part provides: "This section shall not apply to the employees of any contracting agency, nor to any contracting agency, unless and until the contracting agency elects to be subject to this section by amendment to its contract with the board, pursuant to Section 20461.5, or by express provision of its contract with the board."
[3] "In the construction of a statute ... the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted...." (Code Civ. Proc., § 1858.)
[4] The change from "fireman" to "firefighter" rendered the category gender neutral. For this reason we read "firemen," in the unamended section 20019, as inclusive of "firefighter" as used in section 20021. (See §§ 12, 12.5.)
[5] Section 20803.2 is as follows:
"Past local miscellaneous service shall be converted to local safety service if the past service:
"(a) Was rendered by a current employee of the same agency for which the miscellaneous service was performed; and
"(b) Was rendered in a position that has subsequently been reclassified as a local safety position; and
"(c) Is credited to an employee who has other local safety service credit for service performed with the agency."
[6] Another formulation is provided in de Sloovere, Textual Interpretation of Statutes (1934) 11 N.Y.U.L.Q. Rev. 538; reprinted in 2B Sutherland Statutory Construction (5th ed. 1992) 315, 319 [Textual Interpretation]): "[T]he real problem of interpretation in most cases is ... the making of a satisfactory choice from the several possible meanings that the text will bear, the choice may well be one between literalness, logic, history, analysis, grammar, rhetoric, or a meaning derived from aids extrinsic of the text. But which ever is chosen, it must be justified by the whole text by fair use of language."
[7] "The classical statement is in William v. Berkeley, Plow 223, 231, (1601): `Whoever would consider an act well ought always have particular regard to the intent of it, and accordingly as the intent appears, he ought to construe the words.' It simply means that as the legislative intent appears from the text or context or as light may be thrown upon them by extrinsic aids one ought to construe the words." (Textual Interpretation, supra, at pp. 328-329.)
[8] Sacramento suggests that there is an absurdity presented because, in light of the subsequent legislation, persons hired as fire prevention, training, and investigation employees after it became effective are entitled to "local safety membership" only at the election of the local agency. This only aids a claim that the subsequent legislation is absurd. However, even as to that, reducing pension benefits for future employees presents no absurdity. (See generally, Claypool v. Wilson (1992) 4 Cal. App.4th 646, 669-670 [6 Cal. Rptr.2d 77].)
[9] The enactment amended section 20021. It does not completely restore section 20021 as it read prior to the 1987 amendments. It adds the following job functions to the definition of "firefighter": employees engaged in "active firefighting and fire training, active firefighting and hazardous materials, active firefighting and fire or arson investigation, [and] active firefighting and emergency medical services...."
As amended, it reads as shown, adding the underlined matter and deleting the strikeover matter. "`Local firefighter' means any officer or employee of a fire department of a contracting agency, except one whose principal duties are those of a telephone operator, clerk, stenographer, machinist, mechanic, or otherwise and whose functions do not clearly fall within the scope of active firefighting, or active firefighting and fire prevention service, active firefighting and fire training, active firefighting and hazardous materials, active firefighting and fire or arson investigation, or active firefighting and emergency medical services, or fire investigation service even though that employee is subject to occasional call, or is occasionally called upon, to perform duties within the scope of active firefighting, or active firefighting and fire prevention service, active firefighting and fire training, active firefighting and hazardous materials, active firefighting and fire or arson investigation, or active firefighting and emergency medical services, or fire investigation service, but not excepting persons employed and qualifying as firefighters of equal or higher rank, irrespective of the duties to which they are assigned."
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607 F.2d 318
5 Fed. R. Evid. Serv. 180
UNITED STATES of America, Plaintiff-Appellee,v.Ernesto Lopes SALSEDO, Defendant-Appellant.
No. 78-3449.
United States Court of Appeals,Ninth Circuit.
Oct. 29, 1979.
Jerome S. Stanley, Jerome S. Stanley, Inc., Sacramento, Cal., for defendant-appellant.
Fern Segal, Asst. U. S. Atty., Sacramento, Cal., argued, for plaintiff-appellee; John C. Gibbons, Sacramento, Cal., on brief.
Appeal from the United States District Court for the Eastern District of California.
Before DUNIWAY, PECK* and HUG, Circuit Judges.
PECK, Circuit Judge.
At a jury trial in the district court, defendant was convicted of conspiracy to distribute and distribution of a controlled substance1 in violation of 21 U.S.C. §§ 841 and 846. On appeal, defendant raises a variety of issues, all of which are without merit.
First, defendant argues that basic notions of fundamental fairness were violated when the Assistant United States Attorney refused to call defendant as a witness before the grand jury that was considering his indictment. We disagree. A grand jury proceeding is not an adversary proceeding in which the guilt or the innocence of an accused is adjudicated. See, e. g., United States v. Calandra, 414 U.S. 338, 343-44, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). Thus, an accused has ". . . no right of cross-examination, or of introducing evidence to rebut (a) prosecutor's presentation." United States v. Y. Hata & Co., 535 F.2d 508, 512 (9th Cir.), Cert. denied, 429 U.S. 828, 97 S.Ct. 87, 50 L.Ed.2d 92 (1976). Likewise, an accused has no right to be called as a witness before the grand jury that is considering his indictment, United States v. Donahey, 529 F.2d 831, 832 (5th Cir.), Cert. denied, 429 U.S. 828, 97 S.Ct. 85, 50 L.Ed.2d 91 (1976); United States v. Smith, 552 F.2d 257, 261 (8th Cir. 1977); United States v. Ciambrone, 601 F.2d 616, 622-623 (2d Cir. 1979); United States v. Thompson, 144 F.2d 604, 605 (2d Cir. 1944) (L. Hand, J.); Duke v. United States, 90 F.2d 840, 841 (4th Cir. 1937).
1
Second, defendant argues that his Sixth Amendment right to a speedy trial was violated by the "delay" between his arraignment and his trial. This second argument of defendant is patently frivolous. As is conceded by both parties, the "delay" between defendant's arraignment and his trial, excluding any delay attributable to defendant himself, was 111 days. Thus, the length of the "delay" challenged by defendant satisfied the 120-day requirement of the speedy trial plan of the district court in which defendant was tried.2 Further, nothing in the record indicates (and defendant has made no attempt to show) that the "delay" in question either prejudiced defendant in the preparation of his case, or was the result of any misconduct on the part of the government. See Barker v. Wingo, 407 U.S. 514, 530-33, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972) (a court, when confronted with a possible speedy trial violation, should consider the length of the delay between arraignment and trial, the reason for the delay, the defendant's assertion of his Sixth Amendment right, and the prejudice to the defendant).
2
Third, defendant argues that the district court abused its discretion when it appointed an interpreter to allow a government informant to testify in Spanish, his native language. Again we fail to find any merit in defendant's argument. An appointment of an interpreter lies within the sound discretion of a trial judge, and such appointment will be disturbed on appeal only if the judge has abused that discretion. See, e. g., United States v. Barrios, 457 F.2d 680, 682 (9th Cir. 1972). In the present case, the district court conducted a thorough hearing with the informant outside the presence of the jury, and determined that the informant was "not fluent in English." Moreover, the court reasoned that the fluency in Spanish of both the informant and the defendant would serve to eliminate any serious problems with nuances in language. In the light of the circumstances of the present case, the district court's decision to appoint an interpreter was a proper exercise of judicial discretion.
3
Fourth, defendant argues that the trial judge erred when he ordered defendant to provide the government with a transcript of a telephone conversation between defendant and the government informant. In support of this argument, defendant contends that the conversation transcript, made by defendant's counsel from a tape recording provided by the government,3 was protected from disclosure under the doctrine of "work product."4 In advancing this argument, defendant fails to recognize the fact that the doctrine of work product involves a qualified and not an absolute privilege. In other words, a counsel's work product is protected by a privilege that is subject to waiver by its holder. See, e. g., United States v. Nobles, 422 U.S. 225, 239, 95 S.Ct. 2160, 45 L.Ed.2d 141 (1975). The decision of the Supreme Court in the Nobles case is particularly instructive in the context of the present appeal. Therein, a defense counsel relied on an investigative report in his cross-examination of certain prosecution witnesses. The counsel, despite his testimonial use of the report, asserted that he was not required to disclose the report at trial on the ground that the report was his work product. The Supreme Court rejected the counsel's argument, and held that counsel had waived any privilege when he had used the report in his cross-examination. The Court stated:
4
Respondent can no more advance the work product doctrine to sustain a unilateral testimonial use of work product materials than he could elect to testify in his own behalf and thereafter assert his Fifth Amendment privilege to resist cross-examination on matters reasonably related to those brought out in direct examination.
5
422 U.S. at 239-40, 95 S.Ct. at 2171. In the present case, defendant's counsel made reference to the conversation transcript (his alleged work product) in his cross-examination both of the government informant and of another government witness, an agent of the Drug Enforcement Administration. Thus, consistent with the holding of the Court in Nobles, defendant's counsel waived any work product privilege in relation to the transcript through the use of the transcript in his cross-examination. See also Rule 106, Fed.R.Evid.5
6
Finally, defendant argues that the district court abused its discretion when it limited defendant's cross-examination of the government informant. More specifically, defendant argues that the district court should have allowed defendant to inquire more fully into the particulars of the informant's previous work with the Drug Enforcement Administration.
7
The extent of cross-examination is within the sound discretion of the trial judge who must exercise a reasonable judgment in determining when counsel has exhausted an appropriate subject of inquiry. In Skinner v. Cardwell, 564 F.2d 1381, 1389 (9th Cir. 1977), Cert. denied, 435 U.S. 1009, 98 S.Ct. 1883, 56 L.Ed.2d 392 (1978), this Circuit discussed the standard to be applied to determine whether counsel has been afforded an adequate opportunity to cross-examine a witness for impeachment purposes. The Court held:
8
The test for whether cross-examination about a relevant topic was effective, i. e., whether the trial court has abused its discretion, is whether the jury is otherwise in possession of sufficient information upon which to make a discriminating appraisal of the subject matter at issue. When the refused cross-examination relates to impeachment evidence, we look to see whether the jury had sufficient information to appraise the bias and motives of the witness.
9
564 F.2d at 1389.
10
In arguing that the district court in the present case abused its discretion, defendant cites the case of United States v. Leja, 568 F.2d 493 (6th Cir. 1977). Therein, defendant's counsel had attempted to impeach the credibility of a government informant by showing that the informant's livelihood had depended entirely upon the government's compensation. The district court had allowed cross-examination of the informant as to his compensation from the Drug Enforcement Administration (DEA) for his work in the Immediate case. However, the court had refused to allow any inquiry whatever into the informant's compensation for his Previous work with the DEA. The Sixth Circuit reversed the judgment of conviction, reasoning:
11
Past rewards are actually more important than remuneration for the case at hand, since pay for the case at hand comes after the work is done. Evidence of past rewards shows what an informant can expect by making a case. It is in making a case that any deceit occurs, for once the case is made, and an investigation terminated by arrest, the testimony is virtually assured.
12
568 F.2d at 498. We find that the holding of the Sixth Circuit in Leja is sound. However, the facts of the present appeal are distinguishable from the facts of Leja. In the case now before us, the district court allowed defendant's counsel to elicit in detail the fact that the government informant had worked for the DEA on previous occasions. Further, the court ordered the government to produce the DEA's pay guidelines so that defendant's counsel could use the guidelines in his cross-examination. In Leja, on the other hand, the district court had forbidden All inquiry into the subject of the compensation, if any, that had been previously paid to the government's witness.
13
After a careful review of the record in the present case, we conclude that ". . . the jury had sufficient information to appraise the bias and motives . . ." of the DEA's informant. Skinner v. Cardwell, supra, 564 F.2d at 1389.
14
For the reasons stated above, the judgment of the district court is affirmed.
*
Honorable John W. Peck, Senior United States Circuit Judge, Sixth Circuit, sitting by designation
1
The facts of the present case are not important for the purposes of this appeal. Suffice it to say that defendant was implicated in a conspiracy to distribute and a distribution of heroin through the work of two government witnesses Catalino Nunez, an undercover informant for the Drug Enforcement Administration (DEA), and Julius Baretta, a special agent of the DEA
2
Defendant was arraigned on December 29, 1977, in the Eastern District of California. The Speedy Trial District Plan for that district provides that, if an arraignment occurs on or after July 1, 1977, but before July 1, 1978, the trial must commence within 120 days of the arraignment
3
The taped telephone conversation was between defendant and the government informant Nunez. The parties spoke in Spanish. Apparently, defendant's counsel had his secretary, who spoke Spanish, make a written translation of the conversation in English. The district court ordered defendant to disclose at trial the transcript of his secretary's English translation
4
For a discussion of the "work product" privilege, See 4 J. Moore, Federal Practice P 26.63
5
In ordering defendant to disclose the conversation transcript, the district court relied, in part, on Rule 106, Fed.R.Evid. Rule 106 provides:
When a writing or recorded statement or part thereof is introduced by a party, an adverse party may require him at that time to introduce any other part or any other writing or recorded statement which ought in fairness to be considered contemporaneously with it.
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436 F.Supp. 626 (1977)
UNITED STATES of America, for the Use and Benefit of Warren H. COFFEY, d/b/a Warren H. Coffey Excavating Contractor, Plaintiff,
v.
WILLIAM R. AUSTIN CONSTRUCTION COMPANY, INC., an Oklahoma Corporation, and Maryland Casualty Company, a corporation, Defendants,
v.
Harold SHIPMAN, Third-Party Defendant.
No. CIV-76-0988-D.
United States District Court, W. D. Oklahoma.
July 8, 1977.
*627 Hugh A. Baysinger, Dean G. Constantine, Oklahoma City, Okl., for plaintiff.
Robert G. Grove, Carl Michael Smith, Oklahoma City, Okl., for defendants.
James M. Robinson, Oklahoma City, Okl., for third-party defendant.
ORDER TRANSFERRING CASE
DAUGHERTY, Chief Judge.
Plaintiff brings this action against Defendants in this Court under the Miller Act, 40 U.S.C. § 270b(b). The contract bonded and involved herein was performed in connection with the Dierks Lake Project on the Saline River in the state of Arkansas. The above cited statute provides that:
"(b) Every suit instituted under this section shall be brought in the name of the United States for the use of the person suing, in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere, . . ."
Our Circuit in The United States of America For The Use And Benefit Of George W. Cassity and George P. Cassity v. R. J. Connor, Inc., an Indiana corporation, and Fidelity And Deposit Company Of Maryland (Circuit Case No. 76-1704Not for Routine Publication)[1] has held in a Miller Act case as follows:
"We hold that the language of § 270b(b), supra, is unequivocal in stating that actions are to be brought in the United States District Court for the district of performance `and not elsewhere.' This language must be strictly construed. We agree with the following analysis set forth in McDaniel v. University of Chicago, 512 F.2d 583 (7th Cir. 1975):
The Miller Act requirements that suit be brought in the name of the United States for the use of the person suing, that venue be limited to the district in which the contract was to be performed or executed, and the narrow one year limitation period are clearly designed to facilitate the orderly and equitable disposition of all competing rights in the bond and reenforce the conclusion that Miller Act subject matter jurisdiction is limited to suits on the bond. . . . (Underlining supplied.)
512 F.2d, at 586-587 n. 2.
In United States v. American Employers Insurance Co. of Mass., 290 F.Supp. 139 (S.Car.1968), the Court said:
. . . Section 270b of the Miller Act [which] requires Plaintiffs to sue in a federal district court for a district in which the contract was to be performed and not elsewhere is a venue provision benefitting defendants . . . . It should not be distorted, by court construction . . . such venue provisions as are found in the Miller Act express the intention of Congress as to venue and jurisdiction. . . .
*628 290 F.Supp. at 141.
We agree. To the same effect see: United States ex rel. Vermont Marble Co. v. Roscoe-Ajax Construction Co., Inc., 246 F.Supp. 439 (N.D.Cal.1965); United States ex rel. Flow Engineering, Inc. v. Continental Casualty Company, 195 F.Supp. 177 (N.J.1961); United States ex rel. Fairbanks Morse and Co. v. Bero Construc Corporation, 148 F.Supp. 295 (S.D. N.Y.1957).
We also agree with the contentions advanced by appellees that the complaint did not properly plead jurisdiction. There are not adequate facts stated in the complaint to establish jurisdiction. In Dewell v. Lawson, 489 F.2d 877 (10th Cir. 1974), we emphasized the need for adequate and proper allegations of jurisdictional facts.
II.
Cassity contends that Connor and Surety waived any objections to improper venue by appearing generally without raising venue as a defense either by motion, answer, or amended answer. We hold that this contention is without merit.
A party may always raise the issue of lack of subject matter jurisdiction. Fed. R.Civ.Proc. rule 12(b)(3), 28 U.S.C.A. A challenge to the district court's subject matter jurisdiction is not waivable and whenever it is made, the district court must consider it. Savarese v. Edrick Transfer & Storage, Inc., 513 F.2d 140 (9th Cir. 1975); Joyce v. United States, 474 F.2d 215 (3rd Cir. 1973); White v. Commercial Standard Fire & Marine Company, 450 F.2d 785 (5th Cir. 1971); Skolnick v. Board of Commissioners of Cook County, 435 F.2d 361 (7th Cir. 1970)."
The matter of jurisdiction and venue in this case was discussed in depth at the pretrial conference held herein to include the production and reading of the above case. Apparently the parties desire to proceed here and none have attacked the jurisdiction and venue of this Court or requested a transfer of this case to United States District Court for the Western District of Arkansas. But the Court must look to its own jurisdiction at all times. Our Circuit has spoken in this situation.
Hence, sua sponte the Court transfers this action in the interest of justice to the United States District Court for the Western District of Arkansas pursuant to 28 U.S.C. § 1406(a) where the same could have and should have been brought. The Clerk is directed to effect the transfer of this case to United States District Court for the Western District of Arkansas without delay.
It is so ordered this 8th day of July, 1977.
NOTES
[1] Rule 17(c) of the Rules of Court for the United States Court of Appeals for the Tenth Circuit provides that unpublished opinions can be cited, if relevant, in proceedings before this or any other Court.
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578 So.2d 415 (1991)
Thomas J. HIRT, Petitioner,
v.
POLK COUNTY BOARD OF COUNTY COMMISSIONERS and Jack M. Watkins, Sr., Respondents.
Nos. 90-03173, 90-03318.
District Court of Appeal of Florida, Second District.
April 17, 1991.
Curtis J. Grodin and Jeff Albinson of Merkle & Magri, P.A., Tampa, for petitioner.
Andrew R. Reilly of Reilly & Lasseigne, Haines City, for Jack M. Watkins, Sr.
*416 Mark Carpanini, Office of Polk County Atty., Bartow, for Polk County Bd. of County Comm'rs.
SCHEB, Acting Chief Judge.
Thomas J. Hirt challenges the circuit court's order dismissing his amended petition for a writ of certiorari by which he sought judicial review of a zoning decision of the Board of Polk County Commissioners. Hirt's petition alleged a lack of substantial, competent evidence to support the Board's decision. In dismissing Hirt's petition, the court suggested that injunctive relief, rather than certiorari, was the appropriate method of review. We reverse and remand for the circuit court to hear Hirt's petition on its merits.
The facts relevant to our review are undisputed. Hirt owned property adjacent to an area being developed by Jack M. Watkins, Sr. Watkins' property, a planned unit development (PUD 89-25), was intended to be developed in phases. The stated purpose of PUD 89-25 was to develop 258 residential homesites on 58.6 acres. Opposition over the new PUD mounted when Watkins presented his proposals to county zoning authorities. Over the objections of Hirt and other property owners in the vicinity, the Polk County Zoning Advisory Board voted to recommend approval of Watkins' plans with certain conditions. Thereafter, Hirt filed for a de novo hearing before the Board of County Commissioners, a right available under Polk County Zoning Ordinance 83-2 to any landowner whose property may be substantially affected due to proximity. Basically, Hirt and the other objectors contended that Watkins' proposals did not meet the minimum requirements specified in ordinance 83-2 as prerequisites for approval of a planned unit development.
On April 17, 1990, the Board of County Commissioners conducted a de novo hearing. As required by Ordinance 83-2, notice of the hearing was given to all interested parties. Witnesses were heard, an opportunity for cross-examination was afforded, exhibits were introduced, and a verbatim record of the proceedings was made. At the conclusion of the hearing, the Board voted to accept the Advisory Board's recommendation and approved Watkins' proposals.
Hirt then timely filed his petition for certiorari in the circuit court, alleging a lack of substantial, competent evidence to support the Board's decision. Watkins, the developer, moved to dismiss Hirt's petition. On October 1, 1990, after extended arguments, the court dismissed Hirt's petition without prejudice for him to file for injunctive or other relief. It is this order which is now before us.
At the outset, we point out that as the reviewing appellate court, the scope of our review is narrow. We are simply to determine if the circuit court afforded the petitioner procedural due process and applied the correct law. City of Deerfield Beach v. Vaillant, 419 So.2d 624 (Fla. 1982). As the circuit court dismissed Hirt's petition and did not rule on its merits, it follows that if Hirt was entitled to have the Board of County Commissioners' order reviewed by way of certiorari, he was not afforded procedural due process. We think Hirt pursued the correct remedy in filing his petition for certiorari and the court erred in not hearing his petition on the merits.
Zoning decisions of county commissions and other local governmental bodies are generally classified as either legislative or quasi-judicial. Certiorari is the proper method to review the quasi-judicial actions of a Board of County Commissioners, whereas injunctive and declaratory suits are the proper way to attack a Board's legislative actions. Sun Ray Homes, Inc. v. County of Dade, 166 So.2d 827, 829 (Fla. 3d DCA 1964). See Town of Indialantic v. Nance, 400 So.2d 37 (Fla. 5th DCA 1981); approved, 419 So.2d 1041 (Fla. 1982).
Courts have frequently discussed the distinction between the standards of review which furnish the guidelines to determine the validity of different types of zoning actions. It has long been established that in reviewing a legislative action, e.g., enactment of a zoning ordinance, courts must uphold a properly enacted and *417 constitutional ordinance as long as it is "fairly debatable." Harrell's Candy Kitchen v. Sarasota-Manatee Airport Authority, 111 So.2d 439 (Fla. 1959). In reviewing quasi-judicial actions, however, courts are called upon to determine if the action of the local governmental body is supported by substantial, competent evidence. De Groot v. Sheffield, 95 So.2d 912 (Fla. 1957). This difference in the scope of review is appropriate. The judicial deference inherent in the "fairly debatable" standard is suitably employed to review legislative actions whereby a governmental body makes local policy decisions. Such deference, however, is unnecessary and inappropriate in reviewing issues which essentially involve a determination of whether the facts in the case being considered meet the criteria of a specific ordinance.
Whether a board's zoning decision is considered legislative or quasi-judicial appears to turn on whether the local governmental body is enacting an ordinance, in which case it is acting legislatively, or enforcing it, in which case it may be acting quasi-judicially. Thus, creating zoning districts and rezoning land are legislative actions, and as this court said in Naples Airport Auth. v. Collier Dev., 513 So.2d 247, 249 (Fla. 2d DCA 1987), trial courts are not permitted to sit as "super zoning boards" and overturn a board's legislative efforts.
However, when appellate courts have been called upon to classify governmental bodies' application of zoning ordinances, their decisions have sometimes tended to blur the distinction between legislative and quasi-judicial actions. To determine the proper classification of an action, we look to two factors: (1) the nature of the petitioner's challenge and (2) the manner in which the Board went about making its decision.
First, as to the nature of Hirt's challenge, he acknowledges that he is not contesting the validity or applicability of the underlying ordinance. If he were, the proper method for review would be injunctive relief. See Florida Land Co. v. City of Winter Springs, 427 So.2d 170, 174 (Fla. 1983); City of Melbourne v. Hess Realty Corp., 575 So.2d 774 (Fla. 5th DCA 1991).
The planned unit development concept varies from the traditional concept of zoning classifications. It permits a flexible approach to the regulation of land uses. Compliance must be measured against certain stated standards. Hirt's contention is that by not requiring compliance with certain provision of Ordinance 83-2, e.g., inadequate impact statement, rights of way, and utility requirements, the Board is not properly enforcing the ordinance's provisions with respect to PUD 89-25.
Thus, Hirt's challenge is similar to that made in Sun Ray. There, petitioners sought certiorari review of a county board's granting of a permit to erect a particular type of sign. As in the instant case, the petitioners in Sun Ray were concerned about enforcement of an ordinance's provisions, not the ordinance's validity or applicability. The court held that since the Board was called upon to review an interpretation and application of an ordinance by a Zoning Appeals Board and the ordinance was not challenged per se, the Board's decision was "clearly quasi-judicial."
Next, we consider the manner in which the Board made its decision. In De Groot, the supreme court explained that a quasi-judicial function is characterized by a decision which is made contingent on evidence deduced at a judicial-type proceeding. See Flowers Baking Co. v. City of Melbourne, 537 So.2d 1040 (Fla. 5th DCA), review denied, 545 So.2d 1366 (Fla. 1989); Town of Indialantic v. Nance. For example, in De Groot, a decision by a Civil Service Board regarding whether a petitioner's job should be abolished was reviewable by certiorari. The court said the Board's action was a quasi-judicial function "for the reason that it arrived at its decision after a full hearing pursuant to notice based on evidence submitted in accordance with the statute here involved." De Groot at 915.
In the instant case, the de novo hearing conducted by the County Commission was similar to that referenced in De Groot. As noted above, notice was given to all interested *418 parties, evidence was received, and a verbatim record was taken. Thus, the proceedings were clothed with all the characteristics of a quasi-judicial proceeding.
Since the Board's action was quasi-judicial, Hirt properly sought review through certiorari. At that point, the trial court should have reviewed his petition and determined if the Board provided him with due process and if its findings were supported by substantial, competent evidence. Deerfield Beach. Failure to do so was error.
Our opinion addresses only the trial court's procedural error in dismissing Hirt's petition for certiorari. Therefore, we do not express any opinion as to the merits of any of the allegations of the petition. We merely remand and direct the circuit court to reinstate Hirt's petition for certiorari and then review the Board's decision under the standards announced in Deerfield.
RYDER and DANAHY, JJ., concur.
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11 N.Y.3d 817 (2008)
SHAWN MOYNIHAN, Appellant,
v.
STATE OF NEW YORK, Respondent.
Court of Appeals of the State of New York.
Submitted August 4, 2008.
October 23, 2008.
On the Court's own motion, appeal transferred, without costs, to the Appellate Division, Third Department, upon the ground that the direct appeal does not lie (NY Const, art VI, § 3 [b] [2]; § 5 [b]; CPLR 5601 [b] [2]). Motion for poor person relief dismissed as academic.
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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Lopez v. Wilson No. 01-3875
ELECTRONIC CITATION: 2004 FED App. 0020P (6th Cir.)
File Name: 04a0020p.06 Thomas Price, OFFICE OF THE ATTORNEY GENERAL
OF OHIO, Columbus, Ohio, for Appellee.
UNITED STATES COURT OF APPEALS SUHRHEINRICH, J., delivered the opinion of the court, in
which ROGERS, J., joined. COLE, J. (p. 19), delivered a
FOR THE SIXTH CIRCUIT separate opinion concurring in the judgment.
_________________
_________________
FERNANDO LOPEZ, X
OPINION
Petitioner-Appellant, - _________________
-
- No. 01-3875
v. I. Introduction
-
>
, SUHRHEINRICH, Circuit Judge. Under Rule 26(B) of the
JULIUS WILSON, Warden, - Ohio Rules of Appellate Procedure, an Ohio defendant
Respondent-Appellee. - seeking to file an ineffective assistance of appellate counsel
N claim must file an application to reopen in the state court of
Appeal from the United States District Court appeals where the appeal was decided rather than in a state
for the Northern District of Ohio at Cleveland. trial court. In White v. Schotten, 201 F.3d 743, 752-53 (6th
No. 00-02416—Donald C. Nugent, District Judge. Cir.), cert. denied, 531 U.S. 940 (2000), this Court held that
an application to reopen appeal under Rule 26(B) of the Ohio
Argued: September 16, 2003 Rules of Appellate Procedure is part of a criminal defendant’s
direct appeal, rather than part of the state’s post-conviction
Decided and Filed: January 15, 2004 process. The difference matters because a defendant is
constitutionally entitled to counsel only during the direct
Before: SUHRHEINRICH, COLE, and ROGERS, Circuit appeal process. Compare Evitts v. Lucey, 469 U.S. 387, 396
Judges. (1985) (holding that a defendant is entitled to effective
assistance of counsel on direct appeal), with Pennsylvania v.
_________________ Finley, 481 U.S. 551, 555 (1987) (holding that a defendant is
not constitutionally entitled to counsel at any stage of
COUNSEL criminal proceedings beyond a direct appeal as of right).
Based on White, Petitioner Fernando Lopez claims in this
ARGUED: Robert D. Little, LAW OFFICE OF ROBERT habeas action that the state court’s denial of his request for
LITTLE, Maplewood, New Jersey, for Appellant. Douglas R. appointment of counsel to file a Rule 26(B) motion violated
Cole, OFFICE OF THE ATTORNEY GENERAL OF OHIO, his federal constitutional rights. Lopez appeals from the order
Columbus, Ohio, for Appellee. ON BRIEF: Robert D. of the district court denying his petition for writ of habeas
Little, LAW OFFICE OF ROBERT LITTLE, Maplewood, corpus on this ground. See 28 U.S.C. § 2254. This Court
New Jersey, for Appellant. David M. Gormley, Thelma granted a certificate of appealability on that issue.
1
No. 01-3875 Lopez v. Wilson 3 4 Lopez v. Wilson No. 01-3875
For the reasons that follow, we conclude that White is not superior appellate court. The Court held that a defendant had
controlling in this case, because the White decision predates a remedy nonetheless, by raising such claims in the Ohio
the AEDPA,1 which applies here, and that under the AEDPA, appellate courts under the then-extant version of Rule 26.
the state court’s decision was not contrary to clearly Murnahan 584 N.E.2d, 1290 n. 3. Although by its terms Rule
established Federal law. We hold that the district court did 26 seems to permit only reconsideration of “any cause or
not err in denying the writ. motion originally submitted on appeal,” the Ohio Supreme
Court “construe[d] claims of ineffective assistance of
II. Background appellate counsel to be tantamount to constitutional claims
that should have been presented on appeal,” and thus within
A. Rule 26(B) the scope of the rule. Id.
On July 1, 1993, Rule 26(B) of the Ohio Rules of Appellate At the same time, the Murnahan court recognized the
Procedure took effect. That rule provides in relevant part: imperfect fit between Rule 26 and ineffective assistance of
appellate claims and recommended that Rule 26 be amended.
A defendant in a criminal case may apply for reopening Id. at 1209 n.6. In response, the Ohio Supreme Court
of the appeal from the judgment of conviction and amended the rule in 1993, adding the above-quoted
sentence, based on a claim of ineffective assistance of subsection.2 However, neither the Ohio Supreme Court nor
appellate counsel. An application for reopening shall be
filed in the court of appeals where the appeal was
decided within ninety days from journalization of the 2
The Staff N ote to the 7-1-93 A mendme nt states in relevant p art:
appellate judgment unless the applicant shows good The 1993 amendment was in response to the Supreme
cause for filing at a later time. Court’s opinion in State v. Murnahan (1992), 63 Ohio St. 3d 60,
66 n.6. In Murnahan, the Co urt held that claims of ineffective
The Ohio Supreme Court adopted this rule after its decision assistance of appellate counsel may be raised in an application
in State v. Murnahan, 584 N.E.2d 1204 (Ohio 1992). In for reconsideration in the court of appeals, syl. 1, and requested
that a rule be drafted to govern suc h applications. Id. at 66 n.6.
Murnahan, counsel on direct appeal submitted an Anders App. R. 26 p reviously permitted applications for
brief and was permitted to withdraw. Murnahan filed a pro se reconsideration to be filed within ten days of the journalization
brief, but the Ohio Court of Appeals rejected his appeal. or announcement of the appellate decision. The Court noted in
Murnahan next sought post-conviction relief in the state trial Murnahan that although reconsideration under Rule 26 appeared
court under Ohio Rev. Code § 2953.21, claiming that his to be restricted to issues already presented to the ap pellate court,
the Court “construe[d] claims of ineffective assistance of
appellate counsel had been ineffective. The Ohio Supreme app ellate counsel to be tantamount to constitutional claims that
Court held that ineffective assistance of appellate claims are should have been presented on appea l, and but for their omission
not cognizable in post-conviction proceedings pursuant to the outcome of the case would be otherwise.” Id. at 65 n.3 .
Ohio Rev. Code. § 2953.21, because it would be improper for Because “claims of ineffective assistance of appellate counsel
an inferior court to rule on the adequacy of a proceeding in a may be left undiscovered due to the inadequacy of appellate
counsel or the inability of the defendant to identify such errors
within the time allotted for reconsideration,” the Court stated
that it may be necessary for defendants to request delayed
1
reconsideration. Id. at 65-66. The amend ment thus provides for
Antiterrorism and Effective Death Penalty Act of 1996, 28 U.S.C. reconsideration in criminal cases beyond the previous limitation
§ 2254 (d)(1) (1994 & Supp. VII) (AE DPA ). of time. The rule permits delayed reconsideration only of the
No. 01-3875 Lopez v. Wilson 5 6 Lopez v. Wilson No. 01-3875
the new rule indicated whether such proceedings were to be cannot be considered part of an Ohio post-conviction
treated as part of direct or collateral review. matter.
This Court did so in White, supra. Counsel in that case did If the application for delayed reconsideration is neither
not file a Rule 26(B) application until three years after the part of a state habeas nor state post-conviction
ninety-day limit had expired. Noting that an attorney’s failure proceeding, it must be a continuation of activities related
to meet a deadline in handling a client’s appeal falls below to the direct appeal itself. Because a defendant is entitled
minimal standards of competency imposed on counsel to to effective assistance of counsel on direct appeal, see
satisfy constitutional safeguards, and that a defendant only Evitts v. Lucey, 469 U.S. 387, 396 . . . (1985), such an
has a constitutional right to assistance of counsel on direct individual must be accorded effective assistance of
appeal, the question became whether Rule 26(B) applications counsel throughout all phases of that stage of the
were part of direct or collateral review. The White court criminal proceedings.
concluded that an application to reopen appeal under Rule
26(B) is part of a criminal defendant’s direct appeal, and White, 201 F.3d at 752-53.
because of that, counsel was constitutionally required.
B. Procedural History
The State of Ohio argues . . . that a petitioner such as
White has no constitutional right to counsel at any stage Lopez was convicted in 1998 of three counts of rape and
of criminal proceedings beyond a direct appeal as of three counts of gross sexual imposition. The lower courts
right. See Pennsylvania v. Finley, 481 U.S. 551, 555 . . . sentenced him to terms of life imprisonment on the rape
(1987). Without a right to counsel, the petitioner also counts and three years of imprisonment on each of the
has no commensurate right to effective assistance from remaining counts. The Ohio Court of Appeals affirmed the
that counsel. However, as this court’s decision in convictions and sentences on direct appeal. State v. Lopez,
Manning v. Alexander, 912 F.2d 878, 882 (6th Cir. No. 74096, 1999 WL 304527 (Ohio App. 1999). Lopez was
1999), made clear, Ohio law does not consider an attack represented by counsel during that appeal.
on the adequacy of appellate counsel to be proper in a
state habeas proceeding. See Manning, 912 F.2d at 882 In December 1999, more than six months after the state
(citing Manning v. Alexander, 50 Ohio St.3d 127, 553 court of appeals issued its judgment, Lopez filed a pro se
N.E.2d 264 (Ohio1990); In re: Petition of Brown, 49 application to reopen his appeal under Ohio R. App. P. 26(B),
Ohio St.3d 222, 551 N.E.2d 954 (1990)). Furthermore, alleging that his lawyer in his direct appeal was
Murnahan emphatically holds that any such attack constitutionally ineffective. Lopez also asked the state court
of appeals to appoint new counsel for him. The appellate
court ordered a copy of his trial transcript and ordered all
proceedings not previously transcribed as part of the direct
direct appeal and does not ap ply to ap peals related to post- appeal to be transcribed and filed with the court. On May 11,
conviction proceedings pursuant to R.C. 2953.21 . The
amendment permits applications to be filed more than ninety
2000, the Ohio Court of Appeals denied Lopez’s motion to
days after the appellate judgment’s journalization if good cause reopen the appeal and denied the motion for appointment of
is shown. See App. R. 1 4(B ). counsel, finding that Lopez had not shown that his original
appellate lawyer was ineffective. State v. Lopez, No. 74096,
(Ohio R. A pp. P . 26(b ), Staff note to 7-1 -93 amendme nt).
No. 01-3875 Lopez v. Wilson 7 8 Lopez v. Wilson No. 01-3875
2000 WL 574441 (Ohio App. 2000). The Ohio Supreme “defendant in a criminal case may apply for reopening of
Court declined to review that judgment. State v. Lopez, 732 the appeal from the judgment of conviction and sentence,
N.E.2d 999 (Ohio 2000). based on a claim of ineffective assistance of appellate
counsel”-- a civil, post-conviction or collateral
On September 21, 2000, Lopez filed his federal habeas proceeding for challenging a final judgment in a criminal
petition, raising two claims: (1) he was denied his federal case, or is it instead part of the defendant’s first-appeal-
right to the effective assistance of appellate counsel during his of-right in the criminal case?
application for reopening filed under Ohio Appellate Rule
26(B); and (2) he was denied his right to the effective III. AEDPA
assistance of appellate counsel on his first direct appeal. The
district court denied the petition, and denied a certificate of “Congress enacted AEDPA to reduce delays in the
appealability. The court held that Lopez was not entitled to execution of state and federal criminal sentences, . . . and to
habeas relief on these claims because the state court’s further the principles of comity, finality, and federalism.”
decisions were not contrary to or an unreasonable application Woodford v. Garceau, 123 S. Ct. 1398, 1401 (2003) (internal
of clearly established law as determined by the United States citations and quotation marks omitted). Congress did so
Supreme Court. See 28 U.S.C. § 2254(d); Williams v. Taylor, through both procedural requirements, see David v. Hall, 318
529 U.S. 362, 412 (2000). The district court noted as to the F.3d 343, 346 (1st Cir. 2003) (stating that “[o]ne of AEDPA’s
first claim, a lack of Supreme Court precedent supporting a main purposes was to compel habeas petitions to be filed
right to counsel in an application to reopen a direct appeal. promptly after conviction and direct review, to limit their
The district court also observed that, in White, this Court held number, and to permit delayed or second petitions only in
that an Ohio criminal defendant has the right to counsel fairly narrow and explicitly defined circumstances” (citing 28
during his application for reopening under Rule 26(B), but did U.S.C. § 2244(d)(1)(A)-(D); H.R.Rep. No. 104-518 at 111
not find it dispositive because White was decided prior to (1996)), and standards governing the merits of a habeas
Williams, and therefore, this Court had no reason to analyze application. See Woodford, 123 S. Ct. 1401. One of the
the state court opinion under the Williams factors. mechanisms for accomplishing these goals was an amended
version of 28 U.S.C. § 2254(d)(1), which places “new
Lopez appealed to this Court. On February 14, 2002, this constraint[s] on the power of a federal habeas court to grant
Court granted a certificate of appealability on the following a state prisoner’s application for a writ of habeas corpus with
issue: “Whether Lopez was denied the right to the effective respect to claims adjudicated on the merits in state court.”
assistance of appellate counsel during his application for Williams v. Taylor, 529 U.S. 362, 412 (2000).
reopening filed under Ohio App. R. 26(B).” Order dated
February 14, 2002. The Act provides in relevant part as follows:
On April 22, 2002, Respondent asked this Court to certify (d) An application for a writ of habeas corpus on behalf
the following question to the Ohio Supreme Court: of a person in custody pursuant to the judgment of a State
court shall not be granted with respect to any claim that
Is a proceeding filed in the Ohio court of appeals under was adjudicated on the merits in State court proceedings
Rule 26(B) of the Ohio Rules of Appellate unless the adjudication of the claim–
Procedure–which provides in relevant part that a
No. 01-3875 Lopez v. Wilson 9 10 Lopez v. Wilson No. 01-3875
(1) resulted in a decision that was contrary to, or Supreme Court precedent or otherwise explain its reasoning.
involved an unreasonable application of, clearly However, the state court decision need not cite Supreme
established Federal law, as determined by the Supreme Court precedent, or even reflect awareness of Supreme Court
Court of the United States. cases, “so long as neither the reasoning nor the result of the
state-court decision contradicts them.” Early v. Packer, 537
28 U.S.C. § 2254(d)(1). In Williams, supra, the Supreme U.S. 3, 8 (2002) (per curiam).
Court explained the meaning of “contrary to” and
“unreasonable application.” A state court’s legal decision is IV. Analysis
“contrary to” clearly established federal law under §
2254(d)(1) if the state court arrived at a conclusion opposite A. Merits
to that reached by the Supreme Court on a question of law or
if the state court decided a case differently than the Supreme Lopez argues that the district court erred in denying the writ
Court’s decisions on materially indistinguishable facts. Id. at because the United States Supreme Court has found a
412-13. An “unreasonable application” occurs when the state constitutional right to appointed counsel, and this Court has
court correctly identified the correct legal principle from ruled that Ohio’s application to reopen a direct appeal is a
Supreme Court precedent but unreasonably applied that direct appeal requiring the appointment of counsel. See
principle to the facts of the case before it. Id. “[C]learly White, supra. Were this case not governed by the AEPDA,
established Federal law, as determined by the Supreme White, a pre-AEDPA decision, would be controlling and
Court,” refers to “the holdings, as opposed to the dicta, of [the Lopez would easily prevail on this point. However, the
Supreme] Court’s decisions as of the time of the relevant AEDPA applies here, requiring us to analyze the
state-court decision.” Id. at 412. constitutional question under the more deferential standards
set forth by that Act. Compare Taylor v. Withrow, 288 F.3d
Thus, according to the AEDPA and the Supreme Court, our 846, 850 (6th Cir. 2002) (noting that the AEDPA “sets a
inquiry begins with the relevant state court decision. Here, higher hurdle for those seeking habeas than before”), cert.
the Ohio Court of Appeals denied Lopez’s motion for denied, 537 U.S. 1007 (2002), with McQueen v. Scroggy, 99
appointment of counsel on May 11, 2000, stating merely that F.3d 1302, 1310 (6th Cir. 1996) (pre-AEDPA case; stating
“Motion by Appellant, Pro Se, For Appointment of Counsel that de novo standard of review applies to questions of federal
is Denied.”3 The state court did not identify controlling constitutional law). See also Price v. Vincent, 123 S. Ct. 1848
(2003) (reiterating § 2254 standards, as explained by Williams
court; faulting Sixth Circuit for reciting this standard but then
3 evaluating the respondent’s claim de novo rather than through
Ironically, in its opinion denying Petitioner’s pro se application to
reopen direct appeal, the Ohio Court of App eals cited White v. Schotten, the lens of § 2254(d)). In short, because the standard of
albeit for a different proposition: review is much more deferential under the AEDPA, White is
not controlling.
The fact that applicant’s appellate couns el did not present the
assignm ents of error as federal constitutional violations does not
preclude applicant from raising these issues in a federal habeas
petition and having them reviewed by a federal court if counsel’s counsel did not raise federal issues in state court].
failure to do so am ounted to ineffective assistance of appellate
counsel. See White v. Schotten , (6th Cir.2000), 201 F.3d 743. State v. Lopez, No. 74096, 2000 WL 574441, at *3 (N.D. Ohio May 11,
Consequently, applicant is not prejudiced [because his appellate 200 0).
No. 01-3875 Lopez v. Wilson 11 12 Lopez v. Wilson No. 01-3875
The White decision involved the application of Evitts to “a (emphasis added)). If 26(B) proceedings were not part of
unique aspect of Ohio law,” Rule 26(B). See McClendon v. the Ohio habeas or other post-conviction review, we
Sherman, 329 F.3d 490, 494 (6th Cir. 2003). Prior to reasoned, they must be part of direct review. Ibid. If
determining the federal constitutional question of whether the they were part of direct review, White had a
petitioner was entitled to counsel in filing his application to constitutional right to effective assistance of counsel. Id.
reopen direct appeal, the White court determined whether a at 752-53, 584 N.E.2d 1204. As he had been denied such
state procedural rule, 26(B), was part of direct or collateral assistance, we remanded for consideration of the merits
review. As a panel of this Court recently explained: of his claims. Id. at 754, 584 N.E.2d 1204. The United
States Supreme Court denied certiorari. Bagley v. White,
[In White] [w]e first noted that “an attorney’s failure or 531 U.S. 940 . . . (2000) (mem.).
refusal to abide by established time deadlines in handling
a client’s appeal is conduct falling below the minimal Lambert v. Warden, Ross Correctional, No. 01-34222, 2003
standards of competency that federal case law has WL 22071466, at *3 (6th Cir. Sept. 2, 2003) (emphasis
imposed upon counsel to satisfy constitutional added).
standards.” Id. at 752 (citing Strickland v. Washington,
466 U.S. 668, 698 . . . (1984), and Ludwig v. United While several of our published cases have purported to
States, 162 F.3d 456, 459 (6th Cir. 1998)). While the apply the rule of White in the AEDPA setting, see Bronaugh
Ohio Public Defender indisputably and grossly failed to v. Ohio, 235 F.3d 280 (6th Cir. 2000); Searcy v. Carter, 246
abide the ninety-day deadline for 26(B) applications and F.3d 515, 519 (6th Cir. 2002); Miller v. Collins, 305 F.3d
therefore rendered ineffective assistance of counsel, this 491, 493-95 (6th Cir. 2002); Griffin v. Rogers, 308 F.3d 647,
conclusion alone does not establish a constitutional 655 (6th Cir. 2002), in each of those cases, the question of
violation because a defendant only has a constitutional whether a Rule 26(B) motion was part of direct or collateral
right to effective assistance of counsel when there is a review was decided in the context of the proper application of
constitutional right to effective assistance of counsel the AEDPA statute of limitations and its tolling provision,
when there is a constitutional right to assistance of 28 U.S.C. § 2244(d)(1)(A) & (d)(2).4 In determining whether
counsel simpliciter. As there is such a constitutional a habeas petition is barred by the statute of limitations, a
right only on direct and not on collateral review, the federal court is not provided with a state court decision on the
resolution of [the] case depended on this classification
of 26(B) applications. Ibid. (citing Pennsylvania v.
4
Finley, 481 U.S. 551, 555 . . . (1987)). We noted that Under 28 U.S.C. § 2244(d)(1)(A), a conviction becomes final for
challenges to the constitutional effectiveness of appellate purposes of the one-year period of limitations upon “conclusion of direct
counsel cannot be brought in Ohio habeas proceedings. review or the expiration of the time for seeking such review.” Section
Ibid. (citing Manning v. Alexander, 912 F.2d 878, 882 2244(d)(2) provides that “[t]he tim e during which a properly filed
application for State post-conviction or other collateral review with
(6th Cir. 1990)). Then we concluded that such respect to the pertinent judgment or claim is pending shall not be counted
challenges cannot be brought in any Ohio post- toward any period of limitation under this subsection.” In other words,
conviction proceedings. Ibid. (citing Murnahan, 584 “[s]ection 2244 explicitly distinguishes between the conclusion of direct
N.E.2d at 1208 (holding “that claims of ineffective review, after which the limitation period begins to run, 28 U.S.C.
assistance of appellate counsel are not cognizable in post- § 2244(d )(1)(A), and post-conviction remedies, during which the
limitation perio d is merely tolled, § 2244(d)(2).” McClendon v. Sherman,
conviction proceedings pursuant to R.C. 2953.21.” 329 F.3d 490, 493 (6th Cir. 2003).
No. 01-3875 Lopez v. Wilson 13 14 Lopez v. Wilson No. 01-3875
issue, to which it owes deference under AEDPA, because no 357 U.S. 214, 215 . . . (1958) (per curiam) (invalidating
state court will have the opportunity to consider the issue. By state rule giving free transcripts only to defendants who
contrast, in cases such as this, in which a federal court must could convince a trial judge that “justice will thereby be
consider the nature of 26(B) application to determine whether promoted”); Burns v. Ohio, 360 U.S. 252 . . . (1959)
a criminal defendant has the right to counsel in filing such an (invalidating state requirement that indigent defendants
application, the federal court must grant AEDPA deference to pay fee before filing notice of appeal of conviction);
the state court’s conclusion that the defendant was not entitled Lane v. Brown, 372 U.S. 477 . . . (1963) (invalidating
to appointed counsel. Accordingly, even those post-AEDPA state procedure whereby meaningful appeal was possible
Sixth Circuit decisions considering the nature of 26(B) only if public defender requested a transcript); Draper v.
applications for the purpose of determining the timeliness of Washington, 372 U.S. 487 . . . (1963) (invalidating state
habeas petitions do not engage in the analysis required here procedure providing for free transcript only for a
– a determination of whether a state court’s decision is defendant who could satisfy the trial judge that his appeal
contrary to or an unreasonable application of federal law – was not frivolous).
and the holdings at those cases are properly limited to such
cases. Just as a transcript may by rule or custom be a
prerequisite to appellate review, the services of a lawyer
We now turn to the “clearly established Federal law” at the will for virtually every layman be necessary to present an
time of the Ohio Court of Appeals’ decision. Evitts v. Lucey, appeal in a form suitable for appellate consideration on
469 U.S. 387 (1985), which White itself relied upon, provides the merits. See Griffin, supra, 351 U.S. at 20 . . . .
the best overview of the applicable Supreme Court precedent: Therefore, Douglas v. California, supra, recognized that
the principles of Griffin required a State that afforded a
Almost a century ago, the Court held that the right of appeal to make that appeal more than a
Constitution does not require States to grant appeals as of “meaningless ritual” by supplying an indigent appellant
right to criminal defendants seeking to review alleged in a criminal case with an attorney. 372 U.S. at 358 . . . .
trial court errors. McKane v. Durston, 153 U.S. 684 . . . This right to counsel is limited to the first appeal as of
(1894). Nonetheless, if a State has created appellate right, see Ross v. Moffitt, 417 U.S. 600 . . . (1974), and
courts as “an integral part of the . . . system for finally the attorney need not advance every argument, regardless
adjudicating the guilt or innocence of a defendant,” of merit, urged by the appellant, see Jones v. Barnes, 463
Griffin v. Illinois, 351 U.S., at 18 . . . , the procedures U.S. 745 . . . (1983). But the attorney must be available
used in deciding appeals must comport with the demands to assist in preparing and submitting a brief to the
of the Due Process and Equal Protection Clauses of the appellate court, Swenson v. Bosler, 386 U.S. 258 . . .
Constitution. In Griffin itself, a transcript of the trial (1967) (per curiam), and must play the role of an active
court proceedings was a prerequisite to a decision on the advocate, rather than a mere friend of the court assisting
merits of an appeal. See id., at 13-14 . . . . We held that in a detached evaluation of the appellant’s claim. See
the State must provide such a transcript to indigent Anders v. California, 386 U.S. 738 . . . (1967); see also
criminal appellants who could not afford to buy one if Entsminger v. Iowa, 386 U.S. 748 . . . (1967).
that was the only way to assure an “adequate and
effective” appeal. Id. at 20 . . . ; see also Eskridge v. Evitts, 469 U.S. at 393-94.
Washington State Board of Prison Terms and Paroles,
No. 01-3875 Lopez v. Wilson 15 16 Lopez v. Wilson No. 01-3875
As Evitts’ canvassing of the relevant precedent reflects, the by an appellate court. We are dealing only with the first
Supreme Court has never held that a criminal defendant has appeal, granted as a matter of right to rich and poor alike
the right to assistance of counsel to file an application to (Cal. Penal Code §§ 1235, 1237), from a criminal
reopen a direct appeal. The question becomes whether the conviction.
facts of the present case are “materially indistinguishable”
from one of the foregoing decisions but with a different Douglas, 372 U.S. at 356.
result. See Williams, 529 U.S. at 406. None of the foregoing
cases are factually analogous, however. To begin with, only In Evitts, the defendant’s retained counsel filed a timely
a few of those cases actually deal with access to counsel per notice of appeal but failed to file the statement of appeal as
se, and only two, Douglas v. California, 372 U.S. 353 (1963), required by a state rule of appellate procedure when he filed
and Evitts, found the right to assistance of counsel on appeal the brief and record on appeal, resulting in dismissal of the
as of right. In Douglas, the indigent defendants were denied appeal. Thus, the issue in Evitts was whether the Due Process
their request for the assistance of counsel on appeal as of Clause of the Fourteenth Amendment guarantees the criminal
right. The Douglas court found that the defendants were defendant the right to the effective assistance of counsel on his
denied equal protection of the law where their one appeal of first appeal as of right. The Supreme Court held that it did.
right was decided without the benefit of counsel. The
Douglas Court analogized to Griffin v. Illinois, 351 U.S. 12 The Supreme Court found no right to appointed counsel in
(1956): Ross v. Moffitt, 417 U.S. 600 (1974) and Pennsylvania v.
Finley, 481 U.S. 551 (1987). In Ross, the defendant was
In Griffin v. Illinois, we held that a State may not grant denied appointment of counsel for discretionary review, after
appellate review in such a way as to discriminate against his convictions were affirmed on his appeals of right by the
some convicted defendants on account of their poverty. state court of appeals. The Ross Court held that the rule of
There, as in Draper v. Washington, 372 U.S. 487, . . . the Douglas did not extend to discretionary state appeals and for
right to a free transcript on appeal was in issue. Here the petitions of certiorari. In Finley, the Supreme Court held that
issue is whether or not an indigent shall be denied the a state law providing prisoners assistance of counsel in
assistance of counsel on appeal. In either case the evil is collateral postconviction proceedings did not require full
the same: discrimination against the indigent. For there procedural protections which the Constitution extends for trial
can be no equal justice where the kind of an appeal a man and first appeal as of right. The Finley Court reasoned that
enjoys ‘depends on the amount of money he has.’ Griffin “since a defendant has no constitutional right to counsel when
v. Illinois, supra, at p. 19 . . . . pursuing a discretionary appeal on direct review of his
conviction, a fortiorari, he has no such right when attacking
Douglas, 372 U.S. at 355. Significantly, the Supreme Court a conviction that has long since become final upon exhaustion
limited its holding as follows: of the appellate process.” Id. at 555.
We are not here concerned with problems that might Here, Lopez’s request for appointed counsel to file an
arise from the denial of counsel for the preparation of a application to reopen his first appeal as of right is somewhere
petition for discretionary or mandatory review beyond “beyond the stage in the appellate process at which the claims
the stage in the appellate process at which the claims have once been presented by a lawyer and passed upon by an
have once been presented by a lawyer and passed upon appellate court.” Douglas, 372 U.S. at 356. Although a panel
No. 01-3875 Lopez v. Wilson 17 18 Lopez v. Wilson No. 01-3875
of this Court upon de novo review has determined that such for purposes of determining whether the federal question
a motion falls under the rubric of a direct appeal, under the presented.
more deferential standard of review set forth in the AEDPA,
it cannot be said that the Ohio Court of Appeals’ decision V. Conclusion
denying the right to appointed counsel was contrary to
“clearly established Federal law as determined by the For the foregoing reasons, the judgment of the district court
Supreme Court,” because the result is not different from a denying Petitioner’s petition for writ of habeas corpus is
case with materially indistinguishable facts. AFFIRMED. Petitioner’s motion to certify is DENIED.
In sum, as the district court held, the decision of the state
appellate court denying Lopez’s request for appointment of
counsel was not contrary to “clearly established Federal law,
as determined by the Supreme Court of the United States.”
28 U.S.C. § 2254(d)(1).
B. Motion to Certify
The Warden has also asked us to certify to the Ohio
Supreme Court the question of whether a Rule 26(B) motion
to reopen is properly characterized as a civil, post-conviction
proceeding for challenging a final judgment in a criminal
case, or is instead part of the defendant’s first appeal as of
right in a criminal case. Rightly or wrongly, see Lambert,
2003 WL 22071466, at *7-8, this question has already been
addressed by this Circuit in White. Thus, a request for further
clarification by the Ohio Supreme Court by this panel would
be improper, because the only reason for this panel to certify
a question would be to revisit the prior panel’s decision,
which we cannot do. See Salmi v. Secretary of Health &
Human Servs., 774 F.2d 685, 689 (6th Cir. 1985) (“A panel
of this Court cannot overrule the decision of another panel.
The prior decision remains controlling authority unless an
inconsistent decision of the United States Supreme Court
requires modification of the decision or this Court sitting en
banc overrules the prior decision.”); see also 6th Cir. Rule
206(c) (stating that a published panel opinion is binding on all
subsequent panels). In any event, we would not be bound by
the state courts’ characterization of Rule 26(B) proceedings
No. 01-3875 Lopez v. Wilson 19
___________________
CONCURRENCE
___________________
R. GUY COLE, JR., Circuit Judge, concurring in the
judgment. I concur only in the judgment reached by the
majority and agree that Lopez’s petition for a writ of habeas
corpus must be denied. The crucial inquiry in this case is
whether the state’s decision to deny Lopez counsel with
respect to his motion to reopen an appeal was contrary to
clearly established federal law as determined by the United
States Supreme Court. Because the Supreme Court has not
established that criminal defendants are entitled to counsel in
a motion to reopen an appeal nor that such a motion is part of
a direct appeal, Lopez is not entitled to habeas relief pursuant
to the AEDPA. Absent clearly established law by the
Supreme Court with respect to those issues, the state court
was not bound by this Circuit’s characterization of Rule
26(B) proceedings as part of a criminal defendant’s direct
appeal.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
For the First Circuit
No. 13-1025
UNITED STATES OF AMERICA,
Appellee,
v.
JOSE L. BAEZ,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lynch, Chief Judge,
Stahl and Lipez, Circuit Judges.
Gordon W. Spencer for appellant.
Mark T. Quinlivan, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, was on brief, for
appellee.
February 28, 2014
STAHL, Circuit Judge. In United States v. Sparks, 711
F.3d 58 (1st Cir. 2013), we held that the warrantless installation
of a global positioning system (GPS) device on a defendant's
automobile and the use of that device to monitor his and a co-
defendant's movements for eleven days fell within the good-faith
exception to the exclusionary rule, because the monitoring had
occurred before the Supreme Court decided that the installation and
use of a GPS tracker on a car constitutes a Fourth Amendment
search. See United States v. Jones, 132 S. Ct. 945 (2012). Today,
we are faced with another instance of pre-Jones warrantless GPS
tracking, but of a significantly longer duration. We nonetheless
conclude that this case falls within the rule laid out in Sparks,
and we therefore affirm.
I. Facts & Background
Defendant-appellant Jose Baez was charged with, and
ultimately pled guilty to, four counts of arson. He challenges the
district court's denial of his motion to suppress evidence that the
Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) obtained
by monitoring his black 1989 Chevrolet Caprice using a GPS device.
The GPS tracking began in August 2009 and continued for 347 days.1
1
We take this number from the district court's opinion. See
United States v. Baez, 878 F. Supp. 2d 288, 292 (D. Mass. 2012).
Baez has described the monitoring as having lasted for 346 days,
"from August 27, 2009 to August 8, 2010," but because the GPS
device was apparently still on his car on August 9, 2010 (the date
of the final fire that led to his arrest), we will use the district
court's calculation.
-2-
The ATF decided to track Baez's car as a result of two fires that
occurred earlier that year: the first on April 29, 2009, at Jamaica
Plain Auto Body in Jamaica Plain, Massachusetts, and the second on
July 31, 2009, in a brownstone building in Boston that housed both
condominium units and a dentist's office known as Back Bay Dental.
At the scenes of both fires, surveillance cameras
captured and recorded the image of an older-model, dark-colored
Chevrolet Caprice with silver trim, a light-colored steering wheel
cover, and a silver emblem located on the driver's side C-pillar of
the car. Using the surveillance footage, ATF agents concluded that
the car had been manufactured sometime between 1986 and 1989. They
then obtained, from the Massachusetts Registry of Motor Vehicles
(RMV), a list of all of the dark-colored Chevrolet Caprices
manufactured during that time period and registered to addresses in
the Boston area. The agents located and observed each of the
thirty-eight vehicles on that list and, according to the district
court, determined "that a Chevrolet Caprice belonging to Baez,
unlike most of the other vehicles reviewed, matched the
distinguishing characteristics of the vehicle in the surveillance
tapes." United States v. Baez, 878 F. Supp. 2d 288, 290 (D. Mass.
2012).
The ATF also discovered that Baez was the only owner of
a Chevrolet Caprice on the RMV list who had been a patient at Back
Bay Dental. The office manager at Back Bay Dental reported that
-3-
Baez had become angry in June 2009 when he had to have his veneers
re-cemented and had threatened not to pay for the procedure. In
addition, the ATF investigation revealed that Baez had been a
customer at Jamaica Plain Auto Body, had been dissatisfied with the
shop's work on a Chevrolet Impala in the summer of 2008, and had
filed an unsuccessful claim against the shop in small claims court.
Thus, on August 27, 2009, acting without a warrant, ATF
Agent Brian Oppedisano attached a GPS device to Baez's Caprice
while it was parked on a public road in front of Baez's home. The
ATF set up a "virtual perimeter" around Baez's residence and
programmed the GPS device to send a text message to Agent
Oppedisano whenever the Caprice traveled outside that perimeter;
Agent Oppedisano would then determine whether physical surveillance
of the Caprice was necessary. Agent Oppedisano testified that he
looked at the GPS location logs once every day or two, and that
agents conducted periodic physical surveillance of the Caprice
(even when it did not travel outside the perimeter) to ensure that
it was actually located where the GPS device said it was.
As it turned out, Baez drove the Caprice relatively
infrequently; he appears to have used another car (an Acura MDX) as
his primary vehicle.2 During the nearly year-long monitoring
2
Agent Oppedisano also installed a GPS device on the Acura in
January 2010 but removed that device in April 2010 after concluding
that Baez was not using the car "to scout out locations for
arsons." Baez, 878 F. Supp. 2d at 291 n.3.
-4-
period, the Caprice traveled outside the perimeter on just twenty-
six days, six of which were during the week before the final fire
that led to Baez's arrest.
That fire occurred on August 9, 2010, at 11 Firth Road in
Roslindale, Massachusetts. At 3:21 a.m. that day, Agent Oppedisano
received a text message alerting him that the Caprice had left the
perimeter. From a website available to him, Agent Oppedisano
determined that the car was stopped near 5 Bexley Road in
Roslindale, which runs parallel to Firth Road. Because this was an
unusual travel pattern for Baez, and given that the April 2009 and
July 2009 fires had occurred at a similar time of day, Agent
Oppedisano alerted law enforcement and directed officers to the
area. At around the same time, a fire was reported at 11 Firth
Road, a multi-unit home. After being shown a photo array, two of
the residents of 11 Firth Road identified Baez as a man who had
sold them Dominican lottery tickets.
Shortly after the fire was reported, an officer from the
Boston Police Department located Baez in his vehicle in front of
his residence and arrested him. Footage from surveillance cameras
near Baez's home confirmed his travel in the direction of Firth
Road that night, and searches of his person, his car, his
residence, and two garages that he had rented revealed various
materials associated with arson. The searches of Baez's residence
-5-
and one of the garages also tied him to a December 2008 fire at a
Whole Foods grocery store in Cambridge, Massachusetts.
In September 2011, following his indictment, Baez moved
to suppress all of the evidence obtained as a result of the GPS
monitoring of his vehicle. With the consent of both parties, the
district court decided to hold the motion until the Supreme Court
reached its decision in Jones. In January 2012, the Court
announced that "the Government's installation of a GPS device on a
target's vehicle, and its use of that device to monitor the
vehicle's movements, constitutes a 'search'" for Fourth Amendment
purposes. Jones, 132 S. Ct. at 949 (footnote omitted). The
district court convened a motion hearing and ordered supplemental
briefing. In July 2012, the district court denied Baez's motion to
suppress, concluding that, under Davis v. United States, 131 S. Ct.
2419 (2011), suppression would not serve the purposes of the
exclusionary rule, because, when he installed the GPS device and
engaged in the monitoring, Agent Oppedisano had "a good faith basis
to rely upon a substantial consensus among precedential courts."
Baez, 878 F. Supp. 2d at 289.
After Baez filed his notice of appeal but before the
parties briefed the case, we decided Sparks, in which federal
agents had tracked a defendant's car for eleven days using a GPS
device, without a warrant and before Jones was decided. 711 F.3d
at 60-61. We concluded that the good-faith exception to the
-6-
exclusionary rule applied because, at the time that the GPS
surveillance occurred, settled, binding precedent in the form of
United States v. Knotts, 460 U.S. 276 (1983), and United States v.
Moore, 562 F.2d 106 (1st Cir. 1977), authorized the agents'
conduct. Sparks, 711 F.3d at 67. The question before us today is
whether those same cases authorized the use of the GPS device on
Baez's car.
II. Analysis
Because Baez challenges the district court's legal
conclusion that suppression was not warranted under the
exclusionary rule, our review is de novo. See United States v.
Ryan, 731 F.3d 66, 68 (1st Cir. 2013). We begin by briefly
sketching the relevant legal landscape; for a more detailed
exposition of the case law, we refer the reader to Sparks. See 711
F.3d at 65-67.
"The purpose of the exclusionary rule 'is to deter future
Fourth Amendment violations.'" Id. at 63 (quoting Davis, 131 S.
Ct. at 2426); see also United States v. Thomas, 736 F.3d 54, 60
(1st Cir. 2013) (noting that, under Herring v. United States, 555
U.S. 135 (2009), the exclusionary rule is only available "where the
benefits of deterring the police misconduct that produced the
[Fourth Amendment] violation outweigh the costs of excluding
relevant evidence"). When the police engage in conduct that
complies with existing precedent, and the law later changes, "there
-7-
is nothing to deter; the police cannot modify their conduct to
accord with cases not yet decided." Sparks, 711 F.3d at 63. Thus,
in Davis, the Supreme Court held that "searches conducted in
objectively reasonable reliance on binding appellate precedent are
not subject to the exclusionary rule." 131 S. Ct. at 2423-24.
In Sparks, we interpreted that language as requiring
"precedent that is 'clear and well-settled.'" 711 F.3d at 64
(quoting United States v. Davis, 598 F.3d 1259, 1266 (11th Cir.
2010), aff'd, 131 S. Ct. 2419). We went on to examine whether
clear and well-settled precedent authorized the GPS monitoring at
issue in Sparks. That monitoring occurred a little over two years
before the Supreme Court decided, in Jones, that installing a GPS
device on a vehicle and using that device to track the vehicle
constitutes a Fourth Amendment search. We concluded that, before
Jones was decided, two cases governed the installation and use of
a GPS device on a vehicle in this circuit: Knotts, 460 U.S. 276,
and Moore, 562 F.2d 106. Moore addressed the initial "trespass
involved in installing a tracking device on a car," concluding that
it "was, by itself, immaterial for Fourth Amendment purposes."
Sparks, 711 F.3d at 67. As for the subsequent monitoring, we found
that Knotts laid out an "apparent bright-line rule that the Fourth
Amendment is unconcerned with police surveillance of public
automotive movements." Id.
-8-
We paused to address the fact that the monitoring in
Sparks had gone on for eleven days, whereas Knotts involved less
than a day of monitoring. "Knotts did note that abusive 'dragnet
type' surveillance might be governed by 'different constitutional
principles,'" id. (quoting Knotts, 460 U.S. at 284), but we
concluded that "there was no suggestion in the Knotts opinion that
this rather brusque dismissal of the defendant's Orwellian warnings
imposed a concrete temporal limitation on the case's apparently
unqualified holding." Id.
Today, we are asked to reexamine the Knotts "dragnet"
language. The crux of Baez's claim is that the GPS monitoring to
which he was subjected was the very kind of abusive surveillance
anticipated in Knotts, rendering that case inapplicable and placing
the ATF's conduct outside the protection of the good-faith
exception. As he describes it, Agent Oppedisano put the GPS device
on Baez's car "indefinitely, or until further notice, to see if he
could get lucky," without any evidence of an ongoing crime or a
reasonable basis to believe that Baez might engage in further
arson. That, he claims, sets his case apart from Sparks, in which
the monitoring period was much shorter and there was reason to
think that the defendant might commit additional robberies.
Baez relies upon the following passage from Knotts:
Respondent . . . expresses the
generalized view that the result of the
holding sought by the government would be that
"twenty-four hour surveillance of any citizen
-9-
of this country will be possible, without
judicial knowledge or supervision." Br. for
Resp., at 9 (footnote omitted). But the fact
is that the "reality hardly suggests abuse,"
Zurcher v. Stanford Daily, 436 U.S. 547, 566
(1978); if such dragnet type law enforcement
practices as respondent envisions should
eventually occur, there will be time enough
then to determine whether different
constitutional principles may be applicable.
460 U.S. at 283-84. At the time of the GPS installation and
monitoring at issue here, the Supreme Court had not provided any
further explanation of that language, and lower courts had offered
varying assessments of its meaning. See, e.g., United States v.
Maynard, 615 F.3d 544, 556-57 (D.C. Cir. 2010) (interpreting Knotts
as having reserved the issue of prolonged surveillance), aff'd sub
nom. Jones, 132 S. Ct. 945;3 United States v. Garcia, 474 F.3d 994,
998 (7th Cir. 2007) (suggesting that Knotts reserved the issue of
mass surveillance).
In the government's view, Sparks's conclusion that the
Supreme Court imposed no "concrete temporal limitation" on its
"apparently unqualified holding" in Knotts forecloses a pre-Jones
Fourth Amendment claim based on the duration of the GPS tracking.
Sparks, 711 F.3d at 67. It is true that Sparks found "scant reason
to think that the duration of the tracking" in Knotts (less than a
3
The D.C. Circuit decided Maynard just three days before the
ATF removed the GPS device from Baez's car. Baez, 878 F. Supp. 2d
at 293. We mention the opinion here not because we believe that it
should necessarily have informed the ATF's conduct, but simply to
point out that the meaning of Knotts's "dragnet" passage was
unclear.
-10-
day) "was material to the Court's reasoning." Id. Sparks also
concluded that the length of the monitoring in that case (eleven
days) was not enough to render Knotts inapplicable for purposes of
the good-faith exception. Id. But Sparks did not say that the
duration of the GPS surveillance could never be relevant for Fourth
Amendment purposes. Nor did Sparks rule out the possibility that
tracking conducted in the pre-Jones era could otherwise be so
abusive in nature as to fall outside the scope of Knotts.4 After
all, Davis requires that a particular police practice be clearly
authorized by judicial precedent, Sparks, 711 F.3d at 64, and
perhaps one could imagine a warrantless GPS investigation so
extensive or indiscriminate that the officers who conducted it
could not fairly be said to have been complying with Knotts. See,
e.g., Garcia, 474 F.3d at 998 (describing the possibility of a
program of "wholesale" or "mass" surveillance).
This, however, is not that case. Contrary to Baez's
claims, Agent Oppedisano was not taking a shot in the dark when he
installed the GPS device on Baez's Chevrolet Caprice; the ATF had
ample reason to suspect that Baez had set the 2009 fires at Jamaica
Plain Auto Body and Back Bay Dental. Specifically, the ATF knew
that: (1) Baez had been a customer at, and had had disputes with,
4
But cf. United States v. Cuevas-Perez, 640 F.3d 272, 279
(7th Cir. 2011) (Flaum, J., concurring) ("Regardless of the precise
contours of Knotts's reservation, . . . I do not believe it invests
lower courts with the authority to depart from the case's
holding."), vacated and remanded, 132 S. Ct. 1534 (2012).
-11-
both businesses; (2) he owned a Caprice with the same
distinguishing features as the one seen on the surveillance tapes
at the scenes of both fires; and (3) he was the only individual the
ATF had identified who fit both of those characteristics. The ATF
also had reason to believe that Baez might engage in further arson.
Given his altercations with both Jamaica Plain Auto Body and Back
Bay Dental in the time period before the fires, Baez exhibited some
of the traits of a serial arsonist, defined (according to an expert
affidavit that is part of the record in this case) as a person who
commits "three or more arsons at separate locations, with a
cooling-off period in between," to relieve stress or exact revenge.
Though the tracking went on for nearly a year, apparently without
any evidence of criminal activity on Baez's part, the record in
this case also establishes that it is not uncommon for a
significant amount of time (often months, but sometimes years) to
pass between a serial arsonist's fires. The particularly lethal
nature of Baez's July 2009 fire provided further cause for concern:
that fire was set in the front vestibule of a residential building
in the middle of the night. In short, as in Knotts, the reality
here "hardly suggests abuse." 460 U.S. at 283 (quoting Zurcher,
436 U.S. at 566).
We need not decide whether the ATF had probable cause, or
reasonable suspicion, to track Baez's car, or whether the existence
of either would excuse Agent Oppedisano's failure to obtain a
-12-
warrant.5 See Jones, 132 S. Ct. at 954 (leaving that question
open). Nor need we determine what type of law enforcement conduct,
if any, might have implicated the Knotts "dragnet" passage in the
pre-Jones era. It is enough for us to say that what occurred in
this case was not the indiscriminate monitoring that Baez
describes. This was relatively targeted (if lengthy) surveillance
of a person suspected, with good reason, of being a serial
arsonist.
Under these circumstances, it was objectively reasonable
for the ATF to believe that its conduct fell within the rule laid
out in Knotts that "[a] person travelling in an automobile on
public thoroughfares has no reasonable expectation of privacy in
his movements from one place to another." 460 U.S. at 281. We
therefore conclude that the good-faith exception applies. See
Davis, 131 S. Ct. at 2423-24.
There is, of course, a postscript: after Baez was
monitored and arrested, Jones came along and taught us that the
majority of circuit courts had misunderstood Knotts and that GPS
tracking does in fact constitute a Fourth Amendment search. See
132 S. Ct. 945.6 Jones also shed some new light on the Supreme
5
Baez argues that probable cause was required under Moore,
but as we clearly stated in Sparks, Knotts abrogated Moore's
probable-cause requirement. Sparks, 711 F.3d at 65.
6
It remains to be seen, at least in this circuit, whether a
warrant is required for such tracking. See Sparks, 711 F.3d at 62.
-13-
Court's understanding of a "dragnet," suggesting that the twenty-
eight days of GPS monitoring at issue in that case, which generated
more than 2,000 pages of data about the defendant's movements, id.
at 948, constituted a "dragnet" within the meaning of Knotts. See
id. at 952 n.6 (describing Knotts as having "reserved the question
whether 'different constitutional principles may be applicable' to
'dragnet-type law enforcement practices' of the type that GPS
tracking made possible here"); see also id. at 956 n.* (Sotomayor,
J., concurring) ("Knotts reserved the question whether 'different
constitutional principles may be applicable' to invasive law
enforcement practices such as GPS tracking."). But Agent
Oppedisano, who placed the GPS device on Baez's car in August 2009,
did not have the benefit of Jones, which was decided almost two and
a half years later.
III. Conclusion
Our conclusion today certainly should not be read as an
endorsement of prolonged warrantless electronic surveillance. We
share the concerns that the respondent articulated in Knotts and
that the Supreme Court later acted upon in Jones. Moving forward,
new rules will apply, and perhaps congressional action will follow.
See Jones, 132 S. Ct. at 962-63 (Alito, J., concurring in the
judgment). But in this case, as in Sparks, the agents were acting
in objectively reasonable reliance on then-binding precedent. We
therefore find that the good-faith exception to the exclusionary
-14-
rule applies, and we affirm the district court's denial of Baez's
motion to suppress.
-15-
| {
"pile_set_name": "FreeLaw"
} |
274 F.Supp.2d 615 (2003)
Keith JONES, D & K Charitable Foundation, and Daniel Borislow, Plaintiffs,
v.
INTELLI-CHECK, INC., Frank Mandelbaum, Paul Cohen, Edwin Winiarz, and W. Robert Holloway, Defendants.
Civil Action No. 01-CV4860(FLW).
United States District Court, D. New Jersey.
July 30, 2003.
*617 Louis R. Moffa, Jr., Schnader Harrison Segal & Lewis LLP, Cherry Hill, NY, Rolin P. Bissell, Jonathan S. Liss, Schnader Harrison Segal & Lewis LLP, Philadelphia, PA, for plaintiffs.
Allyn Z. Lite, Lite DePalma Greenberg & Rivas, LLC, Newark, NJ, Francis P. Karam, Elizabeth A. Berney, Milberg Weiss Bershad Hynes & Lerach LLP, New York, NY, for defendants.
OPINION
WOLFSON, District Judge.
Presently before the Court is the motion of defendants, Intelli-Check, Inc. ("Intelli-Check" or "IDN" or the "Company"), Frank Mandelbaum, Paul Cohen, Edwin Winiarz, and W. Robert Holloway, to dismiss plaintiffs' Second Amended Complaint alleging violations of Sections 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78j(b), Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, and Section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a). The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1337. For the reasons set forth below, defendants' motion to dismiss is granted, though plaintiffs are given leave to file an amended complaint on certain of the claims as set forth herein.
I. FACTUAL BACKGROUND
Plaintiffs, Keith Jones, Daniel Borislow, and the D & K Charitable Foundation,[1] seek redress for approximately $2,000,000 in losses incurred when they short sold defendant IDN's stock. Second Amended *618 Complaint at ¶¶ 7, 8. Short selling, as explained by the Third Circuit Court of Appeals,
is accomplished by selling stock which the investor does not yet own; normally this is done by borrowing shares from a broker at an agreed upon fee or rate of interest. At this point the investor's commitment to the buyer of the stock is complete; the buyer has his shares and the short seller his purchase price. The short seller is obligated, however, to buy an equivalent number of shares in order to return the borrowed shares. In theory, the short seller makes this covering purchase using the funds he received from selling the borrowed stock. Herein lies the short seller's potential for profit: if the price of the stock declines after the short sale, he does not need all the funds to make this covering purchase; the short seller then pockets the difference. On the other hand, there is no limit to the short seller's potential loss: if the price of the stock rises, so too does the short seller's loss, and since there is no cap to the stock's price, there is no limitation on the short seller's risk. There is no time limit to this obligation to cover.
Zlotnick v. TIE Communications, 836 F.2d 818, 820 (3d Cir.1988). In other words, a short seller borrows shares from a broker and immediately sells them to a buyer; this transaction is the "short sale." The short seller is obligated to purchase the same number of shares to return to the broker at any later date in the future; this transaction is the "covering purchase." If the stock price drops in the time between the short sale and the covering purchase, the short seller profits. If instead the stock price rises, the short seller suffers a loss.
Defendant IDN manufactures and markets a product known as ID-Check, which enables a retailer to verify driver licenses and other forms of government-issued identification. Second Amended Complaint at ¶¶ 17-18. Believing the price of IDN stock was overvalued, plaintiffs short sold a total of 215,300 shares from February 23, 2001 through September 20, 2001. Id. at ¶ 1. The stock price, however, did not drop as plaintiffs had expected. Rather, the price rose substantially, so much so that plaintiffs lost a total of $2,000,000 when they made their covering purchases from October 18, 2001 through January 3, 2002. Id Plaintiffs allege that defendants engaged in securities fraud through a series of actions designed to artificially inflate the price of IDN's stock, thereby causing plaintiffs' losses. Id. The individual defendants are sued in their following capacities with the Company: Frank Mandelbaum as Chairman of the Board and Chief Executive Officer; Edwin Winiarz as Chief Financial Officer, Senior Executive Vice President, Treasurer and director; W. Robert Holloway as Senior Executive Vice President; and Paul Cohen as director. Id. at ¶¶ 12-15.
A. Plaintiffs' Decision to Short Sell IDN's Stock
Plaintiffs allege that the reason they decided to short sell IDN's stock was because they noticed in IDN's filings with the SEC that for the first and second quarters of 2001, the Company's reported revenues came largely from previous sales instead of new sales. Second Amended Complaint at ¶¶ 28-41. Under IDN's new policy of "deferred revenue recognition," revenues from sales in the fourth quarter of 2000 would be recognized ratably over the following year. Id. at ¶ 29. This was possible because after IDN's sale of its product to a customer, it provided the customer with post-contract service and support. See id. Up until the start of the fourth quarter 2000, IDN recognized all of *619 its revenue at the time the product was sold; the Company thereafter changed its policy by recognizing revenue ratably over the course of the one-year period following the sale. See id. Defendants analogize the difference between the revenue recognition policies to magazine subscriptions: a publisher could recognize revenue of a one-year subscription at the time the sale is made, or ratably over the course of the year when each month's magazine is delivered. Memorandum of Law in Support of Defendants' Motion to Dismiss the Second Amended Complaint ("Def.Br.") at 12 n. 6.
Plaintiffs believed IDN's newly-adopted revenue recognition policy gave the false impression that IDN's sales were increasing when in fact they were, at some points, decreasing. For example, as described in more detail below, IDN reported in a press release that its first quarter 2001 revenues were $204,635, compared with $30,218 for the first quarter 2000. Second Amended Complaint at 133. Plaintiffs considered this misleading because (as IDN disclosed in its 10-QSB for the first quarter 2001) $180,984 of that revenue included revenue that was deferred from previous sales. Id. at ¶ 31. Thus, sales had actually decreased $23,651 from the first quarter of 2000 to the first quarter of 2001. See id. Plaintiffs considered this a misleading accounting technique that artificially inflated the price of IDN's stock. Id. at ¶ 40. They "believ[ed] that eventually IDN would not be able to rely on the use [of] deferred revenues" to overstate the Company's growth, and that the stock price would in time drop as other investors realized it was overvalued. See id. at ¶ 41. According to plaintiffs, this was the reason they decided to short sell IDN's stock. Id.
Plaintiffs allege that they came to the conclusion that IDN was using a misleading accounting technique by analyzing the following three filings with the Securities and Exchange Commission ("SEC") and two press releases: Form 10-KSB for the period ended December 31, 2000 (filed March 31, 2001 and amended October 9, 2001); the May 9, 2001 press release; Form 10-QSB for the period ended March 31, 2001 (filed May 14, 2001 and amended on August 23, 2001); Form 10-QSB for the period ended June 30, 2001 (filed August 13, 2001); and the August 13, 2001 press release. These documents are discussed in turn below.
1. Form 10-KSB for the Period Ended December 31, 2000
IDN filed its Form 10-KSB for the period ended December 31, 2000 on March 31, 2001, and amended it on October 9, 2001. As plaintiffs allege, this filing announced IDN's new revenue recognition policy:
Revenue on sales of the Company's product is recognized upon shipment to the customer. Certain sales require continuing service or post contract customer support and performance by the Company, and accordingly a portion of the revenue is deferred and recognized ratably over the period in which the future service, support and performance are provided, which is generally one year. Currently, if the Company does not have enough experience to identify the fair value of each element, the full amount of the revenue and related gross margin is deferred and recognized ratably over the one-year period in which the future service, support and performance are provided.
. . . . .
... Revenues of $517,950 from sales in the fourth quarter of 2000, as well as cost of revenues of $299,040, were deferred in accordance with the Securities and Exchange Commission's Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements." *620 The deferred revenue and the related cost of revenue will be recognized ratably over a 12 month period....
Second Amended Complaint at ¶ 29. Plaintiffs do not allege that this filing contained any misleading information.
2. May 9, 2001 Press Release
On May 9, 2001, five days before IDN filed its 10-QSB for the first quarter of 2001, it issued a press release highlighting the results of the quarter. The press release stated:
INTELLI-CHECK, INC. (AMEX IDN),[2] a developer of advanced document verification systems, announced today financial results for the first quarter ended March 31, 2001, with revenues increasing to $204,635 compared with $30,218 for the first quarter of 2000.
Id. at ¶ 33. In the release, Defendant Frank Mandelbaum, Chairman and CEO of IDN, was quoted as saying:
This is the second consecutive quarter that Intelli-Check has reported significant increases in revenues for its state-of-the-art ID-Check unit ... During the first quarter of 2001, Intelli-Check shifted its marketing focus to national accounts, which are expected to contribute to further growth during the remainder of the fiscal year....
Id. Plaintiffs allege these statements were misleading because sales actually decreased from the first quarter of 2000 to the first quarter of 2001.[3]Id.
3. Form 10-QSB for the Period Ended March 31, 2001
IDN filed its Form 10-QSB for the period ended March 31, 2001 on May 14, 2001, and amended it on August 23, 2001. This filing listed the same figures announced in the May 9, 2001 press release. See id. at ¶ 31. It stated, in relevant part: "[revenues increased substantially from $30,218 for the first three months ended March 31, 2000 to $204,638 recorded for the three months ended March 31, 2001." Declaration of Francis P. Karam in Support of Defendants' Motion to Dismiss ("Karam Dec") at Ex. D, p. 5.[4] As defendants point out, the same paragraph states:
... Revenues for the period ended March 31, 2001 includes [sic] $180,984 of sales deferred during the prior 12 month period. Sales for the period was [sic] minimal due to the recent refocus of our marketing efforts towards the larger retail market, in which the sales cycle requires an extended time frame involving *621 multiple meetings, presentations and a test period. In addition, the roll-out of Sensormatic's sales and marketing initiatives first began in April 2001.
Id. In the same filing, IDN again reported its revenue recognition policy, using substantially the same language as in its 10-KSB for the period ended December 31, 2000. Compare id. at p. 3 with Second Amended Complaint at ¶ 29. Plaintiffs allege that this filing materially misrepresented IDN's performance during the first quarter of 2001. See Second Amended Complaint at ¶ 31.
4. Form 10-QSB for the Period Ended June 30, 2001
On or about August 13, 2001, IDN filed its Form 10-QSB for the period ended June 30, 2001. In relevant part, it stated:
Comparison of the six months ended June 30, 2001 to the six months ended June 30, 2000.
Revenues increased substantially from $47,320 for the six months ended June 30, 2000 to $474,846 recorded for the six months ended June 30, 2001. Revenues from distributors totaled $416,009 and revenues from direct customers totaled $58,837. Revenues for the period ended June 30, 2000 included initial sales of a limited number of ID-Check terminals prior to the early return of our inventory of these terminals to the manufacturer for upgrading. Revenues for the six months ended June 30, 2001 includes [sic] $219,625 of sales deferred during the prior 12-month period. Sales for the period ended June 30, 2001 were limited by the recent refocus of our marketing efforts towards the larger customers within the retail market, in which the sales cycle normally requires an extended time frame involving multiple meetings, presentations and a test period, which has been further extended by the rapid slowing of the economy, whereby decisions for capital expenditures are being delayed. In addition, the roll-out of Sensormatic's sales and marketing initiatives first began in April 2001.
Second Amended Complaint at ¶ 36. This filing also described IDN's revenue recognition policy. Karan Dec. at Ex. F, p. 3. Plaintiffs allege that this filing materially misrepresented IDN's performance during the second quarter of 2001. Second Amended Complaint at ¶ 34.
5. The August 31, 2001 Press Release
On the same day IDN filed its second quarter 2001 10-QSB, it issued a press release announcing the results. The release stated, in relevant part:
INTELLI-CHECK, INC. (AMEX IDN), a developer of advanced document verification systems, announced today financial results for the second quarter ended June 30, 2001, with significant revenue increases for the quarter and six month period.
Revenues for the second quarter of 2001 increased nearly 15-fold to $270,211 compared with $17,102 for the second quarter of 2000. For the first six months of 2001, revenues rose to $474,846, a 10-fold increase, when compared with $47,320 for the year-ago period.
Second Amended Complaint at ¶ 37. Defendant Mandelbaum was quoted as saying:
Intelli-Check reported significant revenue gains even though the roll-out of our advanced ID-Check unit by our major distributor did not occur until well into the second quarter.... Our refocused marketing efforts on the larger mass market retailers requires a sales cycle with an extended time frame involving multiple meetings, presentations and *622 test periods, which have been further extended by current economic conditions. To date, we have already sold ID-Check units to some of the largest companies in the gaming industry and have begun to place test units in some of the largest pharmacy and grocery chains, as well as with a large tobacco company. As part of a new marketing effort, we have also begun discussions with original equipment manufacturers to license our technology for inclusion on their platforms. Additionally, we recently released our C-Link software product, which when used with our ID-Check unit enhances a retailer's ability to prevent economic loss from fraudulent transactions. We are confident that these efforts together with our past marketing focus should result in future growth.
Id. at ¶ 38. Plaintiffs allege that this press release materially misstated IDN's growth during the second quarter of 2001. Id. at ¶ 39.
B. IDN's "Squeeze" of Plaintiffs and the Resultant "Bubble Period"
Plaintiffs allege that in the summer of 2001, IDN became aware that plaintiffs had taken significant short positions in its stock. Id. at ¶ 42. Because substantial short sales in a stock can have the effect of lowering the stock price, defendants allegedly set out on a plan to punish or "squeeze" plaintiffs by:
(a) failing to disclose material information that would cause IDN's stock price to drop; and
(b) suppressing the supply of IDN's stock available to be sold.
Id. According to plaintiffs, "the effect of these two strategies was to balloon the overvaluation into a huge, artificial bubble" stretching from late September 2001 until the filing of the Second Amended Complaint on May 31, 2002. Id. The allegedly improper acts of defendants are discussed in turn below.
1. Comparison of Prior Period "Sales" with Current Period "Revenues": Form 10-QSB for the Period Ended September 30, 2001
On November 13, 2001, IDN filed its Form 10-QSB for the period ended September 30, 2001. Id. at ¶ 53. As in the first and second quarter 2001 reports, the third quarter 2001 report announced an increase in revenue as compared to the same period in 2000: "[r]evenues increased $170,590 from $109,676 recorded for the three months ended September 30, 2000 to $280,266 recorded for the three months ended September 30, 2001." IDN's Third Quarter 2001 10-QSB, p. 7.[5] This filing also contained an explanation of the revenue recognition policy, id. at 3, but did not specify an amount of current revenues that had been deferred from previous sales, id. at 7. Plaintiffs allege that IDN, through its third quarter 2001 filing, "suggested], wrongfully, that it was continuing to experience sales growth." Second Amended Complaint at ¶ 50.
2. Failure to Disclose Competition
Plaintiffs allege that IDN has never disclosed the existence of competition by VeriFone, a company that markets an identification verification product substantially similar to IDN's. Id. at ¶¶ 43-46. Plaintiffs contend that VeriFone has a unique advantage in the identification verification market because its technology can coexist on terminals that it has already provided *623 to the global market. Id. at ¶ 45. As
VeriFone's website explains: VeriFone's Easy ID application enables merchants to conduct automatic age verificationright from their VeriFone point-of-sale terminal. Easy ID provides a helpful tool to enhance a merchant's overall program to prevent the sale of alcohol, tobacco and other age-restricted items to minors....
Easy ID runs in VeriFone's Verix multiapplication environment, meaning it can securely co-exist on the same terminal with payment and other applications. Verix terminals with Verix Multi-app Conductor can automatically launch Easy ID when a customer's state-issued identification is swiped or scanned.
Id.
VeriFone first publicized its Easy ID product in a press release June 20, 2001. Id. at ¶44. Since then, IDN has not named VeriFone as a competitor in any of its public filings or statements. Id. at ¶ 46.
3. Untimely and Misleading Disclosure of the Messina Lawsuit
Kevin Messina, a former officer and director of IDN,[6] filed a lawsuit on October 19, 2001, against the Company seeking a preliminary injunction enjoining it from restricting sales of his shares of company stock. As discussed more fully in the successive section, Messina alleged that on October 12, 15, and 16, 2001, IDN improperly prevented him from selling significant blocks of his IDN stock. Second Amended Complaint at ¶ 57. On November 13, 2001, in IDN's third quarter 2001 10-QSB, IDN reported that:
On October 19, 2001, a former officer and director of the Company filed a lawsuit against the Company to force the Company to permit him to sell his restricted shares. The complaint also seeks damages of $29,350 for miscellaneous compensation and punitive damages of $3,000,000. The Company considers this former officer an "insider" subject to the rules under Section 144 of the Securities and Exchange Act of 1934. The Company feels it is acting properly and will defend itself vigorously. In addition, the Company intends to file a counter claim.
IDN's Third Quarter 2001 10-QSB, p. 9.
While plaintiffs' complaint is not a model of clarity with respect to the claims of improper disclosure of the Messina suit, the Court can discern four distinct allegations of impropriety:
i) the disclosure was late; that is, IDN should have informed the public about the suit at some point prior to November 13, 2001, see Second Amended Complaint at ¶ 52 and Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion to Dismiss the Second Amended Complaint ("Pl.Br.") at 17;
ii) the disclosure was misleading because it was "inaccurate," see Second Amended Complaint at ¶ 53;
iii) the disclosure was misleading because it failed to specify the allegations of the dispute, see id. at ¶ 52; and
iv) the disclosure was misleading because it did not reveal that Messina refused to cooperate with IDN in a separate patent lawsuit, see id. at ¶¶ 53-54.
The patent suit was filed against IDN in August 1999 by IdentiScan, a rival company which markets a product similar to IDN's. Karam Dec. at Ex. C, p. 10. As reported in IDN's Year 2000 10-KSB, the suit involved a dispute over which company *624 held patent rights to the identification verification technology. Id. IDN's counsel in that suit identified Messina's "input on both our defensive case and affirmative claims against Identi-Scan as critical." Second Amended Complaint at ¶ 53. Yet on July 10, 2001, IDN's patent counsel informed the Company in writing that he had "endeavored unsuccessfully to obtain Mr. Messina's assistance" in the patent litigation. Id Plaintiffs allege that because the patent was so important to IDN's business, and because Messina's input was critical to IDN's success in the suit, IDN should have disclosed that Messina did not intend to cooperate. Id. at ¶¶ 53-54.
4. IDN's Block of Messina's Sales of His Company Stock
In addition to alleging that IDN improperly disclosed the details of the Messina suit, plaintiffs claim that IDN's actions that precipitated the suitnamely, the Company's refusal to allow Messina to sell his shares on October 12, 15, and 16, 2001amount to securities fraud. Id at ¶¶ 56-58. Plaintiffs contend IDN blocked Messina's sales in order to create a "false shortage" of IDN's shares, which in turn would artificially inflate the stock price. Id at ¶ 58. Plaintiffs argue this effect on the market is shown by the fact that "IDN's share price has consistently dropped following Messina's sales on January 10, 2002, April 19, 2002, and May 7, 2002." Id.
5. Rights Offering
On September 21, 2001, IDN filed a Registration Statement with the SEC announcing a rights offering for 970,076 of its shares, whereby its stockholders were to receive one non-transferable right to purchase one share of IDN's common stock at $8.50 a share for every ten outstanding shares of common stock held on March 30, 2001. Id. at ¶ 60. On October 5, 2001, IDN issued a press release publicizing the rights offering, which expired on October 4, 2002. Id. at ¶ 62. Plaintiffs allege that the rights offering harmed them because it had "the effect of increasing the cost to cover their short positions." Id. at ¶ 63. In addition, plaintiffs contend that IDN's Prospectus filed in connection with the rights offering incorporated by reference its Year 2000 10-KSB, and its first and second quarter 2001 10-QSBs, which included material misrepresentations concerning the overstatement of revenue and the failure to properly disclose the existence of VeriFone and the details of the Messina suit, as discussed above.[7]Id. at ¶ 61.
6. Interference with Borislow's Trading Activities
Plaintiffs dedicate only one paragraph in their Second Amended Complaint to this claim. The paragraph, in its entirety, is as follows:
In addition to the improper activities alleged above, defendants directly or through their legal counsel have interfered with plaintiffs relationship with plaintiffs stock broker, caused an investigation by the SEC into plaintiffs trading activities, attempted to interfere with efforts by plaintiffs [sic] to cover their short positions and otherwise targeted *625 plaintiffs in order to adversely impact their short positions.
Id. at ¶ 59.
II. PROCEDURAL HISTORY
Plaintiff Keith Jones originally filed this suit as a class action on October 18, 2001. On November 30, 2001, plaintiff Daniel Borislow joined Jones in filing an amended complaint, which abandoned the class action. Defendant Kevin Messina and the remaining defendants filed, pursuant to Appendix N of the Local Rules of Civil Procedure, two separate Notices of Intent to submit a motion to dismiss the amended complaint on March 11, 2002. Before the Appendix N packages were submitted to the Court, plaintiffs obtained new counsel, and the parties stipulated that defendants would withdraw their motions to dismiss and plaintiffs would file a Second Amended Complaint. On May 31, 2002, plaintiffs Jones and Borislow, along with a new plaintiff, D & K Charitable Foundation, filed their Second Amended Complaint. Plaintiffs voluntarily dismissed their claims against Messina on September 25, 2002, and on October 2, 2002, the remaining defendants filed the present motion to dismiss the Second Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(6) and Fed. R.Civ.P. 9(b). This matter was reassigned from the Honorable Jerome B. Simandle to me on January 8, 2003.
III. APPLICABLE STANDARDS
A. Federal Rule of Civil Procedure 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint "for failure to state a claim upon which relief can be granted." A claim should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." In re: Rockefeller Center Properties, Inc. Securities Litig., 311 F.3d 198, 215 (3d Cir.2002) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). The inquiry is not whether plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claims. Id. (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). In deciding a 12(b)(6) motion, courts must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Id. (citing Scheuer, 416 U.S. at 236, 94 S.Ct. 1683). Nevertheless, courts are not required to credit bald assertions or legal conclusions alleged in the complaint. Id. (citing In re Burlington Coat Factory Securities Litig., 114 F.3d 1410, 1429 (3d Cir.1997)). Similarly, legal conclusions draped in the guise of factual allegations do not benefit from the presumption of truthfulness. Id. (citing In re: Nice Systems, Ltd. Securities Litig., 135 F.Supp.2d 551, 565 (D.N.J.2001)).
As a general matter, courts ruling on a motion to dismiss may not consider matters extraneous to the complaint. Burlington Coat Factory, 114 F.3d at 1426. However, an exception to the general rule is that a "document integral to or explicitly relied upon in the complaint" may be considered "without converting the motion [to dismiss] into one for summary judgment." Id. (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir.1996) and citing Trump Casino, 7 F.3d at 368 n. 9 ("a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document.")). The rationale underlying this exception is that the primary problem raised by considering documents outside the complaint lack of notice to the plaintiffis dissipated where plaintiff has actual notice and has *626 relied upon the documents in framing the complaint. Id (quotations and citations omitted). For the same reason, courts may consider matters of public record that are relied upon or cited in the complaint. In re: Cybershop.com Securities Litig., 189 F.Supp.2d 214, 223-24 (D.N.J.2002).
B. Section 10(b) of the Exchange Act and Rule 10b-5
Section 10(b) of the Exchange Act and Rule 10b-6 create liability for securities fraud, i.e. for false or misleading statements or omissions of material fact, Burlington Coat Factory, 114 F.3d at 1417, or for deceptive or manipulative acts, GFL Advantage Fund, Ltd. v. Colkitt, 272 F.3d 189, 207 (3d Cir.2001), that affect the trading of securities on the secondary market. Section 10(b) provides in pertinent part:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility or national securities exchange
. . .
b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered,... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
15 U.S.C. § 78j(b). To implement this section, the SEC enacted Rule 10b-5, violation of which gives rise to a private cause of action. Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975). Rule 10b-5 makes it unlawful:
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5.
There are two types of claims available under Section 10(b) and Rule 10b-5: misrepresentation or omission of material facts, Burlington Coat Factory, 114 F.3d at 1417, and market manipulation, Colkitt, 272 F.3d at 207. Plaintiffs in this case allege both.
1. Misrepresentation or Omission of Material Facts
To state a securities fraud claim for misrepresentation or omission of material facts, a plaintiff must plead:
(1) that defendant made a misstatement or an omission of a material fact,
(2) in connection with the purchase or sale of a security,
(3) upon which plaintiff reasonably relied;
(4) that plaintiffs reliance was the proximate cause of the injury suffered; and
(5) that defendant acted with scienter.
See Semerenko v. Cendant Corp., 223 F.3d 165, 174 (3d Cir.2000). A defendant cannot be held liable for failure to disclose unless plaintiff first establishes a duty to disclose, since "[s]ilence, absent a duty to disclose, is not misleading under Rule 10b-5." Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). Except for specific periodic reporting requirements, primarily the quarterly and annual reports, there is no general *627 duty on the part of a company to provide the public with all material information. Burlington Coat Factory, 114 F.3d at 1432 (citing In re: Time Warner, Inc. Securities Litig., 9 F.3d 259, 267 (2d Cir.1993) ("a corporation is not required to disclose a fact merely because a reasonable investor would very much like to know that fact.")). Nonetheless, a duty to disclose may arise where there is insider trading, a statute requiring disclosure, or an inaccurate, incomplete, or misleading prior disclosure. Oran v. Stafford, 226 F.3d 275, 285-S6 (3d Cir.2000) (citations omitted). In the latter connection, a company may be subject to a duty to correct or update a prior disclosure. Id. at 286. The duty to correct arises "when a company makes a historical statement that, at the time made, the company believed to be true, but as revealed by subsequently discovered information actually was not." Id. (quoting Burlington Coat Factory, 114 F.3d at 1431). The duty to update "concerns statements that, although reasonable at the time made, become misleading when viewed in the context of subsequent events." Id.
A fact is material if there is a substantial likelihood that a reasonable investor would have viewed it as having significantly altered the total mix of information available to the public. Shapiro v. UJB Financial Corp., 964 F.2d 272, 280 n. 11 (3d Cir.1992) (quotations omitted). "Materiality is a mixed question of law and fact, and the delicate assessments of the inferences a reasonable shareholder would draw from a given set of facts are peculiarly for the trier of fact." Id. (citing TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 450, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). However, the Third Circuit has fashioned a special rule for deciding materiality as a matter of law in the context of an efficient securities market. Oran, 226 F.3d at 282 (3d Cir.2000) (citing Burlington Coat Factory, 114 F.3d at 1425). The rule is based on the fundamental economic insight that in an open and developed market, the price of a company's stock is determined by all available material information regarding the company and its business. Id. In an efficient market, "information important to reasonable investors ... is immediately incorporated into the stock price." Id. As a result, when a stock is traded in such a market, the materiality of disclosed information may be measured by looking to the movement of the stock's price in the period immediately following disclosure. Id. If a company's disclosure has no effect on the stock price, "it follows that the information disclosed ... was immaterial as a matter of law." Id,
2. Market Manipulation
Third Circuit case law on market manipulation is sparse. In 2001, the Third Circuit noted that "we seem not to have addressed squarely what elements are required to establish a claim of market manipulation." Colkitt, 272 F.3d at 203. Section 10(b) provides in relevant part that "[i]t shall be unlawful for any person... [t]o use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations" promulgated by the SEC. Id. The SEC's Rule 10b-5 states in pertinent part that "[i]t shall be unlawful for any person ... [t]o employ any device, scheme, or artifice to defraud." Id.
Colkitt, read in conjunction with the well-established law on pleading a Section 10(b)/Rule 10b-5 claim, instructs that in order to state a claim of market manipulation, a plaintiff must plead that:
(1) in connection with the purchase or sale of securities,
*628 (2) defendant engaged in deceptive or manipulative conduct by injecting inaccurate information into the marketplace or creating a false impression of supply and demand for the security,
(3) for the purpose of artificially depressing or inflating the price of the security;
(4) that plaintiff reasonably relied on the artificial stock price;
(5) that plaintiffs reliance proximately caused plaintiffs damages; and
(6) that defendant acted with scienter.
See Colkitt, 272 F.3d at 206 n. 6; see also Semerenko, 223 F.3d at 174.
The issue of market manipulation in Colkitt arose in the context of an affirmative defense under Section 29(b) of the Exchange Act. Section 29(b) provides that a contract made or performed in violation of any other section of the Exchange Act or in violation of any rule or regulation promulgated thereunder is void. Colkitt, 272 F.3d at 199. As an affirmative defense to a breach of contract claim, Colkitt argued that because plaintiff had violated Section 10(b) and Rule 10b-5 by engaging in market manipulation, the contract at issue was void pursuant to Section 29(b). Id. The Third Circuit held that in order for an affirmative defense of market manipulation to survive summary judgment, a party must prove steps (1) through (3), noted above. Id. at 207. The court also noted that in order to maintain any private cause of action under Section 10(b), a plaintiff must also prove reliance and damages. Id. at 206 n. 6 (clarifying that "Section 29(b) only requires a violation of Section 10(b), not the maintenance of a private suit under Section 10(b)," which "requires a plaintiff to prove reliance and damages."). Though procedurally Colkitt involved summary judgment, the Third Circuit has made clear on other occasions that in order for a Section 10(b)/Rule 10b-5 claim to survive a motion to dismiss, a plaintiff must plead reliance, causation of damages, and also scienter (i.e. steps (4) through (6), noted above). E.g., Semerenko, 223 F.3d at 174.
C. Federal Rule of Civil Procedure 9(b)
Since claims brought under Section 10(b) and Rule 10b-5 are fraud claims, plaintiffs must comply with the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Rockefeller, 311 F.3d at 216. Rule 9(b) provides: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Id. This requirement has been rigorously applied in securities fraud cases. Id. (citing Burlington Coat Factory, 114 F.3d at 1417). Rule 9(b) requires, at a minimum, that plaintiffs support their allegations of securities fraud with all of the necessary factual background that would accompany "the first paragraph of any newspaper story," that is, the "who, what, when, where and how" of the relevant events. Id. at 217 (citing Burlington Coat Factory, 114 F.3d at 1422). Rule 9(b)'s heightened pleading standard serves important objectives: it "gives defendants notice of the claims against them, provides an increased measure of protection for their reputations, and reduces the number of frivolous suits brought solely to extract settlements." Id at 216 (quoting Burlington Coat Factory, 114 F.3d at 1418).
Nevertheless, the Third Circuit has also warned that courts should be "sensitive" to situations in which "sophisticated defrauders" may "successfully conceal the details of their fraud." Id. If plaintiffs can show that the requisite factual information is "peculiarly within the defendant's knowledge or control," the strict requirements of Rule 9(b) may be relaxed. Id. In order to *629 get the benefit of this relaxed standard, "at the very least plaintiffs must allege that the necessary information lies within defendants' control." Shapiro, 964 F.2d at 285. A boilerplate allegation that the information "lies within defendants' exclusive control" will not sufficeplaintiffs must accompany such an allegation with a statement of facts upon which the assertion is based. Id. "To avoid dismissal in these circumstances, a complaint must delineate at least the nature and scope of plaintiffs' efforts to obtain, before filing the complaint, the information needed to plead with particularity." Id.; see also Rockefeller, 311 F.3d at 216.
Citing case law from the Southern District of New York, plaintiffs argue that market manipulation claims are entitled to the benefit of a less exacting pleading standard. PI. Br. at 19. In that district, plaintiffs bringing a market manipulation claim are entitled to a somewhat relaxed pleading standard[8] because "the facts relating to a manipulation scheme are often known only by the defendants." Internet Law Library, 223 F.Supp.2d at 486; In re Blech Securities Litig., 928 F.Supp. 1279, 1290-91 (S.D.N.Y.1996). As noted above, the Third Circuit also allows a relaxed pleading standard in certain securities fraud cases because the pertinent information may be in the exclusive control of defendants. Shapiro, 964 F.2d at 285. However, in order to obtain the benefit of this relaxed standard in the Third Circuit, plaintiffs must plead that the information missing from their complaint is in the exclusive control of defendants, and must also plead the extent of their efforts to obtain the information prior to filing their complaint. Id. Plaintiffs in this case have made no such allegations in their Second Amended Complaint. Accordingly, their claims are not entitled to a relaxed pleading standard.
D. The Private Securities Litigation Reform Act
In addition to Rule 9(b), plaintiffs alleging securities fraud must also comply with the heightened pleading standards of the Private Securities Litigation Reform Act ("PSLRA"). 15 U.S.C. § 78u-4(b)(1), (b)(2); Rockefeller, 311 F.3d at 217. The PSLRA was designed to establish a "uniform and stringent pleading" standard and to provide companies added protection against what Congress perceived as a growing number of frivolous "strike suits" aimed at achieving quick settlements. Nappier v. Pricewaterhouse Coopers LLP, 227 F.Supp.2d 263, 273 (D.N.J.2002) (citing In re Advanta Corp. Securities Litig., 180 F.3d 525, 531 (3d Cir.1999)). Section 78u-4(b)(1) requires specificity in pleading a claim of misrepresentation or omission of material fact. It provides:
[i]n any private action arising under this chapter in which the plaintiff alleges that the defendant
(A) made an untrue statement of material fact; or
(B) omitted to state a material fact necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading;
the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and if an allegation regarding *630 the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.
Advanta, 180 F.3d at 530. Section 78u-4(b)(2) requires a showing of scienter, or knowledge, in any securities fraud claim:
"[i]n any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind."
Advanta, 180 F.3d at 530-31. Failure to meet the pleading requirements of the PSLRA results in mandatory dismissal of the complaint. See 15 U.S.C. § 78u-4(b)(3)(A); see also Nappier, 227 F.Supp.2d at 274.
Scienter is adequately plead by "setting forth facts that constitute circumstantial evidence of either reckless or conscious behavior" or by alleging facts "establishing a motive and an opportunity to commit fraud." Advanta, 180 F.3d at 534-35 (quoting Weiner v. Quaker Oats Co., 129 F.3d 310, 318 n. 8 (3d Cir.1997)). Pursuant to the PSLRA, allegations of scienter must be supported by facts stated "with particularity" and must give rise to a "strong inference" of scienter. Id at 535. This requirement of scienter supercedes Rule 9(b) to the extent that the Rule would otherwise allow state of mind to be averred generally. Id at 531 n. 5. A reckless act is one "involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it." Id. (quotations omitted). "The definition of `reckless behavior' should not be a liberal one lest any discernable distinction between `scienter' and `negligence' be obliterated." In re: Digital Island Securities Litig., 223 F.Supp.2d 546, 555 (D.De.2002) (quoting Sanders v. John Nuveen & Co., 554 F.2d 790, 793 (7th Cir.1977)). Conscious wrongdoing can be shown through specific allegations of such acts as "intentional fraud or other deliberate illegal behavior." Advanta, 180 F.3d at 535.
Since passage of the PSLRA in 1995, "catch-all allegations that defendants stood to benefit from wrongdoing and had the opportunity to implement a fraudulent scheme are no longer sufficient, because they do not state facts with particularity or give rise to a strong inference of scienter." Id. Courts "will not infer fraudulent intent from the mere fact that some officers sold stock." Burlington Coat Factory, 114 F.3d at 1424 (citing Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir.1994) (noting in a similar context that if "incentive compensation" could be the basis for an allegation of fraud, "the executives of virtually every corporation in the United States would be subject to fraud allegations.")). "Instead, plaintiffs must allege that [a defendant's stock] trades were made at times and in quantities that were suspicious enough to support the necessary strong inference of scienter." Id.
IV. PLAINTIFFS'CLAIMS
Each of plaintiffs' three claims is premised on alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. One claim is for misrepresentation and non-disclosure of material facts, specifically: the misleading comparison of current revenues to prior sales contained in IDN's Third Quarter 2001 10-QSB; faillure *631 to disclose the existence of VeriFone as a key competitor; and inadequate disclosure of the details of the Messina lawsuit. See Second Amended Complaint at ¶¶ 79-89. A second claim is for market manipulation; this claim includes all of the improprieties alleged in the Second Amended Complaint, specifically: the blocked sales of Messina's stock; the rights offering; interference with Borislow's trading activity; and the three allegations comprising the misrepresentation/non-disclosure claim. See PI. Br. at 18, 20; see also Second Amended Complaint at ¶¶ 71-78. The third claim is directed at the individual defendants, pursuant to Section 20(a) of the Exchange Act, which provides a cause of action against certain individuals responsible for violations of Section 10(b) and Rule 10b-5. Second Amended Complaint at ¶¶ 90-95.
I will analyze each of the allegations that comprise these claims individually. Plaintiffs argue that I should instead read the complaint as a whole. PI. Br. at 20. Under plaintiffs' theory, if I find that one of the fraud allegations lacks merit, I should nonetheless allow it to remain in the complaint because it is "part of a larger scheme" of market manipulation. Id. However, the Third Circuit rejected a similar argument in the securities fraud context:
Plaintiffs argue that the district court, by "compartmentalizing the evidence and wiping the slate clean after considering each component," failed to give weight to the "totality of the pleadings".... We have instructed that the district courts should engage in precisely the sort of analysis undertaken by the district court in this case, [citations omitted], and we therefore find no merit in this argument.
In re: Westinghouse Securities Litig., 90 F.3d 696, 712 (3d Cir.1996). Thus, I will "compartmentalize" plaintiffs' various allegations and analyze whether each has merit standing on its own.
As an additional preliminary note, the full caption of the market manipulation claim is "For violations of Section 10(b) and Rule 10b-5 thereunder against defendants based upon deceptive and manipulative practices in connection with the IPO" (caption preceding ¶ 71 of the Second Amended Complaint) (emphasis added). However, plaintiffs have not alleged any type of deceptive or manipulative practices by defendants whatsoever in connection with the IPO. The IPO was completed in November of 1999, id. at ¶ 11, though plaintiffs do not allege any impropriety on the part of defendants until May 9, 2001, when defendants issued a press release announcing the allegedly misleading comparison of current revenues with prior sales, id. at ¶ 33. While plaintiffs allege that the May 9 press release "continued to mislead the market place," id., the press release is indeed plaintiffs' earliest plead example of anything that can possibly be construed as misleading. Even IDN's announcement of its new revenue recognition policy, which is not alleged to have contained any misleading information, was not publicized until the filing of its Year 2000 10-KSB, on March 29, 2001, almost a year and a half after the IPO. See id, at ¶¶ 28-30. Plaintiffs' brief is devoid of any reference to the IPO, and of any allegation of impropriety even remotely concerning the IPO. To the extent plaintiffs claim any type of securities fraud "in connection with the IPO," such claim is dismissed.
Before examining plaintiffs' six allegations of impropriety[9] that form the basis of their claims, I will first discuss the *632 issues of reliance and causation, elements necessary for the survival of each allegation.
A. Reliance
To state a claim for securities fraud under Section 10(b) and Rule 10b-5 thereunder, a complaint must show that plaintiffs reasonably relied on defendants' allegedly fraudulent misrepresentations, omissions, or conduct. Zlotnick v. TIE Communications, 836 F.2d 818, 821 (3d Cir.1988). In Zlotnick, plaintiff believed Technicom's stock was overvalued because his analysis of the company's earnings and prospectus suggested to him that the company was not earning nearly enough to justify its stock price, and because he expected Technicom to face future competition that would diminish its profits and decrease further earnings. Id. at 819. He therefore sold short 1,000 shares of its stock on January 6, 1983, and another 1,000 shares five days later. Id At the time of his short sales he was unaware of any wrongdoing or misrepresentations by defendants; he did not base his decision to sell short on a belief that the company was deceiving investors. Id In early 1983, subsequent to plaintiffs short sales and 4unbeknownst to him, defendantsTIE, the parent company of Technicom, and Kifer, Technicom's Chairman and CEO allegedly took action to artificially inflate the price of Technicom's stock. Id. Specifically, they caused the company to issue several press releases which misrepresented the company's sales agreements and earnings prospects, and caused the company to engage in illusory sales to TIE. Id. These actions had the desired effect of falsely inflating Technicom's stock price. Id. On March 14, 1983, plaintiff, unaware of these deceptive practices, decided to cut his losses by making the purchases necessary to cover his short positions, for a loss of approximately $35,000. Id. After Technicom issued more realistic statements, its stock price dropped sharply. Id. By the summer of 1983, its stock price was significantly lower than it had been the previous January when plaintiff acquired his short positions. Id
The sole issue before the Third Circuit was whether plaintiff adequately plead reliance. Id. at 821.[10] Plaintiff argued that he should be entitled to the presumptions afforded parties under the "fraud on the market theory." Id. That theory creates a three-fold rebuttable presumption of reliance: first, the court presumes that the misrepresentation or fraudulent act affected the market price; second, it presumes that plaintiff did in fact rely on the price of the stock as indicative of its value at the time plaintiff purchased the stock; third, it presumes the reasonableness of that reliance. See id. at 822. The court found that a short seller, because of his belief that the market price is not a dependable indicator of the stock's value at the time of the initial short sale, is not entitled to the presumptions of the fraud on the market theory. Id. at 822-23. A short seller may, however, use that same theory to prove his reliance; he is merely not accorded the theory's presumptions, which are granted to other investors. Id. at 822, 824. Thus, a short seller may prove reliance by showing that: 1) the misrepresentation or fraudulent act raised the stock's price; 2) when making the covering purchase, he relied on the integrity of the market price of the stock; that is, he believed that the stock's price, at the time *633 he covered, accurately reflected the stock's true value because he was ignorant of any fraud; and 3) his reliance on the stock's price at the time of cover was reasonable. Id. at 821-22.
Zlotnick classified reliance on the market price of a stock as indirect reliance. Id. at 822, 823-24. It is so called because the misrepresentation or fraudulent act is not perpetrated directly on plaintiff. Id, Rather, the fraud is incorporated into the stock's price. Id. at 822. Thus, when plaintiff relies on the stock's price in making a purchase, he indirectly relies on defendants' fraud. Id. The court stressed that plaintiffs reliance must be actual; that is, plaintiff must be the one who actually relies on the stock's price. Id. at 823-24. The court squarely rejected an alternative theory of reliance whereby a short seller who is aware of defendants' fraud at the time he covers may nonetheless state a claim by arguing that the market was unaware of the fraud, and thus the stock's price remained artificially high despite his knowledge of the fraud. Id. The court reasoned that a plaintiff cannot recover for the reliance of other investors: "to the extent Zlotnick argues he is entitled to recover for the reliance of third parties, we reject his claim." Id. at 824.
For purposes of this case, the important lesson from Zlotnick is that if plaintiffs' complaint shows that at the time they covered, they were unaware of any fraudulent activity by defendants, they have adequately plead reliance. Id. at 822, 824. However, if plaintiffs were aware of defendants' fraud when they covered, then as a matter of law they are unable to show reasonable reliance, and their claims necessarily fail. See id. at 822 n. 6 ("if Zlotnick had known of the misrepresentation [when he covered], it would not have been reasonable for him to rely on the price of the stock as an accurate indication of the stock's value when he made his [covering] purchase.")
1. Plaintiffs Cannot Show Reasonable Reliance on IDN's Allegedly Misleading Accounting.
The rule announced in Zlotnick requires dismissal of many portions of plaintiffs' Second Amended Complaint. Most glaring is plaintiffs' attempt to recover for IDN's allegedly misleading comparison of current revenues to prior sales in its Third Quarter 2001 10-QSB.[11] Plaintiffs were certainly not fooled by this tactic, for they themselves explain that they perceived it as misleading when they noticed it in IDN's previous filings and press releasesindeed, that is precisely why plaintiffs allege they began to short sell IDN's stock in the first place. See, e.g., Second Amended Complaint at ¶ 25.
Plaintiffs try to dodge this obvious defect in their pleading by alleging that when they were "forced to cover," they "relied on the integrity of the market for IDN stock in light of IDN's steadfast position that its accounting was proper," id. at ¶ 66, in an apparent attempt to parrot the legal standard of Zlotnick, Their assertion, however, runs afoul of Zlotnick in three respects. Firstly, as Zlotnick notes, there is no time limit on when a short seller may choose to cover. 836 F.2d at 820. Thus, it is disingenuous for plaintiffs to claimas they do throughout the Second Amended Complaint and their briefthat they were "forced" to cover. See id. at 824 n. 8. Secondly, plaintiffs' assertion that they "relied on the integrity of the market" is also misplaced. Zlotnick carefully explained the difference between reliance on the integrity of the market and reliance on the integrity of the market price of a *634 stock. Id at 823. The court reasoned that a short seller can show reliance on the latter, not the former.[12]Id. Notwithstanding that defect, the third and most substantial problem with plaintiffs' allegation is the one discussed above: it is inconsistent with other allegations of their Second Amended Complaint. Plaintiffs were well aware of IDN's accounting methods, however misleading they may have been. They are therefore unable to show reasonable reliance on IDN's "steadfast position that its accounting was proper." See id. at 822 n. 6.
Further support for dismissal of plaintiffs' allegations of accounting impropriety is found in Moelis v. ICH Corp., 1987 WL 9709, * 4 (S.D.N.Y.1987).[13] In Moelis, plaintiff decided to short sell after reading an article in Barron's which concluded that defendant ICH's accounting techniques misleadingly inflated its assets and income. Id at *3. After plaintiff suffered losses on his covering purchases, he brought suit against ICH, basing one of his securities fraud claims on the very same accounting techniques that prompted him to enter into the short sale in the first place. The court noted that "[b]y his own admission, Moelis was aware of the alleged fraud and did not rely on the inflated financial statement." Id Holding that plaintiff could therefore not recover for that alleged fraud, the court reasoned that:
[p]laintiff does not contend that he was in any sense deceived by the inflated financial statements when he made his... short sale. To the contrary, his short sale was motivated by his perception of the fraud: he went short because the Barron's article had made him aware of the overstatements. It was his hope that when others acquired the same awareness of ICH's past misstatements, there would be heavy selling resulting in a drop in the market and profit on his short position.
Id. at *4. The exact situation is presented in this case. Believing IDN's accounting was misleading, plaintiffs sold short, hoping that other investors would catch on and the stock price would fall. Second Amended Complaint at 1141. Now that the stock price has not fallen, plaintiffs have brought a fraud claim against IDN for those same allegedly misleading accounting methods of which they were plainly aware at all relevant times. Such a claim clearly fails.
Accordingly, to the extent plaintiffs' claims seek recovery for IDN's allegedly misleading accounting methods, the claims are dismissed pursuant to Fed.R.Civ.P. 12(b)(6).
2. Plaintiffs' Limited Ability to Show Reasonable Reliance on Their Remaining Allegations of Fraud
The first complaint in this case was filed with only Jones as a named plaintiff, on October 18, 2001before Jones made any covering purchases. Class Action Complaint at ¶ 10 ("Plaintiff has not, to *635 date, purchased the securities of [IDN] to cover" the short sales.).[14] In the Class Action Complaint, in addition to the claim of improper accounting for which he may not recover, Jones alleged failure to disclose the existence of VeriFone, and manipulation of the supply of shares through the rights offering. Thus, before Jones made a single covering purchase, he was aware of these allegedly fraudulent acts or omissions on the part of defendants. Therefore, even assuming arguendo that the failure to disclose VeriFone and the rights offering constituted fraud, they cannot form the basis of a valid claim for Jones because at the time he covered he knew that the market price was affected by that fraud. See Zlotnick, 836 F.2d at 822 n. 6. He is therefore unable to show reasonable reliance with respect to the failure to disclose VeriFone and the rights offering. See id. To the extent Jones' claims in the Second Amended Complaint seek redress on those bases, his claims are dismissed pursuant to Fed.R.Civ.P. 12(b)(6).
On November 30, 2001, Borislow joined Jones in filing the First Amended Complaint. This complaint contained the same six allegations[15] as the Second Amended Complaint now before the Court. Thus, it is clear from the record that by November 30, 2001, at the very latest, both plaintiffs had knowledge of every alleged fraudulent act or omission. What is not clear is precisely when each plaintiff first learned of the alleged fraud. This information is crucial because, according to Zlotnick, plaintiffs are unable to show reasonable reliance with respect to any alleged impropriety that they knew about when they made their covering purchases. See id.
The Second Amended Complaint therefore lacks critical particulars. This inadequacy is discussed more fully in the succeeding section regarding the specificity of losses plead. At this juncture it is enough to say that, as a matter of law, plaintiffs cannot base their claims on any alleged fraud known to them when they covered. To the extent plaintiffs seek to do so, their claims are dismissed pursuant to Fed. R.Civ.P. 12(b)(6).
B. Causation/Specificity of Losses Plead
Plaintiffs in a securities fraud case must show that their reliance on the fraud proximately caused their losses. Semerenko, 223 F.3d at 174. To survive a motion to dismiss, plaintiffs must allege facts sufficient to show that they suffered a monetary loss by purchasing shares whose prices were artificially inflated by defendants' fraudulent actions, misrepresentations or omissions. See id. at 185-86. Plaintiffs in this case have alleged:
78. As a result of the manipulative conduct set forth herein, Plaintiffs purchased or otherwise acquired IDN's stock during the Bubble Period at artificially inflated prices to cover their short sales and were damaged thereby.
89. As a result of the dissemination of materially false and misleading information *636 described above, Plaintiffs purchased or otherwise acquired IDN's stock during the Bubble Period without knowledge of the fraud alleged herein at artificially inflated prices and were damaged thereby.
Second Amended Complaint at ¶¶ 78, 89. Assuming the truth of those allegations, and taking all reasonable inferences in the light most favorable to plaintiffs, they have adequately plead causation. See Semerenko, 223 F.3d at 186.
Defendants insist that the aftermath of September 11, 2001, specifically the market's newfound interest in security-related products such as IDN's identification verification system, was the true cause of the spike in IDN's stock price and plaintiffs' resultant losses. Def. Br. at 1. While a factfinder may very well agree with defendants, their argument is irrelevant to this motion to dismiss. Semerenko, 223 F.3d at 186-87.
In a related issue, defendants contend that plaintiffs have not plead their losses with sufficient particularity, pursuant to Fed.R.Civ.P. 9(b). Def. Br. at 15-17. According to the Second Amended Complaint:
Between February 23, 2001 and September 20, 2001, plaintiffs short-sold 215,300 shares of IDN's common stock. Plaintiffs were forced to purchase IDN shares at inflated prices to cover these short positions beginning in October 18, 2001 through January 3, 2002, and have incurred over $2,000,000 in losses as a result.
Second Amended Complaint at 18. Defendants argue, inter alia, that Rule 9(b) requires plaintiffs to plead the specific details of their transactions and resultant losses.
In Brickman v. Tyco Toys, Inc., 722 F.Supp. 1054, 1059-60 (S.D.N.Y.1989), plaintiffs claimed, in part, that a company's fraudulent misrepresentations caused harm to a class of investors who purchased the company's stocks. Id. at 1058. The court made clear that in order to recover, plaintiffs had to show that they relied on those misrepresentations. Id. at 1060. In this connection, the only relevant stock purchases were those that took place after the alleged misrepresentations. Id. Thus, plaintiffs were required to plead the dates of their purchases made after the alleged fraud. Id. at 1060-61.
Similarly, in this case, the dates of plaintiffs' transactions are relevant to the issue of reliance. Specifically, as discussed in the preceding section, plaintiffs cannot base their claims on any alleged fraud known to them when they covered. Thus, in addition to the dates Jones and Borislow first became aware of each allegation of fraud, it is necessary to know, for each individual plaintiff, including D & K Charitable Foundation, and for each short sale: the date the short position was acquired, the number of shares acquired, the sale price of those shares, the date the covering purchase was made, and the price of the covering purchase. That information is crucial to an understanding of which plaintiff may be entitled to recover for losses on which covering transaction, and in what amount. Plaintiffs' failure to plead these particulars is a basis for dismissing the Second Amended Complaint in its entirety, pursuant to Fed.R.Civ.P. 9(b).
C. Failure to Disclose the Existence of VeriFone
Plaintiffs allege that IDN failed to inform the market of the existence of a major new competitor in its field, Veri-Fone.[16] VeriFone announced its arrival on *637 the market by way of a press release on June 20, 2001. Second Amended Complaint at ¶ 44. After that date, IDN made several filings with the SEC, none of which discussed VeriFone in any way. Id. at ¶ 46. One of those filings, an amendment to its Year 2000 10-KSB, was made on October 9, 2001. Id. at ¶ 47. Pursuant to SEC regulations, there is a duty to disclose competition in annual reports. As a "small business issuer,"[17] IDN's disclosure requirements under the Exchange Act are governed by Regulation S-B. 17 C.F.R. § 228.10(a). Regulation S-B provides that, when filing an annual report, a company must describe "to the extent material to an understanding of the issuer: ... [c]ompetitive business conditions and the small business issuer's competitive position in the industry and methods of competition." Id. at § 228.101(b)(4); see also Form 10-KSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,133 (Item 1) at 22,094 (Oct. 9, 2002) (referring the small business issuer to 17 C.F.R. § 228.101).
Defendants' amended Year 2000 10-KSB reported in the "Competition" section:
Unless a device can read, decode and analyze all of the information legally permitted to be analyzed which is electronically stored on a driver license, the user may not obtain accurate and reliable confirmation that a driver license is valid and has not been altered or tampered with. We are aware of several companies, including Legal Age and The IndentiScan Company, LLC, that are currently offering products that electronically read and calculate age from a driver license. We have tested and compared some of these products to ID-Check and believe that our product is superior in quality and functionality. These other products are based on types of equipment which have limited functionality. Those units that cannot read barcodes are at a significant disadvantage because nearly 31% of the currently issued driver licenses as well as all encoded U.S. military ID's and uniformed services cards contain barcodes. This percentage is expected to continue to increase within the next year based upon current available information. In addition, some of these other products cannot connect to a PC or use a printer. We also believe that some of these products may infringe on our patent.
There are also products being marketed which are essentially electronic calendars designed to assist the retailer in calculating the age of the person presenting a driver license. These devices, however, cannot determine whether a driver license is valid or has been altered.
A very small number of laminate verifiers are currently used to determine the validity of the laminate on a driver license. However, laminate verifiers are fragile, not reliable and we believe can only be used in New York State.
IDN's Form 10-KSB/A, p. 7.[18]
Plaintiffs allege that VeriFone markets the same type of product as IDN, and *638 enjoys a unique advantage in the identification verification market because its technology can coexist on terminals that it has already provided to the global market. See Second Amended Complaint at ¶ 45. IDN's amended Year 2000 annual report, however, describes only competitors whose products have "limited functionality," some of which "cannot connect to a PC or use a printer," or are incompatible because they are unable to electronically verify the accuracy of an identification card as can IDN's ID-Check. IDN's Form 10-KSB/A, p. 7. Thus, I find that a question of fact exists as to whether IDN fulfilled its duty of disclosing "competitive business conditions" in its amended Year 2000 annual report. See 17 C.F.R. § 228.101(b)(4).
An equally viable theory of recovery for IDN's failure to disclose the existence of VeriFone is that IDN was subject to a duty to update the description of its competition in its SEC filings once IDN learned of the emergence of VeriFone. A company is under a duty to update a prior disclosure if it "[b]ecomes misleading when viewed in the context of subsequent events." Oran, 226 F.3d at 286 (quoting Burlington Coat Factory, 114 F.3d at 1431). As noted above, in IDN's Year 2000 10-KSB, filed March 29, 2001 and amended October 9, 2001, IDN disclosed the existence of various competitors whose products are portrayed as substandard to IDN's. In contrast, plaintiffs suggest that VeriFone's product is superior to IDN's. See Second Amended Complaint at ¶ 45. Hence, I find that a question of fact exists as to whether the arrival of VeriFone rendered IDN's previous disclosures of its competitors misleading, and thus whether IDN was under a duty to update its Year 2000 10-KSB, both as originally filed and as amended, to reflect the existence of VeriFone.[19]
Defendants argue that they had no such duty because the market was already aware of VeriFone. Def. Br. at 20. As stated in the Second Amended Complaint ¶¶ 44-45, VeriFone announced its product through a press release on June 20, 2001, and its website contained a detailed description of its product. Id, Defendants also contend that plaintiffs themselves informed the market of VeriFone when they issued two press releases, on October 18 and October 25, 2001, announcing the basis of the class action suit to potential class members. Id. at 2, 20.[20]
Defendants' arguments are unavailing. In re Campbell Soup Company Securities Litig., 145 F.Supp.2d 574 (D.N.J.2001), dealt with a similar issue. In that case, plaintiffs alleged that Campbell was aggressively supplying its customers with far more cans of its soup than they required, without informing the market, and all the while reporting in SEC filings that its sales and earnings were steadily increasing. Id. at 580-82. When Campbell finally revealed the extent of its sales tactics, its stock price fell significantly, to the detriment of the class of investors. Id. at 582. Plaintiffs contended that Campbell's earlier failure to disclose its sales practices rendered their reported earnings misleading and artificially inflated its stock price. See id, at 585. Campbell responded that the market knew of its sales tactics by way of various analyst reports which defendants included in their filings. Id. at 588 n. 1. The court found that it could not consider the reports for the pending motion to dismiss because plaintiffs did not *639 rely on those reports in their complaint. Id. The reasoning in Campbell is equally applicable here: this Court cannot consider the press releases that plaintiffs allegedly issued announcing the class action complaint because plaintiffs did not rely on those releases in pleading their Second Amended Complaint. In any event, defendants have not submitted copies of the releases, so the Court does not know if any mention was actually made of VeriFone.
Defendants further argue that any failure to disclose the existence of VeriFone is immaterial as a matter of law because when plaintiffs issued the press releases announcing VeriFone's existence as a previously undisclosed competitor, IDN's stock prices rose instead of fell. Def. Br. at 20. This method of determining materiality is valid in the Third Circuit in the context of an efficient market, see Oran, 226 F.3d at 282 (discussed above in section III.B.l). IDN's stock is traded on the American Stock Exchange, "a market which has always been found efficient." RMED International, Inc. v. Sloan's Supermarkets, Inc., 185 F.Supp.2d 389, 405 (S.D.N.Y.2002); Second Amended Complaint at ¶ 11. However, for the reasons explained above, this Court cannot consider plaintiffs' press releases and therefore cannot consider their effect on the stock price. See Campbell, 145 F.Supp.2d at 588 n. 1; see also Burlington Coat Factory, 114 F.3d at 1424-25 (district court's reliance on information based solely on an affidavit attached to defendant's motion to dismiss was improper). Hence, I find that the question of the materiality of IDN's failure to disclose the existence of VeriFone cannot be decided on this motion to dismiss. Shapiro, 964 F.2d at 280 n. 11.
Thus, this claim will not be dismissed pursuant to Fed.R.Civ.P. 12(b)(6). However, to survive a motion to dismiss, plaintiffs must also comply with the PSLRA's requirement of raising a strong inference of scienter by "setting forth facts that constitute circumstantial evidence of either reckless or conscious behavior."[21]Advanta, 180 F.3d at 534-35. A reckless act is one "involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it." Id. at 535 (quotations omitted). "The definition of `reckless behavior' should not be a liberal one lest any discernable distinction between `scienter' and `negligence' be obliterated." Digital Island, 223 F.Supp.2d at 555. Conscious wrongdoing can be shown through specific allegations of such acts as "intentional fraud or other deliberate illegal behavior." Advanta, 180 F.3d at 535.
The Second Amended Complaint contains no allegations that would support any inference, much less a strong inference, that IDN intended to commit fraud by failing to disclose the existence of VeriFone in its amended Year 2000 10-KSB. Nor have plaintiffs alleged any support for the inference that IDN's failure to disclose VeriFone was "an extreme departure from the standards of ordinary care." At best, plaintiffs have alleged that IDN was negligent in submitting an incomplete or misleading filing with the SEC. This is not scienter. Thus, plaintiffs' claim of failure to disclose competition is dismissed for failure to comply with the PSLRA.
*640 D. Failure to Timely and Adequately Disclose Details of the Messina Lawsuit
Kevin Messina, a former officer and director of IDN, filed a lawsuit on October 19, 2001, against the Company seeking a preliminary injunction enjoining it from restricting sales of his shares of company stock. Regulation S-B governs the requirements for a small business issuer's disclosure of legal proceedings. In the Company's annual and quarterly reports, it must do the following:
(a) If a small business issuer is a party to any pending legal proceeding (or its property is the subject of a pending legal proceeding), give the following information (no information is necessary as to routine litigation that is incidental to the business):
(1) Name of court or agency where proceeding is pending;
(2) Date proceeding began;
(3) Principal parties;
(4) Description of facts underlying the proceedings; and
(5) Relief sought.
17 C.F.R. § 228.103; Form 10-KSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,133 (Item 3) at 22,094 (Oct. 9, 2002) (referring the small business issuer to 17 C.F.R. § 228.103); Form 10-QSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,041 (Item 1) at 22,034 (Oct. 9, 2002) (referring the small business issuer to 17 C.F.R. § 228.103). "A legal proceeding need only be reported in the Form 10-QSB filed for the quarter in which it first became a reportable event and in subsequent quarters in which there have been material developments." Form 10-QSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,041 (Item 1) at 22,034 (Oct. 9, 2002).
On November 13, 2001, approximately three weeks after Messina filed suit, IDN reported in its Third Quarter 2001 10-QSB that:
On October 19, 2001, a former officer and director of the Company filed a lawsuit against the Company to force the Company to permit him to sell his restricted shares. The complaint also seeks damages of $29,350 for miscellaneous compensation and punitive damages of $3,000,000. The Company considers this former officer an "insider" subject to the rules under Section 144 of the Securities and Exchange Act of 1934. The Company feels it is acting properly and will defend itself vigorously. In addition, the Company intends to file a counter claim.
IDN's Third Quarter 2001 10-QSB, p. 9. Plaintiffs claim this disclosure was deficient in several respects:
i) the disclosure was late; that is, IDN should have informed the public about the suit at some point prior to November 13, 2001, see Second Amended Complaint at II52 and PI. Br. at 17;
ii) the disclosure was misleading because it was "inaccurate," see Second Amended Complaint at ¶ 53;
iii) the disclosure was misleading because it failed to specify the allegations of the dispute, see id. at ¶ 52; and
iv) the disclosure was misleading because it did not reveal that Messina refused to cooperate with IDN in a separate patent lawsuit, see id. at ¶¶ 53-54.
Plaintiffs first allegation of impropriety, that the disclosure was late, fails as a matter of law. Regulation S-B clearly states that a "legal proceeding need only be reported in the Form 10-QSB filed for the quarter in which it first became a reportable event." Form 10-QSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,041 (Item 1) at 22,034 (Oct. 9, 2002). The suit was filed on October 19, which is in *641 the fourth quarter. IDN reported the suit in its third quarter filing; thus, the disclosure was actually early. This claim is therefore dismissed pursuant to Fed. R.Civ.P. 12(b)(6).
Plaintiffs' remaining allegations are that IDN's disclosure of the Messina suit was misleading in various ways. These claims are therefore subject not only to Rule 9(b)'s requirement of stating fraud with particularity and the PSLRA's requirement of scienter, but are also subject to the PSLRA's mandate that:
[i]n any private action arising under this chapter in which the plaintiff alleges that the defendant
(A) made an untrue statement of material fact; or
(B) omitted to state a material fact necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading;
the complaint shall specify each statement alleged to have been misleading, [and] the reason or reasons why the statement is misleading....
Advanta, 180 F.3d at 530-31; 15 U.S.C. § 78u-4(b)(1).
Plaintiffs' contention that the disclosure was misleading because it was "inaccurate" is entirely unsupported by particulars. Plaintiffs allege nothing in support of this claim, and have therefore failed to comply with Rule 9(b). In addition, their failure to plead "the reason or reasons why" the disclosure was inaccurate is a violation of § 78u-4(b)(1) of the PSLRA. Without so much as an explanation as to why the disclosure was inaccurate, plaintiffs have likewise neglected to raise a strong inference of scienter, as required by § 78u-4(b)(2) of the PSLRA.
Plaintiffs third claim, that IDN's disclosure of the Messina suit was misleading because it failed to specify the allegations of the dispute, suffers from the same deficiencies. The disclosure in IDN's Third Quarter 2001 10-QSB reports that Messina sued the Company because it was not allowing him to sell restricted shares, on account of the Company's belief that he was an "insider." If plaintiffs are privy to other relevant details that IDN failed to disclose, they certainly have not plead those details, as required by Rule 9(b). Similarly, plaintiffs have not plead "the reason or reasons why" IDN's failure to disclose these (unspecified) details was misleading, as mandated by § 78u-4(b)(1) of the PSLRA. Without this information, the Court is unable to determine any basis of scienter on the part of the Company. If, for example, plaintiffs had plead, with particularized allegations in support thereof, that IDN purposefully withheld details of the suit that would have been damaging to the Company if publicized, perhaps they would have made the requisite showing of scienter. However, as it stands, the Second Amended Complaint falls far short of raising a strong inference that IDN intentionally or recklessly committed fraud by inadequately describing the Messina suit in its Third Quarter 2001 10-QSB.
Plaintiffs' fourth allegation pertains to the correlation between the Messina suit and IDN's patent suit against Identi-Scan that was pending at the time. As reported in IDN's Year 2000 10-KSB, the patent suit involved a dispute over which company held patent rights to the identification verification technology. Karam Dec. at Ex. C, p. 10. IDN's counsel in that suit identified Messina's "input on both our defensive case and affirmative claims against Identi-Scan as critical." Second Amended Complaint at II53. Yet on July 10, 2001, IDN's patent counsel informed the Company in writing that he had "endeavored unsuccessfully to obtain *642 Mr. Messina's assistance" in the patent litigation. Id. Plaintiffs allege that because the patent was so important to IDN's business, and because Messina's input was critical to IDN's success in the suit, then IDN should have disclosed that Messina did not intend to cooperate. Id. at ¶¶ 53-54. Thus, plaintiffs have complied with § 78u-4(b)(1) of the PSLRA by stating the reasons why they believe the disclosure was misleading.
However, plaintiffs have not plead enough to state a valid cause of action. Once a small business issuer has reported a legal proceeding in a SEC filing, Regulation S-B requires the company to report "material developments" in the case in subsequent quarterly reports. Form 10-QSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,041 (Item 1) at 22,034 (Oct. 9, 2002). It is not clear from the Second Amended Complaint whether Messina's refusal to cooperate in the patent suit constituted a material development in that suit. What type of "input" could Messina have offered to the patent case? Why was the input "critical"? Could no one else at IDN offer such input? The Second Amended Complaint alleges none of these particulars, as required by Rule 9(b). Without these details, plaintiffs have also failed to raise a strong inference of scienter, as they must under § 78u-4(b)(2) of the PSLRA. If, for example, plaintiffs had plead allegations in support of a showing that Messina's cooperation was material to the patent suit, that his non-cooperation seriously hindered IDN's chances of success in the suit, and that IDN sought to conceal this development from the market, perhaps plaintiffs would have made a showing of scienter. However, the Second Amended Complaint contains no such allegations, and therefore fails to raise a strong inference that IDN intentionally or recklessly committed fraud by not revealing Messina's refusal to cooperate in the patent suit.
In sum: plaintiffs' claim of untimely disclosure of the Messina suit is dismissed pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiffs' second and third allegations with respect to the Messina suit are dismissed for failure to comply with: (1) Fed.R.Civ.P. 9(b); (2) the PSLRA's instruction to allege the "reason or reasons why the statement is misleading," 15 U.S.C. § 78u-4(b)(1); and (3) the PSLRA's requirement of pleading scienter, 15 U.S.C. § 78u-4(b)(2). The fourth allegation, that IDN should have reported Messina's refusal to cooperate in the patent suit, is dismissed because it fails to comply with Rule 9(b), and fails to raise a strong inference of scienter.
E. IDN's Block of Messina's Sales of His Company Stock
As the "chief component of their market manipulation claim, plaintiffs allege that IDN's improper refusal to allow Messina to sell his shares on October 12, 15, and 16, 2001, artificially affected the supply of IDN's stock on the market and constituted securities fraud. Second Amended Complaint at ¶¶ 56-58; PI. Br. at 5. Plaintiffs contend that IDN blocked Messina's sales for the purpose of creating a "false shortage" of IDN's shares, which had the desired effect of artificially inflating the stock price. Id. at 158. Plaintiffs allege this effect on the market is shown by the fact that "IDN's share price has consistently dropped following Messina's sales on January 10, 2002, April 19, 2002, and May 7, 2002." Id.
Defendants argue that any claim based on the Messina suit lacks merit because the court in that case denied him injunctive relief and the case settled favorably for IDN. Def. Br. at 21. However, a review of the opinion in Messina v. Intelli-Check, Inc., (N.Y.Sup.Ct.2001), Index No. *643 15970/01, submitted with defendants' brief, shows that the court did not discuss the merits of the case. The court denied the injunction Messina sought because any injury could be adequately compensated by money damages. Messina at *3. The likelihood of success on the merits was not addressed.
Defendants' arguments that the Messina suit was baseless, and that the Company settled the case favorably, are improper on a motion to dismiss. At this stage, the Court must accept well-pleaded facts as true. See Burlington Coat Factory, 114 F.3d at 1426. Thus, the Court must assume that IDN improperly interfered with Messina's right to sell his stock, thereby creating a false impression of the supply and demand for the security, and that IDN did so for the purpose of artificially inflating the price of the stock. Defendants' protestations to the contrary are better suited for summary judgment.
Thus, this claim will not be dismissed pursuant to Fed.R.Civ.P. 12(b)(6). However, plaintiffs have again failed to show scienter, as required by the PSLRA. They have not plead allegations sufficient to support a strong inference that IDN intentionally or recklessly committed fraud by blocking Messina's sale of his shares. In IDN's Third Quarter 2001 10-QSB, the Company reported that it was acting within its rights by refusing to allow an insider to sell his restricted shares. IDN's Third Quarter 2001 10-QSB, p. 9. As the court noted in Messina v. Intelli-Check, Inc., the SEC has held that ownership of more than 10% of a company's shares supports a finding that the shareholder is an "affiliate" whose shares may only be sold pursuant to certain SEC rules. Messina at *2. IDN claimed that Messina, a former officer and director of the Company, by holding more than 14% of IDN's outstanding voting stock, so qualified as an "affiliate," and that his attempted sales did not comport with the SEC requirements. See id. While the court did not consider whether IDN's position was meritorious, plaintiffs have plead nothing to the contrary. Plaintiffs have not, for example, alleged that IDN blocked Messina's attempted sales despite knowing that the sales would have been in compliance with SEC rules. Accordingly, plaintiffs have failed to raise a strong inference that IDN intentionally or recklessly committed fraud by blocking Messina's sales. This claim is therefore dismissed for failure to show scienter, as required by the PSLRA.
F. Rights Offering
On September 21, 2001, IDN filed a Registration Statement with the SEC announcing a rights offering for 970,076 of its shares, whereby its stockholders were to receive one non-transferable right to purchase one share of IDN's common stock at $8.50 a share for every ten outstanding shares of common stock held on March 30, 2001. Second Amended Complaint at ¶ 60. Plaintiffs allege that the rights offering harmed them because it had "the effect of increasing the cost to cover their short positions." Id. at ¶ 63.
Defendants correctly argue that a rights offering is perfectly legal. Plaintiffs do not allege that defendants in any way violated the SEC's rules and regulations governing rights offerings. In an effort to cast some taint on the matter, plaintiffs contend that IDN's Prospectus filed in connection with the rights offering incorporated by reference its prior SEC filings which contained the misleading comparisons of current revenues with prior sales, and in which IDN also failed to properly disclose the existence of VeriFone and the details of the Messina suit. Id. at ¶ 61. This Court declines plaintiffs' invitation to consider these claims as inextricably intertwined *644 District courts are required to separate claims of fraud and deal with each individually. Westinghouse, 90 F.3d at 712. Each claim rises or falls on its own merits. I therefore reject plaintiffs' argument that a perfectly legal rights offering can be made fraudulent because its Prospectus incorporated by reference other allegedly fraudulent filings.
Accordingly, this claim is dismissed pursuant to Fed.R.Civ.P. 12(b)(6).
G. Interference with Borislow's Trading
Plaintiffs plead only one sentence in support of this allegation:
In addition to the improper activities alleged above, defendants directly or through their legal counsel have interfered with plaintiffs relationship with plaintiffs stock broker, caused an investigation by the SEC into plaintiffs trading activities, attempted to interfere with efforts by plaintiffs [sic] to cover their short positions and otherwise targeted plaintiffs in order to adversely impact their short positions.
Id. at ¶ 59.
This claim is woefully inadequate. It does not come close to passing Rule 9(b)'s requirement that fraud allegations must be plead with particularity. Rule 9(b), rigorously applied in securities fraud cases, requires at a minimum that plaintiffs support their allegations with all of the necessary factual background that would accompany "the first paragraph of any newspaper story," that is, the "who, what, when, where and how" of the relevant events. Rockefeller, 311 F.3d at 217 (citations omitted).
The vagueness of this claim begs a host of unanswered questions: Who interfered with Borislow's relationship with his stock broker? How was this done? When and where did this happen? Who is Borislow's stock broker? What is wrong with "causfing] an investigation by the SEC into plaintiffs trading activities"? Who "attempted to interfere with efforts by plaintiffs [sic] to cover their short positions?" What does that mean? Who "otherwise targeted plaintiffs"? What does that mean? Who is bringing this claim Borislow or all three plaintiffs? How is any of this a violation of Section 10(b) and Rule 10b-5? Where is the strong inference of scienter?
This claim is dismissed for failure to comply with Fed.R.Civ.P. 9(b) and the PSLRA.
H. Claims Against Individual Defendants
I. Section 20(a)
Plaintiffs bring a claim against each of the individual defendantsFrank Mandelbaum, Paul Cohen, Edwin Winiarz, and W. Robert Hollowaybased on Section 20(a) of the Exchange Act. Section 20(a) creates a cause of action against individual defendants alleged to have been "control persons" of companies guilty of securities fraud. The section provides:
Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
15 U.S.C. § 78t(a). One can be liable under this section for controlling a company that committed securities fraud. See In re: MobileMedia Securities Litig., 28 F.Supp.2d 901, 940 (D.N.J.1998). Plaintiffs *645 must plead facts showing: (1) an underlying violation by the company; and (2) circumstances establishing defendant's control over the company's actions. Id.; Campbell Soup, 145 F.Supp.2d at 599. "To establish that a defendant is a control person, a plaintiff must demonstrate [that] 'the defendant had actual power or influence over the allegedly controlled'" company. MobileMedia, 28 F.Supp.2d at 940 (citations omitted).
In MobileMedia, plaintiffs alleged that defendant was a director of the company who had, and exercised, power to influence and control the company. Id. Defendant argued that he did not have sufficient control over the company for purposes of a Section 20(a) violation. See id. Rejecting that argument as a question of fact improperly raised at the motion to dismiss stage, the court held that plaintiffs sufficiently plead control person status. Id.
Only defendants W. Robert Holloway and Paul Cohen contest that they are control persons. Def. Br. at 27-28. They claim that they are low-level officers or outside directors. Plaintiffs have alleged that Holloway was a Senior Executive Vice President of IDN, Cohen was a director of IDN, and that:
By virtue of [their] positions with the Company, [they] had the authority and, in fact, ability to control the contents of the company's annual and quarterly reports filed with the SEC, and press releases, including IDN's reported revenues. Further, [their] actions during the Period caused the material misstatement of the Company's financial conditions and results as alleged herein. [They were] aware that the contents of the Company's publicly disseminated reports and press releases alleged herein were misleading and had the ability and opportunity to prevent their issuance or cause them to be corrected, but failed to do so.
Plaintiffs further allege that the individual defendants:
had the power and influence and exercised the same to cause IDN to engage in the illegal conduct and practices complained of herein by causing the company to disseminate the false and misleading information referred to above.
Second Amended Complaint ¶¶ 13,15, 92. Plaintiffs have sufficiently alleged that Holloway and Cohen "had actual power or influence" over IDN's public filings and press releases. See MobileMedia, 28 F.Supp.2d at 940. As the MobileMedia court found, defendants' arguments to the contrary are questions of fact which are improper at the motion to dismiss stage. Id.
The Court notes that both defendants and plaintiffs in their briefing on Section 20(a) present arguments that are without sufficient legal support. Defendants argue that a cause of action for control person liability must include facte showing defendants' "culpable participation" in the company's wrongdoing. Def. Br. at 28. While plaintiffs will have to prove culpable participation at trial, Rochez Brothers, Inc. v. Rhoades, 527 F.2d 880, 889-90, the "overwhelming trend in this circuit" is that culpable participation does not have to be plead in order to survive a motion to dismiss. Derensis v. Coopers & Lybrand Chartered Accountants, 930 F.Supp. 1003, 1013 (D.N.J.1996) ("plaintiff need only plead circumstances establishing control because: (1) the facts establishing culpable participation can only be expected to emerge after discovery; and (2) virtually all of the remaining evidence, should it exist, is usually within the defendants' control.") (quotations omitted); accord Campbell, 145 F.Supp.2d at 600 (collecting cases).
*646 For their part, plaintiffs argue that they should be entitled to the "group pleading doctrine," which would allow them "to avoid the requirement of informing each defendant of the nature of his or her alleged participation in a fraud." PI. Br. at 25. However, since the passage of the PSLRA, mandating strict pleading requirements in claims of securities fraud, courts in this circuit have declined to apply the lenient group pleading doctrine. E.g., Marra v. Tel-Save Holdings, Inc., 1999 WL 317103, *5 (E.D.Pa.1999) (the group pleading doctrine "is inconsistent with the PSLRA's purpose" of imposing heightened pleading standards); In re: Home Health Corp. of America, Inc. Securities Litig., 1999 WL 79057, * 21 (E.D.Pa.1999) (same). This Court agrees with Marra and Home Health Corp. that the application of the group pleading doctrine would circumvent the PSLRA's heightened pleading requirements. As such, the doctrine is not available to plaintiffs.
In any event, plaintiffs have adequately plead control person status under Section 20(a) for the individual defendants.
2. The Individual Defendants' Scienter
In addition to pleading control person status for purposes of Section 20(a), plaintiffs must also raise a strong inference that each individual defendant acted with scienter, as required by the PSLRA. Scienter is adequately plead by "setting forth facts that constitute circumstantial evidence of either reckless or conscious behavior" or by alleging facts "establishing a motive and an opportunity to commit fraud." Advanta, 180 F.3d at 534-35. A showing of scienter with respect to a company does not amount to a showing of scienter with respect to any officer or director of the company, since "[generalized imputations of knowledge do not suffice regardless of the defendant's position within the company." Oran, 226 F.3d at 290 (quoting Advanta, 180 F.3d at 539). Blanket allegations that defendants stood to benefit from wrongdoing and had the opportunity to commit fraud are not sufficiently plead under the PSLRA because they do not state facts with particularity or give rise to a strong inference of scienter. Burlington Coat Factory, 114 F.3d at 1424. Similarly, conclusory assertions that defendants acted "knowingly," or that, because of a defendant's position in a company, he or she "must have known" of alleged fraud are insufficient to establish scienter. Advanta, 180 F.3d at 539 (citation omitted).
Plaintiffs allege the following as evidence of scienter for the individual defendants:
68. As alleged herein, the Defendants acted with scienter in that they:
(a) knowingly or recklessly engaged in acts and practices and a course of conduct which had the effect of artificially inflating the price of IDN's stock in the "Bubble Period"; and/or
(b) knowingly or recklessly manipulated the supply of IDN stock through the Messina lawsuit, the rights offering and other acts directed at short sellers.
70. Defendants also had the motive and opportunity to engage in the wrongful conduct described herein to maintain the value of their own holdings of IDN.
93. The Individual Defendants were motivated to act as aforesaid and to cause the stock value to be artificially inflated by reason of their ownership and sale of IDN stock for their personal benefit and to facilitate the success of the pending IDN rights offering. The Individual Defendants had actual knowledge of the facts making the material statements false and misleading, or acted *647 with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though same were available to them.
Second Amended Complaint at ¶¶ 68, 70, 93.[22] Paragraph 68 is precisely the type of conclusory allegation found to be insufficient in Advanta. 180 F.3d at 539. Plaintiffs fail to allege any support for their bald claim that the individual defendants knowingly or recklessly engaged in any acts.
Paragraphs 70 and 93 allege that defendants committed fraud in order to "maintain the value of their holdings" in the Company and to profit by selling their stocks at an inflated price. The Third Circuit has found that in order to successfully plead scienter in this fashion, plaintiffs must allege that defendants sold shares, "at times and in quantities that were suspicious enough to support the necessary strong inference of scienter." Burlington Coat Factory, 114 F.3d at 1424. Plaintiffs cannot successfully use this method of showing scienter with respect to a defendant who sold no shares during the relevant time period. Oran, 226 F.3d at 289. Plaintiffs have alleged the following regarding defendants' stock sales:
Mandelbaum: in 2001, "sold more than $351,000 worth of IDN common stock at substantial gain."
Cohen: in December 2000 and 2001, "sold more than $1,000,000 worth of IDN common stock at substantial gain."
Winiarz: no sales.
Holloway: no sales.
Second Amended Complaint at ¶¶ 12-15. Plaintiffs have failed to show that Winiarz and Holloway had a motive to commit fraud. See Oran, 226 F.3d at 289. Plaintiffs' allegations of Mandelbaum and Cohen's sales are not nearly specific enough to support a strong inference of scienter. There is no indication whether these sales were uncommon for the two; perhaps they normally trade this quantity of stock. More importantly, it is impossible to tell whether any of these sales occurred during plaintiffs' alleged "bubble period," which lasted from September 2001 through May 29, 2002. Plaintiffs have therefore failed to raise a strong inference of scienter with respect to Mandelbaum and Cohen as well. Id. at 290.
In sum, plaintiffs have not shown scienter with respect to any of the individual defendants. The claims against them are therefore dismissed pursuant to the PSLRA.
V. CONCLUSION
In conclusion, the following claims are dismissed pursuant to Fed.R.Civ.P. 12(b)(6):
comparison of prior sales with current revenues in IDN's Third Quarter 2001 10-QSB, see supra section IV.A.l
failure to disclose the existence of VeriFone (for Jones only), see supra section IV.A.2
IDN's allegedly late disclosure of the Messina suit, see supra section IV.D
the rights offering, see supra section IV.F.
These claims cannot be replead.
The following claims are dismissed for failure to comply with Fed.R.Civ.P. 9(b) and/or the PSLRA:
*648 failure to disclose the existence of VeriFone (for Borislow and D & K Charitable Foundation), see supra section IV.C
allegation that disclosure of the Messina suit was misleading because it was inaccurate, see supra section IV.D
allegation that disclosure of the Messina suit was misleading because it failed to specify the details of the suit, see supra section rV.D
failure to report Messina's refusal to cooperate in the patent suit, see supra section IV.D
blocking of Messina's attempts to sell his company shares, see supra section IV.E
interference with Borislow's trading, see supra section IV.G
Section 20(a) claims against the individual defendants, see supra section IV.H.2.
In addition, plaintiffs have failed to plead the dates on which they each became aware of each allegedly fraudulent misrepresentation or act, see supra section IV. A.2, and the dates and details of their short sale transactions, see supra section IV.B, as is in this case required by Fed. R.Civ.P. 9(b). Plaintiffs will be given the opportunity to move for leave to amend their complaint to account for the Rule 9(b) and PSLRA deficiencies within thirty days of the entry of the accompanying Order. See Nappier, 227 F.Supp.2d at 282 (granting motion to dismiss for failure to adequately plead scienter, but allowing plaintiffs to move to amend complaint through submission of proposed amended complaint containing more factual support for scienter). If plaintiffs choose to timely move for leave to file a Third Amended Complaint, the Court will then consider whether the amendments would be futile.
NOTES
[1] D & K Charitable Foundation was formed by plaintiff Borislow. Second Amended Complaint at ¶ 7.
[2] "AMEX IDN" indicates that Intelli-Check's common stock is listed on the American Stock Exchange under the symbol IDN. See id. at Ull.
[3] The Court notes an inconsistency in plaintiffs' Second Amended Complaint regarding the timing of their decision to short sell IDN's stock. Plaintiffs explain that they decided to acquire their short positions because they believed IDN's misleading comparison of current revenues to prior sales artificially inflated the stock price. Id. at ¶ 41. The first instance of this allegedly misleading comparison is the May 9, 2001 press release. Yet, plaintiffs began to short IDN's stock on February 23, 2001, approximately ten weeks before the press release. See id. at ¶ 25. Even if plaintiffs could somehow foretell from reading the announcement of IDN's new revenue recognition policy that IDN would later misleadingly compare current revenues with prior sales, that announcement was first made in IDN's Year 2000 10-KSB, filed March 29, 2001over a month after plaintiffs began shorting the stock. See id. at ¶ 29.
[4] As discussed below in section III.A, in deciding a motion to dismiss, a district court may consider documents relied upon or referred to in the complaint. In re: Donald J. Trump Casino Securities Litig., 7 F.3d 357, 368 n. 9 (3d Cir.1993). Since IDN's SEC filings are cited in the Second Amended Complaint, this Court will consider the full text of each document.
[5] Though neither party submitted this filing to the Court, I will consider it for purposes of this motion to dismiss because plaintiffs refer to it in their Second Amended Complaint. Trump Casino, 7 F.3d at 368 n. 9.
[6] Mr. Messina is also a former defendant in this case; plaintiffs voluntarily dismissed their claims against him on September 25, 2002.
[7] The Court notes that nowhere else in the Second Amended Complaint have plaintiffs asserted that IDN's Year 2000 10-KSB was misleading. As plaintiffs themselves explain, that filing simply announced IDN's new revenue recognition policy. Id. at ¶ 28-30. IDN didnot make the allegedly misleading comparison of current revenues with prior sales until its May 9, 2001 press release announcing the results of the first quarter of 2001. Id. at ¶ 33.
[8] Even under the relaxed standard in the Southern District of New York, plaintiffs must specify, at a minimum: "what manipulative acts were performed, which defendants performed them, when the manipulative acts were performed, and what effect the scheme had on the market for the securities at issue." Internet Law Library, Inc. v. Southridge Capital Management, LLC, 223 F.Supp.2d 474, 486 (S.D.N.Y.2002) (quotations omitted).
[9] Described above in sections I.B.I through I.B.6.
[10] Since plaintiff did not allege any wrongdoing on the part of defendants prior to his initial decision to sell short, the inquiry was focused on whether plaintiff could have reasonably relied on defendants' fraudulent conduct at the time he made his covering purchases. See id. at 824 n. 9.
[11] Described above in section I.B.I.
[12] This is because a typical investor relying on the integrity of the market when purchasing a stock is relying on the market's future ability to take into account factors that will hopefully raise the stock price, thus giving the investor a return; whereas a short seller making a covering purchase is relying on the integrity of the market price in a stock because of the belief that at the time of the covering purchase, the price reflects the true worth of the company. Id. at 823. The plaintiff in Zlotnick also plead the wrong sort of reliance (i.e. reliance on the integrity of the market as opposed to reliance on the integrity of a stock's market price), but the court did not consider the defect fatal to his claim. See id. at 824.
[13] Cited by defendants for two different propositions. Def. Br. at 17, 18.
[14] As defendants point out, a short seller cannot recover for any claim of securities fraud before the covering purchases are made. Moelis, 1987 WL 9709, at * 2 (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539). In light of that, it is worth mentioning defendants' speculation that Jones' motivation for filing the complaint at such an early date, as well as for issuing two public notices of the action within a week of filing the complaint, was the hope that IDN's stock price would drop as the market reacted to the suit, so that his covering purchases would not be as costly. See Def. Br. at 2.
[15] Described above in sections I.B.I through I.B.6.
[16] This allegation is described more fully in section I.B.2 above.
[17] That IDN is a small business issuer is evidenced by the fact that it uses Forms 10-KSB and 10-QSB for its annual and quarterly filings, respectively. The "SB" stands for "small business." See Form 10-KSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31,132(A) at 22,091-3 (Jan. 15, 2003); Form 10-QSB, Exchange Act, Fed. Sec. L. Rep. (CCH) ¶ 31.041(A) at 22,032 (Jan. 15, 2003).
[18] This is the same language as is in IDN's original Year 2000 10-KSB, filed March 29, 2001. See Karam Dec. at Ex. C, p. 7.
Though neither party submitted IDN's amended Year 2000 annual report to the Court, I will consider it for purposes of this motion to dismiss because plaintiffs' claims are in part based upon it. Trump Casino, 7 F.3d at 368 n. 9.
[19] Thus, plaintiffs' concession that "[p]erhaps" no cause of action exists for failure to disclose competition, is unwarranted. PI. Br. at 20.
[20] While defendants contend that "plaintiffs" issued the press releases announcing "their" claims of fraud, only Jones was a named plaintiff in the class action suit.
[21] Scienter can also be shown by alleging facts "establishing a motive and an opportunity to commit fraud." Advanta, 180 F.3d at 534-35. Plaintiffs do not attempt to show IDN's scienter by alleging that the Company had a motive and opportunity to commit fraud. Plaintiffs attempt this method of pleading scienter with respect to the individual defendants, as discussed below in section IV.H.2.
[22] Plaintiffs also suggest that IDN was motivated by a desire to harm plaintiffs specifically. See Second Amended Complaint at ¶¶ 42, 55. Plaintiffs do not allege that the individual defendants shared this motivation, nor do plaintiffs offer any particularized allegations whatsoever in support of that contention.
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531 F.2d 780
Panda WEEKS, Petitioner-Appellee,v.W. J. ESTELLE, Jr., Director, Texas Department ofCorrections, Respondent-Appellant.
No. 75--2983.
United States Court of Appeals,Fifth Circuit.
May 17, 1976.
John L. Hill, Atty. Gen., Gilbert J. Pena, Asst. Atty. Gen., Austin, Tex., Kathryn Fuller, Law Clerk (pro hac vice), for respondent-appellant.
Michael A. Maness, Houston, Tex. (Court-Appointed), for petitioner-appellee.
Appeal from the United States District Court for the Southern District of Texas.
Before COLEMAN, RONEY and TJOFLAT, Circuit Judges.
COLEMAN, Circuit Judge.
1
The basic issue in this appeal is whether the police had probable cause to arrest Panda Weeks and to search her car for heroin. The District Court held that probable cause did not exist. 399 F.Supp. 879. We disagree, and reverse.
2
Ms. Weeks was tried to a jury in state court in March, 1968, convicted of the possession of heroin, and sentenced to 30 years imprisonment. No appeal was taken from that conviction. Thereafter, she filed an application for the writ of habeas corpus in the state convicting court, alleging an illegal arrest and search. The petition was rejected because it did not 'state sworn facts which, if believed, would entitle him (sic) to relief'. The Texas Court of Criminal Appeals affirmed, without written opinion, March 29, 1971. Appellee then filed her application in the Southern District of Texas on August 1, 1972. The District Court held an evidentiary hearing and on July 15, 1975, granted the writ. The Court found that Ms. Weeks had effectively exhausted her state court remedies1 and that on all the facts of the case, the search had been conducted without probable cause. The State appealed and this Court granted a stay pending appeal.
3
At approximately 2:15 a.m. on January 10, 1968, Officer Dunlap, a Houston police narcotics officer, received a telephone call from an informant who had given him reliable information on three or four occasions in the past. The informant told Officer Dunlap that Weeks and her mother-in-law (Mrs. Haywood) would be in the 1400 block of West 11th Street, Houston, early on the morning of January 10, 1968. They would be riding in a 1968 Chevrolet of a specified color, body style, and license plate number. They would be leaving that location shortly and the car contained heroin.
4
At the federal habeas hearing Officer Dunlap testified that the informant stated that he had obtained the information by overhearing appellee in a conversation earlier that evening. However, at the prior state trial on the merits, Officer Dunlap had not testified as to how the informer came by his information. The federal district judge made no finding as to whether the informant told Officer Dunlap how he obtained his information.
5
Immediately following the telephone tip, Officer Dunlap radioed a group of narcotics officers, relaying the information he had just received. One of these officers, Albert, knew Ms. Weeks.
6
The officers proceeded to the 1400 block of West 11th Street, where they saw an automobile of the same detailed description radioed to them, occupied by two females. The car was parked at a Seven-Eleven drive-in grocery store. Mrs. Haywood walked into the store, and Ms. Weeks remained in the automobile, on the driver's side. The officers parked next to the automobile and two of them went into the Seven-Eleven and arrested Mrs. Haywood. Two other officers arrested Ms. Weeks, who was still in the automobile, and read her the Miranda warnings. The officers then searched the automobile and found heroin under the front seat. The arrest of Ms. Weeks and the search of her automobile were accomplished without a warrant.
7
The appellee argues that the informer's tip was insufficient to establish probable cause because it failed to satisfy the now familiar two-prong test of Aguilar v. Texas, 1964, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723. Aguilar, of course, provides that in order for an informer's tip to serve as the sole basis for probable cause it must reveal (1) how the informer obtained his information and (2) why the police believed that the informer was a credible reliable person, Aguilar v. Texas, supra, 378 U.S. at 114, 84 S.Ct. at 1514, 12 L.Ed.2d at 728.
8
There is no doubt that the second part of the Aguilar test was met as to this appellee since the informer had proven reliable on several prior occasions. The appellee contends that the first part of Aguilar's test is lacking since it was never shown that the police were told how the informer came by his information.
9
As we mentioned earlier, the District Court made no affirmative finding as to whether the police were told the source of the informer's information. However, an entire reading of its memorandum and order raises the distinct likelihood that the district judge concluded (without saying so) that the police were not told how the informer came by his information.
10
Even so, a tip from an informer previously known to be reliable may establish probable cause if it is in sufficient detail, corroborated by independent observations so as 'to negate the possibility that the informer 'fabricat(ed) his report out of the whole cloth", Gonzales v. Beto, 5 Cir. 1970, 425 F.2d 963, 969, cert. denied, 400 U.S. 928, 91 S.Ct. 194, 27 L.Ed.2d 189. See United States v. Freund, 5 Cir. 1976, 525 F.2d 873; United States v. Black, 5 Cir. 1973, 476 F.2d 267, 269; United States v. Drew, 5 Cir. 1970, 436 F.2d 529, 532--34, cert. denied, 1971, 402 U.S. 977, 91 S.Ct. 1682, 29 L.Ed.2d 143; United States v. Cummings, 8 Cir. 1974, 507 F.2d 324, 328.
11
The basic authority here is Draper v. United States, 1959, 358 U.S. 307, 79 S.Ct. 329, 3 L.Ed.2d 327.
12
In Draper an informer, who for several months had been providing narcotics agents with reliable information, reported that the defendant had gone to Chicago to receive a shipment of heroin and that he would return to Denver on a specified train, with the drugs on his person. Although the informer did not state how he had obtained his information, he described the defendant in meticulous detail, giving a description of defendant's physical appearance, the clothes which he would be wearing when he alighted from the train, the type of luggage he would be carrying, and the fact that the defendant habitually walked very rapidly. Relying solely on this information, federal narcotics agents met the train as it arrived in Denver and arrested the defendant at the station. The Supreme Court found that the information supplied by the informant was sufficient to show probable cause.
13
In Gomez v. Beto, 5 Cir. 1973, 471 F.2d 774, cert. denied, 414 U.S. 843, 94 S.Ct. 103, 38 L.Ed.2d 81, a case factually very similar to the case at bar, we found a tip from informers to be sufficiently detailed so as to establish probable cause when the details were confirmed by officers' surveillance. The Court related the facts and holding in Gomez as follows:
14
Officers of the Austin Police Department received a tip from unidentified informers that petitioner and one Torres had in their possession a large amount of heroin and were preparing it for distribution to pushers. The informers stated that petitioner and Torres would soon leave a certain house with the heroin in a blue and white Oldsmobile belonging to Torres. Within minutes another officer who had been directed to the vicinity of the house for the purpose of surveillance, reported that the petitioner and Torres had left the house in the Oldsmobile. Shortly thereafter the car was stopped by the police and the occupants arrested. The suspects and the car were taken to the police station. The car was thoroughly searched at the station within fifteen to thirty minutes of the time of the arrest, and three packages containing heroin were found.
15
The information provided by the informers provided ample probable cause for the arrest of the petitioner. The officers who received the tip testified that they had received tips from these same informers on numerous occasions and that they had always been reliable. The specificity of their information and the subsequent confirmation of some of the details by the surveillance officer provided a sure constitutional basis for this procedure.
16
471 F.2d at 774--75.
17
In United States v. Acosta, 5 Cir. 1969, 411 F.2d 627, we again found probable cause for a warrantless arrest and search in a factual context similar to the instant case. In Acosta the informant told customs agents that a smuggler described as a young Mexican male would be driving a 1958 green and white Buick with a specified Texas license plates number. The informer later told agents that the delivery would take place in a certain city and informed them of the smuggler's route of travel. We found that these facts were sufficient to establish probable cause for a warrantless search relying on the Supreme Court's opinion in Draper v. United States, supra.2
18
As to Panda Weeks, the police were told by a previously reliable informant that she (a woman personally known to one of the officers), with her mother-in-law, would be at a specific location, on a certain morning, riding in a specifically described car; that they would be leaving that location 'shortly'; and that the automobile contained heroin. By their personal observation the officers verified every assertion of the informer except the presence of the heroin.
19
Under Draper, and its progeny in this Circuit, the officers had probable cause to make the arrest and the search, without a warrant, which resulted in the discovery of the heroin.
20
The Judgment of the District Court, granting the writ of habeas corpus, is
21
REVERSED.
1
The requirement that a petitioner exhaust available state court remedies before seeking federal habeas corpus is a policy of comity and is not jurisdictional, Fay v. Noia, 1963, 372 U.S. 391, 419--20, 83 S.Ct. 822, 9 L.Ed.2d 837; United States ex rel. Reis v. Wainwright, 5 Cir. 1976, 525 F.2d 1269, 1272; Hairston v. Alabama, 5 Cir. 1972, 465 F.2d 675, 679. The state court order dismissing Ms. Weeks' habeas corpus petition is somewhat opaque and makes it difficult, if not impossible, to tell whether the writ was dismissed on procedural or substantive grounds. Since we find that the case must be reversed because there was probable cause for the arrest, we do not discuss the state's contention that Ms. Weeks had not sufficiently exhausted her state court remedies
2
Courts have found probable cause in many cases where the factual situation was similar to the one before us. See, e.g., Weeks v. Estelle, 5 Cir. 1975, 509 F.2d 760, 763--65, cert. denied, 423 U.S. 872, 96 S.Ct. 139, 96 S.Ct. 139, 46 L.Ed.2d 103; United States v. White, 5 Cir. 1972, 464 F.2d 1037, cert. denied, 409 U.S. 1043, 93 S.Ct. 538, 34 L.Ed.2d 493; United States v. Drew, 5 Cir. 1970, 436 F.2d 529, 532--34, cert. denied, 1971, 402 U.S. 977, 91 S.Ct. 1682, 29 L.Ed.2d 143; United States v. Martin, 5 Cir. 1970, 425 F.2d 268; United States v. Singleton, 3 Cir. 1971, 439 F.2d 381; United States v. Cummings, 8 Cir. 1974, 507 F.2d 324, 327--29
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551 F.2d 307
Lilesv.Reese
No. 76-1327
United States Court of Appeals, Fourth Circuit
2/14/77
1
W.D.N.C.
AFFIRMED
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 00-3694/01-2379
___________
Clarice P. Seko, *
*
Appellant, *
* Appeals from the United States
v. * District Court for the
* Eastern District of Missouri.
Boeing/McDonnell Douglas, *
* [UNPUBLISHED]
Appellee. *
___________
Submitted: July 6, 2001
Filed: July 16, 2001
___________
Before BOWMAN, BEAM, and LOKEN, Circuit Judges.
___________
PER CURIAM.
In these consolidated appeals, Clarice Seko appeals the District Court’s1 adverse
grant of summary judgment in her employment discrimination action, and its denial of
her motion to stay the award of costs to appellee pending the outcome of this appeal.
As relevant to this appeal, Seko alleged that the Boeing Company, formerly McDonnell
Douglas Corporation, recalled her in October 1997 during a layoff and then unlawfully
placed her on medical leave. She claimed that Boeing’s action violated the Americans
1
The Honorable Carol E. Jackson, United States District Judge for the Eastern
District of Missouri.
with Disabilities Act (ADA) and Title VII, because Boeing ignored her requests for
reasonable job accommodations and retaliated against her for filing previous lawsuits.
Having conducted a de novo review, see Lloyd v. Hardin County, Iowa, 207 F.3d 1080,
1084 (8th Cir. 2000), we affirm.
We agree with the District Court that Seko failed to present a prima facie case
under the ADA. See Hennenfent v. Mid Dakota Clinic P.C., 164 F.3d 419, 421-22 (8th
Cir. 1998) (stating that one element of prima facie ADA case is that employee is
qualified to perform essential job functions with or without reasonable
accommodation). Further, assuming, as did the District Court, that she established a
causal connection between the decision to place her on medical leave and her prior
lawsuits, she failed to present evidence showing that Boeing’s proffered legitimate non-
discriminatory reason for placing her on such leave—her inability to return to a job
requiring the use of power tools, given her medical condition—was pretextual. See
Scroggins v. Univ. of Minn., 221 F.3d 1042, 1045 (8th Cir. 2000) (holding that even
if employee established prima facie case of retaliation, he produced no evidence
challenging employer’s reason for firing him).
We decline to address the new arguments Seko raises on appeal, see Von
Kerssenbrock-Praschma v. Saunders, 121 F.3d 373, 378 (8th Cir. 1997), and we find
no abuse of discretion in the Court’s denial of her motion to compel. See In re Mo.
Dep’t of Natural Res., 105 F.3d 434, 435-36 (8th Cir. 1997) (standard of review).
Based on our disposition of Seko’s challenge of the adverse grant of summary
judgment, the issue as to the propriety of the Court’s denial of her motion to stay is
moot.
Accordingly, we affirm. See 8th Cir. R. 47B.
-2-
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-3-
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422 S.E.2d 784 (1992)
BOYD, PAYNE, GATES & FARTHING, P.C., et al.,
v.
PAYNE, GATES, FARTHING & RADD, P.C., et al.
Record No. 911939.
Supreme Court of Virginia.
November 6, 1992.
R.D. McIlwaine, III (Peter W. Rowe; Janice McPherson Doxey; Stackhouse, Rowe & Smith, on briefs), for appellants.
Gregory N. Stillman (Benjamin V. Madison, III; Hunton & Williams, on brief), for appellees.
Present: All the Justices.
CARRICO, Chief Justice.
The question for decision in this case is whether law partners who form a professional corporation but who continue to conduct themselves as partners inter sese may yet have their rights and liabilities determined according to the law of partnership. The trial court answered the question in the affirmative. We agree with the trial court and will affirm.
*785 Effective January 1, 1977, Robert F. Boyd, Charles E. Payne, Ronald M. Gates, and Philip R. Farthing, who practiced law together in Norfolk, formed a professional corporation known as Boyd, Payne, Gates & Farthing, P.C. (Boyd P.C.). In 1983, Anthony F. Radd joined the practice. Then, in 1987, Payne, Gates, Farthing, and Radd left that practice and formed their own professional corporation under the name of Payne, Gates, Farthing & Radd, P.C. (Payne P.C).
On November 29, 1988, Boyd P.C. filed a motion for declaratory judgment against Payne P.C. and Charles Payne, Ronald Gates, and Philip Farthing (collectively, the defendants). In the motion, Boyd P.C. alleged that the defendants had collected and deposited into "a segregated interest-bearing account, monies in payment of [Boyd P.C.'s] accounts receivable." Boyd P.C. sought an order declaring that it was the owner of corporate assets consisting of accounts receivable, unearned professional liability insurance premiums, office furniture and equipment, and fiduciary fees.
Payne P.C. and the individual defendants filed an answer. In addition, the individual defendants filed a counterclaim and cross-bill against Boyd P.C. and Robert Boyd, individually, alleging that the professional corporation had been formed as a convenience to obtain certain tax and other benefits but that the law practice had been conducted as a partnership both before and after the corporation's formation. The trial court was requested to order an accounting and to require Boyd P.C. and Robert Boyd, individually, to "pay to each of the other partners ... their respective partnership percentages ... of all partnership monies, funds, receivables, and assets."
Boyd P.C. demurred to the counterclaim and cross-bill on the ground that it was "a legal impossibility" for a partnership and a corporation to coexist under the circumstances. After argument, the trial court overruled the demurrer.
By pretrial order, Anthony Radd was joined "as a party defendant and counterclaimant." Thereafter, the trial court held a hearing to determine the nature of the entity that had been utilized to conduct the law practice.
In an order incorporating a letter opinion, the trial court held that while Boyd P.C. was, "in organizational respects ... a de jure professional law corporation," the corporation had not "conducted or controlled the law practice" of the several lawyers involved and had been utilized solely as a tax shelter. Continuing, the court held that the law practice in which the parties engaged during the period from 1977 until the break-up in 1987 "was conducted as a partnership in which the partners received annual salaries and shared in the profits." The court transferred the case to equity for a partnership accounting.
The trial court held an ore tenus hearing related to the winding up of the partnership. In its final decree, the court applied the "partnership percentages" and ordered Boyd P.C. and Robert F. Boyd, individually, to pay Charles Payne $119,443.95, Ronald Gates $97,727.45, Philip Farthing $83,247.66, and Anthony Radd $18,098.15, for a total of $318,517.21. From this decree, we awarded an appeal to Boyd P.C. and Robert Boyd (collectively, Boyd).
Viewed in the light most favorable to the defendants, the prevailing parties below, the evidence shows that in the mid-1950s, Robert Boyd formed a partnership with J. Randolph Davis, and they practiced together as Boyd and Davis. Charles Payne joined the firm as a salaried associate in 1969. In 1970, Boyd and Davis called Payne in and told him that he was "going to be made a partner concurrently with [Davis's] retirement." The firm name was changed to Boyd, Davis & Payne, and Payne began receiving ten per cent of the profits. In a "couple of years," Payne's percentage was increased to twenty percent, with Boyd receiving the remaining eighty percent.
Ronald Gates and Philip Farthing joined the firm as salaried associates in 1973 and were made profit-sharing partners effective January 1, 1977. Boyd's share of the profits was reduced to 60%, with Payne receiving 20% and Gates and Farthing 10% each. At the same time, the now fourmember *786 firm decided to form a professional corporation in order to obtain "tax benefits and limited liability." An announcement prepared by Boyd was sent to "all the clients and ... the legal community." The announcement stated that Gates and Farthing had "become partners" and that "the partnership [would] continue to practice" under the new firm name of Boyd, Payne, Gates & Farthing, a professional corporation.
Stock in the professional corporation was issued to the four partners in the same percentages as their entitlement to profits, viz., 60% to Boyd, 20% to Payne, 10% to Gates, and 10% to Farthing. This ratio of stock ownership did not change over the years and remained the same at the time of the firm's break-up in 1987. However, the percentages of partner profit sharing varied from time to time. For example, when Anthony Radd was made a partner in 1983, he received no stock but began receiving five per cent of the profits.[1] At the same time, Boyd's share of the profits was reduced to 12% because of his lessened participation in the practice, with Payne receiving 33%, Gates 27%, and Farthing 23%. These percentages remained in effect until the 1987 break-up.
No formal partnership agreement existed during any of the periods in question and no partnership certificate was ever filed. However, tax returns described the law firm as a partnership and indicated that the members shared in losses as well as profits. Both before and after the corporation was formed, the members of the firm referred to each other as "partners" and to Boyd as the "managing partner." "Partner meetings" were held periodically during the year, and, in a year-end meeting, the "partners" discussed associate and staff bonuses and salaries, reviewed their own compensation and profit percentages for the next year, and decided other financial questions. After Radd became a partner, he participated in these meetings even though he owned no stock in the corporation.
Ronald Gates testified, and Payne and Farthing agreed with his testimony, that "[i]nternally" the firm "continued to operate [after incorporation] the way it had always ... operated." Even the office manual, which designated Boyd as the "managing partner" and in several places referred to "the partners," went unchanged.
Further, as noted by the trial court, when the corporation was formed, the "partnership assets of the law practice were not merged into the corporation nor was any physical asset or receivable transferred to the corporation." Significantly, after the corporation was formed, the partners executed an agreement dealing with the possibility of a tax audit. The agreement provided that in the event of such an audit, "any tax liability ... shall become the responsibility ... of each partner ... according to percentage of profits which he received in that particular year." Hence, the tax liability was apportioned on the basis of partnership percentages, not stock ownership.
Boyd contends on appeal that, at the time in question, "an agreement among shareholders to disregard corporate law and function as a partnership was not permitted under Virginia law." Boyd points out that the law applicable to professional corporations is contained in Chapter 7 of Title 13.1 of the Code, consisting of §§ 13.1-542 through -556, and that under § 13.1-553, "[a] professional corporation organized pursuant to [Chapter 7] shall be governed by a board of directors, which shall have the full management of the business and affairs of the corporation and continuing exclusive authority to make management decisions on its behalf."
Boyd then argues that the effect of the trial court's approval of the shareholder agreement in this case is "to do away with the board of directors entirely." Such a result, Boyd opines, is illegal. This position, Boyd says, is sustained by our decision *787 in Kaplan v. Block, 183 Va. 327, 31 S.E.2d 893 (1944), and by the General Assembly's 1990 enactment of Code § 13.1-671.1.
Kaplan involved a corporation whose capital stock was divided into two classes, A and B. Class A, consisting of ten shares, carried no dividend rights but was the only voting stock. Class B, consisting of 120 shares, carried dividend rights but no voting power. The corporation's charter and by-laws provided that no act of the board of directors would be binding upon the corporation or the stockholders unless ratified by the unanimous vote of the holders of the Class A stock.
Block, who had been removed as a corporate officer by the board of directors, brought a mandamus action to regain his office, contending that his removal was violative of the charter and by-law provision. The trial court awarded mandamus. We reversed, holding that the charter and by-law provision was invalid because it divested the board of directors "of all power" and left it without authority "to do anything." Id. at 337, 31 S.E.2d at 897.
Boyd quotes the following excerpts from the Kaplan opinion:
Clearly the law does not permit the stockholders to create a sterilized board of directors.
Id. at 332, 31 S.E.2d at 895.
Under the charter and by-laws no action of the board of directors which is not approved by the stockholders is effective; and to make bad matters worse, it must not only be approved by them but must be unanimously approved by them. For all practical purposes there might as well be no board at all. A private business corporation without a board of directors is an impossible concept.
Corporations were invented to circumvent the unity required in partnerships.
183 Va. at 335, 31 S.E.2d at 896.
These regulations, if followed out, violate both common and statute law and are suicidal of corporate existence. A board of directors whose every act must be endorsed by every stockholder is no board at all.
Id. at 336, 31 S.E.2d at 897.
We think Kaplan is inapposite. No charter or by-law provision "sterilizes" the board of directors here, and the coexistence of the partnership did not have the effect, as Boyd contends, of doing "away with the board of directors entirely." The board still had the authority, and was free, notwithstanding the existence of the partnership, to act as the directors deemed appropriate.
And the board did act. It elected officers at each annual meeting between 1977, when the corporation was formed, and 1987, when the law firm was disbanded. By use of unanimous consent resolutions, the board selected and authorized the implementation of plans for "certain tax and other benefits," including health-care and life insurance programs; it also authorized the lease of a Cadillac automobile and the opening of accounts with banks and investment firms, as well as a savings and loan association.
It is obvious, of course, that these actions of the directors were limited in scope, designed for the most part to promote the purpose for which the corporation was formedto provide a tax shelter for the law practice. But Kaplan itself recognizes that not all limitations upon the powers of directors are illegal. Indeed, we said: "No one contends that limitations may not be placed upon the power of directors, but they cannot be legislated out of office." 183 Va. at 336, 31 S.E.2d at 897. We do not think the circumstances of this case justify a holding that the directors were "legislated out of office" by the continuation of the partnership after the corporation was formed.
Furthermore, in Kaplan, this Court cited Sterling v. Trust Co., 149 Va. 867, 141 S.E. 856 (1928), in support of its holding that the charter and by-law provision under review was illegal. In Sterling, the secretary-treasurer and general manager of a corporation, who was also a principal shareholder, undertook to purchase certain real estate without the knowledge of the president, *788 who was the corporation's largest shareholder and who, upon learning of the purchase, refused to approve it. This Court held the transaction invalid because only the board of directors had the authority to make, or to authorize, the purchase. But in our discussion of the matter, we recognized that binding corporate action can arise in other ways:
"It may arise by a long course of dealing which estops the corporation from denying the legality of that mode of dealing, or by the corporation acquiescing, or by its accepting the benefits of the transaction, or by practically all of the stockholders assenting."
149 Va. at 880-81, 141 S.E. at 859-60 (quoting William W. Cook, Corporations § 709, at 2918-19 (8th ed. 1923)).
Here, the course of dealing which was followed over a period of ten years estops Robert Boyd and Boyd P.C. from denying the existence of the partnership and the legality of the actions taken in that relationship. Moreover, all the shareholders, including Robert Boyd, assented to the actions about which he now complains. Neither of these factors was present in Kaplan, so the exception recognized there, rather than the direct holding, is applicable here.
Boyd argues, however, that prior to the General Assembly's 1990 enactment of Code § 13.1-671.1, "Virginia law did not authorize a Virginia court to treat a de jure professional law corporation ... as a partnership." Section 13.1-671.1 reads in pertinent part as follows:
A. An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation, even though it is inconsistent with one or more other provisions of this chapter in that it:
1. Eliminates the board of directors or restricts the discretion or powers of the board of directors;
2. Governs the authorization or making of distributions, whether or not in proportion to ownership of shares ...;
3. Establishes who shall be directors or officers of the corporation, or their terms of office or manner of selection or removal;
....
5. Establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer or employee of the corporation, or among any of them;
....
B. An agreement authorized by this section shall be:
....
[1.](b) Set forth in a written agreement that is signed by all persons who are shareholders at the time of the agreement;
2. Subject to amendment only by all persons who are shareholders at the time of the amendment, unless the agreement provides otherwise; and
3. Valid for ten years, unless the agreement provides otherwise.
....
D. An agreement authorized by this section shall cease to be effective when the corporation has more than thirty-five shareholders of record.
....
F. The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.
Citing Richmond v. Sutherland, 114 Va. 688, 693, 77 S.E. 470, 472 (1913), and Wisniewski v. Johnson, 223 Va. 141, 144, 286 S.E.2d 223, 224-25 (1982), Boyd argues that when the General Assembly adopts an amendatory act, it is presumed that a change in law is intended. Hence, Boyd concludes, the 1990 enactment of Code § 13.1-671.1 "was intended by the General *789 Assembly to change existing law by making provision for something which did not theretofore exist."[2]
We disagree with Boyd. While Code § 13.1-671.1 doubtless contains features new to Virginia law, for example, the 35-shareholder cap, several provisions pertinent to resolution of the present dispute have long been part of the common law of this Commonwealth. To that extent, at least, the enactment of Code § 13.1-671.1 merely codified existing law, as enunciated in a number of this Court's pre-1990 decisions.
First of all, as noted supra, paragraph (1) of Code § 13.1-671.1(A) authorizes a shareholder agreement which "[e]liminates the board of directors or restricts the discretion or powers of the board of directors." In Sternheimer v. Sternheimer, 208 Va. 89, 155 S.E.2d 41 (1967), shareholders of a family owned corporation, in a 1947 contract, agreed on the family members who were to hold office, how long they should serve, and what compensation they should receivea contract which clearly restricted the discretion and powers of the board of directors. Yet, this Court upheld the agreement, stating that the corporation "and all of its officers and directors are bound by the terms of the 1947 contract." Id. at 98, 155 S.E.2d at 48.
Next, Paragraph 2 of Code § 13.1-671.1(A) permits a shareholder agreement which "[g]overns the authorization or making of distributions, whether or not in proportion to ownership of shares." In Drewry-Hughes Co. v. Throckmorton, 120 Va. 859, 92 S.E. 818 (1917), a shareholder agreement prescribed how assets should be distributed upon dissolution of the corporation. This Court upheld the agreement, stating that such a stipulation, "so long as [it does] not infringe upon the rights of the public or of ... creditors and those dealing with it, ... is permissive and valid." Id. at 865, 92 S.E. at 819.
Further, Paragraph 3 of Code § 13.1-671.1(A) allows a shareholder agreement which "[e]stablishes who shall be directors or officers of the corporation, or their terms of office or manner of selection or removal." Here again, we refer to Sternheimer. The factors now listed in Paragraph 3 of Code § 13.1-671.1 as permitted subjects of a shareholders' agreement were contained in the agreement validated in Sternheimer.
Also, Paragraph 5 of Code § 13.1-671.1(A) permits a shareholder agreement which "[e]stablishes the terms and conditions of any agreement for ... the provision of services between the corporation and any shareholder, director, officer or employee of the corporation." In Brewer v. Bank of Danville, 202 Va. 807, 120 S.E.2d 273 (1961), we considered just such an agreement. There, the president and sole shareholder of a closely held family corporation, which she formed in 1940, received a salary of $40.00 per week. Fifteen years later, she agreed to sell her stock to her son and son-in-law, who managed the business. In return for relinquishing all her interest in the corporation as well as her positions as president and director, the son and son-in-law agreed, "as operators" of the company, to pay her at least $40.00 per week for life.
This Court upheld the agreement as the obligation of the corporation. We said that "where there is a family, or close corporation,... in which the stockholders, officers and directors ignore the requirements of the statutes and corporate by-laws, and conduct [the] business in an informal manner, the actions so taken may, nonetheless, be binding upon the corporation." Id. at 812-13, 120 S.E.2d at 278.
Finally, and of special pertinence here, subsection F of Code § 13.1-671.1 recognizes the validity of a shareholder agreement which "treats the corporation as if it were a partnership." But this is not a novel proposition in Virginia. Indeed, in a case decided more than a half-century ago, this Court treated as a partnership an arrangement entered into by the shareholders of a corporation.
*790 Deeds v. Gilmer, 162 Va. 157, 174 S.E. 37 (1934), involved a dispute among creditors. In the late 1920s, A.E. Boger and T.C. Coleman entered into a partnership for the purpose of manufacturing and selling radio cabinets, with the understanding that a corporation, to be known as B.C. Sales Company, Inc., would be formed to carry out the purpose. About the same time, Boger obtained a contract from Pulaski Veneer Corporation whereby he would be paid commissions for selling the company's products. Boger agreed with Coleman that he would assign his Pulaski contract to B.C. Sales Company, Inc. and that Coleman would share equally in the commissions received from Pulaski.
B.C. Sales Company, Inc. was chartered, but no stock was ever issued, and no capital was paid into the corporation. The corporation did keep a set of books, and the commission account with Pulaski was carried in the name of B.C. Sales Company, Inc. A fund amounting to $17,791.78 was paid into court by Pulaski as the amount of commissions due B.C. Sales Company, Inc. at the time litigation erupted.
In determining what amounts creditors should receive from the fund, a major issue was whether B.C. Sales Company, Inc. should be treated as a corporation or as a partnership. This Court decided that, in settling the company's accounts, B.C. Sales Company, Inc. should be "treated as a partnership composed of Coleman and Boger." 162 Va. at 277, 174 S.E. at 85. In the course of our opinion, we stated:
B.C. Sales Company, Inc., became technically a corporate entity; and as such was capable of contracting and being contracted with, of taking and holding the assignment of Boger's contract with Pulaski Veneer Corporation, and of suing and being sued. But the evidence shows beyond all question that Boger and Coleman have been at all times the beneficial owners in equal parts of all its capital stock and/or of all rights to subscribe therefor; and that they have consistently, utterly disregarded its corporate entity, and dealt with its rights, property and business as if they belonged to a partnership composed of themselves. In view of this, as between themselves and as between one of them and the creditors of the other, they should not be heard to say that ... it is other than a partnership composed of themselves doing business under the name and style of B.C. Sales Company, Inc....
[F]or all the purposes of this cause we shall so treat it and deal with it and its property.
Id. at 258-59, 174 S.E. at 77.
Because Boyd P.C. was a close corporation and its shareholders validly conducted the internal affairs of their law practice as a partnership, we hold that the trial court properly settled their rights and liabilities according to partnership law. Accordingly, we will affirm the court's final decree.
Affirmed.
NOTES
[1] When Radd began sharing profits in 1983, an announcement was sent out informing "the legal community and clients and so forth that [he] was now a partner in the firm of Boyd, Payne, Gates & Farthing."
[2] Boyd states on brief that Code § 13.1-671.1 is taken "almost verbatim" from § 7.32 of the Model Business Corporation Act of the American Bar Association.
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558 F.Supp. 641 (1983)
Richard NASH, Petitioner,
v.
Philip S. CARCHMAN, Prosecutor of Mercer County, State of New Jersey, Respondent.
Civ. A. No. 81-401.
United States District Court, D. New Jersey.
March 7, 1983.
*642 Joseph H. Rodriguez, Public Defender by John Burke and Mary Ellen Shiever, Asst. Deputy Public Defenders, East Orange, N.J., for petitioner.
Philip S. Carchman, Prosecutor of Mercer County by James A. Waldron, Jr., Asst. Prosecutor of Mercer County, Trenton, N.J., for respondent.
OPINION
DEBEVOISE, District Judge.
Petitioner Richard Nash seeks issuance of a habeas corpus writ pursuant to 28 U.S.C. § 2254. He is serving a five to ten year sentence in the State Correctional Institution at Dallas, Pennsylvania and attacks the *643 legality of a detainer filed against him by the State of New Jersey.
Petitioner Nash bases his argument upon the New Jersey Interstate Agreement on Detainers, N.J.S.A. 2A:159A-1 et seq. Under this Agreement, a prisoner may demand the speedy disposition of charges pending against him in another jurisdiction, and a member State may obtain for trial a prisoner incarcerated in another member State. See United States v. Mauro, 436 U.S. 340, 343, 98 S.Ct. 1834, 1839, 56 L.Ed.2d 329 (1978). Under Article III of the Agreement, if a trial is not commenced within 180 days of an inmate's proper request, then a court in the jurisdiction where the outstanding charge is pending shall enter an order dismissing the criminal charges with prejudice. Petitioner claims that the State of New Jersey failed to dispose of the detainer lodged against him within the required 180 days and therefore maintains that the state court should have dismissed both the detainer and its underlying charge and that this court should issue a writ of habeas corpus.
In a June 24, 1981 opinion, I determined that petitioner had not exhausted his state remedies, and on August 3, 1981, I administratively terminated this action without prejudice to allow the petitioner to pursue his claim in the New Jersey courts.
On August 24 and 25, 1981, a hearing was held before the Honorable Richard Barlow, Jr. in the Superior Court of New Jersey. The trial judge determined that the petitioner's correspondence from April to November 1979 (the details of which are set forth below) failed to satisfy the notice requirements of N.J.S.A. 2A:159A-3 necessary to trigger the 180 day period in which a state must commence a hearing on an untried complaint.
The court concluded that the State of New Jersey was not untimely in addressing petitioner's alleged probation violation and held that the detainer against petitioner was valid. Judge Barlow found petitioner guilty of violating his probation on the basis of his Pennsylvania convictions and resentenced petitioner to serve two consecutive 18 month terms with credit for the 249 days petitioner served in 1976 and 1977.
On June 22, 1982, the Appellate Division of the Superior Court of New Jersey affirmed the trial court's judgment, and on November 12, 1982, the Supreme Court of New Jersey denied both certification and petitioner's direct appeal.
The habeas corpus petition is now before this court for a determination on the merits.
Initially, I note that both Pennsylvania and New Jersey adopted the Interstate Agreement on Detainers, 42 Pa.C.S.A. §§ 9101, et seq.; N.J.S.A. 2A:159A-1, et seq., and that the Supreme Court in Cuyler v. Adams, 449 U.S. 433, 101 S.Ct. 703, 66 L.Ed.2d 641 (1981), held that the Agreement is a congressionally sanctioned interstate compact, the interpretation of which presents a question of federal law. Id. at 442, 101 S.Ct. at 709. Additionally, the Third Circuit has found that an alleged violation of the Interstate Agreement on Detainers is an issue cognizable in federal habeas corpus proceedings. Johnson v. Williams, 666 F.2d 842, 844, n. 1 (3d Cir.1981); United States v. Williams, 615 F.2d 585, 590 (3d Cir.1980).
Before I can turn to the merits of petitioner's claim, I must address the state's argument that Article III of the Agreement, N.J.S.A. 2A:159A-3, is inapplicable to a charge of parole or probation violation. Neither the Third Circuit Court of Appeals, the district courts of this circuit, nor the New Jersey courts have ever addressed this issue.
Article III states in relevant part:
(a) Whenever a person has entered upon a term of imprisonment in a penal or correctional institution of a party State, and whenever during the continuance of the term of imprisonment there is pending in any other party State an untried indictment, information, or complaint on the basis of which a detainer has been lodged against the prisoner, he shall be brought to trial within 180 days....
N.J.S.A. 2A:159A-3(a) (emphasis added).
Although an alleged probation violation could be construed as an "untried complaint", *644 the Interstate Agreement on Detainers does not so specify on its face.
However, Article I, the section which sets forth the Agreement's purpose, employs broad language which seems to encompass a probation violation charge. This Article provides that:
charges outstanding against a prisoner, [as well as] detainers based on untried indictments, informations, or complaints ... produce uncertainties which obstruct programs of prisoner treatment and rehabilitation....
(emphasis added). N.J.S.A. 2A:159A-1. The stated purpose of the Agreement is to dispose of outstanding charges, indictments, informations, or complaints expeditiously to protect the prisoner from the adverse consequences of detainers. N.J.S.A. 2A:159A-1; Cuyler v. Adams, 449 U.S. 433, 448-449, 101 S.Ct. 703, 711-12, 66 L.Ed.2d 641 (1981); United States v. Mauro, 436 U.S. 340, 360, 98 S.Ct. 1834, 1847, 56 L.Ed.2d 329 (1978). Article IX of the Interstate Agreement on Detainers directs that the Agreement should be liberally construed to effectuate these purposes. N.J.S.A. 2A:159A-9.
It appears that the stated policy behind the Agreement would apply to petitioner's outstanding detainer. A detainer based on an alleged probation violation will, of course, have the same adverse effects on an inmate as a detainer based on an untried indictment or information. The punitive consequences of detainers are generally recognized to include the following:
the inmate is (1) deprived of an opportunity to obtain a sentence to run concurrently with the sentence being served at the time the detainer is filed; (2) classified as a maximum or close custody risk; (3) ineligible for initial assignments to less than maximum security prisons (i.e., honor farms or forestry camp work); (4) ineligible for trustee status; (5) not allowed to live in preferred living quarters such as dormitories; (6) ineligible for study-release programs or work-release programs; (7) ineligible to be transferred to preferred medium or minimum custody institutions within the correctional system, which includes the removal of any possibility of transfer to an institution more appropriate for youthful offenders; (8) not entitled to preferred prison jobs which carry higher wages and entitle them to additional good time credits against their sentence; (9) inhibited by the denial of possibility of parole or any commutation of his sentence; (10) caused anxiety and thus hindered in the overall rehabilitation process since he cannot take maximum advantage of his institutional opportunities.
Cooper v. Lockhart, 489 F.2d 308, 314 (8th Cir.1973). In light of the above consequences, a prisoner with any kind of outstanding detainer will be anxious to resolve the underlying charges.
The legislative history behind the Interstate Agreement on Detainers provides further support for the contention that a detainer based upon an alleged probation violation constitutes a detainer based upon an "untried indictment, information, or complaint" within the meaning of the statute.
The Interstate Agreement on Detainers, codified in New Jersey at N.J.S.A. 2A:159A-1, et seq., is a compact among 48 states, the District of Columbia, and the United States. The Council of State Governments initially drafted the Agreement in 1956. The draft Agreement was reviewed and approved in April 1956 by a conference jointly sponsored by the American Correctional Association, the Council of State Governments, the National Probation and Parole Association, and the New York Joint Legislative Committee on Interstate Cooperation. Following this conference's endorsement of the Agreement, the Council of State Governments included the proposal in its suggested State Legislation Program for 1957.
The New Jersey legislative enactment of the Interstate Agreement on Detainers in 1958 contained a text identical to the 1957 proposed legislation. A sponsor's statement is the only legislative history that exists for the New Jersey Agreement. This statement provides:
*645 The problem of expedient disposition of detainers filed against inmates of penal or correctional institutions in this State has long been recognized.... This bill ... would do much to facilitate the administration of our correctional institutions in handling cases of inmates presently restricted from parole, minimum security, work assignments, and other rehabilitative procedure.
Assembly Bill 64 (1958), sponsored by William E. Ozzard and Leonard D. Ronco. Although the legislative history recorded in New Jersey is sparse, a more comprehensive statement of legislative intent is found in the comments on the proposed legislation made by the Council of State Governments in 1956 and circulated to all the adopting States. The Supreme Court in both Cuyler v. Adams, 449 U.S. 433, 447, 101 S.Ct. 703, 711, 66 L.Ed.2d 641 (1981) and United States v. Mauro, 436 U.S. 340, 359, 98 S.Ct. 1834, 1846, 56 L.Ed.2d 329 (1978), examined the recommendations of the Council of State Governments in interpreting the Interstate Agreement on Detainers, and I find it instructive to do so in this case.
In recommending the adoption of the Interstate Agreement on Detainers, the Council of State Governments outlined some of the problems caused by detainers that the Agreement was designed to address. The Council states that a "prison administrator is thwarted in his efforts towards rehabilitation [since an] inmate who has a detainer against him is filled with anxiety and apprehension and frequently does not respond to a training program." Council of State Governments, Suggested State Legislation for 1957 at 74 (1956). In addition, the Council noted that a prisoner was often deprived of the ability to take advantage of many of the prison's programs aimed at rehabilitation merely because a detainer was lodged against him. Supra, at 76. Furthermore, the Council stated that a detainer's existence presented problems in sentencing. A judge may be reluctant to give a long sentence if a detainer may cause a defendant to lose the privilege of parole or may result in a defendant serving subsequent sentences. Supra, at 74.
Significantly, the Council further indicated the type of detainer to which the Agreement was meant to apply. The Council stated:
Such detainers may be placed by various authorities under varying conditions, for example, when an escaped prisoner or a parolee commits a new crime and is imprisoned in another state.
Supra, at 74 (emphasis added).
Thus, the Council's explanatory comments address the petitioner's very situation.
Examining the language of the Agreement, its broad purposes, and its legislative history, I find that a probation violation charge is an "untried indictment, information, or complaint" within Article III of the Interstate Agreement on Detainers. N.J.S.A. 2A:159A-3. Thus, the Agreement does apply to petitioner's detainer.
The only federal case which reaches a contrary holding is Sable v. Ohio, 439 F.Supp. 905, 906 (W.D.Okla.1977). The court in Sable asserts in a conclusory fashion that the basis of the detainer at issue was an alleged violation of parole which is not an "untried indictment, information, or complaint." No examination of the Agreement's language, purpose, or legislative history was made, and I find this case unpersuasive.
Although the State cites United States v. Reed, 620 F.2d 709 (9th Cir.), cert. denied, 449 U.S. 880, 101 S.Ct. 229, 66 L.Ed.2d 104 (1980), as standing for the proposition that Article III of the Interstate Agreement on Detainers does not apply to alleged parole violations, the Court in Reed analyzed Article IV and not Article III of the Agreement and held that the petitioner who was in custody awaiting a parole revocation hearing was not serving a "term of imprisonment" as required by Article IV of the Agreement. Id. at 711. The question of whether a detainer based on an alleged probation violation fell within the Agreement was simply not before the court in Reed.
It appears that a majority of state cases conclude that Article III of the Agreement *646 does not extend to detainers based on probation or parole violation charges. People ex rel. Capalongo v. Howard, 453 N.Y.S.2d 45, 47, 87 A.D.2d 242, 244 (App.Div.1982); Maggard v. Wainwright, 411 So.2d 200, 242 (Fla. 1st D.C.A. 1982), cert. denied, ___ U.S. ___, 103 S.Ct. 309, 74 L.Ed.2d 289 (1983); People v. Jackson, 626 P.2d 723, 723 (Colo. App.Div. III 1981); State v. Knowles, 275 S.C. 312, 313, 270 S.E.2d 133, 134 (1980); Blackwell v. State of Tennessee, 546 S.W.2d 828, 829 (Tenn.Cr.App.1976); Suggs v. Hopper, 234 Ga. 242, 243, 215 S.E.2d 246, 247, 248 (1975); Buchanan v. Michigan Dept. of Corr., 50 Mich.App. 1, 2, 212 N.W.2d 745, 746 (1973); contra, Gaddy v. Turner, 376 So.2d 1225, 1228 (Fla. 2nd D.C.A. 1979).
None of the above cases, with the exception of Gaddy v. Turner, supra, examined the Agreement's legislative history. The only state case that did analyze the legislative intent behind the Interstate Agreement on Detainers reviewed the Council of State Government's comments and concluded, as I have, that detainers based on probation violation fall within the mandate of the Agreement. Gaddy v. Turner, supra, at 1228.
The next question is whether the State of New Jersey violated petitioner's rights under the Agreement.
The New Jersey Interstate Agreement on Detainers, N.J.S.A. 2A:159A-1, et seq., gives a prisoner serving a sentence in one state and against whom a detainer is lodged by another state the right to request final disposition of the matter on account of which the detainer is lodged. Article III(a) of the Agreement provides that the prisoner:
shall be brought to trial within 180 days after he shall cause to be delivered to the prosecuting officer and the appropriate court of the prosecuting officer's jurisdiction written notice of the place of his imprisonment and his request for a final disposition to be made of the indictment, information or complaint.
N.J.S.A. 2A:159A-3(a).
Under Article III(b), a prisoner's written notice and request for final disposition referred to in paragraph (a)
shall be given or sent by the prisoner to the warden, commissioner of corrections or other official having custody of him, who shall promptly forward it together with the certificate to the appropriate prosecuting official and court by registered or certified mail, return receipt requested.
N.J.S.A. 2A:159A-3(b).
Sanctions under the Agreement are provided for in Article V(c) which states:
in the event that an action on the indictment, information, or complaint on the basis of which the detainer has been lodged is not brought to trial within the period provided in Article III ... the appropriate court of the jurisdiction where the indictment, information or complaint has been pending shall enter an order dismissing the same with prejudice, and any detainer based thereon shall cease to be of any force or effect.
N.J.S.A. 2A:159A-5(c).
It must be determined whether the communications between petitioner and New Jersey authorities complied with these statutory provisions and, if so, as of what date the 180 day period began to run.
The facts are not disputed by the parties and are as follows:
On June 21, 1976, petitioner pleaded guilty to two counts of a New Jersey indictment. Count One charged the petitioner with breaking and entering with intent to rape, and Count Two charged him with assault with intent to rape.
On October 29, 1976, the New Jersey court sentenced petitioner to eighteen months at the Mercer County Correction Center on each Count, the sentences to run consecutively. The court suspended twenty-four months of the sentence, and petitioner served a twelve-month term. Upon release from the Correction Center, petitioner was placed on probation. While on probation, he was charged, in Pennsylvania, with burglary, involuntary deviant sexual intercourse, and loitering.
*647 Petitioner was arrested and imprisoned pending his trial. On June 21, 1978, New Jersey filed a detainer against petitioner, charging him with violation of probation. Petitioner was tried and convicted on the Pennsylvania charges on March 14, 1979, and sentenced on July 13, 1979.
On April 13, 1979, petitioner sent his first letter to the Mercer County Prosecutor's Office requesting that the office advise him "what [he] should do in reference to the Probation Violation Detainer." Mr. Nash's letter also stated that "[w]hatever [the Prosecutor's Office] can do with respect to the Probation Detainer, would be greatly appreciated." Although petitioner made no explicit reference to the Interstate Agreement on Detainers, this letter did provide the Prosecutor's Office with notice that petitioner had an outstanding New Jersey detainer that he wanted resolved. However, at the time of the April 13, 1979 letter, Mr. Nash had not received a sentence for his Pennsylvania convictions and, therefore, was not serving a term of imprisonment, which is an essential prerequisite to trigger the 180 day time limit of the Agreement. N.J.S.A. 2A:159A-3(a).
On May 16, 1979, the Mercer County Prosecutor's Office responded to petitioner's letter. It did not bring the Interstate Agreement on Detainer's to petitioner's attention. Nor did the Office inform petitioner that his request for a hearing on the detainer had to be made either to the warden or to the prosecutor and the court. The Mercer County Prosecutor's May 16th letter incorrectly informed petitioner that he would have to contact his probation officer for any resolution of his detainer. Relying upon this advice, petitioner wrote to the Mercer County Probation Office on May 17, 1979 and requested its assistance in obtaining action on the detainer charges.
By reply letter dated May 23, 1979, Probation Officer Robert Hughes informed petitioner that he spoke to Judge Jerome Moore of the Superior Court of New Jersey who stated that no action could be taken on the detainer until after the petitioner was sentenced on July 5, 1979. This letter demonstrated that by May 23, 1979, the Superior Court of New Jersey had notice of petitioner's outstanding detainer.
Unfortunately, Judge Moore provided the Probation Office with erroneous information. Although the 180 day period cannot be triggered earlier than a defendant's sentencing date, a defendant can certainly provide notice to the appropriate authorities before that time. United States v. Hutchins, 489 F.Supp. 710, 715 (N.D.Ind. 1980). The defendant's demand for speedy disposition of the charges would be effective as of his sentencing. Id. at 715. However, Judge Moore informed Probation Officer Hughes that nothing can be done until after petitioner's sentencing, and Mr. Hughes passed on this information to petitioner, suggesting that he communicate with the Mercer County Probation Office after his sentencing date.
Petitioner followed this incorrect advice and wrote the Mercer County Probation Office on July 20, 1979, one week after his sentencing, to renew his request that action be taken on the detainer as soon as possible. Probation Officer Judith Giordano's reply, dated August 3, 1979, advised petitioner that she communicated with the Public Defender's Office to arrange representation for Mr. Nash and that a hearing would be held concerning the probation violation charge as soon as an attorney was appointed.
Petitioner testified before Judge Barlow in the New Jersey Superior Court that he first received a detainer procedure notice from the Pennsylvania Correctional Institution on or about August 17, 1979.[*] This notice stated that the Records Officer would provide the necessary forms to a prisoner if he wished to have his untried indictments resolved and that forms would be forwarded to the District Attorney and *648 the court of the county having jurisdiction. (Transcript II, August 25, 1981, at 12).
Petitioner explained in his testimony before Judge Barlow that he did not seek to complete the prison forms since he already received an answer from his probation officer that he would receive a hearing as soon as a public defender was assigned to him. (Transcript II, August 25, 1981, at 13). In Mr. Nash's words, he "felt that that was a promise and there was ... nothing else for [him] to do because a hearing would be held very shortly after that." On the basis of his correspondence with the Prosecutor's Office, the Superior Court of New Jersey, and the Probation Office, petitioner justifiably believed that he made an effective demand for final disposition of his pending charges and in fact the proper authorities in New Jersey had been informed of his demand.
When no hearing was scheduled, petitioner wrote two letters on November 5, 1979 once again requesting disposition of his New Jersey detainer. In his letter to Chief Probation Officer Holloway, petitioner explicitly requested final disposition of the probation violation charge on the basis of the Interstate Agreement on Detainers Act and stated that the Pennsylvania Bureau of Corrections had been asked to attach a certificate indicating the conditions of his sentence. A copy of this letter was mailed to Judge Schoch, the Assignment Judge of the Superior Court of New Jersey, Mercer County. A separate letter was also sent to Judge Schoch which expressed petitioner's frustration in attempting to dispose of his detainer and requested assistance from the Judge on this matter.
Judge Schoch transmitted petitioner's November 5, 1979 letter to the Mercer County Prosecutor with an attached note dated November 13, 1979 suggesting that petitioner was invoking the terms of the Interstate Agreement on Detainers.
On December 6, 1979, petitioner executed Form II under the Interstate Agreement on Detainers formally requesting transfer to Mercer County to resolve the probation violation charge.
This form was addressed to the Prosecutor of Mercer County and constituted a formal notice of petitioner's place of imprisonment and request for disposition of indictments, informations, or complaints. On the same day, Pennsylvania authorities executed Form IV used under the Agreement on Detainers. This form likewise was addressed to the Prosecutor of Mercer County. It constituted an offer to deliver temporary custody of the petitioner to the Prosecutor and set forth pertinent information about petitioner's custody status in Pennsylvania.
On December 14, 1979, the Mercer County Prosecutor's Office responded to petitioner's request by sending Form VI of the Interstate Agreement on Detainers to the State Correctional Institution at Dallas. The form authorized two agents of the Mercer County Sheriff's Office to take custody of petitioner on December 20, 1979. The Sheriff's deputies went to the Correctional Institution but were informed that on December 11, 1979, petitioner had been moved temporarily to a penal institution in Graterford, Pennsylvania.
On or about February 26, 1980, petitioner was returned to the Dallas institution, and on February 28, the Mercer County Prosecutor's Office sent a new Form VI to the State Correctional facility at Dallas. The form designated March 10, 1980 as the date when petitioner would be taken into custody by the New Jersey officers.
Petitioner, however, refused to sign additional papers to effectuate his transfer to New Jersey. Instead, petitioner filed a petition for a writ of habeas corpus on March 6, 1980 in the United States District Court for the Middle District of Pennsylvania, seeking dismissal of the detainer. The State Correctional facility officials notified the Mercer County Prosecutor's Office of this development and, consequently, no agents were sent to bring petitioner to Mercer County.
On November 18, 1980, petitioner filed a petition for habeas corpus in the New Jersey Superior Court, seeking dismissal of the detainer and asked the District Court in *649 Pennsylvania to stay proceedings in the federal habeas corpus action until the New Jersey court had acted.
On December 9, 1980, petitioner filed an amended petition for habeas corpus with the District Court in Pennsylvania stating that his New Jersey state court petition for a writ of habeas corpus petition had been denied.
On February 3, 1981, the District Court for the Middle District of Pennsylvania transferred the case to this district pursuant to 28 U.S.C. § 1406. After consideration by United States Magistrate Devine and then by me, I ruled in an unpublished opinion that petitioner had not exhausted his state remedies and I stayed the action, as mentioned above, until completion of proceedings in the state courts. Only the most indefatigable litigant would have pursued his remedy with the persistence demonstrated by petitioner.
Petitioner argues that the notice provisions of Article III(a) were satisfied by his April 13, 1979 letter to the Mercer County Prosecutor taken in conjunction with the Mercer County Probation Office's May 23, 1979 reply letter which demonstrated that a New Jersey Superior Court Judge had been notified of petitioner's outstanding detainer and request for hearing. Petitioner submits that the 180 day statutory period commenced on July 13, 1979, the date of his sentencing, since he was then serving a term of imprisonment as required by Article III of the Agreement. Petitioner requests that he be relieved from the effect of his detainer and of the conviction on the underlying probation violation charge since the State failed to schedule a hearing by January 9, 1980, 180 days after his sentencing date.
The State argues that the 180 day period commenced December 6, 1979 when the petitioner executed Form II under the Interstate Agreement on Detainers formally requesting transfer to Mercer County to resolve the probation violation charge. The State submits that the 180 day period was tolled 91 days later, since petitioner refused to sign transfer papers and filed a habeas corpus petition seeking dismissal of his detainer on that date. Therefore, the State maintains that no violation of petitioner's rights under the Agreement occurred.
Ordinarily, a prisoner must comply with all the formal prerequisites of Article III to trigger the Agreement's 180 day period. The process is begun when the official having custody of a prisoner "promptly informs" the prisoner of any detainers lodged against him and of his right to request final disposition of the outstanding charges. N.J.S.A. 2A:159A-3(c). A prisoner must then notify his custodian that he wishes final disposition of the charge, and the custodian must notify all appropriate prosecuting officers and courts in the jurisdiction in which the prisoner is initiating proceedings of the prisoner's request for final disposition. N.J.S.A. 2A:159-3(d). The statute further provides that any notification will be accompanied with a certificate from the petitioner's custodian stating the prisoner's term of commitment, time already served on the sentence, amount of good time earned, and parole eligibility. N.J.S.A. 2A:159A-3(a). With the receipt of this formal request, the charging state is put on notice that it has 180 days to bring the defendant to trial on the untried indictment, information, or complaint. N.J.S.A. 2A:159A-3(a).
However, in the unusual circumstances of this case, petitioner was misled and given inaccurate information regarding the action he should take with respect to his outstanding detainer by the Mercer County Prosecutor's Office, the Superior Court of New Jersey in Mercer County, and the Mercer County Probation Office, which was acting upon instructions of the court. Petitioner relied on their advice and followed their instructions carefully. The Pennsylvania prison authorities did not notify the petitioner of his rights under the Interstate Agreement on Detainer until July or August 1979, after the petitioner had already corresponded with the Mercer County Prosecutor's Office and the Mercer County Probation Office and followed, to his detriment, the advice they gave.
*650 The defendant State of New Jersey cites several cases for the proposition that the 180 day period commences only upon a prisoner's technical compliance with the Agreement's requirements. State v. Ternaku, 156 N.J.Super. 30, 34, 383 A.2d 437 (App.Div.), cert. denied, 77 N.J. 479, 391 A.2d 494 (1978); Gray v. Benson, 443 F.Supp. 1284 (D.Kan.1978); People v. Primmer, 59 App. Div.2d 221, 399 N.Y.S.2d 478 (App.Div.), aff'd, 46 N.Y.2d 1048, 416 N.Y.S.2d 548, 389 N.E.2d 1070 (1977); People v. Daily, 46 Ill.App.3d 195, 4 Ill.Dec. 756, 360 N.E.2d 1131 (Ill.App.1972).
However, none of these cases involved a prisoner who received inaccurate or misleading information from duly constituted state authorities regarding the disposition of outstanding detainers. In fact, in People v. Daily, supra, the court stated, in dictum, that courts require only a good faith, diligent effort by the prisoner to invoke the Interstate Agreement on Detainers when his action is the result of mistake or misguidance by the officials involved. Id. 4 Ill. Dec. at 762, 360 N.E.2d at 1137. Likewise, the court in Pittman v. State, 301 A.2d 509 (Del.Sup.Ct.1973), noted that the "burden of compliance with the procedural requirements of [the Agreement] rests upon the party states and their agents; the prisoner, who is to benefit by this statute, is not to be held accountable for official administrative errors which deprive him of that benefit." Id. at 514.
Federal courts have also adopted the philosophy that technical compliance is unnecessary if, through no fault of his own, a petitioner fails to meet all the Article III requirements.
In United States v. Hutchins, 489 F.Supp. 710 (N.D.Ind.1980), the petitioner, after being advised by a United States Marshal of his rights under the Interstate Agreement on Detainers, made a request for final disposition of his detainer to the Marshal rather than to his custodian as required by Article III(b). The Marshal erroneously notified only the United States Attorney's Office and not the United States District Court of petitioner's request. In addition, the petitioner made the request for disposition before he was serving a term of imprisonment as required by the Agreement. The court found that the petitioner nevertheless fulfilled his obligations under the Interstate Agreement on Detainers stating that "it would be asking entirely too much to require a prisoner incorrectly notified of his rights by the wrong person at the wrong time, yet seeking to assert his right in the manner expressly provided by that person to know that his actions do not fit the letter of the statute under which he asserts his rights." Id. at 716. The court stated that where a prisoner is "led to believe that he has made an effective demand for final disposition of pending charges," the fact that the request was made prior to sentencing does not negate the effect of the notice, but only means that the 180 day period commences once the prisoner is sentenced. Id. at 715. To hold otherwise, the court asserted, would undercut the purposes of the Agreement and the mandate that a court liberally construe the Agreement so as to effectuate its purposes. Id. at 714.
In Schofs v. Warden, 509 F.Supp. 78 (E.D. Ky.1981), the court held that since the petitioner failed to receive the appropriate forms, through no fault of his own, his letters sent directly to the clerk and the state attorney's office satisfied the Interstate Agreement on Detainers even though the literal terms of the Act were not met. Id. at 82.
Finally, in Beebe v. Vaughn, 430 F.Supp. 1220 (D.Del.1977), the court held that strict compliance was necessary under the Agreement, noting that they were not examining a case in which a petitioner alleges that the state authorities were responsible for a "procedural default" under the Agreement. Id. at 1224.
In the instant case, petitioner should not be penalized for following the instructions he received from the Mercer County Prosecutor's Office, the New Jersey Superior Court and the Mercer County Probation Office.
The facts of this case must be viewed in light of the Agreement's purpose of expeditiously *651 disposing of outstanding detainers and determining an inmate's proper status under all detainers. N.J.S.A. 2A:159A-1. I further note that the Agreement must be construed liberally to effectuate its purpose, N.J.S.A. 2A:159A-9, and that the Supreme Court has found that a primary purpose of the Agreement is to protect prisoners against whom detainers are outstanding. Cuyler v. Adams, 449 U.S. 433, 449, 101 S.Ct. 703, 712, 66 L.Ed.2d 641 (1981).
I hold that petitioner gave notice to the Mercer County Prosecutor's Office on April 13, 1979 when he expressed his desire to resolve his outstanding detainer even though the petitioner did not mention the Interstate Agreement on Detainers by name. Petitioner gave notice to the Superior Court of New Jersey by at least May 23, 1979 when it became clear in Probation Officer Hughes' reply letter that Judge Moore of the Superior Court was informed of petitioner's outstanding detainer. However, the 180 day period was not triggered until July 13, 1979, the date of petitioner's sentencing because the petitioner was not serving a term of imprisonment until that date.
Since the State did not fulfill its obligation to hear the underlying charges of petitioner's detainer by January 9, 1980, 180 days after petitioner notified the proper authorities, I find that the State violated petitioner's rights under the Interstate Agreement on Detainers. N.J.S.A. 2A:159A-1, et seq. His conviction for violation of probation is a nullity and a writ will issue freeing him from the effect of such conviction.
Petitioner's attorneys are requested to submit an appropriate form of order or writ.
NOTES
[*] The New Jersey Superior Court found that the detainer notice was supplied to petitioner in July 1979 when he first arrived at the Pennsylvania State Correctional Institution at Graterford. (Transcript II, August 25, 1981, at 67).
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21 So.3d 269 (2009)
STATE of Louisiana
v.
Henry BROOKS.
No. 2009-KK-2245.
Supreme Court of Louisiana.
October 28, 2009.
Denied.
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514 F.3d 616 (2008)
John DEMJANJUK, Petitioner,
v.
Michael B. MUKASEY, Respondent.
No. 07-3022.
United States Court of Appeals, Sixth Circuit.
Argued: November 29, 2007.
Decided and Filed: January 30, 2008.
*617 ARGUED: John H. Broadley, John H. Broadley & Associates, Washington, DC, for Petitioner. Robert Thomson, United States Department of Justice, Criminal Division, Washington, DC, for Respondent. ON BRIEF: Jain H. Broadley, John H. Broadley & Associates, Washington, DC, for Petitioner. Robert Thomson, Edgar Chen, United States Department of Justice, Criminal Division, Washington, DC, for Respondent.
Before: ROGERS and SUTTON, Circuit Judges; BERTELSMAN, District Judge.[*]
OPINION
ROGERS, Circuit Judge.
Petitioner John Demjanjuk seeks review of the decision of the Board of Immigration Appeals holding that the Chief Immigration Judge was authorized to preside over Demjanjuk's removal proceeding. Pursuant to 8 U.S.C. § 1229a, a removal proceeding must be conducted by an immigration judge. Demjanjuk contends that the Chief Immigration Judge cannot be considered an immigration judge, and thus lacked authority to order Demjanjuk's removal from the United States. The Chief Immigration Judge, however, clearly meets the statutory definition of "immigration judge." Accordingly, we deny the petition for review,
Demjanjuk, a native of Ukraine, entered the United States pursuant to an immigrant visa in 1952 and became a naturalized citizen in 1958. Prior to immigrating to this country, Demjanjuk served as an armed guard at three World War II Nazi concentration camps. Proceedings in this court regarding his extradition to Israel, for war crimes of which he was subsequently acquitted, are not relevant to the instant case. See Demjanjuk v. Petrovsky, 10 F.3d 338 (6th Cir.1993); Demjanjuk v. Petrovsky, 776 F.2d 571 (6th Cir. 1985).
On May 19, 1999, the federal government filed a complaint in district court *618 seeking the revocation of Demjanjuk's citizenship. The government asserted that Demjanjuk had been ineligible for a visa due to his wartime service to Nazi Germany and that Demjanjuk had consequently entered this country illegally. The district court ruled in the government's favor, and this court affirmed. United States v. Demjanjuk, 367 F.3d 623 (6th Cir.2004).
On December 17, 2004, the Department of Homeland Security served Demjanjuk with a Notice to Appear, charging that he was removable from the United States. Shortly thereafter, the Executive Office for Immigration Review ("EOIR") initiated a removal proceeding pursuant to 8 U.S.C. § 1229a. Then Chief Immigration Judge ("CIJ") Michael J. Creppy assigned himself to preside over the removal proceeding. After learning that Creppy would be conducting the proceeding, Demjanjuk filed a motion to reassign the case to another judge, alleging, among other things, that the CIJ was without statutory authority to conduct removal proceedings. The CIJ denied the motion and, on December 28, 2005, ordered that Demjanjuk be removed from the United States.
Demjanjuk appealed both the denial of his motion to reassign, and the order of removal, to the Board of Immigration Appeals ("BIA"). The BIA, however, affirmed both rulings. Demjanjuk now seeks review of the BIA's decision with respect to CIJ Creppy's authority to conduct removal proceedings.
Because CIJ Creppy was an immigration judge, as that term is statutorily defined, he was empowered to preside over the removal proceedings brought against Demjanjuk. Accordingly, the BIA did not err in declining to vacate the CIJ's order of removal.
Pursuant to 8 U.S.C. § 1229a, proceedings for deciding an alien's admissibility or deportability must be conducted by an "immigration judge." The term "immigration judge" is defined in 8 U.S.C. § 1101(b)(4) to mean "an attorney whom the Attorney General appoints as an administrative judge within the Executive Office for Immigration Review, qualified to conduct specified classes of proceedings, including a hearing under section 1229a of this title."
CIJ Creepy met all of the elements of this definition. First, it is uncontested that CIJ Creppy was an attorney. Second, it is evident from Creppy's certificate of appointment as CIJ that he was appointed by the Attorney General to serve within the EOIR. The certificate, signed by then Attorney General Janet Reno, provides that Creppy was to serve has CIJ in the "Office of the Chief Immigration Judge, Executive Office for Immigration Review."[1]
Third, Creppy's appointment as CIJ constituted an appointment as an administrative judge. Although the Immigration and Naturalization Act does not define *619 "administrative judge," it is clear from the term's ordinary meaning that it encompasses the position of CIJ. This court "read[s] statutes and regulations with an eye to their straightforward and commonsense meanings." Henry Ford Health Sys. v. Shalala, 233 F.3d 907, 910 Oh Cir.2000). In its normal use, the term "administrative judge" is understood to refer to an Article I judge who presides over executive agency proceedings. The CIJ is a judge, by the terms of his title, and was appointed by an executive official, the Attorney General, to serve in an executive agency, the EOIR. Common sense thus advises that CIJ Creppy was an administrative judge.
The designation of "Chief" before "Immigration Judge" in Creppy's job title does not change this understanding. Demjanjuk essentially asks this court to ignore the plain meaning of the words "Immigration Judge" because Creppy's title also included the word "Chief." The latter term, however, denotes merely that the CIJ is the head immigration judge, and, as such, may be responsible for performing duties beyond those performed by other immigration judges. See WEBSTER'S THIRD NEW ITERNATIONAL DICTIONARY 387 (2002) (defining "chief" as "accorded highest rank"). The word "Chief" does not somehow alter the fundamental meaning of the words "Immigration Judge" to make this position entirely managerial, as Demjanjuk claims it to be.
Fourth, and finally, CIJ Creppy was qualified to conduct immigration proceedings, including those for removal. As noted, § 1101(b)(4) provides that an "immigration judge" should be "qualified to conduct specified classes of proceedings, including a hearing under section 1229a." The parties dispute the significance of this language, in particular the meaning of the term "qualified." The Attorney General contends that this clause requires simply that the appointee be "capable of" presiding over immigration hearings. Demjanjuk, on the other hand, reads this language to require that the Attorney General have specifically "appointed" a judge to conduct removal proceedings in order for that party to be considered "qualified."
Because CIJ Creppy was "qualified" in both senses of the term, we need not decide which of these interpretations is correct. If "qualified" means "capable of," or "able to," then there is little doubt that Creppy was qualified to preside over removal hearings. Demjanjuk does not suggest that Creppy was unable to conduct immigration proceedings effectively, nor does anything in the record so suggest.
This interpretation moreover represents a reasonable reading of the statutory language. In its normal use, the word "qualified" means "competent" or "fit," as the Attorney General contends. See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1858 (2002). It is also significant that Congress chose to use the term "appoint" elsewhere in § 1101(b)(4), but not in the clause at issue. If Congress had wanted, it could have said that an immigration judge is an attorney "whom the Attorney General appoints as an administrative judge within the Executive Office for Immigration Review to conduct [removal proceedings.'" Instead, Congress chose to discuss removal proceedings in a separate clause and use the word "qualified" instead of "appoint."
However, even assuming that the term "qualified" somehow means "appointed" or "delegated," as Demjanjuk suggests, the Attorney General has specifically delegated the power to conduct removal proceedings to all immigration judges. At the time that Creppy presided over Demjanjuk's removal hearing, the pertinent regulation, *620 8 C.F.R. § 1003.10 (2005),[2] stated that
Immigration Judges . . . shall exercise the powers and duties in this chapter regarding the conduct of exclusion, deportation, removal, and asylum proceedings and such other proceedings which the Attorney General may assign them to conduct.
The CIJ is undoubtedly an immigration judge, and thus was explicitly empowered by the Attorney General to preside over removal hearings.
Demjanjuk argues that § 1003.10 did not grant removal authority to Creppy, since this section does not specifically mention the position of CIJ. This argument is unpersuasive. As discussed, the term "Chief' does not change the basic meaning of the words "Immigration Judge." Because any reasonable person would assume that the position of Chief Immigration Judge is a mere subcategory of immigration judge, the absence of any mention of the CIJ in § 1003.10 is not significant. Nor is it telling that § 1003.9, which describes the CIJ's duties, did not, at the time, list presiding over immigration hearings as one of the position's responsibilities.[3] Although that section only mentioned certain supervisory functions, it made explicit that the position "[was] not limited" to such duties.
This analysis is supported by recent amendments to § 1003.9, the language of which now clearly states that "[t]he Chief Immigration Judge shall have the authority to . . . [a]djudicate cases as an immigration judge." § 1003.9(b)(5). The amended regulation then goes on to provide that "[t]he Chief Immigration Judge shall have no authority to direct the result of an adjudication assigned to another immigration judge.". § 1003.9(c) (emphasis added). While these amendments do not have retroactive effect, they confirm the previously implicit understanding that the CIJ is an immigration judge. Indeed, the comments to the current version of § 1003.9 state that the regulation was amended in part to clear up "apparent confusion . . . among some observers regarding the role and status of the immigration judges." Authorities Delegated to the Director of the Executive Office for Immigration Review, and the Chief Immigration Judge, 72 Fed. Reg. 53673, 53673 (Sept. 20, 2007).
Moreover, the case that Demjanjuk relies upon for the proposition that a delegation of authority must always be perfectly unequivocal and unambiguous, San Pedro v. United States, 79 F.3d 1065 (11th Cir. 1996), is distinguishable. San Pedro involved a situation where the Immigration and Naturalization Service ("INS") initiated deportation proceedings against a party despite a plea agreement, approved *621 by the U.S. Attorney and several Assistant U.S. Attorneys ("AUSAs"), which purported to shield the party from deportation. Id. at 1067. The Eleventh Circuit held that the U.S. Attorney and AUSAs could not bind the INS, which had been delegated authority over deportation, since the Attorney General had not also granted such power to the U.S. Attorney by an "explicit and affirmative" delegation. Id. at 1070-71 (emphasis omitted).
The instant case differs from San Pedro in key respects. In San Pedro, the document claimed to have given U.S. Attorneys deportation authority, the United States Attorney's Manual, explicitly limited the power of U.S. Attorneys to negotiate concerning deportation orders and stated that U.S. Attorneys should "be cognizant of the sensitive areas where plea agreements involve . . . deportation." Id. at 1070 n. 4. Here, the regulations describing the powers of the CIJ used broad rather than restrictive language, stating that the CIJ's powers "include, but are not limited to" certain enumerated duties. 8 C.F.R. § 1003.9 (2005). Further, in San Pedro, it would have been problematic for U.S. Attorneys to have been delegated deportation power, since that power had already been delegated to a different government entity. Here, on the other hand, there is no risk of opposing government entities' holding the same power and creating conflicting pronouncements. The CIJ and immigration judges operate within the same entity, the EOIR, and have aligned, rather than potentially adverse, interests. Because it would not be problematic or illogical for both the CIJ and the remaining immigration judges to conduct removal proceedings, there is not the same need for exact precision in a delegation that existed in San Pedro.
Officials must consider a multitude of issues in delegating authority and drafting regulations. Although they should make their best efforts to do so, they simply cannot anticipate every scenario that may arise or challenge that will be made. It is understandable that an official might take for granted something that is abundantly clear and that has long been understood to be the case. To hold that a delegation will always be ineffective where it does not spell out the obvious would place too onerous a burden on these officials and encourage parties to seek out the slightest of ambiguities in order to evade the law.
For the foregoing reasons, we deny the petition for review.
NOTES
[*] The Honorable William O. Bertelsman, Senior District Judge for the Eastern District of Kentucky, sitting by designation.
[1] Demjanjuk does not dispute that Creppy was appointed to serve in the EOIR, but contends that this appointment was made by the Director of the EOIR, rather than by the Attorney General. Demjanjuk notes that at one point in its decision, the BIA stated that the CIJ "is an attorney appointed by the Attorney General's designee (the Director of EOIR) as an administrative judge qualified to conduct removal proceedings." This contention overlooks the BIA's clear statement in the same paragraph that the CIJ "is an attorney whom the Attorney General appointed," and the contention is completely contrary to the evidence. While the BIA statement to which Demjanjuk points is not entirely clear, it appears to refer simply to the fact that a position description for Creppy, signed by the Director of the EOIR, stated that one of Creppy's responsibilities as CIJ was to conduct removal proceedings. The BIA took this description as evidence that Creppy was "qualified" to or "able to" preside over removal proceedings.
[2] When Creppy was appointed in 1994, § 1003.10 similarly provided that
Immigration judges shall exercise the powers and duties in this chapter regarding the conduct of exclusion and deportation hearings and such other proceedings which the Attorney General may assign them to conduct.
[3] In full, the regulation provided that
The Chief Immigration Judge shall be responsible for the general supervision, direction, and scheduling of the Immigration Judges in the conduct of the various programs assigned to them. The Chief Immigration Judge shall be assisted by Deputy Chief Immigration Judges and Assistant Chief Immigration Judges in the performance of his or her duties. These shall include, but are not limited to:
(a) Establishment of operational policies; and
(b) Evaluation of the performance of Immigration Courts, making appropriate reports and inspections, and taking corrective action where indicated.
8 C.F.R. § 1003.9 (2005).
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 01-1008
VELMA V. BANKS,
Plaintiff - Appellant,
versus
SAN-J INTERNATIONAL,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern Dis-
trict of Virginia, at Richmond. Robert E. Payne, District Judge.
(CA-00-184-3)
Submitted: September 25, 2001 Decided: October 15, 2001
Before MICHAEL, MOTZ, and KING, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Velma V. Banks, Appellant Pro Se. William Carter Younger, James
LeRoy Banks, Jr., MCGUIREWOODS, L.L.P., Richmond, Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Velma V. Banks appeals the district court’s order granting
summary judgment to the Defendant in her civil action. We have
reviewed the record and the district court’s opinion and find no
reversible error. Accordingly, we affirm on the reasoning of the
district court. Banks v. San-J Int’l, No. CA-00-184-3 (E.D. Va.
Nov. 29, 2000 & Jan. 18, 2001). We dispense with oral argument
because the facts and legal contentions are adequately presented in
the materials before the court and argument would not aid the
decisional process.
AFFIRMED
2
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NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
is not citable as precedent. It is a public record.
United States Court of Appeals for the Federal Circuit
05-3318
LINDA M. GOULDNER,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
________________________
DECIDED: April 10, 2006
________________________
Before RADER, SCHALL, and GAJARSA, Circuit Judges.
RADER, Circuit Judge.
The Merit Systems Protection Board (Board) affirmed the Office of Personnel
Management’s (OPM’s) reconsideration decision denying Ms. Gouldner’s application for
disability retirement under the Federal Employees Retirement System (FERS).
Gouldner v. Office of Pers. Mgmt., No. AT-844E-04-0150-I-1 (M.S.P.B. June 15, 2005)
(Board Opinion). Because this record shows no reversible errors, this court affirms.
I.
Ms. Gouldner was as a Finance Clerk, Level 6, with the United States Postal
Service until she resigned on April 3, 2005, following a criminal investigation for theft of
postal funds and property. On May 28, 2002, during investigation, she was placed on
leave without pay. During this time, Ms. Goulder applied for disability retirement
claiming an inability to work since June 2002 because of “depression, migraine
headaches, stress, anxiety, sleep disorder and paranoia.” In 1999, Ms. Gouldner’s
family physician, Dr. Thomas N. Anderson, diagnosed her as suffering from depression
and began treating her for anxiety and depression. In August 2002, Ms. Gouldner
began seeing Dr. Margaret R. Mortensen, Ph.D. in Clinical Psychology. Id. The reports
and testimony of Dr. Mortensen diagnosed Ms. Gouldner with major depression and
post-traumatic stress disorder due to family abuse.
On March 5, 2003, OPM denied Ms. Gouldner’s request for disability retirement
because she did not meet the disability eligibility requirements. Ms. Gouldner requested
reconsideration by OPM. After reconsideration, on October 20, 2003, OPM affirmed the
original decision. Ms. Gouldner proceeded to file an appeal with the Board. On March
26, 2004, the Board affirmed OPM’s decision and concluded that Ms. Gouldner did not
show that she is disabled from useful and efficient service. Board Decision, slip op. at
4. Ms. Gouldner has now filed a review with this court.
II.
This court possesses limited authority to review an appeal from the Board. The
Board’s decision must be affirmed unless it is: (1) arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law; (2) obtained without procedures
required by law, rule or regulation having been followed; or (3) unsupported by
substantial evidence. 5 U.S.C. § 7703(c) (2000); see Briggs v. Merit Sys. Protection
Bd., 331 F.3d 1307, 1311 (Fed. Cir. 2003). “Substantial evidence” is defined as “such
relevant evidence as a reasonable mind might accept as adequate to support a
05-3318 2
conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). This court cannot
review the factual underpinnings of a decision by OPM to deny an application for
disability retirement under FERS. Lindahl v. Office of Pers. Mgmt., 470 U.S. 768, 791
(1985). This court may only review the determinations in disability benefit cases to
ascertain whether “there has been a substantial departure from important procedural
rights, a misconstruction of the governing legislation, or some like error going to the
heart of the administrative determination.” Id. (citation and quotes omitted).
Ms. Gouldner primarily complains about the factual determinations made in the
denial of her application. This court cannot review those factual underpinnings of
OPM’s denial.
Ms. Gouldner has claimed that the Board did not take into account, or properly
weigh, evidence in her in favor. Again, this court cannot review these factual
considerations.
Ms. Gouldner also alleges that the Board did not consider some evidence that
would have aided her case. Ms. Gouldner does not explain or provide any proof that
any new evidence was rejected by the Board or ever provided at any stage of her
proceedings. Again, this court cannot review new evidence. In any event, Ms.
Gouldner’s allegation is insufficient to demonstrate a reversible error.
Ms. Gouldner claims that the Board incorrectly based its decision on the
assumption that she wrote her petition to the Board. Id. Even assuming that the Board
made an incorrect assumption, the Board’s decision is, nevertheless, supported by
substantial evidence. The Board stated Ms. Gouldner “failed to show that she could not
perform the duties of her position as a result of those disorders or that she is otherwise
05-3318 3
generally foreclosed from employment as a result of those disorders.” Board Decision,
slip op. at 5. The Board also noted that Dr. Mortensen did not foreclose Ms. Gouldner’s
return to work or testify that the disability was permanent. Id. Additionally, the Board
pointed out that Ms. Gouldner was employed at the time of the decision. Id. Finally, the
Board’s reference to “the writer” of Ms. Gouldner’s petition was not a basis for its
decision, but was merely a passing comment, as shown by the fact that this comment
begins with “further;” follows many pages of the Board’s factual findings; and also
follows a lengthy paragraph that contains the Board’s determination with its many bases
therefor. Id. As a result, substantial evidence supports the Board’s decision.
Because Ms. Gouldner has not demonstrated any substantial departure from
important procedural rights, any misconstruction of the governing legislation, or any
error going to the heart of the administrative determination, this court affirms.
05-3318 4
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137 Ariz. 90 (1983)
669 P.2d 68
STATE of Arizona, Appellee,
v.
Dennis Earl ROUTHIER, Appellant.
No. 5390.
Supreme Court of Arizona, En Banc.
July 6, 1983.
Rehearing Denied September 13, 1983.
*92 Robert K. Corbin, Atty. Gen. by William J. Schafer III, Gerald R. Grant, Asst. Attys. Gen., Phoenix, for appellee.
Ross P. Lee, Maricopa County Public Defender by Robert D. Bohm, Terry J. Adams, Phoenix, for appellant.
HOLOHAN, Chief Justice.
A jury found appellant, Dennis Earl Routhier, guilty of first degree murder and attempted first degree murder. He was sentenced to death on the first degree murder charge and to 21 years on the charge of attempted first degree murder. Appellant appeals these convictions and sentences. We have jurisdiction of this case pursuant to Arizona Const. art. 6 § 5 and A.R.S. § 13-4031.
*93 The appellant raises seven issues on appeal but we believe the answers to the following questions will be dispositive of the appeal:
1. Whether the scope of the prosecutor's cross-examination of the appellant violated his fifth and fourteenth amendment rights.
2. Whether photographs of the deceased and a bloody shirt were erroneously admitted into evidence.
3. Whether the trial court erred in not granting appellant's motion for acquittal on the count of attempted murder.
The following facts are necessary for a resolution of the issues presented.
On the morning of September 20, 1980, Lawrence Barrick and his son, Robert, stopped the vehicle in which they were travelling to aid a man who had flagged them down. Dennis Earl Routhier, appellant, told the Barricks he was having trouble with his truck. The Barricks drove the appellant to his truck, which was parked some distance off the main road. When the three men arrived at the truck, a '56 Chevy, the appellant stated he would make one more attempt to start it. The truck started unaided. The three men then sat on the tailgate of the Barricks' truck and drank some beer.
After finishing their beer, the Barricks drove to a friend's house. The appellant was invited to follow them in his own truck, and he did. The Barricks' friend was not at home so they decided to drive out to Roosevelt irrigation canal and take a swim. The appellant followed the Barricks to the canal.
Robert Barrick jumped into the canal and swam for five to ten minutes. As Robert began to climb out of the canal, the appellant approached him and hit him in the head with a hammer. Robert was cut and knocked unconscious for a few seconds. He testified that appellant asked him if he had any money, to which Robert replied "No." Appellant then instructed Robert to get out of the canal or his father would be harmed. At this point Robert noticed that his father was slumped over on the ground by his truck. Robert climbed the opposite bank of the canal and ran to the nearby freeway to summon help.
Meanwhile, the appellant sped away in his truck. When the police arrived at the scene, they found Lawrence Barrick beaten and bleeding profusely from the head and neck. He died soon afterwards. Medical testimony revealed that he died of multiple wounds inflicted by a blunt instrument.
Later that afternoon, police apprehended the appellant after a high speed chase on the freeway. The chase terminated when the appellant's truck swerved into a semitruck and rolled off the freeway. The appellant was taken into custody and admitted to Good Samaritan Hospital for treatment of head and leg injuries.
Appellant's testimony at trial was that he killed Lawrence Barrick in self-defense. He claimed that Barrick attacked him without reason and appellant only used his hammer when Barrick tried to gouge his eye out. Additional facts pertinent to questions raised by the appellant will be discussed as necessary.
HOSPITAL STATEMENTS
On the morning of September 21, 1980, Detective Barber of the Phoenix Police Department visited the appellant at Good Samaritan Hospital. The appellant was informed of his rights to silence and to the services of an attorney. He stated that he understood his rights and was willing to submit to questioning. Appellant signed a waiver of rights card, and the interrogation began. During the interrogation the appellant indicated that he remembered meeting an old man and his son, having a disagreement with the old man and hitting both individuals with his fists. When asked by Detective Barber whether he had used a hammer, the appellant stated *94 that he may have been mad enough to use one, but he did not believe that he had. Detective Barber then asked the appellant to elaborate on specific details, but the appellant stated that he wanted to speak with an attorney. At that point, the questioning ceased.
Three days after the first interview at Good Samaritan Hospital, before counsel had been provided him, the appellant was interrogated a second time by a Detective Locksa. The interrogation was conducted at the detention ward of Maricopa County Hospital, where the appellant had been transferred from Good Samaritan Hospital. Detective Locksa had been advised by Detective Barber of the appellant's previous request for counsel. The appellant was again informed of his rights to silence and legal representation. Detective Locksa further told the appellant that he did not want to discuss the Barrick homicide but that he wanted to discuss two unrelated homicide cases. The appellant stated that he was willing to talk to the detective. In response to Detective Locksa's questions regarding these unrelated homicides, the appellant implicated himself in the Barrick homicide. His precise words were, "I have never done anything like this before. The only reason I did what I did is that I was totally shitfaced, I probably would not have even hit the old man if it hadn't been for his big mouth."
The appellant was charged by indictment with having committed first degree murder and attempted first degree murder. Subsequently, pursuant to a plea agreement, the appellant appeared before the superior court to enter a no contest plea. At the hearing on the no contest plea a set of police reports and the medical examiner's report were admitted into evidence to establish a factual basis for the plea.
Before the plea was accepted by the superior court, the appellant asked to withdraw the plea. The request was granted, and the case was transferred to another superior court judge.
Prior to trial, the appellant moved to suppress all of his hospital statements[1] on the grounds that they were involuntary due to appellant's physical condition at the time of interview. No mention was made of the appellant's request for counsel in his motion to suppress or at the voluntariness hearing. Both Detectives Barber and Locksa testified at the voluntariness hearing and neither one mentioned the appellant's request for counsel. The appellant's motion to suppress his statements was denied. The trial court found that the statements were voluntarily made after the appellant had waived his constitutional rights.
At trial, when the appellant was being cross-examined, the fact of his request for counsel was brought out by the prosecution. At that point defense counsel made a motion to preclude any questioning of the appellant regarding statements made by him during the second interview on the grounds of inadequate showing of Miranda[2] compliance. The trial judge denied the motion stating that he had already ruled that the statements were voluntary and admissible. Defense counsel, however, did not make any motion concerning the cross-examination of appellant on matters to which he had invoked his right to silence and counsel.
The prosecutor then questioned the appellant on the substance of his incriminating statement to Detective Locksa. Specifically, the prosecutor read the statement in court and asked the appellant if he remembered making it. The appellant stated he did not remember making such a statement.
Detective Barber was recalled by the state in rebuttal, and he testified that the appellant had invoked his right to counsel during the first interview at Good Samaritan Hospital and that he told Detective Locksa before Locksa interviewed the appellant a second time, that the appellant had previously invoked his right to counsel. Detective Locksa testified that Detective Barber had, in fact, informed him that the appellant requested an attorney when Barber was interviewing the appellant.
*95 Appellant challenges the admission of his hospital statements.
THE DOYLE ISSUE
The appellant argues that he was denied due process by the prosecutor's reference to his post-arrest silence. During cross examination of appellant the following testimony was elicited.
Q. [by the prosecutor] But you don't remember that you had told them that it was possible that you used a hammer?
A. Oh, yes, I think I might have told them it was possible I might have.
Q. But you didn't tell them that the man had been gouging your eye out, did you?
A. I don't recall. I don't think so. I don't think I'd want to tell them that.
Q. Why not?
A. Well, after I found out where I was and what I was you know, the situation I was in, I wanted to speak to a lawyer. I do recall asking him that or telling him that not him, but the other officer I talked to. I do recall saying I'd just as soon speak to an attorney, yes. I did hit the man, that's all I recall saying. However I put it, that's exactly what I meant out of it was, yes, I did hit the man, and, yes, I'd like to see an attorney. They proceeded asking questions after I told them I wanted to see an attorney and kept on and on. What they got off that, I don't know. I'm sure it was just, you know, to show them that I was not gonna talk anymore.
Q. But at that time you at no point mentioned any kind of self-defense?
A. I don't think so. No, I didn't discuss any of the details with them.
The State also brought out in its case in chief on redirect examination of Detective Barber the following:
Q. BY MR. HOTHAM [the prosecutor]: Mr. Bohm [defense counsel] asked you whether it wasn't a fact that the defendant admitted to you that he had struck an older man and a younger man, is that correct?
A. That's correct.
Q. The did the defendant tell you anything about the victim coming at him?
A. The defendant made no mention at all of the victim attacking him or approaching him in any manner to me.
Q. Did he tell you anything about the victim threatening him?
A. No, he did not.
Q. Did he tell you anything about the victim having a gun?
A. No, he did not.
Q. All he stated to you was that he remembers striking both the older man and the younger man, but thought it was with his fists, and then he might have been mad enough to pick up a hammer, but he did not recall doing that; is that correct?
A. That's correct.
Initially, we note that defense counsel made no objection to any of the questioning now being challenged. Although objection is usually required to preserve a question for appeal, an objection is not necessary in the case of fundamental error. State v. Navarre, 132 Ariz. 480, 647 P.2d 178 (1982). Because appellant asserts that fundamental error was committed in this case and we are obligated to review the record for such error, State v. Post, 121 Ariz. 579, 592 P.2d 775 (1979), we address appellant's contention that his post arrest right to silence was violated.
The United States Supreme Court has ruled that a defendant cannot be impeached by his post-arrest silence after being read his Miranda warnings. Doyle v. Ohio, 426 U.S. 610, 96 S.Ct. 2240, 49 L.Ed.2d 91 (1976); see Fletcher v. Weir, 455 U.S. 603, 102 S.Ct. 1309, 71 L.Ed.2d 490 (1982). This ruling is consistent with Arizona case law which has established that a defendant's silence at the time of arrest cannot be used against him as inconsistent with testimony given at trial. State v. Anderson, 110 Ariz. 238, 517 P.2d 508 (1973); State v. Shing, 109 Ariz. 361, 509 P.2d 698 (1973); see State v. Ward, 112 Ariz. 391, 542 P.2d 816 (1975). These decisions are grounded on the principle that the Miranda warnings implicitly *96 assure a person that the exercise of his rights carries no penalty and cannot be used against him. See Doyle v. Ohio, supra.
The State argues that the above rationale does not apply in this case because appellant waived his constitutional rights. While it might be true that appellant signed a waiver of rights card at the beginning of the interview with Detective Barber, appellant was not inextricably bound by that waiver. As stated in Miranda:
Once warnings have been given, the subsequent procedure is clear. If the individual indicates in any manner, at any time prior to or during questioning, that he wishes to remain silent, the interrogation must cease.
* * * * * *
Moreover, where in-custody interrogation is involved, there is no room for the contention that the privilege is waived if the individual answers some questions or gives some information on his own prior to invoking his right to remain silent when interrogated. Miranda v. Arizona, 384 U.S. at 473-74, 475-76, 86 S.Ct. at 1627-1628.
In this case it is clear that, although appellant initially waived his rights, he subsequently reinvoked those rights by requesting an attorney. Detective Barber in fact testified that he understood appellant was invoking his rights and ceased questioning. Appellant's express invocation of his rights, as well as his failure to make a complete statement or to answer particular questions, distinguishes this case from, e.g., State v. Reinhold, 123 Ariz. 50, 597 P.2d 532 (1979); State v. Tuzon, 118 Ariz. 205, 575 P.2d 1231 (1978) and State v. Raffaele, 113 Ariz. 259, 550 P.2d 1060 (1976). While it was permissible for the prosecutor to question the appellant and Detective Barber on matters which the appellant had volunteered prior to reinvoking his rights, it was impermissible to ask questions on matters about which the appellant had not made any comment or given any information. In doing so, the State violated appellant's fifth amendment right to silence.[3]
FUNDAMENTAL ERROR
Since the violation of appellant's constitutional rights constituted fundamental error, the remaining issue is whether the error was harmless. State v. Anderson, supra. From a review of the record we cannot say that the error was harmless beyond a reasonable doubt.
Since the case must be retried it is necessary to address several issues.
THE SECOND STATEMENT
The incriminating remarks to Detective Locksa were not offered in the state's case in chief. The statement was brought out by the state in its cross-examination of the defendant. Since no cautionary instructions were given by the trial judge, the jury was free to consider the statement of appellant to Locksa as evidence of guilt.
Appellant argues that the testimony of Detective Locksa should not have been admitted because it was obtained after the appellant had requested the assistance of counsel. The appellant relies on Edwards v. Arizona, 451 U.S. 477, 101 S.Ct. 1880, 68 L.Ed.2d 378 (1981).
The State contends, however, that Edwards v. Arizona, supra, is inapplicable to the case at bar. It argues that Edwards only spoke to waiver of counsel pursuant to reinterrogation on the same offense, whereas the appellant in the instant case was reinterrogated on other matters.
The precise issue that this court must decide is whether appellant's fifth and fourteenth amendment rights were violated when he was questioned about two unrelated homicides after having asserted a right to counsel incident to the Barrick homicide. We decide today the issue left open in State v. Hensley, No. 5556, 669 P.2d 58 (Ariz. filed June 30, 1983).
The State argues that Michigan v. Mosley, 423 U.S. 96, 96 S.Ct. 321, 46 L.Ed.2d 313 *97 (1975), controls this issue. In Mosley, the U.S. Supreme Court considered the propriety of questioning a suspect about one crime after the suspect had invoked his right to remain silent when he was questioned earlier about an unrelated crime. The Court held that a reinterrogation is not a violation of a suspect's fifth amendment right to silence where the invocation of that right is "scrupulously honored." Id., at 104, 96 S.Ct. at 326. The Court found that the resumption of interrogation about an unrelated offense was not inconsistent with Mosley's earlier refusal to answer any questions. Id. at 105, 96 S.Ct. at 327.
Michigan v. Mosley, supra, however, did not address the procedures to be followed after a defendant invokes his right to counsel. The majority opinion in Mosley meticulously distinguished the right to silence from the right to counsel: "The present case does not involve the procedures to be followed if the person in custody asks to consult with a lawyer, since Mosley made no such request at any time." Id., at 101, n. 7, 96 S.Ct. at 325. And again: "[T]he Court in Miranda ... distinguished between the procedural safeguards triggered by a request to remain silent and a request for an attorney and directed that `the interrogation must cease until an attorney is present' only `[i]f the individual states that he wants an attorney. 384 U.S. at 474, 86 S.Ct. 1628.'" Id. at 104, n. 10, 96 S.Ct. at 326.
The procedures governing the reinterrogation of a suspect after he invokes his right to counsel were detailed by the Supreme Court in Edwards v. Arizona, supra. In Edwards, the defendant was reinterrogated after previously invoking his right to counsel in an earlier interview. The Supreme Court determined that Edwards' confession, given during the second custodial interrogation, was inadmissible. The court stated:
we now hold that when an accused has invoked his right to have counsel present during custodial interrogation, a valid waiver of that right cannot be established by showing only that he responded to further police-initiated custodial interrogation even if he has been advised of his rights. We further hold that an accused, such as Edwards, having expressed his desire to deal with the police only through counsel, is not subject to further interrogation by the authorities until counsel has been made available to him, unless the accused himself initiates further communication, exchanges or conversations with the police. 451 U.S. at 484-85, 101 S.Ct. at 1884-1885 (footnote omitted).
The only difference between Edwards and the appellant is that Edwards was questioned about the same offense after a request for counsel while the appellant was reinterrogated about an unrelated offense. We do not believe that this factual distinction holds any legal significance for fifth amendment purposes.
The language of Edwards is unequivocal; an accused who has asserted his right to counsel "is not subject to further interrogation by the authorities until counsel has been made available to him." 451 U.S. at 485, 101 S.Ct. at 1885. The rule prohibits "further interrogation." Nowhere in Edwards does the majority indicate that reinterrogation of the accused is permissible if the authorities merely shift the line of questioning to other matters or unrelated offenses. Such a rule would render the Edwards opinion meaningless and invite the ingenious officer to invent new schemes to produce colorable waivers of the fifth amendment rights.
The assertion of the right to counsel is an expression by the accused that he is not competent to deal with the authorities without legal advice.[4] See Edwards v. Arizona, supra. The resumption of questioning *98 in the absence of an attorney after an accused has invoked his right to have counsel present during police interrogation strongly suggests to an accused that he has no choice but to answer. Thus, "a later decision at the authorities' insistence to make a statement without counsel's presence may properly be viewed with skepticism." Michigan v. Mosley, 423 U.S. at 111, n. 2, 96 S.Ct. at 329 (White, J., concurring).
We therefore hold that, after requesting counsel during the initial interrogation, the appellant should not have been subjected three days later to interrogation which he did not initiate, without counsel having been made available to him.
Regarding the statement to Locksa, we note that it was admitted as impeachment evidence on cross examination of the appellant rather than in the State's case in chief. In Harris v. New York, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1 (1971), the U.S. Supreme Court held that a Miranda violative statement that is inadmissible against a defendant in the prosecution's case in chief, may, if its trustworthiness satisfies legal standards, be used for impeachment purposes to attack the credibility of the defendant. The State contends that the remarks to Locksa were properly admitted to attack the appellant's credibility by cross-examining him on the inconsistencies between his hospital statement to Detective Locksa and his statements at trial.
In State v. Swinburne, 116 Ariz. 403, 569 P.2d 833 (1977), we stated:
In Oregon v. Hass, 420 U.S. 714, 95 S.Ct. 1215, 43 L.Ed.2d 570 (1975), the Supreme Court held admissible for impeachment purposes inculpating post-arrest statements of the defendant made after he had been given his Miranda rights and exercised his right to request a lawyer, but before he had been furnished with counsel. The court said that evidence which is otherwise inadmissible against the defendant in the prosecution's case in chief is not barred for all purposes, provided that "the trustworthiness of the evidence satisfies legal standards." 420 U.S. at 721, 95 S.Ct. at 1221, 43 L.Ed.2d at 577. State v. Swinburne, supra, 116 Ariz. at 412, 569 P.2d at 842.
It is clear, therefore, that statements obtained in violation of an accused's fifth amendment right to counsel may be used for impeachment purposes to attack the credibility of the accused. See State v. Swinburne, supra, and Oregon v. Hass, supra. In the instant case, however, the jury was not instructed as to the restricted and limited purpose for which the statements could be considered, namely, impeaching the appellant's credibility. In both Harris and Hass the federal supreme court carefully noted that specific instructions were given to the jury concerning the limited purpose for the use of such testimony.
In the event of retrial the statement to Locksa may be used by the state for impeachment, but proper instructions to the jury must be given to limit the use of such testimony to the issue of credibility of appellant and not as evidence of guilt.
EVIDENTIARY ISSUE
Appellant contends that the trial court erred in admitting into evidence photographs of the victim and a bloody shirt found at the scene. He argues that these items had no probative value, were highly prejudicial, and their admission only served to inflame the jury.
Evidence which may tend to incite the jury's emotions is admissible if it is relevant and if its probative value outweighs the danger of unfair prejudice created by its admission. State v. Chapple, 135 Ariz. 281, 660 P.2d 1208 (Ariz., 1983); State v. Gerlaugh, 134 Ariz. 164, 654 P.2d 800 (1982); Rule 403, Ariz.R. of Evid., 17A A.R.S. In making this determination, the court will look to the purpose of the offer. State v. Chapple, supra. Photographs are admissible to identify the victim, to illustrate how the crime was committed, to aid the jury in understanding testimony, and to show the location of the wounds. State v. Navarre, 132 Ariz. 480, 647 P.2d 178 (1982); State v. Vickers, 129 Ariz. 506, 633 P.2d 315 (1981). The purpose for which the photographs *99 are admitted must, however, be a contested issue. State v. Chapple, supra.
In the instant case, the photographs showed the location and extent of the victim's wounds. Because the appellant asserted self defense at trial, the location of the wounds was evidence to contradict appellant's story and to support the state's theory of how the homicide was committed. See State v. Gretzler, 126 Ariz. 60, 612 P.2d 1023 (1980). The wounds found on the victim's hands and in the back of his head are probative evidence that the defendant was not acting in self defense and that the victim may not have been lying down during the attack, as appellant testified. The extent of the wounds also tends to show that the appellant was not acting in self defense. Furthermore, the photographs aided the jury in understanding the pathologist's testimony as to the wounds on the victim. See State v. Navarre, supra.
Trial courts have great discretion in the admission of photographs. State v. Schad, 129 Ariz. 557, 633 P.2d 366 (1981); State v. Clark, 126 Ariz. 428, 616 P.2d 888, cert. denied, 449 U.S. 1067, 101 S.Ct. 796, 66 L.Ed.2d 612 (1980). This discretion will not be disturbed unless it has been clearly abused. State v. Gerlaugh, supra. Although the photographs are of the type that may arouse the emotions of some jurors, we cannot conclude that the trial court abused its discretion in finding that the probative value of the photographs outweighed the danger of unfair prejudice attendant to their admission. We find no error.
As to the shirt, however, we agree with the appellant that its admission was error. The State argues that the shirt also corroborated its theory of the murder and, therefore, is admissible. The shirt by itself, however, proves nothing. It is only its location and condition after the murder that is relevant to the State's case. The admission of gruesome objects when they add nothing to the evidence to be considered by the jury and serve no other purpose than to inflame the jury is error, State v. Steele, 120 Ariz. 462, 586 P.2d 1274 (1978), and we so find in this case.
ATTEMPTED MURDER CHARGE
The appellant finally contends that the trial court erred in failing to grant his motion for judgment of acquittal on the count of attempted murder.
The standard of review to test the sufficiency of evidence on appeal is whether there exists substantial evidence from the entire record from which a rational trier of fact could have found guilt beyond a reasonable doubt. State v. Tison, 129 Ariz. 546, 633 P.2d 355 (1981); State v. Schad, 129 Ariz. 557, 633 P.2d 366 (1981), cert. denied, 455 U.S. 983, 102 S.Ct. 1492, 71 L.Ed.2d 693 (1982). The evidence will be reviewed in the light most favorable to sustaining the verdict and all reasonable inferences will be resolved against a defendant. State v. Tison, supra; State v. Hall, 129 Ariz. 588, 589, 633 P.2d 397 (1981).
To sustain a conviction for attempted murder, the evidence must show some overt act or steps taken toward the commission of the crime and an intent to commit the crime. State v. Savchick, 116 Ariz. 278, 569 P.2d 220 (1977); State v. Mandel, 78 Ariz. 226, 278 P.2d 413 (1954); A.R.S. § 13-1001(A)(2). Criminal intent, being a state of mind, is shown by circumstantial evidence. Defendant's conduct and comments are evidence of his state of mind. State v. Vann, 11 Ariz. App. 180, 463 P.2d 75 (1970).
The record reveals that as Robert Barrick was getting out of the canal, he was hit in the head with a hammer by the defendant. According to Barrick's testimony, he was "knocked out" for a few seconds and floated down the canal, during which time appellant followed alongside the canal. Routhier asked Barrick if he had any money and ordered him out of the canal with the threat that if he did not do so, Routhier would hurt his father. Barrick got out on the opposite side of the canal and climbed up to the freeway to summon help. As he did so, appellant continued to yell at Barrick to "get over there."
*100 There is substantial evidence that appellant performed an overt act toward the commission of the crime. The appellant struck Barrick in the head, a vital area of the body, with a dangerous instrument. There is also evidence from which a rational trier of fact could have found that the appellant had the requisite intent to be guilty of attempted murder. Appellant had just severely beaten Lawrence Barrick. He followed Robert Barrick along the canal and ordered him to get out after once hitting him with the same instrument that killed his father. While the evidence is not overwhelming, it is substantial. See State v. Tison, supra; State v. Bearden, 99 Ariz. 1, 405 P.2d 885 (1965). We find no error.
The conviction for first degree murder and for attempted first degree murder are reversed and the case remanded to the superior court for a new trial.
GORDON, V.C.J., and HAYS, CAMERON and FELDMAN, JJ., concur.
NOTES
[1] Those made during the first interview at Good Samaritan Hospital to Detective Barber and those made during the second interview at the County Hospital to Detective Locksa.
[2] Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).
[3] Because we are remanding for a new trial, we do not feel it is necessary to analyze the references made to appellant's silence in the prosecutor's closing argument.
[4] In contrast, the U.S. Supreme court has stated that the assertion of the right to silence is merely an expression of the accused's desire to cut off questioning with respect to a specific subject. The lines of communication between the accused and the authorities remain open, as the accused has chosen to make his own decisions in regards to future police interrogation. See Michigan v. Mosley, supra.
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750 N.E.2d 739 (2001)
322 Ill. App.3d 514
255 Ill.Dec. 822
The ESTATE OF Norma PRICE, Deceased, Plaintiff-Appellant,
v.
UNIVERSAL CASUALTY COMPANY, Defendant-Appellee.
No. 1-00-1412.
Appellate Court of Illinois, First District, First Division.
May 14, 2001.
*740 Arthur H. Levinson & Associates, P.C., Chicago (Arthur H. Levinson, of counsel), for Appellant.
Beermann, Swerdlove, Woloshin, Barezky, Becker, Genin & London, Chicago (Alvin R. Becker and Ninnette G. Karg, of counsel), for Appellee.
Justice FROSSARD delivered the opinion of the court:
Plaintiff, the estate of Norma Price, appeals the trial court's denial of her cause of action under section 155 of the Insurance Code (215 ILCS 5/155 (West 1998)) against defendant, Universal Casualty Company. Plaintiffs decedent (Norma) was involved in a hit-and-run accident and obtained an arbitration award for uninsured motorists benefits. After defendant refused to pay the arbitration award, plaintiff brought this complaint to confirm the arbitration award and for section 155 damages. Plaintiffs complaint alleged that "Universal's conduct in this cause in failing to seek judicial determination of coverage disputes prior to the arbitrator [sic], in failing to participate in the arbitration[,] and failing and refusing to pay said award in full and in a timely manner, despite repeated demands for payment of same, amount to vexatious and unreasonable conduct within the meaning of [section 155]." On appeal, plaintiff argues that the trial court's denial of her section 155 claim is against the manifest weight of evidence.
Initially, we note that plaintiff mainly relied on documentary evidence to establish a section 155 violation. Although the trial court initially denied plaintiff's *741 counsel's request to admit into evidence documents that he received pursuant to a request to produce, the court allowed plaintiffs counsel to admit into evidence original documents from defendant's claim file. In addition, the court allowed plaintiff to call defendant's claim manager, who testified that these documents were contained in defendant's file and maintained in the ordinary course of business. The court also admitted into evidence correspondences between the parties' counsel. Finally, the court either took judicial notice of or, without any objection, admitted into evidence several court orders.
The documentary evidence established that on January 30, 1997, Norma was in a motor vehicle accident and sustained personal injuries. Norma reported the claim to defendant on February 4, 1997, and defendant described the accident in its claim form as a "Hit & Run." On September 17, 1998, defendant's claims manager wrote "this is a one-vehicle accident where our insured apparently claimed that they [sic] were cut-off by an unknown vehicle and forced into a wall resulting in an impact with a fixed object." Defendant's claims manager further wrote that the police report did not mention that Norma came in contact with an uninsured vehicle and that he was waiting to raise that issue until Norma gave a sworn statement. Defendant's claims manager additionally wrote that a report in the file indicated that Norma sustained a broken wrist and herniated disk.
The case was scheduled for arbitration. On February 1, 1999, defendant moved to stay the arbitration, which the circuit court denied in case number 98 CH 13682. On February 22, 1999, the arbitrator then found in favor of Norma and awarded her $20,000, the limits of her insurance policy. On March 2, 1999, plaintiff filed this action. On August 19, 1999, the trial court granted plaintiffs motion for summary judgment to confirm the arbitration award. The court ordered defendant to pay plaintiff $20,000, costs, and interest from the date of the award. Defendant then offered to settle with plaintiff for $15,000 and told plaintiffs counsel that if plaintiff did not accept the offer, defendant would appeal.
On September 24, 1999, plaintiffs counsel wrote to defendant's counsel to determine the status of the case. Plaintiffs counsel noted that he had left telephone messages on September 22, 23 and 24, 1999, which had not been returned. Plaintiffs counsel gave defendant until September 29, 1999, to make full payment of the judgment or plaintiff would start collection proceedings. On September 30, 1999, defendant delivered to plaintiffs counsel a check for $20,450. In an attached letter, defendant's counsel recognized that plaintiffs counsel "may have calculated interest and costs differently." Defense counsel explained that if his calculations were less than plaintiffs, he would "deliver a check for the balance upon your notification."
On September 30, 1999, plaintiffs counsel responded that the total due to plaintiff, including interest from the date of the arbitration award until September 30, 1999, and costs was $21,329. Plaintiffs counsel, therefore, requested defendant to pay an additional $829 to satisfy the judgment. On October 8, 1999, defense counsel responded that "[defendant] will not be paying interest from the date of the arbitration award." Defense counsel further stated that plaintiff brought the declaratory action at her own "peril." Defense counsel offered to "listen" if plaintiff revised her demand. Plaintiff then instituted garnishment proceedings, and on November 18, 1999, the court ordered defendant's garnishee to pay plaintiff $929.
*742 After plaintiff rested, defendant moved for a directed finding. The court ruled that it had been presented with no "real evidence in the court's view that would substantiate the claim of vexatious interruption and delay in a trial." Despite this finding, the court discussed the nature of the evidence before it. The court believed that defendant was "aggressive" and that delay could be inferred from the documents. The court, however, believed that some of the delay could also be attributed to plaintiff. The court also found some "vexation" but attributed this to the nature of the contested litigation. The court, therefore, granted defendant's motion for a directed finding. This appeal followed.
As defendant correctly notes, the trial court granted defendant's motion for a directed finding pursuant to section 2-1110 of the Code of Civil Procedure. 735 ILCS 5/2-1110 (West 1998). Section 2-1110 allows a defendant to move for a finding in the defendant's favor at the close of plaintiffs case. It further states: "In ruling on the motion the court shall weigh the evidence, considering the credibility of the witnesses and the weight and quality of the evidence." 735 ILCS 5/2-1110 (West 1998). Under this section, the court conducts a two-part analysis. First, it determines whether plaintiff has presented a prima facie case, and, if not, it enters judgment in favor of the defendant. In re Estate of Goldstein, 293 Ill.App.3d 700, 709, 227 Ill.Dec. 991, 688 N.E.2d 684 (1997). If the court finds that plaintiff has presented a prima facie case, the court then considers the general weight and quality of the evidence before it, including evidence favorable to the defendant. In re Estate of Goldstein, 293 Ill.App.3d at 709, 227 Ill.Dec. 991, 688 N.E.2d 684. After weighing this evidence, the court applies the standard of proof required for the underlying case to determine whether sufficient proof remains to sustain plaintiffs prima facie case. Wehde v. Regional Transportation Authority, 237 Ill.App.3d 664, 676, 178 Ill.Dec. 190, 604 N.E.2d 446 (1992). If the court finds insufficient proof to satisfy the required burden of proof, the court should grant the motion and enter judgment against the plaintiff. Wehde, 237 Ill.App.3d at 676, 178 Ill.Dec. 190, 604 N.E.2d 446. The trial court's decision under the second part of this analysis will not be disturbed unless it is against the manifest weight of the evidence. Evans v. Gurnee Inns, Inc., 268 Ill.App.3d 1098, 1102, 206 Ill.Dec. 551, 645 N.E.2d 556 (1994).
In this case, the record indicates that the trial court weighed and evaluated plaintiffs evidence. After defendant moved for a directed judgment, the court indicated that it "was leaning towards entering a judgment for the time" defendant delayed in paying the arbitration award. However, after reviewing plaintiffs counsel's affidavit detailing the time he spent on the case, the court noted that plaintiff filed a garnishment proceeding before receiving defendant's letter that disputed the amount of interest defendant owed. Therefore, based on the court's oral ruling and its discussion of the evidence, the court determined that plaintiff satisfied her prima facie case but provided insufficient "competent" evidence to satisfy her burden of proof. We, therefore, must determine if the court's finding that plaintiff did not meet her burden of proof to establish a violation of section 155 is against the manifest weight of evidence.
To determine whether the insurer's conduct was vexatious and unreasonable, the court should consider "the insurer's attitude, whether the insured was forced to file suit to recover, and whether the insured was deprived of the use of its property." Mobil Oil Corp. v. Maryland *743 Casualty Co., 288 Ill.App.3d 743, 752, 224 Ill.Dec. 237, 681 N.E.2d 552 (1997). Section 155 is also intended to prevent the insurer from using its superior financial position to profit at the insured's expense. Valdovinos v. Gallant Insurance Co., 314 Ill.App.3d 1018, 1022, 248 Ill.Dec. 211, 733 N.E.2d 886 (2000). A trial court must consider the insurer's conduct in the totality of the circumstances. Marcheschi v. Illinois Farmers Insurance Co., 298 Ill. App.3d 306, 232 Ill.Dec. 592, 698 N.E.2d 683 (1998). In addition, when there is a bona fide dispute as to whether an insurance policy was in effect at the time of the loss, an insurer may delay in paying the claim. Peerless Enterprise, Inc. v. Kruse, 317 Ill.App.3d 133, 145, 250 Ill.Dec. 519, 738 N.E.2d 988 (2000).
Plaintiff asserts that its documentary evidence establishes unreasonable and vexatious delay. Plaintiff cites the following conduct: defendant moved to stay the arbitration; defendant then refused to pay the award, requiring plaintiff to file suit; when the trial court confirmed the arbitration award, defendant neither appealed the trial court's judgment nor paid within 30 days of the judgment; and to recover the full amount of the court's judgment, plaintiff was required to initiate collection proceedings. A review of the documents plaintiff submitted provides evidence that defendant's action and delay in either settling or paying the claim was unreasonable and vexatious. Specifically, defendant's attitude was to delay settlement and payment of this claim; defendant required plaintiff to bring suit; defendant did not offer any settlement until the trial court ruled against it; and defendant refused to comply with the court's order awarding plaintiff interest from the date of the arbitration award. We believe that, under the totality of circumstances, plaintiffs documentary evidence established sufficient unreasonable delay and vexatious conduct to support a claim under section 155.
The trial court, in fact, acknowledged delay and vexatious conduct. Plaintiff filed suit because defendant refused to arbitrate plaintiffs dispute or accept the arbitration award. When the trial court confirmed the arbitration award and ordered defendant to pay interest, defendant did not submit payment or appeal the award within 30 days. Defendant eventually paid part of the judgment but only after plaintiffs counsel demanded payment and indicated the intent to initiate collection proceedings. After plaintiffs counsel told defendant's counsel that it had not paid the full judgment, defense counsel responded that it would "not be paying interest from the date of the arbitration award." That response directly contradicted the earlier court order requiring defendant to pay interest from the date of the award. Therefore, although defendant did not appeal the trial court's award of interest, it still refused to pay interest and required plaintiff to initiate collection proceedings. The record reflects sufficient competent evidence that defendant's conduct caused unreasonable delay.
Relying on the affidavit from plaintiffs counsel regarding his fees for representing plaintiff, the trial court concluded that plaintiffs counsel initiated collection proceedings before he gave defendant an opportunity to pay the judgment. This conclusion was erroneous for two reasons. First, the affidavit was offered only to establish the fees of plaintiffs counsel for damage purposes. Recognizing this purpose, the trial court reserved ruling on the admissibility of the affidavit. Second, the record reflects that plaintiff did not initiate garnishment proceedings until October 12, 1999. By that time, 43 days had passed since the trial court issued its judgment. Moreover, defendant had informed plaintiff on October 8, 1999, that it would not *744 comply with the judgment and pay interest from the date of the arbitration hearing. As noted above, defendant's initial insistence on not paying the arbitration award and later refusal to pay the interest left plaintiffs counsel with little choice but to initiate collection proceedings.
Defendant argues that it made a reasonable attempt to investigate the claim, but plaintiff prevented it from completing this investigation. Even if true, this does not excuse defendant's conduct in refusing to pay the arbitration award, requiring plaintiff to file suit, and then refusing to pay the court's judgment. In any event, defendant offers little evidence that it reasonably attempted to investigate the claim. It only cites two letters that it sent to plaintiffs counsel requesting evidence of damages to plaintiffs car, plaintiffs sworn statement, and evidence of medical damages. Defendant claims that plaintiff did nothing in response to these letters. Defendant, however, points to no specific evidence that plaintiffs counsel did not comply with defendant's attempt to investigate the claim. On May 19, 1998, plaintiffs counsel demanded arbitration and settlement of the cause for the policy limits of the insurance policy. On July 24, 1998, plaintiffs counsel again demanded arbitration and requested that defendant contact his office to set a date for the sworn statement. On September 28, 1998, defendant admits in a letter that it received plaintiffs request for an arbitration, that Norma claimed that she was "cut-off by an unknown vehicle," and that Norma sustained a broken wrist and herniated disk. Defendant cites no letters or evidence that after July 24, 1998, it attempted to set up plaintiffs sworn statement or that it contacted plaintiffs counsel to obtain evidence of damages. In addition, the record reflects that defendant never demanded or set a date for Norma's sworn statement and that Norma eventually gave an evidence deposition upon plaintiffs counsel request. At this point in the proceedings, the record does not reflect evidence in support of defendant's argument that it reasonably attempted to investigate the claim.
Defendant next argues that a bona fide dispute over coverage explains its delay in not paying the claim. Defendant initially notes that it filed a declaratory action in 1998 to dispute coverage. However, the trial judge in that case denied defendant's motion to stay the arbitration. The record contains little evidence of this declaratory action or how it was resolved. If defendant had evidence in 1998 that its insurance policy did not cover plaintiffs accident, which it never submitted during the bench trial, then the circuit court would have been required to stay the arbitration until the resolution of the coverage dispute. State Farm Fire & Casualty Co. v. Yapejian, 152 Ill.2d 533, 542-44, 178 Ill.Dec. 745, 605 N.E.2d 539 (1992). Defendant, therefore, has not shown how this declaratory action establishes a bona fide dispute of coverage and allowed it to delay settling or paying the claim. Nor has defendant explained why this bona fide dispute excused it from paying plaintiff the full amount of the arbitration award, plus costs and interest, within 30 days of the trial court's August 19, 1999, judgment. In fact, defendant did not pay plaintiff the arbitration award until plaintiffs counsel left numerous phone messages and indicated the intent to initiate collection proceedings. Based on the record at this point in the proceedings, we cannot say that a bona fide dispute in coverage explained defendant's delay in either settling or paying the claim.
Defendant also notes that plaintiff should have filed a bill of costs and not initiated garnishment proceedings to recover the interest on the arbitration award that the trial court ordered defendant to pay. Section 155 directs the court to examine *745 the action and delay of the insurance company and whether that action or delay was vexatious and unreasonable. 215 ILCS 5/155 (West 1998); see also Cramer v. Insurance Exchange Agency, 174 Ill.2d 513, 221 Ill.Dec. 473, 675 N.E.2d 897 (1996). We reject defendant's argument that it should be excused from liability under section 155 for not paying a judgment or interest, as ordered by the court, because plaintiff chose one means of enforcement over another. Plaintiffs counsel brought the garnishment action because defense counsel told him that defendant was not paying for interest on the award even though the trial court ordered it to pay the interest 51 days earlier. Plaintiff brought the garnishment proceedings to collect the money owed to plaintiff by defendant. At the time plaintiff undertook the garnishment proceedings, it had been over 2 years since the motor vehicle accident and over 8 months since the arbitration award. The fact that plaintiff chose to initiate garnishment proceedings has no bearing on whether defendant acted unreasonably and vexatious in not settling or paying the claim. Therefore, we find that plaintiff has presented sufficient evidence of a section 155 violation to withstand defendant's section 2-1110 motion. The trial court's decision to grant the section 2-1110 motion and not proceed with the bench trial is against the manifest weight of evidence.
For the foregoing reason, the judgment of the circuit court of Cook County is reversed and remanded for further proceedings consistent with this opinion.
Reversed and remanded.
McNULTY, P.J., and COHEN, J., concur.
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472 F.3d 1038
UNITED STATES of America, Appellee,v.Corey Louis HINES, Appellant.
No. 06-1719.
United States Court of Appeals, Eighth Circuit.
Submitted: October 18, 2006.
Filed: January 8, 2007.
Paul E. Sims, Stokely Group, St. Louis, MO, for appellant.
Matthew T. Schelp, Asst. U.S. Atty., St. Louis, MO, for appellee.
Corey Louis Hines, Forrest City, AR, pro se.
Before SMITH, BOWMAN, and COLLOTON, Circuit Judges.
PER CURIAM.
1
Corey Louis Hines was convicted of conspiracy to commit social security fraud, misuse of a social security number, aiding and abetting the misuse of a social security number, and aggravated identity theft. Hines challenges: (1) the denial by the District Court1 of his motion for a judgment of acquittal and (2) his sentence. Additionally, Hines has filed a pro se motion to remove counsel and his counsel has filed a motion to withdraw. We affirm the District Court and deny both of the motions.
2
Hines and his wife defrauded several retailers by obtaining credit with the name, driver's license, and social security number of a woman whose purse had been stolen. When Hines was subsequently arrested and booked, he told police that he was Joseph Miller and provided Miller's social security number. Hines later admitted in a letter to prison staff that he had used Miller's name without permission, but then testified at trial that he had paid Miller cash and marijuana for the use of his name. In addition to other charges, Hines was charged with misuse of a social security number because of his fraudulent statement made during arrest and with aggravated identity theft because the misuse involved the identification of another person. The jury returned a guilty verdict on all counts. Hines challenges the District Court's denial of his motion for an acquittal.
3
We review the denial of a motion for an acquittal de novo, examining the sufficiency of the evidence in the light most favorable to the jury verdict, and will reverse only if no reasonable jury could have found the defendant guilty. United States v. Howard, 413 F.3d 861, 864 (8th Cir.2005). Because Hines only raised a meaningful argument on the sufficiency of his identity-theft conviction, we will only address that count. See Chay-Velasquez v. Ashcroft, 367 F.3d 751, 756 (8th Cir.2004) (points not argued in brief are waived).
4
To support a conviction for aggravated identity theft, the government must prove that the defendant (1) knowingly used (2) the "means of identification" of another person (3) without lawful authority (4) during and in relation to a violation of 42 U.S.C. § 408(a)(7)(B) (misuse of a social security number). 18 U.S.C. § 1028A(a)(1), (c)(11); United States v. Montejo, 353 F.Supp.2d 643, 655 (E.D.Va. 2005), aff'd, 442 F.3d 213 (4th Cir.2006), cert. denied, ___ U.S. ___, 127 S.Ct. 366, ___ L.Ed.2d ___ (2006). The term "means of identification" includes another person's name or social security number. 18 U.S.C. § 1028(d)(7)(A). The government satisfied the "knowingly" requirement with Hines's admission that he provided another person's name to police. See United States v. Crounsset, 403 F.Supp.2d 475, 483 (E.D.Va.2005) ("knowingly" requirement satisfied by proof that defendant knew identification was fraudulent). Hines's use of Miller's name and social security number satisfied the "means of identification" requirement. Whether Hines used Miller's name without permission (as Hines claimed in his letter) or he obtained Miller's consent in exchange for illegal drugs, Hines acted without lawful authority when using Miller's identification. These actions occurred during and in relation to Hines's misuse of a social security number—they occurred while Hines misused Miller's number to defraud police. A reasonable jury could have found Hines guilty of aggravated identity theft; therefore, the District Court did not err in denying Hines's motion for an acquittal.
5
The District Court sentenced Hines to a term of seventy-one months of imprisonment on the conspiracy and misuse counts, a consecutive term of twenty-four months on the identity-theft count, a three-year term of supervised release, and ordered restitution. This sentence resulted in part from enhancement findings that Hines: (1) was an organizer and leader of the scheme; (2) obstructed justice; and (3) defrauded ten or more victims. Hines contends that Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), requires that a jury find these enhancement facts beyond a reasonable doubt. We review the District Court's application of the sentencing guidelines de novo and its findings of fact for clear error. United States v. Mashek, 406 F.3d 1012, 1016-17 (8th Cir.2005).
6
Hines's argument fails under Booker2 and this Court's post-Booker precedent. See United States v. Brave Thunder, 445 F.3d 1062, 1065 (8th Cir.2006) (after Booker, "judicial factfinding is permissible at sentencing so long as the district court understands that the sentencing guidelines are advisory only"); United States v. Garcia-Gonon, 433 F.3d 587, 593 (8th Cir. 2006) ("Under an advisory Guidelines regime, sentencing judges are only required to find sentence-enhancing facts by a preponderance of the evidence."). The District Court properly applied the guidelines as advisory; therefore, under the governing case law, a jury determination beyond a reasonable doubt was not required.
7
We affirm Hines's conviction and sentence. Hines's motion to remove counsel and his counsel's motion to withdraw are denied.
Notes:
1
The Honorable Henry E. Autry, United States District Judge for the Eastern District of Missouri
2
United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).
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779 N.W.2d 504 (2010)
PEOPLE of the State of Michigan, Plaintiff-Appellee,
v.
Susan BROWN, Defendant-Appellant.
Docket No. 139529. COA No. 290849.
Supreme Court of Michigan.
March 29, 2010.
Order
On order of the Court, the motion for reconsideration of this Court's January 29, 2010 order is considered, and it is DENIED, because it does not appear that the order was entered erroneously.
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794 So.2d 333 (2001)
Tom DAWKINS et al.
v.
Melisa L. WALKER.
1991712.
Supreme Court of Alabama.
March 16, 2001.
*334 Hobart A. McWhorter, Jr., of Bradley, Arant, Rose & White, L.L.P., Birmingham; and Walter F. McArdle of Spain & Gillon, Birmingham, for appellants.
N.P. Callahan, Jr., Birmingham, for appellee.
HARWOOD, Justice.
Tom Dawkins and other members of the board of directors ("the Board") of the Emerald Valley Resort Club, Inc. ("EVRC"), appeal the Jefferson County Circuit Court's "partial summary judgment" in favor of the plaintiff Melisa M. Walker. We affirm.
On January 7, 2000, Walker sued eight members of the Board, based upon her removal from the Board. She alleged that no provision in the Code of Alabama or in the bylaws of the EVRC provides for the prospective removal of a Board member, i.e., for the removal of a Board member from a term that has not yet begun. Walker sought a judgment declaring, among other things, that her removal from the Board of the EVRC was invalid.
On February 25, 2000, Walker moved for a summary judgment. The Board also moved for a summary judgment; its motion argued that Walker had failed to name as defendants all of the Board members for the years 1999 and 2000, and the EVRC in its corporate formand that those members and the EVRC in its corporate form were necessary and proper defendants; that Walker had failed to make a proper demand on the Board for the relief she sought; and that she did not fairly and adequately represent the interests of the members of the EVRC. The Board also argued that the circuit court could not set aside the proper removal of a director for cause and that Walker's removal had been based upon her beginning a project without prior discussions or approval by the Board or by members of the EVRC, as required by the bylaws of the corporation.
After receiving evidentiary submissions and conducting a hearing, the circuit court entered a partial summary judgment for Walker which provided, in pertinent part:
*335 "The Court finds that the action of the 1999 Board in removing Walker from the Board in futuro was neither de jure [nor] equitable. The removal by the 1999 Board for the year 2000 was accomplished by some directors who were not on the 2000 Board. Walker claims that two of such voters went on the 2000 Board as a result of the purported removals. The Court presumes that all of the parties have the best interests of EVRC in mind and makes no judgment other than that the act of the 1999 Board removing Walker for the year 2000 through 2002 was impermissible. It is therefore Ordered that Walker be restored to the Board for the 2000-2002 term forthwith. Consistent with this order the Court grants partial summary judgment to the Plaintiff and denies the Defendants' motion for summary judgment."
At the outset, we note that this Court must consider this appeal as an appeal from an order granting injunctive relief. Such an order is appealable. See Rule 4(a)(1)(A), Ala.R.App.P., relating to the appeal of "any interlocutory order granting, continuing, modifying, refusing, or dissolving an injunction, or refusing to dissolve or to modify an injunction." Any noninjunctive aspect of this interlocutory "summary judgment" would not be appealable. See Ala.Code 1975, § 12-22-2.
An injunction is defined as "[a] court order commanding or preventing an action." Black's Law Dictionary 788 (7th ed.1999). Because the order at issue in this case directs the Board to take action, by ordering that "Walker be restored to the Board ... forthwith," we conclude that the order, though styled as a "partial summary judgment," was injunctive in nature.
Although the relief Walker sought concerning her removal from the Board was only that the trial court make a declaration, that court had the authority to order, i.e., to "enjoin," the Board to reinstate Walker. This Court has held:
"An injunction and punitive damages are but forms of relief which a court has the power to grant. Under present practice, every final judgment (except a default judgment) should `grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings.' Rule 54(c), [Ala.R.Civ.P.]."
Price v. South Cent. Bell, 294 Ala. 144, 150, 313 So.2d 184, 189 (1975). Section 6-6-230, Ala.Code 1975, also provides that "[f]urther relief based on a declaratory judgment may be granted whenever necessary or proper." See also Berman v. Wreck-A-Pair Bldg. Co., 234 Ala. 293, 298, 175 So. 269, 274 (1937) ("It should be kept in mind that the equity of a bill under the Declaratory Judgment Act does not turn on whether a case is made for an injunction," and "Further relief may be had in such [a] proceeding if necessary to complete relief."). In light of the injunctive component of the trial court's order, we conclude that this appeal is properly before the Court.
The Board argues that the order appealed from must be reversed because, it says, (1) Walker failed to join necessary parties, (2) Walker failed to comply with the security requirements of Rule 65, Ala.R.Civ.P., (3) Walker failed to prove irreparable injury, and (4) the Board acted within its authority in removing Walker.
Walker and two other persons were removed from the Board by a 6-4 vote of the then existing Board on November 8, 1999. The Board's vote not only removed Walker from an independent term she was serving for the year 1999, but it also purported to remove her from a three-year term to which she had been elected at the annual *336 meeting of the EVRC membership on October 3, 1999. Her three-year term was scheduled to begin on January 1, 2000. One member of the 1999 Board who was not reelected to serve in 2000 participated in the vote to remove Walker. That member was subsequently named to the 2000 Board after Walker had been removed.
Our review of a summary judgment is de novo:
"In reviewing the disposition of a motion for summary judgment, `we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact,' Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988), and whether the movant was `entitled to a judgment as a matter of law.' Wright v. Wright, 654 So.2d 542 (Ala.1995); Rule 56(c), Ala.R.Civ.P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is `substantial' if it is of `such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359 (Ala.1993); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990)."
Hobson v. American Cast Iron Pipe Co., 690 So.2d 341, 344 (Ala.1997).
I. Joinder
The Board first argues that the trial court's order must be set aside because, it says, Walker failed to join all the members of the 2000 board of directors, and the EVRC in its corporate form, as necessary defendants. This Court has previously recognized that all possible defendants need not be joined in order for the court to be able to make a proper adjudication.
"Rule 19, Ala.R.Civ.P., provides for joinder of persons needed for just adjudication. Its purposes include the promotion of judicial efficiency and the final determination of litigation by including all parties directly interested in the controversy. Hooper v. Huey, 293 Ala. 63, 69, 300 So.2d 100, 105 (1974), overruled on other grounds, Bardin v. Jones, 371 So.2d 23 (Ala.1979). Where the parties before the court adequately represent the absent parties' interests and the absent parties could easily intervene should they fear inadequate representation, no reason exists why the trial court could not grant meaningful relief to the parties before the court. Ross v. Luton, 456 So.2d 249, 257 (Ala.1984). Also, joinder of the absent parties is not absolutely necessary where determination of the controversy will not result in a loss to the absent parties' interest or where the action does not seek a judgment against them. Morgan Plan Co. v. Bruce, 266 Ala. 494, 497-98, 97 So.2d 805, 808 (1957). A defendant's delay and its self-serving purpose for raising the issue have also been held to be proper considerations in determining whether a judgment is proper in the absence of a particular party. J.R. McClenney & Son, Inc. v. Reimer, 435 So.2d 50, 52 (Ala.1983). See also, Geer *337 Bros., Inc. v. Walker, 416 So.2d 1045, 1050 (Ala.Civ.App.1982)."
Byrd Cos. v. Smith, 591 So.2d 844, 846 (Ala.1991).
In her original complaint, Walker named eight members of the Board as defendants in this action. Six of the defendants were the 1999 Board members who had voted to remove Walker. One of the remaining two defendants had been placed on the Board after Walker was removed and the other was on the 2000 Board. Four members of the 1999 Board that had voted to remove Walker were also serving on the 2000 Board. In addition, the trial court allowed Walker leave to amend her complaint to include all of the directors of the 1999 and 2000 Boards as parties to this action. She subsequently joined four Board members as additional plaintiffs and three as additional defendants. One of the additionally named defendants was later dismissed from the lawsuit because she had resigned from the 2000 Board. All of the members of the 1999 and 2000 Boards were in fact joined as parties in Walker's lawsuit.
The named defendants represent the only interests of the Board that were contrary to Walker's interest. For the purposes of this litigation, we conclude that this lawsuit was one of a personal nature between Walker and the Board members. The Board also argues that the trial court erred by failing to require the joinder of the corporate entity EVRC. In support of this argument, the Board cites cases dealing with shareholder derivative actions, but those cases do not persuade us that the corporate entity has some distinct interest in this litigation that requires its joinder. See Byrd Cos., supra. This lawsuit is not a shareholder derivative action. See, e.g., General Motors Corp. v. Bell, 714 So.2d 268, 290 (Ala.1996), and Pegram v. Hebding, 667 So.2d 696, 702 (Ala.1995). The Board was the proper entity for the trial court to direct to reinstate Walker. Article V, § 1, of the EVRC's bylaws states that "the business and affairs of the Corporation shall be managed by a Board of Directors." Thus, under the Board's management powers, the EVRC's interests were completely represented by the parties before the trial court. The trial court did not err by not requiring Walker to join the EVRC in its corporate form.
II. Rule 65, Ala.R.Civ.P.
The Board argues that because Walker received injunctive relief, she was required to post security, under the terms of Rule 65(c), Ala.R.Civ.P. We have already recognized that the trial court's order contains language that is both declaratory and injunctive in nature. See Ala. Code 1975, § 6-6-230, and our Berman discussion, supra. Because Walker did not request injunctive relief and the trial court granted it pursuant to its authority under the declaratory-judgment statute, § 6-6-230, we cannot hold that security was required by Rule 65(c). Moreover, the injunctive relief the trial court ordered was permanent relief. This Court has held that "[n]o bond is required for the entry of an order granting a permanent injunction." Ross v. Luton, 456 So.2d 249, 258 (Ala.1984).
III. Irreparable Injury
The Board also argues that Walker did not prove any irreparable injury that would support the issuance of an injunction. We therefore consider whether Walker's removal from the Board was an irreparable injury. In an analogous case, this Court has discussed the element of irreparable injury in the context of injunctive relief:
"Ordinarily a court of equity will not interfere with the internal affairs of a voluntary association, or assume jurisdiction to restrain its acts done or attempted *338 in accordance with its rules and within the scope of its powers. On the other hand, if the act complained of is unauthorized or unlawful and occasions irreparable injury to the complainant member for which there is no adequate and complete remedy at law, equitable relief by way of injunction will be granted. 28 Amer.Jur. section 161, page 351.
"But it is earnestly insisted that irreparable injury is not shown here.
"It is perfectly clear that the threatened acts of the respondents are unauthorized, unlawful and in direct violation of the constitution of the society. As above pointed out, this court has ruled to the effect that complainant's membership... is a property right of value; that the constitution of the society is a contract between its members, and one that the society itself must observe until changed in legal form."
Medical Soc'y of Mobile County v. Walker, 245 Ala. 135, 140, 16 So.2d 321, 325 (1944) (emphasis added). In light of the principles stated in Medical Society of Mobile County, the trial court could have properly concluded that Walker had suffered irreparable injury. Thus, we cannot reverse the trial court's order on the basis that the plaintiff had not shown an irreparable injury.
IV. The Board's Authority to Remove Walker
The Board's final argument is that it was acting within its authority when it removed Walker. We first note that the passage of time has rendered moot the issue of the Board's authority to remove Walker from the remainder of her 1999 term.
"[I]t is not within the province of this court to decide abstract or hypothetical questions, which are disconnected from the gravity of actual relief, or from the determination of which no practical result can follow."
Breaux v. Bailey, 789 So.2d 204, 207 (Ala. 2000) (quoting Spence v. Baldwin County Sav. & Loan Ass'n, 533 So.2d 192, 193 (Ala.1988) (Maddox, J., concurring specially) (quoting Caldwell v. Loveless, 17 Ala. App. 381, 382, 85 So. 307 (1920))). Thus, the only issue properly before us is whether the 1999 Board had the authority to bar Walker from serving on the Board for her 2000-2002 term.
It is well established that a court is a proper forum for a challenge to such an action by a board of directors. This Court has held that "[j]udicial review of an organization's actions is available to a member of the organization who challenges such action[s] on the grounds that [they do] not conform to the organization's constitution or [bylaws]." Mitchell v. Concerned Citizens of the CVEC, Inc., 486 So.2d 1283, 1287 (Ala.1986) (citing Weatherly v. Medical & Surgical Soc'y, 76 Ala. 567 (1884)). Also, "[t]his Court has recognized that the constitution and [bylaws] of both incorporated and unincorporated societies and associations are binding on the organization and members thereof if not in contravention of law or public policy." Mitchell, 486 at 1286 (citing Wells v. Mobile County Bd. of Realtors, Inc., 387 So.2d 140 (Ala.1980); Gulf South Conference v. Boyd, 369 So.2d 553 (Ala.1979); and Weatherly v. Medical & Surgical Soc'y, supra).
Section 10-3A-35(d), Ala.Code 1975, discusses the removal of directors of nonprofit corporations, and that Code section applies to the EVRC. That statute states that "[a] director may be removed from office pursuant to any procedure therefor provided in the articles of incorporation." The only clause pertaining to removal of an EVRC director is found in the EVRC's *339 bylaws. Article V, § 7 of those bylaws states:
"Whenever a vacancy in the membership of the Board of Directors occurs, the member receiving the next highest vote at the last election of Directors shall be appointed to serve the unexpired term. If a Director does not perform duties he/she was elected to perform (such as attending Board meetings) the other Directors have an obligation to remove that Director and may do so by a majority vote of the remaining Directors."
In relation to the binding effect of bylaws, this Court has stated:
"It is well established that the constitution, bylaws, rules and regulations of a voluntary association constitute a contract between the association's members, which is binding upon each member so long as the bylaws, etc., remain in effect. Medical Society of Mobile County v. Walker, 245 Ala. 135, 16 So.2d 321 (1944). Any dispute between a voluntary association and one of its members concerning the construction or validity of the association's constitution, bylaws, rules and regulations constitutes a dispute as to the construction or validity of a written contract."
Wells v. Mobile County Bd. of Realtors, 387 So.2d 140, 142 (Ala.1980). Because Article V, § 7, is the only bylaws provision that addresses the removal of a director, we conclude that it specifies the only basis for removing a director of the EVRC.
Our first rule governing the interpretation of the bylaws as contracts is to follow the plain language of the agreement:
"General contract law requires a court to enforce an unambiguous, lawful contract, as it is written. P & S Business, Inc. v. South Central Bell Telephone Co., 466 So.2d 928, 931 (Ala.1985). See also McDonald v. U.S. Die Casting & Development Co., 541 So.2d 1064 (Ala. 1989). A court may not make a new contract for the parties or rewrite their contract under the guise of construing it. Estes v. Monk, 464 So.2d 103 (Ala.Civ. App.1985)....
". . . .
"When interpreting a contract, a court should give the terms of the agreement their clear and plain meaning and should presume that the parties intended what the terms of the agreement clearly state. Pacific Enterprises Oil Co. (USA) v. Howell Petroleum Corp., 614 So.2d 409 (Ala.1993)."
Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 35-36 (Ala.1998).
This language of Article V, § 7, plainly envisions that a director can be removed from his or her present service as a director. It does not mention, nor can one infer from its terms, that a director can be excluded from serving in a future term. Because Walker's three-year term of membership on the Board had not yet begun, she could not, in a literal sense, be removed from it.
We see no basis for construing the language of the EVRC bylaws to give the Board the power to removeor barfuture directors. This Court has held: "Contracts will not be construed so as to render them oppressive or inequitable as to either party or so as to place one of the parties at the mercy of the other...." G.F.A. Peanut Ass'n v. W.F. Covington Planter Co., 238 Ala. 562, 566, 192 So. 502, 506 (1939) (citing Little Cahaba Coal Co. v. Aetna Life Ins. Co., 192 Ala. 42, 68 So. 317 (1915)). We refuse to give an "oppressive or inequitable" construction to the bylaws now before us. We make no judgment as to whether cause actually existed for Walker to be removed from the term she was then serving, but to allow a sitting Board the power to bar members from *340 serving future terms would be both oppressive and inequitable, especially in the absence of specific language investing the Board with such power. The trial judge properly held that Walker's prospective removal from the Board was invalid.
The order of the trial court declaring the action of the Board invalid and ordering that Walker be restored to the Board is affirmed.
AFFIRMED.
MOORE, C.J., and SEE, BROWN, and STUART, JJ., concur.
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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
23-APR-2019
08:00 AM
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392 F.Supp.2d 668 (2005)
George PIECZENIK, Plaintiff,
v.
PFIZER, INC., Defendant.
No. 04CIV.4558(LAK)(RLE).
United States District Court, S.D. New York.
October 13, 2005.
George Pieczenik, New York City, pro se.
Adam Gahtan, White & Case LLP, New York City, for Defendant.
OPINION AND ORDER
ELLIS, United States Magistrate Judge.
I. BACKGROUND
On April 8, 2005, plaintiff George Pieczenik filed a motion to limit depositions to three months; appoint a panel of three lawyers experienced in Pieczenik's prior patent litigation to act as counsel to the undersigned; and to consent to jurisdiction over dispositive motions pursuant to 28 U.S.C. § 636(b)(1)(B). Pieczenik's motion is hereby DENIED.
*669 II. DISCUSSION
Following a conference with the Court on May 10, 2005, the parties were ordered to complete discovery by November 14, 2005. Order, dated May 10, 2005, ECF Doc. No. 13. Since the Court has already ruled on the length of the discovery period, the part of the motion seeking to limit depositions to three months is DENIED as moot.
Pieczenik's request to appoint a panel of three lawyers experienced in his prior patent litigation to act as advisors to the Court is not supported by the record. Pieczenik asks the Court to engage these lawyers to help determine "claim construction and infringement." Pieczenik's Motion to Limit Depositions at 2. He has presented no special circumstances to justify this action. Courts are competent to make these factual and legal determinations. The motion is DENIED.
On September 7, 2004, Judge Kaplan referred this case to the undersigned for dispositive motions. Pieczenik's purported consent for this Court to have jurisdiction over dispositive motions pursuant to 28 U.S.C. § 636(b)(1)(B) is DENIED as moot.
III. CONCLUSION
Pieczenik's motion to limit depositions to three months; appoint a panel of lawyers; and to consent to jurisdiction over dispositive motions is hereby DENIED.
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532 F.2d 184
Mabryv.Estelle
No. 75-2947
United States Court of Appeals, Fifth Circuit
5/7/76
1
N.D.Tex.
2
REVERSED AND REMANDED***
***
Opinion contains citation(s) or special notations
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Order filed, November 14, 2013.
In The
Fourteenth Court of Appeals
____________
NO. 14-13-00468-CV
____________
EDWARD GRISHAM, Appellant
V.
LORA A. THYE, Appellee
On Appeal from the 25th District Court
Colorado County, Texas
Trial Court Cause No. 22,073
ORDER
The reporter’s record in this case was due November 07, 2013. See Tex. R.
App. P. 35.1. The court has not received a request to extend time for filing the
record. The record has not been filed with the court. Because the reporter’s record
has not been filed timely, we issue the following order.
We order Patricia M. Wagner, the substitute court reporter, to file the
record in this appeal within 30 days of the date of this order.
PER CURIAM
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37 F.Supp.2d 1056 (1999)
N & N CATERING COMPANY, INC., Plaintiff,
v.
CITY OF CHICAGO, Defendants.
Alberto Bedoya d/b/a Casanovas, Inc., Plaintiff,
v.
City of Chicago, Richard M. Daley, as Mayor and Commissioner of the Liquor Control Commission of the City of Chicago, Liquor Control Commission of the City of Chicago, Defendants.
Club Misty Inc., d/b/a Tequila Roadhouse, Plaintiff,
v.
James Laski, Clerk of the City of Chicago, Board of Election Commissioners of the City of Chicago, and City of Chicago, Defendants.
Nos. 98 C 6961, 98 C 7831, 98 C 8054.
United States District Court, N.D. Illinois, Eastern Division.
February 17, 1999.
*1057 *1058 J. Brian Pierce, J. Brian Pierce & Associates, Chicago, IL, James Frederick Carlson, Law Offices of James F. Carlson, Chicago, IL, for N & N Catering Company, Inc., plaintiff.
J. Brian Pierce, J. Brian Pierce & Associates, Chicago, IL, for Alberto Bedoya, plaintiff.
Michael A. Moses, Richard G Schoenstadt, Morton Siegel, James L. Webster, Siegel, Moses, Schoenstadt & Webster, P.C., Chicago, IL, for Club Misty, Inc., plaintiff.
Patrick Walter Johnson, City of Chicago, Law Department, Corporation Counsel, Chicago, IL, Ralphette Gaston Rhodes, City of Chicago, Law Department, Chicago, IL, Norma Reyes, City of Chicago, Chicago, IL, Scott A. Frey, City of Chicago, Department of Law, Chicago, IL, for James Laski, defendant.
James Michael Scanlon, James M. Scanlon & Associates, Chicago, IL, for Board of Election Commissioners of the City of Chicago, defendant.
Patrick Walter Johnson, City of Chicago, Law Dept. Corp. Counsel, Chicago, IL, Ralphette Gaston Rhodes, City of Chicago Law Dept., Chicago, IL, Michael A. Forti, Scott A. Frey, City of Chicago, Department of Law, Chicago, IL, Norma Reyes, City of Chicago, Chicago, IL, for City of Chicago, Richard M. Daley, defendants.
Patrick J. Solberg, Illinois Attorney General's Office, Chicago, IL, Patrick Walter Johnson, City of Chicago, Law Dept. Corp. Counsel, Chicago, IL, Michael A. Forti, Scott A. Frey, City of Chicago Dept. of Law, Chicago, IL, for State of Illinois Liquor Control Commission, defendant.
Patrick Walter Johnson, City of Chicago, Law Department, Corporation Counsel, Chicago, IL, Michael A. Forti, Scott A. Frey, City of Chicago, Department of Law, Chicago, IL, for James Laski, defendant.
OPINION and ORDER
NORGLE, District Judge.
Before the court are challenges to the constitutionality of the single-address local option provision of the Illinois Liquor Control Act, 235 ILCS 5/9-2 (1995). For the following reasons, those challenges brought pursuant to the federal constitution are denied. The court declines to exercise its jurisdiction over the claim attacking the Liquor Control Act on state constitutional grounds.
I. BACKGROUND
The plaintiffs in these three related actions hold state and city licenses authorizing them to sell alcohol at their respective establishments within the City of Chicago. What they share in common is that single-address local option referenda under the Illinois Liquor Control Act ("Liquor Control Act"), 235 ILCS 5/9-2 (1995), jeopardize the validity of their liquor licenses. In a prior Opinion and Order, this court temporarily enjoined on due process grounds the enforcement of a local option referendum passed pursuant to the Liquor Control Act. If operative, the referendum would have extinguished Plaintiff N & N Catering Company's ("N & N") licenses to sell alcohol at the International Amphitheatre. See N & N Catering Co. v. City of Chicago, 26 F.Supp.2d 1067 (N.D.Ill. 1998).
Two other liquor licensees, Alberto Bedoya ("Bedoya") and Club Misty Inc. *1059 ("Club Misty"), have since filed actions in federal court on the same constitutional grounds as N & N. Because their respective complaints include claims nearly identical to those raised by N & N, Bedoya and Club Misty each moved for reassignment of their cases to this court pursuant to Local Rule 2.31. Like N & N, Bedoya seeks an order enjoining enforcement of a local option referendum passed in the November 3, 1998, election. The City of Chicago ("the City"), however, has agreed not to enforce any local option referenda from that election until the court issues a final ruling on the constitutionality of the Liquor Control Act. In contrast to N & N and Bedoya's claims for post-election relief, Club Misty seeks a pre-election ruling that would enjoin placement of a local option referendum on the ballot for the February 23, 1999, election.
Although the three related cases may not be at identical stages of litigation, they each seek a decision on the same constitutional issues. In fact, N & N, Bedoya, and Club Misty (collectively referred to as "the Licensees") have filed consolidated memoranda in support of their claims. Thus, in the interests of judicial economy, the court submits the following opinion as a comprehensive adjudication of all three actions.
N & N Catering Co. v. City of Chicago, 98 C 6961
N & N is licensed to sell alcoholic beverages for on-premises consumption at 4220 S. Halsted in Chicago; 4220 S. Halsted is a notable address in Chicago because it is the site of the International Amphitheatre ("the Amphitheatre"), an arena which has a considerable place in the city's history.[1] In July 1998, certain residents of the precinct surrounding the Amphitheatre initiated a campaign to prohibit the sale of alcohol at the arena's address. Pursuant to the local option provision of the Liquor Control Act, 235 ILCS 5/9-2, those residents began circulating petitions that would allow precinct voters to decide, via referendum, whether to prohibit the sale of alcohol at 4220 S. Halsted. The petition read, in relevant part:
To the City Clerk or the City of Chicago, Illinois:
The undersigned, residents of the 35th Precinct of the 11th Ward of the City of Chicago, County of Cook, State of Illinois, respectfully petition that you cause to be submitted in the manner provided by law, to the voters thereof, at the next election to be held on November 3, 1998 the proposition:
"Shall the sale at retail of alcoholic liquor be prohibited at the following address:
4220 South Halsted Street, Chicago, Illinois"
(N & N Orig.Mem., Ex. A.); see also 235 ILCS 5/9-2, 9-4.
By August 4, 1998, the petition included the "signatures of not less than 40% of the legal voters" residing in the precinct, thereby requiring the Clerk of the City of Chicago to take the necessary administrative steps to place the referendum on the November 3rd ballot. See 235 ILCS 5/9-2, 9-10.
N & N, however, sought to prevent the referendum from being placed on the November 3rd ballot. On October 8, 1998, N & N filed suit in state court against James Laski ("Laski"), as Clerk of the City of Chicago, and the Board of Election Commissioners of the City of Chicago ("the Board of Election"). In its complaint, N & N challenged the validity of the petitions, see 235 ILCS 5/9-4, 9-19, and alleged that the Liquor Control Act deprived it of due process of law. (See City's Orig.Resp. at 1, 10.) On October 21, 1998, the Circuit Court of Cook County dismissed the suit, concluding that "[t]he failure of the Plaintiffs in this cause to file *1060 a bond for costs within the time prescribed by 235 ILCS 5/9-4 deprives this court of jurisdiction to hear this cause." (Id., Ex. 1.) On October 30, 1998, the Illinois Appellate Court issued an order affirming the trial court's decision. (Id., Ex. 2.)
On that same day, N & N filed a six-count complaint in federal court under 42 U.S.C. § 1983 and 28 U.S.C. § 1367(a), again naming Laski and the Board of Election as defendants. N & N alleges that the single-address local option provision of the Liquor Control Act, 235 ILCS 5/9-2, violates its rights under the United States and Illinois constitutions. Specifically, the complaint alleges that the Liquor Control Act: (1) deprives N & N of its liquor license without due process of law in violation of the Fourteenth Amendment; (2) violates N & N's "rights to equal protection of the laws under the Fourteenth Amendment" by treating N & N differently from other similarly situated establishments within the 35th precinct; (3) violates the Bill of Attainder Clause of Article I, Section 10, of the United States Constitution by creating "a mechanism through which voters enact into law a provision which legislatively singles out an identifiable individual establishment for guilt and punishes it without the protection of judicial trial"; (4) creates an arbitrary and groundless distinction between the City of Chicago and all other municipalities within Illinois, thereby depriving licensees within the City of Chicago of equal protection of the laws under the Fourteenth Amendment; and (5) grants a special privilege and immunity to similarly situated retail establishments located outside the City of Chicago in violation of the Special Legislation Clause, Article 4, Section 13 of the 1970 Illinois Constitution.
To those ends, N & N's prayer for relief seeks the following: (1) an order declaring the single-address local option provision of 235 ILCS 5/9-2 unconstitutional, invalid and void; (2) a preliminary, and ultimately permanent, injunction voiding the results of the November 3rd referendum and prohibiting its enforcement; (3) a preliminary, and ultimately permanent, injunction prohibiting the City from taking any adverse action against N & N in relation to the November 3rd referendum; and (4) reasonable attorney's fees pursuant to 42 U.S.C. § 1988.
With the November 3rd election date fast-approaching, N & N immediately moved for a temporary restraining order to enjoin Laski and the Board of Election from placing the referendum on the ballot. On November 2, 1998, however, N & N withdrew its motion, and the court ordered this matter certified to the Attorney General of the State of Illinois pursuant to 28 U.S.C. § 2403(b). See also Fed.R.Civ.P. 24(c); Perez v. City of Chicago, 95 C 685, 1995 WL 410981, at *6 (N.D.Ill. July 10, 1995).
The referendum was thus placed to a vote on November 3, 1998. The final voting tally was 178 in favor of passing the referendum and 88 against. Put another way, 67% of the ballots cast in the 35th precinct indicated that voters wanted to prohibit the sale of alcohol at the Amphitheatre. The referendum's passage by a simple majority of 35th precinct voters thus extinguished N & N's licenses to sell alcohol at the venue. See 235 ILCS 5/9-2.
As provided in the Liquor Control Act, the results of the referendum "become operative on the 30th day after the day of the election at which such vote is cast." 235 ILCS 5/9-3. Although N & N abandoned its effort in federal court to enjoin the referendum from being placed to a vote, it still sought to enjoin the impending, early December enforcement date of the referendum.
In support of its prayer for declaratory and injunctive relief, N & N presented only two arguments. First, N & N argued that the Liquor Control Act denies it due process of law by allowing a precinct to vote a single address dry. Second, N & N argued that the Liquor Control Act violates the Special Legislation Clause of the Illinois Constitution because it "arbitrarily distinguishes between Chicago and other municipalities in Illinois." On December 3, 1998, this court issued a preliminary *1061 injunction that enjoined the City's enforcement of the referendum on due process grounds. The court, however, expressed reservations about the merits of N & N's due process claim and declined to determine conclusively at that juncture whether the Liquor Control Act withstands constitutional scrutiny. In the meantime, the parties have presented further arguments on the issue, and the Illinois Attorney General has notified the court that it declines to participate in this action. See generally 28 U.S.C. § 2403(b); 15 ILCS 205/4. Thus, Case Number 98 C 6961 is now ripe for final disposition on all of N & N's claims for declaratory and permanent injunctive relief.
Alberto Bedoya d/b/a Casanova's Inc. v. City of Chicago, et al., 98 C 7831
Plaintiff in Case Number 98 C 7831 is Alberto Bedoya ("Bedoya"), a liquor licensee in the 8th Precinct of the 33rd Ward. Since 1980, Bedoya has sold alcoholic beverages for on-premises consumption at 2415 W. Lawrence Avenue, where he operates an establishment called "Casanova's." Pursuant to the Liquor Control Act, residents of the 8th Precinct voted in the November 3rd election to prohibit the sale of alcohol at "2415 W. Lawrence Ave., Chicago." The local option referendum passed by a tally of 176 to 52.
In the wake of the court's Opinion and Order granting temporary injunctive relief in favor of N & N, Bedoya filed a complaint for declaratory and injunctive relief on December 11, 1998. Like N & N, Bedoya notes that several other liquor establishments within his precinct remain in business not threatened by the prospect of a local option referendum. The only relevant difference between N & N's action and Bedoya's is that Bedoya's complaint does not include a claim that the Liquor Control Act violates the Bill of Attainder Clause of the United States Constitution, Art. I, § 10, cl. 1. As already noted, the City has agreed to stay enforcement of the results of local option referenda from the November 3rd election until this court issues a final ruling on the constitutionality of the Liquor Control Act. Therefore, the court may proceed directly to Bedoya's claims for declaratory and permanent injunctive relief.
Club Misty, Inc. d/b/a Tequila Roadhouse v. Laski, et al., 98 C 8054
Plaintiff in Case Number 98 C 8054 is Club Misty, Inc., a liquor licensee in the 26th Precinct of the 43rd Ward. Since the early 1980's, Club Misty has sold alcoholic beverages for on-premises consumption at 1653 N. Wells Street, where it currently operates an establishment called "Tequila Roadhouse." Soon after the November 1998 election, certain residents of the 26th Precinct initiated a campaign to prohibit the sale of alcohol at that address. Pursuant to the local option provision of the Liquor Control Act, 235 ILCS 5/9-2, those residents began circulating a petition that would allow precinct voters to decide in the February 23, 1999, election whether the sale of alcohol should be prohibited at 1653 N. Wells Street. With over 95% of 26th precinct residents residing in one high-rise building, the petition drive did not entail neighborhood canvassing, and was successful in obtaining the requisite amount of signatures within two weeks.[2]
On December 15, 1998, Club Misty filed a federal complaint alleging the same claims as N & N's complaint, including a claim that the Liquor Control Act violates the Bill of Attainder Clause. The only notable difference in Club Misty's action is that it filed suit in federal court well-before the election. Nonetheless, that Club Misty seeks preemptive relief does not preclude the adjudication of its action with N & N Catering and Bedoya.
II. DISCUSSION
A. Overview
The regulation of alcohol has a long history in the United States, with the Prohibition *1062 Era being the most notable period. See generally Craig v. Boren, 429 U.S. 190, 205, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976); Mugler v. Kansas, 123 U.S. 623, 8 S.Ct. 273, 31 L.Ed. 205 (1887); Mihir A. Munshi, Share the Wine Liquor Control in Pennsylvania: A Time for Reform, 58 U.Pitt.L.Rev. 507, 508-12 (Winter 1997). The Eighteenth Amendment in 1919 initiated the Prohibition Era, as it prohibited "the manufacture, sale, or transportation of intoxicating liquors" in the United States and its territories. In 1933, the Twenty-first Amendment repealed the Eighteenth Amendment and "delegated to the several states the power to prohibit commerce in, or the use of, alcoholic beverages." 44 Liquormart v. Rhode Island, 517 U.S. 484, 514, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996). Since then, however, the Supreme Court has commented that "the [Twenty-first] Amendment does not license the States to ignore their obligations under other provisions of the Constitution." Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 712, 104 S.Ct. 2694, 81 L.Ed.2d 580 (1984); see also 44 Liquormart, 517 U.S. at 516, 116 S.Ct. 1495 (holding that "the Twenty-first Amendment does not qualify the constitutional prohibition against laws abridging the freedom of speech embodied in the First Amendment."). "Neither the text nor the history of the Twenty-first Amendment suggests that it qualifies individual rights protected by the Bill of Rights and the Fourteenth Amendment where the sale of liquor is concerned." Craig, 429 U.S. at 206, 97 S.Ct. 451 (citation and internal quotation marks omitted). Yet the Court has also recognized that "[e]ntirely apart from the Twenty-first Amendment, the State has ample power to prohibit the sale of alcohol in inappropriate locations." 44 Liquormart, 517 U.S. at 515, 116 S.Ct. 1495. Indeed, "[l]iquor laws are enacted by virtue of the [State's] police power to protect the health, morals, and welfare of the public." Eberle v. People of the State of Michigan, 232 U.S. 700, 707, 34 S.Ct. 464, 58 L.Ed. 803 (1914); see also Ziffrin, Inc. v. Reeves, 308 U.S. 132, 138, 60 S.Ct. 163, 84 L.Ed. 128 (1939); cf. Scott v. Village of Kewaskum, 786 F.2d 338,,341 (7th Cir. 1986) ("The twenty-first amendment gives states special powers over the sale of liquor, powers that have been held to diminish even rights granted by the first amendment and hence the fourteenth."); United Beverage Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Comm., 760 F.2d 155, 159 (7th Cir.1985) ("[T]he states have, by virtue of the Twenty-First Amendment, broader authority over the liquor business than over any other business ... though of course not plenary authority....").
Via the local option provision of the Liquor Control Act, Illinois law provides a democratic mechanism, a referendum, in which residents of Chicago precincts may prohibit the sale of alcohol precinct-wide or at a single address. See 235 ILCS 5/9-2. In a case nearly a century ago, the Court refused to strike down a similar local option provision in Alabama, rejecting the argument that a vote in favor of precinct-wide prohibition violated a liquor seller's due process rights. See Rippey v. Texas, 193 U.S. 504, 509-10, 24 S.Ct. 516, 48 L.Ed. 767 (1904). The Court concluded that a state "does not abridge" its power over the sale of alcohol by allowing its citizens to vote on prohibition. Id.; see also Ohio v. Dollison, 194 U.S. 445, 448-49, 24 S.Ct. 703, 48 L.Ed. 1062 (1904). Similarly, in a relatively recent case addressing a precinct-wide prohibition under the Liquor Control Act, the Seventh Circuit remarked, "Illinois local-option liquor law is just section 2 of the Twenty-First Amendment writ small."[3]Philly's v. *1063 Byrne, 732 F.2d 87, 92 (7th Cir.1984). But see 87 South Rothschild Liquor Mart v. Kozubowski, 752 F.Supp. 839, 842 (N.D.Ill. 1990) (declaring the "single establishment" local option provision of the Liquor Control Act (1989) unconstitutional on due process grounds). Further, the Philly's court deemed a precinct-wide referendum to decide whether liquor may be sold in a particular area "a pragmatic as well as venerable response to the social problems created by the sale and consumption of liquor." Philly's, 732 F.2d at 92. The Sixth Circuit, while reviewing a similar local option provision under Ohio law, shared this view, commenting: "Local voters possess a legitimate interest in regulating the types, modes, and circumstances of alcohol sales in their neighborhood." 37712, Inc. v. Ohio Dept. of Liquor Control, 113 F.3d 614, 620 (6th Cir.1997); see generally Shelly Ross Saxer, "Down with Demon Drink!": Strategies for Resolving Liquor Outlet Overconcentration in Urban Areas, 35 Santa Clara L.Rev. 123 (1994).
Of course in each of the instant cases, it appears that the primary concern of local voters is the sale of alcohol at a single address, rather than the overall sale of alcohol in their respective precincts. Consequently, the Licensees each contend that they are being unfairly targeted while other liquor licensees within their respective precincts continue to sell alcohol without protest. That raises questions with respect to the fairness of the Liquor Control Act. Nonetheless, the perceived unfairness of the Liquor Control Act is not the issue here; nor is the wisdom of the legislature. The question is simply whether the Liquor Control Act passes constitutional scrutiny. Cf., e.g., Ferguson v. Skrupa, 372 U.S. 726, 730, 83 S.Ct. 1028, 10 L.Ed.2d 93 (1963) ("The doctrine that ... due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely ... has long since been discarded."). That said, the court turns to the constitutional issues at bar.
As a preliminary matter, it is well-established that federal courts generally are reluctant to declare state statutes unconstitutional, as state statutes are entitled to a presumption of constitutionality. See Dept. of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 796, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994); Illinois v. Krull, 480 U.S. 340, 351, 107 S.Ct. 1160, 94 L.Ed.2d 364 (1987); Cohen v. City of Des Plaines, 8 F.3d 484, 489 (7th Cir.1993); Andree v. Ashland Cty., 818 F.2d 1306, 1313 (7th Cir.1987). At least two points follow from this statement.
First, the burden is on the Licensees to show that the Illinois Liquor Control Act is unconstitutional. Cf. United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987); In re Konizeski, 820 F.2d 982, 990 (9th Cir. 1987); Kraft General Foods, Inc. v. Iowa Dept. of Rev., 505 U.S. 71, 82-83, 112 S.Ct. 2365, 120 L.Ed.2d 59 (1992) (Rehnquist, C.J., dissenting). The Licensees, however, submit supporting arguments only on their claims under the Due Process Clause, the Bill of Attainder Clause, and the Special Legislation Clause of the Illinois Constitution. (Licensees' Supp.Mem. at 43 n. 22 (express waiver of one equal protection argument)). Because the Licensees fail to present arguments on their remaining claims, e.g., their equal protection claims, the court deems those claims waived. See Mathis v. New York Life Ins. Co., 133 F.3d 546, 548 (7th Cir.1998) ("`A litigant who fails to press a point by supporting with pertinent authority, or by showing why it is sound despite a lack of supporting authority ... forfeits the point. We will not do his research for him.'") (quoting Pelfresne v. Village of Williams Bay, 917 F.2d 1017, 1023 (7th Cir.1990)); see also Sledd v. Lindsay, 102 F.3d 282, 288 (7th Cir.1996); Doe v. Johnson, 52 F.3d 1448, 1457 (7th Cir.1995).
*1064 Second, federal courts' reluctance to address issues of state governance is intertwined with an important doctrine that the parties have failed to raise here: abstention. Nonetheless, there is currently no certain indication that the court should abstain from exercising its federal (original) jurisdiction in favor of the state courts. See generally Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ("Abstention from the exercise of jurisdiction is the exception, not the rule."); Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943); Railroad Comm'n of Tex. v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941); Waldron v. McAtee, 723 F.2d 1348, 1351 (7th Cir.1983); Ahrensfeld v. Stephens, 528 F.2d 193, 196 (7th Cir. 1975); Lowery v. Schnorf, 97 C 6688, 1998 WL 341835, at *3 (N.D.Ill. June 18, 1998); Jack & Lou's, Inc. v. County of Cook, 93 C 5196, 1994 WL 91963, at *2 (N.D.Ill. March 18, 1994); Ross v. City of Chicago, 89 C 8049, 1989 WL 157332, at *4 (N.D.Ill. Dec. 18, 1989); Van Drunen v. Village of South Holland, 550 F.Supp. 258, 260 (N.D.Ill.1982). Though the constitutionality of a state statute is at issue, the court has a "virtually unflagging obligation" to exercise its jurisdiction over federal questions in this case via 42 U.S.C. § 1983. Illinois Bell Tel. Co. v. Illinois Commerce Comm'n, 740 F.2d 566, 569 (7th Cir.1984) (quoting Colorado River, 424 U.S. at 817, 96 S.Ct. 1236); see also Toney v. Burris, 829 F.2d 622, 624 (7th Cir.1987) ("[B]ecause the statute implicated the plaintiff's due process rights under the fourteenth amendment to the federal Constitution there was no reason for the district court to abstain from deciding the case in favor of the state courts.").
That obligation is not nearly as exacting with respect to the court's jurisdiction over supplementary state claims. See 28 U.S.C. § 1367(c). While this suggests that the court should initially address the Licensees' federal claims, the doctrine of constitutional avoidance teaches that "federal courts should avoid addressing federal constitutional issues when it is possible to dispose of a case on pendent state grounds." Triple G Landfills, Inc. v. Bd. of Commissioners of Fountain County, Ind., 977 F.2d 287, 291 (7th Cir. 1992); see also RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). It is not clear, however, whether the court should address the pendent state claim here, i.e., the Licensees' assertion that the Liquor Control Act's population classification violates the Special Legislation Clause of the 1970 Illinois Constitution.[4] That claim calls for a federal court to determine whether a state statute runs afoul of a state constitution; such a question is better-suited for the Illinois state courts, and ultimately the Illinois Supreme Court, to answer. See BMW of North America, Inc. v. Gore, 517 U.S. 559, 577, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) ("[O]nly state courts may authoritatively construe state statutes."). And though the Illinois Appellate Court has upheld the Liquor Control Act's population classification as constitutional under the Special Legislation Clause, (see, e.g., Gorgees v. Daley, 256 Ill.App.3d 143, 195 Ill.Dec. 257, 628 N.E.2d 721, 726 (1993) and Rincon v. License Appeal Comm'n, 62 Ill.App.3d 600, 19 Ill.Dec. 406, 378 N.E.2d 1281, 1285-86 (1978)), the Illinois Supreme Court (post 1970) has yet to address the precise claim asserted by the Licensees. Contrast Johnkol, Inc. v. License Appeal Comm'n, 42 Ill.2d 377, 247 N.E.2d 901, 903-04 (1969) (in case not involving local option provision, population classification under the Liquor Control Act was invalid) and Shepard v. Illinois Liquor Control Comm'n, 43 Ill.2d 187, 251 N.E.2d 206, 207-09 (1969) (same) with Anderson v. Nick, 402 Ill. 508, 84 N.E.2d 394, 398-99 *1065 (1949) (population classification under the Liquor Control Act's precinct-wide local option provision was valid); see generally Lumpkin v. Cassidy, 184 Ill.2d 117, 234 Ill.Dec. 389, 703 N.E.2d 1, 5 (1998); Best v. Taylor Machine Works, 179 Ill.2d 367, 228 Ill.Dec. 636, 689 N.E.2d 1057, 1069 (1998). Even in light of Gorgees and Rincon (and Anderson), it would still be incumbent on this court to predict how the Illinois Supreme Court would resolve the issue today. See Allen v. Transamerica Ins. Co., 128 F.3d 462, 466 (7th Cir.1997). The court declines to do so.
Thus, notwithstanding the possibility of abstention and the doctrine of constitutional avoidance, the court exercises its jurisdiction over the Licensees' § 1983 claims, and declines to exercise supplementary jurisdiction over their state law claim. Cf. RAR, Inc., 107 F.3d at 1277 (in absence of Illinois case law on issue, stating hesitancy "to venture unguided into Illinois state constitutional law"); United Beverage Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Comm'n, 760 F.2d 155, 157 (7th Cir.1985) (declining to exercise jurisdiction over pendent state law claim after addressing federal constitutional claims); 28 U.S.C. § 1367(c)(1) (stating that a district court may decline to exercise supplemental jurisdiction over a state law claim if "the claim raises a novel or complex issue of State law.").
B. Due Process
"The Fourteenth Amendment protects persons from state governmental deprivations of life, liberty, or property without due process of law." Pro-Eco, Inc. v. Bd. of Commiss. of Jay County, 57 F.3d 505, 512 (7th Cir.1995). A procedural due process claim under the Fourteenth Amendment is brought pursuant to 42 U.S.C. § 1983, and "require[s] a two-step analysis." Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir.1996); Kim Constr. Co. v. Bd. of Trustees of Village of Mundelein, 14 F.3d 1243, 1245 (7th Cir.1994); Greco v. Guss, 775 F.2d 161, 170 (7th Cir.1985).[5] As a threshold inquiry, the court must determine whether an Illinois liquor license is a property interest; if that query is answered in the affirmative, the next step is to determine "what process is due." Doherty, 75 F.3d at 322. However, if the Licensees cannot establish that they have a property interest in their liquor licenses, their due process claims must fail. See Kim Constr. Co., 14 F.3d at 1245; Cornelius v. LaCroix, 838 F.2d 207, 212 (7th Cir.1988).
In its prior Opinion and Order, the court reviewed the language of the Liquor Control Act and cases from Illinois courts (federal and state) to determine whether N & N had made a sufficient showing, for purposes of a preliminary injunction, that it had a property interest in its liquor license. See N & N Catering Co., 26 F.Supp.2d at 1071-77. From the outset, the court noted the continuing difference of opinion among Illinois courts as to whether a liquor license is a property interest or a mere "privilege." See id. at 1072; see also Esmail v. Macrane, 862 F.Supp. 217, 225 (N.D.Ill.1994) (recognizing that "there appears to be some dispute as to whether a liquor license is a property right under Illinois law"), rev'd on other grounds, 53 F.3d 176 (7th Cir.1995). Upon review of the relevant case law, the court expressed reservations as to whether N & N could ultimately show that it had a property interest in its Illinois liquor license. Nonetheless, the court found that there were at least arguable grounds indicating that N & N had such an interest. See N & N Catering Co., 26 F.Supp.2d at 1076-77.
The court then concluded that N & N had met its burden with respect to the process prong of the due process inquiry. See id. at 1077-79. In doing so, the court *1066 primarily relied on Philly's v. Byrne, 732 F.2d 87, 92-93 (7th Cir.1984) and 87 South Rothschild Liquor Mart v. Kozubowski, 752 F.Supp. 839, 842 (N.D.Ill.1990). As discussed below, the Seventh Circuit in Philly's held that a referendum which prohibits the sale of liquor precinct-wide does not violate due process. See 732 F.2d at 92-93. The Philly's court reasoned that the "across the board" nature of a precinct-wide referendum was an adequate safeguard against arbitrary and adjudicative action by the electorate. See id. at 93. In 87 South Rothschild, the court addressed a former version of the Liquor Control Act (1989) that allowed voters to ban the sale of alcohol at a "single establishment." 752 F.Supp. at 841, 842. Relying on Philly's, the court in 87 South Rothschild declared the single establishment provision unconstitutional because the safe-guard of a precinct-wide prohibition was missing. See id. at 842.
Though Philly's and 87 South Rothschild are similar to the actions at bar, neither case affirmatively establishes that a licensee has a property interest in its liquor license. In fact, the court in 87 Rothschild does not address the "property" prong in its due process analysis. Here, by contrast, the "property" prong is hotly-contested, and a resolution of that issue is required. The Licensees, however, have failed to persuade the court to abandon its initial reservations on the existence of a property interest, and thus the court's final and conclusive determination is that the Licensees have failed to show that they have a property interest in their liquor licenses. Accordingly, the court need not reach the "process" prong of the due process analysis.
Although "`property' has never had a single, fixed meaning," Patterson v. Portch, 853 F.2d 1399, 1404 (7th Cir.1988), the Seventh Circuit has articulated essentially the same test for determining whether a property interest exists for purposes of the Due Process Clause of the Fourteenth Amendment. See Mid-American Waste Systems, Inc. v. City of Gary, 49 F.3d 286, 289 (7th Cir.1995); Toulabi v. United States, 875 F.2d 122, 125 (7th Cir. 1989); Baja Contractors, Inc. v. City of Chicago, 830 F.2d 667, 676 (7th Cir.1987); Scott, 786 F.2d at 341; Reed v. Village of Shorewood, 704 F.2d 943, 948 (7th Cir. 1983). In short, Seventh Circuit cases addressing "property" under the Due Process Clause reflect "efforts to implement the conclusion in [Board of Regents v.] Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), that property depends on a legitimate claim of entitlement." Mid-American Waste Systems, Inc., 49 F.3d at 289. In relevant part, the property inquiry articulated in Roth provides:
To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate expectation of entitlement to it.... Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.
408 U.S. at 577, 92 S.Ct. 2701. Although Roth instructs that the "underlying substantive interest is created by `an independent source such as state law,' [it is] federal constitutional law [that] determines whether the interest rises to the level of a `legitimate claim of entitlement.'" Memphis Light, Gas and Water Division v. Craft, 436 U.S. 1, 9, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978). The court begins its inquiry with the state law at issue here the Liquor Control Act.
The plain language of the Liquor Control Act would seem to solve the "liquor license as property" debate quite conclusively. See 235 ILCS 5/6-1. Indeed, the Liquor Control Act expressly states that a liquor license "shall not constitute property." Id. Further, by the terms of the *1067 Liquor Control Act, a liquor license lacks many of the typical attributes of property. Id. For instance, a liquor license cannot be transferred or sold, and it is site-specific, in that it "applies only to the premises described in the application and in the license issued thereon...." 235 ILCS 5/7-14. The relevant portion of the Liquor Control Act is excerpted here:
A license shall be purely a personal privilege, good for not to exceed one year after issuance ... unless sooner revoked as in this Act provided, and shall not constitute property, nor shall it be subject to attachment, garnishment or execution, nor shall it be alienable or transferable ... or subject to being encumbered or hypothecated. Such license shall not descend by the laws of testate or intestate devolution, but it shall cease upon the death of the licensee, provided that executors or administrators of the estate of any deceased licensee, and the trustee of any insolvent or bankrupt licensee, when such estate consists in part of alcoholic liquor, may continue the business ... under order of the appropriate court, and ... until the expiration of such license but not longer than six months after the death, bankruptcy or insolvency of such licensee. ...
235 ILCS 5/6-1.
Additionally, the Liquor Control Act states the terms for renewal of a liquor license:
Any licensee may renew his license at the expiration thereof, provided he is then qualified to receive a license and the premises for which such renewal license is sought are suitable for such purpose; and provided further that the renewal privilege herein provided for shall not be construed as a vested right which shall in any case prevent the city council or village president and board of trustees or county board, as the case may be, from decreasing the number of licenses to be issued within its jurisdiction.
Id.
Several courts, including this one, have relied upon the plain language of the Liquor Control Act to reject claims that a licensee has a property interest in its Illinois liquor license. See Sapir v. City of Chicago, 749 F.Supp. 187, 190 (N.D.Ill. 1990) (Norgle, J.); Blue Cat Lounge, Inc. v. License Appeal Comm'n, 281 Ill.App.3d 643, 217 Ill.Dec. 465, 667 N.E.2d 554, 557 (1996); Roach Enterprises v. License Appeal Comm'n, 277 Ill.App.3d 523, 214 Ill. Dec. 85, 660 N.E.2d 276, 282 (1996); County of Cook v. Kontos, 206 Ill.App.3d 1085, 152 Ill.Dec. 7, 565 N.E.2d 249, 252 (1990); Ole, Ole, Inc. v. Kozubowski, 187 Ill.App.3d 277, 134 Ill.Dec. 895, 543 N.E.2d 178, 181 (1989); Ross v. Kozubowski, 182 Ill.App.3d 687, 131 Ill.Dec. 248, 538 N.E.2d 623, 626 (1989); Black Knight Restaurant, Inc. v. City of Oak Forest, 159 Ill.App.3d 1016, 111 Ill.Dec. 863, 513 N.E.2d 109, 111 (1987); Two Kats, Inc. v. Village of Chicago Ridge, 147 Ill.App.3d 440, 101 Ill.Dec. 1, 497 N.E.2d 1314, 1315 (1986); City of Wyoming v. Liquor Control Comm'n of Illinois, 48 Ill.App.3d 404, 6 Ill.Dec. 258, 362 N.E.2d 1080, 1083 (1977). And other courts have relied on Illinois common law to reject the argument that an Illinois liquor license is property. See Great Atlantic & Pacific Tea Co. v. Mayor and Commissioners of Danville, 367 Ill. 310, 11 N.E.2d 388, 392 (1937) ("The right to engage in the liquor traffic is not an inalienable right guarded by the organic law."); People v. McBride, 234 Ill. 146, 84 N.E. 865 (1908) (stating that licenses to sell liquor create no vested rights and "are merely temporary permits to do what would otherwise be an offense against the law...."); Duncan v. Marcin, 82 Ill. App.3d 963, 38 Ill.Dec. 422, 403 N.E.2d 653, 656 (1980); Huguley v. Marcin, 39 Ill.App.3d 230, 349 N.E.2d 564, 566 (1976); Malito v. Marcin, 14 Ill.App.3d 658, 303 N.E.2d 262, 265 (1973); Maywood Proviso *1068 State Bank v. City of Oakbrook Terrace, 67 Ill.App.2d 280, 214 N.E.2d 582, 586 (1966).
Most relevant to this court's property inquiry, however, are two cases from the Seventh Circuit that have addressed a licensee's alleged property rights under the Liquor Control Act: (1) Philly's v. Byrne, supra; and (2) Reed v. Village of Shorewood, 704 F.2d 943, 948-49 (7th Cir.1983). In each of these cases, the Seventh Circuit declined (either expressly or implicitly) to find the above section of the Liquor Control, 235 ILCS 5/6-1, controlling as to whether a liquor license is property for purposes of the Due Process Clause. Moreover, both cases largely dismiss without comment the several Illinois cases that reject the assertion that a liquor license is property.[6]
In its prior Opinion and Order, the court closely examined the Seventh Circuit's reasoning in Philly's and Reed. Though neither case is directly on point (Philly's is close), each provides insightful analysis that in large part, if not entirely, controls the outcome here. Additionally, the parties vigorously contest each case's application to the facts at bar. It is therefore necessary to re-examine Philly's and Reed, beginning with the earlier case, Reed.
Reed v. Village of Shorewood
In Reed, officials of the Village of Shorewood, Illinois, employed various, questionable tactics as they attempted to strip the plaintiffs of their Illinois liquor license. See 704 F.2d at 947. Before the officials began implementing these tactics, the plaintiffs were able to renew their liquor license for three years. At some point, however, the village (through its officials) began a campaign of harassment against the plaintiffs, which included customer arrests and groundless allegations of liquor ordinance violations. After the limited success of those tactics, the village passed an ordinance which reduced the number of liquor licenses available and informed the plaintiffs that their liquor license would not be renewed. The Illinois Liquor Control Commission reversed and remanded, holding that the plaintiffs were entitled to a hearing before a decision was made not to renew. Unswayed, the village ignored the directive for a hearing and revoked the plaintiffs' liquor license on trumped-up charges. Again, the Illinois Liquor Control Commission reversed. Later, the village again refused to renew the plaintiffs' license without a hearing, and were again reversed. Nonetheless, the village was successful in wearing down the plaintiffs to the point where the plaintiffs eventually closed their watering-hole and surrendered their license. See id.
The plaintiffs then filed suit, alleging that the village and its officials "interfered with and eventually destroyed their business, in violation of the due process clause of the Fourteenth Amendment." Id. Of particular note was the plaintiffs' allegation that the defendants "wait[ed] for the license to expire and then refuse[d] to issue a renewal license." Id. at 949 (brackets in original). The district court dismissed the suit without addressing whether the plaintiffs' liquor license was property, instead holding that there was no actual deprivation by the village and its officials. See id.
On appeal, the Seventh Circuit discussed whether an Illinois liquor license is property for purposes of the Fourteenth Amendment. See id. at 948. At the outset, the court noted that since the Supreme Court's decision in Roth, state law provided the answer to that inquiry. See id. The Reed court, however, rejected the seemingly "inescapable" conclusion that the state law apparently on point here, i.e., *1069 the Liquor Control Act's statement that a liquor license is "purely a personal privilege ... and shall not constitute property," is controlling for due process purposes. See Reed, 704 F.2d at 948 (citing Ill.Rev. Stat.1981, ch. 43, ¶ 119).[7] Specifically, the court remarked that "`[p]roperty' in the Illinois Liquor Control Act need not mean the same thing as `property' in the due process clause." Id. (citing Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972)). The court explained that while Illinois liquor licenses lack some of the typical attributes of property, e.g., they cannot be sold or bequeathed, "this does not mean they are not property in a due process clause sense." Id. Thus, according to the court, "The statement that a liquor license is not property may have been intended just to emphasize these limitations...." Id.
Therefore, the Reed court stated that it "must look beyond labels ... and decide whether the plaintiffs' license was `property' in the functional sense." Id. Accordingly, the court posed the dispositive question as "whether under Illinois law a liquor license is securably and durably the licensee's" as opposed to "what you hold subject to so many conditions as to make your interest meager, transitory, or uncertain." Id.
The court answered the former query in the affirmative. See id. First, the court reasoned that an Illinois liquor license "is good for one year and during that time, clearly, it is securely held, for it can be revoked only for cause, after notice and hearing, and subject to judicial review." Id. (citing Ill.Rev.Stat.1981, ch. 43, ¶¶ 149, 153 [now 235 ILCS 5/7-5, 5/7-9]). According to the court, "These are the same conditions under which a teacher's tenure, a form of property under the Fourteenth Amendment, can be revoked." Id. (referring to Perry).
Second, the court examined the criteria for renewal of a liquor license as provided in the Liquor Control Act, Ill.Rev.Stat. 1981, ch. 43, ¶ 119 [now 235 ILCS 5/6-1]. See id. at 948-49. After noting that the Liquor Control Act does not provide equivalent protections for nonrenewal as revocation, the court found that the "criteria for renewal of a [liquor] license are undemanding, which suggests that the Illinois legislature expected most licenses to be renewed as a matter of course." Id. The court then determined that nonrenewal could be equated with revocation, meaning that the same statutory safeguards against arbitrary revocation were required for arbitrary nonrenewal. See id. at 949. In support thereof, the court relied on the following passage from City of Wyoming v. Liquor Control Comm'n, 48 Ill.App.3d 404, 6 Ill.Dec. 258, 362 N.E.2d 1080, 1084 (1977):
[I]t could not have been the legislative intent that a liquor control commissioner be able to easily avoid the application of the statutory procedural requirements to license revocation by waiting for the license to expire and then refuse to issue a renewal license. For that reason, we interpret the term `revocation' [in Ill. Rev.Stat.1981, ch. 43, ¶ 149, now 235 ILCS 5/7-5] to include the refusal to issue a renewal license.
Id. The court deemed this passage as standing for the principle "that you may not do indirectly by nonrenewal what you could not do directly by revocation." Id. In doing so, the court also rejected the express language in the Liquor Control Act, Ill.Rev.Stat.1981, ch. 43, ¶ 119 [now 235 ILCS 5/6-1], that provides that renewal is not a "vested right." See id.
As for the case before it, the court iterated the plaintiffs' allegation that the village "wait[ed] for the license to expire and then refuse[d] to issue a renewal license." Id. And under the court's extensive analysis, "if true this entitled [the plaintiffs] ... to all the protections, procedural and substantive, *1070 stantive, of the revocation process, thus making their interest in renewal a property right for purposes of the Fourteenth Amendment." Id. That is the holding of Reed.
Philly's v. Byrne
The court now turns to Philly's, a case comparable to the instant actions because it addressed the constitutionality of a precinct-wide local option referendum under the Liquor Control Act. In Philly's, a Chicago restaurant lost its liquor license as a result of a referendum banning the sale of alcohol throughout the entire, surrounding precinct. See 732 F.2d at 89. The restaurant then filed suit, alleging that "the operation of Illinois' local-option liquor law ... allow[ing] the voters in a precinct to vote the precinct dry, deprived [them] of property without due process of law...." Id. For reasons not reiterated in the Seventh Circuit's opinion, the district court dismissed the action on summary judgment. See id.
The Seventh Circuit affirmed, holding that a referendum which prohibits the sale of liquor precinct-wide does not violate due process. See id. at 92-93. Because the court ultimately concluded that the local option referendum satisfied the process prong of the due process inquiry, it expressly declined to decide whether a liquor license is property in these circumstances. See id. at 91. Before refraining from this determination, however, the court re-examined the "liquor license as property" issue. See id. at 90-91.
Although the court characterized Reed as holding that an Illinois liquor license is property within the meaning of the Fourteenth Amendment, see id. at 90 (citing Reed, 704 F.2d at 948-49), it opined that to determine whether an Illinois liquor license is property, an inquiry into "the precise dimensions of the right" is also required. Id. The court deemed the expiration date of the liquor license as one of these dimensions, commenting:
Every liquor license in Illinois has a variable expiration date: either the date stamped on the license or the date on which the licensee is required to surrender the license because the precinct where the licensed premises are located has voted to go dry whichever is earlier. Just as a tenant is not deprived of a property right when he is ejected from the premises at the expiration of his lease, so it can be argued that when a precinct votes itself dry any liquor licensees' property rights are extinguished by the terms of the licenses.
Id. at 90-91. The court, however, distinguished this argument from the situation where "a condition that limits a property right infringes a constitutional liberty." Id. at 91. An example of such a case, the court explained, would be "if ... liquor licenses expired by their terms when the licensee criticized the Liquor Control Commission." Id. In that scenario, "there would be a deprivation of liberty [of expression]." Id. But, the court noted, "a referendum does not invade any constitutional liberty." Id.
While making this distinction, the court stopped short of endorsing the argument that a licensee's "property rights [could be] extinguished by the terms of the licenses." The court explained that in at least one instance such an argument would potentially allow states to circumvent due process. See id. The court gave the following example:
If Illinois provided that a liquor license could be taken away only for cause but cause as determined by the Liquor Control Commission without any notice to the licensee or opportunity for a hearing, the state could argue that this was simply a condition, not unlawful in itself (for there is not a general constitutional requirement that government act only after notice and hearing), that limited the right.
Id. Thus, "[t]he holder of the right could complain only if the procedures of the state prescribed, however meager, were not followed." Id.
The court noted that this approach, while endorsed in some legal circles, "is *1071 not yet law." Id. (citations omitted). Returning to the issue at bar, the court remarked, "Maybe the parallel argument that a liquor licensee's rights are merely conditional on the voters' not voting the precinct dry also fails." Id. And that is the end of the "property" analysis in Philly's, as the court declined to provide a conclusion on the "liquor license as property" issue. See id.
Though Reed and Philly's discuss extensively whether an Illinois liquor license is property, they do not resolve the issue conclusively. On the one hand, the answer seems clear because Reed holds that a licensee has a property interest under the Fourteenth Amendment in the renewal of its license. See 704 F.2d at 949. The Licensees argue that the holding in Reed is easily extended to a case where a local option referendum is at issue, and, a la Reed, they equate a prohibitive referendum with statutory revocation. According to the Licensees, "[t]o say ... that Reed only applies to the renewal right would be to read its holding and, as importantly, its reasoning, too narrowly; for it would defy common sense, let alone longstanding principles of constitutional law, that a licensee could have a property interest in the renewal of a license, but not in the underlying license itself, merely because the legislature labeled the license a privilege." (Licensees' Supp.Mem. at 12.) That argument carries weight, as later Seventh Circuit cases interpret Reed as holding that an Illinois liquor license is property under the Fourteenth Amendment period. See Kelly v. City of Chicago, 4 F.3d 509, 511 (7th Cir.1993) (stating in passing that under Reed, "a liquor license constitutes property for purposes of the Fourteenth Amendment"); Philly's 732 F.2d at 90 (arguably citing Reed as establishing that a liquor license is always property); see also 87 South Rothschild Liquor Mart, 752 F.Supp. at 842 (implicit in decision declaring Liquor Control Act's single establishment provision unconstitutional on due process grounds is that Illinois liquor license is property). This would seem to end the "liquor license as property" debate.
On the other hand, the Philly's court arguably re-opened the debate by reiterating the instruction from Roth that the property inquiry also depends "on the precise dimensions of the right." Philly's, 732 F.2d at 90. If as the Licensees urge, Reed conclusively established that a liquor license was property for seemingly all purposes, then a legitimate question is why the Philly's court re-addressed the issue. Perhaps one obvious reason is that the facts in Philly's were distinguishable from those in Reed. And for purposes here, Philly's, unlike Reed, involved facts comparable to the ones at bar. That is, Philly's involved the loss of a liquor license via a local option referendum rather than the unexpected nonrenewal, and thus statutory revocation, of a license. Therefore, the court is not convinced that Reed's "liquor license as property" determination controls here. See Wilcox v. Miller, 89 C 20053, 1990 WL 304268, at *3 (N.D.Ill. Nov.6, 1990) (construing Reed to state that the expectation of renewal "creates a `vested right' in [an Illinois liquor license]" thereby requiring due process protection).
The most relevant instruction from Philly's is where the court deemed a local option referendum as providing a potential expiration date for a liquor license. See 732 F.2d at 90-91. According to the Philly's court, this potential expiration date is one of "the precise dimensions of the right" accompanying the possession of a liquor license. Id. Although the Philly's court declined to reach a conclusion on these grounds, it did not outright reject the argument that a licensee's supposed property rights are conditional on the expiration date of its license. In fact, this view is supported by Judge Wood's concurring opinion in Philly's, in which he stated:
While Justice Holmes' assertion in Rippey [v. Texas, 193 U.S. 504, 509-10, 24 S.Ct. 516, 48 L.Ed. 767 (1904)], that the power to prohibit includes the power to prohibit conditionally, has proven overbroad *1072 in other contexts, the holding of the case remains in force in the context of a local option provision of an otherwise constitutional legislative enactment such as a prohibition on the sale of liquor under the unique aegis of the twenty-first amendment.
732 F.2d at 94.
Similarly, in a case addressing the revocation of a license to sell guns under Wisconsin law, the Seventh Circuit endorsed the argument, stating that "[a] license to operate a business is [held securely by the licensee and is] therefore property if it cannot be taken away from the holder before the end of a definite period without proof of misconduct on his part, so that if he keeps out of trouble he knows he can hold on to the license for that period." Baer v. City of Wauwatosa, 716 F.2d 1117, 1122 (7th Cir.1983) (emphasis added) (citing Reed, 704 F.2d at 948-49) (other citations omitted). The Baer court stated further that the plaintiff's right to sell guns "was conferred by the license, and if [the plaintiff] had no expectation reasonably grounded in law that he would be able to retain the license for a fixed term during good behavior, he was not deprived of property." Id. (emphasis added); see also National Paint & Coatings Assoc. v. City of Chicago, 45 F.3d 1124, 1129 (7th Cir. 1995) ("[T]he people, directly or through their legislature, may alter the substantive terms of the promise not to interfere in private economic transactions.") (citing Philly's); Doe v. Edgar, 721 F.2d 619, 624 (7th Cir.1983) (Once an "individual loses his [driver's] pursuant to a valid conviction and he exhausts his administrative remedies, his property interest in that license terminates.").
The court finds the property analysis from Baer dispositive here. Via the local option provision of the Liquor Control Act, the term of a liquor license is indefinite, thereby indicating that a licensee's interest is "meager, transitory, or uncertain." In other words, the ever-present possibility of an Illinois liquor license expiring on an indefinite date (despite the one-year term otherwise provided) via a local option referendum indicates that it is not "securably and durably the licensee's" the standard articulated in Reed. Indeed, while the Licensees, like the plaintiffs in Reed, had a legitimate expectation via the Liquor Control Act that their licenses would be renewed administratively as a matter of course, they were also on notice under the statute that their licenses may expire by the discretion of the electorate (the statute uses the term "void"). This notice of potential expiration by referendum therefore negates any "legitimate claim of entitlement" that a licensee would assert in its license. See Border v. City of Crystal Lake, 75 F.3d 270, 273 (7th Cir.1996) ("A person's interest in a benefit ... constitutes `property' for due process purposes only if `there is are such rules or mutually explicit understandings that support his claim of entitlement to the benefit.'") (quoting Perry, 408 U.S. at 601, 92 S.Ct. 2694); National Paint, 45 F.3d at 1129 ("A license is nothing but a promise by the issuing body not to interfere in business according to its terms"); cf. Ross v. City of Chicago, 89 C 8049, 1990 WL 37700 (N.D.Ill.Mar. 22, 1990) (no unconstitutional taking where local option referendum voided liquor license because the plaintiff "operated his liquor store with the knowledge that a local referendum could take away his liquor license at any time."); People v. McBride, 234 Ill. 146, 84 N.E. 865, 872 (1908) (license not property where license "stated on its face that it was subject to all the laws of the state."); M & F Supermarket, Inc. v. Owens, 997 F.Supp. 908, 913 (S.D.Ohio 1997) (local option referendum did not violate plaintiff's substantive due process rights because plaintiff's "knew or should have known that the citizens had this option under the laws of the State of Ohio."); Scioto Trails Co. v. Ohio Dept. of Liquor Control, 11 Ohio App.3d 75, 462 N.E.2d 1386, 1388-92 (1983) (no due process violation where licensee held liquor license subject to the exercise of the statutory right of a local option election).
The Licensees nevertheless argue that they had a legitimate expectation in the *1073 continued validity of their licenses because the history of the Liquor Control Act, going back to its original enactment in 1934 and including its review in Philly's and 87 South Rothschild Liquor Mart, "makes clear the fact that licensees have, and had, an equal right to expect that any "dry" vote would only be precinct-wide...." (Licensees' Supp.Mem. at 16.) (citing Philly's, 732 F.2d at 92-93 and 87 South Rothschild Liquor Mart, 752 F.Supp. at 842). Thus, according to the Licensees, their "true expectation ... is that any threat of a local option referendum would solely be across the board, thus furnishing them with a permissible substitute safeguard against an unconstitutional taking." Id. This expectation, however, does not derive from the language of the Liquor Control Act, and is therefore nothing more than a unilateral expectation of entitlement. See Cornelius v. LaCroix, 838 F.2d 207, 211 (7th Cir.1988) (rejecting argument that legitimate claim of entitlement arose from past contracts); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1080 (7th Cir.1987) ("A person has a `property interest' in an expectation of renewal only if state law so provides."). And as noted above, neither Philly's nor 87 South Rothschild Liquor Mart conclusively establishes that a licensee has a property interest in its license. Moreover, the Licensee's attempt to distinguish a precinct-wide referendum from a single-address referendum (for purposes of the property inquiry) is not persuasive.[8]
In sum, a unilateral claim of entitlement, as the Licensees have here, simply does not suffice for purposes of establishing that they have a property interest in the continued validity of their liquor licenses. See Roth, 408 U.S. at 576-77, 92 S.Ct. 2701; River Park, Inc. v. City of Highland Park, 23 F.3d 164, 165 (7th Cir. 1994); Wallace v. Robinson, 940 F.2d 243, 246 (7th Cir.1991); Dziewior v. City of Marengo, 715 F.Supp. 1416, 1418 (N.D.Ill. 1989); cf. Marusic Liquors, Inc. v. Daley, 55 F.3d 258, 262 (7th Cir.1995) (plaintiff misunderstood the nature of a license in a system of regulation where he depicted it "as a kind of property that the state must respect and the privileges of which it may not change."). Because the Licensees have failed to show that they have a property interest in their liquor licenses, their due process claim must fail. Therefore, the court concludes that the local option provision of the Liquor Control Act does not violate the Due Process Clause of the Fourteenth Amendment.[9]
C. Bill of Attainder
Next, the court addresses the Licensees' claim that the local option provision allowing single-address referenda under the Liquor Control Act, 235 ILCS 5/9-2, amounts to a bill of attainder in violation of the U.S. Constitution
The Constitution provides that "[n]o State shall ... pass any Bill of Attainder." See U.S. Const. Art. I, § 10, cl. 1; see also U.S. Const. Art. I, § 9, cl. 3 (applied to the federal government). "The Supreme Court has defined a bill of attainder *1074 as `a law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial.'" Dehainaut v. Pena, 32 F.3d 1066, 1070 (7th Cir.1994) (quoting Selective Ser. Sys. v. Minn. Public Int. Research, 468 U.S. 841, 847, 104 S.Ct. 3348, 82 L.Ed.2d 632 (1984)); see also Nixon v. Administrator of Gen. Services, 433 U.S. 425, 468, 97 S.Ct. 2777, 53 L.Ed.2d 867 (1977); United States v. Brown, 381 U.S. 437, 445, 85 S.Ct. 1707, 14 L.Ed.2d 484 (1965); United States v. Lovett, 328 U.S. 303, 315-16, 106 Ct.Cl. 856, 66 S.Ct. 1073, 90 L.Ed. 1252 (1946). Likewise, "[t]he singling out of an individual for legislatively prescribed punishment constitutes an attainder whether the individual is called by name or described in terms of conduct which, because it is past conduct, operates only as a designation of particular persons." Communist Party of the United States v. Subversive Activities Control Bd., 367 U.S. 1, 86, 81 S.Ct. 1357, 6 L.Ed.2d 625 (1961). However, the prohibition against bills of attainder "surely was not intended to serve as a variant of the equal protection doctrine, invalidating every Act of Congress or the States that legislatively burdens some persons or groups but not other plausible individuals." Nixon, 433 U.S. at 477; see also Falls v. Town of Dyer, Ind., 875 F.2d 146, 148 (7th Cir.1989) ("Our Constitution requires neither perfection nor comprehensive regulation."); Song v. City of Elyria, Ohio, 985 F.2d 840, 844 (6th Cir.1993); cf. River Park, Inc., 23 F.3d at 167 ("Federal litigation is not a repêhcage round for losers of earlier contests....").
The Licensees bear a heavy burden in seeking to have the Liquor Control Act declared a bill of attainder, as "`only clearest proof suffices to establish unconstitutionality of a statute on such a ground.'" Communist Party of the United States, 367 U.S. at 83, 81 S.Ct. 1357 (quoting Flemming v. Nestor, 363 U.S. 603, 617, 80 S.Ct. 1367, 4 L.Ed.2d 1435 (1960)); see also Kerr-McGee Chemical Corp. v. Edgar, 837 F.Supp. 927, 935 (N.D.Ill.1993). To carry their burden, the Licensees must show that the Liquor Control Act has three attributes: "(1) specification of the affected persons; (2) punishment; and (3) lack of a judicial trial." Dehainaut, 32 F.3d at 1070. Because the "lack of a judicial trial" element is not at issue, the court limits its discussion to the remaining two elements, "specification of the affected persons" and "punishment."
With respect to the specificity element, the Licensees argue that "[t]he referendum that appears on the ballot specifies a particular licensed establishment which alone is affected by the vote to revoke its license." (Licensees' Supp.Mem. at 37.) Thus, the Licensees attack the Liquor Control Act at the referendum level rather than the terms of the statute itself. Compare City of Eastlake v. Forest City of Enterprises, Inc., 426 U.S. 668, 672-79, 96 S.Ct. 2358, 49 L.Ed.2d 132 (1976) (rejecting a due process challenge to a zoning referendum) with Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 295, 102 S.Ct. 434, 70 L.Ed.2d 492 (1981) ("It is irrelevant that the voters rather than a legislative body [adopted the measure], because voters may no more violate the Constitution by enacting a ballot measure than a legislative body may do so by enacting legislation."). Though the Licensees' argument carries weight, the contravening argument is that where a statute is attacked as a bill of attainder, the focus is on its terms, and whether those terms either explicitly or as applied specify (and punish) an individual or group. Cf. Pro-Eco, Inc. v. Bd. of Comm. of Jay County, Ind., 57 F.3d 505, 513 n. 9 (7th Cir.1995) ("If an ordinance professed general applicability, but it were so specific in describing the prohibited acts that only one actor could ever come within its purview, the ordinance might amount to a bill of attainder...."); Coniston Corp. v. Village of Hoffman Estates, 844 F.2d 461, 469 (7th Cir.1988). But cf. Philly's, 732 F.2d at 93; United Beverage Co. of South Bend, Inc., 760 F.2d at 159.
*1075 Assuming that the proper focus is on the actual terms of the enabling statute, the Liquor Control Act lacks such specificity. Although the Liquor Control Act provides for single-address referenda, its terms do not identify any particular licensee by name or otherwise. Put simply, the single-address provision applies generally to all current and potential liquor licensees in the City of Chicago. Contrast Brown, 381 U.S. at 450, 85 S.Ct. 1707 (federal statute limiting eligibility for union office "designated in no uncertain terms" the characteristics of communists). Indeed, the city-wide addresses of the Licensees reflect the general application of the statute. Moreover, the only common characteristic that the Licensees have shown is that each holds a liquor license. Finally, their mere number also weighs against finding an unconstitutional "class of one." See Coniston Corp., 844 F.2d at 469 (stating that "where the class has only one member, we have the bill of attainder."). In any event, the court's bill of attainder analysis does not rest on whether the "specificity" element has been satisfied.
Even if the focus were on particular referenda and the Licensees demonstrated "specificity," they nevertheless fail to show that the Liquor Control Act, via its provision for single address referenda, is punitive. To determine whether a statute inflicts punishment, the court must make three inquiries: "(1) whether the challenged statute falls within the historical meaning of legislative punishment; (2) whether the statute `viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes'; and (3) whether the legislative record `evinces a [legislative] intent to punish.'" Selective Serv. Sys. v. Minn. Public Int. Research, 468 U.S. at 852, 104 S.Ct. 3348 (quoting Nixon, 433 U.S. at 475-76, 478, 97 S.Ct. 2777); see also Dehainaut, 32 F.3d at 1071.
From a historical perspective, the single-address provision of the Liquor Control Act does not fall within the meaning of punishment. In this country, the punishments forbidden by the Bill of Attainder Clause have expanded beyond the prohibition's English origin, namely death sentences, "to include legislative bars to participation by individuals or groups in specific employments or professions." Selective Serv. Sys., 468 U.S. at 852, 104 S.Ct. 3348; see also Nixon, 433 U.S. at 473-74, 97 S.Ct. 2777. In conclusory fashion, the Licensees contend that the loss of their licenses falls within this ambit of punishment. (See Licensees' Supp.Mem. at 34-35) ("There is no doubt, then, that the legislative revocation of a specific individual's license qualifies as the kind of punitive measure governed by the Bill of Attainder Clause."). As the brevity of the Licensees' argument implies, there is simply no basis to deem the loss of a liquor license as punishment in the historical sense. Further, the Licensees do not attempt to show that the loss of their licenses bars them from participation in specific employment; nor do they attempt to compare their predicament with instances where punishment was found. See, e.g., Nixon, 433 U.S. at 474-75, 97 S.Ct. 2777 (citing cases). In short, "[f]orbidden punishment is not involved merely because [a statute] imposes burdensome consequences." Id. at 472, 97 S.Ct. 2777.
Moreover, the court finds that the single-address provision of the Liquor Control Act furthers a nonpunitive legislative purpose. As discussed at the outset of the court's analysis, states have an important interest, and wide latitude in exercising their police powers to control the sale of liquor. That interest is evident in the plain language of the Liquor Control Act, which states:
This Act shall be liberally construed, to the end that the health, safety and welfare of the People of the State of Illinois shall be protected and temperance in the consumption of alcoholic liquors shall be fostered and promoted by sound and careful control and regulation of the manufacture, sale and distribution of alcoholic liquors. *1076 235 ILCS 5/1-2; cf. Kerr-McGee Chem. Corp., 837 F.Supp. at 936 (referring to the purpose of the statute at issue). And that legitimate interest is most apparent when the electorate votes in a referendum on whether to prohibit the sale of alcohol. See Philly's, 732 F.2d at 92 ("It has seemed best in default of consensus to leave the matter [of alcohol sales] to local preference as expressed in the voting booth."). Simply put, the "the restriction [on the Licensees] comes about as a relevant incident to [the] regulation" of alcohol. Dehainaut, 32 F.3d at 1071 (citation and internal quotation marks omitted).
The court's final inquiry into whether the challenged enactment inflicts punishment is "whether the legislative ... record as a whole evinces an intent to punish." Dehainaut, 32 F.3d at 1072. The Licensees must present "`unmistakable evidence of punitive intent' before an enactment may be invalidated on this basis." Id. (citations omitted). Thus, even "several isolated statements" by legislators will not suffice. Id.
On this prong, the Licensees' evidence consists of one such isolated statement. To wit, a legislator commented that single-address referenda "will not penalize the good licenses ... but only target that bad operator." (Licensees' Supp.Mem. at 37.) That statement, however, does not refer to a specific licensee. And in any event, the court declines to infer punitive intent in the absence of additional evidence. Finally, the court rejects the Licensees' argument that statements in the legislative history directed at the anti-social consequences of alcohol consumption are probative of punitive intent; such statements instead reflect the purpose of the legislation.
In sum, the Licensees have failed to show that the single-address provision of the Liquor Control Act constitutes punishment. Therefore, the court concludes that the Liquor Control Act is not a bill of attainder in violation of the United States Constitution.
III. CONCLUSION
For the foregoing reasons, the court concludes that the Licensees have failed to show that the Liquor Control Act violates the Due Process Clause or the Bill of Attainder Clause of the United States Constitution. The court declines to exercise supplemental jurisdiction over the Licensees' claim that the Liquor Control Act violates the Special Legislation Clause of the 1970 Illinois Constitution.
IT IS SO ORDERED.
NOTES
[1] For a brief review of some of the events that have taken place at the Amphitheatre, see N & N Catering Co., 26 F.Supp.2d at 1068 (citing John Kass, Daley Wants to Buy, Raze Amphitheatre, Chicago Trib., October 9, 1996 (Metro Chicago section), at 3, 1996 WL 2715347 and Robert Davis, Amphitheatre Comes Back From Oblivion, Chicago Trib., November 27, 1987, (Chicagoland section), at 1, 1987 WL 2999569).
[2] Out of 209 signatories to the petition, only one does not reside in the high-rise building. (See Club Misty Compl., Ex. 1.)
[3] Section 2 of the Twenty-first Amendment provides that "[t]he transportation or importation into any State ... for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited". U.S. Const. amend. XXI, § 2. Though the language of § 2 does not appear to authorize state control of the sale of liquor, that is how courts have interpreted the section. See Laurence H. Tribe, How to Violate the Constitution without Really Trying: Lessons from the Repeal of Prohibition to the Balanced Budget Amendment, 12 Const.Comment. 217, 218-21 (Summer, 1995).
[4] The Special Legislation Clause provides: "The General Assembly shall pass no special or local law when a general law is or can be made applicable. Whether a general law is or can be made applicable shall be a matter of judicial determination." Ill. Const.1970, art. IV, § 13.
[5] Some courts have presented the due process inquiry in three steps: (1) whether there was a property interest under the Fourteenth Amendment; (2) whether the alleged loss amounted to a deprivation; (3) whether that deprivation was without due process of law. See Bayview-Lofberg's, Inc. v. City of Milwaukee, 905 F.2d 142, 144 (7th Cir.1990).
[6] Three additional notes: (1) the Philly's court refers to the line of Illinois cases only in passing, see 732 F.2d at 89; (2) the Reed court did refer to one of those cases, City of Wyoming v. Liquor Control Commission of Illinois, 48 Ill.App.3d 404, 6 Ill.Dec. 258, 362 N.E.2d 1080, 1084 (1977), but relied on it for a different proposition, see 704 F.2d at 949; (3) the Illinois Appellate Court has criticized the "liquor license as property" analysis in Reed, see Black Knight Restaurant, 111 Ill.Dec. 863, 513 N.E.2d at 111 ("In our view, [Reed] directly contradicts controlling Illinois law, and we decline to follow it as precedent.").
[7] As noted above, that statement is now included in 235 ILCS 5/6-1, which was formerly cited as Ill.Rev.Stat.1981, ch. 43, ¶ 119. The parties have not identified any material change that the provision has undergone since 1981.
[8] Additionally, the Licensees (notwithstanding that N & N and Club Misty are corporations) have not shown that the "continued possession [of their liquor licenses is] essential in the pursuit of a livelihood." Bell v. Burson, 402 U.S. 535, 539, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971); Scott, 786 F.2d at 341; cf. Nat'l Paint & Coatings, 45 F.3d at 1129-30 (discussing substantive due process). The Bell court stated that "[i]n such cases ... licenses are not to be taken away without that procedural due process required by the Fourteenth Amendment." Id. But cf. Hawkins v. Agric. Marketing Service, 10 F.3d 1125, 1133 (5th Cir.1993) ("The Constitution does not guarantee an unrestricted privilege to engage in a particular profession or a privilege to conduct a business as one pleases.").
[9] For excellent discussions on whether a liquor license is entitled to constitutional protection as a property interest, see Shelly Ross Saxer, License to Sell: Constitutional Protection Against State or Local Government Regulation of Liquor Licensing, 22 Hastings Const. L.Q. 441 (Winter 1995) and Linda L. Munden, Retail Liquor Licenses and Due Process: The Creation of Property Through Regulation, 32 Emory L.J. 1199 (Fall 1983).
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December 20, 2012
JUDGMENT
The Fourteenth Court of Appeals
FLORENTINO ROBERT ENGLISH, Appellant
NO. 14-12-00420-CR V.
THE STATE OF TEXAS, Appellee
________________________________
This cause was heard on the transcripts of the record of the court below, and
having inspected the record, the Court holds there was no error in the judgment
requiring reversal, but there was error in the judgment as entered, which is capable
of reformation by this Court. Therefore, the judgment is REFORMED, to read as
follows: we reform the judgment of the trial court to reflect the administrative fees
assessed in the amount of $882.
The Court orders the judgment AFFIRMED as REFORMED.
We further order appellant pay all costs expended in the appeal.
We further order this decision certified below for observance.
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591 F.2d 1151
79-1 USTC P 9284
Irwin MAZO, Marvin I. Rosenzweig, Erwin A. Friedman andBarney L. Sadler, Plaintiffs,v.UNITED STATES of America, Defendant-Appellee,v.Marvin I. ROSENZWEIG, Erwin A. Friedman, Barney L. Sadler,William Lattimore, Norman W. Fries, George Moore,and Irwin Mazo, Defendants-Appellants.
No. 77-2104.
United States Court of Appeals,Fifth Circuit.
March 23, 1979.
Fred S. Clark, Savannah, Ga., for Norman Fries and William Lattimore.
Morton G. Forbes, Savannah, Ga., for George Moore.
Bruce A. Howe, Savannah, Ga., for defendants-appellants.
Gilbert E. Andrews, Chief, Appellate Section, M. Carr Ferguson, Asst. Atty. Gen., Richard Farber, Mary L. Jennings, Attys., William A. Friedlander, Tax Div., Dept. of Justice, Washington, D. C., for defendant-appellee.
Appeals from the United States District Court for the Southern District of Georgia.
Before GEWIN, GEE and RUBIN, Circuit Judges.
ALVIN B. RUBIN, Circuit Judge:
1
An officer or employee of a corporation who is responsible for the collection of employment taxes from the pay due an employee may be assessed a penalty equal to the amount of the taxes if he willfully fails to account for and pay over the amount due to the United States. 26 U.S.C. § 6672. The government found such liability on the part of those parties who were simultaneously the officers, directors and stockholders of Savannah Inn & Country Club, Inc., and its general manager, George Moore. Although each of them protests that he had a title and position without genuine authority, each was, under the statute, a responsible person both at the time tax was withheld and at the later date when funds were available to pay it and were diverted to other purposes, and within the meaning of the statute the failure of each to perform his duty was willful; to paraphrase an aphorism of the late President Harry Truman, the corporate buck stopped with them. Accordingly, we affirm the judgment of the trial court granting the motion for summary judgment filed by the United States and denying the motion for summary judgment filed by the officers.
I.
2
Under the withholding system set up in the Internal Revenue Code, 26 U.S.C.A § 3401 Et seq., employers have a duty to collect both income and FICA ("socialsecurity") taxes from their employees. These sums are commonly referred to as "trust funds" because the Code provides that they are deemed to be "a special fund (held) in trust for the United States." 26 U.S.C. § 7501. When net wages are paid to the employee, the taxes that were, or should have been, withheld are credited to the employee even if they are never remitted to the government; so the IRS has recourse only against the employer for their payment.
3
However, Section 6672 of the Internal Revenue Code imposes a penalty on any "person required to collect, truthfully account for, and pay over any tax" withheld who willfully fails to do so. The penalty is equal to the total amount of the tax not paid over, and is itself referred to as a "tax" in Section 6671. The term "person," as defined in Section 6671, includes "an officer or employee of a corporation . . . who as such officer (or) employee . . . is under a duty" to collect, account for, and pay over the withheld tax. This is known as a "responsible person." Thus, liability for a penalty is imposed only on (1) a responsible person (as defined in Section 6671), who has (2) willfully failed to perform a duty to collect, account, "and" pay over the tax.
4
The statute has recently been explained by the Supreme Court in Slodov v. United States, 1978, 436 U.S. 238, 98 S.Ct. 1778, 56 L.Ed.2d 251. That case involved an orthodontist who, having no prior business connection with three food vending businesses, bought their stock and acquired their control after the sellers represented that the corporation had sufficient cash to pay its accrued liability for withheld employee wage and Federal Insurance Contribution Act (FICA) taxes, which amounted to $250,000. As soon as the orthodontist took command, he found that the representations were untrue; the corporations had no liquid assets. After reporting these findings to the Internal Revenue Service (IRS), he used his personal funds to finance corporate operations and paid all the taxes that later became due.
5
The initial question presented was whether the orthodontist was a "responsible person." As a postulate for resolving it, the Court stated that there is no question that the statute applies "(w)hen the same individual or individuals who caused the delinquency in any tax quarter are also the 'responsible persons' at the time the Government's efforts to collect from the employer have failed . . . ". 436 U.S. at 245, 98 S.Ct. at 1784, 56 L.Ed.2d at 260-61.
6
The taxpayer's first argument was that, because the statute uses the conjunctive "and," it reaches only persons who have all three duties: " 'to collect, truthfully account for And pay over any tax imposed by this title'." (Emphasis supplied). This, the court concluded, was a misreading: a person is responsible if he has a duty to perform any one of these functions collecting, accounting or paying over; the penalty is not limited "to those persons in a position to perform all three of the enumerated duties with respect to the tax dollars in question." 436 U.S. at 250, 98 S.Ct. at 1787, 56 L.Ed.2d at 263. The orthodontist was in authority when the corporation had a duty to pay over the taxes due; he might therefore be considered a "responsible person" if he himself had a duty at that time to apply available funds to payment of the taxes.
7
The Court next considered the scope of liability of an individual becoming a responsible person for the first time after withholding tax liability has accrued and the trust funds have been dissipated. It held that funds collected by the corporation after a change in corporate control are not impressed with a trust for taxes withheld during a prior regime unless those funds are directly traceable to dissipated trust funds; failure to use such later acquired funds to pay federal withholding taxes does not constitute a violation of the § 6672 requirement that the responsible person "pay over" withholding taxes. See 436 U.S. at 258, 98 S.Ct. at 1791, 56 L.Ed.2d at 269.
8
The trust § 7501 creates for funds withheld may in most circumstances be enforced. However, the liability of responsible persons generally is not limited to restoring actual cash diverted from the trust; it encompasses the duty to have initially or to collect funds to pay withholding taxes. Thus, if a corporation has only sufficient cash to pay net wages, and does so, there may literally be no funds to constitute the corpus of the trust, but the responsible persons are nevertheless liable for failure to collect withholding taxes; the United States may not be made an unwilling joint venturer in the corporate enterprise. Brown v. United States, 5 Cir. 1979, 591 F.2d 1136; Sorenson v. United States, 9 Cir. 1975, 521 F.2d 325; Pacific National Insurance Co. v. United States, 9 Cir. 1970, 422 F.2d 26, Cert. denied, 398 U.S. 937, 90 S.Ct. 1838, 26 L.Ed.2d 269. See also Frazier v. United States, 5 Cir. 1962, 304 F.2d 528.
9
It is in this light that we must read observations in Slodov that § 7501 and § 6672 do not "impress a trust on . . . after-acquired cash," 436 U.S. at 254, 98 S.Ct. at 1789, 56 L.Ed.2d at 266, or that § 6672 cannot "be construed as establishing a fiduciary obligation to pay over after-acquired cash unrelated to the withholding taxes." 436 U.S. at 255, 98 S.Ct. at 1789, 56 L.Ed.2d at 267. The orthodontist in Slodov was not subject to a § 6672 penalty because the funds he acquired after his accession to control were not subject to a trust, and his duty as a person assuming corporate control with respect to the accrued withholding tax liability was limited to paying any trust funds related to that liability and any other funds directly traceable to those trust funds that had been dissipated. Where there has been no change in control, however, responsible persons are subject to a duty to apply any available unencumbered funds to reduction of accrued withholding tax liability, whether or not those funds are deemed to be trust funds within the meaning of § 7501. See Maggy v. United States, 9 Cir. 1977, 560 F.2d 1372, 1376, and Teel v. United States, 9 Cir. 1976, 529 F.2d 903, 905. Although both Maggy and Teel stated that such funds are held in trust, this was unnecessary to the results reached in those cases. Furthermore, although those cases antedate Slodov, nothing in those opinions restrict their continued applicability. In fact, Slodov implicitly affirms their conclusions because the Court assumes at the outset that a penalty may be exacted from a person who was responsible both during the period withholding tax liability accrued and thereafter. 436 U.S. at 244-45, 98 S.Ct. at 1784, 56 L.Ed.2d at 260-61. The Court also specifically limited its holding to funds acquired after the responsible person's "accession to control."1 436 U.S. at 258-59, 98 S.Ct. at 1791, 56 L.Ed.2d at 269.
10
At no point does Slodov reach the need to define the meaning of the term "willfully" with respect to individuals who were responsible persons both before and after withholding tax liability accrued. The term "willfully" is defined by prior cases as meaning, in general, a voluntary, conscious, and intentional act, such as payment of other creditors in preference to the United States, although bad motive or evil intent need not be shown. Liddon v. United States, 5 Cir. 1971, 448 F.2d 509, 513, Cert. denied, 1972, 406 U.S. 918, 92 S.Ct. 1769, 32 L.Ed.2d 117; Monday v. United States, 7 Cir. 1970, 421 F.2d 1210, 1216, Cert. denied, 400 U.S. 821, 91 S.Ct. 38, 27 L.Ed.2d 48; Hewitt v. United States, 5 Cir. 1967, 377 F.2d 921, 924. The willfulness requirement is satisfied if the responsible person acts with a reckless disregard of a known or obvious risk that trust funds may not be remitted to the Government, See Teel v. United States, Supra, and Monday v. United States, supra, 421 F.2d at 1215, such as by failing to investigate or to correct mismanagement after being notified that withholding taxes have not been duly remitted. Kalb v. United States, 2 Cir. 1974, 505 F.2d 506, 511, Cert. denied, 1975, 421 U.S. 979, 95 S.Ct. 1981, 44 L.Ed.2d 471; United States v. Leuschner, 9 Cir. 1964, 336 F.2d 246, 248.
11
Although the Fifth Circuit recognizes that reasonable cause may excuse the failure to collect, account for, or pay over withholding taxes, See Newsome v. United States, 5 Cir. 1970, 431 F.2d 742, 746, the mere delegation of responsibility to another does not constitute reasonable cause. Moreover, once an assessment of penalty taxes is made and it is established that the taxpayer is a responsible person, the burden of proving lack of willfulness is on the taxpayer. E. g., Anderson v. United States, 8 Cir. 1977, 561 F.2d 162, 165; Liddon v. United States, supra, 448 F.2d at 513-14.
II.
12
Each of the appellants, save Moore, was an officer, director and stockholder of Savannah, a business corporation, at the time its employees' income and FICA taxes should have been withheld and paid. At the same time, Moore was Savannah's general manager and handled day-to-day operations. A Mr. Lavoie was employed as controller and prepared corporate checks, but he had no authority to sign or countersign those checks. Two signatures were required for checks drawn on the regular corporate account; this meant that the signatures of two directors or of Moore plus one director were requisite. The corporation also had a payroll and salvage account. Only one signature was necessary for checks drawn on that account, and Moore was usually the signatory.
13
During the first three quarters of 1969, ending September 30, income and FICA taxes were withheld when the corporate employees were paid, but the portion retained by Savannah was not paid to the government although, under the statute, it was "held in trust" for that purpose. On October 6, at the instance of an IRS agent, a meeting was held to discuss this liability. Each of the officers was present. Moore admits he knew of the arrearages in August, but each of the other officers contends that before the meeting he knew nothing of them. Lavoie, they assert, prepared all payroll checks and presented them for signature (although Lavoie had no authority to sign or countersign any check). Each assumed that Lavoie was paying over the withheld taxes. Following the October 6 meeting, Savannah paid the amount due for the first quarter of 1969, leaving unpaid the debts for the second quarter ($49,386.04) and third quarter ($29,333.67). The total of these sums is $78,719.71. On November 7, Moore was discharged. Savannah continued to operate until February 1970, when the holder of the first mortgage on its property foreclosed. It is now a dormant shell, fiscally, though not legally, bankrupt. From October 6 through the end of that month, there were total deposits to Savannah's checking account of about $96,000, but none of these funds was applied to the tax debts. During the period after October 6, each of the appellants except Sadler signed one or more corporate checks drawn to creditors for substantial amounts.
14
In May 1974, the IRS assessed $78,719.71 against some of the officers as penalties under § 6672. They paid $100 each toward the assessment and sued for refunds. The government counterclaimed for the balance owed and joined the remaining defendants. The material facts apparently being undisputed, the case was submitted on cross-motions for summary judgment, and the trial court granted the government's motion.
III.
15
Each of the individuals assessed now asserts that summary judgment was inappropriate because there were disputed issues of material fact: their willfulness and their control over Savannah. Rule 56(c), F.R.Civ.P. With respect to disputed facts we must, of course, assume the version most favorable to the officers. See United States v. Diebold, Inc., 1962, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176; Poller v. Columbia Broadcasting System, Inc., 1962, 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458; BAW Manufacturing Co. v. Slaks Fifth Avenue, Ltd., 5 Cir. 1977, 547 F.2d 928, 930. Therefore we must credit that, except for Moore, the individuals assessed had no knowledge that before the October 6 meeting any taxes were in arrears and that Moore knew of the default in August, but was informed that Lavoie would take care of it. We assume also that, although the directors together had complete control over corporate affairs, they did not exercise their prerogatives, leaving management to Moore.
16
If it is assumed that prior to the October 6 meeting the officers were unaware that the taxes had not been paid, there is no dispute as to any material fact, unless that very lack of knowledge would relieve them of liability. However, the legal effect of that fact as material or immaterial is properly resoluble on motion for summary judgment. See, e. g., Ralli-Coney, Inc. v. Gates, 5 Cir. 1976, 528 F.2d 572, 574.
IV.
17
The trial court did not attempt to determine whether the officers assessed were responsible persons before October 6. It found that from that date, when they acquired actual knowledge of the tax liability, they were responsible. However, as we have indicated, responsibility is a matter of status, duty and authority, not knowledge. On October 6 no one's status, duty or authority changed. The statute as construed in Slodov, supra, makes it clear that each of the appellants was a responsible person before as well as after October 6. The officers, directors and the general manager of the corporation were in complete control of its affairs. Their authority to see that trust funds were remitted made them "responsible persons" under § 6672. Liddon v. United States, supra, 448 F.2d at 512; Brown v. United States, 5 Cir. 1972, 464 F.2d 590, Cert. denied, 1973, 410 U.S. 908, 93 S.Ct. 962, 35 L.Ed.2d 270; Hewitt v. United States, supra; Anderson v. United States,supra; Monday v. United States, supra.
18
While Moore did not have the same authority as the officer-directors, he had greater management responsibilities. He could have refrained from signing checks on the payroll and salvage account to other creditors until the United States was paid. He also had authority over the controller, Lavoie, on whom all of the appellants place blame.
19
The conclusion that the appellants were responsible persons is supported by our prior decision in Liddon v. United States, supra ; we there held that evidence that a director was the only person at the company's home office who was permitted to sign checks supported a finding that he was a responsible person, even though the right-hand man did most of the check signing and supervised the clerical operations of the company.
20
The real issue here is whether the officers assessed acted willfully in failing to discharge their duty after October 6. With respect to the question of willfulness, the trial court found it undisputed that after October 6 each officer save Sadler signed one or more checks paying private creditors in preference to the government, and that Sadler actually knew the taxes were unpaid, and yet took no action. Moreover, the court found it undisputed that there were monies available after October 6 with which to restore the trust funds.2 On this basis, the court concluded that the officers' failure to attend personally to discharge of the corporate liability must be considered willful.
21
The issue of willfulness is necessarily directed to the state of the responsible person's mind, a subjective determination. This determination is usually factual, and "if sufficiently controverted, would preclude the granting of a summary judgment on penalty liability," Teel v. United States, supra, 529 F.2d at 905. However, as the court held in Teel, supra, evidence that the responsible person had knowledge of payments to other creditors after he was aware of the failure to pay withholding tax is sufficient for summary judgment on the question of willfulness. See also Kalb v. United States, supra, 505 F.2d at 511, and our decision in Moore v. United States, 5 Cir. 1972, 465 F.2d 514, 516, Cert. denied, 1973, 409 U.S. 1108, 93 S.Ct. 907, 34 L.Ed.2d 688, sustaining the correctness of a charge to the jury that the taxpayer's conduct was willful as a matter of law.
22
In essence the appellants' primary argument is that an issue was created with respect to willfulness by their contention that Lavoie, the controller, misled them by asserting that he had taken care of the matter or would take care of the matter for them. However, once they were aware of the liability to the government, they were under a duty to ensure that the taxes were paid before any payments were made to other creditors. If, after receiving actual notice, corporate officials could once again delegate their responsibility to subordinates, then repeated escape from liability would be possible and the government would be required to monitor corporate affairs daily. The statutory concept of willfulness conveys no such meaning.
23
The appellants also contend that Slodov holds that responsible persons are not subject to a duty to use after-acquired funds to pay withholding taxes, and that, therefore, their actions were not "willful" because the only funds available to pay withholding taxes after they became aware of Savannah's withholding liability were funds acquired after that obligation became payable. However, as our discussion of Slodov indicates, their argument is based on a misreading of that decision; its holding regarding liability for failure to apply after-acquired funds to withholding taxes is limited to the situation of an individual becoming a responsible person after those taxes are payable and trust funds have been dissipated. In the case of individuals who are responsible persons both before and after withholding tax liability accrues, as the appellants were in this case, there is a duty to use unencumbered funds acquired after the withholding obligation becomes payable to satisfy that obligation; failure to do so when there is knowledge of the liability, as was the case here, constitutes willfulness.
24
In conclusion, there can be no serious dispute concerning the correctness of the court's conclusion that each of the officers was a person who had ultimate authority over the corporate expenditures, could have seen to it that the taxes were paid, and who can fairly be said to have acted purposely, that is to say, willfully, in devoting available corporate funds to purposes other than payment of withholding taxes.
25
Because the officers assessed are jointly and severally liable for the penalty provided in § 6672, See Brown v. United States, 5 Cir. 1979, 591 F.2d 1136, it is not necessary to apportion liability in this case. In addition, because the government has stated that its policy is to collect only 100 percent of the employer's deficiency, it is unnecessary to decide whether the government may collect the full § 6672 penalty from both Brown and Sibley; nevertheless, we note that it is doubtful whether the government may obtain more than one satisfaction of Savannah's withholding liability, which underlies the liability of the appellants. Id.
26
For the foregoing reasons, the judgment of the district court is AFFIRMED.
1
We note that the Court's language also does not rule out the possibility that, where there has been no accession to control, funds acquired after withholding tax liability has accrued may be "trust funds" within the meaning of § 7501
2
On October 6, the corporation had on hand about $34,000. Subsequently during the month of October, and prior to Moore's dismissal on November 1, the corporation deposited approximately $58,000 in its general account. The taxpayers neither alleged nor offered any evidence that these funds were encumbered or otherwise restricted so that they were unavailable for payment of withholding taxes
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
NOV 4 1999
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
KRIS WELLBORN,
Plaintiff-Appellee,
v. No. 98-8106
(D.C. No. 95-CV-211-J)
COBRAY FIREARMS INC., a (D. Wyo.)
Georgia corporation, S W DANIEL,
INC., a Georgia corporation; SYLVIA
DANIEL; MARIETTA PLASTICS
INC., a Georgia corporation;
MOUNTAIN ACCESSORIES
CORPORATION, aka MAC, Inc., a
Tennessee corporation; DICK
LOFFER, individually,
Defendants,
and
WAYNE DANIEL, individually,
Defendant-Appellant.
ORDER AND JUDGMENT *
Before ANDERSON , BARRETT , and BRISCOE, Circuit Judges.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
Defendant Wayne Daniel appeals from the district court’s grant of summary
judgment adjudging him personally liable for the torts of his corporation as a
matter of law. We have jurisdiction pursuant to 28 U.S.C. § 1291 and
§ 1331(a)(1) and affirm.
On August 31, 1994, plaintiff Kris Wellborn set off a self-loaded shell in a
flare launcher he purchased from Mountain Accessories Corporation (MAC), a
corporation in which defendant is the sole shareholder and president. The shell
(from a “load your own” shell kit) exploded in the flare launcher and, among his
other injuries, plaintiff’s right hand was amputated.
Plaintiff initiated this action on theories of negligence, strict liability, and
breach of express and implied warranties. His complaint named various
corporations involved in the manufacture and design of the flare launcher and
shell kit, including MAC. In addition, plaintiff’s complaint named as individuals
defendant, Sylvia Daniel, and Dick Loffer, a MAC employee. Shortly before
trial, the district court dismissed on summary judgment defendant and Sylvia
-2-
Daniel. The district court dismissed defendant based on plaintiff’s failure to
bring forth evidence to raise a genuine issue of fact material to defendant’s
personal liability for MAC’s actions. In doing so, the district court noted
defendant’s affidavit statements that: he never “personally” designed,
manufactured, fabricated, packaged, prepared, sold, or distributed flare launchers
or flare canisters; he never “personally” had contact with plaintiff; and he never
instructed plaintiff on the use of flare launchers or flare canisters. Appellant’s
App. at 9. The case proceeded to trial and the jury returned a verdict for plaintiff
against MAC, the sole remaining corporation (plaintiff voluntarily dismissed the
other defendant corporations), finding that MAC was negligent, breached its
implied warranty, and was strictly liable for design defect. The jury awarded
plaintiff $200,000 in damages, plus costs but no punitive damages, finding MAC
90% negligent, plaintiff 10% negligent, and Mr. Loffer not negligent at all.
Under Wyoming’s comparative fault statute, plaintiff’s damages were
correspondingly decreased to $180,000. See Wyo. Stat. Ann. § 1-1-109.
Plaintiff appealed to this court. As relevant here, this court reversed
defendant’s dismissal and remanded the case for further proceedings. See
Wellborn v. Cobray Firearms, Inc. , No. 96-8120, 1998 WL 80236 (10th Cir.
Feb. 25, 1998) (unpublished). This court cited Zimmerman v. First Federal
Savings & Loan Ass’n , 848 F.2d 1047 (10th Cir. 1988), for the principle that
-3-
because “the corporate veil doctrine does not apply to a tort claim brought by a
third party against a corporation’s directors, officers, or shareholders, the
traditional notion of a shield for acts committed in a corporate capacity does not
apply either.” 1998 WL 80236, at *3. Based on defendant’s deposition testimony
admitting to “fabricating, designing, manufacturing, packaging, and selling the
flare launcher” and “writing the instruction which accompanied the ‘load your
own’ shell kit,” this court found sufficient evidence to create a genuine issue of
material fact regarding his potential liability under Zimmerman . Id. at *4. In
addition, this court noted defendant’s statement that “‘I sold the launcher. When
I say ‘I,’ I mean, MAC.’” Id.
On remand, plaintiff moved for summary judgment, propounding the
principles of respondeat superior, res judicata, collateral estoppel, and stare
decisis. The district court granted plaintiff’s motion, finding that, for purposes of
collateral estoppel, defendant “was in privity with MAC . . . for the issues of
product liability, negligence, damages and comparative fault” and that he had a
“full and fair opportunity in the previous trial to litigate” these issues.
Appellant’s App. at 48. The district court found that collateral estoppel did not
apply to defendant’s personal liability since that issue was not litigated at the
trial. It concluded, however, that plaintiff was entitled to judgment based on
summary judgment principles. Essentially, the district court found that, under
-4-
Zimmerman , defendant “actively participated in and directed the omissions and
commissions that led to liability for the company he owns, directs and controls”
and he failed to submit materials in opposition that raised an issue of fact to the
contrary. Appellant’s App. at 52.
On appeal, defendant contends the district court erred in granting summary
judgment because: (1) a genuine issue of material fact exists concerning his
liability; (2) a jury was never instructed under Zimmerman ; (3) no new evidence
was brought forth at trial to supplement the genuine issue of fact regarding
defendant’s liability under strict liability and breach of warranty; (4) a genuine
issue of material fact exists as to whether defendant directed or participated in a
wrongful act or omission which injured or prejudiced plaintiff; and (5) the jury
must consider the issue of plaintiff’s contributory negligence.
We review the district court’s grant of summary judgment de novo and
apply the principles set forth in Fed. R. Civ. P. 56(c). See Kaul v. Stephan ,
83 F.3d 1208, 1212 (10th Cir. 1996). Summary judgment is appropriate on a
record demonstrating that “there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(c). “‘We view the evidence and draw any inferences in a light
most favorable to the party opposing summary judgment, but that party must
identify sufficient evidence which would require submission of the case to a
-5-
jury.’” Aramburu v. Boeing Co. , 112 F.3d 1398, 1402 (10th Cir. 1997) (quoting
Williams v. Rice , 983 F.2d 177, 179 (10th Cir. 1993)).
We have reviewed the parties’ submissions, the district court’s order, the
record, and the relevant legal principles and case law. We have nothing to add to
the district court’s analysis of the law and the evidence before it. Accordingly,
we affirm the district court’s grant of summary judgment for substantially the
reasons stated in the district court’s thorough memorandum and order of
October 20, 1998.
The judgment of the United States District Court for the District of
Wyoming is AFFIRMED .
Entered for the Court
James E. Barrett
Senior Circuit Judge
-6-
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742 P.2d 922 (1987)
PEOPLE of the State of Colorado, Plaintiff-Appellant,
v.
Larry Ray PORTER, Defendant-Appellee.
No. 86SA445.
Supreme Court of Colorado, En Banc.
September 14, 1987.
*923 Douglass F. Primavera, Dist. Atty., Alamosa, for plaintiff-appellant.
David F. Vela, Colorado State Public Defender, Bruce Boreson, Deputy State Public Defender, Alamosa, for defendant-appellee.
ROVIRA, Justice.
Prior to the trial of Larry Porter, the defendant, his confession was suppressed by the trial court. The basis for the suppression order was that the federal agents interrogating the defendant violated Fed.R. Crim.P. 5. In this interlocutory appeal, pursuant to C.A.R. 4.1, the People challenge the district court's order. We reverse.
I.
On June 4, 1986, the Federal Bureau of Investigation (FBI) in Austin, Texas, was alerted by the Colorado office of the FBI regarding a kidnapping and extortion attempt. Telephone calls demanding ransom for Kenneth Dabney of Creede, Colorado, had been received by his aunt and uncle in Creede and had been traced to Austin. One call ordered the aunt to go to a motel in Austin by 10:00 p.m. on the evening of June 4, with $324,000 in ransom money.
Dabney's aunt did not go to Austin. Instead, by an arrangement between the motel and the FBI, calls asking for the aunt were put on hold and traced. After three failed attempts, the call was successfully traced to a public telephone in Austin. An FBI agent on stakeout in the area near the telephone was alerted by radio, and he approached the telephone. He observed the defendant at the public telephone, and was informed by radio that the connection was broken at the same time he saw the defendant hang up. The agent attempted to follow the defendant to ascertain the whereabouts of the victim, but the surveillance was compromised and the defendant was arrested at approximately 10:30 p.m. At the scene, he was twice advised of his Miranda rights; he refused to sign the tendered Miranda waiver form, stating "I think I'll wait."
The defendant was taken to the FBI office in Austin, arriving there about 11:00 p.m. He was again advised of his Miranda rights and agreed to talk to FBI agents. He signed the written Miranda waiver form.
The defendant stated that he and Kenneth Dabney conspired together to deceive Dabney's aunt into paying the ransom, but that he did not know where Dabney was and had no way to get in touch with him. The FBI agents did not believe, with more than $300,000 in ransom demanded, the two co-conspirators would have no way to reestablish contact. Accordingly, the agents doubted the defendant's story and were still concerned with Dabney's safety.
At approximately 12:30 a.m. on June 5, 1986, the defendant was asked to take a polygraph test to confirm his story and verify that Dabney was not in danger. He agreed. The nearest polygrapher was 100 hundred miles away in San Antonio, so the defendant was placed in the county jail until the examiner arrived later that morning.
The defendant was picked up at about 8:30 a.m. and taken to the FBI office. The polygrapher arrived at about 10:00 a.m., and the examination began at 10:30 a.m. Prior to the examination, the defendant was again advised of his Miranda rights and given the questions he would be asked. *924 The test, a major focus of which was the whereabouts of the victim, was then given, the results analyzed, and the defendant informed that the tests indicated he had not been truthful.
The defendant thereupon confessed, stating he had killed Dabney while attempting to kidnap him and that he had concealed the body in Colorado. The confession was reduced to writing. The defendant read it, made some corrections which he initialed, initialed each page, and then signed the last page about 3:30 p.m. He was then taken before a federal magistrate, where he was advised of his rights pursuant to Rule 5 of the Federal Rules of Criminal Procedure.
The defendant was subsequently charged in Colorado with murder, kidnapping, extortion, and a crime of violence. The defendant moved to suppress his statements and confession on numerous grounds, including violation of his right against self-incrimination under the Colorado and United States Constitutions and violation of Rule 5 of the Colorado and Federal Rules of Criminal Procedure. The trial court found that the FBI agents fully advised the defendant of his Miranda rights on at least four occasions before his confession was obtained, and that all of the defendant's statements were made after a voluntary, knowing, and intelligent waiver of his Miranda rights. Further, that under the totality of the circumstances, the statements were knowingly, intelligently, and voluntarily made.[1] Accordingly, none of the defendant's constitutional rights were violated.
The court found, however, that the defendant was not taken before a magistrate as soon as possible. Instead, because of the FBI agents' concern for the victim's safety, they delayed until the polygraph examination could be performed. The court found this was "unnecessary delay" under Fed.R.Crim.P. 5,[2] which the court held applicable because the defendant was under federal custody for federal charges.
Based on this analysis, the trial court suppressed all statements made during the polygraph test and afterward, including the written confession. The People appeal, arguing that state, not federal, law applies and that Colo.Crim.P. 5[3] was not violated. In the alternative, the People argue that the trial court misapplied the federal law and the confession did not violate Fed.R. Crim.P. 5.
II.
A.
As a threshold issue, we agree with the trial court and the defendant that Colo. Crim.P. 5 does not apply. People v. Robinson, 192 Colo. 48, 556 P.2d 466 (1976), is dispositive of this issue. There, the defendant was arrested in Missouri for violations of both Missouri law and for being a fugitive from Colorado. He was held without advisement by a magistrate for a week, at which time he confessed. In his prosecution in Colorado, he argued that since Colo.Crim.P. 5 was clearly violated, his confession must be suppressed. We disagreed, observing that his argument "ignores the limited extraterritorial effect which the procedural rules of this jurisdiction can generally be given absent denial of constitutional rights.... A Missouri judge could not be expected to advise the defendant [pursuant to Colo.Crim.P. 5]." *925 The same reasoning applies here. The defendant was arrested in Texas by federal agents. Federal officers in Texas cannot be expected to know of the Colorado rules of procedure. At the stage of the proceeding where the defendant confessed, Colo. Crim.P. 5 was simply inapplicable, and the Federal Rules of Criminal Procedure controlled. See Corr, Criminal Procedure and the Conflict of Laws, 73 Geo. L.J. 1217, 1234 (suggesting law of jurisdiction where police activity took place controls in interstate criminal procedure matters).
B.
The People argue that the trial court incorrectly applied the federal law and that a delay necessary to safeguard an innocent victim is not "unnecessary." The defendant responds that the trial court correctly ruled that the FBI agents violated Fed.R. Crim.P. 5. Both parties apparently assume that if the applicable federal rule was violated the confession must be suppressed. We disagree with that assumption and, accordingly, need not decide whether or not the federal rule was violated.
The situation presented by this casewhether evidence obtained by nonconstitutional violation in another jurisdiction is to be admitted in a criminal proceeding in the forum jurisdictionis rare but not unknown. Some courts have applied a conflicts of law analysis in resolving this issue. E.g., People v. Saiken, 49 Ill.2d 504, 275 N.E.2d 381 (1971), cert. denied, 405 U.S. 1066, 92 S.Ct. 1499, 31 L.Ed.2d 796 (1972); Burge v. State, 443 S.W.2d 720 (Tex.Crim.App.), cert. denied, 396 U.S. 934, 90 S.Ct. 277, 24 L.Ed.2d 233 (1969). These courts analyze the issue as if it were a civil case and apply the choice of law method of the forum state to determine whether the law of the forum state or the situs state should be followed, and what sanctions are to be used if the appropriate law is violated.
However, this approach has been criticized. Both courts and commentators have concluded that it is preferable to use an exclusionary rule analysis rather than the traditional conflicts of law approach to determine the admissibility of evidence in the forum state which is obtained in another jurisdiction. Pooley v. State, 705 P.2d 1293, 1303 (Alaska App.1985); People v. Blair, 25 Cal.3d 640, 159 Cal.Rptr. 818, 602 P.2d 738, 748 (1979); State v. Lucas, 372 N.W.2d 731 (Minn.1985); W. LaFave, Search and Seizure § 1.5(c) at 116-117 (1987) (suggesting the correct inquiry is "whether the [forum] courts should attempt to deter [situs] police...."); W. Theis, Choice of Law and the Administration of the Exclusionary Rule in Criminal Cases, 44 Tenn.L.Rev. 1043, 1064 (1977) (states must determine whether to apply the exclusionary rule for statutory violations of federal law); R. Tullis & L. Ludlow, Admissibility of Evidence Seized in Another Jurisdiction: Choice of Law and the Exclusionary Rule, 10 U.S.F.L. Rev. 67, 88 (1975) (indicating that exclusionary rule analysis is preferable to choice of law analysis). The exclusionary rule analysis is more appropriate even if the action violated the laws of both jurisdictions. See W. LaFave, Search and Seizure § 1.5(c) at 116-117 (1987). We agree that, in determining whether evidence obtained in violation of the statutes or rules of criminal procedure of another jurisdiction should be suppressed, an exclusionary rule analysis should be followed.
This analysis is consistent with our decision in People v. Robinson, 192 Colo. 48, 556 P.2d 466 (1976). In Robinson, the defendant was arrested in Missouri for Missouri crimes, as well as being a fugitive from Colorado. He was held seven days without presentment to a magistrate, at which time he was interviewed by officers from Colorado and confessed. On appeal, he argued that his detention violated both Colo.Crim.P. 5 and Mo.R.Crim.P. 21.11, which provided that a defendant must be advised of his rights by a magistrate "as soon as practicable," and that his confession should accordingly be suppressed.
We affirmed his conviction. As noted in part II.A. of this opinion, we held that Colo.Crim.P. 5 did not apply. We did not make explicit reference to his claim that the Missouri rule was also violated, concluding *926 that the remainder of defendant's contentions were "without merit." In his petition for rehearing, the defendant argued that this meant that his arrest in another jurisdiction "depriv[ed] him of basic rights afforded to criminals in both jurisdictions." (Emphasis in original.) Although the opinion was modified after considering the rehearing petition, the defendant's other claims were still dismissed as being "without merit." Since the defendant was unquestionably correct that the Missouri rule was also violated, the clear implication of our holding was that the violation of a rule of criminal procedure in another jurisdiction did not require suppression.
C.
In People v. Ressin, 620 P.2d 717 (1980), we adopted the analysis utilized in United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974), in determining whether to extend the exclusionary rule to probation revocation proceedings. The Calandra analysis involves a balancing of the benefit of the exclusionary rule (prime purpose is deterrence of police misconduct) against the costs to society (suppression of probative evidence). We concluded that the per se extension of the rule to such proceedings would furnish little deterrence to law enforcement officers and any incidental benefits wrought by such an approach would be outweighed by the detrimental effect upon society's interest in the supervision and rehabilitation of probationers.[4]
This analysis has resulted, in several contexts, in a determination that the deterrent value of excluding evidence is too minimal to justify the cost to society of excluding probative evidence. Immigration and Naturalization Service v. Lopez-Mendoza, 468 U.S. 1032, 104 S.Ct. 3479, 82 L.Ed.2d 778 (1984) (exclusionary rule inapplicable to deportation proceedings); United States v. Havens, 446 U.S. 620, 100 S.Ct. 1912, 64 L.Ed.2d 559 (1980) (exclusionary rule not applied to evidence used at trial to impeach credibility); United States v. Janis, 428 U.S. 433, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976) (exclusionary rule not extended to civil proceedings commenced against a defendant by a different sovereign); United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974) (exclusionary rule inapplicable to grand jury proceedings); People v. Wolf, 635 P.2d 213 (Colo. 1981) (exclusionary rule inapplicable for statutory violation; however, where police act in willful disobedience of law, court may use supervisory power to suppress evidence).
In cases such as this one, the officers involved were investigating crimes of another jurisdiction in that other jurisdiction. Those officers had taken an oath to uphold the laws of that jurisdiction. If they fail to follow the laws of that jurisdiction, they run the risk that evidence obtained will be excluded in the cases they investigate. If that is not enough to deter them from misconduct, it does not seem likely that the slight increment in deterrence achieved by suppressing the evidence in another jurisdiction will have any effect. See Calandra (if threat of inadmissibility at trial not enough to deter officers, added increment of inadmissibility in grand jury proceedings will make no difference, therefore, exclusionary rule inapplicable to those proceedings); People v. Orlosky, 40 Cal.App.3d 935, 115 Cal.Rptr. 598 (1974) (California court will not exclude evidence obtained by statutory misconduct in Indiana "merely to add a wrist slap to a foreign police officer, whose interest in a California prosecution must be relatively remote"); W. LaFave & J. Israel, Criminal Procedure § 3.1(e) at 87 (1985) (when violation not of fourth amendment dimension, "courts do not utilize the exclusionary rule in such circumstances, and rightly so; the prospect of deterrence is remote ... and there has been no profit from the wrongdoing attributable *927 to the prosecuting jurisdiction."). Also, there would be little deterrent effect on federal law enforcement personnel since under precedent that is controlling in the United States Court of Appeals for the Fifth Circuit, which includes Texas, the confession would appear to be admissible in federal court even if the FBI agents failed to comply with Fed.R.Crim.P. 5(a). O'Neal v. United States, 411 F.2d 131, 136-37 (5th Cir.), cert. denied, 396 U.S. 827, 90 S.Ct. 72, 24 L.Ed.2d 66 (1969).[5]
In People v. Blair, 25 Cal.3d 640, 159 Cal.Rptr. 818, 602 P.2d 738 (1979), the California Supreme Court considered the deterrent effect of excluding evidence obtained by federal agents in Pennsylvania which, although seized legally under both federal and Pennsylvania law, would have been regarded as being obtained in violation of the California Constitution if obtained in California.
[The goal of deterrence] would obviously not be served by exclusion of the evidence in question, for no California law enforcement personnel participated in the seizure of the records from the telephone company in Philadelphia, and since the seizure was not illegal where it occurred, exclusion would serve no deterrent effect in either jurisdiction.[6]
On the other hand, the cost to society of suppressing the statements in this case will be quite high. The defendant's confession is likely to have significant probative value in determining whether or not he committed the crimes with which he is charged.
Our employment of an exclusionary rule analysis in resolving this case is not contrary to People v. Heintze, 200 Colo. 248, 614 P.2d 367 (1980). In Heintze, we were concerned with a violation of Crim.P. 5 by Colorado police officers in Colorado. We concluded that compliance with the Miranda requirements is not a substitute for the speedy presentment mandated by Crim.P. 5(a), and suppression of a confession due to an unnecessary delay in presentment proceeds from the supervisory power of this court to enforce its own rules of procedure relating to the administration of justice in Colorado courts.
In this case, however, the benefits of the exclusionary rule do not outweigh the cost to society of suppression. Suppressing the confession would have no effect on FBI officers investigating a federal crime in Texas, but would greatly affect the jury's ability to determine the defendant's guilt in this matter.
The order of the trial court is reversed.
ERICKSON, J., specially concurs in the result.
VOLLACK, J., joins in the special concurrence.
*928 ERICKSON, Justice, specially concurring in the result:
I agree with the majority's result and the conclusion that suppression of the defendant's confession is unwarranted. I write separately because I disagree with the majority's approach, which requires balancing on a case-by-case basis to determine the applicability of the exclusionary rule. Since the defendant's confession was not obtained in violation of the United States or Colorado Constitutions, it is unnecessary for us to employ a judicial balancing test to decide this case and to further confuse the law relating to the exclusionary rule.
The district court correctly held that the defendant was properly advised of his Miranda rights and that he voluntarily confessed after an effective waiver of these rights. Since Colorado Crim.P. 5 does not apply, People v. Robinson, 192 Colo. 48, 556 P.2d 466 (1976), the acts of the FBI agents are governed by Fed.R.Crim.P. 5(a). This rule, however, is not of constitutional dimension. Van Ermen v. Burke, 398 F.2d 329, 331 (7th Cir.), cert. denied, 393 U.S. 1004, 89 S.Ct. 494, 21 L.Ed.2d 468 (1968); Barnett v. United States, 384 F.2d 848, 856 (5th Cir.1967). There is also no constitutional requirement that evidence obtained in another jurisdiction be suppressed simply because the process of acquisition offended some local law. Burge v. Estelle, 496 F.2d 1177, 1178 (5th Cir. 1974) ("A more strict local rule may serve as a deterrent to lawless action. But it does not follow that Oklahoma's choice of a deterrent must be imposed upon the State of Texas to trigger application of the exclusionary rule via a nexus of federal constitutional law."); W. La Fave, Search and Seizure § 5(c), at 112 (1987).
Absent a denial of constitutional rights, the exclusionary rule will not bar evidence acquired in violation of the laws of another jurisdiction from being admitted in the forum jurisdiction. People v. Price, 54 N.Y.2d 557, 431 N.E.2d 267, 446 N.Y.S.2d 906 (1981) (possible violation of California law in constitutional narcotics search was irrelevant to the legality of a search warrant issued in New York based on evidence obtained in the search); Burge v. State, 443 S.W.2d 720 (Tex.Crim.) (violation of Oklahoma law in acquiring evidence did not bar evidence from being admitted in Texas court), cert. denied, 396 U.S. 934, 90 S.Ct. 277, 24 L.Ed.2d 233 (1969); see Elkins v. United States, 364 U.S. 206, 223-24, 80 S.Ct. 1436, 1447, 4 L.Ed.2d 1669 (1960) ("In determining whether there has been an unreasonable search and seizure by state officers, a federal court must make an independent inquiry, whether or not there has been such an inquiry by a state court, and irrespective of how any such inquiry may have turned out. The test is one of federal law, neither enlarged by what one state court may have countenanced, nor diminished by what another may have colorably suppressed."); United States v. Mitchell, 783 F.2d 971, 973 (10th Cir.) (in addressing the legality of a search by state officers which resulted in a United States district court conviction for drug possession the court of appeals stated "we need not consider whether the Oklahoma statute was satisfied or not.... The issue in this case is one under the fourth amendment and the exclusion of evidence would only be warranted if there were a violation of the Constitution of the United States") (footnote omitted), cert. denied, ___ U.S. ___, 107 S.Ct. 208, 93 L.Ed.2d 138 (1986); United States v. Bedford, 519 F.2d 650, 653-54 (3d Cir.1975) (state court decision that search warrant violated state law irrelevant to validity of warrant in federal court), cert. denied, 424 U.S. 917, 96 S.Ct. 1120, 47 L.Ed.2d 323 (1976). By adopting a judicial balancing test, the majority has created unnecessary uncertainty regarding the application of the exclusionary rule. See New Jersey v. T.L.O., 469 U.S. 325, 369-70, 105 S.Ct. 733, 758, 83 L.Ed.2d 720 (1985) (Brennan, J., joined by Marshall, J., concurring in part and dissenting in part) (in response to the majority's application of a judicial balancing test to define the fourth amendment standard of reasonableness for searches by school officials, Justice Brennan stated: "All of these `balancing tests' amount to brief nods by the Court in the direction of a neutral utilitarian calculus while the Court in fact engages in an unanalyzed *929 exercise of judicial will. Perhaps this doctrinally destructive nihilism is merely a convenient umbrella under which a majority that cannot agree on a genuine rationale can conceal its differences."); see also United States v. Leon, 468 U.S. 897, 929, 104 S.Ct. 3405, 3422, 82 L.Ed.2d 677 (1984) (Brennan, J., joined by Marshall, J., dissenting) ("the language of deterrence and of cost/benefit analysis, if used indiscriminately, can have a narcotic effect. It creates an illusion of technical precision and ineluctability"); Alienikoff, Constitutional Law in the Age of Balancing, 96 Yale L.J. 943 (1987) (discussing the problems inherent in judicial balancing). Accordingly, I concur in the result only.
I am authorized to say that VOLLACK, J., joins in this special concurrence.
NOTES
[1] No issue has been raised, and therefore we do not consider, whether the delayed presentment in Texas may be considered by the trial court in determining whether any custodial statement made by the accused during the period of unnecessary delay satisfied the constitutional standard of voluntariness.
[2] Federal Rule of Criminal Procedure 5(a) provides:
An officer making an arrest under a warrant... or any person making an arrest without a warrant shall take the arrested person without unnecessary delay before the nearest available federal magistrate.... [who shall] proceed in accordance with the applicable subdivisions of this title.
[3] Colorado Rule of Criminal Procedure 5(a) provides:
If a peace officer or any other person makes an arrest, whether with or without a warrant, the arrested person shall be taken without unnecessary delay before the nearest available county or district judge.
[4] In Ressin, 620 P.2d at 721, we held that although the exclusionary rule is generally inapplicable to probation revocation proceedings, it might be applicable if police engage in gross official misconduct. Here, the officers delayed only long enough to verify defendant's story for the purpose of safeguarding innocent victims. This does not rise to the level of gross misconduct.
[5] Under Fifth Circuit precedent, which would have guided the actions of the FBI agents in Texas, see Corr, Criminal Procedure and the Conflict of Laws, 73 Geo.L.J. 1217, 1234 (1985) (suggesting that in interstate criminal procedure cases the law of the jurisdiction in which the police activity took place should be applied), a defendant who has validly waived his Miranda rights cannot show prejudice from an untimely advisement under Fed.R.Crim.P. 5. In O'Neal v. United States, 411 F.2d 131, 136-37 (5th Cir.), cert. denied, 396 U.S. 827, 90 S.Ct. 72, 24 L.Ed.2d 66 (1969), the defendant was arrested about noon, advised of his Miranda rights, and made incriminating statements before being taken to a magistrate the next morning. He argued that he would not have made the statements if he had been promptly taken before an officer as required by Crim.P. 5, and therefore his statements were inadmissible under Mallory v. United States, 354 U.S. 449, 77 S.Ct. 1356, 1 L.Ed.2d 1479 (1957). Noting that Mallory was decided before Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the court stated, "Knowing [his Miranda rights], he chose to speak. How, then, can Mallory aid him? His detention before seeing the Commissioner, though delayed, caused him no harm."
We have reached a result contrary to O'Neal in applying Crim.P. 5(a). In People v. Heintze, 200 Colo. 248, 614 P.2d 367, 371 (1980), we stated that the purpose of Crim.P. 5 "is to furnish a prophylaxis against abuses in the detention process and, more importantly, to place the accused in early contact with a judicial officer so that the right to counsel may not only be clearly explained, but also be implemented upon the accused's request."
[6] In Blair, 602 P.2d at 748, the court also held that the goal of judicial integrity was not compromised by admitting the evidence in question since the search was legal where it occurred and, thus, the government is not profiting from illegal conduct.
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282 Pa. Superior Ct. 480 (1980)
423 A.2d 4
Mable A. RODGERS
v.
William N. RODGERS, Appellant.
Superior Court of Pennsylvania.
Argued April 15, 1980.
Filed December 12, 1980.
*481 Arthur Feldman, Pittsburgh, for appellant.
Mable A. Rodgers, appellee, in pro. per.
Before CAVANAUGH, HOFFMAN and VAN der VOORT, JJ.
CAVANAUGH, Judge:
The dispute in this case involves the appellant's failure to comply with a support order entered against him on November 7, 1977. By that order appellant, William N. Rodgers, *482 was required to pay sixty dollars per month for the support of his two children. In December, 1977 a "Petition for Attachment for Contempt and Rule to Show Cause" was granted the appellee, Mable Rodgers, against the appellant. The court then ordered a hearing for appellant to show cause why he should not be adjudicated in contempt. Appellant failed to appear at the hearing and it was not until over a year later, March 19, 1979, that he was brought before the court on a body attachment.
At the hearing it was shown that current arrearages totalled $990.00, appellant having made no payments under the November 7, 1977 order. Defendant testified that he had owned a grocery store which had gone bankrupt in November, 1977 and since then he had not worked. The court entered two companion orders as set forth below:
"AND NOW, to wit, this 19th day of March, 1979, defendant in the above proceeding being present in Court, and after hearing and it appearing to the Court that the support order of November 7, 1977 has never been carried out by the defendant, it is hereby
ORDERED, ADJUDGED and DECREED that WILLIAM N. RODGERS, defendant, shall report on Thursday, March 22, 1979, at 9:00 A.M. to The Salvation Army Corrections Bureau, 424 Third Avenue, Pittsburgh, Pennsylvania 15219, to perform such community service as The Salvation Army shall require and as shall be commensurate with his ability to so perform, and the defendant shall devote a minimum of sixteen (16) hours in said service each week, according to a schedule to be worked out and determined by The Salvation Army, until such time as the defendant has secured a full-time position, but in no event for a longer period than three (3) months from the date of this Order.
The lower court stated that the following Order was filed to clarify the future disposition of the case for the Court records:
AND NOW, to-wit, this 19th day of March, 1979, it is hereby directed that the above-captioned case be continued *483 as defendant appeared on Body Attachment and after hearing, order of support suspended-defendant has not worked in two years. (Separate order made for defendant to work through Salvation Army.) Body Attachment dissolved. Rule held.
NOW, therefore, it is HEREBY ORDERED AND DIRECTED that the above-entitled case be set down for hearing on 5th day of September, 1979, at 9:00 a.m. before Judge Colbert or whosoever may be assigned, as suits the convenience of the court. . . ."
The appellant raises several arguments challenging the lower court's authority to enter these orders. However, because these orders are interlocutory and not appealable we do not address the merits and must quash this appeal. Appellate jurisdiction is generally limited to appeals from final orders of courts of common pleas, unless a statute provides otherwise. Piltzer v. Independence Federal Savings and Loan Association of Philadelphia, 456 Pa. 402, 319 A.2d 677 (1974); Williams v. Williams, 253 Pa.Super. 444, 385 A.2d 422 (1978). An order is final and thus appealable if it ends litigation, disposes of the entire case or effectively puts the litigant out of court. T.C.R. Realty, Inc. v. Cox, 472 Pa. 331, 372 A.2d 721 (1977); In the Interest of C.A.M., 264 Pa.Super. 300, 399 A.2d 786 (1979).
The reason for prohibiting appeals from interlocutory orders is to preclude piecemeal determinations and the consequent protraction of litigation. Piltzer v. Independence Federal, supra. This policy is well served in the instant case. The requirement that appellant perform volunteer services notwithstanding the order appealed from is actually a continuance coupled with an order directing appellant to attempt to find work prior to the entry of a final order of support. If Mr. Rodgers is dissatisfied with the final resolution of the dispute, he is free to take an appeal at that time. Therefore, notwithstanding any resulting inconvenience to the parties, whenever possible appellate review must await determination of the suit. Pugar v. Greco, 483 Pa. 68, 394 A.2d 542 (1978); Keasbey's Trust Estate, 342 Pa. 439, 20 *484 A.2d 281 (1941); Miller Paper Company v. Keystone Coal and Coke Company, 275 Pa. 40, 118 A. 565 (1922). See also Williams v. Williams, supra, where the appeal was quashed as interlocutory where there had been a finding of paternity but no support order had been entered by the court below.
Appellant has not filed a brief in this matter. However, because the appealability of the order goes to the appellate court's jurisdiction, we raise it sua sponte. Jones v. Crossgates, Inc., 220 Pa.Super. 427, 289 A.2d 491 (1972).
Appeal is quashed and case remanded to the court below for further proceedings.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 96-6644
EDWARD D. SMALLS,
Petitioner - Appellant,
versus
SOUTH CAROLINA DEPARTMENT OF CORRECTIONS; AT-
TORNEY GENERAL OF THE STATE OF SOUTH CAROLINA,
Respondents - Appellees.
Appeal from the United States District Court for the District of
South Carolina, at Columbia. Charles E. Simons, Jr., Senior Dis-
trict Judge. (CA-95-1298-3-6BC)
Submitted: October 17, 1996 Decided: October 24, 1996
Before MURNAGHAN and WILLIAMS, Circuit Judges, and BUTZNER, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Edward D. Smalls, Appellant Pro Se. Donald John Zelenka, Chief
Deputy Attorney General, Columbia, South Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellant seeks to appeal the district court's order denying
relief on his 28 U.S.C. § 2254 (1988) petition. We have reviewed
the record and the district court's opinion accepting the recom-
mendation of the magistrate judge and find no reversible error.
Accordingly, we deny a certificate of appealability and dismiss
the appeal on the reasoning of the district court. Smalls v. South
Carolina Dep't of Corr., No. CA-95-1298-3-6BC (D.S.C. Mar. 22,
1996). We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
DISMISSED
2
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 13-3477
___________________________
Michael G. Wells
lllllllllllllllllllll Plaintiff - Appellant
v.
United States of America
lllllllllllllllllllll Defendant - Appellee
____________
Appeal from United States District Court
for the Western District of Missouri - St. Joseph
____________
Submitted: June 17, 2014
Filed: June 23, 2014
[Unpublished]
____________
Before BYE, COLLOTON, and BENTON, Circuit Judges.
____________
PER CURIAM.
Michael G. Wells appeals the district court’s1 dismissal, for lack of subject
matter jurisdiction, of his claim for reimbursement from Medicare for medical services
provided. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.
1
The Honorable Gary A. Fenner, United States District Judge for the Western
District of Missouri.
The district court lacked subject matter jurisdiction because Wells failed to
pursue administrative remedies available to him in 2005 when he discovered the
intermediary’s failure to pay. See 42 U.S.C. §§ 405(g), (h), 1395ii; Heckler v. Ringer,
466 U.S. 602, 614-15 (1984) (third sentence of § 405(h), made applicable to Medicare
Act by § 1395ii, provides that § 405(g), to exclusion of 28 U.S.C. § 1331, is sole
avenue for judicial review for all claims arising under Medicare Act); In Home Health,
Inc. v. Shalala, 272 F.3d 554, 559 (8th Cir. 2001) (standard of review). In 2005,
Wells’s administrative remedies included the rights to request review of or a hearing
on the intermediary’s initial determination, seek an extension of time to request such
review or hearing, or request that the intermediary reopen its initial determination
(which, depending on the type of initial determination, can be made up to 4 years later
if good cause is shown). See 42 C.F.R. § 405.801-.877, .1801-.1889 (Oct. 1, 2004
ed.); 42 C.F.R. § 405.940-.1140 (Oct. 1, 2005 ed.). Wells did not allege that he had
pursued any steps in the administrative process, or that he had otherwise submitted to
the Secretary of Health and Human Services the claim for payment that he asserts in
this lawsuit. See Mathews v. Eldridge, 424 U.S. 319, 328-29 (1976) (section 405(g)
includes nonwaivable jurisdictional requirement that plaintiff present claim to
Secretary, which is essential and distinct precondition for § 405(g) jurisdiction). The
district court did not abuse its discretion by ruling on the issue without first holding
a hearing because Wells had the opportunity to submit evidence in support of
jurisdiction and did not request a hearing. See Fed. R. Civ. P. 78(b); Sunseri v. Macro
Cellular Partners, 412 F.3d 1247, 1250-51 (11th Cir. 2005) (it is not abuse of
discretion to decide motion to dismiss for lack of subject matter jurisdiction on basis
of affidavits and other documents when neither party makes timely and unequivocal
request for evidentiary hearing); Berrios v. Dep’t of Army, 884 F.2d 28, 33 (1st Cir.
1989).
The judgment is affirmed.
______________________________
-2-
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NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1194-14T1
DENISE NETTA (f/k/a DENISE
MONEK),
Plaintiff-Appellant/Cross-
Respondent,
v.
CHRISTOPHER MONEK,
Defendant-Respondent/Cross-
Appellant.
__________________________________
Submitted October 6, 2016 – Decided May 11, 2017
Before Judges Alvarez and Accurso.
On appeal from Superior Court of New Jersey,
Chancery Division, Family Part, Middlesex
County, Docket No. FM-12-2213-94.
Robbins & Robbins, LLP, attorneys for
appellant/cross-respondent (Claudia C.
Lucas, of counsel and on the brief).
Shane & White, LLC, attorneys for
respondent/cross-appellant (Kenneth A.
White, of counsel; Katelyn M. Brack, on the
brief).
PER CURIAM
Plaintiff Denise Netta appeals from aspects of a post-
judgment order entered by the Family Part on September 15, 2014,
denying her motion to compel her ex-husband, defendant
Christopher Monek, to contribute to the college costs of their
twenty-two-year-old daughter. Defendant cross-appeals from
aspects of the same order denying his motion to emancipate the
child retroactive to a prior order entered in January 2011 and
to terminate or reduce his child support obligation from that
date. Both parties complain that the court denied their request
for fees. We vacate the order and remand for a plenary hearing.
By way of background, the parties were married in 1991 and
divorced in 1994. Their only child together, a daughter, was
two years old at the time their marriage broke up. Although
plaintiff did not attend college, and defendant attended only an
eighteen-month program at DeVry before becoming employed as a
police officer, they agreed to either resolve their respective
contributions toward her college expenses themselves, or submit
the issue to the court for resolution, "at the appropriate
time."
Unable to agree on their respective contributions when the
time came, the court resolved their dispute. In January 2011, a
Family Part judge ordered plaintiff to assume 32%, and defendant
to assume 68%, of "all expenses incurred which are reasonably
2 A-1194-14T1
related to [their daughter's] college education, after grants,
scholarships, and loans." The court granted plaintiff's motion
to increase child support and denied defendant's cross-motion to
emancipate the child. The statement of reasons accompanying
that order includes a limitation on defendant's contribution not
contained in the order itself. It provides that defendant's 68%
share of college expenses "shall apply so long as [the child] is
attending either Mercer County Community College (MCCC) or
Rutgers University." No explanation for the limitation was
provided and its basis is not apparent from the record.
It is not possible to summarize accurately the facts of the
parties' most recent dispute as they disagree on almost
everything. Defendant claims the parties' daughter dropped out
of high school and failed to complete her first semester at
Rutgers in fall 2010, which he refers to as "Strike One."
"Strike Two" followed with her failure to secure more than nine
credits at MCCC in the spring 2011 term, thus "failing to
maintain full-time student status." Her failure to earn more
than six credits in the fall 2012 term earned her "Strike Three"
in his view, which she followed with "Strike Four" by posting
only nine credits in spring 2013.
Defendant claims the child "has no special needs, and
therefore no excuse for having amassed only 1 1/2 years of
3 A-1194-14T1
credit toward the college program she is seeking to enter"
despite having "been enrolled for eight (8) full-time
semesters." He claims she works full-time, and that she and her
mother have never kept him apprised of the child's academic
progress or school plans. He maintains the parties' daughter,
"has proven that she is not capable of consistently meeting the
responsibility of maintaining full-time student status."
Finally, defendant claims it is "unconstitutional for the
court to compel [him] as a divorced parent to contribute to the
college costs and expenses of [his twenty-two] year old child as
the court would lack the ability to so compel [him] had [he]
remained married." Defendant maintains he supports a ten-year-
old child from a second marriage and wishes to retire from the
police force in the near future. Thus he claims he and does not
"have the financial ability to support [the parties' daughter]
thru 3 [plus] more years of college, particularly at an out-of-
state private college (with a $60,000 a year price tag)."
Plaintiff counters that the parties' daughter "was a
straight 'A' honor student and varsity cheerleader" in high
school and graduated with her class, albeit having attended her
senior year at night as a result of "anxiety issues as her
father well knows." Plaintiff acknowledges that the child
withdrew from Rutgers during her first semester in fall 2010,
4 A-1194-14T1
but maintains she thereafter diligently pursued her studies at
MCCC, as a full-time student every semester, achieving a 3.83
average and her associate's degree in 2014. She explains their
daughter attended MCCC for three years instead of two because
she was pursuing a career in photography, and was taking classes
in a prescribed order and creating a portfolio.
Plaintiff maintains defendant was always kept apprised of
their daughter's academic plans and progress, as demonstrated by
the vast number of emails she attached to her certification.
Further, plaintiff contends in February 2014, defendant paid his
share of the cost of her applications to Parsons School of
Design and the School of Visual Arts (SVA), both located in
Manhattan. After the child was accepted at both, and decided to
go to SVA, plaintiff claims defendant agreed to pay his share of
the costs, and only reneged when he got the bill.
Finally, plaintiff contends that defendant has paid
"virtually zero" in college costs for the parties' daughter, and
thus his attempt to "give the impression that he has already put
her through college for 4 years is disingenuous." She maintains
their daughter attends school full-time, is plainly not
emancipated and that defendant's desire to retire at forty-five
years old should not redound to the detriment of their
daughter's education.
5 A-1194-14T1
The trial judge denied plaintiff's request to find
defendant in violation of the prior order, as under that order
defendant "is only responsible for 68% of [the child's] college
expenses if she is attending either Mercer County Community
College or Rutgers University." The judge denied plaintiff's
further request that defendant pay his 68% share of the costs of
SVA "for the reason stated above," i.e., it is not Rutgers or
MCCC. The court further found, "based on the evidence
provided," that plaintiff had not shown that defendant "ever
agreed to pay any amount towards SVA's tuition and costs." The
judge likewise denied plaintiff's request that defendant
reimburse her $884, representing his 68% share of the $1300
enrollment fee and dorm room deposit plaintiff paid SVA.
The judge denied defendant's cross-motion to emancipate the
parties' daughter or decrease his child support. In an
accompanying statement of reasons, the judge noted that the
parties' daughter still lives with plaintiff, "intends to
continue her higher education and does not work full-time."
Finding the child was "not independent nor outside the sphere of
influence of her parents," the judge deemed emancipation
unwarranted. Noting that defendant earns in excess of $100,000
as a police officer and that his claim the parties' daughter
"works full-time is unsubstantiated," the judge found defendant
6 A-1194-14T1
had failed to demonstrate a change in circumstances warranting a
reduction in his child support. The judge denied counsel fees
to both parties, finding it "not evident" that either had "acted
in bad faith."
The parties appeal, reprising essentially the same
arguments they made to the trial court. Having reviewed the
record, we think it readily apparent that neither defendant's
motion to emancipate the parties' daughter, nor plaintiff's
motion to compel defendant to contribute to her expenses at SVA,
could be decided in the absence of a plenary hearing. See
K.A.F. v. D.L.M., 437 N.J. Super. 123, 137 (App. Div. 2014)
(noting a court may not resolve conflicting factual averments on
material issues without a plenary hearing).
The parties' views about the academic abilities and
diligence of their daughter could not be more diametrically
opposed. Plaintiff says that she is an excellent student,
diligently pursuing her studies full-time with the goal of
pursuing a career in photography while working part-time to
defray expenses. Defendant presents the same child as one
unable to remain regularly enrolled, who works full-time.
Plaintiff maintains that defendant is financially secure and can
well contribute to their daughter's education. Defendant claims
he has other obligations, wishes to retire and cannot contribute
7 A-1194-14T1
to the child's education and should not have to. The court
accepted on the basis of the conflicting certifications that the
child is not independent and is pursuing her degree, but without
any reference to the Newburgh factors determined that defendant
had no obligation to contribute to the costs of her education.
See Newburgh v. Arrigo, 88 N.J. 529, 545 (1982) (setting forth
twelve factors courts should consider in evaluating a claim for
contribution toward the cost of higher education).
The parties' conflicting certifications make clear that
there are material facts in dispute on the critical questions of
whether the parties' daughter has moved beyond the sphere of her
parents' influence or instead remains a full-time student
entitled to some level of support from them in the discharge of
their parental duty to assure her an education. See id. at 544
("In appropriate circumstances, parental responsibility includes
the duty to assure children of a college and even of a
postgraduate education."). We remand for discovery and a
plenary hearing. See Tretola v. Tretola, 389 N.J. Super. 15,
20-21 (App. Div. 2006) (underscoring the need for a plenary
hearing to determine parents' obligation for support when their
child both worked full-time and attended community college with
intent of pursuing four-year degree). In light of our
8 A-1194-14T1
disposition, we need not reach the parties' remaining arguments,
including defendant's constitutional claims.
Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
9 A-1194-14T1
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Case: 13-30796 Document: 00512654174 Page: 1 Date Filed: 06/05/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-30796 FILED
June 5, 2014
Lyle W. Cayce
DARNELL DEON BALONEY, Clerk
Plaintiff
v.
ENSCO OFFSHORE COMPANY; STONE ENERGY OFFSHORE, L.L.C.,
Defendants-Third Party Plaintiffs -
Appellees
v.
BAYOU INSPECTION SERVICES, INCORPORATED, doing business as
Bayou Testers, Incorporated,
Third Party Defendant - Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:11-CV-2730
Before KING, SOUTHWICK, and GRAVES, Circuit Judges.
PER CURIAM:*
This appeal concerns the enforceability of an indemnity clause in a
contract between Bayou Inspection Services, Inc. and Ensco Offshore Co. The
district court determined the indemnity clause was enforceable because it was
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 13-30796 Document: 00512654174 Page: 2 Date Filed: 06/05/2014
No. 13-30796
governed by maritime law which recognizes the enforceability of such clauses,
and not by Louisiana law which does not. We AFFIRM.
FACTS AND PROCEDURAL HISTORY
Darnell Baloney was injured in the Gulf of Mexico while working on the
ENSCO 99, a mobile offshore drilling unit (“MODU”). The ENSCO 99 is a
“jack-up drilling rig” that, after the legs of the floating rig are lowered to the
seabed, is jacked up above the water. The important facts are undisputed.
Ensco Offshore Co. is a drilling company that furnishes MODUs for use in an
offshore environment to energy companies that need its services. Stone Energy
Offshore, LLC, the owner of an offshore lease in the Gulf of Mexico, entered
into an agreement with Ensco in which Ensco would provide offshore well
drilling services on this lease. Pursuant to this agreement, Ensco transported
the ENSCO 99 to Stone’s offshore lease, extended its legs into the floor of the
Gulf of Mexico, and began drilling operations.
Bayou Inspection Services, Inc., performs non-destructive x-ray and
magnetic particle testing on welded surfaces. Ensco and Bayou entered into a
master services agreement (“MSA”) containing various terms that would
govern any future contractual work performed by Bayou for Ensco. This
agreement contemplated that future work orders would detail the specific
tasks to be performed. Bayou agreed in the MSA to defend and indemnify
Ensco against any claims arising from injury to Bayou’s employees in
connection with work performed under the agreement. Bayou also agreed to
carry certain insurance and to name Ensco as an “additional insured” in its
policies. In the MSA, Bayou acknowledged that Ensco “performs its services
under contract with various energy related companies, sometimes referred to
as ‘Operators,’” and agreed “to extend the benefit of [its] indemnification and
2
Case: 13-30796 Document: 00512654174 Page: 3 Date Filed: 06/05/2014
No. 13-30796
insurance, including additional insured status . . ., to any Operator for whom
[Ensco] may be performing services under written Contract.”
In November 2012, Ensco called in a work order to Bayou for inspection
of welds using x-ray photography and magnetic particle testing. The x-ray
photography was to be used to check welds on drilling pipeline. The magnetic
particle testing was to be used to check welds on the boom of a crane attached
to the ENSCO 99. Baloney and Paul Brummet, both Bayou employees, were
assigned to the ENSCO 99 job. Baloney spent one day aboard the ENSCO 99
performing x-ray testing on pipeline without incident. The following day, he
completed the x-ray testing and began the magnetic testing on the crane. At
the time of his alleged injury, Baloney was inspecting the welds on the boom
of one crane attached to the ENSCO 99 while suspended in a personnel basket
from another crane on the ENSCO 99. The crane operator allegedly caused
the basket to hit the crane’s cable, jerking the basket and injuring Baloney.
Baloney sued Ensco and Stone in federal court to recover for his injuries.
Ensco and Stone both filed third-party complaints against Bayou seeking
defense and indemnification based on the provisions of the MSA. Baloney’s
claims against Stone were dismissed. His remaining claims were eventually
settled, leaving only the contract dispute between Ensco, Stone, and Bayou
remaining. The parties filed cross motions for summary judgment. The
district court granted summary judgment in favor of Ensco and Stone. The
court held that the contract between Ensco and Bayou was a maritime
contract, and that maritime law therefore applied. The court further held that
the contract’s defense and indemnity provisions were enforceable under
maritime law and that Ensco and Stone were contractually entitled to these
benefits. Bayou appeals, arguing that the contract is non-maritime, that
Louisiana law applies, and that the Louisiana Oilfield Indemnity Act renders
3
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No. 13-30796
the indemnity provision null and void. Whether the Ensco–Bayou contract is
a maritime contract controls the outcome of this appeal.
DISCUSSION
A district court’s grant of summary judgment is reviewed de novo. Prison
Legal News v. Livingston, 683 F.3d 201, 211 (5th Cir. 2012). Summary
judgment is appropriate when, viewing the evidence in the light most favorable
to the nonmoving party, there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of law. Id.
The Outer Continental Shelf Lands Act (“OCSLA”) applies federal law
to “devices” attached to the seabed within the geographical reach of the Act:
The Constitution and laws and civil and political jurisdiction of the
United States are extended to the subsoil and seabed of the outer
Continental Shelf and to all artificial islands, and all installations
and other devices permanently or temporarily attached to the
seabed, which may be erected thereon for the purpose of exploring
for, developing, or producing resources therefrom, . . . to the same
extent as if the outer Continental Shelf were an area of exclusive
Federal jurisdiction located within a State.
43 U.S.C. § 1333(a)(1). A jack-up rig temporarily attached to the Outer
Continental Shelf is a “device” that falls within this statute. Barker v. Hercules
Offshore, Inc., 713 F.3d 208, 213 (5th Cir. 2013).
OCSLA also establishes when laws of adjacent states will apply:
To the extent that they are applicable and not inconsistent with
this subchapter or with other Federal laws and regulations . . ., the
civil and criminal laws of each adjacent State . . . are declared to
be the law of the United States for that portion of the subsoil and
seabed of the outer Continental Shelf, and artificial islands and
fixed structures erected thereon, which would be within the area
of the State if its boundaries were extended seaward to the outer
margin of the outer Continental Shelf. . . .
43 U.S.C. § 1333(a)(2)(A).
As a result of these provisions, state law will apply as surrogate federal
law under OCSLA if these three conditions are met:
4
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No. 13-30796
(1) The controversy must arise on a situs covered by OCSLA (i.e.
the subsoil, seabed, or artificial structures permanently or
temporarily attached thereto).
(2) Federal maritime law must not apply of its own force.
(3) The state law must not be inconsistent with Federal law.
Union Tex. Petroleum Co. v. PLT Eng’g, Inc., 895 F.2d 1043, 1047 (5th Cir.
1990). The second condition is the focus of the parties’ dispute. “For disputes
arising out of contracts — including indemnity contracts for offshore drilling
— the courts of this circuit have held that if the contract is a maritime contract,
federal maritime law applies of its own force, and state law does not apply.”
Demette v. Falcon Drilling Co., Inc., 280 F.3d 492, 497 (5th Cir. 2002),
overruled on other grounds by Grand Isle Shipyard, Inc. v. Seacor Marine, LLC,
589 F.3d 778 (5th Cir. 2009) (en banc). Accordingly, if the contract between
Ensco and Bayou is a maritime contract, maritime law applies to this case.
When deciding whether a contract is maritime in nature, this court first
examines the historical treatment of similar contracts in our jurisprudence,
then considers six fact-specific questions. Davis & Sons, Inc. v. Gulf Oil Corp.,
919 F.2d 313, 316 (5th Cir. 1990). Our historical treatment can make the
subsequent fact-specific inquiry unimportant, but only when the nature of the
contract in question has been clearly answered. Hoda v. Rowan Companies,
Inc., 419 F.3d 379, 381 (5th Cir. 2005). We will first analyze the history of
contracts such as the one here, then identify and answer the six questions.
A. Historical Treatment of Similar Contracts
The district court briefly surveyed our jurisprudence and determined
that it leaned in favor of finding that Ensco and Bayou had entered into a
maritime contract, but the history was not so clear as to render a fact-specific
inquiry superfluous. As the district court correctly recognized, when it comes
5
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No. 13-30796
to determining whether contractual services performed on a jack-up rig have a
sufficiently “salty flavor” such that they are maritime, our precedent has not
established a clear boundary between sea and land. See Hoda, 419 F.3d at
382-83. One of our decisions called this area of the law a “marshland.”
Domingue v. Ocean Drilling and Exploration Co., 923 F.2d 393, 393-94 (5th
Cir. 1991). Nonetheless, the majority of contractual oil-and-gas-related
services performed on the jack-up rig, especially those services rendered under
contracts for vessel repair, have been deemed maritime because they relate to
the vessel’s overall mission. Diamond Offshore Co. v. A&B Builders, Inc., 302
F.3d 531, 549 (5th Cir. 2002), overruled on other grounds by Grand Isle, 589
F.3d at 788.
We agree with the district court, though, that our caselaw is not
definitive. A fact-specific inquiry is needed.
B. Fact-Specific Inquiry
When the historical treatment of similar contracts does not resolve the
issue of whether a maritime contract exists, we consider these six questions:
(1) What does the specific work order in effect at the time of
injury provide?
(2) What work did the crew assigned under the work order
actually do?
(3) Was the crew assigned to work aboard a vessel in navigable
waters?
(4) To what extent did the work being done relate to the mission
of that vessel?
(5) What was the principal work of the injured worker?
(6) What work was the injured worker actually doing at the time
of injury?
6
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Davis, 919 F.2d at 316. Answers to these questions depend entirely upon the
nature or character of the work performed even when the work is performed in
the Gulf. See Hoda, 419 F.3d at 381.
The district court considered these questions before determining that the
contract was a maritime one. We start our review by noting that a jack-up rig
is a “vessel.” Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 1115, 1122-
23 (5th Cir. 1992). Thus, Baloney and the crew were assigned to work aboard
a vessel in navigable waters. The specific work order in effect at the time of
the injury called for weld testing on a recently repaired crane attached to the
vessel. The crew actually did this work, and in fact Baloney was doing this
work at the time he was injured. This work on an appurtenance of the vessel
such as a crane is characterized as “vessel repair services” and is therefore
maritime work. See Diamond Offshore, 302 F.3d at 549.
The work order also called for weld testing on drilling pipeline, and the
crew actually performed this work before starting the crane work. Because the
record does not precisely explain the nature of the pipeline work, it is not clear
whether it would be considered work on an appurtenance of a vessel. However,
as explained below, it is undoubtedly work on equipment used by a vessel to
carry out its fundamental mission and purpose.
The parties’ dispute on appeal largely concerns the fourth question: Was
the crane and pipeline work performed on the ENSCO 99 related to its
mission? We have already analyzed the nature of a contract that called for
well-casing services to be performed from a jack-up rig. Campbell, 979 F.2d at
1117-18. Such services did not involve any type of repairs or construction on
the rig itself or its appurtenances. The court explained that the rig was not
“be[ing] used as a mere work platform to execute a particular service contract”;
rather, the rig’s equipment, such as its “derrick and draw works,” were
necessary for the casing work. Id. at 1123. The court concluded that the casing
7
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No. 13-30796
work was “‘inextricably intertwined with maritime activities since it required
the use of a vessel and its crew.’” Id. (quoting Davis, 919 F.2d at 317). Ten
years later, a different panel undertook a similar analysis and reached the
same result in a case involving a contract to perform well-casing services from
a jack-up rig. See Demette 280 F.3d at 494-95. The court stated that “circuit
precedent virtually compels the conclusion that this is a maritime contract.”
Id. at 501.
Similarly, in another appeal we considered a worker who was injured
while tightening nuts on the blowout preventers; we had to resolve whether a
contract that involved installing and changing blowout preventers on a
wellhead was maritime. Hoda, 419 F.3d at 381. We recognized that “the
torquing services [the contractor] provided pertain solely to oil and gas
development and, in and of themselves, have nothing to do with traditional
maritime activity or commerce.” Id. at 382. Nevertheless, the court explained
that “the torquing up and torquing down of the blow-out preventer stacks was
but a discrete function in a carefully orchestrated series of actions conducted
by [the drilling company] during the drilling of the well.” Id. at 383. The court
further expounded that the contractor’s services “were ‘inextricably
intertwined’ with the activity on the rig, were dependent on [the drilling
company’s] placement of the equipment on which [the contractor’s] employees
worked, and could not be performed without the rig’s direct involvement.” Id.
The court therefore concluded that the torquing “‘is an integral part of drilling,
which is the primary purpose of the vessel.’” Id. (quoting Demette, 280 F.3d at
501). Accordingly, the court held that the contract was a maritime contract.
The only Fifth Circuit case cited by Bayou that arguably supports the
contrary conclusion is Domingue, 923 F.2d 393. There, the operative contract
8
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No. 13-30796
called for wireline services 1 to be performed from a jack-up drilling rig, but the
plaintiff, who was not employed by either contracting party, was injured while
performing well-testing services unrelated to the wireline services. Id. at 394.
It was in this context that we ultimately concluded that the contract was non-
maritime. Id. at 397-98; see Campbell, 979 F.2d at 1122. Domingue has little
application here because Baloney was a Bayou employee and was injured
performing services pursuant to Ensco’s work order. Moreover, to the extent
that Bayou relies on Domingue for the suggestion that repair services
performed to aid the vessel’s oil and gas exploration capabilities are incidental
to its mission, Campbell and Hoda directly discussed and held that contract
work aboard a rig in furtherance of oil drilling, particularly when that work is
to repair the vessel’s functionality, is inseparable from the rig’s mission.
Bayou’s attempts to distinguish Campbell and Hoda are unconvincing.
First, Bayou advances the idea that the rig lost its vessel character when
jacked up. Bayou offers no binding authority for this proposition, 2 and our
precedent is to the contrary. The place where the injury occurred is not
dispositive of the maritime inquiry, and we have never looked to whether the
vessel is temporarily anchored to the sea floor to determine the nature of the
work performed. See Hoda, 419 F.3d at 381. More broadly, Bayou argues that
“[b]ecause the work performed by Darnell Baloney did not relate to the
1 “A team performing a wireline operation services partially drilled oil and gas wells
and also gathers geophysical data relevant to production.” 923 F.2d at 394 n.3.
2 Bayou does cite one case, a Louisiana appellate case, containing language suggesting
that a jacked-up vessel in some sense loses its vessel character. Brennan v. Shell Offshore,
Inc., 612 So.2d 929 (La. App. 1993). In that case, the plaintiff was working as a welder on a
jack-up barge that performed services on wellheads and fixed platforms in the Gulf of Mexico.
Id. at 932-33. The court held that his work was not maritime: “The jackets [the plaintiff]
welded were attached to fixed platforms. The fact that the welding occurred on a jack-up
barge is not determinative. The barge when jacked up was similar to a fixed platform.” Id.
at 934. However, Brennan is distinguishable in that the contract was not for repairs to a
vessel; rather, the vessel was to be used as a work platform for repairs to fixed structures.
9
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navigation functions of the Ensco 99, the work, and thus the contract, must be
considered non-maritime.” While this idea has been expressed in the tort law
context, 3 adopting this narrow view of maritime contracts would be a departure
from our precedent, which requires us to look at the vessel’s mission, not
whether the services performed relate to the vessel’s navigation. Cf. Diamond
Offshore, 302 F.3d at 537; 549-50 (finding a maritime contract even though the
contractual work did not relate to the navigation functions or movement of the
rig).
Bayou’s work aboard the ENSCO 99 was integral to the vessel’s primary
purpose. The drilling pipeline which Baloney repaired was indisputably part
of the vessel’s equipment. Further, the crane being repaired by Baloney when
he was injured was correctly deemed to be an appurtenance to the vessel. This
equipment, and in particular the functional crane, was essential to the vessel’s
mission of drilling for oil and gas. The ENSCO 99 was not merely being used
as a platform to perform some work unrelated to the vessel’s mission. See
Domingue, 923 F.2d at 394. Rather, Baloney was injured while performing
repairs that were critical to the fulfillment of the vessel’s mission.
Under the fact-specific Davis inquiry, Baloney was performing work
under a maritime contract, which recognizes the enforceability of indemnity
clauses.
AFFIRMED.
3Bayou’s primary support for this argument is a concurrence in Barker v. Hercules
Offshore, Inc., 713 F.3d 208, 213 (5th Cir. 2013) (Clement, J., concurring). Barker concerned
whether the plaintiff’s tort action was maritime in nature. 713 F.3d at 217 n.5. Judge
Clement drew a clear line between our tort and contracts cases: “[C]ontract cases with similar
fact patterns are not binding on whether this tort action is maritime in nature, since tort and
contract cases apply different tests to determine whether maritime law applies.” Id.
10
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UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted August 11, 2005*
Decided August 17, 2005
Before
Hon. THOMAS E. FAIRCHILD, Circuit Judge
Hon. FRANK H. EASTERBROOK, Circuit Judge
Hon. DIANE S. SYKES, Circuit Judge
No. 05-1804
Appeal from the United States District
JAMES R. STEPHENS, Court for the Southern District of
Plaintiff-Appellant, Indiana, Indianapolis Division.
v. No. 02 C 1212
JACK L. COTTEY, et al., John Daniel Tinder,
Defendants-Appellees. Judge.
ORDER
Indiana prisoner James Stephens was held briefly at the Marion County Jail
while attending a postconviction hearing in Indianapolis, and for eight days of his
stay was given insufficient bedding. He spent three days with no mattress, sleeping
directly on the metal bedframe, and five days with no bedframe, sleeping on a
mattress on the floor. Stephens sued, claiming that a consent decree from an
unrelated lawsuit in which Marion County Jail officials agreed to improve various
prison conditions, including bedding, “created a liberty/property interest that is
protected by due process.” The district court granted summary judgment to the
defendant jail officials, rejecting the due process claim and holding that Stephens’s
Eighth Amendment rights were not violated. On appeal, Stephens challenges both
conclusions. There are no facts in dispute; we are presented only with questions of
law.
*
After examining the briefs and record, we conclude that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R.
APP. P. 34(a)(2).
No. 05-1804 Page 2
Stephens first argues that the district court erred in determining that he
does not have a liberty interest in proper bedding. He contends that a class action
lawsuit against officials of the Marion County Jail—a suit that yielded a 1975
settlement and consent decree and a 2003 court order imposing sanctions for
violating that consent decree—created a liberty interest in a bed and mattress for
all inmates at the jail.
The 2003 court order cannot confer a liberty interest on Stephens because it
was issued well after his jail stay. And we doubt that a consent decree or a
follow-up court order in a lawsuit to which Stephens was not even a party could
confer upon him a constitutionally protected liberty interest. In its recent decision
in Town of Castle Rock v. Gonzales, 125 S. Ct. 2796, 2809-10 (2005), the Supreme
Court held that a domestic violence restraining order did not create a
constitutionally protected entitlement to enforcement of the order. The due process
claim in this case falls within the Castle Rock holding.
Moreover, Stephens failed to show that his ordeal was an “atypical and
significant hardship.” See Wilkinson v. Austin, 125 S. Ct. 2384, 2394 (2005);
Sandin v. Connor, 515 U.S. 472, 484 (1995). In determining whether prison
conditions meet this standard, courts place a premium on the duration of the
deprivation, Arce v. Walker, 139 F.3d 329, 336 (2d Cir. 1998), and we have held that
more extended and serious burdens than the one Stephens endured do not amount
to a deprivation of a liberty interest. See, e.g., Lekas v. Briley, 405 F.3d 602, 612
(7th Cir. 2005) (90-day disciplinary segregation with severe restrictions on exercise,
group worship, work, and educational opportunities not atypical or significant);
Thomas v. Ramos, 130 F.3d 754, 760-62 (7th Cir. 1997) (70-day confinement with
another inmate in one-man cell for 24 hours a day does not implicate liberty
interest). Summary judgment on this claim was appropriate.
Stephens also challenges in general terms the district court’s resolution of his
Eighth Amendment conditions-of-confinement claim. But summary judgment was
proper here as well because Stephens failed to prove that he suffered an “extreme”
deprivation. Delaney v. DeTella, 256 F.3d 679, 683 (7th Cir. 2001). As is the case
under the Due Process Clause, a short-term deprivation is less serious for Eighth
Amendment purposes than a long-term one. Tesch v. County of Green Lake,
157 F.3d 465, 476 (7th Cir. 1998); Antonelli v. Sheahan, 81 F.3d 1422, 1430 (7th
Cir. 1996). Sleeping for three days on a bedframe without a mattress is not
extreme, see Johnson v. Pelker, 891 F.2d 136, 138-39 (7th Cir. 1989), and neither is
sleeping for five days on a mattress without a bedframe, Rogers v. Thomas,
879 F.2d 380, 383-84 (8th Cir. 1989). See also Mann v. Smith, 796 F.2d 79, 85 (5th
Cir. 1986) (the Constitution does not require elevated beds for prisoners); Hamm v.
DeKalb County, 774 F.2d 1567, 1575 (11th Cir. 1985) (same). But cf. Lyons v.
Powell, 838 F.2d 28, 31 (1st Cir. 1988) (pretrial detainee stated a claim by alleging
that he had to sleep on a mattress on the floor for 27 days). In addition, although
Johnson sought medical treatment for a sore back because of the sleeping
arrangements, it is undisputed that he was not seriously harmed and was merely
No. 05-1804 Page 3
prescribed a cold pack and analgesics. This further undermines his conditions-of-
confinement claim. See Rogers, 879 F.2d at 384.
Accordingly, for the foregoing reasons, the judgment of the district court is
AFFIRMED.
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569 F.Supp. 1452 (1983)
Thomas T. WILLIAMS and Kempy Mitchell, Plaintiffs,
v.
Victor GARCIA, et al., Defendants.
Civ. No. 83-0623.
United States District Court, E.D. Michigan, S.D.
August 24, 1983.
Kenneth W. Morrison, Detroit, Mich., and Robert A. Peurach, Bloomfield Hills, Mich., for plaintiffs.
Thomas D. Beeby, Detroit, Mich., for Sheriff Santos and Webb Co.
Anthony C. McGettrick, Asst. City Atty., Laredo, Tex., and James C. Zeman, Detroit, Mich., for Garcia, Tatangelo, Police Dept. & City of Laredo.
MEMORANDUM OPINION
RALPH M. FREEMAN, Senior District Judge.
The complaint filed in this case contains two counts. Jurisdiction is based on 42 U.S.C. §§ 1981, 1983, 1985(3), 1986, and the First, Fourth, Fifth, Sixth, Eighth, and Fourteenth Amendments. Plaintiffs' claim is based on the imprisonment of plaintiffs in Laredo, Texas by the City of Laredo Police Department. Plaintiffs' first count asserts that defendants, acting separately and in concert, deprived them of a battery of constitutionally protected rights. (Plaintiffs' Complaint ¶ 21). The second count asserts that the same defendants are liable for the same conduct on a variety of tort *1453 theories under Texas law. In lieu of answering the complaint, defendants Mario Santos, Jr., Webb County, Texas, Victor Garcia, Aldo Tatangelo, City of Laredo, Texas, and the Laredo Police Department have moved to dismiss the complaint pursuant to F.R.Civ.P. 12(b)(2) and (3) or, in the alternative, for change of venue to the Western District of Texas pursuant to either 28 U.S.C. § 1404(a) or 1406(a). There are four unnamed Texas defendants, Laredo Police Officers A and B, Laredo Police Detective John Doe, and Laredo Warrant Officer Richard Roe. The only other defendant is Joseph Moses, who is alleged to be a resident of Michigan. Based on the record in this case, Moses has not been served with the complaint. Argument was heard on August 3, 1983 at which time this matter was taken under advisement.
12(b)(2) Motion to Dismiss
The Court will first review the Texas defendants'[1] motion to dismiss for lack of personal jurisdiction under F.R.Civ.P. 12(b)(2). Leroy v. Great W. United Corp., 443 U.S. 173, 180, 99 S.Ct. 2710, 2714-15, 61 L.Ed.2d 464 (1979). Each party agrees that valid service depends upon the reach of Michigan's long-arm statute under F.R. Civ.P. 4(e). This Court must first determine whether the state statute authorizes jurisdiction over these defendants and, second, whether the jurisdictional reach of the statute is within the constitutional due process limits of the Fourteenth Amendment. When the state has permitted its courts to reach the constitutional limit, the two questions merge into one. See World-Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); National Can Corp. v. K Beverage Co., 674 F.2d 1134 (6th Cir.1982); Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374 (6th Cir.1968).
In the case at hand, plaintiffs contend that the Court has limited personal jurisdiction over the Texas defendants under M.C. L.A. § 600.705(2) and § 600.715(2). The relevant language of these sections, which apply to individuals and corporations, respectively, and which is identical, requires "[t]he doing or causing of any act to be done, or consequences to occur, in the state resulting in an action for tort." Plaintiffs all but acknowledge that all conduct which they allege violated their constitutional rights and all conduct which they allege was tortious occurred in Texas. The only nexus to Michigan is defendant Moses, who plaintiffs allege conspired with the Texas defendants resulting in the alleged injuries to plaintiffs.
Plaintiffs allege the following facts in their complaint, which give rise to their cause of action. Defendant Garcia is the Chief of Police for the City of Laredo. Defendant Tatangelo is the Mayor of the City of Laredo. Defendant Mario Santos, Jr., is the Sheriff of Webb County. Plaintiffs' employer, Stephen Talley, entered into a lease agreement with defendant Moses for use of a tractor to haul freight. Moses supplied the tractor to Talley who then engaged plaintiffs to haul freight to Missouri. While in Missouri, plaintiffs obtained a one-way haul from Lebo, Kansas to Laredo, Texas. Subsequent to plaintiffs' departure from Detroit, a dispute arose between Moses and Talley with respect to the terms of the lease. At this point, Moses demanded payment or return of his tractor. When Talley refused both demands, plaintiffs allege that Moses set in motion the events which led to their arrest and incarceration in Laredo, Texas for unauthorized use of a motor vehicle under the Texas Penal Code. The alleged injurious conduct of the defendants is asserted to have begun with the arrest and continued throughout their incarceration. The plaintiffs have presented two theories on just how the Laredo Police Department was brought into this matter. In the complaint, at ¶ 5, plaintiffs allege that defendant Moses directly contacted the Laredo Police Department. In plaintiffs' response to the motions now before the Court, they allege that Moses *1454 first contacted the Detroit Police Department about the missing tractor and that it was the Detroit Police Department who then contacted the Laredo Police Department. When questioned about the discrepancy at the hearing, plaintiffs asserted that their investigation has led them to believe that Moses initially contacted the Detroit Police Department. Plaintiffs noted, however, that they need further time to discover the nature of Moses' contacts with both the Detroit Police Department and the Laredo Police Department. Plaintiffs allege that the Laredo Police Department obtained a warrant for their arrest based on the information transmitted by the Detroit Police Department. The plaintiffs were then arrested pursuant to the warrant. Plaintiffs describe the subsequent events as follows:
After apprehending the plaintiffs, the Laredo Police Department contacted the Detroit Police Department, by telecommunication, to determine whether to extradite the plaintiffs for prosecution in the State of Michigan. The Detroit Police, pursuant thereto, contacted Moses for verification of the plaintiffs' identities and for a formal, sworn complaint. Moses, however, refused to swear to the formal complaint because his charges were unfounded.
Faced with an inadequate record the Detroit Police Department sent another message to the Laredo Police Department directing that the plaintiffs be immediately released. However, in spite of that direction, and without charging plaintiffs with any violation of Texas law, the Laredo Police Department retained plaintiffs in jail for thirty-eight (38) more days. Plaintiffs understand that the Laredo Police Department did not release them because of further directions directly from Moses. It was during that false imprisonment period that plaintiffs were subjected to the repeated psychological and physical abuse alleged in the complaint which included, but was not limited to, racial slurring, inadequate physical protection, grossly substandard meals and general ill treatment, which resulted in the anxiety, humiliation and general suffering for which plaintiffs are suing herein.
For purposes of the instant motion, therefore, the connection between the tortious course of conduct that began with Moses' fraudulent complaint filed in Detroit, and continued with the other malicious acts in Texas, turns upon the conspiracy between the Texas defendants and Moses to subject the plaintiffs to retributional abuse without regard to constitutional rights. (Plaintiffs' brief in response to Motion to Dismiss). Plaintiffs contend that, because very little discovery has been completed, they are not able to set forth the nature of defendant Moses' contacts with the Texas defendants. This is compounded by their inability to serve Moses with the complaint in this action.
In Hadad v. Lewis, 382 F.Supp. 1365 (E.D.Mich.1974), M.C.L.A. § 600.705(2) was construed as bestowing upon Michigan courts the broadest grant of jurisdiction that would be consistent with due process, citing Sifers v. Horen, 385 Mich. 195, 188 N.W.2d 623 (1971). Section 600.715 has been construed as granting equally extensive jurisdiction. Microelectronic Sys. Corp. v. Bamberger's, 434 F.Supp. 168 (E.D.Mich. 1977). Thus, the sole inquiry for this Court is whether there are minimum contacts between the defendants and Michigan, keeping in mind that "limited jurisdiction ... exposes a nonresident to suit in Michigan only for a cause which arose out of the relationship serving as a basis for such jurisdiction." Sifers v. Horen, 385 Mich. at 199, 188 N.W.2d 623. It is clear that even a single act may provide the basis for longarm jurisdiction under the statute. Khalaf v. Bankers & Shippers Ins. Co., 404 Mich. 134, 273 N.W.2d 811 (1978); Sifers v. Horen, 385 Mich. 195, 188 N.W.2d 623 (1971). Considering the due process limitations on the exercise of jurisdiction based on a single act, the Sixth Circuit has developed three criteria for determining the outer limits of such jurisdiction:
First, the defendant must purposely avail himself of the privilege of acting in the forum state. Second, the cause of action must arise from defendant's activities there. Finally, the acts of the defendant *1455 or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction reasonable.
Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir.1968). Michigan also requires a plaintiff to demonstrate that a non-resident defendant has purposefully availed himself of the privilege of conducting activities in Michigan before he can be subject to the jurisdiction of Michigan courts. Khalaf v. Bankers & Shippers Ins. Co., supra.
Since there is no statutory procedure for resolving the issue of jurisdiction, the mode of its determination is left to the discretion of the trial court. Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111 (1939). Although the burden of establishing jurisdiction is on the plaintiff, the burden is ordinarily met by a prima facie showing that jurisdiction is confined by the state long-arm statute. See Weller v. Cromwell Oil Co., 504 F.2d 927 (6th Cir.1974); United States v. Montreal Trust Co., 358 F.2d 239 (2d Cir.), cert denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966). The burden is relatively slight and the Court must consider the pleadings and affidavits in the light most favorable to plaintiff to determine whether plaintiff has demonstrated facts which would support a finding of jurisdiction. Welsh v. Gibbs, 631 F.2d 436 (6th Cir.1980), cert denied, 450 U.S. 981, 101 S.Ct. 1517, 67 L.Ed.2d 816 (1981). However, plaintiffs may not rest on their complaint but must come forward with evidence, by affidavits or otherwise, to support jurisdiction. Amba Mktg. Sys. v. Jobar Int'l., Inc., 551 F.2d 784 (9th Cir.1977).
Plaintiffs contend that the Texas defendants caused an act to be done or consequences to occur in Michigan resulting in an action for tort. M.C.L.A. §§ 660.705(2), 715(2). Plaintiffs rely on their theory of a conspiracy to demonstrate that the defendants caused an act to be done in Michigan. The theory advanced, while not clearly articulated, rests on the legal premise that the acts of a conspirator are imputed to all other co-conspirators. Thus, in the case at hand, plaintiffs contend that the acts of defendant Moses in Michigan should be imputed to the Texas defendants. Under this theory, according to plaintiffs, the Texas defendants are subject to the jurisdiction of this Court for having caused an act in Michigan. Plaintiffs have cited and relied on two cases that have adopted and applied such a theory. Dixon v. Mack, 507 F.Supp. 345 (S.D.N.Y.1980); Istituto Bancario Italiano v. Hunter Eng'g Co., 449 A.2d 210 (Del.1982). The Sixth Circuit has neither adopted nor rejected the conspiracy theory of in personam jurisdiction. Chrysler Corp. v. Fedders Corp., 643 F.2d 1229 (6th Cir.), cert denied, 454 U.S. 893, 102 S.Ct. 388, 70 L.Ed.2d 207 (1981). In Chrysler, the court held that Chrysler's allegations of a conspiracy among the defendants were unsupported by any factual assertions. Therefore, the Court did not have to address the viability of the conspiracy theory in this Circuit. In the case at hand, plaintiffs' allegations are not supported by any affidavits; plaintiffs themselves have failed to file any affidavits.
This case was filed February 22, 1983. Because the Texas defendants opted to file the motions now before the Court prior to filing an answer to the complaint, little or no discovery has taken place. Thus, the Court finds that it would be premature to dismiss the complaint against the Texas defendants due to plaintiffs' failure to factually support their assertions.
The Court will, however, review the allegations under the analyses proposed in Dixon, supra, and Hunter, supra, to determine if there are minimum contacts, accepting the allegations of plaintiffs as established and accepting the viability of the conspiracy theory in this Circuit. In Dixon v. Mack, supra, plaintiff was abducted in New York City where he was a member of the Unification Church. The abduction was part of an effort to deprogram him. Plaintiff was eventually taken to Pennsylvania where he was treated by a psychiatrist. Plaintiff brought suit in New York against several individuals involved in the effort to deprogram him, including the Pennsylvania psychiatrist. The psychiatrist moved to quash service. Plaintiff asserted that the psychiatrist was amenable to service in New York *1456 as a member of the conspiracy to deprogram him. As such, under the conspiracy theory, the psychiatrist was liable for the conduct of the actors who committed the tortious act of allegedly abducting plaintiff in New York City. The court noted:
It has been recognized that "under certain circumstances a person may be subjected to jurisdiction under CPLR § 302(a)(2) on the theory that his co-conspirator is carrying out activities in New York pursuant to the conspiracy." Socialist Workers Party v. Attorney General of the United States, 375 F.Supp. 318, 321 (S.D.N.Y.1974). To establish jurisdiction on this basis, plaintiff must make a prima facie factual showing of conspiracy. Merkel Associates, Inc. v. Bellofram Corp., 437 F.Supp. 612, 617 (W.D.N.Y. 1977). See also United States v. Montreal Trust Co., 358 F.2d 239, 242 & n. 4 (2d Cir.1966), cert. denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966). He must also allege specific facts warranting the inference that the defendant was a member of the conspiracy. Louis Marx & Co. v. Fuji Seiko Co., 453 F.Supp. 385, 391-92 (S.D.N.Y.1978). "The plaintiff must come forward with some definite evidentiary facts to connect the defendant with transactions occurring in New York." Socialist Workers Party, 375 F.Supp. at 322.
507 F.Supp. at 348 (emphasis added). The New York court found that the act of allegedly abducting plaintiff in New York City could be imputed to the Pennsylvania psychiatrist. The alleged abduction was a substantial act in New York sufficient to satisfy the due process requirements of minimum contacts and therefore assert jurisdiction over the non-resident psychiatrist. Both the injury and the alleged tortious act occurred in New York.
In Istituto Bancario Italiano v. Hunter Eng'g Co., supra, upon which plaintiff relies, the Delaware Supreme Court reviewed the pronouncements of various courts on the "conspiracy theory" of in personam jurisdiction. The court then developed a five prong test:
We therefore hold that a conspirator who is absent from the forum state is subject to the jurisdiction of the court, assuming he is properly served under state law, if the plaintiff can make a factual showing that: (1) a conspiracy to defraud existed; (2) the defendant was a member of that conspiracy; (3) a substantial act or substantial effect in furtherance of the conspiracy occurred in the forum state; (4) the defendant knew or had reason to know of the act in the forum state or that acts outside the forum state would have an effect in the forum state; and (5) the act in, or effect on, the forum state was a direct and foreseeable result of the conduct in furtherance of the conspiracy.
449 A.2d at 225 (emphasis added). The significance of the third element cannot be understated. The element is firmly rooted in the minimum contacts requirement set forth by the Supreme Court in International Shoe. The Sixth Circuit has also stressed the significance of conduct within the forum state: "[T]he cause of action must arise from defendant's activities" in the forum state.
The question before this Court is whether the alleged acts of defendant Moses in Michigan, when attributed to his alleged Texas co-conspirators, satisfy the due process requirement of minimum contacts with respect to the Texas defendants. The only acts alleged to have been committed by Moses in Michigan are his phone calls to the Detroit Police Department and/or the Laredo Police Department. All conduct which allegedly deprived plaintiffs of certain of their constitutional rights and which was allegedly tortious occurred in Texas. Plaintiffs would have this Court find that these phone calls initiated by Moses in Michigan are substantial acts in Michigan sufficient to assert jurisdiction over the Texas defendants when imputed to them pursuant to the conspiracy theory. The Court cannot agree with such a conclusion. The acts of defendant Moses are not sufficient enough for this Court to conclude that it would be reasonable to assert jurisdiction over the Texas defendants under the conspiracy theory. In Dixon, the tortious act and injury occurred in New York. Thus, once the New York *1457 court found that plaintiffs had established a prima facie case of a conspiracy which included the Pennsylvania psychiatrist, the court could conclude that there were sufficient contacts with New York to assert in personam jurisdiction over the psychiatrist. Indeed, the conduct occurring in New York was significant. In Hunter, the Delaware Supreme Court held that before a conspirator absent from Delaware can be called to answer in Delaware, the plaintiff must make a showing that a substantial act or effect in furtherance of the conspiracy occurred in Delaware.
In the case at hand, the only acts taking place in Michigan that plaintiffs can hope to establish are phone conversations between the defendant Moses and the Laredo Police Department. The facts of this case, viewed by the Court as if established, simply do not measure up to the facts in Dixon or the test proposed in Hunter.
Further, the actions of defendant Moses, if imputed to the Texas defendants, do not satisfy the Sixth Circuit's three prong test in Southern Machine, supra. Concededly, the first prong is inapplicable to the conspiracy theory of in personam jurisdiction.[2] But with respect to the second prong, the plaintiffs could not establish that the cause of action arises from the Texas defendants' activities in Michigan. The cause of action is based solely on the actions of the Texas defendants in Texas. The injuries complained of, the effects of those actions, were sustained solely in Texas. Finally, this Court cannot conclude that plaintiffs have satisfied the third prong of the test. The acts of defendant Moses, if imputed to the Texas defendants, are not a substantial enough connection with Michigan to make the exercise of jurisdiction reasonable. Therefore, the Court concludes that the Texas defendants lack the requisite minimum contacts with Michigan necessary for this Court to assert in personam jurisdiction over them.
Thus, the Court need not pass on the viability of the conspiracy theory of in personam jurisdiction, having found that plaintiffs could not satisfy the requisite elements of the theory if all their factual allegations were accepted as having been established.
The only other possible nexus of the Texas defendants with Michigan is the second half of M.C.L.A. §§ 600.705(2), .715(2), tortious conduct causing consequences to occur in Michigan. In Storie v. Beech Aircraft Corp., 417 F.Supp. 141 (E.D.Mich.1976), Judge Kennedy was called on to review the nature of conduct causing consequences to occur in Michigan.
The Court concludes that when the Michigan statute speaks of causing consequences to occur within the state, it applies to situations in which an act or conduct of the defendant outside of Michigan leads to an event in Michigan which gives rise to a tort claim. In the context of personal injury cases, that event occurs when the injury results, and in this case that consequence occurred in Ohio at the time of the airplane crash.
Id. at 145. In the case at hand the injuries were sustained at the time of the arrest and throughout incarceration. As such, the consequences did not occur in Michigan. Further, plaintiffs cannot bootstrap jurisdiction under this theory to their conspiracy theory. The injuries were simply not suffered in Michigan.
Thus, plaintiffs have failed to establish the relationship necessary under MCLA §§ 600.705(2), .715(2) for this Court to require the named Texas defendants to defend themselves in Michigan. This is also true of the four unnamed individuals who are members of the Laredo Police Department. While their identities are not yet known to the plaintiffs, their actions, and the consequences of those actions, occurred in Laredo, Texas. The only defendant possibly subject to the jurisdiction of this Court is Joseph Moses. Therefore, the 12(b)(2) motion to dismiss of the six named Texas defendants will be granted.
*1458 12(b)(3) Motion to Dismiss
Alternatively, the Texas defendants have moved for dismissal pursuant to F.R.Civ.P. 12(b)(3), improper venue. Under 28 U.S.C. § 1391(b), "[a] civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law." Jurisdiction in this case is founded on 28 U.S.C. § 1331, federal question jurisdiction. Therefore, venue is proper only where all defendants reside or where the claim arose. Plaintiffs concede, and it is beyond question, that there is no district wherein all defendants reside. Thus, this action can proceed only in the district where the claim arose.
In Lamont v. Haig, 590 F.2d 1124 (D.C. Cir.1978), the court reviewed the legislative history surrounding section 1391(b).
The legislative history of Section 1391(b), by its very generality, is helpful in the resolution of the problem. The portion of Section 1391(b) extending venue to a district "in which the claim arose" was added by amendment in 1966, and the resulting "enlargement of venue" was intended merely to "facilitate the disposition of ... claims by providing, in appropriate cases, a more convenient forum to the litigants and the witnesses involved." The legislative concern was pragmatic: Since the place where the claim arose is the situs of events important to the case, Congress undertook "to facilitate the administration of justice" by permitting suit in a district where the litigation might more handily progress.
This practical orientation of Section 1391(b), then, counsels against adherence to mechanical standards in its application. Rather, where "the claim arose" should in our view be ascertained by advertence to events having operative significance in the case, and a commonsense appraisal of the implications of those events for accessibility to witnesses and records.
Id. at 1133-34 (footnotes omitted). Earlier in the opinion, the court noted that "resort to familiar common law tort theories might furnish a reasonable ground for selection of a particular district in uncomplicated tort or contract actions." Id. at 1133.
Plaintiffs cited Maney v. Ratcliff, 399 F.Supp. 760 (E.D.Wis.1975) in their brief in opposition to the Texas defendants' 12(b)(3) motion to dismiss. This Court finds the Maney court's analysis quite appropriate. Unfortunately for the plaintiffs, the analysis requires dismissal.
Section 1983 actions which contain allegations of constitutional deprivations caused by unlawful arrests and seizures are analogous to tort actions for false arrest and imprisonment. See, Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961). Since § 1983 should be read against a background of tort law liability, Pierson v. Ray, 386 U.S. 547, 556-557, 87 S.Ct. 1213 [1218-1219], 18 L.Ed.2d 288 (1967); Monroe v. Pape, supra, 365 U.S. at 167, 81 S.Ct. 473 [at 484] law governing where tort law claims arise is highly relevant for determining where claims under § 1983 should be ruled to have arisen. The traditional rule is that the claim or cause of action arises where the injury occurs, since until there is an injury an essential element of the cause of action is missing. See, Miller v. Cousins Properties, Inc., 378 F.Supp. 711 (D.Vt. 1974); Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corp., 291 F.Supp. 252, 260 (E.D.Pa.1968); Rosen v. Savant Instruments, Inc., 264 F.Supp. 232 (E.D.N.Y.1967).
Id. at 766-67.
The cause of action in the instant case sounds principally in false arrest and imprisonment. Each of the other claims arises incidentally as a result of the arrest and confinement of the plaintiffs in Laredo, Texas. Under the Maney analysis, the injuries suffered by plaintiffs were sustained solely in Texas. Therefore, the cause of action arose in the Southern District of Texas, which encompasses the City of Laredo.
This finding is not altered under the analysis proposed in Lamont. The "events having operative significance in the case" occurred in the City of Laredo. The alleged *1459 acts of defendant Moses in Michigan, viewed as if established, simply do not represent a substantial portion of the acts giving rise to the plaintiffs' cause of action. Thus, the cause of action arose in the Southern District of Texas and, accordingly, venue is proper in that district. Conversely, venue in the Eastern District of Michigan is improper.
Summary
For the reasons stated above, this action will be dismissed with respect to the six named Texas defendants. The Court finds that it lacks in personam jurisdiction over the Texas defendants and thus dismissal is required under F.R.Civ.P. 12(b)(2). Alternatively, venue in the Eastern District of Michigan is not authorized under 28 U.S.C. § 1391(b) and thus dismissal under Rule 12(b)(3) is also required. In light of the Court's disposition of the motions to dismiss, it is not necessary to address the Texas defendants' motion to transfer venue to the Southern District of Texas. An appropriate order shall be submitted.
NOTES
[1] The phrase "Texas defendants" will be used as a shorthand expression to refer to the six Texas defendants who have filed the motions now before the Court.
[2] Proof of the absent defendant's membership in the conspiracy could be substituted for the first prong.
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441 So.2d 1144 (1983)
INVESTORS ASSOCIATES, INC., Appellant,
v.
Jane MOSS, Appellee.
No. 82-1440.
District Court of Appeal of Florida, Third District.
November 15, 1983.
Rehearing Denied December 22, 1983.
*1145 Samuel I. Burstyn and Michel Ociacovski, Miami, for appellant.
Shalle Stephen Fine, Miami, for appellee.
Before HUBBART, DANIEL S. PEARSON and FERGUSON, JJ.
FERGUSON, Judge.
This appeal, taken from a final judgment which awards money damages to appellee, challenges that part of the judgment which finds jurisdiction over the parties and subject matter.[1]
Appellee, a securities investor, commenced this action in the circuit court alleging that appellant, a stock brokerage firm, in violation of her instructions, traded her account on margin in speculative securities, occasioning substantial losses. The jurisdictional facts, as alleged in an unsworn amendment to the complaint, are:
The defendant actively solicited the business of the Plaintiff [sic], a resident of the State of Florida, calling her for the specific purpose of attempting to get her to place money with them and to purchase securities through them using their long distance telephone to initiate and promote the business relationship between the Defendant and the Plaintiff resident in Florida.
The evidence, taken from an affidavit of the appellant and deposition of the appellee, shows without contradiction that appellant has offices in, and does business in the State of New Jersey; the parties entered the subject agreement while appellee was a New Jersey resident; appellant has no agents or offices in Florida nor have any of its agents ever solicited business, or even been in the State of Florida; appellant's contact with appellee after she moved to Florida has been limited to answering telephonic inquiries, initiated by appellee, as to the status of her account.
It is unnecessary to decide whether the complaint alleges a sufficient factual basis for the acquisition of jurisdiction. The sufficiency of proof presents a much easier and equally dispositive issue. The affidavit filed by defendant in support of its motion to dismiss for lack of jurisdiction over the person was sufficient to shift to the plaintiff the burden of going forward with evidence on the question of jurisdiction. The proof presented by plaintiff was insufficient or, more accurately, nonexistent. A plaintiff seeking to subject a non-resident defendant to the jurisdiction of the court via the long-arm statute does not satisfy her obligation by simply alleging facts which show a possibility of jurisdiction; in the face of a meritorious challenge, the *1146 plaintiff has to prove jurisdiction over the person by affidavits, testimony or documents. Hyco Manufacturing Co. v. Rotex International Corp., 355 So.2d 471, 474 (Fla. 3d DCA 1978); see also Nichols v. Seabreeze Properties, Inc., 302 So.2d 139 (Fla. 3d DCA 1974).
Since the plaintiff failed in her burden to prove jurisdiction over the defendant, the defendant's motion to dismiss should have been granted.
Reversed and remanded with directions to dismiss.
NOTES
[1] The court entered an order denying defendant's motion to dismiss for lack of jurisdiction several months prior to the final judgment. That non-final order finding jurisdiction over the person was appealable pursuant to Florida Rule of Appellate Procedure 9.130(a)(3)(C)(i), but failure to take an immediate appeal from that order does not bar review of the question on plenary appeal. Fla.R.App.P. 9.130(g); Saul v. Basse, 399 So.2d 130 (Fla. 2d DCA 1981). Neither does the fact that judgment of liability was entered by default rather than after a trial on the merits affect the appealability of the non-final order. No further evidence was presented on the jurisdictional issue after the hearing on the motion to dismiss.
In the same motion to dismiss defendant challenged the court's jurisdiction over the subject matter on the basis that plaintiff's claim, which alleged violations of the Federal Securities Exchange Act of 1934, is exclusively within the jurisdiction of the federal courts. We need not reach this issue since we decide this case solely on the basis of lack of personal jurisdiction.
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610 S.W.2d 512 (1981)
Ex parte Harlan NORTON.
No. 66531.
Court of Criminal Appeals of Texas, En Banc.
January 21, 1981.
*513 James E. Davis, Texarkana, Ark., for appellant.
Louis J. Raffaelli, Dist. Atty., and Rodney McDaniel, Asst. Dist. Atty., Texarkana, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION
ODOM, Judge.
This is an original habeas corpus proceeding. The facts pertinent here are set out in a portion of the judgment of contempt:
"BE IT REMEMBERED THAT on this 2nd day of October, 1980, came on to be heard the above entitled and numbered matter in which Harlan K. Norton stood charged with resisting arrest in this cause, and came the Court at a regular setting of the Misdemeanor Docket to sound such Docket, whereupon the said Harlan K. Norton appeared with a placard with writings and an American flag, which appearance was disruptive and the Court then and there instructed the said Harlan K. Norton to remove the said placard and flag from the Courtroom, which instruction was refused by the said Harlan K. Norton, but rather the said Harlan K. Norton embarked upon a loud and offensive discourse about freedom, `freedom fighting,' and other matters unintelligible to the Court and was required to be forcibly removed from such Courtroom by officers of the Court;
"And prior to his removal by force from the Courtroom, the said Harlan K. Norton was instructed that his conduct was disruptive and contemptuous and he was, then and there in Open Court, found to be in direct contempt of Court."
Subsequently we ordered petitioner released upon the posting of a $1000.00 bond pending our further orders.
Petitioner contends that the judgment is void "because the proceedings ... were not recorded in accordance with Article 2324 [VACS], thus denying the Petitioner due process of law," citing Ducoff v. Ducoff, 523 S.W.2d 264 (Tex.Civ.App.1975) and Ex parte Hart, 520 S.W.2d 952 (Tex.Civ.App. 1975).
Petitioner's contention is without merit. This contempt order followed disruptive behavior in the view and immediate presence of the court. The due process considerations of such contempt do not require a hearing. See generally, Odom and Baker, Direct and Constructive Contempt, 26 Baylor L.R. 147, 155-60 (1974). Further, the cited statute does not require the attendance of a court reporter or the transcription of such proceedings absent a request by the party. See Art. 2324, V.A.C.S. (Vernon Supp.1980-81).
The cases cited by petitioner, although not binding on us, are not even in point. Ducoff and Hart both involved contempt committed outside the view or immediate presence of the court. In those situations due process does require a hearing. Both cases involved Art. 2324 prior to its amendment in 1975 which did require the court reporter to attend and note all sessions of the court; however, as noted above, it no longer does. See Baen-Bec, Inc. v. Tenhoopen, 548 S.W.2d 799 (Tex.Civ.App.1977); see also Art. 40.09, Sec. 4, V.A.C.C.P.
Accordingly the relief requested is denied.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1987
MARIYA YEVGENYEVNA AIRIKYAN,
Petitioner,
RUSTAM V. PACHEV,
Party in Interest,
v.
ERIC H. HOLDER, JR., Attorney General,
Respondent.
On Petition for Review of an Order of the Board of Immigration
Appeals.
Submitted: February 25, 2015 Decided: March 18, 2015
Before FLOYD and HARRIS, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Petition denied by unpublished per curiam opinion.
Mariya Yevgenyevna Airikyan, Petitioner Pro Se. Joyce R.
Branda, Acting Assistant Attorney General, Keith Ian McManus,
Senior Litigation Counsel, Joseph Anthony O’Connell, Michele
Yvette Frances Sarko, Office of Immigration Litigation, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Respondent.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Mariya Yevgenyevna Airikyan, a native of Armenia and a
citizen of Kazakhstan, petitions for review of an order of the
Board of Immigration Appeals (“Board”) dismissing her appeal
from the immigration judge’s denial of her requests for asylum
and withholding of removal. * We have thoroughly reviewed the
record, including the transcript of Airikyan’s merits hearing
and all supporting evidence. We conclude that the record
evidence does not compel a ruling contrary to any of the
administrative factual findings, see 8 U.S.C. § 1252(b)(4)(B)
(2012), and that substantial evidence supports the adverse
credibility finding. See Tewabe v. Gonzales, 446 F.3d 533, 538
(4th Cir. 2006). We further conclude that a review of
Airikyan’s independent corroborating evidence does not compel a
different result.
Accordingly, we deny the petition for review for the
reasons stated by the Board. See In re: Airikyan (B.I.A. Aug.
21, 2014). We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
*
Airikyan does not challenge the denial of relief under the
Convention Against Torture. Accordingly, review of that issue
is waived. See Ngarurih v. Ashcroft, 371 F.3d 182, 189 n.7 (4th
Cir. 2004).
2
before this court and argument would not aid the decisional
process.
PETITION DENIED
3
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94 Cal.Rptr.2d 680 (2000)
79 Cal.App.4th 1088
Eva CAMARGO et al., Plaintiffs and Appellants,
v.
TJAARDA DAIRY et al., Defendants and Respondents.
No. F031741.
Court of Appeal, Fifth District.
April 14, 2000.
Review Granted July 26, 2000.
*683 Law Offices of Federico Castelan Sayre and Timothy A. Black, Newport Beach, for Plaintiffs and Appellants.
Borton, Petrini & Conron, John F. Petrini and Michael J. Stump, Bakersfield, for Defendants and Respondents.
Certified for Partial Publication.[*]
OPINION
DIBIASO, Acting P.J.
Plaintiffs and appellants Eva Camargo (and her five children) (the Camargos) filed suit against Tjaarda Dairy (the Dairy) for the wrongful death of Alberto Camargo, on various causes of action. The Camargos now appeal from the judgment entered following the order granting summary judgment in favor of the Dairy and from the later order denying the Camargos' motion for a new trial. We will reverse with directions. We hold, in the published portion of this opinion, that a cause of action for negligent hiring brought against the hirer of an independent contractor by an employee of the independent contractor survives Privette v. Superior Court (1993) 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 and Toland v. Sunland Housing Group (1998) 18 Cal.4th 253, 74 Cal.Rptr.2d 878, 955 P.2d 504.
PROCEDURAL SUMMARY
On May 15, 1997, the Camargos alleged eight causes of action against the Dairy: (1) wrongful death and negligence, (2) negligent hiring and supervision, (3) negligence per se, (4) premises liability, (5) strict product liability, (6) breach of express warranty, (7) breach of implied warranty of merchantability, and (8) breach of implied warranty of fitness. On August 7, 1997, the Dairy filed its answer.
On February 10, 1998, the Dairy moved for summary judgment. On March 16, 1998, the Camargos filed their opposition to the motion for summary judgment and, on March 23, 1998, the Dairy replied to the opposition.
On March 30, 1998, the trial court heard argument regarding the summary judgment motion. On June 12, 1998, the court invited briefing on the effect of the then newly issued opinion in Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th 253, 74 Cal.Rptr.2d 878, 955 P.2d 504. The Dairy filed additional briefing, but the Camargos did not.
On June 29, 1998, the trial court granted the Dairy's motion for summary judgment. Judgment was entered on July 17, 1998.
On July 28, 1998, the Camargos unsuccessfully moved for a new trial.
On September 15, 1998, the Camargos filed a timely notice of appeal.
FACTUAL SUMMARY
In the spring of 1996, the Dairy determined it was necessary to scrape and pile the manure in its corrals. As the Dairy was aware, such scraping and piling would require driving a tractor over mounds of manure exceeding six feet in height. The Dairy, which had itself performed the task before, decided not to do so at this time because the wet winter had left the corrals too wet and slippery. Instead, the Dairy called Golden Cal Trucking (Golden Cal), a company in the business of soil amendment which had purchased manure from *684 the Dairy in the past. The Dairy knew very little of Golden Cal, but chose to approach Golden Cal because it had paid promptly for a prior transaction in manure. Ultimately, the Dairy engaged Golden Cal to do the work, in return for either the right to purchase the manure or a discounted price on the manure.
Alberto Camargo, the decedent, was employed by Golden Cal and, on about April 29, 1996, was sent to the Dairy to begin the scraping and piling using Golden Cal's tractor. On May 17, 1996, while Alberto was driving over a manure pile, the tractor rolled and Alberto was killed.
DISCUSSION
The Camargos contend the trial court erred in granting the Dairy's motion for summary judgment because a triable issue of material fact existed regarding the negligent hiring cause of action. The Camargos argue the trial court was wrong in ruling that, pursuant to Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th 253, 74 Cal.Rptr.2d 878, 955 P.2d 504, a negligent hiring claim cannot be pursued on behalf of the employee of an independent contractor, such as Golden Cal, against the hirer of the independent contractor.
I. RELEVANT STANDARDS
A. In the Trial Court
A motion for summary judgment is an assertion by the moving party that no triable issues of fact exist and therefore that the court should terminate the action without a trial. (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary judgment bears the burden of showing the plaintiffs claims have no merit. (Ibid.) The defendant does this either by demonstrating, through the plaintiffs discovery responses, that the plaintiff will be unable to prove his or her case at trial or by negating ("disproving"), through affirmative evidence, an essential element of each of the plaintiffs causes of action. (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1598, 50 Cal.Rptr.2d 431.) If the defendant succeeds in meeting his or her substantive burden of proof, the burden then shifts to the plaintiff to come forward with evidence which counters the showing made by the defendant and creates a triable issue of material fact. (Ibid.) If the plaintiff fails to satisfy this burden, the trial court must enter judgment in favor of the defendant. (Ibid.)
The party bringing and the party opposing a motion for summary judgment must produce admissible evidence to support his or her case; a party cannot rely upon claims or theories unsupported by hard evidence. (Arciniega v. Bank of San Bernardino, N.A (1997) 52 Cal.App.4th 213, 231, 60 Cal.Rptr.2d 495; Rochlis v. Walt Disney Co. (1993) 19 Cal.App.4th 201, 216, 23 Cal.Rptr.2d 793 disapproved on other grounds in Turner v. Anheuser-Busch (1994) 7 Cal.4th 1238, 32 Cal. Rptr.2d 223, 876 P.2d 1022; see generally Weil & Brown, Cal. Practice Guide: Civil Procedure (The Rutter Group 1998) ¶ 10:253.1, p. 10-94.) Moreover, Code of Civil Procedure section 437c, subdivision (b), strictly requires the parties to identify all the material facts upon which they rely. Consequently, the parties must include in their respective separate statements all the facts upon which the motion or the opposition is founded; the presence of a relevant fact elsewhere in the record is not enough. As one court has put it, the "Golden Rule of Summary Adjudication" is that "if it is not set forth in the separate statement, it does not exist." (United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337, 282 Cal.Rptr. 368.) "Thus, when the `fact' is not mentioned in the separate statement, it is irrelevant that such fact might be buried in the mound of paperwork filed with the court, because the statutory purposes are not furthered by unhighlighted facts." (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 31, 21 Cal. Rptr.2d 104.)
*685 "`That the fact could have been found in the filed documents is of no value, because this would have imposed on the trial court the impossible burden of determining both the existence and significance of facts unmentioned by the parties. We will not place on the trial court the burden of conducting a search for facts which counsel failed to bring out, nor can we attribute a level of prescience to the trial court which counsel lacked. Instead, we adhere to the familiar rule that "possible theories not fully developed or factually presented to the trial court cannot create a `triable issue' on appeal."' [Citation.] [Citation.]" (Artiglio v. General Electric Co. (1998) 61 Cal.App.4th 830, 842, 71 Cal.Rptr.2d 817.)
B. In This Court
On appeal from a summary judgment, "we determine de novo whether an issue of material fact exists and whether the moving party was entitled to summary judgment as a matter of law. [Citation.] In other words, we must assume the role of the trial court and reassess the merits of the motion. [Citation.] In doing so, we will consider only the facts properly before the trial court at the time it ruled on the motion. [Citation.]" (Brantley v. Pisaro, supra, 42 Cal.App.4th at p. 1601, 50 Cal.Rptr.2d 431; see also Chaknova v. Wilbur-Ellis Co. (1999) 69 Cal.App.4th 962, 967, 81 Cal.Rptr.2d 871.) In this role, we do not decide the merits of the issues, but limit our review to "determining if `there is evidence requiring the fact-weighing procedures of a trial....' [Citation.]" (Pensinger v. Bowsmith, Inc. (1998) 60 Cal.App.4th 709, 717, 70 Cal.Rptr.2d 531.) Thus, we focus on issue finding; we do not resolve issues of fact. (Oliver v. County of Los Angeles (1998) 66 Cal.App.4th 1397, 1403, 78 Cal.Rptr.2d 641.) We review directly those papers submitted in connection with the motion (Hussey v. Operating Engineers Local Union No. 3 (1995) 35 Cal.App.4th 1213, 1218, 42 Cal.Rptr.2d 389), seeking "to find contradictions in the evidence, or in inferences reasonably deducible from the evidence, which raise a triable issue of material fact. [Citation.]" (Oliver v. County of Los Angeles, supra, 66 Cal.App.4th at p. 1403, 78 Cal.Rptr.2d 641.)[1]
Our assessment of a motion for summary judgment involves the same three-step analysis applicable in the trial court. "`We first identify the issues framed by the pleadings, since it is these allegations to which the motion must respond.'" (Pensinger v. Bowsmith, Inc., supra, 60 Cal.App.4th at p. 717-718, 70 Cal.Rptr.2d 531.) Second, we determine whether the moving party has met his or her burden of proof "by reliance on competent declarations, binding judicial admissions contained in the allegations of the [opposing party's pleadings], responses to discovery, and the testimony of witnesses at noticed depositions. ([Code Civ. Proc.,] § 437c, subd. (b); D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21, 112 Cal.Rptr. 786, 520 P.2d 10; [citations].)" (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162, 80 Cal.Rptr.2d 66.) Third, we "`determine whether the opposition demonstrates the existence of a triable, material factual issue.'" (Saldana, v. Globe-Weis Systems Co. (1991) 233 Cal. App.3d 1505, 1513, 285 Cal.Rptr. 385.) However, we are not obliged to cull the record for the benefit of the appellant in order to attempt to uncover the requisite triable issues. As with an appeal from any *686 judgment, it is the appellant's responsibility to discharge his or her duty to affirmatively demonstrate error and therefore to point out to this court the triable issues the appellant claims are present. (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6, 76 Cal.Rptr.2d 457.)
Because of the severity of the consequences of summary judgment, we carefully scrutinize the moving party's papers and resolve all doubts regarding the existence of material, triable issues of fact in favor of the party opposing the motion. (Pensinger v. Bowsmith, Inc., supra, 60 Cal.App.4th at p. 717, 70 Cal.Rptr.2d 531.) "`"[T]he moving party's affidavits are strictly construed while those of the opposing party are liberally construed." ... We accept as undisputed facts only those portions of the moving party's evidence that are not contradicted by the opposing party's evidence.... In other words, the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences therefrom must be accepted as true.' [Citation.]" (Cheyanna M. v. A.C. Nielsen Co. (1998) 66 Cal. App.4th 855, 861, 78 Cal.Rptr.2d 335.) Like the trial court, we must consider all the evidence properly identified in the papers submitted, except that to which objections have been made and sustained by the court. (Code Civ. Proc., § 437c, subd. (c); Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 561, fn. 2, 42 Cal.Rptr.2d 697.) If the trial court does not rule upon objections to evidence advanced by a party, the objections are waived and the appellate court may consider "as the trial court presumably did, all of the evidence set forth in the papers." (Barber v. Marina Sailing, Inc., supra, 36 Cal.App.4th at p. 561, fn. 2, 42 Cal.Rptr.2d 697.) Where a party fails to timely object in the trial court to the admissibility of evidence, the objection is also waived. (Code Civ. Proc., § 437c, subd. (d); Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 175, 48 Cal. Rptr.2d 197.)
II. MERITS
A. Introduction
The Camargos challenge the trial court's granting of summary judgment only as to the second cause of action for negligent hiring, which alleged that the Dairy breached its "duty to investigate the background and experience of employees [of Golden Cal] to insure that these employees understood the importance of and were qualified in operating the TRACTOR and providing safety equipment to protect workers ... from being crushed to death by the TRACTOR."
As defendant and moving party, the Dairy bore the burden of showing that a necessary element of the negligent hiring cause of action could not be established or that there existed a complete defense to it. (Brantley v. Pisaro, supra, 42 Cal.App.4th at p. 1598, 50 Cal.Rptr.2d 431.) To this end, the Dairy's motion asserted that summary disposition of this cause of action was required because Privette v. Superior Court, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 limited the Camargos' recovery to the exclusive remedy of workers' compensation and precluded the Camargos' recovery against the Dairy for injuries caused by Golden Cal's negligence. In supplemental briefing to which the Camargos did not respond, the Dairy further argued that Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th 253, 74 Cal. Rptr.2d 878, 955 P.2d 504 also supported a summary judgment in the Dairy's favor and "eliminate[d] any ambiguity" or "confusion" about the Dairy's liability after Privette. The trial court granted summary judgment in favor of the Dairy, stating "GENERAL NEGLIGENCE AND NEGLIGENT HIRING THEORIES OF LIABILITY DO NOT APPLY TO GOLDEN CAL EMPLOYEES. (TOLAND VS SUNLAND [supra, 18 Cal.4th 253, 74 Cal. Rptr.2d 878, 955 P.2d 504])."
Under the common law, a person who hired an independent contractor was generally immunized from liability for a *687 third party's injuries caused by the torts of the independent contractor. The rule, however, has become subject to so many exceptions that "`"`[it] is now primarily important as a preamble to the catalog of its exceptions.'"' [Citations.]" (Privette v. Superior Court, supra, 5 Cal.4th at p. 693, 21 Cal.Rptr.2d 72, 854 P.2d 721; see also Sugimoto v. Exportadora De Sal (9th Cir.1994) 19 F.3d 1309, 1312 [nonliability is the rule "only in the sense that it is applied when no good reason is found for departing from it"].) Two of the many acknowledged exceptions to the nonliability rule have been the doctrine of peculiar risk and the theory of negligent hiring. Until recently, both of these exceptions allowed the independent contractor's own employee to bring suit against the person who hired the independent contractor. However, in Privette v. Superior Court, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 and Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th 253, 74 Cal.Rptr.2d 878, 955 P.2d 504, the Supreme Court explicitly abrogated the doctrine of peculiar risk to the extent it applied to the independent contractor's own employee, leaving workers' compensation as that employee's exclusive remedy for the independent contractor's negligence.
The parties now disagree whether Privette and Toland also extinguished the negligent hiring exception to the general rule of nonliability. The Camargos contend these two opinions did not reach negligent hiring and thus the trial court should not have summarily disposed of the Camargos' claim the Dairy was negligent in hiring the allegedly incompetent independent contractor, Golden Cal. The Camargos argue that their cause of action for negligent hiring is based upon a theory of direct liability the Dairy's own negligence (Rest.2d. Torts, § 411)[2] and not upon a theory of vicarious liability such as peculiar risk (§§ 416, 413). The Dairy, on the other hand, maintains that Privette and Toland have effectively foreclosed actions for negligence, whatever the theory, against the hirer of an independent contractor and have limited the employee's recovery to the benefits payable under the workers' compensation scheme. We agree with the Camargos, for the reasons explained below, that their cause of action for negligent hiring survived Privette and Toland.
B. Peculiar Risk: The Privette-To-land Rule
"Under the doctrine of peculiar risk, a person who hires an independent contractor to do inherently dangerous work can be held liable for tort damages when the contractor causes injury to others by negligently performing the work. The doctrine serves to ensure that innocent bystanders or neighboring landowners injured by the hired contractor's negligence will have a source of compensation even if the contractor turns out to be insolvent." (Toland, supra, 18 Cal.4th at p. 256, 74 Cal.Rptr.2d 878, 955 P.2d 504.) Although the doctrine of peculiar risk was at one time applied to the benefit of the independent contractor's own employees (see Woolen v. Aerojet General Corp. (1962) 57 Cal.2d 407, 20 Cal.Rptr. 12, 369 P.2d 708 and its progeny), in Privette the Supreme Court reversed this line of authority, reasoning that the doctrine should not extend to the contractor's employees because they receive payment for their injuries through workers' compensation. The court therefore held that an employee who is harmed by the negligence of the independent contractor cannot sue the nonnegligent hirer of the independent contractor.
In Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th 253, 74 Cal. Rptr.2d 878, 955 P.2d 504, the Supreme Court "clarified" Privette (Toland, at p. *688 264, 74 Cal.Rptr.2d 878, 955 P.2d 504) by explaining that Privette bars suits by an employee of an independent contractor against the hirer of the independent contractor "irrespective of whether recovery is sought under the theory of peculiar risk set forth in section 416 or section 413...."[3] (Toland, at p. 267, 74 Cal.Rptr.2d 878, 955 P.2d 504.) The court believed that "[i]n either situation, it would be unfair to impose liability on the hiring person when the liability of the contractor, the one primarily responsible for the worker's on-the-job injuries, is limited to providing workers' compensation coverage." (Ibid.) The court also thought it "illogical and unfair that a landowner or other person who hires an independent contractor should have greater liability for the independent contractor's negligence towards the contractor's employees than the independent contractor whose liability is limited to providing workers' compensation coverage." (Id. at p. 270, 74 Cal.Rptr.2d 878, 955 P.2d 504.) The Privette-Toland rule, therefore, insulates the hirer of an independent contractor from all forms of vicarious liability to the contractor's employees for injuries caused by the contractor's negligence.
C. Negligent Hiring
Under the negligent hiring exception to the general rule of nonliability, a hirer "who negligently fails to employ a competent and careful contractor may be liable for injuries caused by the contractor's failure to exercise due care. [Citations.]" (Chevron v. Superior Court (1992) 4 Cal.App.4th 544, 549, 5 Cal.Rptr.2d 674; Grahn v. Tosco Corp. (1997) 58 Cal. App.4th 1373, 1390, 68 Cal.Rptr.2d 806; Golden v. Conway (1976) 55 Cal.App.3d 948, 956-957, 128 Cal.Rptr. 69; Risley v. Lenwell (1954) 129 Cal.App.2d 608, 622-625, 277 P.2d 897; Holman v. State of California (1975) 53 Cal.App.3d 317, 336, 124 Cal.Rptr. 773; see also Rest.2d Torts, §411; Wilson v. Good Humor Corp. (D.C.Cir.1985) 757 F.2d 1293, 1309; SeaRiver Maritime, Inc. v. Industrial Medical Services, Inc. (N.D.Cal.1997) 983 F.Supp. 1287, 1296.) Thus, "`quite apart from any question of vicarious responsibility, the [hirer] may be liable for any negligence of his own in connection with the work to be done. Where there is a foreseeable risk of harm to others unless precautions are taken, it is his duty to exercise reasonable care to select a competent contractor .... In [this] case[ ], he is liable for his personal negligence, rather than that of the contractor.' "(Risley v. Lenwell, supra, 129 Cal.App.2d at p. 622, 277 P.2d 897.) The hirer's duty to select a competent and careful independent contractor has been held to extend to the employees of the negligently hired independent contractor, permitting them to sue the hirer for on-the-job injuries caused by the independent contractor's lack of due care. (Grahn v. Tosco Corp., supra, 58 Cal.App.4th at p. 1390, 68 Cal.Rptr.2d 806; Chevron v. Superior Court, supra, 4 Cal.App.4th at p. *689 549, 5 Cal.Rptr.2d 674; Gettemy v. Star House Movers (1964) 225 Cal.App.2d 636, 643-644, 37 Cal.Rptr. 441; Holman v. State of California, supra, 53 Cal.App.3d at p. 336,124 Cal.Rptr. 773.)
Although there is a paucity of guidance and a wealth of controversy surrounding the question, our reading of Privette and Toland, along with Grahn v. Tosco Corp., supra, 58 Cal.App.4th 1373, 68 Cal.Rptr.2d 806, leads us to conclude that these principles remain viable.
1. The Effect of Privette
By the time Toland was decided in 1998, the effect and scope of Privette had become a contentious topic. Appellate courts struggled to decipher whether the reasoning and policy premise of Privette mandated so broad a sweep that an independent contractor's employee was left with no cause of action whatsoever against the person who hired the contractor.[4] Many courts concluded, either explicitly or implicitly, that Privette was inapplicable to direct liability theories. For example, in Smith v. ACandS, Inc. (1994) 31 Cal. App.4th 77, 37 Cal.Rptr.2d 457, the court, relying upon Privette, reversed to the extent the judgment was based on peculiar risk vicarious liability but found sufficient evidence the hirer "breached its duty to exercise ordinary care in the management of its premises by failing to hire careful and competent [independent contractors].... The matter was for the jury, and properly submitted to them." (Smith, at p. 97, 37 Cal.Rptr.2d 457.) In Whitford v. Swinerton & Walberg Co. (1995) 34 Cal. App.4th 1054, 40 Cal.Rptr.2d 688, the jury found the independent contractor's employer vicariously liable on a peculiar risk theory and also independently negligent for its own conduct. On appeal, the court agreed that Privette retroactively applied to doom the plaintiffs peculiar risk cause of action, but upheld the judgment based upon the employer's own independent negligence without even a nod to Privette. The federal circuit court in Yanez v. United States (9th Cir.1995) 63 F.3d 870 also relied on Privette to affirm the district court's rejection of the employee's peculiar risk claim, but reversed the judgment on the retention of control cause of action under section 414. Similarly, in Lopez v. University Partners (1997) 54 Cal.App.4th 1117, 63 Cal.Rptr.2d 359, the court discussed the applicability of Privette to the peculiar risk cause of action (Lopez, at pp. 1122-1125, 63 Cal.Rptr.2d 359), but, as in Yanez, did not mention Privette when considering section 414's retention of control theory.[5] (Lopez, at pp. 1125-1126, 63 Cal. Rptr.2d 359).
Not long after Lopez, and while Toland was pending review before the Supreme Court, Grahn v. Tosco Corp., supra, 58 Cal.App.4th 1373, 68 Cal.Rptr.2d 806, upon which the Camargos rest their appeal, was decided; it dealt directly with negligent hiring. The Grahn court explicitly held that Privette did not bar suit by an employee of the independent contractor against the contractor's hirer where the hirer was itself alleged to have been independently negligent in engaging an incompetent independent contractor. The court stated:
"Negligent hiring is a theory of personal rather than vicarious liability. The negligence of the contractor, in and of itself, is insufficient to impose liability on the hirer under section 411 of the Restatement. Instead, liability is imposed under ordinary negligence principles for hiring an independent contractor the hirer knows or should know is incompetent to do the work and where the contractor's incompetence results in injury to others. Therefore, while the *690 hirer is subject to liability for injury immediately caused by the independent contractor's deficiencies, the hirer's culpability is based on its own negligence in entrusting the work to the independent contractor ab initio. [Citation.]" (Grahn v. Tosco Corp., supra, 58 Cal. App.4th at p. 1391, 68 Cal.Rptr.2d 806.)[6]
The court explained that, "while in most cases the workers' compensation system is the employee's exclusive remedy against the [hirer], it was never designed to constitute the employee's exclusive remedy against the universe. ... In Privette itself, the court recognized that the exclusivity clause, `does not preclude the employee from suing anyone else whose conduct was a proximate cause of the injury. [Citations.]' [Citation.]" (Grahn v. Tosco Corp., supra, 58 Cal.App.4th at p. 1386, 68 Cal.Rptr.2d 806.) The court held that "Privette's concern about the fundamental unfairness of imposing vicarious liability on a nonnegligent hirer is entirely inapplicable where the hirer's own negligent conduct has caused or contributed to the worker's injury." (Grahn, at pp. 1384-1385, 68 Cal.Rptr.2d 806.) Refusing to "interpret[ ] Privette as establishing a rule by which hirers are entirely free from the financial consequences of their own negligent conduct vis-à-vis independent contractor employees," a concept the court believed would "analytically collide[ ] with long-standing common law and statutory doctrines," Grahn found a "`safe harbor' in adhering to the salutary principle of judicial restraint in leaving such a major change in substantive tort law to our Supreme Court." (Id. at pp. 1388-1389, 68 Cal.Rptr.2d 806.) Grahn rejected the proposition that it had "an obligation to extend the Supreme Court's reasoning to situations where the hirer's liability is based on fault rather than status" and "join[ed its] colleagues who, after Privette was pronounced, [had] continued to recognize the potential liability of a hirer for its own negligence resulting in injuries to an independent contractor's employee. [Citations.]" The Grahn court summarized: "We therefore conclude Privette is limited to cases of peculiar risk seeking to impose liability on hirers of independent contractors vicariously under the rubric of a non-delegable duty. It does not impair the right of an injured employee to sue the hirer for causes of action not based on principles of vicarious liability." (Grahn, at p. 1389, 68 Cal.Rptr.2d 806.)
2. The Effect of Toland
Seven months after Grahn, the Supreme Court decided Toland without mentioning Grahn.[7] Like that of Privette, the scope of Toland is debatable, as is its attempted "clarification" of Privette. Toland expanded Privette in the sense that it criticized the "misleading" distinction between the two peculiar risk theories of the Restatement Second of Torts the "vicarious" liability of section 416 (addressed by Privette) and the "direct" liability of section 413. (Toland v. Sunland Housing Group, Inc., supra, 18 Cal.4th at p. 264, 74 Cal. Rptr.2d 878, 955 P.2d 504.) The court explained:
"[U]nder either section 413 or section 416, the hiring person is subject to liability for injuries to others resulting from the contractor's failure to take safety precautions while performing the inherently dangerous work. [¶] ... [U]nder both sections 413 and 416, the hiring person's liability is cast in the form of the hiring person's breach of duty to see *691 to it that special precautions are taken to prevent injuries to others; in that sense, the liability is `direct.' Yet, peculiar risk liability is not a traditional theory of direct liability for the risks created by one's own conduct: Liability under both sections is in essence `vicarious' or 'derivative' in the sense that it derives from the `act or omission' of the hired contractor, because it is the hired contractor who has caused the injury by failing to use reasonable care in performing the work." (Toland, at pp. 264-265, 74 Cal.Rptr.2d 878, 955 P.2d 504.)
The court repeated its statement in Privette: "`The conclusion that peculiar risk is a form of vicarious liability is unaffected by the characterization of the doctrine as 'direct' liability in situations when the person hiring an independent contractor `fails to provide in the contract that the contractor shall take [special] precautions.'" (Toland, supra, 18 Cal.4th at p. 265, 74 Cal. Rptr.2d 878, 955 P.2d 504, fn. omitted.)
However, in a remark of relevance to us, the court also said:
"By concocting a duty in a particular situation to prevent another from acting negligently, as an exception to the general rule ..., it is always possible to impose liability on one person for the negligence of another and to label that liability `direct.' ... [There is a] distinction between this artificial `direct liability' and the liability imposed on the hiring person for injuries resulting from the hiring person's own conduct, such as, for example, concealing a hidden danger ... or insisting on use of an unsafe method to execute the work." (Toland, supra, 18 Cal.4th at p. 265, fn. 3, 74 Cal.Rptr.2d 878, 955 P.2d 504, italics added.)[8]
The single relevant case we have found published after Toland is Zamudio v. City and County of San Francisco (1999) 70 Cal.App.4th 445, 82 Cal.Rptr.2d 664. Cited by the Dairy as critical of Grahn's pre-Toland reasoning, Zamudio is in reality unhelpful to the Dairy's case. The employee in Zamudio worked for a subcontractor who was hired by a city and its prime contractor (the hirers). The employee sued the hirers on a variety of direct and vicarious liability theories, including the hirers' retention of control (§ 414) over the subcontractor's work. The hirers' motion for summary judgment was granted by the trial court.
The appellate court affirmed. Addressing the employee's vicarious liability claims, the court stated:
"Appellant is mistaken in his reliance upon Grahn. It is important to recognize that Grahn preceded the Supreme Court ruling in Toland, a ruling which reaffirmed and extended Privette. In the body of its decision, the court in Grahn mentioned that the Supreme Court had granted review in Toland [citation]; but it could not, and did not, anticipate Toland's sweeping holding which barred the assertion of vicarious liability in tort against the hirers of a subcontractor for injuries to the subcontractor's own employees. Because Grahn did not have the benefit of this most recent holding, its reasoning cannot be relied upon to support appellant's argument. Further, it must be recognized that even Grahn would not allow tort liability to be imposed against an owner of the construction project or its *692 manager which did not control the work in question or directly cause the injury which is the case here. [Citation.]" (Zamudio v. City and County of San Francisco, supra, 70 Cal.App.4th at p. 451, 82 Cal.Rptr.2d 664.)
The Zamudio court did not assess whether the employee's direct liability claims, including constructive knowledge of a dangerous practice and failure to prevent the subcontractor's negligent performance, had been preempted by Privette and Toland. Rather, the court assumed without deciding that the employee's "characterization between `vicarious' and `direct' liability [was] an accurate statement ]" and found that the employee's papers in opposition to the motion did not disclose sufficient admissible evidence to raise a triable issue of fact about the employee's right to recover under any direct liability theory. Zamudio thus is not authority for the proposition that the Camargos' cause of action for negligent hiring was abrogated by Privette and Toland.[9]
3. Conclusion
For the reasons stated above and those expressed in Grahn (58 Cal.App.4th at pp. 1389-1392, 68 Cal.Rptr.2d 806), we will not hold that Privette eliminated negligent hiring as a viable independent ground of liability for plaintiffs such as the Camargos. Nor can we say that Toland unambiguously enlarged Privette to encompass negligent hiring. Toland, like Privette, expressly dealt with "vicarious," or at least "derivative," liability imputed to a non-negligent hirer for the negligence of an independent contractor. The claimed liability here is not vicarious; it is direct, arising from the hirer's alleged personal and independent failure to use care in choosing the independent contractor. (See § 411, Comment b [Hirer is legally responsible "for any harm caused by the contractor's lack of skill, experience, or equipment, but not for any harm caused solely by the contractor's inattention or negligence." (Italics added) ].) We therefore conclude that negligent hiring as an independent cause of action survives Privette and Toland. In doing so, we join company with Grahn, preferring to wait for clear direction from the Supreme Court rather than to interpret ambiguous language, uttered in a different context, as heralding a watershed in California law.
D. The Camargos' Case[**]
DISPOSITION
The judgment is reversed and the matter is remanded to the trial court with directions to vacate its order granting summary judgment in favor of the Dairy and to make and enter a different order denying summary adjudication of the Camargos' cause of action for negligent hiring and granting summary adjudication in favor of the Dairy as to all other causes of action of the Camargos' complaint. The Camargos' appeal from the trial court's order denying the Camargos' motion for new trial is dismissed as moot. The Camargos are awarded costs on appeal.
BUCKLEY, J., and WISEMAN, J., concur.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of Part II.D.
[1] The opinion in Oliver v. County of Los Angeles, supra, 66 Cal.App.4th at page 1403, 78 Cal.Rptr.2d 641, includes language to the effect that the appellate court may affirm on a theory not raised by the moving party in the trial court and first addressed on appeal. We do not adopt this aspect of Oliver because it would appear to permit affirmance of a judgment against the opposing party based upon a ground as to which the opposing party was given no notice or opportunity to respond. (Compare Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 69-71, 15 Cal. Rptr.2d 598; see also Western Mutual Ins. Co. v. Yamamoto (1994) 29 Cal.App.4th 1474, 1481, 35 Cal.Rptr.2d 698.)
[2] All subsequent references to "sections" refer to the Restatement Second of Torts unless otherwise noted.
[3] Section 416 appears under the topic "Harm Caused by Negligence of a Carefully Selected Independent Contractor" and is entitled "Work Dangerous in Absence of Special Precautions." It reads: "One who employs an independent contractor to do work which the employer should recognize as likely to create during its progress a peculiar risk of physical harm to others unless special precautions are taken, is subject to liability for physical harm caused to them by the failure of the contractor to exercise reasonable care to take such precautions, even though the employer has provided for such precautions in the contract or otherwise."
Section 413, found under the topic "Harm Caused by Fault of Employers of Independent Contractors," is entitled "Duty to Provide for Taking of Precautions Against Dangers Involved in Work Entrusted to Contractor." It provides: "One who employs an independent contractor to do work which the employer should recognize as likely to create, during its progress, a peculiar unreasonable risk of physical harm to others unless special precautions are taken, is subject to liability for physical harm caused to them by the absence of such precautions if the employer [¶](a) fails to provide in the contract that the contractor shall take such precautions, or [¶](b) fails to exercise reasonable care to provide in some other manner for the taking of precautions."
[4] The controversy has arisen most often in connection with the theory of retention of control. (§ 414.)
[5] In Yanez's concurring and dissenting opinion, Judge Noonan argued the reasoning of Privette extended to theories of direct liability such as retention of control. (Yanez v. United States, supra, 63 F.3d at pp. 875-877.)
[6] Section 411 is found under the topic "Harm Caused by Fault of Employers of Independent Contractors" and is entitled "Negligence in Selection of Contractor." It states: "An employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a competent and careful contractor [¶](a) to do work which will involve a risk of physical harm unless it is skillfully and carefully done, or [¶](b) to perform any duty which the employer owes to third persons."
[7] The majority never cited Grahn, although the concurring and dissenting opinion did so repeatedly.
[8] Toland also left open another direct liability cause of action deceit. The court noted: "Our decision in no way precludes employees of independent contractors from seeking recovery from a general contractor or other hiring person for personal injury resulting from a failure to disclose a concealed preexisting danger at the site of the hired work that was known to the hiring person. Recovery in such a case would be for fraudulent concealment or misrepresentation, however, and would not involve the `comparative knowledge' analysis proposed by the concurring and dissenting opinion, nor would it depend on the peculiar risk doctrine." (18 Cal.4th at p. 269, fn. 4, 74 Cal.Rptr.2d 878, 955 P.2d 504.)
[9] To the extent Zamudio may be read to disapprove the reasoning of Grahn regarding the theory of negligent hiring, we respectfully disagree.
[**] See footnote *, ante.
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57 S.E.2d 366 (1950)
231 N.C. 395
In re PORT PUB. CO.
No. 594.
Supreme Court of North Carolina.
February 3, 1950.
*367 Clayton C. Holmes, Wilmington, for Typographical Union No. 556.
Elbert A. Brown, Wilmington, for Wilmington Printing Pressman and Assistant's Union, No. 186.
E. H. Bellamy, C. D. Hogue, Sr., Wallace C. Murchison and R. E. Calder, Wilmington, for Port Pub. Co.
DENNY, Justice.
An agreement entered into by and between an employer and its employees, in which it is agreed that the employer will only employ members of a union, or that it will only employ non-union members, is void in this jurisdiction, insofar as it makes union membership or non-union membership a prerequisite to employment. Chapter 328, 1947 Session Laws of North Carolina, G.S. §§ 95-78 to 95-84; State v. Whitaker, 228 N.C. 352, 45 S.E.2d 860, which decision was affirmed by the Supreme Court of the United States, and reported in 335 U.S. 525, 69 S.Ct. 251, 93 L.Ed. .
A provision in a contract which is against public policy will not be enforced. Glover v. Rowan Mut. Fire Ins. Co., 228 N.C. 195, 45 S.E.2d 45; Cauble v. Trexler, 227 N.C. 307, 42 S.E.2d 77; Waggoner v. Western Carolina Publishing Co., 190 N.C. 829, 130 S.E. 609; Seminole Phosphate Co. v. Johnson, 188 N.C. 419, 124 S.E. 859; Burbage v. Windley, 108 N.C. 357, 12 S.E. 829, 12 L.R.A. 409. Even so, when such agreement contains provisions which are severable from an illegal provision and are in no way dependent upon the enforcement of the illegal provision for their validity, such provisions may be enforced. Glover v. Rowan Mut. Fire Ins. Co., supra; Security Life & Annuity Co. v. Costner, 149 N.C. 293, 63 S.E. 304, 17 C.J.S., Contracts, § 289, p. 674 et seq., and 12 Am.Jur. Sec. 220, p. 738 et seq., where the general rule governing such contracts *368 is stated in the following language: "It is well established that the fact that a stipulation is unenforceable because of illegality does not affect the validity and enforceability of other stipulations in the agreement, provided they are severable from the invalid portion and capable of being construed divisibly. Moreover, it makes no difference whether there are two distinct promises, whether there is one promise that is divisible, or whether the consideration for the two promises is entire or apportionable. At least this is true where the illegal provision is clearly separable and severable from the other parts which are relied upon and does not constitute the main or essential feature or purpose of the agreement. If, however, any part of a nonseparable agreement is void for illegality or reasons of public policy, the taint extends to every part of it and neither party can enforce any of its provisions against the other."
In the instant case, the "closed shop" agreement between the Port Publishing Company and the Wilmington Typographical Union was legal and valid until the contract was extended on 1 December, 1947, at which time it became eo instante null and void, being in contravention of the provisions contained in G.S. §§ 95-78 to 95-84. Likewise, the agreement which was entered into between the Port Publishing Company and the Wilmington Typographical Union, on 1 October, 1947, containing a "closed shop" agreement, was void insofar as it provided for a "closed shop". Therefore, the provision in these respective contracts providing for a "closed shop", being in violation of the above statutes, and contrary to public policy, such provision could constitute no part of the consideration for the execution or extension of the agreements. And likewise, any right under the terms of the respective contracts which must be bottomed on the validity of the "closed shop" agreement cannot be enforced.
However, it is only when the illegal element in a contract permeates the entire agreement that such contract is void in its entirety. Florsheim Shoe Co. v. Leader Department Store, 212 N.C. 75, 193 S.E. 9; Marshall v. Dicks, 175 N.C. 38, 94 S.E. 514; Standard Fashion Co. v. Grant, 165 N.C. 453, 81 S.E. 606; Culp v. Love, 127 N.C. 457, 461, 37 S.E. 476. In each of these cases, the relief sought was bottomed on an illegal contract, one prohibited by law or contrary to public policy, consequently the relief sought was denied.
It is the declared public policy of North Carolina "that the right of persons to work shall not be denied or abridged on account of membership or non-membership in any labor union or labor organization or association." But there is nothing in this policy to indicate that the Legislature intended to restrict the power of an employer and its employees to contract in the field of labor relations, in any respect, except as to certain matters set forth in G.S. §§ 95-78 to 95-84. And the provisions contained in the contracts under consideration relative to working conditions, hours, rate of pay, training of journeymen, overtime, vacation and severance pay, are not violative of the above statutes, and are therefore, severable and may be sustained irrespective of the invalidity of the "closed shop" provisions in the contracts.
There is no dispute between the parties as to the terms of the respective agreements relative to hourly wages, "vacation" or "severance" pay. Therefore, the determinative question presented is whether or not the petitioners are entitled to a prior lien for "vacation" and "severance" pay, within the provisions of G.S. § 55-136, the pertinent part of which reads as follows: "In case of the insolvency of a corporation, partnership or individual, all persons doing labor or service of whatever character in its regular employment have a lien upon the assets thereof for the amount of wages due to them for all labor, work, and services rendered within two months next preceding the date when proceedings in insolvency were actually instituted and begun against the corporation, partnership or individual, which lien is prior to all other liens that can be acquired against such assets. * * *"
It was the intent of the Legislature to create a lien on the assets of an employer *369 in favor of his employees who come within the purview of the statute, for the amount of all wages earned during the two months next preceding the date of the institution of insolvency proceedings. Phoenix Iron Co. v. Roanoke Bridge Co., 169 N.C. 512, 86 S.E. 184. And these petitioners earned one-sixth of their vacation pay during such period. This view is in accord with the interpretation given to priority payments for wages under our Bankruptcy Act, 11 U.S.C.A. § 104, sub. a(2); Division of Labor Law Enforcement, State of California v. Campsell, 9 Cir., 172 F.2d 400; Kavanas v. Mead, 4 Cir., 171 F.2d 195; In re Kinney Aluminum Co., D.C., 78 F.Supp. 565; In re B. H. Gladding Co., D.C.R.I., 120 F. 709.
On the other hand, "severance" pay is in the nature of liquidated damages which was agreed upon in advance, as compensation for any loss that might be sustained by the employees of the Post Publishing Company "in the event of the consolidation or suspension" of the corporation, and not for wages earned. Such pay, in our opinion, does not come within the purview and meaning of the provisions of G.S. § 55-136. In re Public Ledger, 3 Cir., 160 F.2d 762, upon which the appellees are relying, does not sustain their position. The decision does not purport to construe our statute nor does it hold that the priority given to the payment of certain wages due by a bankrupt estate, under the priority provisions of our Federal Bankruptcy Act, may include "severance" pay. The Court held that since the Trustees of the bankrupt estate continued the operation of the business and ratified the labor contract, which had been entered into theretofore by and between the bankrupt and its employees, "severance" pay was allowable, not as a preferred lien but as an administrative expense.
It follows, therefore, that the judgment entered below will be modified to conform to this decision.
Modified and affirmed.
BARNHILL, J., concurs in result.
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866 F.2d 431
49 Fair Empl.Prac.Cas. 656
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Sally KERANS and Lewis Kerans, Plaintiffs-Appellants, Cross-Appellees,v.PORTER PAINT COMPANY, INC., Defendant-Appellee, Cross-Appellant.
Nos. 87-3988, 87-4016.
United States Court of Appeals, Sixth Circuit.
Jan. 24, 1989.
Before KEITH, KENNEDY and MILBURN, Circuit Judges.
PER CURIAM:
1
Plaintiffs, Sally Kerans ("Kerans") and her husband Lewis Kerans, appeal from the order of the district court imposing sanctions pursuant to Fed.R.Civ.P. 11. Defendant, Porter Paint Company, Inc. ("Porter Paint"), cross-appeals from the district court's denial of attorney fees under 42 U.S.C. Sec. 1988 ("Sec. 1988"). For the reasons discussed below, we AFFIRM.
I.
2
The Kerans filed the initial action against Porter Paint on August 21, 1986, alleging violations of 42 U.S.C. 2000e ("Title VII"), 42 U.S.C. Sec. 1983 ("Sec. 1983") and 42 U.S.C. Sec. 1985 ("Sec. 1985") and several pendent state claims including the lost of consortium. In her original complaint, Kerans, a decorator employed by Porter Paint, alleged that she had been sexually harassed and assaulted by her supervisor, Al Levine; and that Porter Paint had tolerated his conduct for many years. In response, Porter Paint filed a motion to dismiss or in the alternative a motion for summary judgment. On March 16, 1987, judgment for Porter Paint was granted. There was no appeal.
3
Three months later Porter Paint filed a motion for attorney fees pursuant to Rule 11 and Sec. 1988. In granting Porter's motion, the district court assessed $1,000 in attorney fees against Kerans and her lawyer. However, the district court refused to award fees under Sec. 1988. Kerans appeals and Porter Paint cross-appeals.
4
The primary questions on appeal are whether the district court abused its discretion by imposing Rule 11 sanctions and assessing attorney fees in the amount of $1,000 to be paid to defense counsel; and whether the district court erred by failing to award attorney fees under Sec. 1988.
II.
5
Kerans raised three federal causes of action. The district court found that all three were without merit and subsequently imposed sanctions pursuant to Rule 11. Rule 11, provides in pertinent part:
6
Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated ... The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion or other paper, that to the best of his knowledge, information and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existed law or a good faith argument for the extension, modification or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of reasonable expenses incurred because of the filing of the pleading, motion or other paper including a reasonable attorney's fees.
7
Under the 1983 amendments to Rule 11, sanctions must be imposed if the district court finds that the Rule was violated. The current standard of review is whether counsel's conduct was reasonable under the circumstances and not the original standard of whether counsel established a "good faith" showing. Accordingly, there is no Rule 11 violation if an appellant can demonstrate "that the district court abused its discretion in finding that his conduct was not reasonable under the circumstances." Century Prods. Inc. v. Sutter, 837 F.2d 247, 250 (6th Cir.1988) (citations omitted).
8
In Century, this court discussed the relevant factors necessary to determine whether counsel's conduct was reasonable under the circumstances.
9
What constitutes a reasonable inquiry may depend on such factors as the time available to the signor for investigation; whether the signor had to rely on a client for information as to the facts underlying the pleading, motion, or other paper; whether the pleading, motion, or other paper was based on a plausible view of the law; or whether the signor depended on forwarding counsel or another member of the bar. Although a district court is given wide discretion in deciding whether counsel have acted reasonably under the circumstances " 'the court is expected to avoid using the wisdom of hindsight and should test the signor's conduct by inquiring what was reasonable to believe at the time the pleading, motion or other paper was submitted.' " The conduct of counsel that is the subject of sanctions must be measured by an objective standard of reasonableness under the circumstances. (citations omitted) (emphasis added).
10
Id. at 250-51. On appeal, Kerans alleged that there was no Rule 11 violation1, and that the district court should not have imposed Rule 11 sanctions. We disagree for the reasons set forth below.
A. TITLE VII
11
The jurisdictional prerequisites that must be met before a district court can exercise subject matter jurisdiction are clear. To maintain an action under Title VII, a plaintiff must first file a complaint with the Equal Employment Opportunity Commission ("EEOC") and receive a right to sue letter before bringing a Title VII cause of action in federal court. Alexander v. Gardner-Denver Co., 415 U.S. 36, 47 (1974); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 798 (1973).
12
During the course of this law suit Kerans has had three lawyers. The first lawyer she hired was the law partner to Levine's brother. When she discovered this she hired another attorney who only suggested that she write a letter to Porter Paint describing the events of the harassment. Meanwhile, by the time she had retained the third attorney the statute of limitations had run on filing a sexual harassment claim with the EEOC. Courts have consistently held that a plaintiff must exhaust her administrative remedies before bringing a Title VII action in federal court. See e.g., Parsons v. Yellow Freight System, Inc., 741 F.2d 871 (6th Cir.1984). Although the injury Kerans alleges she suffered was egregious, sexual harassment complicated by poor and inadequate legal advice, the procedural requirements of Title VII can not be excused. Counsel may not avoid Rule 11 sanctions by blaming his errors on the incompetence of his predecessors or by arguing that he harbors a "sincere feeling" that a valid claim exists.
13
Rule 11 requires counsel to study the law before representing its contents to a federal court. An empty head but a pure heart is no defense. The Rule requires counsel to read and consider before litigating ... It is not acceptable to make an assertion of law and hope that it will turn out to be true.
14
Thorton v. Wahl, 787 F.2d 1151, 1154 (7th Cir.1986). Accordingly, the district court did not err by imposing Rule 11 sanctions.
B. 42 U.S.C. Sec. 1983
15
Section 1983 requires a plaintiff to demonstrate that the defendant has deprived her of a constitutionally protected right and that the deprivation has occurred under "color of state law." Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 155 (1978). To hold a private individual liable for unconstitutional acts, a plaintiff must establish that the conduct complained of can be attributed to the state. Kerans alleges that Porter Paint was acting under "color of state law" because they were licensed by the State of Ohio. However, it is a well recognized principle that "state action" cannot be shown by mere state regulation. See e.g., Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351 (1974). "A complaining party must demonstrate a sufficient nexus between the challenged action and the regulatory scheme alleged to be the the impetus behind the private action." Crowder v. Conlan, 740 F.2d 447, 451 (6th Cir.1984). No such nexus exists in this case. In the absence of such a showing, raising a Sec. 1983 claim was unreasonable under these circumstances and was not supported by existing law nor was a good faith argument offered for an extension, modification or reversal of existing law. See, Crowder v. Conlan, 740 F.2d 447 (6th Cir.1984). The district court, therefore, did not abuse its discretion.
C. 42 U.S.C. Sec. 1985(3)
16
Kerans third federal claim alleges that Levine and Porter Paint conspired to deprive her of her constitutional rights. However, as a matter of law, Kerans can not prevail under Sec. 1985. To maintain a cause of action under Sec. 1985, a plaintiff must:
17
allege that the defendants did 1) "conspire or go on the highway or on the premises of another" 2) "for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws." [She] must then assert that one or more of the conspirators 3) did, or caused to be done, "any act in furtherance of the object of [the] conspiracy," whereby another was "injured in his person or property" or "deprived of having and exercising any right or privilege of a citizen of the United States."
18
Griffin v. Breckenridge, 403 U.S. 88, 102-03 (1971). There was no such conspiracy between Porter Paint and Levine. This court has held that under the Civil Rights Act allegations of conspiracy between a corporation and its employees are precluded because "there is no conspiracy if the conspiratorial conduct challenged is essentially a single act by a single corporation acting exclusively through its own directors, officers, and employees, each acting through the scope of his employment." Doherty v. Americam Motors Corp., 728 F.2d 334, 339 (6th Cir.1984).
19
The law of conspiracy requires at least two guilty minds. Generally, the conduct of an employee or agent acting within the scope of his employment is always imputed to the corporation; however a corporation can not conspire with itself. Id. Similarly, Porter Paint, the corporation can not conspire with its employee, Al Levine, to deprive another of her constitutional rights. Therefore, no conspiracy existed and, as a matter of law, the district court was required to dismiss this claim.
III.
20
Kerans argues that even if her attorney violated Rule 11, awarding attorney fees was not justified because Porter Paint's motion requesting sanctions was not filed according to the established practice of the district court judge.2 Kerans alleges that the district court judge ignored his own rules by allowing Porter Paint to file its motion for sanctions after the deadline3 and therefore abused his discretion. The rules Kerans relies on are not even the local rules of the court but rather a practice of Judge Rubin. We agree with the Eighth Circuit "that it is for the district court to determine what departures from its local rules of practice may be overlooked." Trundle v. Bowen, 830 F.2d 807, 809 (8th Cir.1987). If a rule adopted by the district court court as a whole may be overlooked, we cannot say that it is error to overlook a guideline promulgated by a single district court judge for use in his court alone. Accordingly, we find that Judge Rubin did not abuse his discretion by waiving his own practices and awarding attorney fees in the amount of $1,000.
IV.
21
As mentioned above, in Rule 11 cases, an appellant will prevail if the district court abused its discretion in finding that appellant's conduct was unreasonable under the circumstances. A court must objectively evaluate the conduct of the parties and their lawyers during the filing and litigation of cases. If the conduct of either party is unreasonable under the circumstances, the district court is required to impose sanctions pursuant to Rule 11.
22
There is no evidence in this case to suggest that Kerans' conduct was unreasonable under the circumstances. She was injured and sought redress through the judicial system. Kerans presented the factual situation to counsel and was not responsible for the legal theories counsel chose to pursue; therefore, Kerans should not be penalized for the incompetence of counsel. Accordingly, we find that because Kerans' conduct did not violate Rule 11, the district court abused its discretion when it assessed an award of $1000 against Kerans; therefore we hold that the penalty shall be assessed against counsel only.
V.
23
On cross-appeal, Porter Paint contends that the district court erred by failing to award attorney fees pursuant to 42 U.S.C. Sec. 1988. In a civil rights suit, a successful defendant may recover attorney fees under Sec. 1988 if the plaintiff has acted frivolously, unreasonably, vexatiously, in bad faith or has filed a meritless claim. Huges v. Rowe, 449 U.S. 5 (1980); Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978). The district court found that Kerans' claim was "devoid of legal foundation and without merit."
24
However, we note that a conclusion that the elements for awarding attorney fees exist is not, by itself, sufficient to justify the award of actual fees. The Supreme Court held that "[t]he party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where documentation is inadequate, the district court may reduce the award accordingly." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). See also, Northcross v. School Board of Memphis, 611 F.2d 624 (6th Cir.1979) (district court must make findings determining the number of hours attorneys have expended, which should take into account affidavits of counsel). In this case, the documentation was not only inadequate, it was non-existent; therefore there was no basis for awarding attorney fees.
As noted in Judge Rubin's order:
25
It is the law of this circuit that a finding of a violation of Rule 11 requires the imposition of sanction, but allows the type of sanction to be within the discretion of the District Court. It should be pointed out that the rationale of Northcross is not required for the imposition of sanctions under Rule 11. (citations omitted)
26
We read this to mean that under Rule 11, unlike Sec. 1988, the district court need not follow calculating procedures supported by documentation from the prevailing party as provided by Northcross. However, the converse is equally true. Absent documentation of a request for fees under Sec. 1988, as opposed to Rule 11, parties must provide some basis for determining the amount. Accordingly, we find the district court did not abuse its discretion by denying Porter Paint's request for attorney fees under Sec. 1988.
27
We therefore AFFIRM the district court's decision to impose Rule 11 sanctions and award attorney fees against Kerans' counsel, we REVERSE the imposition of sanctions against Kerans personally, and AFFIRM the district court's decision to deny Porter Paint's cross-appeal.
1
Counsel for Kerans argues, that unlike the attorney in Albright v. UpJohn, 788 F.2d 1217 (6th Cir.1986), he did not fail to reasonably investigate the facts prior to filing. This argument is irrelevant since the facts are not in dispute. Moreover, Albright also recognizes that an unreasonable inquiry into the law is also violative of Rule 11. Counsel argues, that he conducted an adequate inquiry into the legal theories supporting the federal claims. However, as shown below, even a cursory examination would have revealed that his claims were unsupportable
2
District Court Judge Rubin sent a pamphlet titled "Instructions for Trial Preparation in the Court of Carl B. Rubin, Chief Judge United States District Court for the Southern District of Ohio" to both attorneys in this case. The last section specifically addresses the awarding of attorney fees. Judge Rubin's guidelines required that a request for fees be submitted 30 days after the final order of the court and accompanied by an accounting of the expenses. Porter Paint did not comply with either guideline
3
The final order was filed on March 16, 1987. Porter Paint did not file its motion for attorney fees until June 3, 1987
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368 F.Supp. 1401 (1974)
William MARINIELLO, t/a J & B Shell Stations, Inc., Plaintiff,
v.
SHELL OIL COMPANY, a corporation of the State of Delaware, authorized to transact business in the State of New Jersey, Defendant.
Civ. A. No. 1506-72.
United States District Court, D. New Jersey.
January 11, 1974.
*1402 Fierro, Fierro & Mariniello by Joseph R. Mariniello, Fort Lee, N. J., for plaintiff.
Howrey, Simon, Baker & Murchison by Michael M. Levy, Michael W. Graney, William Simon, Washington, D. C., (District of Columbia bar), Mattson, Madden, Polito & Loprete by Andrew S. Polito, Michael D. Loprete, Newark, N. J., for defendant.
*1403 OPINION
COOLAHAN, District Judge:
The question for decision is whether, in the light of Shell Oil Co. v. Marinello, 63 N.J. 402, 307 A.2d 598 (1973), cert. den., 42 U.S.L.W. 3460 ("the Shell decision" or "Shell"), this Court's December 27, 1972 grant of summary judgment to defendant Shell Oil Company on count 2 of the complaint and on count 2 of the counterclaim must be vacated. The Court concludes that it is not bound by the Shell decision to vacate its grant of summary judgment. That judgment will therefore not be disturbed.
i. The Contract Clause
Article I, Section 10 of the Constitution provides, "[n]o State shall . . . pass any . . . Law impairing the Obligation of Contracts . . . ." Defendant argues that the New Jersey Franchise Practices Act, N. J.S.A. 56:10-1 et seq., works an unconstitutional impairment of its lease and dealer agreement with plaintiff Mariniello, because it converts an obligation to deal for a fixed period of time into an obligation to deal indefinitely. Specifically, the argument runs, the Supreme Court of New Jersey has in fact applied the Franchise Practices Act in its Shell decision, and that judicial interpretation is sufficient to present to this Court the issue of the constitutionality of the New Jersey statute.
This Court agrees that Shell utilized N.J.S.A. 56:10-1 et seq. As Mr. Justice Holmes put it in Terre Haute & Indianapolis R. R. v. Indiana ex rel. Ketcham, 194 U.S. 579, 589, 24 S.Ct. 767, 769, 48 L. Ed. 1124 (1904), "[t]he state court has sustained a result which cannot be reached . . . without relying on [state] legislation. It clearly did rely upon that legislation to some extent, but exactly how far is left obscure." The Shell decision, however, does not directly invoke the New Jersey statute sought to be put in issue under the Contract Clause. The trial court's opinion, which as modified was affirmed by Shell, holds that the Franchise Practices Act did not apply to the controversy there decided. 120 N.J. Super. 357, 368-371, 294 A.2d 253 (Law & Ch.Divs.1972). The Supreme Court of New Jersey stated that "[t]he Act does not directly control the franchise relationship herein. . . ." 63 N.J. at 409, 307 A.2d at 602.
Detroit United Ry. v. Michigan, 242 U.S. 238, 246-247, 37 S.Ct. 87, 89, 61 L. Ed. 268 (1916), states, "[i]t is true, as this court has many times decided, that the `contract clause' of the Constitution is not addressed to such impairment of contract obligations, if any, as may arise by mere judicial decisions in the state courts without action by the legislative authority of the state." Although there is authority that supports defendant's contention that the Franchise Practices Act works an unconstitutional impairment of contract,[1] the Act is not ipsissimis *1404 verbis the subject of interpretation in Shell. This Court will not strike down a state statute under the Contract Clause unless that statute is itself directly and unequivocally implicated in the alleged impairment of contract. Accordingly, the Court refrains from ruling on whether the Franchise Practices Act works an unconstitutional impairment of contract between a franchisor and his franchisee.[2]
ii. The Supremacy Clause
The Franchise Practices Act reads in pertinent part, "[i]t shall be a violation of this act for a franchisor to terminate, cancel or fail to renew a franchise without good cause. For the purposes of this act, good cause for terminating, canceling, or failing to renew a franchise shall be limited to failure by the franchisee to substantially comply with those requirements imposed upon him by the franchise." N.J.S.A. 56:10-5. The key holding of Shell appears at 63 N.J. 410-411, 307 A.2d 603, and precisely tracks the Franchise Practices Act.[3] "We hold . . . that . . . the public policy of this State . . . requires that there be read into [service station lease and dealer agreements] the restriction that Shell [a franchisor] not have the unilateral right to terminate, cancel or fail to renew the franchise, including the lease, in absence of a showing that Marinello [a franchiseee] has failed to substantially perform his obligations under the lease and dealer agreement, i. e., for good cause. . . ." Such was never the common law of contract in New Jersey. And such cannot fairly be said to be a legal creation of the Supreme Court of New Jersey alone, without reference to N.J.S.A. 56:10-5. The phrasing and syntax of the holding in the Shell decision and of the state statute are strikingly similar; the policies expressed by each are identical; the practical effect of each is the same. Indeed, the reference in Shell to "the public policy of this State," 63 N.J. at 410, 307 A.2d at 603, must be deemed a reference to the same policy considerations[4] as are incorporated in N.J.S.A. 56:10-2. To pretend that the Shell decision independently created new law without reliance on the Franchise Practices Act is to blink reality.
Terre Haute & Indianapolis R. R., supra, states, "[w]e are of opinion that we cannot decline jurisdiction of a case . . . because the state *1405 court put forward the untenable construction more than the unconstitutional statutes in its judgment. To hold otherwise would open an easy method of avoiding the jurisdiction of this court." 194 U.S. at 589, 24 S.Ct. at 769. Because this Court concludes that the Shell decision in reality constitutes, ". . . to some extent, but exactly how far is left obscure," a judicial interpretation and application of the Franchise Practices Act, and thus comprises the meaning of that Act equally as the statute's very words, it is compelled to accept jurisdiction to decide if the Act as explicated in Shell raises a question under the Supremacy Clause that involves the Lanham Act, 15 U.S.C. § 1051 et seq.[5]
The Lanham Act, which constitutes the federal statutory law of trademarks, is properly at issue in the present proceedings. First, N.J.S.A. 56:10-3(a) defines a "franchise" as ". . . a written arrangement . . . in which a person grants to another person a license to use a . . . trade mark. . . ." It is uncontested that such an arrangement exists between plaintiff and defendant in the case at bar. Second, the use of registered trademarks in the gasoline service station business constitutes use that has sufficient impact upon interstate commerce to invoke the Lanham Act. Pure Oil Co. v. Puritan Oil Co., 127 F.2d 6, 8 (2d Cir. 1942) (L. Hand, J.); Application of Gastown, Inc., 326 F.2d 780, 782, 51 C.C.P.A. 876 (1964). Third, the various trademarks used by the Shell Oil Company to market its products through service stations are federally registered trademarks under 15 U.S.C. § 1051.
The holding of the Shell decision is succinctly expressed in its companion case, Texaco, Inc. v. Appleget, 63 N.J. 411, 307 A.2d 603 (1973). Texaco states, at 412, 307 A.2d at 604, that Shell ". . . restricts the unilateral right of an oil company to terminate, cancel or fail to renew a lease and dealer agreement with one of its service station operators to a situation where `good cause' for such action exists."[6] Under the law created in the Shell decision, a franchisor such as the Shell Oil Company that licenses its federally registered trademarks to a service station operator-franchisee for a limited, definite period of time (customarily, one or several years; in the case at bar, three years) is actually granting a license for an indeterminate period of time. As stated at 63 N.J. 411, 307 A.2d 603, the franchise ". . . would have legal existence for an indefinite period. . . ."
Under the Lanham Act, 15 U.S.C. § 1114(1), a trademark owner ("registrant") who registers his trademark is granted the exclusive right to the use of the trademark, as well as the right to restrain all others from using it without his permission.[7] The Shell decision acts *1406 to destroy the right of an owner of a federally registered trademark to grant a license of that mark for a specific, definite term. Reciprocally to such impairment of the rights of the registrant, the Shell decision unavoidably bestows new rights to the trademark upon the franchisee: the franchisee's license to use the trademark, instead of lapsing at the end of the set time called for in the written lease and dealer agreement between the parties, continues "for an indefinite period." Such elongation is not a simple temporal adjustment, without more. Conversion from a definite date of termination to an indefinite date of termination constitutes both a substantive enhancement of the franchisee's rights in the trademark, and a corresponding substantive impairment of the franchisor-registrant's rights in his trademark.
Congress, by defining "commerce" for the purpose of the Lanham Act as signifying ". . . all commerce which may lawfully be regulated by Congress," 15 U.S.C. § 1127, left no doubt that its intention was to regulate federally registered trademarks to the furthest reach of its constitutional power. As explained in Bulova Watch Co. v. Steele, 194 F.2d 567, 571 (5th Cir.), aff'd, 344 U.S. 280, 73 S.Ct. 252, 97 L. Ed. 319 (1952), ". . . in the Lanham Trade Mark Act of 1946, the Congress intended to regulate interstate and foreign commerce to the full extent of its constitutional powers." A. Smith Bowman Distillery, Inc. v. Schenley Distillers, Inc., 198 F.Supp. 822, 825 (D. Del.1961), concurs: ". . . Congress here intended to regulate all it constitutionally could."
The intention of Congress in passing the Lanham Act, and consequently the purpose of that statute, is unmistakably expressed in 15 U.S.C. § 1127. That intention is ". . . to protect registered marks used in [interstate] commerce from interference by State . . . legislation." See S. Rep.No. 1333, 79th Cong., 2d Sess. (1946), U.S.Code Cong.Service, p. 1274. Where Congress is granted constitutional authority to legislate and has exercised its power in that field to the fullest, the states have no authority to legislate on the same subject matter. As stated in McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 435, 4 L.Ed. 579 (1819), ". . . the states have no power . . . to . . . in any manner control, the operations of the constitutional laws enacted by congress. . . ." In the case at bar, unlike the situation with which this Court was recently confronted in Wuillamey v. Werblin, 364 F.Supp. 237, 242 (D.N.J.1973), there exist two legislative enactments 15 U.S.C. § 1051 et seq., and N.J.S.A. 56:10-1 et seq. as implemented by the Supreme Court of New Jersey in the Shell decision that deal with the same subject matter and occupy the same field, i. e., federally registered trademarks.
Under the Supremacy Clause of the Constitution (Article VI, Clause 2), ". . . the Laws of the United States . . . shall be the supreme Law of the Land . . . any Thing in the . . . Laws of any State to the Contrary notwithstanding." The Supremacy Clause prohibits the State of New Jersey from legislating in the field of federally registered trademarks. Burger King of Florida, Inc. v. Hoots, 403 F.2d 904, 907 (7th Cir. 1968), states that under the federal trademark statutes antedating the Lanham Act, ". . . the policy of the Acts, to provide protection of federally registered marks used in interstate commerce, `may not be defeated or obstructed by State law' and that if state law conflicts with the policy it `must yield to the superior federal law' . . . . [F]ederal-registration rendered all questions of use and protection in interstate commerce questions of federal law, not state law." (quoting Philco Corp. v. Phillips Manufacturing Co., 133 F.2d *1407 663 (7th Cir. 1943) at 671-672) And Mister Donut of America, Inc. v. Mr. Donut, Inc., 418 F.2d 838 (9th Cir. 1969), states at 844, "[w]hat the effect of this California statutory provision might be if the Lanham Act had not been passed by Congress, we need not decide. The Lanham Act has pre-empted the field of trademark law and controls." The decision of the Supreme Court of New Jersey in Shell Oil Co. v. Marinello, by utilizing N.J.S.A. 56:10-1 et seq. to whittle the rights of the owner of a federally registered trademark and correspondingly to enlarge the rights of a licensee in such a trademark, collides with the Lanham Act's preemptive grant to its owner of total control of a federally registered trademark. Consequently, insofar as the Shell decision regulates the rights of owners of federally registered trademarks and the rights of their licensees, it is invalid and inapplicable.
A Supremacy Clause argument may be composed of two parts, "preemption" and "conflict." Helmsley v. Borough of Fort Lee, 362 F.Supp. 581, 589-591 (D.N.J.1973). Under the federal law of trademarks, it is axiomatic that a licensee of a registered trademark is entitled to only those rights that are conveyed to him in the licensing arrangement. As stated in Pacific Supply Cooperative v. Farmers Union Central Exchange, Inc., 318 F.2d 894, 908 (9th Cir. 1963), ". . . appellant fails to recognize the long settled principle of law that a licensee . . . of a trademark . . . may not set up any adverse claim in it as against its licensor." This limitation of the rights of the licensee to those included in the licensing agreement is in conflict with the holding in the Shell decision, which utilizes the Franchise Practices Act to grant rights for "an indefinite period" to a licensee of a federally registered trademark.
Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963), states, "[t]he test of whether both federal and state regulations may operate, or the state regulation must give way, is whether both regulations can be enforced without impairing the federal superintendence of the field. . . ." The New Jersey regulation of trademarks in Shell, which grants to the licensee more and greater rights than bestowed by the licensor, cannot be enforced without impairing the effectiveness of the Lanham Act, which limits a licensee's rights to what is granted by the licensor-owner of the federally registered trademark. "[A]ny state legislation which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause." Perez v. Campbell, 402 U.S. 637, 652, 91 S.Ct. 1704, 1712, 29 L.Ed.2d 233 (1971).
Defendant's federally created rights cannot be nullified by state regulation where federal policy runs directly to the contrary in a field that has been preempted by federal legislation. The Court must conclude that the irreconcilable conflict engendered by the clash of federal and state regulation demands that state law give way to federal. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824). It is accordingly held that the State of New Jersey cannot interfere with defendant Shell's federal rights (1) to limit the grant of its federally registered trademarks to its licensees for the stated period of time spelled out in its leases, (2) to regain full and exclusive use of its licensed-out trademarks when that period of time has expired, unless renewal or rearrangement of the lease and dealer agreement is otherwise mutually made, and (3) not to suffer any adverse consequences (e. g., having to defend an action brought in a state court for injunctive relief and damages, N.J.S.A. 56:10-10) that may stem from its so limiting the grant of its federally registered trademarks.
NOTES
[1] Consumers Oil Corp. of Trenton v. Phillips Petroleum Co., 488 F.2d 816 at 819-820 (3d Cir., 1973) (actual state interpretation of the Franchise Practices Act may raise "substantial constitutional questions"); Globe Liquor Co. v. Four Roses Distillers Co., 281 A.2d 19 (Del.Sup.Ct.1971) (Delaware Franchise Security Law that provided that franchisor could not "unjustly terminate a franchise" was declared unconstitutional because it effected "substantive change" in rights and obligations under contract in suit, 281 A.2d at 21); Comment, "Franchise Regulation: An Appraisal of Recent State Legislation," 13 B.C. Ind. & Comm.L.Rev. 529, 560-61 (1972) (There is a ". . . serious question whether a law can be drafted that will be upheld as constitutional and still be strong enough to protect franchisees"; "To prohibit refusals to renew in effect creates a contract of indeterminate duration," echoed at 63 N.J. 411, 307 A.2d 603, ". . . Marinello's franchise, including his lease, would have legal existence for an indefinite period . . ."); Superior Motors, Inc. v. Winnebago Industries, Inc., 359 F.Supp. 773 (D.S.C.1973) ("It is the retrospective application of this legislation . . . which is the concern of this decision," 359 F.Supp. at 778 (emphasis added); abstention is not mandated ". . . where the issue of a state statute's constitutionality is squarely presented to the court," 359 F.Supp. at 782 (emphasis added)).
See also, Brown, "Franchising: Fraud, Concealment and Full Disclosure," 33 Ohio St.L.J. 517 (1972); Brown & Cohen, "Franchise Misuse," 48 Notre Dame Lawyer 1145 (1973); Caine, "Termination of Franchise Agreements: Some Remedies for Franchisees Under the Uniform Commercial Code," 3 Cumberland-Samford L.Rev. 347, 366-72, 388-401 (1972); Chisum, "State Regulation of Franchising: The Washington Experience," 48 Wash.L.Rev. 291, 377-83 (1973); Collison, "Trademarks The Cornerstone of a Franchise System," 24 Southwestern L.J. 247 (1970); Gellhorn, "Limitations on Contractual Termination Rights Franchise Cancellations," 1967 Duke L.J. 465 (1967); "Student Symposium: The Franchise Relationship Abuses & Remedies," 33 Ohio St.L.J. 641, 664-73 (1972).
[2] The strongest statement that this Court can find to the effect that a Contract Clause question is properly presented even though the state statute is not squarely and directly invoked comes from Cross Lake Shooting & Fishing Club v. Louisiana, 224 U.S. 632, 638-639, 32 S.Ct. 577, 579, 56 L.Ed. 924 (1912): ". . . when the state court, either expressly or by necessary implication, gives effect to a subsequent law of the State whereby the obligation of the contract is alleged to be impaired, a Federal question is presented. In such a case it becomes our duty to take jurisdiction. . . ." (emphasis supplied) Because this Court is deciding the case at bar on Supremacy Clause grounds, it becomes unnecessary to base decision on the Contract Clause.
[3] Note, 4 Seton Hall L.Rev. 683 (1973) refers to the trial court's decision in Shell as adhering to the "underlying spirit" of the Franchise Practices Act (at 683) and, at 685, comments that "the spirit of the Act was effected" by the lower court decision.
[4] Franklin National Bank v. New York, 347 U.S. 373, 74 S.Ct. 550, 98 L.Ed. 767 (1954), states, 347 U.S. at 378-379, 74 S.Ct. at 554, "[t]here appears to be a clear conflict between the law of New York and the law of the Federal Government. We cannot resolve conflicts of authority by our judgment as to the wisdom or need of either conflicting policy. The compact between the states creating the Federal Government resolves them as a matter of supremacy. However wise or needful New York's policy, a matter as to which we express no judgment, it must give way to the contrary federal policy."
[5] A single-judge District Court is the proper forum in which to decide questions arising under the Supremacy Clause of the Constitution, where there is a claim that a state statute conflicts with and is preempted by a federal statute. Swift & Co. v. Wickam, 382 U.S. 111, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965).
[6] This explanation precludes the possibility of the Court avoiding a collision between state and federal trademark regulation by construing "trade mark" in N.J.S.A. 56:10-3(a) as referring only to common law and state registered trademarks, N.J.S.A. 56:313.1 et seq., and not to federally registered trademarks. An "oil company" of any significance has its trademarks federally registered.
[7] 15 U.S.C. § 1114(1) reads in pertinent part as follows:
"Any person who shall, without the consent of the registrant (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale [or] distribution . . . of any goods or services . . . shall be liable in a civil action by the registrant. . . ." The phrase "any person" is all-inclusive. If Congress had meant to limit the applicability of 15 U.S.C. § 1114(1) to competitors of similar economic strength, it would so have legislated.
Our own Circuit recognized this concept of exclusivity of control long before the Lanham Act came into existence. Judge Woolley stated, in Hicks v. Anchor Packing Co., 16 F.2d 723, 726 (3d Cir. 1926), "[a] grant of an exclusive use of a trademark, limited as to duration and place . . . does not convey title or establish ownership of the trademark in the licensee . . ." (emphasis added). See also Campbell Soup Co. v. Armour & Co., 175 F.2d 795 (3d Cir. 1949); In re Beatrice Foods Co., 429 F.2d 466, 472 (C.C.P.A.1970).
| {
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Docket No. 97165.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
In re APPLICATION OF THE COUNTY COLLECTOR for
Judgment and Sale Against Lands and Lots Returned Delinquent for
Nonpayment of General Taxes and/or Special Assessments for the
Years 1991 and Prior Years (Apex Tax Investments, Inc., et al.,
Appellees, v. Mary Lowe, Deceased, by Patrick T. Murphy, Cook
County Public Guardian and Supervised Adm’r of the Estate of Mary
Lowe, Appellant).
Opinion filed April 19, 2007.
CHIEF JUSTICE THOMAS delivered the judgment of the court,
with opinion.
Justices Freeman, Fitzgerald, and Garman concurred in the
judgment and opinion.
Justice Kilbride dissented, with opinion.
Justices Karmeier and Burke took no part in the decision.
OPINION
This cause is before us on remand from the United States
Supreme Court for further consideration in light of Jones v. Flowers,
547 U.S. ___, 164 L. Ed. 2d 415, 126 S. Ct. 1708 (2006). We have
allowed additional briefing and oral argument addressing the
Supreme Court’s decision in Jones. We also have permitted the
Mental Health Association in Illinois and the Mental Health Project
of the University of Chicago Law School’s Edwin F. Mandel Legal
Aid Clinic to file a brief amici curiae on behalf of the Cook County
public guardian, as supervised administrator for the estate of Mary
Lowe. In addition, we have permitted the Illinois Tax Purchasers
Association to file a brief amicus curiae on behalf of Apex Tax
Investments, Inc., and its subsequent transferee and claimed
beneficial interest holder, John Herndon.
The facts in this case are set forth in the original opinion of this
court (In re Application of the County Collector, 217 Ill. 2d 1 (2005)).
We repeat those facts in some detail in this opinion, as those facts are
relevant to our reconsideration in light of Jones.
BACKGROUND
In 1977, Mary Lowe purchased a single-family home located at
13250 South Riverdale in Chicago. In 1993, Lowe quitclaimed the
property to herself and William Austin. Austin died in 1994. Property
taxes were paid on the home until 1992, when $110.65 in assessed
taxes for the 1991 property tax year went unpaid.
Once property taxes become delinquent, the Property Tax Code
(the Code) (35 ILCS 200/1–1 et seq. (West 1994)) provides that the
county collector may file an application in the circuit court for
judgment and order of sale of the delinquent property. The Code
directs that the county collector shall publish notice of its intent to file
an application for judgment. 35 ILCS 200/21–110 (West 1994). The
notice must be published in a newspaper in the township where the
property is located at least 10 days before the application is filed. 35
ILCS 200/21–115 (West 1994). In addition, the county collector shall
send a notice of the application for judgment and sale, by certified or
registered mail, to the person in whose name the taxes were last
assessed at least 15 days before the date of the application for
judgment and sale of the delinquent property. 35 ILCS 200/21–135
(West 1994). The county collector must present proof of the mailing
to the court along with the application for judgment. 35 ILCS
200/21–135 (West 1994). The property owner can pay the delinquent
taxes and costs any time prior to the sale. 35 ILCS 200/21–165 (West
1994). If judgment is entered against the property, the county
-2-
collector shall offer the property for sale pursuant to the judgment. 35
ILCS 200/21–190 (West 1994).
Following a tax sale, the Code provides that, in order to seek a tax
deed, the tax purchaser must deliver a notice to the county clerk to be
given to the party in whose name the taxes were last assessed. 35
ILCS 200/22–5 (West 1994). This notice must be delivered to the
county clerk within five months after the tax sale, and the county
clerk must mail the notice, within 10 days of receipt, by registered or
certified mail. 35 ILCS 200/22–5 (West 1994). This section 22–5
“Take Notice” advises a party that his property has been sold for
delinquent taxes, that redemption can be made until a specified date,
and that a petition for tax deed will be filed by the tax purchaser if
redemption is not made. 35 ILCS 200/22–5 (West 1994).
The Code provides for a second “Take Notice” to be sent to the
owners, occupants and parties interested in the delinquent property
not less than three months or more than five months prior to the
expiration of the period of redemption. 35 ILCS 200/22–10 (West
1994). This section 22–10 take notice must give notice of the sale and
the date of expiration of the period of redemption. 35 ILCS
200/22–10 (West 1994). The section 22–10 take notice must be
served: personally by the sheriff; by registered or certified mail, return
receipt requested; and by three publications in a newspaper. 35 ILCS
200/22–15, 22–20, 22–25 (West 1994).
Also “within 5 months but not less than 3 months prior to the
expiration of the redemption period,” the tax purchaser may file a
petition in the circuit court seeking an order directing the county clerk
to issue a tax deed to the property. See 35 ILCS 200/22–30 (West
1994). In order to receive an order issuing a tax deed, the redemption
period must expire without any redemption taking place, and the tax
purchaser must prove to the circuit court that it has strictly complied
with the statutory notice provisions set forth in sections 22–10
through 22–25 of the Code (35 ILCS 200/22–10 through 22–25 (West
1994)). 35 ILCS 200/22–30 (West 1994).
In this case, the circuit court granted the collector’s application for
judgment and sale. The county collector offered Lowe’s home for sale
and, on March 3, 1993, Apex Tax Investments, Inc. (Apex),
purchased the home at the annual Cook County tax sale for $347.61,
the amount of the 1991 tax delinquency and fees. Apex did not
-3-
receive title to the property at that time, but instead received a
“certificate of purchase.” See 35 ILCS 200/21–250 (West 1994). The
certificate of purchase did not affect Lowe’s legal or equitable title to
the property. In addition, Lowe had the right to redeem the property,
upon payment of the tax arrearage and costs, until the redemption
period expired. See 35 ILCS 200/21–345 through 21–355 (West
1994).
On October 5, 1995, Apex filed a petition in the circuit court of
Cook County for a tax deed to the property. Apex’s tax petition stated
that the redemption period expired by extension on February 21,
1996. Because no redemption occurred by February 21, 1996, Apex’s
petition proceeded to an ex parte hearing on March 18, 1996.
At the March 18, 1996, hearing, Apex’s attorney testified
concerning Apex’s compliance with the statutory notice provisions of
sections 22–10 through 22–25 of the Code. Apex conducted a tract
search and learned that the property at issue was owned by Mary
Lowe and William Austin. Apex conveyed this information to the
Cook County sheriff and the clerk of the circuit court of Cook
County. Pursuant to section 22–15 of the Code (35 ILCS 200/22–15
(West 1994)), the Cook County sheriff attempted to personally serve
Lowe, Austin and “occupant” with the section 22–10 “take notice” on
October 26, 1995. The Cook County sheriff filed the returns of
service for the section 22–10 take notices with the clerk of the circuit
court on November 9, 1995. On each return of service, the deputy
sheriff wrote “House vacant per neighbors.” In addition, the deputy
sheriff wrote the word “MOVED” on the preprinted form to indicate
the reason why notice was not served.
Because the Cook County sheriff could not effect personal service
on Austin, Lowe or “occupant,” the sheriff also sent section 22–10
take notices to Austin, Lowe and “occupant” at the property’s address
by certified mail, return receipt requested. The three certified mail
notices were returned to the sheriff undelivered, and were filed with
the clerk of the circuit court.
The envelopes for the three certified mail notices were admitted
into evidence at the hearing on Apex’s petition for a tax deed. All
three envelopes were postmarked November 8, 1995, and were
stamped “return to sender.” On the envelope addressed to Austin, the
word “deceased” was handwritten in pencil on the left side of the
-4-
envelope. The envelopes addressed to Lowe and “occupant”
contained stamps indicating that attempts were made to deliver the
notices on November 16, December 11, and December 18, 1995. In
addition, the two envelopes addressed to Lowe and “occupant”
contained a handwritten notation written vertically on the left side of
the envelope which read, “Person is Hospitalized.” Under that
notation, the number “2719” and the letters “JHT” were handwritten.
The handwritten notations on the envelopes have a line drawn
through them and are obscured in part by the circuit court clerk’s
filing stamp and the post office’s “return to sender” stamps. The
sheriff filed the returned certified mail notice for Austin with the
court on November 22, 1995, and filed the returned certified mail
notices for Lowe and “occupant” with the court on January 2, 1996.
Pursuant to statute, the clerk of the circuit court of Cook County
also sent section 22–10 take notices by certified mail to Lowe, Austin
and “occupant.” These notices were returned undelivered. The three
certified mail envelopes were postmarked November 8, 1995, and
were stamped “return to sender.” The three envelopes contained
notations indicating that attempts were made to deliver the notices on
November 9, November 15, and November 24, 1995. Apex also
provided publication notice to Lowe and Austin by publishing notice
in the Chicago Daily Law Bulletin on October 11, October 12, and
October 13, 1995.
At the hearing on Apex’s petition for tax deed, Apex’s attorney
testified that, in attempting to ascertain the whereabouts of Lowe and
Austin, the Cook County sheriff personally served a section 22–10
take notice on the law firm that prepared the 1993 quitclaim deed on
behalf of Lowe. The clerk of the circuit court also sent notice to the
law firm by certified mail on November 8, 1995. Moreover, the First
National Bank of Chicago, in its capacity as a mortgagee of the
property, was personally served with a section 22–10 take notice on
October 24, 1995. Likewise, the clerk of the circuit court sent notice
by certified mail to the bank on November 8, 1995.
Apex’s agent, Fred Berke, testified at the hearing that he had
visited the property and inspected it on behalf of Apex sometime
between October 21 and December 21, 1995. When Berke arrived at
the home, he knocked on the door and looked into the living room
window. Berke did not see any furniture inside the home. In addition,
-5-
Berke spoke to a next-door neighbor who told Berke that the owner
of the property was the “Lowes,” but that no one was living there
currently. Berke testified that the home appeared to be uninhabited.
Apex’s attorney also testified that Apex checked city and
suburban phone directories and voter registration records, but was
unable to develop any address for William Austin or Mary Lowe
other than the subject property address. Apex’s attorney stated that all
regular efforts to locate Lowe and Austin had proven fruitless.
At the close of the hearing on Apex’s petition for tax deed, the
circuit court found that no redemption had been made, that Apex had
complied with the notice provisions of the Property Tax Code, and
that Apex had exercised “due diligence” in attempting to locate Lowe
and Austin. Consequently, on May 20, 1996, the circuit court directed
the county clerk to issue Apex a tax deed to the property. The tax
deed was issued on May 20, 1996.
Subsequently, on December 6, 1996, Apex entered into an
installment contract to sell the property to third-party John Herndon
for $10,000. Herndon testified via deposition that the property was in
substantial disrepair when he purchased it, describing the home as an
abandoned building. Herndon invested more than $20,000 in material
and labor in renovating the property, completing the renovations by
early 1998.
On September 5, 1997, two of Mary Lowe’s sons, Bruce and
Mario Lowe, filed a pro se petition for “Restoration of Property
Ownership” in the circuit court of Cook County, stating that Mary
Lowe had been in and out of various mental facilities for the past 30
years and that Lowe had been hospitalized in a mental-health facility
from August 26, 1995, to December 17, 1996. The petition stated that
Mary Lowe had been released to Bruce Lowe’s custody and that Mary
currently resided with Bruce in California. The pro se petition alleged
that personal service on an incompetent person violates that person’s
right to due process. The petition therefore asked that the court
reinstate Mary’s full rights of ownership in the subject property.
Based upon the allegation that Mary Lowe was mentally disabled,
the circuit court on November 1997 appointed the Cook County
-6-
public guardian to represent her.1 The public guardian then filed a
petition, and later an amended petition, pursuant to section 2–1401 of
the Code of Civil Procedure (735 ILCS 5/2–1401 (West 1994)) and
section 22–45 of the Code (35 ILCS 200/22–45 (West 1994)),
seeking to have the tax deed that was issued to Apex set aside. The
public guardian alleged the Mary Lowe suffered from schizophrenia
and had been hospitalized at the Tinley Park Mental Health Center at
the time the section 22–10 notices were sent to the property in
November 1995. The public guardian also noted that two of the
notices mailed by the Cook County sheriff were returned with the
notation “Person is hospitalized 2719 JHT” written on the envelopes.
The public guardian alleged that the notations were written by mail
carrier Jewel Hightower. The number 2719 was Hightower’s postal
route numbers and the letters “JHT” were Hightower’s initials. The
public guardian contended that Apex failed to make diligent inquiry
concerning the whereabouts of Mary Lowe because Apex never
attempted to contact Hightower or the post office.
An evidentiary hearing on the public guardian’s amended petition
to set aside the tax deed was held on February 20, 2002. The circuit
court allowed Herndon to participate at the hearing because he had
purchased the subject property. Dr. Bernard Rubin testified at the
hearing that he had reviewed Lowe’s mental-health records and
concluded that Lowe had suffered from disorganized, chronic
schizophrenic disorder. Rubin said that from January 1995 until
October 1996, Lowe suffered from a mental illness, was generally
incompetent, and would not have been able to understand or respond
to legal documents served upon her between January 1995 and
October 1996.
Hightower also testified at the evidentiary hearing that she was a
mail carrier for the United States Postal Service and that the property
at issue was on her route. She wrote “Person is Hospitalized” on the
certified letters sent by the sheriff to Lowe and occupant. Hightower
1
Mary Lowe died on November 15, 1998. The probate division of the
circuit court of Cook County entered an order appointing the public
guardian as administrator to collect for the estate of Lowe, and the public
guardian, as administrator to the estate of Mary Lowe, was substituted as
the proper party to prosecute the amended petition to set aside the tax deed.
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also wrote her postal route number, “2719,” and her initials, “JHT,”
on the envelopes. At the time she made the notations on the
envelopes, Hightower knew that Lowe was in Tinley Park Mental
Health Center, but postal regulations did not allow her to note
anything more specific than the fact that an addressee was
hospitalized. Hightower testified that anyone wanting further
information concerning Lowe’s whereabouts could have come to the
post office and filled out the proper forms, although Hightower did
not further explain what forms would authorize disclosure that a
person was hospitalized in a mental-health facility.
On April 9, 2002, the circuit court denied the public guardian’s
amended petition to set aside the tax deed. The appellate court
affirmed. No. 1–02–1101 (2003) (unpublished order under Supreme
Court Rule 23). This court granted the public guardian’s petition for
leave to appeal and affirmed the circuit and appellate courts.
In affirming, this court noted that relief from an order issuing a
tax deed could be had under section 2–1401 of the Code of Civil
Procedure (735 ILCS 5/2–1401 (West 1994)), but that the grounds for
relief were limited as set forth in section 22–45 of the Code (35 ILCS
200/22–45 (West 1994)). In re Application of the County Collector,
217 Ill. 2d at 25-26. These grounds are limited to: (1) proof that the
taxes were paid prior to the sale; (2) proof that the property was
exempt from taxation; (3) proof by clear and convincing evidence that
the tax deed was procured by fraud or deception; or (4) proof by a
person or party holding a recorded ownership or other interest in the
property that he was not named as a party in the section 22–20
publication notice and that the tax purchaser did not make a diligent
inquiry and effort to serve that person or party with the notices
required pursuant to sections 22–10 through 22–30. 35 ILCS
200/22–45 (West 1994).
The public guardian argued that the tax deed issued to Apex
should be set aside because there was clear and convincing evidence
that Apex had procured the tax deed by fraud or deception. In re
Application of the County Collector, 217 Ill. 2d at 26. The public
guardian claimed that Apex’s representation that it had been unable
to ascertain Lowe’s whereabouts despite having conducted a diligent
search constituted fraud or deception in light of “ ‘Apex’s willful
ignorance with respect to the notations [from Hightower] on the
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undelivered envelopes.’ ” In re Application of the County Collector,
217 Ill. 2d at 23.
This court rejected the public guardian’s argument, noting that in
the context of tax deed proceedings, fraud is defined as a wrongful
intent or an act calculated to deceive. In re Application of the County
Collector, 217 Ill. 2d at 23. This court held that the record in the case
did not show fraud. Specifically, this court found that:
“The envelopes with Jewel Hightower’s notations on
them were returned by the post office to their sender, the
Cook County sheriff. The sheriff submitted the envelopes to
the clerk of the circuit court, who then placed the envelopes
in the court file, which, by statute, the clerk is required to
maintain in tax deed cases. [Citation.] There was nothing
unusual or unexpected about the fact that the envelopes were
returned, undelivered. Both an agent from Apex and a deputy
sheriff from the Cook County sheriff’s office had visited the
property, found it vacant, and had been told by neighbors that
the occupants of the home had moved. Further, the notations
on the envelopes addressed to Mary Lowe and ‘occupant,’
though legible, cannot reasonably be called prominent. The
notations have a line drawn through them and they are
partially obscured by the circuit court clerk’s filing stamps
and the post office’s ‘returned to sender’ stamps. More
important, there is no evidence that Apex attempted to
conceal the notations or alter the envelopes in any way. ***
On this record, the most that can be said with respect to
Apex’s actions is that Apex simply failed to discover the
notations on the envelopes. However, as this court has
frequently noted, the failure to uncover a particular fact
during the search for a delinquent taxpayer does not, by itself,
establish fraud.” In re Application of the County Collector,
217 Ill. 2d at 23-24.
This court also rejected the public guardian’s claim that the tax
deed should be set aside because Lowe had been denied her due
process right to adequate notice prior to the deprivation of her
property. This court concluded that the public guardian was
attempting to relitigate the circuit court’s diligent-inquiry finding–a
finding that could not be challenged in a section 2–1401 petition
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except on the grounds set forth in section 22–45 of the Code. In re
Application of the County Collector, 217 Ill. 2d at 37-38. Because this
court had already concluded that fraud under section 22–45 had not
been proven, this court declined to further consider the public
guardian’s argument that Apex failed to conduct a diligent inquiry to
locate Lowe. In re Application of the County Collector, 217 Ill. 2d at
38.
Finally, this court rejected the public guardian’s argument that the
Code is unconstitutional as applied to all individuals like Lowe, who
are hospitalized with a disabling mental illness during the section
22–10 notice period. In re Application of the County Collector, 217
Ill. 2d at 38. We held that the notice procedures set forth in sections
22–10 through 22–25 of the Code embodied all that could be done
under existing law to locate and identify a delinquent taxpayer who
is hospitalized for mental illness. In re Application of the County
Collector, 217 Ill. 2d at 41-42.
The United States Supreme Court subsequently granted the public
guardian’s petition for writ of certiorari, vacated the judgment of this
court, and remanded the cause for our further consideration in light
of Jones v. Flowers, 547 U.S. ___, 164 L. Ed. 2d 415, 126 S. Ct.
1708 (2006). Estate of Lowe v. Apex Tax Investments, Inc., 547 U.S.
___, 164 L. Ed. 2d 811, 126 S. Ct. 2287 (2006).
ANALYSIS
We begin our analysis on reconsideration with a review of the
Jones decision. At issue in Jones was whether the government must
take additional reasonable steps to provide notice before taking an
owner’s property when the notice of tax sale that was mailed to the
owner is returned undelivered. Jones, 547 U.S. at ___, 164 L. Ed. 2d
at 425, 126 S. Ct. at 1713.
In that case, Gary Jones purchased a home on Bryan Street in
Little Rock, Arkansas, in 1967 and lived in the Bryan Street home
with his wife until they separated in 1993. Jones then moved into an
apartment in Little Rock and his wife remained in the Bryan Street
home. Jones continued to pay the mortgage on the Bryan Street home
after he moved out, and the mortgage company paid Jones’ property
taxes. After the mortgage was paid off in 1997, the property taxes
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went unpaid and the property was certified as delinquent. Jones, 547
U.S. at ___, 164 L. Ed. 2d at 424, 126 S. Ct. at 1712.
In April 2000, the Commissioner of State Lands mailed a certified
letter to Jones at the Bryan Street home notifying Jones of the tax
delinquency and of his right to redeem the property. The letter also
stated that unless Jones redeemed the property, the property would be
subject to a public sale two years later on April 17, 2002. The post
office returned the certified letter to the Commissioner marked
“unclaimed” because no one was home to sign for the letter and no
one retrieved the letter from the post office within the next 15 days.
Jones, 547 U.S. at ___, 164 L. Ed. 2d at 424, 126 S. Ct. at 1712.
Two years later, the Commissioner published a notice of public
sale in the newspaper. No bids were submitted, so the State was
permitted to negotiate a private sale of the property. Thereafter, Linda
Flowers submitted a purchase offer. Accordingly, the Commissioner
mailed another certified letter to Jones at the Bryan Street address
notifying Jones that his house would be sold to Flowers if he did not
pay his taxes. This letter was returned to the Commissioner marked
“unclaimed.” Flowers then purchased the house and, after the 30-day
period for postsale redemption had passed, Flowers had an unlawful-
detainer notice delivered to the property. The unlawful-detainer notice
was served on Jones’ daughter. Jones’ daughter then told Jones about
the tax sale. Jones, 547 U.S. at ___, 164 L. Ed. 2d at 424, 126 S. Ct.
at 1712-13.
Jones filed suit in state court against the Commissioner and
Flowers alleging that the Commissioner’s failure to provide notice of
the tax sale and of Jones’ right to redeem resulted in the taking of
Jones’ property without due process. The trial court granted summary
judgment in favor of the Commissioner and Flowers, finding that the
state tax sale statute that set forth the notice procedure complied with
constitutional due process requirements. The Arkansas Supreme
Court affirmed, finding that attempting to provide notice by certified
mail satisfied due process under the circumstances. Jones, 547 U.S.
at ___, 164 L. Ed. 2d at 424-25, 126 S. Ct. at 1713.
Before the Supreme Court, the Commissioner argued that due
process was satisfied once the state provided notice reasonably
calculated to apprise Jones of the impending tax sale by mailing Jones
a certified letter. Jones, 547 U.S. at ___, 164 L. Ed. 2d at 425, 126 S.
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Ct. at 1714. The Supreme Court agreed that it had deemed notice
constitutionally sufficient if it was reasonably calculated to reach the
intended recipient when sent. Jones, 547 U.S. at ___, 164 L. Ed. 2d
at 426, 126 S. Ct. at 1714. However, the Court stated that it had never
addressed whether due process required further responsibility when
the government becomes aware, prior to the taking, that its attempt at
notice failed. Jones, 547 U.S. at 426, 164 L. Ed. 2d at 426, 126 S. Ct.
at 1714.
The Court explained that it did not “think that a person who
actually desired to inform a real property owner of an impending tax
sale of a house he owns would do nothing when a certified letter sent
to the owner is returned unclaimed.” Jones, 547 U.S. at ___, 164 L.
Ed. 2d at 427, 126 S. Ct. at 1716. Consequently, the State of
Arkansas’ decision to take no further action when the notice to Jones
was returned unclaimed was “not what someone ‘desirous of actually
informing’ Jones would do; such a person would take further
reasonable steps if any were available.” Jones, 547 U.S. at ___, 164
L. Ed. 2d at 428, 126 S. Ct. at 1716. The Court held that upon
receiving the returned form suggesting that Jones had not received
notice that his property was about to be sold, the “State should have
taken additional reasonable steps to notify Jones, if practicable to do
so.” Jones, 547 U.S. at ___, 164 L. Ed. 2d at 430, 126 S. Ct. at 1718.
The Court explained that there were several reasonable steps the
state could have taken when the certified letter to Jones was returned
unclaimed. For example, the state could have resent the notice by
regular mail so that a signature was not required. Jones, 547 U.S. at
___, 164 L. Ed. 2d at 431, 126 S. Ct. at 1718-19. In addition, the state
could have posted notice on the front door of the house or could have
addressed the mail to “occupant.” Jones, 547 U.S. at ___, 164 L. Ed.
2d at 431, 126 S. Ct. at 1719. Further, the Court found that the state’s
attempt to follow up with Jones by publishing notice in the newspaper
was not constitutionally adequate under the circumstances of the case
because it was possible and practicable to give Jones more adequate
warning of the impending tax sale. Jones, 547 U.S. at ___, 164 L. Ed.
2d at 433, 126 S. Ct. at 1720.
The Court rejected Jones’ claim, however, that the Commissioner
should have looked for his new address in the Little Rock phonebook
and other government records, including income tax rolls. Jones, 547
-12-
U.S. at ___, 164 L. Ed. 2d at 431-32, 126 S. Ct. at 1719. The Court
stated that an “open-ended search for a new address–especially when
the State obligates the taxpayer to keep his address updated with the
tax collector [citation]–imposes burdens on the State significantly
greater than the several relatively easy options outlined above.”
Jones, 547 U.S. at ___, 164 L. Ed. 2d at 432, 126 S. Ct. at 1719.
The Court declined to prescribe the form of service that the state
should adopt, concluding that the state could determine how to
proceed in response to the Court’s conclusion that notice was
inadequate under the facts of this particular case. Jones, 547 U.S. at
___, 164 L. Ed. 2d at 433, 126 S. Ct. at 1721. Because notice in the
case before it was insufficient to satisfy due process, the Supreme
Court reversed the Arkansas state courts, holding that “when mailed
notice of a tax sale is returned unclaimed, the State must take
additional reasonable steps to attempt to provide notice to the
property owner before selling his property, if it is practicable to do
so.” Jones, 547 U.S. at ___, 164 L. Ed. 2d at 425, 126 S. Ct. at 1713.
In reconsidering this case in light of Jones, we first note that this
case is factually distinguishable from Jones. The notice provided
pursuant to the Illinois Property Tax Code is far more comprehensive
than the notice provided for in the Arkansas statute at issue in Jones.
The Arkansas statute required the state to send only one notice, by
certified mail, to a property owner notifying him of the government’s
intent to sell his property for delinquent taxes. In contrast, the Illinois
statute provides that the county collector must provide notice to a
delinquent taxpayer by certified or registered mail before obtaining
a judgment order from the circuit court authorizing the sale of the
property. 35 ILCS 200/21–110, 21–115, 21–135 (West 1994). In
addition, after the court has ordered the sale of the property and the
property has been sold to a tax purchaser, the county clerk must notify
the delinquent taxpayer by certified or registered mail that the
property has been sold and that the taxpayer may redeem the property
by paying the tax arrearage on or before a specified date. 35 ILCS
200/22–5 (West 1994). Finally, a tax purchaser seeking to obtain a
tax deed also must send the delinquent taxpayer notice of the sale and
the expiration of the redemption period.
Jones is further distinguishable because the issue in that case
concerned the notice a state must provide to a property owner before
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taking his property. The Jones court characterized the issue before it
as “whether the Due Process Clause requires the government to take
additional reasonable steps to notify a property owner when notice of
a tax sale is returned undelivered,” and held that “when mailed notice
of a tax sale is returned unclaimed, the State must take additional
reasonable steps to attempt to provide notice to the property owner
before selling his property, if it is practicable to do so.” (Emphases
added.) Jones, 547 U.S. at ___, 164 L. Ed. 2d at 425, 126 S. Ct. at
1713. In holding that the state must take additional reasonable steps
to attempt to provide notice, the Supreme Court stated that it did “not
think that a person who actually desired to inform a real property
owner of an impending tax sale of a house he owns would do nothing
when a certified letter sent to the owner is returned unclaimed.”
(Emphasis added.) Jones, 547 U.S. at ___, 164 L. Ed. 2d at 427, 126
S. Ct. at 1716.
In this case, in contrast, there is no issue concerning notice of the
tax sale. As we observed in our original opinion:
“In the case at bar, it is undisputed that Mary Lowe was
mentally incapacitated from January 1995 through October
1996. However, the tax sale in this case, and the time periods
for the procedures noted above, occurred in 1993. The circuit
court made no finding regarding the competency, or
incompetency, of Mary Lowe in 1993. Moreover, while Dr.
Rubin testified as to Lowe’s incapacity in 1995 and 1996, he
did not testify with respect to her condition in 1993. Thus, it
appears that, prior to the deprivation of her property, and at
a time when there is no finding of record that she was
incompetent, Lowe was given notice of the application for
judgment and order of tax sale, had an opportunity to object
to the application for judgment, was given notice that the tax
sale had occurred, and was given notice that she had the right
to redeem her property.” (Emphasis added.) In re Application
of the County Collector, 217 Ill. 2d at 31.
Because there is no issue in this case concerning whether Lowe was
given notice of the tax sale, we find that the due process concerns in
Jones are not at issue in this case and, therefore, that Jones does not
require this court to reverse its prior opinion.
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The public guardian argues, however, that because the lack of
notice in this case concerns the hearing at which Lowe actually lost
the title to her home, Lowe was denied due process even if she may
have received some earlier notice. The public guardian contends that
the notice given to Lowe in this case was deficient because Apex
failed to follow up on specific information that would have led to the
discovery of Lowe’s whereabouts and, even absent that specific
information, Apex failed to make a diligent inquiry into finding
Lowe.
The public guardian notes that in Jones, the certified mail notices
were returned marked “unclaimed.” In this case, not only were the
section 22–10 certified mail notices to Lowe and “occupant” returned
unclaimed, but the envelopes also contained a notation from the letter
carrier that “Person is Hospitalized” along with the letter carrier’s
initials and postal route number. The public guardian argues that
Jones directly addressed this type of situation and held that due
process requires a party to follow up on information provided in
response to its chosen method of service.
The public guardian maintains that Hightower’s notation on the
envelopes in this case put Apex on notice that Lowe was not at the
property where notice was sent, was not receiving mail at that
address, and was hospitalized. In addition, the notation on the
envelopes indicated that Apex could follow up with Hightower to
find out where Lowe was hospitalized in order to provide Lowe with
actual notice. Further, had Apex followed up with Hightower, Apex
would have learned that Lowe was hospitalized in a state mental
institution and that she was incompetent. The public guardian asserts
that Apex had a constitutional duty under Jones to inspect the
returned envelopes and take reasonable steps in response to any
information that it discovered as a result.
Even if we were to accept the public guardian’s argument that
Jones applies in this case to the section 22–10 take notice, we
nonetheless find our prior opinion to be consistent with Jones. The
gravamen of the public guardian’s argument is that, under Jones,
Hightower’s notations on the envelopes provided additional
information to Apex that required Apex to take additional reasonable
steps in an attempt to provide constitutionally sufficient notice to
Lowe. We disagree.
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As discussed, the Supreme Court in Jones observed that the state
did nothing for two years after its notice to Jones was returned
unclaimed. The Supreme Court held that the state could have taken
additional reasonable steps to notify Jones that he was about to lose
his property, such as resending the notice by regular mail, posting
notice on the front door, or addressing the mail to “occupant.”
In this case, Apex did take numerous additional steps to notify
Lowe that her property had been sold and that a petition for tax deed
had been filed. Apex conducted a tract search of the property to
determine the owner of the property. The Cook County sheriff
attempted to personally serve Lowe, Austin and “occupant,” but
determined that the home was vacant. The Cook County sheriff also
sent the section 22–10 take notice by certified mail addressed to
Lowe, Austin and “occupant.” The clerk of the circuit court likewise
attempted to serve Lowe, Austin and “occupant” with the section
22–10 take notice by certified mail, return receipt requested.
Apex also served the section 22–10 take notice on the law firm
that prepared the quit claim deed in 1993, and on the mortgagee of the
property. Apex’s agent, Berke, visited the property and spoke with a
neighbor, who told Berke that the “Lowes” owned the property, but
no one currently lived there. Moreover, Apex checked city and
suburban phone directories and voter registration records in order to
find another address for Lowe and Austin.
It is clear that the steps taken by Apex exceeded those suggested
by the Jones Court as reasonable. In fact, the Jones Court stated that
the state was not required to search for Jones’ new address in the
Little Rock phone book or in other government records, explaining
that “[a]n open-ended search for a new address–especially when the
State obligates the taxpayer to keep his address updated with the tax
collector [citation]–imposes burdens on the State significantly greater
than the several relatively easy options outlined above.” Jones, 547
U.S. at ___, 164 L. Ed. 2d at 432, 126 S. Ct. at 1719.
In light of the foregoing, it is clear in this case that Apex’s
attempts at notice in this case were sufficient to satisfy due process
under Jones. We are not convinced that, under the circumstances of
this case, Apex was required to take additional steps in response to
Hightower’s notations on the certified mail envelopes. We cannot
consider the envelopes containing Hightower’s notations in isolation,
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but instead must consider the envelopes in light of all the facts in this
case.
Prior to receiving the envelope with the notation that “Person is
Hospitalized,” the Cook County sheriff filed returns of service
indicating that the property was vacant and that Lowe had moved.
This information was confirmed by Apex’s agent based upon his own
observation and his discussion with Lowe’s neighbor. Apex also
knew that Lowe had not responded to the county collector’s initial
notice of sale or the section 22–5 notice. Given the apparently
accurate information suggesting that Lowe had moved, which
conflicted with the notation that “Person is Hospitalized,” we cannot
say that Apex had a duty to further determine whether, in fact, Lowe
was hospitalized, where Lowe was hospitalized, and why Lowe was
hospitalized. We believe that such an open-ended search would
impose a significantly greater burden than required under Jones.
Moreover, we are not as confident as the public guardian that any
further inquiry would have revealed that Lowe was hospitalized at the
Tinley Park Mental Health Center. As the appellate court found:
“[T]he notation ‘person is hospitalized’ does not necessarily
mean the individual is hospitalized in a mental health center.
As the trial court indicated, individuals are hospitalized for
numerous reasons. Hospitalization at a mental health center
would not first come to mind when learning that a ‘person is
hospitalized.’ ” No. 1–02–1101 (unpublished order under
Supreme Court Rule 23).
In addition, as noted in our prior opinion, section 3(a) of the
Mental Health and Developmental Disabilities Confidentiality Act
(740 ILCS 110/3(a) (West 2000)) does not permit hospitals to
disclose to tax purchasers the fact that an individual is a recipient of
mental health services. In re Application of the County Collector, 217
Ill. 2d at 41. Likewise, Hightower did not explain what postal forms
would have authorized disclosure that Lowe was hospitalized in the
Tinley Park Mental Health Center.
Accordingly, we do not agree with the public guardian that, had
Apex followed up on Hightower’s notation, Apex would have
discovered where Lowe was hospitalized and that Lowe was mentally
incompetent. As the Supreme Court recognized, “[w]hat steps are
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reasonable in response to new information depends upon what the
new information reveals,” and if there are “no reasonable additional
steps the government could have taken upon return of the unclaimed
notice letter, it cannot be faulted for doing nothing.” Jones, 547 U.S.
at ___, 164 L. Ed. 2d at 430-31, 126 S. Ct. at 1718.
The public guardian next argues that, even absent the information
provided by Hightower, Apex failed to undertake an inquiry expected
of one seeking to inform Lowe of the proceedings against her. The
public guardian asserts that Apex’s agent, Berke, could have
questioned Lowe’s neighbor further concerning her whereabouts or
could have questioned other neighbors for information on Lowe.
Berke also could have posted information on the property, which
likely would have elicited further information.
Again, given the information available to Berke, we do not agree
that Jones would require Berke to conduct an open-ended search into
Lowe’s whereabouts. The information available to Berke was that the
property was vacant and that Lowe had moved. Further, Apex did
check city and suburban phone directories and voter registration
records in order to find another address for Lowe and Austin, but was
unable to find an address other than the subject property address.
Under the circumstances, we cannot say that Berke was required to
conduct further investigation or that Lowe was constitutionally
entitled to a more diligent inquiry.
Finally, we note that the public guardian argues that this court
erred in its prior opinion in rejecting the public guardian’s challenge
to the adequacy of Apex’s diligent inquiry, without addressing the
merits of that argument, on the basis that a circuit court’s diligent-
inquiry finding cannot be challenged in a section 2–1401 petition.
The public guardian contends that its challenge to the adequacy of
Apex’s diligent inquiry is authorized by section 22–45(4) of the
Code. The public guardian states that this court apparently read
section 22–45(4) as allowing relief only when a party can show both
that the tax purchaser failed to make a diligent inquiry and that the tax
purchaser failed to comply with statutory publication requirements.
The public guardian argues that section 22–45(4) should be read
disjunctively to permit relief to a property owner who can show either
a lack of diligent inquiry or a lack of adequate notice by publication.
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We decline to address the public guardian’s argument concerning
section 22–45(4), as our reconsideration of this case is limited to the
Supreme Court’s decision in Jones. Consequently, our
reconsideration of Apex’s diligent inquiry in attempting to serve
Lowe is limited to whether Apex’s notice to Lowe satisfied due
process under Jones.
After considering this case in light of the United States Supreme
Court’s decision in Jones, we find that this case does not present facts
establishing that Lowe was denied her due process right under Jones
to adequate notice prior to the deprivation of her property. For that
reason, we adhere to our former disposition in this cause and affirm
the judgment of the appellate court.
Appellate court judgment affirmed.
JUSTICES KARMEIER and BURKE took no part in the
consideration or decision of this case.
JUSTICE KILBRIDE, dissenting:
I respectfully dissent from the majority opinion because I disagree
with its interpretation and application of the Supreme Court’s opinion
in Jones v. Flowers, 547 U.S. 220, 164 L. Ed. 2d 415, 126 S. Ct. 1708
(2006). Jones stands for the proposition that a party with the duty to
provide notice to a property owner must “take additional reasonable
steps to attempt to provide notice” when “it is practicable to do so.”
Jones, 547 U.S. at ___, 164 L. Ed. 2d at 425, 126 S. Ct. at 1713. In
explaining the types of steps necessary to fulfill this requirement, the
Court reiterated the long-established standard cited in Mullane v.
Central Hanover Bank & Trust Co., 339 U.S. 306, 94 L. Ed. 865, 70
S. Ct. 652 (1950). Under that standard, to comport with due process,
notice “ ‘must be such as one desirous of actually informing the
absentee might reasonably adopt to accomplish it.’ ” (Emphasis
added.) Jones, 547 U.S. at ___,164 L. Ed. 2d at 427, 126 S. Ct. at
1715, quoting Mullane, 339 U.S. at 315, 94 L. Ed. at 874, 70 S. Ct.
at 657. I do not believe that standard was met in this case.
As the majority correctly notes (slip op. at 13-14), the facts in
Jones differ from those in this appeal. Those differences, however,
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only serve to underscore the need for heightened due process
protections for property owners like Lowe, who face imminent danger
of forfeiting all interest in their homes without an opportunity to
object. In Jones, the Court addressed the sufficiency of Arkansas’
notice requirements prior to a tax sale. Jones, 547 U.S. at ___, 164 L.
Ed. 2d at 425, 126 S. Ct. at 1713. Slip op. at 13-14. Here, the issue
involves this state’s section 22–10 notice requirements after a tax sale
has occurred but before the owner is actually stripped of title to the
property. Slip op. at 14. Without the section 22–10 notice, Lowe was
at risk of irretrievably losing all interest in her home without being
given an opportunity to make a timely objection or redeem the
property.
Furthermore, the property owner in Jones was mentally competent
and simply neglected to ensure that the taxes on the property were
paid and that the mailing address in the tax records was updated.
Lowe, on the other hand, has a long history of serious mental health
problems and was undeniably incompetent when the section 22–10
notices were given. Moreover, her permanent mailing address in the
tax records was correct because she continued to reside at the
property except when she was hospitalized for mental-health
treatment.
Illinois’ section 22–10 “Take Notice” is designed to inform the
owner that property has already been sold at a tax sale and that title
will transfer to the tax purchaser if the property is not redeemed by
paying the back taxes before the expiration of the redemption period.
35 ILCS 200/22–10 (West 1994). Thus, this notice provides the final
opportunity for the property owner to preserve any interest in the
property. Due to the magnitude and imminence of the risk of
complete forfeiture, I believe that due process mandates even more
stringent notice requirements than those required before the sale of
the property. A heightened notice standard is justified when the
parties’ interests are balanced, with the imminent, irreversible loss of
title to a home or other property carrying substantial weight. See
Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70 S. Ct. at 657
(explaining that the specific test for the sufficiency of notice depends
on the balance between the interest of the individual being protected
by the due process clause and the state’s interest). See also Jones, 547
U.S. at ___, 164 L. Ed. 2d at 427, 126 S. Ct. at 1715 (quoting
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Mullane). Indeed, our legislature has deemed it appropriate to enact
more stringent statutory notice requirements in the postsale context
than in the presale context. Compare 35 ILCS 200/21–110, 21–115,
21–135 (West 1994) with 35 ILCS 200/22–5, 22–10, 22–15, 22–20,
22–25 (West 1994).
There is, however, one significant factual similarity between this
case and Jones. In both instances, after it became apparent that the
property owner had not received the statutory notice, the party obliged
to provide notice “did–nothing.” Jones, 547 U.S. at ___, 164 L. Ed.
2d at 430, 126 S. Ct. at 1718. The Court in Jones concluded that due
process necessitated “additional reasonable steps to notify [the
property owner], if practicable to do so.” Jones, 547 U.S. at ___, 164
L. Ed. 2d at 430, 126 S. Ct. at 1718.
More specifically, the Jones Court repeatedly noted the principle
that due process mandates notice “ ‘such as one desirous of actually
informing the absentee might reasonably adopt to accomplish it.’ ”
(Emphasis added.) Jones, 547 U.S. at ___, ___, ___, ___, 164 L. Ed.
2d at 427, 428, 433, 435, 126 S. Ct. at 1715, 1716, 1721, 1722,
quoting Mullane, 339 U.S. at 315, 94 L. Ed. at 874, 70 S. Ct. at 657.
Here, it is difficult to imagine that someone “desirous of actually
informing” Lowe of the impending loss of her property would find it
unreasonable or “impracticable” to call the post office to inquire
about the letter carrier’s notation on the returned certified mail
envelope addressed to Lowe stating that she was “hospitalized.”
While this standard conflicts with the inherently adverse interests of
tax purchasers, who rationally wish to obtain their tax deeds with the
least possible effort and expense, constitutional due process standards
do not exist for the benefit of the party intent on taking possession of
another’s property. See Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70
S. Ct. at 657. See also Jones, 547 U.S. at ___, 164 L. Ed. 2d at 433-
34, 126 S. Ct. at 1721 (noting that the state has far less incentive to
provide proper notice to property owners before taking actions
adverse to them than it has to secure the revenue obtained from the
taking). Fundamental due process safeguards are designed to provide
property owners with the right to be heard. Due process entails the
right to present objections and not be unwittingly stripped of property.
This right has little meaning if the owner is not informed of the
pending action and given the opportunity to object. See Greene v.
-21-
Lindsey, 456 U.S. 444, 449-50, 72 L. Ed. 2d 249, 254-55, 102 S. Ct.
1874, 1877-78 (1982).
Moreover, while due process does not demand actual notice to the
property owner (Dusenbery v. United States, 534 U.S. 161, 170, 151
L. Ed. 2d 597, 606, 122 S. Ct. 694, 701 (2002)), the notice provided
must be “reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford
them an opportunity to present their objections” (emphasis added)
(Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70 S. Ct. at 657). Here,
the circumstances required Apex to follow up on the letter carrier’s
notation that Lowe was hospitalized. Only by following up on that
information would the notice provided be “reasonably calculated” to
afford Lowe notice “under all the circumstances” known to Apex at
the time. The arguably conflicting information suggesting that Lowe
had moved (see slip op. at 17) did not negate the relevance of the
additional information on the envelope to Apex’s duty to provide
notice sufficient to satisfy due process. The duty to provide due
process required the notice given to be “reasonably calculated, under
all the circumstances, to apprise” Lowe of the action. (Emphasis
added.) Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70 S. Ct. at 657.
See slip op. at 16-17.
Similarly, ignoring information stating that the property owner is
hospitalized does not comply with Apex’s statutory duty under
section 22–15 (35 ILCS 200/22–15 (West 1994)). Section 22–15
mandates that a tax purchaser exercise “diligent inquiry and effort”
in finding the property owner and serving a section 22–10 notice. 35
ILCS 200/22–15 (West 1994). The plain and ordinary meaning of
“diligent” is “characterized by steady, earnest, attentive, and energetic
application and effort in a pursuit.” Webster’s Third New
International Dictionary 633 (1993). Under this definition, Apex’s
failure to do anything after being informed that Lowe was
hospitalized cannot reasonably be regarded as even “diligent inquiry
and effort” to locate and serve Lowe.
Nor does the mere possibility that Apex’s inquiries at the post
office may have been unsuccessful in obtaining information about
Lowe’s location or mental-health status fulfill its due process duty to
at least attempt to provide notice based on all available information.
Jones, 547 U.S. at ___, 164 L. Ed. 2d at 425, 126 S. Ct. at 1713-14
-22-
(citing Dusenbery, 534 U.S. at 170, 151 L. Ed. 2d at 606, 122 S. Ct.
at 701, and Mullane, 339 U.S. at 314, 94 L. Ed. at 873, 70 S. Ct. at
657). See slip op. at 17. Surely due process does not allow the
selective acknowledgment of information minimizing the tax
purchaser’s duty of notification and the complete disregard of other
available information requiring the “additional reasonable step” of
simply inquiring about the notation at the post office. See Jones, 547
U.S. at ___, 164 L. Ed. 2d at 425, 126 S. Ct. at 1713. Due process is
intended, after all, to provide property owners with a reasonable
opportunity to protect their interests. See Mullane, 339 U.S. at 314,
94 L. Ed. at 873, 70 S. Ct. at 657. The goal of due process is not to
minimize the notification burden placed on a tax purchaser.
Finally, requiring Apex to inquire about the letter carrier’s
notation at the post office does not constitute the type of “open-ended
search” rejected by the Jones Court. Jones, 547 U.S. at ___, 164 L.
Ed. 2d at 432, 126 S. Ct. at 1719. Apex would initially be required to
take the limited step of contacting the post office to inquire about the
notation on the returned certified mail envelope indicating that Lowe
was hospitalized. Apex may or may not be required to take other
reasonable and practicable steps to follow up on any subsequent
findings. Jones, 547 U.S. at ___, 164 L. Ed. 2d at 426, 126 S. Ct. at
1714 (quoting its explanation in Walker v. City of Hutchinson, 352
U.S. 112, 115, 1 L. Ed. 2d 178, 182, 77 S. Ct. 200, 202 (1956), that
“the ‘notice required will vary with circumstances and conditions’ ”).
Regardless of the outcome of its inquiry, however, Apex would not
be obliged to scour local hospitals in an open-ended search for Lowe.
Thus, because “[u]nder the circumstances presented here,
additional reasonable steps were available” to Apex, I believe it failed
to satisfy its due process obligations. Jones, 547 U.S. at ___, 164 L.
Ed. 2d at 425, 126 S. Ct. at 1713. I would reverse the appellate court
judgment and remand for further proceedings. Therefore, I
respectfully dissent from the majority opinion.
-23-
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IN THE SUPREME COURT OF THE STATE OF DELAWARE
IN THE MATTER OF THE §
PETITION OF ROGER A. § No. 414, 2017
EDWARDS FOR A WRIT OF §
HABEAS CORPUS §
Submitted: October 31, 2017
Decided: November 3, 2017
ORDER
This 3rd day of November 2017, it appears to the Court that, on October 9,
2017, the Senior Court Clerk issued a notice directing the petitioner to show cause
why his petition for a writ of habeas corpus should not be dismissed for this Court’s
lack of original jurisdiction to issue a writ of habeas corpus. The petitioner failed to
respond to the notice to show cause within the required ten-day period. Dismissal
of this petition is therefore deemed to be unopposed.
NOW, THEREFORE, IT IS ORDERED, under Supreme Court Rules 3(b)(2)
and 29(b), that the petitioner’s petition for a writ of habeas corpus is DISMISSED.
BY THE COURT:
/s/ Karen L. Valihura
Justice
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-10285
Conference Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MELITON BONILLA-CASTANEDA,
Defendant-Appellant.
- - - - - - - - - -
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:00-CR-282-ALL-X
- - - - - - - - - -
October 29, 2001
Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
Meliton Bonilla-Castaneda (Bonilla) appeals the 71-month
sentence imposed following his plea of guilty to a charge of
being found in the United States after deportation, a violation
of 8 U.S.C. § 1326. He contends that the felony conviction that
resulted in his increased sentence under 8 U.S.C. § 1326(b)(2)
was an element of the offense that should have been charged in
the indictment.
Bonilla acknowledges that his argument is foreclosed by the
Supreme Court’s decision in Almendarez-Torres v. United States,
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 01-10285
-2-
523 U.S. 224 (1998), but he seeks to preserve the issue for
Supreme Court review in light of the decision in Apprendi v. New
Jersey, 530 U.S. 466 (2000).
Apprendi did not overrule Almendarez-Torres. See Apprendi,
530 U.S. at 489-90; United States v. Dabeit, 231 F.3d 979, 984
(5th Cir. 2000), cert. denied, 121 S. Ct. 1214 (2001). Bonilla’s
argument is foreclosed. The judgment of the district court is
AFFIRMED.
The Government has moved for a summary affirmance or
dismissal of the appeal. The motion is GRANTED to the extent
that the Government requests an affirmance.
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204 P.3d 140 (2009)
226 Or. App. 503
STATE of Oregon, Plaintiff-Respondent,
v.
Gregg Alan ANDREWS, Defendant-Appellant.
03CR0591, A133612.
Court of Appeals of Oregon.
Argued and Submitted September 26, 2008.
Decided March 19, 2009.
*141 Zachary Lovett Mazer, Deputy Public Defender, argued the cause for appellant. With him on the briefs was Peter Gartlan, Chief Defender, Legal Services Division, Office of Public Defense Services.
Jeff J. Payne, Assistant Attorney General, argued the cause for respondent. With him on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.
Before EDMONDS, Presiding Judge, and SERCOMBE, Judge, and CARSON, Senior Judge.
EDMONDS, P.J.
Defendant appeals convictions for possession of a precursor substance with intent to manufacture a controlled substance, ORS 475.967, and possession of a controlled substance (methamphetamine), former ORS 475.992 (2003). On appeal, he contends that the trial court erred by failing to dismiss the indictment on statutory speedy trial grounds under ORS 135.747.[1] We agree and therefore reverse the convictions.
The facts relevant to our discussion are procedural. Defendant was indicted on the above-mentioned charges on August 7, 2003. When defendant appeared at his arraignment on August 27, 2003, the court scheduled him for a second arraignmentthis time with counsel-on September 3, 2003. Defendant, however, failed to appear for that arraignment, and the court issued a warrant for his arrest. On September 17, defendant appeared, and the court recalled the warrant and set a new arraignment date of September 24, 2003. Defendant appeared on that date, and the trial court set a status hearing for November 3, 2003.
In late November, the court set defendant's trial for April 24, 2004. On April 23, the court granted the state's motion for a continuance, and a new trial date was set for September 29, 2004, with a trial readiness ("call") hearing on September 22. Defendant, though, did not appear at call, and the court issued a bench warrant for his arrest. Defendant appeared on September 27, and the court recalled the warrant.
The court then set a new trial date for February 2, 2005, with a call date on January 26, 2005. Meanwhile, defendant's counsel moved to withdraw, and, after a reset at defendant's counsel's request, the court set a hearing on the motion for November 29. Defendant again did not appear as required, and the court issued yet another warrant for his arrest.
On December 7, defendant appeared in court to clear the outstanding warrant. At the time that defendant appeared, his trial was still set for February 2, 2005; that date had not been rescheduled as a result of his failure to appear at the November 29 hearing. However, after defendant's December 7 appearance, a court clerk routed the trial court file back to calendaring, where a calendaring clerk set a second trial date, this time *142 for March 29, 2005. When the calendaring clerk realized her mistake, she chose to cancel the February date and leave the March 29 date on the calendar.
On February 24, 2005, the state again moved to continue the trial. Defendant objected to the state's request, but the court rescheduled the March trial date for June 7, 2005. On June 1, the state requested another continuance, and defendant again objected. This time, the court denied the state's motion, but the court nonetheless continued the case on its own motion because of a lack of judicial resources-specifically, only one judge was available, and the court gave priority to another case involving an in-custody defendant.
On July 5, the court set defendant's trial for November 3, 2005, with a call date of October 26. On October 4, defendant filed a motion to dismiss for lack of a speedy trial under ORS 135.747, and the court took the matter under advisement on October 17. At call on October 26, defendant failed to appear, and the court reset the trial for January 5, 2006. On October 28, Pat Wolke, then a judge pro tempore, issued a letter opinion denying defendant's motion to dismiss.
At call for the January trial date, defendant reported that he was ready for trial, but the court, on its own motion, reset the trial date for February 8, 2006. At call for the February 8 trial date, defendant again reported that he was ready for trial. Defendant's counsel, however, also had another trial scheduled for that same week involving another defendant. That second trial involved a defendant who was in custody but had waived his speedy trial rights. The court nonetheless elected to proceed on defense counsel's other case involving the in-custody defendant and reset defendant's trial date for April 12, 2006.
On March 15, defendant filed a second motion to dismiss for lack of a speedy trial under ORS 135.747. Two weeks later, defendant moved to postpone his upcoming April trial date because he required triple-bypass surgery. The court granted the motion to postpone and scheduled the trial date for August 9, 2006. In May 2006, the court denied defendant's second motion to dismiss under ORS 135.747. Defendant was finally tried on August 8 and 9, 2006. He was convicted on both counts in the indictment.
In his first assignment of error, defendant argues that the court erred by not granting his second motion to dismiss for lack of a speedy trial on statutory grounds. In denying defendant's motion to dismiss, Judge Lindi Baker explained:
"Judge Wolke concluded that the state delay at the time of his letter opinion was approximately 15 months. If this Court adds on the extra five months that both parties and the Court agree should have been assessed as a state delay, not a defense delay, the subtotal state delay is 20 months. Additionally, the Court adds an additional month to reflect a start date from the date of indictment, not the arraignment (subtotal state delay is 21 months). And, finally, the Court adds three months of state delay that have occurred since Judge's Wolke's ruling (total state delay of 24 months). The defense argues that the total state delay is 25 or 26 months. The Court concludes that it is less than that, but the difference is not determinative for the Court's ruling on this motion.
"Defendant is charged with a Class B felony and a Class C felony in this case. His total delay is approximately 32 months, 24 of which have been state caused. Argument presented in the current motion indicated that a certain portion of state caused delay was due to the unavailability of judges, the court's scheduling procedures and priorities of other `in custody" trials and court set overs. (It is noted that the Defendant caused approximately 8 months of delay due to multiple failures to appear.)
"In assessing the overall delay in bringing this case to trial, and in reviewing all of the attendant circumstances, including the causes of the delay, the Court concludes that a delay of 24 months is not unreasonable. In reaching this conclusion, the Court relies on the guidelines provided in State v. Adams, 339 Or. 104, 112, 116 P.3d 898 (2005) in which the Supreme Court stated that it is difficult to identify *143 the point at which a delay becomes unacceptable but suggests that a delay that roughly equals the statute of limitations for the crime(s) charged would be too long.
"Here, Defendant is charged with B and C felonies, each carrying a statute of limitations of three years. ORS 131.125(6)(a). The state caused delay is approximately 24 months (25 to 26 months by Defendant's argument). While not insignificant, this period of time is notably less than the statute of limitations of thirty six months. Accordingly, given the attendant circumstances of the state caused delay, the Court finds that such delay is not unreasonable. Defendant's motion must be denied."
"A statutory speedy trial claim presents two related but separate inquiries." State v. Johnson, 342 Or. 596, 615, 157 P.3d 198 (2007), cert. den., ___ U.S. ___, 128 S.Ct. 906, 169 L.Ed.2d 753 (2008). The first inquiry is whether the delay in trying the defendant is "reasonable" under ORS 135.747, which provides:
"If a defendant charged with a crime, whose trial has not been postponed upon the application of the defendant or by the consent of the defendant, is not brought to trial within a reasonable period of time, the court shall order the accusatory instrument to be dismissed."
In deciding whether a delay is "reasonable," a court considers both the length of the delay and the reasons for it. State v. Johnson, 339 Or. 69, 88, 116 P.3d 879 (2005). In calculating the length of the delay, the court does not count those delays that the defendant caused or to which the defendant expressly consented. Id. at 95, 116 P.3d 879; see also State v. Davids, 339 Or. 96, 100-01, 116 P.3d 894 (2005) (suggesting that a defendant's "pattern of tactics at odds with demanding dismissal" under ORS 135.747 might constitute an implied waiver of the right to a speedy trial). When the length of the delay "is greater than would be expected," the court must examine all the attendant circumstances, including the reasons for the delay. Johnson, 339 Or. at 88-89, 116 P.3d 879.
If the state has failed to bring a defendant to trial within a reasonable period of time, the second inquiry is whether there is "sufficient reason" to continue the case. ORS 135.750.[2] In deciding the sufficiency of the reason, we must look to the purposes underlying the speedy trial statuteto clear out cases that "are languishing in the criminal justice system without affecting the state's ability to reprosecute serious charges" and to serve as a "housecleaning" mechanism for trial court dockets. Johnson, 339 Or. at 90-91, 116 P.3d 879. The question whether the delay is "reasonable" under ORS 135.747 and the question whether there is "sufficient reason" to continue the case under ORS 135.750 are questions of law. Id. at 86-87, 116 P.3d 879.
In this case, the total period of delay between defendant's indictment (August 7, 2003) and his trial (August 8, 2006) was three years. He had 10 different trial settings during that period. He twice failed to appear at call and once moved for a continuance because he required surgery. The state three times moved to continue the trial date (and twice had its motion granted). The court, on its own motion, continued the case three times, and a calendaring clerk once reset the trial date as the result of a scheduling error.
At the time that the court decided defendant's second motion to dismiss in May 2006, the total period of delay was 32 months. The trial court found that defendant had caused approximately eight months of that delay and that the state was responsible for the remaining 24 months. Although defendant challenges the accuracy of the trial court's allocation, we need not decide whether the disputed periods of delay are attributable to defendant or to the state because, even assuming they are attributable to defendant, *144 based on the record before us, we disagree with the trial court that a delay of 24 months by the state is reasonable under ORS 135.747.
A delay of 24 months is considerably longer than would ordinarily be expected to bring a defendant to trial on felony charges. See, e.g., State v. Forsyth, 220 Or. App. 476, 485, 188 P.3d 299 (2008) (explaining that a 21-month delay is "considerably longer than the 15 months that we observed to be generally regarded as excessive"); State v. Spicer, 222 Or.App. 215, 222-23, 193 P.3d 62 (2008) (delay of 17.25 months for two counts of felon in possession of a firearm was unreasonable and required reversal under ORS 135.747). The question, then, is whether a 24-month delay in bringing defendant to trial was nevertheless reasonable in light of the attendant circumstances in this case.
As the Supreme Court explained in State v. Adams, 339 Or. 104, 111-12, 116 P.3d 898 (2005), there are limits to how far the priorities of an overcrowded docket and the availability of judicial resources can go in expanding the period of time that will be considered "reasonable" for bringing a defendant to trial. "At some point, the focus must shift away from whether the various postponement requests and decisions individually are justifiable to whether the overall period of time to bring the defendant to trial is `reasonable' in toto." Id. (emphasis in original).[3] In State v. Myers, 225 Or.App. 666, 667, 202 P.3d 238 (2009), we applied the overall focus required by Adams and concluded that all the delays attributable to the state were justifiedin the early part of the life of the case by the routine scheduling delays that are always present and, later, by the lack of judicial resources. Thus, "the acceptability of the total delay in a case is influenced by the extent to which it is justified. The longer the total delay is, the shorter any unjustified portion may be." 225 Or.App. at 677, 202 P.3d 238.
On appeal, the state defends the trial court's conclusion that the delays by the state in this case were reasonable. However, the state's argument and our review are hampered by the state's failure to make an adequate record before the trial court as to why delays attributable to it were justifiable. Some examples follow. On September 17, 2003, defendant cleared the first warrant for his failure to appear at arraignment, and he was then arraigned on September 24, 2003. Excluding the time that is attributed to defendant for his failure to appear at the arraignment, the time between his indictment and his first trial setting (April 27, 2004) was approximately 8.3 months. There is no explanation or justification in the record for that delay. The state then moved to postpone the April 27, 2004, trial date because one of its key witnesses, the officer who investigated the case, was not available. The trial date was then rescheduled to September 29, 2004, or a date more than 13 months after defendant was charged. What is missing from the record is an explanation of why another delay of five months was necessary and why the trial date could not have been expedited at that time in light of the previous unexplained eight-month delay.
When defendant failed to appear at call for the September 2004 trial date, the case was reset for February 2005. As a result of a calendaring error, the trial date was later moved to March 29, 2005. Assuming, for the sake of argument, that defendant was responsible for those delays, the next delay occurred when the state moved to continue the March trial date, again based on the unavailability of a key witness. The resulting continuance extended the trial date another two months, from March 29 to June 7, 2005. Again, there is no explanation as to why trial could not have been set at an earlier date rather than continuing it for another two months. By that point, the case had been pending for nearly 20 months (with a delay attributable to the state of more than 15 months).
*145 Then, in June 2005, the state moved for another continuance-yet again based on witness availability. The court denied the state's motion, but, on its own motion, continued the case because of a lack of judicial resources. The next trial setting was not until November 3, 2005. Although there is evidence in the record regarding the lack of judicial resources and crowded docket between June and November 2005, the record does not explain why a five-month delay was necessary for this particular defendant, given the previous history of delays in this case. More specifically, the record does not demonstrate why defendant's case, which was two years old by that time, did not receive higher priority over other cases ready for trial. We conclude that the legislature intended that, under ORS 135.747, when a case is continued, the defendant does not necessarily go to the end of the line for purposes of setting a new trial date.
It bears emphasis that the ruling before this court is the denial of defendant's second motion for dismissal under ORS 135.747. Defendant's first motion was denied in October 2005. At that time, the presiding judge found that the net delay caused by the state was "slightly less than 15 months, which makes this a very close case." In fact, as the court later determined, the actual state delay at that time was 20 months. At call for the January 2006 trial date, which was set as the result of defendant's failure to appear at call on October 26, defendant reported ready for trial. The court, however, reset the trial date for February 8, 2006. At call for that trial date, defendant again reported that he was ready for trial, but the court gave priority to a trial of a defendant who had waived his speedy trial rights.
It is not our intent to second-guess the propriety of any of these individual rulings regarding trial postponements, but as Adams instructs, at some point, the focus must be on the overall period of time that it took to bring defendant to trial. As demonstrated by the above-described procedural history, the record does not contain an adequate explanation for the length of delay that resulted from the setovers attributable to the state. That is, the state's evidence justifies the court's decisions to postpone certain trial dates, but it does not demonstrate why the resulting delays-which were as long as five months-were reasonable in light of the age of defendant's case. Rather, it appears on this record that each time a trial date was canceled, defendant simply received a new trial date in the ordinary course, and that no effort was made to prioritize defendant's case, even after the trial court recognized that defendant's first speedy trial motion presented a "very close case."
Under those circumstances, we are unwilling to declare that a delay of 24 months was reasonable. As we understand Adams, more is required than simply to ask whether a delay is within the statute of limitations, which appears to have been the focus of the trial court's analysis. In Adams, the court explained:
"Although statutes of limitation clearly serve a different purpose than the speedy trial statutes, they nevertheless provide some indication of what the legislature views as the outer limit of reasonableness for proceeding against a defendant for a given crime. If two years is the limit for commencing a DUII prosecution, then it certainly must be beyond the reasonable time for bringing to trial a defendant whom the state already has charged with DUII."
339 Or. at 112, 116 P.3d 898 (emphasis in original). Adams itself, however, cautioned that its "utilization of the applicable statute of limitations in this case does not, of course, mean that only such extreme delays will require dismissal pursuant to ORS 135.747[.]" Id. at 112 n. 9, 116 P.3d 898 (emphasis added). In fact, the Supreme Court and this court have found state delays of 21 months and less to be unreasonable, despite statutes of limitations in those cases of three years or more. See, e.g., Johnson, 339 Or. at 88-89, 116 P.3d 879 (21-month delay was unreasonable for third-degree rape charge with a six-year statute of limitations); Davids, 339 Or. at 101-03, 116 P.3d 894 (11.5-month delay was unreasonable where one of the charges, felony driving while suspended, carried a three-year statute of limitations); Spicer, 222 Or.App. at 223, 193 P.3d *146 62 (17.25-month delay was unreasonable where charges for felon in possession of a firearm carried three-year statute of limitations); Forsyth, 220 Or.App. at 485, 188 P.3d 299 (21-month delay was unreasonable where it was nearly two thirds of the applicable three-year statute of limitations). The three-year statute of limitations in this case, although an indicator of the "outer limit" of reasonableness, does not justify a two-year delay for the trial of felony drug charges that has not been adequately explained by the state.
In sum, the state's delay in bringing defendant to trial was well beyond the time expected for a felony trial, and the state's justifications for that delay were insufficient to demonstrate that defendant could not have been tried sooner. Moreover, nothing in the record demonstrates that the delay was due to any special circumstance or policy that would provide sufficient reason for the trial court to have continued the case under ORS 135.750; the state's proffered "sufficient reason" to continue the case is based on the same arguments that we have rejected with regard to "reasonableness" under ORS 135.747. See Johnson, 339 Or. at 76-77, 116 P.3d 879 (describing the circularity between the two statutes). Thus, the trial court should have granted defendant's motion to dismiss for lack of a speedy trial.
Reversed.
NOTES
[1] Defendant also contends that the trial court erred in denying his motion for a judgment of acquittal as to one of the counts and in instructing the jury regarding aid and abet liability. Because we agree with defendant's speedy trial argument, and the three-year statute of limitations has run on both counts, we do not address his additional assignments of error.
[2] ORS 135.750 provides:
"If the defendant is not proceeded against or tried, as provided in ORS 135.745 and 135.747, and sufficient reason therefor is shown, the court may order the action to be continued and in the meantime may release the defendant from custody as provided in ORS 135.230 to 135.290, for the appearance of the defendant to answer the charge or action."
[3] In Adams, the court held that a 23-month delay, excluding the delay that the defendant caused, exceeded the reasonable limit for the prosecution of a driving while under the influence charge, which had a two-year statute of limitations. 339 Or. at 112, 116 P.3d 898. As the trial court noted, the offenses for which defendant was charged in this case were governed by a three-year statute of limitations.
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Filed 1/29/16 Marriage of Pablo CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of ERNEST PABLO and B260727
SHANNON PABLO.
____________________________________ (Los Angeles County
ERNEST PABLO, Super. Ct. No. BD511144)
Respondent,
v.
SHANNON PABLO,
Appellant.
APPEAL from an order of the Superior Court of Los Angeles County,
Bruce G. Iwasaki, Judge. Affirmed.
Law Office of Jennifer S.F. Lim and Jennifer S.F. Lim for Appellant.
Castellanos & Pelayo-Garcia and Beatriz A. Pelayo-Garcia for Respondent.
_________________________
Appellant Shannon Pablo (mother) and respondent Ernest Pablo (father) are
former spouses and the parents of E., born in October 2007. Mother and father separated
in 2008, after a marriage of less than three years.
Mother appeals from a post-judgment order denying her request for joint legal and
physical custody of E. We find no abuse of discretion, and thus we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
I.
Initial Custody and Visitation Orders
Mother and father separated in 2008 and divorced in 2012. The judgment of
dissolution of marriage, entered January 4, 2012, granted mother and father joint legal
and physical custody of E., with the award of joint physical custody to mother expressly
made “dependent on the condition that [mother] attend six (6) anger management classes
and submit proof of same to the court.”
In July 2012, mother and father stipulated to modify the custody order. They
agreed that mother would have custody of E. every other weekend, plus one weeknight
every other week. They also agreed that father would have the “tie-breaking vote” for all
non-educational, joint legal decisions, and that all exchanges of E. would occur at the
Fullerton Police Department.1
Mother’s custody and visitation rights were further reduced on October 1, 2012.
The court granted father sole legal and physical custody of E., and reduced mother’s
visitation to six hours of monitored visits each week.
II.
March 13, 2013 Hearing
On March 13, 2013, mother and father participated in a custody evaluation
conducted by court-appointed Marriage and Family Therapist Sharis Peters (evaluator).
1
The stipulation apparently followed testimony in the trial court that mother acted
inappropriately at a police station during transfers of E., disrupted school operations, and
assaulted father’s parents.
2
That same day, the evaluator testified about her findings and recommendations as
follows.
Father believed it was in E.’s best interests that he continue to have sole legal
custody. Father noted that E. had begun attending public kindergarten for two hours per
day several months earlier, and by the time of the hearing had progressed to three-and-a-
half hours per day. E. was participating in behavioral modification programs through
school, meeting with a school psychologist once per week, and meeting with a private
psychiatrist once per month. E. had begun taking medication to reduce his aggression,
and father had modified his work schedule so he could take E. to school each day and
spend time in class, as requested by the psychologist or the teacher.
With regard to physical custody, father requested a “step-up” plan over the long
term, with the eventual goal of resuming shared legal and physical custody. Father told
the evaluator that E.’s monitored visits with mother were positive, and he requested that
the monitor be eliminated. Father was opposed to increasing the amount of mother’s
visitation, however, because he felt that E. was making progress with his behavioral
issues and father did not want to upset that progress by making changes too quickly.
Father was also concerned that mother continued to expose E. to angry outbursts, which
were upsetting to him. Finally, father noted that he and mother continued to have a high
level of discord between them, and he asked that mother have a psychiatric evaluation
before any changes were made to the custody arrangements.
Mother requested that she be granted primary physical custody of E., and that E.
be reenrolled at a school near her home. She expressed concerns that father and his
parents did not like her and said negative things about her to E. She also believed that
father was interfering with her phone calls with E.
The evaluator recommended that father continue to have sole legal custody “until
. . . there have been some resolutions in this case.” She noted that the interactions
between mother and E. were positive and loving, and that mother was very appropriate
with E. when he acted out. The evaluator noted, however, that E. was “very new in his
therapeutic interventions,” and she did not want to delay or disrupt them. The evaluator
3
further was concerned that mother appeared “[unable] to separate her concerns and the
way they impact her from her concerns about the child and the way things impact him.”
(Italics added.) The evaluator explained: “That concern came to light for me because in
talking with mom about the child and about her concerns about him, she often spoke
about . . . them from the perspective of herself. And I’m concerned about how much she
can separate out those two issues.”
Based on the foregoing, the evaluator recommended no change in the custodial
plan. She urged that mother “become involved in [E.’s] therapeutic interventions in some
regard” and complete a psychiatric assessment to assess, among other things, anger
management issues, impulse control, interpersonal dynamics, and mother’s ability to co-
parent. The evaluator also recommended that mother’s visits with E. continue to be
monitored. She explained that she could not determine whether mother was able to
control her impulsiveness, and that mother continued not to take responsibility for an
altercation with the paternal grandparents and E.’s expulsion from preschool. According
to the evaluator, “It’s almost as if those things happened to her instead of her being an
active participant in both of those things.” (Italics added.) Finally, the evaluator
recommended a follow-up evaluation and status review by the court.
In adopting the evaluator’s recommendations, the court observed: “The report of
the evaluator about [E.’s] physical interaction with [mother] is quite poignant and
moving. And I have no doubt that [mother] loves [E.] very much. The evidence the
court has received on more than one hearing has been more with [mother’s] interaction
not with the child, but with other adults, authority figures, other people that is causing her
frustration one way or the other. Maybe it was a frustration she felt was justified, or an
impediment that she felt was unjustified, but more than one person who had no ax to
grind had things to say that troubled the court very much. So I think this evaluation could
be very helpful for [mother], and very helpful for [E.]. It’s not that [mother] needs a
therapist to make her love [E.] more. That’s not remotely the problem. And the court
wants the parties to understand that that’s how the court views the situation. I think,
[father], there’s some work you need to do here as well.” The court told the parties it
4
would issue an order incorporating the evaluator’s recommendations, and it set the next
hearing date for July 19, 2013.
III.
July 19, 2013 hearing
The parties returned to court on July 19, 2013, after a follow-up assessment by
evaluator Peters. The evaluator testified at the hearing as follows.
Father reported that E.’s anger issues had improved and that E. had most recently
had an outburst in April. E. had a “team”—a school psychologist, a linguist, a math
specialist, and two teachers—working with him. Father and the team had decided to have
E. repeat kindergarten in order to give him another year to adjust and mature. Further, E.
was participating in different recreational activities and had progressed to attending
school for the full school day.
Father requested that he maintain sole legal custody. He felt that communication
between him and mother had not improved, and “he would like to have that first so that
they could begin to make joint decisions.” With respect to physical custody, father
requested removal of the monitor for mother’s visits, although he expressed reservations
about that as E. had been doing much better and he did not want to do or change anything
that might cause E. to regress.
Mother requested that she be awarded sole legal custody. She agreed that she and
father continued to communicate poorly, and she expressed concerns that father had not
followed the court’s orders that she be provided with E.’s report cards and information
regarding E.’s therapist and psychiatrist. She believed E. had become more angry and
aggressive. As to physical custody, mother requested “to remove the monitor completely
and reverse the custody situation.” She believed E.’s behavior resulted from him feeling
abandoned by her, and she said he would be happier emotionally and do better socially if
he spent more time with her. Mother said she would consider a split custody plan, but
that in any case she would want E. to transfer to a school in her area.
The evaluator noted that mother had made a report to the Department of Children
and Family Services (DCFS) that E. had been emotionally and sexually abused by
5
someone in father’s family. DCFS had concluded that the allegation was unfounded and
there was no reason to suspect harm or danger to E. Further, the investigating social
worker had concluded that mother was using DCFS as part of a contentious custody
battle, was disruptive, and had difficulty controlling her anger and respecting authority.
The evaluator recommended that mother be permitted unmonitored visits with E.
every Saturday, noting that she did not believe mother was a danger to E. and that E. said
that he would like to have more time with mother. However, the evaluator recommended
that father continue to hold sole legal custody, in part because of her concern that mother
was unable to articulate what she had done to contribute to the current level of tension
and lack of communication between herself and father. The evaluator also recommended
that any future changes to physical custody be made gradually: “My recommendation is
that in the event the court considers more [custodial time for mother] in the future, I
would recommend that this child have a step-up plan. I want to be clear. I know this
child’s plan will need to change over time. I think that everybody in this courtroom is
aware of that. But given this child’s emotional development and the time it takes to
adjust to changes, I think that a step-up plan would be more warranted than a sudden
change or shift.”
The court then asked each parent what role he or she played in their “pretty
contentious, pretty dysfunctional relationship,” and asked what each was going to do to
make it better. Father admitted that he made assumptions about mother’s intentions,
which caused him to be dismissive of her and to “shut down.” He said that he would use
“Our Family Wizard” (an online tool provided by the court) as a means to communicate
with mother, and that he would provide mother with E.’s psychiatrist and school
information. When it was mother’s turn, she said that she did not believe that there was
anything she needed to change: “I’ve always communicated . . . I don’t believe that
there’s something I need to change right now.”
At the conclusion of the hearing, the court ordered that father would continue to
have sole legal and primary physical custody of E.; mother would have unmonitored
visits with E. every first and third weekend of the month from Saturday morning to
6
Sunday evening, and every second and fourth weekend from Saturday morning to
Saturday evening; the parents would exchange E. at the Fullerton Police Department;
neither parent would speak in a negative manner about the other; and “[i]n the event the
court considers more time for Mother in [the] future[,] a Step Up Plan would be
recommended given the child’s age, emotional development and the time it takes this
child to adjust to and recognize changes in his schedule.”
The court addressed mother: “I have to say, Miss Pablo, it is striking that the
DCFS employee came to the exact same conclusion this court has come to . . . [that you]
are . . . in denial – about your difficulty with authority, . . . about your disruptive
behavior, about using the system in a way to be contentious. And it is exactly what
teachers have said. And it is exactly what law enforcement has said. . . . [I]t is
noteworthy that neutral parties, over time, observed the same traits. And that creates
conflict. And this court is trying to shield this conflict away from [E.].”
When mother’s counsel asked if there was a going to be a “come back date in this
case,” the court responded: “At this point, no. Either party may seek a modification. I
will say this. The court will not be inclined to make any changes for at least a year
because I want to see how [E.] does through school and through the therapy that he’s
going to be undertaking. [¶] . . . [¶] . . . The court is not issuing an order forbidding
either party from access to the court. I want that clear. But let me simply say, the court
does not want to have, every three months, one party or the other saying, ‘well I have a
right to make this request, and I’m going to make this request.’ The standard will always
be the best interest of the child. We won’t have to show a change of circumstances. And
the court will be interested in hearing from therapists, teachers, or anyone else. But the
court will be particularly interested in how the parties comply and what insights the
parties come to that they can share with the court that has an impact.”
IV.
Mother’s 2014 Request For Joint Legal and Physical Custody
Mother filed a request for joint legal and physical custody of E. in September
2014. She urged that joint custody would be in E.’s best interests because she had been
7
his primary caregiver for the first five years of E.’s life, and joint custody would “restore
balance into [E.]’s life and provide him with the benefit of co-parenting.” In her
supporting declaration, mother described the strong bond between E., herself, and E.’s
infant half-brother Chase. Mother asserted that she was very attentive to “the
development of [E.]’s cognitive abilities and skills,” and she said that being “cut off”
from E.’s teachers, therapists, and other providers over the past year had put her at a “big
disadvantage.” Mother asserted that she had repeatedly asked father to transfer E. to a
school that was mid-way between their two residences, and said that father’s refusal to do
so “is another example of [his] one-sided decisions which leave[] me at a big
disadvantage.”
Mother submitted the declaration of E.’s maternal grandmother, maternal
grandfather, and two maternal aunts, each of whom stated that mother was a good parent
and had a strong bond with E.
Father filed a responsive declaration on October 1, 2014, indicating that E. was
flourishing in his current school environment, and that a change in custody would not be
to E.’s benefit. Father asserted: “[F]or the first time our son is doing well in school and
is doing well behaviorally as well. It seems to me that for the first time, our son has
found true structure and stability. Because he is doing so well, I am fearful that a change
to his custodial schedule will cause serious problems for him and that he will regress.”
Further, father said the high level of conflict between himself and mother had made it
difficult for them to make joint decisions, noting that mother sought to change E.’s school
“without considering the effect on him and without providing a rational basis, other than
[her] personal convenience.” Father also included notes from E.’s elementary school
detailing E.’s progress.
Following the October 15, 2014 hearing, the court entered an order denying
mother’s request to modify the custody and visitation order. The court observed that
though mother argued that a change of custody would be in E.’s best interest, she offered
no evidence in support. Further, the court noted that in the past there had been
tremendous conflict between mother and other adults in E.’s life, and mother had made
8
no showing that the conflict was unlikely to recur. The court said: “This is a mother who
causes havoc wherever she goes. She has a very serious problem with authority. We’ve
had police officers in this court testify about how she acts at the police station with the
child. We’ve had school officials say how she disrupts the school operation. We’ve had
[father’s] parents testify about her assault of them. So there are some very serious
problems that Miss Pablo has, including her complete denial of her responsibility in any
of these things. So the court is loathe to make changes without some recognition on
[mother’s] part that she has screwed up in the past and that she is on a better path. And I
don’t see that.”
Mother timely appealed from the order denying her request to modify custody and
visitation.
DISCUSSION
I.
Applicable Legal Standards
California’s statutory scheme governing child custody and visitation
determinations is set forth in the Family Code.2 Under this scheme, “the overarching
concern is the best interest of the child.” (Montenegro v. Diaz (2001) 26 Cal.4th 249,
255.) In making custody determinations, “consideration of the best interest of the child
may lead the trial court to award custody either to both parents (joint or shared custody)
or to only one parent (sole custody). If a parent is awarded ‘sole legal custody,’ that
means the parent ‘shall have the right and the responsibility to make the decisions
relating to the health, education, and welfare of a child.’ (§ 3006.) If a parent is awarded
‘sole physical custody,’ that means the child ‘shall reside with and be under the
supervision’ of the custodial parent, ‘subject to the power of the court to order visitation’
for the noncustodial parent. (§ 3007.)” (In re Marriage of Brown and Yana (2006)
37 Cal.4th 947, 956 (Brown and Yana).)
2
All subsequent statutory references are to the Family Code.
9
For purposes of an initial custody determination, section 3040, subdivision (b),
affords the trial court and the family “ ‘ “the widest discretion to choose a parenting plan
that is in the best interest of the child.” ’ ” (In re Marriage of Burgess (1996) 13 Cal.4th
25, 31 (Burgess).)” (Brown and Yana, supra, 37 Cal.4th at p. 955.) Once the trial court
has entered a final or permanent custody order reflecting that a particular custodial
arrangement is in the best interest of the child, courts generally require a parent seeking
to change the existing custody arrangement to demonstrate “ ‘a significant change of
circumstances’ indicating that a different custody arrangement would be in the child’s
best interest.” (Id. at p. 956.) In the present case, however, the trial court stated at the
July 2013 hearing that if either parent sought a future modification of the existing custody
arrangement, he or she would not be required to show changed circumstances.
Accordingly, the sole basis for the trial court’s 2014 order—and the only issue before
us—is E.’s best interests.3
In reviewing the trial court’s custody and visitation order, we apply the deferential
abuse of discretion standard, “measuring ‘whether the trial court could have reasonably
concluded that the order in question advanced the “best interest” of the child.’ [(Burgess,
supra, 13 Cal.4th at p. 32.)] . . . We draw all reasonable inferences in support of the
court’s ruling and defer to the court’s express or implied findings when supported by
substantial evidence. [Citations.]” (J.M. v. G.H. (2014) 228 Cal.App.4th 925, 935.)
II.
The Trial Court Properly Considered the
Factors Set Out in Section 3011
Mother’s sole contention on appeal is that the trial court failed to consider the
factors identified in section 3011. That section provides that in making a determination
3
Mother contends that notwithstanding its assurance that it would not require a
showing of changed circumstances, the trial court did precisely that. We do not agree.
The transcript of the October 2014 hearing, which we have carefully reviewed, makes it
abundantly clear that the trial court considered only best interest, not changed
circumstances.
10
of a child’s best interest in a custody proceeding, the court “shall, among any other
factors it finds relevant, consider all of the following:
“(a) The health, safety, and welfare of the child.
“(b) Any history of abuse by one parent or any other person seeking custody . . .
“(c) The nature and amount of contact with both parents . . .
“(d) The habitual or continual illegal use of controlled substances, the habitual
or continual abuse of alcohol, or the habitual or continual abuse of prescribed controlled
substances by either parent. . . .
“(e)(1) Where allegations about a parent pursuant to subdivision (b) or (d) have
been brought to the attention of the court in the current proceeding, and the court makes
an order for sole or joint custody to that parent, the court shall state its reasons in writing
or on the record.”
Mother suggests that because the trial court did not articulate “any reasons for” its
custody determination, “it is anybody’s guess as to whether any of the factors listed in
Family Code § 3011 [were] considered by the trial court.” In other words, mother
appears to suggest that because the trial court did not make specific reference to the
section 3011 factors, it must have ignored them. We do not agree. “A judgment or order
of a lower court is presumed to be correct on appeal, and all intendments and
presumptions are indulged in favor of its correctness.” (In re Marriage of Arceneaux
(1990) 51 Cal.3d 1130, 1133.) Thus, mother has the burden to affirmatively show error
by citation to the record. (E.g., Nealy v. City of Santa Monica (2015) 234 Cal.App.4th
359, 372; Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 116.) Her
suggestion that the trial court may have committed error because it may have failed to
consider mandatory factors, without more, does not satisfy her appellate burden.
Further, section 3011 requires that the court state its reasons “in writing or on the
record” only if it awards custody to a parent who has a history of child or spousal abuse
or of habitual or continued illegal use of drugs or alcohol. (Subd. (e)(1).) Neither parent
has a history of chronic substance abuse or abuse of a child or spouse, and thus the
requirement that the court state reasons for its custody determination does not apply here.
11
Finally, our independent review of the record satisfies us that in considering
mother’s request for joint legal and physical custody, the court appropriately considered
the two section 3011 factors relevant here—i.e., the “nature and amount of contact with
both parents” and E.’s “health, safety, and welfare.” The court’s comments at each of the
custody hearings in this case make clear that the trial court awarded sole legal and
physical custody of E. to father because it concluded mother and father were unable to
communicate effectively or make decisions together, and therefore would be unable to
implement a joint custody order. To be workable, joint custody requires the parents’
willingness to cooperate in making medical, educational, and psychological decisions.
(See In re Marriage of McLoren (1988) 202 Cal.App.3d 108, 115-116 [observing, in
most circumstances, children’s best interests are served by joint legal custody, but where
there is acrimony “the reality of their parents’ conflicts unavoidably hampers the
realization of that goal”].) Mother cites no evidence presented in the trial court to
contradict the court’s conclusion that the parties are unable to communicate effectively
with one another and, therefore, would be unable to implement a joint custody order. To
the contrary, mother’s declaration in support of her request for modification highlights
the conflict between herself and father—and, indeed, suggests that father should be
ordered to counseling sessions “so that [father] can acquire some skills for a co-parenting
plan.”
Further, in declining to modify the custody order, the trial court emphasized that
mother in the past had acted in ways that maintained a high level of conflict between
herself and father and had shown no willingness to conduct herself differently in the
future.4 Mother cites no evidence that contradicts this finding. Instead, her testimony in
4
Specifically, the court said that it continued to be concerned with mother’s “very
serious problem with authority,” noting that in the past mother had assaulted E.’s paternal
grandparents, disrupted the operation of E.’s school, and acted inappropriately at a police
station while dropping off or picking up E. The court emphasized, moreover, that mother
had made no showing that she “is on a better path”—i.e., that she recognized past errors
and was committed to behaving differently in the future.
12
the trial court acknowledged the conflict between her and other adults in E.’s life, but
placed the blame for those conflicts on others.
Finally, mother’s reliance on Burchard v. Garay (1986) 42 Cal.3d 531, 535, is
misplaced. There, the California Supreme Court, in reversing the lower court’s decision,
found that the trial court impermissibly relied on the relative economic positions of the
parties as a relevant factor in determining custody. (Id. at p. 535.) Those facts are not
present here. Notwithstanding mother’s intimation to the contrary, there is absolutely no
evidence that the trial court took father’s financial standing into account when denying
mother’s request to modify the custody order.
DISPOSITION
The order denying mother’s request for modification of child custody and
visitation is affirmed. Father is awarded his appellate costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EDMON, P. J.
We concur:
ALDRICH, J.
LAVIN, J.
13
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 15-1407
___________
FLORIN HAXHARI, AKA Daniele Hessi;
LUCE HAXHARI, AKA Elena Inzachi,
Petitioners
v.
ATTORNEY GENERAL OF THE
UNITED STATES,
Respondent
_______________________
On Petition for Review of an Decision of the
Board of Immigration Appeals
BIA No. A098-586-576
BIA No. A098-586-577
(U.S. Immigration Judge: Honorable Annie S. Garcy)
______________
Submitted Pursuant to Third Circuit LAR 34.1(a)
October 27, 2015
Before: GREENAWAY, JR., SCIRICA, and ROTH, Circuit Judges.
(Opinion Filed: April 29, 2016)
________________
OPINION*
________________
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
SCIRICA, Circuit Judge
Petitioners Florin Haxhari and his wife, Luce Haxhari, petition for review of a
decision of the Board of Immigration Appeals (BIA) denying their motion to reopen. For
the reasons detailed below, we will deny the petition for review.
I.
The Haxharis, citizens of Albania, first entered the United States on May 26, 2004
using false Italian passports. They applied for asylum, withholding of removal, and relief
under the Convention Against Torture on October 18, 2004, claiming they feared future
persecution from members of the Socialist Party of Albania due to Mr. Haxhari’s
membership in the Democratic Party.
In 2008, Mr. Haxhari testified in support of his claim before an Immigration
Judge. According to Mr. Haxhari, he was detained by the police on three occasions
between 1998 and 2004 because of his connection to Democratic Party activities, and was
physically assaulted on two of those occasions. In addition, Mr. Haxhari testified he was
beaten on three separate occasions by members of the Socialist Party, and was told that if
he continued his political activism, he would be killed. Although the Democratic Party
controlled the Albanian government by 2008, Mr. Haxhari testified that where he lived,
police and local government officials were loyal to the Socialist Party.
The IJ also heard testimony in support of the Haxharis’ claim from Dr. Bernd J.
Fischer, an expert in post-1990 Albania. Dr. Fischer testified the Haxharis’ experience
was consistent with his knowledge of Albania. He also testified that although the
Democratic Party was in power at the time of the hearings, it did not exercise sufficient
control over the country to guarantee the safety of its members on a local level.
Based on the testimony of Mr. Haxhari and Dr. Fischer, and the State
Department’s Report on Human Rights Practices in Albania, the IJ granted the Haxharis’
application for asylum. The IJ found the Haxharis’ fear of persecution was objectively
reasonable, given the abuses Mr. Haxhari had suffered and the fact that some of them
were carried out by the police. The IJ also found the Democratic Party’s rise to power
did not diminish the Haxharis’ fear, relying on Dr. Fischer’s testimony that the Socialist
Party still exercised local control in some areas.
The Department of Homeland Security appealed from the IJ’s finding, and on
March 31, 2011, the BIA sustained its appeal. The BIA disagreed with the IJ’s finding
that the Haxharis’ fear of persecution was objectively reasonable. It first noted that based
on the factual findings of the IJ, the harm suffered by the Haxharis did not rise to the
level of past persecution required to establish a presumption of persecution. Further, the
BIA found Dr. Fischer’s testimony and the State Department’s report did not provide a
sufficient objective basis for a well-founded fear of persecution. It found no evidence the
Haxharis would be singled out for persecution if they returned to Albania, and no
evidence of a pattern of persecution of Democratic Party members in Albania at the time.
Accordingly, the BIA vacated the IJ’s decision granting asylum.
The Haxharis petitioned for review of the BIA’s decision, which we denied on
January 12, 2012. Haxhari v. Att’y Gen., 459 F. App’x 140 (3d Cir. 2012). We found
substantial evidence supported the BIA’s conclusions that the Haxharis failed to establish
past persecution and failed to establish a fear of future persecution. Id. at 143.
On October 7, 2014, the Haxharis moved to reopen their case. They conceded
their motion fell outside the statutory deadline for motions to reopen, but argued the
deadline did not apply because circumstances in Albania had materially changed since
their case was decided. Specifically, the Haxharis contended that because the Socialist
Party had returned to power in Albania during 2013, their case should be reopened. Their
motion was supported by a new declaration by Dr. Fischer outlining how conditions had
worsened in Albania.
The BIA disagreed, and denied the motion as time-barred on January 28, 2015.
The BIA found the circumstances in Albania had not materially changed because there
was still no evidence members of the Democratic Party faced persecution due to their
political beliefs. The Haxharis again petitioned us for review of the BIA’s order.
II.
We have jurisdiction pursuant to 8 U.S.C. § 1252. We review the denial of a
motion to reopen for abuse of discretion. See Liu v. Att’y Gen., 555 F.3d 145, 148 (3d
Cir. 2009). We give broad deference to the BIA, and will not disturb its decision unless it
is “arbitrary, irrational, or contrary to law.” Pllumi v. Att’y Gen., 642 F.3d 155, 158 (3d
Cir. 2011). Generally, a motion to reopen must be filed within ninety days of the date of
entry of a final administrative order of removal. 8 U.S.C. § 1229a(c)(7)(C)(i). But this
deadline does not apply if the motion is “based on changed country conditions arising in
the country of nationality . . . if such evidence is material and was not available and
would not have been discovered or presented at the previous proceeding.” Id. §
1229a(c)(7)(C)(ii).
III.
The Haxharis argue the BIA abused its discretion and violated their due process
rights by failing to consider new evidence regarding changed country conditions in
Albania. They contend the BIA ignored evidence demonstrating the worsened conditions
in Albania, particularly Dr. Fischer’s report, which the BIA did not mention in its
decision.
Contrary to the Haxharis’ assertion, the BIA did not ignore the evidence
supporting their motion to reopen. The Haxharis submitted a U.S. Department of State
Human Rights Report that was cited in the BIA’s order. The report concluded that during
the 2013 elections in Albania, “multiple political parties participated freely, with active
citizen participation and respect for fundamental freedoms.” J.A. 7. Relying on this
report, along with a lack of direct or specific evidence that the Haxharis would be at risk
of political persecution, the BIA concluded that the Haxharis did not demonstrate that
circumstances in Albania were materially different from the time of their removal
hearing. This determination was not an abuse of the BIA’s discretion.
Nor did the BIA violate the Haxharis’ due process rights by failing to mention Dr.
Fischer’s report in its order. So long as the BIA has “given reasoned consideration” to
the motion to reopen, it need not “expressly parse or refute on the record each individual
argument or piece of evidence offered by the petitioner.” Zheng v. Att’y Gen., 549 F.3d
260, 268 (3d Cir. 2008). The BIA gave consideration to the arguments made in the
Haxharis’ motion—it specifically rejected the idea that the 2013 election constituted a
material change in circumstances, and explained that the Haxharis failed to provide
specific evidence that they faced a risk of political persecution in Albania. The BIA’s
failure to mention Dr. Fischer’s report in its order does not amount to a denial of due
process.
Moreover, the report does not establish that circumstances in Albania have
materially changed. Dr. Fischer’s original report explained that even before 2013, the
Socialist Party asserted local control over the area where the Haxharis lived. His new
report does not specify how the Socialist Party’s success in the 2013 election increased
the Haxharis’ risk of political persecution. Instead, his report asserts that “[h]igh levels
of corruption and organized crime are a critical ongoing problem in Albania….” Pet’r’s
Br. 16 (emphasis added). While this may be true, it reflects a continuation of instability
in Albania, not a material change. See Pllumi, 642 F.3d at 161 (holding that the BIA did
not abuse its discretion when it denied a motion to reopen because “the conditions
described have persisted”).
IV.
For the foregoing reasons, we will deny the petition for review.
| {
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