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209 F.2d 956
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.HARDING COLLEGE, Respondent.
No. 11850.
United States Court of Appeals, Sixth Circuit.
December 3, 1953.
A. Norman Somers, Asst. Gen. Counsel, Washington, D. C., John F. Lebus, Regional Director, New Orleans, La., George J. Bott, Gen. Counsel, David P. Findling, Assoc. Gen. Counsel, and Owsley Vose and Robert H. Hurt, Attys. for the National Labor Relations Board, Washington, D. C., for petitioner.
Before SIMONS, Chief Judge, and ALLEN and MILLER, Circuit Judges.
PER CURIAM.
1
This case came on to be heard upon the record and briefs and oral argument of counsel;
2
And it appearing that the answer to the complaint herein admitted ownership and operation of WHBQ Radio Station by Harding College;
3
And it appearing by the uncontradicted testimony that respondent Harding College exercises complete control over WHBQ Radio Station;
4
And it appearing that any objection as to the service of the complaint was waived by the participation of the respondent Harding College in the proceedings and in its argument to the Board;
5
And it appearing that the findings of the Board as to the existence of the unfair labor practices charged are supported by substantial evidence on the record considered as a whole;
6
It is ordered that the order of the Board entered June 26, 1952, be enforced.
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914 F.2d 66
Rosemarie CHRISTOPHERSEN, Surviving Spouse of Albert RoyChristophersen, deceased and Steven RoyChristophersen, Plaintiffs-Appellants,v.ALLIED-SIGNAL CORPORATION, Inco Alloys International, Inc.,United Catalysts, Inc., The Hall Chemical Company,Marathon Manufacturing Company, and CPChemicals, Inc., Defendants-Appellees.
No. 89-1995.
United States Court of Appeals,Fifth Circuit.
Sept. 25, 1990.
Paul Colley, Jr., Law Offices of Paul Colley, Jr., Tyler, Tex., Christophersen, et al.
Steve Schoettmer, P. Jefferson Ballew, Thompson & Knight, Dallas, Tex., for Allied-Signal, Inc.
Marc A. Sheiness, Hirsch, Glover, Robinson & Sheiness, Houston, Tex., for Inco Alloys Intern'l, Inc.
Pat Beard, Beard & Kultgen, Waco, Tex., for United Catalysts, Inc.
Michael W. Huddleston, Teresa Bohne, Stan Thiebaud, R. Brent Cooper, Cowles & Thompson, Dallas, Tex., for Hall Chemical Co.
Clifton T. Hutchison, Hughes & Luce, James J. Juneau, Strasburger & Price, Dallas, Tex., for Marathon Manuf.
Jeff Kinsel, Elizabeth S. Miller, Frederick deB. Bostwick, III, Naman, Howell, Smith & Lee, Waco, Tex., for CP Chemicals, Inc.
Appeal from the United States District Court for the Western District of Texas; Walter Smith, Jr., Judge.
ON PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC
(Opinion June 4, 1990, 5 Cir., 1990, 902 F.2d 362)
Before CLARK, Chief Judge, GEE, KING, JOHNSON, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHE, WIENER and BARKSDALE, Circuit Judges.*
BY THE COURT:
1
A member of the Court in active service having requested a poll on the suggestion for rehearing en banc and a majority of the judges in active service having voted in favor of granting a rehearing en banc,
2
IT IS ORDERED that this cause shall be reheard by the Court en banc with oral argument on a date hereafter to be fixed. The Clerk will specify a briefing schedule for the filing of supplemental briefs.
*
Judge Politz is recused, and therefore did not participate in this decision
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102 F.3d 555
U.S.v.St. Amour*
NO. 96-4025
United States Court of Appeals,Eleventh Circuit.
Nov 15, 1996
1
Appeal From: S.D.Fla., No. 95-00533-CR-EBD
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
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904 F.2d 709
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.Dennis L. WEAVER, Plaintiff-Appellant,v.Wayne WALTERS; Ann Doe, Defendants-Appellees.
No. 89-3653.
United States Court of Appeals, Sixth Circuit.
June 19, 1990.
Before MILBURN and DAVID A. NELSON, Circuit Judges, and LIVELY, Senior Circuit Judge.
ORDER
1
Dennis L. Weaver, an Ohio state prisoner, moves for the appointment of counsel on appeal from the district court's judgment dismissing his civil rights complaint filed under 42 U.S.C. Sec. 1983. The case has been referred to a panel of the court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination of the record and briefs, this panel unanimously agrees that oral argument is not needed. Fed.R.App.P. 34(a).
2
Weaver filed suit against the head cashier of the Southern Ohio Correctional Facility and an unknown deputy clerk of the district court, seeking injunctive and declaratory relief, and compensatory and punitive damages. The complaint alleged that the cashier had requested that a complaint by Weaver in another action be returned to him, and that the deputy clerk had complied, thus delaying the filing of the complaint. In a report issued on May 16, 1989, the magistrate recommended that defendants' motion to dismiss for failure to state a claim be granted. After reviewing the record and noting that no objections to the magistrate's report had been filed, the district court adopted this recommendation and, on June 7, 1989, dismissed the action.
3
Upon consideration, we conclude that the district court's judgment should be affirmed, as Weaver waived his right to appeal by failing to file objections to the magistrate's report. See Thomas v. Arn, 474 U.S. 140, 155 (1985). Moreover, the dismissal was proper, as Weaver did not state a claim of denial of access to the courts. See Walker v. Mintzes, 771 F.2d 920, 932 (6th Cir.1985).
4
Accordingly, the motion for counsel is denied and the district court's judgment is affirmed. Rule 9(b)(5), Rules of the Sixth Circuit.
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729 F.2d 1446
Diaz (Jose Rivera)v.Schweiker (Richard S.)
NO. 83-1252
United States Court of Appeals,third Circuit.
FEB 22, 1984
1
Appeal From: E.D.Pa.
2
AFFIRMED.
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996 F.2d 1223
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.Vicente L. ARCEGA, Plaintiff-Appellant,v.TAYLOR ENTERPRISES; Yuvetta Robinson; Joe Brumfield;Pasadena Housing Authority; City of Pasadena;Municipal Court of Pasadena, Defendants-Appellees.
No. 92-56208.
United States Court of Appeals, Ninth Circuit.
Submitted April 27, 1993.*Decided May 20, 1993.
Before BROWNING, KOZINSKI and RYMER, Circuit Judges.
1
MEMORANDUM**
2
Vicente L. Arcega appeals pro se the district court's summary judgment in favor of defendants in Arcega's action alleging that defendants wrongfully denied him federal housing aid. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.
3
We review de novo the district court's summary judgment. McGuckin v. Smith, 974 F.2d 1050, 1059 (9th Cir.1992). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant law. See Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536, 539 (9th Cir.1991), cert. denied, 112 S.Ct. 1603 (1992).
4
In both his brief on appeal and his pleadings below, Arcega sets forth numerous allegations regarding the wrongfulness of defendants' actions. These allegations can be grouped into two main categories: (1) that defendants exceeded their authority under applicable federal statutes and regulations; and (2) that defendants lied regarding a waiting list for federal Section 8 housing benefits.
5
Arcega's argument that defendants acted in excess of their statutory and regulatory authority is largely based on his belief that defendants violated the "guidelines" set forth in a document he calls the "HUD booklet". A review of the HUD booklet reveals, however, that these guidelines are applicable to the federal Department of Housing and Urban Development ("HUD").1 In fact, the HUD booklet clearly contemplates that actions such as processing applications for Section 8 benefits will be performed by entities such as defendant Pasadena Housing Authority ("PHA"). Accordingly, because the guidelines in the HUD booklet do not limit the authority of defendants, the booklet does not serve to raise any genuine issues of material fact as to whether the defendants exceeded their authority.
6
The record also indicates that there is no genuine issue of material fact as to whether defendant Robinson exceeded her authority by promulgating additional "regulations" or whether these regulations violate federal law. The record contains a copy of PHA's Administrative Plan that sets forth the alleged new regulations of which Arcega complains. The Plan was in effect in 1987, before Arcega applied for benefits and before Robinson and defendant Brumfield allegedly changed the "standard operating procedure" for processing applications. The Plan was submitted to and approved by HUD.
7
There is no evidence to support Arcega's allegations that Robinson promulgated these regulations or that Robinson has been acting independently of either PHA or HUD. Moreover, Arcega cites to no federal statute or regulation that prohibits PHA from setting up an enrollment period or waiting list for benefits. Therefore, no genuine issue of material fact exists on these issues.
8
Arcega also contends the defendants wrongfully denied his application for Section 8 housing aid because an application can be denied only for the reasons set forth in 42 C.F.R. § 882.210. The record shows, however, that defendants did not deny Arcega housing aid on the ground he was ineligible for benefits. In fact, defendants have never decided whether Arcega was eligible or not. Rather, defendants merely informed Arcega that he could apply for benefits only during an open enrollment season.
9
Arcega also contends that Robinson and Brumfield made false statements in their affidavits that PHA had a waiting list of approximately 500 families for Section 8 benefits. Arcega argues that only 20 of these families received benefits and the other 480 applications have expired. The record contains a copy of the 1990 waiting list of families who applied for Section 8 benefits through PHA. Even if the 1990 list showed a large number of expired applications, Arcega has not shown that those applications were expired at the time he applied for benefits. Accordingly, Arcega failed to show there is a genuine issue of material fact on this issue.
10
Because no genuine issue of material fact exists on the relevant issues, the district court did not err by granting summary judgment in favor of defendants. See Alaska Airlines, Inc., 948 F.2d at 539.
11
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
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
1
We refer to the statements in the HUD booklet as "guidelines" only for purposes of addressing Arcega's arguments. We express no opinion on whether the HUD booklet actually constitutes a binding limitation on the authority of HUD
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707 F.2d 512
Wrightv.Aiken
83-8017
UNITED STATES COURT OF APPEALS Fourth Circuit
4/1/83
1
D.S.C.
CPC DENIED--DISMISSED
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NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
DAVID and ROBIN ROBERTS, Trustees of the Roberts Family Trust Joint
Living Trust dated February 12, 1999; et al., Plaintiffs/Appellees,
v.
DEL WEBB COMMUNITIES, INC., an Arizona corporation; DEL WEBB
HOME CONSTRUCTION, INC., an Arizona corporation; DEL WEBB
CORPORATION, a Delaware corporation; and PULTE HOME
CORPORATION, a Michigan corporation; PULTE DEVELOPMENT
CORPORATION, a Michigan corporation, Defendants/Appellants.
No. 1 CA-CV 13-0119
FILED 2-24-2015
Appeal from the Superior Court in Maricopa County
No. CV2012-003956
The Honorable Katherine M. Cooper, Judge
AFFIRMED
COUNSEL
Kasdan Weber Turner, L.L.P., Phoenix
By Stephen L. Weber, Michael J. White, James W. Fleming
Osborn Maledon, P.A., Phoenix
By Thomas L. Hudson
Counsel for Plaintiffs/Appellees
Koeller Nebeker Carlson & Haluck, L.L.P., Phoenix
By William A. Nebeker, Troy G. Allen
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Judge Maurice Portley delivered the decision of the Court, in which
Presiding Judge Donn Kessler and Judge Patricia K. Norris joined.
P O R T L E Y, Judge:
¶1 Del Webb1 appeals from the superior court’s confirmation of
an arbitration award in favor of 460 claimants (the “homeowners”). For the
reasons that follow, we affirm.
BACKGROUND
¶2 Sun City Grand residents who had purchased their homes
from Del Webb reported a variety of problems with their homes, ranging
from the expanding and collapsing of soils beneath the slab to defective
window seals. They requested arbitration pursuant to their sales contracts2
and ultimately the homeowners brought a consolidated claim against Del
Webb for breach of the sales agreement, breach of express warranty, and
1 “Del Webb” refers collectively to Appellants Del Webb Communities, Inc.,
Del Webb Home Construction, Inc., Del Webb Corporation, Pulte Home
Corporation, and Pulte Development Corporation.
2 Paragraph 5.5 of the agreement provided:
Any controversy, claim or dispute arising out of or relating to
this Agreement or Your purchase of the Home shall be settled
by arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association
(“AAA”) and the Federal Arbitration Act (Title 9 of the United
States Code) and judgment rendered by the arbitrator(s) may
be confirmed, entered and enforced in any court having
jurisdiction. The arbitration shall take place in Maricopa
County, Arizona.
2
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
breach of the implied warranty of workmanship and habitability, though
the claimants only proceeded on the breach of implied warranty claim.
¶3 Following fifty-two days of hearings, the unanimous three-
person panel issued an interim award to the homeowners of $7,884,534.87
on November 17, 2011. After briefing on the issues of fees and costs, the
panel included $5,774,144 for attorneys’ fees, expert witness fees, and costs
in the award. The homeowners then sought confirmation of the final
arbitration award in superior court and requested prejudgment and post-
judgment interest. Del Webb moved to vacate the award, but after an
evidentiary hearing the court confirmed the final award and included pre-
and post-judgment interest. Del Webb filed an appeal and we have
jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) sections
12-2101.01(A)(6) and (B).3
DISCUSSION
¶4 This court reviews the superior court’s confirmation of the
arbitration award in the light most favorable to upholding the decision and
we will affirm absent an abuse of discretion. Atreus Cmtys. Grp. of Ariz. v.
Stardust Dev., Inc., 229 Ariz. 503, 506, ¶ 13, 277 P.3d 208, 211 (App. 2012).
We review the court’s construction of statutes de novo, mindful that judicial
review of arbitration awards is severely restricted. Nolan v. Kenner, 226
Ariz. 459, 461, ¶ 4, 250 P.3d 236, 238 (App. 2011).
¶5 The Federal Arbitration Act (“FAA”) provides that a court
must confirm an arbitration award unless the award is otherwise vacated,
modified, or corrected. 9 U.S.C. § 9; see Hall St. Assocs., L.L.C. v. Mattel, Inc.,
552 U.S. 576, 582 (2008). The FAA provides the following grounds for
vacating an award:
(1) where the award was procured by
corruption, fraud, or undue means;
(2) where there was evident partiality or
corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of
misconduct in refusing to postpone the
hearing, upon sufficient cause shown, or in
refusing to hear evidence pertinent and material
to the controversy; or of any other misbehavior
3 We cite to the current applicable statutes unless otherwise noted.
3
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
by which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers,
or so imperfectly executed them that a mutual,
final, and definite award upon the subject
matter submitted was not made.
9 U.S.C. § 10(a) (2002). Unless a court finds grounds to vacate or modify,
“confirmation is required even in the face of erroneous findings of fact or
misinterpretations of law.” Lagstein v. Certain Underwriters at Lloyd’s,
London, 607 F.3d 634, 640 (9th Cir. 2010), cert. denied, 131 S. Ct. 832 (2010)
(quoting Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997
(9th Cir. 2003) (en banc)).
I. Expert Testimony
¶6 Del Webb first contends that the arbitrators exceeded their
authority by admitting evidence from John Bardin, the homeowners’
primary expert, in violation of 9 U.S.C. § 10. Specifically, Del Webb argues
that because Barden was not paid on an on-going basis he was working on
a contingent fee basis and, as a result, had a financial stake in the arbitration.
In making this argument, Del Webb relies on Laos v. Soble, where we held
that a “contract providing for compensation of a witness contingent on the
success of the litigation is subversive of public justice” and “[p]ublic policy
considerations brand such contract illegal.” 18 Ariz. App. 502, 503, 503 P.2d
978, 979 (1972); see also, Westin Tucson Hotel Co. v. State Dept. of Revenue, 188
Ariz. 360, 367, 936 P.2d 183, 190 (App. 1987) (holding that the Tax Court
properly denied taxpayer’s motion for sanctions after Pima County moved
to strike the affidavit of the witness for the taxpayer because his fee was
contingent on the outcome of the case).
¶7 A court may vacate an arbitration award “where the
arbitrators exceeded their powers[.]” 9 U.S.C. § 10(a)(4). An arbitration
panel exceeds its powers not by “merely interpret[ing] or apply[ing] the
governing law incorrectly,” but must “exhibit[] a manifest disregard of
law[.]” Kyocera, 341 F.3d at 997 (citations and internal quotation marks
omitted). Or stated differently, (1) “[t]he governing law alleged to have
been ignored by the arbitrators must be well defined, explicit, and clearly
applicable[,]” and (2) the record clearly shows that “the arbitrators
recognized the applicable law and then ignored it.” Collins v. D.R. Horton,
Inc., 505 F.3d 874, 879-80 (9th Cir. 2007) (quoting Carter v. Health Net of Cal.,
Inc., 374 F.3d 830, 838 (9th Cir. 2004)).
4
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
¶8 Here, the issue – was Bardin a “contingent fee” expert – was
not one of law, but of fact as the panel had to determine the circumstances
of his retention. Thus, the issue was clearly within the province of the
arbitrators. See Smitty’s Super-Valu, Inc. v. Pasqualetti, 22 Ariz. App. 178, 182,
525 P.2d 309, 313 (1974) (“decisions of the arbitrators on questions of
fact . . . are final and conclusive”). Del Webb raised the issue and the panel
received briefs, including conflicting expert declarations, and heard
Bardin’s testimony on the issue. The panel did not find, as the trial courts
had in Laos and Westin, see Laos, 18 Ariz. App. at 502, 503 P.2d at 978 (noting
that the handwritten contract demonstrated that the appraisal witness had
a contingent fee agreement based on the outcome of the condemnation
proceeding); Westin, 188 Ariz. at 366-67, 936 P.2d at 189-90 (noting that Pima
County’s motion to strike was properly based on the fact that the taxpayer’s
witness fee was contingent on the outcome of the case), that Bardin had a
contingent fee contract based on the outcome of the litigation. Instead, the
panel concluded that Del Webb’s objections to the payment of Bardin’s
hourly fee went “to the weight and credibility of his testimony, not its
admissibility.” Accordingly, the panel did not disregard the pertinent law
after considering the facts as they found them, and the superior court
properly declined to disturb its ruling. See Collins, 505 F.3d at 884 (“In short,
the arbitrators could not manifestly disregard the law because no binding
precedent existed . . . .”).
¶9 Del Webb also argues that admission of Bardin’s testimony
violated public policy. Even if we assume the non-statutory ground
survives Hall Street, 552 U.S. at 582,4 we disagree. Given the determination
of the arbitration panel, Del Webb cannot rely merely on an allegation that
public policy was violated, but must show “an overriding public policy
rooted in something more than ‘general considerations of supposed public
interests’ and, of equal significance, it must demonstrate that the policy is
4 It is unclear whether public policy, or even manifest disregard, is available
under the FAA in light of Hall Street, which held that § 10(a) provides the
exclusive grounds for vacating an arbitration award. 552 U.S. at 584-85; see
also Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 672 n.3 (2010)
(leaving the question of manifest disregard’s survival open). Cf. Comedy
Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1290 (9th Cir. 2009), cert. denied,
558 U.S. 824 (2009) (holding that the manifest disregard ground survives
because it is “shorthand for § 10(a)(3) or 10(a)(4)”); In re Wal-Mart Wage &
Hour Emp’t Practices Litig., 737 F.3d 1262, 1267 n.7 (9th Cir. 2013) (explaining
that standard is a judicial gloss on § 10(a)(4)) with Frazier v. CitiFinancial
Corp., 604 F.3d 1313, 1323-24 (11th Cir. 2010) (holding that judicially created
bases for vacatur were not available after Hall Street).
5
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
one that specifically militates against the relief ordered by the arbitrator.”
Stead Motors of Walnut Creek v. Auto. Machinists Lodge No. 1173, 886 F.2d
1200, 1212-13 (9th Cir. 1989) (citation omitted). Given that the issue was
fully briefed and the panel heard testimony before making its ruling, we
perceive no “overriding public policy violation” that now requires the
award to be vacated because the panel allowed Bardin to testify.
II. Fair Hearing
¶10 Del Webb argues that the superior court should not have
confirmed the award because the homeowners’ counsel employed undue
means in procuring the award and deprived Del Webb of a fair hearing.
Specifically, Del Webb contends opposing counsel improperly solicited
homeowners, used expert witnesses to develop a large-scale construction
defect case, and owned Tiger Labs, which took pictures in preparation for
the arbitration. Del Webb bears the burden to prove undue means with
clear and convincing evidence. Barcume v. City of Flint, 132 F. Supp. 2d 549,
556 (E.D. Mich. 2001).
¶11 “Undue means,” as interpreted by both federal and Arizona
courts, requires proof of intentional misconduct amounting to bad faith.
PaineWebber Grp., Inc. v. Zinsmeyer Trusts P’ship, 187 F.3d 988, 991-94 (8th
Cir. 1999), cert. denied, 529 U.S. 1020 (2000); FIA Card Servs., N.A., v. Levy, 219
Ariz. 523, 525, ¶ 7, 200 P.3d 1020, 1022 (App. 2008). The term “clearly
connotes behavior that is immoral if not illegal[,]” but excludes “sloppy or
overzealous lawyering.” A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d
1401, 1403 (9th Cir. 1992) (holding that offering a meritless defense did not
constitute undue means), cert. denied, 506 U.S. 1050 (1993).
¶12 Although Del Webb contends the solicitation of homeowners
was overzealous and unethical, it cites no authority that the circumstance
under which parties decide to file claims constitutes undue means and
justifies denial of relief. We find no basis for reversal. See id. Additionally,
Del Webb does not explain why the conduct it complains of is tantamount
to corruption or fraud. Likewise, Del Webb does not allege that Tiger Labs’
photos were fraudulent.
¶13 Moreover, relief for undue means is only available when the
conduct (1) is not discoverable before arbitration even with the exercise of
due diligence, (2) materially relates to an issue in the arbitration, and (3) is
established by clear and convincing evidence. Edwards, 967 F.2d at 1404;
Nolan, 226 Ariz. at 461-62, ¶¶ 5-7, 250 P.3d at 238-39 (applying an undue
means standard identical to the FAA). Because Del Webb has
6
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
acknowledged on appeal that the arbitration panel “was aware of the
manner in which the claims were developed” (and Del Webb had the ability
to conduct discovery into any misconduct and bring it to the attention of
the arbitration panel), the arbitration award was not procured by “undue
means.” See Edwards, 967 F.2d at 1404 (stating the standard not satisfied
because the arbitrators and opposing party were aware of the meritless
defenses from the outset); accord Nolan, 226 Ariz. at 461-62, ¶¶ 6-7, 250 P.3d
at 238-39 (holding that openly using a foreign lawyer is discoverable and
not “sufficiently nefarious” to warrant undermining the award’s finality).
III. Attorneys’ Fees
¶14 Del Webb also argues that the arbitration panel exceeded its
authority by determining that the homeowners were the prevailing party
and awarding attorneys’ fees. The arbitration panel awarded the
homeowners $2,628,178 in attorneys’ fees, after finding it had the authority
to determine the issue and award fees and costs to the prevailing party
pursuant to ¶ 6.4.12 of the sales agreement.
¶15 Del Webb, however, contends the award was improper
because the homeowners had abandoned their contract-based claims by
only pursuing a claim of breach of implied warranty. We disagree.
¶16 Although the homeowners did not pursue the breach of sales
agreement and breach of warranty claims, the sales agreement required
arbitration providing “[a]ny controversy, claim or dispute arising out of or
relating to this Agreement . . . shall be settled by arbitration.” See
Schoenduve Corp. v. Lucent Techs., Inc., 442 F.3d 727, 732 (9th Cir. 2006)
(adopting the premise that an arbitration clause that “calls for any dispute
relating to or arising out of the agreement to be submitted to arbitration” to
mean that “the parties intend[ed] the clause to reach all aspects of the
relationship”) (citation and internal quotation marks omitted). And
paragraph 6.4.12 of the sales agreement contained the following fee
provision:
Attorneys Fees: In the event of any arbitration
or mediation between Us and You, before or
after the Closing, the prevailing party shall be
entitled to an award of all attorneys fees and costs
(including, if We prevail, the cost of Our in-
house counsel based on equitable
apportionment of the salary and overhead
attributable to the work of such in-house
7
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
counsel), in an amount to be determined by the
arbitrator or mediator hearing the matter. Any
court or arbitrator hearing any matter on appeal
may also award such fees to the prevailing party
in and for any prior mediation or arbitration.
(Emphasis added.) Because the sales agreement required the arbitration
and had a specific fee provision that expressly governed the arbitration, Del
Webb cannot now complain that the arbitration panel exceeded its
authority in awarding attorneys’ fees.
¶17 Moreover, even if the sales agreement did not authorize the
panel to award fees in the absence of a breach of contract claim, Del Webb
can still not complain that the fee provision was inapplicable here because
both parties submitted the issue of attorneys’ fees to the arbitration panel at
the outset of the action. As a result, the parties gave the arbitration panel
authority to address the attorneys’ fees claim and cannot – after the fact -
claim that the panel exercised that authority. See Coutee v. Barington Capital
Grp., L.P., 336 F.3d 1128, 1136 (9th Cir. 2003) (noting the exception to the
general rule is that an “arbitration panel may award attorney’s fees, even if
not otherwise authorized by law to do so, if both parties submit the issue to
arbitration”).5 Consequently, the action of the parties supplied additional
support for the panel’s action and we do not find that the arbitration panel
exceeded its authority by awarding attorneys’ fees.
¶18 Del Webb also argues that the fee award was improper
because the homeowners were not the prevailing party. Del Webb argues
that “[a]summing arguendo that the contract and/or A.R.S. § 12-341.01(A)
applied, the [p]anel was required to determine who was the prevailing
party before awarding attorneys’ fees.” As a result, Del Webb contends that
because the homeowners received less ($7.8 million) than their demand for
settlement ($25 million), they are not entitled to attorneys’ fees.
5 Even if we accept Del Webb’s assertion that the arbitration panel
committed legal error, such is insufficient to demonstrate that the panel
exceeded its authority. See Nolan, 226 Ariz. at 463, ¶¶ 12-13, 250 P.3d at 240
(noting that the arbitrator’s award of attorneys’ fees, even if legally or
factually erroneous, could not be modified unless specific statutory factors
allowing modification were proven); Kyocera, 341 F.3d at 1003 (holding that
the risk that arbitrators may imperfectly construe the governing law is a
risk that arbitration parties assume).
8
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
¶19 Although the attorneys’ fees provision uses the term
prevailing party, Del Webb has not cited to the FAA or any case law
interpreting the FAA that supports its argument. Moreover, there is
nothing in the arbitration agreement that suggests that the offer of
settlement provisions of Arizona Rule of Civil Procedure 68 apply by
requiring the party prevailing at arbitration to be awarded more than their
settlement offer before being entitled to an award of attorneys’ fees. And
there is no indication in the arbitration agreement or fee provision that the
arbitration panel had to determine any “percentage of success factor” or a
“totality of the litigation test” to determine the successful party as outlined
in Schwartz v. Farmers Ins. Co., 166 Ariz. 33, 38, 800 P.2d 20, 25 (App. 1990).
¶20 Instead, we look to the plain meaning of the term “prevailing
party” in the fees provision to determine whether the arbitrators properly
construed the term. See, e.g., Grubb & Ellis Mgmt. Servs., Inc. v. 407417 B.C.,
L.L.C., 213 Ariz. 83, 90, ¶ 26, 138 P.3d 1210, 1217 (App. 2006) (a contractual
attorney’s fee provision controls to the exclusion of a statute); Keggi v.
Northbrook Property & Cas. Ins. Co., 199 Ariz. 43, 46, ¶ 11, 13 P.3d 785, 788
(App. 2000) (noting that contracts are construed according to their plain and
ordinary meaning); United Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz.
238, 258-59, 681 P.2d 390, 410-11 (App. 1983) (same). The plain meaning of
the contractual term suggests that the party who succeeded at arbitration is
the prevailing party. See, e.g., Grubb & Ellis, 213 Ariz. at 90, ¶ 25, 138 P.3d
at 1217. Moreover, we have no reason to decide that it means anything else.
And we need not decide whether the arbitrators correctly interpreted the
contract provision; we need only determine whether their interpretation
was plausible. Lagstein, 607 F.3d at 643, 644-45; see generally Berklee Coll. of
Music v. Berklee Chapter of Mass. Fed’n of Teachers, Local 4412, 858 F.2d 31, 34
(1st Cir. 1988) (“Whether we would find these arguments convincing were
it up to us to interpret the contract is beside the point.”). Because the issue
was fully briefed and the arbitrators’ interpretation of the sales agreement
provision was plausible, we affirm. See Lagstein, 607 F.3d at 643, 644-45
(affirming and holding that arbitrators plausibly determined that their
initial award was an interim award under the agreement); see generally
Oxford Health Plans L.L.C. v. Sutter, 133 S. Ct. 2064, 2068 (2013) (an
arbitrator’s decision even arguably interpreting the contract must stand).
IV. Expert Witness Fees
¶21 Del Webb also argues that the panel exceeded its authority by
awarding expert witness fees to the homeowners because the sales
agreement did not authorize an award of expert witness fees, only “costs,”
which, it argues, means only taxable costs. Del Webb also challenges the
9
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
reasonableness of certain expert fee expenses and contends that because it
demonstrated that the panel exceeded its authority in awarding fees, the
award should have been vacated. We disagree with these arguments.
¶22 Although the sales agreement is silent about expert witness
fees or whether such fees would be considered a cost, Del Webb did not
object to the request the homeowners made in their arbitration demand for
expert witness fees. As a result, the arbitrators had authority to decide that
issue. See Schoenduve Corp., 442 F.3d at 732 (noting that in view of the failure
to object to the arbitration demand, “the scope of the arbitrator’s authority
is determined not only by the [arbitration agreement], but also by the
Demand for Arbitration”). Consequently, because the resolution on expert
fees fell within the scope of the arbitration submission, the arbitrators’
decision is final. See id.
V. Interest Awarded
¶23 Finally, Del Webb challenges the superior court’s addition of
prejudgment interest to the interim award. The homeowners asked for
interest on the interim award from November 17, including the corrected
award on November 21 “through [the] date of the [f]inal [a]ward, February
7, 2012.” In its ruling, the court granted the homeowners interest on the
interim award from November 17, 2011 through February 7, 2012, the date
of the arbitration panel’s final award.6 We look to Arizona law to determine
whether a party is entitled to interest on an FAA interim arbitration award
before confirmation. Northrop Corp. v. Triad Int’l Mktg., S.A., 842 F.2d 1154,
1155 (9th Cir. 1988). Because the issue of a party’s entitlement to interest is
a legal issue, we review it de novo. Gemstar Ltd. v. Ernst & Young, 185 Ariz.
493, 508, 917 P.2d 222, 237 (1996).
¶24 Under Arizona law, “prejudgment interest on a liquidated
claim is a matter of right.” Id.; Aqua Mgmt., Inc. v. Abdeen, 224 Ariz. 91, 95,
¶15, 227 P.3d 498, 502 (App. 2010). The sum being claimed becomes
liquidated when it is capable of exact calculation. Alta Vista Plaza, Ltd. v.
Insulation Specialists Co., 186 Ariz. 81, 82, 919 P.2d 176, 177 (App. 1995).
Here, the homeowners’ claim for damages was unliquidated until after the
6 The court’s order also provides that the homeowners will receive
“prejudgment and post-judgment interest at the statutory rate of four and
one-quarter percent (4.25%) per annum ($1,586.90 per day) from and after
February 7, 2012, the date of the arbitrators Final Award, until paid.”
10
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
panel’s interim award. Once the panel set the amount of damages,
however, the claim became liquidated.
¶25 Moreover, the homeowners were entitled to interest on the
interim award and final award because the homeowners did not raise the
issue and the arbitration panel did not address it. In Lagstein v. Certain
Underwriters at Lloyd’s of London, 725 F.3d 1050, 1055 (9th Cir. 2013), the
Ninth Circuit Court of Appeals stated that “[c]ourts do not lack authority
to award interest where an arbitration award is silent” because the failure
of the arbitrators “to speak on interest otherwise does not constitute a
denial of interest[.]” Consequently, once the arbitration panel issued its
interim award, the award was a liquidated sum and the homeowners were
entitled to interest.
¶26 Del Webb also contends that the court erred by ordering
interest on the interim award because it was not a final award. We disagree
and find that our decision in Creative Builders Inc. v. Avenue Developments,
Inc., 148 Ariz. 452, 458, 715 P.2d 308, 314 (App. 1986), is instructive. There,
the arbitration panel issued its ruling, but the trial court twice returned the
award for consideration of additional issues. Id. at 453-54, 715 P.2d at 309-
10. After recognizing that prejudgment interest on a liquidated claim is a
matter of right, id. at 457, 715 P.2d at 313, we noted that the trial court had
erred by awarding pre-award interest from the date of its first demand, id.,
but stated that our holding did not preclude the court from awarding
interest on the award “from the date of the of the issuance of the initial
award.” Id. at 457-58, 715 P.2d at 313-14.7
¶27 Although the trial court sent the initial award in Creative
Builders back to the panel two times to address different issues, the case
helps inform our decision because the arbitration panel’s interim award in
this case was corrected by the panel within four days as follows: the
homeowners were awarded $7,878,934.87 on November 17, and the panel
corrected the sum by modification to $7,884,534.87 on November 21, 2011.
Accordingly, the interim award was a liquidated amount and entitled to an
award of interest beginning November 17, 2011. Consequently, and as
7 Equally unavailing is Del Webb’s reliance upon Cummings v. Budget Tank
Removal & Environmental Services, L.L.C., 260 P.3d 220 (Wash. Ct. App. 2011).
In Cummings, the interim award was not in the record. Id. at 228, ¶¶ 32, 36.
As a result, and under Washington law, the trial court abused its discretion
by awarding interest on the interim award. Id. at ¶ 36. Given the fact that
Arizona allows interest on liquidated amounts and the interim award is in
the record, we find no error.
11
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
requested by the homeowners, they were entitled to interest on the interim
award from the date it was entered until the date modified and then until
the date of the final award. Accordingly, the court, did not err by awarding
interest on the interim award.
¶28 Del Webb next contends that the claim was not liquidated
until the filing of the final award because the interim award did not include
fees and costs. We also disagree with this argument.
¶29 As noted, the interim award was the panel’s resolution of the
damages for the breach of implied warranty claims. The only issues that
remained were attorneys’ fees and costs because the arbitrators noted that
those were “[t]o be determined in the Final Award.” The parties then
addressed attorneys’ fees, expert fees and related costs, and those were
resolved in the final award. Although both parties made a claim for
attorneys’ fees, and the arbitrators had to resolve that issue, along with the
expert witness fee issue and costs, the damages in the interim award did
not change. Because there were no additions to the interim award after it
was modified on November 21, 2011, the homeowners were entitled to
interest on the interim award when it was issued and modified. See Alta
Vista, 186 Ariz. at 83, 919 P.2d at 178 (holding that the plaintiffs are entitled
to prejudgment interest on damages from the date of first accrual, even if
defendants dispute the claim or succeed in reducing the amount).
Similarly, because the final award combined the damages claim and added
attorneys’ fees, expert fees, and costs, the homeowners were then entitled
to interest on the combined final award from the date of that award.
¶30 Del Webb also complains that the court granted interest on
the final award from February 7, 2012, until the confirmation judgment,
instead of the date the final award was entered by the American Arbitration
Association. We disagree.
¶31 When the homeowners originally requested interest on the
final award, they requested interest beginning on February 14, 2012, the
date the final award was filed with the American Arbitration Association,
but later amended the request to February 7, 2012, the date the panel signed
the final award. Although the final award of February 7 was not filed with
the American Arbitration Association until February 14, interest was due
on the final award from February 7 because the sum was then liquidated.
Consequently, the superior court did not err by awarding interest
beginning on the date was final award was signed.
12
ROBERTS et al. v. DEL WEBB et al.
Decision of the Court
VI. Attorneys’ Fees on Appeal
¶32 Both parties request attorneys’ fees and costs on appeal
pursuant to the sales agreement and ARCAP 21. Because the homeowners’
have prevailed, we grant them their reasonable attorneys’ fees on appeal
pursuant to the sales agreement, as well as their costs on appeal upon
compliance with ARCAP 21.
CONCLUSION
¶33 We affirm the superior court’s judgment confirming the
arbitrators’ award and adding interest.
:ama
13
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469 F.2d 396
In the Matter of WALLACE LINCOLNMERCURY COMPANY, INC., Bankrupt,Ford Motor Credit Company, Appellant,v.Herschel A. GENTRY, Trustee, et al., Appellees.
No. 71-2700.
United States Court of Appeals,Fifth Circuit.
Nov. 16, 1972.Rehearings Denied Dec. 11, 1972.
William F. Pipes, Jr., Monroe, La., George V. Burbach, Dearborn, Mich., Peter A. Feringa, Jr., New Orleans, La., for appellant.
Fred W. Jones, Jr., Kenneth W. Campbell, Ruston, La., for bankrupt.
James A. Hobbs, West Monroe, La., for Trustee.
A. K. Goff, Jr., Ruston, La., for Ruston Bank.
Ragan D. Madden, Dist. Atty., Ruston, La., for Mrs. Heard.
Before GEWIN, AINSWORTH and SIMPSON, Circuit Judges.
AINSWORTH, Circuit Judge:
1
In this bankruptcy proceeding, we must determine the rights of creditors, one of whom claims a preference. In a complex series of transactions, Wallace Lincoln-Mercury Company purchased automobiles from Ford Motor Company (Ford) using credit extended by Ford Motor Credit Company (FMCC). When Wallace filed a debtor's petition in bankruptcy, the general creditors challenged FMCC's claim of preference to the 65 automobiles in Wallace's possession. The Referee in Bankruptcy and the District Judge, 326 F.Supp. 1243, agreed with the general creditors and denied FMCC's claim as a preferred creditor. We reverse.
2
On April 1, 1957, Wallace initiated its dealership relationship with Ford by signing a Mercury Sales Agreement. The pertinent provisions insofar as this case is concerned follow:
3
6. (b) Title. Title to each COMPANY PRODUCT purchased by the Dealer shall pass to the Dealer, or to such financing institution or other party as may have been designated to the Company by the Dealer, upon delivery thereof to the carrier or to the Dealer, whichever first shall occur.
* * *
34
The parties hereto intend this agreement to be executed as a Michigan agreement and to be construed in accordance with the laws of the State of Michigan
Wallace subsequently signed a Lincoln Sales Agreement with Ford on December 6, 1968, and the identical paragraphs above were included.
FMCC is a wholly owned subsidiary created by Ford to handle credit arrangements with dealers. Ford gave FMCC flexibility to acquire a security interest in the automobiles by writing to FMCC on September 27, 1961: "As at present, title to any vehicle shipped by us to any of your dealer accounts will continue to pass (to you or the dealer depending on your arrangements with the dealer) upon delivery to the dealer or the carrier, whichever occurs first." FMCC took charge in working out the financial arrangements with dealers who desired to purchase automobiles from Ford on credit.
Wallace was provided with a brochure by FMCC, explaining the proposed Wholesale Plan (in pertinent part):
Factory Wholesale Method
The normal method for placing vehicles under the Wholesale Plan is the factory method. Under this method the Dealer instructs the manufacturer to ship vehicles to him, but to invoice FMCC for the vehicles. FMCC arranges to pay the manufacturer for vehicles delivered to the Dealer. A Trust Receipt and Note, printed on the reverse side of the Daily Transaction Register, are executed for the Dealer by a representative of FMCC under a power of attorney.
4
* * *
Trust Receipts
5
All vehicles placed under the FMCC Wholesale Plan are held in trust by the Dealer and are owned by FMCC. A Trust Receipt evidences that title to the vehicles remains with FMCC (the entruster) until the full invoice price advanced by FMCC is paid by the dealer (trustee). . . . Satisfactory relations depend upon strict compliance by the Dealer with the Trust Receipt provisions.
6
On May 20, 1967, Wallace executed two FMCC documents, (1) an Application for Wholesale Financing and (2) a Power of Attorney to Execute Trust Receipts and Notes. The introductory sentence of the Application incorporated by reference the explanation in the FMCC "Wholesale Plan" brochure referred to above. Paragraphs two and three of the Application state:
7
Dealer shall execute and deliver to FMCC promissory notes or other evidences of indebtedness and/or trust receipts, conditional sale contracts, chattel mortgages or other title retention or security instruments for the amounts of credit extended by FMCC hereunder and shall execute any additional documents which FMCC may reasonably request to confirm Dealer's obligations to FMCC and to confirm FMCC's title, title retention, lien or security interest in any merchandise financed by FMCC for Dealer under the Plan, and FMCC's title, title retention, lien or security or other interest in any such merchandise shall not be impaired by the delivery to Dealer of such merchandise or of bills of lading, certificates of origin, invoices or other documents pertaining thereto, or by the payment by Dealer of any curtailment, security or other deposit or portion of the amount financed. . . . FMCC's title, title retention, lien or security interest in any such merchandise shall attach, to the full extent provided or permitted by law, to the proceeds, in whatever form, of any sale or disposition thereof by the Dealer until such proceeds are accounted for and remitted to FMCC as hereinbefore provided.
8
Paragraph eight of the Application adds the following:
9
Dealer waives notice of FMCC's acceptance thereof and this agreement will be deemed accepted by FMCC at the time it shall first extend credit to Dealer under the Plan and shall be binding on Dealer and FMCC and their respective successors and assigns from the date thereof until terminated by receipt of written notice by either party from the other, but any such termination shall not relieve either party from any obligation incurred prior to the effective date thereof.
10
In the Power of Attorney executed by it, Wallace appointed R. C. White "and any other officer or employee of Ford Motor Credit Company" to be Wallace's "true and lawful attorneys with full power of substitution" to execute FMCC "promissory notes" and "trust receipts."
11
Wallace then notified Ford of its financial arrangements with FMCC by filling in the printed form entitled "Delivery Instructions" dated May 20, 1967, the provisions of the "Delivery Instructions" being as follows:
12
Please be advised that the undersigned Dealer has applied to Ford Motor Credit Company for the wholesale accommodations provided under the FMCC Automotive Wholesale Plan for purchases by the undersigned from you of new cars and trucks . . . . You are hereby requested and authorized to handle all deliveries to the undersigned of such motor vehicles in accordance with the terms of the FMCC Automotive Wholesale Plan until you are notified in writing to the contrary by the undersigned. You also are authorized to rescind the sale of, or divert the shipment of, any of such motor vehicles ordered by the undersigned in accordance with the instructions of Ford Motor Credit Company from time to time.
13
A field representative visited Wallace's office in Ruston, Louisiana, once a month to take orders. When the car was built at the Ford plant and became ready for shipment to Wallace, a data processing system notified FMCC. FMCC then used one of its printed forms entitled "Daily Transaction Register, Promissory Note and Trust Receipt" covering the involved new vehicle. This printed form is on a single sheet of paper. On one side, the Daily Transaction Register lists the car, date, and invoice amount. On the reverse side is a Promissory Note and a Trust Receipt. The Promissory Note was a promise by Wallace to pay to the order of FMCC the invoice amount. In the Trust Receipt, Wallace agreed to the following:
14
The dealer, named on the reverse side hereof, hereinafter referred to as the trustee, hereby acknowledges delivery of the items of property . . . described on the reverse side hereof, pursuant to the trustee's order for shipment by the manufacturer of said property, subject to transfer of title thereto by the manufacturer [Ford] to the entruster [FMCC] under the entruster's Wholesale Financing Plan. The trustee further acknowledges that the entruster has a security interest in said property and agrees that the trustee's possession thereof shall be on the following terms and conditions:
15
1. Title to said property shall remain in the entruster as security retained for and until the trustee's payment in cash of all amounts payable under the foregoing promissory note.
* * *
5
The trustee may sell said property at retail in the ordinary course of trustee's business, provided, however, that any and all proceeds thereof shall be fully, faithfully and promptly accounted for by the trustee to the entruster to the extent of the obligation hereby secured
16
* * *
17
8. This agreement shall be interpreted in accordance with the laws of the state of the trustee's place of business shown on the reverse side hereof. Any provision hereof prohibited by law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions hereof.
18
The Promissory Note and the Trust Receipt were each signed separately for Wallace by the facsimile signature of R. C. White, the agent designated by Wallace in the Power of Attorney heretofore referred to. FMCC paid Ford for the vehicle and sent a copy of the Daily Transaction Register, Promissory Note and Trust Receipt to Wallace.
19
In addition, Wallace received three documents from Ford, (1) a notice that the car was to be built, (2) a Statement of Origin indicating the car's identification number and the day the car was transferred to Wallace, and (3) an invoice showing total charges due by the dealer. On the front of the invoice was a notation that the car was "Sold to Wallace" and that the "Finance Company" was FMCC, but at the bottom was the statement: "This is for information only and in no way affects the transfer of title." The back of each invoice declared:
20
As provided in the Sales Agreement between Ford Motor Company and the Dealer. Check, draft, or other commercial paper received for merchandise covered by this invoice does not constitute payment until Ford Motor Company shall have received cash in full payment thereof, but title shall pass to the dealer, or to the financing institution or other party designated in "finance company and/or bank" on the face hereof and in any event a security interest shall pass to such institution or party upon delivery of the merchandise to the carrier or to the dealer, whichever first occurs.
21
For 61 of the vehicles, FMCC paid Ford directly upon notification from Ford that the car was built. As for the other 4 Lincolns, they were obtained by Wallace before it became an authorized Lincoln dealer, so the transactions were handled differently. Wallace ordered the 4 vehicles from Ford's representative, but Ford's Statement of Origin showed a transfer to Harter Lincoln-Mercury, Inc. (an authorized Lincoln dealer in Shreveport, Louisiana) with an assignment to Wallace. The face of Ford's invoice, besides again indicating FMCC to be the finance company, said "Sold to Harter"; and "Ship to (if other than above) Wallace." In connection with the purchase of the 4 vehicles, Wallace executed a Wholesale Security Agreement with FMCC which reads in pertinent part:
22
For value received, the undersigned [Wallace] hereby sells, conveys and transfers unto Ford Motor Credit Company all of its right, title and interest in and to the items of property described above and hereby assigns to Ford Motor Credit Company all certificates of title, certificates of origin, original invoices, trust receipts, chattel mortgages, conditional sale contracts and all other documents of title held by the undersigned with respect to the said property.
23
Instead of FMCC paying Ford, as happened with the other 61 transactions, Harter paid Ford and Wallace paid Harter with funds supplied by FMCC.
24
For all 65 transactions, in the interim between the time FMCC extended credit and the time Wallace satisfied the debt, Wallace paid interest each month to FMCC's office in Monroe, Louisiana. The final step for all 65 transactions, but for the bankruptcy, would have been Wallace's paying FMCC with the proceeds from Wallace's sale of the vehicles.
25
Under the circumstances here, the law of Louisiana is applicable1 to decide the question whether appellant FMCC has a lien on the vehicles so as to entitle it to priority in the proceeds in bankruptcy. In Louisiana that lien is known as the vendor's privilege and is provided for in Louisiana Civil Code article 3227.2 The District Judge believed Louisiana law was applicable, and as far as we can determine, the parties do not disagree that Louisiana law should be applied in this case.3
* * *In order to decide whether appellant has a vendor's privilege in this matter, entitling it to the proceeds in bankruptcy, we must inquire from what source Wallace derived its title to the vehicles. That title to the vehicles passed from Ford to FMCC is shown by the testimony and the various instruments in evidence, as illustrated by the following: the Sales Agreement between Wallace and Ford states that title to the vehicles shall pass "to the Dealer, or to such financing institution" (in this case FMCC), "as may have been designated to the company by the dealer." The Delivery Instructions by Wallace to Ford state that all deliveries shall be "in accordance with the terms of the FMCC Automotive Wholesale Plan." That Plan makes specific reference to the Trust Receipts which we have previously described, and the Plan states that "all vehicles placed under the FMCC Wholesale Plan are held in trust by the Dealer and are owned by FMCC." The Trust Receipt contains the stipulation between Wallace and Ford that "[t]his agreement shall be interpreted in accordance with the laws of the state of the trustee's [Wallace's] place of business," i. e., Louisiana; it also contains language which states that "The dealer . . . acknowledges delivery of the items of property . . . subject to transfer of title thereto by the manufacturer to the entruster [FMCC] under the entruster's Wholesale Financing Plan." Printed on the back of each Ford invoice to Wallace for the vehicle involved, is a provision that title shall pass to the financing institution designated on the face of the invoice. All invoices here show such financing institution to be FMCC.4 In the face of this clear and unambiguous provision on the reverse side of the Ford invoice we find it difficult to understand how appellee can so vigorously (and erroneously) state that "[i]n not a single instance of any invoice in the record is any indication of any intention by the owner of the vehicle, Ford Motor Company, to sell it or convey it to Ford Motor Credit Company." The evidence is all to the contrary.
Thus, while the transaction is complex, it is undoubted that under the agreements signed by Wallace, Ford and FMCC, and the Delivery Instructions, all parties knew and agreed that title would remain in Ford until FMCC paid for the vehicle, that FMCC, the financing institution, paid Ford for the vehicle, and title passed to FMCC.5 FMCC attempted to retain title until paid for the vehicle by the dealer. But under Louisiana law, a conditional sale whereby title is retained in the vendor is legally impossible,6 so the courts respect the contract but ignore the provision retaining title in the vendor. Morelock v. Morgan & Bird Gravel Co., 174 La. 658, 677, 141 So. 368, 374 (1932). By operation of the law of Louisiana title passes to the purchaser but the vendor retains the vendor's privilege provided by Louisiana Civil Code article 3227. Tangipahoa Bank & Trust Co. v. Kent, 5 Cir., 1934, 70 F.2d 139, 141; Christina Inv. Corp. v. Gulf Ice Co., 55 So.2d 685, 687 (1 Cir.La.App.1951). Therefore, the chain of title flows from Ford to FMCC to Wallace. See Edward J. Gay Co. v. Crichlow & Donelson, 29 La.Ann. 122 (Orl.App.1877).
The circumstances clearly show a Louisiana transaction, both in origin and in ultimate consummation. Wallace's orders were taken by Ford's representative at Wallace's place of business in Ruston, Louisiana; financing arrangements by Wallace were executed in Louisiana and conducted with FMCC's office in Monroe, Louisiana, where Wallace's payments were to be made; the vehicles were shipped from the place of manufacture to Louisiana; and finally Wallace's title to the vehicles was derived from FMCC under written agreements, one of which specified particularly that the agreement be interpreted in accordance with Louisiana law. In our view, these circumstances are sufficient to confer the Louisiana vendor's privilege in favor of FMCC.
The District Court's reliance on Witt7 is misplaced. There the creditor, a manufacturer of shoes, was a Virginia corporation which sent a traveling salesman to Louisiana to take orders. The Louisiana Supreme Court said the contract was consummated when the shoes were segregated in Virginia and placed on a carrier for shipment. That case is not apposite since it referred to an executory contract for the sale of an indeterminate object. Here the vehicle ordered by Wallace from Ford was not yet manufactured, but when FMCC entered the transaction the vehicle was in being, bore a serial number, and title was then transferred to FMCC by Ford, thence to Wallace. In Witt, specific exception was also reserved for transactions where "a specific agreement"8 existed between the parties, such as occurred here when Wallace and FMCC agreed that their transactions were to be interpreted under Louisiana law.9
The interpretation placed on Witt by the District Court does violence to equitable principles and disregards the overwhelmingly dominant Louisiana activity in this case. We reject such a conclusion for the reasons we have already outlined. Furthermore, the Louisiana Supreme Court does not mechanically apply the Witt rule.10 In John M. Parker Co. v. E. Martin & Co., 148 La. 791, 805, 88 So. 68, 72 (1920), the Court distinguished Witt by stating, "[I]n the present case both vendor and vendee were residents of the city of New Orleans and state of Louisiana, the contract was made here, contemplated delivery here, and delivery was actually made here, both of the bills of lading and the cotton itself." Even though the object of sale, the cotton, was in Mississippi11 and not segregated at the time the contract to sell was made, the Court decided that this was a Louisiana contract.
We hold therefore that appellant FMCC is entitled to all the proceeds from the 65 vehicles by priority over all other creditors.
Reversed.
1
In this federal bankruptcy case the District Court is not obliged to use the choice-of-law methodology of the forum state, Louisiana. Compare Vanston Bondholders Protective Comm. v. Green, 329 U.S. 156, 161-163, 67 S.Ct. 237, 239-240, 91 L.Ed. 162 (1946); McKenzie v. Irving Trust Co., 323 U.S. 365, 371, n. 2, 65 S.Ct. 405, 408, n. 2, 89 L.Ed. 305 (1945); Speare v. Consolidated Assets Corp., 2 Cir., 1966, 367 F.2d 208, 211, with Richards v. United States, 369 U.S. 1, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962); Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). See generally Hill, The Erie Doctrine in Bankruptcy, 66 Harv.L.Rev. 1013, 1047, n. 135 (1953); 4A Collier on Bankruptcy p 70.04, n. 31 (J. Moore, ed. 1971)
2
The article provides in pertinent part:
He who has sold to another any movable property, which is not paid for, has a preference on the price of his property, over the other creditors of the purchaser, whether the sale was made on a credit or without, if the property still remains in the possession of the purchaser.
So that although the vendor may have taken a note, bond or other acknowledgment from the buyer, he still enjoys the privilege.
See generally La.Civ.Code arts. 3217(7), 3228-3231; R. Slovenko, Treatise on Creditors' Rights Under Louisiana Civil Law 276-280 (1968); Sachse, Using Inventory as Security: A Civil Law Perspective, 39 Tul.L.Rev. 397 (1965); Comment, Vendor's Privilege, 4 Tul.L.Rev. 238 (1930).
3
Both Wallace and FMCC agreed to the provision in paragraph eight of the Trust Receipt, stipulating the application of the laws in the state of the trustee's (Wallace's) place of business (Louisiana). Since Louisiana has a substantial connection with the contract due to Wallace having its principal place of business in the state and because Louisiana was the place where the automobiles were delivered, the stipulation should be dispositive. See R. Leflar, American Conflicts of Law 356 (1968)
4
Ford's Statements of Origin relative to the vehicles did not show FMCC as transferee of the automobiles, but the purpose of these documents is merely to satisfy state registration requirements. As illustrated by the following Louisiana provision on Certificates of Title, the state does not focus on transfers of title prior to a sale to a customer. La.R.S. 32:704 provides:
Applicability
The provisions of this Chapter shall apply to the sale and chattel mortgaging of vheicles of the sort and kind required to be registered and licensed under the provision of Chapter 4 of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950, except that there is specifically excluded from the provisions of this Chapter the sale of a new vehicle prior to the first sale of such new vehicle to a user, as defined herein. Such exclusion, however, does not exempt from the provisions of this Chapter such first sale made to a user as defined herein.
(Emphasis supplied.) La.R.S. 32:702(3) defines a "user" as "any person who acquires a vehicle for purposes other than resale and is required to register same under the provisions of the Louisiana Vehicle Registration License Tax Law . . . ." Since FMCC was not a user, the failure to show FMCC on the Statements of Origin is not critical. See also La.R.S. 47:473, 501, 509.
5
As for the transactions involving the 4 Lincolns that Wallace acquired prior to becoming a Lincoln dealer, we regard them as essentially the same as the other 61 transactions. Wallace placed the order, as usual, with the Ford representative, and Wallace received delivery as usual. Although the face of the invoice showed "Sold to Harter," the bottom of the invoice said: "This is for information only and in no way affects transfer of title." The back of the invoice said title passed to the financing institution listed on the face, and FMCC is named as the Finance Company on the face of the invoice. The funds went from FMCC to Wallace to Harter to Ford rather than directly from FMCC to Ford. But the end result was the same. In these special circumstances, we respect FMCC as the buyer from Ford, and subsequently as the seller to Wallace, particularly when the 4 transactions are seen against the backdrop of the many other transactions where FMCC paid Ford directly. See Cottonport Bank v. Dunn, 21 So.2d 525 (La.App. 1 Cir. 1945); Jeckell v. Fried, 18 La.Ann. 192 (Orl.La.Ann.1866)
6
The only recognized exception may be where the object of sale is brought into Louisiana without the consent of the creditor. Universal C.I.T. Credit Corp. v. Hulett, 151 So.2d 705, 707 (3 Cir. La. App.1963). This exception is unavailable here because FMCC knew the automobiles were destined for Ruston, Louisiana, the location of Wallace's dealership
7
George D. Witt Shoe Co. v. J. A. Seegars & Co., 122 La. 145, 47 So. 444 (1908)
8
Id. at 150, 47 So. at 446
9
This case differs from our previous decision, In re Hoover, 5 Cir., 1971, 447 F.2d 195, in the stipulations. In Hoover, the parties agreed that "'the sale was consummated in the State of Minnesota,"' and we said, "Regardless of where or when title passed, the parties stipulated that the sale was consummated in Minnesota, and we think the court properly determined from that fact that for the purposes of applying Article 3227 the sale was made outside of Louisiana and must be judged as such." 447 F.2d at 197
10
Prior to Witt a lower court did not regard as essential the existence of segregated goods at the time the contract was made; McLlane v. His Creditors, 47 La. Ann. 134, 16 So. 764 (1895) (at the time of contract, the seller did not have in stock an engine and boiler constituting part of the machinery that was the subject of the contract); nor did the Louisiana Supreme Court look into the question in Erman v. Lehman, 47 La.Ann. 1651, 18 So. 650 (1895), although the Court noted that when the goods were ordered they were in other states. The two courts examined whether the agents taking orders had authority to make binding contracts. Here that problem is obviated because FMCC and Wallace had a long-standing arrangement that was accepted when FMCC first extended credit, according to paragraph eight of the Application for financing
11
The Court added, in regard to the fact that the cotton was in Mississippi, the following remarks:
Plaintiff did not undertake to deliver, and did not deliver either actually or technically any cotton in the state of Mississippi to Martin & Co. The fact of its presence in that state was a mere incident or circumstance of the arrangement under which plaintiff itself acquired, and its arrival in New Orleans was necessary before plaintiff could perform the executory provision of its contract for delivery to Martin & Co.
Id. at 806, 88 So. at 73.
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T.C. Summary Opinion 2012-67
UNITED STATES TAX COURT
DREAMCO DEVELOPMENT CORP., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16136-11S L. Filed July 16, 2012.
Rosanne DiPizio (an officer), for petitioner.
John M. Janusz, for respondent.
SUMMARY OPINION
WELLS, Judge: The petition in this case was filed pursuant to the provisions
of section 7463.1 Pursuant to section 7463(b), the decision to be entered is not
1
Unless otherwise indicated, section references are to the Internal Revenue
Code of 1986, as amended, and Rule references are to the Tax Court Rules of
Practice and Procedure.
-2-
reviewable by any other court, and this opinion shall not be treated as precedent for
any other case. This case is before the Court on respondent’s motion for summary
judgment pursuant to Rule 121. We must decide whether respondent’s Appeals
Office abused its discretion when it upheld respondent’s notices of intent to levy
and notices of Federal tax lien with respect to the quarters ending March 31, June
30, September 30, and December 31, 2008; March 31, June 30, September 30, and
December 31, 2009; and March 31, June 30, and September 30, 2010.
Background
The facts set forth below are based upon examination of the pleadings,
moving papers, responses, and attachments. Petitioner’s principal place of business
is in Cheektowaga, New York. Rosanne DiPizio (also known as Rosanne Lettieri)
is petitioner’s president (Ms. DiPizio). Petitioner is a developer and general
contractor.
On June 4, 2010, petitioner untimely filed Forms 941, Employer’s Quarterly
Federal Tax Return, for the quarters December 31, 2008, through March 31, 2010.
Petitioner included full payment of the tax with the Forms 941. Respondent
assessed late filing and failure to pay additions to tax, failure to deposit penalties,
-3-
and interest against petitioner.2 On July 31, 2010, petitioner filed its Form 941 with
respect to the quarter ending June 30, 2010.
On August 4, 2010, respondent’s employee Susan Mitchell contacted Ms.
DiPizio to attempt to collect the penalties and interest with respect to the quarters
ending December 31, 2008, through March 31, 2010. Ms. DiPizio requested
abatement of the penalties; but because respondent had previously, on another
occasion within the preceding three years, assessed a penalty against petitioner
because of its failure to timely file and pay, Ms. Mitchell determined that petitioner
was not eligible for abatement.
On August 20, 2010, respondent received petitioner’s Forms 941 for the
quarters ending March 31, June 30, and September 30, 2008. Petitioner also
paid the tax due with those returns. On September 8, 2010, petitioner submitted a
partial payment for the interest due on the returns filed on June 4, 2010. On
September 17, 2010, Ms. Mitchell received a letter from Ms. DiPizio again
requesting abatement of the penalties. Ms. DiPizio wrote: “I have now hired an
employee to handle the payments in a timely manner and do all the paperwork
2
Throughout the correspondence in the record, the parties refer to the
additions to tax and penalties without distinction as “penalties”; for clarity, we
adopt their usage in this opinion.
-4-
necessary so that this issue does not happen again.” Ms. Mitchell denied Ms.
DiPizio’s request for abatement.
On October 19, 2010, respondent mailed petitioner a Letter 1058, Final
Notice of Intent to Levy and Notice of Your Right to a Hearing, with respect to
petitioner’s liabilities for the quarters ending March 31, 2008 through 2010. On
October 31, 2010, petitioner filed its Form 941 with respect to the quarter ending
September 30, 2010. On November 9, 2010, respondent mailed petitioner a Notice
of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, with
respect to petitioner’s liabilities for the quarters ending March 31, 2008 through
2010.
On November 15, 2010, respondent received petitioner’s Form 12153,
Request for a Collection Due Process or Equivalent Hearing, regarding the proposed
levy with respect to the quarters ending March 31, 2008 through 2010. On
November 18, 2010, respondent received petitioner’s Form 12153 regarding
respondent’s notice of Federal tax lien (NFTL) with respect to the quarters ending
March 31, 2008 through 2010. On both Forms 12153 petitioner checked the box for
Offer in Compromise and wrote: “Interest only, penalties waived. I have now
employed the services of having this taken care of [sic] so it doesn’t happen
anymore [sic].”
-5-
On December 6, 2010, respondent assessed a Federal tax deposit penalty
with respect to petitioner’s deposits for the quarter ending June 30, 2010. On
December 16, 2010, respondent mailed to petitioner a notice of intent to levy with
respect to petitioner’s liability for the quarter ending June 30, 2010. On December
20, 2010, respondent assessed a Federal tax deposit penalty with respect to
petitioner’s deposits for the quarter ending September 30, 2010. On December 28,
2010, respondent received petitioner’s request for a collection due process hearing
regarding the proposed levy with respect to petitioner’s liability for the quarter
ending June 30, 2010. On January 7, 2011, respondent mailed to petitioner a notice
of intent to levy with respect to petitioner’s liability for the quarter ending
September 30, 2010. On January 14, 2011, respondent received petitioner’s request
for a collection due process hearing regarding the proposed levy with respect to
petitioner’s liability for the quarter ending September 30, 2010.
Respondent’s Appeals Office acknowledged its receipt of petitioner’s
requests for collection due process hearings with four separate letters dated
December 23, 2010, and January 25, February 4, and February 4, 2011. Settlement
Officer Rebecca Warfield scheduled a telephone conference for February 15, 2011.
Ms. Warfield requested that, before the conference, petitioner complete and submit
a Form 433-B, Collection Information Statement for Businesses, and the required
-6-
attachments. Additionally, Ms. Warfield asked that petitioner submit other
documents including: lists of officers, directors, and major shareholders; bank
signature cards; lists of all real properties owned by petitioner; lists of all open
accounts receivable; lists of all machinery and inventory on hand; and all unfiled
Forms 941. Petitioner failed to submit any of the documents Ms. Warfield
requested. On February 14, 2011, Ms. Warfield contacted petitioner’s president,
Ms. DiPizio. After reaching Ms. DiPizio, Ms. Warfield informed Ms. DiPizio that
she had not received any of the requested documents. Ms. DiPizio acknowledged
that she had not submitted the documents yet but that she was planning to do so the
following day. Ms. Warfield gave petitioner an extension until February 28, 2011.
On February 16 and 18, 2011, Ms. DiPizio faxed at least some of the
requested documents to Ms. Warfield, including a number of Forms 941. On the
Form 433-B, Ms. DiPizio disclosed that petitioner’s assets included more than
$33,000 in cash and equity in real property of $128,916. The Form 433-B also
showed that petitioner had lent Ms. DiPizio more than $87,000. The Form 433-B
showed that, during the six-month period ending December 31, 2010, petitioner had
monthly income of $1,815,265 and monthly expenses of $1,805,844, including gross
wages and salaries of $406,851.
-7-
Ms. Warfield held a telephone conference with Ms. DiPizio on February 28,
2011. During the telephone conference, Ms. Warfield advised Ms. DiPizio that
petitioner was not eligible for the proposed offer-in-compromise because its equity
in real property alone was sufficient to pay its liability. Ms. DiPizio stated that her
divorce decree required her to transfer the real property to her former husband. Ms.
Warfield also advised Ms. DiPizio that petitioner again was behind on filing its
quarterly returns, and Ms. DiPizio said that she would fax copies of the returns to
Ms. Warfield, which she did on March 3, 2011.
On June 2, 2011, respondent mailed to petitioner three separate Notices of
Determination Concerning Collection Action(s) Under Section 6330 (notices of
determination). One of the notices of determination sustained the levy action with
respect to petitioner’s tax quarters ending March 31, June 30, September 30, and
December 31, 2008; March 31, June 30, September 30, and December 31, 2009;
and March 31, 2010. No notice of determination was issued with respect to the lien
action for those quarters; respondent acknowledges that this omission was an
inadvertent error. The other two notices of determination sustained both the lien
and levy actions with respect to the quarters ending June 30, and September 30,
2010.
-8-
The notices of determination explained that petitioner was not eligible for the
proposed offer-in-compromise because petitioner had not yet filed all of the Forms
941 required, including returns for the quarters ending March 31, June 30, and
September 30, 2004, June 30, 2005, March 31, 2006, and March 31, 2011;3 because
petitioner had not yet filed its Form 940, Employer’s Annual Federal Unemployment
(FUTA) Tax Return for 2005 or 2006; and because petitioner had fallen behind
again on its tax deposits during May 2011. The notices of determination also noted
that petitioner had sufficient equity in assets to satisfy the amount due. With respect
to petitioner’s request for abatement of penalties, the notices of determination
stated:
During the Collection Due Process hearing, at your request, the Settlement
Officer also discussed the possibility of relief from penalties associated with
the tax assessment. You were encouraged to review the information
available and www.irs.gov, and a brief discussion of Reasonable Cause as
basis for relief took place. Appeals advised you that a period of time would
be given to you for the purpose of providing a request of that nature and
supportive documentation for this consideration. While Appeals is aware of
your current efforts to secure professional assistance to ensure the
difficulties of complying with filing and payment of federal tax liabilities
and would support the continuation of those efforts, this does not constitute
Reasonable Cause basis for relief of prior penalties. Appeals has considered
in full your request for relief from penalties separately. That consideration
does not provide for any relief at this time.
3
Although Ms. DiPizio faxed at least some of those Forms 941 to the Appeals
Office on February 16 and 18, 2011, for reasons that are not entirely clear from the
record the Appeals Office did not process them.
-9-
Separately, on June 2, 2011, Ms. Warfield mailed petitioner a letter denying its
request for adjustment of the penalties. In the letter, Ms. Warfield explained the
process for appealing the determination of the Appeals Office with respect to the
penalties. The record contains no evidence that petitioner pursued any further
actions with respect to its request for adjustment of the penalties.
Petitioner timely filed its petition in this Court. Petitioner contends in its
petition that it has filed all the required Forms 941 even though it was not required
to do so because it is a seasonal employer, that it does not have equity sufficient to
pay the amount due, that it is current on its tax obligations, and that it will suffer
hardship if it has to pay the full amount of its liabilities. The petition does not
mention the denial of petitioner’s request for abatement of penalties.
Respondent filed a motion for summary judgment, and we ordered petitioner
to file a response to respondent’s motion. However, petitioner failed to file a
response. Before the date set for trial, respondent filed a motion to continue the trial
so that the Court could consider respondent’s motion for summary judgment. We
ordered petitioner to file a response to respondent’s motion to continue the trial, but
petitioner again failed to file a response. Petitioner also failed to appear at the
- 10 -
calendar call for the Court’s Buffalo, New York, trial session on April 10, 2012.
On April 13, 2012, we granted respondent’s motion to continue the trial.
Discussion
Summary judgment is intended to expedite litigation and avoid unnecessary
and expensive trials and may be granted where there is no genuine issue of material
fact and a decision may be rendered as a matter of law. Rule 121(a) and (b); Fla.
Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The moving party bears
the burden of proving that there is no genuine issue of material fact, and factual
inferences are viewed in the light most favorable to the nonmoving party.
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965
(7th Cir. 1994). However, the party opposing summary judgment must set forth
specific facts that show a genuine issue of material fact exists and may not rely
merely on allegations or denials in the pleadings. Rule 121(d). Under Rule 121(d),
if the adverse party does not respond to the motion for summary judgment, this
Court may, where appropriate, enter a decision against that party. Baker v.
Commissioner, T.C. Memo. 2001-283. Even though petitioner failed to respond to
respondent’s motion and failed to appear at trial, we will address the contentions
petitioner raised in its petition.
- 11 -
If a taxpayer requests a hearing in response to a notice of Federal tax lien or a
notice of levy pursuant to section 6320 or 6330, a hearing shall be held before an
impartial officer or employee of the Appeals Office. Sec. 6330(b)(1), (3). At the
hearing the taxpayer may raise any relevant issue, including appropriate spousal
defenses, challenges to the appropriateness of the collection action, and collection
alternatives. Sec. 6330(c)(2)(A). A taxpayer is precluded from contesting the
existence or amount of the underlying tax liability, unless the taxpayer did not
receive a notice of deficiency for the liability in question or did not otherwise have an
earlier opportunity to dispute the liability. Sec. 6330(c)(2)(B); see also Sego v.
Commissioner, 114 T.C. 604, 609 (2000). The phrase “underlying tax liability”
includes the tax deficiency, additions to tax, and statutory interest. Gray v.
Commissioner, 138 T.C. ___, ___ (slip op. at 10) (Mar. 28, 2012); Katz v.
Commissioner, 115 T.C. 329, 339 (2000).
Following a hearing, the Appeals Office must determine whether to sustain the
filing of the lien and whether proceeding with the proposed levy action is
appropriate. In making that determination, the Appeals Office is required to take
into consideration: (1) verification presented by the Commissioner during the
hearing process that the requirements of applicable law and administrative procedure
have been met, (2) relevant issues raised by the taxpayer, and (3) whether the
- 12 -
proposed lien or levy action appropriately balances the need for efficient collection
of taxes with the taxpayer’s concerns regarding the intrusiveness of the proposed
collection action. Sec. 6330(c)(3).
Section 6330(d)(1) grants this Court jurisdiction to review the determination
made by the Appeals Office in connection with the section 6330 hearing. Where the
underlying tax liability is properly in issue, we review the matter de novo. See Goza
v. Commissioner, 114 T.C. 176, 181-182 (2000). However, where the validity of the
underlying tax liability is not properly in issue, we will review the determination of
the Appeals Office for abuse of discretion. Lunsford v. Commissioner, 117 T.C.
183, 185 (2001); Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner,
114 T.C. at 182. An abuse of discretion occurs if the Appeals Office exercises its
discretion “arbitrarily, capriciously, or without sound basis in fact or law.” Woodral
v. Commissioner, 112 T.C. 19, 23 (1999).
Petitioner does not contest its underlying liabilities;4 therefore, we review the
determination of the Appeals Office for abuse of discretion. We have held that it is
not an abuse of discretion for the Appeals Office to refuse to consider a taxpayer’s
offer-in-compromise on the grounds that the taxpayer has a history of
4
In its petition, petitioner did not raise the issue of respondent’s denial of its
request for abatement of penalties. Accordingly, we deem that issue conceded. See
Rule 331(b)(4).
- 13 -
noncompliance and is not in compliance with current tax obligations. See Giamelli v.
Commissioner, 129 T.C. 107, 111-112 (2007). In doing so, the Appeals Office is
following the requirements of the regulations. See secs. 301.6320-1(d)(2), Q&A-D8,
sec. 301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs. (“the IRS does not
consider offers to compromise from taxpayers who have not filed required returns or
have not made certain required deposits of tax”).
Petitioner contended in its petition that it has filed all the required Forms 941
even though it was not required to do so because it is a seasonal employer.
Petitioner’s contention that it is a seasonal employer and therefore not required to file
Forms 941 is belied by the fact that, in many years, petitioner paid employees during
every quarter. Moreover, petitioner’s business is general contracting, which is not an
industry, such as farming, typically associated with seasonal employees, and the
administrative record contains no evidence that would suggest petitioner should be
considered a seasonal employer. Accordingly, we conclude that petitioner has not
shown that it was a seasonal employer. Therefore, petitioner was required to file
Forms 941 every quarter, even when it did not have employees on its payroll. See
IRS Publ’n 15 (Circular E), Employer’s Tax Guide (2010). Although petitioner
contests respondent’s assertion that it failed to file all required Forms 941 and Forms
940, petitioner has offered no evidence to support its contention. Similarly, although
- 14 -
petitioner contends that it is current with its tax obligations, it offered no evidence to
contradict respondent’s records that it is again behind on its Federal tax deposits.
Accordingly, we conclude that there is no genuine issue of material fact as to
whether petitioner is in compliance with its tax obligations. We conclude that
petitioner is not in compliance with its filing and paying obligations and that it
therefore was not an abuse of discretion for respondent’s Appeals Office to reject
petitioner’s offer-in-compromise on those grounds. See Giamelli v. Commissioner,
129 T.C. at 111-112.
On the basis of the foregoing, we hold that respondent’s Appeals Office did
not abuse its discretion, and therefore we will grant respondent’s motion for
summary judgment.
In reaching the foregoing holdings, we have considered all the parties’
arguments, and, to the extent not addressed herein, we conclude that they are moot,
irrelevant, or without merit.
To reflect the foregoing,
An appropriate order and decision
will be entered for respondent.
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646 S.W.2d 437 (1982)
James R. BLACK, a minor by his next friend, H.R. BLACK, Sr., Plaintiff-Appellant,
v.
Sandra L. QUINN, Defendant-Appellee.
Court of Appeals of Tennessee, Western Section, at Nashville.
December 2, 1982.
Application for Permission to Appeal Denied February 14, 1983.
*438 Charles Galbreath, Nashville, for plaintiff-appellant.
B.F. Lowery, Hugh E. Green, Jr., Lebanon, for defendant-appellee.
Application for Permission to Appeal Denied by Supreme Court February 14, 1983.
HIGHERS, Judge.
This is an appeal by James Robert Black, a minor, by his father, H.R. Black, as next friend, from a jury verdict in favor of the defendant.
Two questions are presented for review:
1. Was the trial judge correct in denying the plaintiff's motion for a directed verdict at the end of all of the proof?
2. Did the trial judge correctly instruct the jury that a minor driving a motor vehicle on the streets and highways is charged with the same duty of care as an adult?
The accident in this case occurred on September 6, 1980, at which time the minor plaintiff was eleven years of age. He and a friend, John Ledsinger, had been riding their motorcycles on some undeveloped property which they referred to as the "trails." Prior to the accident they had ridden their motorcycles to the intersection of South Greenhill and Woodlawn Streets in Mt. Juliet. They were seated on their motorcycles in a stopped position when the defendant, Sandra L. Quinn, approached on South Greenhill and made a left turn on to Woodlawn. James Robert Black, the minor plaintiff, started his Honda SL-70 and proceeded in the same direction as the defendant, traveling some distance behind her. The defendant slowed as she neared her driveway, looked into her rear view mirror and saw nothing unusual, and proceeded to turn left into her driveway. She was at that time struck on the left side of her vehicle by the minor plaintiff who was attempting to pass. The defendant acknowledges that she did not give any signal of her intention to turn; however, James Robert Black testified that he did observe defendant's vehicle slowing down and he also saw her brake lights come on before he attempted to pass. There was a conflict in the testimony as to whether the defendant pulled to the right before turning or if she turned from a straight line.
At the conclusion of the proof motions were made for directed verdicts by both parties and these were overruled by the trial judge. After argument of counsel the jury was instructed and thereafter returned a verdict for the defendant. The plaintiff moved for a new trial, but the trial judge denied the motion and approved the jury verdict.
The plaintiff objects to the following charge which was read to the jury:
A minor driving a motor vehicle on the streets and highways is chargeable with the same duty of care as an adult.
It is the contention of the plaintiff that the proper charge to the jury would have been that there is a presumption that a child between the ages of seven and fourteen years is incapable of negligence, but the presumption is not conclusive and may be rebutted by evidence of the minor's capacity for negligence. This, of course, is the general rule in Tennessee regarding the capacity of a minor for negligence. See Bailey v. Williams, 48 Tenn. App. 320, 346 S.W.2d 285 (Tenn. App. 1960), Prater v. Burns, 525 S.W.2d 846 (Tenn. App. 1975).
There is, however, an exception to the general rule when the minor is the operator of a motor vehicle. The rule was stated by Justice White in Powell v. Hartford Accident and Indemnity Co., 217 Tenn. 503, 398 S.W.2d 727 (Tenn. 1966), in which it was said:
We believe the better reasoned cases place the same duty of care upon all *439 operators of motor driven vehicles, regardless of age, that is, ordinary care ...
Finally, we hold that a minor is held to the same standard of care as an adult with respect to the operation of a motor vehicle on the highways, roads, streets, and alleys of this State.
In the opinion the Court also quoted, with approval, the following language from Wagner v. Shanks, 194 A.2d 701 (Del. 1963):
We consider it to be a matter of paramount public policy, in fact a rule of necessity, that society in general be assured that all drivers of motor vehicles upon our highways be charged with equal responsibility in the operation of motor vehicles regardless of age, or any other physical or mental disparity which may exist.
In Mize v. Skeen, 63 Tenn. App. 37, 468 S.W.2d 733 (Tenn. App. 1971), the Court stated: "Under the holding of the Powell case a minor, operating a motor driven vehicle, is no longer entitled to a charge of the presumption he is not capable of negligence but the trial judge is required to charge the jury, as was done in this case, that such minor is held to the same standard of care as an adult."
Counsel for the plaintiff argues in his brief that the holding in McIntyre v. McIntyre, 558 S.W.2d 836 (Tenn. 1977), limits the application of Powell to minors who are nevertheless licensed drivers. First, it should be pointed out that the Court expressly disallowed the licensing rationale as the basis for its decision in the Powell case. Justice Creson recognized this in his dissent when he said of the majority opinion that "this Court would apply the adult duty of care both under the motor vehicle license statutes of Tennessee and a `rule of reason' based upon the minor engaging in an `adult activity.'" Second, the McIntyre case does not turn on any particular age limit, nor does it carve out an exception to the holding in Powell v. Hartford Accident and Indemnity Co., supra. In fact, the opinion in McIntyre reiterates the principle set forth in the Powell case. Justice Henry said: "A minor is held to an adult standard of care when operating a motor vehicle on the highways, roads, streets and alleys of the state." 558 S.W.2d 836 at 838.
The issue raised by the plaintiff-appellant is therefore without merit with respect to the charge of the trial court. The instruction of the court to the jury is approved as a correct statement of the law under our cases.
Now, having established the proper duty of care applicable to the minor plaintiff, we come to the question of whether the trial court erred in failing to direct a verdict for the plaintiff on the issue of liability at the conclusion of the proof.
Counsel for the plaintiff argues in his brief before the Court that the record is "devoid of any proof of negligence" on the part of the plaintiff and the trial judge should have directed a verdict in his favor. We do not so read the record. The defendant alleged that the plaintiff failed to maintain his motorcycle under reasonable control, failed to keep a proper lookout ahead, commenced to pass when it was not safe to do so, followed too closely, and was otherwise guilty of negligence under the statutes and the common law. The proof showed that the plaintiff proceeded behind the defendant's vehicle, saw the car slow down, saw the brake lights come on, all before he proceeded to pass her vehicle on the left. There was testimony that the accident took place approximately three hundred feet from the place where the plaintiff was sitting at the intersection when the car first passed, and that the plaintiff did not begin to move until the car had traveled a hundred feet beyond that point. He testified that he thought his speed was approximately fifteen miles per hour, but he was unable to explain how he managed to catch up with the defendant's vehicle in such a short distance. There was certainly proof upon which reasonable minds could have differed concerning whether he was traveling at a speed which was too great under the circumstances then existing and whether he was exercising reasonable and ordinary care in the operation of his motorcycle.
In reviewing a judgment based upon a jury verdict this Court is limited to *440 determining whether there is material evidence to support the verdict. In determining whether there is material evidence to support the verdict, we are required to take the strongest legitimate view of all the evidence in favor of the verdict, to assume the truth of the evidence in support thereof, allowing all reasonable inferences to sustain the verdict and to disregard all evidence to the contrary. Crabtree Masonry Co. v. C & R. Const., Inc., 575 S.W.2d 4 (Tenn. 1978); Pullins v. Fentress Cty. Gen. Hospital, Etc., 594 S.W.2d 663 (Tenn. 1979); Truan v. Smith, 578 S.W.2d 73 (Tenn. 1979). In considering the action of the trial court in granting, or declining to grant, a motion for directed verdict, the motion must be denied if there is any dispute as to any material determinative evidence, or any doubt as to the conclusion to be drawn from the whole evidence. Goings v. Aetna Casualty and Surety Company, 491 S.W.2d 847 (Tenn. App. 1972); Norman v. Liberty Life Assur. Co., 556 S.W.2d 772 (Tenn. App. 1977).
Finding no error, we affirm the judgment of the trial court as entered. Costs are assessed against the appellant.
TOMLIN and CRAWFORD, JJ., concur.
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1452
PHYSICIANS HEALTHSOURCE, INC., indi-
vidually and as the representative of a
class of similarly-situated persons,
Plaintiff-Appellee,
v.
A-S MEDICATION SOLUTIONS, LLC, et al.,
Defendants-Appellants.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12-cv-05105 — Matthew F. Kennelly, Judge.
____________________
ARGUED JANUARY 16, 2020 — DECIDED FEBRUARY 24, 2020
____________________
Before FLAUM, MANION, and KANNE, Circuit Judges.
FLAUM, Circuit Judge. In February 2010, A-S Medication So-
lutions, LLC (“AMS”) sent a fax advertisement to 11,422 dif-
ferent numbers from a recently acquired customer list. Nearly
two years later, Physicians Healthsource, Inc. (“PHI”) filed a
putative class action suit asserting that those faxes violated
the Telephone Consumer Protection Act of 1991 (“TCPA”),
2 No. 19-1452
47 U.S.C. § 227. The district court subsequently: certified the
proposed class; granted PHI’s motion for summary judgment
on liability against AMS and its CEO, Walter Hoff; entered a
nearly $6 million judgement; and approved a distribution
plan for that judgment. On appeal, AMS challenges all those
decisions but the certification of the class. We affirm.
I. Background
In March 2009, AMS1 purchased part of Allscripts, Inc.’s
business. As part of that sale, AMS received access to a cus-
tomer database containing the fax numbers of Allscripts’ rel-
evant customers. The database had a customer interface that
allowed customers like PHI to manage their own accounts.
For example, customers could add or delete their fax numbers
as well as check a box informing Allscripts (or subsequently
AMS) that they did not want to receive faxes.
Sometime after the transaction, Lauren McElroy, AMS’
Vice President of Marketing, drafted a fax to send to All-
scripts’ former customers at Hoff’s direction. On February 10,
2010, Hoff approved the fax and AMS started sending it. Us-
ing an automated system, AMS sent the fax to 15,666 fax num-
bers over the course of 18 days from February 10 to February
28. AMS successfully delivered the fax to 11,422 numbers, in-
cluding PHI’s on February 18. The fax advertised a new ser-
vice from AMS, provided AMS’ contact information, and ref-
erenced “The A-S Medication Solution Quality Service Guar-
antee.” AMS never sought or obtained permission from any
of the recipients prior to sending the fax. Indeed, Hoff later
testified that he believed “[AMS] didn’t need to.” The fax also
1 We collectively refer to both the individual defendant, Walter Hoff, and
the entity defendant, AMS, as “AMS.”
No. 19-1452 3
lacked a disclaimer explaining recipients’ ability to “opt out”
of future faxes and how to do so.
PHI subsequently filed a putative class action in Illinois
state court against AMS, Hoff, and 10 other John Does under
the TCPA, which AMS then removed to federal court. After
adjudicating two separate motions to dismiss, the district
court certified the case as a class action in September 2016. The
certified class included:
All persons or entities who were successfully
sent the Fax providing “A-S Medication Solu-
tions, LLC, Quality Service Guaranteed,” and
“Ask about our new Pedigree RxSolution!,” be-
tween February 10, 2010 and February 28, 2010.
Class counsel sent out the notice via fax, rather than physical
mail, and directed it at fax numbers as opposed to individuals
or entities.
PHI filed its first motion for summary judgment in Janu-
ary 2017. In response, AMS submitted an expert report show-
ing that multiple individuals or entities could have claims for
each fax because the fax numbers were registered to multiple
individuals in a federal database. Considering this new infor-
mation, AMS argued the court could not enter summary judg-
ment. The district court denied PHI’s motion to strike the ex-
pert report but allowed PHI to conduct discovery as to the re-
port. It also denied PHI’s motion for summary judgment
without prejudice.
PHI’s second motion for summary judgment—this time
on liability alone—proved successful. The district court found
that AMS and Hoff were jointly and severally liable for the
4 No. 19-1452
11,418 faxes.2 AMS subsequently requested the court set a
briefing schedule and hold an evidentiary hearing on dam-
ages. The court denied that motion, however, concluding that
because PHI sought only statutory damages under the TCPA,
no evidentiary hearing on damages was necessary. PHI filed
a motion for the entry of judgment shortly thereafter, which
the district court granted. The court entered judgment for PHI
and the plaintiff class in the amount of $5,709,000 (the undis-
puted number of faxes, 11,418, multiplied by the statutory
fine, $500). The court also ordered briefing on how that sum
should be distributed to class members.
AMS subsequently filed a motion to alter or amend the
judgment or, in the alternative, to reconsider. The district
court denied that motion and entered a distribution plan sub-
ject to revision regarding the amount of attorney’s fees and
incentive awards. This appeal followed.
II. Discussion
AMS specifically challenges (1) the district court’s ruling
on liability, (2) the denial of its motion for leave to file a sur-
reply to PHI’s motion for the entry of judgment, (3) the entry
of judgment for PHI, (4) the denial of AMS’ motion to alter or
amend the judgment, and (5) the adoption of the fund award
process.
A. Liability
We review a district court’s grant of a motion for summary
judgment de novo, interpreting the facts and drawing all rea-
sonable inferences in favor of the nonmoving party. O’Brien
2Four of the 11,422 fax recipients opted out of the class after receiving
notification of the suit.
No. 19-1452 5
v. Caterpillar Inc., 900 F.3d 923, 928 (7th Cir. 2018). Our de novo
review necessarily includes a review of the legal framework
adopted by the district court. Martinez v. Cahue, 826 F.3d 983,
989 (7th Cir. 2016). “Summary judgment is appropriate where
there are no genuine issues of material fact and the movant is
entitled to judgment as a matter of law.” Hess v. Bd. of Trs. of
S. Ill. Univ., 839 F.3d 668, 673 (7th Cir. 2016) (citing Fed. R. Civ.
P. 56(a)). And summary judgment is inappropriate “if the ev-
idence is such that a reasonable jury could return a verdict for
the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). We may affirm the entry of summary judg-
ment on any ground supported in the record, so long as the
parties adequately presented the issue to the district court and
the non-moving party had an opportunity to contest it.
O’Brien, 900 F.3d at 928 (citation omitted).
1. Prior Express Permission or Invitation
AMS concedes that the fax in question was an advertise-
ment that lacked any kind of disclaimer explaining how to opt
out of future faxes. Thus, it cannot rely on the TCPA’s estab-
lished business relationship safe harbor (the so-called “EBR”),
which requires—among other things—that the fax contain a
notice informing the recipient of his or her ability to avoid fu-
ture faxes and how to do so. See 47 U.S.C. § 227(b)(1)(C)(iii),
(b)(2)(D); see also 47 C.F.R. § 64.1200(a)(4)(iii). Consequently,
AMS may avoid liability for the faxes only if it had prior ex-
press permission or invitation to send the fax in question from
each of the recipients. See 47 U.S.C. § 227(b)(1)(C) (making it
unlawful to send an “unsolicited advertisement”); see also id.
§ 227(a)(5) (“The term ‘unsolicited advertisement’ means any
material advertising the commercial availability or quality of
any property, goods, or services which is transmitted to any
6 No. 19-1452
person without that person’s prior express invitation or per-
mission, in writing or otherwise.”).
We now turn to whether PHI or AMS bore the burden
proof on this issue. Although we have never explicitly ad-
dressed the question, at least one other circuit has held that
defendants bear the burden of proving they had prior express
invitation or permission to send the faxes in question to avoid
TCPA liability. See True Health Chiropractic, Inc. v. McKesson
Corp., 896 F.3d 923, 931 (9th Cir. 2018), cert. denied, 139 S. Ct.
2743 (2019) (holding that “‘prior express invitation or permis-
sion’ is an affirmative defense on which [defendants] bear[ ]
the burden of proof”). Because we find the reasoning of True
Health that prior express permission is not an element of a
TCPA offense persuasive, we likewise adopt that rule and
conclude that AMS had the burden of proof. We must now
determine how AMS may meet its burden.
There is scant Circuit precedent regarding what a defend-
ant must put forward to show that it had “prior express invi-
tation or permission.” Indeed, it appears our only substantive
discussion of the topic came in the dicta of an opinion consid-
ering the propriety of class certification. See CE Design Ltd. v.
King Architectural Metals, Inc., 637 F.3d 721, 725–28 (7th Cir.
2011) (suggesting that a firm that affirmatively publishes its
fax number in a trade publication has granted prior express
permission to members of that trade association). Similarly,
the Illinois courts, for example, appear to have only addressed
the issue once as well. See Travel 100 Grp., Inc. v. Mediterranean
Shipping Co. (USA) Inc., 889 N.E.2d 781, 788–790 (Ill. App. Ct.
2008) (holding that, because plaintiff travel agency had au-
thorized a trade group to disseminate its fax number after be-
No. 19-1452 7
ing explicitly informed that such dissemination would “ena-
ble[ ] suppliers to pay commissions and to market their prod-
ucts and services to” it directly, it had given prior express per-
mission).
In this case, the district court relied on the Federal Com-
munications Commission’s (FCC) definition of “express per-
mission.” See In Re Rules & Regulations Implementing the Tel.
Consumer Prot. Act of 1991, 18 FCC Rcd. 14014, 14129 (2003).
We are similarly bound to follow the FCC’s interpretation of
a term where, as here, there is no appeal of the FCC’s inter-
pretation. See Blow v. Bijora, Inc., 855 F.3d 793, 802 (7th Cir.
2017) (citing CE Design, Ltd. v. Prism Bus. Media, Inc., 606 F.3d
443, 448–50 (7th Cir. 2010)).
In its 2003 Order, the FCC explained that “[e]xpress per-
mission to receive a faxed ad requires that the consumer un-
derstand that by providing a fax number, he or she is agreeing
to receive fax advertisements.” 18 FCC Rcd. at 14129. Per the
FCC, such permission may be written or oral. In the Matter of
Rules & Regulations Implementing the Tel. Consumer Prot. Act of
1991 Junk Fax Prevention Act of 2005, 21 F.C.C. Rcd. 3787, 3811
(2006). That said, the FCC has explicitly found that “negative
options,” in which a sender presumes consent unless advised
otherwise, are insufficient to prove express permission. Id. at
3811 n.168 (explaining that “[a] facsimile advertisement con-
taining a telephone number and an instruction to call if the
recipient no longer wishes to receive such faxes, would con-
stitute a ‘negative option’”); see also 18 FCC Rcd. at 14130
(“‘negative option[s]’ [are] contrary to the statutory require-
ment for prior express permission or invitation”).
8 No. 19-1452
In light of the FCC’s rules, neither the evidence regarding
Allscripts’ general practice of getting permission before send-
ing faxes in the course of its business (as testified to by Brian
Moffett, an Allscripts executive), nor the fact that Allscripts
customers could check a box within its customer database to
opt out of receiving faxes, may support a finding of express
permission. Moffett’s testimony provides no insight as to
whether any customer ever consented to receive fax advertise-
ments. And, as just explained, advertisers cannot rely on a re-
cipient’s failure to “opt out” of receiving faxes to prove that it
had prior express permission to send a fax advertisement.
Thus, as it did before the district court, AMS must rely upon
the affidavits of customers asserting they gave Allscripts prior
express permission to fax them ads.
These affidavits fall into three general categories. The first
category includes statements suggesting that the individual
or entity generally gave permission to receive faxes from All-
scripts. As just explained, however, evidence of permission to
generally send faxes does not establish prior express permis-
sion to fax ads. Similarly, the second category includes post
hoc statements that an individual would have given consent.
These also fail because they do not show AMS had prior ex-
press permission to send the faxes in question.
The third and closest category includes statements that the
affiants and their employers consented to receive “Allscripts’
product information” at the beginning of their business rela-
tionship with Allscripts. For example, an employee of one of
Allscripts’ customers provided an affidavit attesting that after
her employer bought some medication and software from
Allscripts, she wanted information regarding them and thus
consented to receive this information via fax. Similarly, AMS
No. 19-1452 9
submitted several identical affidavits from other Allscripts
customers stating that:
I do not specifically remember receiving any
particular faxes from Allscripts (or a predeces-
sor) promoting its (or others’) products or ser-
vices, but in general, I have consented to receiv-
ing such communications from Allscripts and
others, in the past and currently as well.
The district court found these uniformly “too thin to per-
mit a reasonable jury to conclude that “consented,” as used in
the declarations, meets the legal definition of ‘prior express
permission.’” Specifically, the court explained that the affida-
vits and other testimony (1) did not permit an inference that
the recipient understood he or she was expressly giving, in
advance, permission to send faxed advertisements, and (2) did
not describe the content of the faxes that the declarant pur-
portedly consented to receive. We agree.
First, at a general level, we must ask whether a consumer
must renew its permission for every fax advertisement, or
whether a consumer’s consent at one point in time gives on-
going consent. Both CE Design and Travel 100 Grp., as well as
the FCC’s regulations, imply that a party may consent on an
ongoing basis to faxed advertisements. See 637 F.3d at 726;
889 N.E.2d at 789; 18 F.C.C. Rcd. at 14128–29. Given the im-
practicality of any other rule, we make our ruling explicit:
Provided a customer gives consent in the manner described
below, we will presume that the customer has given permis-
sion on an ongoing basis to fax advertisements.
10 No. 19-1452
The second and more challenging question is how that
permission should be phrased. In light of the FCC’s explana-
tion that, for prior express permission to be valid, “a con-
sumer [must] understand that by providing a fax number, he
or she is agreeing to receive fax advertisements,”
18 F.C.C. Rcd. at 14129, we conclude that the consumer must
affirmatively and explicitly give the advertiser permission to
send it fax advertisements on an ongoing basis. The invitation
or permission cannot simply authorize a single, specific fax,
or state that the consumer consented to receive faxed ads from
the defendant in the past. Instead, it must explicitly convey
that the consumer gives the advertiser ongoing permission to
send ads via fax until such time as the consumer withdraws
its consent. This framework is both consistent with the FCC’s
statements on the matter and conforms to the TCPA’s text.
See, e.g., 18 F.C.C. Rcd. 14129 (“For example, a company that
requests a fax number on an application form could include a
clear statement indicating that, by providing such fax num-
ber, the individual or business agrees to receive facsimile ad-
vertisements from that company. Such statement, if accompa-
nied by the recipient’s signature, will constitute the necessary
prior express permission to send facsimile advertisements to
that individual or business.”).
With that rule in mind, the third category of affidavits
does not demonstrate that the affiants gave prior express per-
mission for faxed advertisements. A statement explaining
that a consumer agreed to receive “product information” via
fax after purchasing some products or services from a com-
pany is not the same as agreeing to accept faxed advertise-
ments. As the FCC and now we have explained, a recipient
must specifically acknowledge that faxed advertisements will
follow its consent to constitute prior express permission. A
No. 19-1452 11
consumer’s statement that it gave permission to send “prod-
uct information” via fax, even on an ongoing basis, after pur-
chasing products or services from a company cannot as a mat-
ter of law constitute prior express permission. (It would be a
different matter if the affidavits explicitly suggested that that
consent included promotional materials or product infor-
mation regarding products or services not yet purchased.)
Similarly, that one had consented to receive a fax advertise-
ment in the past and would have consented to fax advertise-
ments if asked again does not establish ongoing permission to
send fax advertisements.
Thus, AMS has not shown that Allscripts had prior ex-
press permission to send faxes. Even assuming we concluded
otherwise, prior express permission or invitation is not trans-
ferrable under the TCPA.
2. Transferability
The TCPA does not expressly address whether, and to
what extent, an entity may transfer or extend an individual’s
prior express permission to another entity. Because the Act is
silent on the issue, PHI points to our statement in Adeyeye v.
Heartland Sweeteners, LLC, that “Title VII is a remedial statute
that we construe liberally in favor of employee protection”
and asserts that we should similarly interpret the TCPA in fa-
vor of consumer protection. 721 F.3d 444, 450 (7th Cir. 2013).
At least two other circuits have done just that. See Gager v. Dell
Fin. Servs., LLC, 727 F.3d 265, 271 (3d Cir. 2013) (“The TCPA
is a remedial statute that was passed to protect consumers
from unwanted automated telephone calls. … As a result, we
should interpret in [plaintiff]’s favor any silence in the TCPA
as to a revocation right.”) (citations omitted); see also Physi-
cians Healthsource, Inc. v. Boehringer Ingelheim Pharm., Inc., 847
12 No. 19-1452
F.3d 92, 96 (2d Cir. 2017) (explaining that “[r]equiring plain-
tiffs to plead specific facts alleging that specific products or
services would be, or were, promoted at the free seminar
would impede the purposes of the TCPA”) (citations omit-
ted). And now we follow suit: The TCPA is a remedial statute
that we must liberally construe in favor of consumer protec-
tion. Applying that rule here proves decisive.
As is well-established, the TCPA prohibits advertisers
from sending advertisements via fax unless they have (1) an
established business relationship with the recipient and fol-
low certain requirements, or (2) the recipient’s prior express
permission or invitation. See 47 U.S.C § 227(a)(5), (b)(1)(C),
(b)(2)(d). Given those requirements, it would seem odd if a
company could solicit express prior permission to send fax
advertisements, then transfer that permission to a completely
different company who in turn may send advertisements
with impunity until the consumer affirmatively terminates its
previous permission. Indeed, such a practice could eviscerate
the entire statutory scheme which is designed to protect con-
sumers from receiving unwanted contact from unknown en-
tities or individuals.
We also find unpersuasive AMS’ argument that generally
prohibiting the transfer of permission would create unwork-
able barriers when one company acquires the assets of an-
other. The obvious solution for a company in AMS’ position—
the purchaser of a company who seeks to fax advertisements
to its new customers—is to adhere to the EBR’s requirements,
which AMS did not do here. It is entirely consistent with the
statute to conclude that if a company changes hands, the com-
pany’s new owner would qualify for the EBR if they simply
step into the former company’s shoes, and as a result, have an
No. 19-1452 13
existing business relationship with that company’s custom-
ers. In that scenario, the purchaser would qualify for the EBR
on any fax advertisements, provided those ads contained the
requisite “opt out” notice. The problem for AMS is that it is
simply ineligible for that defense because it omitted the nec-
essary notice.
What is more, our understanding is allied with the FCC’s.
As the district court correctly noted, the 2006 FCC Order ex-
plains that “the sender must obtain the prior express invitation
of permission from the consumer” before it sends an ad.
21 F.C.C. Rcd. at 3811 (emphasis added). The only logical un-
derstanding of this statement is that a fax’s sender must pro-
cure prior express permission or invitation. Moreover, the be-
ginning of that sentence—“In the absence of an EBR”—
confirms our conclusion that the proper defense for a com-
pany in AMS’ position is the EBR.
AMS points to CE Design and Travel 100 Group, Inc., con-
tending that those decisions demonstrate that we and other
courts have found that prior express permission or invitation
is in fact transferrable. In both those cases, however, we and
the Illinois Appellate Court found that the plaintiffs in ques-
tion had expressly consented to the ability of a group of indi-
viduals to send them faxes, not that permission given to one
entity could be extended or transferred. In CE Design, the
named plaintiff knew that by providing his fax number to a
trade book for publication, he was granting all the subscribers
of that trade guide permission to fax him. 637 F.3d at 725–26.
By doing so, we posited, he may have given prior express per-
mission for all recipients of that trade guide to fax him adver-
tisements. The permission in Travel 100 was even more ex-
press. As the court explained, the form that the plaintiff filled
14 No. 19-1452
out stated that, by providing the fax number, the plaintiff was
“enabl[ing] suppliers to pay commissions and to market their
products and services to” it. 889 N.E.2d at 786 (emphasis
omitted); see also id. at 789–90.
Accordingly, even if Allscripts had received prior express
permission or invitation to send the fax in question—and it
did not—AMS could not rely on Allscripts’ procurement of
that permission. And because AMS admitted it never pro-
cured prior express permission or invitation from any of the
fax recipients, we must conclude that the district court appro-
priately held it liable under the TCPA.
B. Entry of Judgment
We next address PHI’s challenge of the district court’s re-
fusal to hold an evidentiary hearing on damages and its entry
of judgment. As an initial matter, however, we must resolve
AMS’ assertion that the district court erred when it denied its
motion to file a sur-reply to PHI’s motion for the entry of
judgment.
1. Motion for Sur-reply
District courts abuse their discretion when they deny a
party a chance to respond to new arguments or facts raised
for the first time in a reply brief in support of a motion for
summary judgment and subsequently enter judgment on the
basis of those new arguments or facts. See Dr. Robert L.
Meinders, D.C., Ltd. v. UnitedHealthcare, Inc., 800 F.3d 853, 858
(7th Cir. 2015) (“the district court deprived Meinders due pro-
cess by entering judgment against him on law and facts to
which he did not have a full and fair opportunity to re-
spond”); see also Black v. TIC Inv. Corp., 900 F.2d 112, 116 (7th
Cir. 1990) (“Where new evidence is presented in a reply to a
No. 19-1452 15
motion for summary judgment, the district court should not
consider the new evidence without giving the movant an op-
portunity to respond.”). That, however, is not what happened
here.
When it filed its reply brief in support of its motion for the
entry of judgment, PHI did not submit any new evidence rel-
evant to the court’s entry of judgment. For the reasons ex-
plained in greater detail below, the only evidence relevant to
the court’s entry of judgment after finding AMS liable was
how many faxes AMS sent and to what fax numbers. As the
record makes clear, there has never been any dispute as to
those facts. To the extent that PHI submitted purportedly new
evidence establishing the identity of the individuals and enti-
ties associated with the fax numbers, that evidence was not
relevant to the entry of judgment. Therefore, the district court
did not abuse its discretion by declining to allow AMS to file
a sur-reply. After a court finds the defendant(s) liable, the
question becomes what more must a TCPA plaintiff class
prove before the court may enter a money judgment in its fa-
vor.
2. Evidence Required for the Entry of Judgment
In appealing both the district court’s denial of its motion
for an evidentiary hearing and its entry of judgment, AMS
maintains that the district court erred by never disposing of
the purported dispute about who may recover for each of the
11,418 faxes at issue in this case. We find no error in either
denial.
In Ira Holtzman, C.P.A. v. Turza (Holtzman I), we explained
that once liability is established and the class informs the
court that it seeks only statutory damages, there need not be
16 No. 19-1452
an adjudication as to the specific nature of each class mem-
bers’ damages. 728 F.3d 682, 684–85 (7th Cir. 2013). Indeed,
each class member need only show that they received the fax
and had some connection to the fax machine to recover. Id.
Although our discussion in Holtzman I implied as much, we
now explicitly hold that upon a finding a liability, a court may
enter judgment as soon as the plaintiffs establish the amount
of faxes and the numbers to which those faxes were sent.3
And, as we explained in Holtzman I, a defendant’s successful
fax log is sufficient on its face to prove these facts. Id.
Here, AMS’ fax log was in evidence early on and AMS has
never challenged its validity. Indeed, the parties have never
disputed how many faxes were sent, or to what numbers.
Hence, once the district court held that AMS violated the
TCPA when it sent each of those faxes, the plaintiffs had es-
tablished everything they needed to for the court to enter
judgment; there was neither any need for further fact finding,
nor any delay in the entry of judgment.
C. Distribution Plan
Finally, that brings us to AMS’ objection to the district
court’s acceptance of a modified version of PHI’s distribution
plan. AMS insists that the court abused its discretion by en-
tering a distribution plan that does “not ensure that those who
will receive judgment awards are actually entitled to an
award of damages pursuant to the TCPA.” Accounting for
our abuse-of-discretion standard of review, we will only re-
verse if convinced that “no reasonable person could take the
view adopted by the trial court.” Lynch v. City of Milwaukee,
3 Our holding assumes, of course, that the plaintiffs have elected to receive
the statutory damages of $500 per fax.
No. 19-1452 17
747 F.2d 423, 426 (7th Cir. 1984). We decide that the district
court did not abuse its discretion.
As a general matter, each class member must demonstrate
that the member had the necessary association (that it re-
ceived the fax, owned the fax machine, etc.) with one of the
11,418 fax machines that received an improper fax before col-
lecting his or her share of the judgment. That is part and par-
cel of each class member’s burden of proof. See Holtzman I, 728
F.3d at 684 (“each recipient must prove that his fax machine
or computer received the fax”); see also Am. Copper & Brass,
Inc. v. Lake City Indus. Prod., Inc., 757 F.3d 540, 545 (6th Cir.
2014) (rejecting the notion that only a fax machine’s owner
may recover for an unsolicited fax ad). The question is at what
point in the process and how they may do so.
Although the parties appear to agree, as do we, that each
class member need not meet that burden until a judgment is
finally distributed, they dispute exactly what due process re-
quires. Indeed, PHI disputes that a defendant like ASM, who
has already been found to have violated the TCPA, has any
right to demand evidence that each class member has stand-
ing to recover.
Given we have suggested that unclaimed money can re-
vert to the defendant in TCPA cases, see Holtzman I, 728 F.3d
at 689–90, AMS arguably has a due process interest in ensur-
ing that any class member coming forward to collect the dam-
ages for a particular fax has standing to do so. Cf. Mullins v.
Direct Digital, LLC, 795 F.3d 654, 670–71 (7th Cir. 2015) (hold-
ing that a defendant’s due process is implicated when the
“calculation of each class member’s damages affects the total
amount of damages it owes to the class”). For example, in
Mullins, we explained that a defendant’s due process rights
18 No. 19-1452
are implicated when the defendant may have individual de-
fenses or challenges to the calculation of a given class mem-
ber’s damages. Id. Although AMS may no longer raise any in-
dividual defenses as to each class member, unlike the exam-
ple we gave in Mullins, AMS’ total liability may still be af-
fected if no person with standing comes forward to collect for
a specific fax. Thus, AMS has a due process interest in ensur-
ing that at least one person has standing to recover on each
fax.
By contrast, AMS has no due process interest in whether
more than one individual can collect the $500 fine for each fax.
See Mullins, 795 F.3d at 670 (explaining that, where damages
do not depend on the specific identity of a class member, there
is no implication of a defendant’s due process rights). Once at
least one person has come forward with standing to collect for
any given fax, AMS has no further interest in the $500 associ-
ated with that fax. With that standard set, we implement it in
this case.
This was the distribution plan entered by the district court:
1) Notice of the judgment and a contact infor-
mation form were to be mailed and faxed to
the individuals identified on the class list.4
2) The notice advised class members of the
judgment and gave them an opportunity to
4 Although the district court did not specify that the notice of the judgment
itself be sent out via fax and mail, it was included within the notice of the
motions for fees and expenses, which the court did specifically order to be
sent to the fax numbers and mailing addresses identified on the class list.
No. 19-1452 19
reject the money by filling out and returning
a form.
3) Non-response to the class notice was inter-
preted as consent to receive payment, which
will be sent out via check made to the indi-
vidual listed on the class list.
Although AMS demonstrated that at least one individual
included on the initial class list submitted to the district court
at certification was deceased at the time the fax was sent, AMS
has not provided any reason whatsoever to doubt that the in-
dividuals listed in that document generally are eligible to re-
cover under the TCPA. Instead, AMS’ argument appears to be
that there may be others who are also entitled to recover the
money, in addition to those named on the class list. But as just
explained, the fact that there may be more than one individual
who could collect for a fax is legally inconsequential as to
AMS. So long as the distribution plan entered by the court en-
sures that at least one person has standing to recover for each
fax, we must affirm. Cf. Holtzman v. Turza, 701 F. App’x 506,
507 (7th Cir. 2017) (Holtzman III) (clarifying that class mem-
bers need not verify that they used a particular fax number
considering that “[w]hose fax numbers those were was estab-
lished from electronic records and does not depend on per-
sonal recollection”).
Here, the district court ordered that class counsel send the
notice both by mail to members’ physical addresses and via
fax to the numbers with which they are associated. Signifi-
cantly, the notice requires class members to verify that their
information (including name and address) is accurate, and if
not, correct the information and authenticate that they were
affiliated with the fax number at the time they received the
20 No. 19-1452
fax. This distribution plan is adequate to guarantee that each
class member has standing to collect the funds at issue.
Although the identity and information of some class mem-
bers may be incorrect, the fact that counsel is faxing the notice
to the same numbers that received the offending fax assures
us that the individuals responding to it, and subsequently col-
lecting the judgment, do in fact have standing. Thus, we con-
clude that the distribution plan as it stands now reliably vali-
dates that the individuals who will receive the money are en-
titled to do so. For that reason, the district court appropriately
exercised its discretion.
III. Conclusion
For the foregoing reasons, we AFFIRM.
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425 F.Supp. 399 (1976)
Thomas R. PARNELL et al.
v.
RAPIDES PARISH SCHOOL BOARD et al.
Civ. A. No. 760364.
United States District Court, W. D. Louisiana, Alexandria Division.
September 30, 1976.
*400 *401 Stanley A. Halpin, Jr., New Orleans, La., for plaintiffs.
James J. Brady, Alexandria, La., for defendants.
John F. Ward, Jr., Baton Rouge, La., Richard B. Crowell, Alexandria, La., for intervenors.
Gerald W. Jones, John P. MacCoon, Dept. of Justice, Washington, D. C., for the government.
EDWIN F. HUNTER, Jr., Senior District Judge:
The history of litigation involving the reapportionment of the Rapides Parish Police Jury and School Board is set out in Bradas v. Rapides Parish Police Jury, 508 F.2d 1109, at 1110-1111 (5th Cir. 1975). The reapportionment plans for the Rapides Parish Police Jury and School Board, challenged in the instant action under the Fourteenth and Fifteenth Amendments, were originally instituted and approved by a Federal Court in LeBlanc v. Rapides Parish *402 Police Jury, Civil Action No. 13,715 (W.D. La., July 26, 1971).
The sequence of the litigation is pertinent:
(1) By judgment of July 26, 1971, in a prior suit entitled LeBlanc et al. v. Rapides Parish Police Jury et al., Civil Action No. 13,715, the district court approved the LeBlanc Plan. The plan divided the eleven (11) wards of Rapides Parish into one single-member and three multi-member districts for the purpose of electing 18 officers to the Parish Police Jury, as well as to the Parish School Board.
(2) A year after implementation of LeBlanc, the United States instituted an action seeking to nullify the plan because it lacked prior approval of the Attorney General of the United States, pursuant to Section 5 of the Voting Rights Act of 1965.
(3) The district judge dismissed the suit, holding that Section 5 did not require prior approval of reapportionment plans submitted to a United States District Court in the trial of an adversary proceeding (United States v. Rapides Parish School Board, et al., Civil Action No. 19,209, W.D.La., October 25, 1973).
(4) Subsequently, ten parish citizens, both blacks and whites, brought suit attacking the LeBlanc Plan as violative of the one man-one vote rule. Plaintiffs charged also that the at-large voting scheme impermissibly diluted the votes of local blacks and asked for appropriate declaratory and injunctive relief.
(5) The District Court, in May of 1974, vacated its judgment of July 26, 1971, which had instituted LeBlanc. The court proceeded to implement its own reapportionment scheme which divided the parish into nine single member election districts. Bradas v. Rapides Parish Police Jury, 376 F.Supp. 690 (W.D.La., 1974). It did so only after rejecting four plans submitted jointly by the School Board and Police Jury, all of which were found to be either insufficiently prepared or constitutionally defective.
(6) On February 14, 1975, the United States Court of Appeals for the Fifth Circuit, in Bradas v. Rapides Parish Police Jury, 508 F.2d 1109, vacated the district court order of May, 1974. The case was remanded with directions to reinstate LeBlanc prior to the next election for police jury and school board scheduled to be held in Rapides Parish.
(7) Meanwhile, Judge Scott's single member district plan had been put into effect and two black members had been elected to the Rapides Parish Police Jury and two had been elected to the School Board.
(8) The Court of Appeals decision stated:
To prevent needless expense and confusion, the tenure in office of the present members of the Police Jury and School Board, elected under the 9 member plans of the May 10, 1974 judgment, shall not be disturbed in the interim.
(9) On July 31, 1975, Judge Scott granted the application of the School Board, the Police Jury, and the plaintiffs for a compromise settlement of the Bradas case. The effect of this settlement was to keep in effect the nine single member district plan. Plaintiffs and both public bodies favored the plan.
(10) On August 8, 1975 the Court of Appeals granted a petition for a writ of mandamus, vacating and setting aside Judge Scott's approval of the compromise settlement. This order directed forthwith compliance with its mandate of February 13, 1975.
(11) On September 24, 1975, Judge Scott entered an order pursuant to the Fifth Circuit mandate. This resulted in once again activating the LeBlanc multi-member district plan. Police jury elections were held, and the two black members of the Rapides Parish Police Jury elected under the single member plan ran as incumbents and were defeated. There are now no black members on the Rapides Parish Police Jury.
(12) On April 2, 1976 the present suit was filed. LeBlanc is again under attack.
(13) A trial was held on the merits on July 12, 1976.
(14) At this stage, 18 members of the Police Jury had been elected and were serving *403 in that capacity. It must be emphasized that the Police Jury election was held pursuant to specific and precise court orders. The election of school board members was scheduled for August, 1976.
(15) Attorneys for plaintiffs and the incumbent school board (the 9-member board) requested a stay until the disposition of the present litigation.
(16) We declined to issue the stay order because of the Fifth Circuit's decision in Bradas and the mandamus of August 7, 1975. The reasons for the denial were set forth in a written opinion filed immediately after the conclusion of the July 12th hearing.
(17) On July 29, 1976 the Court of Appeals entered the following order:
The order of the District Court denying an injunction is stayed pending appeal and the cause is remanded to the District Court for the entry of appropriate orders to effectuate a legal election under present facts and law, freed from the restraint of a prior mandamus entered by this Court.
(18) Upon receipt of the July 29, 1976 ruling we immediately granted the stay requested by plaintiffs.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
(1) This is a class action pursuant to 42 U.S.C. § 1983. Plaintiffs seek a declaratory judgment, pursuant to 28 U.S.C. § 2201, a preliminary injunction, a permanent injunction and other appropriate relief to enjoin the deprivation under color of law, by the State of Louisiana and in particular the School Board and Police Jury of Rapides, Louisiana, of the rights, privileges and immunities of the plaintiffs and the class they represent, arising under the Constitution of the United States.
(2) Plaintiffs Thomas R. Parnell, Granvel G. Metoyer, and Frazier Bell are black citizens of the United States and residents and registered voters of Rapides Parish, Louisiana.
(3) The plaintiffs have standing to sue individually and properly sue as representatives of the class of black voters of Rapides Parish, Louisiana.
(4) The Rapides Parish School Board is a legislative body charged with the operation of the public schools in Rapides Parish.
(5) The Rapides Parish Police Jury is the legislative governing body of the Parish of Rapides, whose duties include the maintenance of roads, canals, drainage and other public services throughout the Parish including the operation of the Coliseum, operation of the Food Stamp program, and other functions for which the Police Jury appoints special commissions.
(6) Defendant Edwin Edwards is Governor of the State of Louisiana and Defendant Wade O. Martin, now succeeded in office by Paul Hardy, is Secretary of State of Louisiana. These are nominal defendants who have certain duties with respect to the conduct of elections for the Rapides Parish Police Jury and School Board and are included for purposes of relief only. An answer was filed on their behalf by the Attorney General of Louisiana, waiving appearance and praying that the court enter such judgment and orders as it determines are necessary and proper in view of the law and evidence controlling.
(7) The United States was allowed to file a memorandum as amicus curiae which supported plaintiffs' position.
(8) To assure that all parties alleging an interest in this litigation would have notice and intervene at an early date without delay of these proceedings, this court issued an order on April 22, 1976 which was published in the local newspapers setting a time in which interventions would be considered.
(9) In response to this order certain individuals who were then police jurors-elect sought and were allowed intervention, and upon assuming office were made defendants herein.
(10) The plan challenged herein is a court-ordered plan instituted by this court in LeBlanc v. Rapides Parish Police Jury, *404 C.A. No. 13,715 (W.D.La., July 26, 1971), hereinafter referred to as the LeBlanc plan.
(11) The LeBlanc plan was challenged as racially discriminatory under the standard of White v. Regester, 412 U.S. 755, 93 S.Ct. 2332, 37 L.Ed.2d 314 (1973), invalidated, and a nine single-member district plan was substituted for it in Bradas v. Rapides Parish Police Jury et al., 376 F.Supp. 690.[1]
(12) The Supreme Court of the United States, in East Carroll Parish School Board v. Marshall, 1976, 424 U.S. 636, 96 S.Ct. 1083, 47 L.Ed.2d 296, defoliates "the political thicket in which we have been wandering for some years." Wallace v. House, 538 F.2d 1138 (5th Cir., 1976). The law now is clear. In fashioning remedial districting schemes, federal district courts are to order single member plans, absent special circumstances.
(13) The term "special circumstances" is possessed of no talismanic significance. It merely represents the Supreme Court's recognition that a "singular combination of unique factors" may sometimes persuade a district court to conclude that the policies underlying the general preference for single member districts may be outweighed by grave defects of single member districting as applied to a particular case. Wallace v. House, supra.
(14) No showing of special circumstances has been made to justify such a holding in this case.
(15) Accordingly, plaintiffs must prevail as a matter of law on the proposition that the LeBlanc plan is an impermissible scheme for a court ordered plan under the standards of East Carroll, supra, 96 S.Ct. at 1085, and Wallace v. House, supra.
(16) Cognizant of Justice Brandeis' well known principles of judicial self-restraint, see Ashwander v. TVA, 297 U.S. 288, 346-347, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring), which includes the principle that the Court should not decide a constitutional question where there is an alternative non-constitutional basis for disposing of the case, we find that the interest of judicial economy and the need for a prompt final resolution of this case dictate that the Court also reach the constitutional question.
(17) Under the totality of the circumstances of the instant case, the LeBlanc plan with its large multi-member districts operates to minimize or cancel out the voting strength of the sizable black minority in Rapides Parish and operates to deny to them equal access to the political process under White v. Regester, 412 U.S. 755, 93 S.Ct. 2332, 37 L.Ed.2d 314 (1973).
(18) Within District A reside 23,647 of the Parish's total black population of 32,882. Thus, 72% of the total black population of the Parish resides within this 10-member district. (See plaintiffs' Exh. 2, 1970 Census, Louisiana General Population Characteristics.)
(19) Examination of plaintiffs' Exh. 1, 1970 Census for Rapides Parish by enumeration districts and part of plaintiffs' Exhibit 11, Census Enumeration District maps for the Parish of Rapides, reveals that in fact this large black population contained within District A is exceedingly compact and is concentrated in an area along the railroad tracks lying in the northwestern sector of the City of Alexandria and adjacent areas immediately outside of the City.
(20) There has been a continuing history of state and local official racial discrimination in Rapides Parish which, prior to 1954 has extended to deprivation of the rights of blacks to register and vote and to participate in a democratic process.
(21) We take judicial notice of the school desegregation case against the Rapides Parish School Board and note, as was attested to by plaintiffs' witnesses, that the schools were historically segregated according to race. The schools were desegregated step-by-step with each step being compelled *405 by a specific order of the federal courts. Under freedom of choice in the late sixties and early seventies, only a handful of blacks attended the formerly all-white schools and it was not until imposition of a court-ordered zoning plan that a reasonably substantial number of blacks were in formerly all-white schools and it was not until imposition of a court-ordered zoning plan that a reasonably substantial number of blacks were in formerly all-white schools and vice versa. The litigation continues to this day.
(22) The court notes that there were a number of statewide obstacles to black registration and voting which were in operation until declared invalid in Louisiana v. United States, 380 U.S. 145, 85 S.Ct. 817, 13 L.Ed.2d 209 (1965). Until invalidated by the Voting Rights Act of 1965, a literacy and constitutional interpretation test was in force.
(23) The effects of these obstacles can be seen from plaintiffs' Exhibit 9, Louisiana Board of Registration Report, showing black and white registration at six-month intervals since 1958. This exhibit shows that as of November, 1964, there were 36,197 whites registered in the Parish and by November, 1967 there were 44,336 whites registeredan increase of only 10% from 1964 to 1967. In November, 1964, only 3,829 blacks were registered, whereas in November, 1967, 8,675 blacks were registeredan increase of 127%. From these figures it can also be calculated that, for example, in November of 1964 blacks comprised only 11% of the total Parish electorate, whereas in 1967 they comprised 20% of that electorate.
(24) There are debilitating vestiges of the past which preclude blacks from participating on an equal basis in large multimember districts. Plaintiffs' expert witness, Dr. Gordon Henderson, analyzed voting returns, particularly from the recent Police Jury elections under the LeBlanc Plan (see plaintiffs' Exhs. 4-7, and 14) together with registration figures by race and by precincts, and determined that statistically there was a 98% probability of bloc voting among racial lines where a black candidate opposed a white candidate in Rapides Parish. Dr. Henderson did this analysis with the assistance of a computer, running two independent statistical analysesthe Pearson Correlation analysis and a retrogression analysis which statistically allows prediction from evenly mixed precincts. The returns, of course, show that black candidates occasionally receive some votes in 100% white precincts, but this in not particularly significant when the returns are viewed as a whole and especially are not significant in view of the computer analysis which takes all of the data into account, and using accepted statistical methods shows the level of bloc voting present here.
(25) For all practical purposes, historically Rapides Parish is a one-party Parish, with nomination by the Democrat Party tantamount to election. Neither the Party nor a dominant white slating organization has nominated, endorsed or slated any blacks.
(26) The constitutional insufficiency of an at-large or multi-member district arrangement is not demonstrated solely by showing that the cognizable minority has not been able to elect officials in the multimember district in mathematical proportion to its voting potential. White v. Regester, 412 U.S. 755, 766, 93 S.Ct. 2332, 37 L.Ed.2d 314 (1973); Whitcomb v. Chavis, 403 U.S. 124, 149, 91 S.Ct. 1858, 29 L.Ed.2d 363; Zimmer v. McKeithen, 485 F.2d 1297, at 1305. Instead, to demonstrate unconstitutionality:
* * * Plaintiffs' burden is to produce evidence to support findings that the political processes leading to nomination and election were not equally open to participation by the group in questionthat its members had less opportunity than others in the district to participate in the political process and to elect legislators of their choice. Whitcomb v. Chavis, supra, 403 U.S. at 149-150, 91 S.Ct. [1858] at 1872. White v. Regester, supra, 412 U.S. at 766, 93 S.Ct. [2332] at 2339.
*406 (27) Whether a particular multi-member or at-large arrangement violates this standard is to be determined from the totality of circumstances of the particular case. In examining the totality of circumstances there is a panoply of factors which have been relevant to this determination; however, the presence or absence of any particular factor or set of facts standing alone is not dispositive of the issue. Rather, the examination must "[represent] * * a blend of history and intensely local appraisal of the design and impact of the Bexar County multi-member district in light of past and present reality, political and otherwise." White v. Regester, supra, 412 U.S. at 769-770, 93 S.Ct. at 2341.
(28) Plaintiffs have met their burden of proof, and the multi-member districting arrangement under the LeBlanc plan within the framework of facts and circumstances peculiar to the Parish of Rapides operates impermissibly to dilute or cancel out the voting strength of the black minority.
(29) The ultimate question is, of course, how these formal structures (multi-member districts, majority run-off), informal structures (such as the one-party system), and political context (history of racial discrimination, etc.) operate in combination. The evidence demonstrates that in combination, these factors operate to minimize or cancel out the voting strength of the black minority in the parish, and thereby deny to them equal access to the political process. The experiences of blacks running in the multi-member districts under the LeBlanc Plan show that these factors, particularly in combination with racial bloc voting, effectively denies blacks access to the political process. The predictable outcome is that blacks are consistently defeated in the multi-member districts. This is no accident, nor is the mere function of losing fair elections. Rather, given the totality of circumstances of the political context which includes bloc voting, a one-party system, and the vestiges of a long history of racial discrimination, the LeBlanc plan clearly stacks the deck against blacks by the use of multi-member districts with a majority run-off requirement.
(30) Plaintiffs are entitled to judgment on both of the grounds urged. The proper standard to be applied is actually the East Carroll rule, since the plan in questionthe LeBlanc Planis a court-ordered plan. However, we have made findings in the alternative that plaintiffs have met their burden under White v. Regester to demonstrate that the plan is also violative of the constitutional standards.
(31) The Supreme Court in Whitcomb v. Chavis, 403 U.S. 124, 91 S.Ct. 1858, 29 L.Ed.2d 363, held that a district court judgment approving an apportionment plan is not binding on an application for reapportionment four years later, after initial decisions on constitutional apportionment had undergone considerable refinement in intervening Supreme Court decisions. In the instant case there has been a significant change in law, in that since both the LeBlanc and Bradas cases, the United States Supreme Court decided East Carroll Parish School Board v. Marshall, and held for the first time that a court-ordered plan which had been submitted by one of the parties was not subject to Section 5 scrutiny but was subject to the single-member district rule of Connor and Chapman. The amicus brief of the United States discusses this development in detail, and it will not be repeated here.
(32) The Fifth Circuit decision (Bradas v. Rapides Parish Police Jury et al.) which defendants urge bars the present action was decided on an inadequacy of proof. The Fifth Circuit decision noted specifically that the record below was practically devoid of the type of evidence required in these cases: "Consideration of the evidence below in light of these factors emphasizes the dearth of appellees' proof." Under these circumstances, particularly since plaintiffs have demonstrated that such proof can be presented, it can hardly be said that the class of black voters was forever foreclosed. Further, the East Carroll case was pending in the United States Supreme Court when Bradas was decided, and had the Bradas *407 plaintiffs sought review in that court, it is highly likely that the Fifth Circuit decision would have been overturned when the East Carroll opinion was handed down, as was done, for example in Wallace v. House, 425 U.S. 947, 96 S.Ct. 1721, 48 L.Ed.2d 191.
WHERE DO WE GO FROM HERE?
The multi-member districts must be disestablished. LeBlanc is out.
Neither courts nor police juries nor school boards are furnished with any specialized caliphers which enable them to extract from the general language of the law any mathematical formula which establishes what range of percentage deviations is permissible. Surely, the plan approved in Bradas (376 F. Supp. 690 at 694) which provides for nine single member districts with a maximum deviation of 2.2% achieves the primary goal of one man-one vote. When tested against proportional norms it affords to all groups a fair chance to realize full voting potential. On July 31, 1975, both public bodies favored this specific nine single member concept. The plan preserves to a substantial degree present lines and geographic boundaries. We adopt and order the implementation of the nine-member plan[2] for both public bodies.
WHEN?
The School Board presently operates under the plan. The members serve staggered terms. The elections which had been scheduled for August 14, 1976 under the LeBlanc plan have been enjoined. In lieu thereof an election is to be scheduled under the nine-member plan. A date will be set when and if this judgment becomes final.
The Police Jury elections have been held under the LeBlanc plan. This election was mandated by federal court orders. To prevent needless expense and confusion, the tenure in office of the present members of the Police Jury (elected pursuant to federal court orders) is not to be disturbed. The nine-member plan is to be activated for the Police Jury at the next regular election for Police Jury scheduled to be held in Rapides Parish.
NOTES
[1] The chronology has been set forth in paragraphs 1-18. No useful purpose would be served by reiterating under these findings.
[2] Statistics and boundaries appear at 376 F.Supp. at 694, and in the exhibits.
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OFFICE OF-~HEAI-I-ORNEY GENERAL• FT~AES
AUSTIN
""""Z
.
.
.iionorsblc D, C. Gror
ixate High-uayzn~inecr
!i%ias Higzh-:lay Depnrtnent
Austin, '&%a~
Dear SirI
.
authorizedt0 reject the
in 3her:mn Couuty.
requested the Coa-
a
e -
.- -.-
,::.
.: 59
Honorable D. C. Greer, ?a&e 2 -'
per cubic yard for Class '*Anconcrete instead
of.l?# per cubic yard, his bid would have been
ap?roximtely $2,000.00 hi~gherthan th8 next
lc+ieatbid." .~
The reminder of your letter is devoted to references to
statutes and itea of the standard Specifiostionspublished
by the XighvzayComission. Ke agpreoiate your cooperation
and assistancein'gointingout to us'the authority which you
considerpertin.ent.tothe.wc?stion.at baud.
The 'firstsentence of Article 60741, Vernon's
Aunotated Civil Statutes of Texas, states that "The State
High;tayDepartment shall~have the right to reject any sod
all such bids : .,.n It thus appears that the Legislature
has delegatedto tha~Highway'Consfssion the right on its own
motion to'reject any bid which it does not desire to con-
sider. You state in your opinion request that.the award of
contract.coveringthe constructionoi'the projeot involved
has,not yet been rende. It is therefore u~~~csssarytb con-
-siderthis point further. In accordanceWith the above quot-
ed provisionof krtiole 66741, we find the following pro-
vision in itea 3.1 under the hesding "Award and Execution ol
Contract"of the Standard Specificat~ions: ~.
** * * Until the award of the contract is
Iiiade,
the right will be reserved to reject any or
all roposals and to waive such technicalitiesas
e consideredfor the best interest of the
xt! ,.=' .
The folloning provision is'tcken fros Iten 2.10
of Itea.2, under the hesding Tnstructions to Didders" OS
the Standard Specifications: I
**.* * Drcposals'inwhich the prices are
obviously.unbalanoedoay,be rejected *.+ *:n
The informtion which you have subzitted to us in-
dicates beyond doubt that Zr. &rhhfll*s bid.of 17d uer
cubic yard-on Class I,A** concrete not only.is in er&o% ‘but
also is $0 unreasonablea$ to imediately op?car ridiculous.
It is obvious that no contractorT,vould submit intentlonnlly
or seriously uny such bid; The faotthat :A-.?arnhill's
bid on Clans “hs coocrcte is patently erroneous distinguishes
the fact situationwhich you have presented to us fro3tPcse
c332s iuvolvihgiatentionslunierbids or si~glc errors of
calculntio:i.
. ,. -.~, _
.
fionorable
D. C. Greer, Page 3
~8,above stated it appear8 that the Highway Coti-
alsslon is authorizedby law to.*eject any bid which it does
aat see fit to consider. The highv;ayComission itself has
xcco&zed the a!ithority thus conferred upon it and has in-
cluded in its Standard Bpeclficationsa provision directly
fu line with the atatutes. Se btilievethat under this au-
t1lorit.y
alone tiie’iii&imay
Cosnission is authorizedto reject
the bid iu qUestiOn.
It doe8 not appear upon the inforxatlonfurnished
us that any other ‘classesinclu,dedin .Xr.Saruhillls bid
are out of line or unbalanced. Taking his bid on Class “A*
concretealone, it unquestionablyis unbalanced. in so far
as its ratio to the usual and custotiry bids on the sama
aaterial is.coticarred.:‘;e.beliove that a d.stake so obvious
~111 coze under .the quoted provision of Itex 2.10~of Itex
2 of the Standard GpecIfications.
For the reasons stated above, it is the opinion of
thf8 departsent that the Highway Com~~Lssionis authorized to
reject the bid of .J’.
3;.Earnhill atidto return to him his
.proposalg3arauty and award the contract to the next lowest
bidder.
Youre Very truLy
ix : r?f
APPROVEDOCT 19, 194G
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535 U.S. 1024
LEARYv.GARRAGHTY, WARDEN.
No. 01-8784.
Supreme Court of the United States.
April 22, 2002.
1
C. A. 4th Cir. Certiorari denied. Reported below: 21 Fed. Appx. 149.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
LA TRICIA HARDY, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-0362 (ABJ)
)
NORTHERN LEASING SYSTEMS, INC., )
)
Defendant. )
___________________________________ )
MEMORANDUM OPINION
This matter is before the Court on the motion to dismiss the plaintiff’s amended
complaint filed on behalf of Northern Leasing Systems, Inc. [ECF No. 11]. For the reasons
discussed below, the motion will be granted.
I. BACKGROUND
This action arises from efforts by Northern Leasing Systems, Inc. (“NLS”) to enforce an
equipment finance lease, personally guaranteed by the plaintiff, for the rental of equipment for
processing non-cash payments at the plaintiff’s business, Capitol Hill Beauty LLC. See Am.
Compl. ¶¶ 12–14; Mem. of P. & A. in Support of Def.’s Mot. to Dismiss for Failure to State a
Claim (“Def.’s Mem.”); id., Ex. 1 (New York Civil Court Summons and Verified Complaint and
Non Cancelable Equipment Finance Lease Agreement (“Lease Agreement”)) at 5–10 (page
numbers designated by ECF).
1
NLS is a “corporation located in the state of New York” which “finances the equipment
needs of . . . business[es] . . . .” Def.’s Mem. at 1. NLS represents that it “has no ties to the
District of Columbia,” that it “does not have an office in the District of Columbia, and that it
does not “solicit or engage in persistent conduct aimed at deriving revenue from good or services
from the District of Columbia.” Id. at 3.
The plaintiff entered into the Lease Agreement with NLS on October 14, 2010. See
Def.’s Mem. at 1; Mem. of P. & A. in Support of Denying Def.’s Mot. to Dismiss for Failure to
State a Claim (“Pl.’s Opp’n”) at 3. She thereby agreed to “individually, absolutely and
unconditionally guarant[ee] to [NLS] prompt payment when due” of all obligations under the
lease. Lease Agreement at 2. The plaintiff “abid[ed] by her contract for over two years,” Am.
Compl. ¶ 12, at which time she “stopped the automatic payment deductions from her bank
account,” id. ¶ 14, and “requested that said contract be cancelled due to inequities within said
contract.” 1 Id. ¶ 12. When the plaintiff defaulted on her payment obligations, NLS “filed a
lawsuit against the [her] . . . in New York State Court[.]” Def.’s Mem. at 1; see id., Ex. 1
(Verified Complaint). “[A] judgment was entered in favor of [NLS].” Def.’s Mem. at 1; Pl.’s
Opp’n, Ex. B (Civil Judgment entered on October 26, 2012).
The plaintiff alleges that NLS “placed negative information on [her] credit reports with
all three (3) Credit Bureaus,” Am. Compl. ¶ 15, and “placed two (2) inquiries on [p]laintiff’s
credit reports to reflect her account as being a charge off for non-payment,” id. ¶ 21. These
actions allegedly “brought her credit down drastically.” Id. Due to what the plaintiff describes
1
According to the plaintiff, “due to [her] business being cash only . . . she had made
numerous requests . . . to cancel the[] contract.” Pl.’s Opp’n at 4. She further asserted that the
serial numbers of the equipment she received were different from the serial numbers on the
Lease Agreement. See id.
2
as “erroneous placements on [her] credit reports,” she further alleges that “she has been unable to
secure any type of loan,” causing her “undue hardship.” Id. ¶ 22.
According to the plaintiff, NLS violated the Fair Credit Reporting Act (“FCRA”), see 15
U.S.C. § 1681, the Fair Debt Collection Practices Act (“FDCPA”), see 15 U.S.C. § 1692, certain
District of Columbia criminal statutes, see D.C. Code §§ 22-3401 to -3403, the D.C. Consumer
Protections Act (“Consumer Act”), see D.C. Code § 28-3814, and the D.C. Consumer Protection
Procedures Act (“CPPA”), see D.C. Code § 28-3904. See generally Am. Compl. ¶¶ 23–28
(Counts I–IV). She demands a declaratory judgment and monetary damages. See id. at 5 (page
number designated by ECF).
II. DISCUSSION
A. Subject Matter Jurisdiction
The Court recognizes its ongoing obligation to ensure that “it is acting within the scope
of its jurisdictional authority,” Ha v. U.S. Dep’t of Educ., 608 F. Supp. 2d 45, 46 (D.D.C. 2010)
(internal citations omitted), and begins its discussion with NLS’s motion to dismiss the
complaint under Rule 12(b)(1) of the Federal Rules of Civil Procedure on the ground that the
Court lacks subject matter jurisdiction over the plaintiff’s FDCPA and Consumer Act claims.
According to NLS, neither statute applies, and therefore, “the Court lacks power to hear [these
claims].” Def.’s Mem. at 4. The plaintiff responds that the Court has jurisdiction because
“liability and damages are founded on [f]ederal question jurisdiction.” Pl.’s Opp’n at 5. The
Court concurs.
It is apparent that the plaintiff’s causes of action arise in part under two federal statutes --
the FDCPA and the FCRA -- and these are matters over which this Court has subject matter
jurisdiction. Whether the statutes are applicable is a different question which the Court will
3
address in the context of NLS’s motion under Rule 12(b)(6) to dismiss the complaint for failure
to state claims upon which relief can be granted.
B. Personal Jurisdiction
NLS moves to dismiss the plaintiff’s amended complaint under Rule 12(b)(2) of the
Federal Rules of Civil Procedure on the ground that this Court lacks personal jurisdiction over it.
See Def.’s Mem. at 2. Because “the [p]laintiff has failed to make a prima facie showing of
personal jurisdiction over [NLS],” it argues that “the suit must be dismissed.” Id. at 4. The
plaintiff counters that NLS falls within the scope of the District of Columbia’s long-arm statute
because the equipment “was that of [NLS], it was set-up on behalf of [NLS] and any payment
made regarding this lease was made to [NLS]. . . . [T]his is evidence of them doing business
within the District of Columbia.” Pl.’s Opp’n at 6.
The plaintiff bears the “burden of establishing personal jurisdiction over each defendant.”
Thompson Hine LLP v. Smoking Everywhere, Inc., 840 F. Supp. 2d 138, 141 (D.D.C. 2012)
(citing Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 455-56 (D.C. Cir. 1990). She cannot rely
on bare allegations or conclusory statements, but “must allege specific acts connecting [the]
defendant with the forum.” Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d
521, 524 (D.C. Cir. 2001) (internal quotation omitted). The plaintiff’s pro se status does not
relieve her of her obligation to “plead an adequate jurisdictional basis for [her] claims.”
Donnelly v. Sebelius, 851 F. Supp. 2d 109, 116 (D.D.C. 2012) (internal citation omitted).
The Court determines whether personal jurisdiction may be exercised “by reference to
District of Columbia law.” United States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995). “A
District of Columbia court may exercise personal jurisdiction over a person domiciled in . . . or
maintaining . . . its principal place of business in, the District of Columbia as to any claim for
4
relief.” D.C. Code § 13-422. Nowhere in the complaint does the plaintiff allege that NLS either
is domiciled in or maintains its principal place of business in the District of Columbia.
The Court next engages in a two-part inquiry to determine whether a non-resident
defendant is subject to personal jurisdiction in the District of Columbia. See GTE New Media
Servs., Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000). The Court “first
examine[s] whether jurisdiction is applicable under the [District of Columbia’s] long-arm statute
and then determine[s] whether a finding of jurisdiction satisfies the constitutional requirements
of due process.” Id. (citing Ferrara, 54 F.3d at 828). To this end, the plaintiff may show that
NLS has “minimum contacts” with this forum, such that “the maintenance of the suit does not
offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945). These minimum contacts must arise from “some act by which the
defendant purposefully avails itself of the privilege of conducting activities with the [District of
Columbia], thus invoking the benefits and protections of its laws.” Asahi Metal Indus. Co., Ltd.
v. Super. Ct. of Cal., Solano Cnty., 480 U.S. 102, 109 (1988) (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474 (1985)). In other words, “the defendant’s conduct and connection
with the [District of Columbia] are such that [it] should reasonably anticipate being haled into
court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
In relevant part, the long-arm statute allows a court in the District of Columbia to
exercise personal jurisdiction over a non-resident defendant with regard to a claim arising from
the defendant’s conduct in:
(1) transacting business in the District of Columbia;
(2) contracting to supply services in the District of Columbia;
(3) causing tortious injury in the District of Columbia by an act
or omission in the District of Columbia;
(4) causing tortious injury in the District of Columbia by an act
or omission outside the District of Columbia if he regularly
5
does or solicits business, engages in any other persistent
course of conduct, or derives substantial revenue from
goods used or consumed, or services rendered, in the
District of Columbia.
D.C. Code § 13-423(a). 2 Although the plaintiff alleges that “the conduct complained of occurred
here,” Am. Compl. ¶ 7, she does not indicate which provision of the long-arm statute applies in
this case. Her opposition to the defendant’s motion, however, suggests that she relies on the
“transacting business” provision. She “contends that due to the fact that no one other than [NLS]
provided the equipment, installed it or received payment, that this is evidence of [NLS] doing
business within the District of Columbia. Pl.’s Opp’n at 6.
Section 13-423(a)(1) is “interpreted to be coextensive with the Constitution’s due process
limit.” First Chicago Int’l v. United Exch. Co., 836 F. 2d 1375, 1377 (D.C. Cir. 1988) (internal
citations omitted). “To establish personal jurisdiction under the ‘transacting business’ clause of
the long-arm statute . . . a plaintiff must demonstrate that (1) the defendant transacted business in
the District; (2) the claim arose from the business transacted in the District . . . ; (3) the defendant
had minimum contacts with the District; and (4) the Court's exercise of personal jurisdiction
would not offend ‘traditional notions of fair, play and substantial justice.’” COMSAT Corp. v.
Finshipyards S.A.M., 900 F. Supp. 515, 521 (D.D.C. 1995) (quoting Int’l Shoe, 326 U.S. at 316).
In the face of NLS’s arguments that it neither engages in persistent conduct aimed at
deriving revenue from goods or services from the District of Columbia or transacts any business
here, see Def.’s Mem. at 3, the plaintiff gives no indication that NLS has the requisite contacts,
ties, or relation to the District of Columbia. Missing from the amended complaint are any factual
allegations to show that NLS “‘purposefully directed’ any activities at residents of the District of
2
The alternative bases set forth under the long-arm statute are inapplicable.
6
Columbia . . . [or] that it has any ‘contacts, ties, or relation’ to the District of Columbia.”
Buesgens v. Brown, 567 F. Supp. 2d 26, 36 (D.D.C. 2008) (quoting Burger King, 471 U.S. at
472).
If the plaintiff were to rely on D.C. Code § 13-423(a)(2) as a basis for asserting personal
jurisdiction, she still cannot prevail. “[T]he mere existence of a contract between a non-resident
and a resident is not sufficient basis on which to claim jurisdiction over the non-resident in the
District of Columbia.” COMSAT, 900 F. Supp. at 524 (citing Hanson v. Denckla, 357 U.S. 235
(1958)); Willis v. Willis, 655 F.2d 1333, 1338 (D.C. Cir. 1981). The Lease Agreement is a
particularly weak justification for invoking the D.C. long-arm statute. By its terms, New York
law governs, and any litigation shall be brought in the federal or state courts in New York. See
Lease Agreement at 5. 3
If the Court were to consider NLS’s alleged threats to sue the plaintiff, see id. ¶ 19,
telephone calls to her workplace, id. ¶ 20, and the “undue hardship” she allegedly suffers, id. ¶
22, as tortious injury suffered in the District of Columbia caused by NLS’s actions outside of the
District of Columbia, the plaintiff cannot rely on section 13-426(a)(4) either. The plaintiff fails
to establish “any of subsection (a)(4)’s so-called ‘plus factors’: “regularly do[ing] or solicit[ing]
business, engag[ing] in any other persistent course of conduct, or deriv[ing] substantial revenue
3
Paragraph 20 of the Lease Agreement provides:
THIS LEASE SHALL BE GOVERNED BY THE LAWS FO THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW, RULES OR PRINCIPLES THEREOF.
ALL ACTIONS, PROCEEDINGS OR LITIGATION BROUGHT BY [NLS OR THE
GUARANTOR] ARISING FROM OR IN ANY WAY RELATED TO THIS LEASE SHALL BE
INSTITUTED AND PROSECUTED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS
LOCATED IN THE STATE AND COUNTY OF NEW YORK NOTWITHSTANDING THAT
OTHER COURTS MAY HAVE JURISDICTION OVER THE PARTIES AND THE SUBJECT
MATTER.
Lease Agreement at 5 (emphasis in original).
7
from goods used or consumed, or services rendered, in the District of Columbia.” McIntosh v.
Gilley, 753 F. Supp. 2d 46, 59 (D.D.C. 2010) (quoting D.C. Code § 13-423(a)(4)).
NLS is neither subject to the District’s long-arm statute nor maintains sufficient contacts
with the District so as to render it subject to this Court’s jurisdiction. 4 Its motion to dismiss
under Rule 12(b)(2) for lack of personal jurisdiction will be granted.
C. Failure to State Claims Upon Which Relief Can Be Granted
NLS moves to dismiss the amended complaint under Rule 12(b)(6) of the Federal Rules
of Civil Procedure on the ground that the pleading fails to state claims under the FCRA, the
FDCPA, and the Consumer Act upon which relief can be granted. See Def.’s Mem. at 6-9. To
survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
In other words, it must “plead factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Patton Boggs LLP v. Chevron
Corp., 683 F.3d 397, 403 (D.C. Cir. 2012) (internal quotation omitted). Although a complaint
filed by a pro se plaintiff is “to be liberally construed,” Erickson v. Pardus, 551 U.S. 89, 94
4
It does not appear that D.C. Code § 13-423(a)(3) applies in this case, as the amended
complaint does not allege that NLS caused tortious injury by an action originating in the District
of Columbia. Nor can the plaintiff rely on 15 U.S.C. § 1692k(d), see Pl.’s Opp’n at 5, as a basis
for establishing personal jurisdiction. Section 1692k(d) does not confer jurisdiction and instead
establishes the limitations period within which to bring an action under the FDCPA “in any
appropriate United States district court without regard to the amount in controversy, or in any
other court of competent jurisdiction . . . .” 15 U.S.C. § 1692k(d). Lastly, the plaintiff cannot
rely on Rule 4 of the Federal Rules of Civil Procedure as support for the proposition that
“serving a summons . . . establishes personal jurisdiction.” Pl’s Mot. to Amend ¶ 3. Rather,
under Rule 4(k), “[s]erving a summons . . . establishes personal jurisdiction over a defendant . . .
who is subject to the jurisdiction of a court of general jurisdiction in the state where the district
court is located.” Id. (emphasis added). Service on a non-resident defendant by mail to a New
York address might establish personal jurisdiction only if NLS otherwise were subject to this
Court’s jurisdiction.
8
(2007), it, too, must set forth factual allegations that “raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555.
1. Fair Credit Reporting Act
NLS moves to dismiss the plaintiff’s claims under the FCRA on the ground that the
complaint “has not alleged any facts which would make the FCRA applicable to this action . . . .”
Def.’s Mem. at 7. “Congress enacted FCRA to ensure fair and accurate credit reporting, promote
efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr,
551 U.S. 47, 52 (2007) (internal citations omitted). In order to show a violation of the FCRA,
the plaintiff must allege that NLS is a “consumer reporting agency,” 5 or that it creates “consumer
report[s],” 6 or that it “regularly engages in . . . assembling or evaluating consumer credit
information, or other information on consumers for the purpose of furnishing consumer reports
to third parties.” 15 U.S.C. § 1681a(f). Although information originating from NLS may have
been reported to the credit bureaus, see Am. Compl. ¶ 24, the amended complaint fails to make
any factual allegations showing that NLS is a consumer reporting agency, or that it creates
consumer reports, or that it otherwise engages in conduct within the scope of the FCRA. Her
claim under the FCRA therefore will be dismissed.
5
“The term ‘consumer reporting agency’ means any person which . . . regularly engages in
whole or in part in the practice of assembling or evaluating consumer credit information or other
information on consumers for the purpose of furnishing consumer reports to third parties . . . .”
15 U.S.C. § 1681a(f) (emphasis added).
6
“The term ‘consumer report’ means any written, oral, or other communication of any
information by a consumer reporting agency bearing on a consumer's credit worthiness
[creditworthiness], credit standing, credit capacity, character, general reputation, personal
characteristics, or mode of living which is used or expected to be used or collected in whole or in
part for the purpose of serving as a factor in establishing the consumer's eligibility for (A) credit
or insurance to be used primarily for personal, family, or household purposes; (B) employment
purposes; or (C) any other purpose authorized under section [1681b].” 15 U.S.C. § 1681a(d)
(emphasis added).
9
2. Fair Debt Collection Practices Act
NLS also moves to dismiss the plaintiff’s claim under the FDCPA which, it alleges,
“do[es] not apply to the facts of this case.” Def.’s Mem. at 8. NLS asserts that it is not a “debt
collector” and the plaintiff’s debt is not a “debt” as these terms are defined in the FDCPA. See
id. at 7-8.
“The FDCPA is a consumer protection statute that prohibits certain abusive, deceptive,
and unfair debt collection practices,” and it “authorizes any aggrieved person to recover damages
from any debt collector who fails to comply with any provision of the FDCPA.” Marx v.
General Revenue Corp., __ U.S. __, __, 133 S. Ct. 1166, 1171 n.1 (2013) (internal quotation
marks and citations omitted). A “debt collector” is any person in any business “the principal
purpose of which is the collection of any debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. §
1692a(6). Excluded from the FDCPA’s coverage is activity that “concerns a debt obtained by
such person as a secured party in a commercial credit transaction involving the creditor.” 15
U.S.C. § 1692a(6)(F)(iv). Rather, the FDCPA concerns debt collection practices for “consumer
debt[s]” that are primarily for “personal, family, or household purposes.” 15 U.S.C. § 1692a(5).
The plaintiff’s allegations regarding NLS’s debt collection activities are vague at best.
For example, she contends that “many of these practices are widespread for the Defendants,”
Am. Compl. ¶ 3, yet she does not articulate or describe these practices. And even if NLS failed
to respond to her “numerous requests of reporting of unsubstantiated credit inaccuracies . . . to
all three . . . Credit Bureaus,” id. ¶ 4; see id. ¶¶ 17-20, none of these allegations indicate that NLS
is a debt collector for purposes of the FDCPA. The Lease Agreement pertains to financing for
non-cash payment processing equipment for the plaintiff’s business, such that the underlying
10
debt not is a “consumer debt” for purposes of the FDCPA, notwithstanding the plaintiff’s
unsupported assertion that “said equipment, if used, was for personal use only.” Id. ¶ 2. “[T]he
burden rests on [the plaintiff], at this stage, to allege facts sufficient to support [her] claim[s]”
under the FDCPA, Winstead v. EMC Mortgage Corp., 697 F. Supp. 2d 1, 4 (D.D.C. 2010)
(internal citations omitted), and she fails to establish that the underlying debt was a consumer
debt primarily for personal, family, or household purposes.
3. The Consumer Act and the Consumer Protection Procedures Act
NLS argues that “the underlying obligation . . . is a Commercial lease in which the
[p]laintiff acted as guarantor,” such that the District’s Consumer Act does not apply. Def.’s
Mem. at 8. Had NLS acknowledged the plaintiff’s claim under the CPPA, presumably it would
have moved to dismiss it, too.
“[T]he [Consumer Act is] designed to police trade practices arising only out of consumer-
merchant relationships . . . , and [it] does not apply to commercial dealings outside the consumer
sphere.” Ford v. ChartOne, Inc., 908 A.2d 72, 81 (D.C. 2006) (internal quotation marks and
citations omitted). It is limited to addressing “conduct and practices in connection with
collection of obligations arising from consumer credit sales, consumer leases, and direct
installment loans.” D.C. Code § 28-3814; see id. § 28-3802 (defining “consumer credit sale” as
the “sale of goods or services in which . . . (C) the goods or services are purchased primarily for
a personal, family, household, or agricultural purpose . . . .”). The Consumer Act “does not
protect merchants in their commercial dealings with suppliers or other merchants.” Ford, 908
A.2d at 83 (internal citation omitted).
Similarly, “[t]he purpose of the CPPA is to protect consumers from a broad spectrum of
unscrupulous practices by merchants,” and “[d]espite its broad reach the CPPA applies only to
11
consumer-merchant relationships.” Busby v. Capital One, N.A., 772 F. Supp. 2d 268, 279
(D.D.C. 2011) (internal quotation marks and citations omitted). For purposes of the CPPA, a
“consumer” is “a person who does or would purchase, lease (from), or receive consumer goods
or services.” D.C. Code § 28-3901(a)(2). The term “consumer” used as an adjective “describes
anything, “without exception, which is primarily for personal, household, or family use.” Id.
According to the plaintiff, “the equipment that is at the core of this Complaint[] was
delivered to a place of business,” yet “if used, was for personal use only.” Am. Compl. ¶ 2.
Notwithstanding this assertion, the amended complaint contains no factual allegations to indicate
that the underlying equipment finance lease was primarily for personal, household, or family use.
The pleading neither describes the equipment, nor explains its function, nor offers an alternative
interpretation of the Lease Agreement, the plain language of which establishes the commercial
nature of the transaction. The plaintiff fails to state claims under the Consumer Act and the
CPPA upon which relief can be granted, and both claims will be dismissed.
4. Criminal Statutes
Although NLS fails to address them, the amended complaint also includes allegations
that NLS violated certain criminal laws of the District of Columbia. See Am. Compl. ¶ 27
(Count III). The sections at issue, see D.C. Code §§ 22-3401 to –3403, pertain to persons
engaged in the business of debt collection and prohibit such persons from using the words
“‘District of Columbia,’ ‘District.’ the initials ‘D.C.’, or any emblem or insignia utilizing any of
the said terms as part of its design, in such manner as reasonably to convey the impression or
belief that such business is a department, agency, bureau, or instrumentality of the municipal
government of the District of Columbia . . . .” D.C. Code § 22-3401. A penalty for such an
offense is “a fine of not more than $300 or by imprisonment for not more than 90 days, or by
12
both.” D.C. Code § 22-3402. Assuming without deciding that the plaintiff may bring a civil suit
under these provisions, her claim necessarily fails because the amended complaint sets forth no
factual allegations that NLS has taken any action to create the erroneous impression that it is an
agency or instrumentality of the District government.
D. Attorney’s Fees and Costs
Finally, NLS “move[s] the Court to award . . . costs and attorney’s fees,” Def.’s Mem. at
10, under the FDCPA which in relevant part provides that, “[o]n a finding by the court that an
action under this section was brought in bad faith and for the purpose of harassment, the court
may award to the defendant attorney’s fees . . . .” 15 U.S.C. 1692k(a)(3). According to NLS, the
plaintiff filed this action “in retaliation of the proper New York claim,” and thus has acted in
“bad faith . . . or for the purpose[] of harassing” the defendant. Def.’s Mem. at 10.
The plaintiff not only strains the Court’s limited resources, but also forces NLS to incur
expenses in responding to the complaint. But where “the plaintiff is a pro se litigant . . . , courts
should afford greater leniency and rarely award attorney’s fees.” Scott-Blanton v. Universal City
Studio Prods. LLP, 593 F. Supp. 2d 171, 175 (D.D.C. 2009) (citing Hughes v. Rowe, 449 U.S. 5,
15 (1980)). Generally, “[a]n unrepresented litigant should not be punished for [her] failure to
recognize subtle factual or legal deficiencies in [her] claims.” Hughes, 449 U.S. at 15. It is far
more likely that the plaintiff misconstrues the law, and the filing of a lawsuit by a person with
limited knowledge of the law is not an act of bad faith. The Court will deny NLS’s motion for
attorney’s fees and costs.
III. CONCLUSION
The Court concludes that it lacks personal jurisdiction over the NLS in this matter and
that the amended complaint fails to state claims under the Fair Credit Reporting Act, the Fair
13
Debt Collection Practices Act, the D.C. Consumer Act and Consumer Protection Procedures Act,
and the D.C. Criminal Code upon which relief can be granted. Accordingly, NLS’s motion to
dismiss will be granted. Its motion for an award of attorney’s fees and costs will be denied. An
Order accompanies this Memorandum Opinion.
/s/
AMY BERMAN JACKSON
United States District Judge
DATE: July 12, 2013
14
| {
"pile_set_name": "FreeLaw"
} |
People v Casimay (2016 NY Slip Op 06895)
People v Casimay
2016 NY Slip Op 06895
Decided on October 20, 2016
Appellate Division, First 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 October 20, 2016
Sweeny, J.P., Renwick, Manzanet-Daniels, Gische, Webber, JJ.
1999 2618/12
[*1]The People of the State of New York, Respondent,
vAngel Casimay, Defendant-Appellant.
Seymour W. James, Jr., The Legal Aid Society, New York (Kristina Schwarz of counsel), for appellant.
Cyrus R. Vance, Jr., District Attorney, New York (Patrick J. Hynes of counsel), for respondent.
Judgment, Supreme Court, New York County (Bonnie G. Wittner, J.), rendered February 7, 2013, convicting defendant, upon his plea of guilty, of attempted burglary in the second degree, and sentencing him, as a second felony offender, to a term of three years, unanimously affirmed.
Defendant, who contends that his plea was involuntary because the court did not specifically advise him that he could be deported as a result of the plea, did not show that the narrow exception to the preservation requirement applies (see People v Peque, 22 NY3d 168, 182-183 [2013], cert denied 574 US __, 135 S Ct 90 [2014]). Defendant was informed, by way of a notice of immigration consequences served upon him by the People, that he could potentially be deported. We decline to reach defendant's unpreserved contention in the interest of justice because, given the circumstances of the plea, it is unlikely that he could make the requisite showing of prejudice under Peque if granted a hearing (see id. at 198-201; People v Diakite, 135 AD3d 533 [1st Dept 2016], lv denied 27 NY3d 1131 [2016]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: OCTOBER 20, 2016
CLERK
| {
"pile_set_name": "FreeLaw"
} |
Revised May 22, 2001
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
____________
No. 00-60044
____________
COMSAT CORPORATION; AT&T CORPORATION,
Petitioners,
versus
FEDERAL COMMUNICATIONS COMMISSION; UNITED
STATES OF AMERICA,
Respondents.
______________________________________________________
AT&T CORPORATION,
Petitioner,
versus
FEDERAL COMMUNICATIONS COMMISSION; UNITED
STATES OF AMERICA,
Respondents.
Petition for Review of a Final Order of
the Federal Communications Commission
May 3, 2001
Before DAVIS, EMILIO M. GARZA, Circuit Judges, and POGUE* , District Judge.
EMILIO M. GARZA, Circuit Judge:
Comsat and AT&T, along with intervenors MCI WorldCom, Inc., Sprint Corporation, and
Telecommunications Resellers Association, petition for review of Federal-State Joint Board on
Universal Service, CC Docket No. 96-45, Sixteenth Order on Reconsideration, FCC 99-290, 15 FCC
Rcd. 1679 (released Oct. 8, 1999) (“Remand Order”). Finding that Comsat lacks standing, we
dismiss Comsat’s petition for lack of jurisdiction. With respect to the petition of AT&T and the
intervenors, we reverse and remand.
I
Pursuant to the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
(codified as amended in scattered sections of title 47, United States Code) (“the Act”), the Federal
Communications Commission (“the Commission”) issued its 1997 Universal Service Order. See
Federal-State Joint Board on Universal Service, 12 FCC Rcd. 8776 (1997). Numerous parties
challenged that order, and we affirmed it in part and reversed it in part in our decision in Texas Office
of Public Utility Counsel v. FCC, 183 F.3d 393 (5th Cir. 1999) (“TOPUC”).
In TOPUC, we addressed two portions of the 1997 Universal Service Order pertinent to the
petitions now before us. First, Comsat, also a party in TOPUC, attacked the inclusion of international
services revenue in determining a carrier’s universal service fund contribution. Comsat contended
that for carriers like itself, who generate minimal interstate services revenues, the FCC’s rule required
it to pay a universal service contribution that exceeded its interstate services revenues. Comsat
maintained that this outcome violated § 254(d)’s requirement that all universal service support be
*
Judge, United States Court of International Trade, sitting by designation.
-2-
equitable and nondiscriminatory. We agreed and found that the Commission’s interpret ation of §
254(d), in which it found it could impose such costs on carriers, was “arbitrary and capricious and
manifestly contrary to the statute.” Id. at 434-35.
Second, GTE asserted that requiring incumbent local exchange carriers (“ILECs”)1 to recover
their universal service costs through access charges to interexchange carriers (“IXCs”)2 contravened
the Act’s mandate that all support for universal service be explicit. See TOPUC, 183 F.3d at 425.
We agreed and concluded that the plain language of 47 U.S.C. § 254(e) did not “permit the FCC to
maintain any implicit subsidies for universal service support.” Id. We further found that by forcing
ILECs to “recover their universal service contributions through access charges, the FCC’s
interpretation maintain[ed] an implicit subsidy for ILECs.” Id. Accordingly, we reversed and
remanded to the FCC.
In response to TOPUC, the Commission issued the Remand Order. The agency adopted a
bright-line percentage rule for when a carrier’s international revenues would be included in the base
from which the agency calculates the carrier’s universal service contribution. Under the new rule,
if a carrier derives less than 8 percent of its revenue from interstate services, its international revenues
will not be used in calculating the contribution. For those carriers receiving 8 percent or more of their
1
A local exchange carrier provides local telephone service within a particular
geographical calling area. ILECs were those local exchange carriers historically granted exclusive
franchises to provide local service. See Assoc. of Communications Enters. v. FCC, 235 F.3d 662,
664 (D.C. Cir. 2001); 47 U.S.C. §153(26) (defining “local exchange carrier”); 47 U.S.C. § 153(47)
(defining “telephone exchange service”).
2
IXCs, long distance carriers, “must obtain access to local telephone customers in order
to sell their services. An IXC connects to its long-distance customers by using either special access
or switched access facilities.” Southwestern Bell Tel. Co. v. FCC, 168 F.3d 1344, 1347 (D.C. Cir.
1999).
-3-
revenues from interstate services, the FCC will include their international revenue in the base for
determining their contributions. The Commission also revised its rule regarding ILEC access charges
by permitting, rather than requiring, ILECs to recover their universal service costs through access
charges to interstate carriers.3
Comsat and AT&T each filed for review of the Remand Order in the District of Columbia
Circuit Court of Appeals. Their cases were consolidated and they made a motion to transfer the case
to our Circuit, which was granted. MCI WorldCom Inc., Sprint Corp., and Telecommunications
Resellers Association intervened.4 Comsat challenges the Commission’s 8 percent rule. AT&T
challenges the Commission’s decision to permit ILECs to recover universal service fund contributions
through access charges to interstate carriers.
II
As a preliminary matter, we must address the Commission’s assertion that Comsat lacks
standing to bring this challenge to the universal service fund 8 percent contribution rule. If Comsat
lacks standing, we lack jurisdiction to consider its challenge. See Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998) (a party’s standi ng must be
addressed first because “[w]ithout jurisdiction the court cannot proceed at all in any cause”) (quoting
3
In a subsequent order, the Commission narrowed its permissive rule to apply it only
to non-price cap ILECs and competitive LECs. See In re Access Charge Reform, Price Cap
Performance Review for Local Exchange Carriers, Low Volume Long Distance Users, and Federal-
State Joint Board on Universal Service, Sixth Report and Order in CC Docket No. 96–26 and 94-1,
Report and Order in CC Docket No. 99-249, and Eleventh Report and Order in CC Docket 96-45,
FCC 00-193, 15 FCC Rcd. 12962, app. B at 56, § 69.158 (2000) (requiring price cap ILECs to
recover universal service costs through end user charges, leaving non price cap ILECs and
competitive LECs to recover their costs through access charges to IXCs).
4
Hereinafter AT&T, MCI WorldCom, Inc., Sprint Corporation, and the
Telecommunications Resellers Association are collectively referred to as AT&T.
-4-
Ex parte McCardle, 7 Wall. 506, 514, 19 L. Ed. 264 (1868)) (opinion of Scalia, J.).
The “irreducible constitutional minimum of standing” requires three things. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992). “First
the plaintiff, must have suffered an ‘injury in fact’—an invasion of a legally protected interest which
is (a) concrete and particularlized, and (b) actual or imminent, not conjectural or hypothetical.
Second, there must be a causal connection between the injury and the conduct complained of—the
injury has to be fairly traceable to the challenged action of the defendant. . . . Third, it must be likely
as opposed to merely speculative that the injury will be redressed by a favorable decision.” Id. at 560-
61, 112 S. Ct. at 2136 (internal quotations and citations omitted); see Bertulli v. Indep. Assoc. of
Continental Pilots, 242 F.3d 290, 294-95 (5th Cir. 2001). Comsat bears the burden of demonstrating
that it has met these requirements. See Lujan, 504 U.S. at 561, 112 S. Ct. at 2136.
Comsat currently makes no payment to the universal service fund, nor are its revenues
sufficient to trigger the 8 percent rule. Thus, Comsat’s injury is not that it now makes a universal
service payment nor that it is subject to the 8 percent rule. Instead, Comsat posits that it suffers from
two interrelated injuries. First, it contends that it faces the threat of a massive universal service
payment should its interstate revenues reach the 8 percent threshold. Second, the cost of that
contribution would be so great as to render entry into the interstate services market unprofitable, and,
therefore, the threat of this payment operates as a barrier to Comsat’s entry into that market. In
support of its argument, Comsat maintains that the threat of payment it faces is analogous to the
injury suffered by the New York City Health and Hospitals Corp. (“NYCHHC”) in Clinton v. New
York, 524 U.S. 417, 118 S. Ct. 2091, 141 L. Ed. 2d 393 (1998), which the Supreme Court found
sufficient to confer standing on NYCHHC. We disagree.
-5-
In Clinton, the Supreme Court concluded that the NYCHHC had standing to challenge the
constitutionality of the Line Item Veto Act, 2 U.S.C. §§ 691-692. NYCHHC challenged the
President’s cancellation of a provision that would have relieved NYCHHC of its contingent liability
to the United States, which remained contingent because of a pending petition for a waiver of the
liability. See Clinton, 524 U.S. at 422, 118 S. Ct. at 2095. Comsat contends that it too suffers from
a contingent liability, i.e., the possible universal service payment. In making this comparison, Comsat
focuses on NYCHHC’s still pending waiver and the potential for relief this waiver provided apart
from that which would have been afforded by the provision had it not been canceled. This
comparison to NYCHHC is flawed because Comsat assumes that the NYCHHC’s contingent liability
per se was the injury that gave NYCHHC standing. The Supreme Court’s reasoning demonstrates
otherwise. In rejecting the government’s contention that NYCHHC’s injury was too speculative
because the liability might still be waived, the Court compared NYCHHC’s injury to the setting aside
of a favorable verdict and remanding for a new trial. The Court stated: “Even if the outcome of the
second trial is speculative, the reversal, like the President’s cancellation, causes a significant
immediate injury by depriving the defendant of the benefit of a favorable final judgment.” Id. at 431,
118 S. Ct. at 2099. NYCHHC’s injury occurred when the President canceled the provision, depriving
it of immediate relief from liability. The fact that NYCHHC’s liability might later have been relieved
by this waiver did not affect the Court’s conclusion that the cancellation caused NYCHHC to lose
a benefit which it already had in hand. Comsat, in contrast, does not contend that it lost a benefit.
Thus, Clinton is inapposite to the case at bar.
A threatened injury satisfies the injury in fact requirement so long as that threat is real, rather
than speculative. See Whitmore v. Arkansas, 495 U.S. 149, 158, 110 S. Ct. 1717, 1724-1725, 109
-6-
L.Ed.2d 135 (1990) (“A threatened injury must be certainly impending to constitute an injury in
fact.”) (internal quotations and citations omitted); Loa-Herrera v. Trominiski, 231 F.3d 984, 988 (5th
Cir. 2000) (“Mere threatened injury is sufficient, and the threat in this case is real.”). Here, in order
for the threat of a universal service payment to be sufficiently concrete, Comsat must be able to
expand into the interstate services market so as to increase its revenue to the requisite 8 percent. See
City of Los Angeles v. Lyons, 461 U.S. 95, 105, 103 S. Ct. 1660, 1667, 75 L.Ed. 2d 675 (1983)
(“Lyons’ standing to seek the injunction requested depended on whether he was likely to suffer future
injury from the use of the chokeholds by police officers.”); Prestage Farms v. Bd. of Supervisors of
Noxubee County, Miss., 205 F.3d 265, 268 (5th Cir. 2000) (denying standing where party failed to
show challenged ordinance had a “concrete effect” on its business endeavors). At this time, however,
there are various FCC regulations, unrelated to the challenged rule, that prevent Comsat from
expanding its interstate services. Comsat asserted for the first time at oral argument that it had an
application pending before the FCC to remove these regulations.5 Even assuming arguendo that this
allegation is properly before us, Comsat also admitted that the FCC could remove these in whole or
in part. Obviously, the FCC could also decide not to remove any of these regulatory barriers.
Consequently, the threat of a universal service payment is conjectural because Comsat cannot expand
its interstate services due to those barriers, and the likelihood that it will be able to do so is merely
speculative. Therefore, this alleged injury fails to constitute an injury in fact.
As for Comsat’s second assertion that this threatened payment bars Comsat from entering the
5
Comsat argued for the first time at oral argument that its merger with Lockheed
Martin bore on its standing argument. Arguments presented for the first time at oral argument are
waived. See Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 270 (5th Cir. 1998). Thus, we
do not consider this argument.
-7-
interstate services market, we need not determine whether this injury would constitute an injury in
fact. Comsat’s inability to enter the interstate market undermines its ability to meet the requirement
that the challenged action be fairly traceable to the alleged injury. Comsat’s inability to enter the
interstate services market results from other regulations, rather than the 8 percent rule; therefore,
Comsat does not have standing on this basis. See Warth v. Seldin, 422 U.S. 490, 506, 112 S. Ct.
2197, 2209, 45 L. Ed. 2d 343 (1975) (finding failure to demonstrate causation where it appeared that
petitioners’ financial situations and particular housing needs suggested that their inability to purchase
homes in the town resulted not from respondents’ actions but from the “economics of the area
housing market”). Accordingly, because neither of the proffered bases for standing succeeds, we
dismiss Comsat’s petition for lack of jurisdiction.
III
Before proceeding to the merits of AT&T’s petition, we must address the Commission’s
contention that 47 U.S.C. § 405 bars consideration of AT&T’s petition. Under § 405, a party must
afford the Commission an opportunity to pass on the arguments the party presents for judicial review.
See 47 U.S.C. § 405.6 The Commission contends that because AT& T failed to present its assertion
(i.e., the agency must eliminate ILEC cost recovery through IXC access charges) to the Commission
prior to filing the instant petition for review, we are barred from hearing AT&T’s petition for review.
We disagree. In the Remand Order, at ¶ 32, the Co mmission stated: “We believe that the Fifth
6
47 U.S.C. § 405 provides in relevant part that:
The filing of a petition for reconsideration [by the Commission] shall not be a
condition precedent to judicial review of any such order, decision, report, or action,
except where the party seeking review (1) was not a party to the proceedings
resulting in such order, decision, report, or action or (2) relies on questions of factor
law upon which the Commission, or designate authority within the Commission has
been afforded no opportunity to pass.
-8-
Circuit intended to hold only that section 254(e) barred the FCC from requiring incumbent LECs to
recover universal service contributions through access charges.” See also id. at ¶ 33 (“To comply
with the Fifth Circuit’s order we will expand incumbent LEC’s options for recovering their universal
service contributions.”). In doing so, the Commission discarded the notion that our TOPUC holding
required the elimination of this implicit subsidy. Where the Commission has considered an argument,
§ 405 does not preclude review of a petitioner’s claim. See Time Warner Entertainment, Co., L.P.
v. FCC, 144 F.3d 75, 80 (D.C. Cir. 1998) (“So long as the issue is necessarily implicated by the
argument made to the Commission, section 405 does not bar our review.”).
In reviewing the Commission’s actions on the merits of AT&T’s claims, we apply the two-
step inquiry set forth in Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-843,
104 S. Ct. 2778, 2781-2783, 81 L. Ed. 2d 694 (1984). In step one, we determine whether “Congress
has directly spoken to the precise question at issue.” Id. at 842, 104 S. Ct. at 2781. If Congress has
done so, we must “give effect to [Congress’s] unambiguously expressed intent.” Id. at 843, 104 S.
Ct. at 2781. If we find that the statute is ambiguous with respect to the question at issue, we proceed
to step two and “the question for [us] is whether the agency’s answer is based upon a permissible
construction.” Id. at 843, 104 S. Ct. at 2782. If we reach this second step, we may only reverse the
agency’s decision if we find that the decision was “arbitrary, capricious, or manifestly contrary to the
statute.” Id. at 844, 104 S. Ct. at 2782.
Section 254(e) provides that universal service support “should be explicit.” In TOPUC, we
concluded that “the plain language of § 254(e) does not permit the FCC to maintain any implicit
subsidies.” 183 F.3d at 425 (5th Cir. 1999). In this case, in contrast to TOPUC, it is not disputed
that the recovery of universal service costs through access charge to IXCs is an implicit subsidy. The
-9-
FCC concedes, and we agree, that TOPUC forecloses such an argument. See id.; see also Alenco
Communications, Inc. v. FCC, 201 F.3d 608, 623 (5th Cir. 2000) (“We made clear in TOPUC that
the implicit/explicit distinction turns on the distinction between direct subsidies from support funds
and recovery through access charges and rate structures.”). Because Congress has directly spoken
to this issue and the access charge is an implicit subsidy, we review the challenged rule under Chevron
step-one. Thus, what we must resolve is whether the FCC decision to permit ILECs to continue to
recover universal service costs through access charges to interstate carriers violates § 254(e). We
hold that permitting this method of cost recovery countermands Congress’s clear legislative directive,
as we articulated in TOPUC and reaffirmed in Alenco, that universal service support must be explicit.
See TOPUC, 183 F.3d at 425; Alenco, 201 F.3d at 623 (finding that § 254(e) “mandat[es] that all
universal service support by explicit” and, thus, DEM weighting had to be eliminated).
Relying on our decisions in TOPUC and Alenco, AT&T contends that the Commission cannot
permit ILECs to recover their universal service costs via access charges to interstate carriers because
§ 254(e) requires the elimination of all implicit subsidies. In response, the Commission maintains that
our holding in TOPUC was much narrower, precluding the FCC only from requiring ILECs to
recover costs through access charges. See Remand Order, at ¶ 32. Moreover, the Com mission
asserts that this rule harmonizes TOPUC with the Eighth Circuit’s decision in Southwestern Bell Tel.
Co. v. FCC, 153 F.3d 523 (8th Cir. 1998). See Remand Order, at ¶ 33.7
The Commission contends that our holding in TOPUC merely proscribed requiring ILECS
7
The Commission also contends that the rule permitting access charges is transitional
and, therefore, Chevron step-two applies, thereby granting it the discretion to continue the implicit
subsidy during the transition to the explicit subsidy system. The Commission, however, failed to brief
this issue, raising it for the first time at oral argument. Thus, the Commission has waived this
argument. See Zuccarello v. Exxon Corp., 756 F.2d 402, 407-08 (5th Cir. 1985).
-10-
to recover universal service costs through access charges to IXCs. In support of this contention, the
agency points to: (1) the scope of GTE’s argument in TOPUC; and (2) that we declined to grant
standing to MCI as an intervenor. The Commission is correct that GTE at tacked the FCC rule
requiring it to recoup universal service costs from access charges to IXCs on the ground that the
absence of choice in its cost recovery methods would put it at a competitive disadvantage with
potential new competitors. See TOPUC, 183 F.3d at 425. Nevertheless, we did not, as t he
Commission suggested at oral argument, reject the recovery of universal service costs through access
charges because it unfairly forced ILECs to use this method of cost recovery. While GTE’s argument
focused on the absence of choice, the distinction the agency draws between “require” and “permit”
is one without a difference. We found that the FCC’s previous rule “continue[d] to require implicit
subsidies,” not that requiring cost recovery through access charges was t he implicit subsidy. Id.
(emphasis added). In short, our holding in TOPUC that § 254(e) did not permit the Commission to
require ILECs to recover universal service costs via access charges turned on the recovery method
per se, not whether the Commission permitted or mandated it. Thus, we held that the access charges
constituted an implicit subsidy in violation of the clear congressional directive that support for
universal service be explicit. See id.
Second, the Commission contends that in declining to consider MCI’s argument in TOPUC,
we limited our holding to invalidating the requirement of access charges to IXCs. Specifically, the
Commission maintains that our description of MCI’s assertions as seeking “the elimination of implicit
subsidies” cabins our holding. The FCC tries to glean too much from our decision declining to grant
MCI intervenor-standing. MCI, rather than filing a petition for review, sought to intervene in order
to challenge the FCC’s plan to reduce access charges by the amount received as explicit universal
-11-
service subsidies. MCI asserted that the access charges should be reduced “to the forward-looking
cost level used by the agency to calculate support for high-costs areas” because the failure to do so
violated the FCC’s “statutory mandate to eliminate implicit subsidies when it implements the new
universal service plan.” TOPUC, 183 F.3d at 437-38. We found t hat this challenge differed from
those presented by the petitioners. As such, we declined to grant MCI standing, finding that “‘we
could grant the intervenor the full relief it seeks while rejecting all of the petitioners’ challenges and
vice versa.’” Id. at 438 (quoting Ill. Bell Tel. Co. v. FCC, 911 F.2d 776, 786 (D.C. Cir. 1990)). In
doing so, we simply indicated that, as a result of the difference between MCI’s argument and those
proffered by the petitioners, the possibility existed for denying the petitioners relief but granting it to
MCI. It was not a comment on what we did or did not hold. As a result, our decision in TOPUC not
to address MCI’s argument does not impinge upon our holding that § 254(e) does not permit the
Commission “to maintain any implicit subsidies.” Id. at 425.
The Co mmission next maintains that it needed to permit ILECs to recoup their universal
service co st via access charges in order to comply with our holding in TOPUC and the Eighth
Circuit’s decision in Southwestern Bell. We disagree. Our sister circuit concluded that the recovery
of contribution costs from IXCs did not constitute an implicit subsidy, but was “a real cost of doing
business.” Southwestern Bell, 153 F.3d at 554. This finding cannot be harmonized with our holding
that the recovery of universal service costs through access charges is an implicit subsidy. See
TOPUC, 183 F.3d at 425. Furthermore, because the Eighth Circuit reached this conclusion, it did
not pass upon the question of whether § 254(e) allowed the FCC to permit a continuation of implicit
subsidies. Finally, contrary to the Commission’s contention, it could have complied with both
TOPUC and Southwestern Bell by precluding the access charges to IXCs. Thus, we find this
-12-
argument unavailing.
In short, we find that our holding in TOPUC makes it clear that the “FCC cannot maintain any
implicit subsidies” whether on a permissive or mandatory basis. We hold that the FCC’s Remand
Order permitting the ILECs to recoup universal services costs through access charges is contrary to
the plain language of § 254(e).
IV
For the foregoing reasons, we DISMISS Comsat’s petition for want of jurisdiction. We
GRANT AT&T’s petition for review and we REVERSE and REMAND to the Commission for
proceedings not inconsistent with this opinion.
-13-
Pogue, Judge, concurring:
I agree with the majority that the decisions in Texas Office of Pub. Util. Counsel v. FCC, 183
F.3d 393 (5th Cir. 1999) (“TOPUC”), and Alenco Communs., Inc. v. FCC, 201 F.3d 608 (5th Cir.
2000), control the outcome in this case. I write separately to express my concerns with the TOPUC
court’s conclusions that access charges are implicit subsidies, and that “the plain language of § 254(e)
does not permit the FCC to maintain any implicit subsidies,” thus preventing the court from
“afford[ing] the FCC any Chevron step-two deference in light of this unambiguous Congressional
intent.” See TOPUC, 183 F.3d at 425; see also Chevron U.S.A. Inc. v. Natural Resources Defense
Council, 467 U.S. 837, 842-43, 104 S. Ct. 2778, 2781-82, 81 L. Ed. 2d 694 (1984) (holding that if
“Congress has directly spoken to the precise quest ion at issue,” the court must “give effect to
[Congress’s] unambiguously expressed intent”; if the statute is silent or ambiguous with respect to
the question at issue, the court asks “whether the agency’s answer is based on a permissible
construction of the statute”).
Section 254(e) provides that “support should be explicit and sufficient to achieve the purposes
of this section.” 47 U.S.C. § 254(e) (1986) (emphasis added). It is simply not clear to me that this
language amounts to a “plain, direct statutory command.” TOPUC, 183 F.3d at 425. Indeed, it is
accepted that “should” does not convey a command in the same way that “shall be explicit” or “must
be explicit,” as is acknowledged in TOPUC itself in addressing a different part of the statute. See
TOPUC, 183 F.3d at 418 (“Generally speaking, courts have read ‘shall’ as a more direct statutory
command than words such as ‘should’ or ‘may.’”) (footnote omitted). Moreover, the statute is silent
insofar as it does not define any of the relevant terms (“explicit,” “implicit,” “support” or “subsidy”),
and the TOPUC court recognized that the statute is ambiguous as to the meaning of “explicit.” See
TOPUC, 183 F.3d at 425. It is also relevant that § 254(b) of the statute, which lists “Universal
service principles,” states that support mechanisms “should be specific, predictable and sufficient .
. . to preserve and advance universal service.” 47 U.S.C. § 254(b)(5). That § 254(b)(5) does not
suggest that support mechanisms should also be explicit makes it even more difficult for me to agree
that § 254(e) is unambiguous on its face.
Assuming that the language of § 254(e) is ambiguous, then Chevron step two should apply.
In TOPUC, the FCC advanced an argument that access charges could be maintained because they are
explicit to the carrier, even though implicit to the consumer. See TOPUC, 183 F.3d at 425. It is not
evident to me that interpreting the statute to mean “explicit to the carrier” is an unreasonable
interpretation of the language “should be explicit.” The statute does not answer the question of to
whom the support should be explicit, nor does it suggest that support be explicit to all parties. It thus
seems to me that the FCC’s interpretation may well be reasonable, especially where the support
mechanism is otherwise “specific, predictable and sufficient . . . to preserve and advance universal
service,” and, generally, “to achieve the purposes of this section.” 47 U.S.C. §§ 254(b)(5), (e).
Although I respect the controlling effect of TOPUC and Alenco on the disposition of this case,
it is my opinion that the TOPUC court failed to afford the FCC’s interpretation of the statute the
deference required under the Chevron doctrine. For these reasons, I concur.
-15-
-16-
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Opinion issued August 7, 2018
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00225-CR
———————————
JEFF MARTINEZ, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 351st District Court
Harris County, Texas
Trial Court Case No. 1454459
MEMORANDUM OPINION
Without an agreed recommendation from the State, appellant, Jeff Martinez,
pleaded guilty to the felony offense of manslaughter.1 The trial court found appellant
1
See TEX. PENAL CODE ANN. § 19.04 (Vernon 2011).
guilty and assessed his punishment at confinement for ten years. Appellant filed a
notice of appeal.
We dismiss the appeal for lack of jurisdiction.
We cannot exercise jurisdiction over an appeal without a timely filed notice
of appeal. See TEX. R. APP. P. 26.2(a); see also Castillo v. State, 369 S.W.3d 196,
198 (Tex. Crim. App. 2012); Olivo v. State, 918 S.W.2d 519, 522 (Tex. Crim. App.
1996). A defendant’s notice of appeal is timely if filed within thirty days after the
date sentence is imposed or suspended in open court or within ninety days after that
date if the defendant timely files a motion for new trial. TEX. R. APP. P. 26.2(a); see
Bayless v. State, 91 S.W.3d 801, 806 (Tex. Crim. App. 2002); Lair v. State, 321
S.W.3d 158, 159 (Tex. App.—Houston [1st Dist.] 2010, pet. ref’d). Here, the trial
court imposed sentence and signed the judgment of conviction on October 24, 2017.
The clerk’s record filed in this Court reflects that appellant timely filed a motion for
new trial on November 21, 2017. See TEX. R. APP. P. 21.4(a). Appellant’s notice of
appeal, therefore, was due to be filed no later than January 22, 2018. See TEX. R.
APP. P. 26.2(a)(2); Olivo, 918 S.W.2d at 522. Appellant’s notice of appeal, filed on
March 6, 2018, was untimely to perfect an appeal of the October 24, 2017 judgment
of conviction, and we have no basis for jurisdiction over the appeal. See Olivo, 918
S.W.2d at 522; Lair, 321 S.W.3d at 159.
2
Accordingly, we dismiss the appeal for want of jurisdiction. See TEX. R. APP.
P. 43.2(f). We dismiss all pending motions as moot.
PER CURIAM
Panel consists of Chief Justice Radack and Justices Jennings and Lloyd.
Do not publish. TEX. R. APP. P. 47.2(b).
3
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71 N.W.2d 571 (1955)
JERAULD COUNTY, a quasi municipal corporation of the State of South Dakota, Plaintiff and Respondent,
v.
SAINT PAUL-MERCURY INDEMNITY COMPANY, a Corporation, Defendant and Appellant.
No. 9501.
Supreme Court of South Dakota.
July 22, 1955.
Rehearing Denied September 3, 1955.
*573 Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellant.
Charles R. Hatch, Wessington Springs, for plaintiff and respondent.
RENTTO, Judge.
The respondent Jerauld County pursuant to the provisions of SDC 27.19 and acts supplementary thereto, established and maintained a county hospital designated and known as Memorial Hospital. It was managed by a Board of Trustees. The trustees bought public liability insurance from the appellant indemnifying the hospital against loss by reason of liability imposed by law or contract in the operation of the hospital. This action was brought to recover the amounts paid by the county to appellant as premiums for such insurance together with interest thereon.
In its brief respondent states the reasoning on which its cause of action is premised as follows: "The basis of the action is that there is no liability on the part of the plaintiff county for the liabilities insured against and therefore no consideration for the premiums paid and that the premiums paid are recoverable under the provisions of SDC 31.0603(1)". This section in substance provides that the insured is entitled to the return of the premiums paid where the insurer has never incurred any risk or liability under the policy for which the premium was paid. Grabinski v. United States Annuity & Life Ins. Co., 33 S.D. 300, 145 N.W. 553. Appellant contends that under the insurance furnished, it assumed risks and liabilities for which the county was liable. Appellant's motion to dismiss the complaint for failure to state a claim upon which relief could be granted was overruled. On respondent's motion for judgment on the pleadings, judgment was entered as requested. This appeal is from the judgment so entered.
It is well settled in this state that no action lies against a county in the absence of statute to the contrary, for the negligence of its officers, agents, or employees. Bailey v. Lawrence County, 5 S.D. 393, 59 N.W. 219; Hanigan v. Minnehaha County, 47 S.D. 606, 201 N.W. 522; Brown v. Roberts County, 49 S.D. 173, 206 N.W. 479; Cain v. Meade County, 54 S.D. 540, 223 N.W. 734; Robinson v. Minnehaha County, 65 S.D. 628, 277 N.W. 324; Vesely v. Charles Mix County, 66 S.D. 570, 287 N.W. 51; Arms v. Minnehaha County, 69 S.D. 164, 7 N.W.2d 722; Williams v. Wessington Twp., 70 S.D. 75, 14 N.W.2d 493. See also Jackson County v. Dufty, 8 Cir., 147 F.2d 227; Minnehaha County v. Kelley, 8 Cir., 150 F.2d 356. The reason for this rule has been made manifest.
In the Bailey case the Court said [5 S.D. 393, 59 N.W. 221]: "The ground upon which it is held that counties are not liable for damages in actions of this character is that they are involuntary political divisions of the state, created for governmental purposes, and are organized without regard to the consent or dissent of the inhabitants". In the Williams case it is stated [70 S.D. 75, 14 N.W.2d 494] "The reason assigned for the rule of non-liability at common law is that counties and townships are political subdivisions of the state exercising a part of the sovereign powers of the state and liable only to the extent the state itself would be in the absence of statute imposing liability." In the Cain case the Court said [54 S.D. 540, 223 N.W. 736] "If, although the duty is imposed by contract and not by *574 statute, it is still acting in a sovereign function, requiring a waiver of immunity before it can be held". In Jensen v. Juul, 66 S.D. 1, 278 N.W. 6, 8, 115 A.L.R. 1280, after discussing the tort liability of a municipal corporation proper the Court went on to say "On the other hand, counties, civil townships, and school districts classified as quasi public corporations are merely instrumentalities of the state for the purpose of carrying into effect the functions of government, and, as such, are not liable for damages caused by neglectful performance of such duties, unless cause of action is expressly given by statute." The rule of nonliability and our reasons therefor are supported by the weight of authority. 14 Am.Jur., Counties, §§ 48, 49; 20 C.J.S., Counties, § 215.
Appellant contends that the immunity from liability which a county enjoys is available if the activities by which the damage is occasioned is a governmental function, but if the activity is proprietary in character there is no immunity from liability. Since we are of the view that the activity here involved is governmental in character a decision of this question in this case becomes unnecessary. Nor do we determine whether a county in this state can ever be said to be performing a function which is proprietary in character.
SDC Supp. 50.0101 makes it the duty of the county to relieve and support all poor and indigent persons having a lawful poor relief settlement therein. In this general duty is included, among other things, the specific duty to provide hospitalization, medical care and treatment. South Dakota Employers Protective Association v. Poage, 65 S.D. 198, 272 N.W. 806. In the acceptance of this duty the county has no choice. It does however have a choice as to the means by which the hospitalization, medical care and treatment are to be provided. SDC 50.0201. SDC Supp. 50.0204. Bartron v. Codington County, 68 S.D. 309, 2 N.W.2d 337, 140 A.L.R. 550. If the electors of the county petition and vote to establish a county hospital as authorized by SDC Supp. 27.19, the county may utilize such facility in providing the enumerated services.
Appellant argues that since the establishment of a county hospital is a matter of choice to be determined by the electors of the county, its maintenance and operation by the county is a proprietary function. It seems to us that the character of the activity here involved must be determined from the nature and purposes of the duty imposed. That various means for discharging the duty are permitted does not alter the character of the activity.
In State ex rel. Hurd v. Blomstrom, 72 S.D. 526, 37 N.W.2d 247, at page 250, this Court said "It has been said that if a municipal corporation `is made, by the state, one of its instruments, or the local depository of certain limited and prescribed political powers, to be exercised for the public good in behalf of the state rather than for itself' the function is governmental. Also that `The governmental functions of a municipal corporation are those conferred or imposed upon it as a local agency, to be exercised not only in the interest of its inhabitants, but also in the advancement of the public good or welfare as affecting the public generally.' However, if the powers are conferred, not primarily or chiefly in the interest of the state at large, but for the private advantage of the incorporated community, they are proprietary." While this was written concerning a municipal corporation we believe these definitions are equally valid in determining the character of county activities.
Governmental support of the poor and indigent has long been recognized as a means of promoting the general welfare of the state. It is an exercise of the police power of the state. The same is true when the assistance provided is hospitalization, medical care and treatment. In this, as in every other activity, a county has only such powers as are given to it by the state. South Dakota Employers Protective Association v. Poage, supra. We believe it must follow that when a county maintains and operates a hospital under authority of SDC Supp. 27.19 it acts in a governmental capacity. This appears to be the majority rule. Elliott v. Lea County, 58 N.M. 147, 267 P.2d 131; Waterman v. Los *575 Angeles County General Hospital, 123 Cal.App.2d 143, 266 P.2d 221; 41 C.J.S., Hospitals, § 8(b); 26 Am.Jur., Hospitals and Asylums, § 13. The same rule prevails when the operation is by a municipality. 25 A.L.R.2d 227; Calomeris v. District of Columbia, D.C., 125 F.Supp. 266. The fact that the hospital is public and available to paying patients does not deprive the activity of its governmental character. 25 A.L.R.2d 229. The charge to such patients is only the cost of their care and as collected it is credited to the county poor fund. SDC 50.0108.
In a few jurisdictions it is held that the admittance of paying patients destroys the hospital's immunity from liabilityat least to the paying patient. These cases are collected in 25 A.L.R.2d 230. They are definitely a minority. Judge Holtzoff, while not in sympathy with the general rule granting immunity from liability expressed his thoughts about the distinction made by these minority cases thus "It would seem abhorrent to conclude that a municipality is to be held to a greater degree of diligence to a patient who pays for his care in whole or in part, than to a poor person who is unable to pay anything." Calomeris v. District of Columbia, supra [125 F.Supp. 268]. In this connection it is proper to observe that one who today is a nonpaying patient in a county hospital may later on be in a position to pay for the services rendered him. The legislature has recognized this and has made available to the county means for collecting for the services rendered when the ability to pay occurs or is discovered subsequent to the rendition of the service. SDC Supp. 27.1906.
In maintaining and operating Memorial Hospital, Jerauld County was immune from liability on account of damages occasioned by the negligence of its employees or servants. SDC 12.1801 permits a county to sue and be sued. This is a waiver of its immunity from suit, Pommarane v. Washabaugh County, 61 S.D. 422, 249 N.W. 734, but is not a waiver of its immunity from liability. Hamilton v. Jefferson County, 209 Ala. 517, 96 So. 628; 49 Am.Jur. § 77, p. 291; 81 C.J.S., States, § 215(b), p. 1307. No statute has been enacted in this state depriving a county of its immunity from liability in this regard.
Appellant very forcefully criticizes the rule granting a county immunity from liability and earnestly asks this Court to apply the contrary doctrine. Opposition to the rule exists rather generally and is becoming more intense and wide-spread. However it is a long standing rule of public policy in this state and as this Court said twelve years ago in Arms v. Minnehaha County, supra [69 S.D. 164, 7 N.W.2d 723], "Be that as it may, the remedy is not by judicial fiat. If there is to be a departure from the rule of governmental immunity, the policy must be declared and the extent of liability should be definitely fixed by legislative action." See also Hanigan v. Minnehaha County, supra. Even as early as the Bailey case it was recognized that a holding of liability by the Court in absence of legislation making them so liable, would be a species of judicial legislation.
The next proposition urged by appellant is that even though the rule of immunity insulates the county from liability for negligence, it is not available to the county if the damage is occasioned by a nuisance resulting from the maintenance or operation of the hospital. None of the cases in this Court concerning governmental immunity from liability have expressly referred to liability resulting from the maintenance of a nuisance. An attempt was made to inject it into the case of Vesely v. Charles Mix County, supra.
A careful study of the opinions of this Court in all the cases concerned with the rule of immunity compels us to the conclusion that the rule is available to a county if the damage complained of is caused by a nuisance arising out of the maintenance of a county hospital. The rule came into the common law as a traditional attribute of sovereignty, and counties in this state are merely instrumentalities of that sovereignty. This makes them quasi public corporations as distinguished from public corporations. Every reason and consideration for holding *576 that a county is immune from liability for damage due to negligence supports with equal vigor a like holding when the damage is occasioned by nuisance.
The reasoning and holding in Bailey v. Lawrence County, supra, were approved in the North Dakota case of Vail v. Town of Amenia, 4 N.D. 239, 59 N.W. 1092. In Anderson v. Board of Education of City of Fargo, 49 N.D. 181, 190 N.W. 807, 810, that Court held that a quasi public corporation was immune from liability for damages occasioned by a nuisance when the activity involved was governmental in character. It is there written "If it be conceded that the board in furnishing and installing such apparatus and needful supplies in a school or on the school grounds is acting in a governmental capacityand we think this must be concededit cannot be charged with the establishing and maintaining of a nuisance in that respect in the absence of a permissive statute to that effect, and there is no such statute in this state. Neither is it liable in an action of negligence if the negligence grew out of some act or acts of the board while acting in a governmental capacity." For other statements of this rule and cases supporting it see Mokovich v. Independent School District of Virginia, 177 Minn. 446, 225 N.W. 292; Odil v. Maury County, 175 Tenn. 550, 136 S.W.2d 500; Buckholtz v. Hamilton County, 180 Tenn. 263, 174 S.W.2d 455; Barnett v. City of Memphis, Tenn., 269 S.W.2d 906; Bingham v. Board of Education of Ogden City, Utah, 223 P.2d 432.
We are not unmindful of recent cases holding that the rule of immunity does not apply when a nuisance is involved. Kilbourn v. City of Seattle, 43 Wash.2d 373, 261 P.2d 407; Jones v. Kansas City, 176 Kan. 406, 271 P.2d 803; Lloyd v. Chippewa County, 265 Wis. 293, 61 N.W.2d 479. By utilizing the nuisance concept the rule has been judicially relaxed. The distinction between negligence and nuisance is not easily drawn. Under this view the rule of immunity has been avoided by the simple expedient of labeling acts of negligence as a nuisance. In Vesely v. Charles Mix County, supra, this Court rejected the employment of such expedient. If a relaxation of the rule is desired, we are of the view that it must come by act of the legislature, rather than by judicial legerdemain.
Appellant points out that the policy involved protected the servants and employees of the county employed in the hospital from liability, and claims that this feature is consideration for the premium. This contention assumes authority in the county to provide such insurance protection. There was no statute granting such authority to the county. Whether such authority could be spelled out from a particular fact situation even in the absence of statute is not presented by this record. In Burns v. American Casualty Co., 127 Cal.App.2d 198, 273 P.2d 605, cited by appellant the county was granted such authority by statute. Gov. Code, Cal. § 1956. In passing we note that the recent session of our legislature enacted legislation for this purpose. Chapter 199, Laws of 1955. However this act does not legalize or validate expenditures previously made for such liability insurance.
It is suggested by appellant that its obligation to investigate and defend claims against the county arising from the maintenance and operation of the hospital is consideration for the premiums paid. It seems to us that this is without merit. The state's attorney is the county's legal counsel. It is his duty to investigate and defend such claims when they arise. SDC 12.1302. He is a constitutional officer duly elected by the people of his county. Const. art. 9, § 5; State ex rel. Hooper v. Tarr, 62 S.D. 305, 252 N.W. 854. Assistance may be furnished him as provided in SDC 12.1306 or upon a showing of unusual circumstances. Grant County v. Jones, 43 S.D. 6, 177 N.W. 121. He may not be supplanted except as provided in SDC 12.1304. State v. Flavin, 35 S.D. 530, 153 N.W. 296.
The judgment appealed from is affirmed.
All the Judges concur.
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37 A.3d 131 (2011)
STATE
v.
PRATT.
No. 10-383.
Supreme Court of Vermont.
October 3, 2011.
Appeal Disposed of Without Published Opinion or Memorandum Decision Dismissed.
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Order entered February 22, 2019
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-19-00148-CV
IN RE CRAIG LA DARIUS THOMAS, Relator
Original Proceeding from the 283rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. F-1170706-T
ORDER
Before Justices Whitehill, Partida-Kipness, and Pedersen, III
Based on the Court’s opinion of this date, we DENY relator’s petition for writ of
mandamus.
/s/ ROBBIE PARTIDA-KIPNESS
JUSTICE
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963 F.Supp. 20 (1997)
BRACCO DIAGNOSTICS, INC., Plaintiff,
v.
Donna SHALALA, Secretary, United States Department of Health and Human Services, Michael Friedman, M.D., Lead Deputy Commissioner, Food and Drug Administration, and Food and Drug Administration, Defendants.
The DuPONT MERCK PHARMACEUTICAL COMPANY and Imarx Pharmaceutical Corp., Plaintiffs,
v.
Donna SHALALA, Secretary, United States Department of Health and Human Services, and Michael Friedman, M.D., Deputy Commissioner for Operations, Food and Drug Administration, Defendants.
SONUS PHARMACEUTICALS, INC., Plaintiff,
v.
FOOD AND DRUG ADMINISTRATION, Donna Shalala, Secretary, United States Department of Health and Human Services, and Michael Friedman, M.D., Lead Deputy Commissioner, Food and Drug Administration, Defendants.
Civil Action Nos. 97-0739(PLF), 97-0740(PLF) and 97-0742(PLF).
United States District Court, District of Columbia.
April 21, 1997.
*21 *22 Richard S. Morey, Kleinfeld, Kaplan and Becker, Washington, DC, for Bracco.
Nancy L. Buc, Buc & Beardsley, Washington, DC, for Sonus.
William W. Vodra, Arnold & Porter, Washington, DC, for DuPont.
Drake Cutini, Office of Consumer Litigation, U.S. Dept. of Justice, Washington, DC, David M. Fox, Chief Counsel, U.S. Food and Drug Admin., Rockville, MD, for defendants.
Robert J. Shaughnessy, Williams & Connolly, Washington, DC, for defendant/intervenor Molecular Biosystems, Inc.
ORDER
PAUL L. FRIEDMAN, District Judge.
Upon consideration of defendants' motion to dismiss the complaints in these consolidated actions pursuant to Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, the memorandum in support thereof, the memoranda in support of plaintiffs' motions for preliminary injunction, the memorandum of Molecular Biosystems, Inc. and the oral arguments of counsel on the motions for preliminary injunction, and the Court having found that there is a substantial likelihood of plaintiffs' succeeding on the merits of this case, and the Court having further found that exclusive jurisdiction over the merits of this case does not rest in the court of appeals, *23 and the Court having also necessarily rejected plaintiffs' ripeness and exhaustion arguments, and for the further reasons set forth in its Opinion issued this same day, it is hereby
ORDERED that defendants' motion to dismiss is DENIED.
SO ORDERED.
ORDER OF PRELIMINARY INJUNCTION
Upon consideration of the separate motions for preliminary injunction filed by the plaintiffs in the above-captioned cases, the memorandum in opposition thereto filed by the defendants, the opposition filed by defendant-intervenor Molecular Biosystems, Inc., and the oral arguments made by counsel for the parties, it is hereby
ORDERED that defendants, their officers, agents and employees be and hereby are enjoined from continuing any approval or review procedures with respect to the Pre-Market Application submitted to the Food and Drug Administration by Molecular Biosystems, Inc. for its ultrasound contrast agent FSO69 until ten days after the FDA resolves the merits of the Citizen Petitions filed by each of the plaintiffs in these actions or until further order of this Court; it is
FURTHER ORDERED that defendants, their officers, agents and employees be and hereby are enjoined from continuing any approval or review procedures with respect to plaintiffs' products, BR-1, DMP 115 and EchoGen, until ten days after the FDA resolves the merits of the Citizen Petitions filed by each of the plaintiffs in these actions or until further order of this Court; and it is
FURTHER ORDERED that plaintiffs shall submit security in accordance with Rule 65, Fed.R.Civ.P. The Court shall designate the amount of the security after the parties have filed supplemental briefs on that issue. The parties shall file their supplemental briefs by April 23, 1997; responses shall be due by noon on April 25, 1997.
SO ORDERED.
OPINION
This matter is before the Court on plaintiffs' motions for preliminary injunction. Their motions are opposed by the Food and Drug Administration and the other defendants, as well as by their competitor, Molecular Biosystems, Inc., whom the Court has permitted to enter the case as a defendant-intervenor. The defendants have also moved to dismiss the complaints for lack of subject matter jurisdiction and for failure to state a claim. The Court heard extensive oral argument on April 18, 1997, and, upon consideration of the briefs filed by the parties and the arguments presented, it grants plaintiffs' motions for preliminary injunction.
I. BACKGROUND
The plaintiffs in these three consolidated cases are manufacturers of injectable contrast imaging agents for use with diagnostic ultrasound equipment in the diagnosis of cardiac dysfunction. Bracco's product is named BR-1; the DuPont Merck and ImaRx product is named DMP 115; and the SONUS product is named EchoGen. Each product contains fluorinated gas (perfluoropropane) encapsulated in a microsphere membrane or microbubble. Each is administered by intravenous injection into a patient's body in order to better reflect the sound waves used in ultrasound diagnostics, which in turn helps to improve the quality of the ultrasound images. After injection, the microbubbles eventually dissolve and the patient exhales the gas. See Bracco Mot. for Prelim. Inj., Declaration of Frank Didato at ¶ 2; DuPont Merck Mot. for Prelim. Inj., Declaration of Dr. Alan P. Carpenter at ¶¶ 12-16; SONUS Mot. for Prelim. Inj., Declaration of Dr. Steven Quay at ¶¶ 4-5. Plaintiffs' products are at various stages of review by the FDA, but none presently is approved for marketing.
Molecular Biosystems, Inc. has developed a virtually identical injectable microbubble ultrasound contrast imaging agent named FSO69 (the successor to its already-approved product Albunex), which is also the subject of a pending application for approval by the FDA. MBI maintains that FSO69 is significantly different from plaintiffs' products. It points out that EchoGen and DMP 115 require *24 some type of agitation to create the microbubbles and that while some of the microbubbles in EchoGen are formed outside the patient's body prior to injection by the action of pulling back the syringe, more microbubbles are subsequently created inside the body as the heat from the patient's body vaporizes the suspension liquid to create gas bubbles. In contrast, the microbubbles in FSO69 are all formed during the manufacturing process, outside the human body; FSO69 is not dependent upon being metabolized for the achievement of its primary intended purposes. MBI Mem. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶¶ 5, 6.
Plaintiffs argue that the only difference between their products and FSO69 is that the microbubbles in FSO69 are suspended in human albumin while the microbubbles in plaintiffs' products are suspended in a synthetic medium, a matter they say is of no significance. The declarations they have filed and an exhibit they submitted at oral argument (Exhibit 1), which is appended to this Opinion, demonstrate to the Court's satisfaction that the characteristics of all three of the plaintiffs' products and those of FSO69 are identical in all material respects. Indeed, on this point, the FDA has offered no counter-declarations or argument in response. The few differences noted in Dr. Dittrich's declaration submitted by MBI do not persuade the Court that all four products at issue are not virtually identical in their important characteristics.
Despite the similarity of the products, the FDA has chosen to regulate plaintiffs' products as new drugs and MBI's product as a device.[1] Under the Federal Food, Drug and Cosmetic Act ("FFDCA"), there are separate provisions governing the regulation of drugs and devices, and the review provisions applicable to each differ in several respects. Compare 21 U.S.C. § 355 (regulating review and approval of new drugs) with 21 U.S.C. §§ 351(f), 360c, 360d, 360e (regulating classification, review and approval of devices). In addition, the FDA has established two distinct operating units or "Centers" to exercise the FDA's regulatory responsibilities: the Center for Drug Evaluation and Review ("CDER") is responsible for drugs; the Center for Devices and Radiological Health ("CDRH") is responsible for medical devices. 21 C.F.R. §§ 5.100, 5.32, 5.33, 5.59, 5.71, 5.72. Each has authority to approve products within its jurisdiction, but each Center is subject to direction by the Office of the Commissioner of the FDA.
The FDA has decided to treat MBI's product as a device and is treating plaintiffs' products as drugs; thus, both the CDER and the CDRH are regulating ultrasound contrast agents. The two Centers, however, apparently are applying very different standards to assess the safety and effectiveness of essentially identical products. Plaintiffs maintain, without contradiction, that they have been required to produce much more exhaustive scientific data demonstrating the safety and effectiveness of their ultrasound agents while MBI, in response to requests from the CDRH, has been required to submit much less rigorous information and testing results.[2] Plaintiffs argue that these disparate *25 standards impose considerably greater financial and other burdens on those companies whose agents are being treated as drugs and regulated by the CDER than on MBI's product, treated as a device and regulated by the CDRH.
In January of 1982, the FDA issued a proposed rule relating to the classification of all radiological devices pursuant to the 1976 Medical Device Amendments to the FFDCA. 47 Fed.Reg. 4406 (Jan. 20, 1982). In its preamble, which constitutes an advisory opinion binding on the agency unless repudiated by the agency, see 21 C.F.R. § 10.85(d)(1), (e), the FDA stated: "The agency has determined that all radiologic contrast media, including barium enema kits, are to be regulated by FDA as drugs under section 201(g) of the act (21 U.S.C. 321(g)(1)) and not as devices." 47 Fed.Reg. 4406, 4412. Plaintiffs argue that the FDA's review of MBI's precursor to FSO69, Albunex, and of FSO69 itself as devices rather than as drugs is directly contrary to this advisory opinion and, thus, unless fully and rationally explained, is arbitrary and capricious agency action in violation of the Administrative Procedure Act. Defendants and MBI respond that the advisory opinion had nothing whatsoever to do with products like plaintiffs' or MBI's and thus is of no moment in this litigation.[3]
In October 1987, the FDA approved the review of Albunex, manufactured by MBI, as a Class III device. MBI Mem. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶ 3. Albunex was the first ultrasound contrasting agent to be regulated by the FDA as a Class III medical device and it is the so-called "first generation" product to which MBI's FSO69 is the successor.[4] After four *26 years of review, the FDA approved Albunex as a device, making Albunex the first and only approved ultrasound contrast agent. The FDA publicly announced this approval on February 17, 1995. 60 Fed.Reg. 9334 (Feb. 17, 1995). Plaintiffs acknowledge that they were aware of Albunex's approval as a device, but Bracco argues that plaintiffs reasonably assumed that this approval was an anomaly, likely due to a "historical quirk" in the development of Albunex it initially included medical instrumentation intended to be used by physicians to prepare the injectable suspension of air-filled microspheres prior to administration in patients. Bracco Mot. for Prelim. Inj. at 4 & n. 2.
In October 1992, SONUS recommended to the FDA that its product, EchoGen, be regulated as a drug, and the FDA product jurisdiction officer concurred by designating the CDER as the unit with primary review over EchoGen. See SONUS Mot. for Prelim. Inj., Ex. C, Letter from Amanda Pederson to Charles H. Davis (Dec. 17, 1992); Declaration of Dr. Steven C. Quay at ¶ 6. Bracco, allegedly relying on the FDA's policy of regulating ultrasound contrasting agents as drugs, see supra at 7 & n. 3, and its designation of EchoGen as a new drug, submitted an Investigational New Drug application ("IND") to the CDER for its product BR-1 on December 24, 1994.[5] ImaRx submitted an IND for DMP 115 to the CDER on August 8, 1995. On September 15, 1996, SONUS filed a New Drug Application ("NDA") for EchoGen.
Meanwhile, unbeknownst to plaintiffs, the FDA had been engaging in discussions with MBI about whether review responsibility for its products should be transferred from the CDRH to the CDER in other words, whether the FDA should begin to treat MBI's products as drugs rather than as devices. MBI Mem. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶ 3. MBI urged the FDA "to maintain in all respects the status quo," and "to insure that MBI's products continued to be regulated as medical devices assigned to CDRH." MBI Mem. in Opp'n, Ex. 5, Letter from Steven H. Unger, Deputy, Office of the Chief Mediator and Ombudsman, FDA to Kenneth C. Widder at 1 (March 29, 1996). The FDA ultimately agreed that "the principal review responsibility for Albunex and MBI's other microsphere contrast agents should remain in CDRH," and MBI was advised that both Albunex and FSO69 would "remain subject to review and regulation as medical devices." Id. at 2. Plaintiffs were unaware of the existence of this letter or of the decision that had been made until after the instant lawsuits had been filed.
By February 24, 1997, however, plaintiffs were aware that MBI had submitted its application for approval of FSO69 as a device and that the FDA had indicated it was satisfied with the studies performed by MBI to demonstrate the safety and efficacy of FSO69. Plaintiffs also were aware of the fact that the CDRH was the entity reviewing the Pre-Market Approval application for FSO69, submitted in October of 1996, although they were not aware that a final determination had been made that FSO69 would be reviewed as a device and approved, if at all, as a device.[6]
Beginning in the summer of 1996, Bracco. DuPont Merck and SONUS began discussions with the FDA in an effort to persuade the FDA to regulate ultrasound agents under uniform standards, be they as devices or as drugs. When the informal discussions were unsuccessful, each of the plaintiffs filed a Citizen Petition pursuant to FDA regulations. See 21 C.F.R. § 10.25. Bracco was the first to file its petition on December 27, 1996. Because the FDA has 180 days to respond to citizen petitions, see 21 C.F.R. § 10.30(e)(2), neither Bracco nor the other plaintiffs, who *27 filed their petitions later, have yet received responses.
In their petitions, plaintiffs requested the FDA to act promptly to eliminate the disparity in the regulation of ultrasound contrast agents and what they viewed as the "unjustified preferential treatment" given to MBI to the disadvantage of those whose products were being treated as drugs. See Bracco Mot. for Prelim. Inj., Exs. 3-5; DuPont Merck Mot. for Prelim. Inj., Ex. 1; SONUS Mot. for Prelim. Inj., Ex. G. They pointed out that the CDRH applies significantly different standards than the CDER to assess the safety and effectiveness of the agents even though the products are essentially identical. Id. Plaintiffs requested that the FDA determine that all ultrasound contrast agents be regulated under uniform standards and procedures either as new drugs or as medical devices. DuPont Merck asked for expedited consideration of its request, presumably because it knew that MBI's product was on track for approval by mid-April 1997. See DuPont Merck Mot. for Prelim. Inj., Ex. 1 at 1. DuPont Merck did not get expedited review, and all of the petitions remain pending.[7]
II. DISCUSSION
A. Standards for Granting Emergency Injunctive Relief
In deciding whether to grant emergency injunctive relief, the Court must consider (1) whether there is a substantial likelihood that plaintiffs will succeed on the merits of the case, (2) whether plaintiffs will suffer irreparable injury absent an injunction, (3) the harm to defendants or other interested parties, and (4) whether an injunction would be in the public interest or at least not be adverse to the public interest. Sea Containers Ltd. v. Stena AB, 890 F.2d 1205, 1208 (D.C.Cir.1989); see Washington Metro. Area Transit Comm'n v. Holiday Tours. Inc., 559 F.2d 841, 843 (D.C.Cir.1977).
Plaintiff is not required to prevail on each of these factors. Rather, under Holiday Tours, the factors must be viewed as a continuum, with more of one factor compensating for less of another. "If the arguments for one factor are particularly strong, an injunction may issue even if the arguments in other areas are rather weak." CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 747 (D.C.Cir.1995). An injunction may be justified "where there is a particularly strong likelihood of success on the merits even if there is a relatively slight showing of irreparable injury." Id. Conversely, when the other three factors strongly favor interim relief, a court may grant injunctive relief when the moving party has merely made out a "substantial" case on the merits. The necessary level or degree of likelihood of success that must be shown will vary according to the Court's assessment of the other factors. Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d at 843-45. In sum, an injunction may be issued "with either a high probability of success and some injury, or vice versa." Cuomo v. United States Nuclear Regulatory Comm'n, 772 F.2d 972, 974 (D.C.Cir.1985).
In this case, the Court finds that plaintiffs have a substantial likelihood of success on the merits with respect to their claim that by treating similar products differently the FDA has acted arbitrarily and capriciously in violation of the Administrative Procedure Act.
B. Likelihood of Success on the Merits
Our court of appeals has repeatedly held that "an agency must treat similar cases in a similar manner unless it can provide a legitimate reason for failing to do so." Independent Petroleum Association of America v. Babbitt, 92 F.3d 1248, 1258 (D.C.Cir.1996) (citing National Association of Broadcasters v. FCC, 740 F.2d 1190, 1201 (D.C.Cir.1984)); see also Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C.Cir.1996); Doubleday Broadcasting Co. v. FCC, 655 F.2d 417, 423 (D.C.Cir.1981). "Government is at its most arbitrary when it treats similarly situated people differently." Etelson v. Office of Personnel Management, 684 F.2d 918, 926 (D.C.Cir.1982). As Judge Greene noted in a related context, "If an agency treats similarly *28 situated parties differently, its action is arbitrary and capricious in violation of the APA." Allergan. Inc. v. Shalala, 6 Food and Drug Rep. 389, 391, No. 94-1223 (D.D.C. Nov. 10, 1994) (Greene, J.).
In this case, the Bracco, DuPont Merck. SONUS and MBI products are identical in all material respects, and the FDA has not provided a legitimate reason for failing to regulate these similar products in the same way. Under the Administrative Procedure Act, the FDA either must provide a rational basis for treating MBI's imaging agent as a device while simultaneously regulating essentially identical agents as drugs, or it must treat all four of these similar products in the same way. A failure to do one of these two things is arbitrary and capricious agency action and therefore is a violation of the APA, 5 U.S.C. § 706(2)(A). See Independent Petroleum Assoc. of America v. Babbitt, 92 F.3d at 1258; Transactive Corp. v. United States, 91 F.3d at 237.
The MBI products and plaintiffs' products all likely meet both the definition of a drug and the definition of a device under the Federal Food, Drug and Cosmetic Act, and the FDA therefore has discretion in determining how to treat them. See 21 U.S.C. § 353(g) ("The Secretary shall designate a component of the Food and Drug Administration to regulate products that constitute a combination of a drug, device, or biological product.") What the FDA is not free to do, however, is to treat them dissimilarly and to permit two sets of similar products to run down two separate tracks, one more treacherous than the other, for no apparent reason. Plaintiffs merely maintain that the same tests and studies should be required of each product before it is approved and that that result is impossible so long as the FDA treats one as a device subject to the regimen established by the CDRH and the other three as drugs subject to the more rigorous regimen established by the CDER. The Court agrees. The disparate treatment of functionally indistinguishable products is the essence of the meaning of arbitrary and capricious. See Independent Petroleum Assoc. of America v. Babbitt, 92 F.3d at 1260; Doubleday Broadcasting Co. v. FCC, 655 F.2d at 423. Plaintiffs therefore are likely to succeed on this argument as a matter of law.[8]
In concluding that plaintiffs are likely to succeed on the merits, the Court necessarily accepts plaintiffs' characterization of the merits over defendants'. The issue in this case is whether the FDA policy of allowing similar ultrasound contrast agents to be regulated according to inconsistent standards and procedures is arbitrary, capricious, an abuse of discretion or unlawful. The issue is not, as defendants suggest, whether this Court has jurisdiction to review an agency decision not yet made to approve FSO69 as a medical device or to act in aid of that jurisdiction by entering an injunction. If it were, concededly the court of appeals, not this Court, would have jurisdiction. See 21 U.S.C. § 360g(a)(4); Telecommunications Research and Action Center v. FCC, 750 F.2d 70, 72, 78 (D.C.Cir.1984). In the absence of a clear congressional directive vesting jurisdiction over an APA challenge to the FDA's policies and procedures in the court of appeals, however, jurisdiction rests here. See 5 U.S.C. §§ 702, 706(2)(A).
C. Irreparable Harm
Plaintiffs point to two primary sources of non-speculative, on-going and imminent harm. The first relates directly to the disparate treatment of their products and MBI's. They point out that they have had to undertake more difficult, time-consuming and expensive testing regarding the safety and effectiveness of their products than the testing required of MBI's product. Particularly because SONUS and Bracco are small companies, the time and person power spent, as well as the millions of dollars in costs, are indeed significant and irreparable losses. As plaintiffs point out, most of these costs in time and money would not have been imposed had their products been treated as medical devices to begin with. But plaintiffs *29 were required to undertake additional studies even before they filed their applications, requiring them at the outset to spend more time and significantly more money than MBI was required to spend. "The usual development of a device takes less time than development as a drug. It requires fewer patients and less safety and efficacy data. This results in development cost savings and increased development speed." DuPont Merck Mot. for Prelim. Inj., Declaration of Mish Kara at 2. Plaintiffs' greater financial costs, which are on-going, can never be recouped.[9] While the injury to plaintiffs is "admittedly economic," there is "no adequate compensatory or other corrective relief" that can be provided at a later date, tipping the balance in favor of injunctive relief. Hoffmann-Laroche Inc. v. Califano, 453 F.Supp. 900, 903 (D.D.C.1978).
Plaintiffs will face a second form of imminent harm when the FDA acts on MBI's application later today assuming it is approved. As pointed out by both SONUS' Steven C. Quay and MBI's Howard C. Dittrich, there is a significant economic advantage to receiving first approval and being the first company to enter the market, an advantage that can never be fully recouped through money damages or by "playing catch-up." See SONUS Mot. for Prelim. Inj., Declaration of Dr. Steven C. Quay at ¶¶ 10-12; MBI Mem. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶ 2-3. As Judge Robertson recently noted, giving a pharmaceutical company's competitor "an officially sanctioned head start in the market" for a discrete pharmaceutical product will cause irreparable injury to the company that is left behind. Mova Pharmaceutical Corp. v. Shalala, 955 F.Supp. 128, 130-31 (D.D.C. 1997). Cf. Allergan. Inc. v. Shalala, 6 Food and Drug Rep. at 391 (concluding that "if a manufacturer of a product drops out of the market, its competitors are likely to gain sales, probably in some measure in proportion to their market share," and that this sufficiently demonstrates irreparable harm). The Court concludes that plaintiffs have demonstrated irreparable injury.[10]
D. The Harm to Defendants Or Other Interested Parties
MBI has made a strong argument, both in its memorandum of law and orally, that the injunction sought by plaintiffs an injunction preventing the FDA from approving the pre-market application submitted by MBI for its ultrasound contrast agent FSO69 until such time as the Court rules on plaintiffs' requests for declaratory and permanent injunctive relief would significantly harm MBI. MBI is a small company, a one product line company, that is counting on the approval of FSO69. MBI Mere. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶ 2. It has devoted substantial time and money itself to the approval process for FSO69, and a delay in approval would have an injurious impact on MBI. Furthermore, MBI maintains that it relied in good faith on the decision of the FDA to treat its product as a medical device and that it should not now be penalized even if the FDA has treated the plaintiffs unfairly (a point that MBI does not concede). Finally, MBI points out that plaintiffs knew as early as February 17, 1995 that the FDA was treating Albunex, MBI's first generation product, as a medical device and plaintiffs sat on their rights without acting. Again, MBI says it should not be penalized in these circumstances. The Court is persuaded that MBI would be seriously harmed by the grant of an injunction.
E. The Public Interest
Defendants and defendant-intervenor make strong arguments that the public interest favors permitting an agency to proceed with its administrative process without *30 interference and that there are public health reasons why FSO69 should be allowed to be marketed promptly after it has been thoroughly tested, passed all the tests and has been approved by the FDA. As plaintiffs point out, however, there is also a strong public interest in requiring an agency to act lawfully, consistent with its obligations under the APA, and to treat all similarly situated and regulated parties equally.
The FDA's "core function" is "[t]he promotion and protection of the public health." MBI Mem. in Opp'n, Ex. 7, Stmt. by Michael A. Friedman, M.D., Deputy Commissioner for Operations, FDA at 2 (February 27, 1997). If there is no rational basis for treating plaintiffs' and MBI's products differently, however, then an injectable ultrasound contrast agent may be released onto the market and used on cardiology patients after having passed less rigorous testing requirements than are required of every other ultrasound contrast agent currently under FDA review. Requiring the FDA to test similar products with the same scrutiny is consistent with the FDA's mission and is in the public interest. Requiring them to act lawfully is also very much in the public interest. Therefore, on balance, the Court concludes that the public interest is better served by issuing an injunction that will assure that the FDA meets its statutory obligations.
F. Exhaustion of Administrative Remedies
Defendants argue that in view of the pendency of the Citizen Petitions that plaintiffs have filed with the FDA, and the fact that FDA regulations provide a procedural mechanism to petition the Commissioner "to take or refrain from taking any ... form of administrative action," 21 C.F.R. § 10.25, the Court would be acting prematurely by granting an injunction.
"Of `paramount importance' to any exhaustion inquiry is congressional intent.... Where Congress specifically mandates, exhaustion is required.... But where Congress has not clearly required exhaustion, sound judicial discretion governs." McCarthy v. Madigan, 503 U.S. 140, 144, 112 S.Ct. 1081, 1086, 117 L.Ed.2d 291 (1992) (citations omitted). The FFDCA provides for administrative review of orders approving or denying New Drug Applications or Pre-Market Approval Applications. See 21 U.S.C. §§ 355(h), 360e(g). Plaintiffs, however, are not seeking this type of review because there are no NDA or PMA approvals or denials at issue in this case. Plaintiffs do seek relief of the disparate treatment to which they are currently subjected by the FDA, circumstances in which the FFDCA does not mandate administrative review. The Citizen Petition mechanism and its 180-day timeline is a creature of the FDA, not of Congress. Therefore, because Congress has not required exhaustion, "sound judicial discretion governs" the question whether to require exhaustion of remedies. McCarthy v. Madigan, 503 U.S. at 144, 152, 112 S.Ct. at 1085-86, 1090.
"The principle of exhaustion rests on the dual purposes of protecting administrative agency authority and promoting the economy of judicial resources." National Treasury Employees Union v. King, 961 F.2d 240, 243 (D.C.Cir.1992) (citing McCarthy v. Madigan, 503 U.S. 140, 145, 112 S.Ct. 1081, 1086-87, 117 L.Ed.2d 291 (1992)); see Public Citizen Health Research Group v. FDA, 740 F.2d 21, 29 (D.C.Cir.1984). Exhaustion of administrative remedies, however, is not a requirement that the courts apply rigidly; it is a "flexible doctrine." National Treasury Employees Union v. King, 961 F.2d at 243. There are, in general, "three broad sets of circumstances" in which federal courts may legitimately decline to require exhaustion. McCarthy v. Madigan, 503 U.S. at 146, 112 S.Ct. at 1087. Most relevant to the instant case is the exception to the exhaustion requirement that pertains when a plaintiff "may suffer irreparable harm if unable to secure immediate judicial consideration of [its] claim." Id. at 147, 112 S.Ct. at 1087. In such circumstances, a plaintiff need not await the conclusion of the administrative process. See National Treasury Employees Union v. King, 961 F.2d at 244. This appears to be just such a case.
The FDA regulations require the agency to respond to a Citizen Petition within 180 days of its receipt, see 21 C.F.R. *31 § 10.30(e)(2), in Bracco's case, by the end of June 1997. The Court was advised during oral argument, however, that a "response" might consist only of a letter advising a petitioner that the agency needs more time to consider the matter. Forcing plaintiffs to await the FDA's response to their Citizen Petitions would permit the FDA to continue the disparate treatment of plaintiffs' products that is causing them to spend millions of dollars in testing fees and costs. More importantly, due to the apparently imminent approval of FSO69 as a device, see Bracco's Mot. for Prelim. Inj., Ex. 2, Transcript of Radiological Devices Panel Meeting at 35 (Feb. 24, 1997), the requirement of exhaustion would cause plaintiffs to wait while MBI gains first entry into the market with FSO69, giving it, in MBI's own words, a very "significant economic advantage." MBI Mem. in Opp'n, Declaration of Howard C. Dittrich, M.D. at ¶ 2. Meanwhile, plaintiffs would remain under the review jurisdiction of the CDER, subjected to more rigorous testing requirements than were imposed on MBI through the CDRH. Lacking a specific congressional mandate as to the plaintiffs' administrative remedy and finding plaintiffs faced with irreparable harm, the Court concludes that exhaustion of administrative remedies in the circumstances of this case is not required.
III. CONCLUSION
The Court concludes that plaintiffs are likely to succeed on the merits of their APA claim that the FDA has failed to treat similarly situated products in the same fashion and that such conduct is arbitrary and capricious. The Court also concludes that the plaintiffs have suffered irreparable injury and will continue to suffer immediate and irreparable injury absent injunctive relief. Finally, the Court concludes that The public interest is better served by the grant of a limited injunction to preserve the status quo pending a decision by the FDA as to how to treat all ultrasound contrast agents, whether as medical devices or as drugs, or to provide a rational explanation for its different treatment of the products at issue here.[11]
MBI argues that if the Court does grant injunctive relief it should truly preserve the status quo by placing constraints on the FDA with respect to all parties, not just with respect to MBI. Not surprisingly, plaintiffs oppose this suggestion, but MBI has the better argument. Plaintiffs told the Court at oral argument that they seek only to be treated the same way as MBI, subject to the same requirements and other procedures, not that all products necessarily should move through the process at the same pace; an earlier applicant or one with a more developed product or a better application, for example, might well be evaluated more quickly. Until uniform rules that will govern all are established, it is fair and equitable that the FDA not act with respect to any of the products at issue. See United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 607-08, 77 S.Ct. 872, 884-85, 1 L.Ed.2d 1057 (1957); Muskegon Piston Ring Co. v. Gulf of Western Industries, Inc., 328 F.2d 830, 831-32 (6th Cir.1964).[12] Accordingly, the Court will grant plaintiffs' motions for preliminary injunction and preserve the status quo by enjoining the FDA from approving FSO69 until ten days following the FDA's response to plaintiffs' Citizen Petitions, or until further order of the Court. The Court shall also enjoin the FDA from proceeding with any approval or review proceedings relating to any of plaintiffs' products until such time.
Orders consistent with this Opinion shall be issued this same day.
SO ORDERED.
*32
Ultrasound Contrast Agents
CHARACTERISTIC DMP 115 ECHOGEN BR-1 FS069
Mechanism of Action:
Reflection of Acoustical Energy
Composition:
Fluorocarbon Gas
Description of Product:
Microbubble Capsules
Mode of Administration:
Intravenous Injection
Medical Applications Proposed:
Left Ventricular Opacification
Endocardial Border Delineation
Left Ventricular Functional Assessment
Questions Presented for FDA Approval:
Is the diagnosis accurate?
Is it safe for humans?
Based on information in the Citizen Petitions of Bracco Diagnostics, Inc., SONUS Pharmaceuticals,
Inc., and The Dupont Merck Pharmaceutical Company. (FDA Docket Numbers
CPI + CP2/96P-0511 and CPI/97P-0104.)
NOTES
[1] The Federal Food, Drug and Cosmetic Act ("FFDCA") defines "new drugs" as "articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.... which [are] not generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested." 21 U.S.C. §§ 321(g)(1)(B), 321(p)(1).
The FFDCA defines a "device" as "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article ... intended for use in the diagnosis of disease or other conditions ... which does not achieve its primary intended purpose through chemical action within or on the body ... and which is not dependent upon being metabolized for the achievement of its primary intended purposes." 21 U.S.C. § 321(h). Devices are categorized as Class I, Class II, or Class III, depending on the degree of regulation necessary to ensure the safety and effectiveness of the device for its intended use. See 21 U.S.C. § 360c(a). Class III devices face the most stringent controls. See 21 U.S.C. § 360c(a)(1)(C).
[2] The disparity in the review procedures imposed on plaintiffs' products compared to MBI's product were highlighted during oral argument by Plaintiff's Exhibit No. 2. Some of the differences are:
(1) The CDRH permitted MBI to utilize a head-to-head clinical study with Albunex, MBI's predecessor product to FSO69, as the comparator for efficacy, while the CDER required plaintiffs to verify the diagnosis made with their products and Albunex against a standard procedure such as cardioangiography or radionuclide ventriculography;
(2) With respect to DMP 115, the CDER required DuPont Merck to demonstrate the accuracy of its images in assessing cardiac function through clinical human trials. The CDRH, by contrast, allowed MBI to demonstrate the accuracy of FSO69 by performing a study on dogs.
(3) With respect to DMP 115, the CDER required DuPont Merck to conduct two safety and efficacy studies to demonstrate structure and function utility. The CDRH required MBI to conduct two safety and efficacy studies to demonstrate structure utility alone.
(4) With respect to DMP 115, the CIDER has instructed DuPont Merck that each of its clinical trials must have adequate statistical power to demonstrate reproducibility. The CDRH allowed MBI to pool data and it appears that no replication of results was required.
(5) The CDRH permitted MBI to conduct clinical studies in an open label fashion with the investigator, sponsor and patient aware of the contrast agent employed. By contrast, the CDER required plaintiffs' clinical studies to be conducted under blinded conditions where both the sponsor and the patient are blinded to the contrast agent administered in each case.
(6) With respect to the DuPont Merck product, DMP 115, the CDER required that a total of more than 500 subjects be exposed for safety testing while the CDRH only required that approximately 300 subjects be exposed for safety testing with respect to FSO69.
(7) While the CDRH only required MBI to evaluate patients at a single point in time at least 48 hours after administration of FSO69, the CDER required plaintiffs to collect and submit follow-up safety data on patients evaluated at 24, 48, and 72 hour intervals post-administration.
(8) The CDRH did not require MBI to adhere to a weight-based dosing regimen in certain clinical trials, whereas the CDER required DuPont Merck to perform its clinical trials using weight-based dosing.
See DuPont Merck's Mot. for Prelim. Inj., Declaration of Alan P. Carpenter at ¶¶ 17-56; Plaintiffs' Ex. 2 (Submitted during oral argument April 18, 1997); see also Bracco's Mot. for Prelim. Inj., Declaration of Frank Didato at ¶ 6.
[3] In his declaration, Roger H. Schneider, former Associate Director for Science of the CDRH states:
The preamble and the proposed regulation that it accompanied were part of the FDA's effort to carry out its statutory responsibility ... to classify all medical devices in commercial distribution before May 1976 into one of the three class established by the 1976 Act. As there were no ultrasonic contrast media in commercial distribution prior to May 1976, the preamble could not possibly have contemplated their classification or manner of regulation.... The phrase "radiologic contrast media" in the preamble referred specifically to contrast media intended for use in x-ray radiographic imaging.... which cannot have been intended, and cannot reasonably be read, to encompass contrast media used in connection with other imaging modalities.
MBI Mem. in Opp'n, Declaration of Roger H. Schneider at ¶¶ 4, 5.
[4] The novel aspect of FSO69 compared to its precursor, Albunex, is the gas encapsulated in the microspheres. Whereas Albunex utilizes sonicated air, FSO69 uses a perfluorocarbon gas that is similar to the gases used in the Bracco, SONUS and DuPont Merck/ImaRx products.
[5] An IND allows a new drug manufacturer to conduct clinical trials on patients before submitting a New Drug Application, the application that must be submitted prior to a new drug's ultimate approval. Defs.' Mem. in Opp'n at 8-9.
[6] A Pre-Market Approval Application, or PMA, is the device approval counterpart to the NDA, the application for approval of a new drug. Compare 21 U.S.C. § 360e with 21 U.S.C. § 355.
[7] Plaintiffs also filed petitions for stay with the FDA. Bracco's and SONUS' petitions were denied; the FDA has not acted on DuPont Merck's petition for stay.
[8] The Court is not persuaded that plaintiffs are likely to prevail on their second APA argument, namely, that in approving Albunex as a device the FDA changed a long-standing policy as reflected in its 1982 advisory opinion. See supra note 3.
[9] For example, the rigorous testing requirements of the CDER has already resulted in at least $1.5 million in additional expenses for DuPont Merck. DuPont Merck Mot. for Prelim. Inj., Declaration of Dr. Alan P. Carpenter ¶ 21. SONUS reports to have spent over $700,000 on studies that the CDRH did not require of MBI and estimates that it has incurred clinical study cost increases due to the CDER requirements of more than $3,000,000 compared to PMA study requirements. SONUS Mot. for Prelim. Inj., Ex. G, Citizen Petition at 6 (Feb. 3, 1997).
[10] The Court is not persuaded by plaintiffs' argument that they have suffered a constitutional violation or that a constitutional violation would constitute injury per se in this case.
[11] The FDA could simply announce that all four products will be treated as drugs and reviewed by the CDER under its tests and procedures or that all four will be treated as devices reviewed by the CDRH. Alternatively, it could respond promptly to the plaintiffs' Citizen Petitions and provide a rationale for differential treatment after which the Court would be able to review that agency action and determine whether, while it does so, the injunction should remain in force or be vacated that is, to reassess plaintiffs' likelihood of success on the merits in view of the FDA's reasons for its decisions.
[12] The current status of plaintiffs' products is the following: SONUS has filed an NDA, which is still under review by the CDER; Bracco and DuPont Merck have filed INDs with the CDER, allowing them to conduct clinical trials on patients before submitting an NDA.
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934 F.2d 280
137 L.R.R.M. (BNA) 2750, 119 Lab.Cas. P 10,847
MOBILE STEAMSHIP ASSOCIATION, INC., Plaintiff-Appellee,v.LOCAL 1410, INTERNATIONAL LONGSHOREMEN'S ASSOCIATION,AFL-CIO, Defendant,International Longshoremen Association, AFL-CIO, Defendant-Appellant.
No. 90-7461.
United States Court of Appeals,Eleventh Circuit.
June 20, 1991.
John F. Janecky, Barker & Janecky, P.C., Mobile, Ala., Thomas W. Gleason, Maura R. Cahill, New York City, for defendant-appellant.
Richard G. Alexander, Mobile, Ala., for Local 1410.
Frank McRight, McRight, Jackson,
Myrick & Moore, Mobile, Ala., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Alabama.
Before ANDERSON and CLARK, Circuit Judges, and TUTTLE, Senior Circuit Judge.
ANDERSON, Circuit Judge:
1
Appellant International Longshoremen Association, AFL-CIO ("ILA") appeals from the district court's ruling granting the application of Appellee Mobile Steamship Association, Inc. ("MSA") for a permanent injunction and denying ILA's motion for summary judgment. The district court enjoined ILA and its local Mobile, Alabama affiliate ("Local 1410")1 from proceeding with arbitration of their dispute with MSA in a national forum, the Emergency Hearing Panel ("EHP"), until after completion of arbitration pursuant to the terms of a local collective bargaining agreement. The district court further ordered that "[n]o arbitration awards should impose on [MSA] or any of its member companies any obligation that is inconsistent with the terms and conditions of the [MSA]/ILA Local 1410 Collective Bargaining Agreement." Mobile Steamship Ass'n, Inc. v. ILA, No. 90-00037-T-H at 2 (S.D.Ala. May 24, 1990). For the reasons stated below, we vacate the judgment of the district court and remand for entry of summary judgment in favor of ILA.
I. FACTS
2
The origin of the instant dispute is the "containerization" technology that has revolutionized the shipping industry. Although the increased use of large, reusable metal containers to transport cargo by ship has resulted in greater ease in handling and significantly reduced cost, the practice has also resulted in a reduction in the need for longshoremen to load and unload cargo. See generally, N.L.R.B. v. International Longshoremen's Ass'n, 447 U.S. 490, 493-96, 100 S.Ct. 2305, 2308-09, 65 L.Ed.2d 289 (1980). Labor and management have attempted to solve the problems associated with the resulting decreased employment opportunities for longshoremen through collective bargaining. As a result of such collective bargaining, the national union, ILA, and the carriers entered into a single Master Contract covering all of the Atlantic and Gulf Coast ports where ILA was the collective bargaining representative, including Mobile, for the 1980-83, 1983-86, and 1986-89 contract periods. MSA, which is a trade association consisting, inter alia, of stevedore companies serving the Port of Mobile, also was a party to the 1980-83 and 1983-86 agreements. The provision relevant to the instant case, included in the Master Contract's "Containerization Agreement" and "Rules on Containers," required carriers to contribute a royalty of $2.00 per ton of containerized cargo for eventual distribution as supplemental cash benefits to eligible ILA employees.
3
At the expiration of the 1983-86 Master Contract, MSA did not sign a new Master Contract covering the 1986-89 period. Instead, MSA negotiated a collective bargaining agreement with ILA's local affiliate in Mobile, Local 1410, for the 1986-89 contract period (the "local agreement"). The local agreement included the following provision with respect to containers:
4
The parties agree to abide by the terms and conditions of any national agreement between the ILA and the Carriers concerning the loading and unloading of Container Vessels and the stuffing and stripping of containers for such vessels. Except as specifically provided otherwise in this Agreement, the terms and conditions of that agreement shall control. Notwithstanding the foregoing, the parties further agree:
5
a. The first royalty payment paid per ton of cargo in containers will be paid to eligible employees as a vacation benefit.
6
b. The second and third royalty payments paid on containers will be contributed to the MSA/ILA Welfare Plan for the purpose of providing welfare benefits to eligible employees....
7
The change in the allocation of the container royalty payments accomplished by the local agreement is at the center of the present dispute. In addition to the above provision, the local agreement also contains detailed provisions calling for local arbitration of disputes arising under it.
8
Although MSA was not a party to the 1986-89 Master Contract, it is a party, as is ILA, to an arbitration agreement entitled "Management-ILA Emergency Hearing Panel" covering the 1986-89 period (the "EHP Agreement"). The EHP Agreement calls for the EHP, a national arbitration panel made up of representatives from management and labor, to hear and resolve "all cases relating to the Containerization Agreement and Rules on Containers on an emergency basis at the earliest possible moment." R1-11 Exhibit B, at 1.
9
ILA, contesting the royalty payment allocation set out in the local agreement, instituted arbitration proceedings in the national forum, EHP.2 Although MSA asserted that the EHP lacked jurisdiction, the EHP proceeded to the merits of the dispute. After the EHP deadlocked on the merits, the matter was referred to the American Arbitration Association ("AAA") pursuant to EHP procedure. However, before the AAA could hear the case, MSA filed the instant action in the district court seeking to enjoin further arbitration under the EHP Agreement. ILA responded with a motion for summary judgment. The district court granted the relief sought by MSA, concluding that the EHP, the national forum, lacked jurisdiction, and that the arbitration should proceed pursuant to the local agreement. The district court further ordered that any local arbitration award could not impose obligations inconsistent with the local agreement, effectively ruling on the merits of the dispute.
10
The issue on appeal is whether the district court correctly concluded that the EHP lacked jurisdiction. We conclude that the EHP, the national arbitration forum, is the proper forum for arbitration of the instant dispute. We also conclude that the district court erred by ordering relief that went to the merits of the controversy.
II. DISCUSSION
11
The primary issue is whether the proper forum for the instant arbitration is the national arbitration forum, EHP, or the local arbitration forum. The national union, ILA, entered into a Master Contract with the carriers under which the carriers would pay the $2 royalty for eventual distribution in cash to eligible ILA employees. In the Mobile port, MSA apparently was the entity through which such royalty payments were funneled for the benefit of the eligible ILA employees in the Mobile port area. MSA and the union have entered into a local agreement which provides for a distribution of these royalty payments different from the distribution provided for in the Master Contract. Although MSA is not a party to the Master Contract for the relevant period, it is a party to the EHP Agreement and thus has agreed to arbitrate before the national arbitration forum, EHP, any dispute relating to the Master Contract's provisions governing distribution of the royalty payments.
12
MSA argues that it should not be required to arbitrate before the national forum because MSA was not a party to the Master Contract, and therefore was not subject to that contract's provisions regarding the disposition of the container royalty payments. MSA makes this argument notwithstanding the fact that it signed the EHP Agreement, and thus agreed to arbitrate before the national forum any dispute relating to the "Containerization Agreement" and "Rules on Containers" (which of course include the Master Contract's royalty provisions).
13
The fallacy of MSA's reasoning is that it assumes the very fact at issue. In other words, it assumes that ILA's position is wrong on the merits. On the merits, ILA's dispute with MSA is over whether MSA properly bargained and agreed with Local 1410 to change the Master Contract's disposition of the container royalty payments. In other words, ILA challenges certain aspects of the validity of the local agreement and thus is arguing that MSA is bound by the Master Contract's container royalty provisions. ILA's challenge is in the nature of a claim that MSA has interfered with ILA's contractual relations regarding the royalty payments.
14
Seen in this light, it is clear that the dispute does "relat[e] to the Containerization Agreement and Rules on Containers," i.e., the Master Contract's provisions regarding the disposition of the container royalty payments. MSA is a party to the EHP Agreement and has agreed to arbitrate in the national forum any dispute related "to the Containerization Agreement and Rules on Containers," which of course includes the Master Contract's provisions regarding the disposition of container royalty payments. The instant dispute is over which disposition of the container royalty payments is applicable, the Master Contract or the local agreement. Because ILA's contention is that the container royalties must be paid as cash supplements to eligible ILA employees pursuant to the mandate of the Master Contract and despite the contrary disposition provided for in the local agreement, the dispute clearly "relates" to the Master Contract. Therefore, as a party to the EHP Agreement, MSA is bound to arbitrate the instant dispute in the national forum.
15
MSA's argument--that because it was not a party the 1986-89 Master Contract, it is not required to proceed with EHP arbitration--is really an argument on the merits. MSA is apparently of the belief that ILA's argument regarding the applicability of the Master Contract provisions not incorporated into the local agreement is without merit. The district court evidently shared this view when it ordered that "[n]o arbitration awards should impose on [MSA] or any of its member companies any obligation that is inconsistent with the terms and conditions of the [MSA]/ILA Local 1410 Collective Bargaining Agreement." Mobile Steamship Ass'n, Inc. v. ILA, No. 90-00037-T-H at 2 (S.D.Ala. May 24, 1990). However, it is clear that "in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims ... even if [the union's claim] ... appears to the court to be frivolous...." AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649-650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986).3
16
Therefore, the district court erred not only by ordering local arbitration and enjoining further arbitration in the national forum, but also by ordering that resolution of the dispute be consistent with the terms of the local agreement. Accordingly, we VACATE the district court's judgment and REMAND for entry of summary judgment in favor of ILA.4
17
VACATED AND REMANDED.
1
Local 1410, International Longshoremen's Association, AFL-CIO is not a party to this appeal
2
Pursuant to the EHP procedure, the parties first tried to resolve their dispute over the proper allocation of the container royalty payments locally. However, when settlement negotiations at the local level broke down, the matter was placed on the EHP agenda
3
ILA also notes that EHP, the national arbitration forum, has already resolved the jurisdictional issue, concluding that it does have jurisdiction. ILA argues that we should accord some deference to that decision. MSA disagrees, arguing that the jurisdiction of the arbitration forum is an issue which the court must decide. We need not address this disagreement. Our plenary review of the jurisdictional issue persuades us that the national forum does have jurisdiction, and thus we need not decide whether some deference is due to the EHP decision which also sustains its jurisdiction
4
MSA does not contend that there are disputed issues of fact. Thus, our legal conclusions require the district court to grant ILA's motion for summary judgment
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560 F.Supp. 372 (1983)
Charles R. DODD, Jr., Petitioner,
v.
Douglas WILLIAMS, Superintendent, Walker County Correctional Institute, Respondent.
Civ. A. No. C82-181R.
United States District Court, N.D. Georgia, Rome Division.
March 11, 1983.
*373 *374 Richard D. Allen, Jr., Atlanta, Ga., for petitioner.
Virginia H. Jeffries, Asst. Atty. Gen., Atlanta, Ga., for respondent.
ORDER
HAROLD L. MURPHY, District Judge.
Petitioner is a state prisoner currently serving a ten-year sentence imposed pursuant to a plea agreement by the Superior Court of Whitfield County, Georgia. The Superior Court, later sitting as a habeas corpus court, granted petitioner partial relief on a state habeas petition, but concluded, after a hearing, that petitioner's guilty plea was knowing and voluntary, and that petitioner received effective assistance of counsel. Following exhaustion of available state remedies, petitioner, through counsel, instituted this action for a writ of habeas corpus pursuant to 28 U.S.C. § 2254. The case was referred to a United States Magistrate, who, based on the record of petitioner's state court habeas proceeding, refused petitioner a further evidentiary hearing and found that petitioner's plea was knowing and voluntary and aided by the effective assistance of counsel. Petitioner objects to the recommendation of the Magistrate, whose report now is before the Court for consideration.
I
The facts generally are not in dispute. On January 15, 1975, a Whitfield County grand jury indicted petitioner for motor vehicle theft, Whitfield County Superior Court No. 9537. Pending at the same time was an indictment for forgery, Whitfield County Superior Court No. 9522. On January 29, 1975, Dodd, represented by attorney Bill Glisson, pleaded guilty to the offense of theft by receiving stolen property. Apparently, all involved believed the charge pleaded to was a lesser included offense of theft by taking.[1] Petitioner was sentenced to the custody of the Youthful Offender Division of the State Board of Corrections for a term not to exceed six years. The documentary record is silent on the disposition of the forgery charge, although at the state habeas hearing it was stated that the sentence on the forgery charge was entered in No. 9537 charging Dodd with motor vehicle theft. (Hearing transcript at 10) (hereinafter referred to as T. 10).
Subsequently, in the January, 1980, term of the Whitfield County grand jury, Dodd was charged in two more indictments. Number 13335 charged Dodd with child molestation (Count I) and with being a habitual felon (Count II), on account of the guilty pleas to Nos. 9522 and 9537 in 1975. The child molestation accusation exposed Dodd to up to 20 years in the penitentiary. Number 13602 charged Dodd with driving under the influence (Count I) and driving without a license (Count II).
On December 2, 1980, John Neal was appointed to represent Dodd on the pending charges. On December 5, 1980, petitioner entered a plea of guilty to the child molestation charge (Count I, No. 13335) and the DUI charge (Count I, No. 13602). The state entered a nolle prosequi to the habitual felon charge and dismissed the license offense. The Superior Court sentenced petitioner to 10 years for child molestation, with a 12 month concurrent sentence for the DUI charge.
Thereafter, Neal realized that he erred when he advised petitioner of the effect of the habitual felon count and that a conviction under that statute would result in the maximum 20-year sentence without eligibility for parole, subject to good time credit of one day for every three days served. Although *375 he drafted a state habeas petition, the Superior Court relieved him from his representation and appointed new counsel for petitioner.
Attorney Gene Gouge then filed for a writ of habeas corpus on behalf of petitioner in Whitfield Superior Court, claiming that the misinformation rendered petitioner's guilty plea uninformed and involuntary and that he did not receive effective assistance of counsel (Count I); and that the plea of guilty to theft by receiving stolen property was void because it is not a lesser included offense of theft by taking (Count II).
A hearing was held March 5, 1981, at which petitioner was represented by Gouge. Glisson testified that there was no new indictment prior to the plea of guilty to theft by receiving; the charge was "reduced" by notation on the indictment. See n. 1, supra.
Neal stated that he was appointed to represent Dodd in Nos. 13335 and 13602 on December 2, 1980. He stopped by the District Attorney's office on that date to receive a copy of the charges and to review the state's evidence. (T. 6) He then met with Dodd and talked with him about the charges, specifically the molestation charge, which Neal considered the most serious charge (T. 7). They also conversed about Dodd's prior record and a little about the DUI and license offenses. (id.). Neal claimed there were no discussions at that point about possible sentences, but that Dodd said, "See what you can do," or "Let's see what can be had." (T. 8).
On December 3, Neal spoke with the D.A. about possible sentences.
In addition, Neal testified that Dodd was unsure of his prior record, since the motor vehicle theft charge, but not the forgery charge, was on his prison "rap" sheet. Accordingly, Neal went to the Clerk's office, searched the docket (he did not have prior benefit of case numbers), and pulled Dodd's files. (T. 10).
Neal also testified that as result of his conversation with petitioner on December 2, he did not interview witnesses or attempt to locate any, either for the defense or prosecution. (T. 8). Over objection from petitioner's counsel, Neal testified that although Dodd never used the words "I'm guilty" specifically,
I interviewed him and based on the facts he related to me, I told him that, if those facts were proven at trial, he could receive a legal conviction of guilty.
(T. 18).
On December 4, 1980, Neal again met with Dodd. The bulk of the conversation concerned the possibility of a plea. Neal did not advise Dodd as to the course he should take, but did discuss with him the consequences of a guilty plea. (T. 9). He advised him of the various possible sentences depending upon whether there was a trial, conviction or guilty plea. Moreover, he informed Dodd that if found to be a habitual felon, he would be sentenced to the maximum of 20 years with no parole eligibility, subject to one day good time credit for every three days served, i.e., that he would serve 15 years. (T. 12).[2]
On December 4, or 5, the D.A. agreed to recommend 10 years to serve in exchange for a nolle prosequi of the habitual felon count. (T. 14). Neal further testified that the D.A.'s evidence and Dodd's version of the incident forming the basis of the molestation charge were similar, and that Neal did not interview any witnesses nor attempt to locate the victim, after Dodd said he would take the D.A.'s proposed recommendation. (T. 20).
On December 5, 1980, Dodd pleaded guilty and was sentenced. The Court informed him that he could be sentenced to serve 20 years (Plea transcript at 6).
On March 23, 1981, the Superior Court issued its ruling on the petition and found that Neal was appointed to represent Dodd on the child molestation charge on December 2, 1980. He interviewed petitioner on *376 more than one occasion, researched the applicable law, negotiated with the prosecutor, and discovered from him the state's expected evidence. He told the defendant that what he admitted doing would constitute the offense of child molestation. He negotiated a plea bargain. The Superior Court concluded that petitioner had the benefit of effective assistance of counsel, and that any erroneous advice with respect to the eligibility for parole was not so significant as to amount to a denial of due process or effective representation of counsel. The Superior Court held that the guilty plea was voluntarily and knowingly entered. However, on April 9, 1981, the Superior Court set aside the conviction and sentence for theft by receiving stolen property, No. 9537.
The Supreme Court of Georgia denied petitioner's application for certificate of probable cause on June 30, 1981.
Petitioner then filed this 28 U.S.C. § 2254(d) petition. The Magistrate recommends that petitioner's request for another hearing be denied, since the state court record is adequate for a determination of the issues in this Court, and that petitioner's testimony is not necessary to adjudicate the factual issues here. He also recommends that it be concluded that petitioner's guilty plea was voluntary and knowing, that he received effective assistance of counsel, and that the application for the writ be dismissed.
II
A.
As a preliminary matter, the Court must determine whether petitioner is entitled to an evidentiary hearing in this Court. He claims he is, because the failure of the state court to take his testimony requires this Court to conclude that the Superior Court's findings are due no presumption of correctness. He alleges that the material facts were not adequately developed and that the factfinding procedure employed was not adequate for a full and fair hearing. In his objections to the Magistrate's report, he also claims that the state court findings were not fairly supported by the record.
Title 28 U.S.C. § 2254(d) governs the Court's review of a state court habeas corpus record, and to some extent, controls the request of a complaining petitioner for a further evidentiary proceeding in federal court. This code section provides that a determination after a hearing on the merits of a factual issue made by the state habeas court, "shall be presumed to be correct," unless one or more of eight exceptional circumstances are met:
(1) the merits of the factual dispute were not resolved in the state court hearing;
(2) the factfinding procedure employed by the state court was not adequate to afford a full and fair hearing;
(3) the material facts were not adequately developed at the state court hearing;
(4) the state court lacked jurisdiction of the subject matter or over the person of the applicant in the state court proceeding;
(5) the applicant was an indigent and the state court, in deprivation of his constitutional right, failed to appoint counsel to represent him in the state court proceeding;
(6) the applicant did not receive a full, fair and adequate hearing in the state court proceeding; or
(7) the applicant was otherwise denied due process of law in the state court proceeding;
(8) or unless that part of the record of the state court proceeding in which the determination of such factual issue was made, pertinent to a determination of the sufficiency of the evidence to support such factual determination, is produced as provided for hereinafter, and the federal court on a consideration of such part of the record as a whole concludes that such factual determination is not fairly supported by the record.
28 U.S.C. § 2254(d)(1) through (8).
Then, even if the federal court holds an evidentiary hearing, unless one of the *377 criteria of (1) through (8) is met, the burden remains on the habeas applicant to establish by convincing evidence that the factual determination of the state court was erroneous. 28 U.S.C. § 2254; Sumner v. Mata, 449 U.S. 539, 550, 101 S.Ct. 764, 770, 66 L.Ed.2d 722 (1981) (Sumner I). See also, Marshall v. Lonberger, ___ U.S. ___, 103 S.Ct. 843, 74 L.Ed.2d 646 (1983).
In the instant case, petitioner argues that he is entitled to a new evidentiary hearing based on factors (2), (3), and (8). Of these three, petitioner's claim that the factfinding procedure employed by the Superior Court was not adequate to afford a full and fair hearing must be dismissed out of hand. The Superior Court appointed counsel for petitioner, who prepared the state petition and examined Dodd's former attorneys at trial. The Superior Court did not restrict counsel from following any line of questioning. That counsel did not choose to put petitioner on the stand at the hearing does not render the state court process insufficient.
Exception (3) concerns the failure to develop adequately the material facts at the state hearing. At the outset, the Court notes that petitioner has not stated what material facts or lines of inquiry were not developed at the state hearing, although he now contests Mr. Neal's assertion that petitioner admitted the facts which would constitute guilt.[3] In any event, Thomas v. Zant, 697 F.2d 977 (11th Cir.1983) requires a two-pronged showing by a petitioner prior to the holding of a federal evidentiary hearing on the grounds that material facts were not developed in prior hearings. He must show,
[F]irst, that a fact pertaining to his federal constitutional claim was not adequately developed at the state court hearing and that the fact was "material" (in the language of [§ 2254(d)(3)] or "crucial to a fair, rounded development of the material facts" (in the language of Townsend [v. Sain, 372 U.S. 293, 322, 83 S.Ct. 745, 761, 9 L.Ed.2d 770 (1963))]; [and] second, that failure to develop that material fact at the state proceeding was not attributable to petitioner's inexcusable neglect or deliberate bypass.
Thomas v. Zant, 697 F.2d at 986 (footnote omitted). Nothing in petitioner's pleadings indicates even that an evidentiary hearing is required on the threshold questions noted in Thomas, see id. ("Either of these may itself require an evidentiary hearing"), not to mention petitioner's entitlement to an evidentiary hearing on the substance of his federal claim.
Finally, the Court finds, after consideration of the entire record, including petitioner's present allegations, that the Superior Court's findings of fact are "fairly supported by the record." Accordingly, § 2254(d)(8) does not require a further hearing based on petitioner's bare allegations to the contrary. In this regard, it is important to note that, in order to ignore the state court's findings or grant a new hearing, this Court must "more than disagree [with those findings]; it must conclude that the state court's findings lacked even `fair [] support' in the record." Marshall v. Lonberger, supra, ___ U.S. at ___, 103 S.Ct. at 850. In effect, the state court determination of facts is entitled to a "high measure of deference" by this Court. Sumner v. Mata, 455 U.S. 591, 598, 102 S.Ct. 1303, 1307, 71 L.Ed.2d 480 (1982) (Sumner II).
Therefore, based on petitioner's failure to allege with some focus how the supposed errors of the state court's findings could be rectified by an additional hearing, and on the Court's own review of that record, the Court concludes that determination of petitioner's federal claims properly may be considered *378 without the further taking of evidence.[4]
Fowler v. Jago, 683 F.2d 983 (6th Cir. 1982) compels no different result. There, the state court's conclusions were not deferred to because of its failure to indicate that it applied the appropriate standard. The record was full of contradictory evidence which did not totally refute the petitioner's claims. 683 F.2d at 990-991. Here, on the other hand, petitioner has offered no refutation of the state court's findings, but merely claims they are not adequate nor deserving of deference. The Court does not believe that it must hold additional hearings on such allegations.
B.
The gist of petitioner's claims is that he received ineffective assistance of counsel because of the faulty advice and that his guilty plea was involuntary and unintelligent because of this erroneous advice of counsel. In addition, he cites counsel's failure to discover the void conviction underlying the habitual felon count and his failure to interview witnesses as further support of his ineffective assistance contention.
The Magistrate concluded, and the Court finds substantial support in the record, that Neal consulted several times with petitioner prior to the entry of the plea. He advised petitioner, based on petitioner's version of the facts, of the probability of conviction at trial.[5] He consulted with the District Attorney and negotiated a favorable plea agreement. He advised petitioner that a conviction under the habitual felon count would require that he would be sentenced to the maximum of 20 years for child molestation. But, regardless of the habitual felon count, petitioner still was exposed to a possible 20 year sentence. Petitioner benefitted from the prosecutor's agreement to drop the habitual felon count and recommend only a 10 year sentence. The guilty plea transcript, also part of the record, reveals that petitioner had had prior experience in the criminal justice system; that he understood that he had a right to certain protections, such as the privilege against self-incrimination, forcing the state to put up its proof and convince a jury beyond a reasonable doubt of his guilt, to confront his accusers, and to testify on his own behalf; and that by pleading guilty, he waived those privileges. He explained his version of the case, as did the District Attorney. The judge explained that he was not bound by the state's recommendation and could sentence Dodd to up to 20 years, but the agreement was accepted and petitioner was sentenced in accordance with the deal. Despite the erroneous advice of counsel, petitioner still received less than the maximum sentence.
Therefore, petitioner's contentions of ineffective assistance of counsel as to Neal's failure to interview witnesses or discover the faulty prior conviction, must fail. Effective counsel need not be errorless counsel, nor should counsel be judged ineffective by hindsight. Baty v. Balkcom, 661 F.2d 391, 394 (5th Cir.1981); Washington v. Estelle, 648 F.2d 276 (5th Cir.1981); Clark v. Blackburn, 619 F.2d 431 (5th Cir.1980). The appropriate methodology for determining whether there has been effective assistance is to examine the totality of the circumstances in the record. Lovett v. Florida, 627 F.2d 706 (5th Cir.1980).
The more stringent test, that required for trial counsel, reviews the actual performance of counsel to determine whether counsel was reasonably likely to *379 render and did render effective assistance of counsel. Carbo v. United States, 581 F.2d 91, 92 (5th Cir.1978); United States v. Gray, 565 F.2d 881, 887 (5th Cir.1978); MacKenna v. Ellis, 280 F.2d 592, 599 (5th Cir.1960). But, the burden is on the petitioner to show by a preponderance of the evidence that he lacked effective assistance of counsel and that he suffered prejudice thereby. Owens v. Wainwright, 698 F.2d 1111, 1113 (11th Cir.1983); Washington v. Strickland, 693 F.2d 1243, 1250, 1258, 1262 (11th Cir.1982) (en banc) ("actual and substantial disadvantage to the course of his defense"); United States v. Killian, 639 F.2d 206, 210 (5th Cir.1981).
In this context, petitioner has not shown the requisite prejudice. Rather, his plea bargain offered him less of a sentence than he was exposed to, regardless of the failure to discover the faulty prior conviction. The focus here is not "what might have been if," but actual prejudice.
However, this is not a case to be judged solely on the MacKenna v. Ellis standard. A guilty plea is required to be knowing and voluntary, or it is invalid. Boykin v. Alabama, 395 U.S. 238, 242, 89 S.Ct. 1709, 1711, 23 L.Ed.2d 274 (1969); Brady v. United States, 397 U.S. 742, 747, 90 S.Ct. 1463, 1468, 25 L.Ed.2d 747 (1970); Bradbury v. Wainwright, 658 F.2d 1083, 1086 (5th Cir.1981). But, a guilty plea cannot have been knowing and voluntary if a defendant does not receive reasonably effective assistance of counsel in connection with the decision to plead guilty, because the plea does not then represent an informed choice. Mason v. Balkcom, 531 F.2d 717, 724-725 (5th Cir.1976); Scott v. Wainwright, 698 F.2d 427, 432 (11th Cir.1983).
Thus, the guilty plea does not relieve counsel of the responsibility to investigate potential defenses so that the defendant has an informed choice. Lee v. Hopper, 499 F.2d 456, 463 (5th Cir.1974); Scott v. Wainwright, supra. Counsel must assist actually and substantially in the defendant's decision whether to plead guilty, so that the decision is made knowingly and voluntarily. Bradbury v. Wainwright, supra, at 1087; Herring v. Estelle, 491 F.2d 125 (5th Cir. 1974). Counsel's advice need not be errorless and need not involve every conceivable defense, but it must be within the realm of competence demanded of attorneys representing criminal defendants. McMann v. Richardson, 397 U.S. 759, 771, 90 S.Ct. 1441, 1449, 25 L.Ed.2d 763 (1970); Tollett v. Henderson, 411 U.S. 258, 264, 93 S.Ct. 1602, 1606, 36 L.Ed.2d 235 (1973).
With this background, the Court notes initially that this is not a case like Scott v. Wainwright, supra, where, since counsel was not ready for trial, defendant pleaded guilty. No such coercion is evident in this case. Instead, petitioner argues that he was "coerced" into pleading guilty by the supposed operation of the habitual felon statute and counsel's further error on petitioner's eligibility for parole if convicted.
Once a plea of guilty has been entered, all nonjurisdictional challenges to the conviction's constitutionality are waived, and only an attack on the voluntary and knowing nature of the plea can be sustained. Scott v. Wainwright, supra, 698 F.2d at 432; McMann v. Richardson, supra; Bradbury v. Wainwright, supra, at 1087. The focus, therefore, on federal habeas review is the nature of the advice and the voluntariness of the plea, not the existence as such of an antecedent constitutional infirmity. Tollett v. Henderson, supra, 411 U.S. at 266, 93 S.Ct. at 1607. As stated previously, the petitioner must show that the advice was not "within the range of competence demanded of attorneys in criminal cases." id.; McMann v. Richardson, supra, at 771. As the Tollett Court held,
Counsel's failure to evaluate properly facts giving rise to a constitutional claim, or his failure properly to inform himself of facts that would have shown the existence of a constitutional claim, might in particular fact situations meet this burden of proof. [But], while claims of prior constitutional deprivation may play a part in evaluating the advice rendered by counsel, they are not themselves independent grounds for federal collateral relief.
*380 Tollett v. Henderson, supra, 411 U.S. at 266-267, 93 S.Ct. at 1607-08.
In the Court's view, this case is controlled by a long series of cases which denied federal collateral relief to a criminal defendant who pleaded guilty, and then sought relief on a constitutional claim not adjudicated because of the plea. These cases generally rely on the maxim that complaints of ineffective representation cannot be judged through the distorted vision of hindsight, Young v. Zant, 677 F.2d 792, 798 (11th Cir.1982); Clark v. Blackburn, 619 F.2d 431, 433 (5th Cir.1980); but only by taking into account all of the circumstances of the case, and only as those circumstances were known to counsel at that time. Washington v. Strickland, supra, at 1251; Washington v. Watkins, 655 F.2d 1346, 1356 (5th Cir.1981).
In Brady v. United States, supra, petitioner was indicted for kidnapping, and subsequently pleaded guilty to avoid the death penalty, as the law then permitted. Thereafter, Jackson v. United States, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968), held the death penalty under the statute unconstitutional. The Brady Court left the guilty plea undisturbed.
We decline to hold ... that a guilty plea is compelled and invalid under the Fifth Amendment whenever motivated by the defendant's desire to accept the certainty or probability of a lesser penalty rather than face a wider range of possibilities extending from acquittal to conviction and a higher penalty authorized by law for the crime charged.
Brady v. United States, 397 U.S. at 751, 90 S.Ct. at 1470.
The rule that a plea must be intelligently made to be valid does not require that a plea be vulnerable to later attack if the defendant did not correctly assess every relevant factor entering into his decision. A defendant is not entitled to withdraw his plea merely because he discovers long after the plea has been accepted that his calculus misapprehended the quality of the State's case or the likely penalties attached to alternative courses of action ... The fact that Brady did not anticipate United States v. Jackson, supra, does not impugn the truth or reliability of his plea. We find no requirement in the Constitution that defendant must be permitted to disown his solemn admissions in open court that he committed the act with which he is charged simply because it later develops that the State would have had a weaker case than the defendant had thought or that the maximum penalty then assumed applicable has been held inapplicable in subsequent judicial decisions.
id., at 757, 90 S.Ct. at 1473.
And in McMann v. Richardson, supra, petitioner's later request for collateral relief asserting that a coerced confession induced his plea was held "at most a claim that the admissibility of his confession was mistakenly assessed and that since he was erroneously advised, either under the applicable law or under the law later announced, his plea was an unintelligent and voidable act."
The constitution, however, does not render guilty pleas so vulnerable ... That a guilty plea must be intelligently made is not a requirement that all advice offered by the defendant's lawyer withstand retrospective examination in a post-conviction hearing.
McMann v. Richardson, 397 U.S. at 769-770, 90 S.Ct. at 1448. See also Busby v. Holman, 356 F.2d 75, 77 (5th Cir.1966) (A judgment on a plea of guilty which has been entered voluntarily on the advice of counsel is not rendered invalid because the defendant had previously made a confession under circumstances which might have rendered it inadmissible in evidence if the defendant had pleaded not guilty and gone to trial).
In this case, petitioner was indicted as an habitual felon along with the substantive offense of child molestation. The record discloses two sentences imposed on defendant as result of the 1975 plea: plea of guilty to motor vehicle theft, No. 9537 (attached as defendant's exhibit no. 2 to the state habeas proceeding) and plea of guilty to theft by receiving, No. 9537 (defendant's exhibit no. 3). Regardless of the confusing *381 nature of these entries, defendant's counsel in 1975 and the assistant district attorney believed it to be a valid plea, and thus, a valid conviction. It was a valuable agreement for all involved at the time. That it was ruled void over six years later, or could have been attacked at a trial on the newer indictments, does not render petitioner's plea of guilty to avoid the operation of the habitual offender statute any less voluntary or Neal's assistance less effective.
Cooks v. United States, 461 F.2d 530 (5th Cir.1972), is inapposite. In a multi-count indictment, Cooks was charged with multiple violations of transporting forged securities across state lines. All of the alleged forgeries were carried across the state line in one occurrence. The indictment clearly was defective, yet counsel misadvised his client to plead to the maximum sentence for one count, the maximum time defendant faced if he went on trial anyway.
The Fifth Circuit issued a writ of habeas corpus, holding that "[w]here counsel has induced defendant to plead guilty on the patently erroneous advice that if he does not do so he may be subject to a sentence six times more severe than that which the law would really allow, the proceeding surely fits the mold we describe as a `farce and a mockery of justice.'" 461 F.2d at 532.
The advice here was not "patently erroneous." The conviction was not facially invalid. Even if it was, Dodd still faced a maximum exposure of 20 years regardless of the validity of the habitual felon charge.
Even if misinformed about the possible maximum sentence, the defendant's plea is not to be set aside as involuntary if he receives a sentence less than the law permitted, or less than the defendant was informed that the court would impose.
Hill v. Estelle, 653 F.2d 202, 205 (5th Cir. 1981); United States v. Woodall, 438 F.2d 1317, 1328-1329 (5th Cir.) (en banc), cert. denied 403 U.S. 933, 91 S.Ct. 2262, 29 L.Ed.2d 712 (1971).
Nor did counsel's misstatements of the eligibility for parole render counsel's assistance ineffective or the plea involuntary. An erroneous sentence estimate by defense counsel does not make a plea of guilty involuntary. United States ex rel. Scott v. Mancusi, 429 F.2d 104, 106 (2nd Cir.1970); United States ex rel. Bullock v. Warden, 408 F.2d 1326, 1330 (2nd Cir.1969). Rather, as long as petitioner understood the length of time he might possibly receive, he was fully aware of the plea's consequences. United States v. Maggio, 514 F.2d 80 (5th Cir.1975); Dunlap v. United States, 462 F.2d 163 (5th Cir.1972). Under these circumstances, the plea was not induced by misrepresentation. Bradbury v. Wainwright, supra, at 1087.[6] Since counsel informed petitioner of his maximum exposure, as well as all the available options, his assistance, even with the error, cannot be said to be ineffective.
Nor is this case governed by this Court's ruling in McBryar v. McElroy, 510 F.Supp. 706 (N.D.Ga.1981). McBryar's attorney told him that the prosecutor agreed to recommend probation in exchange for his testimony, when in fact the prosecutor agreed merely to tell the court of McBryar's aid. McBryar was sentenced to seven years. This Court granted the writ because McBryar, under the mistaken belief that he would not serve any time, did not enter his plea intelligently and with awareness of all the circumstances. 510 F.Supp. at 712.
The Court concludes that Neal negotiated a very good deal for Dodd, and would have had good reason to feel that Dodd should plead guilty to the lesser charges rather than stand trial. See United States ex rel. Scott v. Mansusi, supra. As the Court stated *382 in McBryar, the state of mind of the pleading defendant must be focused upon in determining the validity of the plea. McBryar v. McElroy, supra, at 712. It is clear that Dodd accepted the state's recommendation to avoid what possibly was a much harsher sentence; a guilty plea will not be adjudged involuntary solely because it was entered to limit the maximum sentence. North Carolina v. Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1975); Starling v. Estelle, 651 F.2d 1082, 1083 (5th Cir.1981); Jones v. Estelle, 584 F.2d 687 (5th Cir.1978).
Thus, the plea was intelligently and voluntarily entered; any errors of counsel were within the range of competency of attorneys representing criminal defendants; and in any event, were not such as to cause actual and substantial disadvantage.
ACCORDINGLY, the application for a writ of habeas corpus is DENIED.
IT IS SO ORDERED, this the 11th day of March, 1983.
NOTES
[1] The notation on the indictment pleaded to reads,
This charge is hereby changed and reduced to that of theft by receiving stolen property as defined in Ga.Code Annotated, a felony ... (signed) Steven K. FainAsst. D.A.
[2] The error, in part, was that only criminal defendants with three prior felonies are not eligible for parole following conviction for their fourth offense. Ga.Code Ann. § 27-2511, O.C. G.A. § 17-10-7.
[3] The Court also concludes that the proceeding was not rendered unfair by Neal's testimony to petitioner's statements. O.C.G.A. § 29-9-24 excepts from the attorney-client privilege an attorney's testimony as to any facts which may transpire in connection with his employment. By attacking Neal's competency, Dodd waived any privilege resulting from their relationship. United States v. Woodall, 438 F.2d 1317, 1324 (5th Cir.1970) (en banc).
[4] Moreover, because Dodd has failed to allege satisfaction of the Thomas factors (or their equivalent from prior caselaw, see Townsend v. Sain, supra), the Court also concludes that petitioner need not be afforded an opportunity to refute Neal's contentions of Dodd's admissions of the facts constituting the offense charged.
[5] This Court has no authority under 28 U.S.C. § 2254(d) to redetermine the credibility of witnesses whose demeanor was observed by the state court, but not by it. Marshall v. Lonberger, supra, ___ U.S. at ___, 103 S.Ct. at 851. Petitioner now attacks Neal's credibility. However, that petitioner relied heavily upon Neal's admissions of error, in the Court's view, strengthens Neal's credibility.
[6] See also Shelton v. United States, 246 F.2d 571, 572 n. 2 (5th Cir.1957) (en banc), rev'd. on confession of error on other grounds, 356 U.S. 26, 78 S.Ct. 563, 2 L.Ed.2d 579 (1958):
[A] plea of guilty entered by one fully aware of the direct consequences, including the actual value of any commitments made to him by the court, prosecutor, or his own counsel, must stand unless induced by threats (or promises to discontinue improper harassment), misrepresentation (including unfulfilled or unfulfillable promises), or perhaps by promises that are by their nature improper as having no proper relationship to the prosecutor's business (e.g. bribes).
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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 1 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MIKE TSOSIE, No. 15-17330
Plaintiff-Appellant, D.C. No. 3:15-cv-08044-DKD
v.
MEMORANDUM *
NANCY A. BERRYHILL, Acting
Commissioner Social Security,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Arizona
David K. Duncan, Magistrate Judge, Presiding
Submitted August 17, 2017**
San Francisco, California
Before: O’SCANNLAIN and RAWLINSON, Circuit Judges, and VANCE,***
District Judge.
Appellant Mike Tsosie appeals the district court’s judgment affirming the
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Sarah S. Vance, United States District Judge for the
Eastern District of Louisiana, sitting by designation.
Commissioner of Social Security’s denial of his application for disability benefits.
Because the ALJ’s opinion is supported by substantial evidence, we affirm.
The Commissioner’s disability determination “may be set aside only when
the ALJ’s findings are based on legal error or not supported by substantial
evidence in the record.” Benton ex rel. Benton v. Barnhart, 331 F.3d 1030, 1035
(9th Cir. 2003). Substantial evidence is “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion,” which is “more than a
mere scintilla, but may be less than a preponderance.” Molina v. Astrue, 674 F.3d
1104, 1110-11 (9th Cir. 2012) (citation and quotation marks omitted). It is the
ALJ’s responsibility to “determine credibility, resolve conflicts in the testimony,
and resolve ambiguities in the record.” Treichler v. Comm’r Soc. Sec. Admin., 775
F.3d 1090, 1098 (9th Cir. 2014) (citing 42 U.S.C. § 405(g)). If “the ALJ commits
legal error, we uphold the decision where that error is harmless.” Id. at 1099.
Tsosie first argues that the ALJ committed reversible error because her
opinion does not adequately explain how Tsosie’s obesity affects his residual
functional capacity. But the ALJ’s opinion did explicitly address obesity. The
ALJ found that Tsosie’s obesity was a severe impairment but concluded that there
was no evidence that obesity, alone or in combination with other ailments,
precluded him from performing light level work. This case is therefore
distinguishable from Celaya v. Halter, 332 F.3d 1177 (9th Cir. 2003), where the
2 15-17330
ALJ failed to either explicitly or implicitly determine the effect of obesity on the
claimant’s ability to work. See id. at 1182.
Moreover, the ALJ considered medical evidence from consulting physicians
who took into account Tsosie’s obesity in assessing his functional capacity.
Notably, the ALJ recognized more limitations on Tsosie’s residual functional
capacity than suggested by the consulting physicians. The ALJ also provided
germane reasons to discount the opinion of Tsosie’s physician’s assistant, which
the ALJ concluded was unsupported by objective medical findings and inconsistent
with treatment records. See Molina, 674 F.3d at 1111. Tsosie has not shown that
the ALJ ignored any relevant evidence of obesity that could have affected his
residual functional capacity determination. See Burch v. Barnhart, 400 F.3d 676,
683 (9th Cir. 2005). We therefore find that the ALJ gave legally sufficient
consideration to Tsosie’s obesity.
Tsosie also contests the ALJ’s finding that he could return to his past
relevant work. He argues that the occupational categories used by the ALJ are not
sufficiently comparable to his past jobs. The ALJ heard testimony from a
vocational expert, who identified the position of membership secretary for a non-
profit organization as an appropriate comparator for Tsosie’s past secretarial work.
The ALJ inquired whether the membership secretary position was consistent with
Tsosie’s duties at his former secretarial job. The vocational expert explained that it
3 15-17330
was difficult to find a clear match in the Dictionary of Occupational Titles (DOT)
for Tsosie’s past work because he did not perform a typical secretary job, but the
expert concluded that Tsosie’s limited duties were similar to those of a
membership secretary.
Substantial evidence supports the ALJ’s determination that Tsosie had the
residual functional capacity to perform his past relevant work as a membership
secretary as that job is generally performed. The membership secretary position in
the DOT is similar to Tsosie’s prior secretarial work. Tsosie was represented by
counsel at the administrative hearing and did not question the vocational expert’s
use of the membership secretary category. The ALJ affirmatively developed the
record regarding Tsosie’s past employment and had sufficient basis to accept the
expert’s testimony that the membership secretary position was an adequate
comparator for Tsosie’s previous job.
We have found error at step four of the disability determination when the
ALJ relies on a job description that “fails to comport with a claimant’s noted
limitations” without providing sufficient explanation. Pinto v. Massanari, 249
F.3d 840, 847 (9th Cir. 2001). But Tsosie did not argue before the ALJ, the district
court or this Court that he lacks the skills or residual functional capacity to perform
any specific aspect of the membership secretary job.
4 15-17330
Our decisions also recognize that an ALJ may not characterize the
claimant’s past job “according to the least demanding function.” Valencia v.
Heckler, 751 F.2d 1082, 1086 (9th Cir. 1985). “Where an individual cannot
perform any of his earlier jobs, but only one or more tasks associated with those
jobs,” he cannot return to his past relevant work. Id. at 1087; see also Vertigan v.
Halter, 260 F.3d 1044, 1051 (9th Cir. 2001). Here, the ALJ found that Tsosie
could not return to his past job as actually performed because he mentioned lifting
up to 50 pounds. But the ALJ correctly concluded that Tsosie could return to his
past work as generally performed. “Reconciling the generally performed test with
the Valencia line of cases is difficult but not impossible,” and we have upheld a
finding that a claimant could perform his past job as generally performed when the
claimant spent most of his time on tasks that he had the residual functional
capacity to perform. Stacy v. Colvin, 825 F.3d 563, 570 (9th Cir. 2016). Tsosie
testified at the hearing, and represents in his brief, that his job involved lifting less
than 20 pounds. This lifting requirement is within his residual functional capacity.
Tsosie does not suggest that his former secretarial occupation as generally
performed requires lifting more than 20 pounds occasionally. He has not met his
burden of showing that he can no longer perform his past relevant work. See
Hoopai v. Astrue, 499 F.3d 1071, 1074 (9th Cir. 2007).
AFFIRMED.
5 15-17330
FILED
DEC 1 2017
Tsosie v. Berryhill, No. 15-17330
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
O’SCANNLAIN, Circuit Judge, concurring in part and dissenting in part.
I
I concur in the decision to the extent it holds that the Administrative Law
Judge (“ALJ”) did adequately explain how Tsosie’s obesity affects his residual
functional capacity. I am unable, however, to join in its holding that the ALJ
sufficiently justified her conclusion that Tsosie could return to his prior work.
II
Tsosie’s prior job included only unskilled tasks, including moving
documents and mail between buildings and lifting reams of paper. These tasks are
not a good match for the specialized, skilled, and sedentary job of “membership
secretary” that the vocational expert selected from the Dictionary of Occupational
Titles (“DOT”). “In order for an ALJ to accept vocational expert testimony that
contradicts the [DOT], the record must contain ‘persuasive evidence to support the
deviation.’” Pinto v. Massanari, 249 F.3d 840, 846 (9th Cir. 2001) (quoting
Johnson v. Shalala, 60 F.3d 1428, 1435 (9th Cir. 1995)). There is no such
evidence in this record. Although there are some similarities between Tsosie’s job
and the membership secretary, the key dimensions on which they differ—the
amount of lifting and movement required—are precisely what the parties have
contested in this litigation and are the reason the ALJ could not find that Tsosie
could return to his past work as actually performed.
Stacy v. Colvin, 825 F.3d 563 (9th Cir. 2016), does not salvage the ALJ’s
determination. In Stacy, we observed that, under the “generally performed test,” if
a claimant “‘cannot perform the excessive functional demands . . . actually
required in the former job but can perform the functional demands and job duties
as generally required by employers throughout the economy,’” then the claimant is
not disabled. Id. at 569 (quoting SSR 82-61, 1982 WL 31887 (1982)). If the
membership secretary job were a good match for Tsosie’s actual prior work, Stacy
would resolve the case: although he is unable to perform the 50-pound lifting
“excessive functional demand,” he could perform the other duties of the
membership secretary job. Instead, however, the vocational expert picked a
sedentary and skilled job from the DOT that is a poor match for Tsosie’s actual
work, added light work to that job description, and then opined that Tsosie could
perform the invented job as generally performed without any additional evidence.
The ALJ therefore lacked a basis in the DOT or any other evidence to establish
how Tsosie’s prior job was “generally performed,” much less that Tsosie could
have performed it.
Perhaps Tsosie could have performed the job of a membership secretary.
But that is only relevant to step five of the disability determination analysis, at
2
which point the ALJ determines if the claimant “can perform any substantial
gainful work in the national economy,” not simply his own prior work. Pinto, 249
F.3d. at 844 (emphasis added). “[W]e are constrained to review the reasons the
ALJ asserts,” and “we cannot affirm the decision of an agency on a ground that the
agency did not invoke in making its decision.” Stout v. Comm’r, Soc. Sec. Admin.,
454 F.3d 1050, 1054 (9th Cir. 2006) (internal quotation marks omitted).
For the foregoing reasons, I would reverse the judgment of the district court
and remand to the agency for the ALJ to determine, without the errors identified
above, whether Tsosie could return to his past work or could perform any other
substantial gainful work in the national economy.
3
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-6144
ROMMELL RIGGINS,
Petitioner - Appellant,
v.
JOHN WOLFE, Warden; ATTORNEY GENERAL FOR THE STATE OF
MARYLAND,
Respondents - Appellees.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, Senior District
Judge. (8:12-cv-00930-PJM)
Submitted: May 23, 2013 Decided: May 29, 2013
Before MOTZ and AGEE, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Rommell A. Riggins, Appellant Pro Se. Edward John Kelley,
OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Rommell Riggins seeks to appeal the district court’s
order denying relief on his 28 U.S.C. § 2254 (2006) petition.
The order is not appealable unless a circuit justice or judge
issues a certificate of appealability. See 28 U.S.C.
§ 2253(c)(1)(A) (2006). A certificate of appealability will not
issue absent “a substantial showing of the denial of a
constitutional right.” 28 U.S.C. § 2253(c)(2) (2006). When the
district court denies relief on the merits, a prisoner satisfies
this standard by demonstrating that reasonable jurists would
find that the district court’s assessment of the constitutional
claims is debatable or wrong. Slack v. McDaniel, 529 U.S. 473,
484 (2000); see Miller-El v. Cockrell, 537 U.S. 322, 336-38
(2003). When the district court denies relief on procedural
grounds, the prisoner must demonstrate both that the dispositive
procedural ruling is debatable, and that the petition states a
debatable claim of the denial of a constitutional right. Slack,
529 U.S. at 484-85.
We have independently reviewed the record and conclude
that Riggins has not made the requisite showing. Accordingly,
we deny a certificate of appealability, deny Riggins’ motion to
appoint counsel, and dismiss the appeal. We dispense with oral
argument because the facts and legal contentions are adequately
2
presented in the materials before this court and argument would
not aid the decisional process.
DISMISSED
3
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Order entered September 18, 2018
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-18-00676-CV
RUTH TORRES, Appellant
V.
MARIE DIAZ, ET AL., Appellees
On Appeal from the 44th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-16-08711
ORDER
Before the Court is appellant’s September 6, 2018 “Motion for Order for Release of
Court Records & Extension of Time to Resubmit Corrected Brief with Record References.”
Appellant who is presumed indigent, requests a supplemental clerk’s record containing an
additional 105 documents. In her motion, she states that each of these records was before the
trial court and she maintains generally that these records are “important to fully provide the
information for the Court of Appeals to make a determination.”
After undertaking an extensive review of the clerk’s records on file in this appeal and the
list of requested documents, the Court has found that the following twenty-five documents
totaling 995 pages are already included in the record:
1. Plaintiff’s Original Petition - filed July 20, 2016;
2. Order Denying Defendant’s Motion to Strike or Reconsider Temporary Injunction
- signed June 6, 2018;
3. Order on Plaintiff’s Motion for Contempt and Sanctions - signed June 4, 2018;
4. Order Granting Dallas/Fort Worth International Airport Board’s Plea to the
Jurisdiction - signed June 4, 2018;
5. Supplemental Order on Plaintiff’s Motion for Contempt and Sanctions - signed
June 5, 2018;
6. Dallas/Fort Worth International Airport Board’s Plea to the Jurisdiction, Original
Answer, Affirmative Defenses, and Jury Demand to Defendant Ruth Torres’s Second Amended
Counterclaim - filed April 12, 2018;
7. Third-Party Defendant Dallas/Fort Worth International Airport Board’s Plea to
the Jurisdiction - filed May 14, 2018;
8. Dallas/Fort Worth International Airport Board’s First Supplement to Its Plea to
the Jurisdiction, Original Answer, Affirmative Defenses, And Jury Demand to Defendant Ruth
Torres’s Second Amended Counterclaim - filed May 14, 2018;
9. Defendant Torres’s Answer to DFW Plea to the Jurisdiction - filed May 30, 2018;
10. Dallas/Fort Worth International Airport Board’s Reply to Defendant Torres’s
Answer to DFW’s Plea to the Jurisdiction - filed June 1, 2018;
11. Defendant’s Letter to Court Requesting Orders - filed June 5, 2018;
12. Notice of Appeal of Order Granting DFW’s Plea to the Jurisdiction - filed June 6,
2018;
13. Order Denying Defendant’s Motion to Dismiss Under Texas Citizens
Participation Act - signed June 6, 2018;
14. Defendant’s Answer to Original Petition and Counter-Claim - filed August 1,
2016;
15. Special Exception on Plaintiff’s Original Petition - filed January 17, 2018;
16. Defendant Torres’s Motion to Dismiss Under Texas Citizens Participation Act -
filed - May 15, 2018;
17. Plaintiff’s Response in Opposition to Defendant Torres’s Motion to Dismiss
Under Texas Citizens Participation Act - filed May 29, 2018;
18. Defendant Torres’s Motion for Leave to File Motion to Dismiss Under Texas
Citizens Participation Act - filed May 30, 2018;
19. Order Denying Defendant’s Motion to Reconsider Order on POE Parties’ Motion
to Dismiss - signed June 1, 2018;
20. Order Denying Defendant Torres’s Motion for Summary Judgment - signed June
6, 2018;
21. Order Denying Defendant’s Motion to Compel Discovery, for Protective Order
and Sanctions - signed June 6, 2018;
22. Order Regarding Defendant’s Motion for Sanctions and for Leave to File
Amended Pleading - signed June 6, 2018;
23. Order Regarding Defendant’s 3rd Motion for Leave to File Amended Pleading -
signed June 6, 2018;
24. Defendant Ruth Torres’s 3rd Amended Counter-Claim - filed May 29, 2018;
25. Order Denying Defendant’s Motion for Recusal - signed June 7, 2018.
Additionally, the following requested documents are not listed on the trial court’s docket sheet
and are, therefore, unavailable for inclusion in a supplemental clerk’s record: (1) “Email to court
re TI on October 15, 2016;” (2) “Email to Judge re DFW Plea w/ cases attached;” and (3) “All
ex-parte emails, calls or other communications between POE counsel & Judge directly or
through staff.”
Although we question the necessity of the requested additional numerous documents, we
GRANT the motion as follows: We ORDER appellant to file, by September 24, 2018, an
amended request with Felicia Pitre, Dallas County District Clerk, that excludes the twenty-five
above-listed documents that are already included in the clerk’s records on file in this appeal and
those not on file with the trial court. We ORDER Ms. Pitre to file, by October 1, 2018, either a
supplemental clerk’s record containing the documents as set forth in appellant’s amended request
that she is to file by September 24 or written verification no amended request was filed by
September 24.
We ORDER appellant to file her corrected brief by October 11, 2018 and caution her
that further requests for extension will be strongly disfavored.
We DIRECT the Clerk of this Court to send a copy of this order to Ms. Pitre and all
parties.
/s/ ADA BROWN
JUSTICE
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IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
TED SMITH, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Petitioner, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D16-0640
DAYSPRING VILLAGE, INC.,
Respondent.
___________________________/
Opinion filed April 12, 2016.
Petition for Writ of Habeas Corpus -- Original Jurisdiction.
Ted Smith, pro se, Petitioner.
Pamela Jo Bondi, Attorney General, Tallahassee, for Respondent.
PER CURIAM.
The petition for writ of habeas corpus is denied.
WETHERELL, ROWE, and OSTERHAUS, JJ., CONCUR.
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Filed 12/15/09 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2009 ND 207
First International Bank & Trust, Plaintiff and Appellant
v.
D. Duane Peterson, MID AM Group, LLC,
James R. Bullis, Kevin L. Christianson,
Richard R. Jordahl, Arlan H. Anderson,
Greg Anderson, and Robert Green, Defendants and Appellees
Douglas H. Peterson, Defendant
No. 20090214
Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Frank L. Racek, Judge.
AFFIRMED.
Opinion of the Court by VandeWalle, Chief Justice.
Roger J. Minch (argued), Serkland Law Firm, 10 Roberts St., P.O. Box 6017, Fargo, ND 58108-6017, for plaintiff and appellant.
James R. Bullis (argued), Montgomery Goff & Bullis PC, 4650 38th Ave. S., Ste. 110, P.O. Box 9199, Fargo, ND 58106-9199, for defendants and appellees James R. Bullis, Kevin L. Christianson and Richard R. Jordahl.
Todd E. Zimmerman (argued) and Matthew A. Kipp, Dorsey & Whitney LLP, 51 North Broadway, Ste. 402, P.O. Box 1344, Fargo, ND 58107-1344, for defendants and appellees Arlan H. Anderson, Greg Anderson and Robert Green.
Paul A. Sortland, Sortland Law Office, 431 S. 7th St., Ste. 2440, Minneapolis, MN 55415, for defendants and appellees MID AM Group, LLC and D. Duane Peterson.
First International Bank v. Peterson
No. 20090214
VandeWalle, Chief Justice.
[¶1]
First International Bank & Trust appealed from a judgment denying its motion for summary judgment, granting summary judgment for the guarantors, and dismissing the Bank’s claims against each guarantor. The Bank argues the guaranties, by their terms, are enforceable notwithstanding the Bank’s successful bid at the foreclosure sale for the full amount of the indebtedness, and the guarantors waived their right to argue that their guaranties were extinguished by the Bank’s bid at the foreclosure sale, or should be estopped from doing so, because they did not respond to the Bank’s letter. We affirm because the guarantors were discharged when the Bank satisfied the underlying debt by purchasing the property at the foreclosure sale for the full amount of the indebtedness, and the guarantors had no duty to respond to the Bank’s letter.
I.
[¶2] Mid Am Group, LLC, borrowed money from the Bank to build condominiums. The Bank received guaranties from the appellees. Mid Am paid the guarantors for providing the guaranties. According to the guaranties, only “full payment and discharge of all indebtedness,” would discharge the guarantors. The guaranties further state, “The liability of the Undersigned shall not be affected or impaired by . . . any acceptance of collateral, security, guarantors, accommodation parties or sureties for any or all Indebtedness; . . . any foreclosure or enforcement of any collateral security.” The guarantors waived all defenses “except the defense of discharge by payment in full.” The guarantors agreed to be liable “for any deficiency remaining after foreclosure of any mortgage or security interest securing Indebtedness.” The guaranties also state:
Until the obligations of the Borrower to Lender have been paid in full, the Undersigned waives . . . any right of subrogation, contribution, reimbursement, indemnification, exoneration, and any right to participate in any claim or remedy the Undersigned may have against the Borrower, collateral, or other party obligated for Borrower’s debts, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law.
[¶3] Mid Am defaulted on the loan. The Bank brought a foreclosure action against Mid Am and an action against the guarantors. The Bank obtained a judgment against Mid Am for $6,591,770.19. The Cass County Sheriff held a foreclosure sale. Prior to the sale, the Bank’s attorney sent a letter to the guarantors’ attorneys indicating the Bank intended to make a bid for the full amount of the indebtedness at the foreclosure sale. The Bank explained it would consider the indebtedness to be paid in full and the guaranties discharged if a third party outbid the Bank. However, if the Bank was the highest bidder, the Bank reserved the right to attempt to collect on the guaranties. The Bank did not ask the guarantors to respond to the letter or state their position regarding the Bank’s bidding strategy. The guarantors did not respond to the Bank’s letter.
[¶4] At the foreclosure sale, after a third party bid six million dollars, the Bank bid the full amount of the indebtedness including interest and fees, totaling $7,325,313.08. The Bank’s bid was the highest. The Sheriff’s Report of Sale indicates no deficiency remained after the Bank’s purchase of the property. The Bank’s attorney acknowledged receipt of the money and its application to the judgment against Mid Am.
[¶5] The Bank subsequently moved for summary judgment against all the guarantors. The district court granted summary judgment to the guarantors and dismissed the Bank’s complaint.
See
N.D.R.Civ.P. 56(c) (“Summary judgment, when appropriate, may be rendered against the moving party”). The district court reasoned the guaranties were discharged by the Bank’s full payment of the underlying indebtedness at the foreclosure sale. The district court also concluded the guarantors neither waived their right to resist the Bank’s complaint, nor did estoppel bar their defense. The district court explained the Bank was “fully aware of all of the circumstances and made the conscious choice to bid at the Sheriff’s Sale.” Finally, the guarantors did not voluntarily or intentionally relinquish any of their rights. “They simply did not respond to the [Bank]’s letter, which they were not required to do.”
II.
[¶6] The Bank argues the guaranties, by their terms, are enforceable despite the foreclosure sale. The parties do not dispute the facts, only the interpretation of the guaranties. Interpretation of a contract is a question of law, and on appeal this Court independently examines and construes the contract “to determine if the district court erred in its interpretation of it.”
General Electric Credit Corp. of Tenn. v. Larson
, 387 N.W.2d 734, 736 (N.D. 1986) (citing
Poyzer v. Amenia Seed and Grain Co.
, 381 N.W.2d 192, 194 (N.D. 1986)). “If a written contract is ambiguous, extrinsic evidence may be considered to determine the parties’ intent, and the terms of the contract and the parties’ intent are questions of fact.”
Doeden v. Stubstad
, 2008 ND 165, ¶ 14, 755 N.W.2d 859 (citing
Spagnolia v. Monasky
, 2003 ND 65, ¶ 10, 660 N.W.2d 223). Here, the parties do not argue the guaranties are ambiguous.
[¶7] A guaranty is “a promise to answer for the debt, default, or miscarriage of another person.” N.D.C.C. § 22-01-01(2). This Court has previously explained the relationship between a mortgage and a guaranty:
The mortgage and individual guaranties existed only to insure payment of that debt. Although the mortgage and note are separate and independent obligations from the debt, their operation depend entirely on the existence of the debt. Once a debt secured by a mortgage is paid, the mortgage is satisfied, and upon payment of the underlying debt a guarant[y] is extinguished.
First Fed. Sav. & Loan Ass’n v. Scherle
, 356 N.W.2d 894, 896 (N.D. 1984) (internal citations omitted).
[¶8] This Court has previously decided cases in which lenders attempted to collect on guaranties after purchasing property at a foreclosure sale. In
Scherle
, the bank obtained personal guaranties on a debt secured by a mortgage.
Id.
at 895. When the debt became delinquent, the bank commenced an action against the guarantors and against the borrower.
Id.
The bank received a judgment of foreclosure against the borrower and purchased the property at a foreclosure sale for the full amount of the indebtedness.
Id.
The district court granted summary judgment to the guarantors and dismissed the bank’s complaint, concluding the bank’s purchase of the property satisfied the underlying debt.
Id.
at 895-96. We concluded the bank had voluntarily discharged the debt by converting the debt into property.
Id.
at 896. The guaranties were extinguished “[b]ecause one cannot guarantee payment on a nonexistent debt.”
Id.
[¶9] In
Principal Residential Mortgage, Inc. v. Nash
, 2000 ND 21, 606 N.W.2d 120, the lender foreclosed on the borrower’s mortgage.
Nash
, at ¶ 2. The only bid at the foreclosure sale was the lender’s, which was greater than the amount of the indebtedness.
Id.
at ¶¶ 3, 19. According to the foreclosure sale statute, “The proceeds of every foreclosure sale must be applied to the discharge of the debt adjudged by the court to be due and of the costs, and if there is any surplus, it must be brought into court for the use of the defendant or of the person entitled thereto, subject to the order of the court.”
Id.
at ¶ 20 (quoting N.D.C.C. § 32-19-10). The lender asserted it did not have to pay any surplus to the borrower because its bid was a “credit bid” and no actual money changed hands.
Id.
at ¶ 19. This Court disagreed with the lender’s “novel assertion.”
Id.
at ¶ 22. Adoption of the lender’s argument “would render the sheriff’s sale a sham.”
Id.
at ¶ 23. We explained:
When a creditor bids at a sheriff’s sale, its bid is on the same footing as other bids. The creditor’s bid is an offer to pay the specified amount for the property. If the creditor bids more than it is allowed to recover under the foreclosure judgment and sale provisions, there is a surplus. If there is no “real money” in the court’s hands, the court can surely order the judgment creditor to tender the amount of its bid which exceeds the amount the creditor is entitled to recover from the proceeds of the sale.
Id.
The lender, thus, had to apply the surplus under N.D.C.C. § 32-19-10.
Id.
at ¶ 24.
[¶10] Here, the guarantors waived all defenses, except the defense of discharge by payment in full. The Bank entered the highest bid at the foreclosure sale, for the full amount of the indebtedness. If a third party had bid the full amount of the indebtedness at the foreclosure sale, the guarantors would have been discharged because the borrower’s debt would have been paid in full. The same is true when the lender bids at the foreclosure sale. As we explained in
Nash
, the lender’s bid is “on the same footing as other bids.”
Nash
, 2000 ND 21, ¶ 23, 606 N.W.2d 120. The Bank’s successful bid at the foreclosure sale paid the borrower’s debt in full. According to the plain language of the guaranties, when the borrower’s debt was paid in full the guarantors were discharged. In addition, this Court has previously explained, “[U]pon payment of the underlying debt a guarant[y] is extinguished.”
Scherle
, 356 N.W.2d at 896. The waivers and exclusions in the guaranties may be applicable in other situations. Here, however, the Bank’s purchase of the property at the foreclosure sale paid the borrower’s debt in full, and thus extinguished the guaranties. The district court did not err in its interpretation of the guaranties.
III.
[¶11] The Bank also argues the guarantors waived their right to resist the Bank’s efforts to collect on the guaranties, or are estopped from doing so, due to their failure to respond to its letter. The district court rejected this argument, concluding the guarantors “never made any voluntary or intentional relinquishment of any of their rights. They simply did not respond to the [Bank]’s letter, which they were not required to do.”
[¶12] The district court granted summary judgment to the guarantors. Summary judgment “is a procedural device for promptly resolving a controversy on the merits without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving disputed facts would not alter the result.”
Estate of Dionne
, 2009 ND 172, ¶ 8, 772 N.W.2d 891 (citing
Pear v. Grand Forks Motel Assocs.
, 553 N.W.2d 774, 778 (N.D. 1996);
Lire, Inc. v. Bob's Pizza Inn Rest., Inc.
, 541 N.W.2d 432, 433 (N.D. 1995)). “Whether a district court properly grants summary judgment is a question of law that we review de novo on the record.”
Id.
(citing
Ernst v. Acuity
, 2005 ND 179, ¶ 7, 704 N.W.2d 869). Neither party disputes the material facts of this case, nor the inferences to be drawn from those facts.
A.
Waiver
[¶13] This Court has explained:
A finding of waiver is a finding of fact reviewed under the clearly erroneous standard. For a waiver to be effective, the waiver must be a voluntary and intentional relinquishment of a known existing advantage, right, privilege, claim, or benefit. The right, claim, privilege, or benefit must be one the party could have enjoyed, but for the waiver. Once the right is waived, the right or privilege is gone forever and cannot be recalled. A waiver cannot be extracted, recalled or expunged. A waiver can be made expressly or by conduct.
Tormaschy v. Tormaschy
, 1997 ND 2, ¶ 19, 559 N.W.2d 813 (internal citations and quotations omitted). When there is no dispute as to the material facts, we determine whether the trial court properly granted summary judgment as a matter of law.
Burr v. Kulas
, 1997 ND 98, ¶ 8, 564 N.W.2d 631 (citing
Ertelt v. EMCASCO Ins. Co.
, 486 N.W.2d 233, 234 (N.D. 1992)).
[¶14] In its letter, the Bank did not ask the guarantors to respond or inform the Bank of their positions regarding the Bank’s bidding strategy for the foreclosure sale. The letter did not indicate the Bank would change its strategy if the guarantors responded. The Bank concedes the guarantors had no duty to respond to its letter. The guarantors did not waive any advantage, right, privilege, claim, or benefit by failing to respond to the Bank’s letter. The guarantors had no duty to inform the Bank they would avail themselves of the defense of discharge by payment in full. The defense was clearly provided for in the guaranties. The district court properly concluded the guarantors did not waive any of their rights.
B.
Estoppel
[¶15] The Bank’s estoppel argument is equally unconvincing. We have set out the elements of an estoppel claim:
As to the person being estopped the elements are: 1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than those which the party subsequently attempts to assert; 2) the intention, or at least the expectation, that such conduct will be acted upon by, or will influence the other party or persons; and 3) knowledge, actual or constructive, of the real facts. As to the person claiming estoppel the elements are: 1) lack of knowledge and the means of knowledge of the truth as to the facts in question; 2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and 3) action or inaction based thereon, of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.
Id.
(citing
Farmers Coop. Ass’n of Churchs Ferry v. Cole
, 239 N.W.2d 808, 809 (N.D. 1976)).
[¶16] The district court determined the Bank “was fully aware of all of the circumstances and made the conscious choice to bid at the Sheriff’s Sale.” The district court concluded the Bank did not prove an estoppel claim because it did not lack knowledge of the truth as to the facts in question. The Bank does not assert any facts of which it was not aware. The guarantors did not inform the Bank of their intentions prior to the foreclosure sale, but the Bank was aware the guarantors maintained the defense of discharge by payment in full due to the plain language of the guaranties. In addition, the Bank concedes the guarantors had no duty to respond to its letter. By sending the letter, the Bank may have intended to induce a response from the guarantors if they disagreed with the Bank’s position, but the Bank’s intent in sending the letter does not turn the guarantors’ failure to respond into inaction upon which the Bank could rely. The Bank did not change its position or status based on the guarantors’ failure to respond. The Bank bid at the foreclosure sale just as it stated it would in the letter. The district court properly concluded the Bank did not prove an estoppel claim.
[¶17] We affirm the district court’s judgment denying the Bank’s motion for summary judgment, granting summary judgment for the guarantors, and dismissing the Bank’s complaint.
[¶18]
Gerald W. VandeWalle, C.J.
Carol Ronning Kapsner
Mary Muehlen Maring
Daniel J. Crothers
Dale V. Sandstrom
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533 F.Supp.2d 337 (2008)
James PETTUS, Plaintiff,
v.
Supt. McGINNIS, Sgt. Kerbein, C.O. Brown, Lt. Carine, D. Sullivan, Defendants.
No. 04-CV-6364L.
United States District Court, W.D. New York.
February 11, 2008.
*338 James Pettus, Comstock, NY, Pro se.
J. Richard Benitez, NYS Attorney General's Office, Rochester, NY, for Defendants.
DECISION AND ORDER
DAVID G. LARIMER, District Judge.
Plaintiff, James Pettus, appearing pro se, commenced this action pursuant to 42 U.S.C. § 1983. Plaintiff, an inmate in the custody of the New York State Department of Correctional Services ("DOCS") alleges that defendants, who at all relevant times were employed by DOCS, have violated his rights under the United States Constitution. Specifically, plaintiff alleges that in March 2004, defendant Correction Officer Wayne Brown issued a false misbehavior report against plaintiff in retaliation for plaintiffs having testified against Brown at a disciplinary hearing involving another inmate, Michael Charles. Following a hearing on Brown's charges against plaintiff, plaintiff was found guilty of harassment, and sentenced to thirty days in keeplock. Dkt. # 1 at 14.[1]
In addition to Brown, plaintiff has sued four other DOCS employees, alleging that they participated in the constitutional violation through their involvement in the disciplinary hearing against plaintiff and in the administrative review of the finding of guilt. All five defendants have Moved for summary judgment. For the reasons that follow, the motion is granted.
DISCUSSION
I. Plaintiff's Failure to Respond to the Summary Judgment Motion
Although plaintiff has filed certain documents, and sent several letters W the Court since defendants filed their summary judgment motion, he has not submitted an actual response to the motion; none of his submissions address the merits of defendants' motion. As stated, though, he has filed several documents, most recently on January 11, 2008, asking the Court to issue a decision on defendants' motion. See Dkt. # 62, # 68, # 71, # 74.
Rule 56(e) of the Federal Rules of Civil Procedure provides that
[w]hen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denial of the adverse party's pleading, but the adverse party's response by affidavits or *339 as otherwise provided in this, rule must set forth specific facts showing that there is a genuine issue for trial. If tile adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.
The Court of Appeals for the Second Circuit has held that when a party moves for summary judgment against a pro se litigant, either the movant or the district court must provide the pro se litigant with notice of the consequences of failing to respond to the motion. Vital v. Interfaith Med. Ctr., 168 F.3d 615, 620 (2d Cir.1999); see also Irby v. New York City Transit Auth., 262 F.3d 412, 413 (2d Cir.2001).
In the instant case, defendants' notice of motion (Dkt.# 53) and the Court's scheduling order (Dkt.# 54) both gave plaintiff notice of the requirements of Rule 56 and the consequences of failing to respond properly to a motion of summary judgment. There is no question that plaintiff has been adequately advised of the, pendency of the motion, of the need for him to respond and the form in which he should do so, and of the consequences of not responding to defendants' arguments and factual' allegations. Since plaintiff has not done so, the Court may accept the truth of defendants' factual allegations, and determine whether defendants are entitled to summary judgment.
II. Defendants' Motion
In order to establish a First Amendment retaliation claim, plaintiff must show (1) that he engaged in constitutionally protected speech or conduct, (2) that the defendants took adverse action against him, and (3) that there was a causal connection between the protected activity and the adverse action. Dawes v. Walker, 239 F.3d 489, 492 (2d Cir.2001), overruled on other grounds by Swierkiewicz v. Sorema N.A. 534 U.S. 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).
The Second Circuit has cautioned district courts to approach prisoner claims of retaliation "with skepticism and particular care." Dawes, 239 F.3d at 491. Such claims are "easily fabricated," since "virtually any adverse action taken against a prisoner by a prison official even those otherwise not rising to the level of, a constitutional violation can be characterized as a constitutionally proscribed retaliatory act." Id. See also Graham v. Henderson, 89 F.3d 75, 79 (2d Cir.1996) (observing that "[r]etaliation claims by prisoners are `prone to abuse' since prisoners can claim retaliation for every decision they dislike") (quoting Flaherty v. Coughlin, 713 F.2d 10, 13 (2d Cir.1983)).
In the case at bar, defendants contend that plaintiff has failed to allege that he engaged in constitutionally, protected conduct. They assert that plaintiff "simply argues that CO Brown retaliated against him for verbally defending another inmate," and that there "is no first amendment right to verbally defend another inmate, against a correction officer." Defendants' Mem. of Law (Dkt.# 51) at 6 (citing Nevares v. Morrissey, No. 95 Civ. 1135, 1999 WL 760231 (S.D.N.Y. Sept. 27, 1999)).
Plaintiff does not simply allege, however, that he "verbally defended another inmate." He alleges that he testified on behalf of another inmate (Charles), and in particular, that he testified that Brown had assaulted Charles. See Complaint at 8. Defendants have not disputed plaintiffs assertion that he testified at Charles's disciplinary hearing. See Defendants' Response to Plaintiff's Interrogatory (Dkt.# 35) at 1. The facts here are thus clearly distinguishable from those in Nevares, in which the court held that "[c]omplaining aloud to correction officers about the treatment of another inmate while that inmate [wa]s being forcibly removed from his cell" was not constitutionally protected activity. 1999 WL 760231, at *6.
*340 I conclude, however, that defendants are entitled to summary judgment on the ground of qualified immunity. Even if plaintiffs act of testifying at Charles's disciplinary hearing constituted protected activity under the First Amendment, the law in this circuit was unclear in that regard at the time of the events giving rise to this action.
Qualified immunity shields public officials "from civil damages liability insofar as their conduct `does not violate clearly established statutory or constitutional rights of which a reasonable person would have known,' Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), or insofar as it [is] objectively reasonable for them to believe that their acts d[o] not violate those rights,' Velardi v. Walsh, 40 F.3d 569, 573 (2d Cir.1994)." Simms v. Village of Albion, 115 F.3d 1098, 1106 (2d Cir.1997); accord Brown v. City of Oneonta, 106 F.3d 1125, 1130-31 (2d Cir.1997). "The matter of whether a right was clearly established at the pertinent time is a question of law." Kerman v. City of New York, 374 F.3d 93, 108-09 (2d Cir.2004).
In the case at bar, the Court has found no authority showing that it was clearly established in March 2004 that an inmate's act of, providing testimony on behalf of another inmate at the other inmate's disciplinary hearing was protected by the Constitution. In 2005 the year after the events giving rise to this lawsuit the Court of Appeals for the Second Circuit resolved a "split among the district courts in this Circuit as to whether retaliation [against a government employee] based on identification as a witness in a fellow [government] employee's discrimination suit could give rise to a First Amendment cause of action" by holding that "any use of state authority to retaliate against those who speak out against discrimination suffered by others, including witnesses or potential witnesses in proceedings addressing discrimination claims, can give rise to a cause of action under 42 U.S.C. § 1983 and the First Amendment." Konits v. Valley Stream Central High Sch. Dist., 394 F.3d 121, 125 (2d Cir.2005). The court held that the prior trial testimony of the Konits plaintiff in a coworker's lawsuit was related to the "broad[ ] public purpose" of redressing the coworker's claims of sex discrimination against the government, and that her' retaliation claim "implicated the access Of the courts to truthful testimony. . . ." Id. at 125-26.
This Court has found no authority, however, that even today clearly establishes within this circuit whether an inmate's testimony on behalf of another inmate at the other inmate's disciplinary hearing is constitutionally protected. Since inmates' First Amendment rights are generally more circumscribed than those of government employees, see Diesel v. Town of Lewisboro, 232 F.3d 92, 109 (2d Cir.2000) (noting that "[p]risoners may be required to tolerate more than public employees, who may be required to tolerate more than average citizens," with respect to First Amendment retaliation claims) (quoting Thaddeus-X v. Blatter, 175 F.3d 378, 398 (6th Cir.1999) (in banc)), I conclude as a matter of law that, regardless of whether plaintiffs having testified on behalf of Charles played a role in Brown's issuance of the misbehavior report against plaintiff, Brown's actions did not violate any of plaintiffs clearly established rights of which a reasonable person in Brown's position would have known. Brown is therefore entitled to qualified immunity.[2]See *341 Rodriguez v. Phillips, 66 F.3d 470, 478-79 (2d Cir.1995) (finding it unnecessary to "determine the precise contours of the First Amendment's protections" in the context of an inmate who alleged that he had been retaliated against for approaching and speaking out against an officer who was engaged in disciplining another inmate, since court's inquiry on issue of defendant's qualified immunity was limited to whether right allegedly violated was clearly established at the time of the incident, and concluding that it was not).
In addition, although plaintiff does not appear to be asserting a due process claim, such a claim would fail in any event. In order to make out a due process claim based on the issuance of a false misbehavior report, plaintiff would have to allege, and ultimately prove, that the issuance of the misbehavior report led to an "atypical and significant hardship . . . in relation to the ordinary incidents of prison life." Sandin v. Conner, 515 U.S. 472, 483-84, 115 S.Ct. 2293, 132 L.Ed.2d 418 (1995); see, e.g., Flemings v. Kinney, No. 02 Civ. 9989, 2004 WL 1672448, at *3-4 (S.D.N.Y. July 27, 2004).
In the case at bar, plaintiff was sentenced to thirty days in keeplock as a result of the charges against him. He has not alleged or demonstrated any facts suggesting that the conditions to which he was subjected during that relatively brief period, were in any way unusual or severe. See Hynes v. Squillace, 143 F.3d 653, 658 (2d Cir.), cert. denied, 525 U.S. 907, 119 S.Ct. 246, 142 L.Ed.2d 202 (1998). Likewise, he has not alleged or presented facts showing that the finding of guilt on the harassment charge lacked evidentiary support. Luna v. Pico, 356 F.3d 481, 487-88 (2d Cir.2004) (no due process violation as long as "some evidence" supports finding of inmate's guilt).[3]
III. Brown's Personnel File
On September 29, 2006, Magistrate Judge Jonathan W. Feldman issued a Decision and Order (Dkt.# 64) concerning plaintiffs motion to compel discovery of Brown's disciplinary history. Magistrate Judge Feldman stated that after reviewing, in camera, documents from Brown's personnel file concerning a prior complaint against Brown, he concluded that the best course of action would be to forward the material to me for my "consideration as to whether it should be disclosed for summary judgment or, if necessary, for trial." Id. at 3.
Having conducted my own in camera review of these materials, I decline to order that they be produced to plaintiff. The records concern an incident involving Brown and another inmate over twenty years ago, and in any event they have no *342 bearing on the Court's conclusion that defendants are entitled to summary judgment on the ground of qualified immunity. To the extent that these materials might constitute impeachment evidence at trial, plaintiffs request that they be disclosed is denied as moot.
CONCLUSION
Defendants' motion for summary judgment (Dkt.# 50) is granted, and the complaint is dismissed.
Plaintiffs motions for a decision on defendants' motion for summary judgment (Dkt. # 71 and # 74) are denied as moot.
IT IS SO ORDERED.
NOTES
[1] Plaintiff was found not guilty on a false-statement charge.
[2] The Court is aware that "the `public concern' requirement, developed in the context of public employee speech, has no place in the context of prisoner petitions for redress of grievances, which typically address matters of personal concern." Friedl v. City of New York, 210 F.3d 79, 87 (2d Cir.2000). In the case at bar, however, plaintiff was not seeking redress of his own grievances, but was helping a fellow inmate defend against disciplinary charges. It is evident from Konits that whether the First Amendment protects the act of testifying on behalf of a third party was an open question in this circuit in 2004.
[3] Plaintiff alleges in his complaint that he did not write the letter that gave rise to Brown's charge of harassment, and that the "letter was not in [plaintiff's] handwriting. . . ." Dkt. # 1 at 8. Aside from the fact that the letter does appear to be in plaintiff's handwriting, see Dkt, # 1 at 12, the hearing officer relied upon testimony by an officer that plaintiff directly handed him the letter. Dkt. # 1 at 15. That certainly constitutes at least some evidence that plaintiff wrote the letter, and I also find the evidence supporting the finding of guilt on the harassment charge to be constitutionally adequate. See 7 N.Y.C.R.R. § 270.2 (stating that harassment "includes, but is not limited to, using insolent, abusive, or obscene language or gestures, or writing or otherwise communicating messages of, a personal nature to an employee or any other person. . . . ").
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121 S.W.3d 486 (2003)
Jai B. STRAUSS, Appellant,
v.
The STATE of Texas, Appellee.
No. 07-02-0453-CR.
Court of Appeals of Texas, Amarillo.
October 31, 2003.
Order Overruling Rehearing December 8, 2003.
*488 James C. Fling, Adkins & Fling, Shamrock, for Appellant.
Richard J. Roach, District Attorney, Pampa, for Appellee.
Before BRIAN QUINN, REAVIS, and CAMPBELL, JJ.
Opinion
BRIAN QUINN, Justice.
Jai B. Strauss appeals his conviction for possessing marijuana. Through four issues he contends that the trial court erred in denying his motions to suppress evidence and to dismiss the cause. He believed the evidence was subject to suppression and the cause subject to dismissal because his detention and the ensuing search of his van were illegal. We affirm the judgment.
*489 Background
In pertinent part, the record illustrates that appellant and a passenger were stopped on I-40 outside McLean, Texas, for speeding. The two were in a Chevrolet van with Ohio plates, which van appellant drove at the time. The officer who made the stop asked for appellant's identification and about the identity of the individual who owned the van. The latter did not belong to appellant, and though appellant said the owner was a friend, he could not recall his name. Furthermore, appellant and his passenger gave the officer conflicting stories about the location at which they previously stayed. This caused the officer to ask if appellant possessed drugs and to request permission to search the van. Appellant consented to the request.
As he searched the vehicle, the officer discovered a shaving bag, opened it, and smelled burnt marijuana. Thereafter, appellant informed the officer that he (appellant) had smoked some marijuana earlier. The officer continued his search and noticed laundry detergent scattered about the rear floor of the van. Laundry detergent was commonly used to mask the odor of drugs, according to the officer. Further investigation revealed a compartment in the rear of the vehicle wherein tools were commonly stored. Upon opening it, the officer smelled the scent of fresh marijuana. At that point he decided to call for a drug dog to sniff the vehicle to confirm his suspicion that marijuana was present and determine its location. The dog was in the possession of authorities in Shamrock, a neighboring town, and was not immediately available. Nonetheless, arrangements were made for the dog and the officer to meet in the town of McLean. Apparently, the officer thought it safer to continue the search at a location off the highway. So, he asked appellant to drive the van to a service station in town. Appellant agreed to do so.
After the group arrived at the service station, the officer informed appellant and his passenger that they were not under arrest and were free to leave. However, they were denied the opportunity to drive away in the van. The officer opted to retain control over the vehicle until his investigation was completed. Shortly thereafter, appellant and his passenger asked for permission to go to a nearby convenience store to obtain cigarettes. The officer acquiesced. The two left afoot but did not return.
The drug dog arrived about an hour and fifteen minutes after appellant's initial stop on the highway. It sniffed the vehicle and indicated that drugs were present in the vicinity of the van wherein the officer smelled raw marijuana. Ultimately, 60 pounds of the substance was discovered in the van, and appellant was arrested after being found running down the highway some eight hours later.
Issue TwoConsent to Search
We initially address appellant's second issue, the matter of his consent to search the van. He alleges that the State failed to prove it was voluntarily given. We overrule the point for it was waived.
Via his written motion to suppress, appellant questioned the validity of his consent. That is, he alleged that the officers entered upon and searched "premises" and seized materials "without lawful consent or lawful authority and without a search warrant." Yet, the validity of his consent was not mentioned by appellant orally at hearing upon his motions. Nor did he orally mention it after the hearing when the trial judge returned to the courtroom to clarify the issues the parties wanted him to consider. At that time, appellant informed the trial court that he believed the case *490 "turns on whether or not you can seize a vehicle without seizing people." His silence about the question of consent may stem from comments made to the trial court via the "Trial Brief in Support of Motion to Dismiss" that he previously tendered to the court. Therein, appellant expressly represented that while he thought it "doubtful that the consent to search ... was voluntary," the "issue does not have to be decided" since the prior arrest was unlawful.
It is clear that to preserve error one must contemporaneously inform the trial court not only of the objectionable matter but also of the specific grounds underlying the objection. Cisneros v. State, 692 S.W.2d 78, 83 (Tex.Crim.App. 1985); Villareal v. State, 811 S.W.2d 212, 217 (Tex.App.-Houston [14th Dist.] 1991, no pet.). Similarly clear is that an objection can be waived. For instance, if one moves to suppress evidence and the motion is denied, uttering the phrase "no objection" when the evidence is tendered at trial results in the loss of appellant's complaint viz the motion to suppress. Moraguez v. State, 701 S.W.2d 902, 904 (Tex.Crim.App.1986) (en banc).
Here, while appellant may have mentioned the validity of his consent in his motion to suppress, he said nothing about it during his argument at the subsequent hearing. Nor did he broach the topic when the trial court inquired about the pivotal issues in the dispute. By that time, he had already told the judge in writing that the issue of consent did not have to be decided.
We are troubled with the prospect that an appellant can urge an objection on particular grounds in a written motion, later inform the trial court to disregard one or more of those grounds, and then contend, on appeal, that one of those very grounds which the trial court was directed to ignore actually warrants reversal of the judgment. See Prystash v. State, 3 S.W.3d 522, 531-32 (Tex.Crim.App.1999) (stating that under the doctrine of invited error, one is estopped from complaining about that which he induced). Under those circumstances, the appellant hardly complies with the spirit of Texas Rule of Appellate Procedure 33.1.[1] Indicating that one ground for objection need not be addressed falls short of informing the trial court, with sufficient specificity, of all the grounds upon which the appellant relies in asserting his complaint. And, because it does, we conclude that an appellant cannot assert, on appeal, the ground that he told the court need not be decided. So, having told the trial court that it need not address consent, the appellant at bar cannot raise that issue on appeal as grounds for reversal.
Issues One, Three and Four
Through his remaining three issues, appellant asserts that the officer had no legitimate basis to detain and search the van after being stopped for speeding. We overrule these points as well.
It is clear that an officer who witnesses a traffic violation has sufficient authority to stop the vehicle. Nuttall v. State, 87 S.W.3d 219, 222 (Tex.App.-Amarillo 2002, no pet.); Josey v. State, 981 S.W.2d 831, 837 (Tex.App.-Houston [14th Dist.] 1998, pet. ref'd). Admittedly, during that stop both the vehicle and its occupants are considered seized. Spight v. State, 76 S.W.3d 761, 766 (Tex.App.-Houston [1st Dist.] 2002, no pet.) (stating that a *491 routine traffic stop is a detention). And, while the seizure may last no longer than necessary to effectuate the purpose of the initial stop, Davis v. State, 947 S.W.2d 240, 244-45 (Tex.Crim.App.1997), the officer is nonetheless entitled to conduct a brief and minimally intrusive investigation. For instance, he may require the detainee to identify himself and produce a valid driver's license and proof of insurance. Spight v. State, 76 S.W.3d at 766. So too may the officer check for outstanding warrants, Davis v. State, 947 S.W.2d at 245 n. 6, ask about the driver's destination and purpose for the trip, Nuttall v. State, 87 S.W.3d at 222; Estrada v. State, 30 S.W.3d 599, 603 (Tex.App.-Austin 2000, pet. ref'd.), and direct the driver to step out from the vehicle. Estrada v. State, 30 S.W.3d at 603.[2] Indeed, when justified by safety and security concerns, the officer may also require the detainee to move from one location to another during the investigatory stop. Josey v. State, 981 S.W.2d at 841. And, most importantly, once the purpose of the stop has been effectuated and the officer's suspicions allayed, he may still ask the driver if he possesses any illegal contraband and then solicit his voluntary consent to search the vehicle. Spight v. State, 76 S.W.3d at 767-68.[3] If consent is withheld, then further detention of either the individual or chattel becomes improper.
Here, the record depicts that the officer stopped appellant for speeding and asked him to identify himself. While that was occurring, appellant was also asked about the ownership of the van and the destination from whence he came. The same was asked of the passenger. The two individuals gave conflicting responses. See Estrada v. State, 30 S.W.3d at 603 (considering the utterance of contradictory stories by occupants of a vehicle as articulable facts which a court can consider in determining the existence of reasonable suspicion). Furthermore, appellant informed the officer that though the owner of the van (which vehicle was registered in Ohio) was a friend, he did not recall his name.[4] Thereafter, the officer asked if appellant was carrying drugs and obtained consent to search the van.[5] While conducting that search, he saw a large quantity of detergent scattered about, recalled that detergent is used as a masking agent to cover the odor of drugs, see Estrada v. State, supra (recognizing the presence of odormasking agents as another articulable fact suggestive of criminality), smelled the odor of burnt marijuana, was told by appellant that he had smoked marijuana earlier, and smelled the odor of raw marijuana after opening a compartment of the vehicle. These circumstances, at the very least, constitute articulable facts from which a *492 reasonable officer can reasonably infer that appellant may be transporting contraband. So, they justified further investigation.
Due to his concern about unduly deconstructing the vehicle to confirm or negate his suspicions, the officer then decided to secure the use of a drug dog. See Davis v. State, 947 S.W.2d at 245 (requiring that the investigative methods employed be the least intrusive means reasonably available to verify or dispel the suspicion). Such a method of investigation has been deemed to be minimally intrusive. Josey v. State, 981 S.W.2d at 841. Additionally, the idea of conducting a further search on an interstate also raised some safety concerns for the officer. So, he asked appellant to drive the van into town, and appellant agreed. To reiterate, safety and security reasons may justify moving a suspect from one location to another.
Eventually, the drug dog arrived and indicated that drugs were present in the vehicle. Upon the dog so indicating, the officer's reasonable suspicion ripened into probable cause not only to seize the vehicle but also arrest its driver. Glenn v. State, 967 S.W.2d 467, 472 (Tex. App.-Amarillo 1998, pet. dism'd). That approximately 75 minutes lapsed between the time the officer first stopped appellant and the dog arrived did not per se render the detention unreasonable. See id. (holding that a 90-minute delay was not per se unreasonable); accord, Josey v. State, supra (holding that the detention was not unreasonable even though the officers had to wait 90 minutes for the drug dog to arrive). The record illustrates that the animal had to be secured from a law enforcement agency in a neighboring community. Furthermore, it was not immediately available. And, while I-40 may be considered to be a thoroughfare over which drugs are often transported, the record does not suggest that the officer 1) knew appellant would be traveling through the area or 2) suspected him of carrying contraband prior to the time of the initial stop. See United States v. Place, 462 U.S. 696, 710, 103 S.Ct. 2637, 77 L.Ed.2d 110 (1983) (wherein the Supreme Court found the investigatory detention unreasonable because, among other things, the investigators previously knew of the time the suspect was to appear and could have arranged to have the dog present at that time).
Finally, that the officer detained the van while informing appellant and his passenger that they were free to leave is of no import. Officers have the authority to temporarily detain for investigatory purposes either people or personalty. Davis v. State, 947 S.W.2d at 243-44. So, as long as reasonable suspicion exists indicating that the chattel is linked to criminal activity, the officer is free to detain only the chattel.[6]
In sum, and after reviewing the totality of the circumstances, we cannot say that the trial court abused its discretion in concluding that the initial stop, subsequent search of the vehicle, and ultimate arrest of appellant were lawful. Accordingly, we affirm its judgment.
Opinion on Motion for Rehearing
Pending before the court is the motion of Jai B. Strauss, appellant, for rehearing. Appellant contends that the issue of consent to search was preserved and not waived as this court determined in its *493 opinion. We overrule the motion for rehearing.
Assuming, arguendo, that this issue was preserved for review, we find that appellant contended on appeal that his consent was involuntary because he was "not free to go." However, it has been determined that the mere restriction in one's liberty does not itself negate the validity of one's subsequent consent to search his person or vehicle. See Meeks v. State, 692 S.W.2d 504, 509 (Tex.Crim.App. 1985) (holding that the fact a person is under arrest does not, in and of itself, prevent free and voluntary consent from being given).
Moreover, even if the detention was unlawful, consent may still be valid. See Boyle v. State, 820 S.W.2d 122, 131-32 (Tex.Crim.App.1989). As stated in Boyle, much depends on the facts surrounding other indicia such as 1) the proximity of the consent to the arrest, 2) whether the seizure brought about police observation of the particular object which they sought consent to search, 3) whether the illegal seizure was "`flagrant police misconduct,'" 4) whether the consent was volunteered rather than requested by the detaining officers, 5) whether the arrestee was made fully aware of the fact that he could decline to consent and thus prevent an immediate search of the car or residence, and 6) whether the individual was detained simply to obtain consent. Id. at 131-32. None of these other factors were addressed by appellant in any way. Instead, he merely relied upon the fact of his detention as basis for attacking his consent. And, with regard to that criteria, he does not attempt to explain how the fact he "was not free to go" rendered his consent involuntary.
Accordingly, we overrule appellant's motion for rehearing.
NOTES
[1] Rule 33.1 obligates one to inform the trial court of the grounds underlying a complaint "with sufficient specificity to make the trial court aware of the complaint...." Tex.R.App. P. 33.1(a)(1)(A).
[2] Given Estrada and Nuttall, appellant is mistaken when he posits that he was "under arrest" simply because the officer asked him to exit the vehicle and would not allow him to leave. (Emphasis added). Again, those are things that can occur during a temporary investigative detention. Nor does the fact that an officer may also pat down the suspect for weapons evince that the suspect has been arrested. That too is something that may be done during an investigatory detention. Carmouche v. State, 10 S.W.3d 323, 329 (Tex. Crim.App.2000).
[3] Given Spight, appellant also is mistaken when he argues that an officer can neither ask if the detainee possesses contraband nor solicit consent to search his vehicle once the purposes of the initial detention have been completed.
[4] It is not unreasonable to construe that response as suspicious. Indeed, common sense suggests that a detainee would normally know the name of a "friend" who authorized the detainee to drive the vehicle across the United States.
[5] As previously discussed, appellant failed to preserve any complaint he had about the validity of the consent.
[6] We do admit, though, that when the personalty is a car, detention of the vehicle may effectively restrain the liberty of the driver as well. Davis v. State, 947 S.W.2d 240, 243 (Tex.Crim.App.1997).
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475 F.2d 1399
Connorv.Koons Ford Inc.
72-1514
UNITED STATES COURT OF APPEALS Fourth Circuit
4/19/73
1
E.D.Va.
AFF. IN PART REVERSED IN PART AND REMANDED
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220 S.E.2d 409 (1975)
28 N.C. App. 7
STATE of North Carolina ex rel. COMMISSIONER OF INSURANCE, Appellee,
v.
INTEGON LIFE INSURANCE COMPANY et al., Appellants.
No. 7510INS660.
Court of Appeals of North Carolina.
December 17, 1975.
*410 Davis & Hassell by Charles R. Hassell, Jr., Raleigh, for Commissioner appellee.
Young, Moore & Henderson by Charles H. Young, Allen, Steed & Pullen by Arch T. Allen and Thomas W. Steed, Jr., Jordan, Morris & Hoke by John R. Jordan, Jr., Raleigh, for appellants.
HEDRICK, Judge.
Credit life insurance is defined by statute to be "insurance upon the life of a debtor *411 who may be indebted to any person, firm, or corporation extending credit to said debtor," and "may include the granting of additional benefits in the event of total and permanent disability of the debtor." G.S. 58-195.2. Credit accident and health insurance is defined by statute to be "insurance against death or personal injury by accident or by any specified kind or kinds of accident, and insurance against sickness, ailment, or bodily injury of a debtor who may be indebted to any person, firm, or corporation extending credit to such debtor." G.S. 58-254.8. As used in the orders appealed from and in this opinion, these terms apply to policies "where the original beneficiary is a creditor, to the extent of the creditor's interest".
Because of the different disposition required as to each of the two orders, we shall consider them separately.
Order of the Commissioner Setting Maximum Credit Life Insurance Rates
The Commissioner, in his order, concluded that there existed in North Carolina what is termed as "reverse competition" which tends to force the price of insurance premiums up rather than down. Because of competition among insurance companies to have lending institutions offer credit insurance policies to debtors from one insurance company to the exclusion of all other insurance companies and because there is no market for debtors to obtain credit insurance other than from the lending institution, there results competition among each insurance company to offer higher commissions to the lending institution in order to have the institution issue only its insurance to the exclusion of other companies. Higher premiums are charged debtors in order to cover the cost of the commissions.
The Commissioner also concluded that the premium rates charged in North Carolina were the highest in the United States and that such rates were excessive.
The Commissioner, in his order, found that reverse competition was (1) "a practice injurious to the public of this State and. . . an appropriate subject of regulation by the Commissioner pursuant to [the power granted in] G.S. 58-9(1)", and (2) "an unfair method of competition and . . . an unfair and deceptive act or practice in the business of insurance" as defined in G.S. 58-54.4 and prohibited by G.S. 58-54.3. The Commissioner found that excessive rates were a "direct adverse consequence" of reverse competition and were likewise an appropriate subject of regulation pursuant to 58-9(1) and 58-54.3. In addition, regulation of rates for credit life insurance was "consistent" with the authority to set maximum credit accident and health insurance rates as provided by G.S. 58-260.2, and as defined in G.S. 58-254.8 to include "accidental death". Finally, the Commissioner found that "[t]here is no law in North Carolina which specifically prohibits the Commissioner of Insurance from regulating credit life insurance rates, and by custom and practice former Commissioners of Insurance have heretofore set maximum rates for credit life insurance, and such maximum rates have been adhered to by insurance companies writing credit life insurance in this State."
Based on the above findings, the Commissioner concluded that he had "the responsibility and authority to regulate credit life insurance rates", and in his order set maximum premium rates for credit life insurance at approximately one-half the prevailing premium rates then being charged.
The authority of the Commissioner to set rates must be conferred by statute. In re Filing by Automobile Rate Office, 278 N.C. 302, 180 S.E.2d 155 (1971); In re Filing by Fire Ins. Rating Bureau, 275 N.C. 15, 165 S.E.2d 207 (1969); Insurance Co. v. Gold, Commissioner of Insurance, 254 N.C. 168, 118 S.E.2d 792 (1961); 1 Strong, N.C. Index 2d, Administrative Law, § 3. While the legislature may delegate rate making authority to an administrative officer where sufficiently clear standards exist to control his discretion, "[o]bviously, the Commissioner *412 of Insurance has no authority to prescribe or regulate premium rates, except insofar as that authority has been conferred upon him . . . [by statute]. In exercising the authority, he must comply with the statutory procedures and standards." Filing by Fire Ins. Rating Bureau, supra 275 N.C. at 33, 165 S.E.2d at 220.
Appellants contend that nothing in the statutes cited by the Commissioner grant to him the express or implied authority to set rates for credit life insurance. We agree.
"Express powers delegated by statute and implied powers reasonably necessary for its proper functioning are the only powers which an administrative agency possesses. . . . Thus, it is clear that administrative agencies must find within the statutes justification for any authority which they purport to exercise." Insurance Co. v. Lanier, Comr. of Insurance, 16 N.C.App. 381, 384, 192 S.E.2d 57, 58-59 (1972).
The Commissioner purports to act under G.S. 58-9(1) and 58-54.3. G.S. 58-9(1) provides:
"Powers and duties of Commissioner. The Commissioner shall:
(1) See that all laws of this State governing insurance companies, associations, orders or bureaus relating to the business of insurance are faithfully executed, and to that end he shall have power and authority to make rules and regulations, not inconsistent with law, to enforce, carry out and make effective the provisions of this Chapter, and to make such further rules and regulations not contrary to any provision of this Chapter which will prevent practices injurious to the public by insurance companies, fraternal orders and societies, agents, adjusters and motor vehicle damage appraisers. The Commissioner may likewise, from time to time, withdraw, modify or amend any such regulation." (Emphasis added).
The Commissioner's power to make "rules and regulations" can in no way grant him the authority to carry out the "legislative power" (Filing by Automobile Rate Office, supra 278 N.C. at 319, 180 S.E.2d 155) of setting rates. Rate making authority, as distinguished from purely administrative functions, must be derived from a clear statutory enactment granting the Commissioner such power. See generally Comr. of Insurance v. Automobile Rate Office, 287 N.C. 192, 214 S.E.2d 98 (1975). Insurance Co. v. Lanier, Comr. of Insurance, supra. An administrative agency has no power to promulgate rules and regulations which alter or add to the law it was set up to administer or which have the effect of substantive law. 1 Strong, N.C. Index 2d, Administrative Law § 3; 1 Am. Jur.2d, Administrative Law, § 126. Clearly, G.S. 58-9(1) contains no express grant of authority to set rates and it is not such an implied power as is "reasonably necessary for [the Commissioner's] proper functioning." Insurance Co. v. Lanier, Comr. of Insurance, supra.
G.S. 58-54.3 provides:
"Unfair methods of competition or unfair and deceptive acts or practices prohibited. No person shall engage in this State in any trade practice which is defined in this Article as or determined pursuant to this Article to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance."
Chapter 58, Article 3A, which includes this statute was enacted to regulate trade practices in the insurance business in accordance with directives from federal anti-trust law. G.S. 58-54.1. Filing by Automobile Rate Office, supra. Nothing in the quoted statute grants authority to the Commissioner to take any action whatsoever. It merely prohibits unfair methods of competition or unfair or deceptive acts or practices in the insurance industry, which are exhaustively defined in G.S. 58-54.4. Nothing in 58-54.4 declares the charging of excessive rates to be an act or practice within the prohibition of 58-54.3. Moreover, 58-54.5, 54.6, and 54.7 which provide *413 for the Commissioner's power to act in regard to "any unfair method of competition or in any unfair or deceptive act or practice prohibited by G.S. 58-54.3 . . .", grant no remedial power to the Commissioner to remedy unfair trade practices other than the power to investigate, bring charges, and issue cease and desist orders. Clearly Article 3A generally and 58-54.3 specifically contain no authority to issue orders setting premium rates.
The Commissioner also found that rate making authority for credit life insurance is "consistent" with rate making authority granted under G.S. 58-260.2, for credit accident and health insurance (repealed by Session Laws 1975 c. 660 s. 4, ratified 18 June 1975). The fact that the two types of insurance are defined differently indicates that two distinct types of policies are contemplated. The conspicuous absence of express rate making authority with regard to credit life insurance when such authority exists with regard to credit accident and health insurance manifests the fact that no such authority has been conferred. Since G.S. 54-260.2 applies only to credit accident and health insurance defined in G.S. 58-254.8, it has no application to credit life insurance and cannot be seen as granting implied authority to set credit life rates.
Finally, the Commissioner's contention that acquiescence by companies writing credit life insurance in rates set by prior Commissioners of Insurance gives the present Commissioner the authority to fix credit life rates is untenable.
We hold the Commissioner had neither express nor implied authority to enter the order setting credit life insurance rates. The order appealed from is vacated.
Order of Commissioner Promulgating "Rules & Regulations Governing Credit Life and Credit Accident & Health Insurance"
While appellants have argued extensively the merits of the Commissioner's action in promulgating rules and regulations with regard to credit insurance, we do not deem it necessary or appropriate to consider these arguments.
G.S. 58-9.3 in pertinent part provides:
"Court review of orders and decisions. (a) Any order or decision made, issued or executed by the Commissioner, except an order to make good an impairment of capital or surplus or a deficiency in the amount of admitted assets and except an order or decision that the premium rates charged or filed on all or any class of risks are excessive, inadequate, unreasonable, unfairly discriminatory or are otherwise not in the public interest or that a classification assignment is unwarranted, unreasonable, improper, unfairly discriminatory, or not in the public interest, shall be subject to review in the Superior Court of Wake County on petition by any person aggrieved. . . ."
G.S. 58-9.4 in pertinent part provides:
"Court review of rates and classification. Any order or decision of the Commissioner that the premium rates charged or filed on all or any class of risks are excessive, inadequate, unreasonable, unfairly discriminatory or are otherwise not in the public interest or that a classification or classification assignment is unwarranted, unreasonable, improper, unfairly discriminatory or not in the public interest may be appealed to the North Carolina Court of Appeals by any party aggrieved thereby."
Clearly an appeal from an order promulgating rules and regulations lies in the Superior Court in accordance with G.S. 58-9.3. The order appealed from is not "an order to make good an impairment of capital or surplus or a deficiency in the amount of admitted assets" or an order regarding rates, or one concerned with a "classification assignment". Accordingly, the appeal from the order promulgating rules and regulations is dismissed.
*414 The result is: The order purporting to fix credit life insurance rates is vacated; the appeal from the order promulgating rules and regulations with respect to credit life and credit accident and health insurance is dismissed.
PARKER and ARNOLD, JJ., concur.
| {
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 11‐1989
JOHANA CECE,
Petitioner,
v.
ERIC H. HOLDER, JR., Attorney General
of the United States,
Respondent.
____________________
Petition for Review of an Order of the
Board of Immigration Appeals.
No. A096 158 857
____________________
ARGUED OCTOBER 5, 2011 — DECIDED FEBRUARY 6, 2012
REARGUED EN BANC SEPTEMBER 27, 2012
DECIDED AUGUST 9, 2013
____________________
Before EASTERBROOK, Chief Judge, and POSNER, FLAUM,
MANION, KANNE, ROVNER, WOOD, WILLIAMS, SYKES, TINDER,
and HAMILTON, Circuit Judges.
2 No. 11-1989
ROVNER, Circuit Judge. United States asylum laws grant
refuge to those who have been persecuted in foreign lands
because of race, religion, nationality, membership in a par-
ticular social group, or political opinion. The complexity sur-
faces when we try to define terms such as persecution and
“social group”—the latter of which has perplexed this court
and others, and is in the spotlight once again in this case.
I.
Johana Cece, a native of Albania, arrived in the United
States in 2002, and sought asylum within the requisite time
allotted. The immigration judge deemed Cece credible, and
therefore we use her testimony and the immigration judge’s
factual findings as a basis to set forth the facts of the case.
Cece lived with her family in Korçë, Albania until her
parents left the country in 2001. As a young woman living
alone in Albania, Cece caught the attention of a well-known
local criminal gang that was notorious for forcing women
into prostitution rings. One of the leaders of that gang, a
man Cece knew as “Reqi,” began following her around
town, offering her rides, and inviting her on dates. Cece
knew Reqi by reputation—that is, for his membership in a
gang known for its participation in prostitution rings, mur-
der of other gang members, and the drug trade. Cece also
testified that the gang members appeared to enjoy complete
immunity from the law. Cece had long seen Reqi near her
high school, where he cruised the area looking for girls and
offering drugs to young women. Cece had heard that one of
these women had been kidnapped by Reqi and forced into
prostitution. Reqi’s stalking culminated in a confrontation on
June 4, 2001, when Reqi followed Cece into a cosmetics store,
cornered her, and pinned her to a wall. There he confronted
No. 11-1989 3
her and asked her why she would not go out with him. Reqi
made it clear to Cece that he could not be stopped and that
he would find her and do whatever he wanted to her. She
told him to let go, but he merely tightened his grip and held
her there. There were several people in the store, but no one
came to her aid. Cece surmised that they too were frightened
by Reqi. Cece’s friend convinced her to report the assault to
the police, but the police perfunctorily dismissed her accusa-
tion, claiming she lacked proof.
A few days later someone threw a rock through Cece’s
window. She stopped going out, stopped going to school,
and made plans to leave Korçë.
Cece moved 120 miles north to Tirana to stay with her
sister, who lived in a university dormitory, but her safety
there was short-lived. A year later, her sister left the country
and, without access to the dormitory or family with whom
to live, Cece was once again left alone to fend for herself. As
a single woman living alone in Albania, Cece claims she re-
mained a target no matter where she lived.
In 2002, fearing for her safety, Cece fraudulently pro-
cured an Italian passport and came to the United States un-
der the Visa Waiver Program. Less than a year later, she ap-
plied for asylum and withholding of removal, asserting that
she feared returning to Albania because she believed that as
a young woman living alone she would be kidnapped and
forced to join a prostitution ring.
At Cece’s hearing, Dr. Bernd Fischer, a Professor in Bal-
kan History at the Indiana University–Purdue University
Fort Wayne and an expert on Albania, testified that Cece’s
4 No. 11-1989
experience was “unfortunately usual.” (R. 223). Dr. Fischer
described a very serious problem of human trafficking for
prostitution in Albania in which gangs, often with the pro-
tection, and at times the participation of the police, kidnap
women and spirit them out of the country either through
Greece, Kosova, or across the Adriatic Sea to Italy. Dr. Fisch-
er described how anomalous it is for a single woman to live
by herself in Albania, that such a woman would be an ideal
target for a trafficker, particularly if she had been such a tar-
get in the past, and that the problem was pervasive through-
out Albania and not limited to Cece’s home village of Korçë.
Dr. Fischer testified that although gang members primarily
target women between the ages of sixteen and twenty-six,
many women outside of the target age range are also forced
into prostitution. Finally, he noted that the Albanian judicial
system does not adequately enforce laws against traffickers.
Reports issued by the U.S. State Department in 2004 corrob-
orated his representations of a large-scale problem with hu-
man trafficking in Albania. (R. 573-84).
The immigration judge granted Cece asylum in 2006,
concluding that she belonged to the group of “young wom-
en who are targeted for prostitution by traffickers in Alba-
nia,” and that the Albanian government was unwilling or
unable to protect such women. (R. 128-29). He noted in par-
ticular that Albania stands out in Europe as a major country
of origin of traffickers in prostitution; the government’s judi-
cial system is not effective against the problem; Albania suf-
fers from a major and ongoing trafficking of young women
by gangs; and there is no prospect in the foreseeable future
of the government being able or willing to address the prob-
No. 11-1989 5
lem. (R. 129). The immigration judge also found Cece’s tes-
timony credible and her fear reasonable.
The Board of Immigration Appeals vacated the decision
of the immigration judge, however, finding that Cece failed
to establish past persecution and had successfully relocated
within Albania. (R. 330-31). Specifically, the Board held that
the immigration judge erred in determining that Cece was a
member of a social group of young women who have been
targeted for prostitution by traffickers, noting its precedent
that a social group must have social visibility and share a
narrowing characteristic other than the risk of being perse-
cuted.
On remand, the immigration judge expressed concern
with the Board’s conclusion that Cece did not belong to a
protectable social group and that she could safely relocate
within the country. (R. 114-116, 119-120). The immigration
judge, however, recognized that he was bound by the
Board’s determinations and denied the application for asy-
lum. The Board dismissed Cece’s second appeal, emphasiz-
ing that Cece’s proposed group was defined in large part by
the harm inflicted on its members and did not exist inde-
pendently of the traffickers. 1 The Board also concluded that
1The Board appropriately abandoned its criticism that Cece had failed to
demonstrate “social visibility.” Between the time of the first and second
Board appeals, this Court rejected a social visibility analysis and
concluded that applicants need not show that they would be recognized
as members of a social group to qualify for withholding. See Gatimi v.
Holder, 578 F.3d 611, 614-15 (7th Cir. 2009) (noting that homosexuals
might well pass as heterosexual, and women who have not yet
undergone genital mutilation look no different than other women).
6 No. 11-1989
there was insufficient evidence in the record that internal re-
location was not reasonable. (R. 9).
Cece appealed to this Court and over one dissent, the
panel denied Cece’s petition for review, agreeing with the
Board that Cece had not named a cognizable social group
and that the Board had sufficient evidence to conclude that
Cece could relocate safely within Albania. We granted
Cece’s petition for rehearing en banc and vacated the panel’s
opinion and judgment.
II.
To be eligible for asylum, an applicant must show that
she is “unable or unwilling to return” to the country of his
nationality “because of persecution or a well-founded fear of
persecution on account of race, religion, nationality, mem-
bership in a particular social group, or political opinion.” 8
U.S.C. §1101(a)(42)(A). An applicant who successfully
proves that she was subject to past persecution is presumed
to have a well-founded fear of future persecution, which the
Attorney General can rebut by demonstrating a change in
conditions in the applicant’s home country. 8 C.F.R. §
1208.13(b)(1); Mustafa v. Holder, 707 F.3d 743, 750-751 (7th
Cir. 2013). The applicant must show that she fits within one
of those categories and that there is “a nexus between her
fear of future persecution and one of those five protected
grounds.” Escobar v. Holder, 657 F.3d 537, 542 (7th Cir. 2011);
Ishitiaq v. Holder, 578 F.3d 712, 715 (7th Cir. 2009).
The primary question in this case is whether Cece has
proffered a particular social group that is cognizable under 8
U.S.C. § 1101(a)(42)(A). Whether a group constitutes a par-
No. 11-1989 7
ticular social group under the Immigration and Nationality
Act is a question of law that we review de novo, while giving
Chevron deference to the Board’s reasonable interpretation
set forth in precedential opinions interpreting the statute.
Chevron, U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467
U.S. 837, 842-43 (1984); Escobar, 657 F.3d at 542. See also, Ayala
v. Holder, 640 F.3d 1095, 1096-97 (9th Cir. 2011) (whether a
group constitutes a particular social group under the Immi-
gration and Nationality Act is a question of law, which a
court of appeals reviews de novo); Castaneda-Castillo v. Hold-
er, 638 F.3d 354, 363 (1st Cir. 2011) (same); Crespin-Valladares
v. Holder, 632 F.3d 117, 124 (4th Cir. 2011) (same); Gomez-
Zuluaga v. Att’y Gen. of United States, 527 F.3d 330, 339 (3d
Cir. 2008) (same); Malonga v. Mukasey, 546 F.3d 546, 553 (8th
Cir. 2008) (same); Castillo-Arias v. United States. Att’y Gen.,
446 F.3d 1190, 1195 (11th Cir. 2006) (same); Cruz-Funez v.
Gonzales, 406 F.3d 1187, 1191 (10th Cir. 2005) (same).
Under the deference analysis set forth in Chevron, if con-
gressional purpose is clear, we must give it effect. Chevron,
467 U.S. at 842-43. We also give deference to precedential
decisions of the Board. Id. at 843; Escobar, 657 F.3d at 542.
Our duty at this stage is to uphold the Board's determination
if it is supported by substantial evidence—that is, reasona-
ble, substantial, and probative evidence on the record con-
sidered as a whole. Escobar, 657 F.3d at 545. If Congress has
directly spoken to the precise question at issue, then a court
must follow that clear guidance. Chevron, 467 U.S. at 842-43.
If, however, the statute is silent or ambiguous, the court
must defer to authoritative agency interpretations of the law.
Id. at 844. Congress did not directly address what it meant
8 No. 11-1989
by a protected “social group” in the Immigration and Na-
tionality Act, so we look to see how the agency has inter-
preted the statute.
The Board took on the task of defining “social group” in
Matter of Acosta, 19 I. & N. Dec. 211, 233-34 (1985), overruled,
in part, on other grounds by Matter of Mogharrabi, 19 I. & N.
Dec. 439, 439 (BIA 1987) limiting it to groups whose mem-
bership is defined by a characteristic that is either immutable
or is so fundamental to individual identity or conscience that
a person ought not be required to change. Id. This Circuit
has deferred to the Board’s Acosta formulation of social
group. See Lwin v. INS, 144 F.3d 505, 512 (7th Cir. 1998).
The immutable or fundamental characteristic might be
membership in an extended family, sexual orientation, a
former association with a controversial group, or member-
ship in a group whose ideas or practices run counter to the
cultural or social convention of the country. The latter group
might seem plausibly alterable, but we respect an individu-
al’s right to maintain characteristics that are “fundamental to
their individual identities.” Escobar, 657 F.3d at 545. Cece
could find a man to marry to protect her (and anachronisti-
cally, the lawyer representing the government in this case
inquired why she had not done just that (R. 172)), but this is
the type of fundamental characteristic change that we do not
ask of asylum applicants. See, e.g., Agbor v. Gonzales, 487 F.3d
499, 502 (7th Cir. 2007) (women who are opposed to and fear
female genital mutilation); Sarhan v. Holder, 658 F.3d 649, 654
(7th Cir. 2011) (women who “in accordance with social and
religious norms in Jordan, are accused of being immoral
criminals and, as a consequence, face the prospect of being
No. 11-1989 9
killed without any protection from the Jordanian govern-
ment.”); and Yadegar-Sargis v. INS, 297 F.3d 596, 603 (7th Cir.
2002) (Christian women in Iran who do not wish to adhere
to the Islamic female dress code). See also Al-Ghorbani v.
Holder, 585 F.3d 980, 996 (6th Cir. 2009) (social group that
opposes the repressive and discriminatory Yemeni cultural
and religious customs that prohibit mixed-class marriages
and require paternal consent for marriage); Safaie v. INS, 25
F.3d 636, 640 (8th Cir. 1994) (Iranian women who advocate
women’s rights or who oppose Iranian customs relating to
dress and behavior); 2 Fatin v. INS, 12 F.3d 1233, 1241 (3d Cir.
1993) (Iranian women who refuse to conform to the govern-
ment's gender-specific laws and social norms).
Members of a social group need not be swimming
against the stream of an embedded cultural norm. Some-
times the characteristic is immutable because a shared past
experience or status has imparted some knowledge or label-
ing that cannot be undone. Acosta, 19 I. & N. Dec. at 233.
Thus we have held that former truckers (or, more generally,
those with a special skill needed by the persecutors) consti-
tute a social group because their past actions and acquisition
of skills are unchangeable, Escobar, 657 F.3d at 545-46; as do
the subordinates of the attorney general of Colombia who
had information about insurgents plaguing that nation,
Sepulveda v. Gonzales, 464 F.3d 770, 771-72 (7th Cir. 2006);
former members of a violent and criminal faction in Kenya,
Gatimi v. Holder, 578 F.3d 611, 614 (7th Cir. 2009); tattooed,
2Both Al-Ghorbani and Safaie, supra, have been superseded on other grounds
by statute, 8 U.S.C. § 1252(b)(3)(B), as recognized in Rife v. Ashcroft, 374 F.3d
606, 614-15 (8th Cir. 2004).
10 No. 11-1989
former Salvadoran gang members who had since turned to
God, Benitez Ramos v. Holder, 589 F.3d 426, 428-29 (7th Cir.
2009); parents of Burmese student dissidents, Lwin, 144 F.3d
at 512; and the educated, landowning class of cattle farmers
targeted by Columbian rebels, Tapiero de Orejuela v. Gonzales,
423 F.3d 666, 672 (7th Cir. 2005). See also Lukwago v. Ashcroft,
329 F.3d 157, 178 (3d Cir. 2003) (former Ugandan child sol-
diers who have escaped abduction, enslavement and tor-
ture).
In order to compare Cece’s social group with the likes of
those above, we must first determine the contours of her so-
cial group. Both the parties and the immigration courts were
inconsistent, and the description of her social group varied
from one iteration to the next. The inconsistencies, however,
do not upset the claim. See In re Kasinga, 21 I. & N. Dec. 357,
(BIA 1996) (the Board, recognizing that both the Immigration
and Naturalization Service and the applicant “advanced
several formulations of the ‘particular social group’ at is-
sue”). And in one form or another, both Cece and the immi-
gration judge articulated the parameters of the relevant so-
cial group.
On her application for asylum, Cece explains that she is a
“perfect target” of forced prostitution because she is a
“young Orthodox woman living alone in Albania.” (R. 669).
The immigration judge, in initially granting Cece asylum,
collapsed this definition and described her social group as
first, “a social group consisting of young women who are
targeted for prostitution by traffickers in Albania,” (R. 128)
and then a “social group consisting of women in danger of
being trafficked as prostitutes.” (R. 131). Thus the immigra-
No. 11-1989 11
tion judge omitted the important characteristic that Cece
lived alone. 3 There is no doubt that it should have been in-
cluded in the immigration judge’s description of social
group, as so much of the testimony before him centered on
Cece’s status as a woman living alone. Cece testified at
length that women do not live alone in Albania (R. 147-148,
167, 195, 674), that she did not know anyone who lived alone
(R. 167, 173,195, 207); that she was afraid to live alone, (167,
171, 197, 300, 674) and most importantly that she was target-
ed because she was living alone. See (R. 147-148, 158, 166,
172-73, 195, 197, 300, 304, 305). Similarly, the Albanian ex-
pert’s testimony was focused on the risk of women who
lived alone in Albania. (R. 229-30). Cece’s brief before this
Court noted several times that the Board failed to consider
this formulation of the group. Opening Brief of Appellants
before the three-judge panel of this Court, at 20, 22, 27.
We could surmise that the immigration judge’s descrip-
tion of Cece’s social group as one consisting of “young
women who are targeted for prostitution by traffickers in
Albania,” (R. 128) or “women in danger of being trafficked
as prostitutes,” (R. 131) was simply shorthand for describing
women who are vulnerable to trafficking. And we know that
women in Albania become vulnerable to targeting when, for
example, they lack protection from husbands and family
members. We need not do too much surmising, however,
3Occasionally the adjudicators or parties refer to Cece as “single,” which
appears, in this context, to be shorthand for living alone, see Opening
Brief of Appellants before the three-judge panel of this Court, at 20, 22,
27, 28 (contending that Cece is member of a group of “young, single,
women in Albania.”)
12 No. 11-1989
because the immigration judge’s order on remand—and re-
ally the only order that matters on this appeal—specifically
concludes that her characteristics are “namely that she is a
young woman from a minority religion who has lived by her-
self most of the time in Albania, and thus is vulnerable, par-
ticularly vulnerable to traffickers for this reason.” (R. 120)
(emphasis ours). 4
The Board’s order rejects Cece=s social group as being not
cognizable under the Act because it “is defined in large part
by the harm inflicted on the group, and does not exist inde-
pendently of the traffickers.” (R. 9). This is not a reasoned
conclusion. As we have just described, the characteristics of
the group consist of the immutable or fundamental traits of
being young, female, and living alone in Albania. Even if the
group were defined in part by the fact of persecution (and
we do not believe it to be), that factor would not defeat
recognition of the social group under the Act. Although it is
true that “where a proposed group is defined only by the
characteristic that it is persecuted, it does not qualify as a
‘social group,’” the Board of Immigration Appeals has never
required complete independence of any relationship to the
4 The immigration judge’s decision on remand is the only one which we
review, as the former has been vacated. We refer to the earlier decision
only to determine how Cece’s social group has been articulated through-
out the litigation. Our review then is of the immigration judge’s second
opinion of December 1, 2008, as supplemented by the Board’s opinion of
March 31, 2011 dismissing her appeal. See Barma v. Holder, 640 F.3d 749,
751 (7th Cir. 2011) (“Where, as here, the BIA agrees with the IJ’s decision
but supplements that decision with its own explanation for rejecting the
appeal, we review the IJ’s decision as supplemented by the BIA's reason-
ing.”).
No. 11-1989 13
persecutor. Escobar, 657 F.3d at 545 (emphasis ours). And just
because all members of a group suffer persecution, does not
mean that this characteristic is the only one that links them.
Id. at 545-46. A social group “cannot be defined merely by the
fact of persecution” or “solely by the shared characteristic of
facing dangers in retaliation for actions they took against al-
leged persecutors.” Jonaitiene v. Holder, 660 F.3d 267, 271-72
(7th Cir. 2011) (emphasis ours). That shared trait, however,
does not disqualify an otherwise valid social group. Escobar,
657 F.3d at 547 (instructing that we cannot tease out one
component of the group’s characteristics to defeat the defini-
tion of social group). It certainly did not invalidate the social
group in Agbor which consisted of “women who fear being
circumcised should they return to their home countries,” de-
spite the fact that the group was defined in large part by the
persecution inflicted on the group. Agbor, 487 F.3d at 502.
Nor did it disqualify “women in Jordan who have (alleged-
ly) flouted repressive moral norms, and thus who face a high
risk of honor killing.” Sarhan, 658 F.3d at 654, 655. These
women still had the immutable characteristics of gender, na-
tionality, and the inability to alter their past labels of non-
conformist.
“Women who fear female genital circumcision” sound a
lot like “women who fear prostitution,” thus demonstrating
that it is not fair to conclude that the group is defined by the
harm or potential harm inflicted merely by the language
used rather than determining what underlying characteris-
tics account for the fear and vulnerability. The Board=s cases
instruct that we must look to see whether the group shares
Acommon characteristics that members of the group either
14 No. 11-1989
cannot change, or should not be required to change, because
such characteristics are fundamental to their individual
identities.@ Escobar, 657 F.3d at 545 (citing Gatimi, 578 F.3d at
614, In re Kasinga, 21 I. & N. Dec. 357, 365-66 (BIA 1996)). In
this case, although it is true that these women are linked by
the persecution they suffer—being targeted for prostitu-
tion—they are also united by the common and immutable
characteristic of being (1) young, (2) Albanian, (3) women,
(4) living alone. For this reason we disagree with the Sixth
Circuit’s conclusion in Rreshpja v. Gonzales, that the social
group of “young (or those who appear to be young), attrac-
tive Albanian women who are forced into prostitution” does
not constitute a social group because it is circularly defined
by the fact that it suffers persecution. Id. 420 F.3d 551, 555-56
(6th Cir. 2005). 5
Our conclusion is consistent with a parallel line of rea-
soning found in mixed motive cases. The Board of Immigra-
tion Appeals and this Court have long recognized that per-
secution can exist in a mixed motive case in which the perse-
cutor targets an individual for more than one reason and one
of the reasons does not warrant protection under the Act.
Under the mixed-motives doctrine, an applicant may qualify
for asylum so long as the applicant demonstrates by either
direct or circumstantial evidence that his persecutors were
motivated, at least in part, by one of the enumerated
5 The Second Circuit has also addressed a similar issue in Gjura v. Holder,
502 Fed. App’x 91 (2d Cir. 2012), but in that case the court skirted the
issue of whether “young, unmarried Albanian women could constitute a
social group” and found instead that the applicant, Gjura, had failed to
establish a nexus. Id.
No. 11-1989 15
grounds. Mustafa v. Holder, 707 F.3d 743, 751 (7th Cir. 2013). 6
See also Bueso-Avila v. Holder, 663 F.3d 934, 937 (7th Cir. 2011)
(“[A]n individual may qualify for asylum if his or her perse-
cutors have more than one motive as long as one of the mo-
tives is specified in the Immigration and Nationality Act.”).
Suppose, for example, that Muslims in a particular coun-
try are wildly disfavored and frequently persecuted by the
government. Wealthy Muslims, however, are tolerated be-
cause of their vast contribution to the poor country’s busi-
ness, tax base and overall wealth. The government, on the
other hand, routinely beats, jails and strips of rights poor
Muslims. Although the United States does not grant asylum
based on poverty, the fact that the persecuted group shares
this common characteristic does not disqualify the group
from seeking asylum based on religious persecution. We
cannot tease out one component of a group’s characteristics
to defeat the definition of social group. Escobar, 657 F.3d at
547.
Both dissents submit that Cece is not in the group of
young Albanian women living alone because her own expert
6The REAL ID Act of 2005 now requires an applicant to show that one of
the five protected grounds was at least one “central reason” for his per-
secution. See 8 U.S.C. § 1158(b)(1)(B)(i). Cece filed her asylum claim in
2002, thus pre-REAL ID standards and case law apply. See Dawoud v.
Gonzales, 424 F.3d 608, 613 (7th Cir. 2005). In any event, the “central rea-
son” for her persecution is that she was a young woman living alone,
and as such she would qualify even under the Real ID Act as the ground
need only be “central.” A ground may be a secondary (or tertiary, etc.)
reason and still justify asylum provided the applicant can show that the
protected status played more than a minor role in motivating a persecu-
tor. Shaikh v. Holder, 702 F.3d 897, 902 (7th Cir. 2012).
16 No. 11-1989
defined “young” as 16 to 26 or 27, and Cece is now 34. He
testified, however, that “this is just a targeted age group.
There are many examples of people outside of the targeted
age group being kidnapped and trafficked.” (R. 255). In this
case, the Petitioner is part of a group of young Albanian
women who live alone. Neither their age, gender, nationali-
ty, or living situation are alterable. These characteristics
qualify Cece’s proposed group as a protectable social group
under asylum law.
Demonstrating that an asylum applicant belongs to a
cognizable social group is only the first step in determining
asylum. Recall that an applicant must show not only that she
fits within a cognizable social group but also that there is a
nexus between the persecution and the membership in the
social group. Escobar, 657 F.3d at 542; Ishitiaq, 578 F.3d at 715.
Justice Alito, while on the Third Circuit, described the steps
as follows:
The alien must (1) identify a group that constitutes a
‘particular social group’ within the interpretation just
discussed, (2) establish that he or she is a member of
that group, and (3) show that he or she would be per-
secuted or has a well-founded fear of persecution
based on that membership.
Fatin v. INS, 12 F.3d 1233, 1240 (3d Cir. 1993). He then went
on to note that, “to the extent that the petitioner in this case
suggests that she would be persecuted or has a well-founded
fear that she would be persecuted in Iran simply because she
is a woman, she has satisfied the first of the three elements
that we have noted.” Id. As we are about to see, it is the nex-
us requirement where the rubber meets the road.
No. 11-1989 17
Those who fear that the slope leading to asylum has been
made too slick by broad categories need not worry. The im-
portance of the “on account of” language must not be over-
looked. It is this requirement that should assuage Judge
Easterbrook’s fears that “[t]his makes eligible for asylum
everyone who faces a substantial risk of harm in his native
land, no matter the reason.” Post at 32. Although the catego-
ry of protected persons may be large, the number of those
who can demonstrate the required nexus likely is not. As the
Board explained of clan-based persecution in Somalia, “the
fact that almost all Somalis can claim clan membership and
that interclan conflict is prevalent should not create undue
concern that virtually all Somalis would qualify for refugee
status, as an applicant must establish he is being persecuted
on account of that membership.” In re H-, 21 I. & N. Dec. 337,
343 (BIA 1996). The breadth of the social group says nothing
about the requirements for asylum, just as the breadth of
categories under Title VII of the Civil Rights Act says noth-
ing about who is eligible to sue an employer for discrimina-
tion. All African Americans and all women, for example, are
members of “protected” categories under Title VII, but not
all African Americans and women have a claim for discrimi-
nation. In order to be entitled to asylum, Cece must be able
to demonstrate a particular link between her mistreatment
and her membership in the stated social group. Escobar, 657
F.3d at 544; Bueso-Avila, 663 F.3d at 936. This requirement is
not unique to inquiries about persecution based on “social
group,” but rather one that is applicable to cases of claimed
persecution based on race, religion, nationality or political
opinion. In other words, an ethnic Rom (gypsy) who has
been mistreated by the town mayor because of a long-
18 No. 11-1989
standing business dispute would not be eligible for asylum
even if the mayor has undoubtedly and unfairly mistreated
him, and even if he belongs to an ethnic group that was fre-
quently the target of persecution in his country. The persecu-
tion must still be “on account of” the protected category.
In any event, the breadth of category has never been a
per se bar to protected status. As we noted in Iao v. Gonzales,
The number of followers of Falun Gong in China is
estimated to be in the tens of millions, all of them sub-
ject to persecution … . [Because] [a]nyone, we sup-
pose, can get hold of a book of [Falun Gong] teach-
ings, start doing the exercises, and truthfully declare
himself or herself a bona fide adherent to Falun Gong
[,][t]he implications for potential Chinese immigration
to the United States may be significant … . But Con-
gress has not authorized the immigration services to
[control Chinese immigration] by denying asylum
applications in unreasoned decisions.
Iao v. Gonzales, 400 F.3d 530, 533 (7th Cir. 2005). Many of the
groups recognized by the Board and courts are indeed quite
broad. These include: women in tribes that practice female
genital mutilation; Matter of Kasinga, 21 I. & N. Dec. at 365,
Agbor, 487 F.3d at 502; persons who are opposed to involun-
tary sterilization, 8 U.S.C. § 1101(a)(42)(B); Chen v. Holder,
604 F.3d 324, 332 (7th Cir. 2010); members of the Darood clan
and Marehan subclan in Somalia, In re H–, 21 I. & N. Dec. at
340, 343 (1% of the population of Somalia are members of the
Marehan subclan); homosexuals in Cuba, In re Toboso–
Alfonso, 20 I. & N. Dec. 819, 822-23 (BIA 1990); Filipinos of
Chinese ancestry living in the Philippines, Matter of V–T–S–,
No. 11-1989 19
21 I. & N. Dec. 792, 798 (BIA 1997) (approximately 1.5% of
the Philippines population has an identifiable Chinese back-
ground); Singh v. INS, 94 F.3d 1353, 1359 (9th Cir. 1996) (re-
jecting the notion that an applicant is ineligible for asylum
merely because all members of a persecuted group might be
eligible for asylum). The ethnic Tutsis of Rawanda num-
bered close to 700,000 before the genocide of 1994, and yet a
Tutsi singled out for murder who managed to escape to the
United States could surely qualify for asylum in this coun-
try. And undoubtedly any of the six million Jews ultimately
killed in concentration camps in Nazi-controlled Europe
could have made valid claims for asylum, if only they had
had that opportunity. 7 Many of our asylum laws originated
out of a need to address just such refugees from World War
II. It would be antithetical to asylum law to deny refuge to a
group of persecuted individuals who have valid claims
merely because too many have valid claims. See Iao, 400 F.3d
at 533; Singh, 94 F.3d at 1359. For this reason we also reject
the Sixth Circuit’s reasoning that the group of young-
looking, attractive Albanian women who are forced into
prostitution is not a cognizable social group because it is too
broad and sweeping of a classification. Rreshpja, 420 F.3d at
555.
7Although some Jews might have had the opportunity to seek asylum in
the United States, having escaped Germany on the M.S. St. Louis, they
were ultimately denied entry into the United States. The ship was forced
to return to Europe where 254 of the 937 refugees seeking asylum from
the Nazis were eventually killed in concentration camps. S.Res. 111,
111th Cong. (2009).
20 No. 11-1989
The safeguard against potentially innumerable asylum
claims is found in the stringent statutory requirements for all
asylum seekers which require that the applicant prove (1)
that she has suffered or has a well-founded fear of suffering
harm that rises to the level of persecution, (2) on account of
race, religion, nationality, membership in a particular social
group, or political opinion, and (3) is unable or unwilling to
return to her country because of the persecution or a well-
founded fear of persecution. 8 U.S.C. §1101(a)(42)(A),
1158(b)(1); Bejko v. Gonzales, 468 F.3d 482, 484 (7th Cir. 2006).
Judge Easterbrook’s dissent argues that “[w]hatever risk
Cece faces comes from criminals, not from the government.”
Post at 29. Of course “persecution does not include the
actions of private citizens unless the government is complicit
in those acts or is unable or unwilling to take steps to
prevent them.” Bitsin v. Holder, No. 12-2717, 2013 WL
2402855, *6 (7th Cir. May 31, 2013). In his initial
determination, the immigration judge found that Albania
was unable or unwilling to protect Cece from third party
traffickers, (R. 129, 131). In its decision overturning the
immigration judge, the Board said only that “there is no
indication that the government of Albania was involved in
the incident described by the applicant, nor that such
government is interested in harming the applicant. (R. 330).
The first proposition is simply wrong. Cece complained to
the police, but they refused to take any action. More
importantly, the standard is not just whether the
government of Albania was involved in the incident or
interested in harming Cece, but also whether it was unable
or unwilling to take steps to prevent the harm. Bitsin v.
No. 11-1989 21
Holder, 2013 WL 2402855 at *6. On remand, the immigration
judge acknowledged his obligation to follow the Board’s
determination regarding the proposed social group, but still
noted his finding that Cece could not depend upon the
police to protect her from traffickers. (R. 115-116). The Board
had nothing further to say about the matter. When the Board
agrees with the decision of the immigration judge, adopts
that decision and supplements that decision with its own
reasoning, as it did here, we review the immigration judge’s
decision as supplemented by the Board. Mustafa v. Holder,
707 F.3d 743, 750 (7th Cir. 2013) (citing Jonaitiene v. Holder,
660 F.3d 267, 270 (7th Cir. 2011)); Barma, 640 F.3d at 751. In
this case the Board based its denial of asylum on the fact that
first, Cece did not belong to a cognizable social group and
second, she would have been able to relocate safely within
Albania. The Board therefore had no need to address the
immigration judge’s factual finding that the police were
unable or unwilling to prevent the harm. Judge Easterbrook
opines that the Board must be at liberty to consider this
subject on remand. Whether or not the Board could consider
(or reconsider) this matter on remand, however, this court is
certainly entitled to (and indeed obligated to) review the
decision of the immigration judge as supplemented by the
BIA’s reasoning. Jonaitiene, 660 F.3d at 270. We review
agency findings of fact for “substantial evidence” and may
reverse the Immigration Judge's determinations “only if we
determine that the evidence compels a different result.” FH–T
v. Holder, No. 12-2471, 2013 WL 3800252, * 3 (7th Cir. July 23,
2013). Judge Easterbrook’s conclusion that Cece faced no
“mistreatment at public hands” is contrary to the only
factual finding on the matter. In any event, the entirety of the
22 No. 11-1989
discussion is unnecessary, as the Board based its decision on
the fact that Cece’s proposed social group was not
cognizable under the act—a holding with which we
disagree.
Circling back to our level of deference, now with a clear
understanding of the Board’s definition of social group de-
rived from Acosta, we must uphold the Board’s determina-
tion if it is “a reasonable construction of the statute, whether
or not it is the only possible interpretation or even the one a
court might think best.” Holder v. Martinez-Gutierrez, 132 S.
Ct. 2011, 2017 (2012) (citing Chevron U.S.A. Inc. v. Natural Re-
sources Def. Council, Inc., 467 U.S. 837, 843-844, and n.
11(1984)); INS v. Orlando Ventura, 537 U.S. 12, 16 (2002). The
problem here is that the Board’s decision is inconsistent with
its decisions in other similar cases. Cece’s social group is not
different than many of the groups approved by the BIA. For
example, she is not unlike the women in Kasinga, supra, 21 I.
& N. Dec. at 365-66 who were young women in a tribe that
practices female genital mutilation. In both cases the broad
immutable group that triggered social group status—young
women in particular tribes in Kasinga’s case, and young
women in Albania, in Cece’s case—could be narrowed by
other changeable but fundamental characteristics—living
alone in Cece’s case, and having not yet been subjected to
female genital mutilation in Kasinga’s case. Nor is Cece un-
like the Jordanian women who face “honor killings” because
of the social and religious norms in Jordan, Sarhan, 658 F.3d
at 654, or Christian women in Iran who do not wish to ad-
here to the Islamic female dress code. Yadegar-Sargis, 297
F.3d at 603.
No. 11-1989 23
In other words the social group is defined by gender plus
one or more narrowing characteristics. Although some
courts have toyed with the idea that gender alone can form
the basis of a social group, we need not decide that today.
See, e.g., Perdomo v. Holder, 611 F.3d 662, 667 (9th Cir. 2010)
(“Thus, we clearly acknowledged that women in a particular
country, regardless of ethnicity or clan membership, could
form a particular social group”); Hassan v. Gonzales, 484 F.3d
513, 518 (8th Cir. 2007) (“Somali females” constitute a partic-
ular social group); Fatin v. INS, 12 F.3d 1233, 1240 (3d Cir.
1993) (Iranian women meet the social group definition). See
also In re A–T–, 24 I. & N. Dec. 296, 304 (“gender is an immu-
table trait that is generally recognizable”), vacated and re-
manded, Matter of A–T–, 24 I. & N. Dec. 617, Interim Decision
3622, 2008 WL 4306933 (BIA Sep 22, 2008). Although non-
binding, the agency’s own “Gender Guidelines,” which pro-
vide Asylum Officers with guidance on adjudicating wom-
en's claims of asylum, provide a helpful understanding by
noting that gender is an immutable trait that can qualify un-
der the rubric of “particular social group.” United States Bu-
reau of Citizenship and Immigration Services, Considerations
for Asylum Officers Adjudicating Asylum Claims from Women
("INS Gender Guidelines"), 26 May 1995, available at:
http://www.unhcr.org/refworld/docid/3ae6b31e7.html [ac-
cessed July 25, 2013]. And the Office of the United Nations
High Commissioner for Refugees (again, not authoritative,
but informative) has made clear that “women may constitute
a particular social group under certain circumstances based
on the common characteristic of sex, whether or not they as-
sociate with one another based on that shared characteris-
tic.” UNHCR, Guidelines on International Protection: Member-
24 No. 11-1989
ship of a Particular Social Group, at 4 (HCR/GIP/02/02, 7 May
2002).
Because Cece’s group cannot be distinguished from oth-
ers with immutable and fundamental traits, the Board’s de-
cision is inconsistent with its own precedent.
When an administrative agency’s decisions are incon-
sistent, a court cannot pick one of the inconsistent
lines and defer to that one, unless only one is within
the scope of the agency’s discretion to interpret the
statutes it enforces or to make policy as Congress’s
delegate … . Such picking and choosing would con-
done arbitrariness and usurp the agency's responsibil-
ities.
Gatimi, 578 F.3d at 616 (internal citations omitted). In this
case, the Board has offered no explanation for why Cece’s
group is not cognizable under the test the Board has adopted
in Acosta. Sepulveda v. Gonzales, 464 F.3d 770, 772 (7th Cir.
2006). Or, more specifically, why being a young woman liv-
ing alone in Albania does not qualify as a social group when
the attributes are immutable or fundamental. The issue of
whether a particular social group is cognizable is a question
of law on which the Board erred. Escobar, 657 F.3d at 542. See
also, Ayala, 640 F.3d at 1096-97; Castaneda-Castillo, 638 F.3d at
363; Crespin-Valladares, 632 F.3d at 124; Gomez-Zuluaga, 527
F.3d at 339; Malonga, 546 F.3d at 553; Castillo-Arias, 446 F.3d
at 1195; Cruz-Funez, 406 F.3d at 1191. The Board’s decision
cannot stand and must be reconsidered on remand: Cece has
established that she belongs to a cognizable social group.
No. 11-1989 25
We are well aware of the limits of our review set forth in
Gonzales v. Thomas, 547 U.S. 183, 185-86 (2006) (per curium)
and INS v. Orlando Ventura, 537 U.S. 12, 16-17 (2002) (per cu-
rium). An appellate court errs by deciding in the first in-
stance, without giving the Board the first opportunity on
remand, whether a proposed social group is cognizable
within the meaning of the Act. Id. The judge and Board had
before them all of the facts pertaining to Cece’s proposed so-
cial group and yet determined that her social group was not
cognizable under the Act. This was error in light of the
Board’s own precedent in Acosta.
III.
The Board also found that there was insufficient evidence
in the record that internal relocation was not a feasible
means of avoiding the persecution of which Cece complains.
The Board, however, ignored the fact, emphasized through-
out the hearing and appeals, that Cece had lived safely in
Tirana only while living with her sister in her sister’s univer-
sity dormitory. Once her sister left Tirana and Cece had to
move from the dormitory, she was again at risk. (R. 168-172).
The Albanian expert testified at length that Albania was a
small country and that it would be difficult to hide any-
where. (R. 231). Even in the big city of Tirana, people tended
to live in family or clan groupings, and a young single wom-
an living alone would stick out as an anomaly. Id. The expert
also surmised that Cece faced an increased risk of being tar-
geted simply because of her previous status as a target, i.e.
she was already known to traffickers. (R. 229, 230, 257). The
immigration judge acknowledged the expert’s testimony on
these facts and was troubled by the Board’s conclusion that
26 No. 11-1989
Cece could move safely within Albania notwithstanding the
facts that “she is a young woman from a minority religion
who has lived by herself most of the time in Albania, and
thus is vulnerable, particularly vulnerable to traffickers for
those reasons.” (R. 120). The immigration judge then con-
cluded, “I do not agree with the Board’s conclusion, but I am
required to follow it.” Id. The Board, in its order, had but this
to say about her ability to relocate: “we once again find that
there is insufficient evidence in the record that internal relo-
cation is not reasonable.” 8 (R. 9). The Board’s decision lacked
any discussion or analysis of the issue. Thus the only evi-
dence-based analysis we have is that of the immigration
judge whose conclusion is that Cece could not safely relocate
within Tirana. Nevertheless the Board held that she could.
The Board’s conclusion is not supported by substantial evi-
dence. Vahora v. Holder, 626 F.3d 907, 912-913 (7th Cir. 2010)
(“Under the substantial evidence standard, the agency’s de-
termination will stand if it is supported by reasonable, sub-
stantial, and probative evidence on the record considered as
a whole.”). Indeed it is not supported by evidence of any
kind whatsoever. The only evidence in the record is that
Cece felt safe in Tirana only so long as she was not living
alone—a status quo that ended as soon as her last family
member left the country. An asylum applicant is entitled to a
reasoned analysis of her case supported by relevant, proba-
8 In its first order, before remand, the Board simply stated that “the
applicant appears to have successfully relocated within Albania. There is
insufficient evidence in the record that she has a well-founded fear of
persecution in Tirane or in another city within Albania, outside of Korçë
… there is no indication that Reqi (or any other trafficker) tried or was
motivated to pursue the applicant outside of Korçë.” (R. 331).
No. 11-1989 27
tive evidence. Mustafa, 707 F.3d at 754. A failure to provide
such a reasoned analysis requires remand. Kadia v. Holder,
557 F.3d 464, 467 (7th Cir. 2009).
We therefore grant the petition for review and remand to
the agency for further proceedings consistent with this opin-
ion.
28 No. 11-1989
EASTERBROOK, Chief Judge, dissenting. Cece defines, as the
“social group” at risk of persecution, “young Albanian
women in danger of being trafficked as prostitutes.” At ear-
lier stages of these proceedings she made different pro-
posals, but this is the definition in her appellate briefs. My
colleagues hold that the Board of Immigration Appeals erred
by not treating “young Albanian women who live alone” as
her social group. Put to one side the fact that Cece does not
ask us to define a social group that way. Whether the group
is “young Albanian women in danger of being trafficked as
prostitutes” or “young Albanian women who live alone”,
Cece isn’t in it. Her own expert defined “young” as 16 to 26
or 27. Cece is 34. The basis for her claim of asylum is future
risk; she does not argue that she suffered persecution before
leaving Albania, so the fact that she is not a member of her
own proposed group should be dispositive. (Perhaps Cece
looks younger than her age and would be targeted by mis-
take, but she does not argue this.)
Then there is the question “how much risk is too much?”
Cece’s expert did not attempt to quantify the risk that young
Albanian women living alone face, nor does the majority.
That many of Western Europe’s prostitutes are Albanians
does not tell us how many are in the sex trade involuntarily.
The State Department tries to estimate risk. Its Human Traf-
ficking Report 2012 finds that 84 complaints about trafficking
were made to Albanian public agencies during 2011. Report
at 64. Nongovernmental groups (NGOs) reported more: they
counted 132 Albanian trafficking victims in 2011. Ibid. The
number of young women living alone in Albania is substan-
tially higher. The State Department ranks nations into four
tiers (1, 2, 2 Watch List, and 3), with Tier 1 representing the
best performance. Id. at 51. Albania is in Tier 2, as are Greece,
No. 11-1989 29
Hong Kong, Japan, Switzerland, and more than 60 other na-
tions. Id. at 52. Fifty-one nations are in tiers 2WL or 3, below
Albania. Ibid. Deplorable as human trafficking is, any given
woman’s danger in Albania may be modest.
Whatever risk Cece faces comes from criminals, not from
the government, yet “persecution” means mistreatment at
public hands. See Hor v. Gonzales, 421 F.3d 497 (7th Cir. 2005);
Bitsin v. Holder, 719 F.3d 619, 628–31 (7th Cir. 2013). Crime
may be rampant in Albania, but it is common in the United
States too. People are forced into prostitution in Chicago.
See, e.g., United States v. Cephus, 684 F.3d 703 (7th Cir. 2012).
Must Canada grant asylum to young women who fear pros-
titution in the United States, or who dread the risk of vio-
lence in or near public-housing projects? If there were reason
to think the Albanian government in cahoots with the traf-
fickers, Cece would have a better case; but when the record
shows no more than ineffective law enforcement, there’s no
basis to infer persecution. Meghani v. INS, 236 F.3d 843, 847
(7th Cir. 2001).
I can see why we ought not make anything turn today on
the facts that Cece is 34 years old, that the number of traf-
ficking victims in Albania may be under 150 annually, and
that any risk comes from private criminals rather than public
policy: the BIA did not do so, and the Chenery doctrine (SEC
v. Chenery Corp., 318 U.S. 80, 87 (1943)) limits reviewing
courts to the agency’s grounds of decision. Perhaps the
Board will consider these issues on remand.
When tackling this subject, the Board may wish to con-
sider whether a government’s inability to protect people
from criminals is a form of persecution. Equating inability to
control crime with unwillingness to do so (a form of perse-
30 No. 11-1989
cution because it reflects public policy disfavoring a person
or group) first appeared in a decision of the Board in 1964.
See Matter of Eusaph, 10 I&N Dec. 453, 454 (1964). The formu-
la has been repeated many times, e.g., Matter of Pierre, 15
I&N Dec. 461, 462 (1975); Matter of Kasinga, 21 I&N Dec. 357,
365 (1996), without explaining why “unable” has the same
effect as “unwilling”—or quantifying what “unable” means.
The Board appears to be happy with this formula, but its
utility is limited when we do not know how much shortfall
in law enforcement counts as “inability” to protect citizens.
A remand is unnecessary even on the majority’s views
about the social-group question, however. The Board found
that Cece could live safely in Tirana, though perhaps not in
her parents’ city. Part III of the majority’s opinion declares
that this decision is not supported by substantial evidence.
As Judge Manion shows, however, the Board had, and gave,
the best of all possible reasons: that Cece had moved to Tira-
na and was not followed or accosted there. Indeed, Cece does not
even contend that the person who pursued her in Korçë
learned that she was in Tirana or attempted to locate her (or
anyone else) outside of Korçë. Cece’s expert witness testified
that Tirana is a collection of enclaves and that people find
things out; this might have led the Board to conclude that
Cece was at risk there after her sister left. But the inference is
permissive, not compulsory. An agency is entitled to give
more weight to what actually happened than to what could
have happened. Cece’s untroubled time in Tirana is “sub-
stantial evidence” for the Board’s conclusion. See INS v. Eli-
as-Zacarias, 502 U.S. 478, 481 (1992) (if the record allows rea-
sonable disagreement, the Board’s decision must stand).
No. 11-1989 31
Cece’s brief in conjunction with the rehearing en banc
makes a different argument: that it is not reasonable to re-
quire her to relocate to Tirana, even if she would be safe. See
8 C.F.R. §1208.13(b)(2)(ii). According to Cece, the Board
should have deemed relocation unreasonable because she
had no relatives in Tirana after her sister left. Yet every year
millions of persons move to cities where they are strangers;
they make new friends (or acquire new relatives) afterward.
A person who left Tirana for Rome, and then left Rome for
Chicago, is hard pressed to contend that it would not be
“reasonable” to think that she could have lived closer to her
relatives, even if none was in the neighborhood. (Korçë and
Tirana are 110 miles apart.)
Although I think the majority mistaken in its treatment of
Cece’s specific claim, I am more concerned by its treatment
of the Board’s doctrine. My colleagues recognize that the
statute does not define the term “social group” and that
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984), therefore applies to the Board’s gap-
filling work. See Holder v. Martinez Gutierrez, 132 S. Ct. 2011,
2017 (2012); INS v. Aguirre-Aguirre, 526 U.S. 415, 424–26
(1999). Yet the dispositions of this and other cases demon-
strate that the Seventh Circuit has rejected the Board’s ap-
proach and established its own—one under which everyone
belongs to a “social group” and the question whether that
membership caused the persecution drops out of considera-
tion. (It drops out because, when the asserted criteria of per-
secution are used to define the “social group,” the process is
circular.)
The Immigration and Nationality Act permits federal of-
ficials to grant asylum to aliens who seek refuge here “be-
32 No. 11-1989
cause of persecution or a well-founded fear of persecution
on account of race, religion, nationality, membership in a
particular social group, or political opinion”. 8 U.S.C.
§1101(a)(42)(A). Cece does not contend that her race, nation-
ality, or politics mattered to the traffickers (or to any Albani-
an public official), and although she initially argued that she
was at risk because of her religion she has abandoned that
contention. This leaves “social group.”
What the Seventh Circuit has done in this and other re-
cent cases is read “because of … membership in a particular
social group” in a way that includes everyone threatened by
criminals, rebels, or anyone else a nation’s government does
not control. This makes eligible for asylum everyone who
faces a substantial risk of harm in his native land, no matter
the reason.
The Board of Immigration Appeals has established, in
decisions the court concedes we must respect, several re-
quirements of social-group status. One is that a “social
group” entails a characteristic that is either immutable or so
important that no one should be required to change it. See
Matter of Acosta, 19 I&N Dec. 211, 233–34 (1985); Matter of
Kasinga, 21 I&N Dec. 357, 365–66 (1996). Age changes; that’s
why decisions such as Vance v. Bradley, 440 U.S. 93 (1979), re-
ject arguments that age must be treated like race or sex for
legal purposes. Whether a person lives alone also is subject
to change. People may marry, live with relatives, or join forc-
es with similarly situated persons. Many single women live
with other single women. A group such as “young Albanian
women who live alone” therefore flunks the Board’s test on
multiple grounds, even if we treat marital status as the sort
of thing that no one should be required to change.
No. 11-1989 33
Another series of cases in this circuit expands the scope
of “social group” by a different route. It asks whether the al-
ien used to be at risk. For example, Escobar v. Holder, 657 F.3d
537 (7th Cir. 2011), holds that an alien is eligible for asylum
as a member of a “social group” that comprises truckers who
ever opposed a band of Colombian rebels. Events of a decade
ago cannot be changed; the past is “immutable”; thus the
Board’s primary defense against limitless expansion of “so-
cial group” vanishes. Everyone who seeks asylum in the
United States can point to some event in the past, and as the
past can’t be changed this event becomes the basis for a
claim based on an “immutable characteristic.” See, e.g.,
Sepulveda v. Gonzales, 464 F.3d 770 (7th Cir. 2006) (former
employees of a public agency are a social group); Benitez
Ramos v. Holder, 589 F.3d 426 (7th Cir. 2009) (former criminal-
gang members are a social group).
Some people might be inclined to ask: Why not just treat
everyone as belonging to a social group and skip to the ques-
tion whether persecution occurred? The answer is that the
statute makes membership in a group (or classification by
race, religion, or politics) essential to analysis of the sup-
posed persecution. The agency must decide whether a per-
son has been persecuted “on account of” membership in the
group (or because of politics, race, etc.). You can’t sensibly
ask about cause without deciding what differentiates the
applicant from other persons. To know whether X has been
persecuted on account of Y, it is essential to know what Y is.
The Board has tried to define groups by fixed attributes
(such as “member of the Yoruba tribe” or “born in Korçë”). It
is only after defining a group that it becomes possible to ask
the statutory question: whether membership in that group is
the reason for the adverse treatment.
34 No. 11-1989
Cece is a member of one social group that the Board
probably would acknowledge: Albanian women. But she
does not contend that she fears persecution because of those
characteristics. She does not say that the government of Al-
bania persecutes Albanian women. Indeed, she does not con-
tend that Albania discriminates in any way by national
origin or sex. She does not maintain that police and courts
protect male victims of crime but not female victims; instead
she tells us that Albania’s system of law enforcement is
weak. Failure to achieve optimal deterrence is unfortunate
but not “persecution” by any useful understanding. That’s
why Cece proposed a group such as “young Albanian wom-
en in danger of being trafficked as prostitutes.” The qualifi-
cations that distinguish this proposal from “all Albanian
women”—age, living alone, and the criminal enterprise of
sex traffickers—all fail the Board’s filters.
The BIA has held that a “social group” cannot be identi-
fied by asking who was mistreated. Matter of C– A–, 23 I&N
Dec. 951, 956 (2006). For if the persecutors’ acts define social
groups, then again §1101(a)(42)(A) effectively offers asylum
to all mistreated persons, whether or not race, religion, poli-
tics, or some extrinsically defined characteristics (such as
tribal membership) account for the persecution. And again
this court professes to accept the Board’s position—though
with the proviso that it applies only when the persecutors’
acts are the entire definition (opinion at 12–13, which uses
“only” or “solely” or “merely” four times, putting three of
the four in italics for emphasis). Thus although the Board
concluded that “young Albanian women in danger of being
trafficked as prostitutes” flunks, the majority rules otherwise
because “danger of being trafficked as prostitutes” is not the
sole component of the definition. That is not what Chevron
No. 11-1989 35
requires. We have not applied the Board’s definition. We
have rewritten it.
Under this court’s approach, any person mistreated in his
native country can specify a “social group” and then show in
circular fashion that the mistreatment occurred because of
membership in that ad hoc group. Anyone threatened or in-
jured in the past has an “immutable” characteristic (the past
can’t be changed), and the selection criteria used by the per-
secutor (here, people who want to force others into prostitu-
tion) become the defining characteristics of the “social
group”. The structure of §1101(a)(42)(A) unravels.
The majority accuses the Board of inconsistency (opinion
at 22–25), but the BIA has been inconsistent by the court’s
standard, not its own. For example, the “social group” in
Kasinga, which the court calls “not unlike” Cece’s (opinion at
22), was a tribe. The Board sees a big difference between
tribal groups (membership is immutable and extrinsic to the
choices made by criminals) and “young Albanian women in
danger of being trafficked as prostitutes” (defined in part by
changeable characteristics and in part by who criminals tar-
get). The majority says that it does not see a difference, so
the Board must be inconsistent. That’s a statement about ju-
dicial rejection of the Board’s doctrine, not about how the
Board administers its own approach.
I grant that some of the inconsistency is real—it has been
forced on the Board by judicial refusal to accept its approach
to defining “social group.” Our court has discarded not only
the immutability and don’t-use-the-wrongdoers’-perspective
rules but also another component of the Board’s definition:
social visibility. See, e.g., Gatimi v. Holder, 578 F.3d 611, 614–
15 (7th Cir. 2009); majority opinion at 5 n.1. Other circuits
36 No. 11-1989
have allowed the Board to use the “visibility” criterion but
have revised or rejected different parts of the Board’s defini-
tion of “social group.” See, e.g., Ucelo-Gomez v. Mukasey, 509
F.3d 70 (2d Cir. 2007) (approving the “visibility” standard
and adding that changeable attributes such as wealth do not
identify a social group); Castillo-Arias v. Attorney General, 446
F.3d 1190 (11th Cir. 2006) (denying a petition to set aside the
decision in C– A–). The Board tries to apply circuit law—
and, when it does so, is accused of abandoning its own defi-
nition or applying it inconsistently.
The majority says that it accepts the Board’s approach.
Yet in case after case, of which today’s is just a sample, we set
aside the Board’s decisions. I have already mentioned Esco-
bar, Gatimi, Sepulveda, and Benitez Ramos. Here are a few
more: Sarhan v. Holder, 658 F.3d 649 (7th Cir. 2011); Torres v.
Mukasey, 551 F.3d 616 (7th Cir. 2008); Agbor v. Gonzales, 487
F.3d 499 (7th Cir. 2007); Tapiero de Orejuela v. Gonzales, 423
F.3d 666 (7th Cir. 2005); Yadegar-Sargis v. INS, 297 F.3d 596
(7th Cir. 2002). The meaning of a legal standard lies in its
application to concrete facts. That the BIA and this court
regularly reach different decisions on identical facts shows
that they are applying different legal standards.
This is a particularly poor case for our court to nix the
Board’s approach, because at least two other circuits have
held that the agency properly denied asylum claims identi-
cal to Cece’s. The majority concedes (opinion at 14) that its
decision conflicts with Rreshpja v. Gonzales, 420 F.3d 551, 555–
56 (6th Cir. 2005). It also conflicts with Gjura v. Holder, 502
Fed. App’x 91 (2d Cir. 2012). The Second Circuit’s initial
opinion, 695 F.3d 223, held that the Board acted within its
discretion in concluding that “young, unmarried Albanian
No. 11-1989 37
women” is not a social group. The court then issued a re-
placement opinion denying the petition on the ground that
sex traffickers are private actors whose criminal conduct
does not demonstrate persecution by public officials. Cece
would have lost in the Second Circuit for either of these rea-
sons. As far as I can see this circuit stands alone in disman-
tling the BIA’s approach so thoroughly that the agency must
recognize social groups such as “young Albanian women in
danger of being trafficked as prostitutes” or “young Albani-
an women who live alone” and treat members of that group
as victims of persecution.
The majority expresses sympathy for Cece and other ap-
plicants for asylum. Yet the choice whether to be strict or le-
nient belongs to the agency, not to the court. See, e.g., INS v.
Phinpathya, 464 U.S. 183 (1984); INS v. Jong Ha Wang, 450 U.S.
139 (1981). The Board has chosen to make “social group” do
real work. This court effectively reads it out of the statute
and directs the agency to ask only whether an alien faces a
significant risk for any reason. This intrudes on the sort of
choice Congress has committed to the Executive Branch. The
Attorney General could direct the Board to ditch Acosta and
C– A–, but as long as the political branches of government
stand by them, Chevron requires the judiciary to implement
their choices.
One final observation. Cece entered the United States by
fraud, pretending to be from a nation whose citizens do not
need visas to visit. See Bayo v. Napolitano, 593 F.3d 495 (7th
Cir. 2010) (en banc). She started that journey from Rome and
has never contended that she feared sex trafficking in Italy.
Her fraud thus is not mitigated by a need to escape from
danger. The Board has concluded that entering the United
38 No. 11-1989
States by fraud, when danger is not imminent, is a strongly
adverse factor in the discretionary decision whether to grant
asylum. See Alsagladi v. Gonzales, 450 F.3d 700 (7th Cir. 2006);
Matter of Pula, 19 I&N Dec. 467 (1987). Although the court
decides today that Cece is eligible for asylum, it does not hold
that she is entitled to it; that question, at least, remains open
to decision on remand.
No. 11-1989 39
MANION, Circuit Judge, with whom EASTERBROOK, Chief
Judge, joins, dissenting.
I.
After illegally entering the United States using a false
Italian passport, Johana Cece sought asylum. To be eligible for
asylum, applicants must show that they are “unable or
unwilling to return” to the country of their nationality
“because of persecution or a well-founded fear of persecution
on account of race, religion, nationality, membership in a
particular social group, or political opinion.” 8 U.S.C.
§ 1101(a)(42)(A).
In seeking asylum, Cece claimed she both had suffered past
persecution and had a well-founded fear of future persecution.
The Board, however, concluded that Cece had not established
past persecution, R. 330, and Cece does not challenge that
determination on appeal. The Board also concluded that Cece
was not entitled to asylum on the basis of a well-founded fear
of future persecution because Cece had not “established that
she fears persecution based upon one of the protected grounds
under the Act.” R. 330. The Board further found that “there is
[in]sufficient evidence in the record … that internal relocation
is not reasonable.” R. 331.
The en banc court holds that “Cece has established that she
belongs to a cognizable social group,” Opinion at 24, namely
“young Albanian women who live alone.” Opinion at 16. And
that the immigration judge and Board erred in determining
“that her social group was not cognizable under the Act.”
Opinion at 25. The en banc court further holds that the Board’s
conclusion that Cece could safely relocate in Albania was not
40 No. 11-1989
supported by substantial evidence, and grants the petition for
review and remands to the agency for further proceedings.
Opinion at 26–27.
In holding that “Cece has established that she belongs to a
cognizable social group,” Opinion at 24, the en banc court
discusses at length the complexity of defining a “social group.”
See Opinion at 6–25. As discussed below, I have several
concerns with the court’s analysis. However, even if the en banc
court is correct that “young Albanian women who live alone,”
is a “social group” within the meaning of the INA, her petition
for review should nonetheless be denied because substantial
evidence supports the Board’s finding that Cece did not
present sufficient evidence that internal relocation is not
reasonable. That finding alone dooms Cece’s asylum petition
and accordingly we should deny Cece’s petition for review.
I DISSENT.
II.
A. Social Group
As the en banc court explains, “Congress did not directly
address what it meant to be a protected ‘social group’ in the
Immigration and Nationality Act, so we look to see how the
agency has interpreted the statue.” Opinion at 7–8. The court
then notes that the Board defined “social group” in Matter of
Acosta, 19 I. & N. Dec. 211, 233-34 (1985), to be limited “to
groups whose membership is defined by a characteristic that
is either immutable or is so fundamental to individual identity
or conscience that a person ought not be required to change.”
Opinion at 8. We have deferred to that definition. Opinion at
8 (citing Lwin v. INS, 144 F.3d 505, 512 (7th Cir. 1998)).
No. 11-1989 41
My first concern with the en banc court’s holding is that the
court’s formulation of Cece’s social group as “young Albanian
women who live alone” does not satisfy the Board’s definition
of “immutable” or “fundamental” characteristics. There is
nothing immutable about “living alone.” Nor is “living alone,”
unlike an individual’s choice to be single1 or married, “so
fundamental to individual identity or conscience that a person
ought not be required to change.” And there are many varia-
tions in location and type of dwelling where a woman can
choose to live alone.
I also have concerns with the en banc court defining a social
group with the subjective adjective of “young.” A shared
characteristic of a “social group,” “must provide a clear
demarcation, ‘permit[ting] an accurate separation of members’
from non-members,’ … Consequently, loose descriptive
phrases that are open-ended and that invite subjective interpre-
tation are not sufficiently particular to describe a protected
social group.” Mayorga-Vidal v. Holder, 675 F.3d 9, 15 (1st Cir.
2012) (quoting Ahmed v. Holder, 611 F.3d 90, 94 (1st Cir. 2010).
The use of “young,” or for that matter, “middle-aged,” or
“old,” to define a characteristic of a social group is simply too
amorphous; there is no clear demarcation of who fits within
this social group. See Larios v. Holder, 608 F.3d 105, 109 (1st Cir.
2010) (“There are, for example, questions about who may be
considered ‘young,’ … [this is an] ambiguous group character-
istic[], largely subjective, that fail to establish a sufficient level
1
The en banc court rejected the formulation of young single Albania
women in favor of “young Albania women living alone.” Opinion at 11 n.3.
42 No. 11-1989
of particularity.” (quoting Mendez-Barrera v. Holder, 602 F.3d 21,
27 (1st Cir. 2010))). In fact, this case aptly illustrates the
problem with such a subjective term. Cece’s own expert
defined the targeted group as “young women” between the
“ages of about 16, 17 up until probably about 26 or so but
many minor females get caught up in this as well, children.”
R. 473. At the time of the hearing, Cece was just two months
shy of 27. R. 501. And so the agency’s attorney asked the expert
whether traffickers would be interested in Cece if she were 27
at the time she returned to Albania. R. 501. The expert re-
sponded that “it’s certainly possible.” R. 502. But “a social
group does not exist as such merely because words are
sufficiently malleable to allow a litigant to sketch its margins.”
Ahmed, 611 F.3d at 94. Now Cece is 34. R. 105. Can “16, 17 - up
until probably about 26,” stretch further to 34? Is 34 young? It
depends on whom you ask. And that is the problem with using
such subjective characteristics to define a “social group.”
Further, we should leave to the Board in the first instance
to determine whether “living alone” and “young” should
qualify as characteristics of a social group. As the en banc court
recognizes, “[a]n appellate court errs by deciding in the first
instance, without giving the Board the first opportunity on
remand, whether a proposed social group is cognizable within
the meaning of the Act.” Opinion at 25. The court, however,
reasons that the immigration judge and Board erred because
they “had before them all of the facts pertaining to Cece’s
proposed social group and yet determined that her social
group was not cognizable under the Act.” Opinion at 25.
While the immigration judge and Board may have had all
the facts pertaining to Cece’s proposed social group before it,
No. 11-1989 43
they did not view Cece’s proposed social group as “young
Albania woman living alone.” Rather, they viewed the social
group as “young women who are targeted for prostitution by
traffickers in Albania,” or “women in danger of being traf-
ficked as prostitutes.” Opinion at 10 (citing R. 128, 131).
Accordingly, the immigration judge and Board never consid-
ered the propriety of the social group defined by this court, i.e.,
“young Albania women living alone.” More specifically, the
immigration judge and Board never considered whether
“young” and “living alone,” could be characteristics of a social
group. And since we lack the authority to decide in the first
instance whether these characteristics may form a social group,
remand is the appropriate course of action. See Gonzales v.
Thomas, 547 U.S. 183, 186 (2006) (per curiam); INS v. Orlando
Ventura, 537 U.S. 12, 16-17 (2002) (per curiam).
There is one further complication. While Cece’s application
for asylum and her expert witness’s testimony focused on the
risk to young woman, human trafficking in Albania is not so
limited. Virtually everyone in Albania is a potential target for
human trafficking, as explained by the U.S. Embassy’s June
2012 Trafficking in Persons Report:
Albania is primarily a source country for
men, women, and children subjected to sex
trafficking and forced labor, including the
forced begging of children. Albanian women
and children continue to be subjected to sex
trafficking within the country. Albanian
victims are subjected to conditions of forced
labor and sex trafficking in Greece, Italy,
44 No. 11-1989
Macedonia, Kosovo, Serbia, and throughout
Western Europe. Authorities reported find-
ing trafficking victims from Greece and
Ukraine in Albania during the year. Children
were exploited for commercial sex, forced
begging, and forced criminality, such as
burglary and drug distribution; girls were
also subjected to prostitution or forced labor
after arranged marriage. There is evidence
that Albanian men are subjected to forced
labor in agriculture in Greece and other
neighboring countries. Re-trafficking of
Albanian victims continued to be a problem.2
Thus, girls, boys, women, and men living in Albania are
subjected to human trafficking. And others are targeted, as
Cece’s expert testified, “because of the fact that the trafficker
has something against their particular family.” R. 256. But the
“‘generalized lawlessness and violence between diverse
populations, of the sort which abounds in numerous countries
and inflicts misery upon millions of innocent people daily
around the world, generally is not sufficient to permit the
Attorney General to grant asylum.’” Konan v. Attorney Gen. of
U.S., 432 F.3d 497, 506 (3d Cir. 2005) (quoting Singh v. INS, 134
F.3d 963, 967 (9th Cir. 1998)); see also Ahmed v. Ashcroft, 348 F.3d
611, 619 (7th Cir. 2003). Can individuals subjected to such
“generalized lawlessness” nonetheless seek asylum by carving
2
http://tirana.usembassy.gov/press-releases2/2012-press-releases/
2012-trafficking-in-person-report--albania-june-20-2012/2012-trafficking-
in-person-report-albania-june-20-2012.html (last visited May 8, 2013).
No. 11-1989 45
out the immutable or fundamental characteristics that make
them the target for that violence? In other words, could
virtually every Albania obtain “social group” status by
identifying the characteristics that make them a target for
human trafficking, when as Cece’s own expert testified,
“[m]ost of the time, however, [human trafficking] has simply
to do with economics.” R. 256. What about: “Young strong
men,” targeted for human trafficking for forced labor; “handi-
capped boys,” targeted for human trafficking for forced
begging; “strong boys,” targeted for human trafficking for
burglary; “pretty girls,” targeted for sexual exploitation; and
“young woman living alone,” targeted for prostitution?
When the scourge of human trafficking targets such a broad
segment of the population, if not the entirety of the population,
it may well seem that what the victims have in common is not
an immutable or fundamental trait, but the unfortunate
circumstance of being targeted for any offensive purpose. That
may explain why the Board concluded that this was not a
“social group” within the meaning of the INA: because it is
“defined in large part by the harm inflicted on the group, and
does not exist independently of the traffickers.” R. 9.
Accord Rreshpja v. Gonzales, 420 F.3d 551, 555-56 (6th Cir 2005);
see also Escobar v. Holder, 657 F.3d 537, 545 (7th Cir. 2011)
(holding that a social group “cannot be defined solely by the
fact that its members suffer persecution from the government
or from a group that the government cannot or will not
control”). But rather than rejecting Cece’s proposed social
group because it is defined in large part by the harm inflicted
on the group, as the Board did, the better approach might be to
46 No. 11-1989
instead recognize that the problem is one of generalized
lawlessness.
However, in the final analysis, we need not reach these
difficult questions because, as discussed below, even if Cece
identified a social group within the meaning of the INA, and
presented a case of persecution—as opposed to generalized
lawlessness—Cece still cannot prevail on her request for
asylum because the Board found that “there is [in]sufficient
evidence in the record … that internal relocation is not reason-
able.” R. 331.
B. Internal Relocation
Because Cece’s application for asylum is based on a well-
founded fear of future persecution, in addition to proving that
she is unable or unwilling to return to Albania because of her
membership in a particular social group, she also bears the
added burden of proving she cannot reasonably relocate to
another part of her home country to avoid persecution.
Oryakhil v. Mukasey, 528 F.3d 993, 998 (7th Cir. 2008). “The
immigration regulations contemplate two separate inquiries to
determine whether an applicant could reasonably relocate
within his home country: (1) whether safe relocation is possi-
ble, and if so, (2) whether it would be reasonable to expect the
applicant to safely relocate.” Id.
In this case, the Board found that Cece failed to meet her
burden to show that internal relocation was not reasonable.
The en banc court holds that the Board’s conclusion is not
supported by substantial evidence because its decision lacked
any discussion or analysis of the issue, but merely stated “we
once again find that there is insufficient evidence in the record
No. 11-1989 47
that internal relocation is not reasonable.” Opinion at 26. But
in the Board’s first order before remand, it had already
explained its reasoning. There was no need for the Board to
restate the same analysis in the second appeal.
Turning then to the analysis of the issue of internal reloca-
tion contained in the Board’s first order. The Board explained
that, after [Cece] moved to Tirane, she felt safe and
protected and there is no indication that she had any
further problems. See Tr. at 59-60. There is no indica-
tion that anyone was looking for the applicant in
Tirane, nor pursuing her there. See Tr. at 35 (indicat-
ing that nothing happened to the applicant in
Tirane). Thus, the applicant appears to have success-
fully relocated within Albania. See 8 C.F.R. §
1208.13(b)(3)(1). There is insufficient indication in
the record that she has a well-founded fear of
persecution in Tirane or in another city within
Albania, outside of Korce. The applicant testified
that, “if [Reqi] wanted to come after me, he’d find
me anywhere.” See Tr. at 34. However, there is no
indication that Reqi (or any other trafficker) tried or
was motivated to pursue the applicant outside of
Korce. Thus, we find that the applicant failed to
meet her burden of proof in this case.
R. 330-331.
The Board then concluded: “In sum, we can not find that
there is sufficient evidence in the record … that internal
relocation is not reasonable.” R. 331.
48 No. 11-1989
The Board’s conclusion that Cece failed to show that safe
relocation was not reasonable was supported by substantial
evidence. Following her encounter with Reqi, Cece successfully
relocated to Tirane and while there obtained a job teaching
English. It is true that Cece was not living alone in Tirane—she
was living in a dormitory room she shared with three other
single women. But Cece was not homebound. She had to go to
and from work, and about her daily affairs. Not once during
the year Cece lived in Tirane was she approached by Reqi or
anyone else. While Cece claimed Reqi could find her anywhere,
the Board could reasonably conclude, as it did, that because no
one had approached Cece in Tirane, neither Reqi nor any other
trafficker was motivated to pursue Cece outside of Korce. And
given Cece’s testimony that she had no problems in Tirane, the
Board could reasonably conclude that “[t]here is insufficient
indication in the record that she has a well-founded fear of
persecution in Tirane or in another city within Albania, outside
of Korce.” True, if she were living alone in Tirane she would fit
one (of the many) profiles of those targeted by criminals. But
when the profile of those targeted by criminals is so broad, as
it is here, something more is necessary—some evidence that
the individual has a well-founded fear that she will be targeted.
In her case, Cece offered no evidence that she would actually
be targeted in Korce and thus that she had a well-founded fear
of persecution there. Without such evidence, the Board could
reasonably conclude that Cece did not meet her burden of
showing that internal relocation was not reasonable. Accord-
ingly, the Board did not err in denying Cece’s application for
asylum and the petition for review should be denied.
I DISSENT.
| {
"pile_set_name": "FreeLaw"
} |
291 F.3d 473
Charles ROCHE, Jr., Petitioner-Appellee, Cross-Appellant,v.Cecil DAVIS,* Warden, Indiana State Prison, Respondent-Appellant, Cross-Appellee.
No. 01-1664.
No. 01-1665.
United States Court of Appeals, Seventh Circuit.
Argued January 29, 2002.
Decided May 28, 2002.
Rehearing and Rehearing En Banc Denied July 15, 2002.
COPYRIGHT MATERIAL OMITTED Alan M. Freedman, Midwest Center for Justice, Chicago, IL, Marie F. Donnelly (argued), Virginia Capital Representation Resource Center, Richmond, VA, for Petitioner-Appellee.
Thomas D. Perkins (argued), Office of Attorney General, Indianapolis, IN, for Respondent-Appellant.
Before COFFEY, KANNE, and ROVNER, Circuit Judges.
KANNE, Circuit Judge.
1
A Lake County, Indiana jury found petitioner Charles Roche, Jr. guilty of murder, and the trial judge sentenced him to death. After exhausting his state court remedies, Roche filed a petition for writ of habeas corpus pursuant to 28 U.S.C. § 2254. The district court granted the habeas petition and ordered Roche to be sentenced to life without parole. We affirm the grant of habeas corpus, but vacate the disposition and remand to the district court to return the case to state court for re-sentencing.
I. History
A. Background
2
On May 11, 1990, the bodies of Ernest "Pee Wee" Graves and Daniel Brown were found near Gary, Indiana. The police soon determined that the two men had been victims of a homicide. On May 16, 1990, an information was filed against Roche in the Lake County Superior Court, charging him with two counts of murder and two counts of felony murder pursuant to IND. CODE §35-42-1-11 and seeking the death penalty. Edward Niksich and Roche's father, Charles Roche, Sr., were both joined as defendants, although the State did not seek the death penalty against Roche, Sr. On May 21, 1990, Noah Holcomb was appointed as Roche's counsel. Thereafter, both Niksich and Roche, Sr. moved for severance. The court granted Roche, Sr.'s motion, but denied Niksich's, thereby leaving Niksich and Roche to be tried jointly. Additionally, Niksich moved to suppress the fruits of the search of his home, which the court granted. Niksich also filed a motion in limine, seeking to exclude evidence concerning a robbery in which Niksich had previously been involved. Roche's counsel did not attend any of the severance hearings or the hearings on Niksich's motion to suppress or motion in limine.
B. The Trial
3
During most of the joint trial of Roche and Niksich, Roche wore shackles on his legs while he sat at counsel's table and when he took the stand to testify. The following evidence was adduced against Roche at trial: In early 1990, Niksich told his girlfriend, Patricia Andrasco, that Graves had stolen $120 worth of food stamps from Andrasco's car. Several weeks later, the woman who babysat Andrasco's children overheard a conversation between Roche and Niksich, and one of the men stated that Graves and Brown needed to be killed.
4
On May 10, 1990, Roche and Niksich went to the Spot Bar in Calumet City, Illinois and induced Graves and Brown to come to Roche's house by concocting a phony drug deal. Once there, Roche and Niksich took Graves and Brown into the basement of the house. Roche then went upstairs into his bedroom and told his girlfriend Delores Duszynski "to stay put" because "he had some guys downstairs that he was going to shoot because [they] owed somebody $120." Duszynski testified that several minutes later, she heard about nine or ten gunshots coming from the basement. She then heard someone pleading for his life, begging "please don't kill me, please don't kill me, just take my money, but please don't kill me." Duszynski then heard several more gunshots, and a few minutes later, Roche, Niksich, and Roche, Sr. came into the bedroom. Roche told her that all the two men had on them was $19 and a dime bag of cocaine. Roche then cut up some lines of cocaine on the dresser in the bedroom, and she, Roche, and Niksich each snorted a line. Roche, Niksich, and Roche, Sr. then loaded the two bodies into the trunk of Duszynski's car and drove off.
5
The three men then saw Jose Sanchez walking down the street and offered to give him a ride home. Sanchez testified that when he got into the car he saw blood on Roche, Sr.'s shirt. When the group arrived at Sanchez's house, they got out of the car and Roche opened the trunk, inside of which Sanchez saw two bloody bodies. The group then went inside of Sanchez's house, and Roche, Sr. immediately went into the bathroom and came out wearing a different shirt than he was wearing before. Next, the group gathered in Sanchez's living room, and Niksich exclaimed that he had shot one of the victims in the head in the basement of Roche's house and had taken his wallet. Roche then exclaimed that he had shot the other victim once in the chest, once in the stomach, and once in the head. Roche said that the victim was still alive and had begged for his life, but that Roche went upstairs, got a rifle, and went back into the basement and "kept on shooting him in the head." Sanchez testified that Roche told him that he used a .38 caliber gun and a .22 caliber rifle to kill one of the victims.
6
On May 11, 1990, there was an article in a local newspaper concerning Graves' and Brown's deaths.2 The article stated that two dead bodies had been found at the intersection of 9th Avenue and Cline Avenue near Gary in the early morning hours of May 11. The article also claimed that the police believed that the two dead men were victims of homicides and that there were no suspects at that time. Roche cut the article out of the newspaper and Duszynski put the article into a folder to save as a keepsake. Furthermore, Roche boasted about his involvement in Graves' and Brown's deaths on several occasions. For example, on May 12, 1990, he told his neighbor Larry Milligan, "I shot one and Eddie [Niksich] shot one." Also, at a party that Roche hosted on May 13, he told another neighbor, James Superits, that he and Niksich had shot two men in Roche's basement a few days earlier. He showed Superits the newspaper article and brought him down to the basement to show him where he and Niksich had shot Graves and Brown. In addition, Roche sold Superits a .38 caliber Derringer handgun, which Superits later gave to the police, and which the State entered into evidence.
7
On May 13, Sanchez went to the Hammond police station and informed them of his knowledge regarding the deaths of Brown and Graves, pointing the finger at Roche, Niksich, and Roche, Sr. Niksich, Roche, Sr., Duszynski, and Milligan were arrested several days later, although Roche remained at large. On May 16, Roche turned himself in to Russ Ewing, a Chicago television reporter, and Ewing's crew filmed Roche admitting that he shot two men in his basement. Ewing then took Roche to the Gary Police Department, where Roche gave a statement to the police, claiming that he "unloaded seventeen shots with a .22 rifle into the bodies of the two men." Roche confessed to his involvement in Graves' and Brown's deaths a fifth time on July 10, 1990, while being detained at the Lake County Jail. He told corrections officer Virginia Ratajczak that on May 10, he brought Graves and Brown into the basement of his house, that they had pleaded for their lives, and that he had shot them both to death. The State entered into evidence a redacted series of notes that Roche and another detainee passed back and forth while both were detained at the Lake County Jail. The redacted notes stated as follows:
8
Detainee: Roche, how do you deal with it, man, now that the prosecutor has filed the death request on you, don't it even bother you?
9
Roche: That shit don't move me. That's their way of trying to bluff someone into a cop-out, but I know they ain't got the balls to go through with it. They're faking at it, dude. They [have to prove] I did it in cold blood, plus they can't prove I took their money.
10
Detainee: Man, you just don't seem like the type to kill people for no reason or just in cold blood. From what I know of you, you just don't seem that kind.
11
Roche: Well, that's the whole idea behind my innocent smile. As long as a person doesn't think one is capable of it or don't look like the type, they can lure a person anywhere and smile them to their grave. Ha, my regret is turning myself in. I should of shot it out with the pigs and killed some of them. Plus, I should have killed my old lady that night and the Mexican. It's too late for the should of's and could of's. I've just got to beat this shit now.
12
Further, the State entered evidence concerning the investigation of Graves' and Brown's deaths. Security guard Randall Bowman testified that in the early-morning hours of May 11, he saw two bodies lying in the roadway at the intersection of 9th Avenue and the Cline Avenue service road. He stated that he returned to his office and called the police. Lake County Sheriff's Department evidence technician Ronald Lach testified that he arrived at the scene at approximately 12:30 a.m. on May 11. He photographed the bodies, collected a cigarette butt at the scene, and noted the absence of any identification on the bodies. Finally, he transported the bodies to the Guy and Allen Funeral Home, where the autopsies were conducted.
13
Dr. Young Kim, a pathologist for the Lake County Coroner's Office, performed the autopsies on Graves and Brown. Dr. Kim testified that he found six gunshot wounds on Brown's body — one on the left side of his chest, one on the left side of his head, and four on the right side of his face. Dr. Kim testified that Brown had died as a result of extensive fracturing of his skull and laceration of his brain due to gunshot wounds. He testified that he observed seven gunshot wounds on Graves' body — one on the upper right side of his chest, one on the right side of his chest, one of the left side of his back, one on the left side of his head, one on the right side of his face, one behind his ear, and one on the left side of his face. Dr. Kim stated that he determined that Graves had died as a result of gunshot wounds that caused a perforal injury of his right lung and a perforation of his brain. Finally, Dr. Kim testified that he recovered three bullets from Brown's body and five bullets from Graves' body.
14
Firearms expert Jay Gauthier testified that of the three bullets recovered from Brown's body, two were .38 caliber bullets fired from the gun that Roche had sold to Superits, and the other was a .22 caliber bullet. He also testified that of the five bullets recovered from Graves' body, four were .38 caliber bullets fired from the gun that Roche had sold to Superits and one was a .25 caliber bullet.
15
After the State entered the evidence detailed above, Roche took the stand in his own defense and testified to the following: On May 10, 1990, Niksich asked him to obtain some cocaine, and in response, he called Sanchez to arrange to purchase some. Sanchez told him that he would deliver the cocaine to him by 10:30 p.m. that evening. In turn, Roche told Niksich to arrange for the buyers to be in the basement of Roche's house by 11:00 p.m. Roche and his father then went to a local bar, where Roche became intoxicated. Roche and his father met Niksich at Roche's house around 10:30 p.m. Roche, Sr. and Niksich then left the house to go purchase some beer, and while they were gone, Roche heard some noises in the basement. He retrieved his .38 caliber Derringer and his .25 caliber automatic handgun and went down to the basement to investigate. Once in the basement, Roche found two men standing in the utility room. One of the men pointed a gun at him and told Roche to give him the cocaine. The second individual told the gunman to shoot Roche. Roche told the two men that he would go and get the cocaine, but instead he pulled his own gun and fired at the gunman, shooting him in the chest. He then shot the other man in the face. The gunman then pointed his gun at Roche again, so Roche shot him several times with his .25 automatic handgun. Shortly thereafter, Niksich, Roche, Sr., and Sanchez entered the basement and agreed to assist Roche in disposing of the bodies.
C. Penalty Phase
16
The jury found Roche and Niksich each guilty of two counts of murder and of two counts of "Murder in the Perpetration of a Robbery." A sentencing hearing was then held for both defendants, during which the State sought the death penalty against both Roche and Niksich. The Indiana Code provided that the State could seek the death penalty against Roche if it proved at least one of the following aggravating circumstances beyond a reasonable doubt: "[t]he defendant committed the murder[s] by intentionally killing the victim[s] while committing or attempting to commit ... robbery [or][t]he defendant has been convicted of another murder." IND.CODE §§ 35-50-2-9(b)(1)(G) & (b)(7) (1990). Further, the Indiana death penalty statute also provided that Roche could present evidence pertaining to any potential mitigating circumstances. See id. at § 35-50-2-9(c). The statute provided that the jury could recommend the death penalty, see id. at § 35-50-2-9(e), only after it had found that: 1) the state had proved beyond a reasonable doubt that at least one of the aggravating circumstances existed and 2) any mitigating circumstances that existed were outweighed by the aggravating circumstance(s). See id. at § 35-50-2-9(k). The court instructed the jury accordingly. The judge would then make the final determination about the appropriate sentence after considering the jury's recommendation and the standards elucidated in IND.CODE § 35-50-2-9(k). See id. at § 35-50-2-9(e).
17
With regard to Roche's sentencing hearing, the State entered the Pre-Sentence Report ("PSR") into evidence, which indicated the following: Roche had attained a ninth-grade education and had pled guilty to burglary in 1982 and was incarcerated for about six years as a result. Roche had one child, Crystall Lynn McDaniel, who was five and a half months old, and Roche helped support his daughter financially. Roche's parents divorced when he was very young and he lived with his paternal grandparents from age three to age seven, while his father was incarcerated. After his father was released from prison, Roche lived with Roche, Sr. and his stepmother, who moved around a lot. As a result, Roche frequently changed schools. Further, Roche did not sleep much as a child because his father would "take him places to rip off for money." Roche spent a considerable amount of his childhood in foster homes and with other relatives because his father was in and out of prison. Further, Roche had received psychiatric treatment when he was twelve years old. Finally, the PSR stated that Roche had said that he had never been addicted to any illegal drugs and that he used marijuana and alcohol daily and snorted cocaine occasionally.
18
Roche's mother testified that when Roche, Sr. went to prison (and Roche was about three years old), she accepted an offer from Roche's paternal grandparents to allow Roche to live with them. In exchange, the grandparents agreed to pay for her divorce from Roche, Sr. She testified that although she has had very little contact with Roche in the last twenty years, she promised that in the future, she would be much more involved in his life. Roche's sister testified that Roche had told her that he was "very sorry for what had happened [with Graves and Brown]."
19
After eight hours of deliberation, the jury indicated to the court that it had reached a recommendation with respect to one of the defendants, but that it had not with respect to the other. Each juror stated to the court that further deliberations would not result in the jury being able to reach a recommendation with respect to the second defendant. The jury then told the court that it recommended that the death penalty not be imposed on Niksich, but that it was unable to reach a recommendation with respect to Roche. The court, with counsel's approval, then discharged the jury. Thereafter, the court sentenced Niksich to 80 years imprisonment and sentenced Roche to death. In sentencing Roche to death, the court found that "[a]lthough there were three (3) defendants involved in these killings, the evidence showed that [Roche] was by far the most culpable and is deserving of the death penalty."
D. Procedural History
20
After the Indiana Supreme Court affirmed Roche's conviction and sentence on direct appeal, Roche filed a petition for post-conviction relief in the Lake Superior Court. At the post-conviction hearing held on October 30, 1995, Roche presented testimony regarding his shackling during the trial and at the sentencing hearing. Walter Murray, one of the bailiffs during Roche's trial, testified that at some point after the trial had started, he placed leg cuffs on Roche, but not on Niksich. Murray testified that he did not recall placing a drape over Roche's legs to prevent the jury from seeing the leg cuffs. He further testified that "with the judge's permission we left the leg irons on during the trial because we thought [Roche] was an escape risk." Paula Niksich, Edward Niksich's mother, testified that she could see Roche's shackles during trial and that she did not see a drape that covered the shackles. Finally, a trial witness, Patricia Andrasco, testified that she could see Roche's shackles from the witness box when she testified.
21
Ultimately, the trial court denied Roche's petition for post-conviction relief. Roche's counsel appealed the denial of the petition to the Indiana Supreme Court, which affirmed. See Roche v. State, 690 N.E.2d 1115 (1997). Subsequently, Roche filed a petition for writ of habeas corpus in federal district court, and the district court found that Roche's shackling claim warranted habeas relief. See Roche v. Anderson, 132 F.Supp.2d 688, 709 (N.D.Ind.2001). However, it held that "[r]ather than require that Roche be retried, when it is clear from his subsequent conduct that Roche is in fact an escape risk and would most likely be retried in shackles, albeit with an explanation on the record, this court will order Roche sentenced to life without parole." Id. (citation omitted).
22
On appeal, the state of Indiana argues that the district court improperly granted relief on Roche's shackling claim. On the other hand, Roche cross-appeals, arguing among other things that we should grant him a new trial because his counsel was ineffective for permitting him to be tried before the jury in shackles. Additionally, Roche claims that in granting habeas relief, the district court erred in re-sentencing him to life without parole.
II. Standard of Review
23
Roche filed his habeas petition after the effective date of the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), Pub.L. 104-132, 110 Stat. 1214 (1996) (codified at 28 U.S.C. § 2254). Therefore, the provisions of AEDPA govern our review. See, e.g., Lindh v. Murphy, 521 U.S. 320, 336, 117 S.Ct. 2059, 138 L.Ed.2d 481 (1997). AEDPA provides that if a constitutional claim was adjudicated on the merits by the state courts, a federal court may only grant habeas relief based on that claim if the state court's decision was "contrary to" or an "unreasonable application of" federal law as determined by the Supreme Court of the United States.3 28 U.S.C. § 2254(d).
24
In Williams v. Taylor, 529 U.S. 362, 405-06, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000), the Supreme Court stated that a state court's decision is "contrary to" established Supreme Court precedent when 1) the state court applies a rule that contradicts the governing law set forth in Supreme Court cases or 2) the state court confronts a set of facts that is materially indistinguishable from those of a decision of the Supreme Court and nevertheless arrives at a decision different from that reached by the Supreme Court precedent. In the present case, the Indiana Supreme Court correctly applied Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984) as the controlling precedent for Roche's ineffective assistance of counsel claims, see Roche, 690 N.E.2d at 1120, and "Strickland undoubtedly qualifies as `clearly established Federal law, as determined by the Supreme Court of the United States,' within the meaning of [AEDPA]." Williams, 529 U.S. at 413, 120 S.Ct. 1495. Further, the Supreme Court has never addressed facts that are materially indistinguishable from those in this case. Therefore, because the Indiana Supreme Court's decision was not "contrary to" established federal law, Roche is not entitled to habeas relief on this ground.
25
Nevertheless, we must determine whether the Indiana Supreme Court's conclusions with respect to Roche's ineffective assistance of counsel claims resulted from "an unreasonable application of" Strickland. See Williams, 529 U.S. at 411, 120 S.Ct. 1495. In doing so, we must keep in mind that we may not issue a writ of habeas corpus "simply because [we] conclude[ ]... that the relevant state-court decision applied [Strickland] erroneously or incorrectly. Rather, that application must also be unreasonable." Id. A defendant who claims that his counsel's assistance was so defective as to warrant a reversal must establish two components: 1) that his counsel's performance fell below an objective standard of reasonableness and 2) that he was prejudiced by the deficient performance. See Strickland, 466 U.S. at 687-88, 104 S.Ct. 2052. A failure to establish either prong results in a denial of the ineffective assistance of counsel claim. See Hough v. Anderson, 272 F.3d 878, 890 (7th Cir.2001). Prejudice occurs when there is a "reasonable probability" that but for counsel's deficient performance, the result of the proceeding would have been different. Strickland, 466 U.S. at 694, 104 S.Ct. 2052. A "reasonable probability is a probability sufficient to undermine confidence in the outcome." Id.
III. Analysis
A. Procedural Default
26
As an initial matter, the state contends that Roche has procedurally defaulted his claim that trial counsel was ineffective with respect to his shackling during trial because this claim was not raised on direct appeal. However, the Indiana Supreme Court adjudicated Roche's shackling claim on the merits, noting that Roche's appellate counsel was the same person that represented him at trial. See Roche, 690 N.E.2d at 1122-23. Thus, we are not barred from reaching the merits of this claim because "[i]f the last state court to be presented with a particular federal claim reaches the merits, it removes any bar to federal-court review that might otherwise have been available." Ylst v. Nunnemaker, 501 U.S. 797, 801, 111 S.Ct. 2590, 115 L.Ed.2d 706 (1991).
B. Shackling
27
With regard to the merits, Roche argues that he should receive a new trial because his counsel was ineffective for not objecting to him being shackled during trial and then for not taking precautions to ensure that the jury could not see the shackles. In addition, the state appeals the district court's decision that Roche's shackling prejudiced him during his initial sentencing hearing.
28
The jurisprudence regarding the effects of shackling merits a brief discussion. In Illinois v. Allen, 397 U.S. 337, 343-44, 90 S.Ct. 1057, 25 L.Ed.2d 353 (1970), the Supreme Court first addressed the issue of shackling and held that "there are at least three constitutionally permissible ways for a trial judge to handle an obstreperous defendant ...:(1) bind and gag him, thereby keeping him present; (2) cite him for contempt; (3) take him out of the courtroom until he promises to conduct himself properly." In addition, the Supreme Court explained that "no person should be tried while shackled and gagged except as a last resort." Id. at 344, 90 S.Ct. 1057. Building on Allen, the Supreme Court in Holbrook v. Flynn, 475 U.S. 560, 568-69, 106 S.Ct. 1340, 89 L.Ed.2d 525 (1986), considered the issue of "whether the conspicuous, or at least noticeable, deployment of security personnel in a courtroom during trial is the sort of inherently prejudicial practice that, like shackling, should be permitted only where justified by an essential state interest specific to each trial." The Court held that it was not, but set forth the standard for analyzing inherently prejudicial practices such as shackling. See id. at 569-70, 106 S.Ct. 1340. The Court stated that "[w]henever a courtroom arrangement is challenged as inherently prejudicial ... the question must be not whether jurors actually articulated a consciousness of some prejudicial effect, but rather whether an unacceptable risk is presented of impermissible factors coming into play." Id. at 570, 106 S.Ct. 1340 (quotation omitted). Consistent with Allen and Holbrook, this court has held that "[a]s a general rule, a defendant in a criminal case has the right to appear before the jury free from shackles or other physical restraints." Harrell v. Israel, 672 F.2d 632, 635 (7th Cir.1982). We have stated that the sight of a defendant in shackles "could instill in the jury a belief that the defendant is a dangerous individual who cannot be controlled, an idea that could be devastating to his defense." Id. at 637. Thus, when the defendant was shackled at trial, the key issues are whether the jury "was aware of" the shackles or whether the shackles "were readily visible." Fountain v. United States, 211 F.3d 429, 435 (7th Cir.2000).
29
Because Roche raised his shackling claim in the context of ineffective assistance of counsel, in order to prevail on this claim, Roche must demonstrate that: (1) his counsel's performance fell below an objective standard of reasonableness; and (2) the deficient performance so prejudiced his defense that it deprived him of a fair trial. See Strickland, 466 U.S. at 687-88, 104 S.Ct. 2052. There is no real question that Roche was in fact required to wear shackles during the guilt and penalty phases of his trial. However, the sole mention of this fact on the trial record is when immediately before Roche was to take the stand, his counsel requested, outside of the presence of the jury, that he would "like to have [Roche] seated at the witness chair before the jury comes in so they don't see his braces." We do not know why this is the first and only mention of Roche's shackling—the record is devoid of any of the facts that gave rise to the decision to shackle him. At the very least, this omission reveals the fact that his trial counsel made no record of any objection to Roche's shackling.
30
The Indiana Supreme Court held that counsel's failure to object to Roche's shackling did not constitute deficient performance because he was "careful about preventing the jury from seeing his client's ankle restraints [when Roche took the stand to testify]." Roche, 690 N.E.2d at 1123. The district court held that this was an "unreasonable application of" Strickland, stating that "Roche's counsel's failure to object on the record to the use of shackles is a clear example of deficient performance." Roche, 132 F.Supp.2d at 704. At the post-conviction hearing, a bailiff's testimony indicated that there was no drape covering Roche's shackles. Further, a witness recounted that during her testimony at trial, she could see Roche's shackles from the witness box. Most importantly, the jury box was directly next to the witness box, and therefore, Roche's shackles were "readily visible" to the jury. Fountain, 211 F.3d at 435.
31
Thus, not only did counsel fail to object to Roche's shackling, he also failed to ensure that Roche's shackles would not be visible to the jury while Roche was sitting at counsel's table during the entire trial. Accordingly, the issue that we are presented with is whether counsel's failure to object to Roche's shackling plus his failure to ensure that the jury could not see the shackles constituted deficient performance. Cf. Harrell, 672 F.2d at 636-37 (drawing a distinction between cases where jury was "aware of" shackles because no precautions were taken and cases where precautions were taken to conceal shackles from jury).
32
While the Indiana Supreme Court considered counsel's efforts to ensure that the jury would not see Roche's shackles when Roche testified, counsel's failure to do so while Roche was sitting at counsel's table during trial and during the sentencing hearing was not addressed. Therefore, given that the key inquiry in shackling cases is whether the shackles were "readily visible" to the jury, Fountain, 211 F.3d at 435, we hold that in this case, the Indiana Supreme Court's determination that counsel was not deficient was unreasonable.
33
Nevertheless, with respect to the guilt phase, Roche cannot establish that but for his counsel's deficient performance, the outcome of his trial would have been different. See Strickland, 466 U.S. at 694, 104 S.Ct. 2052. In Fountain, we held that "in light of the substantial evidence of [the petitioner's] guilt posited at trial," the petitioner could not show that he was prejudiced by "his counsel's failure to object to... the jury's observation of his shackles." 211 F.3d at 436. We held:
34
All of the events leading up to [the petitioner's] involvement in the murder... from the pre-murder planning, to the murder itself and the post-murder admissions, were established and corroborated by witness testimony and physical evidence. Thus ... [petitioner] has failed to establish that he was prejudiced by the allegedly defective assistance of counsel.
35
Id. (footnote omitted). In our case, the evidence showed that Roche planned the homicides with Niksich and told Duszynski that "he had some guys downstairs that he was going to shoot because [they] owed somebody $120." Further, on numerous occasions, Roche bragged to his friends that he had killed Graves and Brown and cut out a newspaper article discussing the homicides. Finally, he confessed his involvement in the homicides on a television news broadcast, to the police, and to a corrections officer. Thus, because of the overwhelming evidence of Roche's guilt, we cannot say that there was a "reasonable probability" that but for counsel's deficient performance, the result of the guilt phase of his trial would have been different. Strickland, 466 U.S. at 694, 104 S.Ct. 2052.
36
However, we cannot reach the same conclusion with respect to the outcome of the penalty phase. During the sentencing hearing, there was considerable evidence concerning the mitigating circumstances to be considered under IND.CODE § 35-50-2-9(c). For example, the PSR indicated the circumstances of Roche's troubled childhood and alcohol and drug problems, Roche's criminal history was relatively minor, and Roche's family members testified about Roche's remorse and about their improved relations with him. In fact, after eight hours of deliberation, the jury was unable to recommend the death penalty for Roche. While not second-guessing the trial judge's determination on this issue, we note that whether the aggravating circumstances outweighed the mitigating circumstances in this case was apparently a closer call than whether there was sufficient evidence of Roche's guilt during the guilt phase. Moreover, given the extreme inherent prejudice associated with shackling, see, e.g., Harrell, 672 F.2d at 637, and the considerable mitigating evidence, we agree with the district court and conclude that Roche has established that there was a "reasonable probability" that but for his counsel's deficient performance, the result of his sentencing hearing would have been different. Strickland, 466 U.S. at 694, 104 S.Ct. 2052.
37
In granting Roche's habeas petition, the district court held that it would "order Roche sentenced to life without parole." Roche, 132 F.Supp.2d at 704. However, at the time of Roche's offense, a sentence of life without parole was not an option under Indiana law, and the subsequently enacted life without parole statute cannot be applied retroactively. See State v. Alcorn, 638 N.E.2d 1242, 1244-45 (Ind. 1994) (stating that life without parole provision only applies to murders committed after June 30, 1993). Therefore, although we affirm the district court's grant of Roche's habeas petition, we vacate its order for modification of his sentence and remand for the issuance of an order returning the case to state court and directing that Roche receive a new sentencing hearing. Roche's other arguments on appeal for why he should receive a new trial are without merit and warrant no discussion. Further, because we are ordering that Roche receive a new sentencing hearing, we need not address his argument that he received ineffective assistance of counsel during his initial sentencing hearing.
IV. Conclusion
38
The district court's grant of habeas corpus is AFFIRMED; the disposition of resentencing by the district court is VACATED; and the case is REMANDED to the district court for return to the Indiana state court for resentencing.
Notes:
*
Cecil Davis, Superintendent, has been substituted as appellant for Rondle Anderson, pursuant to Fed. R.App. P. 43(c)
1
The Indiana Code provides that a "person who knowingly or intentionally kills another human being commits murder, a felony." IND.CODE § 35-42-1-1(1). Further, it provides that a "person who ... kills another human being while committing or attempting to commit ... robbery ... commits murder, a felony."Id. at § 35-42-1-1(2). In turn, the Indiana Code provides that a "person who knowingly or intentionally takes property from another person ... by using or threatening the use of force on any person ... commits robbery." Id. at § 35-42-5-1.
2
The record does not identify in which newspaper this article appeared
3
AEDPA also allows habeas relief when the state court's determination of the facts was unreasonable in light of the evidence presented. 28 U.S.C. § 2254(d). However, Roche has not raised such a claim so we need not consider this prong of the statute
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"pile_set_name": "FreeLaw"
} |
491 F.3d 1136
In re Jon A. HICKS; Amy E. Hicks, Debtors.J. Michael Morris, Trustee, Plaintiff-Appellant,v.Jon A. Hicks; Amy E. Hicks, Defendants, andBoeing Wichita Credit Union, Defendant-Third-Party-Plaintiff-Appellee,v.State of Kansas, Department of Revenue, Division of Vehicles, Third-Party-Defendant-Appellee.
No. 06-3243.
United States Court of Appeals, Tenth Circuit.
June 25, 2007.
Submitted on the briefs:*
J. Michael Morris, Klenda, Mitchell, Austerman & Zuercher, L.L.C., Wichita, KS, for Plaintiff-Appellant.
Eric D. Bruce, Bruce, Bruce & Lehman, L.L.C., Wichita, KS, for Defendant-Third-Party-Plaintiff-Appellee Boeing Wichita Credit Union.
Jay D. Befort, Robert W. Challquist, Kansas Department of Revenue, Topeka, KS, for Third-Party-Defendant-Appellee Kansas Department of Revenue.
Before McCONNELL, PORFILIO, and BALDOCK, Circuit Judges.
PORFILIO, Circuit Judge.
1
J. Michael Morris, trustee in bankruptcy (trustee), appeals from an order of the district court reversing a decision of the bankruptcy court that granted his complaint for lien avoidance. We conclude that the bankruptcy court correctly determined that the lien the trustee sought to avoid was not perfected as of the date the debtors filed for bankruptcy. The trustee should therefore have been permitted to avoid the unperfected lien. This being the case, we reverse the decision of the district court and remand for further proceedings.
FACTS
2
The lien in question arose when the debtors, Jon Anthony Hicks and Amy Elizabeth Hicks, borrowed funds from Boeing Wichita Credit Union (BWCU) to buy a Ford Expedition automobile. The debtors granted BWCU a purchase money security interest in the vehicle. The parties have stipulated to the following facts concerning this transaction and the subsequent history of BWCU's security interest:
3
1. On September 2, 2003, debtors purchased a 1999 Ford Expedition with the VIN of 1FMPU18L5XLC09309 (hereinafter "vehicle") from Innovative Auto Sales. The Credit Union was granted a purchase money security interest in the vehicle.
4
2. On September 2, 2003, Amy Hicks signed a Notice of Security Interest (NOSI) in favor of the Credit Union on the vehicle[.]
5
3. The Credit Union mailed a check in the amount of $52.50 for recording fees to the Kansas Department of Revenue with twenty-one NOSI forms, including the one on the Hick's [sic] vehicle. The check was deposited on September 10, 2003.
6
4. KDOR [Kansas Department of Revenue] acknowledges receiving the NOSI dated September 2, 2003, from the Credit Union on September 8, 2003[.]1
7
5. On October 22, 2003, the debtors made a submission to the Kansas Department of Revenue in applying for title on the vehicle pursuant to K.S.A. 8-135(b)[.] This submission by the debtors failed to note the lien of the [Credit] Union.
8
6. A paper document denominated "title" was subsequently printed by the Kansas Department of Revenue, indicating its "issued date" to be December 1, 2003. This document did not list the Credit Union or anyone else as a lien-holder. This document was mailed to the debtors and it was in their possession on the date of the bankruptcy[.]
9
7. From at least December 1, 2003, through May 26, 2004, the digital records of the Kansas Department of Revenue showed the debtors to be the owners of the vehicle, with no lien[.]
10
8. On December 8, 2003, debtors filed for Chapter 7 bankruptcy protection.
11
9. On or about December 18, 2003, the debtors made submission of documents to the Kansas Department of Revenue[.] This submission of the Debtors listed the lien of the Credit Union. The debtors surrendered the December 1, 2003 title to the Kansas Department of Revenue as part of this submission.
12
10. On May 26, 2004, the Credit Union's lien began to appear on the digital records of the Department of Revenue, by virtue of the second documents submission of the debtors of December 18, 2003.
13
11. On May 7, 2004, debtors received their discharge.
14
Aplt.App. at 65-66.
15
On March 10, 2004, the trustee filed this adversary proceeding, contending that he was entitled to avoid BWCU's lien.2 The bankruptcy court concluded that the filing of a NOSI only perfects a security interest until a certificate of title has been issued. BWCU lost its temporary perfection once a title was issued that failed to denote its lien, the court reasoned, and was therefore unperfected at the time the debtors filed for bankruptcy. The bankruptcy court therefore entered a memorandum decision granting the trustee's complaint for lien avoidance.
16
BWCU appealed to the district court. The district court concluded that the lien the NOSI created continued in effect even though KDOR had issued an "inappropriate" title certificate to the debtors. It reasoned that the title certificate, which did not identify the lien specified in the NOSI, could not make the previously-issued NOSI ineffective. The trustee therefore could not avoid BWCU's lien. Accordingly, the district court reversed and remanded the case to the bankruptcy court.
ANALYSIS
1. Jurisdiction
17
In response to the trustee's complaint in this action, BWCU filed a third party complaint against KDOR. BWCU sought to hold KDOR liable for improperly issuing a title certificate that omitted BWCU's lien. After the bankruptcy court ruled in favor of the trustee, in order to facilitate an immediate appeal from its decision granting the trustee's complaint for lien avoidance notwithstanding the unresolved third party complaint, it entered a certification and judgment under Fed.R.Civ.P. 54(b).
18
We ordered the parties to brief whether, in light of the district court's order remanding the case to the bankruptcy court, and given BWCU's unresolved third party complaint, the district court's order was a "final decision" that could be appealed to this court. See 28 U.S.C. §§ 158(d), 1291. We now conclude that the order was final and appealable. As the parties acknowledge, the bankruptcy court's only task on remand would have been to dismiss the trustee's complaint, and to dismiss the third-party complaint as moot. These ministerial actions would not have involved significant further proceedings on remand. A district court order that leaves the bankruptcy court with "no significant further proceedings to conduct" on remand is final and may be appealed to this court. Office of Thrift Supervision v. Overland Park Fin. Corp. (In re Overland Park Fin. Corp.), 236 F.3d 1246, 1251 (10th Cir.2001) (quotation omitted). We therefore have jurisdiction to consider this appeal.
2. Standard of Review
19
Our review of the bankruptcy court's decision is governed by the same standards of review that govern the district court's review of the bankruptcy court. Accordingly we review the bankruptcy court's legal determinations de novo and its factual findings under the clearly erroneous standard.
20
Connolly v. Harris Trust Co. (In re Miniscribe Corp.), 309 F.3d 1234, 1240 (10th Cir.2002) (quotation omitted). Here, the facts are stipulated. This case therefore presents us with a single legal issue that we review de novo: was BWCU's security interest perfected at the time the debtors filed for bankruptcy?
3. Governing Law
21
a. Trustee's Status as Lien Creditor
22
The so-called "strong arm" powers of 11 U.S.C. § 544(a)(1) grant the trustee the status of a hypothetical lien creditor once the bankruptcy petition has been filed. See LMS Holding Co. v. Core-Mark Mid-Continent, Inc., 50 F.3d 1520, 1523 (10th Cir.1995) (discussing lien creditor status assumed by debtor-in-possession). The rights of such a lien creditor are determined under state law. Id. Kansas law subordinates an unperfected security interest to the rights of a person who became a lien creditor prior to perfection. Kan. Stat. Ann. § 84-9-317(a) (2006 Cum. Supp.). Thus, if BWCU's security interest was unperfected under state law at the time the debtors filed for bankruptcy, the trustee may exercise his power to avoid BWCU's lien.
23
b. Perfection by Notation on Certificate of Title
24
Under Kansas law, a security interest in a vehicle may be perfected only by compliance with that state's certificate-of-title laws. See id. §§ 84-9-311(a)(2), (b) (2006 Cum.Supp.). The Kansas certificate-of-title statute provides that "[a]n application for certificate of title shall be made by the owner or the owner's agent upon a form furnished by the division and shall state all liens or encumbrances thereon, and such other information as the division may require." Id. § 8-135(c)(1) (2006 Cum.Supp.). Once the application is received, "[t]he county treasurer shall use reasonable diligence in ascertaining whether the facts stated in such application are true, and if satisfied that the applicant is the lawful owner of such vehicle, or otherwise entitled to have the same registered in such applicant's name, shall so notify the division, who shall issue an appropriate certificate of title." Id. The certificate thus issued "shall be in a form approved by the division, and shall contain a statement of any liens or encumbrances which the application shows, and such other information as the division determines." Id. Here, the certificate of title that had been issued at the time the debtors filed for bankruptcy did not reflect BWCU's lien.
25
c. Perfection by Filing of a NOSI
26
The Kansas Official UCC Commentary notes that the interplay of § 84-9-311 with certain certificate-of-title statutes may create a "gap" period between the time a certificate of title is applied for and when it is issued, during which a security interest is technically unperfected. See § 84-9-311, cmt. 5. Kansas has ameliorated this problem in the case of a purchase money security interest by providing for the filing of a NOSI. See Mid American Credit Union v. Bd. of County Comm'rs, 15 Kan.App.2d 216, 806 P.2d 479, 484 (1991) (stating legislature created NOSI procedure "to cover the period between the sale and the purchaser's obtaining a certificate of title."). The applicable statute provides:
27
[U]pon sale and delivery to the purchaser of every vehicle subject to a purchase money security interest as provided in article 9 of chapter 84 of the Kansas Statutes Annotated, and amendments thereto, the dealer or secured party may complete a notice of security interest and when so completed, the purchaser shall execute the notice, in a form prescribed by the division, describing the vehicle and showing the name and address of the secured party and of the debtor and other information the division requires. The dealer or secured party, within 30 days of the sale and delivery, may mail or deliver the notice of security interest, together with a fee of $2.50, to the division. The notice of security interest shall be retained by the division until it receives an application for a certificate of title to the vehicle and a certificate of title is issued. The certificate of title shall indicate any security interest in the vehicle. Upon issuance of the certificate of title, the division shall mail or deliver confirmation of the receipt of the notice of security interest, the date the certificate of title is issued and the security interest indicated, to the secured party at the address shown on the notice of security interest. The proper completion and timely mailing or delivery of a notice of security interest by a dealer or secured party shall perfect a security interest in the vehicle described on the date of such mailing or delivery.
Kan. Stat. Ann. § 8-135(c)(5).3
28
d. Interplay Between § 84-9-311 and § 8-135
29
It cannot be disputed that BWCU's filing of a NOSI perfected its security interest in the debtors' vehicle. The question is whether this perfection outlasted the subsequent issuance of a title certificate that failed to reflect BWCU's lien. More specifically, does the NOSI procedure provide a permanent, parallel record of perfection, or does it merely afford temporary perfection protection that dissolves upon issuance of a title certificate?
30
In Mid American, the Kansas Court of Appeals addressed this question and reached the latter conclusion. Mid American Credit Union, the holder of a purchase money security interest, filed a NOSI with KDOR. After thirty days, when no one had applied for a certificate of title, KDOR removed the NOSI from its files. Mid American repossessed the vehicle for non-payment, but subsequently re-sold it to the same purchaser, without filing a new NOSI. The purchaser then submitted an application for title that did not reflect the credit union's lien. After that, the vehicle was re-sold a number of times. The lien was never listed on the subsequent titles issued in connection with these sales. The original purchaser defaulted on the loan and disappeared. The lien holder thereafter sued the county treasurer, county commissioners, and KDOR, contending that its lien had been impaired by their failure to insure that its lien was noted on the certificate of title. The Kansas Court of Appeals determined that the lien holder had lost its perfected status and its right to recover from bona fide purchasers of the vehicle.
31
In reaching this conclusion, the court explained that a "lien must be noted on the certificate of title to be perfected. Allowing perfection without such a notation would endanger the reliability of sales of vehicles by assignment of title." Mid American, 806 P.2d at 484. Notwithstanding Mid American's original filing of a NOSI, its security interest was now unperfected because it was not listed on the certificate of title. Id. The court further noted that
32
[w]hile notifying the KDR of a security interest is a method of perfecting a lien on a vehicle, it is only meant to perfect the lien until the certificate of title is issued. Beneficial Finance [v. Schroeder,] 12 Kan.App.2d 150, 737 P.2d 52 [, 53 (Kan.Ct.App.1987)]. Allowing it to be a method of perfection beyond this period would again diminish the reliability of a certificate of title.
33
Id. (emphasis added).
34
We find the rationale of Mid American persuasive on the issue here.4 If a NOSI were allowed to contradict a certificate of title, certificates of title would lose their reliability as a method of determining whether a vehicle is encumbered by a lien.
35
In addition, we find the plain language of § 8-135(c)(5) compelling. That statute only requires the KDOR to keep the NOSI on file "until it receives an application for a certificate of title to the vehicle and a certificate of title is issued." Id. Application for a certificate of title, which supersedes the NOSI, is not an optional procedure. Under § 8-135(c)(6), "[i]t shall be unlawful for any person to operate in this state a vehicle required to be registered under this act, or to transfer the title to any such vehicle to any person or dealer, unless a certificate of title has been issued as herein provided." The language of § 8-135(c)(5) suggests that once a lien holder avails itself of the "permanent" method of perfection by notation on the certificate of title, the temporary perfection created by a NOSI disappears. The lien holder is then protected by the further provision in § 8-135(c)(5) that "[t]he certificate of title shall indicate any security interest in the vehicle."
36
The district court concluded that the title certificate issued to the debtors did not supersede the NOSI because it was not an "appropriate" certificate of title. While it is true that KDOR is charged with issuing an "appropriate certificate of title" that "shall contain a statement of any liens or encumbrances," § 8-135(c)(1), taken in context this statutory language refers only to KDOR's duties. There is no indication that it is intended to govern the rights of innocent third-party purchasers when a lien has been omitted from the certificate of title. If a purchaser were charged with ascertaining whether a facially valid certificate of title "appropriately" listed all liens, the function of a certificate of title, to provide a reliable means of determining the ownership and encumbrances of a vehicle, would be defeated.
37
Nor do we accept KDOR's argument that the debtors' second application for a certificate of title, which did reflect BWCU's lien, related back to the filing of the NOSI, thereby retroactively defeating the trustee's rights as a lien creditor. A trustee's rights are established as of the date the bankruptcy is filed. See LMS Holding Co., 50 F.3d at 1523. KDOR's reliance on In re Ridley, 50 B.R. 51 (Bankr.M.D.Tenn.1985), is misplaced. In Ridley, prior to the filing date of the debtor's bankruptcy, the Tennessee Motor Vehicle Division had suspended a title that did not reflect the creditor's lien, and had instructed the debtor to return the faulty title. After the debtor filed bankruptcy, the Division re-issued the title, correctly noting the lien. The facts of Ridley are thus distinguished from those of this case and we have no reason to believe the Kansas courts would apply the reasoning of that case to the circumstances present here.
38
Finally, both BWCU and KDOR argue that a Kansas statute enacted in 2003, permitting "electronic certificates of title" designed to reflect the NOSI received by KDOR, Kan. Stat. Ann. § 8-135d (2006 Cum.Supp.), casts doubt on the whole matter of reliance on "paper" certificates of title. We need not address the impact of § 8-135d, however, because the electronic title record that the trustee could have consulted at the time the debtors filed bankruptcy also failed to reflect the existence of BWCU's lien. The issue here is official notice of the lien, and the trustee had none.
39
The judgment of the district court is therefore REVERSED and this case is REMANDED for further proceedings in accordance with this opinion.
Notes:
*
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appealSee Fed. R.App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.
1
Although this fact is not part of the stipulation, the record contains a letter from KDOR's attorney to BWCU's attorney indicating that the NOSI relating to the Hicks transaction became stuck to another document and was put into storage without being entered into KDOR's computer as it should have been. Aplt.App. at 69
2
The adversary proceeding was resolved as to the debtors when they agreed that if the trustee were successful in avoiding the lien, they would pay the trustee the remainder of their obligations to BWCU under the pre-petition notesSee Aplt.App. at 84-85.
3
The Kansas legislature has recently amended § 8-135See 2007 Kan. Sess. L. Ch. 60, 135. These amendments, however, did not take effect until after the events in question and are therefore not pertinent to the issues on appeal.
4
InMorris v. CIT Group/Equipment Financing, Inc. (In re Charles), 323 F.3d 841 (10th Cir.2003), we described notation on a certificate of title and filing a NOSI as "two alternative ways that a secured creditor on a motor vehicle can perfect its security interest." Id. at 843 (quotation omitted; emphasis added). That statement, however, was dictum in light of the issues at stake in Charles, and in any event did not purport to address the durational limitations of a NOSI. This dictum in Charles is therefore not binding on us here.
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631 F.3d 802 (2011)
UNITED STATES of America, Plaintiff-Appellee,
v.
Terence STOKES, Defendant-Appellant.
No. 08-6451.
United States Court of Appeals, Sixth Circuit.
Argued: January 21, 2011.
Decided and Filed: February 7, 2011.
*804 ARGUED: L. Daniel Johnson, Memphis, Tennessee, for Appellant. Tony R. Arvin, Assistant United States Attorney, Memphis, Tennessee, for Appellee. ON BRIEF: L. Daniel Johnson, Memphis, Tennessee, for Appellant. Tony R. Arvin, Assistant United States Attorney, Memphis, Tennessee, for Appellee.
Before: ROGERS, SUTTON, and McKEAGUE, Circuit Judges.
OPINION
ROGERS, Circuit Judge.
Terence Stokes appeals his judgment of conviction on two counts of bank robbery, in violation of 18 U.S.C. § 2113(a), and two counts of brandishing a firearm during the commission of a crime of violence, in violation of 18 U.S.C. § 924(c). Stokes argues that there was insufficient evidence to support a jury verdict of guilty. He also asserts that the district court improperly denied his motion to suppress evidence, which was premised on the claims that his warrantless arrest was a Fourth Amendment violation and that his confession was involuntary due to police coercion. Because there was sufficient evidence for a reasonable jury to find Stokes guilty, because his arrest was justified by the consent exception to the warrant requirement, and because his confession was not involuntary, Stokes is not entitled to appellate relief.
Stokes was indicted for robbing three Memphis banks with the use of a firearm. A jury ultimately found him guilty of two of the robberies, both of the same branch of Trust One Bank. In all three robberies, the perpetrator entered the bank wearing a mask or hat and carrying a pillowcase with a heavy object in the bottom. Witnesses in each robbery described the perpetrator as a dark-skinned male, between 5'11" and 6' tall, and between 200 and 250 pounds. In the last of the three robberies (of which Stokes was not convicted) the robber fired a shot inside a branch of the Regions Bank. The police did not release information about the shot to the media.
The robberies were investigated by members of the Memphis Police Department's Safe Streets Task Force. Stokes came to the investigators' attention after a police informant led officers to Stokes's co-defendant, Casanyl Valentine, who was trying to sell dye-stained cash in the Memphis area. Because cash taken in the robberies had been given to the robber with dye packs that would later explode, investigators believed the person selling the *805 cash would have information about the crimes. Officers arrested Valentine, who did not meet the physical description of the perpetrator in the three robberies. Valentine told the officers that he hired people to carry out bank robberies for him. Valentine gave officers details of the three robberies, describing the location and procedure of each, and mentioning that a shot had been fired in one robbery.
Valentine told police that all three robberies had been carried out by Stokes. Investigators then pulled a booking photo of Stokes and compared it to a surveillance photo from one of the robberies. The officers concluded that the photos matched. They also showed the booking photo to Valentine, who confirmed that it depicted the person he had hired to carry out the robberies. Valentine told the investigators the address of a Memphis rooming house in which Stokes lived.
After talking with Valentine about Stokes, several officers went to the rooming house, arriving around 11:00 p.m. or midnight. These officers included Sergeant Pearlman, with the Memphis Police Department, and FBI Special Agent Bill Kay, who worked with the Safe Streets Task Force. Both Pearlman and Kay testified at the suppression hearing. Sergeant Pearlman testified that the officers arrived at the rooming house, went to Stokes's room, and knocked on the door. Pearlman testified that a woman opened the door of Stokes's room, and that the officers identified themselves as part of the Safe Streets Task Force and asked if they could enter. Pearlman testified that the woman gave consent for their entry. Sergeant Pearlman reported that Stokes could be seen sleeping in a recliner when the woman opened the door. Pearlman could not remember the woman's name, but stated on cross-examination that she identified herself as Stokes's girlfriend. Kay testified that the officers asked the woman how she knew Stokes. Neither Pearlman's nor Kay's testimony made clear whether they asked the woman about her relationship to Stokes before or after she granted them access to the room. The officers testified that their time at the rooming house was limited to an arrest and search incident to arrest. They further testified that after Stokes was arrested, he was placed in a police car to be taken to a nearby police building, the Project Safe Neighborhood (PSN) office, for interrogation. Kay testified that Stokes gave the officers information about the crimes only after they had arrived at PSN and Stokes had received his Miranda rights orally and in writing.
At the suppression hearing, Stokes gave a very different account of the officers' conduct at the rooming house. Stokes testified that he was smoking crack cocaine while lying in bed with a woman, whom he identified as a prostitute, when a dozen officers entered his apartment by unlocking the door. Stokes claimed the officers were all pointing their guns at him and that the officers asked: "where is the gun." He further testified that the officers searched the room and found crack cocaine and that one officer threatened that another, very large, officer would beat Stokes up if he didn't help them. Stokes also claimed that the officers promised him they would talk to the prosecutor to try to get him help, and that he told the officers, while still at the rooming house, that there was a gun at Valentine's girlfriend's house in Cordova. Stokes testified that he was then handcuffed and placed in an SUV, at which point he gave the officers directions to the house in Cordova where they recovered cash and a gun. He testified that after leaving the Cordova house, he directed the officers to a parking lot where he had left a getaway car used in one of the robberies. Stokes testified that he was *806 not given Miranda warnings in the course of these events.
On appeal, the parties agree that Stokes was interviewed at the PSN office until 5:08 a.m., at which point the officers started taking his written statement. Because Stokes appeared tired, the officers decided to take a break. Questioning resumed at 5:10 p.m., at which time Stokes completed and reviewed his written statement. Although Stokes's testimony provided a coherent account of the circumstances surrounding his arrest, he did not relate a clear story with regard to his statement. When testifying about when he made his statement, Stokes said: "I don't remember a lot of things . . . I was like out of my mind . . . I had been doing dope all that day, and I was full of dope then."
Stokes filed a pre-trial motion to suppress in which he argued that his arrest was illegal and that his statements, which amounted to a confession, were given under duress and thus involuntary. Stokes sought suppression of all evidence seized and statements made as a result of his arrest. The district court found the officers' testimony credible and Stokes's testimony inconsistent. The court denied Stokes's motion to suppress, finding that the "police were objectively reasonable in believing that the adult woman who answered the door at approximately 11:00 p.m. had actual authority to grant consent to enter," and that Stokes's confession was voluntary.
At trial, the Government called four witnesses: Sarah Britt, a Trust One teller who had been present during both of that branch's robberies; Justin Levick, an assistant vice-president of Trust One; FBI Special Agent Kay; and Teresa Thomas, a teller who was present during the robbery of Regions Bank. Britt and Kay both provided testimony relevant to the identity of the Trust One robber. In particular, Kay testified regarding Stokes's confession to the crimes.
On appeal, Stokes claims that there was insufficient evidence presented at trial to support his conviction. More specifically, Stokes contends that the evidence does not "sustain a finding that [Stokes] committed the crimes in question." This claim is unavailing because the jury could reasonably rely on the testimony of Sarah Britt and on the evidence of Stokes's own confession to conclude that Stokes was the robber. See United States v. Lawrence, 391 Fed.Appx. 480, 483 (6th Cir.2010).
Stokes's brief presents several arguments for why Britt's identification was not reliable. However, Britt's testimony provided the jury with several reasonable grounds for relying on her identification. Therefore, taking the evidence in the light most favorable to the prosecution, Britt's testimony could support a reasonable jury's finding that Stokes carried out the Trust One robberies. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). Stokes identifies the following weaknesses in Britt's identification: the robber's face was covered during the first robbery and partially obscured by sunglasses in the second; Britt testified that she knew it was the same man in both robberies only from his voice, but she had not heard his voice since the robberies; Britt identified someone other than Stokes as resembling the robber in a photographic line up she was shown in the weeks following the robbery (this line up did not contain a photo of Stokes); the robbery was a very stressful and short experience for Britt, thereby decreasing the credibility of her recollection; roughly two years had elapsed since the bank robberies at the time Britt identified Stokes in the courtroom; and Stokes was the only person in the courtroom who could come close to matching the robber's physical description. *807 However, Stokes acknowledges that Britt's testimony was not tainted by any constitutional violation, and his attorney was able to point out each of these weaknesses during cross examination.
Further, Britt's testimony provided the jury with ample grounds for relying on Britt's identification to conclude that Stokes had committed the robberies. Britt detailed the robberies at some length, and stated that she had walked the robber from drawer to drawer in the bank and followed him as he left the branch in order to read the license plate numbers of the getaway vehicles. She also testified that she was able to see the robber's face during the second robbery, and that it was clearly the same man who had previously robbed the bank based on his voice alone. Britt also stated that the two robberies were carried out in a similar fashion, further supporting her testimony that the same perpetrator committed both crimes. This testimony, taken in the light most favorable to the government, supports the conclusion that Stokes committed the robberies.
In addition to Britt's detailed testimony, the jury also heard testimony from Agent Kay that Stokes had confessed to committing both robberies, evidence that strongly supports the jury's guilty verdict. Stokes does not argue that the evidence of his confession does not support a conviction or that the jury gave the confession too much weight. Rather, he contends that the confession never should have been admitted and therefore should not be considered when reviewing the sufficiency of trial evidence. This claim is flawed, however, because sufficiency of the evidence claims are analyzed by examining all of the evidence admitted, regardless of the merits of any challenges to the admission raised in the same appeal. See Patterson v. Haskins, 470 F.3d 645, 651-53 (6th Cir.2006). If this court finds that the admitted evidence was sufficient to support a conviction, the court will then proceed to examine any claims that might lead to a remand for retrial. Id. Therefore, even if Stokes's confession were improperly admitted, we would still consider it in evaluating his sufficiency of the evidence claim.
Stokes emphasizes that his confession dealt not only with the two robberies of which he was convicted, but also included his confession to a third robbery charge, for which he was acquitted. Stokes contends that this reveals that the jury viewed the confession as suspect. Whatever the merits of this claim, the jury was not limited to the confession. A factfinder could reasonably rely on both the confession and Britt's testimony, and the two combined certainly support the conclusion that there was sufficient evidence to support the jury's verdict in this case.
Stokes's suppression claims are also without merit. Stokes's in-home arrest, although carried out without a warrant, was justified by consent. Because the consent exception to the warrant requirement applies, no evidence need be suppressed as a result of the arrest. Stokes correctly asserts that the Fourth Amendment generally "prohibits the police from making a warrantless and nonconsensual entry into a suspect's home in order to make a routine felony arrest." Payton v. New York, 445 U.S. 573, 576, 100 S.Ct. 1371, 63 L.Ed.2d 639 (1980). However, this quote from Payton reflects an exception to the warrant requirement: a warrant is not required when the officers obtain consent to enter from the suspect or "from a third party who possesses common authority over the premises." Illinois v. Rodriguez, 497 U.S. 177, 181, 110 S.Ct. 2793, 111 L.Ed.2d 148 (1990). This consent exception applies even when the third *808 party does not possess actual authority to grant officers entry, so long as the officers reasonably believe the consenting person has such authority. Id. at 186-88, 110 S.Ct. 2793. This is such a case.
Although the record does not contain evidence that the woman who answered the door of Stokes's room was his cotenant, the circumstances support the officers' conclusion that she shared authority over the premises. She answered the door of the one-room dwelling at a late hour, and the officers could see from the door that Stokes was asleep behind her. Her presence in the apartment while Stokes slept suggests she was more than a casual visitor. Further, the size and furnishings of the dwellingthe testimony showed that there was only one bedfurther supported the conclusion that Stokes and the woman were cohabitating, and that she had authority to grant entry to the premises. Because "the facts available to the officer[s] at the moment . . . [would] warrant a man of reasonable caution in the belief that the consenting party had authority over the premises," id. at 188, 110 S.Ct. 2793 (citing Terry v. Ohio, 392 U.S. 1, 21-22, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968)) (internal quotation marks omitted), the warrantless arrest of Stokes in his home was not a violation of the Fourth Amendment.
Stokes also argues that his confession should have been suppressed because it was obtained by police coercion. Stokes contends that under a totality of the circumstances test, his statements to the officers were involuntary and should therefore have been suppressed. In developing his involuntariness argument, however, Stokes specifically identifies only one factor in support of his claim: the officers' promise to inform the prosecutor of Stokes's cooperation. Because such promises do not support a finding of coercion, Stokes's claim was properly rejected.
Stokes's claim that the promise to make his cooperation known to the prosecutor amounted to coercion is unavailing. This court has stated three requirements for finding that a confession was involuntary due to police coercion: "(i) the police activity was objectively coercive; (ii) the coercion in question was sufficient to overbear the defendant's will; (iii) and the alleged police misconduct was the crucial motivating factor in the defendant's decision to offer the statement." United States v. Mahan, 190 F.3d 416, 422 (6th Cir.1999) (internal citations omitted).
The district court found that Kay had promised Stokes that the prosecutor would be made aware of Stokes's cooperation. However, as the district court concluded, that promise alone did not render the confession coerced. It is true that a promise of leniency "may render a confession coerced," depending on the totality of the circumstances. See United States v. Wiley, 132 Fed.Appx. 635, 640 (6th Cir.2005) (quoting Clanton v. Cooper, 129 F.3d 1147, 1159 (10th Cir.1997)). Stokes argues that the promise to inform the prosecutor of cooperation is de facto fraud, essentially because the promise could be perceived by the defendant as a promise of leniency even though the officers know the Government is in no way obligated to provide such leniency. But Kay testified that he advised Stokes that Kay could not promise anything about the prosecutor's actions, thereby explaining the limited nature of the promise. Further, "promises to inform a prosecutor of cooperation do not, ipso facto, render a confession coerced," Wiley, 132 Fed.Appx. at 640, and Stokes offers little more than Kay's statement regarding notifying the prosecutor of any cooperation in support of his coercion claim.
*809 Although Stokes does not explicitly argue other grounds for finding his confession involuntary, he does assert in his statement of facts that he was placed in a small room, handcuffed to a chair, and interviewed over the course of several hours in the very early morning. To the extent Stokes is urging that these assertions be factored into a totality of the circumstances review of his statement, the alleged facts do not support a finding of involuntariness. If true, these facts suggest that Stokes may have been somewhat uncomfortable during his interview, but they do not elevate the notification promise to the level of coercion. Nor do these alleged facts provide other grounds for finding that Stokes's statement was coerced. Although Stokes's initial custody and interview did last for approximately five hours, interviews lasting several hours (as opposed to entire days) are not considered to be of "great duration," see United States v. Williams, 612 F.3d 417, 422 (6th Cir.2010), and are therefore not indicative of coercion. Even if the five-hour time period did constitute great duration, it would need to be accompanied by other factors indicating coercion before the confessions were found to be involuntary. Id. This court has approved lengthy interrogations during the midnight hours, see United States v. Redditt, 87 Fed.Appx. 440, 444 (6th Cir.2003); Ledbetter v. Edwards, 35 F.3d 1062, 1069 (6th Cir.1994), and Stokes did not offer any credible testimony or other argument that the duration or hour of his questioning led to his will being overborne. Stokes's claim that he was handcuffed to a chair is not supported by any finding by the district court, but Agent Kay testified that Stokes may have had one hand cuffed to a chair during the interview. However, the use of a single handcuff does not support a finding that the defendant's will was overborne where he was not denied other physical comforts. See, e.g., United States v. Miller, 48 Fed. Appx. 933, 952-53 (6th Cir.2002).
The other factors considered in the totality of the circumstances analysis weigh against a finding of involuntariness. Stokes was given his Miranda rights orally and in writing, and he acknowledged at his hearing that he had an extensive criminal history and was familiar with his rights. Further, Stokes had attended some college, and therefore had sufficient education to understand the Miranda warnings. Based on the totality of the circumstances, the district court did not err in denying Stokes's motion to suppress his confession as involuntary.
For the foregoing reasons, Stokes's judgment of conviction is affirmed.
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286 F.2d 689
James Eugene ALCORN, Appellant,v.Clarence T. GLADDEN, Warden, Oregon State Penitentiary, Appellee.
No. 16970.
United States Court of Appeals Ninth Circuit.
February 1, 1961.
James E. Alcorn, in pro. per. Richard M. Kaplan, San Francisco, Cal., for appellant.
Robert Y. Thornton, Atty. Gen., for State of Oregon, Robert G. Danielson, Asst. Atty. Gen., for State of Oregon, for appellee.
Before POPE and HAMLEY, Circuit Judges, and JAMESON, District Judge.
HAMLEY, Circuit Judge.
1
James Eugene Alcorn, a prisoner in Oregon State Penitentiary, appeals from a district court order denying his application for a writ of habeas corpus. The application was denied without calling for a return and without hearing. This was done on the ground that the application did not state facts upon which relief might be granted and that there was no showing of any attempt to comply with the Oregon Post-Conviction Hearing Act, Oregon Laws 1959, ch. 636, ORS 138.510-680.
2
In Alcorn's application in the district court for a writ of habeas corpus it was alleged that in connection with his conviction in the courts of Oregon his federal constitutional rights had been violated in two respects: (1) He was denied the right to legal counsel; and (2) he was coerced into entering a plea of guilty as a result of beatings and the promise of a light sentence.
3
Appellee concedes that Alcorn's application states facts which, if true, establish a violation of his rights under the due process clause of the fourteenth amendment. It follows that if the denial of his application without a hearing is to be sustained it must be on the other ground stated in the district court order.
4
This other ground, as stated above, is that Alcorn failed to show that he had sought relief under the Oregon Post-Conviction Hearing Act. In essence this is a ruling that, by reason of his failure to proceed under that act, Alcorn has not exhausted his state remedies and therefore, under 28 U.S.C.A. § 2254, is not entitled to proceed in federal court.
5
It appears from the record that in a coram nobis proceeding instituted in a circuit court of Oregon on October 18, 1958, appellant advanced the same contentions concerning lack of counsel and coercion which he makes here. The coram nobis application was stricken. On April 17, 1959, appellant filed in the same state court an amended motion in the nature of coram nobis. A further amendment thereto was filed on July 2, 1959. That court held a hearing thereon and entered an order denying the motion. There is no appeal to the Oregon Supreme Court from an adverse order or judgment in coram nobis. State v. Endsley, 214 Or. 537, 542, 331 P.2d 338, 340.
6
Alcorn then commenced the instant proceeding, asserting that he had thus exhausted the remedies available to him in the state of Oregon. Appellee, on the other hand, contends that an adequate and complete remedy is available to Alcorn under ORS 138.530(1) (a), a provision of Oregon's Post-Conviction Hearing Act, which became effective on May 26, 1959.1
7
Appellant points out, however, that under one subsection of this act, with certain qualifications not here relevant, no ground for relief may be claimed under that act when such ground has been asserted in any post-conviction proceeding prior to May 26, 1959, and relief was denied by the court.2 Appellant argues that since he advanced the grounds upon which he now relies in the Oregon coram nobis proceeding and relief was denied, he is precluded from proceeding under the Oregon Post-Conviction Hearing Act.
8
In our opinion the prior post-conviction proceedings referred to in ORS 138.550(4) are those which can properly be invoked and in which the state court would have jurisdiction to grant relief. In Alcorn's case coram nobis was not such a proceeding. In State v. Huffman, 207 Or. 372, 392, 297 P.2d 831, 840, it was held that the trial courts of Oregon lack jurisdiction to grant relief under coram nobis if habeas corpus is available for that purpose. Habeas corpus was a remedy available to Alcorn at the time he proceeded by coram nobis. See Huffman v. Alexander, 197 Or. 283, 251 P.2d 87, 253 P.2d 289. Thus Alcorn's coram nobis proceeding was a nullity and does not stand in the way of a new proceeding under the Post-Conviction Hearing Act.
9
Section 2254 does not require that every possible method of obtaining state court relief be pursued to ultimate conclusion. Where, for example, the highest court of a state has held against a defendant on an appeal from his conviction and certiorari has been denied, section 2254 does not make it necessary for him to thereafter seek collateral relief in the state courts with respect to the same alleged errors. Brown v. Allen, 344 U.S. 443, 447, 73 S.Ct. 397, 97 L.Ed. 469.
10
But that section does require that some available state procedure be followed. Daugharty v. Gladden, 9 Cir., 257 F.2d 750, 757. Up to now Alcorn has not pursued any Oregon remedy properly available to him, and he may now seek such a remedy under the Post-Conviction Hearing Act.
11
Affirmed.
Notes:
1
ORS 138.530(1) (a) reads as follows:
"(1) Post-conviction relief pursuant to ORS 138.510 to 138.680 shall be granted by the court when one or more of the following grounds is established by the petitioner:
"(a) A substantial denial in the proceedings resulting in petitioner's conviction, or in the appellate review thereof, of petitioner's rights under the Constitution of the United States, or under the Constitution of the State of Oregon, or both, and which denial rendered the conviction void."
2
ORS 138.550(4):
"(4) Except as otherwise provided in this subsection, no ground for relief under ORS 138.510 to 138.680 claimed by petitioner may be asserted when such ground has been asserted in any post-conviction proceeding prior to May 26, 1959, and relief was denied by the court, or when such ground could reasonably have been asserted in the prior proceeding. However, if petitioner was not represented by counsel in such prior proceeding, any ground for relief under ORS 138.510 to 138.680 which was not specifically decided in the prior proceedings may be raised in the first petition for relief pursuant to ORS 138.510 to 138.680. Petitioner's assertion, in a post-conviction proceeding prior to May 26, 1959, of a ground for relief under ORS 138.510 to 138.680, and the decision of the court in such proceeding adverse to the petitioner, shall not prevent the assertion of the same ground in the first petition pursuant to ORS 138.510 to 138.680 if the prior adverse decision was on the ground that no remedy heretofore existing allowed relief upon the grounds alleged, or if the decision rested upon the inability of the petitioner to allege and prove matters contradicting the record of the trial which resulted in his conviction and sentence."
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F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUN 10 1997
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
MOSE C. WATTS, individually; MOSE C. WATTS,
Co-Trustee of the Mose C. Watts Ranch Trust; RONALD
W. MCGEE, as Co-Trustee of the Mose C. Watts Ranch
Trust; EDITH B. WARTICK; JOHN ALLEN WARTICK;
RITA L. PARK; JUDITH ANN HOLLINGBACK;
THOMAS OWEN WARTICK; EDITH B. WARTICK,
Co-Trustee of the Edith B. Wartick Trust; JOHN ALLEN
WARTICK, Co-Trustee of the Edith B. Wartick Trust;
RITA L. PARK, Co-Trustee of the Edith B. Wartick Trust;
THE WARTICK FAMILY LIMITED PARTNERSHIP, an
Oklahoma Limited Partnership; RAAN LADAWN JONES,
also known as Ladawn Jones; WINFREY TURNER,
individually; BILLY JEAN TURNER; TRUMAN
MATHIEWS, individually; DEVOLA MATHIEWS,
individually; TRUMAN MATHIEWS, Trustee of the No. 96-7041
Truman Mathiews Trust and of the Devola Mathiews
Trust; DEVOLA MATHIEWS, Trustee of the Truman
Mathiews Trust and of the Devola Mathiews Trust; H. L.
DOLLINS, III; ANGELINA DOLLINS; NANCEY
DOLLINS SUDDUTH; VIOLET DOLLINS; GEORGE
MILTON DOLLINS; DAVID DOLLINS; JACK
DOLLINS; BEVERLY ANN DOLLINS; CREEDA JUNE
DOLLINS; ROCKY DEAN DOLLINS; KAREN DANON
CHANEY; ROBSON ROYALTY CO.; JERRY L.
DOLLINS; RUTH EVERY; RUTH EVERY, as Trustee of
the Allen Every Revocable Trust; RUTH EVERY, as
Trustee of the Ruth Every Revocable Trust; W. P.
LERBLANCE; EARL JEFFREY; JAMES DAVID
LUCAS, also known as David Lucas; BETTY LEFLORE;
HELEN CALDWELL; FRANCES RICHMOND; JAMES
F. ELLIOTT; LINDA L. ANGELI; DEBBIE HOLUBY;
BILLIE JEAN LEFLORE; NEIL WAYNE DOLLINS,
Plaintiffs - Appellants,
v.
ATLANTIC RICHFIELD COMPANY; VASTAR
RESOURCES, INC.,
Defendants - Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D. Ct. No. CV-95-339)
Terry Joe Barker, Pezold, Richey, Caruso & Barker, Tulsa, Oklahoma (Danny P.
Richey and Joseph C. Woltz, Pezold, Richey, Caruso & Barker, Tulsa, Oklahoma,
Douglas G. Dry, Wilburton, Oklahoma, and George Zellmer, Allford, Ashmore,
Ivester & Zellmer, McAlester, Oklahoma, with him on the briefs), appearing for
the Plaintiffs-Appellants.
Jay A. Brandt, Hutcheson & Grundy, Dallas, Texas (Cynthia L. Frankel and
Nishita S. Shah, Hutcheson & Grundy, Dallas, Texas, and Joe Stamper, Stamper
& Hadley, Antlers, Oklahoma, with him on the brief), appearing for the
Defendants-Appellees.
Before TACHA, McWILLIAMS, and BALDOCK, Circuit Judges.
TACHA, Circuit Judge.
-2-
Several lessors of oil and gas mineral interests (“Lessors”) brought this
diversity action against their lessee, Atlantic Richfield Company and Vastar
Resources, Inc. (collectively “ARCO”). Lessors allege that ARCO: (1) failed to
pay royalties on proceeds received from the settlement of certain disputes with its
gas purchaser, Arkla Energy Resources (“Arkla”), (2) failed to obtain the highest
price available for Lessors’ gas, and (3) failed to protect several of Lessors’ units
against drainage. The district court granted summary judgment to ARCO on all
three claims. We exercise jurisdiction pursuant to 28 U.S.C. § 1291. For the
reasons set forth below, we reverse and remand for further proceedings.
BACKGROUND
Lessors own oil and gas mineral interests located in the Wilburton Field in
Latimer County, Oklahoma. There are forty-one separate oil and gas leases
between Lessors and ARCO setting forth the respective obligations of the
parties. 1
1
The leases provide in pertinent part:
Leases #1-22
The lessee shall pay lessor, as royalty, one-eighth of the proceeds from the
sale of the gas, as such from wells where gas is only found. . .
Leases #23-24
The lessee shall pay to lessor for gas produced from any oil well and used
by the lessee . . . as royalty 1/8 of the market value of such gas at the mouth
of the well; if said gas is sold by the lessee, then as royalty 1/8 of the
proceeds of the sale thereof at the mouth of the well.
-3-
I. T HE R OYALTY D ISPUTE AND S ETTLEMENT A GREEMENT
Lease #25, as contained in the record on appeal, is illegible.
Leases #26-30
And where gas only is found one-eighth of the value of all raw gas at the
mouth of the well, while said gas is being used or sold off the premises . . .
Leases #31-36
To pay lessor for gas of whatsoever nature or kind produced and sold or
used off the premises . . . one eighth (1/8) at the market price at the well for
the gas sold . . .
Lease #37
If gas, as above defined, produced from any well is sold by Lessee, then
Lessee shall pay Lessor one quarter (1/4) of the proceeds thereof at the well
received by the Lessee from the sale . . . All such payments shall be
received and accepted by Lessor as full compensation for all such gas.
Lease #38
The Lessee shall deliver to the credit of the Lessor as royalty . . . the equal
of 1/4 part of all oil produced and saved from the leased premises . . . or at
Lessee’s option, Lessee may from time to time purchase such royalty oil by
paying to the Lessor for such 1/4 royalty the market price at the well . . .
Lease #39
The lessee shall pay lessor, as royalty on gas . . . the market value at the
mouth of the well of one-eighth of the gas so sold or used, provided that on
gas sold at the wells the royalty shall be one-eighth of the amount realized
from such sale. . .
Leases #40-41
To pay lessor one-eighth (1/8) of the gross proceeds each year, payable
quarterly, for the gas from each well where gas only is found. . .
App’t. App. at 100-193.
-4-
Pursuant to a long-term gas purchase contract, ARCO has supplied Arkla, a
natural gas pipeline and gas purchaser, with natural gas produced from the
Wilburton Field at stipulated prices. In 1988, ARCO and Arkla became involved
in litigation over Arkla’s refusal to purchase gas from the Wilburton Field. Arkla
contended that it was not obligated to take gas from ARCO’s Wilburton wells
because the gas did not meet quality specifications and, therefore, ARCO had
improperly classified the wells as § 103 wells under the Natural Gas Policy Act
(“NGPA”). See 15 U.S.C. § 3313. Based on Arkla’s refusal to take gas and pay
the correct contract price, ARCO brought a claim for breach of contract against
Arkla. In its complaint, ARCO sought damages of $279 million, reflecting the
highest lawful price Arkla allegedly was obligated to pay for NGPA § 103 gas.
During settlement negotiations, ARCO and Arkla became involved in a
separate dispute involving Arkla’s gas purchases from a field located off the
shore of Louisiana in the Gulf of Mexico, known as the Mississippi Canyon. In
1987, the parties had attempted to resolve the dispute regarding the Mississippi
Canyon by entering into a Compromise and Settlement Agreement (“1987
Settlement Agreement”) under which Arkla made a recoupable $30 million
prepayment to ARCO for gas from the Mississippi Canyon. The parties, however,
continued to dispute their respective obligations under the 1987 Settlement
Agreement.
-5-
On February 8, 1989, ARCO and Arkla entered into a settlement agreement
(“1989 Settlement Agreement”) resolving both the Wilburton litigation and the
Mississippi Canyon dispute. ARCO agreed to sell gas from the Wilburton Field
to Arkla at an initial price of $2.20 per MMbtu to be adjusted later according to a
formula. In return, ARCO received: (1) sixty monthly recoupable prepayments of
$5 million ($300 million total) for gas from the Wilburton Field, (2) a new gas
gathering system in the Wilburton Field, (3) Arkla’s agreement to enter into a gas
transportation contract, at specified discount rates, for gas from the Wilburton
Field, (4) a $35 million recoupable prepayment for gas from the Mississippi
Canyon, and (5) a January 1, 1995 deadline for ARCO to refund any unrecouped
portion of the $300 million prepayment for the Wilburton Field, the $35 million
prepayment for the Mississippi Canyon, and the $30 million prepayment under the
1987 Settlement Agreement.
Since the 1989 Settlement Agreement, ARCO has paid Lessors royalties on
gas produced and sold from the Wilburton Field. ARCO, however, has not paid
royalties on any of the other settlement proceeds. Lessors brought this suit
against ARCO seeking damages for ARCO’s failure to pay royalties on the
settlement proceeds. Lessors sought royalties under six separate legal theories:
(1) breach of the contractual duty to pay royalties, (2) breach of the implied
covenant to market, (3) breach of fiduciary duty, (4) constructive fraud, (5)
-6-
breach of the duty of good faith, and (6) civil conspiracy. Lessors also sought
damages against ARCO for failing to obtain the best price available for Lessors’
gas under the 1989 Settlement Agreement. The district court granted summary
judgment to ARCO on both of Lessors’ claims.
1. T HE D RAINAGE I SSUE
In the mid-1980s, ARCO discovered the Arbuckle formation, a large source
of natural gas underlying other formations in the Wilburton Field. ARCO is the
operator of fourteen of sixteen wells producing gas from the Arbuckle formation
pursuant to private joint operating agreements with other working interest
owners. 2
On January 31, 1991, the Oklahoma Corporation Commission (“OCC”)
issued Field Rules, retroactive to May 1, 1990, recognizing the Arbuckle
Formation as a common source of supply, meaning that any one well could
ultimately drain all the gas in the formation. The Field Rules established certain
limits on the monthly production of each unit, called “allowables.” The OCC
determined that because seven of the Arbuckle wells were limited in their ability
2
Each well is composed of a separate 640-acre drilling and spacing unit. See
Okla. Stat., tit. 52, § 87.1 91993) (authorizing the Oklahoma Corporation Commission to
establish well spacing units to prevent waste and to protect the correlative rights of
interested parties in a common source of supply). Unless the OCC grants an exception,
only one well is permitted to be drilled in each drilling and spacing unit.
-7-
to produce gas, the Field Rules were necessary to ensure that each well would
produce approximately its fair share of the gas.
The Field Rules contained several provisions concerning the treatment of a
well that is underproducing its allowable, known as an “underage.” The Field
Rules specified that underages accumulated by a well could be carried forward
and added onto that well’s monthly allowable, effectively increasing the limit on
future production. If a well’s underages exceeded a specified amount, however,
those underages would be canceled. The Field Rules contained an “Effective
Date” provision as follows:
These rules shall be effective May 1, 1990, and the Unit Operator of
each Unit shall have the period from the effective date of the rules to
December 31, 1991 to adjust any over and under production before it
is adjusted in accordance with [the cancellation provision].
App’t. App., Vol. I at 227 (emphasis added).
After the Field Rules were issued, three of ARCO’s wells (the Yourman
No. 2, the Costilow No. 3, and the Kilpatrick No. 2) began to accrue underages
each month and were approaching the point at which their underages would be
canceled pursuant to the Field Rules. In early 1991 ARCO performed “workover”
operations on the three underproducing wells to increase their deliverability. The
successful workovers resulted in increased production in all three wells and
permitted two of the wells to make up their underages and meet the allowables
established by the Field Rules.
-8-
Several of the Lessors owning interests in adjacent units contend that the
workovers caused the three wells to drain gas from their units, resulting in
decreased production relative to the “draining” wells. Before the district court,
Lessors sought damages against ARCO for uncompensated drainage, asserting a
number of theories including: (1) breach of the implied covenant to protect
against drainage, (2) tortious drainage, (3) breach of fiduciary duty, (4) breach of
good faith, (5) conversion, and (6) unjust enrichment. In addition, Lessors
contended that by selectively performing the workovers on units in which ARCO
has a greater working interest, ARCO acted tortiously, wantonly and maliciously,
subjecting ARCO to liability for punitive damages. The district court granted
summary judgment to ARCO on the basis that the Field Rules bar all of Lessors’
claims.
DISCUSSION
We review the grant of a motion for summary judgment de novo, applying
the same standard used by the district court pursuant to Fed. R. Civ. P. 56(c).
Harvey E. Yates Co. v. Powell, 98 F.3d 1222, 1229 (10th Cir. 1996) [hereinafter
Yates]. Summary judgment is appropriate “if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
-9-
Appellants, as the nonmoving party, must go beyond the pleadings and “must set
forth specific facts showing that there is a genuine issue for trial as to those
dispositive matters for which [they] carr[y] the burden of proof.” Applied
Genetics Int’l v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990).
“We view the evidence and draw any inferences therefrom in the light most
favorable to the party opposing summary judgment.” Coosewoon v. Meridian Oil
Co., 25 F.3d 920, 929 (10th Cir. 1994). “If there is no genuine issue of material
fact in dispute, we must determine whether the substantive law was correctly
applied by the district court.” Yates, 98 F.3d at 1229.
I. ARCO’ S D UTY TO P AY R OYALTIES
The district court granted summary judgment to ARCO on Lessors’ claim
for royalties because the leases did not provide for royalties to be paid on the
proceeds of settlements and because none of the proceeds constituted payment for
the production and sale of gas. The court reasoned that because the ARCO/Arkla
litigation involved disputes over gas quality and Arkla’s obligation to take gas
from ARCO’s wells, the settlement consideration did not constitute payment for
the production and sale of gas. Thus, the district court concluded that the
settlement consideration was not royalty bearing. In so holding, the court
analogized such settlement consideration to non-royalty bearing take-or-pay
payments.
- 10 -
On appeal, Lessors contend that the district court erred in concluding that
the settlement proceeds were not royalty bearing. Lessors argue that Arkla would
not have made the settlement payments to ARCO if Arkla were not to receive
something in return. What Arkla received in return could only have been gas
production:
The only good or service sold by ARCO to Arkla under the 1989
Settlement Agreement is natural gas. The disputes between ARCO
and Arkla over “interpretation of purchase contract” and “collateral
issues” were disputes over the terms (i.e., price and quality) under
which this gas production was to be sold. There is nothing in the
record to show that ARCO provided anything to Arkla under the
1989 Settlement Agreement other than gas production. Because
whatever settlement consideration ARCO received was necessarily
for the production of gas, it was subject to royalties.
App’t. Reply Br. at 11-12.
a. Royalties Are Due Only on Actual Production
We begin our analysis by looking to the royalty clauses in the leases
between ARCO and Lessors. Although containing slightly varying language, all
of the leases require royalties to be paid only on the proceeds from the sale of gas
produced from the wells—that is, gas physically extracted from the earth and
sold. Under the plain terms of these so-called “production-type” leases, the lessee
is not obligated to pay a royalty on the value of gas in the abstract, but only on the
cash value of gas that is actually produced and sold from the leased property. See
Yates, 98 F.3d at 1230 (discussing “production-type” leases); see also Roye
- 11 -
Realty & Dev., Inc. v. Watson, No. 76848, 1996 WL 515794, at *9 & n.8 (Okla.
Sept. 10, 1996) [hereinafter Roye Realty] (stating that royalties are payable under
production-type lease language only when gas is “produced and sold” and
distinguishing cases in which royalties are payable on the “amount realized” from
the sale of gas).
Because the leases expressly require royalties to be paid on gas actually
produced, we hold that the district court erred in concluding that royalties are not
payable here because the leases do not expressly require the payment of royalties
on settlement proceeds. If the settlement proceeds constitute payment for gas
actually produced and sold, it is immaterial that the leases do not explicitly
provide for the payment of royalties on settlement proceeds. Rather, for the
proceeds to be non-royalty bearing, the leases would have to expressly exclude
settlement proceeds. See Yates, 98 F.3d at 1231 (“[A]ny portion of a settlement
payment that is . . . for gas actually produced and taken by the settling purchaser
is subject to the lessor’s royalty interest.”). Thus, the mere failure to expressly
include settlement proceeds in the royalty provision of a lease, by itself, does not
preclude the payment of royalties on such proceeds.
Similarly, we hold that the district court erred in concluding that the
proceeds in this case should be treated like nonrecoupable take-or-pay
settlements. Under a take-or-pay clause, a purchaser must take a specified
- 12 -
volume of gas or, failing that, must pay a sum representing the difference between
the specified minimum and the volume of gas actually taken—that is, a payment
in lieu of production. See Diamond Shamrock Exploration Corp. v. Hodel, 853
F.2d 1159, 1164 (5th Cir. 1988) [hereinafter Diamond Shamrock] (discussing
take-or-pay clauses). Thus, “proceeds received by the lessee in settlement of the
take-or-pay provision of a gas supply contract (for either accrued take-or-pay
deficiencies or to abrogate future take-or-pay obligations) are not royalty bearing
because they are payments for non-production.” Yates, 98 F.3d 1236; see also
Roye Realty, 1996 WL 515794 at *9; Diamond Shamrock, 853 F.2d at 1167-68.
The non-royalty bearing nature of take-or-pay proceeds does not mean that
all settlement proceeds are non-royalty bearing. The relevant question in both
cases (take-or-pay payments and settlement proceeds) is “whether or not the funds
making up the payment actually pay for any gas severed from the ground.”
Independent Petroleum Ass’n of Am. v. Babbitt, 92 F.3d 1248, 1260 (D.C. Cir.
1996). In short, the nature of the settlement proceeds determines whether they are
royalty bearing. The central question in this case, therefore, is whether the
settlement consideration paid to ARCO constitutes payment, at least in part, for
gas actually produced and sold or whether it constitutes payment for something
other than the production and sale of gas. To that question we now turn.
- 13 -
b. Are the Settlement Proceeds Attributable to Actual Production?
In determining whether the settlement proceeds constitute payment for gas
actually produced and sold, we begin with our recent decision in Harvey E. Yates
Co. v. Powell, 98 F.3d 1222. In Yates, we addressed whether proceeds from the
settlement of take-or-pay and pricing disputes were subject to the lessee’s duty to
pay royalties. The parties in Yates, as in this case, operated under a standard
production-type lease where the duty to pay royalties was contingent upon the
actual production and sale of gas. Id. at 1230. After deregulation of natural gas
pricing, the gas purchasers in Yates reduced their gas “takes” and unilaterally
lowered to market level the purchase price of gas actually taken, prompting a
lawsuit by the gas producer. Id. at 1227. The parties subsequently entered into a
settlement agreement in which the producer agreed to accept a nonrecoupable
“buy-down” payment in exchange for certain price and take reductions in the gas
supply contract. Id. The producer paid royalties on the proceeds from gas sold at
the lower market price but failed to pay royalties on the nonrecoupable buy-down
payment. Id. at 1227-28.
In Yates, we developed three “guiding principles” in deciding whether
royalties are payable on settlement proceeds:
First, royalty payments are not due under a “production”-type lease
unless and until gas is physically extracted from the leased premises.
Second, nonrecoupable proceeds received by a lessee in settlement of
the take-or-pay provision of a gas supply contract are specifically for
- 14 -
non-production and thus are not royalty bearing. Third, any portion
of a settlement payment that is a buy-down of the contract price for
gas that is actually produced and taken by the settling purchaser is
subject to the lessor’s royalty interest at the time of such production,
but only in an amount reflecting a fair apportionment of the price
adjustment payment over the purchases affected by such price
adjustment.
Id. at 1231. In effect, we concluded that when a lessee accepts a settlement
payment in exchange for a reduced future price term, the lessors are entitled to a
royalty payment on two components, each of which constitutes consideration for
actual production: “(1) the proceeds obtained by the lessee from the sale of gas at
the bought-down price; and (2) a commensurate portion of the settlement
proceeds that is attributable to price reductions applicable to future production
under the renegotiated gas sales agreement as production occurs.” Id. at 1236.
In this case, the parties apparently do not dispute that ARCO has already
paid royalties on the sixty monthly prepayments of $5 million (or $300 million) as
gas was taken by Arkla during the five-year period from February 1, 1989 through
January 31, 1994. This amount represents the first component addressed in Yates,
the proceeds from the sale of gas at the bought-down price. Because royalties
have already been paid on this amount, the sole controversy is whether ARCO
must pay royalties on any of the other items of settlement consideration. Under
Yates, if Arkla gave any of the other items of consideration in exchange for
- 15 -
ARCO’s settling past price deficiencies or agreeing to future sales at a lower
price, Lessors are entitled to a royalty on the value of those items.
On appeal, Lessors contend that Yates, handed down after the district
court’s decision in this case, is dispositive and requires reversal of the grant of
summary judgment in favor of ARCO. In particular, Lessors assert that the record
contains evidence that a portion of the settlement proceeds constitutes
consideration for a reduction in the price ARCO was willing to accept for gas
under the terms of its contract with Arkla. According to Lessors, prior to the
1989 Settlement Agreement, Arkla was obligated to purchase gas at the NGPA
§ 103 price, which ranged between $3.40 and $4.60 per MMBtu. Lessors point to
the complaint ARCO filed in its lawsuit against Arkla, in which ARCO alleged
damages of $279 million based on its claim that the parties’ contract required
Arkla to pay a price in excess of the $2.20 per MMBtu for which ARCO
ultimately settled. Lessors also point to Section 4.1 of the 1989 Settlement
Agreement, which explicitly refers to the new price as a “price reduction.”
Lessors contend that under Yates, royalties are payable on any portion of
settlement proceeds that constitutes consideration for a reduction in the price a
purchaser is obligated to pay for gas production.
ARCO contends that Yates is not controlling in this case because there is
no evidence that the 1989 Settlement Agreement resulted in a “buy down” of the
- 16 -
actual price Arkla paid for gas. At argument, counsel for ARCO insisted that
Arkla has never paid the higher NGPA § 103 price and, in fact, paid a pre-
settlement price below the $2.20 price which ARCO ultimately accepted. ARCO
thus contends that the Settlement Agreement actually resulted in a price increase
for Lessors’ gas. As counsel for ARCO confirmed at argument, however, the
record before us does not show what price Arkla actually paid for gas prior to the
1989 Settlement Agreement. Even if ARCO were correct that an actual price
increase removes this case from the ambit of Yates, providing an alternate basis
for affirmance, such facts are not in the record, and thus, summary judgment in
favor of ARCO on this basis is premature.
We are not convinced, however, that an actual price increase would relieve
ARCO of its duty to pay royalties on proceeds received from the settlement of its
pricing claim. ARCO is correct that Yates involved a “buy-down,” or a reduction
in the actual price paid for gas. In Yates, the settling purchaser explicitly sought
and received a price reduction in exchange for a lump sum payment. See Yates,
98 F.3d at 1227. A “buy down,” however, is not the shibboleth that ARCO claims
it to be. Even absent a “buy down” (i.e., an actual price reduction), a lessee’s
refusal to pay royalties on the proceeds received from the settlement of a pricing
dispute would result in a windfall for the lessee. More importantly, such a refusal
- 17 -
would constitute a breach of the lessee’s duty to pay royalties on proceeds from
the production and sale of gas. A brief example illustrates this point.
Suppose that a purchaser is obligated to take 1,000,000 units of gas at
$4.00 per unit payable in two equal installments of $2 million. Upon receiving
the first 500,000 units, the purchaser unilaterally reduces the price to $3.00 per
unit (claiming that the gas is of substandard quality) and remits payment of only
$1.5 million. In response, the producer files a lawsuit for $1 million, the amount
due on the past price deficiency and the anticipated future shortfall. Instead of
litigating the gas quality issue, the parties agree to settle their dispute. In
exchange for a one-time lump sum payment of $500,000, the producer agrees to
forgive the past price deficiency and to accept the lower price of only $3.00 per
unit for future production. In this situation, there has been no “buy down” (i.e.,
actual price reduction). The pre-settlement price and the post-settlement price are
both $3.00 per unit. Despite the absence of a price reduction, however, the lump
sum payment still constitutes proceeds from the sale of gas because it represents a
component of the true price paid for both past and future production under the
supply contract. No one would dispute, therefore, that the royalty owners are
entitled to their royalty share of the lump sum payment. The important factor
triggering the duty to pay royalties is not an actual price reduction, as ARCO
- 18 -
contends, but rather an agreement by the producer to compromise its right to
pursue a higher price in exchange for a lump sum payment.
Although Yates involved an actual price reduction, the general rule
announced in Yates also applies in situations where the settlement of a pricing
dispute results in a post-settlement price that remains the same, as in the example
above, or where the price actually increases, as appears to be the case here. In
either situation, the lessee has agreed to compromise its pricing claim in exchange
for valuable consideration. From the point of view of the royalty owner, the
lessee has decreased the price at which it is willing to sell gas and thus has
unilaterally decreased the amount subject to the lessor’s royalty interest.
Therefore, whatever settlement consideration the lessee receives is a component
of the true price paid for the gas and is subject to the lessors’ royalty interest. In
sum, a lessor’s royalty interest is not limited to settlements involving an actual
“buy-down,” as in Yates, but extends to any settlement in which a producer
receives consideration for compromising its pricing claim, assuming of course
that the pricing claim relates to either past or future production actually taken by
the settling purchaser.
In this case, the 1989 Settlement Agreement included several items of non-
cash consideration in addition to Arkla’s agreement to make monthly prepayments
of $5 million for five years. ARCO does not dispute that royalties have not been
- 19 -
paid on the value of these non-cash items. Thus, if such items constitute
consideration for the settlement of ARCO’s pricing claim, Lessors are entitled to
a royalty on their fair market value. Producers such as ARCO cannot escape the
duty to pay royalties merely by disguising the form of consideration received in
the settlement of pricing disputes. This is true irrespective of the collateral
benefits the items have conferred upon Lessors.
In Yates, we concluded that “there exists a genuine issue of material fact
whether the . . . settlement proceeds are attributable solely to take-or-pay
deficiencies (i.e., non-production), or whether they are attributable, at least in
part, to a price adjustment for the actual production of gas.” 98 F.3d at 1235.
Similarly, in this case, we conclude that there is a genuine issue of material fact
whether the settlement proceeds received by ARCO are attributable solely to the
resolution of collateral disputes (i.e., the Mississippi Canyon) or whether they
constitute payment, at least in part, for ARCO’s agreement to compromise its
pricing claim for gas actually produced and sold from the Wilburton Field.
Although the district court concluded that none of the settlement proceeds were
related to the production and sale of gas, the record does not allow us to rule out
such a finding. We therefore reverse the grant of summary judgment in favor of
- 20 -
ARCO on the royalty issue and remand to the district court for further
proceedings on this question. 3
II. ARCO’ S D UTY TO O BTAIN THE H IGHEST P RICE A VAILABLE
Lessors argue that ARCO breached the implied covenant to market by
failing to obtain the highest price available for Lessors’ gas. The district court
granted summary judgment to ARCO on this claim because the court found that
Lessors could not show that the settlement price of $2.20 per MMbtu was not the
highest market price available to ARCO at the time of the 1989 Settlement
Agreement. The district court held that because ARCO obtained the best price
available, ARCO acted prudently and with due diligence in marketing the gas.
Lessors argue on appeal that the district court erred in granting summary
judgment to ARCO because the court reached its conclusion by resolving a
genuine dispute of material fact. Lessors contend that a genuine factual dispute
exists regarding whether ARCO’s decision to settle its pricing claim satisfies the
3
In addition to their claim for breach of the contractual duty to pay royalties,
Lessors contend that ARCO’s failure to pay royalties on the settlement proceeds
constitutes a breach of the implied covenant to market gas, breach of the duty of good
faith, breach of fiduciary duty, and unjust enrichment. In view of our holding that
Lessors may (depending on the facts) have a contractual right to royalties on at least some
portion of the settlement proceeds, we need not address Lessors’ alternative claims. We
see nothing in these claims that would “enlarge upon [Lessors’] contractual royalty
rights.” Yates, 98 F.3d at 1237 n.12; see also Cannon v. Cassidy, 542 P.2d 514, 516
(Okla. 1975) (failure to pay royalties does not constitute a separate breach of the implied
covenant to market).
- 21 -
implied covenant to market. In particular, Lessors contend that a reasonable jury
could find that ARCO breached the implied covenant to market by entering into
the settlement agreement and accepting a price for gas lower than the price ARCO
should have received under its gas supply contract with Arkla.
Under Oklahoma law, a producer such as ARCO has the “duty to market the
gas produced from a well and to obtain the best price and terms available.” Barby
v. Cabot Corp., 550 F. Supp. 188, 190 (W.D. Okla. 1981) (citing Tara Petroleum
Corp. v. Hughey, 630 P.2d 1269, 1273 (Okla. 1981)). In marketing the gas and
obtaining the best price available, ARCO must exercise “that degree of diligence
exercised by a prudent operator having regard for the interests of both the lessor
and lessee.” Fisher v. Grace Petroleum Corp., 830 P.2d 1380, 1391 (Okla. Ct.
App. 1991). Lessors bear the burden of proving that ARCO violated this duty.
Barby, 550 F. Supp. at 190; Tara Petroleum Corp., 630 P.2d at 1274.
To prevail on their claim at trial, Lessors initially must show that a higher
price was available at the time of the settlement agreement. To survive a motion
for summary judgment, therefore, Lessors must “set forth specific facts showing
that there is a genuine issue for trial” regarding whether the $2.20 price was the
best available price for their gas. Applied Genetics Int’l v. First Affiliated Sec.,
Inc.,, 912 F.2d 1238, 1241 (10th Cir. 1990). Although not entirely clear from the
record, it appears that Arkla may have been obligated to pay the NGPA § 103
- 22 -
price for Lessors’ gas. Indeed, this is what ARCO alleged in its lawsuit against
Arkla in Oklahoma state court. Under the 1989 Settlement Agreement, however,
ARCO agreed to a price below the § 103 price.
ARCO asserts that given the actual quality of the gas sold, ARCO could not
have charged the § 103 price under the contract. Thus, ARCO maintains that its
decision to settle with Arkla for the $2.20 price satisfied its duty to market the
gas in a prudent manner.
While ARCO’s ultimate decision to settle may have been a prudent business
decision, we cannot say as a matter of law that ARCO has satisfied the implied
covenant to market. Viewing the evidence and drawing all inferences in favor of
Lessors as the nonmoving party, we conclude that Lessors have shown facts
which support their contention that ARCO was entitled to receive the higher
NGPA § 103 price. In particular, Lessors have shown that ARCO’s existing
contract required Arkla to purchase gas from the Wilburton Field at the § 103
price. ARCO admits that whether Arkla was obligated to pay the higher § 103
price under the purchase contract was a “hotly contested” issue during the 1989
settlement negotiations. If ARCO was entitled to receive the higher NGPA § 103
price from Arkla (which appears to depend on the quality of the gas), then
ARCO’s decision to settle for the $2.20 price may have breached its duty to
market the gas and obtain the best price available. We therefore reverse the grant
- 23 -
of summary judgment to ARCO on this claim and remand to the district court for
further proceedings.
III. T HE D RAINAGE C LAIM
Finally, Lessors argue that ARCO failed to protect their units against
drainage. The district court granted summary judgment to ARCO on this issue
because it found that a prior decision of the Oklahoma Corporation Commission
bars Lessors’ claim.
A. Implied Covenant to Protect Against Drainage
Under Oklahoma law, all oil and gas leases contain the implied covenant to
develop a lease as a prudent operator, which includes “a duty to protect against
drainage by the lessee’s other operations.” Leck v. Continental Oil Co., 800 P.2d
224, 228 (Okla. 1989) (quoting Samson Resources Co. v. Corporation Comm’n,
702 P.2d 19, 23 (Okla. 1985)). Normally, the duty to protect against drainage
requires the lessee to drill an offset well on the lessor’s land or pay damages to
the lessor to compensate for gas being drained by adjacent wells. See Leck, 800
P.2d at 227. Thus, an action for drainage is proper where a lessee operates wells
on the adjacent tracts in such manner as to “get a larger share” of the minerals
beneath the leased premises or “to favor one lessor at the expense of another.”
Id. (quotation omitted). Under Oklahoma law, the failure to protect against
drainage, under appropriate facts, “may be more than just a breach of the contract
- 24 -
(lease), but could amount to a tortious act.” Id. (citing Morriss v. Barton, 190
P.2d 451, 457 (Okla. 1947)).
B. Effect of the OCC Field Rules
In this case, the district court did not separately address the merits of
Lessors’ various theories of liability in support of their drainage claim. Instead,
the district court held that Lessors’ drainage claim was barred by the
“governmental regulations” clause in their leases with ARCO. This clause states:
This lease shall not be terminated, in whole or in part, nor shall
lessee be held liable in damages, for failure to comply with the
express or implied covenants hereof, if compliance therewith is
prevented by, or if such failure is the result of any Federal or State
laws, executive orders, rules or regulations.
App’t. App. at 99. The district court concluded that any failure by ARCO to
protect Lessors from drainage was caused by ARCO’s compliance with the OCC
Field Rules. The court noted that under the Field Rules, ARCO had until the end
of 1991 “to adjust any over and under production.” Because ARCO performed
the workovers “in conformity with” the Field Rules, the court held that the
governmental regulations clause excused ARCO from any potential liability for
failure to comply with the covenant to protect against drainage. In so holding, the
court relied on Fransen v. Conoco, Inc., 64 F.3d 1481 (10th Cir. 1995).
We disagree that the governmental regulations clause bars Lessors’ claim
against ARCO for breach of the implied covenant to protect against drainage.
- 25 -
While we recognize that “the express provisions of an oil or gas lease may negate
or modify the lessee’s implied covenants,” Fransen, 64 F.3d at 1488, we conclude
that the provisions of the Field Rules did not prevent or render impossible
ARCO’s compliance with its duty to protect against drainage. Although the Field
Rules may have allowed ARCO to perform the workovers, nothing in the Field
Rules excused ARCO from liability for drainage caused by the workovers. Put
differently, the Field Rules neither commanded ARCO’s selective performance of
workovers nor precluded ARCO from taking action with respect to Lessors’ wells
to prevent the alleged drainage from occurring. As such, the Field Rules did not
prevent ARCO’s compliance with its implied duty to protect Lessors’ units
against drainage.
We do not read Fransen as broadly as the district court. In Fransen, several
lessors alleged that their lessee breached the covenant to protect against drainage
by failing to drill an offset well on their property. Fransen, 64 F.3d at 1484-85.
The lessee defended on the basis that the OCC had specifically denied permission
to drill a second well on the lessors’ land, excusing the lessee from any liability
resulting from its failure to drill an additional well. Id. at 1488. We held that the
lessors’ drainage claim was barred because the OCC decision “prevented
compliance with any duty the defendants might otherwise have had to drill an
- 26 -
offset well” and because “a prudent operator would not drill a well that was
prohibited by law.” Id.
ARCO contends that Fransen bars Lessors’ drainage claim in this case
because ARCO’s workover operations, as the district court put it, “equate[d] with
compliance with . . . the Field Rules.” Watts v. Atlantic Richfield Co., No. 95-
339-S, slip op. at 13 (E.D. Okla. Jan. 11, 1996). Mere compliance with a
governmental regulation, however, is insufficient to satisfy the standard contained
in a governmental regulations clause. Fransen makes clear that to satisfy this
standard, the governmental regulation at issue must preclude a lessee from
performing the sought-after relief. In Fransen, an OCC decision specifically
prevented the drilling of an offset well. Unlike the situation in Fransen, nothing
in the Field Rules prevented ARCO from taking steps to protect Lessors’ units
from drainage. More importantly, nothing in the Field Rules sanctioned the
selective performance of workovers on some wells thereby causing drainage from
other wells operated by the same lessee. Because Fransen is not so broad as to
bar Lessors’ claim for drainage, we reverse the grant of summary judgment in
favor of ARCO and remand for further proceedings.
CONCLUSION
Having reviewed the record and found that a genuine issue of material fact
exists regarding Lessors’ claim for royalties, we REVERSE the grant of summary
- 27 -
judgment to ARCO and REMAND this claim to the district court to determine
which portions of the settlement, if any, are attributable to the resolution of
collateral disputes (and thus are not royalty bearing), and which portions are
attributable to ARCO’s settlement of past and future pricing deficiencies (and
thus are royalty bearing to the extent that the payment is linked to actual
production). We also REVERSE the grant of summary judgment to ARCO on
Lessors’ claims for failure to obtain the highest available price and REMAND for
further proceedings to determine whether ARCO violated the implied covenant to
market. Finally, we REVERSE the grant of summary judgment to ARCO on
Lessors’ claim for failure to protect against drainage and REMAND this claim for
further proceedings consistent with this opinion.
- 28 -
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<BODY TEXT="#000000" LINK="#0000ff" VLINK="#551a8b" ALINK="#ff0000" BGCOLOR="#c0c0c0">
<P><SPAN STYLE="font-size: 14pt"><STRONG></STRONG></SPAN><SPAN STYLE="font-family: Times New Roman" STYLE="font-size: 14pt"><STRONG><CENTER></STRONG></SPAN><SPAN STYLE="font-family: Times New Roman" STYLE="font-size: 14pt"><STRONG>TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN</STRONG></SPAN><SPAN STYLE="font-family: Times New Roman"></CENTER>
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<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<P><SPAN STYLE="font-family: Times New Roman"><HR ALIGN="CENTER" WIDTH="26%">
</SPAN></P>
<SPAN STYLE="font-family: Times New Roman"><STRONG><CENTER>NO. 03-<A NAME="1">01</A>-00<A NAME="2">75</A>-CV</CENTER>
</STRONG></SPAN>
<P><SPAN STYLE="font-family: Times New Roman"><HR ALIGN="CENTER" WIDTH="26%">
</P>
<STRONG></STRONG></SPAN><CENTER><A NAME="3">Greg Orr d/b/a Pet Emporium</A>, Appellant</CENTER>
<BR WP="BR1"><BR WP="BR2">
<P><SPAN STYLE="font-family: Times New Roman"><STRONG><CENTER>v.</CENTER>
</STRONG></SPAN></P>
<BR WP="BR1"><BR WP="BR2">
<P><SPAN STYLE="font-family: Times New Roman"><STRONG><CENTER><A NAME="4">Steven M. Zager</A>, Appellee</CENTER>
</STRONG></SPAN></P>
<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<P><SPAN STYLE="font-family: Times New Roman"><STRONG><HR SIZE="3">
</STRONG></SPAN></P>
<SPAN STYLE="font-family: Times New Roman" STYLE="font-size: 11pt"><STRONG><CENTER>FROM THE DISTRICT COURT OF <A NAME="5">TRAVIS</A> COUNTY, <A NAME="6">261ST</A> JUDICIAL DISTRICT</CENTER>
</STRONG></SPAN>
<P><SPAN STYLE="font-family: Times New Roman" STYLE="font-size: 11pt"><STRONG><CENTER>NO. <A NAME="7">GN002097</A>, HONORABLE <A NAME="8">F. SCOTT MCCOWN</A>, JUDGE PRESIDING</STRONG></SPAN><SPAN STYLE="font-family: Times New Roman"><STRONG></CENTER>
</STRONG></SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman"><STRONG><HR SIZE="3">
</STRONG></SPAN></P>
The parties have informed this Court that they have reached a settlement agreement
in this case. Accordingly, we will reverse the district court's judgment and remand the case to the
trial court for entry of a judgment in accordance with the parties' settlement agreement.
<P><SPAN STYLE="font-family: Times New Roman"> The district court's order is reversed and the case is remanded to the district court for
entry of judgment in accordance with the parties' settlement agreement.</SPAN></P>
<BR WP="BR1"><BR WP="BR2">
<BR WP="BR1"><BR WP="BR2">
<P><SPAN STYLE="font-family: Times New Roman"> <SPAN STYLE="text-decoration: underline"> </SPAN></SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman"> Mack Kidd, Justice</SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman">Before Justices Kidd, B. A. Smith and Puryear</SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman">Reversed and Remanded</SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman">Filed: August 9, 2001</SPAN></P>
<P><SPAN STYLE="font-family: Times New Roman">Do Not Publish</SPAN></P>
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Arrowhead Capital Fin., Ltd. v Cheyne Specialty Fin. Fund L.P. (2017 NY Slip Op 07219)
Arrowhead Capital Fin., Ltd. v Cheyne Specialty Fin. Fund L.P.
2017 NY Slip Op 07219
Decided on October 17, 2017
Appellate Division, First 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 October 17, 2017
Tom, J.P., Richter, Andrias, Gesmer, Singh, JJ.
651962/14 -4695 4694 4693
[*1]Arrowhead Capital Finance, Ltd., Plaintiff-Appellant,
vCheyne Specialty Finance Fund L.P., et al., Defendants-Respondents.
Barry L. Goldin, New York, for appellant.
Willkie Farr & Gallagher, LLP, New York (Jefrey B. Korn of counsel), for respondents.
Judgment, New York County (Shirley Werner Kornreich, J.), entered August 12, 2016, dismissing the complaint with prejudice as against defendant Cheyne Specialty Finance Fund General Partner and without prejudice as against defendant Cheyne Specialty Finance Fund, unanimously affirmed, without costs. Appeals from orders, same court and Justice, entered on or about August 10, 2016, and on or about July 22, 2016, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
The record supports the court's determination that plaintiff's counsel failed to maintain an in-state office at the time he commenced this action, in violation of Judiciary Law § 470 (see e.g. Webb v Greater N.Y. Auto. Dealers Assn., Inc., 93 AD3d 561 [1st Dept 2012]). Plaintiff's subsequent retention of co-counsel with an in-state office did not cure the violation, since the commencement of the action in violation of Judiciary Law § 470 was a nullity (Neal v Energy Transp. Group, 296 AD2d 339 [1st Dept 2002]). The court properly permitted defendants to make a second dispositive motion to dismiss since at the time of the first motion defendants had no reason to suspect that plaintiff's counsel may have violated Judiciary Law § 470 (see e.g. Lemberg v Blair Communications, 258 AD2d 291 [1st Dept 1999]; see also generally Barbarito v Zahavi, 107 AD3d 416, 420 [1st Dept 2013]; Ultramar Energy v Chase Manhattan Bank, 191 AD2d 86 [1st Dept 1993]).
Defendants did not waive their right to argue that plaintiff's counsel violated Judiciary Law § 470 (see CPLR 3211[e]). Contrary to plaintiff's contention, the court properly considered evidence submitted in defendants' reply papers that was responsive to plaintiff's claims in opposition to defendants' motion. Contrary to defendants' further contention, the court was not bound by the holding of a federal district court at the time of the commencement of this action that Judiciary Law § 470 was unconstitutional (see generally Sue/Perior Concrete & Paving, Inc. v Lewiston Golf Course Corp., 24 NY3d 538, 551 [2014]).
The court correctly dismissed the breach of trust claim as duplicative of the breach of fiduciary duty claim, and correctly dismissed the action with prejudice as against Cheyne [*2]Specialty Finance Fund General Partner (GP), since the complaint contains no factual allegations of wrongdoing against GP.
We have considered plaintiff's remaining arguments and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: OCTOBER 17, 2017
CLERK
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Case: 18-13424 Date Filed: 01/30/2019 Page: 1 of 7
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-13424
Non-Argument Calendar
________________________
D.C. Docket No. 1:18-cv-01083-MHC
WILLIE G. SMITH,
Plaintiff-Appellant,
versus
NATHAN DEAL, et al.,
Defendants,
ROBYN A. CRITTENDEN,
The Commissioner of the Human
Services in her individual capacity,
GEORGIA DEPARTMENT OF HUMAN SERVICES and
the DIVISION OF FAMILY AND CHILDREN SERVICES,
DHS/DFCS EMPLOYEES IN THEIR INDIVIDUAL CAPACITIES,
Defendants-Appellees.
Case: 18-13424 Date Filed: 01/30/2019 Page: 2 of 7
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(January 30, 2018)
Before TJOFLAT, WILLIAM PRYOR and JORDAN, Circuit Judges.
PER CURIAM:
Willie Smith appeals pro se the dismissal of his amended complaint against
Robyn Crittenden, the Commissioner of the Georgia Department of Human
Services; the Department and its Division of Family and Children Services; and
unnamed employees of the Department and its Division. The district court
dismissed Smith’s complaint for failure to state a claim. 28 U.S.C.
§ 1915(e)(2)(B)(ii). We affirm.
Smith complained about the methods that Division employees used to
recover overpayments he received from the supplemental nutrition assistance
program. Smith alleged that he received $1,570 in overpayments from the
program. In 2004, Smith received notice of his obligation to refund that amount
and the Division recovered $1,091.69 between November 2004 and July 2013 by
withholding $10 monthly from his food stamp benefits. In August 2013, a Division
employee terminated Smith’s repayment schedule even though he still owed
$478.31. Smith also alleged that, in 2015, after he protested an error in the
2
Case: 18-13424 Date Filed: 01/30/2019 Page: 3 of 7
administration of his Medicaid benefits, the Division filed a fraudulent claim for a
“delinquent Food Stamp Collection Claim” with the Treasury Offset Program that
resulted in one deduction of $49 from Smith’s social security benefits. In 2017, the
Division sought another refund from Smith by notifying him of his outstanding
balance and withholding $10 monthly from his food stamp benefits. Smith filed a
claim against the Division with the Office of State Administrative Hearings, but he
withdrew his request for a hearing and the Office dismissed his claim.
Smith complained that the defendants’ collection practices were attributable
to “race and disability discrimination as well as retaliation.” He alleged that an
unnamed employee mishandled his application to renew his Medicare benefits, in
violation of Section 504 of the Rehabilitation Act. 29 U.S.C. § 794. Smith also
alleged that an unnamed employee filed a false claim with the Treasury Offset
Program, in violation of the False Claims Act, 31 U.S.C. § 3729, to retaliate for
Smith’s complaint about the mishandling of his Medicare application. And Smith
alleged that unnamed Division employees “violated the due process clauses and
equal protection clauses of the Fifth and Fourteenth Amendments” in 2004, 2015,
and 2017 by “fail[ing] to give notice . . . of its settlement authority when
demanding repayment” as required to “adequately inform [him] of his rights under
the Food Stamp Act.” 42 U.S.C. § 1983.
3
Case: 18-13424 Date Filed: 01/30/2019 Page: 4 of 7
The district court dismissed Smith’s complaint for failure to state a claim.
The district court ruled that the Department and its Division were not subject to
suit and that Smith alleged no plausible facts from which to infer that Crittenden
could be held liable, as a supervisor, for the conduct of her subordinates. The
district court also ruled that, “[a]lthough [Smith] styled the Amended Complaint as
a ‘retaliation and discrimination complaint,’ [he] fail[ed] to include any plausible
factual allegations demonstrating that any adverse action [he] suffered . . . was
linked to any racial or otherwise discriminatory animus on the part of Defendants”
and he failed to “show a causal connection between any protected activity and any
adverse action . . . [by] the Defendants.”
We review de novo the sua sponte dismissal of a complaint for failure to
state a claim and accept the allegations in the complaint as true. Alba v. Montford,
517 F.3d 1249, 1252 (11th Cir. 2008). A district court is obligated to dismiss an in
forma pauperis complaint if it determines that the action is “frivolous” or “fails to
state a claim on which relief may be granted.” 28 U.S.C. § 1915(e)(2)(B). To avoid
dismissal, a complaint must contain facts sufficient to support a plausible claim to
relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). We interpret pro se pleadings
liberally, but we will not rewrite a deficient pleading to sustain an action. Campbell
v. Air Jamaica Ltd., 760 F.3d 1165, 1168–69 (11th Cir. 2014).
4
Case: 18-13424 Date Filed: 01/30/2019 Page: 5 of 7
Smith’s complaint failed to state a plausible claim against Crittenden.
Supervisory officials cannot be held vicariously liable under section 1983 for the
actions of their subordinates unless the supervisor “personally participates in the
alleged unconstitutional conduct” or “there is a causal connection between the
actions of a supervising official and the alleged constitutional deprivation.”
Cottone v. Jenne, 326 F.3d 1352, 1360 (11th Cir. 2003). Smith’s complaint did not
allege that Crittenden personally participated in collecting Smith’s outstanding
debt. Nor did Smith’s complaint allege that Crittenden directed her employees to
act unlawfully or that she knew they would do so and failed to intervene. The
district court did not err when it ruled that Crittenden could not be liable for her
employees’ alleged unlawful acts.
The district court also did not err in dismissing Smith’s complaint insofar as
it alleged any claims against the Department and its Division. The allegations of
wrongdoing by unnamed “DHS/DCFS employees” were deficient. See Richardson
v. Johnson, 598 F.3d 734, 738 (11th Cir. 2010) (requiring a complaint to identify
or describe defendants with specificity). And state agencies are not subject to suit
under section 1983. See Will v. Michigan Dep’t of State Police, 491 U.S. 58, 65–71
(1989). Section 1983 provides a cause of action against any “person” acting “under
color of state law” who deprives an aggrieved person of rights secured by federal
5
Case: 18-13424 Date Filed: 01/30/2019 Page: 6 of 7
law. 42 U.S.C. § 1983. State agencies are not persons under section 1983. See Will,
491 U.S. at 65.
In addition, Smith’s complaint failed to allege plausible facts of wrongdoing
by any Division employees. Smith’s complaint admitted that, as of August 2013,
he had yet to repay $478.31 in overpayments from the supplemental nutrition
assistance program. See 31 U.S.C. § 3729 (stating that the Act prohibits the
presentation of “a false or fraudulent claim for payment”). Smith’s complaint
failed to allege any plausible facts about the submission of a false claim to the
government. Smith’s complaint also failed to allege that an employee mishandled
his Medicare application because of his disability. See Ellis v. England, 432 F.3d
1321, 1326 (11th Cir. 2005) (“[U]nder the Rehabilitation Act, a plaintiff must
prove that he suffered an adverse employment action ‘solely by reason of’ his
handicap.”). And Smith’s conclusory allegations that Division employees
“intentionally treated [him] differently from other similarly situated” people of
“other races and national origin” lacked any supporting facts necessary to state a
plausible claim that he was denied equal protection of the law. See Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (“[A] plaintiff's obligation to provide the
grounds of his entitlement to relief requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.”). Smith also
complained that the employees reinstated his debt because he was black, but we
6
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agree with the district court that his complaint failed to make “any plausible factual
allegations demonstrating that any adverse action [he] suffered . . . was linked to
any racial . . . animus on the part of Defendants.”
Smith’s complaint also failed to state a claim that the employees violated his
constitutional right to due process of law. Division employees did not violate
Smith’s right to substantive due process by collecting an amount he owed to the
government. See Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1577 (11th
Cir. 1989) (“[A] deprivation of a property interest . . . [violates substantive due
process] if it is undertaken ‘for an improper motive and by means that were
pretextual, arbitrary and capricious, and . . . without any rational basis.’”). And
Smith’s claim that he was denied procedural due process failed because he alleged
that he received notice of his obligation to refund the overpayments and that he
requested and later withdrew his requests for hearings to protest the collections.
See Mathews v. Eldridge, 424 U.S. 319, 348 (1976) (“The essence of due process
is the requirement that ‘a person in jeopardy of serious loss (be given) notice of the
case against him and opportunity to meet it.’”).
We AFFIRM the dismissal of Smith’s complaint.
7
| {
"pile_set_name": "FreeLaw"
} |
Filed 1/22/15 Noval v. Frost CA4/3
NOT TO BE PUBLISHED IN 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
FOURTH APPELLATE DISTRICT
DIVISION THREE
HECTOR A. NOVAL,
Plaintiff and Appellant, G048911
v. (Super. Ct. No. 30-2012-00620923)
LOURDES FROST et al., OPINION
Defendants and Respondents.
Appeal from a judgment and an order of the Superior Court of Orange
County, Sheila Fell, Judge. Reversed. Request for judicial notice denied.
Law Offices of Casey T. Young and Casey Young for Plaintiff and
Appellant.
Bidna & Keys and Richard D. Keys for Defendant and Respondent Lourdes
Frost.
No appearance for Defendants and Respondents Tania Noval and Victor
Noval.
* * *
Three siblings, Lourdes Frost (Lourdes), Tania Noval (Tania), and Victor
Noval (Victor), allegedly directed a hospital to take their father, Victorino Noval
(decedent), off life support and administer fatal doses of morphine, without the consent of
their brother, Hector Noval (Hector),1 whose permission was required under a durable
power of attorney for healthcare. Lourdes, Tania, and Victor also allegedly absconded
with cash and other personal property of decedent while he was hospitalized. A flurry of
lawsuits and proceedings followed. In the one generating this appeal, Lourdes filed a
demurrer to Hector’s complaint on the basis of res judicata, standing, and failure to state
facts sufficient to constitute a cause of action. The court, apparently exasperated with the
plethora of proceedings, sustained the demurrer without leave to amend, on the basis of
the statute of limitations—a ground not raised in the demurrer.
Hector appeals from the judgment of dismissal as to Lourdes following the
sustaining of the demurrer. He also appeals from a postjudgment order dismissing the
complaint as to defendants who had not been served, which would include Tania and
Victor. He argues, inter alia, that the court had no right to raise the statute of limitations
sua sponte. We agree. However, “‘[w]hen a demurrer is sustained, we determine
whether the complaint states facts sufficient to constitute a cause of action on any theory.
[Citations.]’” (Stueve Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303,
309.) Here, we cannot conclude that Hector failed to allege facts sufficient to state a
viable cause of action. We reverse.
I
FACTS
A. Allegations of Complaint:
In his complaint, Hector alleged the following:
1 We refer to the parties by their first names for ease of reference. We mean
no disrespect. (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1513, fn. 2.)
2
Decedent was a fully functioning 78-year-old with about $60 million in
assets and $3 million in annual income. On April 28, 2010, decedent was admitted to the
hospital with pneumonia. He was intubated and, when sedated, became temporarily
incapable of making his own medical decisions. By the end of the 10-day hospitalization,
decedent had overcome the pneumonia, had had his intubation removed, had become
distress free, and could make “‘eye contact for more than 10 seconds.’” Nonetheless,
Lourdes, Tania, and Victor ordered hospital staff to terminate decedent’s treatment and
administer fatal doses of morphine on May 7, 2010, causing his death that day. The only
reason the threesome so directed hospital staff was to hasten decedent’s death and collect
their inheritances.
According to Hector, decedent had a durable power of attorney for health
care (health care power) that named Hector and Lourdes as joint attorneys-in-fact, such
that the unanimous consent of the two of them was required for action to be taken.
However, Lourdes, Tania and Victor falsely represented to hospital staff that Hector
concurred in their decision to end decedent’s life, and concealed the existence of the
health care power from Hector himself. Furthermore, at the same time that they directed
hospital staff to withdraw decedent’s treatment and end his life, they misrepresented to
Hector that decedent’s treatment would be continued indefinitely. On May 7, 2010,
Lourdes contacted Hector and told him decedent had died of natural causes. She did not
mention “any withdrawal of treatment, terminal extubation, or fatal injections of
morphine.” So, Hector had no reason to suspect foul play.
Hector alleged that he did not learn of the existence of the health care
power until February 2011, when it was disclosed during probate proceedings. Health
care power in hand, Hector was then able to obtain a copy of decedent’s hospital medical
records, which disclosed a set of facts entirely different from what he had previously
been told. Apparently, Lourdes had told hospital staff that decedent had advanced
3
Parkinson’s disease, had been declining over the preceding six months, had a poor quality
of life, would not want to be hooked up to a ventilator, would not want to be resuscitated,
and would want to die peacefully. Lourdes, Tania and Victor met with hospital staff on
May 4 and 5, 2010 and represented that the whole family, Hector included, “desired
terminal extubation for decedent.” (Capitalization omitted.) They also represented to
hospital staff, on May 5 and 6, 2010, that Hector “was a violent person, a drug addict,
someone with paranoid personality,” who had “‘threatened violence’ against them . . .
and that they were ‘afraid’ of him.” Hector further alleged that his siblings had
represented to hospital staff that he had ulterior motives and was unfit to make health
care decisions for decedent.
Lourdes, Tania and Victor met with hospital staff on May 7, 2010 for “the
planned withdrawal of decedent’s treatment and fatal injections or morphine[.]”
(Capitalization omitted.) Even though they were informed that decedent was improving,
they declined “the opportunity to . . . cancel decedent’s planned death[.]” (Capitalization
omitted.) Moreover, they again falsely informed hospital staff that Hector was in favor of
the plan, and said he simply elected not to be present. To the contrary, Hector was not
even aware of the plan. Hospital staff removed the ventilator, withdrew oxygen support,
removed the nutritional tubes, and administered fatal doses of morphine. According to
Hector, decedent would have lived absent these acts.
B. Procedural History:
Probate proceedings were commenced in the San Bernardino County
Superior Court (Estate of Victorino Noval (No. PRODS 1000489)) (Probate
Proceedings). On August 10, 2010, Lourdes and Tania were appointed executors of the
will of decedent.
4
In February 2011, Hector filed, in the Probate Proceedings, a Probate Code
section 850 petition for the determination of title to seven pieces of real property. The
real properties had been listed on the inventory and appraisal in the Probate Proceedings,
but Hector claimed the properties belonged to him.
On about March 14, 2011, Hector filed a complaint against Lourdes, Tania,
Victor, and others, in a civil action in the San Bernardino County Superior Court (Noval
v. Noval (No. CIVVS 1101520)). He filed a first amended complaint two weeks later,
asserting causes of action for physical elder abuse, neglect, wrongful death, financial
elder abuse, conspiracy, aiding and abetting, fraud, conversion, and breach of fiduciary
duty. The lawsuit was transferred to the Orange County Superior Court (Noval v. Noval
(No. 30-2011-00498440)) (First Lawsuit). At some point, Hector dismissed the First
Lawsuit without prejudice.
On April 13, 2011, Hector filed, in the Probate Proceedings, a petition to
remove Lourdes and Tania as executors and to appoint himself as successor executor. He
alleged, inter alia, that while decedent was still alive in the hospital, they had entered his
home, opened his safe, and taken his estate planning documents and other property,
including legal and financial documents and $400,000 in cash. He further alleged that
they had failed to list the items they took on the inventory and appraisal. Hector
maintained that Lourdes and Tania had conflicts of interest, inasmuch as they surely
would not enforce the right of decedent’s estate to the return of the assets wrongfully
taken.
On May 31, 2012, Hector filed another lawsuit, this one against Lourdes
and Tania, in the Orange County Superior Court (Noval v. Frost (2012, No. 30-2012-
00573131)) (Second Lawsuit). This lawsuit asserted many of the same causes of action
as the First Lawsuit.
5
About three weeks later, on June 21, 2012, Hector, on the one hand, and
Lourdes and Tania in their capacities as executors of decedent’s will and trustees of his
trust, on the other hand, signed a settlement agreement with respect to the two petitions
Hector had filed in the Probate Proceedings. Among other things, Lourdes and Tania
agreed to distribute the seven properties in question to Hector as part of his distributive
share of decedent’s trust estate. In exchange, Hector agreed to dismiss the Probate Code
section 850 petition and the removal petition.
On August 7, 2012, Hector filed a first amended complaint in the Second
Lawsuit. Thereafter, Lourdes filed a demurrer, primarily based on lack of standing.
Lourdes raised a statute of limitations defense with respect to one of the 12 causes of
action—the one pertaining to physical elder abuse under Welfare and Institutions Code
section 15610.63.
Although we find nothing in the record on the point, according to Attorney
Casey Young, counsel for Hector, in December 2012, the court sustained the demurrers
in part, overruled them in part, and granted Hector leave to amend. Lourdes represents
that “the primary ground upon which the Court . . . sustained the demurrer” was standing.
Further according to Attorney Young, after filing a second amended complaint, he
realized that he had added new parties and new causes of action without first obtaining
leave of the court. Because of this procedural error, he dismissed the Second Lawsuit
without prejudice and refiled the matter as a new complaint.
The record reflects that, on December 28, 2012, Hector filed, in the Orange
County Superior Court, the underlying action for physical elder abuse, neglect, financial
elder abuse, wrongful death, and conspiracy, against Lourdes, Tania, and Victor (Noval.
v. Frost (2013, No. 30-2012-00620923)) (Third Lawsuit). In February 2013, Lourdes
filed a demurrer to the complaint, on the basis of res judicata, standing, and failure to
state facts sufficient to constitute a cause of action.
6
The court sustained the demurrer on the basis of the statute of limitations,
and entered a judgment of dismissal as to Lourdes. 2 Hector appeals.
II
DISCUSSION
A. Standard of Review:
“We independently review the ruling on a demurrer and determine de novo
whether the complaint alleges facts sufficient to state a cause of action. [Citation.] We
assume the truth of the properly pleaded factual allegations, facts that reasonably can be
inferred from those expressly pleaded, and matters of which judicial notice has been
taken. [Citation.] We construe the pleading in a reasonable manner and read the
allegations in context. [Citation.] We affirm the judgment if it is correct on any ground
stated in the demurrer, regardless of the trial court’s stated reasons. [Citation.]”
(Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111.)
B. Statute of Limitations:
(1) Hearing—
Although the grounds raised in the demurrer were res judicata, standing,
and the failure to state facts sufficient to constitute a cause of action, Hector is correct
that the court, sua sponte, ruled on the basis of the statute of limitations. At the hearing
on the demurrer, immediately after the lawyers announced their appearances, the court
stated: “From what I can see the statute of limitations has run on the whole case. I’m
2 It would appear that legal battles between the parties have not been limited
to the three above-referenced lawsuits and the Probate Proceedings. The record on
appeal indicates that there has been at least one other matter, entitled In re Victorino
Noval Revocable Trust (Super. Ct. Orange County, No. 30-2011-00457465), commenced
sometime prior to March 15, 2012 (on which date a deposition was taken). Furthermore,
Lourdes represents, without citation to the record, that Hector filed a petition in the Los
Angeles County Superior Court to obtain an order to disinter decedent’s remains, a
request that purportedly had already been rejected by the Orange County Superior Court.
7
going to sustain the demurrer without leave.” Attorney Young replied that the statute of
limitations was not an issue raised in the demurrer. The court responded: “The statute
has run. There’s no point to go on.”
Attorney Young began to address tolling and the court quickly interrupted
with: “What you’ve shown me does not toll the statute.” Attorney Young requested
leave to amend to plead more specific facts with respect to tolling. The court replied: “I
think you’ve done it a few times in a similar lawsuit in several courts, including this one.
I’m not going to give you leave to amend unless there’s a reason to do so.”
Attorney Young continued to assert that the statute of limitations was not at
issue and that he had had no opportunity to brief the matter. The court said: “Well, yeah,
you did. You talked about the power of attorney and how this would toll the statute. It
doesn’t.” However, the court would not entertain discussion on the point.
We note that while the demurrer to the first amended complaint in the
Second Lawsuit raised the issue of the statute of limitations with respect to one cause of
action, for physical elder abuse, the demurrer to the complaint in the Third Lawsuit did
not raise the statute of limitations at all. Nonetheless, apparently out of an abundance of
caution, Hector, in his complaint in the Third Lawsuit, indicated that he had no reason to
suspect wrongdoing before February 2011. That was when he found out that he had been
named in the health care power as one of decedent’s joint attorneys-in-fact—a matter
Lourdes, Tania, and Victor had concealed from him. Thereafter, in March 2011, he used
the health care power to obtain decedent’s medical records, which demonstrated that
decedent had died not of natural causes, as Lourdes had represented, but rather of what
Hector called “planned euthanization.” However, Hector’s discussion pertained only to
the facts of discovery, and did not address either legal authorities on the discovery rule,
or the lengths of the statutes of limitations applicable to the five causes of action.
8
(2) Analysis—
As Hector duly observes, a complaint does not fail to state a cause of action
just because a cause of action may be barred by the statute of limitations. Rather, the
defense of the statute of limitations is personal to the defendant and if the defendant does
not raise the defense in his or her demurrer, the defense is waived. (Bank of America etc.
Assn. v. Ames (1936) 18 Cal.App.2d 311; see also Salton Bay Marina, Inc. v. Imperial
Irrigation Dist. (1985) 172 Cal.App.3d 914, 940, fn. 4.) It follows that it was not the
place of the trial court to raise the defense on Lourdes’s behalf, thereby denying Hector
the opportunity to present his argument on the matter. (Cf. Day v. McDonough (2006)
547 U.S. 198 [court sua sponte raised timeliness of habeas corpus]; McMillan v. Jarvis
(4th Cir. 2003) 332 F.3d 244 [same].)
Lourdes does not respond to these points or these authorities. Rather, she
focuses her attention on the arguments raised in the demurrer, and reminds us that the
appellate court must affirm the ruling sustaining a demurrer without leave to amend if
any of the grounds stated in the demurrer is correct. (Fremont Indemnity Co. v. Fremont
General Corp., supra, 148 Cal.App.4th at p. 111.) However, she does mention the statute
of limitations with respect to only one of the causes of action—the physical elder abuse
cause of action. She now mentions that the statute of limitations is two years (Code Civ.
Proc., § 335.1) and contends there should be no tolling, because the facts as she presents
them do not support the assertion that Hector was unaware that he was one of decedent’s
attorneys-in-fact under the health care power.
However, even if we were to consider the statute of limitations, we would
assume the facts as alleged in the complaint, not as proffered by a defendant, are true for
the purposes of the demurrer. (Stueve Bros. Farms, LLC v. Berger Kahn, supra, 222
Cal.App.4th at pp. 309-310.) Moreover, “‘“‘[t]he question of when there has been a
belated discovery of the cause of action, . . . is essentially a question of fact . . . [and] [i]t
9
is only where reasonable minds can draw but one conclusion from the evidence that the
question becomes a matter of law.’ [Citations.]” [Citations.]’” (Id. at p. 315.)
Consequently, “‘“‘a demurrer on the ground of the bar of the statute of limitations does
not lie where the complaint merely shows that the action may have been barred. It must
appear affirmatively that, upon the facts stated, the right of action is necessarily barred.’
[Citations.]” [Citations.]’ [Citation.]” (Id. at p. 313.) So, had the demurrer raised the
issue of the tolling of the statute of limitations as Lourdes now discusses, it still would
have been error to sustain the demurrer without leave to amend.
But the point of the matter is that the demurrer to the complaint in the Third
Lawsuit did not raise the statute of limitations. Even were we to go back in time and
consider the demurrer to the first amended complaint in the Second Lawsuit, we would
see that it mentioned the statute of limitations with respect to only the physical elder
abuse cause of action and none of the others. There is no basis for even conjuring up a
historical challenge to the other four causes of action raised in the Third Lawsuit.
We agree with Hector. It was improper for the court to raise the issue of
the statute of limitations sua sponte and to dismiss all of Hector’s causes of action
without permitting him leave to amend. Moreover, the ruling was doubly problematic in
light of Welfare and Institutions Code section 15657.7, which provides a four-year statute
of limitations for financial elder abuse. Lourdes does not explain how it is that the
entirety of the lawsuit could possibly be barred in light of that statute.
We turn, then, to the grounds that were actually raised in Lourdes’s
demurrer.
C. Res Judicata:
On June 21, 2012, Lourdes and Tania, in their capacities as executors of
decedent’s estate and trustees of decedent’s trust, entered into a settlement agreement
10
with Hector in the Probate Proceedings. The agreement settled Hector’s claims under his
Probate Code section 850 petition regarding title to seven identified real properties and
his petition to remove Lourdes and Tania as executors of decedent’s will.
The settlement agreement provided that, upon court approval thereof, the
seven properties would be transferred to Hector, as preliminary distributions from his
share of decedent’s trust estate, and his two petitions would be dismissed with prejudice.
Thereupon, Lourdes and Tania, as executors of decedent’s estate and trustees of
decedent’s trust, on the one hand, and Hector, on the other, would release their respective
claims relating to the properties, the Probate Code section 850 petition, and the removal
petition.
Of particular importance to the matter before us, paragraph 6 of the
settlement agreement stated in pertinent part: “[T]he releases by Hector shall enure to the
benefit of Lourdes Frost and Tania Noval, individually, as well as all beneficiaries of the
Trust. Such releases shall not affect and/or release any claims or allegations unrelated
to the Properties made in the ongoing litigation relating to the Trust and/or any alleged
liability for the death of [decedent].” (Italics added.)
As Lourdes stated in her demurrer, Hector’s petition for removal had
attached thereto a copy of the March 28, 2011 first amended complaint filed in the
Second Lawsuit. Lourdes further stated: “The petition and attached civil complaint
alleged the same basic facts and made the same allegations of ‘wrongdoing’ as the
instant action . . . ,” including that Lourdes and Tania concealed the health care power
from Hector, wrongfully directed hospital staff to remove decedent from life support, and
removed cash and other property from decedent’s home. (Italics added.)
In her demurrer, Lourdes also said that the court had dismissed Hector’s
removal petition with prejudice, in accordance with the terms of the settlement
agreement. Citing Estate of Redfield (2011) 193 Cal.App.4th 1526, she claimed that
11
because the removal petition had been dismissed with prejudice, all of the claims raised
in the Second Lawsuit were barred by the doctrine of res judicata and could not be raised
again in the Third Lawsuit. She maintains this position on appeal.
Her citation to Estate of Redfield, supra, 193 Cal.App.4th 1526 is
unavailing. In Redfield, several siblings got into a dispute over whether their mother’s
will was valid and whether $136,000 one sibling had withdrawn from their mother’s bank
account shortly before her death should be included in her estate. Two siblings filed will
contests, as well as Probate Code section 850 petitions in which they requested the court
to determine that the $136,000 was part of the mother’s estate. (Id. at pp. 1528-1530.)
Ultimately, the siblings settled both the will contests and the petitions for
determination of title to the $136,000. They sought court approval of the settlement,
which included an agreement that the decedent’s estate would be divided in equal shares
per intestate succession, and the dismissal with prejudice of the petition for probate of the
will. Furthermore, the will contests and the petitions for determination of title were
withdrawn. One sibling nonetheless objected to the settlement, on the ground that the
$136,000 was not an inter vivos gift, and should be included in the estate. Decedent’s
granddaughter, who previously had been appointed co-administrator of the estate, filed a
petition for instructions, seeking clarification of the settlement, and arguing that it was
ambiguous as to whether the $136,000 was to be included in the estate or not. (Estate of
Redfield, supra, 193 Cal.App.4th at pp. 1530-1531.)
The court heard argument on both the petition for approval of the
settlement and the petition for instructions. It denied the petition for instructions,
approved the settlement, denied the petition to probate the will, and dismissed with
prejudice the will contests and the petitions for determination of title as to the $136,000.
It entered an order accordingly and no appeal was taken. (Estate of Redfield, supra, 193
Cal.App.4th at p. 1531.) More than a year and a half later, two of the settling siblings
12
objected to an accounting filed in the proceedings, on the basis that it failed to include the
$136,000 as part of the estate. The court held a trial on the matter and ultimately
determined that the $136,000 was part of the estate after all. (Id. at pp. 1532-1533.) The
determination was reversed on appeal, on the basis of res judicata. (Id. at pp. 1533-
1537.)
As the appellate court in Estate of Redfield, supra, 193 Cal.App.4th 1526
observed: “‘Res judicata, or claim preclusion, prevents relitigation of the same cause of
action in a second suit between the same parties . . . .’” (Id. at p. 1534.) It further stated:
“Application of the doctrine of res judicata requires an affirmative answer to the
following three questions: (1) Was there a final judgment on the merits? (2) Was the
issue decided in the prior adjudication identical with the one presented in the subsequent
litigation? (3) Was the party against whom the principle is involved a party . . . to the
prior adjudication? [Citation.]” (Ibid.) The appellate court in Redfield answered all
three questions in the affirmative, on the facts before it. (Ibid.)
Of particular importance in the matter before us, the appellate court in
Estate of Redfield, supra, 193 Cal.App.4th 1526 observed that the issue adjudicated by
the probate court on the petitions for determination of title was identical to the one raised
in the later challenge to the accounting—whether the $136,000 was or was not part of the
estate. The appellate court observed that the probate court’s approval of the settlement
and dismissal of the petitions for determination of title constituted a final judgment on the
merits to the effect that the $136,000 was not included in the estate. (Id. at p. 1535.)
Estate of Redfield, supra, 193 Cal.App.4th 1526 is distinguishable from the
case before us. The settlement agreement between Hector, Lourdes and Tania provided
that Hector’s removal petition would be withdrawn. In other words, he agreed to stop
seeking a determination that Lourdes and Tania should not be executors. The settlement
agreement did not include a provision that the Second Lawsuit would also be dismissed
13
with prejudice. Just because Hector attached to his removal petition a copy of the first
amended complaint in the Second Lawsuit, to show why he felt Lourdes and Tania
should not be executors, did not mean that when he withdrew his request that they be
removed as executors he was abandoning his monetary claims against them. To the
contrary, paragraph 6 of the settlement agreement specifically stated: “Such releases
shall not affect and/or release any claims or allegations unrelated to the Properties made
in the ongoing litigation relating to the Trust and/or any alleged liability for the death of
[decedent].” In other words, he preserved that claim.
In contrast, there is no indication that, in Estate of Redfield, supra, 193
Cal.App.4th 1526, there was an explicit agreement to preserve certain claims for later
resolution. Moreover, in Estate of Redfield, unlike the case before us, there was a dispute
as to the terms of the settlement itself that was resolved by probate court order more than
one and a half years before the matter was dredged up again in the same probate
proceedings. In the case before us, however, the probate court did not adjudicate the
merits of the Second Lawsuit and make a determination whether Lourdes, Tania and
Victor owed monetary damages to Hector.
Given this, in the matter before us we must answer the second of the three
questions bearing upon res judicata in the negative. There was no identity of issues
between the Probate Proceedings and the Third Lawsuit. That is, the court in the Probate
Proceedings decided whether the settlement, including the agreement to dismiss with
prejudice the removal petition, should be approved. The dismissal of the removal
petition, with prejudice, barred any subsequent claim that Lourdes and Tania should be
removed as executors based on the grounds stated therein, including the grounds alleged
in the first amended complaint in the Second Lawsuit. It did not bar a claim for damages
on the ground that Lourdes and Tania had acted wrongfully, as described in that lawsuit.
This is especially so when the court’s approval of the settlement agreement necessarily
14
constituted an approval of the paragraph 6 provision to the effect that the claim was
preserved.
Lourdes’s citation to Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th
788 does not convince us otherwise. As the court in that case observed: “To determine
whether two proceedings involve identical causes of action for purposes of claim
preclusion, California courts have ‘consistently applied the “primary rights” theory.’
[Citation.]” (Id. at p. 797.) “‘In California the phrase “cause of action” is often used
indiscriminately . . . to mean counts which state [according to different legal theories] the
same cause of action. . . .’ [Citation.] But for purposes of applying the doctrine of res
judicata, the phrase ‘cause of action’ has a more precise meaning: The cause of action is
the right to obtain redress for a harm suffered, regardless of the specific remedy sought or
the legal theory (common law or statutory) advanced. [Citation.]” (Id. at p. 798.)
The court in Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th 788,
addressed whether a wife who, during her husband’s lifetime had both filed, and
dismissed with prejudice, a loss of consortium lawsuit against the defendant cigarette
manufacturer, could later bring a wrongful death lawsuit against the same defendant. (Id.
at pp. 791-792.) With respect to the loss of consortium action, the court concluded that
the primary right at issue “was the right not to be wrongfully deprived of spousal
companionship and affection, and the corresponding duty was the duty not to wrongfully
deprive a person of spousal companionship and affection. The breach was the conduct of
defendant . . . that wrongfully induced plaintiff’s husband to smoke defendant’s
cigarettes.” (Id. at p. 798, italics omitted.) The court held that once the plaintiff had
dismissed with prejudice her original lawsuit for loss of consortium, she “could not later
allege the same breach of duty in a second lawsuit against defendant, based on a new
legal theory (statutory wrongful death).” (Ibid.) The court further explained: “[T]he two
actions concern the same plaintiff seeking the same damages from the same defendant for
15
the same harm, and to that extent they involve the same primary right.” (Id. at p. 804.)
Lourdes says Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th 788
shows that the same primary rights—the alleged wrongful killing of decedent and the
alleged wrongful taking of his property—were at issue in both the removal petition in the
Probate Proceedings and in the Third Lawsuit. We disagree. The primary rights at issue
in the Third Lawsuit were the rights of decedent not to suffer his wrongful death at the
hands of defendants and not to suffer the wrongful taking of his property by defendants.
The primary right at issue in the removal petition in the Probate Proceedings was the
right of a party interested in the estate of decedent to have the estate administered by
executors who were free from conflicts of interest and who would properly sequester,
inventory, and distribute all assets of the decedent passing under his will.
Even if we were to agree with Lourdes’s characterization of the primary
rights at issue, we would note that Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th
788 is distinguishable from the matter before us and does not control its outcome.
Boeken did not involve a settlement agreement wherein the parties specifically excepted
certain matters from the settlement and preserved them for later resolution. Although
Lourdes maintains that paragraph 6 of the settlement agreement did not carve out an
exception, it clearly did. The settlement agreement, by its terms, did not serve to “release
any claims or allegations unrelated to the Properties made in the ongoing litigation
relating to the Trust and/or any alleged liability for the death of [decedent].”
Consequently, the dismissal with prejudice of the removal petition, in effectuation of the
settlement agreement, did not operate as a final judgment as to those claims and the
doctrine of res judicata does not bar them.
16
D. Standing:
Hector alleged physical elder abuse (Welf. & Inst. Code, § 15610.63),
neglect (Welf. & Inst. Code, § 15610.57), and financial elder abuse (Welf. & Inst. Code,
§ 15610.30), in his first, second and third causes of action, respectively. In his fifth cause
of action, he alleged conspiracy to commit physical elder abuse, neglect and wrongful
death. In her demurrer, Lourdes asserted that Hector lacked standing to assert each of
these causes of action.3
Lourdes argued that these causes of action were each based on duties she
allegedly owed to decedent, not to Hector, so he had no standing to sue on them. She
also cited Code of Civil Procedure section 377.30, which provides: “A cause of action
that survives the death of the person entitled to commence an action or proceeding passes
to the decedent’s successor in interest, subject to Chapter 1 (commencing with Section
7000) of Part 1 of Division 7 of the Probate Code, and an action may be commenced by
the decedent’s personal representative or, if none, by the decedent’s successor in
interest.” Lourdes said that, inasmuch as she had been appointed decedent’s personal
representative, it was she, not Hector, who had the right to pursue any cause of action that
survived decedent’s death.
In addition, Lourdes stated that Welfare and Institutions Code section
15657 et seq. provided no different result.4 Hector maintains that Welfare and
3 Lourdes did not appear to argue that Hector lacked standing to bring the
fourth cause of action, for wrongful death.
4 She commented that Hector should be well familiar with the issue
inasmuch as the primary reason the court had sustained the demurrer to Hector’s first
amended complaint in the Second Lawsuit was Hector’s lack of standing. Interestingly,
Lourdes also stated, in her reply to Hector’s opposition: “The complaint simply fails to
allege the basis upon which Hector asserts he has standing to bring a claim for ‘elder
abuse.’ While that defect can possibly be cured by amendment, it does not change the
fact that the complaint, as pleaded, is defective.” (Italics added.)
17
Institutions Code section 15657.3, subdivision (d)(2) does indeed confer standing upon
him. We agree.
Welfare and Institutions Code section 15657.3, subdivision (d)(1) provides:
“Subject to paragraph (2) . . . , after the death of the elder or dependent adult, the right to
commence or maintain an action shall pass to the personal representative of the
decedent. . . .” However, paragraph (2) states: “If the personal representative refuses to
commence or maintain an action or if the personal representative’s family or an affiliate,
. . . is alleged to have committed abuse of the elder or dependent adult, the persons
described in subparagraphs (A), (B), and (C) of paragraph (1) shall have standing to
commence or maintain an action for elder abuse. . . .” (Welf. & Inst. Code, § 15657.3,
subd. (d)(2).) Hector is a person described in subparagraph (C) of paragraph (1),
inasmuch as he is an “interested person” as defined in Probate Code section 48.5
Furthermore, Lourdes, as the personal representative, refuses to commence an action,
against herself, Tania and Victor, and she and those siblings are alleged to have
committed the elder abuse in question. So, Hector is correct that, under Welfare and
Institutions Code section 15657.3, subdivision (d)(2), he has standing to pursue the
causes of action in question.
The point of the matter is that when the person who allegedly wronged the
decedent is the one with standing to commence litigation to right the wrong, but
obviously will never undertake to do so, it cannot be the case that the wrongdoer gets
away with the wrongful act simply because no one has standing to pursue him or her.
(Cf. Stueve Bros. Farms, LLC v. Berger Kahn, supra, 222 Cal.App.4th at p. 316; Estate
of Lowrie (2004) 118 Cal.App.4th 220, 231.) In other words, it is untenable to assert that
5 Probate Code section 48, subdivision (a)(1), defines an “interested person”
as “[a]n heir, devisee, child, . . . beneficiary, and any other person having a property right
in . . . a trust estate or the estate of a decedent . . . .” We understand Hector to be both the
child of the decedent and a beneficiary of his trust.
18
one who allegedly wrongfully took money and other property from a decedent before his
death, thereby removing the same from the decedent’s estate in which other persons were
entitled to share, could not be challenged in court because he or she had fortuitously been
named as personal representative in the decedent’s estate plan. The same holds true for
someone who committed the unlawful killing of a decedent with malice aforethought, as
Hector alleges in his complaint. Rather, “where a [personal representative] cannot or will
not enforce a valid cause of action that [he or she] ought to bring . . . , a . . . beneficiary
may seek judicial compulsion against the [personal representative].” (Saks v. Damon
Raike & Co. (1992) 7 Cal.App.4th 419, 427 [trust context]; see also King v. Johnston
(2009) 178 Cal.App.4th 1488, 1500-1502; Harnedy v. Whitty (2003) 110 Cal.App.4th
1333, 1339-1342; cf. Prob. Code, § 16420; Estate of Bowles (2008) 169 Cal.App.4th 684,
692-694.)
E. Failure to State a Cause of Action:
(1) Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst.
Code, § 15600 et seq.) (the Elder Abuse Act)—
Finally, in her demurrer, Lourdes challenged each cause of action for
failure to state facts constituting a cause of action. Hector contends the allegations of the
complaint satisfied the requirements of the Elder Abuse Act.
Lourdes responds that it is unclear whether the provisions of the Elder
Abuse Act were even intended to give rise to independent cause of actions, citing ARA
Living Centers - Pacific, Inc. v. Superior Court (1993) 18 Cal.App.4th 1556 and Berkley
v. Dowds (2007) 152 Cal.App.4th 518. These are not the most persuasive authorities,
however. The court in ARA Living Centers addressed an issue not present in the case
before us, regarding the retroactivity of Welfare and Institutions Code section 15657.
(ARA Living Centers - Pacific, Inc. v. Superior Court, supra, 18 Cal.App.4th at pp. 1558,
19
1560-1562.) In so doing, the court remarked that, inasmuch as “elder abuse” had been
defined by statute nearly a decade before the enactment of section 15657, the section “did
not add a cause of action.” (ARA Living Centers - Pacific, Inc. v. Superior Court, supra,
18 Cal.App.4th at pp. 1560, 1563.) The court in Berkley v. Dowds, supra, 152
Cal.App.4th 518 held that a demurrer to a cross-complaint was properly sustained
without leave to amend, where the cross-complaint failed to allege facts satisfying the
requirements of the applicable provisions of the Elder Abuse Act. (Id. at pp. 521-522,
529-530.) The Berkley court, citing ARA Living Centers without analysis, commented in
its introductory remarks that the Elder Abuse “Act does not create a cause of action as
such, but provides for attorney fees, costs, and punitive damages under certain conditions.
[Citations.]” (Berkley v. Dowds, supra, 152 Cal.App.4th at p. 529.)
We conclude the better view is expressed in Perlin v. Fountain View
Management, Inc. (2008) 163 Cal.App.4th 657, in which the court directly addressed the
question whether the Elder Abuse Act creates a cause of action. (Id. at pp. 664-666.)
After considering certain Supreme Court authorities, the Perlin court stated plainly that
the Elder Abuse “Act creates an independent cause of action. [Citations.]” (Perlin v.
Fountain View Management, Inc., supra, 163 Cal.App.4th at p. 666.)
True, Perlin v. Fountain View Management, Inc., supra, 163 Cal.App.4th
657, relied on dicta from a various authorities. Indeed, numerous Elder Abuse Act cases
have arisen in the context where the parties apparently assumed that the statutes created a
cause of action and the reviewing courts addressed not that point, but other Elder Abuse
Act issues as framed by the parties. (See, e.g., Covenant Care, Inc. v. Superior Court
(2004) 32 Cal.4th 771; Delaney v. Baker (1999) 20 Cal.4th 23; Intrieri v. Superior Court
(2004) 117 Cal.App.4th 72; Mack v. Soung (2000) 80 Cal.App.4th 966.)
For example, the court in Delaney v. Baker, supra, 20 Cal.4th 23 made
reference to a Welfare and Institutions Code section 15657 cause of action for “statutory
20
abuse or neglect committed with recklessness, oppression, fraud or malice.” (Id. at p.
41.) It noted that the statute provided for attorney fees and pain and suffering damages
for “reckless neglect.” (Ibid.) The court in Covenant Care, Inc. v. Superior Court, supra,
32 Cal.4th 771 similarly made mention of what it called “statutory causes of action for
elder abuse committed with recklessness, oppression, fraud, or malice (Welf. & Inst.
Code, § 15657).” (Covenant Care, Inc. v. Superior Court, supra, 32 Cal.4th at p. 786.) It
further noted “that statutory elder abuse includes ‘neglect as defined in Section 15610.57’
[citation] . . . .” (Covenant Care, Inc. v. Superior Court, supra, 32 Cal.4th at p. 783.)
Likewise, the court in Intrieri v. Superior Court, supra, 117 Cal.App.4th 72 stated “[t]he
elements of a cause of action under the Elder Abuse Act are statutory . . . . [Citation.]”
(Id. at p. 82.)
Dicta aside, we observe that the language of several statutes supports the
view that a complaint framing allegations satisfying the requirements of the Elder Abuse
Act states a cause of action thereunder. As noted previously, Welfare and Institutions
Code section 15657.3, subdivision (d)(1) provides that “after the death of the elder or
dependent adult, the right to commence . . . an action shall pass to the personal
representative of the decedent. . . .” (Italics added.) Furthermore, Welfare and
Institutions Code section 15657.7 provides: “An action for damages pursuant to
Sections 15657.5 and 15657.6 for financial abuse of an elder or dependent adult . . . ,
shall be commenced within four years after the plaintiff discovers or, through the exercise
of reasonable diligence, should have discovered, the facts constituting the financial
abuse.” (Italics added.) Welfare and Institutions Code section 15657.5, subdivisions (a),
(b), (c), and (e) pertain to claims for and liability for “financial abuse . . . as defined in
Section 15610.30.” (Italics added.) Finally, Welfare and Institutions Code section
15600, subdivision (j) provides: “It is the . . . intent of the Legislature in adding Article
8.5 (commencing with Section 15657) to this chapter to enable interested persons to
21
engage attorneys to take up the cause of abused elderly persons and dependent adults.”
(Italics added.)
In short, we agree with the court in Perlin v. Fountain View Management,
Inc., supra, 163 Cal.App.4th 657, that where a complaint makes allegations satisfying the
requirements of the Elder Abuse Act, it states a cause of action. (Perlin v. Fountain View
Management, Inc., supra, 163 Cal.App.4th at p. 666.) We turn, then to Hector’s assertion
that his complaint did indeed make such allegations.
(2) Physical elder abuse—
Welfare and Institutions Code section 15610.63 defines “physical abuse”
as: (a) assault (Pen. Code, § 240); (b) battery (Pen. Code, § 242); (c) assault with a
deadly weapon (Pen. Code, § 245); (d) “[u]nreasonable physical constraint, or prolonged
or continual deprivation of food or water[;]” (e) sexual assault; or (f) “[u]se of a physical
or chemical restraint or psychotropic medication” under specified circumstances.
As Hector observes, when a doctor performs a procedure without patient
consent, he commits a battery. (Saxena v. Goffney (2008) 159 Cal.App.4th 316, 324-
325.) Hector argues that when Lourdes, without his consent under the health care power,
directed “hospital staff to remove [decedent] from the ventilator, eliminate his oxygen
support, remove his nutritional tubes, and administer fatal dosages of morphine,” she
directed acts that constituted a battery. He cites Probate Code section 4202, subdivision
(b), which provides: “Authority granted to two or more attorneys-in-fact is exercisable
only by their unanimous action.” Hector argues that because he was a joint attorney-in-
fact and did not give his consent to the administration of fatal doses of morphine, the
drug was administered without consent and thus, a battery was committed against
decedent. He states that, under Ayer v. Robinson (1958) 163 Cal.App.2d 424, 428,
Lourdes was liable for the battery, having directed it to take place. (See also People v.
Beeman (1984) 35 Cal.3d 547.)
22
Lourdes counters that decedent, in effect, gave his own consent, inasmuch
as his health care power directed medical personnel to withdraw life support under the
circumstances. Indeed, his declaration attached to the health care power states: “If I
should have an incurable and irreversible condition that has been diagnosed by two
physicians and that will result in my death within a relatively short time without the
administration of life-sustaining treatment . . . , and I am no longer able to make decisions
regarding my medical treatment, I direct my attending physician, . . . to withhold or
withdraw treatment, including artificially administered nutrition and hydration, that only
prolongs the process of dying . . . and is not necessary for my comfort or to alleviate
pain.” (Italics added.)
However, the complaint alleges that decedent did not have an incurable and
irreversible condition. Rather, it alleges that decedent had “overcome his pneumonia,”
showed no signs of infection, and had improved so substantially that hospital staff asked
whether the family wanted to change course and cancel the instruction to remove
intubation and administer fatal doses of morphine. In short, factual issues concerning
consent abound. Consequently, “[i]t is premature to determine the point on appeal[.]”
(Stueve Bros. Farms, LLC v. Berger Kahn, supra, 222 Cal.App.4th at p. 325.)
(3) Neglect—
The Welfare and Institutions Code section 15610.57 definition of “neglect”
includes, in subdivision (a)(1), “The negligent failure of any person having the care or
custody of an elder or a dependent adult to exercise that degree of care that a reasonable
person in a like position would exercise.” In her demurrer, Lourdes asserted that the
allegations of the complaint showed that decedent was in the care and custody of the
hospital, not her, and therefore the requirements of the statute were not met. She also
stated that the complaint did not allege that she failed “to exercise that degree of care that
a reasonable person in a like position would exercise.” (Welf. & Inst. Code, § 15610.57,
23
subd. (a)(1).) Finally, relying on Delaney v. Baker, supra, 20 Cal.4th 23, Lourdes said
the complaint was required to allege that she acted with recklessness, oppression, fraud,
or malice, in order to state a cause of action under Welfare and Institutions Code section
15657 et seq., but that it failed to do so. She renews these arguments on appeal.
While the complaint recited that decedent was hospitalized at the time of
his death, it alleged that Lourdes utilized a health care power to direct hospital staff with
regard to his care and treatment. It further alleged that Lourdes failed “to exercise that
degree of care which a reasonable person in a like position would have exercised.” It
continued on to state that she “acted recklessly, intentionally, oppressively, fraudulently,
and maliciously . . . with the sole intent of willfully and unlawfully killing [decedent]
with malice aforethought.” It explained that she directed hospital staff to withdraw
ventilation and nutrition and to administer fatal doses of morphine even though decedent
had “overcome his pneumonia” and improved substantially, so substantially that on May
7, 2010, hospital staff pointed out that decedent was better even than the day before and
indicated that perhaps Lourdes would want to wait before making a decision to remove
intubation and administer the morphine. The complaint also alleged that hospital staff
had asked Lourdes about whether Hector, who was joint attorney-in-fact under the health
care power, agreed with her desired course of action and that Lourdes, on more than one
day, including May 7, 2010, misrepresented that he agreed to the termination of
decedent’s life.
Lourdes insists that members of the hospital staff were “acting within the
scope of their own medical judgment” and would not have terminated life support if it
had not been appropriate to do so. However, the point of the lawsuit is that the members
of the hospital staff did not choose to terminate decedent’s life on their own, but rather,
that Lourdes, armed with the health care power and providing a false representation that
Hector agreed, directed them to do so. Moreover, while one might assume, and indeed
24
hope, that hospital staff would not take the action in question were it not appropriate to
do so, this is not an assumption we make for the purposes of a demurrer. We do not
prejudge the likelihood that a plaintiff will be able to prove the facts alleged. (Alcorn v.
Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496; Aragon-Haas v. Family Security Ins.
Services, Inc. (1991) 231 Cal.App.3d 232, 239.)
Lourdes warns the court, with respect to both the cause of action for
physical elder abuse and the cause of action for neglect, that the court would proceed
down a very slippery slope if it held that a grief stricken family could be subject to civil
liability for following the recommendation of medical personnel to withdraw life support.
But the allegations here are more than that. The allegations are that defendants
knowingly, and indeed fraudulently, excluded Hector from exercising his right as
attorney-in-fact to advocate for the preservation of decedent’s life, and further, that they
did so in order to pursue their own self interests and seize decedent’s fortune. Finally,
Hector alleges that defendants took these actions in a context where hospital staff
indicated that decedent had improved substantially and perhaps the family should
reconsider the plan to terminate life support.
(4) Financial elder abuse—
Welfare and Institutions Code section 15610.30, subdivision (a)(1), (2)
provides that financial abuse occurs when one either takes, or assists another “in taking,
secreting, appropriating, obtaining, or retaining real or personal property of an elder or
dependent adult for a wrongful use or with intent to defraud, or both.”
In his complaint, Hector alleged that, while decedent was in the hospital,
Lourdes, Tania and Victor entered decedent’s home and took certain of his property,
including, among other things, real estate documents, estate planning documents,
financial documents, checkbooks, guns, and cash-on-hand. He stated that the items
wrongfully taken included a $5,000 check, and that they transferred title to decedent’s
25
Mercedes Benz to their mother. In addition, Hector alleged that, in 2008, Lourdes
engaged in a scheme whereby she purchased a piece of San Juan Capistrano real estate
from decedent for $14.5 million, but managed to secretly take back $2 million of the
purchase price without decedent’s consent. He further alleged that, after decedent found
out, he demanded the return of the money, which remained owing at the time of his
death. Purportedly, the paperwork documenting this course of events was among the
documentation defendants stole. That being the case, upon decedent’s death, Lourdes
would get away with keeping the money.
In her demurrer, Lourdes argued the complaint did not allege that anything
she did caused decedent harm. Rather, she asserted the complaint merely stated that she
took possession of certain records and personal items. She further stated that the
allegations that she “‘took back’ $2 million of the purchase price she paid for” the San
Juan Capistrano property made no sense. She reiterates these arguments on appeal, and
further asserts that the statute of limitations on the purported wrongful taking of $2
million in 2008 had to have run by the time the complaint was filed on December 28,
2012.
We do not read Welfare and Institutions Code section 15610.30,
subdivision (a) as requiring the plaintiff to specify the exact harm the elder or dependent
adult suffered as a result of the wrongful taking. Furthermore, it is understandable that
Hector was unable to detail the specific mechanism whereby Lourdes allegedly
absconded with decedent’s $2 million, inasmuch as defendants allegedly stole the
paperwork documenting the transaction and the debt. Furthermore, a wrongful taking in
2008 would not necessarily be barred by December 28, 2012. Welfare and Institutions
Code section 15657.7 provides a four-year statute of limitations from the date “the
plaintiff discovers or, through the exercise of reasonable diligence, should have
discovered, the facts constituting the financial abuse.” In any event, to the extent the
26
allegations of the financial elder abuse cause of action were vague, Hector should have
been given an opportunity to amend his complaint.
(5) Wrongful death—
In her demurrer, Lourdes stated in a quick two sentences simply that
Hector’s cause of action for wrongful death failed for the same reasons that his other
causes of action failed. In her respondent’s brief on appeal, she provides an equally curt
discussion, in which she states that “consenting to [decedent] being removed from life
support is not a wrongful act.” But it could be on the facts alleged. Moreover, the facts
alleged are that Lourdes did something other than just consent to a course of conduct
desired by hospital staff.
(6) Conspiracy—
In his conspiracy cause of action, Hector alleged that defendants conspired
to commit wrongful death, physical elder abuse, and neglect. In her demurrer, Lourdes
correctly pointed out that conspiracy is not a separate tort. “‘Although conspiracy to
commit a tort is not a separate cause of action from the tort itself, alleging a conspiracy
fastens liability on those who agree to the plan to commit the wrong as well as those who
actually carry it out. [Citation.]’” (Stueve Bros. Farms, LLC v. Berger Kahn, supra, 222
Cal.App.4th at p. 323.) While the court could properly sustain a demurrer as to this
particular cause of action, Hector should be given leave to amend as and if necessary to
weave the conspiracy allegations into his other causes of action.
F. Request for Judicial Notice:
As a final note, Hector has filed a request for judicial notice, in which he
asks this court to take notice of a portion of the transcript of a deposition taken in another
case. The request does not comply with the requirements of California Rules of Court,
27
rule 8.252(a).6 The request is denied. (See Kinney v. Overton (2007) 153 Cal.App.4th
482, 497, fn. 7.)
III
DISPOSITION
Appellant’s request for judicial notice is denied. The judgment and the
postjudgment order are reversed. Appellant shall recover his costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
ARONSON, J.
THOMPSON, J.
6 As an aside, we observe that Hector is not the only one who has failed to
comply with the California Rules of Court in this appeal. Lourdes’s respondent’s brief is
largely devoid of record references to support her factual assertions. Fully aware of this,
Lourdes acknowledges that her description of the background facts and procedural
history is not supported by record references. However, she says her proffered facts are
simply provided to show the context in which the appeal arises. We admonish counsel
for failing to comply with California Rules of Court, rule 8.204(a)(1)(C) and we
disregard any assertion of fact not supported by the record. (Graham v. Bank of America,
N.A. (2014) 226 Cal.App.4th 594, 611-612.)
28
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 07-2601
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the Northern
* District of Iowa.
*
Collin McDonald, *
*
Appellant. *
___________
Submitted: March 12, 2008
Filed: April 9, 2008
___________
Before RILEY, GRUENDER, and SHEPHERD, Circuit Judges.
___________
RILEY, Circuit Judge.
Collin McDonald (McDonald) pled guilty to one count of bank robbery, in
violation of 18 U.S.C. § 2113(a). The district court1 sentenced McDonald to 175
months imprisonment, to be served consecutively to sentences previously imposed in
Missouri state and federal court. McDonald challenges his sentence, arguing the
district court erred by imposing: (1) a two-level increase for being a leader, organizer,
manager, or supervisor of criminal activity under United States Sentencing Guidelines
1
The Honorable Linda R. Reade, Chief Judge, United States District Court for
the Northern District of Iowa.
(U.S.S.G.) § 3B1.1; (2) a two-level increase for attempting to obstruct justice under
U.S.S.G. § 3C1.1; and (3) a two-level increase for reckless endangerment during flight
under U.S.S.G. § 3C1.2. McDonald also appeals the part of the sentence which orders
the instant sentence to run consecutively to McDonald’s other undischarged terms of
imprisonment. We affirm.
I. BACKGROUND
On November 25 and December 2, 2003, McDonald robbed two banks in the
Kansas City, Missouri, area. McDonald and his girlfriend, Tiffany Callahan
(Callahan), left Kansas City on December 5, 2003 to get away from the police.
That same day, as they drove through Cedar Rapids, Iowa, McDonald took the
Collins Road Exit off Interstate 380 and decided to rob the Farmers State Savings
Bank on Collins Road in Marion, Iowa.2 McDonald asked Callahan to go into the
bank to determine whether there were any police inside. Callahan walked around the
lobby, and then returned to the car and reported to McDonald that she did not see a
security guard in the bank. McDonald and Callahan drove away from the area to plan
an escape route. While driving around, Callahan unsuccessfully tried to talk
McDonald out of robbing the bank.
McDonald asked Callahan to hold the door of the bank open in case the bank
had an alarm which would cause the door to lock. When they entered the bank,
Callahan held the door while McDonald approached the tellers and demanded money.
McDonald hid a knife up his right shirt sleeve during the robbery. McDonald and
Callahan were in the bank less than one minute, making off with $8,315 in cash.
2
McDonald chose the Collins Road Exit and this bank in Collins Square
because his first name is Collin.
-2-
The following day, McDonald decided they should buy a different car because
the one they were driving had been used to commit multiple bank robberies.
McDonald and Callahan bought a car in South Sioux City, Nebraska, abandoning the
car used in the robberies in the parking lot of their hotel. McDonald controlled the
expenditures of the stolen money, and paid $1,950 from the proceeds of the robberies
to purchase the car.
On December 10, McDonald and Callahan checked into a hotel in Lincoln,
Nebraska, under an alias. Law enforcement had been tracking McDonald’s and
Callahan’s movements. On the afternoon of December 10, officers made contact with
McDonald and Callahan outside their hotel room. The couple retreated and barricaded
themselves in their room, and a standoff ensued. McDonald initially claimed to have
a gun. Officers cleared adjacent rooms of any guests. The Lincoln SWAT team was
called in to assist at the scene. During the standoff, McDonald threw two chairs
through a closed window in their second floor room. Officers below were close to
where the chairs and broken glass landed. When McDonald and Callahan looked out
their window, presumably to escape, officers yelled for McDonald and Callahan to get
their hands up. McDonald and Callahan again retreated into their hotel room.
Officers negotiated with McDonald and Callahan by talking on the phone and through
the door. Near the end of negotiations, McDonald admitted he lied about having a
gun. After a standoff of approximately two and one-half hours, officers forcibly
entered the room and took McDonald and Callahan into custody.
Callahan met with authorities on February 10, 2004, to give a proffer
concerning her involvement in the bank robbery. At some point after Callahan met
with authorities, McDonald wrote Callahan a letter which read in part:
I hope and pray to God you did not say anything about a weapon when
you were in Iowa. Because it will make it worse on me and you even if
-3-
they promised you not to prosecute you that’s not always true I would
hate to see you go to jail it’s a horrible place especially since you are
very sensitive you would have God with you No matter what don’t ever
forget that you will also have my soul to share with you everywhere you
go
At McDonald’s sentencing hearing, Callahan also testified that, when she visited
McDonald in jail after his arrest, he held up a note that said, “Don’t tell them about
the knife.”
McDonald ultimately pled guilty to one count of bank robbery, in violation of
18 U.S.C. § 2113(a). At the time of sentencing, McDonald was serving a 54-month
sentence imposed in the Western District of Missouri for the Kansas City bank
robberies. McDonald was previously ordered to serve a one year consecutive sentence
for forgery in Bates County, Missouri. McDonald was then scheduled to begin
another thirteen year sentence for a March 6, 2004, attempt to escape from jail in
Bates County, Missouri, followed by an additional seven year term for armed criminal
action and second degree assault arising from his escape attempt. Thus, at the time
of sentencing, McDonald had already been sentenced to serve 54 months for the
Kansas City bank robberies, followed by 252 months for his Missouri state court
convictions. After applying increases for McDonald’s aggravating role in the instant
offense, obstruction of justice, and reckless endangerment during flight, the district
court sentenced McDonald to 175 months imprisonment, to be served consecutively
to McDonald’s other undischarged terms of imprisonment.
II. DISCUSSION
A. McDonald’s Role in the Offense
McDonald claims the district court erred in assessing a two-level increase for
his role in the offense, arguing Callahan was an equal partner and willing participant
in the robbery. “We review for clear error the district court’s factual findings
underlying the imposition of a sentencing enhancement based on the defendant’s role
-4-
in the offense.” United States v. Rosas, 486 F.3d 374, 376 (8th Cir. 2007) (citation
omitted). Under U.S.S.G. § 3B1.1(c), “[i]f the defendant was an organizer, leader,
manager, or supervisor in any criminal activity [not involving five or more
participants], increase by 2 levels.” The terms “organizer,” “leader,” “manager,” and
“supervisor” are to be construed broadly. Rosas, 486 F.3d at 376; United States v.
Willis, 433 F.3d 634, 636 (8th Cir. 2006). In determining whether a defendant had
a managerial or supervisory role in an offense, application note 4 to U.S.S.G. § 3B1.1
directs the district court to consider such factors as:
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.
U.S.S.G. § 3B1.1, cmt. n.4
At the sentencing hearing, Callahan testified McDonald made the decision to
rob a bank, chose the Farmers State Savings Bank on Collins Road, asked Callahan
to enter the bank and see if any police were in the bank, and instructed her to hold the
door open for him so the door would not lock. McDonald was the one who carried a
knife and demanded money while Callahan held the door. Callahan also testified it
was McDonald who decided they should buy a different car because the one they were
driving had been used to commit multiple bank robberies. Callahan further testified
McDonald paid the purchase price for the new car from the proceeds of the robberies,
as McDonald held the cash and controlled the expenditures. This evidence was more
than sufficient to support a two-level enhancement for McDonald’s aggravating role
in the offense.
-5-
B. Obstruction of Justice
McDonald argues the district court erred in applying a two-level enhancement
for obstruction of justice because Callahan’s testimony was not credible. “We review
a district court’s factual findings underlying an obstruction of justice enhancement for
clear error[.]” United States v. Peters, 394 F.3d 1103, 1105 (8th Cir. 2005) (citation
omitted). “When the factual findings by the trial court are based on the credibility of
witnesses, they are virtually unreviewable.” United States v. Moore, 242 F.3d 1080,
1081 (8th Cir. 2001) (internal quotation marks and citation omitted).
U.S.S.G. § 3C1.1 provides:
If (A) the defendant willfully obstructed or impeded, or attempted to
obstruct or impede, the administration of justice with respect to the
investigation, prosecution, or sentencing of the instant offense of
conviction, and (B) the obstructive conduct related to (i) the defendant’s
offense of conviction and any relevant conduct; or (ii) a closely related
offense, increase the offense level by 2 levels.
In McDonald’s case, the district court based the obstruction of justice
enhancement on: (1) Callahan’s testimony that, when she visited McDonald while he
was incarcerated, he showed her a note urging her not to say anything about the knife;
and (2) the letter McDonald wrote to Callahan which stated in part, “I hope and pray
to God you did not say anything about a weapon when you were in Iowa. Because it
will make it worse on me and you even if they promised not to prosecute you[.]” The
district court did not err by finding Callahan’s testimony “totally believable,” nor did
it err by imposing a two-level increase for obstruction of justice based on McDonald’s
attempts to prevent Callahan from revealing McDonald carried a concealed knife
during the bank robbery.
C. Reckless Endangerment During Flight
McDonald contends the district court erred by imposing a two-level
enhancement for reckless endangerment during flight because insufficient evidence
-6-
existed to support the enhancement. “We review for clear error a district court’s
findings with respect to reckless endangerment during flight.” United States v.
Bazaldua, 506 F.3d 671, 674 (8th Cir. 2007). Under U.S.S.G. § 3C1.2, “[i]f the
defendant recklessly created a substantial risk of death or serious bodily injury to
another person in the course of fleeing from a law enforcement officer, increase by 2
levels.” The term “during flight” should be “construed broadly” and includes conduct
“in the course of resisting arrest.” U.S.S.G. § 3C1.2, cmt. n.3.
McDonald acknowledges he is responsible for “his own conduct and for
conduct that he aided or abetted, counseled, commanded, induced, procured, or
willfully caused.” (quoting U.S.S.G. § 3C1.2, cmt. n.5). However, McDonald
contends the reckless endangerment enhancement does not apply because McDonald
did not aid, abet, counsel, command, induce, procure, or cause the SWAT team to be
dispatched or the police forcibly to enter his hotel room to end the standoff.
McDonald also claims he should not be subject to the two-level increase because he
never threatened anyone and there was no evidence throwing chairs through the closed
second story window was intended to harm anyone or created a substantial risk to
anyone.
These arguments are unpersuasive. First, it is not the actions of law
enforcement, in dispatching the SWAT team or breaking down the door of
McDonald’s hotel room, that “recklessly created a substantial risk of death or serious
bodily injury to another person.” Instead, it is McDonald’s conduct (barricading
himself in a hotel room for over two hours, claiming to be armed with a gun, and
hurling furniture through a closed second story window) that constituted reckless
endangerment. Even though McDonald lied about having a gun, officers were
nevertheless at heightened risk of physical injury as a result of having to enter
McDonald’s hotel room with force to arrest him. Officers cleared adjacent rooms of
any guests due to the perceived threat. Anyone stationed on the ground in the vicinity
of McDonald’s hotel room window could have been hit by the falling chairs or broken
-7-
glass. Ample evidence existed to support the district court’s finding the risks
McDonald created in his attempt to avoid arrest warranted a two-level increase for
reckless endangerment during flight.
D. Consecutive Sentences
McDonald argues the district court abused its discretion and imposed an
unreasonable sentence by ordering his sentence to run consecutively to McDonald’s
other undischarged terms of imprisonment. “We review a district court’s decision to
impose a consecutive or concurrent sentence for reasonableness.” United States v.
Winston, 456 F.3d 861, 867 (8th Cir. 2006). To allow for meaningful appellate
review, “[t]he district court must explain its reasoning for imposing a concurrent or
consecutive sentence[.]” Id.
The district court considers the factors set forth in 18 U.S.C. § 3553(a) to
determine whether to impose a consecutive or concurrent sentence. See United States
v. Shafer, 438 F.3d 1225, 1227 (8th Cir. 2006) (quoting 18 U.S.C. § 3584(b)). “When
the defendant is subject to an undischarged term of imprisonment for an unrelated
crime, ‘the sentence for the instant offense may be imposed to run concurrently,
partially concurrently, or consecutively to the prior undischarged term of
imprisonment to achieve a reasonable punishment.’” Id. (quoting U.S.S.G. § 5G1.3(c)
(policy statement)). The district court has “wide discretion” under U.S.S.G. §
5G1.3(c) to order a sentence to be served consecutively to an undischarged sentence.
See United States v. Mathis, 451 F.3d 939, 941 (8th Cir. 2006).
In McDonald’s case, the district court noted, “[f]or all the reasons stated by [the
government], it’s clear to me that a consecutive sentence is appropriate in this case
under the advisory [G]uidelines.” The district court also stated it had “considered all
the other statutory factors, even though I may not have discussed them specifically.
I have considered them very carefully in deciding what the appropriate sentence is.”
The sentencing transcript makes clear that the district court gave substantial
-8-
consideration to all the appropriate factors. The district court was well within its
broad discretion in ordering McDonald’s sentence to be served consecutively to his
other undischarged terms of imprisonment.
III. CONCLUSION
Having carefully reviewed the sentencing record and the parties’ arguments, we
conclude ample evidence supported the district court’s imposition of: (1) a two-level
increase for McDonald’s aggravating role in the offense; (2) a two-level increase for
McDonald’s attempts to obstruct justice; and (3) a two-level increase for reckless
endangerment during flight. We further conclude the district court did not abuse its
discretion by ordering McDonald’s sentence to run consecutively to his other
undischarged terms of imprisonment. The reasonable sentence imposed by the district
court is affirmed.
______________________________
-9-
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888 F.2d 1389
Trippiv.City of Kenner*
NO. 88-3693
United States Court of Appeals,Fifth Circuit.
OCT 16, 1989
1
Appeal From: E.D.La.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 21, 2006 Session
MELODY WESTON, PERSONAL REPRESENTATIVE, ET AL. v.
COMMUNITY BAPTIST CHURCH OF WILSON COUNTY
Appeal from the Chancery Court for Wilson County
No. 01085 C. K. Smith, Chancellor
No. M2004-02688-COA-R3-CV - Filed on February 5, 2007
This case arises from a dispute between a church and the estate of one of its former members over
money given by the former member and her spouse to enable the newly-formed church to pay off
a loan on its property. The estate contended that the money was a gift subject to a condition
subsequent, with return of the gift required in the event the church ceased existence. The church
admitted that it had accepted the gift, but argued that it never accepted any conditions. The court
took note of a church resolution that ratified the alleged condition and ruled in favor of the estate.
We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed
PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which WILLIAM C. KOCH , JR., P.J.,
M.S., and FRANK G. CLEMENT , JR., J., joined.
Randle S. Davis, Nashville, Tennessee, for the appellant, Community Baptist Church of Wilson
County.
James H. Kinnard, Lebanon, Tennessee, for the appellee, Melody Weston, Personal Representative
et al.
OPINION
I. THE FOUNDING OF A NEW CHURCH
In 1999, some members of the Vine Baptist Church in Lebanon, Tennessee began discussing
the possibility of starting a new church. The three men who spearheaded the new venture, Bryan
Hubbard, Thomas Watson, and Jessie Hardin, kept other potential members informed as their plans
progressed. They located a piece of property in Lebanon with a trailer on it, which they thought
would be a good location for a new church building.
The three approached the bank for a loan to purchase the property. A bank officer suggested
that it would be a good idea for them to obtain a charter for the church. On August 26, 1999, they
filed a charter with the Secretary of State incorporating the Community Baptist Church of Wilson
County (“Church”) as a nonprofit religious corporation under state law. See Tenn. Code Ann. § 48-
52-101 and 102.
R.C. “Mutt” Weatherly and his wife, Betty Weatherly, were both interested in taking part in
the new church. They loaned $12,500 to be used for the down payment and closing costs on the 6.18
acre property. The loan carried no interest. A promissory note was executed in the name of
Community Baptist Church of Wilson County signed by Mr. Hubbard and Mr. Watson as trustees.
The note was eventually paid off in full by installments of $1,000 per month collected from
donations to the church over the following year.
However, the bank was unwilling to make a loan directly to the church itself. Mr. Hubbard
and Mr. Watson therefore borrowed $46,400 in their own names from First Tennessee Bank in order
to close on the property. The closing took place on September 7, 1999. A warranty deed and deed
of trust were executed on the same day. The warranty deed recited that the property was being
transferred “unto Bryan E. Hubbard and Thomas R. Watson, Co-Trustees with full power to
mortgage, sell, transfer and convey without the joinder of any beneficiary.”
Several meetings were conducted both before and after the closing for individuals wishing
to become members of the new church. During at least one meeting, a draft of a proposed
constitution with by-laws for the church’s governance was circulated. October 10, 1999 was the
church’s “Constitution Day.” On that day, the constitution and by-laws were formally adopted.1
Thirty-eight individuals became charter members of the church on that day, and Mr. Hubbard and
Mr. Watson were chosen trustees of the church.
The constitution and by-laws were contained in a single document. The parties have cited
several sections of that document as being of particular relevance to the case before us. The clause
titled “Property” stated that if the membership could not continue to operate the church, “by reason
of financial difficulty or other hindrance,” the church would return the real property to Mr. Watson
and Mr. Hubbard “as the deed is in their name and they are responsible to First Tennessee Bank for
payment of the loan.” If, however, the church ceased to function after the loan was paid off, the
property would be sold, with the proceeds to go to the Wilson County Baptist Association to help
start new churches.
Article II describes the duties of the various officers of the church. Section 8 of that article
charges trustees with, among other things, the duty of holding church property in trust, and declares
1
The church’s attorney stated at trial that the legal existence of the church should be deemed to have begun by
or before September 2, 1999. Likewise, Jeanie Fanning testified that she considered the church to be in operation well
before October 10. Although there was much discussion at trial as to the correct date of the founding of the church, we
do not believe it to have much bearing on the issues before us.
-2-
that they have no power to buy, sell, mortgage, lease or transfer any property without specific
authorization by a vote of the church. However, Section 8 also cites the above quoted Property
clause and notes that it constitutes a possible exception to those limitations.
Article VI establishes a procedure for amending the constitution and by-laws. Amendments
must be presented in writing at two regular business meetings, with copies furnished to each member
present. They can then be adopted at a subsequent meeting by an affirmative vote of three-fourths
of all voting members of the church present.
II. THE MORTGAGE IS PAID OFF
According to the affidavits of Mr. Hubbard and Mr. Watson, Mr. Weatherly wished to be the
first person baptized in the new church building. They informed him that the church could not
finance the construction of the building until the mortgage was paid off. After extended discussions
with the trustees and with an attorney, Mr. Lee, the Weatherlys agreed to pay off the mortgage loan.
They sold some properties they owned, and on or about October 24, 1999, they gave the trustees a
cashier’s check for $46,519.17 with the bank named as payee.2 The trustees gave the check to the
bank and quitclaimed their property rights to Community Baptist Church of Wilson County.3
The exact date of the next significant event in this story is a matter of disagreement between
the parties. That event was a special business meeting called to enact an amendment to the
constitution of the church, specifically to the Property clause, cited above, which was duly amended
to read as follows:
In the event that Community Baptist Church ceases to be a church for any reason, and
a building has not been erected, the property will be deeded to R.C. Weatherly and/or
Betty Weatherly or their heirs.
If any building or buildings have been erected at the time the church ceases to be a
church, then the property will be sold. Proceeds from the sale will be distributed as
follows, $46,519.17 will be returned to R.C. Weatherly and/or Betty Weatherly or
their heirs and the balance will be given to the Wilson County Baptist Association
to be used to start new churches.
The Weatherly estate contends that the above amendment was adopted on October 24, 1999,
essentially contemporaneous to their providing the money to pay off the bank. The estate asserts the
amendment was adopted for the express purpose of protecting the interests of the Weatherlys and
that it reflects the understanding of the parties at the time the Weatherlys gave the money. However,
2
Mr. Hubbard testified that he and Mr. W atson turned the check over to the bank on October 26.
3
The quitclaim deed was for the land only. It did not include the trailer on the property. Mr. Hubbard and Mr.
W atson argued at trial that as a result they still retained their ownership interest in the trailer, but the trial court ruled
against them. They have not appealed the trial court’s ruling, so we need not discuss that question any further.
-3-
the church asserts the amendment was adopted one year later, on October 24, 2000, and contends
that the amendment was a voluntary expression of love towards the Weatherlys in appreciation for
what they had done for the church, and that it was not intended to document a condition for a gift
which had been given a year before. The church submitted minutes of the meeting adopting the
amendment that were dated October 24, 2000.
Whatever love or affection may have existed apparently began to wane. In December of
2000, R. C. Weatherly and his wife, as well as Mr. Watson and Mr. Hubbard, had a falling out with
the pastor of the church and with other members, and they stopped attending services. According
to the testimony of the church secretary, Betty Weatherly read a statement at the end of a prayer
meeting on January 3, 2001, in which she voiced her objections to the direction the church had taken
and asked for repayment of the money she and her husband had donated.
The church conducted a quarterly business meeting on January 10, 2001, during which Mr.
Watson and Mr. Hubbard were removed as trustees and deacons of the church.4 At the same
meeting, pastor Sten Criscoe first submitted a motion that the church fully reimburse the Weatherlys
for the contribution they had made. The motion failed by a vote of nine to six. The pastor then
submitted an alternate motion to amend the Property clause of the church’s constitution to the effect
that in the event the church ceased to operate for any reason, all its property would be donated to the
Wilson County Baptist Association for the purpose of creating new churches. That motion passed.
III. COURT PROCEEDINGS
R.C. Weatherly died on February 8, 2001. On March 15, 2001, Betty Weatherly filed a
complaint against the church in the Wilson County Chancery Court.5 She claimed that the money
that she and her husband gave to the church was a loan that was made in reliance on an October 24,
1999 amendment to the church’s constitution and by-laws, thereby creating a contract with the
church; that the amendment of January 10, 2001 amounted to a breach of that contract; and that the
money constituted a purchase money lien on the property. She asked the court to impose a lien lis
pendens on the property. The lien was duly executed.
Betty Weatherly was diagnosed with cancer in June of 2001. After the diagnosis she moved
to the Memphis home of Melody Weston, her daughter. Ms. Weston is a registered nurse, and she
took care of her mother during her illness. Betty Weatherly died on April 8, 2002. Ms. Weston
qualified as the executrix of her estate and was substituted as a plaintiff in the present lawsuit on
October 8, 2002.
4
The minutes of that meeting were erroneously dated January 10, 2000. The contents of those minutes clearly
indicate a date one year later. The secretary who prepared the minutes acknowledged the error.
5
An amended complaint, filed four days later, corrected an error in the amount of money that the first complaint
alleged was at issue.
-4-
The plaintiff’s theory of recovery changed as this case moved towards trial. Although her
initial and amended complaints referred to the money that was advanced to the church as a loan,
evidenced by a contract in the form of a church resolution, in later filings (including a response to
a request for a more definite statement) she suggested that her interest should be considered to be
in the nature of a resulting trust. For its part, the church always insisted that the money was a gift,
and that nothing in its constitution or bylaws dealing with the property created any beneficial, legal
or contractual interest in the Weatherlys or in their heirs.
The church filed a motion for summary judgment on June 21, 2004. Ms. Weston filed a
response in opposition to the motion and a memorandum of law. The memorandum recited the
previous theory of loan and contract, but also contended for the first time that the money given to
the church was a gift subject to a condition subsequent. The church objected to this late introduction
of a new theory of recovery, but the trial court allowed it, and allowed Ms. Weston to amend her
complaint to incorporate her new theory.
The hearing on the motion for summary judgment was conducted on July 23, 2004, during
which the merits of the plaintiff’s condition subsequent theory was argued by both sides. The trial
court declined to grant the church summary judgment on that issue, and ruled that “[t]here is a
genuine issue of material fact as to whether R.C. Weatherly and Betty Weatherly intended to make
a gift subject to a condition subsequent when they transferred $46,519.47 to the Defendant on
October 26, 1999.”
The final hearing of this case was conducted on September 22, 2004.6 Both Mr. Hubbard and
Mr. Watson testified that before the mortgage loan was paid off there were discussions between
them, the Weatherlys, and Mr. Lee, an attorney, as to the best way to protect the interests of the
Weatherlys and their heirs in the event that the church failed.7 According to their testimony, the
attorney advised against putting restrictions in the deed and recommended that they be protected
through church resolutions.
A key witness for the church was Jeanie Fanning. She testified that she was a member of the
church from its very beginning and that she attended several meetings of the church prior to its
Constitution Day. As church secretary, she took notes during the church’s business meetings and
referred to those notes when she typed the minutes of those meetings, generally a few weeks later.
6
One unusual feature of the hearing was that neither attorney called for the Rule, and perhaps as a result there
was an unusual degree of unanimity of testimony between the witnesses called by each side. Although Mr. Hubbard and
Mr. W atson both testified extensively, Mr. W atson was simply asked at one point if he agreed with the testimony of Mr.
Hubbard as to some matters, without any further testimony being taken from him as to those matters. Three witnesses
for the church were later asked if they were in agreement with the testimony of the other witnesses for the church. They
said that they were, and no further testimony was taken from them.
7
Mr. George Puckett, a current trustee of the church, testified that it was his understanding that only three out
of ten attempts to found a new church is crowned with success.
-5-
She was questioned extensively about the minutes of two meetings, one set bearing the date January
10, 2000, and the other October 24, 2000.
Under questioning, she readily admitted that the January 10, 2000 date on one set of minutes
had to be incorrect and was just a typographical error. The minutes themselves recited a church
account balance as of January 8, 2001, stated that the nominating committee brought a motion to
vote on church officers and teachers for the year 2001, and referred to its actions on the division of
tithes as being retroactive to January 1, 2001.
As for the meeting that is so critical to resolution of this case, she stated that she was certain
that the date of October 24, 2000 was correct. However, she also testified that church meetings were
held on Wednesdays and Sundays and on no other days. In its ruling from the bench, the trial court
took judicial notice of the fact that October 24, 1999 was a Wednesday, while October 24, 2000 was
a Tuesday. While Ms. Fanning insisted under questioning that the disputed meeting took place in
2000, at one point she suggested that perhaps she got the exact date wrong, and that it was actually
the 23rd. That date would have been a Monday.
All the witnesses for the church, with one exception, testified that they also were absolutely
certain that the meeting in which the amendment regarding the return of the money to the Weatherlys
was adopted occurred in October of 2000.8 They also testified that they had been unaware of any
sort of negotiations or deal between the trustees and the Weatherlys in regard to the mortgage on the
church property until Betty Weatherly filed suit.
At the conclusion of the proof, the court announced its ruling from the bench. In that ruling
and in its subsequent final order of October 11, 2004, the court ruled for the plaintiff, holding that
the Weatherlys had made a valid gift to the church subject to a condition subsequent.
The court found that the Weatherlys had given the $46,519 to the church through the trustees
with the intent of requiring that the money be returned to them or their heirs if the church ever ceased
to operate as a church, and that the church members had amended its bylaws on October 24, 1999
in accordance with that requirement, thereby ratifying the condition. Since the church was still
functioning, the court did not order that any payment be made, but it removed the lien lis pendens
from the property and ruled that Ms. Weston could file the final order in the Office of the Register
of Deeds for Wilson County. This appeal followed.
The church raised three issues on appeal: whether the trial court committed reversible error
by allowing Ms. Weston to amend her amended complaint to assert a claim that the money donated
by her parents was a gift subject to a condition subsequent; whether any such condition was in fact
placed on the gift at the time it was made; and whether the controversy was ripe for decision, since
the church had never stopped operating. We will discuss each of those arguments in turn.
8
Jessie Hardin testified that although he had probably been there, he didn’t have any memory of that particular
meeting or its date.
-6-
IV. THE AMENDMENT TO THE AMENDED COMPLAINT
The church claims the trial court deprived it of a “level playing field” by allowing Ms.
Weston to raise a new cause of action so late in the course of litigation. Rule 15.01 of the Tennessee
Rules of Civil Procedure allows a party to amend its pleadings once as a matter of course at any time
before a responsive pleading is served. “Otherwise a party may amend the party’s pleading only by
written consent of the adverse party or by leave of court; and leave shall be freely given when justice
so requires.” Rule 15.01 has been construed to give our courts broad discretion when determining
whether to allow the amendment of complaints. Henderson v. Bush Bros. & Co., 868 S.W.2d 236,
238 (Tenn. 1993); Harris v. St. Mary's Medical Center, 726 S.W.2d 902, 904 (Tenn. 1987);
Merriman v. Smith, 599 S.W.2d 548, 559 (Tenn. Ct. App. 1979). A trial court’s decision to allow
amendment will not be reversed on appeal unless an abuse of discretion has been shown. Welch v.
Thuan, 882 S.W.2d 792, 793 (Tenn. Ct. App. 1994); Wilson v. Ricciardi, 778 S.W.2d 450, 453
(Tenn. Ct. App. 1989).
As the rule indicates, in general, permission to amend should be liberally granted. The reason
is “to insure that cases and controversies be determined upon their merits and not upon legal
technicalities or procedural niceties.” Doyle v. Frost, 49 S.W.3d 853, 856 (Tenn. 2001); Karash v.
Pigott, 530 S.W.2d 775, 777 (Tenn. 1975). Factors the trial court should consider when deciding
whether to allow amendments include “undue delay in filing; lack of notice to the opposing party;
bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue
prejudice to the opposing party, and futility of amendment.” Harden v. Danek Medical, Inc., 985
S.W.2d 449, 454 (Tenn. Ct. App. 1998); Merriman v. Smith, 599 S.W.2d at 559.
In the case before us, the church was long aware that Ms. Weatherly and, later, her heirs
sought return of the money the Weatherlys had provided to pay off the mortgage on the land. The
church was also long aware that the Weatherlys relied in part on the amendment of the church’s
constitution that provided for return of the money or transfer of the land to the Weatherlys upon the
occurrence of specified circumstances. Throughout the litigation the church contended the money
was a gift. In her amendment to the complaint, Ms. Weston agreed with the church that the money
was a gift, but alleged it was conditioned on the circumstances described in the church’s revision
to its constitution. No new evidence was required to resolve the issue. In other words, the
amendment did not implicate additional evidence of which the church had been unaware and did
not change the relief sought. See Hunt v. Temco, Inc., 452 S.W.2d 879, 888 (Tenn. Ct. App.
1969)(late-filed amendment asserting quantum meruit theory of recovery for first time permitted
because (1) same evidence could have been used to support either quantum meruit or contract
pleadings and (2) the measure of damages was the same for each theory). Consequently, we can
find no prejudice to the church’s ability to defend the lawsuit due to the amendment of the
complaint. The church was unable to point to any.
Further, the delays in the present case were at least partially due to the terminal illness and
absence from the area of the original plaintiff, Betty Weatherly. There was no indication that the
plaintiff acted in bad faith, and the amendment could not be considered futile.
-7-
Accordingly, the trial court acted within its discretion to allow Ms. Weston to amend her
complaint to advance a new theory of recovery.
V. A GIFT WITH CONDITION SUBSEQUENT
It is undisputed that the money advanced by the Weatherlys for the benefit of the
Community Baptist Church was intended to be a gift to the church and that the church accepted the
gift. The church insists that the Weatherlys’ gift was unconditional, with no strings attached. Ms.
Weston contends that the church accepted the gift with the condition regarding its return if the new
church was unsuccessful.
Gifts for charitable purposes, including gifts for the advancement of religion or to religious
organizations, are common and have long been recognized in the law. See, e.g., Dickson v.
Montgomery, 31 Tenn. 348, 362 (1851). It is also not uncommon for donors making such gifts to
impose conditions on them. Tennessee Division of the United Daughters of the Confederacy v.
Vanderbilt University, 174 S.W.3d 98, 114 (Tenn. Ct. App. 2005). “[A] donor, by a condition
subsequent, may limit his gift to a particular purpose and render it so conditioned and dependent
on an expected state of facts that where the state of fact fails, the gift fails with it, if such condition
is not illegal or against public policy.” 28A C.J.S. Gifts § 38.
The owner of personal property may make a gift thereof to another person (the
donee) in which the donor retains a reversionary interest by delivering the personal
property to the donee, or to a third person for the donee, with the manifested
intention that the donee acquire an ownership that terminates -
(1) after the passage of some specified period of time; or
(2) on the occurrence or nonoccurrence of some event or condition.
Acceptance of the gift by the donee is required for completion of the gift.
RESTATEMENT , SECOND , PROPERTY (DONATIVE TRANSFERS) § 31.2.
The question in the case before us is whether the gift of money to the church by the
Weatherlys was a complete, unconditional inter vivos gift or whether it was a gift with a condition
attached. If it was an inter vivos gift, meeting all the legal requirements therefor,9 then it became
irrevocable upon delivery of the money. Franklin v. Moss, 101 S.W.2d 711, 714 (Mo. 1937).
However, if it was a gift subject to a condition subsequent, the gift is subject to forfeiture upon
9
To establish a inter vivos gift, the donee must prove donative intent on the part of the donor coupled with
delivery of the property to the donee. Lowry v. Lowry, 541 S.W .2d 128, 130 (Tenn. 1976); Hansel v. Hansel, 939
S.W .2d 110, 112 (Tenn. Ct. App. 1996). Intent and delivery must be clearly proved, and “doubts must be resolved
against the gift.” Figuers v. Sherrell, 178 S.W.2d 629, 632 (Tenn. 1944).
-8-
noncompliance with the condition. United Daughters of the Confederacy, 174 S.W.3d at 115;
Southwestern Presbyterian Univ. v. City of Clarksville, 259 S.W. 550, 554 (Tenn. 1924).
Whether or not a gift was unconditional is a question of intent. Where the gift is made by
or through a document, such as a deed, will, or contract, that intent can be gleaned by express
language in the conveying document. United Daughters of the Confederacy, 174 S.W.3d at 114
(“A conditional gift is enforceable according to the terms of the document or documents that created
the gift.”) The Weatherlys’ gift herein was not made by document. That is, they did not transfer the
money by will or contract, and they did not transfer any land by deed or otherwise. In such
situations, the intent of the parties can be gleaned from any other express language regarding intent
or from circumstances surrounding the transfer. 28A C.J.S. Gifts § 38. “Because noncompliance
results in a forfeiture of the gift, the conditions must be created by express terms or by clear
implication and are construed strictly.” United Daughters of the Confederacy, 174 S.W.3d at 115
(citing Southwestern Presbyterian Univ., 259 S.W. at 558).
In the case before us, although the gift was not effectuated through a document, there is a
document setting out the condition asserted by the Weatherlys. The language of the amendment
to the church constitution expressly limits use of the money given by the Weatherlys in the event
the newly-formed church ceased to exist. The question is whether the amendment evidences the
intent of the parties at the time the gift was made. See Ewing v. Hladky Constr., Inc., 48 P.3d 1086,
1089 (Wyo. 2002); Courts v. Annie Penn Memorial Hospital, Inc., 431 S.E.2d 864, 866 (N.C. Ct.
App. 1993) (holding that the intent of the donor to condition a gift must be measured at the time of
the gift).
In other words, did the amendment reflect the Weatherlys’ intent to place a condition
subsequent on their gift and the church’s intent to accept the gift with the condition attached? If
the amendment was adopted essentially contemporaneously with the gift and the church’s use of
the money to pay off the mortgage, the answer becomes clear. In that situation, the amendment
provides express language establishing the condition. Additionally, the circumstances taken as a
whole would clearly indicate a mutual intent to place the condition on the gift. Thus, the
determinative question is a factual one: when was the amendment adopted? Was it October 24,
1999 (at the time of the gift and the church’s establishment) or one year later, October 24, 2000?
The trial court found that the amendment was adopted on October 24, 1999. On appeal, that
finding of fact is entitled to a presumption of correctness unless the evidence preponderates against
it. Tenn. R. App. P. 13(d). The testimony as to the date of the crucial meeting was highly
controverted. Mr. Hubbard and Mr. Watson testified that it took place in 1999 at about the same
time the Weatherlys gave them the $46,000 check, although they admitted on cross-examination
that they did not remember the exact date. Some current and former members of the church
testified to the contrary that they clearly remembered the meeting as actually occurring in 2000.
-9-
The minutes of that meeting, typed by Jeanie Fanning, were dated October 24, 2000.
However, Ms. Fanning admitted that she had mistakenly put the wrong date on the minutes of a
later meeting. She also testified that all meetings of the church took place on Sundays or
Wednesdays, without exception. In its ruling from the bench, the trial court took judicial notice of
the fact that October 24, 1999 was a Wednesday, while October 24, 2000 was a Tuesday.
The church argues on appeal that the court erred in believing the testimony of Mr. Hubbard
and Mr. Watson over its own witnesses; that only two witnesses testified that the disputed meeting
took place in 1999, while a greater number testified that the meeting took place in the year 2000;
and that the court mistakenly characterized all of the church’s witnesses as interested witnesses,
when in actuality some of them were no longer members of the church, and so should be considered
no more interested in the outcome of the proceedings than were Mr. Hubbard and Mr. Watson.
None of these arguments convinces us that the evidence preponderates against the trial
court’s finding. The preponderance of the evidence is not determined by the number of witnesses
who testify to a fact or to a set of facts. See Robertson v. State, 221 S.W.2d 535, 536 (Tenn. 1949);
Christian v. State, 197 S.W.2d 797 (Tenn. 1946). Conflicts in testimony require the trial court to
determine the relative credibility of the testifying witnesses. Fielder v. Lakesite Enterprises, 871
S.W.2d 157, 160 (Tenn. Ct. App. 1993). When reviewing factual findings based on credibility we
must give considerable deference to the trial courts, because they are in a far better position to
observe the demeanor of witnesses than are the appeals courts. Jones v. Garrett, 92 S.W.2d 835,
839 (Tenn. 2002); McCaleb v. Saturn Corp., 910 S.W. 412, 415 (Tenn. 1995); Fell v. Rambo, 36
S.W.3d 837, 846 (Tenn. Ct. App. 2000).
We conclude the evidence does not preponderate against the trial court’s finding that the
amendment to the church’s constitution was adopted at a meeting on October 24, 1999. The
amendment on that date corroborates the testimony regarding the Weatherlys’ intent. The trustees
testified that, prior to the gift, the Weatherlys stated they wanted to be protected in the event the
new church did not succeed. They also testified that an attorney advised all of them to provide for
that protection through a church resolution. It was clearly the intent of the donors and the trustees
that the gift be subject to the subsequent condition. The minutes of the meeting at issue recite that
the meeting was called for the purpose of amending the “Property” clause of the church’s
constitution. The amendment, adopted at the time of the gift, evidences the intent of the church to
accept the gift with the condition attached.10 Accordingly, we conclude that the trial court correctly
determined that the Weatherlys’ gift of money was subject to the condition established in the
amendment to the church constitution.
10
Because the amendment evidences the church’s acceptance of the gift with the condition attached, the church’s
arguments regarding the trustees’ authority to agree to the condition are irrelevant.
-10-
VI. EFFECT OF CONDITION
The condition established in the amendment has clear language of reversion. In other words,
the language states that if the condition failed, the money or its equivalent would be returned to the
donors or their heirs. In a conditional gift situation, the right of the donor (or his heirs) to recover
the gift depends upon the failure of the condition. United Daughters of the Confederacy, 174
S.W.3d at 114-15; Ver Brycke v. Ver Brycke, 843 A.2d 758, 776 (Md. Ct. App. 2004). In this case,
the triggering event for the return is the church’s ceasing to be a church.
The church argues that it eliminated any obligation it might have owed to the Weatherlys
or their heirs by deleting any provisions for their benefit by amending its Property Clause on
January 10, 2001. This amendment purported to delete the condition attached to the gift. The
church relies on Tenn. Code Ann. § 48-60-101(a), which allows a non-profit corporation to “amend
its charter at any time to add or change a provision that is required or permitted in the charter or to
delete a provision not required in the charter.” However, while the church may have the right to
modify its governing documents as it sees fit, it cannot effectively disclaim its obligations by such
unilateral action. United Daughters of the Confederacy, 174 S.W.3d 98 at 118 (holding that the
recipient of conditional gift may not unilaterally repudiate the condition, even after the passage of
many years).
The church also argues that the trial court’s final order gave the plaintiff “a greater and
more expansive interest in the real property than the interest held by the original grantor.” As we
interpret it, the church is objecting to the fact that while the Weatherlys only gave a gift of money,
the court’s final order held out the possibility (however remote) that the plaintiff might eventually
obtain the church’s real property. It is true that when the donee of a conditional gift ceases to
comply with the condition, the donor’s remedy is generally limited to recovery of the gift. United
Daughters of the Confederacy, 174 S.W.3d at 114. However, where the gift is money, a court may
order that the donee return the amount originally given as well as an additional amount to reflect
the current value of the gift. Id., 174 S.W.3d at 119 (holding that in order to return the gift the
donee would be required to pay an amount based on the consumer price index to account for the
changed value of the original donation).
Additionally, the Weatherlys’ monetary gift was used to pay off the debt on the land, and
the church and the Weatherlys agreed that, if the church ceased to exist before a building was
erected, the land would be deeded to the Weatherlys or their heirs. We find no basis for ignoring
the agreed-upon condition. Should the church cease to exist before a building is built, the value of
the land at the time may or may not be equivalent to the current value of the original gift. That is
not a question, however, that the courts must answer at this time.
The church’s real objection, however, is that the filing of the court’s final order with the
Register of Deeds effectively placed a cloud upon its title, making it difficult to obtain a mortgage
to improve the property. The church therefore asks us to modify the court’s order to limit the
-11-
donor’s remedy for failure of the condition subsequent to recovery of the monetary gift and to
eliminate any reference to the property itself. For the reasons set out, we decline to do so.
The church’s final argument is that even if the court believed that a valid condition
subsequent had been placed on the Weatherlys’ gift, the question was not yet ripe for decision
because “Defendant continues as of this date to be a thriving, functioning church,” and thus the
triggering condition had not yet occurred.
The trial court observed that the church’s amendment of its bylaws on January 10, 2001 put
the Weatherlys on notice that their rights had been placed at risk, and they therefore were justified
in taking action to protect those rights. The court suggested that, if nothing else, they were entitled
to a declaratory judgment to determine the nature of their interest. See Tenn. Code Ann. § 29-14-
102 (stating that “[c]ourts of record within their respective jurisdictions may declare rights, status
and other legal relations whether or not further relief is or could be claimed”).
The trial court also observed that no time limit had been placed upon the condition, and thus
if the church were to cease existence sometime in the distant future, the court would face the exact
same question as the one currently before it, but its ability to correctly determine the rights of the
parties would be rendered far more difficult due to the passage of time, the deterioration of
documentary evidence and the fading of the memories of witnesses. See HCA v. American
Protection Insurance Co., 174 S.W.3d 184, 207 (Tenn. Ct. App. 2005).
We agree with the trial court. Ms. Weston, on behalf of the Weatherly estate, was entitled
to a declaratory judgment as to the rights or interests of the estate related to the conditional gift
made by the Weatherlys.
VII.
We affirm the order of the trial court. Remand this case to the Chancery Court of Wilson
County for any further proceedings necessary. Tax the costs on appeal to the appellant, Community
Baptist Church of Wilson County.
___________________________________
PATRICIA J. COTTRELL, JUDGE
-12-
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644 F.2d 852
Chester Otto HENRIKSEN, Plaintiff-Appellant,v.The Honorable Judge Vernon G. BENTLEY, of the SecondJudicial Circuit, and PhilKrahn, Clerk of theCourt, Second Judicial District In andFor the State ofWyoming,Defendants-Appellees.
No. 79-2143.
United States Court of Appeals,Tenth Circuit.
Argued and Submitted Feb. 19, 1981.Decided March 26, 1981.
Leonard D. Munker, Federal Public Defender, Wichita, Kan., for plaintiff-appellant.
Allen C. Johnson, Senior Asst. Atty. Gen., Cheyenne, Wyo., for defendants-appellees.
Before BARRETT, DOYLE and LOGAN, Circuit Judges.
WILLIAM E. DOYLE, Circuit Judge.
1
Chester Otto Henriksen, a Wyoming state prisoner, seeks review of the dismissal of his cause of action brought pursuant to 42 U.S.C. § 1983, against a state district court judge and clerk, both of the Second Judicial District Court in Albany County, Wyoming.
2
In his complaint, Henriksen alleged that he mailed a certified letter, containing "legal mail" to the state district court clerk's office. This letter was received by the post office and the post office apparently twice notified the clerk's office of the letter. However, the clerk's office failed to pick up the letter and it was subsequently returned to Henriksen. Henriksen then commenced this § 1983 action in the federal district court, claiming that he had been denied access to the courts and seeking damages and equitable relief.
3
The district court granted Henriksen's motion to proceed in forma pauperis, and ordered that the complaint be filed. The court then summarily dismissed the cause of action on the ground that the defendants-appellees enjoyed absolute judicial immunity, and upon the further ground that the action was frivolous and devoid of merit.
4
Henriksen has argued in this court that prisoners have a recognized constitutional right of access to the courts, and that his complaint therefore had merit. He maintains that immunity is a defense which must be raised by the defendants in the first instance.
I.
5
Summary dismissal is appropriate under certain circumstances. 28 U.S.C. § 1915(d). When a motion to proceed in forma pauperis is filed and the poverty affidavit is facially sufficient, the complaint should be filed. Phillips v. Carey, 638 F.2d 207 (10th Cir., 1981); Duhart v. Carlson, 469 F.2d 471 (10th Cir. 1972), cert. denied, 410 U.S. 958, 93 S.Ct. 1431, 35 L.Ed.2d 692 (1973). The complaint is then tested under 28 U.S.C. § 1915(d), and if found to be frivolous, improper or obviously without merit, the case is subject to dismissal. See Phillips v. Carey, supra at 208 and cases cited therein. This court has made clear in numerous cases that a trial court need not require service of the complaint and filing of an answer in cases of this type where on the face of the complaint it clearly appears that the action is frivolous or malicious.
6
The test to be applied in determining whether an in forma pauperis complaint is frivolous has been clearly stated by this court in numerous cases. E. g., Phillips v. Carey, supra; Smart v. Villar, 547 F.2d 112 (10th Cir. 1976). Such a complaint is frivolous if the plaintiff cannot make a rational argument on the law or the facts to support his claim.
7
So tested, dismissal of Henriksen's complaint against the state district court judge was appropriate. The complaint premises the liability of the judge on the allegation that the judge "is responsible for the acts committed by the clerk." (R. 3). The law is clear that liability under 42 U.S.C. § 1983 may not be premised on the doctrine of respondeat superior. Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976); Bennett v. Passic, 545 F.2d 1260 (10th Cir. 1976); Kite v. Kelley, 546 F.2d 334 (10th Cir. 1976). An isolated instance of violation of constitutional rights by a subordinate is incapable of rising to an issue regarding the liability of a superior under § 1983. McClelland v. Facteau, 610 F.2d 693 (10th Cir. 1979). Henriksen's complaint contains no allegation which has any tendency to support his contention that the judge is liable under § 1983.
8
Accordingly, the complaint is without merit as to the judge. It was properly dismissed.
9
In light of the result reached above, we need not decide whether absolute judicial immunity also supports dismissal of Henriksen's cause of action against the judge. See Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978); Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967). Nor need we decide whether judicial immunity insulates state judges from injunctive and declaratory relief as well as monetary relief under § 1983 an issue which was recently left open by the Supreme Court. Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 100 S.Ct. 1967, 64 L.Ed.2d 641 (1980).
II.
10
The district court also concluded that the complaint against the state court clerk was frivolous under 28 U.S.C. § 1915(d); that a clerk enjoys the same absolute immunity from suit as does a judge. In light of the stage at which the action was dismissed, the allegations in Henriksen's complaint must be accepted as true. Viewed in this light, we cannot say that no rational argument on the law or the facts can be made to support the allegations of the complaint.
11
Denial of access to the courts violates a recognized constitutional right, and conceivably could be the basis of a suit pursuant to 42 U.S.C. § 1983. Bounds v. Smith, 430 U.S. 817, 97 S.Ct. 1491, 52 L.Ed.2d 72 (1977); Silver v. Cormier, 529 F.2d 161 (10th Cir. 1976). Thus, actions which prevent an individual from communicating with a court could constitute denial of access to the court.1
12
This court has not previously addressed the appropriate type of immunity to be afforded to a clerk of a court. However, the considerations which underlie grants of immunity have been stated in several Supreme Court cases. At the outset, it should be noted that immunity is a judicially developed limitation on the protection established by Congress in 42 U.S.C. § 1983. § 1983 provides:
13
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other property proceeding for redress. (emphasis added)
14
The doctrine of official immunity from § 1983 is based on two mutually dependent rationales:
15
(1) the injustice, particularly in the absence of bad faith, of subjecting to liability an officer who is required, by the legal obligations of his position, to exercise discretion;
16
(2) the danger that the threat of such liability would deter his willingness to execute his office with the decisiveness and the judgment required by the public good. Butz v. Economou, 438 U.S. 478, 497, 98 S.Ct. 2894, 2906, 57 L.Ed.2d 895 (1978), quoting Scheuer v. Rhodes, 416 U.S. 232, 240, 94 S.Ct. 1683, 1688, 40 L.Ed.2d 90 (1974).
17
Absolute immunity has been granted sparingly and only in those cases where the public interest in unfettered decision-making outweighs the individual interest in redress pursuant to § 1983.
18
Judges are absolutely immune from civil liability for judicial acts, unless committed in the clear absence of all jurisdiction. Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978); Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967). "(I)t is a general principle of the highest importance to the proper administration of justice that a judicial officer, in exercising the authority vested in him, shall be free to act upon his own convictions, without apprehension of personal consequence to himself." Bradley v. Fisher, 13 Wall 335, 347, 80 U.S. 335, 347, 20 L.Ed. 646 (1872). The same rationale has been invoked to extend absolute immunity to prosecutors from liability for decisions to initiate and prosecute cases. Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976).
19
Although the absolute immunity of judges has limits we need not discuss these limits beyond saying that the immunity does not extend to acts which are outside the jurisdiction of the judge. Stump v. Sparkman, supra at 362, 98 S.Ct. at 1107. The court in Supreme Court of Virginia v. Consumers Union of the United States, supra, suggests that immunity from liability in damages may not bar prospective relief, injunction, for example, against a judge.
20
Immunity which derives from judicial immunity may extend to persons other than a judge where performance of judicial acts or activity as an official aide of the judge is involved. Dennis v. Sparks, --- U.S. ----, 101 S.Ct. 183, 66 L.Ed.2d 185 (1980); see also Gravel v. United States, 408 U.S. 606, 92 S.Ct. 2614, 33 L.Ed.2d 583 (1972). Thus, clerks of courts have been ruled immune to suit under § 1983 when performing "quasi-judicial" duties. E. g., Smith v. Rosenbaum, 460 F.2d 1019 (3rd Cir. 1972) (setting bail pursuant to statute); Denman v. Leedy, 479 F.2d 1097 (6th Cir. 1973). Other courts have held that absolute immunity applies where a court clerk is acting under the command of a court decree or explicit instructions from a judge. Williams v. Wood, 612 F.2d 982 (5th Cir. 1980); Slotnick v. Garfinkle, 632 F.2d 163 (1st Cir. 1980).
21
In most of the cases in which the immunity of various types of public officials has been considered, the Supreme Court has concluded that only a limited or qualified immunity is appropriate. E. g., Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967) (police officers); Wood v. Strickland, 420 U.S. 308, 95 S.Ct. 992, 43 L.Ed.2d 214 (1975) (school board members); Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). In each case, it is necessary to weigh the nature of the activity involved and the need for unfettered exercise of discretion against the individual interest in protection under § 1983. C. f., G. M. Leasing Corp. v. United States, 560 F.2d 1011 (10th Cir. 1977).
22
The precise scope of the immunity, if any, that should be afforded to a clerk of court can only be determined on a more developed factual record. However, the courts which have considered the question have concluded that clerks are generally entitled to qualified immunity. In McLallen v. Henderson, 492 F.2d 1298 (8th Cir. 1974), the court states that a clerk is entitled to immunity from damages where he "can show that he was acting pursuant to his lawful authority and following in good faith the instructions or rules of the court and was not in derogation of those instructions or rules." 492 F.2d at 1300. See also Williams v. Wood, supra (qualified immunity for entry of order and notification of parties). In McCray v. State of Maryland, 456 F.2d 1 (4th Cir. 1972), the plaintiff prisoner alleged that the negligence of a state court clerk had impeded the filing of a petition for post-conviction review. The court view was that the filing of papers is ministerial and non-discretionary. This precluded a grant of absolute immunity. Finally, even if a clerk is immune from damages for the discharge of certain functions, equitable relief may still be obtained under § 1983. Shipp v. Todd, 568 F.2d 133 (9th Cir. 1978).
23
Where a public official has or may have a defense based on qualified immunity, the burden is on the official to raise the defense and establish his entitlement to immunity. Gomez v. Toledo, 446 U.S. 635, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980). This is not to say that in every case in which qualified immunity is an issue, a trial on the merits is necessary. Summary disposition consistent with the Federal Rules of Procedure may be appropriate. See Butz v. Economou, supra at 508. However, dismissal of the complaint pursuant to 28 U.S.C. § 1915 is not appropriate in such cases.
24
In the present case the district court allowed the complaint to be filed but quickly dismissed it without hearing. An answer should have been ordered following the issuance and service of process. Further proceedings would depend on the form and scope of the answer.
25
For the reasons set forth above, the judgment of the district court is affirmed in part, reversed in part and remanded for further proceedings in accordance with this opinion.
1
The precise nature of the "legal mail" involved in this case is not clear. The contents of Henriksen's letter may have a bearing on his claim that he was denied access to the courts. See Collins v. Cundy, 603 F.2d 825 (10th Cir. 1979). However, the allegation of interference with "legal mail" is sufficient to prevent dismissal under 28 U.S.C. § 1915(d)
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335 F.Supp.2d 57 (2004)
Jesse R. CHESTER, Plaintiff,
v.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY Defendant.
No. CIV.A. 03-1573 EGS.
United States District Court, District of Columbia.
September 8, 2004.
*58 *59 Aria Shariati, Washington, DC, for Plaintiff.
Sara Lynne Bloom, Washington, DC, for Defendant.
MEMORANDUM OPINION
SULLIVAN, District Judge.
I. Introduction
Plaintiff Jesse R. Chester ("Chester" or "plaintiff") brings suit against defendant Washington Metropolitan Area Transit Authority ("WMATA" or "defendant"), alleging retaliation and wrongful termination in violation of common law (Count I) and the collective bargaining agreement ("CBA") between plaintiff's union, Office and Professional Employees International Union, Local 2 ("Local 2") and WMATA (Counts II and III). In addition, plaintiff alleges defendant violated the CBA (1) by not hiring plaintiff for a new position following his discharge (Count IV), (2) by hiring two white persons for positions that plaintiff (an African-American) could have applied (Count V), and (3) by refusing to promote plaintiff to a retiring supervisor's position for which plaintiff contends he was the most qualified candidate (Count VI). Defendant has moved to dismiss the complaint in its entirety or, in the alternative, for summary judgment.
II. Background
Because defendant's Motion for Summary Judgment asserts absolute defenses, the Court's decision will be based on questions of law and very few facts are necessary to the decision.[1]
Plaintiff is an African-American man who, prior to the events giving rise to this *60 suit, had been employed by defendant since 1982. Plaintiff is a member of the Office and Professional Employees Union International, Local 2. Compl. at ¶ 14. An agreement between the union and defendant governed the conditions of plaintiff's employment with defendant. Id. Defendant is a governmental organization created by a multi-state compact between the District of Columbia, Virginia, and Maryland. Pl.'s Resp. to Def.'s Mot. at 1.
On June 27, 2000, an altercation occurred between plaintiff and Denton U. Kent, the Director of the Office of Property Development and Management ("LAND"). As a result of that altercation and pursuant to the CBA, plaintiff filed a Step 2 grievance on June 28, 2000. The grievance was denied on July 20, 2000. Plaintiff then filed a Step 3 grievance on July 31, 2002 (and again on October 2, 2000), which was denied on October 2. Plaintiff did not pursue Step 4 arbitration. Compl. at ¶¶ 14-30.
On May 1, 2002, plaintiff learned that, as a result of post-9/11 budget cuts, a Reduction-In-Force ("RIF") had been ordered. Plaintiff's position and that of one co-worker were to be eliminated and replaced by one new position. Plaintiff believes his position was eliminated in response to the grievance he filed in June 2000. See Compl. at ¶¶ 39, 41-44; Pl.'s Resp. to Def.'s Mot. at 8; Def.'s Mot. Ex. 4.
On May 24, 2002, Local 2 filed a Step 2 grievance on behalf of plaintiff to protest the elimination of his position. The Step 2 grievance was denied on June 7, 2002. Local 2 then filed a Step 3 grievance on June 11, 2002. On June 28, 2002, the Step 3 grievance was resolved by a mutually agreeable settlement, whereby plaintiff was allowed to remain in his position until the new position created by the RIF was filled. Compl. at ¶¶ 55-58.
On May 9, 2002, plaintiff received a list of "Current Vacancies" from defendant in order to seek alternate employment. On June 6, 2002, plaintiff applied for a position that was lower in rank, but received no response. On July 7, 2002, plaintiff learned the position had been vacant for two years and had been placed on "hold" two months prior (around the time of the RIF) by Director Kent. Id. at ¶¶ 48-54.
On June 28, 2002, plaintiff interviewed for the position left vacant by his retiring supervisor, but was not selected. Id. at ¶ 45. On July 29, 2002, LAND hired two new employees, both of whom are white. Id. at ¶ 59. On November 18, 2002, the new position created after the RIF was offered to an African-American employee with 11 years less seniority than plaintiff. Although plaintiff's statement of facts is unclear, it appears that plaintiff filed a Step 2 grievance regarding plaintiff's non-selection for the new position. The Court assumes that the Step 2 grievance was denied because plaintiff states that a Step 3 grievance was denied on December 13, 2002.[2] That same day, Local 2 filed a Step 4 appeal of the Step 3 denial, requesting final and binding arbitration. Compl. at ¶¶ 68, 70-71.
Plaintiff's Step 4 grievance over his non-selection for the new position never reached arbitration because Local 2 determined, based on its prior experience, that pursuing arbitration of plaintiff's grievance would be futile. Compl. at ¶ 72; see Pl.'s Resp. Ex. 1 (letter from Local 2 dated May 30, 2003, explaining why arbitration was not pursued).
Plaintiff has not alleged facts indicating he challenged Local 2's decision or believed *61 it to be in error. In addition, plaintiff has provided no facts indicating he filed any grievances under the CBA regarding defendant's hiring of two white people or its refusal to promote plaintiff to his retiring supervisor's position.
III. Standard of Review
Because it is necessary to consider evidence presented or facts alleged extrinsic to the original complaint, "the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." Fed.R.Civ.P. 12(b)-(c). Under Rule 56, summary judgment is appropriate only when the record before the court shows that "there is no genuine issue as to any material fact," Fed.R.Civ.P. 56(c), and the moving party has demonstrated that the non-moving party did not "make a showing sufficient to establish the existence of an element essential to that party's case," Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The non-moving party's evidence must be accepted as true and all reasonable inferences drawn in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Greene v. Amritsar Auto Servs. Co., 206 F.Supp.2d 4, 7 (D.D.C.2002). However, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position," Anderson, 477 U.S. at 252, 106 S.Ct. 2505, is insufficient to withstand a motion, and "the non-moving party may not rely solely on mere conclusory allegations," Sokos v. Hilton Hotels Corp., 283 F.Supp.2d 42, 46 (D.D.C.2003) (citing Greene v. Dalton, 164 F.3d 671, 675 (D.C.Cir.1999)).
IV. Discussion
A. The WMATA Compact Provides Defendant With Immunity From Plaintiff's Wrongful Termination Tort Claim.
"In signing the WMATA Compact, Maryland, Virginia, and the District of Columbia conferred upon WMATA their respective sovereign immunities." Beebe v. WMATA, 129 F.3d 1283, 1287 (D.C.Cir.1997) (citing Morris v. WMATA, 781 F.2d 218, 219 (D.C.Cir.1986)). However, this immunity is not absolute. In section 80 of the Compact, WMATA expressly waives its immunity from suits for contracts and for torts "committed in the conduct of any proprietary function," while retaining immunity "for any torts occurring in the performance of a governmental function." D.C.Code Ann. § 9-1107.01(80) (2001). In order to distinguish proprietary functions from governmental functions, the court first inquires whether the challenged activity "amounts to a `quintessential' governmental function, like law enforcement. If so, the activity falls within the scope of WMATA's sovereign immunity." Beebe, 129 F.3d at 1287 (citing Burkhart v. WMATA, 112 F.3d 1207, 1216 (D.C.Cir.1997) (internal citations omitted)).
In the case of activities which are not quintessential governmental functions, such as the personnel decisions at issue here, "the immunity question turns on whether the activity is `discretionary' or `ministerial.'" Id. Only discretionary acts fall within section 80's retention of sovereign immunity for governmental acts. Beebe, 129 F.3d at 1287. The D.C. Circuit has held that "decisions concerning the hiring, training, and supervision of WMATA employees are discretionary in nature, and thus immune from judicial review." Burkhart, 112 F.3d at 1217. The Circuit affirmed this reasoning in Beebe, noting that the WMATA Compact "confers broad powers on WMATA to `[c]reate and abolish offices, employments and positions,'" 129 F.3d at 1287 (quoting D.C.Code Ann. § 9-1107.01(12)(g)), and concluding that, with regard to personnel decisions, WMATA is immune from any tort claims. Beebe, 129 F.3d at 1288.
*62 Plaintiff attempts to distinguish the clear precedent of Beebe and Burkhart, claiming that their holdings should be restricted to negligent tort claims. According to plaintiff, because his retaliation claim alleges an intentional tort, it is distinguishable from the past cases establishing WMATA's immunity from tort claims resulting from employment decisions. Plaintiff provides no precedent for drawing a distinction between intentional and negligent torts claims and fails to acknowledge that the D.C. Circuit explicitly held in Beebe that WMATA was immune from all tort suits stemming from personnel decisions, "including the alleged intentional torts." Id.; see also Smith v. WMATA, 1997 WL 182286, *4 (D.D.C. April 4, 1997) ("[T]he court is not aware of a single case in which WMATA has been held liable for torts arising from the administration of its personnel system.").
Thus, defendant is entitled to summary judgment on Count I because WMATA is immune from any tort suits arising out of its discretionary personnel decisions made "in the performance of a governmental function." D.C.Code Ann. § 9-1107.01(80).
B. The Doctrine Of Res Judicata Prevents Suit On Plaintiff's Wrongful Termination Claims Because These Claims Have Already Been Resolved By Settlement Between The Parties.
With respect to all of plaintiff's wrongful termination claims (Counts I, II, and III), the doctrine of res judicata bars plaintiffs claims because the allegations were already raised and settled within the binding CBA grievance process and cannot be pressed again. See Sanders v. WMATA, 819 F.2d 1151, 1156 (D.C.Cir.1987). Plaintiff's Step 3 grievance of the termination of his position was settled on June 28, 2002, prior to arbitration, by a mutually agreeable accord between Local 2 and defendant, whereby plaintiff was allowed to remain in his eliminated position until the new position was filled. Plaintiff does not allege he objected to this settlement. As the D.C. Circuit declared in Sanders, settlement agreements "further support preclusion" of additional claims by parties to the settlement. 819 F.2d at 1157-58. Under this rationale, plaintiff is barred from bringing his previously settled claim again. See id. If plaintiff objected to the settlement, he could have refused it and taken his grievance to arbitration.[3] However, plaintiff does not even attempt to refute the defendant's assertion of res judicata preclusion for the wrongful termination claims and such silence must be viewed as a concession. See FDIC v. Bender, 127 F.3d 58, 67-68 (D.C.Cir.1997).
Thus, having already been settled by the CBA grievance process, the doctrine of res judicata prevents Counts I, II and III of plaintiff's complaint from being litigated again and summary judgment on these counts shall be granted for defendant.
C. Plaintiff's Failure To Exhaust The Grievance Procedures Of The CBA And The Doctrine of Collateral Estoppel Require That Summary Judgment On Counts IV-VI Be Granted For Defendant.
Section 66(c) of the WMATA Compact requires employees to submit all unresolved "labor disputes" to arbitration. D.C.Code Ann. 9-1107.01(66)(c); see Beebe, 129 F.3d at 1286-87. Plaintiffs allegations in Counts IV-VI (wrongful refusal to place plaintiff in an available position or to train him for a new position; discrimination; and wrongful refusal to promote plaintiff to retiring supervisor's position) *63 were never submitted to arbitration and are therefore not properly before the Court.
Plaintiff acknowledges that prior to filing suit, unionized employees must first exhaust the grievance procedures provided in the CBA. Pl.'s Resp. at 9; see, e.g., Beebe, 129 F.3d at 1286-87; Sanders, 819 F.2d at 1158. Here, defendant alleges that, with respect to Count IV, plaintiff has not yet exhausted all the remedies under the CBA because the claim has not been submitted to arbitration. With respect to Counts V and VI, defendant contends that these claims have not been grieved under the CBA at all and are therefore precluded from being brought in this Court because arbitration is required under the Compact and the CBA and because the doctrine of collateral estoppel precludes bringing claims that could have and should have been brought previously.
All parties agree that the allegations contained in Counts IV, V, and VI have not been submitted to arbitration. A Step 4 grievance was filed with respect to Count IV, and arbitration was requested, but the claim has never actually been submitted to arbitration. The undisputed facts indicate that Local 2 decided not to pursue plaintiff's claim through arbitration after determining it would be futile to do so. See Pl.'s Resp. Ex. 1. Defendant contends that this failure to submit the grievance to arbitration prevents the filing of a suit, while plaintiff asserts that because Local 2 will not pursue arbitration, he has exhausted all remedies under the CBA and should be permitted to bring suit. Plaintiff's argument is unpersuasive. Plaintiff has not suggested that Local 2's decision not to pursue arbitration is flawed or unreasonable and nothing in the record suggests that plaintiff ever requested Local 2 to reconsider its decision.
Furthermore, Article XX section 4 of the CBA states: "the Authority and the Union recognize the right of the employee(s) to settle his or her grievance directly." See Pl.'s Resp. Ex. 2. Plaintiff does not claim to have attempted to settle his grievance directly with WMATA, by requesting arbitration. Furthermore, nothing in the record suggests that plaintiff was precluded from seeking relief directly from defendant, or that it would have been futile to do so. See Martin v. WMATA, 99 F.3d 448 (Table) (D.C.Cir.1996). Section 66(c) of the WMATA Compact requires defendant to submit to arbitration for unresolved labor disputes and nothing indicates defendant would not have done so had plaintiff requested. In short, plaintiff has alleged no set of facts to demonstrate why arbitration of the "non-selection" grievance (Count IV) was not pursued directly with WMATA and/or by appeal to Local 2 for reconsideration of its decision not to pursue arbitration. Accordingly, the Court cannot consider this claim because plaintiff did not exhaust his remedies under, and as required by, the CBA. Cf. UDC Chairs Chapter, Am. Ass'n of Univ. Professors v. Bd. of Trustees, 56 F.3d 1469, 1475-76 (D.C.Cir.1995) (public employees barred from bringing suit against university when employees failed to seek relief directly from university or to show that such a request would be futile).
The law of this Circuit is clear, summary judgment is appropriate for "claims that should have been submitted to arbitration, even if they were not actually heard." Sanders, 819 F.2d at 1157 (quoting Schattner v. Girard, Inc., 668 F.2d 1366, 1368 (D.C.Cir.1981) (emphasis in original)). Under this rule, absent a final arbitration decision, the Step 3 denial of plaintiff's grievance of his non-selection is binding. Vaca v. Sipes, 386 U.S. 171, 191, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). As such, judicial review is not available because plaintiff has provided neither evidence nor allegation that the decision was unfair or flawed *64 or represented "some egregious deviation from the norm." Sanders, 819 F.2d at 1157.
In addition, plaintiff has not alleged that he ever attempted to grieve either the discrimination claim (Count V) or the non-promotion claim (Count VI). As such, under settled law, plaintiff "may not seek redress in court on claims that could and should have been grieved." Id. at 1157 (citing Republic Steel Corp. v. Maddox, 379 U.S. 650, 653, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965)). This rule amounts to a form of collateral estoppel, or issue preclusion, prohibiting non-grieved complaints from being brought when, as here, the plaintiff had the opportunity and the obligation to do so.
Thus, plaintiff is barred from pursuing Counts IV, V, VI in this Court because the grievance remedies afforded under the CBA have not been exhausted for each claim and the doctrine of collateral estoppel prevents non-grieved complaints under the CBA from being brought before the Court.
D. Summary Judgment Shall Be Granted For Defendant For Plaintiff's Breach Of CBA Claims Because Plaintiff Has Not Alleged Local 2 Breached Its Duty of Fair Representation, As Required By The Law Governing CBA Dispute Adjudication, § 301 Of The Labor Management Relations Act, 29 U.S.C. § 185.
Counts II through VI of plaintiff's complaint allege defendant breached the CBA.[4] It is well settled that an "individual employee may bring suit against his employer for breach of a collective bargaining agreement." DelCostello v. Int'l Brotherhood of Teamsters, 462 U.S. 151, 163, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). Such a suit, because it requires interpretation of the CBA, is governed by § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. See DelCostello, 462 U.S. at 163, 103 S.Ct. 2281 ("The suit against the employer rests on § 301, since the employee is alleging breach of the collective bargaining agreement."); Sokos, 283 F.Supp.2d at 46 (holding that only if the claim can be resolved without interpreting the CBA can the plaintiff avoid § 301 preemption). Here, plaintiff alleges numerous violations of the CBA that will necessarily require its interpretation to resolve. As such, the alleged breach of the CBA claims is governed by § 301 of the LMRA.
Under the LMRA, an employee is required to exhaust any grievance procedures provided by the CBA before coming to court and will be bound by the result of such procedures, subject to very limited judicial review. See DelCostello, 462 U.S. at 163-64, 103 S.Ct. 2281. However, the Supreme Court has enumerated two instances when an individual employee will be allowed to obtain judicial review of a breach of CBA claim without first exhausting the CBA grievance process. See, e.g., DelCostello, 462 U.S. at 163-164, 103 S.Ct. 2281; Vaca, 386 U.S. at 184-87, 87 S.Ct. 903. In order to obtain judicial review without first exhausting the remedies under the CBA, plaintiff must allege either that his employer's actions effectively repudiated the grievance procedures of the CBA or that his union wrongfully refused to pursue his grievance. See Vaca, 386 U.S. at 185, 87 S.Ct. 903. In the present case, plaintiff has not alleged, and nothing *65 in the record suggests, that defendant repudiated the CBA's grievance procedures. Plaintiff's wrongful termination grievance was resolved by settlement prior to arbitration and plaintiff's non-selection grievance was not submitted to arbitration in the discretion of Local 2. Nothing suggests that defendant was not willing and/or ready to submit to arbitration if Local 2 or plaintiff requested.
Therefore, plaintiff's only means of obtaining judicial review, without first submitting his grievance to arbitration, is to allege that Local 2 breached its duty of fair representation by settling the wrongful termination prior to arbitration and/or choosing not to pursue arbitration for the non-selection claim. In effect, plaintiff's claim must consist of two causes of action: (1) a § 301 breach of the CBA claim against defendant; and (2) a breach of the duty of fair representation against Local 2. As noted in DelCostello, "the two claims are inextricably interdependent," 462 U.S. at 164-65, 103 S.Ct. 2281, but, contrary to defendant's contention, the plaintiff is not required to bring both causes of action simultaneously. However, "the case [plaintiff] must prove is the same whether he sues one, the other, or both." Id. at 165, 103 S.Ct. 2281. Plaintiff must establish that defendant's actions constituted a breach of the CBA and that Local 2's actions in not exhausting the grievance procedures available to plaintiff under the CBA constituted a breach of its duty of fair representation. In the present case, accepting as true all of plaintiff's allegations that defendant breached the CBA, plaintiff's claims must still fail because plaintiff has not alleged, and nothing in the record indicates, that Local 2 breached its duty of fair representation. Thus, summary judgment in favor of defendant on Counts II through VI is appropriate
V. Conclusion
Upon consideration of the Motion to Dismiss or, in the alternative, for Summary Judgment, the Response and Reply there to, the applicable statutory and case law and for the all reasons stated herein, defendant's Motion for Summary Judgment shall be GRANTED in its entirety.
An appropriate Order and Judgment accompanies this Memorandum Opinion.
NOTES
[1] It should be noted that some dispute exists as to whether plaintiff exhausted his remedies under the CBA with respect to his non-selection for the replacement position (Count IV). However, both parties agree on the factual question of what remedies plaintiff pursued, and only disagree on the legal question of whether plaintiff's acts constituted exhaustion of the available remedies under the CBA, a question the Court can readily decide.
[2] Defense Exhibit 8 demonstrates that plaintiff's Step 3 grievance was actually denied on November 13, 2002, but this factual dispute is only relevant to the statute of limitations questions, which the Court need not address.
[3] Section 66(c) of the WMATA Compact requires the WMATA to submit to arbitration in the case of any labor dispute in which collective bargaining does not result in an agreement. D.C.Code Ann. § 9-1107.01(66)(c).
[4] Plaintiff taken great pains to allege his employment is governed by an implied contract. However, because his allegations rest on an alleged violation of the CBA, such pains are unnecessary. The CBA is an express contract governing the conditions of plaintiff's employment and the defendant enjoys no immunity over contract claims. D.C.Code 9-1107.01(80).
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260 U.S. 516 (1923)
ROSENBERG BROS. & COMPANY, INC.
v.
CURTIS BROWN COMPANY.
No. 102.
Supreme Court of United States.
Argued November 16, 1922.
Decided January 2, 1923.
ERROR TO THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF NEW YORK.
*517 Mr. George H. Harris for plaintiff in error.
Mr. Jacob H. Corn, with whom Mr. Isaac Siegel was on the brief, for defendant in error.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
Rosenberg Bros. & Company, Inc., a New York corporation, brought this suit in the Supreme Court of that State against Curtis Brown Company, an Oklahoma corporation. The only service of process made was by delivery of a summons to defendant's president while he was temporarily in New York. Defendant appeared specially; moved to quash the summons on the ground that the corporation was not found within the State; and, after evidence was taken but before hearing on the motion, removed the case to the federal court for the Western District of New York. There, the motion to quash was granted, upon the ground that the defendant was not amenable to the process of the state court at the time of the service of the summons. A writ of error was sued out under § 238 of the Judicial Code; and the question of jurisdiction was duly certified. The order entered below, although in form an order to quash the summons and not a dismissal of the suit, is a final judgment; and the case is properly here. Goldey v. Morning News, 156 U.S. 518; Conley v. Mathieson Alkali Works, 190 U.S. 406. Compare The Pesaro, 255 U.S. 216, 217.
The sole question for decision is whether, at the time of the service of process, defendant was doing business within the State of New York in such manner and to such extent as to warrant the inference that it was present there. Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 265. The District Court found that it was not. That decision was clearly correct. The Curtis Brown *518 Company is a small retail dealer in men's clothing and furnishings at Tulsa, Oklahoma. It never applied, under the foreign corporation laws, for a license to do business in New York; nor did it at any time authorize suit to be brought against it there. It never had an established place of business in New York; nor did it, without having such established place, regularly carry on business there. It had no property in New York; and had no officer, agent or stockholder resident there. Its only connection with New York appears to have been the purchase there from time to time of a large part of the merchandise to be sold at its store in Tulsa. The purchases were made, sometimes by correspondence, sometimes through visits to New York of one of its officers. Whether, at the time its president was served with process, he was in New York on business or for pleasure; whether he was then authorized to transact any business there; and to what extent he did transact business while there, are questions on which much evidence was introduced; and some of it is conflicting. But the issues so raised are not of legal significance. The only business alleged to have been transacted by the company in New York, either then or theretofore, related to such purchases of goods by officers of a foreign corporation. Visits on such business, even if occurring at regular intervals, would not warrant the inference that the corporation was present within the jurisdiction of the State. Compare International Harvester Co. v. Kentucky, 234 U.S. 579; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79. And as it was not found there, the fact that the alleged cause of action arose in New York is immaterial. Compare Chipman, Limited v. Thomas B. Jeffery Co., 251 U.S. 373. 379.
Affirmed.
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710 So.2d 1357 (1996)
William Crocker CULP, Sr., and William Crocker Culp, Jr.
v.
STATE.
CR-95-1622.
Court of Criminal Appeals of Alabama.
November 1, 1996.
Opinion on Return to Remand August 22, 1997.
Rehearing Denied October 17, 1997.
*1358 Mayer Perloff, Mobile, for appellants.
Jeff Sessions, atty. gen., and Melissa G. Math, asst. atty. gen., for appellee.
Jeff Sessions and Bill Pryor, attys. gen., and Melissa G. Math, asst. atty. gen., for appellee (on remand).
COBB, Judge.
William Crocker Culp, Sr., and William Crocker Culp, Jr., entered guilty pleas and were adjudged guilty of selling unregistered securities, a violation of § 8-6-4, Ala.Code 1975. In accordance with their plea agreements, the trial court found William Crocker Culp, Jr., guilty of two counts and William Crocker Culp, Sr., guilty of one count and nol-prossed the remaining cases. Their sentences included payment of $275,624.32 in restitution, from which they were jointly and severally liable. The appellants challenge the restitution portion of their sentence on appeal.
At the restitution hearing the appellants admitted that the total economic loss to their victims was $275,624.32. The appellants argued at the hearing that the amount they have to pay in restitution should be less than that amount because, they say, they do not have the financial capability to pay the full amount. After hearing testimony concerning the appellants earning capacities, the trial court ordered each appellant to pay $600 a month toward the ordered restitution of $275,624.32. The appellants have raised four issues on appeal.
I.
The appellants contend that the restitution orders entered by the court do not comply with § 15-18-69, Code of Alabama 1975, which requires the court to state in its restitution order its findings and the underlying facts and circumstances on which those findings are based. A review of the orders reveals that the trial court has not complied with § 15-18-69. Each restitution order states "Restitution is set at $275,624.32. Defendant ordered to pay $600.00 per month." C.R. 4, 8. Therefore, this case must be remanded so that the trial court can enter an order in compliance with § 15-18-69. See also Moore v. State, 706 So.2d 265 (Ala.Cr. App.1996).
*1359 II.
The appellants contend that the trial court erred in ordering the appellants to pay restitution without any evidence that the economic loss that formed the basis of the restitution was caused by the criminal acts of the appellants. The appellants also contend that the trial court erred in awarding restitution without the presentation of legal evidence of the precise damage claimed. These contentions were not raised in the appellants motions for reconsideration of restitution or at the hearing on these motions. The appellants argument below was that they could not afford to pay the amount of restitution ordered. The argument advanced below was that "there's just no way in this lifetime that these two men can pay that amount of money." R. 9. "The statement of specific grounds of objection waives all grounds not specified, and the trial court will not be put in error on grounds not assigned at trial." Ex parte Frith, 526 So.2d 880, 882 (Ala.1987). Furthermore, regarding the argument that no evidence was offered tending to prove that the damage for which restitution was sought was caused by the criminal acts of the appellants, we note that the appellants entered negotiated guilty pleas. "If voluntarily and understandingly made, a plea of guilty is conclusive as to the defendant's guilt." Matthews v. State, 659 So.2d 991 (Ala.Cr.App. 1994). The appellants incorrectly contend that the trial court erred in awarding restitution without legal evidence of the precise damage claimed. The prosecutor submitted a list containing the name of each victim and the amount each was owed and the appellants conceded at the restitution hearing that $275,624.32 was the total economic loss suffered by the victims. R. 9. Consequently, this issue is without merit.
III.
The appellants contend that the trial court erred in ordering that the restitution be paid in monthly installments that allegedly exceed the appellants ability to pay. The appellants argue:
"To require [William Crocker Culp, Sr.] to pay $600.00 a month out of a gross monthly income of $659.00 and [William Crocker Culp, Jr.] to pay $600.00 a month out of a gross monthly income of $2000.00, which is further reduced by the repayment of the IRS lien, cannot be characterized as other than clear and flagrant abuse of discretion as required by Clare v. State, 456 So.2d 355 (Ala.Cr.App.1983), aff'd. 456 So.2d 357 (Ala.1984). The trial court must have realized that this was an impossible burden when in response to [Culp, Sr.'s] attorney's statement to the court that the amount he was ordered to pay was all of his income and the court replied `My suggestion to him is to be real nice to his wife.'"
Appellant's brief at page 11.
We follow and quote below our reasoning in Moore v. State, 706 So.2d 265 (Ala. Cr.App.1996), regarding an appellant's ability to pay the monthly installments ordered as restitution:
"This court must have, on the record, the trial court's specific findings and the specific underlying facts and circumstances thereof that led the trial court to grant restitution as to each claimfacts deduced from legal evidence that support the trial court's finding that each amount awarded is for (1) damages recoverable under the Alabama Restitution to Victims of Crimes Act and (2) that were proximately caused by Moore's criminal activity. Similarly, we need an explanation on the record of why the trial court ordered monthly payments of $ 2000 when the record before this court shows that that amount would clearly exceed Moore's financial ability. We find that the record needs to be supplemented before we can determine whether the trial court abused its discretion in the amount and manner of restitution."
706 So.2d at 268-69. (Emphasis added).
We will not consider this issue until the restitution order is modified to comply with § 15-18-69.
This case is remanded for the trial court to enter a restitution order that complies with § 15-18-69, and also explains on what basis the trial court ordered monthly payments *1360 from each appellant of $600. The trial court shall take all action directed in sufficient time to permit the circuit clerk to make a proper return to this court at the earliest possible time within 42 days of the release of this opinion.
REMANDED WITH DIRECTIONS.
All the Judges concur.
ON RETURN TO REMAND
COBB, Judge.
On November 1, 1996, we remanded this case with instructions to the trial court to enter a restitution order that complied with § 15-18-69, Ala.Code 1975. We also stated that, upon receipt of the restitution order, we would determine whether the trial court erred in ordering each appellant to pay restitution in installments of $600 per month. The appellants contended on appeal that the trial court had erred in ordering them to pay restitution in installments of $600 per month because, according to the appellants, that sum vastly exceeds their ability to pay.
In accordance with our remand order, the trial court has provided a revocation order that complies with § 15-18-69. The order explains why the court ordered payment of $600 per month from each appellant. The order gives the following reasons: It is without dispute that the appellants owe a total of $ 275,624.32 to 29 victims as a result of securities fraud. Culp, Sr., is currently unemployed and draws Social Security in the amount of $659 per month. He is married and shares a home with his wife. His wife works for the University of South Alabama and earns approximately $50,000 per year. Culp, Sr., admitted that his wife helps to support him. Based upon this testimony, the court concluded that Culp, Sr., is able, at this time, to make a monthly restitution payment of $600 per month. Remandment Transcript at 17. Culp, Jr., is employed at Burch-Lowe, Incorporated, and earns $2000 per month. He is married, and his wife earns approximately $42,000 per year. Based upon this testimony, the trial court found that Culp, Jr., is capable of making monthly restitution payments in the amount of $600 per month. Remand Transcript at 18.
We find no error in the trial court's findings. Rule 26.11, Ala.R.Crim.P., states:
"(a) Imposition of Restitution. Restitution should be ordered in all cases where a victim has been injured or damaged. The financial resources and obligations of the defendant and the burden that payment of restitution will impose should be considered in determining how much restitution is to be paid or collected, i.e., whether to be paid by installments and what length of time should be given for payment."
Section 15-18-68, Ala.Code 1975 provides:
"In determining the manner, method or amount of restitution to be ordered the court may take into consideration the following:
"(1) The financial resources of the defendant and the victim and the burden that the manner or method of restitution will impose upon the victim or the defendant;
"(2) The ability of the defendant to pay restitution on an installment basis or on other conditions to be fixed by the court;
"(3) The anticipated rehabilitative effect on the defendant regarding the manner of restitution or the method of payment;
"(4) Any burden or hardship upon the victim as a direct or indirect result of the defendant's criminal acts;
"(5) The mental, physical and financial well being of the victim."
Moore v. State, 706 So.2d 265 (Ala.Cr. App.1996), involved an order of restitution. In reciting the facts in that case we noted the combined monthly income of Moore and his wife, and their combined monthly living expenses. We then noted in a footnote that, "Mr. Moore's monthly income is $1600. This is relevant because the restitution order is only binding on him as his wife was not indicted or convicted." 706 So.2d at 273. We are now persuaded that the "financial resources of the defendant" can include aid or support from a spouse, even though the restitution order is not binding on a spouse. See United States v. Helton, 975 F.2d 430 (7th Cir.1992) (In ordering restitution the court considered a presentence report that reflected that, "Helton's wife is employed as *1361 a speech and language therapist by a special education school district. Shortly after the revelation of Helton's crimes in the instant case, she filed for divorce to protect her financial assets. Nevertheless, the report indicates that she remains supportive of Helton."); State v. Stueben, 240 Neb. 170, 481 N.W.2d 178 (1992) ("The court's consideration of an anticipated tax refund to the Stuebens and of Mrs. Stueben's financial contributions to the family's needs was not improper. The tax refund is a financial resource, and Mrs. Stueben's financial contributions alleviate appellant's financial and legal obligations. Thus, both are relevant to appellant's ability to pay restitution. We affirm the court's order of restitution."); Commonwealth v. Yanoff, 456 Pa.Super. 222, 690 A.2d 260 (1997) ("We note that even though the report indicated that appellant did not possess any assets, appellant does not have to render restitution payments from his current earnings. We conclude that, because appellant has had a long employment history which establishes his ability to acquire employment, along with his spouse's ability to secure a nursing position, the restitution award was not excessive."); People v. Stewart, 926 P.2d 105 (Colo.App.1996) (at the restitution hearing, "the defendant testified regarding his household income including his wife's income, his earning expectancy, and his living expenses"); but see, Anthony v. State, 574 So.2d 266 (Fla. 1st Dist.Ct.App. 1991) ("Trial court erred in considering appellant's husband's income and expenses in determining appellant's ability to pay restitution. According to statutory and case law, the trial court is required to determine a defendant's ability to pay both before ordering restitution... and before revoking probation for failure to pay restitution imposed as a condition thereof.").
If the appellants' financial conditions change, the trial court can adjust the monthly payment obligations to so reflect to the change. Bearden v. Georgia, 461 U.S. 660, 103 S.Ct. 2064, 76 L.Ed.2d 221 (1983) (court cannot automatically revoke probation just because a probationer is unable to pay).
Having previously decided all other issues raised on appeal adversely to the appellants, and now determining that the monthly installment payments are proper, we conclude that the judgment of the trial court in all respects is due to be, and it is hereby, affirmed.
AFFIRMED.
All the Judges concur.
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552 P.2d 468 (1976)
89 N.M. 337
John I. GONZALES and Nick Gonzales, Petitioners,
v.
Feliberto GARCIA, Respondent.
No. 10962.
Supreme Court of New Mexico.
July 28, 1976.
*469 R. Howard Brandenburg, Taos, for petitioners.
Peggy Nelson, Taos, for respondent.
OPINION
SOSA, Justice.
This case presents the issue of whether the trial court's conclusions of law may be attacked upon appeal if appellant failed to submit requested findings of fact and conclusions of law, and the issue as to the appropriate measure of damages if purchaser under executed contract for purchase of real property receives only part of the agreed-upon acreage.
In 1962 plaintiffs-appellees-petitioners John and Nick Gonzales entered into a contract to purchase 22.675 acres from respondent Feliberto Garcia. In 1969 petitioners discovered that Mr. Garcia did not own approximately 10.157 acres of that land, whereupon they purchased them from the owner, Mr. Joe Sanchez, for $7,109.90. Petitioners then brought suit against Mr. Garcia based upon fraud, misrepresentation, and the warranty covenants in the deed. Neither party submitted requested findings of fact and conclusions of law. On April 10, 1975, the trial court issued its separate findings of fact and conclusions of law, and entered judgment awarding petitioners $7,109.90 plus interest. Mr. Garcia appealed. The Court of Appeals reversed. Gonzales v. Garcia, No. 2078 (Ct. App., May 11, 1976). We granted certiorari.
Petitioners present the following issue for review in their petition for writ of certiorari: In the absence of requested findings of fact and conclusions of law by either party, may an appellate court review the trial court's conclusions of law? We hold that in this case we may review the conclusions of law since the trial court's separate findings of fact are before us.
The trial court issued its separate findings of fact and conclusions of law based upon the stipulation of the facts which was entered into by both the petitioners and the respondent. Upon appeal respondent did not challenge any of the findings of fact but did challenge the conclusions of law based upon those findings of fact. Petitioners argue by analogy that since a party who fails to submit his own requested findings of fact is precluded from attacking the court's findings of fact, Wagner Land and Investment Co. v. Halderman, 83 N.M. 628, 495 P.2d 1075 (1972), Speechly v. Speechly, 76 N.M. 390, 415 P.2d 360 (1966), then similarly a person who fails to submit requested conclusions of law is precluded from attacking the court's conclusions of law.
We disagree. Findings of fact are determined by the factfinder(s), and upon appeal, our scope of review with respect to these findings is in general limited to an inquiry into whether they are supported by substantial evidence. However, in the first instance, the determination as *470 to the applicable law is a function of the trial court, and this determination is reviewable by the appellate court. See generally Edens v. New Mexico Health & Social Services Dept., 89 N.M. 60, 547 P.2d 65 (1976). In Edens the findings of fact by the trial court were properly before the appellate court and they were sufficient for that court to determine the proper law to be applied to those findings. Speechly v. Speechly, supra, is distinguishable because there the trial court failed to make separate findings of fact and conclusions of law, and none were before the appellate court. Wagner Land, supra, is distinguishable because plaintiff-appellant wanted review of the court's findings of fact but did not submit his own requested findings of fact. Thus, in the case at bar the Court of Appeals properly reviewed the trial court's conclusions of law that flowed from the trial court's findings of fact.
The question then becomes whether the Court of Appeals, in determining the standard of damages to be the proportionate part of the purchase price, applied the appropriate measure of damages in this case. Mr. Garcia argued that the proper measure of damages for the deficient acreage is the proportionate part of the purchase price of the land that he failed to convey; petitioners argued that the proper measure of damages is at least the replacement cost of the deficient acreage. The trial court awarded the petitioners $7,109.90, the replacement cost, but it failed to elucidate the legal theory upon which it relied to reach this result.
Two of the trial court's findings have direct bearing upon the resolution of this problem. First, the court found that no fraud on Mr. Garcia's part was involved; rather, he made a mistake. Second, the court found that purchase of the deficient acreage was necessary in order to protect petitioners' improvements thereon, including the gravel pit, access to the new United States Highway 64, and the resultant increase in value to the remaining portion of the purchased land.
Based upon plaintiffs'-purchasers' complaint two remedies with attendant measures of damages are available to them.[1] First, since purchasers utilized the theory of breach of the covenant of seisin of an executed contract, and since purchasers eventually acquired title to the deficient land from the actual titleholder, the measure of damages in this case generally is the purchase price for the outstanding title, provided it was reasonable in amount and did not exceed the consideration paid by the purchaser to the vendor-in-deficiency, plus reasonable expenses to obtain the title to the deficient acreage. Jeffords v. Dreisbach, 168 Mo. App. 577, 153 S.W. 274 (1913); Annot., 61 A.L.R. 10, 60-61 (1929); see 6 R. Powell, Law of Real Property ¶ 905 (rev. ed. P. Rohan 1975); 77 Am.Jur.2d Vendor and Purchaser § 557-60 (1975); D. Dobbs, Handbook of the Law of Remedies § 12.8 (1973). If, as here, the third party who has actual title conveyed that title to the purchaser before that purchaser brought the action for breach of the covenant of seisin against the vendor-in-deficiency, the measure of damages has been held to be the amount expended to acquire that title. Havens v. Howell, 243 App.Div. 806, 278 N.Y.S. 223 (Sup.Ct. 1935); Annot., 100 A.L.R. 1194, 1197 (1936). Second, purchasers alleged that fraud was perpetrated upon them, but the court found no fraud but rather an innocent mistake. Since purchasers desired to keep that land which vendor's deed could convey, then, as to the deficiency, purchasers' damages under the theory of mistake are generally limited to ratable abatement of the purchase price plus interest (assuming all land had approximately equal value, that is, quantitative rather than qualitative pricing of the land). Flygare v. Brundage, 76 Wyo. 350, 302 P.2d 759 (1956); Annot., 57 A.L.R. 1253, 1508 (1928).
*471 Under the circumstances of this case we are inclined to adopt the measure of damages enunciated in Havens v. Howell, supra, and place upon the vendor the entire cost of replacement of deficient acreage rather than the mere repayment of the ratable portion of the purchase price plus interest. Vendor undertook to sell 22.675 acres but had good and merchantable title to only 12.518 acres. Although the court found that the mistake was an innocent one, we are persuaded that in this case it was a significant mistake because approximately 45% of the land area was not conveyable by this vendor. Vendor should know the extent of his property or at least make significant efforts in ascertaining it before selling it under a warranty deed. Vendor is in the best position to obtain this information. Selling land one does not have title to often results in costly litigation many years after the initial conveyance. The burden of loss should fall upon the vendor.
By adopting this test the trial court properly awarded purchasers the $7,109.90. The Court of Appeals is reversed. The judgment of the trial court is affirmed.
OMAN, C.J., and McMANUS, MONTOYA and EASLEY, JJ., concur.
NOTES
[1] For a more complete analysis of the possible legal and equitable theories and their remedies, see D. Dobbs, Handbook of the Law of Remedies § 12.7-12.12 (1973).
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235 S.C. 147 (1959)
110 S.E.2d 165
SOUTH CAROLINA ELECTRIC & GAS COMPANY et al., Respondents,
v.
AETNA INSURANCE COMPANY et al., Appellants. SOUTH CAROLINA ELECTRIC & GAS COMPANY et al., Respondents,
v.
AGRICULTURAL INSURANCE COMPANY et al., Appellants.
17567
Supreme Court of South Carolina.
August 14, 1959.
*148 *149 Messrs. Joseph L. Nettles, Belser & Belser, and Robinson, McFadden & Dreher, of Columbia, for Appellants.
Messrs. Arthur M. Williams, Jr., Cooper & Gary, and McLain & Sherrill, of Columbia, for Respondents.
*150 Messrs. Joseph L. Nettles, Belser & Belser, and Robinson, McFadden & Dreher, of Columbia, for Appellants, in Reply.
August 14, 1959.
OXNER, Justice.
Each of these cases is here on appeal from an order of the Circuit Court refusing a motion by defendants for a change of venue from Lexington County to Richland County, upon the ground that "the convenience of witnesses and the ends of justice would be promoted by the change". Code of 1952, Section 10-310(3).
The first action named in the title was instituted in Lexington County on May 15, 1953 by South Carolina Electric & Gas Company against 38 defendant fire insurers, alleging that they had breached their respective insurance contracts by failing to pay losses arising out of an alleged fire, occurring on June 27, 1950, in one of plaintiff's generators at its Saluda hydro-electric station in Lexington County. Plaintiff claimed that it had sustained loss within the coverage of said policies and sought to recover same.
After issues had been joined, the case came before us on the question of proper parties plaintiff and a motion by defendants to require plaintiff to produce certain documents. South Carolina Electric & Gas Company v. Aetna Life Insurance Co., 230 S.C. 340, 95 S.E. (2d) 596. As a result of this decision, Lloyd's of London was added as a party plaintiff. Later the case was tried on its merits, resulting in a verdict in favor of the plaintiffs for $138,000.00. The trial Judge granted a new trial on the issue of damages only but on appeal to this Court it was held that there should be a new trial as to both liability and damages. 233 S.C. 557, 106 S.E. (2d) 276.
The second action above entitled was instituted by the South Carolina Electric & Gas Company in Lexington *151 County on July 6, 1956. Plaintiff there claimed damages to a generator occurring on June 17, 1954. This second action, which has not yet been tried, is similar to the first except that Lloyd's of London is not a party.
On January 22, 1959, defendants moved in each case to change the venue from Lexington County to Richland County. The motions were denied by the presiding Judge in separate orders filed on March 31, 1959. This appeal followed.
Section 10-307 of the 1952 Code permits an action against any insurance company doing business in this State to "be brought in the county where the loss occurs", subject to the right of the Court to change the place of trial for any of the causes specified in Section 10-310. The losses in these cases having occurred in Lexington County, there can be no doubt of the right of the respondents to bring suit in that county. Padgett v. Calvert Fire Insurance Co., 221 S.C. 166, 69 S. E. (2d) 565. While the only ground asserted by appellants in the notice of their motion to change the venue is that the convenience of witnesses and the ends of justice would be promoted by changing the trial to Richland County, Subdivision 3 of Section 10-310, it is also claimed in the affidavit of one of appellant's counsel in support of said motion that a fair and impartial trial cannot be obtained in Lexington County. Subdivision 2 of Section 10-310. We shall first discuss the ground stated in the notice.
It seems to be conceded that the witnesses on another trial will be substantially the same as those who testified at the first trial. From the affidavits upon which the motions were heard, it appears that of the 19 witnesses who testified at the first trial, 7 are non-residents, 5 are residents of Lexington County, and 7 are residents of Richland County. Of those now living in Richland County, two formerly resided in Lexington County. All of the Richland County witnesses made affidavits to the effect that it would be no more inconvenient or burdensome for them to attend court in Lexington County than in Richland County. This is understandable *152 in view of the fact that the distance between Lexington and Columbia, the county seat of Richland County, is only thirteen miles. There is no statement by any witness that he would be inconvenienced by attending court in Lexington County. The only showing by appellants is contained in the affidavit of one of their attorneys.
It is well settled that a motion of this kind is addressed to the discretion of the Judge who hears it, and his decision will not be disturbed by this Court except in a case of manifest error. Among the more recent cases to this effect are Herndon v. Huckabee Transport Corporation, 231 S.C. 364, 98 S.E. (2d) 833; Perdue v. Southern Railway Co., 232 S.C. 78, 101 S.E. (2d) 47; Doss v. Douglass Construction Co., 232 S.C. 261, 101 S. E. (2d) 661. Clearly there was no manifest abuse of discretion on the part of the Circuit Judge in holding that appellants had failed to show that the convenience of witnesses would be promoted by changing the place of trial to Richland County.
It is charged that the Court erred in concluding that the ends of justice would be promoted by having a jury from Lexington County pass upon the credibility of the witnesses from that county. Appellants say that there is no issue as to their credibility and that the facts stated by them on the last trial were not disputed. Assuming that the Court below erred in holding that appellants had not met the requirement as to the ends of justice, a reversal would not follow because the burden was upon appellants to show both the convenience of witnesses and the ends of justice would be promoted by changing the place of trial. Sample v. Bedenbaugh, 158 S.C. 496, 155 S.E. 828; Tucker v. Ingram, 187 S.C. 525, 198 S.E. 25; Gregory v. Powell, 206 S.C. 261, 33 S.E. (2d) 629; Perdue v. Southern Railway Co., supra, 232 S.C. 78, 101 S.E. (2d) 47; Doss v. Douglass Construction Co., supra, 232 S.C. 261, 101 S.E. (2d) 661.
*153 There remains appellants' contention that a fair and impartial trial cannot be had in Lexington County. We shall assume that this ground was included in their motions for a change of venue.
One of appellants' counsel states in his affidavit that the South Carolina Electric & Gas Company "is the largest property holder and the largest taxpayer in said Lexington County" and has "long carried on a successful policy of enlisting the support and favor of the public of Lexington County in behalf of said Company". These facts are conceded by respondents who also say that this Company is the second largest taxpayer in Richland County. One of respondents' counsel states in his affidavit that the Electric & Gas Company has enlisted the support and good will of the public in every county in which it operates by rendering prompt and courteous service, cooperating in community and civic projects and aiding in the industrial development of the territory served.
The fact alone that a party to an action is popular, influential or enjoys a good reputation is ordinarily not sufficient to warrant a change of venue. Huckle v. Speranza, Sup., 31 N.Y.S. (2d) 901; Louisville & Nashville Railroad Co. v. Netherly, 160 Ky. 369, 169 S.W. 883; Bennett v. Jackson, Tex. Civ. App., 172 S.W. 395, 398; 92 C.J.S. Venue § 144, p. 855. As stated in Bennett v. Jackson, supra: "A good name ordinarily is and rightfully should be a benefit rather than a burden to its bearer by virtue of which he should be protected rather than penalized". We do not think it was held otherwise in Johnston v. Belk-McKnight Co. of Newberry. S.C., 194 S.C. 490, 10 S.E. (2d) 1, 2, cited by appellants. It was there stated that prejudice existing in the county from which removal is sought need not be directed solely against the applicant for change of venue but may "exist in favor of the opposing litigant such as to prevent the applicant from receiving a fair and impartial trial." The opinion does not disclose the cause of the prejudice which there existed in favor of the party opposing *154 the change of venue. It may not have been due to mere popularity or a good reputation.
Lastly, appellants argue that the excessive verdict rendered by the jury on the first trial indicates that such passion and prejudice exist in Lexington County as to prevent a fair and impartial trial in that county. It is claimed that the verdict of $138,000.00 represents the entire cost of a new set of stator coils with interest, without any allowance for depreciation and in disregard of the fact that all these coils were not damaged or destroyed. Particular attention is called to the following portion of the order granting a new trial: "I do not regard this as a proper case for an order for a new trial nisi. It is not merely an over-liberal verdict. The defendants have not had the benefit of the considered judgment of the jury as to the actual cash value of the old coils. To this they are entitled." In a subsequent order refusing plaintiffs' motion that the order be amended by ordering a new trial nisi, the trial Judge said: "The views of able counsel for the plaintiffs as to the amount of recoverable damages in this case are so far in excess of my own, that there is little, if any, likelihood that anything would be accomplished by granting plaintiffs' motion for an order nisi as to damages. I am not disposed to grant such an order."
The trial Judge did not say that the verdict was the result of passion and prejudice. Other circumstances could have brought about an excessive verdict, such as a misapprehension of the testimony or misunderstanding of the charge as to the measure of damages. But be that as it may, it does not necessarily follow from the fact that one jury rendered a grossly excessive verdict that such prejudice exists throughout the county as to require a change of venue. The only supporting affidavit is by one of appellants' counsel, a resident of Richland County, whose opinion that a fair and impartial trial could not be had in Lexington County was obviously a mere conclusion from the facts that we have discussed. It is significant that no resident of Lexington County or other person familiar with local conditions has stated that appellants could not get a fair and impartial trial in that county.
*155 A motion for change of venue on the ground that an impartial jury cannot be obtained is addressed to the discretion of the Court. State v. Mouzon, 231 S.C. 655, 99 S.E. (2d) 672. We cannot say from this record that the refusal of appellants' motion on this ground constituted a clear abuse of discretion.
Both orders appealed from are affirmed.
STUKES, C.J., and TAYLOR, LEGGE and MOSS, JJ., concur.
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364 F.Supp. 1349 (1973)
UNITED STATES of America, Plaintiff,
v.
Robert ALBRECHT and Marion Albrecht, Defendants.
Civ. No. 4758.
United States District Court, D. North Dakota, Northeastern Division.
October 5, 1973.
Lynn E. Crooks, Asst. U. S. Atty., Fargo, N. D., for plaintiff.
Robert Q. Price, Price & La Qua, Langdon, N. D., for defendants.
MEMORANDUM OF DECISION
BENSON, Chief Judge.
This is an equitable action. The United States of America, as plaintiff, is asking that the defendants be required to fill certain drainage ditches, and that they be permanently enjoined from further drainage or ditching of the area in question.
*1350 The Court finds:
1. On the 25th day of September, 1964, the defendants' immediate predecessors in interest, for a consideration of Six Hundred Dollars ($600.00), conveyed an easement over the NE ¼, Section 21, Township 160N, Range 62W, Cavalier County, North Dakota, to the United States of America, acting by and through the Secretary of the Interior, United States Fish and Wildlife Service, Bureau of Sport Fisheries and Wildlife. The easement was recorded in the office of the Register of Deeds of Cavalier County, on the 7th day of December, 1964.
2. The easement provided the right of use in perpetuity for the maintenance of land for a waterfowl production area, and under the terms of the easement, the grantors:
". . . for themselves and for their heirs, successors and assigns, covenant and agree that they will cooperate in the maintenance of the aforesaid lands as a waterfowl production area by not draining or permitting the draining . . . of any surface water including lakes, ponds, marshes, sloughs, swales, swamps, or potholes . . .."
3. The land covered by the easement is an excellent waterfowl production area. The defendants are the present owners, having acquired ownership by warranty deed dated and recorded June 26, 1967. At the time the defendants took title, they had actual and constructive notice of plaintiff's interest.
4. In late 1969, the Bureau of Sport Fisheries and Wildlife discovered, by aerial survey, that certain lands in the area, including the NE ¼, Section 21, Township 160N, Range 62W, had been ditched for drainage purposes. This drainage was confirmed by additional aerial photos taken on April 7, 1970.
5. The defendants permitted the drainage of surface waters, accumulating from natural causes, from the bottom of the potholes and sloughs served by the ditches that were dug on the subject land. These ditches significantly reduced the capability of the land for waterfowl production.
Agents of the Bureau of Sport Fisheries and Wildlife requested the defendants to have the ditches filled and the land restored to the condition that existed before the ditching. Defendants have neglected and refused to do so, and the ditches have remained open.
6. An irreparable injury has been done to the interest of the plaintiff.
From the foregoing facts, the Court concludes that defendants acquired ownership in the land subject to the plaintiff's easement, and have violated the terms of the easement by permitting the drainage of natural surface water from the land subject to the easement. Defendants having caused the plaintiff an irreparable injury, the plaintiff has no adequate remedy at law.
The defendants have asserted numerous defenses, all of which are without merit, and the Court will comment only on the defendants' principal contentions.
Defendants take the position that the plaintiff's easement is not one of the type specifically enumerated by the statutes of the State of North Dakota, and that even if it is construed as an easement, it is an easement in gross, not binding on the defendants as successors in title to the original grantors of the easement.
The program under which the United States acquired its easement rights here is authorized under 16 U.S.C. § 718d, and it is national in scope. It serves a public purpose, which is to preserve waterfowl production areas by acquiring interests in small wetland and pothole areas. The instrument which created the easement described it as ". . . *1351 an easement or right of use for the maintenance of the land . . . as a waterfowl production area in perpetuity . . .". The grantors covenanted ". . . for themselves and for their heirs, successors and assigns . . . that they will cooperate in the maintenance of the . . . lands as a waterfowl production area by not draining or permitting the draining of any surface water . . . now existing or reoccuring due to natural causes . . .."
The easement created no burden on the land except that the landowners in their use of the land covered by the easement may do nothing to disturb the natural state of the wetland and pothole areas. The only other burden imposed was that authorized representatives of the United States have access to those areas.
16 U.S.C. § 718d specifically authorizes the Secretary of the Interior to acquire ". . . small wetland and potholes areas, interests therein, and rights-of-way to provide access thereto".
This Court would construe the law to mean that the United States may acquire something less than a fee title. In this case, it acquired an interest which it termed an easement. It is clear that the parties intended it to be a permanent interest. It appears to this Court to be immaterial what term is used to describe the interest acquired. To attach a label to it and then apply a rule of law applicable to that label that would wholly defeat the purpose of the program cannot be permitted. The Supreme Court of the United States, in addressing itself to this issue, has held that:
". . . in a setting in which the rights of the United States are at issue in a contract to which it is a party and `the issue's outcome bears some relationship to a federal program, no rule may be applied which would not be wholly consistent with that program.'" United States v. Little Lake Misere Land Company, Inc., 412 U.S. 580, at 602, 93 S.Ct. 2389, at 2402, 37 L.Ed.2d 187, decided June 18, 1973.
Defendants also contend that they had prior rights to the premises, and that the plaintiff took its interest subject to those rights. This claim is based on the fact that at the time the plaintiff acquired its interest, the defendants were in possession of the premises under a farm lease. Subsequently, the defendants purchased the property from their lessors, who were also the plaintiff's grantors herein. The Court has examined the lease, and finds there was nothing therein giving the defendants the option or right to purchase the premises. Therefore, any prior rights which the defendants had existed only under the lease, and were extinguished when the lease terminated. The plaintiff acquired its interest on September 25, 1964. The defendants had actual and constructive notice of that interest when they acquired title to the premises on June 26, 1967. By acquiring ownership of the premises on June 26, 1967, defendants' lease was terminated by operation of law. See Section 47-16-14(3) N.D.C.C. Defendants' title was acquired subject to the prior interest of the plaintiff.
It is ordered that judgment be entered requiring the defendants to forthwith confer with representatives of the Bureau of Sports Fisheries and Wildlife and then within a time limit acceptable to the Bureau, restore the premises to the conditions that existed prior to the ditching, and
It is further ordered that the defendants be permanently enjoined from draining, or permitting the draining, of the marshes, sloughs, swales, and potholes on the above described real estate, by ditching or by any other means.
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FILED
NOT FOR PUBLICATION AUG 17 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
ISMAEL BRAHIM TOUNEKTI, No. 08-75237
Petitioner, Agency No. A078-466-191
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted August 11, 2011 **
Before: THOMAS, SILVERMAN, and CLIFTON, Circuit Judges.
Ismael Brahim Tounekti, a native and citizen of Tunisia, petitions for review
of the Board of Immigration Appeals’ order dismissing his appeal from an
immigration judge’s decision denying his application for asylum, withholding of
removal, and relief under the Convention Against Torture (“CAT”). We have
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
jurisdiction under 8 U.S.C. § 1252. We review for substantial evidence the
agency’s factual findings, and we review de novo the agency’s legal
determinations. Wakkary v. Holder, 558 F.3d 1049, 1056 (9th Cir. 2009). We
deny the petition for review.
The record does not compel the conclusion that Tounekti’s untimely asylum
application was filed within a reasonable period of time from when he last held
lawful status. See 8 C.F.R. § 1208.4(a)(5)(iv); Dhital v. Mukasey, 532 F.3d 1044,
1050 (9th Cir. 2008) (application filed 22 months after expiration of lawful
nonimmigrant status expired was not reasonable). Accordingly, his asylum claim
fails.
Tounekti does not contend he suffered past persecution. Rather, he contends
he faces a clear probability of future persecution because the government would
impute to him the Islamist political opinions of his cousin and brother-in-law, who
were both politically active and imprisoned by the government. Substantial
evidence supports the agency finding that Tounekti has not established a clear
probability of future persecution. See Hoxha v. Ashcroft, 319 F.3d 1179, 1185 (9th
Cir. 2003); Nagoulko v. INS, 333 F.3d 1012, 1018 (9th Cir. 2003) (possibility of
future persecution too speculative). Accordingly, his withholding of removal
claim fails.
2 08-75237
Finally, substantial evidence supports the agency’s denial of Tounekti’s
CAT claim because he failed to show that it is more likely than not that he will be
tortured by, or with the consent or acquiescence of Tunisian authorities if returned
to Tunisia. See Wakkary, 558 F.3d at 1067-68.
PETITION FOR REVIEW DENIED.
3 08-75237
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501 F.Supp. 854 (1980)
UNITED STATES of America,
v.
Howard L. CRIDEN, Harry P. Jannotti, Louis C. Johanson, George X. Schwartz.
Crim. No. 80-166.
United States District Court, E. D. Pennsylvania.
October 22, 1980.
*855 James J. Rohn, Asst. U. S. Atty., Philadelphia, Pa., for plaintiff.
Richard Ben-Veniste, Washington, D. C., for defendant Criden.
J. Clayton Undercofler, III, Philadelphia, Pa., for defendant Jannotti.
John Duffy, Philadelphia, Pa., for defendant Johanson.
Richard A. Sprague, Pamela W. Higgins, Philadelphia, Pa., for defendant Schwartz.
MEMORANDUM AND ORDER
FULLAM, District Judge.
National Broadcasting Company, Inc., American Broadcasting Companies, Inc., CBS, Inc., and Westinghouse Broadcasting Company, Inc. (hereinafter referred to as "the broadcasters") have renewed their application "for permission to copy, for the purpose of broadcasting to the public, those video and audio tapes admitted into evidence and played to the jury in open court in this action."
At the trial of the defendants Schwartz and Jannotti, the Government introduced evidence in the form of video tapes of meetings between the defendants and undercover F.B.I. agents posing as representatives of fictitious wealthy mideastern businessmen, and audio tapes of telephone conversations between the defendant Criden and the undercover agents and a government informant. All of this evidence was obtained through surreptitious surveillance, without the knowledge or consent of the participating defendants.
The defendants Schwartz and Jannotti were convicted, and their post-trial motions are pending before this Court. The cases of the defendants Criden and Johanson were severed, and they are awaiting trial.
The defendants Criden and Johanson are also named as defendants in various indictments pending in the Eastern District of New York, arising from the same investigation, generally referred to as the Abscam investigation, giving rise to the present cases. Trial on one of those indictments, in which United States Congressman Michael Myers and Camden, New Jersey, Mayor Angelo Errichetti are also defendants, commenced in the Eastern District of New York in August of this year, and resulted in convictions of all of the defendants. Their post trial motions are pending before the District Court. (For convenience, that case will be referred to herein as "the Myers trial"). Much of the Government's evidence in that trial consisted of similar video tapes of meetings and audio tapes of conversations.
In the course of the Myers trial, the broadcasters sought permission to make copies of the videotapes presented to the jury. It was established that this could readily be accomplished unobtrusively as the tapes were being played before the jury, without alteration of or damage to the originals. In a ruling from the Bench, the trial judge granted the request, but directed that the copying be performed only during recesses in the trial, rather than simultaneously with the presentation of the evidence. The defendants appealed that ruling to the Court of Appeals for the Second Circuit, and obtained a temporary stay of the order. The Court of Appeals expedited its consideration of the matter, combining the hearing on the continuation of the stay with the hearing on the merits, but the Myers trial had ended when the Court of Appeals, on October 1, 1980, rendered its decision affirming the order of the trial *856 judge. On October 14, 1980, the Supreme Court declined to grant a stay of the order.
At the start of the Schwartz-Jannotti trial in this Court, on September 8, 1980, the broadcasters initially sought the same relief they now seek. The application was denied, in a bench ruling. Among the reasons expressed at that time were the pendency of the appeal before the Second Circuit; the fact that Criden and Johanson faced trial on this Indictment at a later date, and none of the trials of the defendants on this Indictment had been concluded; and the pendency of non-frivolous challenges to the Indictments on due process grounds. In renewing their application at this time, the broadcasters point out that the tapes they now seek were offered in evidence at the trial of Schwartz and Jannotti which has now been completed, the Second Circuit has upheld the order of the trial judge releasing the tapes in the Myers case, the Supreme Court refused to stay those orders, and the tapes from the Myers trial have now been copied and extensively broadcast.[1]
I agree that these intervening developments necessitate a re-examination of the issues raised by the broadcasters' applications.
I.
In U. S. v. Myers, et al., In re Application of National Broadcasting Company, Inc., et al., 635 F.2d 945 (2d Cir. 1980), the court upheld the release of the tapes to the broadcasters upon essentially the following rationale: The broadcasters, like other members of the public, have a very important common law right to inspect and copy judicial records; while this right is not absolute, there is a strong presumption in favor of such public access to judicial records; and only the most compelling reasons can justify curtailment of that right. The court stated:
"... there is a presumption in favor of public inspection and copying of any item entered into evidence at a public session of a trial. Once the evidence has become known to the members of the public, including representatives of the press, through their attendance at a public session of court, it would take the most extraordinary circumstances to justify restrictions on the opportunity of those not physically in attendance at the courtroom to see and hear the evidence, when it is in a form that readily permits sight and sound reproduction." (At p. ____.)
The court held that the presumption had not been overcome in this case, and that the possibility of impairing the Sixth Amendment rights of defendants not yet tried, and of defendants whose convictions were not yet final, were too speculative to justify non-disclosure; and that such interests could be accommodated in other ways.
The court found support for its holding in the decision of the Court of Appeals for the District of Columbia Circuit in the Watergate Tapes litigation, U. S. v. Mitchell, 551 F.2d 1252 (D.C.Cir. 1976), rev'd sub. nom. Nixon v. Warner Communications, 435 U.S. 589, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978), and in the Opinion of the Supreme Court in the Watergate litigation, Nixon v. Warner Communications, supra.
The decision of a circuit court of appeals which is squarely apposite is entitled to the utmost respect, notwithstanding the fact that it emanates from another circuit, and is therefore not totally binding upon this Court. This is particularly true when the decision is rendered in litigation so closely related to the case under consideration. After carefully considering this matter, however, and with all deference to the views of the Second Circuit Court of Appeals, I find myself in total disagreement with the Myers decision, which I believe to be contrary to the views of the Supreme *857 Court as expressed in the Warner Communications case, supra.[2]
The seeming temerity of declining to follow the Second Circuit's lead is tempered by the observation that, as plainly recognized by the Supreme Court, the decision as to access to trial evidence is committed to the discretion of the trial court. Thus, the Second Circuit's decision, in the final analysis, was that the trial court in the Myers case had not abused his discretion by releasing the tapes; it does not necessarily mean that a contrary decision by the trial court would have been reversed by the Second Circuit. It ought not to be surprising that matters committed to the discretion of trial courts may produce differing results.
In Nixon v. Warner Communications, Inc., supra, the Supreme Court held: "That the common law right of access to judicial records does not authorize release of the tapes in question from the custody of the district court" (435 U.S. at p. 608, 98 S.Ct. at p. 1317); that release of the tapes in that case was not required by the First Amendment guarantee of freedom of the press (id., at pp. 608-610, 98 S.Ct., at pp. 1317-1318); and that release of the tapes was not required by the Sixth Amendment guarantee of a public trial (id., at p. 610, 98 S.Ct., at p. 1318). All of the factors which eliminated constitutional issues in that case are present here. The trial was public, the tapes were viewed and heard by all in attendance at the trial, and representatives of the media had the same access to the evidence as anyone else (indeed, media representatives had greater access, in that they were furnished transcripts of the tapes). Thus, only issues related to the asserted common law right of access are implicated in the present decision. And it is correspondingly important to focus upon what the Supreme Court said about those issues.
Speaking for the Court, Mr. Justice Powell stated:
"Both petitioner and respondents acknowledge the existence of a common law right of access to judicial records, but they differ sharply over its scope and the circumstances warranting restrictions of it. An infrequent subject of litigation, its contours have not been delineated with any precision ...
"It is clear that the courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents. In contrast to the English practice [citation omitted], American decisions generally do not condition enforcement of this right on a proprietary interest in the document or upon a need for it as evidence in a lawsuit. The interest necessary to support the issuance of a writ compelling access has been found, for example, in the citizen's desire to keep a watchful eye on the workings of public agencies [citations omitted] and in a newspaper publisher's intention to publish information concerning the operation of government [citation omitted].
"It is uncontested, however, that the right to inspect and copy judicial records is not absolute. Every court has supervisory power over its own records and files, and access has been denied where court files might have become a vehicle for improper purposes. For example, the common law right of inspection has bowed before the power of a court to ensure that its records are not `used to gratify private spite or promote public scandal' through the publication of `the painful and sometimes disgusting details of a divorce case' [citations omitted]. Similarly, courts have refused to permit their files to serve as reservoirs of libelous statements for press consumption [citations omitted], or as sources of business information that might harm a litigant's competitive standing [citations omitted].
"It is difficult to distill from the relatively few judicial decisions a comprehensive definition of what is referred to as the common law right of access or to *858 identify all the factors to be weighed in determining whether access is appropriate. The few cases that have recognized such a right do agree that the decision as to access is one best left to the sound discretion of the trial court, a discretion to be exercised in light of the relevant facts and circumstances of the particular case. In any event, we need not undertake to delineate precisely the contours of the common law right, as we assume, arguendo, that it applies to the tapes at issue here." (435 U.S. at pp. 597-99, 98 S.Ct. at pp. 1311-12.) [Footnotes omitted.]
The Court then proceeded to review the contentions of the parties, and stated:
"At this point, we normally would be faced with the task of weighing the interests advanced by the parties in light of the public interest and the duty of the courts. On respondents' side of the scales is the incremental gain in public understanding of an immensely important historical occurrence that arguably would flow from the release of aural copies of these tapes, a gain said to be not inconsequential despite the already widespread dissemination of printed transcripts. Also on respondents' side is the presumption-however gauged-in favor of public access to judicial records. On petitioner's side are the arguments identified above, which must be assessed in the context of court custody of the tapes. Underlying each of petitioner's arguments is the crucial fact that respondents require a court's cooperation in furthering their commercial plans. The court-as custodian of tapes obtained by subpoena over the opposition of a sitting president, solely to satisfy `fundamental demands of due process of law and the fair administration of criminal justice' [citation omitted]-has a responsibility to exercise an informed discretion as to the release of the tapes, with a sensitive appreciation of the circumstances that led to their production. This responsibility does not permit copying upon demand. Otherwise, there would exist a danger that the court could become a partner in the use of subpoenaed materials `to gratify private spite or promote public scandal' [citation omitted] with no corresponding assurance of public benefit.
"We need not decide how the balance would be struck if the case were resolved only on the basis of the facts and arguments reviewed above. There is in this case an additional, unique element that was neither advanced by the parties nor given appropriate consideration by the courts below. In the Presidential Recordings Act, Congress directed the administrator of General Services to take custody of petitioner's Presidential tapes and documents. ..." (At pp. 602-603, 98 S.Ct. at pp. 1314-1315.)
"... because of this Congressionally prescribed avenue of public access we need not weigh the parties' competing arguments as though the district court were the only potential source of information regarding these historical materials. The presence of an alternative means of public access tips the scales in favor of denying release." (At pp. 605-606, 98 S.Ct. at p. 1316.)
To recapitulate, the Supreme Court held:
1. The interest of the public in a public trial, as guaranteed by the Sixth Amendment, is fully vindicated when the public is permitted to attend, and when representatives of the news media are accorded the unfettered right to be present and to convey to the general public information about what occurred at trial. The Sixth Amendment does not guarantee to the general public an absolute right to participate in the trial through attendance (this right is, of course, qualified by limitations of space and feasibility), nor does it guarantee, or even necessarily encourage, the realization of an expectation that the actual experiences of the trial-the sights and sounds of the witnesses, the perusal of trial exhibits-will be shared by the public at large to the maximum possible extent. (If the law were otherwise, I suggest, the trial of a sensational or otherwise newsworthy case should be held in Veterans Stadium. But the mass-spectacle or "show trial" is totally antithetical to our concept of justice.)
*859 2. The First Amendment rights of the news media are fully vindicated when representatives of the media have the unfettered right to attend the trial and to report fully what occurred there.
3. The absence of a constitutional basis for permitting copying and broadcasting of trial evidence does not mean that there is no such right. On the contrary, the common law right of access to public documents and related materials antedates, and exists independently of, the constitutional provisions. However, this common law right has not been defined with precision. It probably includes the right to copy all forms of trial evidence; at least, the Supreme Court was willing to assume so, arguendo. The court in which the trial evidence was introduced has control over that evidence; decisions concerning access to and copying of such material rest within the sound discretion of the trial court. In exercising its discretion, the trial court must carefully consider, and give appropriate weight to, the competing interests involved. However, in the Watergate litigation, it was unnecessary to engage in that weighing process to any great extent, because, in the interim, Congress had provided an administrative mechanism through which access to the evidentiary materials might ultimately be obtained, from sources other than the trial court.
I find it quite impossible to derive from the Supreme Court's decision any support for the expansive view of the common law right of access espoused by the Second Circuit and the D. C. Circuit Court of Appeals, namely, that there is a very strong presumption in favor of permitting copying and re-dissemination by the broadcasters, and that only the most extraordinary circumstances imaginable could justify a contrary decision. It is true that, in summarizing the competing considerations, the Supreme Court referred to "the presumption-however gauged-in favor of public access to judicial records" (in itself, a far cry from declaring a strong presumption in that direction); but this language is immediately followed by the Court's recognition of "the crucial fact that [the broadcasters] require a court's cooperation in furthering their commercial plans." And the Court stated flatly that the trial court "has a responsibility to exercise an informed discretion as to the release of the tapes, with a sensitive appreciation of the circumstances that led to their production. This responsibility does not permit copying upon demand."
One searches the Supreme Court's Opinion in vain for any suggestion that only the most extraordinary circumstances would warrant denial of the right to copy and disseminate trial evidence. Indeed, the examples cited by the Court, in which curtailment of the right of access was upheld, could scarcely be characterized as extraordinary: the messy divorce case, potentially libelous statements, information detrimental to a business enterprise.
It should be noted, also, that the reasoning of the D.C. Circuit, adopted by the Second Circuit, in support of the alleged strong presumption, invoked the very concepts of the public's interest in a public trial which the Supreme Court held were not involved in its consideration of the matter.[3]
For these reasons, I am not at all persuaded that the presumption in favor of disclosure is as powerful as the Myers decision indicates. But whatever the force of the presumption, I am also convinced that the circumstances of the present case are indeed sufficiently extraordinary to require denial of the broadcasters' application.
II.
The first point to be emphasized, in attempting to achieve a correct exercise of the Court's discretion in this case, is the very great difference between videotape evidence and other forms of evidence. The hackneyed expression, "one picture is worth a thousand words" fails to convey adequately the comparison between the impact of *860 the televised portrayal of actual events upon the viewer of the videotape and that of the spoken or written word upon the listener or reader. The viewer of videotape becomes virtually a participant in the events portrayed. Eyewitness testimony is often dramatic and convincing, but its effectiveness and convincing power are almost negligible in comparison with a film or videotape of actual events. When the videotape shows a crime actually being committed, it simply leaves nothing more to be said.
This is all to the good, when the videotape is presented in evidence in the course of a trial: The jury is plainly entitled to the best and most reliable evidence available, in its quest for the truth. If the truth is shocking, if the evidence is powerfully convincing, so be it; the accused has no justifiable complaint.
But dissemination of powerfully convincing evidence beyond the confines of the trial arena can, in some circumstances, cause serious and irreparable harm, both to persons whose interests are entitled to protection, and to the judicial process itself.
Until this point in our history, it has been generally accepted that the impact of our criminal justice system upon persons whose activities subject them to criminal charges comes about approximately as follows: the community becomes aware of the accusation; the defendant and his family and friends undergo whatever embarrassment and unpleasantness that may entail; the defendant faces the rigors and uncertainties of a trial; if the defendant is found guilty, the community is made aware of that fact; the criminal sanctions provided by law are imposed; at the conclusion of the process, the defendant will have "paid his debt to society" and, it is to be hoped, will have achieved rehabilitation. That the entire process causes anguish, and even severe hardship, to innocent third persons is often unavoidable, but such unfortunate consequences are not an intended purpose of the process.
The greater and more widespread the publicity about a particular criminal case, the more likely it is that penalties not prescribed by the law will be visited upon the accused and, more importantly, upon innocent relatives and friends. Similarly, the greater the publicity, the greater the risk of infringement of the defendant's right to a fair trial.
Given the nature of our society these side effects are inevitable; indeed, it can be argued that they form an important, if unofficial, part of the sanctions imposed by society upon lawbreakers. The unfortunate fact is, however, that these side effects are not uniformly visited upon persons accused of violating the law. And, since they are not an official part of the criminal justice process, and are beyond the reach of that process, there is probably no acceptable way of ensuring uniformity of application.
It is, however, one thing to say that these disparate side effects are independent of the law and beyond the reach of the courts, and quite a different thing to suggest that courts may, with propriety, actively intervene to bring them about, in particular cases.
In its present stage of development, our law surely would not tolerate parading a convicted defendant through the streets, or holding him up to public ridicule by exhibiting him in a cage or in the stocks. The balance between the public interest in free access to news, and the law's regard for the dignity of every human being, is achieved when the public is informed concerning the events at trial, and concerning the punishment inflicted by the law. That balance would be destroyed by intentionally creating a situation in which the defendant's initial misconduct is graphically portrayed in every living room in America.
It is one thing to say that, in a highly publicized trial, the defendant's right to trial before an impartial jury of his peers may have to be limited by the necessity of relying upon the integrity of the prospective jurors, and the accuracy of their professions of ability to disregard unfavorable publicity and to base their verdict solely upon the evidence presented at trial. It is quite another thing to suggest that courts can, with *861 propriety, intentionally create, or vastly increase the dissemination of, unfavorable publicity. Stated otherwise, courts may have to cope with difficulties not of their own making, in assuring a defendant his right to a fair trial, but that does not mean that courts can actively create such difficulties without doing violence to the Sixth Amendment.
The convictions of Schwartz and Jannotti are not yet final. At this stage, it would be presumptuous to suggest that, no matter what disposition is made by this Court of their post-trial motions, the possibility of a retrial is purely speculative. The tapes which were used at the Schwartz and Jannotti trial also show the defendants Johanson and Criden, whose initial trials in this district have not yet taken place. Notwithstanding the vast amount of publicity which has already been accorded this case, there remains a possibility that an untainted jury may yet be obtainable. But see Rideau v. Louisiana, 373 U.S. 723, 726, 83 S.Ct. 1417, 1419, 10 L.Ed.2d 663 (1963). For example, while virtually all of the prospective jurors called in the Schwartz and Jannotti case had heard or read about the case, most were able to state, truthfully in my view, that their awareness of the case was somewhat vague, and that they had formed no lasting conclusions concerning the guilt or innocence of the defendants. Because of the heightened publicity which would attend broadcasting of the actual tapes, and because of the vastly enhanced impact of the tapes themselves, I believe it is much less likely that a truly impartial jury could be obtained for the Criden and Johanson trials, or for possible retrials of Schwartz and Jannotti, if disclosure were permitted at this time. See Rideau v. Louisiana, supra.
The alternatives usually suggested for dealing with this problem would, I believe, be ineffectual. Delay of the trial would not solve the problem, since the broadcasters can undoubtedly be relied upon to re-play the tapes as part of their advance coverage of such trials. A change of venue would be of dubious value, given the nationwide dissemination of the tapes.[4]
Because release of the tapes at this time would seriously jeopardize the fair trial rights of the defendants, and because quite apart from that problem, respect for due process of law mandates that a court may not take any action which amounts to the imposition of punishment except upon final conviction, I have concluded that the tapes should not now be released to the broadcasters.
III.
Denial of the present application is also justified for additional reasons, arising from the peculiar circumstances of this particular case, and the precise nature of the videotape evidence. In the Myers case in the Second Circuit, it was assumed, and the preceding discussion in this case has assumed, that all of the videotape evidence sought by the broadcasters was properly admitted in evidence at the trial. Whatever may be the validity of that assumption with respect to the Myers litigation,[5] the admissibility of the videotapes was sharply contested at the Schwartz-Jannotti trial. I ruled that the evidence was admissible; but not only will the correctness of that ruling be subject to further challenge on appeal, but the very basis upon which I concluded that the tapes were admissible in evidence points up the inadvisability of releasing the tapes for broadcast at this time.
Surreptitiously obtained recordings of conversations would ordinarily not be admissible in evidence. They become admissible only where one of the parties to *862 the conversation has consented to the recording. The law takes the position that, except in situations covered by a recognized privilege, when A has a conversation with B, neither party can be sure that the other will not disclose what was said. Therefore, if A has no reasonable expectation of privacy with respect to the contents of his conversation with B, the fact that B records the conversation merely ensures accuracy, and violates no right of A. See, e. g., U. S. v. White, 401 U.S. 745, 91 S.Ct. 1122, 28 L.Ed.2d 453 (1971).
In the case of videotape, however, a new dimension is added. The fact that A has no reasonable expectation of privacy with regard to what he says to B does not necessarily mean that he has no expectation of privacy with respect to his appearance, demeanor, or actions, in the course of the conversation. To refine the matter still further, it can perhaps be stated that A has no reasonable expectation that B will not describe to others how A looked and what he did during the conversation; but B's description does not emanate from A; moreover, its impact is of a different order of magnitude than the actual sight of A throughout the conversation.
In the relatively small percentage of cases in which videotape evidence of actual events is presented (as distinguished from videotaped testimony of witnesses), the taped or filmed events generally occur in public places. Since no one has any reasonable expectation of privacy with respect to his appearance and actions in a public place, there is no obstacle to admissibility of the tape.
The present cases are unique in that the videotaped transactions occurred in a private place, namely, a hotel room. In ruling the tapes, with certain exceptions which will be mentioned below, admissible in evidence, I took the position that the sound portions of the tapes, which recorded the conversations between the participants, were admissible because the recording had been consented to by one of the participants. I did not interpret any of the objections raised at trial as suggesting that only the sound should have been played to the jury; moreover, the conduct of the participants in the course of their actual conversations could properly be regarded as a form of speech. There was also the argument, advanced by the Government, that an expectation of privacy with respect to occurrences in a hotel room arises only on the part of the person registered in that room; as to visitors, it was argued, there is no expectation of privacy. While I continue to believe that the rulings were correct, the issue is certainly not free from doubt.
More importantly, it was necessary at trial to excise certain portions of the taped conversations, namely, those conversations which occurred when no representative of the Government was present in the room. As to such portions of the conversation, no participant had consented to the recording.
In my view, several portions of the videotape deemed admissible at the Schwartz-Jannotti trial would not be admissible in the Criden trial. I refer in particular to the periods when Criden was alone in the room. The videotape showing Mr. Criden snooping through the contents of the undercover agent's briefcase did no harm at the Schwartz Jannotti trial, but would be devastatingly prejudicial as evidence against Criden, notwithstanding its marginal relevance.
It should be noted that the audiotapes involved in the Watergate litigation were concededly admissible in evidence, and that the Second Circuit in the Myers case stressed the absence of objection to the evidence at trial. Both the Second Circuit and the D. C. Circuit intimated that the result might be different if there were substantial doubt as to the admissibility of the evidence sought to be copied and broadcast, and the same view is reflected in the Supreme Court's Opinion in Warner Communications, supra.
Another feature of the evidence in the present case which distinguishes it from the cited cases is that the tapes now under consideration are replete with scurrilous and libelous statements about third parties. I simply do not believe that a court should *863 condone, much less affirmatively aid, the large-scale republication of such material.
The pendency of non-frivolous challenges to the entire prosecution as a violation of due process of law-an issue soon to be resolved in this Court but certain to be subject to appellate review-is a further factor militating against premature dissemination of the trial evidence, as is the defendants' related assertion that the tapes are misleading because they reveal only part of the story.
IV.
Finally, I suggest that the broadcasting of videotape evidence is virtually indistinguishable from televising the trial itself. Yet the televising or other broadcasting of trial proceedings in the federal courts is expressly prohibited by resolution of the Judicial Conference of the United States, most recently reiterated at the September 1980 meeting of that body. This Court is not at liberty to disregard that injunction, merely because broadcasting can be accomplished unobtrusively.
Moreover, it is not at all clear that the sole concern of the Judicial Conference is with maintaining courtroom decorum or avoiding distracting influences. Also implicated are much larger questions concerning the fundamental changes in our society wrought by technological advances in instant communication. That the marvels of the electronic age are highly beneficial should not obscure their potential for devastating encroachment upon traditional concepts of individual dignity, generally, though in my view inadequately, described as the right of privacy. Governmental intrusions upon the privacy of individuals embroiled in or affected by criminal prosecutions may be more readily acceptable when the result is the dissemination of information to a public which is limited either geographically or by interest in the subject matter, than when the result is dissemination of videotapes to a national or even worldwide public. There is, I believe, a growing public awareness that when a person becomes a totally public figure, whether through choice or involuntarily, there are trade-offs which benefit neither the public, its institutions, nor the individual.
Awareness that one is being viewed by spectators in a courtroom may not have entirely the same consequences as awareness that one is being viewed by millions of people. That difference, for witnesses, jurors, counsel and judges, may affect the integrity of the trial process, but that question is not necessarily the only concern; the greater intrusion upon privacy interests, including those of the defendant and his family, must also be considered. The Supreme Court will have occasion to address these larger issues in cases now pending for review, and it is neither necessary nor appropriate for this Court to venture further into the free press fair trial privacy thicket. I am, however, bound to comply with the Judicial Conference resolution. And, in my view, copying videotape evidence for public broadcast is sufficiently different from copying documentary evidence, and sufficiently analogous to permitting broadcasting of the trial itself, to warrant the conclusion that granting the broadcasters' application in this case would be contrary to that resolution.
V.
For all of the reasons discussed above, the application of the broadcasters will be denied.
NOTES
[1] After the conclusion of the Schwartz-Jannotti trial, this Court permitted copies of the video tapes of their meetings with the F.B.I. undercover agents to be viewed by members of the Philadelphia City Council in closed session, in recognition of the importance of that evidence to matters currently under consideration by City Council.
[2] The Supreme Court's denial of a stay in the Myers case does not, of course, constitute a ruling on the merits.
[3] It is also important to note that the convictions of the defendants in the Watergate cases were final when the tapes issues were decided by the appellate courts, a distinction virtually ignored by the Myers court.
[4] Pertinent excerpts from the tapes of the Myers trial have been repeatedly played during network news programs; the public television network has devoted several hours of prime viewing time to playing the tapes in their entirety, with a running commentary. The tapes have been the subject of nationally televised discussion programs.
[5] Apparently, there was no objection to the evidence at the Myers trial, except to the extent that such an objection may be implicit in the broader due process challenge, which is to be resolved post-trial.
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134 F.3d 366
Wileyv.Anderson*
NO. 97-60787
United States Court of Appeals,Fifth Circuit.
Dec 08, 1997
Appeal From: N.D.Miss. ,No.397MC37B
Vacated.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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980 F.2d 744
NOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.LOWRY COMPUTER PRODUCTS, INC., Plaintiff-Appellant,v.Rodney D. ALDRICH, Defendant-Appellee.
No. 92-1221.
United States Court of Appeals, Federal Circuit.
Oct. 21, 1992.Rehearing Denied Dec. 7, 1992.
PER CURIAM.
1
Before PAULINE NEWMAN, CLEVENGER and RADER, Circuit Judges.
Judgment
2
AFFIRMED. See Fed.Cir.R. 36.
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FILED
United States Court of Appeals
Tenth Circuit
November 22, 2017
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
CORY SYLVIA,
Plaintiff - Appellant,
v. No. 15-3284
JAMES L. WISLER; DAVID
TREVINO; XPRESSIONS, L.C.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 2:13-cv-02534-EFM-TJJ)
Submitted on the briefs: *
Alan V. Johnson of Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C.,
Topeka, Kansas, for Plaintiff-Appellant.
Steven R. Smith, Gates Shields Ferguson Hammond, P.A., Overland Park, Kansas,
for Defendants-Appellees James L. Wisler and Xpressions, L.C.
Daniel F. Church of Morrow Willnauer Klosterman Church, Kansas City,
Missouri, for Defendant-Appellee David Trevino.
*
After examining the briefs and appellate record, this panel has
determined unanimously that oral argument would not materially assist in the
determination of this appeal. See F ED . R. A PP . P. 34(a)(2); 10 TH C IR . R. 34.1(G).
The case is therefore ordered submitted without oral argument.
Before HARTZ, HOLMES, and MATHESON, Circuit Judges.
HOLMES, Circuit Judge.
This case presents a difficult question of Kansas law: when do legal
malpractice claims involving a failure to act sound in tort rather than contract?
Kansas, like other states, distinguishes between legal malpractice claims. Some
sound in contract. Others sound in tort. Generally, breach of a specific
contractual provision or agreement to do a certain action sounds in contract, while
breach of a duty imposed by law on attorneys by virtue of the attorney-client
relationship sounds in tort. But the line separating failure to perform an agreed-
upon action from breach of a duty imposed by law is not always bright.
Here, the plaintiff, Cory Sylvia, sued his former attorneys, James L. Wisler
and David Trevino, for legal malpractice allegedly sounding in tort and breach of
contract arising from their representation of Mr. Sylvia in a suit for wrongful
termination against Goodyear Tire & Rubber Co. (“Goodyear”), his former
employer. Later, Mr. Sylvia amended his complaint to add as a defendant
Xpressions, L.C. (“Xpressions”), a limited liability company formerly known as
the Wisler Law Office, L.C.
Mr. Sylvia’s initial complaint characterized his claims as sounding both in
tort and in contract. Specifically, he faulted (1) both individual defendants for
2
failing to include in, or to later amend, his complaint to aver a workers’
compensation retaliation claim; and (2) solely Mr. Wisler for voluntarily
dismissing Mr. Sylvia’s case on the erroneous belief that all claims could be
refiled, causing one of his claims to become barred by the statute of limitations.
For each of these claims, Mr. Sylvia advanced both tort and contract theories of
liability.
Messrs. Wisler and Trevino each filed Federal Rule of Civil Procedure
12(b)(6) motions to dismiss, which were granted in part and denied in part. The
court granted dismissal of the legal malpractice claims—allegedly sounding in
tort—holding that the claims were not properly characterized as torts and merely
duplicated the breach of contract claims. The court allowed the breach of
contract claims to go forward. On motions for summary judgment by Mr. Trevino
and by Mr. Wisler and Xpressions, filing jointly, the court granted both motions,
disposing of the remaining contract claims and the case.
Mr. Sylvia appeals from both the district court’s dismissal of his alleged
tort claims and its grant of summary judgment for the defendants on the breach of
contract claims. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, 1 we hold
1
On July 1, 2016, this court ordered the parties to file a joint response
to state the citizenship of Messrs. Wisler and Trevino and all members of
Xpressions at the time that proceedings commenced in the district court. Mr.
Sylvia’s amended complaint had failed both to make clear the state of domicile of
Mr. Wisler, as well as to indicate the citizenship of all members of Xpressions.
(continued...)
3
that, under Kansas law, Mr. Sylvia has alleged that defendants breached a duty
imposed by law in the context of their attorney-client relationship; such claims
sound in tort. Accordingly, for reasons further detailed infra, we reverse in part
and vacate in part the district court’s judgment dismissing Mr. Sylvia’s legal
malpractice claims. However, regarding the district court’s grant of summary
judgment for the defendants on the breach of contract claims, we affirm. We
remand the case for further proceedings not inconsistent with this opinion.
I. BACKGROUND
Mr. Sylvia’s claims against Messrs. Wisler and Trevino arose from a
lawsuit against Goodyear for wrongful termination in which the defendants
represented Mr. Sylvia. Mr. Sylvia had sustained repeated injuries working for
Goodyear. He filed multiple workers’ compensation claims for those injuries but
was fired when he allegedly failed to report a medically necessary absence in
violation of a “Last Chance Agreement” Mr. Sylvia had entered into with
Goodyear. Aplt.’s App. at 11–13 (Compl., dated Oct. 16, 2013). After his firing,
1
(...continued)
In response, the parties clarified to our satisfaction that all the defendants and all
members of Xpressions are citizens of Kansas. Because Mr. Sylvia is a citizen of
Massachusetts, the requirements of diversity jurisdiction are met. See, e.g.,
Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014) (“Congress has
authorized the federal district courts to exercise jurisdiction over certain cases
between citizens of different states. 28 U.S.C. § 1332(a)(1). But such diversity
jurisdiction exists only if no plaintiff and no defendant are citizens of the same
state—that is, there must be ‘complete diversity between all plaintiffs and all
defendants.’” (quoting Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005))).
4
Mr. Sylvia filed a charge with the Equal Employment Opportunity Commission
alleging that his termination violated the Americans with Disabilities Act
(“ADA”), 42 U.S.C. §§ 12101–213, and later received a notice of right to sue.
Between filing the charge and receiving the notice of right to sue, Mr. Sylvia
received an award from the Kansas Division of Workers’ Compensation for his
claims against Goodyear.
Shortly after receiving the notice of right to sue, Mr. Sylvia retained Wisler
& Trevino, L.C., the defendants’ former law firm, to represent him in a wrongful
termination suit against Goodyear. Mr. Sylvia signed a written contract with
Wisler & Trevino, L.C., that stated in part:
Cory Sylvia has been wrongfully discharged due to disability
discrimination and FMLA [i.e., Family and Medical Leave Act,
29 U.S.C. §§ 2601–54] violation/retaliation and Workers
Compensation retaliation from GoodYear Tire and Rubber
Company on or about May 9, 2009. The firm will file suit in
federal court in Kansas on one or more of these claims.
Aplt.’s App. at 132 (Wisler & Xpressions’ Mem. Supp. Mot. Summ. J., dated
Mar. 5, 2015) (emphasis added). Mr. Sylvia alleges that before or at the time the
contract was executed, he was assured by Messrs. Wisler and Trevino that all five
claims discussed by the parties would be brought against Goodyear. 2 The
2
Not entirely apparent from the face of the contract, the five claims
are: disability discrimination under both the ADA and the Kansas Act Against
Discrimination, a violation of the FMLA, FMLA retaliation, and workers’
compensation retaliation. See id. at 67 (Mem. & Order, dated June 19, 2014).
5
complaint filed by Mr. Trevino, however, omitted both retaliation claims (i.e.,
FMLA retaliation and workers’ compensation retaliation).
Further, Mr. Sylvia avers that after the lawsuit was filed he received a copy
of the complaint and—alerted to the fact that his attorney had included only three
of the claims—raised the issue of the missing retaliation claims with Mr. Wisler,
who allegedly responded: “[W]e had to file these three claims first, but we will
file the other two claims later.” Id. at 191 (Pl.’s Mem. Opp’n Mot. Summ. J.,
dated Apr. 7, 2015). Mr. Sylvia asserts that, in relying on Mr. Wisler’s statement,
he did not insist that the written contract be modified to require the filing of all
five claims.
During the course of the underlying litigation, Messrs. Wisler and Trevino
dissolved their partnership, and Mr. Sylvia chose Mr. Wisler to continue the
representation; Mr. Trevino withdrew. About the same time, the Social Security
Administration determined that Mr. Sylvia was disabled and so eligible for
disability benefits beginning April 1, 2009—over a month before he was
discharged by Goodyear on May 8, 2009. As a result, Mr. Wisler believed that he
could not argue in good faith that Mr. Sylvia had a good claim or had suffered
substantial damages.
According to Mr. Sylvia, around this time he and Mr. Wisler had multiple
conversations regarding the possibility of voluntarily dismissing the case against
Goodyear. Mr. Sylvia allegedly asked Mr. Wisler multiple times not to dismiss
6
so that Mr. Sylvia could find other counsel to prosecute the case. But Mr. Sylvia
says that Mr. Wisler repeatedly assured him that he would be able to refile all of
the claims. Allegedly relying on those assurances, Mr. Sylvia consented to the
voluntary dismissal of his case.
Mr. Sylvia retained new counsel who filed suit in the District of Kansas
against Goodyear for (1) interference in violation of the FMLA, (2) FMLA
retaliation, (3) wrongful discharge in violation of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. §§ 1000–461, and (4) disability
discrimination in violation of the ADA. However, on April 26, 2012, Mr.
Sylvia’s claim for disability discrimination under the ADA was dismissed as
time-barred because state tolling and savings statutes do not apply to ADA
claims, which must be filed within 90 days of receiving a notice of right to sue.
Mr. Sylvia settled his remaining claims against Goodyear for $12,000.
On October 16, 2013, Mr. Sylvia brought suit against Messrs. Wisler and
Trevino in the District of Kansas for allegedly tortious conduct and breach of
contract. Before answering the complaint, Messrs. Wisler and Trevino moved to
dismiss the claims against them for failure to state a claim. The district court
granted in part the motions to dismiss, dismissing the legal malpractice claims
that Mr. Sylvia asserted sounded in tort, while permitting the contract claims to
proceed.
In doing so, the district court held that Mr. Sylvia had failed to state a
7
facially plausible claim that the defendants violated a duty imposed by law and
thus committed a tort. Mr. Sylvia then moved to amend his complaint to add
Xpressions, formerly Wisler Law Office, L.C., as a defendant. He conformed his
amended complaint to the district court’s dismissal order by omitting the alleged
tort claims.
After limited discovery, the defendants moved for summary judgment on
the remaining contract claims. The district court granted the defendants’ motions
for summary judgment, dismissing the remaining contract claims. The court
rejected Mr. Sylvia’s arguments, and held, inter alia, (1) that the parol evidence
rule barred evidence of oral statements before or contemporaneous with the
execution of the written contract; (2) that Mr. Sylvia had failed to show a
subsequent oral agreement supported by consideration; and (3) that the voluntary
dismissal of the underlying case did not breach the terms of the written contract
or any other contractual obligation.
Mr. Sylvia now appeals from the district court’s dispositions of the motions
to dismiss and the motions for summary judgment. We examine each set of
motions in turn, beginning with the district court’s granting of the motions to
dismiss for failure to state a claim as to Mr. Sylvia’s alleged tort claims, before
turning to the granting of the summary judgment motions in favor of the
defendants on Mr. Sylvia’s contract claims.
II. DISCUSSION
8
As to the claims at issue here, we note at the outset that “[b]ecause the
district court’s jurisdiction was based on diversity of citizenship, [Kansas]
substantive law governs . . . . This court must therefore ‘ascertain and apply
[Kansas] law with the objective that the result obtained in the federal court should
be the result that would be reached in [a Kansas] court.’” Brady v. UBS Fin.
Servs., Inc., 538 F.3d 1319, 1323 (10th Cir. 2008) (citation omitted) (quoting
Blanke v. Alexander, 152 F.3d 1224, 1228 (10th Cir. 1998)). “To properly
discern the content of state law, we ‘must defer to the most recent decisions of the
state’s highest court.’” Kokins v. Teleflex, Inc., 621 F.3d 1290, 1295 (10th Cir.
2010) (quoting Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir.
2003)). However, stare decisis requires that we be “bound by our own prior
interpretations of state law” “unless an intervening decision of the state’s highest
court has resolved the issue.” Id. (quoting Wankier, 353 F.3d at 866).
A. Dismissal of Mr. Sylvia’s Alleged Tort Claims
This court reviews “de novo the district court’s granting of a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6).” Albers v. Bd. of Cty.
Comm’rs, 771 F.3d 697, 700 (10th Cir. 2014) (quoting Slater v. A.G. Edwards &
Sons, Inc., 719 F.3d 1190, 1196 (10th Cir. 2013)). To overcome a motion to
dismiss, “a complaint must plead facts sufficient ‘to state a “claim to relief that is
plausible on its face.”’” Slater, 719 F.3d at 1196 (quoting Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009)). “[W]e must accept all the well-pleaded allegations of the
9
complaint as true and must construe them in the light most favorable to the
plaintiff.” Albers, 771 F.3d at 700 (quoting Cressman v. Thompson, 719 F.3d
1139, 1152 (10th Cir. 2013)). “[T]he Rule 12(b)(6) standard doesn’t require a
plaintiff to ‘set forth a prima facie case for each element.’” George v. Urban
Settlement Servs., 833 F.3d 1242, 1247 (10th Cir. 2016) (quoting Khalik v. United
Air Lines, 671 F.3d 1188, 1193 (10th Cir. 2012)). “[A] claim is facially plausible
if the plaintiff has pled ‘factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.’” Id.
(quoting Hogan v. Winder, 762 F.3d 1096, 1104 (10th Cir. 2014)).
On appeal, Mr. Sylvia argues that his complaint stated facially plausible
claims for legal malpractice sounding in tort against Messrs. Wisler and Trevino.
Specifically, he argues that the district court erred by not recognizing that he had
properly pleaded claims for malpractice sounding in both tort and breach of
contract, which is permitted under Kansas law. He further argues that these tort
claims are based on violations of a duty imposed by law by virtue of the attorney-
client relationship, independent of obligations arising under the contract. Messrs.
Wisler and Trevino respond that the district court was correct in its holding and
that Mr. Sylvia’s claims most closely resemble the kind found in Juhnke v. Hess,
506 P.2d 1142 (Kan. 1973), where the Supreme Court of Kansas held that an
attorney’s failure to file an appeal where he had been employed for that very
purpose sounded in contract rather than tort.
10
Because the same principles of Kansas law apply to the dismissal of the
claims against Messrs. Wisler and Trevino, we first analyze the Kansas caselaw to
establish the relevant legal principles before applying them to these claims.
1. Kansas Caselaw Characterizing Legal Malpractice Claims
Under Kansas law, “[l]egal and medical malpractice generally constitute both a
tort and a breach of contract.” Pancake House, Inc. v. Redmond, 716 P.2d 575, 578 (Kan.
1986). However, Kansas cases distinguish tort and contract malpractice claims by asking
“whether the actions or omissions complained of constitute a violation of duties imposed
by law, or of duties arising by virtue of the alleged express agreement between the
parties.” Id. (citing Malone v. Univ. of Kan. Med. Ctr., 552 P.2d 885, 888–89 (Kan.
1976) (holding that a complaint stated a claim for tortious medical malpractice rather than
breach of contract where the gravamen of the complaint was failure “to provide
necessary, complete, competent, and authorized treatment” (emphasis omitted))).
The leading Kansas case on the characterization of legal malpractice claims,
Pancake House, offers the following guidance:
A breach of contract may be said to be a material failure of
performance of a duty arising under or imposed by agreement. A tort,
on the other hand, is a violation of a duty imposed by law, a wrong
independent of contract. Torts can, of course, be committed by parties
to a contract. The question to be determined here is whether the actions
or omissions complained of constitute a violation of duties imposed by
law, or of duties arising by virtue of the alleged express agreement
between the parties.
. . . Where the act complained of is a breach of specific terms of
the contract without any reference to the legal duties imposed by law
11
upon the relationship created thereby, the action is contractual. Where
the essential claim of the action is a breach of a duty imposed by law
upon the relationship of attorney/client and not of the contract itself, the
action is in tort.
....
While other jurisdictions are divided as to whether legal
malpractice may be categorized as a cause of action in tort or one in
contract, Kansas has held that where a legal duty is imposed by law, the
cause of action is in tort. Where the malpractice involves failure to
perform a contractual obligation, whether express or implied, the cause
of action is in contract.
716 P.2d at 578 (citations omitted); accord Kan. Pub. Emps. Ret. Sys. v. Reimer & Koger
Assocs., Inc., 936 P.2d 714, 718 (Kan. 1997) (quoting same). Compare W. Page Keeton
et al., PROSSER AND KEETON ON TORTS § 92, at 656 (5th ed. 1984) (noting that “[c]ontract
obligations” are those “based on the manifested intention of the parties to a bargaining
transaction”), with id. (“Tort obligations are in general obligations that are imposed by
law on policy considerations to avoid some kind of loss to others. They are obligations
imposed apart from and independent of promises made and therefore apart from any
manifested intention of parties to a contract or other bargaining transaction.”).
As in other jurisdictions, Kansas courts most commonly have addressed legal
malpractice claims that sound in tort. See Pancake House, 716 P.2d at 578 (identifying
one Kansas Supreme Court case in which claims sounded in contract and noting that
“[n]ot all malpractice actions in Kansas may be deemed tort actions”); Roy Ryden
Anderson & Walter W. Steele, Jr., Fiduciary Duty, Tort and Contract: A Primer on the
Legal Malpractice Puzzle, 47 SMU L. REV. 235, 236 (1994) (noting that “the action for
12
negligence is the most common and well-developed form for a malpractice claim”).
“Lawyers, like other professionals, are required to have and exercise the learning and skill
ordinarily possessed by members of their profession in the community.” Bowman v.
Doherty, 686 P.2d 112, 120 (Kan. 1984). “[W]hen the attorney’s performance falls short
of that expected of an ordinary, reasonably prudent lawyer, the attorney is guilty of the
tort of malpractice.” Anderson & Steele, supra, at 245; see Pancake House, 716 P.2d at
578 (noting that “[w]here the essential claim of the action is a breach of a duty imposed
by law upon the relationship of attorney/client[,] . . . the action is in tort”).
In this regard, in a host of cases, the Kansas courts have determined that
malpractice actions sounded in tort, where the claims alleged that attorneys failed to
properly perform their professional duties imposed on them by law in the context of the
attorney-client relationship. For example, in Pancake House, attorneys who had
previously represented a corporation filed suit against the corporation on behalf of certain
of its shareholders; Kansas’s high court held that the corporation’s malpractice claim
sounded in tort because the obligation allegedly breached was “not a part of any express
or implied contract,” but instead stemmed from “a legal duty [] imposed by law.” 716
P.2d at 578. The legal duty at issue related to the circumstances under which an attorney
is prohibited from suing a business for whom she had previously provided legal services.
Id. at 577–78. In effect, the plaintiff claimed that the attorney defendants had “breach[ed]
a duty imposed by law upon the relationship of attorney/client” by their allegedly
improper actions. Id.
13
Likewise, in Kansas Public Employees Retirement System, the Kansas Supreme
Court held that a failure “to provide sound and appropriate legal services” or “failing to
properly advise” in relation to investment transactions sounded in tort rather than
contract. 936 P.2d at 718–19 (emphases added). In Canaan v. Bartee, that court affirmed
a district court judgment that the malpractice claims of a criminal defendant against his
court-appointed attorneys and their investigator for his wrongful conviction sounded in
tort where “the gravamen of [the] lawsuit [was] that his appointed public defenders and
their investigator were negligent in providing services.” 72 P.3d 911, 913, 921 (Kan.
2003).
Additionally, in Jeanes v. Bank of America, N.A.—a case cited by all parties—the
Kansas Court of Appeals held that a trust and estate attorney’s failure to provide legal
advice in estate-planning services that would have saved millions in estate tax liability
was not a breach of any specific contractual provision and instead sounded in tort as a
failure “to exercise ordinary skill and knowledge in giving legal advice.” 191 P.3d 325,
331 (Kan. Ct. App. 2008), aff’d on other grounds, 295 P.3d 1045, 1047, 1053 (Kan.
2013) (per curiam). Earlier, the Kansas Court of Appeals had also held, in Chavez v.
Saums, that an attorney’s conflicted representation in filing suit against a former client
breached a “legal dut[y] imposed by law upon the relationship” between the lawyer and
client, rather than any “specific terms of the contract.” 571 P.2d 62, 65 (Kan. Ct. App.
1977). The court therefore held that the former client’s claims against the attorney arising
from the conflicted representation sounded in tort. Id.
14
On the other hand, in limited instances, the Kansas courts have classified
malpractice actions as sounding in contract. A clear example in this regard is the Kansas
Supreme Court’s decision in Juhnke v. Hess. There, an attorney was expressly retained to
file an appeal and failed to do so, resulting in his client’s right to appeal becoming time-
barred. See 506 P.2d at 1143. The Supreme Court of Kansas held that this constituted
“breach of a specific contract—failure to do that which [the attorney] expressly agreed to
perform.” Id. at 1145 (noting that “the claim for relief [was one for breach of an express]
unwritten contract”).
Moreover, in an instructive opinion, the Kansas Court of Appeals applied Juhnke
to conclude that the plaintiff’s claim against the attorney and law firm that handled a
domestic relations matter for her sounded in contract. Pittman v. McDowell, Rice &
Smith, Chartered, 752 P.2d 711, 718 (Kan. Ct. App. 1988). As in Juhnke, the attorney
failed to perform an expressly bargained-for task in carrying out the representation.
“While the attorney in Juhnke neglected to perform the initial duty in his contractual
representation (failure to file a notice of appeal), [the attorney in Pittman] neglected to
perform the final duty in his contractual representation (failure to file a journal entry
setting forth an agreed child support order).” Id. More specifically, the court reasoned:
[The attorney] was employed to file a motion for child support,
obtain service on [the plaintiff’s ex-husband], and obtain a child
support order.
. . . The only thing [the attorney] failed to do was to prepare
and file a journal entry which would have completed his express
agreement for services to [the plaintiff].
15
We hold [the attorney] has failed to perform a duty arising under
or imposed by agreement, which is in contract . . . .
Id.
Pittman underscores Juhnke’s message that claims sounding in contract typically
involve bargained-for promises by attorneys to perform certain actions—whether those
actions are concentrated at the outset of the representation, as in Juhnke, or are just
particular steps during the journey of the representation to a definite destination, as in
Pittman. See Anderson & Steele, supra, at 251 (“The core ingredient of a contract action
by a client against his attorney is breach of promise by the attorney. Accordingly, the
client must plead and prove by a preponderance of the evidence breach of a promise, as
well as the other basic ingredients of a contract cause of action, such as foreseeability,
causation, and damages.”); id. at 244–45 (“[A] suit between a client and his lawyer may
be based on a breach of contract without raising issues of negligence or violation of the
attorney’s fiduciary obligations. In such cases, the allegation is simply that the attorney
did not do what the contract, by expression or implication, said that he would do.”); see
also Keeton et al., supra, § 92, at 658 (“When one makes a promise—a commitment as to
what he will do or will not do in the future—this generally induces reasonable reliance
. . . . But contractual liability can be regarded as limited to the type of case where
promises are found to be enforceable, and the damage results from the breach of an
enforceable promise.”).
Thus, in contrast to claims sounding in tort, the focus of these claims sounding in
16
contract is not whether the attorney “exercise[d] the learning and skill ordinarily
possessed by members of their profession in the community,” or even whether the
attorney offered unenforceable assurances regarding her performance. Bowman, 686 P.2d
at 120; cf. Keeton et al., supra, § 92, at 659 (“[I]n some situations when one undertakes to
act he may be doing so under circumstances where, apart from the contract that he
makes, there should be a duty to exercise reasonable care to others whose economic
interests are likely to be affected by the way the conduct is performed. This is especially
true of representations made to a client by a lawyer . . . .” (emphases added)).
All that said, we acknowledge that “legal malpratice actions often fall on th[e]
‘borderland of tort and contract,’” Anderson & Steele, supra, at 266 (quoting William
Lloyd Prosser, The Borderland of Torts and Contract, in SELECTED TOPICS ON THE LAW
OF TORTS 380 (1953)), and that “[t]he distinction between tort and contract liability” may
be a “difficult distinction to make,” Keeton et al., supra, § 92, at 655; see Hunt v. KMG
Main Hurdman, 839 P.2d 45, 46 (Kan. Ct. App. 1992) (“The determination of whether a
particular action is based on contract or in tort is not always an easy one.”). In clarifying
and illuminating the metes and bounds of this “borderland” in Kansas law, we consider a
careful examination of the Kansas Supreme Court’s decision in Bowman helpful. This is
especially so because, at least at first blush, Bowman might appear to be akin to Juhnke
and Pittman, where the Kansas courts concluded that the claim at issue sounded in
contract; yet, in Bowman, the Kansas Supreme Court concluded that the claim sounded in
tort.
17
Specifically, in Bowman, the plaintiff, Michael Bowman, retained an attorney,
defendant Harold Doherty, to represent him in connection with a charge of passing a
worthless check. See 686 P.2d at 115. Mr. Bowman was out of town and unable to
appear for his initial court date when he retained Mr. Doherty, who told Mr. Bowman he
would “take care of the matter.” Id. Despite arranging with a deputy district attorney for
a continuance, Mr. Doherty failed to arrange a continuance with the trial court. See id.
Thereafter, a bench warrant was issued for Mr. Bowman, and he later received a letter
from the sheriff’s office notifying him that he was in contempt of court for failure to
appear. See id. at 115–16. Mr. Bowman called Mr. Doherty and met with him regarding
the letter, and Mr. Doherty again assured Mr. Bowman that he would take care of the
matter. See id. at 116. Mr. Bowman was arrested a month later for aggravated failure to
appear. See id. After Mr. Bowman was released from jail, he and his father met with Mr.
Doherty, who agreed to represent Mr. Bowman in both cases (i.e., the worthless-check
and failure-to-appear cases). See id. Toward the end of resolving the cases, Mr. Doherty
advised Mr. Bowman that he needed to appear before the court and promised Mr.
Bowman that he would be there with him. Mr. Doherty thereafter scheduled the court
date. Mr. Bowman and his father appeared on that date; Mr. Doherty did not. See id.
Mr. Bowman thereafter hired a new lawyer and resolved both of his cases. See id.
Mr. Bowman then sued Mr. Doherty for both legal malpractice and breach of
contract. See id. at 115. As relevant here, the jury rendered a verdict in Mr. Bowman’s
favor and awarded him damages, including punitive damages. See id. at 117. Mr.
18
Doherty appealed from the jury’s verdict on the grounds that Mr. Bowman’s claim
sounded solely in contract and therefore punitive damages were not available. See id. at
117, 120. At the outset, the Supreme Court of Kansas concluded that the trial court
“correctly” denied Mr. Doherty’s motions for directed verdicts upon “determining that
both a legal and contractual obligation could have been breached.” See id. at 120
(emphasis added). However, the court upheld the punitive damages award under the view
that the jury ultimately determined that Mr. Doherty was negligent. Id. at 117, 120. That
is, the punitive damages award was permissible because the “action sounded in tort” (i.e.,
stemmed from the breach of a legal duty). Id. at 120.
Yet, the claims at issue in Bowman—at least on a superficial level—arguably
resemble the claims in Juhnke and Pittman, which the Kansas courts held sounded in
contract. In this regard, like the attorneys in those two cases, Mr. Doherty made
assurances to Mr. Bowman that he would take certain steps in the representation and then
failed to accomplish them. See Bowman, 686 P.2d at 115–16. However, unlike Juhnke
and Pittman, there was no indication in Bowman that Mr. Doherty’s assurances were
enforceable—viz., that they constituted enforceable contracts. Specifically, Mr. Doherty
agreed to represent Mr. Bowman in his pending worthless-check case and the later case
for failure to appear but did not explicitly contract with Mr. Bowman to undertake any
particular steps in the representation; instead, Mr. Doherty repeatedly said he would “take
care of” things and offered general, naked assurances to this effect, on which he did not
follow through. Bowman, 686 P.2d at 115–16. Thus, Mr. Doherty’s failure to perform
19
certain promised acts in his representation of Mr. Bowman did not have the effect under
the circumstances there of breaching any specific terms of their attorney-client contract.
Instead, insofar as the particular acts were important to the representation and would have
been performed by a lawyer possessing ordinary learning and skill, Mr. Doherty’s failure
to undertake them breached his professional duty to his client3—a duty imposed by law.
Thus, Mr. Doherty’s liability turned on his failure to undertake such necessary
steps in the representation by “exercis[ing] the learning and skill ordinarily possessed by
members of [the legal] profession in the community.” Id. at 120; see also id. at 119 (“The
jury believed the defendant took insufficient action to obtain a continuance in the
plaintiff’s criminal case. Without a continuance, plaintiff’s arrest for his failure to appear
3
Mr. Doherty undertook some actions to represent Mr. Bowman in
each proceeding, such as negotiating a continuance with the deputy district
attorney for the original proceedings regarding the worthless-check case and
obtaining a court date with the aim of resolving both the worthless-check case
and the failure-to-appear case. See 686 P.2d at 115–16. But in each instance, Mr.
Doherty failed to diligently and competently represent Mr. Bowman. In the
worthless-check case, despite successfully negotiating a continuance with the
deputy district attorney, he failed to obtain a continuance with the court itself.
See id. at 115. Similarly, although he scheduled a court date to address the two
cases, he failed to appear with his client on the date the client was to appear. See
id. at 116. In each representation, Mr. Doherty did something, but he did not take
necessary steps to carry out the representation that would have been taken by a
competent attorney. He did not do enough or well enough, and his client suffered
harm as a result. Cf. Hunt, 839 P.2d at 48 (“[T]he action is more in the nature of
a violation of a duty imposed by law, instead of failure to perform a duty arising
by reason of the agreement. . . . The challenge by [the client] is not that the
auditors failed to perform the contract, but rather that they failed to perform it
with due care.”).
20
was foreseeable to a lawyer.” (emphasis added)). And, accordingly, the Kansas Supreme
Court held that Mr. Bowman’s claim sounded in tort.
On closer inspection, then, Bowman is distinguishable from Juhnke and Pittman.
The holdings of these three cases nevertheless may be harmonized in a way that clarifies
and sheds light on the “borderland” between tort and contract in Kansas legal malpractice
claims. In brief, a claim that a lawyer failed to perform acts in his legal representation of
a client that were the subject of bargained-for promises sounds in contract, whereas a
claim that an attorney’s acts or omissions in carrying out a representation fell short of the
ordinary standard of learning or skill in the legal community sounds in tort.
***
We now proceed to apply the foregoing principles to Mr. Sylvia’s claims against
Messrs. Wisler and Trevino. We begin with the claims against Mr. Wisler before turning
to the claim against Mr. Trevino.
2. Claims Against Mr. Wisler
Mr. Sylvia argues that his complaint stated facially plausible claims for legal
malpractice sounding in tort against Mr. Wisler for two separate breaches of duty: (1)
failure to amend the complaint in the underlying litigation to include a claim of workers’
compensation retaliation, resulting in that claim becoming time-barred; and (2)
voluntarily dismissing Mr. Sylvia’s case after erroneously advising him that he would be
able to refile all claims, causing his ADA discrimination claim to become time-barred.
Notably, these two breaches—that is, claims of legal malpractice allegedly sounding in
21
tort—both appeared in a single count of the original complaint, Count I, which was
denominated “Legal Malpractice.” Aplt.’s App. at 17. The district court dismissed this
count in its entirety; its analysis, however, only expressly addressed the first alleged
breach of duty related to the failure to amend.
More specifically, Mr. Sylvia’s original complaint alleged that he met with Mr.
Wisler along with Mr. Trevino “to employ them to file a lawsuit on his behalf,” that he
“signed a written contract with Wisler & Trevino, L.C.,” and that, when Mr. Trevino
withdrew from the litigation, Mr. Wisler filed an entry of appearance on behalf of Mr.
Sylvia. Id. at 13–15.
Count I of the complaint alleges that Mr. Wisler “failed to amend the complaint [in
the underlying litigation] to include a claim of workers[’] compensation retaliation.” Id.
at 17. Because of that failure to amend the complaint to include a claim of workers’
compensation retaliation, Mr. Sylvia was unable to bring that claim in his second suit
against Goodyear filed by new attorneys because “such a claim was never asserted in [the
first lawsuit], and therefore the claim was time-barred.” Id. at 16.
Count I also alleges that Mr. Wisler later refused Mr. Sylvia’s requests not to
voluntarily dismiss the case and repeatedly and “erroneously advised Mr. Sylvia that all
of the claims in that case could be re-filed.” Id. at 17. However, after filing a new action,
the district court dismissed his claim for ADA discrimination as time-barred because
Kansas’s savings statute does not apply to ADA cases. Id. at 16–17. The loss of the
workers’ compensation retaliation claim and the ADA discrimination claim “substantially
22
diminished” “the value of Mr. Sylvia’s claims” in his second suit against Goodyear. Id. at
17. This diminution in value allegedly was caused by Mr. Wisler’s negligence. Id.
The question presented here is whether these two claims sound in tort, rather than
contract, under Kansas law. As to the first claim relating to the failure to amend, we
conclude that the district court committed reversible error in granting Mr. Wisler’s
motion to dismiss. Based on the authorities and reasoning explicated supra, this claim
sounds in tort. As to the second claim (i.e., relating to the dismissal of the underlying
action based on erroneous advice), though the district court’s judgment effectively
dismissed this claim, the court’s analysis did not expressly address it, much less
characterize it as sounding in contract rather than tort. Consequently, for reasons that we
explicate infra, we believe it to be most prudent and fair to permit the district court to
address the merits of this second claim in the first instance, with the benefit of our sketch
herein of the contours of Kansas law.
a. Claim Against Mr. Wisler for Failure to Amend the
Complaint to Include a Claim for Workers’
Compensation Retaliation
In dismissing Mr. Sylvia’s claim against Mr. Wisler for failure to amend the
complaint to include a workers’ compensation retaliation claim, the district court
characterized the claim as being like that in Juhnke:
Plaintiff entered into a contract with Wisler & Trevino, L.C. for legal
services, namely to file a claim of wrongful termination against
Goodyear based on a variety of grounds. Plaintiff now alleges that
Defendants failed to do exactly that by not asserting a claim of
workers’ compensation retaliation. . . . Plaintiff fails to set forth a
23
facially plausible argument that Defendants violated a legal duty, and
therefore committed a tort, by not filing a petition that contained a
claim for workers’ compensation retaliation.
Aplt.’s App. at 73–74. We must disagree with the district court’s analysis and ultimate
conclusion.
The court’s analysis centered on the existence of an attorney-client contract
between Mr. Sylvia and Mr. Wisler’s firm for the filing of certain claims with respect to
Mr. Sylvia’s wrongful termination from Goodyear; based on its analysis, the court
concluded that Mr. Sylvia’s first Count I claim sounded in contract. But the existence of
this contract in itself does not shed much light on whether Mr. Sylvia may properly allege
that Mr. Wisler violated a legal duty stemming from their attorney-client relationship
(evidenced by the contract) when he failed to amend the complaint to include a workers’
compensation retaliation claim. See Pancake House, 716 P.2d at 578 (noting that a legal
malpractice action “generally constitute[s] both a tort and a breach of contract,” but where
“the essential claim of the action is a breach of a duty imposed by law upon the
relationship of attorney/client and not of the contract itself, the action is in tort”); Keeton
et al., supra, § 92, at 657–58 (“A contract or bargaining transaction brings into existence
a relationship of one kind or another at or after the contract or bargaining transaction is
made. . . . The obligations as between parties to such contracts are not always
obligations based entirely on the manifested intent of the parties.” (emphasis added)).
More specifically, the same relationship between a client and her attorney may
conceivably provide the basis for claims sounding in both contract and tort. See Pancake
24
House, 716 P.2d at 578 (“Legal . . . malpractice generally constitute[s] both a tort and a
breach of contract.”); accord Bowman, 686 P.2d at 120; see also Dan B. Dobbs et al.,
DOBBS’ LAW OF TORTS § 718 (2d ed.), Westlaw (database updated June 2017) (“Legal
malpractice . . . entails breach of a duty created by the contract or by the relationship with
the client. Indeed, in some cases the claim may be brought as a contract claim as well as
a negligence claim.” (emphasis added) (footnotes omitted)); Anderson & Steele, supra, at
251 (“Frequently courts allow the same set of facts to support causes of action against
attorneys for both malpractice[, i.e., sounding in tort,] and breach of contract.”). And
there is nothing in the federal rules or in Kansas practice that prevented Mr. Sylvia from
pleading in the alternative claims sounding in both tort and contract. See FED. R. CIV. P.
8(d)(2)–(3) (allowing the pleading of claims “alternatively or hypothetically, either in a
single count . . . or in separate ones” and for the pleading of separate claims “regardless of
consistency”); KAN. STAT. ANN. § 60-208(d)(2)–(3) (Kansas’s analogue to Federal Rule
8(d)); Price v. Holmes, 422 P.2d 976, 980 (Kan. 1967) (“[W]e have held it permissible for
a pleader to allege a cause of action in the alternative provided the alternatives are not
repugnant . . . . Our decisions have also upheld the right of a plaintiff to plead twin
causes of action arising out of a single transaction, the one sounding in tort and the other
being in contract . . . .” (citation omitted)); see also Bowman, 686 P.2d at 120 (“The trial
court correctly overruled the defendant’s motions for directed verdicts by determining
that both a legal and contractual obligation could have been breached.”).
Accordingly, the mere existence of an attorney-client contractual relationship
25
between Mr. Sylvia and Mr. Wisler for the latter’s firm to file certain claims with respect
to Mr. Sylvia’s wrongful termination from Goodyear should not have the effect of
transforming any subsequent malpractice claims by Mr. Sylvia related to such filing into
ones sounding solely in contract. Cf. Juhnke, 506 P.2d at 1145 (“It is true the petition
also described such default as having negligently occurred but use of the term
‘negligently’ does not necessarily serve to translate the action into one sounding in tort.”).
Naturally construed, the complaint alleges that Mr. Wisler’s failure to amend the
complaint was an act of negligence that caused a viable workers’ compensation claim to
become time-barred, diminishing the value of Mr. Sylvia’s claims against Goodyear.
Aplt.’s App. at 13–17. In our view, Mr. Wisler’s failure to act is akin to the failure of
performance of Mr. Doherty in Bowman. Accordingly, Mr. Sylvia properly stated a claim
for malpractice sounding in tort.
More specifically, contrary to the district court’s apparent view, we believe that
Mr. Sylvia’s Count I claim is better analogized to that in Bowman than that in Juhnke.
Unlike in Juhnke, the facts alleged by Mr. Sylvia do not show that Mr. Wisler expressly
contracted with Mr. Sylvia to file each of the claims discussed by the parties, and that Mr.
Wisler then breached that contract by not including the workers’ compensation retaliation
claim. And the plain text of Mr. Sylvia’s written agreement with Mr. Wisler’s firm does
not establish the existence of such a contract. Though in complaint averments
incorporated into Count I, Mr. Sylvia maintains that Mr. Wisler assured him that he
would file all claims identified in their agreement, including the workers’ compensation
26
retaliation claim, there is no indication in the complaint that these assurances constituted
bargained-for promises (i.e., contracts in themselves). Cf. Pittman, 752 P.2d at 718
(discerning a claim sounding in contract where the complaint averred that the attorney
failed to “perform the final duty in his contractual representation”). Thus, as in Bowman,
Mr. Wisler is alleged to have offered only naked assurances, and by failing to follow
through he did not “exercise the learning and skill ordinarily possessed by members of
[the legal] profession in the community.” 686 P.2d at 120. In other words, he allegedly
breached a legal duty and committed a tort.
Moreover, the Kansas Court of Appeals’s decision in Jeanes—which the district
court used as the exemplar of a malpractice claim sounding in tort, Aplt.’s App. at
73—suggests that the mere allegation of a failure to provide services does not of itself
produce a claim sounding in contract rather than tort. In Jeanes, the plaintiff complained
of what was essentially a failure “to exercise ordinary skill and knowledge in giving legal
advice”—that is, failing to counsel a client to take steps that would have avoided
substantial estate tax liability upon her death. 191 P.3d at 331. Nonetheless, the plaintiff
administrator attempted to bring a claim for breach of contract by alleging “a contract . . .
to give estate planning advice” to the decedent and “fail[ure] to implement estate
planning measures” or to “giv[e] any estate-planning advice.” Id. at 329, 331. But the
Kansas Court of Appeals looked behind the allegations of the contract claim and
recognized that the contract claim merely duplicated the malpractice claim (sounding in
tort) without actually alleging a failure “to do something which [the attorney] had
27
specifically agreed or contracted to do.” Id. at 331 (emphasis added). Here, as in Jeanes,
mere allegation of a “failure” to perform—even relating to (naked) assurances to file all
claims, including the workers’ compensation claim—does not have the effect of turning
Mr. Sylvia’s malpractice claim into one sounding in contract.
Mr. Wisler contends that, “[w]here doubt exists as to whether an action is based on
contract or tort, words appropriate to a tort action will be disregarded and the petition will
be treated as sounding in contract.” Aplees. Wisler & Xpressions’ Br. at 10 (quoting
Juhnke, 506 P.2d at 1145). But Mr. Wisler omits an essential word from Juhnke. The
full quotation reads: “[W]here doubt exists as to whether an action is based on implied
contract or tort, words appropriate to a tort action will be disregarded and the petition will
be treated as sounding in contract.” Juhnke, 506 P.2d at 1145 (emphasis added). In other
words, this rule requires that where there is doubt as to whether a plaintiff’s claim is for
breach of an implied contract or a tort claim, the claim must sound in contract and tort
language is to be ignored. The district court, too, relied on this language from
Juhnke—though properly quoted—in reaching its conclusion that Mr. Sylvia failed to
plead tort malpractice claims against Messrs. Wisler and Trevino. But no implied
contract is alleged here.
The complaint does not allege breach of an implied contract—viz., “[a] contract
implied in fact aris[ing] from facts and circumstances showing mutual intent to contract”
or “[a] contract implied in law, or quasi contract, . . . a fiction of the law designed to
prevent unjust enrichment.” Mai v. Youtsey, 646 P.2d 475, 479 (Kan. 1982); see also
28
Kirk v. United States, 451 F.2d 690, 695 (10th Cir. 1971) (“The express contract is proven
by testimony showing the promise and the acceptance, whereas the implied contract is
inferred from the acts of the parties and other circumstances showing an intent to
contract.”). Instead, the complaint alleges a written agreement. In other words, at issue
here is an express contract: that is, neither an implied-in-fact contract—such as when a
man silently enters a barbershop and receives a haircut without having said a word or
signed any agreement—nor an implied-in-law contract—such as in actions for quantum
meruit or quantum valebant to obtain restitution of the value, respectively, of services or
goods—is implicated by Mr. Sylvia’s original complaint’s averments. Accordingly, the
proposition that the quoted Juhnke language establishes is inapposite.
Mr. Wisler further argues that Mr. Sylvia abandoned his tort claims for legal
malpractice by having omitted them from the amended complaint filed after those claims
were dismissed. Aplees. Wisler & Xpressions’ Br. at 11. In making this argument, Mr.
Wisler cites scant legal authority and none on point. The only case cited is an
unpublished disposition of the Kansas Court of Appeals in a malpractice suit. See Guinn
v. Raymond, No. 90971, 2004 WL 944256, at *4 (Kan. Ct. App. Apr. 30, 2004)
(unpublished). Guinn, however, is easily distinguished. There, the Kansas appellate
panel ruled that the plaintiff had abandoned a malpractice claim against his attorney for
failing to file a lost wage claim by settling the underlying action; the court reasoned that
the plaintiff “never gave the trial court [in that action] the opportunity to address the lost
wage claim issue head-on, and it would not have been futile to do so.” Id. at *5. It is
29
patent that the facts giving rise to the alleged abandonment in Guinn bear no resemblance
to the facts here. Perhaps most saliently, unlike in Guinn, Mr. Sylvia gave the district
court a straightforward and direct opportunity here to consider and determine whether his
tort characterization of his legal malpractice claims was correct. And the court actually
ruled on the matter. Specifically, Mr. Sylvia pleaded his malpractice claims in Count
I—distinct from his breach of contract claims—and made clear, through his complaint
averments, his view that the claims evinced “a breach of . . . duty” sounding in tort.
Aplt.’s App. at 17. But the court dismissed Count I in its entirety. Guinn’s abandonment
holding is obviously inapposite here. Therefore, Mr. Wisler’s reliance on Guinn is
completely misplaced.
Furthermore, and perhaps more to the point, this court has held that “a notice of
appeal which names the final judgment is sufficient to support review of all earlier orders
that merge in the final judgment.” McBride v. CITGO Petroleum Corp., 281 F.3d 1099,
1104–05 (10th Cir. 2002) (“As an earlier interlocutory order, the order of dismissal
merged into the final judgment.”); see Montgomery v. City of Ardmore, 365 F.3d 926,
933–34 (10th Cir. 2004); 16A Charles A. Wright et al., FEDERAL PRACTICE &
PROCEDURE § 3949.4, at 100 (4th ed. 2008) (“A notice of appeal that names the final
judgment suffices to support review of all earlier orders that merge in the final judgment
under the general rule that appeal from a final judgment supports review of all earlier
interlocutory orders . . . .”). The notice of appeal in this case did precisely that; it named
the final judgment. Therefore, the June 19 order was an interlocutory order that merged
30
with the final judgment and Mr. Sylvia’s challenge to it is properly preserved for appeal.
Indeed, in the notice of appeal, Mr. Sylvia was even more specific, expressly identifying
the court’s June 19 order dismissing Count I as an order from which appeal was taken.
Accordingly, Mr. Wisler’s contention that Mr. Sylvia abandoned his malpractice claims
allegedly sounding in tort by filing an amended complaint omitting those claims—after
the court dismissed them—fails.
***
In sum, Mr. Sylvia’s first malpractice claim relating to the failure to amend the
complaint to add a workers’ compensation retaliation claim sounds in tort. Thus, we
reverse the district court’s judgment as to that claim.
b. Claim Against Mr. Wisler for Voluntarily
Dismissing the Underlying Litigation on the
Erroneous Belief That All Claims Could Be Refiled
As noted, although Mr. Sylvia’s complaint did plead a second malpractice claim
against Mr. Wisler in Count I for voluntarily dismissing the underlying lawsuit after
erroneously advising Mr. Sylvia that he would be able to refile all claims, the district
court did not explicitly address this claim in dismissing the entirety of Mr. Sylvia’s legal
malpractice action (i.e., Count I) and, more specifically, did not opine on whether this
claim was properly characterized as sounding in tort or breach of contract. Presumably,
this was an oversight by the district court. In any event, although the district court’s
judgment in favor of Mr. Wisler regarding Count I did have the effect of tacitly resolving
this claim, we do not have the benefit of the district court’s rationale for doing so.
31
For the reasons stated below, we decline to review the merits of the court’s
disposition of this second claim, which would oblige us to address the tort-contract
characterization issue in the first instance. Instead, we remand the case with instructions
to the district court to vacate the portion of its Count I judgment encompassing this claim
and to resolve in the first instance under the principles of Kansas law explicated supra the
characterization of this claim. In other words, the court should determine under these
principles whether the claim is in fact a legal malpractice claim sounding in tort or
whether it is more properly viewed as a claim for breach of contract.
We recognize that Mr. Sylvia argues vigorously on appeal that this second claim
pleaded averments that “state a facially plausible claim for legal malpractice [sounding in
tort] against Mr. Wisler” under “the principles established” in Juhnke, Bowman, and other
Kansas cases bearing on the characterization of claims as sounding in tort or contract.
Aplt.’s Opening Br. at 28. But Mr. Sylvia’s argument does not acknowledge that the
district court did not expressly reach his second claim, much less apply Juhnke and
Bowman to it. In other words, Mr. Sylvia’s argument does not engage with the district
court’s reasoning regarding this claim because there is not any.
We are not saying—at least in the context of de novo review, as here—that the fact
that a district court’s underlying reasoning is nonexistent necessarily precludes our review
of its judgment effectively dismissing a claim. See Cox v. Glanz, 800 F.3d 1231, 1243
(10th Cir. 2015) (“[T]he district court did not mention qualified immunity in its
summary-judgment order. However . . . the court did explicitly deny Sheriff Glanz all
32
relief in its order, and part of the relief that Sheriff Glanz unquestionably sought in his
summary-judgment briefing was qualified immunity. Consequently, the court effectively
denied Sheriff Glanz the defense of qualified immunity when it denied his
summary-judgment motion.”); cf. Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1130
(10th Cir. 2011) (“We have long said that we may affirm on any basis supported by the
record, even if it requires ruling on arguments not reached by the district court or even
presented to us on appeal.”); Rivera v. City & Cty. of Denver, 365 F.3d 912, 920 (10th
Cir. 2004) (“Because our review is de novo, we need not separately address Plaintiff’s
argument that the district court erred by viewing evidence in the light most favorable to
the City and by treating disputed issues of fact as undisputed.”).
But there is also an absence of meaningful adversarial briefing here regarding the
tort-contract characterization issue with respect to this claim. In this regard, Mr. Wisler,
too, has failed to acknowledge the district court’s failure to address Mr. Sylvia’s second
claim. And, because his appellate briefing substantially tracks the rationale of the district
court’s order, Mr. Wisler (like the district court) elides this claim entirely. In other
words, he does not respond to Mr. Sylvia’s appellate briefing regarding this claim. This
absence of meaningful adversarial briefing—at least under the circumstances of this
case—militates against our review. See Abernathy v. Wandes, 713 F.3d 538, 552 (10th
Cir. 2013) (“[W]e are nevertheless reluctant to definitively opine on the merits of Mr.
Abernathy’s Suspension Clause argument under de novo review, because the government
has devoted very little time to addressing it, and, thus, we are deprived of the benefit of
33
vigorous adversarial testing of the issue, not to mention a reasoned district court decision
on the subject.”); see also Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1155
(10th Cir. 2013) (en banc) (Gorsuch, J., concurring), aff’d sub nom. Burwell v. Hobby
Lobby Stores, Inc., 134 S. Ct. 2751 (2014) (“At the end of the day, then, and even after
inviting supplemental briefing, we are left with almost no help from the government on
the critical question of the statutory text’s receptivity to prudential standing doctrine.
Without that assistance, without as well some meaningful adversarial engagement on the
question, we run a serious risk of reaching ‘an improvident or ill-advised opinion[]’ . . . .”
(quoting Hill v. Kemp, 478 F.3d 1236, 1251 (10th Cir. 2007))).
To be sure, one might argue that Mr. Wisler’s failure to make an argument in
defense of the district court’s judgment regarding the second claim—in the face of Mr.
Sylvia’s appellate briefing regarding it—is tantamount to a waiver. See, e.g., United
States v. De Vaughn, 694 F.3d 1141, 1154–55 (10th Cir. 2012); United States v.
Heckenliable, 446 F.3d 1048, 1049 n.3 (10th Cir. 2006). But, notably, Mr. Sylvia makes
no such waiver argument. Furthermore, we cannot ignore the fact that Mr. Sylvia never
drew the district court’s attention to its failure to address his second claim—through a
motion for reconsideration or otherwise4—thereby depriving us of a reasoned district
4
Mr. Sylvia certainly understood the notion of seeking
reconsideration. In this regard, though not in a stand-alone motion, Mr. Sylvia
purported to conditionally seek reconsideration of the district court’s June 19
dismissal order in his response to Mr. Trevino’s motion for summary judgment.
Specifically, Mr. Sylvia argued that, if the district court concluded, at the
(continued...)
34
court decision regarding that claim. Relatedly, Mr. Sylvia never made the
characterization argument regarding the second claim that he does on appeal before the
district court.5 Consequently, under the circumstances presented here, we are inclined to
overlook any ostensible waiver by Mr. Wisler relative to the second claim. See Singleton
v. Wulff, 428 U.S. 106, 121 (1976) (“The matter of what questions may be taken up and
resolved for the first time on appeal is one left primarily to the discretion of the courts of
appeals, to be exercised on the facts of individual cases.”); Abernathy, 713 F.3d at 552
(“[T]he decision regarding what issues are appropriate to entertain on appeal in instances
of lack of preservation is discretionary.”).
4
(...continued)
summary-judgment phase, that Mr. Sylvia’s remaining claims—which were
ostensibly contractual claims—“do not, as a matter of law, ‘stem from a breach of
contract,’ then the court must reconsider whether Mr. Sylvia’s claims stem from a
breach of duties imposed by law.” Aplt.’s App. at 202 (quoting id. at 74). Mr.
Sylvia made no request for reconsideration, however, of the effective dismissal of
his second claim arising from the voluntary dismissal of the underlying action, in
his response to Mr. Wisler’s motion for summary judgment and, notably, he never
brought to the court’s attention its failure to expressly resolve his second legal
malpractice claim against Mr. Wisler.
5
Mr. Wisler’s motion to dismiss did target this second malpractice
claim, but he only argued that the claim was time-barred, because the dismissal of
the underlying lawsuit—in his view, the nub of the “alleged negligence”—fell
outside of Kansas’s two-year limitations period for legal malpractice actions (i.e.,
tort actions). Aplt.’s App. at 24. Mr. Sylvia’s response brief—when addressing
this second Count I claim—only responded to this specific argument, contending
that it “must be rejected because it is plausible that Mr. Wisler is equitably
estopped from asserting the statute of limitations as a defense.” Id. at 46 (Pl.’s
Mem. Opp’n Def. Wisler’s Mot. Dismiss, dated Apr. 2, 2014). In other words, in
their motion-to-dismiss briefing, neither Mr. Wisler nor Mr. Sylvia made
arguments regarding the tort-contract characterization issue, as it relates to this
second claim.
35
Deprived of meaningful adversarial briefing regarding this claim, as well as a
reasoned district court decision resolving it, we believe that the most prudent and fair
course is to allow the district court to address this claim in the first instance on remand
under the Kansas law principles articulated supra. We turn now to the single legal
malpractice claim allegedly sounding in tort that Mr. Sylvia alleged against Mr. Trevino.
3. Malpractice Claim Against Mr. Trevino for Failure to Include a
Claim of Workers’ Compensation Retaliation
Mr. Sylvia contends that he pleaded a facially plausible claim for legal malpractice
sounding in tort against Mr. Trevino and that the district court erred in dismissing his
claim for the “same . . . reasons discussed in detail . . . in regard to Mr. Wisler.” Aplt.’s
Opening Br. at 30. But Mr. Trevino argues (a) that Mr. Sylvia has failed to meet the
federal pleading standards, and (b) that the Kansas cases that Mr. Sylvia cites are not
analogous to his case and so fail to demonstrate error by the district court.
Specifically, Mr. Trevino first asserts that Mr. Sylvia has merely pleaded legal
conclusions insufficient to make out a claim for legal malpractice: “Mr. Sylvia has not
alleged any facts that even infer Mr. Trevino breached a duty to exercise ordinary skill
and knowledge. Moreover, no facts were pled that Mr. Trevino was negligent as an
attorney by not filing a claim for workers[’] compensation retaliation.” Aplee. Trevino’s
Br. at 16. But, under contemporary pleading standards, we conclude that Mr. Sylvia
adequately pleaded a legal malpractice claim sounding in tort against Mr. Trevino.
“[T]he Rule 12(b)(6) standard doesn’t require a plaintiff to ‘set forth a prima facie
36
case for each element.’” Urban Settlement Servs., 833 F.3d at 1247 (quoting Khalik, 671
F.3d at 1192–93). And that standard is still fundamentally one of notice pleading
intended “to ensure that a defendant is placed on notice of his or her alleged misconduct
sufficient to prepare an appropriate defense.” Kan. Penn Gaming, L.L.C. v. Collins, 656
F.3d 1210, 1215 (10th Cir. 2011) (quoting Pace v. Swerdlow, 519 F.3d 1067, 1076 (10th
Cir. 2008) (Gorsuch, J., concurring in part)). Plausibility requires that the scope of
allegations not be “so general that they encompass a wide swath of conduct, much of it
innocent.” Id. (quoting Robbins v. Oklahoma ex rel. Dep’t of Human Servs., 519 F.3d
1242, 1247 (10th Cir. 2008)).
But the nature and specificity required of a complaint “depends on context.”
Robbins, 519 F.3d at 1248. For example, “[a] simple negligence action based on an
automobile accident may require little more than the allegation that the defendant
negligently struck the plaintiff with his car while crossing a particular highway on a
specified date and time.” Id. This too is a relatively simple negligence action. In our
view, under these circumstances, Mr. Sylvia’s complaint serves to put Mr. Trevino on
notice of the misconduct alleged such that he can prepare his defense.
Naturally construed, Mr. Sylvia alleges that Mr. Trevino failed to exercise the skill
and knowledge required of an attorney by failing to amend the complaint to include a
workers’ compensation retaliation claim before withdrawing from the attorney-client
relationship. This alleged negligent omission caused the retaliation claim to become
time-barred, resulting in diminishment of the value of Mr. Sylvia’s claims against
37
Goodyear. These allegations are sufficient on their face to state a facially plausible claim
for legal malpractice sounding in tort because they are sufficient to have put Mr. Trevino
on notice of the precise conduct alleged to be negligent and to be the cause of Mr.
Sylvia’s injury.
Mr. Trevino maintains that the district court was correct in holding that Mr.
Sylvia’s claim sounded in contract rather than tort and that Mr. Sylvia fails to “address
the [d]istrict [c]ourt’s reasoning in dismissing Mr. Sylvia’s malpractice claim[s].” Aplee.
Trevino’s Br. at 14. According to this argument, the Kansas cases that Mr. Sylvia cites
are not analogous to his case and so do not support Mr. Sylvia’s contention that his
malpractice claim sounds in tort. Specifically, Mr. Trevino contends that the cases “all
concern which statute of limitations appl[ies] in a legal malpractice case and involve
situations in which a trial court dismissed a cause of action because the perceived harm fit
more appropriately within the realm of either tort or breach of contract.” Id. (citing
Pancake House, 716 P.2d at 578; Bowman, 686 P.2d at 120; Juhnke, 506 P.2d at
1144–45; Price, 422 P.2d at 979–80). He reasons that, by contrast, in Mr. Sylvia’s case,
“his tort claim was not independent of the breach of contract claim.” Id. at 15.
Mr. Trevino’s argument rests on a mistaken understanding of the cases. Of the
cases he cites, only Juhnke turned directly on whether the two-year limitations period for
torts or the longer period for contracts would apply. 506 P.2d at 1143, 1145 (reciting that
dismissal by the trial court was based on two-year tort limitations period, but holding that
the claim sounded in contract and so the three-year limitations period applied). In
38
Bowman, the statute of limitations was in no way implicated, and the trial court did not
dismiss either cause of action; instead, the defendant challenged the jury’s award of
punitive damages on the grounds that the plaintiff’s claim sounded in contract, not tort,
and so punitive damages were inappropriate. See 686 P.2d at 120. Although the
characterization issue in Pancake House did arise in the context of which statute of
limitations would apply, 716 P.2d at 578, the court’s determination that the plaintiff’s
claim sounded in tort rather than contract was decisive not because that holding
determined which limitations period would apply but because it determined when the
claim accrued, id. at 578–79 (tort claim accrued when substantial injury was suffered).
Similarly, Price turned not on which statute of limitations applied but on the fact that the
contract claim accrued during the life of the decedent and so survived her death, while the
tort claim did not accrue until after her death and so did not survive. 422 P.2d at 981–82.
But Mr. Trevino’s mistaken reading of these cases regarding the relevance of the
limitations question is not the only reason his argument fails.
Mr. Trevino’s argument also fails because the Kansas Supreme Court has
expressly decided whether to characterize malpractice claims as sounding in tort or
contract in a variety of contexts. See Tamarac Dev. Co. v. Delamater, Freund & Assocs.,
675 P.2d 361, 363 (Kan. 1984) (“The issue of whether a cause of action sounds in
contract or tort, or both, has been before this court numerous times.”); Hunt, 839 P.2d at
47 (“Kansas cases have addressed the question[, i.e., the tort-contract characterization
question,] in the context of doctors, attorneys, architects, and accountants.”). Thus, we
39
see no reason—and Mr. Trevino offers none—why the question ought to be decided
differently in the present setting, such that we should consider irrelevant the Kansas
caselaw cited. We should not cavalierly seek to distinguish these cases so as to ignore
binding authority from Kansas’s highest court. See Wankier, 353 F.3d at 866 (“[We]
must defer to the most recent decisions of the state’s highest court.”).
Mr. Trevino offers no further argument as to why the malpractice claim lodged
against him must sound in contract rather than tort. The same legal principles that we
applied to the claims against Mr. Wisler are controlling here. In the context of Count I,
Mr. Sylvia does not allege that Mr. Trevino breached some bargained-for promise to
amend the complaint to add the workers’ compensation retaliation claim; instead, he
essentially alleges that Mr. Trevino did not follow through with his bald assurances that
all of Mr. Sylvia’s five claims—including the workers’ compensation claim—would end
up in the complaint. In other words, Mr. Sylvia alleges that, by failing to amend the
complaint, Mr. Trevino failed to “exercise the learning and skill ordinarily possessed by
members of [the legal] profession in the community,” Bowman, 686 P.2d at 120, and
thereby caused him injury (i.e., diminished the value of his subsequent action against
Goodyear by depriving him of his time-barred workers’ compensation retaliation claim).
As such, Mr. Sylvia adequately pleaded a legal malpractice claim sounding in tort.
***
In sum, for the reasons noted above, we reverse the district court’s judgment
granting Mr. Trevino’s motion to dismiss Mr. Sylvia’s malpractice claim for failing to
40
include a workers’ compensation retaliation claim in the original complaint. We turn now
to Mr. Sylvia’s contract claims, which the district court disposed of on summary
judgment.
B. Summary Judgment as to the Contract Claims
We review de novo the district court’s grant of summary judgment. Burnett v. Sw.
Bell Tel., L.P., 555 F.3d 906, 907 (10th Cir. 2009). “Summary judgment should be
granted ‘if the pleadings, the discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and that the movant is entitled
to judgment as a matter of law.’” Kannady v. City of Kiowa, 590 F.3d 1161, 1168 (10th
Cir. 2010) (quoting Martinez v. Beggs, 563 F.3d 1082, 1088 (10th Cir. 2009)). This court
“examine[s] the record and all reasonable inferences that might be drawn from it in the
light most favorable to the non-moving party.” Ellis v. J.R.’s Country Stores, Inc., 779
F.3d 1184, 1192 (10th Cir. 2015) (quoting Merrifield v. Bd. of Cty. Comm’rs, 654 F.3d
1073, 1077 (10th Cir. 2011)).
Mr. Sylvia’s post-dismissal amended complaint included two separate sets of
contract claims: (1) claims against Messrs. Wisler and Trevino, as willful participants in a
breach of contract by Wisler & Trevino, L.C., for failure to include a claim of workers’
compensation retaliation; and (2) a claim against Xpressions (formerly Wisler Law
Office, L.C.) and against Mr. Wisler, as a willful participant in the breach of contract of
Xpressions by voluntarily dismissing the underlying case. Aplt.’s App. at 81–82, 89
(Am. Compl., dated Oct. 27, 2014). The district court granted summary judgment on Mr.
41
Sylvia’s contract claims because the undisputed facts failed to show the existence of a
contract to bring a workers’ compensation retaliation claim or to refrain from voluntarily
dismissing the case.6
As to the first claim of breach of contract by failure to include a workers’
compensation retaliation claim, Mr. Sylvia argues (a) that the written contract with Wisler
& Trevino, L.C. was incomplete, permitting the introduction of evidence of prior or
contemporaneous parol, or (b) that the written contract was modified by a subsequent oral
agreement. As to the second claim against Mr. Wisler and Xpressions, Mr. Sylvia
appears to argue, as he did below, that Mr. Wisler entered into a contract to “assure the
effect of legal services rendered” by making assurances that all claims could be refiled.
Aplt.’s Opening Br. at 36 (emphasis omitted) (quoting Juhnke, 506 P.2d at 1145).
As to the first claim, Mr. Trevino’s liability on the written contract is said to stem
from his having “participated and acquiesced in the express assurances made by Mr.
Wisler that a claim for workers[’] compensation retaliation would be specifically included
in the suit against Goodyear.” Id. at 37. Accordingly, Mr. Trevino’s contractual liability
depends entirely on whether Mr. Wisler’s assurances supplemented or modified the
6
In its dismissal order, the district court ruled that, although the
individual attorneys were not parties to the written contract, they could be held
liable as owners for willful participation in the entity’s breach of contract under a
veil-piercing theory. Id. at 75–76; see also Speer v. Dighton Grain, Inc., 624
P.2d 952, 958–59 (Kan. 1981) (“[A] corporate officer or director acting on behalf
of a corporation is personally liable for damages caused by his willful
participation in acts of fraud or deceit to one directly injured.”). No party
challenges this ruling on appeal, and therefore we need not opine on the matter.
42
written contract. In other words, Mr. Trevino stands or falls with Mr. Wisler; if the
latter’s arguments fail, so do Mr. Trevino’s. We turn to this first claim and then examine
the district court’s judgment regarding the contract claim against Mr. Wisler and
Xpressions arising from the voluntary dismissal.
1. Contract Claims Against Messrs. Wisler and Trevino for Failing
to Include a Workers’ Compensation Retaliation Claim
Before the district court, Mr. Sylvia contended that Mr. Wisler made oral promises
before, during, and after the execution of the written contract of representation that served
to either clarify or modify the written contract such that it would require Mr. Wisler to
file a workers’ compensation retaliation claim. Messrs. Wisler and Trevino argued that:
(a) any prior or contemporaneous statements are barred by the parol evidence rule and so
evidence of those statements is not admissible and could not create a genuine dispute as
to a material fact; and (b) even assuming arguendo that subsequent oral promises were
made to Mr. Sylvia, they would still be entitled to summary judgment because those
promises are not enforceable for want of consideration.
On appeal, Mr. Sylvia contends that the district court erred in holding (a) that the
written contract was complete, and (b) that there was no subsequent oral agreement
modifying the written contract for want of consideration. For the reasons noted below,
these arguments fail. We affirm the district court’s grant of summary judgment on the
breach of contract claims against Messrs. Wisler and Trevino for failure to include, or
amend to include, a claim for workers’ compensation retaliation.
43
a. Incompleteness
Mr. Sylvia first contends that the written contract is incomplete, and so parol
evidence is admissible and creates a genuine factual dispute preventing summary
judgment.
Under Kansas law, unless a contract is incomplete, ambiguous, or uncertain, “parol
evidence of prior or contemporaneous agreements or understandings tending to vary the
terms of the contract evidenced by the writing is inadmissible.” Decatur Cty. Feed Yard,
Inc. v. Fahey, 974 P.2d 569, 574 (Kan. 1999) (quoting Simon v. Nat’l Farmers Org., Inc.,
829 P.2d 884, 887–88 (Kan. 1992)). Where, however, a contract is “silent or ambiguous
concerning a vital point” or otherwise “does not definitely embrace the entire agreement
of the parties . . . parol proof may be received to supplement and explain that which is
written.” Souder v. Tri-Cty. Refrigeration Co., 373 P.2d 155, 160 (Kan. 1962); see
Barbara Oil Co. v. Kan. Gas Supply Corp., 827 P.2d 24, 35 (Kan. 1992).
But there is a “wide distinction between an attempt to contradict the terms of a
written instrument and to explain the circumstances and conditions under which it was
executed and delivered.” Souder, 373 P.2d at 159. In this regard, parol evidence is
admissible “when a written contract is silent as to a particular matter discussed and agreed
upon between the parties,” insofar as such evidence “may be offered on that matter
without varying the written contract.” Hummel v. Wichita Fed. Sav. & Loan Ass’n, 372
P.2d 67, 70–71 (Kan. 1962) (emphasis added) (quoting Kirk v. First Nat’l Bank, 295 P.
703, 705 (Kan. 1931)). In order then to show that the contract is incomplete and that his
44
parol is admissible, Mr. Sylvia must show that the contract is silent on the point at issue
and that the parol offered would not vary the text as it stands but would merely
supplement or explain it.
We conclude that the contract is not incomplete; more specifically, it is not silent
as to whether Wisler & Trevino, L.C. was obligated to bring a workers’ compensation
retaliation claim. The relevant clause reads:
Cory Sylvia has been wrongfully discharged due to disability
discrimination and FMLA violation/retaliation and Workers
Compensation retaliation from GoodYear Tire and Rubber Company
on or about May 9, 2009. The firm will file suit in federal court in
Kansas on one or more of these claims.
Aplt.’s App. at 132 (emphasis added). Put simply, the contract is not silent regarding
whether Wisler & Trevino, L.C. was required to file in particular a workers’
compensation retaliation claim: the firm was not. Rather, it was only obliged to bring at
least one of the enumerated claims.
Further, Mr. Sylvia’s parol averment attributed to the defendants that “a claim for
workers[’] compensation retaliation would be specifically included” directly contradicts
the plain language of the contract. Aplt.’s Opening Br. at 33. The contract required only
that the firm bring at least one of the claims. Aplt.’s App. at 132. Even were this parol
evidence admissible in other respects, it would not be admissible to directly contradict an
express contractual term.
Mr. Sylvia contends that the contract is incomplete because “it does not
specifically identify which ‘one or more of these claims’ would be included in the suit
45
against Goodyear.” Aplt.’s Opening Br. at 33. However, at best this is an argument for
ambiguity of the contract, not for incompleteness or silence. But the agreement is not
ambiguous. “There can be no ambiguity in a written agreement unless after the
application of pertinent rules of construction there is left a genuine uncertainty which of
two or more possible meanings was intended by the parties.” Mays v. Middle Iowa Realty
Grp., 452 P.2d 279, 284 (Kan. 1969); see also Ark. La. Gas Co. v. State, 675 P.2d 369,
371 (Kan. 1984) (“This court has held a contract to be ambiguous ‘when . . . the contract
may be understood to reach two or more possible meanings.’” (quoting First Nat’l Bank
of Olathe v. Clark, 602 P.2d 1299, 1304 (Kan. 1979))). Here, no meaning presents itself
other than the plain meaning: Wisler & Trevino, L.C. obligated itself to bring at least one
of Mr. Sylvia’s claims. By bringing one claim, the firm met its obligation under the
contract; it was not required to specifically file a workers’ compensation retaliation claim.
Mr. Sylvia offers no reasonable alternative reading such that the contract should be
considered ambiguous.
Accordingly, the district court did not err in holding that the written contract was
complete. Mr. Sylvia next contends that, even if the agreement is complete, it was
modified by a subsequent oral agreement. This argument, too, fails.
b. Subsequent Oral Agreement
The district court found that Mr. Sylvia did not raise a genuine dispute of fact
regarding whether Mr. Wisler “bargained for or received any consideration in exchange
for [the] alleged promise [to file the two claims omitted from the initial filing later]” or
46
whether Mr. Sylvia “incurred any loss or detriment in exchange for the promise.” Aplt.’s
App. at 218 (Mem. & Order, dated Oct. 26, 2015). Mr. Sylvia argues, however, that the
district court erred because he suffered a detriment sufficient to serve as consideration.
Consistent with the district court’s holding, we conclude that Mr. Sylvia’s evidence, taken
as true, shows nothing more than bare promises by Mr. Wisler—unsupported by
consideration—that fall well short of a subsequent agreement to modify the written
contract.
Specifically, Mr. Sylvia contends that, “[i]n reliance on [Mr. Wisler’s promise to
file the two claims omitted from the initial filing later], I did not insist that the contract of
representation be re-written to specifically state that all five claims would be included in
the complaint.” Aplt.’s Opening Br. at 34; accord Aplt.’s App. at 173 (Decl. Cory Sylvia,
dated Apr. 1, 2015). As support for this argument, Mr. Sylvia directs us to the Kansas
Supreme Court’s decision in Temmen v. Kent-Brown Chevrolet Co., 535 P.2d 873 (Kan.
1975). There, quoting liberally from the late Professor Williston’s leading treatise on
contracts, the court seemed to primarily center its holding on the concept of “legal
detriment,” ruling that, “[t]enuous though it be, we believe that under the circumstances
here there was a sufficient showing of consideration.” Id. at 880–81 (quoting 1 Samuel
Williston, WILLISTON ON CONTRACTS § 102A (3d ed. 1957)).
As Professor Williston’s treatise explains:
[D]etriment in this context [has] a technical meaning. . . . [T]he
detriment to the promisee need [not] be actual; rather, it is a sufficient
legal detriment to the promisee [to satisfy the consideration
47
requirement] if it promises or performs any act, regardless of how slight
or inconvenient, which it is not obligated to promise or perform so long
as it does so at the request of the promisor and in exchange for the
promise.
3 Samuel Williston et al., WILLISTON ON CONTRACTS § 7:4 (4th ed.), Westlaw (database
updated May 2017) (second emphasis added) (footnote omitted); see In re Shirk’s Estate,
350 P.2d 1, 7, 9–10 (Kan. 1960) (applying the concept of legal detriment).
In Temmen, the court identified facts that—while admittedly bearing a “[t]enuous”
connection to the concept of legal detriment—provided “a sufficient showing of
consideration.” 535 P.2d at 881. Specifically, the court noted that the plaintiff “allege[d]
he specifically informed [the defendant] that unless the work [on his vehicle] were taken
care of under the warranty he would take the vehicle elsewhere for the repairs and that he
left it with [the defendant] only upon assurance the warranty would cover the work.” Id.
at 880. In the same vein, the plaintiff “assert[ed] that by reason of [the defendant’s]
agreement[,] he gave up the right to attempt to receive a better bargain elsewhere for the
repair work.” Id. In ultimately concluding that these facts yielded sufficient
consideration, the Temmen court necessarily inferred from the plaintiff’s averments that
all of the features of a legal detriment to the plaintiff were effectively present, including
notably a request from the defendant for the plaintiff to leave his vehicle with it for repair
and thereby give up an opportunity to seek a better deal on repairs elsewhere.
There are no such facts present here. Though steadfastly maintaining that he “did
not insist that the contract of representation be re-written to specifically state that all five
48
claims would be included in the complaint against Goodyear” because of his reliance on
Mr. Wisler’s promise to subsequently include the two omitted claims, at no point does
Mr. Sylvia identify facts from which it could be reasonably inferred that Mr. Wisler asked
him to forgo making a request to have the contract rewritten (i.e., an act Mr. Sylvia did
not have to forgo). Therefore, a key element of a legal detriment—a request from the
promisor, Mr. Wisler—is not present here. Consequently, Mr. Sylvia’s detriment was not
sufficient to constitute consideration for any alleged assurances from Mr. Wisler
regarding the inclusion of the omitted claims. Such assurances were nothing more than
naked promises. Thus, Mr. Sylvia’s contention that his written contract of representation
was modified by a subsequent oral agreement is without merit; any such agreement was
devoid of consideration.7
7
In his reply brief, Mr. Sylvia largely shifts gears. For the first time,
he points to different language in Temmen, where the court is discussing the
substantial conceptual similarity between principles of consideration and
estoppel. See Aplt.’s Reply Br. at 14–15 (quoting Temmen, 535 P.2d at 880).
This language seemingly alludes to a possible rubric identified in Kansas
caselaw—which is distinct from the legal detriment concept—for establishing
“sufficient” consideration. French v. French, 167 P.2d 305, 308 (Kan. 1946)
(cited in Temmen, 535 P.2d at 880–81). This rubric centers on whether “the
promisor should reasonably expect [its promise] to induce action or forbearance
of a definite and substantial nature [from the promisee] and which does induce
such action or forbearance[,] if injustice can be avoided only by enforcement of
the promise.” Id. (discussing this rubric as separate from one focusing on
whether the promisor suffered a detriment). We have no need to opine here on
whether this rubric ever was an established component of Kansas contract law
with respect to the issue of consideration and, if so, whether it is still viable. This
is so because Mr. Sylvia’s invocation of this rubric comes too late.
(continued...)
49
***
Because Mr. Sylvia has failed to show that the district court erred in holding that
the contract was complete and that it was not modified by a subsequent oral agreement,
we uphold the district court’s grant of summary judgment for all defendants on the breach
of contract claims for failure to include a workers’ compensation claim in the underlying
lawsuit against Goodyear.
7
(...continued)
In this regard, Mr. Sylvia has attempted for the first time in this appeal to
demonstrate under this rubric that he supplied sufficient consideration through his
“forbearance.” Aplt.’s Reply Br. at 14. As a general matter, however, this court
has routinely “declined to consider arguments that are not raised, or are
inadequately presented, in an appellant’s opening brief.” Bronson v. Swensen,
500 F.3d 1099, 1104 (10th Cir. 2007). Relatedly, “[i]t is well settled that ‘[t]his
court does not ordinarily review issues raised for the first time in a reply brief.’”
United States v. Gordon, 710 F.3d 1124, 1150 (10th Cir. 2013) (second alteration
in original) (quoting Stump v. Gates, 211 F.3d 527, 533 (10th Cir. 2000)). This is
true even if the new issue or theory is of the same general genus, or otherwise
generally related to the argument previously advanced. Cf. Jacks v. CMH Homes,
Inc., 856 F.3d 1301, 1306 (10th Cir. 2017) (“[O]ur forfeiture-and-waiver rule
applies even ‘when a litigant changes to a new theory on appeal that falls under
the same general category as an argument presented at trial.’” (quoting Schrock v.
Wyeth, Inc., 727 F.3d 1273, 1284 (10th Cir. 2013))). Such arguments are not
merely forfeited, they are “deemed waived.” Becker v. Kroll, 494 F.3d 904, 913
n.6 (10th Cir. 2007) (“Federal Rule of Appellate Procedure 28(a)(9)(A) requires
appellants to sufficiently raise all issues and arguments on which they desire
appellate review in their opening brief. An issue or argument insufficiently raised
in the opening brief is deemed waived.”); see also Richison, 634 F.3d at 1127–28
(discussing the distinction between waived and forfeited theories and noting that
under certain circumstances, “[u]nlike waived theories, we will entertain forfeited
theories on appeal” (emphasis added)). Consistent with these authorities, we will
not consider this late-blooming argument by Mr. Sylvia.
50
2. Contract Claims Against Mr. Wisler and Xpressions for
Voluntarily Dismissing the Underlying Case
The district court held that Mr. Sylvia had failed to show breach of any contract by
Mr. Wisler and Xpressions arising from Mr. Wisler’s dismissal of the case against
Goodyear. As the district court put it, while alleging that Mr. Wisler “breached his
contractual obligations,” Mr. Sylvia failed to explain “which contractual obligations” Mr.
Wisler breached. Aplt.’s App. at 219. In support of his position that the district court
erred in granting summary judgment for Mr. Wisler and Xpressions, Mr. Sylvia offers
only one argument. Although the exact contours of this argument are difficult to discern,
he appears to assert that under Juhnke a contractual obligation can be implied from
attorneys assuring the effect of legal services rendered. See Aplt.’s Opening Br. at 36.
Thus, as the argument goes, Mr. Wisler—by assuring Mr. Sylvia that voluntary dismissal
would not prevent the refiling of all claims—became subject to just such a contractual
obligation. See id. But Juhnke stands for no such proposition.
Mr. Sylvia is only able to cite dicta from Juhnke—dicta that, properly read, refutes
his argument. He quotes:
Courts in other jurisdictions which have considered the question
are not in harmony as to which statute of limitations—contract or
tort—governs a damage action against an attorney for neglect in the
performance of his professional services. The majority appears to
favor the contract approach and uniformly so where the contract
breached is one to obtain a specific result or to assure the effect of legal
services rendered (see [H. H. Henry, Annotation, What Statute of
Limitations Governs Damages Action Against Attorney for Negligence
in Performance of Professional Services,] 49 A[.]L[.]R[.] 2d 1216[,
superceded by 2 A.L.R. 4th 284,] and Later Case Service).
51
Aplt.’s Opening Br. at 36 (emphasis added by appellant) (quoting Juhnke, 506 P.2d at
1145). This language appears to be little more than an aside on the Juhnke court’s way to
holding that under the circumstances of that case—where Mr. Juhnke’s attorney
contracted to file an appeal and failed to do so—Mr. Juhnke’s claim sounded in contract
as a “failure to discharge a contractual obligation.” Juhnke, 506 P.2d at 1145. More
importantly, Mr. Sylvia misreads this language.
The language cited offers no principle of law akin to that which Mr. Sylvia
advances. The language reads: “The majority appears to favor the contract approach and
uniformly so where the contract breached is one . . . to assure the effect of legal services
rendered.” Id. (emphasis added). On its face, this language requires an existing contract.
It does not call for implying a contract from a naked promise assuring the effect of legal
services rendered. As the district court pointed out, the written contract here does not
prohibit dismissal of the case and so cannot be the source of the alleged contractual
obligation. The only alleged source of a contractual obligation that Mr. Sylvia identifies,
even obliquely, is that Mr. Wisler “repeatedly assured [him] that all of the claims in the
case could be re-filed.” Aplt.’s Opening Br. at 36. But the Juhnke dictum does not make
of those assurances a contractual obligation.
Mr. Sylvia fails to explain or support his assertion that such assurances created a
binding contractual obligation on the part of Mr. Wisler and Xpressions not to dismiss the
case. Nor does he present any other reason to reverse. Accordingly, we uphold the
52
district court’s grant of summary judgment for Mr. Wisler and Xpressions on this claim.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s judgment as to
the breach of contract claims and REVERSE in part and VACATE in part the
court’s judgment regarding the allegedly tort-based legal malpractice claims, and
REMAND the case for further proceedings consistent with this opinion.
53
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} |
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
DEREK SMITH, : No. 224 MAL 2016
:
Respondent : Petition for Allowance of Appeal from
: the Order of the Commonwealth Court
:
v. :
:
:
PENNSYLVANIA BOARD OF :
PROBATION AND PAROLE, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 11th day of August, 2016, the Petition for Allowance of Appeal is
GRANTED. The issue, as stated by petitioner, is:
Does the Commonwealth Court’s decision conflict with this Court’s
decision in Gaito v. Pennsylvania Board of Probation and Parole?
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} |
139 S.W.3d 491 (2003)
355 Ark. 392
Tom ALLEN
v.
The Honorable Keith RUTLEDGE, Judge; Kenneth Lavigne; Cynthia M. Lavigne.
No. 03-330.
Supreme Court of Arkansas.
December 18, 2003.
Jeff Rosenzweig, Little Rock, for appellant.
Mike Beebe, Att'y Gen., by: Jill Jones Moore, Ass't Att'y Gen., Little Rock, for appellee.
W.H. "DUB" ARNOLD, Chief Justice.
This case involves the propriety of sanctions assessed by Circuit Judge Keith Rutledge, who was serving by appointment, against attorney Tom Allen under Rule 11 of Arkansas Rules of Civil Procedure. The trial judge ordered Allen to pay five hundred dollars ($500.00) to the opposing party. Allen is an attorney in Batesville and has presented various cases before Judge Rutledge, namely Cynthia Lavigne *492 v. Kenneth Lavigne (Independence County Cir. PR-2002-251-4) and Greenway v. Swaims (Independence County Cir. CIV-2001-530-4) and was counsel in both cases. We take jurisdiction of this appeal, because it involves this court's power to regulate the practice of law. Ark. Sup.Ct. R. 1-2(a)(5). We reverse and remand.
Facts
On September 26, 2002, the trial court heard Lavigne v. Lavigne and announced its ruling from the bench. On October 11, 2002, Allen filed a motion to recuse and a brief in support thereof seeking Judge Rutledge's removal from the case based upon an "appearance of impropriety and an appearance of partiality." Allen cited the following reasons for recusal: (1) during the Lavigne trial, the trial judge had fondly referred to counsel for the plaintiff as Jo Hart Jr., the trial judge's former law partner and now a court of appeals judge; (2) the trial judge had made a comment in response to plaintiff's counsel as to alimony case law that "defendant's counsel would probably be happy with that amount;" (3) that alimony and child support constituting fifty-six percent of take home pay was unconscionable; (4) that the trial judge's refusal to decide custody according to the best interests of the children; (5) a statement by the trial judge earlier in the day that "I can do anything I want to. I'm the judge" and, (6) comments by the trial judge including "unfortunately sometimes you have to pay through the nose when you screw up." Allen argued by noting that the size of the alimony payments together with the judge's remarks about considering fault led him to conclude that Judge Rutledge neither gave his client a fair trial nor could he fairly rule on a motion for new trial, which Allen was considering filing in the Lavigne case.
On October 14, 2002, Allen filed a second motion to recuse and briefs in support thereof in the same case. The second motion noted the following: (1)that Allen believed that Judge Rutledge and Grady, opposing counsel, received the motion for recusal on the afternoon of Friday, October 11; (2) that upon arriving at his office on Monday, October 14, Allen found he had been delivered a copy of a letter dated October 11 from Grady to the trial judge, enclosing a suggested precedent "pursuant to the request of the trial judge;" (3) that Allen was not aware of any written request to prepare a precedent and that he believed that the request was an ex parte oral communication; and, (4)that the transcript of the trial judge's ruling contained no request for preparation of a precedent.
Ms. Grady filed a response and brief in support to the motion to recuse. Grady conceded that Judge Rutledge had called her "Jo Hart Jr.," but, asserted that the rulings of the trial court were not the basis for recusal. Grady also stated that Judge Rutledge had indeed phoned her and asked her to prepare the precedent, as she was the prevailing party. Grady further suggested that Allen's allegations were sanctionable under Rule 11; however, Grady failed to present a formal motion.
On November 1, 2002, a hearing was set for the recusal motions in both Lavigne and Greenway. Neither party called witnesses in the recusal motion in Lavigne, both attorneys stating that they would stand on their written pleadings. Then the recusal motion was heard in the Greenway motion. Allen presented witnesses to the effect that Judge Rutledge had been discourteous to him and his client in that case. The following colloquy occurred:
THE COURT: Okay. Now those are the two motions pending in this motion on the recusal. I'm going to state for the record that sometime prior to Ms. Grady *493 furnishing me with the prep proposed precedent in this matter, I had called her office as the winning attorney, which is normal in these cases, and I had ruled from the bench as to what my findings were in the case, and advised her secretary I don't think I'd ever talked to Ms. Grady, that I needed a precedent in this, and to send the same to Mr. Allen so he could either object or not. Now, as far as I know that's the only communication that I've ever had and there's no evidence to the contrary in this record. Now, as it relates to the
MR. ALLEN: May I inquire of the Court?
THE COURT: What?
MR. ALLEN:I I need to ask you a question.
THE COURT: What are you going to ask me?
MR. ALLEN: The letter dated October 11th that was delivered to my office was
THE COURT: Mr. Allen, do you have a question?
MR. ALLEN: Yes, sir.
THE COURT: What is it?
MR. ALLEN: The letter that was dated October 11th that you have on my Motion to Recuse, a copy of which was hand-delivered and stuck in my door, says: "Dear Judge Rutledge: Pursuant to your request " Was that made before the
THE COURT: I just told you, Mr. Allen. I just answered that question and it's
MR. ALLEN: No. My my question to you
THE COURT: Well,I I'm not going to sit up here and
MR. ALLEN: is, was your request before or after you received the Motion to Recuse?
THE COURT: I don't know. I don't know, Mr. Allen, but I'll tell you this. I'm not up here to answer your questions.
MR ALLEN: Well, Judge, I think
THE COURT: I'm not up here to answer your questions. I just told you, I don't recall, but I do recall that I didn't talk to Jerrie Grady, okay.
MR. ALLEN: Well
THE COURT: That's the end of that discussion. Now, let's go on back to your original motion. And
MR. ALLEN: Was it was it
THE COURT: besides that, even if I had talked to her and said prepare this, it's not
MR. ALLEN: Judge, was the suggested precedent hand-delivered to your office on Friday afternoon?
THE COURT: I have no idea. I wasn't there. And I wasn't there on the 14th or
MR. ALLEN: Well, would you
THE COURT: the 15th either, Mr. Allen, like you've alleged, okay.
MR. ALLEN: Did you instruct Ms. Grady to give me a letter that I am to immediately notify the Court?
THE COURT: Mr. Allen, sit down. I'm not up here to answer your questions, okay. You had your opportunity to put on evidence. You didn't take it. Sit down. Okay.
MR. ALLEN: Well, Judge, okay.
THE COURT: All right, on as it relates to the first Motion to Recuse in this case. I want to go back over that because I want to take it line by line since there's no evidence in this record that's been offered, okay. As it relates to my comments about Jo Hart,I I don't know that that's important. I may or may not have said that. I don't think it shows anything other than an aggressive *494 part and I don't know that it was fondly. Fondly is a word I wouldn't necessarily use. But I do want to go to and so I'll take care of that.
MR. ALLEN: What?
THE COURT: That
MR. ALLEN: What on "d"?
THE COURT: that Mr. Allen, do you have something that you want to say. I'm going down through here
MR. ALLEN: I'm trying to understand what you're saying.
THE COURT: You put on no evidence whatsoever, okay. Do you understand that? You have put on no evidence.
MR. ALLEN: Well, Judge, the record will bear it out though, right?
THE COURT: Now, let well, Mr. Allen
MR. ALLEN: Judge, you know whether or not you made that statement.
THE COURT: I don't know that I made that statement, but if I did so what? That's my point. The second number(b), I don't know what that means. It I don't know what it means. It doesn't show anything. It it's of a recusal nature. An unconscionable amount of alimony is something that you can appeal, if you feel like it's unconscionable. That's an appellate decision, nota
MR. ALLEN: I understand that.
THE COURT: Motion for Recusal. The whether or not the Court properly followed the law as it relates to change of custody, that's an appealable issue, not something that the this Court's going to recuse on. The statement that you and this is a cheap shot, Jr. Allen, and I will state it for the record, it's a cheap shot. You put in here that the Trial Judge's statement earlier in the day in the courtroom, prior to hearing his case, that, "I can do anything I want to. I'm the Judge," was an aside bar comment, had nothing to do with any case. It had to do with a case that you and Mr. Garner were here on and Mr. Garner at your request I got those children back for you that day
MR. ALLEN: That's-that's not what happened.
After some more discussion, Judge Rutledge then ruled in the following way:
The Court: Now, on these two motions, I'm going to deny both motions, but I want to read you what Rule 11 says because I think that's significant in this case, `cause I think especially on the Lavigne case I think it's just atrocious that you would file these allegations where there's no factual bases for any of them. "The" Rule 11 says in part: "The signature of an attorney or party constitutes a certificate by him that he has read the pleadings, 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 I warranted by existing 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 not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader. If a pleading, motion or other paper is signed in violation of this Rule, the Court upon motion or upon it's 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 the reasonable expenses incurred because of the filing of the pleading, motion or other *495 paper, including a reasonable attorney's fee." Subparagraph (b): "A motion for sanctions under this rule shall be made separately from other motions." And and I can do that on my own. "And it shall be served on the proper person." And I'm doing that on you today, Mr. Allen.
MR. ALLEN: Serving what?
THE COURT: "But shall not be filed with or presented to the Court unless, within twenty-one days after service of the motion or such other period as the Court may prescribe, the challenged paper, claim, defense, contention, allegation or denial is not withdrawn or appropriately corrected." Now, you heard me go through your motion especially in the Swaims case and you heard-you know that those allegations are false on their face, that I communicated with Ms. Grady in that case on the 12th of September [sic], or anytime thereabouts, or on the 14th or 15th of October. You know that to be false.
MR. ALLEN: No, I do not know that.
THE COURT: You have stated that and you have offered no evidence of that.
MR. ALLEN: I do not know under the under the Code, Judge
THE COURT: Well
MR. ALLEN: well, wait a minute. Let me say something.
THE COURT: No.
MR. ALLEN: Under under under the Code as it pertains to ex-parte communications, a Judge must disclose to all parties all ex-parte communications.
THE COURT: I know the law. Okay, since you brought that up
MR. ALLEN: And that's what that's what I was going to ask you to do today.
THE COURT: Well, I did.
MR. ALLEN: But the only way I can do it
THE COURT: I did that, Mr. Allen. I just did it.
MR. ALLEN: I I
THE COURT: I told you there were none. Now, but since you brought that up, this is why I asked you about the Wood-the Woodall case
MR. ALLEN: Right, I know that it's on there.
THE COURT: You know you know yourself, you've had ex-parte communication to the Court. It's right there in black and white. You did not furnish that to Ms. Grady. You told the Court you weren't furnishing it to Ms. Grady.
MR. ALLEN: That's right.
THE COURT: And that is a violation of if there ever was one, okay. You're the one that initiated that ex-parte communication, not me, not Ms. Grady, not anybody else and you know that. So I don't want to hear if you've got some evidence that I have communicated with Ms. Grady on any of this stuff, other than to direct her office to furnish me a precedent in a case that she won, I I want to you have had your opportunity and you have presented no evidence.
MR. ALLEN: Well, that that ex-parte communications made by the Court are strictly within you knowledge and I understand the code of Judicial Conduct to provide that that those have to be disclosed by this Court.
THE COURT: And I've done that.
MR. ALLEN: Well, I didn't know what it was until I got here, Judge.
THE COURT: You made an allegation
MR. ALLEN: I did.
THE COURT: You stated on your face that I did that.
MR. ALLEN: I did.
THE COURT: That is false allegations.
MR. ALLEN: Well, Judge
*496 THE COURT: I'm giving you the opportunity, Mr. Allen, to withdraw that pleading. If you don't want to do that, because you put on absolutely no evidence to that, that's fine with me. I will address that at the proper time. But right now, you have no evidence. I have stated just because you make a-a brass [sic] allegation that the Court's talking to all these lawyers doesn't mean I have to come in here and and outline to you everything I do. I don't know where you're coming from, but I can assure you this, that on October the 14th and 15th I was with my wife and daughter in Virginia and Washington, D.C., and I wasn't communicating with Ms. Grady.
MR. ALLEN: Well, on
THE COURT: On September the 12th [sic], I wasn't communicating and you've alleged that, and I'm asking you if you want to withdraw it, fine. If you don't, we'll take up the sanctions, all right. Now, anything else.
MR. ALLEN: No.
THE COURT: Okay. Ms. Grady, fix me an order on both of those, and on the on these, not the Lavigne case, but that other case, the Greenway v. Swaims case, I'm going to hold that. You fix me up one on Lavigne, all right.
MS. GRADY: This is an order denying his Motion for Recusal.
THE COURT: Uh hum. Mr. Allen, we're not through yet.
MR. ALLEN: Pardon?
THE COURT: Are you leaving?
MR. ALLEN: No, I thought we were through.
THE COURT: Okay. All right. I'm going to give you ten days to decide what you want to do on those motions. Okay. I'm going to shorten that twenty-one to ten days and you can decide what you want to do.
MR. ALLEN: You mean about withdrawing my Motion to Recuse. Is that what you're referring to?
THE COURT: Uh hum. And your allegations in those motions, that's right.
MR. ALLEN: Well, I'll I'll visit with some counsel
THE COURT: Yeah, okay. All right.
MR. ALLEN: and advise the Court accordingly.
THE COURT: Okay.
MR. ALLEN: When is that decree doing to be filed of record?
THE COURT: When I sign it. Okay.
Allen failed to file a document withdrawing any allegation. Judge Rutledge then issued an order imposing sanctions.
Allen now brings five points on appeal: (1) whether the imposition of sanctions should be reversed because the notice to Allen was not in writing; (2) whether, even if oral service of a Rule 11 warning is sufficient in some instances, the complaint was not specific enough to properly apprise Allen of the alleged misconduct, and the incongruity between the notice and the order imposing Rule 11 sanctions requires reversal; (3) whether the trial court should recuse from deciding sanctions; (4) whether Allen's conduct meets the criteria for imposition of Rule 11 sanctions; and, (5) whether the sanctions order specifies why the amount of the sanction is $500.
Rule 11(b) of the Arkansas Rules of Civil Procedure states:
(b) A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision (a). It shall be served as provided in Rule 5 but shall not be filed with or presented to the court unless, within 21 days after service of the motion (or such other period as the court may prescribe), *497 the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected. If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion.
Standard of Review
The imposition of sanctions is a serious matter to be handled with prudence, and the trial court's decision is due substantial deference. Williams v. Martin, 335 Ark. 163, 980 S.W.2d 248 (1998); Jenkins v. Goldsby, 307 Ark. 558, 822 S.W.2d 842 (1992). This court reviews a trial court's determination of whether a violation of this rule occurred under an abuse-of-discretion standard. Ward v. Dapper Dan Cleaners & Laundry, Inc., 309 Ark. 192, 828 S.W.2d 833 (1992). In deciding an appropriate sanction, trial courts have broad discretion not only in determining whether sanctionable conduct has occurred, but also what an appropriate sanction should be. Crockett & Brown v. Wilson, 321 Ark. 150, 901 S.W.2d 826 (1995).
Allen argues that this abuse-of-discretion standard should be modified, "since if the trial court finds that Rule 11 criteria have been met, the court has no discretion in assessment of sanctions." Crockett & Brown, supra. Allen avers that this court should analyze questions of law de novo and that underlying factual determinations should be subject to the clearly erroneous standard under Rule 52 of the Arkansas Rules of Civil Procedure.
However, the United States Supreme Court has analyzed review standards for Rule 11 cases, and it supports the use of the abuse-of-discretion standard finding is best suited to address Rule 11 situations given the close interplay between factual and legal issues. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 359, (1990). The United States Supreme Court wrote:
The Circuits also agree that, in the absence of any language to the contrary in Rule 11, courts should adhere to their usual practice of reviewing the district court's findings of fact under a deferential standard. See Fed. Rule Civ. Proc. 52(a) ("Findings of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses"). In practice, the "clearly erroneous" standard requires the appellate court to uphold any district court determination that falls within a broad range of permissible conclusions. See, e. g., Anderson v. Bessemer City, 470 U.S. 564, 573-574, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) ("If the district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous"); Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 857-858, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982). When an appellate court reviews a district court's factual findings, the abuse-of-discretion and clearly erroneous standards are indistinguishable: A court of appeals would be justified in concluding that a district court had abused its discretion in making a factual finding only if the finding were clearly erroneous.
Cooter & Gell, 496 U.S. at 400-401, 110 S.Ct. 2447.
*498 Recusal from Determining Sanctions
Allen argues for his third point on appeal that the trial judge should have recused from deciding sanctions. We agree. For the purposes of this particular case, we hold that Judge Rutledge should have recused from deciding sanctions. Therefore, this court need not reach the merits of the other points on appeal.
In Clark v. State, 287 Ark. 221, 697 S.W.2d 895 (1985) this court held:
These remarks indicate that the judge became "embroiled in a personal dispute", [U.S. v.] Meyer, supra, [462 F.2d 827 (C.A.D.C. 1972)] with the appellant. Even though the judge's objectivity may not have been affected by the appellant's attack, "justice must satisfy the appearance of justice." Offutt v. United States, 348 U.S. 11, 75 S.Ct. 11, 99 L.Ed. 11 (1954). Accordingly, the trial judge under these circumstances should have recused from hearing the contempt charge. As stated by Chief Justice Taft in Cooke v. United States, 267 U.S. 517, 539, 45 S.Ct. 390, 69 L.Ed. 767 (1925):
[A]ll of such cases ... present difficult questions for the judge. All we can say on the whole matter is that where conditions do not make it impracticable, or where the delay may not injure public or private rights, a judge called upon to act in a case of contempt by personal attack upon him, may, without flinching from his duty, properly ask that one of his fellow judges take his place.
By our holding we do not intend that all contempts not committed in the immediate view and presence of the court, must be tried by a third party. But where a direct personal attack is made on a judge which is the subject of a contempt charge by that judge, or contemptuous conduct occurs which necessitates a factual hearing on the allegations made against the judge (as seems to have been contemplated in this case), to ensure a fair and impartial hearing the judge must recuse.
Clark, 287 Ark. at 227, 697 S.W.2d 895. Here, Judge Rutledge was required to recuse from the Rule 11 sanction issue because of his obvious bias toward Allen. Due process requires not only that a judge be fair, but that he also appear to be fair. Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927). The colloquies in this case demonstrate the wisdom of the Clark rule, because Judge Rutledge misread, at least the second motion to recuse, and repeatedly shut Allen off when Allen sought answers to his questions.
In Bennett v. NAACP, 236 Ark. 750, 755, 370 S.W.2d 79, 82 (1963), this court stated, "Our form of government guarantees to all of us the right of free and uninhibited access to the judiciary, and this certainly implies that we must not be so fearful of every day and common acts that this access to the judiciary is actually fettered because of fear." Further, Article 2, ?4, of the Arkansas Constitution states:
The right of the people peaceable to assemble to consult for the common good, and to petition, by address or remonstrance, the government, or any department thereof, shall never be abridged.
Rule 11 is employed to sanction attorneys who have unjustifiably failed to carry out a responsibility as an officer of the court. A criminal contempt citation may be used to penalize attorneys and nonattorneys alike for an insult to the authority of the court. In this case, Judge Rutledge should have recused from deciding the sanction issue. His comments and rulings indicate that he was biased. During the hearing on the recusal motions, Judge Rutledge stated, "I'm not up here to *499 answer your questions," and prior to the hearing referred to Ms. Grady as "Jo Hart Jr.," a former law partner of Judge Rutledge, and, "I can do anything I want to. I'm the Judge." These remarks, along with the overall biased tone of Judge Rutledge's comments, indicate that he should have recused himself from hearing and deciding the Rule 11 sanctions issue.
Reversed and remanded.
GLAZE, J., dissents.
TOM GLAZE, Justice, dissenting.
This case troubles me because the underlying divorce decree between the divorcing parties, Cynthia M. Lavigne and Kenneth Lavigne, has not been appealed. This is true even though the allegations contained in Kenneth's motion to recuse allege the misconduct of Circuit Court Judge Keith Rutledge. The motion further alleges that Judge Rutledge showed his appearance of impropriety or bias when rendering the Lavignes' divorce. The allegations Kenneth's attorney alleged as the basis of his recusal motion are as follows:
a. That during the trial of this cause the Court fondly referred to counsel for the plaintiff as Jo Hart, Jr., the Judge's former law partner, and now a Court of Appeals judge.
b. That near the conclusion of the trial of this cause plaintiff's counsel commented to the Court that she had found a case wherein the amount of alimony to be determined by the trial court by accounting the parties seeking alimony as two (2) dependents under the Arkansas Family Support Chart to which the Judge commented that defendant's counsel would probably be happy with that amount.
c. The unconscionable amount of alimony awarded when coupled with the amount of child support awarded constitutes 56% of defendant's take-home pay.
d. The refusal of the Court to decide the custody issue on the best interest of the children having announced in the pre-trial conference immediately prior to the hearing that the Court would not place the children with the defendant while he was residing with another woman, thereby foregoing a decision based on the "best interest" of the children.
e. The trial judge's statement earlier in the day in the Courtroom prior to hearing this case that "I can do anything I want to, I'm the judge."
f. The trial judge at the conclusion of the trial stated as follows:
Okay, here's what we're going to do. In addition I think she's entitled to alimony and I think he's going to have to pay and and unfortunately sometime you have to pay through the nose when you screw up, okay. I mean that's just the way life is. When you if you want more than you've got sometimes you have to pay. (Emphasis added.)
While counsel for Kenneth contends that it appears Judge Rutledge's bias has affected his decision rendered in the parties' divorce, Kenneth has not appealed the divorce decree. Rather, this court is given snips and pieces of the colloquy between Kenneth's attorney, Tom Allen, and the judge. Obviously, without the record before us, it is impossible to determine whether the charges made by Kenneth are valid, warranted by law, or a good-faith argument. It is Kenneth's and his counsel's burden to show error on appeal, and, in my view, they have failed to provide a full record upon which this court can decide the validity of their allegations. *500 Therefore, the appeal should be dismissed. I do wish to point out that I believe Mr. Allen and Judge Rutledge entered into a discourse that did not exemplify the appropriate conduct or demeanor established in either the Rules of Professional Conduct or the Arkansas Code of Judicial Conduct. Perhaps the issues raised by counsel and the judge should be dealt with in those two venues.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-50513
Summary Calendar
RODNEY F. STRAUGHN,
Plaintiff-Appellant,
versus
CHRISTOPHER J. KIMMY; MARIO A. JUAREZ;
HENRY L. ESCOBER; HILDA VALADEZ; JEP
YOUNG CANON,
Defendants-Appellees.
--------------------------------
Appeal from the United States District Court
for the Western District of Texas
USDC No. SA-01-CV-177
--------------------------------
September 12, 2001
Before DAVIS, BENAVIDES and STEWART, Circuit Judges:
PER CURIAM:*
The motion filed by Rodney Straughn, Texas prisoner # 670935, for permission to proceed in
forma pauperis (IFP) is GRANTED. Although the district court erred by dismissing Straughn’s 42
U.S.C. § 1983 complaint as barred by the applicable two-year statute of limitations, we AFFIRM the
district court’s dismissal on alternate grounds. See United States v. McSween, 53 F.3d 684, 687 n.3
(5th Cir. 1995). The challenge Straughn raised in his 42 U.S.C. § 1983 complaint to the propriety
of the arrest leading to his robbery conviction necessarily implicates the validity of that conviction.
As such, the challenge to his arrest is barred pursuant to Heck v. Humphrey, 512 U.S. 477, 486-87
*
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.
(1994). See Mackey v. Dickson, 47 F.3d 744, 746 (5th Cir. 1994). The distri ct court’s decision
dismissing Straughn’s 42 U.S.C. § 1983 complaint is AFFIRMED.
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707 F.2d 511
U. S.v.Widemon
82-6224
UNITED STATES COURT OF APPEALS Fourth Circuit
5/16/83
1
M.D.N.C.
AFFIRMED
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0194n.06
Filed: March 17, 2005
No. 04-5240
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE WESTERN
) DISTRICT OF KENTUCKY
TYRONE D. HOWARD, )
) OPINION
Defendant-Appellant. )
_______________________________________)
Before: KENNEDY, MOORE, and SUTTON, Circuit Judges.
KAREN NELSON MOORE, Circuit Judge. After a jury trial, Defendant-Appellant
Tyrone D. Howard (“Howard”) was convicted of bank fraud in violation of 18 U.S.C. § 1344. The
district court sentenced Howard to the lowest sentence possible, absent a downward departure, under
the then-mandatory U.S. Sentencing Guidelines (“Guidelines”). Howard raises only one argument
on appeal: that the district court unconstitutionally increased his sentence on the basis of facts
neither admitted by Howard nor proved to a jury beyond a reasonable doubt. Conceding that he
failed to raise this issue in the district court, Howard nonetheless argues that the district court’s plain
error warrants our review. We agree, and accordingly VACATE Howard’s sentence and REMAND
the case to the district court for resentencing in light of United States v. Booker, 125 S. Ct. 738
(2005).
We briefly set out the facts relevant to this appeal. At sentencing, the district court
determined that Howard should be sentenced at Offense Level 12, Criminal History Category II,
mandating a Guidelines imprisonment range of twelve to eighteen months. See U.S. SENTENCING
GUIDELINES MANUAL (“U.S.S.G.”) Sentencing Table (2002). In calculating this Guidelines range,
the district court began with a Base Offense Level of 6. See U.S.S.G. § 2B1.1(a). The district court
then added four levels after determining that the amount of loss involved in the offense was more
than $10,000 but not greater than $30,000, Joint Appendix (“J.A.”) at 484 (Feb. 2, 2004 Sentencing
Hr’g); U.S.S.G. § 2B1.1(b)(1)(C), plus an additional two levels based on its finding that Howard had
obstructed justice by testifying falsely under oath about matters material to his guilt or innocence
of the crime charged. J.A. at 530 (Feb. 9, 2004 Sentencing Hr’g); U.S.S.G. § 3C1.1. The district
court sentenced Howard to a total term of imprisonment of one year and one day.1
In United States v. Oliver, 397 F.3d 369, 380-81 (6th Cir. 2005), we held that a sentence
enhancement imposed in violation of the Sixth Amendment constitutes plain error warranting
remand for resentencing.2 Howard contends that such an error occurred in this case. Absent the
enhancements, Howard would have been sentenced at Offense Level 6, Criminal History Category
II, for a Guidelines range of only one to seven months’ imprisonment. U.S.S.G. Sentencing Table.
1
Although this sentence is technically one day longer than the minimum Guidelines term of
imprisonment, it is in effect the lowest possible sentence the district court could have imposed
within the applicable Guidelines range. Inmates sentenced to serve more than one year of
imprisonment become eligible for up to fifty-four days of credit for good conduct during each year
of imprisonment. See 18 U.S.C. § 3624(b). Accordingly, a year-and-a-day sentence can result in
an inmate serving up to fifty-three days less than he or she would serve under a one-year sentence.
2
In its supplemental letter brief, the United States asserts that we should follow United States
v. Bruce, 396 F.3d 697 (6th Cir. Feb. 3, 2005), rather than United States v. Oliver, 397 F.3d 369 (6th
Cir. Feb. 2, 2005). However, as Oliver was decided prior to Bruce, we are bound by our
longstanding rules to follow Oliver. 6TH CIR. R. 206(c); see also United States v. Davis, 397 F.3d
340, 350 n.7 (6th Cir. 2005).
2
As the maximum seven-month sentence permissible under this Guidelines range is shorter than the
year-and-a-day sentence actually imposed, the sentence imposed violates the Sixth Amendment
unless based on facts “admitted by the defendant or proved to a jury beyond a reasonable doubt.”
Booker, 125 S. Ct. at 756.
In this case, Howard maintained his innocence during trial. Nevertheless, he was found
guilty by the jury. The jury’s verdict made no finding as to the amount of loss, but Howard’s
attorney conceded at sentencing (conducted prior to the Supreme Court’s decision in Blakely v.
Washington, 124 S. Ct. 2531 (2004)) that it was appropriate for the district court to apply the four-
level § 2B1.1(b)(1)(C) amount-of-loss enhancement. J.A. at 457-59 (Feb. 2, 2004 Sentencing Hr’g).
However, Howard’s attorney did successfully object to the government’s request that the district
court instead apply the six-level § 2B1.1(b)(1)(D) amount-of-loss enhancement. J.A. at 483-84 (Feb.
2, 2004 Sentencing Hr’g). We need not decide whether counsel’s § 2B1.1(b)(1)(C) concession —
made under a preponderance-of-the-evidence standard and prior to the Blakely decision — would
constitute, for Booker purposes, an admission by the defendant sufficient to avoid a Sixth
Amendment violation,3 because the sentence imposed in this case requires remand even absent a
Sixth Amendment violation.
In United States v. Barnett, 398 F.3d 516, 529-530 (6th Cir. 2005), we held that in certain
circumstances remand of a pre-Booker sentence is required even absent a Sixth Amendment
3
If we did conclude that defense counsel’s concession allowed the district court to apply the
amount-of-loss enhancement without violating the Sixth Amendment, the district court’s application
of the obstruction-of-justice enhancement, standing alone, would not be sufficient to establish a
Sixth Amendment violation. Without the obstruction-of-justice enhancement, Howard would have
had an Offense Level of 10 and a Criminal History Category of II, for a Guidelines range of eight
to fourteen months’ imprisonment. U.S.S.G. Sentencing Table. As the year-and-a-day sentence
imposed by the district court would have fallen within this Guidelines range, Howard’s sentence
would not violate the Sixth Amendment.
3
violation. As Howard was sentenced at the bottom of the applicable Guidelines range, Barnett
requires that we remand the case to the district court. Accordingly, we VACATE Howard’s
sentence and REMAND the case to the district court for resentencing in light of Booker.
4
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HTTP/1.1 200
Date: Tue, 23 Jun 2020 22:07:23 GMT
Content-Type: application/pdf
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 26, 2006
Charles R. Fulbruge III
Clerk
No. 05-10010
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ROBERTO LOPEZ-MORENO,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Northern District of Texas
(3:04-CR-249-ALL)
--------------------
Before KING, WIENER, and DeMOSS, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Roberto Lopez-Moreno (Lopez) appeals his
guilty-plea conviction and sentence for illegal reentry into the
United States following removal subsequent to a conviction for an
aggravated felony. His constitutional challenge is foreclosed by
Almendarez-Torres v. United States, 523 U.S. 224, 235 (1998).
Although Lopez contends that Almendarez-Torres was incorrectly
decided and that a majority of the Supreme Court would overrule
Almendarez-Torres in light of Apprendi v. New Jersey, 530 U.S. 466
*
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.
(2000), and its progeny, we have repeatedly rejected such arguments
because Almendarez-Torres remains binding. See United States v.
Garza-Lopez, 410 F.3d 268, 276 (5th Cir.), cert. denied, 126 S. Ct.
298 (2005).
Lopez asserts that the district court committed reversible
error under United States v. Booker, 543 U.S. 220 (2005), by
sentencing him pursuant to a mandatory application of the
Sentencing Guidelines. The government maintains that the error was
harmless. As the government concedes, Lopez preserved this error
for review by raising an objection in the district court based on
Blakely v. Washington, 542 U.S. 296 (2004), and arguing that the
Guidelines were unconstitutional as a whole. See United States v.
Walters, 418 F.3d 461, 462-63 (5th Cir. 2005). The question that
this places before us is “whether the government has met its burden
to show harmless error beyond a reasonable doubt.” Id. at 464; but
cf. United States v. Mendoza-Blanco, 440 F.3d 264, 265 n.7 (5th
Cir. 2006) (following Walters, but questioning standard of review).
At sentencing, the district court narrowly declined to make an
upward departure and sentenced Lopez at the top of the guidelines
range. The court did not, however, give any indication of the
sentence it would impose if the Guidelines were held
unconstitutional or advisory. Under these circumstances, the
government has not met its burden of showing that the error was
harmless. See United States v. Woods, 440 F.3d 255, 257-59 (5th
2
Cir. 2006). We therefore vacate Lopez’s sentence and remand to the
district court for resentencing.
Lopez further contends that the application of the remedial
opinion in Booker to his case would violate his rights under the
Due Process Clause and the Ex Post Facto Clause were he to be
resentenced to a sentence greater than the maximum allowable
sentence as set forth in the merits opinion in Booker. This
argument is without merit. See United States v. Scroggins, 411
F.3d 572, 575-76 (5th Cir. 2005).
CONVICTION AFFIRMED; SENTENCE VACATED; REMANDED FOR
RESENTENCING.
3
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703 F.2d 578
U. S.v.Ruiz-Ramos
82-1548
UNITED STATES COURT OF APPEALS Ninth Circuit
3/14/83
1
W.D.Wash.
AFFIRMED
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962 F.2d 14
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.Elyse RUTH, Petitioner-Appellant,v.COMMISSIONER OF INTERNAL REVENUE SERVICE, Respondent-Appellee.
No. 91-70324.
United States Court of Appeals, Ninth Circuit.
Submitted May 4, 1992.*Decided May 6, 1992.
Before ALARCON, WILLIAM A. NORRIS and O'SCANNLAIN, Circuit Judges.
1
MEMORANDUM**
2
Elyse Ruth appeals a United States Tax Court decision that she has a tax deficiency for 1983 in the amount of $831. Ruth argues that she met her burden of proving that the income in question was not taxable. Ruth also contends that the Commissioner of Internal Revenue ("Commissioner") should be equitably estopped from collecting the tax deficiency. We affirm.
3
* The Commissioner determined that Ruth had failed to report $4,421.80 in interest income in 1983, leading to a tax deficiency of $831.00. Before the Tax Court, Ruth stipulated that such interest income had indeed been paid to her from three bank accounts,1 and that she had failed to report such income on her Form 1040 submitted for the 1983 tax year. Ruth argued, however, that such interest income was excludable under section 71(c) of the Internal Revenue Code.2 Under former section 71(c), payments made from one former spouse to another as part of a property settlement following a divorce were not taxable to the payee spouse. 26 U.S.C. § 71(c) (1982); White v. Commissioner, 770 F.2d 685, 687 (7th Cir.1985).
4
The Tax Court found that Ruth had "failed to prove her case." Ruth argues on appeal that the Tax Court erred in finding that Ruth failed to meet her burden of proof. The determination that Ruth failed to produce sufficient evidence to support an exclusion of income is one of fact, subject to reversal only if clearly erroneous. See Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir.1985). " 'A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed.' " P.R. Farms, Inc. v. Commissioner, 820 F.2d 1084, 1086 (9th Cir.1987) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
5
Interest paid on deposits in banks and credit unions is ordinarily taxable as income, 26 U.S.C. § 61(a)(4), but Ruth argues that the interest here was excludable from income under section 71(c). When Ruth and her husband divorced, she relinquished her interest in real property the couple had owned while married in exchange for $37,500. Thus, under section 71(c) payments made by her former husband to Ruth toward the $37,500 settlement would be excluded from Ruth's income.
6
Ruth argues that not only is a payment from her former husband itself excludable from income, but also interest paid on such payment after it had been received by Ruth and deposited in her bank. Ruth claims that her husband paid her $14,364.23 shortly after the divorce was final, that she deposited such money into the three bank accounts, and that she and her former husband agreed that the interest that accrued on such funds would be credited toward the $37,500 owed Ruth. Ruth further claims that four-and-a-half years later, she received $11,575.55, and that if one were to add this figure to the earlier payment of $14,364.23 and its accrued interest, it would equal $37,500.
7
Aside from Ruth's own testimony before the Tax Court, which the court described as "self-serving" and which gave no more detail than what has just been stated, however, there was no evidence that this was in fact what occurred. Ruth presented no evidence that the $14,364.23 was deposited in any or all of the three bank accounts. There was no evidence as to the dollar figure of interest that had accrued over the years. There was no evidence that Ruth's former husband had any connection to the $11,575 payment, which was made by one Carol J. Warnsholz. There was no evidence that the original divorce settlement, which makes no mention of any such arrangement, had been amended by the parties. Indeed, the documentary evidence presented to the Tax Court by Ruth in some respects contradicted her account. For example, in the letter from her former husband accompanying the check for $14,364.23, not only was there no mention of the money being segregated with the interest accruing on it being credited toward the $37,500 owed, but he characterized the check as being the "final payment of principal and interest due ... in connection with the property settlement at our divorce conclusion."
8
Perhaps most important, Ruth presented no evidence, not even her own testimony, regarding control and ownership of the three bank accounts. "Generally, interest earned on investment is taxable to the person who controls the principal." P.R. Farms, 820 F.2d at 1086. This is true even where the principal itself had been excludable from taxable income when received by the taxpayer. See Commissioner v. Raphael, 133 F.2d 442, 446-47 (9th Cir.) (even if part of judgement itself is not taxable, interest on judgment is taxable income), cert. denied, 320 U.S. 735 (1943); 26 U.S.C. § 102 (gift itself is excluded from income, but interest earned on gift is taxable income). Thus, after Ruth received a payment from her former husband (that was excludable from income) and invested such payment, whether it be in a savings account, real estate, or the stock market, the interest, rents, or profits earned on such investment would be taxable income.
9
Ruth could only escape tax liability on the interest payments by showing that her former husband actually or constructively controlled the three bank accounts, earned the interest, and then assigned it to her in satisfaction of his debt to her. Ruth presented no evidence whatsoever as to who in fact controlled the bank accounts in question, or concerning who held legal or equitable title to the accounts. Thus, the Tax Court was entitled to infer "that [Ruth] was the sole owner of those accounts and had full authority and power to dispose of those accounts at any time she saw fit." See McKay v. Commissioner, 886 F.2d 1237, 1238 (9th Cir.1989) (where taxpayer failed to testify on an issue "peculiarly within his knowledge," tax court "properly concluded that his testimony would be unfavorable to him").
10
Control and ownership of the three bank accounts was material to establishing that the interest payments were excludable from income, and Ruth presented no evidence on this subject. We hold that the Tax Court was not clearly erroneous in finding that Ruth failed to show by a preponderance of the evidence that the interest payments were excludable under section 71(c).
II
11
Ruth also argues that the Commissioner should be equitably estopped from collecting the 1983 tax deficiency. Ruth introduced four letters at trial which she contends show conduct by the Commissioner so egregious as to preclude collection of the deficiency in question here. One of these letters, however, was written not by an agent of the Commissioner, but by Ruth herself.
12
The three remaining letters all concern the Commissioner's efforts to collect an alleged tax deficiency from an earlier tax year. Even assuming that the Commissioner's representations about Ruth's earlier tax deficiency are inconsistent with his position in this matter, the Commissioner cannot be estopped from correcting past mistakes of law. Schuster v. Commissioner, 312 F.2d 311, 317 (9th Cir.1962).
13
Although apparently conceding that the evidence of error or misconduct all concerns a different tax year, Ruth points out that an agent of the Commissioner wrote that "the issues for 1983 are substantially the same" as the issues in the earlier alleged tax deficiency. From this Ruth argues that the usual rule that the Commissioner need not be consistent in the tax treatment of income from year to year should not apply here. Whether the same issues are presented is itself a question of law, however, and hence the Commissioner is not bound by this statement to treat the deficiency here the same as the earlier deficiency.
14
Ruth also points to a statement made by an agent of the Commissioner that the earlier case had been closed, which would appear to be a statement of fact, not law. The Commissioner later claimed the earlier case had not been closed. Without addressing the applicability of estoppel doctrine to mistakes of fact rather than law, in any event we fail to see how this alleged misstatement regarding another alleged tax deficiency has any bearing on the matter before us.
15
The pattern of egregious misconduct alleged by Ruth concerns a different tax year and tax deficiency than this case. We conclude that the Tax Court did not err in determining that Ruth had failed to show that the elements of estoppel were present for the 1983 tax year.
16
AFFIRMED.
*
The panel unanimously finds this case suitable for submission on the record and briefs and without oral argument. Fed.R.App.P. 34(a), Ninth Circuit R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit R. 36-3
1
Ruth was paid $117 by Maryland Federal Savings, and $4,332 from two separate accounts at the Internal Revenue Federal Credit Union. Of these amounts, apparently $27.20 was reported by Ruth on her Form 1040
2
Section 71(c) was repealed in 1984
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318 F.2d 26
Jocylin E. KIMBLERv.The PITTSBURGH & LAKE ERIE RAILROAD COMPANY, Appellant.
No. 14152.
United States Court of Appeals Third Circuit.
Argued March 22, 1963.
Decided April 3, 1963.
James R. Orr, Pittsburgh, Pa. (Reed Smith Shaw & McClay, Pittsburgh, Pa., on the brief), for appellant.
John M. Feeney, Pittsburgh, Pa. (McArdle, Harrington & McLaughlin, Pittsburgh, Pa., on the brief), for appellee.
Before HASTIE, GANEY and SMITH, Circuit Judges.
PER CURIAM.
1
This FELA action by a railroad employee for negligent injury was tried to the court without a jury and resulted in the recovery of a money judgment. The defendant railroad appealed.
2
When the appeal was originally called for argument, this court directed attention to the absence of findings of fact and conclusions of law and ordered the case continued to permit the transcription of missing parts of the record which counsel thought would remedy this deficiency. However, it now appears that even with this additional material, including certain observations of the trial judge from the bench, we are unable to reach the merits of the case.
3
The evidence indicates that the plaintiff slipped and fell on icy steps. The principal question in dispute was whether the railroad failed to furnish some advance protection or to take some corrective action such as a reasonable person in its position would have done to prevent such a mishap. Until we know what significant facts, in the trial court's view, were established by the evidence, and upon what facts and factual inferences the court based its conclusion that the defendant had not exercised due care, we cannot satisfactorily review the merits of the decision.
4
The judgment will be vacated and the cause remanded for the making of informative and dispositive findings of fact and conclusions of law.
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332 So.2d 218 (1976)
STATE of Louisiana
v.
Paul Alcide TRAHAN.
No. 57240.
Supreme Court of Louisiana.
May 17, 1976.
*219 William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., John M. Mamoulides, Dist. Atty., Abbott J. Reeves, Director, Research and Appeals Division, Metairie for plaintiff-appellee.
Ross T. Scaccia, New Orleans, for defendant-appellant.
DENNIS, Justice.
Defendant Paul Trahan was convicted of attempted murder, a violation of La. R. S. 14:30.1 and La. R.S. 14:27, and sentenced to ten years imprisonment at hard labor. Although defendant reserved five assignments of error to rulings by the court during the trial, he urges but one as a basis for reversal of his conviction.
That assignment of error was taken when the trial court sustained an objection by the State to the introduction of defendant's medical records from a mental hospital in which he had been treated. The defense attempted to introduce these records as evidence in order to use them to impeach the testimony of two psychiatrists on the lunacy commission appointed to examine defendant. Both doctors testified that in their opinion defendant knew the difference between right and wrong at the time of the commission of the crime. The defense claims that the reports of doctors who had examined defendant in the institutions classified him as a "borderline psychotic" and that these opinions should have been admissible to contradict the findings of the lunacy commission.
Ordinarily, the written or oral testimony of an expert witness cannot be introduced in evidence unless he is present in court to submit to cross-examination. Otherwise, his testimony would be inadmissible hearsay. However, there are jurisprudential and legislative exceptions to the hearsay rule, one of which applies to hospital records. The exception relied on by the defendant was established by La. R.S. 13:3714:
"Whenever a certified copy of the chart or record of any hospital in this state, signed by the director, assistant director, superintendent or secretary-treasurer of the board of administrators of the hospital in question, is offered in evidence in any court of competent jurisdiction, it shall be received in evidence by such court as prima facie proof of its contents, provided that the party against whom the record is sought to be used may summon and examine those making the original of said record as witnesses under cross-examination."
This provision augments the general rule of La. R.S. 15:457, which provides:
"A copy of a document, certified to by the officer who is the legal custodian of the same is equivalent to the original in authenticity; but the certificate of an officer to any matter not under the general powers vested in him is no evidence at all."
Since State v. Kelly, 237 La. 956, 112 So.2d 674 (1959), this Court has applied La. R.S. 13:3714 in criminal as well as civil cases. Moreover, we have held that, when the statutory requirements have been satisfied, introduction of certified copies of hospital records does not deny a defendant *220 the right to confront witnesses against him. State v. O'Brien, 255 La. 704, 232 So.2d 484 (1970). However, because the medical records rule is an exception to the hearsay rule created by statute, it is essential that all of the formalities prescribed in the statute be followed before such records are admissible in evidence.
The hospital records defendant sought to introduce in the instant case were not certified by any of the authorities named in La. R.S. 13:3714. Consequently, the records did not quality for introduction under the hospital records exception to the hearsay rule. The trial judge correctly sustained the State's objection to their admission.
We note that the purpose for which the defendant sought to admit the records was to show that one psychiatrist who had previously examined him concluded that defendant was a "borderline psychotic." This conclusion does not contradict the testimony of the two members of the lunacy commission as to whether defendant knew the difference between right and wrong. One of the psychiatrists on the commission stated during questioning that he disagreed with the conclusion that defendant was a borderline psychotic, and the fact that another doctor held a different view would not change his opinion. The other psychiatrist who testified on behalf of the State at trial agreed that defendant possibly could have been a borderline psychotic, but she stated that such a diagnosis was not inconsistent with her conclusion that defendant knew the difference between right and wrong at the time of the commission of the crime.
Thus, no great prejudice was suffered by defendant because of his inability to introduce the medical records in question. The assignment of error has no merit.
For the reasons assigned, we affirm defendant's conviction and sentence.
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567 F.Supp. 768 (1983)
Virginia E. WRIGHT and Paris E. Wright
v.
LONDON GROVE TOWNSHIP.
Crim. A. No. 83-00205.
United States District Court, E.D. Pennsylvania.
June 2, 1983.
*769 Virginia E. & Paris E. Wright, pro se.
John H. Spangler, Parke, Barnes, Byrne & Spangler, West Chester, Pa., for defendant.
*770 MEMORANDUM OF DECISION
McGLYNN, District Judge.
I have before me a petition seeking the removal of a criminal proceeding pending in the Court of Common Pleas of Chester County, Pennsylvania. Section 1446(c)(4) of Title 28 provides that when a petition for the removal of a criminal action is filed:
The United States district court to which such petition is directed shall examine the petition promptly. If it clearly appears on the face of the petition and any exhibits annexed thereto that the petition for removal should not be granted, the court shall make an order for its summary dismissal.
For the reasons which follow, I conclude that the petition should not be granted. The case will be remanded to the state court.
On March 1, 1982, petitioners were convicted and fined by a district justice for violations of the London Grove Township Zoning Ordinance of 1974. The specific violations involved the moving of a second mobile home onto their property. Petitioners filed a timely appeal to the Court of Common Pleas and are entitled to a trial de novo.[1]
Petitioners assert that their right to removal is based on the civil rights removal statute, 28 U.S.C. § 1443, and also upon diversity of citizenship. At the outset it is clear that diversity of citizenship is not a proper basis for removal of a criminal proceeding. In any event, the defendants seeking removal bear the burden of establishing that the requirements for removal are met. Wilson v. Republic Iron and Steel Co., 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144 (1921). Petitioners have not made any averments as to the citizenship of any party. Even if diversity of citizenship were a proper basis for removal here, petitioners would have to show that neither of them are citizens of Pennsylvania, the state in which the action was brought. See 28 U.S.C. § 1441(b). Accordingly, I find that the petition on its face will not support removal on the basis of diversity of citizenship.
The civil rights removal statute, 28 U.S.C. § 1443, states:
Any of the following civil actions or criminal prosecutions, commenced in a State court may be removed by the defendant to the district court of the United States for the district and division embracing the place wherein it is pending:
(1) Against any person who is denied or cannot enforce in the courts of such State a right under any law providing for the equal civil rights of citizens of the United States, or of all persons within the jurisdiction thereof;
(2) For any act under color of authority derived from any law providing for equal rights, or for refusing to do any act on the ground that it would be inconsistent with such law.
The petition for removal tracks the language of § 1443 and essentially makes three sets of allegations. First, petitioners characterize the Pennsylvania Municipal Planning Code, 53 P.S. 10101 et seq., as amended, as "a law calling for the equal Civil Rights in the use and ownership of land in a reasonable non-discriminatory manner." The zoning laws are said to be customarily applied in Chester County in a way that discriminates against minorities. Petitioners assert that their equal protection and due process rights have been violated by this criminal prosecution. Second, petitioners allege that these same laws are being applied in a way that discriminates against females. Third, petitioners claim that the district justice violated their Sixth Amendment right by denying their request *771 for assignment of counsel and their Fifth and Fourteenth Amendment right not to have their property taken without due process of law by taking the cash they posted as security to pay the fine imposed.
In two companion cases decided in 1966, the Supreme Court made it plain that the scope of § 1443 is highly circumscribed and permits removal only in specific and well-defined circumstances. As interpreted in City of Greenwood v. Peacock, 384 U.S. 808, 86 S.Ct. 1800, 16 L.Ed.2d 944 (1966), subsection (2) of § 1443 only affords a right of removal to federal officers and those acting under them. Accordingly, petitioners may only invoke § 1443(1) to secure removal.
The scope of § 1443(1) was defined in Georgia v. Rachel, 384 U.S. 780, 86 S.Ct. 1783, 16 L.Ed.2d 925 (1966). The Supreme Court emphasized that defendants are entitled to removal only if both requirements of that subsection are met. They must show both that the right on which they rely is a "right under any law providing for ... equal civil rights" and that they are "denied or cannot enforce" that right in the state courts. As to the first requirement, the Court said:
On the basis of the historical material that is available, we conclude that the phrase "any law providing for ... equal civil rights" must be construed to mean any law providing for specific civil rights stated in terms of racial equality. Thus, the defendants' broad contentions under the First Amendment and the Due Process Clause of the Fourteenth Amendment cannot support a valid claim for removal under § 1443, because the guarantees of those clauses are phrased in terms of general application available to all persons or citizens, rather than in the specific language of racial equality that § 1443 demands.
Id., at 792, 86 S.Ct. at 1790. Thus, statutes or constitutional provisions phrased in terms of general rights applicable to all citizens, rather than couched in the specific language of racial equality, will not provide a basis for removal under § 1443. Petitioners' allegations of violations of their due process rights and Sixth Amendment right to counsel[2] are, therefore, insufficient to support removal. See Commonwealth of Pennsylvania v. Civill, 313 F.Supp. 1318 (W.D.Pa.1970). Moreover, § 1443(1) has been held inapplicable to cases of sexual discrimination. Delavigne v. Delavigne, 530 F.2d 598 (4th Cir.1976).
Petitioners point to the Pennsylvania Municipal Planning Code, 53 P.S. § 10101 et seq. An examination of this statute reveals that, unlike the Civil Rights Act of 1964 that was invoked in Georgia v. Rachel, this is not a statute couched in the specific language of racial equality. It will not, therefore, support removal.
Only petitioners' equal protection allegations seem to get past the first requirement of § 1443(1). Although the petition does little more than broadly assert an equal protection claim, I need not stop to decide whether the allegations are specific enough for § 1443 because it is clear, under Rachel and Peacock, that the petitioners cannot satisfy the second requirement of § 1443(1) as to any of their allegations.
In order to establish that they have been "denied or cannot enforce" their civil rights in the state courts, petitioners must point to a formal expression of state law that provides a basis for a firm prediction that their rights will be denied. See Georgia v. Rachel, 384 U.S. 780, 794-804, 86 S.Ct. 1783, 1791-1796, 16 L.Ed.2d 925. The Supreme Court has said:
It is not enough to support removal under § 1443(1) to allege or show that the defendant's *772 federal equal civil rights have been illegally or corruptly denied by state administrative officials in advance of trial, that the charges against the defendant are false, or that the defendant is unable to obtain a fair trial in a particular state court. The motives of the officers bringing the charges may be corrupt, but that does not show that the state trial court will find the defendant guilty if he is innocent, or that in any other manner the defendant will be "denied or cannot enforce in the courts" of the State any right under a federal law providing for equal civil rights. The civil rights removal statute does not require and does not permit the judges of the federal courts to put their brethren of the state judiciary on trial. Under § 1443(1), the vindication of the defendant's federal rights is left to the state courts except in the rare situations where it can be clearly predicted by reason of the operation of a pervasive and explicit state or federal law that those rights will inevitably be denied by the very act of bringing the defendant to trial in the state court.
Peacock, 384 U.S. at 827-28, 86 S.Ct. at 1812 (emphasis in original).
Here petitioners only point to an alleged custom in Chester County of discriminatory application of the Pennsylvania Municipal Planning Code. Petitioners do not assert that the code itself or the zoning ordinance under which they are being prosecuted are discriminatory on their face and that the state courts would inevitably enforce them as written, i.e. in a way that discriminates against minorities. Even assuming that this statute is one that provides for equal civil rights, there is no indication that the Pennsylvania state courts cannot or will not correct any erroneous or illegal application of its provisions in Chester County.
Moreover, petitioners' assertions of various denials of their rights by the district justice amount only to allegations of erroneous rulings that could, if indeed erroneous, be rectified in the de novo proceeding in the Court of Common Pleas or upon further appeal in the state courts and ultimately in the United States Supreme Court. See People of the State of New York v. Jenkins, 422 F.Supp. 412 (S.D.N.Y.1976).
For the foregoing reasons I find that, upon examination of the removal petition and the attached exhibits, it clearly appears that the petition should not be granted. Therefore, I will enter an order dismissing the petition and remanding the case to the Court of Common Pleas.
NOTES
[1] Under the Third Circuit's decision in Commonwealth of Pennsylvania v. Newcomer, 618 F.2d 246, 250-252 (3d Cir.1980), I will assume that petitioners' right to a trial de novo renders this removal petition timely under 28 U.S.C. § 1446(c)(1). Accord Calhoun v. City of Meridian, 355 F.2d 209 (5th Cir.1966).
[2] I have assumed for purposes of ruling on whether the petition for removal should be summarily dismissed that petitioners could make out a Sixth Amendment violation. But see Bacik v. Commonwealth of Pennsylvania, 61 Pa.Cmwlth. 552, 434 A.2d 860 (1981); Pa.R. Crim.P. 316.
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Citation Nr: 1533660
Decision Date: 08/06/15 Archive Date: 08/20/15
DOCKET NO. 11-21 485 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Denver, Colorado
THE ISSUE
Entitlement to service connection for a left hip disability.
REPRESENTATION
Appellant represented by: Veterans of Foreign Wars of the United States
ATTORNEY FOR THE BOARD
T. Stephen Eckerman, Counsel
INTRODUCTION
The Veteran had active military service from January 1962 to August 1965.
These matters come to the Board of Veterans' Appeals (Board) on appeal from an August 2010 rating decision issued by the Department of Veterans Affairs (VA) Regional Office (RO) in Denver, Colorado, which inter alia denied a claim for service connection for a left hip replacement. The Board has determined that the issue is more properly characterized as stated on the cover page of this decision. Brokowski v. Shinseki, 23 Vet. App. 79, 86-87 (2009). The Veteran appealed, and in August 2014, the Board denied the claim.
The appellant appealed to the U.S. Court of Appeals for Veterans Claims (Court). In May 2015, while his case was pending at the Court, the VA's Office of General Counsel and appellant's representative filed a Joint Motion requesting that the Court vacate the Board's August 2014 decision as to this issue. That same month, the Court issued an Order vacating the Board's August 2014 decision as to this issue. To the extent that the Board's August 2014 decision denied claims for service connection for a bilateral foot condition, and hepatitis, and denied a compensable rating for peripheral neuropathy of the bilateral lower extremities, the Joint Motion states that these decisions were not being contested, and they are therefore no longer before the Board.
In May 2014, the Veteran was afforded a videoconference hearing before the undersigned Acting Veterans Law Judge who is rendering the determination in this claim and was designated by the Chairman of the Board to conduct that hearing, pursuant to 38 U.S.C.A. § 7102(b) (West 2014).
This appeal was processed using the VBMS and Virtual VA paperless claims processing system. Accordingly, any future consideration of this appellant's case should take into consideration the existence of this electronic record.
In August 2014, the Board remanded the issues of entitlement to service connection for a bilateral hand disability, hypertension, and status post nasal fracture, for additional development. These issues remain in remand status. Therefore, the Board does not have jurisdiction over them at this time.
The appeal is REMANDED to the AOJ. VA will notify the appellant if further action is required.
REMAND
The Veteran asserts that he sustained a left hip injury during service after he fell out of a vehicle while on temporary duty at a base called Monkey Mountain, near Danang, Republic of Vietnam. He has asserted that his left hip injury occurred sometime between 1964 and 1965. See Veteran's statements, received in October 2010, and August 2011. He has stated that he was not treated for any left hip symptoms during service, and that, "It wasn't until many years later, after I got out of the service, that my hip started to give me problems." See also Veteran's statement, received in October 2010 ("it was 40 some years later before it flared up").
Service in Vietnam has been conceded. The Veteran is therefore presumed to have been exposed to Agent Orange, see 38 U.S.C.A. § 1116 (West 2014), and his claim has been construed to include the possibility of service connection due to exposure to Agent Orange. His claim has also been construed to include the theory of secondary service connection. See 38 C.F.R. § 3.310 (2014).
In August 2014, the Board denied the claim. The Board determined that the Veteran was not treated for, or diagnosed with, a left hip disorder during service, and that the earliest diagnosis of a left hip condition (avascular necrosis) was dated no earlier than 2006. The Board noted that the Veteran had not specifically asserted that he had a continuity of symptomatology, and that in any event, service connection under the theory of continuity of symptomatology was not applicable because § 3.303(b) does not apply to any condition that has not been recognized as chronic under 38 C.F.R. § 3.309(a), and that avascular necrosis is not among these listed conditions. Citing Walker v. Shinseki, 708 F.3d 1331 (Fed. Cir. 2013). The Board further determined that service connection as due to exposure to Agent Orange, or on a secondary basis, was not warranted. See 38 C.F.R. §§ 3.307, 3.309, 3.310 (2014).
At the time of the Board's August 2014 decision, the Veteran had not been afforded an examination for his left hip disability, and an etiological opinion had not been obtained. The Joint Motion essentially states that in the Board's August 2014 decision, it failed to provide adequate reasons and bases for its conclusion that a remand was not required in order to obtain and examination and opinion. Citing McLendon v. Nicholson, 20 Vet. App. 79 (2006). Accordingly, on remand, the Veteran should be afforded an examination, to include an etiological opinion. Forcier v. Nicholson, 19 Vet. App. 414, 425 (2006).
The appellant is hereby notified that it is the appellant's responsibility to report for the examination and to cooperate in the development of the case, and that the consequences of failure to report for a VA examination without good cause may include denial of the claim. 38 C.F.R. §§ 3.158 and 3.655 (2014).
Accordingly, the case is REMANDED for the following action:
1. Arrange for the Veteran to undergo a VA examination to determine the nature and etiology of his left hip disability.
The entire claims folder must be made available to and reviewed by the examiner, and the examiner should indicate that the Veteran's C-file has been reviewed. All indicated studies and tests should be accomplished, and all clinical findings should be reported in detail and correlated to a specific diagnosis.
The examiner should be informed that the Veteran's exposure to herbicides during service in Vietnam, between 1964 and 1965, is presumed, and that service connection is currently in effect for posttraumatic stress disorder, diabetes mellitus type 2 with peripheral neuropathy of the bilateral lower extremities, hearing loss, tinnitus, and erectile dysfunction.
a) The examiner should provide an opinion as to whether it is at least as likely as not (i.e., there is at least a 50% probability) that a left hip disability had its clinical onset during the Veteran's active duty service, or is related to exposure to Agent Orange during service.
b) If, and only if, the examiner determines that the Veteran's left hip disability is not related to his service (on any basis), the examiner should state whether it is at least as likely as not (i.e., there is at least a 50% probability) that a left hip disability was caused or aggravated by a service-connected disability.
c) A rationale for all requested opinions shall be provided. If the examiner cannot provide an opinion without resorting to mere speculation, he or she shall provide a complete explanation stating why this is so. In so doing, the examiner shall explain whether the inability to provide a more definitive opinion is the result of a need for additional information or that he or she has exhausted the limits of current medical knowledge in providing an answer to that particular question(s).
d) The term "at least as likely as not" does not mean within the realm of medical possibility, but rather the weight of medical evidence both for and against a conclusion is so evenly divided that it is as medically sound to find in favor of that conclusion as it is to find against it.
e) "Aggravation" is defined as a permanent worsening of the pre-existing or underlying condition, as contrasted to temporary or intermittent flare-ups of symptoms which resolve with return to the previous baseline level of disability.
2. Thereafter, readjudicate the issue on appeal. If the benefits sought on appeal remain denied, furnish the appellant and his representative an appropriate supplemental statement of the case that includes clear reasons and bases for all determinations, and affords them the appropriate time period for response before the claims folder is returned to the Board for further appellate consideration.
The appellant has the right to submit additional evidence and argument on the matter or matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999).
This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West 2014).
_________________________________________________
Michael J. Skaltsounis
Acting Veterans Law Judge, Board of Veterans' Appeals
Under 38 U.S.C.A. § 7252 (West 2014), only a decision of the Board of Veterans' Appeals is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R. § 20.1100(b) (2014).
| {
"pile_set_name": "FreeLaw"
} |
429 F.Supp. 771 (1977)
Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
R & M ERECTORS, INC., and Robert R. Hastings, Sr., Individually and as an Officer of the Corporate Defendant, Defendants.
Civ. A. No. 74-57.
United States District Court, D. Delaware.
March 11, 1977.
*772 *773 *774 W. Laird Stabler, Jr., U. S. Atty., Wilmington, Del., William J. Kilberg, Sol. of Labor, and Robert B. Lagather, Deputy Sol. of Labor, Washington, D. C., Marshall H. Harris, Regional Sol., and Richard D. Soltan, Atty., U. S. Dept. of Labor, Philadelphia, Pa., for plaintiff.
Roy S. Shiels of Brown, Shiels & Barros, Dover, Del., for defendants.
MEMORANDUM OPINION
LATCHUM, Chief Judge.
The Secretary of Labor[1] (the "Secretary") has brought this action against R & M Erectors, Inc. ("R & M") and Robert R. Hastings, Sr. ("Hastings"), former president and co-owner with his former wife of R & M,[2] (collectively, the "defendants") pursuant to the Fair Labor Standards Act of 1938, as amended, ("FLSA") 29 U.S.C. § 201 et seq., to recover, unpaid overtime wages owed by defendants to several former employees and to enjoin the defendants from violating the FLSA's overtime provisions *775 and record-keeping requirements.[3] The case was tried to the Court, without a jury, on October 18, and 19, 1976,[4] and this memorandum opinion constitutes the findings of fact and conclusions of law required by Rule 52(a), F.R.Civ.P.
I. Background
From October 1972[5] until December 1973,[6] the defendants, based in Bridgeville, Delaware,[7] erected and finished off modular units which had been pre-fabricated in North Carolina[8] for public schools in Maryland.[9] During the course of these activities, the defendants employed numerous laborers, and it is on behalf of these employees that the Secretary maintains this action.[10]
Overtime compensation is guaranteed to certain employees by section 7(a)(1) of the FLSA, 29 U.S.C. § 207(a)(1), which provides:
"Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."[11]
The phrase "enterprise engaged in commerce or in the production of goods for commerce" is defined in part as:
". . . an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person, and which
* * * * * *
(3) is engaged in the business of construction or reconstruction, or both . . .."[12]
The transfer of the pre-fabricated units (which the defendants' employees erected) from North Carolina to Maryland, for example, establishes that materials handled by defendants' employees "moved in commerce." Also, the defendants "engaged in the business of construction or reconstruction".[13] Thus, the Court finds, and the defendants do not dispute,[14] that defendants' enterprise was subject to the FLSA's overtime pay provisions.
II. Record-keeping
To enable the Secretary to carry out the mandate of the FLSA, Congress *776 empowered him to require employers, covered by the FLSA, to maintain certain employment records. As authorized by section 11(c), 29 U.S.C. § 211(c),[15] the Secretary promulgated regulations[16] which specify the information which certain employers must record for each employee. The Court finds that defendants failed to maintain adequate records, as required by the Secretary, containing the following data on their employees: hours worked on a daily or weekly basis, day and time of day when workweek began, and overtime payments.[17] Accordingly, the Court holds that defendants violated section 11(c) by failing to prepare and preserve appropriate employee records.
III. Overtime
The Secretary has petitioned the Court to enjoin the defendants from withholding overtime compensation due defendants' former employees under section 7(a).[18] Initially, the Secretary must prove that defendants violated section 7(a) by allowing their employees to work in excess of forty hours per week without payment of overtime. Then, to establish the liability of defendants for back wages resulting from any failure to pay overtime, the Secretary must identify the employee, the number of hours of overtime worked during a week, the number of weeks which the employee worked for defendants, and the employee's regular salary rate.
The failure of defendants to satisfy the record-keeping requirements of section 11(c) has made resolution of these issues significantly more difficult. Defendants' breach, however, does not inevitably bar recovery by employees who understandably did not document contemporaneously the history of their employment with defendants.[19]
"When the employer has kept proper and accurate records, the employee may easily discharge his burden by securing the production of those records. But where the employer's records are inaccurate or inadequate and the employee cannot offer convincing substitutes, a more difficult problem arises. The solution, however, is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer's failure to keep proper records in conformity with his statutory duty; it would allow the employer to keep the benefits of an employee's labors without paying due compensation as contemplated by the Fair Labor Standards Act. In such a situation we hold that an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent *777 of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate. . . .
"The employer cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records in accordance with the requirements of § 11(c) of the Act. . . . [W]e are assuming that the employee has proved that he has performed work and has not been paid in accordance with the statute."
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88, 66 S.Ct. 1187, 1192-1193, 90 L.Ed. 1515 (1946) (emphasis added).
The testimony of several employees can often be used to prove a uniform pattern or practice of their working time. Brennan v. General Motors Acceptance Corp., 482 F.2d 825, 829 (C.A. 5, 1973). Specifically, when employees leave a central location together at the beginning of a work day, work together during the day, and report back to the central location at the end of the day, the relatively consistent testimony of several employees can set forth a prima facie case that all employees in the same job classification worked the same number of hours. The burden then shifts to the employer to rebut the prima facie case.
From the testimony of former R & M employees, the following work day pattern emerged. On the typical day, the employees reported to the Bridgeville office at 6:00 A. M.[20] Sometimes small tools or supplies were loaded into defendants' vehicles, and perhaps the vehicles were serviced; the employees then learned from Hastings where the day's work would be performed.[21] Because the job sites were scattered throughout Maryland, an automobile trip averaging 1.5 hours was necessary before the work could begin.[22] Once at the job site, the employees worked a daily average of nine hours.[23] Finally, the return trip to Bridgeville consumed another 1.5 hours.[24] Thus, the Court finds, on the basis of pattern and practice evidence, that the average work day of defendants' employees, measured from the 6:00 A. M. starting time until the return to Bridgeville in the evening, lasted twelve hours.[25] The standard five day week followed by defendants, accordingly, totaled sixty hours.[26]
Because employees, who are protected by the FLSA, are entitled to overtime compensation for time worked weekly in excess of forty hours, defendants' employees should have been paid at one-and-one-half times their regular hourly rate or its equivalent for the twenty overtime hours that they worked each week. The defendants' employees were paid a flat salary for a week's work[27] since the defendants did not pay overtime.[28] No adjustment was *778 made in an employee's weekly wage to reflect any fluctuation in the hours worked during the week.[29] Therefore, the Court finds that defendants violated section 7(a) of the FLSA.
Next the Court must determine the amount of overtime compensation wrongfully withheld. The Secretary after reviewing the records of defendants and conducting interviews has determined the term of employment and salary of twenty-three employees and has calculated the overtime owed to them.[30] The hourly regular rate upon which the overtime figures are based was computed by dividing each employee's weekly salary by the weekly average of sixty hours. Overnight Motor Co. v. Missel, 316 U.S. 572, 580 n.16, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942); Mumbower v. Callicott, 526 F.2d 1183, 1187 (C.A. 8, 1975). Then, the overtime due each week was found by multiplying the hourly rate by one-half of the twenty hours of overtime.[31] Multiplication of the weekly overtime due by the number of weeks of overtime worked[32] yielded the total owed to the employee.
The Secretary's findings have been corroborated substantially[33] by the trial testimony of eleven former employees.[34] The defendants concede that the Secretary has made out a prima facie case with respect to the eleven employees who testified,[35] but they argue that the Secretary failed to carry his burden for the twelve identified employees who did not appear at trial. The hours worked by these employees have been established by virtue of the pattern and practice evidence. The Secretary's inspection of records and interviews confirmed their salaries and terms of employment. The proof, of course, is not as powerful as might normally be expected, but it is sufficient to raise a "just and reasonable inference," Anderson v. Mt. Clemens Pottery Co., supra, that the twelve employees were denied overtime in the amounts estimated by the Secretary.[36]See Brennan v. Parnham, 366 F.Supp. 1014, 1026 (W.D.Pa.1973).
The defendants have not rebutted the Secretary's prima facie case, and, therefore, the Court will direct payment of wrongfully withheld overtime by defendants to the Secretary on behalf of the twenty-three employees according to the following schedule:[37]
*779
Name Dates of Employment Overtime Due
G. N. Adams 7/11/73 11/21/73 $ 352.80
R. Blades 7/4/73 9/12/73 250.50
K. Cook 5/9/73 7/25/73 293.92
J. Custer, III 6/6/73 8/15/73 250.50
K. Custer 6/6/73 8/22/73 238.95
L. R. Davis 8/29/73 9/5/73 46.76
J. DeFord 1/10/73 11/21/73 1,503.00
W. L. DeFord 8/15/73 11/21/73 397.46
A. Handley, III 10/11/72 11/15/72 100.20
J. W. Hunter 8/15/73 11/21/73 397.46
L. Lippert 8/22/73 11/21/73 300.60
F. B. Maloney 11/22/72 6/27/73 367.40
M. J. McGreir 8/1/73 8/22/73 112.88
M. S. Melson 8/1/73 10/17/73 248.05
R. Melson 6/20/73 10/3/73 300.60
D. Moore 11/29/72 1/31/73 133.60
G. D. Moore 12/7/72 12/5/73 1,115.10
L. J. Moore 11/29/72 6/26/73 551.10
L. Murphy 2/7/73 10/10/73 935.20
D. Seabrease 9/5/73 9/12/73 42.76
G. F. Sennett 10/11/72 8/22/73 1,061.49
C. Smith 8/15/73 10/3/73 150.30
J. C. Street, Jr. 12/6/72 6/26/73 551.10
___________
$9,701.73
The Secretary has also sought compensation for eleven "unidentified" employees.[38] The Secretary arrived at an overtime amount for these employees apparently by taking the average overtime payment owed to the employees in whose behalf he made individual calculations.[39] At trial, however, the Secretary made no *780 effort to support the reliability of this method of approximation. While the Secretary's burden of proof under these circumstances is relatively light, he may not recover on the basis of nothing more than pure speculation. The identity of these employees is far from clear, but, more important, the Court cannot ascertain justly or reasonably the length of employment or the weekly salaries of these employees. Accordingly, without a plausible factual basis for the Secretary's speculation, the Court will not award back wages to the Secretary for the benefit of employees on whose behalf no evidence was presented at trial.[40]
IV. Defenses
The defendants have tendered several arguments which, if accepted by the Court, would eliminate or reduce their liability for unpaid overtime.
First, the defendants maintain that the salaries paid to the employees included the necessary overtime payment for travel time. They argue that the minimum wage was paid for on-site work and that travel time was appropriately treated as overtime. Assuming that the employees worked forty hours on-site and traveled for twenty hours, the defendants contend that no back wages are owed because the sum of forty hours compensated at the minimum wage and twenty hours of overtime based on the minimum wage would have been less than the salaries actually paid to the employees. However, a fixed salary will not be deemed to include an overtime component in the absence of an express agreement to that effect. Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88, 93, 63 S.Ct. 125, 87 L.Ed. 83 (1942); Overnight Motor Co. v. Missel, supra, 316 U.S. at 581, 62 S.Ct. 1216; Brennan v. Valley Towing Co., supra, 515 F.2d at 106; Wirtz v. Leon's Auto Parts Co., 406 F.2d 1250 (C.A. 5, 1969). While Hastings may have calculated the salaries with an eye on the minimum wage,[41] the Court finds that the employees had no such understanding.[42] In the absence of an express agreement between the employees and defendants, defendants' contention that the employees have already received appropriate overtime compensation cannot stand.
Second, the defendants contend that the employees acquiesced in defendants' failure to pay overtime and, therefore, waived any right to overtime. As a factual matter, the evidence simply does not support defendants' claim of waiver. Few employees had any inkling that overtime was deserved,[43] and the defendants did not prove the existence of any agreement by which any employee surrendered his right to overtime. Furthermore, it is plain that an employee cannot waive his entitlement to overtime. Brooklyn Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945); Mumbower v. Callicott, supra, 526 F.2d at 1188; Walling v. Richmond Screw Anchor Co., 59 F.Supp. 291, 293-94 (E.D.N.Y.1945), aff'd, 154 F.2d 780 (C.A. 2, 1946), cert. denied, 328 U.S. 870, 66 S.Ct. 1383, 90 L.Ed. 1640 (1946).
"The purpose [of section 7(a) of the FLSA] was to compensate those who labored in excess of the statutory maximum number of hours for the wear and tear of extra work and to spread employment through inducing employers to shorten hours because of the pressure of extra cost." Bay Ridge Co. v. Aaron, 334 U.S. 446, 460, 68 S.Ct. 1186, 1194, 92 L.Ed. 1502 (1948).
"[T]o allow waiver of statutory wages by agreement would nullify the purposes of the [FLSA]", Brooklyn Bank v. O'Neil, supra, 324 U.S. at 707, 65 S.Ct. at 902, and, thus, defendants' argument grounded on employee waiver must be rejected.
*781 Third, defendants assert that John DeFord ("DeFord"), one of the individuals in whose behalf the Secretary has brought this action, is not entitled to overtime pay because he was not an employee.[44] Instead, the defendants claim that he was a partner in the business with Hastings and therefore an employer.[45] Soon after DeFord began working for the defendants in early 1973, Hastings offered him a 15% partnership in the business and DeFord responded with interest to the proposition.[46] In return for assuming management responsibilities and purchasing 15% of the equipment, DeFord would have become entitled to a 15% share of the profits in addition to his weekly salary.[47] DeFord, however, never bought any interest in the business,[48] never exercised any managerial discretion,[49] and never shared in the profits of the business.[50] Furthermore, Hastings did not treat DeFord as a partner. In short, the Court finds that DeFord was an employee and not a business partner. See Voyles v. Murray, 297 F.Supp. 1288 (N.D. Tex.1969).
Fourth, the Portal-to-Portal Pay Act, 29 U.S.C. § 251 et seq. (the "Portal Act"),[51] although not expressly relied upon by defendants should be considered briefly. In general, the Portal Act may provide an exemption from the overtime provisions of the FLSA for time spent traveling from a central reporting location to the job site. When work of consequence is performed for *782 the employer before travel commences, travel time becomes subject to overtime. Dunlop v. City Electric, Inc., 527 F.2d 394, 399 (C.A. 5, 1976). The quantity and nature of the pre-travel work generated significant disagreement among the witnesses and may not have been sufficient to remove the usual three hour travel period from the Portal Act's scope.[52]See Carter v. Panama Canal Co., 150 U.S.App.D.C. 198, 463 F.2d 1289 (1972), cert. denied, 409 U.S. 1012, 93 S.Ct. 441, 34 L.Ed.2d 306 (1972). However, Hastings testified,[53] and employees concurred,[54] that the salaries by agreement compensated travel time as well as on-site time, and, pursuant to 29 U.S.C. § 254(b), where an employer agrees to pay employees for travel time, the Portal Act exemption is no longer available. Wirtz N. Marino, 405 F.2d 938, 941 (C.A. 1, 1968); Wirtz v. Sherman Enterprises, Inc., 229 F.Supp. 746, 753 (D.Md.1964).
V. Prospective Injunctive Relief
Finally, the Secretary has urged the Court to enjoin the defendants from committing future violations of the FLSA's record-keeping and overtime provisions. Injunctions are frequently granted in cases of this nature, e. g., Brennan v. Patio Cleaners, Inc., 373 F.Supp. 987, 991 (S.D.Ohio 1974), because of the significant public interest affected by violations of the FLSA, see Bay Ridge Co. v. Aaron, supra, and because the existence of an injunction eases somewhat the heavy burden imposed upon the Secretary for administering and enforcing the FLSA.[55]Goldberg v. Cockrell, 303 F.2d 811, 814 (C.A. 5, 1962). Furthermore,
"[t]he issuance of a permanent injunction in FLSA cases does not subject an employer against whom it runs to a penalty or a hardship since it requires him to do `what the Act requires anyway to comply with the law.' Mitchell v. Pidcock, 5 Cir. 1962, 299 F.2d 281, 287." Dunlop v. Davis, 524 F.2d 1278, 1281 (C.A. 5, 1975).
The defendants resist the imposition of injunctive relief. Since the end of 1973, neither R & M nor Hastings has been actively involved in erecting pre-fabricated units.[56] R & M has disposed of all assets[57] and its certificate of incorporation was voided in March 1975.[58] Hastings, who cites Social Security as his source of income, has not severed connections to the industry as he still performs some consulting work for others,[59] but it is fair to conclude that he has no present intention of becoming an employer again.[60]
The critical question, therefore, is whether the risk that the defendants will fail to keep appropriate employee records or to pay overtime is substantial enough to merit injunctive relief. Brennan v. Southwire Co., 396 F.Supp. 525 (N.D.Ga.1974). Where there clearly is no danger of future violations, injunctive relief is inappropriate. Current compliance with the FLSA or current exemption from the FLSA do not ordinarily lead to the conclusion that injunctive relief is unnecessary. Dunlop v. Davis, supra, 524 F.2d at 1281; Brennan v. Carl Roessler, Incorporated, supra.
R & M, as a result of its dissolution, is no longer an entity capable of violating the FLSA,[61] and the Court can perceive no *783 purpose that would be served by an injunction directed against R & M. Accordingly, the Secretary's request for injunctive relief against R & M is denied.
Hastings, however, has not totally disassociated himself from the modular construction business, and it appears that his eventual return to that business is possible. The minimal burden that would result from injunctive relief, the public interest in effective enforcement of the FLSA, and the failure of Hastings to cooperate fully with the Secretary during the course of his investigation also persuade the Court that, in the exercise of its discretion, Hastings should be enjoined from violating sections 7(a), 11(c) and 215(a)(2) & (5) of the FLSA.
Judgment will be entered in accordance with this memorandum opinion.
NOTES
[1] Ray Marshall, the recently appointed Secretary of Labor, has been substituted automatically as the party-plaintiff by virtue of Rule 25(d)(1), F.R.Civ.P.
[2] Trial Transcript (Docket Item 16A) 356, 376 (hereinafter cited "T.____"). Because the corporate charter of R & M was voided on March 1, 1975 (Docket Item 14, Part III, No. 8) and because his ex-wife was not named as a defendant, Hastings is, for practical purposes, the only defendant.
[3] Jurisdiction is conferred upon this court by section 17 of the FLSA, 29 U.S.C. § 217, which enables district courts to remedy violations of section 15(a)(2) & (5) of the FLSA, 29 U.S.C. § 215(a)(2) & (5), which in turn makes unlawful the failure to comply with the overtime (section 7 of the FLSA, 29 U.S.C. § 207) and the record-keeping (section 11(c) of the FLSA, 29 U.S.C. § 211(c)) provisions of the FLSA. Brennan v. Valley Towing Co., 515 F.2d 100, 102 (C.A. 9, 1975); Brennan v. Jaffey, 380 F.Supp. 373 (D.Del.1974).
[4] The case was not submitted to the Court for decision until completion of the post-trial briefing on January 27, 1977.
[5] T. 357.
[6] T. 360.
[7] T. 5.
[8] T. 12.
[9] Docket Item 14, Ex. A.
[10] Section 16(c) of the FLSA, 29 U.S.C. § 216(c).
[11] After the events which led to this litigation occurred, the FLSA was amended in 1974 by Pub.L. 93-259. Accordingly, references to the FLSA do not reflect the 1974 amendments.
[12] Section 3(s) of the FLSA, 29 U.S.C. § 203(s). The parties stipulated that the business activities of the defendants constituted an enterprise within the meaning of section 3(r) of the FLSA, 29 U.S.C. § 203(r). (Docket Item 14, Part III, No. 3).
[13] Docket Item 14, Part III, No. 7.
[14] Docket Item 19, pp. 16-17.
[15] Section 11(c) of the FLSA, 29 U.S.C. § 211(c), provides:
"Every employer subject to any provision of this chapter or of any order issued under this chapter shall make, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him, and shall preserve such records for such periods of time, and shall make such reports therefrom to the Administrator as he shall prescribe by regulation or order as necessary or appropriate for the enforcement of the provisions of this chapter or the regulations or orders thereunder."
Since the defendants were subject to the overtime requirements of the FLSA, they were also subject to its record-keeping requirements. Brennan v. Valley Towing Co., supra 515 F.2d at 111.
[16] 29 C.F.R. Part 516. The particularized standards of 29 C.F.R. § 516.2 were applicable to the defendants because they were subject to both the overtime and the minimum wage provisions of the FLSA.
[17] T. 261, 381-82; PX 7; DX 4. Furthermore, the limited records maintained by defendants did not span the full period of their operation. T. 259-60.
[18] While the discretion of the Court to deny restitution is limited, the Court need not always award back overtime wages to employees statutorily entitled to them. Brennan v. Saghatelian, 514 F.2d 619 (C.A. 9, 1975), reh. denied sub nom Dunlop v. Saghatelian, 520 F.2d 788 (C.A. 9, 1975).
[19] T. 61, 163.
[20] T. 5, 49, 52, 57, 80, 112, 152, 183, 230, 245, 337-38.
[21] T. 6-7, 9, 52, 81, 113, 184.
[22] T. 11, 52, 153. Occasionally, some employees would join the R & M crew at a convenient location along the route. The Court does not view the infrequent savings of perhaps twenty to thirty minutes as affecting the accuracy of the employees' estimates of the length of the work day. T. 26-27, 39, 276.
[23] T. 13, 84, 116, 154. Testimony on the duration of lunch breaks was inconsistent. The estimates ranged from no period of rest to a sustained work stoppage of more than thirty minutes. T. 14, 32, 131, 154, 171, 206-07, 311, 371. Given the absence of detailed time records, the Court is satisfied that a working period of nine hours represents a reasonable and acceptable estimate.
[24] T. 15, 85.
[25] T. 15.
[26] T. 16, 56, 86, 103, 117-18, 157, 191, 235, 329, 349.
[27] T. 198-99, 246, 316.
[28] T. 389.
[29] T. 17, 122, 157, 378. Sometimes the employees worked a sixth day without receiving overtime (T. 18, 370-71), but the Secretary has not sought compensation for work performed beyond the five day week.
[30] PX 3; PX 4; T. 259, 262, 267-73.
[31] A coefficient table simplified the arithmetic. PX 5; T. 272.
[32] The Secretary's conservative estimate of the number of weeks took into account weeks where no overtime was worked because, for example, the employees stayed in motels near job sites which were too distant for daily travel. T. 39, 127, 234, 274, 279-281, 366-67.
[33] T. 151, 182, 229, 336.
[34] The number of weeks of overtime estimated by the employees who testified exceeded in some instances the results of the Secretary's investigation. T. 48, 168, 266. Because the Secretary made his findings in February, 1974, soon after R & M ceased operations and in part from payroll records and because the employees did not dispute directly the Secretary's data, the Court concludes that the Secretary's tabulation is more reliable. Brennan v. Carl Roessler, Incorporated, 361 F.Supp. 229, 234 (D.Conn.1973).
[35] T. 299.
[36] Moreover, the defendants agreed that PX 3 and PX 4 containing the results of the Secretary's study, could be "offered into evidence without objection for the limited purpose of showing the computation of back wages as made by [the Secretary]." Docket Item 14, Part VI.
[37] Interest at the legal rate from the median date of each employee's service with R & M until satisfaction of the claims must also be forthcoming. Brennan v. Maxey's Yamaha, Inc., 513 F.2d 179, 183 (C.A. 8, 1975); Brennan v. Parnham, supra; Brennan v. Carl Roessler, Incorporated, supra.
The Secretary has not sought liquidated damages for the defendants' failure to pay appropriate overtime.
[38] The Secretary suggests (Docket Item 20, p. 10) that the eleven former employees listed in the pre-trial order (Docket Item 14, Part III, No. 4) who are not within the group for whom the Secretary made individual computations are the "unidentified" employees, but DX 4 indicates that there were other employees who are not listed in the pre-trial order.
[39] PX 4.
[40] See note 18 supra. The Secretary points to Brennan v. Parnham, supra, as an example of a case in which an award was made for the benefit of unknown employees, but in that case, unlike this one, the Secretary presented testimony in support of his claim.
[41] T. 361.
[42] T. 174-76, 194-95.
[43] T. 174, 246.
[44] Defendants have abandoned a similar contention with respect to three other employees. (Docket Item 19, p. 11).
[45] Defendants no longer suggest that DeFord was an executive within the scope of 29 C.F.R. § 541.1.
[46] T. 19, 357.
[47] T. 23. No agreement was ever expressed in writing.
[48] T. 387. Purchase of R & M stock apparently was not considered.
[49] DeFord did not negotiate any contracts and his work day was devoted almost exclusively to manual labor. T. 19-21, 387. In Hastings' absence he did have supervision of the other workers T. 34-35; in exercising this power, DeFord was acting as a strawboss. See 29 C.F.R. § 541.115.
[50] T. 387. Shortly after DeFord started working for defendants, he did receive $1,300 which he then thought was the first payment of his partnership share. At Hastings' urging, DeFord signed a document, which Hastings told him was needed by his lawyer, that turned out to be a note for $1,300. Hastings eventually terminated his relationship with DeFord and sought to collect the money owed to him under the note. Under these circumstances, the Court concludes that the $1,300 payment was merely a loan and was not a partnership distribution. T. 19, 40-41, 386. Moreover, even if DeFord shared in R & M's profits, it would not necessarily follow that he was a partner or employer within the purview of the FLSA.
[51] The relevant provision of the Portal Act, 29 U.S.C. § 254, reads:
"(a) Except as provided in subsection (b) of this section, no employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended, the Walsh-Healey Act, or the Bacon-Davis Act, on account of the failure of such employer to pay an employee minimum wages, or to pay an employee overtime compensation, for or on account of any of the following activities of such employee engaged in on or after May 14, 1947
(1) walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and
(2) activities which are preliminary to or postliminary to said principal activity or activities, which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.
(b) Notwithstanding the provisions of subsection (a) of this section which relieve an employer from liability and punishment with respect to an activity, the employer shall not be so relieved if such activity is compensable by either
(1) an express provision of a written or nonwritten contract in effect, at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer; or
(2) a custom or practice in effect, at the time of such activity, at the establishment or other place where such employee is employed, covering such activity, not inconsistent with a written or nonwritten contract, in effect at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer."
[52] T. 363; see note 21 supra. The Court need not and does not resolve this issue.
[53] T. 362.
[54] T. 306, 343.
[55] Criminal sanctions for willful failure to maintain proper records or to pay overtime are prescribed by section 16(a) of the FLSA, 29 U.S.C. § 216(a).
[56] T. 360.
[57] T. 377.
[58] Docket Item 14, Part III, No. 8.
[59] T. 361.
[60] There is nothing in the record to suggest that Hastings' failure to keep adequate records stemmed from anything other than Hastings' lack of knowledge about the FLSA. T. 375-77, 391-92. On the other hand, once the Secretary's investigation began, Hastings was less than cooperative. T. 280, 287.
[61] The record does not suggest the existence of a successor to R & M.
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770 F.Supp.2d 24 (2011)
ADMINISTRATORS OF the TULANE EDUCATIONAL FUND (a/k/a Tulane University), et al., Plaintiffs,
v.
IPSEN PHARMA, S.A.S. (f/k/a Societe Conseils De Recherches et D'Applications Scientifiques SAS), et al., Defendants.
Civil Case No. 09-2428 (RJL).
United States District Court, District of Columbia.
March 14, 2011.
*25 Peter M. Brody, Ropes & Gray, Washington, DC, Barbara A. Ruskin, Jacqueline M. James, Kenneth B. Herman, Ropes & Gray, New York, NY, Leslie M. Spencer, Ropes & Gray LLP, Boston, MA, for Plaintiffs.
Andrew C. Bernasconi, Reed Smith, LLP, Washington, DC, William J. McNichol, Jr., Reed Smith, LLP, Philadelphia, PA, for Defendants.
MEMORANDUM OPINION
RICHARD J. LEON, District Judge.
Plaintiffs in this case, the Administrators of the Tulane Educational Fund (a/k/a Tulane University) ("Tulane") and David H. Coy ("Dr. Coy") (collectively, "plaintiffs") filed this action against Ipsen Pharma, S.A.S. ("Ipsen Pharma") and Ipsen, S.A. ("Ipsen") for correction of inventorship of several U.S. patents pursuant to 35 U.S.C. § 256. The complaint also alleges three claims under Massachusetts state law for unfair business practices, unjust enrichment, and constructive trust. Now before the Court is defendant Ipsen's Motion to Dismiss for Lack of Personal Jurisdiction and for Failure to State a Claim [Dkt. # 22]. For the following reasons, the motion is GRANTED.
*26 BACKGROUND
Dr. Coy is a Research Professor of Medicine and Adjunct Professor of Biochemistry at Tulane University, an educational and research institution in Louisiana. Compl. ¶ 10. Ipsen is a French corporation. Id. ¶ 11. Ipsen and its affiliates develop and market more than twenty drugs internationally, including throughout the United States. Id. Ipsen holds 95.05% of the share capital and voting rights of Ipsen Pharma, one of its subsidiaries. Id. ¶¶ 12-13. Ipsen Pharma is the successor company to Societe Conseils, de Recherches et d'Applications Scientifiques ("SCRAS"). Id. ¶ 13. Ipsen Pharma holds, among other things, intellectual property rights for Ipsen, including the patents at issue. Id. ¶ 12. Ipsen Pharma's majority-owned subsidiary, Biomeasure, is a Massachusetts corporation. Id. ¶ 14. Neither SCRAS nor Biomeasure are a party in this case.
In November 1990, Dr. Coy, Tulane, and Biomeasure entered into an Amended and Restated Research Funding Agreement ("RFA") that superseded prior research agreements. Id. ¶ 16. The RFA covered Dr. Coy's research in the field of biologically active fragments and analogs of various peptides, and was amended in 1997 and 1998 to include research on glucagon-like peptides, or GLP-1 analogs having extended biological half-life. Id. ¶¶ 17-18. The GLP-1 research is the subject of the patents at issue in this case. The RFA granted Tulane the property rights to any research, subject to Biomeasure's right to pursue a patent, with Tulane's approval, at its own expense. Id. ¶¶ 19-20. Biomeasure also retained the right to an exclusive, worldwide license from Tulane of any results or any patent application or patent covering results within a certain time period and subject to certain fee and notice provisions. Id. ¶¶ 21-22. The RFA also accounted for various royalty payments depending on which party funded and invented the result. Id. ¶ 23. Plaintiffs allege in the complaint that Ipsen Pharma's predecessor, SCRAS, funded Biomeasure's payments to Tulane in connection with the GLP-1 research. Id. ¶ 24.
Plaintiffs seek correction of inventorship for several patents that cover the results of this research, U.S. Patent 6,903,186 ("'186 Patent"), and all related patents claiming priority to or through the applications from which it matured, including U.S. Patents 7,268,213 ("'213 Patent") and 7,235,628 ("'628 Patent"). Id. ¶ 1. The relevant patent applications are U.S. utility application serial number 09/206,601 and U.S. provisional application serial number 60/111255. Id. The '186 Patent is directed generally to compounds which are peptide analogs of the GLP-1, as well as pharmaceutical compositions thereof, including a compound known as "Taspoglutide" or "BIM-51077," which is expected to be effective in diabetes and obesity treatment. Id. ¶ 2.
On December 7, 1998, Biomeasure filed four U.S. patent applications pertaining to certain GLP-1 analogs. Id. ¶¶ 32, 37. Two of those applications, U.S. utility application serial number 09/206,833 ("the '833 Joint Application") and U.S. provisional application serial number 60/111, 186 (collectively, "the Joint Applications"), named a Biomeasure employee, Dr. Zheng Xin Dong ("Dr. Dong"), and Dr. Coy as co-inventors, and were entitled "GLP-1 Analogs." Id. ¶ 33. U.S. Patent 7,368,427 has issued from the '833 Joint Application. Id. ¶ 34.
The two other applications, which were entitled "Analogues of GLP-1" and are the ones at issue in this suit, named Dr. Dong as the sole inventor and did not name Dr. Coy. Id. ¶ 37. Those applications, U.S. utility application serial number 09/206,601 *27 and U.S. provisional application serial number 60/111255 ("the Biomeasure Only Applications"), disclose and claim BIM-51077 compounds and compositions, both generically and specifically. Id. ¶ 39. Plaintiffs allege that Biomeasure filed and prosecuted the Biomeasure Only Applications on behalf of Ipsen Pharma and Ipsen. Id. ¶ 38.
Three issued patentsthe '186, '213, and '628 Patentsand two pending patent applications claim priority to the Biomeasure Only Applications. Id. ¶¶ 42-44. Dr. Dong assigned the Biomeasure Only Applications to Biomeasure. Id. ¶ 45. Plaintiffs allege that Biomeasure then assigned all of its patent rights to SCRAS, the predecessor company to Ipsen Pharma. Id. Ipsen Pharma is the assignee of record at the U.S. Patent and Trademark Office for the Biomeasure Only patents and related applications. Id. ¶ 55.
Ipsen and/or Ipsen Pharma has since partnered with F. Hoffman-La Roche Ltd. ("Roche"), through various licenses and agreements, to develop and market the drug Taspoglutide, or BIM-51077, for the treatment of Type 2 diabetes. Id. ¶ 47-50. Ipsen has maintained, through communication with plaintiffs and a press release, that BIM-51077 originated from its research alone. Id. ¶¶ 52, 54.
Ipsen now moves to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) and for failure to state a claim pursuant to Rule 12(b)(6). For the following reasons, the Court lacks personal jurisdiction over Ipsen and the complaint against Ipsen is therefore dismissed.
ANALYSIS
1. Legal Standard
The plaintiffs bear the burden of establishing personal jurisdiction over the defendant. To meet this burden, the "plaintiff[s] must allege specific facts on which personal jurisdiction can be based; [they] cannot rely on conclusory allegations." Purdue Research Found. v. Sanofi-Synthelabo, S.A., 332 F.Supp.2d, 63, 66 (D.D.C.2004) (citing GTE New Media Servs., Inc. v. Ameritech Corp., 21 F.Supp.2d 27, 36 (D.D.C.1998), remanded on other grounds sub nom. GTE New Media Servs., Inc. v. BellSouth Corp., 199 F.3d 1343 (D.C.Cir.2000)). In assessing challenges to personal jurisdiction, the Court need not treat all of plaintiffs' allegations as true, and instead "may receive and weigh affidavits and other relevant matter to assist it in determining the jurisdictional facts." United States v. Philip Morris Inc., 116 F.Supp.2d 116, 120 n. 4 (D.D.C.2000) (internal citations omitted).
2. Section 293
Section 293 confers personal jurisdiction over foreign patentees on the District Court for the District of Columbia. It was "designed to assure a forum for suit in the United States in cases that otherwise might not be accommodated by either state or federal courts." Nat'l Patent Dev. Corp. v. T.J. Smith & Nephew Ltd., 877 F.2d 1003, 1006-07 (D.C.Cir.1989) (citation omitted). Specifically, Section 293 provides that:
Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and *28 summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.
Ipsen argues that plaintiffs cannot obtain personal jurisdiction pursuant to Section 293 because Ipsen is not the owner or the assignee of the patent at issue, and is therefore not a "patentee" covered by the statute. I agree.
"The plain language of § 293 limits the exercise of personal jurisdiction to a foreign `patentee.'" Int'l Mfg. & Eng'g Servs. Co. v. Semiconductor Energy Lab Co., No. 06-1230, slip op. at 3, 2007 WL 2059768 (D.D.C. July 16, 2007) (granting motion to dismiss for lack of jurisdiction because patent applicant was not a "patentee"). The term "patentee" is further defined by statute: "The word `patentee' includes not only the patentee to whom the patent was issued but also the successor in title to the patentee." 35 U.S.C. § 100(d). Ipsen contends that plaintiffs have failed to allege that Ipsen itself is the owner or successor of any of the patents at issue. In fact, the complaint clearly states that "Ipsen Pharma continues to be the assignee of record at the USPTO for the Biomeasure Only patents and related applications." Compl. ¶ 55 (emphasis added). Plaintiffs nevertheless argue that one who obtains the benefit of a patent qualifies as a patentee under the statute, citing to Deprenyl Animal Health, Inc. v. University of Toronto Innovations Foundation, 297 F.3d 1343, 1353 (Fed.Cir.2002) and Hanes Corp. v. Millard, 531 F.2d 585, 593 n. 6 (D.C.Cir.1976). I disagree. These cases, at best, are unpersuasive. In fact, plaintiffs acknowledged at oral argument that they had no case squarely on point on this issue and that they were, in essence, urging a novel interpretation of § 293. As such, I find that plaintiffs have not satisfied their burden to establish that the Court has personal jurisdiction over Ipsen as a patentee under 35 U.S.C. § 293.
3. Alter Ego Analysis
Undaunted, plaintiffs urge the Court to find personal jurisdiction over Ipsen by piercing the corporate veil between Ipsen and its subsidiaries, Ipsen Pharma and/or Biomeasure. Disregarding the separate identities of a corporate parent and its subsidiary is, of course, a rare exception grounded in equity considerations, and is only to be applied when, inter alia, "an adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice." Diamond Chem. Co. v. Atofina Chems., Inc., 268 F.Supp.2d 1, 7 (D.D.C. 2003) (quotation omitted); see also Material Supply Int'l, Inc. v. Sunmatch Indus. Co., 62 F.Supp.2d 13, 20 (D.D.C.1999).
In determining whether personal jurisdiction exists, piercing the corporate veil can be used to attribute the subsidiary's contacts with the forum to the parent. Diamond Chem., 268 F.Supp.2d at 7 ("[w]here affiliated parties are `alter egos' of a corporation over which the Court has personal jurisdiction . . . the corporation's contacts may be attributed to the affiliated party for jurisdictional purposes.") (quotation omitted). Plaintiffs argue that because Ipsen is the alter ego of Ipsen Pharma and/or Biomeasure, it is a de facto patentee and the Court can therefore exercise personal jurisdiction over Ipsen. Ipsen, by contrast, argues that this issue has already been determined in the earlier litigation in Louisiana, and that "the facts determined by the Louisiana court in arriving at its jurisdictional decision must be given preclusive effect by this Court." Def.'s Mot. 13. I agree.
*29 "[O]nce a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case." Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). "To preclude parties from contesting matters that they have had a full and fair opportunity to litigate protects their adversaries from the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). The standards for establishing the preclusive effect of a prior holding are: (1) "the same issue now being raised must have been contested by the parties and submitted for judicial determination in the prior case;" (2) "the issue must have been actually and necessarily determined by a court of competent jurisdiction in that prior case;" and (3) "preclusion in the second case must not work a basic unfairness to the party bound by the first determination." Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C.Cir.1992). "[I]f a court makes a substantive determination in order to arrive at a jurisdictional holding, the substantive determination can have issue preclusive effect so long as it was `actually litigated and determined in the prior action.'" NextWave Pers. Commc'ns, Inc. v. FCC, 254 F.3d 130, 148 (D.C.Cir.2001) (quoting I.A.M. Nat'l Pension Fund, Benefit Plan A v. Indus. Gear Mfg. Co., 723 F.2d 944, 947 n. 3 (D.C.Cir.1983)).
Ipsen is correct that it is entitled to the benefit of issue preclusion as to whether Ipsen is the alter ego of Biomeasure. Indeed, the issue currently before this Court is the same as the one adjudicated and determined by the Eastern District of Louisiana: that is, whether or not jurisdiction over Ipsen can be exercised through its subsidiary, Biomeasure, through piercing of the corporate veil. See Adm'rs of Tulane Educ. Fund v. Biomeasure, Inc. ("Tulane I"), 687 F.Supp.2d 620, 624-27 (E.D.La.2009). Plaintiffs argue that the Eastern District of Louisiana's findings are irrelevant because they related to the defendants' contacts to Louisiana. This argument, however, is also unpersuasive. In that case, though the ultimate inquiry was whether jurisdiction over Ipsen could be obtained under the Louisiana long-arm statute, the court necessarily addressed the relationship between Ipsen and Biomeasure (as well as Ipsen Pharma and Biomeasure) to determine whether Biomeasure was Ipsen's alter ego and thus, whether jurisdiction over Ipsen could be obtained by piercing the corporate veil. In this case, the jurisdiction over Ipsen again turns on the relationship between Ipsen and Biomeasure and whether or not corporate form should be disregarded.
Furthermore, the analyses used by this Court and the Eastern District of Louisiana are essentially identical. This Court employs the following two-pronged test to determine whether to pierce the corporate veil of a subsidiary: "(1) whether there is `such unity of interest and ownership that the separate personality] of [the subsidiary] no longer exist[s]'; and (2) whether an inequitable result will follow if the court treats [the subsidiary]'s allegedly wrongful acts as those of [the subsidiary] alone." Material Supply, 62 F.Supp.2d at 20 (quoting Smith v. Washington Sheraton Corp., 135 F.3d 779, 786 (D.C.Cir.1998)). The first prong requires a showing that Ipsen's control over Ipsen Pharma and/or Biomeasure is "active and substantial." Id. (quotation omitted). In making this assessment, the Court considers "the nature of the corporate ownership and control; failure to maintain corporate minutes *30 or records; failure to maintain corporate formalities; commingling of funds and assets; diversion of one corporation's funds to the other's uses; and use of the same office or business location." Id. (citing Labadie Coal Co. v. Black, 672 F.2d 92 97-99 (D.C.Cir.1982)).
Similarly, the Eastern District of Louisiana used the Fifth Circuit's seven-factor test, which looks to: "(1) the amount of stock owned by the parent of the subsidiary; (2) whether the two corporations have separate headquarters; (3) whether they have common officers and directors; (4) whether they observe corporate formalities; (5) whether they maintain separate accounting systems; (6) whether the parent exercises complete authority over general policy; and (7) whether the subsidiary exercises complete authority over daily operations." Tulane I, 687 F.Supp.2d at 624-27 (citing Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 339 (5th Cir.1999)). These factors are essentially identical to those facts that the two-pronged test in Material Supply was designed to elicit, and thus, the issue now before this Court has for all intents and purposes been previously adjudicated in the Eastern District of Louisiana. See, e.g., Def.'s Reply 7.
Finally, plaintiffs will suffer no unfairness from being held to the prior finding because they had every incentive and opportunity to fully litigate the issue in the earlier case. Indeed, plaintiffs should not be permitted to forum-shop because they disliked the outcome of that earlier case. Thus, because the question of whether Ipsen is Biomeasure's alter ego has already been determined, by necessity, by the Eastern District of Louisiana and answered in the negative, and because no basic unfairness results from so doing, issue preclusion bars reconsideration of that finding. Accordingly, personal jurisdiction over Ipsen cannot be exercised by piercing the corporate veil between Ipsen and Biomeasure. What about the relationship between Ipsen and Ipsen Pharma?
The Eastern District of Louisiana did not directly consider that relationship. Plaintiffs nonetheless point to three facts that they contend demonstrate that Ipsen is the alter ego of Ipsen Pharma: (1) the shared officers and directors between the two companies; (2) that Ipsen's Operations Committees provide general guidance to Ipsen affiliates, including Ipsen Pharma, and (3) that in press releases, Ipsen claims to be the originator of Taspoglutide. See Pls.' Opp'n 5, 10, 13-15. But this alone, however, is not enough! After all, "it is entirely appropriate for directors of a parent corporation to serve as directors of its subsidiary, and that fact alone may not serve to expose the parent corporation to liability for its subsidiary acts." Diamond Chem., 268 F.Supp.2d at 9 (quoting United States v. Bestfoods, 524 U.S. 51, 69, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998)). Nor is it unusual for a parent corporation to provide guidance to its subsidiaries. See, e.g., AGS Int'l Servs. SA v. Newmont USA Ltd., 346 F.Supp.2d 64, 89-90 (D.D.C. 2004). Additionally, "joint promotion without more does not mandate the finding that a subsidiary is a mere shell for its parent corporation." Diamond Chem., 268 F.Supp.2d at 9.
Moreover, plaintiffs have also "failed to demonstrate that `adherence to the fiction of the separate existence of the corporation would sanction fraud or promote injustice,'" as required by the second prong of the alter ego analysis. Id. at 9 (quotation omitted). They merely allege that inequity will result because Biomeasure "only receives the funding that Ipsen Pharma doles out," whereas "Ipsen has the proceeds from commercializing the GLP-1 patents." Pls.' Opp'n 15. While this may *31 go to the inequity of not holding Ipsen or Ipsen Pharma liable for Biomeasure's actions, it fails to demonstrate any particular injustice that would come from a decision not to pierce the corporate veil between Ipsen and Ipsen Pharma. Thus, there is nothing in the record to indicate that Ipsen and Ipsen Pharma are alter egos, and personal jurisdiction over Ipsen cannot be exercised on this basis.[1]
4. Jurisdictional Discovery
Plaintiffs, not surprisingly, also seek the opportunity to take additional discovery to establish personal jurisdiction over Ipsen. Jurisdictional discovery, however, "is appropriate where the existing record is `inadequate' to support personal jurisdiction and `a party demonstrates that it can supplement its jurisdictional allegations through discovery.'" Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1283 (Fed.Cir.2005) (quotation omitted). Indeed, the district court may deny additional discovery when it could produce no facts that would affect the jurisdictional analysis. Here, plaintiffs had the opportunity to take jurisdictional discovery during the litigation in Louisiana. They now seek additional discovery to establish the following facts they claim would support jurisdiction:
(1) Ipsen, through at least its Chairman and Chief Executive Officer, Jean-Luc Belingard, and its Executive Committee, exercises coordination and control over the internal affairs and operation of its wholly-owned subsidiary, defendant Ipsen Pharma S.A.S. ("Ipsen Pharma"); (2) Ipsen actively and substantially controls Ipsen Pharma such that Ipsen Pharma is an alter ego or mere instrumentality of Ipsen, including in respect of the GLP-1 patent rights at issue in this case; and (3) Ipsen, including through its alter ego Ipsen Pharma, has obtained and controls all exclusive rights and economic benefits derived from the GLP-1 patents.
Pls.' Ex. 14 ¶ 5. Ipsen, however, has re-submitted declarations from Jean Luc Belingard, Ipsen's Chief Executive Officer and Ipsen Pharma's Chairman, that were previously submitted to and credited by the Eastern District of Louisiana in Tulane I. Def's Exs. B, C. In those declaration, Belingard avers that each of the operating companies held by Ipsen, including Ipsen Pharma, function independently of Ipsen, observe the requisite business formalities, maintain their own accounting systems and bank accounts separate from those of Ipsen, and "exercise independent authority over [their] daily operations, including the hiring of employees, research, development, sales and marketing." Def's Ex. B ¶ 4; see also Def's Ex. C ¶ 12. Thus, I find that there are no set of facts plaintiffs could uncover through additional discovery that would alter the jurisdictional analysis set forth above and therefore deny their request for additional discovery and grant Ipsen's motion to dismiss for lack of personal jurisdiction.
CONCLUSION
For all the foregoing reasons, Ipsen's Motion to Dismiss is hereby GRANTED. An appropriate order shall accompany this memorandum opinion.
*32 ORDER
For the reasons set forth in the Memorandum Opinion entered this date, it is this 14th day of March, 2011, hereby
ORDERED that the defendant Ipsen S.A.'s Motion to Dismiss [#22] is GRANTED, and it is further
ORDERED that Count I against Ipsen S.A. be DISMISSED with prejudice; and it is further
ORDERED that the remaining counts against Ipsen S.A. be DISMISSED without prejudice.
SO ORDERED.
NOTES
[1] Pendent personal jurisdiction "enable[s][a] plaintiff to obtain personal jurisdiction over the defendant with respect to any of his claims that arose out of the same core of operative fact as those claims which clearly fell within the scope of § 293." Oetiker v. Jurid Werke, G.m.b.H, 556 F.2d 1, 4-5 & n. 10 (D.C.Cir. 1977). Because the Court lacks personal jurisdiction over Ipsen on plaintiffs' patent claim, it cannot have pendent personal jurisdiction over the Massachusetts claims and dismisses these without prejudice.
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709 So.2d 706 (1998)
Winston MADDOX
v.
OMNI DRILLING CORPORATION.
No. 97-C-2767.
Supreme Court of Louisiana.
January 30, 1998.
*707 Denied.
LEMMON, J., not on panel.
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147 Pa. Commonwealth Ct. 234 (1992)
607 A.2d 339
The CITY OF PITTSBURGH, a municipal corporation, Appellant,
v.
Henry F. JODZIS, Jr., an individual, Appellee.
Commonwealth Court of Pennsylvania.
Argued February 5, 1992.
Decided April 10, 1992.
*238 George R. Spector, for appellant.
Edward B. Friedman, for appellee.
Before CRAIG, President Judge, and DOYLE, COLINS, McGINLEY, SMITH, FRIEDMAN and KELLEY, JJ.
McGINLEY, Judge.
The City of Pittsburgh (City) appeals the orders of the Court of Common Pleas of Allegheny County (trial court) denying its motions for post-trial relief and assessing delay damages. We reverse.
On July 1, 1979, at approximately 4:00 A.M., Henry F. Jodzis, Jr. (Jodzis), ran a stop sign while riding his motorcycle. City police officers in a police van observed the infraction and attempted to stop Jodzis with their siren and beacon lights. Jodzis did not stop and, after a chase, succeeded in evading the police van. When Jodzis turned down a narrow, downhill street he encountered a police car. Jodzis' attempt to escape around the car to his right resulted in a collision. Jodzis' foot and part of his leg were amputated as a result of his injuries.
Jodzis sued the City claiming that the officers recklessly struck him with the police car; that the City negligently failed to set up a proper roadblock; that the police officers failed to follow proper apprehension procedures and failed to operate the police car in accordance with relevant statutes and in disregard for the safety of others. The case was tried before a jury in 1987. After receiving evidence, the trial court instructed the jury that Jodzis was negligent as a matter of law because of his admitted violation of a statute that requires motorists to stop upon the request or signal of a police officer, but the trial court reserved for the jury the determination of whether Jodzis' negligence was a substantial factor in causing his injury. Although requested, the trial court did not instruct the jury on the defense of assumption of the risk. The jury assessed damages of $750,000, apportioning 18% of the causal negligence to *239 Jodzis and 82% to the City. Accordingly, the trial court reduced the verdict against the City to $615,000 and then molded it to $500,000, the maximum recovery permitted by statute against a political subdivision.[1] The trial court also awarded delay damages of $419,232.87.
Local Rule 212
The City contends that the trial court erred in applying Local Rule 212 VI. of the Allegheny County Common Pleas Court (Local Rule), relating to pre-trial procedure in trespass cases, which at the time provided in pertinent part as follows:[2]
C. Defendant, within fifteen (15) days after the time set forth for performance by the plaintiff in VI. A. and VI. B. hereof:
(1) Shall serve upon all other parties a written statement containing;
....
(d) The reports of any expert whose opinion will be offered in evidence at the time of trial. Such reports shall include the findings and conclusions of the expert. (Emphasis added.)
Local Rule 212 VI. A.(1)(d) establishes a similar requirement for plaintiffs.
On August 6, 1987, Jodzis deposed Robert J. Coll (Coll), who was Superintendent of Police of the City at the time of the accident and formally listed as a witness for the City. Coll was questioned about his knowledge in 1979 of what constitutes a proper roadblock and the methods of communication of such information to police officers.[3] When counsel *240 for Jodzis concluded, counsel for the City asked Coll his opinion on whether the roadblock was properly set up. Counsel stated that the sole purpose for the question was to comply with Local Rule 212, because the City intended to call Coll as an expert and to submit his pre-trial deposition as the expert's report. During the deposition Coll opined that the roadblock was proper, and when counsel for Jodzis attempted to question Coll about the factual basis for his opinion, counsel for the City instructed him not to answer.
At the beginning of the trial Jodzis moved to bar the testimony of Coll. The trial court concluded that his deposition did not comply with Local Rule 212 which requires a statement of the facts accepted as true by the expert on which the opinion is based. The trial court gave the City the opportunity to submit a proper report. A newly submitted report stated that Coll's opinion was based on a review of the pleadings, the police reports, the plaintiff's deposition, photographs of the scene and the knowledge and information Coll possessed as Superintendent of Police. The trial court concluded the report also failed to comply with Local Rule 212, and indicated that Coll would not be permitted to testify beyond the scope of his deposition and the pleadings and photographs unless the City complied with the Local Rule. The City chose not to submit anything further. Called as a witness for Jodzis, Coll read the transcript of his deposition to the jury, except for the portion containing his opinion. The City did not ask Coll any questions or call him as its own witness.
The City contends that the trial court misapplied Local Rule 212 in refusing to allow Coll to render an expert opinion and deprived the City of its only expert testimony on liability. The City asserts that the purpose of the rule *241 was served and there was no possibility of the plaintiff being surprised at trial by the testimony because the plaintiff participated in the deposition and was aware of its contents. This argument ignores the plaintiff's central objection, which is that the City deliberately failed to describe the assumed facts upon which the opinion was based. As the trial court's opinion recites, the purpose of Local Rule 212 is to facilitate preparation for trial, and to apprise opposing counsel of the expert's rationale in order to assist effective cross-examination and adequate rebuttal, if necessary. Starr v. Allegheny General Hospital, 305 Pa.Superior Ct. 215, 451 A.2d 499 (1982). The exclusion of testimony without exception on the basis of this rule has been held to be overzealous where counsel unquestionably is aware of the factual claims that form the basis for the opinion. See Starr. Here, the trial court concluded that the situation in the present case was in marked contrast to that in Starr, because at the time of trial Jodzis still did not know where Coll assumed the police car was situated for purposes of his opinion, among other things. We find no error in the trial court's conclusion that the City's failure to comply with the requirements of Local Rule 212 justified the exclusion of Coll's opinion.
The second Local Rule 212 dispute relates to the trial court's admission of the testimony of Lieutenant Thomas J. Neill (Neill), an officer who arrived on the scene shortly after the accident and who wrote the initial police report. Neill was called by Jodzis as a witness during rebuttal and testified that, in his opinion, a roadblock was not set up. The City asserts that Neill effectively testified as an expert and rendered an opinion on whether a roadblock was set up, although no report by him was filed. The trial court noted that Neill was deposed long before trial, and Jodzis' counsel elicited testimony from him about the observations and conclusions on which his opinion was based. In contrast with Coll's deposition, the trial court found that the City had ample notice of the basis for Neill's opinions and a full opportunity to formulate cross-examination *242 or rebuttal. Relying once again on the interpretation of the purpose of Local Rule 212 in Starr, the trial court concluded that the purpose of the rule was satisfied, and to exclude Neill's testimony would have been an overzealous application of the Local Rule. We agree.
Exclusion of Evidence of Contraband
Jodzis filed a motion in limine requesting the trial court to exclude any evidence relating to the fact that, at the time of the pursuit and the accident, Jodzis was in possession of a handgun stolen from the office of the District Attorney of Westmoreland County, hollow point ammunition, and controlled substances. The trial court granted the motion. The City contends that the trial court's ruling precluded it from presenting evidence to the jury concerning Jodzis' motivation to flee and his judgment regarding the manner in which he drove the motorcycle when he attempted to run the roadblock. The City argues that the evidence was relevant because it relates to the issue of whether Jodzis acted as a reasonable person during the flight, which bears directly on the issue of his negligence. In support, the City cites state and federal precedent regarding the admissibility of evidence that a witness has an interest in the outcome of a case, including evidence of prior misconduct of the witness for the always relevant purpose of showing possible partiality and a motive to testify falsely. See Commonwealth v. Shands, 338 Pa.Superior Ct. 296, 487 A.2d 973 (1985) (quoting Davis v. Alaska, 415 U.S. 308, 94 S.Ct. 1105, 39 L.Ed.2d 347 (1974)).
As the trial court explained, relevance, which is the fundamental consideration for admissibility, is shown only where the proffered evidence "tends to make a fact at issue more or less probable." Martin v. Soblotney, 502 Pa. 418, 422, 466 A.2d 1022, 1024 (1983). In the present case, Jodzis admitted that he fled from the police initially. He also admitted that as he closed on the second police car he realized it was a police car, that the police wanted him to stop, that he had time to stop, and that he made a decision *243 to go around the police car instead. N.T., Vol. I, pp. 185, 190-94, 216, 232. In view of Jodzis' admissions, the trial court concluded that Jodzis' intent to flee was no longer at issue.
In Pennsylvania a trial court may properly exclude evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of issues or misleading the jury; "prejudice" for the purposes of this rule does not mean detrimental to a party's case, but rather, an undue tendency to suggest a decision on an improper basis. Daset Mining Corp. v. Industrial Fuels Corp., 326 Pa.Superior Ct. 14, 22, 473 A.2d 584, 588 (1984). The trial court has broad discretion regarding the admission of potentially misleading and confusing evidence. Id. In the present case, the trial court concluded that the City's attempt to introduce the evidence of contraband was designed to present scandalous information that was otherwise inadmissible, and logically unrelated to any legitimate determination of causation, and which would inflame the social conscience or biases of the jury and suggest a decision on an improper basis. Again, we agree that any probative value of this evidence was slight in comparison with the potential for prejudice; therefore we find the trial court's exclusion to be a proper exercise of discretion. Compare Morreale v. Prince, 436 Pa. 51, 258 A.2d 508 (1969), (admission of evidence that a litigant was in a bar before a motor vehicle accident, without proof of intoxication, was so prejudicial as to require a new trial).
Assumption of Risk
The City contends that the trial court erred by refusing to grant the City's requested point for charge on the issue of assumption of the risk, which stated: "When the plaintiff voluntarily proceeded to encounter a known or obvious danger, he is deemed to have agreed to accept the risk and to undertake to look out for himself." Defendant's Points for Charge and Motion for Directed Verdict at II(14), Reproduced Record at 1067a. The City asserts that, based *244 on Jodzis' egregious and illegal conduct and his uncontroverted testimony that he could have avoided the collision, the trial court erred by failing to grant the requested charge.
The trial court refused to charge on assumption of risk, holding that the doctrine of assumption of the risk does not apply to Jodzis' conduct because the doctrine has been strictly circumscribed by a plurality of the Supreme Court of Pennsylvania in Rutter v. Northeastern Beaver County School District, 496 Pa. 590, 437 A.2d 1198 (1981). In Rutter, the Supreme Court stated:
We agree that the difficulties of using the term "assumption of risk" outweigh the benefits. The issues should be limited to negligence and contributory negligence. Those are the problems in the case at bar and in all cases brought on a negligence theory....
For the reasons set out herein, we hold that except where specifically preserved by statute; or in cases of express assumption of risk, or cases brought under [strict liability theory], the doctrine of assumption of risk is abolished.
Id., 496 Pa. at 613, 437 A.2d at 1209. Nine years after the Rutter decision the Pennsylvania Superior Court commented on the uncertain state of the law as it regards assumption of the risk in Ott v. Unclaimed Freight Company, 395 Pa.Superior Ct. 483, 493, 577 A.2d 894, 898 (1990), stating: "[A] majority of the Supreme Court has yet to directly address the issue of whether the assumption of the risk doctrine remains viable, and panels of this court have continued to apply the doctrine."
In furtherance of the proposition that the doctrine has not been abolished, the City relies on the cases of Carrender v. Fitterer, 503 Pa. 178, 469 A.2d 120 (1983), Malinder v. Jenkins Elevator and Machine Co., 371 Pa.Superior Ct. 414, 538 A.2d 509 (1988) and Chiricos v. Forest Lakes Council Boy Scouts of America, 391 Pa.Superior Ct. 491, 571 A.2d 474 (1990). The Supreme Court in Carrender recognized the continued existence and applicability of the defense of assumption of the risk under certain circumstances. *245 There, the plaintiff was a business invitee of a medical clinic who had parked her car on an icy section of a partially cleared parking lot and subsequently slipped. The trial court refused to charge on assumption of risk. The Supreme Court noted that a possessor of land is not liable to invitees for physical harm caused by a condition on the land whose danger is known and obvious. Carrender, 503 Pa. at 185, 469 A.2d at 123 (quoting Sections 343 and 343A of the Restatement (Second) of Torts (1965)). The Carrender court concluded that the plaintiff's testimony established that the danger was known and obvious. The plaintiff contended that the comparative negligence statute[4] reflected a legislative intent to eliminate the defense of assumption of risk by incorporating it into comparative negligence. The Carrender court stated:
It is precisely because the invitee assumes the risk of injury from obvious and avoidable dangers that the possessor owes the invitee no duty to take measures to alleviate those dangers. Thus, to say that the invitee assumed the risk of injury from a known and avoidable danger is simply another way of expressing the lack of any duty on the part of the possessor to protect the invitee against such dangers.... (Emphasis added.)
Id., 503 Pa. at 187-89, 469 A.2d at 125. The Carrender court found that the comparative negligence system envisioned two negligent acts: a breach of duty by the defendant to the plaintiff and failure by the plaintiff to exercise care for himself. Id. Malinder and Chiricos were, similarly, cases involving a finding that the defendant owed the plaintiff no duty.
As Jodzis emphasizes, the above cases illustrate the "no duty" category of cases under the general rubric of assumption of risk. Our courts consistently have recognized that "no duty" cases are distinct from other categories of assumption of the risk cases. Assumption of risk outside the category of "no duty" cases was discussed by the Superior Court in Fish v. Gosnell, 316 Pa.Superior Ct. 565, *246 463 A.2d 1042 (1983). There the plaintiff did not move out of the way of an oncoming car at night because he assumed it was a friend playing a joke. The trial court refused to instruct the jury on assumption of risk. The Superior Court stated that assumption of risk may be applied under the following standard:
[A] plaintiff who fully understands a risk of harm to himself ... caused by the defendant's conduct ... and who nevertheless voluntarily chooses to enter or to remain... within the area of that risk, under circumstances that manifest a willingness to accept it, is not entitled to recover for harm within that risk.
Fish, 316 Pa.Superior Ct. at 575, 463 A.2d at 1047 (quoting Section 496C of the Restatement (Second) of Torts (1965)). The Superior Court ultimately concluded that the plaintiff's conduct, although foolhardy and negligent, did not manifest a willingness to accept the risk. Id., 316 Pa.Superior Ct. at 579, 463 A.2d at 1049.
Another assumption of risk case, Berman v. Radnor Rolls, Inc., 374 Pa.Superior Ct. 118, 542 A.2d 525 (1988), involved a claim by an injured novice roller skater that the defective design of the skating rink caused his injuries. In Berman, the Superior Court stated that the defense of assumption of the risk requires that the defendant show that the plaintiff was subjectively aware of the facts which created the danger and must appreciate the danger itself, and the nature, character and extent which made it unreasonable. Id., 374 Pa.Superior Ct. at 136, 542 A.2d at 533. A defendant must show more than that the plaintiff did what a reasonable person would know was dangerous, for in that case, the plaintiff would merely be negligent, and his recovery subject to the theory of comparative negligence. Id.
Applying these principles to the present case, we conclude, first, that this is not a "no duty" case. The police and Jodzis were not in a situation equivalent to that of a possessor of land and a business invitee. Further, as the trial court and the plaintiff emphasized, the provisions of 75 Pa.C.S. § 3105(e) statutorily reaffirm the duty of police *247 engaged in a pursuit to operate their vehicles with due regard for the safety of all persons. In addition, the police policies and procedures described by Coll impose a duty on police engaged in a pursuit to protect life and property, including the life of the person pursued. N.T. Vol. I, pp. 281-82. The only exception Coll recognized to the requirement of an adequate avenue of escape in a roadblock situation is where the person fleeing "has demonstrated the willingness and ability to take lives." N.T. Vol. I, p. 292. Therefore, the fact that Jodzis took flight does not eliminate the need to leave an avenue of escape, and the City cannot rely on his "illegal" conduct to form the basis for an assumption of the risk charge.
Although the City cites and quotes from "no duty" cases such as Carrender and Chiricos, the thrust of its argument is more nearly in line with the standards described in Berman and Fish. The City argues that Jodzis made a conscious choice to place himself in a position of danger from which he could have extricated himself but deliberately chose not to do so, and asserts that, based on Jodzis' uncontroverted testimony, the jury could have believed that Jodzis was subjectively and objectively aware of the risk of collision when he cut across the path of a police car while fleeing from the police.
The City's argument is contrary to the evidence the City presented in its case. Lieutenant William Robert Bell (Lieutenant Bell),[5] called by the City, testified that a roadblock was set up, that the car was stopped, and that the car did not move from the time it stopped until the impact with the motorcycle. N.T. Vol. III, pp. 901-02. It is certainly inconsistent for the City to now argue that the danger which Jodzis perceived and accepted was the danger involved in cutting in front of a moving car.
Another danger to which the City might be referring would be that involved in attempting to drive a motorcycle through a space not large enough to accommodate it. Jodzis *248 testified that he attempted to go around the car because he saw sufficient room to go around. N.T. Vol. I, p. 193. As we have noted, Officer Barth testified that it was his intention to block as much of the road as possible and to make it "difficult at best" and "hazardous" for the motorcycle to get by. N.T. Vol. I, pp. 372, 384.[6] He testified also that there was some room between the car and the curb on his left when he stopped, but he did not know how much. N.T. Vol. II, pp. 526-27. Lieutenant Bell testified, on the basis of a photograph of the accident scene taken before the police car or the motorcycle had been moved, that the distance between the left front corner of the car and the curb was approximately six feet. N.T. Vol. III, pp. 905-06. The City did not attempt to elicit testimony from Jodzis about his perception of the adequacy of the space available, therefore the record does not sustain the assertion that Jodzis was aware of the nature and character of the danger of forcing his motorcycle through a space not large enough to accommodate it. If Jodzis perceived that the space was large enough to fit his motorcycle through, he cannot be said to have accepted the risk in the manner delineated in Fish and Berman.
Jodzis' testimony at trial raises the question of whether the car was moving slowly at the time of the accident. In its brief, the City reproduces certain testimony given by Jodzis during the trial to establish that an assumption of the risk charge should have been given. During the trial, Jodzis testified as follows:
JODZIS:
[I] decided to go through that area [on the driver's side of the police car], which was big enough for my bike to go through and still have room.
*249 As I had did that, the police car, he was going very slow, if moving at all as I came across and started to turn in front of him, and my front wheel had started to come around his front end and side of the car, he turned to the left and accelerated a little bit.
JODZIS' ATTORNEY TO JODZIS:
And what happened?
JODZIS:
It struck me and the bike on my left side.
N.T., Vol. I, at 193 (emphasis added). The trial court's opinion indicates that the police car "slowed short of [Jodzis']
[motor]cycle, then veered forward ..." Opinion of the Trial Court, August 8, 1990 at 3 (emphasis added).
The Superior Court has held consistently that it is erroneous for a trial judge to refuse to instruct the jury on the theory of contributory negligence if evidence of contributory negligence can be found in either party's case. Matteo v. Sharon Hill Lanes, Inc., 216 Pa.Superior Ct. 188, 263 A.2d 910 (1970). See also Nelson v. Barclay Motors, Inc., 414 Pa. 633, 202 A.2d 48 (1964), Brown v. Jones, 404 Pa. 513, 516, 172 A.2d 831, 833 (1961). However, Jodzis' testimony, while it may indicate negligence, does not indicate that he assumed the risk of being struck by a slowly moving police vehicle which suddenly accelerated as he tried to pass it. There was no reason for the trial court to instruct the jury in accordance with Section 496C of the Restatement.
Delay Damages
The City also contends that the trial court erred in awarding and computing delay damages pursuant to Pa. R.C.P. No. 238. Under the new version of Rule 238 promulgated by the Supreme Court after its decision in Craig v. Magee Memorial Rehabilitation Center, 512 Pa. 60, 515 A.2d 1350 (1986), a defendant is not liable for delay damages for periods after which it had made a written settlement offer, and the ultimate award to the plaintiff was not *250 more than 125% of that offer, or for periods during which the plaintiff caused the delay. The City never made a written settlement offer in this case.[7] However, the City refers to delays in pursuing discovery by the plaintiff, a motion for a continuance, and failure to place the case at issue. The trial court noted that Craig directed a court which rules on a petition for delay damages to consider a variety of factors:
In making a decision on a plaintiff's entitlement to delay damages the mere length of time between the starting date and the verdict is not to be the sole criterion. The fact finder shall consider the parties' respective responsibilities in requesting continuances, the parties' compliance with rules of discovery; the respective responsibilities for delay necessitated by the the joinder of additional parties; and other pertinent factors.
Craig, 512 Pa. at 66, 515 A.2d at 1353 (footnote omitted).
The trial court then described various discovery disputes that it said revealed a "pattern of recalcitrance" on the part of the City. The complaint was filed in May of 1981. In September of 1982, Jodzis filed a "Motion for Sanctions" which sought to compel the City to provide requested documents and to answer certain interrogatories. The trial court granted the requested relief. In July of 1984, after Jodzis had sought to depose four witnesses, he filed another "Motion for Sanctions", which asserted that counsel for the City had repeatedly and disruptively objected during depositions, had refused to instruct witnesses to answer and had instructed witnesses not to answer and otherwise impeded full responses. The court referred the matter to a special master who, after a hearing, issued a report which recommended that the City be required to provide additional testimony in regard to roughly two-thirds of the fifty-eight matters in dispute. The trial court quoted from the master's report as follows:
*251 The single most significant factor contributing to this breakdown was the unwillingness of the defendant to provide information. This may reflect a grudging approach to discovery generally. Based upon statements made at the hearing, it more likely reflects a particular distaste for this plaintiff and the claim he is asserting. Whether he is ultimately successful or not, however, as long as his action is pending, this plaintiff, like all other litigants, is entitled to make use of discovery in preparing his case.
Jodzis v. City of Pittsburgh, No. GD 81-13844, slip op. at 49-50.
The case was called to trial in October of 1986, but neither side had filed a pre-trial statement. Jodzis filed a motion to continue, without opposition from the City, and discovery continued. In July of 1987, Jodzis once again was forced to seek judicial intervention for the purpose of compelling the City to designate a witness to testify on police department policy at the time of the accident.
The court considered Jodzis' prudence in placing the case at issue as well-advised, because of the parties' previous skirmish and the pendency of further discovery, and noted that the City could have placed the case at issue, too. Concerning delays in scheduling depositions following the special master's report, the trial court observed that Jodzis had no reason to expect the City to be cooperative, and that the second round of depositions was necessary only because of the City's lack of cooperation during the first. In regard to the continuance, the trial court observed that both parties were equally surprised at the appearance of the case on the trial list, that the City did not oppose the motion, and that the City amended its new matter some ten months later, the same day on which it filed its pre-trial statement.
The Explanatory Comment 1988 to the new Rule 238 expressly notes that the burden is on the defendant who resists a motion for delay damages to prove either that the requisite offer was made or that the plaintiff was responsible for a period during which the trial was delayed. In view *252 of the history of the case, we conclude that the trial court was correct when it determined that the City did not meet its burden and was liable for delay damages in accordance with the provisions of Rule 238.
Immunity and Comparative Negligence
The City argues that this matter is controlled by the decision of a panel of this Court in Crowell v. City of Philadelphia, 131 Pa.Commonwealth Ct. 418, 570 A.2d 626, petition for allowance of appeal granted, 525 Pa. 550, 551, 582 A.2d 1311 (1990). In Crowell this Court concluded that joint tortfeasor liability of a governmental unit had been effectively eliminated by the Supreme Court's decision in Mascaro v. Youth Study Center, 514 Pa. 351, 523 A.2d 1118 (1987) (the negligence of a government instrumentality must actually cause the injury in question, not merely facilitate the injury caused by the actions of another). See Crowell, 131 Pa.Commonwealth Ct. at 425-426, 570 A.2d at 630. An en banc panel of this Court recently overruled Crowell. Buschman v. Druck, 139 Pa.Commonwealth Ct. 182, 590 A.2d 53 (1991). Although Buschman did not overrule Crowell on its essential holding that the conduct of the government instrumentality must cause a plaintiff's injuries, and not merely facilitate the injuries, Crowell no longer provides a basis for the position that governmental immunity will not lie in a joint tortfeasor situation. The City is not entitled to a judgment n.o.v. on this point.
Vehicle Exception to Municipal Tort Liability
Finally, the City asserts that the trial court erred when it permitted testimony relative to standards for the proper use and setting up of roadblocks and testimony concerning radio communications between a dispatcher and officers involved in a pursuit. The City argues that the trial court, by admitting this testimony and in its charge to the jury, introduced theories of negligence outside the statutory exceptions to governmental immunity.
*253 Section 8541 of the Judicial Code, 42 Pa.C.S. § 8541, provides for governmental immunity generally. Section 8542(a) of the Judicial Code, 42 Pa.C.S. § 8542(a), imposes liability where (1) damages would be recoverable under common law or a statute creating a cause of action from a defendant not having an immunity defense and (2) the injury was caused by negligent conduct of a local agency or its employee acting within the scope of his office or duties with respect to one of the eight exceptions. The exceptions are listed in Section 8542(b) of the Judicial Code, 42 Pa.C.S. § 8542(b), and include "(1) Vehicle liability. The operation of any motor vehicle in the possession and control of the local agency."
In Mascaro the Pennsylvania Supreme Court held that exceptions to governmental immunity are to be narrowly construed, because of the expressed legislative intent to insulate political subdivisions from tort liability. The Supreme Court has stated that the word "operation" in Section 8542(b)(1) means actually putting the motor vehicle in motion, therefore preparing to operate it or acts taken at the cessation of operation are not the same as actually operating the vehicle. Love v. City of Philadelphia, 518 Pa. 370, 375, 543 A.2d 531, 533 (1988). In Force v. Watkins, 118 Pa.Commonwealth Ct. 87, 544 A.2d 114 (1988), this Court held that the the motor vehicle exception is not applicable to training or supervision, acts which constitute preparation for the use of the vehicle. However, the fact that a police policy may relate to activity that involves the operation of a motor vehicle does not mean that violation of the policy is negligent supervision and exclusive of negligent operation. In setting up a roadblock, the operator of the vehicle must place the vehicle into position, and in doing so may create an unnecessary hazard. Under the facts of this controversy, the claim that the roadblock was improperly conducted, even if the decision to use it was proper, involves the actual operation of the vehicle.
The City first challenges the testimony of the plaintiff's expert witness, Dr. James J. Fyfe, and the portions *254 of the trial court's charge relating to that testimony. Dr. Fyfe, a former police officer, is a professor at the American University School of Justice, a senior fellow of the Police Foundation (a private nonprofit research and training foundation), a consultant to many police organizations in training matters and the author of several books, including a textbook and numerous articles relating to police training in general and police use of force in particular.[8] The trial court permitted Dr. Fyfe to testify about nationwide standards for police pursuits, when the use of a roadblock is proper and the proper method of setting up a roadblock.
Concerning pursuit in general, Dr. Fyfe's testimony is very similar to Coll's, indicating that virtually all police training materials emphasize that the primary responsibility of the police is to protect life, and that this concern outweighs apprehension. N.T. Vol. II, pp. 656-57. See N.T. Vol. I, p. 281 (testimony of Coll). Dr. Fyfe testified that the policy of the International Association of Chiefs of Police regarding roadblocks is that they may properly be used only under circumstances that justify the use of deadly force because of the hazard they create; hence roadblocks are not appropriate for stopping traffic violators. N.T. Vol. II, pp. 677, 752. Coll testified that roadblocks were not governed by the same rules applicable to use of deadly *255 force, because the roadblock, if properly set up, should not be a surprise obstruction and should allow ample time to stop. N.T. Vol. I, pp. 285-87. Concerning the standard for setting up a roadblock, Dr. Fyfe testified that a proper roadblock always leaves an avenue of escape, consistent with the obligation of the police to protect life. N.T. Vol. II, p. 679. This coincides with Coll's testimony. N.T. Vol. I, p. 281.
In the present case, Officer Barth testified that he intended to block as much of the roadway as possible and to make it hazardous for the motorcyclist to attempt to go around him. N.T. Vol. I, p. 384, Vol. II, p. 506. Jodzis testified that the police car, driven by Officer Barth, may have been "moving slowly" but accelerated as he tried to pass it on the right side and struck his motorcycle. N.T., Vol. I, p. 193-194. In response to hypothetical questions, Dr. Fyfe rendered his opinion that, if after both vehicles had come nearly to a stop, the police car rammed the motorcycle as it cut in front, such conduct would violate both national police standards and the policies of the Pittsburgh Police as described by Director Coll. Also if the police car set up a roadblock intending to block the entire road and to make it hazardous for the motorcycle to go around, such conduct would violate national and local standards. And if the police officer acted without knowledge of the policy of protecting life and his only intent was to stop the motorcyclist, such conduct would violate national and local standards. Finally, if the police department failed to provide training relating to ramming or the proper use and implementation of roadblocks, this did not conform to national standards. N.T. Vol. II, pp. 685-95.
The City mischaracterizes Dr. Fyfe's testimony by stating that his description of nationwide standards implies that it is reasonable for violators to flee the police and that the police are negligent and should be liable because they dare to pursue. In fact, Dr. Fyfe testified regarding policies which govern pursuit of fleeing traffic violators, noting that such policies are necessary because vehicle pursuits *256 are among the most tense situations that police face; he did not state that pursuit was per se unreasonable. N.T. Vol. II, pp. 659, 663. In the context of the overriding principle of protecting life, Dr. Fyfe described guidelines which included: not undertaking the pursuit unless a "serious defendant" is involved; advising the dispatcher immediately of the type of vehicle and type of offense and keeping the dispatcher posted as to the progress of the pursuit; not riding on the bumper of the fleeing vehicle because that increases the speed and the danger; cutting the pursuit off when it becomes clear that it is dangerous; and advising the dispatcher if another vehicle joins in the pursuit. N.T. Vol. II, pp. 672-74. None of Dr. Fyfe's testimony contradicts the postulates of Pennsylvania law as set forth in Bickert v. Borough of Riverside, 118 Pa.Commonwealth Ct. 91, 545 A.2d 962 (1988) and Commonwealth v. Hunter, 240 Pa.Superior Ct. 23, 360 A.2d 702 (1976), relied upon by the City.[9] The standard of care exercised by a police officer when operating a motor vehicle is an appropriate subject for inquiry under the terms of the exception to governmental immunity. Bickert, 118 Pa.Commonwealth Ct. at 95, 545 A.2d at 964.[10]
As the trial court instructed the jury at the outset of the case, Section 3105 of the Vehicle Code, 75 Pa.C.S. § 3105, grants privileges to drivers of emergency vehicles (including police cars engaged in actual pursuit of suspected violators) with regard to certain traffic laws, but also provides as follows: "(e) Exercise of care. This section does not relieve the driver of an emergency vehicle from the duty to drive with due regard for the safety of all persons." N.T. Vol. I, p. 95. The trial court noted that the Superior *257 Court has frequently recognized that national standards of custom or practice in a given profession or industry, although not dispositive or required, are persuasive indicia of the requisite standard of care. The Superior Court approved the admission of such evidence relating to police practices in connection with accident scenes in Kubit v. Russ, 287 Pa.Superior Ct. 28, 429 A.2d 703 (1981).[11] The admission of evidence of national standards involving police pursuit procedures, the proper use of roadblocks and the proper method of setting up roadblocks was proper.
However, the City also contends that the trial court erred in its instructions to the jury. Erroneous jury instructions may be the basis for a new trial if it is shown that the instructions were fundamentally in error and might have been responsible for the verdict. Ott v. Buehler Lumber Company, 373 Pa.Superior Ct. 515, 541 A.2d 1143 (1988). The City alleges two errors in the instructions given by the trial court. The first concerns the alleged negligence of Lieutenant Bell. Officer Barth testified that the division of labor between them was that the driver (Officer Barth) drove and the passenger (Lieutenant Bell) wrote the reports and manned the radio. N.T. Vol. II, p. 525. The trial court instructed the jury that the City would be liable for negligent actions of Officer Barth or Lieutenant Bell. N.T. Vol. IV, p. 1212. The City asserts that they cannot be liable for the actions of Lieutenant Bell, because operation of the police radio is not operation of the motor vehicle within the meaning of Section 8542(b)(1), 42 Pa.C.S. § 8542(b)(1).
The trial court noted that Coll's testimony, and that of Lieutenant Bell himself, emphasized the role of radio communication as an integral aspect of the control of a police vehicle. Coll testified that the role of a supervisor in the Pittsburgh Police Department is to monitor all of the actions of the officers on his shift, including radio communications *258 of officers engaged in a pursuit and, if there was a need, to lend supervision, which frequently included calling off a pursuit. N.T. Vol. I, pp. 339-40. Lieutenant Bell testified that the communication between the chase officers and the dispatcher provided the dispatcher and the supervisor with the opportunity to review what was happening. Lieutenant Bell agreed that the dispatcher and the supervisor "controlled" the cars in that they could direct the officers to stop or proceed. N.T. Vol. III, pp. 960-61.
As noted, under the motor vehicle exception to governmental immunity, liability is restricted to instances where the operation of the motor vehicle in the possession and control of the agency causes harm. 42 Pa.C.S. § 8542(b). The term "operation" must be interpreted narrowly, as actually putting the motor vehicle in motion. Love. While this Court has previously held that there is some communication inherent in the operation of a vehicle, particularly the exchange of commonly acknowledged signals among drivers, Vogel v. Langer, 131 Pa.Commonwealth Ct. 236, 569 A.2d 1047 (1990), the trial court concluded that Lieutenant Bell's description of the police radio system established that the operation of a motor vehicle as a police car actually involves three people the dispatcher who gives instructions to the radio operator/passenger who in turn instructs the driver on matters of direction, speed etc. Although not untenable, such a conclusion does stretch the concept of "operation" beyond precedent. The exchange of information between the dispatcher and the radio operator is, at most, verbal supervision of the operation of the vehicle, but it is not "operation" as contemplated by Love, nor is it an essential part of operating the vehicle in traffic, as in Vogel. Consequently, we agree with the City that the trial court's instruction to the jury on this point was erroneous insofar as Lieutenant Bell's conduct in not contacting the dispatcher cannot be recognized as a basis for liability.
The City also contends that the trial court erred in instructing the jury that even a properly set up roadblock *259 can form a basis for a finding of negligence on the part of the City. The trial court instructed the jury as follows:
The City, in this regard, that is, concerning a roadblock, could be negligent if you, the jury, determine that utilization of a roadblock in a situation such as this is an act of negligence. If you find that it's wrongful for a roadblock to have been used in this situation where they're attempting to apprehend a traffic violator, that in and of itself would be negligence as a matter of law even to use a roadblock.
N.T. Vol. IV, p. 1214. We must recognize that decisions rendered subsequent to the able trial court's handling of this issue, particularly Bickert, approve a different rationale. There is no exception to governmental immunity for negligent decisions made by the police in determining which apprehension techniques to enact. This instruction and the erroneous instruction concerning Lieutenant Bell are sufficient ground to justify the granting the City's request for a new trial, as they possibly were responsible for the jury's determination that the City was negligent.
We therefore reverse the orders of the trial court and remand for further proceedings consistent with this opinion.
SMITH, J., dissents.
PELLEGRINI, J., did not participate in the decision in this case.
ORDER
AND NOW, this 10th day of April, 1992, the orders of the Court of Common Pleas of Allegheny County, dated November 3, November 8 and November 13, 1989, at No. GD 81-13844, are reversed and this matter is remanded.
Jurisdiction relinquished.
SMITH, J., dissents.
PELLEGRINI, J., did not participate in the decision in this case.
*260 COLINS, Judge, concurring and dissenting.
I, as does Judge Kelley, agree with the majority that a reversal and remand for a new trial are warranted. I further wish to indicate that I join with Judge Kelley in his concurring and dissenting opinion, insofar as it would require the trial court to instruct the jury on assumption of risk.
However, I wish to further express my belief that the trial court erred in its granting of a Motion in Limine to exclude any evidence relating to the fact, as noted by the majority, that at the time of the pursuit and accident, Jodzis was in possession of a handgun, stolen from the Office of the District Attorney of Westmoreland County, controlled substances and "hollow point" ammunition.
It is true that Jodzis admitted that he fled from the police initially and, at the time of his attempted circumvention of the second police car, that he was fully aware that it was a police vehicle, the purpose of which was to make him stop, and that he intentionally did not stop. However, Jodzis contends that the police car intentionally moved forward and struck him. The police deny this. Therefore, there exists a further motive to testify falsely regarding whether the police car was moving.
Since the testimonies of the witnesses were at odds concerning this portion of the chase, the jury should not be deprived of evidence which would underscore and amplify Jodzis' desire to escape from the police and, therefore, further reflect upon his credibility.
The jury should not be allowed to hear this case in a vacuum, knowing only a portion of the facts surrounding this controversy. Since these additional facts would relate to Jodzis' credibility and also his need or desire to incur incredible risk in his effort to escape apprehension at all cost, the mention of the contraband would not only be relevant, but would also provide the jury an additional tool in assessing the credibility of the parties.
*261 KELLEY, Judge, concurring and dissenting.
I agree with the majority that a reversal and remand for a new trial are required here, and further agree with most of the majority's analysis. I write separately only because I believe that on remand, the City is entitled to its requested instruction on assumption of the risk.
In Rutter v. Northeastern Beaver County School District, 496 Pa. 590, 437 A.2d 1198 (1981), a plurality of our Supreme Court was prepared to abolish the doctrine of assumption of risk in its entirety, finding it unnecessarily confusing and inconsistent with Pennsylvania's comparative negligence statute, 42 Pa.C.S. § 7102. This view, however, has never garnered a majority of the justices. To the contrary, as the majority recognizes, the appellate courts of this state have continued to apply the doctrine, at least under certain circumstances. (Maj. op. at 243-248 and cases cited therein). I believe that this case is a classic example of such circumstances.
The cases of Fish and Berman cited by the majority could best be classified as "secondary" assumption of risk cases; i.e., cases in which the plaintiff's conduct was unreasonable in pursuing a course of conduct when he knew or should have known of the danger. In these cases, assumption of risk "overlaps with the defense of contributory negligence." Jones v. Three Rivers Management Corp., 483 Pa. 75, 78, 394 A.2d 546, 552-53 (1978). On the other hand, "primary" assumption of risk occurs where the plaintiff "knew of the risk, appreciated its character, and voluntarily chose to accept it." Id. In its primary sense, assumption of risk remains viable as a complete bar to recovery in Pennsylvania. Carrender v. Fitterer, 503 Pa. 178, 469 A.2d 120 (1983), Malinder v. Jenkins Elevator & Machine Co., 371 Pa.Superior Ct. 414, 538 A.2d 509 (1988), Smith v. Seven Springs Farm, Inc., 716 F.2d 1002 (3d Cir.1983).
Only when a plaintiff was "subjectively aware of the facts which created the danger and ... must have appreciated the danger itself and the nature, character and extent *262 which made it unreasonable," and nevertheless voluntarily chose to encounter the risk will the plaintiff be held to have assumed the risk in the "primary" sense. Fish, 316 Pa.Superior Ct. at 578, 463 A.2d at 1049.
An important factor in determining whether a plaintiff has assumed the risk in a "primary" sense is the timing of his voluntary choice. When the choice is made prior to the occurrence of the physical event immediately preceding the injury, assumption of risk in the primary sense will most likely be found. Malinder, 371 Pa.Superior Ct. at 426, 538 A.2d at 515, while acts of the plaintiff more immediately preceding the actual accident are more likely to be analyzed in terms of "secondary" or negligent conduct. Fish, 316 Pa.Superior Ct. at 578-79, 463 A.2d at 1049.
It is at this point that I must separate myself from the majority's analysis. While the majority dissects the course of conduct involved, and analyzes the "risk" solely as the risk of being hit by a police car while attempting to escape from the roadblock, I believe that the entire course of events must be viewed. Jodzis made his voluntary choice when he first elected to evade the police, rather than to stop as was his lawful duty. At that point, Jodzis, by voluntarily engaging in a deliberate attempt to avoid apprehension, assumed the risk that his unreasonable, and indeed unlawful conduct might well result in injuries to himself, the pursuing police officers, or the general public. That a high-speed chase might result in a vehicle collision is so painfully obvious that Jodzis must have been aware of it.
Because Jodzis assumed the risks inherent in a high-speed chase when he first chose to evade police rather than stop, I would hold that this case is more correctly classified as a "primary" rather than a "secondary" assumption of risk. I would also conclude that the facts of this case do not automatically mandate judgment against Jodzis. If Jodzis' testimony that the police car intentionally "rammed" him is believed, this intentional act by the police would most certainly be found to be beyond the scope of the risk *263 assumed by Jodzis. This, however, is an issue of fact which must be decided by a jury.
NOTES
[1] See Section 8553 of the Judicial Code, 42 Pa.C.S. § 8553.
[2] Local Rule 212 was substantially rewritten effective March 18, 1991. The new Local Rule 212 III. A. 3. requires each party to serve a written pre-trial statement containing "a copy of the written report containing the opinions and the basis therefor of any person who may be called as an expert...."
[3] The question of whether or not a roadblock existed and how it was configured was disputed by the parties. At trial, Jodzis testified that when he encountered the second police car coming toward him it entered his lane and continued to change lanes in front of him in response to his motions in an apparent attempt to block his path. Notes of Testimony, September 30, 1987 through October 8, 1987, (N.T.) Vol. I, pp. 190-191. Officer Joseph L. Barth (Officer Barth), the driver of the second police car, testified that upon encountering Jodzis on his motorcycle he attempted to blockade the road. N.T., Vol. I, p. 369.
[4] Section 7102 of the Judicial Code, 42 P.S. § 7102.
[5] Lieutenant (then Officer) Bell was the partner of Officer Barth and a passenger in the police car involved in the roadblock.
[6] Counsel for the City objected to questioning of Officer Barth concerning the degree of obstruction that he intended to create, in view of Jodzis' testimony that he thought there was enough room to go around. The trial court overruled the objection, stating that, on this factual issue within the province of the jury, the trial court would accept evidence of the possibly different memories of various witnesses. N.T. Vol. I, pp. 374-76.
[7] After the jury was selected and the trial was set to commence, the City made an oral settlement offer of $10,000.
[8] The City also asserts on appeal that the trial court erred by denying its motion for withdrawal of a juror when Dr. Fyfe, during redirect examination on his qualifications, responded to a question concerning how he decides to become involved in cases by stating that he decided whether the attorney who approached him was on the right side. N.T. Vol. II, p. 639. During sidebar conference on the City's motion, counsel for the City asserted that the only thing that would cure the prejudice would be for the trial court to admonish the jury that the witness' statement was improper. Over objection from the plaintiff the trial court did instruct the jury that the statement was improper, and the trial court further emphasized the jury's role as sole fact finder and the irrelevance of the opinion of anyone else as to which side in the case is right. N.T. Vol. II, p. 645-50. Both counsel declined the trial court's invitation to comment after the curative charge. N.T. Vol. II, p. 650. The trial court addressed this issue at some length in its opinion, and we agree that counsel's acquiescence in the curative charge constituted waiver of the record objection.
[9] Bickert confirmed that averred acts of negligence which do not concern the operation of the motor vehicle, particularly the decision whether or not to pursue another vehicle, fall outside the exception to governmental immunity. Hunter is a criminal case which held that police are justified in attempting to stop a car which has committed a clear traffic violation in their presence.
[10] See also Baker v. Hawks, 127 Pa.Commonwealth Ct. 92, 560 A.2d 939 (1989) and Dickens v. Upper Chichester Township, 123 Pa.Commonwealth Ct. 226, 553 A.2d 510 (1989).
[11] The City's assertion that Kubit is inapplicable because it was decided before the enactment of the predecessor to 42 Pa.C.S. § 8542 is incorrect. The trial court relied on Kubit to show the admissibility of evidence of customary police practices to establish the applicable standard of care.
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742 F.Supp. 402 (1990)
Henry LOGAN, Plaintiff,
v.
UNITED STATES of America, Defendant.
No. C 87-0123-L(B).
United States District Court, W.D. Kentucky, Louisville Division.
May 17, 1990.
*403 Norman E. McNally, Louisville, Ky., for plaintiff.
Richard Dennis, Asst. U.S. Atty. and David Busse, Veterans Admin., Louisville, Ky., for defendant.
MEMORANDUM
BALLANTINE, District Judge.
Plaintiff, an Army veteran, commenced this Federal Tort Claims action, Title 28 U.S.C. § 2671 et seq., against the Veterans Administration Medical Center (VAMC) in Louisville, alleging medical malpractice, unnecessary and improper surgery, and lack of informed consent to the surgery. The matter was tried on November 29, 1989, and is before the Court or findings of fact, conclusions of law and judgment. F.R. Civ.P. 52.
It is conceded that plaintiff has exhausted his administrative remedies, Title 28 U.S.C. § 2675(a), and, therefore, the Court has jurisdiction of the subject matter and of the parties. Title 28 U.S.C. § 1346(b).
A preliminary matter needs to be addressed.
Following the trial, counsel for defendant requested that post-trial briefs and memoranda be delayed until the transcript of evidence had been filed. The transcript was filed February 9, 1990, and the parties were ordered to submit simultaneous memoranda. After extensions were granted, defendant filed its memorandum on April 6, 1990, but, as of the date of this memorandum, plaintiff has not filed any post-trial brief. The Court will therefore prepare its findings without guidance from plaintiff.
The following recitation of plaintiff's history is taken from United States' Exhibit 2 at trial, plaintiff's medical record at VAMC, and references to "MR ____" indicates the page at which the procedure is described.
Plaintiff has a lengthy history of foot problems dating back to 1966. Those problems *404 were finally diagnosed as intractable plantar keratosis (IPK). When conservative treatment by the Podiatry Clinic at VAMC, consisting of shaving, the application of acid, and corrective shoes and appliances, failed to accomplish any permanent relief, on January 20, 1983, plaintiff was referred to the Orthopedic Clinic for surgery (MR 10).
On February 15, 1983, plaintiff underwent a surgical procedure described as resection of the left third metatarsal head (MR 11). On April 26, 1983, plaintiff underwent the same procedure on his right foot (MR 18).
On June 2, 1983, plaintiff was diagnosed as having "hammer toe" on his left foot, and on July 13, 1983, he underwent an arthrodesis of the second toe of his left foot (MR 23).
When plaintiff's complaints of pain persisted, he returned to VAMC and on March 14, 1984, the second and third toes on the left foot were removed (MR 26).
On August 28, 1984, plaintiff underwent yet another surgical procedure following a diagnosis of a neuroma at the site of the March 14, 1984, surgery and a hammer toe on the right foot (MR 31). The neuroma was removed and the hammer toe was fused at the proximal interphalangeal joint (MR 31).
Plaintiff's foot problems persisted and on August 9, 1985, another neuroma and a plantar wart were removed from his left foot (MR 44).
At the outset, it must be noted that Kentucky law applies to this controversy. Title 28 U.S.C. § 1346(b). See Hess v. United States, 361 U.S. 314, 80 S.Ct. 341, 4 L.Ed.2d 305 (1960), and Welsh v. United States, 844 F.2d 1239 (6th Cir.1988).
In Kentucky, "[N]egligence in medical malpractice cases must be established by expert testimony unless negligence and injurious results are so apparent that a layman with general knowledge would have no difficulty in recognizing it." Morris v. Hoffman, 551 S.W.2d 8, 9 (Ky.App.1977).
The Court has no difficulty in holding that the circumstances of this case require the introduction of expert testimony and we therefore will not analyze the plaintiff's testimony as it relates to his claim of malpractice and his claim that the surgical procedure departed from the standard of care in such cases. Also before beginning our discussion it should be clear that plaintiff is making no claim for his problems with his right foot (Plf's depo. p. 50-52).
At trial plaintiff introduced the deposition testimony of Dr. Louis Heusmann, a Board-certified orthopedic surgeon who practices in Delaware, Ohio.
Neither Dr. Heusmann nor plaintiff suggests that the surgical procedures were negligently performed. The thrust of plaintiff's complaint is that the surgery was an inappropriate method of treating plaintiff's condition.
Dr. Heusmann's deposition is difficult to summarize owing in part to the repeated colloquies between counsel. When asked what procedures he considered would be a violation of the standard of care in plaintiff's surgery, Dr. Heusmann responded: "A resection of met[atarsal] head or plantar wart." (Depo. p. 43-44). Dr. Heusmann was then asked:
"Q. You don't consider that there was intractable plantar keratosis here?
A. There might have been, but I don't think that is synonymous with verruca plantars or plantar wart.
Q. If there had been IPK here, would the resection of the metatarsal head have been a violation of the standard of care?
MR. MCNALLY: For treatment of what condition?
A. He is saying, if I understand your question right, if the patient, hypothetically, if the patient had had IPK.
Q. Yes.
A. Would resection on the met head be a standard of deviation of the standard of care.
Q. That's correct.
A. And I said no.
Q. Why do you not believe that IPK was present here?
A. I didn't say that.
*405 Q. All right. Let me rephrase that. Doesn't the medical record indicate that IPK was present?
A. Yeah.
Q. And wasn't there a resection of the metatarsal head done for the condition of IPK?
MR. MCNALLY: On the left foot?
A. I would have to go back and refresh my memory. I am talking about the initial operation.
It was my understanding that the initial operation was done, resection of the met head, for intractable verruca plantars or plantar wart. And I believe that first operation of the left foot was 8-27-81.
Q. That wouldn't have been '81.
A. That's when he was first seen, sorry.
MR. MCNALLY: 2-14-83. Somewhere around there.
A. 2-14 or 2-15 of '83. That's correct. I am sorry. That's the right third. I am looking for the left third. Left third metatarsal head resection. Okay.
* * * * * *
Q. And it is your opinion based upon your review in this case that there was at the time of the first surgery in 1983 verruca plantars or plantar's warts but not IPK?
A. Yeah, well, the admitting note on 2-14-83 says patient has been treated with multiple methods, nitrogen, acid, metatarsal block and shaving.
Now, in my teaching and training and knowledge, you don't use nitrogen and well, you usually don't use acid in the context here of acid on IPK.
You might use a metatarsal block or shaving, but I don't know that you use this is treatment directed at plantar wart that he is describing here.
Q. Is it probable, doctor, that he was being treated for both IPK and plantar's warts?
A. It could be, yes."
(Deposition, pp. 44-46, 48-49.)
Dr. Heusmann did not challenge the resection of the metatarsal head as the appropriate treatment for IPK. Rather, he assumed that the surgery was for treatment of plantar warts.
A review of the medical records discloses that as early as September 3, 1981, plaintiff was diagnosed by the VAMC Podiatry Clinic as having traumatic IPK (MR 3), and that that diagnosis was repeated on January 7, 1982 (MR 6), March 4, 1982 (MR 7), April 29, 1982 (MR 7), July 8, 1982 (MR 8), and September 2, 1982 (MR 9). Finally, on January 20, 1983, the record reports that plaintiff was referred to the orthopedic surgeon, Dr. O. James Hurt "for consideration metatarsal head section 3rd lt. foot" (MR 10).
Dr. Chester Nava, the podiatrist who made the entries in plaintiff's record relating to IPK, testified that after he had unsuccessfully tried conservative treatment of plaintiff's IPK, he consulted with Dr. Hurt and plaintiff, and it was agreed that surgery was the only viable option (Transcript of Evidence, p. 60 et seq.)
Dr. Hurt is a Board-certified surgeon who was the Chief of the orthopedic clinic at VAMC until his retirement in 1986 (T.E. 135). He first saw plaintiff on January 20, 1983 (T.E. 129), and at the time of the first surgery, there was a diagnosis of IPK (T.E. 133).
Dr. Hurt also testified that prior to the surgery, he was familiar with the prior treatment plaintiff had received from Dr. Nava and that he knew of no conservative measure that should have been taken that was not. (T.E. 137-138).
Dr. Hurt testified from the medical records that the first diagnosis of a hammer toe on the left foot was made June 2, 1983 (T.E. 148). Plaintiff was seen again on June 27, 1983, and was put on the waiting list for surgery. (T.E. 150). On July 13, 1983, plaintiff underwent surgery for repair of a hammer toe (T.E. 152).
In March, 1984, plaintiff underwent another surgical procedure described as, "a disarticulation of the second and third metatarsal phalangeal joints of the left foot." In plain English, his second and third toes were amputated. (T.E. 153). Dr. Hurt *406 was of the opinion that the amputation was the only remedy that would relieve plaintiff's intractable pain in his foot (T.E. 154).
The Court has set forth Dr. Hurt's testimony in some detail because it is felt that, as the treating physician, his testimony is entitled to greater weight than that of Dr. Heusmann. This conclusion is strengthened by the fact that Dr. Heusmann's opinion that the treatment was a departure from standard practice was premised on his belief that plaintiff's main complaint was plantar warts. The medical record establishes that the condition which the metatarsal head resection was intended to relieve was IPK, not plantar warts.
All of the credible evidence before the Court convinces the Court that there was no departure from the standard of care in treating plaintiff's IPK. Dr. Heusmann's opinion to the contrary is based on his misunderstanding of the condition for which the surgery was performed.
We turn next to the claim of lack of informed consent.
Prior to each surgical procedure, plaintiff executed either a form styled, "Request for administration of anesthesia and for performance of operation and other procedures" (MR 12, 19, 24, 28), or a form styled, "Patient Consent." (MR 37-38, 45-46).
Each of the first four forms contained a handwritten description of the surgery to be performed. Those descriptions are in everyday English: "Make incisionfind tip of bone and saw it off and remove it" (MR 12), "remove bone from foot" (MR 19), "operation to allow straightening of second toe on left foot" (MR 24), and "removal of 2nd and 3rd toes left foot." (MR 28).
The patient consent forms likewise contain descriptions which are readily understandable by a layman: "to fuse middle joint of R 2nd toe to explore L foot to remove nerve ending," (MR 37), and "to remove neuroma and shave the callus from left foot." (MR 45).
At trial, plaintiff testified that Dr. Hurt did not explain the complications that could arise from the surgery, including infection, death, or changes in the way he would walk, and that had such information been given to him, he would not have consented (T.E. 15-16). This testimony is refuted by the testimony of Dr. Nava (T.E. 66-68, 84, 85-87, 98-100, 108-109), and Dr. Hurt (T.E. 155, 161-164, 167-169, 181-183, 185-186).
The forms which plaintiff signed but which he denies reading (T.E. 41-42) provide that the patient had no guarantees made concerning the results and that the risks and expected results had been explained.
The standard for determining whether a patient's consent is informed is set forth in KRS 304.40-320 (1976):
"In any action brought for treating, examining, or operating on a claimant wherein the claimant's informed consent is an element, the claimant's informed consent shall be deemed to have been given where:
(1) The action of the health care provider in obtaining the consent of the patient or another person authorized to give consent for the patient was in accordance with the accepted standard of medical or dental practice among members of the profession with similar training and experience; and
(2) A reasonable individual, from the information provided by the health care provider under the circumstances, would have a general understanding of the procedure and medically or dentally acceptable alternative procedures or treatments and substantial risks and hazards inherent in the proposed treatment or procedures which are recognized among other health care providers who perform similar treatments or procedures.
* * *"
In Holton v. Pfingst, 534 S.W.2d 786 (Ky.1975), decided before the enactment of the statute just quoted, the Court articulated the standard by which the extent of disclosure is to be judged:
"If it is the law, and it surely is, that a physician ordinarily is not liable for an honest mistake in judgment, when he follows acceptable medical standards for examination and diagnosis and treatment, *407 then the extent of disclosure relevant to securing the patient's consent must be evaluated in terms of what the physician knew or should have known at he time he recommended the treatment to the patient."
534 S.W.2d at 789.
Even plaintiff's expert, Dr. Heusmann, conceded that in his practice he didn't list each and every conceivable complication attendant on surgical procedure. (Depo. 52).
The Court rejects plaintiff's testimony that he would have refused the surgery had he known of the risk. While he might have refused the surgery had he known of the ultimate results, no results were guaranteed, and results do not equate with risks.
It is hornbook law that, in the absence of a contract to cure a patient or to accomplish a result, a physician does not warrant or insure either a correct diagnosis or a successful course of treatment. Prosser and Keaton on Torts, 5th Ed. (1984), § 32 at page 186.[1] This statement has been cited with approval by the Court of Appeals of Kentucky, then Kentucky's highest court, in Hackworth v. Hart, 474 S.W.2d 377 (Ky.1971).
The Court finds that plaintiff's consent was informed in that defendant's agents' disclosure to plaintiff was based on what they knew or reasonably expected the result would be. That they may have been wrong is no more than an honest mistake in judgment for which they are not liable. Holton v. Pfingst, supra.
CONCLUSION
While it is regrettable that plaintiff's longstanding foot problems, no doubt exacerbated by his tour of duty in Viet Nam, cannot be cured by any medical or surgical treatment, the Court finds that there is no credible evidence of negligence. The Court further finds that the treatment given plaintiff did not fall "below the degree of care and skill expected of a reasonably competent practitioner." Reams v. Stutler, 642 S.W.2d 586, 588 (Ky.1982).
Finally, the Court finds from a preponderance of the evidence that defendant's agents explained in sufficient detail the risks and expected results of each procedure so as to render plaintiff's consent to the procedure informed.
Judgment will be entered for defendant.
An appropriate order has been entered this 17th day of May, 1990.
NOTES
[1] The authors note that a doctor seldom contracts to cure a patient, and counsel for plaintiff conceded that "no physician does [guarantee success] and, I understand, never made any claim that you did." (T.E. 182).
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23 Cal.2d 670 (1944)
THE PEOPLE, Respondent,
v.
DAN KOLEZ, Appellant.
Crim. No. 4507.
Supreme Court of California. In Bank.
Feb. 1, 1944.
Grover C. Julian for Appellant.
Robert W. Kenny, Attorney General, and T. G. Negrich, Deputy Attorney General, for Respondent. *671
THE COURT.
An information was filed charging defendant with the murder of Roscoe Edward Sutton in Lassen County on December 25, 1942. Defendant pleaded not guilty and not guilty by reason of insanity. After trial, the jury returned a verdict finding defendant guilty of murder in the first degree, without recommendation. Defendant then moved to withdraw the insanity plea. The trial court informed defendant that as a result of the verdict there was no alternative except to pronounce the death sentence if he withdrew his plea of insanity. Defendant and his counsel assured the court that they fully understood the effect of the verdict and in response to the court's inquiry stated that they still desired to withdraw the insanity plea. The motion to withdraw the plea was thereupon granted and defendant was sentenced to death. He orally announced this appeal from the judgment.
Defendant is a cook by trade and at the time of the homicide was employed in a restaurant at Doyle, Lassen County. Deceased was a regular patron of the restaurant. He died from stab wounds in the abdomen inflicted by defendant while the two men were in the restaurant. There was no eyewitness to the scuffle which preceded the stabbing, but the restaurant proprietor heard the noise incident thereto, and, turning, saw the deceased bending over and the defendant holding a knife, which the proprietor took from him. Apparently the homicide resulted from defendant's jealousy over attentions shown by the deceased to a waitress in the restaurant.
No challenge is made as to the sufficiency of the evidence to support the verdict and judgment, and further statement of the facts surrounding commission of the homicide is therefore unnecessary.
[1] Defendant's sole contention upon this appeal is that the trial court erred in giving the following instruction:
"If the Jury in this case should find the defendant guilty of murder in the first degree, and they also shall find the further fact that there are some extenuating circumstances or facts in the case, it is within their discretion to pronounce such a sentence as will relieve the defendant from the extreme penalty of the law. The Penal Code invests a Jury in a criminal case of murder with the discretion, limited to determining which of two punishments shall be inflicted, and is to be employed, only when the Jury is satisfied that the lighter *672 penalty should be imposed. If the evidence shows the defendant to be guilty of murder in the first degree, but does not show some extenuating facts or circumstances, it is the duty of the Jury to find a simple verdict of murder in the first degree, and leave with the law the responsibility of fixing the punishment."
Defendant argues that this instruction is prejudicially erroneous as an attempt on the part of the trial court to circumscribe and control the discretion given to the jury in such cases by section 190 of the Penal Code, which reads: "Every person guilty of murder in the first degree shall suffer death, or confinement in the state prison for life, at the discretion of the jury trying the same; ..." The trial court also gave an instruction in the language of the code section.
It has been held in a long line of decisions that the giving of an instruction similar to the one above quoted is not erroneous. (People v. Jones, 63 Cal. 168, 169-170; People v. Murback, 64 Cal. 369, 370 [30 P. 608]; People v. Brick, 68 Cal. 190, 191-192 [8 P. 858]; People v. Olsen, 80 Cal. 122, 128 [22 P. 125]; People v. Bawden, 90 Cal. 195, 197-198 [27 P. 204]; People v. Rogers, 163 Cal. 476, 483-484 [126 P. 143]; People v. Harris, 169 Cal. 53, 70 [145 P. 520]; People v. Wolfgang, 192 Cal. 754, 761-762 [221 P. 907]; People v. Reid, 193 Cal. 491, 496 [225 P. 859]; People v. Casade, 194 Cal. 679, 682-683 [230 P. 9]; People v. Perry, 195 Cal. 623, 640 [234 P. 890]; People v. Craig, 196 Cal. 19, 28 [235 P. 721]; People v. Bollinger, 196 Cal. 191, 207 [237 P. 25]; People v. Arnold, 199 Cal. 471, 500 [250 P. 168]; People v. King, 13 Cal.2d 521, 525 [90 P.2d 291]; People v. Smith, 15 Cal.2d 640, 651 [104 P.2d 510]; cf. People v. Smith, 13 Cal.2d 223, 228 [88 P.2d 682]; and see People v. Welch, 49 Cal. 174, 178.)
The judgment is affirmed.
TRAYNOR, J.
I dissent. Section 190 of the Penal Code in providing that the punishment for first degree murder is life imprisonment or death "in the discretion of the jury" imposes no limitation on that discretion. The Legislature did not distinguish between one kind of first degree murder and another, nor did it establish death as the ordinary punishment for first degree murder and life imprisonment as the exceptional one. The Legislature did not prescribe, nor did it authorize the court to prescribe, rules to govern which *673 punishment should be imposed but "confided the power to affix the punishment between these two alternatives to the absolute discretion of the jury." (People v. Leary, 105 Cal. 486, 495-496 [39 P. 24].) It thus left it to the jury to decide whether capital punishment should be invoked. "The authority of the jury to decide that the accused shall not be punished capitally is not limited to cases in which the court, or the jury, is of opinion that there are palliating or mitigating circumstances. But it extends to every case in which, upon a view of the whole evidence, the jury is of opinion that it would not be just or wise to impose capital punishment. ..." (Winston v. United States, Strather v. United States, and Smith v. United States, 172 U.S. 303, 313 [fn. *] [19 S.Ct. 212, 43 L.Ed. 456], quoted in People v. Bollinger, 196 Cal. 191, 206 [237 P. 25]; see Bye, Capital Punishment, 17 Journal of Amer. Inst. of Crim. Law, pp. 234, 236.)
The trial court in the present case limited the jury's discretion *674 in this respect by instructing it that "If the evidence shows the defendant to be guilty of murder in the first degree, but does not show some extenuating facts or circumstances, it is the duty of the jury to find a simple verdict of murder in the first degree, and leave with the law the responsibility of fixing the punishment." In disregard of the statute, the court usurped the power of the jury to determine the considerations that would govern its choice of one punishment or the other. Moreover it decided, without statutory authority, that death should be the ordinary punishment for first degree murder and life imprisonment the exceptional one. It thereby greatly reduced the chances of the jury's imposing the lesser sentence to the prejudice of the defendant. It was the duty of the jury to follow the court's instructions, and since it was not permitted to exercise the discretion plainly given it by the statute, there are no grounds for holding that a different result would have been improbable had the instruction not been given. (People v. Putnam, 20 Cal.2d 885, 892 [129 P.2d 367].) "The proper practice for the trial court is to refrain from giving any instructions which might have a tendency in the slightest degree to influence or control the discretion of the jury in its determination of the proper penalty in a case where the defendant is charged with murder in the first degree." (People v. Martin, 12 Cal.2d 466, 470-471 [85 P.2d 880].)
For over fifty years precedents have accumulated condemning such instructions, even though the court has fallen short of reversing judgments because of them. As early as 1891, in People v. Bawden, 90 Cal. 195 [27 P. 204], the court said, "It is to be hoped, however, that trial courts will not make further excursions into this doubtful domain." In 1912, when the instruction was challenged, the court declared that such an instruction was not error, but that "If the question presented were a new one, there would be strong reasons for holding in accord with defendant's claim." (People v. Rogers, 163 Cal. 476, 483-484 [126 P. 143].) In 1925, in People v. Bollinger, 196 Cal. 191, 207-209 [237 P. 25], the court expressed itself in more emphatic terms: "In our opinion, the trial court should never instruct the jury as to how the discretion should be exercised. ... While we are satisfied that the giving of such instructions is opposed to the provisions of section 190 of the Penal Code, we are not prepared to *675 depart from the decisions on this point. ... We have, however, gone into the subject in the hope, if not the expectation, that the practice of giving such instructions may be abated, thus giving assurance that the penalty reflects the decision of the jury alone. ... And considering the number of times this court has held that section 190 confers on the jury alone the discretion of determining the punishment in cases of guilt of murder in the first degree, trial courts, especially where a human life is at stake, should not interfere with the discharge of that solemn duty by the jury." (See, also, People v. Ross, 134 Cal. 256, 258-259 [66 P. 229]; People v. Martin, supra.) In 1939, in People v. Smith, 13 Cal.2d 223 [88 P.2d 682], the court again declared that such an instruction violated Penal Code section 190, adding, "Just why this and similar warnings by this court have not been observed by prosecuting officers and trial courts, we are at a loss to understand." It stated that such an instruction might be a ground for reversing the trial court, even though it concluded that under the facts of that case the possibility that the jury might have voted for life imprisonment was so remote that prejudice could not be assumed.
The court has thus been unwilling to overrule the cases holding that it is not error to give the instruction in question but has also been unwilling to hold that it is proper to give it. It has thus placed itself in the inconsistent position of tolerating the giving of an instruction that it condemns. It has sought to overcome this inconsistency by admonishing trial courts not to give the instruction. There can be no such middle ground, however. If the instruction is not erroneous it is quite proper for trial courts to give it and an unwarranted interference for this court to admonish them not to give it. If the instruction is erroneous it should be held to be so outright. The dilemma is not resolved but perpetuated when this court, in deference to precedent, sanctions an incorrect instruction and at the same time admonishes the trial court to cease giving it. The repeated disregard of such admonitions demonstrates that if the correct rule is to be applied, this court must join in its enforcement and reverse the judgments of trial courts that vitiate it. Disregard of admonitions of this court in the past has been held to indicate an attempt to influence the jury improperly and therefore to constitute ground for reversal. (People v. Maughs, 149 Cal. *676 253, 263 [86 P. 187]; People v. Costello, 21 Cal.2d 760 [135 P.2d 164]; see People v. Ryan, 152 Cal. 364 [92 P. 853].) There can be no justifiable reliance on decisions allowing this instruction in view of the repeated warnings by this court that district attorneys should not offer and trial courts should not give it. A decision that cannot properly be relied upon cannot serve to justify adherence to an interpretation it condemns. Nothing is gained and much is lost by insisting upon a mechanical adherence to precedent that perpetuates an admittedly erroneous interpretation of a statute and defeats the very purpose of the Legislature in enacting it.
Schauer, J., concurred.
" 'The right to qualify a verdict of guilty by adding the words "without capital punishment," is thus conferred upon the jury in all cases of murder. The act does not itself prescribe, nor authorize the court to prescribe, any rule defining or circumscribing the exercise of this right; but commits the whole matter of its exercise to the judgment and the consciences of the jury. The authority of the jury to decide that the accused shall not be punished capitally is not limited to cases in which the court, or the jury, is of opinion that there are palliating or mitigating circumstances. But it extends to every case in which, upon a view of the whole evidence, the jury is of opinion that it would not be just or wise to impose capital punishment ..."
" 'The instructions of the judge to the jury, in each of the three cases now before this court, clearly gave the jury to understand that the act of Congress did not intend or authorize the jury to qualify their verdict by the addition of the words 'without capital punishment,' unless mitigating or palliating circumstances were proved."
" 'This court is of opinion that these instructions were erroneous in matter of law, as undertaking to control the discretionary power vested by Congress in the jury, and as attributing to Congress an intention unwarranted either by the express words or by the apparent purpose of the statute; ...' " (People v. Bollinger, 196 Cal. 191, 206-207 [237 P. 25].)
NOTES
[fn. *] *. "These cases involved the act of Congress of January 15, 1897, chapter 29, 29 Stats. at Large, 487, which reads in part: 'In all cases where the accused is found guilty of murder ... the jury may qualify their verdict by adding thereto "without capital punishment"; and whenever the jury shall return a verdict qualified as aforesaid the person convicted shall be sentenced to imprisonment at hard labor for life.' The juries in those cases were instructed in effect that their discretion was not an arbitrary one and that the qualification should be added to the verdict only in those cases showing palliating or mitigating circumstances. In condemning the instructions and reversing the judgments, the court said:
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In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
______________________________
No. 06-11-00167-CR
______________________________
MICHAEL LERON DOWDEN, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 5th Judicial District Court
Cass County, Texas
Trial Court No. 2010-F-00079
Before Morriss, C.J., Carter and Moseley, JJ.
Memorandum Opinion by Justice Moseley
MEMORANDUM OPINION
After having been charged with and convicted of delivery of one gram or more but less
than four grams of a controlled substance (oxycodone), a second-degree felony with the
punishment enhanced to a first-degree felony range due to prior felony convictions, Michael Leron
Dowden was sentenced to sixty-five years’ imprisonment.1
On appeal, Dowden complains that: (1) the evidence is legally insufficient to support his
conviction;2 (2) the trial court erred by excluding evidence of a witness’ (Johnny Broach’s) prior
felony convictions; and (3) the court erred in not allowing Dowden to explore mental health issues
from which Broach is alleged to have suffered.
We affirm the trial court’s judgment because: (1) the evidence is sufficient to support the
judgment; (2) Dowden failed to preserve his argument regarding Broach’s prior felony
convictions; and (3) Dowden’s argument regarding Broach’s mental afflictions is moot.
1
Dowden was also charged with and convicted of the state-jail felony of delivery of a controlled substance
(hydrocodone) of a quantity of less than twenty-eight grams and sentenced to two years’ confinement for that offense,
the sentence to run concurrently with the offense the subject of this appeal. This second offense is the subject of our
opinion in our cause number 06-11-00168-CR, issued simultaneously with this opinion.
2
Dowden also argues that there is factually insufficient evidence to support the verdict. With Judge Cochran joining
the lead opinion, authoring a concurring opinion, and Judge Womack concurring with the lead opinion and joining the
concurrence, in Brooks v. State, 323 S.W.3d 893, 912 (Tex. Crim. App. 2010) (4–1–4 decision), a plurality of the
Texas Court of Criminal Appeals abolished the factual sufficiency review established by Clewis v. State, 922 S.W.2d
126 (Tex. Crim. App. 1996), and its progeny. The plurality and Judge Womack agreed that the Jackson v. Virginia,
443 U.S. 307 (1979), legal sufficiency standard is the only standard that a reviewing court should apply in determining
whether the evidence is sufficient to support each element of a criminal offense that the State is required to prove
beyond a reasonable doubt. Brooks, 323 S.W.3d at 894–95, 912–13. Since the Texas Court of Criminal Appeals has
abolished factual sufficiency review, we will review only Dowden’s challenge to the legal sufficiency of the evidence.
2
Factual Background
According to the evidence presented by the State, Sergeant Richard Greer 3 of the Texas
Department of Public Safety (DPS) had been investigating reports that Dowden had been
trafficking in prescription narcotics. On January 26, 2009, Police Officer Richard Mixon of the
Queen City Police Department introduced Greer to Broach with the idea that Broach could assist
Greer in the investigation.4 Broach agreed to participate in a sting operation whereby he would
purchase narcotics from Dowden.
On February 10, 2009, Greer first conducted a full search of Broach and his vehicle,
ensuring that Broach did not possess any contraband. After taking all of Broach’s personal cash,
Greer gave Broach $400.00 and instructed Broach to go to Dowden’s residence, purchase fifteen
oxycodone tablets and twenty-five hydrocodone tablets, and immediately return to meet with
Greer. Greer also rigged Broach up with concealed audio and video recording devices. A police
video recording showing Broach arriving at Dowden’s residence was also admitted into evidence
and published to the jury.
Broach testified that he met with Dowden in the kitchen of Dowden’s residence (which
Broach testified was located in Cass County, Texas) and told him that he wanted to purchase
fifteen oxycodone and twenty-five hydrocodone tablets. Dowden removed pill bottles out of his
3
Greer is now a lieutenant with the DPS.
4
Broach testified that he had known Dowden for six months to a year prior to his meeting with Greer. He agreed to
take part in Greer’s investigation of Dowden because Broach’s ex-fiancé, Jessie Jane Lunsford, was charged with
writing fraudulent prescriptions, and Broach wished to obtain some leniency for her.
3
kitchen cabinet and counted out the tablets Broach had requested. Broach testified that Dowden
did not hand the tablets directly to him, but “left them on the counter.” Dowden told Broach he
had some sandwich bags inside the cabinet, and Broach retrieved one of the bags and put the pills
inside. Broach put the bag containing the pills in his pocket, paid Dowden $200.00, and after a
brief conversation about a possible future purchase, Broach left the residence and returned to meet
with Greer.
At the meeting, Greer searched Broach once again, retrieving the pills and the recording
equipment. Based upon the investigation and Broach’s recorded transaction with Dowden,
Dowden was arrested and charged with delivery of the narcotics mentioned above.
Legal Sufficiency
In his first point of error, Dowden contends that the evidence is legally insufficient to
support his conviction.5 Specifically, Dowden submits that a rational trier of fact could not have
found that he delivered controlled substances to Broach on February 10, 2009, in Queen City,
Texas.
In reviewing the legal sufficiency of the evidence, we review all the evidence in the light
most favorable to the jury’s verdict to determine whether any rational jury could have found the
essential elements of the offense beyond a reasonable doubt. Brooks, 323 S.W.3d at 912 (citing
5
Dowden’s first point of error generally contends that the evidence supporting his conviction is insufficient, but in his
second point of error, he specifically argues that the evidence identifying him as the perpetrator is insufficient and/or
inconclusive. Because identity is an element of the offense of delivery of a controlled substance, we review the two
points of error together rather than separately.
4
Jackson, 443 U.S. at 319); Hartsfield v. State, 305 S.W.3d 859, 863 (Tex. App.—Texarkana 2010,
pet. ref’d) (citing Clayton v. State, 235 S.W.3d 772, 778 (Tex. Crim. App. 2007)). Our rigorous
legal sufficiency review focuses on the quality of the evidence presented. Brooks, 323 S.W.3d at
917–18 (Cochran, J., concurring). We examine legal sufficiency under the direction of the
Brooks opinion, while giving deference to the responsibility of the jury “to fairly resolve conflicts
in testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate
facts.” Hooper v. State, 214 S.W.3d 9, 13 (Tex. Crim. App. 2007) (citing Jackson, 443 U.S. at
318–19).
Legal sufficiency of the evidence is measured by the elements of the offense as defined by
a hypothetically-correct jury charge. Malik v. State, 953 S.W.2d 234, 240 (Tex. Crim. App.
1997). The hypothetically-correct jury charge “sets out the law, is authorized by the indictment,
does not unnecessarily increase the State’s burden of proof or unnecessarily restrict the State’s
theories of liability, and adequately describes the particular offense for which the defendant was
tried.” Id.
The elements of the offense of delivery of a Penalty Group 3 or 4 controlled substance are:
(1) a person (2) knowingly6 (3) delivers (4) a controlled substance. TEX. HEALTH & SAFETY
CODE ANN. § 481.114(a) (West 2010). An actor may effectuate delivery of contraband by actual
transfer, constructive transfer, or by an offer to sell. TEX. HEALTH & SAFETY CODE ANN.
§ 481.002(8) (West 2010). The indictment alleged that on or about February 10, 2009, Dowden
6
Dowden does not challenge the “knowingly” element, and, therefore, we do not address it.
5
did then and there intentionally or knowingly deliver by actual transfer to Johnny
Broach, a controlled substance, to wit: Oxycodone, in an amount by aggregate
weight, including any adulterants or dilutants, one (1) gram or more but less than
four (4) grams.
A reiteration of the facts previously stated is not required here.
Prior to the sale to which Broach testified, Greer had shown Broach a driver’s license
photograph of Dowden and Broach positively identified the man in the photograph as Dowden.
Greer testified that he was confident that the person depicted in the photograph provided to
Broach, and the person seen in the video recording of the sting operation 7 conducting the
transaction with Broach was Dowden. Further, Greer and Broach both identified Dowden in the
courtroom as the person shown in the video recording, and the person from whom Broach had
purchased the drugs.
“Deliver” is defined in the Texas Controlled Substances Act as “to transfer, actually or
constructively, to another a controlled substance, . . . regardless of whether there is an agency
relationship.” TEX. HEALTH & SAFETY CODE ANN. § 481.002(8). When discussing actual
delivery, the Texas Court of Criminal Appeals held that “[f]or some purposes, a delivery is
accomplished by nothing more than making a thing available to another, placing it within his
reach, notwithstanding there is no actual handing of the thing from one person to another.”
Nevarez v. State, 767 S.W.2d 766, 768 (Tex. Crim. App. 1989).
7
The video recording from Broach’s hidden equipment of the alleged transaction was admitted into evidence as State’s
Exhibit Number 4 and was published to the jury.
6
Here, although the drugs were not physically delivered directly from the hand of Dowden
to the hand of Broach, there was sufficient delivery of the narcotics when Dowden placed them on
the counter for Broach to retrieve.
Chance Kline, a DPS forensic scientist employed with the Tyler Regional Crime
Laboratory, testified that substances that Broach allegedly purchased from Dowden were 2.97
grams of oxycodone and 16.18 grams of hydrocodone.
Viewing this evidence in the light most favorable to the jury’s verdict, we find there is
sufficient evidence from which a rational trier of fact could find on or about February 10, 2009, in
Cass County, Texas, Dowden actually delivered controlled substances to Broach. Accordingly,
we overrule Dowden’s first point of error.
Restrictions on Impeachment Questions Directed to Broach
As a part of his second point of error, Dowden argues that the trial court erred in excluding
evidence of Broach’s prior felony convictions and mental afflictions.8
On appeal, the trial court’s rulings admitting or excluding evidence are subject to review
for an abuse of discretion. Matson v. State, 819 S.W.2d 839, 850 (Tex. Crim. App. 1991). If the
trial court’s decision was within the bounds of reasonable disagreement, we will not disturb its
ruling. Montgomery v. State, 810 S.W.2d 372, 391 (Tex. Crim. App. 1990) (op. on reh’g).
8
In a conclusory sentence, Dowden contends that these alleged errors are fundamental errors. However, we decline to
address this aspect of his argument because Dowden fails to explain how this is fundamental error or into which
fundamental category these errors belong.
7
During Dowden’s cross-examination of Broach, the following exchange took place
regarding Broach’s prior criminal history:
Q [By Defense Counsel] Were you convicted of burglary of a
building in Bowie County on December 11, 1997?
A [By Broach] I plead the Fifth [Amendment] to that too.
[By Defense Counsel]: Your Honor, we would object to that as not
being an appropriate response.
THE COURT: What’s the state’s position?
[By State]: Your Honor, there -- the court’s aware there are
charges pending against this defendant and to acknowledge any prior criminal
history could -- if in fact it does exist -- could influence or impact the outcome of
any proceeding that he may have on charges now pending against him.
THE COURT: I’ll sustain the objection -- I’m sorry. I’ll overrule
the objection. I’ll sustain his Fifth Amendment privilege.
To preserve an issue for appellate review, a party must make a timely request, motion, or
objection, state the specific grounds thereof, and obtain a ruling. Wal-Mart Stores, Inc. v.
McKenzie, 997 S.W.2d 278, 280 (Tex. 1999) (citing TEX. R. APP. P. 33.1(a)). The specific
grounds of an objection must be stated if it is not apparent from the context in which the objection
is raised. TEX. R. EVID. 103(a); Morales v. State, 951 S.W.2d 59, 62 (Tex. App.—Corpus Christi
1997, no pet.). An appellant’s trial objection must be timely and specific, and it must comport
with his objection on appeal, or error is waived. TEX. R. APP. P. 33.1(a)(1)(A); Gallo v. State, 239
S.W.3d 757 (Tex. Crim. App. 2007). At trial, Dowden objected to Broach’s invocation of his
8
Fifth Amendment rights on the grounds that it was not “an appropriate response.” On appeal,
Dowden contends that the “evidence related to the prior felony history . . . contributed to”
Dowden’s conviction and such evidence “would have impacted the mind of the average juror.”
Not having advanced this argument to the trial court, it was waived and not preserved for our
review. Accordingly, we overrule this point of error.
Dowden also contends that the trial court erred by excluding evidence regarding Broach’s
mental afflictions. During Dowden’s cross-examination of Broach, the following exchange took
place regarding Broach’s alleged mental afflictions:
Q [By Defense Counsel] Have you had any mental afflictions during
your life?
A [By Broach] No, sir.
Q Have you ever attempted to commit suicide?
A Yes, sir, I have.
Q When was that?
A Back when I was a young kid.
Q How many times did you attempt to commit suicide?
A Just one time.
Q How old were you?
[By the State]: Your Honor, I’m going to object to the line of
questioning. I do not believe that that goes to the credibility of this witness, his
9
mental health issues from when he was a juvenile which probably extend beyond a
ten year period of time.
THE COURT: What’s the defense’s position?
[By Defense Counsel]: Your Honor, it does -- we think that his
mental afflictions do affect his credibility or could possibly affect his credibility,
and it’s certainly a decision that the jury should weigh. And I don’t think he said
he was a juvenile yet.
THE COURT: Well, I’m going to sustain the state’s objection.
I’ve sustained the state’s objection.
Insofar as Dowden’s point of error as it relates to Broach’s suicide attempt, we overrule it
as moot because the trial court did not exclude such evidence. The suicide-related testimony was
before the jury for all purposes, and the trial court neither struck it, nor instructed the jury to
disregard it. Insofar as Dowden’s point of error relates to other mental afflictions, nothing was
preserved for our review. To adequately preserve error and demonstrate harm, Dowden needed to
make a bill of exception or other offer of proof in order to demonstrate or make a showing of what
evidence or testimony the trial court was excluding. See TEX. R. EVID. 103(a)(2); see Guidry v.
State, 9 S.W.3d 133, 153 (Tex. Crim. App. 1999) (finding error in exclusion of evidence may not
be urged on appeal unless proponent perfects offer of proof or bill of exception); Chavez v. State, 6
S.W.3d 66, 69 (Tex. App.—San Antonio 1999, pet. ref’d). In this case, Dowden failed to make an
offer of proof regarding any other mental afflictions suffered by Broach (if any). Accordingly,
insofar as his point of error relates to other mental afflictions, Dowden failed to preserve this
contention for our review.
10
We affirm the trial court’s judgment.
Bailey C. Moseley
Justice
Date Submitted: May 1, 2012
Date Decided: May 8, 2012
Do Not Publish
11
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630 F.Supp.2d 33 (2009)
William HOPKINS, Plaintiff,
v.
Kathie A. WHIPPLE, Director, Office of Personnel Management[1], Defendant.
Civil Action No. 04-1591 (RWR).
United States District Court, District of Columbia.
June 30, 2009.
*35 Lee Boothby, Washington, DC, for Plaintiff.
Mercedeh Momeni, U.S. Attorney's Office, Washington, DC, for Defendant.
MEMORANDUM OPINION
RICHARD W. ROBERTS, District Judge.
Plaintiff William Hopkins filed this lawsuit against the Director of the Office of Personnel Management ("OPM") alleging that OPM discriminated against him based on his national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and based on his age in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., by not scoring Hopkins as high as he believed he should have been scored on the certificate of eligibles that accompanied Hopkins' application for a position of Russian interpreter with the United States Department of State. Hopkins also claims that defendant's selection process has a disparate impact upon people of advanced age and people who share his national origin. OPM moves for summary judgment on the claims of national origin and age discrimination in scoring because the State Department withdrew the vacancy announcement and did not hire anyone to fill the position Hopkins sought, and moves to dismiss the disparate impact claim arguing that Hopkins failed to exhaust his administrative remedies. Because Hopkins neither presents a prima facie case of discrimination nor rebuts as pretextual OPM's neutral rationale for not manually adjusting Hopkins' score, and because Hopkins did not satisfy administrative prerequisites with respect to his disparate impact claim, the defendant's motion to dismiss and for summary judgment will be granted.
BACKGROUND
Hopkins, a U.S. native, was a resident of the District of Columbia who was approximately 60 years of age when the events at issue occurred. (Compl. at ¶¶ 5, 6.) As of July 2002, Hopkins had interpreted Russian for nine years in consecutive and simultaneous nodes for Presidents and Secretaries of State. In addition, for 20 years before that, Hopkins interpreted Russian for various United States arms negotiators, and he was the personal interpreter of the United States ambassador in Moscow for two years. (Compl. at ¶ 6.)
In July 2002, the State Department asked OPM to refer eligible applications for four Interpreter positions in languages including French, German, Russian, and Spanish. (Def.'s Stmt. of Material Facts Not in Dispute ("Def.'s Stmt.") at ¶ 1.) Hopkins received an e-mail from an employee of the State Department's Office of Language Services stating that the Office of Language Services was recruiting a staff Russian interpreter, and inviting Hopkins to apply for the position. (Compl. at ¶ 9.) Hopkins replied to the e-mail, and shortly thereafter received an official announcement via fax. (Compl. at ¶ 10.) The announcement included a questionnaire containing 17 questions. Hopkins applied for the position at both the grade GS-13 and grade GS-14 levels, and OPM confirmed that it had received Hopkins' application. OPM's automated staffing system evaluated applicants' questionnaire responses and generated a numeric rating for the applicants. (Def.'s Stmt. at ¶ 3.) OPM staff examined the top scoring applicants' application materials and compared them to objective benchmarks to ensure the accuracy of the automated staffing systems' rankings, and to ensure that the applicants' self-assessments about their ability to interpret Russian were substantiated. *36 (See Def.'s Mem. of P. & A. in Supp. of its Mot. to Dismiss and for Summ. J. at 10-11.) Later, OPM informed Hopkins that his application would be considered under open competition examining procedures, and that he had been found to be qualified for the position he sought based upon OPM's review of his application. (Compl. at ¶ 13.)
Hopkins was one of 29 applicants to apply for the Russian Interpreter position (Def.'s Stmt. at ¶ 5), and one of 11 candidates whose application materials OPM forwarded to the State Department. His score was 92 out of 100, which fell in the category of well-qualified. (Def.'s Stmt. at ¶ 7.) However, Hopkins was not interviewed for the position because the State Department decided to interview only the top four scoring candidates applying for the position at the GS-13 grade, and his name was not listed as one of the top four scoring candidates. (Pl.'s Resp. to Def.'s Mot. ("Pl.'s Resp.") Ex. 3, Sprague Aff. at 1-2, April 15, 2003.) In December 2002, OPM informed Hopkins that his application "was among those referred to the selecting official. ... However, no selection was made from those referred." (Compl. at ¶ 16; Def.'s Stmt. at ¶ 12.) According to Brenda Saunders Sprague, the Director of the Office of Language Services, the vacancy announcement was withdrawn "due in large part to a changed workload and resulting lack of work for Russian interpreters." (Def.'s Mot. to Dismiss and for Summ. J. ("Def.'s Mot."), Ex. 9, Sprague Aff. ¶ 4, October 27, 2005.)
Hopkins alleges that he was the most qualified applicant based upon objective standards used among language professionals. However, Hopkins alleges that he was given a lower rating and ranking on the OPM certificate of eligibles than he should have been given because the OPM examiner favored applicants whose national origin suggested that their native language was Russian. (Compl. at ¶ 17.) Hopkins contends that the extent and quality of his qualifications were superior to that of the other identified candidates, yet were underrated by the automated computer ranking and scoring system. According to Hopkins, the OPM examiner who reviewed his application should have realized that the computer generated ratings for other applicants were over-inflated. He also claims that the OPM examiner made subjective determinations that had a disproportionate impact on people who were not native Russian speakers because the reviewing official subjectively over-inflated the scores for native Russian speakers. As a result, he says, two thirds of the top-ranking candidates were people who had been educated in the Soviet Union. (Compl. at ¶¶ 18-19, 22.) According to Hopkins, the OPM examiner should have changed or adjusted the rankings when he reviewed the top scoring applicants' application materials to account for Hopkins' superior qualifications, but did not do so. Hopkins also alleges that he was considerably older than the applicants that OPM rated as the top three scorers. (Compl. at ¶ 20.)
Plaintiff filed an administrative complaint of discrimination, and OPM ultimately issued a final order denying the complaint. (Compl. at ¶ 22.) Hopkins then filed this action, and OPM moved for summary judgment on the claims of national origin and age discrimination in scoring in the complaint's first and second causes of action, and dismissal of the disparate impact claim in the complaint's third cause of action.
DISCUSSION
I. DISCRIMINATORY SCORING
"Summary judgment is appropriate when the pleadings and the evidence demonstrate *37 that `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.'" Feirson v. Dist. of Columbia, 506 F.3d 1063, 1066 (D.C.Cir.2007) (quoting Fed.R.Civ.P. 56(c)); see also Nails v. England, 311 F.Supp.2d 116, 121 (D.D.C.2004). "Not all alleged factual disputes represent genuine issues of material fact which may only be resolved by a jury. Material facts are those that might affect the outcome of the suit under governing law, and a genuine dispute about material facts exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Hines v. Bair, 594 F.Supp.2d 17, 22 (D.D.C.2009) (quoting Nails, 311 F.Supp.2d at 121) (internal quotations omitted).
"In deciding whether there is a genuine issue of material fact, the court must assume the truth of all statements proffered by the non-movant except for conclusory allegations lacking any factual basis in the record." Hines, 594 F.Supp.2d at 22 (quoting Hussain v. Nicholson, 435 F.3d 359, 366 (D.C.Cir.2006)) (internal quotations omitted). "Summary judgment may be granted even if the movant has proffered no evidence, so long as the nonmovant `fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Dist. Intown Prop. L.P. v. Dist. of Columbia, 198 F.3d 874, 878 (D.C.Cir. 1999) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). "Although the burden on the nonmoving party is not great, it is still required to show specific facts, as opposed to general allegations, that present a genuine issue worthy of trial." Palestine Info. Office v. Shultz, 853 F.2d 932, 944 (D.C.Cir.1988).
In general, a prima facie claim of discrimination requires a plaintiff to establish that he is a member of a protected class and that he was subjected to an adverse employment action which gives rise to an inference of discrimination. See Mastro v. Potomac Elec. Power Co., 447 F.3d 843, 850 (D.C.Cir.2006); Stella v. Mineta, 284 F.3d 135, 145 (D.C.Cir.2002); see also Heasley v. D.C. General Hosp., 180 F.Supp.2d 158, 168 (D.D.C.2002) ("To establish [a] prima facie case of disability, age, or race discrimination, plaintiff must establish, inter alia, that [his] employer took an adverse employment action against [him] because of [his] protected status."). To establish a prima facie case of discrimination in a job referral case, plaintiff must show that 1) he belongs to a protected class; 2) he was qualified for and requested referral to jobs for which the employer accepted referrals; 3) he was not referred despite his qualifications; and 4) after refusing to refer plaintiff, the referring agency continued to refer individuals to available positions. See McDonnell Douglas v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Mills v. Int'l Brotherhood of Teamsters, 634 F.2d 282, 285 (5th Cir.1981); Andrews v. Bechtel Power Corp., 780 F.2d 124, 141 (1st Cir.1985); NAACP Labor Comm. v. Laborers' Int'l Union of N. Am., 902 F.Supp. 688, 712 (W.D.Va.1993); Sharpe v. Int'l Brotherhood of Electrical Workers, Civil Action No. 85-2564(JHP), 1990 U.S. Dist. LEXIS 7244, at *28 (D.D.C. April 30, 1990). A plaintiff can establish the necessary inference of discrimination by showing that a similarly situated person outside of his protected class requested and received the benefit he desired, or by showing that an adverse employment action was "not attributable to `the two most common legitimate reasons on which an employer might rely to reject a job applicant: an absolute or relative lack of qualifications or the *38 absence of a vacancy in the job sought.'" George v. Leavitt, 407 F.3d 405, 412 (D.C.Cir.2005) (quoting Stella, 284 F.3d at 145 (internal quotations omitted)); see also Cones v. Shalala, 199 F.3d 512, 517 (D.C.Cir.2000).
In deciding summary judgment motions on Title VII and ADEA claims, courts apply the burden-shifting framework announced in McDonnell Douglas, 411 U.S. at 802-05, 93 S.Ct. 1817. See Barnette v. Chertoff, 453 F.3d 513, 515-16 (D.C.Cir. 2006); Hall v. Giant Food, Inc., 175 F.3d 1074, 1077 (D.C.Cir.1999) (citing Paquin v. Federal National Mortgage Ass'n, 119 F.3d 23, 26 (D.C.Cir.1997)). Under McDonnell Douglas, if the plaintiff establishes his prima facie case, then the employer must "produce admissible evidence that, if believed, would establish that [its] action was motivated by a legitimate, nondiscriminatory reason." Royall v. National Ass'n of Letter Carriers, 548 F.3d 137, 144-45 (D.C.Cir.2008) (quoting Teneyck v. Omni Shoreham Hotel, 365 F.3d 1139, 1151 (D.C.Cir.2004)). The defendant's burden is one of production, meaning it does not have to "`persuade the court that it was actually motivated by the proffered reasons.'" Barnette, 453 F.3d at 516 (quoting Tex. Dep't of Community Affairs v. Burdine, 450 U.S. 248, 254, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981)). If the defendant meets this burden of production, the burden-shifting framework disappears, and a court deciding a summary judgment motion looks to whether a reasonable jury could infer intentional discrimination or retaliation from the evidence presented by the plaintiff.
Hopkins fails to establish a prima facie case of discrimination against OPM. As an initial matter, OPM did refer Hopkins' application to the State Department and assigned it a score of 92, reflecting that he was well qualified for the position Hopkins sought. (Def.'s Stmt. ¶¶ 7, 10.) This negates Hopkins' implication that OPM constructively prevented him from being referred to the State Department for an interview. (See, e.g., Pl.'s Stmt. of Genuine Issues, ¶¶ a(7), b(1).) While Hopkins alleges that he would have been given the position if he had been granted an interview with the State Department, the vacancy announcement was withdrawn "due in large part to a changed workload and resulting lack of work for Russian interpreters." (Sprague Aff. ¶ 4, October 27, 2005.) It was the State Department that chose not to interview all qualified applicants, cancelled the vacancy announcement, and chose not to hire anyone for the position Hopkins sought. (See id. ¶ 3.) "When a government agency cancels a vacancy announcement and no one outside the protected class is hired to fill the position, the plaintiff cannot establish her prima facie case." Bowie v. Ashcroft, 283 F.Supp.2d 25, 31 (D.D.C.2003) (citing Morgan v. Federal Home Loan Mortgage Corp., 172 F.Supp.2d 98, 112-113 (D.D.C. 2001) (holding that no adverse employment action exists if, when the plaintiff applied, there was no vacancy, or the position was never filled)). Therefore, Hopkins fails to show that his failure to obtain a position with the State Department was attributable to OPM's decision not to manually adjust his evaluation score. That is, plaintiff has not shown that OPM caused the State Department not to interview or hire him. See Teneyck, 365 F.3d at 1153 (finding judgment as a matter of law proper where the plaintiff offered no evidence indicating that the position for which she applied remained open); Hayslett v. Perry, 332 F.Supp.2d 93, 100 (D.D.C.2004) (finding that the plaintiff could not establish a prima facie case of employment discrimination based on non-promotion where the plaintiff lacked evidence of an available position).
*39 Even if OPM's failure to beneficially adjust Hopkins' score could be viewed as the cause of his not being hired notwithstanding the vacancy cancellation, OPM presents a neutral explanation for its evaluation process and its failure to adjust Hopkins' score upward which Hopkins does not counter with evidence permitting any reasonable inference of discrimination. "Because courts are not superpersonnel departments that reexamine an entity's business decisions," a plaintiff must present evidence of "stark superiority of credentials over those of the successful candidates." Stewart v. Ashcroft, 352 F.3d 422, 429-30 (D.C.Cir.2003) (internal quotations omitted); Jackson v. Gonzales, 496 F.3d 703, 707 (D.C.Cir.2007) ("in order to justify an inference of discrimination, the qualifications gap must be great enough to be inherently indicative of discrimination."). "This Court will not reexamine governmental promotion decisions where it appears the Government was faced with a difficult decision between two qualified candidates." Jackson, 496 F.3d at 708. "[T]he Court will not second-guess an employer's personnel decision unless the disparities in qualifications `are so apparent as to virtually jump off the page and slap [it] in the face.'" Hammond v. Chao, 383 F.Supp.2d 47, 58 (D.D.C.2005) (granting government summary judgment although plaintiff alleged that she had more experience than the other candidates applying for the position) (quoting Choates v. Powell, 265 F.Supp.2d 81, 95 (D.D.C.2003)). "Even if a court suspects that a job applicant was `victimized by [] poor selection procedures' it may not `second-guess an employer's personnel decision absent demonstrably discriminatory motive.'" Fischbach v. Dist. of Columbia Dept. of Corrections, 86 F.3d 1180, 1183 (D.C.Cir. 1996) (quoting Milton v. Weinberger, 696 F.2d 94, 100 (D.C.Cir.1982)).
OPM acknowledged that the top scorers and Hopkins were experienced and well qualified. For the court to be asked to judge whether Hopkins' credentials were starkly superior to those of the other well-qualified candidates who received higher scores would likely thrust the court into a role disfavored by Jackson. However, Hopkins' evidence reflects a demonstrable absence of discriminatory motive. While OPM staff may have had discretion to subjectively alter the candidates' scores when reviewing the top scoring applicants' application materials, the questionnaire that the applicants completed contained no questions seeking the applicants' national origin or age, and Hopkins only speculates as to how OPM would deduce that information.[2] (See Def.'s Mot., Ex. 2; Pl.'s Resp. at 13.) Although the plaintiff asserts that John T. Mays, the OPM Human Resource Specialist who reviewed the candidates' materials, was clearly aware of several imperfect proxies for the applicants' national origin, such as where the applicants were educated or whether the applicants were native Russian speakers, Mays testified in his deposition that he was not aware of those proxies, in part because he "didn't really look at education," and instead focused on other factors, *40 such as work experience. (See Pl.'s Resp. Ex. 8 ("Mays Dep") at 216-217.) In addition, Mays measured applicants against external benchmarks, not against each other, and raised and lowered applicants' scores based upon discrepancies between their application materials and their self-assessed ability to interpret Russian. (Mays Dep. at 151, 180-182, 191-192.) Hopkins also argues that he should have been ranked higher than the top-ranked native Russian-language candidate because of his superior experience. However, their scores were close, and two applicants Hopkins cites nonetheless each possessed a significant amount of experience interpreting Russian. (Pl.'s Resp. at 10.) Further, Hopkins acknowledges that a non-native Russian speaker was the second-highest scoring applicant, receiving a rating of 98.0, placing her in the top three on the certificate of eligibles and in the State Department's range of targeted interviewees. (Pl.'s Resp. at 10-11.) There is no reasonable factual dispute left, then, for a jury to decide on the claim that discriminatory scoring deprived Hopkins of a job.
II. DISPARATE IMPACT
OPM moves under Federal Rule of Civil Procedure 12(b)(1) to dismiss Hopkins' Title VII and ADEA disparate impact claims contained in the third cause of action in Hopkins' complaint, arguing that Hopkins failed to satisfy the jurisdictional prerequisite of exhausting his administrative remedies. However, "motions to dismiss for failure to exhaust administrative remedies are more appropriately analyzed under Rule 12(b)(6)[,]" which involves failure to state a claim for which relief can be granted. Marshall v. Honeywell Tech. Solutions, Inc., 536 F.Supp.2d 59, 64 n. 6 (D.D.C.2008) (quoting Hazel v. Wash. Metro. Transit Auth., Civil Action No. 02-1375(RWR), 2006 WL 3623693, at *3 (D.D.C. Dec. 4, 2006)). "In order to survive a motion to dismiss under Rule 12(b)(6), the allegations stated in the contested portion of the plaintiff's complaint `must be enough to raise a right to relief above the speculative level[.]'" Demery v. Montgomery County, 602 F.Supp.2d 206, 212 (D.D.C.2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). If a plaintiff does not assert sufficient facts to support his claim, that claim must be dismissed. Demery, 602 F.Supp.2d at 212.
A disparate impact claim is distinct from the disparate treatment claims Hopkins has alleged, and requires distinct elements of proof. Disparate impact claims arise from employment practices that are facially neutral in their treatment of different groups, but that fall more severely on one statutorily protected group than another in practice, and which a defendant cannot justify by business necessity. Smith v. City of Jackson, 544 U.S. 228, 241, 125 S.Ct. 1536, 161 L.Ed.2d 410 (2005). If an applicant for federal employment believes that any practice has discriminated against him on the basis of national origin or age, he must consult an agency equal employment opportunity ("EEO") counselor in an effort to solve the situation informally. See 29 C.F.R. § 1614.105(a). This contact with the EEO counselor must occur within 45 days of the alleged discriminatory incident. See 29 C.F.R. § 1614.105(a)(1). Alternatively, if the complainant alleges a violation of the ADEA, the complainant can avoid seeking relief administratively, and can instead decide to "bring the claim directly to federal court, so long as, within 180 days of the allegedly discriminatory act, he provides the [Equal Employment Opportunity Commission] with notice of his intent to sue at least 30 days before commencing suit." Hunter v. Rice, 531 F.Supp.2d 185, 190 (D.D.C.2008) (citing 29 U.S.C. § 633a(c) *41 and (d)). A defendant bears the burden of proving that a plaintiff failed to exhaust these administrative requirements. See Colbert v. Potter, 471 F.3d 158, 165 (D.C.Cir.2006); Armstrong v. Reno, 172 F.Supp.2d 11, 20 (D.D.C.2001) (citing Bowden v. United States, 106 F.3d 433, 437-38 (D.C.Cir.1997) and Brown v. Marsh, 777 F.2d 8, 13 (D.C.Cir.1985)).
Assuming that a disparate impact claim under the ADEA against a federal employer is legally cognizable,[3] Hopkins did not comply with the administrative requirements under the ADEA or Title VII before filing a lawsuit alleging disparate impact. Hopkins' administrative complaint of discrimination did not raise a disparate impact claim against the OPM's employment policies, and there was no discussion of a disparate impact claim in the counselor's report or the investigative record. Hopkins' administrative complaint, filed with OPM on December 31, 2002 states:
It is my position that I should have been selected and employed for one of the two positions for which I applied. Because I was discriminated against in the selection process, I contend I should be compensated with back pay and other economic losses I suffered as a result of the discriminatory conduct in the selection process. I also seek compensatory damages for injury to my professional reputation and for psychological and emotional distress I have suffered. In the alternative, I should be ranked and listed among the top 3 candidates on a new referral to the Department of State and compensated with back pay and other economic losses I have suffered as a result of the discriminatory conduct by OPM. Prior to such a determination, I also seek an explanation of and the criteria used for assigning each candidate's certification ranking, as well as the ranking of the candidates as to the two positions.
(See Def.'s Mot., Ex. 15B.) Specificity in a charge is not a "mere technicality" and compliance with all administrative procedures and deadlines is mandatory. Park v. Howard Univ., 71 F.3d 904, 908-909 (D.C.Cir.1995) (finding that a Title VII plaintiff had not exhausted her administrative remedies because her administrative complaint did not contain the allegation of hostile work environment that appeared in the court complaint); see also Lane v. Hilbert, Civil Action No. 03-5309, 2004 WL 1071330, at *1, 2004 U.S.App. LEXIS 9397, at *2 (D.C.Cir. May 12, 2004) (affirming district court's dismissal of plaintiff's claim where plaintiff's district court complaint alleged disparate treatment on account of sex, but her administrative complaint did not). The allegations in an administrative complaint must be sufficiently specific to give a federal agency the opportunity to handle the matter internally, and Hopkins' allegations did not provide a sufficient basis upon which the agency would know that he was alleging that the ranking process itself resulted in a disparate impact upon people within certain classes of age and national origin. Brown, 777 F.2d at 14; Park, 71 F.3d at 907. In addition, the plaintiff does not present any evidence that he provided the advance notice of his intent to sue concerning disparate impact as is required by 29 U.S.C. § 633a(c) and (d).
CONCLUSION
Hopkins does not present a prima facie case that OPM scored his application discriminatorily *42 or demonstrate that the OPM's stated rationale for not manually adjusting Hopkins' score was pretext. Hopkins also did not pursue his administrative remedies with respect to his disparate impact claim. Thus, the defendant's motion to dismiss and for summary judgment will be granted. An appropriate Order accompanies this Memorandum Opinion.
NOTES
[1] Kathie A. Whipple is substituted as the defendant under Fed.R.Civ.P. 29(d).
[2] While the questionnaire asked for the applicants' citizenship, citizenship and national origin are distinct concepts. "Title VII forbids discrimination on the basis of national origin, not of citizenship." Nyunt v. Tomlinson, 543 F.Supp.2d 25, 41 (D.D.C.2008) (quoting Fortino v. Quasar Co., 950 F.2d 389, 391 (7th Cir.1991)). In addition, while the job announcement informed applicants that they would be required to provide "all biographic information" sought on Form 1203-FX, the biographic data that Form 1203-FX sought was an applicant's first name, middle initial, last name, street address (including city, state, country, zip code), preferred contact time, and telephone number. The form did not seek national origin or age data.
[3] See Aliotta v. Bair, 576 F.Supp.2d 113, 127 n. 7 (D.D.C.2008) (noting that "[m]embers of the D.C. District Court remain divided on the issue" of whether a plaintiff may allege disparate impact under the ADEA against a federal employer.)
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762 F.2d 998
Jonesv.Heckler
84-2159
United States Court of Appeals,Fourth Circuit.
5/10/85
1
E.D.N.C.
AFFIRMED
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Fourth Court of Appeals
San Antonio, Texas
August 25, 2016
No. 04-15-00536-CV
Romeo LONGORIA, et al.,
Appellant
v.
EXXON MOBIL CORPORATION, et al.,
Appellee
From the 79th Judicial District Court, Brooks County, Texas
Trial Court No. 13-12-16488-CV
Honorable Richard C. Terrell, Judge Presiding
ORDER
Sitting: Sandee Bryan Marion, Chief Justice
Karen Angelini, Justice
Marialyn Barnard, Justice
Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Jason Pulliam, Justice
The Court has considered appellants’ motion for rehearing en banc. The motion is
DENIED.
_________________________________
Karen Angelini, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 25th day of August, 2016.
___________________________________
Keith E. Hottle
Clerk of Court
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359 F.Supp. 1289 (1973)
SIERRA CLUB et al., Plaintiffs,
v.
Robert F. FROEHLKE, Secretary of the Army, et al., Defendants,
Trinity River Authority of Texas et al., Defendants by Intervention.
Civ. A. No. 71-H-983.
United States District Court, S. D. Texas, Houston Division.
February 16, 1973.
*1290 *1291 *1292 *1293 *1294 *1295 *1296 *1297 *1298 Robert H. Singleton, Lawrence D. Thompson, Houston, Tex., James W. Moorman, San Francisco, Cal., for plaintiffs.
Anthony J. P. Farris, U. S. Atty., Jack Shepherd, Chief Asst. U. S. Atty., Charles B. Wolfe, Asst. U. S. Atty., Houston, Tex., for defendants.
Martin Harris, Barry Bishop, Clark, Thomas, Harris, Denius & Winters, Austin, Tex., for Trinity River Authority of Texas.
William A. Olson, City Atty., Edward A. Cazares, First Asst. City Atty., Joseph G. Rollins, Senior Asst. City Atty., Houston, Tex., for City of Houston and Coastal Industrial Water Authority of Texas.
S. G. Johndroe, Jr., City Atty., City of Fort Worth, Tex., for Fort Worth, Tex.
N. Alex Bickley, Carroll R. Graham, Peter R. Thompson, Dallas, Tex., for City of Dallas, Texas.
MEMORANDUM AND ORDER
CARL O. BUE, Jr., District Judge.
A.
1.
INTRODUCTION
The complexity of this case and the substantial record[1] submitted for review *1299 have caused this Court great concern. The geographical magnitude of the projects and the financial investment involved are very substantial. The Court has closely studied the entire record, paying particular attention to the various studies and congressional hearings. These include three studies pertaining to what this Court shall identify as the Trinity Project, described in detail hereafter, which were published in 1941,[2] 1965,[3] and most recently in 1968.[4] Several *1300 relate specifically to what this Court will identify as the Wallisville Project, including one published in 1961,[5] the general design memorandum[6]*1301 *1302 and recreational study[7] published in 1965, and a supplement published in 1969.[8] Of central importance will be the environmental impact statement for the Wallisville Project, dated December, 1971.[9] The congressional hearings to which this Court has paid closest attention include those relating to appropriations for public works projects for the fiscal years 1966,[10] 1967,[11] 1968,[12] 1969,[13] 1970,[14] 1971,[15] 1972,[16] and 1973.[17]*1303 *1304 *1305
*1306 2.
THE PARTIES AND ISSUES
a.
Description of Parties
This case is brought as a class action by five organizations and two individuals on behalf of themselves and a class who have enjoyed or otherwise derived benefit from the Trinity River, Trinity Bay, and surrounding areas in their natural state and who wish to preserve and enhance such areas in their natural state and beauty. Four of the organizations include the Sierra Club, the Houston Audubon Society, the Houston Sportsmens Club and the Environmental Protection Fund. In general, each alleges a membership in Texas who use and enjoy the waters of the Trinity River, Trinity Bay, and surrounding areas. Collectively, they exist for purposes of promoting conservation and proper management of land, water and wildlife resources. The fifth organization, the Texas Shrimp Association, is composed of members primarily engaged in commercial shrimping in areas of the Trinity River, Trinity Bay, and related localities. The organization exists for the purpose, among others, of preserving the shrimp nursery grounds in their natural state. The two named individuals, Charles L. Peting and Eugene A. Dutton, live in or near the affected areas where they have hunted, trapped, fished and shrimped in the Trinity River and Trinity Bay areas, and they wish to preserve these areas in their natural state. The complaint, taken as a whole, alleges that the failure of the defendants to abide by the applicable law has caused irreparable harm and damage to plaintiffs who have no adequate remedy at law.
Named as defendants in the complaint are Robert F. Froehlke, Secretary of the Army, Lt. Gen. Frederick J. Clark, Chief of Engineers of the Army Corps of Engineers, and Col. Nolan C. Rhodes, District Engineer of the Army Corps of Engineers. All defendants, collectively referred to as the Corps by this Court, are sued in their official capacities. For purposes of this decision, the Court requested, and the Corps supplied, a simplified chain-of-command for the Corps of Engineers. This is included in the footnotes.[18] Another party appearing *1307 *1308 as a defendant, by intervention, is the Trinity River Authority of Texas (hereinafter referred to as the TRA). The TRA is a governmental agency of the State of Texas which was created as a conservation and reclamation district pursuant to statute.[19] The duty of the TRA is to prepare a master plan for the maximum development of the soil and water resources of the entire Trinity River watershed, including plans for the complete utilization, for all economically beneficial purposes, of the water resources of the watershed. The TRA is empowered to engage in water supply, flood control, pollution control, sewerage transportation and treatment, navigation, soil conservation and other related activities. Both the Wallisville and Trinity River Navigation Projects are located within the territory over which the TRA has authority. The record indicates that the TRA has been active in promoting and coordinating planning and construction activities related to both of these projects as well as several others. The City of Houston, Texas, defendant by intervention, is a municipal corporation concerned with the conveyance, transportation and distribution of water for and on behalf of the City. Much of its water sources presently come from the Trinity River, and it has contracted with the federal government to store and impound water in the reservoir being created by the Wallisville Project. The Coastal Industrial Water Authority of Texas, which intervened jointly with the City of Houston, is a governmental agency of the State of Texas created as a conservation and reclamation district and authorized to sell, transport and deliver water to customers. Additional defendants are the Cities of Dallas and Fort Worth, Texas, both of which are being allowed to intervene as defendants by this opinion,[20] as they have substantial interests in flood control and navigational aspects of the Trinity Projects.
b.
Description of Projects
The controversy in this case focuses upon a comprehensive development program of the Trinity River Basin which includes provisions for navigation, flood control, water conservation and recreation.[21] This is being accomplished in part by the State of Texas and in part by the Corps of Engineers, both working together. Part of this development program is the Trinity Project which provides for a multiple purpose channel 12 ื 200 feet in dimensions extending about 363 miles from the Houston Ship Channel in Galveston Bay, near the Gulf of Mexico, to Fort Worth, Texas. The channel serves both navigation and flood control purposes and will consist of sixteen navigation dams and twenty navigation locks to overcome a total lift of 496 feet. The channel will follow an existing navigation channel to Liberty, Texas, and pass through the pools of Wallisville, Livingston and Tennessee Colony reservoirs. The existing Dallas floodway will be enlarged, and part of the Trinity River and tributary channels in the vicinity of Dallas will be realigned for flood control. This project also entails other flood control features, construction of about 98 miles of 84 inch pipeline from Tennessee Colony Lake to Benbrook Lake, and alterations to existing bridges and utilities to provide navigation clearances. Future plans include a widening of the channel to 250 feet and the adding of duplicate locks with pumping facilities to recirculate water. Provisions are also made for water quality control, recreation and redevelopment.[22] The latest projected appropriation *1309 estimate for the total Trinity project to completion is $1,356,000,000.[23] The magnitude of this project may be seen by considering that the total civil works budget for the Corps of Engineers in the entire country for fiscal year 1973 is $1,844,591,000.[24] According to the record, with the exception of Wallisville, no construction work has begun on any of the specified components of the Trinity Project, although engineering and environmental studies and evaluations are underway.
The focal point of this litigation is the Wallisville Project. Located at the mouth of the Trinity River, this project consists of a low dam 39,000 feet in length, a navigation lock compatible with the dimensions indicated for the Trinity Project's navigation features and ancillary facilities needed for operation of the lock. The structural facilities will occupy approximately 80 acres of land, while the reservoir contained behind the dam will, at its initial maximum operating level of four feet, cover approximately 19,700 acres. This project also entails enlarging an existing 6 foot deep by 100 foot wide navigation channel from the reservoir to Liberty, Texas, a distance of approximately twelve miles, as well as developing recreational facilities.[25] The total estimated appropriation cost of the Wallisville Project is $28,800,000. As of December 31, 1972, construction on the dam and lock is represented to be approximately 87 percent complete with the overall project development being approximately 72 percent complete.
The project territory for the Trinity Project includes wooded lands, pasture and crop lands with the majority of the area being characterized as agricultural.[26] The Wallisville Project will submerge substantial amounts of woodands and marshands which provide natural settings for a variety of wildlife, waterfowl and fish, some of which are referred to as rare and endangered species.
The plaintiffs, in their complaint, point out that the defendant Army Corps of Engineers intends to cut out 184 of the natural crooks and bends and convert the Trinity River into a generally straight barge canal 370 miles long, 12 feet deep and 250 feet wide with additional footage on either side. The plaintiffs continue by alleging the following:
Plaintiffs would show that the construction of the Trinity Project will destroy thousands of acres of bottom-land and hundreds of thousands of trees between Fort Worth-Dallas and the Gulf of Mexico. Numerous game, fish and other wildlife will lose their habitat and perish. Industrial and population growth will be thereby encouraged in over-developed areas with resulting pollution and urban problems. Construction of the projected barge canal across Texas will concentrate heavy industry along its banks which, when considered with the trafficking of barges and boats up and down the canal, shall reduce the free-flowing Trinity River to a series of placid pools with polluted and stagnant water.
Plaintiffs also state that the Wallisville Project will cause substantial harm to the saltwater commercial fishing industry in that the reservoir will convert to a freshwater condition substantial acres of saltwater marshlands that are breeding *1310 areas of commercial species. Agencies generally concurring with the plaintiffs' position regarding environmental aspects of the Wallisville Project include the Environmental Protection Agency (EPA),[27] the Bureau of Sport Fisheries and Wildlife, U. S. Department of the Interior,[28] the National Marine Fisheries Service,[29] and the Texas Department of Parks and Wildlife.[30] The environmental impact of the Trinity Project has not yet been adequately measured; thus the various positions with respect to specific environmental impacts are not as fully developed in this record as they are with respect to the Wallisville Project.
Perhaps a document appearing in the record best expresses the position of the Corps with respect to water resource projects and their related environmental problems. It provides in part:
It has long been the policy of the Corps to coordinate its water resource projects with all local, state, and Federal agencies concerned with recreational and fish and wildlife resources located in each project area. Since the passage of the National Environmental Policy Act of 1969 (Public Law No. 91-190), the Corps has been required to issue a formal statement of the impact of any Corps project on the natural environment. The Environmental Impact Statement for the Trinity River study is presently scheduled for completion in 1972. Until the environmental survey is made by qualified personnel and an impact statement prepared and reviewed by all of the local, state, and Federal agencies involved in evaluating the relative need and value of these resources, a complete assessment of the project's impact on the environment cannot be made. A full assessment of the relative value of land and water resources in terms of a positive and negative effect of the project on the natural environment and the ecological balance within the project area will be included in the statement. (Some persons) subscribe to the often expressed belief that all Corps projects, per se, destroy most environmental values, including land, water, and fish and wildlife resources. A project of this size and scope will open large recreation areas to the general public for such activities as: boating, canoeing, sailing, hiking, fishing, scenic driving, etc.
With the Federal Government's participation in this project, large areas of land will come under the Federal control in the form of operation and maintenance easements. This control will afford the Federal Government the opportunity to manage development and public use along the waterway in a manner consistent with the intent of Congress in Public Law No. 91-190. Recreational type activities such as those previously mentioned would be encouraged in the controlled areas and facilities to accommodate public access and use will be provided. Thus, the land use potential of the area with respect to preserving and enhancing environmental qualities will be maximized. While the project plan calls for widening, deepening, and straightening the Trinity River, it also contemplates leaving the River *1311 cutoffs and oxbows in their natural state, which will provide undisturbed spawning, nursery, and foraging areas for the preservation of the species of fish and wildlife native to the river and adjoining land areas. . . .
Should the Federal investment in this project be eliminated, there is no assurance that any private or Federal funds will be expended to preserve the natural setting of the Trinity River. On the contrary, land owners may find it profitable to sell their land to private interests who may develop the land with little or no consideration to the preservation of the natural environment or to the ecological balance of the area, strictly to maximize their return from the land. It might be added that the Federal Government is the prime sponsor of wildlife preserves and national forest areas, which provide significant contributions toward the preservation of our natural environment.[31]
c.
Description of Issues
The plaintiffs seek a declaration that the defendants are proceeding in violation of law in that they have exceeded their authority by not complying with the requirements of the National Environmental Policy Act of 1969 (NEPA) 42 U.S.C.A. ง 4321 et seq., which became effective January 1, 1970. The plaintiffs contend that the Wallisville Project is, in reality, a part of the Trinity Project, although separately funded by Congress, and that the Corps has begun construction at Wallisville without first preparing an impact statement as to the Trinity. In the alternative, the plaintiffs contend that the environmental impact statement already prepared for the Wallisville Project is nevertheless deficient under NEPA's requirements for a full disclosure. The Corps responds that the projects are separate, although compatible, that an impact statement now in preparation for the Trinity Project will be completed prior to the initiation of construction on that project, and that the Wallisville Project impact statement is legally sufficient. The Corps has also raised ancillary issues pertaining to legal standing to sue, subject matter jurisdiction and personal jurisdiction.
The case is before this Court on plaintiffs' motion for summary judgment seeking to enjoin the named defendants from constructing or causing the construction of the entire Trinity Project of which Wallisville is a part unless and until they comply with the National Environmental Policy Act. Alternatively, the plaintiffs seek similar injunctive relief with respect to the Wallisville Project alone until the standards of NEPA are met. In December, 1972, the defendant Corps of Engineers also filed a motion for summary judgment, alleging that there is substantial evidence in the record reflecting that the named officials have in all respects complied with the provisions of NEPA.
B.
HISTORY AND GENERAL BACKGROUND
1.
THE TRINITY RIVER BASIN PROJECTS
A comparison of the recited purposes and descriptions of the Trinity and Wallisville Projects, as stated by the Corps of Engineers, would appear to raise questions as to the Corps' contention that the projects should be regarded as separate and distinct, at least for environmental *1312 purposes. In the 1968 study, the Corps of Engineers reported to Congress that the Trinity Project envisaged several aspects, the navigation features of which included the lock and reservoir of Wallisville.[32] The environmental impact statement reports the primary function of the Wallisville Project as being a bar to saltwater intrusion accompanying enlargement of the navigation channel to Liberty, Texas, and as serving as the first lock and dam in the Trinity system, when constructed.[33] Because of the genuine difficulties encountered in assessing this problem and the environmental implications raised by the National Environmental Policy Act, this Court has felt compelled to probe behind the outward appearances of these projects to determine as equitably as possible from this extensive record what the facts are and thus what legal consequences flow from such a determination. For this reason, an inquiry into the history and evolution of these projects is beneficial.
Navigation of the Trinity River is known to have first received federal assistance at about the time of the Civil War, ultimately extending up some 300 miles with limited success. In 1902 a major federal project was undertaken, anticipating a four foot channel with 37 locks and dams for utilization of water in the upper reaches of the river for continuous navigation. Between 1902 and 1916 various Congressional acts authorized the individual construction of various locks and dams as part of the overall project; nevertheless, the project was abandoned by Congress in 1922, except for the reach from the mouth of the Trinity to Liberty, Texas, because it was too difficult to maintain open river navigation. Even the Liberty channel was later suspended in 1930, for lack of commerce. Local interests thereafter pressured Congress to reopen the Liberty channel which resulted in a limited allocation of funds in 1940.
In 1941 the Army Corps of Engineers published the first major study of the Trinity River Basin, analyzing the needs for flood control, navigation, water conservation, and allied purposes.[34] This plan, similar to the 1902 concept, contemplated a 9 foot deep by 150 foot wide channel, 26 locks, sufficient dams and reservoirs to store the water necessary for navigation, plus modification of 43 bridges and 22 pipelines to permit navigation. By straightening the river channel through cutoffs, the route would be reduced approximately 110 miles.[35] Because the navigation aspects were found to be economically unjustified, the Corps recommended approval of the plan as a whole, postponing construction beyond Liberty until additional justification arose.[36]
In 1944 and again in 1945 the House Committee on Rivers and Harbors sought to have a restudy made,[37] but it was unable to gain sufficient congressional *1313 support. In 1956 a major drought caused extensive saltwater intrusion and damage to rice crops, causing local interests to construct a temporary dam on the river.[38] Being at sea level in its lower reaches, the Trinity and its constructed navigation channels allow saltwater at times to penetrate upstream despite the natural flow of the river. Periodic influences such as high tides, seasonal changes, low river flow and droughts increase the likelihood of intrusion.[39] This situation apparently spurred the adoption of a restudy resolution by the Senate Committee on Public Works in 1958,[40] which Congress acted upon favorably.[41] Under this Congressional authorization, which directed the Secretary of the Army to cause a survey of the "Trinity River, Texas", the Corps authorized an interim report survey focusing upon "the saltwater aspect of the authorized navigation project for the preservation of the quality of water available for irrigation."[42]
The then new Corps of Engineers' Southwest Division Engineer, Brigadier General William Whipple, was quoted in 1958 as stating that the study of the Trinity River, as a whole, would be given top priority. Discussing the past history of efforts to make the river navigable, he stated that a 1945 attempt to open a channel from Galveston Bay to Liberty was a mistake. It had been found that canalizing the river caused saltwater to intrude inland, thereby disrupting irrigation among the rice growers. While some of the historic problems were attributable to lack of interest, lack of funds, and the two World Wars, General Whipple also attributed much of it to bad planning. His recommendation was a comprehensive study of the entire Trinity River Basin with a view towards development over the next 40 to 50 years.[43]
The studies of the saltwater intrusion problem revealed that much of it was directly attributable to navigation efforts. It had been greatly increased, for example, when a navigation channel to Houston, Texas, removed the natural barriers restricting the inward flow of seawater.[44] It was so identified by local residents *1314 who registered many complaints.[45] The Corps reported to Congress that the Anahuac Channel, a navigation channel located in Trinity Bay, "was not extended into the Trinity River because of saltwater intrusion problems."[46] In various letters to Texas Congressmen, the Corps described the "origin" of the Wallisville Project as stemming from the need for salinity control necessitated by the navigation project associated with the Trinity Project.[47] The Environmental Protection Agency, to which an early draft of the Wallisville impact statement was submitted, reported in 1971:
The statement that the alleviation of the saltwater intrusion problem will permit the extension of the authorized navigational improvements upstream should be elaborated. It should be made clear that the prevention of saltwater intrusion up the Trinity River by construction of the lock and dam would permit the extension of navigation channel upstream without a concurrent increase of salt intrusion. This project is the key part of the total development of the Trinity River Basin, especially the navigational aspects.[48]
As stated previously, the Wallisville impact statement notes that the primary function of the Wallisville Project is a saltwater barrier to aid navigation.[49]
While the saltwater studies were underway, local entities were interested in possibly developing water storage capabilities in conjunction with this barrier.[50] In September, 1959, the City of Houston and the Trinity River Authority executed an agreement regarding water usage to be obtained from the Wallisville Project. It was agreed that their usage would be "in a manner which will not constitute a deterrent to navigation." The State of Texas water permit which was issued included a similar restriction. It provided that water usage was to be:
Subordinate to the present and future use and reuse for navigation purposes of the return flows from the metropolitan areas of Dallas and Fort Worth in their natural flowing state and by impoundment in pools created by locks and appurtenances within the river and navigation channels; and further, such return flows shall be permitted to pass through the (Wallisville) reservoir authorized herein to the extent necessary to provide navigation below said reservoir and the rights hereby acquired shall be subordinate to such uses.[51]
*1315 Following completion of the studies, the Corps recommended to Congress in 1961 that a saltwater barrier reservoir be constructed near the mouth of the Trinity River. It was anticipated that the findings of the studies would be incorporated in the pending comprehensive review of reports being undertaken on the Trinity River and tributaries, and that the project would also serve a function in an integrated water supply plan.[52] Congress approved the Corps' recommendation.[53] A location at river mile 3.9 was selected because of "site limitations" and because it was apparently viewed as the most suitable location for meeting the water resource needs of the area.[54]
Although the record is not clear, it appears that numerous projects were funded separately for budgetary reasons, administrative manageability or because of some "urgent" local problem. Nevertheless, these various projects, including Wallisville, Aubrey and Lakeview Lakes, existing navigation channels, and the high-level bridges, were included and considered as being part of the Trinity River comprehensive development program.[55]
In March, 1963, the restudy of the Trinity River and tributaries was completed. Following its review process through the Corps' chain-of-command, the Board of Engineers recommended that the development plans be coordinated with the Wallisville Project and that the navigational features be conditionally approved, subject to later studies indicating economic justification. The Chief of Engineers concurred, recommending that navigation construction be deferred until further economic studies warranted requesting the funds from Congress.[56] Congress conditionally approved *1316 the Trinity Project in 1965 in the following language:
The following works of improvement of rivers and harbors and other waterways for navigation, flood control, and other purposes are hereby adopted and authorized to be prosecuted under the direction of the Secretary of the Army and supervision of the Chief of Engineers, in accordance with the plans and subject to the conditions recommended by the Chief of Engineers in the respective reports hereinafter designated. . . .
. . . . . .
Trinity River and tributaries, Texas: House Document Numbered 276, Eighty-Ninth Congress, including navigation, except that the recommendations of the Board of Engineers for Rivers and Harbors, dated March 14, 1963, shall apply, and there is hereby authorized $83,000,000 for initiation and partial accomplishment of the project. Prior to expenditure of any funds for construction of those features designed exclusively for navigation, the Chief of Engineers shall submit to the Congress a reevaluation based upon current criteria.[57]
In 1967 and 1968 the only apparent activity in the Trinity Basin, with the exception of continued study and planning of the various projects, related to the modification of the high-level bridges. In both years Congress appropriated funds, as requested by the Corps, but with the limitation that such funding "is in no way to be interpreted as approval of the planning and construction of the navigation portion of the project."[58] The Corps concluded a reevaluation study of the economics for the navigation aspects and submitted it to Congress in 1968.[59] The District Engineer's report stated that the navigation features were "well justified".[60] The Southwest Division Engineer, in a one sentence endorsement, concurred in that conclusion;[61] the acting Chief of Engineers, relying on the District Engineer's statistics, concurred;[62] the Bureau of the Budget stated briefly that it had "no objection" to the transmission of the report to Congress,[63] and the Secretary of the Army transmitted the report to the Speaker of the House of Representatives on July 15, 1968, without commenting upon the merits of the report.[64]
A close examination of the Senate and House Reports, conference reports, and public hearings indicates that since the submission of the 1968 reevaluation study there has been no Congressional approval of the study's findings, nor approval of construction on the navigation channel.
*1317 2.
A CHRONOLOGY OF ENVIRONMENTALLY-RELATED EVENTS
The Corps of Engineers' attention was first drawn to a possible adverse environmental effect of the Wallisville saltwater barrier project in 1960, ten years before the advent of NEPA, when the Fish & Wildlife Service, U. S. Department of the Interior, stated that marine (saltwater) commercial fishing might be affected. Based upon a fifty year period of analysis of fresh water fishery and wildlife aspects of the dam, the service reported:
It is evident that there will be some loss of nursery areas for marine fish and shellfish, but until the Bureau of Commercial Fisheries has been able to conduct the necessary investigations and adequate assessments, the project effects on the marine fisheries cannot be made.
. . . . . .
The amount of nutrients and fresh water that will enter the bay areas will be reduced considerably and will have an adverse and cumulative effect on marine fisheries. Until such time as studies have been made, the effects of the projects on marine fisheries will remain unknown.[65]
The report noted that there would be substantial benefits to sport and commercial fresh water fishing, as contrasted with the saltwater marine fishing. There would be elimination of some upland game and fur animal habitat, but this was thought to be insignificant. The report indicated that potential benefits could be obtained for waterfowl and hunting if a National Wildlife Refuge was included. Natural habitats in other areas of the Texas Coast were reportedly being rapidly engulfed by increasing industrial and urban expansion.
There was apparently substantial local public opposition to the wildlife refuge, as it would necessarily require acquisition of additional, privately-owned land.[66] At the time of recommending construction of the Wallisville Project to Congress, the Corps also recommended that the wildlife refuge should be considered favorably, but that the necessary water rights should be acquired by someone other than the Corps. The Corps also pointed out that the refuge was regarded as being a severable economic component which could be included or excluded without affecting the justification for the reservoir project itself.[67] As to the reported effect of the Wallisville Project upon marine commercial fishing, the 1961 report was silent, noting only that "[t]he Acting Regional Director states that the Bureau of Commercial Fisheries advises that no investigation has been made of the marine commercial fishers relative to the Wallisville reservoir, however, it is proposed to make adequate study of this phase of the reservoir project when funds become available."[68] In 1963 the Assistant Secretary for the U. S. Department of the Interior communicated with the Corps regarding the claimed damage to commercial fishing. He wrote:
The Fish and Wildlife Service advises that significant losses to the marine commerical fishery would result in the absence of the fresh water discharges recommended in its report. Freshwater inflows for the maintenance of fishery resources is as much a water requirement as that for navigation, industrial supply, etc., and should be *1318 provided for in the comprehensive planning for the development of all river basins. The Department therefore urges that every effort be made to provide for mean monthly fresh-water discharges into Trinity Bay as recommended by the Fish and Wildlife Service.[69]
The issue of the project's effects upon marine fishing led the Corps to employ Dr. Gordon Gunter, a marine biologist from Mississippi. His report, filed in 1966, stated that the reservoir would have a minor effect only. In his opinion, the amount of fresh water diverted by the reservoir from its normal flow into Trinity Bay would be minimal, as the majority of the water diverted would be attributable to a state funded reservoir, located upstream at Lake Livingston, with which Wallisville was to be jointly operated.[70] Aside from the brevity of his reports, Dr. Gunter's covering letter placed much of his analysis in question:
Enclosed is my report on the Wallisville Reservoir. I am sorry that I could not get it to you right away. However, I ran into a buzz saw of things that had to be done when I got back home and I did not get the statistical data I wanted right away.
Even so, none of this can be used with any surety, and the really important thing is that Galveston Bay produced a great many oysters last year. The Bay is quite rich in nutrients.[71] Prior to receiving this report, the Corps reportedly placed much reliance on the opinion of the Fish and Wildlife Service that the project would produce substantial fresh water benefits.[72] The then Division Engineer, Brig. Gen. W. T. Bradley, reported that a 1966 conference with the U. S. Fish and Wildlife Service had led him to believe that the Service had made a judgment evaluation of the impact on the commercial fishing industry which was based substantially upon a lack of basic data. As to the Gunter report, he stated "it appears from his analysis that a scientific evaluation of the project's impact upon wildlife might well result in only a small fraction of that resulting from the approximation made by the Fish and Wildlife Service."[73] The report of the conference which was attended by representatives of the Corps from both the District and Division levels, the Bureau of Sports Fisheries and Wildlife, and the Bureau of Commercial Fisheries, indicated that an estimate of the commercial loss could be placed at slightly more than $562,000 annually. The report concluded by stating "based upon available data and the assumptions made, the estimates appeared to be reasonable."[74] Nevertheless, to this date the Corps has attributed no financial loss to commercial fishing. The Corps' present position is as follows:
The possibility that such a loss might occur was considered. Available techniques and data, however, did not produce results indicating that *1319 such a loss would, in fact, occur. Accordingly, no cost for this item was taken into account in the economic analysis of the project.[75]
The report of the 1966 conference also noted that it was recognized by all parties that "the construction of Wallisville is a certainty whether it is done by the Corps of Engineers or by the Trinity River Authorities."[76]
Although there was continuing controversy over this issue for several years, it reached its zenith in 1970. In February of that year, Dr. R. T. Baldauf published a report conducted by Texas A&M University on behalf of the Department of the Interior and with the cooperation of the Fish and Wildlife Service. Covering more than a two year study period, the report found that the Wallisville reservoir would destroy approximately 12,500 acres of nursery grounds upon which various commercial marine species depended by converting those acres from saltwater to freshwater.[77] To resolve the obvious inconsistencies contained in the two reports, the Corps engaged a firm known as Environment Consultants, Inc., of Dallas, Texas, to evaluate both reports. This firm concluded that the Gunter report "lacked any substance and would not hold water under close scrutiny" because it was "overly simplistic."[78] The report of Environment Consultants, Inc. stated that Dr. Gunter had misused or juggled figures regarding water diversion and, as such, his findings were "not sensible." In summary, it stated that "the entire report should be dismissed as having no validity."[79] As for the Baldauf report, Environment Consultants, Inc. found that the placement of sampling stations could have been better, but that the data overall, was a "tribute to their good field technique."[80] By comparison, the criticism of the Baldauf report was slight.[81]
Only shortly before the Baldauf report was published, the National Environmental Policy Act of 1969 became effective. Copies of the Act were disseminated throughout the Army Corps of Engineers on March 3, 1970.[82] In May, 1970, the first interim guidelines regarding statements on proposed federal actions affecting the environment were issued by the Council on Environmental Quality.[83] In July, 1970, the Galveston Division of the Corps established an Environmental Resources Section of the Project Planning Branch. The staff included civil engineers with backgrounds in water resource planning, hydraulics and hydrology and agronomy. Later, they were joined by a landscape architect, *1320 a biologist, and an officer with chemical engineering background.[84] In early August, 1970, the Department of Defense issued an interim set of guidelines on the preparation of environmental statements.[85] They were very general guidelines aimed at all branches of the Department of the Defense dealing with environmental areas. In that same month, the office of the chief engineer advised all Districts that environmental statements should be prepared for projects under construction where unresolved conflicts existed. Because of the controversy surrounding the Wallisville reservoir, the decision was made that same month to prepare an environmental statement.[86] The first preliminary draft of a statement, also prepared in August, was submitted to Southwest Division (SWD) for comment by the District Engineers. There it was generally revised and augmented by the Environmental Resources Branch, Southwest Planning Division, and then returned to the Galveston Division for review.[87] This had no sooner been done when new Corps instructions were promulgated on September 25, 1970, giving more detailed guidance on the preparation and coordination of environmental statements. The need for coordination with other federal agencies was emphasized.[88]
After further revision to meet the new specifications, the preliminary draft was submitted for comment to various federal and state agencies in October, 1970, by the District Engineer.[89] In November, 1970, the Army Corps of Engineers disseminated a set of environmental guidelines for civil works programs.[90] The preliminary draft was again modified, based upon comments received, and drafts were submitted through channels on January 18, 1971, a copy of which was subsequently transmitted to the Council on Environmental Quality.[91] On January 28, 1971, new guidelines for the preparation for impact statements were published by the Council on Environmental Quality.[92] Apparently in response to these new guidelines and other comments received, the draft was revised again by the District Engineer in February of 1971 and was believed to be a final statement. In late March, however, the district was advised by SWD that major revisions were required in accordance with comments provided by the staff of the Southwest Division. During April and May, 1971, the statement was revised and submitted to the District Counsel for review.[93] His response was:
The attached statements meet the requirements of Section 102(2)(C) of the National Environmental Policy Act of 1969 (Public Law 91-190).[94]
In April, 1971, further modifications to the Environmental Guidelines were issued by the Council on Environmental *1321 Quality.[95] These are the latest guidelines issued by the CEQ.
At about this time, however, the Corps received a letter dated June 7, 1971, from the Assistant Secretary of Commerce transmitting critical comments supplied by the National Marine Fisheries Service. The NMFS comments, based upon the February, 1971, draft, were critical of the Corps' environmental decisions relying upon Dr. Gunter's report. The comments stated:
Among the biologists who have investigated this area, only one has concluded that the environmental effects of the project on the estuary would be minimal . . . the Corps of Engineer's consultant.[96]
The strongly worded report criticized other Corps environmental decisions regarding the Wallisville Project, such as the refusal to reconsider relocating the dam upstream where, reportedly, the harm would be reduced. It also criticized the Corps' summaries of the various consultant reports as given in the environmental statement because, although technically correct, the summaries conveyed "an erroneous impression that the consultant's (Gunter) report which reports some biological observations of one month, was equally (as) thorough as the Texas A&M team's report which reported on a sampling program conducted for more than two years."[97] The NMFS report also called attention to Dr. Gunter's covering letter noted previously. Meanwhile, the Corps' first set of proposed regulations on the preparation and coordination of impact statements was issued in June of 1971.[98]
Concern over the growing and expressed opposition to the Wallisville Project at such a late stage in the planning phase led to a conference in Galveston on June 25, 1971, of representatives from the Galveston District and Southwest Division of the Corps, the Trinity River Authority, the City of Houston, and the Chambers-Liberty Counties Navigation District. It was felt that the Corps had only three courses of action: (1) to stop the project until more comprehensive environmental studies were made and the statement detailed, (2) to slow down construction pending further studies, or (3) to continue working as rapidly as possible, but also to work on strengthening the environmental impact statement.[99] The last course of action was selected because it was not believed that the second option would produce new data within a "reasonable time frame", because the benefits were thought to be needed immediately and partially because it was feared that stoppage might cloud the status of the future Trinity River Navigation Project.[100] The acting chief of the Southwest Division Engineering recommended that the District Engineer not compromise the Corps' position with Dr. Gunter; instead, he should insert a statement in the environmental impact statement that ways would be found to mitigate the loss of the marshlands, and he should accept the position that the mitigation losses would be paid for by someone. No concern was to be paid to the benefit-cost ratio.[101]
Modifications were made once more in the environmental impact statement which was again submitted to the District Counsel who, as before, found that it met the requirements of the law.[102] At this point the record stops. The final *1322 impact statement, dated December 13, 1971, does not reflect the channels through which it was submitted for approval by or within the Corps, whether it was submitted to any other federal agencies, or whether any comments thereto were received. Furthermore, it cannot be determined from the impact statement itself or from the record before this Court whether such statement was reviewed and approved by the Secretary of the Army and whether, in turn, the Secretary transmitted the statement to Congress for review. The record only reflects that a copy was received by the Council on Environmental Quality in late January of 1972.[103]
C.
THE ROLE OF THE WALLISVILLE PROJECT FOR NEPA PURPOSES
The history of the comprehensive development plans for the Trinity Basin reveals that the Wallisville Project, although funded separately, was and is, in fact, an important and essential component. Thus an injunction as to further construction on any aspect of the Trinity Project could be justified pending completion of a satisfactory impact statement and full review as required by law. This Court carefully considered the issue of retroactivity and those cases which have held, more or less categorically, that NEPA is not to be applied retroactively.[104] However, NEPA does not contain the traditional "grandfather clause" with which Congress has exempted ongoing projects from laws it intends to be applied prospectively only.[105] Those cases of the Court of Appeals for the Fifth Circuit which discuss or involve factual situations related to the issue of retroactivity or environmental considerations have also been carefully noted.[106] A majority of the better reasoned cases have generally held NEPA applicable to ongoing projects, using a variety of tests.[107]*1323 The guidelines of the Council on Environmental Quality (CEQ) would favor applying NEPA in full except in instances in which it is not practicable to reassess the basic course of action. When this is the case, the guidelines state that "further incremental major actions" should be "shaped so as to minimize adverse environmental consequences."[108] As a rule of thumb to employ during this transition period when numerous federal projects initiated prior to NEPA are still underway, this Court is persuaded that a presumption in favor of NEPA's application is proper, particularly where substantial action is yet to be taken, absent equally persuasive countervailing factors.
The present projected total cost of the Wallisville Project is approximately $28,800,000. While this is a substantial figure, it is only about two percent of the total present projected cost of the Trinity Project. Despite the extent of completion of the Wallisville Project, this Court cannot ignore its relationship to the Trinity Project which has now reached a coherent stage of development that is distinctive and comprehensive. See Citizens for Clean Air v. Corps of Engineers of U. S. Army, 349 F.Supp. 696, 708 (S.D.N.Y.1972). The guidelines of the CEQ advise the agencies to bear in mind the effect a complex of projects may cumulatively produce and direct that the lead agency should prepare an environmental statement, if it is reasonable to anticipate a cumulatively significant impact.[109] The majority of decisions involving agency attempts to divide projects or development programs into artificial "segments" for determining the scope of environmental impacts have opposed such action on the grounds that this would frustrate the vitality of NEPA by allowing piecemeal decisions.[110] The Fifth Circuit Court of Appeals has also held this approach to be unreasonable. Named Individual Members of San Antonio Conservation Society v. Texas Highway Department, 446 F.2d 1013, 1023 (5th Cir. 1971), cert. denied, 403 U.S. 932, 91 S.Ct. 2257, 29 L.Ed.2d 711. Thus, this Court concurs in and adopts the position that impact statements are required for ongoing federal projects initiated prior to January 1, 1970, the effective date of NEPA, which are likely to extend significantly into the future. Environmental Defense Fund v. Tennessee Valley Authority, 339 F.Supp. 806, 811 (E.D.Tenn.1972). This is obviously a balancing test based on practical considerations. In its totality, the development of the Trinity River Basin has not reached that stage of progress where the cost of alteration or abandonment would definitely outweigh whatever benefits might accrue therefrom. Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323, 1331 (4th Cir. 1972), cert. denied, 409 U.S. 1000, 93 S.Ct. 312, 34 L.Ed.2d 261.
This Court believes that equitable considerations must also be taken into consideration. First, as the record reflects, the Corps of Engineers has invested a substantial amount of time, effort and technical expertise on the Wallisville *1324 Project. Until the Baldauf report stressing the resulting estuarine damage was published in February, 1970, there is every reason to conclude that the Corps exercised a good faith judgment in determining whether or not to proceed. The Corps believed that opponents to the project, who admittedly had no reliable evidence or facts upon which to base a conclusion, were in error. Until 1970 the Corps was under no legal obligation to obtain that evidence upon which an accurate judgment could be based. Similarly, during the first year under NEPA, virtually no one understood what action was really expected under the new law. Guidelines were not issued until the middle and latter part of the year, and they were extremely vague. Only as the case law applying NEPA commenced to develop and fill in gaps could the Corps have known what was required. Similarly, the report of Environment Consultants, Inc., which concluded that the Baldauf report was substantially more accurate than the Gunter report, was not completed until November 5, 1971. At this point construction on Wallisville had already begun. Although the record does suggest that the Corps may have been hasty in awarding the first contract, it does not appear that it was doing so in the deliberate effort to evade the law.[111] Similarly, since the Wallisville Project was funded separately and developed independently of the Trinity Project, it was not patently unreasonable for the Corps to presume that an impact statement as to Wallisville only would be sufficient.
This Court also has been concerned with the multiple purpose nature of the Wallisville Project. Its five authorized purposes include salinity control, navigation, water conservation, recreation and fish and wildlife enhancement.[112] For the most part, the latter three purposes are substantially "local" in nature, particularly that related to water conservation. This purpose was added to the saltwater barrier purpose shortly after the plan for building a barrier was accepted.[113] This purpose developed as the project developed and appears to be one of the more significant features requiring scrutiny by this Court.
In instances in which the multiple purposes of a local nature were determined to be particularly substantial, such a determination would equitably favor a resolution of the case under NEPA on a local basis. In other words, if only one of several project purposes was related to the master project and it was relatively insignificant when compared to the purposes serving local needs, equity would not favor granting an injunction as to the local project pending completion of an environmental impact statement as to the larger, minimally associated project. There is presently a paucity of case law in this area. The only reported case which this Court has found bearing upon multiple purpose issues is Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 734 (D.Conn. 1972). In that case it was determined that if a highway segment which had a utility of its own was constructed, it would narrow the range of locality alternatives of the major route. Accordingly, its construction was enjoined. Id. at 740. That particular problem is not present here because all navigation, existing and proposed, will use the waters of the Trinity River, if at all. Keeping in mind the basic purpose of NEPA to avoid piecemeal environmental evaluations, a practical test to determine at what point a multiple purpose project becomes sufficiently associated with a major project so as to be controlled by it basically turns on the nature and extent of the nexus between the two projects. If in any given relationship the nexus between a major project and a smaller, multiple purpose project is exceedingly thin and attenuated, it would appear to *1325 be unreasonable and impracticable to enjoin what is substantially a local project. Similarly, if the major project is not yet sufficiently distinct or comprehensive, the nexus might be insufficient as well.
In the present case the Trinity Project is sufficiently distinct, but an evaluation of the nexus poses difficulty. According to Corps benefit-cost figures for the Wallisville Project in fiscal year 1972, the latest in the record, 41.3 percent of the total benefits are attributed to navigation and 25.4 percent to salinity control.[114] Thus on the surface it appears that over 65 percent of the total project benefits are attributable to a role compatible with the Trinity Project. In light of the existing navigation to Liberty, Texas, however, and the barrier impact on saltwater accompanying navigational uses, the above percentages do not necessarily reflect an accurate nexus between the two projects. Unfortunately, the present record does not provide a basis for a more informed judgment. However, it is not necessary at this point for the Court to make such a determination because, as the following will demonstrate, the record raises questions as to the true significance of certain of the claimed purposes of the project.
1.
WATER CONSERVATION AND SUPPLY
The record is replete with references and statistics regarding the role and value of the Wallisville Project in conserving river water for industrial and municipal purposes.[115] This Court accepts the proposition that if the project was operated jointly with the state built Lake Livingston reservoir, for which it was designed, a substantial increase in the amount of water captured would occur.[116] As counsel for the Corps points out, the public need for water is also an essential environmental element.[117]
There are some detracting factors in the record, however, which are not sufficiently clarified in the present Wallisville impact statement as prepared by the Corps. For example, it can be misconstrued, since it suggests that conservation may be needed for drinking water.[118] The appended comments from the City of Houston also suggests this *1326 possible use. However, comments dated July 7, 1971, from the Southwest Planning Division of the Army Corps of Engineers, made in connection with a draft copy of the impact statement, noted:
The misunderstandings that reservoir water will be used as drinking water have been clarified in the environmental statement as previously noted.[119]
Contrary to this representation, the Court can only conclude that the environmental statement is anything but clear. Furthermore, chemical treatment of water in order to rid it of vegetation may also render the water unsuitable for drinking purposes.[120]
The record also places in question the actual volume of water available for supply over the life of the project and the benefits attributed to this supply. When the Wallisville Project is placed in "system operation", the normal water level will apparently fluctuate between one and four feet with an average level of 2.3 feet above sea level. Yet the impact statement almost invariably uses the four foot level whenever reservoir volume is considered.[121] The impact statement makes two references to an operationally lower level, both of which are lost in the text. The first declares:
After twenty-five years, the water level may frequently be drawn down to an elevation of one foot above mean sea level whenever necessary for development and use of the water yield from the lake.[122]
The other reference states:
Later, the local sponsors, under their contractual agreement with the Government, may utilize the full Wallisville yield down to the minimum operating level of one foot above mean sea level, which is required for control of the salinity intrusion.[123]
Furthermore, a letter in the record dated February 8, 1961, from the then Galveston District Engineer reported that if the Livingston and Wallisville Reservoirs were operated in a manner calculated to yield the maximum water from the combined reservoirs. Wallisville would be empty of storage conservation water approximately 63 percent of the time and that large portions of the reservoir area would be mud flats. He continued by stating, "[a]s a water conservation storage reservoir, the four foot Wallisville reservoir is considered to be without merit."[124] There appears to be little discussion or analysis of potential growth of water plants which reportedly has cut the volume of most lakes and reservoirs in Texas by one-half.[125] Sediment collection in the reservoir, deposited *1327 by the river, is lightly discussed in the impact statement as being "variable and unpredictable."[126] Yet the record reflects that the Corps predicted in 1965 the reservoir volume would be diminished by twenty percent at the end of fifty years.[127] No discussion is given to the effect of the proposed addition of a duplicate set of locks and the reusing of the river water for navigation purposes associated with the Trinity Project,[128] to which the water rights of the City of Houston and the Trinity River Authority are presumed to be subordinated.[129] Also, the effect of water evaporation appears to be inadequately considered, particularly where the record indicates that it may be very substantial.[130]
An important element in an analysis such as this one is the degree of need, present or projected, for one or more uses of water. The impact statement does not discuss the fact that off-river freshwater storage reservoirs for rice irrigation nearly equal the water storage capacity of the Wallisville reservoir after deducting that quantity reserved *1328 for navigation purposes.[131] Furthermore, it appears that the "need" for rice farmers for proposed crop expansion uses may not necessarily exist in light of their recent opposition to proposals of the Federal Government for expanding regulated production.[132] As to the total need of the community for water supply, it is worth noting that at no time since fiscal year 1967 have the total estimated benefits attributable to the water supply purposes of the Wallisville Project ever exceeded 3.7 percent of the total claimed project benefits.[133] This would suggest that water need plays a very low role in the project's motivating forces.
It is quite possible, if not probable, that the water needs of this area are substantial and that they will increase dramatically in the future. Nevertheless, the record casts considerable doubt on whether the Wallisville Project was intended to meet those needs, regardless of the understanding of local interests. Furthermore, there is some question as to whether it can meet those needs, even if it were intended to do so. The impact statement's analysis of these factors appears to be superficial. Assuming that the Corps has not, in fact, made an error in judgment, the impact statement needs clarification and amplification so that a decision-maker may be apprised of the nature and extent of the claimed water needs, the availability of such water from the project sources and the uses to which it will be put. The Court is simply unable to conclude from the impact statement that a full disclosure of these facts has been made as required under NEPA.
One additional matter is worthy of note. The impact statement does not reconcile the fact that, as reported by Corps officials, system operation of Wallisville with the Lake Livingston reservoir would produce only an additional $38,000 of additional claimed annual water supply benefits, while eliminating $291,000 of claimed annual recreation benefits.[134]
*1329 2.
SALTWATER BARRIER EFFECT
Reportedly, the saltwater barrier would permit the withdrawal of 880 million gallons per day from the Trinity River without contamination.[135] The impact statement reports that Wallisville Lake, operating in conjunction with Livingston reservoir, will prevent average annual crop damages in excess of $800,000,[136] a figure somewhat higher than the $500,000 claimed in 1965.[137] The use of this figure in this context is not entirely appropriate, since it does not indicate that only about half that amount is attributable to the Wallisville Project.[138] The record is not clear as to the emphasis which should be given to a saltwater barrier. Although the Corps attributes 25.4 percent of the total project benefits to this purpose,[139] the record reflects that local interests did not seek saltwater protection until navigation expansion programs began.[140] There apparently has been no demand for such a barrier, unrelated to navigation, since 1950.[141] The record does not provide a basis for allocating this purpose between existing and proposed navigation.
3.
FACILITATING EXISTING NAVIGATION
The record does reflect that there is some commerce on the existing navigation channel to Liberty,[142] and that early plans for the Wallisville Project included navigation locks sufficient to meet existing traffic.[143] The record is not clear as to whether anticipated channel enlargement plans, associated with the Wallisville Project, are sought to be justified on the basis of meeting existing navigation needs.[144] Although the present lock size is greater than that needed for existing commerce,[145] that factor alone is not sufficient justification for finding the required "nexus" with the Trinity Project.
4.
RECREATION
The Wallisville Project anticipates providing four public park areas with related facilities.[146] Substantial annual benefits up to 38 percent have been attributed to recreation,[147] the present figure being approximately 18 percent.[148] Aside from the recreation evaluation *1330 problems discussed hereafter in the benefit-cost section of this opinion, the impact statement does not meet, discuss or evaluate in any detail the various reports questioning the validity of the claimed recreation benefits. As has been mentioned in the discussion of water conservation, it has been reported by a past Corps official that joint operation of Lake Livingston and Wallisville reservoirs would deplete it of conservation water (on which water recreation would occur) approximately 63 percent of the time, leaving large portions of the reservoir in mudflats.[149] This same joint operation results in the loss of $291,000 worth of recreational benefits in order to obtain a minimal amount of increased water supply benefits.[150] In 1965 the Corps reported that the shallow water depth of the project would be the principal deterrent to recreational use of the reservoir waters themselves.[151] While the impact statement does state that recreation value is of short term duration and may terminate after 25 years,[152] the record is unclear as to whether this was taken into account in evaluating claimed benefits. More importantly, this does not correlate with the fact that recreation benefits, as claimed, were not made on the basis of existing recreation needs, but on projected needs in the year 2010, a point in time beyond which present recreation benefits ostensibly will terminate.[153] Early Corps' instructions suggest that recreation "needs" are to be evaluated.[154] Nevertheless, the current project evaluations do not appear to have done so; nor have they taken into account, as requested by the Bureau of Outdoor Recreation, U. S. Department of the Interior, the "need" for natural recreation environment.[155]
5.
FISH AND WILDLIFE
The presently claimed fish and wildlife benefits for Wallisville are $157,000 annually,[156] in contrast with the originally estimated $109,300,[157] although the impact statement does not indicate the basis utilized in arriving at these benefits. One brief reference in the impact statement recites that "many thousands of acres of rice fields", the cultivation of which is permitted by fresh water from the Trinity, furnishes suitable homes to waterfowl.[158] This representation may or may not be in conflict with a 1962 report of the Bureau of Sport Fisheries and Wildlife noting that intensive management of a water area, not *1331 water alone, is the "key to making the area attractive to waterfowl."[159]
6.
SUMMARY
As the above discussion points out, each of the local purposes of this claimed multiple-purpose project at Wallisville conceivably may be lacking in substantial support, thus placing additional weight on the navigation and salinity barrier purposes of Wallisville which form the basis of its nexus with the Trinity Project. The situation is simply very much in doubt based on the record before this Court. This being the case, a decision based solely on deference to the claimed multiple purposes of Wallisville and the record of Corps' good faith to date cannot be justified. This is so, even though substantial construction is underway, high costs have been incurred and a delay may well increase them. The law provides that administrative costs, delay and related problems may not undermine NEPA's requirement that federal agencies comply "to the fullest extent possible."[160] That future funding of a project may be imperiled or placed in doubt by a delay is not sufficient reason to alter the rule,[161] nor does it matter that a federal agency has executed contracts with contractors who may lose income through delay,[162] that employees will lose earnings,[163] or even that there exists the likelihood of increased project costs.[164] As one Court properly phrased the resolution of such problems:
The Court is not suggesting that the status of the work not be considered in determining whether to proceed with the project. It is suggesting that the degree of the completion of the work should not inhibit the objective and thorough evaluation of the environmental impact of the project as required by NEPA. . . . [A]s the Court interprets NEPA, the Congress of the United States is intent upon requiring the agencies of the United States Government, such as the defendants here, to objectively evaluate all of the projects, regardless of how much money has already been spent thereon and regardless of the degree of completion of the work.[165]
From a complete analysis of the record in this case, this Court does not believe that the project in question, the Wallisville Dam and related facilities, has progressed to the point where the costs of altering or abandoning it would certainly outweigh the benefit that might accrue therefrom to the general public.[166]
*1332 This Court originally denied the plaintiffs' request for a temporary injunction pending this decision on the merits because it appeared on the face of this massive record that the Wallisville Project probably served primarily a local role and was merely compatible with the Trinity Project. Although Wallisville appeared to function as a significant part of Trinity, this Court, in weighing the equities, did not wish to delay completion of a project satisfying important local needs which originated and developed in concept long before NEPA was ever considered or became effective as a law. Local governmental entities appeared to rely upon Wallisville for water, rather than to develop their own separate facilities. On the basis of a full probing of this record, however, such an equitable resolution is not warranted. There are simply too many issues in this case wherein there is a failure to satisfy the full disclosure requirements of NEPA, including little supported justification in the present environmental impact statement for the claimed local purposes.
Accordingly, an injunction will be granted by this Court to halt any construction on the overall Trinity Project, including further construction on the Wallisville reservoir, until the requirements of NEPA as elaborated upon in the following sections have been complied with. The true purposes and character of Wallisville simply must be ascertained. If and when the Corps can present to this Court additional evidence as to Wallisville's local purposes, and if this Court upon appraising such evidence finds that this project possesses, in reality, substantial local purposes, then it will dissolve the injunction as to Wallisville upon the resubmission of an environmental impact statement which satisfies the requirements of NEPA in all other respects. On the other hand, if such evidence is inadequate under the law and the claimed primarily local purposes are not demonstrated, the Wallisville Project will then be considered by this Court only as the first segment of the Trinity Project. Further construction of Wallisville will then be delayed pending completion, review, and acceptance of the Trinity environmental impact statement as outlined in the following sections of this opinion.
D.
THE ROLE OF THE COURTS UNDER NEPA
1.
SCOPE OF JUDICIAL REVIEW
The role of District Courts in reviewing decisions of federal agencies under NEPA has not yet been clearly enunciated, and it appears that differing standards have been used. It has been held that in the ultimate weighing of values, the courts cannot strike the balance but must insist that the appropriate administrative officials use the scales prescribed by Congress with a scrupulous regard for the importance of the choices presented.[167] Another decision has noted that a court cannot seek to impose unreasonable extremes or inject itself into the area of discretion of the agencies as to the choice of the action to be taken.[168] Yet, as one of the major forerunners of environmental litigation noted, the courts must see that important legislative purposes are not lost or misdirected in the vast hallways of the federal bureaucracy.[169]
At least one Circuit has held that the scope of review of an agency decision, which normally must be upheld if supported by "substantial evidence", is not altered by the National Environmental Policy Act.[170] The Supreme Court has *1333 peripherally touched upon environmental values in Overton Park.[171] The decision was formally based upon sections of two federal highway acts which included clear and specific directives that the Secretary of Transportation "shall not approve any program or project" that requires the use of any public park land "unless (1) there is no feasible and prudent alternative to the use of such land, and (2) such program includes all possible planning to minimize harm to such park. . . ."[172] The language in NEPA is not as specific. Nevertheless, NEPA was enacted many years after the statutes at issue in Overton Park and was intended to cover a multitude of potential environmental harms, rather than one specified item. As the Supreme Court remarked about the highway statutes, the very existence of NEPA indicates that protection of the environment was to be given paramount importance and thus was not to be placed on an equal footing with the usual economic and technical factors.[173]
The Supreme Court reviewed the standards of the Administrative Procedure Act, 5 U.S.C. ง 706 (1964 Ed., Supp. V), and found the "substantial evidence" test authorized only when the agency action is taken pursuant to a rule-making provision of the APA itself, or when the agency action is based on a public adjudicatory hearing. However, the court could not engage in a de novo review in the absence of certain agency procedures which, as here, were not present. The generally applicable standards of ง 706 were held to require the reviewing court to engage in a "substantial inquiry."[174] The Secretary's decision, according to the Court, is entitled to a presumption of regularity, although that presumption is not to shield his action from a thorough, probing and indepth review. The reviewing court must then determine whether the Secretary has acted within the scope of his authority. This would include ascertaining if the actual choice made was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, if the decision was based on a consideration of the relevant factors and if there had been a clear error of judgment. Despite the fact that the inquiry into the facts is to be searching and careful, the ultimate standard of review is narrow, as the court is not empowered to substitute its judgment for that of the agency.[175]
This Court believes that the Overton Park test is a proper one for testing agency decisions under NEPA. Although the Supreme Court has presently foregone the opportunity to speak directly on the applicable test,[176] this Court believes that Overton Park, expressly interpreting Congressional legislation in light of Congressional concern over environmental issues,[177] was intended to serve as a guidepost in these presently uncharted waters. The Fifth Circuit Court of Appeals has only recently adopted this same standard. Save Our Ten Acres v. Kreger, 472 F.2d 463 (5th Cir., 1973). Furthermore, this Court *1334 finds the "substantial inquiry" test more compatible with the problems surrounding burden of proof, discussed below, than would be the case with the "substantial evidence" test. Nevertheless, this Court has given close consideration to both tests in the light of the facts and the relevant law in this case, and it would reach the same conclusion, regardless of which test was applied.
2.
BURDEN OF PROOF
Few courts have expressly indicated upon which party the burden of proof should fall, although several have indirectly reached the issue. In a case similar to the one before this Court, a district judge has held that the burden of persuasion rests with the plaintiffs.[178] The Court of Appeals for the Second Circuit, in one of its earlier decisions, pointed out that the burden of proof must not be shifted so as to give, in essence, the plaintiffs a virtual veto power over federal agency decisions.[179] On the other hand, the Court of Appeals for the Fourth Circuit has held that NEPA places a heavy burden upon the federal agencies to enable a court to ascertain whether there has been a genuine and not a perfunctory compliance with the Act, thus requiring the agency to "explicate fully its course of inquiry, its analysis and its reasoning."[180]
The District of Columbia Circuit, in Calvert Cliffs, pointed out:
It is . . . unrealistic to assume that there will always be an intervenor with the information, energy and money required to challenge a staff recommendation which ignores environmental costs. NEPA establishes environmental protection as an integral part of the (agency's) basic mandate. The primary responsibility for fulfilling that mandate lies with the (agency). Its responsibility is not simply to sit back, like an umpire, and resolve adversary contentions at the hearing stage. Rather, it must itself take the initiative of considering environmental values at every distinctive and comprehensive stage of the process beyond the staff's evaluation and recommendation.[181]
The Court of Appeals for the Second Circuit has echoed the language and reasoning of Calvert Cliffs, noting that it was, in part, for this reason that Congress compelled the agencies to seek the aid of all available expertise and formulate their own position early in the review process.[182] Although neither of these two cases expressly laid the burden of proof upon one party or the other, both clearly reveal the rationale for placing it upon the federal agency, once a plaintiff has made out a prima facie case of a violation of NEPA. The agencies have created environmental divisions or sections within their structure whose tasks include the survey, evaluation and description of environmental features and impacts. Publicly paid experts spend their full time investigating these features in conjunction with the various projects undertaken by their agencies as well as coordinating with other agencies who are experts in particular fields. Aside from the limited roles served by the Council on Environmental Quality and the Environmental Protection Agency, there is no public environmental "ombudsman" to superintend agency compliance with NEPA. It *1335 would be unrealistic, as pointed out, to expect that the various environmental and conservation groups and individuals would be able to provide an effective check and balance against agency decisions affecting the environment. In most cases, these environmentalists are teachers, laborers, professors, housewives, etc., who must spend the vast majority of the employment time engaged in occupations other than watching the agencies. On the other hand, the agency employees spend their employment time performing tasks related to the very subject matter and activities upon which environmental issues are based.
Equally important is the nature of the litigation and the judicial role. The record in this case, for the most part relating only to one reservoir, is massive and contains hundreds of documents pertaining to scores of issues. This Court has necessarily spent a truly inordinate amount of time in reading, comparing, analyzing, and indexing these documents so as to be able to comprehend this complex lawsuit. Virtually all of this record is the product of the administrative agency, the Corps of Engineers, with the Wallisville impact statement constituting a distillation of what it considered in good faith to be important in such record. Under the circumstances, this Court is compelled to conclude that the very nature of the problem in this legal area is so extensive that if the burden were placed wholly upon citizen plaintiffs, the full disclosure requirements of NEPA would never be implemented satisfactorily and environmental protection as contemplated by Congress would be little more than a fiction. Accordingly, once a prima facie showing has been made that the federal agency has failed to adhere to the requirements of NEPA, the burden must, as a general rule, be laid upon this same agency which has the labor and public resources to make the proper environmental assessment and support it by a preponderance of the evidence contained in the impact statement.
3.
JURISDICTION
Early in the present litigation, the government moved to dismiss on several grounds, including both subject matter and personal jurisdiction. The Court denied the motion to dismiss.[182a] To elaborate here somewhat, this Court finds that jurisdiction is properly based on the federal question statute, 28 U.S.C. ง 1331. Harrisburg Coalition Against Ruining the Environment v. Volpe, 330 F.Supp. 918, 921 (M.D.Pa. 1971); Ely v. Velde, 321 F.Supp. 1088, 1094 (E.D.Va.1971); Pennsylvania Environmental Council, Inc. v. Bartlett, 315 F.Supp. 238, 240 n. 1 (M.D.Pa.1970), aff'd, 454 F.2d 613 (3d Cir. 1971). Furthermore, the pleadings adequately establish jurisdiction under the Administrative Procedure Act, 5 U.S.C. ง 701 et seq. Environmental Defense Fund, Inc. v. Hardin, 138 U.S.App.D.C. 391, 428 F.2d 1093, 1097-1098 (1970); Citizens Committee for Hudson Valley v. Volpe, 425 F.2d 97, 101-102 (2d Cir. 1970), cert. denied, 400 U.S. 949, 91 S. Ct. 237, 27 L.Ed.2d 256; Upper Pecos Association v. Stans, 328 F.Supp. 332, 333 (D.N.M.1971), aff'd, 452 F.2d 1233 (10th Cir. 1971), vacated, 406 U.S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 330 (remanded to determine mootness); Pennsylvania Environmental Council, supra, 315 F. Supp. at 245. Similarly, this Court does not find that the suit is barred by the doctrine of sovereign immunity. Environmental Defense Fund, Inc. v. Corps *1336 of Engineers of U.S. Army, 325 F.Supp. 749, 763 (E.D.Ark.1971); Crowther v. Seaborg, 312 F.Supp. 1205, 1219 (D. Colo.1970).
In light of the above disposition, this Court does not reach the jurisdictional allegations advanced by plaintiffs resting on 28 U.S.C. ง 1361 relating to mandamus and 28 U.S.C. งง 2201 and 2202 pertaining to declaratory judgment.
4.
STANDING
This Court has studied carefully the Supreme Court's recent pronouncement regarding the standing to sue in an environmental setting. Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). It has also considered numerous other lower court cases wherein the issue of standing was raised in environmental settings. See, e. g., Environmental Defense Fund, Inc. v. Corps of Engineers of United States Army, 348 F.Supp. 916 (N.D.Miss.1972); Citizens for Clean Air v. Corps of Engineers of U.S. Army, 349 F.Supp. 696 (S.D.N.Y.1972); Maddox v. Bradley, 345 F.Supp. 1255 (N.D.Tex.1972); Natural Resources Defense Council v. Grant, 341 F.Supp. 356 (E.D.N.C.1972). This Court is satisfied that the present allegations, asserted prior to Sierra Club v. Morton, are sufficient for standing. Were they to be determined to be insufficient, which this Court does not find, an amendment would only be a minor procedural matter. Environmental Defense Fund v. Corps of Engineers of U.S. Army, 342 F.Supp. 1211, 1216 (E.D.Ark. 1972).
5.
INTERVENTION
To date this Court has received several motions to intervene as of right, Fed. R.Civ.P. 24(a)(2), or, alternatively, permissively under Fed.R.Civ.P. 24(b)(2). Prior to this decision the Trinity River Authority and, joining in one motion, the City of Houston and the Coastal Industrial Water Authority of Texas were granted leave to intervene. Their interests in this matter are amply supported by the facts of this case.
Presently pending are motions to intervene by each of the following Texas cities, moving independently: Dallas, Fort Worth, Irving and Trinity. Another motion is filed collectively on behalf of Houston County (population 18,000), the cities of Crockett (population 7,000), Grapeland (population 1,300), Lovelady (population 400), and the Houston County Water Control and Improvement District No. 1. Finally, another motion is filed collectively on behalf of some 75 cities, 12 counties, 13 soil and water conservation districts and 4 electric cooperatives. This motion shall conveniently be referred to by this Court as the motion of the City of Pantego.
The cities of Dallas and Fort Worth, in addition to their joint interests in the navigation features of the Trinity Project, emphasize their concern for the flood control projects and water supply facilities immediately associated with the project and their cities. Inasmuch as these features, plus the location of the northern terminus of the proposed Trinity navigation channel in Fort Worth, are substantially associated with these cities, their motions to intervene are granted as of right. These claims are substantial, and, as a practical matter, can be impaired or impeded by this litigation. As to the status of the other movants, varying circumstances are noted. The City of Irving, for example, is concerned with flood control features of the project, and the City of Trinity seeks to protect a $13,000 investment in a railroad right-of-way which that City regards as being a potentially good site for a barge terminal. The other movants generally are concerned in varying degrees with flood control, water supply, the recreational needs of its citizens, low cost transportation and their local economy and prosperity.
*1337 The central issue of this litigation involves NEPA and environmentally related aspects of the projects in question. Although they may be affected, the specific elements such as flood control, recreation, economic prosperity, right-of-ways and transportation are not directly the concern of this Court. These issues are not particularly unique to these movants when contrasted with the hundreds of other cities, water districts and other entities which might desire to intervene on similar grounds. Because of this situation, the Court must focus upon adequacy of representation. The Committee Note of 1966 to Fed.R.Civ.P. 24(a) noted, in applicable part:
A class member who claims that his "representative" does not adequately represent him, and is able to establish that proposition with sufficient probability, should not be put to the risk of having a judgment entered in the action which by its terms extends to him. . . .
. . . . . .
A party to an action may provide practical representation to the absentee seeking intervention although no such formal relationship exists between them, and the adequacy of this practical representation will then have to be weighed. . . .
An intervention of right under the amended rule may be subject to appropriate conditions or restrictions responsive among other things to the requirements of efficient conduct of the proceedings.
3b J. Moore's Federal Practice ถ 24.01[10], at 24-17, 18 (2d Ed. 1969). Inadequacy of representation under the old intervention rule was shown if there was proof of collusion between the representative and an opposing party, if the representative has or represents some interest adverse to that of the petitioner, if the representative fails because of nonfeasance in the duty of representation, and sometimes if the representative is willing but unable to present the claim of the petitioner. 3b J. Moore's Federal Practice ถ 24.08[2], at 24-184, 185 (2d Ed. 1969). It would appear that the basic standards have not changed under the new rule. Hobson v. Hansen, 269 F.Supp. 401 (D.D.C.1968); 3b J. Moore's Federal Practice ถ 24.09-1[4], at 24-314, 315 (2d Ed. 1969). Assuming, but not deciding, that these movants have interests which would be impaired by this litigation, it appears that their interests are adequately represented by one or more of the existing parties, cumulatively considered. Intervention as of right is therefore denied to these remaining movants at this time. Similarly, permissive intervention is denied at this time on the grounds that the mere paperwork and duplication of issues and arguments would delay the proceedings and prejudice the interests of all parties, including their own. See, gen., 3b J. Moore's Federal Practice ถ 24.10[4], at 24-391 et seq. (2d Ed. 1969).
Holdings of the Fifth Circuit Court of Appeals on intervention questions[183] and the procedures adopted by other courts engaged in environmental litigation[184] do not suggest that another approach is more reasonable.
*1338 E.
THE NATIONAL ENVIRONMENTAL POLICY ACT
1.
THE SUBSTANTIVE POLICY ELEMENTS
The basic requirements and obligations of NEPA have been sufficiently outlined by major decisions.[185] NEPA is at the very least "an environmental full disclosure law,"[186] an "action-forcing" statute,[187] which is intended to assure "substantial and consistent consideration of environmental factors in decision making," even where it may conflict with other federal objectives.[188] In this manner the "full cost" of a project, including environmental impact, may become known.[189] It is incumbent upon this Court to ensure that the Corps, like all federal agencies, uses "all practicable means, consistent with other essential considerations of national policy," to meet the policies established by Congress.[190] In this respect, there are two matters which are of particular application to this case.
Requirement of Continual Policy Reevaluation:
Section 102 directs all agencies of the federal government, to the "fullest extent possible," to ensure that the "policies, regulations, and public laws of the United States shall be interpreted and administered in accordance with the policies set forth in this chapter. . . ."[191] This sets a high standard and obligates the agencies continually to review and reappraise existing policies and procedures, not only in light of the developing law, but also in light of the developing agency awareness of environmental factors as issues arise at project sites. Congress sought to ensure that "no agency shall utilize an excessively narrow construction of its existing statutory authorization to avoid compliance."[192] Thus, an agency's review must reflect a "systematic, inter-disciplinary approach" and be "integrated" with the natural and social sciences, the environmental design arts, and be developed in consultation with the Council on Environmental Quality.[193] It is a matter of common sense that the field level personnel of the federal agencies, those directly associated with the projects creating environmental impacts, are those most likely to become aware of potential conflicts between existing practices and environmental policies. Effective means of communication must be maintained to apprise them of changing environmental practices as well as to allow them to point up related problems. If these discoveries require new legislation, then it is incumbent upon the agency *1339 as a positive duty to bring the issue to the attention of Congress.[194]
MitigationโThe Substantive Requirement:
NEPA states indirectly, but affirmatively, that under some circumstances federal agencies must mitigate some and possibly all of the environmental impacts arising from a proposed project. This requirement is embodied primarily within Section 101, 42 U.S.C. A. ง 4331, with important implementing assistance from Section 102, 42 U.S.C.A. ง 4332. This Court will not endeavor to catalogue all permutations of this requirement, but will highlight a few as they apply to the present litigation.
Consistent with other essential considerations of national policy, all federal agencies must "use all practicable means" to assure safe surroundings, 42 U.S.C.A. ง 4331(a), (b)(2), to attain the widest range of beneficial uses of the environment without unintended consequences, 42 U.S.C.A. ง 4331(a), (b)(3), and to preserve important historic, cultural and natural aspects of our national heritage. 42 U.S.C.A. ง 4331(a), (b)(4). While tested by a rule of practicability with respect to other essential considerations of national policy, these requirements must be implemented "to the fullest extent possible." 42 U.S.C.A. ง 4332.
Although the mitigation requirement has not been examined in the relatively few reported cases to date, its significance is implicit in the guidelines of the CEQ and EPA. For example, the CEQ guidelines since first issued in 1970 have required that:
. . . Federal agencies will . . . assess in detail the potential environmental impact in order that adverse effects are avoided, and environmental quality is restored or enhanced, to the fullest extent practicable. In particular, alternative actions that will minimize adverse impact should be explored and both the long-short-range implications to man, his physical and social surroundings, and to nature, should be evaluated in order to avoid to the fullest extent practicable undesirable consequences for the environment. (emphasis added)[195]
The more recent EPA guidelines provide that:
Remedial, protective and mitigative measures which will be taken as part of the proposed action shall be identified. These measures to prevent, eliminate, reduce, or compensate for any environmentally detrimental aspects of the proposed action shall include those of the agency and others, e. g., its contractors and grantees.[196]
More significantly are those EPA guidelines directed toward those adverse impacts which cannot be avoided. They require the agencies to:
Describe the kinds and magnitudes of adverse impacts which cannot be reduced in severity or which can be reduced to an acceptable level but not eliminated. For those which cannot be reduced, their implications and the reasons why the action is being proposed, notwithstanding their effect, shall be described in detail. Where abatement measures can reduce adverse impacts to acceptable levels, the basis for considering these levels adequate and the effectiveness and cost of the abatement measures shall be specified. In particular this analysis shall detail the aesthetically or culturally valuable surroundings, human health, standards of living, or environmental goals set forth in ง 101(b) of the National Environmental Policy Act which would be sacrificed.[197] (emphasis added)
This Court is fully aware that many cases have held that NEPA does not create *1340 "substantive" rights, but rather creates only "procedural" obligations.[198] To the extent that NEPA does not articulate acceptible levels of air, water, heat and noise pollution, this is an accurate position. To the extent that NEPA does not give the courts the final decision with respect to which way a highway should go, or which trees should stand and which should fall, this is an accurate position. But to the extent that it would allow the agencies merely to disclose the likely harm without reflecting a substantial effort to prevent or minimize environmental harm, it is not an accurate position of the role of the courts under NEPA.
Issues pertaining to mitigation most frequently arise in the context of considering alternatives to the whole or any part of a proposed project's environmental impact. This was noted by the Eighth Circuit Court of Appeals which stated:
The Corps also argues that it was not necessary to discuss in greater detail the alternative of acquiring land to mitigate the loss of natural resources because this alternative was a separate project requiring separate Congressional authorization. We disagree.
The proposed mitigation plans go to the very heart of the question before the Corps in preparing its environmental impact statementโwhether the project should proceed at the present time in view of its environmental consequences. Responsible critics of the project have urged that no project be initiated until a mitigation plan is actually put into effect in order to prevent easily avoidable environmental losses. They state that following the commencement of construction, it will become difficultโif not impossibleโ to acquire suitable land for mitigation because of increased property values and the continued clearing of land for cultivation. Thus, in their view, any mitigation proposal is inextricably linked to the project itself. Such a view is not clearly without merit.[199]
Both the Second and District of Columbia Court of Appeals have suggested that judicial action might be required if there was a significant potential for subversion of the substantive policies in NEPA.[200] The courts should not impose unreasonable extremes of compliance or inject themselves into the area of discretion as to what action should be *1341 taken;[201] but they should not hesitate to require further agency consideration when a project appears to call for mitigation and yet none was considered, or only a half-hearted effort was made.
The Wallisville impact statement does not indicate that mitigation was considered or implemented with respect to any environmental impacts noted. Initially, this is not in accordance with the instructions issued by the Chief of Engineers on September 25, 1970. In pertinent part they instruct project planners as follows:
Identify remedial, protective, and mitigation measures which would be taken in response to adverse effects of environmental impacts. Such measures taken for the minor or short-lived negative aspects of the project will be discussed in this section. The adverse effects which cannot be satisfactorily dealt with will be considered in greater detail along with their abatement and mitigation measures in the following section.[202]
The Wallisville impact statement does indicate generally that control of some future environmentally related problems, such as increased reservoir vegetation, will be subjected to Corps control measures. There is no specific discussion at any one point, however, which would indicate that consideration of mitigation of existing, major impacts was undertaken. For example, the impact statement, dated December 13, 1971, nearly two full years after NEPA, does not reveal any project modifications since Wallisville was planned and designed in 1965. At the least, this does not comply with CEQ guidelines requiring that agencies of ongoing projects reassess the basic course of action, except where impracticable, and shape further action "so as to minimize adverse environmental consequences."[203]
2.
THE ENVIRONMENTAL IMPACT STATEMENT
a.
Detail Required
The existing guidelines of the CEQ and EPA, as well as those of the Corps, do not yet adequately indicate what amount of detail is required in impact statements. As various courts have pointed out, the statement should gather in one place the discussion of environmental impacts and alternatives[204] so that it serves as comprehensive document upon which responsible agency officials and others might rely in making the required balance between environmental and non-environmental factors.[205] Two district judges, studying impact statements before them, have articulated what appear to be, at first glance, somewhat different tests. One stated that the statement should, at a minimum, contain information as to "all known possible environmental consequences."[206] The other limited it to discussing "the significant aspects of the probable environmental impact."[207] The first judge had been presented with a twelve page impact statement from what appeared to *1342 be a recalcitrant agency. Upon subsequent submission of a more elaborate statement, he dissolved an injunction and stated that it was not necessary to "dot all the I's and cross all the T's" in an impact statement.[208] In light of these facts, the tests espoused do not appear to differ substantially, if at all. A reasonable test would be the same as that adopted by present Corps regulations: an impact statement should contain "all possible significant effects on the environment."[209] The larger the physical size of the environmental amenity at issue, and hence the more readily available for public observation, appreciation, use, or enjoyment, then the greater the likelihood it should be dealt with in the impact statement. This is particularly true if it is endangered or is rapidly diminishing. Likewise, even if the physical size is miniscule or microscopic, the impact statement should deal with it if the environmental impact on it is apt to be significant. In this fashion, the impact statement will be sufficiently detailed so that, if challenged, the courts will not be left to guess as to what is involved and whether the requirements of NEPA have been met.[210]
b.
Objectivity Required
Objectivity is required of federal agencies, particularly with respect to evaluation of environmental impacts. The Eighth Circuit Court of Appeals has stated that "the test of compliance with ง 102, then, is one of good faith objectivity rather than subjective impartiality."[211] A district judge has offered a practical interpretation of objectivity as requiring, at a minimum, a good faith effort to comply with the provisions of NEPA. This would preclude, he stated, consciously slanted or biased impact statements wherein intentional misrepresentation was attempted.[212]
These are sound tests and should be equally applicable to a federal agency with respect to all environmentally related activities, be it selection of consultants, the undertaking of environmental studies, the reliance upon such studies, the creation of environmental assessments, the coordination with reviewing agencies or the preparation of impact statements. There are indications in the record that the Corps of Engineers may have, at one time or another, been less than objective by engaging in rationalizations and super salesmanship.[213]
c.
Written For The Layman
All features of an impact statement must be "written in language that is understandable to non-technical *1343 minds and yet contain enough scientific reasoning to alert specialists to particular problems within the field of their expertise."[214] The reason for this standard is that impact statements must assist in rational, thoroughly informed decision making by officials higher up in the agency chain-of-command, including the Congress, the Executive and the general public, some of whom may not possess the technical expertise of those who evaluate the impact and prepare environmental statements. In this regard the present impact statement is deficient.[215] Additionally, when technical procedures are discussed, such as in connection with the benefit-cost analysis issues, the applicable law and methods employed should be adequately explained so that all may understand them.
d.
Discussion Of Alternatives
The role that possible alternatives play in the environmental process is particularly critical because it is usually through this medium that mitigation measures may be discovered. By the use of an appropriate alternative, be it to all or a part of a proposed project, a part of the environmental impact may be mitigated. Like mitigation, the consideration of alternatives may not be treated cavalierly by the federal agencies. By the use of the word "alternatives" Congress meant, "[T]he alternative ways of accomplishing the objectives of the proposed actions and the results of not accomplishing the proposed action."[216] Since first issued in April, 1970, the guidelines of the Council on Environmental Quality have required the following standards for the consideration of alternatives:
A rigorous exploration and objective evaluation of alternative actions that might avoid some or all of the adverse environmental effects is essential. Sufficient analysis of such alternatives and their costs and impact on the environment should accompany the proposed action through the agency review process in order not to foreclose prematurely options which might have less detrimental effects.[217]
The Department of Defense guidelines, issued in August, 1970, are similar. They require:
A list of carefully developed alternatives to the proposed action that may avoid some or all of the adverse environmental effects. Include with these alternatives economic, technical and *1344 operational considerations, as well as their environmental impact.[218]
Of the several courts that have carefully considered the role of alternatives in the environmental spectrum, perhaps the soundest and most succinct statement comes from the District of Columbia Circuit which has stated:
. . . Section 102(2)(D) requires all agencies specifically to "study, develop, and describe appropriate alternatives to recommended courses of action in any proposal which involves unresolved conflicts concerning alternative uses of available resources." This requirement, like the "detailed statement" requirement, seeks to ensure that each agency decision maker has before him and takes into proper account all possible approaches to a particular project (including total abandonment of the project) which would alter the environmental impact and the cost-benefit balance. Only in that fashion is it likely that the most intelligent, optimally beneficial decision will ultimately be made. Moreover, by compelling a formal "detailed statement" and a description of alternatives, NEPA provides evidence that the mandated decision making process has in fact taken place, and, most importantly, allows those removed from the initial process to evaluate and balance the factors on their own.[219]
While agencies must consider alternatives to the "fullest extent possible,"[220] the search for appropriate alternatives need be neither "exhaustive"[221] nor speculative and remote.[222] Although only those "reasonably available"[223] need be considered, the discussion and consideration cannot be superficial, but must be thoroughly explored.[224] It is not necessary that a particular alternative offer a complete solution to all technical, economic and environmental considerations. If a portion of the original purpose of the project, or its reasonably logical subcomponent, may be accomplished by other means, then a significant portion of the environmental harm attendant to the project as originally conceived may be alleviated.[225] The fact that some reasonably related alternative might require Congressional legislation is not sufficient either to place it beyond the consideration of the agency or beyond inclusion in the impact statement.[226] Likewise, the fact that a particular alternative would require substantial coordination with another federal agency is not sufficient, in and of itself, to place its consideration beyond the requirements of NEPA.[227]
There are some circumstances, such as are present in this case, in which the duty to consider alternatives takes on an even greater role than would ordinarily appear to be necessary. In those cases in which a proposed project *1345 has a nexus to a more detailed and comprehensive project, it may be necessary that an impact statement not only evaluate the effect of the proposed project, but also assess some or all of the effect of the master plan.[228] As the D.C. Circuit Court of Appeals aptly phrased this duty:
When the proposed action is an integral part of a coordinated plan to deal with a broad problem, the range of alternatives that must be evaluated is broadened. . . .
. . . In the absence of assignment of the impact statement function to an agency with broader responsibility the implementation of the environmental review mandated by NEPA fell on the (sponsoring agency) when it took the first step in carrying out the broader . . . program.[229]
Referring to the present suit and assuming that the nexus between Wallisville and the Trinity Project was not sufficient to require an environmental assessment of the larger project, it would still be necessary to evaluate the expected impact that the adjoining Trinity Project would have upon Wallisville. For example, the range of alternatives for Wallisville would also need to take cognizance of potential water pollution traveling downstream and collecting within the borders of the Wallisville reservoir.
A court must use reason and assess the results with an eye to practicality so as not to further tie up the governmental bureaucracy with red tape. However, a court should engage in a "substantial inquiry" to ensure that the agency has rigorously and objectively fulfilled its obligations. In the same fashion that agencies must continually update and reevaluate their policies, they must continue to reevaluate such aspects as mitigation, impact and the scope of a proposed project, even if an acceptable impact statement has been prepared, reviewed and accepted.[230] It may well be difficult as a practical matter for the courts to determine where mere consideration of an alternative is sufficient as contrasted with when actual mitigation is required. As a basic rule, if the agency has properly used its own expertise and that contributed by other expert agencies, all acting fully and reasonably within their own respective jurisdictions, then the final balance should not be disturbed, even if a court would have personally arrived at a different result.
3.
REVIEW OF ENVIRONMENTAL IMPACT STATEMENTS BY OTHER AGENCIES
a.
In General
NEPA requires sponsoring agencies, prior to the making of an impact statement, to "consult with and obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved."[231] The guidelines of the CEQ and EPA expand very little on this point, although the CEQ guidelines do provide lists of agencies arranged by indicated expertise.[232] The legislative *1346 history reveals that Congress did not intend to delay unreasonably the processing of federal agency proposals, or that local agencies with only a remote interest in the project without concomitant primary responsibility had to be included. The information obtained, however, was to accompany the proposal through the review process.[233]
This inter-agency contact must, in fact, be a true "consultation."[234] While one of the purposes behind this requirement was to avoid obvious duplication of efforts, time, and expense,[235] it was also to ensure that the required analysis was undertaken. It could not be presumed that interested citizens or groups would have the financial and technical resources necessary for such undertakings.[236] While 30 to 45 days is usually allowed for reviewing agencies to study and comment upon a proposed project,[237] the "and obtain" requirement of NEPA would prevent too strict an adherence to a time schedule when, for example, the impact statement was particularly large and complex, the reviewing agency was unusually swamped with review requests, or possibly even when on-site investigation or additional study was required before the reviewing agency could render an intelligent opinion.[238] This exception should be reasonably limited to an agency whose expertise appears to be particularly significant with respect to a major aspect of a project.
b.
Duties Of Other Agencies
Because NEPA obligates sponsoring agencies to use a systematic, interdisciplinary approach, the basic burden is on these agencies to seek out and contact the appropriate authorities. On the other hand, the other federal agencies may not, because of their own interdisciplinary requirements under NEPA, merely sit by until contacted by a sponsoring agency. By maintaining a check of the Federal Register, they may guard against the possibility that some sponsoring agency has failed to submit an impact statement to them through inadvertence or design when the nature of the project appears to lie within their area of jurisdiction. In short, the use of a systematic, interdisciplinary approach means what it says.
If in a given situation it reasonably appears that an on-site investigation is required before a reviewing agency may adequately exercise its expertise, then an on-site investigation is required.[239] This is likely to arise more frequently with respect to particularly large projects. Similarly, when an agency's expertise would indicate that it should have comments upon a given proposal, then comments should be made.[240]*1347 More importantly, the range of its comments should focus upon the impact the project will have upon the environment, a determination which may require the reviewing agency's expertise, not just whether the project will affect some other ongoing project being conducted by the reviewing agency.[241] Application of this expertise may require a myriad of activities, such as file checks, reviews of past studies, literature searches or map investigations. The reason underlying this approach is to ensure that some significant impact does not go undiscovered until too late, merely because the sponsoring agency was unaware of potential problems which the reviewing agency might suspect.
c.
Deference To Agency Expertise
The record reflects that in the course of planning Wallisville reservoir, sharp differences of opinion arose between the Corps of Engineers and other agencies which rendered opinions that, at least, arguably fell under their jurisdiction and area of expertise. For example, according to the record the Department of the Interior claims that the Wallisville Project would cause a significant reduction in the amount of fresh water discharged into Trinity Bay, a development likely to have a significant adverse effect on the saltwater commercial fishing industry.[242] The impact statement reflects that it will not be significantly reduced for the first 25 years,[243] although a Corps official, writing four weeks after the impact statement was published, approximated the reduction as being 17 to 20 percent within only a few years after the project's completion.[244] In another matter, the Corps claims substantial recreation benefits,[245] although the Bureau of Outdoor Recreation disagrees and indicates that it would be better if the area were left undeveloped for natural recreation.[246] While the Corps has developed procedures for measuring recreation demand and benefits,[247] the record does not reflect whether they are acceptable to agencies with recreational expertise or whether they accurately measure recreational "need."[248] For example, in 1962 the Bureau of Sport Fisheries and Wildlife computed fish and wildlife benefits for Tennessee Colony Reservoir to be $1,236,000. The Corps claimed $6,300,000, an amount criticized by the Bureau as being unsupported.[249] With respect to the *1348 Trinity Project, in apparently that same year the District Engineer estimated hunting and fishing would increase by 4,900,000 man-days annually if the project were constructed, while the Fish and Wildlife Service estimated an increase of only 937,000 man-days. The District Engineer also estimated the general recreation increase to be 9,100,000 man-days annually, an amount approximately three times that estimated by the National Park Service. These differences led the Board of Engineers for Rivers and Harbors to comment:
Considering that the Park Service and Fish and Wildlife Service are experts in their fields, it is believed that these wide differences should be reconciled to a greater degree, or more support furnished for the estimates used.[250]
Another area of disagreement appears to have arisen in the context of the benefit value to be attributed to water supply, the Department of Health, Education, and Welfare evidently setting one value while the Corps utilized a higher one.[251]
Possibly one of the more critical areas pertains to the claimed damages to the saltwater commercial fishing industry if the Wallisville Project is completed as designed.[252] As the 1965 Corps' study reported, an inclusion of these damages in the benefit-cost ratio computation might well result in a lack of economic justification for the project:
In the undefined "estuarine waters", the Corps makes no estimate of effects, whereas the bureau estimates major losses in both commercial and sport fishing. As stated above, the bureau estimated these effects in pounds of catch and visitor days, respectively, but made no monetary estimate. Using Corps estimates of 30 cents per pound for commercial fish catch and $1.00 per visitor day for sport fishing, the bureau's estimate of effects would result in a net annual loss of over $1.5 million for the independent operation and over $1.8 million for the system operations. Since the remaining benefits for all other purposes total $991,000 for the independent operation and $842,000 for the system operation, acceptance of the bureau's estimate would result in an unfavorable project from an economic standpoint.[253]
The Corps subsequently recomputed the claimed loss on agreed-upon rates and reduced the estimated loss from $1.5 million to $562,000.[254] Nevertheless, not even this amount was reported in the impact statement, nor was it apparently computed in the benefit-cost ratio.[255]
This Court is not attempting to decide whether one position is more reasonable than another. In light of the disposition of this case, it is not necessary to do so. This Court is only concerned that the law as passed by the Congress is followed. This warrants some discussion of what NEPA requires.
Congress did not intend that a federal agency consult with another agency "which has jurisdiction by law *1349 or special expertise with respect to any environmental impact involved" and then have its comments accompany the impact statement through the review process, only to have them ignored. This would not satisfy the requirement that agencies "utilize a systematic, interdisciplinary approach." With all due respect to the experts acquired by the Corps of Engineers to work in the environmental sections added at both District and Division levels, their duties cannot include their substitution for the expertise of other federal agencies charged with primary duties relating to the environment. Rather, these Corps experts must serve the Corps as environmental managers to ensure that unintended impacts do not go unnoticed by engineers until it is too late in a project's development. These officials presumably are alerted to whatever studies or inquiries need to be made, and they may evaluate comments of reviewing agencies for purposes of completeness and ensure that obvious errors in analysis are not made by such agencies. When a conflict arises between the Corps and an agency which is making an evaluation in its particular field of expertise, and when the Corps' evaluation is based upon factors of which the reviewing agency may take cognizance, then NEPA obligates the Corps in most instances to defer to that evaluation. Only upon the presentation of clear and convincing evidence that the reviewing agency was incorrect in its assessment should the Corps adopt another evaluation; even so, this refusal to defer should not occur until after the reviewing agency has had the opportunity to review the Corps' claimed evidence, and possibly reverse or modify its original evaluation.
The Court in Calvert Cliffs criticized an agency seeking to defer to water quality standards devised and administered by state agencies and approved by the federal government under the Federal Water Pollution Control Act. There the Court stated that NEPA required full consultation, but "most certainly did not authorize a total abdication to those agencies. Nor did it grant a license to disregard the main body of NEPA obligations."[256] This case does not compel a different result here, because in Calvert Cliffs the sponsoring agency was not seeking to defer to the considered judgment of a reviewing agency which was evaluating an environmental impact in the context of the proposed project. Rather, the sponsoring agency was seeking to defer to water permit standards based upon an entirely different set of values, namely maximum levels of acceptable pollution (as a single impact), rather than a measurement of actual total project impact.
By requiring this deference to the agency best equipped to render an expert opinion, it appears that Congress intended to provide a form of environmental "check and balance" with which federal agencies might complement one another and thereby keep the ship of state, as unwieldy as it often is, on a more steady course as "trustee of the environment for succeeding generations."[257]
F.
THE WALLISVILLE ENVIRONMENTAL IMPACT STATEMENT
1.
THE DISCLOSURE
a.
In General
Because of both procedural and substantive deficiencies, it will be necessary that the Corps of Engineers prepare a new environmental impact statement, either as to Wallisville alone or for the entire Trinity Project. This will depend, as noted earlier, upon the Corps' presentation of satisfactory proof to this Court that the project has substantial local *1350 purposes which would favor its equitable segregation from the Trinity Project for NEPA purposes. Some of the more significant deficiencies of the present impact statement appear in the following areas:
b.
Archeological Sites
As advised by the National Park Service, the impact statement notes there are 175 identified archeological sites in the project area, 17 of which contain material of historic association and 5 of which are listed in the National Registry of Historic Places. Three of these 5 sites "will not be inundated at normal pool levels," while the other 2 "will be inundated in the lake and may be subject to accelerated erosion by wave action."[258]
The Texas State Historical Survey Committee urges that steps be taken to preserve and protect "one of the most important historic site complexes in Southeast Texas."[259]
Aside from failing to consider the total impact at one location,[260] and apparently failing to contact the Advisory Council on Historic Preservation as required by CEQ guidelines,[261] the impact statement is unclear as far as weighing the importance of the sites, the degree to which the affected areas may contain still undiscovered important sites, or the actual, anticipated "impact" likely to result from inundation. The question is โdoes it or does it not mean destruction? There is no evaluation of the effect of floods which the Corps reports will occur from one to three times per year, nor any assessment of the effect of hurricanes on a large body of water which reportedly hit the Texas Coast on an average of every 1.7 years with occasional fifteen foot tides.[262]
Although there is no "cost" assigned to the loss of these archeological sites for benefit-cost purposes,[263] there is no indication that protection of the sites is anticipated, even though some means are reported as being available.[264] The subject merits a full and fair inquiry, particularly since it does appear that there is concern for approximately 300 acres of oil fields which are to be protected with a ring levee.[265]
c.
Water Quality
The impact statement generally reports that water quality is expected to be good for the purposes intended, noting that upstream sewage and other polluted discharges are controlled by state permits and future discharges will be controlled by the Corps of Engineers with approval of the Environmental Protection Agency. Aside from critical communications received regarding the above procedures,[266] this report is in apparent disregard of the caveat in Calvert Cliffs concerning the abdication of responsibility for evaluating total pollution impact.[267] The statement is not sufficient under NEPA, particularly when it apparently indicates no change in pollution control policy from that contemplated *1351 in 1941 in connection with the Trinity Project.[268] There is some discussion of water quality couched in terms of parts per million, but it fails to provide the non-technical reader with a scale of reference as to what is acceptable and what is not.
Most significant is the failure of the statement to assess the likely pollution level, assuming full navigation operations on the Trinity River in accordance with projected water commerce estimates. The Wallisville Project lies at the mouth of the Trinity River and is a likely collection point for upstream barge and tug discharges, leaks, spills, etc. The record reflects the potential presence of other factors which may affect water quality including saltwater intrusion (from storms), damage to the locks (used as a control device), chemical treatment for vegetation and exceedingly low water levels. These factors should be discussed in sufficient detail, as should the water quality "cost" of pollution through elimination of the Trinity as a free flowing river and the effect of the Federal Water Pollution Control Act Amendment of 1972 upon Corps procedures.
d.
Population and Industrial Expansion
Although there is reason to believe that there will be development, growth and industrial expansion as a result of the Wallisville Project's providing of a dependable water supply,[269] there is no impact evaluation of such expansions, nor has its environmental "cost" been considered. Not only has Congress determined that this type of growth leads to increased pollution,[270] but also guidelines of the CEQ and EPA point out that consideration to such hazards must be given.[271]
e.
Damage to Wildlife, Waterfowl and Fish
The impact statement reflects that 85 acres of partially wooded land inhabited by numerous species of wildlife will be removed and that some 12,500 acres of high marsh and cypress swamp will be submerged by the completion of this project. The statement points out that some rare and endangered species will be affected, and that competition for the remaining habitat may impair survival prospects of "some species." Noting that most animals exhibit a degree of mobility and adaptability, the statement concludes by declaring that "the degree of such impairment and the identity of such species as might be so affected, are indeterminate."[272]
At the very least, the impact statement should indicate whether any already endangered species may be among those whose survival may be impaired, and qualified experts on the subject should be identified. NEPA requires federal agencies to "preserve . . . natural aspects of our natural heritage . . . wherever possible."[273] Efforts should also be made to identify which species may be significantly impaired[274] so that a judgment decision, *1352 made in conjunction with the appropriate agencies, can determine the degree of mitigation required for non-endangered species on a national or regional basis, if any. In 1961 it was reported that there was a "critical need for a refuge and feeding area in this section of Texas."[275] Because of local opposition to federal purchase of private property for this purpose, the concept was rejected.[276] This Court expresses no opinion regarding the propriety of a wildlife refuge, but the concept may need to be reconsidered in light of the project's impact on the area.
f.
Estuarine Damage
The key defect of the impact statement with respect to the estuarine areas and the claimed resultant damage to the commercial saltwater fishing industry is the basis upon which the Corps' decision is made. The Corps' rejection of the critical opinions of other agencies is not fully explained, so that a layman reader cannot determine for himself which viewpoint accurately depicts the true situation. For example, substantial reliance appears to be placed upon a paper entitled "Estuarine Nekton" by Dr. J. L. McHugh, but the study is not attached to the impact statement, his qualifications are not indicated, and the methods employed to arrive at his conclusions are not revealed. In light of the controversy over the methodology underlying the Gunter report, this explanation would appear to be critical.
The statement also reflects that the Corps undertook independently to evaluate the problem with its own staff marine biologist. The statement reports that "[m]arine biologists use various methods of evaluating estuarine habitat and estimating its contributions to the commercial fishery resources."
One method uses energy-balance principles based upon the assumption that, all other environmental factors remaining constant, the ecology of a given area will support life forms at an equilibrium level in consonance with the available food and nutrient supply. It is unlikely that the assumptions and input data required for computations of this nature ever are sufficiently complete and valid to ensure complete reliability of results. Nevertheless, the method is used to estimate unit productivity of estuarine areas and does offer some means of comparing quality in different areas. Another, and perhaps more commonly used, method of evaluating the unit productivity of estuarine areas is proportionately relating the total area of available estuarine habitat to the total landings of commercial fish in the areas of concern. Data pertaining to the total landings are readily available and comparatively accurate. However, the assumptions and judgment factors that must, of necessity, enter into computations of this nature cause the final results to be questionable.[277] (emphasis added)
The impact statement undertakes no application of either method to determine if any indication of possible harm results. The matter is simply dismissed. Assuming without further information that both methods contain the represented deficiencies, the fact remains that no other test or standard is advanced by the Corps to assist in solving what is admittedly a very knotty problem. On the other hand, if both methods were applied as scientifically as possible, and both indicated a substantial likelihood of harm, then this result would tend to support the opinion of the Bureau of Fish and Wildlife Service. Under such circumstances, failure to attribute any environmental "cost" as a consequence *1353 of impaired commercial fishing would be a violation of NEPA's policy. In short, a recognized indicator regarding environmental amenities, even with admitted shortcomings, appears to be a better analysis procedure than no indicator at all.
The impact statement declares that the Wallisville Project will only eliminate about 2.4 percent of the acres of water and intertidal marsh capable of sustaining estuarine animals in the Galveston Bay system. This declaration was not subjected to scrutiny, comment and appraisal by other federal agencies. The impact statement then goes on to cite numerous percentages. It indicates that much of the "emergent marsh" in the Galveston Bay system, which is located in the Trinity River Delta, comprises about 19 percent of the entire system, that Trinity Bay encompasses about 25 percent of the water area of Galveston Bay system, that about 82 percent of the state's oyster harvest, 50 percent of the blue crab harvest, 46 percent of the estuarine shrimp harvest and 10 percent of the fin fish harvest come from the Galveston estuary. These statistics obviously relate to sizable amounts of water area and commercial commodities. Yet, there is no assessment of the Wallisville Project's impact on any or all of these various harvests.
The impact statement touches only summarily on the issue of mitigation. One method suggested to minimize the estuarine loss involves the erection of artificial holes and water courses; this possible solution was discounted as being in an experimental stage with costs unknown based upon the present state of knowledge in the field. Another method involving artificial propagation of commercial species was dismissed by stating that the ability to propagate large numbers of animals is not in prospect in the near future. The layman reader simply has insufficient information to make any independent assessment, and the Corps gives no indication in the statement that it plans to consider the problem further.
2.
THE CONSIDERATION OF ALTERNATIVES
a.
Background
The record is unclear as to why the particular site for the Wallisville Project was selected, as early studies focused on "site limitations at river mile 3.9" (the present location) and another location at river mile 8.6.[278] The present location and design were selected as being the most beneficial, considering the factors deemed important in the early 1960's. Following the decision to make an environmental impact statement in 1970, the Corps formulated six alternatives as being "reasonably broad and practical," in addition to the alternative of abandonment. The basis of each was salvage of current navigation construction with secondary consideration being given to the other purposes. All of the plans reportedly would involve additional expense and, as the Corps states, the only method of assuring preservation of recovered estuarine habitat for present purposes would be to have the federal government purchase the lands at an additional cost of about $2,300,000. Inasmuch as all of the alternatives would have a benefit-cost ratio of less than one, all were rejected.
b.
Proper Methodological Approach
The proper method for approaching a consideration of alternatives under NEPA is to consider first the primary purposes or functions that the project is to serve. Alternatives to each of these projects must then be weighed, because it is not appropriate to disregard alternatives merely because they do not offer, individually, a complete solution to the problem.[279] Furthermore, *1354 each of the primary environmentally adverse effects must be considered, and alternative approaches to the project should be considered with an eye to mitigating each or all of these. The purpose of "breaking" down a project into its beneficial and detrimental "components" is to determine whether some significant portion of the environmental harm may be alleviated. The record reflects that this was done in 1966, although lacking the details that would be required for environmental decisions.[280] The Court is aware of a 1965 finding by the Corps that "development of single purpose plans for water supply, recreation and fish and wildlife on tributary streams is not feasible due to the lack of suitable tributaries near the project area."[281] It is possible that reevaluation on an individual basis in light of NEPA and the current emphasis upon environmental protection might produce different conclusions from those reached in 1965. In truth, the requirement of "breaking" down a project is nothing more than a bona fide exercise in common sense to place in proper perspective what is bad and what is good about a project in terms of the environmental consequences. This Court cannot hope to identify every conceivable alternative here that should be properly considered. However, in light of what this Court regards as inadequate treatment of reasonable alternatives in the present impact statement, these observations are advanced in a constructive effort to point up the NEPA standards to be met.
c.
Water Conservation and Supply
The record sheds some light on the thinking of certain experts in this area. One alternative might be a deep, compact surface reservoir instead of the present one which is shallow and spreads out to cover thousands of acres. As recently as April of 1971, this suggestion was brought to the attention of the Corps in a public hearing considering a site selection for Aubrey Lake Reservoir, another project associated with the Trinity Project. Dr. J. K. G. Silvy, representing the Water Research Laboratories of North Texas State University and the Utility Board of the City of Denton at a recent Corps public meeting, offered this suggestion based upon what he stated was approximately forty years' study of Texas reservoirs. As his footnoted statement indicates, he estimated that the useful volume of a shallow reservoir might be cut by fifty percent within 25 years.[282]
Additionally, alternative sources for meeting the water needs of users might be considered, such as expanding the existing fresh water reservoir supplies used by rice farmers for preventing damage due to saltwater intrusion.[283] Expansion of other existing water reservoir areas in the vicinity, even though possibly more expensive as far as pumping costs may be concerned,[284] might offer substantially more environmental reward which, if evaluated in economic terms, might well outweigh the increased cost of pumping.
*1355 d.
Saltwater Barrier
This Court does not purport to understand the complexities of the saltwater intrusion problem to the degree that the Corps must. However, from a reading of the record it is apparent that other methods of mitigation have been tried in the past with varying degrees of success. For example, the record reflects that during a period of particularly high intrusion, local interests constructed a temporary dam across the river itself.[285] It is also known that local interests have substantial off-river storage reservoirs containing fresh water which are used, apparently, for irrigating rice fields when intrusion precludes the use of water from the Trinity River directly.[286] The record also indicates that eight foot levies with wide drainage ditches are planned, or are in the process of being built, to protect families in the Wallisville area from the river.[287] The record also indicates that approximately one-half of the saltwater barrier effect is attributed to the release of fresh water from the Livingston Reservoir which flushes out the saltwater and prevents crop damage.[288]
In discussing alternatives in the statement, perhaps attention should be paid to the possibility of increased use of one or more of these above procedures, or other reasonable methods, either singly or in conjunction with others, so as to alleviate a majority of the damage caused by saltwater intrusion. The impact statement simply does not indicate any interest in alternatives on the part of the Corps in this area.
e.
Abandonment
This section of the impact statement focused on the money presently invested, the need for joint operation of Wallisville with Livingston Reservoir and the increased cost of obtaining municipal water from Livingston. The conclusion was reached that abandonment is not feasible. While this, in fact, may be accurate, in light of the present deficiencies in the statement regarding consideration of alternatives, a lack of elaboration in the area of the benefit-cost analysis discussed hereafter, and inadequate treatment of mitigation, this alternative will require reconsideration as well.
f.
Navigation (As Applicable To Trinity Project)
Undoubtedly one of the major areas for consideration of alternatives is that of navigation. As has been previously noted, the origin of the Wallisville Project sprang from a need for a saltwater barrier to cope with the increased penetration of saltwater following navigation on the lower Trinity. Inasmuch as the Wallisville reservoir is a significant first step in the Trinity Project, the purpose of which rests primarily upon navigation, consideration of alternatives to navigation necessarily will have to appear as well in the Trinity impact statement. As at least one other court has noted, the federal agency cannot fulfill the demanding standard of "careful and informed decisionmaking" by disregarding impending plans for future project development.[289]
Most prominent is the giving of serious consideration to the use of existing railroads, truck or other surface facilities. An environmental report prepared by Stephen F. Austin State University for the Corps in connection with the proposed Tennessee Colony Reservoir, another link in the overall Trinity Project, recommended serious consideration *1356 of existing or new railway facilities.[290] Another factor to which obvious attention will need to be drawn is whether the use of one mode of transportation produces greater pollution than another, be it air pollution, water pollution or noise pollution. It is but another requisite in satisfying NEPA that all probable approaches to a particular project are receiving full consideration. Some inquiry might be directed to the Department of Transportation to determine what, if anything, might constitute other reasonable alternatives. The merits of water transportation versus other forms of transportation between the Gulf area and North Texas are obviously matters beyond the expertise of this Court. Yet common sense dictates that any consideration of alternatives under NEPA would require an overall assessment of existing transportation facilities in the area of the proposed project.
G.
THE ENVIRONMENTAL IMPACT STATEMENT REVIEW PROCESS
1.
THE AGENCY REVIEW PROCESS
a.
NEPA And The CEQ Guidelines
While NEPA does not detail the precise procedures which federal agencies must follow in conducting their review process, it does require that the agencies must consider the environment "to the fullest extent possible," 42 U.S. C.A. ง 4332, and use "all practicable means" in implementing their observations and the Congressional policies. 42 U.S.C.A. ง 4331(b). Section 102 requires the agencies to utilize a systematic, interdisciplinary approach integrating the natural and social sciences and the environmental design arts in "decisionmaking" where the project is expected to have an impact upon the environment.[291] The Act also requires the agencies to identify and develop methods and procedures of decision making which will ensure giving presently unquantified environmental amenities and values "appropriate consideration" along with economic and technical considerations.[292] NEPA additionally requires that the impact statement, along with the comments and views of the various agencies, accompany the project proposal through the existing agency review process.[293] The Guidelines of the Council on Environmental Quality have constantly emphasized that the agency decision-making process, in considering the impact statement and alternatives, must look at both the short-term and long-term effects of a given project and "assess the action for cumulative and long-term effects from the perspective that each generation is trustee of the environment for succeeding generations."[294] This role of trustee impressed upon the federal agencies whose actions will affect the existing environment imposes a high standard of performance which carries with it exacting and sometimes onerous requirements.
By compelling the preparation of a detailed impact statement and description of alternatives discussed earlier,
NEPA provides evidence that the mandated decision making process has in fact taken place and, most importantly, allows those removed from the initial process to evaluate and balance the factors on their own.[295]
*1357 This allows, as the CEQ Guidelines suggest, the opportunity for proposal changes or mitigation of damage by higher levels in the reviewing process.[296] The review must not only be objective,[297] it must be a "truly independent review" so as to provide "a crucial check on the staff's recommendations."[298] The need for this type of review led to the creation of the Council on Environmental Quality. As NEPA's legislative history noted:
An independent review of the interrelated problems associated with environmental quality is of critical importance if we are to reverse what seems to be a clear and intensifying trend toward environmental degradation. The Federal Government has spent vasts sums of money on aspects of the problem and will certainly increase its efforts in the futureโand yet there is still no independent source of review of the total environmental situation, nor is there in existence any agency to provide the President and the Congress with an estimation of the priorities which should be assigned to different aspects of the problem.[299]
The federal agencies are not free to ignore the impact statement, as such statement and its contents must be considered at each step in the agency review process.[300] The review it receives must be "rigorous."[301] The review alternatives are not limited to just minimizing damage, or of going ahead while revealing any irreparable harm which might be caused. NEPA requires an agency decision, informed of all pertinent environmental factors, as to whether or not the project should even be built.[302]
These obligations are strict, and, indeed, they must be if environmental considerations are to be regarded in the concept of a trusteeship mandated by NEPA. Hasty and ill-considered decisions are impermissible. Similarly, the courts have been swift to point out that the duty of review is a primary, non-delegable function residing in the federal agencies.[303] Even if a particular project is uncontested, the reviewing levels of an agency must examine the impact statement carefully to determine that the initial environmental assessment was adequate. Furthermore, the reviewers must still independently consider the final balance that was struck among conflicting factors.[304] In all cases the agency reviewers must take the "hard look" at environmental consequences mandated by Congress[305] by giving individualized consideration and balancing of environmental factors, conducted fully and in good faith.[306]
*1358 The reviewing courts assume a heavy burden as well. They must ensure that the final agency decision was not arbitrary and that it clearly gave sufficient weight to environmental values.[307] Obviously perfection cannot be required,[308] nor should the courts, in interpreting the intent of Congress, seek to impose unreasonable extremes upon the agencies.[309] Nevertheless, the procedural duties of Section 102 must be complied with by the agencies to the fullest extent, and these standards must be rigorously enforced by the Courts.[310] As a practical matter, the courts should demand greater compliance during the early stages of project planning at which point the project is still being comprehended and evaluated environmentally. Irrevocable decisions have not yet been made at this point. If the impact statement is complete, detailed and objective, then there should be no information gaps, and the review process can be much more easily performed by the agencies. On the other hand, if all of these various steps have not been conducted in accordance with these standards, then it is the responsibility of the courts to require further agency deliberation.[311] It is this Court's considered opinion that, within the scope of its obligation to enforce the provisions of NEPA, it is appropriate to insist that these standards are equally applicable to ongoing projects authorized prior to NEPA in which substantial work remains to be done and in which the project has not yet reached that point where the cost of altering or abandoning it clearly outweighs the benefits that might accrue therefrom to the general public.
b.
The Corps' Impact Statement Review Process
As this memorandum and opinion has noted previously,[312] there is limited indication of the actual review given to the Wallisville impact statement, and there is no indication, so far as this Court has been able to determine from this massive record, that either the Secretary of the Army or Congress has passed upon the propriety of the final balance indicated in the impact statement. Inasmuch as further review is required, an examination of the Corps' decision-making process is appropriate.[313]
As applicable to the present litigation, there appear to be four separate procedures utilized by the Corps in preparing and reviewing impact statements involving the public and in communicating with other federal agencies for comments. Why they have been selected cannot be determined from the face of the regulations or the record. They are not based upon project cost, geographical dimensions or even the magnitude of the anticipated environmental impact. Such factors arguably might justify different degrees of attention and review by the various levels in the chain-of-command. However, it would appear that the particular Corps procedure utilized depends upon the method or status of the project authorization. For example, "new" projects being studied, but which have not received formal authorization, *1359 are subjected to what appears to be the most rigorous review process.[314] Projects classified under the heading "special projects and continuing authorities," which do not receive individualized annual appropriations by Congress, are subjected to a second procedure.[315] And projects already considered "authorized" are subject to still different procedures, depending upon whether construction has begun[316] or not.[317] Presumably the Wallisville and Trinity Projects, respectively, would be examples of the latter two procedures for "authorized" projects, both being continually identified as authorized in the record.[318] In the absence of any explanation for the differing procedures, the Court can only presume that the procedures to be applied to "authorized" as well as to "new" projects were intended to be applied so as to fully comply with NEPA. Admittedly, this Court is concerned about the wisdom of such separation in the context of this case, the main concern being that both the Secretary of the Army and the Congress have knowledge of and fully approve of all current Corps proposals as to both the Trinity and the Wallisville Projects. For example, the Trinity Project, although "authorized" at least in part, is apparently still sometime away from the point at which construction on projects other than Wallisville will begin. As a practical matter, this would appear to be no different from a "new" project of this magnitude on which environmental and engineering studies were still being considered. Furthermore, it hardly appears justifiable that a project of this unusual size costing over $1 billion would be subjected to a less rigorous review procedure than, for example, a single "new" reservoir project costing a few million dollars.[319] As for Wallisville, the current status has already been pointed up. It does not appear from the record that the Secretary of the Army or the Congress have passed upon the final balance struck in the impact statement.
A few of the key differences will be noted in Corps review procedures. It should first be pointed out that impact statements apparently go through a series of versions or stages, depending upon which procedure is used. For example, "new" projects receive an environmental "assessment," a "preliminary" draft impact statement, a "draft" impact statement, and then a "final" impact statement. The procedure for "authorized" projects involves only the latter two stagesโthe draft and then the final statements. Furthermore, for all procedures except those pertaining to "new" projects, it is the District Engineer who is charged with the duty of preparing draft and final statements; on "new" projects he prepares only the assessment and preliminary versions, while the Office of the Chief Engineer (OCE) prepares the draft and final versions.
"New" projects involve more opportunity for review and comment by other *1360 federal agencies, inasmuch as there are two formal coordination efforts and sometimes a third but more informal opportunity.[320] "Authorized" projects receive only one opportunity for coordination, a formal one occurring after the draft version is prepared. Equally significant is the difference in the procedures utilized by the Board of Engineers for Rivers and Harbors (BERH). "New" projects receive a special BERH staff presentation on environmental issues and impacts, with "controversial issues receiving special consideration." This occurs after the preliminary statement is prepared and before the OCE prepares the draft version. Projects under "special and continuing authorities" also receive the presentation, but not until after the final statement is prepared. "Authorized" projects on which construction has begun (Wallisville) do not receive the presentation, while those on which construction has not yet begun (Trinity) receive one "where applicable." The regulations are silent as to when it is "applicable." It appears to this Court that the earlier the focus upon environmental issues, assuming the full impact is known, the greater the flexibility and opportunity for striking a reasonable balance with regard to all factors.
In light of the above, and the fact that Congressional approval will be required before the Secretary of the Army makes expenditures for navigation construction, this Court presently views the Trinity Project as one which should be processed as though it were not yet authorized, thereby eliminating any question as to its complete exposure to scrutiny of the decision makers on environmental issues.
There are several additional apparent deficiencies noted in the regulations. For example, they do not clearly indicate how, if at all, Corps officials charged with project implementation may recommend project alteration in order to mitigate unnecessary, or perhaps previously unknown, environmental harm.[321] Similarly, the regulations give little firm guidance with respect to when public meetings should be held,[322] a situation *1361 compounded by the recent issuance of proposed Corps Regulations on public meetings which appear not to take cognizance of existing practices.[323] With respect to public access and review of draft and final impact statements the Corps' Regulations are more definite, although a relatively minor discrepancy would appear to exist. EPA guidelines provide that draft and final impact statements "shall be" distributed to public organizations for comments, while merely being made available to private individuals.[324] While Corps regulations appear to be in accord with respect to final statements, they appear to be in error insofar as they require a prior "request" from the public without regard to organizational or individual status.[325]
The most serious defect of the present regulations is that they do not appear to require circulation of impact statements to Congress except on "new" projects.[326] It is clear that each appropriation request since January 1, 1970, is required to be accompanied by all required detailed impact statements. Environmental Defense Fund v. Tennessee Valley Authority, 339 F.Supp. 806, 811 (E.D.Tenn.1972). See also, Environmental Defense Fund, Inc. v. Froehlke, 473 F.2d 346, 352 (8th Cir., 1972). Conservation Council of North Carolina v. Froehlke, 340 F.Supp. 222, 226 (M.D. N.C.1972).[327] The obligation with respect to the Secretary is less clear. NEPA does not require that the Secretary file formal findings regarding proposed projects and their impact, regardless of the size of the project or magnitude of its impact. Nevertheless, as head of the federal agency, the Secretary is responsible for ensuring that agency action complies with NEPA.[328] As the Supreme Court in Overton Park pointed out, formal findings would be of much assistance to the courts, particularly where large projects are involved. They might also avoid subsequent delays and the possible need to examine the Secretary more directly. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 417-421, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), on remand, 335 F.Supp. 873 (W.D.Tenn.1972). A possible procedure for avoiding this problem might be to precede the main body of impact statements, in the same fashion the Corps presently uses for project reports to Congress, with the report of each level of review.[329]
A last problem involves the handling by the Corps of other agency review and comment, the modification of the impact statement, and the determination of who gets the "last word" with regard to critical environmental assessments. *1362 For example, a draft version of the Wallisville impact statement prepared in October, 1970, was submitted to the various reviewing federal agencies, and in January, 1971, was submitted to the CEQ.[330] Afterwards, one of the more critical sections of the statement was expanded with new material that substantially justified the Corps' position with respect to the claimed estuarine area damage and its effect upon commercial fishing.[331] No other agency had received the opportunity to review this new evidence and comment upon it. At least two other courts have been confronted with similar situations. One merely noted the problem without comment.[332] In the other case an addendum had been prepared to an impact statement previously found judicially insufficient under NEPA. The court held the addendum to be "essentially a draft statement" which was required to be circulated to the appropriate agencies under NEPA.[333] This is an area of great concern to a court which is called upon to comprehend complex environmental problems and evaluate the efficacy of impact statements filled with incomplete or conflicting assessments. The problem merits attention and because of its complexity, suggested procedures for minimizing this dilemma are advanced at a later point in this opinion.[333a]
H.
THE BENEFIT-COST ANALYSIS AREA
1.
IN GENERAL
A study of the record in this case, and particularly the Congressional hearings since fiscal year 1966 as they apply to projects contained within the ambit of the Trinity Project, points up the importance of benefit-cost ratios in the appropriation and decision making process for public works projects funded by the United States Government. The benefit-cost ratio is basically a comparison of the anticipated "benefits" derived from a particular public works project with the anticipated "costs" over the estimated life span of the project. Both benefits and costs must be stated in monetary terms. Furthermore, since benefits and costs will be accruing over each of the many years of the project's life span, it is necessary to discount them so that their present values may be determined and compared. As one writer described this discounting procedure:
Discounting involves the reduction of future dollar values by the application of a discount or interest rate to them. For example, if the appropriate discount rate is 5 percent, $1.05 one year from now is only worth one dollar today. *1363 Otherwise stated, $1.05 one year in the future discounted to today is equal to one dollar. There is no other way to account of costs and benefits which do not accrue in the present. All future figures must be discounted to today if a proper calculation of net benefits is to be obtained.[334]
Once this has been done, if a comparison indicates that the projected benefits will reasonably exceed the costs, then, all other things being equal, the project is typically regarded as being "justified". If, for example, it was expected that for every one dollar of federal investment in a given project the benefits would be equal to two dollars, then the benefit-to-cost ratio would be 2.0 to 1 or 2.0:1. If the benefits equal the costs, the ratio is 1:1 or unity, as the term is used.
There is little Congressional guidance regarding benefit-cost procedures. The only applicable statute provides, in pertinent part:
. . . it is the sense of Congress . . . that the Federal Government should improve or participate in the improvement of navigable waters or their tributaries, including watersheds thereof, for flood-control purposes if the benefits to whomsoever they may accrue are in excess of the estimated costs. . . .[335]
As a general rule the courts in the past have avoided inquiring into benefit-cost procedures and conclusions, being of the view that Congress should resolve related disputes, and occasionally holding that courts have no jurisdiction into such matters.[336] This Court must conclude that, on the basis of the present record and the intended thrust of NEPA, it cannot bypass an examination of the benefit-cost analysis, at least insofar as it is relevant to environmental considerations within the Trinity and Wallisville Projects. As a close scrutiny will reveal, the present procedures tend to intertwine environmental and non-environmental factors in such a way that certain claimed environmental "benefits" have been quantified in economic terms and included in the benefit-cost analysis; yet, at the same time, certain of the environmental "costs" have not been quantified or considered at all. The result is that the meaning of the benefit-cost ratio, which is represented to the Congress, this Court and the public as being an objective evaluation of all quantifiable factors involved in these various projects, is open to considerable question. Congress evidently contemplated that benefit-cost procedures might be adaptable to include environmental considerations. In discussing the duties and functions of the CEQ, NEPA's legislative history recited how environmental amenities might be given suitable consideration:
One way in which this might be done would be to develop a sophisticated cost and benefit analysisโin which the total (and often not strictly economic) consequences of Federal activities may be assessed. The environmental auditing function of the *1364 Council falls squarely within the functions specified in this subsection.[337]
While the CEQ has not presently proposed such an analysis procedure, it is the Corps which is charged by Congress with preparing benefit-cost analyses. Congress is evidently relying upon these as presently being an indicator of all costs and benefits, economic and non-economic. For example, the following remarks were made in a recent House Report concerning a Mississippi public works project:
The Committee notes that the proposed plan provides a significant reduction in flood control damages in addition to providing municipal and industrial water supply, recreation and area redevelopment benefits. Alternative projects would have more adverse effects on the environment, or would be economically infeasible. The very favorable benefit cost ratio indicates the investment in the project is sound.[338]
The District of Columbia Circuit Court has properly identified the role of a court under these circumstances:
We conclude, then, that Section 102 of NEPA mandates a particular sort of careful and informed decision-making process and creates judicially enforceable duties. The reviewing courts probably cannot reverse a substantive decision on its merits, under Section 101, unless it be shown that the actual balance of costs and benefits that was struck was arbitrary or clearly gave insufficient weight to environmental values. But if the decision was reached procedurally without individualized consideration and balancing of environmental factorsโconducted fully and in good faithโit is the responsibility of the courts to reverse. As one District Court has said of Section 102 requirements: "It is hard to imagine a clearer or stronger mandate to the Courts."[339]
Because of non-compliance with the requirements of NEPA, as has been outlined in previous sections of this opinion, it is not necessary to rely upon deficiencies in benefit-cost computations to reach a decision in this case. However, because the Wallisville impact statement and the record which relates to both projects indicate that the balance struck was "arbitrary" and "clearly gave insufficient weight to environmental values", under Calvert Cliffs', supra, substantial in-depth revision by the Corps in this area will be required prior to the acceptance of either the Wallisville or the Trinity Project impact statement.
2.
THE BENEFIT-COST RATIOS INVOLVED
The benefit-cost ratio claimed by the Corps of Engineers in 1961 for the Wallisville Project was 2.5 to 1. Congress authorized the project the following year. This was eight years prior to the passage of NEPA, and environmental factors, on the whole, were not then given the consideration that the law requires today. The Wallisville Project ratio of benefits to costs has diminished over the years, and since fiscal year 1970 the claimed ratio has stood at 1.11 to 1.[340] Virtually the sole reference to the ratio in the Wallisville environmental impact statement is as follows:
When the project was authorized in 1962, the benefit-to-cost ratio was estimated *1365 at 2.5, based on an amortization period of 50 years and an interest rate of 2.5 percent. Based on 1970 price data and an interest rate of 3.125 percent, the benefit-to-cost ratio of the project is estimated at 1.11.[341]
In 1968 the Corps' reevaluation of the navigational features of the overall Trinity Project resulted in a claimed benefit-to-cost ratio as 1.5 to 1, based upon the average annual benefits and costs over the 50 year life span of the project.[342] This claimed ratio remains the same today.[343]
3.
VARIABLE JUDICIAL INQUIRY
This Court cannot be primarily concerned with a specific, final mathematical ratio of benefits to costs, although it is interesting to note that the Secretary of the Army, in another case in which there existed a claimed ratio of 1.24 to 1, stated that the project was "only marginally justified."[344] Furthermore, a document in the record recites that in 1961 the national benefit-cost ratio of our nation's waterways was 3.17 to 1, whereas that for the Intracoastal Canal, a canal system extending, in part, along the Gulf of Mexico from the west coast of Florida to the Mexican border, was reported as being 14.8 to 1 in 1955.[345] Nevertheless, under the law the final decision to build or not to build any given public works project is to be left to Congress, and it may accept or reject any ratio that it chooses. However, when the claimed ratio is composed, in part, of environmental amenities which Congress has required under current law to be given careful attention and consideration, then the courts have an obligation to act, where necessary. The standard of judicial review is the same as for other features of environmental law, being one of "substantial inquiry."[346]
4.
LEGAL JUSTIFICATION FOR JUDICIAL INQUIRY
NEPA obligates all agencies of the Federal Government to
identify and develop methods and procedures, in consultation with the Council on Environmental Quality . . . which will insure that presently unquantified environmental amenities and values may be given appropriate consideration in decision-making along with economic and technical considerations.
42 U.S.C.A. ง 4332(2)(B). As we enter the third year following the passage of NEPA, this has still not been done. The response of the Corps of Engineers to this deficiency is as follows:
While the present state of the art does not afford a basis for quantifying environmental amenities and project benefits in the same economic terms, the courts, the Congress and the Council on Environmental Quality have all expressed interest in, and Federal agencies are working toward the establishment of, a systematic balancing analysis which will assure that *1366 environmental amenities are considered along with economic and technical factors in the light of the overall public interest.[347]
The legislative history of NEPA clearly reveals that Congress intended the "development of adequate methodology for evaluating the full environmental impacts and the full costsโsocial, economic, and environmentalโof federal actions.[348]
In September, 1970, at about the same time that the Wallisville impact statement was being initiated, the Office of the Chief of Engineers issued instructions for the preparation of environmental statements. In relevant part they provided:
Discuss both the beneficial and detrimental aspects of the environmental changes or conversions placing some relative value on the impacts described. A distinction should be observed here, whereby the impacts (changes) were initially detailed without making value judgments while at this point are discussed in terms of their effects (who or what is affected by the changes). Identify the recipient (environmental element, interest group, industry, agency) of these effects and the nature and extent of the impacts on them. Discuss these effects not only with reference to the project area, but in relation to any applicable region, basin, watershed or ecosystem. In the example given, the loss of wetland might have relevance to different areas depending on the uniqueness of the filled area, the developmental plans and state of adjacent and regional wetlands, and the extent of the secondary effects of the filling (alteration of estuarine salinity wedge, sedimentation effects on adjacent shellfish, the modification of the surficial and groundwater hydrology of contiguous marsh and upland areas, etc).[349]
The Wallisville impact statement does not comply with this directive. Instead, it contains numerous conclusory statements that the benefit-cost ratio is justified and that the alternative possibilities would not be justified. There is no semblance of the "finely tuned and `systematic' balancing analysis" mandated by NEPA. Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1113 (1971). More particularly, the impact statement does not discuss the benefit-cost analysis of the project or its possible alternatives in sufficient detail and non-technical language so as to permit the non-expert reader to evaluate intelligently the agency's conclusions. See Environmental Defense Fund v. Tennessee Valley Authority, 339 F.Supp. 806, 809 (E.D.Tenn.1972). As noted previously, the reason for the methodology required by Section 102(2)(B) of NEPA is to ensure that the "full cost" of the action will be known, including the environmental factors. Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 928 (N.D.Miss.1972). The full cost as contained in this vast record is not shown in the impact statement.
The developing law as well as the Corps' own guidelines should have resulted, at least, in the presentation of *1367 the highlights of the benefit-cost analysis in the Wallisville impact statement. They were omitted. It is now clear that even more than highlights are required. The proposed guidelines issued by the Environmental Protection Agency in January, 1972, since adopted, should make it clear to all federal agencies that this is the case. They provide:
(d) Alternatives to the proposed action. Develop, describe, and objectively weigh alternatives to any proposed action which involves significant trade-offs among the uses of available environmental resources. The analysis shall be structured in a manner which allows comparisons of: (1) Environmental and financial cost differences among equally effective alternatives, or (2) differences in effectiveness among equally costly alternatives. Where practicable, benefits and costs should be quantified or else described qualitatively in a way which will aid in a more objective judgment of their value. Where such an analysis is prepared, it shall be appended to the statement. The analysis of different courses of action shall include alternatives capable of substantially reducing or eliminating any adverse impacts, even at the expense of reduced project objectives. The specific alternative of taking no action always must be evaluated. This analysis shall evaluate alternatives in such a manner that reviewers independently can judge their relative desirability. In addition, the reasons why the proposed action is believed by the Agency to be the best course of action shall be explained.
(e) Relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity. Describe the cumulative and long-term effects of the proposed action which either significantly reduce or enhance the state of the environment for future generations. In particular, the desirability of Agency actions shall be weighed to guard against short-sighted foreclosure of future options or needs. Special attention shall be given to effects which narrow the range of beneficial uses of the environment or pose long-term risks to health or safety. Who is paying the "environmental cost" versus who is gaining the "benefits" over time shall be identified. In addition, the reasons the proposed action is believed by the Agency to be justified now, rather than reserving a long-term option for other alternatives, including no use, shall be explained. (emphasis added)
Section 6.45(d), (e), 37 Fed.Reg. 883 (1972). In February, 1972, the Corps' regulations were issued with the following provision:
Contain objective analyses. Normally, the use of detailed project cost figures should be avoided but general cost comparisons may be used to illustrate the environmental, economic, or social trade-offs necessary to achieve objectives.
Section 7e, 37 Fed.Reg. 2526 (1972). While detail is not required to the extent indicated in the general design memoranda, which are the multiple-volume studies focusing on virtually every cost involved in the project, substantial detail as to broad totals would appear to be necessary in order to explain intelligently to the layman reader the basis behind the benefit-cost conclusions.
5.
QUANTIFYING SELECTED ENVIRONMENTAL AMENITIES
The basic problem underlying the benefit-cost procedures in environmental cases is one of inclusion of such "benefits" and "costs." Selected environmentally-related "benefits" have been identified by the Corps and "quantified." That is, they have been given a dollar-and-cents value and included as *1368 justification for building some of the projects in the Trinity master plan including Wallisville. Yet, similarly situated environmentally related features which would appear to be "costs" in that they would be irreparably lost by construction of a given project, have not been included or quantified at all. In some cases these losses are identified, but in this context mere disclosure is insufficient. Last of all, some of the quantified factors characterized as "benefits" would seem to be open to considerable question.
The 1965 economic analysis of the Wallisville Project, which is the only comprehensive study in the record, contains what appear to be typical engineering "costs", including lands, structures, construction costs, and the like. In order to obtain a realistic total cost figure, the analysis projected future costs of construction and operation. To avoid the possibility of error and to compensate for rising prices affecting the total figure, the Corps increased the total estimates of virtually every cost item by 12 to 15 percent as a buffer.[350] Yet, upon close study of the Wallisville impact statement and a review of the record, this Court is unable to locate any costs which can be designated as environmental "costs." The closest item appears to be the inclusion of the market values of trees which is included in real estate costs.[351] Nevertheless, when "benefits" are considered, a different standard is employed. In addition to including the economic benefits attributable to navigation, water supply and salinity control,[352] the Wallisville benefit-cost analysis also includes "benefits" which are basically environmental. These include fish and wildlife benefits,[353] hunting and fishing benefits,[354] and a recreational benefit incorporating all other forms of recreation besides hunting and fishing.[355]
For commercial fishing, which appears to be both economic and environmental in nature, the Wallisville analysis includes a $29,000 per year benefit for fresh-water commercial fishing,[356] but, as noted previously, it has not included estimated salt-water commercial fishing losses calculated at over $500,000 annually.[357] While the Wallisville analysis includes $8,500 annual benefits attributable to small boat usage,[358] no evaluation has been made of boating benefits existing in the absence of the project.[359] Substantial benefits have *1369 been attributed to hunting,[360] although the statement does not contain information as to how a shallow reservoir is likely to benefit it. Substantial benefits are also attributed to fishing.[361] While it is conceivable that many persons might be attracted to fishing at a reservoir, obviously more convenient and more easily reached than seeking out various streams, the statement does not indicate any reasonable basis for excluding data on those who would continue to fish in free-flowing streams or rivers such as the Trinity, even if the reservoir was never constructed. In connection with another project component of the Trinity Project, although apparently not used in conjunction with Wallisville, the Corps has included substantial benefits for "nature students."[362] This benefit is difficult to comprehend. If, in fact, the individuals counted are true students of nature, it scarcely seems to follow that such students were attracted and thus became measurable benefits solely because of the project.
There are additional problems in evaluating environmental benefits, more particularly, the establishment by the Corps of a "need" for a project without adequate support in the record, and the reliance upon local interest evaluations of such a "need" when it is in the interest of such persons or entities to be somewhat less than objective. NEPA directs that the full story be told about a given project including its negative as well as its positive factors. The present methods of analysis and comparison appear to be looking in large part at only one-half of the picture.
6.
UNSTABILIZED COST PROJECTIONS
The tables which follow this section summarize the various yearly estimated total federal appropriation costs for the Trinity Project and its components, some of which like Wallisville are funded separately. As the tables indicate, the total projections have generally continued to increase substantially year after year. Such increases have occurred despite the apparent practice of allowing a 12 to 25 percent margin for error in costs at the time of originally estimating total costs.[363] In certain instances substantial project changes have been made, such as relocating the project site, adding a new highway loop or some other reasonably justifiable cause. In other cases the increases appear to be less meritorious. While some of such increases may be attributable to a rise in the cost of living, the majority cannot be. During approximately the last four years, the national annual consumer price index increase varied between 4.2 percent and 6.0 percent, whereas the reported index variation in the Dallas metropolitan area varied between 3.0 and 6.5 percent annually.[364] Such cost of living increases do not generally comport with the percentage increases in estimated costs of the projects reflected in the tables.
In spite of the large annual increases in costs, the benefit-cost ratio of each of the projects in question generally has not changed. The apparent reason for this situation is that claimed benefits have been escalated by the Corps at the *1370 same rate as the costs. The following testimony before the House Subcommittee of the Committee on Appropriations obtained by John M. Slack, Representative from West Virginia (who was apparently chairing the Subcommittee that day), from Maj. Gen. Harold R. Parfitt, Southwest Division Engineer, indicates what occurred:
Mr. Slack. On page 25, $3 million is budgeted to continue planning of the Trinity River project in Texas. Please outline the current status of planning on the project.
General Parfitt. Sir, we have really just begun planning on the Trinity River project. We are in its early phase. We are emphasizing in this phase an analysis of the environmental situation in the Trinity River system.
Mr. Slack. It is noted that the cost of the project is now estimated at $1.4 billion, an increase of $169.4 million since last year. Yet the benefit-to-cost ratio remains the same at 1.5 to 1. What benefits have been increased to offset the added cost?
General Parfitt. Sir, almost all of the benefits have been escalated in about the same ratio as the charges. These are navigation, flood control, water supply and water quality, and redevelopment benefits.[365]
While it might be reasonable to escalate claimed benefits at the same rate as the general area cost-of-living increase, such escalation to offset those price increases due solely to the cost-of-living changes, there is no indicated basis in the record for escalating them at a higher rate. Obviously, the increases in claimed benefits in this instance are almost precisely the same as the increased costs, thereby preserving the project's benefit-to-cost ratio at 1.5 to 1.
The reason for this Court's concern in this area is that a valid favorable benefit-cost ratio combining all facets of a project must represent the final synthesis of technical, economic and environmental factors. Any major changes on either the cost or benefit side of any of these factors can alter substantially the premise upon which a final decision by the agency and Congress was based approving a given project. Accordingly, if there were an increase in economic "benefits", unless there was a proportional increase in environmental benefits, the possibility exists that economic benefit increases alone could be used to override increased environmental costs in a manner contrary to the intent of Congress.[366] What must not be overlooked is the priority assigned by Congress to environmental factors under NEPA. As this Court understands this body of law, protection of the environment is now viewed as paramount, and it is not to be placed on an equal footing with the usual economic and technical factors. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971).
*1371
COMPARISON OF PROJECTED TOTAL APPROPRIATION COSTS
INDICATING ANNUAL COST PERCENTAGE CHANGES
Trinity River Wallisville High-Level
Project [a] Project [a], [c] Bridges [c]
Completion
Date: 1988 1973 (Sept.) 1974 (June)
-----------------------------------------------------------------------------------------------
Fiscal Year
(July 1-June 30)
1962-63 --- $ 9,498,000[373] (b) ---
1963-64 --- [$ 9,638,666][e] ---
(ann. chge= +1.5%)
1964-65 --- [$ 9,779,332][e] ---
(ann. chge= +1.5%)
1965-66 $ 737,607,000[367] (b) $ 9,920,000[374]
(ann. chge= +1.4%)
1966-67 [$ 755,535,000][e] $14,400,000[375] $10,180,000[383]
(ann. chge= +2.4%) (ann. chge= +45.2%)
1967-68 [$ 773,463,000][e] $16,200,000[376] $12,300,000[384]
(ann. chge= +2.4%) (ann. chge= +12.5%) (ann. chge= +20.8%)
1968-69 $ 791,391,000[368] $17,200,000[377] $12,800,000[385]
(ann. chge= +2.3%) (ann. chge= +6.2%) (ann. chge= +4.1%)
1969-70 $1,019,100,100[369] $19,400,000[378] $11,400,000[386]
(ann. chge= +28.7%) (ann. chge= +12.8%) (ann. chge= +10.9%)
1970-71 $1,109,800,000[370] $21,500,000[379] $10,700,000[387]
(ann. chge= +8.9%) (ann. chge= +10.8%) (ann. chge= -6.1%)
1971-72 $1,187,600,000[371] $24,400,000[380] $ 7,600,000[388]
(ann. chge= +7.0%) (ann. chge= +13.5%) (ann. chge= -29.0%)
1972-73 $1,357,000,000[372] $27,000,000[381] $10,400,000[389]
(ann. chge= +14.3%) (ann. chge= +10.7%) (ann. chge= +36.8%)
Dec. 31, 1972 --- $28,800,000[382] ---
(ฑ 6 mos.= +6.7%) ---
----------------------------------------------------------------------------------------------------------
Total Increase
Period 1965-72 1962-72 (Dec.) 1966-72
Cost to $619,393,000 $19,302,000 $220,000
Date
Total %
to
Date 84% Overall 203.2% Overall 2.2% Overall
Average
% 12% Yearly 19.4% Yearly 0.36% Yearly
*1372
Elm Fork Duck Creek Lakeview
Floodway[d] Channel [d] Reservoir[d]
Completion
Date: (Unknown) 1975 (Oct.) (Unknown)
----------------------------------------------------------------------------------------
Fiscal Year
(July 1-June 30)
1966-67 --- --- $31,180,000[400]
1967-68 --- --- $36,100,000[401]
(ann. chge= +15.8%)
1968-69 $11,191,000[390] $4,540,000[395] $35,300,000[402]
(ann. chge= -2.2%)
1969-70 $13,700,000[391] $4,870,000[396] $38,900,000[403]
(ann. chge= +22.4%) (ann. chge= +7.33%) (ann. chge= +10.2%)
1970-71 $16,000,000[392] $5,430,000[397] $73,100,000[404]
(ann. chge= +16.8%) (ann. chge= +11.5%) (ann. chge= +87.9%)
1971-72 $17,500,000[393] $6,702,000[398] [$84,250,000][e]
(ann. chge= +9.4%) (ann. chge= +23.4%) (ann. chge= +15.3%)
1972-73 $20,100,000[394] $7,800,000[399] $95,400,000[405]
(ann. chge= +14.9%) (ann. chge= +16.4%) (ann. chge= +13.2%)
----------------------------------------------------------------------------------------
Total Increase
Period 1968-72 1968-72 1966-72
Cost to $ 8,909,000 $ 3,260,000 $ 64,220,000
Date
Total %
to
Date 79.6% Overall 71.8% Overall 206.0% Overall
Average
% 19.9% Yearly 17.9% Yearly 34.3% Yearly
*1373
Aubrey Lavon Reservoir
Reservoir[a], [d] Modification[a], [d]
Completion
Date: (Unknown) 1975 (June)
-------------------------------------------------------------------------
Fiscal Year
(July 1 to June 30)
1966-67 --- $27,300,000[410]
1967-68 --- $40,300,000[411]
(ann. chge= +47.6%)
1968-69 --- [$45,050,000][e]
(ann. chge= +11.8%)
1969-70 $41,200,000[406] [$49,800,000][e]
(ann. chge= +10.5%)
1970-71 $46,300,000[407] [$54,550,000[e]
(ann. chge= +12.4%) (ann. chge= +9.5%)
1971-72 $50,500,000[408] $59,300,000[412]
(ann. chge= +9.1%) (ann. chge= +8.7%)
1972-73 $60,400,000[409] $63,400,000[413]
(ann. chge= +19.6%) (ann. chge= +6.9%)
----------------------------------------------------------------------------
Total Increase
Period 1969-71 1966-71
Cost to
Date $19,200,000 $36,100,000
Total %
to Date 46.6% Overall 132.2% Overall
Average % 15.5% Yearly 22.0% Yearly
*1374 7.
BENEFIT ANALYSIS PROCEDURES โIN GENERAL
The record indicates several aspects of the procedures utilized in the benefit-cost analysis which merit comment. One of the more critical, it would appear, is the period of analysis, the "life span" of the project over which the benefits and costs are computed. As a general rule, the longer the period of time over which benefits can be claimed, the higher and more favorable the benefit-cost ratio. The greatest costs occur at the time the project is constructed when maintenance costs are comparably small. However, the longer the projected life span, the greater the initial cost will be in order to ensure that the project will last for the contemplated period of time. Care must be taken to select a realistic "life span" of a project. Claiming a life span which is substantially longer than a given project can actually sustain will reflect an abnormally favorable benefit-cost ratio, as the initial cost will be comparatively lower, the projected benefits will be received for a longer period of time, and, as a consequence, the project may well appear to be fully justified. Once built, however, the project can become a liability if, in fact, it cannot last as long as claimed.
The reason for noting this area is that the Wallisville Project's benefit-cost ratio was originally calculated on a fifty year life span, was subsequently lengthened to 100 years, and then returned to its present fifty year period.[414] The Trinity Project's benefit-cost ratio in 1965 was calculated originally on a 100 year basis. Only after the Bureau of the Budget noted that the Corps usually used a 50 year basis was the projected life span lowered. Thereupon, benefit-cost ratio dropped from 1.4 to 1 down to 0.74 to 1; the Secretary of the Army then recommended deferring construction of the navigation features until it became economically justified at some time in the future.[415] A study of the record indicates no changes in engineering design or technical aspects of either the Wallisville or Trinity Projects during the changes from one life span to the other. It should be axiomatic that an artificially long projected life span for a project involving combined environmental economic "benefits and costs" would be unacceptable under NEPA; the resulting ratio would be artificially high, thus suggesting a false "balancing" between technical, economic, and environmental factors.
A related and more complex computation involves the area within which specified benefits are measured. For example, the record reflects that the Corps' 1968 economic reevaluation of the Trinity Project focused on the two major market areas in physical proximity to the navigation channelโthe Dallas-Fort Worth and the Houston-Galveston markets. Economic interests opposed to the barge channel argue that benefits should be measured within the boundaries *1375 of the entire state.[416] The record suggests that the larger the area within which benefits are measured, and the farther away from the dense marketing areas they are obtained, the lower the benefits become. The economic savings from using barges, for example, are greatest to those in close proximity to the waterway who can readily transport commodities on it instead of utilizing more expensive transportation alternatives; businesses located farther away would need to first transport their goods by some method to the canal, a cost which might exceed their shipping directly to their customers. This Court's concern at this time is to determine if such a problem exists with reference to areas within which environmental benefits are computed. If the area of environmental analysis parallels that for economic analysis, the resulting claimed benefits could be more easily analysed in a benefit-cost computation. Problems would seem to arise when the respective economic and environmental areas differ, particularly if the procedures for determining an economic area were too elastic. By altering the area of economic measurement, an unrealistically high benefit can conceivably appear, thus upsetting any fine balance arrived at with environmental benefits. The record in this case offers insufficient data for this Court to suggest or apply a proper rule for measuring such areas, either for economic or environmental analysis. What is important is that the problem be identified and fully examined in the impact statement.
The record indicates some controversy over the fact that the Corps, in its 1968 economic justification reevaluation of the navigation features of the Trinity Project, added an additional flat ten percent to computed transportation savings on some or all of the commerce items surveyed.[417] The Corps reported to Congress that this was done to take into account an estimated amount of general commerce which would utilize the waterway that was undisclosed by a field traffic canvass conducted by the Corps. The entire record relating to this economic resurvey is not before the Court; thus a more thorough inquiry at this point cannot be made. However, the Court notes that this procedure might be proper if balanced statistical sampling techniques were utilized.
The record also reflects substantial controversy over the interest rate used to discount benefits and costs;[418] the purpose is generally to approximate investments in private business.[419] Both the Wallisville and Trinity Projects' benefit-costs analyses are based on an interest rate of 3.125 percent.[420] The current rate of interest required for federal projects is apparently 5 5/8 percent.[421] Although construction has not begun on the Trinity Project, the lower rate prevails because it was the approved rate when the basic project was *1376 authorized in 1968.[422] If the higher interest rate were applied, the benefit-cost ratio would drop substantially below unity. This problem has recently been reconsidered by at least one House and two Senate subcommittees, and in each case the present procedures were retained. The Senate Committee on Public Works reported:
Of particular concern is the proposal by the Water Resources Council that the standards include a discount rate of interest based on the private money market. The Committee believes that the adoption of this interest rate would adversely affect the continuation of an orderly program of water resources development, since economic justification would be difficult to establish on such an artificial basis.
The Committee further believes that it is incompatible with the purpose of water resource programs to make these government activities dependent upon fluctuations in the private money market. Water resource projects must be considered on the basis of their value to local communities, regions and the Nation as a whole.[423]
It appears, however, that one reason for not changing the present procedures was to "assure that Congress will have sufficient time to review water resources standards now being considered by the Water Resource Council."[424] From the brief comments contained in the noted reports, it appears that no consideration was given to the effect of the interest rate upon environmental decisions bound up in the benefit-cost ratio. Inasmuch as a final decision does not appear to have been made, and since the Council on Environmental Quality has apparently not addressed itself to this issue, this Court can do no more than allude to the controversy in the record.
8.
PROCEDURES FOR ANALYZING RECREATION BENEFITS
One of the most frequently claimed benefits arising out of public works projects is that of outdoor recreation. Because of the nature of the benefit, it is obviously closely associated with environmental decisions. This Court's greatest concern here is two-fold; that the record raises a question as to the procedures used to claim these benefits and that the claimed "need" for this type of recreation is not adequately supported statistically or otherwise. The Court has already noted that the Wallisville Project claims substantial recreation benefits, despite the existence of similar facilities nearby and criticism from the Bureau of Outdoor Recreation.[425] The late Senator Allen J. Ellender of Louisiana has suggested, and the record seems to support it, that some public works projects would not have been economically "justified" except for the fact that the benefit-cost ratio was increased by adding a great deal more recreation benefits than could be justified on the basis of reasonable need.[426] In order to understand this area, there are several aspects to which attention should be directed.
*1377 a.
Evaluating Recreational Benefits
According to the record recreational benefits are based upon a schedule of visitation values adopted in 1960 by the Interagency Committee on Water Resources.[427] Calculated on the basis of the number of recreation users per day, rates of $0.50 per person for general visitors, $1.00 for nature students, $1.00 to $2.00 for sport fishing and hunting, and $3.00 for waterfowl hunting have been used by the Corps in determining the recreational benefits to be attributed to various projects.[428]
Reportedly, an analysis is made by the Corps of an area in its "unimproved" condition and then compared to the projected usage of the area if the project were built.[429] A judgment estimate is made by the Corps as to projected usage, depending upon such factors as proximity to metropolitan areas, an evaluation of the overall vicinity, the quality of the facilities provided, and the degree to which opportunities to engage in a number of activities are provided.[430] For example, prospective recreation visitation at the Wallisville Project was analysed by the Corps as follows:
An estimate of the average annual attendance for recreational purposes recognizes the various factors of population and potential increase of population within the zone of influence, the quality of recreational opportunities inherent in the project, access, trends of interest in outdoor recreation, availability of similar recreational opportunities, and other elements that must be considered in obtaining a judgment estimate of visitation. Consideration was given to the records of annual visitation to the Dam B reservoir located on the Neches River, about 80 miles from the Wallisville Reservoir site. Considering all of these factors, it is estimated that Wallisville Reservoir will attract about 785,000 visitors during the third year after completion and a total of about 969,000 by the year 1975. It is believed that the estimated attendance *1378 in 1975 will approach the optimum recreational capacity for this reservoir.[431]
There is little more in the record that indicates the procedures utilized by the Corps in arriving at these estimates.[432]
In ascertaining projected estimates for both the Trinity and Wallisville Projects, the record reflects that the Corps communicated with some federal and state agencies whose expertise lies in the area of recreation.[433] The key documents used to justify these projects do not indicate what the nature of the communications was, nor the degree of coordination undertaken by the Corps with the other agencies. It appears that the Corps places substantially greater reliance upon visitation statistics at other Corps public works projects than upon other factors.[434] A question may be raised as to whether standardized procedures for measuring recreational demand are being utilized. For example, visitation estimates at Wallisville were limited generally to a fifty mile radius of the project.[435] The record is unclear as to the scope of the Trinity Project. While it appears that recreational measurement may have paralleled the scope of the survey of economic benefits, there is no indication that a fifty mile radius limitation was imposed.[436]
The Court raises a question as to the procedures utilized for projecting future "usage" of these recreation areas, as they would appear to be unsupported by the record. For example, there appears to be little or no basis for the method employed to obtain estimates of site visitation at an area in its "unimproved" state. Whereas the Corps apparently keeps accurate visitation records of users of existing Corps facilities, it is not inappropriate to inquireโwho records the treks of individuals into the wilderness? Conclusions arrived at based upon a procedure weighted in favor *1379 of developmental type recreation facilities does not take into account the desires of those who may prefer natural recreation. Unless measurement procedures accurately calculate both types of usages, the former can be emphasized at the expense of the latter. Similarly, the methods used for projecting estimated visitation must be objective and realistic. This opinion has already noted that in connection with the Trinity Project the District Engineer computed estimated increases of 9,100,000 man days of general recreation and 4,900,000 man days of hunting and fishing, whereas the Fish and Wildlife Service and the National Park Service made estimates of approximately 3,000,000 and 937,000 respectively.[437] The U.S. Department of the Interior, and particularly such components as the Fish and Wildlife Service, the National Park Service and the Bureau of Outdoor Recreation, who are charged with duties and legal responsibilities relating both directly and indirectly to the determination of recreational needs,[438] would in all likelihood be better qualified to evaluate such estimates as are here involved.
b.
Recreation Benefits Versus Costs
Somewhat akin to the foregoing discussion is the fact that certain of the projects in the Trinity Project are being justified through use of recreation benefits, when the main purpose of the project is non-recreational, and the costs of building the recreational facilities are minimal compared to the main purpose costs. For example, the cost of constructing recreational facilities at Lakeview Reservoir is only about 12 percent of the total project cost,[439] whereas about 70 percent of the total claimed benefits justifying the project are attributed to recreation; the primary purpose for building the reservoir is flood control and water supply.[440] The latest figures available in the record for the Wallisville Project indicate that the costs of recreational facilities equal only about 3.5 percent of the total costs[441] while claimed benefits account for 18.4 percent of the total.[442] Similarly, although approximately 64.5 percent of the benefits claimed by Aubrey reservoir are attributed to recreation, the primary role of the project is water conservation;[443] yet, the cost of recreational facilities is approximately 18 percent of total first cost.[444]
c.
Elasticity of Claimed Recreational Benefits
The record suggests that recreation analysis procedures are inexact and occasionally are subject to use in connection with non-recreational purposes. *1380 For example, the Corps reportedly made no claim for recreational benefits in the benefit-cost analysis of the Gilham Dam project on the Cossatot River in Arkansas, although emphasizing such benefits in the impact statement.[445] On the other hand, when the total estimated costs of the Lakeview Reservoir doubled between 1969 and 1970 due to a relocation of the proposed site, the benefit-cost ratio increased from 2.7:1 up to 3.3:1, primarily because of a 262.7 percent increase in claimed recreation benefits.[446] The record does not indicate that there was a 262.7 percent greater need for recreation at the new site.
9.
CONCLUSION
The foregoing is an effort to point out what appear to be deficiencies in the Corps' benefit-cost analysis procedures, primarily as they impinge upon environmental factors in such a way as might dilute the emphasis to be given to these amenities. The present procedures do not appear to comply with Congressional policies as declared in NEPA or as reported above. Probably the area embodying the greatest deficiencies is that associated with recreational benefit claims. These have also been the cause of Congressional concern, although for non-environmental reasons. For example, the late Senator Allen J. Ellender of Louisiana, at a Senate Subcommittee Hearing in 1971, made the following observations to a Corps of Engineers official reflecting his concern over the use of recreational benefits to justify projects:
You can swell those benefits by increasing the visitations by maybe triple what it will actually be, if you want.
. . . . . .
. . . But here lately, in order to justify many projects in the program, you have added large recreation benefits. Except for the addition of those recreation benefits, you could not justify the project. You could not obtain a 1 to 1 ratio . . . except by adding . . . large recreation benefits. . . .
. . . . . .
. . . it strikes me that any program that is advocated by the Engineers should stand on its own on the basis of navigation and flood control. If you have to add recreation benefits to jackup your benefits in order to make it feasibleโthat is to obtain a benefit-to-cost ratio over 1.1 to 1โI just think that is wrong. I have been trying to keep the justification for these projects within the primary responsibility of the Corps, and that is for navigation and flood control. Because you could easily justify almost any program if you start adding water pollution now to what you do for recreation.
You could have, maybe, your navigation and your flood control 0.5 to 1 and then add enough recreation and other benefits to make the ratio 2 to 1. This could be recreation or some other type of benefit that has not even been considered in the past in order to justify a project on the basis of a good benefit-cost ratio.[447]
The magnitude of the total Trinity River Basin development project and the fact that the nation is entering its third *1381 year following the enactment of NEPA without tangible strides being made towards development of measureable environmental economic analysis procedures compel substantial scrutiny of existing procedures and claimed benefits. Fortunately a time crisis is not at hand as to the Trinity Project with studies, technical and environmental, apparently far from completion and the initiation of construction even more distant. Even if the studies were complete, the long term benefits likely to accrue from a delay while a re-analysis of techniques was undertaken might well outweigh any resulting increased costs.
If such sophisticated techniques are not presently available for use, then interim alternative methods should be explored by Congress to ensure that we do not necessarily jeopardize the intent of NEPA between now and the time that agencies and ultimately the courts are supplied with appropriate standards for evaluating the comparative degrees of benefits and costs. For example, as one witness suggested in testimony before Congress, it may be desirable for the present to require "a benefit cost ratio very much in excess of unity in order to justify the project."[448] If the Congress were to decide upon some arbitrary benefit-cost ratio below which a project would not be considered, only the more meritorious and more urgently needed public works projects would survive close examination and be authorized until such time as a more all-encompassing and refined set of benefit-cost tools becomes available. In this fashion, the formidable task assigned to the courts could be more adequately and intelligently undertaken, and hopefully the decisions rendered would comport more fully with the intent of Congress.
I.
THE DIRECTIONS OF THE COURT: STRUCTURE OF SUBSEQUENT ENVIRONMENTAL IMPACT STATEMENTS
In this new and largely uncharted area of the law, this Court has encountered many problems, both mechanical as well as theoretical. One such mechanical problem is that of fully assimilating the contents of the Wallisville impact statement and related record as submitted in this case so as to comprehend in some logical manner what information is contained therein. Lengthy impact statements appear to be the rule, rather than the exception, in environmental cases, but a Court simply does not possess the time or the capacity in environmental cases to wade through such a mass of records as are submitted here in order to determine if the Corps has satisfied the requirements of NEPA. What becomes particularly distressing is the fact that Wallisville is but the initial segment of the overall Trinity Project in which the impact statement and record will necessarily be of immense size. Because of the sheer magnitude of this project and the absolute necessity that an impact statement be prepared by the Corps which can be meaningfully reviewed, it is apparent that much greater care must be taken in the system, organization and presentation of material for the benefit of a Court and a layman.
The courts to date have apparently not dealt with impact statement structure to any depth. The District of Columbia Circuit Court of Appeals stated, in passing, that the statement "must set forth the material contemplated by Congress in form suitable for the enlightenment of the others concerned."[449] Another court found an impact statement to be sufficiently detailed when *1382 "perused in its entirety, including the independent and often opposing views of the other public agencies. . . .[450] This latter impact statement, it should be noted, was 55 pages in length, exclusive of exhibits and letters.[451] This Court believes that this latter standard will not be sufficient for an impact statement of the magnitude likely to result in the overall Trinity Project. Yet, it would be unreasonable to expect even the most diligent administrator, congressman or court to read hundreds or thousands of pages of text, exhibits, enclosures and appendices in the effort to gain an overall grasp of the environmental impact. For this reason, the Court advances the following guidelines for use in preparing the impact statements associated with the overall Trinity Project, including the resubmission of a Wallisville statement. They are not to be read as being in lieu of guidelines promulgated by the CEQ and EPA, or those of the Corps otherwise not inconsistent; rather, they should be applied to supplement such guidelines so as to present the clearest possible picture of the project in question.
1. The primary intention of this Court is to ensure that:
(a) The revised Wallisville impact statement, assuming it satisfies the Court's stated objections and assuming it properly and fully reflects the precise scope of the project as of 1973, not some prior date, is submitted to the Congress, the CEQ and other appropriate agencies for full review and authorization. The obtaining of such authorization is not clear from the present impact statement and record.
(b) The Trinity impact statement which is presently being prepared will be fully processed and reviewed by the Corps as a "new" project and thereafter submitted to the Congress, the CEQ and other appropriate agencies for full review and authorization.
2. With respect to mechanical organization of the impact statement, maximum efforts shall be expended by the Corps to ensure clarity, thoroughness and objectivity of presentation so that all factors including environmental amenities are fairly portrayed. With reference to the Trinity Project, a substatement will be prepared, processed and reviewed with respect to each of its major components so that a fact finder and a court can discern that component's relevance and justification when related to the overall Trinity Project. This will include, but is not necessarily limited to, each major dam, reservoir, lock or combination thereof and each flood control project. Thereafter, a "master" impact statement will be prepared focusing upon the cumulative effect of all of the components for the benefit of the fact finder and a court so that full compliance with NEPA can be ascertained. Consideration should be given to the use of environmental matrix analysis which, this Court has noted, was included as an integral part of the Cossatot River impact statement.
3. In order to ensure full coordination with the reviewing agencies in preparation of impact statements, the following are advanced:
(a) If modifications or changes take place in a project or in an impact statement after reviewing agencies have reviewed and expressed opinions, then further coordination and review of such modifications or changes by these agencies are required. The Corps and all agencies must express opinions based on the same information.
(b) The impact statement will contain the written opinion of all appropriate reviewing agencies as well as those of the Corps, the primary purpose being to present a complete and objective appraisal of the good and the bad of a proposed project including the balance struck between environmental, *1383 technical and economic factors. The textual discussion of the impact statement must draw the attention of readers to any views opposing those espoused by the Corps with respect to any amenity, be it technical economic or environmental. They may be discussed in the text, if desired, providing a reference notation is made to where the original comments or letters may be found in the enclosed appendices. If the opposing view is not textually discussed, a footnote reference shall be inserted in the text at the Corps' challenged comment. At the bottom of that same page, some signal notation should be inserted to apprise the reader of the controversy (e. g., "contra"), the source identified (e. g., Bur. Sport Fish.), and a reference to where in the record the original comments or letter may be found.
4. Because this Court is convinced that under the present state of the law construing NEPA, any benefit-cost analysis must include a full consideration of environmental factors as well as the traditional economic and technical valuations, it has no hesitancy to examine this area concerning the Wallisville and Trinity Projects by reviewing the information appearing in the record of this case. What is of deep concern is the absence of definitive guidelines, procedures and common denominator terms to be used in quantifying and comparing environmental values with other values. Such expertise should be found most readily in the Congress, the CEQ and the agencies administering these programs.
In order that this Court may have the benefit of the latest guidelines and procedures in the field to apply to the Wallisville and Trinity Projects, the Corps is directed to seek out such information from all appropriate sources and supply to this Court definitive policy guidelines, regulations or standards with respect to the following:
a. The basic procedure, standard or measure for comparing and evaluating environmental amenities with economic and technical factorsโjointly or separately without overlapping features.
b. The methods to be used for quantifying environmental amenities, both as to benefits and as to costs. Procedures need to be established for determining which agency or entity will be primarily charged with the duty for evaluating the "values" to be applied to natural conditions and the "benefits" to be attributed to uses such as recreation.
c. The procedures to be used for controlling project cost increases, the statistical soundness of the add-on benefit procedure, the relationship of project life to projected benefits, environmental or otherwise, the role of interest levels to environmentally-related analyses, and the comparative areas to be used for economic benefit studies versus environmental benefit studies.
d. Guidelines to be used for determining the "need" for recreation in a given area and which agency or entity is to determine such "need."
J.
SUMMARY AND HOLDING OF THIS COURT
The history of planned navigational development in the Trinity River Basin extends over the past century. The present plans relate back at least to the early 1940s, and they have regularly been considered in the light of existing navigation on the Trinity River which extends from Trinity Bay to Liberty, Texas. As a result of navigational improvements made over the years, saltwater from Trinity Bay penetrated upstream following the navigation channel, particularly when the flow of the Trinity River was low. As a consequence, there were protests of rice farmers located in the vicinity of the mouth of the Trinity who demanded that a protective saltwater barrier dam be built. This *1384 was the genesis of the Wallisville Dam and Reservoir. Soon thereafter, local governments and interests sought expansion of the project to include areas for water preservation and supply, and this purpose was thereafter incorporated as well. At the present time, two additional purposes and benefits are claimed for the Wallisville Project, recreation as well as fish and wildlife enhancement.
The National Environmental Protection Act (NEPA) under which the present suit has been brought became effective on January 1, 1970. At that time the development planning of Wallisville had already progressed substantially. The Corps of Engineers recognized after a period of understandable indecision that the Act required the Corps to consider the environmental impact of the entire Trinity Basin project as well as the impact of its initial segment at Wallisville. Recognizing the extensive history of Wallisville and noting its claimed important and predominantly local purposes, this Court did not wish to delay the completion of the project which originated in concept long before the advent of NEPA. Accordingly, a temporary injunction was denied pending a decision on the merits. Following an exhaustive examination of the Wallisville impact statement and the massive record submitted in this case, this Court has concluded that such an equitable resolution is not warranted. The claimed local purposes are not adequately documented and supported in the Wallisville environmental impact statement at this time, and it will be necessary to determine through further evidence the true character and purposes of the Wallisville Project.
Additionally, the existing Wallisville environmental impact statement is insufficient under NEPA, since it lacks the requisite detail and fails to satisfy the full disclosure requirements of the Act. Alternatives to the present project are inadequately considered, and there is no indication that genuine efforts have been made to mitigate any of the major impacts on the environment resulting from the construction of the project. There is little support in the record for the Corps' failure to defer to the expert judgment of other federal agencies which have expressed opinions with respect to significant environmental impacts. Inasmuch as this Court finds that the plaintiffs have made out a prima facie case of defendants' non-compliance with NEPA, the burden of proof is on the defendants to demonstrate that they have fully complied with its provisions.
Of particular significance to the Trinity Project as well as to the Wallisville Project is the Court's finding that the Corps' benefit-cost analysis procedures are deficient under NEPA because they consider and evaluate selected environment related "benefits" without also considering and evaluating environmentally related "costs". Before an impact statement for the Wallisville or Trinity Projects may be completed and adequately reviewed, there is a need to bring certain procedures to the attention of Congress, the appropriate federal agencies, and the Council on Environmental Quality in order that appropriate policy decisions may be made to assist the Corps and the Court in assessing the completeness of environmental impact statements. These will include the determination of proper methods for quantifying and evaluating environmental amenities.
In view of the uncertainty surrounding the character and purposes of the Wallisville Project at this time, all as set forth earlier in this opinion, both the Wallisville and Trinity Projects will necessarily be enjoined. Inasmuch as Wallisville is a segment of the master plan for the Trinity Project, directions as to the preparation of impact statements will apply to both projects in order to assist this Court in enforcing the letter and spirit of NEPA. It will be necessary that the Corps of Engineers prepare impact statements for each major *1385 component of the Trinity River Basin development program including Wallisville as well as a subsequent one assessing the cumulative environmental impact. Apart from the mechanical organization of such impact statements in order to ensure maximum clarity and completeness, each impact statement will be given the same general agency and congressional review that new projects currently receive under the Corps of Engineers' regulations. It is the intent of this Court, in view of the circumstances in this case, that Congress, the appropriate federal agencies and the Council on Environmental Quality pass upon and render decisions on the Wallisville and Trinity Projects as well as other components in the light of NEPA as passed by Congress.
Accordingly, an injunction will be granted by this Court to halt any construction on the overall Trinity Project, including further construction on the Wallisville Project, until the requirements of NEPA have been complied with. The Court has been apprised of the fact that modification on several highway bridges spanning the Trinity is underway so as to accommodate the navigation channel, if built. Federal funds are being used to cover the increased costs of building these high level bridges. Because these bridges and connecting roads are not directly related to the Trinity Project, and because the mere increase in height appears to this Court at this time to be a very tenuous nexus to the Trinity Project, this injunction shall not apply to such bridge construction.
Among other matters, the satisfying of the requirements of NEPA will necessitate the ascertaining of the true purposes and character of the Wallisville Project. If and when the Corps can present to this Court additional evidence as to Wallisville's local purposes, and if this Court upon appraising such evidence finds that this project possesses, in reality, substantial local purposes, then it will dissolve the injunction as to Wallisville upon the resubmission of an environmental impact statement which satisfies the requirements of NEPA as outlined in this opinion. On the other hand, if such evidence is inadequate under the law and the claimed primarily local purposes are not demonstrated, the Wallisville Project will then be viewed by this Court only as the first segment of the Trinity Project. In that event, further construction of Wallisville will be delayed to await completion of the Trinity environmental impact statement assessing the cumulative impact of the overall Trinity Project, including Wallisville, in a manner satisfactory to the requirements of NEPA to be followed by such statement's complete review and acceptance by the Congress, the relevant federal agencies and the Council on Environmental Quality.
Plaintiffs' motion for summary judgment is hereby granted, and an injunction will issue forthwith as to both the Wallisville and Trinity Projects. The defendant Corps of Engineers' motion for summary judgment is denied. An appropriate order will be prepared terminating construction on both projects with the exception of the modification of the high level bridges spanning the Trinity River noted previously, and such order will be submitted to this Court for entry within seven (7) days. It is further ordered that plaintiffs file an appropriate bond for payment of costs and other matters in the amount of $100 in line with current reported decisions.[452] Clerk will notify counsel.
*1386 SUMMARY JUDGMENT
CAME on for hearing the Motion for Summary Judgment filed by Plaintiffs; and the Court being of the opinion that Plaintiffs' said Motion should be granted, accordingly, by its Memorandum and Order issued and filed herein by the Court on the 16th day of February, 1973, Plaintiffs' Motion for Summary Judgment is Granted; and pursuant thereto, it is hereby
Ordered, Adjudged and Decreed that Defendants, Robert F. Froehlke, Secretary of the Army, Lt. General Frederick J. Clarke, Chief of Engineers of the United States Army, and Colonel Nolan C. Rhodes, District Engineer of the Corps of Engineers of the United States Army, their successors in office, their agents, representatives and employees, and all other persons acting in concert or cooperation with said Defendants, or at their direction or under their control, shall be and are hereby permanently enjoined from constructing, or causing the construction of, directly or indirectly, the Trinity River Project or the Wallisville Project, or of any parts or components thereof, unless said Defendants fully comply with the law, including all requirements of the National Environmental Policy Act and this Court's Memorandum and Order of February 16, 1973; and until further Order of this Court; provided, however:
(1) there is excluded from this Order those certain six (6) highway bridges designed to cross the Trinity River on State of Texas Highway No. 105; United States Highway No. 190; State of Texas Highway No. 31; International Highway No. 635; International Highway No. 45; and State Highway Loop 12; and
(2) in terminating construction of the Wallisville Project, Defendants are hereby authorized to perform only the following acts on or before April 15, 1973: (i) install and adjust gate seals on navigation lock, (ii) remove gates and apply protective coating thereto; (iii) paint armor and steel sheet piles; (iv) remove lower well point system and flood chamber; (v) remove upper well point system; (vi) protect ends of concrete overflow dam with sandbags; and (vii) clean up, move out and secure equipment and supplies; in the performance of such acts during said period of time, Defendants are hereby Ordered to file with the Court and with copies thereof to be furnished to each counsel of record, each two weeks of such period a report setting out the status as of such time of the work done pursuant hereto, the nature of such work so done and an estimate of time required for completion thereof; and it is further,
Ordered that Plaintiffs tender security for the payment of costs and damages as may be suffered by any party determined to have been wrongfully or unlawfully enjoined herein in the amount of, or equivalent to, One Hundred Dollars ($100.00).
*1387 APPENDIX A
*1388 APPENDIX B
*1389
NOTES
[414] Total Federal Cost (Corps of Engineers), subject to partial reimbursement by State of Texas or others.
[415] Total projected cost estimate at time of requesting Cong. approval.
[416] Component of Trinity River Basin Development Project, separately funded.
[417] Component of Basin Development Projetc, originally included in total.
[418] Figure not supplied in record. Amount interpolated by averaging total change between supplied figures indicated over period of time for which figures are missing. Accompanying percentages based upon the interpolated figure.
[419] DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, WALLISVILLE RESERVOIR, DESIGN MEMORANDUM NO. 1 (GENERAL IN FEATURE DETAIL) (rev. ed., Aug. 1965). Vol. one of this three volume study contains the basic District Engineer's report, several appendices, and numerous letters containing comments regarding various features of the project. The remaining two volumes contain additional appendices. The first 103 pages of volume one, containing the letters, were not numbered consecutively at the time of printing the volume; thus the Court has taken the liberty of adding numbers for purposes of review. The main report, beginning at the 104th page of the volume, and each of the subsequent appendices have consecutively numbered pages which will be used hereinafter for references. In order to simplify subsequent reference to the material in this volume, the following section notations are used:
ง 1โSection contains numerous memos, letters of comment, endorsements, and replies by various levels of the Corps communicating with one another regarding the main report. Where reference is made to one of the documents in this section, it will be fully described in the footnote if necessary to a fuller understanding. All documents in this section, however, shall generally be referred to hereinafter as 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965) [Box 2, Item 25, ง 1].
ง 2โThis section consists of the main report of the District Engineer [hereinafter cited as 1 WALLISVILLE GEN.DESIGN MEMO NO. 1 ง 2 (1965) [Box 2, Item 25, ง 2].
Where reference is made to material located in one of the appendices to this report, reference will be made as follows:
App. AโHydrology and Hydraulics, Vol. 1 [hereinafter cited as 1 WALLISVILLE GEN.DESIGN MEMO NO. 1 App. A (1965)] [Box 2, Item 25, App. A].
App. BโGeology and Soils, Vol. 1 [hereinafter cited as 1 WALLISVILLE GEN.DESIGN MEMO NO. 1 App. B (1965)] [Box 2, Item 25, App. B].
App. CโCosts, Project Evaluation, and Cost Allocations, Vol. 1 [hereinafter cited as 1 WALLISVILLE GEN.DESIGN MEMO NO. 1 App. C (1965)] [Box 2, Item 25, App. C].
App. DโExhibits, Vol. 1 [hereinafter cited as 1 WALLISVILLE GEN.DESIGN MEMO NO. 1, App. D (1965)] [Box 2, Item 25, App. D].
App. EโElectrical, Water and Sewage, and Corrosion Control, Vol. 1 [hereinafter cited as 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. E (1965)] [Box 2, Item 25, App. E].
App. FโNavigation Lock, Vol. 2 [hereinafter cited as 2 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. F (1965)] [Box 2, Item 26, App. F].
The third volume, containing data pertaining to the diversion control structure, was deleted in July, 1965, following engineering changes.
[420] DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, WALLISVILLE RESERVOIR, DESIGN MEMORANDUM NO. 2A (June, 1965). This one volume study presents a preliminary plan surrounding the recreational features of the project [hereinafter cited as WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965)] [Box 2, Item 29].
[421] DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, WALLISVILLE RESERVOIR, DESIGN MEMORANDUM NO. 1 (General in Feature Detail) SUPP. NO. 1 (February 1969). This supplement updates the Design Memorandum No. 1 by incorporating revisions resulting from more detailed planning and supplemental field data [hereinafter cited as WALLISVILLE DESIGN MEMO NO. 1, SUPP. NO. 1 (1969)] [Box 2, Item 28].
[422] DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, ENVIRONMENTAL IMPACT STATEMENT, WALLISVILLE LAKE, TRINITY RIVER, TEXAS (Dec. 13, 1971) [hereinafter cited as WALLISVILLE EIS]. [Box 5, Item 102].
[423] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1966 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes, has identified these hearings as follows:
ง 1โHearings on H.R. 9220 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1966), 89th Cong., 1st Sess., pt. 1 (1965) [hereinafter cited as 1966 Senate Subcomm. Hearings ง 1] [Box 4, Item 81, ง 1].
ง 2โHearings on H.R. 9220 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1966), 89th Cong., 1st Sess., pt. 2 (1965) [hereinafter cited as 1966 Senate Subcomm. Hearings ง 2] [Box 4, Item 81, ง 2].
ง 3โHearings on H.R. 9220 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1966), 89th Cong., 1st Sess., pt. 4 (1965) [hereinafter cited as 1966 House Subcomm. Hearings ง 3] [Box 4, Item 81, ง 3].
[424] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1967 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 17787 Before sional hearings relating to public works appropriations for fiscal year 1967 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 17787 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1967), 89th Cong., 2d Sess., pt. 1 (1966) [hereinafter cited as 1967 Senate Subcomm. Hearings ง 1] [Box 4, Item 82, ง 1].
ง 2โHearings on H.R. 17787 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1967), 89th Cong., 2d Sess., pt. 2 (1966) [hereinafter cited as 1967 Senate Subcomm. Hearings ง 2] [Box 4, Item 82, ง 2].
ง 3โHearings on H.R. 17787 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1967), 89th Cong., 2d Sess., pt. 1 (1966) [hereinafter cited as 1967 House Subcomm. Hearings ง 3] [Box 4, Item 82, ง 3].
ง 4โHearings on H.R. 17787 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1967), 89th Cong., 2d Sess., pt. 3 (1966) [hereinafter cited as 1967 House Subcomm. Hearings ง 4] [Box 4, Item 82, ง 4].
[425] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1968 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 11641 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works and Atomic Energy Commission Appropriations for Fiscal Year 1968), 90th Cong., 1st Sess., pt. 1 (1967) [hereinafter cited as 1968 Senate Subcomm. Hearings ง 1] [Box 4, Item 83, ง 1].
ง 2โHearings on H.R. 11641 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works and Atomic Energy Commission Appropriations for Fiscal Year 1968), 90th Cong., 1st Sess., (non-departmental witnesses) (1967) [hereinafter cited as 1968 Senate Subcomm. Hearings ง 2] [Box 4, Item 83, ง 2].
ง 3โHearings on H.R. 11641 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1968), 90th Cong., 1st Sess., pt. 1 (1967) [hereinafter cited as 1968 House Subcomm. Hearings ง 3] [Box 4, Item 83, ง 3].
ง 4โHearings on H.R. 11641 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Fiscal Year 1968), 90th Cong., 1st Sess., pt. 3 (1967) [hereinafter cited as 1968 House Subcomm. Hearings ง 4] [Box 4, Item 83, ง 4].
[426] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1969 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 17903 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Resources Development and Atomic Energy Commission Appropriations for Fiscal Year 1969), 90th Cong., 2d Sess., pt. 1 (1968) [hereinafter cited as 1969 Senate Subcomm. Hearings ง 1] [Box 4, Item 84, ง 1].
ง 2โHearings on H.R. 17903 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Resources Development and Atomic Energy Commission Appropriations for Fiscal Year 1969), 90th Cong., 2d Sess., pt. 2 (1968) [hereinafter cited as 1969 Senate Subcomm. Hearings ง 2] [Box 4, Item 84, ง 2].
ง 3โHearings on H.R. 17903 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Water and Power Resources Development and the Atomic Energy Commission for Fiscal Year 1969), 90th Cong., 2d Sess., pt. 1 (1968) [hereinafter cited as 1969 House Subcomm. Hearings ง 3] [Box 4, Item 84, ง 3].
[427] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1970 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified those hearings as follows:
ง 1โHearings on H.R. 19877 Before the Subcomm. on Rivers and Harbors and the Subcomm. on Flood Control of the House Comm. on Public Works (Omnibus River and Harbor and Flood Control Act of Fiscal Year 1970), 91st Cong., 2d Sess., (Hearings of September 30 through October 13) (1970) [hereinafter cited as 1970 House Subcomm. Hearings ง 1] [Box 4, Item 85, ง 1].
ง 2โHearings on H.R. 14159 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 1 (1969) [hereinafter cited as 1970 Senate Subcomm. Hearings ง 2] [Box 4, Item 85, ง 2].
ง 3โHearings on H.R. 14159 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 5 (1969) [hereinafter cited as 1970 Senate Subcomm. Hearings ง 3] [Box 4, Item 85, ง 3].
ง 4โHearings on H.R. 14159 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 6 (1969) [hereinafter cited as 1970 Senate Subcomm. Hearings ง 4] [Box 4, Item 85, ง 4].
ง 5โHearings on H.R. 14159 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 7 (1969) [hereinafter cited as 1970 Senate Subcomm. Hearings ง 5] [Box 4, Item 85, ง 5].
ง 6โHearings on H.R. 14159 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Water and Power Resources Development and the Atomic Energy Commission for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 1 (1969) [hereinafter cited as 1970 House Subcomm. Hearings ง 6] [Box 4, Item 85, ง 6].
ง 7โHearings on H.R. 14159 Before the Subcomm. of the House Comm. on Appropriations (Public Works Appropriations for Water and Power Resources Development and the Atomic Energy Commission for Fiscal Year 1970), 91st Cong., 1st Sess., pt. 5 (1969) [hereinafter cited as 1970 House Subcomm. Hearings ง 7] [Box 4, Item 85, ง 7].
[428] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1971 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 18127 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1971), 91st Cong., 2d Sess., pt. 4, Vol. 1 (1970) [hereinafter cited as 1971 Senate Comm. Hearings ง 1] [Box 4, Item 86, ง 1].
ง 2โHearings on H.R. 18127 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1971), 91st Cong., 2d Sess., 47-073 (1970) [hereinafter cited as 1971 Senate Subcomm. Hearings ง 2] [Box 4, Item 86, ง 2].
ง 3โHearings on H.R. 18127 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1971), 91st Cong., 2d Sess., 41-379 (1970) [hereinafter cited as 1971 Senate Subcomm. Hearings ง 3] [Box 4, Item 86, ง 3].
ง 4โHearings on H.R. 18127 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1971), 91st Cong., 2d Sess., pt. 1 (1970) [hereinafter cited as 1971 House Subcomm. Hearings ง 4] [Box 4, Item 86, ง 4].
ง 5โHearings on H.R. 18127 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1971), 91st Cong., 2d Sess., pt. 2 (1970) [hereinafter cited as 1971 House Subcomm. Hearings ง 5] [Box 4, Item 86, ง 5].
ง 6โHearings on H.R. 18127 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1971), 91st Cong., 2d Sess., pt. 5 (1970) [hereinafter cited as 1971 House Subcomm. Hearings ง 6] [Box 4, Item 86, ง 6].
[429] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1972 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 10090 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 2 (1971) [hereinafter cited as 1972 Senate Subcomm. Hearings ง 1] [Box 4, Item 87, ง 1].
ง 2โHearings on H.R. 10090 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 4, Vol. 2 (1971) [hereinafter cited as 1972 Senate Subcomm. Hearings ง 2] [Box 4, Item 87, ง 2].
ง 3โHearings on H.R. 10090 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 4, Vol. 1 (1971) [hereinafter cited as 1972 Senate Subcomm. Hearings ง 3] [Box 4, Item 87, ง 3].
ง 4โHearings on H.R. 10090 Before the Subcomm. of the Senate Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 5 (1971) [hereinafter cited as 1972 Senate Subcomm. Hearings ง 4] [Box 4, Item 87, ง 4].
ง 5โHearings on H.R. 10090 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 2 (1971) [hereinafter cited as 1972 House Subcomm. Hearings ง 5] [Box 4, Item 87, ง 5].
ง 6โHearings on H.R. 10090 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1972), 92d Cong., 1st Sess., pt. 5 (1971) [hereinafter cited as 1972 House Subcomm. Hearings ง 6] [Box 4, Item 87, ง 6].
[430] The extensive, multi-volume Congressional hearings relating to public works appropriations for fiscal year 1973 were submitted to the Court in Xerox form, excerpting those pages pertaining to the Trinity or Wallisville Projects, their components or related projects. This Court for reference purposes has identified these hearings as follows:
ง 1โHearings on H.R. 15586 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 1, Vol. 1 (1972) [hereinafter cited as 1973 Senate Comm. Hearings ง 1] [Box 7, Item 144, ง 1].
ง 2โHearings on H.R. 15586 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 1, Vol. 2 (1972) [hereinafter cited as 1973 Senate Comm. Hearings ง 2] [Box 7, Item 144, ง 2].
ง 3โHearings on H.R. 15586 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 4, Vol. 1 (1972) [hereinafter cited as 1973 Senate Comm. Hearings ง 3] [Box 7, Item 144, ง 3].
ง 3aโHearings on H.R. 15586 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1973, 92d Cong., 2d Sess., pt. 5 (1972) [hereinafter cited as 1973 Senate Comm. Hearings ง 3a] [Box 7, Item 144, ง 3a].
ง 4โHearings on H.R. 15586 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 1 [hereinafter cited as 1973 House Subcomm. Hearings ง 4] [Box 7, Item 144, ง 4].
ง 5โHearings on H.R. 15586 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 2 [hereinafter cited as 1973 House Subcomm. Hearings ง 5] [Box 7, Item 144, ง 5].
ง 6โHearings on H.R. 15586 Before the Senate Comm. on Appropriations (Public Works for Water, Pollution Control, and Power Development and Atomic Energy Commission Appropriations for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 4, Vol. 2 (1972) [hereinafter cited as 1973 Senate Comm. Hearings ง 6] [Box 7, Item 144, ง 6].
ง 7โHearings on H.R. 15586 Before the Subcomm. of the House Comm. on Appropriations (Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill for Fiscal Year 1973), 92d Cong., 2d Sess., pt. 5 [hereinafter cited as 1973 House Subcomm. Hearings ง 7] [Box 7, Item 144, ง 1].
[431]
[432] Tex.Rev.Civ.Stat. art. 8280-188 (1959), as amended (Supp.1971).
[433] See pages 1336 to 1337 infra and accompanying text.
[434] A map depicting the comprehensive plan of development for the Trinity River Basin is located at Appendix A infra.
[435] See 1973 Senate Comm. Hearings ง 2, supra note 17, at 1407; H.Doc. No. 364 ง 3, supra note 4, at 1-3.
[436] 1973 Senate Comm. Hearings ง 2, supra note 17, at 1407.
[437] Public Works for Water and Power Development and Atomic Energy Commission Appropriation Act of 1973, Pub. L. No. 92-405, 86 Stat. 621, U.S.C.Cong. & Admin.News, p. 713 (1972). See also, H.Rep. No. 92-1310, 92d Cong., 2d Sess. 6-28 (1972) (Conference Report) [Box 8, Item 158a].
[438] See WALLISVILLE EIS, supra note 9, at 2-3; 1972 Senate Subcomm. Hearings ง 1, supra note 16, at 1664.
[439] See Department of the Army, Corps of Engineers, Trinity River Project, Texas, Tennessee Colony Lake Design Memorandum No. TC-2, Site Selection and Project Formulation, I-2 (1971) [hereinafter cited as Tenn. Colony Lake Memo] [Box FW, Item ii]; H.Doc. No. 364 App. I, supra note 4, at 54.
[440] Letter of Kenton Kirkpatrick, Director, Office of Planning, to Galveston District Engineer, Mar. 1, 1971. WALLISVILLE EIS, supra note 9, at A-16 to A-19.
[441] Letter of Robert F. Stevens, Acting Regional Director, to Galveston District Engineer, Nov. 6, 1970. WALLISVILLE EIS, supra note 9, at A-1. Previous letters may be found at E1-1, E3-1, E4-1.
[442] Comments, accompanying letter of James R. Hibbs, for Sidney R. Galler, Deputy Assistant Secretary for Environmental Affairs, U.S. Department of Commerce, to Office of Chief Engineer, June 7, 1971. WALLISVILLE EIS, supra note 9, at A-4.
[443] Letter of J. R. Singleton, Executive Director, to Division of Planning Coordination, Office of the Governor of Texas, Nov. 13, 1970. WALLISVILLE EIS, supra note 9, at A-32.
[444] Army Corps of Engineers, Response to Testimony by Donald Mitchell Smith Before the Public Works Sub-Committee of Appropriations, Committees of the U.S. House of Representatives and U.S. Senate on the Subject of the Trinity River and Tributaries, Texas Project, 6-7 [Box 6, Item 129, at 9-10] [hereinafter cited as Corps Response to Donald Smith]. While the report in the record is undated, Mr. Smith first testified before Congress in 1971. 1972 Senate Subcomm. Hearings ง 2, supra note 16, at 1446.
[445] H.Doc. No. 364 ง 3 (1968), supra note 4, at 2.
[446] WALLISVILLE EIS, supra note 9, at 1-2.
[447] H.Doc. No. 403 (1941), supra note 2.
[448] Sources of the foregoing history include the following: WALLISVILLE EIS, supra note 9, at 3-4; H.Doc. No. 276 ง 5 (1965), supra note 3, at 37-39; Department of the Army, Corps of Engineers, Plan of Survey, Navigation Study-Trinity River, Texas, 5-10 (1958) [hereinafter cited as Corps Plan of Survey] [Box FW, Item u, at V-7 to V-13].
[449] H.Doc. No. 403 (1941), supra note 2, ง 3 at 8, ง 2 at 6, ง 1 at IX.
[450] by the Committee on Rivers & Harbors of the House of Representatives, United States, That the Board of Engineers for Rivers and Harbors created under Section 3 of the River and Harbor Act, approved June 13, 1902 [32 Stat. 373], be, and is hereby requested to review the reports on the Trinity River and Tributaries, Texas, contained in House Document Numbered 403, Seventy-seventh Congress, First Session, with a view to determining whether any modification should be made in the recommendations therein at this time with respect to work for navigation and local flood protection along the main stem and major tributaries of the Trinity River.
Above resolution adopted March 1, 1944, and again February 28, 1945. Quoted in H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 20.
[451] See 1970 Senate Subcomm. Hearings ง 4, supra note 14, at 6235; H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 28.
[452] See, e. g., H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 24-25, 28, 36. The Corps reported that hurricanes hit the Texas coast on the average of once every 1.7 years and will inundate the Wallisville reservoir with tides as high as fifteen feet above sea level. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 2 (1965), supra note 6, ถ 17-03 at 17. The saltwater intrusion accompanying these tides would be removed by flushing out the reservoir, through the navigation locks with fresh river water. Id., ง 1 at 43, 48.
[40] Resolution of Jan. 20, 1958, quoted in H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 21. The language was virtually identical to that of prior Congressional resolutions. See note 37 supra.
[41] River and Harbor Act of 1958, Pub.L. 85-500, ง 112, 72 Stat. 297, 304, U.S.C. Cong. & Admin.News, 85th Cong., 2d Sess., 349 (1958) [Box 1, Item 4, at 297, 304]. The pertinent text is also quoted in H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 21.
[42] H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 21. See also The Liberty Vindicator, Aug. 28, 1958 [Box FW, Item q, at U-279].
[43] See Fort Worth Star Telegram, Aug. 22, 1958, at 8 [Box FW, Item q, at U-281]; Houston Post, Aug. 24, 1958 [Box FW, Item q, at U-282].
[44] "Without question, saltwater intrusion into the lower river has been aggravated by federal nevigation improvements constructed in Galveston and Trinity Bays and in the lower Trinity River since 1870." Report of Col. John E. Unverferth, Galveston District Engineer, May 9, 1966. Subject: Trinity River and Tributaries, TexasโWallisville Reservoir, Design Memorandum No. 1 [General in feature detail]. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 45.
[45] H.Doc. No. 215 (Wallisville 1961), supra note 5, ง 5 at 30-34, App. IV. The Corps reported that the intrusion was in part due to natural causes. Id., ง 5, at 36. A "judgment estimate" made in 1966 by the Corps attributed 75 percent of the saltwater intrusion to natural causes and 25 percent to navigational features. 1 WALLISVILLE GEN. DESIGN MEMO No. 1 ง 1, supra note 6, at 45.
[46] H.Doc. No. 276 ง 5 (1965), supra note 3, at 104.
[47] See, e. g., Letters to: Senator John Tower, Aug. 24, 1970 [Box 6, Item 126, at 26], and also March 13, 1971 [Box 6, Item 127, at 54]; Congressman George Bush, Aug. 24, 1970 [Box 6, Item 126 at 17]; Congressman Bob Casey, Aug. 10, 1970 [Box 6, Item 126, at 34]; and Congressman Bob Eckhardt, Aug. 10, 1970 [Box 10, Item 126, at 41].
[48] WALLISVILLE EIS, supra note 9, at A-17.
[49] See note 33 supra and accompanying text. Some of the barrier effect has been attributed to the Livingston Reservoir by the Corps. At a conference held on Feb. 23, 1966, a judgment decision allocated the claimed salinity control benefits equally between the two reservoirs. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 83.
[50] H.Doc. No. 215 (Wallisville 1961), supra note 5, ง 4 at 12, ง 5 at 38.
[51] See, Agreement between the City of Houston, Texas, and the Trinity River Authority of Texas, Sept. 10, 1959 [Box FW, Item q, at U-309]; Permit to appropriate public waters of the State of Texas, No. 1970, granted jointly to the City of Houston and Trinity River Authority of Texas, Oct. 11, 1960 [Box FW, Item q, at U-297].
The record is not clear, but the question arises as to whether this subordination of water usage to navigation is in conflict with federal law. 33 U.S.C.A. ง 701-1(b).
[52] H.Doc. No. 215 ง 5 (Wallisville 1961), supra note 5, at 63, 64.
[53] Rivers and Harbors Act of 1962, Pub.L. No. 87-874, ง 101, 76 Stat. 1173, 1175, U.S.C. Cong. & Admin.News, 87th Cong., 2d Sess., 1376 (1962) [Box 1, Item 10]. The common introduction of the Act, and the part pertinent to the Wallisville Project, reads as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.
Sec. 101. That the following works of improvement of rivers and harbors and other waterways for navigation, flood control, and other purposes are hereby adopted and authorized to be prosecuted under the direction of the Secretary of the Army and supervision of the Chief of Engineers, in accordance with the plans and subject to the conditions recommended by the Chief of Engineers in the respective reports hereinafter designated:
. . . . .
Trinity River, Wallisville Reservoir, Texas: House Document Numbered 215, Eighty-seventh Congress, at an estimated cost of $9,162,000: Provided, That nothing in this Act shall be construed as authorizing the acquisition of additional lands for establishment of a national wildlife refuge at the reservoir; . . .
[54] H.Doc. No. 215 (Wallisville 1961), supra note 5, ง 4 at 12, ง 5 at 38.
[55] See, e. g., H.Doc. No. 276 ง 5 (1965), supra note 3, at 105, 103-06; Letter from Maj. Gen. William F. Cassidy, Director of Civil Works to U. S. Senator John Tower (Texas), Feb. 5, 1962, 2 [Box FW, Item x, at C-175]; H.Doc. No. 215 (Wallisville 1961), supra note 5, ง 5 at 30-32, 69, ง 6 at 71, ง 4 at 16, ง 1 at v; 1973 Senate Comm. Hearings ง 2, supra note 17, at 1459; Statements of Col. K. S. Kristoferson, Fort Worth District Engineer, Transcript of public meeting for Tennessee Colony Lake, April 20, 1971, at 10 [Box FW, Item jj, at FF-22], public meeting for Aubrey Lake, April 30, 1971, at 9 [Box FW, Item hh, at EE-19].
[56] See H.Doc. No. 276 (1965), supra note 3, ง 4 at 28-33, ง 3 at 2.
[57] Rivers & Harbors Act of 1965, Pub.L. No. 89-298, ง 301, 79 Stat. 1089, 1091, U.S.C.Cong. & Admin.News, 89th Cong., 1st Sess., 1074 (1965) [Box 2, Item 24, at 1089, 1091].
[58] The words of limitation are found in the Committee or Conference Reports which accompany the appropriation bills. H.R.Rep. No. 505, 90th Cong., 1st Sess., at 49-50 (1967) (to accompany the Atomic Energy Commission Appropriation Bill of 1968, H.R. 11641) [Box 4, Item 74, at 49-50]; H.R.Rep. 1788 (Conf.Report), 90th Cong., 2d Sess., at 29 (1968) (To accompany the Public Works for Water and Power Resources Development and Atomic Energy Commission Appropriation Bill of 1969, H.R. 17903) [Box 4, Item 76, at 291]. The language of the bills themselves, which are extremely general in terms, contain no such words of limitation. Act of Nov. 20, 1967, Pub.L. 90-147, Tit. I, 81 Stat. 471, U.S.C.Cong. & Admin.News, 90th Cong., 1st Sess., pp. 503-506 (1967); Act of Aug. 12, 1968, Pub.L. 90-479, Tit. I, 82 Stat. 705, U.S.C.Cong. & Admin.News, 90th Cong., 2d Sess., pp. 813-816 (1968).
[59] See note 4 supra.
[60] H.Doc. No. 364 ง 4 (1968), supra note 4, at 39.
[61] Id. ง 5 at 43.
[62] Id. ง 3 at 1-6.
[63] Id. ง 2 at vi.
[64] Id. ง 1 at v.
[65] Letter of John C. Gatlin, Regional Director, Southwest Region 2, Bureau of Sport Fisheries and Wildlife, United States Department of the Interior, to the Galveston District Engineer, Mar. 29, 1960, pages 1, 7. WALLISVILLE EIS, supra note 9, at E1-1, 1-7.
[66] Report of Southwest Division Engineer on Public Hearing on Wallisville Reservoir and Wildlife Refuge, to Chief of Engineers, Feb. 17, 1961 [Box FW, Item z, at W-43].
[67] H.Doc. No. 215 ง 3 (Wallisville 1961), supra note 5, at 4, 6.
[68] Id. ง 5 at 60-61.
[69] Letter from Assistant Secretary of the Interior, to Chief of Engineers, Sept. 27, 1963. H.Doc. No. 276 ง 2a (1965), supra note 3, at Lvi. This letter is not attached to the Wallisville Environmental Impact Statement.
[70] G. Gunter, A Report on the Probable Damages to Estuarine Fishery Resources of the Galveston Bay System by Construction of the Wallisville Reservoir Near the Mouth of the Trinity River (June 17, 1966). WALLISVILLE EIS, supra note 9, at E5 to E5-7.
[71] Letter of Gordon Gunter to Galveston District Engineer, June 17, 1966 [Box 5, Item 105]. The covering letter is not included with the Wallisville environmental impact statement.
[72] See note 65 supra and accompanying text.
[73] 1 WALLISVILLE GEN. DESIGN MEMO No. 1 ง 1 (1965), supra note 6, at 54.
[74] Summary of Discussions, Subject: Effects of Construction of Wallisville Reservoir on Fish and Wildlife Resources, 3 (June 3, 1966) [Box 5, Item 115, at 3] [hereinafter cited as 1966 Conference Report]; also found at 1 WALLISVILLE GEN. DESIGN MEMO No. 1 ง 1 (1965), supra note 6, at 92.
[75] Army Corps of Engineers, Answer to Interrogatory No. 40(n).
[76] 1966 Conference Report, supra note 74, at 3.
[77] Baldauf, A Study of Selected Chemical and Biological Conditions of the Lower Trinity River and the Upper Trinity Bay (Feb. 1970) (Texas A&M Water Resources Institute). WALLISVILLE EIS, supra note 9, Exhibit 7.
[78] Covering letter from David Louis Steed, Ph.D, Environment Consultants, Inc., to Galveston District Engineers, Nov. 5, 1971. WALLISVILLE EIS, supra note 9, at E9-2.
[79] WALLISVILLE EIS, supra note 9, at E9-13, 9-15 (Report).
[80] Id. at E9-7.
[81] The Baldauf Report was criticized by Environment Consultants, Inc. for not having more fully utilized the wealth of data amassed by the study. It was also questioned concerning its conclusion that locating the dam upstream would have reduced the direct destructive effect upon the prime nursery areas. The Baldauf Report had not fully considered the possibilities of indirect destruction from such changes as salinity, flow patterns and vegetative cover.
[82] It was disseminated by circular EC XXXX-X-XX (ENGCW-RL). Files, Wallisville Lake, TexasโHistory of Preparation of Environmental Statement 1, Oct. 18, 1971 (record of Corps). [hereinafter cited as Corps' Environmental History] [Box 5, Item 101].
[83] CEQ Interim Guidelines, 35 Fed.Reg. 7390-93 (1970).
[84] Corps' Environmental History, supra note 82, at 4.
[85] DEPARTMENT OF DEFENSE, INTERIM GUIDELINES ON ENVIRONMENTAL STATEMENTS, Envir.L.Rep. โStat. & Admin. 46021-22 (Aug. 8, 1970) [Box 5, Item 90]. [Hereinafter cited as DOD GUIDELINES]
[86] Corps' Environmental History, supra note 82, at 4.
[87] Id. at 4, 5.
[88] These instructions were disseminated by circular EC XXXX-X-XX. Corps' Environmental History, supra note 82, at 5.
[89] Id. at Incl. 8.
[90] DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, ENVIRONMENTAL GUIDELINES FOR THE CIVIL WORKS PROGRAM OF THE CORPS OF ENGINEERS, INSTITUTE FOR WATER RESOURCES REPORT 70-5, ER XXXX-X-XXX Appendix A (Nov. 30, 1970) [Box 5, Item 92]. [Hereinafter cited as 1970 CORPS GUIDELINES].
[91] Corps' Environmental History, supra note 82, at 6.
[92] CEQ Guidelines, 36 Fed.Reg. 1398-1402 (1971).
[93] Corps' Environmental History, supra note 82, at 9.
[94] Id. at Incl. 22 (June 14, 1971).
[95] CEQ Guidelines, 36 Fed.Reg. 7724-29 (1971).
[96] WALLISVILLE EIS, supra note 9, at A-6.
[97] WALLISVILLE EIS, supra note 9, at A-12.
[98] Proposed Corps Regs., 36 Fed.Reg. 11309-18 (1971).
[99] Corps' Environmental History, supra note 82, Incl. 25, at 4.
[100] Id. at 4-5.
[101] Covering letter of R. L. Buffington, June 29, 1971. Corps' Environmental History, supra note 82, Incl. 25.
[102] CERTIFICATION SHEET, WALLISVILLE EIS, supra note 9 (inside front cover).
[103] 37 Fed.Reg. 3005 (1972) [Box 5, Item 104].
[104] See, e. g., Pennsylvania Environmental Council, Inc. v. Bartlett, 315 F.Supp. 238 (M.D.Pa.1970), aff'd 454 F.2d 613 (3rd Cir. 1971); Investment Syndicates, Inc. v. Richmond, 318 F.Supp. 1038 (D.Or. 1970).
[105] This has been held to indicate a strong legislative intent to apply Section 102 to federal actions initiated prior to January 1, 1970. Environmental Defense Fund v. Tennessee Valley Authority, 339 F.Supp. 806, 811 (E.D.Tenn.1972); Nolop v. Volpe, 333 F.Supp. 1364, 1367 (D.S.D.1971).
[106] Zabel v. Tabb, 430 F.2d 199, 213 (5th Cir. 1970), cert. denied, 401 U.S. 910, 91 S.Ct. 873, 27 L.Ed.2d 808 (1971); Texas Committee on Natural Resources v. United States, 430 F.2d 1315 (5th Cir. 1970), vacating 1 E.R. 1303 (W.D.Tex. 1970); Named Individual Members of San Antonio Conservation Society v. Texas Highway Department, 446 F.2d 1013, 1025 (5th Cir. 1971), cert. denied, 403 U.S. 932, 91 S.Ct. 2257, 29 L.Ed.2d 711; Clark v. Volpe, 461 F.2d 1266 (5th Cir. 1972), affirming 342 F.Supp. 1324 (E.D.La.1972); Ragland v. Mueller, 460 F.2d 1196 (5th Cir. 1972).
[107] See, e. g., Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323, 1329-1330 (4th Cir. 1972), cert. denied, 409 U.S. 1000, 93 S.Ct. 312, 34 L.Ed.2d 261; Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 425 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90; Lathan v. Volpe, 455 F.2d 1111, 1116, 1121 (9th Cir. 1971); Scenic Hudson Preservation Conference v. Federal Power Commission, 453 F.2d 463, 481 (2nd Cir. 1971), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972); Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1120, 1120 n. 25 (1971); Named Individual Members of San Antonio Conservation Society v. Texas Highway Department, 446 F.2d 1013, 1025 (5th Cir. 1971), cert. denied, 403 U.S. 932, 91 S.Ct. 2257, 29 L.Ed.2d 711; Zabel v. Tabb, 430 F.2d 199, 213 (5th Cir. 1970), cert. denied, 401 U.S. 910, 91 S.Ct. 873, 27 L.Ed.2d 808 (1971); Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 348 F.Supp. 916 (N.D.Miss.1972); Thompson v. Fugate, 347 F.Supp. 120, 124 (E.D.Va.1972); Natural Resources Defense Council v. Grant, 341 F.Supp. 356, 364-365 (E.D. N.C.1972); Morningside-Lenox Park Association v. Volpe, 334 F.Supp. 132, 144 (N.D.Ga.1971); Environmental Defense Fund v. Corps of Engineers of U. S. Army, 325 F.Supp. 728, 742-743 (E.D. Ark.1971).
[108] CEQ Guideline ง 11, 36 Fed.Reg. 7727 (1971).
[109] CEQ Guideline ง 5(b), 36 Fed.Reg. 7724-25 (1971). See also Proposed EPA Reg. ง 6.7(c), 36 Fed.Reg. 880 (1972). This Court has been advised that all proposed EPA regulations have become effective.
[110] See, e. g., Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 835 (1972); Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323, 1329 (4th Cir. 1972); Greene County Planning Board v. Federal Power Commission, 455 F.2d 412 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90; Indian Lookout Alliance v. Volpe, 345 F.Supp. 1167, 1172 (S.D.Iowa 1972); Thompson v. Fugate, 347 F.Supp. 120, 123-124 (E.D.Va. 1972); Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 740 (D.Conn. 1972); Morningside-Lenox Park Association v. Volpe, 334 F.Supp. 132 (N.D.Ga. 1971).
[111] See WALLISVILLE EIS, supra note 9, at 100-01.
[112] Id. at 1.
[113] See note 50 supra and accompanying text.
[114] Tabulation by Fiscal Years Showing Federal Cost Estimate, B/C Ratio, Interest Rate, Benefit, Capability [Box 5, Item 88]. [Hereinafter cited as Corps' B/C Tabulations].
[115] See, e. g., WALLISVILLE EIS, supra note 9, at 1, 6, 8-9; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 App. C (1965), supra note 6, at 26-27; H.DOC. NO.215 (Wallisville 1961), supra note 5, ง 4 at 11, ง 5 at 26, 36-37, ง 6 at 111-36 (U. S. Public Health Service, Municipal and Industrial Water Requirements, Wallisville Reservoir [1960]).
[116] WALLISVILLE EIS, supra note 9, at 5-7, 9, 20; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 App. C (1965), supra note 6, at 26-27.
[117] Defendants' Memorandum in Opposition to Plaintiffs' Motion for Summary Judgment at 9.
[118] Referring to a study prepared by the U. S. Geological Survey, the impact statement notes that the chemical quality of Trinity River water is suitable for domestic purposes, including drinking water, as well as for industrial and irrigation purposes. Noting that the Upper Trinity contains water of poor organic quality, due to sewage and industrial discharges, it is evidently diluted with natural runoff in the Trinity Basin and is suitable for most municipal and other purposes. Referring specifically to water stored in Wallisville Lake, the impact statement notes that adverse discharges, such as upstream sewage effluents, will be regulated under permits and that "these discharges will not adversely affect the quality of water stored in Wallisville Lake to any significant degree." WALLISVILLE EIS, supra note 9, at 17-19.
The City of Houston referred to water supply as follows:
The City of Houston has already commenced the preparation of plans to use Trinity River water within its domestic water supply system and it is estimated that at least 100 MGD will be so utilized in five years.
Letter from E. B. Tate, Director, Houston Department of Public Works, to Col. Nolan E. Rhodes, Galveston District Corps of Engineers, July 23, 1971, at 2. WALLISVILLE EIS, supra note 9, at A-54. [Hereinafter cited as Houston Letter].
[119] Corps' Environmental History, supra note 82, at Incl. 26, No. 32, at 5.
[120] Letter of Texas Department of Parks and Wildlife to Office of the Governor of Texas, Nov. 13, 1970. WALLISVILLE EIS, supra note 9, at A-33. But see Corps' response. Id. at 72-73. Identification of chemicals to be used would facilitate the following of opinions upon actual effect.
[121] Id. at i, 1, 2, 6 and 21a.
[122] Id. at 24.
[123] Id. at 6.
[124] Letter of Col. Harold C. Brown, District Engineer, to Southwestern Division Engineer, Dallas, Texas, February 8, 1961, at 5 [Box 2, Item 23]. [Hereinafter cited as Brown Letter].
[125] The record reflects that at a recent public meeting conducted by the Corps regarding site selection for Aubrey Lake reservoir, a Dr. J. K. G. Silvy spoke about this problem. Representing the Water Research Laboratories of North Texas State University, based upon a stated forty years of experience studying Texas reservoirs, he made the following statement:
This is a statement by North Texas State University and the Utility Board of the City of Denton. We wish to take this opportunity to present some ideas based on findings from the Water Research Laboratories of the University that have been studying Texas reservoirs for a period of almost forty years.
During the past seventy years . . . the construction of reservoirs has not taken into consideration the ecology of the region that was to be inundated, the number of streams feeding into the reservoir, except for volume and flow, the changes likely in the socio-economic areas, the recreational use, and, most of all, quality and preservation of water for areas that are semi-arid. . . .
Thus, the Corps of Engineers is urged to weigh the expense and advantage of a deep, compact surface reservoir instead of the usual sprawling type. As a matter of fact, it seem incredible that thousands of acres of land are purchased which are rarely exposed to enough water to be of any importance either from the standpoint of flood control, conservation pool, municipal supply, or other uses for which water may be ultimately consumed. Many biological problems are created by the shallow areas which characterize most lakes and reservoirs in Texas. Shallow water results in rapid eutrophication or aging, if you like to put it that way, reduction in water quality, increased evaporation, and inferior and maybe dangerous recreational supply areas.
. . . It is further urged, in acquiring dam-site land, that the cost of digging or finding a deeper base can be compared with the cost of purchasing large tracts of flat land. We have learned that in this region, for example, every year there is more evaporation than rainfall. . . . And the most critical water loss would be evaporation from the large-surfaced lakes, not from consumption. Any water plan that spans less than fifty years is perhaps very short sighted.
It is now time to use the information that is available from an ecological standpoint to build a reservoir that eutrophication would not take in fifty years as it has in all reservoirs in this part of the country. To be sure, old reservoirs may have the same area, but they do not have the same volume.
We urge the Corps of Engineers to choose a dam site that will give the maximum depth and to use its funds for excavating as deep as possible rather than procuring expensive land. It is likely that such a reservoir may have a total useful age of fifty years. Otherwise, it is our prediction based on limnological data that a reservoir constructed like Garza-Little Elm may have a useful life of little more than 25 years. While the surface is still there, the volume is not available. . . .
The response of Col. Kristoferson of the Corps of Engineers was as follows:
That's a good statement, Dr. Silvy, but, boy, you sure made it more difficult, I'll tell you, to meet all those requirements.
Record of public meeting held at Denton, Texas, by Col. R. S. Kristoferson, Fort Worth District Engineer, April 30, 1971, 60-64 [Box FW, Item HH, at EE-70 to EE-74].
[126] WALLISVILLE EIS, supra note 9, at 25.
[127] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 (1965), supra note 6, ง 1 at 66, App. A at 9. Siltation also has other effects. Id., App. E at 2.
[128] See note 22 supra and accompanying text.
[129] See note 51 supra and accompanying text.
[130] See WALLISVILLE EIS, supra note 9, at 11; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 2 (1965), supra note 6, at 10; H.Doc.No.215 ง 5 (Wallisville 1961), supra note 5, at 27; Brown Letter, supra note 124, at 5. See also note 125 supra.
[131] The volume of Wallisville reservoir is 45,600 acre-feet. WALLISVILLE EIS, supra note 9, at 1. Of this, 10,000 acre-feet is allocated solely to navigation. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 2 (1965), supra note 6, at 17, thus leaving approximately 35,600 acre-feet for use as a salinity barrier as well as water supply purposes. The record reflects that two water suppliers of rice irrigation water have off-river storage reservoirs with combined capacity of about 35,400 acre-feet. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 43.
The Wallisville impact statement makes only the following comment regarding these supplies:
Lake Anahuac was formerly an estuarine arm of Trinity Bay, known as Turtle Bay, but was converted by non-federal interests to a fresh water storage pool many years ago.
WALLISVILLE EIS, supra note 9, at 7.
[132] According to recent newspaper reports, Texas rice farmers are opposing an acreage increase being considered by the federal government on the grounds that it would require additional expense while only depressing the market price. Houston Post, Nov. 28, 1972, at A13, col. 1.
[133] Corps' B/C Tabulations, supra note 114.
[134] Wallisville Project should be operated as an independent unit at present and not as an element of a system since the independent plan of operation provides the greatest excess of benefits over costs. The reimbursable costs for this project should be derived from a cost allocation study based on an independent plan of operation. The system operation is not an economically feasible plan since the report indicates that we must forego $291,000 of recreation benefits annually to obtain $38,000 of additional water supply benefits. However, should future conditions indicate that the system plan is justified, the pertinent economic and non-economic factors which justify the plan will be submitted to this office for approval prior to modifying the operation of the project.
Memo from Wendell E. Johnson (by Homer B. Willis), Chief Engineering Division, Civil Works, Army Corps of Engineers, to Southwest Division Engineer, July 22, 1966. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1, supra note 6, at 57. See also App. C at 27.
[135] Houston Letter, supra note 118, at A-54.
[136] WALLISVILLE EIS, supra note 9, at 20.
[137] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 (1965), supra note 6, ง 1 at 44, App. C at 26.
[138] The barrier effect has been estimated by the Corps as being equally divided between Wallisville and Livingston reservoirs. See note 49 supra. The latest benefit-cost figures, which are not included, in the impact statement, attributed, $356,000 benefits to Wallisville. Corps' B/C Tabulations, supra note 114.
[139] Corps' B/C Tabulations, supra note 114.
[140] See notes 43-47 supra and accompanying text.
[141] WALLISVILLE EIS, supra note 9, at 89.
[142] See, e. g., H.DOC.NO.215 ง 4 (Wallisville 1961), supra note 5, at 11.
[143] Id., ง 3, at 1-2; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 22.
[144] See note 25 supra and accompanying text; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 46-47.
[145] H.DOC.NO.215 (Wallisville 1961), supra note 5, ง 3 at 1-2, ง 4 at 15.
[146] WALLISVILLE EIS, supra note 9, at 2; WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 5-6, 10-11.
[147] H.DOC.NO.215 ง 5 (Wallisville 1961), supra note 5, at 50 (Table 5).
[148] Benefits of $257,000 are claimed. Corps' B/C Tabulations, supra note 114.
[149] See note 124 supra and accompanying text.
[150] See note 134 supra and accompanying text.
[151] WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 3.
[152] WALLISVILLE EIS, supra note 9, at 52.
[153] H.DOC.NO.215 ง 5 (Wallisville 1961), supra note 5 at 43. The record suggests that present recreational facilities are adequate to meet present needs. See WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 4 (Table 2).
[154] should discuss significant relationships between the proposal and other developments (existing and authorized). For example, a statement on a project which would convert a free-flowing section of a stream to a reservoir should contain information on the amount of flowing and flat water available in the area.
Investigation, Planning and Development of Water Resources, EC XXXX-X-XX, Sept. 25, 1970, ง 4g at 2. [Box 5, Item 96].
[155] Letter of Maurice D. Arnold, Regional Director, to Col. Rhodes, District Engineer, July 23, 1971. WALLISVILLE EIS, supra note 10, at A-23. Similar testimony was received in the Cossatot River case. Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F.Supp. 749, 760 (E.D.Ark. 1971).
[156] 1973 Senate Comm. Hearings ง 2, supra note 17, at 1463.
[157] H.Doc.No.215 ง 5 (Wallisville 1961), supra note 5, at 50 (Table 50).
[158] WALLISVILLE EIS, supra note 9, at 26.
[159] Letter from Carey H. Bennett, Acting Regional Director, Region 2, Bureau of Sport Fisheries & Wildlife, U.S. Department of the Interior, to Fort Worth District Engineer August 3, 1962, at 2 [Box FW, Item s, at E-359].
[160] See, e. g., Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 422 (2nd Cir. 1972), cert. denied 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed. 2d 90; Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1118 (1971); Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 165, 166-167 (D.D.C.1971), aff'd 148 U.S. App.D.C. 5, 458 F.2d 827 (1972).
[161] See Named Individual Members of San Antonio Conservation Society v. Texas Highway Department, 446 F.2d 1013, 1028 (5th Cir. 1971), cert. denied, 403 U.S. 932, 91 S.Ct. 2257, 29 L.Ed.2d 711.
[162] Morningside-Lenox Park Association v. Volpe, 334 F.Supp. 132, 145-146 (N.D. Ga.1971).
[163] Scherr v. Volpe, 336 F.Supp. 886, 888 (W.D.Wis.1971).
[164] Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 738-739 (D.Conn.1972).
[165] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F. Supp. 728, 746 (E.D.Ark.1971). See also, Morningside-Lenox Park Association v. Volpe, 334 F.Supp. 132, 142 (N.D. Ga.1971).
[166] Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323, 1329-1330 (4th Cir. 1972), cert. denied, 409 U.S. 1000, 93 S.Ct. 312, 34 L.Ed.2d 261; Thompson v. Fugate, 347 F.Supp. 120, 125 (E.D.Va. 1972).
[167] Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 739 (D.Conn.1972).
[168] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 838 (1972).
[169] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1111 (1971).
[170] Scenic Hudson Preservation Conference v. Federal Power Commission, 453 F.2d 463, 467 (2nd Cir. 1971), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972).
[171] Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971).
[172] 23 U.S.C.A. ง 138 (Supp.1972); 49 U.S.C.A. ง 1653(f) (Supp.1972).
[173] See Overton Park, supra, 401 U.S. at 411-413, 91 S.Ct. 814.
[174] Id. at 415, 91 S.Ct. 814.
[175] Id. at 415-416, 91 S.Ct. 814.
[176] See note 170, supra, 407 U.S. 926, 931, 92 S.Ct. 2453, 2455, 32 L.Ed.2d 813, 815 (Justice Douglas dissenting). "Although value judgments are inevitable and even though the Commission's balancing of environmental costs with other factors may be entitled to some deference, I share Judge Timber's doubts that under ง 101 the balance struck by an agency unskilled in environmental matters should be reviewed only through the lens of the `substantial evidence' test."
[177] See Overton Park, supra, 401 U.S. 404 n. 1, 91 S.Ct. 814 and accompanying text.
[178] Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 933 (N.D.Miss.1972).
[179] Scenic Hudson Preservation Conference v. Federal Power Commission, 453 F.2d 463, 480 (2d Cir. 1971), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972).
[180] Ely v. Velde, 451 F.2d 1130, 1138-1139 (4th Cir. 1971).
[181] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1118-1119 (1971).
[182] Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 420 (2d Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90.
[182a] In pertinent part the entry provided:
Defendant's motion to Dismiss is denied, see, e. g., EDF v. Corps of Engineers, 324 F.Supp. 878 (D.D.C. 1971); Ely v. Velde, 321 F.Supp. 1088 (E.D.Va.1971), aff'd in part, rev'd in part on other grounds, 451 F.2d 1130 (4th Cir. 1971); Izaak Walton League v. Macchia, 2 ERC 1661 (D.N.J.1971); see also Named Individual Members of the San Antonio Conservation Society v. Texas Hwy. Dept., 446 F.2d 1013 (5th Cir. 1971).
[183] See, e. g., Gabriel v. Standard Fruit and Steamship Co., 448 F.2d 724 (5th Cir. 1971); Diaz v. Southern Drilling Corp., 427 F.2d 1118, 1124 (5th Cir. 1970); Martin v. Kalvar Corp., 411 F.2d 552, 553 (5th Cir. 1969); Atlantis Development Corp. v. United States, 379 F.2d 818, 825 (5th Cir. 1967).
[184] See, e. g., Wilderness Society v. Morton, 150 U.S.App.D.C. 170, 463 F. 2d 1261 (1972) (per curiam); Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 416 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90; Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 921 n. 3 (N.D.Miss.1972); Natural Resources Defense Council, Inc. v. Tennessee Valley Authority, 340 F.Supp. 400, 408-409 (S.D.N.Y.1971), rev'd on other grounds, 459 F.2d 255 (2nd Cir. 1972).
[185] See, e. g., Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323 (4th Cir. 1972), cert. denied, 409 U.S. 1000, 93 S.Ct. 312, 34 L.Ed.2d 261; Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827 (1972); Greene County Planning Board v. Federal Power Commission, 455 F.2d 412 (2d Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90; Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109 (1971).
[186] Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 325 F. Supp. 728, 759 (E.D.Ark.1971).
[187] See Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1113 (1971).
[188] 115 Cong.Rec. (Part 30) 40419 (1969), section-by-section analysis of S. 1075 as reported to the Senate. Noted in Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 926 (N.D.Miss.1972).
[189] Id. at 928.
[190] See 42 U.S.C.A. ง 4331(b) (Supp. 1972).
[191] 42 U.S.C.A. ง 4332(1) (Supp.1972).
[192] Conf.Rep. No. 91-765, 91st Cong., 1st Sess., U.S.C.Cong. & Admin.News, pp. 2767, 2770 (1969).
[193] See 42 U.S.C.A. ง 4332(2)(A), (B) (Supp.1972).
[194] See Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 837 (1972).
[195] CEQ Guideline ง 2, 36 Fed.Reg. 7724 (1971).
[196] Proposed EPA Reg. ง 6.45(b)(2), 37 Fed.Reg. 883 (1972).
[197] Id., ง 6.45(c).
[198] See, e. g., Upper Pecos Association v. Stans, 452 F.2d 1233, 1236 (10th Cir. 1971), vacated, 406 U.S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 330 (remanded to determine mootness); Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 925 (N.D.Miss. 1972); Indian Lookout Alliance v. Volpe, 345 F.Supp. 1167, 1172 (S.D.Iowa 1972); Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 342 F.Supp. 1211, 1216-1217 (E.D.Ark. 1972), supporting earlier ruling, 325 F. Supp. 749, 755 (1971); Morningside-Lenox Park Association v. Volpe, 334 F. Supp. 132, 139 (N.D.Ga.1971).
[199] Environmental Defense Fund, Inc. v. Froehlke, 473 F.2d 346, 351. (8th Cir., 1972).
[200] See Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 425 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90; Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1112 (1971). See also Environmental Defense Fund, Inc. v. U. S. Army Corps of Engineers, 470 F.2d 289 (8th Cir., filed Nov. 28, 1972).
The D.C. Circuit Court of Appeals was recently confronted with what may have been such a case. The Secretary of the Interior was planning to sell offshore leases for oil and gas drilling, notwithstanding an environmental impact statement characterized by the plaintiffs as crying out for a contrary result. An injunction was granted on the ground that the Secretary had not taken a "hard look" at available alternatives which would mitigate the expected environmental impact. Natural Resources Defense Council, Inc. v. Morton, 148 U.S. App.D.C. 5, 458 F.2d 827, 830, 838 (1972).
[201] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 838 (1972).
[202] Engineering Circular No. 1120-2-56, App. B at B-4 [Box 5, Item 96].
[203] CEQ Guideline ง 11, 36 Fed.Reg. 7727 (1971).
[204] See, e. g., Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App. D.C. 5, 458 F.2d 827, 834 (1972); Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1114 (1971).
[205] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 833, 835 (1972); Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 348 F.Supp. 916, 931 (N.D.Miss.1972).
[206] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F.Supp. 749, 759 (E.D.Ark.1971).
[207] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 348 F.Supp. 916, 933 (N.D.Miss.1972).
[208] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 342 F.Supp. 1211, 1216 (E.D.Ark.1972).
[209] Corps Reg. ง 11b, 37 Fed.Reg. 2528 (1972). This obviously requires a high level of knowledge of all possible effects in order that "significant" ones may be identified by the agency when preparing an impact statement. See Corps Reg. ง 11a, 37 Fed.Reg. 2528 (1972).
[210] Ely v. Velde, 451 F.2d 1130, 1138 (4th Cir. 1971); see also note 219 infra and accompanying text.
[211] Environmental Defense Fund, Inc. v. U. S. Army Corps of Engineers, 470 F.2d 289, 296 (8th Cir., 1972).
[212] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 342 F.Supp. 1211, 1214 (E.D.Ark.1972).
[213] See, e. g., note 101 supra, and accompanying text; Civil Works Daily Log, Nov. 18, 1963, Headquarters, Department of the Army, Office of Chief of Engineers [Box FW, Item w, at B-48]; American Association of Railroads, Cross Florida Barge Canal Project, Preliminary Analysis of the Restudy Report of the Corps of Engineers, U. S. Army on the Cross Florida Barge Canal Project, Jan. 10, 1958, 14 (Dec. 17, 1958) (quoting from a Congressional Investigating Committee). [Box FW, Item t, at F-33]; Summary of Conference on Proposed Trinity River Waterway, July 26-27, 1960 at 2 [Box FW, Item v, at W-74].
[214] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 348 F.Supp. 916, 933 (N.D.Miss.1972); see also, Proposed EPA Reg. ง 6.45, 37 Fed. Reg. 883 (1972) ("Statements shall not be drafted in a style which requires extensive scientific or technical expertise to comprehend and evaluate the environmental impact of an Agency action.")
[215] This Court has not undertaken the task, which federal agencies must do, to screen the impact statement for all words which might be less than fully understandable to an average individual. Some of the terms appearing in the Wallisville impact statement which this Court believes were unclear are as follows:
weir notch (Wallisville EIS, supra note 9, at 2);
estuarine (Id. at 13 and others);
estuarine dependent (Id. at 14);
alignment improvement and bend easement, siltation, and turbidity (Id. at 21a);
preclude flotation (Id. at 22);
eutrophication, (rough fish) (Id. at 22);
high trapping effect (Id. at 25);
inundate brackish marsh vegetation (Id. at 25);
vegetative detrital material (Id. at 25, 35);
habitat (Id. at 26);
nektonic inhabitants (later clarified as all fish and "crustaceans") (Id. at 31);
aquatic ecosystems (Id. at 35).
[216] This is the language of the section-by-section analysis presented by Senator Jackson, in charge of the legislation and Chairman of the Senate Interior Committee, in explaining and recommending approval of the bill as agreed in conference. 115 Cong.Rec. 40420 (Dec. 20, 1969).
[217] CEQ Guideline ง 6a(iv), 36 Fed.Reg. 7725 (1971).
[218] DOD Guidelines, supra note 85, at ง 5c.
[219] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1114 (1971).
[220] 42 U.S.C.A. ง 4332 (Supp.1972). As the Court in Calvert Cliffs also noted, these procedural requirements do not tolerate the same degree of agency discretion as substantive duties. Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1114 (1971).
[221] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 836 (1972).
[222] Id. 458 F.2d at 837-838.
[223] Id. at 834.
[224] See Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 165, 167 (D.D.C.1971), aff'd, 148 U.S.App.D.C. 5, 458 F.2d 827 (1972); Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F.Supp. 749, 761-762 (E.D.Ark.1971). See also, Environmental Defense Fund, Inc. v. Coastside County Water District, 27 Cal.App.3d 695, 104 Cal.Rptr. 197 (1972).
[225] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 836 (1972).
[226] Id. 458 F.2d at 837.
[227] See Id. at 835.
[228] The purpose of this is to avoid the likelihood of severely limiting the range of otherwise available alternatives. Committee to Stop Route 7 v. Volpe, 346 F. Supp. 731, 740 (D.Conn.1972).
[229] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 835 (1972).
[230] See Id. 458 F.2d at 836; Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 170, 172 (D.D.C.1972), aff'd, 148 U.S.App.D.C. 5, 458 F.2d 827; Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F.Supp. 749, 758-759 (E.D.Ark.1971). See also CEQ Guideline ง 11, 36 Fed.Reg. 7727 (1971); Proposed EPA Reg. งง 6.23(a), 6.27(a)(2), 37 Fed.Reg. 881, 882 (1972).
[231] 42 U.S.C.A. ง 4332(2)(C) (Supp. 1972).
[232] See CEQ Guideline ง 7, 36 Fed.Reg. 7725 (1971), and 7727-29; see also Proposed EPA Reg. ง 6.27(b)(2)(iv)(c), 37 Fed.Reg. 882 (1972).
[233] Conf.Rep.No.91-765, 91st Cong., 1st Sess., U.S.C.Cong. & Admin.News, pp. 2767, 2769 (1969).
[234] See Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 325 F.Supp. 728, 741, 745; 325 F.Supp. 749, 758 (E.D.Ark.1971).
[235] See Environmental Defense Fund Inc. v. Corps of Engineers of U. S. Army, 348 F.Supp. 916, 930 (N.D.Miss.1972).
[236] See notes 181-182 supra and accompanying text.
[237] CEQ Guideline ง 7, 36 Fed.Reg. 7725 (1971); Proposed EPA Reg. ง 6.27(b) (2) (iv) (c), 37 Fed.Reg. 882 (1972); Corps Reg. ง 9a, 37 Fed.Reg. 2527 (1972).
[238] In November, 1970, the Bureau of Outdoor Recreation was unable to provide substantial comments regarding the Wallisville Project because of a large number of impact assessment requests. The Bureau finally was able to respond in July, 1971. WALLISVILLE EIS, supra note 9, at A-22, 23.
[239] The Bureau of Mines and Bureau of Outdoor Recreation reported that their comments regarding Wallisville were made without benefit of on-sight examination. Id. at A-20, 23. The Court expresses no opinion as to whether such investigation was required by either agency as to this project.
[240] The Bureau of Reclamation reported that it had no comments to make regarding the Wallisville Project. Id. at A-27. The Court has no opinion as to whether such comments were required. In this regard it appears that it would be worth-while for sponsoring agencies, at the time of preparing impact statements, to precede agency comments (or letters noting lack of comment) with a brief description of the reviewing agency's expertise and area of responsibility, such as might be found in the United States Government Organization Manual. This would enable readers to determine whether the reviewing agency was meeting its obligations as well as to judge more intelligently the value of the comments supplied.
[241] The Soil Conservation Service reported "the Project (Wallisville) will not adversely affect or benefit any existing or proposed projects of the Soil Conservation Service." Id. at A-13.
[242] See note 69 supra and accompanying text.
[243] WALLISVILLE EIS, supra note 9, at 24.
[244] Letter of D. T. Graham, Chief, Engineering Division to Dr. Gordon Gunter, Jan. 21, 1972. [Box 6, Item 128].
[245] See note 148 supra and accompanying text.
[246] See note 155 supra and accompanying text.
[247] WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 6-9.
[248] See, e. g., note 153 supra and accompanying text.
[249] system of estimating fish and wildlife benefits appearing in your report makes no allowance for project-caused losses. Moreover, it is not a biologically sound approach since it gives no real consideration to the many interrelated biological factors which bear upon populations of fish and wild-life at any given site. In the final analysis, it is the populations of fish and wildlife that ultimately determine the extent of hunting and fishing.
The estimated net annual benefit to fish and wildlife of $1,236,000 shown in our report was arrived at through the cooperative efforts of our Bureau, the Bureau of Commercial Fisheries and the Texas Game and Fish Commission. Our experience and judgment indicates this figure to be quite realistic.
Letter from Carey H. Bennett, Acting Regional Director, Southwest Region 2, Bureau of Sport Fisheries and Wildlife, U. S. Department of the Interior, Aug. 3, 1962, to Ft. Worth District Engineer, at 3 [Box FW, Item s, at E-360].
[250] Letter from Col. Edmund H. Lang, Resident Member, BERH, to Southwestern Division Engineer, Feb. 5, 1963, at 6-7 [Box FW, Item w, at B-134].
[251] Letter of Jerome H. Svore, Regional Program Director, Water Supply and Pollution Control, Public Health Service, U. S. Department of HEW, Nov. 8, 1965, to Galveston District Engineer. 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 App. C (1965), supra note 6, at Exh. 4.
[252] See notes 27, 65, 69-81, 96-101, supra, and accompanying text.
[253] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 App. C (1965), supra note 6, at 25.
[254] See note 74 supra and accompanying text.
[255] Defendant Corps of Engineers' Answer to Interrogatory 40(n).
[256] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1123 (1971).
[257] See 42 U.S.C.A. ง 4331(b)(1) (Supp. 1972).
[258] WALLISVILLE EIS, supra, note 9, at 27.
[259] Id. at A-39, 40.
[260] The Archeological impact is considered at three locations in the Wallisville impact statement with some overlap. Id. at 16-17, 26-27a, 36.
[261] CEQ Guidelines, Appendix I, 36 Fed. Reg. 7727 (1971).
[262] See note 39 supra.
[263] Defendant Corps of Engineers' Answer to Interrogatory 40(1).
[264] WALLISVILLE EIS, supra note 9, at 27-27a.
[265] 1 WALLISVILLE GEN. DESIGN MEMO 1 ง 2 (1965), supra note 6.
[266] 3 Envir.L.Rep. 184-5 (June 16, 1972); 3 Envir.L.Rep. 271 (June 30, 1972).
[267] See note 257 supra and accompanying text. See also CEQ Guideline ง 6(a) (iii), 36 Fed.Reg. 7725 (1971); Proposed EPA Reg. ง 6.21(d), 37 Fed.Reg. 881 (1972).
[268] See H.Doc. No. 403 ง 4 (1941), supra note 2, at 88-90.
[269] WALLISVILLE EIS, supra, note 9, at 21, 24; see also, H.Doc. No. 215 (Wallisville 1961), supra note 5, ง 4 at 12, ง 5 at 37; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 1 (1965), supra note 6, at 47.
[270] 42 U.S.C.A. ง 4371(a)(3) (Supp. 1972).
[271] CEQ Guideline ง 6(a)(ii), (iii), 36 Fed.Reg. 7725 (1971); Proposed EPA Reg. ง 6.45(b)(1), 37 Fed.Reg. 883 (1972). See also, 42 U.S.C.A. ง 4331 (b)(5) (Supp.1972); Environmental Defense Fund, Inc. v. Corps of Engineers of the U.S. Army, 325 F.Supp. 728, 748 (E.D.Ark.1971).
[272] WALLISVILLE EIS, supra note 9, at 35.
[273] 42 U.S.C.A. ง 4331(b)(4) (Supp. 1972); see also notes 194-195 supra and accompanying text.
[274] This may require more than the Corps' admitted "cursory inspection" made at Tennessee Colony Lake. Tenn. Colony Lake Memo, supra note 26, at III-3.
[275] Letter of Director, Bureau of Sports Fisheries and Wildlife, U.S. Department of Interior, to Chief of Engineers, Feb. 3, 1961. H.Doc. No. 215 ง 2a (Wallisville 1961), supra note 5, at xvii.
[276] See notes 66-67 supra and accompanying text. See also note 53 supra.
[277] WALLISVILLE EIS, supra note 9, at 33.
[278] See note 54 supra and accompanying text.
[279] See note 225 supra and accompanying text.
[280] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 App. C, (1965), supra note 6, at 37-42.
[281] Id., ง 1 at 49.
[282] See note 125 supra.
[283] See note 131 supra and accompanying text.
[284] The impact statement notes that the alternative to the natural river concept, a system of overland canals, pumping stations, highway crossings and appurtenant equipment from Livingston and its water users would be particularly expensive. WALLISVILLE EIS, supra note 9, at 40. This fails to consider the overall environmental "costs" as well as the known fact that system operations, which would save these costs, would result in a loss of $219,000 of annual recreational benefits in order to obtain $38,000 in water benefits. See note 134 supra and accompanying text.
[285] See note 38 supra and accompanying text.
[286] See note 131 supra and accompanying text.
[287] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1 ง 2 (1965), supra note 6 at 8.
[288] See note 49, supra.
[289] Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 424 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90.
[290] Stephen F. Austin State University, Environmental and Cultural Impact, Proposed Tennessee Colony Reservoir, Vol. I, at 21 (Jan. 1972) [Box FW, Item mm]; But see 1973 Sen.Comm. Hearings ง 6, supra note 17, at 1996.
[291] 42 U.S.C.A. ง 4332(2)(A) (Supp.1972).
[292] Id. at ง 4332(2)(B) (Supp.1972).
[293] Id. at ง 4332(2)(C) (Supp.1972).
[294] CEQ Guideline ง 6(a)(v), 36 Fed.Reg. 7725 (1971).
[295] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1114 (1971).
[296] CEQ Guideline ง 6(a)(iv), 36 Fed. Reg. 7725 (1971). According to the testimony of a Corps official before Congress, projects are, in fact, being modified as a consequence of the consideration given to impact statements. 1973 Senate Comm. Hearings ง 2, supra note 17, at 1373.
[297] See notes 211 to 213 supra and accompanying text for a discussion of the requirement of objectivity.
[298] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1118 (1971).
[299] H.Rep.No.91-378, 91st Cong., 1st Sess., U.S.C.Cong. & Admin.News, pp. 2751, 2753 (1969).
[300] See Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1117-1118 (1971).
[301] Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F. Supp. 916, 931 (N.D.Miss.1972). See also, CEQ Guideline ง 6(a)(iv), 36 Fed.Reg. 7725 (1971).
[302] Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 738 (D.Conn.1972).
[303] Greene County Planning Board v. Federal Power Commission, 455 F.2d 412, 420 (2nd Cir. 1972), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90.
[304] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1118 (1971).
[305] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 838 (1972).
[306] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1115 (1971).
[307] Id.
[308] See Environmental Defense Fund v. Corps of Engineers of U.S. Army, 348 F. Supp. 916, 927 (N.D.Miss.1972).
[309] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 838 (1972).
[310] See Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1114 (1971); Environmental Defense Fund v. Corps of Engineers of U.S. Army, 348 F. Supp. 916, 927 (N.D.Miss.1972).
[311] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1115 (1971).
[312] See notes 82-103 supra and accompanying text.
[313] Inasmuch as the review process generally follow the Corps' chain-of-command, attention is directed to the chart indicated in footnote 18 supra.
[314] See gen., Corps Reg. ง 14a, 37 Fed.Reg. 2528-29 (1972).
[315] See gen., Corps Reg. ง 14b, 37 Fed. Reg. 2529 (1972). These projects include minor flood control and navigation improvement works. Because of annual fiscal limitations on this category of projects, specific appropriation requests are not required.
[316] See gen., Corps Reg. ง 14d, 37 Fed.Reg. 2530 (1972).
[317] See gen., Corps Reg. ง 14c, 37 Fed. Reg. 2529-30 (1972).
[318] The Wallisville Project was authorized by Congress in 1962. See note 53 supra. The Trinity Project was authorized by Congress in 1965 although restricting any expenditures on navigational features. See note 68 supra and accompanying text.
[319] Aside from the fact that Congress has not passed upon the 1968 reevaluation study of the navigation aspects of the Trinity Project, it does not appear that the various levels of the Corps of Engineers' chain-of-command has subjected that study to the same degree of independent review and analysis as is required of an environmental impact statement. Compare notes 59-64 supra and accompanying text with notes 297-306 supra and accompanying text.
[320] At the time of preparing the initial environmental assessment the District Engineer is instructed by the regulations to coordinate with the appropriate federal, state and local agencies. The two formal reviews noted occur after the preliminary draft statement is prepared by the District Engineer and, subsequently, after the draft statement is prepared by the OCE.
[321] In the general prologue of the regulations, District and Division Engineers are required to ensure that the project or proposal in question is "fully consistent with the policies enunciated" in NEPA and Corps directives. Corps Reg. ง 4c(2), 37 Fed.Reg. 2525 (1972). If, "after taking all measures within [their] authority," they cannot satisfy that requirement, they are to request authority or guidance. Id. at ง 4d. In light of the guideline requirements of periodic project reevaluation, CEQ Guideline ง 11, 36 Fed.Reg. 7727 (1971), Proposed EPA Reg. งง 6.23(a), 6.27(a)(2), 37 Fed.Reg. 881-82 (1972), it would appear that Corps regulations should be more explicit in advising officials that comments or recommendations were encouraged as well as providing them with a means of communication. Implicit in the CEQ guidelines is the need for a procedure for altering or abandoning projects, even after authorization, should unforeseen environmental consequences be discovered.
[322] The Corps' regulations, notes 315-318 supra, require a minimum of one public meeting prior to preparing final statements, with as many as three or more meetings for new projects. Congress has not clearly specified the role of public meetings in the environmental process. See 42 U.S.C.A. ง 4331(a); H.Rep.No. 91-378, 91st Cong., 1st Sess., U.S.C.Cong. & Admin.News 2760, 2768 (1969). Present guidelines are little more explicit. See CEQ Guidelines งง 10(b), (c), (e), 36 Fed.Reg. 7726 (1971); Proposed EPA Reg. ง 6.61, 37 Fed.Reg. 883-84 (1972); Corps Reg. ง 12, 37 Fed.Reg. 2528 (1972). With respect to the Trinity Project, at least one public meeting at each component project site should be held prior to preparing preliminary draft statements for both component statements and the cumulative impact statements. Comments made at these meetings should be considered.
[323] Proposed Corps Regs., 37 Fed.Reg. 21818-20 (1972).
[324] Proposed EPA Reg. งง 6.65(a), (b), 37 Fed.Reg. 884 (1972).
[325] See Corps Reg. งง 10a, 14a(8), 14b(5), 14c(2), 37 Fed.Reg. 2527-29 (1972).
[326] See Corps Reg. งง 8, 14a(10), 14b(9), 14c(6), 37 Fed.Reg. 2527-30 (1972). This Court is aware that specific appropriation requests from Congress are not generally required for projects within the category of special projects and continuing authorities. Nevertheless, where the impact is of such significance that an impact statement is required, these statements should be made available to the Congress so that they may take specific action regarding the impact, if they so choose. The Court has not directed its attention to the application of this standard to the civil duties of the Corps as they pertain to regulation of permit applications or disposal of land for port and industrial uses.
[327] This requirement also appears to be implicit in the various applicable guidelines. See, e.g., CEQ Guidelines งง 5(a) (i), 10(c), 36 Fed.Reg. 7724-26 (1971); Proposed EPA งง 6.23(a), (d), 37 Fed. Reg. 881 (1972); DOD Guidelines, supra, note 85, at ง 8.
[328] The Corps regulations do indicate that impact statements are transmitted to the CEQ by the office of the Secretary of the Army. See note 326 supra. There is no indication that any review is had.
[329] See notes 2-5 supra.
[330] See notes 88-91 supra and accompanying text.
[331] See, gen., WALLISVILLE EIS, supra note 9, at 27a-34. The justification is extensively reworked over earlier drafts. See Corps Environmental History, supra note 82, Incl. 5 at 5-6, Incl. 10 at 6-8. Of particular interest is the following statement in the impact statement:
Based on the best available information, there are over 300,000 acres of water and intertidal marsh in Galveston Bay estuarine system capable of sustaining estuarine animals, and this project will eliminate about 2.4 percent of this acreage.
WALLISVILLE EIS, supra, at 32. The suggestion is that the project would affect commercial fishing by only about 2.4 percent. This particular comment is not found in the Corps' Environmental History, thus was apparently prepared sometime after September 23, 1971. See Corps Environmental History, supra, at 11.
[332] Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 325 F. Supp. 749, 760 (E.D.Ark.1971) ("Note: The defendants did not send to Mr. Wood's office, [Bureau of Outdoor Recreation] prior to the hearing on the merits, a copy of their second impact statement.")
[333] Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 170, 172 (D. D.C.1972); see also note 230 supra and accompanying text.
[333a] See page 1382 infra.
[334] Joskow, Cost-Benefit Analysis for Environmental Impact Statement, 91 Pub. Util.Fort. 21, 22 (1973). See also defendant Corps of Engineers' Answers to Interrogatories 40(a)-(e).
[335] 33 U.S.C.A. ง 701a. See Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 923 n. 7 (N.D.Miss.1972). This provision originated as Act of June 22, 1936, 49 Stat. 1570. See also Box 7, Item 143, "List of Statutes, Documents or Guidelines Bearing on Cost-Benefit Analysis Civil Works Projects."
[336] See, e. g., Environmental Defense Fund, Inc. v. Corps of Engineers of the U.S. Army, 348 F.Supp. 916, 924-925 (N.D. Miss.1972); Conservation Council of North Carolina v. Froehlke, 340 F.Supp. 222, 226 (M.D.N.C.1972); Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 325 F.Supp. 728, 754-755 (E.D.Ark.1970).
[337] H.Rep.No.91-378, 91st Cong., 1st Sess., U.S.Cong. & Admin.News, pp. 2751, 2760 (1969).
[338] H.Rep.No.92-1475, 92d Cong., 2d Sess., 27-28 (1972) [Box 10, Item 182b].
[339] Calvert Cliffs' Coordinating Committee v. Atomic Energy Commission, 146 U.S. App.D.C. 33, 449 F.2d 1109, 1115 (1971). See also note 219 supra and accompanying text.
[340] Corps' B/C Tabulations, supra note 114.
[341] WALLISVILLE EIS, supra note 9, at 1.
[342] H.Doc.No.364 ง 3, supra note 4, at 4-5.
[343] See, e. g., 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1407.
[344] Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F. Supp. 916, 924 n. 10 (N.D.Miss.1972).
[345] Letter from Dale Miller, Executive Vice President, Intracoastal Canal Association of Louisiana and Texas, to Col. R. G. West, Fort Worth District Engineer, Army Corps of Engineers, Dec. 18, 1961, at 2 [Box FW, Item q, at U-40].
[346] The standard of judicial review is discussed at notes 167-177 supra and accompanying text.
[347] WALLISVILLE EIS, supra note 9, at 94.
[348] See 115 Cong.Rec. (Part 30) 40420 (1969) (support of ง 102(2)(B), section-by-section analysis of S. 1075 as reported to the Senate), quoted in Environmental Defense Fund, Inc. v. Corps of Engineers of U.S. Army, 348 F.Supp. 916, 928 n. 18 (N.D.Miss.1972).
[349] Department of the Army Circular No. 1120-2-56 App. B, at B-3 (Sept. 25, 1970) ("Investigation, Planning and Development of Water Resources, Preparation and Coordination of Environmental Statement"). [Box 5, Item 96].
[350] See, gen., 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 3-15. The 1965 Trinity Project study used contingency margins of 25 percent. See, e. g., H.DOC.NO. 276, App. VI (1965), supra note 3, at 5, 97-102, 122-136, 147-149, 153-155, 158-162. The 1968 reevaluation study used 20 percent margins. H.DOC.NO.364, App. I (1968), supra note 4, at 74.
[351] Army Corps of Engineers' Answer to Interrogatory No. 40(j). This appears to be little change in practice since 1941 when trees were considered in terms of being a paper mill resource. H.DOC.NO. 403 ง 4 (1941), supra note 2, at 104.
[352] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 20-21, 26, 27.
[353] Id. at 21.
[354] Id. at 22-23.
[355] Id. at 27-28.
[356] Id. at 21.
[357] See note 74 supra and accompanying text.
[358] Corps' Memo from Brigadier General C. H. Dunn, Southwest Division Engineer, to Board of Engineers for Rivers & Harbors, March 6, 1963, at 4 [Box FW, Item w at B-122].
[359] The Corps refers to a study by the Texas Parks & Wildlife Department, not in the present record, which reportedly rates canoe type activities by annual users as 23rd on a scale of 24. Corps' Response to Donald Smith, supra note 31, at 10. The Corps also reported that recreational surveys for the project at the time of the investigation found no major identifiable use of the river for the type of activities described. The Court has been unable to locate any references to such surveys in the record.
[360] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 22 (Table 1), 23.
[361] Id.
[362] 1971 House Subcomm. Hearings ง 5, supra note 15, at 1640 (Lakeview Reservoir).
[363] See note 350, supra and accompanying text.
[364] Telephone conference with Gloria Conway, U.S. Bureau of Labor Statistics, Dallas, Texas, January 19, 1973. National statistics based on fiscal years 1968 through 1971. Statistics for Dallas area based on calendar years 1968 through 1971. Figures for 1972 were not yet available.
[365] 1973 House Subcomm. Hearings ง 5, supra note 17, at 1618.
[366] The method of Congressional appropriation has clearly begun involving environmental considerations. See, e. g., S.Rep. No.92-1199, 92d Cong., 2d Sess., 35 (1972) [Box 10, Item 182d]. The public works appropriation bill to which this section referred was vetoed by the President on October 27, 1972, because Congress was exceeding the President's recommended ceiling on spending.
[a] H.DOC.NO.276 ง 1, supra note 3, at ix.
[c] 1970 Sen. Subcomm. Hearings ง 2, supra note 14, at 520.
[373] Id.
[e] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1485.
[367] 1972 Sen. Subcomm. Hearings ง 1, supra note 16, at 1608.
[374] 1973 Sen. Subcomm. Hearings ง 2, supra note 17, at 1408.
[] H.DOC.NO.215 ง 3, supra note 5, at 5.
[] 1966 Sen. Subcomm. Hearings ง 1, supra note 10, at 165.
[] 1967 Sen. Subcomm. Hearings ง 1, supra note 11, at 460.
[e] 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 608.
[375] 1969 Sen. Subcomm. Hearings ง 1, supra note 15, at 118.
[383] 1970 Sen. Subcomm. Hearings ง 2, supra note 14, at 588.
[e] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1552.
[376] 1972 Sen. Subcomm. Hearings ง 1, supra note 16, at 1665.
[384] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1464.
[368] Corps' Status Report to Dec. 31, 1972 [Box 7, Item 145-1].
[377] 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 605.
[385] Id.
[369] 1969 Sen. Subcomm. Hearings ง 1, supra note 13, at 116.
[378] 1970 Sen. Subcomm. Hearings ง 2, supra note 14, at 583.
[386] 1971 Sen. Subcomm. Hearings ง 3, supra note 16, at 1548.
[370] 1972 Sen. Subcomm. Hearings ง 1, supra note 16, at 1662.
[379] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1460.
[387] 1970 House Subcomm. Hearings ง 6, supra note 14, at 494.
[371] Id.
[380] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1508.
[388] 1972 Sen. Subcomm. Hearings ง 1, supra note 16, at 1632.
[372] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1436.
[381] 1970 House Subcomm. Hearings ง 6, supra note 14, at 505.
[389] Id.
[382] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1506.
[] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1528.
[] Id.
[] 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 582.
[] Id.
[] 1970 House Subcomm. Hearings ง 6, supra note 14, at 507.
[] Id.
[] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1511.
[] 1973 Sen. Subcomm. Hearings ง 3a, supra note 17, at 232.
[] 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1501.
[] Id.
[] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1428.
[] Id.
[] 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 664.
[] Id.
[] 1973 Sen. Comm. Hearings ง 2, supra note 17, at 1544.
[] Id.
[] Corps' B/C Tabulations, supra note 114.
[] H.Doc.No.276, supra note 3, ง 2 at xv, ง 1 at x. See also notes 56-57 supra and accompanying text.
[] Testimony of General Koisch. 1970 Sen. Subcomm. Hearings, ง 5, supra note 14, at 6981. See also id. at 5530.
[] H.Doc.No.364 (1968), supra note 4, ง 3 at 3, ง 4 at 15, 27, 28; see also, 1972 Sen. Subcomm. Hearings, supra note 16, ง 2 at 1449, 1451; ง 4 at 257.
[] Discounting is discussed briefly at note 334 supra and accompanying text.
[] Authority is derived from 18 C.F.R. ง 704.39. For a review of the controversy see: 1972 Sen. Subcomm. Hearings ง 2, supra note 16, at 1447, 1450-51; 1971 Sen. Subcomm. Hearings ง 1, supra note 15, at 432, 461; Corps' Response to Donald Smith, supra note 31, at 6. This same matter has been raised in at least one other case. Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F.Supp. 749, 761 (E.D.Ark.1971). The record reflects that different interest rates are used for federal costs than are used for non-federal costs. H.Doc.No.276, App. VI (1965), supra note 3, at 1, 6, 157, 163.
[] WALLISVILLE EIS, supra note 9, at 1; 1972 Sen. Subcomm. Hearings ง 4, supra note 16, at 257-58. See also defendant Corps of Engineers' Answer to Interrogatory No. 40(e).
[] 1973 Sen. Subcomm. Hearings ง 4, supra note 17, at 43.
[] 1972 Sen. Subcomm. Hearings ง 4, supra note 16, at 257-58. See also note 79 supra.
[] S.Rep.No.92-1199, 92d Cong., 2d Sess., 3 (1972) [Box 10, Item 182d]. See also S.Rep.No.92-923, 92d Cong., 2d Sess., 2-3 (1972) (Senate Committee on Appropriations) [Box 8, Item 158]; H.Rep. No.92-1151, 92d Cong., 2d Sess., 5-6 (1972) (House Committee on Appropriations) [Box 8, Item 158b].
[] H.Rep.No.92-1582, 92d Cong., 2d Sess., 46 (1972) (Explanatory Comment to ง 72 of the Flood Control Act of 1972, subsequently vetoed by the President, which provided for no change in the current interest rate formula.) [Box 10, Item 182a].
[] See notes 146-155 supra and accompanying text.
[] 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 581. See also note 447 infra and accompanying text.
[] H.Doc.No.276, App. V (1965), supra note 3, at 21. This document was apparently printed as Sen.Doc.No.97, Supp. 1, and prescribed values ranging from $0.50 to $1.50 for general recreation. 1971 House Subcomm. Hearings ง 5, supra note 15, at 1639.
[] For example, benefits for Lakeview Reservoir in 1970 were calculated on the basis of $.50 for general visitors and $1 for sports fishermen and hunters. In 1971, when the total cost increased, benefits were recalculated at the rate of $1 for general visitors, sport fishermen and nature students, $2 for sports hunters and $3 for waterfowl hunters. Id. at 1640. The basic forms of "recreation" to which values are apparently attached includes sports fishing, hunting, picnicking, water sports and other outdoor activities. See, e. g., H.Doc.No.215 ง 5 (Wallisville 1961), supra note 5, at 49. Reportedly recreation benefits do not attempt to include "intangible" benefits, i. e., economic gains due to pre-visitation expenditures, such as purchase of boats, water sports equipment, hunting equipment and the like. Nor are benefits accruing to the general well being, health and mental conditioning resulting from recreation at a particular project included. Id., ง 6 at 75. Wallisville rates are noted at note 431, infra.
[] Id. at 49; defendant Corps of Engineers' Answer to Interrogatory No. 40(f). 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 23-25. See also 1968 Sen. Subcomm. Hearings ง 1, supra note 12 at 580; 1971 H. Subcomm. Hearings ง 5, supra note 15, at 1633, 1639. The Corps determined that the demand for outdoor recreation in the Trinity Project was increasing due largely to six factors: (1) increased urbanization, (2) increasing numbers of older persons with time for outdoor recreation, (3) larger than average increases in young persons not yet in the labor force, (4) steady growth in per capita income, (5) improved travel facilities, and (6) increases in leisure time. H.DOC. NO. 276, App. V (1965), supra note 3 at 4-6.
[] See 1968 Sen. Subcomm. Hearings ง 1, supra note 12, at 580; 1971 House Subcomm. Hearings ง 5, supra note 15, at 1633, 1639; 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 23.
[] WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 5. The procedure used by the Corps for establishing the visitation benefits appears to be as follows:
According to procedures contained in "Proposed Supplement No. 1, Evaluation Standards for Primary Outdoor Recreation," the designation of a unit value per recreation day is based on three major factors, as follows: (1) the class of recreation, (2) the quality of recreation, and (3) the degree to which opportunities to engage in recreation activities are available. The class of recreation which will be available will be of a general nature, such as warm water fishing and small game and waterfowl hunting. The fish and wildlife habitat of the Wallisville area indicates that success in hunting and fishing should range from average to good. Access to the reservoirs considered to be convenient to most people residing within the 50 mile zone of influence. The service facilities planned for construction at the reservoir are considered to be adequate for the proposed hunting and fishing demand. Based on the above considerations, the unit value per visitor day is established at $1 per visit for hunters and fishermen.
1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 23.
[] See, gen., 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6; WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7.
[] See, e. g., H.Doc.No.276, App. V (1965), supra note 3, at 5-15; WALLISVILLE DESIGN MEMO NO. 2A (Recreation 1965), supra note 7, at 12-13.
[] See, e. g., H.Doc.No.276, App. V (1965), supra note 3, at 3-4, 6, 8 (Figure 2), 9-12, 14.
[] H.Doc.No.215 ง 5 (Wallisville 1961), supra note 5, at 75; see also note 431 supra.
[] See, e. g., H.Doc.No.276, App. V (1965), supra note 3, at 4-5, 16-19. Corps reservoirs to be built in conjunction with the Lakeview, Aubrey, Garza-Little Elm, and Grapevine components of the Trinity Project, collectively estimated at attacting 15 million visitors annually, are all approximately within 50 miles of one another and the triangle of cities of Dallas-Fort Worth-Denton. On the other hand, the Tennessee Colony Reservoir Project, estimated to attract 6 million visitors annually, is located in an area with a combined urban and rural population of approximately 550,000. Id. at 11.
[] See note 250 supra and accompanying text.
[] See, e. g., United States Government Organization Manual 1972/73 250, 256-58, 263-64.
[] 1972 House Subcomm. Hearings ง 5, supra note 16, at 571 (Percentage computed from testimony). In 1965 recreation construction costs as reported to Congress only totaled 3.8 percent of the total first costs. H.Doc.No.276, App. VI (1965), supra note 3, at 101, 102.
[] See 1968 House Subcomm. Hearings ง 1, supra note 12, at 582; 1972 House Subcomm. Hearings ง 5, supra note 16, at 571.
[] 1 WALLISVILLE GEN. DESIGN MEMO NO. 1, App. C (1965), supra note 6, at 1.
[] Corps B/C Tabulations, supra note 114. When Congressional approval was sought in 1961, the estimated total federal costs invested in construction and operation of recreational facilities at Wallisville equaled 24 percent of the total expenditures, while the annual benefits attributed to recreation were 38 percent. H.Doc.No.215 ง 4 (Wallisville 1961), supra note 5, at 13-14.
[] H.Doc.No.276, App. VI (1965), supra note 3, at 105 n. 1.
[] Id. at 108.
[] the impact statements refer to the creation of outdoor recreational opportunities, the defendants do not "formally" claim recreational benefits as part of the benefit-to-cost ratio.
Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 325 F. Supp. 749, 759 (E.D.Ark.1971).
[] Claimed recreation benefits rose from $2,025,000 annually to $7,345,000. 1971 House Subcomm. Hearings ง 5, supra note 15, at 1632-33. See also 1971 Sen. Subcomm. Hearings ง 3, supra note 15, at 1509-14.
[] 1971 Sen. Subcomm. Hearings ง 3, supra note 16, at 1504-05; see also, 1972 House Subcomm. Hearings ง 5, supra note 17, at 571; 1968 Sen. Subcomm. Hearings ง 1, supra note 13, at 580-81.
[] Testimony of Donald Smith, Assistant Professor of Economics at Southern Methodist University. 1972 Sen. Subcomm. Hearings, ง 2, supra note 16, at 1451-52.
[] Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 836 (1972).
[] Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 348 F. Supp. 916, 933 (N.D.Miss.1972).
[] Id. at 940.
[] See, e. g., Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 167, 169 (D.D.C.1971), aff'd 148 U.S.App.D.C. 5, 458 F.2d 827 (1972); Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 331 F.Supp. 925, 927 (D.D.C.1971); Environmental Defense Fund, Inc. v. Corps of Engineers of U. S. Army, 324 F.Supp. 878, 883 (D.D.C. 1971).
[414] Total Federal Cost (Corps of Engineers), subject to partial reimbursement by State of Texas or others.
[415] Total projected cost estimate at time of requesting Cong. approval.
[416] Component of Trinity River Basin Development Project, separately funded.
[417] Component of Basin Development Projetc, originally included in total.
[418] Figure not supplied in record. Amount interpolated by averaging total change between supplied figures indicated over period of time for which figures are missing. Accompanying percentages based upon the interpolated figure.
[414] Total Federal Cost (Corps of Engineers), subject to partial reimbursement by State of Texas or others.
[415] Total projected cost estimate at time of requesting Cong. approval.
[416] Component of Trinity River Basin Development Project, separately funded.
[417] Component of Basin Development Projetc, originally included in total.
[418] Figure not supplied in record. Amount interpolated by averaging total change between supplied figures indicated over period of time for which figures are missing. Accompanying percentages based upon the interpolated figure.
[414] Total Federal Cost (Corps of Engineers), subject to partial reimbursement by State of Texas or others.
[415] Total projected cost estimate at time of requesting Cong. approval.
[416] Component of Trinity River Basin Development Project, separately funded.
[417] Component of Basin Development Projetc, originally included in total.
[418] Figure not supplied in record. Amount interpolated by averaging total change between supplied figures indicated over period of time for which figures are missing. Accompanying percentages based upon the interpolated figure.
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573 F.Supp. 896 (1983)
INGRAM RIVER EQUIPMENT, INC., Plaintiff,
v.
POTT INDUSTRIES, INC., Defendant.
No. 79-947 A (D).
United States District Court, E.D. Missouri.
September 30, 1983.
*897 *898 Goldstein & Price, Elmer Price, St. Louis, Mo., for plaintiff.
Thompson & Mitchell, Mary M. Bonacorsi, W. Stanley Walch, St. Louis, Mo., for defendant.
MEMORANDUM
WANGELIN, District Judge.
This matter is before the Court for a decision after a twelve-day trial on the merits. Since this is an admiralty case and within the Court's maritime jurisdiction under Rule 9(h) of the Federal Rules of Civil Procedure, and 28 U.S.C. § 1333, the Court heard the evidence without a jury. After considering the pleadings, testimony of the witnesses, stipulations of the parties and the various memoranda submitted on behalf of the respective parties, the Court makes the following findings of fact and conclusions of law in accordance with Rule 52 of the Federal Rules of Civil Procedure. Any finding of fact equally applicable as a conclusion of law is adopted as such and, conversely, any conclusion of law applicable as a finding of fact is adopted as such.
Findings of Fact
1. Plaintiff Ingram River Equipment, Inc. (hereinafter Ingram) was and is incorporated under the laws of the State of Delaware having its principal place of business in the State of Tennessee. Defendant Pott Industries, Inc. (hereinafter Pott) was and is incorporated and has its principal place of business in the State of Missouri.
2. Pott is engaged in the business of building boats and barges through its St. Louis ship division. The barges which are the subjects of this action were operated by Ingram Barge Company, a division of Ingram Industries, Inc., under a bareboat charter. Ingram Barge Company has assigned its claim for damages in this cause to plaintiff Ingram.
3. On March 21, 1973, Ingram and Pott entered into a written contract for the construction of four tank barges. The price of construction for the barges was stated as One Million Nine Hundred Sixty Five Thousand Two Hundred Dollars subject to certain escalation charges.
4. The contract originally provided that only one barge, the IB3001B, would have a steam coil system for heating heavy liquid cargo. However, the parties later agreed to include such a system in all four barges.
5. Article IX of the contract contained warranties made by Pott. It provides, in pertinent part, that the barges will: (1) conform to the requirements of contract documents, the U.S. Coast Guard and the American Bureau of Shipping; (2) be of good workmanship and quality; and (3) be free of all defects. The warranty extended for six months after delivery to Ingram.
6. In March, 1975, Pott submitted plans and drawings (including bills of materials) to Ingram providing for the fabrication of the steam coil system with a combination of two-inch Sch. forty and Sch. eighty A.S. T.M. 53 furnace-weld (type "F" pipe), sometimes referred to as "butt weld pipe". Ingram approved the bills of materials calling for the use of furnace-weld pipe. The additional cost of installing the pipe was One Hundred Twenty Two Thousand Three Hundred Dollars ($122,300). The total price paid by Ingram to Pott, including extras and changes for the four barges was Two Million Three Hundred Ten Thousand Four Hundred Nineteen Dollars and Seventeen Cents ($2,310,419.17).
7. The evidence indicates that seamless pipe is considerably stronger than furnace-weld pipe. The A.S.T.M. A-53 standards for two-inch Sch. forty and Sch. eighty furnace-weld pipe required such pipe to *899 withstand hydrostatic fluid test pressures of up to one thousand p.s.i.g. (per square inch) and thirteen hundred p.s.i.g. respectively. The A.S.T.M. A-53 standards for two-inch Sch. forty Grade A seamless pipe require such pipe to withstand hydrostatic test pressures up to twenty three hundred p.s.i.g. The A.S.T.M. A-53 standards for two-inch Sch. forty Grade B seamless pipe requires such pipe to withstand hydrostatic test pressures up to twenty five hundred p.s.i.g.
8. The parties dispute whether defendant represented to plaintiff that furnace-weld pipe would be "just as good as" seamless pipe. The Court finds, however, that Ingram relied upon Pott's reputation as a shipbuilder and that Pott held itself out as an expert in this field. Additionally, Article IV(a) of the contract provides in pertinent part:
The detailed manner and method of performing work shall be under the control of seller (Pott), buyer (Ingram) being interested only in the results obtained.
9. Seamless and furnace-weld pipes of the same size and made from the same grade of steel are manufactured differently. Seamless pipe is manufactured in a continuous circumference without a seam; furnace-weld has a vertical seam which is joined together by welding in the manufacturing process. The use of both types of pipe and the fabrication of steel coils complies with the regulations of the United States Coast Guard applicable to the design and construction of steam coil heating systems in tank barges. Generally, seamless is more expensive than furnace-weld pipe.
10. Both Ingram and the United States Coast Guard approved the final bills of materials, plans and drawings of the steam coil heating systems in the barges. The heating systems were then installed by Pott in each of the four Ingram barges in conformity with the final material specifications, plans and drawings. An Ingram representative was present at Pott's shipyard during construction of the four barges.
11. Prior to delivery, Pott hydrostatically tested the steam coils in each barge and then purged the coils. The United States Coast Guard inspected each barge and issued its Barge Certificate of Inspection for each barge.
12. In August, 1977, splits, cracks and leaks were discovered in a number of the steam coils when one of the barges, IB2702T, was at the Avondale shipyards for hull repairs. The coils had not been used prior to this time because the barges only carried "light" cargo, such as gasoline, that did not require heat to be used to facilitate the pumping process. Ultimately, thirty five splits were found in the coils of barge IB2701L, seventy one splits in the coils of barge IB2702T, and fifty seven splits were found in the coils of a barge IB3001B. Splits were not found in the coils of the IB1501B at that time, although some splits were discovered later. Pott sent representatives to Avondale to examine the pipe after the steam coils had been repaired.
13. Following the initial repairs, Ingram continued to experience problems with leakage from the steam coils. In the Fall of 1978, Ingram decided to replace the steam coils in all four barges and to make certain design changes. Ingram contracted for the work to be done at Avondale after obtaining bids from Pott and Avondale. The barges were kept at Avondale from December 5, 1978 until February, 1979 for replacement of the steam coil system.
14. The parties agree that water freezing in the coils was most probably the immediate cause of the splits, cracks and leaks discovered in the steam coil systems of the Ingram barges. In normal operations, steam is introduced into tank barge heating coils to heat heavy liquid cargo sufficiently to permit the cargo to flow freely for pumping. Following the introduction of steam into the coils, normal operating procedures required that the coils be purged in order to remove the water accumulated during steaming. The design of the Ingram barges provided for purging *900 by means of blowing compressed air through the coils to discharge the water. Water is also introduced from time to time in steam coils for testing. At other times coils are tested by introduction of air.
15. Both parties have introduced a substantial degree of expert testimony. The expert witnesses have performed numerous tests with different models of the steam coil heating system under a variety of conditions. Despite this impressive array of technical expertise, however, the central issue remains what quantity of water was necessary to rupture the furnace-weld pipe as it was designed in defendants' steam coil heating system.
16. Defendant argues that the pipes had to be substantially full of water before ruptures occurred. If this condition existed, the evidence indicates that regardless of the design of the system or whether seamless or furnace-weld pipe was utilized, the pipes would have burst. Further, defendant contends that the only party possibly responsible for filling the system with water would be the plaintiff. This is necessarily so because defendant hydrostatically tested the pipes only once and both parties have stipulated that the pipes were purged at that time. However, the Court finds that the extent and efficiency of the purging process was never tested by defendant.
17. Plaintiff's position is that the pipes need not have been substantially filled with water to rupture. Plaintiff argues that a relatively small amount of water left in the system could form pockets. These pockets of water would then freeze causing a rupture. However, only that portion of the water closest to the pipes surrounded by the freezing air would freeze, while water closest to the pipes surrounded by the petroleum product would remain liquid and, therefore, harmless to the pipe. This theory explains the apparently random ruptures in the coil since the movement of the barge would cause the water to be collected at various points which would then break when exposed to the freezing temperatures. Under plaintiff's theory, the efficiency of the purging process, as well as the design of the coils, becomes critical. If the water is not sufficiently purged by compressing air through the system, the pipe will rupture. Plaintiff argues that the purging process is ineffective to remove all of the water because the compressed air simply seeks the path of least resistance and blows over the low points in the pipes. Plaintiff also contends that the design of coils decreased the efficiency of the purging process.
18. The preponderance of the credible evidence indicates that plaintiff's theory is correct. Not only does plaintiff's theory explain the random ruptures in the pipes, it also explains why further ruptures occurred only in the furnace-weld pipes after the pipes were repaired in the Avondale shipyards in 1977. Additional support for this theory is provided by the fact that Ingram experienced no further problems with the barges after recoiling the heating system with seamless pipe and implementing design changes to improve the purging process. The Court therefore finds that defendant was negligent in its design of the steam coil heating system and in its choice of furnace-weld pipe in the construction of the system.
19. With respect to the purging process itself, this Court finds that plaintiff's estimates concerning the amount of water left in the system after purging are more credible. Plaintiff's tests showed that between twenty per cent (20%) to thirty per cent (30%) of the water injected into the pipes remained after purging. The discrepancy in plaintiff's tests is explained by the fact that tests performed within the context of actual operating conditions yielded higher percentages of water retention. Defendant's tests, in contrast, were performed under optimal conditions on land, thus eliminating the rolling motion of an operating barge. Nevertheless, a number of defendant's tests revealed that water was retained in the coils. The Court therefore finds that defendant was negligent in failing to test the purging efficiency of the steam coil heating system.
*901 Conclusions of Law
The Court has jurisdiction of this cause under maritime law. It is undisputed that the steam coils split while the barges were operating on navigable waterways and employed in the business of transporting commerce. Thus, there is maritime locality and a significant relationship to a traditional maritime activity. See Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 268, 93 S.Ct. 493, 505, 34 L.Ed.2d 454, 467 (1972). This is true even though the conduct alleged is negligent construction or defective design and may have occurred ashore. Jig the Third Corp. v. Puritan Marine Ins. Underwriter Corp., 519 F.2d 171, 174 (5th Cir.1975), cert. denied 424 U.S. 954, 96 S.Ct. 1429, 47 L.Ed.2d 360 (1976).
Defendant argues that because the only damage sustained by plaintiff was economic loss, recovery should be denied. Defendant bases this contention on the holding in R.W. Murray Co. v. Shatterproof Glass Corp., 697 F.2d 818 (8th Cir.1983). In this case, after a review of Missouri law, the Eighth Circuit Court of Appeals ruled that Missouri law requires something more than economic loss, i.e., damage to the property itself to state a cause of action in negligence. The court concluded that there must be personal injury or property damage either to property other than the property sold, or to the property sold when it was rendered useless by some violent occurrence. Id. at 828-29.
Missouri law thus delineated, this Court must determine whether it should be applied in a tort action grounded in maritime law. One of the basic precepts of maritime law is that it is a federal law and, thus, should be applied in a uniform manner. Lindsay v. McDonnell Douglas Aircraft Corp., 460 F.2d 631 (8th Cir.1972). It has been held that negligent construction of a vessel states a claim under maritime law. See Jig the Third Corp. v. Puritan Marine Ins. Underwriter Corp., 519 F.2d 171 (5th Cir.1975). Moreover, a number of courts have agreed that negligent repair of a vessel states a claim for negligence under maritime law. See, e.g., General Intermodal Logistics v. Main Stream Shipyards, 666 F.2d 129 (5th Cir.1982); Alcoa S.S. Co. v. Charles Ferran & Co., 383 F.2d 46 (5th Cir.), cert. denied 393 U.S. 836, 89 S.Ct. 111, 21 L.Ed.2d 107 (1967); Houston-New Orleans, Inc. v. Page Engineering Co., 353 F.Supp. 890 (E.D.La.1972).
The Court has considered the interest of Missouri in having the contract considered under its laws, but finds that the need for uniformity in federal maritime law is overriding. Therefore, Missouri law restricting negligence actions to those situations where damages other than economic loss is alleged cannot be followed.
Plaintiff in this cause alleges that defendant negligently designed the steam coil heating system of the Ingram barges in that the coils could not be properly purged. Negligent design of a vessel states a claim under maritime law. Sears, Roebuck & Co. v. American President Lines, Ltd., 345 F.Supp. 395 (N.D.Cal. 1971). Plaintiff has also alleged that defendant failed to use proper care in the material chosen to construct the heating system, i.e., the use of furnace-weld pipe. This also has been acknowledged as stating a cause of action under maritime law. See Jig the Third Corp. v. Puritan Marine Ins. Underwriter Corp., 519 F.2d 171 (10th Cir.1975). The Court has found that plaintiff has sustained its burden of proof in this matter and, accordingly, finds for plaintiff on this count of his claim.
Plaintiff has also alleged and proven that defendant failed to adequately test the purging procedure whereby condensate was to be removed from the steam coil heating system. Defendant had this duty. Watz v. Zapata Off-shore Co., 431 F.2d 100, 119 (5th Cir.1970).
Plaintiff also contends that the Court should find defendant strictly liable in its construction of the Ingram barges. The Court cannot agree with this assertion. A number of Circuits, including the Eighth Circuit, have expressly recognized the doctrine of strict liability as a part of federal *902 maritime law. See e.g., Pan Alaska Fisheries, Inc. v. Marine Const. & Design Co., 565 F.2d 1129 (9th Cir.1977); Lindsay v. McDonnell Douglas Aircraft Corp., 460 F.2d 631 (8th Cir.1972); Shaeffer v. Michigan-Ohio Navigation Co., 416 F.2d 217 (6th Cir.1969); McKee v. Brunswick Corp., 354 F.2d 577 (7th Cir.1965). However, two elements of strict liability as it is stated in § 402(a) of the Restatement of Torts and as it has been developed in the Circuit Court decisions are that the product be unreasonably dangerous and that physical harm occur. These conditions are not extant in the present cause. Therefore, strict liability will not provide plaintiff with an alternate theory of recovery.
The second count of plaintiff's complaint sounds in contract theory. Plaintiff argues that defendant breached an implied warranty of fitness for a particular purpose. Mo. Rev.Stat. § 400.2-315 states:
Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods will be fit for such purpose.
Furthermore, any exclusion or modification of the warranty of fitness must be in writing and conspicuous. Mo.Rev.Stat. § 400.2-316.
Two provisions of the contract between the parties are particularly pertinent with regard to this count of plaintiff's claim. The first provision, in Article 4(a), states:
The detailed manner and method of performing work shall be under the control of seller (Pott), buyer (Ingram) being interested only in the results obtained.
From this provision, it is clear that plaintiff relied upon defendant's judgment in selecting suitable material for the construction of the steam coil heating system. The second provision, in Article 9 of the contract, created the warranties between the parties. It stated only that the barges would conform to certain minimum objective requirements, be of good workmanship and quality, and be free of all defects. It does not exclude any implied warranties.
Plaintiff cites Singer Co. v. E.I. du Pont de Nemours & Co., 579 F.2d 433 (7th Cir. 1978), as support for its proposition that plaintiff breached its implied warranty of fitness. In this case, the defendant, du Pont, contracted to provide plaintiff Singer with paint for an electro-disposition paint system. The paint provided failed to adequately perform its function and both the trial court and the appellate court ruled that the defendant had breached its implied warranty of fitness.
Defendant argues that Singer is not controlling in this cause because the furnace-weld pipes supplied to plaintiff were not intended for a particular purpose. The Court cannot agree with this contention. Defendant did not simply provide pipe for plaintiff, it provided pipe to be used in a steam coil heating system. Such a system requires the pipe to withstand a severe increase in temperature when the coils are heated by steam to facilitate the transfer of cargo, and a dramatic drop in temperature when the pipes are not being used and the vessel ventures into colder climates during winter. The pipe must also be able to withstand great pressure when steam is introduced into the system and when the condensate is purged from the system by means of high pressure air. The pipe therefore had to be manufactured with these characteristics in mind to adequately serve its intended purpose.
Defendant can hardly argue that it was unaware of the purpose of the pipe because defendant constructed the barges. Moreover, under the terms of the contract, defendant cannot convincingly argue that plaintiff did not rely on defendant's skill in choosing the material. Defendant's choice of material, as already noted, failed to function adequately for its particular purpose as a steam coil heating system. Thus, this Court concludes that defendant breached its implied warranty of fitness.
*903 Plaintiff also argues that defendant breached an implied warranty of merchantability. The Court disagrees. Mo.Rev. Stat. § 400.2-316, comment 9, states:
The warranty of merchantability in such a transaction, however, must be considered in connection with the next section on the cumulation and conflict of warranties. Under paragraph (c) of that section in case of such an inconsistency the implied warranty of merchantability is displaced by the express warranty that the goods will carefully comply with the specifications.
Mo.Rev.Stat. § 400.2-317(c) states:
Express warranties displace inconsistent implied warranties other than a warranty for a particular purpose.
A portion of the express warranty stated that the barges would conform to the requirements of contract documents. Thus, this express warranty would displace the warranty of merchantability, but not the warranty of fitness for a particular purpose analyzed above.
Plaintiff also brings a claim under express warranty. Plaintiff alleges that Anthony Tobin, defendant's Vice President of Sales, had stated that furnace-weld pipe was "just as good" as seamless pipe. Plaintiff argues that this statement became part of the basis of the bargain and must be considered an express warranty. Community Television Services v. Dresser Industries, 586 F.2d 637, 640 (8th Cir.1978). Defendant vigorously disputes that Tobin ever made such a statement.
The Court cannot agree with plaintiff's contention. In Community Television, the court found that a written sales catalogue circulated by the defendants and stating that its "television towers would safely withstand the maximum wind velocities and ice loads to which they are likely to be subjected", created an express warranty beyond that stated in the contract. Although somewhat analogous to the present cause, the Court cannot find that a statement allegedly made by one of defendant's officers while the barges were already being constructed could rise to the level of an express warranty. Therefore the Court does not find defendant liable under a violation of express warranty.
Plaintiff sues for the cost of the initial repairs at Avondale, the cost of the subsequent recoiling of the barges, the loss of use of the barges while they were being repaired, and for prejudgment interest.
Defendant argues that Ingram had a duty to minimize the cost of correcting the situation and cites cases in support of its proposition. Todd Shipyards Corp. v. Turbine Service, Inc., 467 F.Supp. 1257 (E.D.La.1978); Monsanto Co. v. Port of St. Louis, 350 F.Supp. 502 (E.D.Mo.1972). Defendant contends that simple repairs would have been sufficient to correct the situation. However, because the Court has found that the design and the material were negligently defective, defendant's contention is irrelevant. All of the barges would necessarily have to be recoiled to eliminate these defects.
The Court finds that plaintiff's proof for loss of use of the barges during the time that they were being recoiled at Avondale is too speculative to be awarded. Plaintiff's witness in this regard Mr. Val Slicho, Vice President in charge of Petroleum Sales and Transportation, testified that Ingram had received inquiries for rate quotes on a New Orleans to Pittsburgh trip. Based on these inquiries and using the "going rate" of 5.5 mils per ton miles, Mr. Slicho arrived at the figure for loss of use.
The standard for determining loss of use is too rigid to warrant allowing a judgment on such speculative opinion. In Cargill, Inc. v. Taylor Towing Service, Inc., 642 F.2d 239 (8th Cir.1981), the court noted that:
To warrant a recovery for lost profits, the plaintiff must present proof sufficient to bring the issue outside the realm of conjecture, speculation or opinion unfounded on definite facts. (citations omitted). As an element of recoverable damages, the sufficiency of the evidence *904 of lost profits is dependent upon whether the financial information contained in the record is such that a just or reasonable estimate can be drawn.
Id. at 241. The record simply fails to offer sufficient proof in this cause to justify an award for loss of use.
Prejudgment interest will be awarded. Prejudgment interest is awarded whenever damages lawfully due are withheld absent a showing of exceptional circumstances that would justify the refusal. Id. at 242.
In conclusion, the Court finds that plaintiff has proven its claim in maritime tort for negligent design of the steam coil heating system; negligent choice of material for construction of the system; negligent failure to test the purging capacity of the system; and for a breach of the warranty of fitness for a particular purpose. Accordingly, judgment will be for plaintiff.
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20 F.3d 1396
John HARRIS, Plaintiff-Appellant,v.CITY OF AKRON, et al., Defendants-Appellees.
No. 93-3056.
United States Court of Appeals,Sixth Circuit.
Argued Dec. 7, 1993.Decided April 6, 1994.Rehearing Denied April 29, 1994.
Allen C. Carter, Sr. (argued and briefed), Canton, OH, for plaintiff-appellant.
Kathryn W. Pascover (argued and briefed), Director of Law, Akron, OH, for defendant-appellee.
Before: RYAN and SUHRHEINRICH, Circuit Judges; and LIVELY, Senior Circuit Judge.
LIVELY, Senior Circuit Judge.
1
We must decide in this case whether the owner of real estate that was demolished by city officials is foreclosed from recovering damages in an action under 42 U.S.C. Sec. 1983 because of his failure to plead and prove that no adequate state law remedy existed by which he could pursue his claim. Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981); Vicory v. Walton, 721 F.2d 1062 (6th Cir.1983), cert. denied, 469 U.S. 834, 105 S.Ct. 125, 83 L.Ed.2d 67 (1984). The district court granted summary judgment for the defendants, and we now affirm on different reasoning than that of the district court.
I.
2
Because our decision turns on determination of whether the plaintiff carried his burden of demonstrating the existence of a genuine issue of material fact, we recite the facts and prior proceedings in some detail.A.
3
On July 17, 1990, at about 11:30 a.m., the City of Akron Building Inspection Office received a call from Ohio Edison Company, an electric utility, informing it of a potential building hazard at 488 Wooster Avenue in Akron. The defendant John Hymes, chief building inspector, sent defendant Greg Burgoon, Akron's superintendent of building, to the reported location to investigate. Burgoon found a two story brick building that he believed was dangerously close to falling onto Wooster Avenue and a neighboring occupied home. The upper east wall of the building had moved inward four to five feet, and he thought the roof was collapsing.
4
Burgoon immediately called Hymes, who drove to the Wooster Avenue site to make a personal inspection of the building. After examining the building Hymes determined that an emergency demolition was necessary, as provided by Akron City Code Sec. 190.705:
Emergency Work
5
In case there shall be, in the opinion of the Superintendent of Building Inspection, actual and immediate danger of failure or collapse of a building or structure or any part thereof so as to endanger life or property, he shall cause the necessary work to be done to render the building or structure or part thereof temporarily safe. If the building or structure is in such a state of decay that it is impracticable to be repaired, he may order the building or structure razed or demolished.
6
The city placed a call to the owner of the building, plaintiff John Harris. Unfortunately, Harris was not at his office; Hymes left an emergency message with Harris' secretary to call the Building Inspection Office immediately. Jim Gardner of the Akron Building Department also contacted Steve Nome, Supervisor of Sanitarians and acquaintance of John Harris, in an attempt to locate Harris. Nome advised Gardner of two alternative addresses where Harris might be found. In fact, Harris was present at one of the two addresses provided by Nome, but no one attempted to contact him at either address.
7
Instead, Hymes decided that the condition of the building required immediate action, and initiated plans to destroy the building partially. Bids were hastily made, and the emergency demolition began at 4:10 p.m. on July 17, the same day that the damage to the building was reported to the building department. Although Hymes originally planned to remove only the second story of the building, he felt that the entire structure became unstable after a few blows from a wrecking ball and thus he decided to raze the entire building.
8
The owner, Harris, was using the Wooster Avenue building as a storage warehouse for various materials when it was destroyed. After the demolition, Harris hired an expert in construction and building diagnostics, Jack Bergson, to make an analysis of the building department's decision to destroy the building. Bergson prepared a lengthy affidavit after reading the depositions of Nome, Hymes, Gardner and Burgoon and other documents pertaining to the demolition, viewing photographs in the Akron City Building Department purporting to show the condition of the Harris building before, during and after demolition, and making an on-site inspection of the lot where the building had stood. The plaintiff filed this affidavit in opposition to the defendants' motion for summary judgment.
9
In his affidavit Bergson stated that the city officials made their decision without ever entering the building or viewing the roof from any point other than ground level. Their hasty decision was made, according to Bergson, based on a "examination of the building [that] did not remotely meet minimum standards for ascertaining structural worthiness."
10
The affidavit then described in detail readily available techniques by which the true condition of an apparently damaged building can be determined. Examples of methods for learning the actual condition of a roof without risking injury are use of mirrors from a step ladder and use of an elevated bucket called a "cherry picker." With respect to the wall that appeared to have moved, Bergson stated that temporary support by shoring is frequently used while a more complete inspection takes place. To protect the public during shoring and inspection, the city could have erected a temporary canopy over the sidewalk. Bergson's affidavit stated that the city had the necessary materials available to make this more thorough inspection.
11
Based on his study of the photographs and documents, Bergson stated in his affidavit that there was no evidence that the roof was collapsing when the demolition order was given. Further, he stated his opinion that the basis upon which Burgoon gave the order for total demolition of the building was flawed. The affidavit disputed Burgoon's basis for finding that the building's reaction to efforts at partial destruction indicated that it was on the verge of a total collapse. Bergson pointed to contradictions in statements of various city officials as to the significance of several facts on which Burgoon relied for his final decision, and gave his opinion of the conclusions properly to have been drawn from the existence of these conditions.
B.
12
Harris originally filed a pro se suit, but ultimately hired an attorney who was permitted to file several amended complaints. In the second amended complaint Harris alleged the city deprived him of several constitutional rights by demolishing his building and sought damages under 42 U.S.C. Secs. 1983 and 1985 plus attorney fees. Specifically, in his Sec. 1983 claim he alleged that the city and officials named as defendants, acting under color of state law, took his property for a public purpose without paying any compensation, in violation of the Fifth Amendment, and deprived him of his property without due process and denied him equal protection of the laws, in violation of the Fourteenth Amendment. His Sec. 1985 claim charged a conspiracy to deprive him of his property.
13
The defendants filed a motion to dismiss or, in the alternative, for summary judgment. The district judge referred the matter to a magistrate judge. In his report the magistrate judge recommended dismissing the Fifth Amendment claim as premature and the conspiracy claim for failing to contain required allegations of racial or other class-based discrimination. The magistrate judge recommended that the motion for summary judgment be denied and that the plaintiff be permitted to litigate the due process and equal protection claims.
14
The district court agreed with the recommendations respecting the Fifth Amendment and conspiracy claims, but concluded that the defendant was entitled to have the due process and equal protection claims dismissed as well. Accordingly, the district court granted summary judgment in favor of the defendants on all claims. The district court found that Harris had failed to satisfy the legal requirements for recovery on either his substantive due process claim or the equal protection claim. With respect to the procedural due process claim, the court found that the plaintiff was seeking recovery for a random and unauthorized act of city officials and that recovery was foreclosed because Harris had failed to plead and demonstrate that no state postdeprivation remedy adequate to compensate his loss existed.
II.
15
On appeal the plaintiff does not contest dismissal of the Sec. 1985 conspiracy claim or the equal protection claim. Although he does not contest the dismissal of the Fifth Amendment "taking" claim directly, he does argue that his substantive due process claim incorporated elements of an unlawful taking of his property without just compensation. Nevertheless, on appeal Harris seeks reversal only on the ground that the district court erroneously granted summary judgment on his procedural and substantive due process claims.
A.
16
Harris maintains that the district court erroneously treated his action as one for damages suffered because of random and unauthorized acts of city officials. He points out that he has consistently contended that the individual defendants acted under an established procedure of the city. His procedural due process complaint is that the defendants failed to give him notice of their intent to destroy his building and an opportunity to contest their determination that the building was a nuisance or a threat to public safety or health. According to Harris, the affidavit of his expert raised a genuine issue of material fact as to whether the condition of the building on July 17 was such that the defendants properly proceeded under the emergency provisions of code Sec. 190.705. He contends that the defendants should have proceeded under code Sec. 190.701, which requires that unsafe buildings be removed or repaired and code Sec. 190.702, which provides:
17
Sec. 190.702 INSPECTION; NOTICE OF UNSAFE BUILDING; SERVICE, SECURING VACANT STRUCTURE.
18
(A) The Superintendent of Building Inspection shall examine every building or structure reported as dangerous, unsafe structurally, or constituting a fire hazard; and he shall cause the report to be filed in a docket of unsafe structure, the nature and estimated amount of damages, if any, caused by collapse or failure.
19
(B) If the person to whom such notice and order is addressed cannot be found within the city after diligent search, then such notice and order shall be sent by certified mail to the last known address of such person. A copy of the notice shall be posted in a conspicuous place on the premises and posting shall be deemed adequate service.
20
Harris argues that the depositions of Burgoon and other city officials clearly contradict each other on the critical issue of whether an emergency existed. Only a fact-finder, after considering all the evidence, could conclude that Hymes and Burgoon reasonably treated the condition of the building as an emergency requiring demolition without prior notice. And if the demolition were found to have been properly carried out as an emergency under code Sec. 190.705 the plaintiff would be required to seek damages in a postdeprivation state court action. According to Harris, the district court erroneously analyzed the case and granted summary judgment on the procedural due process claim when there was an unresolved issue of material fact. He argues that the district court assumed that an emergency existed, but the essence of the plaintiff's procedural due process argument is that there was no emergency. The plaintiff asserts that the Bergson affidavit put this question squarely in issue.
21
With respect to his substantive due process claim, Harris argues that the defendants acted arbitrarily and capriciously in destroying his building even though they proceeded under code provisions that are facially fair. He contends that there was no rational basis for the defendants' actions under the circumstances. He also asserts that the Fourteenth Amendment prohibition against deprivation of property by a governmental entity "implicitly contains the same basis on taking [private] property without just compensation as does the more explicit 5th Amendment."
B.
22
The defendants maintain that the district court properly granted their motion for summary judgment because the plaintiff failed to produce "specific facts" showing the existence of a genuine issue of material fact; evidence "suggesting the possibility" of such an issue is not sufficient to avoid summary judgment. Without discussing the Bergson affidavit, the defendants argue that because they followed the emergency procedure of code Sec. 190.705, in the absence of a constitutional challenge to that procedure, the plaintiff has not stated a procedural due process cause of action, but merely a non-federal claim for tort damages based on negligence.
23
Departing from the reasoning of the district court, the defendants do not argue that their actions were random and unauthorized. Rather, they contend that the emergency created a situation in which it was impossible to provide prior notice and a hearing before demolishing the building. Under such circumstances, due process does not require a predeprivation hearing if state law provides an adequate postdeprivation remedy. Ohio does provide such a remedy, they assert, by permitting an inverse condemnation action. According to the defendants, the plaintiff's conclusory allegations are not sufficient to create an issue of fact.
24
As an alternative procedural due process argument, the defendants also assert that the plaintiff's claim is not ripe for review. Because the due process claim grows out of a "taking," they argue that any deprivation is not complete until the plaintiff has sought compensation from the city and failed to obtain it. This is so, they say, because a taking by the governmental unit is not by itself a constitutional violation; it is only when the governmental body takes property and fails to compensate the owner that the taking infringes a constitutional right.
25
Answering the plaintiff's substantive due process arguments, the defendants state that their actions were not arbitrary or capricious. Indeed, they argue, they carefully followed the procedures prescribed by the city code. The defendants contend that a city may invade individual rights in the interest of public safety, health, morals, or the general welfare so long as its agents do not act arbitrarily or capriciously. Further, the defendants maintain that nothing they did in demolishing the plaintiff's building could reasonably be found to shock the conscience of a reasonable person.
III.
26
The Due Process Clause of the Fourteenth Amendment does not prohibit every deprivation by the state of an individual's life, liberty or property. Only those deprivations carried out without due process are actionable under 42 U.S.C. Sec. 1983. Generally, the process that is due before the state may deprive an owner of property includes notice to the owner prior to the deprivation and an opportunity for a predeprivation hearing.
A.
27
We now examine the exception to these general due process requirements that was the basis of the district court's decision to grant summary judgment for the defendants in the present case. In Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), the Supreme Court explicitly held that in some situations a state may satisfy procedural due process by providing "some meaningful means by which to assess the propriety of the State's action at some time after the initial taking." Id. at 539, 101 S.Ct. at 1915. When the situation necessitates "quick action" by the state or makes efforts to provide a meaningful predeprivation process impracticable, the persons acting under state authority may proceed without violating the property owner's rights so long as the state provides an adequate postdeprivation procedure. Id. Such a procedure satisfies the "fundamental requirement of due process"--an opportunity to be heard "at a meaningful time and in a meaningful manner." Id. at 540, 101 S.Ct. at 1915 (quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965)).
28
Parratt involved a tortious destruction of a state prisoner's personal property by the random and unauthorized act of a prison guard, but the rule announced by the Court was not limited to such acts. The touchstone of the Parratt rule is the impossibility or impracticability of providing predeprivation process combined with provisions for adequate postdeprivation process.
29
The Supreme Court made it clear in Logan v. Zimmerman Brush Co., 455 U.S. 422, 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982), that where state actors are following established state procedures that result in the deprivation of an individual's property, ordinarily the existence of postdeprivation remedies is irrelevant. In such cases the general due process requirements of prior notice and opportunity to be heard apply. Nevertheless, even when the defendants are acting pursuant to established procedures, if a predeprivation due process hearing is impossible or impracticable, or the necessity for quick action exists, a postdeprivation remedy may be adequate. Id. at 436, 102 S.Ct. at 1158.
30
In Zinermon v. Burch, 494 U.S. 113, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990), the Supreme Court narrowed its Parratt holding. The plaintiff in Zinermon was admitted to a state mental hospital and confined for a period of time pursuant to Florida's voluntary admission procedures. In his Sec. 1983 action he alleged that hospital doctors and administrators knew or should have known that he was incompetent to give informed consent to his "voluntary" admission. Thus, he contended, it was a denial of his procedural due process rights for the state not to use the Florida procedure for involuntary placement, which required notice and a hearing before he could be hospitalized for more than the brief time required for an evaluation.
31
The Court acknowledged that Parratt applies when postdeprivation remedies are the only ones that a state could be expected to provide because of the impossibility or impracticability of providing remedies prior to the deprivation. Zinermon, 494 U.S. at 128, 110 S.Ct. at 984-85. Parratt does not control, however, when the state provides a procedure under which it is predictable that its officials may deprive a person of a protected right. A predeprivation process for Burch, the hospitalized plaintiff, would not have been impossible or impracticable, the Court held, because the state agents could have proceeded under the involuntary commitment provisions of Florida law. The action of the state employees was not "unauthorized" in the Parratt sense because the state "delegated to them the power and authority to effect the very deprivation complained of here...." Id. at 138, 110 S.Ct. at 990. The deprivation complained of was unauthorized "only in the sense that that it was not an act sanctioned by state law, but, instead was a 'depriv[ation] of constitutional rights ... by an official's abuse of his position.' " Id. (quoting Monroe v. Pape, 365 U.S. 167, 172, 81 S.Ct. 473, 476, 5 L.Ed.2d 492 (1961)).
B.
32
This court has examined and applied Parratt, Logan, and Hudson v. Palmer, 468 U.S. 517, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984), (holding that the Parratt rule applies to intentional as well as negligent1 acts) in numerous cases, but we need consider only a few of those decisions here.
33
In Watts v. Burkhart, 854 F.2d 839 (6th Cir.1988), we held that generally where a deprivation is caused by application of established state procedures, the existence of adequate postdeprivation procedures is irrelevant. Id. at 843. In Watts a doctor argued that procedures initiated by a state agency to suspend his license to practice medicine were inadequate and therefore violated due process. The district court dismissed the procedural due process claim under the Parratt rule. We reversed, finding that the district court erred in dismissing under Parratt when the official actions were taken pursuant to established procedures and there was no showing that quick action by the authorities was essential. Id. at 843-44.
34
In Doe v. Sullivan County, Tenn., 956 F.2d 545 (6th Cir.1992), a state inmate sought damages under Sec. 1983 for injuries received when a cellmate assaulted him. The plaintiff claimed that the jail superintendent and other county officials violated the Eighth Amendment by acting with reckless disregard for his safety, thus depriving him of a protected liberty interest. We found that the district court's jury instructions on procedural due process were deficient. Quoting Zinermon, we stated, "[w]hether the postdeprivation remedies provide constitutionally adequate recourse will turn on 'whether predeprivation procedural safeguards could address the risk of deprivations of the kind ... allege[d],' ... or 'whether predeprivation safeguards would have any value in guarding against the kind of deprivation ... allegedly suffered.' " 956 F.2d at 558-59 (quoting 494 U.S. at 132 and 135, 110 S.Ct. at 986 and 988).
35
Both sides cite Bigelow v. Michigan Dept. of Natural Resources, 970 F.2d 154 (6th Cir.1992), in support of their positions. We believe this reliance is misplaced. Bigelow was a "taking" case in which the procedural due process claim was "ancillary to [the] main issue." Id. at 160. That is not the present case. The magistrate judge recommended that Harris' Fifth Amendment taking claim be dismissed and Harris did not file an objection to that recommendation. Failure to file an objection to a magistrate judge's recommendation constitutes a waiver of the right to appeal on the basis of that recommendation. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); United States v. Walters, 638 F.2d 947, 949-50 (6th Cir.1981). The matter comes to us as a "pure due process case," not as one in which the due process claims are ancillary to any other claim.
IV.
36
We review an order granting summary judgment de novo. Patton v. Beardon, 8 F.3d 343, 346 (6th Cir.1993). Summary judgment may be granted only where there are no genuine issues of material fact and the moving parties are entitled to judgment as a matter of law. FED.R.CIV.P. 56(c). The court considering a motion for summary judgment must consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," in the light most favorable to the party opposing the motion. Id.; Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The non-moving party may not rely on his pleadings alone, but must demonstrate the existence of a genuine issue for trial by pointing to "specific facts" that create such an issue. Id. at 586-87, 106 S.Ct. at 1356; Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The judge may not make credibility determinations or weigh the evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986).
V.
A.
37
The district court erred in treating the plaintiff's procedural due process claim as one for deprivation of property by reason of a random or unauthorized act of a government official. From the beginning Harris stressed that the defendants acted pursuant to established procedures but either with intent to injure his property or with reckless disregard of the requirements for determining whether an emergency actually existed before deciding to demolish his building. The district court relied upon dictum in Macene v. M.J.W., Inc., 951 F.2d 700 (6th Cir.1991), where we stated that a plaintiff can prevail in a Sec. 1983 procedural due process claim in one of two ways:
38
(1) by demonstrating that he is deprived of property as a result of established state procedure that itself violates due process rights; or (2) by proving that the defendants deprived him of property rights pursuant to a "random and unauthorized act" and that available state remedies would not adequately compensate for the loss.
39
Id. at 706 (emphasis in original). The present case involves the situation referred to in Parratt, where "either the necessity of quick action by the State or the impracticality of providing any meaningful predeprivation process, when coupled with the availability of some meaningful means by which to assess the property of the State's action at some time after the initial taking, can satisfy the requirements of procedural due process." 451 U.S. at 539, 101 S.Ct. at 1915 (footnote omitted).
40
Harris alleged that the defendants followed an established state procedure outlined in the city code, but in their haste to demolish his building, they found an emergency where none actually existed and, as a result, followed the wrong established procedure. In the absence of an emergency Harris claimed he was entitled to notice and an opportunity to be heard as provided in code Sec. 190.702. The defendants responded that they acted pursuant to a code provision applying to emergencies, and that their efforts to give Harris notice before the demolition were unavailing.
B.
41
As in Zinermon, the plaintiff here does not challenge the constitutionality of the emergency procedure in code Sec. 190.705. Rather, Harris charges that Hymes and Burgoon and other city officials acted improperly in deciding there was an emergency situation and then proceeding under code Sec. 190.705, which dispensed with the notice requirement applicable to non-emergency situations under code under code Sec. 190.702. This act was "authorized" because the code delegated to Hymes and Burgoon the authority under which they proceeded, and thus permitted the very act that the plaintiff complains of--demolition of his property without prior notice.
42
Despite the similarities described above, however, we believe Zinermon is distinguishable. To the extent there was an emergency requiring the Zinermon plaintiff Burch to be hospitalized immediately, this could have been accomplished under either the voluntary or the involuntary admission procedure. Zinermon, 494 U.S. at 136-37, 110 S.Ct. at 989. If the state officials had followed the involuntary procedure, Burch would have been admitted for observation and evaluation over a limited time and would have had an opportunity to contest the findings prior to an indefinite commitment. He would not have been subjected to the seven months of confinement that resulted from his allegedly wrongful admission under the voluntary procedure.
43
No such option was available to the Akron officials. If an emergency existed, the only available course of action for removing the threat to public health and safety was to carry out the demolition forthwith. Under these circumstances, there was no opportunity for notice and a predeprivation process. An erroneous determination that no emergency existed would have resulted in the very threat to the public that the code was intended to prevent. Thus, if there was an actual emergency, unlike in Zinermon, the authorities in this case could remove that emergency only by destroying the building. Following the non-emergency procedure of code Sec. 190.702 would have left the emergency untreated and the public exposed to the resulting danger.
44
In addition, Zinermon involved a liberty interest, not just property. In Parratt the Court quoted from two earlier opinions the rule that "[w]here only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for ultimate judicial determination of liability is adequate." 451 U.S. at 540, 101 S.Ct. at 1915 (quoting Mitchell v. W.T. Grant Co., 416 U.S. 600, 611, 94 S.Ct. 1895, 1902, 40 L.Ed.2d 406 (1974), in turn quoting Phillips v. Commissioner, 283 U.S. 589, 596-97, 51 S.Ct. 608, 611-12, 75 L.Ed. 1289 (1931) (interior quotation marks omitted)). The facts and holding of Zinermon simply do not fit this case.
C.
45
Code Sec. 190.705 leaves the determination of whether an emergency existed on July 17 completely within the judgment of the superintendent of building inspection. Harris has not attacked the constitutionality of code Sec. 190.705 for lack of standards or otherwise. Thus, he accepts the authority of this official to make the determination, but questions the correctness of his judgment. Regardless of whether the official's conclusion as to the existence of an emergency was correct or not, the unchallenged code section placed him in a position where there was "necessity of quick action." Parratt, 451 U.S. at 539, 101 S.Ct. at 1915. Under these circumstances, it was impracticable to wait for a predeprivation process to run its course. The availability of a meaningful postdeprivation process "by which to assess the propriety of the [city's] action at some time after the initial taking" satisfied the requirements of procedural due process. Id. Our Watts decision is not to the contrary, as it recognizes the emergency exception, stating there was no showing that it was essential for the authorities to take quick action.
46
The Bergson affidavit demonstrated the existence of a genuine issue of fact, but we conclude that no genuine issue of material fact existed in this case. With the authority of the decision makers unchallenged, the question of whether an emergency actually existed constituted nothing more than a question of whether they made the right decision. By attempting to show only that the defendants made the wrong decision, Harris in no sense attacked the constitutionality of the process by which that decision was reached.
47
We conclude that the district court correctly granted summary judgment on the plaintiff's procedural due process claim. Although the court incorrectly analyzed the issue under the "random and unauthorized act" Parratt exception, we believe judgment for the defendants was proper under the other Parratt rationale. The defendants were faced with a situation that required quick action. The non-emergency procedure for notifying the owner of a building would not have removed the threat to public safety and health perceived by the responsible officials. The state provided a meaningful postdeprivation process to determine the propriety of the demolition decision. Under these circumstances the requirements of procedural due process were satisfied.
VI.
48
This court has recognized two types of substantive due process violations: (1) official acts that are unreasonable and arbitrary and "may not take place no matter what procedural protections accompany them," and (2) official conduct that "shocks the conscience." Wilson v. Beebe, 770 F.2d 578, 586 (6th Cir.1985) (en banc) (quoting Hudson v. Palmer, 468 U.S. at 541 n. 4, 104 S.Ct. at 3208 n. 4 (separate opinion of Stevens, J.)). Although Harris alleged in his complaint that the defendants acted arbitrarily and in bad faith, when faced with a motion for summary judgment he came forward with no proof of specific facts in support of that claim. Bergson's affidavit states that the defendants acted hastily and without resorting to available means of determining the true condition of the building. Harris offered no evidence in support of his claim that any of the officials acted arbitrarily and unreasonably, or in bad faith. At most the proffered evidence pointed to a faulty decision made in haste. The code gave these officials the authority to demolish a building found to be a threat to public safety or health and the plaintiff produced no proof that they abused that power.
49
So far as we know, or have been informed, no court has held that it shocks the conscience for municipal authorities, acting pursuant to an unchallenged ordinance, to order the destruction of a building found by responsible officers to be a nuisance or threat to public health or safety. Although perhaps the defendants could have made further inquiries concerning the condition of the building, their deposition testimony makes clear that they acted on the basis of their observations and training. The district court properly granted summary judgment on the substantive due process claim.
CONCLUSION
50
Parratt holds that government actors faced with the necessity to take quick action under circumstances where it is impracticable or impossible to provide predeprivation process do not violate an individual's due process rights by depriving him of property so long as there is in place a meaningful postdeprivation process. It is not necessary that the official conduct consist of random and unauthorized acts for Parratt to apply. The record in this case does not support the plaintiff's claim of either a procedural or substantive due process violation.
51
The plaintiff is not without a remedy, however. The district court, accepting the magistrate judge's recommendation, dismissed Harris' "taking" claim as premature; it did not decide that claim on the merits. The plaintiff may pursue his claim for damages in an inverse condemnation proceeding as recognized by the Ohio Supreme Court in Solly v. City of Toledo, 7 Ohio St.2d 16, 19-20, 36 O.O.2d 9, 218 N.E.2d 463 (1966). Only if that action fails to produce a remedy will the plaintiff have fulfilled the prerequisites for a Fifth Amendment claim based on a taking of his property without just compensation. Williamson County Reg. Planning Comm. v. Hamilton Bank, 473 U.S. 172, 185, 194-95, 105 S.Ct. 3108, 3115-16, 3120, 87 L.Ed.2d 126 (1985); Bigelow v. Michigan Dept. of Natural Resources, 970 F.2d 154, 157-58 (6th Cir.1992).
52
The judgment of the district court is affirmed.
1
The Supreme Court overruled Parratt in Daniels v. Williams, 474 U.S. 327, 106 S.Ct. 662, 88 L.Ed.2d 662 (1986), to the extent Parratt held that negligent acts of state officials causing unintended deprivation of life, liberty or property constitute due process violations
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731 F.2d 887
In re Landes (Sherrill Parker)*
NO. 84-1200
United States Court of Appeals,fifth Circuit.
APR 13, 1984
1
Appeal From: W.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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948 So.2d 313 (2006)
Louie SCHEXNAYDER, Sr. and Michael J. Fernandes
v.
Roy and Norma "Rena" GISH, Rhondalyn Singh Tanwar and Allstate Mortgage Corporation.
No. 06-CA-579.
Court of Appeal of Louisiana, Fifth Circuit.
December 27, 2006.
Cary B. Bryson, Angela S. Bryson, Attorneys at Law, Lafayette, Louisiana, for Plaintiff/Appellant.
Charles J. Neupert, Jr., Charles Neupert & Associates, Shreveport, Louisiana, for Defendants/Appellees.
Panel composed of Judges THOMAS F. DALEY, CLARENCE E. McMANUS and FREDERICKA HOMBERG WICKER.
CLARENCE E. McMANUS, Judge.
The plaintiffs, Louie Schexnayder, Sr. and Michael J. Fernandez, appeal from a decision of the trial court that granted an exception of no right of action filed by defendants, Roy and Norma Gish, dismissing them from plaintiffs' action. For the reasons that follow, we vacate the judgment *314 of the trial court and we remand for further proceedings.
The plaintiffs filed suit for damages as a result of breach of contract, alleging that they were owed a real estate commission stemming from a sale of real property. Named as defendants were Roy and Norma Gish, (hereinafter "Gish"), the owners of the property, Allstate Mortgage Corporation,[1] and its employee Rhondalyn Singh Tanwar.
Gish initially filed an exception of improper venue, on the basis that Gish was a resident and domiciliary of Caddo Parish, the immovable property that was the subject of the sale was located in Caddo Parish, and the real estate commission agreement was executed in Caddo Parish. In the exception, Gish states that plaintiffs filed the identical suit in the 1st Judicial District Court for the Parish of Caddo. (Attached to the memorandum in support is a copy of the petition.)
Prior to a ruling on the exception of improper venue in this case, Gish filed an exception of no right of action. Gish also filed an exception of no right of action in the First Judicial Court. That court granted the exception of no right of action before it and dismissed plaintiff's suit pending in the 1st Judicial District Court against Gish on April 1, 2004. The parties have admitted that there is currently an appeal pending in the Court of Appeal for the Second Circuit from that decision.
In its opposition to the exception of no right of action filed by plaintiffs in this proceeding, the plaintiffs argued the merits and also requested that the proceedings be delayed pending decision by the Second Circuit. The trial court held a hearing on the exceptions filed by Gish, and on June 14, 2006 it rendered judgment granting the exception of no right of action and declaring the exception of improper venue moot. The plaintiffs filed this appeal from that decision.
In this case, Gish first filed the declinatory exception of improper venue, and then filed a peremptory exception of no right of action. Thus, Gish properly placed the issue of venue before the trial court. A declinatory exception of improper venue must be tried before a peremptory exception filed before or at the same time. Favorite v. Alton Ochsner Medical Foundation, 537 So.2d 722 (La.App. 4 Cir.1988), Bennett v. Giarrusso, 583 So.2d 607 (La. App. 4 Cir.1991). An exception of improper venue should be ruled on prior to a peremptory exception because if it is later necessary to transfer the suit, the transferee court should not be bound by a decision of a co-equal court from another parish. Favorite, supra at 723-4. This is especially true in this case where there are two identical and simultaneous lawsuits. We therefore find that the trial court erred rendering the exception of improper venue moot, and in ruling on the exception of no right of action prior to a ruling on the merits of the exception of venue.
For the above discussed reasons, we vacate the judgment of the trial court and remand this case for proceedings consistent with the views expressed herein.
JUDGMENT VACATED; CASE REMANDED.
NOTES
[1] Allstate has filed a motion for summary judgment which was still pending in the record before us.
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436 F.Supp.2d 1220 (2005)
Ronald W. HELMS, individually and on behalf of all persons similarly situated, Plaintiff,
v.
CONSUMERINFO.COM, INC., a corporation, Defendant.
No. CV 03 HS 1439 M.
United States District Court, N.D. Alabama, Middle Division.
February 14, 2005.
*1221 *1222 *1223 John G. Dana, Lowe Grammas Hitson & Dana LLP, Birmingham, AL, Peter A. Grammas, E. Clayton Lowe, Jr., William J. Trussell, Trussell & Funderburg, Pell City, AL, for Plaintiff.
Amy Payne, Jones Day, Dallas, TX, Jerome R. Doak, S. Andrew Kelly, Samuel H. Franklin, Lightfoot Franklin & White LLC, Birmingham, AL, for Defendant.
MEMORANDUM OF DECISION AND ORDER
HOPKINS, District Judge.
Introduction
The instant case calls upon the court to interpret and apply provisions of the Credit Repair Organization Act (hereafter *1224 "CROA"). The cornerstone of the parties' dispute is whether Consumerinfo.com, Inc., (hereafter "Defendant") qualifies as a "credit repair organization" as defined in the CROA. Within the Eleventh Circuit there is no published case law addressing application of the CROA, much less this specific issue. Although other federal courts have entertained suits based on the CROA, a large body of case law does not exist. Eugene J. Kelley, Jr., John L. Ropiquet & Andrea J. Durkin, The Credit Repair Organization Act: "The Next Big Thing?,"57 CONSUMER FIN. L.Q. REP. 49, 50 (2003). Accordingly, whether Defendant qualifies as a credit repair organization is an issue of first impression for this court.
Procedural Background
On June 17, 2003, pursuant to 15 U.S.C. § 1679g which allows for private causes of action, Ronald W. Helms (hereafter "Plaintiff') filed a putative class action for damages alleging Defendant violated § 1679b(b) of the CROA (Count One). Plaintiff also brought claims for unjust enrichment (Count Two), constructive trust (Count Three), and conspiracy (Count Four). Defendant answered on July 31, 2003, denying liability and asserting affirmative defenses. Nearly a year after the original complaint was filed, Plaintiff filed his first amended complaint. Plaintiffs amended complaint added to Count One violations of § 1679b(a)(3), § 1679b(a)(4), § 1679c, § 1679d, and § 1679e(b) and (c). Counts Two, Three, and Four were realleged and unamended.[1] Defendant answered, denied liability, asserted affirmative defenses, and contended that the CROA does not apply to it.
Defendant then moved to sequence the proceedings and requested that the court delay the previously scheduled hearing on class certification until it had ruled on both parties' summary judgment motions. By its November 22, 2004, order the court granted Defendant's motion and scheduled oral argument on summary judgment for February 7, 2005.[2] Now remaining before the court are Plaintiffs Count One for violations of the CROA and Count Two for unjust enrichment.[3] The court has before it both parties' motions for summary judgment and accompanying evidentiary submissions therewith. In addition, the Court has received and reviewed the Plaintiffs opposition to Defendant's cross-motion for summary judgment and Defendant's reply thereto. Both motions are under submission.
Undisputed Factual Background[4]
In 1995, Edward Ojdana founded ConsumerInfo.com, Inc., the Defendant in this case. (Pl.Ex. B at 19). Defendant is a corporation which provides consumers with information allowing them to read, understand, and monitor their credit history. (Pl.Ex. C at 97; Def.App. I, Tab 1, ¶ 2). Mr. Odjana is the president of Defendant and oversees all the general operations of the corporation. (Def.App. 1, Tab 1, ¶ 1). Through websites, television, and radio, Defendant markets its products, which include: 1) credit reports, 2) credit scores, and 3) the "CreditCheck" credit *1225 monitoring service. (Pl.Ex. C at 28; Def. App. I, Tab 1, ¶ 8). More than three million consumers have purchased Defendant's services and products. (Pl.Ex. C at 280). These sales have generated approximately three hundred million dollars in revenue for Defendant. (Pl.Ex. B at 218).
Defendant offers its customers two varieties of credit reports: a single bureau report and a three bureau report. (Def.App. I, Tab 1, ¶10). A visitor to one of the Defendant's websites can purchase a single bureau report for $9.95. The report can be delivered by mail or viewed on line and is typically available the instant the customer enters his credit card information. (Def.App. I, Tab 1, ¶ 10). A three bureau report contains information from each of the three principle credit bureaus. The three bureau report costs customers $34.95 and is also viewable online or can be delivered by mail. (Def.App. 1, Tab I, ¶10, 11).
Defendant also provides its customers with credit scores. Credit scores are calculated using different formulas, depending on which credit bureau does the scoring. Credit scores are one factor that credit grantors use in determining a consumer's credit worthiness. Because the information on an individual's credit report may vary between the three principle bureaus, a customer may purchase a score from each bureau to compare his ratings. Defendant calculates a customer's score using computer software licensed from its parent company, Experian, and a "Credit-Check" member may purchase multiple scores for five dollars each. (Def.App. I, Tab 1, ¶ 12-13).
Finally, Defendant offers its customers the "CreditCheck" service, which allows a computer to monitor a customer's credit reports daily and to alert the customer to any irregularities or problems. (Def.App. I, Tab 1, 1115). In order to check his report as it is monitored, a customer must use his password and access a secure portion of Defendant's website, wherein he can check for any alerts. When Plaintiff purchased "CreditCheck" the alerts were provided monthly. (Def.App. I, Tab 1, ¶ 15). With the purchase of "Credit-Check," each customer is entitled to unlimited credit reports from Experian, one of the major credit bureaus. (Def.App. I, Tab 1, ¶ 16).
Defendant owns multiple websites,[5] all of which pertain to credit matters and allow site visitors to obtain information on their own credit or purchase one of Defendant's products. (Def.App. I, Tab 1, ¶ 7). When a customer visits one of Defendant's websites, all of the information on the initial "level" is free. (Def.App.I, Tab1, ¶ 28-33). The second "level" is for members only and can be accessed by any customer *1226 who purchases the "CreditCheck" service. (Def.App.I, Tab1, ¶ 37). When a customer chooses to enroll in the "CreditCheck" program he is subject to a free trial, during which he has access to all the materials on the website free of charge, and may cancel at no cost during the first thirty days. (Def.App. I, Tab 1, ¶ 18).
In order to market its products better, Defendant enters agreements with "partners," such as Yahoo! and Google. (Pl.Ex. C at 32). Defendant pays fees to its partners for certain key words. Whenever a site visitor runs a search containing those key words, Defendant's partner's website will list Defendant's website as a "sponsored result." (Pl.Ex. D at 33).
Defendant's website, among other things, provides visitors with advice on how to manage their credit. Specifically, Defendant's website advises consumers that they can "[a]ctively Monitor and Manage" their credit by paying bills on time and by keeping a close watch for inaccuracies in their credit history. (Pl.Ex. H at 1). Defendant's website promotes its product "CreditCheck" as a good way to keep track of one's credit history. (Pl.Ex. H at 1). For those customers who choose to purchase a membership, which includes the "CreditCheck" service, Defendant's website offers "expert" advice on how to dispute inaccuracies on a credit report. (Pl.Ex. N at 1). These customer service "experts" are not necessarily trained to know what kind of information creates a negative credit rating. In general, the "experts" are trained to know what a credit file is and who keeps track of the reports. They are also informed that customer information is very private and should be kept secure at all times. (Pl.Ex. C at 208). Because the majority of the customer interaction is automated, in most instances Defendant's representatives do not actually see any of the customer's credit information. (Def.App. I, Tab 1, ¶ 24). Defendant's website also advises against using so-called "credit repair" clinics and tells customers that an individual can accomplish anything a credit repair clinic can for free. (Pl.Ex. H at 1). In addition the website also warns that many "credit repair" clinics are frauds and are under investigation by the FTC. (Pl.Ex. H at 1).
Ronald Helms, the Plaintiff in this case, has a history degree from Livingston University.[6] (Def.App. III, Tab 27 at 12). Plaintiff owned his own insurance business from 1979 until 1998, when his company was purchased by Union State Bank. (Def.App. III, Tab 27 at 22, 24). Even after Union State Bank purchased his insurance company, Plaintiff retained his position as president, which he currently still occupies. (Def.App. III, Tab 27 at 25). Plaintiff pays his credit card bills on time each month and does not carry a balance on any of his credit cards. (Def.App. III, Tab 27 at 36-37).
In 2002, Plaintiff became aware that there was a problem with his credit report involving an account with Cingular Wireless. (Def.App. III, Tab 27 at 37-40). In an attempt to remove the erroneous Cingular charge from his credit report, on February 28, 2003, Plaintiff visited Defendant's website ConsumerInfo.com and purchased the "CreditCheck" computer monitoring service. (Def.App. III, Tab 27 at 134; Tab 26, ¶ 3). In connection with his purchase, Plaintiff received a credit report and viewed it on Defendant's website. (Def.App. III, Tab 27 at 98, 115). Plaintiff also received an email confirming his purchase of "CreditCheck," and outlining the other benefits included with his purchase of a membership in Defendant's program. (Def.App. III, Tab 27 at 98-99). After his initial visit to Defendant's website, Plaintiff never returned to the website. (Def.App. *1227 III, Tab 27 at 126). A month after Plaintiff purchased a membership from Defendant's website, on March 27, 2003, his credit card was billed for $79.95, the fee for "CreditCheck." (Def.App. III, Tab 26, ¶ 5). A few months later Plaintiff filed the instant action.
Summary Judgment Standard[7]
Under Fed.R.Civ.P. 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Chapman v. Al Transp., 229 F.3d 1012, 1023 (11th Cir.2000). The party asking for summary judgment always bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the pleadings or filings, which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party has met its burden, Rule 56(e) requires the non-moving party to go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548.
The substantive law will identify which facts are material and which are irrelevant. Chapman, 229 F.3d at 1023; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. Chapman, 229 F.3d at 1023; Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Chapman, 229 F.3d at 1023. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249, 106 S.Ct. 2505.
The method used by the party moving for summary judgment to discharge its initial burden depends on whether that party bears the burden of proof on the issue at trial. See Fitzpatrick, 2 F.3d at 1115-17 (citing U.S. v. Four Parcels of Real Property, 941 F.2d 1428 (11th Cir. 1991)(en banc)). If the moving party bears the burden of proof at trial, then it can only meet its initial burden on summary judgment by coming forward with positive evidence demonstrating the absence of a genuine issue of material fact; i.e. facts that would entitle it to a directed verdict if not controverted at trial. Fitzpatrick, 2 F.3d at 1115. Once the moving party makes such a showing, the burden shifts to the non-moving party to produce significant, probative evidence demonstrating a genuine issue for trial.
*1228 If the moving party does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. First, the moving party may produce affirmative evidence negating a material fact, thus demonstrating that the non-moving party will be unable to prove its case at trial. Once the moving party satisfies its burden using this method, the non-moving party must respond with positive evidence sufficient to resist a motion for directed verdict at trial. The second method by which the moving party who does not bear the burden of proof at trial can satisfy its initial burden on summary judgment is to affirmatively show the absence of any evidence in the record in support of a judgment for the non-moving party on the issue in question. This method requires more than a simple statement that the non-moving party cannot meet its burden at trial but does not require evidence negating the non-movant's claim; it simply requires the movant to point out to the district court that there is an absence of evidence to support the non-moving party's case. Fitzpatrick, 2 F.3d at 1115-16. If the movant meets its initial burden by using this second method, the non-moving party may either point to evidence in the court record, overlooked or ignored by the movant, sufficient to withstand a directed verdict, or the non-moving party may come forward with additional evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. However, when responding, the non-movant can no longer rest on mere allegations, but must set forth evidence of specific facts. Lewis v. Casey, 518 U.S. 343, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).
I. Background and Statutory Scheme of the CROA
In 1993, testimony before the Senate confirmed that:
[f]raudulent companies that lead consumers to believe that the companies can "repair" bad credit histories have bilked consumers of millions of dollars in the past several years, have caused consumer reporting agencies to waste time and money reinvestigating spurious disputes, and have been the focus of numerous enforcement actions by the FTC.
S.Rep. No. 103-209, at 7-8 (1993). Based upon these and other findings, in 1996 Congress enacted the Credit Repair Organization Act (hereafter "CROA"). Kelley, 57 CONSUMER FIN. L.Q. REP. at 50. The goal of the CROA is to prevent "credit repair organizations" from misleading consumers as to their rights and liabilities connected with their credit history. See generally id. The CROA's requirements allow consumers unfettered access to their own credit records and educational materials, while at the same time protecting them from "unfair or deceptive advertising and business practices by credit repair organizations." 15 U.S.C.A. § 1679(b)(1)(2).
To accomplish its goal and ensure that credit repairs organizations do not mislead unsophisticated consumers, the CROA mandates specific procedures that credit repair organizations must follow and prohibits them from engaging in deceptive practices. See generally §§ 1679a-1679e.[8] For example, a credit repair organization may not accept payment from any consumer before the promised service is completed. § 1679b(b). In addition, before *1229 entering a contract with a consumer, a credit repair organization must provide the consumer with a written statement outlining the consumer's rights. § 1679c(a). The CROA also requires that certain information be contained in any credit repair contract and provides the minimum time within which the customer may cancel his or her contract. §§ 1679d-1679e. While nearly all of the CROA's provisions apply only to credit repair organizations, § 1679b(a) applies to any "person," and prohibits the making of fraudulent or deceptive statements regarding the services of a credit repair organization. See e.g., Bigalke v. Creditrust Corp., 162 F.Supp.2d 996, 999 (N.D.Ill.2001) (finding that even if defendant was not a credit repair organization, it was still subject to prosecution under § 1679b(a)(3) and (4)). The CROA also provides for specific damage limitations, allows awards for attorneys' fees, allows for punitive damages, and contemplates the use of class actions as a suitable vehicle for enforcement of the statute. § 1679g.
At the outset, the court notes that when interpreting a statute the initial inquiry is whether the meaning of the statute's language is "plain and unambiguous." Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 450, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997)). If it is, the court's inquiry should go no further. Id.; see also BedRoc Ltd., LLC v. U.S., 541 U.S. 176, 124 S.Ct. 1587, 1595 n. 8, 158 L.Ed.2d 338 (2004) (noting that looking to legislative history absent "ambiguous statutory text," constitutes a "radical abandonment of . . . longstanding [Supreme Court] precedents."); CBS, Inc. v. EchoStar Communications, 265 F.3d 1193, 1212 (11th Cir. 2001) (when interpreting a statute "ambiguity in statutory language must be shown before a court delves into legislative history.").[9] Moreover, "statutory language cannot be construed in a vacuum," and "[i]t is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989) (quoting U.S. v. Morton, 467 U.S. 822, 828, 104 S.Ct. 2769, 81 L.Ed.2d 680 (1984)). Plaintiff correctly points out that because the CROA is a consumer protection statute, with a remedial purpose, it should be given a liberal or broad interpretation. See e.g., Parker v. 1-800 Bar None, A Financial Corp., Inc., No. 01 C 4488, 2002 WL 215530 at *2 (N.D.Ill. Feb.12, 2002); Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir.1998). However, even allowing for a "liberal" interpretation, absent ambiguity, this court may only give the CROA the meaning mandated by its plain language. In other words, the Court will not expand or constrict the statutory definition of credit repair organization where Congress has made its meaning clear.
II. Defining Credit Repair Organization under the CROA
The plain language of the CROA defines credit repair organization as any organization that performs or represents that they will perform,
any service in return for the payment of money . . . for the express or implied *1230 purpose of(i) improving any consumer's credit record, credit history, or credit rating; or (ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i) . . .
§ 1679a(3)(A) (emphasis added). It is clear that Defendant provides as least some form of service for money as contemplated by the CROA.[10] Thus, Plaintiff must show that Defendant either actually performs credit "repair" services or that it represents that it will do so.
Plaintiff contends that Defendant markets its services to those interested in "improving their credit."[11] Specifically, Plaintiff points to an advertisement for Defendant on the website of one of Defendant's partners, which invites customers to "[m]aximize [their] credit rating." (PI.Ex. D at 1). Plaintiff also points to pages on Defendant's website offering that customers can learn how to "establish" or "rebuild" "good credit." Defendant's online form for ordering a free credit report asserts that customers who choose to purchase an additional credit score for $5.00 will receive "personalized tips that can help you raise your credit score." (Pl.Ex. K at 1). One document produced by Defendant shows a page on its website which advises customers that Defendant's "personalized analysis with tips . . . can help you improve your credit rating." (Pl.Ex. P at 1).[12] Defendant's customers routinely contact Defendant through email and ask for advice on how to improve their credit. (Pl.App. Ex. 4 at 101-102).[13] Moreover, *1231 Defendant also purchased multiple phrases containing the word "improve" from Google.com, such as "improve your credit rating" and "how to improve your credit score." (Pl.App. Ex. 1A to Ex. 14 at 1A-14). As explained earlier whenever, an individual enters these search terms on Google.com, Defendant's name will appear under the sponsored results.
When addressing language similar to that used by the Defendant, other courts applying the CROA have concluded that such language brings an actor within the definition of credit repair organization. For example, in In re National Credit Management Group, LLC (NCMG), the state of New Jersey and the Federal Trade Commission brought an enforcement action against the defendant for violations of various consumer credit statutes and FTC regulations. 21 F.Supp.2d 424, 431 (D.N.J.1998).[14] The defendant, National Credit Management Group (NCMG), offered customers credit monitoring, and a "confidential analysis" of their credit history, aimed at helping them to re-establish their credit. Id. In addition, NCMG's advertisements offered customers a pre-approved credit card application. Id. NCMG marketed its products through a 1-800 number and radio and t.v. ads. Id. Like Defendant in the instant case, NCMG also promised its customers attention from a "trained credit analyst." Id. at 434. Investigation of NCMG revealed that it did not obtain any of the information it promised its customers, and its "trained analysts" did not have any special training in the credit industry. Id. at 433.
The New Jersey Court acknowledged that NCMG did not actually provide credit repair services as contemplated by the CROA. Id. at 457. However, the Court found that NCMG did "represent that they [would] perform services, monitor, and provide advice to assist customers improve their credit ratings." Id. (emphasis added). Accordingly, the Court concluded that NCMG fell squarely within the definition of credit repair organization as contemplated by the CROA. Id. at 458.
Likewise, in Sannes v. Jeff Wyler Chevrolet, Inc., the plaintiff brought claims against the defendant, a car dealership, claiming violations of the CROA. No. C-1-97-930, 1999 WL 33313134, at *1 (S.D.Ohio Mar.31, 1999). On summary judgment, the defendant argued that it did not fall within the definition of credit repair organization. Id. The Sannes Court noted that defendant placed its advertisements in a newspaper in interstate commerce, and that the advertisements promised to help customers "[r]e-establish" their credit. Id. at *2. The Court reasoned that such language "implies" that it "will help consumers improve their credit rating." Id.
*1232 While these cases are not binding upon this court, their reasoning is persuasive. The Defendant here uses words like "establish," "rebuild," "raise," and even "improve," to describe the effect its products and services will have on a consumer's credit rating. Although the language does not always directly promise to improve a credit rating, and some of the language concerning "improvement" relates to free products or services, the net message is clear. Moreover, Defendant's purchase of search terms containing the word "improve" in conjunction with the term "credit rating," indicates that Defendant intends to market its products to those looking to improve their credit rating. At the very least, the representations of Defendant imply that its services will help customers improve their credit ratings.[15]
Under the CROA, a business is a credit organization even if its representations only have the "implied purpose of" improving a credit rating. § 1679a(3)(A). Furthermore, Defendant's representation that it will provide "tips" to help customers improve their credit ratings also falls squarely within the language of the CROA, which provides that those who "provide advice or assistance . ." concerning credit history improvement are credit repair organizations. § 1679a(3)(A)(ii). In short, Defendant provides a service for money and represents that its services will improve a customer's credit rating. The plain language of the statute warrants only one conclusion: Defendant is a credit repair organization subject to the strictures of the CROA.
Defendant argues that, when taken in context, it is clear that organizations like itself, which only "monitor" credit, were not intended to be covered by the CROA." The court rejects this contention. Defendant points to commentary by the FTC contained in the Code of Federal Regulations, which suggests that "credit monitoring" programs were not meant to be regulated.[16] CFR § 310.04 at 30416. Defendant acknowledges that this commentary is not aimed at the CROA, but rather the Telemarketing Sales Rule. Nevertheless, Defendant argues that the CROA is part of an entire scheme of consumer protection statutes (of which the Telemarketing Sales Rule is a part) which provide the proper context in which to view the CROA itself. According to Defendant, these consumer protection statutes were not meant to stifle, but to encourage, the free flow of educational materials such as the ones it provides. The referenced FTC commentary in its entirety says "services, such as monitoring or counseling, that are not represented to improve a person's credit history," were not meant to be covered. 16 CFR § 310.04 at 30416 (emphasis added). *1233 Thus, a complete reading shows that even if an organization only "monitors" credit, yet represents it will improve credit, then it was meant to be covered.
Defendant makes many more arguments based upon commentary.[17] Even if the court agreed that this commentary establishes that Defendant should be exempt from the CROA, which it does not, these arguments are not dispositive because as the NCMG Court recognized, FTC commentary is not binding. See Heintz v. Jenkins, 514 U.S. 291, 298, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995); see also Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1372 n. 2 (11th Cir.1998) ("FTC's construction of the FDCPA [Fair Debt Collection Practices Act] is not binding on the courts."). Defendant also points out that much of the information on its website is contained on other websites, such as the FTC's website or the Alabama Attorney General's website. Such educational material is clearly encouraged by the CROA and not meant to be prohibited, but Defendant overlooks the major difference in these public websites and its own. These public websites only disseminate information that is free. Defendant offers a service and charges money for it. This is the very type of activity the plain language of the CROA extends to cover.
Finally, this court is under no obligation to address the intent of Congress because the language of the CROA is clear. See CBS, Inc., 265 F.3d at 1212. Even if the language of the statute is later deemed to be ambiguous, thus necessitating an examination of the statutory history, the court finds that organizations like Defendant were intended to fall within the umbrella of the CROA.[18] The court finds it doubtful that Congress intended the definition of credit repair organization to be construed so narrowly so as to cover only fraudulent companies. This is supported by the fact that Congress actually recognized that some credit repair organizations are legitimate and helpful. S.Rep. No. 103-209, at 7 (1993) ("While some of these [credit repair] organizations may benefit consumers, . . . a number of fraudulent credit repair organizations have inappropriately led consumers to believe that adverse information in consumer reports can be deleted or modified regardless of the accuracy of the information").
The general scheme of the CROA also supports the notion that non-fraudulent organizations fall within the definition of *1234 credit repair organization. The CROA is not a blanket prohibition on the operation of credit repair businesses. Rather, the CROA only regulates such businesses to ensure that consumers are not duped and that they receive full disclosure concerning the purchases they make. Were the statute meant only to cover fraudulent organizations, Congress would have simply made it illegal to operate these businesses at all. Furthermore, other portions of the CROA address fraud and misrepresentation directly, yet the definition of credit repair organization makes no mention of it at all. See § 1679b(1)(4). Had Congress meant for only "scams" or "frauds" to be part of the term credit repair organization, it could have said so. See Brown v. Gardner, 513 U.S. 115, 120, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994) ("[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion."). In sum, a comprehensive reading of the statute and its history support the proposition that Defendant does indeed fall within the definition of credit repair organization in the CROA and is subject to its strictures.
Because the CROA does apply to Defendant, Defendant must comply with the statute's provisions. Defendant's sale of CreditCheck violates § 1679b(b) because, until 2004, Defendant's customers were charged for a year of credit monitoring prior to actually receiving the complete service. Defendant admits as well that it does not comply with § 1679c because it does not provide the required disclosure to its customers prior to entering into a contract. (Pl.Ex. C at 276). Likewise, Defendant does not provide its customers with a written contract as required by § 1679d and § 1679e(c). (Pl.Ex. A at 2). Neither does Defendant provide the required cancellation form provided for in § 1679e(b). (Pl.Ex. C at 278). Defendant makes no argument contradicting that it does meet the above-listed requirements. Accordingly, because there is no genuine issue of material fact that Defendant is subject to and violated these specific sections of the CROA, Plaintiff is entitled to a judgment as a matter of law on these issues, and summary judgment is due to be granted.
III. 1679b(a)(3) and (4) fraud under the CROA
In addition to his claims that Defendant failed to comply with sections of the CROA applying only to credit repair organizations, Plaintiff also moves for summary judgment on his claims that Defendant made "untrue or misleading" representations and committed fraud as defined in § 1679b(a)(3) and (4). As Plaintiff points out, several courts addressing these sections of the CROA have found that they are more permissive and apply to "any person" and not just credit repair organizations. See e.g., Parker v. 1-800 Bar None, No. 01 C 4488, 2002 WL 215530, at *5 (N.D.Ill. Feb.12, 2002); FTC v. Gill, 265 F.3d 944, 955 (9th Cir.2001); Bigalke v. Creditrust Corporation, 162 F.Supp.2d 996, 999 (N.D.Ill.2001). While it is true that § 1679b(a)(3) and (4) do apply to those who are not credit repair organizations, the Defendant correctly argues that the misrepresentations addressed in these sections must be made about "the services of a credit repair organization." Regardless, in the instant case further discussion is unnecessary because this court has already found Defendant to be a credit repair organization. Accordingly, § 1679b(a)(3) and (4) apply to Defendant.
Section 1679b(a)(3) provides that it is unlawful for any person to "make any untrue or misleading representation of the services of the credit repair organization." On its face, this portion of the CROA does not appear to require anything more than *1235 a showing that some of Defendant's statements were misleading. In FTC v. Gill, the Ninth Circuit addressed a claim for summary judgment under § 1679b(3) of the CROA. 265 F.3d at 955. The defendant in Gill conceded that he made statements over the radio that could have been interpreted to be false. Id. The court found that the "overall `net impression'" communicated by the statements was misleading and that "even if the information was accurate, complete and not obsolete," the misleading nature of the statements constituted a violation of § 1679b(a)(3) of the CROA. Id. at 956. The court reasoned that § 1679b(a)(3) "liability attaches even if the representation made by the [defendant] is not made `for the purpose of induc[ing]' consumers to purchase a . . . service." Id. at 955. To show a violation of § 1679b(3), all that is necessary is "an untrue or misleading statement regarding the services of" a credit repair organization. Id. Accordingly, the court granted summary judgment for the plaintiff. Id.
The Gill court noted that a violation of § 1679b(3) is also a violation of 15 U.S.C. § 45(a).[19] § 1679h(b)(1). Section 45(a) prohibits unfair competition and "unfair or deceptive acts or practices in or affecting commerce."[20] Under § 45(a) the Eleventh Circuit has held that finding liability does not require a showing of individual reliance. McGregor v. Chierico, 206 F.3d 1378, 1388 (11th Cir.2000). Rather, "[a] presumption of actual reliance arises once [plaintiff] has proved that the defendant made material misrepresentations, that they were widely disseminated, and that consumers purchased the defendant's product." Id. The Gill court adopted a similar standard for violations of § 1679b(3) under the CROA.
If the plaintiff must only show that the defendant, in general, made misleading or untrue statements under § 1679b(a)(3), the court must determine by whose standard the statements are deemed misleading. In White v. Financial Credit Corp., the plaintiff brought parallel claims under the Fair Debt Collection Practices Act (FDCP) and the CROA, alleging that the defendant, a credit agency, used misleading statements while trying to collect debt from the plaintiff. No. 99 C4023, 2001 WL 1665386, at *6 (N.D.Ill.Dec. 27, 2001).[21] Because the plaintiff's FDCP and CROA claims where identical, the court concluded that the same standard which applied to the deceptive and misleading statements under the FDCP applied to statements made under the CROA. Id. Accordingly, the court determined that, under § 1679b(a)(3) and (4), to succeed, the plaintiff must show the statements to be misleading to the "unsophisticated debtor." Id.[22]
*1236 While the Eleventh Circuit has not addressed this issue under the CROA, it has articulated a standard under the FDCP. In Jeter v. Credit Bureau, Inc., the district court had ruled that under the FDCP a misleading statement is one that would mislead a reasonable consumer. 760 F.2d 1168, 1172 (11th Cir.1985). The Eleventh Circuit rejected this contention and noted that the FTC Act (which the court found analogous to the FDCP) was passed to protect unsophisticated consumers, not only those who are reasonable. Id. Consumer protection statutes must protect "the public-that vast multitude which includes the ignorant, the unthinking and the credulous." See id. at 1172-1173 (citations omitted). The Jeter court concluded that prior FTC enforcement actions, coupled with the history of the FDCP and the relevant jurisprudence, all supported the finding that a statement is misleading if it deceives the "least sophisticated consumer." See id. at 1175.
In the instant case, the court finds the reasoning of both White and Jeter persuasive. Though the Eleventh Circuit has not specifically decided which standard applies under § 1679b(a)(3), the same reasoning that was apposite in Jeter applies to the case now before the court. The CROA was not meant to protect only those consumers who are reasonable. Accordingly, under § 1679b(a)(3) a statement is misleading if it would deceive the least sophisticated consumer.
Plaintiff also brings a claim under § 1679b(a)(4), which is more specific than § 1679b(a)(3) and prohibits any person from engaging in any action "that constitutes or results in the commission of, or an attempt to commit, a fraud or deception on any person in connection with the offer or sale of the services of the credit repair organization." It is not entirely clear what type of fraud or deception is required by § 1679b(a)(4). Typically, fraud requires a heightened standard of pleading and a showing of reliance and damages. See FED. R. CIV. P. 9(b). The CROA, however, is silent on these issues and this court is unaware of any case law directly addressing them.
It is a well established precept of statutory construction that "a statute ought, upon the whole to be construed that, if it can be prevented, no clause, sentence, or word shall be superfluous or void, or insignificant." TRW, Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001). Furthermore, as noted earlier, "[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Brown, 513 U.S. at 120, 115 S.Ct. 552. Looking at the plain language of the statute, it is clear that § 1679b(a)(4) is meant to target different behavior than § 1679b(a)(3). Otherwise, § 1679b(a)(4) would have no effect at all, rendering it "superfluous or void." TRW, 534 U.S. at 31, 122 S.Ct. 441. Likewise, Congress's inclusion of the term fraud in § 1679b(a)(4) indicates that the standard for the two sections is indeed different. If a successful claim under § 1679b(a)(3) requires only a showing of a misleading statement and does not require a showing of damages or reliance, then § 1679b(a)(4) requires something more. Thus, the court holds that § 1679b(a)(4), consistent with the requirements of fraud, requires a showing of reliance and actual damages.
In sum, the court finds that § 1679b(a)(3) requires that the Plaintiff show Defendant made material statements, which would be untrue or misleading in the eyes of the least sophisticated consumer, that were widely disseminated and that consumers have purchased Defendant's *1237 service. See McGregor, 206 F.3d at 1388. In contrast, in order to avoid making § 1679b(a)(4) meaningless, and taking heed that Congress intentionally used the word fraud in subsection (4) and not in subsection (3), the court finds that, to succeed on an claim under § 1679b(a)(4), the Plaintiff must show individual reliance and damages, as would be required of a traditional fraud claim. Finally, because subsection (4) provides that "an attempt to commit, a fraud" is a violation, the court finds that the Plaintiff may succeed on this claim, without showing individual reliance, only if he can show specific intent to defraud. Otherwise, reliance is required under § 1679b(a)(4).
Plaintiff now has the burden of showing that Defendant has made misleading representations or attempted to commit fraud as outlined above in § 1679b(a)(3) and (4). In support of its contention, Plaintiff points to several of the statements made on Defendant's website. For example, Defendant's website tells customers to "go to the Members-Only Dispute Tips section and see what our experts recommend." The page further suggests that Defendant's "credit experts" will "suggest ways [to] dispute inaccuracies" on a credit report. (Pl.Ex. N). Defendant admits that the referenced experts are not trained to know what negatively affects a credit report. (Pl.Ex. C at 208). Defendant also concedes that handling disputes is not part of its job and that its representatives are not trained in this area either. (Pl.Ex. C at 208). Defendant also admits that among its staff there is no employee who carries the title of credit expert. (Pl.Ex. C at 216). Furthermore, there is no one-to-one interaction between its employees and its customers. (Pl.Ex. B at 194). As discussed earlier, Defendant makes some statements which might lead the average consumer to believe Defendant can actually improve a persons's credit. In response to Plaintiff's assertions that statements on its website are misleading or fraudulent, Defendant contends that references to "experts" on its website are merely titles of particular sections consumers may visit. In particular, the "Ask the Expert" section allows consumers to type in questions which are then researched by Defendant's staff and answers are posted on the website to the five most frequently asked questions. (App. I, Tab 1, ¶ 33).
As to § 1679b(a)(3), Plaintiff has not presented evidence sufficient to prevail on summary judgment. The Defendant's statements through its website might be considered misleading to the least sophisticated consumer by a reasonable jury, but a jury might also conclude the opposite. As the Jeter court recognized "whether the least sophisticated consumer would construe," Defendant's website statements as misleading is an issue of fact for a jury to decide. See Jeter, 760 F.2d at 1177-1178. Genuine issues of material fact exist as to whether Defendant's websites contain untrue and misleading information in violation of § 1679b(a)(3), and Plaintiff's motion for summary judgment is due to be denied on this issue.
Regarding § 1679b(a)(4), because Plaintiff must present evidence sufficient for a jury to conclude Plaintiff himself individually relied upon Defendant's statements, Plaintiff's Motion for Summary Judgment is due to be denied and Defendant's is due to be granted. While it is possible for Plaintiff to show that Defendant's websites contain misleading statements in general, Plaintiff has failed to come forward with evidence sufficient for a jury to conclude he actually relied upon any one statement. Plaintiff admits that he cannot recall the precise pages he looked at. (Def.App. III, Tab 27 at 101, 116). Plaintiff also admits that, after his initial visit, he never went back to the Defendant's website. (Def.App. III, Tab *1238 27 at 126). The only precise statement Plaintiff points to as misleading him is on the email he received from Defendant with his purchase of the CreditCheck monitoring service. (Def.App. III, Tab 27 at 132). Plaintiff contends the statement that he would receive monthly monitoring of his statement was not true. (Def.App. III, Tab 27 at 132). Plaintiff is incorrect. Defendant explains that monitoring alerts are provided, but only if the consumer uses his password and checks for the alerts on Defendant's website. (Def.App. I., Tab 1, ¶ 15). In short, Plaintiff's mere misunderstanding of Defendant's website does not provide a sufficient basis from which a jury could conclude Defendant engaged in fraud. Moreover, Plaintiff has offered no evidence that Defendant specifically intended to defraud consumers.[23]
Conclusion
In conclusion, the court holds that Defendant is a credit repair organization as defined by the CROA. Because Defendant admittedly does not comply with § 1679b(b), § 1679c, § 1679d, and § 1679e(b) and (c), Plaintiff's motion for summary judgment as to those portions of the CROA is hereby GRANTED, and Defendant's cross motion for summary judgment is DENIED. Because material issues of fact exist with regard to Plaintiff's claim that Defendant violates § 1679b(a)(3), Plaintiff's motion for summary judgment is DENIED on this issue, and Defendant's cross motion is likewise DENIED. Finally, the Plaintiff has failed to come forward with evidence sufficient to allow a reasonable jury to conclude that he relied upon specific false statements made by Defendant. There is no genuine issue of material fact with regard to Plaintiff's claim of fraud under § 1679b(a)(4). Accordingly, Defendant's cross motion for summary judgment as regards § 1679b(a)(4) is GRANTED, and Plaintiffs motion for summary judgment on this issue is DENIED. Because Plaintiff's claims for unjust enrichment and violation of § 1679b(a)(3) remain unresolved, the court declines to make any damage determination at this stage of the litigation. Only upon resolution of the above mentioned claims will the court be able to properly determine damages under § 1679g of the CROA.
As noted earlier by the court, there is no controlling Eleventh Circuit precedent on the claims addressed in this memorandum and order. Whether the Defendant in this case is a credit repair organization is a "controlling question of law," and an "immediate appeal from [this court's] order may materially advance the immediate termination of the litigation." 28 U.S.C. § 1292(b) If, on appeal, this court's determination regarding Defendant's status as a credit repair organization is reversed, Defendant's cross motion for summary judgment would be granted, and the litigation would likely end. Conversely, if the Court of Appeals rules that the Defendant is a credit repair organization, the resources invested in the litigation thereafter, judicial and otherwise, will be made knowing that a major, and controlling, question of law has been resolved. Therefore, the court's foregoing ORDER is certified for immediate interlocutory appeal to the Eleventh Circuit Court of Appeals. See e.g., Leach v. Braswell, 804 F.Supp. 1551, 1556 (S.D.Ga.1992). Any of the parties involved may pursue appeal.
*1239 The hearing scheduled for February 28, 2005, is CANCELLED.
NOTES
[1] This case was originally assigned to Magistrate Judge Robert Armstrong. On June 23, 2004, it was reassigned to the undersigned.
[2] Pursuant to the Court's January 11, 2005, order, the hearing date was changed to February 28, 2005.
[3] On November 22, 2004, the court dismissed Plaintiff's Count Four for conspiracy pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court also noted that Plaintiff's Count Three for constructive trust is an equitable remedy and was not properly pleaded as a cause of action.
[4] Where there is a factual dispute, unless otherwise noted, the facts are stated in the light most favorable to the non-movant.
[5] The Defendant owns the following websites, ConsumerInfo.com; CreditMatters.com; FreeCreditReport.com; Qspace.com; Nationalscore.com; GetMyReport.com; and HomeRadar.com. Defendant argues that Plaintiff misstates the record by alleging that ConsumerInfo.com makes certain representations that are not on www.consumerinfo.com, but rather appear on one of its other free websites, such as www.creditmatters.com. See e.g., (Def.App. VII at ¶ 23 & ¶ 24). While Defendant is correct, its assertions are of no consequence because it owns all of the websites, and all of the websites are part of Defendant's business network. In fact, at the top of www.creditmatters.com, Defendant's name "ConsumerInfo.com" is boldly displayed. Furthermore, even though www.creditmatters.com has a separate web address, you can reach that website and all of Defendant's other websites via links on the main webpage. All of Defendant's websites combined, regardless of their technical juxtaposition, are most properly described as different facets of Defendant's namesake website. The Court acknowledge, that if each of Defendant's websites were owned by a separate subsidiary, then what one website advertises might not be properly attributable to Defendant. However, that is not the case here.
[6] Livingston University is now the University of West Alabama.
[7] Because this court has yet to rule on class certification in this case, a summary judgment ruling against Plaintiff will not bind the as yet unnamed class members. David F. Herr, MANUAL FOR COMPLEX LITIGATION § 21.11 (4th ed.2004); see also Smith v. Network Solutions Inc., 135 F.Supp.2d 1159, 1165-1166 (N.D.Ala.2001), aff'd, 29 Fed.Appx. 575 (11th Cir. Nov.21, 2001) (finding it proper to rule on summary judgment prior to class certification and recognizing that unnamed class members would not be bound by the court's decision); Thornton v. Mercantile Stores Co., Inc., 13 F.Supp.2d 1282, 1289-1290 (M.D.Ala.1998) (noting that "in moving for summary judgment prior to class certification, the defendant is assuming the risk of stare decisis protection rather than the protection of res judicata").
[8] Section 1679a(3)(B) provides that several types of businesses, such as banks, are excluded from the definition of credit repair organization. None of those exceptions are applicable to the instant case.
[9] Stated another way, "The cardinal rule of statutory construction is to ascertain the legislative intent and purpose in enacting the law and to construe the statute to effectuate that intent, but when statutory language is plain and unequivocal, judicial construction is not only unnecessary but is forbidden." Chepstow Ltd. v. Hunt, 381 F.3d 1077, 1088 (11th Cir.2004) (internal quotations omitted).
[10] Defendant concedes that it charges money for three products, "(1) credit reports; (2) credit scores; and (3) CreditCheck." (Def. Mem. in Support of Sum. Jud. at 50). The court accepts that credit reports are not a "service." While Defendant argues that "CreditCheck" monitoring service is not in fact a service, the court is unpersuaded. The fact that "CreditCheck" is a completely automated process is not decisive. Defendant's customers do not purchase the "CreditCheck" software, but rather they pay a yearly membership so that Defendant will use "CreditCheck" software to monitor their credit history. As a part of CreditCheck, Defendant also provides customers with pre-written dispute letters from its website. Defendant's CreditCheck program is more honestly characterized as a service than as a product. As regards credit scores, it is less than clear which category this falls into. However, for present purposes the court is willing to assume that the assembly and calculation of credit scores and analysis also constitutes a service within the plain meaning of the statute. See (Def.App. I, Tab 1, 1113-14). The above interpretation is consistent with the Eleventh Circuit's recognition that Iclommon sense is the most fundamental guide to statutory construction." Wilderness Watch and Public Employees for Envtl. Responsibility v. Mainella, 375 F.3d 1085, 1093 n. 9 (11th Cir.2004).
[11] Plaintiff offers a virtually inexhaustible list of quotes from Defendant's website, materials, mailings, etc. Some not mentioned in the text include the following: "CreditCheck Monitoring Service keeps you on top of information that may affect your credit;" "credit check alerts allow you to take an active role in your credit and may help you find and dispute inaccuracies;" Credit Check will help you "take control of your credit."
[12] The page on which this appears is a free page, which offers a free credit score accompanied by the aforementioned "tips" with the purchase of a three bureau credit report from Defendant.
[13] Defendant argues that much of the evidence concerning its websites and its customer service email should not be considered because a) its webpages have not been authenticated and b) because Plaintiff himself did not contact customer service and did not read many of the webpages presented as evidence. See e.g., (Def.App. VII at ¶ 27 & ¶ 39). Defendant contends that unauthenticated documents cannot be viewed on summary judgment because they would not be admissible at trial. There is no evidence that any of Plaintiff's webpages are not authentic, and were this case to go to trial, undoubtedly, Plaintiff would be able to authenticate the webpages. Therefore, the Court may consider this evidence on summary judgment despite the fact that it has not been formally authenticated at this stage of the case. See McMillian v. Johnson, 88 F.3d 1573, 1584-1585 (11th Cir. 1996). As to Defendant's other argument, the CROA does not have any requirement of reliance. According to the statute's plain language, it is enough that Plaintiff purchased Defendant's online service. In determining whether Defendant is a credit repair organization, the Court need not limit itself to only those webpages or statements which Plaintiff specifically recalls seeing. Rather, the Court may look to the entire nature of Defendant's business and the representations that it makes in order to arrive at a conclusion. See generally §§ 1679a-1679g.
[14] In an attempt to distinguish the NCMG case, the Defendant points out that NCMG was running a "scam," and didn't provide its customers with the promised result. In contrast, Defendant contends it actually delivers "everything that it promises." While the court acknowledges that the facts of the NCMG case and the instant case are not identical, both NCMG and Defendant engaged in very similar advertising and made analogous representations to consumers.
[15] The court does not necessarily believe the Defendant's statements to be untrue. Indeed, if a customer follows the advice offered on Defendant's website, in certain instances and over a long period of time, the customer's credit rating might improve. Regardless, the CROA's plain language does not distinguish between organizations that purport to help improve consumer credit legally and those that purport to do so illegally. All that is required is that the business imply its services will improve a consumer's credit history.
[16] The difficulty with this case lies in the conflict between the desire not to chill the dissemination of purely educational materials or prohibit counseling and monitoring, while at the same time preventing businesses from using advertising to take advantage of uninformed consumers. As the district court for the Eastern District of New York recognized, "there is a fine line, in advertising and soliciting for credit counseling services to an unsophisticated audience of lower-income debtors, between promising future rewards for credit-worthiness, and implying that existing bad credit records may be prematurely expunged." Limpert v. Cambridge Credit Counseling Corp., 328 F.Supp.2d 360, 364 (E.D.N.Y.2004).
[17] Defendant also contends that if it is subject to the CROA, the statute's reach would expand to cover entities never contemplated by the Congress. Thus, the "Dear Abby" advice column and books by Suze Orman (an author who focuses on financial advice) would fall under the CROA. The court is unpersuaded by this argument. An examination of the excerpts offered by Defendant show that Suze Orman's book is merely informative and does not represent or even imply that it will "improve" a person's credit rating. (App. III, Tab 22). Likewise, the Dear Abby column referenced by Defendant merely offers advice about how to avoid identity theft. While Defendant may provide similar advice for free, its other products are not free, and its advertisements send the distinct message that its services will improve a person's credit rating. Thus, the comparisons Defendant makes are simply inapposite. Even if the court's interpretation of the CROA would extend regulation to others such as author Suze Orman, an extension the court views as improbable, that is not the question before the court.
[18] For example, in Sannes, the Court concluded that the CROA was aimed at "bogus credit repair organizations" and "credit repair cons," not car dealerships. 1999 WL 33313134, at *3. The Sannes Court noted that the defendant's promise to repair credit was not being charged for and it was "ancillary" to its main business of selling cars. Id. at *4. In contrast here, Defendant's entire business and sole way of making profit revolves around the credit industry.
[19] 15 U.S.C. § 45(a) does not provide a private right of action, but is only enforceable by the FTC. Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001, 1008 n. 13 (5th Cir.1981).
[20] The legislative history of the CROA indicates that credit repair organizations are to be prohibited from "making any untrue or misleading representations," and "engaging in deceptive acts or practices." S.Rep. No. 103-209, at 30 (1993). The language "deceptive acts or practices," is identical to the prohibition contained in 15 U.S.C. § 45(a). While certainly not conclusive, this is at the least indicative that the standard applied under § 1679b(a)(3) should be similar to that applied under § 45(a).
[21] The FDCP prohibits a creditor agency from using "false, deceptive, or misleading representation[s] or means in connection with the collection of any debt." 15 U.S.C. § 1692e (1996).
[22] The White court concluded that both § 1679b(a)(3) and (4) were judged by the "unsophisticated debtor" standard. As will become evident hereinafter, this court accepts the White court's reasoning as to § 1679b(a)(3) but rejects the same conclusion for § 1679b(a)(4).
[23] The fact that Defendant's website actually warns consumers to avoid "credit repair" clinics and other similar scams does not support a finding that Defendant has in any way intentionally attempted to defraud its customers. (Pl.Ex. H, I).
| {
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} |
Filed 10/16/13 P. v. Martinez CA2/6
Opinion following recall of remittitur
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 SIX
THE PEOPLE, 2d Crim. No. B232880
(Super. Ct. No. 2009019981)
Plaintiff and Respondent, (Ventura County)
v.
OPINION FOLLOWING RECALL
ENRIQUE SANDOVAL MARTINEZ, OF REMITTITUR1
Defendant and Appellant.
Enrique Sandoval Martinez appeals from the judgment following his
conviction by jury of making false financial statements (Pen. Code, § 532a, subd. (1));2
grand theft (§ 487, subd. (a)); money laundering (§ 186.10, subd. (a)); and three counts of
offering a false instrument for recording (§ 115, subd. (a)). The jury also found true
allegations of aggravated white collar crime, excess taking, and excessive transaction
values. (§§ 186.11, subd. (a)(3)), 12022.6, subd. (a)(2), 186.10, subd. (c)(1)(C).) The
trial court sentenced appellant to 15 years in prison.3 Appellant contends that there is not
1
On October 2, 2013, the Supreme Court granted petitioner's request for review
and remanded the matter to this court with directions to recall the remittitur issued by this
court on June 18, 2013, and "to refile" our opinion in this case.
2
All statutory references are to the Penal Code unless otherwise stated.
3
His sentence includes the following consecutive terms and enhancements: an
upper three-year term for making false financial statements, with two-year excess taking
and five-year aggravated white collar crime enhancements; an eight-month term for theft,
with an eight-month excess taking enhancement; an eight-month term for money
sufficient evidence to support his theft conviction and the accompanying excess taking
enhancement; and the trial court erred by admitting evidence that he used different names
in his two immigration applications, and by instructing the jury with a "false theory of
guilt" for making false financial statements. He further contends that the court violated
section 654 by failing to stay the execution of his sentences for two counts of offering
false documents for recording. We affirm.
BACKGROUND
The Palmer Property and Related Real Estate Transactions
In 2004, Sharon Jachec worked as a real estate agent for Toll Brothers, the
builder of a residential development in Moorpark, to discuss the purchase of a home in
the development. Real estate agent Cheri Tucker and appellant met with Jachec in
September 2004. Appellant selected a lot and floor plan, gave Jachec a deposit, and
completed a questionnaire, using the name Antonio Padilla.
On October 26, 2004, appellant, using the name Padilla, signed an
agreement to buy a residence at 12216 Palmer Drive in Moorpark (the Palmer property)
for $1,775,275. The agreement required appellant to pay $409,840 to complete the sale,
including earlier deposits that totaled $40,000.
In October 2005, with the assistance of Tucker Mortgage (a company
owned by Cheri, and her husband, Terry Tucker), appellant, as Padilla, applied to borrow
$1,366,168 from Washington Mutual (WAMU)4 to purchase the Palmer property. Earlier
that year, in June or July, appellant had approached Alejandro Aguilera Herrera, a
plumber, urging him to invest in the Palmer property. Herrera knew appellant as Enrique
Sandoval. He met appellant through Alfonso Corona, a mutual acquaintance.
laundering, with a one-year excessive value enhancement; and one eight-month term for
each of three section 115, subdivision (a) offenses. (Each eight-month term is one-third
of a two-year middle term.)
4
J.P. Morgan Chase acquired the assets of WAMU before appellant's trial.
2
Appellant and Corona frequented a restaurant that Herrera owned with his
brother, Alfredo Aguilera. Appellant asked Herrera to look at the Palmer property and
give his opinion about the quality of its plumbing. During the inspection, appellant said
that Herrera could own or invest in the Palmer property. Herrera said it was impossible.
A month or two later, at the restaurant, appellant asked Herrera something like,
"What . . . if I told you there is a way to buy that property?" Herrera said, "No, not for
me." Appellant also asked if Herrera would like to live there.
On three or four subsequent occasions, appellant urged Herrera to buy or
invest in the Palmer property. He suggested that Herrera could "pull up some money out
of the property that [he bought with his] brother [Aguilera] . . . and . . . pull out lines of
credit." Herrera was not familiar with lines of credit. Herrera and his brother owned a
house on Avenida De Las Flores, and a house on Calle Olivo, in Thousand Oaks.
Herrera also owned a house on Calle Violeta in Thousand Oaks.
Later still, at appellant's suggestion, Herrera met with Terry Tucker, Corona
and appellant at the Tucker home. Herrera had done plumbing projects for the Tuckers
and knew they were in the real estate business. He had referred appellant to the Tuckers
at one point. Terry explained that Herrera could obtain more than one home equity line
of credit (HELOC) from his property. Herrera asked if that was legal. Terry said, "Yes."
Corona and appellant said that Herrera could invest with them, and they had plans to buy
properties. Herrera said he needed time to think about their idea.
At appellant's suggestion, Herrera again met with appellant, Corona, and
Terry. They told Herrera he could obtain money to invest in the Palmer property, by
using his property as security for HELOCs. When Herrera asked about the amount of the
down payment, the men said it was nearly $600,000. Herrera again refused to invest in
the property.
Appellant and Corona continued meeting with Herrera to urge him to invest
in the Palmer property. Eventually, he agreed to do so. As he understood their
agreement, Herrera would provide half of the down payment by obtaining HELOCs on
3
his property, and appellant would supply the other half. Appellant would make the
Palmer property mortgage payments and give Herrera money for his HELOC payments.
The remaining money from Herrera's HELOCs would be applied to his share of the
Palmer property mortgage, and to purchase other real estate investments. Herrera would
live in the Palmer property. If the property sold, appellant and Herrera would split any
profits "50 and 50." Herrera did not know that appellant had previously agreed to
purchase the Palmer property.
Terry said he would be in charge of obtaining the HELOCs.5 Terry and
appellant directed Herrera to several HELOC lenders. On October 28, 2005, appellant
took Herrera to Wells Fargo in Moorpark, WAMU in Ventura, and E-loan in Camarillo.
Herrera went to Bank of America on November 2, 2005, either alone or with appellant.
Herrera's HELOCs totaled $788,826 ($190,900 from Wells Fargo; $174,598 from
WAMU; $190,000 from E-loan; and $233,328 from Bank of America). At least two of
the HELOCs were secured by the Las Flores property.
On November 2, 2005, appellant accompanied Herrera to Wells Fargo
Bank and WAMU. Herrera used his HELOCs to obtain cashier's checks payable to
Lawyers Title in the amounts of $190,000 (at Wells Fargo) and $174,000 (at WAMU).
He gave those checks to appellant, who deposited them in the escrow account for the
Palmer property purchase. In addition, Herrera exhausted his $233,328 Bank of America
HELOC and his $190,000 E-loan HELOC to write two large checks. At appellant's
direction, he gave one of those checks to appellant, and gave the other check to Corona.
The value of the checks that Herrera delivered to appellant and Corona was nearly
$800,000.
On November 4, 2005, the county recorded a deed of trust granting WAMU
a security interest in the Palmer property (for Padilla's $1,366,168 note to WAMU). That
5
The jury heard testimony that Terry and Cheri Tucker were serving sentences for
federal bank fraud crimes. Appellant argued that the criminally sophisticated Terry was
responsible for Herrera's HELOC-related losses, rather than the relatively naïve appellant.
4
deed transferred title to the Palmer property from the builder to "Antonio Padilla, a single
man." Lawyers Title delivered the Palmer property keys to appellant upon the close of
escrow.
In November 2005, Herrera and his family moved to the Palmer property.
He repeatedly asked appellant, whom he knew as Enrique Sandoval, why the post office
was delivering mail for Antonio Padilla to the property. After initially failing to respond,
appellant said there were "some things we need to do to keep growing."
Herrera also asked appellant why he had not provided him with any
recorded document showing Herrera's interest in the Palmer property. Herrera wanted his
wife, Filomena Avalos, to be listed as an owner of the property. On January 31, 2006,
appellant, using the name Padilla, signed a grant deed that transferred an undivided 50
percent interest in the Palmer property to Avalos, as a tenant in common with Padilla.
That deed recorded on February 7, 2006.
On July 15, 2006, appellant, again identified as Padilla, borrowed $262,000
from ACE Dreams. The loan was secured by a deed of trust that granted ACE Dreams an
interest in the Palmer property. Appellant never told Herrera he was using that property
to secure a loan. Herrera received a check for about $270,000 from ACE Dreams, a
company he thought was founded by appellant and Corona.
For nearly two years, appellant made payments on the WAMU mortgage,
with checks that bore a variety of account names. (The account names included Paradise
Insurance Agency, Pacific Economic Multi-services, Miguel Del Rio, Maria Maldonado,
and Maria Lux.) Appellant stopped making mortgage payments on the Palmer property
in September 2007. Appellant had provided Herrera with money to make the required
HELOC payments. When he ceased doing so, Herrera could not make all of the HELOC
payments, and the lender foreclosed on his Las Flores property.
On October 18, 2007, appellant, as Padilla, signed a deed to quitclaim part
of his remaining interest in the Palmer property to Avalos (Herrera's wife). He gave
Herrera the quitclaim deed and asked him to obtain HELOCs on the Palmer property in
5
Avalos's name. Herrera refused. Appellant had already ceased providing Herrera money
for his existing HELOC payments. The county recorded the Padilla-Avalos quitclaim
deed on October 18, 2007. However, 30 minutes earlier, it had recorded the July 2006
deed that granted ACE Dreams an interest in the Palmer property. Both deeds were
recorded at appellant's request.
In 2008, an official went to the Palmer property and advised Herrera that
his family had approximately two weeks to vacate the premises. They moved from the
Palmer property into the Las Flores property, but moved again when the lender
foreclosed on that property. Herrera tried without success to reach appellant by
telephoning and visiting his home and office. Appellant had just "disappeared," several
months before the Palmer property foreclosure.
On June 4, 2008, WAMU foreclosed on the Palmer property. It sold the
property and suffered a loss of about $733,000, including the difference between the
property's $941,000 sale price and the outstanding WAMU mortgage balance, plus
attorneys' fees, taxes, and sales expenses.
Herrera received approximately $310,000 from appellant. That amount
includes an ACE Dreams check for approximately $270,000, and several other payments,
with a combined value of approximately $39,000.
Identity Evidence
Appellant had a driver's license in his name (Enrique Sandoval Martinez).
He had another driver's license in the name of Antonio Padilla.
Ezequiel Armendariz, an officer for the Immigration and Customs
Enforcement (ICE) agency, testified regarding two immigration applications that
appellant submitted to ICE. He submitted one application under the name Enrique
Sandoval Martinez and another application under the name Antonio Padilla.
Appellant used the name Miguel del Rio to buy property in Nipomo,
California. Appellant, as del Rio, provided a bank with a driver's license number that
purportedly belonged to him. That number actually belonged to a Caucasian female.
6
Antonio Padilla's WAMU loan file includes an insurance binder from
Paradise Insurance agent Enrique Sandoval. It also contains a letter from Enrique
Sandoval, of Pacific Multi-Services, to certify their preparation of Padilla's 2003 and
2004 tax returns. Miguel del Rio's loan file contains a tax return prepared by Antonio
Padilla.
Adela Vargas met appellant when they were children in Guatemala and
knew him as Enrique Sandoval Martinez. They were married from 1993 to 2009, and
had a child. Vargas was not aware that appellant used the names Antonio Padilla and
Miguel Del Rio. In 2005, Vargas and appellant moved into a house on Emerson Street in
Thousand Oaks (Emerson property). Before moving there, appellant told her to sign
some documents and not to ask questions. Three deeds for the Emerson property were
recorded in 2005; each deed showed Adela Sandoval, a single woman, as the grantee,
subject to a lender's security interest. Vargas remained at the Emerson property until
May or June 2008. She moved after learning that the lender was foreclosing on the
property. Sometime earlier, appellant had left the Emerson property without telling
Vargas where he was going.
DISCUSSION
Sufficiency of the Evidence - Theft
Appellant contends the evidence is insufficient to support his theft
conviction, under either a theft by trick or theft by embezzlement theory. He claims that
there is no evidence that he intended to permanently deprive Herrera of his property, a
requisite element of theft under either theory. We disagree.
In reviewing claims of insufficient evidence, "we review the whole record
in the light most favorable to the judgment to determine whether it discloses substantial
evidence–that is, evidence that is reasonable, credible, and of solid value–from which a
reasonable trier of fact could find the defendant guilty beyond a reasonable doubt. . . .
[W]e presume every fact in support of the judgment the trier of fact could have
reasonably deduced from the evidence." (People v. Wilson (2008) 44 Cal.4th 758, 806,
7
[internal citations and quotation marks omitted].) "Unless it is clearly shown that 'on no
hypothesis whatever is there sufficient substantial evidence to support the verdict,' the
conviction will not be reversed." (People v. Misa (2006) 140 Cal.App.4th 837, 842.)
The requisite intent for theft is the "intent to permanently deprive," which is
not intended literally, but "is merely a shorthand way of describing" the intent to steal.
(People v. Avery (2002) 27 Cal.4th 49, 55.) A defendant's "'intent to deprive an owner of
the main value of his property is equivalent to the intent to permanently deprive an owner
of property.'" (Id. at p. 57.) The intent element is satisfied "by the intent to deprive [an
owner of his property] temporarily but for an unreasonable time so as to deprive the
[owner] of a major portion of its value or enjoyment." (Id. at p. 58.)
In arguing there is no evidence of his intent to permanently deprive Herrera
of his money, appellant selectively stresses the evidence that supports his position. For
example, he put Herrera's wife's name on the deed; and for a two-year period, appellant
made the Palmer property mortgage payments, allowed Herrera to use the property, and
provided Herrera money for HELOC payments. However, appellant took full title to the
Palmer property (as Padilla) when escrow closed in early November 2005. It was only
after Herrera expressed concern about the absence of any recorded document reflecting
his interest in the property that appellant granted Herrera's wife an interest in the Palmer
property. The deed conveying her interests did not record until early February 2006. In
July 2006, without Herrera's consent or knowledge, appellant granted ACE Dreams a
security interest in the Palmer property. Moreover, the primary lender foreclosed on the
Palmer property and the HELOC lender foreclosed on Herrera's Las Flores property, after
appellant stopped making mortgage payments and providing Herrera money for his
HELOC account payments. The evidence supports the inference that appellant's conduct
deprived Herrera of the "main value of his property," and that he intended to permanently
deprive Herrera of his money. (People v. Avery, supra, 27 Cal.4th at p. 57.)
We also reject appellant's claim that there is insufficient evidence to
support a conviction of theft by embezzlement because there is no evidence that he
8
appropriated Herrera's money for his own use. A conviction for theft by embezzlement
requires that the defendant appropriate the property of another for his own benefit. (See
People v. Fenderson (2010) 188 Cal.App.4th 625, 636- 637, 641.) Here, appellant used
Herrera's money for the down payment on the Palmer property, without listing Herrera or
his wife on the deed. Although he transferred an interest in that property to Herrera's
wife after Herrera complained to him, appellant ceased making the mortgage payments,
which caused the lender to foreclose upon and sell the Palmer property. Appellant had
also pledged the Palmer property as security for a loan without Herrera's knowledge or
consent. He ceased providing Herrera funds for HELOC payments, and Herrera
consequently lost the Las Flores property. Based on the evidence, the jury could
reasonably conclude that appellant appropriated Herrera's money for his own use.
Sufficiency of the Evidence - Excess Taking Enhancement
Appellant contends that there is insufficient evidence to support the finding
that the property he took from Herrera caused Herrera to lose in excess of $150,000.
(§ 12022.6, subd. (a)(2).) We disagree.
"We review the sufficiency of the evidence to support an enhancement
using the same standard we apply to a conviction." (People v. Gonzales (2011) 51
Cal.4th 894, 941.) If the evidence reasonably supports the jury's findings, reversal of the
judgment is not warranted merely because the evidence might also support a contrary
finding. (People v. Powell (2011) 194 Cal.App.4th 1268, 1287.)
The version of section 12022.6, subdivision (a)(2) applicable at the time of
appellant's theft provided an enhancement for taking property during the commission of a
felony, where the loss exceeded $150,000. "The word 'loss,' as used in section 12022.6 in
the context of the taking of property, . . . includes any dispossession which constitutes
theft of the victim's property." (People v. Bates (1980) 113 Cal.App.3d 481, 484.)
Appellant argues that at most, Herrera lost $51,444, because he gave
appellant $554,000 to invest in the Palmer property and appellant "returned $503,556" of
that money. "It is of no consequence that most of the stolen property was eventually
9
recovered" (People v. Loera (1984) 159 Cal.App.3d 992, 999), or that the owner's
ultimate loss was less than $150,000 because Penal Code section 12022.6 is applicable
"'without regard for the duration of the dispossession.'" (Id. at p. 1000.) We are not
persuaded by appellant's suggestion that Loera and similar cases should not apply to his
case where, he argues, the "amount and timing of the taking is less clear."
Moreover, viewing the evidence in the light most favorable to the
judgment, the jury could reasonably infer that Herrera's loss exceeded $150,000. At
appellant's direction, Herrera provided appellant and Corona with checks that totaled
approximately $787,000.
The $503,556 that appellant claims he returned to Herrera includes Palmer
property mortgage payments that total $83,556. Herrera did not receive mortgage
payments for the Palmer property; WAMU did. Appellant's failure to continue paying
WAMU led to its foreclosure and sale of the Palmer property. His failure to continue
paying Herrera as he agreed to do led the HELOC lender to foreclose on Herrera's Las
Flores property.
Evidence Code Section 352
Appellant contends that the trial court committed prejudicial error by
admitting evidence that he submitted immigration applications in two names (Enrique
Sandoval Martinez and Antonio Padilla). Specifically, he argues that the court should
have excluded the immigration evidence pursuant to Evidence Code section 352 because
it was unduly prejudicial. We disagree.
We review the trial court's evidentiary rulings under the deferential abuse
of discretion standard. (People v. Hamilton (2009) 45 Cal.4th 863, 929-930.) Evidence
Code section 352 authorizes the trial court to exclude evidence if "its probative value is
substantially outweighed by the probability that its admission will (a) necessitate undue
consumption of time or (b) create substantial danger of undue prejudice, of confusing the
issues, or of misleading the jury." "'Evidence is substantially more prejudicial than
probative . . . if, . . . it poses an intolerable "risk to the fairness of the proceedings or the
10
reliability of the outcome."'" (People v. Eubanks (2011) 53 Cal.4th 110, 144.)
"'Prejudice for purposes of Evidence Code section 352 means evidence that tends to
evoke an emotional bias against the defendant with very little effect on issues, not
evidence that is probative of a defendant's guilt.' [Citation.]" (Id. at p. 145.)
Here, appellant argues that the immigration evidence was unduly
prejudicial because it "established that [he] is an immigrant [who] committed fraud
against the United States," and it was "likely to sway the jury to decide the case based on
an emotional bias against illegal residents rather than the evidence." The challenged
immigration evidence was not unduly prejudicial. It was relevant to show how appellant
acquired the false Antonio Padilla identity that he used in perpetrating the crimes. It was
also relevant to rebut appellant's claim that he was relatively naive, in contrast to
sophisticated criminals such as Terry Tucker who, he argued, directed Herrera to obtain
the HELOCs to invest in the Palmer property. The admission of the challenged
immigration evidence did not pose an intolerable "risk to the fairness of the proceedings
or the reliability of the outcome." (People v. Eubanks, supra, 53 Cal.4th at p. 144.)
Moreover, even if the court had erred by admitting that evidence, the error was harmless.
The immigration evidence formed a small part of the prosecution case, and was presented
through the brief testimony of one witness in a trial with fourteen prosecution witnesses.
It is not reasonably probable that the jury would have reached a result more favorable to
the appellant absent such evidence. (People v. Marks (2003) 31 Cal.4th 197, 226-227.)
CALCRIM No. 2020 (Theories of Guilt for Making False Financial Statements)
Appellant contends that the trial court erred by instructing the jury, with
CALMCRIM No. 2020, that it could conclude that appellant violated section 532a,
subdivision (1), if it found that he had made a false written statement about his intent to
occupy the Palmer Drive residence. Appellant is wrong.
Appellant signed an "Owner Occupancy Agreement" stating that he would
occupy the Palmer property, and acknowledging that the "Lender [WAMU] would not
have agreed to make the loan if the Property were not to be owner-occupied." His loan
11
application stated the Palmer property would be his primary residence. Based on that
evidence, the court instructed the jury as follows, in relevant part:
"The defendant is charged in Count 1 with making or causing to be made a
false written statement about his/her financial condition, means or ability to pay in
violation of Penal Code section 532a(1). [¶] To prove that the defendant is guilty of this
crime, the People must prove that: [¶] 1. The defendant made or caused to be made a
false written statement about his financial condition, means or ability to pay; [¶] 2. The
defendant knew that the statement was false; [¶] 3. When the defendant made the
statement or caused the statement to be made, he intended that the statement be relied on;
AND [¶] 4. The defendant made the statement or caused the statement to be made to
obtain the making of a loan for his benefit.
"A person may make a false statement or cause a false statement to be made
either directly or indirectly, or through his or her agent. . . . [¶] The People allege that
the defendant made or caused to be made the following statements: [¶] . . . . [¶] He
intended to occupy the 12216 Palmer Drive property as his primary residence . . . .
"You may not find the defendant guilty unless you all agree that the People
have proved that the defendant made or caused to be made at least one of these
statements and that the statement was false. You must all agree on which false statement
he made or caused to be made."
Appellant argues that by allowing the jury to convict him of making a false
statement in violation of section 532a, subdivision (1), based upon his statement of intent
to occupy the Palmer property, the trial court eliminated an element of the crime—that
the statement must be specific to his ability to pay. His argument rests on the faulty
premise that his stated intent to occupy the property was not related to his financial
condition or ability to pay. In so arguing, appellant cites People v. Vincent (1993) 19
Cal.App.4th 696, 702. In Vincent, the defendant made false statements concerning her
name, address and social security number when she opened two bank accounts. (Ibid.)
She was convicted of making a false financial statement regarding her financial condition
12
or ability to pay in violation of section 532a, subdivision (1). In reversing her conviction,
the Vincent court held that her false statements did not concern her financial condition or
ability to pay. (Id. at p.702.)
Appellant's case is distinguishable from Vincent. The false identity
statements of the defendant in Vincent did not concern her income, assets, or expenses, or
other matters relating to her ability to pay or financial condition. In contrast, appellant's
statement of intent to occupy the Palmer property related specifically to his future
expenses, and thus, his financial condition and ability to pay for the WAMU loan. His
loan application included information about his assets, liabilities, income, and expenses,
including his proposed housing expense (in the Palmer property, if he qualified for the
loan). His occupation of the Palmer property necessarily concerned his financial
condition and ability to pay the lender, i.e., the lender could reasonably assume that
appellant's only housing expense would be that attributable to the Palmer property, and it
would use that expense to assess his ability to pay the loan.
Section 654
Appellant argues that the execution of three consecutive sentences for three
convictions of offering a false instrument for recording violates the section 654 bar
against double punishment because those crimes shared a single criminal objective. We
disagree.
Ordinarily, section 654 prohibits multiple punishments for more than one
offense where the offenses are committed during an "indivisible transaction" having a
single criminal objective. (People v. Gangemi (1993) 13 Cal.App.4th 1790, 1799.)
However, a different rule applies to offering false instruments for filing or recording in
violation of section 115. (Id. at p. 1800.) "For purposes of prosecution under this section
[115], each act of procurement or of offering a false or forged instrument to be filed,
registered, or recorded shall be considered a separately punishable offense." (§ 115,
subd. (d).) "This language demonstrates an express legislative intent to exclude section
115 from the penalty limitations of section 654. Thus, the Legislature has unmistakably
13
authorized the imposition of separate penalties for each prohibited act even though they
may be part of a continuous course of conduct and have the same objective. . . . [E]ach
false filing is separately punishable." (Gangemi, at p. 1800.)
DISPOSITION
The judgment is affirmed
NOT TO BE PUBLISHED.
PERREN, J.
We concur:
GILBERT, P. J.
YEGAN, J.
14
Patricia M. Murphy, Judge
Superior Court County of Ventura
______________________________
Christina Alvarez Barnes, under appointment by the Court of
Appeal, for Defendant and Appellant.
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant
Attorney General, Lance E. Winters, Senior Assistant Attorney General, Paul M.
Roadarmel, Jr., Supervising Deputy Attorney General, Stephanie A. Miyoshi, Deputy
Attorney General, for Plaintiff and Respondent.
15
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11 F.Supp. 145 (1935)
JOSEPH TRINER CORPORATION
v.
ARUNDEL et al.
FRANK McCORMICK, Inc.,
v.
SAME.
Nos. 2836, 2839.
District Court, D. Minnesota, Fourth Division.
June 29, 1935.
Bradford, Cummins & Cummins, of St. Paul, Minn., for Joseph Triner Corporation.
Thomas Gallagher, of Minneapolis, Minn., for Frank McCormick, Inc.
Harry H. Peterson, Atty. Gen., Frederic A. Pike, Deputy Atty. Gen., and Roy C. Frank, Asst. Atty. Gen., for the defendants.
Before SANBORN, Circuit Judge, and NORDBYE and JOYCE, District Judges.
SANBORN, Circuit Judge.
Since the suits were brought to enjoin the enforcement of a state statute, the hearing was before a court consisting of three judges, as required by law.
The facts are not in dispute, and we find them to be, in substance, as follows:
Joseph Triner Corporation is and has been a corporation organized under the laws of Illinois. Its business is that of manufacturing and rectifying alcoholic liquors in its manufacturing plant at Chicago, Ill. It has complied with the statutes of the state of Minnesota relative to foreign corporations doing business *146 within that state, and it owns and operates therein its business as a wholesaler of intoxicating liquors to retailers within the state of Minnesota. On February 19, 1934, it was licensed by the defendant David R. Arundel, as Liquor Control Commissioner of the state of Minnesota, to sell its liquors at wholesale in said state. Pursuant to its license, it registered forty brands of liquor with said defendant, and since that time has been engaged in the sale of such brands in Minnesota. It has built up an extensive trade in the various brands so listed. Its gross sales have approximated $90,000, and it has realized a profit of about $1,200 per month. It has spent approximately $10,000 in advertising its products and in establishing a demand therefor. All of the liquors manufactured by it in Illinois and sold by it in Minnesota have contained more than 25 per cent. of alcohol by volume, and were finished products when imported into the state of Minnesota. In addition to complying with the laws of Minnesota with respect to the sale of intoxicating liquors in that state, as such laws existed prior to April 30, 1935, the Joseph Triner Corporation complied with the laws of the United States relative to the manufacture and sale of such liquors. The Legislature of Minnesota enacted chapter 390, Laws of 1935, entitled, "An Act to regulate the Importation of Intoxicating Liquor Containing More Than 25 Per Cent of Alcohol by Volume." Section 1 of that act provides: "No licensed manufacturer or wholesaler shall import any brand or brands of intoxicating liquors containing more than 25 per cent of alcohol by volume ready for sale without further processing unless such brand or brands shall be duly registered in the patent office of the United States."
This act became effective April 30, 1935. The brands of the Joseph Triner Corporation were not registered in the Patent Office. After chapter 390 became effective, the defendant Arundel served notice upon the Joseph Triner Corporation that it could no longer import any of its brands of liquor into the state of Minnesota unless and until said brands were registered in the United States Patent Office. A number of months will have elapsed before such brands can be registered. Some of them are of such a nature as not to be subject to registration.
Frank McCormick, Inc., is a Minnesota corporation, the holder of a manufacturer's license issued to it by the defendant Arundel on January 20, 1935. It is engaged solely as a wholesaler of intoxicating liquors to retail dealers within the state of Minnesota. It has established a valuable business in which it has invested a large sum of money. It has imported large quantities of intoxicating liquor containing more than 25 per cent. of alcohol by volume, and bearing brand names which are not registered in the United States Patent Office, and which liquor, if chapter 390 is valid, can no longer be imported into the state. Prior to the effective date of chapter 390, Frank McCormick, Inc., contracted with foreign manufacturers for the purchase of liquors, the importation of which is now prohibited by that act.
The contentions of the plaintiffs are that chapter 390 violates the commerce clause (section 8 of article 1) and the equal protection clause (section 1 of Amendment article XIV) of the Constitution of the United States.
The contention of the defendants is that chapter 390 represents a proper exercise of its police power by the state and is in no respect violative of the Constitution of the United States. They also contend that, since the adoption of the Twenty-first Amendment to the Constitution of the United States, neither the commerce clause nor the equal protection clause applies to intoxicating liquor, and that the power to control the manufacture, importation, and use of such liquor was, without any restrictions, conferred upon the states by virtue of the provision of the Twenty-first Amendment, that "the transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."
With the contention that by this language it was intended that intoxicating liquors should be excepted from the provisions of the commerce clause and other provisions of the Constitution of the United States, we are unable to agree. The purpose of the provision referred to was to make it impossible for Congress to permit the transportation or importation into any state, territory, or possession of the United States of intoxicating liquors in violation of the laws of the *147 state, territory, or possession. In other words, the provision left the states, territories, and possessions free to determine to what extent, if at all, intoxicating liquor should be a lawful subject of commerce within their limits.
While the plaintiffs contend that chapter 390 places an unreasonable burden upon interstate comerce, and that it unreasonably discriminates not only between the manufacturers of liquor within the state and manufacturers and importers of liquor without the state, but also between manufacturers and importers without the state whose brands are registered in the Patent Office and similar manufacturers and importers whose brands are not registered, without any respect whatever to the kind or quality of the liquor which is manufactured and imported into the state, and without any regard as to whether such brands are or are not subject to registration; and that the registration of brands has no proper relation to the regulation of the liquor traffic within the state of Minnesota, we think it is only necessary to consider one question, and that is whether chapter 390 denies to the plaintiffs the equal protection of the laws.
The equal protection clause extends to foreign corporations within the jurisdiction of the state and safeguards to them protection of laws applied equally to all in the same situation. The plaintiff Joseph Triner Corporation is entitled in Minnesota to the same protection of equal laws that natural persons within its jurisdiction have a right to demand under like circumstances. Kentucky Finance Corp. v. Paramount Exch., 262 U. S. 544, 550, 43 S. Ct. 636, 67 L. Ed. 1112; Quaker City Cab Co. v. Commonwealth of Pennsylvania, 277 U. S. 389, 400, 48 S. Ct. 553, 72 L. Ed. 927. The equal protection clause does not prevent the state from adjusting its legislation to differences in situation, or forbid classification in that connection, "but it does require that the classification be not arbitrary, but based on a real and substantial difference, having a reasonable relation to the subject of the particular legislation." Power Mfg. Co. v. Saunders, 274 U. S. 490, 493, 47 S. Ct. 678, 679, 71 L. Ed. 1165; Quaker City Cab Co. v. Commonwealth of Pennsylvania, supra, page 400, 277 U. S. 389, 48 S. Ct. 553, 72 L. Ed. 927.
That the act here in question discriminates between the manufacturers of liquor located within the state of Minnesota and those located without the state, but who are permitted to import liquor into the state, cannot be doubted. The Minnesota manufacturer may sell his liquor whether his brands are registered in the Patent Office or not. The manufacturer or importer without the state who imports his liquor into the state in a finished condition can only sell it provided that he has registered his brands in the Patent Office. Unless this discrimination is justified because of some real and substantial difference having a reasonable relation to the subject of the particular legislation, it is clear that the act cannot be sustained.
Counsel for the defendants suggest that chapter 390 was enacted for the purpose of protecting the public from spurious brands of intoxicating liquor manufactured outside the limits of the state, recognizing that the manufacturing and processing of liquor within the state can be more easily supervised by local officials than the manufacturing and processing of liquor without the state, and that, while the registration of the brand name has no relation to quality or purity of the product, its registration fixes the ownership of the brand and the responsibility for the products sold thereunder.
We are unable to see any justification for making a distinction between those who are permitted to manufacture or process liquor within the state and those who are permitted to import liquor into the state, with respect to the use of registered or unregistered brands. If the registration of brands of liquor in the Patent Office has, as is contended, some tendency to protect the public from misbranded liquor or to place responsibility for liquor sold within the state, there seems to be no logical reason for making the law apply only to those who import the finished product. Under chapter 390, the Minnesota manufacturer, processor, or rectifier can sell his liquor to the public under an unregistered brand, whereas the Joseph Triner Corporation and all others similarly situated are prohibited from selling liquor similar in all respects, unless their brands are registered in the Patent Office.
We have reached the conclusion that chapter 390 denies to the plaintiffs the equal protection of the laws, and is therefore unconstitutional.
*148 It is ordered that interlocutory injunctions issue as prayed for. A bond will be furnished by each plaintiff in the usual form, in the sum of $2500.
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177 Wis.2d 445 (1993)
501 N.W.2d 782
F. James SMART, Plaintiff-Respondent-Petitioner,
v.
DANE COUNTY BOARD OF ADJUSTMENTS and Dane County, Defendants,
WINGRA STONE COMPANY, Defendant-Appellant.
No. 91-1894.
Supreme Court of Wisconsin.
Oral argument May 25, 1993.
Decided June 23, 1993.
*449 For the plaintiff-respondent-petitioner there were briefs by Frank J. Bucaida, Richard E. Petershack and Axley Brynelson, Madison and oral argument by Mr. Petershack.
For the defendant-appellant there was a brief by Bruce K. Kaufmann and Jenswold, Studt, Hanson, Clark & Kaufmann, Madison and oral argument by Lawrence E. Bechler.
JON P. WILCOX, J.
This is a review under sec. (Rule) 809.62, Stats., of an unpublished court of appeals' decision reversing an order of the Dane County Circuit Court, Judge Michael N. Nowakowski, which reversed a decision of the Dane County Board of Adjustment (Board). The Board affirmed a determination of the Dane County Zoning Administrator, William Fleck, that Wingra Stone Company be allowed to expand its mining operation onto an adjacent 40 acre parcel of land it owns, on the grounds that mining is a valid nonconforming use for that property. We conclude, as did the court of appeals, that the Board properly determined that mining is a valid nonconforming use of the property; therefore, we affirm.
Wingra Stone and its predecessors in interest (hereafter Wingra) owned 80 acres of land in the Town of Verona, Dane County, Wisconsin, during all times pertinent to this case. Wingra began mining operations on a portion of the land in 1967.
In 1968, Dane County adopted an ordinance providing in relevant part that:
*450 All existing mineral extraction operations shall be deemed non-conforming uses and may be continued providing that they have been worked prior to the date of adoption of this ordinance and they have been registered with the County Zoning Supervisor within one year of the date of adoption of this ordinance.
In compliance with the ordinance, Wingra submitted to the Zoning Supervisor a written registration of all of its mining operations in Dane County including the entire 80 acres that is the subject of this case. Upon receipt of the registration list, the Dane County Zoning Department performed a verification process to determine if the registered land was actually being worked as a mine and qualified as a valid nonconforming use under the ordinance. For purposes of verification, the Zoning Department developed a form which broke the land down into quarter-quarters of sections, i.e. 40 acre parcels. The form which was completed for the Wingra property divided Wingra's 80 acres into two adjacent 40 acre parcels. An aerial photo was taken of the property. William Fleck, who was an employee of the Zoning Department at that time, performed a field study. The form indicates that there was photo and field evidence of mining on one of the 40 acre parcels known as the "Marty Pit." The form further indicates that no mining activity was occurring on the other 40 acre parcel which the parties refer to as the disputed property.
The form indicates that the Marty Pit was "accepted" and the disputed property was not "accepted." The meaning of the term "accepted" is disputed by the parties. However, it appears from the record that the failure to accept the disputed property was the Zoning Department's determination that the *451 property did not qualify for nonconforming use status and mining would not be permitted on that property because the property was not being mined prior to adoption of the ordinance. There is nothing in the record indicating that Wingra was informed of this determination by the Zoning Department.
There the matter rested until September of 1989, when Wingra asked the Zoning Administrator, William Fleck, to review the status of the 80 acre parcel. Wingra brought to Fleck's attention the published decision in Sturgis v. Winnebago County Board of Adjustment, 141 Wis. 2d 149, 413 N.W.2d 642 (Ct.App. 1987), which held that when contiguous parcels are owned by the same entity and excavation operations are in existence on part of the land, all land constituting an integral part of the operation is deemed "in use." Fleck's written determination concluded that Wingra is allowed a nonconforming mineral extraction status for its entire 80 acres. Fleck found that the Zoning Department's decision to limit nonconforming use status to the specific quarter-quarters in which mining was taking place in 1968 "was apparently only a policy decision, it was not included in the original ordinance and had not been included by any subsequent amendment."
During the interval between 1968 and 1989, a residential community developed adjacent to he disputed 40 acres. Petitioner, F. James Smart, is a property owner in the residential community. Smart appealed to the Board of Adjustment, Fleck's 1989 determination that Wingra could mine the disputed 40 acres as a nonconforming use. The Board affirmed Fleck's determination.
Pursuant to sec. 59.99(10), Stats., Smart sought certiorari review in the Dane County Circuit Court. The circuit court reversed the Board's decision, holding *452 that Wingra waived any right to assert a nonconforming use by failing to appeal in 1970 the Zoning Department's refusal to accept its registration for the disputed 40 acres.
Wingra appealed to the court of appeals. The court of appeals reversed. The court of appeals concluded that no law prevented Fleck from correcting a previous error by the Zoning Department. Relying on Sturgis, the court of appeals further concluded that, "Fleck and the board correctly allowed Wingra the opportunity to extend its mining operation to the previously unused, contiguous land, on the grounds that mining was a nonconforming use of that land before the ordinance was enacted in 1968."
We accepted Smart's petition for review and now affirm the court of appeals.
[1]
We review this case by applying the certiorari standard of review. Our review is limited to determining: (1) whether the Board kept within its jurisdiction; (2) whether it proceeded on a correct theory of law; (3) whether its action was arbitrary, oppressive or unreasonable and represented its will and not its judgment; and (4) whether the evidence was such that it might reasonably make the order or determination in question. Arndorfer v. Sauk County Board of Adjustment, 162 Wis. 2d 246, 254, 469 N.W.2d 831 (1991).
The Board properly affirmed Fleck's determination that mining was a valid nonconforming use of Wingra's entire 80 acres. The Board proceeded under a correct legal theory in reaching its conclusion. The Board relied upon the applicable provisions of the 1968 Dane County ordinance, a prior decision of the Board of Adjustment and the Sturgis case.
*453 Nothing in the 1968 ordinance limited the registration of mineral extraction operations to quarterquarters or 40 acre parcels. Fleck's determination which was adopted by the Board properly points out that the ordinance did not support the Zoning Department's decision in 1969 to restrict approval for nonconforming use status to 40 acre parcels in which mineral extraction activity was located.
The Board also properly relied upon a decision it rendered on September 16, 1980, which interpreted the ordinance at issue in this case. In that decision, the Board concluded that "the intent of registration was to make possible the continuation of mineral extractions on the entire property owned by the registrant...." Relying on a number of decisions from other jurisdictions which espoused the diminishing asset rule as was later adopted in Wisconsin by Sturgis, the Board concluded that limiting registration to 40 acre parcels without considering the area of deposits and the mode of operation was improper.
The Board properly applied Sturgis to this case. The fact situation in Sturgis was very similar to the instant case. In 1979, Winnebago County adopted an ordinance that provided for permits to be granted, as a matter of right, to all extraction operations existing at the time the ordinance was adopted. Conditional use permits were required for extensions of existing operations or creation of a new extraction operation. The core of the dispute in Sturgis was whether a 30 acre parcel, where extraction had started, and a 10 acre parcel, where it had not, would be considered one 40 acre parcel for the purpose of finding an existing use. The court held that "when a single owner has contiguous parcels on which an excavation operation is in existence, all land which constitutes an integral part of the operation *454 is deemed `in use,' not withstanding the fact that a particular portion may not yet be under actual excavation." Sturgis, 141 Wis. 2d at 154.
The Sturgis court applied the diminishing asset rule which states:
This is not the usual case of a business conducted within buildings, nor is the land held merely as a site or location whereon the enterprise can be conducted indefinitely with existing facilities. In a quarrying business the land itself is a mineral or resource. It constitutes a diminishing asset and is consumed in the very process of use. Under such facts the ordinary concept of use, as applied in determining the existence of a nonconforming use, must yield to the realities of the business in question and the nature of its operations. We think that in cases of a diminishing asset the enterprise is "using" all that land which contains the particular asset and which constitutes an integral part of the operation, notwithstanding the fact that a particular portion may not yet be under actual excavation. It is in the very nature of such business that reserve areas be maintained which are left vacant or devoted to incidental uses until they are needed. Obviously, it cannot operate over an entire tract at once. (Emphasis in original).
Sturgis, 141 Wis. 2d at 153, quoting County of DuPage v. Elmhurst-Chicago Stone Co., 165, N.W.2d 310, 313 (Ill. 1960). Sturgis is directly on point and the Board properly applied it in the instant case.
[2]
Based upon the foregoing law, it was reasonable for the Board to conclude that Wingra's entire 80 acres qualified for nonconforming mineral extraction status under the 1968 ordinance.
*455 The Board was presented with evidence that the Zoning Department's decision to limit registration to 40 acre parcels was an arbitrary decision not called for by the ordinance. The Board could reasonably conclude from the evidence that the Zoning Department made a mistake in 1969 when it denied Wingra nonconforming use status for the disputed 40 acres. It was reasonable for the Board to correct this error.
[3]
Smart argues that Wingra waived its right to seek review of the zoning status of its property by failing to appeal in 1969 the Zoning Department's decision that the disputed 40 acres did not qualify as a nonconforming use. Smart asserts that Jefferson County v. Timmel, 261 Wis. 2d 39, 51 N.W.2d 518 (1952) precludes Wingra from seeking a change in the zoning status of its property. We disagree.
In Timmel, a property owner used his property for retail purposes. The county adopted a zoning ordinance prohibiting retail uses on the owner's property. After adoption of the ordinance, the owner applied for a building permit to construct a new building to continue the prior retail use. The application for the building permit was denied and the owner did not appeal that denial. Instead, the owner applied for a new building permit for a residence, which was granted. Upon completion of the new building, the owner did not use it as a residence, but continued to use it for retail purposes. The county applied for and obtained an injunction prohibiting the retail use of the property. As a defense, the owner argued that there was no violation of the ordinance because retail use of the property was the continuance of a prior nonconforming use.
This court held that the statutory procedure set forth in sec. 59.99, Stats., for appeal from an adverse *456 ruling of an administrative officer to the board of adjustment is exclusive of all other remedies and must be exhausted before a party can resort to the courts for relief. Timmel, 261 Wis. 63-64. We concluded that the owner waived his right to claim nonconforming use status for the property by failing to appeal the denial of the first building permit. Id. 261 Wis. at 64.
Timmel is easily distinguished from the instant case. In Timmel, the owner was denied a permit to build a building for retail use. Instead of appealing the explicit decision that a retail business could not be conducted on the property, the owner attempted to avoid the decision by applying for a new permit to construct a building for a residence. The permit was granted with a special notation that the building could only be used as a residence. The owner then continued to conduct a retail business out of the new building in direct contravention of the express orders of the building permit.
In the instant case, Wingra did not intentionally violate the orders of the Zoning Department. There is nothing in the record indicating that Wingra ever received notice that the disputed 40 acres was denied nonconforming use status in 1969. Even assuming Wingra was so informed in 1969, Wingra never attempted to mine the land in violation of such a determination. In 1989, Wingra requested that Fleck review the status of its entire 80 acres because it believed the entire 80 acres qualified as a valid nonconforming use. No authority exists for the proposition that action or inaction by Wingra prevented Fleck from correcting a previous error of the Zoning Department. It is Fleck's 1989 decision allowing a nonconforming use on the disputed 40 acres that is the subject of this proceeding, not the Zoning Department's 1969 decision.
*457 The doctrine of exhaustion of administrative remedies is not applicable in this case, because all steps in the administrative agency process were completed. The Zoning Administrator and the Board had an opportunity to perform their functions, to compile a factual record, to interpret and apply the ordinance, and to correct any errors they might have made.
[4]
Smart argues that Sturgis should not be applied retroactively to this case. We disagree. Courts generally apply the law as it is at the time of the decision, rather than at the time of the transaction underlying the lawsuit. Bell v. County of Milwaukee. 134 Wis. 2d 25, 31, 396 N.W.2d 328 (1986). "A decision is given prospective effect only when there are compelling judicial reasons for doing so." Bell, 134 Wis. 2d at 31.
[5]
We do not believe that there are any compelling judicial reasons for applying Sturgis prospectively only. Smart argues that many of the property owners in the residential community adjacent to the disputed 40 acres built homes believing that Wingra could not mine the property as a nonconforming use. While this may be true, we do not believe this rises to the level of a compelling reason for applying Sturgis prospectively. Any property owners who built homes adjacent to the disputed 40 acres did so knowing that Wingra owned the land and was mining the land adjacent to the disputed 40 acres. Further, they could have anticipated that even if Wingra was denied nonconforming use status, it would apply for a conditional use permit to mine the disputed 40 acres. Even if the residential property owners relied on the Zoning Department's 1969 determination that Wingra not be allowed nonconforming mineral extraction status for the disputed 40 acres, *458 they had no reason to believe that Wingra would not someday mine the land under a conditional use permit.
[6]
Finally, Smart argues that the doctrine of laches should be applied to prevent Wingra from mining the disputed 40 acres as a nonconforming use. We reject this argument.
The equitable doctrine of laches has been defined as:
[A] recognition that a party ought not to be heard when he has not asserted his right for unreasonable length of time or that he was lacking in diligence in discovering and asserting his right in such a manner so as to place the other party at a disadvantage.
Bade v. Badger Mut. Ins. Co., 31 Wis. 2d 38, 47, 142 N.W.2d 218 (1966). The elements of laches are: "(1) unreasonable delay, (2) lack of knowledge on the part of the party asserting the defense that the other party would assert the right on which he bases his suit, and (3) prejudice to the party asserting the defense in the event the action is maintained." Schafer v. Wegner, 78 Wis. 2d 127, 132, 254 N.W.2d 193 (1977).
[7]
It is Smart's position that Wingra was not diligent in challenging the Zoning Department's 1969 denial of nonconforming use status for the disputed 40 acres. Smart argues that it was unreasonable for Wingra to delay until 1989 before seeking a review of the zoning status of its property. We reject this argument and conclude that the doctrine of laches is not appropriate in this case.
There is no evidence in the record that Wingra was ever informed in 1969 of a final decision by the Zoning Department that it could not mine the disputed 40 *459 acres as a nonconforming use. Even if Wingra was informed of the Zoning Department's decision in 1969, it was not unreasonable for Wingra to accept that decision at that time. We can find no law suggesting that a property owner cannot request a review of the zoning status of his property at any time.
Smart and the other property owners in the residential community cannot reasonably argue that they lacked knowledge that Wingra might attempt to mine on the disputed 40 acres as a nonconforming use. The property owners knew or should have known when they purchased their land and built their homes that Wingra owned the entire adjacent 80 acres and was mining on a portion of it. The only reasonable assumption was that Wingra intended to mine the entire 80 acres.
[8]
Smart was not prejudiced by the Board's 1989 decision to allow Wingra to mine the disputed 40 acres as a nonconforming use. Zoning laws change from time to time. Zoning classifications are changed as land use plans are developed or redesigned. A person who purchases land in reliance upon current zoning restrictions on adjacent property acquires no right that the restrictions will not change. 1 Robert M. Anderson, American Law of Zoning 3d § 4.28 (1986). Smart's argument really boils down to the fact that he wishes to benefit from a mistake of the Zoning Department in 1969. The Zoning Department mistakenly believed the 1969 ordinance required it to break property down into quarter-quarters for determination of nonconforming use status. The Board's later correction of an error cannot be prejudicial to Smart.
We conclude that the diminishing assets rule was applicable in this case and the Board properly applied *460 the law in affirming the Zoning Administrator's determination that mining was a valid nonconforming use of Wingra's entire 80 acres.
By the Court.The decision of the court of appeals is affirmed.
SHIRLEY S. ABRAHAMSON, J. (concurring).
I concur in the mandate only.
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[Cite as State v. Leatherwood, 2020-Ohio-3012.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
STATE OF OHIO C.A. No. 29544
Appellant
v. APPEAL FROM JUDGMENT
ENTERED IN THE
LORENZO LEATHERWOOD, JR. COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellee CASE No. CR 2019 03 0935
DECISION AND JOURNAL ENTRY
Dated: May 20, 2020
CALLAHAN, Presiding Judge.
{¶1} Appellant, the State of Ohio, appeals an order that granted Lorenzo Leatherwood’s
motion to suppress. This Court reverses.
I.
{¶2} On February 23, 2019, two Ohio State Troopers stopped a vehicle in Akron after it
failed to stop at a stop sign. As the troopers prepared to exit their cruiser and approach the vehicle,
the front passenger door opened, and the passenger fled the scene on foot. One of the troopers
gave chase but returned to the scene of the stop when he was unable to apprehend the individual.
{¶3} Simultaneously with the stop of the vehicle—and unbeknownst to the troopers—a
woman called 911 to report that Mr. Leatherwood had an outstanding warrant for his arrest. During
the 911 call, the woman stated that Mr. Leatherwood was walking in a park but that he got into a
vehicle when he discovered that she was calling the police. The woman described Mr.
Leatherwood and the vehicle, and she provided the dispatcher with the vehicle’s license plate
2
number. She also informed the dispatcher that she was following behind the vehicle, and she noted
when State troopers pulled the vehicle over. When the troopers initiated the traffic stop, the woman
abruptly ended the call.
{¶4} Meanwhile, as the troopers continued to process the stop, two things happened: an
unknown woman arrived at the scene, and dispatch from the City of Akron provided information
related to the 911 call. The woman who approached informed the troopers that she knew the
identity of the passenger who had fled the scene and that the driver of the stopped car would be
able to identify him as well. When the troopers were advised by dispatch that the fleeing individual
was Mr. Leatherwood, the woman at the scene confirmed this information. Akron police officers
also arrived at the scene and provided the troopers with a photograph of Mr. Leatherwood. One
of the troopers, who had been able to observe the individual who fled, identified him from the
photograph. The troopers did not obtain any further information from the woman who approached
the scene of the stop because an unrelated incident involving the safety of another trooper forced
them to leave the scene unexpectedly.
{¶5} After these events, a warrant issued for Mr. Leatherwood’s arrest. On March 9,
2019, Mr. Leatherwood was arrested on the outstanding warrant and on the warrant arising out of
this incident. Mr. Leatherwood was indicted on one count of aggravated possession of drugs in
violation of R.C. 2925.11(A) and (C)(1)(a) and two counts of obstructing official business in
violation of R.C. 2921.31(A)/(B) arising out of the traffic stop and on one count of domestic
violence in violation of R.C. 2919.25(A) and (D)(3) related to the existing warrant. Mr.
Leatherwood moved to “suppress[] all information as it was derived from anonymous unknown
callers[]” and argued that “anonymous tips * * * are generally less reliable than tips from known
informants and can form the basis for reasonable suspicion only if accompanied by specific indicia
3
of reliability[.]” After conducting a hearing on the motion, the trial court acknowledged that “[Mr.
Leatherwood’s] boilerplate motion to suppress simply raises the issue of the unreliability of
anonymous tips and requests this Court grant its motion.” Nonetheless, the trial court determined
that the unknown woman’s information was an anonymous tip that could not support a reasonable
suspicion of criminal activity and reasoned that “it follows that the anonymous tip on its own is
also insufficient to find probable cause for an arrest.” The trial court suppressed “the identification
of [Mr.] Leatherwood derived from the anonymous call[,]” and the State appealed.
II.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN SUPPRESSING THE IDENTIFICATION OF
THE DEFENDANT[.]
{¶6} The State’s assignment of error argues that the trial court erred by suppressing the
identification of Mr. Leatherwood because the woman who provided information in the course of
the 911 call and at the scene of the stop did not provide an anonymous tip. This Court agrees that
the trial court erred, but for a more fundamental reason.
{¶7} The exclusionary rule “operates to exclude, or suppress, evidence that is derived
from police conduct that violated constitutional protections.” State v. Hobbs, 133 Ohio St.3d 43,
2012-Ohio-3886, ¶ 21, citing Mapp v. Ohio, 367 U.S. 643 (1961). Consequently, a constitutional
violation in obtaining evidence must be present in order for the exclusionary rule to be applied.
See Hudson v. Michigan, 547 U.S. 586, 592-593 (2006) (explaining the role of but-for causation
in application of the exclusionary rule). The exclusionary rule is “‘a deterrent sanction that bars
the prosecution from introducing evidence obtained by way of a Fourth Amendment violation.’”
(Emphasis added). State v. Dibble, Slip Opinion No. 2020-Ohio-546, ¶ 14, quoting Davis v. U.S.,
564 U.S. 229, 231-232 (2011). See also Kettering v. Hollen, 64 Ohio St.2d 232, 234-235 (1980).
4
{¶8} A motion to suppress is the vehicle through which suppression under the
exclusionary rule may be obtained. State v. French, 72 Ohio St.3d 446, 449 (1995). See also
Hilliard v. Elfrink, 77 Ohio St.3d 155, 158 (1996), quoting Black’s Law Dictionary 1014 (6th
Ed.1990) (explaining that a motion to suppress is “a ‘[d]evice used to eliminate from the trial of a
criminal case evidence which has been secured illegally, generally in violation of the Fourth
Amendment * * *, the Fifth Amendment * * *, or the Sixth Amendment * * * of [the] U.S.
Constitution.’”). “The purpose and effect of a motion to suppress and a motion in limine are
distinct.” (Emphasis in original.) French at 449. In contrast, a trial court’s ruling on a motion in
limine reflects “the court’s anticipatory treatment of an evidentiary issue at trial.” Defiance v.
Kretz, 60 Ohio St.3d 1, 4 (1991).
{¶9} The investigatory stop of an automobile is a seizure for purposes of the Fourth
Amendment and, consequently, must be based on a law enforcement officer’s reasonable suspicion
“that a motorist has committed, is committing, or is about to commit a crime.” State v. Mays, 119
Ohio St.3d 406, 2008-Ohio-4539, ¶ 7, citing Delaware v. Prouse, 440 U.S. 648, 663 (1979). In
justifying the stop, the officer “must be able to point to specific and articulable facts which, taken
together with rational inferences from those facts, reasonably warrant that intrusion.” Terry v.
Ohio, 392 U.S. 1, 21 (1968). This question is evaluated in light of the totality of the circumstances
surrounding the stop. State v. Freeman, 64 Ohio St.2d 291 (1980), paragraph one of the syllabus.
{¶10} When officers rely on an informant’s tip to establish reasonable suspicion for an
investigative stop, the tip must have “sufficient indicia of reliability” that justifies the stop.
Maumee v. Weisner, 87 Ohio St.3d 295 (1999), paragraph two of the syllabus. As a general rule,
anonymous informants are “comparatively unreliable” and a tip “will generally require
independent police corroboration.” Id. at 300, citing Alabama v. White, 496 U.S. 325, 329 (1990).
5
The nature of and circumstances surrounding an informant’s tip are part of the totality of the
circumstances that must be considered in determining whether an investigative stop is based upon
reasonable suspicion. See Weisner at 302-303.
{¶11} Evidence gained as a result of an investigative stop that is not based upon
reasonable suspicion—whether or not that determination is based upon an informant’s tip—may
be suppressed. A challenge to the admission of testimony related to the substance of the tip itself,
however, raises questions outside the scope of application of the exclusionary rule through a
motion to suppress. See, e.g., State v. Szafranski, 8th Dist. Cuyahoga No. 107905, 2019-Ohio-
4349, ¶ 44-52; State v. Conyer, 7th Dist. Mahoning No. 16 MA 0021, 2017-Ohio-7506, ¶ 11-20;
State v. Hart, 1st Dist. Hamilton No. C-060686, 2007-Ohio-5740, ¶ 32-36.
{¶12} In this case, Mr. Leatherwood’s motion to suppress alleged, in vague terms, a lack
of reasonable suspicion, but it is unclear to what alleged action on the part of law enforcement the
motion was directed. Mr. Leatherwood did not identify any constitutional violation that resulted
from police conduct. See Hobbs, 133 Ohio St.3d 43, 2012-Ohio-3886, at ¶ 21. Specifically, he
did not maintain that the potential “identification testimony * * * was illegally obtained.” See
Crim.R. 12(C)(3). Mr. Leatherwood did not request the exclusion of any evidence seized by law
enforcement as a result of acting in reliance upon the information provided by the 911 caller, and
his motion to suppress did not challenge the adequacy of the warrant that led to his arrest or point
to any evidence seized as a result of its execution. Indeed, it appears that Mr. Leatherwood’s goal
was not the suppression of any evidence gained as the result of an alleged constitutional violation,
but the exclusion of testimony related to the trooper’s identification of him as the individual who
fled when the troopers approached. See generally Szafranski at ¶ 44-52; Conyer at ¶ 11-20; Hart
at ¶ 32-36.
6
{¶13} Under these circumstances, when no constitutional violation has been alleged or
demonstrated, we cannot agree that suppression was appropriate. Accordingly, the State’s
assignment of error is sustained.
III.
{¶14} The State’s assignment of error is sustained. The judgment of the Summit County
Court of Common Pleas is reversed, and this matter is remanded for proceedings consistent with
this opinion.
Judgment reversed
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period
for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is instructed to
mail a notice of entry of this judgment to the parties and to make a notation of the mailing in the
docket, pursuant to App.R. 30.
Costs taxed to Appellee.
LYNNE S. CALLAHAN
FOR THE COURT
7
HENSAL, J.
CONCURS.
TEODOSIO, J.
CONCURRING.
{¶15} I concur with the majority in its analysis and disposition of this appeal, but feel
compelled to write separately if only to stress that this matter does not involve an anonymous
informant as the trial court determined, but rather an identified citizen informant. Although the
informant never actually provided her name and the police never asked for it, courts are generally
“lenient in their assessment of the type and amount of information needed to identify a particular
informant.” Maumee v. Weisner, 87 Ohio St.3d 295, 301 (1999). “Whether an informant is
‘anonymous’ depends on whether the informant [herself] took steps to maintain anonymity, not on
whether the police had time to get [her] name.” State v. Cisternino, 8th Dist. Cuyahoga No. 94674,
2010-Ohio-6027, ¶ 16. The informant here provided information to the 9-1-1 dispatcher and then
spoke with officers in person at the scene. “‘There is nothing even remotely anonymous,
clandestine, or surreptitious about a citizen stopping a police officer on the street to report criminal
activity.’” Maumee at 301, quoting State v. Ramey, 129 Ohio App.3d 409, 416 (1st Dist.1998).
Nothing in the record before us suggests that the informant here would have refused to give her
name if asked or that she attempted to conceal her identity in any way. See Cisternino at ¶ 16.
She is therefore an identified citizen informant, based on the totality of the circumstances present
in this case.
APPEARANCES:
SHERRI BEVAN WALSH, Prosecuting Attorney, and HEAVEN R. DIMARTINO, Assistant
Prosecuting Attorney, for Appellant.
WALTER T. MADISON, Attorney at Law, for Appellee.
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894 F.2d 402
U.S.v.Brandon (Ricky)
NO. 89-5018
United States Court of Appeals,Fourth Circuit.
DEC 14, 1989
1
Appeal From: E.D.Va.
2
AFFIRMED.
3
(The decision of the Court is referenced in a 'Table of Decisions Without Reported Opinions' appearing in the Federal Reporter. The Fourth Circuit provides by rule that an opinion will not be published unless it meets specific criteria, and further provides that citation of unpublished dispositions is 'disfavored.' Fourth Circuit Rules, I.O.P. 36.4, 36.6, 28 U.S.C.A.)
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950 N.E.2d 375 (2011)
BLINN
v.
KAMMEN.
No. 27A04-1008-PL-532.
Court of Appeals of Indiana.
June 30, 2011.
MAY, J.
Disposition of Case by Unpublished Memorandum Decision Affirmed.
BAKER, J., concurs.
BRADFORD, J., concurs.
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87 F.2d 104 (1936)
SHELLMAR PRODUCTS CO.
v.
ALLENQUALLEY CO. et al.
No. 6007.
Circuit Court of Appeals, Seventh Circuit.
December 16, 1936.
Rehearing Denied January 27, 1937.
Franklin M. Warden and John C. Slade, both of Chicago, Ill., for appellant.
George I. Haight and M. K. Hobbs, both of Chicago, Ill., and Louis Quarles, of Milwaukee Wis., for appellees.
Before SPARKS and ALSCHULER, Circuit Judges, and BRIGGLE, District Judge.
SPARKS, Circuit Judge.
For want of equity, the District Court dismissed appellant's bill of review to modify a decree entered by it on April 10, 1929, Allen-Qualley Company v. Shellmar Products Company, 31 F.(2d) 293, which was affirmed by this court, Shellmar Products *105 Co. v. Allen-Qualley Co., 36 F.(2d) 623. The bill sought to modify that part of the decree which enjoined appellant, the defendant in the original action, from making, using or selling a certain type of wrap for food products such as candy bars, and from using, revealing or making known the processes and machinery used in its manufacture. The wrap, the machine, the essential feature of the process, and the decree, together with the circumstances under which it was entered, are fully set forth in the opinions hereinbefore referred to.
It is contended by appellant that this record discloses that everything which the court originally held to be the secret invention of Allen-Qualley was disclosed to the world through United States patents to Royal, No. 1,814,967, and to Novick, No. 1,865,037, and British patent to Robinson, No. 313,423, the last being applied for and issued in behalf of Royal. It is asserted by appellant that these patents, although not published until after the original decree of April 10, 1929, was entered, were granted for inventions made prior to the date of Allen-Qualley's invention. Hence, appellant argues that Allen-Qualley's right of secrecy was extinguished by the disclosures of the patents referred to, and that equity will not continue injunctive relief to protect a right of secrecy which no longer exists. It may be conceded that the three patents relied upon by appellant fully disclose the Allen-Qualley product and process, and the Royal and Robinson patents also disclose the Allen-Qualley apparatus.
At the original trial, appellant, in an effort to show that Allen-Qualley had no secret which could be considered as the basis for a confidential relationship, presented evidence that the process involved had already been published. That evidence included the public practice, in April or May, 1929, at the plant of Thomas M. Royal and Company in Philadelphia; the sale of wraps, made in accordance with Allen-Qualley's teachings, by the Milwaukee Printing Company, a licensee of Allen-Qualley, now the Milprint Products Corporation; the Olsen patent, No. 1,640,052, issued August 23, 1927, on an application filed December 21, 1925, and purchased by appellant before the original trial without the knowledge of Allen-Qualley; and the Cameron Slitting and Rewinding Machine, claimed to have been used by appellant in making a continuous web from which "Revelation" wraps were cut. The original decree awarded an accounting for damages; enjoined appellant as stated; and ordered an assignment of the Olsen patent to Allen-Qualley upon its reimbursing appellant for the amount paid by the latter for the patent. The damages subsequently were agreed upon and paid, and the patent was assigned pursuant to the decree. On July 17, 1931, the District Court, pursuant to the settlement of damages and the assignment, entered an order declaring and adjudging the decree of April 10, 1929, to have been satisfied in full, except as to the injunction which was ordered to remain in force.
On February 27, 1928, prior to the original decree, Olm and Mair, who were Allen-Qualley's employees, filed their application for a patent covering the secret process here involved for the Revelation wrap, as it is called, which was designed by them in the early part of 1927. This application was assigned to Allen-Qualley. It came into interference with the application of Royal, so far as claims relating to bags formed of the composite wrapping material were concerned, and priority was conceded to Royal of all subject matter common to the interfering applications. No United States patent has been granted on the Olm and Mair application, but a Canadian patent, No. 291,371, was granted thereon to Allen-Qualley on July 16, 1929, on its application filed on September 17, 1928.
Prior to the original trial, and before the taking of testimony began, appellant had secured the issuance of Canadian patent, No. 283,944, to Miller, its employee, and it was reissued in 1933. Both fully disclose the process here involved, and the applications were based on the confidential information received by appellant from Allen-Qualley. Furthermore, before the original trial, appellant, through Olsen, Jr., filed application for a Canadian patent corresponding to the United States patent to Olsen, referred to in the original decree. That application resulted in the issuance of Canadian Letters Patent, No. 297,343, to appellant on February 4, 1930. The facts with relation to the application and issuance of these two Canadian patents were not known to the District Court when the original decree was entered.
*106 For convenience, a chronological list of pertinent facts is set forth in the margin.[1]
For the purpose of protecting their interests, the appellees Ramco, Inc., and Milprint Products Corporation, by leave of court, intervened as co-parties with Allen-Qualley in the proceedings to review. Ramco, Inc., asserted that the interests of Allen-Qualley in the Revelation wraps, and the inventions, processes, patents and patent applications relating thereto, and the interests of Thomas M. Royal and Company in the Revelation bags and the inventions, processes, patents, and patent applications relating thereto, were assigned to Royal-Allen-Mair, Inc., and were subsequently assigned in June, 1935, by the latter corporation to Ramco, Inc.
Ramco, Inc., was created to consolidate the interests of Thomas M. Royal and Company, assignee of Royal, Allen-Qualley, Continental Paper and Bag Corporation, and Royal-Allen-Mair, Inc., in and to the patents, inventions and processes relating to the art of fabricated wrappers. It is now the owner of the Olm and Mair application of February 27, 1928, the Royal patent and the Olsen patent, and holds an exclusive license under Novick.
Milprint asserted that it was the exclusive licensee of Allen-Qualley, and its assignee of the right to make, use and sell the Revelation wrap; that Royal-Allen-Mair, Inc., as assignee of Allen-Qualley's right, title and interest to royalties under the license, entered into an amended license *107 agreement continuing the exclusive license to Milprint, and that it was subsequently assigned by Milprint to Ramco, Inc.
Allen-Qualley filed its answer and counterclaim, demanding that appellant be required to assign to it the Miller and Olsen Canadian patents. That answer and counterclaim were ordered filed as and for the answer and counterclaim of all the appellees. The District Court held that the new facts presented on review were merely cumulative of evidence offered at the original trial, and that because of appellant's breach of the confidential relations, it was not entitled to relief from the injunction, regardless of the public disclosure of Allen-Qualley's secret by the subsequently issued patents. The decree further ordered appellant to assign the Miller and Olsen Canadian patents to Allen-Qualley.
It is clear that appellant's claim for relief against the injunctive decree is based upon the well-recognized principle that equity will dissolve an injunction when there is no longer a basis for it; or expressed more narrowly, an injunction issued to protect a right will be dissolved upon the extinguishment of that right. These principles are not here denied, and the question presented for solution is whether the basis for the injunction lawfully issued still exists, or has the right once established been extinguished.
In support of its contention that Allen-Qualley's right to the injunction has been extinguished, appellant relies upon the general principle that the issuance of a patent extinguishes all rights of secrecy in the subject matter disclosed in the patent. Its theory is constructed upon the assumption that the original decree was based upon the conclusion that the wrap, process and machine were first invented by Allen-Qualley, and were secrets of which no one other than it had any knowledge. That assumption is erroneous. The findings upon which the original decree was based were that the wrap, process and machine were Allen-Qualley's trade secrets; that they had been disclosed to appellant in confidence; and that it had violated that confidence by manufacturing and selling the wrap without Allen-Qualley's authority, after negotiations for a co-operative arrangement had failed.
The District Court's opinion in the original case clearly and correctly set forth the distinction between rights under unpatented secret processes and those under patents, as follows [31 F.(2d) 293, 296]:
"The difference between secret processes and patents is that the owner of a patent has a monopoly against all the world, while the owner of a secret process has no right `except against those who have contracted, expressly or by implication, not to disclose the secret, or who have obtained it by unfair means.' * * * The jurisdiction of equity to protect such trade secrets is founded upon trust or confidence. The court `fastens the obligation upon the conscience of the party, and enforces it against him in the same manner as it enforces against a party to whom a benefit is given, the obligations of performing a promise on the faith of which the benefit has been conferred.' * * * Whether the subject-matter is patentable or not, if the designer discovers and keeps secret a process of manufacture, though he will not have an exclusive right to it as against the public, after he shall have published it, or against those who in good faith acquire knowledge of it, yet he has a property right, which a court of chancery will protect against one who in bad faith and breach of confidence undertakes to apply it to his own use. [Cases cited.]"
The findings of the court in the original action placed appellant in the precise situation described in the quotation, and it was enjoined because of its bad faith in breaching the confidence which Allen-Qualley had placed in it. This was done notwithstanding the conceded and pleaded disclosures of Olsen, Royal's public practice, the Cameron machine of appellant, and the disclosure of Allen-Qualley to its licensee.
The Olsen United States patent was issued prior to Allen-Qualley's confidential disclosure to appellant, and its application was filed long before Allen-Qualley had designed its wrap or filed its application for a patent, and yet the court protected the confidential communication, because appellant by its inequitable conduct had taken itself outside the pale of the general public to which the disclosure of that patent was made. True, the Olsen patent was required to be and was assigned to Allen-Qualley by appellant because of appellant's inequity in purchasing it. That, however, did not add to the inviolability of the confidential communication, as between appellant and Allen-Qualley, nor did it detract from it. It merely gave to Allen-Qualley a monopoly *108 against all the world. As between it and appellant, the effect was the same as if a patent had issued on the Olm and Mair application, which belonged to Allen-Qualley. In that event anyone, except appellant, could have infringed it if he desired to do so and thereby hazard an action for infringement at the hands of Allen-Qualley. But not so with appellant, for the consensus of authority is that by its inequitable conduct appellant has precluded itself from enjoying the rights of the general public to the patent disclosure, and will not be permitted to place upon Allen-Qualley the burden of suing for patent infringement, when its proprietary rights in the process have already been adjudicated against appellant. A. O. Smith Corporation v. Petroleum Iron Works Company (C.C.A.) 73 F.(2d) 531; Id. (C.C.A.) 74 F.(2d) 934; Allen-Qualley Company v. Shellmar Products Company, supra; Shellmar Products Company v. Allen-Qualley Company, supra; Du Pont Powder Company v. Masland, 244 U.S. 100, 37 S.Ct. 575, 61 L.Ed. 1016.
Appellant's reliance upon the Royal, Robinson and Novick patents as grounds for review, lies in the facts that they were issued since the decree was entered, and constitute disclosures by others than Allen-Qualley with which appellant was in no way connected. Hence, it argues that as a part of the general public, it is entitled, as against Allen-Qualley, to make use of that company's secret process, and that the injunction should be dissolved. In support of that contention, it relies upon John D. Park & Sons Co. v. Hartman (C.C.A.) 153 F. 24, 12 L.R.A.(N.S.) 135, and Thum Company v. Tloczynski, 114 Mich. 149, 72 N.W. 140, 142, 38 L.R.A. 200, 68 Am.St.Rep. 469. Generally, those cases merely reiterate the well-known principle that the public is free to make use of secret processes discovered by fair and honest means, and neither presents facts analogous to those presented here. Appellant quotes from the last cited case as follows:
"It should also be observed * * * that the word `property,' as applied to trade secrets and trade inventions, has its limitations; for it is undoubtedly true that when an article manufactured by some secret process, which is not the subject of a patent, is thrown upon the market, the whole world is at liberty to discover, if it can by any fair means, what that process is, and, when the discovery is thus made, to employ it in the manufacture of similar articles. In such a case the manufacturer's or inventor's property in his process is gone."
Immediately following this quotation, however, the court said:
"But the authorities all hold that, while knowledge obtained in this manner is perfectly legitimate, that which is obtained by any breach of confidence cannot be sanctioned."
The facts before us show that appellant discovered nothing from the Royal, Robinson and Novick patents. The word "discover" means to get first sight or knowledge of; to get knowledge of what has existed but has not theretofore been known to the discoverer. The process disclosed by these patents had been discovered by appellant when it received the confidential communications from Allen-Qualley, and it will not be heard to say that it again discovered the process from the subsequent patents upon which it now relies. Furthermore, as a defense at the original trial, appellant relied upon the product and process subsequently patented by Royal, to show that Allen-Qualley had no secret, and it received an adverse ruling thereon. The same disclosure, so far as appellant is concerned, is not strengthened in any manner by the issuance of the patent to Royal, and lends no support for the relief now sought. The Royal patent is but a counterpart of the British Robinson patent, both being obtained by Royal, and what has been said applies to both. Neither they nor the Novick patent furnished any ground for relieving appellant from the injunction which resulted from its own misconduct. It is clear that a patent disclosure by Allen-Qualley would not entitle appellant to the relief sought, and we conceive of no reason why a stranger's disclosure would atone for the wrong. This, in effect, was decided in the original decree, and we affirm that decision. True, the Novick disclosure was not before that court, but the Olsen United States patent was considered, and Olsen was a stranger to Allen-Qualley so far as the disclosure was concerned.
Under this view of the law, we think the District Court was right in holding that the evidence relating to the disclosures of the Royal, Robinson and Novick patents, although subsequent in point of time, was merely cumulative with respect to the issue presented on the original hearing and for that reason was not sufficient to warrant a *109 review. Stearns-Roger Manufacturing Company v. Ruth (C.C.A.) 79 F.(2d) 425; Bradley Manufacturing Company v. Eagle Manufacturing Company (C.C.A.) 57 F. 980.
It is suggested by appellees, and we think justly so, that the instant action was prematurely brought because appellant has suffered no legitimate damage and can not suffer through a continuance of the injunction. If the injunction were dissolved, appellant would be confronted with Royal and Novick, whose validity it is in no position to question, at least in any controversy in which Allen-Qualley is involved, under A. O. Smith Corporation v. Petroleum Iron Works, supra, and it is clear that appellant's Revelation wrap would infringe each. It would also be confronted with Olsen, whose validity it has admitted by assignment, and the infringement of which was admitted by appellant in marking its Revelation wraps with the Olsen patent number and by threatening suit thereon against the identical wrap.
It is contended by appellant, however, that it can not be classed as a former owner or a voluntary assignor of the Olsen United States patent, because the original decree held that appellant was acting as a constructive trustee when it purchased it from Olsen, and at that moment Allen-Qualley became the equitable owner. Hence, it argues that appellant was never the owner and can not be prevented on account of the enforced assignment, or its use, from denying its validity or its infringement. We are not impressed with this argument. Appellant admittedly held the legal title and possession of the patent. It assumed that it owned the equitable title, and was persistent in its denial of a trust relationship, and in manufacturing its product according to the involved process under the aegis of the Olsen patent. The court enforced an assignment, which should have been a voluntary one in view of appellant's knowledge of the undisputed facts. Moreover, prior to the original decree and the assignment, the Miller Canadian patent, covering the same process, had been issued to appellant, and it had applied for the Olsen Canadian patent, which facts were not known to the court at the time of the interlocutory decree. Almost a year afterwards, the Olsen Canadian patent, the counterpart of the Olsen United States patent, was issued to appellant, which since that time has continued to operate under it. Under those circumstances, we perceive no reason why equity should confer upon appellant a status, because of its involuntary assignment, different from that of a voluntary assignor. By the assignment, Allen-Qualley was placed in the same situation, so far as appellant is concerned, as if a patent had issued upon the Allen-Qualley application, and we think the injunction should continue, and appellant should not be permitted to burden Allen-Qualley or its assigns with the necessity of infringement proceedings. To grant appellant's petition would be in effect to grant it the privilege of becoming a defendant in an infringement suit which appellant has no right to cause to be brought, and which it could not successfully defend.
It is further contended by appellant that Allen-Qualley was deprived of its further right to hold appellant under the injunction because of Allen-Qualley's assignment of its entire right, title and interest in the invention since the decree. It is worthy of note, however, that appellant admits that that assignment did not refer to or purport to convey any secret rights. This contention is obviously based on the erroneous assumption that the original decree was bottomed on the protection of a prior invention, when in fact it was based upon the violation of a confidential relationship. That relationship remains the same, and we think it is unaffected by Allen-Qualley's assignment. The consideration for the assignment included unnamed valuable considerations moving to Allen-Qualley, the character of which this record does not disclose. The assignment was made to the Royal-Allen-Mair Company, which name indicates an alliance of interests, as Allen and Mair were employees of Allen-Qualley in whose name that company had applied for a patent on its process, product and machine. In the absence of evidence other than this assignment, the court will not presume that Allen-Qualley did not still retain a very real and valuable interest in its trade secrets, as against appellant, which could be preserved and protected only by a continuation of the injunctive decree.
If, as we think, the injunctive right under the original decree is still existent, it is immaterial in the determination of this cause whether it is owned by Allen-Qualley or the other appellees or all of them collectively, as they were all before the court. It is quite true that Allen-Qualley's trade *110 secrets have been disclosed to the world. That disclosure was the cause of the original action which resulted in the injunction. Appellant first made that disclosure in an unlawful manner, and because of that fact it can not contend that it is a member of the public to whom it made the disclosure. To hold otherwise would be to permit appellant to profit by its own wrong. We are dealing here not with Allen-Qualley's right against the world, but with that company's right against appellant. Morison v. Moat, 9 Hare, 241, 41 Eng.Chancery, 241. We hold, therefore, that the reason for the injunction still exists and that Allen-Qualley's right thereto has not been extinguished.
With respect to the issue raised by the counterclaim, we think the District Court's order that the Canadian patent, No. 297,343, and Canadian reissue patent No. 335,489, be assigned to Allen-Qualley, should not be disturbed. The same reason exists for those assignments as existed for the assignment of the United States patent to Olsen. The application for the first one, and the original patent upon which the reissue was based, should have been voluntarily assigned at the time of the decree. Their assignments undoubtedly would have been ordered at that time had not appellant failed to inform the court of the facts.
Decree affirmed.
NOTES
[1] 1925 Dec. 21 U. S. Olsen patent application
filed.
1927 Aug. 23 U. S. Olsen patent No.
1,640,052 issued.
" Sept. 19 Novick patent application
filed.
" Dec. 14 Shellmar bought Olsen
U. S. patent.
1928 Feb. 2 Miller Canadian patent
application filed by
Shellmar.
" Feb. 11 Robinson Canadian application
filed by Royal.
" Feb. 27 Olm and Mair U. S. application
filed by Allen-Qualley.
" Mar. 21 Olsen Canadian application
filed by Shellmar.
" March Shellmar puts candy bar
wrapper, marked with
Olsen patent, on the
market.
" Apr. 11 Royal U. S. application
filed.
" May 14 Allen-Qualley filed original
action.
" Sept. 17 Olm and Mair application
filed in Canada by
Allen-Qualley.
" Oct. 9 Miller Canadian patent
No. 283,944 issued to
Shellmar.
1929 Apr. 10 Interlocutory decree entered
in original action.
" June 11 Robinson Canadian patent
No. 313,423 accepted.
" July 16 Olm and Mair Canadian
patent No. 291,371 issued
to Allen-Qualley.
" July 23 Robinson Canadian patent
filed in U. S. Patent
Office.
1929 Dec. 24 This court affirms interlocutory
decree of
District Court.
1930 Feb. 4 Olsen Canadian patent
No. 297,343 issued to
Shellmar.
" June 3 Declaration of interference
between Olm and Mair, and
Royal.
" June 30 Mandate of this court
filed.
1931 June 12 Concession of priority
of Olm and Mair to
Royal on bags, filed in
U. S. Patent Office.
" July 14 U. S. Royal patent No.
1,814,967 issued to
Royal - Allen - Mair
Company.
" July 17 Final decree entered in
this suit adjudging the
interlocutory decree
to have been satisfied
in full, except as to
the injunction, which
was continued in
force.
" Sept. 7 Term of District Court
expired.
1932 May Shellmar learns of Canadian
and United
States Royal patents.
" June 28 Novick patent issued.
1933 Sept. 5 Miller Canadian patent
reissued as No. 335,489
to Shellmar.
" Nov. 29 Shellmar petitions this
court for leave to file
bill of review in the
District Court.
1935 May Ramco, Inc., takes title
to patents and inventions
of Allen-Qualley.
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996 So.2d 224 (2008)
GREEN
v.
STATE.
No. 5D08-3343.
District Court of Appeal of Florida, Fifth District.
December 2, 2008.
Decision without published opinion. Affirmed.
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541 U.S. 1059
SPENCERv.EASTER ET AL.
No. 03-6536.
Supreme Court of United States.
May 24, 2004.
1
C. A. 4th Cir. Motion of petitioner for leave to proceed in forma pauperis granted. Certiorari granted, judgment vacated, and case remanded for further consideration in light of Tennessee v. Lane, ante, p. 509. Reported below: 63 Fed. Appx. 160.
| {
"pile_set_name": "FreeLaw"
} |
This opinion is subject to revision before final
publication in the Pacific Reporter
2013 UT 20
299 P.3d 1139
IN THE
SUPREME COURT OF THE STATE OF UTAH
SAMUEL R. MCLAUGHLIN and JOHN DOES 1-10,
Plaintiffs and Appellant,
v.
GREG SCHENK; Estate of BOYD SCHENK; ANNA SCHENK;
COOKIETREE, INC.; JOHN DOES 1-10,
Defendants and Appellees.
No. 20111109
Filed April 5, 2013
Third District, Salt Lake
The Honorable Anthony B. Quinn
No. 040924997
Attorneys:
Lincoln W. Hobbs, Margaret H. Olson, Salt Lake City,
for appellant
Matthew M. Durham, Justin B. Palmer, Salt Lake City, for
appellees Cookietree, Inc. and Greg Schenk
Richard D. Flint, Salt Lake City, for appellees Anna Schenk and
Estate of Boyd Schenk
JUSTICE PARRISH authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
JUSTICE DURHAM, and JUSTICE LEE joined.
JUSTICE PARRISH, opinion of the Court:
INTRODUCTION
¶1 This case involves an appeal from an entry of summary
judgment in a case that we remanded in 2009. In 1999, Greg Schenk
purchased shares in Cookietree, Inc. (Cookietree), in violation of a
1991 Shareholder Agreement. In 2005, Cookietree’s Board of
Directors (Board), including Schenk, voted to waive the provisions
of the 1991 Shareholder Agreement that precluded the stock
purchase. Around that same time, shareholders representing nearly
90 percent of Cookietree’s shares, again including Schenk, signed
consent and waiver forms ratifying the 1991 stock purchase (collec-
MCLAUGHLIN v. SCHENK
Opinion of the Court
tively, the 2005 Waivers). Samuel McLaughlin, a minority share-
holder, brought suit challenging the stock purchase, and the district
court granted Cookietree and Schenk’s motion for summary
judgment. On appeal, we held that the 2005 Waivers were tainted
by Schenk’s participation in the votes and remanded for a determi-
nation of whether the 2005 Waivers were fair. McLaughlin v. Schenk,
2009 UT 64, 220 P.3d 146 (McLaughlin I).
¶2 Following our remand, Cookietree took several corporate
actions that it intended to have “the same purpose and effect of a
fairness hearing: to resolve the nontransaction conflict of interest that
tainted the 2005 Waivers” (2009 Ratifications). Specifically, in 2009,
the Board voted to waive the stock transfer provisions in the 1991
Shareholder Agreement and to ratify the 2005 Waivers. And in 2010,
the shareholders similarly voted to waive the stock transfer provi-
sions and to ratify the 2005 Waivers.
¶3 The district court thereafter held that McLaughlin was still
entitled to a fairness hearing, notwithstanding Cookietree’s attempts
to resolve the conflict of interest. But when the case was reassigned
to another district court judge, the replacement judge disagreed with
the determination that a fairness hearing was necessary. He ruled
that the post-remand corporate actions resolved any issue concern-
ing the conflict of interest that had tainted the 2005 Waivers and
entered summary judgment in favor of Cookietree and Schenk.
McLaughlin appeals to this court, raising several issues for our
consideration.
¶4 The first issue is whether the district court violated the law
of the case doctrine when it ruled that it could consider options other
than a fairness hearing to resolve the nontransaction conflict of
interest situation. The second issue is whether the holding of
McLaughlin I that shareholders in closely held corporations owe each
other fiduciary duties has been superseded by statute and whether
the statute is dispositive in this case. The third issue is whether the
district court violated our mandate in McLaughlin I by declining to
hold a fairness hearing. The final issue is whether the post-remand
corporate action mooted the need for a fairness hearing, thereby
mandating summary judgment in favor of Schenk and Cookietree.
BACKGROUND
¶5 Cookietree is a Utah corporation that was established in
1981. McLaughlin v. Schenk, 2009 UT 64, ¶ 3, 220 P.3d 146. Schenk is
the majority shareholder and President of the Board. Id. ¶¶ 3, 6.
2
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Opinion of the Court
McLaughlin is a minority shareholder and former executive
employee. Id. ¶¶ 3, 9.
¶6 In 1999, the Estate of Boyd Schenk sold 545,200 shares of
Cookietree common stock to Greg Schenk. “This transfer was not
recorded in Cookietree’s minutes or written records, and a right of
first refusal was not provided to the corporation or the other
shareholders,” in violation of the 1991 Shareholder Agreement. Id.
¶7 In 2004, McLaughlin filed suit against Schenk and
Cookietree, alleging that the stock transfer violated the 1991
Shareholder Agreement. In 2005, Cookietree’s Board and sharehold-
ers, including Schenk, who acted in both capacities, passed the 2005
Waivers, which purported to waive the provisions of the 1991
Shareholder Agreement that precluded the stock transfer.
Cookietree and Schenk then successfully moved to dispose of
McLaughlin’s claims on summary judgment. Id.
¶8 McLaughlin appealed to this court. Id. Although we held
that the 2005 Waivers did not violate Cookietree’s corporate
governance documents, we held that the 2005 Waivers “suffer[ed]
from . . . [a] lack of probity and fair dealing.” Id. ¶ 36. We reasoned
that shareholders in closely held corporations owed fiduciary duties
to other shareholders and extended the conflict of interest provisions
of section 851 of the Utah Revised Business Corporation Act
(Corporation Act), UTAH CODE §§ 16-10a-101 et seq., to
“nontransaction related conflicts” of interest such as those at issue
in this case. Id. ¶ 37. After concluding that Schenk’s participation in
both the Board waiver and the shareholder waiver was tainted by a
conflict of interest, we reversed the summary judgment that had
been based on these waivers. “We therefore remand[ed] for a
determination of whether the [2005] [W]aivers were fair within the
meaning of Utah Code section 16-10a-851, which is a fact-intensive
inquiry focusing on whether the waivers were beneficial to the
corporation and the shareholders and whether they satisfied the
standard of fair dealing.” Id. ¶ 38.
¶9 Following our remand, on December 18, 2009, all three of
Cookietree’s Board members met. They included Schenk, Harold
Rosemann, and David Rudd. Schenk and Rosemann disqualified
themselves from voting due to a conflict of interest. The one
remaining Board member, Rudd, voted to ratify the 2005 Waivers
and “presently waived the stock transfer provisions in the Share-
holders Agreement.” All three Board members then voted to ratify
the actions of Rudd.
3
MCLAUGHLIN v. SCHENK
Opinion of the Court
¶10 Rudd then authorized two proposals to be submitted to the
shareholders for vote at the upcoming annual meeting on January 6,
2010. Proposal One was a present waiver of the stock transfer
provisions. Proposal Two was ratification of the 2005 Waivers and
Proposal One.
¶11 The 1991 Shareholder Agreement required that two-thirds
of the shares, excluding those shares owned by the controlling
shareholder, vote to waive the Shareholder’s Agreement’s restriction
on share transfers. Therefore, Schenk voted on Proposal One
because his vote was necessary for waiver under the Shareholder
Agreement. However, because of Schenk’s conflict of interest, the
vote on Proposal One was tallied in two different ways: one tally
including Schenk’s shares other than the shares at issue in the 1999
Stock Sale; the other tally excluding all of his shares. When Schenk’s
shares were included in the tally, 3,168,200 shares were voted in
favor of Proposal One and 400,000 shares (owned by McLaughlin
and his wife) were voted against Proposal One. When Schenk’s
shares were excluded from the tally, 987,000 shares were voted in
favor of Proposal One and 400,000 shares were voted against.
¶12 Proposal Two to ratify the 2005 Shareholders Waiver was
voted for by a majority of the shareholders, not including Schenk.
Specifically, 987,000 shares were voted in favor of Proposal Two and
400,000 shares were voted against.
¶13 On January 15, 2010, McLaughlin filed a Motion for Partial
Summary Judgment and/or Declaratory Judgment Declaring the
Invalidity of Corporate Actions. He argued “that the corporate
actions taken on December 18, 2009 and January 6, 2010 were
improperly undertaken for the specific purpose of circumventing the
remand directive.” In response, Cookietree and Schenk argued that
our remand instruction had only “remanded for further action to
resolve the conflict of interest,” and asked the district court to
recognize that the December 18, 2009 and January 6, 2010 corporate
actions effectively ratified the 2005 Waivers. The district court
disagreed with this reasoning and granted McLaughlin’s motion. It
held that McLaughlin was “entitled to the fairness hearing identified
by the Supreme Court.” Schenk and Cookietree then petitioned this
court for interlocutory appeal, which was denied.
¶14 At a rule 16 conference set for the purpose of scheduling a
trial and obtaining clarification on the procedure for the fairness
hearing, the district court judge originally assigned to the case
announced to the parties that he was retiring and that the case
4
Cite as: 2013 UT 20
Opinion of the Court
would be reassigned. Following the reassignment, the replacement
judge convened a status conference where he stated that he
“certainly [was] not going to take the same position [on the fairness
hearing] that [the retired judge] did” because he thought “that the
corporation can try [to] fix [the 2005 Waiver issues].” He thereafter
invited the parties to file motions for summary judgment.
¶15 Cookietree and Schenk filed such a motion, arguing that
the December 18, 2009 and January 6, 2010 corporate actions “cured”
any defect in the 2005 Waivers. McLaughlin opposed the motion,
arguing that “‘fairness’ by its nature is a fact-intensive inquiry,”
making summary judgment improper. He also argued that the
retired judge’s denial of Cookietree and Schenk’s Cross Motion for
Summary Judgment was the law of the case and that, under the
mandate rule, the district court and the parties were bound by this
court’s remand directive.
¶16 The replacement judge ruled that the post-remand
corporate action “completely resolve[d] any issue concerning the
conflict of interest that was found to have tainted the [2005
W]aivers.” He therefore granted summary judgment in favor of
Cookietree and Schenk. McLaughlin appealed.
¶17 On May 11, 2010, the Legislature amended section 16-10a-
622 of the Utah Code in response to our opinion in McLaughlin I.
That section now states that “[a] shareholder of a corporation, when
acting solely in the capacity of a shareholder, has no fiduciary duty
or other similar duty to any other shareholder of the corporation,
including not having a duty of care, loyalty, or utmost good faith.
This Subsection . . . applies to . . . a closely-held corporation.” UTAH
CODE § 16-10a-622(3). Legislative history indicates that the purpose
of this amendment was to reverse a portion of our decision in
McLaughlin I. Specifically, in advocating for passage of the bill, its
sponsor described McLaughlin I as a “troubling decision” holding
that “shareholders of a closely-held corporation have a fiduciary
duty to the other shareholders of the corporation.” Senate Business
& Labor Committee Hearing, S.B. 197, 58th Leg., Gen. Sess. (Feb. 16,
2010) (statement of Sen. Liljenquist).
¶18 We have jurisdiction pursuant to Utah Code section 78A-3-
102(3)(j).
STANDARD OF REVIEW
¶19 “The application of the law of the case doctrine is ordi-
narily reviewed under an abuse of discretion standard.” M.F.K. v.
5
MCLAUGHLIN v. SCHENK
Opinion of the Court
S.V. (In re Adoption of A.F.K.), 2009 UT App 198, ¶ 15, 216 P.3d 980
(alternations omitted) (internal quotation marks omitted). “How-
ever, when a legal question is presented to an appellate court in law-
of-the-case packaging, the abuse of discretion standard must yield
to the correctness standard of review.” Id. (alteration omitted)
(citation omitted) (internal quotation marks omitted). Although
McLaughlin argues that the standard of review in this case is
correctness, we see no legal question presented in law of the case
packaging. The issue is simply whether the replacement judge
violated the law of the case doctrine when he ruled differently than
the retired judge on an issue previously decided. Therefore, we
apply the abuse of discretion standard to this issue.
¶20 Whether a district court complied with the mandate of an
appellate court is a question of law, which we review for correctness.
See Amax Magnesium Corp. v. State Tax Comm’n, 874 P.2d 840, 842
(Utah 1994); Slattery v. Covey & Co., 909 P.2d 925, 927 (Utah Ct. App.
1995). Similarly, we review a district court’s grant of summary
judgment for correctness, with “the facts and all reasonable infer-
ences [reviewed] in the light most favorable to the nonmoving
party.” McLaughlin I, 2009 UT 64, ¶ 14 (internal quotation marks
omitted).
ANALYSIS
I. THE REPLACEMENT JUDGE’S RECONSIDERATION
OF THE RETIRED JUDGE’S RULING WAS PROPER
BECAUSE THE RETIRED JUDGE’S RULING WAS
NOT THE LAW OF THE CASE
¶21 McLaughlin argues that the retired judge’s order of a
fairness hearing was the law of the case and that the replacement
judge should not have reconsidered the issue. Cookietree and
Schenk argue that the replacement judge was not bound to follow
the prior order. We hold that the retiring judge’s ruling, in which he
ordered a fairness hearing, did not fall within the law of the case
doctrine. The replacement judge therefore was free to reconsider the
issue.
¶22 Under the law of the case doctrine, “a court [may] decline
to revisit issues within the same case once the court has ruled on
them.” IHC Health Servs., Inc. v. D & K Mgmt., 2008 UT 73, ¶ 26, 196
P.3d 588. However, this doctrine is generally discretionary, with
three exceptions for extraordinary circumstances in which reconsid-
eration is mandatory.
6
Cite as: 2013 UT 20
Opinion of the Court
Law of the case does not prohibit a district court judge
from revisiting a previously decided issue during the
course of a case, regardless of whether the judge has
changed or remained the same throughout the pro-
ceedings. Rather, the doctrine allows a court to decline
to revisit issues within the same case once the court
has ruled on them.
Mid-Am. Pipeline Co. v. Four-Four, Inc., 2009 UT 43, ¶ 11, 216 P.3d 352
(internal quotation marks omitted). “While a case remains pending
before the district court prior to any appeal, the parties are bound by
the court’s prior decision, but the court remains free to reconsider
that decision. It may do so sua sponte or at the suggestion of one of
the parties.” IHC Health Servs., 2008 UT 73, ¶ 27 (footnote omitted).
¶23 This rule correctly tracks rule 54(b) of the Utah Rules of
Civil Procedure, which states that “any order or other form of
decision, however designated, that adjudicates fewer than all the
claims . . . is subject to revision at any time before the entry of
judgment adjudicating all the claims and the rights and liabilities of
all the parties.” Therefore, in this case, the replacement judge was
free to reconsider the fairness hearing issue that had been previously
ruled upon by the retired judge.
¶24 McLaughlin correctly points out that there are exceptions
to the law of the case. In these situations, a judge is required to
reassess a prior ruling. These situations are “(1) when there has been
an intervening change of authority; (2) when new evidence has
become available; or (3) when the court is convinced that its prior
decision was clearly erroneous and would work a manifest injus-
tice.” Mid-Am. Pipeline, 2009 UT 43, ¶ 14 (internal quotation marks
omitted). “While there are exceptions to the doctrine of law of the
case, these exceptions function only to dictate when the district court
has no discretion but rather must reconsider a previously decided,
unappealed issue.” Id. The exceptions do not operate to bar a
replacement judge from reconsidering an issue previously ruled on
by a prior judge in the same case. We therefore hold that the
replacement judge did not abuse his discretion when he decided to
re-visit the retired judge’s decision ordering a fairness hearing.
7
MCLAUGHLIN v. SCHENK
Opinion of the Court
II. ALTHOUGH THE HOLDING OF McLAUGHLIN I
THAT SHAREHOLDERS IN CLOSELY HELD
CORPORATIONS OWE EACH OTHER FIDUCIARY
DUTIES HAS BEEN SUPERSEDED BY STATUTE, THE
STATUTE IS NOT DISPOSITIVE IN THIS CASE BECAUSE
IT IS NOT RETROACTIVE
¶25 McLaughlin I concluded that shareholders in closely-held
corporations owe each other a heightened duty of “utmost good
faith and loyalty.” McLaughlin v. Schenk, 2009 UT 64, ¶¶ 18, 20, 220
P.3d 146. In response to McLaughlin I, the Legislature amended
section 16-10a-622 to state that “[a] shareholder of a corporation,
when acting solely in the capacity of a shareholder, has no fiduciary
duty or other similar duty to any other shareholder of the corpora-
tion, including not having a duty of care, loyalty, or utmost good
faith. This Subsection . . . applies to . . . a closely-held corporation.”
UTAH CODE § 16-10a-622(3).
¶26 The bill’s sponsor described McLaughlin I as a “troubling
decision” holding that “shareholders of a closely-held corporation
have a fiduciary duty to the other shareholders of the corporation.”
Senate Business & Labor Committee Hearing, S.B. 197, 58th Leg.,
Gen. Sess. (Feb. 16, 2010) (statement of Sen. Liljenquist). He
explained that
this bill just basically clarifies that a shareholder of a
corporation, when acting solely in the capacity of a
shareholder, has no fiduciary duty. When they’re just
a shareholder, they do not have a fiduciary duty to
other shareholders, and this clarifies that the fiduciary
duties are basically held with the directors of the
company. So this, hopefully, will correct that issue in
the McLaughlin v. Schenck [sic.] case.
Id.
¶27 The plain language and legislative history of section 622(3)
are clear: shareholders, whether in a public corporation or a closely-
held corporation, do not owe each other any fiduciary duties. As
Cookietree and Schenk correctly note, “[s]ection 622(3) supersedes
the McLaughlin I court’s holding that shareholders in closely-held
corporations owe their co-shareholders fiduciary obligations.” It is
clear that the McLaughlin I holding regarding shareholder fiduciary
duties is superseded by statute. But, section 622(3) does not apply
to the facts at issue here since they transpired prior to its passage.
8
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Opinion of the Court
¶28 As a general rule, statutes are not retroactive without clear
evidence to the contrary. Warne v. Warne, 2012 UT 13, ¶ 25, 275 P.3d
238; see also UTAH CODE § 68-3-3 (“A provision of the Utah Code is
not retroactive, unless the provision is expressly declared to be
retroactive.”). Because section 622(3) is silent as to retroactivity, it
does not apply retroactively. And because the stock purchase, the
2005 Waivers, and the 2009 Ratifications all occurred prior to the
passage of the amendment, section 622(3) does not apply and is not
dispositive here.
III. THE DISTRICT COURT DID NOT VIOLATE OUR
MANDATE IN McLAUGHLIN I BY DECLINING TO
HOLD A FAIRNESS HEARING BECAUSE NOTHING
IN OUR OPINION PRECLUDED THE CORPORATION
FROM TAKING POST-REMAND ACTION
¶29 The replacement judge granted summary judgment in
favor of Schenk and Cookietree after concluding that the post-
remand corporate action resolved any issue concerning the conflict
of interest that had tainted the 2005 Waivers. McLaughlin argues
that decision was erroneous under the mandate rule. He specifically
argues that the district court was in error when it considered actions
taken by the corporation after remand instead of holding a fairness
hearing. Cookietree and Schenk argue that our remand instruction
in McLaughlin I did not preclude the district court from taking a
course of action other than a fairness hearing and in fact “specifically
authorized . . . disinterested directors’ or shareholders’ action as a
means of resolving the conflict of interest that tainted the 2005
Waivers.” We agree with Cookietree and Schenk.
¶30 There was nothing in our McLaughlin I opinion forbidding
Cookietree from attempting to remedy the defects in the 2005
Waivers using procedures available under then-applicable law and
its corporate governance documents. The disinterested Board and
the disinterested shareholders were therefore free to act, and if they
were successful in ratifying the 2005 Waivers, then our order for a
fairness hearing would necessarily be moot. Thus, the district court
did not violate our remand order when it considered the validity of
other avenues for resolving the nontransaction conflict of interest
created by the 2005 Waivers. We therefore address the post-remand
corporate action below.
9
MCLAUGHLIN v. SCHENK
Opinion of the Court
IV. SUMMARY JUDGMENT WAS PROPER BECAUSE
THE 2009 RATIFICATION BY THE BOARD MOOTED
THE NEED FOR A FAIRNESS HEARING
¶31 McLaughlin argues that summary judgment was improper.
Specifically, he argues that the post-remand actions by the Board
and shareholders could not be effective as a matter of law because
there remained disputed issues of fact as to the adequacy and
fairness of the information provided to the disinterested director.
We agree with Cookietree and hold that the 2009 Ratification by the
Board of Directors resolved any conflict of interest problem,
rendering summary judgment appropriate.
¶32 Following our remand in 2009, Cookietree’s three directors,
Greg Schenk, Harold Rosemann, and David Rudd, met to attempt to
ratify the 2005 Waivers. “Prior to the meeting, David Rudd analyzed
and reviewed documentation containing all of the material facts
concerning the [s]tock [s]ale and the 2005 Waivers, including, but not
limited to, the 2005 Waivers themselves, the 1991 Shareholders’
Agreement, Cookietree’s financial statements and other financial
information, and the McLaughlin decision.” Schenk and Rosemann
abstained from voting due to conflicts of interest. Rudd alone then
voted to ratify the 2005 Waivers and to presently waive the stock
transfer provision of the 1991 Shareholder Agreement.
¶33 Cookietree and Schenk are correct that such a vote is
allowable under sections 850–853 of the Corporation Act, which
specifies the requirement for quorums and directors’ actions. These
sections of the Corporation Act expressly contemplate that there
may be situations where corporate directors have conflicts of interest
and specifies mechanisms for handling such circumstances.1
¶34 Under section 851, “[a] director’s conflicting interest
transaction may not be enjoined, be set aside, or give rise to an
award of damages or other sanctions . . . solely because the
director . . . has an interest in the transaction, if: directors’ action
respecting the transaction was at any time taken in compliance with
[s]ection 16-10a-852.” UTAH CODE § 16-10a-851(2)(a). Under section
852, “a quorum for purposes of action that complies with this
section” is a “majority of the qualified directors on the board of
1
In McLaughlin I, we held that, as a matter of law, the provisions
in the Corporation Act addressing conflicting interest transactions
also extend to nontransaction conflicts of interest, like the one at
issue here. McLaughlin v. Schenk, 2009 UT 64, ¶ 37, 220 P.3d 146.
10
Cite as: 2013 UT 20
Opinion of the Court
directors,” and directors’ action is taken if there is the affirmative
vote of the majority of those qualified directors. Id. § 16-10a-852(1)-
(3). Section 850 defines a “qualified director” as
any director who does not have either a conflicting
interest respecting the transaction, or a familial,
financial, professional, or employment relationship
with a second director who does have a conflicting
interest respecting the transaction, which relationship
would, in the circumstances, reasonably be expected
to exert an influence on the first director’s judgment
when voting on the transaction.
Id. § 16-10a-850(3).
¶35 In this case, the parties agree that the only qualified
director on Cookietree’s Board was Rudd. Thus, Schenk and
Cookietree assert that Rudd’s vote to waive the stock transfer
provisions was sufficient.
¶36 In response, McLaughlin argues that since three board
members were present at the meeting and two were disqualified, it
was impossible to have a majority because “[o]ne of three is not a
majority.” While McLaughlin is certainly correct that one of three is
not a majority, the Corporation Act does not require a majority vote
of all directors present. It requires only a quorum, which it specifi-
cally defines as a majority vote of all “qualified directors.” Id. § 16-
10a-852(3).
¶37 McLaughlin makes much of the fact that Cookietree’s
Bylaws state that “the act of the majority of the directors present . . .
shall . . . be the act of the Board.” He argues that because only Rudd
voted to ratify the 2005 Waiver when there were three directors
present, there was no majority. But this provision of the Bylaws
simply restates the more general provision of the Corporation Act
relating to quorums and voting. See Id. § 16-10a-824(3) (stating that
“the affirmative vote of a majority of directors present is the act of
the board of directors”). Thus, it is not this section, but rather
section 852, which provides the more specific requirements related
to conflicted situations. Thus, when dealing with conflicts of
interest, it is section 852 that fills in any potential gaps in a corpora-
tion’s articles and bylaws.
¶38 Under the circumstances presented here, the only qualified
director was Rudd. As the sole disinterested director, Rudd’s vote
in favor of the 2009 Ratification constituted a majority of the
11
MCLAUGHLIN v. SCHENK
Opinion of the Court
“qualified” directors entitled to vote. In fact, section 852 clearly
provides that “[d]irectors’ action that otherwise complies with this
section is not affected by the presence or vote of a director who is not
a qualified director.” Id. § 16-10a-852(3). Here, the only qualified
board member ratified the transfers. And under section 851(2) of the
Utah Code, once director action is taken to ratify a conflicted
transaction or “nontransaction,” it “may not be enjoined, be set
aside, or give rise to an award of damages or other sanctions” as a
matter of law.
¶39 McLaughlin makes much of the “adequacy of the disclo-
sures made to” Rudd. He argues that
Mr. Rudd did not know and still does not know
material pieces of information which would allow him
to evaluate the circumstances and fairness of the
disputed stock transfer. For example, he does not
know what consideration was paid for the disputed
shares in 1999 or whether the provisions of the Share-
holders Agreement setting forth how shares were to be
valued were followed in 1999. He does not know how
many shares Sam and Kim McLaughlin . . . would
have been able to acquire in 1999, had they been given
the opportunity or the value of those shares in 2010
compared to 1999. . . . He has never talked to Anna
Schenk, the seller of 545,200 shares. He has never
talked to Sam McLaughlin, the shareholder who
challenged the transaction. He has never talked to
Greg Schenk, the buyer, about the transaction. . . .
There was no counter-opinion contained in the Disclo-
sure Statement [provided to shareholders]. The
document was drafted by litigation counsel and
therefore subject to a reasonable inference that it was
advocacy, not information. The Disclosure Statement
was single spaced, rambling[,] and confusing to read.
¶40 McLaughlin’s alleged factual disputes about Rudd’s
knowledge regarding the stock transfers are legally irrelevant. There
is nothing in the Corporation Act or the Bylaws requiring that
qualified directors have a perfect knowledge as to all matters on
which they cast a vote. The only requirement is that they be
disinterested and that the conflicted director disclose “the existence
and nature of the conflicting interest . . . and all facts known to the
director respecting the subject matter of the transaction that an
ordinarily prudent person would reasonably believe to be material
12
Cite as: 2013 UT 20
Opinion of the Court
to a judgment about whether or not to proceed with the transaction.”
Id. §§ 16-10a-850(4), 16-10a-852(3). And McLaughlin does not even
attempt to argue that Rudd was conflicted.
¶41 The 2009 Ratification resolved any conflict of interest
problem with the transfer of shares to Schenk. Summary judgment
was therefore proper.
V. BECAUSE THE 2009 RATIFICATION BY THE BOARD
DISPOSES OF THE CASE, WE DECLINE TO ADDRESS
THE 2010 SHAREHOLDER VOTE
¶42 Because the 2009 Ratification by the Board mooted the
need for a fairness hearing and completely resolved any conflict of
interest problem, questions regarding the validity of the 2010
shareholder vote are moot. We therefore decline to address them.
CONCLUSION
¶43 We hold that the district court did not violate the law of the
case doctrine. Under that doctrine, it remained free to reconsider an
issue it had previously decided. We additionally hold that the
district court did not violate our mandate in McLaughlin I. There
was nothing in McLaughlin I to prohibit the corporation from taking
post-remand action. Although the holding in McLaughlin I relating
to shareholder fiduciary duties has been superseded by statute,
because the statute is not retroactive, it is not dispositive in this case.
The 2009 Ratification by the Board of Directors mooted the need for
a fairness hearing by completely resolving any conflict of interest
problem. We therefore affirm the summary judgment entered by the
district court.
13
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"pile_set_name": "FreeLaw"
} |
760 F.Supp. 1486 (1991)
Lois ROBINSON, Plaintiff,
v.
JACKSONVILLE SHIPYARDS, INC., et al., Defendants.
No. 86-927-Civ-J-12.
United States District Court, M.D. Florida, Jacksonville Division.
January 18, 1991.
Order, Injunction and Final Judgment March 8, 1991.
*1487 *1488 *1489 *1490 Kathy G. Chinoy, Jacksonville, Fla., Alison Wetherfield and Sarah E. Burns, NOW Legal Defense & Educ. Fund, New York City, for plaintiff.
Eric J. Holshouser and William H. Andrews, Coffman, Coleman, Andrews & Grogan, Jacksonville, Fla., for defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
MELTON, District Judge.
This action was commenced by plaintiff Lois Robinson pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq., and Executive Order No. 11246, as amended. Plaintiff asserts defendants created and encouraged a sexually hostile, intimidating work environment. Her claim centers around the presence in the workplace of pictures of women in various stages of undress and in sexually suggestive or submissive poses, as well as remarks by male employees and supervisors which demean women. Defendants dispute plaintiff's description of the work environment and maintain that, to the extent the work environment may be found to satisfy the legal definition of a hostile work environment, they are not liable for the acts that give rise to such a description. Defendants further contest the Court's authority to structure a remedy in the form sought by plaintiff.
This non-jury action was tried by the Court over the course of eight days in January and February 1989, with final arguments subsequently submitted in writing. Testimony was received from various persons who were involved in the events allegedly creating the hostile work environment. The testimony of several witnesses was received in deposition form.[1] Each *1491 side presented two expert witnesses. Photographs and other documentary evidence were received. The Court has fully considered the believability of the testimony presented, including the credibility of witnesses, and has also carefully reviewed the photographs and other documentary evidence. Based thereon, the Court finds that certain of the defendants violated Title VII through the maintenance of a sexually hostile work environment and thereby discriminated against plaintiff because of her sex. In so holding, the Court makes the following Findings of Fact and Conclusions of Law in accordance with Fed.R.Civ.P. 52(a).[2] To the extent that any Findings of Fact constitute Conclusions of Law, they are adopted as such; to the extent that any Conclusions of Law constitute Findings of Fact, they are so adopted.
FINDINGS OF FACT
Parties
1. Plaintiff Lois Robinson ("Robinson") is a female employee of Jacksonville Shipyards, Inc. ("JSI"). She has been a welder since September 1977. Robinson is one of a very small number of female skilled craftworkers employed by JSI. Between 1977 and the present, Robinson was promoted from third-class welder to second-class welder and from second-class welder to her present position as a first-class welder.
2. JSI is a Florida corporation that runs several shipyards engaged in the business of ship repair, including the Commercial Yard and the Mayport Yard. (The Court takes judicial notice of the closing and the reopening of the Commercial Yard operation subsequent to the trial of this case.) JSI does ship repair work for the federal government Department of the Navy. See P.Exh. No. 73 (list of Navy vessels JSI worked on during 1983-88). As a federal contractor, JSI has affirmative action and non-discrimination obligations. 6 T.T. at 80-81 (stipulation by counsel); P.Exh. No. 34.
3. Defendant Arnold McIlwain ("McIlwain") held the office of President of JSI from the time Robinson was hired by the company through the time of the trial of this case. (The Court is aware from news reports that McIlwain no longer holds this office.) In that capacity he was the highest-ranking officer at JSI; as such he had supervisory authority over Robinson throughout her employment at JSI.
4. Defendant Lawrence Brown ("Brown") has been Vice-President for Operations at JSI since 1980. During the time relevant to this case, he oversaw the operations of the Commercial Yard and the Mayport Yard and formulated policies and regulations concerning the conduct and treatment of JSI employees at these two yards. He had and has supervisory authority over Robinson.
*1492 5. Defendant John Stewart ("Stewart") has been Industrial Relations Manager of JSI since 1981. During the time relevant to this case, he was responsible for personnel policies at all of JSI's facilities, including the Mayport Yard and the Commercial Yard, and was in charge of handling Equal Employment Opportunity (EEO) complaints filed against JSI.
6. Defendant Elmer L. Ahlwardt ("Ahlwardt") was Vice-President of the Mayport Yard from 1977 to 1988. During that time, he was the highest ranking official and principal supervisor at the Mayport Yard. (He retired from JSI in 1988.) He had supervisory authority over Robinson throughout her employment by JSI when she worked at the Mayport Yard.
7. Defendant Everette P. Owens ("Owens") was a yard superintendent at the Mayport Yard from 1973 until 1988. (He was not working at the time of the trial due to an injury.) He was responsible for managing the daily operation of the Mayport Yard; he had supervisory authority over Robinson when she worked there.
8. Defendant Ellis Lovett ("Lovett") has been shipfitters' foreman at JSI's Mayport Yard since approximately 1970. Lovett handled personnel problems in his shop, including reprimanding shipfitters at the Mayport Yard.
9. Defendant John Kiedrowski ("Kiedrowski") was promoted from first-class welder to leaderman at JSI in 1976, and since that time he has held the position of either quarterman or leaderman. Kiedrowski has exercised limited supervisory authority over Robinson and has inspected her work. Kiedrowski Depo. at 42. In January 1985 Kiedrowski was the most senior person in the welding department on the day shift at the Mayport Yard and aboard the U.S.S. Saratoga. 8 T.T. at 97.
The JSI Workplace
10. In addition to a welding department, JSI's other craft departments include shipfitting, sheetmetal, electrical, transportation, shipping and receiving (including toolroom), carpenter, boilermaker, inside machine, outside machine, rigging, quality assurance and pipe. Employees in these craft departments may be assigned to work at either the Mayport Yard, situated at the Mayport Naval Station, or the Commercial Yard, situated at a riverfront site in downtown Jacksonville and sometimes referred to as the downtown yard. Robinson's job assignments at JSI have required her to work at both the Commercial Yard and the Mayport Yard.
11. The term "shop" has two meanings at the shipyards. The various craft departments are called shops. These departments also have permanent physical locations that are called shops. A craft department may bear a nickname; for example, the shipfitters' shop is sometimes referred to as the fab shop.
12. At Mayport, the shops are housed in several large buildings in the "backyard compound." When an aircraft carrier is docked for repair, the ship gives a compound to JSI in a hangar bay in which to put trailers which serve as temporary offices for each shop or department. This shipboard compound may range from approximately 30 feet by 100 feet to 60 feet by 150 feet. The space between the trailers on either side of the compound is approximately wide enough to allow passage of a truck. Each trailer houses two temporary offices, about six feet by twelve feet in size, which may be empty, or may contain office furniture (for example, desks and bulletin boards). Workers store their equipment in the trailers and congregate there with coworkers, both to socialize and for work-related reasons.
13. Robinson's job assignments at the Mayport Yard have included "combination jobs," in which she sometimes works as a welder in combination with shipfitters. At times, Robinson has been directed by her superiors to stand in front of the shipfitters' trailer to get her assignment from the shipfitters' leaderman. When welders work with shipfitters at the Mayport Yard, it is not unusual for them to go into the shipfitters' trailer. Robinson has, for example, gone into the shipfitters' trailer to check on paperwork or her assignment.
14. Ship repair work is a dangerous profession; JSI acknowledges the need to "provide a working environment that is *1493 safe and healthful." Jt.Exh. No. 11, at 37 (collective bargaining agreement); see also Jt.Exh. No. 12 (JSI Safety Instructions and General Company Rules). Accidents pose a continuing risk and do happen; as defendant McIlwain noted, where individuals are working together, "one slip" could lead to someone getting hurt. McIlwain Depo. at 27. Welding, Robinson's profession, poses particular risks. See Turner Depo. at 62-65 (falling, slipping, burns, flammable gas).
15. Quartermen and leadermen at JSI are union bargaining unit employees who assign and check the work performed by craftworkers. Quartermen are below foremen in authority, but a quarterman does the foreman's job when the foreman is absent from the work area. Owens Depo. at 33-34. Leadermen are directly below quartermen in authority and look to quartermen as their immediate supervisors. 5 T.T. at 172. Leadermen often are the most senior persons in a shop in a work area. See, e.g., 7 T.T. at 128; 8 T.T. at 97. Leadermen, however, lack the authority to hire, fire, or promote other employees. 8 T.T. at 89. Leadermen cannot discipline other workers, id., although they can make recommendations to the foremen about discipline, McMillan Depo. at 137. Leadermen have no authority to resolve or adjust formal employee grievances. 8 T.T. at 89.
The JSI Working Environment
16. JSI is, in the words of its employees, "a boys club," 4 T.T. at 36, and "more or less a man's world," McMillan Depo. at 97. Women craftworkers are an extreme rarity. The company's EEO-1 reports from 1980 to 1987 typically show that women form less than 5 percent of the skilled crafts. P.Exh. Nos. 35-42. For example, JSI reported employing 2 women and 958 men as skilled craftworkers in 1980, 7 women and 1,010 men as skilled craftworkers in 1983, and 6 women and 846 men as skilled craftworkers in 1986. Henry Starling, a shift superintendent at the Commercial Yard, testified that on a busy shift he may see only 8 or 10 women, while seeing 150 men; on a quiet shift he may see no women at all. 7 T.T. at 21-22; see also 5 T.T. at 169 (welding leaderman estimated shift of 50 to 100 people included only 1 or 2 women); Lovett Depo. at 8 (only 5 or 6 of 98 shipfitters are female); Turner Depo. at 6 (only 2 of approximately 100 welders are female). Leslie Albert, Lawanna Gail Banks, and Robinson each testified that she was the only woman in a crowd of men on occasions when each was sexually harassed at JSI. See, e.g., 1 T.T. at 32-33, 112-14, 175-76; 2 T.T. at 16, 35-37; 3 T.T. at 42-47, 52-54, 84-86, 109-11; 4 T.T. at 11-12, 25-28, 75-77. JSI has never employed a woman as a leaderman, quarterman, assistant foreman, foreman, superintendent, or coordinator. Nor has any woman ever held a position of Vice-President or President of JSI.
17. Pictures of nude and partially nude women appear throughout the JSI workplace in the form of magazines, plaques on the wall, photographs torn from magazines and affixed to the wall or attached to calendars supplied by advertising tool supply companies ("vendors' advertising calendars"). Two plaques consisting of pictures of naked women, affixed to wood and varnished, were introduced into evidence, Jt. Exh. Nos. 6, 7, and identified by several witnesses as having been on display for years at JSI in the fab shop area under the supervision of defendant Lovett, 1 T.T. at 101; 7 T.T. at 94; 8 T.T. at 142-43.
18. Advertising calendars, such as Joint Exhibits Nos. 1-5, have been delivered for years to JSI by vendors with whom it does business. JSI officials then distribute the advertising calendars among JSI employees with the full knowledge and approval of JSI management. JSI employees are free to post these advertising calendars in the workplace. (It is not a condition of JSI's contracts with the vendors that the advertising calendars be posted.) A major supplier of advertising calendars to JSI is Whilden Valve and Gauge Repair, Inc.; Valve Repair, Inc. also does business with JSI and also delivers advertising calendars to the company. Joint Exhibit No. 1 is the 1984 Whilden Valve and Gauge Repair, Inc. calendar that was distributed among employees at JSI; it hung in the pipe shop at the Mayport Yard, among other places. The exhibit designated as Joint Exhibit No. 2 is a copy of an advertising calendar from Whilden Valve and Gauge Repair, Inc. that *1494 was posted, among other places, in the shipfitters' temporary office on the U.S.S. Saratoga in January 1985. Joint Exhibit No. 5 is a copy of a Valve Repair, Inc. calendar that was distributed at JSI in 1987 and which was on display in, among other places, the offices of the foreman and leaderman of the pipe shop at the Commercial Yard. Generally speaking, these calendars feature women in various stages of undress and in sexually suggestive or submissive poses. A description in greater detail of the calendars' contents is set forth in Findings of Fact ("FOF") ¶ 25. Several male JSI employees corroborated the display of similar advertising calendars at JSI. See, e.g., 6 T.T. at 130, 145 (Owens); id. at 198-200 (Ahlwardt); 7 T.T. at 53 (McBride); id. at 79, 93 (Cooney).
19. JSI has never distributed nor tolerated the distribution of a calendar or calendars with pictures of nude or partially nude men. Ahlwardt stated that he has never seen a picture of a nude man at JSI and would be surprised to see one. Ahlwardt Depo. at 100-01. Lovett said that he would probably throw such a calendar in the trash. Lovett Depo. at 18-20. Welding foreman Fred Turner noted it was accepted at the shipyards for vendors to supply calendars of nude women, but he had never known of a vendor distributing a calendar of nude men and, if one did so, he would think the "son of a bitch" was "queer." Turner Depo. at 52-53.
20. JSI employees are encouraged to request permission to post most kinds of materials; however, prior approval by the company is not required for the posting of advertising calendars with pictures of nude or partially nude women. JSI management has denied employees' requests to post political materials, advertisements and commercial materials.
21. Bringing magazines and newspapers on the job is prohibited, 6 T.T. at 139-42, but male JSI employees read pornographic magazines in the workplace without apparent sanctions, see 7 T.T. at 215-23 (testimony of Roy Wingate regarding Robinson's complaint about coworker reading pornographic magazine on the job). Although JSI employees are discouraged by management from reading on the job, they are not prohibited from tearing sexually suggestive or explicit pictures of women out of such magazines and displaying them on the workplace walls at JSI. Kiedrowski Depo. at 76-77; see also Leach Depo. at 19-21, 26 (Playboy and Penthouse magazines in desk drawers in shipfitting shop and trailer office; Leach showed them to other men in the fab shop); McMillan Depo. at 46-47 (magazines showing nude women kept in storeroom and transportation department for JSI male employees to read).
22. Management employees from the very top down condoned these displays; often they had their own pictures. McIlwain, for example, has been aware for years of Playboy- and Penthouse-style pictures showing nude women posted in the workplace; he refused to issue a policy prohibiting the display of such pictures. McIlwain Depo. at 56-57, 81-82. Both Brown and Stewart have encountered pictures of nude or partially nude women in the work environment at JSI. Nevertheless, both men have concluded, and agreed with each other, that there is nothing wrong with pictures of naked or partially naked women being posted in the JSI workplace. Ahlwardt kept a "pin-up" himself, 6 T.T. at 207; Lovett, like some other foremen, had vendors' advertising calendars in his office. Lovett Depo. at 35-36; Jt.Exh. No. 5. Coordinators, who are members of management, 6 T.T. at 132, and who are responsible for ensuring that government contracts are performed to the satisfaction of the federal government, have had pornographic magazines in the desks of their trailers, 5 T.T. at 182.
Sexual Harassment of Plaintiff
23. Robinson credibly testified to the extensive, pervasive posting of pictures depicting nude women, partially nude women, or sexual conduct and to the occurrence of other forms of harassing behavior perpetrated by her male coworkers and supervisors. Her testimony covered the full term of her employment, from 1977 to 1988. The Court considered those incidents that fall outside the time frame of a Title VII complaint for the purpose of determining *1495 the context of the incidents which are actionable (i.e., whether the more recent conduct may be dismissed as an aberration or must be considered to be a part of the work environment) and for the purpose of assessing the reasonableness of the response by defendants to the complaints that Robinson made during the Title VII time frame. The Court also recognizes some limitations in Robinson's testimony. She tried to ignore some sexual comments. Her testimony included many episodes of harassment not previously disclosed in her answers to defendants' interrogatories because, as stated in those answers, the frequency with which the incidents occurred over the course of her employment made delineating every one a difficult task. Robinson's demeanor at trial reflected the emotional nature of her recollections. Moreover, the large number of male employees and the often surreptitious nature of the postings and graffiti writings left Robinson incapable of identifying many of her harassers. (Indeed, a perusal of her testimony and that of her coworkers reveals that many persons in the shipyards knew each other only by nicknames.) These limitations, however, do not diminish the weight and the usefulness of the testimony. The individual episodes illustrate and lend credibility to the broader assertion of pervasiveness.
24. Robinson's testimony provides a vivid description of a visual assault on the sensibilities of female workers at JSI that did not relent during working hours. She credibly testified that the pervasiveness of the pictures left her unable to recount every example, but those pictures which she did describe illustrate the extent of this aspect of the work environment at JSI. She testified to seeing in the period prior to April 4, 1984, the three hundredth day prior to the filing of her EEOC charge:
(a) a picture of a woman, breasts and pubic area exposed, inside a drydock area in 1977 or 1978. 1 T.T. at 104.
(b) a picture of a nude Black woman, pubic area exposed to reveal her labia, seen in the public locker room. 1 T.T. at 105.
(c) drawings and graffiti on the walls, including a drawing depicting a frontal view of a nude female torso with the words "USDA Choice" written on it, at the Commercial Yard in the late 1970's or early 1980's, in an area where Robinson was assigned to work. 1 T.T. at 112-13.
(d) a picture of a woman's pubic area with a meat spatula pressed on it, observed on a wall next to the sheetmetal shop at Mayport in the late 1970's. 1 T.T. at 113.
(e) centerfold-style pictures in the Mayport Yard toolroom trailer, which Robinson saw daily in the necessary course of her work for over one month in the late 1970s. 1 T.T. at 105-08. Neal McCormick, a toolroom worker from 1975 to 1980, verified that the toolroom personnel had indeed displayed pictures of nude women "of the Playboy centerfold variety" during the time he worked there. 8 T.T. at 66-67.
(f) pictures of nude or partially nude women in the fab shop lockers at the Commercial Yard in 1978 through 1980. 1 T.T. at 110-11.
(g) a pornographic magazine handed to Robinson by a male coworker in front of other coworkers in the early 1980s. 1 T.T. at 110-11.
(h) a magazine containing pictures of nude and partially nude women in the possession of a pipefitter, in 1980, who was reading it in the engine room of a ship. 2 T.T. at 17.
(i) pictures in the shipfitters' shop at the Commercial Yard, in 1983, observed by Robinson while she was walking to the welding shop, including a frontal nude with a shaved pubic area and corseted nude with her breasts and buttocks area exposed. 1 T.T. at 120-21. Robinson complained to John Robinson, the quarterman on the third shift in the shipfitting department, about the second picture; he took it down that night and she never saw the picture again. Id.
(j) a picture of a woman with her breasts exposed, on the outside of a shack on a ship in the Commercial Yard. 2 T.T. *1496 at 10. Robinson enlisted the assistance of union vice-president Leroy Yeomans to have the picture removed. 6 T.T. at 221-22, 228-29. It was removed within a day or two.
25. Robinson's testimony concerning visual harassment in the period commencing April 4, 1984, includes:
(a) a picture of a nude woman with long blonde hair wearing high heels and holding a whip, waved around by a coworker, Freddie Dixon, in 1984, in an enclosed area where Robinson and approximately six men were working. 1 T.T. at 114-20. Robinson testified she felt particularly targeted by this action because she has long blonde hair and works with a welding tool known as a whip. Id. at 114. Dixon admitted that he had indeed waved the picture around for other male employees to see, but denied that he intended to target or offend Robinson. 7 T.T. at 150. In fact, Dixon claimed that he was unaware that Robinson was in the area and that he was unaware that Robinson was a blonde. Id. at 149-51. The Court does not find his denials credible; the evidence more readily supports the conclusion that Dixon intended to offend Robinson, or acted with such disregard for her that the harassment could be equated with intent.
(b) calendars posted in the pipe shop in the Commercial Yard, in 1983 or 1984, including a picture in which a nude woman was bending over with her buttocks and genitals exposed to view. 1 T.T. at 121-22. (Joint Exh. No. 1 was admitted as illustrative of this type of calendar. It is a Whilden Valve and Gauge calendar for 1984. The naked breasts or buttocks of each model are exposed in every month; the pubic areas also are visible on the models featured in April and September. Several of the pictures are suggestive of sexually submissive behavior.) Robinson testified that she observed at least three pictures posted in the pipe shop. Id. Although this was not Robinson's usual work area, she was in that shop with a leaderman to find the pipe shop leaderman to clarify a work matter. Id. at 122.
(c) a picture of a nude woman with long blond hair sitting in front of a mirror brushing her hair, in a storage area on a ship. 1 T.T. at 123. Robinson mentioned to either a leaderman or the assistant foreman that she considered it a "very dirty ship," and she was subsequently reassigned to a different location. Id.
(d) Joint Exh. No. 3, a Whilden Valve & Gauge calendar for 1985, which features Playboy playmate of the month pictures on each page. 2 T.T. at 21. The female models in this calendar are fully or partially nude. In every month except February, April, and November, the model's breasts are fully exposed. The pubic areas are exposed on the women featured in August and December. Several of the pictures are suggestive of sexually submissive behavior.
(e) several pictures of nude or partially nude women posted in the fab shop area in the backyard of the Mayport Yard, in January 1985, visible to her from her path to and from the time clock building. 1 T.T. at 19-20.
(f) pictures in the shipfitters' trailer on board the U.S.S. Saratoga, in January 1985, including one picture of two nude women apparently engaged in lesbian sex. 1 T.T. at 22-23. Robinson later observed a calendar, Jt. Exh. No. 2, in this office. Id. at 44-45. This calendar, distributed by Whilden Valve and Gauge, features pictures of nude and partially nude women each month. The breasts of each model are exposed; the pubic areas of the models also are exposed for May, October and December. Several of the pictures are suggestive of sexually submissive behavior.
(g) pictures in the toolroom trailer aboard the U.S.S. Saratoga, in January 1985, including one of a nude woman with long blond hair lying down propped up on her elbow and a *1497 smaller black and white photograph of a female nude. 1 T.T. at 24-25. These pictures formed a part of Robinson's complaint that forms the foundation of this lawsuit. The details are recounted infra FOF ¶¶ 98-116.
(h) pictures in the fab shop area, in January 1985, including one of a woman wearing black tights, the top pulled down to expose her breasts to view, and one of a nude woman in an outdoor setting apparently playing with a piece of cloth between her legs. 1 T.T. at 55-56.
(i) Joint Exh. No. 4, a Whilden Valve & Gauge calendar for 1986, which features Playboy playmate of the month pictures on each page. 1 T.T. at 103-04. The female models in this calendar are fully or partially nude. In every month except April, the model's breasts are fully exposed. The pubic areas are exposed on the women featured in May, June and December. Several of the pictures are suggestive of sexually submissive behavior.
(j) a picture of a nude woman left on the tool box where Robinson returned her tools, in the summer of 1986. 2 T.T. at 35. The photograph depicted the woman's legs spread apart, knees bent up toward her chest, exposing her breasts and genitals. Id. at 36. Several men were present and laughed at Robinson when she appeared upset by the picture. Id. at 36-37.
(k) pictures seen in the shipfitters' trailer, in 1986, including one of a woman with short blond hair, wearing a dark vest pulled back to expose her breasts. 1 T.T. at 192. Robinson complained to shipfitter leaderman Danny Miracle about the photograph of the blond woman. Miracle removed the photograph, with some reluctance, but it was posted again shortly thereafter. 8 T.T. at 70-71. It was not visible from outside the trailer when it was posted the second time. Id.
(l) a sexually-oriented cartoon, D.Exh. No. 1, posted in the safety office, in 1986, at the Mayport Yard. 1 T.T. at 193-96.
(m) pictures observed in the fab shop area office, in 1986, including Jt.Exh. No. 6, 1 T.T. at 101, and a picture of a topless brown haired woman. 2 T.T. at 5-7. Joint Exh. No. 6 is a wooden plaque consisting of a picture of a very young-looking woman with one breast fully exposed and the other breast partially exposed. Robinson also remarked that another plaque was present in that shop, without further identifying it. Other testimony indicated that Jt.Exh. No. 7 hung in the fab shop at that time. Jt.Exh. No. 7 shows a nude woman straddling a hammock with her head tossed back and her back arched. Her exposed breasts are fully visible as is some pubic hair.
(n) a life-size drawing of a nude woman on a divider in the sheetmetal shop, in April 1987, which remained on the walls for several weeks. 1 T.T. at 169-70.
(o) a drawing on a heater control box, approximately one foot square, of a nude woman with fluid coming from her genital area, in 1987, at the Commercial Yard. 1 T.T. at 170-72.
(p) Joint Exh. No. 5, a Valve Repair, Inc. calendar for 1987, which features Playboy playmate of the month pictures on each page. 1 T.T. at 172-73. (Defendants have admitted that this calendar was displayed during 1987 in the foreman's and leaderman's offices of the pipe shop at the Commercial Yard.) The female models in this calendar are fully or partially nude. In every month the model's breasts are fully exposed. The pubic areas are exposed on the women featured in March and September. Several of the pictures are suggestive of sexually submissive behavior.
(q) a dart board with a drawing of a woman's breast with her nipple as the bull's eye, in 1987 or 1988, at the Commercial Yard. 1 T.T. at 175-76.
*1498 (r) pornographic magazines, including Players, on a table by the gangway of a ship, in 1987 or 1988, where JSI machinists were looking through them and commenting on the pictures, 1 T.T. at 180-82, a Club magazine, held out by coworker Thomas Adams in the bow of a ship, id. at 183-84, several magazines being read by pipefitters, in 1986, aboard a ship at the Mayport Yard, 2 T.T. at 16, and various other instances of welders with magazines throughout the 1980's, id. at 18.
(s) pictures of nude and partially nude women posted in the engine room of the M/V Splay, in 1988, at the Commercial Yard, including a picture of a nude woman in a kneeling position and a calendar featuring photographs of nude women. 1 T.T. at 177-79. Robinson complained to her leaderman, who in turn found a person associated with the ship to remove and cover the pictures. Id. at 179. Later, however, the pictures were again posted and uncovered. Id. at 179-80.
(t) a shirt worn by the shop steward, in December 1988, with a drawing of bare female breasts and the words "DALLAS WHOREHOUSE" written on it. 2 T.T. at 204-05.
26. In January 1985, following a complaint by Robinson concerning a calendar in the shipfitters' trailer, the words "Men Only" were painted on the door to that trailer. Full details of this incident are recounted infra FOF ¶¶ 102-106.
27. Robinson also testified about comments of a sexual nature she recalled hearing at JSI from coworkers. In some instances these comments were made while she also was in the presence of the pictures of nude or partially nude women. Among the remarks Robinson recalled are: "Hey pussycat, come here and give me a whiff," 1 T.T. at 54-55; "The more you lick it, the harder it gets," id. at 96 (incorrectly transcribed as "The more you look at it ..."); "I'd like to get in bed with that," id. at 175; "I'd like to have some of that," id.; "Black women taste like sardines," id. at 129; "It doesn't hurt women to have sex right after childbirth," id.; "That one there is mine" (referring to a picture in a magazine), id. at 181; "Watch out for Chet. He's Chester the Molester" (referring to a cartoon character in a pornographic magazine who molests little girls), 2 T.T. at 17; "You rate about an 8 or a 9 on a scale of 10," id. at 18. She recalled one occasion on which a welder told her he wished her shirt would blow over her head so he could look, 1 T.T. at 126, another occasion on which a fitter told her he wished her shirt was tighter (because he thought it would be sexier), id. at 127-28, an occasion on which a foreman candidate asked her to "come sit" on his lap, id. at 130, and innumerable occasions on which a coworker or supervisor called her "honey," "dear," "baby," "sugar," "sugar-booger," and "momma" instead of calling her by her name, id. at 57, 128, 173-74. Robinson additionally related her exposure to joking comments by male coworkers about a woman pipefitter whose initials are "V.D." 2 T.T. at 17-18.
28. Robinson encountered particularly severe verbal harassment from a shipfitter, George Nelson ("Nelson"), while assigned to work with him on a number of different nights in 1986 at the Mayport Yard. Nelson regularly expressed his displeasure at working with Robinson, making such remarks as "women are only fit company for something that howls," and "there's nothing worse than having to work around women." 1 T.T. at 196-201. On one occasion, Nelson responded to Robinson's inquiry regarding a work assignment by stating, "I don't know, I don't care where you go. You can go flash the sailors if you want." Id. at 196-97. On other occasions, Nelson ridiculed Robinson in front of the Navy fire watch personnel. Id. at 197-98. When Robinson confronted Nelson over her perception of his behavior as sexual harassment, Nelson denied he was engaging in harassment because he had not propositioned her for sexual favors. Id. at 200. Nelson subsequently made Robinson's perception of "harassment" a new subject of ridicule and accused her of "crusading on a rabbit." 2 T.T. at 5.
29. On one occasion, George Leach told an offensive joke in Robinson's presence, the subject matter of which concerned *1499 "boola-boola," a reference to sodomous rape. 1 T.T. at 131-35. He admitted telling the joke but maintained that he told it quietly and Robinson had taken steps to avoid hearing the joke. The Court credits Robinson's testimony and further observes that the work environment is not rendered less hostile by a male coworker's demand of a female worker that she "take cover" so that the men can exchange dirty jokes. Leach later teased Robinson in a threatening fashion by yelling "boola-boola" at her in the parking lot at JSI. Robinson subsequently learned that some shipfitters had dubbed her "boola-boola" as a nickname arising out of these events. Id. at 133.
30. Robinson testified concerning the presence of abusive language written on the walls in her working areas in 1987 and 1988. Among this graffiti were the phrases "lick me you whore dog bitch," "eat me," and "pussy." This first phrase appeared on the wall over a spot where Robinson had left her jacket. 1 T.T. at 163-65. The second phrase was freshly painted in Robinson's work area when she observed it. Id. at 165-67. The third phrase appeared during a break after she left her work area to get a drink of water. Id. at 167-68.
31. Donald Furr, Robinson's leaderman, attested to further evidence of the frequency with which this abusive graffiti occurred. He stated that he had seen words like "pussy" and "cunt" written on the walls in the JSI workplace. 5 T.T. at 165-67. He added that at one point "it was getting to be an almost every night occasion [Robinson] wanted something scribbled out or a picture tooken [sic] down...." Id. at 171.
Sexual Harassment of Other Female Craftworkers
32. The Court heard testimony from two of Robinson's female coworkers, Lawanna Gail Banks ("Banks") and Leslie Albert ("Albert"), concerning incidents of sexual harassment to which they were subjected, including incidents that did not occur in Robinson's presence. The Court heard this evidence for several reasons. First, as with the incidents outside the time frame of a Title VII complaint involving Robinson, incidents involving other female employees place the conduct at issue in context. The pervasiveness of conduct constituting sexual harassment outside Robinson's presence works to rebut the assertion that the conduct of which Robinson complains is isolated or rare. Second, the issue in this case is the nature of the work environment. This environment is shaped by more than the face-to-face encounters between Robinson and male coworkers and supervisors. The perception that the work environment is hostile can be influenced by the treatment of other persons of a plaintiff's protected class, even if that treatment is learned second-hand. Last, other incidents of sexual harassment are directly relevant to an employer's liability for the acts of employees and to the issue of an appropriate remedy for the sexual harassment perpetrated against Robinson.
33. Banks and Albert both confirmed the description of the work environment related by Robinson. Each of these other women endured many incidents of sexually harassing behavior. To the extent that defendants attempted to show that either Banks or Albert engaged in behavior demonstrating a welcomeness of the sexually harassing behavior or a lack of offense at such behavior, the Court does not find these contentions credible. Rather, for reasons expressed in the expert testimony infra, the Court finds the description of these witnesses' behavior to be consistent with the coping strategies employed by women who are victims of a sexually hostile work environment.
34. Banks testified that she experienced what she considers to be sexual harassment in the form of comments, pictures, public humiliation and touching by male coworkers and supervisors. 3 T.T. at 30-31. The harassing behavior negatively affected her attitude toward work; she had to prepare herself mentally each day for what might happen. Id. at 131-32. Among the incidents to which she credibly testified:
(a) being pinched on the breasts by a foreman, id. at 34-35.
*1500 (b) having her ankles grabbed by a male coworker who pulled her legs apart and stood between them, id. at 36-37.
(c) hearing such comments as "it's a cunt hair off," id. at 38, "are you on the rag," id. at 51, and "what do you sleep in?," id. at 48. Indeed, a welding department supervisor, John Nicholas, testified that he personally had used the first two of these phrases, as well as "put some hair around it." 7 T.T. at 229, 235. Banks testified Nicholas remarked to her that she would "go to hell for culling pussy," 3 T.T. at 42, a remark which Nicholas denied, 7 T.T. at 226. Banks testified that Herbert Kennedy, a foreman, told her that "she's sitting on a goldmine," 3 T.T. at 49-50, a phrase that Nicholas testified he had heard used in the shipyards, 7 T.T. at 229, although Nicholas did not name any person who used the phrase.
(d) receiving verbal abuse from a rigger named Hawkins. On one occasion Hawkins belittled Banks' concern over a large rat by making a quip that Banks took to be a sexual reference. 3 T.T. at 43-44. The following day Hawkins humiliated Banks by stating, in front of a large group of male coworkers, "if you fell into a barrel of dicks, you'd come up sucking your thumb." Id. at 42-48.
(e) receiving a variety of harassment from a rigger named John Fraser. Fraser sniffed at Banks' behind while she was walking up a gangway, producing laughter from the group of men observing the incident. 3 T.T. at 53-54. Fraser also placed a large flashlight in his pants in Banks' presence to create the illusion of a large penis. Id. at 54-55. (Fraser admitted that he had done this with a flashlight, but denied that it was done in Banks' presence. 8 T.T. at 125.) Fraser once so bothered Banks during a bus ride at work that she swore at him and felt compelled to immediately report his actions, first to her leaderman, then his leaderman. 3 T.T. at 55-57. His leaderman, Eugene Sharpe ("Sharpe"), responded in a fashion that left Banks feeling humiliated. Id. at 57-59. In fact, Banks was summoned before her supervisor the next day and called to task for having sworn at Fraser. Id. at 60-68.
(f) suffering the embarrassment of having a shipfitter leaderman, Ernie Edenfield ("Edenfield"), hold a chipping hammer handle, which was whittled to resemble a penis, near her face while he told her to open her mouth. 3 T.T. at 83-86. (Edenfield denied having done this. 7 T.T. at 164-65.)
(g) enduring the unwelcome advances of a coworker, a pipefitter named Romeo Bascuguin, who pursued her for dates and talked explicitly about his reputed sexual prowess. 3 T.T. at 72-81, 173-77. Banks complained to Kiedrowski about Bascuguin's advances and Kiedrowski spoke to him about his behavior. 8 T.T. at 94-95. Banks also testified to two other incidents involving calls to her home by JSI employees, including a supervisor, who expressed sexual interest in her. 3 T.T. at 126-30.[3]
35. Banks observed pictures of nude and partially nude women throughout the workplace at JSI. 3 T.T. at 114-17, 120-22, 124. She did not take as great offense at the pictures as Robinson did, but Banks stated that she steered clear of men who worked where such pictures were displayed because she came to expect more harassment from those men. 3 T.T. at 125, 179-80.
36. Following Robinson's complaints to management about the pictures of nude or partially nude women, Banks observed an increase in the number of pictures and in the objectionableness of their content. 3 T.T. at 88, 94, 123. On two occasions when *1501 Banks was the only woman on the company bus, male coworkers displayed or read from pornographic magazines. Id. at 103-04, 109-11. Banks also testified concerning two occasions in which male coworkers posted pictures with an apparent animus toward Robinson. A coworker, Chris Lay, showed a number of men, and Banks, a picture of a nude woman with a welding shield. He remarked, "Lois would really like this," and placed it on the wall in the welding trailer aboard the U.S.S. Saratoga. Id. at 97-98. Banks removed the picture when the men had left. Id. at 98. Approximately the same time, some male pipefitters placed a picture of a nude woman on Robinson's toolbox. Banks removed it, but another picture was placed there and subsequently discovered by Robinson. Id. at 100-03.
37. Albert, a machinist at JSI from 1976 to 1986, testified to a description of the work environment consistent with that described by Robinson and Banks. She related sexual comments identical to or similar to those heard by Robinson and Banks, see 4 T.T. at 32-36, 75-77, and noted that the recollection of specific incidents was hampered by the commonplace, daily nature of the comments, id. In one noteworthy incident, a male coworker persistently propositioned Albert, prompting her to complain to her leaderman and assistant foreman. The propositions continued after those individuals spoke to the coworker. When he finally put his hands on Albert, she responded both verbally and physically. Thereafter the coworker was fired, although the circumstances in the record of his discharge do not indicate whether the discharge was for the sexually harassing behavior or for drunkenness and sleeping on the job. See id. at 54-56.
38. Albert also testified to the pervasive presence of pictures of nude and partially nude women throughout the shipyards, and the increase of male employee attention to such pictures following Robinson's complaints over the presence of the pictures. Among the incidents to which she credibly testified:
(a) observing a large poster of a nude woman with profuse hair growing down the centerline of her body posted on a wall in the transportation department. 4 T.T. at 10-13. A male coworker asked Albert if she had similar hair. Id.
(b) observing the vendors' advertising calendars previously described, the "girlie" magazines kept in the outside machine shop trailer desk drawer, and a variety of men's adult magazines, such as Playboy, Penthouse, Cheri, Chic, and foreign titles, kept in trailers and carried by male employees in their back pockets. Id. at 13-20.
(c) finding a foreign magazine, left open on a table in the shipfitters' trailer, containing a picture of two women engaged in a sexual act while a nude man watched. Id. at 21-23.
(d) being shown a picture of a nude woman engaged in a pose of masturbation by Sharpe, a leaderman in the rigging department. Id. at 25-26.
(e) being shown a picture of a nude man by Steven Leach ("Leach"), a leaderman in the shipfitting department. Id. at 26-28. This incident occurred after Robinson's complaints concerning pictures in the shipyards. Albert also testified that Leach would engage in teasing behavior directed toward Robinson and other women by closing a book in his hand and declaring, "we can't let her see that." Id. at 73-74.
(f) observing pictures of scantily-dressed women in garters and brassieres with tassels in Lovett's office in 1984 or 1985. Id. at 24-25.
Admissions by Male Employees and Supervisors
39. Defendants have admitted that pictures of nude or partially nude women have been posted in the shipfitters' trailer at the Mayport Yard during Robinson's employment at JSI. See Kiedrowski Depo. at 18-19; Jt.Exh. No. 2 (calendar actually posted in that office); 7 T.T. at 173-74 (Edenfield's description of "obscene pictures" posted); 8 T.T. at 106-07. Defendants and their agents also have admitted *1502 that these kinds of photographs have been displayed in and around the fab shop at the Mayport Yard. Lovett Depo. at 30-31; 7 T.T. at 56.
40. The few witnesses who claimed never to have seen pictures such as those described by Robinson, Banks, and Albert, e.g., 6 T.T. at 227 (Yeomans); 7 T.T. at 205 (Martin), cannot be credited given the weight of the credible and corroborated testimony to the contrary.
41. Based on the foregoing, the Court finds that sexually harassing behavior occurred throughout the JSI working environment with both frequency and intensity over the relevant time period. Robinson did not welcome such behavior.
Effect of JSI Work Environment on Women
42. The foregoing evidence was supplemented with the testimony of various experts. Plaintiff called experts in the fields of sexual stereotyping and sexual harassment; defendants presented expert testimony on the relative offensiveness of pornographic materials to men and women.
Plaintiff's Expert Witness Testimony
43. Dr. Susan Fiske appeared as an expert witness on plaintiff's behalf to testify on the subject of sexual stereotyping. Dr. Fiske holds a full professorship in the psychology department at the University of Massachusetts at Amherst. Her credentials in the field of stereotyping are impressive. She is a member of the American Psychological Association and the Society for Experimental Social Psychology. Dr. Fiske has performed research for the National Science Foundation and the National Institute of Mental Health. She has published nearly forty articles in the top journals in her field. She generally does not accept offers to appear as an expert witness, having turned down fourteen such offers and having appeared as an expert previously only once, in the case Hopkins v. Price Waterhouse, 618 F.Supp. 1109 (D.D.C.1985), aff'd in relevant part, 825 F.2d 458, 467 (D.C.Cir.1987), rev'd on other grounds, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989), on remand, 737 F.Supp. 1202 (D.D.C.1990), aff'd, 920 F.2d 967 (D.C.Cir.1990). Her testimony and expertise were well-regarded in that case. The Court accepted Dr. Fiske, without objection, as an expert in stereotyping.
44. The study of stereotyping is the study of category-based responses in the human thought and perceptual processes. Stereotyping, prejudice, and discrimination are the three basic kinds of category-based responses. Stereotyping exists primarily as a thought process, prejudice develops as an emotional or an evaluative process, primarily negative in nature, while discrimination manifests itself as a behavioral response. 4 T.T. at 177-78. Discrimination in this context is defined by the treatment of a person differently and less favorably because of the category to which that person belongs. Id. at 178-79. Either stereotyping or prejudice may form the basis for discrimination.
45. To categorize people along certain lines means their suitability will be evaluated in these terms as well. In the process of perceiving people as divided into groups, a person tends to maximize the differences among groups, exaggerating those differences, and minimize the differences within groups. 4 T.T. at 179-80. In practice, this translates into a perception that women are more similar to other women and more different from men (and vice versa) than they actually may be. Id. This perceptual process produces the in-group/out-group phenomenon: members of the other group or groups are viewed less favorably. Id. at 181. This categorizing process can produce discriminatory results in employment settings if it leads a person in that job setting to judge another person based on some quality unrelated to job performance into which the other person falls.
46. For example, when a superior categorizes a female employee based on her sex, that superior evaluates her in terms of characteristics that comport with stereotypes assigned to women rather than in terms of her job skills and performance. 4 T.T. at 182. Thus, to categorize a female employee along the lines of sex produces an evaluation of her suitability as a "woman" who might be expected to be sexy, *1503 affectionate and attractive; this female employee would be evaluated less favorably if she is seen as not conforming to that model without regard for her job performance. Id. at 183; 5 T.T. at 26-27. Interestingly, this example is borne out in testimony by several witnesses called by defendants, who expressed disapproval of Robinson's demeanor because she did not meet the expectation of "affectionate" female behavior, see, e.g., 5 T.T. at 197 (Leach); 7 T.T. at 18 (Starling); id. at 180 (Meyder); id. at 195 (Bright); 8 T.T. at 151-53 (Lowder), or who expressed disapproval of Banks' use of "crude" language as inappropriate behavior for a "lady," see, e.g., 7 T.T. at 159-61 (George Livingston).
47. Dr. Fiske reviewed documentation in this case, including fifteen depositions of male and female JSI employees, defendants' responses to plaintiff's requests for admissions, and the EEO-1 reports prepared by JSI. Based on this review, she concluded, "the conditions exist for sex stereotyping at Jacksonville Shipyards and ... many of the effects of sex stereotyping exist...." 4 T.T. at 177. Dr. Fiske described the sex stereotyping at JSI as a situation of "sex role spillover," where the evaluation of women employees by their coworkers and supervisors takes place in terms of the sexuality of the women and their worth as sex objects rather than their merit as craft workers. Id. at 183.
48. Dr. Fiske identified several preconditions that enhance the presence of stereotyping in a workplace. The four categories of preconditions are: (1) rarity; (2) priming (or category accessibility); (3) work environment structure; and (4) ambience of the work environment. Stereotyping may occur in the absence of these conditions; studies have demonstrated, however, a statistically significant correlation between these preconditions and the prevalence of stereotyping. 5 T.T. at 17, 30-31, 41. All of the preconditions are present in the work environment at JSI.
49. "Rarity" exists when an individual's group is small in number in relation to its contrasting group, so that each individual member is seen as one of a kind a solo or near solo. Rarity or "solo" status exists when an individual's group comprises fifteen to twenty percent or less of the work force in the relevant work environment. 5 T.T. at 13. Women at JSI in general occupy solo status and rarity is extreme for women in the skilled crafts. See supra FOF ¶ 16.
50. Solos capture the attention of the members of the majority group, providing fodder for their rumors and constantly receiving their scrutiny. 4 T.T. at 186. The solo is far more likely to become the victim of stereotyping than a member of the majority group, and the stereotype develops along the dimension that makes the solos rare. Id. at 187; 5 T.T. at 15-17. Solos typically elicit extreme responses from members of the majority group. Thus, mildly substandard work performance or workplace behavior is perceived as much worse when a solo is the worker than when a member of the majority group is responsible. 4 T.T. at 187. According to Dr. Fiske, the studies concerning the perception of solo work performance and behavior demonstrate that the solo status per se, not the behavior, produces the extreme reaction from other people. Id. at 187-88.
51. The second precondition for stereotyping, "priming" or "category accessibility", is a process in which specific stimuli in the work environment prime certain categories for the application of stereotypical thinking. 4 T.T. at 189. The priming impact created by the availability of photographs of nude and partially nude women, sexual joking, and sexual slurs holds particular application in the JSI workplace. Id. at 189-90.
52. Dr. Fiske testified these stimuli may encourage a significant proportion of the male population in the workforce to view and interact with women coworkers as if those women are sex objects. 4 T.T. at 192-94. She described one study, Mohr & Zanna, Treating Women as Sex Objects: Look to the (Gender Schematic) Male Who Has Viewed Pornography, 16 PERS. & SOC. PSYCH. BULL. 296 (1990), which in her view confirmed this proposition. This study used randomly assigned male college students as subjects who viewed either a nonviolent, "fairly normal sexual" pornographic *1504 film or a film having no pornographic content. Subsequently, a woman interviewed the subjects without knowing which film they watched. Two effects emerged. First, the males who viewed the pornographic film remembered little about the female interviewer other than her physical attributes. The males who viewed the neutral film remembered the contents of the interview. Second, the female interviewer could reliably distinguish between the males who had seen the pornographic films and those who had not because the conduct of the former group during the interviews was different. These two results held for approximately half of the men who viewed the pornographic films, those men who fit the description "sex role schematic." These men are oriented to their masculinity and their sexuality as an important part of their self-concept. 4 T.T. at 190-92. This proportion about half of the men fitting the description of sex role schematic holds for the general population. 4 T.T. at 192.
53. The testimony of witnesses confirms a correlation between the presence of pictures and sexual comments and the level of sexual preoccupation of some of the male workers whose conduct had sexual overtones observable by female workers.
54. The third precondition for an increased frequency of stereotyping is the nature of the power structure or hierarchy in the work environment. This factor examines the group affiliation of the persons in the positions of power and the degree to which particular groups are given a sense of belonging. At JSI, this precondition arises because the people affected by the sexualized working conditions are women and the people deciding what to do about it are men. The in-group/out-group effect diminishes the impact of the women's concerns. The men who receive the complaints perceive those complaints less favorably and take them less seriously because they come from women. 5 T.T. at 4-5. Specific instances of the handling of complaints of sexual harassment, developed infra, demonstrate the phenomenon of male supervisors trivializing the valid complaints of Robinson and other female workers.
55. Dr. Fiske addressed a hypothetical concerning the effect of a sexualized workplace on a complaint lodged by a female employee. 5 T.T. at 6-8. This hypothetical involved a work environment where women are solos and men control the power structure. A woman complains about a man who exposed himself to her. Dr. Fiske predicted that, where sexualization of the workplace has occurred, the woman lodging the complaint would be the focus of attention, rather than the misconduct of which she complains. The woman would be perceived as the problem; she might be subject to ridicule and become the subject of rumors. The man likely would not be disciplined commensurate with the misconduct. Dr. Fiske's prediction is borne out in part by Albert's testimony concerning two male coworkers' discussion of an incident at JSI in which a male employee had exposed himself to a female employee. See 4 T.T. at 37-39; see also 6 T.T. at 37 (Stewart dismissing gravity of complaint as "one person's word against another's").
56. In a like manner, Dr. Fiske predicted that a female employee who complained about sexual pictures of women would, in the hypothetical environment, find that she is perceived as the problem and dismissed as a complainer. 5 T.T. at 9-11. The content of the speculations and reactions to the complainer, in a sexualized work environment, would focus on her sexuality. Aspersions may be cast on the sexuality of the complaining employee regarding, for example, her sexual preference, background, experiences or traumas. Dr. Fiske found it unsurprising that male employees at JSI entertained such derogatory rumors concerning Robinson. Id. at 11; see also Leach Depo. at 47 (describing rumors about Robinson's sexuality).
57. The fourth precondition is the ambience of the work environment. According to Dr. Fiske, studies show that the tolerance of nonprofessional conduct promotes the stereotyping of women in terms of their sex object status. For instance, when profanity is evident, women are three times more likely to be treated as sex objects than in a workplace where profanity is not tolerated. 4 T.T. at 195-96. When sexual *1505 joking is common in a work environment, stereotyping of women in terms of their sex object status is three to seven times more likely to occur. 5 T.T. at 5. These results obtain for a wide range of employment settings, including settings in which women hold nontraditional jobs.
58. Nonprofessional ambience imposes much harsher effects on women than on men. The general principle, as stated by Dr. Fiske, is "when sex comes into the workplace, women are profoundly affected ... in their job performance and in their ability to do their jobs without being bothered by it." 4 T.T. at 197. The effects encompass emotional upset, id., reduced job satisfaction, 5 T.T. at 18, the deterrence of women from seeking jobs or promotions, 4 T.T. at 198, and an increase of women quitting jobs, getting transferred, or being fired because of the sexualization of the workplace, id. By contrast, the effect of the sexualization of the workplace is "vanishingly small" for men. Id. at 197-98.
59. Men and women respond to sex issues in the workplace to a degree that exceeds normal differences in other perceptual reactions between them. 4 T.T. at 198. For example, research reveals a near flip-flop of attitudes when both men and women were asked what their response would be to being sexually approached in the workplace. Approximately two-thirds of the men responded that they would be flattered; only fifteen percent would feel insulted. For the women the proportions are reversed. Id.
60. The sexualization of the workplace imposes burdens on women that are not borne by men. 4 T.T. at 199. Women must constantly monitor their behavior to determine whether they are eliciting sexual attention. They must conform their behavior to the existence of the sexual stereotyping either by becoming sexy and responsive to the men who flirt with them or by becoming rigid, standoffish, and distant so as to make it clear that they are not interested in the status of sex object. Id.
61. Two major effects of stereotyping were described by Dr. Fiske. One effect is selective interpretation. The individual who engages in stereotyping of another person because of that person's membership in a minority group selectively interprets behavior of the other person along the lines of the stereotypes applied to the group. 4 T.T. at 200-01. Thus, an employer may respond to a complaint by a female employee by stereotyping her as "an overly emotional woman," and thereafter ignore her complaints as exaggerated or insignificant. Id. at 201. (Behavior of this sort is apparent in JSI's responses to female complaints concerning sexual harassment described infra.) A second effect of stereotyping is denigration of the individual merit of the person who is stereotyped. Id. The presence of stereotyping in the workplace affects the job turnover and job satisfaction of the members of the group subjected to stereotyping. Id. at 199-200; 5 T.T. at 18.
62. Dr. Fiske's testimony provided a sound, credible theoretical framework from which to conclude that the presence of pictures of nude and partially nude women, sexual comments, sexual joking, and other behaviors previously described creates and contributes to a sexually hostile work environment. Moreover, this framework provides an evidentiary basis for concluding that a sexualized working environment is abusive to a woman because of her sex. Defendants did not provide any basis to question the theory of stereotyping and its relationship to the work environment. It appears to the Court that the primary concern raised by defendants concerning Dr. Fiske's testimony was the materials upon which she relied for a description of the JSI workplace. The Court is of the opinion that the more credible testimony describing the JSI workplace supports the assumptions upon which Dr. Fiske relied.
63. Ms. K.C. Wagner appeared as an expert witness on plaintiff's behalf to testify on common patterns and responses to sexual harassment and remedial steps. (Ms. Wagner's testimony concerning prevention of harassment at JSI is discussed infra on the matter of appropriate remedies.) Ms. Wagner is a self-employed consultant in the area of issues regarding women and the work environment, with particular emphasis on the prevention of *1506 sexual harassment on the job. She worked for the Working Women's Institute, an organization devoted to the study and remedy of sexual harassment in the workplace, for seven years, where she held positions as counseling director and program director before being named executive director. She holds a master's degree in social work from Hunter College. She has been an instructor in sexual harassment courses for managers and human relations specialists. She has been a consultant to employers to train supervisors and employees concerning sexual harassment and she also has been a consultant to an organization called Women in the Trades. Her expertise and experience concerning women in nontraditional employment settings is impressive. The Court accepted Ms. Wagner, over the objection of defendants, as an expert on common patterns and responses to sexual harassment and accepted her, without objection, as an expert in education and training relative to sexual harassment.
64. According to Ms. Wagner, women in nontraditional employment who form a small minority of the workforce are at particular risk of suffering male worker behaviors such as sexual teasing, sexual joking, and the display of materials of a sexual nature. This proposition finds support in the published research and in Ms. Wagner's own experience in counseling over two hundred women in nontraditional work who have suffered such harassment and her experience in training over two hundred and fifty firefighters in New York City regarding the prevention and identification of sexual harassment. 4 T.T. at 94-96.
65. Ms. Wagner expressed her expert opinion that sexually harassing conditions for female employees exist at JSI. Her conclusion rests on the presence of indicators of sexually harassing behaviors and of a sexually hostile work environment, including evidence of a range of behaviors and conditions that are considered sexually harassing, evidence of common coping patterns by individual victims of sexual harassment, evidence of stress effects suffered by those women, evidence of male worker behavior and attitudes, and evidence of confused management response to complaints of sexual harassment. 4 T.T. at 92-93. In reaching her conclusion, she reviewed a variety of depositions of female employees at JSI, defendants' answers to interrogatories and defendants' responses to plaintiff's requests for admissions. Id. at 91. She read these materials for the purpose of identifying these indicators, presuming the truth of the contents of the materials. Id. at 92, 129-30.
66. According to Ms. Wagner, women respond to sexually harassing behavior in a variety of reasonable ways. The coping strategy a woman selects depends on her personal style, the type of incident, and her expectation that the situation is susceptible to resolution. 4 T.T. at 96. Typical coping methods include: (1) denying the impact of the event, blocking it out; (2) avoiding the workplace or the harasser, for instance, by taking sick leave or otherwise being absent; (3) telling the harasser to stop; (4) engaging in joking or other banter in the language of the workplace in order to defuse the situation; and (5) threatening to make or actually making an informal or formal complaint. Id. at 96-102.
67. Of these five categories, formal complaint is the most rare because the victim of harassment fears an escalation of the problem, retaliation from the harasser, and embarrassment in the process of reporting. 4 T.T. at 103-04. Victims also often fear that nothing will be done and they will be blamed for the incident. Id. Thus, the absence of reporting of sexual harassment incidents cannot be viewed as an absence of such incidents from the workplace. Id. at 169. An effective policy for controlling sexual harassment cannot rely on ad hoc incident-by-incident reporting and investigation. Id. at 169-70.
68. Victims of sexual harassment suffer stress effects from the harassment. Stress as a result of sexual harassment is recognized as a specific, diagnosable problem by the American Psychiatric Association. 4 T.T. at 109. Among the stress effects suffered is "work performance stress," which includes distraction from tasks, dread of work, and an inability to work. Id. at 105. Another form is "emotional stress," which *1507 covers a range of responses, including anger, fear of physical safety, anxiety, depression, guilt, humiliation, and embarrassment. Id. Physical stress also results from sexual harassment; it may manifest itself as sleeping problems, headaches, weight changes, and other physical ailments. Id. at 106. A study by the Working Women's Institute found that ninety-six percent of sexual harassment victims experienced emotional stress, forty-five percent suffered work performance stress, and thirty-five percent were inflicted with physical stress problems. Id. at 105.
69. Sexual harassment has a cumulative, eroding effect on the victim's well-being. 4 T.T. at 106-08. When women feel a need to maintain vigilance against the next incident of harassment, the stress is increased tremendously. Id. at 107. When women feel that their individual complaints will not change the work environment materially, the ensuing sense of despair further compounds the stress. Id. at 107-08.
70. Management's perception concerning the scope and range of sexual harassment provides an important indicator of the hostility of the work environment. 4 T.T. at 110. The more subtle forms of sexual harassment, such as sexual comments, sexual teasing, and leering, often fall outside management's perception. Id. As a general proposition, the higher an individual is on the management ladder, the more likely he is to regard sexual harassment as an exaggerated problem and the more likely he is to minimize complaints from women concerning what they perceive to be harassing behavior. Id. at 110-11.
71. Men and women perceive the existence of sexual harassment differently. 4 T.T. at 110-11. Ms. Wagner testified that the differential perception of sexual harassment is borne out by her own experiences and by survey research. A study of federal employees by the Merit Systems Protection Board found that 11 to 12 percent more women than men characterized sexual remarks or materials of a sexual nature in the workplace as sexual harassment. Id. at 163-67. Regarding the second of these categories, which consisted of letters, calls and materials of a sexual nature, including materials depicting sexually provocative poses, nude, and partially nude pictures, 87 percent of the women considered this behavior to constitute sexual harassment, in contrast to 76 percent of the men. Id. at 167.
72. Male coworkers often fail to see any potential for harassment in their behavior because they believe that only the behavior of supervisors can contribute to a sexually hostile work environment. 4 T.T. at 113-14.
73. Ms. Wagner's testimony provided a credible, sound explanation for the variety of responses to harassing behavior at JSI to which other witnesses testified.[4] Moreover, her framework explains why some women may not feel offended by some behaviors in the workplace that offend other women, see, e.g., 7 T.T. at 205 (testimony of Donna Martin that she was not offended by sexual joking in workplace), and yet the work environment remains hostile to most women.
Defendants' Expert Witness Testimony
74. Dr. Donald Mosher appeared as an expert witness on defendants' behalf to testify in the area of the psychological effects *1508 of sexual materials. He is a professor of psychology at the University of Connecticut. He has studied the effects of sexual materials for nearly thirty years. He has authored or coauthored approximately ninety publications, about one half of which concern sexuality and aggression. Dr. Mosher is on the editorial boards of the Journal of Sex Research and Psychology and Human Sexuality. He has testified as an expert witness in three obscenity trials and before the Meese Commission on pornography. The Court accepted Dr. Mosher as an expert in the area of the psychological effects of sexual materials.
75. Dr. Mosher prepared for his testimony by reviewing Robinson's deposition and all of the visual materials contained in Joint Exh. Nos. 1 through 7. 5 T.T. at 59. He expressed his expert opinion that those pictures do not create a serious or probable harm to the average woman. Id. at 61. He based his opinion on the body of scientific literature germane to pornography and on a study which he conducted as part of his preparation. Id. at 61-62.
76. Dr. Mosher's own study examined the reaction of 137 college women to the 1989 Playboy playmate calendar. 5 T.T. at 63. Eighty-nine of the women also reviewed pinups of nude men taken from Playgirl. Id. Dr. Mosher employed a seven-point Lippitt rating scale. In rating the offensiveness and the degrading quality of the Playboy playmate calendar, Dr. Mosher characterized the responses as showing "mild to low moderate in terms of being offensive or degrading." Id. at 64-65. The women were asked to place their response in the context of a private setting, a college setting or a work setting. The negative responses rose as the setting moved from private to college to work. Id. at 65. In a work setting some women reported that they would find the materials "moderately disgusting and moderately offensive," a result that Dr. Mosher interpreted as "never a seriously negative response." Id. Dr. Mosher concluded that this study supported the proposition that females are not adversely affected in their psychological well-being by their exposure to such materials. Id.
77. Dr. Mosher additionally testified that research suggests that pinups do not promote sexual aggression by men or induce calloused attitudes toward women. 5 T.T. at 67-69.
78. The Court does not accept Dr. Mosher's ultimate conclusions concerning the impact of sexual materials as pertinent to deciding the issues in this case. Dr. Mosher's study and the studies upon which he relies do not address the matter of workplace exposure to sexual materials under conditions comparable to those existing at JSI. Indeed, Dr. Mosher's subjects viewed the playmate calendars as small groups of women, not as a solo or near solo in a group of men. Dr. Mosher conceded that the element of control is a factor in a woman's reaction to sexual materials. 5 T.T. at 99-100. The more specific studies and observations undertaken by plaintiff's experts deserve greater weight. To the extent that Dr. Mosher's study is valuable, it is because the study suggests the role of context in evaluating the response of women and men to sexually-oriented materials. The relatively greater offense expressed concerning sexual materials in the workplace tends to support the propositions put forward by plaintiff's experts.
79. Dr. Joseph Scott appeared as an expert witness on defendants' behalf to testify in the area of the effects of sexual materials on behavior and generally on men and women. Dr. Scott is an associate professor in the Department of Sociology of Ohio State University. He has published approximately forty articles in professional journals and three books, with a fourth book in progress. He received some of his training at the Kinsey Sex Institute as a National Institute of Mental Health fellow. He has received honors from the Western Society of Criminology and the American Society of Criminology. He has been an expert witness in many obscenity trials. A controversial methodology used by Dr. Scott in some obscenity trials, ethnography analysis, has been criticized by some courts, but Dr. Scott stated that his testimony in this case did not rest on any studies using this methodology. Dr. Scott has done contract work paid for by the *1509 publishers of what he called "male sophisticate magazines," that is, Playboy, Penthouse, Hustler, and the like; he would not disclose further details on such research but he did give assurance that his opinions did not rest on any of these studies. The Court accepted Dr. Scott as an expert as offered.
80. Dr. Scott prepared for his testimony by reviewing Robinson's deposition and the visual materials contained in Joint Exh. Nos. 1 through 7. 5 T.T. at 129-30. He expressed his expert opinion that "the average female would not be substantially effective [sic] in a negative manner" by the materials, that is, she would not take offense at them. Id. at 130-31. He further stated that women in the workforce would be slightly more offended by such materials than men. Id. at 131. He based his opinion upon surveys which he conducted himself and surveys conducted by other people on the effects of sexual materials. Id. One of the studies upon which he relied is a study of the offensiveness to the raters of the contents of Hustler magazine. Id. at 105, 131.
81. Dr. Scott described the Hustler study as his only workplace setting study. 5 T.T. at 118. In this study the females rated the cartoons and the pictorials to be less offensive than the males did, id. at 131-32, although the level of offensiveness was low for both groups, id. at 135. The methodology of the study, however, diminishes its application to the workplace. The subjects were twelve college student volunteers, six men and six women. Id. at 141. They viewed the materials at their own leisure, alone or at their own table in a room with three tables. Id. at 140-41. The primary focus of the study was the content of the pictures and cartoons, not the reactions of the individuals. Id. at 143. Dr. Scott's testimony about the offensiveness of sexual materials to working women relies on survey results in which individuals are questioned about their attitudes toward such materials and this information is correlated with their employment status and gender. Id. at 137-38.
82. Dr. Scott testified that no research of which he is aware indicates that exposure to sexual materials similar to Joint Exh. Nos. 1 through 7 will prompt males to act more aggressively or threateningly toward females. 5 T.T. at 136. Under cross-examination Dr. Scott admitted his lack of familiarity with one researcher's work that reached results contrary to his conclusion. Id. at 147-50.
83. The Court does not accept Dr. Scott's expert testimony as useful to the determination of the issues in this case. His opinions provide a basis for evaluating the offensiveness of sexual materials in the abstract only. The important element of context is missing; the sexually harassing impact of the materials must be measured in the circumstances of the JSI work environment. Dr. Scott's testimony does not assist in this effort.
Defendants' Social Context Evidence
84. Defendants introduced into evidence several examples of magazines often purchased by women in which complete or partial nudity, sexual cartoons, and sexually frank articles appear. See D.Exh. Nos. 13 (Cosmopolitan, Sept. 1987), 14 (Glamour, Sept. 1987), 15 (Ms., Sept. 1987), 16 (Vanity Fair, Oct.1987). Dr. Scott testified that the sexual explicitness of these magazines reflects a recent trend for "women's magazines." 5 T.T. at 134. In addition, a picture of a statute in the Duval County Courthouse, in which a female figure's breasts are exposed, was introduced into evidence. D.Exh. No. 4.
85. Defendants also solicited evidence about the conditions at two other shipyards, Norfolk Shipbuilding and Drydock Corp. (NORSHIPCO) and Colona Shipyard. Harvey Williams worked in employee relations positions at both facilities (NORSHIPCO from 1956 to 1982 and Colona from 1986 to 1988) and testified about his experiences. NORSHIPCO is comparable in size to JSI while Colona is considerably smaller. Both have workforces in which approximately 10 to 15 percent of the employees are female. Pictures of nude and partially nude women are posted in the shops and locker rooms, but no complaints about the pictures were filed at either site during Williams' tenure. 8 T.T. at 53-62. *1510 Williams did not provide any other details concerning the work environment at these shipyards.
86. For the reasons stated in Conclusions of Law ("COL") ¶ 15, the Court finds that this "social context" evidence has little to no value in determining the issues of this case. If this type of evidence were material, the Court finds considerable weakness in defendants' presentation. The magazines introduced into evidence do not form a basis to suggest the extent to which sexually frank or sexually explicit materials are accepted by women; no circulation figures were introduced and no evidence suggests the acceptance of the sexually frank material by female subscribers or readers. The absence of formal complaints at NORSHIPCO and Colona does not tell whether their work environments are hostile; plaintiff's expert witnesses testified that a lack of complaints does not indicate the level of hostility. Moreover, the professional relations between men and women may be otherwise so favorable that the presence of sexually-oriented pictures does not threaten the relationship; the percentage of women in the workforces at both shipyards is much higher than at JSI. Because of these weaknesses, the Court finds the social context evidence inadequate to draw reliable conclusions concerning the reaction of women to sexually-oriented pictures in the workplace.
JSI Responses to Sexual Harassment Complaints
Sexual Harassment Policy from 1980 to 1987
87. JSI adopted its first policy dealing specifically with sexual harassment in 1980. It was part of a policy statement from an executive vice-president of JSI titled "Equal Employment Opportunity," dated June 17, 1980. D.Exh. No. 9. It stated, in pertinent part:
we should all be sensitive to the kind of conduct which is personally offensive to others. Abusing the dignity of anyone through ethnic, sexist or racial slurs, suggestive remarks, physical advances or intimidation, sexual or otherwise, is not the kind of conduct that can be tolerated.
If any employee feels that they are [sic] the object of such conduct, it should be reported immediately to the EEO coordinator at this facility.
Id. This policy statement was apparently posted in all shops and offices at both the Commercial Yard and the Mayport Yard and near the time clock at the Mayport Yard. P.Exh. No. 1/A-1/F (answer to question 12(b)); 6 T.T. at 158-60; 8 T.T. at 156-57.
88. This policy fell short of effectiveness in several respects. The EEO coordinator was not named and the identity of this person was not widely known. See 1 T.T. at 137; 4 T.T. at 41. JSI did not distribute the policy commensurate with other important company policies. For example, the standard JSI rule book, Jt.Exh. No. 12, did not incorporate the policy, 8 T.T. at 189, although this book is the source for the rules upon which employees rely to govern their conduct in the workplace, see Turner Depo. at 61-62, 71-72. While safety policies sometimes are distributed with employee daily time cards, 6 T.T. at 141, the sexual harassment policy did not receive such distribution. Prior to April 1987, many employees and some of the defendants (defendants admitted to Owens' lack of knowledge) were unaware of the sexual harassment policy. See, e.g., 1 T.T. at 136 (Robinson); 4 T.T. at 40-41 (Albert); Kiedrowski Depo. at 10.
89. The handling of several sexual harassment complaints between 1980 and 1987 illustrates the ineffectiveness of the policy.
(a) When Banks suffered harassment from a rigger, John Fraser, on a company bus, see supra FOF ¶ 34(e), she initially complained to Sharpe, the rigging leaderman. Banks testified that Sharpe placed his arm around her shoulder and said, "Well, don't worry about it. Let me blow in your ear and I'll take care of anything that comes up." 3 T.T. at 52-58. The latter phrase refers to a sophomoric shipyard joke involving a man's erection. Id. at 58; McMillan Depo. at 138-39. Banks was summoned to a *1511 meeting the next day at which Fraser demanded an apology for Banks' profanity directed at him in response to his harassment. Herbert Kennedy, a foreman present at the meeting, interrupted an emotionally distraught Banks and told her to shut up, stop crying, return to work, or face being fired. 3 T.T. at 60-68; 5 T.T. at 186-89. Fraser was not reprimanded for his behavior. Kennedy conducted a cursory investigation of Banks' complaint about Sharpe, but this investigation was limited to a conversation with Sharpe and those witnesses suggested by Sharpe. Kennedy did not request the names of prospective witnesses from Banks. Based on this limited investigation, Kennedy determined that Sharpe had not committed any misconduct. 7 T.T. at 99-106, 111-13.
(b) When Banks endured harassment from a rigger named Hawkins in the form of a humiliating comment from him, see supra FOF ¶ 34(d), Banks complained to the assistant welding foreman, John Nicholas. Nicholas testified that he was an appropriate person to hear her complaint on this matter. 7 T.T. at 238-39. Banks testified that when she complained to Nicholas, he thought the comment was funny, 3 T.T. at 47-48; Nicholas testified that when Banks repeated the offensive comment to him, he "probably grinned." 7 T.T. at 230. Banks felt deterred from further pursuing the matter as a result of Nicholas' reaction. 3 T.T. at 161.
(c) When Robinson suffered abusive language from a shipfitter, George Nelson, see supra FOF ¶ 28, her complaint to her supervisor, assistant welding foreman John McLean, resulted in an informal conversation between McLean and Nelson. McLean, however, took no steps to document his actions and did not report the fact of the complaint to Nelson's superiors in the shipfitting department. 7 T.T. at 143-47.
(d) When Karen Gamble ("Gamble"), a paint and labor shop employee at the Mayport Yard, lodged a formal complaint with Stewart, the ensuing investigation reflected a lack of appreciation for the seriousness of the complaint. According to the memorandum introduced into evidence by defendants, D.Exh. No. 24, Gamble initially reported her complaint, concerning unwanted sexual remarks and touching by a male coworker, to her leaderman, who then spoke to the male coworker. The leaderman explained his actions to Gamble and told her if she was not satisfied, she could register a complaint with the foreman. Gamble took the matter to Stewart, who contacted Ahlwardt, who in turn delegated investigatory responsibility to E.E. Hastey, an assistant night shift superintendent. See 8 T.T. at 187-88. Hastey gathered together Gamble, the male coworker of whom she complained, her foreman and two leadermen. Hastey had each person concerned recount the circumstances. Thereafter, he suggested the matter be settled there "as amicably as possible." He further suggested that an apology should suffice, and the offender apologized. Gamble accepted the apology, and the foreman asked her to repeat her acceptance. Hastey warned the offender against future misconduct and the foreman gave him a verbal warning. Hastey's memorandum, D.Exh. No. 24, was not placed in the offender's personnel file, 8 T.T. at 185, and the record does not indicate any other documentation of the events in his file. The most striking aspect of the handling of Gamble's complaint, however, is the urging by a high management official that she accept an apology as full settlement of her complaint, under circumstances that exerted great pressure on her to follow this management suggestion, when she had indicated through her formal complaint that she was unsatisfied with informal steps of the same kind taken by her leaderman.
*1512 90. The failure to document complaints of sexual harassment is commonplace at JSI. The company has no system to record concerns raised about sexual harassment; no instructions to document harassment complaints have been given to leadermen, quartermen, foremen, or superior management employees. 6 T.T. at 14-16. This gap in the sexual harassment policy left higher management unaware, until the prosecution of this lawsuit, of the fact that one JSI employee, Morris Green, had twice been the subject of complaints from female employees to lower level management employees about Green's lewd, sexual behavior at work. 6 T.T. at 27-28; 46-47. Both foremen to whom the complaints were made told Green that a further offense would result in discipline, but neither foreman disciplined him (even though he admitted the offenses and the second foreman was aware of the prior complaint). McMillan Depo. at 122-29; Wingate Depo. at 46-49.
91. Female employees lacked confidence in the willingness and commitment of JSI to take steps to halt sexually harassing behavior. Consequently, Robinson, Banks, and Albert adopted personal strategies for coping with the work environment. Robinson, for instance, declined to complain about degrading pictures and comments at the beginning of her employment because she feared that she might be subjected to retaliation and that the complaints would not be well-received. 1 T.T. at 92-95. These findings of fact bear out the validity of her fears. Banks also declined to complain about many instances of harassment because she feared ridicule and she felt that management would not take effective steps to remedy the situation. 3 T.T. at 32-34, 48-49, 51-52, 58-59, 86, 147-48. Albert perceived that no discipline would be meted out against offending male employees, so she handled the situations as they arose in her own fashion, often using "smart remarks" directed to the harasser. 4 T.T. at 27-28, 33-40.
Quartermen and Leadermen
92. Quartermen and leadermen are perceived as appropriate persons to whom to complain about work environment problems. Robinson lodged complaints about sexually-oriented pictures with Robert Fields ("Fields"), a quarterman in the welding shop at the Mayport Yard, 8 T.T. at 116-19, with Danny Miracle, a leaderman in the shipfitters' shop at the Mayport Yard, id. at 69-71, with Donald Furr ("Furr"), a leaderman in the welding shop at the Commercial Yard, 5 T.T. at 155-60, and with Kiedrowski, 8 T.T. at 91-92. Banks also lodged a harassment complaint on one occasion with a leaderman in the rigging shop at the Mayport Yard, 7 T.T. at 117, and on another occasion with Kiedrowski, 8 T.T. at 94-95. Gamble initially complained to her leaderman after a coworker made inappropriate sexual remarks and touched her body. D.Exh. No. 24. In response to a question asking to whom Robinson should have complained about work environment problems, Furr, her leaderman, testified, "I reckon I'm the one to start with." 5 T.T. at 173.
93. Quartermen and leadermen have exercised apparent authority to respond to complaints of sexually harassing behavior, have acted as conduits for the relay of complaints to higher management, and have received explicit instructions concerning their authority to exercise discretion to control the work environment. Examples of each appear in the testimony. Dan Cooney ("Cooney"), a quarterman in the shipfitters' shop at the Mayport Yard, testified that he directed a leaderman to paint over the "Men Only" sign on his own authority. 7 T.T. at 87-89. (Although conflicting testimony suggests that Cooney received an instruction from a foreman to paint over the sign, Cooney's testimony is significant for his assertion that he possessed the authority to take such action independently.) Fields and Furr each testified to instances in which they took steps to cover over offensive graffiti or pictures after a complaint from Robinson. 8 T.T. at 117-18 (Fields); 5 T.T. at 155-56 (Furr). Both men also testified to instances in which they passed along a complaint to someone higher in management. 8 T.T. at 118-19 (Fields relayed complaint about coworker to foreman); 5 T.T. at 156 (Furr relayed complaint about calendar to shift superintendent). *1513 Cooney mentioned an occasion when he received a directive from Lovett to remove pictures and move a calendar. 7 T.T. at 70-72. Furr explained that he sought out his assistant foreman to ascertain the extent of his authority to remove pictures and the like when Robinson complained, and he was told to take whatever actions made her comfortable. 5 T.T. at 170-73. Kiedrowski asserted that, as a leaderman, he possessed the authority and had the responsibility to direct welding department employees to stop reading magazines containing pictures of nude or partially nude women on the job and to get rid of the magazines. 8 T.T. at 108. In the case of Gamble's complaint concerning sexual remarks and touching by a coworker, the assistant night shift superintendent listed among his remedial actions that he directed her leaderman "to keep a closer eye on his crew and not to let the bantering get out of hand." D.Exh. No. 24. This directive suggests a belief by management that leadermen are responsible, in part, for control of the work environment.
Sexually-Oriented Pictures
94. Complaints about the pictures of nude and partially nude women yielded little success. On some occasions pictures were removed but subsequently were posted again or like pictures were posted in their place. See, e.g., 3 T.T. at 100-03; 8 T.T. at 69-71. Even a complaint by a male shipyard worker, David Catir, who expressed concern about the visibility to visiting family members of Navy personnel of some pictures in a JSI shop trailer, went unheeded. 5 T.T. at 179-81. In one instance, a calendar about which Robinson complained was merely moved from one wall to another on the assumption that the lower visibility of the objectionable pictures would adequately address the complaint of sexual harassment. 8 T.T. at 137. On another occasion, Robinson's complaint was addressed by transferring her from the Mayport Yard. 1 T.T. at 73. On yet another occasion, when Robinson attempted to lodge a complaint with Lovett by phone, the administrative clerk in Lovett's office ignored her complaint and shifted the conversation to a criticism of her lack of respect for Lovett (because she did not ask for him as "Mr. Lovett") and of her absence from her assigned work area. 8 T.T. at 151-53.
95. The display of pictures of, and calendars featuring pictures of, nude and partially nude women was left to the discretion of the foremen of the respective shops. See 6 T.T. at 146-48. The evidence shows only one foreman, Ben West of the outside machine shop at the Mayport Yard, ordered the pictures of nude and partially nude women, whether pinups or calendars, off his shop's walls. This bold action, however, was attenuated by the replacement of the calendars bearing nudes with calendars showing women in provocative swimwear. 4 T.T. at 60-61.
Robinson's January 1985 Complaints (Events Precipitating Lawsuit)
96. The present lawsuit stems from Robinson's complaints in January 1985 that pictures of nude and partially nude women were posted in the toolroom trailer and in the shipfitters' trailer aboard the U.S.S. Saratoga at the Mayport Yard. (Her complaint regarding the shipfitters' trailer concerned a calendar with pictures of nude and partially nude women on it, Jt.Exh. No. 2, and other pictures.) Robinson was assigned to work with the shipfitters; she checked out welding equipment from the toolroom trailer on a daily basis. Robinson initially complained to Kiedrowski, her leaderman and the most senior person in the welding department aboard ship, 8 T.T. at 97, and later to Fred Turner ("Turner"), the welding department foreman.
97. Kiedrowski's reaction to Robinson's complaint to him left her feeling embarrassed. 1 T.T. at 31-32. At trial, Kiedrowski described these events with a specificity that included a denial that he responded to Robinson's complaint with a loud "wow," but his testimony lacks credibility when contrasted with his denial in his deposition testimony that he recalled anything about the event. Robinson observed that one of the pictures in the toolroom trailer about which she complained, a color photograph of a nude blond woman, was removed *1514 shortly after her complaint to Kiedrowski; another picture in the toolroom trailer, a black and white photograph, remained posted for several more days. Id. at 33. Kiedrowski disclaimed any ability to assist Robinson in securing removal of the calendar in the shipfitters' trailer. 8 T.T. at 91. Kiedrowski also told Robinson that she had no business in the shipfitters' office. 8 T.T. at 92. The basis for his scolding her on this point is unclear; Kiedrowski had previously assigned Robinson to work with the shipfitters on occasion, Kiedrowski Depo. at 33, and, when he worked as a welder, he had occasion to enter the shipfitters' office himself, 8 T.T. at 103-04.
98. In the case of Turner, Robinson approached him and expressed her complaint over the "pornography" she had seen. Turner responded, "the what?"; Robinson repeated the term "pornography" three times before Turner acknowledged that he understood that she was referring to the pinup and calendar pictures in the shipyards. 1 T.T. at 29-30. Turner testified that he directed his leaderman (Kiedrowski), his quarterman (Harris), and Banks to make the rounds of the shops aboard the U.S.S. Saratoga and remove any pinup pictures. 8 T.T. at 75-77. He did not direct the removal of any calendars bearing pictures of nude or partially nude women. Id. at 80. While Turner received a report from his group that the offending pictures had been removed, deposition and trial testimony by Owens indicate that either some pictures were missed or new pictures were posted after Turner's order. 6 T.T. at 129-30; Owens Depo. at 132-33.
99. Dissatisfied with the response within her own department, Robinson approached Edenfield, a shipfitting leaderman, to complain. 1 T.T. at 35. Edenfield told her to go back to her own office. 7 T.T. at 165-66. Robinson felt trivialized by his response. 1 T.T. at 35.
100. Robinson then telephoned Lovett, the shipfitting foreman, to complain. Lovett advised Robinson he would "look into it," but he did not subsequently speak to her about it again. 1 T.T. at 36-37; 8 T.T. at 137-38. Robinson had requested that the calendar be removed, but Lovett did not grant this request. Lovett testified that he instructed Cooney to move the calendar about which Robinson complained so that the calendar was no longer visible from outside the trailer. 8 T.T. at 137. Cooney relayed this instruction to Leach, who carried it out. 7 T.T. at 70-72. Lovett stopped by the trailer the next day to confirm that his instruction had been followed.
101. Robinson's complaints became common knowledge around the shipyards and the catalyst for a new wave of harassing behavior directed against her and other women. Banks asked Robinson at one point to cease in her shop-to-shop complaints because the male employees made a joke of it, laughed at Robinson openly, and had begun to bring in "hard pornography" that they showed to female workers. 3 T.T. at 92. Many specific incidents of sexually harassing behavior arising at this time are set forth supra in these findings.
102. A "Men Only" sign appeared on the door to the shipfitters' trailer after the calendar was moved. The sign was comprised of letters approximately six inches high and was written in white paint on a brown door. Cooney saw the sign and, on Lovett's order, painted over it with red paint. 7 T.T. at 73-84; 8 T.T. at 139-40. Ahlwardt observed the sign, as painted over, and directed that it be painted over again because it was still visible. 6 T.T. at 177. The legend remained visible as painted the second time. See D.Exh. No. 3/A, 3/B, 3/C (photographs of door after painting, taken two years later). Robinson first observed the "Men Only" sign on January 19, 1985, before it was painted over. 2 T.T. at 118. She walked to the shipfitters' office to examine it more closely and, while she was there, peered inside the trailer, discovering that the calendar about which she complained was still posted. 1 T.T. at 38-39. Edenfield spotted Robinson "snooping" in the trailer and told her to go away because she had no business there. 7 T.T. at 165-66, 169-73. Robinson complained to Kiedrowski about the sign, but he advised her that it would be replaced by an "Authorized Personnel Only" sign. 1 T.T. at 52. The following day the sign was covered with a cardboard covering. 2 T.T. at 124-25. Two days later, however, the covering *1515 was removed and the sign had been painted over with red paint that failed to completely obscure its message. 2 T.T. at 125-26; 3 T.T. at 21.
103. Robinson decided to make a formal complaint about the discriminatory sign and the continuing presence of the pictures of nude and partially nude women. On January 23, 1985, Robinson met with Owens, Turner and Chief Shop Steward Quentin McMillan ("McMillan") to complain about the pictures. In route to Owens' office for the meeting, Robinson observed several pictures on the wall and a lewd comment was directed at the woman escorting Robinson to the office. Robinson told the men at this meeting that she felt the pictures were degrading and humiliating to her, that they nauseated her, and that she wanted them removed. She complained about the "Men Only" sign and told the men that the sign and pornography constituted discrimination, promoted harassment, and were harassment.
104. Owens told Robinson that the company had no policy against the pictures, which had been posted throughout the shipyards for at least nineteen years. 6 T.T. at 125; 1 T.T. at 59. Owens asserted that the nudity on television was as bad as the pictures at JSI, and she should look the other way just as she would turn off the television if she were offended. 6 T.T. at 142-43. He told her that she chose the JSI work environment and that the men had "constitutional rights" to post the pictures. Id. at 126. He would not order the removal of the pictures. He told Robinson she had no business going into the shipfitters' trailer, but he would have the sign removed because JSI had "lady shipfitters." Id. at 125. Owens made it clear to Robinson that the shipyards were a man's world and that the rules against vulgar and abusive language did not apply to the "cussing" commonly heard there. 1 T.T. at 59-60. She asserted, in response to a question, that she been verbally harassed more often than she could count, id. at 60, but his definition of sexual harassment did not admit her complaint into its scope, see 6 T.T. at 148-50 (Owens' definition of sexual harassment).
105. Owens did not investigate the details of Robinson's complaints. He directed that the "Men Only" sign be painted over, but he did not initiate any investigation to determine who perpetrated the deed. 6 T.T. at 153. He did not take any opportunity to view the calendar about which Robinson complained. Id. at 151. He told the Mayport Yard foremen at a meeting shortly thereafter that pictures showing sexual intercourse should be removed, but pictures of nude or partially nude women could remain. Id. at 146-48. He specifically directed the foremen to leave up vendors' advertising calendars such as Joint Exhibits Nos. 1 through 5, some of which he had observed in various locations in the backyard compound after Robinson's complaint to him. Id. at 146-47.
106. Robinson next took her complaint to Ahlwardt, Owens' superior at the Mayport Yard. On January 23, 1985, Robinson called Ahlwardt and told him of her complaints to Owens regarding the pictures and the "Men Only" sign. Robinson testified that after she explained the course of events involving her complaint to Owens and her desire to have the pictures removed, Ahlwardt stated that he would not order the pictures removed. 1 T.T. at 65. Defendants initially admitted Robinson's version of Ahlwardt's reaction but Ahlwardt denied at trial that he had told Robinson that he would refuse to remove the pictures, 6 T.T. at 194. The admission is binding and the Court credits Robinson's description of Ahlwardt's reaction. Ahlwardt, however, agreed to meet with Robinson to discuss her complaints.
107. Prior to meeting with Robinson, Ahlwardt made several phone calls. He contacted supervisors at the Commercial Yard to determine whether the pictures to which Robinson objected were present there also. Earl Day, a machinery superintendent at the Commercial Yard, confirmed that pictures of nude or partially nude women were on display in that workplace. Ahlwardt Depo. at 114-16. Ahlwardt learned from Harry Wingate, a hull superintendent at the Commercial Yard, that such pictures were "all over the place" there.
*1516 108. Ahlwardt also spoke to two persons in policymaking positions. He called Stewart to discuss whether JSI had a policy forbidding the posting of pictures such as those about which Robinson complained. He told Stewart that a "breast shot" was at issue. Stewart told Ahlwardt that no policy prohibited such pictures, that Robinson's complaint was baseless, and that the calendars and pictures should be left alone. 6 T.T. at 164-65. Thereafter Ahlwardt spoke to Brown. Brown likewise expressed his opinion that the materials should not be removed and that Robinson's complaint lacked merit. Brown specifically instructed Ahlwardt that an order prohibiting the display of pictures of nude and partially nude women should not be issued. 6 T.T. at 201-02. Neither Stewart nor Brown conducted any investigation of Robinson's complaint prior to rendering advice to Ahlwardt.
109. Following these phone calls, Ahlwardt met with Robinson. Also present at this meeting were Turner, McMillan, and Barbara Dingle, a union secretary who worked as a mechanic. Robinson did not ask for the presence of union representatives; those individuals appeared at Ahlwardt's request. Robinson initiated the conversation by requesting the removal of the offending pictures and calendars. She explained her position, including her representation that other women at JSI took offense at the presence of the pictures. Ahlwardt replied that he did not know of any "pornographic" pictures in any offices or shops at the Mayport Yard; his definition of pornography is limited to pictures depicting intercourse, masturbation, or other sexual activity. 6 T.T. at 206. Robinson pressed her point by referring to the company rule against obscenity; Ahlwardt belittled her concern by looking up the term in a dictionary and dismissing it as vague. 1 T.T. at 69. Ahlwardt further told Robinson that nautical people always had displayed pinups and other images of nude or partially nude women, like figureheads on boats, and that the posting of such pictures was a "natural thing" in a nautical workplace. Ahlwardt opined that there was nothing wrong with pinups in the shipyards, that he himself previously had posted such pictures, 1 T.T. at 69, and that they certainly were not intended to intimidate, embarrass or cause concern for anyone, 6 T.T. at 173. Robinson attempted to raise a comparison between the effect of pornography on women and the effect of Ku Klux Klan propaganda on black people, 1 T.T. at 69-70, but Ahlwardt dismissed this comparison with the retort that there were Klan members working in the shipyards, id. at 70; 6 T.T. at 175. The focus of the meeting then shifted to an inquiry whether Robinson had been physically assaulted or sexually propositioned in the course of her work. 2 T.T. at 134-36. Robinson stated she had not been harassed in those manners, but she considered the pictures to be harassment and to promote harassment. Id. at 135; 6 T.T. at 169.
110. Ahlwardt complimented Robinson on her high morals. 1 T.T. at 71. He then asked Dingle if she took offense at the pictures, to which Dingle answered that she did not. 6 T.T. at 172. Dingle suggested that Robinson was spending too much time attending to the pictures and not enough time attending to her job. Id.; McMillan Depo. at 101. McMillan asserted that the shipyards were "a man's world" and therefore men are going to post pinups. McMillan Depo. at 98-99.
111. Turner was first to leave the meeting. He stated the problem was taken care of because he was transferring Robinson to the Commercial Yard. 1 T.T. at 73. Robinson left thereafter, visibly upset from the encounter. 3 T.T. at 91-92; McMillan Depo. at 110-11; see 1 T.T. at 79 (Robinson's testimony of how upset she was). Robinson received the transfer downtown.
112. Following the meeting with Robinson, Ahlwardt instructed Owens not to issue any prohibition of pictures of nude and partially nude women in the workplace. Ahlwardt took no action of his own to remove any pictures, although he visited the shipfitters' trailer the next day, when he was scheduled to be aboard the U.S.S. Saratoga, to observe the Whilden Valve calendar. 6 T.T. at 176-77.
113. Robinson testified that she filed a union grievance about the pictures and the *1517 "Men Only" sign. 1 T.T. at 78. She further testified that the third-shift shop steward told her that the grievance was pulled withdrawn by the union leadership. Id. at 80. The vice-president of the union at that time, Leroy Yeomans, testified that, to his knowledge, no such grievance was filed or pulled. 6 T.T. at 224. The Court credits the testimony of Robinson. An account of the events at issue drafted by her contemporaneously with the incident, see Jt.Exh. No. 10, at 18-19, is consistent with her testimony and it was written at a time and for a purpose that do not suggest a motive for fabrication.
114. The Court further finds that use of the grievance procedure would have been futile for Robinson. The chief steward at the Mayport Yard, McMillan, considered the pictures to be acceptable; indeed, he recounted his statement to Owens that he would grieve any rule banning the pictures as an infringement on the freedom of expression of male shipyard workers. McMillan Depo. at 99. Further, since the offensive pictures originated in the conduct of the majority of the bargaining unit members, it is unrealistic to expect the union to press for sanctions. Moreover, the supervisory personnel who would rule on the various steps of the grievance, Lovett, Owens, and Stewart, clearly expressed their unwillingness to take action against the posting of sexually-oriented pictures in the shipyards.
115. Robinson filed her complaint with the Jacksonville Equal Opportunity Commission ("JEOC"), an authorized state referral agency. Jt.Exh. No. 9. A wide range of behavior was alleged in her complaint, including exposure to the above-described pictures, exposure to sexually suggestive and humiliating comments, and the "Men Only" sign. Robert Kimbrough from JEOC visited JSI, spoke with Ahlwardt, Owens, and Stewart, and conducted a walk-through in some areas of the shipyard to observe the pictures in those places. 8 T.T. at 170-72, 197-98. Robinson subsequently received a right to sue letter from the Equal Employment Opportunity Commission, together with a determination that no reasonable cause existed to believe that "she was discriminated against ... by being subjected to sexually explicit pornography and harassment because of her sex, female." D.Exh. No. 6. The Court places little weight on this "no cause" determination because the investigation apparently was cursory and the only decided case relevant to this issue at that time, Rabidue v. Osceola Refining Corp., 805 F.2d 611 (6th Cir.1986), cert. denied, 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 823 (1987), may have provided the misleading impression that Robinson had not raised an actionable claim.
116. On September 2, 1986, within ninety days of her receipt of the right to sue letter, Robinson filed the present lawsuit. The parties and claims were adjusted in the second amended complaint filed herein on May 6, 1987.
1987 Sexual Harassment Policy
117. In April 1987, during the pendency of this lawsuit, JSI adopted a new sexual harassment policy. It was instituted unilaterally, without consulting or bargaining with the union. See McMillan Depo. at 118-19. The official policy statement, signed by Vice-President for Operations Larry Brown, endorses the following policy:
1. It is illegal and a violation of Jacksonville Shipyards, Inc., Policy for any employee, male or female, to sexually harass another employee by
a. making unwelcomed sexual advances or request for sexual favors or other verbal or physical conduct of a sexual nature, a condition of an employee's continued employment, or
b. making submission to or rejection of such conduct the basis for employment decisions affecting the employee, or
c. creating an intimidating, hostile, or offensive working environment by such conduct.
2. Any employee who believes he or she has been the subject of sexual harassment, should report the alleged act immediately to John Stewart Ext. 3716 in our Industrial Relations *1518 Department. An investigation of all complaints will be undertaken immediately. Any supervisor, agent or other employee who has been found by the Company to have sexually harassed another employee will be subject to appropriate sanctions, depending on the circumstances, from a warning in his or her file up to and including termination.
D.Exh. No. 10. This policy is virtually verbatim a model policy distributed by JSI's parent corporation. P.Exh. No. 55. The model policy was part of an industrial relations newsletter which contained an article on sexual harassment. Stewart read this newsletter in the normal course of his job. 8 T.T. at 195. The article on sexual harassment, authored by the manager of employee services at the corporate headquarters, stated that among the "conditions or items in the work environment" that an employee may find offensive on the basis of the employee's sex are "`subtle' forms of harassment like: dirty jokes, sexually offensive pictures, leers or glares, sexual innuendoes, wolf whistles or cat calls, etc." P.Exh. No. 55, at 5. The article further cautioned that coworkers and peers might create the hostile work environment. The article observed that the problem of whether offensive conduct is "unwelcome" cannot be determined from an offended employee's failure to complain because the employee might not know how to react, or where to seek help, so the offending employees may continue the behavior under the mistaken impression that it is welcome. The article referenced the model policy and its inclusion of the author's name and telephone number as an alternative avenue for complaints where an employee feels unable to complain to the industrial relations department representative. JSI's policy did not include any alternate person to receive complaints. A final point made by the article was that the standard for conduct had to come from the top. "Our defense is stronger if the pictures are not there at all than to argue that they are in an area where the employee shouldn't have been. Rather than asking if the employee would be offended by the joke, don't tell it at all." Id. JSI's policy did not incorporate this advice.
118. The new policy was distributed solely through posting on the bulletin boards in the shops and the general bulletin boards. 8 T.T. at 174-75. It was not incorporated into the General Safety Instruction and Company Rule Book, the contract book, the affirmative action plan, or on the EEO posters. Id. at 189.
119. The 1987 policy had little or no impact on the sexually hostile work environment at JSI. Employees and supervisors lacked knowledge and training in the scope of those acts that might constitute sexual harassment. For example, Henry Starling, night shift superintendent at Commercial Yard, testified that he received no training and that he had no idea what is meant by the phrase sexual harassment, 7 T.T. at 34-35, and John Nicholas, assistant foreman in welding shop at Commercial Yard, also testified that he lacked instruction concerning sexual harassment, id. at 233-34. The pictures of nude and partially nude women remained posted throughout the workplace. In fact, in January 1988, after the issuance of the new policy, Stewart objected strongly when O.C. McBride, a superintendent at the Mayport Yard, removed three Playboy- and Penthouse-style calendar pictures from the shipfitters' shop and the electrical shop in anticipation of a tour of the shipyards conducted by Stewart. 7 T.T. at 53-60. The naming of only one company representative, Stewart, to hear sexual harassment complaints diminished the policy's value to an employee, such as Robinson, whose prior experiences with Stewart left her without confidence in his willingness to handle such complaints. 1 T.T. at 137.
120. The Court finds that the policies and procedures at JSI for responding to complaints of sexual harassment are inadequate. The company has done an inadequate job of communicating with employees and supervisors regarding the nature and scope of sexually harassing behavior. This failure is compounded by a pattern of unsympathetic response to complaints by employees who perceive that they are victims *1519 of harassment. This pattern includes an unwillingness to believe the accusations, an unwillingness to take prompt and stern remedial action against admitted harassers, and an express condonation of behavior that is and encourages sexually harassing conduct (such as the posting of pictures of nude and partially nude women). In some instances, the process of registering a complaint about sexual harassment became a second episode of harassment.
Remedial Aspects
121. Plaintiff seeks injunctive relief to force JSI to implement a comprehensive, effective and enforced sexual harassment policy. She also seeks make-whole relief for financial loss she alleges she suffered due to the harassing work environment. The components of this loss include days of absenteeism taken to recover from or to avoid the work environment, foregone opportunities for overtime and holiday pay, and passed opportunities for advancement through certain welding certification tests. She additionally seeks expungement of warnings she has received for excessive absenteeism.
122. Ms. Wagner, plaintiff's expert whose expertise on education and training to combat sexual harassment was accepted without objection, testified regarding the elements of a comprehensive, effective sexual harassment policy. See 4 T.T. at 115-24. In her experience and according to the research conducted in this field, sexual harassment can be eliminated through a program that trains key supervisors how to investigate sexual harassment complaints, that teaches male and female employees what conduct is prohibited, and that includes a strong policy statement signed by a top-ranking company executive. The training of key supervisors in investigatory techniques encourages active monitoring of the environment and relieves some barriers to reporting of sexual harassment by placing the burden on management. The policy statement should: (1) describe with specificity the behaviors that constitute sexual harassment; (2) advise employees that sexual harassment may result from the behavior of coworkers as well as the behavior of supervisors; (3) promise and provide confidentiality and protection from retaliation for complainants and witnesses; and (4) provide a number of avenues through which a complaint may be initiated. The policy statement must receive wide, effective distribution.
123. Plaintiff proposed a remedial sexual harassment policy in her pretrial briefs. Ms. Wagner examined this policy and concluded that it contains all of the important features of an effective policy implementation procedure and training program. 4 T.T. at 126.
124. The Court finds that the evidence fully supports the appropriateness of injunctive relief in the nature of that requested by Robinson. Because defendants have not provided detailed comment on the proposed policy, the Court will permit a brief period of time for the parties to consult regarding any modification that they may deem appropriate to secure maximum success of the policy and the procedures at JSI and for defendants to register with the Court any objections to the policy that concern JSI's ability to implement the policy in a fashion consistent with the remedial goals expressed herein.
125. Regarding lost days of work, Robinson testified that she missed several days each year because she could not face entering the hostile work environment. 1 T.T. at 156-57. She did not identify this as the reason for her absenteeism when providing her reason to her employer because it did not fit into the acceptable categories for absence. Id. at 158. In one instance, she told her employer that she needed a leave of absence for thirty days in order to tend to a sick relative; she testified at trial that her reported reason was false and her real reason for the absence was work environment anxiety. 3 T.T. at 3. In December 1988, Robinson received a call to work the day shift at the Mayport Yard. She did not feel safe or comfortable working that shift because most of the defendants work at that time. Her anxiety caused her to have difficulty sleeping and to miss two days of work. 2 T.T. at 38-40.
126. Robinson estimated her total lost time attributable to her inability to cope with the hostile work environment. She *1520 estimated six days lost in 1983 (at a rate of pay ranging from $9.50 to $10.50 per hour), twenty-eight days lost in 1984 (at $10.00 to $10.50 per hour), fifty days lost in 1985 (at $10.50 to $11.00 per hour), twenty-six days in 1986 (at $11.00 to $11.10 per hour), twenty-two days in 1987 (at the same rate), and thirty days in 1988 (at $10.50 to $11.00 per hour). Based on an eight hour day and lower rate of pay in each year, her estimated loss pay totals $13,640. She further estimated that she missed six holiday days between 1983 through 1988, which translates to a loss of triple the standard rate of pay for an eight hour day. 1 T.T. at 159-60. Her estimate for lost overtime earnings, which pays time and a half for Monday through Saturday and double time for Sunday, is fifteen days per year for the period. Id. at 158-59. She elected not to take certain welding certification tests because they would have made her more useful at the Mayport Yard, the work environment she sought most to avoid. Id. at 138-39. While Robinson's annual salary from JSI averaged approximately $11,000 to $12,000 over the last few years, 2 T.T. at 29-30, a male first-class welder with less seniority, Gene Joazil, earned an average of approximately $19,000 to $20,000 from 1984 through 1987 because he worked overtime. 6 T.T. at 4-7. Although Robinson worked as a massage therapist when she did not work at JSI, she testified that the job always supplemented her JSI work and did not conflict with the opportunities she lost.
127. Robinson's estimate of days missed are an admitted approximation. She explained that she could not give the dates of these days missed and that the business records that she reviewed contained errors. 1 T.T. at 139-41; 3 T.T. at 4. Defendants objected at trial to Robinson's testimony estimating the number of days missed because she did not provide the precise dates when requested to do so in a supplemental interrogatory; she had provided only the number of days estimate upon which she relied at trial.[5] Robinson unsuccessfully sought business records that might have provided her with more detail from which to draw precise dates. Her lack of success in procuring this information is wholly attributable to her failure to seek to compel compliance with her discovery request within the time permitted by the Amended Docket Control Order, entered April 6, 1987. This Court affirmed the Magistrate's ruling that plaintiff failed to show excusable neglect for her dilatory efforts. See Order entered January 26, 1988, at 5-6. Plaintiff reasserted her desire to discover this evidence in her pretrial brief and the Court again refused to grant a unilateral exception to the deadlines in this case under the circumstances. The Court cannot now reward plaintiff's failure to conduct discovery within the deadlines by shifting the burden to the defendants to disprove Robinson's vague estimates of time lost. Robinson made and kept notes of various events throughout the course of her struggle to get JSI to recognize the sexually harassing nature of the pictures of nude and partially nude women. Her asserted inability to identify more precisely the dates at issue lacks credibility in this light. If her estimate of the number of days is based on something more than a guess, then she should be able to identify the dates with a greater degree of specificity. It is not unreasonable, under the circumstances of this case, to require more precision in her identification of time lost. Moreover, the standard for evaluating her claim for compensation for lost time requires that she show that conditions rose to or existed at a level equivalent to an intermittent constructive discharge. See 118 F.R.D. at 531. Defendants require a list of the specific dates on which plaintiff was absent in order to determine if the degree of harassment in the workplace on those dates rises to the level of this higher standard; plaintiff's failure to provide specific *1521 dates unfairly deprives defendants of the opportunity to argue that the work environment may be sufficiently hostile to create liability under Title VII without being sufficiently hostile to warrant plaintiff's absence from the job. The specific dates also would provide a basis for defendants to rebut Robinson's assertion that her massage therapist work did not conflict with her work at JSI; the lost overtime asserted may well have fallen on days when Robinson earned money as a massage therapist during the hours for which overtime was available.
128. The Court finds that Robinson's testimony on the financial loss alleged to flow from her missed opportunities and days off is insufficient to form a basis to calculate an entitlement to make-whole monetary relief. Likewise, the vagueness of the testimony relating to absences is an insufficient basis upon which to expunge warnings concerning absenteeism.
CONCLUSIONS OF LAW
Title VII
1. Jurisdiction and venue are proper in this Court.
2. Robinson is an employee within the definition of 42 U.S.C. § 2000e(f). JSI is an employer within the definition of 42 U.S.C. § 2000e(b). McIlwain, Brown, Stewart, Ahlwardt, Owens and Lovett are agents of JSI and are therefore employers within the meaning of 42 U.S.C. § 2000e(b).
3. Kiedrowski's status poses a difficult and contested issue. He is an employer only if he is an agent of JSI, but "[n]owhere in Title VII is the term `agent' defined." Barger v. Kansas, 630 F.Supp. 88, 89 (D.Kan.1985). The most widely used definition construes the term "to be a supervisory or managerial employee to whom employment decisions have been delegated by the employer." York v. Tennessee Crushed Stone Ass'n, 684 F.2d 360, 362 (6th Cir.1982). Kiedrowski has held the positions of leaderman and quarterman, neither of which falls within the formal management structure at JSI. Moreover, he does not possess authority to place discipline reports in another employee's personnel file (although he may in some instances recommend that disciplinary action be taken), he does not play any role for the company in the grievance procedure, and he does not make personnel changes in his department. Cf. Vance v. Southern Bell Tel. & Tel. Co., 863 F.2d 1503, 1515 (11th Cir.1989) (finding these factors persuasive in imposing direct liability under Title VII). The lesson of Vance, however, is "an agency standard which looks solely to the degree of authority the harasser wields over the plaintiff is not particularly useful in a hostile environment case such as this." Id. Instead, the direct authority question forms but one factor; it is necessary to "examine any evidence bearing on the overall structure of the workplace, including the relative positions of the parties involved." Id. Analyzed at this level, Kiedrowski's status becomes more problematic. Kiedrowski has a role in the work assignments, traditionally a significant factor leading to a finding of employer status. See, e.g., Paroline v. Unisys Corp., 879 F.2d 100, 104 (4th Cir.1989), modified on other grounds, 900 F.2d 27, 28 (4th Cir. 1990) (en banc); Hamilton v. Rodgers, 791 F.2d 439, 442-43 (5th Cir.1986). Further, quartermen and leadermen sometimes exercise apparent authority by acting to resolve disputes between employees, including disputes that have arisen because of sexually harassing behavior. Employees recognize this difference in apparent authority by approaching them for assistance. These facts somewhat weigh in favor of assigning employer status to Kiedrowski. Cf. Mason v. Twenty-Sixth Judicial Dist. of Kan., 670 F.Supp. 1528, 1532 (D.Kan. 1987) (employees could be held as Title VII employers where they were "given authority to rate the plaintiff in her performance, and also to control work assignments and other conditions of employment"). The absence of a formal delegation in all instances and the exclusion of quartermen and leadermen from the formal supervisory structure, however, place the relative positions of the parties more closely to that of coworkers than that of employer and subordinate.[6] The limitations on the authority *1522 of quartermen and leadermen persuade the Court in the final balance to conclude that the role filled by quartermen and leadermen is not that of an employer and therefore the imposition of employer liability on Kiedrowski is inappropriate.
4. Five elements comprise a claim of sexual discrimination based on the existence of a hostile work environment: (1) plaintiff belongs to a protected category; (2) plaintiff was subject to unwelcome sexual harassment; (3) the harassment complained of was based upon sex; (4) the harassment complained of affected a term, condition or privilege of employment; and (5) respondeat superior, that is, defendants knew or should have known of the harassment and failed to take prompt, effective remedial action.[7]See Meritor Sav. Bank v. Vinson, 477 U.S. 57, 66-69, 106 S.Ct. 2399, 2405-07, 91 L.Ed.2d 49 (1986); Henson v. City of Dundee, 682 F.2d 897, 903-05 (11th Cir.1982); Robinson v. Jacksonville Shipyards, Inc., 118 F.R.D. 525, 527-28 (M.D.Fla.1988).
5. Robinson indisputably belongs to a protected category.
6. The threshold for determining that sexually harassing conduct is unwelcome is "that the employee did not solicit or incite it, and ... that the employee regarded the conduct as undesirable or offensive." Henson, 682 F.2d at 903 (citations omitted).
7. The relevant conduct in this case is the posting of pictures of nude and partially nude women in the workplace, the sexually demeaning remarks and jokes made by male workers, and harassment lacking a sexually explicit content such as the "Men Only" sign. The credible testimony of Robinson, corroborated by the observations of her supervisors and coworkers, attests to the offense she took at this behavior. Cf. Vinson, 477 U.S. at 68, 106 S.Ct. at 2406 ("the question whether particular conduct was indeed unwelcome presents difficult credibility determinations committed to the trier of fact"). Moreover, not a scintilla of evidence suggests that she solicited or incited the conduct. Robinson did not welcome the conduct of which she complains.
8. The third element imposes a requirement that Robinson "must show that but for the fact of her sex, she would not have been the object of harassment." Henson, 682 F.2d at 904. This causation requirement encompasses several claims. For example, harassing behavior lacking a sexually explicit content but directed at women and motivated by animus against women satisfies this requirement. See Andrews v. City of Philadelphia, 895 F.2d 1469, 1485 (3d Cir.1990) ("The offensive conduct is not necessarily required to include sexual overtones in every instance."); Lipsett v. University of Puerto Rico, 864 F.2d 881, 905 (1st Cir.1988); Hall v. Gus Constr. Co., 842 F.2d 1010, 1014 (8th Cir. 1988) ("Intimidation and hostility toward women because they are women can obviously result from conduct other than sexual advances."); Hicks v. Gates Rubber Co., 833 F.2d 1406, 1415 (10th Cir.1987); McKinney v. Dole, 765 F.2d 1129, 1138 (D.C.Cir.1985). Second, sexual behavior directed at women will raise the inference that the harassment is based on their sex. E.g., Huddleston v. Roger Dean Chevrolet, Inc., 845 F.2d 900, 904-05 (11th Cir.1988); Sparks v. Pilot Freight Carriers, Inc., 830 F.2d 1554, 1561 (11th Cir.1987); see Andrews, 895 F.2d at 1485; Lipsett, 864 F.2d at 905; Bennett v. Corroon & Black Corp., 845 F.2d 104, 106 (5th Cir.1988), cert. denied, 489 U.S. 1020, 109 S.Ct. 1140, 103 L.Ed.2d 201 (1989). A third category of actionable conduct is behavior that is not directed at a particular individual or group of individuals, but is disproportionately *1523 more offensive or demeaning to one sex. See Henson, 682 F.2d at 904; see also Andrews, 895 F.2d at 1485-86; Waltman v. International Paper Co., 875 F.2d 468, 477 (5th Cir.1989), rev'g 47 Fair Empl.Prac. Cas. (BNA) 671 (W.D.La.1987); Lipsett, 864 F.2d at 905; Rabidue v. Osceola Ref. Corp., 805 F.2d 611, 627 (6th Cir.1986) (Keith, J., dissenting), cert. denied, 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 823 (1987). This third category describes behavior that creates a barrier to the progress of women in the workplace because it conveys the message that they do not belong, that they are welcome in the workplace only if they will subvert their identities to the sexual stereotypes prevalent in that environment. That Title VII outlaws such conduct is beyond peradventure. Cf. Price Waterhouse v. Hopkins, 490 U.S. 228, 249-51, 109 S.Ct. 1775, 1790-91, 104 L.Ed.2d 268 (1989) (plurality opinion); id. at 262-67, 109 S.Ct. at 1797-99, 104 L.Ed.2d 268 (O'Connor, J., concurring in judgment) (use of gender stereotypes to evaluate female employees violates Title VII); Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S.Ct. 849, 853, 28 L.Ed.2d 158 (1971) (Title VII was passed to remove "artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of ... [an] impermissible classification").
9. The harassment of which Robinson complains was based upon her sex. The Findings of Fact reflect examples of the three aforementioned types of behavior. She suffered nonsexual harassing behavior from coworkers such as George Leach, who verbally abused or shunned her because she is a female. The "Men Only" sign also illustrates this type of harassment. She suffered incidents of directed sexual behavior both before and after she lodged her complaints about the pictures of nude and partially nude women. The pictures themselves fall into the third category, behavior that did not originate with the intent of offending women in the workplace (because no women worked in the jobs when the behavior began) but clearly has a disproportionately demeaning impact on the women now working at JSI. The expert testimony of Dr. Fiske provides solid evidence that the presence of the pictures, even if not directed at offending a particular female employee, sexualizes the work environment to the detriment of all female employees.
10. The fourth element tests the impact of the harassing behavior on the employee and the work environment, separating the "mere utterance of ... [a discriminatory] epithet which engenders offensive feelings in an employee," Rogers v. EEOC, 454 F.2d 234, 238 (5th Cir.1971), cert. denied, 406 U.S. 957, 92 S.Ct. 2058, 32 L.Ed.2d 343 (1972), and "the petty slights suffered by the hypersensitive," Zabkowicz v. West Bend Co., 589 F.Supp. 780, 784 (E.D.Wis.1984), from actionable conduct under Title VII. To affect a "term, condition, or privilege" of employment within the meaning of Title VII, the harassment "must be sufficiently severe or pervasive `to alter the conditions of [the victim's] employment and create an abusive working environment.'" Vinson, 477 U.S. at 67, 106 S.Ct. at 2405 (quoting Henson, 682 F.2d at 904). "This test may be satisfied by a showing that the sexual harassment was sufficiently severe or persistent `to affect seriously [the victim's] psychological well being.'" Sparks, 830 F.2d at 1561 (quoting Henson, 682 F.2d at 904). This "is a question to be determined with regard to the totality of the circumstances." Henson, 682 F.2d at 904. In the context of a racial harassment case, which is governed by the same standards under Title VII as a sexual harassment case, see Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 2374, 105 L.Ed.2d 132 (1989); Risinger v. Ohio Bureau of Workers' Compensation, 883 F.2d 475, 485 (6th Cir. 1989), the Eleventh Circuit elaborated on the evaluation of the totality of the circumstances:
The prima facie showing in a hostile work environment case is likely to consist of evidence of many or very few acts or statements by the defendant which, taken together, constitute harassment. It is important to recognize that in assessing the credibility and weight of the evidence presented, the [trier of fact] does not necessarily examine each alleged *1524 incident of harassment in the vacuum. What may appear to be a legitimate justification for a single incident of alleged harassment may look pretextual when viewed in the context of several other related incidents.
....
... A hostile environment claim is a single cause of action rather than a sum total of a number of mutually distinct causes of action to be judged each on its own merits.... [T]he totality of the circumstances necessarily includes the severity, as well as the number, of incidents of harassment.
Vance, 863 F.2d at 1510-11 (footnote omitted).
11. Element four must be tested both subjectively and objectively. Regarding the former, the question is whether Robinson has shown she is an "affected individual," that is, she is at least as affected as the reasonable person under like circumstances. See Robinson, 118 F.R.D. at 530. The evidence reflects the great upset that Robinson felt when confronted with individual episodes of harassment and the workplace as a whole. Further, the impact on her work performance is plain. For essentially the same reasons that she successfully proved her case on the second element of this cause of action, Robinson likewise carries her burden as to the subjective part of the fourth element. (Defendants, having urged throughout these proceedings that Robinson is hypersensitive, appear to concede the point.) The contested issue in this case is the objective evaluation of the work environment at JSI.
12. The objective standard asks whether a reasonable person of Robinson's sex, that is, a reasonable woman, would perceive that an abusive working environment has been created. See Vinson, 477 U.S. at 67, 106 S.Ct. at 2405; Andrews, 895 F.2d at 1482; Brooms v. Regal Tube Co., 881 F.2d 412, 419-20 (7th Cir.1989). The severity and pervasiveness aspects form a structure to test this hypothesis. As the prior quotations illustrate, the contours of what comprises "severe" and "pervasive" are not defined with precision. An interaction between the two is plain; greater severity in the impact of harassing behavior requires a lesser degree of pervasiveness in order to reach a level at which Title VII liability attaches. E.g., Carrero v. New York Hous. Auth., 890 F.2d 569, 577 (2d Cir.1989). Moreover, the analysis cannot carve the work environment into a series of discrete incidents and measure the harm adhering in each episode. Rather, a holistic perspective is necessary, keeping in mind that each successive episode has its predecessors, that the impact of the separate incidents may accumulate, and that the work environment created thereby may exceed the sum of the individual episodes. "A play cannot be understood on the basis of some of its scenes but only on its entire performance, and similarly, a discrimination analysis must concentrate not on individual incidents but on the overall scenario." Andrews, 895 F.2d at 1484. It follows naturally from this proposition that the environment viewed as a whole may satisfy the legal definition of an abusive working environment although no single episode crosses the Title VII threshold.
13. The objective evaluation must account for the salient conditions of the work environment, such as the rarity of women in the relevant work areas. This important qualification explains why the Court places little value on the expert testimony of Drs. Mosher and Scott regarding the level of offensiveness to women of pornographic materials as measured in the abstract. Correspondingly, the need to identify the context in which harassing conduct arises weighs heavily in the Court's acceptance of the expert opinions of Dr. Fiske and Ms. Wagner.
14. A reasonable woman would find that the working environment at JSI was abusive. This conclusion reaches the totality of the circumstances, including the sexual remarks, the sexual jokes, the sexually-oriented pictures of women, and the nonsexual rejection of women by coworkers. The testimony by Dr. Fiske and Ms. Wagner provides a reliable basis upon which to conclude that the cumulative, corrosive effect of this work environment over time affects the psychological well-being of a reasonable woman placed in these conditions. *1525 This corollary conclusion holds true whether the concept of psychological well-being is measured by the impact of the work environment on a reasonable woman's work performance or more broadly by the impact of the stress inflicted on her by the continuing presence of the harassing behavior. The fact that some female employees did not complain of the work environment or find some behaviors objectionable does not affect this conclusion concerning the objective offensiveness of the work environment as a whole. See Priest v. Rotary, 634 F.Supp. 571, 582 (N.D.Cal. 1986); Morgan v. Hertz Corp., 542 F.Supp. 123, 128 (W.D.Tenn.1981), aff'd, 725 F.2d 1070 (6th Cir.1984).
15. The Court recognizes the existence of authority supporting defendants' contention that sexually-oriented pictures and sexual remarks standing alone cannot form the basis for Title VII liability. The Court concludes that the reasoning of these cases is not consistent with Eleventh Circuit precedent and is otherwise unsound.
(a) Defendants' authority, which hails from other jurisdictions, proceeds from premises that are inconsistent with authority that is binding on this Court. For example, the Sixth Circuit in Rabidue quoted with approval the conclusion of the district court that
it cannot seriously be disputed that in some work environments, humor and language are rough hewn and vulgar. Sexual jokes, sexual conversations and girlie magazines may abound. Title VII was not meant to or can change this. It must never be forgotten that Title VII is the federal court mainstay in the struggle for equal employment opportunity for the female workers of America. But it is quite different to claim that Title VII was designed to bring about a magical transformation in the social mores of American workers.
805 F.2d at 620-21 (quoting in full 584 F.Supp. 419, 430).[8] This conclusion buttressed the appellate court's belief that "a proper assessment or evaluation of an employment environment" in a sexual harassment suit includes "the lexicon of obscenity that pervaded the environment of the workplace both before and after the plaintiff's introduction into its environs, coupled with the reasonable expectation of the plaintiff upon voluntarily entering that environment." Id. at 620. The Rabidue court further expounded on the social context argument:
The sexually oriented poster displays had a de minimis effect on the plaintiff's work environment when considered in the context of a society that condones and publicly features and commercially exploits open displays of written and pictorial erotica at the newsstands, on prime-time television, at the cinema, and in other public places.
Id. at 622. These propositions, however, cannot be squared with the Eleventh Circuit's holding in Walker v. Ford Motor Co., 684 F.2d 1355, 1359 & n. 2 (11th Cir.1982), that the social milieu of the area and the workplace does not diminish the harassing impact of racial slurs. (As previously noted, the analysis is not different for racial and sexual harassment claims.) The point is made more directly for sexual harassment claims in Sparks, wherein the appellate court explained that often "the whole point of the sexual harassment claim" is that behavior that "may be permissible in some settings ... can be abusive in the workplace...." 830 F.2d at 1561 n. 13; see also Wyerick v. Bayou Steel Corp., 887 F.2d 1271, 1275 n. 11 (5th Cir.1989) ("heavy pollution defense" inconsistent with Vinson and Henson). A district court within the Eleventh Circuit recently concluded that a sexually hostile work environment was created in a police department when male officers subjected a female patrol officer to verbal abuse, "a plethora of sexually offensive posters, pictures, graffiti, and *1526 pinups placed on the walls throughout the Police Department," and "innumerable childish, yet offensive sexual and obscene innuendoes and incidents aimed at her on the basis of sex." Sanchez v. City of Miami Beach, 720 F.Supp. 974, 977 (S.D. Fla.1989).
(b) The "social context" argument also lacks a sound analytical basis. Professor Kathryn Abrams has written an insightful critique of this argument:
The Rabidue court's proposed standard is wholly inappropriate for several reasons. Not only did the court overestimate the public consensus on the question of pornography, but the fact that many forms of objectionable speech and conduct may be protected against interference by public authorities in the world at large does not mean that pornography should be accepted as appropriate in the workplace. Pornography in the workplace may be far more threatening to women workers than it is to the world at large. Outside the workplace, pornography can be protested or substantially avoided options that may not be available to women disinclined to challenge their employers or obliged to enter certain offices. Moreover, while publicly disseminated pornography may influence all viewers, it remains the expression of the editors of Penthouse or Hustler or the directors of Deep Throat. On the wall of an office, it becomes the expression of a coworker or supervisor as well.
In this context the effect of pornography on workplace equality is obvious. Pornography on an employer's wall or desk communicates a message about the way he views women, a view strikingly at odds with the way women wish to be viewed in the workplace. Depending upon the material in question, it may communicate that women should be the objects of sexual aggression, that they are submissive slaves to male desires, or that their most salient and desirable attributes are sexual. Any of these images may communicate to male coworkers that it is acceptable to view women in a predominately sexual way. All of the views to some extent detract from the image most women in the workplace would like to project: that of the professional, credible coworker.
Abrams, Gender Discrimination and the Transformation of Workplace Norms, 42 VAN.L.REV. 1183, 1212 n. 118 (1989) (citation omitted); accord Andrews, 895 F.2d at 1485-86; Lipsett, 864 F.2d at 905 (adopting analysis of dissent in Rabidue); Bennett, 845 F.2d at 106; Barbetta v. Chemlawn Servs. Corp., 669 F.Supp. 569, 573 & n. 2 (W.D.N.Y.1987); Ehrenreich, Pluralist Myths and Powerless Men: The Ideology of Reasonableness in Sexual Harassment Law, 99 YALE L.J. 1177, 1201-10 (1990); Strauss, Sexist Speech in the Workplace, 25 HARV. C.R.-C.L.L. REV. 1, 11-16 (1990). Professor Catherine MacKinnon makes the point in a pithy statement: "If the pervasiveness of an abuse makes it nonactionable, no inequality sufficiently institutionalized to merit a law against it would be actionable." C. MACKINNON, FEMINISM UNMODIFIED 115 (1987).
(c) The "social context" argument cannot be squared with Title VII's promise to open the workplace to women. When the pre-existing state of the work environment receives weight in evaluating its hostility to women, only those women who are willing to and can accept the level of abuse inherent in a given workplace a place that may have historically been all male or historically excluded women intentionally will apply to and continue to work there. It is absurd to believe that Title VII opened the doors of such places in form and closed them in substance. A pre-existing atmosphere that deters women from entering or continuing in a profession or job is no less destructive to and offensive to workplace equality than a sign declaring "Men Only." As the Fifth Circuit recently observed, "Work environments `heavily charged' or `heavily polluted' with racial or sexual abuse are at the core of the hostile environment theory." Wyerick, 887 F.2d at 1275. To implement fully the promise of Title VII, "the standards for assessing women's psychological harm due to harassment must begin to reflect women's sensitivity to behavior once condoned as acceptable." Note, The Aftermath of Meritor: A Search for Standards in the Law of Sexual *1527 Harassment, 98 YALE L.J. 1717, 1737-38 (1989).
(d) The Rabidue analysis violates the most basic tenet of the hostile work environment cause of action, the necessity of examining the totality of the circumstances. Excluding some forms of offensive conduct as a matter of law is not consistent with the factually oriented approach dictated by Vinson, Henson, and their progeny. The expert testimony in this case places the many instances of offensive behavior into a context that permits evaluation of the environment as a whole. The Court cannot ignore the expert testimony, or the Court's own perception of the work environment evaluated as a whole; it would have to do so in order to adopt the Rabidue conclusion that a sexually charged environment has only a "de minimis effect" on the psychological well-being of a reasonable woman who works in the skilled crafts at JSI.
16. Having determined that the first four elements of a sexual harassment claim have been satisfied, the Court faces the task of assessing the liability of the employers in this case. The corporate employer, JSI, is subject only to vicarious liability, an issue more fully developed infra. The individual employers, however, pose a distinct liability issue.
17. The principles of employer liability for individual corporate officers are broad. It has been described as "inconceivable that Congress intended to exclude from liability the very persons who have engaged in the employment practices which are the subject of the action." Dague v. Riverdale Athletic Ass'n, 99 F.R.D. 325, 327 (N.D.Ga.1983). Instead, a liberal interpretation of Title VII works to hold responsible "those who control the aspects of employment accorded protection" by that law. Spirt v. Teachers Ins. & Annuity Ass'n, 475 F.Supp. 1298, 1308 (S.D.N.Y. 1979), aff'd in relevant part, 691 F.2d 1054 (2d Cir.1982), vacated, 463 U.S. 1223, 103 S.Ct. 3565, 77 L.Ed.2d 1406 (1983), reinstated as modified, 735 F.2d 23 (2d Cir.), cert. denied, 469 U.S. 881, 105 S.Ct. 247, 83 L.Ed.2d 185 (1984).
It may seem odd that an individual occupying a supervisory position could be held liable for the acts of his underlings when the employer of both can also be held liable, particularly where the supervisor had no personal involvement in the discriminatory acts of those working for him. However, placing an affirmative duty to prevent discriminatory acts on those who are charged with employment decisions appears to be consistent with the aims of Title VII.
McAdoo v. Toll, 591 F.Supp. 1399, 1406 (D.Md.1984). Because these principles are so broad, however, they should be applied with an eye toward finding liability only against individuals who exercise effective control in the workplace those persons who make or contribute meaningfully to employment decisions. See, e.g., Kolb v. Ohio, 721 F.Supp. 885, 891 (N.D.Ohio 1989); McAdoo, 591 F.Supp. at 1406. Thus, lower level supervisory employees who qualify as employers should be exonerated from liability when they do no more than follow the policies established by their superiors. Individual liability attaches, if at all, to the generals, not their soldiers.
18. McIlwain is not liable for the hostile work environment to which Robinson was subjected. He did not personally participate in any sexually harassing behavior that affected Robinson and he was not personally presented with her complaints of sexual harassment. Indeed, his status as an employer derives from his status as an agent of JSI. The responsibility for handling sexual harassment complaints was delegated to supervisory personnel below McIlwain. While Robinson suggests that this delegation creates an agency relationship between McIlwain and the supervisory personnel responsible for remedying sexual harassment, her argument does not account for the source of McIlwain's authority to delegate. The delegation is done on behalf of the corporation, within McIlwain's agency relationship with JSI, and it therefore creates an agent-principal relationship between the delegatees and JSI, not the delegatees and McIlwain. See Brown, 684 F.Supp. at 1085-86; see also RESTATEMENT (SECOND) OF AGENCY *1528 § 5 comment a (1958); id. § 222. Accordingly, JSI, not McIlwain, incurs liability when the actions (or inactions) of the delegatees create the circumstances for the application of respondeat superior.
19. Brown is liable for the hostile work environment to which Robinson was subjected. His responsibility extended to the creation and implementation of JSI's sexual harassment policies. Their failure is his failure. Additionally, he personally intervened in Robinson's complaint and directed that no remedial action be taken.
20. Stewart is liable for the hostile work environment to which Robinson was subjected. He held responsibility for the day-to-day administration of the sexual harassment complaint machinery. Its failure is his failure. Additionally, he personally intervened in Robinson's complaint and directed that no remedial action be taken.
21. Ahlwardt is not liable for the hostile work environment to which Robinson was subjected. He stood in a middle management position and did no more or less than implement the order of his superiors, albeit with little finesse or compassion.
22. Owens is not liable for the hostile work environment to which Robinson was subjected. He also stood too far down on the ladder of authority to accrue individual liability for the state of the workplace.
23. Lovett is not liable for the hostile work environment to which Robinson was subjected. Not only did he stand too far down on the ladder of authority, he did not exercise control directly over Robinson.
24. Defendants argue that they cannot be held liable unless they personally participated in sexually offensive conduct, citing Brown v. City of Miami Beach, 684 F.Supp. 1081, 1085-86 (S.D.Fla. 1988), judgment rendered sub nom. Sanchez v. City of Miami Beach, 720 F.Supp. 974 (S.D.Fla.1989), and Hendrix v. Fleming Cos., 650 F.Supp. 301, 302-03 (W.D. Okla.1986). The Court disagrees with the limiting force of defendants' proposition. Active participation in sexually harassing behavior is a sufficient but not a necessary condition to the imposition of Title VII liability.[9] An individual employer who ratifies the sexually harassing conduct of another is surely as culpable as if the employer actively participated. See McAdoo, 591 F.Supp. at 1406. One method of ratification is an individual employer's failure or refusal to act to remedy a valid complaint of sexual harassment presented to that individual for which the individual has a duty to respond. See Morris v. American Nat'l Can Corp., 730 F.Supp. 1489, 1496-97 (E.D.Mo.1989); Maturo v. National Graphics, Inc., 722 F.Supp. 916, 923-24 (D.Conn.1989).
25. JSI is liable for the hostile work environment to which Robinson was subjected. Corporate defendant liability may be proved under either of two theories. Direct liability is incurred when an agent of the corporate employer is responsible for the behavior that comprises the hostile work environment and the agent's actions were taken within the scope of the agency. See Steele v. Offshore Shipbuilding, Inc., 867 F.2d 1311, 1316 n. 1 (11th Cir.1989); Vance, 863 F.2d at 1512. Indirect liability attaches where the hostile environment is created by one who is not the plaintiff's employer, such as a coworker, or by an agent of the employer who is acting outside the scope of the agency, and the plaintiff can establish that the employer knew or should have known of the harassment and failed to take prompt, effective *1529 remedial action. See Steele, 867 F.2d at 1316; Vance, 863 F.2d at 1512; Henson, 682 F.2d at 910. The Court concludes that Robinson has demonstrated JSI's liability under both theories.
26. Direct liability for a corporate defendant in a hostile work environment case is unusual. In Steele, the Eleventh Circuit described the concept as "illogical" because "[t]he supervisor does not act as the company; the supervisor acts outside `the scope of actual or apparent authority to hire, fire, discipline, or promote.'" 867 F.2d at 1316. This proposition is true for the facts of that case, where a male supervisor made sexually offensive comments to a female employee and company policy clearly disapproved of such conduct. The agency principles involved in Steele apply more clearly because of the nature of the harassment. Here it must be recognized that "the legal concept [of the scope of employment] was developed for factual settings bounded by a specific authorized task, a single unauthorized act, and one-time injury. Consequently, it is difficult to draw useful analogies to the continuing injuries and complex management practices involved in sexual harassment." Note, Employer Liability Under Title VII for Sexual Harassment After Meritor Savings Bank v. Vinson, 87 COLUM.L.REV. 1258, 1273 (1987). It is therefore necessary to examine closely the fashion in which the agents exercised authority in this case.
(a) The policymaking agents of the corporate defendant condoned the distribution of the vendors' advertising calendars that formed part of the basis for Robinson's 1985 complaint. The work rules at JSI did not permit the posting of many kinds of materials, required permission for the posting of other kinds of materials, but did not restrict the posting of pictures of nude or partially nude women. Direct liability is apparent when an employer's policy subjects female employees to sexual harassment on the job. See Priest, 634 F.Supp. at 581; EEOC v. Sage Realty Corp., 507 F.Supp. 599, 608-10 (S.D.N.Y.1981); Marentette v. Michigan Host, Inc., 506 F.Supp. 909, 911 (E.D.Mich.1980).
(b) Brown and Stewart occupied the key positions at JSI for controlling the quality of the work environment. When faced with Robinson's complaint over sexually-oriented pictures, they did not merely fail to act to remedy the hostile environment, they affirmatively endorsed and ratified a portion of it. Moreover, the 1987 policy change presented an opportunity to begin reform of the work environment, and the materials accompanying the model policy suggested a course consistent with remedying plaintiff's complaint, but JSI declined to take these suggested steps.
(c) The aforementioned actions came within the scope of the agency relationship between JSI and its supervisors who acted as policymaking agents. Cf. Sparks, 830 F.2d at 1558-59 & n. 5 (setting forth relevant common law agency principles). The supervisors acted as the company. See Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1422 (7th Cir.1986) ("to say that the `corporation' has committed some wrong ... simply means that someone at the decision-making level in the corporate hierarchy has committed the wrong"). Liability therefore flows directly to the corporate employer, JSI. See RESTATEMENT (SECOND) OF AGENCY § 218 (common law agency principles of ratification); see also Rosenthal & Co. v. Commodity Futures Trading Comm'n, 802 F.2d 963, 966 (7th Cir.1986) ("Principals are strictly liable for their agents' acts ... if the principals authorize or ratify the acts or even just create an appearance that the acts are authorized.").
27. Liability also flows to JSI indirectly. JSI may be charged with actual or constructive knowledge of the harassing conduct. "The employee can show that the employer had knowledge of the harassment by proving that she complained to higher management of the problem or by demonstrating that the harassment was so pervasive that an inference of constructive knowledge arises." Huddleston, 845 F.2d at 904. Both types of knowledge exist in this case.
28. Actual complaints of sexual harassment are documented for several instances. In this regard, two points merit discussion.
(a) One, JSI must assume knowledge for complaints to quartermen and leadermen. As noted supra, quartermen and leadermen *1530 are not agents of JSI to the extent that they may be held as employers under Title VII. The facts show, however, that JSI relied upon these quasi-supervisory bargaining unit employees to monitor work performance, particularly on remote job sites within the compounds. Employees perceived that quartermen and leadermen were appropriate persons to whom to complain about work conditions. Cf. Llewellyn v. Celanese Corp., 693 F.Supp. 369, 380 (W.D.N.C.1988) (reporting of incidents of sexual harassment to dispatchers appropriate and adequate notice where dispatchers were in most frequent contact with employee truck drivers and were responsible for passing information up corporate hierarchy to supervisory personnel). Quartermen and leadermen apparently exercised discretion whether to act on these complaints or to refer the complaints to management supervisors. Cf. id. JSI structured its work environment in this fashion and condoned the apparent authority sometimes exercised by quartermen and leadermen. Point in fact, the sexual harassment policies were little known and understood, so JSI's formal assignment of complaints to other management personnel was wholly ineffectual. See Vinson, 477 U.S. at 72, 106 S.Ct. at 2408 (mere existence of complaint procedure and policy against discrimination insufficient to insulate employer from liability); cf. EECO v. Hacienda Hotel, 881 F.2d 1504, 1516 (9th Cir.1989); Lipsett, 864 F.2d at 907 n. 27; Sanchez, 720 F.Supp. at 979. Accordingly, the company must accept responsibility for the reporting of sexual harassment complaints to the individuals occupying the positions of quartermen and leadermen. Moreover, JSI must bear the responsibility of deterred reports of sexual harassment caused by the treatment of female employees by the quartermen and leadermen.
(b) Two, JSI cannot stand on an "ostrich defense" that it lacked knowledge of many of the complaints, because its handling of sexual harassment complaints deterred reporting and it did not conduct adequate investigation of the complaints it did receive. JSI received reports at the supervisory level and at the line level (quartermen and leadermen) concerning incidents of sexual harassment. Additionally, many supervisory personnel admitted that they knew of the sexually-oriented pictures throughout the workplace. Defendants concede several such reports in a series of tables attached to their post-trial brief; the testimony as recorded in the Findings of Fact documents many more reports. These reports should have alerted JSI management to the need to conduct a more thorough investigation of conditions in the shipyards. A duty to conduct further investigation arises when a report or reports of sexual harassment to management suggests that the workplace may be charged in a sexually hostile manner. See Risinger, 883 F.2d at 481-83; Yates v. Avco Corp., 819 F.2d 630, 636 (6th Cir.1987); Paroline, 879 F.2d at 107; Rauh v. Coyne, 744 F.Supp. 1186, 1189 (D.D.C.1990) (investigation of complaints by other female employees may have uncovered problem in workplace prior to harassment of plaintiffs); Watts v. New York City Police Dep't, 724 F.Supp. 99, 107-08 & n. 7 (S.D.N.Y.1989) (reports from other female employees may trigger duty to investigate workplace as a whole). JSI instead ignored the warning signs of a hostile work environment. The evidence reveals a supervisory attitude that sexual harassment is an incident-by-incident matter; records were not maintained that would have permitted an analysis of sexual harassment complaints to determine the level of sexual hostility in the workplace. Under these circumstances, the Court concludes that JSI received adequate actual knowledge of the state of the work environment but, like an ostrich, the company elected to bury its head in the sand rather than learn more about the conditions to which female employees, Robinson in particular, were subjected.[10]
*1531 29. The Court additionally imposes constructive knowledge on JSI for the sexually hostile state of its work environment. Constructive knowledge is measured by a practical threshold. An employer escapes liability for isolated and infrequent slurs and misogynist behaviors because even a reasonably prudent employer cannot exercise sufficient control over the workplace to put an end to such conduct; conversely, an employer incurs liability when harassing behavior happens frequently enough that the employer can take steps to halt it. See Hunter, 797 F.2d at 1421-22. The sexually harassing behaviors described in the Findings of Fact are too pervasive to have escaped the notice of a reasonably alert management. E.g., Andrews, 895 F.2d at 1479, 1486 ("middle management" must have known of comments and pictures); Waltman, 875 F.2d at 478-79; Lipsett, 864 F.2d at 906 & n. 25 (knowledge unavoidable when management entered areas where pictures were posted); Bennett, 845 F.2d at 106 (management official saw offending cartoons but did not remove them until plaintiff complained on next day); Hall, 842 F.2d at 1016; Katz v. Dole, 709 F.2d 251, 256 (4th Cir.1983). Moreover, the extent to which coworkers and supervisory personnel actually knew of the existence of sexually harassing behavior is a good barometer of the company's constructive knowledge. Cf. Vaughn v. AG Processing, Inc., 459 N.W.2d 627, 635 (Iowa 1990). The testimony before this Court establishes that Robinson's plight was widely known. To the extent that JSI contends that the physical size of its work environment diminished its ability to monitor incidents of sexual harassment, the company must realize that its expansive size may increase its burden in providing a workplace free of discrimination, but that expanse does not decrease its responsibility in this task. See Llewellyn, 693 F.Supp. at 380.
30. Given that JSI should have responded and did respond to some aspects of the sexually hostile work environment, the effectiveness of its response must be evaluated. Two methods of measuring effectiveness have received endorsement. One, the employer's total response is evaluated on the basis of the circumstances as then existed. See, e.g., Brooms, 881 F.2d at 421. The employer's response is ineffective if "it delay[ed] unduly ... [and] the action it [did] take, however promptly, [was] not reasonably likely to prevent the misconduct from recurring." Guess v. Bethlehem Steel Corp., 913 F.2d 463, 465 (7th Cir. 1990). Two, an employer can defend successfully by showing that the conduct brought to the company's attention was not repeated after the employer took action. See, e.g., Steele, 867 F.2d at 1316 (special importance attached to fact that harassment ended after employer took remedial steps). In this regard, the employer must show the effectiveness of the actions, not merely that actions were taken. See, e.g., Sanchez, 720 F.Supp. at 981-82 (remedial action of new sexual harassment policy and procedures constituted change in form, not in substance).
31. JSI did not respond to complaints of sexual harassment with prompt, effective remedial measures. In some instances in which a complaint was made, offending graffiti and pictures were removed promptly; in many other instances, no action was taken or the action was taken after considerable delay. It is noteworthy that the company did not either seek to identify the perpetrators of most harassing incidents (such as the "Men Only" sign and the pictures and graffiti that were removed), cf. Tunis v. Corning Glass Works, 698 F.Supp. 452, 460 (S.D.N.Y.1988) (employer could be held liable for failing "to attempt to identify the offending ... employees, much less to discipline them"), judgment entered for defendant, 747 F.Supp. 951 (S.D.N.Y.1990), or take steps to communicate with other male employees concerning the nature of the offending behavior and *1532 the need to show respect to female employees, cf. Daniels v. Essex Group, Inc., 740 F.Supp. 553, 556-60 (N.D.Ind.1990) (company did not take steps to warn against repetition of racially harassing behavior). Those remedial actions that were taken, such as the removal of pictures or painting over the "Men Only" sign, lacked effectiveness, as the pictures often were replaced and the sign remained visible through the paint. The evidence shows that complainants were treated as not credible if their complaint lacked independent corroboration, that little investigation was conducted of complaints, and that discipline, on the rare occasions that it was meted out, did not reflect the seriousness of the offense. These weaknesses create liability on the corporation's part. See, e.g., Paroline, 879 F.2d at 106-07 (failure to investigate and failure to impose commensurate discipline); Ways v. City of Lincoln, 871 F.2d 750, 755 (8th Cir.1989) (failure to investigate and failure to discipline); Morris, 730 F.Supp. at 1496-97 (failure to interview complainant and reliance on coworkers to police themselves); Maturo, 722 F.Supp. at 923 (failure to intervene after initial complaints); Anderson v. Hewlett-Packard Corp., 694 F.Supp. 1294, 1304 (N.D.Ohio 1988) (demanded additional corroboration from complainants, exhibiting stereotypical thinking about frivolity of complaints by women); Llewellyn, 693 F.Supp. at 377-81.
32. Not only were the behaviors repeated throughout the workplace and over time, but examples show that the same individuals would repeat sexually harassing misconduct following intervention from management. Moreover, JSI cannot escape the burden of responsibility for many unreported instances of sexual harassment. Although JSI did not receive the opportunity to respond to these instances due to the lack of a formal complaint, the fact that a complaint was not made resulted from the failure to maintain an effective sexual harassment complaint procedure and other circumstances in the work environment that deterred the reporting of episodes of sexual harassment.
33. The response to Robinson's complaint demonstrated a lack of appreciation for the gravity of the conduct of which she complained. In doing so, management condoned and encouraged further harassment. The small steps taken in response, such as the moving of an offensive calendar and the removal of some pictures, are out-weighed by the continuing abuse that went unremedied.
Executive Order No. 11246
34. Plaintiff asserts that liability may be imposed for violation of the anti-discrimination provisions of Executive Order No. 11246 and as a breach of contract enforced by plaintiff as a third-party beneficiary to the United States Navy contracts entered into by JSI. The Court rejects these theories of liability. In Banks v. Jacksonville Shipyards, Inc., Case No. 88-128-Civ-J-16 (M.D.Fla. July 7, 1988), Judge Moore of this Court dismissed claims asserting these theories of liability. His decision is highly persuasive, for it rests on a sound legal foundation. In Farkas v. Texas Instruments, Inc., 375 F.2d 629, 633 (5th Cir.), cert. denied, 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471 (1967), the appellate court found no private cause of action under the predecessor order to Executive Order No. 11246. Farkas is binding precedent, and its continuing validity received a boost from dictum in Eatmon v. Bristol Steel & Iron Works, Inc., 769 F.2d 1503, 1515 (11th Cir.1985), that states that no private cause of action is available under Executive Order No. 11246. These cases seem to settle the issue, but if this precedent is not in fact dispositive, the Court adopts the analysis finding no private cause of action which appears in Utley v. Varian Assocs., 811 F.2d 1279, 1284-86 (9th Cir.), cert. denied, 484 U.S. 824, 108 S.Ct. 89, 98 L.Ed.2d 50 (1987). Accord Women's Equity Action League v. Cavazos, 906 F.2d 742, 750 (D.C.Cir.1990). The third-party beneficiary theory is merely derivative of the private cause of action theory and the former cannot be entertained given the disposition of the latter.
Remedy
35. Plaintiff is not entitled to monetary relief as a make-whole remedy. As a general rule, a plaintiff is entitled to *1533 backpay when economic injury is suffered as a result of discrimination. See Nord v. United States Steel Corp., 758 F.2d 1462, 1472 (11th Cir.1985) ("Under the `make whole' rationale ..., victorious Title VII plaintiffs are presumptively entitled to back pay."). Also, a plaintiff's presentation of evidence showing economic injury stemming from discrimination will create an entitlement to backpay unless defendants effectively rebut, by a preponderance of evidence, the plaintiff's assertion of loss. Id. at 1470-71. However, the linchpin of these principles is the plaintiff's initial burden to demonstrate economic loss. See EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 529 (11th Cir.1990) (court should not award backpay unless wages are properly owed to employee); Jinks v. Mays, 464 F.2d 1223, 1226 (5th Cir.1972) (proving wages are properly owed "requires positive proof that plaintiff was ordinarily entitled to the wages in question and, being without fault, would have received them in the ordinary course of things but for the inequitable conduct of the party from whom the wages are claimed"); Ross v. Twenty-Four Collection, Inc., 681 F.Supp. 1547, 1555 (S.D.Fla. 1988) (employer's burden to rebut claim for backpay begins when plaintiff satisfies "the burden of proving the amount of damage resulting from the employer's discriminatory acts"), aff'd, 875 F.2d 873 (11th Cir.1989) (Table). This burden includes the presentation of the evidence of the loss in a form that is not merely speculative. See, e.g., Huddleston, 845 F.2d at 905 (evidence of lost commissions too vague to provide basis for award of backpay); Walker, 684 F.2d at 1362-63 (backpay properly denied where continued employment was speculative and plaintiff provided no evidence concerning likelihood that he would be retained); Spencer v. General Elec. Co., 697 F.Supp. 204, 219 & n. 19 (E.D.Va.1988) (monetary relief unavailable for speculative losses of overtime and promotions, particularly given absence of reasonable basis to quantify promotional opportunities), aff'd, 894 F.2d 651 (4th Cir.1990); see also Denton v. Boilermakers Local 29, 673 F.Supp. 37, 41 (D.Mass.1987) (burden of proving backpay entitlement satisfied by reasonable basis of computation). Robinson has not satisfied this part of her burden, as explained in FOF ¶ 127, and therefore the monetary relief will not be granted.
36. Nominal damages are available and appropriate where actual loss is not proven or provable. Huddleston, 845 F.2d at 905; Henson, 682 F.2d at 905; C. MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES § 23 (1935). The Court thus will award nominal damages in the amount of $1.00 against JSI. See Carey v. Piphus, 435 U.S. 247, 266-67, 98 S.Ct. 1042, 1053-54, 55 L.Ed.2d 252 (1978) (one dollar is appropriate amount for nominal damages). Because nominal damages are awarded as a surrogate for a backpay award, the circumstances of an award should be identical. Binding precedent holds that public officials cannot be held personally liable for backpay under Title VII, see Clanton v. Orleans Parish School Bd., 649 F.2d 1084, 1099 & n. 19 (5th Cir. Unit A July 1981); persuasive authority extends this principle to individual employer defendants in private corporations,[11]see Seib v. Elko Motor Inn, Inc., 648 F.Supp. 272, 274 (D.Nev. 1986); Pree v. Stone & Webster Eng'g Corp., 607 F.Supp. 945, 950 (D.Nev.1985). On this basis the nominal damages should be awarded against JSI only. Alternatively, backpay liability also may be limited for equitable reasons tailored to the circumstances of the individual's involvement, see, e.g., Altman v. Stevens Fashion Fabrics, 441 F.Supp. 1318, 1321 (N.D.Cal.1977). The circumstances in this case do not show Brown or Stewart to be motivated by any ill will or bad faith; they appear to have *1534 acted on their belief concerning the best interests of JSI. The Court thus also finds equitable grounds to limit the assessment of nominal damages to JSI alone.
37. Plaintiff is entitled to injunctive relief. See Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, 1561 (11th Cir.), cert. denied, 479 U.S. 883, 107 S.Ct. 274, 93 L.Ed.2d 250 (1986). It must take the form of negative and affirmative relief. Simply enjoining JSI from engaging in or permitting further sexually harassing behavior is insufficient to repair and rehabilitate the sexually hostile working environment. The history of management's condonation and approval of sexually harassing conditions, together with the past failures to redress effectively those instances of sexual harassment of which management disapproved, argues forcefully for affirmative relief that provides guidance for all employees regarding acceptable and offensive conduct, provides confidence to female employees that their valid complaints of sexual harassment will be remedied, and provides male employees who transgress the boundaries of sexual harassment with notice that their conduct will be penalized commensurate with the seriousness of the offense.
38. This Court must "render a decree which will so far as possible eliminate the discriminatory effects of the past as well as bar like discrimination in the future." Albemarle Paper Co. v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280 (1975). Ms. Wagner endorsed plaintiff's proposed sexual harassment policy and procedures as an effective remedy for the work environment at JSI. The Court agrees with her assessment. The Court notes the use of education, training, and the development of effective complaint procedures as an appropriate remedy in prior hostile work environment sexual harassment cases. See, e.g., Bundy v. Jackson, 641 F.2d 934, 947 (D.C.Cir.1981); Morris, 730 F.Supp. at 1498; Sanchez, 720 F.Supp. at 982; but see Hopkins v. Price Water-house, 737 F.Supp. 1202, 1216 (D.D.C.1990) (declining to monitor potential for sexual stereotyping in future promotions because remedy is too intrusive, unnecessary to provide notice of potential liability if defendant failed to monitor itself, and case was atypical), on remand from 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989), aff'd, 920 F.2d 967 (D.C.Cir.1990). The Court adopts the policy and procedures proposed by plaintiff, with the exceptions stated herein.
39. Injunctive relief is limited to the corporate defendant, JSI, because there exists no reason to believe that Brown and Stewart will act contrary to a court order covering their employer and their liability is incidental to their actions taken within the scope of their employment. They are in privity with JSI and thereby are effectively bound by a decree directed to the corporation alone. See Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14, 65 S.Ct. 478, 481, 89 L.Ed. 661 (1945); Professional Ass'n of College Educators v. El Paso County Community College Dist., 730 F.2d 258, 274 (5th Cir.), cert. denied, 469 U.S. 881, 105 S.Ct. 248, 83 L.Ed.2d 186 (1984); Texas Util. Co. v. Santa Fe Indus., Inc., 553 F.Supp. 106, 111-12 (N.D.Tex. 1982). The narrower coverage relieves the Court of the burden of releasing Brown and Stewart if they should leave JSI or change jobs there.
40. The first amendment guarantee of freedom of speech does not impede the remedy of injunctive relief. Accord Davis v. Monsanto Chem. Co., 858 F.2d 345, 350 (6th Cir.1988), cert. denied, 490 U.S. 1110, 109 S.Ct. 3166, 104 L.Ed.2d 1028 (1989); Jew v. University of Iowa, 749 F.Supp. 946, 961 (S.D.Iowa 1990); cf. EEOC v. Beverage Canners, Inc., 897 F.2d 1067, 1070 (11th Cir.1990) (upholding injunction directed to racially abusive language in workplace, without addressing free speech issues).
(a) First, JSI has disavowed that it seeks to express itself through the sexually-oriented pictures or the verbal harassment by its employees. No first amendment concern arises when the employer has no intention to express itself, see Sage Realty, 507 F.Supp. at 610 & n. 17, and JSI's action in limiting the speech options of its employees in the workplace, see FOF ¶¶ 20-21, establishes that the company may direct an *1535 end to the posting of materials without abridging its employees' free speech rights, cf. May v. Evansville-Vanderburgh School Corp., 787 F.2d 1105, 1110 (7th Cir.1986) (because "workplace is for working," employer may lawfully withhold its consent for employees to engage in expressive activities).
(b) Second, the pictures and verbal harassment are not protected speech because they act as discriminatory conduct in the form of a hostile work environment. See Roberts v. United States Jaycees, 468 U.S. 609, 628, 104 S.Ct. 3244, 3255, 82 L.Ed.2d 462 (1984) ("[P]otentially expressive activities that produce special harms distinct from their communicative impact ... are entitled to no constitutional protection."); Hishon v. King & Spalding, 467 U.S. 69, 78, 104 S.Ct. 2229, 2235, 81 L.Ed.2d 59 (1984); Strauss, Sexist Speech in the Workplace, 25 HARV.C.R.-C.L.L.REV. 1, 38-41 (1990). In this respect, the speech at issue is indistinguishable from the speech that comprises a crime, such as threats of violence or blackmail, of which there can be no doubt of the authority of a state to punish. E.g., Rankin v. McPherson, 483 U.S. 378, 386-87, 107 S.Ct. 2891, 2897-99, 97 L.Ed.2d 315 (1987) (threat to kill the President is not protected by first amendment); United States v. Shoulberg, 895 F.2d 882, 886 (2d Cir.1990) (threats to intimidate witnesses); see generally Greenawalt, Criminal Coercion and Freedom of Speech, 78 NW.U.L.REV. 1081 (1983); Greenawalt, Speech and Crime, 1980 AM.B. FOUND.RES.J. 645. This treatment is consistent with the holding of Pittsburgh Press Co. v. Human Relations Comm'n, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973), that a ban on discriminatory help-wanted advertisements did not offend the first amendment. See also Smolla, Rethinking First Amendment Assumptions About Racist and Sexist Speech, 47 WASH. & LEE L.REV. 171, 197 (1990) (transactional setting of sexual harassment opens sexist speech to regulation); cf. Swank v. Smart, 898 F.2d 1247, 1251 (7th Cir.) (casual chitchat while working is not protected speech), cert. denied, ___ U.S. ___, 111 S.Ct. 147, 112 L.Ed.2d 113 (1990).
(c) Third, the regulation of discriminatory speech in the workplace constitutes nothing more than a time, place, and manner regulation of speech. See Strauss, supra, at 46 ("[B]anning sexist speech in the workplace does not censor such speech everywhere and for all time."). The standard for this type of regulation requires a legitimate governmental interest unrelated to the suppression of speech, content neutrality, and a tailoring of the means to accomplish this interest. See, e.g., United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 1679, 20 L.Ed.2d 672 (1968). The eradication of workplace discrimination is more than simply a legitimate governmental interest, it is a compelling governmental interest. See Rotary Int'l v. Rotary Club of Duarte, 481 U.S. 537, 549, 107 S.Ct. 1940, 1947, 95 L.Ed.2d 474 (1987) (eliminating discrimination against women is compelling governmental interest); Roberts, 468 U.S. at 626, 104 S.Ct. at 3254 (compelling governmental interest lies in removing barriers to economic advancement and political and social integration that have historically plagued women). Given the circumstances of the JSI work environment, the method of regulation set forth in this order narrowly tailors the regulation to the minimum necessary to remedy the discrimination problem. To the extent that the regulation here does not seem entirely content neutral, the distinction based on the sexually explicit nature of the pictures and other speech does not offend constitutional principles. See Renton v. Playtime Theatres, Inc., 475 U.S. 41, 48-49, 106 S.Ct. 925, 929-30, 89 L.Ed.2d 29 (1986); see also Sunstein, Pornography and the First Amendment, 1986 DUKE L.J. 589, 616-17.
(d) Fourth, female workers at JSI are a captive audience in relation to the speech that comprises the hostile work environment. "Few audiences are more captive than the average worker.... Certainly, if employer-employee relations involve sufficient coercion that we justify regulation in other contexts, then this coercion does not suddenly vanish when the issue is submission to racist or sexist speech." Balkin, Some Realism About Pluralism: Legal *1536 Realist Approaches to the First Amendment, 1990 DUKE L.J. 375, 423-24. The free speech guarantee admits great latitude in protecting captive audiences from offensive speech. See, e.g., Frisby v. Schultz, 487 U.S. 474, 487, 108 S.Ct. 2495, 2503, 101 L.Ed.2d 420 (1988); FCC v. Pacifica Found., 438 U.S. 726, 744-51, 98 S.Ct. 3026, 3037-41, 57 L.Ed.2d 1073 (1978) (plurality opinion); Lehman v. City of Shaker Heights, 418 U.S. 298, 302-04, 94 S.Ct. 2714, 2716-18, 41 L.Ed.2d 770 (1974) (plurality opinion).
(e) Fifth, if the speech at issue is treated as fully protected, and the Court must balance the governmental interest in cleansing the workplace of impediments to the equality of women, the latter is a compelling interest that permits the regulation of the former and the regulation is narrowly drawn to serve this interest. Cf. United States v. Paradise, 480 U.S. 149, 171-85, 107 S.Ct. 1053, 1066-74, 94 L.Ed.2d 203 (1987) (performing similar analysis for race-conscious remedy to race discrimination). Other first amendment rights, such as the freedom of association and the free exercise of religion, have bowed to narrowly tailored remedies designed to advance the compelling governmental interest in eradicating employment discrimination. See, e.g., Rotary Int'l, 481 U.S. at 548-49, 107 S.Ct. at 1947-48; EEOC v. Pacific Press, 676 F.2d 1272, 1280-81 (9th Cir. 1982); EEOC v. Mississippi College, 626 F.2d 477, 488-89 (5th Cir.1980), cert. denied, 453 U.S. 912, 101 S.Ct. 3143, 69 L.Ed.2d 994 (1981); see also Ellis v. Brotherhood of Ry. Airline & S.S. Clerks, 466 U.S. 435, 455-56, 104 S.Ct. 1883, 1895-96, 80 L.Ed.2d 428 (1984) (governmental interest in industrial peace justifies interference with dissenting employees first amendment rights resulting from allowing union shop).
(f) Sixth, the public employee speech cases lend a supportive analogy. If this Court's decree is conceptualized as a governmental directive concerning workplace rules that an employer must carry out, then the present inquiry is informed by the limits of a governmental employer's power to enforce workplace rules impinging on free speech rights. In the public employee speech cases, the interests of the employee in commenting on protected matters is balanced against the employer's interests in maintaining discipline and order in the workplace. See, e.g., Finch v. City of Vernon, 877 F.2d 1497, 1502 (11th Cir.1989). When an employee's exercise of free expression undermines the morale of the workforce, the employer may discipline or discharge the employee without violating the first amendment. See, e.g., Bryson v. City of Waycross, 888 F.2d 1562, 1564-67 (11th Cir.1989). Analogously, the Court may, without violating the first amendment, require that a private employer curtail the free expression in the workplace of some employees in order to remedy the demonstrated harm inflicted on other employees. Cf. McMullen v. Carson, 568 F.Supp. 937, 943-45 (M.D.Fla.1983) (finding no first amendment violation in discharge of KKK member from police force because inter alia internal discipline and morale were threatened by potential for racial confrontations), aff'd, 754 F.2d 936 (11th Cir. 1985); accord Rankin, 483 U.S. at 391 n. 18, 107 S.Ct. at 2901 n. 18.
(g) Finally, defendants' reliance upon American Booksellers Ass'n v. Hudnut, 771 F.2d 323 (7th Cir.1985), sum. aff'd, 475 U.S. 1001, 106 S.Ct. 1172, 89 L.Ed.2d 291 (1986), is misplaced. Two concerns dominate that case. One is the broad definition of "pornography" in the Indianapolis ordinance. See 771 F.2d at 332. This issue is not present in this case because the affected speech, if it is speech protected by the first amendment, is reached only after a determination that a harm has been and is continuing to be inflicted on identifiable individuals. The second concern raised in Hudnut is the underlying proposition of the Indianapolis ordinance that pornography conveys a message that is always inappropriate and always subject to punishment, regardless of the context in which it appears. See id. at 327-32. In this case, the context of the speech is the heart of the cause of action and the remedy goes no further than to regulate the time, place, and manner of the offensive speech. Cf. Bryson, 888 F.2d at 1567 (public employee may be discharged lawfully for uttering *1537 on-job speech which would be protected fully if uttered off-duty and in private).
41. The National Labor Relations Act does not impede the grant of injunctive relief to require a policy and procedures to handle sexual harassment complaints. The Court does not perceive that the obligations imposed by the policy and procedures are inconsistent with the collective bargaining agreement between JSI and Local 805 of the International Brotherhood of Boilermakers. See Nowlin, Sexual Harassment in the Workplace: How Arbitrators Rule, 43 ARB.J. 31, 35 (Dec. 1988) (arbitrators generally sustain discipline arising from sexually harassing behavior of the type experienced at JSI); see also Newsday, Inc. v. Long Island Typographical Union, No. 915, 915 F.2d 840, 843-45 (2d Cir.1990) (vacating arbitrator's award reinstating sexual harasser because arbitrator disregarded public policy against sexual harassment in workplace). The unilateral institution of sexual harassment policies by JSI in 1980 and 1987 suggests that the company does not view this area as one subject to bargaining. Defendants' argument regarding the failure to join the union as a party is not well-taken. Joinder of the union in a discrimination suit is not necessary where the relief does not compel revision of the collective bargaining agreement, but only affects the application of its neutral terms to individuals. See Karan v. Nabisco, Inc., 78 F.R.D. 388, 401-02 (W.D.Pa.1978); accord Forsberg v. Pacific N.W. Bell Tel. Co., 622 F.Supp. 1147, 1150, granting reconsideration to 623 F.Supp. 117 (D.Ore. 1985), aff'd on other grounds, 840 F.2d 1409, 1420 (9th Cir.1988) (appellate court expressly declined to rule on joinder issue); Hutcheson v. Tennessee Valley Auth., 604 F.Supp. 543, 548-49 (M.D.Tenn.1985). Plaintiff alleged no wrongdoing by the union and she seeks, at most, only to clarify the application of the nondiscrimination and just cause clauses within the collective bargaining agreement. Under these circumstances, JSI's apparent concern about conflicting obligations placed the onus on it to join the union as a party. An employer may be required to grant relief to victims of discrimination that conflicts with expectations otherwise created by a collective bargaining agreement. See Franks v. Bowman Transp. Co., 424 U.S. 747, 774-79, 96 S.Ct. 1251, 1268-71, 47 L.Ed.2d 444 (1976); EEOC v. McCall Printing Corp., 633 F.2d 1232, 1237 (6th Cir.1980). To the extent that the employer incurs conflicting obligations due to its compliance with a decree to remedy past discrimination, the burden of reconciling the conflict falls on the employer, not the victims of discrimination. See W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 766-70, 103 S.Ct. 2177, 2183-86, 76 L.Ed.2d 298 (1983); see also Martin v. Wilks, 490 U.S. 755, 109 S.Ct. 2180, 2187, 104 L.Ed.2d 835 (1989).
42. The right of unionized employees to representation during some investigatory interviews, based in § 7 of the NLRA, see NLRB v. J. Weingarten, Inc., 420 U.S. 251, 256-64, 95 S.Ct. 959, 963-67, 43 L.Ed.2d 171 (1975), does limit the procedures that the Court may order. The proposal submitted by plaintiff and adopted by the Court, however, does not impose any restriction on the right to representation during investigations. The requirement of confidentiality where possible does not exclude the lawful role of the union in representation of its members. The policy and procedures should be implemented in a fashion that does not abridge Weingarten rights.
43. Based on the foregoing, the Court will affirmatively enjoin defendant JSI to adopt, implement, and enforce a policy and procedures for the prevention and control of sexual harassment, substantially in the form proposed by plaintiff. The Court will set forth in this order its modifications of the proposed policy and procedures. In addition, JSI will have thirty (30) days in which to submit any specific objections that relate to its ability to implement and enforce the policy and procedures, as modified. The Court grants this time for the limited purpose of raising issues in the practical execution of its mandate; the objections should not concern the substance of it. Moreover, the Court expects that the parties will confer about any potential objections that JSI will lodge and that they will work in good faith to craft a solution to the legitimate concerns that JSI may *1538 identify. It is the opinion of the Court that, at this stage of the proceedings, JSI does not waive or otherwise prejudice any objections previously raised to the proposed remedy by working with plaintiff to shape a workable remedy. The judgment in this case is not final until such time as the Court rules on any objections that JSI submits or JSI informs the Court that it has no objections, either by the passage of the allotted time or by formal notice filed with the Court.
44. The scope of the policy and procedures to be adopted by JSI is as follows.
(a) Plaintiff's proposed Sexual Harassment and Retaliation Policy (Exhibit A to Appendix II of plaintiff's Pretrial Brief) shall be adopted by JSI in full. The policy shall receive the widest form of distribution, including publication in the company's work rules book, posting throughout the shops, and distribution to the workers directly, as explained in plaintiff's proposed Sexual Harassment and Retaliation Procedures and Rules for Education and Training (Exhibit E to Appendix II of plaintiff's Pretrial Brief).[12]
(b) JSI shall adopt an equivalent to plaintiff's proposed Sexual Harassment and Retaliation Statement of Prohibited Conduct (Exhibit B to Appendix II of plaintiff's Pretrial Brief) and likewise ensure wide distribution. JSI need not adopt word-for-word plaintiff's proposal, but the statement must cover the same subjects, with the exception of the second-to-last paragraph regarding conduct away from work,[13] and must be calculated to communicate clearly the prohibitions to JSI employees.
(c) JSI shall adopt an equivalent to plaintiff's proposed Sexual Harassment and Retaliation Schedule of Penalties for Misconduct (Exhibit C to Appendix II of plaintiff's Pretrial Brief). The schedule shall reflect the seriousness of sexually harassing behavior, but JSI may integrate the levels of discipline and progression thereof to match its treatment of other serious workplace misconduct.
(d) Plaintiff's proposed Procedures for Making, Investigating and Resolving Sexual Harassment and Retaliation Complaints (Exhibit D to Appendix II of plaintiff's Pretrial Brief) provides a model that JSI shall adopt except for the provision requiring an Independent Investigator. The Court does not preclude JSI from voluntarily undertaking to employ an Independent Investigator; this modification is intended solely to lift that aspect of the proposal as a requirement. The Court is not persuaded that the sexual harassment reporting system needs a permanent outside monitor to guarantee its performance or instill employee confidence. The Court will require, however, that plaintiff's counsel or a representative of the Court shall be given reasonable access to inspect for compliance.
(e) Plaintiff's proposed Sexual Harassment and Retaliation Procedures and Rules for Education and Training (Exhibit E to Appendix II of plaintiff's Pretrial Brief) has four distinctive parts. The Court will require JSI to adopt only the first part, concerning education and training.
(f) JSI shall provide the Court with its equivalent to the Statement of Prohibited Conduct and the Schedule of Penalties no later than thirty (30) days from the entry of this order. JSI may elect to adopt the plaintiff's proposals in lieu of its own by filing a notice with the Court stating as much.
45. In Title VII actions, prevailing plaintiffs may recover reasonable *1539 attorney fees as a part of costs. 42 U.S.C. § 2000e-5(k). Absent special circumstances, the court should award reasonable attorney fees. Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417, 98 S.Ct. 694, 698, 54 L.Ed.2d 648 (1978). No such circumstances exist in this case; accordingly, plaintiff is entitled to recover her costs and attorney fees in this action. Because this type of award follows the award of nominal damages, see Huddleston, 845 F.2d at 905; Henson, 682 F.2d at 905, it is assessed only against JSI. The application for attorney fees should address the factors for evaluating the reasonableness of a request developed in Norman v. Housing Authority, 836 F.2d 1292 (11th Cir. 1988), and Perkins v. Mobile Housing Board, 847 F.2d 735 (11th Cir.1988). Because some of plaintiff's counsel is affiliated with an out-of-town public interest litigation group, attention also should be directed to Judge Thomas' opinion in Dunn v. The Florida Bar, 726 F.Supp. 1261, 1279-80 (M.D.Fla.1988), aff'd on other grounds, 889 F.2d 1010 (11th Cir.1989), cert. denied, ___ U.S. ___, 111 S.Ct. 46, 112 L.Ed.2d 22 (1990).
In accordance with the foregoing, it is hereby
ADJUDGED:
That judgment shall be entered in favor of plaintiff Lois Robinson and against defendants Jacksonville Shipyards, Inc., Lawrence Brown, and John Stewart on the claim made pursuant to Title VII of the Civil Rights Act of 1964;
That this action shall be dismissed as to defendant John Kiedrowski;
That judgment shall be entered in favor of defendants Arnold McIlwain, Elmer L. Ahlwardt, Everette P. Owens, and Ellis Lovett and against plaintiff on the claim made pursuant to Title VII of the Civil Rights Act of 1964;
That judgment shall be entered in favor of all defendants and against plaintiff on the claim made pursuant to Executive Order No. 11246;
That injunctive relief shall be issued against defendant Jacksonville Shipyards, Inc. in the form described in the Conclusions of Law;
That nominal damages shall be assessed against defendant Jacksonville Shipyards, Inc.;
That plaintiff shall be awarded her reasonable costs and attorney fees from defendant Jacksonville Shipyards, Inc.; and
That a separate order will be entered regarding the foregoing matters.
DONE AND ORDERED.
ORDER, INJUNCTION AND FINAL JUDGMENT
This cause is before the Court for the entry of final judgment and an injunction in accordance with the Court's Findings of Fact and Conclusions of Law, entered herein on January 18, 1991. In an Order entered that same day, the Court offered an opportunity to defendant, Jacksonville Shipyards, Inc. ("JSI"), to register objections to plaintiff's proposed policy and procedures. JSI filed its objections herein on February 26, 1991. Plaintiff replied in a letter dated February 28, 1991, which the Court accepted for filing herein on March 1, 1991.[1]
Plaintiff raises an issue whether some of JSI's objections are within the scope of the Court's grant. As the Findings of Fact and Conclusions of Law, at 94 (para. 34), state, the Court gave JSI time
in which to submit any specific objections that relate to its ability to implement and enforce the policy and procedures, as modified. The Court grants this time for the limited purpose of raising issues in the practical execution of its mandate; the objections should not concern the substance of it.
Plaintiff objects that JSI has raised objections going to the substance of the Court's mandate.
The Court agrees. A review of JSI's objections reveals that the following of *1540 them are beyond the leave of the Court and therefore should be stricken: I(B), I(D), I(E), I(F), II(A), II(B), III(C), III(D), IV(A), IV(B), IV(C), IV(D), IV(F), and IV(G). Also, JSI's gratuitous inclusion of a letter allegedly written by two of its female employees is an unauthorized supplement to the record; it will be stricken. By the same token, the second paragraph of the letter from plaintiff's counsel, in response to the letter attached by JSI, adds without permission to a record that is closed; it will be stricken.
JSI makes a request in its objections for a hearing. This case was tried over the course of several days and JSI had the option to introduce evidence on a remedy. It did not. The opportunity to object that this Court provided was an extraordinary exercise of discretion in order to secure input that could enhance the workability of the injunction. The Court finds no need to hold a hearing to gain further input.
Objection I(A) proposes that the Statement of Prohibited Conduct is too open-ended if sexual comments or jokes are prohibited when a person has "indicated" that they are objectionable rather than an express advance statement of disapproval. Were the work environment at JSI pristine, this argument might merit consideration. But the very purpose of this injunction is to remedy a hostile work environment. As such, "breathing room" for the victims of that environment must be created. The objection is overruled.
Objection I(C) relays JSI's concern that "as a practical matter JSI cannot prohibit displays or possession of materials on ships by employees, such as ship crew members." The Court understands that JSI may lack the legal authority to direct the removal of materials on ships, but this does not exhaust JSI's avenues for controlling the work environment. Consistent with its obligations under the policy and procedures, JSI shall take such steps that are within its power to control the work environment aboard ships, including consultation with ship owners about the removal or covering of pictures posted aboard ships and storage of materials belonging to crew members, during repairs.
Objection II(C) recommends flexibility in the discipline of management personnel. Plaintiff concedes this objection is "laudable" if properly communicated to workers. The substance of the objection has been incorporated into the injunction. However, JSI should remain cognizant of its obligation to exercise its "flexibility" consistent with its duty to stop unlawful conduct. See Ellison v. Brady, 924 F.2d 872, 875-76 (9th Cir.1991).
Objection III(A) speaks to the access of complainants to the files on sexual harassment complaints. Plaintiff expresses her concern that JSI's language does not achieve her goal that complainants know from the start of the process how long disposition of the complaint will take. In the Court's view, the two issues are distinct. JSI's objection is valid and plaintiff's concern is valid. Requests by complainants to see files will receive response within a reasonable time. Moreover, although the injunction does not contain plaintiff's language, it is entered under the contemplation that the Investigative Officers will give each complainant an estimate of the expected length of the investigation. While the estimate is not binding, the ability to meet it, together with the reasons for any failure to meet it, will be properly considered in assessing JSI's good faith in implementing the injunction.
Objection III(B) states that "[r]equiring posting of the Policy in `convenient' locations calls for an opinion judgment." While this is true, the good faith decision by JSI to determine "convenient" locations can hardly be assailed. In case of doubt, JSI may consult with plaintiff or her counsel.
Objections III(E) and III(F) have been considered and incorporated into the Court's injunction.
Objection III(G) is well-founded. Plaintiff urges that the language she proposed is designed to secure access to all interviews of alleged harassers and witnesses and to notes of such interviews. The Court is of the opinion that the guarantee to complainants of access to the investigation *1541 file adequately covers this issue, and should be construed as such.
Objection IV(E) raises the salient point that plaintiff's proposal included training on racial harassment when that issue is not present in this case. This is a sex discrimination case and the remedy cannot exceed the scope of the cause of action.
While the Court will strike Objections IV(B) and IV(C), plaintiff indicates a willingness to address reductions in JSI's costs for training if the effectiveness of the training can be maintained. The Court leaves it to the parties to negotiate any such changes and experiment accordingly; the injunction should not be read to bar any agreed alterations in the training program designed to reduce its cost or enhance its effectiveness.
In accordance with the Findings of Fact and Conclusions of Law and the foregoing, it is
ORDERED AND ADJUDGED:
1. That the Court hereby strikes defendant's objections I(B), I(D), I(E), I(F), II(A), II(B), III(C), III(D), IV(A), IV(B), IV(D), IV(F), IV(G), Attachment 2 to the objections, and the second paragraph of plaintiff's letter memorandum;
2. That defendant Jacksonville Shipyards, Inc., is hereby enjoined to cease and desist from the maintenance of a work environment that is hostile to women because of their sex and to remedy the hostile work environment through the implementation, forthwith, of the Sexual Harassment Policy, which consists of the "Statement of Policy," "Statement of Prohibited Conduct," "Schedule of Penalties for Misconduct," "Procedures for Making, Investigating and Resolving Sexual Harassment and Retaliation Complaints," and "Procedures and Rules for Education and Training," attached as an appendix hereto and incorporated by reference; and
3. That final judgment is hereby entered as follows:
(a) dismissing defendant John Kiedrowski from this action;
(b) in favor of all remaining defendants and against plaintiff on the claim made pursuant to Executive Order No. 11246;
(c) in favor of defendants Arnold McIlwain, Elmer L. Ahlwardt, Everette P. Owens, and Ellis Lovett and against plaintiff on the claim made pursuant to Title VII of the Civil Rights Act of 1964;
(d) in favor of plaintiff and against defendants Lawrence Brown and John Stewart on the issue of liability for the Title VII claim, without an award of damages or other relief; and
(e) in favor of plaintiff and against defendant Jacksonville Shipyards, Inc., on the Title VII claim, for nominal damages in the amount of one dollar ($1.00), for costs and attorney fees in an amount to be determined, and for injunctive relief in the form described in the previous section of this Order.
DONE AND ORDERED.
APPENDIX
JACKSONVILLE SHIPYARDS, INC. SEXUAL HARASSMENT POLICY
STATEMENT OF POLICY
Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, color, sex, age or national origin. Sexual harassment is included among the prohibitions.
Sexual harassment, according to the federal Equal Employment Opportunity Commission (EEOC), consists of unwelcome sexual advances, requests for sexual favors or other verbal or physical acts of a sexual or sex-based nature where (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment; (2) an employment decision is based on an individual's acceptance or rejection of such conduct; or (3) such conduct interferes with an individual's work performance or creates an intimidating, hostile or offensive working environment.
It is also unlawful to retaliate or take reprisal in any way against anyone who *1542 has articulated any concern about sexual harassment or discrimination, whether that concern relates to harassment of or discrimination against the individual raising the concern or against another individual.
Examples of conduct that would be considered sexual harassment or related retaliation are set forth in the Statement of Prohibited Conduct which follows. These examples are provided to illustrate the kind of conduct proscribed by this Policy; the list is not exhaustive.
Jacksonville Shipyards, Inc., and its agents are under a duty to investigate and eradicate any form of sexual harassment or sex discrimination or retaliation. To further that end, JSI has issued a procedure for making complaints about conduct in violation of this Policy and a schedule for violation of this Policy.
Sexual harassment is unlawful, and such prohibited conduct exposes not only JSI, but individuals involved in such conduct, to significant liability under the law. Employees at all times should treat other employees respectfully and with dignity in a manner so as not to offend the sensibilities of a co-worker. Accordingly, JSI's management is committed to vigorously enforcing its Sexual Harassment Policy at all levels within the Company.
STATEMENT OF PROHIBITED CONDUCT
The management of Jacksonville Shipyards, Inc., considers the following conduct to represent some of the types of acts which violate JSI's Sexual Harassment Policy:
A. Physical assaults of a sexual nature, such as:
(1) rape, sexual battery, molestation or attempts to commit these assaults; and
(2) intentional physical conduct which is sexual in nature, such as touching, pinching, patting, grabbing, brushing against another employee's body, or poking another employee's body.
B. Unwanted sexual advances, propositions or other sexual comments, such as:
(1) sexually-oriented gestures, noises, remarks, jokes, or comments about a person's sexuality or sexual experience directed at or made in the presence of any employee who indicates or has indicated in any way that such conduct in his or her presence is unwelcome;
(2) preferential treatment or promise of preferential treatment to an employee for submitting to sexual conduct, including soliciting or attempting to solicit any employee to engage in sexual activity for compensation or reward; and
(3) subjecting, or threats of subjecting, an employee to unwelcome sexual attention or conduct or intentionally making performance of the employee's job more difficult because of that employee's sex.
C. Sexual or discriminatory displays or publications anywhere in JSI's workplace by JSI employees, such as:
(1) displaying pictures, posters, calendars, graffiti, objects, promotional materials, reading materials, or other materials that are sexually suggestive, sexually demeaning, or pornographic, or bringing into the JSI work environment or possessing any such material to read, display or view at work.
A picture will be presumed to be sexually suggestive if it depicts a person of either sex who is not fully clothed or in clothes that are not suited to or ordinarily accepted for the accomplishment of routine work in and around the shipyard and who is posed for the obvious purpose of displaying or drawing attention to private portions of his or her body.
(2) reading or otherwise publicizing in the work environment materials that are in any way sexually revealing, sexually suggestive, sexually demeaning or pornographic; and
*1543 (3) displaying signs or other materials purporting to segregate an employee by sex in any area of the workplace (other than restrooms and similar semi-private lockers/changing rooms).
D. Retaliation for sexual harassment complaints, such as:
(1) disciplining, changing work assignments of, providing inaccurate work information to, or refusing to cooperate or discuss work-related matters with any employee because that employee has complained about or resisted harassment, discrimination or retaliation; and
(2) intentionally pressuring, falsely denying, lying about or otherwise covering up or attempting to cover up conduct such as that described in any item above.
E. Other acts:
(1) The above is not to be construed as an all inclusive list of prohibited acts under this policy.
(2) Sexual harassment is unlawful and hurts other employees. Any of the prohibited conduct described here is sexual harassment of anyone at whom it is directed or who is otherwise subjected to it. Each incident of harassment, moreover, contributes to a general atmosphere in which all persons who share the victim's sex suffer the consequences. Sexually-oriented acts or sex-based conduct have no legitimate business purpose; accordingly, the employee who engages in such conduct should be and will be made to bear the full responsibility for such unlawful conduct.
SCHEDULE OF PENALTIES FOR MISCONDUCT
The following schedule of penalties applies to all violations of the JSI Sexual Harassment Policy, as explained in more detail in the Statement of Prohibited Conduct.
Where progressive discipline is provided for, each instance of conduct violating the Policy moves the offending employee through the steps of disciplinary action. In other words, it is not necessary for an employee to repeat the same precise conduct in order to move up the scale of discipline.
A written record of each action taken pursuant to the Policy will be placed in the offending employee's personnel file. The record will reflect the conduct, or alleged conduct, and the warning given, or other discipline imposed.
(A) Assault
Any employee's first proven offense of assault or threat of assault, including assault of a sexual nature, will result in dismissal.
(B) Other acts of harassment by co-workers
An employee's commission of acts of sexual harassment other than assault will result in non-disciplinary oral counseling upon alleged first offense, written warning, suspension or discharge upon the first proven offense, depending upon the nature and severity of the misconduct, and suspension or discharge upon the second proven offense, depending on the nature and severity of the misconduct.
(C) Retaliation
Alleged retaliation against a sexual harassment complainant will result in non-disciplinary oral counseling. Any form of proven retaliation will result in suspension or discharge upon the first proven offense, depending upon the nature and severity of the retaliatory acts, and discharge upon the second proven offense.
(D) Supervisors
A supervisor's commission of acts of sexual harassment (other than assault) with respect to any other employee under that person's supervision will result in non-disciplinary oral counseling upon alleged first offense, final warning or dismissal *1544 for the first offense, depending upon the nature and severity of the misconduct, and discharge for any subsequent offense.
PROCEDURES FOR MAKING, INVESTIGATING AND RESOLVING SEXUAL HARASSMENT AND RETALIATION COMPLAINTS
A. Complaints
JSI will provide its employees with convenient, confidential and reliable mechanisms for reporting incidents of sexual harassment and retaliation. Accordingly, JSI designates at least two employees in supervisory or managerial positions at each of the Commercial and Mayport Yards to serve as Investigative Officers for sexual harassment issues. The names, responsibilities, work locations, and phone numbers of each Officer will be routinely and continuously posted so that an employee seeking such name can enjoy anonymity and remain inconspicuous to all of the employees in the yard in which he or she works.
The Investigative Officers may appoint "designees" to assist them in handling sexual harassment complaints. Persons appointed as designees shall not conduct investigation until they have received training equivalent to that received by the Investigative Officers. The purpose of having several persons to whom complaints may be made is to avoid a situation where an employee is faced with complaining to the person, or a close associate of the person, who would be the subject of the complaint.
Complaints of acts of sexual harassment or retaliation that are in violation of the sexual harassment policy will be accepted in writing or orally, and anonymous complaints will be taken seriously and investigated. Anyone who has observed sexual harassment or retaliation should report it to a designated Investigative Officer. A complaint need not be limited to someone who was the target of harassment or retaliation.
Only those who have an immediate need to know, including the Investigative Officers and/or his/her designee, the alleged target of harassment or retaliation, the alleged harasser(s) or retaliator(s) and any witnesses will or may find out the identity of the complainant. All parties contacted in the course of an investigation will be advised that all parties involved in a charge are entitled to respect and that any retaliation or reprisal against an individual who is an alleged target of harassment or retaliation, who has made a complaint or who has provided evidence in connection with a complaint is a separate actionable offense as provided in the schedule of penalties. This complaint process will be administered consistent with federal labor law when bargaining unit members are affected.
B. Investigations
Each Investigative Officer will receive thorough training about sexual harassment and the procedures herein and will have the responsibility for investigating complaints or having an appropriately trained and designated JSI investigator do so.
All complaints will be investigated expeditiously by a trained JSI Investigative Officer or his/her designee. The Investigative Officer will produce a written report, which, together with the investigation file, will be shown to the complainant upon request within a reasonable time. The Investigative Officer is empowered to recommend remedial measures based upon the results of the investigation, and JSI management will promptly consider and act upon such recommendation. When a complaint is made the Investigative Officer will have the duty of immediately bringing all sexual harassment and retaliation complaints to the confidential attention of the office of the President of JSI, and JSI's EEO Officer. The Investigative and EEO Officers will each maintain a file on the original charge and follow up investigation. Such files will be available to investigators, to federal, state and local agencies charged with equal employment or affirmative action enforcement, *1545 to other complainants who have filed a formal charge of discrimination against JSI, or any agent thereof, whether that formal charge is filed at a federal, state, or local law level. The names of complainants, however, will be kept under separate file.
C. Cooperation
An effective sexual harassment policy requires the support and example of company personnel in positions of authority. JSI agents or employees who engage in sexual harassment or retaliation or who fail to cooperate with company-sponsored investigations of sexual harassment or retaliation may be severely sanctioned by suspension or dismissal. By the same token, officials who refuse to implement remedial measures, obstruct the remedial efforts of other JSI employees, and/or retaliate against sexual harassment complainants or witnesses may be immediately sanctioned by suspension or dismissal.
D. Monitoring
Because JSI is under legal obligations imposed by Court order, the NOW Legal Defense and Education Fund, its designated representative, and, if one is appointed upon motion and a showing of need, a representative of the U.S. District Court for the Middle District of Florida are authorized to monitor the JSI workplace, even in the absence of specific complaints, to ensure that the company's policy against sexual harassment is being enforced. Such persons are not ordinarily to be used in lieu of the JSI Investigative Officers on investigations of individual matters, but instead are to be available to assess the adequacy of investigations. Any individual dissatisfied with JSI's investigation of a complaint may contact such persons in writing or by telephone and request an independent investigation. Such persons' addresses and telephone numbers will be posted and circulated with those of the Investigative Officers. Such persons will be given reasonable access by JSI to inspect for compliance.
PROCEDURES AND RULES FOR EDUCATION AND TRAINING
Education and training for employees at each level of the work force are critical to the success of JSI's policy against sexual harassment. The following documents address such issues: the letter to be sent to all employees from JSI's Chief Executive Officer/President, the Sexual Harassment policy, Statement of Prohibited Conduct, the Schedule of Penalties for Misconduct, and Procedures for Making, Investigating and Resolving Sexual Harassment and Retaliation Complaints. These documents will be conspicuously posted throughout the workplace at each division of JSI, on each company bulletin board, in all central gathering areas, and in every locker room. The statements must be clearly legible and displayed continuously. The sexual harassment policy under a cover letter from JSI's president will be sent to all employees. The letter will indicate that copies are available at no cost and how they can be obtained.
JSI's sexual harassment policy statement will also be included in the Safety Instructions and General Company Rules, which are issued in booklet form to each JSI employee. Educational posters using concise messages conveying JSI's opposition to workplace sexual harassment will reinforce the company's policy statement; these posters should be simple, eye-catching and graffiti resistant.
Education and training include the following components:
1. For all JSI employees: As part of general orientation each recently hired employee will be given a copy of the letter from JSI's Chief Executive Officer/President and requested to read and sign a receipt for the company's policy statement on sexual harassment so that they are on notice of the standards of behavior expected. In addition, supervisory employees who have attended a management training seminar on sexual harassment will explain orally at least once every six months at safety meetings attended by all employees *1546 the kinds of acts that constitute sexual harassment, the company's serious commitment to eliminating sexual harassment in the workplace, the penalties for engaging in harassment, and the procedures for reporting incidents of sexual harassment.
2. For all female employees: All women employed at JSI will participate on company time in annual seminars that teach strategies for resisting and preventing sexual harassment. At least a half-day in length, these seminars will be conducted by one or more experienced sexual harassment educators, including one instructor with work experience in the trades.
3. For all employees with supervisory authority over other employees, including leadermen, quartermen, superintendents, and all employees working in a managerial capacity: All supervisory personnel will participate in an annual, half-day-long training session on sex discrimination. At least one-third of each session (of no less than one and one-half hours) will be devoted to education about workplace sexual harassment, including training (with demonstrative evidence) as to exactly what types of remarks, behavior and pictures will not be tolerated in the JSI workplace. The president of JSI will attend the training sessions in one central location with all company supervisory employees. The president will introduce the seminar with remarks stressing the potential liability of JSI and individual supervisors for sexual harassment and the need to eliminate harassment. Each participant will be informed that they are responsible for knowing the contents of JSI's sexual harassment policy and for giving similar presentations at safety meetings to employees.
4. For all Investigative Officers: The Investigative Officers and their designees, if any, will attend annual full-day training seminars conducted by experienced sexual harassment educators and/or investigators to educate them about the problems of sexual harassment in the workplace and techniques for investigating and stopping it.
The training sessions for components 2-4 will be conducted by an experienced sexual harassment educator chosen jointly by JSI and the NOW Legal Defense and Education Fund after receiving bids. In the event of a disagreement between the parties, the parties will refer the matter to an arbitrator chosen by the parties.
NOTES
[1] Six witnesses were unavailable and testified by deposition: Arnold McIlwain, Lawrence Brown, Quentin McMillan, Steven Leach, Harry Wingate, and Rose Sanders. Additionally, deposition testimony was received for several witnesses who testified: John Stewart, Ellis Lovett, Everette Owens, Elmer Ahlwardt, John Kiedrowski, Fred Turner, Leslie Albert, and Lawanna Gail Banks. The parties designated portions of these depositions and the parties' lists of designations were filed as exhibits. In several instances the deposition accompanied the exhibit and in several instances the deposition had been filed with the Court previously. For simplicity, the Court will cite to the deposition excerpts, when appropriate, in the form "[deponent's last name] Depo. at [page number(s)]."
[2] The Court directly incorporates into its findings those matters admitted by the defendants in their responses to plaintiff's requests for admissions, which appear in P.Exh. No. 9, and those matters stipulated to in the Amended Pretrial Stipulation, filed herein on October 30, 1988. No supporting citation is given for factual statements drawn from these two sources. See Monmouth County Corr. Inst. Inmates v. Lanzaro, 595 F.Supp. 1417, 1432 (D.N.J.1984). To the extent that any evidence presented at trial varied from these admissions, the Court must treat the matters admitted as conclusively established, e.g., Haun v. Humana, Inc., 651 F.Supp. 120, 122 (W.D.Ky.1986), and must refuse to consider the inconsistent evidence, see, e.g., Shakman v. Democratic Org. of Cook County, 481 F.Supp. 1315, 1316 n. 35 (N.D.Ill.1979). Defendants did not move to amend or vacate their admissions, so the Court has not evaluated whether the standards applicable to such a motion could be met. See, e.g., Brook Village N. Assocs. v. General Elec. Co., 686 F.2d 66, 70-73 (1st Cir.1982) (setting forth standards for pretrial and trial motions for amending admissions); see also Smith v. First National Bank of Atlanta, 837 F.2d 1575, 1577-78 (11th Cir.) (adopting central premise of Brook Village), cert. denied, 488 U.S. 821, 109 S.Ct. 64, 102 L.Ed.2d 41 (1988).
[3] While incidents outside the workplace do not provide a basis for concluding that the workplace is sexually hostile, the circumstances of these two incidents make them worthy of this brief notation in order to develop fully the record respecting the degree to which the work environment shaped attitudes that transcended the confines of the shipyards.
[4] In Lipsett v. University of Puerto Rico, 740 F.Supp. 921 (D.P.R.1990), on remand from 864 F.2d 881 (1st Cir.1988) (rev'g 669 F.Supp. 1188 (D.P.R.1987)), Judge Pieras denied a motion to qualify Ms. Wagner as an expert witness in a hostile work environment sex discrimination suit. The Lipsett case, however, is a jury action and may be distinguished for this reason. For instance, Ms. Wagner's testimony on common patterns and responses to sexual harassment directly informs the inquiry into the effect of the conditions at JSI on the psychological well-being of the hypothetical reasonable woman. Whatever merit lies in the argument that jurors may draw on their common experiences to assess the issue, the Court risks injustice if it attempts to fashion a reasonable woman's reaction out of whole cloth. The general rule applied, particularly in nonjury cases, is that "the decision by a trial court on the competency of, and what weight should be given to the testimony of, an expert is a highly discretionary one." IMPACT v. Firestone, 893 F.2d 1189, 1195 (11th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 133, 112 L.Ed.2d 100 (1990). This Court is satisfied that the potential sources of bias, strengths, and weaknesses in Ms. Wagner's qualifications and testimony have been considered fully.
[5] Plaintiff's answer to the relevant question in defendants' first interrogatories, D.Exh. No. 27, at 9 (answer to question 7), specifically identifies 12 days in the time period March 3, 1986 through August 29, 1986. Using the lower hourly rate for this period, her stated loss is $1,056. This cannot form the basis of an award, however, for two reasons. First, it is incomplete and therefore would be no more than the equivalent of nominal damages. Second, plaintiff did not come forward with the additional quantum of proof necessary to adduce whether the equivalent of a constructive discharge existed for those dates or the broader time period.
[6] These limitations do not diminish the significance of quartermen and leadermen in the control of sexually harassing behavior, nor do they diminish the reasonableness of the belief of female employees that reporting sexually harassing behavior to quartermen and leadermen constituted an appropriate course of action to secure remedy thereof.
[7] Although this fifth element bears the label "respondeat superior," it actually embraces a negligence standard for employer liability that essentially restates the "fellow servant" rule. See, e.g., Hirschfield v. New Mexico Corrections Dep't, 916 F.2d 572, 577 n. 5 (10th Cir.1990); Guess v. Bethlehem Steel Corp., 913 F.2d 463, 465 (7th Cir.1990); Hall v. Gus Constr. Co., 842 F.2d 1010, 1015 (8th Cir.1988).
[8] The Sixth Circuit subsequently explained that this passage should be read with "emphasis on the word `magical,' not the word `transformation.' Title VII was not intended to eliminate all private prejudice and biases. The law, however, did alter the dynamics of the workplace because it operates to prevent bigots from harassing their co-workers." Davis v. Monsanto Chem. Co., 858 F.2d 345, 350 (6th Cir.1988), cert. denied, 490 U.S. 1110, 109 S.Ct. 3166, 104 L.Ed.2d 1028 (1989).
[9] Plaintiff seeks to hold Ahlwardt and Lovett directly liable for their admissions that they have posted sexually-oriented pictures in their own work areas. No evidence adduced at trial demonstrated that these pictures formed part of the work environment to which Robinson was subjected. Indeed, it appears that their personal pin-ups appeared on and were removed from the walls before Robinson began work at JSI. Absent such proof, Ahlwardt's and Lovett's pictures cannot form the basis for direct liability to Robinson. This is not to say that those pictures are not important as evidence of the scope of the hostile work environment and of management's attitude toward the conditions that created the environment, for they are. Rather, the principle upheld is that an individual as an employer is held liable only for those actions taken by the individual that actually have an impact on the complaining employee.
[10] The phrase used here is intended to call attention to the analogy between these circumstances and the concept of deliberate ignorance, covered by the so-called ostrich instruction, in the criminal law. See, e.g., United States v. Restrepo-Granda, 575 F.2d 524, 529 (5th Cir.) ("deliberate ignorance is the equivalent of knowledge"), cert. denied, 439 U.S. 935, 99 S.Ct. 331, 58 L.Ed.2d 332 (1978). As one court stated,
[w]hen someone knows enough to put him on inquiry, he knows much. If a person with a lurking suspicion goes on as before and avoids further knowledge, this may support an inference that he has deduced the truth and is simply trying to avoid giving the appearance (and incurring the consequences) of knowledge.
United States v. Ramsey, 785 F.2d 184, 189 (7th Cir.), cert. denied, 476 U.S. 1186, 106 S.Ct. 2924, 91 L.Ed.2d 552 (1986).
[11] Seib and Pree reach this conclusion deductively from Clanton and other cases. The same result may be produced from a different approach. Backpay is part of the equitable remedy of reinstatement. See, e.g., Harkless v. Sweeny Indep. School Dist., 427 F.2d 319, 324 (5th Cir.1970), cert. denied, 400 U.S. 991, 91 S.Ct. 451, 27 L.Ed.2d 439 (1971). It makes little sense to speak of reinstatement by the individual defendants; the corporate defendant bears the burden of that remedy. Accordingly, since backpay follows from reinstatement, the liability for backpay falls on the shoulder of the employer who reinstates the victim of discrimination, the corporate employer defendant.
[12] The Court recognizes that the versions of Exhibit B and Exhibit E attached to plaintiff's proposed findings of fact and conclusions of law differ in some small ways from the versions included with the pretrial brief. Regarding Exhibit B, the differences are truly minor and not of consequence because JSI is charged with adopting an equivalent, not a word-for-word copy. Regarding Exhibit E, the relevant differences involve the identification of McIlwain by name in the later-filed version, whereas the version from which the Court operates identifies the Chief Executive Officer/President as an office. The version used by the Court is preferable because McIlwain is not personally liable and no longer holds the relevant office.
[13] The Court has ruled that this type of conduct is outside the issues in this case and therefore it is inappropriate to include it in the relief ordered herein. JSI is not barred from voluntarily inserting similar language in its statement or developing a separate policy statement on the matter.
[1] Counsel should be cognizant of the strictures of Local Rule 3.01(f), which disapprove of the use of letters to present arguments to the Court.
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794 S.W.2d 856 (1990)
Jessie M. PETERS, Appellant,
v.
GIFFORD-HILL & COMPANY, INC., Appellee.
No. 05-89-00927-CV.
Court of Appeals of Texas, Dallas.
July 13, 1990.
Rehearing Denied September 14, 1990.
*857 Stephen C. Porter, Dallas, for appellant.
Kathleen W. Billingsley, Daniel A. Foster, E. Scott Frost, Fort Worth, for appellee.
Before ENOCH, C.J., and CHADICK[1] and BISSETT[2], JJ.
OPINION
BISSETT, Justice (Retired).
This is an appeal by defendant Jessie M. Peters, the guarantor of an account, from a judgment which enforced the guaranty agreement. We affirm the trial court's judgment.
Gifford-Hill & Company, Inc. (Gifford-Hill) filed suit against Texas Best Redi-Mix, a Texas general partnership, Donovan L. Enox, Jim Doerr, and Tony Peters individually, and as partners in Texas Best Redi-Mix, the Texas Corporation named Texas Best Redi-Mix Inc., the corporate successor to Texas Best Redi-Mix, a partnership, on an open account, and Jessie M. Peters, the guarantor of the account. The remaining defendants have not appealed.
Prior to November of 1982, Jessie M. Peters had done substantial business with Gifford-Hill through a corporation named Peters & Son, Inc. (Peters & Son), in which he was an officer, director, and one of three shareholders. Peters & Son had established a credit account with Gifford-Hill, but Jessie M. Peters had never personally guaranteed the Peters & Son account with Gifford-Hill.
A general partnership, named Texas Best Redi-Mix, was formed in October of 1982. The partners were Donovan L. Enox, Jim Doerr, and Tony Peters (the son of Jessie M. Peters). The partnership opened an account with Gifford-Hill on November 29, 1982, and on the same day, Jessie M. Peters executed a guaranty agreement with Gifford-Hill, whereby he guaranteed the payment of the goods sold by Gifford-Hill to the Texas Best Redi-Mix partnership. The guaranty was executed by the guarantor in his individual capacity by signing his name, "Jessie M. Peters," on a blank line over the printed word "Guarantor."
The guaranty agreement (the guaranty), among other provisions, provided:
Should the status of the Debtor change, this guaranty shall continue and also cover the indebtedness of the Debtor under the new status, according to the terms hereof guaranteeing the indebtedness of the original Debtor.
The guaranty further provided that it could be terminated prospectively if the guarantor gave Gifford-Hill written notice of such termination. Jessie M. Peters never gave notice to Gifford-Hill that he did not intend to be liable on the guaranty. There were no other written agreements or additional written terms to the guaranty that would modify or revise the guaranty's express terms.
The partnership, Texas Best Redi-Mix (Texas Best), ceased doing business on or about June 8, 1983, but its corporate successor, Texas Best Redi-Mix, Inc. with defendants Donovan L. Enox, Jim Doerr, and Tony Peters as its shareholders, directors, and officers, continued doing business with Gifford-Hill. Between November 29, 1982, and June 8, 1983, Texas Best purchased materials (sand and rock) from Gifford-Hill and sold and delivered them to Peters & Son; from June 8, 1983, until October of 1983, Texas Best Redi-Mix, Inc., purchased such materials from Gifford-Hill and sold and delivered them to Peters & Son. In October of 1983, Texas Best Redi-Mix, Inc. opened its own mixing plant, and while it continued to purchase materials from Gifford-Hill, it ceased selling or delivering them to Peters & Son. No common ownership or management existed between Texas Best, the partnership, or Texas Best Redi-Mix, Inc. and Peters & Son.
In October of 1983, when Texas Best Redi-Mix, Inc. opened its new plant and *858 ceased selling and delivering the materials it had purchased from Gifford-Hill to Peters & Son, the balance owed by it to Gifford-Hill was less than $2,000 and was subsequently paid. By April of 1985, Texas Best Redi-Mix, Inc. owed Gifford-Hill a balance in excess of $400,000. Gifford-Hill continued to sell materials to Texas Best Redi-Mix, Inc., until March 31, 1987, when the account was closed. The outstanding balance of the account on the day of closing was $394,299.76. Texas Best Redi-Mix, Inc. failed to pay the outstanding balance and Gifford-Hill then made demand on Jessie M. Peters for payment thereof under the guaranty. Jessie M. Peters failed to do so and this lawsuit was filed by Gifford-Hill.
Gifford-Hill alleged, insofar as its suit against Jessie M. Peters on the guaranty was concerned, that:
1. By the terms of the guaranty agreement, Jessie M. Peters has bound himself to pay to plaintiff any and all of the indebtedness owed by Texas Best, whether or not there was a change of status to Texas Best Redi-Mix, Inc.;
2. Prior to the time the debt was incurred, Jessie M. Peters never gave plaintiff notice, written or oral, that he would not be liable for the debt;
3. The attempt by Jessie M. Peters to vary the terms of the written guaranty agreement by asserting additional terms or conditions or to limit the guaranty agreement only to those sums charged for materials actually delivered to the plant of Peters & Son is barred by the parol evidence rule;
4. The claims of Jessie M. Peters are barred by the Statute of Frauds and the Doctrine of Merger; and
5. It denied that it made any misrepresentations to Jessie M. Peters regarding the terms or conditions of its liability under the guaranty agreement.
The petition was sworn to by L.T. Baker, the Divisional Credit Manager for Gifford-Hill.
Jessie M. Peters, in his first amended answer, alleged that the guaranty agreement is unenforceable due "to fraud in that plaintiff knowingly and fraudulently represented the nature and terms of said guaranty agreement at the time it was executed by defendant," and that he relied on such misrepresentation "and would not have entered into the guaranty agreement except for the misrepresentations." In addition, it was alleged:
For further answer, if such be necessary, defendant J. Peters alleged that he and the plaintiff reached an oral agreement which was understood by both; however, the guaranty agreement ... does not embody the essential and material elements of that oral agreement and was signed as a result of a mutual mistake by both J. Peters and the plaintiff.
Attached to the first amended answer is the affidavit of Jessie M. Peters, which reads:
Before me, the undersigned authority, on this day personally appeared Jessie M. Peters, who, being first duly sworn, on oath stated that he has read the foregoing First Amended Answer and that the statements contained therein are within his personal knowledge and are true and correct; and he denies the alleged account set out in Plaintiff's Original Petition.
Trial was to a jury. At the conclusion of the evidence, the trial court granted Gifford-Hill's motion for a directed verdict against the defendant corporation Texas Best Redi-Mix, Inc., and submitted the remainder of the case to the jury on four questions. We are concerned here only with the jury's answers to question numbers two, three, and four.
The jury, in answer to question number two, found "that as a result of the sale to a third party, all or substantially all of the assets of Texas Best Redi-Mix, Inc. were disposed of to the advantage of or for the benefit of defendants Donovan Enox, Jim Doerr and Tony Peters, and that as a result the corporation was rendered incapable of paying its debts." The jury, in answer to question number three, found "that it was the intent of both Jessie M. Peters and Gifford-Hill, Inc. that Peters & Son Redi-Mix, Inc., and not Jessie M. Peters be *859 bound by the terms of the guaranty agreement dated November 29, 1982." Question number four asked: "Do you find from a preponderance of the evidence that it was the intent of both Jessie M. Peters and Gifford-Hill & Company, Inc. that the guaranty agreement did not include the debt incurred by Texas Best Redi-Mix, Inc. to Gifford-Hill & Company, Inc.?" The jury answered "No."
The trial court, in its judgment, found or concluded:
1. There was no evidence to support the defendants' affirmative defense of mutual mistake as to the identity of the guarantor; that the guaranty agreement was not ambiguous; that there "was no fraud, trick, artifice, or device in the execution of the guaranty agreement;" that the evidence tendered by the defendant Jessie M. Peters or admitted at the trial to vary the terms of the guaranty agreement regarding the identity of the guarantor is in violation of the Parol Evidence Rule and the Statute of Frauds, and "constituted no evidence of probative force to sustain the jury's answer to Question No. 3."
2. That the jury's answer to Question No. 4 was in favor of Gifford-Hill and against the defendant Jessie M. Peters on the latter's affirmative defense of "mutual mistake as to the status of the principal obligee on the account the subject of plaintiff's complaint and the written guaranty agreement," and that judgment should be rendered upon the verdict in favor of Gifford-Hill against the defendant Jessie M. Peters on its claim under the written guaranty agreement.
Accordingly, the trial court granted Gifford-Hill's motion to disregard the jury's answer to question number three, and denied the defendant's motion to disregard the jury's answer to question number four. The trial court's judgment, with respect to Jessie M. Peters, decreed:
1. That Gifford-Hill recover the principal sum of $394,299.66 from the defendant Jessie M. Peters on its claim under the guaranty agreement;
2. That Gifford-Hill recover against the defendant Texas Best Redi-Mix, Inc., and Jessie M. Peters, jointly and severally, prejudgment interest in the amount of $53,735.14, accrued on the principal of $394,299.76 to date of judgment;
3. That Gifford-Hill recover attorney's fees from the defendants Texas Best Redi-Mix, Inc., Jessie M. Peters, and Donovan L. Enox, Jim Doerr and Tony Peters, jointly and severally, the stipulated attorney's fees in the amount of $15,000.00 through the trial of their case, an additional sum of $3,000.00 in the event of an appeal to the Court of Civil Appeals, and an additional sum of $3,000.00 in the event of an appeal to the Supreme Court of Texas;
4. That post-judgment interest on the amounts of money awarded to Gifford-Hill shall accrue at the rate of 10% per annum from the date of judgment (April 18, 1989) until paid.
Jessie M. Peters presents four points of error. We first consider his fourth point of error, wherein he claims that the trial court erred in finding that the guaranty was unambiguous. He argues that "if it was Gifford-Hill's intention to provide that if the partnership (Texas Best) `debtor' later incorporated, with the partners exchanging their partnership interest for corporate stock (in Texas Best Redi-Mix, Inc.) that the guarantor (Jessie M. Peters) would still be liable for the debt of the subsequently chartered corporation, the guaranty should have unambiguously expressed that intent." He further argues: "there is certainly no definition given in the guaranty as to what is meant by the term `status,'... and that a change of `status' could mean many things...." He contends that the agreement must be construed against Gifford-Hill, since it provided the form of the guaranty. He also says that there was no evidence that anyone intended "that the guaranty entered to covered [sic] the indebtedness of an entity that did not exist at the time the guaranty was signed," and, moreover, the "change of status" provision in the guaranty is "ambiguous, vague and indefinite."
*860 The "change of status" provision, previously set out verbatim herein, is found in paragraph two of the guaranty. In addition thereto, paragraph six of the guaranty, in relevant part, provides:
In the event the Debtor is a ... partnership or is hereafter incorporated ... such fact shall in no manner affect my, our or either of our liability hereunder, but I, we, or either of us shall be liable hereunder, notwithstanding said ... partnership is not liable for such indebtedness....
In the case at bar, the partners in Texas Best exchanged their interest in the partnership for an identical interest in the corporation, Texas Best Redi-Mix, Inc., the successor to the Texas Best partnership. The guaranty itself provides in paragraph two that if the status of the debtor (Texas Best, a partnership) should change, the guaranty should continue under the new status. The change in status here was the change of the debtor partnership to the debtor corporation. Consequently, liability under the guaranty continued and extended to Texas Best Redi-Mix, Inc. Furthermore, the guaranty itself expressly contemplated in paragraph six that the debtor (Texas Best) may be "hereafter incorporated," and if so, the guaranty would continue and the guarantor would remain personally liable for the debt of the corporation, the successor to the partnership. The Supreme Court of Texas stated in Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 732 (Tex.1981):
If a written contract is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous. It follows that parol evidence is not admissible to render a contract ambiguous, which on its face, is capable of being given a definite certain legal meaning. This rule obtains even to the extent of prohibiting proof of circumstances surrounding the transaction when the instrument involved, by its terms, plainly and clearly discloses the intention of the parties, or is so worded that it is not fairly susceptible of more than one legal meaning or construction.
(Emphasis added.) The guaranty is unambiguous. The fourth point of error is overruled.
Jessie M. Peters contends in his first point of error that the trial court erred in disregarding the jury's answer to question number three, "as there was sufficient evidence of probative force to support the jury's verdict as to Peters' affirmative defense of mutual mistake." He further contends in his second point of error that "the trial court erred in excluding evidence with respect to Peter's affirmative defense of fraud in the inducement."
Gifford-Hill, on the other hand, asserts that the trial court correctly disregarded the jury's answer to question number three and properly granted judgment to it notwithstanding such answer, and further asserts that the evidence relating to the claimed mutual mistake should have been excluded because of (1) the parol evidence rule, (2) the statute of frauds, and (3) the failure of Jessie M. Peters to plead mutual mistake.
The question of mutual mistake in this case involves the identity of the guarantor which the parties intended to be bound by the guaranty. Jessie M. Peters claims that such party was Peters & Son, a corporation not related to Texas Best or Texas Best Redi-Mix, Inc. Gifford-Hill claims that such party was Jessie M. Peters, individually.
To establish the defense of mutual mistake in a written instrument, the party asserting such defense must plead and prove two elements: (1) the original (true) agreement, and (2) a mutual mistake made after the original agreement in reducing the original agreement to writing. Cherokee Water Co. v. Forderhause, 741 S.W.2d 377, 379 (Tex.1987). The party asserting the defense of mutual mistake must "prove what the true agreement was, but his case is not made by proof that there was an agreement which is at variance with the writing. He must go further and establish the fact that the terms or provisions of the writing which differ from the true agreement made were placed in the instrument by mutual mistake." Sun Oil Co. v. Bennett, *861 125 Tex. 540, 547, 84 S.W.2d 447, 451 (1935). Although the evidence might establish the element of the existence of a prior agreement, it does not establish the vital element that the terms or provisions of the writing vary from the true agreement due to a mutual mistake of the parties. Estes v. Republic National Bank of Dallas, 462 S.W.2d 273, 275-76 (Tex.1970).
Shirley Melvin, the sales representative for Gifford-Hill, testified that she discussed the terms and conditions of the guaranty with Jessie M. Peters prior to his signing it, and told him that the guaranty was a personal guaranty. Her testimony was disputed by Jessie M. Peters. He testified that she told him that Peters & Son "was the party that was going to be responsible as the guarantor under that document." He further testified that he signed the written guaranty, but did not read it.
Assuming, without deciding, that Jessie M. Peters proved the first element by adducing proof of the parties' true oral agreement, he failed to prove the second, that of proving that the challenged terms in the writing were placed there by mistake. Jessie M. Peters did not adduce proof on the second element, because according to his own testimony he did not read the guaranty document before he signed in his own name. The guaranty on its face shows that Jessie M. Peters personally signed it. While a party's failure to read an instrument is not always a bar to the defense of mutual mistake, the general rule is that in the absence of fraud, a party's failure to read an instrument before signing it is not a ground for avoiding it. Estes, 462 S.W.2d at 276. Furthermore, there is no evidence that Jessie M. Peters thought he was signing the guaranty in his capacity as an officer of Peters & Son.
As already noted, the trial court found that there "was no fraud, trick, artifice, or device in the execution of the guaranty agreement." Jessie M. Peters argues that this case is an exception to the parol evidence rule, and the trial court erred in excluding the following testimony from the jury: (1) the statements by Jessie M. Peters that Shirley Melvin represented to him prior to his signing the guaranty that the guaranty was valid only as long as Texas Best was hauling the materials to the Peters & Son plant, and (2) the statement by Tony Peters that Shirley Melvin told him, prior to the execution of the guaranty, that the guaranty would "be good" only for the time that Texas Best was hauling materials to Peters & Son and until Texas Best opened its own mixing plant.
It is settled law that the parol evidence rule is a rule of substantive law, and testimony admitted in violation of that rule cannot be considered. Incorporated Carriers, Ltd. v. Crocker, 639 S.W.2d 338, 341 (Tex.App.-Texarkana 1982, no writ); Piper Stiles & Ladd v. Fidelity & Deposit Co. of Maryland, 435 S.W.2d 934, 940 (Tex. Civ.App.-Houston [1st Dist.] 1968, writ ref'd n.r.e.); Patton v. Crews, 264 S.W.2d 467, 470 (Tex.Civ.App.-Fort Worth 1954, writ ref'd n.r.e.). In upholding the parol evidence rule, the Texas Supreme Court in Town North National Bank v. Broaddus, 569 S.W.2d 489, 492 (Tex.1978), correctly assessed the danger of casually admitting oral testimony to vary the terms of a written agreement:
The promise here complained of as being intended not to be performed was a collateral one in parol at variance with the written contract entered into, and one proof of which the law does not admit. If fraud could be predicated upon such promise and intention, then any collateral parol agreement might be asserted to contradict, vary, or even abrogate any written contract, under the guise of fraudulent intent not to perform such collateral parol agreement. The practical effect would be to destroy the parol evidence rule all together.
(Emphasis added.) The same danger is present when parol evidence is admitted under the guise of mutual mistake.
This Court, in Tripp Village Joint Venture v. MBank Lincoln Centre, 774 S.W.2d 746, 749 (Tex.App.-Dallas 1989, writ denied), said:
In the absence of fraud, mistake, or accident, extrinsic evidence is inadmissible to *862 vary, supplement, or contradict the terms of a valid written instrument that on its face is complete and unambiguous. Crozier v. Horne Children Maintenance and Educ. Trust, 597 S.W.2d 418, 422 (Tex.Civ.App.-San Antonio 1980, writ ref'd n.r.e.). Before extrinsic evidence is admissible, the proponent must make a showing of some type of trickery, artifice, or device employed by the payee. Town North Nat'l Bank v. Broaddus, 569 S.W.2d 489, 494 (Tex.1978); Simpson v. MBank Dallas, N.A., 724 S.W.2d 102, 108 (Tex.App.-Dallas 1987, writ ref'd n.r.e.). When applicable, the fraud exception to the parol evidence rule goes only to the documents that evidenced the parties' agreement. Texas State Bank v. Sharp, 506 S.W.2d 761, 763 (Tex.Civ.App.-Austin 1974, writ ref'd n.r.e.).
The case of Park Creek Associates, Ltd. v. Walker, 754 S.W.2d 426 (Tex.App.-Dallas 1988, no writ), involved a lessor's action against lessees for breach of a lease agreement and against the guarantor of that lease agreement. On facts virtually identical to this case, that guarantor signed the agreement with the word "guarantor" following his signature. This Court stated that the guarantor's signature:
[F]ollowed by the designation "Guarantor" unambiguously showed an intent to answer for [the principal's] performance of the lease. Furthermore, because the writing is unambiguous, the court may not consider parol evidence of its meaning, such as [the guarantor's] testimony that he intended only to guarantee [the principal's] status as partners [in another entity].
Park Creek, 754 S.W.2d at 428-29 (emphasis added). As in Park Creek, nothing in the contract shows or gives the impression that Jessie M. Peters was acting as agent for Peters rather, the contract negates any such impression.
The evidence offered by Jessie M. Peters at trial does not constitute evidence of probative force of any mutual mistake because, as the trial court found, it is parol evidence offered to vary the express written terms of an unambiguous contract. If the parol evidence rule excludes parol evidence (1) that the lender told the guarantor he would not be personally liable on the lease, Friday v. Grant Plaza Huntsville Associates, 713 S.W.2d 755, 756 (Tex.App. Houston [1st Dist.] 1986, no writ); (2) that the lender told the maker that he would not be liable on the note, Broaddus, 569 S.W.2d at 491; (3) that the guaranty was merely a formality that would not result in liability to the guarantor, Simpson v. MBank Dallas, N.A., 724 S.W.2d 102, 107 (Tex.App.-Dallas 1987, no writ); and (4) that the guaranty would only cover goods delivered to Peters & Son, then there is no logical reason why parol evidence that Jessie M. Peters and Shirley Melvin intended the guarantor to be Peters & Son should not have been excluded.
Additionally, Jessie M. Peters and his witnesses were not competent, as a matter of law, to testify regarding Shirley Melvin's intent. Their testimony constitutes no evidence. Varon v. Richardson Professional Properties, Inc., 583 S.W.2d 917, 919 (Tex.Civ.App.-Dallas 1979, no writ). "Testimony concerning the intent of another is at best opinion and is not admissible in evidence." Combs v. Fantastic Homes, Inc., 584 S.W.2d 340, 344 (Tex.Civ.App.- Dallas), writ ref'd n.r.e. per curiam, 596 S.W.2d 502 (Tex.1979).
Assuming, arguendo, that Jessie M. Peters properly alleged the defense of mutual mistake, he failed to present any evidence that proved that such a mistake was made. The parol evidence rule applies to this case and the trial correctly excluded the introduction into evidence of all parol testimony which was in variance with the terms and provisions of the written guaranty. The trial court properly disregarded the jury's answer to question number three and rendered judgment for Gifford-Hill notwithstanding such answer. The first point of error is overruled.
As noted, Jessie M. Peters, in his second point of error, challenges the trial court's exclusion of evidence allegedly relating to his affirmative defense of fraud in the inducement. He has not brought forward *863 any point of error challenging the trial court's refusal to submit such a defense to the jury, nor does the record show an implicit finding against such defense. In order for parol evidence of fraud in the inducement to be admissible, there must be a showing of some type of trickery, artifice, or device. Broaddus, 569 S.W.2d at 494; Simpson, 724 S.W.2d at 108. Jessie M. Peters argues that there is sufficient evidence of trickery on the part of Shirley Melvin, Gifford-Hill's representative, so as to allow the introduction of evidence on the affirmative defense of fraud in the inducement. We do not agree. The general assertions by Jessie M. Peters and his witnesses that it was the intent of Shirley Melvin to deliberately misrepresent the terms of the guaranty that was later reduced to writing are merely conclusions or opinions which are not admissible and do not raise fact questions. See Clark v. Dedina, 658 S.W.2d 293, 296 (Tex.App.-Houston [1st Dist.] 1983, writ dism'd). Jessie M. Peters failed to produce any evidence of fraud which induced him to sign the guaranty. Again, a party is charged with the obligation of reading what he signs. Lawler v. Federal Deposit Ins. Corp., 538 S.W.2d 245, 248 (Tex.Civ.App.-Beaumont 1976, writ ref'd n.r.e.). The mere assertion by a party of his subjective intention to sign a document in a capacity other than the capacity in which he actually signed is insufficient to raise the fact issue of fraud in the inducement. The second point of error is overruled.
Jessie M. Peters claims in his third point of error that the trial court erred in sustaining the jury's answer to question number four "for the reason that there was no evidence to support such answer." He argues that there is no such evidence "for the reasons that the guaranty clearly states that the `Debtor' whose debt is being guaranteed is Texas Best Redi-Mix, a partnership which existed at the time the guaranty was signed, but which ceased to exist in June 2, 1983," and that on that date, "a new entity, Texas Best Redi-Mix, Inc., was formed, and the balance owed by Texas Best Redi-Mix to Gifford-Hill was approximately $2,000 and said balance was subsequently paid in full."
The guaranty, when paragraphs two and six, heretofore discussed, are considered, makes it clear that if the Texas Best partnership was later incorporated, as was the case, that the guarantor would remain personally liable for the debt of the corporate successor (Texas Best Redi-Mix, Inc.). The provisions of paragraphs two and six were sufficient for the jury to find that Jessie M. Peters was personally liable for the debt of Texas Best Redi-Mix, Inc. to Gifford-Hill, subsequent to the change of status of the partnership, Texas Best Redi-Mix. The third point of error is overruled.
The judgment of the trial court is AFFIRMED.
NOTES
[1] The Honorable T.C. Chadick, Justice, retired, Supreme Court of Texas, sitting by assignment.
[2] The Honorable Gerald T. Bissett, retired, Court of Appeals, Thirteenth District of Texas at Corpus Christi, sitting by assignment.
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