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338 S.W.2d 169 (1960)
TEXAS AND PACIFIC RAILWAY COMPANY, Appellant,
v.
Edgar L. MEEKS, Appellee.
No. 3508.
Court of Civil Appeals of Texas, Eastland.
February 19, 1960.
Rehearing Denied June 10, 1960.
Second Rehearing Denied September 2, 1960.
*170 Mays, Leonard & Moore, Sweetwater, John A. Coffee, Big Spring, for appellant.
Warren Burnett and Clarence E. Keys, Odessa, Hartman Hooser, Big Spring, for appellee.
COLLINGS, Justice.
Edgar L. Meeks brought suit against the Texas and Pacific Railway Company to recover damages alleged to have been sustained by him in a railroad crossing collision. He alleged that the pickup which he was driving struck the engine of a short freight train which defendant's employees negligently caused to be operated on and across the highway in front of plaintiff's approaching motor vehicle. The case was tried before a jury which found both plaintiff and defendant guilty of negligence proximately causing the collision. The jury, however, answered special, issues on discovered peril adversely to the defendant, finding that just prior to the collision Meeks was in a position of peril, that one or more of defendant's employees discovered Meeks' perilous position, realized that Meeks would probably not extricate himself from such perilous position in time to avoid the accident, that appellant's employee could have, by the use of the means at hand consistent with the safety of the train and its occupants, avoided the collision, and after making such discoveries failed to use all such means to avoid the collision. Based upon the findings of discovered peril, judgment was entered for plaintiff in the sum of $38,000. The railway company has appealed.
In appellant's first three points it is contended that the court erred in submitting issues concerning discovered peril to the jury because there was no evidence to warrant same, and in overruling his motion to set aside the answers to such issues and render judgment for appellant because such answers have no support in the evidence. In this connection appellant contends the evidence shows it was a physical impossibility for the train crew to have avoided the accident after its employee Dyer discovered that Meeks was about to hit the train.
An essential element in the establishment of liability under the doctrine of discovered peril is discovery of the perilous position of the injured party in time to have avoided the accident and resulting injury. Parks v. Airline Motor Coaches, 145 Tex. 44, 193 S.W.2d 967; Texas & N. O. Ry. Co. v. Grace, 144 Tex. 71, 188 S.W. 2d 378; Texas & Pacific Ry. Co. v. Breadlow, 90 Tex. 26, 36 S.W. 410; Northern Texas Traction Co. v. Weed, Tex.Com. App., 300 S.W. 41.
We are of the opinion that the evidence viewed in its most favorable light to the verdict and the judgment does not show that the perilous position of Meeks was discovered by the employees of appellant in time to have avoided the accident. The accident occurred on a highway west of Big Spring at the point where it crosses the spur railway track leading to Webb Air Force Base. The highway has four lanes of traffic, each 11 feet in width. The two south lanes are for eastbound traffic and the two north lanes are for traffic going west. At the time of the accident, appellee was driving west along the highway in the inside and most southerly lane for westbound traffic. The evidence shows that *171 Meeks approached the spur track crossing at a speed of approximately 35 miles per hour and did not see the train until he was within 25 or 30 feet from it, which was too late for him to stop, and that he ran into the engine.
Appellant's train, composed of an engine, an empty boxcar and a caboose, had been to Webb Air Force Base and was returning to Big Spring. The train was moving north with the engine pulling the train., When the train left the base, the engine foreman, Mr. J. L. Dyer, rode on the front of the engine for the purpose of observing traffic at crossings and giving stop and start signals to the engineer. It is upon his testimony and the surrounding facts and circumstances that appellee relies to show discovered peril. The evidence shows that the train stopped on a signal from Dyer when the engine approached the south edge of the highway crossing where the accident occurred. Then Dyer gave the engineer a signal to proceed and the train moved slowly northward until Dyer gave another stop signal to allow an eastbound automobile to pass. At that time, part of the train was in the main traveled portion of the highway, about 20 or 25 feet north from the first stop. At this second stop Mr. Dyer saw Meeks' vehicle approaching from the east about a block away. He testified that he assumed Mr. Meeks saw the train and that he gave the "go" signal and the train proceeded north over the crossing. The speed at which the train was moving at the time was estimated to be from two to three miles per hour. Mr. Dyer stated that he assumed Mr. Meeks would stop since the train was already on the highway completely over one crossing. When Dyer first saw Meeks approaching, about a block east of the crossing, he was not bound to anticipate that Meeks would continue and negligently collide with the train. Ft. Worth & Denver Ry. Co. v. Shetter, 94 Tex. 196, 59 S.W. 533; Panhandle & S. F. Ry. Co. v. Napier, 135 Tex. 314, 143 S.W.2d 754, 756.
Dyer further testified that he took his eyes off the Meeks' vehicle momentarily and when he again looked toward the east he saw the Meeks' car within about 30 feet of the train. There is no testimony, or circumstance in evidence, indicating that Dyer discovered appellee's perilous position before he was within 30 feet of the train. Since appellee was traveling at a speed of 35 miles per hour, the discovery by Dyer of appellee's peril was less than one second before the collision. For the collision to have been avoided, it would have been necessary during that one second for Dyer to signal the engineer, for the engineer to react to the signal and apply the brakes, and for the brakes to stop the train before it came into the pathway of appellee's approaching car. There was no evidence of probative force to the effect that the employees of appellant discovered Meeks' perilous position in time to have avoided the collision. On the contrary, the evidence shows that when appellant's employees discovered Meeks' peril it was too late for them to have avoided the collision. The evidence, as a matter of law, did not raise the issue of discovered peril. Martin v. Texas & N. O. Ry. Co., Tex.Civ.App., 236 S.W.2d 567 (Writ Ref.).
Mr. Dyer further testified that he gave what he called the "wash out" or stop signal when he saw the Meeks' car about 30 feet away and jumped to the left side of the engine from the right front side where he had been riding. Concerning the location of the engine at the time of the collision, Dyer testified that "we were over the west bound traffic side where they go west, when he hit us." The engineer testified that the impact occurred a little in front of the cab where he was sitting. The cab is shown to be on the back part of the engine. The engine has an overall length of 44 feet and 5 inches. Appellee Meeks identified a picture of the engine and placed the point of impact at the front wheels and the picture shows visible marks on the large bar covering the front wheels. The evidence further shows that the back end of the bar covering the front wheels is 10 or 12 feet from the front end of the engine. The evidence *172 is therefore undisputed that the point of collision on the engine was on the front wheels about 10 or 12 feet back from the front end of the engine. The fastest rate of speed attributed to the train by any witness was three miles per hour, or about four feet per second. Since appellant's engineer, Dyer, discovered the perilous position of Mr. Meeks less than a second before the collision, it is obvious that the engine traveled less than four feet between the time of discovery of the peril by Dyer and the time of the collision. The only reasonable conclusion that can be reached from the undisputed evidence is that the engine was already in the pathway of Meeks' car when appellee's employees discovered the peril and it was then too late to have avoided the collision by stopping the train. If the train had stopped at the exact instant that Dyer was Meeks' approaching vehicle the second time, the collision would still have occurred, and the train would have been struck by Meeks' car at a point about six or eight feet back of the front end of the engine.
Since both appellant and appellee are guilty of negligence proximately causing the collision and there was no probative evidence raising a fact issue on the question of whether appellee's perilous position was discovered by the employees of appellant in time for them to have avoided the collision, the court erred in not rendering judgment for appellant. It is not necessary for us to consider other points raised by appellant.
The judgment of the trial court is reversed and judgment is rendered for appellant.
On Motion for Rehearing
Appellee Meeks has filed an able motion for rehearing vigorously urging that we erred in holding there was no evidence of probative force showing that appellee's perilous position was discovered by the employees of the railway company in time for them to have avoided the collision, and erred in holding that, as a matter of law, the evidence viewed in its most favorable light to the verdict and the judgment did not raise the issue of discovered peril. In support of this contention, appellee points out testimony which he urges is inconsistent with and contrary to our determination of certain material facts. He particularly refers us to the testimony of the witness Dyer that the engine was just barely approaching the inside westbound lane when he saw appellee's automobile the second time and that if the engineer Baker had reacted to the "wash out" signal fast enough, appellee could possibly have passed safely in front of the train. Appellee urges the above testimony by Dyer as evidence of probative force showing that, contrary to his direct testimony, he (Dyer) discovered appellee's perilous position when appellee was more than 30 feet away from the crossing and in time for appellant, by the use of due care, to have avoided the collision. To determine the full import and meaning of Dyer's testimony, it is necessary to consider it in context.
Dyer's testimony, in connection with that stated above, was, in effect, that if the engineer had been able to and had stopped promptly in response to the signal, appellee might have avoided the collision "by swerving over toward his left to miss us," or "possibly could have" passed safely in front of the train, or "maybe by stopping if his brakes had been good". Dyer also testified: "Other people I have worked with could have acted more promptly than he (Baker) did. * * * Mr. Baker is not as capable of acting on a signal as fast as other men physically." Dyer further testified that such inability on the part of Mr. Baker was on account of age.
Any negligence of appellant railway company based upon the fact that its employee Baker did not act on Dyer's "wash out" signal with sufficient rapidity because of his age is not available in support of the issue on discovered peril. Such negligence, if any, was original negligence, *173 in existence prior to appellant's discovery of the perilous position of appellee. The doctrine of discovered peril involves only that negligence arising after knowledge of the danger is acquired. 30-B Tex.Jur. 323; Terry v. English, 130 Tex. 632, 112 S.W.2d 446; Cannady v. Dallas Railway & Terminal Company, Tex.Civ.App., 219 S.W.2d 816.
Conceding appellee's contention that the above testimony by Dyer constitutes probative evidence tending to show that he discovered appellee's perilous position when appellee was more than 30 feet away from the point of collision, we still cannot agree that such evidence raised a fact issue on the question of whether the railway company's employees discovered appellee's perilous position in time to have avoided the collision. Appellee's contention is, in effect, that if his perilous position was discovered by Dyer when the front of the engine was at the center of the highway, "just barely approaching the inside westbound lane", and that the front of the engine at the time of the collision was from 13 to 17 or more feet past the center line of the highway (which latter fact we consider to be conclusively shown) then with the engine traveling at not more than 4.38 feet per second the employees of appellant had about four seconds in which to avoid the collision and if the train was traveling at only 2.92 feet per second, such employees had more than six seconds to avoid the collision and that in either event there was ample time for them to have, by the use of due care, avoided the collision. We cannot agree with this contention.
Appellant's employees did not have all of the time after discovery of appellee's peril to avoid the collision. They had only that time between Dyer's discovery of the peril and the time when the train passed in front of and in the pathway of appellee's approaching car. This is true because the undisputed and unexplained testimony of appellee himself was to the effect that he did not see the train until he was within 30 feet of it; that he was in the center westbound lane and that he immediately applied his brakes but it was too late for him to stop. He did fail to stop and did run into and collide with the train.
Under this evidence the only way that appellant's employees could have avoided the collision would have been to stop the train before it passed in front of and into the pathway of appellee's car. The burden was on appellee to establish this fact. The evidence does not show the exact path of appellee's car in the center westbound lane as it approached the point of the collision. Under the evidence it could have been within a foot or two of the center of the highway as appellee was preparing to make a left turn. Since the burden was on appellee we cannot assume that it was not. If the front of the train was at the center of the highway when Dyer discovered appellee's peril it was only one or two feet away in distance and a fraction of a second in time, from the pathway of appellee's approaching car. It was only about eight feet in distance and approximately two or three seconds in time from being completely across the pathway of the approaching car. To stop the train after Dyer discovered Meek's peril from such position, the following time consuming things were necessary:
(1) Dyer's reaction time after discovery of the peril;
(2) Dyer's signal to Baker;
(3) Baker's reaction time to the signal before applying the brakes; and
(4) The braking time required to stop the train.
Appellee Meeks did not discharge his burden of showing that appellant could, under the circumstances, by the use of due care, have stopped the train in time to have avoided the collision. He established that he did not see the train until it was too late for him to stop. Even though he made full application of his brakes when he saw the *174 train, he was not able to stop but ran into and collided with the train. Appellant was entitled to time after discovery of the peril for its employees to react to the realization of the danger and to act upon that realization. They did not have that time. As a matter of law the time was too short after Dyer's discovery of appellee's peril for the railway company's employees to stop the train before it passed in front of appellee's car. Any finding to the contrary would be pure conjecture. Dyer's statement, in effect, that if the engineer had been able to and had responded to the signal as fast as other engineers, appellee "possibly could have" passed in front of the train, is on its face a conjecture or guess. If, however, the statement should be considered as an opinion of an expert or nonexpert witness, it is still not evidence of probative force in support of the finding of discovered peril. The value of a conclusion or of opinion evidence is no stronger than the facts upon which it is based. 32 C.J.S. Evidence § 569, pp. 395, 396; Insurance Company of North America v. Creech Drug Store, 264 Ky. 364, 94 S.W.2d 654; Pritchard v. Henry, Tex.Civ.App., 200 S.W.2d 651 (Ref. N.R.E.). The facts in this case do not support an opinion, conclusion or finding that appellant's employees discovered appellee's peril in time to have avoided the collision. No basis for recovery was established.
Appellee particularly urges a consideration of the case of Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561. The facts of that case are clearly distinguishable from those of the instant case. In the Ford case discovery of peril occurred when the train was about 100 feet from the crossing. The train continued at the same rate of speed (about 15 miles per hour) to the crossing where it struck the automobile. The evidence showed that the train, traveling at that speed, could have been stopped in less than 300 feet. A slight reduction in the rate of speed by the train would have permitted the car to cross the track without a collision. There was evidence tending to show that the brakes on the train were not applied, that there was time for application of brakes and some reduction in speed, and consequently evidence of probative force showing discovery of peril in ample time for the employees of the railway company to have avoided the collision. The facts of the instant case are entirely different. They are comparable to those in Martin v. Texas & N. O. Ry. Co., Tex.Civ. App., 236 S.W.2d 567 (Writ Ref.). In that case it was held that the evidence did not raise the issue of discovered peril and a writ of error was refused by our Supreme Court. The facts of the Martin case are so similar to those of the instant case that the holding therein is, in our opinion, controlling. See also Waldeck v. Watts, Tex. Civ.App., 326 S.W.2d 913 (Ref.N.R.E.); Schuhmacher v. Posey, 147 Tex. 392, 215 S.W.2d 880; Hall v. National Supply Co., 5 Cir., 270 F.2d 379.
Appellee's motion for rehearing is overruled.
|
734 F.2d 1477
Morganv.Estelle
83-1405
United States Court of Appeals,Fifth Circuit.
5/21/84
1
N.D.Tex.
AFFIRMED
|
Wald v Graev (2016 NY Slip Op 01910)
Wald v Graev
2016 NY Slip Op 01910
Decided on March 17, 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 March 17, 2016
Friedman, J.P., Andrias, Saxe, Kapnick, JJ.
539 652461/13
[*1]Jeffrey Wald, Plaintiff-Appellant,
vLawrence G. Graev, et al., Defendants-Respondents.
Behren & Sobel, Great Neck (Barton Sobel of counsel), for appellant.
Mandel Bhandari LLP, New York (Rishi Bhandari of counsel), for respondents.
Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered on September 18, 2014, which granted defendants' CPLR 3211(a)(7) motion to dismiss the complaint, unanimously modified, on the law, the complaint reinstated only to the extent it asserts a cause of action for breach of contract against defendant GlenRock Group LLC based upon an alleged promise to vest 100,000 stock warrants on March 31, 2008, and otherwise affirmed, without costs.
The July 12, 2013 complaint alleges breach of an April 12, 2006 agreement promising the immediate vesting of 120,000 stock warrants, the vesting of an additional 100,000 warrants on March 31, 2007, and the vesting of a final 100,000 warrants on March 31, 2008. Accepting these allegations as true, affording the pleading a liberal construction, and giving plaintiff the benefit of every possible inference (Leon v Martinez, 84 NY2d 83, 87-88 [1994]), we conclude that Supreme Court properly held that the claim was barred by the applicable six year statute of limitations (CPLR 213[2]) to the extent it was based on the promise to immediately vest warrants on April 12, 2006, and to vest an additional 100,000 warrants on March 31, 2007. However, the right to sue on an obligation does not accrue until an amount is due and payable (see Phoenix Acquisition Corp. v Campcore, Inc., 81 NY2d 138, 141 [1993]; Cadlerock, L.L.C. v Renner, 72 AD3d 454 [1st Dept 2010]). To the extent plaintiff alleges breach of an agreement to vest a final 100,000 warrants on March 31, 2008, the claim did not accrue until approximately April 2008; hence, the July 2013 complaint was timely as to that particular claim.
To the extent the complaint alleges breach of a May 26, 2011 proposed letter agreement, the facts alleged show there was no meeting of the minds as to the agreement, but rather that plaintiff rejected the agreement's terms by making a counteroffer, which was never accepted by defendants (Thor Props., LLC v Willspring Holdings LLC, 118 AD3d 505, 507-508 [1st Dept 2014]).
The claims for unjust enrichment, quantum meruit, and promissory estoppel were properly dismissed as duplicative (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]), and as untimely (CPLR 213[2]).
The complaint fails to set forth allegations sufficient to state a claim against the individual defendant, as the "director of a corporation is not personally liable to one who has contracted with the corporation on the theory of inducing a breach of contract, merely due to the fact that, while acting for the corporation, he has made decisions and taken steps that resulted in the corporation's promise being broken" (Murtha v Yonkers Child Care Assn., 45 NY2d 913, 915 [1978] [internal quotation marks and citation omitted]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MARCH 17, 2016
CLERK
|
152 F.Supp. 818 (1957)
UNITED STATES of America, Plaintiff,
v.
R. P. OLDHAM COMPANY, Winter Wolff & Co., Inc., Thos. D. Stevenson & Sons, Inc., Balfour, Guthrie & Co., Limited, John P. Herber & Company, Inc., Kinoshita and Co., Ltd., U.S.A., R. P. Oldham, Jr., Al Perrish, and William L. McGee, Defendants.
No. 35567.
United States District Court N. D. California, S. D.
June 11, 1957.
*819 *820 Lyle L. Jones, Anti-Trust Division, San Francisco, Cal., for plaintiff.
Carl Schuck, Los Angeles, Cal., for defendants R. P. Oldham & Co. and R. P. Oldham, Jr.
Macklin Fleming, Los Angeles, Cal., for defendants Winter, Wolff & Co. and Al Perrish.
Frank McCarthy, San Francisco, Cal., for defendants Thos. D. Stevenson & Sons and Wm. L. McGee.
Walker Lowry, San Francisco, Cal., for defendant Balfour-Guthrie & Co.
Joseph L. Alioto, San Francisco, Cal., for defendant John P. Herber & Co.
H. Wm. Tanaka, Washington, D. C., and Salvatore Fusco, San Francisco, Cal., for defendant Kinoshita & Co.
EDWARD P. MURPHY, District Judge.
This is a criminal action charging a conspiracy in restraint of interstate and foreign commerce in Japanese wire nails, in violation of Section 1 of the Sherman Act[1] and Section 73 of the Wilson Tariff Act.[2] Brought together as defendants are five United States corporations which import Japanese wire nails for resale on the West Coast of the United States, three officers of these corporations, and an American subsidiary of a Japanese corporation which exports wire nails to the United States. In addition, a number of Japanese firms are named as co-conspirators but not joined as defendants.
Briefly, the facts alleged in the indictment are these. Although there are over 200 Japanese nail makers, the wire rod used in the manufacture of these nails is made by only five Japanese rod makers. *821 With respect to wire nails to be sold on the West Coast of the United States, the defendant importers have engaged in a conspiracy with the five Japanese rod makers and certain Japanese exporters whereby the rod makers have furnished wire rod to nail makers only for the manufacture of nails to be sold and shipped through the co-conspirator exporters and to the defendant importers; the defendant importers in turn have purchased a designated amount of nails and have resold them in allocated sales territories at designated prices. The results of the conspiracy are that the defendant importers have acquired complete control of the Japanese wire nail market on the West Coast, all other importers, as well as direct purchasers, have been excluded from this market, competition in the sale of wire nails on the West Coast has been eliminated, and prices at which the nails are sold on the West Coast have been stabilized.
Various motions are before this court, and there are many duplications. For purposes of discussion, each motion will be deemed to have been made by all defendants unless otherwise noted.
I. Relationship of the Sherman Act and the Wilson Tariff Act
It is contended that Count One of the indictment, charging a violation of Section 1 of the Sherman Act, must be dismissed in view of Count Two, which charges a violation of Section 73 of the Wilson Tariff Act. The ground urged for this dismissal is that Section 73 of the Wilson Tariff Act applies the prohibitions of the Sherman Act to import trade and therefore, being the more specific statute, it must be held to have superseded the Sherman Act with regard to import trade.
This motion merits no discussion. It is well settled that both acts can be applied to restraints on import trade. United States v. General Electric Co., D.C.S.D.N.Y.1948, 80 F.Supp. 989, 1016-1017; United States v. General Dyestuff Corp., D.C.S.D.N.Y.1944, 57 F.Supp. 642, 648; cf. United States v. Sisal Sales Corp., 1927, 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042. Accordingly, the motion to dismiss Count One of the indictment is denied. The alternative motion to require election between the two counts of the indictment is also denied.
II. Jurisdiction
Relying mainly on American Banana Co. v. United Fruit Co., 1909, 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826, the defendants strongly urge that the indictment reaches too far, that all or part of the alleged conspiracy and acts in furtherance of the conspiracy are beyond this court's jurisdiction, or at least that Japanese law controls in determining the legality of these activities.
At the outset, it should be made clear that there is no attempt here to regulate Japanese commerce as such, or to indict Japanese firms or Japanese nationals.[3] Only American corporations and American nationals are named as defendants. The only commerce sought to be regulated is the importation and sale of wire nails on the West Coast of the United States. Surely this is within the jurisdiction of United States courts. Japanese firms and activities in Japan are considered only in so far as they relate to the precise charge, against American defendants, of a conspiracy in restraint of trade in the importation and sale of wire nails on the West Coast of the United States. Under the circumstances, it is absurd to say that principles of international law and comity of nations put the charges of this indictment within the exclusive jurisdiction of the Japanese courts, or require that Japanese law be applied.
*822 There seems to be some disagreement as to where the alleged conspiracy was formed. But assuming, arguendo, that the conspiracy at least "has its situs" in Japan and that most acts in furtherance of the conspiracy have been done in Japan, this does not deprive the court of jurisdiction where, as here, the conspiracy is alleged to operate as a direct and substantial restraint on interstate and foreign commerce of the United States. United States v. Aluminum Co. of America, 2 Cir., 1945, 148 F.2d 416; United States v. Timken Roller Bearing Co., D.C.N.D.Ohio 1949, 83 F. Supp. 284, modified and affirmed, 1951, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199.
Nor does the fact that the agreement may be lawful in Japan serve to make it lawful in this country. United States v. American Tobacco Co., 1911, 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663. Defendants also press the point that if the situation were reversedi. e., if the agreement concerned exportation of American products to Japanthe agreement would be under the aegis of the Webb-Pomerene Act.[4] Suffice it to say that the situation is not reversed.
Much is made of the fact that this is a criminal action. A criminal statute of course must be construed more strictly than a civil statute. But it requires no stretching of the Sherman Act to apply it to the facts of this case. The Supreme Court had no difficulty in similarly applying the Sherman Act in United States v. American Tobacco Co., supra, and United States v. Pacific & Arctic Railway & Navigation Co., 1913, 228 U. S. 87, 33 S.Ct. 443, 57 L.Ed. 742, both criminal actions.
As to American Banana Co. v. United Fruit Co., supra, to the extent that the case still has vigor in anti-trust actions, the facts in the instant action are far closer to those in United States v. Sisal Sales Corp., supra, where it was held that the American Banana case did not apply.
One further point raised by the defendants in support of their motion goes to the evidentiary problems which will come up at trial because of the inclusion of these foreign elements in the indictment. But evidentiary difficulties do not divest a court of jurisdiction. As to the argument that the defendants should not be put to an explanation of the acts of their foreign co-conspirators, it should not be forgotten that the government will have the burden of proof in this action.
For the foregoing reasons, the motion to dismiss the indictment for lack of jurisdiction is denied.
III. Effect of the Treaty
In 1953 the United States and Japan entered into a Treaty of Friendship, Commerce and Navigation. The effect of the Treaty is to accord "national treatment" and "most favored nation treatment" by one party to nationals of the other party (I use the term "nationals" to include companies as well as individuals). In other words, nationals of one party are not to be discriminated against by the other party.
Article XVIII of the Treaty states:
"1. The two Parties agree that business practices which restrain competition, limit access to markets or foster monopolistic control, and which are engaged in or made effective by one or more private or public commercial enterprises or by combination, agreement or other arrangement among such enterprises, may have harmful effects upon commerce between their respective territories. Accordingly, each Party agrees upon the request of the other Party to consult with respect to any such practices and to take such measures as it deems appropriate with a view to eliminating such harmful effects.
"2. * * *"
It is contended by the defendants that Article XVIII provides the exclusive remedy available to the government in reaching *823 the conspiracy charged in the indictment.
I cannot agree that Article XVIII was intended to provide any such exclusive remedy. The language of this Article is permissive rather than mandatory. If it had been intended that the Article should operate as a pro tanto revocation of the anti-trust laws, the Article could easily have been so worded. The tenor of the entire Treaty is equal treatment to nationals of the other party, not better treatment. In view of these considerations, I conclude that Article XVIII was intended to supplement the anti-trust laws, not replace them.
Even if Article XVIII were held to provide an exclusive remedy for antitrust violations, the defendant importers would have no standing to invoke this Article. All are American corporations. Certainly the Treaty was not intended to exempt nationals from the sanctions of their own country's laws. Cf. Skiriotes v. State of Florida, 1941, 313 U.S. 69, 61 S.Ct. 924, 85 L.Ed. 1193.
Nor do I think Kinoshita & Co., Ltd., U. S. A., would have any standing to invoke Article XVIII. Though wholly owned by a Japanese corporation, the defendant Kinoshita is an American corporation organized under the laws of California. Article XXII of the Treaty is the only article devoted to definition of terms used in the Treaty. After defining "national treatment" and "most favored nation treatment" in paragraphs 1 and 2, respectively, Article XXII goes on in paragraph 3 to define "companies", and then states:
"* * * Companies constituted under the applicable laws and regulations within the territories of either Party shall be deemed companies thereof and shall have their juridical status recognized within the territories of the other Party. (Emphasis added.)
"4. * * *"
Thus by the terms of the Treaty itself, as well as by established principles of law, a corporation organized under the laws of a given jurisdiction is a creature of that jurisdiction, with no greater rights, privileges or immunities than any other corporation of that jurisdiction.[5]
If con-conspirator Kinoshita & Co., Ltd., Tokyo had wished to retain its status as a Japanese corporation while doing business in this country, it could easily have operated through a branch. Having chosen instead to gain privileges accorded American corporations by operating through an American subsidiary, it has for most purposes surrendered its Japanese identity with respect to the activities of this subsidiary.
Article VII of the Treaty in no way weakens the above conclusion.[6] Although it equates domestic subsidiaries with their foreign parents, it does so only for purposes of that Article, which *824 has the effect of according nationals of one party engaging in business within the territory of the other party the same treatment accorded nationals of the other party. For example, an American subsidiary of a Japanese parent is to have the same rights as any domestically owned American corporation. The Article nowhere attempts to give greater rights to such subsidiaries.
The motion to dismiss the indictment on the basis of the Treaty of Friendship, Commerce and Navigation between the United States and Japan is therefore denied.
IV. Motion to Strike
As an alternative to dismissing the indictment for lack of jurisdiction, there is a motion pursuant to Rule 7(d) of the Federal Rules of Criminal Procedure, 18 U.S.C.A., to strike as surplusage those allegations in the indictment which relate to the activities of the Japanese co-conspirators. A motion to strike allegations of an indictment as surplusage should not be granted unless it is clear that the allegations are not relevant and are prejudicial or inflammatory. United States v. Klein, D.C.S.D. N.Y.1954, 124 F.Supp. 476, 479-480. Here the allegations which the defendants ask this court to strike are relevant facts relating to the formation of the conspiracy, acts done pursuant to the conspiracy, and the effects of the conspiracy in the United States. Accordingly, the motion to strike is denied.
V. Balfour, Guthrie & Co., Ltd.
In addition to concurring in most of the above motions, defendant Balfour, Guthrie & Co., Ltd., has moved for dismissal on the ground that it did not sign a proposed agreement for distribution of Japanese wire nails in the United States and on the further ground, as stated in a supporting affidavit, that its purchase of Japanese wire nails has been on an order-by-order basis and that it has "shopped around" for the best price. This position may be well taken. But without any evidence before it, without any elaboration of the government's general and broad indictment, at best it would be premature for this court to say that Balfour, Guthrie & Co. should be dropped as a defendant. Therefore, this motion is denied, without prejudice to renew the motion at a later stage of the proceedings.
VI. Bill of Particulars
Essentially, there are two motions for bills of particulars. The motions of the following defendants are identical and will be considered as one motion: R. P. Oldham Co., Winter Wolff & Co., Inc.; R. P. Oldham, Jr.; Al Perrish; Thos. D. Stevenson & Sons, Inc.; and William L. McGee. The motion of Kinoshita & Co., Ltd., U. S. A., will be considered separately.
Because of the complexities of this caseparticularly in its foreign aspect and the generality of the allegations in the indictment, I feel that a bill of particulars is necessary here to enable the defendants properly to prepare their case and avoid surprise at trial.
Motions of R. P. Oldham Co. et al. The section numbers referred to here will be those used in the collective motion of defendants R. P. Oldham Co., Winter Wolff & Co., Inc., R. P. Oldham, Jr., and Al Perrish. The corresponding section numbers used in the joint motion of defendants Thos. D. Stevenson & Sons, Inc., and William L. McGee shall be deemed ruled on in the same manner.
The following requests seek to ascertain the precise nature of the charges against the defendants, and are granted: Paragraphs I-IV, inclusive; V(a); VI-X, inclusive.
The remaining requestsParagraph V(b), (c) and (d)would require too great a disclosure of evidence on the government's part, and the defendants will be adequately apprised of the specific charges against them by the granting of the other requests. Accordingly, they are denied.
Motion of Kinoshita & Co., Ltd., U. S. A. The following requests, or portions thereof, relate to the theory of the government's *825 case with respect to defendant Kinoshita & Co., Ltd., U. S. A., particularly the extent to which the government claims this defendant is responsible for, or in identity with, co-conspirators Kinoshita & Co., Ltd., Tokyo and Shigeru Kinoshita: Paragraphs I-III, inclusive; IV, with the exception of "and by what means" in each of subparagraphs (a), (b) and (c); V and VI; VII, with the exception of "and by what means" in each of subparagraphs (a), (b) and (c). These requests are granted.
Those portions of the requests which have not been granted above are denied. These particular portions relate too heavily to the government's evidence, and their denial will not substantially impair defendant Kinoshita in preparation of its case nor result in surprise at trial.
Order
All motions to dismiss and strike are denied. The motions for bills of particulars are granted to the extent stated in Section VI, supra, and are otherwise denied.
It is so ordered.
NOTES
[1] 15 U.S.C.A. § 1.
[2] 15 U.S.C.A. Sec. 8.
[3] Even if the Japanese co-conspirators had been joined as defendants, this would not in itself be cause for dismissal of the indictment. United States v. Aluminum Co. of America, 2 Cir., 1945, 148 F.2d 416; United States v. American Tobacco Co., 1911, 221 U.S. 106, 31 S.Ct. 632, 55 L. Ed. 663; United States v. Pacific & Arctic Railway & Navigation Co., 1913, 228 U.S. 87, 33 S.Ct. 443, 57 L.Ed. 742.
[4] 15 U.S.C.A. §§ 61-65.
[5] But of course, the rights of an alien owned corporation may be less than those of domestically owned corporations. See Clark v. Uebersee Finanz-Korporation, A. G., 1947, 332 U.S. 480, 68 S.Ct. 174, 92 L.Ed. 88; Daimler Co. v. Continental Tyre & Rubber Co., (1916) A.C. 307 (H.L.)
[6] The pertinent provisions of Article VII read: "1. Nationals and companies of either Party shall be accorded national treatment with respect to engaging in all types of commercial, industrial, financial and other business activities within the territories of the other Party, whether directly or by agent or through the medium of any form of lawful juridical entity. Accordingly, such nationals and companies shall be permitted within such territories: (a) to establish and maintain branches, agencies, offices, factories and other establishments appropriate to the conduct of their business; (b) to organize companies under the general company laws of such other Party, and to acquire majority interests in companies of such other Party; and (c) to control and manage enterprises which they have established or acquired. Moreover, enterprises which they control, whether in the form of individual proprietorships, companies or otherwise, shall, in all that relates to the conduct of the activities thereof, be accorded treatment no less favorable than that accorded like enterprises controlled by nationals and companies of such other Party."
|
841 N.E.2d 1154 (2006)
Tyrus BRYANT, Appellant (Defendant below),
v.
STATE of Indiana, Appellee (Plaintiff below).
No. 48S04-0602-CR-00040.
Supreme Court of Indiana.
February 8, 2006.
*1155 Sarah L. Nagy, Indianapolis, for Appellant.
Steve Carter, Attorney General of Indiana, Daniel J. Kopp, Deputy Attorney General, for Appellee.
SHEPARD, Chief Justice.
This is one of a good many cases that were pending on direct appeal when Indiana's criminal sentencing scheme was declared unconstitutional under Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and to which that holding therefore applies. Here, the trial court enhanced a sentence based on a finding that the perpetrator "lay in wait" and on the perpetrator's prior criminal convictions. Under Blakely, the first of these findings must be made by a jury. Uncertain about the nature of the prior convictions and whether they warrant a maximum enhancement, we grant Tyrus Bryant's petition to transfer and remand.
Facts and Procedural History
On May 6, 2002, Tyrus Bryant, Brandon Wilkerson, E.B. and K.T. devised a plan to steal marijuana from D.S. As part of that plan, E.B. contacted D.S. and arranged for him to come to her residence in Markleville, Indiana. When D.S. arrived, he was invited into the residence and attacked from behind.
The participants gave various accounts of who did what during the course of the melee, but the evidence favorable to the verdict revealed that the perpetrators made off with seventy-five dollars, a cellular phone, D.S.'s car stereo and over a hundred compact discs. Bryant and Wilkerson put a gun to D.S.'s head and forced him into his own car. They drove a short distance and then exited.
The State charged Bryant with armed robbery and criminal confinement, as class B felonies. A jury found him guilty on both counts. The trial court sentenced Bryant to twenty years for the robbery and twenty years for the confinement, to be served consecutively.
In sentencing Bryant, the trial judge found one mitigating factor (that Bryant was seventeen) and two aggravating circumstances (Bryant's prior criminal history and that Bryant had "planned it [the robbery] and waited on this guy [D.S.]"). (T.R. at 544-45.)
Bryant presented multiple claims on appeal and the Court of Appeals affirmed. Bryant v. State, 821 N.E.2d 45 (Ind.Ct. App., 2005). We grant transfer. The Court of Appeals correctly rejected Bryant's claims concerning his convictions, and we summarily affirm their disposition of those claims. Ind. Appellate Rule *1156 58(A). Bryant raises two issues that require further attention: whether the sentences were properly enhanced and whether the consecutive sentences were properly imposed.
I. Were Enhanced Sentences Proper?
Bryant argues that his sentences were unconstitutional because the enhancements "exceed the presumptive sentence established by the Legislature, and were based upon aggravating factors not found by a jury." (Appellant's Pet. Transfer at 2, citing Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000)).
In Blakely v. Washington, the U.S. Supreme Court reiterated the rule expressed in Apprendi that "[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt." 542 U.S. 296, 301, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). The Court then went on to define "statutory maximum" as the "maximum sentence a judge may impose solely on the basis of the facts reflected in the jury verdict or admitted by the defendant." Id. at 303, 124 S.Ct. 2531.
In Smylie v. State, 823 N.E.2d 679 (Ind. 2005), we held that Indiana's "fixed terms" served the same function as Washington's "standard sentencing range" for Sixth Amendment purposes and that those "sort of facts envisioned by Blakely as necessitating a jury finding must be found by a jury." Id. at 686. Because Apprendi specifically exempted "the fact of a prior conviction" from submission to a jury, a sentence enhanced because of a prior criminal conviction does not violate the Sixth Amendment.[1]
In a sentencing statement, a judge must identify all significant aggravating and mitigating factors, explain why such factors were found, and balance the factors in arriving at the sentence. Morgan v. State, 675 N.E.2d 1067, 1074 (Ind.1996). The purpose behind requiring the trial court to follow these steps is to guard "against arbitrary sentences and provid[e] an adequate basis for appellate review." Id.
In this case, the trial court found two aggravators: Bryant had lain in wait, and he had a criminal history. The first of these aggravators cannot support the sentencing enhancement because it: 1) increased the sentence beyond the statutory maximum and 2) was not found by a jury beyond a reasonable doubt. The aggravator that Bryant had lain in wait is precisely the sort of "fact" with which Blakely concerns itself.
The second aggravator, Bryant's criminal history, did not need to be submitted to a jury. Even though sentence enhancements based on prior convictions do not violate the Constitutional right to trial by jury, whether and to what extent a sentence should be enhanced turns on the weight of an individual's criminal history. This weight is measured by the number of prior convictions and their gravity, by their proximity or distance from the present offense, and by any similarity or dissimilarity to the present offense that might reflect on a defendant's culpability.
We Indiana judges commonly recite that "a single aggravator can be sufficient to support an enhanced sentence," and that statement is often true. This does not mean that sentencing judges or appellate judges can stop thinking about the appropriate weight to give a history of prior convictions. The significance of a criminal history "varies based on the gravity, *1157 nature and number of prior offenses as they relate to the current offense." Wooley v. State, 716 N.E.2d 919, 929 n. 4 (Ind.1999). We observed in Wooley that "a criminal history comprised of a prior conviction for operating a vehicle while intoxicated may rise to the level of a significant aggravator at a sentencing hearing for a subsequent alcohol-related offense. However, this criminal history does not command the same significance at a sentencing hearing for murder." Id. To put another example, a conviction for theft six years in the past would probably not, standing by itself, warrant maxing out a defendant's sentence for class B burglary. But, a former conviction for burglary might make it appropriate to impose the maximum sentence for a subsequent theft.
Certainly not all cases will produce so clear-cut a separation between significant and non-significant prior convictions as these examples. The need for clarity and careful weighing, made by reference to appropriate prior criminal convictions, is more pronounced than ever given the increased importance prior criminal convictions play in the sentencing process of a post-Blakely world.
In this particular case, although the court apparently conducted a thoughtful analysis before imposing sentence, the extent and complete nature of Bryant's criminal history is not clearly laid cut in either the trial record or the record on appeal.[2] In the absence of a presentencing report, or a more complete explanation of Bryant's criminal history and its relationship to the current offense, we cannot sustain the sentencing enhancements.
II. Did Consecutive Sentences Violate Blakely?
In Smylie we noted that because there is "no language in Blakely or in Indiana's sentencing statutes that requires or even favors concurrent sentencing," Indiana's discretionary scheme of imposing consecutive sentences was not invalidated by Blakely. 823 N.E.2d at 686. Because the determination of whether to impose consecutive or concurrent sentences is entirely at the discretion of the trial judge (and thus not a "judicial impingement upon the traditional role of the jury"), we concluded that there is "no constitutional problem with consecutive sentencing so long as the trial court does not exceed the combined statutory maximums." Id. See also Blakely, 542 U.S. at 308-10, 124 S.Ct. 2531.
In Bryant's case, the only possible question regarding the propriety of the consecutive sentences is whether or not there were sufficient aggravating circumstances to support the decision to run the sentences consecutively.
As we stated above, the trial judge found two aggravators at the sentencing phase: Bryant's prior criminal history, and *1158 the conclusion that Bryant had lain in wait for D.S. While lying in wait cannot support an enhanced sentence in the absence of a jury finding, it can be used to support the decision to impose consecutive sentences inasmuch as findings to support consecutive sentences can be made by the court. Smylie, 823 N.E.2d at 686. The trial court's finding that the crimes were committed using this technique was not challenged on appeal.
In addition, although Bryant's criminal history was insufficiently laid out at trial to sustain the sentencing enhancement, there was no question that he has a criminal record. We conclude that the simple fact of a criminal history, when taken into consideration with a factor that demonstrates some increased degree of culpability such as lying in wait, is sufficient to support the decision to impose consecutive sentences.
It was within the trial judge's discretion to impose consecutive sentences, and given the evidence presented at Bryant's trial, we find there was no abuse of that discretion.
Conclusion
We reverse the sentencing enhancement and remand to the trial court for new sentencing, either through a clearer explanation of Bryant's criminal history, or, should the State elect, through the intervention of a jury.
We affirm the imposition of the consecutive sentences and the judgment otherwise.
SULLIVAN, BOEHM, and RUCKER, JJ., concur.
DICKSON, J., concurs in result without separate opinion.
NOTES
[1] Apprendi, 530 U.S. at 490, 120 S.Ct. 2348.
[2] At the sentencing hearing, the trial judge expressed his personal amazement at Bryant's criminal record in this way: "I can't tell you this is the worse [sic] record I ever saw, but I honestly, truthfully and sincerely believe its among the worst records I ever saw for a seventeen-year-old boy . . . young man. . . It's just not good." (T.R. at 544.)
Although discussion of Bryant's juvenile record is sparse, the State makes reference to that record, indicating that Bryant had at least six adjudications that would have been charged as crimes were he an adult. (T.R. at 533.) The State also indicated that two of those adjudications were for battery, and that three of the six adjudications were felonies. (T.R. at 533-34.) We recently held that juvenile adjudications may be found by a court to support enhancement of an adult sentence, consistent with the Sixth Amendment. Ryle v. State, 842 N.E.2d 320, 322, 2005 WL 3378469, at *1-2 (Ind. Dec.13, 2005).
Despite Bryant's apparently lengthy history, without a clearer description than the prosecutor provided, it is difficult to ascertain with accuracy its nature.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-4695
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
CHRISTOPHER ALLEN PUNTNEY,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Columbia. Cameron McGowan Currie, District
Judge. (3:06-cr-00857-CMC)
Submitted: December 19, 2007 Decided: January 7, 2008
Before MICHAEL, SHEDD, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Langdon D. Long, Assistant Federal Public Defender, Columbia, South
Carolina, for Appellant. Reginald I. Lloyd, United States
Attorney, Dean A. Eichelberger, Assistant United States Attorney,
Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Christopher Allen Puntney pled guilty to one count of
wire fraud, 18 U.S.C.A. § 1343 (West Supp. 2007), and was sentenced
to thirty months imprisonment. He appeals his sentence, contending
that the district court clearly erred in finding that he had not
accepted responsibility for his offense. U.S. Sentencing
Guidelines Manual § 3E1.1 (2006). We affirm.
At the sentencing hearing, the government presented
evidence that Puntney was involved in two incidents of criminal
activity in Indiana after he was charged with the instant offense,
while he was free on bond. One occurred on February 28, 2007, two
weeks before Puntney’s guilty plea on March 14, 2007. The second
occurred on March 20, 2007. The government showed a store video of
the February 28 incident, alleging that it showed Puntney, Jeremy
Stone, and Ken Selner using fraudulent credit cards to purchase
Apple Ipods and a Sony Playstation. A K-Mart video of the March
20, 2007 incident showed Mark Batti and Ken Selner, who were
arrested there after they used fraudulent credit cards to purchase
electronics. The government provided the court with transcripts of
interviews with Batti and Stone, who identified Puntney as a
participant in both incidents. Although Puntney was not present at
the K-Mart on March 20, Batti said he used fraudulent cards he
obtained from Puntney the day before.
- 2 -
Puntney did not testify, but he denied through counsel
that he was one of the three people in the video of the February 28
incident. Puntney also took the position that Batti’s
identification of him as one of the participants shown in the
February 28 video was not reliable and that Batti and Stone were
lying when they said Puntney was involved in both incidents. The
court considered the store videos and the transcripts of Batti’s
and Stone’s interviews with law enforcement officers, concluded
that Puntney was involved in both incidents, and overruled his
objection to the presentence report.
On appeal, Puntney argues that the district court clearly
erred by denying him the adjustment based on pending state court
charges which he contested. A defendant may receive an adjustment
for acceptance of responsibility under § 3E1.1 if he demonstrates
“by a preponderance of the evidence that he has clearly recognized
and affirmatively accepted personal responsibility for his criminal
conduct.” United States v. May, 359 F.3d 683, 693 (4th Cir. 2004)
(quoting United States v. Nale, 101 F.3d 1000, 1005 (4th Cir.
1996)). A guilty plea alone is insufficient to entitle a defendant
to the adjustment. May, 359 F.3d at 693; USSG § 3E1.1, comment.
(n.3) (a guilty plea is significant evidence of acceptance of
responsibility, but is not dispositive). Continued criminal
conduct may be a basis for denial of the adjustment. United States
v. Dugger, 485 F.3d 236, 240-41 (4th Cir. 2007). The district
- 3 -
court’s determination that a defendant has accepted responsibility
is reviewed for clear error. Id. at 239.
Puntney does not challenge the district court’s findings
on any specific point, but seems to contend only that the court
erred in accepting the “hearsay allegations” of Batti and Stone
concerning charges on which Puntney had not been yet convicted.
However, their allegations were supported by the store video of the
February 28 incident and by information about Puntney supplied by
Batti in his post-arrest police interview. The court viewed the
video in which Puntney allegedly appeared and determined that he,
not Batti, was the third participant on February 28. We conclude
that the district court had sufficient evidence to find, by a
preponderance of the evidence, that Puntney was involved in the two
incidents in Indiana. Therefore, the court’s determination that he
had not accepted responsibility was not clearly erroneous.
Accordingly, we affirm the sentence imposed by the
district court. We dispense with oral argument because the facts
and legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional process.
AFFIRMED
- 4 -
|
FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 3, 2014
Elisabeth A. Shumaker
Clerk of Court
HOLLI LUNDAHL,
Plaintiff - Appellee
v. No. 14-8000
(D.C. No. 2:13-CV-00241-SWS)
ELLAM HALABI, (D. Wyo.)
Defendant - Appellant,
and
ELI LILLY & COMPANY,
Defendant - Appellee,
and
MICHAEL JOHNSON; SNELL &
WILMER; CHERYL SCHROCK;
US BANK; DONALD HALBERG;
FORTUNE MAGAZINE; KAI
FALKENBURG; AOL INC.; JEFF
SEMRAD; DOES 1-10 INCLUSIVE,
Defendants.
HOLLI LUNDAHL,
Plaintiff - Appellant,
v. No. 14-8002
(D.C. No. 2:13-CV-00241-SWS)
ELLAM HALABI; ELI LILLY & (D. Wyo.)
COMPANY; MICHAEL JOHNSON;
SNELL & WILMER; CHERYL
SCHROCK; US BANK; DONALD
HALBERG; FORTUNE MAGAZINE;
KAI FALKENBURG; AOL INC.; JEFF
SEMRAD; DOES 1-10
INCLUSIVE,
Defendants - Appellees.
ORDER AND JUDGMENT*
Before McHUGH, McKAY, and O’BRIEN, Circuit Judges.
Plaintiff Holli Lundahl filed a lawsuit in Wyoming that was removed to federal
court. The district court scheduled a hearing to resolve disputed issues as to whether
it had diversity jurisdiction, including whether Ms. Lundahl had fraudulently joined a
fictitious defendant, Ms. Ellam Halabi, to prevent removal. Ms. Lundahl unilaterally
dismissed her case ninety minutes before that hearing. In No. 14-8000, Ms. Halabi,
proceeding pro se, appeals a criminal contempt order and bench warrant issued for
her failure to attend that hearing and the subsequent hearing scheduled for her to
show cause why she should not be held in contempt. In No. 14-8002, Ms. Lundahl,
*
After examining the briefs and shared appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).
The cases are therefore ordered submitted without oral argument. This order and
judgment is not binding precedent, except under the doctrines of law of the case, res
judicata, and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
-2-
proceeding pro se,1 appeals the district court’s order imposing monetary sanctions
and filing restrictions on her.
Because both Ms. Halabi and Ms. Lundahl appear pro se, we construe their
filings liberally. See Hall v. Bellmon, 935 F.2d 1106, 1110 & n.3 (10th Cir. 1991)
(discussing Haines v. Kerner, 404 U.S. 519, 520-21 (1972) (per curiam)). But this
court will not act as a pro se litigant’s advocate. Id. at 1110. “Thus, although we
make some allowances for ‘the pro se plaintiff’s failure to cite proper legal authority,
[her] confusion of various legal theories, [or her] poor syntax and sentence
construction,’ . . . the court cannot take on the responsibility of serving as the
litigant’s attorney in constructing arguments and searching the record.” Garrett v.
Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005) (brackets
omitted) (quoting Hall, 935 F.2d at 1110). We exercise jurisdiction in both appeals
under 28 U.S.C. § 1291 and affirm.
Background
Ms. Lundahl filed a pro se complaint in Wyoming state court in January 2013
against Eli Lilly and Company (“Lilly”) and its attorney Cheryl Schrock (together,
the “Lilly Defendants”), as well as the attorneys who represented Lilly in connection
with Ms. Lundahl’s prior bankruptcy proceedings, Snell and Wilmer and Michael
Johnson, (the “Snell Defendants”). Ms. Lundahl alleged the Lilly and Snell
1
Ms. Lundahl is under filing restrictions, as described in Johnson v. Stock,
No. 03-4219, 2005 WL 1349963, at *3-4 (10th Cir. June 8, 2005). This court granted
her permission to proceed pro se in this case by order issued February 5, 2014.
-3-
Defendants violated her state constitutional rights and conspired with federal judges
to abuse the civil process in order to defeat her legal claims against Lilly, which are
fairly described as a campaign of frivolous litigation that Ms. Lundahl has waged
against Lilly for over twenty years. See R. Vol. 1, at 772 (listing the lawsuits she has
filed against Lilly since 2005); Johnson v. Stock, No. 03-4219, 2005 WL 1349963, at
*2-3 (10th Cir. June 8, 2005) (describing her frivolous litigation against Lilly prior to
2005). The Lilly and Snell Defendants filed motions to dismiss in state court. In
response, Ms. Lundahl filed a demand that the Wyoming state court enter a
declaratory decree that a 2003 Bankruptcy Court judgment against her be declared
void and set aside. Ms. Lundahl’s complaint also alleged that Ms. Halabi published
unspecified internet articles placing her in a false light.
Removal. Based on Ms. Lundahl’s demand that the 2003 Bankruptcy Court
order be vacated, the Lilly Defendants filed a notice of removal based on federal
question jurisdiction. See 28 U.S.C. §§ 1331, 1441(a). The next day they
supplemented their notice to add diversity of citizenship as a ground for removal, see
id. §§ 1332, 1441, stating there was no evidence Ms. Lundahl ever served the sole
Wyoming defendant, Ms. Halabi. The Snell Defendants consented to removal; Ms.
Halabi did not. Instead, Ms. Halabi filed a declaration in which she claimed she had
been served and that complete diversity did not exist because both she and Ms.
Lundahl were Wyoming residents.
-4-
The district court made a preliminary assessment that it did not have federal
question jurisdiction and, as to its diversity jurisdiction, found that there were
disputed fact issues related to residency and service of process. It set a hearing for
November 22, 2013, and ordered both Ms. Lundahl and Ms. Halabi to appear in
person. Ms. Lundahl filed a motion demanding the district court recuse and vacate
the November 22 hearing. Ms. Halabi also moved to vacate the November 22
hearing, saying she was unavailable. The district court denied both motions.
The district court again ordered both Ms. Lundahl and Ms. Halabi to appear at
the November 22 hearing, stating it suspected that Ms. Halabi “[did] not exist
separately from Holli Lundahl” and had been fraudulently joined by Ms. Lundahl to
defeat diversity and forestall removal. R. Vol. 1, at 349-50. Fraudulently joined
defendants need not be considered for the purposes of determining complete
diversity. See Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879, 882
(10th Cir. 1967) (“[F]ederal courts may look beyond the pleadings to determine if the
joinder, although fair on its face, is a sham or fraudulent device to prevent
removal.”); Dutcher v. Matheson, 733 F.3d 980, 987-88 (10th Cir. 2013). The court
gave several reasons why it suspected Ms. Lundahl had fraudulently joined
Ms. Halabi: (1) Ms. Halabi’s pleadings in the case put forth arguments that favored
Ms. Lundahl’s positions, but were contrary to her own interests and those of the other
defendants; (2) Ms. Halabi’s filings bore a noticeable similarity in formatting to
Ms. Lundahl’s filings, which used a very distinctive format; (3) there was no record
-5-
Ms. Halabi was actually served; (4) Ms. Halabi’s motion requesting the November 22
hearing be rescheduled stated she was “presently” in Oklahoma, yet was postmarked
from Wyoming; and (5) Ms. Lundahl had a history, noted by many courts, of
perpetrating fraud on the court, including using aliases and falsifying documents.
R. Vol. 1, at 346-50 & n.1. The court warned Ms. Halabi and Ms. Lundahl that the
failure of either to appear at the November 22 hearing could result in a finding of
contempt and/or issuance of an arrest warrant. Id. at 350.
November 22 Hearing. Ninety minutes before the November 22 hearing,
Ms. Lundahl dismissed her case by filing a notice of voluntary dismissal pursuant to
Fed. R. Civ. P. 41(a)(1)(A)(i). Her stated reason for dismissing the case was that the
district court had fabricated false criminal charges against her and refused to recuse.
The court opened the hearing by noting it had just seen Ms. Lundahl’s notice of
dismissal, but had two concerns: first, it thought it could entertain the dismissal only
if it first determined it had subject-matter jurisdiction over the case; and, second, it
thought the dismissal required defendants’ stipulation. The Lilly Defendants told the
court they also thought Ms. Lundahl might need their stipulation to dismiss because
they had responded to her complaint with motions to dismiss.2 Ms. Lundahl argued
2
They argued:
[Counsel for Defendants]: Your honor, I was handed this document at
12:30 when I arrived at the courthouse. I obviously have not had a
chance to consult with my client regarding their position as to a
stipulation on dismissal. Certainly we have responded by filing a
lengthy motion to dismiss in the state court and would view that as a
(continued)
-6-
that her notice of dismissal was self-executing and that neither the court’s
authorization nor the defendants’ stipulation was needed to dismiss the case. The
court took this matter under advisement, though as discussed below, Ms. Lundahl
was correct that her notice of dismissal was self-executing.
Ms. Halabi failed to appear at the November 22 hearing, as ordered. The court
issued a show cause order for Ms. Halabi to explain why she should not be held in
contempt for her failure to comply with its orders, and it set a hearing on this issue
for December 23.3 The court heard evidence from the parties who were present on
the issues relating to diversity jurisdiction, then took the matters under advisement.
December 23 Hearing and Sanction Orders. Ms. Halabi did not appear at the
December 23 hearing. One hour before the hearing, she filed a declaration stating
she refused to appear at the hearing because the district court lacked subject-matter
jurisdiction over the case. The court ruled that Ms. Halabi was in direct criminal
responsive pleading under rules such that a stipulation would be
required; but again, I’m not in a position today to state my client’s
positions since I just received the motion.
R. Vol. 3, at 11.
3
On December 4, Ms. Lundahl filed a motion asking the district court to stay
the proceedings and certify its rulings for appeal, stating she would not comply with
any further district court orders because her voluntary dismissal ended the court’s
jurisdiction over the case. The court denied her motion, stating that it had “not yet
ruled on the questions of jurisdiction, removal, and dismissal,” and that the
December 23 hearing would proceed as scheduled. R. Vol. 1, at 541. She also filed
petitions for writs of prohibition and mandamus in this court, seeking an order
directing the district court to stop the proceeding. This court denied the petitions
because Ms. Lundahl failed to meet the pre-filing conditions this court has imposed
on her. In re Lundahl, No. 13-8096 (10th Cir. Dec. 19, 2013).
-7-
contempt of its orders. It found she had been given notice of the orders to attend
both hearings, had willfully refused to comply, and lacked any legal basis for her
non-compliance. R. Doc. 70, (Tr. Dec. 23 Hr’g), at 2-3.4 The district court issued a
bench warrant and sentenced Ms. Halabi to three days’ incarceration for her criminal
contempt.
The court also ruled it was granting Ms. Lundahl’s Rule 41 dismissal effective
as of November 22, 2013. In this regard, the district court was in error. Prior to the
filing of an answer or motion for summary judgment, neither of which had been filed
here, “a plaintiff has an absolute right to dismiss without prejudice [under Rule
41(a)(1)(A)(i)] and no action is required on the part of the court.” Janssen v. Harris,
321 F.3d 998, 1000 (10th Cir. 2003). The dismissal “is effective at the moment the
notice is filed with the clerk,” and an order granting dismissal is “superfluous, a
nullity, and without procedural effect.” Id. (internal quotation marks omitted). A
joint stipulation is required under Rule 41(a)(1)(A)(ii) only when the defendants have
filed an answer or a motion for summary judgment. The motions to dismiss filed by
the Lilly and Snell Defendants did not preclude Ms. Lundahl’s unilateral dismissal of
the case. See De Leon v. Marcos, 659 F.3d 1276, 1283 (10th Cir. 2011) (noting the
4
The transcript of the December 23, 2013, hearing was filed in the district court
on May 5, 2014, after the principle volumes of the shared record on appeal were
filed. The transcript is part of the record on appeal pursuant to 10th Cir. R. 11.2(A)
(“In a pro se appeal . . . the district court clerk must forward the record to the circuit
clerk. . . . The record must include any transcript that has been filed for the appeal.”).
-8-
plaintiff could unilaterally dismiss case under Rule 41(a)(1)(A)(i) because defendant
had filed a motion to dismiss, not an answer or a motion for summary judgment).
The district court then noted that, while it no longer had jurisdiction over the
merits of the case, it had not lost jurisdiction over the conduct of the litigants. The
court found that Ms. Lundahl had filed her Rule 41 dismissal at the last minute for an
improper purpose, causing unnecessary expense to counsel, who had to travel many
miles to the hearing. The court imposed a monetary sanction of $1,500 against
Ms. Lundahl to defray counsel’s expense. After the December 23 hearing the district
court imposed filing restrictions on Ms. Lundahl, finding she had engaged in abusive
and vexatious conduct during the proceedings before it and had an extensive and
ongoing history of filing abusive and frivolous litigation.
No. 14-8000
Ms. Halabi appeals the district court criminal contempt order against her.5
Federal courts have authority to punish disobedience of their lawful orders by fine or
imprisonment. 18 U.S.C. § 401(3). “We review a finding of contempt for an abuse
of discretion. To be held in contempt, a court must find the party violated a specific
and definite court order and the party had notice of the order.” Lucre Mgmt. Grp.,
5
Ms. Lundahl’s March 27, 2014, “Notice of Joinder” in Ms. Halabi’s brief,
construed as a motion to join Ms. Halabi’s brief, is denied. Ms. Lundahl lacks
Article III standing to join in Ms. Halabi’s brief in this appeal because Ms. Lundahl
is not “aggrieved by the order from which appeal is taken.” United States v. Ramos,
695 F.3d 1035, 1046 (10th Cir. 2012) (internal quotation marks omitted).
-9-
LLC v. Schempp Real Estate, LLC (In re Lucre Mgmt. Grp., LLC), 365 F.3d 874, 875
(10th Cir. 2004) (citation and internal quotation marks omitted).
Ms. Halabi argues that the district court lacked any jurisdiction to impose the
criminal contempt because it lacked subject-matter jurisdiction over the case. She
argues there were numerous alleged defects in the notice of removal, the court lacked
federal-question or diversity removal jurisdiction, and it lost any authority to order
her to appear at the November 22 and December 23 hearing immediately upon the
filing of Ms. Lundahl’s Rule 41(a) dismissal.6 It is her position that the court lacked
any jurisdiction to hold either the November 22 hearing or the December 23 hearing
once the Rule 41(a) dismissal was filed with the clerk of court and that all of the
orders it issued after that are void, including its criminal contempt order against her.
These arguments are without merit; the court had adjudicatory jurisdiction to decide
the removal issues and jurisdiction over collateral, non-merits issues relating to
potential abuse of the judicial process.
6
She argues (1) the notice of removal was untimely; (2) the notice of removal
was defective because defendants did not sign it; (3) Lilly violated the affirmative
preclusion defense rule when it based removal on Ms. Lundahl’s request to void the
2003 Bankruptcy Court judgment; (4) the district court did not have power to reach
the issue of diversity jurisdiction in light of the facially defective notice of removal
and the Rule 41(a) dismissal; (5) the district court did not give her sufficient notice of
the November 22 hearing or opportunity to appear and defend; (6) the district court
lacked jurisdiction to order her to appear on December 23 because the diversity issue
was moot and the notice of removal defects had not been corrected; and (7) the
contempt order is void because the district court lacked subject-matter jurisdiction
over the case.
- 10 -
Adjudicatory Jurisdiction. The district court had adjudicatory jurisdiction to
determine whether, as Ms. Halabi contends, there were defects in the notice of
removal and whether it properly had federal-question or diversity jurisdiction. Upon
removal, the district court “instantly acquired the threshold jurisdiction to decide
whether it had the power to exercise jurisdiction over the action.” Okla. ex rel. Okla.
Tax Comm’n v. Graham, 822 F.2d 951, 955 (10th Cir. 1987), vacated on other
grounds, 484 U.S. 973 (1987); see also Pritchett v. Office Depot, Inc., 420 F.3d
1090, 1093 (10th Cir. 2005) (holding that “federal courts always have jurisdiction to
consider their own jurisdiction” even though the court may ultimately decide it lacks
jurisdiction.) “This jurisdiction to determine jurisdiction is not defeated by a
subsequent determination that a court does not have subject matter jurisdiction over
the issues in controversy.” Graham, 822 F.3d at 955. Thus, even if the district court
lacked subject-matter jurisdiction over the case, it and it “alone could decide that
such was the law. It and it alone necessarily had jurisdiction to decide whether the
case was properly before it. On that question at least, it was its duty to permit
argument, and to take the time required for such consideration as it might need.”
United States v. Shipp, 203 U.S. 563, 573 (1906).
Ms. Halabi argues the court lost even that adjudicatory jurisdiction, however,
the instant Ms. Lundahl filed her Rule 41 dismissal. The district court was incorrect
in initially concluding there were issues it needed to adjudicate with respect to
Ms. Lundahl’s Rule 41(a) dismissal. But “[a] court does not usurp its power when it
- 11 -
erroneously exercises jurisdiction.” Gschwind v. Cessna Aircraft Co., 232 F.3d 1342,
1346 (10th Cir. 2000). “Since federal courts have jurisdiction to determine
jurisdiction, that is, power to interpret the language of the jurisdictional instrument
and its application to an issue by the court, error in interpreting a statutory grant of
jurisdiction is not equivalent to acting with total want of jurisdiction.” Id. (internal
quotation marks omitted).
There was not such a total want of jurisdiction here to conclude that the
district court was powerless to hold the November 22 and December 23 hearings.
See id. at 1346 (to find a total want of jurisdiction “[t]here must be no arguable basis
on which the court could have rested a finding that it had jurisdiction” (alteration and
internal quotation marks omitted)). There were genuine factual disputes regarding
joinder of a fraudulent defendant, residency, and service of process relating to
diversity jurisdiction. Further, because Ms. Lundahl waited until the last minute to
file her Rule 41 dismissal, neither the district court nor counsel for the Lilly and
Snell Defendants had time to research whether, under the facts of this case, their
consent to dismissal was needed.
Moreover, Ms. Halabi was not free to decide on her own that the court lacked
jurisdiction to order her to appear at its hearings. It is well settled that while a court
is deciding whether it has jurisdiction, it has the authority to issue orders to preserve
the status quo, and such order “must be obeyed by the parties until it is reversed by
orderly and proper proceedings.” United States v. United Mine Workers, 330 U.S.
- 12 -
258, 293 (1947); GTE Sylvania, Inc. v. Consumers Union of the U.S., Inc., 445 U.S.
375, 386 (1980) (holding that persons subject to a court order “are expected to obey
that [order] until it is modified or reversed, even if they have proper grounds to
object to the order”). It is a basic proposition that all orders and judgments of courts
must be obeyed “however erroneous the action of the court may be,” until the order
“is reversed by orderly review, either by itself or by a higher court” and that
“disobedience of them is contempt of [the court’s] lawful authority, to be punished.”
Howat v. Kansas, 258 U.S. 181, 189-90 (1922). “If a person to whom a court directs
an order believes that order is incorrect the remedy is to appeal, but, absent a stay, he
must comply promptly with the order pending appeal.” Maness v. Meyers, 419 U.S.
449, 458 (1975). “Persons who make private determinations of the law and refuse to
obey an order generally risk criminal contempt even if the order is ultimately ruled
incorrect.” Id.
Inherent Authority over Sanctionable Conduct. Even when a court lacks
subject-matter jurisdiction over the substantive merits of a case, it retains the inherent
authority to issue orders on matters collateral to the merits and to conduct sanction
proceedings and to impose any sanction for abusive conduct for which sanctions are
authorized by the federal rules of procedure or federal statutes, including awarding
costs or attorney fees, imposing punishment for criminal contempt, and issuing
sanctions under Rule 11. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96
(1990); Willy v. Coastal Corp., 503 U.S. 131, 136-37 (1992) (holding district court
- 13 -
may impose sanctions for conduct that occurred during a proceeding in which the
court lacked subject matter jurisdiction). “[I]t is firmly established that the power to
punish for contempts is inherent in all courts.” Chambers v. NASCO, Inc., 501 U.S.
32, 44 (1991) (alteration and internal quotation marks omitted). “This power reaches
both conduct before the court and that beyond the court’s confines, for the underlying
concern that [gives] rise to the contempt power [is] not merely the disruption of court
proceedings [but] disobedience to the orders of the Judiciary.” Id. (alterations and
internal quotation marks omitted).
The Supreme Court has specifically rejected the argument advanced by
Ms. Halabi that the Rule 41(a) dismissal deprived the district court of jurisdiction to
hold the November and December hearings and to issue the contempt order for her
failure to attend. See Cooter & Gell, 496 U.S. at 395-98 (holding that voluntary
dismissal of a lawsuit does not deprive the district court of jurisdiction to impose
sanctions); Mine Workers, 330 U.S. at 293 (upholding a criminal contempt order for
failing to comply with a court order, though the court lacked jurisdiction over the
merits at the time it issued the order). “[N]othing in the language of Rule
41(a)(1)[(A)(i), Rule 11, or other statute or Federal Rule terminates a district court’s
authority to impose sanctions after such a dismissal.” Cooter & Gell, 496 U.S. at
395. A court has jurisdiction to hold a party in criminal contempt, even though it
does not have subject matter jurisdiction over the underlying lawsuit, “because the
court retains an interest in parties’ obedience to its authority.” United States v.
- 14 -
Straub, 508 U.S. 1003, 1009 (11th Cir. 2007) (“[T]the adjudication of a charge of
criminal contempt does not require an assessment of the legal merits of the
underlying controversy, so the court that hears the criminal contempt charge does not
adjudicate a controversy over which it lacks jurisdiction.”).
The district court orders being challenged here all relate to matters collateral to
the merits. The purpose of the November 22 hearing that the court ordered
Ms. Halabi to attend related to whether she and Ms. Lundahl had abused the judicial
process by creating a fictitious defendant. The December 23 hearing followed from
Ms. Halabi’s failure to attend the first hearing and its purpose was to determine if she
should be held in contempt as a result. In short, Ms. Halabi was obligated to comply
with the court’s order to appear at the November 22 and December 23 hearings, and
the district court had jurisdiction and the inherent authority to punish her criminal
contempt for willfully refusing to do so.
Ms. Halabi also argues the district court did not give her sufficient notice of
the November 22 hearing, nor give her a reasonable opportunity to appear and
defend. This is easily disposed of. Ms. Halabi demonstrated that she was notified of
her obligation to attend the November 22 hearing when she moved to reschedule it
and her motion was denied, and she demonstrated that she was notified of her
obligation to attend the December 23 hearing when she petitioned both the district
court and this court to vacate that hearing. Quite clearly she was given an
opportunity to appear and defend. Ms. Halabi demonstrated her willful failure to
- 15 -
comply with the court’s order when she informed the district court she would not
comply with its order to attend the December hearing. R. Vol. 1, at 547.
The record demonstrates that Ms. Halabi willfully and with notice violated the
court’s orders directing her to attend in person the November 22 and December 23
hearings. Accordingly, we lift the stay of enforcement of the criminal contempt
order and bench warrant against Ms. Halabi, and affirm her conviction for criminal
contempt.
No. 14-8002
Ms. Lundahl appeals the district court’s imposition of monetary sanctions and
filing restrictions on her. We review a district court’s imposition of sanctions for
abuse of discretion. Chambers, 501 U.S. at 55. A court has the inherent power to
sanction a party if it acts in “bad faith, vexatiously, wantonly, or for oppressive
reasons,” including “willful[ ] abuse [of the] judicial processes.” Roadway Express,
Inc. v. Piper, 447 U.S. 752, 766 (1980) (internal quotation marks omitted); see also
Chambers, 501 U.S. at 47 (court’s inherent power “extends to a full range of
litigation abuses”). We also review the imposition of filing restrictions for an abuse
of discretion. Tripati v. Beaman, 878 F.2d 351, 354 (10th Cir. 1989) (per curiam).
Federal courts have the inherent power to impose filing restrictions where “a party
has engaged in a pattern of litigation activity which is manifestly abusive.” Winslow
v. Hunter (In re Winslow), 17 F.3d 314, 315 (10th Cir. 1994) (per curiam) (internal
quotation marks omitted). We affirm both orders.
- 16 -
As noted above, the district court imposed a monetary sanction against
Ms. Lundahl at the December 23 hearing. It found that Ms. Lundahl inappropriately
delayed filing her dismissal until only ninety minutes before the November 22
hearing, “resulting in unnecessary expenditure of time and resources for all
involved.” R. Vol. 1, at 837. It found that Ms. Lundahl dismissed the action to avoid
having to establish the merits of her allegations. As a sanction to reimburse counsel
for the Lilly and Snell Defendants for their travel to the hearing, which they stated
was a five-hour drive from Jackson, Wyoming to the courthouse in Casper, the court
assessed a $1500 sanction against Ms. Lundahl. It ordered her to pay the sanction to
the court and directed the clerk of court to distribute it equally between counsel for
the Lilly and Snell Defendants.
Lilly moved for filing restrictions to be imposed on Ms. Lundahl, and the court
gave her an opportunity to respond, which she did. In January 2014, the district court
entered an order imposing filing restrictions on Ms. Lundahl for her repeated abuse
of the judicial process. The district court enjoined her from proceeding in any civil
matter in the District of Wyoming unless she is represented by a licensed attorney or
first obtains permission to proceed pro se. To obtain permission to proceed pro se,
she must list all currently pending lawsuits and all outstanding orders limiting her
access to federal court; and she must submit a notarized affidavit describing the
issues she seeks to present and certifying that the legal arguments being raised do not
violate Rule 11 standards, that she is not representing the interests of any others, and
- 17 -
that she will comply with all court orders. R. Vol. 1, at 1333-35. These restrictions
are nearly identical to the filing restrictions this court has imposed on Ms. Lundahl.
See Johnson, 2005 WL 1349963, at *3-4.
Jurisdiction to Issue Sanction and Filing Restriction Orders. We first address
Ms. Lundahl’s many objections to the sanction and filing restrictions that are based
on her mistaken premise—like Ms. Halabi’s—that the monetary sanction and filing
restriction orders are void because the district court lacked subject-matter jurisdiction
over the underlying case. Like Ms. Halabi, she argues the district court lacked even
colorable jurisdiction because of numerous defects in the removal notice, the court’s
lack of subject-matter jurisdiction, its lack of personal jurisdiction over the Lilly and
Snell Defendants, and because the self-executing nature of her Rule 41 voluntary
dismissal.7 We briefly reiterate what we said at length in rejecting these same
arguments asserted by Ms. Halabi in appeal No. 14-8001.
7
As to both the monetary sanctions and the filing restrictions, Ms. Lundahl
argues that: (1) the district court did not obtain removal jurisdiction because the
Lilly Defendants failed to obtain consent from all properly served and joined parties
and to plead a federal-question claim anywhere on the face of the notice; (2) the
district court did not have power to reach the issue of diversity jurisdiction in light of
the facially defective notice of removal and her Rule 41 notice of voluntary
dismissal; (3) the district court never obtained “fundamental jurisdiction” under
Article III over the removed state action given that personal jurisdiction was never
obtained over the Lilly and Snell Defendants at any time before she filed her notice
of voluntary dismissal; (4) the district court lost jurisdiction over the removed action
once it accused her of felony conduct for a fictitious address and name and then
attempted to conduct a bench trial on these felony charges; (5) the Lilly and Snell
Defendants lacked standing to seek Rule 11 sanctions against her because they never
acquired party status before she filed her notice of voluntary dismissal; (6) the Lilly
(continued)
- 18 -
Upon removal, the district court instantly acquired the adjudicatory
jurisdiction to decide whether it had subject-matter jurisdiction over the case,
Graham, 822 F.2d at 955, and it had the duty and prerogative to hold hearings,
consider arguments, take matters under advisement, and otherwise “take the time
required for such consideration as it might need” in order to make this
determination,” Shipp, 203 U.S. at 573. Because Ms. Lundahl filed her dismissal just
prior to the hearing, the court reasonably proceeded with that hearing and, when
counsel for Lilly argued its stipulation might be required, reasonably took that issue
under advisement. Even if the court erred in continuing to consider the
diversity-jurisdiction issues after Ms. Lundahl filed her Rule 41(a) notice of
voluntary dismissal, “[a] court does not usurp its power when it erroneously exercises
jurisdiction,” Gschwind, 232 F.3d at 1346.
But more to the point, the district court’s orders following the Rule 41(a)
notice of voluntary dismissal did not relate to the merits of Ms. Lundahl’s complaint;
they involved only collateral matters related to whether she and Ms. Halabi had
abused the judicial process or acted in contempt of the court’s orders. A court may
and Snell Defendants lacked standing to seek an injunction order against her because
that they never acquired party status before she filed her notice of voluntary dismissal
and because they were never constitutionally injured by the unrelated pre-filing
injunction orders; (7) the district court did not have jurisdiction under 28 U.S.C.
§ 1651 to enter filing restrictions against her because it failed to obtain jurisdiction
over any independent federal-question claim in the underlying action and also failed
to acquire personal jurisdiction over Lilly to enter a judgment in Lilly’s favor; and
(8) neither § 1651 nor Federal Rule of Civil Procedure 65(d) can be used to sustain
initial orders or subsequent orders which are void ab initio.
- 19 -
award attorney fees, contempt sanctions, and Rule 11 sanctions after a Rule 41(a)
voluntarily dismissal because those issues all involve the determination of a collateral
issue: whether the litigant “has abused the judicial process, and if so, what sanction
would be appropriate.” Cooter & Gell, 496 U.S. at 396.
Rule 41(a)(1) . . . allows one dismissal without prejudice. [It] does not
codify any policy that the plaintiff’s right to one free dismissal also
secures the right to file baseless papers. The filing of complaints,
papers, or other motions without taking the necessary care in their
preparation is a separate abuse of the judicial system, subject to separate
sanction. . . . Baseless filing puts the machinery of justice in motion,
burdening courts and individuals alike with needless expense and delay.
Even if the careless litigant quickly dismisses the action, the harm
triggering Rule 11’s concerns has already occurred. Therefore, a
litigant who violates Rule 11 merits sanctions even after a dismissal.
Moreover, the imposition of such sanctions on abusive litigants is useful
to deter such misconduct. If a litigant could purge his violation of
Rule 11 merely by taking a dismissal, he would lose all incentive to
stop, think and investigate more carefully before serving and filing
papers.
Id. at 397-98 (internal quotation marks omitted).
We conclude the district court had the inherent authority to hold the
November 22 and December 23 hearings, if only to determine whether Ms. Lundahl
had fraudulently joined a fictitious defendant. We reject the claims raised by
Ms. Lundahl challenging the imposition of monetary sanctions against her and affirm
that order.
Filing Restrictions. Even when a court lacks jurisdiction to consider the merits
of a case, it has jurisdiction to impose filing restrictions on a party for her conduct in
that and other cases. See Judd v. Univ. of N.M., 204 F.3d 1041, 1044 (10th Cir.
- 20 -
2000). But in the absence of subject-matter jurisdiction, “we do not decide whether
[the litigant’s] arguments are frivolous or well taken” but more generally “whether
the conduct of this litigant is abusive, as shown by, for example, a history of
repetitive and meritless claims, or the pursuit of numerous facially inappropriate
motions in [the present] proceeding.” Okon v. Comm’r, 26 F.3d 1025, 1027
(10th Cir. 1994) (citation, alterations, and internal quotation marks omitted).
Ms. Lundahl challenges the filing restrictions as improperly supported and
overly broad.8 Filing restrictions are appropriate where “(1) the litigant’s lengthy and
abusive history” is set forth; (2) the court provides guidelines as to what the litigant
must do to obtain permission to file an action; and (3) the litigant receives notice and
an opportunity to oppose the court’s order before it is instituted.” Ysais v.
8
Ms. Lundahl argues (1) even if the district court had jurisdiction to impose
filing restrictions, they are improperly supported because the doctrine of res judicata
and jurisdictional limitations barred the district court from basing a filing injunction
on the eighty-five lawsuits she favorably prosecuted against Lilly’s ACS Health Plan
from 1991 to 1992; (2) the district court could not base its filing restrictions order on
the thirty-eight cases removed and dismissed because Fed. R. Civ. P. 65(a)(2)
requires a merits dismissal to support a filing restriction order; (3) the district court
could not base its filing restrictions order on the 140 health care contract
reimbursement/accounts receivable lawsuits which she brought against other health
plans separate and apart from Lilly; (4) Lilly could not piggyback new filing
restrictions in its favor upon previously entered (void) pre-filing injunction orders
which did not name Lilly in the underlying complaints supporting those pre-filing
restriction orders; (5) the filing restrictions are not void for broadness; and (6) neither
the district court nor any other federal judge having a former affiliation with federal
District Court Judge William Downes should be permitted to sit on any of the
underlying claims.
- 21 -
Richardson, 603 F.3d 1175, 1180 (10th Cir. 2010) (internal quotation marks
omitted).
Here, the district court gave Ms. Lundahl notice it was considering imposing
filing restrictions and gave her an opportunity to be heard as to why she should not be
subject to filing restrictions. The court summarized Ms. Lundahl’s filing history in
numerous courts and noted that the Supreme Court, the Tenth Circuit, the Ninth
Circuit, the Utah Supreme Court, the District of Utah, the Western District of Texas,
and the District of Idaho have all imposed filing restrictions on her. R. Vol. 1,
at 1329-30. It noted that Ms. Lundahl has filed more than 100 cases against Lilly in
various state and federal courts since 1991 and at least 140 cases that did not involve
Lilly in other courts. Id. at 1331. It also found that Ms. Lundahl had engaged in
abusive conduct in the case before it because her pleadings in the case had been
“implausible [and] bizarre,” and she ignored the court’s December 30, 2013, order
not to file any document other than a response to the request for filing restrictions or
notice of appeal by filing a 300-page “Rule 60(b)(4)” motion asking the court to
overturn the Tenth Circuit’s filing restrictions on her. Id. at 1332.
The district court did not abuse its discretion in concluding that Ms. Lundahl’s
history of litigation establishes a sufficiently abusive pattern to merit filing
restrictions. We also conclude that the restrictions crafted by the district court were
sufficiently tailored. The restrictions apply only in the United States District Court
for the District of Wyoming, see Sieverding v. Colo. Bar Ass’n, 469 F.3d 1340, 1344
- 22 -
(10th Cir. 2006); they are not excessively burdensome, because they allow
Ms. Lundahl to file suit if she is represented by a licensed attorney; and they explain
the steps that Ms. Lundahl must take if she does wish to proceed pro se, see Ketchum
v. Cruz, 961 F.2d 916, 921 (10th Cir. 1992).
Recusal. To the extent Ms. Lundahl contends that the district court judge had
an obligation to disqualify himself from this case, we find no abuse of discretion.
See United States v. Mendoza, 468 F.3d 1256, 1262 (10th Cir. 2006). Ms. Lundahl
argued the district court judge must recuse because he served as the magistrate judge
for District Court Judge William F. Downes, who presided over her criminal perjury
proceedings. This is factually incorrect. The district court judge explained that he
had not been the magistrate judge for those proceedings, which were held in the
District of Utah with Judge Downes sitting by designation, not in the District of
Wyoming. Judge Skavdahl stated he was not even aware of those proceedings until
Ms. Lundahl became a litigant in his court. Ms. Lundahl’s argument is based solely
on the unfavorable judicial rulings of another federal judge, which “do not in
themselves call into question the impartiality of [that] judge,” id., let alone another
judge.
Conclusion
In No. 14-8000, the stay of the criminal contempt order against, and bench
warrant for, Ms. Halabi is lifted and the criminal contempt order and sentence are
affirmed. Ms. Lundahl’s motion to join Ms. Halabi’s brief is denied. In
- 23 -
No. 14-8002, the December 30, 2013 order imposing a monetary sanction on Ms.
Lundahl is affirmed, and the January 30, 2014 order imposing filing restrictions on
Ms. Lundahl is affirmed. Appellant’s motion to proceed in forma pauperis is
granted.
Entered for the Court
Carolyn B. McHugh
Circuit Judge
- 24 -
|
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688 F.2d 826
U. S.v.Martell
81-2781
UNITED STATES COURT OF APPEALS Third Circuit
6/17/82
1
E.D.Pa.
AFFIRMED
|
519 F.Supp. 195 (1981)
U. S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
COUNTY OF CALUMET, Defendant.
Civ. A. No. 81-C-402.
United States District Court, E. D. Wisconsin.
June 12, 1981.
On Motion to Amend June 26, 1981.
Dorothy Famber and Lloyd Zimmerman, E. E. O. C., Milwaukee, Wis., for plaintiff.
David L. Uelmen, Goldberg, Previant, Uelmen, Gratz, Miller, Levy & Brueggeman, S. C., Milwaukee, Wis., for defendant.
Sandra Neese, Regional Atty., Thomas Nelson, Supervisory Trial Atty., and Dorothy Famber and Lloyd Zimmerman, Senior Trial Attys., Milwaukee, Wis., for EEOC on motion to amend.
DECISION and ORDER
TERRENCE T. EVANS, District Judge.
After the grant of a preliminary injunction, this matter is before the court on a challenge to the constitutionality of § 11(b) of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 630(b).
The U. S. Equal Employment Opportunity Commission (EEOC) brought this action on behalf of Ruth Schabach, who has been the Deputy Clerk of Court for Calumet County, Wisconsin, since March 1, 1973. Schabach, who was born on March 30, 1916, became 65 years old on March 30, 1981. On March 27, 1981, the County Salary and Personnel Committee informed her that she would be required to retire at 65, despite her desire to continue working. The county extended her employment until April 30, 1981, so that she could train her replacement.
*196 The county, which agrees that Schabach is competent in her work, based its action on § 26 of the Calumet County Personnel Policy, which states: "All non-elected participating employees of the County shall have their employment terminated at such age as conforms with Wisconsin Retirement Fund regulations ...." Wis.Stats. § 41.02(23) sets 65 as the "normal retirement date" for the position of deputy clerk of court. Wis.Stats. § 41.11(1) provides that county employees "may be retired by the employer after the employe attains his or her normal retirement [age] ... except as prohibited by federal law." Not at issue here is the ADEA provision allowing forced early retirement where age is a "bona fide occupational qualification."
On April 7, 1981, Schabach filed a charge of age discrimination with the EEOC to challenge her forced retirement. The EEOC notified the county of the charge on April 8, 1981, and undertook investigation and conciliation. All administrative prerequisites to the filing of this suit have been satisfied.
On April 20, 1981, the EEOC filed this action, seeking a temporary restraining order and a preliminary injunction to restrain the county from retiring Schabach on April 30, 1981. On April 27, 1981, after hearing oral argument from counsel for both parties, I preliminarily enjoined the county from terminating Schabach's employment due to her age pending the outcome of this litigation. An expedited briefing schedule was established, with the last submission received on June 1, 1981. The matter is now ready for a decision.
I
Title VII of the Civil Rights Act of 1964 banned discrimination by private employers on the basis of race, color, religion, sex, or national origin. 42 U.S.C. §§ 2000e-2000e-17. Senator Javits' proposal that Title VII also ban age discrimination was rejected, but § 715 of the Act directed the Secretary of Labor to study the problem and report to Congress. After the Secretary submitted his report, the Senate in 1966 passed Pub.L. 89-601, which amended the Fair Labor Standards Act (FLSA) of 1938 to ban age discrimination. The Conference Committee eliminated that provision, but § 606 of Pub.L. 89-601 directed the Secretary of Labor to submit to the President "his specific legislative recommendations for implementing the conclusions" in his report. In his January 23, 1967, "Older Americans" message, President Johnson recommended to Congress passage of amendments that became the ADEA. See Arritt v. Grisell, 567 F.2d 1267, 1270 n.11 (4th Cir. 1977).
When the ADEA was enacted on December 15, 1967, Congress declared that
"It is therefore the purpose of this Act to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; to help employers and workers find ways of meeting problems arising from the impact of age on employment." 29 U.S.C. § 621(b) (emphasis added).
Thus, the ADEA's central purpose is to prohibit age discrimination in employment. The power to do so would seem to arise from Congress' power under § 5 of the Fourteenth Amendment "to enforce, by appropriate legislation," that amendment's provision of equal protection to citizens against intrusion by the states. As passed in 1967, however, the ADEA was based on the Commerce Clause, U.S.Const. Art. I, § 8, cl. 3, because only private employers were then covered by the Act. See 29 U.S.C. § 621(a)(4). Similarly, the Civil Rights Act of 1964, as applied to private employers, was upheld by the Supreme Court as based on the Commerce Clause. Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964); Heart of Atlanta Motel v. United States, 379 U.S. 241, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964).
In Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976), the Supreme Court held that the 1972 amendments that extended Title VII's protections against discrimination to state and local government employees were validly enacted under § 5 of the Fourteenth Amendment. *197 Thus, through the Fourteenth Amendment, Congress may forbid employment discrimination by state and local governments against their employees despite the Tenth Amendment's protection of state sovereignty.
Of course, age discrimination is prohibited by the ADEA, not Title VII. However, "[t]here are important similarities between the two statutes, to be sure, both in their aims the elimination of discrimination from the workplace and in their substantive prohibitions. In fact, the prohibitions of the ADEA were derived in haec verba from Title VII." Lorillard v. Pons, 434 U.S. 575, 584, 98 S.Ct. 866, 872, 55 L.Ed.2d 40 (1978). "Resemblances between these two acts have prompted courts to interpret one act by resort to the other for clarification and assistance." Carpenter v. Pennsylvania Liquor Control Bd., 25 EPD ¶ 31,653, at p. 19,773 (E.D.Pa.1981). Accord, Ciccone v. Textron, 25 EPD ¶ 31,598 (2d Cir. 1981) (construing ADEA timeliness requirements in light of Title VII timeliness requirements).
In 1974, Congress enacted Pub.L. 93-259, entitled "Fair Labor Standards Amendments of 1974." Every section but one amended the FLSA. The remaining section extended the coverage of § 11(b) of the ADEA, 29 U.S.C. § 630(b), to state and local government employees:
"Section 28. Nondiscrimination on Account of Age in Government Employment. This section amends the Age Discrimination in Employment Act of 1967. The amendments to the Act (1) change the number of employees an employer is required to have to be subject to the Act from 25 employees to 20 employees for each working day in each of 20 or more calendar weeks in a year; and (2) expand the coverage of the Act to Federal, State, and local employees. The Act prohibits discrimination in employment on the basis of age in matters of hiring, job retention, compensation, and other terms, conditions or privileges of employment. Protection under the Act is limited to the individuals who are between the ages of 40 and 65." 1974 U.S.Code and Congressional News, Vol. 2, pp. 2811, 2860.
Despite the ADEA's adoption of the FLSA enforcement provisions, see 29 U.S.C. § 626(b), the prohibition of age discrimination results from the ADEA, not the FLSA. As noted above, that prohibition was lifted from Title VII. Thus, the 1974 amendment of § 11(b), in extending ADEA protections to state and local employees, can be seen as the exercise of Congress' Fourteenth Amendment enforcement power rather than its commerce power.[1]
*198 Calumet County, however, contends that § 11(b) cannot be considered to have been amended pursuant to § 5 of the Fourteenth Amendment unless Congress explicitly stated so. For support, it turns to Pennhurst State School & Hosp. v. Halderman, ___ U.S. ___, ___, 101 S.Ct. 1531, 1538, 67 L.Ed.2d 694 (1981), where the Supreme Court stated:
"In discerning congressional intent, we necessarily turn to the possible sources of Congress' power to legislate, namely, Congress' power to enforce the Fourteenth Amendment....
"... Because such legislation imposes congressional policy on a State involuntarily, and because it often intrudes on traditional state authority, we should not quickly attribute to Congress an unstated intent to act under its authority to enforce the Fourteenth Amendment. Our previous cases are wholly consistent with that view, since Congress in those cases expressly articulated its intent to legislate pursuant to § 5. See Katzenbach v. Morgan, supra (intent expressly stated in the Voting Rights Act of 1965); Oregon v. Mitchell, supra, 400 U.S. 112, 91 S.Ct. 260, 27 L.Ed.2d 272 (intent expressly stated in the Voting Rights Act amendments of 1970); Fitzpatrick v. Bitzer, supra, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (intent expressly stated in both the House and Senate reports of the 1972 Amendments to the Civil Rights Act of 1964); cf. South Carolina v. Katzenbach, 383 U.S. 301, 86 S.Ct. 803, 15 L.Ed.2d 769 (1966) (intent to enforce the Fifteenth Amendment expressly stated in the Voting Rights Act of 1965). Those cases, moreover, involved statutes which simply prohibited certain kinds of state conduct. The case for inferring intent is at its weakest where, as here, the rights asserted impose affirmative obligations on the States to fund certain services, since we may assume that Congress will not implicitly attempt to impose massive financial obligations on the States." (Emphasis in original).
In the next section of the opinion, however, the Court states:
"Applying those principles to this case, we find nothing in the Act or its legislative history to suggest that Congress intended to require the States to assume the high cost of providing `appropriate treatment' in the `least restrictive environment' to their mentally retarded citizens.
"There is virtually no support for the lower court's conclusion that Congress created rights and obligations pursuant to its power to enforce the Fourteenth Amendment. The Act nowhere states that that is its purpose. Quite the contrary, the Act's language and structure demonstrate that it is a mere federal-state funding statute. The explicit purposes of the Act are simply `to assist' the States through the use of federal grants to improve the care and treatment of the mentally retarded. § 6000(b). Nothing in either the `overall' or `specific' purposes of the Act reveals an intent to require the States to fund new, substantive rights. Surely Congress would not have established such elaborate funding incentives had it simply intended to impose absolute obligations on the States." Id. at ___, 101 S.Ct. at 1540.
Thus, the ADEA's legislative history must be searched for evidence of Congress' intent to ground the 1974 ADEA amendment on its Fourteenth Amendment enforcement power.
The legislative history is rife with indications that Congress did indeed intend to exercise its Fourteenth Amendment enforcement power in amending § 11(b):
*199 "NONDISCRIMINATION ON ACCOUNT OF AGE IN GOVERNMENT EMPLOYMENT
"The bill amends the Age Discrimination in Employment Act of 1967 to include within the scope of its coverage Federal, State, and local government employees (other than elected officials and certain aides not covered by civil service) and to expand coverage from employers with 25 or more employees to employers with 20 or more employees....
"The ADEA prohibits discrimination in employment on the basis of age in matters of hiring, job retention, compensation, and other terms, conditions or privileges of employment. Protection under the Act is limited to individuals who are between the ages of 40 and 65.
"As the President said in his message of March 23, 1972, supporting such an extension of coverage under the ADEA, `Discrimination based on age what some people call ageism can be as great an evil in our society as discrimination based on race or religion or any other characteristic which ignores a person's unique status as an individual and treats him or her as a member of some arbitrarily defined group. Especially in the employment field, discrimination based on age is cruel and self-defeating; it destroys the spirit of those who want to work and it denies the Nation the contribution they could make if they were working.
* * * * * *
"The committee expects that expanded coverage under the Age Discrimination in Employment law will remove discriminatory barriers against employment of older workers in government jobs at the Federal and local government levels as it has and continues to do in private employment." 1974 U.S.Code, Cong. and Admin. News, p. 2849 (emphasis added).
Congress amended the ADEA again in 1978 to raise the protected retirement age from 65 to 70 and to prohibit forced retirement based on a retirement plan. The 1978 amendments are particularly relevant because the county seeks to retire Ruth Schabach at age 65 based on a retirement plan. Because the county's intended actions here were not illegal until the 1978 amendments, the legislative history of those amendments is instructive.
The "Forward" to the August, 1977 Report by the Senate Committee on Aging, "Mandatory Retirement: The Social and Human Cost of Enforced Idleness," concluded that the "practice of age-based mandatory retirement is arbitrary and unwarranted. It is as odious as discrimination based on race and sex." The Senate Report went to bolster the ADEA's Fourteenth Amendment underpinnings:
"CONSTITUTIONALITY
"The Age Discrimination in Employment Act of 1967 has close ties to the Civil Rights Act of 1964. Section 715 of the 1964 act directed the Secretary of Labor to make a study of the problem of age discrimination in employment. The study resulted in a report and recommendation for legislation to eliminate arbitrary age discrimination in employment and the passage of the 1967 act....
"From the evidence presented, the committee concludes that `age' should be as protected a classification as race and sex. The argument that everyone ages and no particular group is singled out for discrimination ignores the fact that discrimination solely on the basis of age is wrong. If mandatory retirement because of age the final step in the practice of age discrimination is not to be declared unconstitutional by the Courts, then Congress should act to make such a practice illegal. Any compelling argument for mandatory retirement must be balanced against the cost such retirement exacts in the lives of elderly persons, and the arguments in favor of mandatory retirement do not justify the existence of this discriminatory practice." Id. at 37-38 (emphasis added).
The House of Representatives Committee on Human Resources stated:
"The committee believes that as a matter of basic civil rights people should be treated in employment on the basis of *200 their individual ability to perform a job rather than on the basis of stereotypes about race, sex, or age. A person with the ability and desire to work should not be denied that opportunity solely because of age." Report 95-493 of the House Committee on Human Resources, October 12, 1977 (BNA reprint, p. 151) (emphasis added).
In the same report, Senators Cranston and Riegle of the Senate Human Resources Committee declared:
"The Age Discrimination in Employment Act is a cornerstone in our national commitment to secure the basic rights of all citizens, including older Americans. Age discrimination, like other forms of arbitrary discrimination, is contrary to our fundamental principles of equal treatment and equal rights for all Americans...." Id. at 184.
The July 25, 1977 Report (95-527) of the House Committee on Education and Labor reflects similar Fourteenth Amendment concerns:
"There have been several conflicting court decisions recently regarding the constitutionality of Federal mandatory retirement requirements, and the interpretation of the exception in the Age Discrimination in Employment Act relating to employee benefit plans. The differing opinions relating to the laws and Congress' intent with regard to these laws makes it even more important for Congress to act on this issue. It should be emphasized that the current Age Discrimination in Employment Act and these amendments apply to State and local government employees. Although in National League of Cities, et al. v. Usery [426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976)], the U. S. Supreme Court determined that Federal statutory minimum wage and overtime requirements cannot be applied to State and local governments because it would infringe on the rights of States and localities to regulate the terms and conditions of employment of their own employees, in several lower court cases decided since that time, the courts have all held that the ruling in the League of Cities case does not apply to federal laws prohibiting employment discrimination." BNA reprint, pp. 105-106.
By this point, it should be unnecessary to cite the many other references in the legislative history to show that Congress, when it passed the 1978 ADEA amendments, considered age discrimination a denial of equal protection. Thus, although the ADEA itself does not explicitly state that the 1974 and 1978 amendments extended ADEA protections to state and local government employees pursuant to Congress' Fourteenth Amendment enforcement power, the legislative history is more than sufficient to reach that conclusion. Cf. Pennhurst, supra ___ U.S. at ___-___, 101 S.Ct. at 1538.[2]
Furthermore, as the Report of the House Committee on Education and Labor pointed, several other courts have decided that § 11(b) was validly extended to state and local governments pursuant to § 5 of the Fourteenth Amendment despite National League of Cities. See Arritt, supra; EEOC v. Elrod, No. 79-C-4120 (N.D.Ill. 9/17/80), appeal to Seventh Circuit pending; Carpenter, supra; Marshall v. Delaware River & Bay Auth., 471 F.Supp. 886 (D.Del.1979); EEOC v. Florissant Valley Fire Protection Dist., 21 EPD ¶ 30,520 (E.D.Mo.1979); Remmick v. Barnes County, 435 F.Supp. 914 (D.N.D.1977); Aaron v. Davis, 424 F.Supp. 1238 (E.D.Ark.1976); Usery v. Board of Educ. of Salt Lake City, 421 F.Supp. 718 (D.Utah 1976).
National League of Cities held unconstitutional the extension of the FLSA minimum wage and overtime provisions to state and local employees, an extension made in the same 1974 law that extended ADEA protections to those employees. *201 Pub.L. 93-259. The Supreme Court ruled that requiring state and local governments to meet federal wage and hour guidelines was an impermissible interference with "the States' freedom to structure integral operations in areas of traditional governmental functions...." Id. at 852, 96 S.Ct. at 2474. In other words, Congress may not use its power to regulate commerce, to interfere with powers reserved to the states under the Tenth Amendment. Nevertheless, as the Supreme Court held in Fitzpatrick, supra at 456, 96 S.Ct. at 2671, "... Congress may, in determining what is `appropriate legislation' for the purpose of enforcing the provisions of the Fourteenth Amendment, provide for private suits against States or state officials which are constitutionally impermissible in other contexts."[3] The reason for this was made clear in Board of Education of Salt Lake City, supra at 719:
"The Court in National League of Cities ... was not confronted with an allegation of discrimination against specific individuals in the application of minimum wages and maximum hours, but the Court analyzed and rejected the organic restructuring by Congress of what was properly and traditionally a state function in organizing employer-employee relations. Acknowledging that public education may be an integral state government function, such a state function must operate within constitutional bounds. Individuals within those state systems continue to enjoy constitutionally guaranteed rights which are statutorily protected in such federal legislation as the ADEA. Otherwise, National League of Cities, so interpreted, would undermine constitutionally and statutorily recognized and protected individual rights in employment merely because the federal legislation affects, in some manner, an integral state governmental function. Such an absolute interpretation would itself derogate from the federal system by unduly restricting congressional power to statutorily protect individual rights in employment in which the federal government has a significant interest."
Thus, National League of Cities is inapplicable to the present situation. Having legislated pursuant to its Fourteenth Amendment enforcement power, Congress acted constitutionally in prohibiting age discrimination by state and local governments.[4]
II
Even if Congress had acted only pursuant to its power to legislate under the *202 Commerce Clause, the ADEA may be constitutionally applied to state and local governments.
As noted above, the Supreme Court in National League of Cities, supra, struck down the extension of federal wage and hour guidelines to state and local governments, based on the Tenth Amendment, "which expressly declares the constitutional policy that Congress may not exercise power in a fashion that impairs the States' integrity or their ability to function effectively in a federal system." Id. at 843, 96 S.Ct. at 2475, quoting Fry v. United States, 421 U.S. 542, 547 n.7, 95 S.Ct. 1792, 1795 n.7, 44 L.Ed.2d 363 (1975). Thus, when Congress has acted pursuant to its commerce power, the question is whether Calumet County's establishment of a particular retirement age is a function "essential to [its] separate and independent existence." National League of Cities, supra at 845, 96 S.Ct. at 2471, quoting Coyle v. Oklahoma, 221 U.S. 559, 580, 31 S.Ct. 688, 695, 55 L.Ed. 853 (1911), and Lane County v. Oregon, 74 U.S. 71, 7 Wall. 71, 76, 19 L.Ed. 101 (1869).
The county does not dispute that Ruth Schabach competently performs her work. Its attempt to force her retirement is based on the arbitrary decision that 65 is the proper age at which to discharge all employees, regardless of individual vigor or competence. Yet, the ADEA's prohibition of arbitrary age discrimination does not affect the county's ability to force the early retirement of employees, like police officers, for whom age is a "bona fide occupational qualification." See 29 U.S.C. § 623(f)(1). The county is free to classify all employees according to reasonable factors other than age, 29 U.S.C. § 623(f)(2), and may "discharge or otherwise discipline an individual for good cause." 29 U.S.C. § 623(f)(3).
The State of Wisconsin itself prohibits age discrimination by the state and its counties against employees 40 to 65 years old. Wis.Stats. § 111.32. Furthermore, while the "normal retirement date" for the position of deputy clerk of court is 65, Wis. Stats. § 41.11(1) forbids forced retirement where "prohibited by federal law." Thus, the Wisconsin Statutes themselves indicate that age discrimination violates state policy and serves no sovereign state function.
In Marshall v. City of Sheboygan, 577 F.2d 1, 6 (7th Cir. 1978), the Seventh Circuit upheld the Equal Pay Act under the Commerce Clause after determining that that Act "requires only that the substantive terms of employment not be determined arbitrarily or in a discriminatory fashion." The Equal Pay Act, like the ADEA, was applied to the States as part of the Fair Labor Standard Amendments of 1974. The Seventh Circuit, after reviewing National League of Cities, concluded that employment discrimination is not "essential to [the States'] separate and independent existence." Id. at 5-6. Applying the Court's words to the present case, "States are free to set all substantive terms of employment, such as wages, type of compensation, or period of employment. The [ADEA] requires only that the substantive terms of employment not be determined arbitrarily or in a discriminatory fashion." Id. at 6.
Accordingly, Congress' extension of the ADEA to state and local governments is a valid exercise of its commerce power, and the exercise of that power is not prohibited by the Tenth Amendment. Accord, Board of Education of Salt Lake City, supra at 720; Delaware River & Bay Auth., supra at 892; Elrod, supra at 2.
III
Regardless of the outcome of the constitutional determination, Calumet County argues that the collective bargaining agreement contains an implied consent that employees will retire at the "normal" retirement age.
The deputy clerk of court is part of the collective bargaining unit. The collective *203 bargaining agreement requires the county to pay both employer and employee contributions to the Wisconsin Retirement Fund. Art. XV, p. 9. The agreement promises to keep in effect all practices to which it does not specifically refer. Art. VIII, p. 6. Wisconsin law permits the county to retire employees at 65, and the County Personnel Policy so requires. Thus, argues the county, employees who work under the collective bargaining agreement have given their implied consent to retire at 65 in exchange for the county's payments into the Retirement Fund.
The ADEA requires a different conclusion. Section 4(f)(2) provides that "no ... employee benefit plan shall require or permit the involuntary retirement of any individual specified by Section 631(a) of this title because of the age of such individual." 29 U.S.C. § 623(f)(2). Section 4(f)(2) eliminates the County's right to assert implied consent as a defense. Furthermore, employment discrimination protections create individual rights that cannot be waived through collective bargaining. Alexander v. Gardner-Denver, 415 U.S. 36, 51, 94 S.Ct. 1011, 1021, 39 L.Ed.2d 147 (1974). While Gardner-Denver was based on Title VII, the Supreme Court recently extended that holding to the FLSA. Barrentine v. Arkansas-Best Freight System, ___ U.S. ___, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). Based on the earlier sections of this opinion, the same principle applies to the ADEA. Ruth Schabach made no implied consent to an early, forced retirement.
CONCLUSION
Therefore, the Age Discrimination in Employment Act may constitutionally be applied to Calumet County. The County shall be permanently enjoined from requiring the retirement of Ruth Schabach on the basis of age before she reaches 70 years of age. SO ORDERED.
ON MOTION TO AMEND
The plaintiff Equal Employment Opportunity Commission (EEOC) has moved, pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure, to amend my June 12, 1981, decision and order.
The EEOC seeks to delete the words "like police officers" from the sentence on page 13, lines 15-18, which reads: "Yet, the ADEA's prohibition of arbitrary age discrimination does not affect the County's ability to force the early retirement of employees, like police officers, for whom age is a bona fide occupational qualification." The bona fide occupational qualification (b.f.o.q.) exemption of the ADEA, 29 U.S.C. § 623(f)(1), was cited following that sentence.
The EEOC makes its request because it presently has four separate cases pending in Wisconsin that focus on whether age is a b.f.o.q. for police officers. On page two of my decision, I specifically noted that the b.f.o.q. exemption was not an issue in the case. Therefore, the statement that causes the concern is dicta. Accordingly, I see no reason to amend the decision. The motions are denied.
SO ORDERED.
NOTES
[1] The County argues, citing Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976), that "the federal government and the state government may classify citizens according to their `age' without violating any constitutional rights." Thus, it contends, Congress could not have passed the ADEA pursuant to its Fourteenth Amendment enforcement power because it "knew" that such an action would put it "clearly in conflict with established constitutional law." Defendant's brief at 3, 11.
In Murgia, the Supreme Court held that "the Massachusetts statute clearly meets the requirements of the Equal Protection Clause, for the State's classification rationally furthers the purpose identified by the State: Through mandatory retirement at age 50, the legislature seeks to protect the public by assuring physical preparedness of its uniformed police." Id. at 314, 96 S.Ct. at 2567. Thus, the Court decided that old age is not a "suspect class" requiring "strict scrutiny of a legislative classification." Cf. McMahon v. Barclay, 510 F.Supp. 1114 (S.D.N.Y.1981) (State law forbidding hiring of police officers over age of 29 violates equal protection).
The fact that the Court analyzed the Massachusetts age classification under the "rational basis" test was not a ruling that Congress or a state legislature could not act to prohibit age discrimination. In fact, the Court stated that the rational basis analysis
"... employs a relatively relaxed standard reflecting the Court's awareness that the drawing of lines that create distinctions is peculiarly a legislative task and an unavoidable one. Perfection in making the necessary classifications is neither possible nor necessary. Such action by a legislature is presumed to be valid." Id. at 314, 96 S.Ct. at 2567 (emphasis added).
Furthermore, Congress often passes legislation under its Fourteenth Amendment power to prohibit discrimination that the Constitution would otherwise permit. For example, in Geduldig v. Aiello, 417 U.S. 484, 488, 94 S.Ct. 2485, 41 L.Ed.2d 256 (1974), the Supreme Court held that a State disability insurance plan that excluded pregnancy benefits was a rational classification that did not violate equal protection. In 1978, Congress amended Title VII to add § 701(k), which makes unlawful disability plans that exclude pregnancy benefits. 42 U.S.C. § 2000e(k). Similarly, in Goesart v. Cleary, 335 U.S. 464, 69 S.Ct. 198, 93 L.Ed. 163 (1948), the Supreme Court upheld under the equal protection clause a State "protective" statute that discriminated on the basis of sex, but the Seventh Circuit in Williams v. General Foods, 492 F.2d 399, 404 (7th Cir. 1974), ruled that Title VII had prohibited further reliance on protective statutes.
[2] In Section 2 of Reorganization Plan No. 1 of 1978, 43 F.R. 19807, 92 Stat. 3781, President Carter, with Congressional approval, transferred ADEA enforcement functions from the Department of Labor to the EEOC. This transfer seems a further governmental acknowledgement that age discrimination closely resembles discrimination on the basis of race, color, religion, sex, or national origin, and thus, by implication, was prohibited pursuant to Congress' Fourteenth Amendment enforcement power.
[3] In National League of Cities, supra at 852 n. 17, 96 S.Ct. at 2474 n. 17, the Supreme Court stated: "We express no view as to whether different results might obtain if Congress seeks to affect integral operations of state governments by exercising authority granted it under other sections of the Constitution such as the Spending Power, Art. I, § 8, cl. 1, or § 5 of the Fourteenth Amendment." Fitzpatrick, decided shortly after National League of Cities, may be seen as the Supreme Court's "view" of the question left undecided in the earlier case. See, e. g., Board of Education of Salt Lake City, supra at 721.
[4] As noted, over time Congress has changed the number of employees necessary to bring an employee under the ADEA and the categories of employees covered by the Act, as well as raising the retirement age from 65 to 70. Because the ADEA does not "secure constitutional rights of all citizens of the country," the County argues, it could not have been enacted pursuant to § 5 of the Fourteenth Amendment. However, as the Supreme Court stated in Katzenbach v. Morgan, 384 U.S. 641, 657, 86 S.Ct. 1717, 1727, 16 L.Ed.2d 828 (1966),
"[I]n deciding the constitutional propriety of the limitations in such a reform measure we are guided by the familiar principles that a `statute is not invalid under the Constitution because it might have gone farther than it did,' * * *, that a legislature need not `strike at all evils at the same time,' * * *, and that `reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind.' * * *"
Congress enacted the ADEA after long and careful study. As the House Committee on Human Resources stated in its 1977 report,
"When the Age Discrimination in Employment Act was enacted in 1967, comparatively little was known about the desires or abilities of older workers.... In the ensuing decade, however, much of this uncertainty has been resolved. Scientific research now indicates that chronological age alone is a poor indicator of ability to perform a job." Report 95-493 of the House Committee on Human Resources, October 12, 1977 (BNA reprint, p. 152). Congress waited 100 years after adoption of the Fourteenth Amendment to enact Title VII. It did not apply Title VII to state and local governments until 1972. Congress created exceptions to Title VII, as it has done under the ADEA. "Deliberate speed" does not detract from the Congress' power to enact age discrimination laws under the Fourteenth Amendment.
|
42 F.3d 1257
Leonard HALVERSON; Kenneth Johnson; Rodney F. Archer;Keith E. Bridge; Doug & Barbara McNair, Husband and Wife;Mathew Blaine Mitchell, Individually and on Behalf of AllOthers Similarly Situated; Dale & Patricia Howell, Husbandand Wife; J. Patrick & Selma Albee, Husband and Wife;Glenn M. Anderson, Plaintiffs-Appellants,v.SKAGIT COUNTY, a Municipal Corporation; Diking Dist. No.17, a Municipal Corporation; Diking Dist. No. 12;Board of Commissioners of DikingDistrict No. 17, Defendants-Appellees.
No. 93-35783.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Oct. 4, 1994.Decided Dec. 12, 1994.As Amended on Denial of Rehearing and Rejection ofSuggestion for Rehearing En Banc Feb. 9, 1995.*
Steve W. Berman, Hagens & Berman, Seattle, WA, for plaintiffs-appellants.
William C. Smart, Keller Rohrback, Seattle, WA, Karen E. Vedder, Lane, Powell, Spears, Lubersky, Mount Vernon, WA, Warren John Gilbert, Mount Vernon, WA, for defendants-appellees.
Appeal from the United States District Court for the Western District of Washington.
Before: LAY,** TROTT and T.G. NELSON, Circuit Judges.
TROTT, Circuit Judge:
OVERVIEW
1
Ninety residents of the Nookachamps area of Skagit County, Washington, whose homes and other property were damaged by flood waters of the Skagit River, filed suit under 42 U.S.C. Sec. 1983 against municipal corporations Skagit County and Diking Districts Nos. 12 and 17 (collectively the "County"), claiming the County deprived them of substantive and procedural due process of law. The plaintiffs allege the County pursued a policy of improving, maintaining and operating a system of levees and dikes which diverted additional flood waters into the Nookachamps area, damaging the plaintiffs' property. The plaintiffs appeal the district court's order granting the County's motion for summary judgment. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we affirm.
FACTS AND PRIOR PROCEEDINGS
2
Dikes and levees have long been part of an effort to control Skagit River flooding. Since 1955, a system of dikes and levees has been in place which protects the cities of Mount Vernon and Burlington, as well as agricultural areas further downstream. The County has participated in the maintenance, repair, and operation of this diking system.
3
The Nookachamps area is located upstream from Mount Vernon and across the river from Burlington. Although historically the Nookachamps area has been subject to flooding, Diking District No. 20, which partially encompasses the area, has chosen not to construct dikes along that portion of the Skagit River.
4
State law provides for the creation of diking districts by petition of the local residents. Once established, the diking districts are vested with the status of independent governmental bodies and have statutory authority to construct and maintain dikes. See Wash.Rev.Code tit. 85, 86. Funding for the repair and maintenance of the defendants' diking system is provided, in part, by federal and state agencies; the agencies require any improvement or maintenance to be in accordance with approved specifications. See, e.g., 33 C.F.R. Sec. 208.10(a)(2); Wash.Rev.Code Sec. 86.16.010.
5
The Skagit County Board of Commissioners ("County Commissioners") acts as liaison between the federal and state agencies and the diking districts. The County Commissioners also grant flood control monies to the diking districts and provide technical assistance. In 1980, the County formed a Flood Control Advisory Board ("Advisory Board") made up of area residents; several plaintiffs are long time members of the board. The Advisory Board reviews and makes recommendations concerning flood control projects. After receiving a recommendation from the Advisory Board and holding public hearings, the County Commissioners award grants and direct agency funding to flood control projects.
6
In 1979 the U.S. Army Corps of Engineers proposed improving the diking system to provide 100-year flood level protection. The environmental impact statement prepared in conjunction with the project indicated the improvement would divert additional flood waters into the Nookachamps area. Residents of the Nookachamps area organized opposition to the project, and it was eventually defeated by Skagit County voters.
7
After the voters rejected the 1979 project, the County Commissioners adopted a long term goal of maintaining and improving the diking system to provide for 25-year flood frequency protection. In 1989, the County approved a Comprehensive Flood Control Management Plan which adopted the 25-year level of protection as the standard for the maintenance and repair of the dikes. The Flood Control Plan was approved by the Washington Department of Ecology following public notice and hearings.
8
In November 1990, the Skagit River flooded twice, causing extensive damage to the plaintiffs' homes and other property. The plaintiffs filed suit in federal district court alleging the County's maintenance, improvement, and operation of the diking system diverted additional flood waters onto their property. The plaintiffs claimed that the County's policy and conduct vis a vis the diking system violated their procedural and substantive due process rights under the Fourteenth Amendment. The plaintiffs also asserted pendent state claims of inverse condemnation and strict liability, but they did not assert a federal takings claim. The district court granted the County's motion for summary judgment on the federal claims and declined to exercise jurisdiction over the pendent state claims.1 The plaintiffs timely appealed.
STANDARD OF REVIEW
9
A grant of summary judgment is reviewed de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). Our review is governed by the same standard used by the trial court under Federal Rule of Civil Procedure 56(c). Id.DISCUSSION
10
To succeed on a claim asserted against a municipality under 42 U.S.C. Sec. 1983, the plaintiff must show that the alleged injury amounts to a constitutional deprivation, and that actions sanctioned by the municipality caused the constitutional violation. Jackson v. Gates, 975 F.2d 648, 654 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2996, 125 L.Ed.2d 690 (1993). We first consider whether the evidence demonstrates that the County caused the plaintiffs' alleged injuries.
A. The County's Conduct
11
In challenging the County's decision to operate the diking system to provide for 25-year flood frequency protection, the plaintiffs allege the County pursued a policy of intentionally using plaintiffs' properties as an artificial flood water storage basin. The plaintiffs fail, however, to offer any admissible evidence supporting this allegation. The plaintiffs point to public documents disclosing the possible effects of proposed flood control projects, but, at most, these disclosures put the County, as well as the plaintiffs, on notice that during certain significant flood events the Nookachamps area might serve as a storage area for additional flood waters.
12
On the other hand, the affidavit of the plaintiffs' expert witness raises a genuine issue as to whether the County's operation of the diking system does in fact cause additional flooding of the Nookachamps area. Moreover, the plaintiffs' expert stated that under certain circumstances the additional flood waters could cause damage to property which would otherwise escape flooding.
13
Taken together, the plaintiffs offer sufficient evidence for a reasonable juror to find that the County's operation of the diking system could divert additional flood waters into the Nookachamps area and that the County was aware of this possibility. This showing satisfies the plaintiffs' burden at summary judgment on the question of whether the County's conduct caused the plaintiffs' alleged injuries. See id. We next consider whether the injuries the plaintiffs' claim amount to a deprivation of rights secured by the Constitution.
B. The Procedural Due Process Claim
14
The due process clause of the Fourteenth Amendment protects individuals against governmental deprivations of life, liberty or property without due process of law. U.S. Const. amend. XIV, Sec. 1. The plaintiffs' claim in this regard does not deal with the substance of the challenged decisions, but with the process by which they were reached. The plaintiffs contend specifically that the County's failure "to notify plaintiffs that the levees would divert flood waters onto their properties during significant flood events" violated their due process rights.2
15
The due process clause does not prohibit every deprivation by the state of an individual's property. Only those deprivations carried out without due process are actionable under 42 U.S.C. Sec. 1983. "Ordinarily, due process of law requires [notice and] an opportunity for some kind of hearing prior to the deprivation of a significant property interest." Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1405 (9th Cir.1989) (internal quotations omitted), cert. denied, 494 U.S. 1016, 110 S.Ct. 1317, 108 L.Ed.2d 493 (1990). However, "[w]hen the action complained of is legislative in nature, due process is satisfied when the legislative body performs its responsibilities in the normal manner prescribed by law." Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951, 957 (9th Cir.1991), vacated, --- U.S. ----, 113 S.Ct. 31, 121 L.Ed.2d 4 (1992), on remand, 987 F.2d 662 (9th Cir.1993).
16
In seeking to define when a particular governmental action is "legislative in nature" we have eschewed the "formalistic distinctions between 'legislative' and 'adjudicatory' or 'administrative' government actions" and instead focused on the "character of the action, rather than its label...." Harris v. County of Riverside, 904 F.2d 497, 501 (9th Cir.1990). In doing so, our cases have determined also that governmental decisions which affect large areas and are not directed at one or a few individuals do not give rise to the constitutional procedural due process requirements of individual notice and hearing; general notice as provided by law is sufficient. See, e.g., Christensen v. Yolo County Bd. of Supervisors, 995 F.2d 161, 166 (9th Cir.1993) (no individual notice and hearing required where county zoning decision affects a large number of people and individuals are not targeted); Harris, 904 F.2d at 502 (no individual notice and hearing required where county decisions affect vast areas and large numbers of people); Cf. Bateson v. Geisse, 857 F.2d 1300, 1304 (9th Cir.1988) (absolute immunity attaches only to decisions that are legislative, those that apply to the general community).
17
In the present case, the district court correctly determined that the evidence conclusively demonstrates the legislative nature of the County's conduct about which the plaintiffs complain:
18
The design, construction, and improvement of the diking system entailed complex decisions and activities over a period of several decades. Many parts of the county, and the properties of thousands of people, were potentially affected at all times. The governmental undertakings were of general applicability and were carried out under state law grants of legislative authority.
19
Similarly, the evidence does not show the County directed the operation of the diking system at the specific properties of the plaintiffs. At most, the County knew that under certain circumstances the diking system could divert additional flood waters into the Nookachamps area. This information was disclosed, displayed, and discussed as mandated by law in public documents and during public proceedings. The plaintiffs had access to this information and "[t]heir rights [were] protected in the only way that they can be in a complex society, by their power, immediate or remote, over those who make the rule." Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445, 36 S.Ct. 141, 142, 60 L.Ed. 372 (1915); see also Rogin v. Bensalem Township, 616 F.2d 680, 693-94 (3d Cir.1980), cert. denied, 450 U.S. 1029, 101 S.Ct. 1737, 68 L.Ed.2d 223 (1981).
20
On consideration of the relevant record, we conclude that the plaintiffs "received all the process due ... when the [County's] elected officials discharged their legislative responsibilities in the manner prescribed by law." Sierra Lake, 938 F.2d at 957. On this issue we cannot identify any genuine issues of material fact. Thus, the district court properly granted summary judgment on plaintiff's procedural due process claim.
C. The Substantive Due Process Claim
21
"[T]he due process clause includes a substantive component which guards against arbitrary and capricious government action, even when the decision to take that action is made through procedures that are in themselves constitutionally adequate." Sinaloa Lake, 882 F.2d at 1407. Plaintiffs claim their substantive due process rights were violated by County conduct that was "clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare." Id. (internal quotations omitted). Specifically, the plaintiffs assert that the County's failure to compensate them for the use of their property prior to operating and maintaining a diking system which could divert water onto the plaintiffs' land was unreasonable and irrational.
22
Although at first blush it might appear the plaintiffs are attempting to dress-up a takings claim in substantive due process clothing, we have held that "[i]t is of no moment that this due process claim is based on factors that also form the basis of an alleged taking. Two or more legal theories may cover the same conduct...." Id. at 1404. And because substantive due process is violated at the moment the harm occurs, the plaintiffs' claim is ripe for adjudication despite their failure to first seek "just compensation" in state court. Bateson, 857 F.2d at 1303.
23
However, the protection from governmental action provided by substantive due process has most often been reserved for the vindication of fundamental rights. See Albright v. Oliver, --- U.S. ----, ----, 114 S.Ct. 807, 812, 127 L.Ed.2d 114 (1994) ("The protections of substantive due process have for the most part been accorded to matters relating to marriage, family, procreation, and the right to bodily integrity."); Graham v. Connor, 490 U.S. 386, 395, 109 S.Ct. 1865, 1871, 104 L.Ed.2d 443 (1989) (holding that it was improper to analyze an excessive force claim under substantive due process where a specific constitutional provision was applicable). "[T]he [Supreme] Court has always been reluctant to expand the concept of substantive due process because guideposts for responsible decisionmaking in this unchartered area are scarce and open-ended." Collins v. City of Harker Heights, 503 U.S. 115, ----, 112 S.Ct. 1061, 1068, 117 L.Ed.2d 261 (1992). Accordingly, where, as here, the plaintiffs rely on substantive due process to challenge governmental action that does not impinge on fundamental rights, "we do not require that the government's action actually advance its stated purposes, but merely look to see whether the government could have had a legitimate reason for acting as it did." Wedges/Ledges of California, Inc. v. City of Phoenix, 24 F.3d 56, 66 (9th Cir.1994). "Furthermore, this is not a takings case, in which we must balance the public interest supporting the government action against the severity of the private deprivation; in a substantive due process case such as this, our concern is with the rationality of a government action regardless of its impact." Kawaoka v. City of Arroyo Grande, 17 F.3d 1227, 1238 (9th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 193, 130 L.Ed.2d 125 (1994).
24
Thus, in choosing to base their claim for compensation on an alleged violation of substantive due process, the plaintiffs shoulder a heavy burden. In order to survive the County's summary judgment motion, the plaintiffs must demonstrate the irrational nature of the County's actions by showing that the County "could have had no legitimate reason for its decision." Kawaoka, 17 F.3d at 1234 (internal quotations omitted). If it is "at least fairly debatable" that the County's conduct is rationally related to a legitimate governmental interest, there has been no violation of substantive due process. Id. (internal quotations omitted); see also Sinaloa Lake, 882 F.2d at 1407 ("To establish a violation of substantive due process, the plaintiffs must prove that the government's action was 'clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.' " (quoting Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395, 47 S.Ct. 114, 121, 71 L.Ed. 303 (1926))).
25
There is no question the County's participation in the maintenance and improvement of the diking system to provide 25-year flood level protection is a rational exercise of governmental authority. The diking system protects major population centers as well as substantial acreages of productive agricultural lands, and the County's maintenance of that system is directly related to the public health, safety and general welfare.
26
The plaintiffs assert, however, that it is the County's failure to compensate them prior to the flooding of their property that violates their constitutional rights.3 But even if we assume there has been a taking,4 the plaintiffs fail to explain why the substantive component of the due process clause requires the County to compensate the plaintiffs before appropriating their property. As we have observed in a different context, "[t]he Constitution ... does not require a state to provide ... pre-taking compensation." Cassettari v. County of Nevada, 824 F.2d 735, 738 (9th Cir.1987). The protection afforded the plaintiffs by substantive due process only guards against governmental action where "the interference with property rights was irrational or arbitrary." Bateson, 857 F.2d at 1303.
27
Because Washington state law provides a procedure for pursuing compensation through an inverse condemnation action,5 there is nothing inherently irrational or arbitrary about the County's failure to provide plaintiffs with pre-taking compensation. Cf. Kauth v. Hartford Ins. Co., 852 F.2d 951, 958 (7th Cir.1988) (plaintiff failed to state a substantive due process claim where the only complaint was the deprivation of a state created property interest and a state remedy was available). Any damage to the plaintiffs that might have resulted from the County's maintenance of the diking system was speculative, remote, and dependent on a combination of specific factors during an actual flood event. The County could rationally decide the likelihood that their actions would "take" plaintiffs' property was so attenuated that an inverse condemnation action provided the preferable means of remedying any harm.6 And in fact, the plaintiffs are independently pursuing such an action in state court.
28
The plaintiffs contend that our holding in Sinaloa Lake makes summary judgment on their substantive due process claim inappropriate. Their reliance on that case, however, is misplaced. Our task in Sinaloa Lake was to determine whether the plaintiffs' allegations were sufficient to withstand a motion for judgment on the pleadings. We concluded that the plaintiffs adequately alleged a substantive due process claim precisely because the "claim goes beyond the taking of plaintiffs' property; plaintiffs also claim that government officials abused the legitimate police powers entrusted to them."7 882 F.2d at 1410. In the instant case, although the plaintiffs complain about the lack of pre-taking compensation, they fail to offer any evidence showing the County abused its governmental powers or was engaged in any deception or ruse.
29
After considering the speculative nature of the plaintiffs' potential damage, we are convinced no rational trier of fact could find the County's decision to maintain and operate the diking system at a 25-year flood level protection without first compensating the plaintiffs was irrational or unreasonable. See Kawaoka, 17 F.3d at 1238 (collecting substantive due process cases to demonstrate the showing plaintiffs must make to survive summary judgment). The district court properly granted summary judgment on the substantive due process claim.
CONCLUSION
30
The district court's order granting summary judgment for all defendants is AFFIRMED.
*
Judge Trott and Judge T.G. Nelson voted to reject the suggestion for rehearing en banc and Judge Lay so recommended
**
The Honorable Donald P. Lay, Senior Circuit Judge for the Eighth Circuit, sitting by designation
1
The plaintiffs subsequently filed these claims in state court
2
The parties strenuously argue the question of whether the plaintiffs' state created property rights include the right to be free from flood waters. In light of our decision today, we need not reach this issue
3
The County possesses the statutory authority to exercise the power of eminent domain. See Wash.Rev.Code Sec. 86.12.020
4
It is far from certain the County is required to compensate the plaintiffs. See Paulson v. County of Pierce, 99 Wash.2d 645, 664 P.2d 1202, 1207 (en banc) (holding that Washington state law "implicitly creates a class of landowners whose property might be damaged as a result of a county's flood control activities [but] precludes recovery by all those within the designated class."), appeal dismissed, 464 U.S. 957, 104 S.Ct. 386, 78 L.Ed.2d 331 (1983)
5
Article 1, Sec. 16 of the Washington Constitution prohibits the taking or damaging of private property without just compensation. The Washington Supreme Court has interpreted this provision as allowing a claimant to bring an inverse condemnation action to "recover the value of property which has been appropriated in fact, but with no formal exercise of the condemnation power." See Pierce v. Northeast Lake Washington Sewer and Water Dist., 123 Wash.2d 550, 870 P.2d 305, 309 (1994) (en banc) (internal quotations omitted)
6
We do not imply that the presence of a state procedure providing for inverse condemnation means a taking of private property will always square with the requirements of the Constitution. In some cases it will not. See, e.g., Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 195 n. 14, 105 S.Ct. 3108, 3121, n. 14, 87 L.Ed.2d 126 (1985) (discussing procedural due process cases)
7
The plaintiffs' allegations in Sinaloa Lake "paint[ed] a picture of government officials bent on destroying the [plaintiffs' property] for no legitimate reason, and determined to conceal that decision until the last possible moment to prevent plaintiffs from taking advantage of available legal processes." 882 F.2d at 1410
|
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 16-1461V
Filed: May 30, 2019
UNPUBLISHED
GAIL DIRKSEN,
Petitioner,
v. Special Processing Unit (SPU);
Attorneys’ Fees and Costs
SECRETARY OF HEALTH AND
HUMAN SERVICES,
Respondent.
Shealene Priscilla Mancuso, Muller Brazil, LLP, Dresher, PA, for petitioner.
Lara Ann Englund, U.S. Department of Justice, Washington, DC, for respondent.
DECISION ON ATTORNEYS’ FEES AND COSTS 1
Dorsey, Chief Special Master:
On November 4, 2016, petitioner filed a petition for compensation under the
National Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10, et seq., 2 (the
“Vaccine Act”). Petitioner alleges that she suffered a left shoulder injury caused by her
November 7, 2013 influenza (“flu”) vaccination. Petition at 1-2. On October 18, 2018,
the undersigned issued a decision awarding compensation to petitioner in the amount of
$86,784.56. ECF No. 78.
On May 8, 2019, petitioner filed a motion for attorneys’ fees and costs. ECF No.
86. Petitioner requests attorneys’ fees in the amount of $44,659.20 and attorneys’ costs
1 The undersigned intends to post this decision on the United States Court of Federal Claims' website.
This means the decision will be available to anyone with access to the Internet. In accordance with
Vaccine Rule 18(b), petitioner has 14 days to identify and move to redact medical or other information,
the disclosure of which would constitute an unwarranted invasion of privacy. If, upon review, the
undersigned agrees that the identified material fits within this definition, the undersigned will redact such
material from public access. Because this unpublished decision contains a reasoned explanation for the
action in this case, the undersigned is required to post it on the United States Court of Federal Claims'
website in accordance with the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal
Management and Promotion of Electronic Government Services).
2National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755. Hereinafter, for
ease of citation, all “§” references to the Vaccine Act will be to the pertinent subparagraph of 42 U.S.C. §
300aa (2012).
in the amount of $1,565.91. Id. at 2. In accordance with General Order #9, petitioner's
counsel represents that petitioner incurred no out-of-pocket expenses. Id. at 2. Thus,
the total amount requested is $46,225.11.
On May 9, 2019, respondent filed a response to petitioner’s motion. ECF No. 87.
Respondent argues that “[n]either the Vaccine Act nor Vaccine Rule 13 contemplates
any role for respondent in the resolution of a request by a petitioner for an award of
attorneys’ fees and costs.” Id. at 1. Respondent adds, however, that he “is satisfied the
statutory requirements for an award of attorneys’ fees and costs are met in this case.”
Id. at 2. Respondent “respectfully recommends that the Chief Special Master exercise
her discretion and determine a reasonable award for attorneys’ fees and costs.” Id. at
3.
Petitioner filed no reply.
The undersigned has reviewed the billing records submitted with petitioner’s
request. In the undersigned’s experience, the request appears reasonable, and the
undersigned finds no cause to reduce the total requested hours. However, due to
attorney C. Clark Hodgson, III‘s inexperience in the Vaccine Program, the undersigned
does find cause to reduce his hourly rate from the requested $225.00 an hour to
$200.00 an hour. Therefore, attorneys’ fees requested are reduced by $247.50. The
full amount of costs sought, $1,565.91, is awarded.
The Vaccine Act permits an award of reasonable attorneys’ fees and costs. §
15(e). Based on the reasonableness of petitioner’s request, the undersigned GRANTS
petitioner’s motion for attorneys’ fees and costs.
Accordingly, the undersigned awards the total of $45,977.61 3 as a lump
sum in the form of a check jointly payable to petitioner and petitioner’s counsel
Shealene Priscilla Mancuso.
The clerk of the court shall enter judgment in accordance herewith. 4
IT IS SO ORDERED.
s/Nora Beth Dorsey
Nora Beth Dorsey
3 This amount is intended to cover all legal expenses incurred in this matter. This award encompasses all
charges by the attorney against a client, “advanced costs” as well as fees for legal services rendered.
Furthermore, § 15(e)(3) prevents an attorney from charging or collecting fees (including costs) that would
be in addition to the amount awarded herein. See generally Beck v. Sec’y of Health & Human Servs.,
924 F.2d 1029 (Fed. Cir.1991).
4 Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by the parties’ joint filing of notice
renouncing the right to seek review.
2
Chief Special Master
3
|
998 So.2d 102 (2009)
John C. PALMER and Diane H. Palmer, His Wife
v.
Toussaint A. LECLERCQ, M. D.
No. 2008-C-2532.
Supreme Court of Louisiana.
January 16, 2009.
Denied.
VICTORY, J., would grant.
|
358 F.3d 661
State of CALIFORNIA, on behalf of the CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL, Plaintiff-Appellee,v.NEVILLE CHEMICAL COMPANY, a corporation, Defendant-Appellant.
No. 02-56506.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted November 3, 2003 — Pasadena, California.
Filed February 10, 2004.
COPYRIGHT MATERIAL OMITTED Terry Anastassiou, Ropers, Majeski, Kohn & Bentley, San Francisco, California, for the defendant-appellant.
Bill Lockyer, Atty. Gen. of State of California, Richard Frank, Chief Asst. Atty. Gen., Theodora Berger, Senior Asst. Atty. Gen., Donald Robinson, Supervising Deputy Atty. Gen., Laurie A. Oearlmanm, Deputy Atty. Gen., Harrison M. Pollak, Deputy Attorney General, State of California, Oakland, CA, for the plaintiff-appellee.
Appeal from the United States District Court for the Central District of California; Christina A. Snyder, District Judge, Presiding. D.C. No. CV-00-10205-CAS.
Before: Harry PREGERSON, Ferdinand F. FERNANDEZ, and Marsha S. BERZON, Circuit Judges.
OPINION
BERZON, Circuit Judge:
1
The issue before us presents a question of statutory interpretation: Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), when does the limitations period for suing to collect remedial action costs from a party responsible for hazardous substances begin? One would expect a fairly straightforward answer to that question in the statute. Potential plaintiffs need to know when to file suit, and potential defendants would surely prefer clear notice as to when their legal liability, if any, lapses. True, in the "maze"-like structure and "baffling language" of CERCLA, clarity is rare. Carson Harbor Vill. Ltd. v. Unocal Corp., 270 F.3d 863, 880, 883 (9th Cir.2001) (en banc). The provision we grapple with today appears at first blush to be no exception. But as one works one's way through the statute as a whole, a fairly definite answer emerges. As will appear, we conclude that the limitations period for bringing an initial suit for recovery of remedial action costs under CERCLA cannot accrue until after the final adoption of the remedial action plan required by the statute.
FACTUAL BACKGROUND
2
For 35 years, Neville Chemical Company (Neville) manufactured at its industrial facility in Santa Fe Springs, California, various chemical compounds for use in insecticides, solvents, metal working lubricants, and flame retardants. These activities contaminated the groundwater and soil at the facility. In 1986, the California Department of Toxic Substances Control1 (the Department) issued a Remedial Action Order, directing Neville to (1) begin the process of cleaning the site; (2) conduct a remedial investigation and feasibility study; (3) submit a draft remedial action plan (RAP); and, once the draft RAP was finalized, (4) implement the plan.
3
The Department sent Neville a letter on September 29, 1989, informing Neville of its obligation to pay an "activity fee" to the Department. The letter explained that the activity fee — $46,636.38 — was "to partially cover the Department's cost of overseeing [Neville's] actions to characterize and satisfactorily remediate this site." At that time, the Department had a formal policy of "only collect[ing] direct program expenditures (generally laboratory or contract expenditures) beyond activity fees in cases where the responsible parties are being cooperative." In 1992, the Department rescinded this policy in favor of pursuing the full cost recovery of overseeing a clean-up, regardless of whether the responsible party was recalcitrant or cooperative.
4
In August 1991, Neville presented the Department with preliminary findings from the Remedial Investigation. In October 1991, the Department directed Neville to prepare a Groundwater Removal Action Proposal (the Proposal), in which Neville was to propose an expedited response to the contamination. The Department stated that the Proposal "should be consistent with a final cleanup strategy for groundwater as it may ultimately become the final remedy presented in the Remedial Action Plan." Neville submitted its Proposal on September 1, 1992. It included "three major components: an extraction system, a temporary on-site treatment system, and an effluent disposal system."
5
The Department reviewed the Proposal and, in January 1993, directed Neville to implement the extraction and treatment system. In a letter to Neville, the Department stated: "The proposed system will potentially become part of the final remedial alternative for the site," and "[t]he ground water extraction and treatment system is envisioned as part of the final remedial alternative.... [H]owever, the Department may order the discontinuation of its use in the event it is not effective or if it enhances the migration of contaminants from the Site."
6
Neville submitted a Feasibility Study Technical Memorandum in August 1993, listing alternative possible remedies. In response to this memorandum, the Department stated that it:
7
has not gathered sufficient information and public comment to require any of the alternatives to be implemented as of yet. Part of this remediation process requires that all feasible alternatives be scrutinized carefully and thoroughly prior to actual selection of the remedial alternative. The Feasibility Study is the tool that allows the Department to weigh the technical and substantial issues for all possible alternatives in order to make a sound and fair decision in protecting the public health and the environment.
Additionally, the letter stated:
8
The department reviewed and approved of the [Groundwater] Removal Action as an interim measure to prevent further migration and to protect the public health and the environment. The [Groundwater] Removal Action is not a Department-approved final Remedial Action, and cannot be construed to be such. The [Groundwater] Removal Action, may be included as part of the final Remedial Action depending on the results and conclusions of the Health Risk Assessment and the Remedial Action itself, which has yet to be prepared. Therefore, whether the [Groundwater] Removal Action constitutes the groundwater portion of the final Remedial Action cannot be determined at this point.
9
Neville began to excavate three extraction wells at the site in April 1994. A month later, Neville submitted a Draft Feasibility Study, again proposing several alternative remedies. The Department responded with comments to this draft in June of 1994, including the following: "The Department has never stated that the Ground Water Removal Activity ... is the final ground water remedy, but has to be tested to determine the efficiency of the system." In October of the same year, the Department sent Neville a letter expressing concern because Neville had not started construction of the Groundwater Removal System. The Department also noted, "Neville will need to compare several sample results to determine the effectiveness of the System. Neville will use the information to determine whether this or a modified System will be incorporated into the draft Remedial Action Plan."
10
Neville submitted a final Feasibility Study, discussing seven alternative groundwater remedial options, in December of 1994. Later that month the Department approved it.
11
Neville then submitted a draft remedial action plan. On May 8, 1995, after having circulated the draft for public review and comment and holding a public meeting to discuss the plan, the Department approved the final remedial action plan. The groundwater containment and treatment system originally designed as an interim removal action remained part of the final RAP.
ANALYSIS
I. Accrual of Cause of Action
12
Neville first argues that the district court erred in denying Neville's summary judgment motion because the statute of limitations for bringing a cost recovery action under CERCLA barred California's suit. A party may appeal a denial of summary judgment once a final judgment has been entered in the suit. Comsource Indep. Foodservice Cos. v. Union Pac. R.R. Co., 102 F.3d 438, 442 (9th Cir.1996). We review a denial of summary judgment de novo. Id. (citing Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), and Pomerantz v. County of Los Angeles, 674 F.2d 1288, 1290 (9th Cir.1982)).
13
California brought suit on behalf of the Department under § 107 of CERCLA, 42 U.S.C. § 9607. This statute provides that the owner and operator of a facility "shall be held liable for — (A) all costs of removal or remedial action incurred by ... a State... not inconsistent with the national contingency plan...." An "initial action"2 for recovery of costs "must be commenced ... for a remedial action, within 6 years after initiation of physical on-site construction of the remedial action." 42 U.S.C. § 9613(g)(2). The present suit was brought on September 21, 2000. Therefore, the suit is time-barred if and only if the "initiation of physical on-site construction of the remedial action" occurred on or before September 21, 1994.
14
The facts of the case are not in dispute. The only question is which of the enumerated events constitutes the "initiation of physical on-site construction of the remedial action," thereby triggering the limitations period. Neville maintains that the statute of limitations began to run in April 1994, when it started excavating the extraction wells. California argues that no remedial action could have occurred until the final remedial action plan was approved by the Department on May 8, 1995. This Court has yet to decide when an action is remedial for the purpose of triggering the statute of limitations in cost recovery suits under 42 U.S.C. § 9613(g)(2).
A. Statutory Interpretation
15
The purpose of a limitations period is to "clearly define the time period in which suit must be commenced." United States v. Colvin, 204 F.3d 1221, 1226 (9th Cir.2000). Here, the statute of limitations is invoked to bar the government from collecting the costs it expended in cleaning up a hazardous waste site, a situation in which we have been specially instructed by the Supreme Court to construe limitations periods in favor of the government. See Badaracco v. Comm'r, 464 U.S. 386, 391-92, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984) ("Statutes of limitation sought to be applied to bar rights of the Government, must receive a strict construction in favor of the Government.") (citing E.I. Dupont De Nemours & Co. v. Davis, 264 U.S. 456, 462, 44 S.Ct. 364, 68 L.Ed. 788 (1924)). Additionally, if at all possible, the statute should be interpreted to provide a clear accrual date, so that each party — but especially the State as plaintiff — knows when the time to bring suit runs out. The text of the statute, read as a whole rather than in pieces, specifies that ascertainable date.
16
Title 42 U.S.C. § 9613(g)(2) provides that the "initiation of physical on-site construction of the remedial action" triggers the statute of limitations. CERCLA defines "remedial action" in section 9601(24):
17
The terms "remedy" or "remedial action" means [sic] those actions consistent with permanent remedy taken instead of or in addition to removal actions in the event of a release or threatened release of a hazardous substance into the environment, to prevent or minimize the release of hazardous substances so that they do not migrate to cause substantial danger to present or future public health or welfare or the environment. The term includes, but is not limited to, such actions at the location of the release as storage, confinement, perimeter protection using dikes, trenches, or ditches, clay cover, neutralization, cleanup of released hazardous substances and associated contaminated materials, recycling or reuse, diversion, destruction, segregation of reactive wastes, dredging or excavations, repair or replacement of leaking containers, collection of leachate and runoff, onsite treatment or incineration, provision of alternative water supplies, and any monitoring reasonably required to assure that such actions protect the public health and welfare and the environment.
18
42 U.S.C. § 9601(24) (emphasis added). "Removal," in turn, is defined thus:
19
The terms "remove" or "removal" means [sic] the cleanup or removal of released hazardous substances from the environment, such actions as may be necessary [sic] taken in the event of the threat of release of hazardous substances into the environment, such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances, the disposal of removed material, or the taking of such other actions as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to the environment, which may otherwise result from a release or threat of release. The term includes, in addition, without being limited to, security fencing or other measures to limit access, provision of alternative water supplies, [and] temporary evacuation and housing of threatened individuals not otherwise provided for....
20
42 U.S.C. § 9601(23). The plain meaning of the definition of "remedial," read together with the statute of limitations in § 9613(g)(2) and the use of that same term in the rest of the statute, supports the conclusion that "the initiation of physical on-site construction of the remedial action" can only occur after the final remedial action plan is adopted.
21
The first half of the definition of "remedial action" provides a general description of how such an action fits into the entire scheme of the clean-up required by the statute. Remedial actions, the statute provides, must be "consistent with permanent remedy taken instead of or in addition to removal actions." The second half of the definition lists some activities that could constitute remedial actions. These examples, however, must be read in light of the more general description of the first half.
22
For example, the "provision of alternative water supplies" is listed as both a type of "remedial action" and as a type of "removal." The provision of alternative water supplies will only be "remedial," therefore, if it is done "consistent[ly] with permanent remedy...." On the other hand, if alternative water supplies are provided on a more temporary basis, the very same activity would be a "removal" action. That is, "removal actions generally are immediate or interim responses, and remedial actions generally are permanent responses." Geraghty & Miller, Inc. v. Conoco Inc., 234 F.3d 917, 926 (5th Cir.2000). In this case, therefore, even if the completed extraction wells do fall under one of the types of activities listed in the second half of the definition of "remedial action" (e.g., "onsite treatment"), the excavation of those wells must still be "consistent with permanent remedy" to have triggered the statute of limitations.
23
For an action to be "consistent with permanent remedy," a permanent remedy must already have been adopted. Neither party can know for sure whether a given action is consistent with permanent remedy until that permanent remedy is determined. The first point at which both parties can be certain that any construction is consistent with a permanent remedy is when the permanent remedy is actually selected. In this case, as in most cases,3 the permanent remedy was selected when the final RAP was approved.
24
Until after the adoption of the RAP, then, California could not have brought suit to recover remedial costs. "The standard rule [is] that the limitations period commences when the plaintiff has a complete and present cause of action." Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192, 201, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (quoting Rawlings v. Ray, 312 U.S. 96, 98, 61 S.Ct. 473, 85 L.Ed. 605 (1941)) (internal quotation marks omitted). "[U]ntil the plaintiff can file suit and obtain relief," a limitations period ordinarily does not commence. Bay Area Laundry, 522 U.S. at 201, 118 S.Ct. 542; see also Reiter v. Cooper, 507 U.S. 258, 267, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993) ("While it is theoretically possible for a statute to create a cause of action that accrues at one time for the purpose of calculating when the statute of limitations begins to run, but at another time for the purpose of bringing suit, we will not infer such an odd result in the absence of any such indication in the statute.").
25
The Department could not have brought suit for costs of remedial action at the time Neville began excavating the extraction wells.4 At that time, neither party could have known if the wells would eventually be "consistent with permanent remedy," because no final remedial action plan had been decided upon at that point. As we must assume that the limitations period did not begin to run until at least the time California could have brought suit to recover remedial costs, that period could not have been triggered by the excavation of the wells. To rule otherwise would be to hold, as a practical matter, that California was required to bring suit before April 19, 2000, less than five years after its action for recovery of remedial costs first accrued, even though the statute specifies a six-year limitations period.5
26
In the case at hand, neither party could have known before the final RAP was approved whether any particular construction projects would be "consistent with the final remedy": Before the final remedial action plan was approved, the letters from the Department emphasized and re-emphasized that it did not know whether any of the measures already taken by Neville would or would not be consistent with the final remedial plan. See Letter from the Department to Neville, January 1993 (stating that the Department may discontinue the use of the groundwater extraction and treatment system "in the event it is not effective or if it enhances the migration of contaminants from the Site"); Letter from the Department to Neville, August 1993 (stating that the Department "has not gathered sufficient information and public comment to require any of the alternatives to be implemented as of yet"); id. (stating that the Department "reviewed and approved of the [Groundwater] Removal Action as an interim measure" but that the Groundwater Removal Action "is not a Department-approved final Remedial Action, and cannot be construed as such.... Therefore, whether the [Groundwater] Removal Action constitutes the groundwater portion of the final Remedial Action cannot be determined at this point.").
27
Section 9617 of CERCLA, which provides for public participation in selection by the President or a State of a remedial action plan, reinforces our interpretation of "remedial action" as action taken after the final remedial action plan has been approved. After mandating a public notice and comment period and a public meeting regarding the proposed remedial action plan, 42 U.S.C. § 9617(a)(1) & (2), the statute provides: "Notice of the final remedial action plan adopted shall be published and the plan shall be made available to the public before commencement of any remedial action." 42 U.S.C. § 9617(b) (emphasis added). So, under the statute, remedial action may not commence — and therefore, the "initiation of physical on-site construction of the remedial action" cannot begin — until after a final remedial action plan is adopted.
28
The statutory provision limiting the time in which a party may commence a suit for natural resource damages also supports this interpretation of "remedial action." Title 42 U.S.C. § 9613(g)(1) states, "In no event may an action for damages under this chapter with respect to [a facility at which a remedial action is scheduled] be commenced ... before selection of the remedial action if the President is diligently proceeding with a remedial investigation and feasibility study...." The reason for this limitation was illuminated in the House Report issued by the Committee on the Judiciary: Congress sought to integrate cost recovery and damages actions. H.R. Rep. 99-253(III), reprinted in 1986 U.S.C.C.A.N. 3038, 3044. The premise behind the Report's reasoning is clear: natural resource damages actions and cost recovery actions could not be integrated if damages actions were brought before a remedy was selected, because cost recovery suits could not be brought before that point.
29
Some courts have raised the concern that if one reads the statute, as we do, to provide that "initiation of physical on-site construction of the remedial action" can only take place after the final remedial action plan is approved, much of the definition of "remedial action" would become superfluous. See, e.g., United States v. Navistar Int'l Transp. Corp., 152 F.3d 702, 712 (7th Cir.1998); California v. Hyampom Lumber Co., 903 F.Supp. 1389, 1392-93 (E.D.Cal.1995); Advanced Micro Devices, Inc. v. Nat'l Semiconductor Corp., 38 F.Supp.2d 802, 811 (N.D.Cal.1999) (citing Hyampom, 903 F.Supp. at 1393). This concern is unwarranted. First, the definition of "remedial action" has roles in the statute other than defining the onset of one limitations period. The functional aspects of the definition are critical, for example, in apportioning the percentage of the costs of any clean-up between States and the Fund. See 42 U.S.C. § 9604; see also 42 U.S.C. § 9621 (requiring that certain standards be met when implementing remedial actions).
30
Second, even though an action can only be remedial if it is taken after the final remedial action plan is approved, that does not mean that all actions taken after the final remedial action plan is approved are remedial.6 In Colorado v. Sunoco, Inc., 337 F.3d 1233 (10th Cir.2003), for example, the Tenth Circuit was faced with the task of classifying certain actions, all of which took place after the EPA chose its permanent remedy, as either "remedial" or "removal" actions. After discussing the character of the various actions in light of the definitions of "remedial" and "removal," the court determined that two of the actions were, in fact, removal actions, both because they were interim rather than permanent measures, taken in response to the threat of release of contaminated water, and because similar activities had been denominated "removal action" by the EPA in previous clean-ups. Id. at 1244-45. Thus, as Sunoco illustrates, our interpretation of the statute of limitations does not render any part of the definition of "remedial" superfluous.
B. Decisions of Other Circuits
31
Our conclusion that no action can be "remedial" until a final remedial action plan is in place is consistent with the results reached by every court of appeals that has considered the onset of the limitations period for recovery of remedial action costs under CERCLA, if not with all the reasoning of those cases.
32
In Geraghty, the Fifth Circuit held that the installation of monitoring wells could not have triggered the statute of limitations because it occurred before the government agency overseeing the clean-up had issued its final approval of the remedial plan. See Geraghty, 234 F.3d at 927. The Seventh Circuit also reached the same result as we do, although some of its reasoning differed from ours. See Navistar, 152 F.3d at 711-12. In Navistar, although the final remedial design was not approved until 1990, the final remedial action plan,7 selecting a permanent clay cap as part of the permanent remedy, was apparently approved before that. Id. at 704 ("At the conclusion of this process[, which ended before February 1989], the EPA determined that, among other things, the landfill needed to be covered with a permanent clay cap to isolate the hazardous materials from the rest of the environment."). Thus, although the Seventh Circuit rejected a bright-line rule in which the final remedial design had to be formally approved before an action could be considered remedial, the action that it found to be remedial — installing the clay cap — occurred after the final remedial action plan was chosen. Because our holding finds the pivotal event for defining the initiation of remedial action is the adoption of a remedial action plan — not a final remedial design — the facts in Navistar would have led us to find the suit barred by the limitations period as well.
33
Finally, the Tenth Circuit, while not expressly rejecting a bright-line rule, has distinguished "remedial actions" from "removal actions" based solely on the more "descriptive" parts of their definitions. See Sunoco, Inc., 337 F.3d at 1244-45; see also Pub. Serv. Co. of Colo. v. Gates Rubber Co., 175 F.3d 1177, 1182 (10th Cir.1999) (distinguishing "remedial actions" from "removal actions" in a context other than the triggering of the statute of limitations). In both the Tenth Circuit cases, however, it appears that the actions in question took place after a remedial action plan was in place. See Sunoco, 337 F.3d at 1237, 1244-45; Pub. Serv. Co., 175 F.3d at 1179, 1182-84. Were we faced with the same facts, we, too, would have to turn to the descriptive aspects of the definitions to determine whether the actions at issue in Sunoco Inc. and Public Service Co. were remedial or removal. For the same reasons the result in Navistar is not in conflict with our holding, then, these Tenth Circuit cases do not conflict, either.
34
In sum, we conclude that the "initiation of physical on-site construction of the remedial action" can only occur after the final remedial action plan is adopted, and that, in this case, the statute of limitations, therefore, could not have begun to run until the final remedial action was approved on May 8, 1995. The Department's suit was brought within six years of the approval of the remedial action plan and is not, thus, barred by the statute of limitations.
II. Neville's Defenses on the Merits
35
Neville raised an affirmative defense — waiver and estoppel — in the district court. The argument was that Neville cannot be liable under CERCLA for the costs of overseeing the clean-up incurred by the Department because the Department had promised that it would not sue Neville for full recovery costs if Neville conducted the research, planning, and clean-up of the site. The district court ruled that Neville could not assert equitable defenses to a CERCLA recovery action. We review the grant of summary judgment de novo. United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir.1998).
36
CERCLA section 107(a) and (b), 42 U.S.C. § 9607(a) and (b), allow for only three defenses to CERCLA liability. A covered person is liable under the statute "subject only to the defenses set forth in subsection (b) of this section." 42 U.S.C. § 9607(a). Subsection (b) lists three defenses "(1) an act of God; (2) an act of war; [and] (3) an act or omission of a third party...." 42 U.S.C. § 9607(b)(1)-(3). In Levin Metals Corp. v. Parr-Richmond Terminal Co., 799 F.2d 1312, 1316-17 (9th Cir.1986), we suggested that these defenses were exclusive.
37
Congress imposed strict, but not absolute, liability under CERCLA. It provided defenses to liability for causation solely by an act of God, an act of war, or acts or omissions of a third party.... Consequently, in order to state a claim for declaration of nonliability, the declaratory judgment plaintiff must base its claim of nonliability on one or more of the statutory affirmative defenses.
38
Id. (emphasis added) (internal quotation marks and citations omitted).
39
Every court of appeals that has considered the precise question whether § 9607 permits equitable defenses has concluded that it does not, as the statutory defenses are exclusive. See Gen. Elec. Co. v. Litton Indus. Automation Sys., Inc., 920 F.2d 1415, 1418 (8th Cir.1990) (holding that CERCLA does not provide an "unclean hands" defense) (questioned on other grounds in Key Tronic Corp. v. United States, 511 U.S. 809, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994)); see also Blasland, Bouck & Lee, Inc. v. City of North Miami, 283 F.3d 1286, 1304 (11th Cir.2002) (holding that CERCLA bars equitable defenses); Velsicol Chem. Corp. v. Enenco, Inc., 9 F.3d 524, 530 (6th Cir.1993) (same); Town of Munster v. Sherwin-Williams Co., 27 F.3d 1268, 1270 (7th Cir.1994) (same). Following the implication of Levin Metals and the express holdings of these cases from other circuits, we conclude that the three statutory defenses are the only ones available, and that traditional equitable defenses are not. The district court was correct, therefore, in holding that Neville could not raise equitable defenses to liability under CERCLA.
40
Neville argues separately that equitable defenses are at least relevant to the amount of recovery that the Department receives. Even if it is liable for some of the oversight costs, Neville asserts, that amount is limited by equitable consideration that the Department's implied promise to pursue recovery of only a limited "activity fee," rather than the Department's actual recovery-oversight costs. Neville cites as support for this argument numerous cases in which courts considered equitable factors in allocating costs in suits for contribution. See, e.g., Alcan-Toyo Am., Inc., v. N. Ill. Gas Co., 881 F.Supp. 342, 346-47 (N.D.Ill.1995); Akzo Coatings, Inc. v. Aigner Corp., 909 F.Supp. 1154, 1161-62 (N.D.Ind.1995); New York v. Almy Bros., 971 F.Supp. 69, 73 (N.D.N.Y. 1997).
41
Suits for contribution, however, are entirely distinct under the statute from suits for recovery of costs. The former is governed by 42 U.S.C. § 9613(f)(1), which explicitly states, "In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." The provisions of CERCLA governing suits for recovery of costs, 42 U.S.C. §§ 9607(a) and 9613(g)(2), make no such reference to equitable factors. Also, "the critical distinction between [suits for contributions and suits for cost recovery] is that under § 107 [42 U.S.C. § 9607(a)], the court merely determines whether the party is jointly and severally liable, without regard to the amount of fault; but under § 113 [42 U.S.C. § 9613(f)(1)], the court also divides the fault of the parties, using equitable factors." Catellus Dev. Corp. v. L.D. McFarland Co., 910 F.Supp. 1509, 1514 (D.Or.1995). California is not bringing suit here for contribution, so the specific language allowing the court to consider equitable factors when apportioning contribution is inapplicable.
42
Neville makes one last defensive argument: The Department may not sue for its recovery costs, Neville contends, because those costs were not consistent with the national contingency plan. Whether a party can recover certain costs under § 9607 depends on whether or not those costs were incurred consistently with the "national contingency plan." 42 U.S.C. § 9607(a)(4)(A) (providing that a covered person who violates CERCLA "shall be liable for ... all costs of removal or remedial action incurred by the ... State ... not inconsistent with the national contingency plan") (emphasis added). The national contingency plan is promulgated by the EPA and "provide[s] the organizational structure and procedures for preparing and responding to ... releases of hazardous substances." 40 C.F.R. § 300.1. See also Wash. St. Dep't of Transp. v. Wash. Natural Gas Co., 59 F.3d 793, 799 (9th Cir.1995) ("WSDOT"). To show that the Department's actions were inconsistent with the national contingency plan, the burden is on Neville to show that the Department acted in an arbitrary and capricious manner in choosing a particular response action. See id. at 802 (citing United States v. Hardage, 982 F.2d 1436, 1442 (10th Cir.1992)). When a state is seeking recovery of response costs, consistency with the national contingency plan is presumed. Id. at 799-800.
43
Neville has provided no evidence that the Department acted "arbitrarily and capriciously in choosing a particular response action to respond to a hazardous waste site." Hardage, 982 F.2d at 1442 (emphasis added). Accord WSDOT, 59 F.3d at 802 ("To prove that a response action of the EPA was inconsistent with the NCP, a defendant must prove that the EPA's response action was arbitrary and capricious.") (emphasis added). In fact, Neville does not challenge any response action taken by the Department. Neville challenges instead the Department's attempt to recover the full oversight costs after suggesting that, should Neville cooperate and conduct the clean-up itself, the Department would only require Neville to pay an "activity fee." This change in policy and pursuit of the full costs of oversight cannot be "inconsistent with" the national contingency plan, as the national contingency plan does not direct the state to limit its recovery of response costs in any way. See 40 C.F.R. §§ 300.1 et seq. The district court, therefore, did not err by finding that Neville was responsible for all the Department's response costs.
III. Motion for Leave to Amend
44
Finally, Neville appeals the district court's denial of its motion for leave to amend its counterclaim. We review the district court's denial of Neville's motion for leave to amend for an abuse of discretion. See Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 879 (9th Cir.1999).
45
Generally, leave to amend pleadings "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). "[T]he grant or denial of an opportunity to amend is within the discretion of the District Court," and denial of leave to amend is appropriate if the amendment would be futile. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). "[F]utility includes the inevitability of a claim's defeat on summary judgment." Johnson v. Am. Airlines, Inc., 834 F.2d 721, 724 (9th Cir.1987).
46
Neville moved to amend its complaint to allege a violation of due process and equal protection under the California Constitution. The district court denied Neville's motion for leave to amend because the court determined that amendment would be futile. The district court held that, even if Neville were to amend its complaint and allege a violation of equal protection, Neville could not point to a triable issue of material fact to support such an allegation. On appeal, Neville argues only that the district court erred by (1) holding that the California Constitution requires a showing of "invidious discrimination" to prove selective prosecution, and (2) refusing to compel discovery on the issue of selective prosecution.
47
The district court did not abuse its discretion. First, the court was correct in its interpretation of California constitutional law in holding that Neville had to allege discrimination based on an "invidious" criterion. Baluyut v. Superior Court, 12 Cal.4th 826, 50 Cal.Rptr.2d 101, 911 P.2d 1, 5 (1996), on which Neville exclusively relies, holds that a defendant must show that "he has been deliberately singled out for prosecution on the basis of some invidious criterion" in order to prove discriminatory prosecution. Id. (citation and internal quotation marks omitted). That case goes on to define "invidious" as "unrelated to legitimate law enforcement objectives." Id. at 6. Additionally, Baluyut states that "[u]nequal treatment which results simply from laxity of enforcement or which reflects a nonarbitrary basis for selective enforcement of a statute does not deny equal protection and is not constitutionally prohibited discriminatory enforcement." Id. at 5.
48
Neville fails to allege, first, that other similarly situated parties were excused from paying the full oversight costs and thus that it was "deliberately singled out for prosecution." Even if Neville could show this, it would have to allege also that the reason for this discrepancy was not simply laxity of enforcement, but was in fact a result of invidious discrimination, i.e., unrelated to law enforcement purposes. As the record now stands, Neville has shown that the Department changed its policy about collecting oversight costs. However, this change was explained by the Department: the agency determined that the non-enforcement policy was inconsistent with state statutes. Thus, the Department has provided a non-arbitrary, law enforcement rationale for the change in policy. On the basis of this record, the district court did not abuse its discretion by denying leave to amend, or by denying discovery when no actionable injury was alleged.
49
AFFIRMED.
Notes:
1
The Department of Toxic Substances Control was a division of the California Department of Health Services until it became a separate department in 1991. We will refer to this entity simply as "the Department" throughout this opinion
2
The statute divides actions for recovery of costs into initial and subsequent. The parties do not dispute that this is an "initial action."
3
In cases where private, non-governmental parties conduct the clean-up of a site without governmental or agency oversight and then pursue response costs under CERCLA, there will most likely still be a remedial action plan in placeSee 40 CFR § 300.700 (providing that private parties should follow the public notice and comment procedures required of government actors). As no non-governmental response cost suit is before us, however, we do not address the limitation period applicable to such suits.
4
This is not to say that the Department was unable to bringany suit to recover any costs at the time Neville began excavating the extraction wells. Under 42 U.S.C. § 9613(g)(2), "an action may be commenced under section 9607 of this title for recovery of costs at any time after such costs have been incurred." As soon as the Department expended its first dollar, it could have sued Neville for this dollar and sought a declaratory judgment of Neville's liability for future response costs. However, the availability of the option to bring suit earlier, and thereby obtain a declaratory judgment as to liability, should not confound Congress's clear intention that an initial action to recover remedial costs may be brought "within 6 years after initiation of physical on-site construction of the remedial action." A suit to recover the costs of particular remedial actions, as opposed to a suit to recover removal costs and obtain a declaratory judgment on liability, can only be brought once those remedial actions have been completed.
5
The legislative history of the Superfund Amendments and Reauthorization Act of 1986 (SARA), which added the statute of limitations provision to CERCLA, is consistent with our interpretation of § 9613(g)(2). When we can interpret a statute by its plain meaning, we only look to the congressional history to "ensure that there is no clearly contrary legislative intent."Carson Harbor Village, Ltd., 270 F.3d at 884. There is none here. The House Report from the Judiciary Committee states: "The statute of limitations provided by this amendment for the initial cost recovery action for a remedial action is three years from the commencement of physical on-site construction of the remedial action, that is, after the [Remedial Investigation/Feasibility Study] and after design of the remedy." H.R. Rep. 99-253(III), reprinted in 1986 U.S.C.C.A.N. 3038, 3044 (emphasis added) (referring to one version of the predecessor bill, H.R. 2817, which provided a three-year statute of limitation but was otherwise identical to the final Act with regard to the pertinent limitations provision). The design of the remedy can only occur after the final remedy has been selected in the final remedial action plan.
6
Because of the temporal aspect of our interpretation of "remedial action," we do note that the government can only recover costs as "remedial" if those costs were incurred after the cause of action for such costs accrues. Any costs incurred before the remedial action plan was finally designated (such as the construction of the extraction wells in this case) may be recovered, however, as "removal" costs, and are subject to the statute of limitations for removal actionsSee 42 U.S.C. § 9613(g)(2)(A) ("An initial action for recovery of the costs referred to in section 9607 of this title must be commenced ... [,] for a removal action, within 3 years after completion of the removal action...."); 42 U.S.C. § 9613(g)(2)(B) ("[I]f the remedial action is initiated within 3 years after the completion of the removal action, costs incurred in the removal action may be recovered in the cost recovery action brought under this subparagraph.").
7
A remedial design is a term of art in CERCLA, and differs both substantively and temporally from a final remedial action plan. While there is no explicit definition of "remedial action plan" in either the statute or the regulations implementing it, the regulations do provide a detailed description of the process whereby a final remedy is selected by the agency. In this process, the lead agency must present a proposed plan, which fits the description of the "remedial action plan" of CERCLA's Section 9617, to the public. 40 CFR § 300.430(f)(2). The "proposed plan" must "briefly describe[] the remedial alternatives analyzed by the lead agency, propose[] a preferred remedial action alternative, and summarize[] the information relied upon to select the preferred alternative."Id. The regulation continues, "The purposes of the proposed plan is to supplement the RI/FS and provide the public with a reasonable opportunity to comment on the preferred alternative for remedial action, as well as alternative plans under consideration, and to participate in the selection of remedial action at a site." Id. The remedy chosen in the remedial action plan is only generally described in that document, leaving for a subsequent date the actual design of the plan's physical implementation. See 40 CFR § 300.430(f)(1)-(6) (describing the process by which the lead agency chooses a final remedy and documents its selection in a record of decision); see also 42 U.S.C. § 9617 (providing publication requirements in the event that the remedial action differs from the adopted final remedial action plan).
The final remedial design, on the other hand, while based on the remedy adopted in the RAP, is distinct: it is "the technical analysis and procedures which follow the selection of remedy for a site and result in a detailed set of plans and specifications for implementation of the remedial action." 40 CFR § 300.5.
|
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-12205 ELEVENTH CIRCUIT
DECEMBER 30, 2009
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK
D. C. Docket Nos. 08-80204-CV-DMM,
02-80016-CR-DMM
JORGE ARTURO ARROYO,
Petitioner-Appellant,
versus
UNITED STATES OF AMERICA,
Respondent-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(December 30, 2009)
Before BLACK, PRYOR and KRAVITCH, Circuit Judges.
PER CURIAM:
Jorge Arturo Arroyo appeals the district court’s dismissal of his motion to
vacate his sentence under 28 U.S.C. § 2255 on the ground that the motion was
time-barred. We affirm.
On July 19, 2002, Arroyo was sentenced in federal district court to 120
months’ imprisonment after pleading guilty to conspiracy to possess with intent to
distribute 5 kilograms of cocaine, in violation of 21 U.S.C. § 846. In determining
Arroyo’s criminal history for sentencing purposes, the probation officer identified
several prior state court convictions dating back to 1993. These prior convictions
increased Arroyo’s criminal history points at his federal sentencing and placed
Arroyo in the criminal history category III. As a result, Arroyo faced a statutory
mandatory minimum sentence of 120 months’ imprisonment and was not eligible
to be sentenced below the mandatory minimum under the safety-valve provision.
21 U.S.C. § 841(b)(1)(A); U.S.S.G. § 5C1.2. Arroyo did not directly appeal his
conviction or sentence, and his conviction became final ten days after the judgment
was entered– or August 5, 2002– when the time to file an appeal expired. See
Adams v. United States, 173 F.3d 1339 (11th Cir. 1999).
In April 2003, Arroyo wrote to the state court clerk’s office seeking records
from his state-court convictions and advising the clerk’s office that he needed the
documents to prepare his state motion for post-conviction relief under Fla. R.
Crim. P. (“Rule”) 3.850. He wrote again in May, July, September, and December
2
2003, and in February 2004. He received copies of the records in January and
November 2005. On March 8, 2006, he filed his Rule 3.850 motion. The state
court granted relief, vacated the convictions, and set a hearing to determine if the
state wished to retry Arroyo. At the hearing in November 2007, the state declined
to prosecute, and the state court dismissed the cases by order dated January 25,
2008. On February 20, 2008, Arroyo filed his federal § 2255 motion challenging
his sentence on the ground that the prior state convictions used to enhance his
sentence had been vacated.
The district court ordered the parties to address whether the motion was
timely. Arroyo asserted that the statute of limitations began to run on January 25,
2008, when he received the state court order vacating his prior convictions.
Arroyo explained that he had acted with due diligence to overturn his prior state
convictions since his federal conviction in 2002. He noted that he filed his § 2255
motion within two months of receiving the state court’s vacatur order.
The government responded that the motion was untimely because the statute
of limitations began to run when the facts supporting the § 2255 claim could have
been discovered through due diligence. It explained that Arroyo failed to act with
the necessary diligence because he did not file his state post-conviction motion
attacking the state convictions until March 2006, more than four years after his
3
federal conviction was final.
The magistrate judge recommended dismissing the motion as time-barred,
finding that, under 28 U.S.C. § 2255(f)(4), the limitations period triggered once
Arroyo was on notice of the state court vacatur, see Johnson v. United States, 554
U.S. 295, 125 S.Ct. 1571 (2005), but that Arroyo could not show he acted with due
diligence in obtaining the vacatur. The magistrate judge defined diligence as the
timely filing of a state post-conviction motion and measured the timeliness from
the date of the federal sentencing and judgment. The magistrate judge found that
Arroyo had waited three years after his federal conviction became final to file his
state post-conviction motion, even though he was aware earlier that his state
convictions were invalid because the state court had failed to advise him of the
possible deportation consequences of his guilty plea.
Arroyo objected to the magistrate judge’s recommendation, asserting that he
had acted with diligence and had been waiting for the records from the state court
in order to file his state post-conviction motion. He noted that state law in effect at
the time of his federal conviction precluded any challenge to the validity of the
plea until the date on which deportation proceedings commenced. Once the
Florida Supreme Court changed that requirement in State v. Green, 944 So.2d 208
(Fla. 2006), he promptly filed his motion.
4
The district court dismissed the motion as time-barred, citing Rivers v.
United States, 416 F.3d 1319 (11th Cir. 2005). First, the court found that diligence
meant prompt action by the movant as soon as the movant was in a position to
realize he had an interest in challenging the prior conviction. In the instant case,
Arroyo did not begin to seek records until nine months after the federal judgment
became final and he had written only six letters seeking copies of his state records
during the three-and-a-half year period between the federal conviction and the date
on which Arroyo filed his state Rule 3.850 motion. The court further found that
Arroyo should have known of the possible deportation consequences of his guilty
pleas in state court when he hired an immigration attorney to discuss citizenship in
2001.1
Arroyo appealed and requested a certificate of appealability, which the
district court granted on the following issue: “Whether petitioner exercised the
requisite due diligence in seeking vacatur of his state-court convictions, such that
his petition was timely under § 2255(f)(4).”
In reviewing the denial of a § 2255 motion, we review legal issues de novo
and factual findings for clear error. Lynn v. United States, 365 F.3d 1225, 1232
1
The district court identified 2001 as the date, but the record shows that an attorney advised
Arroyo in 1999 that his prior convictions rendered him ineligible to become a citizen and that he
could face deportation if he initiated citizenship proceedings.
5
(11th Cir. 2004). The determination of whether a party acted with due diligence is
a factual finding subject to clear error review. Drew v. Dep’t of Corr., 297 F.3d
1278, 1283 (11th Cir. 2002).
Section 2255 provides that a motion to vacate a sentence must be filed
within one year of the latest of, relevant to this appeal, “the date on which the facts
supporting the claim or claims presented could have been discovered through the
exercise of due diligence.” 28 U.S.C. § 2255(f)(4). In cases involving a
state-court vacatur of a federal prisoner’s prior state conviction, which was used to
enhance his federal sentence, the limitation period begins to run on the date that the
prisoner receives notice of the order vacating the predicate conviction. Johnson,
544 U.S. 295, 302, 304-07, 308. Thus, a prisoner may file a § 2255 motion up to
one year from the date on which he received notice of the order vacating his prior
state conviction if he exercised due diligence in seeking to overturn his prior
conviction. See id. at 298. At issue in this case is whether Arroyo exercised due
diligence under Johnson to obtain the vacatur.2
Arroyo did not file his state motion for post-conviction relief until 2006,
more than three-and-a-half years after the district court imposed the federal
2
The government concedes that the state court vacatur qualifies as a matter of fact for
purposes of the limitations period and that Arroyo filed his motion within one year of the state court
order vacating his prior convictions.
6
sentence that was enhanced by the state court convictions. In general, a delay of
this length will negate a finding of due diligence. See Johnson, 544 U.S. at 310-
311; Rivers 416 F.3d at 1322-23 (concluding the movant failed to act with due
diligence when he waited three years to file his state habeas petition).
Arroyo contends that his actions during those three-and-a-half years showed
that he acted with diligence and that filing his state post-conviction motion earlier
would have been futile because state law prevented him from bringing his claim.
Arroyo’s arguments are without merit.
First, Arroyo has not shown that his actions qualified as due diligence. He
wrote only six letters over three years in an attempt to gain records, and he did not
begin to correspond with the clerk’s office seeking those records until nine months
after his federal conviction. Waiting nine months after sentencing to seek records
does not show that Arroyo acted diligently to obtain the vacatur.
Second, the changes in state law are not relevant. In State v. Green, the
Florida Supreme Court held that the limitations period for filing a Rule 3.850
motion begins to run when the judgment and sentence become final “unless the
defendant could not, with the exercise of due diligence, have ascertained within the
two-year period that he or she was subject to deportation.” 944 So.2d at 210. In
reaching this conclusion, the court overturned its prior holding in Peart v. State,
7
756 So.2d 42, 48 (Fla. 2000), which required the defendant to show that he had
been threatened with deportation in order to challenge his conviction on the ground
that the state court failed to advise him of the deportation consequences of his
plea.3 Green, 944 So.2d at 218. Arroyo’s claim that he could not file a Rule 3.850
motion before Green and that Green renders his Rule 3.850 motion timely fails
because (1) Arroyo, in fact, filed his Rule 3.850 motion several months before
Green was decided, and (2) Arroyo knew of the immigration consequences of his
pleas and convictions in state court when he consulted an immigration attorney in
1999.4
Therefore, even though there was a change in state law, that change had no
impact on Arroyo’s actions and the determination of whether he acted with due
diligence. The purpose of the Green decision was to trigger the limitations period
when the movant learned or could have ascertained the deportation consequences
of his plea. Because Arroyo knew of the immigration consequences resulting from
his state convictions in 1999, before he entered his plea in federal court, yet waited
over three years after his federal conviction to file his Rule 3.850 motion, Arroyo
3
Moreover, “[a] defendant filing outside the two-year limitation period must allege and
prove that he . . . could not have ascertained the immigration consequences of the plea with the
exercise of due diligence within the two-year period.” Green, 944 So.2d at 219.
4
Even if Green applied, Arroyo would not be entitled to relief because he knew of the
immigration consequences in 1999 and did not file a motion for post-conviction relief within two
years of that date. See Green, 944 So.2d at 218.
8
cannot show that he acted with due diligence.
Accordingly, the district court’s order is
AFFIRMED.
9
|
926 F.2d 42
59 USLW 2576, 17 U.S.P.Q.2d 1688, 18Media L. Rep. 1710
WCVB-TV, Plaintiff, Appellee,v.BOSTON ATHLETIC ASSOCIATION, et al., Defendants, Appellants.
No. 90-1315.
United States Court of Appeals,First Circuit.
Heard Dec. 3, 1990.Decided Feb. 12, 1991.
Thomas M.S. Hemnes, Robert E. Fast, and George J. Skelly with whom Steven W. Phillips, Bruce R. Parker, Teresa A. Martland, Foley, Hoag & Eliot, H. Reed Witherby, Hale and Dorr, Thomas J. Dougherty, and Skadden, Arps, Slate, Meagher & Flom, Boston, Mass., were on brief, for appellants Boston Athletic Ass'n, ProServ Television, Inc. and WBZ-TV.
Thomas P. Olson, Stuart P. Green, Wilmer, Cutler & Pickering, Steven A. Weiswasser, Washington, D.C., Charles Stanford, Joel Lulla, New York City, and Edwin M. Durso, Washington, D.C., on brief, for amici curiae ABC Sports, Inc. and ESPN, Inc.
Steven J. Comen with whom Wm. Gordon Prescott, William R. Moore, Christopher J. Petrini, Hinckley, Allen, Snyder & Comen, Boston, Mass., and Janine Ann Petit, New York City, were on brief, for appellee.
Roberta L. Cairney, James M. Wagstaffe, Kurtis J. Kearl and Cooper, White & Cooper, San Francisco, Cal., on brief for amici curiae The Chronicle Pub. Co., WGBH Educational Foundation and Post-Newsweek Stations, Inc.
Before BREYER, Chief Judge, and ALDRICH and COFFIN, Senior Circuit Judges.
BREYER, Chief Judge.
1
The Boston Athletic Association ("BAA"), its licensing agent (ProServ), and Channel 4 (WBZ-TV) appeal the district court's refusal to enjoin Channel 5 (WCVB-TV) from televising the Boston Marathon. They point out 1) that the BAA has spent a great deal of money over the years promoting the annual Patriot's Day marathon event, 2) that it has registered the words "Boston Marathon" as a trade, or service mark, in connection with the event, 3) that it has licensed (for a fee) Channel 4 to broadcast the event on television, 4) that it has not licensed Channel 5 to broadcast the event or to use its mark, 5) that Channel 5 broadcast the event last year anyway, and intends to do so in 1991, simply by placing television cameras in the streets along the marathon route, and 6) that Channel 5 used the words "Boston Marathon" on the screen in large letters before, during, and after the event. They argue that Channel 5, by broadcasting the words "Boston Marathon" in connection with the event, violated federal trademark law. They asked the district court to issue a preliminary injunction, it refused to do so, and they have appealed that refusal.
2
In our view, the district court's refusal to grant the preliminary injunction was lawful. The dispositive legal issue concerns "customer confusion." A trademark, or service mark, is an "attention getting symbol" used basically, and primarily, to make clear to the customer the origin of the goods or the service. See 1 J. McCarthy, Trademarks and Unfair Competition Sec. 11.17 at 476 (2d ed. 1984). Trademark law prohibits the unauthorized use of such a mark, but only where doing so creates a "likelihood of confusion" about who produces the goods or provides the service in question. See 15 U.S.C. Sec. 1114(1); 15 U.S.C. Sec. 1125(a); Boston Athletic Ass'n v. Sullivan, 867 F.2d 22, 28-35 & n. 11 (1st Cir.1989); see also Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154, 160 (1st Cir.1977). Unless a plaintiff can convince a district court that it will likely show such a "likelihood of confusion" on the merits of its trademark claim (or can convince a court of appeals that the district court abused its discretion), it is not entitled to a preliminary injunction. See Planned Parenthood League v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981) ("likelihood of success" on merits one of four requirements for grant of preliminary injunction; "abuse of discretion" standard for appellate review); Hypertherm, Inc. v. Precision Products, Inc., 832 F.2d 697, 699 n. 2 (1st Cir.1987) (trademark case). Yet, we cannot find in the record before us sufficient evidence of relevant customer confusion, arising out of Channel 5's use of the words "Boston Marathon," to require the district court to issue the preliminary injunction that the appellants seek.
3
Obviously, we do not have before us the common, garden variety type of "confusion" that might arise with typical trademark infringement. This is not a heartland trademark case, where, for example, plaintiff uses the words "Big Tom" to mark his apple juice, defendant (perhaps a big man called Tom) uses the same words (or perhaps similar words, e.g., "Large Tommy") on his own apple juice label, and plaintiff says customers will confuse defendant's apple juice with his own. See, e.g., Beer Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920 (10th Cir.1986) ("Beer Nuts" and "Brew Nuts" confusingly similar); 2 J. McCarthy Sec. 23.3 at 56 ("Cases where a defendant uses an identical mark on competitive goods hardly ever find their way into the appellate reports ... [and] are 'open and shut'...."). No one here says that Channel 5 is running its own marathon on Patriot's Day, which a viewer might confuse with the BAA's famous Boston Marathon.
4
Rather, BAA argues that the confusion here involved is somewhat special. It points to cases where a defendant uses a plaintiff's trademark in connection with a different type of good or service and a plaintiff claims that the public will wrongly, and confusedly, think that the defendant's product somehow has the plaintiff's official "O.K." or imprimatur. The Eleventh Circuit, for example, found trademark law violated when the defendant, without authorization, used the plaintiff's football team mark, a bulldog, not in connection with a different football team, but, rather, on his beer mugs. See University of Georgia Athletic Ass'n v. Laite, 756 F.2d 1535 (11th Cir.1985). This circuit has found trademark law violated, when the defendant, without authorization, used this very appellant's foot race mark, "Boston Marathon," on his t-shirts, sold during the event, permitting the customer to wrongly or confusedly think that his t-shirts were somehow "official." See Sullivan, supra. BAA goes on to say that Channel 5's use of those words will lead viewers, wrongly, and confusedly, to believe that Channel 5 (like the t-shirt seller) has a BAA license or permission or authorization to use the words, i.e., that it broadcasts with the BAA's official imprimatur. It also notes that this court, in Sullivan, listed circumstances that create a "rebuttable presumption" of confusion. And, it quotes language from Sullivan, in which this court, citing International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918), said that the defendant's t-shirts were "clearly designed to take advantage of the Boston Marathon and to benefit from the good will associated with its promotion by plaintiffs," and that defendants obtained a "free ride" at the plaintiffs' expense; they "reap where [they have] not sown." Sullivan, 867 F.2d at 33. Appellants say that Channel 5 is doing the same here.
5
In our view, the cases BAA cites, and Sullivan in particular, do not govern the outcome of this case. Nor can we find a likelihood of any relevant confusion here. First, the Sullivan opinion, taken as a whole, makes clear that the court, in using the language appellants cite, referring to a "free ride," and taking "advantage" of another's good will, did not intend to depart from ordinary principles of federal trademark law that make a finding of a "likelihood of confusion" essential to a conclusion of "violation." As a general matter, the law sometimes protects investors from the "free riding" of others; and sometimes it does not. The law, for example, gives inventors a "property right" in certain inventions for a limited period of time; see 35 U.S.C. Secs. 101 et seq.; it provides copyright protection for authors; see 17 U.S.C. Secs. 101 et seq.; it offers certain protections to trade secrets. See generally 2 J. McCarthy Sec. 29.16. But, the man who clears a swamp, the developer of a neighborhood, the academic scientist, the school teacher, and millions of others, each day create "value" (over and above what they are paid) that the law permits others to receive without charge. Just how, when and where the law should protect investments in "intangible" benefits or goods is a matter that legislators typically debate, embodying the results in specific statutes, or that common law courts, carefully weighing relevant competing interests, gradually work out over time. The trademark statute does not give the appellants any "property right" in their mark except "the right to prevent confusion." See Quabaug Rubber Co., 567 F.2d at 160; 2 J. McCarthy Sec. 23.1. And, nothing in Sullivan suggests the contrary.
6
Second, the "rebuttable presumption" of confusion that this court set forth in Sullivan does not apply here. We concede that the Sullivan court said that "there is a rebuttable presumption" of confusion "about the shirts' source or sponsorship" arising from the fact that the defendants used the words "Boston Marathon" on the shirts, which use made customers more likely to buy the shirts. The court wrote that
7
when a manufacturer intentionally uses another's mark as a means of establishing a link in consumers' minds with the other's enterprise, and directly profits from that link, there is an unmistakable aura of deception.
8
Sullivan, 867 F.2d at 35 (emphasis added). As we read these words, they mean that the Sullivan record indicated that the defendant wanted to give the impression that his t-shirt was an "official" t-shirt, a fact that, in the sports world, might give a shirt, in the eyes of sports fans, a special "cachet." It makes sense to presume confusion about a relevant matter (namely, official sponsorship) from such an intent, at least in the absence of contrary evidence.
9
Here, however, there is no persuasive evidence of any intent to use the words "Boston Marathon" to suggest official sponsorship of Channel 5's broadcasts. To the contrary, Channel 5 offered to "broadcast whatever disclaimers" the BAA might want--"every thirty seconds, every two minutes, every ten minutes"--to make certain no one thought the channel had any special broadcasting status. Nor is there any evidence that Channel 5 might somehow profit from viewers' wrongly thinking that the BAA had authorized its broadcasts. Indeed, one would ordinarily believe that television viewers (unlike sports fans who might want to buy an official t-shirt with the name of a favorite event, team or player) wish to see the event and do not particularly care about the relation of station to event-promoter. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 353 (9th Cir.1979) (when deciding whether there is confusion "the wholly indifferent [consumers] may be excluded") (cites omitted); 2 J. McCarthy Sec. 23.27 at 129 & n. 20 (trademark law does not "protect those buyers who ... [are] 'indifferent' " to the mark).
10
Third, and perhaps most importantly, the record provides us with an excellent reason for thinking that Channel 5's use of the words "Boston Marathon" would not confuse the typical Channel 5 viewer. That reason consists of the fact that those words do more than call attention to Channel 5's program; they also describe the event that Channel 5 will broadcast. Common sense suggests (consistent with the record here) that a viewer who sees those words flash upon the screen will believe simply that Channel 5 will show, or is showing, or has shown, the marathon, not that Channel 5 has some special approval from the BAA to do so. In technical trademark jargon, the use of words for descriptive purposes is called a "fair use," and the law usually permits it even if the words themselves also constitute a trademark. See 15 U.S.C. Sec. 1115(b)(4) (statutory fair use defense); Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 796 (5th Cir.1983) (fair use established if mark descriptive, not used in trademark sense, and used in good faith). If, for example, a t-shirt maker placed the words "Pure Cotton" (instead of the words "Boston Marathon") on his t-shirts merely to describe the material from which the shirts were made, not even a shirt maker who had a registered trademark called "Pure Cotton" could likely enjoin their sale. Cf. Leathersmith of London, Ltd. v. Alleyn, 695 F.2d 27, 30-31 (1st Cir.1982), cert. denied, 459 U.S. 1209, 103 S.Ct. 1202, 75 L.Ed.2d 444 (1983). As Justice Holmes pointed out many years ago, "[w]hen the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth." Prestonettes, Inc. v. Coty, 264 U.S. 359, 368, 44 S.Ct. 350, 351, 68 L.Ed. 731 (1924).
11
This is not a case where it is difficult to decide whether a defendant is using particular words primarily as a mark, i.e., as an "attention getting symbol," or primarily as a description. Cf. Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 937-38 (10th Cir.1983); Ideal Industries, Inc. v. Gardner Bender, Inc., 612 F.2d 1018, 1027-28 (7th Cir.1979), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980); Venetianaire Corp. of America v. A & P Import Co., 429 F.2d 1079, 1083 (2d Cir.1970). Here there is little in the record before us to suggest the former (only the large size of the words on the screen); while there is much to show the latter (timing, meaning, context, intent, and surrounding circumstances). Consequently, the appellants have shown no real likelihood of relevant confusion.
12
We also note that the only federal court which has decided a case nearly identical to the one before us, a case in which a station planning to televise a public parade was sued by the parade's promoter who had granted "exclusive" rights to another station, reached a conclusion similar to the one we draw here. See Production Contractors, Inc. v. WGN Continental Broadcasting Co., 622 F.Supp. 1500, 1504 (N.D.Ill.1985). Reviewing the promoter's Lanham Act claim that the "unauthorized" broadcast would create a "false impression" of sponsorship, the court concluded that it fell "far short of establishing likelihood of confusion" among viewers that the defendant station was the "official" or "authorized" broadcaster of the parade. See id. at 1504-05. Similarly, we do not see how Channel 5's broadcast could likely confuse viewers that it bore the imprimatur of the BAA.
13
The BAA makes one further argument. It says that, because Channel 5, in earlier years, paid it for a license to use the mark for its broadcasts, Channel 5 is "estopped" from contesting the mark's "validity." The estoppel cases that BAA cites, however, all concern a challenge to the validity of a mark, a challenge absent here. See, e.g., Professional Golfers Ass'n v. Bankers Life & Casualty Co., 514 F.2d 665, 671 (5th Cir.1975) (challenge based on abandonment); Seven-Up Bottling Co. v. Seven-Up Co., 420 F.Supp. 1246, 1251 (E.D.Mo.1976), aff'd, 561 F.2d 1275 (8th Cir.1977) (challenge based on false registration statements); see also 1 J. McCarthy Sec. 18.20 ("trademark licensee is estopped from challenging the validity of the licensor's mark"). Regardless, we can find no case that would even prevent a challenge by a prior licensee, based upon post-license facts, after the license has expired. See generally 3 Callman, Unfair Competition, Trademarks & Monopolies Sec. 19.48 (4th ed. 1989). We cannot think of any reason why such a licensee ought to be estopped; or why, a grant of a license should permanently immunize a trademark holder from legal attack. Compare Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969) (estoppel doctrine does not apply to patent licensees) with Beer Nuts, Inc. v. King Nut Co., 477 F.2d 326, 328-29 (6th Cir.), cert. denied, 414 U.S. 858, 94 S.Ct. 66, 38 L.Ed.2d 108 (1973) (estoppel doctrine does apply to trademark licensees).
14
Finally, we note that amici in support of appellants have raised various questions of state law. Appellants themselves, however, have not raised those questions; consequently, they are not properly before us. See United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 60 n. 2, 101 S.Ct. 1559, 2176 n. 2, 67 L.Ed.2d 732 (1981); Knetsch v. United States, 364 U.S. 361, 370, 81 S.Ct. 132, 137, 5 L.Ed.2d 128 (1960).
15
The district court's denial of the motion for preliminary injunction is
16
Affirmed.
|
176 F.3d 880
UNITED STATES of America, Plaintiff-Appellee,v.Gary Steven STOTTS, also known as Jackie Wayne Simmons,Defendant-Appellant.
No. 97-6221.
United States Court of Appeals,Sixth Circuit.
Argued March 9, 1999.Decided May 12, 1999.
David W. Camp (argued and briefed), Dowden, Zdancewicz & Camp, Jackson, Tennessee, Gary Steven Stotts, Beamount, Texas, for Defendant-Appellant.
Jennifer L. Webber, Assistant U.S. Attorney (argued and briefed), Memphis, Tennessee, for Plaintiff-Appellee.
Before: JONES, SUHRHEINRICH, and MOORE, Circuit Judges.
OPINION
SUHRHEINRICH, Circuit Judge.
1
Defendant Gary Stephen Stotts appeals from his judgment and sentence following a jury trial. The principal issue is whether an undetonated bomb that is merely in close proximity to a methamphetamine laboratory is "used or carried" during and in relation to a drug trafficking offense under 18 U.S.C. § 924(c)(1). We conclude that it is not and REVERSE the district court on this point. We AFFIRM as to Defendant's remaining claims.I.
2
On January 10, 1996, in Savannah, Hardin County, Tennessee several volunteer firemen from the Savannah Volunteer Fire Department responded to a fire at 335 Bucktown Loop. A woman was standing in the yard. Inside the house the firemen found a small fire on a hotplate located on the kitchen table. The kitchen was filled with smoke that had an acrid smell and irritated the firemen's mouths and noses. When the firemen attempted to put out the fire with water, there was a small flash explosion. Fireman Tommy Keith Rich patted out the flames with his hands using fire gloves. He noticed a glowing red powdery substance on the gloves, which he thought was very unusual. Rich turned the gloves over to Deputy Tommy Churchwell, who turned them over to Drug Enforcement Agency ("DEA") agent Joey Mundy. (Churchwell, 78, (Mundy.)). Churchwell told Mundy that the firemen had seen glass funnels, a red powder substance, and a white powder substance. The firemen also stated that during the fire Stotts was outside but eventually came in and started hiding the described items.
3
Based on this information, Mundy obtained a search warrant and executed it on January 12, 1996. One of the officers posed as a fireman investigating the January 10th fire, while Mundy hid around the corner of the house. After the officer knocked for one or two minutes with no response, Mundy approached the door, opened the screen door, and banged on the door a couple of times. Mundy saw Stotts looking at him. Mundy testified that he immediately yelled "Police Officer. Federal agent. I've got a search warrant. Open the door." Stotts quickly turned from the door and ran. By the time Mundy forced the door open, Stotts had gone up the stairs.
4
The officers ordered Stotts to come down with his hands up. Instead, Stotts ran down the stairs. While the officers attempted to subdue him, an explosion occurred upstairs. Upstairs Mundy discovered an active methamphetamine laboratory, containing a reaction vessel that was heated by a propane tank. Officers also located the remnants of a detonated homemade explosive device along with an unexploded home made bomb. The exploded bomb was located in the upstairs landing area adjacent to the room containing the reaction vessel. The undetonated bomb was found in a clothes basket located approximately two to three feet from the reaction vessel. A shotgun and revolver were also found near the reaction vessel, along with a police scanner tuned to the local law enforcement frequency, night vision goggles, and the receiving unit from a baby monitor. Transmitters for the baby monitor, wrapped with black tape, were outside the residence on the patio and on the roof. In addition, "The Anarchist's Cookbook," "Poor Man's James Bond," and "The Black Book of Revenge--The Complete Manual of Hard-Core Dirty Tricks and Schemes," were in the same room as the reaction vessel. These books instruct how to make bombs from common, everyday materials.
5
Downstairs the officers found a semi-automatic pistol, ammunition, and pipes with end caps, along with a wallet containing identification in the name of Jackie Wayne Simmons and a recipe for methamphetamine. The officers also discovered a book on birth certificate fraud, laboratory glass, chemicals and additional propane tanks. When Stotts was arrested, he had a baggie of methamphetamine in his pocket.
6
The night of his arrest, Stotts identified himself to the officers as Jackie Wayne Simmons. Stotts signed his fingerprint card as Simmons. The water, electricity and cable services for the residence were also in that name. A criminal history check of Jackie Wayne Simmons came back negative. Mundy became suspicious, however, because of Stotts's unusual behavior at the Criminal Justice Complex in Memphis, Tennessee, where he turned to face the rear of the elevator immediately upon entering without being instructed to do so. Mundy concluded that Stotts must have been at the CJC before. Further investigation revealed Stotts's true identity, and that he had a criminal record.
7
ATF experts determined that the explosive devices found in the residence were an "improvised incendiary bomb," and a "combination of parts that could be readily assembled into an improvised explosive bomb." Furthermore, based on photographs Defendant offered at trial, one expert testified that the fuse that ignited the explosive device could have burned from fifteen seconds to two minutes at the longest. Another government expert testified that all of the firearms in the house had previously traveled in interstate commerce.
8
DEA Chemist Theresa Kout testified that the reaction vessel seized on the night of the search did in fact contain methamphetamine. Kout stated that if the reaction had finished cooking, it would have produced approximately 141 grams of methamphetamine.
9
Stotts was charged on March 11, 1996, with manufacturing methamphetamine, in violation of 21 U.S.C. § 841(a)(1) (Count 1); using or carrying a destructive device during and in relation to a drug trafficking offense, in violation of 18 U.S.C. § 924(c) (Count 2); using or carrying an unassembled destructive device during and in relation to a drug trafficking offense, in violation of 18 U.S.C. § 924(c) (Count 3); and being a felon in possession of firearms, namely a shotgun, a semi-automatic pistol and a revolver, in violation of 18 U.S.C. § 922(g) (Count 4).
10
A jury found Defendant guilty on all four counts. The district court sentenced Defendant to 327 months on Count 1 and 120 months on Count 4, to run concurrently; and 360 months on Counts 2 and 3 to run concurrently to each other, but consecutive to Count 1; for a total of 687 months imprisonment, to be followed by five years of supervised release. Stotts timely appealed.
II.
A.
11
Stotts claims that the district court erred in denying his motion to suppress. Stotts argues that the search warrant lacked probable cause because there was not a sufficient showing that any illegal chemicals or drugs were being manufactured. Stotts also argues that there was insufficient probable cause because Mundy relied upon observations of other individuals without knowledge as to their background or training.
The district court ruled that:
12
The fact that Agent Mundy actually saw the purple, red, powdery substance on the fireman's glove, coupled with the statement of the fireman that this was a flash explosion, an unusual fire, had an acrid or burning smell to it--that, coupled with Agent Mundy's knowledge that red phosphorous is used in the manufacture of methamphetamines, was at the very least, the basis for probable cause.
13
.... [C]oupled with the testimony--or the statement that there were cans of chemical powders, beakers and tubes and burners, leads the court to conclude that there was probable cause for the issuance of the search warrant.
14
We review a district court's factual findings in deciding suppression motions for clear error and its conclusions of law de novo. See United States v. Jones, 159 F.3d 969, 973 (6th Cir.1998). We review the issuance of a search warrant under the "totality of the circumstances" to determine whether the facts in the supporting affidavit indicate a fair probability that evidence of a crime would be discovered. See Illinois v. Gates, 462 U.S. 213, 238-39, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983). "[P]robable cause requires only a probability or substantial chance of criminal activity, not an actual showing of criminal activity." Id. at 243-44 n. 13.
15
We agree with the district court that sufficient probable cause existed for issuance of the search warrant. The affidavit for search warrant which Mundy prepared is entirely consistent with his testimony before the district court. Thus, in determining probable cause, both the district court and issuing magistrate knew that: (1) a fire had reacted in a unique manner to water and produced acrid smoke that was irritating when inhaled; (2) these characteristics are consistent with a chemical fire; (3) defendant attempted to hide laboratory glassware and other items from the firemen; (4) the fireman's gloves used to smother the fire were covered in what appeared to be red phosphorous, a chemical used in the production of methamphetamine; (5) several loaded firearms were located in the residence; and (6) defendant attempted to hide various items from the firemen. In other words, the foregoing facts demonstrated a "substantial chance of criminal activity."
16
Nor did the district court or issuing magistrate err in relying on Mundy's experienced assessment of the facts reported to Mundy by the firemen. A judicial officer may rely on an experienced officer's conclusions based on the nature of the evidence and type of offense. See United States v. Caicedo, 85 F.3d 1184, 1192-93 (6th Cir.1996). Here, both Mundy's testimony and affidavit represented that he had received training about methamphetamine and clandestine laboratories from the DEA. Further, an affiant may present hearsay, if the issuing judicial officer is reasonably assured that the information is reliable and credible. See United States v. Ventresca, 380 U.S. 102, 108, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965); Jones v. United States, 362 U.S. 257, 269, 80 S.Ct. 725, 4 L.Ed.2d 697 (1960), overruled on other grounds by United States v. Salvucci, 448 U.S. 83, 100 S.Ct. 2547, 65 L.Ed.2d 619 (1980); cf. United States v. Jenkins, 525 F.2d 819, 823 (6th Cir.1975) (hearsay upon hearsay in affidavit is permissible if the information otherwise has sufficient indicia of reliability).
17
Stotts also challenges Mundy's failure to submit the red powder to a chemical analysis until after the search warrant was issued. Additionally, he complains that Mundy failed to explain how he could distinguish between a fire caused by chemicals used in methamphetamine production and one caused by ordinary household chemicals. These failings do not invalidate the finding of probable cause. Under the "practical, common-sense" approach dictated by Gates, see 462 U.S. at 237-38, the issuing magistrate could reasonably have concluded, based on the totality of the facts, that Stotts was not dealing with merely ordinary household chemicals and that a search of 335 Bucktown Loop would uncover criminal activity. See Gates, 462 U.S. at 243-44 n. 13; Jones, 159 F.3d at 974.
B.
18
Stotts also contends that the district court erred in denying his motion to suppress because the officers did not knock and announce their presence prior to entering his residence to execute the search warrant, in violation of 18 U.S.C. § 3109. Section 3109 provides that "[a]n officer may break open any outer or inner door or window of a house, or any part of a house, or anything therein, to execute a search warrant, if, after notice of his authority and purpose, he is refused admittance." U.S.C.A. § 3109 (West 1985). Stotts therefore claims that the resulting evidence should have been suppressed. See United States v. Nabors, 901 F.2d 1351, 1354 (6th Cir.1990) (holding that evidence procured in violation of § 3109 must be suppressed).
19
The district court credited Mundy's testimony that he knocked, announced his presence and his purpose, and was then refused admittance by Stotts. The court concluded that Mundy was authorized under the statute to enter by any possible means.1 The court further explained thatI base that upon the testimony that Mr. Stotts saw the officer, left the room, and then came back into the room. That's further buttressed by the testimony that there was an explosion a few moments later. Perhaps it was a coincidental explosion, but the more logical conclusion is that Mr. Stotts left the room went upstairs, ignited the materials, and then came back down. That supports the officer's testimony that Mr. Stotts left the room and then came back. He would only have a reason to do that if he had known the officers were there. That constitutes refusal to admit the officers; therefore, the officers complied with the statute.
20
Stotts complains that the district court failed to address the discrepancy in Mundy's testimony regarding a curtain on the front door and the extent to which it blocked Mundy's view of the inside of the house. Specifically, Stotts claims that at the detention hearing, Mundy testified that there were no curtains on the front door window, and that at a subsequent suppression hearing, Mundy stated that "[t]here were curtains" and that "they were open."
21
Although the district court did not expressly address the curtains, we have reviewed Mundy's testimony and find no discrepancy. At the detention hearing, Mundy did not state that there was no curtain. Rather, he stated that "there was no curtain preventing me from seeing through the window." This statement is not inconsistent with Mundy's later statement that the curtains were open. The district court's findings of fact are not clearly erroneous.
22
Stotts also claims that there is no evidence that he refused to admit the officers. We disagree. As the district court found, Stotts's behavior and the detonating of the bomb are proof that he heard the knock and announcement. Therefore, Stotts's failure to respond to the announcement was a refusal to admit. See Wayne R. LaFave & Jerold H. Israel, 1 Criminal Procedure, § 3.4, p. 231 (1984).
23
In sum, the district court did not err in holding that the requirements of § 3109 were met. Given this conclusion, we need not decide the Government's argument that exigent circumstances justified a violation of the knock and announce rule.
C.
24
Stotts argues that the district court erred in denying his motion to inform the jury of possible penalties, relying on United States v. Datcher, 830 F.Supp. 411 (M.D.Tenn.1993) (holding that defendant could inform the jury of the mandatory sentence to provide the jury with information to exercise its nullification power). Our decision in United States v. Chesney, 86 F.3d 564, 574 (6th Cir.1996) (holding that the Datcher decision is "contrary to Supreme Court pronouncements on this issue") defeats Stotts's argument. As we observed in Chesney, the Supreme Court has held that juries should be instructed not to consider a defendant's possible sentence unless the jury has a specific role in sentencing. See id. at 574; see also Shannon v. United States, 512 U.S. 573, 582, 114 S.Ct. 2419, 129 L.Ed.2d 459 (1994) (holding that "[it] is well established that when a jury has no sentencing function, it should be admonished to reach its verdict without regard to what sentence might be imposed") (internal quotations omitted).
25
In Stotts's case, the jury had no sentencing function and no statute required that the jury be informed of the possible penalties resulting from a guilty verdict. The district court did not err in refusing to inform the jury of possible penalties. See Chesney, 86 F.3d at 574.
D.
26
Stotts argues that the district court erred in denying his motion for a mistrial. While explaining to the jury how Stotts's true identity came to be known, Mundy stated that Stotts "has an extensive criminal record." Stotts immediately moved for a mistrial. The district court denied the motion and instructed the jury as follows:
27
Members of the jury, the last statement of the witness had to do with the defendant's criminal history. Let me instruct you at this point that the defendant's criminal history is not an issue in this case. It's not relevant in this case except to the extent that in count four the defendant is accused of being a prior convicted felon. But other than that, the defendant's criminal history has nothing to do with this case. The defendant is only charged with the four counts that are named in the indictment, and you'll disregard any reference to any of the defendant's criminal history except to the extent that it's necessary to prove that the defendant was, in fact, a convicted felon on the date of these alleged incidents. So disregard that last comment of the witness.
28
Stotts cites Old Chief v. United States, 519 U.S. 172, 117 S.Ct. 644, 136 L.Ed.2d 574 (1997), in support of his position. Old Chief held that a trial court abuses its discretion when it rejects a defendant's offer to stipulate his status as a felon for purposes of 18 U.S.C. § 922(g)(1). The Old Chief court reasoned that the admission of the name and nature of a defendant's prior felony conviction can be prejudicial because the defendant's prior felony conviction was relevant solely to prove an element of § 922(g)(1). Here, Stotts stipulated prior to Mundy's testimony that he had at least one felony conviction.
29
Old Chief does not help Stotts. First of all, neither the name nor the nature of any of Stotts's prior convictions was revealed to the jury. Thus, the precise concern at issue in Old Chief was not implicated here. Moreover, this court has rejected the proposition that Old Chief created a per se rule that it cannot be harmless error when a jury is informed of a defendant's prior conviction for serious violent felonies. See United States v. Daniel, 134 F.3d 1259, 1263 (6th Cir.), cert. denied, --- U.S. ----, 119 S.Ct. 83, 142 L.Ed.2d 65 (1998). More importantly, the remark was isolated and the district court gave an immediate curative instruction. See United States v. Harris, 165 F.3d 1062, 1066 (6th Cir.1999) (holding that government witness's allusion to a prior arrest did not require a new trial since it was isolated and district court gave an immediate curative instruction); United States v. Forrest, 17 F.3d 916, 920 (6th Cir.1994) (and cases cited therein). We therefore reject this claim.
E.
30
Next, Stotts contends that the district court erred in failing to unseal the transcript of an in camera hearing in which, according to Stotts, the Government presented Brady material.2 Stotts filed a separate motion to unseal, which this court denied by order, deferring the matter to the merits panel.
31
Stotts sought information about Patricia Renee Carter, the woman who was present at the time of the fire. When Carter was found, she was driving a car that had two five gallon containers of methamphetamine in the trunk. Carter was not charged, however.
32
Stotts questions the decision to not charge Carter despite her "heavy involvement" in the methamphetamine production. Stotts maintains that Carter was a government informant. Stotts contends that reviewing the transcript of the in camera hearing could have substantially assisted in the preparation of his defense.
33
This Court has reviewed the sealed transcript and records and we find no exculpatory or impeachment evidence requiring disclosure. See Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) (exculpatory evidence); Giglio v. United States, 405 U.S. 150, 154, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972) (impeachment evidence); Schledwitz v. United States, 169 F.3d 1003, 1011 (6th Cir.1999). Specifically, we find no information establishing that Carter was an informant, or any exculpatory or impeachment evidence requiring disclosure. The district court did not err in refusing to unseal the transcript, see United States v. Streit, 962 F.2d 894, 900 (9th Cir.1992), or in ruling that there was no Brady material.
F.
34
Section 924(c) of Title 18 of the United States Code imposes a five year minimum term of imprisonment upon a person who "during and in relation to a drug trafficking crime ... uses or carries a firearm." 18 U.S.C.A. § 924(c) (West Supp.1998). "Firearm" includes "any destructive device." 18 U.S.C.A. § 921(a)(3)(D) (West 1976). "Destructive device" means "any explosive, incendiary, or poison gas ... bomb." Id. § 921(a)(4)(i).
35
Stotts argues that the district court should have granted his motion for judgment of acquittal on to Count 3 of the indictment, which charges him with using and carrying an unassembled destructive device in violation of 18 U.S.C. § 924(c). Stotts argues that the evidence failed to establish he either "used" or "carried" a destructive device under the statute.
36
In arguing that the "use" prong was not met, Stotts points to Agent Charles Stephen Parris's testimony. Parris testified that during the search he discovered the device in a clothes basket, and that the fuse was not engaged and no attempt to ignite the fuse had been made. In Bailey v. United States, 516 U.S. 137, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), the Supreme Court decided "whether evidence of the proximity and accessibility of a firearm to drugs or drug proceeds is alone sufficient to support a conviction for 'use' of a firearm during and in relation to a drug trafficking offense under 18 U.S.C. § 924(c)(1)." Id. at 138-39. The Bailey court held that the "use" of a firearm during and in relation to a narcotics trafficking crime "requires evidence sufficient to show an active employment of the firearm by the defendant, a use that makes the firearm an operative factor in relation to the predicate offense." Id. at 143. The Court defined "active employment" as including "brandishing, displaying, bartering, striking with, and most obviously, firing or attempting to fire, a firearm." Id. at 148. The Bailey court rejected the theory that mere possession could constitute a "use": "[T]he inert presence of a firearm, without more, is not enough to trigger § 924(c)(1)." Id. at 149.
37
The Government responds that although the destructive device listed in Count 3 was technically "unassembled" because the fuse was not actually inserted in the hole of the pyrodex can, the device was nonetheless "used" in the course of the drug offense because it was "displayed." The Government's reliance on "display" is inappropriate here. When a firearm is "displayed" in a drug trafficking offense, the firearm becomes an operative factor in relation to the predicate offense. That is because, although silent, a gun has an "obvious and forceful presence": "Don't mess with the trafficker or the drugs." See Bailey, 516 U.S. at 148 (noting that even a reference to a firearm may constitute a "use" because it is "calculated to bring about a change in the circumstances of the predicate offense ..., just as the silent but obvious and forceful presence of a gun on a table can be a 'use' "). On the other hand, "[i]f the gun is not disclosed or mentioned by the offender, it is not actively employed, and it is not 'used.' " 516 U.S. at 149. In other words, the "display" of the gun sends a message and is in that sense "actively employed" during the drug offense.
38
Stotts's activity, however, was clandestine. Thus, the bomb was not "used" like a firearm is "used" during a drug deal. Admittedly, the undetonated bomb was located nearby in case the laboratory needed to be destroyed, as evidenced by the detonated bomb. This evidence merely established was proximity and accessibility. After Bailey, however, it is indisputable that such placement with the intent to put the firearm to a future active use does not satisfy § 924(c)(1). See Bailey, 516 U.S. at 149-50. The evidence was therefore insufficient to support Stotts's conviction on Count 3.
39
We note that the only other two circuits that have addressed similar issues have reached comparable conclusions. In United States v. Pearce, 146 F.3d 771 (10th Cir.1998), the Tenth Circuit held that the "use" prong of § 924(c) was not satisfied when the evidence merely showed that bombs were stored near drugs, in light of evidence that each bomb required a fuse to detonate it. The Pearce court rejected the government's argument that the bombs were used for intimidation or to protect the drugs because "it failed to show that the weapons were 'disclosed or mentioned by the offender' and thus did not show that they were actively employed." Id. at 775. Similarly, in United States v. Manning, 79 F.3d 212 (1st Cir.1996), the First Circuit held that the government had not shown "use" because the evidence simply demonstrated that the defendant carried six pipe bombs along with drugs in a briefcase "and nothing more." Id. at 216.
40
Alternatively, the Government argues that the "carry" prong is satisfied because the bomb was within Stotts's immediate reach and immediately available for use, citing United States v. Mauldin, 109 F.3d 1159 (6th Cir.1997); United States v. Allen, 106 F.3d 695 (6th Cir.), cert. denied, 520 U.S. 1281, 117 S.Ct. 2467, 138 L.Ed.2d 223 (1997); and United States v. Myers, 102 F.3d 227 (6th Cir.1996). The Government's argument is highly disingenuous. Each of these cases also references the element of transportation. See Mauldin, 109 F.3d at 1162; Allen, 106 F.3d at 702; Myers, 102 F.3d at 237 n. 7. Moreover, each of those cases also referred to United States v. Moore, 76 F.3d 111 (6th Cir.1996), where we stated: "A definition of 'carry' that takes only availability into account ignores the term's most obvious connotation, i.e., physical transportation. Immediate availability is therefore a necessary, but not sufficient determinant." Id. at 113; see also Hilliard v. United States, 157 F.3d 444, 449 (6th Cir.1998); United States v. Washington, 127 F.3d 510, 514 (6th Cir.1997) (and cases cited therein), cert. denied, --- U.S. ----, 118 S.Ct. 2348, 141 L.Ed.2d 2718 (1998). See generally Muscarello v. United States, 524 U.S. 125, 118 S.Ct. 1911, 141 L.Ed.2d 111 (1998). Cf. United States v. Feinberg, 89 F.3d 333, 340 (7th Cir.1996) (holding that "carry" prong was established when coconspirators transported pipe bombs and one held a bomb in his lap while traveling to blow up a target); Manning, 79 F.3d at 216 (holding that evidence established "carrying" when the defendant walked from his vehicle to the garage holding a briefcase containing a handgun, pipe bombs and drugs). In short, there was insufficient evidence to satisfy either the "use" or "carry" prong of § 924(c)(1), and the district court erred in not granting Stotts's motion for acquittal.
G.
41
Stotts also claims that the evidence was insufficient to convict him on Count 2. Stotts argues that there is no evidence to show that Stotts ignited the device, and therefore no showing of either "use" or "carry."
42
This argument is without merit. The evidence established that when Stotts saw the officers, he ran upstairs. Then, after he ran down the stairs, an explosion in the upstairs portion of the residence occurred. The Government offered expert testimony that the fuse on the bomb could have burned as little as fifteen seconds or possibly as long as one to two minutes. Stotts was the only person present in the house, other than the law enforcement officials. A jury could reasonably infer that Stotts detonated the bomb, and therefore "used" it for purposes of § 924(c)(1), to cover up his drug making activities. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
43
Given this clear outcome, we need not address the Government's strained argument that the "carry" prong was satisfied.H.
44
Stotts further argues that the district court erred by admitting evidence pertaining to the unassembled device, which unduly prejudiced the jury's consideration of Count 2. This evidence was clearly probative of Stotts's intent to use a bomb in connection with a drug trafficking crime. We find no error.
I.
45
Stotts contends that his convictions for having violated both 18 U.S.C. § 924(c) (Count 2)3 and 18 U.S.C. § 922(g) (Count 4) violate double jeopardy. Stotts claims that his possession of the guns and the bombs was one "continuous act."
46
This claim must be rejected. Count 4 required proof that Stotts had a prior felony conviction and possessed a firearm. Count 2 required that Stotts used or carried the specified destructive device during and in relation to a controlled substance offense. Thus, the § 924(c) charge and the § 922(g) charge each required proof of an element that the other did not. The Double Jeopardy Clause of the Fifth Amendment was not violated. See United States v. McKinney, 919 F.2d 405, 417 (7th Cir.1990), overruled on other grounds by United States v. Spears, 965 F.2d 262 (7th Cir.1992); United States v. Garrett, 903 F.2d 1105, 1115 (7th Cir.1990).4 See generally Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932). Moreover, several courts have also held that the sentences conform to congressional intent to impose cumulative punishment and that they therefore are not violative of either the Double Jeopardy or Due Process Clauses of the Fifth Amendment. See United States v. Young, 936 F.2d 1050, 1056 (9th Cir.1991); United States v. Lawrence, 928 F.2d 36, 38-39 (2d Cir.1991); Garrett, 903 F.2d at 1114. See generally Whalen v. United States, 445 U.S. 684, 689, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980) ("The Double Jeopardy Clause ... precludes federal courts from imposing consecutive sentences unless authorized by Congress to do so." ) (emphasis added).
47
Stotts cites United States v. Jones, 533 F.2d 1387 (6th Cir.1976), in which a defendant who possessed a single firearm for several months was charged with five separate counts of being a felon in possession of a firearm under § 922(g). Jones is inapposite. Count 2 dealt with a destructive device and Count 4 dealt with possession of a shotgun, pistol, and revolver. This claim is without merit.
J.
48
Stotts claims that the district court erred in allowing testimony regarding the pipes, end caps, and various bomb-making books in his residence on the night of the search. Stotts claims that the evidence was impermissible "other crimes" evidence under Fed.R.Evid. 404(b). The Government responds that the evidence was relevant to both the elements of the crime, and Stotts's defense, which included allegations that the Government had tampered with the evidence to make it appear that these were destructive devices.
The district court ruled that
49
it is some circumstantial evidence that the device that actually blew up was, in fact, a bomb and that it was not as a result of an accident or a mistake or a fire that got loose in the drug lab. That's one of the issues that will come up in this case, and it seems to me this is at least some evidence of that.
50
Immediately after the witness testified, the court instructed the jury that
51
[t]he defendant is not charged in any way with possessing that destructive device, and that's not being admitted for you to decide whether or not he's guilty of possessing that destructive device. That's being admitted only for the limited purpose of your consideration of whether or not the devices alleged in counts 2 and 3 were, in fact, destructive devices.
52
We agree. We think this evidence was clearly relevant and admissible for a proper purpose; that is, to show that the "devices" were intended to be destructive devices as contemplated by § 924(c), and that the explosion was not merely coincidence resulting from the presence of various chemicals near the reaction vessel. We therefore hold that the district court did not abuse its discretion in admitting this evidence because it was not impermissible "prior bad acts" evidence under Fed.R.Evid. 404(b).
III.
53
For the foregoing reasons, we REVERSE Stotts's conviction as to Count 3 and REMAND to the district court with instructions to VACATE the conviction. We AFFIRM the remainder of the district court's judgment.
1
Given this conclusion, the district court stated that it need not consider whether exigent circumstances existed
2
Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963)
3
Stotts also raised this challenge as to Count 3. Because we have vacated that conviction, we need not factor it into this analysis
4
This court has held the same in an unpublished opinion. See United States v. Hayes, Nos. 93-5012, 93-5013, at * 4, 1994 WL 262055 (6th Cir. June 14, 1994)
|
528 F.Supp. 1266 (1981)
James McCoy SMITH, Plaintiff,
v.
PRO-FOOTBALL, INC. and the National Football League, Defendants.
C.A. No. 1643-70.
United States District Court, D. of Columbia.
December 8, 1981.
*1267 Stuart H. Johnson, Jr., R. Kenneth Mundy, Mozart G. Ratner, Washington, D.C., for plaintiff.
James C. McKay, Paul J. Tagliabue and Gary R. Roberts, Washington, D.C., for defendant National Football League.
Lawrence Lucchino, Washington, D.C., for defendant Pro-Football, Inc.
MEMORANDUM
BRYANT, District Judge.
In 1976, the plaintiff won a private antitrust action in this court and treble damages were awarded. 420 F.Supp. 738. The Court of Appeals affirmed the finding of a violation of the antitrust laws but reversed this court on the measurement of damages and remanded for recomputation of damages. 593 F.2d 1173 (1978). The plaintiff has made a motion for this court to recompute damages. Based on the guidance from the Court of Appeals, memoranda from the parties, and the record in the case, I have found the plaintiff's damages to be $4,000 and thus award him $12,000.
I. Background
The plaintiff, James McCoy (Yazoo) Smith, was an All-American college football player at the University of Oregon. In 1968 he was drafted by the Washington Redskins, a team operated by Pro-Football, Inc. ("Redskins"), in the first round of the National Football League's ("NFL") player selection draft. No other NFL team was permitted to sign Smith after the Redskins drafted him. Hence, on May 11, 1968, he signed a one-year contract with the Redskins on the Standard Player Contract form required by the NFL. The contract called for a salary of $22,000, an additional $5,000 if he made the team, and a $23,000 "bonus" for signing. He made the team and played well during the 1968 season, but his career was ended when he received a serious neck injury in the final game of the season.[1]
Smith subsequently filed this suit, contending that the draft as it existed in 1968[2] was an unreasonable restraint of trade in violation of §§ 1, 2, and 3 of the Sherman Act, 15 U.S.C. §§ 1, 2, 3, and of § 4 of the Clayton Act, 15 U.S.C. § 15, and had there been no draft he would have been able to negotiate a far more lucrative contract. He *1268 sought damages for the difference between the amount he would have received in a free market and the amount he actually received.
This court found that the NFL draft was a per se violation of the Sherman and Clayton Acts[3] and alternatively that the draft was a violation if tested under the rule of reason.[4]
An estimate of the contract that Smith would have been able to sign in a free market was then made.[5] The estimate was based on the conclusion that the plaintiff would have been able to negotiate a three-year contract which would have guaranteed payment regardless of injury. The size of the hypothetical contract was established by using the annualized payments of $54,000 to Pat Fischer, who played a similar position to Smith and was signed in the same year by the Redskins in what was then the closest thing to a free market.[6] Fischer was a veteran player with the St. Louis Cardinals who was a "free agent", that is, he was eligible to sign with any team. The Cardinals would be compensated for his loss by the team signing him in an amount ultimately determined by the Commissioner of the NFL.[7] When Fischer was signed by the Redskins, the Commissioner refused the Cardinals' request to award the plaintiff to them as compensation, thus establishing what the Court of Appeals called a "very rough index of the two players' comparability."[8] Thus, this court concluded that Smith would have signed a three-year contract, guaranteed regardless of injury, for $162,000.[9]
The amount of compensation Smith actually received was made up of two parts. First, there was the $50,000 total value of the contract he signed. Second, there was the $19,800 paid to Smith in the year following his injury. This was 90% of his prior year's salary, representing what he would have received had he played a second year under the "option" year of his contract. Thus, the total compensation Smith received was $69,800.[10]
This court found Smith's damages to be the difference between what he would have received in a free market minus what he actually received, $92,200, and awarded treble damages of $276,600.[11]
Both sides appealed this court's decision. The plaintiff argued that the amount of damages was too low and advanced a variety of alternative theories for calculating the amount he would have received in a free market. The defendants argued that the finding of antitrust liability was incorrect and that the damage award was excessive. The Court of Appeals found that the draft was not a per se violation of the antitrust laws[12] but that it was a violation of the rule of reason.[13]
The Court of Appeals overturned this court's determination of damages and remanded for recomputation of damages.[14] The court said, "there was simply no evidence to support the Judge's finding that Smith, absent the draft, would have been able to negotiate a contract containing a guarantee of three years' full salary, regardless of injury."[15] However, the court found that the comparison to Pat Fischer *1269 was not clearly erroneous[16] or unreasonable.[17] Further, the court approved inclusion of the $19,800 in the total actual compensation paid to Smith given the existing factual situation.[18]
On remand, this court must determine the contract terms Smith would have been able to obtain had there been no draft. Smith advances a new theory of how he would have had a multi-year contract that was payable regardless of injury; he repeats his earlier assertions that contracts signed by glamour rookies during the 1965-1966 bidding war are an indication of his free market value, and that if Pat Fischer is used again that the court decide that Fischer's contract was reduced by the value of the draft choices awarded to the Cardinals; and he argues that the $19,800 payment should no longer be included in the total compensation he received from the Redskins. Parts II, III, and IV of this opinion address these three arguments.
II. Smith's New Theory of Multi-Year Injury Protection
The plaintiff has advanced a novel theory that had he agreed to a multi-year contract, he would have inadvertently been guaranteed payment for the entire length of the contract, regardless of injury. He recognizes that the Court of Appeals found that he could not have negotiated for multi-year injury protection,[19] but argues that because of the wording of the Standard Player Contract, had he signed a multi-year contract he would have automatically been guaranteed payment for every year of the agreement.[20]
The plaintiff's theory is based on the wording of the form contract and two district court cases which have considered its meaning. The Standard Player Contract is a four-page printed contract with a small number of blank spaces that are filled in by the parties. For present purposes, portions of three paragraphs are important:
1. The term of this contract shall be from the date of execution hereof until the first day of May following the close of the football season commencing in the calendar year 19__, subject, however, to termination, extension, or renewal as specified herein.
....
6. The Player represents and warrants that ... he is and will continue to be in excellent physical condition .... If Player fails to establish his excellent physical condition to the satisfaction of the Club physician by the physical examination, the Club shall have the right to terminate this contract.
....
14. In the event that Player is injured in the performance of his services under this contract, ... the Club will: ... (2) continue, during the term of this contract, to pay Player his salary ....[[21]]
The interaction of paragraphs 1 and 14 obviously means that if, in 1968, the blank in paragraph 1 was filled in with a "70", the Player would be paid for three years regardless of injury. The defendant concedes this on page 11 of Defendants' Memorandum Regarding Plaintiff's Position on Inadvertent Multiple Year Injury Protection.[22] However, the court finds that it was the practice of NFL teams including the Redskins *1270 to avoid inadvertent multi-year liability by having players sign contracts with a series of consecutive one-year terms.[23] Consecutive contracts each have terms of one year so that the "term" of the contract referred to in paragraph 14 is only a single year.
The record shows that in the period immediately before and after Smith signed his contract, the Redskins used two techniques of drafting consecutive single-year contracts so as to limit their liability to a single year. The first technique is exemplified by the contract with Ray McDonald signed in 1967.[24] The 1967 season was contracted for by inserting "1967" in the blank in paragraph 1. The next two seasons were contracted for with the following paragraph inserted between the end of the printed contract and the signature lines:
19. The Player further agrees that this agreement constitutes a contract to play for the Washington Redskins for a further term beginning the first day of May, 1968, until the first day of May, 1969, for the sum of $22,000, and an additional term beginning the first day of May, 1969, until the first day of May, 1970, for the sum of $24,000, under the same terms and conditions as outlined herein.[[25]]
This paragraph is clearly intended to create two additional independent terms so that when coupled with paragraph 14,[26] the injury protection is only for the remainder of the year in which the injury occurs.[27]
The second technique used by the Redskins undoubtedly was intended to have the same effect as the first, but is not as unambiguous. This technique involved using three separate contract forms (assuming the agreement is for three years), each executed at the same time. This technique is the best indication of what Smith would have signed, had he agreed to a multi-year contract, because it was used on June 17, 1968, one month after Smith signed his contract, to sign Gary Beban to three years worth of contracts.[28]
The last day of the term of each contract is clear since paragraph 1 says that the contract runs until "the first day of May following the close of the football season commencing in the calendar year 19__,"[29] and each contract has a different year inserted in the blank. However the beginning of the term of each of the contracts is not always clear. On one hand, paragraph 1 says that the term of the contract begins on the date of the execution of the contract.[30] Since all three contracts are executed on the same day, a literal reading of paragraph 1 alone would indicate that the player has one contract that runs for one year from the date of execution, one contract that runs for two years from the date of execution, and one contract that runs three years from the date of execution. *1271 On the other hand there are three other factors which show that paragraph 1 is not the best indication of the party's intentions as to the beginning date of each contract.
First, typed at the end of the printed terms of each of the three contracts is paragraph 20:
20. It is agreed that this constitutes a NO CUT contract for the year in which it is operative any other provisions hereinabove to the contrary notwithstanding.[[31]]
This clearly shows that the parties considered each contract to be only for the duration of a single year including the football season in which the contract ended as indicated in paragraph 1.
The second factor indicating the party's true intentions is the very existence of the three form contracts. If a single three-year contract were intended, it served no purpose at all to have executed three separate forms if the words of paragraph 1 of the third form were intended to create a three-year contract. Execution of the third form would have been sufficient with a single addendum listing the salary for each year. Executing three forms was intended for the purpose of creating three separate terms for paragraph 14 to apply to.
The third factor indicating the true intentions of the parties is the bonus agreement entered into at the same time as the three form contracts were executed. The body of that agreement reads:
1. For and in consideration of the Player's services under the contracts, dated June 17, 1968, hereunto annexed, and designated as Contract A, Contract B and Contract C, the Club agrees to make the following payment to the Player or for his benefit:
On July 2, 1971, the Club will pay the Player the sum of $65,000.00.
The aforesaid payment constitutes a bonus to the Player, and it is agreed that this sum is guaranteed by the Club and that death, injury or illness of the Player shall not abate or defeat the obligation of the Club in this matter.
2. It is further agreed that military service shall neither toll nor abate nor otherwise affect the aforesaid bonus payment which is payable in all events as set forth hereinabove.
3. In the event of the Player's death before July 2, 1971, the aforesaid payment shall be made to his heirs or designees.[[32]]
This agreement specifically refers to three contracts rather than one contract. More importantly, the entire thrust of this agreement was to guarantee the payment regardless of injury to the player. This is to distinguish the bonus payment from the payments under the other three contracts which, under paragraph 14, were payable only for the term of each contract should the player get injured.
Thus, from the face of the contracts, it is most likely that the parties intended to create three one-year contracts.
The plaintiff relies heavily on Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265 (3d Cir. 1979), for the proposition that by executing three form contracts simultaneously, the Redskins would have given three-year injury protection. In Chuy, the plaintiff simultaneously executed three separate forms of the Standard Player Contract covering the 1969, 1970, and 1971 football seasons. He was injured in the first season and claimed that he actually signed one three-year contract and should be paid for all three years. The trial court judge ruled that the term of each contract was ambiguous and, as a result, that parol evidence was admissible to determine the true intent of the parties. The jury heard testimony from the negotiators. As recounted by the Court of Appeals for the Third Circuit, id. at 1272-73, Chuy testified that he asked for a three-year, "no-cut, no trade" *1272 contract for a total of $100,000 and an advance of $15,000. He said that the Eagles' negotiator countered with a three-year contract which he described as a "$90,000 package", but rejected the no-cut, no-trade proposal. The Eagles' negotiator had a conflicting recollection of the negotiations. The jury found that the Eagles had indeed intended to compensate Chuy for three years, and the Court of Appeals found that if Chuy was believed, there was sufficient evidence to support that verdict. Id. at 1273.
The Chuy case does not support the assertion that if Smith had signed a series of consecutive contracts, as Gary Beban did, that he would have automatically gotten multi-year injury protection. Rather, the Chuy jury found that Chuy successfully negotiated for multi-year injury protection, and the Court of Appeals of the Third Circuit found that there was enough evidence to support that verdict. This does not help Smith because the Court of Appeals for the District of Columbia Circuit has already held that he could not have negotiated multi-year injury protection.[33]
The plaintiff's arguments that the defendants in this case are collaterally estopped by Chuy from relitigating the effect on multi-year injury liability of signing a series of Standard Player Contracts are meritless. That case merely says that Chuy and the Eagles agreed to a certain set of terms and were ambiguous in the recording of that agreement. It does not mean that, for example, Gary Beban had multi-year injury protection because he signed form contracts with the same facial ambiguity. Instead, the evidence surrounding each set of contracts must be examined by the factfinder.[34] Again, since the Court of Appeals held that Smith could not have negotiated multi-year injury protection, this court cannot find that had Smith signed a Bebantype set of contracts, he would have now been able to resolve the ambiguity by showing that he had negotiated such protection.[35]
In sum, the court finds that even if Smith had accepted a "three-year contract", the wording of the Standard Player Contract would not have given him multi-year injury protection given the Redskins' practice of intentionally creating independent consecutive one-year terms. While one of the techniques used for creating separate one-year terms is ambiguous, when the Redskins used this technique, other parts of the contracts resolve the ambiguity. Furthermore, Smith cannot argue that the ambiguity should be resolved in his favor given the Court of Appeals holding that he could not have negotiated for multi-year injury protection.
III. Smith's Other Theories of His Free Market Value
The plaintiff has again raised two theories which, he asserts, should be used to estimate the value of the contract he would have signed in a free market. Given that, as discussed in Part II of this opinion, he could not have been paid for any years following the year in which he was injured, these theories could be useful only in determining what he would have earned for one year.
A. In 1965 and 1966 there was a bidding war between the NFL and the American *1273 Football League for glamour rookies. The plaintiff cites a number of contracts signed by these rookies, in particular that of Roger Bird, and says that they indicate what Smith would have been able to bargain for in a free market. Bird was a first round draft choice who played the same position as the plaintiff. There is something to be said for this comparison. Even though the compensation agreed to during the bidding war is much greater than that which could be sustained by the teams without going out of business, those contracts may indicate that talented rookies were worth more than they were paid after the bidding war ended. However, these arguments were raised on appeal by the plaintiff,[36] and were rejected by the Court of Appeals as "frivolous".[37]
These arguments were raised again on a motion for rehearing on the issue of damages with suggestion for rehearing en banc and the Court of Appeals responded by adding the second and third paragraphs to footnote 77.[38] The plaintiff now argues that the additional paragraphs are actually a reversal of the Court of Appeals' conclusion that these arguments are frivolous. The plaintiff contends that the Court of Appeals actually recognized the relevance of the bidding war contracts. This contention is truly frivolous. The actual purpose of the first additional paragraph was to respond to the plaintiff's argument that the no cut contracts negotiated by some players supported this court's original award of damages based on multi-year injury protection. The Court of Appeals was merely stating that a no cut contract does not give multi-year injury protection.[39] The purpose of the second additional paragraph was to clearly state that techniques for estimating plaintiff's damages which had not been presented to the Court of Appeals and rejected could still be used by this court to estimate damages. It is unlikely that the court intended that addendum to the last footnote to drastically change its analysis of the validity of the plaintiff's comparisons to the bidding war.
B. The plaintiff also argues that if this court uses Pat Fischer as a basis for comparison again, that the value of the draft choices awarded to the Cardinals as compensation for the loss of Fischer should be added to the value of the contract he signed. This argument was already considered by this court in the original computation of damages. The value of the draft choices awarded to the Cardinals was balanced against the premium in his compensation because the free agent market was player-movement-restricted.[40] The plaintiff raised the argument again on appeal,[41] and the Court of Appeals affirmed this court's analysis.[42] This court believes that its original analysis was correct and, given the agreement by the Court of Appeals, there is no reason to consider the argument again.
Thus, neither of the plaintiff's arguments discussed in this section give any basis for using anything other than Pat Fischer's compensation as a basis for deciding what annual compensation the plaintiff would have been able to obtain in a free market.
IV. The $19,800 Workmen's Compensation Payment
As discussed in Part I of this opinion, in the year following Smith's injury, the Redskins paid him $19,800.[43] Section 12 of the Standard Player Contract says:
12. Any payments made hereunder to the Player, for a period during which he is entitled to workmen's compensation benefits by reason of temporary total, *1274 permanent total, temporary partial, or permanent partial disability shall be deemed an advance payment of workmen's compensation benefits due the Player, and the Club shall be entitled to be reimbursed the amounts thereof out of any award of compensation.[[44]]
Thus, it appears that the $19,800 paid to Smith should not have been included in calculating the total compensation he received from the Redskins because it was actually an independent workmen's compensation liability. However, when this case was originally before this court, Smith's workmen's compensation claim had not yet been resolved. Therefore, this court was not yet able to say that the $19,800 should not be included in the total compensation he received from the Redskins. There was no certainty that the Redskins would ever have a workmen's compensation liability to credit the payment against. Thus, the payment was included as compensation from the Redskins rather than as a part of the team's workmen's compensation liability.[45]
When this case was argued before the Court of Appeals, the facts had not changed. On these facts, the Court of Appeals agreed with this court that Smith's actual damages were reduced by the $19,800 payment.[46] However, the court clearly foresaw and disapproved of the possibility that if the workmen's compensation suit was resolved so that the Redskins were able to offset the $19,800 against their total liability, the Redskins would derive a double benefit they would simultaneously reduce the workmen's compensation liability and the antitrust liability.[47] The Court of Appeals thus left for future proceedings the task of coordinating the two liabilities.
On June 5, 1978, while the Court of Appeals decision was pending, the Department of Labor issued a Memorandum of Informal Conference in which the hearing examiner recommended that the Redskins be permitted to credit the amounts paid to Smith against their liability pursuant to paragraph 12 of his contract. The parties agreed to this settlement.[48]
Since the Redskins have now benefited from their payment to Smith in the workmen's compensation settlement, it would be inconsistent with the opinion of the Court of Appeals and clearly unjust to permit the Redskins to continue to have their antitrust liability reduced after they have used that same payment to reduce their workmen's compensation liability. The court cannot allow the peculiarity of the timing of the decisions in this case and in the workmen's compensation suit to prejudice the plaintiff's right to accurate measurement of damages.
The defendants have directed the court's attention to the letter in which the parties agreed to settle the workmen's compensation suit. This letter was sent by the defendant's counsel and was signed and returned by the plaintiff and his counsel. In it, the plaintiff agreed to refrain from making any effort to use the outcome of the workmen's compensation matter to influence or affect the question of computation of damages in the pending antitrust case, then awaiting decision in the Court of Appeals, or in any other related legal proceedings.[49] This court has considered this issue and reached its conclusion without regard to the agreement of the plaintiff because *1275 basic fairness and the logic of the opinion of the Court of Appeals require it. The Court of Appeals did not want the defendants to get a double benefit from the payment. Given the result reached in the workmen's compensation issue, it was incumbent upon this court to prevent the defendants from receiving more benefit from that payment than is just.[50]
V. Conclusion
The plaintiff has presented no convincing arguments that he would have been able to negotiate a contract with multi-year injury protection or that he would have been able to negotiate a more lucrative one-year contract than did Pat Fischer. Therefore I find that had there been no draft, Smith would have earned $54,000 for his one year in the NFL. Since his actual compensation other than workmen's compensation was $50,000, his damages were $4,000.
The plaintiff has asked for prejudgment interest on any damages he is awarded. In many situations, prejudgment interest can be awarded in cases arising under federal law.[51] In those situations, whether to award prejudgment interest is left to "the sound discretion of the district courts."[52] However, in antitrust cases, the plaintiff receives treble damages by statute. Prejudgment interest is thus not needed in addition to treble damages to compensate the plaintiff for his injuries and should not be awarded.[53]
Recently, Congress has amended § 4 of the Clayton Act, 15 U.S.C. § 15, to authorize the award of prejudgment interest in certain situations.[54] Congress was aware that existing law did not give clear authority for awarding prejudgment interest.[55] It gave courts the authority for the purpose of providing a disincentive for litigants to use delaying tactics.[56] However, the amendment does not help the plaintiff because § 4(b) of the Antitrust Improvements Act states that the amendment applies only to actions commenced after its passage.
Therefore, a judgment will be entered awarding the plaintiff $12,000.[57]
NOTES
[1] See 420 F.Supp. at 740-41 and 593 F.2d at 1174-77 for a more complete factual background.
[2] The draft is currently operated under rules agreed to in 1977 by the NFL and the National Football League Players Association. 593 F.2d at 1176 n.6.
[3] 420 F.Supp. at 744-45.
[4] Id. at 745-47.
[5] Id. at 747-49.
[6] Id. at 748-49.
[7] This technique for determining the amount of compensation was known as the "Rozelle Rule", named after Commissioner Rozelle.
[8] 593 F.2d at 1190 n.76. Two draft choices were awarded to the Cardinals as compensation for Fischer.
[9] 420 F.Supp. at 749.
[10] Id. at 748 n.8. See 593 F.2d at 1176 n.6 for an explanation of the "option" clause in the Standard Player Contract.
[11] Id. at 749.
[12] 593 F.2d at 1177-82.
[13] Id. at 1183-89.
[14] Id. at 1189-91.
[15] Id. at 1190. Footnote omitted.
[16] Id.
[17] Id. at 1190 n.76.
[18] Id. at 1190. See Part IV of this opinion for the explanation of why it is no longer proper to include this as part of the Redskins' payment to Smith.
[19] Id.
[20] This theory is, of course, in direct contradiction to the plaintiff's assertions since the beginning of the lawsuit more than a decade ago that because of the monopoly power of the NFL draft he was unable to obtain multi-year injury protection. See Plaintiff's Amended Complaint, paragraph 17c.
[21] Plaintiff's Exhibit 1, reproduced in Joint Appendix (J.A.) 196-200.
[22] This interpretation of the Standard Player Contract was assumed by the court in Hennigan v. Chargers Football Company, 431 F.2d 308 (5th Cir. 1970).
[23] Accord, Alexander v. National Football League, 1977-2 Trade Cases, ¶ 61,730 at 73000 (D.Minn.1977). But see, Chuy v. Philadelphia Eagles Football Club, 431 F.Supp. 254, 262 n.10 (E.D.Penn.1977), aff'd 595 F.2d 1265 (3d Cir. 1979). See generally, J. Weistart & C. Lowell, The Law of Sports 220-22 (1979).
[24] Defendants' Exhibit 50G, reproduced in J.A. 453-56. The form contract signed by McDonald is not different in any relevant way from the contract signed by Smith.
[25] Id. The dollar amounts were inserted by hand in the typed paragraph.
[26] In the Standard Player Contract used in 1967 this paragraph was actually number 15. In 1968, it was renumbered as paragraph 14. See note 24.
[27] The plaintiff's contention that McDonald's agreement provided multi-year injury protection because it was on a single document ignores the words of paragraph 19.
[28] See Defendants' Exhibit 50M, reproduced in J.A. 477-89. The parties agreed in paragraph 18 that the laws of the District of Columbia govern the contract. Under that law, the question of whether a contract is ambiguous is for the court to decide. Clayman v. Goodman Properties, Inc., 518 F.2d 1026, 1034 (D.C.Cir. 1973). The Beban contracts are ambiguous. Chuy, 595 F.2d at 1272. Interpretation of ambiguous contracts is the job of the factfinder. See, Clayman, 518 F.2d at 1034. Here, the court is the factfinder and what follows is its construction of the ambiguous set of contracts.
[29] See text accompanying note 21.
[30] Id.
[31] Defendant's Exhibit 50M, reproduced in J.A. 477-89. Emphasis added. A "no cut" contract means that the player will be paid even if he lacks the talent to make the team. It does not affect the operation of paragraph 14 concerning payment after injury. 593 F.2d at 1190 n.77. See, Weistart & Lowell, supra, at 253, 54.
[32] Defendant's Exhibit 50M, reproduced in J.A. 477.
[33] 593 F.2d at 1190.
[34] See note 28.
[35] In Sample v. Gotham Football Club, Inc., 59 F.R.D. 160 (S.D.N.Y.1973), Chief Judge Edelstein also considered whether a series of simultaneously executed Standard Player Contracts embodied a guarantee of salary for multiple seasons in the event of injury. He held that the contracts were separate and independent; hence no multi-year injury protection. However, according to Chuy, 595 F.2d at 1272, the printed terms of paragraph 1 of the form contract had been altered so that the starting date of the later contracts was the ending date of the previous contract. Without the facial ambiguity in defining the term of the contract, this interpretation is obviously correct as a matter of law. C.f., Alabama Football, Inc. v. Larry Rayfield Wright, 452 F.Supp. 182 (N.D.Tex. 1977) (consecutive one-year contracts with a team in the now defunct World Football League construed as separate one-year contracts).
[36] Brief for Appellee-Cross-Appellant James McCoy (Yazoo) Smith at 56-58.
[37] 593 F.2d at 1189 n.70.
[38] Order of January 1, 1976.
[39] See note 31.
[40] 420 F.Supp. at 749.
[41] Brief for Appellee-Cross-Appellant James McCoy (Yazoo) Smith at 53-55A.
[42] 593 F.2d at 1190.
[43] 593 F.2d at 1176-77; 420 F.Supp. at 748 n.8.
[44] Plaintiff's Exhibit 1, reproduced in J.A. 198.
[45] 420 F.Supp. at 748 n.8.
[46] 593 F.2d at 1190 & n.75.
[47] Id. at 1190 n.75. The footnote reads in full: 75. Plaintiff's "actual damages" obviously were reduced by the $19,800 that he actually received, and his actual receipt of this sum cannot be ignored on the speculative chance that the Redskins may claim and be allowed it as an offset to an unrelated and as yet undetermined liability. The fact that the Redskins have derived a benefit from their payment of this sum in this case, of course, may prevent them, on some sort of estoppel theory, from deriving a second benefit from it in the workmen's compensation suit; but that is of no concern to us here.
[48] Letter of August 21, 1978 from Lawrence Lucchino to R. Kenneth Mundy.
[49] Id.
[50] While the court is satisfied that the facts compel this result, it is at the same time skeptical of the propriety of counsel's affidavit to the effect that his agreement was tied solely to the proceedings in our Court of Appeals. The clear language of the stipulation will not accommodate such a restricted interpretation.
[51] Lodges 743 and 1746 v. United Aircraft Corp., 534 F.2d 422, 446 (2d Cir. 1975).
[52] Id.
[53] Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 80 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed. 577 (1973); Locklin v. Day-Glo Color Corp., 429 F.2d 873, 877 (7th Cir. 1970); Vandervelde v. Put and Call Brokers and Dealers Association, 344 F.Supp. 118, 157 (S.D.N.Y.1972); Cape Cod Food Products v. National Cranberry Association, 119 F.Supp. 900, 911 (D.Mass. 1954). Accord, Trio Process Corp. v. L. Goldstein's Sons, Inc., 638 F.2d 661, 663 (3d Cir. 1981).
[54] Antitrust Improvements Act, Pub.L.No.96-349, § 4(a)(1), 94 Stat. 1156 (Sept. 12, 1980).
[55] H.R.Rep.No.96-875, 96th Cong., 2d Sess. 5 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 2716, 2766, 2769.
[56] H.R.Conf.Rep.No.96-1234, 96th Cong., 2d Sess. 9 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 2781, 2783.
[57] Since this case is decided in response to the plaintiff's motion for recomputation of damages, it is not necessary to decide whether the plaintiff's motion for summary judgment complies with the requirements of the local rules.
|
NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 21 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
WILLIE BOLDS, No. 16-15592
Plaintiff-Appellant, D.C. No. 1:12-cv-01754-BAM
v.
MEMORANDUM*
J. CAVAZOS, Chief Warden; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
Barbara A. McAuliffe, Magistrate Judge, Presiding**
Submitted April 11, 2017***
Before: GOULD, CLIFTON, and HURWITZ, Circuit Judges.
California state prisoner Willie Bolds appeals pro se from the district court’s
judgment dismissing his 42 U.S.C. § 1983 action alleging procedural due process
violations. We have jurisdiction under 28 U.S.C. § 1291. We review de novo.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
Bolds consented to proceed before a magistrate judge. See 28 U.S.C.
§ 636(c).
***
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Hamilton v. Brown, 630 F.3d 889, 892 (9th Cir. 2011) (dismissal under 28 U.S.C.
§ 1915A); Barren v. Harrington, 152 F.3d 1193, 1194 (9th Cir. 1998) (order)
(dismissal under § 1915(e)(2)(B)(ii)). We affirm.
The district court properly dismissed Bolds’s due process claim arising from
the alleged deprivation of his property because Bolds failed to allege facts
sufficient to show that he was not provided with the process he was due. See Nev.
Dep’t of Corr. v. Greene, 648 F.3d 1014, 1019 (9th Cir. 2011) (a prison violates
the due process clause when it “prescribes and enforces forfeitures of property
without . . . competent procedural protections”).
To the extent that Bolds alleged any other due process claim related to the
deprivation of his property, the district court properly dismissed these claims
because this court affirmed the dismissal of these claims without leave to amend in
Bolds v. Cavados, 599 F. App’x 307, 307-08 (9th Cir. 2015). See S. Or. Barter
Fair v. Jackson County, 372 F.3d 1128, 1136 (9th Cir. 2004) (“The law of the case
doctrine . . . precludes a court from reexamining an issue previously decided
by . . . a higher court in the same case.”).
Contrary to Bolds’s contention that the district court’s construction of his
objections as a motion for reconsideration was improper, Bolds consented to a
2 16-15592
magistrate judge and therefore he was not entitled to file objections to the
magistrate judge’s ruling.
We reject as meritless Bolds’s contentions that the district court misled
plaintiff, failed to comply with this court’s order in Bolds I, failed to consider
allegations in the third amended complaint, and lacked subject matter jurisdiction.
AFFIRMED.
3 16-15592
|
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued January 29, 2020
Decided February 26, 2020
Before
WILLIAM J. BAUER, Circuit Judge
FRANK H. EASTERBROOK, Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
No. 18‐2729
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Northern District
of Indiana, South Bend Division.
v. No. 3:14‐cr‐00055‐JD‐MGG‐1
JAMES P. LEDONNE, Jon E. DeGuilio,
Defendant‐Appellant. Judge.
ORDER
After James LeDonne pleaded guilty to two counts of mail and wire fraud, the
sentencing court included in his Guidelines calculation an enhancement for obstruction
of justice based on false statements he made to a probation officer about his criminal
history. On appeal, LeDonne argues that the court erred in finding that his statements
could support the enhancement. We see no such error and therefore affirm the sentence.
LeDonne, a purported manufacturer of specialized trucks and trailers, defrauded
65 customers of over $1.5 million through five counterfeit companies he created from
2008 to 2013. Under the scheme, LeDonne solicited deposits for purchase orders that he
never fulfilled and provided false information to customers about production
No. 18‐2729 Page 2
schedules, delivery dates, and refunds. When some customers obtained civil judgments
against LeDonne’s companies for the funds he owed, he filed a series of bankruptcies to
avoid paying the debts.
LeDonne was indicted on fourteen counts of mail and wire fraud, among other
charges, and a probation officer conducted a pretrial‐detention interview. In the
interview, the officer asked LeDonne if he had a criminal history, and he initially denied
any. When confronted with three earlier federal and state convictions in 1993 related to
another fraud scheme (which the probation officer discovered in a pre‐interview
background check), LeDonne acknowledged the convictions and commented that the
state convictions were “tied into the federal case.” Regarding his assets and liabilities,
LeDonne told the officer that he earned $10,000 a month, that he had an outstanding
balance on a mortgage, that he had two vehicle loans, and that he had a couple of small
medical bills. Based on these answers, the officer recommended releasing LeDonne on
bond before trial.
The probation officer, however, later learned additional information about
LeDonne’s criminal history and financial liabilities—discoveries that led her to
recommend instead that the court detain LeDonne before trial. First, the officer
discovered that LeDonne had an Arizona misdemeanor conviction for disorderly
conduct that he never disclosed. Second, she learned at the detention hearing that
LeDonne owed hundreds of thousands of dollars in civil judgments.
LeDonne ultimately pleaded guilty to one count of wire fraud, 18 U.S.C. § 1343,
and one count of mail fraud, id. § 1341.
Before sentencing, both parties objected to the PSR. As relevant to this appeal,
the government objected to the probation officer’s decision to exclude from the
Guidelines calculation a two‐level enhancement for LeDonne’s obstruction of justice
under U.S.S.G. § 3C1.1 for making three misleading statements at his pretrial detention
interview. As the government explained, LeDonne initially denied and later minimized
his criminal history, misrepresented his monthly income, and neglected to divulge the
outstanding civil judgments against him. LeDonne, meanwhile, maintained that any
misstatement resulted from confusion or a bad memory and, in any event, was
immaterial to the outcome of his case.
After holding an evidentiary hearing, the district court determined that LeDonne
had misrepresented his criminal history, and on that basis the court imposed the
obstruction‐of‐justice enhancement. LeDonne’s initial denial of any criminal history was
the “critical fact” supporting the enhancement. The court concluded that the denial was
both “clearly intentional” and that there was “no chance that [LeDonne] simply forgot
No. 18‐2729 Page 3
he had a criminal history” because LeDonne had “spent years in a federal prison” for
his previous conviction. The denial also was material, because LeDonne’s history
influenced the court’s decision about whether he would be released on bond.
The enhancement increased LeDonne’s offense level from 31 to 33. This offense
level, combined with a criminal history category of III, bumped up the Guidelines range
to 168–210 months’ imprisonment—slightly higher than the 151–188‐month range
calculated in the PSR. The court sentenced LeDonne to 168 months’ imprisonment
followed by one year of supervised release. In doing so, it stated that its evaluation of
the 18 U.S.C. § 3553(a) factors—including the scope and duration of the fraud scheme,
LeDonne’s history of fraudulent behavior, and the emotional impact on the victims—
would lead to the “same sentence even if [the Guidelines] range were different.”
On appeal, LeDonne challenges the district court’s decision to impose the
enhancement for obstruction of justice. He contends, first, that the enhancement was
inappropriate because his initial denial of his criminal history was immaterial to the
outcome of his case. As he notes, the enhancement applies only when a defendant
provides “materially false information to a probation officer in respect to a presentence
or other investigation for the court.” U.S.S.G. § 3C1.1 cmt. n.4(H) (emphasis added).
But denying one’s criminal record to a probation officer preparing a
recommendation for pretrial detention is “most certainly material.” United States
v. Owolabi, 69 F.3d 156, 160, 163 (7th Cir. 1995) (quoting United States v. Rogers, 45 F.3d
1141, 1143 (7th Cir. 1995) (upholding enhancement where defendant denied previous
bank‐fraud conviction)). Misrepresenting one’s criminal history to a probation officer
preparing a recommendation about pretrial detention falls “squarely” within this
guideline. United States v. Ojo, 916 F.2d 388, 390, 392–93 (7th Cir. 1990) (upholding
enhancement where defendant lied about arrest record). Here, LeDonne denied having
any criminal history—despite having multiple previous fraud convictions for which he
spent years in federal prison. And though he admitted to the fraud convictions when
pressed, he never disclosed his Arizona misdemeanor conviction for disorderly
conduct.
Next, LeDonne argues that his denial had no effect on the probation officer’s
investigation because the officer already knew of the fraud convictions from her
pre‐interview background check. But whether LeDonne’s denial obstructed the
investigation is beside the point; the guideline requires only that he
“willfully … attempted to obstruct or impede, the administration of justice” to impose
the enhancement. U.S.S.G. § 3C1.1 (emphasis added). LeDonne may not have succeeded
in concealing his criminal history from the probation officer, but he did mislead her and
No. 18‐2729 Page 4
cause her to expend time and resources to determine his true criminal history.
See Owolabi, 69 F.3d at 163–64. It is also irrelevant that LeDonne admitted to some of his
past fraud convictions when confronted with the information. See Ojo, 916 F.2d
at 392–93 (upholding enhancement where defendant “withheld information regarding
her prior conviction until it was … brought to the attention of the court by the
government”).
LeDonne also downplays his statements about his criminal history as “likely the
result of confusion, mistake, or faulty memory and not a willful attempt[] to obstruct
justice.” But an intent to obstruct justice can be “inferred from the defendant’s conduct.”
United States v. Schwanke, 694 F.3d 894, 897 (7th Cir. 2012). Here, the district court
reasonably found that LeDonne’s complete denial of his criminal history was “clearly
intentional,” given the years he spent in prison for prior fraud convictions. The court
added that there was “no chance that [LeDonne] simply forgot he had a criminal
history.” In light of the evidence, that conclusion cannot be clearly erroneous.
For the foregoing reasons, we AFFIRM the judgment.
|
101 F.3d 715
NOTICE: Federal Circuit Local Rule 47.6(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.Steven J. CIECWESZ, Petitioner,v.DEPARTMENT OF TREASURY, Respondent.
No. 96-3312.
United States Court of Appeals, Federal Circuit.
Nov. 14, 1996.
Before RICH, CLEVENGER, and SCHALL, Circuit Judges.
PER CURIAM.
1
Steven J. Ciecwesz (Ciecwesz) appeals from the final decision of the Merit Systems Protection Board (Board), Docket No. NY315H960276-I-1, which dismissed for lack of jurisdiction Ciecwesz's appeal challenging his termination during his probationary employment period. We affirm.
2
* On March 20, 1995, the Internal Revenue Service (agency) appointed Ciecwesz to a position as a seasonal Tax Examining Clerk. On November 26, the agency converted his appointment to a career conditional full-time seasonal position, subject to a one-year probationary period to run from March 20, 1995. Under either appointment, he was subject to release to nonpay status. Due to lack of work, Ciecwesz was placed in nonpay status from September 20, 1995 to January 22, 1996, and again on February 17.
3
On March 1, 1996, the agency notified Ciecwesz by letter that he would be terminated effective March 30, 1996. The agency's decision came as a result of Ciecwesz's failure to make payments for a tax delinquency under an installment agreement. The agency based its decision on Subpart H, Section 2635.809 of the Standards of Ethical Conduct, which states: "Employees shall satisfy in good faith their obligations as citizens, including all just financial obligations, especially those such as Federal, State, or local taxes that are imposed by law."
4
Ciecwesz appealed the agency's decision to the Board, claiming that the agency had discriminated against him based on marital status. He stated, "I am a single divorced father who cannot afford to pay my former wife child support payments." The administrative judge found that Ciecwesz's allegation did not go to the essence of his marital status because a person's childcare responsibilities are not dependant upon that person's marital status. Thus, the administrative judge found that Ciecwesz had not shown that the Board had jurisdiction over his appeal, and dismissed the appeal in an initial decision dated May 30, 1996. Ciecwesz did not file a petition for review, and the initial decision became the final decision of the Board on July 4, 1996.
II
5
Our review of the Board's decision is limited: we review the decision to ensure that it is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; obtained without procedures required by law, rule, or regulation having been followed; or unsupported by substantial evidence. 5 U.S.C. § 7703(c) (1994); see Holland v. Department of Air Force, 31 F.3d 1118, 1120 (Fed.Cir.1994). Under this standard, we must affirm the Board's decision if it is supported by "such relevant evidence as a reasonable mind might accept as adequate to support [the] conclusion." Consolidated Edison Co. v. National Labor Relations Bd., 305 U.S. 197, 229 (1938).
6
The Board has no jurisdiction to review an adverse personnel action taken against a government employee during his probationary period absent a nonfrivolous allegation by the employee of discrimination based on marital status or partisan political activity.1 Collins v. Merit Sys. Protection Bd., 978 F.2d 675, 678 (Fed.Cir.1992); see 5 C.F.R. § 315.806(b) (1996). Thus, whatever the Board's view may be on the merits of a particular personnel action, it is powerless to review the action unless the probationary employee supports his claim with such a nonfrivolous allegation.
7
On appeal, Ciecwesz argues that he is a conscientious person who has always paid his taxes when possible, but due to his divorce and child support obligations he was unable to meet the requirements of the installment agreement. Although this allegation is indirectly related to Ciecwesz's marital status (the divorce presumably contributed to his financial troubles), it does not indicate that Ciecwesz was the victim of discrimination based on marital status. To confer jurisdiction on the Board, an allegation of discrimination must go to the basic nature of the petitioner's marital status. While it cannot be said that Ciecwesz's child support payments are entirely independent of his marital status, such payments are an obligation that can be incurred regardless of marital status. No evidence indicates that the agency was motivated by any factor other than its dogged insistence that its employees strictly toe the line on meeting tax obligations. Thus, the agency's decision to terminate Ciecwesz did not go to the basic nature of his marital status.
8
We have carefully reviewed the record and are unable to find any reversible error by the Board. The decision of the Board, being supported by substantial evidence, is affirmed.
1
Although Ciecwesz's probationary term spanned more than one year (March 20, 1995 to March 30, 1996), he was a probationary employee at the time of his termination. That is because "[n]onpay time in excess of 22 workdays extends the probationary period by an equal amount." 5 C.F.R. § 315.802(c) (1996)
|
62 F.3d 393
U.S.v.LeBlanc**
NO. 94-20859
United States Court of Appeals,Fifth Circuit.
June 29, 1995
Appeal From: S.D.Tex., No. CR-H-94-115-1
1
AFFIRMED.
**
Conference Calendar
|
369 F.Supp. 288 (1973)
Donald E. AULT, Individually and on behalf of all others similarly situated, Plaintiff,
v.
Charles J. HOLMES et al., Defendants.
Civ. A. No. 2399.
United States District Court, W. D. Kentucky, Paducah Division.
August 20, 1973.
*289 Robert E. Delahanty, Louisville, Ky., Robert Plotkin, National, Legal Aid and Defender Ass'n, Washington, D. C., Elizabeth M. Freedman, Louisville, Ky., Allen M. Ressler, Ronald L. Roseman, Kansas City, Mo., for plaintiff.
Bruce K. Davis, Dept. of Corrections, Frankfort, Ky., for defendants.
FINDINGS OF FACT, CONCLUSIONS OF LAW
OPINION AND ORDER
ALLEN, District Judge.
Plaintiff, Donald E. Ault, brought this action seeking injunctive relief for himself and fellow prisoners who have been transferred from the Kentucky State Penitentiary to penitentiaries outside the State of Kentucky, and also asks the Court to award him compensatory damages, punitive damages and attorneys' fees for alleged violations of his constitutional rights. The suit is brought pursuant to 28 U.S.C. § 1343(3) and (4); 42 U.S.C. § 1983; and 28 U. S.C. § 1331(a). Jurisdiction is conferred on the Court by these statutes and by the facts alleged in the complaint.
Donald Ault was an inmate of the Kentucky State Penitentiary at Eddyville, Kentucky, on August 15, 1972. Shortly before this date, defendant, Henry E. Cowan, had been appointed Warden of that penitentiary. When Cowan came to Eddyville, he found conditions to be bad there and that there was considerable unrest. He felt that it would be desirable for the discipline of the penitentiary to transfer some of the inmates whom he felt were agitators or troublemakers. Among those whom he thought to be in this category was Donald Ault.
Donald Ault was assigned to the Legal Assistance Office of the penitentiary and was known as a "writ writer". On August 15, 1972, he had written a letter to his parents complaining about the new regime instituted by Warden Cowan and stating, in part, that he believed the other inmates to be "jellyfish" because they would not stand up for their rights against the prison administrators. When this letter was received by the Mailing Department of the prison, its contents were disclosed to William Lasley, Assistant Superintendent of Treatment. Lasley then took Ault with him to the office of defendant Cowan, and *290 while Ault was in the office, prepared an Incident Report. The Incident Report stated that it had been observed for some time that the activities of Ault could possibly be stirring up trouble within the inmate population. The report further stated that this was pretty well verified in a letter he was sending out in which he criticized officials as well as inmates.
The report also stated that the letter contained much agitation and could possibly cause serious trouble if the inmates were knowledgeable of his comments. The report goes on to say that Ault was called to the Superintendent's office and that he displayed a very poor attitude and seemed very bitter. The report further stated that he admitted that what he had done could cause trouble, and he didn't want the other inmates to know about it. He related that he had been mistreated by the courts and it was his desire to get even.
The conference which took place between Ault, Cowan and Lasley on August 15th was then designated as an Adjustment Committee meeting and findings were made that Ault was guilty of agitating and using his influence to get other inmates involved. It was declared that he had placed himself in a position which was detrimental to his own welfare and to the security of the institution and that he admitted it but saw no wrong in it. He was then assigned to administrative segregation.
Ault remained in administrative segregation for some nine days. Administrative segregation resulted in Ault being denied the privilege of going to work in the Legal Assistance office, the privilege of associating with other inmates of the penitentiary and being denied the television and recreational privileges. There was no reduction in his food rations, nor was there any abusive treatment nor lack of any plumbing facilities, blankets nor the other necessities of life afforded to the other inmates.
On September 15, 1972, Ault and eight other inmates at Eddyville were brought to the office of the Warden and informed that they were being transferred to various other state penitentiaries outside the State of Kentucky. There was no hearing held, and a little more than one hour after the notification, Ault and the other eight men were placed in shackles and taken to the various other state penitentiaries to which they had been transferred.
Upon arriving at the Missouri State Penitentiary at Jefferson City, Missouri on the same day, Ault was placed in administrative segregation for five or six days before he was admitted to the general prison population. This is apparently standard procedure when new inmates are received at the Missouri State Penitentiary. No complaint was made by Ault as to the facilities at Jefferson City during his confinement to administrative segregation.
Ault does complain that there is no Legal Assistance office at Jefferson City and no law library, and that he has, therefore, suffered in his attempts to adequately prepare a case which he has pending in the Eastern District of Kentucky, and one that a fellow prisoner named Jenkins has pending in the Western District of Kentucky.
Ault's parents live in Utah, and his former wife has remarried and did not make any attempt to visit him while he was in Eddyville. He seems to be doing fairly well in the Missouri State Penitentiary, and in fact wrote the Warden a letter stating that things were "beautiful in Missouri". Other prisoners who were transferred were sent not only to Missouri but as far distant as Arizona, some 2,000 miles from Kentucky. In all cases, including Ault's, the written reason given for the transfers was stated as "interstate compact". This refers to the statutory provisions whereby Kentucky has agreed with other states such as Missouri and Arizona to the transfer between the states of prisoners, where it is found to be for the prisoner's rehabilitation, treatment and protection. See *291 K.R.S. 196.610, Article IV(a), which states as follows:
"Whenever the duly constituted authorities in a state party to this compact, and which has entered into a contract pursuant to Article III, shall decide that confinement in, or transfer of an inmate to, an institution within the territory of another party state is necessary or desirable in order to provide adequate quarters and care or an appropriate program of rehabilitation or treatment, said official may direct that the confinement be within an institution within the territory of said other party state, the receiving state to act in that regard solely as agent for the sending state."
With reference to the actual reasons for the transfer of Ault and the other prisoners, the Warden stated that primarily the transfers were to improve the discipline at Eddyville and for the protection of the inmates. In each case, rational reasons were given to this Court for their transfers, but no reasons were given to the inmates at the time of the transfers, nor were they allowed any opportunity to state why they should not be transferred.
The Court has previously held that, as to the claim for injunctive and declaratory relief filed by Ault as to the transfer, as citizens of Kentucky from Eddyville and LaGrange to out-of-state penitentiaries, the action should be considered as a class action. This is consistent with many decisions holding that, in actions involving the civil rights of inmates, class action determination should be made where those actions involve also procedures or practices of the prison administration that are challenged on constitutional bases. See Gomes v. Travisono, 353 F.Supp. 457 (D.C.R.I.1973); Jones v. Metzger, 456 F.2d 854 (6th Cir. 1972); Anderson v. Nosser, 438 F.2d 183 (5th Cir. 1971); Jackson v. Bishop, 404 F.2d 571 (8th Cir. 1968).
The Court is of the opinion that while Ault and his fellow transferees had caused difficulties to the prison authorities in Kentucky on some occasions prior to their mass transfer, that there was no compelling reason for the transfer on September 15, 1972. The Court does not believe that the defendants presented persuasive evidence that violence had been indulged in by these transferees during the period immediately predating their transfer, or that they had planned a mass escape from the institution, or the taking of hostages, or that they had planned a riot or other similar disturbances.
In light of this finding and the rapidly evolving constitutional doctrines set out in Gomes v. Travisono, supra; Capitan v. Cupp, 356 F.Supp. 302 (D.C.Ore. 1972); Clutchette v. Procunier, 328 F. Supp. 767 (D.C.Cal.1971); and Sostre v. McGinnis, 442 F.2d 178 (2nd Cir. 1971), cert. denied, 404 U.S. 1049, 92 S.Ct. 719, 30 L.Ed.2d 740, 405 U.S. 978, 92 S.Ct. 1190, 31 L.Ed.2d 254 (1972), the Court concludes that transfer procedures such as took place with regards to Ault and his fellow transferees must comport with at least the most basic elements of procedural due process. The rationale of these cases is to the effect that where there is a serious change in a prisoner's confinement, procedures relating thereto must comport with basic due process. In both Gomes and Capitan it was held that the transfer of prisoners to a penitentiary removed from their native state is a serious change in confinement status.
The various cases which have affirmed this principle are at some variance as to what are the basic minimal elements of procedural due process. For example, in Sostre v. McGinnis, supra, the Second Circuit refused to follow the district judge's holding setting out specifically procedural due process in prison proceedings, particularly those requiring confrontation and cross-examination, calling of witnesses by the prison counsel or counsel substitute, or a written statement of evidence and rationale. The court did say, however, that if substantial deprivations are to be visited upon a prisoner, that he should be, in most cases, confronted with the accusation, *292 informed of the evidence against him and afforded an opportunity to explain his actions.
In Gomes v. Travisono, supra, the court held that prior to transfer, absent an emergency situation or a compelling state interest, the inmate must be given written notice of the reasons for transfer; that the charge must be investigated and reviewed by a superior officer; that a hearing be held before an impartial board; and that administrative review be available and a record kept. That case also held that the inmate must be read the charge, given the opportunity to respond, the right to call and examine witnesses, and for the assistance of a lay advocate. It was further held that the decision to transfer must be based on substantial evidence.
In Clutchette v. Procunier, supra, the court held that any serious charge against a prison inmate should require at least seven days notice; the right to call witnesses and to cross-examine witnesses; the right to counsel or substitute counsel; reasons for the decision given, based on the evidence; a decision by an unbiased fact-finder; and the right to appeal.
The above decisions setting out the courts' notions of what constitutes rudimentary due process are based primarily on the holdings in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287; and Johnson v. Avery, 393 U.S. 483, 89 S.Ct. 747, 21 L.Ed.2d 718. It should be noted, also, that no circuit court has yet attempted to delineate the specific due process procedures required in the case of out-of-state transfers nor has the Supreme Court. In fact, as yet, neither the appellate courts nor the Supreme Court have ruled upon the constitutionality of a transfer of a prisoner to an out-of-state institution with respect to the Fourteenth Amendment. However, in Hillen v. Director of Department of Social Service and Housing, 455 F.2d 510 (9th Cir. 1972), cert. denied, 409 U. S. 989, 93 S.Ct. 331, 34 L.Ed.2d 256, it was held that no constitutional claim was raised by the transfer of an inmate from Hawaii to a federal penitentiary in California. However, this was a pro se action and no evidentiary hearing was ever held, nor were there constitutional issues adequately presented nor briefed.
Likewise, Duncan v. Madigan, 278 F. 2d 695 (9th Cir. 1960), cert. denied, 366 U.S. 919, 81 S.Ct. 1096, 6 L.Ed.2d 242, held that an inmate had no right to be heard with respect to his place of custody, and that the transfer did not deny him equal protection. That case did not reach the Fourteenth Amendment claims as to lack of due process as in this action.
With all due deference to the problems of the defendants, which are manyfold and serious, it would seem that the absence of an emergency, such as a riot, taking of hostages by inmates, flood, or other extraordinary situations, inmates held in the State Penitentiary in Kentucky, who are residents of Kentucky, should be afforded rudimentary due process rights before being transferred to a penitentiary outside the state. The reasons for this holding are set out at some length in Gomes v. Travisono, supra, and also in the very objective and intelligent testimony afforded to the Court by Mr. Keve, a distinguished criminologist. The primary rationale for the decision that a transfer constitutes a serious change in a prisoner's status lies in the fact that he is cut off from the proximity of family and friends located in the state of domicile. Secondly, the inmates who are transferred are required to make new adjustments to new environments. Thirdly, the inmate may have difficulty in preparing his home and job plans. Fourthly, the chances of parole may be reduced somewhat, although there is no conclusive way of determining this to be a fact.
In a 1916 case, Keliher v. Mitchell, 250 F. 904 (D.C.Mass.), the district judge condemned the practice of transferring prisoners some 1,500 miles from the state of original confinement. The reasons set out in his opinion have not diminished over the course of the years and, therefore, we must conclude that such transfers, while not prohibited by *293 the Eighth Amendment, must at least be validated by due process.
More specifically, the Court holds that in each case where a prisoner is to be transferred out-of-state and the transfer is not in accordance with his wishes, and there is no emergency situation, the prisoner must be afforded the following safeguards:
1. A brief statement of the reasons for his proposed transfer;
2. Adequate notice of the date set for the transfer hearing, such notice to be given at least seven days prior to the hearing;
3. The right to call witnesses, cross-examine witnesses, and the right to counsel substitute, but not to a licensed attorney;
4. The decision of the committee should be stated in writing and should be made by an unbiased fact-finder, not involved in any particular incident which constitutes the basis for transfer.
With reference to Ault's claims for damages and counsel fees, the Court is convinced that no compensatory or punitive damages or attorneys' fees should be awarded. At the time the defendants transferred the plaintiff and members of his class to the out-of-state institutions, the question of the unconstitutionality of such transfers was very much in doubt, as is evidenced by Judge Pettine's reference in Gomes v. Travisono, supra, to the decisions of the Ninth Circuit, which had previously held that such transfers within the federal system were not unconstitutional. It is only very recently that Gomes and Capitan v. Cupp, supra, have been decided and, in fact, Gomes and Capitan were reported after the decision to transfer the inmates.
In Jones v. Rundle, 358 F.Supp. 939, 1973 (D.C.E.D.Pa.), Judge Body held that in a civil rights action brought by prisoners, no damages should be awarded, even though a breach of constitutional rights was shown, inasmuch as the law was very unsettled in that field at the time of the constitutional violations. As the District Judge pointed out in that case, to impose liability for damages upon state wardens and other state correctional authorities in prisoner civil rights cases, where the law has not been finally settled by an authoritative Supreme Court or Circuit Court decision, would discourage qualified persons from accepting such positions.
It should be noted that the cases upon which plaintiff relies for an award of damages are those involving either a default judgment, such as United States ex rel. Neal v. Wolfe, 346 F.Supp. 569 (D. C.E.D.Pa.1972), or involving the confinement of a plaintiff to punitive segregation without a rational basis therefor, Wright v. McMann, 460 F.2d 126 (2nd Cir. 1972). Of course, since the Court has reached the conclusion that no compensatory damages should be awarded to plaintiff, it follows that no punitive damages could be awarded to him. Even in cases where default judgments have been rendered against prison authorities and compensatory damages awarded, no punitive damages have been allowed, in the absence of showing malicious actions in gross disregard of plaintiff's rights. United States ex rel. Motley v. Rundle, 340 F.Supp. 807 (D.C.E. D.Pa.1972), and cases cited therein.
No authority is cited by plaintiff in support of his contention that he is entitled to an award of counsel fees or to punitive damages, and, in fact, several of the cases cited by plaintiff as authority for the awarding of compensatory damages deny the award of punitive damages; see, for example, United States ex rel. Neal v. Wolfe, supra.
The Court has not overlooked Ault's contention that he should be entitled to damages for the period when he was in administrative segregation in Eddyville. Ault did not make such a contention in the pleadings filed by his counsel; however, at the trial, extensive proof was taken bearing on this issue, and no objection was taken to the introduction *294 of such proof. Rule 15(b), Federal Rules of Civil Procedure, and the cases interpreting it are authority for the ruling that where issues are not raised by the pleadings but are tried by express or implied consent, they shall be treated as having been properly raised. See Century "21" Shows v. Owens, 400 F.2d 603 (8th Cir. 1968); and Continental Illinois National Bank and Trust Company of Chicago v. Ehrhart, 127 F. 2d 341 (6th Cir. 1942).
Addressing Ault's claim for damages, in this connection, it should be observed that the procedures carried out by defendants Cowan and Lasley, and their findings, did not measure up to the requirements of administrative due process already specified by the prison itself. First, only two of the three members required to be on the Adjustment Committee were there, and secondly, Ault does not seem to have been given any advance notice of the meeting of the Adjustment Committee. However, following the decision in Clutchette v. Procunier, supra, the Court holds that isolation for a period less than ten days is not such a grievous loss to the prisoner as to constitute a serious change in the conditions of his confinement, and to rise to the dignity of an infraction of a constitutional right.
Ault has also raised the claim for damages based on alleged loss of personal property caused by the transfer. It appears from the evidence that, because of the speedy nature of the transfer, certain papers belonging to Ault and a few other personal items were left behind at the penitentiary in Eddyville. Upon his written request to the Eddyville authorities to return these items, most if not all of them were returned. Ault did not introduce any evidence as to the value of any of the items which he claims were lost, which consisted, according to him, of notebooks with legal citations, family photographs, and a transcript of his original conviction. Defendant Cowan testified that the personal property of Ault and the other transferees was sent to them after their transfer, and that he received no inquiries from Missouri as to the personal property. He also stated that the personal property in question was sent by Railway Express.
In the absence of positive evidence that the plaintiff was, in fact, deprived of some of his personal property by the actions of the defendants, the Court concludes that plaintiff is not entitled to damages on this ground. Even if he were so entitled to damages, the award would have to be only nominal, since no value was placed on any of the specific items in contention.
Finally, in accordance with the findings of fact and conclusions of law set forth above, the Court has this day entered a separate judgment.
JUDGMENT
The Court having entered its findings of fact and conclusions of law, and being fully advised in the premises,
It is hereby ordered and adjudged as follows:
1. Plaintiffs have properly brought this action on their own behalf, and pursuant to Rule 23(a) and (b) (2) of the Federal Rules of Civil Procedure, on behalf of all adult male persons presently incarcerated, pursuant to criminal conviction by Kentucky courts, who were, prior to their conviction, residents of the State of Kentucky in that plaintiffs' class is so numerous as to make joinder of all members impracticable; the policies and procedures challenged by the named plaintiffs have been applied to numerous members of plaintiffs' class, and are applicable to all members of plaintiffs' class; and the claims of the named plaintiffs are typical of and common to all members of the class.
2. Defendants are enjoined from the involuntary transfer of any Kentucky male prisoner, incarcerated pursuant to a judgment of conviction by Kentucky courts, who was a resident of Kentucky and domiciled therein prior to conviction, *295 to a state or federal prison in another state, unless:
A. Prior to transfer (absent an emergency situation or compelling state interest), the inmate is given written notice of the charge or reasons for transfer; this charge or reason is investigated and reviewed by a superior officer; a hearing on the question of transfer is held before an impartial board; administrative review of the charge is available; and a record of the proceeding is kept. At the hearing the inmate must be read the charge and given the opportunity to respond, which opportunity shall include the right to call and examine witnesses and to have the assistance of a lay advocate. The decision to transfer must be based on substantial evidence.
In the event of an emergency situation resulting in transfer, the inmate must be returned to Kentucky for the hearing and procedures outlined above soon after the emergency has subsided; and
B. Periodic review is made of the status of the transferred inmate, and whether he should be returned to Kentucky. The Court suggests review every six (6) months; and
C. Written regulations are promulgated which guarantee:
(a) the return of a transferred inmate to Kentucky for all hearings before the parole board which will consider the subject of his parole;
(b) the return of a transferred inmate to Kentucky for appearance in all court proceedings in Kentucky in which he is involved; and
(c) the return of a transferred inmate to Kentucky to confer with counsel in preparation for Kentucky legal proceedings on affidavit of counsel that the presence of the inmate is necessary.
3. Defendants shall return to custody in Kentucky, within a reasonable period of time, the inmates transferred on September 15, 1972, and shall return to Kentucky all inmates who have been transferred at other times for hearings on whether these inmates should be returned to custody in Kentucky.
4. Plaintiff Donald E. Ault's claim for damages is hereby denied, as is his claim for attorneys' fees.
5. It is hereby determined that this is a final and appealable judgment and that there is no just cause for delay in its entry.
|
137 F.3d 1352
U.S.v.Thompson*
NO. 97-10333
United States Court of Appeals,Fifth Circuit.
February 12, 1998
Appeal From: N.D.Tex. ,No.395CV2231H
1
Affirmed.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 96-6067
WILLIE LEE GARY, JR.,
Plaintiff - Appellant,
versus
KATE CLIFTON; NORTH CAROLINA DEPARTMENT OF
CORRECTIONS,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern Dis-
trict of North Carolina, at Raleigh. Terrence W. Boyle, District
Judge. (CA-95-1017-5-BO)
Submitted: May 16, 1996 Decided: June 3, 1996
Before RUSSELL, LUTTIG, and WILLIAMS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Willie Lee Gary, Jr., Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellant appeals from the district court's order denying
relief on his 42 U.S.C. § 1983 (1988) complaint. We have reviewed
the record and the district court's opinion and find no reversible
error. Accordingly, we affirm on the reasoning of the district
court. Gary v. Clifton, No. CA-95-1017-5-BO (E.D.N.C. Jan. 5,
1996). We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
AFFIRMED
2
|
526 F.2d 256
UNITED STATES of America, Plaintiff-Appellee,v.Charles Joseph LARSON, a/k/a Chuck Larson and Fred StevePalilla, Defendants-Appellants.
No. 74--3996.
United States Court of Appeals,Fifth Circuit.
Jan. 22, 1976.Rehearing Denied Feb. 23, 1976.
Frederick B. Tygart, Jacksonville, Fla. (Court-appointed), for palilla.
Robert J. Head, Jr., Orange Park, Fla. (Court-appointed), for Larson.
John L. Briggs, U.S. Atty., John J. Daley, Jr., Asst. U.S. Atty., Jacksonville, Fla., for plaintiff-appellee.
Appeals from the United States District Court for the Middle District of Florida.
Before BELL and DYER, Circuit Judges, and MEHRTENS, District Judge.
BELL, Circuit Judge:
1
This is an appeal by two defendants, Charles Joseph Larson, a/k/a Chuck Larson, and Fred Steve Palilla, from convictions of various crimes arising from a scheme to use forged securities as collateral for loans from federally insured banks in violation of 18 U.S.C.A. § 1014, and to transport such securities in interstate commerce, in violation of 18 U.S.C.A. § 2314. Both appellants were convicted of count one of a thirteen count indictment, which alleged a conspiracy to violate these sections. Palilla was charged and convicted on only one other count of the indictment, count eight, of a substantive violation of § 1014, while Larson was charged and convicted on counts two through nine and thirteen, which were substantive offenses of both § 1014 and § 2314. Other persons named as either co-conspirators or joint-venture agents in the indictment entered pleas before trial; some of these testified as government witnesses. The other defendant at trial, James Anthony Koblein, a/k/a Jimmy Buttons, was charged and convicted on the same counts of the indictment as was Larson.
2
Larson and Palilla assert error in the admission of certain evidence and in the failure to sever their cases for separate trials. Larson also argues there was insufficient evidence to support his convictions. We affirm.
3
The government introduced background evidence to show that Larson was a close associate of Koblein and dependent upon him for all support, although neither Larson nor Koblein had any visible means of support. Palilla was not a direct associate of Larson and Koblein but was a business associate of another co-conspirator, Herman Miller, apparently through whom he met Larson and Koblein. Miller and Pailla had various business dealings over a period of about ten years both as employer-employee and as competitors in the business of laundry and uniform rental. Evidence was presented showing that Palilla was financially troubled at the time of the conspiracy.
4
The genesis of the securities fraud was in a conversation between two co-conspirators, Joseph Scales, a Florida stockbroker, and Frederick Hahn, in which they considered the possibility of pledging counterfeit stocks as collateral for bank loans. Scales and Hahn met with Larson and Koblein at a Jacksonville bar known as the 'Some Place Else,' where Scales suggested the fraud scheme to Koblein. Koblein agreed to further the scheme by finding a Florida businessman who would have sufficient credit to qualify for short term bank loans.
5
Three types of genuine securities were forged and counterfeited: (1) Two 100-share certificates of Natomas Company common stock with two different serial numbers; (2) One 200-share certificate of Walt Disney Productions stock, with a single serial number; and (3) Trans World Airlines, Inc., ten per cent corporate bonds with a face value of $1,000 bearing different serial numbers. Throughout 1972, these forged securities were used as collateral for short term bank loans with banks not only in Florida but in Texas as well. The securities themselves were transported out of Florida to New York, Alabama, Texas, and even to Canada. Because only Larson and Palilla are appealing their convictions, only those incidents relevant to them will be discussed herein.
6
There was evidence of a trip from Florida to Birmingham, Alabama by Larson, Koblein, Palilla and another person, for the purpose of using the fraudulent securities to make bank loans in Birmingham. Palilla testified that he went along gratis only for the purpose of seeing his mother. In addition, however, Palilla introduced Larson and Koblein to a Birmingham businessman, who might have been able to make loans using the forged securities. Palilla claimed ignorance of Larson's and Koblein's purpose for the trip, but testimony by Scales and Miller suggested that he in fact was participating in the attempt to utilize the fraudulent securities.
7
Shortly before June 7, 1972, Palilla was given two of the counterfeit Natomas certificates by Miller who testified that he told Palilla they were counterfeit. Palilla subsequently testified that Miller said no such thing. Testimony by Palilla and Miller conflicted as to the implementation of the loan alleged in the indictment against Palilla, but, subsequently, Palilla asked a friend, Robert Sheridan (who had been Miller's attorney), to pledge the two certificates in his name as collateral on a $7,200 loan. The proceeds of the loan were divided among Palilla, Sheridan, and Miller, and the three subsequently shared interest payments on the loan.
8
There was testimony by Miller that he was unconcerned with the possibility of Palilla going to the authorities, based on his knowledge of a check fraud scheme by Palilla and another person named Tillman, and also because of Palilla's apparent (to Miller) knowledge of the counterfeit nature of the notes, based on Palilla's earlier association with Koblein and Larson. Tillman later testified that Palilla had discussed with him the possibility of using the fraudulent securities.
9
The success of the conspiracy depended upon preventing any of the counterfeit stocks from going into the open market, by maintaining interest payments and not defaulting on any of the loans. Unfortunately, one of the Walt Disney stocks used by Scales' brother for a loan in Orlando, Florida was detected upon Scales' brother's default. In November and December, 1972, other securities were also discovered by various banks as being fraudulent. Evidence was offered by the government of attempts by Larson and Koblein to conceal the conspiracy after these defalcations. These involved threats against Scales' brother as well as against Miller, to keep them from talking. Scales had been first indicted and convicted on some of the transactions involved but did not cooperate fully with the government until his arrest on this indictment.
Sufficiency of evidence
10
The assertion by Larson that there was insufficient evidence to support his convictions is so lacking in merit as not to warrant any discussion. See United States v. Warner, 5 Cir., 1971, 441 F.2d 821, 830; United States v. Mikelberg, 5 Cir., 1975, 517 F.2d 246, 252; United States v. Parr, 5 Cir., 1975, 516 F.2d 458, 463-64.Prejudicial testimony
11
Larson argues that there was plain error in the admission of five pieces of testimony, in particular, that he was a hit man, that Frederick Hahn was 'scared' of Koblein and Larson, that Koblein and Larson threatened another witness, Robert Wheeler, that Koblein and Larson gave the appearance of being associated with the Mafia, and that a threat made by Koblein was attributed to Larson. The government response is that all of this testimony was relevant to proof of the conspiracy, as to either motive or efforts to conceal the conspiracy after it began to fall apart. See United States v. Nakaladski, 5 Cir., 1973, 481 F.2d 289, 296; United States v. Arias-Diaz, 5 Cir., 1974, 497 F.2d 165, 169--70; United States v. Crockett, 5 Cir., 1975, 514 F.2d 64, 71--73. Moreover, the government argues that Koblein's defense counsel opened up these issues on cross-examination of government witnesses, without any objection by either Larson or Palilla. In particular, in the attempt to discredit Scales, Koblein's counsel opened the issue of collateral crimes contained in Scales' plea bargain, see United States v. Gonzalez, 5 Cir., 1974, 491 F.2d 1202, 1204, as well as Scales' need to explain the prior inconsistencies based on his fear of Larson and Koblein. See United States v. Cochran, 5 Cir., 1974, 499 F.2d 380, 387--88.
12
Palilla complains about seven instances of testimony ostensibly offered only to prove his bad character. They are as follows: that he engaged in the used car business, that he went on gambling trips during 1972, that he was separated from his wife, that he engaged in a fraudulent advertising scheme against Miller, that he engaged in a fraudulent check scheme (for which he had been acquitted in federal court), that he owned land with title in a straw man to avoid creditors, and that at a time when he was ostensibly in financial distress he had a 'wad of money.'
13
The first three facts were, in the view of the government, relevant to Palilla's need for money, which was a motive for his participation in the conspiracy and the fraudulent loan transaction. See United States v. Nakaladski, supra. The last four facts were brought out on redirect examination in response to cross-examination of Miller by Palilla. These related primarily to the relationship between Palilla and Miller which had been extensively covered on cross-examination by Palilla. See United States v. Gonzalez supra. In addition, the evidence of the check scheme, although facially prejudicial, was tempered by an instruction of the trial court to the jury that it should be considered not for the truth of the matter but only in weighing Miller's explanation of why he did not fear Palilla would go to the authorities with the counterfeit stocks. Finally, the testimony about the 'wad of money' was offered to show Palilla's benefit from the stock fraud scheme. Cf. United States v. Michaelson, 9 Cir., 1972, 453 F.2d 1248.
14
Palilla also complains of the failure to strike the testimony of the witness DeBruner when DeBruner could not identify Palilla in court after not having seen him for a year and a half. This goes to the weight to be given DeBruner's testimony by the jury rather than to its admissibility and was not error.
Severance
15
At no time either before or during the trial did Larson move for a severance by the trial court. The matter was only arguably raised on his motion for new trial where he stated that it was error not to sever as to 'matters herein.' Thus the burden is on Larson to demonstrate actual prejudice resulting from the failure to sever his trial from that of Koblein and Palilla. Tillman v. United States, 5 Cir., 1969, 406 F.2d 930, 934--35, vacated on other grounds, 1969, 395 U.S. 830, 89 S.Ct. 2143, 23 L.Ed.2d 742; Gordon v. United States, 5 Cir., 1971, 438 F.2d 858, 878--79. There was clearly no improper joinder of defendants in that both Larson and Koblein were involved in all counts of the indictment and because there was an underlying conspiracy count as well. Gordon v. United States, supra.
16
The only basis for challenge here is the argument that Larson was prejudiced by the greater weight of testimony against Koblein. There was no claim that a co-defendant's testimony was consequently unavailable, or that the jury was in any way confused by the number of defendants or issues, cf., Tillman v. United States, supra, or that co-defendants had antagonistic defenses, see United States v. Johnson, 5 Cir., 1973, 478 F.2d 1129. A defendant cannot claim prejudice from failure to sever merely because his likelihood of acquittal is not as great in a joint trial as in a separate trial. Cf. United States v. Harris, 5 Cir., 1972, 458 F.2d 670, 673. Moreover, the judge below appropriately instructed the jury as to their duty to consider the guilt of each defendant separately; this instruction was given to the jury near the end of the judge's instructions, such that it cannot be argued that it did not make an impression on the jury. See United States v. Boyd, 5 Cir., 1971, 436 F.2d 1203, 1205.
17
Palilla argues that the admission of the evidence of bad conduct and crimes of Larson and Koblein was so prejudicial as to deny him due process of law, by suffusing the case against him with the penumbra of their bad character. It is true that his participation in the conspiracy was not as great as that of Koblein and Larson, and that he was charged with only one substantive offense. Having been properly joined as a defendant, however, under Rule 8, F.R.Crim.P., his only relief was to move for a severance of his case, the granting of which is in the sound discretion of the trial judge. United States v. Crockett, 5 Cir., supra, 514 F.2d at 70--71; United States v. Laca, 5 Cir., 1974, 499 F.2d 922, 924--25. He so moved and the court denied his motion. He must therefore show actual prejudice to require reversal of his conviction. Tillman v. United States, supra. We find no such prejudice.
18
Affirmed.
|
45 F.Supp.2d 1349 (1999)
LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff,
v.
The INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Defendant.
No. 98-413-Civ.
United States District Court, S.D. Florida, Miami Division.
March 8, 1999.
*1350 Wayne T. Gill, Walton Lantaff Schroeder & Carson, West Palm Beach, FL, for plaintiff.
Luke S. Brown, Chartered Law Offices of James V. Dolan, Fort Lauderdale, FL, for defendant.
AMENDED ORDER
K. MICHAEL MOORE, District Judge.
THIS CAUSE came before the Court upon Defendant's Motion to Dismiss Complaint, to Remand to State Court, or to Stay (DE # 8, filed May 15, 1998).[1] Plaintiff has filed a Response.
I. Background
In April 1990, Carey Brasecker, a film maker, was gored by a bull while filming a video production in Mexico. Brasecker had been hired by Avon Products, Inc. ("Avon") and LH Productions ("LH"). Brasecker subsequently filed an action in Florida state court in April 1994 against Avon and LH, asserting various state law negligence and breach of contract claims related to his injuries.
Lumbermens Mutual Casualty Company ("Lumbermens") filed the present action before this Court in February 1998, seeking declaratory relief under 28 U.S.C. § 2201. According to Lumbermens' Complaint, it issued an insurance policy to Avon for the period from January 1990 to January 1991. However, Lumbermens alleges that it is not responsible for Avon's defense under the policy because The Insurance Company of the State of Pennsylvania ("ICSP"), the Defendant in the present action, issued a primary insurance policy to Avon for the relevant period. Lumbermens therefore seeks to have the Court declare that: (1) its policy to Avon is excess over ICSP's policy and does not provide coverage for the first $500,000 in damages; and (2) it owes no duty of defense to Avon.
On May 15, 1998, three months after the filing of the present action, Avon filed a third-party complaint against Lumbermens in the state court action. In the third-party complaint, Avon claims that Lumbermens is required by the aforementioned Lumbermens insurance policy to defend and indemnify it in the state court *1351 action against Brasecker's first-party claims. Avon specifically seeks fees and costs incurred in defending the state court action, as well as indemnification for any liability to Brasecker.
Simultaneously, ICSP filed the Motion to Dismiss, to Remand, or to Stay in the present action.[2] ICSP argues that the present action should be dismissed, remanded, or stayed because it presents the same issues related to Lumbermens' insurance policy as does the third-party complaint in the state court action.
II. Discussion
According to the long-standing doctrine first articulated by the Supreme Court in Brillhart v. Excess Insurance Co. of America,[3] "federal district courts enjoy considerable discretion to decline to hear declaratory judgment actions concerning matters already pending in state court."[4] As the Supreme Court observed in Brillhart:
Although the District Court had jurisdiction of the suit under the Federal Declaratory Judgments Act, it was under no compulsion to exercise that jurisdiction. The petitioner's motion to dismiss the bill was addressed to the discretion of the court.... [I]t would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.[5]
While district courts may not decline to hear actions for declaratory relief "on the basis of whim or personal disinclination,"[6] the standard is clearly generous.
In arguing against dismissal, Plaintiff Lumbermens assumes in its Response to the Motion to Dismiss that the Court should apply the very strict abstention standard articulated by the Supreme Court in Colorado River Water Conservation District v. United States.[7] Lumbermens refers repeatedly to the "heavy presumption in favor of the exercise of federal jurisdiction,"[8] apparently a reference to the "exceptional circumstances" stance towards abdication of federal jurisdiction embodied in the Colorado River doctrine.[9]
However, the Supreme Court has held that the jurisdictional presumptions of the Colorado River doctrine are clearly misplaced in the context of an action for declaratory judgment. In Wilton v. Seven Falls Co.,[10] the Supreme Court explicitly held that "[d]istinct features of the Declaratory Judgment Act, we believe, justify a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the `exceptional circumstances' test of Colorado River,"[11] and noted that district courts should refer to Brillhart for the appropriate standard.[12]
*1352 In laying out the guidelines for exercising the necessary discretion, the Brillhart opinion counseled district courts to:
[I]nquir[e] into the scope of the pending state court proceeding and the nature of defenses open there. The federal court may have to consider whether the claims of all parties in interest can satisfactorily be adjudicated in that proceeding, whether necessary parties have been joined, whether such parties are amenable to process in that proceeding, etc.[13]
Applying these guidelines to the facts of this case, the Court finds that the third-party complaint filed in the state court action and the present action present the same issues. The essence of the present action for declaratory relief is Lumbermens' argument that its insurance policy is excess to the ICSP policy, and that Lumbermens has no duty to defend Avon.[14] This is the same defense, nearly word-forword, asserted by Lumbermens to Avon's third-party claim in state court.[15] Adjudication of the third-party claim will therefore require the same arguments, including interpretation of the same provisions of the Lumbermens insurance policy,[16] and the same witnesses as the present action.
The Court is unpersuaded by Lumbermens' argument that it should retain jurisdiction because ICSP is not a party to the third-party claim in state court. While the cases cited by Lumbermens reflect the fact that parallel state and federal claims generally involve the same parties, it is entirely possible to address the same legal issues without representation by the same parties. Avon and ICSP are aligned in interest, and will have to advance the same arguments, as far as determining whether Lumbermens should indemnify Avon for its defense.[17] What is more important in the final analysis is that the district court look at whether the state and federal court proceedings involve "ventilation of the same state law issues."[18]
III. Conclusion
Based on the foregoing, it is ORDERED AND ADJUDGED that Defendant's Motion to Dismiss Complaint, to Remand to State Court, or to Stay (DE # 8, filed May 15, 1998) be, and the same is hereby, GRANTED. This action is STAYED until the state court proceedings have been fully adjudicated.[19] It is
FURTHER ORDERED AND ADJUDGED that the Clerk of the Court is DIRECTED to mark this case as CLOSED for statistical purposes. All pending motions not otherwise ruled on are DENIED AS MOOT. Plaintiff may move to reopen this case depending on the outcome of the state court proceedings.
NOTES
[1] The Court enters this Amended Order in order to correct certain typographical errors in the original Order entered on March 5, 1999.
[2] Apparently, Avon in the state court action and ICSP in the present action are represented by the same counsel.
[3] 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
[4] Eastman Kodak Co. v. Kavlin, 978 F.Supp. 1078, 1089 (S.D.Fla.1997).
[5] Brillhart, 316 U.S. at 494-95, 62 S.Ct. 1173.
[6] Angora v. Condominium Ass'n of Lakeside Village, Inc., 796 F.2d 384, 387 (11th Cir. 1986) (citing Hollis v. Itawamba County Loans, 657 F.2d 746, 750 (5th Cir.1981)).
[7] 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
[8] See, e.g., Def.'s Resp. at 9.
[9] See Colorado River, 424 U.S. at 814-15, 96 S.Ct. 1236.
[10] 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995).
[11] Id. at 286, 115 S.Ct. 2137.
[12] See id. at 282-83, 115 S.Ct. 2137.
[13] Brillhart, 316 U.S. at 495, 62 S.Ct. 1173.
[14] See Pl.'s Compl. at 7.
[15] See Def's Resp. at 3 ("Lumbermens answered the third-party complaint and asserted in its Affirmative Defenses ... that its policy is excess over ICSP policy, and that as an excess insurer, it owes no coverage to Avon for a defense, and that it owes no coverage to Avon for indemnification after the first $500,000 of any damages awarded.").
[16] Indeed, both Lumbermens' Complaint before this Court and Avon's third-party claim in state court focus on Section V of the Lumbermens insurance policy as dispositive on the issue of coverage.
[17] See Brillhart, 316 U.S. at 495, 62 S.Ct. 1173 (noting that it is not so much the nominal identity of the parties to the parallel suits, but "whether the claims of all parties in interest can satisfactorily be adjudicated" (emphasis added)).
[18] Wilton, 515 U.S. at 283, 115 S.Ct. 2137.
[19] See id. at 288 n. 2, 115 S.Ct. 2137 ("We note that where the basis for declining to proceed is the pendency of a state proceeding, a stay will often be the preferable course, because it assures that the federal action can proceed without risk of a time bar if the state case, for any reason, fails to resolve the matter in controversy.").
|
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
SEPTEMBER 1, 2009
No. 09-10772 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 08-00655-CV-UWC-S
CSX TRANSPORTATION, INC.,
Plaintiff-Appellant,
versus
ALABAMA DEPARTMENT OF REVENUE,
TIM RUSSELL, Commissioner of the Alabama
Department of Revenue,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(September 1, 2009)
Before BLACK, BARKETT, and HILL, Circuit Judges.
PER CURIAM:
CSX Transportation, Inc. (CSXT) appeals the one-page order of the district
court dated December 16, 2008, dissolving its preliminary injunction from the
imposition of Alabama’s sales and use tax on diesel fuel. The district court sua
sponte dismissed CSXT’s case on the basis that Norfolk Southern Railway Co. v.
Alabama Dept. of Rev., 550 F.3d 1306 (11th Cir. 2008) was dispositive.
CSXT asserts that the sales and use tax on diesel fuel discriminates against
railroad companies in violation of Section 306(1)(d) of the Railroad Revitalization
and Regulatory Reform Act of 1976, 49 U.S.C. § 11501(b)(4) (Section 306).
CSXT concedes that the Norfolk Southern panel considered an identical challenge
by the Norfolk Southern railroad to the sales and use tax on railroad diesel fuel
under Section 306, and ruled in favor of the Alabama revenue department.
CSXT further concedes that the three-judge panel assigned to hear this
appeal is bound by the panel’s decision in Norfolk Southern.1 We agree. We
affirm the judgment of the district court. See United States v. Archer, 531 F.3d
1347, 1352 (11th Cir. 2008).
AFFIRMED.
1
CSXT filed a petition for hearing en banc of this case, pursuant to Rule 35 of the
Federal Rules of Appellate Procedure. No judge in regular service in this court requested that
the court be polled on hearing en banc; the petition for hearing en banc has been denied.
2
|
Filed 6/7/17 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2017 ND 140
SNAPS Holding Company,
a North Dakota Corporation, Plaintiff, Appellee
and Cross-Appellant
v.
Jim Leach and Elizabeth Leach, Defendants, Appellants
and Cross-Appellees
and
Steve Leach, Defendant and Appellee
and
Darlene Leach, Frank A. Barber,
Sherry Barber, Dennis J. Meyer,
Jerry Nelson, Marjo Nelson,
Kathy Hegland, Michael Hegland,
Rebecca Soloway, William Ockert,
Delores Reznechek, John Bergstrom,
Janice Scott, John W. Scott, and all other
shareholders of IDA of Moorhead
Corporation, as listed on Exhibit A,
attached hereto and made a part
hereof by reference, Defendants
No. 20160313
Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Steven L. Marquart, Judge.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Opinion of the Court by Kapsner, Justice.
Benjamin J. Hasbrouck (argued) and Todd E. Zimmerman (on brief), Fargo, ND, for plaintiff, appellee and cross-appellant SNAPS Holding Company.
Paul A. Sortland, Minneapolis, MN, for defendants, appellants, and cross-
appellees Jim Leach and Elizabeth Leach.
James A. Teigland, Fargo, ND, for defendant and appellee Steve Leach.
SNAPS Holding Company v. Leach
No. 20160313
Kapsner, Justice.
[¶1] Jim Leach and Elizabeth Leach appeal a district court judgment awarding money damages to SNAPS Holding Company after ruling they breached a stock purchase agreement with SNAPS. SNAPS cross-appeals from the dismissal of its breach of contract claims against Jim Leach and Steve Leach. We affirm in part, reverse in part, and remand.
I
[¶2] Jim Leach was the chief operating officer and majority shareholder of IDA of Moorhead Inc., a corporation he created to manufacture electronic communications equipment. Jim Leach’s wife, Elizabeth Leach, and his son, Steve Leach, also owned shares of IDA.
[¶3] In 1994, Jim Leach sold IDA to IDA’s employees, including Reed Danuser. In 2010, Jim Leach and the IDA board of directors terminated Danuser’s employment as president and chief executive officer of IDA. Danuser sued IDA, Jim Leach, and others for wrongful termination and breach of fiduciary duty.
[¶4] While Danuser’s lawsuit was pending, Jim Leach began negotiating with Sanjay Patel, president and CEO of SNAPS, to sell IDA to SNAPS. During negotiations the parties discussed the effect of Danuser’s lawsuit on the potential sale. The parties agreed SNAPS would be responsible for the first $100,000 of expenses associated with the lawsuit, and Jim Leach and IDA would be responsible for that portion exceeding $100,000. At a July 2011 shareholders and board of directors meeting, the IDA shareholders and board of directors authorized the sale of IDA’s stock to SNAPS for $1,180,000. The minutes of both meetings indicate that any award, costs, and expenses associated with the Danuser lawsuit would be deducted from the purchase price. The minutes also indicate it was “anticipated that the pending litigation costs and expenses will not exceed $100,000.”
[¶5] In September 2011, Jim Leach and Patel executed the stock purchase agreement for the IDA stock sale. Jim Leach signed the agreement on behalf of himself, as president of IDA, and as the agent for Elizabeth Leach and all other selling shareholders. The agreement provided SNAPS would be responsible for the first $100,000 related to the Danuser lawsuit, and the selling shareholders would be responsible for any excess amount. SNAPS also executed a $770,000 promissory note, payable to Jim Leach, individually and as agent for the selling shareholders, for the remaining balance due under the stock purchase agreement.
[¶6] In October 2012, the district court ruled IDA wrongfully terminated Danuser and Jim Leach breached a fiduciary duty to Danuser. The court awarded Danuser a money judgment of over $820,000 against Jim Leach and IDA.
See
Danuser v. IDA Marketing Corp.
, 2013 ND 196, ¶ 40, 838 N.W.2d 488 (affirming judgment).
[¶7] Jim Leach and the selling shareholders of IDA refused to pay the Danuser judgment. In January 2014, Danuser filed the judgment against Jim Leach in Arizona. Danuser subsequently assigned the judgment to SNAPS and IDA in February 2014 and Jim Leach objected to the filing of the judgment against him in Arizona. In February 2015, the Arizona court ruled SNAPS and IDA could not enforce the judgment against Jim Leach in Arizona. The court concluded SNAPS exercised total control over the management and activities of IDA and was the alter ego of IDA. The Arizona court concluded both Arizona and North Dakota law prohibit contribution between intentional joint tortfeasors; therefore, allowing IDA to obtain contribution from Jim Leach, its co-intentional joint tortfeasor, was prohibited in Arizona.
[¶8] SNAPS sued Jim Leach, Elizabeth Leach, Steve Leach, and the other former IDA shareholders in December 2014 after they failed to pay the Danuser judgment. SNAPS alleged it had paid over $400,000 toward the Danuser judgment and that under the stock purchase agreement, the former IDA shareholders were responsible for Danuser’s damages in excess of $100,000. Jim Leach and Elizabeth Leach counterclaimed, alleging SNAPS breached the stock purchase agreement by failing to pay $277,500 remaining under the promissory note.
[¶9] All parties moved for summary judgment. SNAPS argued Jim and Elizabeth Leach were responsible for any amounts SNAPS paid in the Danuser lawsuit exceeding $100,000. Jim Leach, Elizabeth Leach, and Steve Leach argued the Arizona ruling was res judicata and prohibited SNAPS from enforcing the Danuser judgment against them in this case.
[¶10] The district court granted SNAPS’ motion for partial summary judgment on the issue of liability against Jim and Elizabeth Leach, concluding the “unambiguous language of the Stock Purchase Agreement makes the sellers . . . responsible for any amounts paid in the Reed Danuser lawsuit exceeding $100,000.” The court denied SNAPS’ motion against Steve Leach, concluding there was a genuine issue of material fact whether Jim Leach had authority to sign the stock purchase agreement on behalf of Steve Leach. The court thereafter granted summary judgment in favor of Jim and Steve Leach, concluding res judicata prohibited SNAPS from enforcing the stock purchase agreement against them on the basis of the Arizona court’s ruling. The court denied Elizabeth Leach’s summary judgment motion, concluding SNAPS’ claims under the stock purchase agreement could be enforced against her because she was not a party to the Arizona proceeding.
[¶11] After a June 2016 trial, the district court found Jim Leach had authority to act on behalf of Elizabeth Leach and the shareholders in executing the stock purchase agreement. The court found the sellers of IDA’s stock, including Elizabeth Leach, breached the stock purchase agreement by refusing to pay the Danuser judgment for all amounts exceeding $100,000. The court found Jim Leach also breached the agreement; however, SNAPS could not recover against him because of the court’s earlier order relating to res judicata and the Arizona ruling.
[¶12] The district court found SNAPS paid Danuser over $619,000. The court found $277,500 remained due from SNAPS under the promissory note, but concluded SNAPS did not breach the stock purchase agreement by refusing to pay that amount. The court reduced SNAPS’ damages by $277,500 and entered a $241,608 judgment against Elizabeth Leach. The court dismissed SNAPS’ claims against Jim Leach and Steve Leach and dismissed the counterclaim against SNAPS.
II
[¶13] Elizabeth Leach argues the district court erred in interpreting the stock purchase agreement. She argues the stock purchase agreement does not impose a duty of indemnification upon the IDA sellers to reimburse SNAPS for the payments made to Danuser exceeding $100,000.
[¶14] Interpretation of a contract presents a question of law fully reviewable on appeal.
Bendish v. Castillo
, 2012 ND 30, ¶ 16, 812 N.W.2d 398. A contract must be interpreted to give effect to the mutual intention of the contracting parties. N.D.C.C. § 9-07-03. A contract’s language governs its interpretation “if the language is clear and explicit and does not involve an absurdity.” N.D.C.C. § 9-07-
02. The entire contract is to be taken together to give effect to every part if reasonably practicable and each clause helps interpret the others. N.D.C.C. § 9-07-
06. The words of a contract are to be understood in their ordinary meaning. N.D.C.C. § 9-07-09.
[¶15] The two provisions in the stock purchase agreement relating to the Danuser litigation and indemnification state:
Reed Danuser Litigation. Buyer is aware of the pending Reed Danuser litigation, and has had an opportunity to review the Company’s records and litigation documents with regard to the pending action, and subject to the indemnity provisions as hereinafter set forth, the Buyer agrees to indemnify and pay all expenses and judgments associated with said lawsuit.
Indemnification. Buyer shall hold and indemnify Sellers harmless from the claims of Reed Danuser up to the sum of $100,000.00. In the event the amount necessary to resolve the issues with Reed Danuser exceed $100,000.00 the Seller shall be responsible for that portion. In the event the amount is less than $100,000.00, the difference shall be paid to the Sellers.
[¶16] The district court addressed those provisions in the stock purchase agreement:
[T]he language of the agreement in regards to the indemnification rights between the parties is not ambiguous. Paragraph 10 clearly states that Plaintiff, [SNAPS], has an obligation to hold harmless and indemnify the Sellers, the Defendants here, for a sum of up to $100,000.00. It is only in the event that the amounts paid in the Danuser lawsuit exceed $100,000.00 that the Sellers, the Defendants, would be responsible.
Here, Plaintiff’s Complaint alleges expenses and damages [in the Danuser lawsuit] exceeding $100,000.00.
. . . .
Here, the unambiguous language of the Stock Purchase Agreement makes the sellers, the Defendants, responsible for any amounts paid in the Reed Danuser lawsuit exceeding $100,000.00 dollars.
[¶17] We agree with the district court’s interpretation of the stock purchase agreement. Under the plain language of the agreement, SNAPS was responsible for the first $100,000 of damages and expenses in the Danuser lawsuit. Any amounts exceeding $100,000 were the sellers’ responsibility. Because SNAPS paid Danuser more than $100,000, the sellers are responsible for reimbursing SNAPS for all amounts paid exceeding $100,000.
III
[¶18] Elizabeth Leach argues the district court erred in finding she authorized Jim Leach to do everything necessary to sell her IDA stock. She argues she did not consent to the language in the stock purchase agreement holding the sellers responsible for all expenses exceeding $100,000 in the Danuser litigation. She argues her consent granting Jim Leach authorization to sell her stock should have been in writing.
[¶19] “Agency is generally a question of fact.”
Lagerquist v. Stergo
, 2008 ND 138, ¶ 9, 752 N.W.2d 168 (quoting
Stockman Bank of Montana v. AGSCO, Inc.
, 2007 ND 26, ¶ 11, 728 N.W.2d 142). A district court’s finding of agency is reviewed under the clearly erroneous standard of review.
Lagerquist
, at ¶ 9. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, there is no evidence to support it, or if, although there is some evidence supporting the finding, a reviewing court is left with a definite and firm conviction a mistake has been made.
Id.
at ¶ 10. Under N.D.C.C. § 3-02-08(1), an “agent has authority [t]o do everything necessary or proper and usual in the ordinary course of business to effect the purpose of the agent’s agency.”
[¶20] Elizabeth Leach’s argument regarding Jim Leach’s authority relates to the two paragraphs in the stock purchase agreement discussing the Danuser litigation and indemnification. The district court found Jim Leach and Sanjay Patel discussed the Danuser litigation while negotiating the IDA stock sale to SNAPS. The court found Jim Leach initially downplayed the lawsuit, calling it “noise” and “Jim made several references that Danuser would get nothing.” The court found the “general practice in such acquisition is to have the seller be responsible for contingent liabilities, such as the Danuser lawsuit.” The court found a June 2011 letter of intent between the parties indicated the seller would be “completely responsible for the Danuser lawsuit, in that any amounts paid for the Danuser claim would be deducted from the purchase price.”
[¶21] At a July 5, 2011, shareholder and board of directors meeting, the sale of IDA stock to SNAPS and the Danuser lawsuit were discussed. Regarding the terms of the stock sale, the minutes of both meetings state that “[f]rom the purchase price . . . there will be deducted any award, costs and expenses associated with pending litigation with Reed Danuser. It is anticipated that the pending litigation costs and expenses will not exceed $100,000.” The minutes and a certificate of resolution reflect the shareholders and board of directors authorized Jim Leach, individually and as agent for the shareholders, to sell IDA’s stock shares to SNAPS.
[¶22] The district court found that after those meetings, Jim Leach and Patel agreed “SNAPS would be responsible for the first $100,000 of the Danuser lawsuit, and Jim and IDA would be responsible for the rest.” The stock purchase agreement executed by the parties in September 2011 included the two previously quoted paragraphs relating to the Danuser litigation and indemnification. The court found Jim Leach signed the stock purchase agreement on behalf of himself, as President of IDA and as agent for Elizabeth Leach and all other shareholders.
[¶23] The district court found Jim Leach “was the acting agent for Elizabeth and other shareholders for selling their stock in the Stock Purchase Agreement.” Jim Leach testified he signed the agreement as the agent for Elizabeth Leach. Elizabeth Leach testified Jim Leach signed the agreement as her agent. The court found Elizabeth Leach did not restrict Jim Leach’s authority to act on her behalf to sell her IDA stock. The court found Jim Leach “was authorized by Elizabeth to do everything necessary and usual in the course of business to effectuate the sale of her stock in the Stock Purchase Agreement.” The court found Jim Leach believed Danuser would not be awarded over $100,000 in damages. The court found that by agreeing to the language in the agreement relating to the Danuser litigation, “Jim did everything necessary or proper and usual in order to affect the sale of Elizabeth’s stock. Therefore, Jim had the actual authority to so act.”
[¶24] Elizabeth Leach argues her authorization to Jim Leach to sell her stock should have been in writing. She argues that under the statute of frauds in N.D.C.C. § 9-06-04, an indemnity agreement is a special promise to answer for the debt of another and must be in writing. Because the indemnity provision in the stock purchase agreement was required to be in writing, she argues her authority to Jim Leach to act as her agent also should have been in writing.
[¶25] Under N.D.C.C. § 3-02-06, “an authority to enter into a contract required by law to be in writing . . . can be given only by an instrument in writing.” The statute of frauds, N.D.C.C. § 9-06-04(2), requires a special promise to answer for the debt of another to be in writing. “Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties or of some other person.” N.D.C.C. § 22-02-01.
[¶26] Elizabeth Leach argues her authority to Jim Leach was required to be in writing because an indemnity agreement must be in writing. Nothing in N.D.C.C. ch. 22-02 relating to indemnity requires a contract for indemnity to be in writing. Additionally, this Court has held a contract for indemnity need not be in writing.
See
Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co.
, 2003 ND 50, ¶ 40, 658 N.W.2d 363 (“A right of indemnity may arise by express agreement or by implication.”);
Johnson v. Haugland
, 303 N.W.2d 533, 543 (N.D. 1981) (“[A] contract of indemnity need not be express but indemnity may be recovered if the evidence establishes an implied contract.”). We conclude Jim Leach was not required to obtain written authorization from Elizabeth Leach or the other selling shareholders to act as their agent in selling their IDA stock. On this record, we conclude the district court did not clearly err in finding Jim Leach had authority under N.D.C.C. § 3-02-08(1) to do everything necessary and usual in the course of business to execute the stock purchase agreement on behalf of Elizabeth Leach and the other selling shareholders. We are not left with a definite and firm conviction a mistake has been made.
IV
[¶27] SNAPS argues the district court erred in concluding res judicata precluded SNAPS from enforcing its claims against Jim Leach and Steve Leach.
[¶28] “Res judicata claim preclusion bars courts from relitigating claims in order to promote finality of judgments, which increases certainty, avoids multiple litigation, wasteful delay and expense, and ultimately conserves judicial resources.”
Lucas v. Porter
, 2008 ND 160, ¶ 16, 755 N.W.2d 88. Res judicata prevents the “relitigation of claims that were raised, or could have been raised, in prior actions between the same parties or their privies.
Id.
(quoting
Riverwood Commercial Park, L.L.C. v. Standard Oil Co., Inc.
, 2007 ND 36, ¶ 13, 729 N.W.2d 101). Res judicata applies if the subsequent claims are based on the same underlying facts even if the subsequent claims are based on different legal theories.
Lucas
, at ¶ 21. The application of res judicata is a question of law, fully reviewable on appeal.
Id.
at ¶ 16.
[¶29] SNAPS argues the district court erred in concluding res judicata barred its claims under the stock purchase agreement against Jim Leach and Steve Leach. We agree.
[¶30] Danuser sued IDA, Jim Leach, and others after he was removed as president and chief executive officer of IDA in 2010. SNAPS purchased the IDA stock in 2011 while the Danuser lawsuit was pending. The district court awarded Danuser a judgment in 2012 against IDA and Jim Leach after finding Danuser was wrongfully terminated and Leach breached a fiduciary duty to Danuser. In January 2014, Danuser filed the judgment against Jim Leach in Arizona and Jim Leach objected to the filing of the foreign judgment. SNAPS became involved in the Arizona proceeding after Danuser assigned the judgment to SNAPS and IDA.
[¶31] The Arizona court ruled SNAPS and IDA were “prohibited from domesticating and executing on the Judgment against Leach in State of Arizona.” The court ruled both A.R.S. § 12-2501(C) and N.D.C.C. § 32-38-01(3) prohibit contribution between intentional joint tortfeasors; therefore, allowing IDA to obtain contribution from Leach, its co-intentional joint tortfeasor, was prohibited. The court also ruled SNAPS exercised total control over the management and activities of IDA and was the alter ego of IDA. The court ordered the Danuser judgment was “unenforceable by SNAPS [and IDA] against Leach in State of Arizona.”
[¶32] SNAPS sued Jim Leach, Steve Leach, and the other IDA shareholders in North Dakota in December 2014, alleging they breached the parties’ stock purchase agreement. SNAPS alleged it paid Danuser over $100,000, and the selling shareholders breached the agreement because SNAPS was obligated to pay Danuser the first $100,000 and the sellers were responsible for the excess.
[¶33] The district court concluded res judicata barred SNAPS’ claims against Jim Leach and Steve Leach:
Here, the issues and the parties, Jim and Steve, were the same in the Arizona action and the North Dakota action. In both actions, it was SNAPS attempting to collect on the Danuser judgment against Jim and Steve. The Stock Purchase Agreement was raised or could have been raised in the Arizona proceeding.
. . . .
Therefore, the Court concludes that SNAPS’ claims against Jim and Steve are barred by res judicata because of the Arizona decision on the identical issue.
[¶34] Contrary to the district court’s ruling, SNAPS’ lawsuit here was not an attempt to collect on the Danuser judgment. SNAPS sued to enforce the stock purchase agreement against Jim Leach, Elizabeth Leach, Steve Leach, and the other selling shareholders. The Arizona proceeding was limited to whether the Danuser judgment could be filed and enforced against Jim Leach in Arizona. Elizabeth Leach, Steve Leach, and the other selling shareholders were not involved in the Arizona proceeding, and the Arizona court specifically limited its ruling to the State of Arizona. The order issued in Arizona states SNAPS is “prohibited from domesticating and executing on the Judgment against Leach in State of Arizona.” Jim and Steve Leach have not cited and we have not found any authority allowing additional claims against additional parties in a proceeding relating to the filing of a foreign judgment. We conclude the proceeding in Arizona relating to the filing of the Danuser judgment and SNAPS’ lawsuit in North Dakota relating to the stock purchase agreement are based on different factual circumstances. SNAPS’ claims under the stock purchase agreement against Jim Leach and Steve Leach are not barred by res judicata. We reverse and remand that part of the district court’s order granting summary judgment in favor of Jim Leach and Steve Leach. We also reverse and remand that part of the judgment dismissing SNAPS’ claims against Jim Leach and Steve Leach.
V
[¶35] Jim Leach and Elizabeth Leach argue the district court erred in allowing SNAPS a recoupment of its obligation to pay the remaining balance due under the promissory note. They argue SNAPS breached the stock purchase agreement by failing to pay the remaining balance due under the note.
[¶36] This Court discussed the equitable doctrine of recoupment in
Minex Resources, Inc. v. Morland
, 467 N.W.2d 691, 699 (N.D. 1991):
Recoupment is an equitable doctrine with its own unique characteristics: it must arise out of the same transaction that is the subject matter of the plaintiff’s action and it can only be used to reduce or avoid the plaintiff’s recovery. It is not a weapon of offense. Recoupment cannot be used to obtain affirmative relief. Recoupment differs from a counterclaim, which may arise out of a separate transaction and allows for affirmative relief and recovery in excess of that sought by the plaintiff, and from a setoff, which involves a transaction unrelated to the plaintiff's action. Recoupment is purely defensive.
(Citations omitted.)
[¶37] Here, the district court found that after Jim Leach refused to pay the Danuser judgment, SNAPS stopped making payments under the promissory note referenced in the stock purchase agreement. The court found SNAPS owed $277,500 under the note. The court found SNAPS paid Danuser $619,108, and after deducting SNAPS’ $100,000 obligation under the stock purchase agreement, awarded SNAPS damages of $519,108 resulting from the shareholders’ breach of the agreement. The court further reduced SNAPS’ damages by $277,500 as a defensive recoupment of its obligation to pay the remaining balance under the promissory note.
[¶38] Recoupment must arise from the same transaction relating to the subject matter of the plaintiff’s action and can only be used to reduce or avoid the plaintiff’s recovery.
Minex
, 467 N.W.2d at 699. The subject matter of SNAPS’ lawsuit is the parties’ rights and responsibilities under the stock purchase agreement. The recoupment of SNAPS’ obligation to pay the remaining balance under the promissory note reduced SNAPS’ recovery. We conclude the district court did not err in granting SNAPS a recoupment of its obligation under the promissory note.
VI
[¶39] We have considered the parties’ remaining arguments and conclude they are either unnecessary to our decision or without merit. The judgment is affirmed in part, reversed in part, and remanded for further proceedings.
[¶40] Carol Ronning Kapsner
Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
Gerald W. VandeWalle, C.J.
|
763 F.Supp. 1576 (1991)
ENVIRONMENTAL WASTE CONTROL, INC., d/b/a Four County Landfill, West Holding Co., Steven W. Shambaugh, and James A. Wilkens
v.
AGENCY FOR TOXIC SUBSTANCES AND DISEASE REGISTRY.
Civ. No. 1:90-cv-2105-ODE.
United States District Court, N.D. Georgia, Atlanta Division.
May 3, 1991.
*1577 *1578 John A. Sherrill, Terrence McQuade, Glass, McCullough, Sherrill & Harrold, Atlanta, Ga., Donn H. Wray, George M. Plews, Pendygraft, Plews & Shadley, Indianapolis, Ind., for plaintiffs.
Daniel A. Caldwell, III, Asst. U.S. Atty., Atlanta, Ga., Daniel S. Goodman, U.S. Dept. of Justice, Environment & Natural Resources Div., Washington, D.C., Deborah Weimer, Centers for Disease Control, Atlanta, Ga., for defendant.
ORDER
ORINDA D. EVANS, District Judge.
This case in which Plaintiffs seek judicial review of a report generated by Defendants in accordance with environmental laws is before the court on Defendant's motions to dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted, and on Plaintiffs' motions to add documents omitted from the original complaint and to supplement their response to the motion to dismiss.
Plaintiffs' motions are hereby GRANTED.
The facts are straightforward even though a wealth of federal environmental law is implicated. Plaintiffs are owners and operators of a hazardous waste disposal facility ("the Landfill") in Fulton County, Indiana. Defendant ("the Agency") is an agency within the Public Health Service of the Department of Health and Human Services which performs research services of various kinds. See, 42 U.S.C. § 9604(i)(1).[1]
In an enforcement suit brought by the Environmental Protection Agency and tried without a jury in December, 1988 before the United States District Court for the Northern District of Indiana, Judge Miller permanently enjoined operation of the Landfill because of Plaintiffs' "dismal history of delay, misperformance, and non-compliance" with environmental laws and because of the public health risks posed by the Landfill. U.S. EPA v. Environmental Waste Control, Inc., 710 F.Supp. 1172, 1247 (N.D.Ind.1989). The Court of Appeals for the Seventh Circuit affirmed the District Court in toto. 917 F.2d 327 (1990), cert. denied, ___ U.S. ___, 111 S.Ct. 1621, 113 L.Ed.2d 719 (1991).
At the behest of Senators Lugar and Quayle of Indiana, the Agency prepared a report denominated a "Health Assessment" on May 1, 1990. 42 U.S.C. § 9604(i)(6)(B) gives discretion to the Administrator of the Agency to perform a health assessment or not in cases where "individual persons" request one. A revised Health Assessment dated July 25, 1990 and attached to the complaint resulted from, according to the language of the report itself, "a public *1579 comment period ... conducted during May and June 1990" and "a public meeting ... conducted on July 2, 1990." H.A. of July 25, 1990 at 2-3. The Health Assessment is a seventeen-page document which describes in some detail the Landfill and its suspected or known hazards, discusses the health implications of these hazards, and makes a number of recommendations for the protection of public health. Included within the Health Assessment are discussions of certain pollutant data appended to the report.
Plaintiffs filed this suit on September 24, 1990, approximately eighteen months after Judge Miller shut down the Landfill and soon after the release of the revised Health Assessment.[2] In their complaint, Plaintiffs ask for judicial review of both the Health Assessment and the Agency's refusal to revise or make additions to the report in light of data and materials submitted by Plaintiffs. Plaintiffs allege that the Health Assessment contains false, misleading, and scientifically indefensible statements. They also allege that they have been denied due process in being excluded from the public hearings preceding the release of the revised Health Assessment. Finally, Plaintiffs allege tort damages to their business reputation and to the value of their property.
The Agency raises four arguments in support of its motion to dismiss for lack of subject matter jurisdiction under Fed.R. Civ.P. 12(b)(1). Its first two related arguments are that it has not engaged in either "agency action" or "final agency action" for purposes of the grant of jurisdiction to the district courts in the Administrative Procedure Act, 5 U.S.C. § 704 ("APA"). Third, it argues that the case is not ripe for review because the Health Assessment has no direct or immediate impact upon the company. Finally, the Agency argues that the specific prohibition against pre-enforcement review of the Health Assessment contained in 42 U.S.C. § 9613(h) prevails over the general conferral of subject-matter jurisdiction over agency action contained in the APA.
In its motion to dismiss for failure to state a claim upon which relief may be granted under Fed.R.Civ.P. 12(b)(6), the Agency contends that Plaintiffs' due process claim must fail because the Agency provided a public comment period. The Agency also argues that, the public comment period notwithstanding, the Agency went on to respond in detail to written submissions from Plaintiffs.
In response, Plaintiffs offer related arguments that preparation of the Health Assessment constitutes "agency action" or "final agency action" under the APA and that the case is ripe for review by this court. In this context, Plaintiffs take issue with case authority cited by the Agency. Next, Plaintiffs argue for an interpretation of 42 U.S.C. § 9613(h) which would not preclude judicial review under the APA in this case. Finally, Plaintiffs urge that the due process claim in their complaint should survive dismissal because the complaint alleges that Plaintiffs "received no notice" of the public hearings. Plaintiffs argue that the notice which the Agency alleges it did provide advertisements in four newspapers, notice at a public library, and an announcement through a local radio station is insufficient as a matter of law and that the Agency should have notified Plaintiffs by letter.
The court need not reach the parties' arguments relating to the availability of review under the APA (5 U.S.C. § 704) because 42 U.S.C. § 9613(h) takes precedence over the APA in this case. Section 9613(h) "clearly provides that federal courts do not have subject matter jurisdiction for pre-enforcement reviews of EPA removal actions pursuant to section 9604." Dickerson v. Administrator, E.P.A., 834 F.2d 974, 977 (11th Cir.1987) (citing authorities). First, it is appropriate to look to the language of § 9613(h). That section reads, in relevant part:
[n]o Federal court shall have jurisdiction under Federal law ... to review any *1580 challenges to removal or remedial action selected under section 9604 of this title ... in any action except one of the following....
None of the exceptions are relevant here. The terms "removal" and "remedial action" are terms of art. The statute provides a very broad definition for "removal" at § 9601(23):
[t]he terms `remove' or `removal' means [sic] the cleanup or removal of released hazardous substances from the environment, such actions as may be necessary taken in the event of the threat of release of hazardous substances into the environment, such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances, the disposal of removed material, or the taking of such other actions as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to the environment, which may otherwise result from a release or threat of release....
42 U.S.C. § 9601(23) (emphasis added).
In the case at bar, the preparation of the Health Assessment falls within the definition for "removal". Sections 9604(i)(6)(F) and (G) describe the nature and purposes of health assessments prepared under authority of § 9604(i)(6)(B). Section 9604(i)(6)(F) states that they "shall include preliminary assessments of the potential risk to human health posed by individual sites and facilities, based on [a number of factors]...." Id. (emphasis added). Section 9604(i)(6)(G) states that
the purpose of health assessments ... shall be to assist in determining whether [certain steps to protect the public health] under paragraph (11) of this subsection should be taken to reduce human exposure to hazardous substances from a facility and whether additional information on human exposure and associated health risks is needed and should be acquired by conducting epidemiological studies under paragraph (7), establishing a health surveillance program under paragraph (9), or through other means. In using the results of health assessments for determining additional actions to be taken under this section, the Administrator of [the Agency] may consider additional information on the risks to the potentially affected population from all sources....
Id. (emphasis added).
It is clear from the relevant statutory language that the definition for "removal" encompasses the preparation of health assessments. Health assessments such as the one in this case clearly do "monitor, assess, and evaluate the release or threat of release of hazardous substances." 42 U.S.C. §§ 9601(23), 9604(i)(6)(F), (G). The statutory definition of "removal" controls, and that definition is broad. Moreover, the statutory provisions quoted herein make plain that health assessments are an integral part of a series of regulatory measures which Congress evidently desires to allow to proceed unhindered up to a certain point. See, Dickerson v. Administrator, E.P.A., 834 F.2d at 977. Until the Agency or other entities take one or more of the specific "actions" listed in § 9613(h)(1)-(5) and not yet taken in this case, the introductory language of § 9613(h) plainly prevents this court acquiring subject matter jurisdiction over the Agency's acts to date. Moreover, a reading of the Health Assessment shows it to be in complete conformity with the statutory prescriptions. Finally, Plaintiffs appear to take issue with characterization of the Agency's actions as actions "selected under section 9604" for purposes of § 9613(h)'s denial of pre-enforcement review. In this regard, the court need only point out that preparation of the Health Assessment, though discretionary under § 9604(i)(6)(B), is nevertheless action "selected" under § 9604. There can be no serious argument to the contrary because all provisions relating to health assessments and their preparation are contained in § 9604. In summary, therefore, the court concludes that it lacks subject matter jurisdiction to review the Health Assessment at this time. 42 U.S.C. § 9613(h) (entitled "timing of review"); see, State of Alabama v. U.S. E.P.A., 871 F.2d 1548, 1557-58 (11th Cir.), cert. denied, ___ U.S. *1581 ___, 110 S.Ct. 538, 107 L.Ed.2d 535 (1989); Dickerson v. Administrator, E.P.A., 834 F.2d at 977.
Note that for Plaintiffs to state a claim for relief,
Rule 8 of the Federal Rules of Civil Procedure merely requires "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). It is well established that a complaint is not subject to dismissal unless it appears to a certainty that no relief can be granted under any set of facts that can be proved in support of the complaint's allegations. Id. at 45, 78 S.Ct. at 101. Generally, the Federal Rules of Civil Procedure do not require a claimant to set forth in detail the facts upon which he bases his claim. Id. at 47, 78 S.Ct. at 102. Rather, cases in which the facts do not establish a true controversy are more properly disposed of through summary judgment.
Arnold v. Board of Educ. of Escambia County, 880 F.2d 305, 309 (11th Cir.1989). The court must construe all allegations in the complaint in the light most favorable to Plaintiffs and accept those allegations as true. Jenkins v. McKeithen, 395 U.S. 411, 416-17, 89 S.Ct. 1843, 1846-47, 23 L.Ed.2d 404 (1969).
Plaintiffs' constitutional claim is that the Agency's failure to provide adequate notice of the public comment period prevented Plaintiffs from participating in the comment period and ultimately deprived them of a property interest namely, their business reputation. This claim rests on the allegation that the Agency did not inform Plaintiffs by letter of the public comment period directed to revisions of the initial Health Assessment of May 1, 1990. Plaintiffs argue that any public notice by newspapers and radio was constitutionally insufficient to put them on notice. Their alleged reputational injury arises from the publication of a revised Health Assessment which did not take account of their data.
In challenging the Agency's method of notice on due process grounds rather than on statutory grounds, Plaintiffs are taking a back-door approach. Section 9604, which authorizes the preparation of health assessments and contains the various rules regarding their preparation, does not by its terms require that the Agency provide notice and hearing. See, 50 Fed.Reg. 5137 (Tues., Feb. 13, 1990) (codified at 42 C.F.R. § 90). The recently published regulations relating to health assessments require a public notice and comment period, but notification is adequate if made in "at least one newspaper of general distribution in the local [sic] where the site is located." 42 C.F.R. § 90.10 (Oct. 1, 1990).[3] Plaintiffs neither argue nor allege that the Agency failed to follow the regulations.
Because of the omnipresence of the APA, it should be noted that the notice rules of the APA in 5 U.S.C. § 553(b), applicable to agency rule-making, do not apply in this case. 5 U.S.C. § 553(b) provides, in relevant part:
[g]eneral notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law.
Id. The provision goes on to prescribe the contents of the required notice. Id.
There is nothing in the Health Assessment, the provisions of § 9604 which create and define it, or the APA's definition of a "rule," which would implicate APA notice requirements. See, 5 U.S.C. § 551(4); Industrial Safety Equip. Ass'n, Inc. v. E.P.A., 837 F.2d 1115, 1120 (D.C.Cir.1988). Again, the Health Assessment merely reaches tentative conclusions and makes recommendations for future public health measures. The Health Assessment does not alter existing law or official policies, does not impose or relieve regulatory burdens on Plaintiffs, does not mandate future *1582 action. As the provisions of § 9604 indicate, it is an advisory report without any apparent binding effect on anyone. See, 42 U.S.C. § 9604(i)(1), (6)(G). The statute's language expresses this clearly: "[t]he purpose of health assessments ... shall be to assist in determining whether actions ... should be taken ... and whether additional information ... is needed and should be acquired." 42 U.S.C. § 9604(i)(6)(G) (emphasis added).
Industrial Safety Equipment presents an analogous set of facts. In that case, manufacturers of occupational safety equipment asked the Court to characterize as "rule making" the publication by government agencies of a guide containing recommendations and scientific information for employers to consider in fashioning asbestos protection programs. Id. The manufacturers argued that in explicitly not recommending certain types of respirators, the guide effectively made an agency rule. The Court rejected this argument. 837 F.2d at 1119. Noting that the guide did not, inter alia, change law or policy, affect the agencies' own certifications of respirators, or alter anyone's obligations or duties, the Court concluded that its advisory, hortatory nature precluded characterizing it as a "rule" for purposes of APA notice requirements. Id. at 1120-21.
The notice provision of the APA being inapplicable, the court thus turns to Plaintiffs' due process claim. Procedural due process guarantees apply when a constitutionally-protected liberty or property interest is at stake. Soranno's Gasco, Inc. v. Morgan, 874 F.2d 1310, 1316 (9th Cir. 1989). To determine whether Plaintiffs have been deprived of a constitutionally-protected liberty or property interest, the court engages in a three-pronged inquiry: 1) whether there is a liberty or property interest at stake; 2) whether the Agency's action deprived Plaintiffs of that interest; and 3) if there was a deprivation, whether Plaintiffs were accorded due process protections. See, Industrial Safety Equip., 837 F.2d at 1122 (paraphrasing Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976)).
To the extent to which Plaintiffs claim to have been deprived of a property interest in their business reputation, there is not a cognizable property interest at stake here. Harm to business reputation, standing alone, does not constitute either a "liberty" interest or a "property" interest for purposes of due process analysis. Paul v. Davis, 424 U.S. 693, 711-12, 96 S.Ct. 1155, 1165-66, 47 L.Ed.2d 405 (1976). Paul v. Davis held that harm to business reputation implicates a liberty or property interest only if there is some additional loss of either a protected right or a more tangible interest. Id. at 710-712, 96 S.Ct. at 1164-1166; see, Marrero v. City of Hialeah, 625 F.2d 499, 512-13, 515 (5th Cir. 1980) (§ 1983 case). As one court has stated,
a constitutionally recognized liberty interest depends on the existence of a special, tangible relationship between the government and the individual in specific contexts. A property interest explicitly created by independent state or federal law undoubtedly creates such a relationship and satisfies the threshold aspect of this `reputation plus' standard.
Doe v. U.S. Dep't of Justice, 753 F.2d 1092, 1106 (D.C.Cir.1985).
Plaintiffs have not begun to satisfy the "reputation plus" standard. The complaint alleges no more than that "false, scientifically indefensible, and defamatory assertions made in the health assessment have caused damage to [Plaintiffs'] business reputation." Plaintiffs have neither argued nor alleged the existence of any tangible harm or the "plus" factor needed to establish a due process claim for reputational injury. Paul v. Davis, 424 U.S. at 710-12, 96 S.Ct. at 1164-66; see also, Doe v. U.S. Dep't of Justice, 753 F.2d at 1104-11 (extensive discussion of Paul v. Davis requirements); E.E.O.C. v. Sears, Roebuck & Co., 504 F.Supp. 241, 269 (N.D.Ill.1980) (bad publicity is not a "plus" factor). Plaintiffs cannot found a due process claim on bald allegations of harm to business reputation.
To the extent that Plaintiffs allege that their business property decreased in *1583 value due to the tentative conclusions and recommendations contained in the Health Assessment, such allegations are insufficient to show a cognizable "deprivation", the second required showing for a due process claim.[4] The Health Assessment effectuates no "taking," for it is merely a series of tentative conclusions and recommendations for further action to protect public health in the areas surrounding the Landfill. The Health Assessment is without binding effect and is merely advisory in character. See, 42 U.S.C. § 9604(i)(6)-(7) (health assessments may or may not trigger an array of further regulatory steps by Agency or other officials); Industrial Safety Equip. Ass'n, Inc. v. E.P.A., 837 F.2d 1115, 1122 (D.C.Cir.1988) (advisory report did not work a deprivation).
Again, the facts of Industrial Safety Equipment are compelling in this context. There, the Court concluded that the agencies' publication of a guide which had merely an indirect effect on the manufacturer's sales of respirators "in no way ... rendered [that property] valueless." 837 F.2d at 1122. The agencies, noted the court, "have only introduced new information into the market with a possible effect on competition." Id. Likewise, in this case, the publication of the Health Assessment for the purposes of scientific assessment of possible health risks has merely an indirect effect on the value of Plaintiff's Landfill. It certainly does not "take" the Landfill and render it valueless, and the Health Assessment and the Landfill can certainly "coexist, however uneasily." Id. Absent a taking, or "deprivation", Plaintiffs' complaint cannot support a due process claim.
Finally, and again as in Industrial Safety Equipment, "even were [the court] to view the publication as a deprivation, the [agency is] discharging [its] statutory duty." Id. Therefore, as the third element of the Mathews v. Eldridge standard for identifying the dictates of due process in a given set of circumstances would dictate, the Agency's statutorily-mandated duties to assess the dangers of potentially hazardous sites and, in the end, to protect public health, far outweigh whatever the speculative injury to property value which Plaintiffs allege. 424 U.S. at 335, 96 S.Ct. at 903; see, Industrial Safety Equipment, 837 F.2d at 1122; 42 U.S.C. § 9604(i)(6)(G).
Accordingly, and in light of the foregoing, Defendant's motions to dismiss for want of subject matter jurisdiction and for failure to state a claim upon which relief may be granted are GRANTED, and Plaintiffs' complaint is hereby DISMISSED. Plaintiffs' motions to add documents and to supplement their response are also GRANTED.
SO ORDERED.
NOTES
[1] This is § 104(i)(1) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (commonly known as "CERCLA") as amended by the Superfund Amendments and Reauthorization Act of 1986 (or "SARA"), 42 U.S.C. § 9601-9675.
[2] Plaintiffs allege venue to be proper in this court by virtue of the relevant statutory venue provision, 42 U.S.C. § 9613(b), and the Agency's maintenance of its principal office in Atlanta.
[3] This rule essentially brings preparation of health assessments, properly denominated as "removal" action under § 9601(23), into line with the statutory notice and comment requirements of § 9617 applicable to "remedial action" as defined in § 9601(24).
[4] The Court assumes, arguendo, that Plaintiffs have a protected property interest in the Landfill despite its shutdown.
|
482 F.2d 361
INTRACOASTAL TRANSPORTATION, INC., and Anderson MarineConstruction, Inc., Plaintiffs-Appellees,v.DECATUR COUNTY, GEORGIA, et al., Defendants,Department of Transportation, Defendant-Appellant.
No. 72-2700.
United States Court of Appeals,Fifth Circuit.
June 29, 1973.Rehearing and Rehearing En Banc Denied Aug. 28, 1973.
William B. Brown, Asst. Atty. Gen., Arthur K. Bolton, Atty. Gen., Harold N. Hill, Executive Asst. Atty. Gen., Marion O. Gordon, Asst. Atty. Gen., Atlanta, Ga., for defendant-appellant.
Ben Kirbo, Bainbridge, Ga., for plaintiffs-appellees.
Harold Lambert, Bainbridge, Ga., for Decatur County.
Before WISDOM, GEWIN and COLEMAN, Circuit Judges.
GEWIN, Circuit Judge:
1
In this admiralty action, the State of Georgia appeals pursuant to 28 U.S.C. Sec. 1292(b) from the district court's denial of its motion to dismiss on the grounds of sovereign immunity. After a careful review of the applicable law, we conclude that Georgia was entitled to avail itself of the sovereign immunity defense, and therefore reverse.1
2
The facts giving rise to the present controversy are not in dispute and may be summarized with brevity. Decatur County, Georgia, and the Georgia Department of Transportation are the alleged owners and operators of a drawbridge across the Flint River, a navigable waterway which flows through Decatur County. The appellees instituted the present action alleging that as a result of the negligent operation of the drawbridge they had suffered considerable damages.2 Georgia then filed a motion to dismiss on the grounds of sovereign immunity asserting that it had not consented to the suit. Georgia bases its defense on the eleventh amendment to the United States Constitution.3
3
The appellees countered that the Flint River was a navigable water way and structures built over it were subject to federal regulation.4 They asserted that Georgia waived the defense of sovereign immunity by entering this federally regulated sphere of activity. The district court denied Georgia's motion to dismiss and we now review the propriety of that ruling.
4
We begin with the general observation that in a suit in admiralty, a state is entitled to the defense of sovereign immunity granted by the eleventh amendment. The Supreme Court has stated:
5
We repeat, the immunity of a state from suit in personam in the admiralty, brought by a private citizen without its consent, is clear.5
6
The appellees argue, however, that Georgia has impliedly consented to this suit by building a bridge over a navigable waterway, which is subject to plenary control by federal statutes.
7
Appellees place primary reliance on Parden v. Terminal Railway of the Alabama State Docks Department.6 In Parden, ailroad employees sued an Alabama owned railroad under the Federal Employers' Liability Act,7 for injuries resulting from their employment. Alabama contended that it was entitled to sovereign immunity under the eleventh amendment. The Court rejected Alabama's claim, stating:
8
A State's immunity from suit by an individual without its consent has been fully recognized by the Eleventh Amendment and by subsequent decisions of this Court. But when a State leaves the sphere that is exclusively its own and enters into activities subject to congressional regulation, it subjects itself to that regulation as fully as if it were a private person or corporation.8
9
Appellees claim that their suit against Georgia falls within the Parden waiver exception to the sovereign immunity doctrine. We cannot agree with this conclusion.
10
A superficial reading of the Parden decision might lead one to the conclusion which appellees wish to have us adopt. Distilled to its basic holding, Parden stands for the proposition that a State impliedly waives its sovereign immunity defense when it: (1) enters a field which is regulated by federal statute;9 and, (2) Congress has specifically created a remedy in private parties for the violation of the applicable federal regulatory statute.10
11
At least one circuit has upheld a state's sovereign immunity defense even where Congress has created a private cause of action under a federal regulatory scheme. See, Employees of the Department of Public Health & Welfare v. Department of Public Health & Welfare, State of Missouri, 452 F.2d 820 (8th Cir. 1971) (en banc). The Eighth Circuit rejected a simplistic reading of the Parden decision, correctly recognizing that many policy considerations must be weighed before a State can be said to have "waived" its immunity by conducting activities subject to federal regulation. The Employees case involved an action by state hospital workers against Missouri for overtime compensation provided by the Fair Labor Standards Act, 29 U.S.C. Sec. 201 et seq.
12
The hospital workers based their waiver claim on 29 U.S.C. Sec. 216(b) which created a private cause of action for an employer's violation of the FLSA's applicable substantive provisions. By a 1966 amendment to the Act, Congress subjected state hospitals to the overtime provisions of the Act. 29 U.S. C. Sec. 203(s)(4). The Eighth Circuit rejected the argument that Missouri had waived its sovereign immunity defense by operating hospitals subject to the overtime provisions of the Act and in face of the provision in the act which created a private cause of action for employees whose employers violated the overtime provisions of the Act.
13
Certiorari was granted and the Supreme Court in an opinion by Mr. Justice Douglas, affirmed.11 The Court carefully distinguished the Parden decision. Whereas in Parden, Alabama began operation of a railroad twenty years after the enactment of the Federal Employers' Liability Act, 45 U.S.C. Secs. 51-60, the state of Missouri had operated hospitals long before the enactment of the 1966 amendment which subjected them to the FLSA's overtime provisions.
14
Moreover, the Court was concerned with the effect a holding of implied waiver would have on the viability of the eleventh amendment. The Court noted that it is one thing to subject a State to suit when it enters into the rather unusual activity of operating a railroad "for profit" but quite another when the State operates a hospital which is widely recognized as a proper state function if not a compelled duty. All States operate hospitals and the burden created by holding a State amenable to private suits would have a greater impact on the financial resources of states than the particularly limited holding of Parden. This problem was accentuated by the fact that the Act provided for double recovery and attorney's fees for the successful private litigants.12
15
Apparently the crucial factor which must have weighed most heavily in the Court's reasoning was the absence of any express intent by Congress to subject the States to private suits. In face of the express limitations on a federal court's jurisdiction by the eleventh amendment, the court refused to expand the implied waiver theory or even entertain such a sensitive constitutional issue, without at least an express congressional provision which made a State amenable to such a suit. Justice Douglas stated:
16
It is not easy to infer that Congress in legislating pursuant to the Commerce Clause, which has grown to vast proportions in its applications, desired silently to deprive the States of an immunity they have long enjoyed under another part of the Constitution. Thus, we cannot conclude that Congress conditioned the operation of these facilities on the forfeiture of immunity from suit in a federal forum. 411 U.S. at 285, 93 S.Ct. at 1618.
17
******
18
* * *
19
But we decline to extend Parden to cover every exercise by Congress of its commerce power, where the purpose of Congress to give force to the Supremacy Clause by lifting the sovereignty of the States and putting the States on the same footing as other employers is not clear. 411 U.S. 286, 93 S.Ct. at 1619.
20
Thus, the Employees decision added an additional requirement to the Parden test for determining whether a private party may successfully invoke a federal court's jurisdiction in his suit against a State. It is no longer sufficient merely to show that a State has entered a federally regulated sphere of activity and that a private cause of action is created for violating the applicable federal provision, but in addition the private litigant must show that Congress expressly provided that the private remedy is applicable to the States.13
21
It is apparent that appellees have met the first requirement of Parden because Georgia has entered a field of activity extensively regulated by federal statute. However a careful reading of the "Bridge Act of 1906" compels us to conclude that Congress did not create a cause of action in private parties for a violation of the Act's standards. The act is penal in nature and enforcement of its provisions is vested in the Attorney General.14
22
We cannot concur in the result reached by the Fourth Circuit in Chesapeake Bay Bridge & Tunnel District v. Lauritzen,15 where the court held that the Act did create a cause of action in private parties. We feel that a careful reading of the cases relied upon will not sustain the conclusion reached by that court, particularly in view of the recent Supreme Court decision in the Employees case.16
23
*****
24
* * *
25
The conclusion reached today is in accord with recent pronouncements of this Court. We have previously stated that:
26
Further we do not deem a mere entry into an area regulated by international treaty as an automatic waiver of sovereign immunity. As long as the sovereign immunity claim does not prevent federal relief which would otherwise be attainable, we see no virtue in invoking federal jurisdiction. Here no relief is possible because no discrimination is evidenced.17
27
The "Bridge Act of 1906" does not create a cause of action in private parties and hence sustaining the state's claim to sovereign immunity will not deny appellees relief to which they would otherwise be entitled.18
28
The order of the district court is reversed, and the cause remanded to that court with directions to dismiss appellees' complaint against the Georgia Department of Transportation.
29
Reversed and remanded with directions.
WISDOM, Circuit Judge (dissenting):
30
I respectfully dissent.
31
Today, the Court holds that even though a state has waived its immunity at common law and under the eleventh amendment by entering a federally regulated sphere of activity, it is still not amenable to suit by a private person for violating a federal statute unless Congress has expressly provided that the private enforcement remedy is applicable in suits against the states. The majority relies on Employees of the Department of Public Health and Welfare of Missouri v. Department of Public Health and Welfare of Missouri, 1973, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (April 18, 1973), to support its holding. I think, however, that a fair reading of that case discloses no such requirement. Furthermore, the Court's holding is in direct conflict with Parden v. Terminal R. Co., 1964, 377 U.S. 184, 84 S.Ct. 1207, 12 L.Ed.2d 233, a case which the Supreme Court did not purport to overrule in Employees.
32
In Parden the plaintiffs, citizens of Alabama, sued the defendant stateowned railroad in federal district court to recover damages under the Federal Employers' Liability Act, 45 U.S.C. Sec. 51 et seq., for injuries sustained while employed by the railroad. The FELA defined the term "carrier" as including "every common carrier by railroad while engaged in [interstate] commerce." 45 U.S.C. Sec. 51. There was no express provision that the Act applied to stateowned railroads. Nor was there any indication to that effect in the legislative history. Nevertheless, the Supreme Court held that Congress impliedly intended the Act to apply to state-owned as well as privately-owned railroads and that it had the power to do so. The Court reasoned that the states, by adopting and ratifying the commerce clause, had authorized Congress to create such a cause of action and that Alabama, by operating an interstate railroad, had consented to suit under the Act and thus waived its immunity at common law and under the eleventh amendment.1 In so holding, the Court rejected the argument of the dissenting justices that immunity should be disallowed "only when Congress has clearly considered the problem and expressly declared that any state will be deemed thereby to have waived its immunity. . . ." 377 U.S. at 198-199, 84 S.Ct. at 1216.
33
Employees presented a materially different situation. There, the plaintiffs, employees of state health facilities, sought to recover overtime compensation due under section 16(b) of the Fair Labor Standards Act, 29 U.S.C. Sec. 216(b), and an equal amount as liquidated damages. The Supreme Court found that the suit was barred since Congress, in enacting the FLSA, did not intend to deprive the states of their immunity to suit by employees of state health facilities. The Court noted that originally section 3(d) of the Act defined "employer" as excluding the United States or any state or political subdivision of a state. In 1966, section 3(d) was amended to extend the Act's coverage to employees of state health facilities. But the language of section 16(b), providing for private enforcement suits, was left unchanged.2 In interpreting congressional silence on this issue, the Court focused mainly on (1) the burden that would be placed on the states by a finding that section 16(b) was applicable to suits against state health facilities and (2) the availability of alternate avenues for enforcement of the private party's rights under the Act. The Court observed that unlike the situation in Parden, extension of section 16(b) to suits against the states would have a pervasive and perhaps financially devastating effect on the operation of those facilities, which were not operated for profit. It said:
34
Where employees in state institutions, not conducted for profit, have such a relation to interstate commerce that national policy, of which Congress is the keeper, indicates that their status should be raised, Congress can act. And when Congress does act, it may place new or even enormous fiscal burdens on the States. Congress acting responsibly would not be presumed to take such action silently. The dramatic circumstances of the Parden case, which involved a rather isolated state activity, can be put to one side. We deal here with problems that may well implicate elevator operators, janitors, charwomen, security guards, secretaries and the like in every office building in a State's governmental hierarchy. Those who follow the teachings of Kirschbaum v. Walling, [1942, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638] and see its manifold applications will appreciate how pervasive such a new federal scheme of regulation would be. 411 U.S. at 284, 93 S.Ct. at 1618.
35
Furthermore, section 16(b) allowed the employees to recover both the compensation due them and an equal amount as liquidated damages and attorneys fees. The Court said:
36
It is one thing, as in Parden to make a state employee whole; it is quite another to let him recover double against a State. Recalcitrant private employers may be whipped into line in that manner. But we are reluctant to believe that Congress in pursuit of a harmonious federalism desired to treat the States so harshly. The policy of the Act so far as the States are concerned is wholly served by allowing the delicate federal-state relationship to be managed through the Secretary of Labor. 411 U.S. at 286, 93 S.Ct. at 1619.
37
With respect to alternate avenues for enforcement of the plaintiffs' statutory rights, the Court noted that sections 16(c) and 17 of the Act authorized the Secretary of Labor to enjoin violations and to obtain restitution in behalf of employees. Also, section 16(b) authorized employee suits in "any court of competent jurisdiction". Arguably, the Court said, this would permit the plaintiffs to sue in a state court to enforce their rights under the Act. In these circumstances, the Court was unwilling to infer that Congress intended to lift the states' immunity from suit.
38
The teaching of Employees may be stated as follows: Where (1) the fiscal burdens that would be placed on the states by the applicable federal statute are great and the new federal scheme of regulation pervasive and (2) there are alternate avenues for the enforcement of the private party's rights under the statute, a congressional intent to lift the states' immunity will not be inferred absent some indication to that effect in either the legislative history or the statutory language. On the other hand, where such extraordinary circumstances are not present and where there is no indication that Congress did not desire to exercise its power to its utmost extent, then, as in Parden, the states' immunity from suit will be deemed to have been lifted. The Court's holding is very much a rule of reason. It comports with established rules of statutory construction and is responsive to the demands for harmony created by our federal system.
39
Applying this standard to the present case, I think it clear that Congress has lifted the states' veil of sovereign immunity. The Bridge Act of 1906, 33 U.S.C. Sec. 491 et seq., establishes standards of care for the maintenance and operation of bridges over the navigable waters of the United States. In relevant part, it provides that draw bridges shall be opened promptly upon reasonable signal for the passage of boats or other water-craft, 33 U.S.C. Sec. 494. The Act does not impose enormous fiscal burdens on the states as part of new pervasive scheme of federal regulation. Nor does it pose a threat to the harmony of our federal system by allowing recovery of double damages or invading an area traditionally reserved to the states. To the contrary, the Act represents a necessary and historically accepted application of Congress' power under the commerce clause by insuring the safe and efficient operation of bridges over navigable waters. The paramount purposes behind the Act demand that the states, who typically own the bridges involved, be made amenable to suits for enforcement of the statutory standards. This is true regardless whether the plaintiff is the United States or a private party injured by the violation of a statutory provision designed to protect him. Thus, there is no reason to presume that Congress did not intend to lift the states' immunity in all cases.
40
Furthermore, unlike the plaintiffs in Employees, the plaintiff in the present case is not able to enforce his statutory rights by alternate means. There is no provision in the Act permitting the federal government to sue to recover the compensation due a private party for violations; nor does the Act specify that a private party may sue in state courts to enforce his rights. Rather than simply being relegated to another forum, as in Employees, here the plaintiff is presumably foreclosed from obtaining any relief in any forum.
41
I would conclude, therefore, that the plaintiff's suit is not barred by sovereign immunity. The majority would require express statutory language that private enforcement remedies are applicable in suits against the states. To me, however, such a rule is contrary to the case law, to common sense, and to the usual presumption that when Congress acts it is deemed to exercise its power to its utmost extent. Under the commerce clause, Congress had the authority to enact the present legislation. For the reasons previously stated, the Act should be construed as applying to private enforcement suits against the states. As the majority acknowledges, Georgia, by entering a federally regulated sphere of activity, waived whatever immunity it had at common law or under the eleventh amendment. There the matter should end.
42
I also disagree with the majority's holding that the Bridge Act of 1906, and in particular 33 U.S.C. Secs. 494 and 495, do not create a cause of action in favor of private parties. Almost a half century ago, this Court held that the Rivers and Harbors Act of 1899, 33 U.S.C. Sec. 401 et seq., an act similar to the one involved here, created an implied private right of action for equitable relief. Neches Canal Co. v. Miller & Vidor Lumber Co., 5 Cir. 1928, 24 F.2d 763. We stated:
43
The Lumber Company, being the user of the navigable stream which was obstructed in violation of the statute, was a beneficiary of the statute, forbidding its obstruction, and the remedy given by the statute was available in behalf of the Lumber Company. The suit was maintainable in the court below as one arising under the laws of the United States, as a right asserted and a remedy sought by the amended bill were based on acts of Congress. 24 F.2d at 765.
44
In Lauritzen v. Chesapeake Bay Bridge and Tunnel Authority, E.D.Va.1966, 259 F.Supp. 633, aff'd 4 Cir. 1968, 404 F. 2d 1001, the Fourth Circuit held that the Rivers and Harbors Act of 1899 created an implied private right of action for damages against the state. As the district court said in that case:
45
It is true that the federal navigation regulations do not expressly provide a cause of action for injured parties . . . but such liability is clearly implied. Even though it be conceded that the statutes pertaining to the protection of navigable waters, 33 U. S.C. Sec. 401 et seq., are penal in nature, it is clear that civil liability may be derived therefrom, both in favor of the United States, United States v. Perma Paving Co., 332 F.2d 754 (2 Cir. 1964), and private parties, Morania Barge No. 140, Inc. v. M. & J. Tracy, Inc., 312 F.2d 78 (2 Cir. 1962). Violation of the navigation laws gives rise to a presumption of negligence, which, if not rebutted, may result in liability to the negligent party. Reading Co. v. Pope & Talbot, Inc., 192 F. Supp. 663 (E.D.Penn.1961), aff'd 295 F.2d 40 (3 Cir. 1961). We think it is evident that the regulations pertaining to the obstruction of navigable waters were manifestly intended for the protection of private parties such as the libelant here, even though the enforcement of these provisions was vested in the United States.
46
259 F.Supp. at 638. A similiar result was reached in Adams v. Harris County, Texas, S.D.Tex.1970, 316 F.Supp. 938.
47
The majority has not attempted to distinguish Lauritzen but is satisfied instead to dismiss it perfunctorily. Private civil remedies have been implied from federal statutes beginning in 1916 with Texas & Pacific Ry. Co. v. Rigsby, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874, where the Court held that an employee could recover damages under the Federal Safety Appliance Act. The Court stated: "[D]isregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover the damages from the party in default is implied. . . ." See also J. I. Case Company v. Borak, 1964, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423; Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 1971, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619; Gomez v. Florida State Employment Service, 5 Cir. 1969, 417 F.2d 569; Note, Implying Civil Remedies from Federal Regulatory Statutes, 77 Harv.L.Rev. 285 (1963).
48
The present case is sui generis. The Bridge Act of 1906, 33 U.S.C. Sec. 491 et seq., sets standards of care for the maintenance and operation of bridges over navigable waters. This Act was clearly intended to protect individuals such as the plaintiff in this case and imposed a correlative duty on the defendant to operate its bridges in accordance with those standards. "[The defendant's] violation of [its] statutory duty imposes civil liability in this as in any other case where, the violation of a duty causes injury to an individual to whom the duty is owed. For every right there is a remedy. If the right is created by a federal statute, the federal courts have the power to fashion an appropriate remedy." Breitwieser v. KMS Industries, Inc., 5 Cir. 1972, 467 F.2d 1391, 1397 (Wisdom, J., dissenting).
49
For the reasons stated, I would affirm the decision of the district court.
50
ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC
PER CURIAM:
51
The Petition for Rehearing is denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is denied.
WISDOM, Circuit Judge, (dissenting):
52
I would grant the rehearing for the reasons stated in my dissent to the majority opinion.
1
At the outset it should be noted that this appeal deals exclusively with the Georgia Department of Transportation. There is no dispute that the Department of Transportation is the alter ego of the State of Georgia. See, Tounsel v. State Highway Department, 180 Ga. 112, 116, 178 S.E. 285 (1934). The propriety of the suit against Decatur County, Georgia, is not before this court. See, County of Lincoln v. Luning, 133 U.S. 529, 530, 10 S.Ct. 363, 33 L.Ed. 766 (1890)
Thus, the dissent's conclusion that we have foreclosed all avenues of relief to the appellees is completely erroneous. We assume that on remand, appellees will be permitted to pursue whatever remedies under common law negligence are open to them against the county. In such event, as we recognize later in this opinion, the standards of care established by the Bridge Act of 1906, 33 U.S.C. Sec. 491 et seq. may be utilized when an otherwise suable party is involved.
The appellees have placed in proper focus the issue before this court:
The sole issue before this Court is one of jurisdiction. It is Defendant's [Georgia's] contention that this Court has no jurisdiction because of sovereign immunity. It is Plaintiffs' contention that Defendant, by the operation and maintenance of a drawbridge over a navigable waterway of the United States, has waived sovereign immunity and thus the Court does have jurisdiction. The question then boils down to whether or not there has been a waiver of sovereign immunity. Appellees' Brief at 2-3.
We thus address ourselves to this "boiled down" issue.
2
Jurisdiction is based on 28 U.S.C. Sec. 1331 (admiralty). Apparently appellee's tug and barge had no difficulty in moving under the bridge on their trip upstream. On March 5, 1971, after receiving heavy cargo, the tug and barge arrived upstream of the bridge on their return trip. It being the rainy season, the waters of the Flint River had risen to such an extent that the tug could not pass beneath the bridge. After notice was given by the tug, the bridge was not raised for twenty-six days because it had been paved over by the state. On oral argument counsel for both parties informed the court that the bridge had not been opened for a long time, perhaps 40 years. The court was also informed that the bridge has now been officially closed and a new bridge will be constructed
3 U.S.Const. amend. XI: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
4
See, Bridge Act of 1906, 33 U.S.C. Sec. 491 et seq., which establishes standards for bridges over navigable waters
5
Ex parte State of New York No. 1, 256 U.S. 490, 500, 41 S.Ct. 588, 590, 65 L.Ed. 1057 (1921); Ex parte Madrazzo, 32 (7 Pet.) U.S. 627, 8 L.Ed. 808 (1833)
6
377 U.S. 184, 84 S.Ct. 1207, 12 L.Ed.2d 233 (1964)
7
45 U.S.C. Secs. 51-60
8
377 U.S. at 196, 84 S.Ct. at 1215
9
"Our conclusion is simply that Alabama, when it began operation of an interstate railroad approximately 20 years after enactment of the FELA, necessarily consented to such suit as was authorized by that Act." 377 U.S. at 192, 84 S.Ct. at 1213
10
"Recognition of the congressional power to render a State suable under the FELA does not mean that the immunity doctrine, as embodied in the Eleventh Amendment with respect to citizens of other States . . . is here being overridden. It remains the law that a State may not be sued by an individual without its consent." 377 U.S. at 192, 84 S.Ct. at 1213. See also, Rothstein v. Wyman, 467 F.2d 226, 238 (2d Cir. 1972); Knight v. New York, 443 F.2d 415, 418 (2d Cir. 1971); Red Star Towing & Transportation Co. v. Department of Transportation of New Jersey, 423 F.2d 104, 106 (3d Cir. 1970); Daye v. Pennsylvania, 344 F.Supp. 1337, 1347 (E.D.Pa.1972); Elliot v. Volpe, 328 F.Supp. 831, 834 (D.Mass.1971); Citizen's Committee for the Hudson Valley v. Volpe, 297 F.Supp. 809, 813 (S.D. N.Y.1969); DeLong Corp. v. Oregon State Highway Comm., 233 F.Supp. 7 (D. Or.1964), aff'd, 343 F.2d 911 (9th Cir. 1965), cert. denied, 382 U.S. 877, 86 S.Ct. 161, 15 L.Ed.2d 119 (1965)
11
Employees of the Department of Public Health & Welfare, State of Missouri v. Department of Public Health & Welfare, State of Missouri, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973)
12
See, 29 U.S.C. Sec. 216(b)
13
See also, Hickman v. Idaho State School and Hospital, 339 F.Supp. 463 (D.Idaho 1972); contra, Briggs v. Sagers, 424 F.2d 130 (10th Cir. 1970). For an excellent discussion of the Parden decision, see, Note, Private Suits Against States in the Federal Courts, 33 U.Chi.L.Rev. 331 (1966)
14
See 33 U.S.C. Sec. 495. Compare, Bass Angler Sportsman Soc. v. United States Steel Corp., 324 F.Supp. 412 (3 Districts Ala.1971) (consolidated), aff'd per curiam, 447 F.2d 1304 (5th Cir. 1971) (Rivers & Harbors Appropriation Act of 1899, 33 U.S.C. Sec. 401 et seq. does not grant enforcement powers in private parties.)
We are aware that some inroads have been made by this Court in recognizing that a cause of action is vested in private parties by the Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. Secs. 401 et seq. In Neches Canal Co. v. Miller & Vidor Lumber Co., 24 F.2d 763 (5th Cir. 1928), this Court held that a private party could enjoin another private party who had clearly violated 33 U.S.C. Sec. 401 by building a dam over a navigable water-way without first obtaining the consent of Congress or the approval of the Army Corps of Engineers. However considering the constitutional complexion of the present suit we feel that the Neches Canal decision should properly be limited to the peculiar fact situation presented there.
The suit in Neches Canal was between private parties. None of the defendants there could assert the defense of sovereign immunity granted by the eleventh amendment. There the obstruction, a dam, was placed in the navigable waterway without a license or a permit; thus the acts of the defendants clearly violated 33 U.S.C. Sec. 401. Of course an obvious difference is the fact that Neches Canal involved the Bridges and Harbors Act of 1899 while while the present suit was instituted under the Bridges Act of 1906, 33 U.S.C. Sec. 491 et seq.
However more importantly, the court in Neches Canal merely utilized the applicable standards enacted by Congress to determine whether a court could properly grant the equitable relief there prayed for. The court observed that the plaintiff was an "intended beneficiary" of the congressional enactment and therefore the remedy provided by section 406, an injunction could be maintained by a private party. We receive many equitable considerations which influenced the reasoning of the court that are not present here. See generally, Tatum v. Blackstock, 319 F.2d 397 (5th Cir. 1963) (suit between private litigants).
The instant suit is for damages against a State. We conclude that under the teachings of the Parden and Employees decisions before a State can be held to have implicitly waived its eleventh amendment defense, Congress must have expressly created a remedy in private parties for the violation of the applicable federal regulatory statute. To conclude otherwise would require a finding that the Bridges Act of 1906 created a private cause of action, a statutory interpretation clearly not mandated by its provisions. Further we would have to take an additional step into the murky waters of congressional intent by assuming since Congress "intended" that the appellee be a beneficiary of the substantive prohibitions of the Bridges Act of 1906, this intended remedy is also applicable against a soveign State. Such "bootstrap logic" can not withstand the constitutional shield erected by the eleventh amendment.
Additionally, we discern a new approach to a private litigant's attempt to sue a state under federal regulatory acts. Many students of constitutional law often question the purpose and focus of the eleventh amendment in light of several recent court decisions which have made its provisions a shallow and meaningless command. However we are not ready to cast aside the clear meaning of that provision without definite directives from Congress to do so.
Against the unambiguous prohibitions of the eleventh amendment, we deem it constitutionally insufficient for a court merely to conclude that Congress by enacting a federal regulatory scheme implied that a state would be amenable to its provision in a suit by a private party. If Congress wishes a state to be amenable to a private suit then we think it is up to that branch to take the proper action necessary for such a result. We believe it is an improper function of the federal judiciary to whittle away at the scope of a constitutional amendment under the guise of such slogans as "common sense" or "implicit purposes." Common sense tells us that the eleventh amendment has viability today as it did in 1906. Until Congress directs us otherwise, we refuse to do by judicial fiat what is properly within Congress' power to do under the commerce clause.
15
404 F.2d 1001 (4th Cir. 1968); See also, Adams v. Harris County, Texas, 316 F. Supp. 938, 947-949 (S.D.Tex.1970); Contra, Mobile Towing Co. v. M/V Weatherly, 343 F.Supp. 276, 278 (S.D. Ala.1971)
16
In denying the immunity defense, the district court in Lauritzen stated:
It is true that the federal navigation regulations do not expressly provide a cause of action for injured parties as does the FELA, [referring to Parden] but such liability is clearly implied. Even though it be conceded that the statutes pertaining to the protection of navigable waters, 33 U.S.C. Sec. 401 et seq., are penal in nature, it is clear that civil liability may be derived therefrom, both in favor of the United States, United States v. Perma Paving Co., 332 F.2d 754 (2 Cir. 1964), and private parties, Morania Barge No. 140, Inc. v. M. & J. Tracy, Inc., 312 F.2d 78 (2 Cir. 1962), 259 F.Supp. 633, 638 (E.D. Va.1966).
It is clear that the holding in Perma Paving is correct since obviously the defense of sovereign immunity must be denied when the United States seeks to enforce a federal regulatory statute. See, United States v. California, 297 U.S. 175, 56 S.Ct. 421, 80 L.Ed. 567 (1936); Wyandotte Transportation Co. v. United States, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407 (1967). However, Morania Barge merely stands for the proposition that the standards established in 33 U.S.C. Sec. 401 et seq., may be used in a suit where independent jurisdiction already exists.
Such circuitous reasoning begs the question and flys in the face of the Parden decision. The conclusion that sovereign immunity has been waived can "only be warranted if exacted by the most express language, or by such overwhelming implication from the text as would leave no room for any other reasonable construction." Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S.Ct. 458, 464, 53 L.Ed. 742 (1909). A statute will not be construed to limit any of the sovereign's pre-existing rights or privileges without express language to that effect. United States v. UMW, 330 U.S. 258, 272, 67 S.Ct. 677, 91 L.Ed. 884 (1947). It is apparent that Parden and Employees require more than a conclusion that a private cause of action is impliedly created, it mandates that it be created expressly against a State.
In affirming the district court's judgment in Lauritzen, the circuit court stated:
The supplication of the State, and her reception into the Federal domain, meant surrender, pro tanto and pro tempore, of State sovereignty and submission to the paramount overlordship of the United States during the tenancy.
Congressional regulation allows causes involving activities in and upon the navigable waterways of the Nation to be adjudicated in admiralty. 28 U.S.C. Sec. 1333. Accordingly, we think liability of the Tunnel District to the Danish suitor upon the maritime tort was justiciable in the chosen instant court. 404 F.2d 1003-1004.
Georgia may have subjected itself to the overlordship of the United States when it entered this federally regulated activity, but it is unreasonable to conclude that it likewise subjected itself to suits by private parties.
17
Centraal Stikstof Verkoop., N.V. v. Alabama State Docks Dept., 415 F.2d 452, 455 (5th Cir. 1969)
18
Our decision is in accord with the conclusion reached by the Third Circuit in Red Star Towing and Transportation Co. v. Department of Transportation of the State of New Jersey, 423 F.2d 104 (3d Cir. 1970)
1
The Court stated:
"By adopting and ratifying the Commerce Clause, the States empowered Congress to create such a right of action against interstate railroads; by enacting the FELA in the exercise of this power, Congress conditioned the right to operate a railroad in interstate commerce upon amenability to suit in federal court as provided by the Act; by thereafter operating a railroad in interstate commerce, Alabama must be taken to have accepted that condition and thus to have consented to suit."
377 U.S. at 192, 84 S.Ct. at 1213.
2
Prior to and after 1966, section 16(b) read in relevant part:
"Any employer who violates the provisions of section 6 or section 7 of this Act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount of liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction. . . ."
|
854 F.2d 1316Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 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 Fourth Circuit.William Lebron CHURCH, Petitioner-Appellant,v.Edward W. MURRAY, Attorney General of the State of Virginia,Respondents- Appellees.
No. 88-7579.
United States Court of Appeals, Fourth Circuit.
Submitted April 27, 1988.Decided July 25, 1988.
William Lebron Church, appellant pro se.
Katherine Baldwin Toone, Office of Attorney General of Virginia, for appellees.
Before JAMES DICKSON PHILLIPS, SPROUSE, and WILKINSON, Circuit Judges.
PER CURIAM:
1
William Church seeks to appeal the magistrate's order refusing habeas corpus relief pursuant to 28 U.S.C. Sec. 2254. Our review of the record and the magistrate's opinion discloses that this appeal is without merit. Accordingly, we deny a certificate of probable cause to appeal and dismiss the appeal on the reasoning of the magistrate. Church v. Murray, C/A No. 88-61-R (E.D.Va. Mar. 18, 1988). We dispense with oral argument because the dispositive issues recently have been decided authoritatively.
2
DISMISSED.
|
868 So.2d 704 (2003)
STATE of Louisiana
v.
Lionel REDDITT.
No. 03-KA-0354.
Court of Appeal of Louisiana, Fifth Circuit.
October 28, 2003.
*705 Paul D. Connick, Jr., District Attorney, Margaret E. Hay, Terry M. Boudreaux, Frank Brindisi, Vincent Paciera, Assistant District Attorneys, Gretna, LA, for Plaintiff/Appellee.
Prentice L. White, Louisiana Appellate Project, Baton Rouge, LA, for Defendant/Appellant.
Panel composed of Judges EDWARD A. DUFRESNE, JR., SOL GOTHARD and THOMAS F. DALEY.
SOL GOTHARD, Judge.
Defendant, Lionel Redditt, appeals his conviction and sentence in this criminal appeal. For reasons that follow, we affirm.
The record shows that, on May 16, 2001, the Jefferson Parish District Attorney's Office filed a bill of information charging defendant, Lionel Redditt, along with Prescott Smith, with one count of second degree kidnapping in violation of La. R.S. 14:44.1, and one count of armed robbery in violation of La. R.S. 14:64[1]. On May 18, 2001, defendant was arraigned and entered a plea of not guilty to the charges. After preliminary rulings on various motions, defendant proceeded to a jury trial.
After a two-day trial in May 2002, a 12person jury found the defendant guilty as charged on both counts. Thereafter, on June 13, 2002, defendant was sentenced to 40 years of imprisonment at hard labor without benefit of parole, probation, or suspension of sentence as to count one, second degree kidnapping, and 50 years of imprisonment at hard labor without benefit of parole, probation, or suspension as to count two, armed robbery. The trial court ordered the sentences to run concurrently.
On November 21, 2002, the State filed a habitual offender bill of information alleging defendant to be a third felony offender. On January 16, 2003, after the denial of a defense motion to quash the habitual offender bill of information, the court held a habitual offender hearing and *706 found defendant to be a second felony offender[2]. Thereafter, the trial court vacated defendant's original sentence as to count two, armed robbery, and re-sentenced defendant to 198 years at hard labor without the benefit of probation, parole, or suspension of sentence to run concurrently with his 40-year sentence on count one in the original bill of information. On January 22, 2002, the defendant filed a motion to reconsider sentence, which was denied on February 11, 2002. Defendant, thereafter, filed a timely motion for appeal.
FACTS
The victim, Raion Hill, testified that, on January 22, 2001, after leaving his girlfriend's home, he proceeded to the Rhythm City Nightclub in New Orleans. After staying five or ten minutes, the victim and a female acquaintance, exited the club and walked back to the victim's vehicle. Before driving away from the parking lot of the club, the victim observed defendant[3] pointing at the vehicle. Thereafter, the victim and his friend drove to Denny's Restaurant in Gretna near the Oakwood Mall. After getting his food order, the victim exited the restaurant by himself and made his way to his vehicle, at which time he was approached by two men, one of whom was the defendant herein. The other individual, Prescott Smith, put a gun to the victim's side and forced him into the rear seat of his own vehicle. Defendant got into the driver's seat of the vehicle, while Smith joined the victim in the back seat.
Defendant drove away from the restaurant and proceeded towards New Orleans. After driving through the toll plaza, Smith and defendant switched seats and Smith drove to New Orleans, exited at Claiborne Avenue, and drove to an Automated Teller Machine (ATM) on Elysian Fields. At the ATM defendant and Smith attempted to withdraw cash, but were unable to do so because the victim could not remember his personal identification number. Thereafter, defendant and Smith dropped the victim off near Brother Martin High School, taking the vehicle. The victim called the police from a nearby payphone and relayed the events that occurred.
Officer Scott DeJong testified that he was employed by the Jefferson Parish Sheriff's Office in January of 2001, and conducted an investigation into the robbery of Mr. Hill. As a result of his investigation, he interviewed the victim and obtained a description of the perpetrators. The victim was also able to give a description of defendant to a composite sketch artist and a sketch was rendered. Subsequently, Officer DeJong was able to develop defendant as a possible suspect in the case. A photographic lineup containing defendant's photograph was compiled and shown to the victim. The victim made a positive identification and defendant was later arrested.
Officer DeJong, after advising defendant of his constitutional rights and obtaining a waiver of those rights, obtained two separate statements from defendant in which defendant indicated his involvement in the crimes. Defendant also indicated that the gun used in the robbery could be found at 1308 Tupelo Street in New Orleans. At the request of Officer DeJong, Detective *707 Darrell Doucette of the New Orleans Police Department (N.O.P.D.) obtained a search warrant.
Detective Kevin Decker of the Jefferson Parish Sheriff's Office testified he was present during defendant's first two statements given to Officer DeJong, and subsequently obtained a third statement from the defendant in which defendant identified certain individuals connected to the robbery from photographic lineups. Detective Decker also assisted in the execution of the search warrant and testified that various items belonging to defendant were seized from the Tupelo Street address. Defendant was subsequently charged with the crimes in the bill of information.
LAW
In brief to this Court defendant assigns three errors for our review. In the first, defendant argues the trial court erred in denying a defense motion to suppress a statement made to investigating officers. Specifically, defendant argues, the motion to suppress should have been granted because the investigating officer conceded that he knowingly questioned the defendant while the defendant was already heavily intoxicated and further, made promises to this defendant in exchange for a statement that incriminated defendant and another individual. Defendant asserts that at the time of the statements, he was highly intoxicated. Defendant also argues that the investigating officers' promises of a favorable outcome if he cooperated were coercive and rendered his statements involuntary.
The State responds that there was no evidence defendant was intoxicated at the time of his statements, or that the officers' statements were sufficient inducements to render defendant's statements inadmissible.
Before an inculpatory statement made during a custodial interrogation may be introduced into evidence, the State must prove beyond a reasonable doubt that the defendant was first advised of his constitutional rights and that the statement was made freely and voluntarily and not under the influence of fear, intimidation, menaces, threats, inducement or promises. La. R.S. 15:451; State v. Comeaux, 9327296 (La.7/1/97), 699 So.2d 16, 29, cert. denied, 522 U.S. 1150, 118 S.Ct. 1169, 140 L.Ed.2d 179 (1998).
A determination of voluntariness is made on a case-by-case basis, depending on the facts and circumstances of each situation. State v. Quest, 00-205 (La.App. 5 Cir. 10/18/00), 772 So.2d 772, 780, writ denied, 00-3137 (La.11/2/01), 800 So.2d 866; State v. Watts, 98-1073 (La.App. 5 Cir. 5/19/99), 735 So.2d 866, 869. The admissibility of a confession or statement is a determination for the trial judge and his conclusions on the credibility and weight of the testimony relating to the voluntary nature of the confession or statement are entitled to great weight and will not be overturned unless unsupported by the evidence. Id. Intoxication renders a confession involuntary when the intoxication is of such a degree as to negate the defendant's comprehension and to make him unconscious of the consequences of what he is saying. State v. Narcisse, 426 So.2d 118, 125 (La.1983), cert. denied, 464 U.S. 865, 104 S.Ct. 202, 78 L.Ed.2d 176 (1983); State v. Quest supra, at 780. Whether intoxication exists and is of a degree sufficient to vitiate the voluntariness of the confession are questions of fact; a trial judge's conclusions on this issue will not be disturbed unless unsupported by the evidence. State v. Quest, supra, at 780.
At the hearing on the motion to suppress, defendant testified that, on the day *708 of his arrest, he had been "shooting" heroin and had been "shooting it" for the previous three days. He maintained that five to ten minutes after "shooting up" he was arrested and taken to the New Orleans Police Fifth District Station. Defendant recalled being driven to the station by a uniformed New Orleans police officer in an unmarked car; however, he claimed that he did not remember being questioned at the station.
Officer DeJong and Detective Decker testified that they obtained three statements from defendant. Prior to taking the statements, Officer DeJong advised defendant of his constitutional rights via a "RIGHTS OF ARRESTEE OF SUSPECTS" form and obtained a signed waiver of those rights from defendant. Thereafter, Officer DeJong questioned defendant as to whether he had taken any drugs to which defendant responded he had taken some drugs earlier in the day. Officer DeJong did not recall what type of drugs defendant stated he had taken. However, both Officer DeJong and Detective Decker testified that defendant did not appear to be under the influence of any drugs at the time of his statements. Officer DeJong testified that defendant's eyes were not blurry, and his speech was not slurred. Detective Decker testified defendant appeared cognizant of his surroundings and the procedures taking place.
In denying the motion to suppress the trial court stated the following:
The Court finds it rather interesting, bordering on remarkable how this Defendant's memory of details leading up until the moment he begins his Statement is rather detailed, plain and straightforward. And yet, as if he had an out-of-body experience, he remembers nothing of the Statements he gave.
The Court rejects any notion that we have to accept, in the form of Judicial Note, the mere fact that someone inculpates himself, he must be out of his mind. We don't accept that on that basis....
Based on the evidence in the record, we do not find the defendant's intoxication was sufficient to vitiate the voluntariness of his statements. Both officers testified that defendant did not show any signs of intoxication. Furthermore, the trial court apparently discounted defendant's testimony concerning his level of intoxication. Therefore, the trial court did not err in denying defendant's motion to suppress defendant's statements on the basis of intoxication.
Defendant also contends that his statements were involuntary because investigating officers made promises to him in exchange for the statements. In the instant case, both Officer DeJong and Detective Decker testified that they informed defendant that if he cooperated, his cooperation would be forwarded to the district attorney's office. However, the mere fact that a police officer tells a person in custody that prosecutors will be advised of any cooperation is not sufficient inducement to vitiate the free and voluntary nature of any statement. See, State v. Jackson, 414 So.2d 310, 312-313 (La.1982); State v. Matthews, 26,550 (La.App. 2 Cir. 12/21/94), 649 So.2d 1022, writ denied, 95-0435 (La.6/12/95), 655 So.2d 341; State v. Lions, 624 So.2d 436, 438 (La.App. 5 Cir. 1993).
Accordingly, we find that the trial court did not err in denying the defendant's motions to suppress statements on this basis. This assignment of error is without merit.
In the second assignment of error, the defendant asserts the district court erred in failing to suppress items that were not listed on the search warrant.
*709 Defendant argues that the trial court erred in not suppressing the warrant because the executing officer did not have personal knowledge of the investigation and, as a result, the issuing magistrate could not have had a reasonable belief in the validity of the warrant.
The State responds that the fact that information contained in the affidavit supporting the warrant is not completely based on personal knowledge of the affiant does not render the warrant invalid.
In order to be valid, "a search warrant may issue only upon probable cause established to the satisfaction of the judge, by the affidavit of a credible person, reciting facts establishing the cause for issuance of the warrant." La.C.Cr.P. art. 162. "Probable cause consists of facts and circumstances sufficient to support a reasonable belief that an offense has been committed and that evidence of the crime or contraband may be found at the place to be searched. These facts and circumstances must be within the affiant's knowledge and based upon reasonably trustworthy information." State v. Fedrick, 614 So.2d 723, 724 (La.App. 5 Cir.1993); State v. Boyd, 94-641 (La.App. 5 Cir. 12/28/94), 649 So.2d 80; State v. Bourg, 470 So.2d 291 (La.App. 5 Cir.1985), writ denied 475 So.2d 354 (La.1985).
In the instant case, Officer DeJong learned through his interview with defendant that Smith had given the gun used in the crimes to an individual named Byron who resided at 1308 Tupelo Street in New Orleans. Thereafter, Officer DeJong and Detective Decker sought the assistance of N.O.P.D. Detective Darrell Doucette in obtaining a search warrant in order to retrieve the handgun. On the search warrant application, Detective Doucette, the affiant, set forth the following facts:
Jefferson Parish investigators arrested defendant, who gave a taped statement in which he implicated himself in the crimes; defendant also informed investigators that the handgun used in the crimes was given to an individual named Byron located at 1308 Tupelo Street; and a computer search revealed that an individual by the name of Byron Green resided at that address.
The fact that the information contained in the affidavit supporting the application for the search warrant was not completely based on the personal knowledge of the attesting officer, but on what he had been told by others, is no bar to finding the warrant valid. State v. Duncan, 420 So.2d 1105, 1109 (La.1982). While Detective Doucette did not have personal knowledge of the information in the warrant application, he had been informed by Jefferson Parish investigators who had obtained the information directly from defendant via a taped statement. Additionally, as shown in the warrant application affidavit, Detective Doucette verified the information by conducting a computer search which indicated that an individual by the name of Byron Green resided at the 1308 Tupelo Street address.
Based on the foregoing, we find that Detective Doucette's warrant application was based on trustworthy information and therefore, the trial court did not err in finding probable cause to support the warrant.
Defendant also contends that the trial court erred in not suppressing items seized in the execution of the search warrant because the items were not listed in the search warrant and the gun was not found. The State responds that, although the items were not listed in the search warrant, they were properly seized because they were in "plain view."
A search warrant should describe with particularity the items to be seized. La. *710 Const. of 1974, art. I, § 5; La.C.Cr.P. art. 162. The warrant should be tested in a common sense and realistic manner without technical requirements of elaborate specificity. State v. Huffman, 419 So.2d 458 (La.1982); State v. Jackson, 97-1246 (La.App. 5 Cir. 4/13/98), 712 So.2d 934, 936, writ denied, 98-1454 (La.10/16/98), 726 So.2d 37. While in the course of executing a search warrant, a police officer may seize things, whether or not they are described in the warrant, which may constitute evidence tending to prove the commission of any offense, and perform all other acts pursuant to his duties. La. C.Cr.P. art. 165, State v. Tanner, 534 So.2d 535 (La.App. 5 Cir.1988); State v. Jackson, supra, 712 So.2d at 936. It is axiomatic that such a seizure is described in search and seizure terms as being based on the "plain view" doctrine. Jackson, supra, at 936; State v. Davis, supra.
In the instant case, Detective Doucette, along with members of the N.O.P.D., Officer DeJong, and Detective Decker, entered the home pursuant to a valid search warrant. Detective Doucette testified that, in the course of executing the search warrant, Officer DeJong informed him that several items located in the home had been taken from Hill's vehicle. Therefore, the incriminating character of the items became immediately apparent to Detective Doucette, and, therefore, the items were properly seized. Additionally, the fact that the hand gun listed in the warrant was not found does not invalidate the warrant. See, Maryland v. Garrison, 480 U.S. 79, 85, 107 S.Ct. 1013, 1017, 94 L.Ed.2d 72, 81 1987). (Those items of evidence that emerge after the warrant is issued have no bearing on whether or not a warrant was validly issued).
Based on the foregoing, we find no error in the ruling of the trial court denying defendant's motion to suppress evidence. This assignment is without merit.
In his final assignment of error, defendant argues the 198-year sentence was excessive in light of the fact that it was grossly disproportionate to the offense and nothing more than the needless imposition of pain. Defendant argues that imposing the maximum 198-year sentence is excessive in light of other sentences given to like defendants in similar cases.
The State responds that defendant failed to show an abuse of the discretion afforded to the trial judge in sentencing him within the legislatively set sentencing limits.
Defendant was found guilty of armed robbery in violation of La. R.S. 14:64 and was adjudicated a second felony offender. At the time of the commission of the present offense, the sentencing range for a second felony offender, with an underlying conviction for a violation of La. R.S. 14:64, armed robbery, punishable by imprisonment for not more than 198 years and not less than 49½ years, without benefit of parole, probation, or suspension of sentence. La. R.S. 15:529.1(A)(1)(a). Defendant was sentenced to 198 years of imprisonment at hard labor, without benefit of parole, probation, or suspension of sentence. Therefore, defendant received the maximum sentence under the Habitual Offender Law.
The United States and Louisiana Constitutions both prohibit the imposition of excessive or cruel punishment. U.S. Const. amend. VIII; La. Const. art. I, § 20. Even a sentence within the prescribed statutory limit may violate a defendant's constitutional right against excessive punishment. State v. Sweeney, 443 So.2d 522 (La.1983); State v. Jones, 98-1055 (La. App. 5 Cir. 2/23/99), 729 So.2d 95. In reviewing a sentence for excessiveness, the appellate court must consider the punishment in light of the harm to society and *711 gauge whether the penalty is so disproportionate as to shock its sense of justice. State v. Daigle, 96-782 (La.App. 5 Cir. 1/28/97), 688 So.2d 158, 159, writ denied, 97-0597 (La.11/5/97), 700 So.2d 506.
Generally, maximum sentences are reserved for cases involving the most serious violations of the offense charged and the worst type of offender. State v. Quebedeaux, 424 So.2d 1009 (La.1982), aff'd on remand, 446 So.2d 1210 (La.1984). However, the trial judge is afforded wide discretion in determining a sentence, and the court of appeal will not set aside a sentence for excessiveness if the record supports the sentence imposed. State v. Jones, 98-1055 (La.App. 5 Cir. 2/23/99), 729 So.2d 95. This Court should further consider three factors in reviewing a judge's sentencing discretion; 1) the nature of the crime, 2) the nature and background of the offender, and 3) the sentence imposed for similar crimes by the same court and other courts. State v. Telsee, 425 So.2d 1251 (La.1983); State v. Slang, 94-332 (La.App. 5 Cir. 11/16/94), 646 So.2d 1037, 1041.
In State v. Freeman, 00-238 (La.App. 3 Cir. 10/11/00), 770 So.2d 482, writ denied, 00-3101 (La.10/5/01), 798 So.2d 963, a defendant received a 198-year sentence as a second felony offender convicted of armed robbery. The Third Circuit in upholding the sentence noted that defendant threatened to kill the grocery store manager while pointing a laser-sighted pistol at her. The court also noted the disabling psychological effect on the victim, which caused her to be unable to work. Also, in State v. Doleman, 02-0957 (La.App. 4 Cir. 12/4/02), 835 So.2d 850, the defendant, a second felony offender convicted of armed robbery, was sentenced to a 198-year term of imprisonment. In upholding the sentence, the Fourth Circuit noted that, during the robbery, defendant threatened to kill employees while holding a sawed off shotgun to the face of the store manager.
As noted by the trial judge in his reasons for sentence at defendant's original sentencing and similar to the cases in Freeman and Doleman, defendant used a dangerous weapon in the commission of the crime and repeatedly threatened to kill the victim, creating the risk of death and bodily harm. The trial judge additionally noted defendant's lack of remorse for his crimes. Therefore, based on the facts in the instant case and factually similar cases in the case law, we do not find that defendant's 198-year sentence is unconstitutionally excessive.
For the reasons discussed herein, we find no merit in defendant's appeal and we affirm the convictions and sentences.
AFFIRMED.
NOTES
[1] A severance was granted and defendants were tried separately. This appeal only addresses defendant, Lionel Redditt's conviction.
[2] Prior to the habitual offender hearing, the State submitted that the defendant could only be billed as a second felony offender because one of his prior convictions occurred after his arrest for the instant offenses.
[3] During the investigation, the victim positively identified defendant and Prescott Smith after being shown a photographic lineup. Furthermore, defendant admitted to his involvement in his statements to Officer DeJong and Detective Decker.
|
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
In the Matter of the Personal Restraint No. 75583-8-1
of
LASZLO MOLNAR, UNPUBLISHED OPINION
n '
Petitioner. FILED: January 22, 2018
rnr-
SCHINDLER, J. Laszlo Molnar pleaded guilty to rape in the second degree. .
Molnar challenges two of the community custody conditions the court imposed.
Because the conditions prohibiting Molnar from possessing, using, accessing, or
viewing sexually explicit material and from entering sex-related businesses are not
crime related, we grant the petition and remand.
Laszlo Molnar and his spouse owned and operated a 24-hour family care center,
AA Adult Family Home Inc. S.M.'s mother, 83-year-old B.A., lived at the care center.
B.A. suffered from severe dementia and was unable to perform any daily functions on
her own.
S.M. became concerned "when she noticed B.A. holding onto her hand longer,
and with a stronger grip," when S.M. tried to leave. On November 12, 2014, S.M.
placed a concealed video camera in B.A.'s room.
The next evening, S.M. visited B.A. and retrieved the memory card from the
video camera. The video showed Molnar sexually assaulting B.A. The video shows
No. 75583-8-1/2
Molnar entering B.A.'s room and helping her sit up in bed. Molnar then pulls down his
sweatpants, exposing his penis. Molnar then puts his penis in B.A.'s mouth.
S.M. gave the video to the Auburn Police Department. The police arrested
Molnar. On November 14, two detectives from the Auburn Police Department
interviewed Molnar. Molnar denied having sexual contact with B.A. But after the
detectives played the video, Molnar admitted that he placed his penis in B.A.'s mouth
approximately 10 different times.
The State charged Molnar with rape in the second degree in violation of RCW
9A.44.050(1)(b). The State alleged the victim was particularly vulnerable and that the
offense was a crime of domestic violence. On August 26, 2015, Molnar pleaded guilty
to rape in the second degree. On October 19, the court imposed a standard range
sentence of 102 months to life imprisonment and community custody conditions.
Molnar did not appeal the conviction.
On July 29, 2016, Molnar timely filed a personal restraint petition arguing his
attorney provided ineffective assistance of counsel and challenging two of the
community custody conditions. The acting chief judge dismissed the claims of
ineffective assistance but referred the challenge to the community custody conditions to
the panel for determination on the merits.1
Molnar contends the condition prohibiting him from entering sex-related
businesses and the condition prohibiting him from possessing sexually explicit or erotic
materials are not crime related and must be stricken.
1 Molnar filed a motion for discretionary review of the acting chief judge's ruling dismissing the
claims of ineffective assistance. On September 6, 2017, a commissioner of the Washington Supreme
Court issued a ruling denying review. The commissioner determined Molnar cannot establish that his
attorney's performance prejudiced him and the acting chief judge properly dismissed the claims of
ineffective assistance.
2
No. 75583-8-1/3
Condition 9 states:
Do not enter sex-related businesses, including: x-rated movies, adult
bookstores, strip clubs, and any location where the primary source of
business is related to sexually explicit material.
Condition 10 states:
Do not possess, use, access or view any sexually explicit material as
defined by RCW 9.68.130 or erotic materials as defined by RCW 9.68.050
or any material depicting any person engaged in sexually explicit conduct
as defined by RCW 9.68A.011(4) unless given prior approval by your
sexual deviancy provider.
Under the Sentencing Reform Act of 1981 (SRA), chapter 9.94A RCW,the court
may order a defendant to comply with crime-related prohibitions while on community
custody. RCW 9.94A.505(9), .703(3)(f). The SRA defines "crime-related prohibition" as
"an order of a court prohibiting conduct that directly relates to the circumstances of the
crime for which the offender has been convicted." RCW 9.94A.030(10).
We review the imposition of crime-related prohibitions for an abuse of discretion.
In re Pers. Restraint of Rainey, 168 Wn.2d 367, 374-75, 229 P.3d 686(2010). We will
uphold a community custody condition if the condition is "reasonably crime related."
State v. Warren, 165 Wn.2d 17, 32, 195 P.3d 940(2008).
The State cites State v. Magana, 197 Wn. App. 189, 389 P.3d 654(2016), to
argue conditions 9 and 10 were properly imposed because Molnar was convicted of a
sex offense. In Magana, Division Three upheld similar conditions. The court held,
"Because Mr. Magana was convicted of a sex offense, conditions regarding access to
X-rated movies, adult book stores, and sexually explicit materials were all crime related
and properly imposed." Magana, 197 Wn. App. at 201.
3
No. 75583-8-1/4
But in State v. Norris, Wn. App. , 404 P.3d 83, 89(2017), we rejected
Mac:Jana to the extent the decision "stands for either a categorical approach or the broad
proposition that a sex offense conviction alone justifies imposition of a crime-related
prohibition." We reiterated that "there must be some evidence supporting a nexus
between the crime and the condition." Norris, 404 P.3d at 89.
Here, there is no evidence in the record showing a nexus between the crime and
frequenting sex-related businesses or any evidence suggesting that sexually explicit or
erotic materials contributed to Molnar's conviction.2 Therefore, we hold the trial court
must strike conditions 9 and 10.
We grant the petition and remand to strike conditions 9 and 10.
WE CONCUR:
2 Because we conclude the condition relating to sexually explicit or erotic materials is not crime
related, we need not address Molnar's argument that this condition is void for vagueness.
4
|
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
******************** *
LANCE BUTERBAUGH, *
* No. 14-127V
Petitioner, * Special Master Christian J. Moran
*
v. * Filed: May 20, 2016
*
SECRETARY OF HEALTH * Attorneys’ fees and costs; award
AND HUMAN SERVICES, * in the amount to which respondent
* has not objected
Respondent. *
******************** *
Ronald Homer, Conway, Homer & Chin-Caplan, P.C., Boston, MA, for Petitioner;
Linda Renzi, U.S. Dep’t of Justice, Washington, DC, for Respondent.
UNPUBLISHED DECISION ON ATTORNEYS’ FEES AND COSTS1
On February 12, 2015, petitioner filed a petition for compensation under the
National Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10 through 34
(the “Vaccine Act”). Petitioner alleged that he suffered Guillain-Barre syndrome
(“GBS”). On March 24, 2016, the undersigned issued a decision awarding
compensation to petitioner based on the parties’ stipulation.
Because petitioner received compensation, petitioner is entitled to an award
of attorneys’ fees and costs. 42 U.S.C. § 300aa-15(e).
1
Because this unpublished decision contains a reasoned explanation for the action in this
case, the undersigned intends to post it on the United States Court of Federal Claims' website, in
accordance with the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal
Management and Promotion of Electronic Government Services). In accordance with Vaccine
Rule 18(b), petitioner has 14 days to identify and move to redact medical or other information,
the disclosure of which would constitute an unwarranted invasion of privacy. If, upon review,
the undersigned agrees that the identified material fits within this definition, the undersigned will
redact such material from public access.
On April 25, 2016, petitioner filed a motion for attorneys’ fees and costs.
Respondent did not respond to the motion. Petitioner requests attorneys’ fees in
the amount of $25,616.40 and attorneys’ costs in the amount of $19,837.07 for a
total amount of $45,453.47. In compliance with General Order #9, petitioner has
filed a signed statement indicating petitioner incurred $350.00 for out-of-pocket
expenses.
The Vaccine Act permits an award of reasonable attorneys’ fees and costs.
42 U.S.C. § 300aa−15(e). Based on the reasonableness of petitioner’s request and
the lack of opposition from respondent, the undersigned GRANTS petitioner’s
motion for attorneys’ fees and costs.2
Accordingly, the undersigned awards the total of $45,803.47. Of this
amount, $45,453.47 shall be payable as a lump sum in the form of a check
jointly payable to petitioner and petitioner’s counsel Ronald Homer.3 The
amount of $350.00 shall be payable in the form of a check payable to the
petitioner.
The clerk of the court shall enter judgment in accordance herewith.4
IT IS SO ORDERED.
s/Christian J. Moran
Christian J. Moran
Special Master
2
Although no reduction is being made, petitioner’s attorneys are instructed to encourage
Dr. Latov and Ms. Hurley to prepare invoices that contain a greater amount of detail. See Pet’r’s
Mot. at pdf 34, 37.
3
This amount is intended to cover all legal expenses incurred in this matter. This award
encompasses all charges by the attorney against a client, “advanced costs” as well as fees for
legal services rendered. Furthermore, 42 U.S.C. § 300aa−15(e)(3) prevents an attorney from
charging or collecting fees (including costs) that would be in addition to the amount awarded
herein. See generally Beck v. Sec’y of Health & Human Servs., 924 F.2d 1029 (Fed. Cir.1991).
4
Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by the parties’ joint
filing of notice renouncing the right to seek review.
2
|
421 F.2d 169
James P. CASWELL, Plaintiff-Appellant,v.The MANHATTAN FIRE & MARINE INSURANCE COMPANY, Defendant-Appellee.
No. 28132 Summary Calendar.
United States Court of Appeals Fifth Circuit.
Dec. 22, 1969.
W. Paul Thompson, DeFuniak Springs, Fla., James E. Hertz, Pensacola, Fla., for plaintiff-appellant.
Robert P. Gaines, Beggs, Lane, Daniel, Gaines & Davis, Pensacola, Fla., for defendant-appellee.
Before WISDOM, COLEMAN, and SIMPSON, Circuit Judges.
PER CURIAM.
1
Pursuant to Rule 18 of the Rules of this Court, we have concluded on the merits that this case is of such character as not to justify oral argument and have directed the clerk to place the case on the Summary Calendar and to notify the parties in writing. See Murphy v. Houma Well Service, 5 Cir., 1969, 409 F.2d 804, Part I; and Huth v. Southern Pacific Company, 5 Cir., 1969, 417 F.2d 526, Part I.
2
James P. Caswell sued the Manhattan Fire and Marine Insurance Company for a libel allegedly resulting from the publication of a report by the National Board of Fire Underwriters, now the American Insurance Association.
3
This is the second appeal of this case, see Caswell v. Manhattan Fire & Marine Insurance Company, 5 Cir., 1968, 399 F.2d 417. The pertinent facts are there set forth.
4
The case was tried on its merits on May 7, 1969. The Court directed a verdict for the defendant. We affirm.
5
We are compelled to agree with the District Court that there was no evidence from which a jury might have found that Manhattan, or its agents, caused or were responsible for the publication of the allegedly libelous report.
6
Additionally, we are convinced that the reports were privileged when judged by the standards discussed in our prior opinion, 399 F.2d 421, 422.
7
Therefore the judgment of the District Court is
8
Affirmed.
|
Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
6-17-2008
Toscano v. AT&T Corp
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-2438
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2008
Recommended Citation
"Toscano v. AT&T Corp" (2008). 2008 Decisions. Paper 1013.
http://digitalcommons.law.villanova.edu/thirdcircuit_2008/1013
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2008 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact [email protected].
CLD-214 NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 07-2438
___________
LOUIS PAUL TOSCANO,
Appellant
v.
AT&T CORPORATE HEADQUARTERS
____________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 05-cv-03539)
District Judge: Honorable Garrett E. Brown, Jr.
____________________________________
Submitted for Possible Summary Action
Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6
May 30, 2008
Before: AMBRO, FUENTES and JORDAN, Circuit Judges
(Opinion filed: June 17, 2008)
_________
OPINION
_________
PER CURIAM
This is an appeal from the district court’s dismissal of Louis Paul Toscano’s
amended complaint filed against AT&T. Because the appeal presents “no substantial
question,” we will summarily affirm the judgment of the district court under Third Circuit
L.A.R. 27.4 and I.O.P. 10.6.
I.
In Feburary 2005, Toscano filed a charge of discrimination against AT&T with the
Equal Employment Opportunity Commission (“EEOC”). The EEOC deemed the charge
untimely filed and dismissed it in March 2005. In June 2005, Toscano filed a complaint
against AT&T in the Superior Court of New Jersey asserting several claims arising out of
his termination by AT&T and his subsequent placement on AT&T’s long-term disability
plan. Specifically, Toscano alleged that AT&T discriminated against him on the basis of
a disability and violated his rights under the Americans With Disabilities Act, 42 U.S.C. §
12101 et seq. (“ADA”), by declaring him totally disabled and placing him on its long-
term disability benefits plan. In July 2005, AT&T removed the case to the district court.
In October 2006, AT&T filed a motion for judgment on the pleadings under Federal Rule
of Civil Procedure 12(c) or, in the alternative, for summary judgment arguing that
Toscano’s claims were time-barred. On March 8, 2007, the district court granted the
motion for judgment on the pleadings and dismissed Toscano’s claims. Toscano filed a
timely appeal.1 We will now summarily affirm the district court’s order and deny
Toscano’s motion.
II.
1
In November 2007, Toscano filed a motion to appoint counsel in this case. We
stayed the briefing schedule pending our ruling on the motion to appoint counsel.
As the district court fully and properly explained, Toscano’s complaint failed to
state a claim because it is time-barred.2 Prior to filing an action for employment
discrimination under the ADA, an employee must file a timely charge of discrimination
with the EEOC. See 42 U.S.C. 12117(a); see also Robinson v. Dalton, 107 F.3d 1018,
1022 (3d Cir. 1997). In a deferral state, such as New Jersey, the employee has 300 days
from the date of the alleged unlawful employment practice in which to file. See 42
U.S.C. § 2000e-5(e)(1). Here, Toscano’s discrimination charges against AT&T stem
from events occurring in 1992, but Toscano’s claim with the EEOC was filed in February
2005—well after the time had passed for timely filing. There is further no evident basis
for equitable tolling following the limitations period.
III.
Accordingly, we will summarily affirm the order of the district court dismissing
Toscano’s complaint. See 3d Cir. L.A.R. 27.4 and I.O.P. 10.6. We also deny Toscano’s
motion for appointment of counsel.
2
We have jurisdiction over this appeal under 28 U.S.C. § 1291. We exercise
plenary review of the dismissal of a complaint under Federal Rule of Civil Procedure
12(c). See Leamer v. Fauver, 288 F.3d 532, 535 (3d Cir. 2002); see also Green v. Fund
Asset Mgmt., 245 F.3d 214, 220 (3d Cir. 2001).
|
95 F.3d 1149
Zenonv.Sonat Offshore Drilling, Inc.
NO. 95-30791
United States Court of Appeals,Fifth Circuit.
Aug 12, 1996
Appeal From: W.D.La., No. CA-92-674
1
REVERSED.
|
497 F.Supp. 513 (1980)
JEWEL FOLIAGE COMPANY, a Texas Corporation, Plaintiff,
v.
UNIFLORA OVERSEAS FLORIDA, INC., a Florida Corporation, et al., Defendants.
No. 80-59-Civ-Oc.
United States District Court, M. D. Florida, Ocala Division.
September 22, 1980.
*514 W. Stephen McConnell, Bailey's Crossroads, Va., Timothy D. Ellis, Jacksonville, Fla., for plaintiff.
Robert W. Duckworth, Orlando, Fla., for defendants.
OPINION
CHARLES R. SCOTT, Senior District Judge.
This case involves an application of the Anti-Dumping Act of 1916, 15 U.S.C. § 72 (hereinafter referred to as the `Act'). Plaintiff is a Texas corporation engaged in the business of, inter alia, importing and distributing several varieties of cut decorative foliage. The subject of this suit is a variety of miniature palm commonly called wide-leaf comador[1] which is harvested from the jungles of Guatemala, Costa Rica, and parts of Mexico. The palm fronds or leaves are cut by native laborers, packed by mule or donkey to a collection site, and then shipped by either air or truck to a port of entry here in the United States. Upon its arrival in America, the foliage is sorted, preserved, and transported to wholesalers located primarily within the Southeast. The greenery finds its ultimate destination as background decoration in flower arrangements sold by retail florists.
In the one count complaint filed by plaintiff on April 29, 1980, it is alleged that, since September 1979, defendants have collectively engaged in the importation and sale of this cut decorative foliage in competition with plaintiff. Plaintiff claims that due to the terms of a certain contract, defendants are obligated to purchase a large quantity of wide-leaf comador from a harvester in Guatemala for which defendants previously had no market in the United States.[2] Plaintiff complains that, since September 1979, defendants have commonly *515 and systematically imported and sold this wide-leaf comador in the United States at prices substantially less than the actual market value or wholesale price in the principal markets supplied with Guatemalan foliage with the intent of injuring the industry in general, and plaintiff in particular. Plaintiff contends that this conduct is in violation of the Anti-Dumping Act of 1916, 15 U.S.C. § 72, and seeks injunctive relief[3] and treble damages.
All defendants have challenged the complaint by way of a motion for summary judgment or, alternatively, to dismiss. In addition, defendants Uniflora, Hamburg and Fritz G. Tempelhof have filed a motion for summary judgment or, alternatively, to dismiss based on other grounds. With respect to the first motion, defendants assert that plaintiff lacks standing to bring this action. Defendants argue that the Act was passed to protect American manufacturers against the introduction of foreign goods into the United States at prices designed to drive the American companies out of business. The Act was not, according to defendants, intended to provide one importer with a cause of action against another importer. In addition, defendants argue that an implied perishable goods exception to the proscriptions of the Anti-Dumping Act authorizes the dismissal of the suit.
Defendant Uniflora, Hamburg seeks dismissal of the suit on the basis that the undisputed facts show that it is not engaged in the importation of the decorative foliage into the United States and is in no way involved with the conduct of which plaintiff complains. Fritz Tempelhof contends that he should not be a party to this suit because he has acted in no other capacity than as an officer and director of the several defendant corporations.
The point of departure in any case involving the construction of a statute is a review of the language of the statute itself. The Anti-Dumping Act of 1916 provides:
It shall be unlawful for any person importing or assisting in importing any articles from any foreign country into the United States, commonly and systematically to import, sell or cause to be imported or sold such articles within the United States at a price substantially less than the actual market value or wholesale price of such articles, at the time of exportation to the United States, in the principal markets of the country of their production, or of other foreign countries to which they are commonly exported after adding to such market value or wholesale price, freight, duty, and other charges and expenses necessarily incident to the importation and sale thereof in the United States: Provided, That such act or acts be done with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States.
Any person who violates or combines or conspires with any other person to violate this section is guilty of a misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding $5,000, or imprisonment not exceeding one year, or both, in the discretion of the court.
Any person injured in his business or property by reason of any violation of, or combination or conspiracy to violate, this section, may sue therefor in the district court of the United States for the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages sustained, and the cost of the suit, including a reasonable attorney's fee.
The foregoing provisions shall not be construed to deprive the proper State *516 courts of jurisdiction in actions for damages thereunder.
15 U.S.C. § 72.
What is at first most notable in the text of the Act is the absence of any mention of or reference to domestic manufacturers. The term "manufacturer" is not even contained in the Act. The broad language appears to permit "any person" whose business or property has been injured by reason of a violation of the Act to bring suit in federal court. Although other rules of standing have been read into this phrase,[4] there is no indication that the term "any person" should be limited to domestic manufacturers. The statute merely uses the generic terms "industry" and "business" to describe the breadth of the Act's coverage. Reasoning from the negative then, the literal language of the Act would appear to allow persons other than the domestic manufacturers to seek redress under the Act.
The language of the proviso relating to intent lends support to this conclusion. There, again, no specific reference is made to domestic manufacturers. Instead, the terms "industry in the United States" and "trade and commerce in such articles in the United States" are used. Had the words "domestic manufacturer" been substituted for these phrases, a conclusion that the right to sue under the Act should be limited to domestic manufacturers would be much more compelling. The use of the broader terms, however, suggests that persons in addition to domestic manufacturers are entitled to be protected by the Act.
The scant legislative history of the Act does not refute this conclusion, although it does suggest that Congress had a limited purpose in mind when the bill was passed. Enacted as a section of the Revenue Act of 1916, the Anti-Dumping Clause was not a particularly momentous piece of legislation. With the end of World War I in sight, Congress was concerned with the effect the importation of products from the recovering European countries would have on American industry. Congress feared that the European manufacturers would engage in unfair methods of competition in order to gain a foothold in the United States for the sale of their post-war products. To combat this perceived threat to the American manufacturers, Congress chose free trade over protectionist tariffs and made illegal only those actions which would thwart fair competition. See Zenith Radio Corporation v. Matsushita Electric Industrial Co., Ltd., 494 F.Supp. 1190, 434 Trade Reg. Rep. (CCH) 1, 55 (E.D.Pa.1980).
That the Act was originally directed specifically toward post-World War I trade with European countries is therefore fairly obvious. However, when viewed in the broader context of other anti-trust legislation, the continued retention of the Act suggests that congressional intent should not be read quite so narrowly. The failure of Congress to repeal the Act after the perceived threat had passed would indicate that more was expected of the statute than originally intended. But more importantly, Congress apparently recognized that the Act plugged a hole in the other unfair competition legislation. As Judge Higginbotham pointed out in Zenith Radio Corporation v. Matsushita Electric Industrial Co., Ltd., 402 F.Supp. 244, 249 (E.D.Pa.1975):
The Anti-dumping Act of 1916, which gives rights to private parties injured by dumping violations, deals specifically with price discriminations between commodities sold to purchasers for use in the United States and commodities sold to purchasers for use in foreign countries. One can only wonder why Congress enacted this statute if, as plaintiffs contend, it had already prohibited international dumping in the Clayton Act.[5]
*517 Assuming that the policy behind the various anti-trust laws is to foster and protect fair and vigorous competition in the sale of goods and services in the United States, then the statute should be read in a manner that gives effect to these aims. If the dumping of foreign products on the American market adversely affects domestic manufacturers, it also harms other domestic businesses engaged in the importation of those products. The business of those importers who are not engaged in dumping activities will be reduced just as the business of the domestic manufacturers will be. To say that the manufacturers can sue to vindicate their losses, but that the importers cannot, does not fairly perceive the consequences of the illegal activity. The harm to the markets of the United States being the same, the importer should not be denied the right to avail itself of the Act's protections.
Defendants, however, cite the decisions in Schwimmer v. Sony Corporation of America, 471 F.Supp. 793 (E.D.N.Y.1979) and Bywater v. Matsushita Electric Industrial Co., Ltd., Trade Reg. Rep. (CCH) p. 73,759 at 91, 201 (S.D.N.Y.1971) for the proposition that only manufacturers have standing to sue under the Act. These cases are not persuasive. In Bywater the plaintiffs were former employees of Emerson Radio and Phonograph Corporation who had lost their jobs allegedly because the dumping by Sony of television sets in the United States had put the Emerson plant out of business. The court's holding merely applied the principle of standing which requires the plaintiff's loss to be a direct, rather than an incidental, result of the defendant's anti-trust violations. The court found that plaintiffs were outside the "target area" of the violation and that their losses were only incidental.
In Schwimmer, the plaintiff complained that Sony was selling directly to other wholesalers at a price less than the products being sold to Sony's wholly-owned distributor from whom plaintiff purchased his inventory. Applying the same rule of standing, the court first held that the plaintiff was too far removed from the alleged discriminatory pricing to be entitled to sue under either the Robinson-Patman Act or the Anti-Dumping Act of 1916. Then, recognizing that, though it "was passed to shield local manufacturers from unfair competition in local markets", the Act "is perhaps used to attack different evils today", the court opined that Sony's manufacturing competitors were the most appropriate persons to sue to prevent the dumping of Sony's products on the American market. Thus, the court felt that there was "even less reason to accord plaintiff standing to sue for violations of the Anti-Dumping Act than there [was] to permit him to bring action under the Robinson-Patman Act." The value of this apparent holding that only manufacturers have standing to sue under the Anti-Dumping Act is lessened by the acknowledgment of the court's previous ruling that the plaintiff was outside the "target area" of the proscriptions against the alleged discriminatory pricing. The court's citation of the Bywater decision also indicates that the stronger basis for the decision was the plaintiff's relationship to the alleged violations rather than the plaintiff's status as a non-manufacturer.
Defendants have made the additional argument that in no reported case has a plaintiff recovered under an Anti-Dumping action. This, of course, is immaterial. The plain language of the Act does not limit the right to sue to domestic manufacturers. The legislative history, although indicating that the original purpose was to protect local manufacturers from cheap European products, must be viewed in the light of the broader anti-trust legislation and its general policy to foster fair competition in the markets of the United States. Finally, there are no reported cases persuasively holding that the protections afforded by the Act should be limited to manufacturers. Accordingly, the Court will decline defendants' invitation to limit the Act's application and deny defendants' motion to dismiss or, alternatively, for summary judgment on the grounds that plaintiff lacks standing to sue.
Defendants also seek dismissal or, alternatively, summary judgment on the basis *518 that the Anti-Dumping Act does not apply to perishable goods. Defendants compare the Anti-Dumping Act, a prohibition against international price discrimination, with the Robinson-Patman Act, a prohibition against domestic price discrimination. The latter contains a proviso excluding price changes necessitated by the deterioration of perishable goods. Defendants argue that a similar exception should be read into the Anti-Dumping Act so that the international dumping of perishable goods would be exempt from the Act's coverage.
Assuming, without deciding, that such an exemption may be read into the Anti-Dumping Act, defendants' motion must still be denied. Under the Robinson-Patman Act, the issue of whether or not an application of the perishable goods exemption is appropriate depends upon the particular facts of the case. See Robbins Flooring, Inc. v. Federal Floors, Inc., 445 F.Supp. 4, 9 (E.D.Pa.1977). Likewise, if such an exemption exists under the Anti-Dumping Act, its application must be determined in light of the facts involved. Thus, the appropriateness of an application may not be decided on the basis of a motion to dismiss. Moreover, in the present case, since there remain disputed issues of material fact regarding the purpose, necessity, and duration of defendants' prices, a summary judgment is premature. Accordingly, this ground can afford defendants no relief at this time.
The motion of defendants Uniflora, Hamburg and Fritz Tempelhof to dismiss or, alternatively, for summary judgment, however, will be granted. The undisputed facts show that the only connection Uniflora, Hamburg has had with the alleged dumping is that its principal stockholder, Fritz Tempelhof, is also the principal stockholder of Uniflora Overseas, Florida, Inc. and Holiday Foliage, Inc. Plaintiff's broad allegation that "defendants and each of them" dumped Guatemalan foliage on the American market is thus rebutted by the admissions of Mr. Frank Rogers, President of plaintiff, that Uniflora, Hamburg has not engaged in the sale of cut decorative foliage in the United States. The principle of guilt by association having long since been rejected in Anglo-Saxon legal theory, the motion of Uniflora, Hamburg for summary judgment will be granted.
Finally, it is well established that a corporation can only act through its agents and representatives, Webb v. Culberson, Heller & Norton, Inc., 357 F.Supp. 923, 924 (N.D.Miss.1973) and, therefore, a corporation cannot conspire with its officers, directors, or employees, Girard v. 94th Street & 5th Avenue Corp., 530 F.2d 66, 70 (2d Cir. 1976) cert. denied 425 U.S. 974, 96 S.Ct. 2173, 48 L.Ed.2d 798, unless the officer, director, or employee has a personal stake in the illegal activities separate and distinct from that of the corporation. Greenville Publishing Company, Inc. v. Daily Reflector, Inc., 496 F.2d 391, 399 (4th Cir. 1974). In the present case, the allegations of the complaint are directed toward the activities of Chico Importers, Inc., Uniflora Overseas Florida, Inc. and Holiday Foliage, Inc. Plaintiff asserts no independent interest of Fritz Tempelhof in the alleged dumping aside from the interest arising out of his majority ownership of the stock of the corporations involved. This is not the type of separate and distinct stake to which the exception is directed. Accordingly, Fritz Tempelhof should not be a party to this suit and his motion to dismiss will be granted.
In view of these rulings on defendants' motion, the Court will set a date for the recommencement of the hearing on plaintiff's motion for a preliminary injunction. It will be so ordered.
NOTES
[1] The cut decorative foliage is also traded under the names of Jade, Ancho, and Jungle.
[2] Although only alluded to in the complaint, this contract with the Guatemalan harvester was apparently entered into by defendants so that another type of foliage could be procured. Plaintiff asserts that prior to the contract defendants purchased its limited needs of wideleaf comador from plaintiff, whose source was the same harvester.
[3] Plaintiff filed a motion for preliminary injunction on May 19, 1980. A hearing on this motion was commenced on July 1, 1980, but was continued upon the joint motion of counsel pending the Court's decision on the instant motions.
[4] Most notable of the standing principles applied to Anti-Dumping cases is the requirement that the plaintiff's injury be a direct rather than remote result of the illegal activity. See Bywater v. Matsushita Electric Industrial Co., Ltd., infra.
[5] Judge Becker has concluded that international dumping is covered by neither the Clayton Act nor the Robinson-Patman Act. Zenith Radio Corporation v. Matsushita Electric Industrial Co., Ltd., 494 F.Supp. 1190, 434 Trade Reg. Rep. (CCH); 37 (E.D.Pa.1980).
|
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/14/2019 09:07 AM CDT
- 257 -
Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
STATE v. COSEY
Cite as 303 Neb. 257
State of Nebraska, appellee, v.Eugene T. Cosey,
also known as John Lnu, also known
as “G,” appellant.
___ N.W.2d ___
Filed May 31, 2019. No. S-18-747.
1. Identification Procedures: Due Process: Appeal and Error. A district
court’s conclusion whether an identification is consistent with due proc
ess is reviewed de novo, but the court’s findings of historical fact are
reviewed for clear error.
2. Identification Procedures: Police Officers and Sheriffs: Pretrial
Procedure. An identification infected by improper police influence
is not automatically excluded. Instead, the trial judge must screen the
evidence for reliability pretrial. If there is a very substantial likelihood
of irreparable misidentification, the judge must disallow presentation of
the evidence at trial. But if the indicia of reliability are strong enough to
outweigh the corrupting effect of the police-arranged suggestive circum-
stances, the identification evidence ordinarily will be admitted, and the
jury will ultimately determine its worth.
3. ____: ____: ____. When considering the admissibility of an out-of-court
identification, a trial court must first decide whether the police used an
unnecessarily suggestive identification procedure. If they did, the court
must next consider whether the improper identification procedure so
tainted the resulting identification as to render it unreliable and therefore
inadmissible.
4. Identification Procedures. Reliability is the linchpin in determining the
admissibility of identification testimony.
5. ____. To determine the reliability of an out-of-court identification, the
trial court must consider, based on the totality of the circumstances, (1)
the opportunity of the witness to view the alleged criminal at the time
of the crime, (2) the witness’ degree of attention, (3) the accuracy of his
or her prior description of the criminal, (4) the level of certainty dem-
onstrated at the confrontation, and (5) the time between the crime and
- 258 -
Nebraska Supreme Court A dvance Sheets
303 Nebraska R eports
STATE v. COSEY
Cite as 303 Neb. 257
the confrontation. Against these factors is to be weighed the corrupting
influence of the suggestive identification itself.
Appeal from the District Court for Clay County: Vicky L.
Johnson, Judge. Affirmed.
Mark Porto, of Porto Law Office, for appellant.
Douglas J. Peterson, Attorney General, and Siobhan E.
Duffy for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Heavican, C.J.
INTRODUCTION
Eugene T. Cosey was charged with delivery of a con-
trolled substance, a Class II felony, pursuant to Neb. Rev.
Stat. § 28-416 (Reissue 2016). During the course of the pro-
ceedings, Cosey repeatedly sought to suppress a confidential
informant’s identification of him as the person who sold the
drugs to the informant, arguing that the identification violated
his due process rights. Cosey was convicted following a jury
trial in which the informant’s identification was admitted.
We affirm.
BACKGROUND
On August 2, 2017, Cosey was charged with delivery of a
controlled substance. The charge stemmed from an October 17,
2016, alleged narcotics transaction that had occurred between
a confidential informant and a man known to the informant
only as “G.”
On October 17, 2016, the informant was working at his
regular job when an acquaintance introduced the informant to
a man who sought to sell the informant an amount of meth-
amphetamine. The informant, who has served as a confiden-
tial informant for law enforcement since 1999, met with the
purported narcotics dealer, identified as G, for approximately
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10 to 15 minutes. During the course of the conversation, the
informant and G agreed to meet later that day to complete the
proposed narcotics sale. The informant then contacted Officer
Thomas Hayes, an investigator with the Fillmore County sher-
iff’s office, to arrange to have the drug transaction recorded by
law enforcement.
At approximately 4 p.m. on October 17, 2016, the informant
again met with G, this time in Sutton, Nebraska. Hayes was
positioned across the street as the informant and G completed
the narcotics sale. According to the informant, G was in the
informant’s vehicle for approximately 3 minutes while the sale
of narcotics took place. During that time, the informant was
recording audio of the encounter. The informant testified that
he made detailed observations of the man that sold him the
narcotics, but further indicated that he knew the subject only
as “G” or “John.”
Following the drug transaction, the informant met with
Hayes at another location. At that point, the informant provided
Hayes with the methamphetamine he had purchased, along with
the unused money and the recording device. The informant was
only able to provide Hayes with the name “G” or “John” as the
individual who sold him the methamphetamine.
At Hayes’ behest, the informant subsequently attempted to
conduct a second transaction with G. However, the informant
was advised by a woman purporting to be G’s girlfriend that
G was incarcerated and unable to sell the informant any addi-
tional methamphetamine.
In the weeks that followed, Hayes attempted to deter-
mine the identity of G. During the course of his efforts, on
November 9, 2017, Hayes contacted the police department
in Hastings, Nebraska, and inquired whether anyone in the
department knew of any person recently arrested going by
the moniker “G.” The office manager of the Hastings Police
Department indicated that Cosey was known to use the moni-
ker “G,” but that Cosey had not recently been arrested. The
Hastings Police Department provided Hayes with a photograph
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of Cosey. Hayes then sent a text message and the photograph
to the informant, asking if it was a photograph of G. The
informant responded that the photograph provided by Hayes
was the man he knew as G.
On August 2, 2017, Cosey was charged with delivery of
a controlled substance, a Class II felony.1 On December 15,
Cosey filed an amended motion to suppress seeking, among
other things, suppression of the informant’s identification of
Cosey on the ground that the identification was the result
of an unduly suggestive identification procedure utilized by
Hayes.
A suppression hearing was held on February 22 and 23,
2018. The district court entered an order finding that the iden-
tification procedure was unduly suggestive; however, the court
ultimately concluded that the informant’s identification was
sufficiently reliable to allow it to be admitted into evidence.
The court therefore denied Cosey’s motion to suppress.
On May 2, 2018, the State filed an amended information
charging Cosey with the original charge of delivery of a con-
trolled substance, as well as a habitual criminal enhancement.
Following a jury trial, Cosey was found guilty of delivery of
a controlled substance. On July 11, the State dismissed the
habitual criminal enhancement and Cosey was sentenced to 3
to 5 years’ imprisonment.
ASSIGNMENT OF ERROR
Cosey’s sole assignment of error is that the district court
erred in denying his motion to suppress.
STANDARD OF REVIEW
[1] A district court’s conclusion whether an identification
is consistent with due process is reviewed de novo, but the
court’s findings of historical fact are reviewed for clear error.2
1
See § 28-416(1)(a) and (2)(a).
2
State v. Taylor, 287 Neb. 386, 842 N.W.2d 771 (2014).
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ANALYSIS
Cosey argues that the district court erred in denying his
motion to suppress. Cosey notes that the district court was cor-
rect in finding that the photographic identification of Cosey
made by the witness was unduly suggestive, a finding that
the State neither contests nor concedes. Cosey argues that the
district court erred in its conclusion regarding the reliability
of the witness’ identification as analyzed with the five factors
set forth in U.S. Supreme Court precedent.3 Therefore, Cosey
contends, the identification made by the informant should not
have been admitted.
[2] The U.S. Supreme Court has noted:
An identification infected by improper police influ-
ence . . . is not automatically excluded. Instead, the trial
judge must screen the evidence for reliability pretrial. If
there is “a very substantial likelihood of irreparable mis-
identification” . . . the judge must disallow presentation
of the evidence at trial. But if the indicia of reliability are
strong enough to outweigh the corrupting effect of the
police-arranged suggestive circumstances, the identifica-
tion evidence ordinarily will be admitted, and the jury
will ultimately determine its worth.4
[3] The U.S. Supreme Court has set forth a two-prong test
for determining the admissibility of out-of-court identifica-
tions. The Court stated that when considering the admissibility
of an out-of-court identification, a trial court must first “decide
whether the police used an unnecessarily suggestive identifica-
tion procedure. . . . If they did, the court must next consider
whether the improper identification procedure so tainted the
resulting identification as to render it unreliable and therefore
3
See Neil v. Biggers, 409 U.S. 188, 93 S. Ct. 375, 34 L. Ed. 2d 401 (1972).
See, also, Manson v. Brathwaite, 432 U.S. 98, 97 S. Ct. 2243, 53 L. Ed.
2d 140 (1977).
4
Perry v. New Hampshire, 565 U.S. 228, 232, 132 S. Ct. 716, 181 L. Ed. 2d
694 (2012).
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inadmissible.”5 As is the case here, a claimed violation of due
process of law in the conduct of a confrontation depends on the
totality of the circumstances surrounding it.6
[4,5] Reliability is the linchpin in determining the admissi-
bility of identification testimony.7 In State v. Faust,8 we adopted
the U.S. Supreme Court’s test for determining the admissibil-
ity of identification testimony such as the identification in this
case. To determine the reliability of an out-of-court identifi-
cation, the trial court must consider, based on the totality of
the circumstances, (1) the opportunity of the witness to view
the alleged criminal at the time of the crime, (2) the witness’
degree of attention, (3) the accuracy of his or her prior descrip-
tion of the criminal, (4) the level of certainty demonstrated at
the confrontation, and (5) the time between the crime and the
confrontation. Against these factors is to be weighed the cor-
rupting influence of the suggestive identification itself.9
Applying the two-prong test to this case, we accept for the
purpose of this appeal the district court’s conclusion that law
enforcement’s use of a single photograph sent to the witness
with the potentially leading question, “‘Is this “G”?’” resulted
in the identification’s being infected by improper police influ-
ence. But our analysis does not end there.
We turn to the second prong of the two-prong test and weigh
the reliability of the identification against the unduly sugges-
tive acts of law enforcement. We begin by weighing the reli-
ability of the identification, and in doing so, we turn to the five
factors discussed above.
5
Id., 565 U.S. at 235.
6
Manson v. Brathwaite, supra note 3.
7
State v. Faust, 269 Neb. 749, 696 N.W.2d 420 (2005) (citing Manson
v. Brathwaite, supra note 3). See, also, Perry v. New Hampshire, supra
note 4.
8
State v. Faust, supra note 7.
9
Id. (citing Manson v. Brathwaite, supra note 3; Neil v. Biggers, supra
note 3).
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Opportunity of Witness to
View Alleged Criminal
at Time of Crime.
Cosey concedes that the informant had a significant opportu-
nity to view G during the course of two meetings that lasted for
a combined total of approximately 18 minutes. The evidence
presented at the hearing on Cosey’s motion to suppress was
that the informant was introduced to G through an acquaint
ance. The informant testified that their introduction and initial
meeting lasted for approximately 10 to 15 minutes and that the
two were in close proximity to one another.
Later the same day, October 17, 2016, the informant and G
met again. Although their second meeting lasted only approxi-
mately 3 minutes, the two were again within mere feet of one
another. During the course of this meeting, the two exchanged
money for narcotics and engaged in a brief discussion. We
further note that the second meeting, like the first, occurred
during daylight hours when the informant had an uninhib-
ited view.
Witness’ Degree of Attention.
During the course of the informant’s testimony, he indicated
that he had worked as an informant since 1999. The informant
testified that throughout the course of his 19-year career, he
learned to make concentrated observations of specific details
of his surroundings and interactions. Specifically, the informant
noted that he was sure to take note of license plates; speech
patterns; and physical, as well as clothing, descriptions when
interacting with others.
The informant indicated that on October 17, 2016, he was
engaging in such concentrated observations. The informant tes-
tified that he observed G pull into the area of an ethanol fuels
plant in Hastings in a white, four-door Buick. The informant
recalled G’s being seated in the rear passenger seat of the
vehicle and further provided an accurate description of G under
the circumstances.
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Cosey argues that the informant’s attentiveness is “virtually
meaningless” considering the delay between the informant’s
observations on October 17, 2016, and Hayes’ presentation of
Cosey’s photograph on November 9.10 Cosey argues that the
informant’s testimony, in which he indicated that he had been
provided Cosey’s photograph “four days later or so, five days
later,” calls into question the informant’s level of attention,
given the fact that he was not presented with Cosey’s photo-
graph until 23 days after October 17. Cosey further argues that
the informant’s inaccuracies with regard to when the informant
provided the identification should be viewed in light of the
“significant financial incentive” to identify Cosey and “remain
in the good graces of . . . Hayes.”11
While the informant’s attention and recollection as to the
specific dates and overall timeline of the investigation may
be flawed, that lapse does not necessarily translate to a lack
of attention with regard to the specific event recalled and
described. Additionally, Cosey’s claim regarding the inform
ant’s recollection of the timetable and his financial incen-
tive calls into question the informant’s overall credibility,
which was a determination more appropriately considered by
the jury.
Based on the record, the informant was not a casual
observer. The record demonstrates that through the inform
ant’s 19 years of experience, which formed his expertise in
information gathering, the informant developed a strategy to
coordinate a surveilled narcotics purchase with G. The inform
ant was in close proximity to G during the narcotics transac-
tion; thus, his observation of G was not based on passing
glances, but on studied observation. The record further dem-
onstrates that the informant testified he was able to describe,
by paying close attention, the environment, background,
and physical description of the parties involved in the two
10
Brief for appellant at 13.
11
Id. at 14.
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transactions; thus, the informant had a high degree of cer-
tainty in this case.
Accuracy of His or Her Prior
Description of Criminal.
The informant first described to Hayes that G was an
African-American male, bald, and 5 feet 8 or 9 inches tall.
During the course of the suppression hearing, the informant
identified Cosey as G, but noted that G had “gained some
weight” since the informant had last seen him on October 17.
Cosey makes two arguments in an attempt to call into ques-
tion the accuracy of the informant’s identification. First, Cosey
alleges that the informant had no way of knowing whether
G was in fact bald, because the photographs taken by Hayes
during the narcotics transaction show G wearing a baseball
cap. Second, Cosey argues that the informant misidentified the
name of the suspected drug trafficker to Hayes as being “John”
and not “G.”
Cosey’s argument that the informant could not have observed
G’s hair length and style does not carry much weight. The
presence of a baseball cap does not necessarily defeat the abil-
ity of the informant to observe G’s hair length at some point
during the course of their two interactions. The State contends
that the photographs depicting G wearing a baseball cap were
taken at the second meeting, during the afternoon of October
17, 2016.
As to Cosey’s second argument that the informant origi-
nally misidentified or misrepresented to Hayes the name of
the suspected trafficker, we find this argument disingenuous.
In his brief, Cosey argues that the informant “stated that the
seller went by the name ‘John’” and further contends that
Hayes testified almost exclusively that the seller’s name was
“‘John’” rather than “‘G.’”12 However, the record reflects that
while Hayes used the name “John” when referring to the seller,
Hayes, in fact, noted that he was provided with two names that
12
Id.
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the seller was known to use. We find that the informant’s prior
description was sufficiently accurate.
Level of Certainty Demonstrated
at Confrontation.
At the suppression hearing, the informant testified that he
had no doubt that the person from whom he purchased drugs
was Cosey. The district court, in its order, took note of the
level of certainty that the informant had with regard to Cosey’s
being the person that allegedly sold the contraband. The record
reflects that the informant had a high level of certainty in his
identification and that the level of certainty did not waver at
the confrontation stage.
Time Between Crime
and Confrontation.
The first instance of the informant’s meeting G and purchas-
ing narcotics occurred on October 17, 2016. Hayes testified
that he received the photograph of Cosey on November 9. At
that point, the photograph was provided to the informant, who
identified it as a photograph of Cosey, or G, the man who sold
him the drugs. This initial identification occurred 23 days after
the informant observed G.
The suppression hearing where the informant identified
Cosey as “G” occurred on February 22, 2018, more than 16
months after the events giving rise to Cosey’s arrest. Although
this is a significant lapse in time that weighs against allowing
the identification, based on the totality of the circumstances,
we cannot say that there is a substantial likelihood of irrepa-
rable misidentification in this case.13
Balancing Test.
Although identifications arising from single-photograph dis-
plays may be viewed in general with suspicion, in this case,
13
See Manson v. Brathwaite, supra note 3 (acknowledging Court’s concern
regarding lapse of 7 months in Neil v. Biggers, supra note 3).
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we find little pressure on the witness to acquiesce in the sug-
gestion that such a display entails.14 Cosey raises a legitimate
concern regarding the potential coercive nature of the quid pro
quo relationship that often exists between confidential inform
ants and law enforcement; here, that fear is largely alleviated
by the fact that the informant has provided reliable informa-
tion to law enforcement for 19 years and has significant inter-
est in providing accurate information.
Although it plays no part in our Faust analysis, the assur-
ance as to the reliability of the identification is hardly under-
mined by the fact that Cosey was also identified by his
acquaintance as the person the acquaintance introduced to the
informant.15 Further, on the voice recording of the narcotics
transaction, Cosey’s voice was identified by an officer familiar
with Cosey’s voice and speech patterns.
We cannot say that under all the circumstances of this
case there is “‘a very substantial likelihood of irreparable
misidentification.’”16 Short of that, such evidence is for the jury
to weigh.17 Juries are not so susceptible that they cannot meas
ure intelligently the weight of identification testimony that has
some questionable feature.18 Under the totality of the circum-
stances, the identification of Cosey was reliable, even though
the confrontation procedure may have been suggestive.
CONCLUSION
The judgment of the district court is affirmed.
A ffirmed.
14
Id. See, also, Simmons v. United States, 390 U.S. 377, 88 S. Ct. 967, 19 L.
Ed. 2d 1247 (1968).
15
See State v. Faust, supra note 7.
16
See Manson v. Brathwaite, supra note 3, 432 U.S. at 116 (quoting
Simmons v. United States, supra note 14).
17
Id.
18
Id.
|
536 U.S. 966
BLANCO LERMAv.ARIZONA.
No. 01-9933.
Supreme Court of the United States.
June 28, 2002.
1
Ct. App. Ariz. Certiorari denied.
|
744 F.Supp. 314 (1990)
COVINGTON & BURLING, Plaintiff,
v.
FOOD AND NUTRITION SERVICE OF the UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant.
Civ. A. No. 88-3713 SSH.
United States District Court, District of Columbia.
June 11, 1990.
*315 *316 Arvid E. Roach, II, Clare M. Elmendorf, Thomas J. Brown, Washington, D.C., for plaintiff.
Asst. U.S. Atty. Nathan Dodell, Washington, D.C., for defendant.
OPINION
STANLEY S. HARRIS, District Judge.
This Freedom of Information Act (FOIA), 5 U.S.C. § 552, matter is before the Court on the parties' cross-motions for summary judgment, the parties' replies, and the entire record.
The underlying facts are as follows. Plaintiff represents the State of Utah in a matter relating to a food stamp quality control error-rate penalty that the Food and Nutrition Service (FNS) has levied against the State of Utah for federal fiscal year (FY) 1983. Presently Utah is contesting the penalty in an administrative review proceeding before the State Food Stamp Appeals Board of the United States Department of Agriculture.
In the course of representing Utah in that proceeding, plaintiff requested documents which it felt were necessary to Utah's appeal. FNS, after a protracted series of interactions and requests, released some documents in full, released others in redacted form, and refused to release other documents under § 552(b)(5). Plaintiff brought this action claiming that FNS conducted an inadequate file search and that FNS is unlawfully withholding documents or parts of documents.
Background
The State of Utah participates in the Food Stamp Program (FSP). 7 U.S.C. § 2011 et seq. Under the FSP, states assume responsibility for certification of eligible individuals, for the issuance of coupons, and for the control and accountability thereof. 7 U.S.C. § 2020(a). States are eligible to receive 50 percent of all administrative costs involved in each state's operation of the FSP. 7 U.S.C. § 2025(a). However, the FSP also provides sanctions for states which operate the program inefficiently. FNS has the authority to sanction or reduce the state's funds if the state fails to meet certain quality control error rate goals. If the FNS determines that a state has failed to meet the quality standards, FNS must notify the state of its liability and give the state 30 days notice so that the state may seek a good cause waiver or a reduction of its liability. 7 C.F.R. § 275.25. Under 7 U.S.C. § 2025(d) and 7 C.F.R. § 275.23(e)(5), states may request that FNS waive penalty assessments for good cause. FNS may determine good cause based upon, among other factors, natural or civil disasters which adversely affect the FSP, significant caseload growth, changes in the federal or state FSP program which adversely impact upon the management of the FSP, and other circumstances beyond the control of the state. If FNS makes a determination, based on the criteria set forth in 7 C.F.R. § 275.25d(5), that good cause does not exist, it is to promptly issue a billing. See 7 C.F.R. § 275.25d(4)(i). If FNS determines that the state had good cause for not achieving its error rate goal, FNS is to reduce or eliminate the state's liability "as appropriate." 7 C.F.R. § 275.25d(5)(ii).
FNS determined that Utah's error rate was too high, and thus notified Utah that it was subject to a reduction of its federally funded share of administrative costs for FY 1983. Utah asked FNS to waive its penalty. Utah claimed it was paralyzed by record floods, it experienced rapid caseload growth, and that dramatic changes were implemented in the FSP. It contended that because of these factors and the uncontrollable costs incurred as a result of food stamp recipients errors, Utah should not be held accountable for its unacceptable quality *317 rating. After considering Utah's petition, FNS waived half of the penalty on the basis of caseload growth, but reasserted the legitimacy of the rest of the sanction.
Utah requested administrative review of all aspects of the penalty before the State Food Stamp Appeals Board (Appeals Board). Proceedings before the Appeals Board are informal. It is not bound by the rules of civil procedure or by the adjudicatory requirements of the Administrative Procedure Act. 7 C.F.R. § 276.7(h)(1). The Appeals Board does not have authority to issue or enforce subpoenas or to compel document production.[1]
In Appeals Board proceedings, FNS must submit all relevant and helpful documents compiled by FNS in support of its claim prior to the state's presentation of its case. 7 C.F.R. § 276.7(g)(2). Accordingly, Utah filed a motion asking the Appeals Board to compel FNS to include specific documents, including materials relating to the calculation of Utah's target rate, error rate, and sanction amount; correspondence and reports concerning Utah's management of the FSP; and information about FNS's policies and practices on good-cause waivers of penalties during the pertinent years. The Appeals Board instructed FNS to include the requested documents in its submission on the appeal. However, FNS declined to include the requested documents, and the Appeals Board notified plaintiff that it did not have the authority to compel FNS to produce the requested documents.
Plaintiff then sought to obtain the information through a FOIA action. The Appeals Board granted plaintiff several extensions of time in which to file its appeal brief before proceeding. The proceeding had been set for mid-May. The case now before the Court is a result of the ongoing dispute between plaintiff and FNS as to the requested documents. It focuses on 108 documents.[2] All but 11 of those were released in a redacted form. The remaining 11 were not released at all.[3]
Arguments
The agency has the burden of proving that material withheld under FOIA is *318 exempt from disclosure. FNS contends that the exemptions have been correctly applied to the documents and moves for summary judgment. FNS has supported its motion with a Vaughn index which describes each of the documents at issue, and with several affidavits explaining the decision-making process at FNS. Plaintiff argues in its cross-motion that FNS has failed to meet its burden. First, plaintiff argues that the necessity for privilege must be demonstrated with particularity and that FNS has failed to give precise and certain reasons for preserving the confidentiality of the withheld documents. Second, plaintiff claims that FNS has failed to show that the materials are an essential part of the deliberative process, and thus that the materials should be disclosed. Third, plaintiff alleges that FNS's withholding is overly broad as it failed to disclose (1) documents that explain or constitute the agency's decision and (2) documents that contain recommendations that were adopted as agency decisions. In addition, plaintiff argues that FNS has failed to disclose post-decisional materials which are explanatory and are not exempt. Fourth, plaintiff argues that FNS has waived any deliberative-process privilege applicable to the withheld documents. Lastly, plaintiff states that FNS has failed to demonstrate the adequacy of its search for responsive documents.
Disclosure Under Exemption Five
The FOIA exempts "inter-agency or intra-agency memorandums or letters which would not be available by law to a party ... in litigation with the agency." 5 U.S.C. § 552(b)(5). This exemption, commonly referred to as exemption five, permits disclosure of documents which routinely would be disclosed in private litigation, but exempts documents normally privileged in the civil discovery context. NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 95 S.Ct. 1504, 1515, 44 L.Ed.2d 29 (1975); A. Adler, Freedom of Information Act and Privacy Act, at 89 (14th ed. 1989) (citing H.R.Rep. No. 1497, 89th Cong., 2d Sess. 10 (1966). As such, exemption five incorporates several discovery privileges such as (1) the deliberative process exemption which protects advice, recommendations, opinions, and other such material which is part of the deliberative, consultative, decision-making processes of government; (2) the attorney work-product privilege; and (3) the attorney-client privilege. NLRB v. Sears, Roebuck & Co., 95 S.Ct. at 1516; Mead Data Central, Inc., v. Dep't of the Air Force, 566 F.2d 242 (D.C.Cir.1977). FNS focuses on the deliberative process and the attorney-client privileges to justify non-disclosure of certain documents or portions of documents.
The Deliberative Process Privilege
The deliberative process privilege has three purposes: "(1) to encourage open, frank discussions on matters of policy between subordinates and superiors; (2) to protect against premature disclosure of proposed policies before they are finally adopted; and (3) to protect against public confusion that might result from disclosure of reasons and rationales that were not in fact ultimately the grounds for the agency's action." R. Bouchard, Guidebook to the Freedom Of Information and Privacy Acts, at 44, (1985 Supp.) (citations omitted). To fit within this privilege, documents must be predecisional drafts, opinions, recommendations, or reports which were prepared in conjunction with an agency's decision-making process. NLRB v. Sears, Roebuck & Co., 95 S.Ct. at 1516, Jordan v. Dep't of Justice, 591 F.2d 753, 774 (D.C. Cir.1978) (en banc). That is, the document must have been generated before the adoption of an agency policy and it must reflect the give-and-take of the deliberative process. Senate of Puerto Rico v. Dep't of Justice, 823 F.2d 574, 585 (D.C.Cir.1987). See also Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 866 (D.C.Cir.1980) (stating that "recommendations, draft documents, proposals, suggestions, and other subjective documents which reflect the personal opinions of the writer rather than the policy of the agency" are examples of predecisional deliberative materials). The agency has the burden of demonstrating how the documents fit into the decisionmaking process in a manner that makes *319 them predecisional, directly related, and thus exempt. Arthur Andersen & Co. v. IRS, 679 F.2d 254, 258 (D.C.Cir.1982).
The deliberative process privilege is not without bounds. Documents which have been expressly adopted by the agency or which in effect are final decisions are not exempt. NLRB v. Sears, Roebuck & Co., 95 S.Ct. at 1523-24. See also Vaughn v. Rosen, 383 F.Supp. 1049 (D.D.C.1974), aff'd, 523 F.2d 1136 (D.C.Cir.1975). In addition, the deliberative process privilege is generally inapplicable to purely factual matters, or to factual sections of deliberative memoranda unless the facts are "inextricably intertwined" with deliberative material. The Guidebook to the Freedom of Information Act and Privacy Act, at 47-48 (citing Ryan v. Dep't of Justice, 617 F.2d 781, 790-791 (D.C.Cir.1980)). And, of course, the deliberative process privilege does not apply to post-decisional explanatory documents. See, e.g., NLRB v. Sears, Roebuck & Co., 95 S.Ct. at 1517; Bristol-Myers v. FTC, 598 F.2d 18, 25 (D.C.Cir.1978).
Need for Particularity in Deliberative Process Privilege Claims
Plaintiff claims that FNS has failed to give detailed reasons for each document withheld and each segment redacted. Plaintiff argues that FNS's Dunn declaration does not, with the necessary degree of clarity or detail, explain why the withheld documents fall into the claimed exemptions. FNS argues that it should be awarded summary judgment based on its affidavits and Vaughn index.
Summary judgment may be awarded to an agency withholding documents only if the agency provides "a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply." King v. Dep't of Justice, 830 F.2d 210, 219 (D.C.Cir.1987) (citing Mead Data Central, 566 F.2d at 251). The agency has the burden of stating the exemption claimed for each deletion or withheld document and explaining the applicability of the exemptions it invokes as to each document withheld, or segment redacted. King v. Dep't of Justice, 830 F.2d at 224. An agency may use affidavits to accomplish this task; however, the affidavits may not be "conclusory, merely reciting statutory standards" nor may they be "too vague or sweeping." Allen v. CIA, 636 F.2d 1287, 1291 (D.C.Cir.1980) (quoting Hayden v. NSA, 608 F.2d 1381, 1387 (D.C. Cir.1979), cert. denied, 446 U.S. 937, 100 S.Ct. 2156, 64 L.Ed.2d 790 (1980). See also, King v. Dep't of Justice, 830 F.2d at 219. The agency's affidavits must be such that: (1) the Court and the plaintiff are given notice that the agency analyzed carefully the material withheld; (2) the Court can fulfill its duty of ruling on the applicability of the exemption; and (3) they give the plaintiff as much information as possible. Keys v. Dep't of Justice, 830 F.2d 337, 349 (D.C.Cir.1987). Thus, the agency must walk the difficult line between giving enough detail to identify the document or segment and demonstrate how it falls into the claimed exemption, without exposing in the process the document or redacted segment that the agency claims should remain confidential.
FNS has provided plaintiff and the Court with a fairly detailed description of the documents it has withheld or redacted. FNS divided the withheld portions into four general categories: (1) Discussion Issue papers which FNS standardly uses to develop and discuss unresolved policy issues; (2) Good Cause/Liability Analyses which reflect specific quality control policy issues debated by FNS; (3) Regional Office Recommendations Concerning Utah Requests for Waivers of Ongoing Program Requirements which reflect the FNS's procedure of having the regional areas do the initial analysis of a state's request for waivers; and (4) Draft Methodologies Under Consideration, which are documents which pertain to memoranda or issue papers containing or addressing draft methodologies under consideration by the agency. FNS then addressed each document, placing it into the appropriate group, giving the nature of the decisional matter involved, and, if a final decision had been rendered, the date *320 of that decision. In explaining the hierarchy of the decision-making process within FNS, defendant provided the Court with the function and significance of the documents within that decision-making process.
The Court finds, with exceptions which will be addressed below, that FNS fulfilled the particularity requirements set by the FOIA.[4] FNS has not fulfilled its duty with several documents. The Court finds that the descriptions given of the following documents are inadequate: No. 17 (as to missing attached documents), No. 30, No. 81 (as to missing attachment C), No. 97, No. 98, No. 100, No. 101, No. 102, No. 103, and No. 105. Accordingly, FNS is directed to provide more detailed information as to why the contents of these documents should be exempt.
Relation of Documents to the Deliberative Process
Plaintiff argues that in order to fall within this exemption, a document must be "an essential element" in the deliberative process. (Plaintiff's opposition at 14, citing Parke, Davis & Co. v. Califano, 623 F.2d 1, 6 (6th Cir.1980).) FNS argues that a less restrictive standard applies. The parties are dealing in subtle distinctions. Documents must be "a direct part of the deliberative process." Vaughn v. Rosen, 523 F.2d 1136, 1143-44 (D.C.Cir.1975). To be ruled predecisional, the court must "be able to pinpoint an agency decision or policy to which these documents contributed." Paisley v. CIA, 712 F.2d 686, 698 (D.C.Cir. 1983), vacated in part on other grounds, 724 F.2d 201 (D.C.Cir.1984). See also, Senate of Puerto Rico v. Dep't of Justice, 823 F.2d at 584-85. The Court acknowledges that FNS did not describe specific agency decisions in each individualized description of each document. See, e.g., documents No. 41 No. 47. However, FNS does pinpoint the agency policy or final decisions in which the documents played a role in the categorized section of FNS's description.[5] In addition, by supplying the Court and plaintiff with a hierarchy of decision-making analyses, FNS provides a framework for understanding how the documents reflect the "give-and-take of the consultative process." Senate of Puerto Rico v. Dep't of Justice, 823 F.2d at 585. There are only a few instances in which the Court found that FNS did not adequately describe how the document or redacted portion of the document fit into the predecisional process. FNS does not adequately describe the predecisional role of document No. 22, a letter regarding the implementation of Final MRRB Regulations. FNS redacts the months listed in the attachment regarding caseload size and change in document No. 63 and the months in document No. 82, exhibit 2, without adequate justification. In addition, the Court does not understand how sample case findings in document No. 64 and the participation statistics redacted on pages 2 and 3 of document No. 65 are predecisional and not factual. See Schwartz v. IRS, 511 F.2d 1303 (D.C.Cir. 1975) (stating that factual information may not be withheld under this exemption). Finally, FNS fails to adequately describe the predecisional role of documents No. 106, No. 107, and No. 108. Accordingly, the above mentioned documents or sections of documents must be provided.
*321 Statements of Policy or Interpretations Which Have Been Adopted by the Agency
Plaintiff claims that FNS's withholding is overly broad. Plaintiff alleges that FNS has withheld documents which explain the final decision or which were expressly adopted by FNS. FNS claims that all the redacted or withheld documents are predecisional and merely reflect initial analysis of the waiver requests.
Exemption five never applies to final opinions; it rarely applies to "statements of policy and interpretations which have been adopted by the agency" and staff instructions which affect the public. NLRB v. Sears, Roebuck & Co., 95 S.Ct. at 1518; Schwartz v. IRS, 511 F.2d at 1305-06 (even deliberative internal memorandum is not protected if it "represent[s] policies, statements or interpretations of law that the agency has actually adopted."); A. Adler, Freedom of Information Act and Privacy Act, at 91. Documents which are "publicly cited by an agency as the sole basis for agency action," or are "formally incorporated as part of a final order" or reflect policy already made and announced, are not exempt. Schwartz, 511 F.2d at 1306. On the other hand, documents which are persuasive, or advisory in nature rather than obligatory, are usually exempt unless expressly adopted. Furthermore, documents which are generated by those who have no authority to make final decisions seldom have the force of law. See Renegotiation Board v. Grumman Aircraft Engineering Corp., 421 U.S. 168, 95 S.Ct. 1491, 1500, 44 L.Ed.2d 57; Brinton v. Dep't of State, 636 F.2d 600, 605 (D.C.Cir. 1980), cert. denied, 452 U.S. 905, 101 S.Ct. 3030, 69 L.Ed.2d 405 (1981). Documents "from a subordinate to a superior official [are] more likely to be predecisional." Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d at 868.
The parties spent a great deal of time discussing how many final decisions were made by the FNS as to the granting or denying of a waiver and what, if any, methodologies were used in arriving at the final decision.[6]
It is obvious to the Court that the decision-making process is twofold. See 7 C.F.R. § 275.25. Accordingly, documents can be predecisional because they are part of the deliberative process of either or both decisions.
First, FNS deliberates on whether or not a state is eligible for a good cause waiver; 7 C.F.R. § 275.25d(5)(i) sets specific criteria for this decision. In making this determination, *322 FNS considers whether or not a state has given enough documentation and justification to fall into one or more of the prescribed regulatory good cause categories. FNS analyzes whether the state connected the regulatory criteria with the failure to meet the quality control rate.[7] The documents created by the regional offices demonstrate that the regional offices sift through the states' requests, summarize them, and analyze them in relation to the regulatory criteria. No separate methodologies or criteria have been established for making this determination. The regional offices rely on the regulatory criteria. They follow the guidelines set forth by FNS.[8] They are sent to the national office so that the national office may review the documents, and compare them to other regional analyses. The national office then prepares similar documents for the Administrator who has the decision-making power and authority.[9] Documents which are "prepared in order to assist an agency decision maker in arriving at his decision" are exempt from disclosure. Renegotiation Board v. Grumman Aircraft Eng. Corp., 421 U.S. 168, 95 S.Ct. 1491, 1500, 44 L.Ed.2d 57 (1975). Thus the Administrator makes the first decision, based on the regional office's and national office's recommendations, on whether a state fits into one or more of the good cause exemptions.
The second aspect of the decision-making process does involve setting forth certain methodologies which determine, once a state is found to fall within a good cause category, the amount of sanction that should be waived. There are no regulatory criteria set for this.[10]See 7 C.F.R. § 275.25d(5)(ii) (stating the FNS should reduce or eliminate liability "as appropriate"). Methodologies for determining the sanction waiver amounts are determined at this stage.
Keeping the circumstances under which the decisions are made and the deliberative process occurs in mind, the Court finds that the documents withheld, with two exceptions, are predecisional and exempt. One exception is the issue paper provided to the OMB by FNS in document No. 29. To the extent that the issue paper was expressly adopted by FNS it must be released. Portions which were changed after discussions with OMB are exempt and may be redacted.[11] The second exception is the issue paper noted in document No. 104 involving quality control waiver methodologies based on natural disasters and implementation of MRRB. To the extent that this was adopted without change, it must be released.
FNS's Alleged Waiver of the Deliberative Process Privilege
Plaintiff claims that FNS has waived its deliberative process privilege by releasing substantially similar documents. Plaintiff cites documents regarding good cause waivers which were released in previous years. Plaintiff claims these documents are indistinguishable. The Court has reviewed the released documents supplied *323 by the plaintiff and find they are distinguishable. In addition, documents which contain opinions and reflections on the applicability of a good cause waiver for one year do not necessarily mirror that for the next year. Opinions, facts, law, and options might change. The Court finds no waiver of the privilege based on this argument.
Attorney-Client Privilege
FNS withholds several documents based on the attorney-client privilege which is incorporated in exemption five. Plaintiff claims that FNS has not met the requirements for exemption under this portion of the privilege.
The attorney-client privilege is narrowly construed and is limited to those situations in which it protects disclosures necessarily made to obtain informed legal advice which might not have been made absent the privilege. Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854 (D.C.Cir.1980) (citing Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1976)). Confidentiality is another important consideration. If the disclosures are not held in confidence, they are not exempt. However, it is acknowledged that "[w]hen the client is by nature a group, as is true of both the government and corporations, the courts have agreed that the privilege should not be defeated by some limited circulation beyond the attorney and the person within the group who requested the advice." Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d at 863. (Emphasis in original.)
Plaintiff argues that the documents reflect a breach of that confidentiality because several FNS officials had access to the legal advice. The Court disagrees; individuals who had access to the information are limited. Lipsman, Director, Program Accountability Division, Hill, Acting Assistant General Counsel, Dunn, Acting Deputy Administrator, Family Nutrition Programs, and Crow, Associate Administrator, are the only ones who received the documents which FNS has withheld under the attorney-client privilege. All four are high-level FNS officials, and while they might not have final decision making authority, they are not simply administrative lackeys. This does not constitute a random or unlimited disclosure which would defeat a confidentiality claim.
Adequacy of FNS's File Search
Plaintiff alleges that FNS's motion for summary judgment should be denied because FNS has failed to conduct an adequate file search. An agency has the burden of proving that its efforts to search for responsive documents were "reasonable." See Founding Church of Scientology v. NSA, 610 F.2d 824, 836-37 (D.C.Cir. 1979). An agency may use affidavits to meet its burden. The affidavits must "explain in reasonable detail the scope and method of the search conducted by the agency," but they "need not set forth with meticulous documentation the details of an epic search for the requested records." Perry v. Block, 684 F.2d 121, 127 (D.C.Cir. 1982). However, just because a search fails to produce all relevant material does not mean that it was unreasonable. Meeropol v. Meese, 790 F.2d 942, 953 (D.C.Cir. 1986); Lawyers Committee for Human Rights v. INS, 721 F.Supp. 552 (D.D.C. 1989).
Although the Court feels that there is a chance that all applicable documents were not discovered by the search described by FNS, the Court finds that FNS has met its burden.[12] In addition, the Court does not find evidence of bad faith on the part of the agency. FNS has produced relevant documents, and the Court expects that it will continue this practice.
Summary
Plaintiff contests FNS's FOIA production on several grounds. FNS filed a motion for summary judgment and plaintiff filed a cross-motion for summary judgment. After careful review of all the documents and filings, the Court concludes that plaintiff's motion for summary judgment *324 should be granted only in respect to documents No. 22, 29, 63, 64, 65, 82, 104, 106, 107, and 108, as set forth in this opinion. The Court denies both parties' motions as to some of the documents. FNS did not adequately describe the following documents: No. 17, No. 30, No. 81, No. 97, No. 98, No. 100, No. 101, No. 102, No. 103, and No. 105. FNS must provide further information justifying their exemption or release the documents in unredacted form. FNS's motion for summary judgment is granted for the remaining documents.
NOTES
[1] Congress has amended this so that beginning in FY 1986, food stamp error sanction appeals go before administrative law judges who have the authority to issue and enforce subpoenas and to control discovery. 7 U.S.C. § 2023(a).
[2] Without addressing in detail the interactions between plaintiff and FNS regarding the FOIA requests, the materials that FNS has withheld in part or in full challenged by plaintiffs are as follows:
FOIA
Request Description FNS Index
1 Penalty-amount documents 1-3
Discussion/Issue Papers
(Defendant's category A)
4 Utah program waiver documents 4-28
Regional Office Recommendations
Concerning Utah Requests for
Waivers of Ongoing Program
Requirements
(Defendant's category C)
6 Caseload-growth methodology documents 29-34
Discussion/Issue Papers
(Defendant's category A)
7 Good-cause waiver analyses 35-94
Good Cause/Liability Analyses
(Defendant's category B)
6 Additional good-cause waiver methodology documents 95-105
Draft Methodologies Under Consideration
(Defendant's category D)
9 Utah program management reports 106-08
Discussion/Issue Papers
(Defendant's category A)
(Note: The parties categorized the documents differently. Plaintiff's categorizations
are in regular print; defendant's are in bold print.)
[3] Documents No. 95-105 were not released at all.
[4] The Court notes that several of FNS's descriptions were somewhat sketchier than the Court would like, but in reading the documents, the large amount of unredacted material reveals that the redacted material is indeed predecisional and exempt. See, e.g., documents No. 49 and No. 50.
In addition, the documents demonstrate a natural progression from the regional offices, which have little decision-making authority, to the Administrator, who granted or denied the waivers.
[5] Defendant alleges that the final methodologies and explanations involving the FY 1984 waiver requests were made available in January 1989. Plaintiff claims that the short analyses given by FNS do not reflect the standards used by FNS to reach its January 1989 waiver conclusion. The Court compares the final methodology made available in January 1989 to one of the draft methodologies prepared by the regional office. (Document No. 63.) The Court concludes that for the most part the final document reflects the original analysis. It is obvious that some paring was done, and several suggestions were rejected or revamped.
[6] Plaintiff's argument is that a decision to grant the good cause waiver and the determination of the amount of the waiver are intertwined. Plaintiff alleges that there is no way that FNS can make determinations regarding the validity of good cause waivers without some sort of methodology. Plaintiff points to document No. 29, a letter from FNS to the Office of Management and Budget, which includes a sentence stating that:
[g]iven the Secretary's discretion in this area, the Food and Nutrition Service has established a methodology to determine the amount of a partial waiver of liability. We have enclosed an issue paper which describes this methodology for partial waivers based on caseload growth.
Plaintiff claims that this proves that a methodology was used to determine good cause waivers which is reflected in the redacted documents. Plaintiff also alleges that documents No. 99-105 reflect postdecisional explanations of the FY 1983 decisions. Accordingly, plaintiff argues that these documents should be released.
FNS asserts that the usual deliberative process is as follows. First, the regional office analyzes state waiver requests. The regional office makes recommendations as to whether the regulatory criteria (that is, natural disaster, case growth, etc.) have been met, and whether or not a waiver should be considered. Those initial analyses are set to the FNS's national office, which reviews the draft analyses and makes a final review and analysis. Then the FNS Administrator, who has been given discretionary authority by the Secretary, reviews the national office's recommendations and analysis and decides whether, based on the regulatory criteria, to grant or to deny a good cause waiver. Once that initial determination is made, the deliberative process begins again with the national office selecting a methodology for the determination of the amount of the good cause waiver. The national office then provides the Administrator with a good cause waiver analysis discussing the options under consideration and the staff recommendations as to the amount of the waiver. The Administrator then sets the methodology after running the suggested methodology by the Office of Management and Budget (OMB).
[7] For example, it is not enough to have several counties that were declared disaster areas; a state must document that as a result of the natural disasters the state had dramatic increases in its FSP error rates.
[8] See plaintiff's cross-motion for summary judgment, exhibit L. In a letter sent to the regional offices, they were told to prepare analyses which include point and counterpoint analysis of each argument presented by the state; documentation supporting the arguments; issue-related arguments; and issues raised by the state.
[9] This does not appear to be an area where FNS is developing a system of "secret law." The guidelines/methodology used by FNS is consideration of the statutory good cause criteria.
[10] The Court notes that in plaintiff's motion for summary judgment, exhibit K, FNS discusses the pro's and con's of having set methodology criteria.
[11] The Court also notes that in document No. 67, FNS states that it "routinely reviews and provides comments to states on draft and final policy materials." Any such comments which are within the scope of plaintiff's FOIA request and not exempted by the parties' agreement not to require production of documents produced in the Alaska litigation must be produced. (Document No. 67, at 6.)
[12] The Court refers to the Batko, Nickels, and Dunn declarations and the Carpenter letters.
|
254 F.Supp.2d 266 (2003)
Angel SANCHEZ, Plaintiff,
v.
John P. DOYLE and Sgt. Blake J. Stine, Defendants.
No. 3:02CV0351 (JBA).
United States District Court, D. Connecticut.
March 31, 2003.
*268 Glenn Mead Conway, Knight, Conway & Cerritelli, New Haven, CT, for Plaintiff.
Stephen Richard Sarnoski, Attorney General's Office, Hartford, CT, for Defendants.
Ruling on Defendants' Motion to Dismiss Plaintiffs Second Amended Complaint [Doc. # 21]
ARTERTON, District Judge.
Plaintiff Angel Sanchez ("Sanchez") brings this suit under 42 U.S.C. § 1983 against defendants John Doyle ("Doyle"), a prosecutor in the Connecticut State's Attorney's Office, and Sergeant Blake J. Stine ("Stine"), an officer in the Connecticut State Police, in both their official and individual capacities, alleging violation of his right to be free from excessive bail under the Eighth Amendment to the United States Constitution in connection with the setting of his bail at $500,000 (cash only) after his arrest for various narcotics related offenses. The first two counts of Sanchez's second amended complaint are directed against Doyle for ordering excessive bail and advising Stine on the subject of plaintiffs bond, and the third is directed against Stine for setting excessive bail after receiving advice from Doyle. Doyle and Stine now move to dismiss all three *269 counts under Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, their motion [Doc. # 21] is GRANTED.
I. Factual Background[1]
On January 3, 2002, after execution of a search warrant pursuant to which 548 packets of "purported" heroin were discovered in the bedroom of a house occupied by Sanchez and another individual, Sanchez was arrested and brought to the New Haven Police Department. Sanchez cooperated with police and acknowledged ownership of some incriminating evidence. He was charged with possession of narcotics, possession of narcotics with intent to sell, possession of narcotics within 1,500 feet of a school, possession of narcotics of over one ounce, operating a drug factory, and possession of drug paraphernalia.
While Sanchez was being processed at the New Haven Police Department, Stine set Sanchez's bail at $500,000 cash only after having been advised and/or ordered to do so by Doyle. Sanchez alleges that Doyle and Stine both acted intentionally, willfully, and maliciously in connection with setting the amount and conditions of his bond, ignoring procedures under Connecticut law and acting for the purpose of punishing him. He further alleges bail was set without consideration of his cooperative nature, lack of prior convictions or charges of failure to appear on previous bonds, family ties, employment record, financial resources, mental condition, character, or community ties.
II. Standard of Review
When deciding a motion to dismiss, the Court must accept all well-pleaded allegations as true and draw all reasonable inferences in favor of the pleader. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)("The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test.").
III. Discussion
A. Eleventh Amendment Immunity
Sanchez's second amended complaint brings suit against Doyle and Stine in their dual official and individual capacities. To the extent Sanchez seeks money damages against Doyle and Stine in their official capacities, his suit is barred by the Eleventh Amendment to the United States Constitution because a state official cannot be sued for monetary damages in his or her official capacity under 42 U.S.C. § 1983. See Will v. Dep't of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989).
B. Judicial Immunity[2]
Count three of Sanchez's second amended complaint must be dismissed be *270 cause Stine is absolutely immune from personal-capacity suits for monetary damages[3] under 42 U.S.C. § 1983 for actions related to performing the bail setting function assigned to police officers under Conn. Gen.Stat. § 54-63c.[4]
*271 "It is ... well established that officials acting in a judicial capacity are entitled to absolute immunity against § 1983 actions, and this immunity acts as a complete shield to claims for money damages." Montero v. Travis, 171 F.3d 757, 760 (2d Cir.1999). The critical inquiry focuses on the nature of the act being performed and not on the status of the individual performing it. See Forrester v. White, 484 U.S. 219, 224, 108 S.Ct. 538, 98 L.Ed.2d 555 (1988)("It is the nature of the function performed, not the identity of the actor who performed it, that informed our immunity analysis."); see also Cleavinger v. Saxner, 474 U.S. 193, 201, 106 S.Ct. 496, 88 L.Ed.2d 507 {1985)(quoting Butz v. Economou, 438 U.S. 478, 511, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978))("absolute immunity flows not from rank or title or `location within the Government,' ... but from the nature of the responsibilities of the individual official."). Thus, judicial immunity may extend to parole board officials who serve in a quasi-adjudicative function in deciding whether to grant, deny, or revoke parole, see Montero, 171 F.3d 757, but not to a judge who performs administrative, legislative, or executive functions, such as discharging an employee, see Forrester, 484 U.S. at 229, 108 S.Ct. 538. Under this functional approach, the Court examines "the nature of the functions with which a particular official or class of officials has been lawfully entrusted, and ... seek[s] to evaluate the effect that exposure to particular forms of liability would likely have on the appropriate exercise of those functions." Id. at 224, 108 S.Ct. 538. To facilitate this dual function/policy analysis, the Second Circuit has extracted a twopart test from the Supreme Court's decision in Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978) to determine whether a judge (or other official performing a judicial function) is entitled to absolute immunity: "First, a judge will not be deprived of immunity because the action he took was in error, was done maliciously,[5] or was in excess of his authority; rather, he will be subject to liability only when he has acted in the clear absence of all jurisdiction ... [;][s]econd, a judge is immune only for actions performed in his judicial capacity." Tucker v. Outwater, 118 F.3d 930, 933 (2d Cir.1997)(quotation and citation omitted)(emphasis in original); see also Montero, 171 F.3d at 761 n. 2.[6]
Setting bail is a judicial act. Tucker, 118 F.3d at 933; see also Cleavinger, 474 U.S. at 206, 106 S.Ct. 496 ("Petitioners... refer to well-known summary and ex parte proceedings, such as the issuance of search warrants and temporary restraining orders, and the setting of bail."). As a result, there can be no doubt that, under Conn. Gen.Stat. § 54-63c, Stine's role in setting Sanchez's bail was "functionally comparable to that of a judge." Butz, 438 U.S. at 513, 98 S.Ct. 2894. Before a police officer sets bond, Conn. Gen.Stat. § 54-63c(a) requires the officer to attempt to *272 conduct an interview with the arrested person to obtain information relevant to the terms and conditions of the person's release from custody. Such information includes the nature and circumstances of the offense insofar as they are relevant to the risk of nonappearance, defendant's record of previous convictions, past record of appearance in court after being admitted to bail, family ties, employment record, financial resources, character and mental condition, and community ties. Compare Conn. Gen.Stat. § 54-63c(a) with Conn. Gen.Stat. § 54-63b(a) and (c). Weighing those factors to determine the appropriate bond demonstrates "independent judgment," Butz, 438 U.S. at 513, 98 S.Ct. 2894, especially in light of the fact that, if the arrested person proceeds to post the bail set by the officer, the officer's determination is not reviewed and the arrested person is released until arraignment. Moreover, even when the arrested person cannot post the officer-determined bond and therefore the officer is required to refer the matter to a bail commissioner, see Conn. Gen.Stat. §§ 54-63c(a), 54-63d(a), & 54-63b(a), the police department retains statutory discretion to advise the state's attorney of its objection to the redetermination of the bail commissioner and the state's attorney may then authorize the police department to delay release pending a hearing before a superior court judge, see Conn. Gen.Stat. § 54-63d(d).[7] In setting bail, therefore, officers like Stine cannot be said to perform merely administrative functions such as scheduling or making recommendations, see King v. Simpson, 189 F.3d 284, 288 (2d Cir.1999), but rather are serving independent judicial functions replete with the exercise of independent judgment in setting and reviewing bail conditions.
Stine's "clear absence of all jurisdiction" is plead in Sanchez's second amended complaint with allegations that Stine violated the procedures and substance of Conn. Gen.Stat. § 54-63c when setting bail for Sanchez. He first claims that Stine had no authority under that statute to set a cash only bond. However, the statute imposes no such limitation, see Conn. Gen.Stat. § 54-63c(a)("After such waiver, refusal or interview, the police officer shall promptly order release of the arrested person upon the execution of a written promise to appear or the posting of such bond as may be set by the police officer ....").
Sanchez further alleges that it was improper for Stine to seek advice from a state's attorney prior to setting Sanchez's bail because the statute only permits Stine to contact a state attorney to object to a bail redetermination made by a bail commissioner. The Court disagrees. Although the statutory structure of Conn. Gen.Stat. § 54-63c does not contemplate or require an officer to contact a state's attorney prior to a bail commissioner's determination, nowhere does it preclude an officer from doing so.
Sanchez also alleges that Stine set the $500,000 cash only bail in violation of Conn. Gen.Stat. § 54-63c because he considered only the nature and circumstances of the offense but failed to take into account Sanchez's lack of previous criminal record and his personal circumstances. While Conn. Gen.Stat. § 54-63c requires the officer to take those factors into consideration, if such details are provided, compare Conn. Gen.Stat. § 54-63c(a) with *273 Conn. Gen.Stat. § 54-63b(a) & (c), this allegation does not constitute a claim of clear absence of all subject matter jurisdiction because the unlawful omissions here relate to the general function of setting bail. See Mireles, 502 U.S. at 13, 112 S.Ct. 286; Tucker, 118 F.3d at 934-36.[8]
Granting absolute immunity to Stine for performing the bail related function of his position serves the underlying purpose for judicial immunity, which is to "free[ ] the judicial process from harassment or intimidation," Forrester, 484 U.S. at 226, since "the nature of the adjudicative function requires a judge frequently to disappoint some of the most intense and ungovernable desires that people can have." Id. "If judges were personally liable for erroneous decisions, the resulting avalanche of suits, most of them frivolous but vexatious, would provide powerful incentives for judges to avoid rendering decisions likely to provoke such suits." Id. at 226-27, 108 S.Ct. 538; see Montero, 171 F.3d at 760. These concerns also have applicability to police officers who would otherwise potentially be subjected to suit by any individual disappointed with a bail determination which he or she could not post.
In addition, safeguards are in place to adequately protect against constitutional violations which reduce the need for private damage actions. See Butz, 438 U.S. at 512, 98 S.Ct. 2894. Counsel may be present during the bail interview, see Conn. Gen.Stat. § 54-63c(a), the arrested person has a right to prompt review of the officer's bail determination if bond has not been posted, see Conn. Gen.Stat. §§ 54-63c(a) & 54-63d(a), and, should a prosecutor authorize delaying release after a redetermination by a bail commissioner that is objectionable to the police department, see Conn. Gen.Stat. § 54-63d(d), such delay lasts only "until a hearing can be had before the court then sitting for the geographical area ... or, if the court is not then sitting, until the next sitting of said court." Id.
Finally, Sanchez's second amended complaint states in the prayer for relief that he is seeking injunctive remedies. See PL's Second Am. Compl. at 15. Although prior to 1996, absolute immunity did not shield a judge in a § 1983 suit from responsibility for attorney fees sought by a prevailing party or from appropriate injunctive relief, see Pulliam v. Allen, 466 U.S. 522, 104 S.Ct. 1970, 80 L.Ed.2d 565 (1984), amendments to 42 U.S.C. § 1983 now preclude such relief against a judicial officer acting in a judicial capacity unless a declaratory decree was violated or declaratory relief was unavailable. 42 U.S.C. § 1983; see Montero, 171 F.3d at 761. As Sanchez alleges no violation of a declaratory decree and no unavailability of declaratory relief, any claim he might assert for injunctive relief against Stine is barred. See Montero, 171 F.3d at 761.
C. Prosecutorial Immunity
Doyle is entitled to absolute immunity with respect to counts one and two of Sanchez's second amended complaint because ordering[9] or advising Stine *274 how to set Sanchez's bail constitutes legal advice provided during the judicial phase of the criminal process by Doyle in his advocacy role on behalf of the State of Connecticut. Absolute prosecutorial immunity shields conduct that can be characterized as "`intimately associated with the judicial phase of the criminal process,'" Buckley v. Fitzsimmons, 509 U.S. 259, 270, 113 S.Ct. 2606, 125 L.Ed.2d 209 (199S)(quoting Imbler v. Pachtman, 424 U.S. 409, 430, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976)), or alternatively formulated as acting in a "`role as advocate for the State.'" Buckley, 509 U.S. at 271, 113 S.Ct. 2606 (quoting Burns v. Reed, 500 U.S. 478, 491, 111 S.Ct. 1934, 114 L.Ed.2d 547 (1991)). Thus, "prosecutors are absolutely immune from liability under § 1983 for their conduct in `initiating a prosecution and in presenting the State's case,' insofar as that conduct is `intimately associated with the judicial phase of the criminal process.'" Pinaud, 52 F.3d at 1147 (quoting Burns, 500 U.S. at 486, 111 S.Ct. 1934). As with judicial immunity, the prosecutorial immunity inquiry is a functional one, concentrating on "`the nature of the function performed, not the identity of the actor who performed it,'" Buckley, 509 U.S. at 269, 113 S.Ct. 2606 (199S)(quoting Forrester, 484 U.S. at 229), or the actor's intent or motive.[10]
Doyle argues that ordering and/or advising Stine to set an excessive bond without consideration of all statutory factors must be dismissed under Pinaud, 52 F.3d at 1149, which held that prosecutors alleged to have improperly sought to increase plaintiffs bail were protected by absolute immunity since "actions in connection with a bail application are best understood as components of the initiation and presentation of a prosecution." Id.[11] Although ordering or advising a particular level or terms of bail to be set by the official with actual responsibility for setting bail falls squarely within a traditional role of a prosecutor as an advocate of the state during the judicial phase of a criminal proceeding, Sanchez seeks to avoid the application of absolute immunity here by asserting that Doyle is precluded by the statutory scheme from providing input at this stage of the bail proceedings and thus any such input must be characterized as legal advice for which the prosecutor is only entitled to qualified immunity under the Supreme Court's decision in Burns, 500 U.S. 478, 111 S.Ct. 1934,114 L.Ed.2d 547. Although Pinaud is not procedurally on all fours with Sanchez's allegations, its reasoning warrants granting absolute immunity.
Pinaud involves a bail application made by a district attorney to increase bail that had already been set, and, as such, implicates a procedural stage subsequent to the one presented in this case but more analogous to the role of a Connecticut state's attorney under Conn. Gen.Stat. § 54-69 *275 (which permits both a prosecutor and an accused to bring an application to the court to contest the excessiveness or insufficiency of a bond determination). As such, Doyle's input into the judicial process of setting bail upon inquiry by the officer statutorily authorized to set bail and at a stage in which the statutory scheme does not give Doyle a formal role constitutes providing legal advice to the bail setter. However, the Court disagrees with plaintiffs assertion that Burns precludes absolute immunity for such advice. Rather, under Pinaud as to prior bail proceedings, such advisory conduct is still a component of the initiation and presentation of a prosecution for which the prosecutor is entitled to absolute immunity.
While Burns precludes grants of absolute immunity for legal advice given by prosecutors to police during the investigative phase of a criminal case, see Burns, 500 U.S. at 492-496, the case is inapplicable to the case at bar because here Doyle provided legal advice to a police officer during the post-arrest bail setting judicial phase of a criminal case and not for an investigatory or administrative purpose. The purpose at this stage is to pursue the arrested person's prosecution by assuring his presence in court since bail "concerns the mechanisms for securing a prisoner's availability for prosecution." Pinaud, 52 F.3d at 1150; see Spivey v. Robertson, 197 F.3d 772, 774-76 (5th Cir. 1999)(prosecutor entitled to absolute immunity for providing legal advice to police where, based on facts provided by police, prosecutor informed police what crimes a suspect could be charged with and instructed officers to prepare for submission an affidavit of probable cause for an arrest warrant); Springmen v. Williams, 122 F.3d 211, (4th Cir.1997)(assistant state's attorney entitled to absolute immunity where she reviewed police officer's application for a "Statement of Charges and Summons" and advised that its factual contents were sufficient to warrant filing the application since such advice implicated prosecutor's decision to proceed with a prosecution and not, in contrast with Burns, advising police with respect to the investigative phase of a criminal case). This conclusion is bolstered by the policy considerations underlying grants of absolute immunity discussed above in the context of judicial immunity. See Kalina v. Fletcher, 522 U.S. 118, 125, 118 S.Ct. 502, 139 L.Ed.2d 471 (1997) and supra at pp. 272-273.
Finally, again Sanchez's second amended complaint includes in his prayer for relief a bare claim for injunctive relief against Doyle, see Pl's Second Am. Compl. at p. 15, but his second amended complaint lacks any allegations that show Sanchez's standing to seek such relief, e.g., that he remains in custody pursuant to officer Stine's determination, or that there is a real or immediate threat that he will be wronged again by Doyle improperly ordering or advising an officer in connection with setting bail for Sanchez. See Riverside County v. McLaughlin, 500 U.S. 44, 51, 111 S.Ct. 1661, 114 L.Ed.2d 49 (1991); Los Angeles v. Lyons, 461 U.S. 95, 111-12, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983).
IV. Conclusion
For the foregoing reasons, defendants are entitled to absolute immunity and therefore their motion to dismiss is GRANTED. The Clerk is directed to close this case.
IT IS SO ORDERED.
NOTES
[1] All factual allegations are taken from plaintiff's second amended complaint.
[2] The parties have not raised the issue of judicial immunity with respect to the functions of Stine's job as a police officer that require him to set bail. The absence of argument, however, does not preclude the Court from raising the immunity question on its own, especially where the parties have extensively briefed and argued the cousin issue of Stine's qualified immunity. See Jean v. Collins, 155 F.3d 701, 705 n. 1 (4th Cir.1998)(en banc)("The officers did plead the defense of qualified immunity, however, and we may properly consider the closely related question of the scope of the immunity to which they are entitled.... Failure to do so here would create the possibility that qualified immunity would incorrectly be accepted as the limit of protection for police officers performing functions that require the exercise of prosecutorial discretion.") (citation and quotation omitted), judgment vacated on other grounds by 526 U.S. 1142, 119 S.Ct. 2016, 143 L.Ed.2d 1029 (1999). The Court also notes that, at the motion to dismiss stage, Stine has not waived the defense of absolute immunity, see Fed. R.Civ.P. 12(g) & (h)(2); Krohn v. U.S., 742 F.2d 24, 29 (1st Cir.1984), and that, in contrast to the qualified immunity analysis, it is proper to first address the applicability of absolute immunity before assessing whether a plaintiff's allegations sufficiently allege a constitutional violation, see Pinaud v. County of Suffolk, 52 F.3d 1139, 1148 n. 4 (1995).
[3] For discussion on the distinction between personal-capacity suits and official-capacity suits, see generally Haferv. Melo, 502 U.S. 21, 25-26, 112 S.Ct. 358, 116 L.Ed.2d 301 (1991); Kentucky v. Graham, 473 U.S. 159, 165-67, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985); Ying Jing Gan v. City of New York, 996 F.2d 522, 529 (2d Cir. 1993). Among other differences, official-capacity suits raise immunity issues only under the Eleventh Amendment whereas immunity issues in personal-capacity suits are limited to absolute and qualified immunities. See id.
[4] Conn. Gen.Stat. § 54-63c provides,
(a) Except in cases of arrest pursuant to a bench warrant of arrest in which the court or a judge thereof has indicated that bail should be denied or ordered that the officer or indifferent person making such arrest shall, without undue delay, bring such person before the clerk or assistant clerk of the superior court for the geographical area under section 54-2a, when any person is arrested for a bailable offense, the chief of police, or his authorized designee, of the police department having custody of the arrested person shall promptly advise such person of the person's rights under section 54-1 b, and of the person's right to be interviewed concerning the terms and conditions of release. Unless the arrested person waives or refuses such interview, the police officer shall promptly interview the arrested person to obtain information relevant to the terms and conditions of the person's release from custody, and shall seek independent verification of such information where necessary. At the request of the arrested person, the person's counsel may be present during the interview. After such a waiver, refusal or interview, the police officer shall promptly order release of the arrested person upon the execution of a written promise to appear or the posting of such bond as may be set by the police officer, except that no condition of release set by the court or a judge thereof may be modified by such officer and no person shall be released upon the execution of a written promise to appear or the posting of a bond without surety if the person is charged with the commission of a family violence crime as defined in section 46b-38a, and in the commission of such crime the person used or threatened the use of a firearm. When cash bail in excess of ten thousand dollars is received for a detained person accused of a felony, where the underlying facts and circumstances of the felony involve the use, attempted use or threatened use of physical force against another person, the police officer shall prepare a report that contains (1) the name, address and taxpayer identification number of each person offering the cash bail, other than a person licensed as a professional bondsman under chapter 533 or a surety bail bond agent under chapter 700f, (3) the amount of cash received, and (4) the date the case was received. Not later than fifteen days after receipt of such cash bail, the police officer shall file the report to the state's attorney for the judicial district in which the alleged offense was committed and to each person offering the cash bail If the arrested person has not posted bail, the police officer shall immediately notify a bail commissioner,
(b) The chief, acting chief, superintendent of police, the Commissioner of Public Safety, any captain or lieutenant of any police department or the Division of State Police within the Department of Public Safety or any person lawfully exercising the powers of any such officer may take a written promise to appear or a bond with or without surety from an arrested person as provided in subsection (a) of this section, or as fixed by the court or any judge thereof, may administer such oaths as are necessary in the taking of promises or bonds and shall file any report required under subsection (a) of this section.
[5] Thus, Sanchez's allegation that Stine set the bail maliciously and with the intent to punish Sanchez has no bearing on the absolute immunity analysis. See Mireles v. Waco, 502 U.S. 9, 11, 112 S.Ct. 286, 116 L.Ed.2d 9 (1991)("[J]udicial immunity is not overcome by allegations of bad faith or malice....").
[6] Sanchez's second amended complaint does not allege that Stine was not an officer authorized to set bail under Conn. Gen.Stat. § 54-63c, rather Sanchez assumes he was. See PL's Second Am. Compl. ¶¶ 7, 8, 19, 32.
[7] Conn. Gen.Stat. § 54-63d(d) provides,
"The police department shall promptly comply with the order of release of the bail commissioner, except that if the department objects to the order or any of its conditions, the department shall promptly so advise a state's attorney or assistant state's attorney, the bail commissioner and the arrested person. The state's attorney or assistant state's attorney may authorize the police department to delay release, until a hearing can be had before the court ..."
[8] Similarly, the Court notes that, even if Stine were prohibited under Connecticut law from setting an all cash bond and from contacting a state attorney before setting any bond, legal conclusions with which the Court disagrees, see supra at p. 272, both would constitute actions in excess of his authority, since Conn. Gen.Stat. § 54-63c clearly grants constitutes a grant of general subject matter jurisdiction over bail to authorized police officers. See Tucker, 118 F.3d at 935-36; see also Jacobson v. Schaefer, 441 F.2d 127 (7th Cir.1971)(absolute immunity shields county judge who set bail with unlawful conditions).
[9] As clarified by his second amended complaint and opposition to defendants' motion to dismiss, Sanchez uses the word "order" in the sense of forceful urging as opposed to unilateral imposition of a decision through a rubber stamping process. See Pl's Second Am. Compl. ¶ 19 (alleging Stine initiated contact with Doyle for purpose of obtaining input on Sanchez's bond determination); PL's Opp'n to Defs.' Mot. to Dismiss at 5-6 (referring to deposition testimony in another case in which a certain officer Canning testified that he always set cash bonds on the advice of a prosecutor and consulted with Defendant Doyle concerning setting a cash bond, and accordingly concluding that "... Defendant Doyle's actions can best be characterized as legal advice").
[10] See Imbler, 424 U.S. at 427, 96 S.Ct. 984 ("[T]he genuinely wronged defendant [is] without civil redress against a prosecutor whose malicious or dishonest action deprives him of liberty.").
[11] See also Myers v. Morris, 810 F.2d 1437, 1446 (8th Cir.1987)("Other acts encompassed within the protected function of initiating a case include ... advocating a particular level of bail....") overruled on other grounds by Burns, 500 U.S. 478, 111 S.Ct. 1934, 114 L.Ed.2d 547, and cited and partially quoted with approval in Pinaud, 52 F.3d at 1149.
|
SUPPLEMENTARY INTERROGATORY RESPONSE REQUIREMENTS
FOR DEFENDANT STATE STREET BANK & TRUST COMPANY
Did SSBT consider whether any Identify the date of any meetings or other
breach of fiduciary duty claims consideration of this subject; the committee,
existed based on allegations in person(s) and/or entity participating in the
Illinois securities litigation? consideration; whether the meeting was in
person, telephonic, or otherwise; the subject
3
matter of such discussions; any conclusions
reached; all communications, if any, between
State Street and the Plans on this subject; and,
by Bates number, any documents evidencing
such consideration.
Did SSBT consider whether Plan Identify the date of any meetings at which this
had any claims arising out of those subject was considered; the committee,
allegations? person(s) and/or entity participating in the
consideration; whether the meeting was in
4
person, telephonic, or otherwise; the subject
matter of such discussions; any conclusions
reached; and, by Bates number, any documents
evidencing such consideration.
Did SSBT consider whether Plans Answer the interrogatory in its entirety.
had additional sources of recovery,
5 such as fiduciary liability
insurance, in the Illinois Securities
Litigation?
Did SSBT consider whether Plans Identify the date of any meetings or other
should seek additional recovery consideration of this subject; the committee,
for release of ERISA breach person(s) and/or entity participating in the
claims in the Illinois Securities consideration; whether the meeting was in
7 litigation? person, telephonic, or otherwise; the subject
matter of such discussions; any conclusions
reached; all communications, if any, on this
subject; and, by Bates number, any documents
evidencing such consideration.
Did SSBT release any ERISA Identify the date of any meetings or other
breach of fiduciary duty claims in consideration of this subject; whether as part
Illinois securities litigation? of the consideration the value of the released
8 claims was calculated; how the value of such
claims was calculated; the committee, persons,
and/or entity participating in such
consideration; whether meetings were in
person, telephonic, or otherwise; all
communications, if any, between State Street
and the Plans on this subject; and, by bates
number, any documents evidencing such
action or consideration.
Describe how Plan purchases were Answer the interrogatory in its entirety.
9
listed in Illinois proof of claim
Did SSBT consider whether Nothing further required.
10 participation in settlement would
result in a prohibited transaction?
Did SSBT communicate with Any supplement to the response is deferred
Department of Labor re: until the waiver of work product is resolved.
11
participation of plans in settlement
of Illinois securities litigation?
SSBT’s understanding of who was Nothing further required.
14 party responsible for protecting
interests of Plan
Did any other fiduciary approve Nothing further required.
15 actions of SSBT in connection
with Illinois securities litigation?
Did SSBT consult with counsel Nothing further required.
16
for protection of Plan?
Did SSBT consider whether any Identify the date of any meetings or other
breach of ERISA fiduciary duty consideration of this subject; the committee,
existed or should be brought in persons and/or entity participating n the
Texas Securities Litigation? consideration; whether the meeting was in
person, telephonic, or otherwise; the subject
17
matter of such discussions; any conclusions
reached; all communications, if any, between
State Street and the Plans on this subject; and,
by Bates number, any documents evidencing
such consideration.
Did SSBT consider whether Plan Identify the date of any meetings or other
had any claims and whether Plan consideration of this subject; the committee,
should initiate litigation in Texas persons and/or entity participating n the
Securities Litigation? consideration; whether the meeting was in
18
person, telephonic, or otherwise; the subject
matter of such discussions; any conclusions
reached; and, by Bates number, any documents
evidencing such consideration.
Did SSBT release any ERISA Answer the interrogatory in its entirety.
19 breach of fiduciary dury claim in
Texas Securities Litigation?
Did SSBT consider whether Plan Answer the interrogatory in its entirety.
had additional sources of relief,
20 such as fiduciary liability
insurance, in the Texas Securities
Litigation?
Did SSBT consider whether Plan Identify the date of any meetings or other
should seek additional recovery in consideration of this subject; the committee,
Texas Securities Litigation? person(s) and/or entity participating in the
consideration; whether the meeting was in
21 person, telephonic, or otherwise; the subject
matter of such discussions; any conclusions
reached; all communications, if any, on this
subject; and, by Bates number, any documents
evidencing such consideration.
Did SSBT consult with counsel Nothing further required.
22 regarding the Texas Securities
Litigation?
Describe how Plan purchases and Answer the interrogatory in its entirety.
23 sales were calculated and listed in
the Texas proof of claim
Describe the process by which the Answer the interrogatory in its entirety.
decision was made as to whether
24
Plan should participate in the
Texas Securities Litigation
State SSBT’s understanding of Nothing further required.
entity responsible for protecting
25
interests of Plan in the Texas
Securities Litigation
|
659 F.2d 1082
Sherrodv.Piedmont Aviation, Inc.
81-5019
UNITED STATES COURT OF APPEALS Sixth Circuit
5/12/81
E.D.Tenn., 516 F.Supp. 57
APPEAL DISMISSED
|
10-3365
Lin v. Sessions
BIA
Sichel, IJ
A099 427 631
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT
FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE
(WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for
the Second Circuit, held at the Thurgood Marshall United States
Courthouse, 40 Foley Square, in the City of New York, on the
3rd day of October, two thousand seventeen.
PRESENT:
JON O. NEWMAN,
DENNIS JACOBS,
PIERRE N. LEVAL,
Circuit Judges.
_____________________________________
XIA LIN,
Petitioner,
v. 10-3365
NAC
JEFFERSON B. SESSIONS III, UNITED
STATES ATTORNEY GENERAL,
Respondent.
_____________________________________
FOR PETITIONER: Theodore N. Cox, New York, New
York.
FOR RESPONDENT: Tony West, Assistant Attorney
General; Shelley R. Goad,
Assistant Director; Kristen
Giuffreda Chapman, Trial Attorney,
Office of Immigration Litigation,
United States Department of Justice,
Washington, D.C.
UPON DUE CONSIDERATION of this petition for review of two
Board of Immigration Appeals (“BIA”) decisions, it is hereby
ORDERED, ADJUDGED, AND DECREED that the petition for review is
DENIED.
Petitioner Xia Lin, a native and citizen of China, seeks
review of (1) a February 19, 2009, decision of the BIA that
reversed the January 23, 2007, decision of an Immigration Judge
(“IJ”) granting asylum, In re Xia Lin, No. A099 427 631 (B.I.A.
Feb. 19, 2009), rev’g No. A099 427 631 (Immig. Ct. N.Y. City
Jan. 23, 2007), and (2) a July 26, 2010, decision of the BIA
that denied her motion to remand, In re Xia Lin, No. A099 427
631 (B.I.A. July 26, 2010). We assume the parties’ familiarity
with the underlying facts and procedural history in this case.
As an initial matter, contrary to the Government’s
contention, we have jurisdiction to review both of the BIA’s
decisions. In Alibasic v. Mukasey, we held that the Court has
jurisdiction to review, as a final order of removal, a BIA
decision denying relief from removal and remanding solely for
consideration of voluntary departure. 547 F.3d 78, 83-84 (2d
2
10242016-11
Cir. 2008). We did not hold that an alien is required to
petition for review of such decisions at the time they are issued
rather than wait to petition until the completion of removal
proceedings on remand. See id.; see also INS v. St. Cyr, 533
U.S. 289, 313 (2001) (referring to 8 U.S.C. § 1252(b)(9) as a
“zipper clause” that provides for consolidation in one action
in the court of appeals of questions of law and fact arising
in removal proceedings).
The standards of review for both decisions are well
established. See Jian Hui Shao v. Mukasey, 546 F.3d 138,
157-58, 168-69 (2d Cir. 2008); see also Wu Lin v. Lynch, 813
F.3d 122, 129 (2d Cir. 2016). Lin applied for asylum,
withholding of removal, and relief under the Convention Against
Torture, and later moved to reopen removal proceedings,
asserting a fear of persecution based on the birth of her
children in the United States purportedly in violation of
China’s population control program.
For largely the same reasons as this Court set forth in Jian
Hui Shao, 546 F.3d at 156-73, we find no error in the BIA’s
determination on de novo review that Lin failed to satisfy her
3
10242016-11
burden of establishing an objectively reasonable well founded
fear of persecution.
For the foregoing reasons, the petition for review is
DENIED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
4
10242016-11
|
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 02-10162
FREDERICK STRONG,
Plaintiff-Appellant,
VERSUS
CITY OF DALLAS; ET AL,
Defendants,
CITY OF DALLAS; BENNIE CLICK, in his personal capacity; MICHAEL
DOERINGSFELD, in his personal capacity; DORA ALICIA SAUCEDO
FALLS, in her personal capacity; RANDY HAMPTON, in his personal
capacity,
Defendants-Appellees.
Appeal from the United States District Court
For the Northern District of Texas
(00-CV-1532)
December 11, 2002
Before JOLLY and DUHÉ, Circuit Judges, and LITTLE,* District Judge.
PER CURIAM:**
Plaintiff Frederick Strong appeals the grant of summary
judgment in favor of the defendant, the City of Dallas, in his
*
F.A. Little, Jr., Senior U.S. District Judge, Western District
of Louisiana, sitting by designation.
**
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.
Title VII and § 1983 suit for wrongful termination. Because the
district court did not abuse its discretion in excluding the
statistical evidence at issue in this appeal, we affirm the grant
of summary judgment.
I.
This Court reviews grants of summary judgment de novo. Patel
v. Midland Memorial Hospital and Medical Center, 298 F.3d 333, 339
(5th Cir. 2002). Summary judgment is appropriate if the moving
party establishes that there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
II.
Frederick Strong was employed by the City of Dallas as a
police officer. Prior to, and during his employment as a police
officer, Strong worked for and assisted his brother’s used car
sales business, which appears to have engaged in unscrupulous and
possibly fraudulent practices. After a complaint from a fellow
officer, the Public Integrity Unit commenced an investigation of
Strong. That investigation revealed ten allegations of wrongdoing
against Strong, including purchasing cars from auto auctions
without payment, selling a motor vehicle acquired by theft, passing
a forged document to obtain a certified copy of a vehicle title,
failing to submit a request to the City for outside employment,
wearing his uniform while conducting personal business and
attending a civil court proceeding, giving inconsistent statements
2
about his ownership of a vehicle, making untruthful statements
about compensation from the sale of a vehicle, and using his
position as a police officer for private gain. These acts violated
the Dallas Police Department Code of Conduct. After a disciplinary
hearing, Strong was terminated. While the United States Attorney
was investigating his actions, he filed this suit, alleging racial
discrimination. The district court granted summary judgment
because it found Strong was unable to demonstrate that the adverse
employment action was the result of racial discrimination.
Strong argues on appeal that the district court abused its
great discretion by excluding statistical evidence that had been
obtained from the Dallas Police Department’s public records
database. Strong alleges that this evidence shows black officers
were statistically more likely to be disciplined than white
officers. Evidentiary decisions by the district court are reviewed
for abuse of discretion. St. Romain v. Industrial Fabrication, 203
F.3d 376, 381 (5th Cir. 2000). The district court excluded this
evidence because it was unauthenticated under Rule 901 of the
Federal Rules of Evidence. This ruling was correct. There is no
indication of the validity or authenticity of the information
contained in the database on which the statistical analysis is
based. Further, because of the unknown validity of the underlying
data, this evidence cannot be proper summary evidence under Rule
1006 of the Federal Rules of Evidence, as Strong urges.
Accordingly, we find no abuse of discretion in the district court’s
3
exclusion of this evidence.
Even if this evidence were reliable and accepted by the
district court, Strong is unable to survive summary judgment
because this evidence is inadequate to establish that his
individual discharge was racially discriminatory. Even if he were
able to establish a prima facie case under McDonnell Douglas Corp.
v. Green, 411 U.S. 792, 802 (1973), ultimately he is unable to
demonstrate that the proffered non-discriminatory reasons for
discharge were untrue. See Wallace v. Methodist Hospital System,
271 F.3d 212, 219-220 (5th Cir. 2001). Furthermore, he has
offered no evidence that the documented reasons were somehow a
pretext for racial discrimination, a showing he must make by a
preponderance of the evidence. McDaniel v. Temple Independent
School District, 770 F.2d 1340, 1346 (5th Cir. 1985). Accordingly,
summary judgment was appropriate in this case.
III.
For the foregoing reasons the judgment of the district court
is
AFFIRMED.
4
|
217 Wis.2d 1 (1998)
576 N.W.2d 545
TARGET STORES, a division of Dayton Hudson Corporation, Petitioner-Appellant,
v.
LABOR & INDUSTRY REVIEW COMMISSION and Mary Crivello, Respondents-Respondents.
No. 97-1253.
Court of Appeals of Wisconsin.
Submitted on briefs December 16, 1997.
Decided January 8, 1998.
*3 On behalf of the petitioner-appellant, the cause was submitted on the briefs of John M. Loomis and Katherine L. Williams of Beck, Chaet, Loomis, Molony & Bamberger, S.C. of Milwaukee.
On behalf of the respondent-respondent, Labor and Industry Review Commission, the cause was submitted on the brief of James E. Doyle, attorney general, and David C. Rice, assistant attorney general.
On behalf of the respondent-respondent, Mary Crivello, the cause was submitted on the brief of Christe L. McKittrick of McKittrick Law Office of Evansville.
Before Dykman, P.J., Vergeront and Deininger, JJ.
VERGERONT, J.
Target Stores appeals from an order affirming the decision of the Labor and Industry Review Commission (LIRC) that Target violated the Wisconsin Fair Employment Act (WFEA) by unreasonably refusing to accommodate the handicap of Mary Crivello. Target contends that LIRC's finding that Target was in a position to know what accommodation Crivello needed is unsupported by substantial evidence and that LIRC erroneously interpreted § 111.34(1)(b), STATS.,[1] in reaching its conclusion that Target had *4 unreasonably refused to accommodate Crivello's handicap. We hold that LIRC's findings are supported by substantial evidence and that LIRC properly interpreted § 111.34(1)(b). We therefore affirm.
BACKGROUND
We take our factual summary from the findings of the Administrative Law Judge (ALJ), which were adopted by LIRC.[2] Crivello began her employment at a Target store in 1979 as a cashier and subsequently became a cash counter. Her duties included counting money from the cash registers of twenty-two Target stores and recording these, encoding the checks, balancing the money against cash register receipts and preparing bank deposits. Her work hours were from 7:30 a.m. until 3:00 p.m., but she sometimes stayed as late as 4:00 p.m. if the workload or the number of interruptions during the day demanded it. She performed her duties alone, in the cash office, which, for security purposes, was locked from the outside. She was monitored by a video camera and, unaware to Crivello, the cash office could also observe her through a security blind.
*5 In August 1990, Crivello received a Phase I disciplinary warning for the minor offense of "loafing"sleeping on the job.[3] She had no recollection of dozing off and assumed a cough medicine she was taking caused the drowsiness. On March 4, 1992, Crivello received another Phase I warning for "loafing" because she was observed dozing off while on the job. She stated that she had no recollection of sleeping on the job. Management suggested she see a doctor and she did, making an appointment with her family physician for March 10. After performing examinations and tests, he referred her on March 17 to a pulmonary specialist, Dr. Schachter, to be tested for a sleeping disorder.
On March 25, 1992, Crivello received a Phase II warning for dozing off on the job again. This occurred while she was waiting to see Dr. Schachter since his first available appointment was April 10. When Target gave her this warning, management made suggestions how Crivello might resolve the sleeping problem, such as by getting out of the cash office more often during her breaks, taking a leave of absence, or working in *6 another position such as head cashier. Crivello responded that she liked her job and did not want to change anything.
After some tests, Dr. Schachter diagnosed Crivello as having obstructive sleep apnea and advised her of this shortly after April 14. Sleep apnea, frequently caused by obesity, is marked by an obstruction of the upper airway that interferes with sleeping at night and causes the individual to uncontrollably doze off during the day. Dr. Schachter decided to first treat Crivello with a nasal inhaler and antihistamine to rule out hay fever as a cause. He told her that if that did not resolve the problem within one month, he would put her on a nasal CPAP, a mask worn at night, connected to a machine.[4] According to Dr. Schachter, the majority of patients who use this device find relief from their symptoms, and, if it works, it works by the next morning.
Shortly after Crivello met with Dr. Schachter, she told Target of the diagnosis. She explained she was on the inhaler and if that did not work, she would be put on the nasal CPAP machine. Target requested verification. On May 1, Crivello provided Kelly Moriarity, personnel manager, with a copy of the April 27, 1992 letter Dr. Schachter wrote to Crivello's family physician. This letter explained the diagnosis, opining that the most likely cause was Crivello's obesity; that he was treating her with antihistamines and nasal steroids to make sure that the nasal obstruction was not precipitating the obstructive sleep apnea; that if her condition did not improve he would be happy to see her again and would place her on the nasal CPAP; and that *7 he had advised her to lose weight. Crivello told Moriarity that if she needed more information, she could call Dr. Schachter directly. Moriarity asked Crivello to explain sleep apnea to her and asked whether she had any work restrictions or whether there was anything Target could do for her at work. Crivello said there was not. Target personnel testified that they did not call Dr. Schachter because there were no work restrictions in the letter, which is what normally prompts a call to the treating physician.
Crivello's annual performance evaluation conducted on April 19, 1992, was overall satisfactory, the same rating she received the previous year. The evaluation indicated there were some encoding errors that could be eliminated if she "makes an attempt to treat her job as a new challenge daily," but that was not attributed to dozing off on the job. The evaluation indicated she was "doing much better with leaving by 3 p.m."
Crivello began using the inhaler but with no results. On May 24, 1992, Crivello was again observed dozing off on the job. After a management team meeting, Target decided to terminate her employment. According to Sue Running, assistant store manager, the team considered Dr. Schachter's letter and that there was another treatment option that Crivello had not yet tried as "mitigating circumstances," but decided to terminate her employment nonetheless.
In July 1992, Crivello began using the nasal CPAP machine and, as a result, her hyper somnolence virtually disappeared. Soon after, Crivello filed a complaint with the Equal Rights Division (ERD) claiming that Target discriminated against her because of her handicap, sleep apnea. After an initial finding of probable cause, a hearing before the ALJ resulted in a decision *8 that Crivello was unable to perform her job without reasonable accommodation and that Target offered her reasonable accommodation, which Crivello declined. LIRC accepted the ALJ's finding of fact but reversed the decision, concluding that Target had refused to reasonably accommodate Crivello's handicap. Target sought judicial review of that decision and the circuit court vacated and remanded it for further consideration by LIRC, concluding that LIRC had impermissibly considered whether Target could have accommodated Crivello, instead of whether Target refused to accommodate her.
Upon remand, LIRC again concluded that Target had refused to reasonably accommodate Crivello's handicap. LIRC found that Target knew about Crivello's handicap, was aware of how it affected her job performance, knew that her sleeping on the job was beyond her control and knew that she was undergoing treatment for it. Under these circumstances, LIRC concluded the specific accommodation that Crivello needed was "clemency and forbearance"that Target refrain from firing her for "loafing" the next time it spotted her dozing off.
LIRC decided that Target's failure to do that, but instead to fire her for "loafing" on the very next occasion she was spotted dozing off, constituted a refusal to provide a reasonable accommodation. LIRC explained that it interpreted "refusal" in § 111.34(1)(b), STATS., to not necessarily require that the employee first make a request or suggestion; rather "refusal" meant that the employer declined to do something either requested or required by law. LIRC also decided that the accommodation of permitting the status quo to continue on what would, in all likelihood be a short-term basis given that she was actively undergoing treatment *9 would not have posed an undue hardship on Target.
LIRC's decision was affirmed by the circuit court, and this appeal followed.
DISCUSSION
[1,2]
The complainant in a handicap discrimination case must show that: (1) he or she is handicapped within the meaning of the WFEA,[5] and that (2) the employer took one of the enumerated actions[6] on the basis of handicap. See Racine Unified School Dist. v. LIRC, 164 Wis. 2d 567, 594, 476 N.W.2d 707, 717 (Ct. App. 1991). The employer then has the burden of proving a defense under § 111.34, STATS. See id. Under § 111.34(2)(a) it is not a violation of the WFEA to take an employment action based on an individual's handicap "if the handicap is reasonably related to the individual's ability to adequately undertake the job-related responsibilities of that individual's employment. *10 ...." However, if an employer refuses to reasonably accommodate an employee's (or prospective employee's) handicap and is unable to demonstrate that the accommodation would pose a hardship, then the employer violates the WFEA. Section 111.34(1)(b). Reading the two paragraphs of § 111.34 together, once the employee has met the first two showings, the employer must show either that a reasonable accommodation would impose a hardship§ 111.34(1)(b), or that, even with a reasonable accommodation, the employee cannot "adequately undertake the job-related responsibilities"§ 111.34(2)(a).
The parties do not dispute that, because of Crivello's sleep apnea, she is handicapped within the meaning of the WFEA; and Target does not challenge LIRC's conclusion that Crivello was discharged for sporadically dozing off on the job, that this dozing off was a direct result of her sleep apnea, and that her termination therefore was based on her handicap. Target's challenge to LIRC's decision concerns whether Target has met its burden to demonstrate a defense under § 111.34, STATS.
Target argues that LIRC erred on a number of grounds in concluding that Target refused to reasonably accommodate Crivello. Target first challenges LIRC's factual finding that Crivello provided Target with the information necessary for Target to recognize that she needed the accommodation of "clemency and forbearance," that is, that she needed Target to refrain from firing her the next time she dozed off on the job. Target contends that this finding is not supported by substantial evidence, as required by § 227.57(6), STATS., because Crivello made no suggestions about accommodations, Dr. Schachter's letter placed no work *11 restrictions on Crivello, and Dr. Schachter's letter did not provide sufficient information.[7]
[3,4]
Our scope of review is identical to that of the trial court and we review the decision of LIRC, not that of the trial court. Racine Unified School Dist., 164 Wis. 2d at 583, 476 N.W.2d at 713. We affirm LIRC's findings of fact if they are supported by substantial evidence. Hamilton v. ILHR Dept., 94 Wis. 2d 611, 617, 288 N.W.2d 857, 860 (1980). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Id. It is not required that the evidence be subject to no other reasonable, equally plausible interpretations. Id. An agency's finding will not be overturned because it is against the great weight and clear preponderance of the evidence. Id. Rather, the agency's decision may be set aside by a reviewing court only when, upon an examination of the entire record, the evidence, including the inferences therefrom, is found to be such that a reasonable person, acting reasonably, could not have reached the decision from the evidence and its inferences. Id. at 618, 288 N.W.2d at 860.
Applying this standard of review, we conclude that the challenged finding is supported by substantial evidence. Target emphasizes that it, not Crivello, took the initiative in referring her to a doctor and suggesting accommodations at the time of the Phase I warning; and that Target had to ask Crivello for a medical statement when Crivello told them the diagnosis. However, *12 the critical evidence from LIRC's standpoint was the letter from Dr. Schachter which Crivello provided Target. That letter reasonably supports a conclusion that Target knew, before it fired Crivello for the May 24 dozing episode, that the cause of Crivello dozing on the job was the sleep apnea; that Crivello was being treated for this condition by medication; and that if the medication did not work, another treatment option was available.
Evidence that Crivello went to the doctor immediately upon Target's suggestion to learn the cause of her falling asleep at work; that she promptly informed Target of the diagnosis when she learned of it; and that she promptly provided Target with Dr. Schachter's letter upon request and told Target that it could contact her doctor for more information, reasonably support a determination that Crivello did this to avoid further disciplinary action for dozing off and that this was or should have been apparent to Target. LIRC could reasonably interpret Crivello's statement that there were no work restrictions and that there was nothing Target could do for her at work, not as a statement that she did not need an accommodation in the form of not being fired for dozing off while she was being treated, but rather as a statement that no device in the workplace or change in her duties would keep her from dozing at work.
Target next challenges LIRC's conclusions that neither its suggestions to Crivello at the time of the Phase II warning nor Moriarity's inquiry on May 1 whether there was anything Target could do at work were offers of reasonable accommodations. Target characterizes this as an erroneous interpretation of "reasonable accommodation" under § 111.34(1)(b), STATS.
*13 We give LIRC's interpretation of a statute varying degrees of deference depending on its obligations with respect to administering the statute, its experience in doing so, and the nature of the determinations. See Kannenberg v. DILHR, 213 Wis. 2d 373, 571 N.W.2d 165 (Ct. App. 1997). We conclude that we should give great weight to LIRC's interpretation of reasonable accommodation under the statute. First, LIRC is charged with adjudicating appeals from the hearing examiner's decision on complaints under the WFEA, § 111.39(5), STATS., which includes complaints under § 111.322, STATS., for handicap discrimination. Second, § 111.34(1), STATS., was enacted in 1981[8] and LIRC has developed experience and expertise in interpreting this section. See, e.g., Janocik v. Herser Chevrolet (LIRC, November 21, 1994); Copus v. Village of Viola (LIRC, December 10, 1987); Owen v. Am Packaging Co. (LIRC, February 1, 1991). Third, by according great deference to these determinations, we will promote greater uniformity and consistency than if we did not do so. Fourth, this determination is intertwined with factual determinations, see McMullen v. LIRC, 148 Wis. 2d 270, 276, 434 N.W.2d 830, 833 (Ct. App. 1988) (what is reasonable accommodation depends on the facts in each case). Fifth, this determination involves value and policy judgments about the obligations of employers and employees when an employee, or prospective employee, has a handicap. See Kannenberg, 213 Wis. 2d at 385, 571 N.W.2d at 171.
[5]
Under the great weight standard of review, we uphold LIRC's interpretation of the statute if it is reasonable and not contrary to the clear meaning of the *14 statute, even if we conclude that another interpretation is more reasonable. Kannenberg, 213 Wis. 2d at 385, 571 N.W.2d at 171-72. Applying this standard, we hold that LIRC's conclusion that neither Target's suggestions at the Phase II meeting nor its May 1 inquiry satisfied Target's obligation under § 111.34(1)(b), STATS., is based on a reasonable interpretation of the statute. This conclusion is also supported by substantial evidence.
LIRC concluded that Target's suggestions at the Phase II meetingthat Crivello might want to consider a different schedule, transfer to a different department, or take a leave of absencedid not fulfill Target's obligations because at the time Crivello had not been diagnosed as having sleep apnea. Target was unaware that she had a handicap that required accommodation and Target did not have a reason to believe that any of these suggestions would resolve the sleeping problem. In addition, Target did not reiterate its offer of a leave of absence after it learned of her medical condition.
We do not understand LIRC to be holding, as Target claims, that an employer never has a duty to accommodate under § 111.34(1)(b), STATS., until there is a precise medical diagnosis of the handicap. Rather, LIRC's conclusion is that, given the information that Target (and Crivello) acquired after the Phase II meeting, Target's decision to fire Crivello a couple of weeks later for sleeping at work, without either renewing the offer for a leave of absence or waiting to see if the treatment worked, constituted a refusal to reasonably accommodate in spite of the earlier suggestions.
Target is, in effect, arguing that § 111.34(1)(a), STATS., should be interpreted such that once the suggestions were made and not accepted, regardless of *15 how little was known then by either party or how much was later learned, Target had met its obligation. While this may be a reasonable interpretation of the statute, LIRC's interpretation is also reasonable. LIRC's interpretation considers the employer's obligation not as a static one, but as one very much affected by the information it has, which may change. This is not contrary to the words of the statute. It is reasonable. And, as we mentioned, LIRC's finding concerning the information Target had is supported by the record.
We reach the same conclusion concerning LIRC's decision that the May 1 inquiry did not satisfy Target's obligation, and for similar reasons. On that date, after receiving Dr. Schachter's letter, Moriarity asked Crivello whether there was anything management could do for her at work. She answered no. LIRC concluded this did not constitute a reasonable offer of accommodation, because, given the information Target had, it knew that there was not some type of device or other change at work that would prevent Crivello from dozing off. Therefore, LIRC concluded, this inquiry did not satisfy Target's statutory obligation and Crivello's answer (that there was nothing Target could do for her at work) was not a failure to accept an accommodation. Again, LIRC is interpreting the employer's obligation in light of the information that the employer had, and this is a reasonable construction and application of the statute.
Target also contends that LIRC erred in interpreting § 111.34(1)(b), STATS., because, as a matter of law, "clemency and forbearance" are not reasonable accommodations within the meaning of that statute. Target contends that this accommodationrefraining from enforcing the loafing policy for a while to see how the treatment workswould not have allowed Crivello to *16 perform "the essential functions of her job," which Target defines as the responsibility to stay awake on the job. Target emphasizes that LIRC's discussion on this point is internally inconsistent because LIRC initially stated that staying awake was a job responsibility that Crivello was unable to meet because of her sleep apnea, and then later LIRC decided that "clemency and forbearance" were reasonable accommodations and did not pose a hardship for Target because Crivello was able to perform the essential functions of her jobmaintaining an accurate daily count of the respondent's cash and assuring the cash was properly counted so that bank deposits could be made. We agree with Target that LIRC's decision insofar as it concerns the relationship between § 111.34(1)(b) and (2)(a) could be clearer.[9] However, we do not agree with Target that *17 forbearance while Crivello was being treated is not, as a matter of law, a reasonable accommodation under § 111.34(1)(b).
No precedential decision has addressed the relationship between § 111.34(1)(b) and (2)(a), STATS.[10] The defense under § 111.34(2)(a)that the handicap is reasonably related to the employee's ability to adequately undertake the job-related responsibilitieswas contained in the statute from the beginning of the inclusion of handicap as a prohibited ground for discrimination.[11] The duty to accommodate was recently added, but without expressly stating the relationship to the existing defense.[12] When read together, the only reasonable construction of these two provisions is that the purpose of reasonable accommodation is to enable employees to adequately undertake job-related responsibilities.
LIRC's conclusion that "forbearance and clemency" while Crivello was receiving treatment were *18 reasonable accommodations (and its comment that a leave of absence for treatment might also have been a reasonable accommodation once Target learned that Crivello had sleep apnea and was being treated for it) is based on its finding that Crivello was undergoing treatment (the inhaler), had another treatment option (the nasal CPAP machine) and that Target had this information. We have mentioned that these findings are supported by substantial evidence. LIRC's decision that this is a reasonable accommodation is also based on its finding that the accommodation would, in all likelihood, be necessary only on a short-term basis. This also is supported by substantial evidence in the record. LIRC's conclusion, then, is that forbearance is a reasonable accommodation on a temporary basis while Crivello is undergoing treatment.
Target's argument, as we understand it, is that it is never a reasonable accommodation to temporarily "forbear," that is, temporarily refrain from enforcing a disciplinary rule, even when the employee is satisfactorily performing the essential functions of her job and is undergoing treatment to address the handicapping condition. The essence of Target's position is that an accommodation is reasonable only if it will immediately remove the difficulty in performing job-related responsibilities caused by the handicap.
Applying the great weight standard in reviewing LIRC's interpretation of the statute on this point, we conclude that its interpretation is reasonable. We have held that "reasonable accommodation" in § 111.34(1)(b), STATS., should be interpreted broadly. McMullen, 148 Wis. 2d at 276, 434 N.W.2d at 833. Nothing in the statutory language indicates that a reasonable accommodation must immediately remove the difficulty caused by the hardship. Numerous courts in *19 other jurisdictions applying similar federal and state laws prohibiting handicap discrimination in employment have concluded that granting an employee a leave of absence to pursue medical treatment is a "reasonable accommodation." See, e.g., Fuller v. Frank, 916 F.2d 558, 561-63 (9th Cir. 1990); Kimbro v. Atlantic Richfield Co., 889 F.2d 869, 877-79 (9th Cir. 1989); Rodgers v. Lehman, 869 F.2d 253, 258-59 (4th Cir. 1989); Schmidt v. Safeway, Inc., 864 F. Supp. 991, 996-97 (D. Or. 1994); Gallagher v. Catto, 778 F. Supp. 570, 577-78 (D.D.C. 1991); McElrath v. Kemp, 714 F. Supp. 23, 28 (D.D.C. 1989); Callicotte v. Carlucci, 698 F. Supp. 944, 949-50 (D.D.C. 1988).
We recognize that neither this court nor LIRC is bound by these cases in interpreting § 111.34(1)(b), STATS. See McMullen, 148 Wis. 2d at 275-76, 434 N.W.2d at 833. However, they are persuasive indications that LIRC's interpretation of "reasonable accommodation" to include forbearing from enforcing the loafing rule while Crivello is undergoing treatment is reasonable. Like a leave of absence, forbearance from enforcing the loafing rule is a temporary accommodation to permit medical treatment which, if successful, will remove the difficulty in performing the job-related responsibility. Whether either is a reasonable accommodation in a given case will depend on the facts and circumstances of that case. See id. at 277, 434 N.W.2d at 834.
LIRC's conclusion that the forbearance was a reasonable accommodation in this case is based on several findings, all supported by substantial evidence: Crivello started the inhaler treatment; there was a reasonably short time frame required to see if it would work; if it did not, another treatment option would likely resolve the symptoms at once. In addition, LIRC *20 found that Crivello was able to perform the essential functions of her job even with the sleep apnea. There is substantial evidence to support this finding because of her April 1992 performance evaluation, which was overall satisfactory.
We reject Target's argument that only in hindsight can anyone say the forbearance would have been temporary. Target fired Crivello without asking for information on how long the inhaler treatment would be tried before trying the nasal CPAP machine and how long that machine might take to produce results. Had Target asked, the information provided would have been that, in all likelihood, the accommodation would have been necessary only on a short-term basis. Because Target fired Crivello within less than four weeks of when she began treatment, we are not faced with the question of how long a forbearance is reasonable.
[6]
In summary, we conclude that LIRC's decision that temporary forbearance of enforcement of the loafing rule while Crivello was undergoing medical treatment is based on a reasonable interpretation of the statute and is supported by substantial evidence.[13]*21 By the Court.Order affirmed.
NOTES
[1] Section 111.34(1)(b), STATS., provides:
Handicap; exceptions and special cases.
(1) Employment discrimination because of handicap includes, but is not limited to:
....
(b) Refusing to reasonably accommodate an employe's or prospective employe's handicap unless the employer can demonstrate that the accommodation would pose a hardship on the employer's program, enterprise or business.
[2] Crivello argues that some of the ALJ's findings were unsupported by the record, but that LIRC did not address this argument because it was unnecessary to its decision. We do not do so, either, because it is unnecessary to our decision.
[3] The Target Policy and Procedure Manual provides that "loafing" is a minor offense subject to progressive discipline. By definition "loafing" includes sleeping on the job, reading for personal pleasure and making personal telephone calls. The first step in this progressive discipline is the Phase I Warning Notice. A repetition of the conduct within thirty days from the issuance of the Phase I Warning Notice generally results in the issuance of a Phase II Warning Notice. If an employee repeats the conduct within a six-month period following the issuance of the Phase II Warning, his/her employment is terminated. In this case, since there was no repetition of the conduct within six months of August, 1990, the next episodein March 1992resulted in another Phase I warning.
[4] A nasal CPAP (Continuous Positive Airway Pressure) is a device that a person wears while sleeping to open the airways so that the person can breathe.
[5] Section 111.32(8), STATS., defines handicapped individual as:
(8) "Handicapped individual" means an individual who:
(a) Has a physical or mental impairment which makes achievement unusually difficult or limits the capacity to work;
(b) Has a record of such an impairment; or
(c) Is perceived as having such an impairment.
[6] Section 111.322(1), STATS., provides:
Subject to ss. 111.33 to 111.36, it is an act of employment discrimination to do any of the following:
(1) To refuse to hire, employ, admit or license any individual, to bar or terminate from employment or labor organization membership any individual, or to discriminate against any individual in promotion, compensation or in terms, conditions or privileges of employment or labor organization membership because of any basis enumerated in s. 111.321.
[7] We do not understand Target to be challenging LIRC's legal conclusions that the Wisconsin Fair Employment Act imposes a duty of accommodation on the employer if the employer has the necessary information, even if the employee does not make a specific request for accommodation.
[8] Laws of 1981, ch. 334, § 17.
[9] Part of the confusion stems from the fact that LIRC used the term "essential function of the complainant's job" when it decided whether the accommodation would be a hardship for Target. This is a term from the federal Americans with Disabilities Act, 42 U.S.C. § 12112. Under that statute, discrimination is defined as not making a reasonable accommodation to the known physical or mental limitations of an "otherwise qualified individual with a disability," unless the employer can demonstrate that the accommodation would impose an undue hardship. 42 U.S.C. § 12112(b)(5)(A). A "qualified individual with a disability" is defined as one who can, with or without reasonable accommodation, perform the "essential functions" of his or her position. 42 U.S.C. § 12112(8). The requirement of being able to perform the essential functions of the job under the ADA operates similarly to the provision in § 111.34(2)(a), STATS., that it is not discrimination based on handicap "if the handicap is reasonably related to the individual's ability to adequately undertake the job responsibilities." However, we do not understand LIRC to be importing the federal test of ability to perform the essential job functions into § 111.34(2)(a). Rather, we understand LIRC to have used the term, "perform the essential functions of the job" without reference to the federal statute, simply as a way of describing Crivello's performance level in the context of deciding whether it would be a hardship on Target to permit her to continue performing at the level she was, while she was being treated.
[10] The concurrence in McMullen v. LIRC, 148 Wis. 2d 270, 277, 434 N.W.2d 830, 833 (Ct. App. 1988), does discuss the relationship between § 111.34(1)(b) and (2)(a), STATS., in the context of deciding whether a reasonable accommodation could include a transfer to another position. However, the majority decision addresses only § 111.34(1)(b), not § 111.34(2)(a).
[11] See Laws of 1965, ch. 230, §§ 1, 2, 3.
[12] Section 111.34(1), STATS., was enacted by Laws of 1981, ch. 334, § 17. Section 111.34(2)(a) was formerly § 111.32(5)(f), STATS., Laws of 1981, ch. 334, § 7, deleted § 111.32(5)(f) and created § 111.34(2)(a).
[13] Target lists another issue in its statement of issueswhether Wisconsin should adopt the federal approach under the ADA and require an "interactive process" between the employer and the employee in determining a reasonable accommodation under § 111.34(1)(b), STATS. However, Target does not address this issue in its argument. Therefore we do not address it in our opinion. We observe that LIRC did not refer to federal cases or to the ADA in discussing the respective obligations of the employer and the employee in the context of reasonable accommodation.
|
70 B.R. 181 (1986)
In re Charles T. and Betty H. BERNARD, Debtors.
Bankruptcy No. JO 85-151M.
United States Bankruptcy Court, E.D. Arkansas, Jonesboro Division.
November 5, 1986.
Ben F. Arnold, James G. Dowden, Little Rock, Ark., for debtors.
Ralph W. Waddell, Jonesboro, Ark., for Federal Land Bank.
Stephen M. Reasoner, Jonesboro, Ark., for Federal Land Bank.
MEMORANDUM OPINION
JAMES G. MIXON, Bankruptcy Judge.
On March 4, 1986, Charles T. Bernard and Betty H. Bernard (debtors) filed their amended plan of reorganization. A confirmation hearing was held in Jonesboro, Arkansas, on the 22nd day of April 1986. The Federal Land Bank of St. Louis (Land Bank), which is a class III secured creditor, filed a written objection to confirmation and also voted to reject the plan. All other classes of creditors voted to accept the plan of reorganization which proposes to pay all creditors in full.
For a plan of reorganization under chapter 11 to be confirmed, the requirements of 11 U.S.C. § 1129 must be met. This section has eleven prerequisites for confirmation and all must be met except 11 U.S.C. § 1129(a)(8) which provides that each class must accept the plan or be unimpaired. A plan may still be confirmed over the dissent of one or more classes of impaired claims if the plan satisfies all other requirements of 11 U.S.C. § 1129(a) and the cramdown standards set forth in 11 U.S.C. § 1129(b).
In addition to the consideration of objections raised by creditors, the Court has a mandatory independent duty to determine whether the plan has met all of the requirements necessary for confirmation. In re Coastal Equities, Inc., 33 B.R. 898 *182 (Bkrtcy.S.D.Cal.1983); Matter of Nikron, Inc., 27 B.R. 773 (Bkrtcy.E.D.Mich.1983); In re Maxim Industries, Inc., 22 B.R. 611 (Bkrtcy.D.Mass.1982); In re Economy Cast Stone Co., 16 B.R. 647 (Bkrtcy.E.D. Va.1981).
The reorganization plan treats the claim of the Land Bank under article III, page 7, paragraph 3.02 as follows:
This secured creditor holds a promissory note executed by Debtors dated March 26, 1981, secured by (a) a first mortgage from Debtors to The Federal Land Bank of St. Louis of even date and recorded on April 9, 1981, in Book 91 at Page 245 in the Recorder's Office of Sharp County, Arkansas; (b) an assignment of rents from Debtors to The Federal Land Bank of St. Louis dated May 27, 1983, and (c) a claimed first lien security interest under 12 U.S.C. § 2054 in stock in The Federal Land Bank of St. Louis owned and held by Debtors in the amount of $12,500.00. The aforementioned promissory note was in the principal amount of $250,000.00 as to principal and bore an original interest rate of 11¾% per annum. The interest rate, however, is variable. The approximate principal and interest balance due under the promissory note is $293,235.78 as of October 30, 1985, plus interest from said date at the rate of $92.24488 per day (subject to increase at the next installment date and in the event advances were made pursuant to claimant's mortgage), attorney's fees, and costs. It is anticipated that the unpaid balance of this secured claim as of January 21, 1986, will be approximately $300,000. The amount of real estate securing this loan is approximately 1,700 acres situated in Sharp County, Arkansas. The real estate consists primarily of fenced pasture land and forest land. There are also a residential structure and storage shed on the mortgaged property. Debtors propose to pay this secured claim in full by listing for sale approximately 450 acres of said real estate more particularly described in Exhibit "A" attached hereto with the net sale proceeds at closing to be paid to The Federal Land Bank of St. Louis. The listing price for said 450 acres is $300.00 per acre pursuant to a real estate contract between Debtors and [C]entury 21 Rich Wood Realty, Highway 167, Ash Flat, Arkansas, which listing agreement will expire by its terms on May 2, 1986. The date of the real estate listing contract is November 2, 1985. If the property is sold on or before May 2, 1986, the net sale proceeds after the commission and closing costs will be paid to the Federal Land Bank of St. Louis. Provided the property is not sold pursuant to the real estate listing contract by May 2, 1986 (the expiration date), Debtors will convey by warranty deed to The Federal Land Bank of St. Louis the 450 acres of real estate for credit against the secured claim of this creditor at a price of $225.00 per acre (total credit of approximately $101,250.00), which valuation is based on and supported by an appraisal recently made by Debtors' appointed appraiser, Rhona Weaver, and introduced into the record of an October 21, 1985, hearing on a complaint for relief from the stay filed by The Federal Land Bank of St. Louis. Pursuant to the terms of a written escrow agreement to be executed on the Effective Date of the Plan by Debtors, Federal Land Bank of St. Louis, and Odell Pollard, a warranty deed to the remaining 444.09 acres will be placed in escrow and there held by the escrow agent for the benefit of the Federal Land Bank of St. Louis to be conveyed by the escrow agent to the Federal Land Bank of St. Louis after January 1, 1987. After January 1, 1987, Debtors will transfer or cause to be transferred by the escrow agent title to the remaining 444.09 acres to the Federal Land Bank of St. Louis for an additional credit of approximately $108,802.05 (depending on the exact appraised value of said lands at the confirmation date) or, at their option, will resume making payments under the existing loan arrangement. The new loan balance will continue to be secured by a first mortgage on the remaining acres in Sharp County, *183 Arkansas. The reason for utilizing the escrow arrangement as a method of conveyance of the 444.09 acres is to delay the realization of anticipated substantial capital gains taxes which likely will be generated by these transaction. In addition, on the Effective Date of the Plan, Debtors will surrender to this secured creditor for immediate credit their stock interest in The Federal Land Bank of St. Louis, which stock has a value of not less than $12,500.00. Therefore, after these transactions are consummated, Debtors will be entitled to a credit of at least $2244000.00 [sic] against the total balance due of principal and accrued interest which amounts to approximately $300,000.00 as of January 21, 1986. The consummation of the aforementioned transactions will bring all delinquencies current, will reinstate the loan on a current basis, and will cure any defaults. For purposes of 11 U.S.C. § 1124, this secured creditor is deemed unimpaired under the Plan since its secured claim will be fully paid as aforementioned, all defaults which existed either pre-petition or post-petition will be cured, all arrearages paid current, and future payments under the existing note and mortgage will be made as they become due thereunder. An adversary proceeding will be filed to collect all past due rents due Debtors from the tenant on said property.
The plan also describes the treatment of Land Bank's claim at page 22, paragraph 6.03:
The Class III secured claim of The Federal Land Bank of St. Louis, which is secured by a first mortgage on 1,700 acres of pasture land and woodlands owned by Debtors in Sharp County, Arkansas, an assignment of rents, Debtors' stock interest in The Federal Land Bank of St. Louis, and perhaps other security will be paid and satisfied in full by:
(a) The sale of 450 acres at $300.00 per acre pursuant to a real estate contract by Debtors and Century 21 Richwood Realty. If said 450 acres, more particularly described in Exhibit "A" attached hereto and incorporated herein as if set out word for word, is not sold by May 2, 1986, that 450 acres will be conveyed immediately thereafter by warranty deed to the Federal Land Bank of St. Louis. In that event, the balance due the Federal Land Bank of St. Louis will be credited at a value of approximately $225.00 per acre, or a total credit of $101,250.00;
(b) Surrender by Debtors on the Effective Date of the Plan to the Federal Land Bank of St. Louis of Debtors' stock therein having a value of $12,500.00 for an immediate loan credit in that amount; and
(c) A warranty deed to the remaining 444.09 acres will be placed in escrow under a written escrow agreement for the benefit of the Federal Land Bank of St. Louis to be conveyed to the Federal Land Bank of St. Louis by the escrow agent after January 1, 1987. The reason for utilizing this method of conveyance is to delay the likely realization of substantial capital gains taxes which will probably be generated by these transactions. In January of 1987, at their sole option, Debtors will resume payments under the existing note as reduced herein by certain credits or will transfer, or cause to be transferred by warranty deed form escrow title to the 444.09 acres to the Federal Land Bank of St. Louis for additional credit at the rate of $245.00 per acre or $108,802.05 (depending on exact appraised value of said lands at confirmation date). The new loan balance will be paid in fifteen (15) equal annual installments of principal and interest beginning January 1, 1987, with an appropriate interest rate to be determined by the Bankruptcy Court on the Confirmation Date of the Plan equal to the then-prevailing market rate of interest for a similar agricultural type loan unless Debtors and the Federal Land Bank of St. Louis can agree on the interest rate provided for in the existing note as being variable. The new loan balance will continue to be secured by a first mortgage *184 on the remaining acres in Sharp County, Arkansas.
The existing second mortgage of Class XIV secured creditor, Odell Pollard, will be paid in the manner above set forth in Article IV. The amount of this unpaid secured obligation, past due since 1981, is approximately $9,366.84.
I
THE CLAIM OF LAND BANK IS IMPAIRED
The debtors assert that the claim of the Land Bank is unimpaired by the terms of the plan and, therefore, this creditor is deemed to have accepted the plan. 11 U.S.C. § 1124 provides the following criteria for determining whether a claim is unimpaired:
Except as provided in section 1123(a)(4) of this title, a class of claims or interests is impaired under a plan unless, with respect to each claim or interest of such class, the plan
(1) leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder of such claim or interest;
(2) notwithstanding any contractual provision or applicable law that entitles the holder of such claim or interest to demand or receive accelerated payment of such claim or interest after the occurrence of a default
(A) cures any such default that occurred before or after the commencement of the case under this title, other than a default of a kind specified in section 365(b)(2) of this title;
(B) reinstates the maturity of such claim or interest as such maturity existed before such default;
(C) compensates the holder of such claim or interest for any damages incurred as a result of any reasonable reliance by such holder on such contractual provision or such applicable law; and
(D) does not otherwise alter the legal, equitable, or contractual rights to which such claim or interest entitles the holder of such claim or interest; or
(3) provides that, on the effective date of the plan, the holder of such claim or interest receives, on account of such claim or interest, cash equal to
(A) with respect to a claim, the allowed amount of such claim; or
(B) with respect to an interest, if applicable, the greater of
(i) any fixed liquidation preference to which the terms of any security representing such interest entitle the holder of such interest; or
(ii) any fixed price at which the debtor, under the terms of such security, may redeem such security from such holder.
Cases construing 11 U.S.C. § 1124 hold that the plan must propose to cure the arrearage on or before its effective date and not otherwise alter the legal rights of the creditor in order for the claim to be deemed not impaired. In re Otero Mills, Inc., 31 B.R. 185 (Bkrtcy.D.N.M.1983); In re Jones, 32 B.R. 951 (Bkrtcy.D.Utah 1983); In re Rolling Green Country Club, 26 B.R. 729 (Bkrtcy.D.Minn.1982).
This plan does not meet the requirements of 11 U.S.C. § 1124. The prepetition rights which Land Bank held were generally the right to be paid in cash plus interest in monthly installments of $32,946.57 with the final payment being made January 1, 2001, and the right to be secured by a first lien on 1,700 acres which the Land Bank could foreclose and sell to satisfy the claim in the event of a default by the debtors.
The plan proposes to sell 450 acres of Land Bank's collateral and use the proceeds from the sale to cure the arrearage. In the alternative, the debtors will deed the 450 acres to Land Bank if this property is not sold by May 2, 1986, and a credit of $101,250.00 will be given the debtors if this property is deeded to Land Bank. The plan also proposes to execute a warranty deed to 444.09 acres and place it in escrow with instructions that delivery of the deed is to be made to Land Bank after January 1, 1987, for an additional credit of $108,802.05 *185 or, at the debtors' option, the debtors will, at a time not specified by the plan, commence making payments in an amount equal to the existing loan agreement with the Land Bank. The plan states that Land Bank will hold as security a first mortgage on the remaining acres in Sharp County, Arkansas. The debtors also propose to convey Land Bank's patronage stock back to Land Bank for a credit of $12,500.00. The balance remaining after these conveyances is proposed to be repaid in fifteen equal annual installments of principal and interest beginning January 1, 1987, with the interest rate to be determined by the Court at the current market rate.
Since the proposed plan alters the prepetition legal rights of Land Bank, the claim of the Land Bank is impaired. If the plan is to be confirmed, it must meet the requirements of 11 U.S.C. § 1129(b).
II
CRAMDOWN
The debtors argue alternatively that the plan may be confirmed under the cramdown provisions of 11 U.S.C. § 1129(b)(2)(A)(i)(I) and (II) or (b)(2)(A)(iii) notwithstanding the rejection by Land Bank. 11 U.S.C. § 1129(b) includes the requirement that the plan be fair and equitable to a dissenting class of secured creditors. 11 U.S.C. § 1129(b)(2)(A)(i)(I) and (II) and (b)(2)(A)(iii) provides that the plan provide with respect to secured claims as follows:
(i)(I) that the holders of such claims retain the liens securing such claims, whether the property subject to such liens is retained by the debtor or transferred to another entity, to the extent of the allowed amount of such claims; and
(II) that each holder of a claim of such class receive on account of such claim deferred cash payments totaling at least the allowed amount of such claim, of a value, as of the effective date of the plan, of at least the value of such holder's interest in the estate's interest in such property; [or]
. . . .
(iii) for the realization by such holders of the indubitable equivalent of such claims.
Section 1129(b) requires the plan to propose to pay in cash the equivalent of the present value of a fully secured claim if the claim is impaired or to give to the secured creditor the indubitable equivalent of the present value of its claim. The debtors' plan proposes to satisfy Land Bank's claim by distributing both cash and real property. The issue is whether this plan provides for the realization by Land Bank of the indubitable equivalent of its claim.
III
THE VALUE OF THE LAND TO BE TRANSFERRED TO FEDERAL LAND BANK
The plan proposes to pay a portion of the Land Bank's claim by abandoning to it a portion of its collateral for a credit of $225.00 per acre. The Land Bank objected to this treatment claiming it was an unfair discrimination and that the value of $225.00 per acre was too high. The indubitable equivalent of the Land Bank's claim may be achieved by abandoning to it all or a portion of its collateral of a value equal to the present value of its claim. In re Pine Lake Village Apartment Co., 19 B.R. 819, 825 (Bkrtcy.S.D.N.Y.1982), reargument denied, 21 B.R. 478 (Bkrtcy.S.D.N.Y.1982). The property to be distributed to Land Bank is to be valued as of the effective date of the plan. See 5 Collier on Bankruptcy ¶ 1129.07 (15th ed. 1981).
The debtors' appraiser, Ms. Weaver, valued the 450 acres to be conveyed at $225.00 per acre while the Land Bank's appraiser valued the property at $200.00 per acre. Both appraisers offered evidence of comparable sales which supported their respective appraisals. Ms. Weaver's appraisal of $225.00 per acre at this hearing is seriously weakened by a prior appraisal of the same property earlier in the case at $175.00 per acre. However, the difference in the two confirmation hearing appraisals is only *186 $25.00 an acre which indicates a substantial agreement as to the value. The Court will accept Land Bank's testimony of $200.00. Valuing the 450 acres at $200.00 per acre allows a total credit of $90,000.00 toward the debt.
The plan provides for the conveyance of 450 acres of land on May 2, 1986. Because of the time the case has been under advisement, execution of this portion of the plan is impossible. Because of the delay, and because the fair market value of the 450 acres has been determined to be $200.00 per acre and not $225.00, the plan is substantially altered from what debtors originally offered Land Bank. The debtors are given thirty days from the date of the entry of this memorandum opinion and order of this same date to amend the plan. The amended plan must set forth an exact legal description of property to be conveyed and must set forth that the property is to be conveyed by warranty deed, free and clear of all encumbrances of record.
The plan also proposes that the remaining 444.09 acres, more or less, of land be placed in escrow and conveyed on January 1, 1987, to the Land Bank. Since a legal description was not set forth in the plan, neither the exact amount of land nor the location is known. The value of this land is fixed at $200.00 per acre based on the testimony of witnesses for Land Bank. Any amended plan must include an exact legal description of the property to be conveyed and must set forth that the property is to be conveyed by warranty deed free and clear of all encumbrances of record.
The plan proposes to pay the balance of the Land Bank debt in fifteen equal installments of principal and interest beginning January 1, 1987. The Land Bank claim will be secured by a first lien on the remaining property in Sharp County, Arkansas. To constitute the indubitable equivalent of Land Bank's claim, the debtors must propose to execute a new first mortgage or deed of trust to Land Bank with substantially all of the provisions of the original prepetition mortgage or deed of trust and with a correct and specific legal description of the collateral. In addition, the plan must also propose that the debtors execute a new note to Land Bank in the exact amount of the remaining balance of Land Bank's debt containing substantially the same terms and conditions as the original promissory note.
The proposed plan stated that the Court was to fix the interest rate to be applied to the remaining balance. No party introduced any evidence on this issue. Therefore, the Court fixes the interest rate on the balance owed to Land Bank at the rate fixed by the original note.
The debtors have thirty days from the date of the entry of this memorandum opinion and order of this same date to amend the plan of reorganization to comply with the requirements of 11 U.S.C. § 1129(b) at set forth herein and to submit the amended plan to all of the creditors for consideration.
IT IS SO ORDERED.
|
711 F.Supp. 1144 (1989)
UNITED STATES of America
v.
James GIANNETTA.
Crim. Nos. 86-00035-P-01, 86-00063-B-04.
United States District Court, D. Maine.
April 14, 1989.
*1145 William H. Browder, Jr., Asst. U.S. Atty., Portland, Me., for U.S.
Judy Potter, University of Maine Law School, Portland, Me., for James Giannetta.
MEMORANDUM OF DECISION AND ORDER DENYING DEFENDANT'S MOTION TO SUPPRESS
GENE CARTER, District Judge.
Defendant in this action pled guilty on December 5, 1986, and March 12, 1987, to charges of conspiracy to possess with intent to distribute approximately two kilograms of cocaine and to import into the United States approximately 8000 pounds of hashish in violation of 21 U.S.C. §§ 841(a)(1), 846, 952(a), 960(a)(1), (b)(2), and 963 and 18 U.S.C. § 2. On February 26, 1988, this Court suspended the imposition of sentence and placed Defendant on probation for a period of five years
Upon the usual terms and conditions of probation and upon the following special condition: (1) that the Defendant shall, at all times during his period of probation, readily submit to a search of his residence and of any other premises under his dominion and control, by his supervising probation officer, upon the officer's request.
Judgment, Docket Item 18 (February 29, 1988). After the sentencing, Defendant's Probation Officer, Vincent Frost, provided Defendant with a copy of the conditions of probation and explained each one to him.
Within a few weeks, Probation Officer Frost became somewhat suspicious of Defendant for several reasons. First, a disclosure of assets listed numerous vehicles and a boat although it had been represented at sentencing that Defendant had no assets with which to pay a fine.[1] In the course of surveilling Defendant's house, as part of his mandated supervision of Defendant, Frost also noted and investigated a brand new BMW automobile. He learned that Defendant had been heavily involved in its purchase by his unemployed roommate, Peter Boucher, and that Defendant's father had loaned Boucher the money for the car. On March 25, 1988, Probation Officer Frost received information from South Portland Police Detective Reed Barker that an almost identical BMW, registered to Boucher's grandfather but driven primarily by Boucher, had been reported stolen in Westbrook. Barker suspected that the claim had been false and, having learned that Defendant was Boucher's roommate, sought information from Frost. Subsequently, Barker informed Frost that Defendant's Corvette had been stolen and found stripped and that Defendant had collected the insurance and then bought the salvage rights to the car. Probation Officer Frost said he and Barker had become suspicious of some sort of fraudulent insurance scheme when they figured out that Boucher had bought a brand new BMW identical to one that he regularly used shortly before the latter car was stolen and then found stripped. Frost testified that the information on the Corvette just pointed to a possible scheme
*1146 to either own the car or have a friend own a car and then have the car reported stolen and, in the meantime you strip all of the major articles off that car and dump the car and then collect the insurance. ... And then you claim salvage, which you would only have to pay sometimes less than a thousand dollars for salvage rights to the car. You get the car back and then put the parts back on it and reconstruct the car.
Suppression Hearing Tr. at 45. Later Barker reported to Frost that he had spotted what he thought was a stripped car under a tarp on a car carrier in front of Defendant's house and that there had been a theft of four wheels from the BMW that Boucher had bought with Defendant's involvement at Classic Olds.
Barker also informed Frost in March that security officers at Filene's, a retail department store in Newington, New Hampshire, thought that Defendant might be involved in some sort of fraudulent scheme concerning the purchase and return of merchandise. Frost went to New Hampshire in May, and Filene's personnel identified Defendant from a photo spread as having been in the store. Defendant had not received permission to go to New Hampshire, so his presence there would be a violation of the conditions of his probation.[2]See Exhibit 3, Condition 2.
In the course of his surveillance of Defendant, Probation Officer Frost also noticed Boucher and two others entering a Pontiac Fiero which he had not seen before. Investigation showed that it had been purchased from a dealership in Concord, New Hampshire, and that Defendant had been at the dealership twice in April, again without permission, and had cosigned a car loan application. In examining the loan application, Frost noted that Defendant had represented himself as the owner of Leisure Leasing in Canton, Massachusetts, with an annual salary of $75,000. Although Defendant had indicated to Mr. Frost that he hoped to go into the car rental business, he had not reported such a job or any such salary in any of his monthly probation reports, and he had not filed a 1987 income tax return because he had not had a job or an income. Frost reasonably suspected, therefore, that Defendant had made a fraudulent loan application.
Probation Officer Frost testified that in May 1988, after Frost had told Defendant he needed a court order to travel to Massachusetts, Defendant leaned over closer to him and whispered, "Why don't you close the door of your office and tell me what I have to do." Frost interpreted Defendant's statement as an attempted bribe.
Probation Officer Frost also determined through telephone toll records and prison telephone recordings that Defendant had talked several times without permission to his codefendant, Biagio Barone, who was imprisoned at FCI Loretto. Probation Condition 10 provides that Defendant shall not associate with any person convicted of a felony unless granted permission to do so by a probation officer, and no permission had been given for such communications.
On June 13, 1988, during a surveillance, Probation Officer Frost noticed Defendant driving a Jeep Cherokee. Defendant's license had previously been suspended, so he was committing a crime by driving, in violation of probation condition 1. Frost reported the incident to the Falmouth Police and an arrest warrant was issued for Defendant.
In mid-June, Probation Officer Frost also learned from Robert Reno, a defendant in this court and a Government witness, that he had seen Defendant in Florida in March and that Defendant always carried a gun. Defendant had not received permission to travel to Florida in March, and possession of a firearm by a felon is a violation of the law.
On June 30, 1988, in possession of all this information, Probation Officer Frost went *1147 to Defendant's house with South Portland police officer Reed Barker and conducted a two- to three-hour search. In the course of the search, Frost seized a large number of items, including documents, checks, cash cards, and computer materials. After reviewing the materials seized, on August 24, Probation Officer Frost sought and obtained an arrest warrant for Defendant for alleged probation violations. Federal marshals executed the warrant on September 2, 1988, at which time Probation Officer Frost conducted another search under the special condition of probation and seized more material. The Government now seeks to revoke Defendant's probation.
Defendant has moved to suppress the items seized during the two searches of his house to prevent their use at the probation revocation hearing. He argues that the searches and seizures violate the Fourth Amendment of the United States Constitution, the Federal Sentencing Guidelines,[3] and 18 U.S.C. § 3603, which specifies the duties of probation officers.
The Searches
Defendant's first argument is that the searches by Probation Officer Frost violated the Fourth Amendment. In Griffin v. Wisconsin, 483 U.S. 868, 107 S.Ct. 3164, 97 L.Ed.2d 709 (1987), the Supreme Court explained Fourth Amendment requirements as they pertain to probationers subject to search under a Wisconsin probation regulation. The Court stated that a probationer's home is protected by the requirement that any searches be reasonable. Id. 483 U.S. at 873, 107 S.Ct. at 3167, at 717. Extrapolating from and quoting Morrissey v. Brewer, 408 U.S. 471, 480, 92 S.Ct. 2593, 2599, 33 L.Ed.2d 484 (1972), which had addressed the issue of parolees' rights, the Court pointed out that "probationers do not enjoy `the absolute liberty to which every citizen is entitled, but only conditional liberty dependent on observance of special [probation] restrictions.'" Griffin, 483 U.S. at 874, 107 S.Ct. at 3168, 97 L.Ed.2d at 718. Probation restrictions serve to insure that the probation period is one of genuine rehabilitation and that the community is not harmed by the probationer being at large. Supervision by probation officers is essential to see that the restrictions are observed. Probation supervision is, therefore, a special need of the state[4] necessitating a degree of infringement of privacy rights which would not be constitutional if it were directed at the public at large. Id. The Supreme Court made clear, however, that the degree to which probationers' rights may be diminished is not unlimited. Id.
In Griffin, defendants had challenged a search conducted under Wisconsin's probation regulations, which permit a search of a probationer's house without a warrant as long as there are reasonable grounds to believe there are items therein which the probationer may not properly possess. The Supreme Court held that the special needs of Wisconsin's probation system, including the need for expedition in searches, the need to maintain a deterrent effect for the supervisory arrangement, and the need for close, nonadversarial monitoring of probationer behavior, justified the regulation. Therefore, a search conducted under the regulation and meeting its requirements is reasonable and requires neither a warrant nor probable cause. Id. 483 U.S. at 876-77, 107 S.Ct. at 3169-70, at 719-20.
Although the federal probation system does not have a regulation similar to that in Wisconsin, Griffin's analysis can be extended to allow the reasonableness of searches to be determined by the findings of the sentencing court embodied in special *1148 conditions of probation.[5]United States v. Schoenrock, 868 F.2d 289 (8th Cir.1989). In examining the special needs of the federal probation system with regard to the Defendant sentenced here, it is clear at the outset that the special needs of the Wisconsin probation system pertain to the federal probation system as well. In this particular case, however, a special search condition was even more justified and, in fact, was deemed crucial both to the rehabilitation of Defendant and to the protection of the public.[6]
Defendant had been involved in major drug dealing for a period of time and his associates, from various segments of the organized crime community, were described by Defendant as "seriously dangerous criminals." Sentencing Tr. at 36. When asked by the Court at sentencing why he had gotten involved in criminal activity, Defendant explained that he was very tempted by the excitement attendant to his criminal life style. He expressed relief at his arrest as an avenue for leaving that life behind:
And I realized that the way I lived my life was walking a very fine line. I knew from the boat races, the excitement of the whole thing, it was just too much for someone who enjoyed life and I knew that there was no possible way that I could ever go back if I had burned every bridge that was behind me.
Id. at 39.
The Court was very concerned that Defendant would go back into crime because of the excitement it held for him. Id. at 43. That this need for excitement is a component of his personality was gleaned not just from Defendant's allocution but from his counsel's description of the way Defendant undertook undercover work for the Government:
When you hear a little about Jim, you will find not only is he an incredibly hard working person but he has a flare when he works on the edge to take chances that no government agent is ever going to do ... He is that kind of person, smart enough, intelligent enough and literally crazy enough to put himself in their position.
Id. at 27-28.
That a person with this personality trait who has been involved so heavily in such serious crime needs extraordinary supervision to keep him from reverting to his prior life was recognized not only by the Court, id. at 44, by the Government, id. at 59, and by two of Defendant's three attorneys, id. at 29, 61, but by the Defendant himself as well. Id. at 45. The Court explained to Defendant that any sentence of probation would have such stringent requirements that Probation Officer Frost "will be walking right behind you if not in your hip pocket." Id. at 44. Defendant replied: "I fully understand. Maybe I need a little more control in my life and that would be something I would need and it may be beneficial to the outcome." Id. at 45.
In the context of this probationary sentence, therefore, where large quantities of drugs were involved and Defendant admittedly was in need of stringent supervision, *1149 a condition subjecting the probationer to searches by his probation officer was not only permissible but perhaps essential if the rehabilitation and protective purposes of probation were to be achieved. See United States v. Consuelo-Gonzalez, 521 F.2d 259, 265 (9th Cir.1975); United States v. Schoenrock, 868 F.2d 289. In Consuelo-Gonzalez,[7] an opinion that went on to substantially foreshadow the Supreme Court's recent opinion in Griffin, the court explained that searches conducted by a probation officer need not be based on probable cause but must be based at least on a reasonable belief that the search is necessary to perform his duties properly. Consuelo-Gonzalez, 521 F.2d at 266. The search must also meet the Fourth Amendment's requirements that it be conducted at a reasonable time and in a reasonable manner. Id. at 263.
The condition imposed by this Court did not expressly require that a probation search conducted under it be based on a reasonable belief.[8] Such a requirement was intended by the Court,[9] however, and the fact that it was implicit in the condition was made known to Defendant at the sentencing proceeding. The Court admonished Defendant to treat his probation officer like a father. "When he says he wants something from you or requires something from you, he has a reason for it." Sentencing Tr. at 64. Moreover, Probation Officer Frost plainly understood the condition to require reasonable cause. He did not conduct the first search until June 30, 1988, when he had good information both that Defendant had apparently violated the conditions of probation on several occasions and that Defendant might be involved in ongoing crimes in further violation of the conditions of his probation. Based on the information that he had received since Defendant's sentencing, Frost decided to search Defendant's house. He stated:
I think that in my mind at that time I was convinced that Mr. Giannetta had violated the conditions of his probation. I was also convinced in my mind that based on the testimony,not the testimony, but the information related to me by Robert Reno, that I was going to find a gun there, and I was also hoping that I might find documents pertaining to the insurance scam that we suspected that he was operating.
Id. at 85. Given what appeared to be an ongoing pattern by Defendant of cavalier disregard for the terms of his probation, Probation Officer Frost plainly had a reasonable belief that a thorough search of Defendant's home was necessary for Frost to perform his supervisory function properly.[10]See Consuelo-Gonzalez, 521 F.2d at *1150 266; see also United States ex rel. Santos v. New York State Board of Parole, 441 F.2d 1216, 1218 (2d Cir.1971) ("parole officer must have reasonable grounds for investigation as to whether the defendant ... was violating his parole," and the search must be "a proper incident of that investigation.").
The record also demonstrates that the search was conducted at a reasonable time and in a reasonable manner. It was begun in the early evening while it was still light, and Frost, noting that Defendant and his friends were about to depart, approached before they could leave so Defendant would have notice and could be present.
Defendant argues that the scope of the search was unreasonable, resembling the colonial general warrant to which the original Fourth Amendment protections were addressed. Probation Officer Frost described the search as follows:
I conducted the search ... by trying to go through everything that was in the house. I looked under beds, looked under mattresses, checked clothing, checked pockets in clothing, put my hands in shoes and boots, ... checked the bathrooms and then ... the last place that I checked on the second floor was the computer alcove where I spent a great deal of time.
Suppression Hearing Tr. at 81-82. Frost went on to describe his search and seizure of large quantities of material from file cabinets and boxes in the computer area.
Although the search conducted by Frost was very broad in scope, the Court finds that it was reasonable under the circumstances of this case. Frost had specifically warned Defendant that he would be watching for any sign that Defendant was again involved in drug dealing. At the time he conducted the search, Frost was confronted with what appeared to be a pattern of wide-ranging disregard for the conditions of probation imposed by the Court. Moreover, Frost knew that Defendant had been in touch with Biagio Barone, a codefendant in the major drug offenses for which Defendant stands convicted. Frost therefore had reasonable grounds to search for drugs when he was searching for evidence of probation violations. Because drugs, as contraband, are often concealed by their possessors, a reasonable search for them would necessarily include all places and containers in which they might be hidden. See Consuelo-Gonzalez, 521 F.2d at 266 (approving "thorough" search of probationer's house on reasonable belief). Similarly, weapons possessed by a felon might be concealed, so a search under mattresses is not unreasonable. Frost testified that one object of his search was documents that would verify his reasonable suspicions that Defendant was involved in a fraudulent automobile insurance scheme. A search for documents necessarily would encompass documents wherever found, whether in file cabinets, boxes, folders, and, in this era, computer disks. As the Supreme Court recognized in Harris v. United States, 331 U.S. 145, 152, 67 S.Ct. 1098, 1102, 91 L.Ed. 1399 (1947) (overruled on other grounds in Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969)), a meticulous investigation is appropriate in a search for items like canceled checks although it would not be considered reasonable if agents are seeking larger items like a stolen automobile or an illegal still. See also, United States v. Ross, 456 U.S. 798, 821, 102 S.Ct. 2157, 2171, 72 L.Ed. 2d 572 (1982) (search into closets, desks, boxes and other containers within the authority of the warrant if some item to be searched for under the warrant could be concealed therein). The scope of the search in this case was, therefore, reasonable given the Court's mandate to Frost to monitor Defendant closely and the existence of reasonable cause to believe that specific probation violations were occurring which necessitated an exhaustive and thorough search.
Seizures
Defendant also argues that the seizures made during the search of his home were much too broad and undiscriminating and that the retention of the articles for over seven weeks to determine whether he had violated his probation was unreasonable. Defendant asserts that "[i]n this *1151 case the police officers and the probation officer seized all the business and personal documents, papers and records of James Giannetta, his apartment mate and/or other persons they could get their hands on without regard to the types of documents and records seized and the location in which the documents and records were found." Defendant's Memorandum at 27. The record does not support this assertion. Exhibit 9A indicates that many items, a large number of them documents, were seized during the two searches. Frost stated specifically, however, that he exercised his discretion when seizing items:
I was going through a lot of stuff and the only things that I seized were what I considered to be contraband, which I thought that were either the products of crimes or, you know, things of that sort. There were, for instance, computer disks that I did not seize on that occasion. There were various papers and many, many files in his file cabinet which I did not seize.
Suppression Hearing Tr. at 84.
As discussed previously, Frost's search for documents pertaining to insurance fraud was reasonable at its inception. He testified that the scope of his search changed dramatically when, on June 30, having discovered checkbooks for many different individuals in Defendant's office area, he "became aware that there appeared to be a perpetration of a bank fraud." Id. at 172. He then included anything that might pertain to that particular crime within the scope of the search. Id. The checkbooks indicating the bank fraud were in plain view[11] during the course of Frost's search for documents. See Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971).
Defendant has argued, based on the recent case of Arizona v. Hicks, 480 U.S. 321, 107 S.Ct. 1149, 94 L.Ed.2d 347 (1987), that Probation Officer Frost needed probable cause to seize items that were found in plain view in the course of the search. The Court cannot agree.[12] For the same reasons given in Griffin for relaxing the probable cause requirement for searches of probationers' homes, a lesser standard should be applied to seizures. The probationer/probation officer relationship is a supervisory arrangement. The deterrent effect of that arrangement, particularly with regard to the commission of fraudulent financial schemes such as those suspected here, could be greatly reduced if the probation officer had to have probable cause to investigate thoroughly. See Griffin v. Wisconsin, 483 U.S. at 878, 107 S.Ct. at 3170, 97 L.Ed.2d at 720. Similarly, the officer's ability to intervene before a probationer reverts to criminal behavior and damages society militates in favor of "a lesser degree of certainty than the Fourth Amendment would otherwise require." Id. 483 U.S. at 879, 107 S.Ct. at 3171, 97 L.Ed.2d at 721.
Defendant does not make specific arguments that Probation Officer Frost lacked a reasonable belief to seize particular items, but instead suggests that the mere breadth of the seizures, particularly the document seizures, makes them unreasonable. The Court, however, has no basis for so finding. Frost testified at the hearing that he sorted through the materials in the house, taking only those he thought were contraband or evidence of the crimes he thought Defendant was committing. As stated previously, Frost had a reasonable belief that Defendant was involved in an automobile insurance fraud and it was reasonable to believe that there would be a *1152 documentary trail. The Court is also persuaded that Frost was justified in believing that Defendant was involved in some sort of bank fraud when he found a large number of checkbooks and bank statements in the names of persons other than Defendant and his roommate. As Frost stated, he considered the items to be ones Defendant had no right to possess. Frost's belief was even more reasonable because at the beginning of his search, he had found what appeared to be a false identification card in the upstairs toilet. Review of Exhibit 9A and the exhibits admitted at Defendant's bail hearing demonstrate that a large number of the items seized, without further explanation, would reasonably have been believed to be evidence of these offenses or to be contraband in the sense described by Frost.
At the hearing, defense counsel asked Frost whether it is true that he seized vehicle documents showing the purchase of a vehicle in Frank Giannetta's name, a legal case file and medical file regarding Peter Boucher, Internal Revenue Service information in the name of Joe Parati, and an estate file for a John Potter. Similarly, defense counsel ascertained that Frost seized photographs, blueprints, diskettes labeled "games," keys, X-rated videotapes, desk calendars, and diaries. No inquiry was made, however, concerning why any of these items were seized. Counsel did not pursue the questioning in an attempt to show that these seizures were not based on a reasonable belief.
To the extent that certain of these seizures were explained on the record, the Court is satisfied that Frost did have a reasonable belief for them. For example, while some of the vehicle documents were in the name of Frank Giannetta, in Frost's opinion, they were not signed by Frank Giannetta but by Defendant. Frost then had a reasonable belief that these were evidence of one of the fraudulent schemes he was investigating. Suppression Hearing Tr. at 162. Also, one of the desk calendars seized contained a reference to "taking BDS wheels," and Frost knew from Detective Barker that the wheels from Boucher's BMW had been reported stolen. Id. at 127. Frost clearly had a reasonable belief that the calendar might be evidence of the fraudulent scheme.
Given Frost's description of his well-defined purpose and method, and the self-evident reasons for many of the seizures in light of these, the Court feels confident in finding that Frost had a reasonable belief in all the instances. Defendant did not elicit any evidence which would undercut the conclusions drawn.[13] Based on the record before it, including both the testimony and the items seized, the Court is satisfied that Probation Officer Frost was properly searching for proof of violations of Defendant's probation, and that he exercised his discretion in that regard to seize only items that he reasonably believed to be either contraband or evidence of such violations.[14]
Finally, Defendant argues that the June 30 seizures were unreasonable because of the long delay between the seizure and decision to arrest Defendant for probation violations. As Probation Officer Frost described the sequence of events, he conducted *1153 the search on the evening of June 30 and spent all day July 1 going through the materials seized. Suppression Hearing Tr. at 91. He called the FBI that day to tell them what he had found and they did not seem to want to get involved at that point. Id. at 93. Frost wanted to involve the FBI because he did not know how to continue the investigation into the materials he had seized. Id. at 92. He also called Detective Barker to verify a date for the theft of Boucher's BMW wheels to see if it corresponded to the date on which Mr. Giannetta's desk calendar referred to taking BDS wheels. Id. at 127. On July 2, 1988, Frost went on vacation for three weeks. When he returned he began to sift through all the evidence, again notified the FBI of the materials, and, after consultation with the Administrative Office in Washington, decided to turn some of the materials over to the FBI by getting a court order to do so. Probation Officer Frost sought, and received on August 24, 1988, a warrant to arrest Defendant on or after September 1, 1988, for probation violations.
In the criminal context, this Court has found that certain detentions of seized material to develop probable cause are unreasonable when an initial seizure has been lawfully made on a reasonable suspicion. See United States v. LaFrance, 702 F.Supp. 350 (D.Me.1988). The probation revocation context is, however, somewhat different because of the supervisory nature of the relationship and the obligation of the probation officer both to aid the probationer and to protect society. If, as Defendant suggests, the reasonableness of the detention here should be determined by applying the test used when seizures are made by police officers on less than probable cause, it is necessary to consider the diligence of the seizing officer in developing probable cause, the duration of the detention, and the information provided to the person from whom the materials were seized. Id. at 354.
In this case, the bulk of the materials seized were suspicious documents requiring a fair amount of time to match against each other and against other information Frost then had. When the search was completed late on the evening of June 30, it was not unreasonable for Frost to defer until the next morning his examination of the materials. On July 1, Frost went through them and pursued his verification of the materiality of the documents as evidence.
Again, both the motion and the record are devoid of any particularized allegations that the detention of the materials seized by Probation Officer Frost was too long, or that he lacked probable cause to detain specific items. The record does make clear that Frost, after even a cursory examination on June 30, would have had probable cause to retain many of the documents seized as evidence of probation violations. For example, the materials seized contained numerous checks, new account information, bank cards and bank statements, in different names and for different accounts at different banks. They also contained handwritten notes on bank accounts, a folder labeled "IDS" containing various documents with names, addresses and dates, and an envelope containing various forms of blank birth certificates and blank identification cards. Bail Hearing Tr. at 36-39. Obviously, Frost knew he had probable cause because he called Agent Dox of the FBI to try to get him to investigate a bank fraud. He stated that he called the FBI because he did not know how to continue the investigation.[15] This occurred within less than twenty-four hours from the time of the seizure, a not unreasonable time given the nature and extensiveness of the materials seized and his mandate to supervise Defendant carefully. The Court is satisfied, therefore, *1154 that Probation Officer Frost conducted his examination of the documents with reasonable diligence. The fact that further work with the materials would be needed by Frost later to prepare his case for the arrest warrant is immaterial once probable cause had been developed.
There is no evidence concerning what Probation Officer Frost told Defendant about the materials he had seized and the length of the expected detention. There is also no evidence indicating that Defendant attempted in any way to get any of the materials back, either by motion or through requests to Probation Officer Frost. The Court is not able, therefore, to evaluate the degree of intrusiveness of the detention to the point of development of probable cause on Defendant's possessory interest.
Given the nature of the items seized, the length of the detention, and Defendant's status as a probationer, which required much closer supervision and control of him and his possessions than would be acceptable in ordinary circumstances, the Court does not find that the detention of Defendant's property was unreasonable.
Probation Act
Defendant contends that the search here was impermissible under the probation statute mandating the duties of probation officers, 18 U.S.C. § 3603. Section 3601 of title 18, United States Code, provides that a probationer shall be supervised by a probation officer to the degree warranted by the conditions specified by the sentencing court. Section 3603 provides in pertinent part that the officer keep informed, to the degree required by the conditions, as to the conduct of probationer, and his compliance with the conditions, and that he use all suitable methods to aid a probationer under his supervision to bring about improvements in his conduct.
Specifically, Defendant asserts that the search here was merely a means of harassing Defendant and part of a larger pattern of harassment and misconduct by Frost and Detective Barker. Although Probation Officer Frost was admittedly suspicious of Defendant and had opposed the probationary sentence imposed by the Court, the Court finds no evidence that he harassed Defendant or was in any way violating his duties as a probation officer. Frost conducted the customary in-office supervisory visits with Defendant. Because the Court also had doubts about Defendant's ability to succeed on probation, Frost was also charged with exerting the most rigorous sort of probation control over Defendant, Sentencing Transcript at 63, that is, "walking right behind [Defendant] if not in [his] hip pocket." Id. at 44. The reason the Court imposed such stringent supervision measures was not to harass Defendant, but rather to prevent him from reverting to what admittedly for him was an exciting, if dangerous, criminal lifestyle. Defendant and his counsel acknowledged prior to imposition of sentence that knowledge of the close scrutiny would act as a beneficial deterrent. The Court contemplated surveillance when it imposed the sentence and is satisfied that Defendant understood he would be closely watched. Surveillance in this context does not constitute harassment.
That Probation Officer Frost was not harassing Defendant by searching his house, but merely trying to fulfill his obligation under the Probation Act and the Court's sentence, is underscored by the fact that Frost waited until he was convinced "in [his] mind" that probation violations were occurring. Frost investigated various leads and obtained evidence that Defendant had traveled out of state. He methodically checked the information that he received relating to possible fraudulent activity. Only after he caught Defendant in flagrante delicto, driving after his license had been suspended,[16] and received *1155 information from a known Government witness that Defendant carried a gun, and therefore might pose a threat to the community, did Frost decide to search Defendant's house for evidence of probation violations.
Defendant also suggests that the surveillance of Defendant and search of his home were a subterfuge for a police investigation, a purpose that would be unreasonable under the Probation Act and under the Fourth Amendment. See Consuelo-Gonzalez, 521 F.2d at 267. The record cannot support that conclusion. Probation Officer Frost had the strongest mandate possible to keep Defendant under close supervision, and he had begun to investigate certain aspects of Defendant's behavior that seemed incongruous to him.[17] After that, Detective Barker called for information on Defendant, because he was suspicious of a possible insurance scheme involving Boucher and a stolen and stripped BMW. While Frost and Barker exchanged information, it is plain that the investigation conducted by Frost related to possible probation violations. He checked to see whether Defendant had left the jurisdiction, as reported, and found that he had on numerous occasions; he checked to see with whom Defendant was associating to determine if he maintained contact with criminals; he observed the comings and goings at Defendant's house; and he followed up leads suggested to him by his own investigation and Detective Barker's to see if Defendant might be committing crimes in violation of his probation conditions. The record demonstrates a pattern of stringent probation surveillance and supervision. That there was cooperation by the police with Probation Officer Frost on some of the points of his concern does not make the investigation one instigated or controlled by the police. See United States v. Jarrad, 754 F.2d 1451 (9th Cir.1985); United States v. Consuelo-Gonzalez, 521 F.2d at 267.
The search here was conducted by Probation Officer Frost because he was subjectively convinced that Defendant had been violating his probation and he wanted to look for confirming evidence of those violations. When he was convinced of the violations, Frost initiated the search and he asked Detective Barker to assist him. Such assistance is commonplace and often advisable. See United States v. Consuelo-Gonzalez, 521 F.2d at 267. Although Detective Barker was conducting an investigation of Defendant and Peter Boucher, there is no evidence in the record to support a finding that Barker initiated, instigated, or controlled the search and seizures conducted on June 30.[18] When the search *1156 had been completed, Detective Barker executed the outstanding arrest warrant for operating under suspension, not on any pretext but because he knew from Frost that it existed, knew that he would be accompanying Frost on the search, and knew that the warrant "had to be taken care of." Suppression Hearing Tr. at 214. The Court is satisfied that Probation Officer Frost acted suitably and reasonably to supervise Defendant as the Court had intended and that his supervision met the standards of the Probation Act.
Exclusionary Rule
Since the Court finds that the search and seizure complained of here were reasonable, it need not address the question ultimately posed: whether the exclusionary rule applies to probation revocation cases.
ORDER
Accordingly, it is ORDERED that Defendant's Motion to Suppress be, and it is hereby, DENIED.
NOTES
[1] The Court here sets forth the pattern of events which led to Probation Officer Frost's reasonable belief that Defendant was violating his probation and which necessitated the search under the conditions of probation. Defendant has argued and has tried to prove that various of Frost's suspicions concerning Defendant's behavior were unfounded or that Frost could have determined that suspicious events were innocuous through other means of investigation. The Court has considered all of Defendant's arguments and finds no need to discuss each one individually. Part of Frost's job was to be suspicious in the interest of supervision and he was to use his judgment and knowledge of Defendant in evaluating the suspicions and deciding how to investigate them. When the record shows, as it does here, a pattern of events giving rise to a reasonable suspicion that Defendant was violating the conditions of his probation and that the probation officer acted reasonably in his investigation, the Court will not examine closely and try to second-guess the officer on his evaluation of any of the underlying occurrences.
[2] Frost knew from Detective James Langella, but not from Defendant, that Langella had questioned Defendant in March and May 1988, with one meeting having been initiated by Defendant. Conditions 12 and 13 require that Defendant inform his probation officer if he is questioned by police and forbid him to enter into cooperation agreements without the Court's permission.
[3] The Federal Sentencing Guidelines do not apply to this case since the crimes for which Defendant was sentenced took place before the effective date of the Guidelines, November 1, 1987. See United States v. Twomey, 845 F.2d 1132, 1135 (1st Cir.1988).
[4] The special needs analysis employed by the Court, which permits warrantless searches in certain types of cases on less than probable cause, parallels that used in the administrative and school search contexts. See Griffin v. Wisconsin, 483 U.S. at 873, 107 S.Ct. at 3167, 97 L.Ed.2d at 717 (citing New Jersey v. T.L.O., 469 U.S. 325, 105 S.Ct. 733, 83 L.Ed.2d 720 (1985), and Camara v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967)).
[5] Defendant argues that the search violated the boundaries set by the conditions of probation imposed upon him. He points specifically to Condition 11, which provides: "You shall permit the Probation Officer to visit at any time at home or elsewhere and shall permit confiscation of any contraband observed in plain view by the Probation Officer." Exhibit 3 at 1. Defendant asserts, and the Court agrees, that Probation Officer Frost did not conduct that sort of plain view search for contraband. Condition 11, however, was not the operative condition in this case. It falls within the general conditions of probation which are applicable to all probationers in this district. In this case, since more supervision was required, the Court had imposed a more stringent special condition which was both recited by the Court at the sentencing hearing and memorialized on page 2 of the Probations Conditions provided to Defendant. It was clear at the time of sentencing that the special condition was in addition to the normal conditions, Sentencing Tr. at 63, not governed by them, and this would have been made clear to Defendant by Probation Officer Frost, who testified that he explained each probation condition individually to Defendant. Suppression Hearing Tr. at 28-29.
[6] Only very rarely has the Court felt it necessary to impose such a drastic condition to effectuate the purposes of probation, and it had never done so prior to the sentencing of this Defendant.
[7] In United States v. Consuelo-Gonzalez, 521 F.2d 259, the Court found that a search condition requiring defendant to submit to searches upon request by a law enforcement officer was improper because, in permitting nonprobation officers to search, the condition did not serve the ends of probation.
[8] In a case subsequent to Consuelo-Gonzalez, the Court of Appeals for the Ninth Circuit found a condition similar to the one in this case overbroad, but upheld a search conducted under it when it was based on reasonable cause and met the other Fourth Amendment requirements that it be conducted at a reasonable time and in a reasonable manner. United States v. Jeffers, 573 F.2d 1074, 1075 (9th Cir.1978). Similarly, in a recent case, citing Griffin, the same court approved a urine test of a probationer without a condition expressly allowing it, when it was based on the probation officer's reasonable belief that it was necessary to determine if probationer was violating a condition of probation forbidding him to violate any federal law. United States v. Duff, 831 F.2d 176, 178-79 (9th Cir.1987). Since the broad authority provided by the specific condition in this case was narrowly and properly exercised, see infra, the search would be reasonable and valid even if the condition were too broad.
[9] The Court intended and knew from its working relationship with Mr. Frost that he would act under the condition only with good reason. In the extreme circumstances of this case, however, the Court firmly believes that even random searches would have been permissible as a reasonable means of conducting the closest possible supervision of Defendant and of providing the greatest possible deterrent to him if he were considering reentering the world of crime.
[10] The court in Consuelo-Gonzalez permitted the probation officer's reasonable belief to be based on a "hunch." Consuelo-Gonzalez, 521 F.2d at 266. This Court does not find that formulation helpful. It is clear, however, that in this case Probation Officer Frost's reasonable belief was based on reasonable inferences to be drawn from what he had learned about Defendant's conduct.
[11] Defendant asserts that Frost admitted many of the items seized were not in plain view. They were not in plain view in the sense that they were lying exposed. They came into plain view, however, when Frost was conducting a justifiable search for documents.
[12] The Hicks Court stated that in certain instances a seizure could be justified on less than probable cause and gave examples of cases in which there are special operational necessities rendering the seizure the only practicable means of detecting certain types of crimes. See Arizona v. Hicks, 480 U.S. at 327, 107 S.Ct. at 1154. As discussed previously and reiterated here, search and seizure in a probationary context is like an administrative search. Both require a lesser standard because of the special needs of the particular situation.
[13] Counsel asked Frost about the seizure of various unmarked keys. Although he did not have a reasonable belief as a basis for their seizure, the record indicates that they were seized inadvertently and found later in the bottom of boxes of documents. The fact of one understandably inadvertent seizure does not render the other seizures unreasonable or indicate a pattern of overbreadth of the search and seizure.
[14] At the inception of the June 30 search, Probation Officer Frost had reasonable cause to be concerned about several different types of probation violations, including some that might have a documentary trail. As he described, in the course of searching for those documents he uncovered what reasonably appeared to him to be evidence of bank fraud committed by Defendant. Subsequent seizures related also to that possible probation violation. The search on September 2, 1988 had Frost's initial reasonable beliefs as a basis plus new indications developed since the first search. For example, Frost had investigated the Rolex watches seized and developed reasonable belief to search for further evidence of a fraudulent scheme involving their purchase. Examination of the first seized materials gave a strong basis to search for more evidence of Defendant's fraudulent activities in violation of his probation.
[15] The Court notes that Mr. Frost only had to have probable cause that the Court would be reasonably satisfied that a crime had been committed and, therefore, a violation of probation had occurred. See United States v. Warner, 830 F.2d 651, 655 (7th Cir.1987); United States v. Guadarrama, 742 F.2d 487, 489 (9th Cir.1984). He wanted to share the information with the FBI, which in investigating criminal violations would have a different scope of investigation and need for a higher standard of proof.
[16] Defendant cites Frost's conduct in this regard as particularly egregious. Defendant seems to argue that Frost's reporting of the incident to police was harassment, since "Frost was aware of the fact that there had been threats on Defendant's life and that Defendant was to spend the rest of his life looking over his shoulder as a result of his undercover work." Defendant's Memorandum in Support of Motion to Suppress at 12. A probation officer would be violating his duties, however, if he did not report wrongdoing by a probationer. Minnesota v. Murphy, 465 U.S. 420, 432, 104 S.Ct. 1136, 1144, 79 L.Ed. 2d 409 (1984) (quoting Fare v. Michael C., 442 U.S. 707, 720, 99 S.Ct. 2560, 2569, 61 L.Ed.2d 197 (1979)).
Defendant also argues that special procedures constituting harassment were used in arresting Defendant on a warrant for the offense rather than issuing a summons. The Court finds no support for this idea. There is no suggestion that the procedures used in Defendant's case were unlawful. Although Defendant contends that police normally issue summonses for operating under suspension, the Court understood Officer Maloney to say that he issued summonses when he, personally, had seen the offense, Suppression Hearing Tr. at 203, and that he could not remember whether he had used an arrest warrant if he were relying on another witness because he did not remember ever having done that. Id. at 202.
[17] Frost was somewhat suspicious when Defendant's disclosure of assets, filed shortly after sentencing, listed numerous vehicles and a boat since at sentencing it had been represented that Defendant had no assets with which to pay a fine. Passing by Defendant's house on March 13, 1988 to check on the cars parked there, Frost also discovered the new BMW, sold to Boucher with Defendant's involvement and funds provided by Defendant's father.
[18] Defendant also suggests that FBI Agent Dox's conduct on the morning of the second search provides evidence that the search was a subterfuge for criminal investigation. The Court cannot agree. Agent Dox had begun an investigation of Defendant and Peter Boucher in mid-August. He learned that there was to be a search and an arrest of Defendant on September 2. Neither Frost nor the Deputy United States Marshal asked Dox to be present, but he decided independently to be present if they did not mind. Dox wanted to interview Peter Boucher, and he waited outside the house until Boucher came out. During the interview, Boucher gave the deputy marshals his consent to a search of his automobile and apartment. After the consent had been given, Dox searched a trash can outside the apartment, recovering some documents. He also assisted Deputy Marshal Orlando in searching a red Jeep Cherokee. He took items handed to him by Orlando, looked at them, and gave them to Frost. Although Dox may have wanted to profit from the general commotion to interview Boucher, there is no indication that he was the impetus behind the search and seizure of any items, other than those found in the trash can, and that search was conducted under a valid consent from Boucher. It seems clear from Dox's testimony that he wanted to stay out of the way and let Frost and the deputy marshals conduct their business and that he provided assistance when necessary. His presence did not convert the search into one for criminal investigation purposes and he conducted no impermissible searches. See United States v. Jarrad, 754 F.2d 1451.
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT January 7, 2005
Charles R. Fulbruge III
Clerk
No. 04-30636
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
CALVIN W. PENNYWELL, JR.,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 5:03-CR-50124-1
Before JONES, BARKSDALE, and PRADO, Circuit Judges.
PER CURIAM:*
Calvin W. Pennywell, Jr., entered a conditional guilty
plea to possession with intent to distribute five grams or more of
cocaine base, in violation of 21 U.S.C. § 841(a)(1), and possession
of firearms in relation to drug trafficking, in violation of
18 U.S.C. § 924(c)(1). He now appeals the district court's denial
of his suppression motion. He argues that the district court
erroneously determined that he voluntarily consented to entry by
*
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.
police into his residence, where they subsequently found firearms,
cash, and drugs.
Voluntary consent to a search is an exception to the
general rule that warrantless searches are per se invalid. See
Schneckloth v. Bustamonte, 412 U.S. 218, 219 (1973). The Govern-
ment has the burden of proving by a preponderance of the evidence
that consent was given freely and voluntarily. Id. at 222. Such
a finding of fact is reviewed for clear error. United States v.
Tompkins, 130 F.3d 117, 121 (5th Cir. 1997). “Voluntarily” means
not coerced by threat or force and not granted only in submission
to a claim of lawful authority. Schneckloth, 412 U.S. at 233.
Two police officers testified that Pennywell consented to
a request to enter and look around when officers knocked on his
door in response to a complaint about narcotics activity and
weapons at the residence. Pennywell testified that he responded
negatively when police asked if they could enter. We conclude that
the district court’s finding of voluntary consent was not clearly
erroneous. See Tompkins, 130 F.3d at 121; see also United States
v. Garza, 118 F.3d 278, 283 (5th Cir. 1997).
AFFIRMED.
2
|
610 F.3d 820 (2010)
DEUTSCHER TENNIS BUND, German Tennis Federation; Rothenbaum Sports GMBH; Qatar Tennis Federation, Appellants
v.
ATP TOUR, INC.; Etienne De Villiers; Charles Pasarell; Graham Pearce; Jacco Eltingh; Perry Rogers; Iggy Jovanovic; John Doe 7; John Doe 8; John Doe 9.
No. 08-4123.
United States Court of Appeals, Third Circuit.
Argued November 2, 2009.
Filed: June 25, 2010.
*823 Robert D. MacGill, Esquire, (Argued), Peter J. Rusthoven, Esquire, Stanley C. Fickle, Esquire, Hamish S. Cohen, Esquire, Matthew B. Barr, Esquire, Barnes and Thornburg, Indianapolis, IN, C. Barr Flinn, Esquire, Karen E. Keller, Esquire, Young Conaway Stargatt & Taylor, Wilmington, DE, Attorneys for Appellants.
*824 Bradley I. Ruskin, Esquire, (Argued), Jennifer R. Scullion, Esquire, Colin A. Underwood, Esquire, Robert D. Forbes, Esquire, Proskauer Rose, New York, NY, Lawrence C. Ashby, Esquire, Carolyn S. Hake, Esquire, Toni-Ann Platia, Esquire, Philip Trainer, Jr., Esquire, Ashby & Geddes, Wilmington, DE, Attorneys for Appellees.
Before SCIRICA, JORDAN and GREENBERG, Circuit Judges.
OPINION OF THE COURT
SCIRICA, Circuit Judge.
Men's professional tennis is a worldwide enterprise and every year, professional tennis players compete in various tournaments around the world. The principal men's professional tennis events are the four Grand Slams, the Davis Cup, and the ATP Tour, a worldwide professional tennis circuit organized by the Association of Tennis Professionals ("ATP"). This lawsuit arises out of the reorganization of the ATP Tourknown as the Brave New World plandesigned to revitalize its popularity, enabling it to better compete with other sports and entertainment events. The redesigned format channeled more top-tier players to the top-tier ATP tournaments and also redesignated the tier categories of some tournaments. The changes included a downgrade of the Hamburg, Germany tournament from the first tier to second tier status.
Dissatisfied with the downgrade, Hamburg tournament owners, the German and Qatar Tennis Federations (the "Federations"), sued ATP and certain of its officers and directors. The suit alleged that the Brave New World plan violated §§ 1 and 2 of the Sherman Act and that ATP's Directors breached fiduciary duties owed to the Federations. At trial, the District Court granted ATP's motions for judgment as a matter of law, dismissing the personal liability claims against the Directors for alleged antitrust violations and breach of fiduciary duty. The antitrust claims against ATP were submitted to a jury, which returned a verdict for ATP. The jury found the Federations failed to prove ATP entered into a contract, combination, or conspiracy with any separate entity under § 1 of the Sherman Act, and did not establish a relevant product market under § 2.
The Federations appeal the jury verdict on § 1 of the Sherman Act, asserting the District Court erred in instructing the jury on a "single entity or enterprise defense," and in failing to instruct on the "quick look" mode of analysis. The Federations also appeal the judgment as a matter of law dismissing the antitrust claims against the Directors and the breach of duty of loyalty claim against Director Charles Pasarell. We will affirm the jury verdict on the Sherman Act § 1 claim based on the Federations' failure to prove the relevant market. Consequently, the question of personal director liability for antitrust claims is moot. We also will affirm the judgment as a matter of law dismissing the breach of duty of loyalty claim against Director Pasarell because neither he individually nor the ATP Board of Directors as a whole were materially self-interested when they voted in favor of the Brave New World plan.
I.
A.
Initially an association of the world's top men's professional tennis players, ATP evolved into a non-profit corporation consisting of a membership of men's professional tennis players and organizers of men's professional tennis tournaments. ATP operates a worldwide tennis tour *825 composed of the member tournaments, culminating in ATP's end-of-season championship tournament, the Tennis Masters Cup.[1] Tennis players earn prize money and ATP ranking points through playing in ATP tournaments.
ATP ranking points determine each player's world ranking. The player rankings are important because they govern entry into and seeding in the Grand Slams[2] as well as ATP top-tier tournamentsthe most important professional tennis tournaments. In turn, these tournaments award the most prize money and ranking points.
ATP tournament members are divided into three categories: (1) Tier I (formerly "Masters Series"); (2) Tier II (formerly "International Series Gold"); (3) Tier III (formerly "International Series"). The categories of tournaments are distinguished by different levels of minimum prize money and different amounts of ranking points awarded on the basis of performance.
ATP is governed by a seven-member Board of Directorsthree elected by tournament members (representing different geographic regions), three elected by player members, and a Chairman/President. ATP's Bylaws give the ATP Board discretion over the Tour's format.
In 2007, the Board voted to adopt several changes to the ATP Tour. According to ATP, this restructuring was necessitated by market changes and conditions: ATP was losing ground in the sports and entertainment markets. ATP's market research revealed that tennis fans wanted to see the top tennis players play against each other more often. ATP perceived that a growing decline in player participation in its top-tier events undermined its prestige and also the profile of the sport, leading to a decline in ticket sales and weakening the member tournaments' ability to secure television coverage and sponsorships. By strengthening its top-tier events and simplifying its tournament structure, ATP believed it could better compete with other sports events and other forms of entertainment, and also award more prize money to the players.
The Brave New World plan's objective was to increase the value and appeal of top-tier tournaments by channeling top players to compete in them. It also aimed to make the progression of the Tour easier for fans to follow by clearly communicating each tournament's tier and differentiating between the different tiers. To achieve these goals, the Brave New World plan altered the number of ranking points awarded to winning players in different tiers of tournaments. Tier I tournaments would award 1000 points instead of 500; Tier II tournaments would award 500 points instead of a range between 250 and *826 300; Tier III tournaments would award 250 points instead of a range between 175 and 250. Additionally, the Brave New World plan renamed the tournament tiers to correspond to the new ranking points system: Tier I became the "ATP World Tour Masters 1000"; Tier II became the "ATP World Tour 500"; and Tier III became the "ATP World Tour 250." The new ranking point distribution was designed in part as an incentive for the top tennis players to play the ATP top-tier events.
The Brave New World plan also reconfigured the Tour calendar to create geographic "swings" or "seasons" around the Grand Slams because of their size, prestige, history, and popularity, and their significantly greater amount of prize money. Thus, the Brave New World plan scheduled the top-tier ATP tournaments in the weeks before the Grand Slams with corresponding court surfacese.g., the Tier I tournament in Madrid, Spain on a clay surface was scheduled in the weeks before the French Open, a Grand Slam tournament also on clay. According to ATP, scheduling their tournaments in this way attracts the top tennis players because of their desire to play on the same surface as the upcoming Grand Slam tournaments.
Notably, the Brave New World plan also amended ATP rules so that qualifying players were required, under threat of sanctionssuspension, loss of ranking, and loss of ability to earn ranking pointsto play all Tier I events, at least four Tier II events, and at least two Tier III events. Further, all qualifying players were also required to play in the year-end Tennis Masters Cup championship. In addition, the Brave New World plan imposed a "Special Events" rule on the top 50 players, prohibiting them from participating in any non-ATP, non-Grand Slam events during the weeks of and surrounding ATP events. As noted, these changes were prompted by the decline in top player participation in ATP tournaments. In turn, ATP increased the tournaments' minimum prize money levels to benefit the players.
The Brave New World plan also spurred significant capital investments in facilities on the part of the tournamentsthe Tier I and Tier II tournaments committed to approximately $864 million in capital investments. ATP undertook to create a more unified branding approach for the Tour and increased spending on promotion and marketing. It projected a $9 million marketing amount for 2009; previous budgets provided for only $800,000 in 2005 and 2006, and $5 million in 2007 and 2008. It also enhanced pooling for existing broadcast and digital media rights.
In sum, ATP designed the Brave New World plan as a comprehensive plan to address the perceived decline of ATP in the sports and entertainment markets. Concluding that fans desired a better structured Tour, featuring the best players playing against each other more often, ATP decided to simplify the Tour's format and to introduce regulations ensuring top player participation in ATP top-tier tournaments. Both ATP and the member tournaments committed to make investments to improve the quality of the Tour and promote it more effectively. The tournament members agreed to increase the prize money levels to compensate the players for agreeing to play in more top-tier events.
B.
Plaintiff German Tennis Federation promotes tennis in Germany and claims to be the world's largest national tennis federation, with approximately 1.7 million members. It stages an annual clay-court tournament in Hamburg, Germany. From 1990 to 2009, Hamburg tournament was a *827 Tier I ATP tournament. Under the Brave New World plan, the Hamburg tournament was demoted to Tier II. The overall number of Tier I events remained at nine, with the addition of Shanghai, China.[3] In Tier II, the number of events was increased from nine to eleven. Plaintiff Qatar Tennis Federation was established in Qatar and has owned and operated a Tier III tournament in Doha, Qatar. It also owns a 25% stake in Hamburg tournament.
ATP contends the Hamburg tournament was demoted to Tier II because of its lack of significant investment, a decrease in attendance, unfavorable weather, and the decline of interest in tennis in Germany. ATP asserts that Hamburg tournament can succeed as a Tier II tournament.
C.
The Federations sued ATP alleging its adoption of the Brave New World plan violated §§ 1 and 2 of the Sherman Act and constituted a breach of the directors' fiduciary duties. The § 1 claim contended defendants conspired and combined to control the supply of top men's professional tennis players' services, establishing a favored class of tournaments in which top-player participation was mandatory, while precluding other tournaments from competing for such player services. Similarly, the § 2 claim alleged monopolization, attempt to monopolize, and conspiracy to monopolize the market for men's professional tennis players' services. Plaintiffs also asserted the ATP directors' adoption of the Brave New World plan breached their fiduciary duties of due care, loyalty, and good faith owed to the Federations.
The case was tried to a jury. At the close of the Federations' case, the District Court granted ATP's Fed.R.Civ.P. 50(a) motions for judgment as a matter of law on all claims of personal liability against the Directors for alleged antitrust violations and breach of fiduciary duties. The court held that personal civil liability for antitrust violations is limited to participation in inherently unlawful acts. The court reasoned that under antitrust law, only per se violations are inherently unlawful. Finding that the alleged conduct could not be classified as classic per se violations, the court concluded that individual directors could not be liable. Addressing the breach of fiduciary duty claims against the Directors, it found the Federations failed to satisfy their initial burden of rebutting the presumption of the business judgment rule by showing the Directors violated any of their fiduciary duties. Accordingly, the District Court granted defendants' motion for judgment as a matter of law and dismissed all claims against the individual Directors.
The court then addressed proposed jury instructions. ATP submitted a proposed instruction on the "single entity or enterprise defense," stating that where entities "are commonly controlled or substantially integrated in their operations, they may be considered a `single entity' or `single enterprise' under the antitrust laws." The Federations objected, arguing that the instruction misstated the law and created a significant risk of confusion. Overruling the Federations' objections, the District Court gave the "single entity or enterprise defense" jury instruction as proposed by ATP. The court also considered whether the alleged restraints should be analyzed under "quick look" or the full rule of reason analysis. The court instructed the jury on the latter.
*828 The jury returned a verdict for ATP on all claims. On the Sherman Act § 1 claim, it found the Federations did not prove ATP "entered into contract(s), combination(s) or conspiracy(ies) with any separate entity or entities." And on the Sherman Act § 2 claim, it found the Federations did not establish "the existence of any relevant product market(s) within any geographic market(s)."
The Federations filed a timely appeal of the Sherman Act § 1 claim against ATP and the Directors and the breach of fiduciary duty of loyalty claim against Director Charles Pasarell. Specifically, they contend the District Court erred by instructing the jury on the single entity defense, refusing to instruct the jury to apply "quick look" analysis, and granting defendants' motion for judgment as a matter of law on all claims against the individual Directors.[4]
II.
A.
Even assuming, arguendo, that the District Court erred in instructing the jury on the single entity defense, the Federations could not have succeeded on their Sherman Act § 1 claim because they failed to prove "the existence of any relevant product market(s) within any geographic market(s)."[5] On the § 1 claim, the jury found no concerted action, so it did not reach the issue of relevant market. But on the Sherman Act § 2 claim, the jury did find the Federations failed to prove the existence of a relevant market.
The Federations contend that market definition and proof under § 2 differ from those under § 1, arguing that insufficient § 2 market proof does not establish insufficiency under § 1. In Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chem. Corp., 579 F.2d 20 (3d Cir.1978), we said that "inquiries into the scope of competition under § 1 and § 2 are not precisely the same." Id. at 27 n. 11. But in this case, the Federations asserted identical market definitions under §§ 1 and 2, as evidenced by the jury instructions.[6]Cf. Tunis Bros. Co., Inc. v. Ford Motor Co., 952 F.2d 715, 724 n. 3 (3d Cir.1991) ("On this record, however, the plaintiffs do not *829 present a sufficiently close factual issue to demarcate a distinction between product market definitions in section 1 and section 2 cases...."). The jury verdict forms posed the same question regarding proof of the relevant market for the purposes of §§ 1 and 2 claims: "Have Plaintiffs proven by a preponderance of the evidence the existence of a relevant product market within a relevant geographic market?" App. 5, 10, 14, 18. Therefore, the jury's conclusion that the Federations failed to prove a relevant market under § 2 is equally applicable to § 1 analysis. See Fraser v. Major League Soccer, L.L.C., 284 F.3d 47, 59-61 (1st Cir.2002) (affirming the judgment on § 1 claims based on the jury finding that plaintiffs failed to establish a relevant market under § 2).
B.
The Federations also contend they did not need to prove a relevant market because the District Court should have instructed the jury to conduct a "quick look" analysis, which does not require detailed market analysis. The Federations proposed a "quick look" jury instruction that the alleged restraints caused substantial harm to competition as a matter of law, so that the jury needed only consider "whether the restraint produces countervailing competitive benefits," and if so, "balance the competitive harm against the competitive benefit." App. 451. But the District Court reasoned that "[t]he evidence [presented] could perhaps be evidence of ... antitrust violations, but only after one engaged in a detailed examination of the industry in question, and furthermore, only after taking the industry in question to be top-tier men's professional tennis, rather than, for example, professional sports or spectator events more generally." Id. at 25. The court concluded that "the plaintiffs failed to show evidence [of acts] that have no purpose except to stifle competition...." Id. Accordingly, the court required the jury to analyze the alleged restraint under full rule of reason principles and rejected the proposed "quick look" instruction.[7] Because even beneficial legitimate contracts or combinations restrain trade to some degree, § 1 of the Sherman Act has long been interpreted to prohibit only those contracts or combinations that are "unreasonably restrictive of competitive conditions." Standard Oil Co. v. United States, 221 U.S. 1, 58, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Historically, "[t]hree general standards have emerged for determining whether a business combination unreasonably restraints trade under [§ 1]." United States v. Brown Univ., 5 F.3d 658, 668 (3d Cir.1993).
"Most restraints are analyzed under the traditional `rule of reason.'" Id. (citing Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977)); see also Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. *830 1276, 164 L.Ed.2d 1 (2006) ("[T]his Court presumptively applies rule of reason analysis...."); State Oil v. Khan, 522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997). "The rule of reason requires the fact-finder to `weigh [] all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition.'" Brown, 5 F.3d at 668 (quoting GTE Sylvania, 433 U.S. at 49, 97 S.Ct. 2549). The inquiry is whether the restraint at issue "is one that promotes competition or one that suppresses competition." Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 691, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978). "The plaintiff bears an initial burden under the rule of reason of showing that the alleged combination or agreement produced adverse, anti-competitive effects within the relevant product and geographic markets." Brown, 5 F.3d at 668. "The plaintiff may satisfy this burden by proving the existence of actual anti-competitive effects," or defendant's market power. Id. "If a plaintiff meets his initial burden of adducing adequate evidence of market power or actual anti-competitive effects, the burden shifts to the defendant to show that the challenged conduct promotes a sufficiently pro-competitive objective." Id. at 669. "To rebut, the plaintiff must demonstrate that the restraint is not reasonably necessary to achieve the stated objective." Id.
Some categories of restraints, such as horizontal price-fixing and market allocation agreements among competitors, "because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable." Id. (quoting N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958)). "Such `plainly anticompetitive' agreements or practices are deemed to be `illegal per se,'" id. (quoting Prof'l Eng'rs, 435 U.S. at 692, 98 S.Ct. 1355), without an "elaborate inquiry into the reasonableness of a challenged business practice," id. (quoting Arizona v. Maricopa County Med. Soc'y, 457 U.S. 332, 343, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982)). "Per se liability is reserved for only those agreements that are `so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality.'" Dagher, 547 U.S. at 5, 126 S.Ct. 1276 (quoting Prof'l Eng'rs, 435 U.S. at 692, 98 S.Ct. 1355); see also State Oil Co., 522 U.S. at 10, 118 S.Ct. 275 ("Per se treatment is appropriate `[o]nce experience with a particular kind of restraint enables the Court to predict with confidence that the rule of reason will condemn it.'" (quoting Maricopa County Med. Soc'y, 457 U.S. at 344, 102 S.Ct. 2466)). Accordingly, the courts are reluctant "to adopt per se rules... where the economic impact of certain practices is not immediately obvious." State Oil Co., 522 U.S. at 10, 118 S.Ct. 275 (internal quotation marks omitted).
"In addition to the traditional rule of reason and the per se rule, courts sometimes apply what amounts to abbreviated or `quick look' rule of reason analysis." Brown, 5 F.3d at 669; see NCAA v. Bd. of Regents, 468 U.S. 85, 109 n. 39, 104 S.Ct. 2948, 82 L.Ed.2d 70. It is "an intermediate standard" and "applies in cases where per se condemnation is inappropriate but where no elaborate industry analysis is required to demonstrate the anticompetitive character of an inherently suspect restraint." Brown, 5 F.3d at 669 (internal quotation marks omitted); see FTC v. Ind. Fed'n of Dentists, 476 U.S. 447, 459, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986); NCAA, 468 U.S. at 109, 104 S.Ct. 2948 (1984); Prof'l Eng'rs, 435 U.S. at 692, 98 S.Ct. 1355. In such cases, "an observer with even a rudimentary understanding of economics could conclude that the arrangements *831 in question would have an anticompetitive effect on customers and markets." Cal. Dental Ass'n v. FTC, 526 U.S. 756, 770, 119 S.Ct. 1604, 143 L.Ed.2d 935 (1999). In other words, "quick-look analysis carries the day when the great likelihood of anticompetitive effects can easily be ascertained." Id. Under "quick look" analysis, the competitive harm is presumed, and "the defendant must promulgate `some competitive justification' for the restraint." Brown, 5 F.3d at 669 (quoting NCAA, 468 U.S. at 110, 104 S.Ct. 2948). "If no legitimate justifications are set forth, the presumption of adverse competitive impact prevails and `the court condemns the practice without ado.'" Id. (quoting Chicago Prof'l Sports Ltd. P'ship v. NBA, 961 F.2d 667, 674 (7th Cir.1992)). "If the defendant offers sound pro-competitive justifications, however, the court must proceed to weigh the overall reasonableness of the restraint using a full-scale rule of reason analysis." Id.
"[T]here is often no bright line separating" the different modes of analysis. NCAA, 468 U.S. at 104 n. 26, 104 S.Ct. 2948. "`There is always something of a sliding scale in appraising reasonableness, but the sliding scale formula deceptively suggests greater precision than we can hope for.... Nevertheless, the quality of proof required should vary with the circumstances.'" Cal. Dental, 526 U.S. at 779, 119 S.Ct. 1604 (quoting Philip E. Areeda, Antitrust Law ¶ 1507, at 402 (1986)). "[The] categories of analysis of anticompetitive effect are less fixed than terms like `per se,' `quick look,' and `rule of reason' tend to make them appear." Id. Regardless of the standard used, the purpose of the inquiry is always to assess the effect of the conduct on competition: "Whether the ultimate finding is the product of a presumption or actual market analysis, the essential inquiry remains the same whether or not the challenged restraint enhances competition." NCAA, 468 U.S. at 104, 104 S.Ct. 2948. As the Supreme Court summarized:
[T]here is generally no categorical line to be drawn between restraints that give rise to an intuitively obvious inference of anticompetitive effect and those that call for more detailed treatment. What is required, rather, is an enquiry meet for the case, looking to the circumstances, details, and logic of a restraint. The object is to see whether the experience of the market has been so clear, or necessarily will be, that a confident conclusion about the principal tendency of a restriction will follow from a quick (or at least quicker) look, in place of a more sedulous one.
Cal. Dental, 526 U.S. at 780-781, 119 S.Ct. 1604. Thus, the three modes of analysis should be viewed as a single inquiry that, depending on the circumstances, may sometimes be conducted by applying various presumptions. See generally 7 Philip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1511, at 418 (2d ed.2000).
C.
The Federations contend that the Brave New World plan "allocates and divides the player services market among horizontal competitors" and "[t]his obviates competition among favored tournaments for the player services vital for success, while making it impossible for other tournaments ... to compete for such services." Appellant's Br. 48. The Federations allege an output-limiting horizontal restraint. Nevertheless, the per se rule does not apply because for a tennis tour, like other sports leagues, "horizontal restraints on competition are essential if the product is to be available at all." NCAA, 468 U.S. at 101, 104 S.Ct. 2948; see also Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 23, 99 S.Ct. 1551, 60 *832 L.Ed.2d 1 (1979) (rejecting per se treatment "where the agreement on price is necessary to market the product at all"); Worldwide Basketball & Sport Tours, Inc. v. NCAA, 388 F.3d 955, 959 (6th Cir.2004) ("Because there is no doubt that horizontal restraints are necessary to make the kind of league competition at issue available, the rule of reason applies."); Law v. NCAA, 134 F.3d 1010, 1019 (10th Cir.1998) ("[C]ourts consistently have analyzed challenged conduct under the rule of reason when dealing with an industry in which some horizontal restraints are necessary for the availability of a product....").
Under "quick look," the rationale for presuming competitive harm without detailed market analysis is that the anticompetitive effects on markets and consumers are obvious. Cal. Dental, 526 U.S. at 770, 119 S.Ct. 1604. Although the Federations contended the Brave New World Plan restrained the "top player services" market, the definition of the relevant market was one of the most contested issues at trialso much so that after all the evidence was presented the District Court saw the bounds of the relevant market as "ambiguous." App. 25. Because "the contours of the market" here are not "sufficiently well known or defined to permit the court to ascertain without the aid of extensive market analysis whether the challenged practice impairs competition," "quick look" is not appropriate and proof of relevant market is required under full-scale rule of reason. Worldwide Basketball & Sport Tours, 388 F.3d at 961.
Further, even where anticompetitive effects are obvious, "quick look" condemnation is proper only after assessing and rejecting the logic of proffered procompetitive justifications. Cal. Dental, 526 U.S. at 771, 119 S.Ct. 1604; see N. Tex. Speciality Physicians v. FTC, 528 F.3d 346, 362 (5th Cir.2008). Although competitive harm is initially presumed under "quick look," "[i]f the defendant offers sound procompetitive justifications, ... the court must proceed to weigh the overall reasonableness of the restraint using a full-scale rule of reason analysis." Brown, 5 F.3d at 669; see also Cal. Dental, 526 U.S. 756, 771, 119 S.Ct. 1604, 143 L.Ed.2d 935 (1999) (holding that full rule of reason analysis was required where challenged restraint "might plausibly be thought to have a net procompetitive effect, or possibly no effect at all on competition"); Bogan v. Hodgkins, 166 F.3d 509, 514 n. 6 (2d Cir.1999) (observing that courts must apply the full rule of reason once defendant has introduced "sound allegations of procompetitive benefit"). Where procompetitive justifications are proffered, their logic must be assessed and rejected in order to avoid reverting to full-scale rule of reason analysis. "[T]he burden remains on the challenger to demonstrate that the proffered procompetitive effect does not plausibly result in `a net procompetitive effect, or possibly no effect at all on competition.'" N. Tex. Speciality Physicians, 528 F.3d at 362 (quoting Cal. Dental, 526 U.S. at 771, 119 S.Ct. 1604). "If, after examining the competing claims of anti-and pro-competitive effects, it remains plausible that the net effect is procompetitive or that there is no effect on competition, then `[t]he obvious anticompetitive effect that triggers abbreviated analysis has not been shown.'" Id. (quoting Cal. Dental, 526 U.S. at 778, 119 S.Ct. 1604); see also 11 Areeda & Hovenkamp, supra, ¶ 1911c, at 305 (2d ed.2005) (explaining that when defendant offers preliminary evidence suggesting that the challenged restraint is justified, and the court finds such evidence plausible, the restraint must be "subjected to general rule of reason analysis requiring full consideration of power and anticompetitive effects").
*833 ATP proffered evidence of procompetitive justifications for the Brave New World plan. The plan was developed to make the ATP Tour more competitive with other spectator sports and entertainment products by improving the quality and consistency of its top-tier events. The modifications to the tour calendar, increase of investment, higher payments to players, and expanded geographic reach were all designed to improve the Tour. Such rules and regulations can be procompetitive where they enhance the "character and quality of the `product.'" NCAA, 468 U.S. at 102, 104 S.Ct. 2948.
In fact, the Federations seem to concede that ATP offered procompetitive justifications. But they would have the jury balance the proffered procompetitive justification against the presumed anticompetitive harm. They argue that under "quick look," the jury's inquiry "starts from the premisealready determined by the court as a matter of law that the restraint's anticompetitive effect is evident without need for detailed market analysis, requiring no proof by plaintiff of market definition or power." Appellant's Reply Br. 7. The Federations misapprehend the reasonableness analysis. Once a defendant comes forward with plausible procompetitive justification for the challenged restraint, the "quick look" presumption disappears and the overall reasonableness of the restraint is assessed using a full-scale rule of reason analysis. Brown, 5 F.3d at 669. "The application of the quick look analysis is a question of law to be determined by the court," and therefore the concept of "quick look" has no application to jury inquiry. ABA Section of Antitrust Law, Model Jury Instructions in Civil Antitrust Cases A-8 n. 2 (2005). The jury was properly instructed to analyze the alleged restraints under the rule of reason, and their finding that the Federations failed to prove the relevant market defeats the Sherman Act § 1 claim.[8]
III.
A.
On the Sherman Act § 1 claim, the jury also found the Federations did not prove *834 that ATP entered into "contract(s), combination(s) or conspiracy(ies) with any separate entity or entities." In other words, the jury did not find the requisite concerted action to support a § 1 claim. The Federations assert the jury reached this conclusion based on the "single entity or enterprise defense" instruction, which allowed the jury to find that defendants' actions were undertaken as a single entity, instead of as independent actors. The Federations contend the instruction misstated the law and thus was given in error.[9]
To prevail under § 1 of the Sherman Act, a plaintiff must first establish a "contract, combination ... or conspiracy." Section 1 applies only to concerted action and does not proscribe independent action by a single entity, regardless of its purpose and effect on competition. Am. Needle, Inc. v. NFL, ___ U.S. ___, 130 S.Ct. 2201, 2208, ___ L.Ed.2d ___ (2010); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984).[10]
Under Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), in certain cases, distinct legal entities are incapable of concerted action for the purposes of § 1 and must be viewed as a single entity.[11] Although Copperweld did not set clear parameters for what constitutes a single economic entity beyond the parent-subsidiary context, "it nonetheless encouraged the courts to analyze the substance, not the form, of economic arrangements."[12]Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1132 (3d Cir. 1995); see Am. Needle, 130 S.Ct. 2201, 2208 ("As Copperweld exemplifies, `substance, not form, should determine whether a[n] ... entity is capable of conspiring under § 1.'" (quoting Copperweld, 467 U.S. at 773 n. 21, 104 S.Ct. 2731)). Courts have applied the single-entity concept to *835 joint ventures of separately owned entities. In determining whether Copperweld applies to joint ventures, courts have focused primarily on whether the venture "bring[s] together the economic power of actors which were previously pursuing divergent interests and goals."[13]Siegel Transfer, 54 F.3d at 1137. "The key is whether the alleged `contract, combination ..., or conspiracy' is concerted actionthat is, whether it joins together separate decisionmakers." Am. Needle, 130 S.Ct. 2201, 2208. "The relevant inquiry, therefore, is whether there is a `contract, combination... or conspiracy' amongst separate economic actors pursuing separate economic interests, such that the agreement deprives the marketplace of independent centers of decisionmaking, and therefore of diversity of entrepreneurial interests, and thus of actual or potential competition." Id. (internal quotation marks omitted). Indisputably, joint ventures can be economically beneficial. But "the fact that joint venturers pursue the common interests of the whole is generally not enough, by itself, to render them a single entity." Freeman v. San Diego Ass'n of Realtors, 322 F.3d 1133, 1148 (9th Cir.2003). "[A] commonality of interest exists in every cartel." Id. (quoting L.A. Mem.'l Coliseum v. NFL, 726 F.2d 1381, 1389 (9th Cir. 1984)). The formalities should not detract from the necessity to examine the economic realities of the restraints imposed on competition by a joint venture. See Am. Needle, 130 S.Ct. 2201, 2208 ("[W]e have eschewed such formalistic distinctions in favor of a functional consideration of how the parties involved in the alleged anticompetitive conduct actually operate."). The focus of the inquiry under § 1 of the Sherman Act centers on diminution of competition that would otherwise exist. Id. at 2208. When the agreement joins together independent centers of decisionmaking, "the entities are capable of conspiring under § 1, and the court must decide whether the restraint of trade is an unreasonable and therefore illegal one." Id. at 2212.
B.
At trial, ATP contended it constitutes a single enterprise, and under Copperweld, its internal decisions cannot violate § 1 of the Sherman Act. It asserted each of its tournament members is dependent on the others to produce a common producta marketable annual professional tennis tour that competes with other forms of entertainment, within and without the sports arena. ATP maintained its members do not compete but instead cooperate to produce the Tour, and its adoption of the Brave New World plan was the core activity of producing this product. For their part, the Federations contended ATP operates in the market for top tier men's professional tennis players, and individual tournaments compete to attract top players. They asserted the Brave New World plan was an agreement unreasonably restraining trade in this alleged market. Both parties presented expert testimony. The District Court concluded "there [were] at least underlying facts that [were] critical to" a determination of "whether the ATP and its members function as a single business entity," and that these facts are "beyond [the] Court's purview and in need *836 of attention by a jury." App. 36. Accordingly, the court gave the jury ATP's proposed single enterprise instruction.
C.
In the context of the professional sports industry, courts have historically subjected sports leagues to antitrust scrutiny under § 1 of the Sherman Act. In NCAA v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984), decided eight days after Copperweld, the Supreme Court considered a § 1 challenge to the NCAA's restrictions on member institutions' ability to enter into separate contracts to televise their football games. The Court acknowledged that "a certain degree of cooperation is necessary" to preserve the "type of competition that [the NCAA] and its member institutions seek to market." Id. at 117, 104 S.Ct. 2948. But the Court concluded that because the challenged plan "prevent[ed] member institutions from competing against each other," they had "created a horizontal restraintan agreement among competitors on the way in which they will compete with one another." Id. at 99, 104 S.Ct. 2948. After analyzing the reasonableness of the alleged restraint, the Court held it violated § 1 of the Sherman Act. Id. at 120, 104 S.Ct. 2948.
Many other courts have resisted single entity arguments involving sports industries.[14] But the Court of Appeals for the Seventh Circuit in Chicago Professional Sports Limited Partnership v. NBA, 95 F.3d 593 (7th Cir.1996) ("Bulls II"), suggested that a sports league can sometimes be viewed as a single entity for antitrust purposes. Id. at 598 ("We see no reason why a sports league cannot be treated as a single firm...."). The court concluded that Copperweld's rule is not limited to the circumstances where cooperating parties have a "complete unity of interest." Id. Recognizing that whether the NBA "is more like a single firm ... or like a joint venture ... is a tough question" because "it has characteristics of both," the court concluded that "the league looks more or less like a firm depending on which facet of the business one examines." Id. at 599. "From the perspective of fans and advertisers... `NBA Basketball' is one product from a single source," "[b]ut from the perspective of college basketball players who seek to sell their skills, the teams are *837 distinct," and "the league looks more like a group of firms acting as a monopsony." Id. Remanding to the district court for determination of the issue, the court observed: "Sports are sufficiently diverse that it is essential to investigate their organization and ask Copperweld's functional question one league at a timeand perhaps one facet of a league at a time...." Id. at 600.
The parties in Bulls II settled after the case was remanded, but the Court of Appeals for the Seventh Circuit revisited the issue in American Needle, Inc. v. NFL, 538 F.3d 736 (7th Cir.2008), rev'd, ___ U.S. ___, 130 S.Ct. 2201, ___ L.Ed.2d ___, 2010 WL 2025207 (U.S. May 24, 2010). Guided by principles enunciated in Bulls II, the court affirmed the district court's grant of summary judgment for the NFL on a claim stemming from its practice of centralized licensing of intellectual property. Id. at 744 (concluding "the NFL teams are best described as a single source of economic power when promoting NFL football though licensing the teams' intellectual property"). But the Supreme Court reversed, finding the court's reasoning unpersuasive. 130 S.Ct. at 2213. The Court observed that each of the teams in the NFL is a "substantial, independently owned, and independently managed business." Id. at 2212. The Court further noted the NFL teams "compete with one another, not only on the playing field, but to attract fans, for gate receipts and for contracts with managerial and playing personnel." Id. Specifically relevant to the case, the Court found "the teams compete in the market for intellectual property." Id. at 2212. Therefore, the Court concluded "[d]ecisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions `that depriv[e] the marketplace of independent centers of decisionmaking,' and therefore of actual or potential competition." Id. (quoting Copperweld, 467 U.S. at 770, 104 S.Ct. 2731).
Similarly, the agreement among the ATP's tournament members in the Brave New World Plan might have deprived the marketplace of potential competition. Professional sports teams or tournaments always have an interest in obtaining the best players possible. Brown v. Pro Football, Inc., 518 U.S. 231, 116 S.Ct. 2116, 135 L.Ed.2d 521 (1996). The record in this case indicates that the individual tennis tournaments traditionally compete for player talent. An agreement restricting this competition should not necessarily be immune from § 1 scrutiny merely because the tournaments cooperate in various aspects of producing the ATP Tour. "The justification for cooperation is not relevant to whether that cooperation is concerted or independent action." Am. Needle, at 2214. The necessity of cooperation does not "transform[] concerted action into independent action." Id. "The mere fact that the teams operate jointly in some sense does not mean that they are immune." Id.
But we need not decide whether the single enterprise instruction was given in error. As noted, even if the jury had found concerted action, the Federations' antitrust claims still fail because they did not satisfy their burden of proving a relevant market.[15]
*838 IV.
A.
In their complaint, the Federations asserted claims of breach of fiduciary duties of loyalty, due care, and good faith against six individual directors of ATP, all of whom voted in favor of the Brave New World plan. The District Court granted ATP's motion for judgment as a matter of law on these claims. The Federations appeal the judgment only in relation to their claim of breach of duty of loyalty by Director Charles Pasarell. Notably, they do not appeal the judgment in relation to their breach of fiduciary duty claims against the other five directors.
As noted, ATP is governed by a seven-member Board of Directorsthree elected by tournament members, each representing a geographic region ("Tournament Representatives"), three elected by player members ("Player Representatives"), and a Chairman/President. Section 12.9 of ATP's Bylaws requires certain corporate actions to be approved by two affirmative votes of both the three Tournament Representatives and the three Player Representatives. The Brave New World plan required such an approval. The European Tournament Representative, Zejlko Franulovic, voted against most provisions of the Brave New World plan, citing concerns about restrictions on competition. Accordingly, the votes of the other two Tournament Representatives were necessary for adoption of the Brave New World plan.
Director Pasarell served as a Tournament Representative from 1990. At the same time, he also was employed as Tournament Director of the Indian Wells Masters Series Event and held a 24% ownership in the Indian Wells tournament. Indian Wells is a tournament member of ATP. The Federations claimed that his vote in favor of the Brave New World plan constituted a breach of duty of loyalty because it was self-interested.
The District Court rejected the Federations' argument, concluding that they failed to rebut the business judgment rule presumption with sufficient evidence that Pasarell was materially self-interested in the Brave New World transaction. The District Court observed that although Pasarell, like other tournament owners, stood to benefit from any projected success of the Brave New World plan, Indian Wells was already among the most financially successful tournaments, and did not need the Brave New World plan to make money. Further, the court also held that the other directors were not materially self-interested and the Federations do not appeal that finding.
B.
Under Delaware law, the business judgment rule "is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company." Aronson v. Lewis, 473 A.2d 805, 812 (Del.1984), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del.2000). Thus, "[t]he burden is on the party challenging the decision to establish facts rebutting the presumption." Id. The business judgment rule presumption can be rebutted by establishing "that the board was either interested in the outcome of the transaction or lacked the independence to consider objectively whether the transaction was in the best interest of its company and all of its shareholders." Orman v. Cullman, 794 A.2d 5, *839 22 (Del.Ch.2002).[16] "To establish that a board was interested[,] ... a plaintiff must allege facts as to the interest ... of the individual members of that board." Id. Thus, a plaintiff must normally demonstrate "that a majority of the director defendants have a financial interest in the transaction...." Id. (internal quotation marks and citation omitted); see also Malpiede v. Townson, 780 A.2d 1075, 1084-85 (Del.2001) (concluding that the claim of breach of fiduciary duty of loyalty was insufficient because it alleged self-interest of only one director); Brehm v. Eisner, 746 A.2d 244, 257 (Del.2000) (determining whether a majority of the board was disinterested and independent); Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1168 (Del.1995) ("Technicolor II") (affirming Court of Chancery determination that "if actual self-interest is present and affects a majority of directors approving a transaction, the entire fairness standard applies" (emphasis added)).
C.
The Federations cannot prevail on their claim of breach of duty of loyalty because they failed to rebut the business judgment rule presumption. The District Court found that Pasarell was not materially self-interested in his Brave New World vote. The Delaware Supreme Court has defined "interest" to "mean[] that directors can neither appear on both sides of a transaction nor expect to derive any personal financial benefit from it in the sense of self-dealing, as opposed to a benefit which devolves upon the corporation or all stockholders generally." Aronson, 473 A.2d at 812. "[I]n the absence of self-dealing, it is not enough to establish the interest of a director by alleging that he received any benefit not equally shared by the stockholders. Such benefit must be alleged to be material to that director."[17]Orman, 794 A.2d at 23 (citing Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 363 (Del.1993), modified, 636 A.2d 956 ("Technicolor II")). "Materiality means that the alleged benefit was significant enough `in the context of the director's economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the ... shareholders without *840 being influenced by her overriding personal interest.'" Id. (omission in original) (quoting In re Gen. Motors Class H S'holders Litig., 734 A.2d 611, 617 (Del.Ch. 1999)). "In determining the sufficiency of factual allegations made by a plaintiff as to... a director's interest ... the Delaware Supreme Court ... requires the application of a subjective `actual person' standard to determine whether a particular director's interest is material and debilitating...." Id. at 24 (quoting Technicolor III, 663 A.2d at 1167).
Pasarell was not materially self-interested because he did not stand to obtain any unique benefits from the Brave New World plan. "A director is considered interested where he or she will receive a personal financial benefit from a transaction that is not equally shared by the stockholders." Rales v. Blasband, 634 A.2d 927, 936 (Del.1993); see also Aronson, 473 A.2d at 812. The Brave New World plan was designed to benefit all the ATP top tier tournamentsPasarell's supposed benefits from the Brave New World plan were not unique. Moreover, Pasarell's alleged interest could not be subjectively material because the evidence showed that Indian Wells was already doing well financially, attracting top tennis players before the Brave New World plan was adopted. Therefore, the alleged benefit was not "significant enough in the context of the director's economic circumstances" to interfere with Pasarell's ability to perform his fiduciary duties "without being influenced by [his] overriding personal interest." In re Gen. Motors Class H S'holders Litig., 734 A.2d at 617. Because the Federations failed to show Pasarell was self-interested, his vote is entitled to the protection of the business judgment rule.[18]
*841 V.
For these reasons, we will affirm the jury verdict for defendants on the Sherman Act § 1 claim, and the District Court's judgment as a matter of law for defendant Pasarell on the breach of fiduciary duty of loyalty claim.
NOTES
[1] In 2009, the Tennis Masters Cup was replaced by the Barclays ATP World Tour Finals.
[2] The four Grand Slams (Australian Open, French Open, Wimbledon, and U.S. Open) and the Davis Cup are not ATP tournaments and are regulated by the International Tennis Federation ("ITF"). But the Grand Slams have agreed to use ATP entry and ranking systems as the basis for determining entry and seeding of men's professional players into their events (Wimbledon has its own method of seeding calculation, which also takes into account players' past performances on grass over the previous two years, as well as their ATP ranking). In return, playing in the Grand Slams is mandatory for top ATP players. The Grand Slams also agreed not to organize a year-end event competing with the ATP's Tennis Masters Cup and ATP agreed not to combine the Masters Cup with the Women's Tennis Association's year-end event. Additionally, ATP has an agreement with ITF not to schedule ATP events against Davis Cup matches and to award ATP ranking points to Davis Cup tournaments.
[3] The Federations contend that initially the Brave New World plan downgraded the Monte Carlo tournament to Tier II. But after Monte Carlo sued ATP, the parties settled with Monte Carlo having a hybrid statusit awards 1,000 ranking points but is not a mandatory tournament for players.
[4] The District Court had subject-matter jurisdiction under 28 U.S.C. §§ 1331 and 1337 based on claims alleged under Sherman Act, 15 U.S.C. §§ 1, 2 and 26, and under 28 U.S.C. § 1367 for supplemental state law claims. We have appellate jurisdiction under 28 U.S.C. § 1291.
[5] Because the Federations did not carry their burden of proving a relevant market, we do not need to decide whether the District Court's single entity instruction was given in error. See infra Part III.
[6] Giving the jury an overview of the rule of reason analysis for the purposes of § 1, the court stated: "[Y]ou must first determine whether Plaintiffs have carried their burden to show that any challenged restraint has resulted or is likely to result in a substantial harm to competition in a relevant product or geographic market(s)." App. 257 (Antitrust Jury Instruction 10Antitrust Claims: Sherman Act Section 1Rule of ReasonOverview). Explaining the requirement of proof of competitive harm, the court repeated: "[I]t is Plaintiffs' burden to show that the harm to competition occurred in an identified market, known as a `relevant market.' There are two aspects to a relevant market. The first aspect is known as the relevant product market. The second aspect is known as the relevant geographic market." Id. at 258 (Antitrust Jury Instruction 11Antitrust Claims: Sherman Act Section 1Rule of Reason-Proof of Competitive Harm). Closely following the Model Jury Instructions, the court then instructed the jury on the substance of the relevant market inquiry. Id. at 261 (Antitrust Jury Instruction 13Rule of Reason-Proof of Relevant Market). Later, describing the elements of the monopolization claim under § 2, the court explained: "Plaintiffs must prove by a preponderance of the evidence that the defendants had monopoly power in a relevant market." Id. at 272 (Antitrust Jury Instruction 21Monopolization: Relevant Market-General). Using the nearly identical language as for the rule of reason instructions, the court continued: "There are two aspects you must consider in determining whether plaintiff has met its burden to prove the relevant market by a preponderance of the evidence. The first is the relevant product market; the second is the relevant geographic market." Id. No relevant market inquiry instructions specific to § 2 claims were proposed or provided. See also ABA Section of Antitrust Law, Model Jury Instructions in Civil Antitrust Cases A-6 (2005) (suggesting that the instruction describing the relevant market for the purposes of § 1 claim incorporate the § 2 relevant market instructions).
[7] The selection of a mode of antitrust analysis is a question of law over which we exercise plenary review. See Arizona v. Maricopa County Med. Soc'y., 457 U.S. 332, 337 n. 3, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982).
[8] The Federations also appeal the District Court's grant of judgment as a matter of law on all antitrust liability claims against individual ATP directors. Relying on Murphy Tugboat Co. v. Shipowners & Merchs. Towboat Co., 467 F.Supp. 841 (N.D.Cal.1979), aff'd sub nom. Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir.1981), the District Court held "that civil liability for antitrust violations is limited to participation in inherently unlawful acts, that is, [] per se violation[s] of antitrust law." App. 24. It concluded that "the evidence [in this case] shows the individuals' conduct was not the type of inherently wrongful activity that gives rise to personal liability under antitrust law," but "seem[s] within or at least bordering that gray area of socially acceptable economically justifiable business conduct that the law, in fact, permits." Id. at 25.
The Federations argue that the District Court's limitation of directors' personal liability to per se antitrust violations is legally incorrect. We question the persuasive value of Murphy Tugboat. See, e.g., Monarch Mktg. Sys., Inc. v. Duncan Parking Meter Maint. Co., No. 82 C 2599, 1986 WL 3625, at *2 (N.D.Ill. Mar.13, 1986); Gregory Walker, Note, The Personal Liability of Corporate Officers in Private Actions Under the Sherman Act: Murphy Boat in Distress, 55 Fordham L.Rev. 909 (1987) (criticizing Murphy Tugboat approach to corporate officers' personal liability for antitrust violations). But we need not decide whether the District Court erred in imposing a limitation on directors' personal liability and dismissing the antitrust claims against them. Because the Federations could not sustain their antitrust claims and failed to prove an antitrust violation, they would not be able to sustain the same claim against the Directors. Therefore, even assuming the District Court erred in granting summary judgment on the antitrust claims against the directors, plaintiffs cannot prevail on these claims.
[9] "We exercise plenary review to determine whether jury instructions misstated the applicable law...." Cooper Distrib. Co. v. Amana Refrigeration., Inc., 180 F.3d 542, 549 (3d Cir. 1999).
[10] Independent action by a single entity can still be scrutinized under § 2 of the Sherman Act. Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 205 (3d Cir.1992).
[11] In Copperweld, the Supreme Court held that "the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act." 467 U.S. at 771, 104 S.Ct. 2731. The Court reasoned that § 1 scrutiny is not justified because "[a] parent and its wholly owned subsidiary have a complete unity of interest," and when they agree to a course of action, "there is no sudden joining of economic resources that had previously served different interests." Id. The antitrust laws treat concerted behavior more strictly than unilateral behavior because "[c]oncerted activity inherently is fraught with anticompetitive risk." Id. at 768-69, 104 S.Ct. 2731. Concerted action "deprives the marketplace of the independent centers of decisionmaking that competition assumes and demands." Id. at 769, 104 S.Ct. 2731. But although parent and wholly owned subsidiaries are distinct corporate entities and independent legal persons, they nevertheless compose a single economic entity for antitrust scrutiny because "[t]hey share a common purpose," id. at 771, 104 S.Ct. 2731. Since they always have a "unity of purpose or a common design," id., they are "incapable of conspiring with each other for purposes of § 1 of the Sherman Act," id. at 777, 104 S.Ct. 2731.
[12] Courts have extended Copperweld to situations involving sibling-subsidiaries of the same parent corporation, see Eichorn v. AT & T Corp., 248 F.3d 131 (3d Cir.2001), subsidiaries owned by the same co-owners who maintained control over them, see Century Oil Tool, Inc. v. Prod. Specialties, 737 F.2d 1316 (5th Cir. 1984), and franchisors and franchisees, see Williams v. I.B. Fischer Nev., 999 F.2d 445 (9th Cir. 1993).
[13] See, e.g., Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 407 F.3d 1027, 1035 (9th Cir.2005) (holding that a national club and its regional affiliates were incapable of conspiring as separate entities because they were not competitors and maintained an economic unity); City of Mt. Pleasant v. Associated Elec. Coop., 838 F.2d 268 (8th Cir.1988) (holding that a rural electrical cooperative consisting of three tiers of cooperatives with interlocking ownership was a single entity because member cooperatives shared a common goal of providing low-cost electricity).
[14] See e.g., NHL Players Ass'n v. Plymouth Whalers Hockey Club, 419 F.3d 462, 470 (6th Cir.2005) (holding that the hockey league's adoption of a players-eligibility rule was "an agreement between multiple actors"); Sullivan v. NFL, 34 F.3d 1091, 1099 (1 st Cir. 1994) (refusing to hold as a matter of law that the NFL is a single entity under Copperweld); L.A. Mem'l Coliseum Comm'n v. NFL, 726 F.2d 1381, 1388-89 (9th Cir.1984) (rejecting the NFL's argument for single entity treatment because "[w]hile the NFL clubs have certain common purposes ... NFL policies are not set by one individual or parent corporation, but by the separate teams acting jointly"); Mid-South Grizzlies v. NFL, 720 F.2d 772, 778, 787 (3d Cir. 1983) (describing ways in which NFL teams compete with each other); N. Am. Soccer League v. NFL, 670 F.2d 1249, 1257-58 (2d Cir.1982) (refusing to treat the NFL as a single economic entity and exempt it from liability under § 1 of the Sherman Act); accord Volvo N. Am. Corp. v. Men's Int'l Prof'l Tennis Council, 857 F.2d 55, 71 (2d Cir. 1995) (holding that an association consisting of representatives of national tennis associations, tournament owners and directors, and professional tennis players was a joint venture, consisting of multiple entities, and able to conspire under § 1 of the Sherman Act). But see Seabury Mgmt., Inc. v. PGA of Am., Inc., 878 F.Supp. 771, 778 (D.Md. 1994) (holding that the PGA could not conspire with its regional sections as a matter of law), aff'd in relevant part, 52 F.3d 322 (4th Cir. 1995) (Table); NFL v. N. Am. Soccer League, 459 U.S. 1074, 1077, 103 S.Ct. 499, 74 L.Ed.2d 639 (1982) (Rehnquist J., dissenting from denial of certiorari) (arguing that the NFL is a single entity because it "competes as a unit against other forms of entertainment").
[15] In American Needle, the Supreme Court emphasized that "teams that need to cooperate are not trapped by antitrust law," id. at 2215 because "`[t]he special characteristics of this industry may provide a justification' for many kinds of agreements." Id. (quoting Brown, 518 U.S. at 252, 116 S.Ct. 2116). "When `restraints on competition are essential if the product is to be available at all,' per se rules of illegality are inapplicable, and instead the restraint must be judged according to the flexible Rule of Reason." Id. (quoting NCAA, 468 U.S. at 101, 104 S.Ct. 2948). As we explained supra Part II.C, given the circumstances of this case, the District Court correctly instructed the jury to evaluate the alleged restraints under the full rule of reason.
[16] The presumption can also be rebutted by showing that "one or more directors less than a majority of those voting" suffers from a material and disabling interest and that "the interested director controls or dominates the board as a whole or [that] the interested director fail[ed] to disclose his interest in the transaction to the board and a reasonable board member would have regarded the existence of the material interest as a significant fact in the evaluation of the proposed transaction." Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1168 (Del.1995) ("Technicolor II") (alteration in original) (quoting Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1134, 1153 (Del.Ch.1994)); see also In re Transkaryotic Therapies, Inc., 954 A.2d 346, 363 (Del. Ch.2008). Because the Federations do not allege Pasarell controlled the ATP Board or failed to disclose his interest in Indian Wells, the only issue relevant to this appeal is whether the Board as a whole was interested and/or lacked independence. See Orman, 794 A.2d at 23.
[17] The materiality requirement is not applicable to cases involving "classic self-dealing" where a director "stand[s] on both sides of a transaction." HMG/Courtland Props., Inc. v. Gray, 749 A.2d 94, 113-115 (Del.Ch.1999). Although the Federations label Pasarell's vote as "self-dealing" instead of "self-interested," such characterization is misleading because Pasarell's Brave New World vote did not involve Indian Wells transacting with ATP. Pasarell's financial stake in Indian Wells was not "antithetic to the corporate interest in a... proposed course of action." 1 David A. Drexler et al., Delaware Corporation Law and Practice § 15.05[1]. The Federations allege that Pasarell received a special benefit. Thus, they must show materiality of the interest to rebut the business judgment rule presumption. See generally id.
[18] Further, regardless of whether Pasarell's vote was materially self-interested, to rebut the business judgment rule presumption, the Federations would need to show that the ATP Board was materially self-interested. But because the Federations do not now dispute that the remaining five directors, who voted for the Brave New World plan, were not materially self-interested, the disinterested directors made up the majority of the Board (six out of seven) and the majority of directors voting to approve the Brave New World plan (five out of six). Therefore, the Federations cannot establish that the majority of the ATP directors were materially self-interested. The Federations emphasize that the Brave New World plan could not have been adopted without Pasarell's vote. They argue that the disinterested majority rule should not apply here because the ATP Bylaws' "super-majority" voting provisions made simple majority approval insufficient to adopt the Brave New World plan.
Because we hold the District Court was correct in its finding that Pasarell was not self-interested, we do not need to decide how the super-majority voting provisions might affect the self-interest inquiry. However, we note that the Delaware Supreme Court has previously addressed a similar issue. In Technicolor III, the corporation's certificate of incorporation included a provision which could be repealed with a recommendation made through a unanimous vote of qualified directors. 663 A.2d at 1170-71. The directors voted unanimously to recommend repealing the provision, but one of the directors was found to have been interested, and plaintiffs argued that the transaction was therefore voidable. The Delaware Supreme Court affirmed the Court of Chancery's conclusion that the unanimity provision in the charter "should not be construed to include an implied exclusion of interested directors from eligibility to participate in the unanimous vote." Id. at 1171. Similarly, Pasarell's necessary vote, even if materially interested, is not excluded by the super-majority provision of the ATP Bylaws. The provision states that "two affirmative votes of the Tournament Tour Board Representatives plus two affirmative votes of the Player Tour Board Representatives" are required. App. 2692. Like the provisions in Technicolor III, the bylaws here do not require exclusion of the interested votes, and Technicolor III suggests that no such exclusion can be implied. But although in Technicolor III the board's actions were examined under the business judgment rule and found not to have breached the duty of loyalty, neither the Court of Chancery nor the Delaware Supreme Court explicitly stated that the super-majority voting requirement does not affect the applicability of the business judgment rule presumption. As noted, because Pasarell was not self-interested, we do not need to decide this issue.
|
510 U.S. 1075
Testav.United States.
No. 93-6461.
Supreme Court of United States.
January 18, 1994.
1
Appeal from the C. A. Fed. Cir.
2
Certiorari denied. Reported below: 9 F. 3d 977.
|
Matter of Sebring (Community First Holdings, Inc.--Commissioner of Labor) (2019 NY Slip Op 04238)
Matter of Sebring (Community First Holdings, Inc.--Commissioner of Labor)
2019 NY Slip Op 04238
Decided on May 30, 2019
Appellate Division, Third 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 and Entered: May 30, 2019
525831
[*1]In the Matter of the Claim of MARY SEBRING, Respondent. COMMUNITY FIRST HOLDINGS, INC., Doing Business as NIAGARA- GAZETTE, Appellant. COMMISSIONER OF LABOR, Respondent.
Calendar Date: April 24, 2019
Before: Lynch, J.P., Mulvey, Devine, Aarons and Rumsey, JJ.
Bond, Schoeneck & King, PLLC, Syracuse (L. Michael Zinser of The Zinser Law Firm, PC, Nashville, Tennessee, admitted pro hac vice), for appellant.
Bruce Evans Knoll, Albany, for Mary Sebring, respondent.
MEMORANDUM AND ORDER
Devine, J.
Appeals from two decisions of the Unemployment Insurance Appeal Board, filed October 2, 2017, which ruled, among other things, that Community First Holdings, Inc. was liable for unemployment insurance contributions on remuneration paid to claimant and others similarly situated.
Claimant entered into several contracts with Community First Holdings, Inc. (hereinafter CFHI) to provide delivery services for its newspapers within certain geographic areas. After CFHI terminated the contracts, claimant applied for unemployment insurance benefits. The Department of Labor determined that claimant was an employee of CFHI and that CFHI was liable for additional contributions based upon remuneration paid to claimant and others similarly situated. This determination was sustained by an Administrative Law Judge following a hearing, and the Unemployment Insurance Appeal Board affirmed. CFHI appeals.
We affirm. The record reflects that the indicia of control retained by CFHI in its contracts with claimant and others similarly situated are nearly identical to the relevant factors identified to establish an employment relationship in Matter of Rosenfelder (Community First Holdings, Inc.-Commissioner of Labor) (137 AD3d 1438, 1439-1440 [2016]). Accordingly, we find that substantial evidence supports the Board's decisions, and they will not be disturbed (see Matter of Nicholas [Gannett Satellite Info. Network, Inc.-Commissioner of Labor], 167 AD3d 1180, 1181 [2018]; Matter of Smith [Gannett Satellite Info. Network, Inc.-Commissioner of Labor], 166 AD3d 1251, 1252 [2018]; Matter of Rosenfelder [Community First Holdings, Inc.-[*2]Commissioner of Labor], 137 AD3d at 1439-1440)[FN1]. CFHI's remaining claims have been considered and found to be unpersuasive.
Lynch, J.P., Mulvey, Aarons and Rumsey, JJ., concur.
ORDERED that the decisions are affirmed, without costs.
Footnotes
Footnote 1: As this claim preceded the enactment of Labor Law § 511 (23), which was added by the Legislature in 2016 (L 2016, ch 503, § 1 [Nov. 28, 2016]), that statute does not apply here.
|
COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
DAVID SIMS, No. 08-15-00113-CV
§
Appellant, Appeal from the
§
v. 12th District Court
§
THE CITY OF MADISONVILLE of Madison County, Texas
AND THE MADISONVILLE POLICE §
DEPARTMENT, (TC# 14-13720-012-10)
§
Appellees.
§
JUDGMENT
The judgment issued by the Court on June 8, 2018 is withdrawn, and the following is the
judgment of the Court.
The Court has considered this cause on the record and concludes there was error in the
judgment. We therefore reverse the judgment of the court below and remand the cause for further
proceedings, in accordance with this Court’s opinion. We further order that Appellant recover
from Appellees all costs of this appeal, for which let execution issue. This decision shall be
certified below for observance.
IT IS SO ORDERED THIS 28TH DAY OF SEPTEMBER, 2018.
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rodriguez, and Hughes, JJ.
Hughes, J., not participating
|
8 Wn. App. 633 (1973)
508 P.2d 1386
THE STATE OF WASHINGTON, Respondent,
v.
WALKER EDWARD KENNEDY, Appellant.
No. 790-2.
The Court of Appeals of Washington, Division Two.
April 4, 1973.
Alan Rasmussen, for appellant (appointed counsel for appeal).
Ronald L. Hendry, Prosecuting Attorney, and Joseph D. Mladinov, Special Counsel, for respondent.
ARMSTRONG, J.
The defendant, Walker Edward Kennedy, appeals from a judgment and sentence entered pursuant to a jury verdict of guilty of robbery and a special finding that he was armed with a deadly weapon.
The appeal raises three issues: (1) Was the search of the house wherein defendant was found illegal as the product of an illegal arrest? (2) Did the trial court err in denying the defendant's motion to exclude the panel of *634 prospective jurors who witnessed a portion of the related proceedings? (3) Was the defendant denied his right to effective counsel when the same counsel represented two of the three defendants named in the information? We answer each question in the negative.
On February 25, 1972 two black males stepped out of an automobile parked in an alley across the street from Hicks Grocery in Tacoma. A third black male remained in the automobile. The two men entered the store. One of them held a pistol to the head of Flora Hicks, the second took Samuel Hicks' wallet and the cash from the cash register. They then fled.
A passing motorist saw the two men get into the automobile and watched as the three men drove away. He wrote down the license number of their vehicle and gave it to the police when they arrived. Neither Samuel nor Flora Hicks could provide a detailed description of the robbers except that they were black and one had worn a blue bandana over his head and was carrying a gun.
The license number and a description of the getaway vehicle were broadcast over the police radio. Several police officers on patrol proceeded to the area of the grocery store. The automobile was found a few blocks from the store and the license number was checked to ascertain the vehicle's registered owner. James Arthur Everett, whose residence was only half a block from where the vehicle was found, was the registered owner. Several Tacoma police officers converged on the Everett residence. They knocked on the door but received no response. Lieutenant Gallwas, a detective with the Tacoma Police Department, arrived and went up to the front porch. While debating whether to obtain a search warrant, he learned that a neighbor woman had seen three black males arrive in the automobile, get out and go into the Everett residence. He knocked again loudly. Receiving no response and without identifying themselves as police officers, they forcefully entered the home and arrested the three men, Kennedy, Everett and Jimmy Rae Richards. All three were taken into custody. Both James *635 Arthur Everett and his father, Earl Everett, gave the police written consent to search the house. The search uncovered the stolen items and the pistol. These were used to secure the convictions of all three men.
James Arthur Everett pleaded guilty to grand larceny and agreed to testify against the other two defendants at their trial. Alan Rasmussen was appointed attorney for both Richards and Kennedy. On the day of trial Richards pleaded guilty to robbery. While the court was questioning Richards as to the voluntariness of his plea, the panel of prospective jurors entered the courtroom. Defense counsel moved to exclude the panel of prospective jurors. Denying this motion, the court stated:
THE COURT: It is the Court's opinion that he stopped all proceedings here which did not involve the remaining Defendant Kennedy in time, that the jurors were not paying any attention to whom was where but were looking for seats, and it will come out in the evidence definitely that there were three participants, there being one defendant remaining; and knowing or believing that the jurors, being laymen, cannot even suspicion the purpose of three people being up before the Court. It might be on an entirely different matter. For that reason, the Court would deny but can appreciate Defendant's Counsel's motion, ...
The panel was sent out of the courtroom and the questioning continued. During this interrogation Richards informed the court that he and Kennedy were the two who entered the store and that Kennedy was the one who carried the gun.
Richards was not called by either party to testify during the trial. James Everett's testimony was consistent with the version Richards told the court when he pleaded guilty. The defendant Kennedy's version was that he stayed in the parked automobile and that Richards and Everett were the only two involved in the robbery. Thus, Kennedy denied any knowledge of the robbery prior to its occurrence. The jury disbelieved his story and found him guilty of robbery.
The defendant's first contention on appeal is that all evidence *636 seized during the search of the Everett residence should have been excluded as the product of an illegal arrest. His argument is that the entry of the officers into the house and the subsequent arrest were illegal because the officers did not have probable cause to believe that any occupants of the house had committed a felony. He also argues that the arrest was illegal because the officers did not announce their identity and purpose prior to the entry as required by RCW 10.31.040.[1]
The defendant rests both of these contentions upon the testimony of Lieutenant Gallwas of the Tacoma Police Department. Lieutenant Gallwas testified that when he arrived, there were already four other officers at the house. He did not know what happened before he arrived but he knocked loudly on both the front and the back doors. He did not at any time announce who he was or what his purpose was. His knocks were met with silence inside the house. It was only when he learned that a neighbor woman had seen three black males enter the house shortly before his arrival that he decided to break in.
[1] We need not discuss the validity of the initial entry or the arrest of the three suspects because neither an invalid entry nor an unlawful arrest would invalidate the defendant's conviction. It is the admission of evidence obtained incident to or as a result of illegal activity which can upset the conviction. State v. Melrose, 2 Wn. App. 824, 470 P.2d 552 (1970). Evidence obtained from an independent source may be proved like any other evidence. Carpenter v. United States, 463 F.2d 397 (10th Cir.1972). The items which were admitted into evidence, and to which the defendant objected, were seized during a search of the premises conducted pursuant to written consent of the owner of the house, Earl Everett. The evidence showed that after their initial entry the officers attempted to obtain a search *637 warrant to search for the stolen items but Earl Everett returned home and consented to a search of his home before a warrant was obtained. Thus, the search was not made incident to or as a result of either the initial entry or the arrest. Under no circumstances, then, did the admission of the seized evidence violate Kennedy's constitutional or statutory rights.
Defendant's next contention is that the court erred in denying his motion to exclude the jury panel which witnessed a portion of the proceedings in which Richards pleaded guilty to robbery. We disagree.
In State v. Parnell, 77 Wn.2d 503, 463 P.2d 134 (1969), the court reversed the defendant's conviction because the trial court had not excused for cause a juror who had witnessed the defendant's preliminary hearing. Noting that the juror's presence at the preliminary hearing was no momentary or casual matter, the court held that his witnessing that proceeding mandated a conclusive presumption of prejudice.
[2] The defendant now brings before us a "momentary or casual" witnessing of another defendant's plea of guilty and seeks the same result as occurred in State v. Parnell, supra. We believe no prejudice occurred and none should be presumed. The court, upon discovering that the panel of prospective jurors was entering the courtroom, immediately stopped the proceeding and asked the jurors to wait out in the hall. The court observed that, as they entered, the jurors were not paying any attention to who was before the court but were looking for seats. We are convinced that this was but a momentary or casual matter and does not establish a reasonable doubt that the defendant received a fair trial. State v. McGee, 6 Wn. App. 668, 495 P.2d 670 (1972).
Lastly defendant contends, in a pro se brief, that he was denied his right to effective counsel under the Sixth and Fourteenth Amendments because his court-appointed attorney also represented the codefendant Richards. Defendant argues that a conflict of interest arose because his defense *638 was at variance with the testimony of Richards and that counsel's failure to call Richards as a defense witness and impeach his credibility constituted actual prejudice.
[3] Defendant asserts that the test to be applied in determining if a criminal defendant has been denied his right to effective counsel when the same attorney represents more than one defendant is whether there is a possibility of conflict or prejudice. We disagree. We believe this is an appropriate standard for the trial court to employ at the time counsel is appointed. Indeed, it is the only standard which may be employed at that point in the proceedings as the court is unaware of the existence of any conflict. However, when we review the proceedings in the trial court we are not confined to the application of such a speculative standard. Concededly, in judging the effectiveness of counsel we must indulge in some sort of speculation as we see only the "tip of the iceberg" in the record before us. Lollar v. United States, 376 F.2d 243 (D.C. Cir.1967). However, we do have the verbatim transcript of the proceedings in the trial court. Accordingly, if we can find anything in the record which indicates that there is a possibility that the defendant may have been actually prejudiced, he has been denied his right to effective counsel. State v. Bible, 77 Wn.2d 69, 459 P.2d 646 (1969); Lollar v. United States, supra.
We do not find even a possibility that the defendant may have been actually prejudiced. Richards did not testify at the trial. Under interrogation by the court when he pleaded guilty to robbery, Richards reluctantly related how he and Kennedy entered the store and that Kennedy carried the gun. This testimony differed from the defendant Kennedy's but, because Richards was not called by the state to testify, counsel was not placed in a situation where his loyalty to one of his clients must suffer. Thus, Kennedy was not prejudiced. Cf. Craig v. United States, 217 F.2d 355 (6th Cir.1954). Kennedy argues, however, that defense counsel's failure to call Richards as an adverse witness indicates that defense counsel did not desire to place himself in the position *639 where, in order to advance Kennedy's defense, he must attack the credibility of his other client. Thus, defendant's pro se brief asserts, there is the possibility that Kennedy was actually prejudiced. We disagree because we are convinced that counsel's failure to call Richards as a defense witness was motivated by his loyalty to Kennedy and not by his duty to simultaneously defend two clients. Kennedy's argument assumes that an attorney would call a witness whose testimony is inimical to his client in order that the witness' testimony may be impeached. Such an assumption is unwarranted and therefore fails to create a possibility that Kennedy may have been actually prejudiced.
We have reviewed the defendant's remaining assignments of error and do not find them persuasive.
Affirmed.
PEARSON, C.J., and PETRIE, J., concur.
NOTES
[1] "To make an arrest in criminal actions, the officer may break open any outer or inner door, or windows of a dwelling house or other building, or any other inclosure, if, after notice of his office and purpose, he be refused admittance." RCW 10.31.040.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 00-6489
BRETT C. KIMBERLIN,
Petitioner - Appellant,
versus
STEPHEN DEWALT, Warden,
Respondent - Appellee.
Appeal from the United States District Court for the Eastern Dis-
trict of Virginia, at Norfolk. Rebecca B. Smith, District Judge.
(CA-99-979-2)
Submitted: May 16, 2000 Decided: May 25, 2000
Before WILLIAMS and TRAXLER, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Brett C. Kimberlin, Appellant Pro Se. George Maralan Kelley, III,
OFFICE OF THE UNITED STATES ATTORNEY, Norfolk, Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Brett C. Kimberlin appeals the district court's order denying
relief on his 28 U.S.C. § 2241 (1994) petition. We have reviewed
the record and the district court's opinion accepting the recom-
mendation of the magistrate judge and find no reversible error.
Accordingly, we affirm on the reasoning of the district court. See
Kimberlin v. Dewalt, No. CA-99-979-2 (E.D. Va. Apr. 3, 2000). We
deny Kimberlin's motions for bail pending appeal and for appoint-
ment of counsel. Finally, we deny Kimberlin's motion for oral
argument because the facts and legal contentions are adequately
presented in the materials before the court and argument would not
aid the decisional process.
AFFIRMED
2
|
321 U.S. 67 (1944)
McLEAN TRUCKING CO. ET AL.
v.
UNITED STATES ET AL.
No. 31.
Supreme Court of United States.
Argued November 12, 15, 1943.
Decided January 17, 1944.
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK.
*68 Mr. Arne C. Wiprud, with whom Messrs. Robert H. Shields and Edward Dumbauld were on the brief, for the Secretary of Agriculture of the United States, appellant. Mr. E.B. Ussery submitted for the McLean Trucking Co., and Messrs. Martin Burns and Paul E. Mathias submitted for the American Farm Bureau Federation, appellants.
Mr. Daniel W. Knowlton for the Interstate Commerce Commission; and Mr. Mortimer Allen Sullivan, with whom Mr. Hugh M. Joseloff was on the brief, for Associated Transport, Inc. et al., appellees.
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
This is an appeal from a decree of a statutory three judge court,[1] 48 F. Supp. 933, refusing to set aside certain orders of the Interstate Commerce Commission which had authorized consolidation of seven large motor carriers.
Associated Transport, Inc., was organized in Delaware in March, 1941, to bring about the proposed merger. In July, 1941, it applied to the Interstate Commerce Commission for permission, under § 5 of the Interstate Commerce Act, as amended (49 U.S.C. § 5; 54 Stat. 898, 905), to obtain control of eight motor carriers, through purchase of their capital stock, and to consolidate their operating rights and properties into one unit within a year from the *69 date it acquired stock control. At the same time, Associated applied for permission under § 214 of the Motor Carrier Act of 1935 (49 U.S.C. § 314; 49 Stat. 543, 557, 52 Stat. 1240, 54 Stat. 924) to issue preferred and common stock to be used mainly in exchange for stocks of the eight common carriers and four associated noncarriers.
Before the Commission, approval of the applications was opposed by the Secretary of Agriculture, the Anti-Trust Division of the Department of Justice, the National Grange, four fruit growers associations and Super Service Motor Freight Company, a motor carrier.[2] An examiner held hearings at which evidence was introduced, and the Commission heard argument on objections to his report before finally authorizing the consolidation.[3] 38 M.C.C. 137. McLean Trucking Company, Inc., a motor carrier which claims to compete with some of the carriers included in the merger, brought suit in the District Court to set aside the Commission's orders. The Secretary of Agriculture and the American Farm Bureau Federation intervened as plaintiffs. The United States confessed error. The Interstate Commerce Commission and the parties to the merger defended the Commission's order.
The principal issues, later set forth with particularity, are intertwined. They relate to whether the Commission applied a proper standard in concluding to approve the merger; whether it failed to give due weight to the prohibitions and policies of the anti-trust laws; and whether, upon the evidence and within the meaning of § 5 (2) (b) *70 of the Interstate Commerce Act, the Commission rightly could determine that Associated, upon consummation of the merger, would not be affiliated with any railroad. The Commission resolved all of these questions in favor of the merger, as did the District Court.
In one respect, however, the case as presented to the court was in different posture than as it came to the Commission. This change arose from the elimination of one of the constituent companies, Arrow Carrier Corporation, from the merger between the time the Commission's orders were rendered and the hearing in the District Court. After the suit was begun the Commission, on the applicant's petition, modified its orders to exclude Arrow. Accordingly the Commission also amended its answer to indicate the change, and the case was decided on the orders as modified. They present the only questions for our consideration. It may be noted that the elimination of Arrow has bearing upon the issue relating to anti-trust policy, but more particularly on that relating to railroad affiliation.
The eight carriers originally sought to be merged[4] were Arrow Carrier Corporation, Paterson, N.J.; Barnwell Brothers, Inc., Burlington, N.C.; Consolidated Motor Lines, Inc., Hartford, Conn.; Horton Motor Lines, Inc., Charlotte, N.C.; McCarthy Freight System, Inc., Taunton, Mass.; M. Moran Transportation Lines, Inc., Buffalo, N.Y.; Southeastern Motor Lines, Inc., Bristol Va.; and Transportation, Inc., Atlanta, Ga. The merger embraces some of the principal operators along the Atlantic seaboard from Massachusetts to Florida. Certain of them *71 serve communities as far west as Cleveland, Ohio, Nashville, Tennessee, and New Orleans, Louisiana. But the most important effect will be to create an end-to-end consolidation from points in the far South to New England, with obviously large possibilities for through service. According to evidence before the Commission the total assets of the companies involved, as of April 30, 1941, exceed $8,000,000 and their gross operating revenues for 1940 exceeded $19,000,000. The carriers operate principally as motor vehicle common carriers of general commodities over regular routes totalling 37,884 miles. Over 13,546 miles between important service points one or more competes with others in the group.[5] This competitive mileage will be eliminated by the merger, leaving a single carrier with routes extending over 24,338 miles.
As a result of the proposed merger Associated will be the largest single motor carrier in the United States at least in terms of its estimated revenues and no other single motor carrier will compete with it throughout its service area. Nevertheless, after careful consideration and on evidence clearly sufficient to sustain it, the Commission found that on completion of the merger "there would remain ample competitive motor-carrier service throughout the territory involved" and in addition that *72 one or more rail carriers would offer substantial competition to Associated at all principal points. It also found that the consolidation would result in improved transportation service. Through movement of freight would be simplified and expedited, equipment would be utilized more efficiently, terminal facilities improved, handling of shipments reduced, relations with shippers and public regulatory bodies simplified, safe operation promoted, and substantial operating economies would be achieved. The Commission concluded that the applicant's assumption of the fixed charges of the carriers would not be inconsistent with the public interest, and consummation of the proposed transaction would not result in substantial injury to the carrier employees affected.
In connection with Arrow's participation, the Commission found that The Transport Company, whose stock was wholly owned by Kuhn, Loeb and Company, had an option to purchase Arrow's common stock and would receive Associated's stock therefor when the merger was effected. The stock thus received, together with 9,000 shares of Associated's common stock already held, would give The Transport Company, and through it Kuhn, Loeb and Company, 6,877 shares of Associated's preferred and 67,167 of Associated's common, a total of 13 per cent and 9.53 per cent, respectively, of the preferred and common stocks expected to be outstanding at the conclusion of the transactions.[6] Kuhn, Loeb and Company is represented on the boards of directors of several railroads *73 and for years has had investment banking connections with the Baltimore and Ohio and the Pennsylvania Railroads, each operating in territory to be served by Associated. A representative of Kuhn, Loeb and Company would be one of Associated's nine directors. After examining the blocks of stock which other persons would hold on completion of the consolidation and other matters bearing on the relationship between the proposed merger and the railroads, the Commission concluded that Associated would not be affiliated with any rail carriers. With the elimination of Arrow, of course, the likelihood of any influence on Associated's policies by Transport, and thus by Kuhn, Loeb and Company and the railroads, was substantially reduced.
I.
The pertinent provisions of the Interstate Commerce Act, which is controlling, are set forth in the margin.[7]*74 Section 5 (2) makes lawful a consolidation of the sort here attempted only if the Commission authorizes it. The Commission is empowered to authorize and approve a *75 consolidation either as applied for or as qualified by such terms and conditions as it deems "just and reasonable," if it finds that the merger "will be consistent with the *76 public interest." § 5 (2) (b). In passing upon a proposed consolidation the Commission is required to "give weight to the following considerations, among others: (1) The effect of the proposed transaction upon adequate transportation service to the public; . . . (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected." § 5 (2) (c). The foregoing provisions supply the general statutory standards for guiding the Commission's judgment; and within their broad limits, its authority is "exclusive and plenary." § 5 (11).
However, in two particulars, pertinent especially to the issues concerning anti-trust policy and railroad affiliation, § 5 lays down more explicit commands. One is a specific exemption of carriers and individuals participating in an approved merger "from the operation of the antitrust laws and of all other restraints, limitations, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transactions *77 so approved . . . and to hold, maintain, and operate any properties and exercise any control or franchises acquired through such transaction." § 5 (11). The other provides the standards to be applied in cases of affiliation of a motor carrier with a railroad. Where a railroad or "any person which is controlled by such a carrier, or affiliated therewith"[8] is an applicant in a consolidation proceeding, the Commission cannot approve the merger "unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition." § 5 (2) (b). In the light of these controlling statutory provisions the issues must be stated more sharply for proper perspective of what is at stake.
II.
As has been said, they are intertwined. This is true especially of the issues concerning the propriety of the standards applied and whether due consideration was given to the anti-trust laws and policies, although the question of rail affiliation is closely related to both.
The chief attack on the orders is that the Commission improperly construed the standards by which Congress intended it to determine the propriety of a consolidation; and the burden of this complaint is that it did so "by failing to consider and give due weight to the anti-trust and other laws of the United States." The argument seems to be that the merger, notwithstanding the Commission's approval, violates the Sherman Act; hence the Commission is without power to approve the merger. This presupposes that Congress did not intend, by enacting the specific exemption of § 5 (11), to give the Commission leeway to approve any merger which, but for the exemption *78 and the Commission's approval, would run afoul of the anti-trust laws. In other words, the Commission's authority is not "exclusive and plenary," as the section declares, within the boundaries set by the Interstate Commerce Act, including the exemption; but it is restricted also by all the ramifications of the anti-trust laws and policies, to which the Commission must give strict regard in approving motor consolidations, as if the exemption did not exist.
It is conceded this is not true of rail consolidations, though they are authorized, and subjected to the same standards, by the identical sections of the statute. A difference in application of the language is said to arise from the difference which existed in the conditions under which rail and motor carriers, respectively, were brought within the purview of the statutory commands. Thus, it is said, the Transportation Act of 1920 (41 Stat. 456) made a broad departure from previous policy by relieving rail consolidations, with the Commission's approval, from anti-trust restrictions in order to rehabilitate a brokendown industry. But, it is also said, such a condition did not characterize motor carriers when they were brought under regulation in 1935 or at the time of any subsequent legislation affecting them. Hence, it is admitted the Commission with propriety may approve a rail consolidation, otherwise prohibited by the anti-trust laws, in order to bring about needed or desirable improvement in service and economies in operation. But, as to motor carriers, it is urged the consolidation cannot be effected with any such purposes or consequences. Only when the existing service is inadequate and consolidation is necessary to bring about adequate service to the public, the argument runs, can the Commission approve it.
On its face the contention would seem to run in the teeth of the language and the purpose of § 5 (11). Nothing in its terms indicates an intention to create one authority *79 for rail consolidations and another for motor mergers. Identical provisions govern both. And to restrict the application of the section to motor carriers in the manner urged would nullify its operation as to them. The attack, when carried to such an extent, comes down to one upon the policy which Congress has declared. It has done so in terms which do not admit of nullification by reference to the varying conditions under which different types of carriers were brought within the statute's operation. It is not for this Court, or any other, to override a policy, or an exemption from one, so clearly and specifically declared by Congress, whatever may be our views of the wisdom of its action. The argument in its full sweep therefore must be rejected. But, taken for less than that, it poses a problem of accommodation of the Transportation Act and the anti-trust legislation, to which we now turn. In doing so we note that the former is the later in time and constitutes not only a more recent but a more specific expression of policy.
III.
To secure the continuous, close and informed supervision which enforcement of legislative mandates frequently requires, Congress has vested expert administrative bodies such as the Interstate Commerce Commission with broad discretion and has charged them with the duty to execute stated and specific statutory policies. That delegation does not necessarily include either the duty or the authority to execute numerous other laws. Thus, here, the Commission has no power to enforce the Sherman Act as such. It cannot decide definitively whether the transaction contemplated constitutes a restraint of trade or an attempt to monopolize which is forbidden by that Act. The Commission's task is to enforce the Interstate Commerce Act and other legislation which deals specifically with transportation facilities and problems. That *80 legislation constitutes the immediate frame of reference within which the Commission operates; and the policies expressed in it must be the basic determinants of its action.
But in executing those policies the Commission may be faced with overlapping and at times inconsistent policies embodied in other legislation enacted at different times and with different problems in view. When this is true, it cannot, without more, ignore the latter. The precise adjustments which it must make, however, will vary from instance to instance depending on the extent to which Congress indicates a desire to have those policies leavened or implemented in the enforcement of the various specific provisions of the legislation with which the Commission is primarily and directly concerned. Cf. National Broadcasting Co. v. United States, 319 U.S. 190; New York Central Securities Corp. v. United States, 287 U.S. 12.
The national transportation policy is the product of a long history of trial and error by Congress in attempting to regulate the nation's transportation facilities beginning with the Interstate Commerce Act of 1887.[9] For present purposes it is not necessary to trace the history of those attempts in detail other than to note that the Transportation Act of 1920 marked a sharp change in the policies and objectives embodied in those efforts.[10] "Theretofore, the effort of Congress had been directed mainly to the prevention of abuses; particularly, those arising from excessive *81 or discriminatory rates";[11] and emphasis on the preservation of free competition among carriers was part of that effort.[12] The Act of 1920 added "a new and important object to previous interstate commerce legislation." It sought "affirmatively to build up a system of railways prepared to handle promptly all the interstate traffic of the country." Dayton-Goose Creek Ry. Co. v. United States, 263 U.S. 456, 478; Texas & Pacific Ry. Co. v. Gulf, C. & S.F. Ry. Co., 270 U.S. 266, 277. And in administering it, the Commission was to be guided primarily by consideration for "adequacy of transportation service, . . . its essential conditions of economy and efficiency, and . . . appropriate provision and best use of transportation facilities.. . ." New York Central Securities Corp. v. United States, 287 U.S. 12, 25.
Since that initial effort at reshaping regulation of railroads to "ensure . . . adequate transportation service,"[13] Congress has extended federal regulation in connection with other forms of transportation[14] and has elaborated *82 more fully the objectives to be achieved by its legislation. In 1935 it enacted a comprehensive scheme of regulation for motor carriers, designed to result in "a system of coordinated transportation for the Nation which will supply the most efficient means of transport and furnish service as cheaply as is consistent with fair treatment of labor and with earnings which will support adequate credit and the ability to expand as need develops and to take advantage of all improvements in the art."[15] The policy which was to guide the Commission in administering that Act was fully stated[16] and has since been absorbed into the equally full statement of the national transportation policy. That policy, which is the Commission's guide to "the public interest," cf. New York Central Securities Corp. v. United States, 287 U.S. 12; Texas v. United States, 292 U.S. 522, demands that all modes of transportation subject to the provisions of the Interstate Commerce Act be so regulated as to "recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; *83 to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; . . . all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense." 54 Stat. 899.
The history of the development of the special national transportation policy suggests, quite apart from the explicit provision of § 5 (11), that the policies of the antitrust laws determine "the public interest" in railroad regulation only in a qualified way. And the altered emphasis in railroad legislation on achieving an adequate, efficient, and economical system of transportation through close supervision of business operations and practices rather than through heavy reliance on the enforcement of free competition in various phases of the business, cf. New York Central Securities Corp. v. United States, 287 U.S. 12, has its counterpart in motor carrier policy. The premises of motor carrier regulation posit some curtailment of free and unrestrained competition.[17] The origins[18] and legislative *84 history[19] of the Motor Carrier Act adequately disclose that in it Congress recognized there may be occasions when "competition between carriers may result in harm to the public as well as in benefit; and that when a [carrier] inflicts injury upon its rival, it may be the public which ultimately bears the loss." Cf. Texas & Pacific Ry. Co. v. Gulf, C. & S.F. Ry. Co., 270 U.S. 266, 277.
Whatever may be the case with respect either to other kinds of transactions by or among carriers[20] or to consolidations of different types of carriers,[21] there can be little doubt *85 that the Commission is not to measure proposals for all-rail or all-motor consolidations by the standards of the anti-trust laws. Congress authorized such consolidations because it recognized that in some circumstances they were appropriate for effectuation of the national transportation policy. It was informed that this policy would be furthered by "encouraging the organization of stronger units" in the motor carrier industry.[22] And in authorizing those consolidations it did not import the general policies of the anti-trust laws as a measure of their permissibility.[23] It in terms relieved participants in appropriate mergers from the requirements of those laws. § 5 (11). In doing so, it presumably took into account the fact that the business affected is subject to strict regulation and supervision, particularly with respect to rates charged the public an effective safeguard against the evils attending monopoly, at which the Sherman Act is directed. Against this background, no other inference is possible but that, as a factor in determining the propriety of motor-carrier consolidations the preservation of competition among carriers, although still a value,[24] is significant chiefly as it aids in the *86 attainment of the objectives of the national transportation policy.
Therefore, the Commission is not bound, as appellants urge, to accede to the policies of the anti-trust laws so completely that only where "inadequate" transportation facilities are sought to be made "adequate" by consolidation can their dictates be overborne by "the public interest." That view, in effect, would require the Commission to permit only those consolidations which would not offend the anti-trust laws. As has been said, this would render meaningless the exemption relieving the participants in a properly approved merger of the requirements of those laws, and would ignore the fact that the Motor Carrier Act is to be administered with an eye to affirmatively improving transportation facilities, not merely to preserving existing arrangements or competitive practices.[25] Compare Dayton-Goose Creek Ry. Co. v. United States, supra; The New England Divisions Case, supra.
Congress however neither has made the anti-trust laws wholly inapplicable to the transportation industry nor has authorized the Commission in passing on a proposed merger to ignore their policy. Congress recognized that the process of consolidating motor carriers would result in some diminution of competition and might result in the creation of monopolies. To prevent the latter effect and to make certain that the former was permitted only where appropriate to further the national transportation policy, it placed in the Commission power to control such developments.[26] The national transportation policy requires *87 the Commission to "promote . . . economical . . . service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, [or] undue preferences or advantages. . . ." The preservation of independent and competing motor carriers unquestionably has bearing on the achievement of those ends. Hence, the fact that the carriers participating in a properly authorized consolidation may obtain immunity from prosecution under the anti-trust laws in no sense relieves the Commission of its duty, as an administrative matter, to consider the effect of the merger on competitors and on the general competitive situation in the industry in the light of the objectives of the national transportation policy.
In short, the Commission must estimate the scope and appraise the effects of the curtailment of competition which will result from the proposed consolidation and consider them along with the advantages of improved service, safer operation, lower costs, etc., to determine whether the consolidation will assist in effectuating the over-all transportation policy. Resolving these considerations is a complex task which requires extensive facilities, expert judgment and considerable knowledge of the transportation industry. Congress left that task to the Commission "to the end that the wisdom and experience of that Commission may be used not only in connection with this form of transportation, but in its coordination of all other forms." 79 Cong. Rec. 12207. "The wisdom and experience of that commission," not of the courts, must determine whether the proposed consolidation is *88 "consistent with the public interest." Cf. Interstate Commerce Commission v. Illinois Central R. Co., 215 U.S. 452; Pennsylvania Co. v. United States, 236 U.S. 351; United States v. Chicago Heights Trucking Co., 310 U.S. 344; Purcell v. United States, 315 U.S. 381. If the Commission did not exceed the statutory limits within which Congress confined its discretion and its findings are adequate and supported by evidence, it is not our function to upset its order.
IV.
The Commission found, as has been noted, that the proposed consolidation would result in improved transportation service, greater efficiency of operation and substantial operating economies. The higher load factor on trucks, reduction in the number of trucks used and the mileage traversed would lead to more efficient use of equipment and save motor fuel. Terminal facilities would be consolidated and used more effectively, through movement of freight would reduce costs and in a multitude of other ways the stability and safety of the service rendered would be enhanced.[27] The Commission also considered the extent to which competition among the merging carriers would be diminished, the effects of the consolidation on competing carriers and the consequences for transportation service and motor carrier operations in general in the areas affected. It found that in each of the areas served by the present components of the merger there are from 44 to more than 100 Class I carriers, many *89 of which were regular route common carriers of general commodities, comparable in size insofar as size is disclosed by operating revenues to some of the participants in the consolidation. Between the principal points in each of the areas served substantial competition by independent Class I carriers now exists. While none of these carriers operates a through service over the entire area to be served by Associated, the Commission found that rail carrier service competes at all the principal points to be served by Associated, and that contract carriers also offer competition.
The Commission determined, on the basis of facts appearing in the record and its experience with other consolidations, that it was not likely that Associated's size and competitive advantages would enable it to control the price and character of interchange traffic, to drain off substantial amounts of shippers' business or in other ways to smother the competition of other motor carriers. It concluded that ample competition would remain and, weighing all the factors, that the consolidation was "consistent with the public interest."
Necessarily in its inquiry the Commission had to speculate to some extent as to the future consequences and effects of a present consolidation. But it based its judgment on available facts as to present operations and business practices and past experience with transportation operations and analogous transactions.
We cannot say that the Commission measured "the public interest" by standards other than those Congress provided or that its findings do not comply with the requirements of the Act. The material findings are supported by evidence; and while a more meticulous regard for its function might have impelled the Commission to accede to the Anti-Trust Division's request for certain information from other shippers bearing on the question of *90 competition, we do not think its failure to do so requires, on this record, that its conclusions be overturned.
V.
Appellants also attack the propriety of the Commission's conclusion that Associated is not, and would not be, on consummation of the consolidation, "affiliated" with any railroad. Whatever might have been the case if Arrow had been included in the merger, a different question is presented by the orders now under review.
Section 5 (2) provides:
"That if . . . any person which is controlled by a [rail] carrier, or affiliated therewith within the meaning of paragraph (6), is an applicant in the case of any such proposed transaction involving a motor carrier, the Commission shall not enter such an order unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition."
Section 5 (6) provides:
"For the purposes of this section a person shall be held to be affiliated with a carrier if, by reason of the relationship of such person to such carrier (whether by reason of the method of, or circumstances surrounding organization or operation, or whether established through common directors, officers, or stockholders, a voting trust or trusts, a holding or investment company or companies, or any other direct or indirect means), it is reasonable to believe that the affairs of any carrier of which control may be acquired by such person will be managed in the interest of such other carrier."
The only relevant evidence now pointing toward affiliation of the applicant with rail carriers are the facts that Kuhn, Loeb and Company indirectly owns 9,000 shares *91 of Associated's common stock, has one representative among the nine directors of Associated, has investment banking connections with competing rail carriers, and is represented on the boards of directors of other railroads. For present purposes we may assume that by virtue of those connections the rail carriers' interests will be the banking house's interests in directing the affairs of Associated. But aside from the proportionately small (9,000 out of 1,000,000 common shares) stock ownership and the place on the board of directors, the Commission found no connection either in the origins of the present proposal or in personnel, financing or otherwise between Kuhn, Loeb and Company and the rail carriers on the one hand and Associated on the other. This contrasts sharply with the circumstances in Transport Co., 36 M.C.C. 61, where a much larger merger of eastern motor carrier operators, sought to be consummated with at least the assistance of Kuhn, Loeb and Company, was denied approval by the Commission. And in the present merger others, not associated, so far as this record shows, with Kuhn, Loeb and Company or rail carriers would have substantial blocks of stock.[28] We cannot find anything arbitrary or unreasonable in the conclusion that the consolidation as finally authorized will not result in Associated's being affiliated with a carrier by rail. It may be added that under the Commission's order in this case the relatively close holdings which will emerge from the consolidation cannot be altered without the Commission's approval. And it is the consolidation as approved which is exempted from the operation of the anti-trust laws and the prohibition against rail affiliation without approval. Any future *92 change which may bring the consolidation into clash with either prohibition may be considered when it arises.
Accordingly the judgment is
Affirmed.
MR. JUSTICE MURPHY is of the opinion that the judgment should be reversed.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK concurs, dissenting:
I think that the Commission misconceived its authority under the merger and consolidation provisions of the Act. I agree that the Commission is not to measure motor vehicle consolidations by the standards of the anti-trust acts. Such a construction would make largely meaningless, as the opinion of the Court demonstrates, the power of the Commission under § 5 (11) to relieve participants in mergers or consolidations from the requirements of those acts. But I think a proper construction of the Act requires the Commission to give greater weight to the principles of competition than it apparently has done here.
I agree that the standard of the "public interest" which governs mergers and consolidations under § 5 embraces the national transportation policy contained in the Act. That declared policy calls, among other things, for the recognition and preservation of "the inherent advantages" of motor vehicle transportation; the promotion of "safe, adequate, economical, and efficient service" and the fostering of "sound economic conditions in transportation and among the several carriers"; the establishment and maintenance of reasonable charges "without unjust discriminations, undue preference or advantages, or unfair or destructive competitive practices" to the end of "developing, coordinating, and preserving a national transportation system" which is "adequate to meet" the national needs. 54 Stat. 899. Those standards are specifically referred *93 to in § 5 (2) (c) where an itemization of some of the factors to which the Commission shall give weight is made. And the preamble itself states that "All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy."
But I am of the opinion that the concept of the "public interest" as used in § 5 also embraces the anti-trust laws. Those laws extend to carriers as well as to other enterprises. But for the approval of the Commission the present consolidation would run afoul of the Sherman Act. United States v. Southern Pacific Co., 259 U.S. 214. And the Clayton Act (which makes specific references to common carriers) by § 11 expressly entrusts the Commission with the authority of enforcement of its provisions "where applicable to common carriers." 38 Stat. 734, 15 U.S.C. § 21. Those laws still stand. We thus have a long standing policy of Congress to subject these common carriers to the anti-trust laws. And we should remember that, so far as motor vehicles are concerned, we are dealing with transportation units whose rights of way the highways of the country have been furnished by the public. These considerations indicate to me that while the power of Congress to authorize the Commission to lift the ban of the anti-trust laws in favor of common carriers is clear (New York Central Securities Corp. v. United States, 287 U.S. 12, 25-26), administrative authority to replace the competitive system with a cartel should be strictly construed. I would read § 5 of the Transportation Act so as to make for the greatest possible accommodation between the principles of competition and the national transportation policy. The occasions for the exercise of the administrative authority to grant exemptions from the anti-trust laws should be closely confined to those where the transportation need is clear.
*94 If it were the opinion of the Commission that the policy of the Transportation Act would be thwarted unless a particular type of merger or consolidation were permitted, I have no doubt that it would be authorized to lift the ban of the anti-trust laws. But unless such necessity or need were shown I do not think the anti-trust laws should be made to give way. Congress did not give the Commission carte blanche authority to substitute a cartel for a competitive system. It may so act only when that step "will be consistent with the public interest." § 5 (2) (b). But since the "public interest" includes the principles of free enterprise, which have long distinguished our economy, I can hardly believe that Congress intended them to be swept aside unless they were in fact obstacles to the realization of the national transportation policy. But so far as we know from the present record that policy may be as readily achieved on a competitive basis as through the present type of consolidation. At least such a powerful combination of competitors as is presently projected is not shown to be necessary for that purpose. In this case the hand of the promoter seems more apparent than a transportation need.
For these reasons I would resolve the ambiguities of the Act in favor of the maintenance of free enterprise. If that is too niggardly an interpretation of the Act, Congress can rectify it. But if the Commission is allowed to take the other view,[1] a pattern of consolidation will have been approved which will allow the cartel rather than the competitive system to dominate this field. History *95 shows that it is next to impossible to turn back the clock once such a trend gets under way.
But there is another phase of the case which in my view requires a reversal of the judgment below. The Commission has allowed the investment banker of railroad companies to be represented on the board of the motor vehicle company. It did so after a finding that it was not "reasonable to believe that the affairs of applicant would be managed in the interest of any railroad" and therefore that the motor vehicle company would not be affiliated with any railroad within the meaning of the Act. § 5 (5) (a), (6). But though we assume there was no such affiliation, I agree with Commissioner Patterson that that is not the end of the matter. The question still remains whether it is "consistent with the public interest" to allow such a banker's nexus between the two competitors. I cannot believe that Congress intended the Commission to treat such a matter as inconsequential. The whole history of finance urges caution when one investment banker stakes out his claim to two competing companies. Experience shows that when one gains a seat at his competitor's table, it is the beginning of the end of competition. A new zone of influence has been created. Its efficacy turns not on the amount of stock ownership but on a host of subtle and imponderable considerations. Such an intertwined relationship has been "the root of many evils" (Brandeis, Other People's Money, p. 51) and so demonstrably inimical to the "public interest" in the past as not to be disregarded today.
I agree that if § 5 were read as the Court reads it, the order of the Commission should be affirmed. But since the Commission took a view of the law which in my opinion was erroneous, I would reverse the judgment below so that the case might be returned to the Commission for reconsideration of the application under the proper construction of § 5.
NOTES
[1] 28 U.S.C. §§ 44, 47, 47a, 345.
[2] Other motor carriers, shippers and shippers' organizations intervened in the proceeding, as did also the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Except for the latter, which at first opposed but ultimately supported the application, they took no position on the question whether the application should be approved.
[3] Three commissioners dissented. Approval of the merger was qualified by the imposition of certain conditions not here relevant.
[4] The four noncarriers, each associated with one of the carriers, are Barnwell Warehouse & Brokerage Company (associated with Barnwell), Brown Equipment & Manufacturing Company (associated with Horton), Conger Realty Company (associated with Horton), and Southern New England Terminals, Inc. (associated with McCarthy).
[5] The Commission found that Consolidated and McCarthy compete substantially throughout Connecticut, Massachusetts and Rhode Island but Consolidated alone operates between those areas and New York City. Consolidated and Moran compete between the principal points in New York State, but Moran's routes also extend to Cleveland, Ohio, and to several points in northern Pennsylvania. There is some competition among Arrow, Consolidated and Moran in New York, and others of Arrow's routes parallel those of Barnwell and Horton. Barnwell, Horton and Southeastern compete to some extent in parts of the Middle Atlantic States (excluding New York). Barnwell, Horton and Transportation, Inc., compete in portions of the southern region, and Southeastern competes somewhat with them in that area.
[6] Associated is authorized by its charter to issue 100,000 shares of $100 par value preferred stock drawing six per cent cumulative dividends annually and 1,000,000 shares of $1.00 par value common stock. One of the conditions of the Commission's order here is that no par value be assigned the common stock. The Commission found that in exchange for all the outstanding stock of the merged companies (except a small quantity of the preferred stock of two of the carriers which was to be redeemed for cash) Associated was to issue 648,643 shares of its common and 39,049 shares of its preferred stock, which on the cancellation of certain shares in connection with the stock of one of the noncarriers would leave outstanding 633,171 shares of common and 37,942 shares of preferred. Another 15,000 shares of preferred were to be offered to the public in order to enable Associated to obtain surplus cash. The preferred, which like the common was entitled to one vote per share, was convertible into common at the option of the holders, on terms not here relevant.
There were 71,480 shares of Associated's common stock outstanding at the time the application was filed, of which 31,240 were held by the president of Associated, 9,000 by The Transport Company (received for engineering accounting data given in connection with the merger), and the remainder by stockholders in the corporations to be merged.
[7] Section 5 provides in pertinent parts:
"Sec. 5. (1) Except upon specific approval by order of the Commission as in this section provided, and except as provided in paragraph (16) of section 1 of this part, it shall be unlawful for any common carrier subject to this part, part II, or part III to enter into any contract, agreement, or combination with any other such common carrier or carriers for the pooling or division of traffic, or of service, or of gross or net earnings, or of any portion thereof; and in any case of an unlawful agreement for the pooling or division of traffic, service, or earnings as aforesaid each day of its continuance shall be a separate offense: Provided, That whenever the Commission is of opinion, after hearing upon application of any such carrier or carriers or upon its own initiative, that the pooling or division, to the extent indicated by the Commission, of their traffic, service, or gross or net earnings, or of any portion thereof, will be in the interest of better service to the public or of economy in operation, and will not unduly restrain competition, the Commission shall by order approve and authorize, if assented to by all the carriers involved, such pooling or division, under such rules and regulations, and for such consideration as between such carriers and upon such terms and conditions, as shall be found by the Commission to be just and reasonable in the premises: . . .
"(2) (a) It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b)
(i) for two or more carriers to consolidate or merge their properties or franchises, or any part thereof, into one corporation for the ownership, management, and operation of the properties theretofore in separate ownership; or for any carrier, or two or more carriers jointly, to purchase, lease, or contract to operate the properties, or any part thereof, of another; or for any carrier, or two or more carriers jointly, to acquire control of another through ownership of its stock or otherwise; or for a person which is not a carrier to acquire control of two or more carriers through ownership of their stock or otherwise; or for a person which is not a carrier and which has control of one or more carriers to acquire control of another carrier through ownership of its stock or otherwise; or
(ii) for a carrier by railroad to acquire trackage rights over, or joint ownership in or joint use of, any railroad line or lines owned or operated by any other such carrier, and terminals incidental thereto.
"(b) Whenever a transaction is proposed under subparagraph (a), the carrier or carriers or person seeking authority therefor shall present an application to the Commission, and thereupon the Commission shall notify the Governor of each State in which any part of the properties of the carriers involved in the proposed transaction is situated, and also such carriers and the applicant or applicants (and, in case carriers by motor vehicle are involved, the persons specified in section 205 (e)), and shall afford reasonable opportunity for interested parties to be heard. If the Commission shall consider it necessary in order to determine whether the findings specified below may properly be made, it shall set said application for public hearing, and a public hearing shall be held in all cases where carriers by railroad are involved. If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed transaction is within the scope of subparagraph (a) and will be consistent with the public interest, it shall enter an order approving and authorizing such transaction, upon the terms and conditions, and with the modifications, so found to be just and reasonable: Provided, That if a carrier by railroad subject to this part, or any person which is controlled by such a carrier, or affiliated therewith within the meaning of paragraph (6), is an applicant in the case of any such proposed transaction involving a motor carrier, the Commission shall not enter such an order unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition.
"(c) In passing upon any proposed transaction under the provisions of this paragraph (2), the Commission shall give weight to the following considerations, among others: (1) The effect of the proposed transaction upon adequate transportation service to the public; (2) the effect upon the public interest of the inclusion, or failure to include, other railroads in the territory involved in the proposed transaction; (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected.
.....
"(6) For the purposes of this section a person shall be held to be affiliated with a carrier if, by reason of the relationship of such person to such carrier (whether by reason of the method of, or circumstances surrounding organization or operation, or whether established through common directors, officers, or stockholders, a voting trust or trusts, a holding or investment company or companies, or any other direct or indirect means), it is reasonable to believe that the affairs of any carrier of which control may be acquired by such person will be managed in the interest of such other carrier.
"(11) The authority conferred by this section shall be exclusive and plenary, . . . and any carriers or other corporations, and their officers and employees and any other persons, participating in a transaction approved or authorized under the provisions of this section shall be and they are hereby relieved from the operation of the antitrust laws and of all other restraints, limitations, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transactions so approved or provided for in accordance with the terms and conditions, if any, imposed by the Commission, and to hold, maintain, and operate any properties and exercise any control or franchises acquired through such transaction."
[8] "Affiliated therewith" is defined in § 5 (6), supra note 7.
[9] 24 Stat. 379. See Sharfman, The Interstate Commerce Commission (1935), Part I, 11-20, and authorities cited, for a concise compilation of the more important legislation implementing the Interstate Commerce Act of 1887 and a reference to some of the impulses leading to the adoption of that Act; see also Healy, The Economics of Transportation (1940) ch. 18 et seq.
[10] Compare the Interstate Commerce Act of 1887, 24 Stat. 379, and the statutes collected in Sharfman, supra note 9, with the Transportation Act of 1920, 41 Stat. 456 (see also MacVeagh, The Transportation Act of 1920 (1923)), the Emergency Transportation Act of 1933, 48 Stat. 211, and the Transportation Act of 1940, 54 Stat. 898. See also Annual Reports of the Interstate Commerce Commission for 1888, pp. 25-26; 1892, pp. 47-55; 1893, p. 9; 1894, p. 63; 1897, pp. 48-51; 1898, pp. 18-22; 1900, p. 13; 1918, pp. 4-9; 1919, pp. 1-6. See generally, Johnson, Government Regulation of Transportation (1938); Nelson, The Role of Regulation Reexamined, Transportation and National Policy, National Resources Planning Board (May, 1942) 197.
[11] The New England Divisions Case, 261 U.S. 184, 189.
[12] Cf. authorities cited supra notes 9 and 10. The Interstate Commerce Act of 1887 (24 Stat. 379) was in a sense a shadow cast by the coming Sherman Act (26 Stat. 209). Compare Snyder, The Interstate Commerce Act and Federal Anti-Trust Laws (1904) 121-122.
[13] The New England Divisions Case, 261 U.S. 184, 189.
[14] Cf. e.g., Air Commerce Act of 1926, 44 Stat. 568, as amended by 48 Stat. 1113; Air Mail Act of 1934, 48 Stat. 933; Air Mail Act of 1935, 49 Stat. 614; Civil Aeronautics Act of 1938, 52 Stat. 973; Motor Carrier Act of 1935, 49 Stat. 543; and compare Title II of the Transportation Act of 1940, 54 Stat. 898, 929.
[15] Sen. Rep. No. 482, 74th Cong., 1st Sess., 3.
[16] "It is hereby declared to be the policy of Congress to regulate transportation by motor carriers in such manner as to recognize and preserve the inherent advantages of, and foster sound economic conditions in, such transportation and among such carriers in the public interest; promote adequate, economical, and efficient service by motor carriers, and reasonable charges therefor, without unjust discriminations, undue preferences or advantages, and unfair or destructive competitive practices; improve the relations between, and coordinate transportation by and regulation of, motor carriers and other carriers; develop and preserve a highway transportation system properly adapted to the needs of the commerce of the United States and of the national defense; and cooperate with the several States and the duly authorized officials thereof and with any organization of motor carriers in the administration and enforcement of this part." 49 Stat. 543.
[17] No motor carrier can operate in interstate commerce without a certificate of public convenience and necessity, 49 U.S.C. § 306, 49 Stat. 551, 52 Stat. 1238, 54 Stat. 923. Compare Monograph No. 21, Temporary National Economic Committee, 76th Cong., 3d Sess., 268.
The Reports of the Coordinator of Transportation (Sen. Doc. No. 152, 73d Cong., 2d Sess.; H. Doc. 89, 74th Cong., 1st Sess.) on which the Act is in large measure based (79 Cong. Rec. 12207; Sen. Rep. No. 482, 74th Cong., 1st Sess.; H.R. Rep. No. 1645, 74th Cong., 1st Sess.) disclose graphically that among the evils with which the motor carrier industry was afflicted and which would be cured by the Act was unrestrained competition. It was anticipated that the Act would confer benefits on the industry "by promoting a more orderly conduct of the business, lessening irresponsible competition and undue internal strife, encouraging the organization of stronger units, and otherwise enabling the industry to put itself on a sounder and more generally profitable basis." H. Doc. 89, 74th Cong., 1st Sess. (1934) 127.
[18] See particularly the Reports of the Coordinator of Transportation, cited supra note 17.
[19] Sen. Rep. No. 482, 74th Cong., 1st Sess.; 79 Cong. Rec. 12206.
[20] Even after the major shift in policy reflected in the Transportation Act of 1920, Congress left it abundantly clear that the preservation of competition and the elimination of monopolistic practices in many phases of the transportation industry was a desideratum. See e.g., 15 U.S.C. §§ 13, 14, 18-21; 38 Stat. 730 et seq., 48 Stat. 1102, 49 Stat. 1526-1528; 31 I.C.C. 32, 61; 31 I.C.C. 351, 413-414; and § 5 (1) of the Interstate Commerce Act, 41 Stat. 480-481; 54 Stat. 905; and compare Chesapeake & Ohio Ry. Co. v. United States, 283 U.S. 35.
[21] Cf. 49 U.S.C. § 5 (14)-(16); 37 Stat. 566, 41 Stat. 482, 54 Stat. 909. In connection with the consolidation of rail and motor carriers Congress was explicit on the subject of competition in its mandate to the Commission. Fearful of the dangerous potentialities which such coordination might create (see 79 Cong. Rec. 5654-5655, 12206, 12222-12225) Congress prescribed more rigorous requirements for that process than for simple motor carrier consolidations. For the latter approval may be granted if the Commission finds the transaction "consistent with the public interest." For a rail carrier to consolidate with a motor carrier, Commission approval requires a finding that the transaction will "be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition." Compare the language of § 213 (a) of the Motor Carrier Act of 1935, 49 Stat. 555-556, 52 Stat. 1239, (and cf. 86 Cong. Rec. 11546) with that of § 5 of the Transportation Act of 1940.
[22] Cf. note 17 supra. Authorization of consolidation of rail carriers stems historically from circumstances different from those impelling the authorization of consolidation of motor carriers. Compare authorities cited in notes 9 and 10 supra with those in notes 17-19 supra This difference in origins is not entirely to be ignored simply because the same provisions of § 5 now govern both motor carrier and rail carrier consolidations. Cf. 86 Cong. Rec. 11546. But whatever effect the difference may have, as a guide to the Commission concerning the extent to which and circumstances in which consolidation should be allowed, it cannot nullify the power given to the Commission by § 5 (11).
[23] Compare the provisions of the statutes cited supra notes 20 and 21.
[24] Cf. note 26 infra; compare also 41 Stat. 481-482; Chesapeake & Ohio Ry. Co. v. United States, 283 U.S. 35; MacVeagh, The Transportation Act of 1920 (1923) 275-292.
[25] Cf. note 17 supra.
[26] E.g., Senator Wheeler, in charge of the measure in the Senate, said:
"At present most truck operations are small enterprises. However, there are many rumors of plans for the merging of existing operations into sizable systems. In view of past experience with railroad and public-utility unifications, it is regarded as necessary that the Commission have control over such developments, where the number of vehicles involved is sufficient to make the matter one of more than local importance." 79 Cong. Rec. 5654-5655.
[27] E.g., tracing shipments and settlement of claims would be facilitated, congestion at shipping platforms would be reduced, the average life of the equipment would be lengthened by scientific maintenance and safety programs on a large scale, vehicles would be shifted quickly to meet peak demands on certain routes, etc.
[28] E.g., H.D. Horton and the members of his family will own 14,917 shares of Associated's preferred stock and 267,873 shares of its common stock. The stockholders of Consolidated also would own substantially greater blocks than the 9,000 shares which Kuhn, Loeb and Company controls.
[1] The position here taken is substantially the view which originally obtained in the Commission. Northland-Greyhound Lines, Inc., 5 M.C.C. 123; Richmond-Greyhound Lines, Inc., 35 M.C.C. 555. But that view did not long obtain. See Northland-Greyhound Lines, Inc., 25 M.C.C. 109; Richmond-Greyhound Lines, Inc., 36 M.C.C. 747. And see Meck & Bogue, Federal Regulation of Motor Carrier Unification, 50 Yale L. Journ. 1376, 1393-1397.
|
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
MICHAEL J. GARSOW,
Claimant-Appellant,
v.
ROBERT A. MCDONALD,
Secretary of Veterans Affairs,
Respondent-Appellee.
______________________
2014-7023
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 12-548, Chief Judge Bruce E.
Kasold.
______________________
JUDGMENT
______________________
NICHOLAS L. PHINNEY, Chisholm Chisholm & Kilpat-
rick, Ltd., of Providence, Rhode Island, argued for claim-
ant-appellant. Of counsel were ROBERT V. CHISHOLM and
ZACHARY STOLZ.
AMANDA TANTUM, Trial Attorney, Commercial Litiga-
tion Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for respondent-
appellee. On the brief were STUART F. DELERY, Assistant
Attorney General, ROBERT E. KIRSCHMAN, JR., Director,
and MARTIN F. HOCKEY, JR., Assistant Director. Of coun-
sel was ERIC P. BRUSKIN, Trial Attorney. Of counsel on
the brief were Y. KEN LEE, Deputy Assistant General
Counsel, and AMANDA R. BLACKMON, Staff Attorney,
United States Department of Veterans Affairs, of Wash-
ington, DC. Of counsel were MICHAEL J. TIMINSKI, Deputy
Assistant General Counsel, and JOSHUA MAYER, Attorney.
______________________
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
PER CURIAM (WALLACH, TARANTO, and CHEN, Circuit
Judges).
AFFIRMED. See Fed. Cir. R. 36.
ENTERED BY ORDER OF THE COURT
November 10, 2014 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk of Court
|
312 F.3d 131
VIRGIN ISLANDS BUREAU OF INTERNAL REVENUE Appellantv.CHASE MANHATTAN BANK, Defendant/Third-party Plaintiff Appellantv.William Lansdale, Third-Party Defendant Appellant
No. 01-3467.
No. 01-3468.
No. 01-4325.
No. 01-4326.
No. 01-4464.
United States Court of Appeals, Third Circuit.
Argued May 13, 2002.
Filed December 5, 2002.
Lawrence M. Hill (Argued), Michael I. Saltzman, Richard A. Nessler, White & Case LLP, New York, NY, for Appellant Chase Manhattan Bank.
Iver A. Stridiron, Attorney General, Elliott McIver Davis, Solicitor General, Joanne E. Bozzuto (Argued), Special Assistant Attorney General, Richard M. Prendergast, Assistant Attorney General, Office of Attorney General of Virgin Islands, Department of Justice, Charlotte Amalie, St. Thomas, USVI, John A. Sopuch, III, Sopuch Nouhan Higgins Arnett & Gaubert, Chicago, IL, John A. Zebedee, Hymes & Zebedee, Charlotte Amalie, St. Thomas, USVI, for Appellee Virgin Islands Bureau of Internal Revenue.
Henry C. Smock (Argued), Smock Law Offices, Charlotte Amalie, St. Thomas, USVI, Richard Smith, Cynthia Morales, Shook, Hardy & Bacon LLP, Miami, FL, for Appellee William Lansdale.
Before AMBRO, FUENTES and GARTH, Circuit Judges.
OPINION OF THE COURT
AMBRO, Circuit Judge.
1
This case poses two questions. First, does senior bank officers' knowledge that the company named in a notice of levy previously had merged into another company neither named nor identified in the levy notice require the bank to enforce the levy against the company not named in the notice? Under the circumstances of this case, we hold that it does not. Second, must a bank honor a notice of levy on property in which it holds an unexercised right of setoff, but has limited the property owner's access? We hold that because an account holder retains a property interest in the account until the right of setoff has been exercised, dishonoring the levy is not justified.
I. Background
2
William Lansdale established La Isla Virgen, Inc. ("La Isla Virgen" or "LIV"), a Delaware corporation, in 1981. He was its president and a director, and he and his wife were its sole shareholders. LIV bought an $800,000 certificate of deposit ("CD") from Chase Manhattan Bank ("Chase") on August 20, 1985, and later increased the amount to $1.2 million. On March 18, 1986, Lansdale personally borrowed $1.2 million from Chase, granting (through LIV) to Chase a security interest and right of setoff against LIV's CD.
3
In late 1988 LIV merged into Marina Pacifica Oil Company ("Marina Pacifica"), a California corporation wholly owned by the Lansdales. In early 1989 Marina Pacifica bought a renewal CD from Chase for $1,487,371.95, by converting the LIV CD. Marina Pacifica granted Chase a security interest in the renewal CD.
4
Four months later, senior Chase officers recommended the reapproval of the collateralized line of credit to Lansdale. An internal memorandum noted that Lansdale, besides being the majority shareholder and president of Marina Pacifica,
5
was also the 100% owner of our former customer, La Isla Virgen, Inc., which during 1988 ceased to be, merging into [Marina Pacifica] which survived the merger. Marina Pacifica Oil resultantly possesses all the debts and obligations of the former LIV. Additionally, the merger agreement provided for the preservation of all the rights of creditors relative to all liens upon any property of LIV, and provided for the attachment of such liens to the surviving corporation.
6
At the same time, LIV was embroiled in litigation with the Virgin Islands Bureau of Internal Revenue ("VIBIR") stemming from alleged income tax liabilities for past tax years. The District Court of the Virgin Islands ultimately resolved that issue in favor of the VIBIR, and we affirmed. See La Isla Virgen, Inc. v. Olive, Nos. 1986-263, 1988-012, and 1988-270 (D.V.I. Feb. 28, 1991), aff'd, 952 F.2d 1393 (3d Cir.1991).
7
On April 22, 1991, the VIBIR, in its attempt to execute against assets of LIV to collect on its judgment, issued to Chase's St. Thomas branch a notice of levy against LIV for $22,514,390.14 in unpaid taxes, interest, and penalties. The notice identified the taxpayer as "La Isla Virgen," and listed its taxpayer identification number. On the date of the notice, $1,304,138.17 remained in Marina Pacifica's CD pledged to Chase, and Lansdale owed a $600,000 balance on his personal loan from Chase secured by the CD.
8
Chase's customer support services department in St. Thomas performed a computer search of Chase's account database. The database maintained files only on open accounts. Chase searched its database both by taxpayer name and tax identification number. It then sent a notice to the holders of any matching accounts, giving an account holder twenty-one days "to settle the dispute with the taxing authority." If there was no such resolution, Chase would remit the funds to that authority. Using this procedure, Chase discovered an open account under La Isla Virgen's name, labeled "LIV Building Account." It remitted the balance, $5,058.53, to the VIBIR. It did not perform a search under Marina Pacifica's name or identification number.
9
On May 12, 1991, Lansdale requested that Chase transfer $724,696.02 from the CD to a Marina Pacifica account in California. Chase refused because the transfer would have reduced the balance below the $600,000 required to secure fully Lansdale's personal loan. In this context, Chase transferred $703,338.17 to the Marina Pacifica account, leaving a balance of $600,800 in the CD.
10
On March 17, 1992, Marina Pacifica merged into Lonesome Dove Petroleum Corporation ("Lonesome Dove"), a Texas corporation wholly owned by the Lansdales. Marina Pacifica assigned its interest in the CD to Lonesome Dove. On May 20, 1992, the VIBIR served Chase with a notice of levy, identifying the taxpayer as La Isla Virgen, naming Marina Pacifica and Lonesome Dove as successor corporations, and providing the taxpayer identification numbers of all three corporations. The balance on the CD was $606,167.51, but Chase wired the accumulated interest of $6,167.51 to Lonesome Dove, leaving a $600,000 balance, which it did not remit to the VIBIR.
11
One week after the VIBIR served the second notice of levy, Chase sent a letter to John deJongh, its local counsel in the Virgin Islands, asking for his opinion on offsetting the balance of the CD against Lansdale's loan. DeJongh replied that he was "unable to vouch for the seniority of Chase's lien as against the V.I. Government's tax lien," but agreed with the decision to set off. Chase sent a letter to Lansdale demanding payment and on June 5 set off the balance of the CD against Lansdale's loan.
12
On June 16, 1993, the VIBIR sued Chase for failure to comply with the 1992 levy, seeking the value of LIV's property Chase held at the time of the levy, plus a 50% penalty. The VIBIR agreed to a dismissal with prejudice as to the 50% penalty in exchange for Chase adding Lansdale as a third-party defendant, which it did. In May 1998 the District Court granted the VIBIR's motion to amend its complaint to add a count for failure to comply with the 1991 levy, and seeking a 50% penalty for that failure. Both parties moved for summary judgment.
13
On July 30, 2001, the District Court granted the VIBIR's motion for summary judgment on the two levies, and granted Chase's cross-motion to dismiss the 50% penalty. Although the order resolved all claims between the two parties, Chase retained a third-party claim for contribution from Lansdale. In light of the outstanding claim, Chase and the VIBIR were uncertain whether this order constituted a final order, and both filed motions for entry of a final judgment under Federal Rule of Civil Procedure 54(b).1 The Court granted the motion and entered judgment on October 26, 2001.
14
Because we find that the District Court did not abuse its discretion in entering its 54(b) judgment, its order is appealable. Berckeley Investment Group Ltd. v. Colkitt, 259 F.3d 135, 140 (3d Cir.2001).2 Our appellate jurisdiction is pursuant to 28 U.S.C. § 1291, and we exercise plenary review over the District Court's grant of summary judgment. Tse v. Ventana Medical Systems, Inc., 297 F.3d 210, 217 (3d Cir.2002).
II. Discussion
A. The 1991 levy
15
The 1991 notice of levy, sent to Chase's St. Thomas branch, named only LIV. At the time of the notice, LIV had merged, more than two years earlier, into its successor company, Marina Pacifica. The District Court used a general agency standard to impute to Chase knowledge of Marina Pacifica's status as LIV's successor. V.I. Bureau of Internal Revenue v. Chase Manhattan Bank, 168 F.Supp.2d 480, 489 n. 13 (D.Vi.2001) (citing F.D.I.C. v. Ernst & Young, 967 F.2d 166, 170 (5th Cir.1992), and In re Carter, 511 F.2d 1203, 1204 (9th Cir.1975)). It reasoned that because senior Chase officers knew Marina Pacifica was LIV's successor in interest, their knowledge was imputed to Chase as a whole. Chase did have property belonging to Marina Pacifica at the time it received notice of the 1991 levy naming LIV, and the Court concluded it should have surrendered that property to the IRS.
16
What the VIBIR is attempting is to shift the burden to Chase to research whether assets held once by one of its customers are now held by a successor entity. For an immense and extensive operation like that of Chase, the consequences of such a ruling slide none too slowly down the slope from irritating to impossible. While we reject per se pronouncements absolving entities like Chase in every instance,3 in this case it makes more sense, and better policy, simply to place on the VIBIR the burden of including each taxpayer Chase should search for assets, particularly when the VIBIR knows that Marina Pacifica was LIV's successor and indeed in the VIBIR's 1992 levy mentioned, in addition to LIV, not only Marina Pacifica but Lonesome Dove as well.
17
The VIBIR and the District Court cited United States v. Donahue Industries, Inc., 905 F.2d 1325 (9th Cir.1990), to bolster their claim of imputed knowledge, but that case differs greatly from this one. In Donahue, the levy notice referred to "Donahue Printing" instead of "Donahue Industries, Inc." Id. at 1332. However, because the bank had responded in the past to the IRS summons with a letter indicating that it acknowledged that both names referred to the same entity, the "deficiencies" in the levy notice did not excuse the bank's refusal to honor the levy. Id.
18
The facts of this case part company with those of Donahue. If there had been a Donahue-like miswording (for example, if the levy listed "Marine Pacifica" instead of "Marina Pacifica"), Chase would presumably have found the correct account, if not by its name search, then certainly by its taxpayer identification number search. Therefore, while it may be true that, as the Ninth Circuit observed in Donahue, "deficiencies" in levy notices necessarily do not constitute "reasonable cause" under § 6332 for dishonoring a levy, id. at 1332, the complete absence of the name "Marina Pacifica" or its taxpayer identification number is not simply a deficiency. Rather, it is an omission of any marker by which Chase could identify Marina Pacifica as the taxpayer subject to levy. This omission resulted in the levy being ineffective as to accounts under that name.
B. The 1992 levy
19
The District Court erred in applying Virgin Islands law regarding levies. Instead, it should have followed the pertinent Internal Revenue Code ("IRC") provisions. Virgin Islands income tax law "mirrors" the IRC:
20
The income-tax laws in force in the United States of America and those which may hereafter be enacted shall be held to be likewise in force in the Virgin Islands of the United States, except that the proceeds of such taxes shall be paid into the treasuries of said islands.
21
48 U.S.C. § 1397. The District Court mistakenly reasoned that, because the provisions at issue in this case are "administrative and procedural in nature," Virgin Islands income tax law should apply. Chase Manhattan Bank, 168 F.Supp.2d at 486. On the contrary, the IRC does not distinguish between "substantive" and "nonsubstantive" income tax provisions, and neither do we. Chase Manhattan Bank v. Gov't of V.I., Bureau of Internal Revenue, 300 F.3d 320 (3d Cir.2002). Therefore, we apply federal law governing liens and levies.
22
We begin with a general review of the subject. Section 6321 of the IRC authorizes the Government to obtain a lien against a delinquent taxpayer:
23
If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.
24
26 U.S.C. § 6321.
25
The Government's lien is not self-executing, however. United States v. Nat'l Bank of Commerce, 472 U.S. 713, 720, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985). The Government must select between two alternative options when enforcing its lien. In the first, a 26 U.S.C. § 7403(a) lien foreclosure suit, the Government files an action in District Court to enforce the lien. This is an involved proceeding that actually determines the priorities of the various claimants. Id.
26
The second, and more common, lien enforcement mechanism is 26 U.S.C. § 6331's administrative levy. This is a "provisional remedy, which does not determine the rights of third parties until after the levy is made, in postseizure administrative or judicial hearings." Nat'l Bank of Commerce, 472 U.S. at 731, 105 S.Ct. 2919 (emphases omitted). 26 U.S.C. § 6332 requires that the party holding the levied property relinquish it. Unlike § 7403(a)'s lien foreclosure suit, § 6331's administrative levy does not determine the relative priority of creditors' claims, either amongst themselves or in relation to the Government's lien. Instead, it simply "protect[s] the Government against diversion or loss while such claims are being resolved." Nat'l Bank of Commerce, 472 U.S. at 721, 105 S.Ct. 2919. In essence, it takes a snapshot of the property at the time of levy, freezing it until the court can sort out the rights of competing claimants.
27
Sometimes someone other than the taxpayer holds property that is subject to an administrative levy. These third parties understandably are apprehensive about turning over property they hold to the Government, especially if it is later proved that another creditor, or the taxpayer, had a superior claim. Section 6332(e) accordingly provides that those who honor an administrative levy "shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment." 26 U.S.C. § 6332(e). Dishonoring the levy, on the other hand, exposes a third party to substantial liability: "failure to surrender the property upon service of a tax levy will render the third party personally liable to the government for the value of the property and for additional penalties if the noncompliance was not reasonable." Congress Talcott Corp. v. Gruber, 993 F.2d 315, 318 (3d Cir.1993). Besides "a sum equal to the value of the property or rights not ... surrendered ... together with costs and interest," the statute imposes an additional 50% penalty upon "[a]ny person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand," if the refusal to surrender property was "without reasonable cause." 26 U.S.C. § 6332(d).
28
There are only two exceptions to the rule that a third-party holder of levied property must turn it over to the Government. The first is where the taxpayer's property is "subject to a prior judicial attachment or execution." Nat'l Bank of Commerce, 472 U.S. at 722, 105 S.Ct. 2919 (citation omitted). The second is where the taxpayer no longer has a property interest in the levied property, so that the third party is "neither in possession of nor obligated with respect to property or rights to property belonging to the delinquent taxpayer." Id.
29
Both exceptions are logical. In the first case, the property has already been judicially determined to be the subject of another attachment or execution proceeding, so to relinquish it to the Government makes little sense, as it would be both inefficient and confusing. In the second, the levy does not apply because the taxpayer has no proprietary interest in the property in question. The Government's right to levy property extends only to the taxpayer's property: the IRS "steps in the taxpayer's shoes ... [and] acquires whatever rights the taxpayer himself possesses." Id. at 725, 105 S.Ct. 2919 (citation omitted). If the taxpayer has no interest in the property, the Government's lien cannot attach. Because the first exception is not in play here, we need not discuss it. Therefore, we turn to the second: did LIV and/or its successors — Marina Pacifica and Lonesome Dove4 — retain any property rights in the CD at the time of the 1992 levy.
30
Section 6331's language is extremely broad, covering "all property and rights to property" owned by the taxpayer. Congress Talcott, 993 F.2d at 319 (quoting Nat'l Bank of Commerce, 472 U.S. at 719-20, 105 S.Ct. 2919). Courts look to both state and federal law to answer whether a taxpayer owns "property or rights to property" held by another. State law determines the nature of the legal interest the taxpayer has in the property. Nat'l Bank of Commerce, 472 U.S. at 722, 105 S.Ct. 2919. However, federal law assigns consequences to the state law rights. Id. "Thus, because the United States Congress meant to attach a broad meaning to the statutory language `all property and rights to property,' courts must liberally identify property rights created under state law." Congress Talcott, 993 F.2d at 319 (citation omitted).
31
In this context, for a levy to attach requires only a small property interest. "[E]ven if others claim an interest in the property and the taxpayer's interest may be quantified as but a modicum, the property remains subject to attachment by levy and must be surrendered until ultimate ownership can be resolved." Id. at 319 (citing Nat'l Bank of Commerce, 472 U.S. at 721-22, 105 S.Ct. 2919). National Bank of Commerce held that joint accounts were subject to administrative levy. Although the co-owner had a right to the accounts, the taxpayer's "unqualified right to withdraw the full amounts on deposit in the joint accounts without notice to his codepositors" was a sufficient property interest to subject the entire amount to administrative levy. 472 U.S. at 723-24, 105 S.Ct. 2919. In Congress Talcott, we concluded that even if the third-party possessor of the property had a right of setoff against the property, the taxpayer retained a property interest until the setoff was exercised. 993 F.2d at 320.
32
A secured creditor who obtains a perfected security interest before the Government's lien attaches has priority over the Government, and its security interest will prevail in a wrongful levy suit. The administrative levy "settles no rights in the property subject to seizure." Nat'l Bank of Commerce, 472 U.S. at 728, 105 S.Ct. 2919 (citation omitted). However, if the property is levied upon, the secured creditor must turn the property over to the Government, or risk incurring the penalties described above. Congress Talcott, 993 F.2d at 318.
33
The proper recourse for secured creditors with a priority interest in levied property is to relinquish the property and then file a wrongful levy action under 26 U.S.C. § 7426(a):
34
If a levy has been made on property or property has been sold pursuant to a levy, any person (other than the person against whom is assessed the tax out of which such levy arose) who claims an interest in or lien on such property and that such property was wrongfully levied upon may bring a civil action against the United States in a district court of the United States.
35
Such a creditor has nine months from the date of the levy to file suit for wrongful levy. 26 U.S.C. § 6532(c)(1). The creditor may then prove the priority of its interest in court and recover the property or its value. 26 U.S.C. § 7426(b)(2).
36
This mechanism may seem overly burdensome to the priority creditor, who must surrender property when it knows it will ultimately prevail over the Government (provided it follows the procedural prerequisites, e.g., filing a § 7426 wrongful levy suit within nine months). However, public policy supports this result: just as a sheriff in executing a judgment would levy (or seize) a debtor's property and then let the court sort out the rights of competing claimants, so here the administrative levy merely freezes the various assets until rights can be established.
37
The alternative is much less appealing. To allow every party who claimed priority to hold on to, and dispose of, property on which the Government levies would result in chaos. All creditors in possession of levied taxpayer property would claim that their interest was prior, and the Government would find it difficult to collect on liens. The administrative levy is a "quick [and] relatively inexpensive" way to serve the "[n]eed for our government promptly to secure its revenues." Nat'l Bank of Commerce, 472 U.S. at 721, 105 S.Ct. 2919 (citation omitted).
38
In this case, Chase Manhattan's decision not to turn over the $606,167.51 was unreasonable. The VIBIR properly obtained a lien, and on May 20, 1992, served Chase with a notice of levy. Section 6332 instructs us that, as a nontaxpayer holding property that had been levied, Chase was obligated to turn over the money, unless one of two exceptions applied. As already noted, the first exception — that the money was subject to prior judicial attachment or execution — does not apply. But as to the second exception, Chase argues that it exercised its right of setoff, and thus the CD was not LIV's property at all.
39
The parties agree that New York law governs, so we apply that law to determine LIV's property interest in the CD. To review, events occurred in the following sequence: at the time of the 1992 levy, the CD's remaining balance was $606,167.51. On the day of the levy, May 20, 1992, Chase wired $6,167.51 to Lonesome Dove's account, leaving $600,000. Chase later sent a letter to John deJongh, its local counsel in the Virgin Islands, requesting an opinion on the advisability of setting off $600,000. DeJongh did not vouch for the priority of Chase's lien, but agreed that the setoff should occur. Chase then authorized the setoff, which was completed June 5, 1992, sixteen days after the levy.5
40
Chase first argues that its right of setoff, acquired in 1986 when it loaned Lansdale $1.2 million secured by the initial CD, extinguished all of LIV's property rights. Appellant's Br. at 45. Chase had a perfected security interest in the CD, with priority over the tax lien, and therefore, it contends, LIV had no property right in the CD.6 Appellant's Br. at 46-47. This argument fails because it amounts to a claim of priority, and that (perhaps counterintuitively to a secured creditor) is not a proper ground for resisting an administrative levy. Chase could have properly raised a claim of priority only by turning over the levied property and then bringing a wrongful levy suit under § 7426 within the prescribed nine-month time period.
41
If Chase were to exercise its right of setoff before an IRS levy, it would gain complete ownership of the property, and LIV would lose any property interest in it. See generally Barkley Clark & Barbara Clark, 2 The Law of Bank Deposits, Collections and Credit Cards ¶ 18.01 (rev. ed.2002). There would then be no need for Chase to comply with the levy, because this would trigger the second permissible reason for dishonoring it, the defense that the taxpayer has no proprietary interest in the property levied against.
42
But what happens when a right of setoff is possible but not exercised before an IRS levy? Congress Talcott answers this question, for it rejects the idea that a mere right of setoff extinguishes a taxpayer's interest in property. In Congress Talcott, the IRS served a notice of levy on Congress Talcott, which, pursuant to a factoring agreement, held cash collateral in an account to which the taxpayer, Gruber, lacked access. 993 F.2d at 317. Congress Talcott refused to turn over the account balance, arguing that it had a superior interest in the account by virtue of the agreement containing the cash collateral provisions. We held that because Gruber's debt had not matured, and "although Congress had absolute control and discretion over the use of the funds, Congress was to return to Gruber any amount not applied to Seegull's debt once the debt was satisfied." Id. at 320. As Gruber possessed a property interest in the account, Congress Talcott was unjustified in refusing to turn over the balance. Id. at 321.
43
Other circuit courts have also rejected the idea that an unexercised right of setoff excuses a bank from honoring a levy. In United States v. Cache Valley Bank, 866 F.2d 1242 (10th Cir.1989), the bank argued that because it could have offset the taxpayer's funds against outstanding loans, it had an interest superior to the Government's. The Tenth Circuit rejected this argument, observing that "the lien attached to the deposits in the taxpayer's account before the bank exercised its right of setoff." Id. at 1245 (emphasis in original). Similarly, in United States v. Sterling Nat'l Bank & Trust, 494 F.2d 919, 922 (2d Cir.1974), the Second Circuit found that until a bank exercised its right of setoff, the taxpayer retained a property interest in his account. In contrast, because Pennsylvania gives banks an automatic right of setoff, Pittsburgh National Bank v. United States, 657 F.2d 36 (3d Cir.1981), held that a taxpayer default alone was enough to constitute the "exercis[ing]" of the right of setoff. Id. at 39. But no such automatic right of setoff exists under New York law, Marine Midland Bank-New York v. Graybar Electric Co., 41 N.Y.2d 703, 708, 395 N.Y.S.2d 403, 363 N.E.2d 1139 (1977), and Lansdale was not in default in any event. Thus, Chase's right of setoff upon a default does not constitute an exercise of the right.
44
Chase next argues that it "effectively" exercised its setoff prior to the 1992 levy because it had restricted LIV's access to the $600,000, refusing to allow it withdrawals that would drop the balance below that threshold, and thereby exercising the functional equivalent of a setoff before the notice of the levy. Appellant's Br. at 46-7.
45
Restriction of LIV's right to withdraw did not extinguish its property interest in the CD. The documents indicate that Chase had to demand payment prior to exercising its right of setoff. No demand was made until after the 1992 levy. Moreover, the fact that Chase inquired of local counsel about the advisability of exercising its right of setoff a week after receiving the notice of levy indicates that it did not believe that it had already exercised the right simply by restricting LIV's access.
46
The Eleventh Circuit has found that "[u]nder New York law setoff is complete when three steps have been taken: a decision to exercise the right, some action that accomplishes the setoff, and some record evidencing that the right of setoff has been exercised." Gregg v. U.S. Industries, 715 F.2d 1522, 1539 (11th Cir.1983) (citing Clarkson Co. v. Shaheen, 533 F.Supp. 905, 925 (S.D.N.Y.1982), and Aspen Industries, Inc. v. Marine Midland Bank, 74 A.D.2d 59, 62, 426 N.Y.S.2d 620 (N.Y.App.Div. 1980), rev'd on other grounds, 52 N.Y.2d 575, 439 N.Y.S.2d 316, 421 N.E.2d 808 (1981)). Chase did not take these steps until after the 1992 levy, when it consulted local counsel as to the advisability of setting off, had the setoff authorized, and finally completed it over a week later. Similarly, the bank in Congress Talcott did not withdraw funds from the taxpayer's account until four months after the notice of levy. 993 F.2d at 321. We held that only at the time of this withdrawal was the right of setoff exercised. Id.
47
These decisions underscore the obvious. A setoff — a nonjudicial remedy — is a taking transferring the debtor's or pledging party's asset to the creditor bank. James J. White & Robert S. Summers, Uniform Commercial Code § 21-7, at 401 (4th ed.1995). Prior to the taking, the property still belongs to the debtor or pledging party. See Sterling Nat'l Bank, 494 F.2d at 922.
48
Chase's emphasis that Lansdale and LIV had no "unfettered right to claim funds," and no "unilateral right to withdraw the $600,000," Appellant's Br. at 48, reveals that it misses the point regarding the nature of our inquiry. The taxpayer in Congress Talcott similarly lacked an "unfettered" right of withdrawal; indeed, he was completely denied access to the account. Nevertheless, we held that he retained a property interest in the account. The same is true here.
49
To recapitulate, the second exception to an administrative levy is not available here. Because Chase did not exercise its setoff right until after it received the notice of levy, LIV retained a property interest in the CD. Chase should have turned over the CD proceeds to the VIBIR, and then filed a § 7426 wrongful levy suit within nine months of the levy. Because it did not take these measures, it is liable for "a sum equal to the value of the property or rights not surrendered," 26 U.S.C. § 6332(d) — $606,167.51, plus costs and interest.7
50
* * * * * *
51
Under the circumstances presented, we conclude that Chase did not dishonor the 1991 levy. However, we hold that Chase's dishonoring of the 1992 levy was impermissible because LIV retained a property interest in the CD at the time of levy. We therefore affirm in part and reverse in part.8
Notes:
1
Rule 54(b) provides: "When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim ... the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."
2
Because Lansdale is not a party to VIBIR's lawsuit against Chase, it is beyond peradventure that Lansdale cannot appeal the District Court's judgment as to that suit. Lansdale's attempt to join in this appeal is therefore dismissed for lack of standing. We further deny Lansdale's motion to serve asamicus curiae.
3
For example, Chase is not absolved where evidence shows it to be in conspiracy with Lansdale to hide assets or it engages in fraud. No evidence of either is presented on the record before us
4
For convenience, unless the context requires otherwise, LIV and its successors are hereinafter jointly and severally referred to as "LIV."
5
Because we performde novo review of the summary judgment, and so have determined for ourselves what facts are undisputed and what reasonable inferences can be drawn in Chase's favor (as the non-moving party) from those undisputed facts, we will not respond separately to Chase's contentions concerning inappropriate fact-finding by the District Court.
6
As a preliminary matter, we note that even if we were to accept this argument, it does not justify Chase's decision to wire the $6,167.51 to Lonesome Dove's account, rather than forwarding the funds to the VIBIR. The balance due on the loan was $600,000.00. Even by its own logic, Chase should have turned over the excess funds to the VIBIR
7
Although Chase's refusal to honor the levy was unreasonable, the 50% penalty does not apply because on June 30, 1994, the parties stipulated for dismissal with prejudice as to a penalty, in exchange for Chase naming Lansdale as a third-party defendantChase Manhattan Bank, 168 F.Supp.2d at 485.
8
As already noted, supra n. 2, we dismiss Lansdale's appeal for lack of standing
|
NO. 07-05-0269-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL A
AUGUST 17, 2005
______________________________
IN RE ROBERT PALMORE, RELATOR
_______________________________
Before REAVIS and CAMPBELL and HANCOCK, JJ.
MEMORANDUM OPINION
By this original proceeding, relator Robert Palmore, acting
pro se,
(footnote: 1) seeks a writ of mandamus to compel the judge of the 242
nd
District Court of Hale County, whom he did not name in the petition, to rule on and reform certain allegedly illegal sentences and judgments previously imposed in cause numbers 8901B10-118CR, 8901B10-120CR, 8904B10-209CR and 8906B10-260CR. We dismiss the petition.
The required filing fee of $75.00 did not accompany relator’s petition. Unless a party is excused from paying a filing fee, the Clerk of this Court is required to collect filing fees set by statute or the Supreme Court when a petition in an original proceeding is presented for filing.
Tex. R. App. P.
5 and 12.1(b).
Additionally, Rule 52.3 of the Texas Rules of Appellate Procedure prescribes the mandatory contents for a petition for mandamus. Specifically, relator has failed to comply with subparagraphs (a), (b), (c) and (j) of Rule 52.3.
Thus, because relator has not paid the required filing fee and has not complied with the requirements of Rule 52 of the Texas Rules of Appellate Procedure, we must dismiss this proceeding.
Mackey K. Hancock
Justice
FOOTNOTES
1:1
A
pro se
litigant is held to the same standards as licensed attorneys and must comply with applicable laws and rules of procedure.
Holt v. F.F. Enterprises
, 990 S.W.2d 756, 759 (Tex.App.–Amarillo 1998, no pet.).
|
123 N.W.2d 49 (1963)
Vicki MURPHY, a Minor, by Elmer Murphy, her father and next friend, and Elmer Murphy, Appellee,
v.
CITY OF WATERLOO, Iowa, Appellant.
No. 51031.
Supreme Court of Iowa.
July 16, 1963.
Rehearing Denied September 17, 1963.
*50 Charles J. Pickett, Waterloo, for appellant.
Kildee, Keith, Gallagher & Lybbert, Waterloo, for appellee.
PETERSON, Justice.
This is an action for damages against defendant city. Vicki Murphy was a twelve year old girl in 1959. When standing on a sidewalk on Edwards Street in Waterloo she was violently pushed from the rear by a five year old boy. She was about 4 feet from Virden Creek, which was 9 feet deep at the point where it connects with the Waterloo storm sewer system. She was pushed into the creek; struck her head on some cement blocks at the bottom of the creek, and sustained a concussion of her skull. The jury rendered verdict in her favor in the amount of $10,000, and rendered a verdict for her father for hospital and doctor bills paid by him in the amount of $736.80. Defendant appealed.
1. For many years a creek tunnel existed under Edwards Street in defendant city. The tunnel crossed under the street at an angle, extended several feet south of the street and connected with said Creek. A vertical wall had been built by the city on each side of the creek connecting with the southern end of the tunnel. The area between the sidewalk and the creek was even with the sidewalk and at the point where Vicki fell the creek was partially in the Murphy yard.
Although the city did not have title to this strip of land, or the land on which the tunnel extension and walls were constructed it maintained and controlled the tunnel and creek walls. In 1947 and 1948 under the inspection, supervision and control of the city, the creek and its walls had all been repaired and re-built by defendant city. Prior to such time there was a guard rail between the sidewalk and the drop off, but it fell down when one of the walls collapsed in 1947 and was never put back when the walls were repaired and rebuilt by the city. At the time of the accident there was no fence nor barrier of any kind between the sidewalk or Murphy yard and the creek.
Vicki lived with her parents, Mr. and Mrs. Elmer Murphy on the south side of Edwards Street. A public grade school was located on Edwards Street about a block west of the Murphy home. Hundreds of small school children passed the spot every day. They were usually on the sidewalk, but they pushed over into the strip of land between the sidewalk and the creek so that it became worn bare and packed hard like a cement walk.
The following copies of exhibits present a visual view of the Murphy home, Edwards Street, and Virden Creek where it connects with the Waterloo Storm sewer system.
Mrs. Murphy, as the only eye witness, saw what happened through the middle window shown on defendant's exhibit "1". (See mark "x" on window.) *51 PLAINTIFF'S EXHIBIT `A'
DEFENDANT'S EXHIBIT `1'
*52 DEFENDANT'S EXHIBIT `3' Vicki was a member of the school patrol. Her duties included patrolling the intersection of Edwards Street and Logan Avenue, which included the sidewalk and creek tunnel in question.
It is pertinent that we show Mrs. Murphy's evidence as to what happened in connection with Vicki being pushed and her early care by the doctor. The testimony was as follows:
"Q. Now, inviting your attention to 12:45 or possibly a few minutes earlier or later, did you have occasion to look out of the west window of your home into the area of Virden Creek and the drop-off? A. Yes, I saw a little boy running back and forth across the wall.
"Q. I hand you Plaintiff's Exhibit "A" and I ask you to make an "X" on this diagram where Vicki was standing at that time? A. Right about there. (See "X" on Exhibit "A")
"Q. Now this, Mrs. Murphy, indicates the sidewalk. You have testified that she was standing on the sidewalk. A. On the sidewalk.
"Q. What happened, then? A. Well, when this little boy got up behind her back he all of a sudden ran toward her and just lunged out with all his might, and he hit her about at the waistline or possibly about it. Just about the middle of her back.
"Q. What happened, then? A. She staggered and stumbled, half falling, several feet before she went over the edge. I thought she would get her footing, but she didn't. On the very edge I saw her go back like this for a minute and then fall over the edge.
*53 "Q. Whereabouts along the edge did she fall over the edge? Would you indicate that on Exhibit A? A. Right about here I would say.
"Q. Would you put a `Z' where the edge was that she went over?" (See Exhibit A)
"I went to Vicki and she was sprawled across to cement slabs lying on her face. I picked her up and carried her to the house with the help of a man. I called Dr. Gerard who arrived about the time she was regaining consciousness. The whole side of her head swelled up and her right eye pupil went over toward her nose."
II. Defendant assigns eight alleged errors as follows: 1. Plaintiff did not prove negligence justifying submission of the case to the jury. 2. In not instructing the jury that some of the evidence indicated Vicki was not on the sidewalk when she was pushed by the small boy; that the jury was entitled to this theory of defendant's case; that the court refused to give an instruction to this effect requested by defendant. 3. That there was insufficient evidence to sustain evidence to sustain the amount of the verdict in favor of Vicki. 4. That the jury should have been instructed with reference to contributory negligence of Elmer Murphy, Vicki's father, in connection with the expenses incurred by him for Vicki. 5. That the evidence of the technician who took an electroencephalogram was wrongfully admitted and interpreted. 6. That the court refused to allow the small boy, five years old who pushed Vicki, to testify. 7. The court refused to admit in evidence a written statement of Mrs. Murphy to the police department of Waterloo, which statement was contradictory of, and inconsistent with, Mrs. Murphy's testimony at the trial. 8. In admitting in evidence photographs showing precautions taken after the accident for the prevention of future accidents.
III. Defendant contends plaintiff did not present sufficient evidence of negligence to justify the court in submitting the case to the jury.
In addition to the factual statement, as heretofore shown, it appears in the record that sometime prior to 1946 a fence had been erected around what would be called the head of Virden Creek. The fence was close to the edge of the creek walls and created a barrier against anyone who might come up to the place of the sudden drop into the bed of the creek. Through the passage of years this fence became dilapidated and worn out. A short time prior to 1947 two of the sidewalls of the creek fell in. In 1947 the city entered into a contract with a contracting firm by the name of Rooff & Spencer for the rebuilding of the walls and placing a cap upon the top of the walls. The improvement cost $17,927.05. The work was inspected by a city inspector and after being approved was paid for under a Resolution duly adopted by the City Council.
When this work was done the city did not re-erect the fence which had previously existed around the head of Virden Creek. As stated supra, the head of the creek ran up to approximately four feet from the sidewalk at the closest point to about eight feet as the creek proceeded in a southeasterly direction.
The important angle of approach to the matter of the city's liability in this case is the proximity of the creek to a city sidewalk. There was a hazard in the situation by reason of failure to erect any fence or barrier at the head of the creek or around the nine foot drop into the creek
Section 389.12, 1958 Code, I.C.A., provides:
"They (cities) shall have the care, supervision, and control of all public highways, streets, avenues, alleys, public squares, and commons within the city, and shall cause the same to be kept open and in repair and free from nuisances."
The matter of the liability of a city or town in case of defects in or near streets or sidewalks had had the consideration of this court in an early case and in recent cases. An early case is Manderschid v. Dubuque, *54 29 Iowa 73, 87, 4 Am.Rep. 196; later cases are Bixby v. Sioux City, 184 Iowa 89, 96, 164 N.W. 641, 644; Nicholson v. Des Moines, 245 Iowa 270, 60 N.W.2d 240, 44 A.L.R.2d 616.
Appellant contends there was no liability because the accident which happened to Vicki was not one which could reasonably be anticipated, even with the creek close to the sidewalk.
In the case of Priebe v. Kossuth County Agricultural Association, Inc., 251 Iowa 93, 99 N.W.2d 292, 296, the court said: "In order to constitute negligence it is not necessary that defendant could have foreseen the particular injury that resulted provided it should have foreseen its omission to act would probably result in injury of some kind to some person."
In McCormick v. Sioux City, 243 Iowa 35, 38, 50 N.W.2d 564, 566, the court said: "Where reasonable minds might differ as to whether an accident could or should have been reasonably anticipated from the existence of the alleged defect or obstruction, the question as to the negligence of the city becomes a question for the jury."
In Whitlatch v. Iowa Falls, 199 Iowa 73, 75, 201 N.W. 83, 85, the court said: "The duty to maintain the streets in a reasonably safe condition for travel includes, when reasonably necessary, the erection of barriers or guard rails along grades and at other dangerous places."
In Nicholson v. Des Moines, supra, decedent was proceeding along a cinder sidewalk in the dark. At one place close to a bridge the cinder sidewalk curved toward the bridge and then onto the sidewalk on the bridge. When the traveler reached the place of the cinder sidewalk curve, he apparently failed to see the curve in the dark and proceeded in a straight line; fell into a pit in the river and lost his life. The case was submitted to the jury on the theory that a city's duty to use reasonable care in maintaining its streets in a safe condition applied not only as to the street or sidewalk itself, but as to conditions reasonably close to or adjacent to the street or sidewalk.
In view of such decisions and several others similar thereto, we hold there was sufficient evidence in the case at bar to require the trial court to submit the case to the jury.
IV. Appellant claims the court erred in failing to submit its theory of the case in connection with the point at which Vicki was pushed by the little boy from the sidewalk or the Murphy yard. This is the assignment principally emphasized and urged by defendant.
It is the position of appellant that the court should have instructed the jury if Vicki was pushed into the creek from her yard the defendant was not negligent, and the verdict should have been for the defendant.
Appellant takes the position that it properly raised this question in pleadings and evidence. In the pleadings defendant failed to allege this specific affirmative defense. We have often held that if a defendant desires to have its theory of affirmative defense submitted in an instruction such affirmative defense must be raised in the answer. Hart v. Hinkley, 215 Iowa 915, 919, 247 N.W. 258; Wise v. Outtrim, 139 Iowa 192, 117 N.W. 264; Clark v. Monroe County Fair Ass'n., 203 Iowa 1107, 212 N.W. 163; First National Bank v. Cook, 171 Iowa 41, 153 N.W. 169.
Appellant contends that in plaintiff's petition an allegation was made that Vicki was on the sidewalk when she was pushed over the wall and into the creek. It further contends that a denial of this statement in the answer is sufficient to require submission of the question in an instruction by the court. It is true there was some variance in the testimony as to this point, although any such difference in the evidence was not clear. Appellant's contention is based largely *55 upon the direction in which Vicki was looking when she was pushed rather than upon any definite statement by any witness that she was not on the sidewalk. We hold that under the circumstances as above outlined it was not reversible error on the part of the trial court to refuse to instruct the jury as to this matter.
V. Appellant contends there was insufficient evidence as to Vicki's injury to sustain the amount of the verdict of the jury.
Appellant takes the position that Vicki's injury was simply a slight depression in the skull area and slight injury to her leg and her finger. The record discloses more severe injuries, which the jury had a right to take into consideration. The case was tried about two and one-half years after the incident happened. Under the testimony of her parents and her physician it appeared without any conflict that she was still having headaches, and hearing and sight loss. The evidence further disclosed that she had a permanent injury in the form of a crooked finger. She was still suffering at the time of trial from dizziness and emotional disturbances which affected her school work, and the doctor testified as to a certain degree and probability of permanent injury. We quote from the doctor's testimony with reference to Vicki's injury.
"Q. Doctor, was there any hematoma, or hemorrhage, around the eye or around any portion of these fractures or in the brain itself? A. There was evidence of hematoma, collection of blood, on the outside of the skull between the skin and the fracture, and that was evident over the frontal area, where she had this large fracture. It was evidenced over the occipit, where she had a fracture there, and the hemorrhage went down and invaded the eye area between the eyeball. * * *
"Yes. This is a skull. (Looking at an exhibit) She had a fracture that went through this area above the orbit, involved both frontal bones, more on the right side, and went back from the parietal bone. She also had a fracture in the occipit that went up in this area, and then this fracture extended down to the foramen magnum, where the spinal cord hooks on. * * *
"She had a hearing loss because the nerve that goes to the middle ear was damaged when this fracture occurred." * * *
"Frequently you will get adhesions between the brain and the covering of the brain, and this is one of the things that we know causes epilepsy. This usually can be picked up, if they have, with an electroencephalogram."
"Q. Doctor, based upon reasonable medical certainty, do you have an opinion as to whether or not this child may in later life develop convulsive epilepsy? A. I think any child or adult that has a severe blow to the skull has some chance of developing later epilepsy.
"Q. Doctor, I wonder if you would give me the degree of possibility? A. That's one of the reasons we sent her down to Iowa City. She does show slight abnormal deformity in the electroencephalogram. Knowing the severity of the skull fracture, I think she has a chance of three to five percent of developing epilepsy." * * *
"A. As we examined the child now, (just before the trial), both here and at Iowa City, there is no evidence now, other than that abnormal electroencephalogram, that she has any permanent disability, either medically or neurologically. Knowing that she had the severe skull fracture, and knowing she does have a little abnormal electroencephalogram, she has a chance, which I have mentioned between three and five percent of developing epilepsy, which to her is a type of permanent disability." * * *
CROSS-EXAMINATION:
"Q. Do you know whether or not there is any scarring between the skull in this case? A. No, we know that if we take *56 electroencephalograms on one hundred people, we will probably have three abnormal ones in one hundred. Maybe one of those three will be caused by what we are talking about." * * *
"Q. Do you feel, that because of this electroencephalogram, there is a possibility of some damage? A. Yes. In other words, I would feel better about the whole thing if it turned out to be a normal electroencephalogram.
"Q. Is there any more than a possibility ? Would you say it was a probability that there might be a little damage? A. I think it's a probability, yes.
"Q. Could you say to a reasonable certainty that this electroencephalogram indicated that something was a little wrong? A. Yes, there is some reason for this abnormal electroencephalogram. As I told you before, there is more than one reason for it, but certainly it isn't normal."
We hold there was sufficient evidence in the record to justify the amount of the verdict rendered by the jury.
VI. Appellant contends the court erred in instructing the jury that if they found in favor of Vicki as to her personal injuries they should also find for her father, plaintiff, to the extent of the amount of the doctor and hospital bill.
Appellant urges it was necessary that the court instruct, and the jury find, that Mr. Murphy independently was not guilty of contributory negligence in connection with Vicki's fall and injury.
There is no merit in this assignment. It is well settled in Iowa and generally elsewhere that a parent's negligence cannot be imputed to the child in its action against a third person to recover for negligent injury to the child.
In Wheatley v. Heideman, 251 Iowa 695, 711-712, 102 N.W.2d 343, 353-354, we said: "* * * But if defendant's negligence * * * was a substantial factor in causing such injury, negligence of either parent would not be a defense." Also see Primus v. Bellevue Apts. 241 Iowa 1055, 1064, 44 N.W.2d 347, 353, 25 A.L.R.2d 565; Ives v. Welden, 114 Iowa 476, 478, 87 N.W. 408, 54 L.R.A. 854.
We hold the court's failure to give an instruction to the jury on this question as requested by appellant, was not reversible error.
VII. Appellant contends it was reversible error that the court allowed an electroencephalographer technician, who was not a practicing physician, to testify.
The Electroencephalographer was Dr. John R. Knott of the University Hospital at the University of Iowa. His qualifications and his field of work can best be shown by quoting from his testimony:
"Since 1941 I have been in the Division of Electroencephalography at the Psychopathic Hospital at the State University of Iowa. I was a charter member and past president of the American Electroencephalographic Society which has 108 members. Those persons in the United States truly able to do electroencephalography number about 65. The Society has a Board of Qualification and I was on that board nine years and am a diplomat thereon. I have a certificate of qualification.
"An electroencephalogram, called for short an E.E.G., is a recording of the electrical currents in the brain;"
Dr. Knott was very careful not to encroach upon the field of a physician. He only testified as to the facts as he found them. He did not give opinion evidence as to the effect of the E.E.G. examination. This is clearly evidenced by his testimony as follows:
"Q. Does this E. E. G. indicate a change in the nerve structures of Vicki Murphy's brain, Doctor? A. This would be the conclusion drawn by an electroencephalographer that there would be a change in the *57 nerve cells in the brain other than would be expected for a child of that age, yes, Sir.
"Q. Just to sum this up, this E.E.G. showed you that there was abnormality in the nerves in the brain of this child? A. If I may restate that so I can answer it. This E.E.G. deviated from normal. An earlier injury could well have caused this E.E.G. abnormality.
"Q. This is based on probability? A. This is based upon probability and upon the available information in the journals in this area. This would be the consensus of electroencephalographers. This E.E.G. run two years or more after the accident would suggest to me that there is an apparently long range change."
We find no reversible error in this assignment.
VIII. Appellant contends Monty Mourhouse, the five year old boy, should have been permitted to testify.
The decision as to the admission or exclusion of the testimony of a child under fourteen years of age is primarily allocated to the trial court. As to when witnesses are competent to testify appears in Section 622.1, 1962 Iowa Code, I.C.A., and is as follows: "Every human being of sufficient capacity to understand the obligation of an oath is a competent witness in all cases, except as otherwise declared." Judge Ladd carefully considered and analyzed the subject in the case of State v. King, 117 Iowa 484, 91 N.W. 768. The Justice said: "When a child under 14 years of age is called as a witness the preliminary inquiry should be directed solely to ascertaining whether sufficient capacity is possessed to understand the obligation of an oath. * * * Treatment of knowledge of God and the elementary precepts of Christianity as controlling seems to rest, in part, at least, on the old rule exacting faith as one of the necessary qualifications to give testimony. [4 citations]. * * * The decision as to capacity is primarily for the Judge, * * * [t]he court sees the witness, notices his manner, observes the apparent degree of intelligence and maturity of mind; and, as these matters cannot be photographed in the record, its decision will not be disturbed unless clearly erroneous."
The trial court observed these precautions with reference to Monty. The following are excerpts from the examination. THE COURT: "Do you know what it means to tell the truth? THE WITNESS: No. * * * Defendant's counsel interrogated Monty somewhat at length. After such interrogation the Court said: "THE COURT: I am going to ask a few questions. Monty, when you came up here I asked you if you knew the difference between right and wrong. You know the difference between right and wrong? Did you hear me? THE WITNESS: No. THE COURT: * * * I am inclined to feel, * * * that we can't permit this witness to testify. Under the circumstances we won't permit him to testify."
Discretion as to Monty testifying was lodged in the Court. The Court, after careful examination, decided he should not. This was not "clearly erroneous" and we will not disturb the Court's decision.
IX. Appellant urges the court should have admitted Exhibit 6 which was a statement made by Mrs. Murphy to the Police Department of Waterloo, the next day after Vicki's injury. It is the position of appellant's counsel that Exhibit 6 should have been admitted for the purpose of impeaching the testimony given by Mrs. Murphy at the trial.
We have repeatedly said that when written statements of this type are admitted in evidence they are not substantive evidence of the matters therein contained, but are only admissible to discredit or impeach the witness. Christensen v. Iowa State Highway Commission, 252 Iowa 1351, 110 N.W.2d 573; Law v. Hemmingsen, 249 Iowa 820, 835, 89 N.W.2d 386, 397, *58 and citations; Stevens v. Gear, 240 Iowa 1348, 1357, 39 N.W.2d 408, 414; State v. Powell, 237 Iowa 1227, 1245, 24 N.W.2d 769, 780; Annotations 133 A.L.R. 1454, 1455.
Appellant's position is that Mrs. Murphy testified in the trial of the case that Vicki was on the sidewalk when Monty pushed her. Appellant interprets Exhibit 6 as different from her statement made at the trial. We do not agree. In the statement made to the police Mrs. Murphy did not say anything about where Vicki was standing when Monty pushed her. She did not say to the police she was standing on the sidewalk; she did not say she was not standing on the sidewalk. At any rate, there is not such direct conflict between the statement Exhibit 6, and her testimony at the trial as to make the admission of Exhibit 6 of any importance. We find no error here.
X. Appellant claims the court wrongfully admitted in evidence photographs showing precautions taken after the accident, for the prevention of future accident.
The record shows that immediately after Vicki's accident defendant city erected a fence completely around the head of Virden Creek, running back for quite a number of feet along the walls on each side of the creek. The trial court clearly instructed as to this matter as follows:
"Instruction No. 6. Evidence was admitted tending to show the erection of a fence at the site of the accident a short time subsequent to the accident.
"You are instructed that such evidence shall not be considered in any manner by you as bearing upon any issue of alleged negligence of the Defendant; nor shall you consider its erection after the accident, if you so find, as any admission of any inadequacy or responsibility by the Defendant for the conditions as they existed at the time of the accident."
It has often been held that evidence as to repairs made after the occurrence of the claimed negligence was not admissible as having any bearing upon the negligence.
See 20 Am.Jur., Evidence, section 282, page 267, where it is stated:
"The weight of authority is to the effect that evidence of repairs or alterations made after an accident or injury and of precautions taken to prevent injuries of like character after the happening of the one complained of, is not competent upon that issue as to the condition of a place or an appliance at the time of an alleged injury."
Subject to the cautionary statements in the instruction, the exhibits were admissible as tending to show the city exercised control over the place in question, and that it was close enough to the street to be subject to section 389.12, 1958 Code, I.C.A., even though on land not owned by the city.
This was a clear and decisive statement by the court advising the jury that they should not pay any attention to the repairs or the precautionary fence erected by the city after Vicki's injury.
In view of the trial court's careful and specific instruction to the jury as to this phase of the exhibits, we find no reversible error.
The case isAffirmed.
GARFIELD, C. J., and HAYS, LARSON, THOMPSON, SNELL and MOORE, JJ., concur.
STUART, J., dissents.
THORNTON, J., takes no part.
|
34 B.R. 543 (1983)
James R. WARREN, Trustee, Plaintiff,
v.
G.M. SCOTT & SONS, Edward Dale Phillips, Defendants.
In the Matter of Edward Dale PHILLIPS, Debtor.
Adv. No. 3-83-0282, Bankruptcy No. 3-82-03019.
United States Bankruptcy Court, S.D. Ohio, W.D.
November 7, 1983.
James R. Warren, Springfield, Ohio, trustee/plaintiff.
Daniel G. Hale, Columbus, Ohio, for defendant Scott & Sons Co.
Samuel L. Calig, Columbus, Ohio, for defendant/debtor.
DECISION AND ORDER
CHARLES A. ANDERSON, Bankruptcy Judge.
Presently before the court is plaintiff-trustee's motion for turnover of property, which was filed on April 20, 1983. The property claimed by the plaintiff-trustee is the defendant-debtor's interest in a profit sharing pension plan with his defendant-employer, O.M. Scott & Sons [Scott].
*544 On October 25, 1982, Edward Dale Phillips, filed for bankruptcy. On that date, he had an interest in a profit sharing pension plan.[1] This interest was not initially listed as an asset, but was later added by amendment on December 17, 1982, when he claimed this property as exempt under Ohio Rev.Code § 2329.66(A)(10) and (A)(17) the Ohio Exemption Statute. The trustee timely objected to this claim and filed this action.
As of June 30, 1982, Phillips' interest in the plan was $3,738.54; as of October 25, 1982 (the date he filed bankruptcy), the interest was approximately $4,799.96.
Scott states that the plan qualified under the Employee Retirement Income Security Act of 1974, [ERISA] 29 U.S.C. §§ 1001 et seq. The Trustee has neither contested this fact nor offered any contrary evidence. For the purposes of this action, I assume that the plan is so qualified and is thus subject to ERISA's anti-alienation provisions.[2]
The trustee here generally claims that the plan is property of the estate, neither subject to exclusion nor exemption. Moreover, he states, that the overall rationale of the Bankruptcy Law never intended a debtor to be able to accumulate funds in such a fund, then have them either excluded or exempted and finally to "walk off with a substantial amount of funds free and clear of his debts."
Scott claims that this pension plan is excluded from the estate per 11 U.S.C. § 541(c) or, alternatively, that, if included in the estate, it is exempted under either the Ohio Exemption Statute or the Federal law exemption found in 11 U.S.C. § 522(b)(2)(A).
Generally, with the expanded reach of 11 U.S.C. § 541(a)(1), the bankruptcy estate includes all the debtor's legal and equitable interest in properties. As the legislative history clearly indicates, the scope of this section is very broad, so broad in fact that it includes even property needed for the debtor's fresh start, which can later be exempted. Matter of Goff, 706 F.2d 574, 578 n. 10 (5th Cir.1983).
While generally broad, the definition of property of the estate was specifically restricted by Congress in 11 U.S.C. § 541(c)(2):
(2) A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under application nonbankruptcy law is enforceable in a case under this title.
According to the language of this section, if the alienation restrictions in Phillips' ERISA pension plan are enforceable against general creditors under nonbankruptcy law, then they are enforceable against the bankruptcy trustee and not included in the estate. I am satisfied that these restrictions are enforceable.
In finding that the alienation restrictions are enforceable against other creditors and thus excluding the ERISA plan from Phillips' estate, I agree with the district judge in In re Threewitt, 24 B.R. 927, 929 (D.C.D. Kan.1982):
The great weight of authority is to the effect that a debtor's interest in an ERISA pension fund is beyond the reach of his general creditors. [Citations omitted.] . . . [T]his Court is persuaded that Congress intended that general creditors not reach a debtor's interest in an ERISA pension fund, and intended to preempt any state law to the contrary. It accordingly follows, by virtue of Section 541(c)(2), that the bankruptcy trustee may not reach Mr. Threewitt's interest in the Plan.
See, e.g. In re Rogers, 24 B.R. 181 (Bkrtcy. D.Ariz.1982); but see Goff, supra.
*545 In GMC v. Buha, 623 F.2d 455 (6th Cir. 1980), [the current Chief] Circuit Judge Pierce Lively held that benefits under an ERISA pension plan were not subject to garnishment in a Michigan state court by a creditor of a plan beneficiary. (The only exception noted at 461 was for family support and maintenance). Crucial to Judge Lively's analysis was the following legislative, as opposed to interpretive, Internal Revenue Service regulation:
(b) No assignment or alienation.(1) General rule. Under section 401(a)(13), a trust will not be qualified unless the plan of which the trust is a part provides that benefits provided under the plan may not be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process.
26 C.F.R. § 1.401(a)-13 (1979). See also, Tenneco Inc. v. First Virginia Bank, 698 F.2d 688 (4th Cir.1983); Commercial Mortgage Ins. Inc. v. Citizens Nat. Bank, 526 F.Supp. 510 (N.D.Tex.1981); In re Holt, 32 B.R. 767, 10 B.C.D. 1267 (Bkrtcy.E.D.Tenn. 1983).
Other courts have held that 11 U.S.C. § 541(c)(2) applies only to traditional spendthrift trusts because the legislative history states that the section preserves restrictions on the transfer of a spend-thrift trust. [H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 369 (1977), S.Rep. No. 95-989, 95th Cong., 2d Sess. 83 (1978)]. U.S.Code Cong. & Admin.News 1978, p. 5787. See Matter of Ross, 18 B.R. 364 (D.C.N.Y.1982); In re Graham, 24 B.R. 305 (Bkrtcy., N.D.Iowa W.D.1982). This Court does not agree with this narrow interpretation of Section 541(c)(2). The language of Section 541(c)(2) is clear on its face and does not limit itself to spend-thrift trusts. When a statute is clear on its face there is no end to resort to legislative history. (United States v. Oregon, 366 U.S. 643, 81 S.Ct. 1278, 6 L.Ed.2d 575 (1961), reh'g denied, 368 U.S. 870, 82 S.Ct. 24, 7 L.Ed.2d 70 (1961); Universal City Studios v. Sony Corp. of America, 659 F.2d 963 (9th Cir.1981).
In re Pruitt, 30 B.R. 330, 331 (Bkrtcy.D. Colo.1983).
One of the leading cases espousing the contrary narrow view, that § 541(c)(2) applies only to traditional spendthrift trusts, is Goff, supra. Goff can be readily distinguished. The Goff court held that a self-settled Keough plan was not a spendthrift trust and thus was includable in the debtor's estate, while state law-determined spendthrift trusts would be excludable. Critical in the court's analysis was the self-settled nature of the Goff plan, as seen at 589 where the court contrasts self-settled plans with "the employer-created-and-controlled nature of [other ERISA] plans [which] may well make them analogous to a spendthrift trust," and thus excludable.[3]
Not only is my position that it is not part of the debtor's estate supported by the clear language of the statute, but also by public policy.
Congress enacted ERISA after finding that the national interest was involved, that the security of millions of employees and their dependents was affected by employee benefit plans, and that uniformity of the law, including minimum standards, was required.
The public policy underlying the requirement of anti-alienation clauses in ERISA plans has been stated as follows:
The purpose of the proscription on alienation is to protect an employee from his own financial improvidence in dealings with third parties. The provision is not intended to alter traditional support obligations but rather to assure that the employee and his beneficiaries reap the ultimate benefits due upon retirement. *546 American Tel. & Tel. Co. v. Merry, 592 F.2d 118, 124 (2d Cir.1979).
This public policy prevailed in keeping such ERISA plans out of the bankrupt's estate under the Bankruptcy Act of 1898.
Under section 70a of the Bankruptcy Act, pension plan funds were viewed as a wage substitute for some future period and, therefore, were not included within the property of the estate. In re Turpin, 644 F.2d 472 (5th Cir.1981); In re Parker, 473 F.Supp. 746 (W.D.N.Y.1979). Plans from which the debtor had an unrestricted right to withdraw funds prior to retirement were the exception to the rule and were included with the property of the estate. See In re Witlin, 640 F.2d 661 (5th Cir.1981) (Keogh plan was property of the estate) In re Maco, 4 B.C.D. 94 (D.C.Or.1978) (IRA plan was property of the estate); In re Wilson, 3 B.C.D. 844 (Bankr.Ct.N.D.Tex.1977) (same).
In re Hinshaw, 23 B.R. 233, 234 (Bkrtcy.D. Kan.1982).
The entire profit sharing pension plan agreement was not introduced into evidence. The evidence as submitted does not completely negate any presently vested interest in the debtor as to the retirement plan instanter. Based upon the arguments of counsel for the parties and the portion of the plan introduced (Article XII) it must be assumed that the debtor has no power of immediate and unrestricted withdrawal of any contributions made by him, by termination of employment or otherwise, distinguishing the decision of this court In the Matter of Brown, 2 B.C.D. 1661 (1976).
Having held that such plans are not includable in the debtor's estate pursuant to the provisions of § 541(c)(2), I note that under Ohio law such plans might be considered as spendthrift trusts and as such would also be excludable or exemptible. The court in Central Nat. Bank of Cleveland v. Eels, 5 Ohio Misc. 187, 22 Ohio Op.2d 418, 215 N.E.2d 77 (Probate Court 1965) dealt with a will containing a spendthrift clause.
This is defined in the Restatement of Trusts 2d, Section 152(2) (1959), as follows:
"A trust in which by the terms of the trust or by statute a valid restraint on the voluntary and involuntary transfer of the interest of the beneficiary is imposed is a spendthrift trust."
See also 2 Scott, Trusts, Section 150 (2d ed. 1956; Griswold, Spendthrift Trusts, Section 421, p. 490 (2d ed. 1947).
Id., 215 N.E.2d at 79.
In the present case before the court, both the terms of the trust and the statute (ERISA) impose valid restraints, thus seeming to qualify Phillips' plan as a spendthrift trust eligible for exclusion or exemption from the debtor's estate.[4]
In accordance with the above opinion,
IT IS HEREBY ORDERED that the complaint for turnover of property be dismissed.
NOTES
[1] This plan specifically included a spendthrift clause, stating that "the right of any Participant . . . to any benefit . . . shall not be subject to alienation or assignment, or to attachment, execution, garnishment, sequestration or other legal or equitable process."
[2] Congress has committed the determination of qualification to the Commissioner of the Internal Revenue Service, and it would therefore be inappropriate for me to pass upon this question since it is not before me. In re Baviello, 12 B.R. 412, 416 n. 5 (Bkrtcy.E.D.N.Y.1981).
[3] It is interesting to note that Goff at 583 and 585 cites only one case in which an ERISA plan had been included in the estate, i.e. In re Graham, 24 B.R. 305 (Bkrtcy.N.D.Iowa 1982). Graham, in turn, relies heavily on the analysis in In re Threewitt, 20 B.R. 434 (Bkrtcy.D.Kan. 1982). This Threewitt decision was subsequently overruled by the District Court in In re Threewitt, 24 B.R. 927 (D.Kan.1982). This only increases the confusion concerning this contrary position as effective precedent.
[4] Judge Speer in In re Everhart, 11 B.R. 770 (Bkrtcy.N.D.Ohio 1981) held that a similar profit sharing ERISA plan was exempt per Ohio law.
|
886 So.2d 527 (2004)
George SMITH, Jr.
v.
FRENCH MARKET CORPORATION, et al.
No. 2003-CA-1412.
Court of Appeal of Louisiana, Fourth Circuit.
October 6, 2004.
*528 John B. Fox, Robert W. "Doc" Booksh, Jr., John Fox & Associates, L.L.C., New Orleans, Counsel for Plaintiff/Appellant.
Gerald A. Melchiode, Scott J. Bradley, Galloway, Johnson, Tompkins, Burr & Smith, New Orleans, Counsel for Plaintiff/Appellee, Cafe Gumbolaya, LLC.
Howard B. Kaplan, Bernard, Cassisa, Elliott & Davis, Metairie, Counsel for Defendant/Appellee, French Market Corporation and Acceptance Insurance Company.
Court composed of Judge DAVID S. GORBATY, Judge EDWIN A. LOMBARD, Judge LEON A. CANNIZZARO Jr.
LOMBARD, J.
The plaintiff appeals from summary judgment rendered in favor of defendant/appellee French Market Corporation and third-party defendant/appellee Cafe Gumbolaya, L.L.C. After de novo review, we affirm the judgment of the trial court.
Relevant Facts and Procedural History
The French Market Corporation ("FMC") is a leasing entity for the City of New Orleans.[1] On November 17, 1993[2], FMC entered into an agreement with the The Fish Market, Inc., for a commercial building.[3] The lease was subsequently assigned to Cafe Gumbolaya, a locally owned restaurant, with all pertinent provisions remaining intact.
Provision XI of the lease agreement, entitled "Maintenance and Repair," states in relevant part:
*529 Tenant's Duties: By entry hereunder, Tenant acknowledges that the Leased Premises and appurtenances are in good, clean and sanitary order and repair. Tenant, at his expense, shall maintain in good order and repair, including necessary replacements, the entire front entrance and all portions of the interior of the Leased Premises and appurtenances, including, without limitations, floor structures, exposed electrical and plumbing pipes, lines and fixtures, utility installations, doors and windows.
Provision XIX of the lease agreement, entitled "Indemnification," states in relevant part:
Tenant covenants that he will hold and save Landlord harmless of and from any and all loss, cost, liability, damage or expense, including, without limitation, attorney's fees and disbursements, caused by or arising from or in connection with injury or death of persons or damage to property in, upon or about the leased Premises or caused by or arising from or in connection with activities conducted thereon, or any act or omission of Tenant including with [sic] limitation, injury or death to Tenant, his agents, employees, licensees and invitees and damages to their property; provided, however, that Tenant shall not be required to indemnify Landlord for any damage or injury of any kind arising out of negligence or intentional acts of Landlord, its agents or employees.
On December 16, 1996, George Smith, Jr., a cook in the kitchen of Cafe Gumbolaya, lost his balance and fell as he attempted to empty a seven-gallon pot of boiling water and pasta into a utility sink. On December 10, 1997, he filed suit against FMC[4] and the City of New Orleans,[5] alleging that the floor of the kitchen was unreasonably dangerous because it was flat and constructed of excessively slippery material and that the defendants had actual and constructive notice of these defects. On July 17, 1998, FMC filed a third-party demand against Gumbolaya, L.L.C, d/b/a Cafe Gumbolaya ("Gumbolaya") and its insurer Essex Insurance Company ("Essex"). Gumbolaya and FMC filed separate motions for summary judgment seeking dismissal of the appellant's claims against FMC, alleging that pursuant to the lease agreement FMC contractually relinquished any alleged defects within the leased premises and, accordingly, summary judgment was appropriate because the undisputed evidence clearly established that FMC had no knowledge or notice of the alleged defect as required by La.Rev.Stat. 9:3221. Following a hearing on the motions, the trial court rendered a written judgment on May 9, 2003, granting both motions for summary judgment and dismissing the plaintiff's claims against FMC.
Discussion
On appeal, motions for summary judgment are reviewed de novo, using the same criteria governing trial court consideration of whether summary judgment is appropriate. Schroeder v. Board of Sup'rs of Louisiana State University, 591 So.2d 342 (La.1991); Spicer v. Louisiana Power & Light Co., 97-2406 (La.App. 4 Cir. 4/8/98); 712 So.2d 226, 227. Because summary judgment is now favored in Louisiana, the rules regarding such judgments should be liberally applied[6]. Spicer, 712 So.2d at *530 227. The test for whether or not summary judgment is appropriate in this case is found in Article 966(C) of the Louisiana Code of Civil Procedure, which states:
(1) After adequate discovery or after a case is set for trial, a motion which shows that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law shall be granted. (2) The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
La.Code Civ. Proc. art. 966.
In the instant case, it is uncontroverted that the plaintiff/appellant was an employee of Cafe Gumbolaya in the course and scope of his employment when the accident occurred and, ordinarily, an employee's sole remedy is found in the workers' compensation statutes.[7] The plaintiff in this case seeks to circumvent the statutory workers' compensation scheme by filing suit against his employer's lessor and, thus, this court must determine whether there is any genuine issue of material fact concerning liability of the lessor.
To establish liability on the part of a lessor who has passed on responsibility for the condition of his property to his lessee under La.Rev.Stat. 9:3221, a plaintiff must establish that (1) he sustained damages; (2) that there was a defect in the property; and (3) that the lessor knew or should have known of the defect. Robinson v. Archdiocese of New Orleans, XXXX-XXXX, p. 4 (La.App. 4 Cir. 3/31/99), 731 So.2d 979, 981; see also Marcades v. Cleanerama, Inc., XXXX-XXXX, p. 3 (La.App. 4 Cir. 9/25/02), 831 So.2d 288, 289 (there appear to be two factual inquiries: first, was there a defect in the property; second, did the lessor know or should he have known of the said defect). La.Rev.Stat. 9:3221, which is entitled, "Assumption of responsibility by lessee; liability of owner," states:
The owner of premises leased under a contract whereby the lessee assumes responsibility for their condition is not liable for injury caused by any defect therein to the lessee or anyone on the premises who derives his right to be thereon from the lessee, unless the owner knew or should have known of the defect or had received notice thereof and failed to remedy it within a reasonable time.
In support of their motions for summary judgment, appellees submit (1) *531 the pertinent lease agreements; (2) deposition testimony of the plaintiff/appellant stating that there was no water on the floor at the time of his accident and that to his knowledge no one else had ever slipped on the kitchen floor; (3) the deposition testimony of Steven Hand, executive director of FMC, who stated that he knew of no structural defects prior to leasing the premises to Gumbolaya, that under the terms of the lease the lessee was responsible for inspecting the premises to insure it was in a safe and appropriate condition for operation of a restaurant prior to taking possession of the premises, and that FMC knew of no other persons who were allegedly injured due to the condition of the floor; (4) the affidavit of Tammy Shield, kitchen manager for Gumbolaya, who stated that Gumbolaya's employee's were responsible for the floor in the kitchen and that, other than the plaintiff's slip and fall, she was unaware of any accidents that were allegedly caused by the slipperiness of the kitchen floor; and (6) the deposition testimony of Gerald Senner, owner of Gumbolaya, who stated that he never made any complaints to FMC about the condition of the kitchen floor. This evidence supports a finding that there is an absence of factual support for one or more elements of plaintiff/appellant's claim, i.e., whether there was a defect in the property and whether FMC knew or should have known of the defect.
Accordingly, under La.Code Civ. Proc. art. 966, to survive the appellees' motions for summary judgment, the plaintiff/appellant must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, i.e., that there was a defect in the property and that FMC knew or should have known of the defect. To meet this burden, the plaintiff/appellant submits deposition testimony of Donald Maginnis, a licensed architect, who opines that the kitchen floor is defective because glazed tile flooring is inappropriate for kitchen use and the floor lacks a positive slope to drain, and deposition testimony of Robert Lipp, a mechanical engineer, who opines that the kitchen floor does not have the minimum coefficient of friction. We need not determine whether this evidence is sufficient to prove a defect for which the lessor would be liable because there is no evidence that FMC knew or should have known of the alleged defect.
Conclusion
Because we find no evidence in the record that the plaintiff/appellant can meet his burden of proving liability on the part of FMC at trial, i.e., that FMC knew or should have known of the alleged defect, we affirm the trial court's ruling.
AFFIRMED.
NOTES
[1] City-owned property is leased to FMC which then subleases the property to various entities.
[2] We note that, although the lease agreement was executed on November 17, 1993, Section I of the lease states that "[t]he term `Commencement Date of the Lease' means November 1, 1980."
[3] The lease agreement makes no reference to a street or postal address, describing the property as 4292 square feet "adjacent to Building E on the upriver or St. Philip Street side." Plaintiff's petition indicates that the premises are located at 1000 N. Peters.
[4] By amended petition filed on December 12, 1997, Acceptance Insurance Company (FMC's insurer) was named as a defendant.
[5] The record indicates that The City of New Orleans has filed an exception for dismissal from this suit
[6] See also La.Code Civ. Proc. art. 966(A)(2). "Summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action ... The procedure is favored and shall be construed to accomplish these ends."
[7] In pertinent part, the provisions of La.Rev.Stat. 23:1032 states: "The exclusive remedy for an employee against his employer available to an employee for injuries resulting from an accident occurring during the course and scope of his employment is in worker's compensation...." This statute has been interpreted to limit an injured employee's remedy to workers' compensation despite the fact that his employer has assumed responsibility for the premises pursuant to a lease. Dumestre v. Hansell-Petetin, Inc., 96-1778, p. 6 (La.App. 4 Cir. 1/29/97), 688 So.2d 187, 190.
|
688 F.2d 822
Karnv.Doyle
82-5045
UNITED STATES COURT OF APPEALS Third Circuit
6/11/82
1
W.D.Pa.
AFFIRMED
|
189 Conn. 360 (1983)
STATE OF CONNECTICUT
v.
ALEXANDER LAFFERTY
(10916)
Supreme Court of Connecticut.
Argued December 7, 1982.
Decision released March 1, 1983.
SPEZIALE, C. J., PETERS, HEALEY, PARSKEY and GRILLO, Js.
*361 Carl Schuman, assistant state's attorney, with whom were Herbert G. Appleton, assistant state's attorney, and, on the brief, John M. Bailey, state's attorney, for the appellant (state).
Albert G. Murphy, for the appellee (defendant).
PER CURIAM.
The defendant was charged by information with two counts of larceny in the first degree for allegedly embezzling approximately $309,000 from his employer. At trial, the defendant presented evidence that at the time of the commission of the crimes with which he was charged he was unable to conform his conduct to the requirements of the law as the result of a mental defect known as pathological or compulsive gambling. On the basis of the psychiatric testimony presented, the trial court found the defendant not guilty by reason of insanity pursuant to General Statutes § 53a-13.[1] Thereafter, the defendant was ordered committed to a state mental hospital under General Statutes § 53a-47(a) (1)[2] to determine whether "his release *362 [from custody] would constitute a danger to himself or others." General Statutes § 53a-47(a) (3). At a subsequent hearing under § 53a-47(a) (4), the trial court heard the testimony of Hans Langhammer, a staff psychiatrist at Norwich State Hospital called by the state, and Marvin Steinberg, a psychologist called by the defendant. At the conclusion of the hearing, the trial court in an oral decision found that the defendant did not constitute a danger to himself or others, and it ordered his release.
The state, after obtaining the permission of the trial court pursuant to § 54-96 of the General Statutes, appealed to this court claiming that the trial court erred by interpreting the phrase "a danger to himself or others" in § 53a-47(a) (4) to mean only a physical danger, and not a danger to property. The state argues that the trial court found the defendant to be a danger to property and that such a danger is included within the meaning of "a danger to himself and others" in the statute. The defendant responds that the court found only that the defendant was "possibly" a danger to property, but that even if he were so, he was nonetheless properly *363 released because the statute is limited to physical danger.
In its oral decision, the court stated: "[A]s this court understands the testimony, I believe Dr. Langhammer was very precise in this, he indicated that there was no danger as far as physical harm was concerned. There was a danger as far as property was concerned possibly by the defendant's action in this matter." (Emphasis added.) It is unclear whether the trial court was merely recapitulating the psychiatrist's testimony or whether it was making a finding of fact. Also, the use of the word "possibly" regarding danger to property adds to the ambiguity of the court's oral decision. Whether the defendant was a danger to property is a question of fact which must be determined before we may properly review the claims made in this appeal. It is the function of the trial court, not this court, to find facts. It is therefore necessary for us to remand this case for a further articulation of the trial court's decision on whether the defendant was a danger to property. "The supervision of a case on appeal is in the Supreme Court. Practice Book § 3096; State v. McCarthy, 167 Conn. 472, 477, 356 A.2d 165 (1975). Where `necessary to the proper disposition of the cause,' this court may `remand the case for a further articulation of the trial court's decision.' Practice Book § 3060D...." State v. Ostroski, 184 Conn. 455, 460, 440 A.2d 166 (1981), cert. denied, 459 U.S. 878, 103 S. Ct. 173, 74 L. Ed.2d 142 (1982); Kaplan v. Kaplan, 185 Conn. 42, 46, 440 A.2d 252 (1981).
The case is remanded to the trial court with direction to file a memorandum of decision articulating the basis upon which it found the defendant not to be a danger to himself or others.
NOTES
[1] General Statutes § 53a-13 then provided, in relevant part: "In any prosecution for an offense, it shall be a defense that the defendant, at the time of the proscribed conduct, as a result of mental disease or defect lacked substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law...."
[2] "[General Statutes] Sec. 53a-47 ACQUITTAL ON GROUNDS OF MENTAL DISEASE OR DEFECT. CONFINEMENT AND EXAMINATION. RELEASE. (a) ... (1)When any person charged with an offense is acquitted on the grounds of mental disease or defect, the court shall order such person to be temporarily confined in any of the state hospitals for mental illness for a reasonable time, not to exceed ninety days, for an examination to determine his mental condition, except that, if the court can determine, on the basis of the evidence already before it, that such person is not mentally ill to the extent that his release would constitute a danger to himself or others, the court may order his immediate release, either unconditionally or conditionally pursuant to subdivision (2) of subsection (e). (2) The person to be examined shall be informed that, in addition to the examination provided for in subdivision (1), he has a right to be examined during such confinement by a psychiatrist of his own choice. (3) Within sixty days of the confinement pursuant to subdivision (1), the superintendent of such hospital and the retained psychiatrist, if any, shall file reports with the court setting forth their findings and conclusions as to whether such person is mentally ill to the extent that his release would constitute a danger to himself or others. Copies of such reports shall be delivered to the state's attorney or prosecutor and to counsel for such person. (4) Upon receipt of such reports, the court shall promptly schedule a hearing. If the court determines that the preponderance of the evidence at the hearing establishes that such person is mentally ill to the extent that his release would constitute a danger to himself or others, the court shall confine such person in a suitable hospital or other treatment facility...."
|
Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-12-00151-CR
Brijido Andres MUNOZ,
Appellant
v.
The STATE of Texas,
Appellee
From the 290th Judicial District Court, Bexar County, Texas
Trial Court No. 2009-CR-1044B
Honorable Melisa Skinner, Judge Presiding
Opinion by: Steven C. Hilbig, Justice
Sitting: Karen Angelini, Justice
Steven C. Hilbig, Justice
Marialyn Barnard, Justice
Delivered and Filed: December 28, 2012
AFFIRMED
Brijido Andres Munoz was indicted for capital murder. A jury found Munoz guilty of the
lesser included offense of aggravated robbery, and Munoz was sentenced to confinement for
thirty years. Munoz appeals, arguing he was denied his Sixth Amendment right to a speedy trial.
We affirm the judgment.
On a night in October 2008, Manuel Barrera was killed when three men were attempting
to rob Barrera and his mother-in-law. Munoz was arrested for the crime on November 5, 2008,
and he was indicted for capital murder in February 2009. When his case was called for trial in
04-12-00151-CR
February 2012, Munoz moved to dismiss the indictment, asserting his right to a speedy trial had
been violated. The trial court denied the motion. In his sole point on appeal, Munoz argues the
trial court’s ruling was error.
We review a trial court’s ruling on a motion to dismiss for want of a speedy trial in light
of the arguments, information, and evidence that was available to the trial court at the time it
ruled. Shaw v. State, 117 S.W.3d 883, 889 (Tex. Crim. App. 2003). We must uphold the trial
court’s ruling if it is supported by the record and is correct under the applicable law. Id. In
determining whether a defendant has been denied his constitutional right to a speedy trial, we use
a balancing test in which the conduct of both the State and the defendant are weighed. Barker v.
Wingo, 407 U.S. 514, 530 (1972); Shaw, 117 S.W.3d at 888. The factors to be considered include
the length of the delay, the reason for the delay, the defendant’s assertion of his speedy trial
right, and the prejudice to the defendant resulting from the delay. Barker, 407 U.S. at 530; Shaw,
117 S.W.3d at 888-89. No single factor is necessary or sufficient to establish a violation of the
defendant’s right to a speedy trial. Barker, 407 U.S. at 533; Shaw 117 S.W.3d at 889.
Length of Delay
A delay approaching one year is sufficient to trigger a speedy trial inquiry. Shaw, 117
S.W.3d at 889. Because the delay of more than three years between Munoz’s arrest and his trial
was far more than the minimum needed to trigger the inquiry, this factor “weighs heavily in
favor of finding a violation of appellant’s right to a speedy trial.” Id.
Reasons for delay
Under Barker we assign different weights to different reasons for the delay. Barker, 407
U.S. at 531. We weigh a deliberate attempt to delay the trial heavily against the government. Id.;
State v. Munoz, 991 S.W.2d 818, 822 (Tex. Crim. App. 1999). We weigh a “more neutral reason
such as negligence or overcrowded courts” less heavily against the State. Barker, 407 U.S. at
-2-
04-12-00151-CR
531; Munoz, 991 S.W.2d at 822. “A valid reason for the delay should not be weighed against the
government at all.” Munoz, 991 S.W.2d at 822. And delay attributable in whole or in part to the
defendant may constitute a waiver of a speedy trial claim. Barker, 407 U.S. at 528–30; Munoz,
991 S.W.2d at 822.
The State has the burden of justifying the delay. Shaw, 117 S.W.3d at 889S90. However,
in the absence of an assigned reason for the delay, we may not presume either a deliberate
attempt by the State to prejudice the defense or a valid reason for the delay. Dragoo v. State, 96
S.W.3d 308, 314 (Tex. Crim. App. 2003). Moreover, in reviewing the trial court’s ruling, we
may only consider the arguments appellant made to the trial court in support of his motion to
dismiss. Id. at 313.
There was a delay of 39 months in this case – from Munoz’s November 2008 arrest until
his February 2012 trial. However, both in the trial court and in his appellate brief, Munoz
complains only about the nine month delay from the date of the first trial setting in May 2011
until his February 2012 trial, arguing that entire delay was due to the State’s “spurious”
interlocutory appeal.
The record of a January 11, 2011, scheduling conference indicates the case had recently
been transferred from one trial court to another. The parties advised the second court there had
not been any previous trial setting and the record does not contain any express explanation for
the delay from November 2008 to January 2011. We note, however, that in December 2010,
defense counsel requested and the court approved payment for additional time beyond that
authorized by the plan to pay court-appointed attorneys. The motion asserted the time was
needed to “properly plan, prepare, and investigate the case.” Also in December 2010, the trial
court granted the defense’s motions for appointment of mitigation and psychological experts to
assist counsel in preparation of the case. This suggests the defense was not prepared to try the
-3-
04-12-00151-CR
case before then. Nevertheless, because Munoz does not complain about this period of delay and
the State did not attempt to justify the delay, we do not attribute the delay from November 2008
to January 2011 against either party.
The record of the January 2011 hearing establishes that the first date the court had
available to try a capital case was April 29, 2011, and the prosecutor stated he would be ready
that date. However, defense counsel had scheduling conflicts that precluded a trial setting before
May 31, 2012. Munoz’s attorney objected to that setting because he wanted one of his co-
defendants to be tried first. The court overruled the objection and set the case for a May 31, 2012
trial. The three month delay because of the court’s docket is weighed slightly against the State,
and the one month delay because of defense conflicts is weighed slightly against Munoz. See
Munoz, 991 S.W.2d at 822.
Munoz’s principal complaint concerns the delay occasioned by the State’s appeal of a
pretrial order signed by the trial court. The trial court held hearings on pretrial motions in April
and May 2011. The court orally denied the defense’s motion to suppress at a hearing on April 7.
The court continued hearing pretrial motions on May 24, and took the defense’s motions in
limine under advisement. On May 25, 2011, the trial court signed an order stating that the
defendant’s motion to suppress was granted as to some of his statements. The State filed a notice
of appeal pursuant to article 44.01 of the Texas Code of Criminal Procedure, certifying that the
evidence suppressed was of substantial importance to the case. See TEX. CODE CRIM. PROC. ANN.
art. 44.01(a)(5) (West Supp. 2012). The State also asserted its right to a stay of the proceedings
pending the disposition of the appeal. See id. art. 44.01(e). The attorneys appeared in the trial
court on May 31, after the notice of appeal had been filed. The trial court stated it was staying
the proceedings, but advised the parties it had signed the order granting the motion to suppress in
error. The trial judge also added the following handwritten annotation at the bottom of the order
-4-
04-12-00151-CR
granting the motion to suppress: “Suppression Order signed in error – Denied on the record
4/7/11. Vacated Motion in Limine should have been signed on date above.”
On July 25, after the appellate record had been filed, but before any briefing in the
appeal, the State’s appellate counsel filed a motion to abate the appeal and restore jurisdiction to
the trial court for the purpose of signing an order that actually reflected the trial court’s rulings.
Before the appeal could be abated, the trial judge filed a written response to the State’s motion.
This court ruled that the trial court’s written response to the motion to abate was an unambiguous
denial of the motion to suppress, and on August 31, 2011, we issued an order dismissing the
appeal for want of jurisdiction and lifted the stay. This court’s mandate issued November 11,
2011, and trial was held February 2, 2012.
Munoz does not challenge the State’s right to take an interlocutory appeal from an order
granting a motion to suppress, nor its argument that the evidence the trial court’s May 25 order
purported to suppress was of substantial importance to the State’s case. Rather, he contends the
appeal was “outrageous” and “spurious” because the trial court made it clear to the parties that it
intended to deny the motion to suppress. We decline to charge the three month delay occasioned
by the appeal against the State. The trial court’s written order suppressed evidence, and its
handwritten clarification on May 31, after the notice of appeal was filed, was ambiguous at best
and arguably did not withdraw or vacate the appealed order. Nothing in the record suggests the
State acted with intent to delay the trial. The State was exercising its statutory right to appeal an
adverse pretrial evidentiary ruling that it considered important to proving its case. We conclude
the State justified the three-month delay caused by the appeal.
The record is silent as to why no party sought early issuance of the mandate from this
court or why the case was not set for trial until four months after the mandate issued. Because the
six-month delay from August 31, 2011 until trial is unexplained, we weigh this part of the delay
-5-
04-12-00151-CR
slightly against the State. However, we find no evidence of any deliberate attempt by the State to
delay or to prejudice the defense.
Munoz’s assertion of his right
A defendant’s failure to seek a speedy trial makes it difficult for him to prevail on a claim
that his right to a speedy trial was violated. Barker, 407 U.S. at 532; Shaw, 117 S.W.3d at 890. A
defendant’s failure to timely demand a speedy trial “indicates strongly that he did not really want
one and that he was not prejudiced by not having one.” Shaw, 117 S.W.3d at 890. “[T]he longer
the delay becomes, the more likely it is that a defendant who really wanted a speedy trial would
take some action to obtain one. Thus, a defendant’s inaction weighs more heavily against a
violation the longer the delay becomes.” Id. (citations omitted). Also relevant to the inquiry is
whether the defendant actually asked for a prompt trial. Although a motion to dismiss gives
notice to the State of a speedy trial claim, asking for a dismissal instead of a prompt trial
attenuates the strength of the claim. Phillips v. State, 650 S.W.2d 396, 401 (Tex. Crim. App.
1983); Marquez v. State, 165 S.W.3d 741, 749 (Tex. App.— San Antonio 2005, pet. ref’d).
The first complaint about delay that appears in the record is in a motion Munoz filed
November 1, 2011, three years after his arrest. Munoz sought release on personal bond or
reduction of his bail because of the delay in bringing him to trial. However, the motion did not
ask for a prompt trial and was not presented to the court until February 21, 2012. When the case
was called for trial on February 21, Munoz moved to dismiss the indictment because he had been
denied a speedy trial. 1 Munoz failed to assert his rights for over three years, until the day trial
started, although he was represented by counsel at all times. Munoz’s acquiescence to the
1
Munoz contends that he asserted his right to a speedy trial by announcing ready for trial on May 31, 2011. When
the case was called in February 2012, the trial judge stated it was her recollection that the defense had been ready
that date. However, the reporter’s record of the May 31, 2011 proceeding reflects that when the parties appeared
before the court, the State had already filed its notice of appeal. The trial court stated it was staying the proceedings
and the case was not called for trial. The court did not ask for announcements, none were made, and Munoz did not
assert a right to a speedy trial on the record.
-6-
04-12-00151-CR
lengthy delay “weighs very heavily against” finding a violation of the speedy trial right. See
Shaw, 117 S.W.3d at 890; Dragoo, 96 S.W.3d at 315.
Prejudice to the defendant resulting from the delay
A defendant claiming his right to a speedy trial has been violated has the burden to make
some showing of prejudice. Munoz, 991 S.W.2d at 826. Munoz did not assert he had been
prejudiced in any way when he presented his motion to dismiss the indictment to the trial court.
On appeal, he contends he was presumptively prejudiced by his lengthy pretrial incarceration.
Munoz made no allegation or showing that he suffered excessive anxiety or concern because of
the delay. Nor does he allege that his ability to defend himself was compromised in any way by
the delay. See Shaw, 117 S.W.3d at 890-91 (discussing interests protected by right to speedy
trial). We conclude Munoz’s showing of prejudice was minimal and any presumed prejudice is
“extenuated by appellant’s longtime acquiescence in the delay.” See Shaw, 117 S.W.3d at 890.
Conclusion
The length of the delay and the States’ failure to justify parts of it weigh against the State.
However, Munoz’s failure to demonstrate any prejudice, and his long acquiescence in the delay
weigh strongly against a finding that his right to a speedy trial was violated. We conclude the
trial court’s ruling denying Munoz’s motion to dismiss the indictment is supported by the record
and the law. Accordingly, we affirm the trial court’s judgment.
Steven C. Hilbig, Justice
DO NOT PUBLISH
-7-
|
621 So.2d 413 (1993)
Charles Henry WILLIAMS, Petitioner,
v.
STATE of Florida, Respondent.
No. 79487.
Supreme Court of Florida.
July 1, 1993.
Bennett H. Brummer, Public Defender, Eleventh Judicial Circuit, Miami, and May L. Cain of Cain & Snihur, Sp. Asst. Public Defender, North Miami Beach, for petitioner.
Robert A. Butterworth, Atty. Gen., Tallahassee, Katherine Fernandez Rundle, State Atty., and Paul Mendelson, Asst. State Atty., Miami, for respondent.
KOGAN, Justice.
We have for review Williams v. State, 592 So.2d 350 (Fla. 3d DCA 1992), because of apparent conflict with Hodges v. State, 403 So.2d 1375 (Fla. 5th DCA 1981), review denied, 413 So.2d 877 (Fla. 1982); and Helton v. State, 365 So.2d 1101 (Fla. 1st DCA), cert. denied, 373 So.2d 461 (Fla. 1979), on the issue of whether similar fact evidence is admissible to rebut a defense of consent is a sexual battery case. We have jurisdiction pursuant to article V, section 3(b)(3) of the Florida Constitution.
Charles Henry Williams was convicted of sexual battery, kidnapping, robbery, and *414 possession of cocaine. At trial, the State was allowed to present, over objection, the testimony of two women who testified that they had been sexually assaulted by Williams under circumstances similar to those present in this case. Williams maintains that admission of this other crime evidence was error because the testimony only served to prove bad character or a propensity to assault women and thus is inadmissible under section 90.404(2)(a), Florida Statutes (1989). For the reasons set forth below, we agree with the district court that the challenged testimony was properly admitted in this case.
The attack on the complainant and the attacks on the two witnesses occurred in the same general area of Miami during the early morning hours on a weekend. Prior to the attacks, Williams engaged all three of the women in conversation concerning purchasing cocaine or having sex for drugs. Williams grabbed each of his victims in a tight choke hold from behind and dragged each of the victims to a secluded spot. The complainant testified that after dragging her behind the detached hood of a car, Williams took her cocaine. Then, while holding her by the neck with one hand, Williams masturbated with the other hand prior to penetrating her. After having sexual intercourse with her, Williams told the complainant not to say anything or he would kill her and then calmly walked away. The first witness's testimony was substantially the same as the complainant's. While holding the witness about the neck, Williams masturbated prior to forcing himself on her. He then took the woman's cocaine and walked away. The second witness testified that after Williams grabbed her by the neck, she lost consciousness momentarily and awoke with her pants pulled down. Williams walked away from her when confronted by another man.
Williams was apprehended soon after the attack on the victim in this case. When questioned, Williams told police that he had helped the complainant purchase crack cocaine and had sex with her in exchange for drugs, but she had become angry when he refused to give her the drugs.
Relying on the conflict cases, Williams maintains that consent is unique to the individual and therefore cannot be proved by evidence of other sexual encounters because the lack of consent of one person is not proof of the lack of consent of another. Hodges, 403 So.2d at 1378; Helton, 365 So.2d at 1102. Thus, the only purpose served by the testimony concerning the encounters with the two witnesses was to show bad character or the propensity to commit sexual battery.
This case presents a textbook example of the interplay of Florida's rules of evidence concerning the admissibility of evidence of other crimes, wrongs, or acts. As a general rule, such evidence is admissible if it casts light on a material fact in issue other than the defendant's bad character or propensity. Bryan v. State, 533 So.2d 744, 746 (Fla. 1988), cert. denied, 490 U.S. 1028, 109 S.Ct. 1765, 104 L.Ed.2d 200 (1989); Williams v. State, 110 So.2d 654 (Fla.), cert. denied, 361 U.S. 847, 80 S.Ct. 102, 4 L.Ed.2d 86 (1959). Evidence of other crimes or acts may be admissible if, because of its similarity to the charged crime, it is relevant to prove a material fact in issue. But it may also be admissible, even if not similar, if it is probative of a material fact in issue. Although similarity is not a requirement for admission of other crime evidence, when the fact to be proven is, for example, identity or common plan or scheme it is generally the similarity between the charged offense and the other crime or act that gives the evidence probative value. Thus, evidence of other crimes, whether factually similar or dissimilar to the charged crime, is admissible if the evidence is relevant to prove a matter of consequence other than bad character or propensity. See Bryan, 533 So.2d at 746; Charles W. Ehrhardt, Florida Evidence § 404.09 (1993).
The broad rule of admissibility based on relevancy, commonly known as the Williams rule, is codified at section 90.404(2)(a), Florida Statutes (1989). That provision provides:
*415 Similar fact evidence of other crimes, wrongs or acts is admissible when relevant to prove a material fact in issue, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident, but is inadmissible when the evidence is relevant solely to prove bad character or propensity.
Section 90.404(2)(a). It is clear that other crime evidence that is probative of a material fact in issue is not inadmissible simply because it has a tendency to suggest the commission of another crime and thus necessarily is prejudicial to the defendant. Bryan, 533 So.2d at 747; Williams, 110 So.2d at 660. However, evidence of other crimes that is relevant and therefore not barred by section 90.404(2)(a), may be excluded under section 90.403 if its probative value is substantially outweighed by undue prejudice. Bryan, 533 So.2d at 747.
Similar fact evidence has been held admissible in sexual battery cases when the evidence was found to have a logical relationship to some material aspect of the charged crime beyond the character of the defendant or his propensity to force himself on women. For example, in Williams, the victim testified that she returned to her car in a department store parking lot to find Williams hiding in the back seat. Williams commandeered the car and then sexually assaulted her. At trial, Williams testified that he had prior sexual relations with the complainant and that she consented on the day in question. The State offered the testimony of a deputy sheriff who stated that on the day after the incident the defendant advised him that when he saw the victim's automobile he thought it was his brother's and crawled in the back to take a nap. 110 So.2d at 656-57.
The State also offered the testimony of a prior victim and a police officer who testified about an incident that occurred six weeks prior to the attack on the complainant. The prior victim testified that she had parked her car in the same lot and at about the same time as the complainant. When she returned to her car she too discovered Williams hiding on the floor of the back seat. When captured, Williams claimed that he had mistaken the car for his brother's, and had crawled into the back to take a nap. The two vehicles were of different make, color, and year. 110 So.2d at 657-58. This Court concluded that the similar fact evidence was properly admitted because
[i]t definitely had probative value to establish a plan, scheme or design. It was relevant to meet the anticipated defense of consent. At the time when it was offered in the presentation of the State's main case it had a substantial degree of relevance in order to identify the accused. Finally, it was relevant because it demonstrated a plan or pattern followed by the accused in committing the type of crime laid in the indictment.
110 So.2d at 663.
More recently, in Jackson v. State, 538 So.2d 533 (Fla. 5th DCA 1989), testimony was admitted that, like the complainant in that case, the witness had been tricked into accompanying the defendant to an isolated area where she was raped. In each of the encounters, the defendant drove his victim to a rural area on some pretext and there assaulted her while she stood nude in front of the headlights of the car. Jackson claimed to have paid both the complainant and the witness for having sex with him. The Fifth District Court of Appeal concluded that the testimony concerning the prior incident was admissible because it was relevant to show modus operandi, plan or scheme, and to rebut the defendant's claim of sex for pay. 538 So.2d at 535.
In contrast to the similar fact evidence found to be admissible in Williams and Jackson, the other crime evidence held inadmissible in Hodges and Helton did nothing more than expose the defendant's bad character and propensity to sexually assault women. In Hodges, testimony was allowed over objection from a woman who was forced by the defendant to submit to sex three years before the charged crime. The only similarity between the charged sexual battery and the prior offense was the fact that in both instances the defendant had forced intercourse with a casual acquaintance. The evidence did not tend to *416 show a scheme or plan to isolate the victims or to create a defense, nor did it tend to prove any other material fact at issue. Thus, the other crime evidence was correctly held inadmissible by the district court because it was relevant to show nothing more than bad character and propensity.
As was the case in Hodges, Helton concerned testimony about another incident that was not similar to the charged offense in any meaningful way so as to make it probative of anything other than propensity to assault women. As noted by the district court, "[t]he only similarities between the two incidents [were] that they occurred in wooded areas, the victims allegedly did not consent to the encounters, and the victim in each case hailed a passing car for help. There [were] numerous dissimilarities." 365 So.2d at 1102. More importantly, there was nothing about the prior incident other than the fact that the woman involved did not consent that shed any light on whether the victim of the charged crime consented.
We agree with the Hodges and Helton courts that because consent is unique to the individual the mere fact that the victim of an unrelated assault did not consent cannot serve as evidence of nonconsent by the victim of the charged offense. However, we do not agree that other crime evidence is never relevant to the issue of consent. The Fifth District Court of Appeal seems to have reached a similar conclusion in Jackson, which postdates its 1981 decision in Hodges.
We find persuasive the analysis employed by the Michigan Supreme Court to uphold the admission of similar fact evidence under circumstances strikingly similar to those in this case. In People v. Oliphant, 399 Mich. 472, 250 N.W.2d 443 (1976), after meeting his accuser, the defendant talked with her about race prejudice and marijuana. After gaining the woman's confidence, he eventually drove her to a secluded area where he raped her. Immediately after, Oliphant told the woman that she should not prosecute him, that she could never prove rape, and that he had a tape recorder in the car. When he dropped her off, he told her to be sure to get his license plate number. Oliphant then went to a police station and reported that he had sex with a woman who became angry when he told her she had an unpleasant body odor. 250 N.W.2d at 445-46.
At trial, three other women testified about similar encounters with Oliphant. Like the complainant, each of the witnesses was a young, white college student. After meeting each of the young women, Oliphant gained a measure of trust by conversing about matters such as marijuana and interracial dating. In each case, he drove his victim to an unfamiliar place where he raped her. He gave one victim his name and address and offered to drive her to the police in an effort to convince her that it would be futile to file a complaint against him.
In finding the evidence of the other encounters relevant to the issue of consent, the Michigan Court explained:
[T]he testimony of "A", "B" and "C" goes beyond tending to show that defendant raped other young women. The many similarities in all four cases tend to show a plan or scheme to orchestrate the events surrounding the rape of complainant so that she could not show nonconsent and the defendant could thereby escape punishment... .
... .
On the key issue of consent there is directly contradictory testimony; thus the trier of fact must look to the attendant circumstances and the parties' behavior prior to and subsequent to the act of intercourse. It then becomes material to know whether defendant orchestrated those circumstances to give the appearance of consent and to make proof of nonconsent difficult... .
Certainly, the fact that an individual commits a rape at one time has no bearing on whether another woman consented to intercourse at another time. Here, however, the People did not offer the prior acts to prove prior rapes, or that the defendant is a bad man with criminal propensities. The People offered the prior acts to show the scheme, plan or system *417 employed by the defendant in raping the complainant in a manner and under circumstances which gave the appearance of consent should he meet with resistance.
It is true that even if a plan to orchestrate events to make it appear that the woman consented is shown, this is not conclusive proof that the woman did not consent. Evidence of such a plan, however, along with evidence of the other circumstances surrounding the intercourse, is both relevant and material to the issue of consent... .
250 N.W.2d at 449-50 (citations and footnotes omitted).
Following similar logic, the Supreme Court of Arizona, in State v. Hill, 104 Ariz. 238, 450 P.2d 696 (1969), held admissible evidence of a prior rape because it tended to show a common plan or scheme to set up a defense of consent. In both the prior incident and the charged crime, Hill broke into the victim's house, threatened her with a sharp object, pulled an object over her face, committed various sex acts on the victim, and then fell asleep in the woman's bed. In the charged crime, the defendant testified that the complainant invited him to have sex with her in exchange for money but when he refused to pay she claimed he raped her. The Arizona Court noted that the defendant's claim of consent was corroborated by the fact that rather than fleeing he fell asleep in the victim's bed. Thus, the evidence of the prior rape, where the defendant also fell asleep in his victim's bed, "was extremely relevant and indeed vital proof of the fact that a forcible rape had been committed." 450 P.2d at 697; see also State v. Willis, 370 N.W.2d 193 (S.D. 1985) (similar fact evidence of sexual encounter with another mentally retarded woman who also was under the influence of the defendant was admissible to rebut consent defense).
In this case, the testimony concerning the other encounters was relevant to rebut Williams' defense that the complainant had consensual sex with him in exchange for drugs. The similar fact evidence tended to rebut the defense by showing a common plan or scheme to seek out and isolate victims likely not to complain or to complain unsuccessfully because of the circumstances surrounding the assaults and the victims involvement with drugs. The other crime evidence was not made the focal point of the trial in this case and proper cautionary instructions were given. Thus, because the challenged testimony is relevant to a material fact in issue and its probative value clearly outweighs the potential for undue prejudice, there is no bar to its admission under either section 90.404(2)(a) or section 90.403.
We find the other issues raised by Williams to be without merit. Accordingly, we approve the decision below and disapprove Hodges and Helton to the extent that they can be read to be inconsistent with this opinion.
It is so ordered.
BARKETT, C.J., and OVERTON, McDONALD, SHAW, GRIMES and HARDING, JJ., concur.
|
Cite as: 589 U. S. ____ (2019) 1
SOTOMAYOR
Statement of, S
J., dissenting
OTOMAYOR , J.
SUPREME COURT OF THE UNITED STATES
KENNETH R. ISOM v. ARKANSAS
ON PETITION FOR WRIT OF CERTIORARI TO THE
SUPREME COURT OF ARKANSAS
No. 18–9517. Decided November 25, 2019
The petition for a writ of certiorari is denied.
Statement of JUSTICE SOTOMAYOR respecting the denial
of certiorari.
Petitioner Kenneth Isom was thrice charged with bur-
glary and theft offenses by Drew County, Arkansas, prose-
cutor Sam Pope. Isom was acquitted on two of those occa-
sions, but was convicted on the third. After Isom was
granted parole three years into his sentence, Prosecutor
Pope met with the Office of the Governor to express his con-
cern and to inquire whether Isom could somehow be re-
turned to prison, but to no avail.
Seven years later, a jury convicted Isom of capital murder
in a case presided over by Pope himself—now a Drew
County judge. Isom sought postconviction relief, which was
denied, also by Judge Pope. The Arkansas Supreme Court
later granted Isom leave to file a writ of coram nobis to chal-
lenge the State’s suppression of critical evidence under
Brady v. Maryland, 373 U. S. 83 (1963). That suppressed
evidence pertained to, among other things, a suggestive
photo identification and the inconsistent testimony of a
state witness.
Again, Judge Pope presided. Isom filed a recusal motion,
alleging that Pope’s prior efforts to prosecute Isom (and to
rescind his parole) created, at the very least, an appearance
of bias requiring recusal under the Due Process Clause.
Judge Pope denied the motion. After crediting testimony
that supported his original photo-identification ruling, and
after limiting discovery relevant to the inconsistent-
2 ISOM v. ARKANSAS
Statement of SOTOMAYOR, J.
testimony issue, Judge Pope also denied coram nobis relief.
The Arkansas Supreme Court affirmed. 2018 Ark. 368,
563 S. W. 3d 533. Justices Hart and Wood dissented, con-
cluding that there was at least an appearance of bias that
required recusal. Justice Hart reasoned that the unusual
coram nobis posture presented an especially compelling
case for recusal, because Judge Pope was in the “untenable
position” of evaluating his own prior findings about
whether the photo identification should have been sup-
pressed. Id., at 550. Justice Hart also considered it signif-
icant that, after a state witness appeared to become con-
fused during cross-examination, Judge Pope rehabilitated
the witness and ordered a recess, after which the witness
testified that his prior statements were mistaken. Id., at
551. Justice Wood, in turn, found it difficult to afford Judge
Pope the usual deference extended to the close, discretion-
ary decisions of circuit court judges, given his “extensive
history” with Isom. Id., at 552.
Our precedents require recusal where the “probability of
actual bias on the part of the judge or decisionmaker is too
high to be constitutionally tolerable.” Rippo v. Baker, 580
U. S. ___, ___ (2017) (per curiam) (slip op., at 2) (quoting
Withrow v. Larkin, 421 U. S. 35, 47 (1975)). The operative
inquiry is objective: whether, “considering all the circum-
stances alleged,” Rippo, 580 U. S., at ___ (slip op., at 3), “the
average judge in [the same] position is likely to be neutral,
or whether there is an unconstitutional potential for bias,”
Williams v. Pennsylvania, 579 U. S. ___, ___ (2016) (slip op.,
at 6) (internal quotation marks omitted). This Court has
“not set forth a specific test” or required recusal as a matter
of course when a judge has had prior involvement with a
defendant in his role as a prosecutor. Cf. id., at ___ (slip
op., at 5). Nor has it found that “opinions formed by the
judge on the basis of facts introduced or events occurring in
the course of . . . prior proceedings” constitute a basis for
recusal in the ordinary case. Liteky v. United States, 510
Cite as: 589 U. S. ____ (2019) 3
Statement of SOTOMAYOR, J.
U. S. 540, 555 (1994). Indeed, “it may be necessary and pru-
dent to permit judges to preside over successive causes in-
volving the same parties or issues.” Id., at 562 (Kennedy,
J., concurring).
At the same time, the Court has acknowledged that
“[a]llowing a decisionmaker to review and evaluate his own
prior decisions raises problems,” Withrow, 421 U. S., at 58,
n. 25, perhaps because of the risk that a judge might “ ‘be so
psychologically wedded to his or her previous position’ ” that
he or she will “ ‘consciously or unconsciously avoid the ap-
pearance of having erred or changed position.’ ” Williams,
579 U. S., at ___ (slip op., at 7) (quoting Withrow, 421 U. S.,
at 57). And it has warned that a judge’s “personal
knowledge and impression” of a case may sometimes out-
weigh the parties’ arguments. In re Murchison, 349 U. S.
133, 138 (1955).
The allegations of bias presented to the Arkansas Su-
preme Court are concerning. But they are complicated by
the fact that Isom did not raise the issue of Judge Pope’s
prior involvement in his prosecutions, either at his capital
trial or for nearly 15 years thereafter during his postconvic-
tion proceedings. Although the Arkansas Supreme Court
did not base its recusal decision on this point, it is a consid-
eration in evaluating whether there was an “unconstitu-
tional potential for bias” in this case sufficient to warrant
the grant of certiorari. Williams, 579 U. S., at ___ (slip op.,
at 6) (internal quotation marks omitted). I therefore do not
dissent from the denial of certiorari. I write, however, to
encourage vigilance about the risk of bias that may arise
when trial judges peculiarly familiar with a party sit in
judgment of themselves. The Due Process Clause’s guaran-
tee of a neutral decisionmaker will mean little if this form
of partiality is overlooked or underestimated.
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 23, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
____________________ Clerk
No. 05-60465
Summary Calendar
____________________
ANAND BABO; HAMAN BABO
Petitioners
v.
ALBERTO R GONZALES, U S ATTORNEY GENERAL
Respondent
_________________________________________________________________
Petition for Review of an Order of the
Board of Immigration Appeals,
BIA No. A79 556 429; BIA No. A79 556 431
_________________________________________________________________
Before KING, BARKSDALE, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Anand Babo and his son, Haman Babo, petition this court for
review of an order from the Board of Immigration Appeals (“BIA”)
affirming the decision of the Immigration Judge (“IJ”) to deny
their applications for asylum, withholding of removal, and
protection under the Convention Against Torture (“CAT”). By
*
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.
-1-
separate motion carried with the case, the Babos contend, in the
alternative, that this case should be transferred to the district
court as a habeas corpus petition pursuant to 28 U.S.C. § 2241 if
this court determines that it lacks jurisdiction over the appeal.
For the following reasons, we DISMISS the petition for review
insofar as it seeks review of the Babos’ asylum claim and DENY
the balance of the petition for review and the accompanying
motion.
I. FACTUAL AND PROCEDURAL BACKGROUND
Petitioners Anand Babo and his son, Haman Babo, were both
born in Karachi, Pakistan. They entered the United States
together as temporary visitors on July 21, 2000, and were
authorized to remain only until January 19, 2001. Both men
remained in the United States past that date without explicit
authorization from the Immigration and Naturalization Service
(“INS”).1 The DHS issued separate Notices to Appear on March 10,
2003 and filed with the immigration court in Dallas, Texas, on
April 1, 2003, to commence removal proceedings against the Babos
1
As of March 1, 2003, the INS’s administrative, service,
and enforcement functions were transferred from the Department of
Justice to the new Department of Homeland Security (“DHS”). See
Homeland Security Act of 2002, Pub. L. No. 107-296, §§ 441, 451,
471, 116 Stat. 2135 (2002). The Bureau of Immigration and
Customs Enforcement (“BICE”) in the DHS assumed the INS’s
detention, removal, enforcement, and investigative functions.
See Peters v. Ashcroft, 383 F.3d 302, 304 n.1 (5th Cir. 2004).
Because the removal proceedings in this case began after the
reorganization, we will henceforth refer to the current agencies
in this opinion for the sake of accuracy.
-2-
as nonimmigrants that remained in the United States for a time
longer than permitted under section 237(a)(1)(B) of the
Immigration and Nationality Act (“INA”), 8 U.S.C.
§ 1227(a)(1)(B).2 The Babos filed their asylum applications in
open court on October 9, 2003, long after the one-year limitation
on filing under section 208(a)(2)(B) of the INA, 8 U.S.C.
§ 1158(a)(2)(B), had lapsed.
On January 5, 2004, the IJ conducted a consolidated removal
hearing and issued a written order and decision that (1) denied
the petitioners’ requests for asylum relief as time-barred and
(2) rejected the petitioners’ claims for withholding of removal
and protection under the CAT. Notwithstanding Anand Babo’s
generalized assertions during his testimony that the situation
had worsened since leaving Pakistan in July of 2000, the IJ
determined that the evidence in the record demonstrated that the
basis of his fear of mistreatment if he returned to Pakistan
already existed at the time he arrived in July of 2000. Thus,
the IJ found that the petitioners’ were bound by the one-year
limitation on filing.
The IJ next addressed the withholding of removal and CAT
claims. The IJ acknowledged that, as practicing Hindus, the
Babos are indeed a religious minority in their Muslim-dominated
2
The petitioners conceded removability on this ground and
petition this court to review only the BIA’s affirmance of the
IJ’s denial of asylum, withholding of removal, and CAT relief.
-3-
native country of Pakistan. When tensions escalated between
Hindus and Muslims in Pakistan following the destruction of the
Babri Mosque in December of 1992, Anand Babo testified that he
was particularly targeted and threatened because he was
purportedly the secretary of a Hindu graveyard that certain
Muslim shopkeepers were encroaching upon. Although Anand Babo
testified that he was shot at by these Muslim individuals in 2000
and allegedly reported the incident to the authorities,3 the IJ
noted that this incident was neither included in his handwritten
affidavit nor corroborated by any documentary evidence in the
record.4 Moreover, the IJ also found a discrepancy with a
document that supposedly certified that Anand Babo was an active
member in the Hindu community and joint secretary of a particular
Hindu organization.
After carefully reviewing the evidence, the IJ determined
that, even putting aside some of his doubts about the credibility
of Anand Babo’s testimony, the alleged acts of persecution
against him seemed to have arisen in response to a real estate
dispute over the cemetery plot, rather than on account of his
religion. Thus, the IJ found that the Babos had failed to
3
Anand Babo also testified that the police did not take
any specific action following his report.
4
Besides expressing a general familiarity with the Hindu-
Muslim conflict in Pakistan and a preference for continuing his
education in the United States, Haman Babo’s testimony largely
tracked that of his father.
-4-
establish a clear probability of persecution on the basis of
religion if they returned to Pakistan and accordingly denied
their requests for withholding of removal. The IJ similarly
rejected the CAT claims because the petitioners had failed to
demonstrate how the police were supposed to know who to arrest
based on the limited information from Anand Babo following the
alleged shooting incident in 2000. Despite denying all requests
for protective relief, the IJ granted voluntary departure to the
Babos with specific instructions to leave the United States on or
before March 5, 2004.
On April 29, 2005, the BIA adopted and affirmed the decision
of the IJ. The Babos timely filed a petition for review of the
BIA’s decision.5
II. DISCUSSION
First, we lack jurisdiction to review the Babos’ asylum
claims because the BIA adopted the IJ’s conclusion that those
claims were time barred. See 8 U.S.C. § 1158(a)(3) (“No court
shall have jurisdiction to review any determination of the
Attorney General under paragraph (2).”); see also Nugroho v.
5
A panel from this court denied the petitioners motion for
a stay of deportation on July 14, 2005. The BIA subsequently
denied the petitioners’ motion to reopen on July 21, 2005, and
further ordered that they would be barred from applying for
adjustment of status pursuant to section 240B(d) of the INA, 8
U.S.C. § 1229c(d). The petitioners have not challenged these
orders in the instant appeal, which would have otherwise been
consolidated with this appeal. See 8 U.S.C. § 1252(b)(6); Roy v.
Ashcroft, 389 F.3d 132, 136 n.3 (5th Cir. 2004).
-5-
Gonzales, No. 04-60248, 2006 WL 319267, at *1 (5th Cir. Feb. 13,
2006) (citing Zhu v. Ashcroft, 382 F.3d 521, 527 (5th Cir.
2005)). The IJ determined that the basis for Anand Babo’s fear
of persecution upon a return to Pakistan already existed when he
arrived in the United States in July of 2000. Thus, the IJ
determined that the Babos failed to demonstrate “either the
existence of changed circumstances which materially affected
[their] eligibility for asylum or extraordinary circumstances
relating to the delay in filing” necessary to overcome the one-
year limitation. 8 U.S.C. § 1158(a)(2)(B),(D). Accordingly,
this court must dismiss the petitioners’ asylum claims for lack
of jurisdiction.6
We retain jurisdiction to review the withholding of removal
and CAT claims.7 See 8 U.S.C. § 1252; Roy, 389 F.3d at 137.
6
In their reply brief and accompanying motion to transfer,
the petitioners urge that this court has jurisdiction to consider
the timeliness of their asylum claim following the passage of the
REAL ID Act, Pub. L. 109-13, 119 Stat. 231 (May 11, 2005). See 8
U.S.C. § 1252(a)(2)(D) (providing for judicial review of
“constitutional claims or questions of law raised upon a petition
for review”). Following the passage of the REAL ID Act, however,
previous panels of this court have noted that this provision does
not preserve jurisdiction over an IJ’s determination of the
timeliness of an asylum application. See, e.g. Nugroho, 2006 WL
319267, at *1; Bregu v. Gonzales, No. 05-60697, 2006 WL 237949,
at *1 (5th Cir. Jan. 31, 2006); Maredia v. Gonzales, No. 04-
60847, 2005 WL 3505398, at *1 (5th Cir. Dec. 23, 2005) (“We
cannot review whether the petitioner’s application for asylum was
timely filed or whether an exception to the one-year filing
requirement applied.”).
7
Because we have jurisdiction to review the remaining
withholding of removal and CAT claims, we deny the petitioners’
motion to transfer the case to the district court as a habeas
-6-
“Withholding of removal is a higher standard than asylum.” Efe
v. Ashcroft, 293 F.3d 899, 906 (5th Cir. 2002). The petitioners
must prove a “clear probability of persecution” based on their
religion or some other enumerated ground upon removal to
Pakistan. INS v. Stevic, 467 U.S. 407, 413 (1984); see also 8
U.S.C. § 1231(b)(3)(A); Efe, 293 F.3d at 906. We review the
BIA’s conclusion on such claims for substantial evidence. See
Chun v. INS, 40 F.3d 76, 78 (5th Cir. 1994). Under substantial
evidence review, we will reverse the BIA only “when the evidence
is ‘so compelling that no reasonable fact finder could fail to
find’ the petitioner statutorily eligible for relief.” Roy, 389
F.3d at 138 (quoting INS v. Elias-Zacarias, 502 U.S. 478, 483-84
(1992)). Moreover, “[w]e cannot substitute our judgment for that
of the BIA or IJ with respect to the credibility of the witnesses
or ultimate factual findings based on credibility
determinations.” Chun, 40 F.3d at 78; see also Efe, 293 F.3d at
903 (noting that courts afford “great deference to an immigration
judge’s decisions concerning an alien’s credibility”).
As practicing Hindus, the Babos allegedly fear persecution
on the basis of their religion if removed to Pakistan, which
remains a predominantly Muslim country. Given the lack of
corpus petition pursuant to 28 U.S.C. § 2241. See Rosales v.
Bureau of Immigration and Customs Enforcement, 426 F.3d 733, 736
(5th Cir. 2005) (discussing the effect of the REAL ID Act and
noting that this court is the “exclusive forum” for petitioners
to challenge removal orders).
-7-
documentary evidence to support Anand Babo’s testimony about the
alleged shooting incident in 2000 and lingering questions over
the veracity of a particular piece of evidence, however, the IJ
drew an adverse credibility determination about the existence of
past persecution and concluded that the petitioners had failed to
demonstrate a clear probability of persecution on the basis of
their Hindu beliefs if removed to Pakistan. The IJ also
determined that the harassment was at least partially motivated
by a real estate dispute over the cemetery land, rather than
simply animosity toward the Babos because they were Hindus. Even
under a mixed motive analysis, the petitioners must still present
evidence “of such weight that it compels the fact-finder to
conclude that the applicant suffered past persecution or has a
well-founded fear of future persecution on account of a protected
ground.” Girma v. INS, 283 F.3d 664, 668 (5th Cir. 2002)
(finding the BIA’s denial withholding of removal relief to be
consistent with a mixed motive analysis) (emphasis added).
Therefore, we conclude that the BIA’s affirmance of the IJ’s
decision to deny withholding of removal relief was supported by
substantial evidence in the record.
Finally, we separately address the remaining CAT claims
because such claims are distinct “from the claims for asylum and
withholding of removal and should receive separate analytical
attention.” Efe, 293 F.3d at 906-07. CAT claims differ from
asylum and withholding of removal in two principal respects: (1)
-8-
CAT claims require a showing of the “higher bar” of torture,
rather than persecution; and (2) CAT regulations do not require
the torture to fall within one of the enumerated grounds for
withholding of removal. Id. The applicant must demonstrate
“that it is more likely than not that he or she would be tortured
if removed to the proposed country of removal.” Id. (quoting 8
C.F.R. § 208.16(c)(2)). Because of the sketchy details
surrounding the alleged police indifference following the
shooting and the aforementioned credibility doubts surrounding
the testimony, the IJ concluded that the petitioners had not
established the requisite likelihood of torture upon removal to
Pakistan. Thus, we conclude that the BIA’s decision to affirm
the IJ’s denial of CAT protection was supported by substantial
evidence.
III. CONCLUSION
For the foregoing reasons, we DISMISS the petition for
review insofar as it seeks review of the denial of asylum and we
DENY the balance of the petition for review and the accompanying
motion to transfer.
-9-
|
In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-08-067 CV
____________________
BAPTIST HOSPITALS OF SOUTHEAST TEXAS d/b/a
MEMORIAL HERMANN BAPTIST BEAUMONT HOSPITAL, Appellant
V.
RICKEY CARTER, Appellee
On Appeal from the 136th District Court
Jefferson County, Texas
Trial Cause No. D-178,269
MEMORANDUM OPINION
This interlocutory appeal concerns the statutory adequacy of an expert's report under
standards that apply to health care liability claims. See Tex. Civ. Prac. & Rem. Code Ann.
§§ 51.014(a)(9), 74.351(b), 74.351(r)(6) (Vernon Supp. 2007). (1) In two issues, the health care
provider, Baptist Hospitals of Southeast Texas d/b/a Memorial Hermann Baptist Beaumont
Hospital ("Baptist"), contends the trial court erred in denying its motion challenging an
amended report's adequacy. We agree that the amended report did not adequately explain
the factual basis for the expert's causation opinion on how a surgeon's absent operative
report delayed the patient's diagnosis and treatment. Therefore, we reverse the trial court's
order and remand this cause for further proceedings consistent with this opinion.
I. Background
Between August 2005 and February 2006, Rickey Carter had four surgeries related
to his gastrointestinal problems, two at Baptist and then two at St. Luke's Episcopal Medical
Center in Houston. Dr. Jerome Schrapps performed both surgeries at Baptist. In Carter's
first surgery on August 12, 2005, Dr. Schrapps resectioned the first portion of Carter's
duodenum and did a truncal vagotomy. On August 31, Dr. Schrapps performed Carter's
second surgery to explore for a leak related to the prior surgery, but none was found. Carter
was discharged from Baptist in mid-September 2005 when "drainage from the surgical drains
decreased and this was interpreted as representing closure of the fistula." Later, at St.
Luke's, Carter underwent a third surgery "for drainage of the abscess, debridement of
necrotic pancreas and placement of a cholecystostomy tube." Finally, on February 3, 2006,
Carter had his fourth surgery in order to correct a pancreatic fistula.
On December 5, 2006, Carter sued Dr. Schrapps, and alleged, among other omissions,
that Dr. Schrapps injured his pancreatic duct during the first surgery at Baptist. On August
1, 2007, Carter added Baptist as a defendant when he filed his Second Amended Petition. (2)
With respect to his claims against Baptist, Carter complained that Baptist (1) failed to ensure
that Dr. Schrapps filed an operative report regarding Carter's first surgery, (2) failed to
enforce its policy to require that physicians dictate and file operative reports, (3) failed to
require Dr. Schrapps to comply with its record-keeping policy, (4) failed to properly regulate
whether physicians complied with its policies, and (5) failed to have a policy and procedure
that required surgeons to timely dictate and file an operative report in the patient's medical
records.
On November 5, 2007, Carter filed an expert report authored by Dr. James R. Macho,
a general surgeon, to support his claims against Baptist. See Tex. Civ. Prac. & Rem. Code
Ann. § 74.351(a) (Vernon Supp. 2007). Baptist objected to the sufficiency of Dr. Macho's
report and asserted that it was conclusory regarding how Baptist's acts or omissions had
caused delays in Carter's treatment. Baptist further objected that Dr. Macho's report did not
demonstrate that he was qualified as an expert on administrative standards applicable to
hospitals.
After conducting a hearing on Baptist's objections, the trial court gave Carter a thirty-day extension to cure his deficient expert report. See id. § 74.351(c) (Vernon Supp. 2007).
At the conclusion of the hearing, the trial court stated: "I think Dr. Macho needs to explain
how if Dr. Schrapps had dictated, timely dictated [an operative report], [ ]how that would
have been significant to the following health care practitioners and what they would have
done that -- how that would have played up causation." With respect to Dr. Macho's
qualifications on the issue of hospital administrative standards, the trial court also stated:
"[H]e needs to specifically set forth with the standard of care why he was able to comment
that the standard of care would require some type of mandatory deadline for reports and
follow-up procedures."
On December 12, 2007, Carter filed an amended expert report. In his amended report,
Dr. Macho noted that the operative report on Carter's first abdominal surgery was "dictated
approximately one year later" on July 24, 2006. Operative reports, according to Dr. Macho,
"aid in diagnosing the patient" by allowing other physicians involved in the patient's care "to
see what was done during the surgery and see if there were any complications during the
surgery." Dr. Macho then concluded: "The physicians consulting on Rickey Carter's case
and caring for Rickey Carter at Baptist Hospital Beaumont and at St. Luke's Hospital in
Houston did not have an operative report for Rickey Carter's first surgery because it was not
dictated and filed until approximately one year after the surgery."
Dr. Macho's amended report, which contained his theory about how the absence of
the first operative report harmed Carter, stated: "It took several months for surgeons to
discover why Rickey Carter was having medical complications." After discovering the
problem, surgeons at St. Luke's performed a surgery "to drain Rickey Carter's [accessory]
pancreatic duct." According to Dr. Macho,
the operative report, when coupled with Rickey Carter's post surgical
symptoms, reveals that there was in all likelihood an injury to Rickey Carter's
pancreatic duct(s)[;] therefore, the surgeons at St. Luke's Hospital would have
been able to identify what was causing Rickey Carter's symptoms and perform
a definitive surgery to re-connect the [accessory] pancreatic duct much sooner
than actually occurred.
With respect to the standard of care applicable to Baptist, Dr. Macho's amended report
stated:
The standard of care also requires hospitals to have policies and procedures in
place, which are enforced, that require surgeons to dictate operative reports
immediately after surgery and have their reports filed in the hospital medical
records as soon as possible after the surgery. The standard of care further
requires hospitals to have policies and procedures, which are enforced, to
review the medical records of patients to insure that they are properly
completed within 30 days of a patient's discharge. Each of these standards of
care [was] breached when Baptist Hospital Beaumont failed to determine that
Dr. Schrapps had not dictated or filed his operative report for Rickey Carter's
first surgery until almost one year following the surgery. Each of these
standards of care [was] also breached when Baptist Hospital failed to make
sure that an operative report for Rickey Carter was dictated and filed by Dr.
Schrapps soon after the surgery. (3)
Baptist reasserted its objections to Dr. Macho's amended report and again argued that
the amended report inadequately explained how the alleged delays in Carter's treatment were
attributable to the absence of a report on the first surgery. Baptist also renewed its objection
that Dr. Macho's report did not demonstrate his qualifications to render opinions on the
standard of care hospitals follow on their record-monitoring practices.
At the hearing on Baptist's objections to the amended report, Baptist introduced copies
of the operative reports on Carter's two surgeries at Baptist. (4) The operative report on the first
surgery reflects that it was dictated on July 24, 2006, or, approximately one year after the
surgery. The operative report on Carter's second surgery at Baptist reflects that it was
dictated and transcribed on September 5, 2005, and Dr. Macho's amended report does not
assert that the second operative report was unavailable to Carter's other physicians. The
operative report on Carter's second surgery shows that Dr. Schrapps was the surgeon. It also
contains information about the first surgery, including the nature of the first surgery, which
Dr. Schrapps indicates consisted of a "vagotomy antrectomy secondary to an ulcer in the
duodenum[.]" According to Dr. Schrapps's second surgical report, "it was [his] presumption
that the patient had either [an] anastomotic leak or an abscess." During Carter's second
surgery, Dr. Schrapps "inspected the area of the duodenal stump" and found "no evidence of
a leak in this area." The report from the second surgery also reflects that based upon Carter's
symptoms, Dr. Schrapps "felt that the diagnosis of an anastomotic leak was definitive and we
are proceeding with repair." During the second surgery, Dr. Schrapps reports that he saw "a
tremendous amount of inflammatory response around the gastrojejunostomy." (5)
Therefore, Dr. Schrapps's four-page report about Carter's second surgery contains
information about Carter's first surgery and his post-surgical course. The report states that
in the first surgery, Dr. Schrapps noted an "ulcer in the duodenum at the junction of the first
and second portions which had eroded posteriorly into the pancreas." Thus, the second-surgery report indicates the involvement of Carter's pancreas in the first surgery.
Following the hearing on the sufficiency of Dr. Macho's amended report, the trial court
denied Baptist's motion to dismiss without entering any findings of fact or conclusions of law.
On appeal, Baptist asserts that Dr. Macho's amended report is inadequate because it was
"built on a foundation of assumptions and speculation." See Tex. Civ. Prac. & Rem. Code
Ann. §§ 74.351(l), (r)(6) (Vernon Supp. 2007). Second, Baptist contends that Dr. Macho's
amended report does not sufficiently demonstrate that he is qualified to render opinions
concerning standards of care pertinent to medical record-keeping requirements.
II. Standards
Generally, we review trial court rulings on motions to dismiss health care liability
claims to determine whether the court abused its discretion. See Bowie Mem'l Hosp. v.
Wright, 79 S.W.3d 48, 52 (Tex. 2002) (citing Am. Transitional Care Ctrs. of Tex., Inc. v.
Palacios, 46 S.W.3d 873, 878 (Tex. 2001)). "A trial court abuses its discretion if it acts in an
arbitrary or unreasonable manner without reference to any guiding rules or principles."
Wright, 79 S.W.3d at 52. A trial court abuses its discretion if it fails to analyze or apply the
law correctly. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992).
With respect to health care liability claims, the claimant must file an expert report that
provides a "fair summary" of the expert's opinions as of the date of the report. See Tex. Civ.
Prac. & Rem. Code Ann. § 74.351(r)(6). To constitute a good-faith effort, the expert's report
"must discuss the standard of care, breach, and causation with sufficient specificity to inform
the defendant of the conduct the plaintiff has called into question and to provide a basis for
the trial court to conclude that the claims have merit." Palacios, 46 S.W.3d at 875. A report
that merely states the expert's conclusions on the applicable standard of care, breach, and
causation "does not fulfill these two purposes." Id. at 879. Thus, an expert report that omits
any of the statutorily required elements does not qualify as a good-faith effort. Id. at 878-79.
To be qualified to provide opinions in claims against hospitals, the expert must
practice in a field that involves the same type of treatment that was delivered to the claimant
by the health care provider, have knowledge of the accepted standards of care for treatment,
and show he is qualified to offer an expert opinion regarding the accepted standards of care.
Tex. Civ. Prac. & Rem. Code Ann. § 74.402(b) (Vernon 2005). Under the Texas Rules of
Evidence, an expert must have knowledge, skill, experience, training, or education regarding
the specific issue before the court that would qualify the expert to give an opinion on that
particular subject. See Broders v. Heise, 924 S.W.2d 148, 153 (Tex. 1996); see also Tex. R.
Evid. 702.
A court may grant one thirty-day extension to cure a deficient report. Tex. Civ. Prac.
& Rem. Code Ann. § 74.351(c); Leland v. Brandal, No. 06-1028, 2008 Tex. LEXIS 574, at
*1 (Tex. June 13, 2008). In this case, the trial court previously granted one extension to allow
Carter the time to cure his deficient expert report.
III. Analysis
Concerning causation in this case, Dr. Macho's amended report provides his opinion
that
the failure of Baptist Hospital to enforce their policies and procedures, as stated
above, contributed to the injuries sustained by Rickey Carter because such a
report would have led to the correct diagnosis of a pancreatic injury earlier (due
to it being stated in the operative report) and avoided the second unnecessary
operation for a suspected anastomotic leak. It would also have led to the
immediate transfer of Mr. Carter to St. Luke's Hospital for definitive care.
But, an opinion is not enough. As the Texas Supreme Court has held, to establish causation,
a report must contain sufficient facts explaining the expert's conclusions and must show
causation beyond mere conjecture. See Wright, 79 S.W.3d at 52-53; see also Tex. Civ. Prac.
& Rem. Code Ann. § 74.351(r)(6).
In this case, we conclude that Dr. Macho did not provide sufficient facts to sufficiently
explain how Baptist's alleged omissions caused delays in Carter's treatment. Instead, Dr.
Macho's amended report bases its causation analysis on several assumptions about Carter's
treatment at Baptist and at St. Luke's that are inconsistent with the medical records placed in
evidence at the hearing.
Treatment at Baptist
As to Carter's treatment at Baptist, the report's conclusion that Carter would not have
had the second surgery if Dr. Schrapps had timely caused a report on Carter's first surgery to
be included in his medical records relies on three main assumptions: a timely filed report
would have been available for other doctors to review prior to the second surgery; other
doctors would have intervened early in Carter's post-surgical treatment and provided him with
the surgery that ultimately corrected his problem; and Carter's surgeon for the second surgery,
without the benefit of a report from the first surgery, would have had insufficient knowledge
of the extent of Carter's first surgery.
With respect to avoiding the second surgery, we conclude that Dr. Macho does not
explain how a timely-filed report would have prevented the second surgery, and a fair
summary should do so. According to Dr. Macho's report, the proper standard of care requires
a hospital to insure that a patient's medical reports are completed "within 30 days of a
patient's discharge." Under this standard, because Carter was discharged in mid-September
2005, Baptist would not have discovered the absence of Dr. Schrapps's August 12 operative
report until mid-October 2005. Carter's second surgery occurred on August 31, more than a
month before the deadline under the standard that Dr. Macho states should apply. As a result,
it does not appear that the second surgery was caused by the breach of Dr. Macho's proposed
standard. His amended report fails to adequately explain how the missing operative report,
had it been timely filed, would have impacted any specific physician's recommendations
about Carter's second surgery. (6)
Dr. Macho's amended report is also vague about how having the first operative report
would have prompted other physicians involved in Carter's care to have prevented the second
surgery. Dr. Macho's amended report indicates that Dr. Chennupati acted as Carter's
consulting gastroenterologist at Baptist and reveals that Dr. Macho reviewed a deposition that
Dr. Chennupati gave in connection with this suit. However, Dr. Macho does not state that Dr.
Chennupati testified that he would have prevented the second surgery had he read a written
report of the first surgery. Dr. Macho's amended report also does not mention by name other
physicians at Baptist who he believes might have prevented Carter's second surgery.
Finally, Dr. Schrapps performed both the August 12 and the August 31 surgeries.
Because Dr. Schrapps would obviously have been aware that Carter's first surgery involved
his duodenum without the necessity of making a written report to himself, Dr. Macho's report
inadequately explains how an operative report on the first surgery would have altered Dr.
Schrapps's own decision to perform the second surgery. In conclusion, Dr. Macho's report
contains insufficient facts to adequately explain how the second surgery would have been
avoided had a written report of the first surgery been filed within the deadlines he has
proposed.
Treatment at St. Luke's
Dr. Macho's conclusion that Carter's condition would have been diagnosed more
quickly at St. Luke's if the first operative report had been part of his records also rests on the
basic assumption that Carter's doctors at St. Luke's could only have obtained the necessary
information from a written, first-surgery operative report. But, as we have explained, the
second operative report contains pertinent information about the first surgery. The second
operative report, which no one asserts was missing from Carter's medical records, states that
Carter "underwent a difficult vagotomy antrectomy secondary to an ulcer in the duodenum
at the junction of the first and second portions which had eroded posteriorly into the
pancreas." Thus, the record before the trial court reflected that Carter's second operative
report was timely under Dr. Macho's proposed standards and that it showed that his first
surgery involved the upper part of his duodenum. Further, Dr. Macho's report does not assert
that the second report inadequately explained the first surgery.
Dr. Macho's amended report even implicitly recognizes that information about the
surgery, as opposed to a report about the surgery, could allow a physician to consider the
likely existence of Carter's pancreas injury. For instance, Dr. Macho's amended report
explains that knowing that the first portion of the duodenum had been excised during the first
surgery would allow any reasonably prudent surgeon or gastroenterologist to recognize the
danger of "a high likelihood of causing injury to the pancreatic duct(s)." While a report from
the first surgery would have reflected that a part of Carter's duodenum had been removed, Dr.
Macho's report does not state that this information was otherwise unavailable to other
physicians from Carter's other records.
We conclude that Dr. Macho's report does not sufficiently explain how not having a
report on the first surgery delayed Carter's treatment and resulted in his injury. We hold that
Dr. Macho's amended report lacks a sufficient explanation of facts showing that the
information about Carter from other medical records, from his symptoms, and from his history
did not provide sufficient information to allow his subsequent physicians to properly treat
him. As a result, Dr. Macho's opinions in his amended report remained conclusory. We
sustain issue one. (7)
Accordingly, we reverse the trial court's order denying Baptist's motion to dismiss and
remand the case to the trial court for further proceedings consistent with this opinion. See
Tex. Civ. Prac. & Rem. Code Ann. § 74.351(b).
REVERSED AND REMANDED.
____________________________
HOLLIS HORTON
Justice
Submitted on April 28, 2008
Opinion Delivered July 31, 2008
Before McKeithen, C.J., Gaultney and Horton, JJ.
DISSENTING OPINION
I respectfully dissent. Macho's report is neither conclusory nor speculative. The report
adequately states the standard of care regarding post-operative reports, how Baptist allegedly
breached the standard of care, and how Baptist's alleged breach of the standard of care caused
Carter's injuries. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351(r)(6) (Vernon Supp.
2007). The report explains that Baptist's alleged breach of the standard of care deprived
Carter's treating physicians of important information concerning the full extent of Carter's
initial surgery and the complications during that surgery, and that this alleged breach delayed
the discovery of the true cause of Carter's post-operative symptoms and necessitated multiple
subsequent surgeries. The report discusses the standard of care, breach, and causation with
sufficient specificity to inform Baptist of the conduct Carter has called into question and to
provide a basis for the trial court to conclude that Carter's claims have merit. See Am.
Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 875 (Tex. 2001). In
addition, the report explained the factual basis for Macho's statements and linked his
conclusions to the facts. (8) See Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002).
I do not believe the trial court abused its discretion by overruling Baptist's motion to dismiss.
______________________________
STEVE McKEITHEN
Chief Justice
Dissent Delivered
July 31, 2008
1. "'Expert report' means a written report by an expert that provides a fair summary
of the expert's opinions as of the date of the report regarding applicable standards of care,
the manner in which the care rendered by the physician or health care provider failed to
meet the standards, and the causal relationship between that failure and the injury, harm,
or damages claimed." Tex. Civ. Prac. & Rem. Code Ann. § 74.351(r)(6) (Vernon Supp.
2007).
2. In addition to Dr. Schrapps, the Second Amended Petition also named Dr. Schrapps'
medical group, Southeast Texas Surgical Associates, P.A., and Carter's gastroenterologist,
Dr. Raja Chennupati, as defendants.
3. Dr. Macho's report does not indicate that he reviewed Baptist's policies and
procedures. However, given our resolution of the appeal based on issue one, we do not
address whether Dr. Macho's failure to demonstrate a familiarity with Baptist's policies
made him unqualified to offer opinions on Baptist's record keeping practices. See Tex. Civ.
Prac. & Rem. Code Ann. § 74.402 (b)(2) (Vernon 2005).
4. Carter asserts that the trial judge was limited to the four corners of Dr. Macho's
report in assessing whether it constituted a fair summary of his opinions. See Bowie Mem'l
Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002); Am. Transitional Care Ctrs. of Tex., Inc. v.
Palacios, 46 S.W.3d 873, 878 (Tex. 2001). Baptist, in contrast, contends that the records the
expert acknowledges he reviewed are relevant to a court's determining whether the report
adequately relates the facts to the expert's opinion about causation.
In general, the records that an expert reviewed could be relevant to a court's
determination of whether the report presents a fair summary of the factual basis of the
expert's opinion. While a court cannot go outside the expert's report in order to supply
information that is statutorily required to be within it, the challenge in this case addresses
whether the opinions in the expert's report are supported by facts reflected in the medical
records the expert has relied upon to render a report. See Wright, 79 S.W.3d at 53 ( "[T]he
report must include the required information within its four corners.").
While Dr. Macho's report reflects that he reviewed several of Carter's medical
records, only two of the records he reviewed were presented to the trial court as part of
Baptist's adequacy challenge. Since appellate courts follow an abuse of discretion standard
in reviewing trial court decisions on health care liability claims, our review is necessarily
limited to the records presented to the trial court. See Palacios, 46 S.W.3d at 877; see also
Tex. R. App. P. 33.1(a) (providing that the record on appeal must show that the complaint
was made to the trial court with sufficient specificity to make the trial court aware of the
complaint).
5. Webster's defines "gastrojejunostomy" as "the surgical formation of a passage
between the stomach and jejunum." Webster's Third New International Dictionary
939 (2002). The "jejunum" is "the first two fifths of the small intestine beyond the
duodenum usu. merging almost imperceptibly with the ileum though somewhat larger,
thicker-walled, and more vascular and having more numerous circular folds and fewer
Peyer's patches." Id. at 1213.
6. Dr. Macho's amended report also fails to identify the date of Carter's first surgery
at St. Luke's. If this surgery also occurred prior to mid-October 2005, Dr. Macho would
have a similar problem linking causation to the absence of the first operative report. Without
addressing the relevant dates of the surgeries, compared to the deadlines he opines were
breached, Dr. Macho's amended report is inadequate to tie the absence of a report to a
change in the number of surgeries required to treat Carter's condition.
7. We need not address issue two, as resolving it would not result in greater relief. See
Tex. R. App. P. 47.1.
8. Baptist contends, and the majority asserts, that even if Baptist had in force the policy
endorsed by Macho, Carter would still have undergone the initial post-operative surgery
without the benefit of Schrapps's report. While this is true, the purpose of the expert report
required by Chapter 74 is to inform defendants of the conduct that plaintiffs allege caused
the complained-of injury, and to allow the trial court to determine in its discretion whether
the plaintiff's claims have merit. It is not the purpose of this report to marshal evidence
sufficient to withstand a motion for summary judgment. See Palacios, 46 S.W.3d at 875,
878-79.
|
Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
8-28-2008
Alexander v. Forr
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-4467
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2008
Recommended Citation
"Alexander v. Forr" (2008). 2008 Decisions. Paper 616.
http://digitalcommons.law.villanova.edu/thirdcircuit_2008/616
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-4467
RAYMOND ALEXANDER,
Appellant
v.
JIM FORR; PHD JEFFREY BEARD; THOMAS JAMES; SHARON BURKS;
TSHANNA KYLER; DONALD WILLIAMSON; ROBERT BITNER;
ROBERT SHANNON; J. KERESTES; J.D. SHUTT; DAVID SEARFOSS;
KEVIN KANE; PETE DAMITER; RUSSELL SCHEUREN; CINDY WALASAVAGE;
DAVID POPEK; E. POGIRSKI; F. PATRICK DAVISON; C.O. MILLER;
CAPT. DURANT; CAPT MIZENKO; LT. POPSON; OFFICER O'DAY;
C.O. HARNER; C.O. KINTZEL; C.O. KIEFABOR; #1 JOHN DOE; #2 JOHN DOE;
#3 JOHN DOE; JOHN DOE 4; JOHN DOE #5; JOHN DOE #6;
WILLIAM WOLFE; RON BRYANT; CAROLYN CHEEK; DAN HENRY
On Appeal from the United States District Court
for the Middle District of Pennsylvania
D.C. Civil Action No. 04-cv-00370
(Honorable Thomas I. Vanaskie)
Submitted Under Third Circuit LAR 34.1(a)
August 2, 2007
Before: SCIRICA, Chief Judge, FUENTES and SMITH, Circuit Judges.
(Filed: August 28, 2008)
OPINION OF THE COURT
PER CURIAM.
Raymond Alexander, a prisoner at Mercer State Regional Correctional Facility,
appeals from the District Court’s order granting Defendants’ motion for summary
judgment. For the reasons that follow, we will affirm.
I
In 2004 Alexander filed a § 1983 complaint against Jim Forr, the former grievance
coordinator at SCI-Frackville, alleging that Forr had filed false misconduct charges in
retaliation against Alexander for filing grievances.1 Alexander later amended his
complaint to add retaliation claims against 35 other officials and employees of prisons in
which he has been housed, including six John Doe correction officers. He claims that in
addition to filing false misconduct charges the defendants have, inter alia, confiscated his
mail, transferred him to an inferior prison, placed him in administrative segregation, and
denied his grievances.
The defendants eventually moved for summary judgment. The Magistrate Judge
recommended dismissing the complaint against three of the defendants based on
Alexander’s failure to exhaust one of his claims; dismissing the complaint as to six named
defendants and all unnamed defendants based on their lack of personal involvement;
granting the motion or dismissing the action with regard to Alexander’s retaliation claims
based on his failure to show causation; granting the motion with regard to Alexander’s
1
Because the relevant facts of this case are set forth in the Magistrate Judge’s detailed
Report and Recommendation, we provide only a brief statement of the procedural and
factual background.
2
due process claim pursuant to Sandin v. Connor, 515 U.S. 472 (1995); and dismissing the
action against those defendants whom Alexander failed to serve. The District Court
overruled Alexander’s objections and rejected all of his claims on the merits (it thus had
no need to address exhaustion and service of process). The court adopted the Report and
Recommendation, granted the defendants’ motion for summary judgment, and dismissed
the action with regard to the John Doe defendants. This appeal followed.
II
We have appellate jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary
review of a District Court’s order granting summary judgment. See S&H Hardware &
Supply Co. v. Yellow Transp. Inc., 432 F.3d 550, 554 (3d Cir. 2005). Summary
judgment is appropriate when the record shows that there is no need of a trial because
“there is no genuine issue of material fact and []the moving party is entitled to judgment
as a matter of law.” FED. R. CIV. P. 56(c). As the Supreme Court has explained, “the
plain language of Rule 56(c) mandates the entry of summary judgment, after adequate
time for discovery and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). “[A]n adverse party may not rest upon the mere allegations or denials
of his pleading, but his response, by affidavits or as otherwise provided in this rule, must
set forth specific facts showing that there is a genuine issue for trial. If he does not so
respond, summary judgment, if appropriate, shall be entered against him.” Rule 56(e).
3
III
To state a claim under § 1983, Alexander must show that the defendants, acting
under color of state law, deprived him of a right secured by the Constitution or laws of the
United States. Moreover, “[a] defendant in a civil rights action must have personal
involvement in the alleged wrongs; liability cannot be predicated solely on the operation
of respondeat superior.” Rode v. Dellarciprete, 845 F.2d 1195, 1207 (3d Cir. 1988). As
the Magistrate Judge explained, Alexander has provided no basis for concluding that
defendants Beard, James, Burks, Kyler, Bitner, Henry or the unidentified defendants were
personally involved in the alleged incidents. For example, the only support Alexander
provides for his retaliation claim against defendant Henry is an affidavit from
Alexander’s brother, William Hossbach, who states that he used to send hockey cards to
Alexander. Prior to October, 2002, the letters containing the cards were sometimes
confiscated, but Alexander would receive the cards if he made a written request to Henry.
After October 2002 the letters were returned to Hossbach undelivered. However, nothing
in the affidavit supports the conclusion that Henry was personally involved in the
confiscation or return of the letters. Alexander admits as much in his objections, where
he states that “[t]he causal link between Henry and the acts sworn to in the affidavit is
that he was the mailroom supervisor and was responsible for the acts.” Objections at 4.
But this is simply an assertion of respondeat superior and, thus, insufficient. Rode, supra.
IV
4
Henry’s example also demonstrates another dispositive flaw with Alexander’s
case: even if he had shown personal involvement on the part of all defendants, as the
District Court properly concluded he has not met all the elements required for a
successful retaliation claim. As we have explained, “government actions, which standing
alone do not violate the Constitution, may nonetheless be constitutional torts if motivated
in substantial part by a desire to punish an individual for the exercise of a constitutional
right.” Allah v. Seiverling, 229 F.3d 220, 224-25 (3d Cir. 2000). To prevail on a
retaliation claim a prisoner must show all of the following: (1) that his conduct against
which the defendants allegedly retaliated was constitutionally protected; (2) that he
suffered some “adverse action” which would be sufficient to deter a person of ordinary
firmness from exercising his constitutional rights; and (3) that his exercise of a
constitutional right caused the defendants to take the adverse action against him. Rauser
v. Horn, 241 F.3d 330, 333 (3d Cir. 2001). The third step involves a shifting burden of
proof: if the prisoner shows that his protected conduct was a substantial or motivating
factor in the retaliation, the defendants can avoid liability by showing by a preponderance
of the evidence that they would have taken the same action even without the protected
activity for reasons reasonably related to a legitimate penological interest. Id. at 333-334.
We will assume arguendo that Alexander satisfies the first two prongs of the
analysis. As the District Court explained, however, Alexander’s allegations of causation
typically amount to no more than unsupported assertions; indeed, he often appears to rely
on his unwarranted belief that causation is self-evident, at least where the defendants have
5
acknowledged that their actions had adverse consequences for him.2 At any rate,
Alexander has provided no evidence that the defendants denied his grievances or appeals
in retaliation rather than because they believed that the grievances had no merit.
Moreover, not only has Alexander failed to support his assertion that his transfer to S.C.I.
Frackville was retaliatory, but the defendants have provided plausible and independent
reasons for transferring him: it is undisputed that Alexander had requested a transfer from
his former prison and that S.C.I. Frackville is over 200 miles closer to his home. Much
the same analysis applies to his placement in administrative segregation: Alexander
reported that he had been threatened by another inmate and he was returned to general
population when the threat ended.
2
Alexander’s reliance on documentary support is typically of no avail. For example,
to support his allegations that defendant Pogirski retaliated by improperly withholding
mail, denying an outside purchase request, and diverting or destroying his grievances,
Alexander cites merely his own prison grievances containing the same allegations. (See
Declaration in Opposition to Summary Judgment at ¶ 7.) It goes without saying that
prison grievances are not evidence of the allegations they contain.
6
V
Finally, to the extent that Alexander’s claim against defendant Kane amounts to a
due process claim as well as a retaliation claim, it is barred by Sandin, supra, because
Alexander has not shown that the discipline involved imposed an “atypical and significant
hardship.” See Sandin, supra; Griffin v. Vaughan, 112 F.3d 703, 706 (3d Cir. 1997).
We have considered Alexander’s remaining arguments and conclude that they are
meritless. Accordingly, we affirm the judgment of the District Court.3
3
Alexander has filed a motion for sanctions against the Appellees in this Court
arguing that many of them perjured themselves in their affidavits in support of summary
judgment. We deny the motion.
7
|
694 F.2d 582
Dennis ROONEY, Plaintiff-Appellant,v.UNITED STATES of America, Defendant-Appellee,v.RELIANCE INSURANCE COMPANY, Plaintiff-In-Intervention-Appellee.
Nos. 81-4513, 81-4534.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Aug. 10, 1982.Decided Dec. 9, 1982.
R. Jay Engel, Engel & Babcock, San Francisco, Cal., for plaintiff-appellant.
John L. Armanino, San Francisco, Cal., argued, for defendant-appellee; Donald R. Brophy, Hanna & Brophy, San Francisco, Cal., on brief.
On Appeal from the United States District Court for the Northern District of California.
Before SCHROEDER, FLETCHER and NORRIS, Circuit Judges.
FLETCHER, Circuit Judge:
1
Plaintiff Rooney takes these two appeals from two 1981 judgments of the district court. The first denied Rooney's motion to compel payment of interest on a 1977 judgment against the defendant United States from date of entry of the 1977 judgment to date of payment of the 1977 judgment. The second denied Rooney's motion for reimbursement by Reliance Insurance Company (Reliance) for work performed by Rooney's attorneys on Reliance's behalf. We affirm both judgments.
2
I. Availability of Post-Judgment Interest Under 31 U.S.C. Sec. 724a.
3
No interest is payable on a judgment against the United States except as specifically provided by statute. United States ex rel. Angarica v. Bayard, 127 U.S. 251, 260, 8 S.Ct. 1156, 1160-1161, 32 L.Ed. 159 (1888); Holly v. Chasen, 639 F.2d 795, 796-97 (D.C.Cir.), cert. denied, 454 U.S. 822, 102 S.Ct. 107, 70 L.Ed.2d 94 (1981); see also United States v. Louisiana, 446 U.S. 253, 264-65, 100 S.Ct. 1618, 1625-1626, 64 L.Ed.2d 196 (1980). Section 2411(b) of Title 28 grants interest on a judgment, like Rooney's 1977 judgment, that is rendered against the United States and is based on a claim under the Federal Tort Claims Act, 28 U.S.C. Sec. 1346(b) (1976). 28 U.S.C. Sec. 2411(b) (1976). Section 724a of Title 31 permits the payment of certain judgments, including those like Rooney's 1977 judgment that are "payable in accordance with the terms of section 2414," from the permanent indefinite appropriation established by section 724a and thereby obviates the necessity of a private bill in Congress. 31 U.S.C. Sec. 724a (Supp. II 1978). Interest on a judgment that is granted under 28 U.S.C. Sec. 2411(b) may also be paid on the judgment from the permanent continuing appropriation provided by section 724a. Id. However, interest is payable under section 724a only for the period of time from the date of the filing of the transcript of the judgment in the General Accounting Office (GAO) to the date of issuance of the mandate of affirmance.
4
Neither 31 U.S.C. Sec. 724a itself nor its legislative history1 explicitly indicates whether the Government or the plaintiff has the responsibility of filing the transcript of the judgment in the GAO. We conclude, however, that the burden properly lies with the party seeking to avail itself of the appropriation provisions of section 724a. See United States v. Varner, 400 F.2d 369, 372 (5th Cir.1968); United States v. State of Maryland, 349 F.2d 693, 694 (D.C.Cir.1965); cf. In re Vaillancourt v. United States, 58 Comp.Gen. 68 (1978) (plaintiff filed transcript). To place the burden on the Government would subject the availability of plaintiff's interest under section 724a to the performance of an act by the Government directly in conflict with the Government's own financial interest. Under this allocation of the burden, the Government would reasonably be expected to file the transcript as a matter of course no earlier than the date of issuance of the mandate of affirmance. Furthermore, to establish some date of "constructive" filing of the transcript for the purposes of allowing interest, where, as here, the Government and the plaintiff each fail to file before the mandate issues, would create a procedural framework inconsistent with the expressed intent of Congress that the actual date of filing of the transcript control. Since neither the plaintiff nor the Government filed a transcript of the 1977 judgment in the GAO before the date of the mandate of affirmance, we conclude that the United States owes appellant no interest on the judgment under section 724a.2 The district court's September 25, 1981 judgment denying interest is therefore affirmed.
5
II. Preclusion of Claim for Reimbursement of Attorney's Fees.
6
Since in 1977 the district court conclusively decided Rooney's claim for reimbursement from Reliance, appellant is precluded, under the doctrine of res judicata, from relitigating the same issue again in the district court in 1981. In the proceeding culminating in the 1977 judgment, Rooney requested contribution from Reliance for services performed by Rooney's attorney. The district court's denial of this request was reflected in the district court's first amended judgment entered on October 9, 1977. Rooney and Reliance were parties to and bound by the judgment. The denial was explained in the district court's opinion in the same case dated April 27, 1977, where the district court held that applicable law barred equitable apportionment of attorney's fees when each party had employed a separate attorney and held that since both Rooney and Reliance had employed separate counsel, no contribution of fees was required under the facts of the case. 434 F.Supp. 766.3
7
On this appeal, Rooney nowhere claims that his 1977 request for attorney's fees could not reasonably be construed to encompass all claims for attorney's fees arising out of the prosecution of Rooney's tort claim against the United States, including fees arising before and during trial and those incurred in defense of any ultimate judgment on appeal. Nor does he contend that, even if the 1977 request could not be so construed, all of his claims for attorney's fees do not arise from the same cause of action underlying the request for fees that was made in 1977. Furthermore, Rooney now asserts no other reason why the October 9, 1977 judgment was not a final and non-interlocutory adjudication, on the merits, of the request for reimbursement for attorney's fees for services by Rooney's attorney to obtain and defend an appeal of the October 9, 1977 judgment. Nor does he set forth any ground on which the district court could validly have treated Rooney's 1981 motion for attorney's fees as a motion to alter or amend the 1977 judgment under Fed.R.Civ.P. 59(e) or as a motion for relief from the 1977 judgment under Fed.R.Civ.P. 60. Consequently, under well-settled principles of claim preclusion, the district court's October 9, 1977 determination of Rooney's attorney's fees for services rendered bars appellant from raising the issue again in district court in 1981.4 Fox v. Connecticut Fire Ins. Co., 380 F.2d 360, 361-63 (10th Cir.1967); Driscoll v. Humble Oil & Refining Co., 60 F.R.D. 230, 234 (S.D.N.Y.1973), aff'd mem., 493 F.2d 1397 (2d Cir.1974). The district court's September 23, 1981 judgment denying Rooney reimbursement is affirmed on the ground of res judicata.5
8
The judgments are AFFIRMED.
1
H.R.Rept. 2638, 84th Cong., 2d Sess. 72-74 (1956) that accompanied H.R. 12138, 84th Cong., 2d Sess. (1956), in which the language regarding filing of the transcript originated, is silent on question of which party is expected to file the transcript
2
Prior to May 4, 1977, 31 U.S.C. Sec. 724a provided that a judgment on a claim against the United States rendered by a district court in an amount greater than $100,000.00 could not be paid under the permanent continuing appropriation of 31 U.S.C. Sec. 724a by the Comptroller General but had to be referred to Congress and funded through a separate special appropriation act
The Act of May 4, 1977, Pub.L. No. 95-26, Title I, ch. 14, 91 Stat. 61, 96-97, extended the applicability of Sec. 724a to any judgment rendered by a district court regardless of the monetary size of the judgment.
Since plaintiff's judgment of $423,733.87 was here entered on October 9, 1977, 31 U.S.C. Sec. 724a was applicable to appellant's judgment and was available to plaintiff as a convenient means of obtaining payment of the judgment itself and interest on that judgment without resorting to Congress for a special appropriation act. However, we do not read 31 U.S.C. Sec. 724a to prohibit plaintiff from seeking judgment interest that is not funded under Sec. 724a through the traditional route of petitioning Congress for a special appropriation act in the amount of interest due and owing under 28 U.S.C. Sec. 2411(b).
3
We express no opinion as to the correctness of these factual and legal conclusions
4
A claim against an adverse party for attorney's fees incurred in the prosecution of a substantive claim is part of the same cause of action as that underlying the substantive claim. Bankers Life and Casualty Co. v. Kirtley, 338 F.2d 1006, 1011 (8th Cir.1964); Driscoll v. Humble Oil & Refining Co., 60 F.R.D. 230, 234 (S.D.N.Y.1973), aff'd mem., 493 F.2d 1397 (2d Cir.1974). Consequently, even if Rooney had not made a request for attorney's fees in 1977, his claim for reimbursement from Reliance would have been merged into the 1977 judgment that adjudicated the substantive claims among Rooney, Reliance, and the United States
5
Appellant's raising of the attorneys' fees issue for the first time before this court on this appeal cannot be construed as an appeal from the October 9, 1977 judgment, since the notice of appeal for this appeal was not filed after the 1977 judgment within the time prescribed by Fed.R.App.P. 4(a)
|
933 N.E.2d 860 (2010)
YPI 180 N. LaSALLE OWNER, LLC, a Delaware Limited Liability Company, Plaintiff-Appellant,
v.
180 N. LaSALLE II, LLC, a Delaware Limited Liability Company, Defendant-Appellee.
No. 1-09-1797.
Appellate Court of Illinois, First District, First Division.
July 19, 2010.
*862 Michael D. Sher, Athanasios Papadopoulos, Jason A. Frye, Neal, Gerber & Eisenberg LLP, Chicago, IL, for Appellant.
Robert N. Hermes, Andrew D. Shapiro, Butler, Rubin, Saltarelli & Boyd, LLP, Chicago, IL, for Appellee.
Presiding Justice HALL delivered the opinion of the court:
This appeal arises from the grant of a motion to dismiss brought under section 2-615 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2006)). The overarching issue before the court concerns the right of an assignee of a contract to rescind the contract on the ground of impossibility of performance. For the reasons that follow, we affirm.
The appeal focuses on two common-law doctrines of contract law: impossibility of performance, which is an affirmative defense to a breach of contract claim (Radkiewicz v. Radkiewicz, 353 Ill. App.3d 251, 260, 288 Ill.Dec. 723, 818 N.E.2d 411 (2004)); and equitable rescission, which allows a party to rescind or abandon a contract based on, among other things, the impossibility of performance. See (30 R. Lord, Williston on Contracts § 77:95, at 593 (4th ed. 2007) ("Impossibility of performance, as a ground for rescission of a contract, refers to those factual situations where one party to a contract finds that the purposes for which a contract was made have become impossible to perform on one side")).
BACKGROUND
On August 12, 2008, defendant-appellee, 180 N. LaSalle II, LLC (LaSalle), as seller, and Younan Properties, Inc. (Younan), as purchaser, entered into a purchase agreement (contract), for the sale and purchase of commercial property located at 180 North LaSalle Street, Chicago, Illinois. The purchase price was $124 million. The purchase price (less earnest money) was to be deposited with an escrow agent two business days prior to closing. Pursuant to the contract, Younan deposited initial earnest money of $2.5 million into an escrow account.
Between August 29, 2008, and September 30, 2008, LaSalle and Younan executed three amendments to the contract. The first amendment extended the time in which Younan could evaluate and then terminate the contract if it decided to do so. In the second amendment, LaSalle and Younan acknowledged that the time to terminate the contract had expired, and as a result, Younan deposited an additional $2.5 million in earnest money with the escrow agent.
In the third amendment, LaSalle provided Younan with a $500,000 credit against the purchase price, and Younan deposited an additional $1 million in earnest money with the escrow agent. LaSalle and Younan also directed the escrow agent to release $1 million of the earnest money to LaSalle and agreed that the released earnest money would be credited against the purchase price at closing but was "hereby deemed earned by Seller and shall be nonrefundable to Purchaser for any reason whatsoever except in the event of a default by Seller of Seller's obligations to close the sale or a failure of a condition to Purchaser's obligation to close the sale."
*863 On October 9, 2008, Younan assigned all of its rights, title, and interest in the contract to plaintiff-appellant, YPI 180 N. LaSalle Owner, LLC (YPI). The assignment provided that Younan remained liable under the contract.
In early October 2008, Younan received notice that one of its lenders, Allied Irish Bank, had pulled out of the financing arrangement on the ground that economic conditions in Ireland beyond the bank's control or anticipation had forced it to withdraw from the credit markets.
Between October 15, 2008, and December 9, 2008, LaSalle, and this time YPI, executed additional amendments to the contract. On October 15, 2008, pursuant to the fourth amendment to the contract, LaSalle and YPI directed the escrow agent to release the remaining earnest money to LaSalle and also agreed that the earnest money would be credited at closing and was deemed earned by seller and nonrefundable, except in the event of default by seller of seller's obligations to close the sale. In return, the parties extended the closing date to December 17, 2008.
Also in the fourth amendment, LaSalle and YPI acknowledged the assignment and agreed that Younan would be jointly and severally liable with YPI for buyer's obligations under the contract. Younan joined in execution of the fourth amendment.
On November 20, 2008, LaSalle and YPI executed a fifth amendment to the contract. Under this amendment, LaSalle agreed to reduce the purchase price by $4 million, and YPI waived the option to extend the closing date beyond December 17, 2008. Younan joined in execution of the fifth amendment.
On December 9, 2008, LaSalle and YPI executed a sixth and final amendment to the contract. Under this amendment, the parties agreed to extend the closing date to no later than February 18, 2009. Younan also joined in execution of this sixth amendment.
When Younan failed to close on purchase of the commercial property, LaSalle terminated the contract and retained the deposited earnest money as its sole remedy for breach of the contract.[1] Shortly thereafter, YPI filed the underlying complaint against LaSalle seeking to rescind the contract and recover $6 million in earnest money retained by LaSalle.
YPI argued that pursuant to the contract-law doctrine of impossibility of performance, it was excused from performing under the contract due to the 2008 global credit crisis which it claimed prevented it and Younan from obtaining the commercially-practical financing contemplated when the contract was originally formed.
Following a hearing, the trial court granted LaSalle's section 2-615 motion to dismiss, striking YPI's complaint with prejudice and without leave to amend. This timely appeal followed.
ANALYSIS
The threshold question before the court is whether YPI, as an assignee of the contract, has the right to rescind the contract. We answer in the affirmative.
Rescission is an equitable remedy that seeks to restore the contracting parties to their precontract positions. See Horan v. Blowitz, 13 Ill.2d 126, 132, 148 N.E.2d 445 (1958) ("`[R]escission' is the cancelling of a contract so as to restore the parties to their initial status * * *"). When a contract is rescinded, it is as if the contract never existed in the first place. *864 See Puskar v. Hughes, 179 Ill.App.3d 522, 528, 127 Ill.Dec. 880, 533 N.E.2d 962 (1989) ("[w]here a contract is rescinded, the rights of the parties under that contract are vitiated or invalidated"). A trial court's decision granting or denying a request to rescind a contract is within the sound discretion of the court, whose ruling will not be disturbed absent an abuse of that discretion. Farmer v. Koen, 187 Ill. App.3d 47, 50, 134 Ill.Dec. 819, 542 N.E.2d 1326 (1989).
An assignment is the transfer of some identifiable property, claim, or right from the assignor to the assignee. Buck v. Illinois National Bank & Trust Co., 79 Ill.App.2d 101, 106, 223 N.E.2d 167 (1967); Bishop v. Village of Brookfield, 99 Ill. App.3d 483, 490, 54 Ill.Dec. 896, 425 N.E.2d 1113 (1981). The assignment operates to transfer to the assignee all of the assignor's right, title or interest in the thing assigned, such that the assignee stands in the shoes of the assignor. Community Bank of Greater Peoria v. Carter, 283 Ill.App.3d 505, 508, 218 Ill.Dec. 791, 669 N.E.2d 1317 (1996).
Because of the equitable and personal character of the right to sue for rescission, mere naked claims for rescission are generally not assignable. Banque Arabe Et Internationale D'Investissement v. Maryland National Bank, 850 F.Supp. 1199, 1214 n. 7 (S.D.N.Y.1994), citing Soderberg v. Gens, 652 F.Supp. 560, 565 (N.D.Ill.1987). However, ordinary business contracts, other than those requiring purely personal services, are generally assignable. In re Estate of Frayser, 401 Ill. 364, 372, 82 N.E.2d 633 (1948). Moreover, executory contracts for the purchase of real estate, such as the one at issue in this case, may be assigned. See In re Estate of Martinek, 140 Ill.App.3d 621, 630, 94 Ill.Dec. 939, 488 N.E.2d 1332 (1986).
In the instant case, LaSalle contends that Younan, the assignor of the contract, waived its right to seek rescission of the contract and that therefore, YPI, as assignee of the contract, lacks standing to seek rescission of the contract. LaSalle contends that after Younan entered into the contract and learned of the 2008 global credit crisis, it nevertheless reaffirmed the contract by assigning the contract to YPI and then executing amendments to the contract. LaSalle maintains that Younan consequently waived its right to seek rescission of the contract, and that YPI, as an assignee of the contract, lacks standing to rescind the contract. We disagree.
The right to rescind a contract must be exercised promptly on discovery of facts that confer the right to rescind, otherwise the right is waived. See Gibson Electric Co., Inc. v. State of Illinois, 27 Ill.Ct.Cl. 60 (1970); Mound City Distilling Co. v. Consolidated Adjustment Co., 152 Ill.App. 155, 159 (1909); see also Vincent v. Vits, 208 Ill.App.3d 1, 7, 152 Ill.Dec. 941, 566 N.E.2d 818 (1991) ("A right to rescission must be exercised promptly"). In this case, there is nothing in the record to suggest that at the time Younan or YPI executed the amendments to the contract, that they possessed knowledge of the 2008 global credit crisis sufficient to justify rescission of the contract. As a result, we find that YPI, as an assignee of the contract, has standing and the right to rescind the contract.
The next question is, if YPI does in fact have standing and the right to rescind the contract, is the contract rescindable on the ground of impossibility of performance under the facts and circumstances of this case? We must answer in the negative.
Impossibility of performance as a ground for rescission of a contract refers to those factual situations where the purposes *865 for which the contract was made have, on one side, become impossible to perform. See 30 R. Lord, Williston on Contracts § 77:95 (4th ed. 2004). The doctrine of impossibility of performance in contract was recognized by our supreme court in Leonard v. Autocar Sales & Service Co., 392 Ill. 182, 187, 64 N.E.2d 477 (1945). See Mouhelis v. Thomas, 95 Ill. App.3d 181, 183, 50 Ill.Dec. 688, 419 N.E.2d 956 (1981); Joseph W. O'Brien Co. v. Highland Lake Construction Co., 17 Ill.App.3d 237, 241, 307 N.E.2d 761 (1974).
The doctrine excuses performance where performance is rendered objectively impossible due to destruction of the subject matter of the contract or by operation of law. Leonard, 392 Ill. at 187, 64 N.E.2d 477; see also 407 East 61st Garage, Inc. v. Savoy Fifth Avenue Corp., 23 N.Y.2d 275, 281, 244 N.E.2d 37, 41, 296 N.Y.S.2d 338, 343-44 (1968) ("impossibility of performance is limited to the destruction of the means of performance by an act of God, Vis major, or by law"); Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1294 (Fed.Cir.2002) (performance of contract only excused under doctrine of impossibility when it is objectively impossible). This doctrine has been narrowly applied "due in part to judicial recognition that the purpose of contract law is to allocate the risks that might affect performance and that performance should be excused only in extreme circumstances." Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900, 902, 519 N.E.2d 295, 296, 524 N.Y.S.2d 384, 386 (1987).
The party advancing the doctrine must show that the events or circumstances which he claims rendered his performance impossible were not reasonably foreseeable at the time of contracting. Illinois-American Water Co. v. City of Peoria, 332 Ill.App.3d 1098, 1106, 266 Ill.Dec. 277, 774 N.E.2d 383 (2002). Where a contingency that causes the impossibility might have been anticipated or guarded against in the contract, it must be provided for by the terms of the contract or else impossibility does not excuse performance. See Leonard, 392 Ill. at 187, 64 N.E.2d 477 ("subsequent contingencies, not provided against in the contract, which render performance impossible, do not bring the contract to an end"); see also United States v. Winstar Corp., 518 U.S. 839, 905, 116 S.Ct. 2432, 2469-70, 135 L.Ed.2d 964, 1010 (1996) ("`[i]f [the risk] was foreseeable there should have been provision for it in the contract, and the absence of such a provision gives rise to the inference that the risk was assumed'"), quoting Lloyd v. Murphy, 25 Cal.2d 48, 54, 153 P.2d 47, 50 (1944).
In this case, YPI argues that its performance under the contract was made impossible due to the 2008 global credit crisis, which it claimed prevented it and Younan from obtaining the commercially-practical financing contemplated when the contract was originally made. YPI's argument is misplaced.
Even if the global credit crisis made it difficult, to nearly impossible, to procure the sought-after commercial financing, this is not the relevant issue. The primary issue is whether it was foreseeable that a commercial lender might not provide Younan and YPI with the financing they sought. See Ner Tamid Congregation of North Town v. Krivoruchko, 638 F.Supp.2d 913, 928 (N.D.Ill.2009). Even without the global credit crisis of 2008, it was foreseeable that a commercial lender might not provide Younan and YPI with the financing they sought. See Ner Tamid Congregation of North Town, 638 F.Supp.2d at 928 (contracting party's failure to obtain commercial financing in connection with purchase of property was not a ground to rescind contract under doctrine *866 of impossibility of performance since it was foreseeable, for any number of reasons, that a lender might not provide the sought after financing).
The potential inability to obtain commercial financing is generally considered a foreseeable risk that can be readily guarded against by inclusion in the contract of financing contingency provisions. Ner Tamid Congregation of North Town, 638 F.Supp.2d at 928. If the inability to obtain commercial financing, standing alone, were sufficient to excuse performance under the doctrine of impossibility of performance, then the law binding contractual parties to their agreements would be of no consequence. See, e.g., Northern Illinois Gas Co. v. Energy Cooperative, Inc., 122 Ill. App.3d 940, 952, 78 Ill.Dec. 215, 461 N.E.2d 1049 (1984) ("If changed prices, standing alone, constitute a frustrating event sufficient to excuse performance of a contract, then the law binding contractual parties to their agreements is no more").
In addition, the doctrine of impossibility of performance does not apply to excuse performance "as long as it lies within the power of the promisor to remove the obstacle to performance." Felbinger & Co. v. Traiforos, 76 Ill.App.3d 725, 733, 31 Ill.Dec. 906, 394 N.E.2d 1283 (1979). The underlying complaint alleged that Younan's current assets exceeded $1.6 billion. Nothing in the record indicates that Younan lacked sufficient assets or equity to pay the contract purchase price. To the extent its resources were not liquid, nothing in the record suggests it would have been impossible for Younan to convert its nonliquid assets to liquid assets in order to pay the contract purchase price.
We find that under the facts and circumstances of this case, as a matter of law, Younan's and YPI's failure to obtain the commercially-practical financing they sought was not an adequate ground to rescind the contract under the doctrine of impossibility of performance.
A section 2-615 motion to dismiss attacks the legal sufficiency of the complaint and should be granted if, after viewing the allegations in the light most favorable to the plaintiff, the complaint fails to state a cause of action on which relief can be granted. McCready v. Secretary of State, 382 Ill.App.3d 789, 794, 321 Ill.Dec. 183, 888 N.E.2d 702 (2008); McHenry County Defenders, Inc. v. City of Harvard, 384 Ill.App.3d 265, 280, 322 Ill.Dec. 726, 891 N.E.2d 1017 (2008). The grant of a section 2-615 motion to dismiss presents a question of law, which is reviewed de novo. McHenry County Defenders, Inc., 384 Ill.App.3d at 280, 322 Ill.Dec. 726, 891 N.E.2d 1017.
In the instant case, we find that the trial court properly struck YPI's complaint with prejudice and without leave to amend pursuant to section 2-615 of the Code, on the ground that the complaint failed to allege sufficient facts warranting rescission of the contract under the doctrine of impossibility of performance.
Accordingly, for the reasons set forth above, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
PATTI and LAMPKIN, JJ., concur.
NOTES
[1] Pursuant to section 13.3 of the contract, LaSalle waived its rights to seek any additional damages from Younan or YPI for their failure to close the sale.
|
203 F.2d 940
NATIONAL LABOR RELATIONS BOARD,v.SEXTON.
No. 11816.
United States Court of AppealsSixth Circuit.
April 16, 1953.
George J. Bott and A. Norman Somers, Washington, D.C., for petitioner
Robert T. Caldwell, Ashland, Ky., for respondent.
Before ALLEN, MARTIN and McALLISTER, Circuit Judges.
PER CURIAM.
1
The above cause came on to be heard upon the record, the briefs of the parties, and the argument of counsel.
2
The Board found that respondent refused to bargain collectively with the certified bargaining representative in violation of Section 8(a) (5) and (1) of the Act, 29 U.S.C.A. § 158(a)(1, 5). Only one of respondent's reasons for refusal to bargain admits of validity. It appears that the Board excluded Henry Sexton, respondent's nephew, from the bargaining unit in question and from participation in the election for the selection of a bargaining agent. The Board acted in accordance with what it considered its proper authority under Section 9 of the National Labor Relations Act, as amended, 29 U.S.C.A. § 159, to exclude from the appropriate unit those employees who do not have a sufficient interest in common with other employees to warrant their inclusion therein, and the above exclusion was based upon the same employee's family relationship to the respondent. Section 2(3) of the National Labor Relations Act, as amended, 29 U.S.C.A. § 152(3), sets forth what the term 'employee' shall include, and specifically excludes a spouse or child of an individual employer as such an employee, but provides for no other exclusion on the basis of family relationship. The Act, therefore, having expressly set forth the individuals who are excluded from the term 'employee' on the basis of family relationship, we find no justification for the exercise of discretion on the part of the Board, by virtue of Section 9 of the Act, to exclude from the appropriate bargaining unit and from participation in the election for the selection of a bargaining agent any persons on the basis of family relationship other than those specifically excluded under Section 2(3).
3
Now, therefore, it is ordered, adjudged, and decreed that the order of the Board be denied enforcement for the reason that the Board improperly excluded Henry Sexton, respondent's nephew, because of his family relationship to respondent, from the appropriate bargaining unit in question and from participation in the election for the selection of a bargaining agent; and the petition for enforcement of the order of the Board is, accordingly, denied.
|
540 U.S. 980
HOLLIDAYv.COMMISSIONER OF INTERNAL REVENUE.
No. 03-6319.
Supreme Court of United States.
November 3, 2003.
1
Appeal from the C. A. 9th Cir.
2
Motion of petitioner for leave to proceed in forma pauperis denied. Petitioner is allowed until November 24, 2003, within which to pay the docketing fee required by Rule 38(a) and to submit a petition in compliance with Rule 33.1 of the Rules of this Court.
|
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 17-0296V
Filed: July 6, 2018
UNPUBLISHED
LYN GEER,
Petitioner,
v. Special Processing Unit (SPU);
Attorneys’ Fees and Costs
SECRETARY OF HEALTH AND
HUMAN SERVICES,
Respondent.
Leah VaSahnja Durant, Law Offices of Leah V. Durant, PLLC, Washington, DC, for
petitioner.
Colleen Clemons Hartley, U.S. Department of Justice, Washington, DC, for respondent.
DECISION ON ATTORNEYS’ FEES AND COSTS 1
Dorsey, Chief Special Master:
On March 3, 2017, petitioner filed a petition for compensation under the National
Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10, et seq., 2 (the “Vaccine
Act”). Petitioner alleges that she suffered a shoulder injury related to vaccine
administration (“SIRVA”) following a tetanus vaccination she received on February 11,
2016. Petition at 1. On December 26, 2017, the undersigned issued a decision
awarding compensation to petitioner based on the respondent’s proffer. (ECF No. 27).
On June 26, 2018, petitioner filed a motion for attorneys’ fees and costs. (ECF
No. 33). Petitioner requests attorneys’ fees in the amount of $28,177.70 and attorneys’
1 Because this unpublished decision contains a reasoned explanation for the action in this case, the
undersigned intends to post it on the United States Court of Federal Claims' website, in accordance with
the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal Management and Promotion of
Electronic Government Services). In accordance with Vaccine Rule 18(b), petitioner has 14 days to
identify and move to redact medical or other information, the disclosure of which would constitute an
unwarranted invasion of privacy. If, upon review, the undersigned agrees that the identified material fits
within this definition, the undersigned will redact such material from public access.
2
National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755. Hereinafter, for
ease of citation, all “§” references to the Vaccine Act will be to the pertinent subparagraph of 42 U.S.C. §
300aa (2012).
costs in the amount of $2,914.50. Id. at 1. In compliance with General Order #9,
petitioner filed a signed statement indicating that petitioner incurred no out-of-pocket
expenses. Id. at 2. Thus, the total amount requested is $31,092.20.
On July 2, 2018, respondent filed a response to petitioner’s motion. (ECF No.
34). Respondent argues that “[n]either the Vaccine Act nor Vaccine Rule 13
contemplates any role for respondent in the resolution of a request by a petitioner for an
award of attorneys’ fees and costs.” Id. at 1. Respondent adds, however, that he “is
satisfied the statutory requirements for an award of attorneys’ fees and costs are met in
this case.” Id. at 2. Respondent “respectfully recommends that the Chief Special
Master exercise her discretion and determine a reasonable award for attorneys’ fees
and costs.” Id. at 3.
On July 3, 2018, petitioner filed a reply. (ECF No. 35). Petitioner requests that
the undersigned award the amount of attorneys’ fees and costs sought.
The undersigned has reviewed the billing records submitted with petitioner’s
request. In the undersigned’s experience, the request appears reasonable, and the
undersigned finds no cause to reduce the requested hours or rates.
The Vaccine Act permits an award of reasonable attorneys’ fees and costs.
§ 15(e). Based on the reasonableness of petitioner’s request, the undersigned
GRANTS petitioner’s motion for attorneys’ fees and costs.
Accordingly, the undersigned awards the total of $31,092.20 3 as a lump
sum in the form of a check jointly payable to petitioner and petitioner’s counsel
Leah VaSahnja Durant.
The clerk of the court shall enter judgment in accordance herewith. 4
IT IS SO ORDERED.
s/Nora Beth Dorsey
Nora Beth Dorsey
Chief Special Master
3 This amount is intended to cover all legal expenses incurred in this matter. This award encompasses all
charges by the attorney against a client, “advanced costs” as well as fees for legal services rendered.
Furthermore, § 15(e)(3) prevents an attorney from charging or collecting fees (including costs) that would
be in addition to the amount awarded herein. See generally Beck v. Sec’y of Health & Human Servs.,
924 F.2d 1029 (Fed. Cir.1991).
4 Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by the parties’ joint filing of notice
renouncing the right to seek review.
2
|
73 F.Supp. 942 (1947)
OIL WORKERS INTERNATIONAL UNION
v.
ELLIOTT, Regional Director, National Labor Relations Board.
Civil Action No. 1428.
District Court, N. D. Texas, Fort Worth Division.
September 8, 1947.
*943 Lindsay P. Walden, of Fort Worth, Tex., for Oil Workers International Union.
David T. Findling and Mozart G. Ratner, both of Washington, D. C., for Elliott.
DAVIDSON, District Judge.
I have read the very able brief of plaintiff's counsel. It conforms to the very concise clear-cut manner in which the case has been presented.
The law has recognized, and does recognize, the right of labor to organize, and is one of the purposes of that organization, to enter into bargains for collective employment. It takes into consideration the fact that there may be a question as to what organization has the right to speak for the employees, and in order to determine that, an election may be ordered for that purpose.
In this case, an election was ordered. The matter in the hands of the defendant, Dr. Edwin A. Elliott, acting either on his own right or under instruction of his superiors, has not counted the ballots.
A bill seeking in effect a mandatory injunction to compel him to count the ballots is before the court.
The defendant moves to dismiss the bill on the ground that the court is without power of review. We are inclined to disagree with that position. We think one of the greatest expressions of the rights of man, was art. 12 of the North Carolina Bill of Rights, 1776. The effect of which was that no situation should ever arise affecting a man's life, liberty, property or privileges, for which he would not have some tribunal to which he might go, and have his rights and grievances adjudicated.
We think under the present legislation of Congress that the right of review is very clear.
Now, coming down to the original petition, or bill, for injunction, of a mandatory type, to require the defendant to open the ballots. The plaintiff, in elections, has shown itself entitled to such, except and unless it be because of and on account of being affiliated with another organization who has not filed the necessary affidavit.
The close point in the case is whether or not this Company, or this plaintiff, can be bound or should be bound by the action of its affiliate.
The American Federation of Labor, and the CIO, as a matter of common knowledge, are made up of constituent units, just like the Federation of Women's Clubs. The policy of this particular unit or, rather, to state it converselythe policy of the CIO is shaped by the joint action of its several units. They are, therefore, affiliated in a sense that they are a part of it, and since they make up the voice or policy of the CIO the CIO in turn must of necessity have its influence on the policies of its affiliates. It is the natural thing for them to do in order to secure the most effective results.
Then, what did Congress have in mind in writing these provisions? Taking section 9, subsection g of the National Labor Relations Act, 29 U.S.C.A. § 159(g) it reads that it shall be the duty of all labor organizations to file annually with the Secretary of Labor, in such form as the *944 Secretary of Labor may prescribe, reports bringing up to date information required, and, further:
"No labor organization shall be eligible for certification under this section as a representative of any employees, no petition under Section 9-E-1 shall be entertained, and no complaint shall issue under Section 10, with respect to the charge of labor organizations, unless they can show that it, and any national or international labor organization of which it is an affiliate or constituent unit has complied with its obligation under this subsection."
Another subsection provides
"That no investigation shall be made by the Board of any question affecting commerce concerning the representation of employees, raised by labor organization under subsection (c) of this section, no petition under section 9(e) (1), shall be entertained, and no complaint shall be issued pursuant to a charge made by a labor organization under subsection (b) of section 10, unless there is on file with the Board an affidavit executed contemporaneously or within the preceding twelve-month period by each officer of such labor organization and the officers of any national or international labor organization of which it is an affiliate or constituent unit that he is not a member of the Communist Party or affiliated with such party, and that he does not believe in, and is not a member of or supports any organization that believes in or teaches, the overthrow of the United States Government by force." 29 U.S.C.A. § 159(h).
The question might be insisted upon, and no doubt is, that Congress has no right to interfere in these matters by reason of a man's belief.
The powers of Congress are outlined and defined by the Constitution of the United States. Section 4, Article 4, I believe it is, which provides that the National Government shall guarantee to each state a Republican form of government. It is recognized that the Communistic form of government is not a representative form of government. Ours is a representative form of government, whereby the representatives of the people chosen by the people, determine the policies of the nation. In the Communistic form, you have more of the dictatorial type. It nowhere has functioned except by and in the hands of a dictator, therefore, it behooves the National Government to curb the growth of any system that would destroy representative government and bring about government by force.
We think that is a matter of policy for Congress to determine. We believe that the evidence discloses that the complainant is an affiliate of an organization that has not yet complied with the provisions of law. In reasonable time, doubtless, that compliance will be had, but if the law means what it says, that compliance must be had before any action could be had here by this court.
If the plaintiff were not a member and not affiliated with an organization that had not yet complied, they would be entitled to relief, but being an affiliate with an organization that has not yet complied with the provisions of the law, the petition will be denied.
|
Matter of Reeves v Annucci (2018 NY Slip Op 00507)
Matter of Reeves v Annucci
2018 NY Slip Op 00507
Decided on January 25, 2018
Appellate Division, Third 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 and Entered: January 25, 2018
525224
[*1]In the Matter of ROBERT REEVES, Petitioner,
vANTHONY J. ANNUCCI, as Acting Commissioner of Corrections and Community Supervision, Respondent.
Calendar Date: December 13, 2017
Before: Garry, P.J., Lynch, Devine, Clark and Rumsey, JJ.
Robert Reeves, Romulus, petitioner pro se.
Eric T. Schneiderman, Attorney General, Albany (Frank Brady of counsel), for respondent.
MEMORANDUM AND JUDGMENT
Proceeding pursuant to CPLR article 78 (transferred to this Court by order of the Supreme Court, entered in Albany County) to review a determination of respondent finding petitioner guilty of violating certain prison disciplinary rules.
On October 10, 2016, petitioner was found unconscious and unresponsive in his cell and a medical emergency was declared. After petitioner was taken to the facility hospital, a correction officer searched petitioner's cell and discovered a brown, powdery substance wrapped in layers of paper; this substance subsequently tested positive for the presence of amphetamines. As a result, petitioner was charged — on that date — in a misbehavior report with drug use and drug possession. When petitioner returned to his cell two days later, a correction officer interviewed him, and petitioner admitted that he had
discovered a folded piece of paper containing a brown, powdery substance — that he knew was "some kind of drug" — in a common area and had ingested the substance. Thereafter, petitioner was charged in a second misbehavior report dated October 12, 2016 with drug use and drug possession. When the resulting tier III disciplinary hearing commenced, petitioner pleaded guilty under both misbehavior reports to drug possession and not guilty to drug use. At the conclusion of the hearing, petitioner was found guilty of all charges and a penalty was imposed. Petitioner's subsequent administrative appeal was unsuccessful, prompting him to commence this CPLR article 78 proceeding to challenge respondent's determination.
Preliminarily, respondent concedes that the drug use and possession charges set forth in [*2]the two misbehavior reports are duplicative because both sets of charges arose out of the same incident, that the determination of guilt resulting from the October 10, 2016 misbehavior report should be annulled and all references thereto expunged from petitioner's institutional record. Because the penalty imposed included a recommended loss of good time, this matter must be remitted for a redetermination of the penalty (see Matter of Wallace v Annucci, 153 AD3d 1499, 1500 [2017]). Accordingly, respondent's determination is modified to that extent.
Turning to the October 12, 2016 misbehavior report, petitioner's plea of guilty to the charge of drug possession precludes him from now challenging the evidentiary basis for that charge (see Matter of Doolittle v Kirkpatrick, 153 AD3d 1490, 1490-1491 [2017]; Matter of DeJesus v Venettozzi, 145 AD3d 1275, 1276 [2016], lv denied 29 NY3d 908 [2017]). As to the sole remaining charge of drug use, we find that the misbehavior report itself, the testimony of its author, who recounted petitioner's admission that he ingested a substance that he knew to be some type of drug, and the positive test results provide substantial evidence to support the determination of guilt (see Matter of Rodriguez v Venettozzi, ___ AD3d ___, ___, 2017 NY Slip Op 08588, *2 [2017]; Matter of Mitchell v Venettozzi, 148 AD3d 1406, 1407 [2017]; Matter of Reese v Prack, 105 AD3d 1236, 1236 [2013]). Although petitioner denied admitting that he had ingested the substance found in his cell, stating instead that he only "tasted it," this presented a credibility issue for the Hearing Officer to resolve (see Matter of Boitschenko v Annucci, ___ AD3d ___, ___, 2017 NY Slip Op 08761, *2 [2017]; Matter of Weekes v Prack, 129 AD3d 1430, 1431 [2015]). Petitioner's remaining contentions, including his challenge to the chain of custody, have been examined and found to be lacking in merit.
Garry, P.J., Lynch, Devine, Clark and Rumsey, JJ., concur.
ADJUDGED that the determination is modified, without costs, by annulling so much thereof as found petitioner guilty of drug use and drug possession as charged in the misbehavior report dated October 10, 2016 and as imposed a penalty; petition granted to that extent, respondent is directed to expunge all references to these charges from petitioner's institutional record and matter remitted to respondent for an administrative redetermination of the penalty imposed upon the remaining violations; and, as so modified, confirmed.
|
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
IFTIKHAR SAIYED, )
)
Plaintiff, )
)
v. ) Civil Action No. 10-0022 (PLF)
)
COUNCIL ON AMERICAN-ISLAMIC )
RELATIONS ACTION NETWORK, INC., )
)
Defendant. )
___________________________________ )
)
RENE ARTURO LOPEZ, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 10-0023 (PLF)
)
COUNCIL ON AMERICAN-ISLAMIC )
RELATIONS ACTION NETWORK, INC., )
)
Defendant. )
___________________________________ )
OPINION
These consolidated matters are before the Court on the motion for
summary judgment brought by defendant Council on American-Islamic Relations Action
Network, Inc. (“CAIR”). The plaintiffs are several individuals who sought legal services
from a CAIR chapter office operating in Virginia (“CAIR-VA”), and who were
connected with that chapter’s “Resident Attorney,” Morris Days. Four of the five
plaintiffs paid fees directly to Mr. Days, but he failed to diligently pursue their legal
claims, and it later emerged that he was not even an attorney. The plaintiffs claim that
they have suffered damages as a result of Days’ alleged fraud. Mr. Days is now dead and
CAIR-VA has disbanded. The plaintiffs seek redress from CAIR-VA’s parent
organization, CAIR, asserting claims for fraud, breach of fiduciary duty, and intentional
infliction of emotional distress under the common law of Virginia, in addition to a claim
under the Virginia Consumer Protection Act.
Based on a careful consideration of the parties’ papers, the relevant legal
authorities, and pertinent portions of the record in this case, the Court will grant CAIR’s
motion for summary judgment. The Court also will deny the plaintiffs’ request, made
under Rule 56(f) of the Federal Rules of Civil Procedure, that the Court enter judgment in
their favor on certain of their claims. 1
I. BACKGROUND
The Court previously issued two Opinions in these cases in which it
described in some detail the underlying facts. See Lopez v. CAIR, 741 F. Supp. 2d 222,
227-29 (D.D.C. 2010); Saiyed v. CAIR, 742 F. Supp. 2d 84, 86 (D.D.C. 2010). Although
these Opinions were issued upon CAIR’s motions to dismiss the plaintiffs’ complaints —
motions which the Court denied in large part — the basic narratives set forth in the
complaints are not disputed by the defendant. See Def.’s MSJ at 20-33. The Court
1
The papers considered in connection with the pending motion include the
following, for which docket entries are provided with reference to Civil Action No.
10-0023, unless otherwise noted: Lopez plaintiffs’ first amended complaint (“Lopez Am.
Compl.”) [Dkt. No. 5]; plaintiff Saiyed’s first amended complaint (“Saiyed Am.
Compl.”) [Dkt. No. 3 in Civil Action No. 10-0022]; CAIR’s motion for summary
judgment (Def.’s MSJ”) [Dkt. No. 80]; plaintiffs’ opposition to CAIR’s motion for
summary judgment (“Pls.’ Opp.”) [Dkt. No. 74]; plaintiffs’ statement of facts (“Pls.’
Stmt. of Facts”) [Dkt. No. 74]; CAIR’s reply (“Def.’s Reply”) [Dkt. No. 85]; CAIR’s
response to plaintiffs’ statement of facts (“Def.’s Resp. Stmt. of Facts”) [Dkt. No. 85-1];
and plaintiffs’ reply (“Pls.’ Reply”) and memorandum in support thereof (“Pls.’ Reply
Memo.”) [Dkt. No. 87].
2
therefore refers the reader to its earlier Opinions for a fuller exposition of the facts
relating to each of the individual plaintiffs. The present discussion will be limited to the
basics.
Defendant CAIR is a national organization committed to protecting the
civil rights of Muslims living in the United States. CAIR’s headquarters office is located
in the District of Columbia, with affiliated chapter offices — which exist as independent
non-profit organizations — located throughout the country. Chapters come into being
through a process involving a written application that is submitted to CAIR headquarters,
which then either denies or approves the applicant’s request to initiate a new chapter.
Deposition of Khalid Iqbal (May 11, 2011) (“Iqbal 2011 Dep.”) at 28:18-29:15 (Pls.’
Ex. 3) [Dkt. No. 81-3]. It was through this process that in 2002 a CAIR chapter was
formed in Bethesda, Maryland, which later moved its operations to nearby Herndon,
Virginia, where it was known by the name of CAIR-VA. In 2006, Morris Days, who had
been volunteering his time to support CAIR-VA’s civil rights work, was hired by CAIR-
VA to continue these efforts. Id. at 69:18-72:1. Mr. Days later was advertised by the
chapter as being its “Resident Attorney” and “Civil Rights Manager.” See Pls.’ Ex. 21
[Dkt. No. 74-23]. Unbeknownst to CAIR-VA and its clients, however, Mr. Days was not
actually an attorney.
At various points during 2007, each of the plaintiffs approached Mr. Days
at CAIR-VA in search of legal counsel. Three plaintiffs — Mohammed Barakatullah
Abdussalaam, Bayenah Nur, and Iftikhar Saiyed — sought Days’ assistance with their
respective claims of workplace discrimination. Another plaintiff, Aquilla Turner, sought
his help in initiating divorce proceedings, while plaintiff Rene Arturo Lopez desired legal
3
counsel in relation to an immigration matter. Several of the plaintiffs paid money
directly to Days for these services, and Turner and Lopez also performed chores at Days’
home as a form of compensation. But Days neglected to fulfill his commitments to these
five plaintiffs. As a result, some of them lost opportunities to file their claims within
applicable limitations periods. In addition, one plaintiff, Ms. Nur, relied on Days’ advice
and rejected her employer’s offer to transfer her to another division of the company. Ms.
Nur was then placed on unpaid leave, and she and her family ultimately felt compelled to
move to North Carolina in search of new job opportunities.
In 2008, each of the plaintiffs came to learn that Days had lied to them
regarding his pursuit of their legal issues, and that Days was not even an attorney. All of
the plaintiffs allege that as a consequence of Days’ betrayal, they have suffered emotional
distress, in addition to the loss of their out-of-pocket expenses and, for some, missed
opportunities to pursue their legal claims.
The plaintiffs filed these two civil actions in 2010, following the dismissal
of an earlier case arising from the same facts. In that previous action, the plaintiffs had
alleged that CAIR and Days committed a conspiracy in violation of the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), but Judge Urbina determined that
their complaint failed to state a viable RICO claim. Lopez v. CAIR, 657 F. Supp. 2d 104,
114-15 (D.D.C. 2009). Judge Urbina then declined to exercise supplemental jurisdiction
over the plaintiffs’ remaining state law claims for fraud, breach of fiduciary duty,
intentional infliction of emotional distress, and violation of Virginia and District of
Columbia consumer protection statutes. Id. at 115-16. In the two present actions, the
4
plaintiffs have brought the same state law claims, invoking this Court’s diversity
jurisdiction. 2
CAIR filed motions to dismiss the two complaints in February 2010,
which this Court granted in part and denied in part. The Court first rejected three
jurisdictional challenges, namely that: the plaintiffs had failed to join required non-
diverse parties; the plaintiffs’ claims for damages did not satisfy the diversity statute’s
amount in controversy requirement; and the plaintiffs lacked Article III standing. Lopez
v. CAIR, 741 F. Supp. 2d at 231-34. Turning to the merits, the Court determined that
Virginia law should apply; it therefore dismissed the claim brought under the District of
Columbia’s consumer protection statute. Id. at 234-35. The Court then concluded that
the plaintiffs in their complaints had set forth allegations sufficient to state claims for
each of their causes of action under Virginia law. Id. at 236-39. The Court also granted
CAIR’s motions to consolidate the two cases. Id. at 239; Saiyed v. CAIR, 742 F. Supp.
2d at 89-90.
CAIR now moves for summary judgment. 3 It renews its objection to this
Court’s jurisdiction, contending that now, after discovery, it is evident that the plaintiffs
are unable to satisfy the amount in controversy requirement under 28 U.S.C. § 1332. On
the merits, CAIR maintains that there are no grounds upon which to impute Days’
purported liability to CAIR. In addition, CAIR argues that the plaintiffs’ alleged
2
The two actions are functionally the same, save for the identity of the
plaintiffs. The Lopez complaint asserts claims on behalf of Lopez, Turner, Abdussalaam,
and Nur. The Saiyed complaint is brought solely on Mr. Saiyed’s behalf. This Court’s
earlier Opinion in Saiyed was limited to a discussion of that plaintiff’s satisfaction of the
amount in controversy requirement. See Saiyed v. CAIR, 742 F. Supp. 2d at 88-90.
3
CAIR requests the opportunity to present oral argument on this motion,
see Def.’s MSJ at 1, but the Court has determined that argument is not needed.
5
emotional suffering is not sufficiently severe to support a claim for intentional infliction
of emotional distress. The plaintiffs oppose CAIR’s motion and, in addition, they ask
that the Court enter judgment in their favor with respect to some of their claims.
According to the plaintiffs, this request, brought under Rule 56(f) of the Federal Rules of
Civil Procedure, amounts to a “de facto” cross-motion for partial summary judgment.
See Pls.’ Reply at 1 & n.2. 4
II. LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the movant is entitled
to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986); see FED. R. CIV. P. 56(a), (c). In making that determination, the court must view
the evidence in the light most favorable to the nonmoving party and draw all reasonable
inferences in its favor. Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014) (per curiam);
Anderson v. Liberty Lobby, Inc., 477 U.S. at 255; Talavera v. Shah, 638 F.3d 303, 308
(D.C. Cir. 2011). A disputed fact is “material” if it “might affect the outcome of the suit
under the governing law.” Talavera v. Shah, 638 F.3d at 308 (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. at 248). A dispute over a material fact is “genuine” if it
could lead a reasonable jury to return a verdict in favor of the nonmoving party. See
Scott v. Harris, 550 U.S. 372, 380 (2007); Paige v. DEA, 665 F.3d 1355, 1358 (D.C. Cir.
4
Under Rule 56(f), the Court is empowered to grant summary judgment for
a nonmovant, after giving notice and a reasonable time to respond. FED. R. CIV. P.
56(f)(1). CAIR does not contend that the plaintiffs’ request for partial summary
judgment is procedurally improper, and by its reply brief CAIR has responded to the
plaintiffs’ joint opposition and cross-motion.
6
2012). “[T]he moving party is entitled to judgment as a matter of law if the nonmoving
party ‘fails to make a showing sufficient to establish the existence of an element essential
to that party’s case, and on which that party will bear the burden of proof at trial.’”
Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986)). “Credibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the facts are jury functions, not
those of a judge at summary judgment. Thus, [the court] do[es] not determine the truth of
the matter, but instead decide[s] only whether there is a genuine issue for trial.” Barnett
v. PA Consulting Group, Inc., 715 F.3d 354, 358 (D.C. Cir. 2013) (quoting Pardo-
Kronemann v. Donovan, 601 F.3d 599, 604 (D.C. Cir. 2010)); see also Tolan v. Cotton,
134 S. Ct. at 1866; Anderson v. Liberty Lobby, Inc., 477 U.S. at 255.
III. DISCUSSION
A. Plaintiffs’ Procedural and Evidentiary Objections
As an initial matter, the plaintiffs contend that the Court should deny
CAIR’s summary judgment motion for three reasons: (1) the motion was not timely filed
within 30 days after the close of discovery; (2) the motion and its accompanying exhibits
were not properly served upon the plaintiffs; and (3) much of CAIR’s evidence has been
proffered without foundation or authentication, and this evidence therefore cannot
support summary judgment in its favor. Pls.’ Opp. at 1-5; Pls.’ Reply Memo. at 1-6.
As to the first point, CAIR concedes that it did not file its motion — which
was submitted under seal in hard copy with the Clerk of the Court — until one day
following its due date, although CAIR did file its Notice of Filing Motion Under Seal on
the motion’s due date. Def.’s Reply at 2. CAIR contends, without citation to authority,
7
that it is “standard practice in this jurisdiction” that the date of filing a notice of intent to
file under seal is treated as the date of filing the motion itself. Id. As to the plaintiffs’
second point, CAIR fails to address their argument regarding defective service of the
motion and exhibits, which, according to the plaintiffs, were provided to them via e-mail
and an online file-sharing service. But the Court does not observe any prejudice that has
resulted from these two procedural defects, and it does not agree that automatic denial of
CAIR’s motion for summary judgment is a sanction warranted by these circumstances.
See Nesbitt v. Holder, 966 F. Supp. 2d 52, 55 (D.D.C. 2013) (“[T]he central purpose of
the summary judgment device . . . is to weed out those cases insufficiently meritorious to
warrant the expense of a jury trial.”) (quoting Greene v. Dalton, 164 F.3d 671, 675 (D.C.
Cir. 1999)) (alterations in original).
As for the plaintiffs’ objections to CAIR’s proffered evidence, plaintiffs
contend that “the vast majority” of these materials are “emails, letters, and similar
documents” that have been submitted to the Court with no declaration or testimonial
evidence made upon personal knowledge either to authenticate them or to provide
foundation for their connection to this case. Pls.’ Opp. at 5. In addition, both parties
raise hearsay objections aimed at various items of evidence produced by the other side.
The Court will touch on these evidentiary issues where they may be relevant to the
substantive matters addressed in the discussion that follows.
B. Subject Matter Jurisdiction
In its motion for summary judgment, CAIR renews a jurisdictional
objection that this Court previously addressed in the context of CAIR’s motions to
dismiss the plaintiffs’ complaints. Specifically, CAIR contends that the plaintiffs have
8
not put into controversy an amount of damages greater than $75,000, which is necessary
for the successful invocation of this Court’s diversity jurisdiction under 28 U.S.C.
§ 1332. At the motion to dismiss stage, the Court examined the plaintiffs’ pleadings and
concluded that they had made colorable claims for damages in excess of the jurisdictional
minimum. See Lopez v. CAIR, 741 F. Supp. 2d at 231-34; Saiyed v. CAIR, 742 F. Supp.
2d at 88-89. CAIR now contends that the plaintiffs cannot substantiate these claims,
warranting dismissal for lack of subject matter jurisdiction. See Def.’s MSJ at 30, 47-55;
Def.’s Reply at 19-23.
CAIR raises two purported defects in connection with the plaintiffs’
claims for damages. First, CAIR responds to the rationale followed by this Court in its
Opinion denying CAIR’s motion to dismiss the Lopez complaint, where the Court
concluded that because Ms. Nur’s claims for out-of-pocket expenses and lost wages
could, in conjunction with a reasonable award of punitive damages, total more than
$75,000, her claimed damages sufficed to support diversity jurisdiction as to her and her
co-plaintiffs in that civil action. Lopez v. CAIR, 741 F. Supp. 2d at 231-34. CAIR now
contends that Ms. Nur’s claimed damages — stated in the complaint as amounting to
$8,925 — must be reduced by nearly half to account for her receipt of governmental
benefits as well as her savings on child care expenses during the period of her
unemployment. Def.’s MSJ at 30, 50 n.7 (citing Deposition of Bayenah Nur (Sept. 4,
2012) at 92:14-15 (Def.’s Ex. Q) [Dkt. No. 80-1]). With these reductions made, Ms.
Nur’s damages, even including a punitive damages award of ten times’ the amount of the
compensatory damages — an award which likely rests at the outer boundary of
conformity with due process, see Lopez v. CAIR, 741 F. Supp. 2d at 234 (citing cases) —
9
would yield a total award of substantially less than $75,000. The plaintiffs do not
directly respond to this argument. See Pls.’ Opp. at 33-34; Pls.’ Reply Memo. at 15-16.
CAIR’s second jurisdictional attack centers on the merits of the legal
issues for which the plaintiffs sought Mr. Days’ counsel. Specifically, CAIR contends
that none of the plaintiffs actually were prejudiced by Days’ failure to resolve their legal
problems, and therefore no compensatory damages could be awarded on the basis of his
neglect. Def.’s MSJ at 48-55.
The plaintiffs respond to these arguments by focusing on a different aspect
of their claims, namely, their request for compensatory damages for their alleged
emotional distress. They maintain that each individual plaintiff has suffered
psychological harm as a consequence of Days’ fraud, and contend that a reasonable jury
could award them compensatory damages in excess of $75,000. The plaintiffs support
these assertions with three pieces of evidence: (1) the plaintiffs’ own statements; (2) the
written psychological reports submitted by Dr. Ron Kimball, based on his evaluations of
each of the plaintiffs; and (3) a survey of jury awards rendered in the District of
Columbia, Maryland, and Virginia from 1990 to 2009 in cases involving claims of fraud
or breach of fiduciary duty resulting in emotional distress, showing a range of awards
from roughly $10,000 to $1.25 million. Pls.’ Opp. at 33-34; Pls.’ Stmt. of Facts ¶¶ 75-80;
Pls.’ Reply Memo. at 15-16.
The Supreme Court has explained that “if, from the face of the pleadings,
it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or
if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was
entitled to recover that amount, and that his claim was therefore colorable for the purpose
10
of conferring jurisdiction, the suit will be dismissed.” St. Paul Mercury Indem. Co. v.
Red Cab Co., 303 U.S. 283, 289 (1938) (emphasis added). Thus, “the Supreme Court’s
yardstick demands that courts be very confident that a party cannot recover the
jurisdictional amount before dismissing the case for want of jurisdiction.” Rosenboro v.
Kim, 994 F.2d 13, 17 (D.C. Cir. 1993). Once the jurisdictional facts have been
challenged, however, the party invoking federal jurisdiction “must produce evidence
supporting a legal uncertainty about whether [it] could prove” its claimed damages. Id. at
18; see also Mace v. Domash, 550 F. Supp. 2d 101, 104 (D.D.C. 2008) (“When the
defendant challenges the jurisdictional amount, plaintiff must come forward with some
facts in support of her assertion that the jurisdictional amount has been met.”).
Because CAIR has now challenged the factual bases for the plaintiffs’
claimed damages, the plaintiffs must produce some evidence to support these claims.
This they have done by way of proffering answers to interrogatories and deposition
testimony in which each of the plaintiffs attests to his or her emotional suffering, which
they attribute to the experience of being defrauded by Morris Days. See Pls.’ Stmt. of
Facts ¶¶ 76-80 (citing plaintiffs’ respective answers to interrogatories and deposition
testimony). Under Virginia law, the plaintiffs may be able to collect compensatory
damages for these alleged harms, even if they do not prevail on their claims for
intentional infliction of emotional distress. See Fairfax Hosp. v. Curtis, 492 S.E.2d 642,
647 (Va. 1997). Given the plaintiffs’ personal accounts of their suffering, it is not
“legally certain” that a jury would not grant to some or all of the plaintiffs an award of
11
damages in excess of $75,000. 5 Whether or not the plaintiffs ultimately do recover
awards of this amount, the Court is not “very confident that [they] cannot recover” them.
Rosenboro v. Kim, 994 F.2d at 17 (emphasis added). Accordingly, the Court will not
dismiss these actions for want of jurisdiction.
C. Plaintiffs’ Theories of Liability
Morris Days worked at CAIR-VA, and his relationship with the plaintiffs
was centered there. This lawsuit, however, is brought against CAIR, the national parent
organization. The plaintiffs advance three legal theories according to which they assert
CAIR can be held liable for Days’ purportedly tortious conduct. First, they argue that
Mr. Days functioned as an agent (though not a servant) of CAIR itself. See Pls.’ Opp. at
9-20; Pls.’ Reply Memo. at 7-10. 6 Second, the plaintiffs contend that because Days was
employed by CAIR-VA — which, they argue, was itself an agent of CAIR — it follows
5
The plaintiffs’ satisfaction of the amount in controversy requirement is
bolstered by the survey of jury awards that they have offered, which demonstrates the
possibility that an amount in excess of $75,000 feasibly could be awarded to them.
Although this survey was cited only in the plaintiffs’ reply, the Court observes that the
survey originally was put into the record in 2010 as an exhibit to plaintiffs’ opposition to
CAIR’s motions to dismiss. See Dkt. Nos. 14-2, 16. The plaintiffs also rely on the
psychological reports of Dr. Ron Kimball. See Dkt. No. 73-14 in Civil Action No.
10-0022. CAIR protests that the Court specifically limited the parties to conducting fact
rather than expert discovery. Def.’s Resp. Stmt. of Facts at 5; see Scheduling Order of
Feb. 24, 2011, ¶ 2 [Dkt. No. 28]. The Court has not considered the reports of Dr.
Kimball.
6
If Days had been employed directly by CAIR, the relationship would have
been one of employer and employee, which could have made CAIR liable for Days’ torts
under the doctrine of respondeat superior. See infra at 21-25. Although the plaintiffs
point out that CAIR’s organizational deponent referred to Days as “one of our
employees,” see Pls.’ Reply Memo. at 7-9 (quoting Deposition of Khadija Athman (May
10, 2011) at 130:22-131:4 (Pls.’ Ex. 1) [Dkt. No. 81-1]), this lone statement does not
suffice to support a finding that Days was CAIR’s employee as a matter of Virginia law.
12
that CAIR may be held liable for Days’ actions. See Pls.’ Opp. at 20-22; Pls.’ Reply
Memo. at 11-13. The plaintiffs’ third theory of liability is direct rather than vicarious;
they assert that CAIR itself breached duties that it owed to the plaintiffs, and that CAIR
therefore has caused the plaintiffs to suffer harms in addition to those stemming from
Days’ conduct. See Pls.’ Opp. at 9, 25 nn.13-14, 31-32.
The plaintiffs’ third argument — for direct liability — focuses on CAIR’s
alleged role in covering up Days’ misdeeds subsequent to its discovery of them, and
CAIR’s purported failure to adequately make amends to those who might have been
harmed by Days. See Pls.’ Opp. at 25 nn.13-14, 31-32; Pls.’ Stmt. of Facts ¶¶ 119-34.
They contend that CAIR affirmatively misrepresented that Days was an independent
contractor rather than an employee of CAIR-VA, in an apparent effort by CAIR to
distance itself from Days. Pls.’ Stmt. of Facts ¶¶ 108-11, 128. The plaintiffs maintain
that CAIR’s actions give rise to CAIR’s direct liability to plaintiffs for breach of
fiduciary duty, fraud, intentional infliction of emotional distress, and violation of Virginia
consumer protection law. See Pls.’ Opp. at 25 nn.13-14, 31-32.
This argument is easily rejected. Even assuming the truth of the plaintiffs’
assertions, their legal claims fail as a matter of law. Simply put, the plaintiffs do not
articulate any legal basis nor cite any legal authority to support their contention that
CAIR itself owed them a fiduciary duty directly. Nor do they persuasively explain how
CAIR’s taking the position that Days was merely an independent contractor of CAIR-
VA, rather than an employee, might constitute a breach of such a duty, fraud, or a
violation of the Virginia Consumer Protection Act. The Court is similarly unpersuaded
that CAIR’s conduct meets the high standard for liability under a theory of intentional
13
infliction of emotional distress. See infra at 29-30. In essence, the plaintiffs seem to
claim only that, in their view, CAIR owed them a meaningful response in the wake of the
revelation of Days’ wrongful conduct. But this claim presumes an answer to the central
disputed issue in these matters, which is whether CAIR actually bears responsibility for
Days’ conduct. The Court therefore turns to consider the plaintiffs’ two theories of
vicarious liability.
1. Plaintiffs’ First Theory of Vicarious Liability:
Morris Days Was the Agent of CAIR Itself
a. Apparent Agency
The plaintiffs maintain that Morris Days was CAIR’s agent, rendering
CAIR liable for the damages caused by Days’ tortious conduct. Pls.’ Opp. at 9-20; Pls.’
Reply Memo. at 7-10. CAIR counters that Days was neither an employee of CAIR nor
any other type of agent. Def.’s Reply at 3-12; see also Def.’s MSJ at 33-35 (arguing that
Days acted only on behalf of CAIR-VA, and not on behalf of CAIR). The plaintiffs rely
primarily on a theory of what they label “apparent authority,” arguing that CAIR held
Days out to the public as an attorney acting on CAIR’s behalf, and that this representation
— in conjunction with Days’ own representations to the plaintiffs that he was acting as a
CAIR attorney — makes CAIR liable for Days’ torts. See Pls.’ Opp. at 9-16. According
to the plaintiffs, “[t]he evidence in the record establishes that Defendant CAIR
represented to the public that Morris Days was acting as its attorney in its Herndon,
Virginia office, and that Plaintiffs were aware of this representation.” Id. at 11.
Under a theory of apparent or ostensible agency, “[a]n agency [is] created
by operation of law and established by a principal’s actions that would reasonably lead a
14
third person to conclude that an agency exists.” Sanchez v. Medicorp Health System,
618 S.E.2d 331, 333 (Va. 2005) (quoting BLACK’S LAW DICTIONARY 67 (8th ed. 2004))
(first alteration in original) (internal quotation marks omitted). The Supreme Court of
Virginia has never endorsed this theory as a basis of tort liability. See id. at 335;
Craddock v. A&E Moving & Storage, Inc., 82 Va. Cir. 491 (Va. Cir. Ct. 2011). The
court in Sanchez did, however, discuss two alternative articulations of the theory. First
drawing on the Restatement (Second) of Torts, the court noted that an agency relationship
may arise where a third party accepts services “in the reasonable belief that the services
are being rendered by the employer or by his servants.” Sanchez v. Medicorp Health
System, 618 S.E.2d at 334 (quoting RESTATEMENT (SECOND) OF TORTS § 429 (1965)).
The court then cited the Restatement (Second) of Agency, which provides that “[o]ne
who represents that another is his servant or other agent and thereby causes a third person
justifiably to rely upon the care or skill of such apparent agent is subject to liability to
the third person” for the apparent agent’s torts. Id. (quoting RESTATEMENT (SECOND) OF
AGENCY § 267 (1958)). Under either standard, the principal’s actions must cause the
third party either to reasonably believe in, or to justifiably rely upon, the status of the
apparent agent.
Assuming arguendo that the plaintiffs have invoked a viable ground for
tort liability under Virginia law, the record demonstrates that CAIR’s public
representations regarding Days could not have led the plaintiffs to reasonably believe that
Days worked for CAIR, nor that the plaintiffs justifiably relied on such a belief. The
plaintiffs highlight the fact that CAIR posted on its website two media stories in which
Days’ legal work was celebrated. In one story, a local NBC affiliate describes CAIR’s
15
success in helping individuals to resolve immigration matters, and it quotes “CAIR’s
Morris Days” as stating that, “[w]e petitioned the courts, and they’ve had a change of
heart.” Pls.’ Ex. 19 [Dkt. No. 74-21]. Another story reports that “Morris Days, an
attorney with the Maryland-Virginia chapter of the Council on American-Islamic
Relations, has helped [sixteen persons] file [immigration petitions] at federal courthouses
in the region in recent months.” Pls.’ Ex. 20 [Dkt. No. 74-22]. But CAIR points out a
critical factual flaw in the plaintiffs’ apparent agency argument, namely that the two
media stories describing Days as a CAIR attorney did not appear on CAIR’s website until
December 2007, after each of the plaintiffs already had initiated their respective
relationships with Days. Def.’s Reply at 5-6. Thus, none of the plaintiffs could have
relied on CAIR’s representations in engaging Days as their legal representative, nor could
those representations have given them a reasonable belief that Days was working on
behalf of CAIR.
b. General Agency Principles
The plaintiffs’ second argument in support of the theory that the
relationship between CAIR and Days was one of principal and agent relies on the general
definition of agency, which is “the relationship which results from the manifestation of
consent by one person to another that the other shall act on his behalf and subject to his
control, and the agreement by the other so to act.” Allen v. Lindstrom, 379 S.E.2d 450,
454 (Va. 1989) (quoting Raney v. Barnes Lumber Corp., 81 S.E.2d 578, 584 (Va. 1954))
(internal quotation marks omitted). “The power of control is an important factor in
determining whether an agency relationship exists.” Reistroffer v. Person, 439 S.E.2d
376, 378 (Va. 1994); see also Allen v. Lindstrom, 379 S.E.2d at 454 (“The power of
16
control is the determining factor in ascertaining the alleged agent’s status.”). If Days was
acting on CAIR’s behalf and subject to CAIR’s control, there would be an agency
relationship between them, and the plaintiffs argue that such was the case. See Pls.’ Opp.
at 16-20.
Under Virginia law, “whether an agency relationship exists is a question to
be resolved by the fact finder unless the existence of the relationship is shown by
undisputed facts or by unambiguous written documents.” Acordia of Va. Ins. Agency,
Inc. v. Genito Glenn, L.P., 560 S.E.2d 246, 250 (Va. 2002) (quoting State Farm Mut.
Auto. Ins. Co. v. Weisman, 441 S.E.2d 16, 19 (Va. 1994)) (alteration and internal
quotation marks omitted); see also Reistroffer v. Person, 439 S.E.2d at 378 (“The
question of agency vel non is one of fact for the fact finder unless the existence of an
agency relationship depends upon unambiguous written documents or undisputed
facts.”). “Agency may be inferred from the conduct of the parties and from the
surrounding facts and circumstances.” Acordia of Va. Ins. Agency, Inc. v. Genito Glenn,
L.P., 560 S.E.2d at 250 (quoting Drake v. Livesay, 341 S.E.2d 186, 189 (Va. 1986))
(alteration and internal quotation marks omitted). “[W]hat evidence shall be sufficient to
establish agency in any given case . . . must be determined in view of the facts in each
particular case.” Id. (quoting Bloxom v. Rose, 144 S.E. 642, 643 (Va. 1928)). The party
alleging the existence of an agency relationship bears the burden of proving it. Id. at 249.
The plaintiffs contend that because Days’ workplace supervisor — Khalid
Iqbal — served simultaneously as both CAIR’s Director of Operations and as CAIR-
VA’s Volunteer Acting Executive Director, CAIR had direct control over Days through
Iqbal. Pls.’ Opp. at 16-20; Pls.’ Stmt. of Facts ¶¶ 87-105. CAIR responds by arguing
17
that Iqbal’s supervision and control of Days were executed strictly in his capacity as the
Executive Director of CAIR-VA. Def.’s MSJ at 40-43; Def.’s Reply at 7-9. It is
undisputed that Iqbal had authority to control Days’ conduct in the workplace. See Iqbal
2011 Dep. at 69:18-70:6, 94:21-95:3. The question is whether the plaintiffs have raised a
genuine issue of material fact as to whether CAIR itself — as opposed to CAIR-VA —
controlled Days by way of his relationship to Iqbal. The Court concludes that they have
not and therefore will grant judgment to CAIR with respect to this theory of vicarious
liability.
Khalid Iqbal was employed by CAIR as its Director of Operations, and
CAIR lent Iqbal on a part-time basis to CAIR-VA, where he served as Volunteer Acting
Executive Director, with supervisory authority over Morris Days. See Iqbal 2011 Dep. at
44:20-23, 47:1-48:8, 69:18-70:6, 94:21-95:3. The plaintiffs maintain that Iqbal’s role as
CAIR’s Director of Operations included within its scope Iqbal’s service as Executive
Director of CAIR-VA, and thus his concomitant role as the workplace supervisor of
Morris Days. See Pls.’ Opp. at 19. They cite Iqbal’s deposition testimony, in which he
testified that part of his duties as CAIR’s Director of Operations entailed managing
relations with CAIR’s chapters. See Pls.’ Stmt. of Facts ¶¶ 87-89 (citing Iqbal 2011 Dep.
at 17:21-24:22). The plaintiffs also point out that CAIR paid Iqbal’s salary, see Iqbal
2011 Dep. at 19:19-20:5, 42:19-43:7, and that CAIR considered Iqbal’s time spent at
CAIR-VA to be a form of donation from the national headquarters to its chapter office.
Pls.’ Stmt. of Facts ¶ 100 (citing email from Parvez Ahmed, Chairman of CAIR, to
Rizwan Jaka, Chairman of CAIR-VA’s board (Pls.’ Ex. 25) [Dkt. No. 81-8]). In
18
addition, the plaintiffs note that Iqbal was often in contact simultaneously with officers
and directors at CAIR headquarters and with the directors of CAIR-VA. Pls.’ Opp. at
19-20. 7 The plaintiffs argue that, in sum, “Iqbal’s supervisory role over Days was
financed by and on behalf of Defendant CAIR and fully aligned with his role at
Defendant CAIR to supervise CAIR-VA as a chapter office,” id. at 20, and they assert
that “given the record in this case it is simply not credible to believe that Defendant
CAIR could not order Iqbal to terminate Days or to impose controls over him.” Id. at 19.
To the contrary, Iqbal has stated in a declaration proffered by CAIR that
“no CAIR-National employee ever told [him] how to manage the operations of CAIR-
VA,” nor did CAIR “condition[] [his] salary as Director of Operations in any way upon
the manner in which [he] served as CAIR-VA’s acting executive director.” Declaration
of Khalid Iqbal ¶ 7 (Def.’s Ex. BB) [Dkt. No. 85-2]. Likewise, several former members
of CAIR-VA’s board state in declarations that CAIR-VA made management decisions
independently, not subject to control by CAIR, and that Iqbal carried out the directives of
CAIR-VA’s board. See Declaration of Hassan Ahmad (“Ahmad Decl.”) ¶¶ 2-10 (Def.’s
Ex. AA) [Dkt. No. 85-2]; Declaration of Rizwan Jaka (“Jaka Decl.”) ¶¶ 6-10 (Def.’s Ex.
CC) [Dkt. No. 85-2]; Declaration of Karen Zhussanbay ¶¶ 6-9 (Def.’s Ex. DD) [Dkt. No.
85-2]. 8 For example, Hassan Ahmad states that “[i]n [Khalid Iqbal’s] capacity as
7
The plaintiffs cite no evidence to support this point, but the Court observes
that Iqbal, in a declaration submitted along with CAIR’s reply brief, states that “CAIR
National personnel were regularly consulted about issues” relating to CAIR-VA’s
operations. Declaration of Khalid Iqbal ¶ 4 (Def.’s Ex. BB) [Dkt. No. 85-2].
8
The plaintiffs raise no objection to CAIR’s submission of these
declarations with its reply brief, which, given the plaintiffs’ request for partial summary
judgment in their favor, also serves as an opposition brief to their “de facto” cross-
19
executive director of CAIR-VA, Mr. Iqbal oversaw CAIR-VA volunteers and employees.
If the CAIR-VA board would make a decision regarding personnel, including hiring and
firing decisions and salary, the board would be presented with the issue and then vote on
it. Mr. Iqbal would then take responsibility for implementing the outcome of the board’s
decision.” Ahmad Decl. ¶ 9. Similarly, Rizwan Jaka states that, “[a]s Mr. Iqbal ran the
operations of CAIR-VA as its acting executive director, he did so pursuant to the
supervision of CAIR-VA’s volunteer board [and] [h]e was bound to the decisions made
by the CAIR-VA volunteer board.” Jaka Decl. ¶ 7. Jaka specifically notes that “Mr.
Iqbal sought CAIR-VA volunteer board approval for [] terminating . . . Morris Days.”
Id. ¶ 10.
The plaintiffs’ contention — that because CAIR was Iqbal’s direct
employer and CAIR lent Iqbal to CAIR-VA to serve as its acting Executive Director,
Iqbal’s day-to-day management of CAIR-VA ipso facto entailed CAIR’s control over
Morris Days — is unsupported by the facts in the record. Nor do the plaintiffs cite any
legal authority to ground this proposition. Furthermore, that Iqbal sometimes consulted
with CAIR headquarters regarding CAIR-VA’s operations does not suggest that CAIR
had any control over decisions Iqbal made in his capacity as Executive Director of the
chapter office; mere consultation cannot support an inference that such control existed.
Nor does the Court find it at all consequential that Iqbal used “his CAIR National email,
letterhead, and title” in the course of supervising Days. Pls.’ Opp. at 20 (citing email
from Iqbal to Days, signed as “Director of Operations CAIR” (Pls.’ Ex. 22) [Dkt. No.
81-5]).
motion. See Pls.’ Motion for Leave to File Reply Brief [Dkt. No. 86]; Pls.’ Reply Memo.
at 11 n.6.
20
Finally, the plaintiffs emphasize that after the revelation of Days’ conduct
in 2008, CAIR-VA turned over all of its client files to CAIR, an act which, according to
the plaintiffs, is indicative of the control that CAIR held with respect to Days and his
civil rights work. See Pls.’ Reply Memo at 10; Iqbal 2011 Dep. at 120:13-122:12. The
Court is unpersuaded that CAIR’s taking possession of CAIR-VA’s legal files after the
events relevant to plaintiffs’ complaints regarding Days’ conduct somehow demonstrates
that CAIR exercised control over Days. The plaintiffs are drawing an inference that
simply does not follow from the facts cited.
Because the plaintiffs fail to raise a genuine issue of material fact
regarding whether Morris Days was the agent of CAIR, the Court will grant judgment to
CAIR on this theory of vicarious liability.
2. Plaintiffs’ Second Theory of Vicarious Liability:
Morris Days Was CAIR-VA’s Employee,
and CAIR-VA Was CAIR’s Agent
The plaintiffs’ second theory of vicarious liability focuses on an alleged
agency relationship between CAIR and CAIR-VA. They argue that because Days was an
employee of CAIR-VA, the chapter office would be liable for his tortious conduct under
the doctrine of respondeat superior, and, in turn, CAIR-VA’s liability may be imputed to
CAIR, its purported principal.
a. Morris Days Was CAIR-VA’s Employee
The first link in the chain concerns Days’ relationship to CAIR-VA. If
Days was an employee of CAIR-VA, then, under the doctrine of respondeat superior,
CAIR-VA would be liable for Days’ tortious conduct provided that his conduct occurred
21
within the scope of his employment. See Plummer v. Center Psychiatrists, Ltd., 476
S.E.2d 172, 173 (Va. 1996). If Days was merely an independent contractor, however,
then CAIR-VA’s vicarious liability would be more difficult to establish. See Southern
Floors & Acoustics, Inc. v. Max-Yeboah, 594 S.E.2d 908, 911 n.1 (Va. 2004); McDonald
v. Hampton Training School for Nurses, 486 S.E.2d 299, 300-01 (Va. 1997).
The Supreme Court of Virginia has explained the distinction between
these two forms of relationship:
The factors which are to be considered when determining
whether an individual is an employee or an independent
contractor are well established: (1) selection and
engagement; (2) payment of compensation; (3) power of
dismissal; and (4) power to control the work of the
individual. The fourth factor, the power to control, is
determinative. This factor refers to control over the means
and method of performing the work. It is immaterial
whether the employer exercises this control; the test is
whether the employer has the power to exercise such
control.
McDonald v. Hampton Training School for Nurses, 486 S.E.2d at 301. Furthermore,
“[w]hether a person is an employee or an independent contractor is generally a question
of fact for the jury,” although “[w]here the evidence admits of only one conclusion, the
question is a matter of law.” Id. at 304.
The Court agrees with the plaintiffs that the record admits of only one
conclusion on this point: Days was an employee of CAIR-VA, not an independent
contractor. Days’ relationship with CAIR-VA satisfies the four factors set forth by the
Supreme Court of Virginia in McDonald: CAIR-VA hired Days, see Iqbal 2011 Dep. at
70:23-71:19, 87:6-89:18; paid him compensation, see id.; held the power to dismiss him,
which it ultimately exercised, see id. at 120:22, 163:16-22; and also retained the power to
22
control his working activities. See id. at 69:18-70:6, 94:21-95:3. That CAIR-VA
characterized Days as an independent contractor rather than as a salaried employee for
financial reasons, see id. at 87:6-89:18, is immaterial to the question whether, under the
law of Virginia, he served as an employee of CAIR-VA.
“[P]ursuant to the doctrine of respondeat superior, an employer is liable
for the tortious acts of its employee if the employee was performing his employer’s
business and acting within the scope of his employment when the tortious acts were
committed.” Plummer v. Center Psychiatrists, Ltd., 476 S.E.2d at 173. The vicarious
liability of an employer under this doctrine may extend to liability for its employee’s
commission of intentional torts, such as fraud on a third party. See Gina Chin & Assocs.,
Inc. v. First Union Bank, 537 S.E.2d 573, 576-79 (Va. 2000); Dudley v. Estate Life
Insurance Co., 257 S.E.2d 871, 874-77 (Va. 1979). “When an employer-employee
relationship has been established, the burden is on the [employer] to prove that the
[employee] was not acting within the scope of his employment when he committed the
act complained of, and . . . if the evidence leaves the question in doubt it becomes an
issue to be determined by the jury.” Gina Chin & Assocs., Inc. v. First Union Bank, 537
S.E.2d at 577-78 (quoting Kensington Assocs. v. West, 362 S.E.2d 900, 901 (Va. 1987))
(some alterations in original) (internal quotation marks omitted). When determining
whether a tortious act was committed within the scope of a servant’s employment, “the
issue is ‘whether the service itself, in which the tortious act was done, was within the
ordinary course of such business.’” Id. at 578 (quoting Davis v. Merrill, 112 S.E. 628,
631 (Va. 1922)).
23
Sometimes in its motion for summary judgment, CAIR seems to agree
with the plaintiffs’ respondeat superior argument with regard to Days’ conduct, stating
plainly that “[t]he injuries that Days caused Plaintiffs — though not actually authorized
by CAIR-VA . . . — were done ‘in the course of employment’ with CAIR-VA.” Def.’s
MSJ at 33 (quoting McNeill v. Spindler, 62 S.E.2d 13, 18 (Va. 1950)); see also id. at
33-35. But later CAIR tries to insulate the now defunct CAIR-VA from any
responsibility for Days’ wrongdoing, saying it should stop with Days. CAIR argues that
CAIR-VA had made it known that it was not a “legal services organization,” as well as
that CAIR-VA staff members were not permitted to accept fees from clients. Id. at
44-47. CAIR maintains that the plaintiffs knew or should have known of these
conditions, and that Days therefore was acting outside the scope of the “apparent
authority” invested in him by his position at CAIR-VA when he agreed to provide legal
services, for a fee, to the plaintiffs. See id.
Days’ interactions with the plaintiffs — which centered around his
agreement to perform legal services for them — seem to fall quite neatly within the
ordinary course of his business as CAIR-VA’s “Resident Attorney” and “Civil Rights
Manager.” At most, CAIR’s arguments might raise genuine issues of material fact
regarding whether the plaintiffs were aware of the scope of Days’ authority, and how that
awareness could affect the determination of respondeat superior liability. But the Court
need not resolve these issues because, as explained below, it ultimately concludes that the
plaintiffs fail to raise any genuine issues of material fact regarding whether CAIR-VA
was CAIR’s agent. Accordingly, even assuming that CAIR-VA would be vicariously
liable for Days’ actions under the doctrine of respondeat superior because Days was
24
CAIR-VA’s employee acting within the scope of his employment, CAIR-VA’s liability
could not move up the chain to CAIR.
b. CAIR-VA Was Not CAIR’s Agent
As already described earlier in this Opinion, see supra at 16-17, Virginia
law “define[s] agency ‘as the relationship which results from the manifestation of consent
by one person to another that the other shall act on his behalf and subject to his control,
and the agreement by the other so to act,’” Allen v. Lindstrom, 379 S.E.2d at 454
(quoting Raney v. Barnes Lumber Corp., 81 S.E.2d at 584), and “[t]he power of control is
an important factor in determining whether an agency relationship exists.” Reistroffer v.
Person, 439 S.E.2d at 378. A principal-agent relationship between CAIR and CAIR-VA
would provide the legal basis for imputing CAIR-VA’s liability to CAIR. See Murphy v.
Holiday Inns, Inc., 219 S.E.2d 874, 875-78 (Va. 1975) (addressing franchisor’s liability
based on alleged negligence of franchisee); see also Infant C. v. Boy Scouts of America,
391 S.E.2d 322, 326 (Va. 1990) (noting that it was proper to submit to jury the question
whether local Boy Scout troop was agent of Boy Scouts of America, which could have
led to national organization’s liability for troop’s negligent hiring of Scoutmaster).
The plaintiffs — who ultimately bear the burden of proving the existence
of an agency relationship between CAIR-VA and CAIR — cite various facts from which
they infer that CAIR-VA functioned as CAIR’s agent. With respect to manifestations of
CAIR’s consent that CAIR-VA act on its behalf, they highlight that CAIR posted on its
website news stories about Days’ work, see supra at 15-16, which, according to the
plaintiffs, constitute public representations that CAIR’s chapters comprise elements of
the national organization. See Pls.’ Opp. at 20-21. They also point to CAIR-VA’s own
25
representations, citing a promotional document in which CAIR-VA seemed to describe
itself as being essentially equivalent to CAIR. Id. at 21 (citing Pls.’ Ex. 21 [Dkt. No.
74-23]).
With regard to CAIR’s purported control over CAIR-VA, the plaintiffs
cite facts including: Khalid Iqbal’s alleged dual role as Director of Operations for CAIR
and as Executive Director of CAIR-VA, Pls.’ Stmt. of Facts ¶¶ 87-99; the substantial
financial support provided by CAIR to CAIR-VA, which amounted to roughly a third of
CAIR-VA’s operating budget, id. ¶ 101 (citing Deposition of Rizwan Jaka (June 12,
2012) at 15:14-20:4 (Pls.’ Ex. 6) [Dkt. No. 74-8]); a communication from CAIR’s
chairperson, Parvez Ahmed, to a CAIR-VA board member, from which the plaintiffs
infer that Ahmed believed that CAIR held authority to mandate CAIR-VA’s dissolution,
id. ¶¶ 100, 102-03 (citing Pls.’ Ex. 25 [Dkt. No. 81-8]); the absence of a written
agreement governing CAIR-VA’s rights in relation to its parent organization, id. ¶ 105
(citing Iqbal 2011 Dep. at 28:18-30:20, 34:2-35:25); and CAIR’s having taken possession
of CAIR-VA’s client files after the discovery of Days’ wrongdoing. Id. ¶ 119 (citing
Iqbal 2011 Dep. at 120:13-122:12); see also Pls.’ Opp. at 20-22; Pls.’ Reply Memo. at
11-13. 9
These facts, even when viewed in the light most favorable to the plaintiffs,
could not support a reasonable jury’s finding that CAIR-VA was the agent of CAIR. As
explained supra at 19-20, there are simply no legal or factual bases for the plaintiffs’
9
CAIR raises a hearsay objection to the plaintiffs’ reliance on the e-mail
from Parvez Ahmed to the CAIR-VA board member. Def.’s Resp. Stmt. of Facts at 21.
But the plaintiffs appear to be relying on this communication as an indication of Mr.
Ahmed’s state of mind with respect to his understanding of the relationship between
CAIR and CAIR-VA.
26
assertion that Khalid Iqbal’s role as CAIR-VA’s Volunteer Acting Executive Director
somehow gave CAIR control over Days, and the same conclusion holds true with respect
to CAIR’s purported control over CAIR-VA. Likewise, the Court already has rejected
the contention that CAIR’s taking possession of CAIR-VA’s legal case files after the
discovery of Days’ wrongdoing was indicative of CAIR’s control over Days or CAIR-
VA. See supra at 21. The Court also is unpersuaded that CAIR’s provision of financial
support to CAIR-VA entailed control over the chapter office; the plaintiffs cite no
evidence to support such an inferential leap.
Similarly, the plaintiffs read far too much into the email written by
CAIR’s chairperson, Parvez Ahmed, and sent to a member of CAIR-VA’s board. In the
email, Mr. Ahmed states that in 2005, CAIR had “pulled back from recommending the
dissolution of [CAIR-VA].” Pls.’ Ex. 25 [Dkt. No. 81-8] (emphasis added). Mr. Ahmed
also refers to a prior understanding between CAIR and CAIR-VA related to their
collective fundraising efforts in the Washington, D.C. region, and he states that “[i]t was
resolved that we [would] periodically review this arrangement keeping open the
possibility of future dissolution [of CAIR-VA].” Id. The plaintiffs contend that Ahmed
“makes it clear that Defendant CAIR reserved the right to dissolve CAIR-VA.” Pls.’
Stmt. of Facts ¶ 103. But the actual text of the email demonstrates only that Ahmed
understood the question of CAIR-VA’s continued existence to be a matter of discussion
between CAIR-VA and CAIR. Ahmed’s words are not susceptible to the inference
plaintiffs draw.
The plaintiffs also infer, based on the apparent absence of a written
agreement defining the terms of CAIR-VA’s use of CAIR’s intellectual property
27
(including CAIR’s name and its logo), that “CAIR-VA operated entirely at the pleasure
of Defendant CAIR.” Pls.’ Stmt. of Facts ¶ 105. Plaintiffs’ counsel explored this issue
when deposing Khalid Iqbal, who stated that to his knowledge, CAIR had never faced a
situation where a chapter office was engaging in conduct that could degrade CAIR’s
brand, which might have prompted CAIR to attempt to close down the chapter or to force
a change in its behavior. See Iqbal 2011 Dep. at 34:11-35:25. But the legal conclusion
that plaintiffs draw from these facts — that CAIR possessed plenary control over CAIR-
VA because “at best there was nothing more than an at-will oral agreement” between
them, see Pls.’ Stmt. of Facts ¶ 105 — is speculative, and the plaintiffs are unable to cite
any specific facts actually demonstrating CAIR’s retention of such control. The only
direct evidence in the record regarding the relationship between CAIR and CAIR-VA
indicates that CAIR-VA’s board managed its affairs independently. See supra at 19-20
(citing the declarations of former CAIR-VA board members).
In sum, on this record, the plaintiffs fail to demonstrate the existence of
genuine issues of material fact regarding whether CAIR-VA was CAIR’s agent. Instead,
they cite facts that show no more than a cooperative relationship between the two entities;
these facts cannot support the inferences that the plaintiffs argue can be drawn from
them. Accordingly, the Court will grant judgment to CAIR on this second theory of
vicarious liability. 10
10
The plaintiffs also advance an alternative argument, that “CAIR utilized
CAIR-VA as an alter ego to effect the fraudulent cover-up of Days’s tortious conduct,”
warranting application of the principle that “allows a court to pierce the corporate veil
when the control by one entity over another is used to effect or protect a fraud.” Pls.’
Opp. at 22. Even assuming that principles of veil-piercing apply with respect to the
relationship between CAIR and CAIR-VA, the Court summarily rejects this argument,
28
D. Intentional Infliction of Emotional Distress
The foregoing analysis establishes that judgment must be granted to CAIR
on all of the plaintiffs’ claims. But CAIR makes an additional argument concerning the
plaintiffs’ claims for intentional infliction of emotional distress (“IIED”), contending at
the threshold that Morris Days’ conduct cannot give rise to liability for this tort. To
succeed on an IIED claim under Virginia law, the plaintiffs must show that “(1) the
wrongdoer’s conduct was intentional or reckless; (2) the conduct was outrageous and
intolerable; (3) there was a causal connection between the wrongdoer’s conduct and the
emotional distress; and (4) the emotional distress was severe.” Lopez v. CAIR, 741 F.
Supp. 2d at 237-38 (quoting Hatfill v. The New York Times Co., 532 F.3d 312, 325-26
(4th Cir. 2008)). Because the tort of intentional infliction of emotional distress is
disfavored under Virginia law, Virginia courts have defined the tort narrowly. See, e.g.,
Ruth v. Fletcher, 377 S.E.2d 412, 415-16 (Va. 1989). In particular, to prevail on an IIED
claim, a plaintiff must demonstrate that he or she has experienced emotional injury so
severe that “no reasonable person could be expected to endure it.” Russo v. White, 400
S.E.2d 160, 163 (Va. 1991).
At the motion to dismiss stage in these cases, the Court recognized that it
was a “close question” whether the plaintiffs’ allegations of emotional distress were
sufficiently severe to state claims for IIED. Lopez v. CAIR, 741 F. Supp. 2d at 238. The
Court permitted the claims to advance mainly because the plaintiffs had included the
allegation that Days’ actions resulted in their inability to sustain employment. See id.
Now, after discovery, it is evident that the plaintiffs cannot carry their burden to support
finding no basis upon which to conclude that CAIR utilized CAIR-VA to perpetrate a
fraud or other type of wrongdoing.
29
this allegation. CAIR cites deposition testimony and answers to interrogatories in which
several of the plaintiffs admit that they have continued to work despite their alleged
emotional suffering. Def.’s MSJ at 57-59. The plaintiffs do not counter CAIR’s
assertion that none of them has been forced to exit the workforce due to depression or
other psychological problems. See Pls.’ Opp. at 29-30. Their failure to raise any genuine
issues of material fact regarding their degree of emotional suffering provides an
additional ground for granting judgment in CAIR’s favor on the plaintiffs’ IIED claims.
IV. CONCLUSION
For the foregoing reasons, the Court will grant CAIR’s motion for
summary judgment, and it will reject the plaintiffs’ request for partial summary judgment
under Rule 56(f) of the Federal Rules of Civil Procedure. A separate Order accompanies
this Opinion.
SO ORDERED.
/s/________________________
PAUL L. FRIEDMAN
United States District Judge
DATE: January 29, 2015
30
|
225 Md. 574 (1961)
172 A.2d 132
MARYLAND STATE FAIR AND AGRICULTURAL SOCIETY, INC.
v.
SUPERVISOR OF ASSESSMENTS OF BALTIMORE COUNTY
[No. 303, September Term, 1960.]
Court of Appeals of Maryland.
Decided June 14, 1961.
The cause was argued before BRUNE, C.J., and HENDERSON, PRESCOTT, HORNEY and MARBURY, JJ.
Richard W. Emory, with whom were Thomas P. Perkins, III, James H. Cook and Venable, Baetjer & Howard on the brief, for the appellant.
Lawrence F. Rodowsky, Assistant Attorney General, with whom were Thomas B. Finan, Attorney General, Johnson Bowie, County Solicitor of Baltimore County, and Walter Haile, Deputy County Solicitor, on the brief, for the appellee.
PRESCOTT, J., delivered the opinion of the Court.
This is an appeal from an order of the Circuit Court of Baltimore County entered on December 7, 1960, reversing in part an order of the Maryland Tax Court by holding that Maryland State Fair and Agricultural Society, Inc. (hereinafter sometimes called the "Society") must pay ordinary *577 (property) taxes for the year 1959 on that portion of its property used to conduct horse racing as a feature attraction of the Maryland State Fair.
The case originated in the Appeal Tax Court of Baltimore County which divided the Fair Grounds owned by the Society into what that court designated as "Exhibition Section" and "Race Track Section." The Appeal Tax Court held that the Society was exempt by the Code (1957 and 1960 Cum. Supp.), Article 81, Section 9 (7) and (8) from paying property taxes on the "Exhibition Section," but that it must pay taxes on land and improvements which that court listed in the "Race Track Section."
The Maryland Tax Court held that the Society is entitled to an exemption as to "all of the 83.410 acres of land [the acreage being stipulated] and improvements erected thereon owned by the Society at Timonium." This, of course, included both the "Exhibition Section" and the "Race Track Section."
The Circuit Court of Baltimore County affirmed the Maryland Tax Court in holding that the Society is a non-profit educational and charitable institution, exempt from property taxes under Article 81, Section 9 (7) and (8), but reversed the Maryland Tax Court in part by holding that the Society is taxable on most of the property which the Appeal Tax Court had listed under the designation "Race Track Section." Under the decision of the Circuit Court, the Society must pay taxes for the year 1959 on 42.961 acres of the Fair Grounds and on certain improvements of which the grandstand, race track, bleachers, four stables and jockeys' quarters are the principal items. The record does not clearly show that the midway was included in this 42.961 acres, but we were informed during argument that it was.
The Society was organized in 1950 by a group of altruistic and public-spirited citizens to purchase the Fair Grounds and preserve the State Fair when the Maryland Jockey Club threatened to sell the property for use as an industrial site. A large number of citizens of Maryland subscribed to $600,000 in bonds to purchase the Fair Grounds for $500,000 *578 and to provide $100,000 in working capital. The certificate of incorporation states the purposes to be:
"the acquisition and operation of Maryland State Fair Grounds (known as Timonium Fair Grounds), Baltimore County, Maryland in the best interests of those engaged in agricultural, horticultural and related pursuits; the betterment of the conditions of those engaged in agricultural and horticultural pursuits, the improvement of the grade of their products, and the development of a higher degree of efficiency in their respective occupations; the conduct of a Maryland State Fair at Maryland State Fair Grounds to encourage the development of better agricultural and horticultural products through a system of awards; the education and instruction of those engaged in agricultural and horticultural pursuits; the conduct of such other entertainments, amusements, contests, horse shows, horse racing and trials of speed, expositions and other activities at Maryland State Fair Grounds as may aid and assist the aforesaid purposes; and any business or objects designed or calculated to aid, assist or achieve these purposes."
The Society has operated since 1950 in accordance with these declared purposes, and no dividend or distribution has ever been declared, or paid to stockholders. No director or officer has ever been paid any salary or other compensation, except the general manager, who is a year round employee.
The question for our determination is whether the Society's exemption from property taxes under Subsections (7) and and (8), mentioned above, applies to all of the land and improvements constituting the Maryland State Fair Grounds, or only a part thereof?
The appellee asserts that under the provisions of said Subsections 7 and 8 there are four elements in the test which the property of the appellant must meet before it qualifies for the privilege of exemption from taxation: (1) The property must be that of an educational or charitable institution, (2) *579 no part of the net income (with an exception not here pertinent) of the institution can inure to the benefit of any private shareholder or individual; (3) the property must be actually used by the educational or charitable institution; (4) and the use of the property must be reasonably necessary for the charitable or educational work of the institution. We agree.[1]
Appellee concedes that the appellant is either an "educational" or "charitable" institution, or both, compare 36 Op. A.G. 303, and that the appellant and the use of its property meet the requirements of (2) and (3); but the appellee earnestly contends that the use of that portion of appellant's property, ruled by the court below to be taxable, is not reasonably necessary for the charitable or educational work of the institution. Our question, therefore, narrows to this single contention.
In order to determine whether the use of the appellant's property is reasonably necessary for its educational and charitable purposes within the spirit, intent and wording of the legislature in enacting Subsections 7 and 8, it is necessary to consider the background and historic aspects of the Society's fairs, and of fairs in general. Fairs are events where people congregate to present and observe exhibitions that disclose how other people work, live and play; for the purpose of buying and selling live stock and commodities; for holding and participating in contests; and for pleasure and enjoyment. The word "fair" is derived from the Latin word feria, meaning a holiday or feast day, but fairs were held in many countries of the world long before the time of the Romans.
The very ancient fairs were connected with religious matters, but, even at that early date, they usually staged games and contests, the famous Olympic games being held at one of the fairs of Ancient Greece. As time wore on, "market" fairs were held, where commodities were bartered and sold, and thereafter came the "agricultural" fairs.
*580 The first one of this latter type to be held in this country was the Berkshire Cattle Show, about 1810. For the first time, women actively participated, sending in their pickles, jellies and other household goods, and receiving medals and prizes for the best. This type of fair became very popular throughout America, especially in the rural areas. Corn huskings, quilting bees, athletic contests, horse races, automobile races, and spectacular events were added to the programs, as time passed, for amusement, pleasure and instruction.[2]
After pointing out the many advantages accruing from the holding of agricultural fairs, 1 Ency. Britannica, pp. 418, 419 (1959 Ed.) has this to say:
"In its early years the agricultural fair was one of the main recreations available to farm families. The form that the recreational and amusement facilities should take has been debated since the beginning of fairs. Critics of the programs have charged that the amusements have overshadowed the exhibits. Early proponents of extensive recreational features replied that the farmer was entitled to relaxation and amusement, while during the 20th century the fair had to compete with many other means of recreation. Much controversy centered around the question of horse racing. This event grew steadily in popularity from its introduction as a feature of a few agricultural fairs in the 1830s, until by 1900 it had proved its importance as a permanent and colourful part of the annual program. By the mid-20th century the typical agricultural fair had an extensive entertainment program that appealed to urban and rural audiences alike.
"The modern county or state fair, with its permanent buildings devoted to farm produce, livestock, farm machinery, automobiles and handicraft, midway, horse and auto racing, dance pavilions, spectacular evening shows and fireworks, has something *581 to appeal to every taste and yet still demonstrates agricultural progress and achievement.
* * *
"The agricultural fairs and shows that survived until past the middle of the 20th century seemed well established and continued as a major force for a better agriculture, serving both the educational and recreational needs of the nation."
This brings us to the actual operation of the Society in conducting Maryland State Fairs at Timonium. The first fair at this location was held in about 1878, and as early as 1903 it became known as the Maryland State Fair, and is now officially designated as such. The evidence clearly shows that horse racing has been a traditional feature attraction of the Fair for many years. Newspaper articles as early as 1894 disclose "First-Class Racing This Year" as the main event of the Fair.
The Fair runs for approximately two weeks each year under the supervision of the Maryland State Farm Board the first week being basically set aside for youth groups; the second for adults. A typical day at the Fair was described by the Society's president as beginning at 9:00 a.m. with 4-H (a national association of farm youth clubs, which teaches young people all phases of farm life) and F.F.A. (another national organization for instructing farm youths) dairy and livestock exhibits, and 4-H dairy cattle, livestock and egg-grading judging contests. These are followed throughout the day with exhibits of baked and canned foods, jellies, candies, clothing, needlework, arts and crafts and flower arrangements, etc. Some of the exhibits are entered by the Farm Bureau and State Grange, two national farm organizations for adults, by the University of Maryland Extension Service, and by the State Department of Forests and Parks. There are also demonstrations in meat cutting and cooking, in hand weaving, lace making, pottery making and other crafts. Horse races are held in the afternoon, except Sundays. The midway entertainment continues throughout the day, and in the evening the Farm Queen Dinner is held.
There was expert testimony tending to establish the many *582 beneficial practical results and the educational value of the overall operation of the Fair.
The horse racing is conducted on a one-half mile track under license from the State Racing Commission with pari-mutuel betting permitted. No races are held except during the Fair. Breeders are permitted to use the stables and the track, without charge, when the Fair is not in progress. The midway has the usual merry-go-round, Ferris wheel and other rides, bingo, wheel-of-fortune, hit-the-baby-doll and other games. And on each night during the Fair, a theatrical show is given in front of the grandstand.
All of the above activities are conducted on one tract of land (stipulated as consisting of some 83 acres), which is owned and operated by the Society as an integrated whole. The segregation into the "Exhibition" and "Race Track" sections was done by the Appeal Tax Court of Baltimore County. The land is improved by numerous fair and exhibition buildings, included among which is a large modern grandstand, completed in 1959 at a cost of about $1,000,000; and this building apparently is the cause of this litigation. The large investment in the grandstand was not initiated by officials of the Society, but was the result of a suggestion from the Racing Commission that the old grandstand would have to be replaced, if the Fair desired to continue high-class racing as an attraction. The grandstand is used for horse racing on twelve afternoons of the Fair, but it is also used for many other events during the Fair and at various times during the year. Each evening of the Fair, it is used for theatrical shows, horse-pulling contests or other entertainments. It is also used for the Farm Queen Dinner, for the crowning of the Farm Queen, for a 4-H parade, and parade of farm implements. In the mornings, it is sometimes used for demonstrations and 4-H activities. Between Fairs, the grandstand is used, without charge, for the Maryland Pony Show, thoroughbred yearling class show, cattle shows and other activities of a civic or agricultural nature.
The operation of the Maryland State Fair is financed by a grant from the State of Maryland and by revenues from a number of the activities conducted as a part of the Fair. For *583 the year 1959, the largest single source of revenue was the grant of $83,000 from the State, and the second largest source of revenue was the $77,380.16 in net income realized from horse racing. Other important sources of revenue were admissions at $58,494.50 and the midway at $31,500.
The precise question posed herein does not seem to have been decided by this Court, and there is a dearth of authority elsewhere directly in point. The case of City of Lewiston v. All Maine Fair Ass'n, 21 A.2d 625 (Me.), involved property taxes on all of the property of the All Maine Fair, under a statute that exempted the property of literary and scientific institutions "occupied by them for their own purposes," but taxed "so much of the real estate of such corporations as is not occupied by them for their own purposes." The Fair Association owned a large tract of land upon which were a race track, grandstand, stables and numerous other buildings. It also owned other land, which it used for a skating rink, for ground rentals as lots upon which to erect cottages, and as a site of a "victualing" house. The argument in that case was quite similar to the contention in the instant one. The City of Lewiston claimed the association was not occupying the race track, grandstand and other buildings "for [its] own [literary or scientific] purposes." The Court held taxable the property not used by the Fair for its own purposes, and stated: "The land upon which the race track is laid out, the grandstand and the buildings used in connection with the operation of the annual Agricultural Fair, having been acquired and designed and always used in good faith for that purpose, are not taxable."
The liability, vel non, of the York County Agricultural Society for property taxes was involved in York County Agricultural Society v. York County, 179 Atl. 893 (Pa.). The facts and the statute involved therein were very much the same as in the City of Lewiston case, supra. The Agricultural Society owned some 100 acres, upon which it had laid out a race track and constructed a grandstand, stables and many other buildings, which had been used in the conduct of its Annual Fair for some years. It also had rented some of its property, including a miniature golf course, to strangers, *584 and this property was "not in any way associated with the charitable purposes" of the Society. The Court held that an injunction suit in equity would not lie; the proper remedy being an action at law. It stated, however, that the Society was entitled to an exemption on its property, including the race track, grandstand and stables, used for its annual Fairs, and that its property, which had been leased to strangers and not used for its charitable purposes, was taxable. During the course of its opinion, the Court stated that "property which is used directly for the purposes and in the operation of the charity is exempt, though it may also be used in a manner to yield some return, and thereby reduce the expenses."
In 36 Op. A.G. 303, the then Attorney General of Maryland and now Judge Hammond of this Court rendered an opinion (concerning an exemption under the retail sales tax) that the horse racing and other amusements at the Maryland State Fair were incidental to, and in aid of, the main purposes of the Society, and therefore did not detract from the "exclusively educational" nature of the Fair. And in Civil Action No. 7535 of the United States District Court for the District of Maryland, the Internal Revenue Service had issued a ruling that the Society was entitled to an exemption from federal income taxes on that portion of its operation which related strictly to exhibits, judging contests, etc., but that it was taxable on the "race meeting," as the race meeting was "an unrelated trade or business." A jury decided this issue adversely to the Internal Revenue Service, and since then the Society has not been required to pay any federal income tax on the net income from its racing.[3]
The appellee cites us no authority that directly supports *585 his position, but he names three previous decisions of this Court that he contends should be controlling: Bullis School v. Appeal Tax Court, 207 Md. 272, 114 A.2d 41; Morning Cheer, Inc. v. Board of County Com'rs, 194 Md. 441, 71 A.2d 255; and Baltimore v. Grand Lodge of Masons, 60 Md. 280. These decisions clearly state the Maryland law, but they are readily distinguishable from the case at bar.
In the Bullis case, a tax exempt school had purchased a 285 acre farm, situated seven miles from the school. Limited school uses of a portion of this tract were made by the taxpayer, and an exemption as to 34 acres had been granted. In 1953, the taxpayer sought an additional exemption for that portion of the farm which was used for farming, up to the 100 acre limitation. Agriculture was no part of the school's curriculum, and the school had been previously operated without a farm. The case turned upon whether the farm itself was reasonably necessary for the educational purposes of the school. Judge Henderson, for the Court, stated: "We cannot escape the conclusion that the whole purpose of the investment in the farm is to hold it as a site for the building of a new school in the indefinite future." The opinion pointed out that when an exemption is based upon "use," the use must be an existing one; and, as the primary purpose of buying the farm was to hold it for a future building site, the taxpayer had made "no showing of reasonable necessity," and therefore it was not entitled to the additional exemption.
Morning Cheer, Inc., supra, involved an exemption under Article 81, Section 9 (4), (then Section 7 [4]), relating to houses and buildings used exclusively for public worship and "the grounds appurtenant to such houses, buildings and parsonages and necessary for the respective uses thereof." Morning Cheer, Inc., a religious organization, purchased some 227 acres of land, all of which was woodland, except about 35 acres. The 35 acre parcel was developed as a place where members of the public could come and participate in a program of religious activities for a period of about ten weeks during the summer. Living facilities, including dormitories and cabins for sleeping, and meals were provided for the participants. A charge was made for board and lodging, but *586 no profit was realized. The improvements included a tabernacle, a lodge and about 15 to 20 cottages.
The taxes involved were for the year 1946. At that time Section 7 (7), (now Section 9 [7]), relating to "charitable and benevolent" institutions permitted an exemption, not to exceed 40 acres. The State Tax Commission and the trial court allowed, under the then Section 7 (4), an exemption of one acre, assessed at $40, on which the tabernacle stood, and the assessed value of the lot on which the residence used as a parsonage was located. Morning Cheer, Inc. claimed it was entitled to an exemption as a "charitable or benevolent" institution, and therefore Section 7 (7), now Section 9 (7), was applicable to it.
The Court held that "the primary objects for which the property of the appellant" was used was for religious purposes; consequently, it was only entitled to an exemption under Section 7 (4), but, as the 35 acres of cleared land were "clearly necessary for the use of the buildings and public worship, and the residence of the pastor," Morning Cheer, Inc. was entitled, under the statute, to an exemption of the 35 acres.
In Baltimore v. Grand Lodge of Masons, 60 Md. 280, the Grand Lodge owned a large building called "The Masonic Temple." It only used the upper portion of this building for the purposes of the lodge, and the lower portion was constructed into storerooms and halls, and as such was rented out and used, and the revenue derived therefrom was received and applied to the purposes of the association. The exemption at that time was to the buildings, equipment and furniture of charitable or benevolent institutions and "to the grounds appurtenant thereto, * * * which is necessary for the respective uses thereof."
The Court held that the statute, in the exemption granted, only contemplated such buildings or parts thereof as may be "reasonably necessary" for the corporate purposes of the institution; and, as the portion of the building rented out represented an investment for revenue, independent of and beside the actual corporate uses of the institution, it was legally liable for assessment and taxation.
*587 We find nothing in these three cases that requires a holding in favor of the appellee; we think, as we shall soon point out, that they point up some of the situations in which the property of religious, educational and benevolent associations are subject to taxation: for example, when the property is not being used for, or fairly incidental to, the main purposes of the exempt association, or where the property is not being used for the primary purposes of the association and is commercially rented to others. It will be noted that in none of these cases was the property which was claimed to be exempt being used directly for the purposes and in the operation of the allegedly exempt institution.
In 2 Cooley, Taxation, § 686, Professor Cooley cites the Grand Lodge case, supra, as authority for the proposition that where the statute bases the exemption on the use of the property and the institution leases to others a part of its building or a separate building or a part of its land, or it receives an income from property otherwise used as a source of profit outside of and independent of its regular line of work, generally, the exemption does not apply to property rented out to others (other than a mere occasional renting out) by the exempt association or to other property held or used by it merely as a source of revenue. He then points out in §§ 683-685 that even if the exemption be based upon the use made of the property, it is not limited to property actually indispensable, unless the statute so expressly provides, but instead also includes property obviously appropriate and convenient to carry out the purposes of the exempt institution; and even where the exemption is based upon the property being "used exclusively" for exempt purposes, the general rule is that if the primary use to which the property is put is necessary for, or fairly incidental to, the main purposes of the exempt institution, it is immaterial that the property is used secondarily or incidentally for a purpose not embraced within the exemption.
In Contributors to Pa. Hospital v. Delaware County, 32 Atl. 456, 457, (Pa.) Mr. Justice Mitchell tersely and clearly marked the dividing line between those cases where the use of the property and the receipt of income therefrom deprive the institution of its exemption and the cases where they do *588 not, when he said: "Property which is not used directly for the purposes and in the operation of the charity, but for profit, is not exempt; and the devotion of the profit to the support of the charity will not alter this result. * * * But property which is used directly for the purposes and in the operation of the charity is exempt, though it may also be used in a manner to yield some return, and thereby reduce expenses."
There is one other principle of law that is involved herein. This Court has said many times (and Section 9 so provides with reference to exemptions thereunder) that tax-exemption statutes are to be strictly construed, but a strict construction permits a fair one, so as to effectuate the legislative intent and objectives, and it does not require that an unusual or unreasonable meaning be given to the words used in an exemption statute. State Tax Comm. v. Standard Oil Co., 181 Md. 637, 640, 31 A.2d 621; State Tax Comm. v. Whitehall, 214 Md. 316, 320, 135 A.2d 298.
Applying the above principles of law to the facts of this case, we are drawn, inescapably, to the conclusion that all of the appellant's property comes within the legislative intent and objectives of Section 9 (7) and (8), so as to render it tax exempt. It is conceded to be, in its primary aims and goals, an educational institution. It has been determined by the former Attorney General of this State that it is "exclusively educational" in nature. It conducts the Maryland State Fair. Fairs, as we indicated above, are gala, festive events or carnivals, combining important educational features with amusements and attractions. Dr. Cairns, Dean of Agriculture at the University of Maryland, pointed this out when he testified: "Basically all fairs are created with * * * two objectives. The one is educational and the other is how to get the people there to show them what is educational and they have to have the traditional, * * * entertainment features associated therewith to help draw the crowds to those attractions."
Two of these traditional entertainment features of the Maryland State Fair, clearly established by the evidence, are the midway and horse racing, and the horse racing has been conducted in good faith as a part of the Fair for many years. *589 The Society is not a fly-by-night institution conducting the exhibits, demonstrations and competitions as a subterfuge to circumvent the payment of taxes on its horse racing activities, but it is composed of, as pointed out by Judge Hammond (36 Op. A.G. 304), "public spirited citizens whose interest was not profit but merely to save the State Fair for the benefit of Maryland farmers, breeders and those interested in the conservation of natural resources, as well as of the general public and the citizens of the State." The midway and horse racing features are an integral part and parcel of the Fair itself. They are not separate enterprises. The midway, horse racing and other activities of the Fair are truly hand-in-glove affairs. To attempt to operate the Fair without the midway or the horse racing would be, as Judge Markell remarked in one of his opinions, like putting on the play of "Hamlet," without the character, Hamlet. In other words, the land where the midway operates and where the horse racing is conducted (including the buildings thereon) is used directly for the purposes and in the operation of the Fair. It is not property used merely as a source of revenue. These facts, we think, clearly show that the uses of the land and buildings where the horse racing is conducted and the land used for the midway are reasonably necessary for the educational purposes of the Society, and we, therefore, hold that, under Section 9 (7) and (8), it is exempt from paying taxes thereon. That part of the order below which held the "Exhibit Section" to be tax exempt will be affirmed; that portion which held the "Race Track Section" to be taxable will be reversed.
Having reached this conclusion, it becomes unnecessary to determine the other question raised by the appellant.
Order affirmed in part and reversed in part, and the case remanded for the entry of an order in conformity with this opinion, the appellee to pay the costs.
NOTES
[1] It is, therefore, unnecessary to set forth the provisions of these Subsections in detail. They provide for the exemption of certain property (not exceeding 100 acres) of charitable and educational institutions "necessary for the respective uses thereof." The quoted phrase is the crucial one in this decision.
[2] For this background of fairs, see 6 The World Book Ency., pp. 9-12.
[3] There are other judicial decisions holding fairs tax exempt, including the amusement features. Campbell v. Big Spring Cowboy Reunion, 210 F.2d 143 (C.A. 5); Southeastern Fair Ass'n v. United States, 52 F. Supp. 219 (Ct. of Cl.); Oklahoma State Fair and Exposition v. Jones, 44 F. Supp. 630 (D.C. Okla.). None of these cases involved property taxes, but they recognize that entertainment, including horse racing, is an integral part of a fair and that a fair is educational and does not lose its tax exemption because of its entertainment features.
|
Case: 16-51046 Document: 00513967482 Page: 1 Date Filed: 04/25/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-51046 FILED
Summary Calendar April 25, 2017
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
JOEL ESTRADA-FERNANDEZ,
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 4:16-CR-164-1
Before HIGGINBOTHAM, PRADO, and HAYNES, Circuit Judges.
PER CURIAM: *
The Federal Public Defender appointed to represent Joel Estrada-
Fernandez has moved for leave to withdraw and has filed a brief in accordance
with Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632
F.3d 229 (5th Cir. 2011). Estrada-Fernandez has not filed a response. We have
reviewed counsel’s brief and the relevant portions of the record reflected
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 16-51046 Document: 00513967482 Page: 2 Date Filed: 04/25/2017
No. 16-51046
therein. We concur with counsel’s assessment that the appeal presents no
nonfrivolous issue for appellate review.
Notwithstanding that determination, we note a clerical error in the
judgment. At sentencing, the district court agreed to recommend that Estrada-
Fernandez be placed in a facility in Post, Texas. The judgment does not contain
this recommendation.
Accordingly, counsel’s motion for leave to withdraw is GRANTED,
counsel is excused from further responsibilities herein, and the APPEAL IS
DISMISSED. See 5TH CIR. R. 42.2. The case is REMANDED to the district
court for the limited purpose of correcting a clerical error in the judgment.
See FED. R. CRIM. P. 36.
2
|
COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
PPC ACQUISITION COMPANY No. 08-19-00143-CV
LLC, LOWE ROYALTY PARTNERS, §
LP, WHITE STAR ENERGY, INC., Appeal from the
COLT DEVELOPMENT, L.L.C., THE §
NORTHERN TRUST COMPANY, AS 143rd District Court
TRUSTEE FOR THE EDWARDS §
LIVING TRUST DATED of Reeves County, Texas
DECEMBER 4, 2007, MICA §
RESOURCES, LLC, BIDWELL (TC# 17-09-22150-CVR)
MINERALS, LLC, BASIN 16 LLC §
AND THE NORTHERN TRUST
COMPANY, AS TRUSTEE FOR THE §
SARAH ZOLLER SEPARATE
PROPERTY TRUST, §
Appellants, §
v. §
DELAWARE BASIN RESOURCES, §
LLC,
§
Appellee.
MEMORANDUM OPINION
This appeal is before the Court on its own motion to determine whether the appeal of Lowe
Royalty Partners, LP, should be dismissed for want of prosecution. Finding that Lowe Royalty
Partners, LP has failed to pay the case filing fee, we dismiss the appeal brought by Lowe Royalty
Partners, LP for want of prosecution.
Three notices of appeal have been filed in the case. Lowe Royalty Partners, LP filed its
notice of appeal from the final judgment signed by the trial court on April 11, 2019, but it has not
paid the case filing fee. There is nothing in the record before us to indicate that Lowe Royalty
Partners, LP is excused from paying the case filing fee. On July 15, 2019, the Clerk of the Court
sent Lowe Royalty Partners, LP a second request for payment of the case filing fee. The letter
notified Lowe Royalty Partners, LP that failure to pay the case filing fee within twenty days could
result in dismissal of the appeal for want of prosecution pursuant to TEX.R.APP.P. 42.3(b) and (c).
Lowe Royalty Partners, LP has not paid the filing fee or otherwise responded to our notice.
Pursuant to Rule 42.3(b) and (c), we dismiss the appeal brought by Appellant Lowe Royalty
Partners, LP for want of prosecution. See TEX.R.APP.P. 42.3(b), (c).
This is a partial dismissal only. The appeal perfected by the remaining appellants will
continue. The Clerk of the Court is directed to change the style of the appeal to PPC Acquisition
Company LLC, White Star Energy, Inc., Colt Development, L.L.C., The Northern Trust Company,
as Trustee for the Edwards Living Trust dated December 4, 2007, MICA Resources, LLC, Bidwell
Minerals, LLC, Basin 16 LLC and The Northern Trust Company, as Trustee for the Sarah Zoller
Separate Property Trust v. Delaware Basin Resources, LLC.
August 14, 2019 GINA M. PALAFOX, Justice
Before McClure, C.J., Rodriguez, and Palafox, JJ.
-2-
|
584 P.2d 833 (1978)
David S. MONSON, Lieutenant Governor, Secretary of State of the State of Utah, Plaintiff and Appellant,
v.
The Honorable Gordon R. HALL, Justice of the Utah Supreme Court, the Honorable Dean E. Conder, the Honorable David Sam, and the Honorable J. Duffy Palmer, District Court Judges, Defendants and Respondents.
No. 15917.
Supreme Court of Utah.
August 25, 1978.
*834 Robert B. Hansen, Atty. Gen., Michael L. Deamer, Deputy Atty. Gen., Joseph P. McCarthy, Asst. Atty. Gen., Salt Lake City, for plaintiff and appellant.
Milton J. Hess, of Hess, Van Wagenen, Page & Hess, Clearfield, for defendants and respondents.
MAUGHAN, Justice:
Before us is a judgment rendered in an action for declaratory relief. The trial court held District Judges Dean E. Conder, J. Duffy Palmer, and David Sam were required to stand for election in the general election of 1978, and they or their successors would begin a six year term commencing January 1, 1979. It further held Justice Gordon R. Hall was not required to declare his candidacy and stand for election to retain the office which he now holds; prior to the general election of 1986.
We affirm the court in holding the District Judges must stand for election, in the general election of 1978, but reverse the judgment in all other particulars. All statutory references are to U.C.A. 1953. No costs awarded.
We first direct our attention to the situation of the three district judges. Each was appointed to a judicial office created by the legislature, to exist from and after July 1, 1976. See Sec. 78-3-1. At the outset, it is well to note Art. VIII, Sec. 3, Constitution of Utah; Sec. 78-3-1, and 20-1-7.1 et seq. are harmonious in their intent to require members of the judiciary to present themselves to the electorate for approval; whether after appointment, or by declaration independent of the appointive process.
The three District Judges were duly appointed by the Governor and began their terms July 1, 1976. Sec. 78-3-1 required them to stand for election in the general election of 1978. Such a provision is in harmony with Sec. 20-1-7.7, for the reason that had Sec. 78-3-1 not contained such requirement, the provisions of Sec. 20-1-7.7 would have required the subject judges to stand for election in the general election of 1978 this because they were appointed subsequent to a time when they could have filed a declaration of candidacy for that year. We conclude the legislature had the provisions of Sec. 20-1-7.7 in mind when it enacted Sec. 78-3-1.
The only question remaining is: For what term will the three District Judges, or their successors, be elected pursuant to an approval by the voters in the general election of 1978?
The pertinent provisions of Sec. 20-1-7.6(d) establish the term. They are:
Subject to the appointee being retained in office by the voters as provided in section 20-1-7.7, the person appointed pursuant to this section ... shall serve for the full term of office provided by law in case the appointment ... is to fill a vacancy created by the establishment of a new judicial office.
The three District Judges were appointed to fill a vacancy created by the establishment of a new judicial office. The full term of office provided by law, for District Judges *835 is six years.[1] The three District Judges were appointed for a term of six years two and one-half years of which will have expired at the end of 1978. Thus, they stand for election this year to be retained in office for the remainder of their term.
One of the cardinal rules of statutory construction requires construction with the objective of bringing consonance to Constitutional and statutory provisions, which will be congruous with expressed intent, and the applicability of the law in general.
We think this consonance and congruity is achieved by holding the three District Judges must stand for election, to be retained in office for the remainders of their terms; and such remainders are four years each, commencing on the first Monday in January 1979. This, at once, places the electoral patterns of these offices in harmony with the judicial and general election laws; and the expressed intent of the legislature.
We cannot conclude the terms should determine on July 1, 1982, at which time incumbents presumably could hold over for six months, until their successors were duly elected and qualified. Such would add six months to the term after each election, and would be contrary to Art. VIII, Sec. 24 Utah Constitution. It provides:
The terms of office of Supreme and District Judges may be extended by law, but such extension shall not affect the term for which any judge was elected.
Nor, can we conclude the legislature intended the terms of these three District Judges to begin for a full term of six years commencing on the first Monday in January 1979. Such a result would give those subject judges terms of eight and one-half years (different from all other); and, additionally, out of step with the expressions of intent in Sec. 20-1-1 et seq.
Thus, the three District Judges will serve the full terms for which they were appointed. The result does not diminish those terms; while, at the same time, it ties their offices to the judicial and general election law, with a band of harmony.
We turn now to the part of the judgment relating to Justice Gordon R. Hall. Again, we repair to the provisions of Sec. 20-1-1 et seq.
Under the clear, specific, and unambiguous language of Secs. 20-1-7.1, 20-1-7.6(d), and 20-1-7.7(1), a person appointed to judicial office, if he desires to retain such office, must subject himself to the electoral process. The legislative intent is expressed in clear, mandatory language.
Sec. 20-1-7.1 provides that a person appointed by the governor "shall be subject to election by the voters at the time and in the manner provided in this act."
Sec. 20-1-7.6(d) provides:
Subject to the appointee being retained in the office by the voters as provided in section 20-1-7.7, the person appointed pursuant to this section shall serve for the unexpired term of his predecessor in office or shall serve for the full term of office provided by law in case the appointment is to fill a vacancy in the office of a justice or judge whose term has expired or is to fill a vacancy created by the establishment of a new judicial office. [Emphasis supplied.]
The underlined phrases are those pertinent to the instant question.
The construction of the foregoing provision is clear and specific; the first phrase modifies the subject "the person appointed pursuant to this section" and requires such appointee to be subject to the electoral provision of Sec. 20-1-7.7. The provision then provides in the alternative the term of office of the person appointed based on the circumstances of the vacancy. An analysis of the sentence structure is important. There is a singular subject "the person appointed" with three alternative predicates but in each instance the subject "the person appointed" is qualified by the initial clause referring to the succeeding Sec. 20-1-7.7.
*836 Sec. 20-1-7.7 provides that "any" justice or judge of the District Court, who holds office by appointment, if he desires to retain the office, to be elected at a general election, for the remainder of the term for which he was selected. There are no exceptions, all appointees must go before the electorate.
The sentence in Sec. 20-1-7.7(1), stating: "The person so elected shall hold the office for the remainder of any unexpired term ..." is to clarify the duration of the term so that one elected could not claim his election entitled him to a full term commencing with his election. For example, one appointed to fill a vacancy created by establishment of a new judicial office, which office had a term of six years, could not contend, after holding the office as an appointee for two years prior to the general election, that his term was for six rather than four years after he was retained by the voters in a general election. This interpretation is consistent with the language in Sec. 20-1-7.6(d) setting forth the duration of the office of the appointees, subject, of course, to their retention by the voters as provided in Sec. 20-1-7.7(1).
The statutory provisions are clear, compelling, and consistent; all appointees to judicial office, if they desire to retain the office must run therefor at the general election designated by the statute.
We reach these conclusions cognizant of the holding in Banks v. Miller.[2]
CROCKETT and WILKINS, JJ., and JAMES S. SAWAYA, District Judge, concur.
ELLETT, Chief Justice (concurring and dissenting).
I concur in the holding regarding the District Court Judges for the reason that to hold otherwise would create confusion and uncertainty. However, I dissent from the holding as to Justice Hall's situation.
U.C.A. 1953, 20-1-7.6[1] provides:
If a vacancy occurs ... in the office of a justice of the Supreme Court... .
* * * * * *
(b) The governor shall forthwith appoint ... to fill such office... .
* * * * * *
(d) Subject to the appointee being retained in the office by the voters as provided in section 20-1-7.7, the person appointed pursuant to this section shall serve for the unexpired term of his predecessor in office or shall serve for the full term of office provided by law in case the appointment is to fill a vacancy in the office of a justice or judge whose term has expired or is to fill a vacancy created by the establishment of a new judicial office.
The term of office of Justice Henriod had expired and Justice Hall was appointed to the full term of office.
The next section of the statute (20-1-7.7) seems to me to be limited to appointments for an unexpired term because in stating that those appointed should run for election, it reads, shall hold the office for the remainder of any unexpired term.
Justice Hall is not involved in any unexpired term. It surely was not contemplated that he was appointed for a period of only one year, ten months and seven days and then would run for an additional term of eight years, one month and twenty-three days. The statute provides that the, "term of office of a justice of the Supreme Court, shall be ten years and until his successor is elected or appointed and qualified."[2]
It is essential that the appointment be for a full term in order to assure that there will be a Chief Justice to preside over the Court. Article VIII, Sec. 2 of our constitution provides that:
... The judge having the shortest term to serve, not holding his office by selection to fill a vacancy before expiration *837 of a regular term, shall be the chief justice, ...
If Justice Hall is required to run for election to a partial term then he, or his opponent, will be selected by the voters to fill an unexpired term and cannot be the Chief Justice. Under the opinion, no judge hereafter chosen for the office can ever be the Chief Justice unless he be young enough to run successfully for re-election.
Under our statute which now requires a justice to resign upon reaching age 72, the majority opinion will create all sorts of mischief regarding the determination of the Chief Justice.
To avoid the likelihood of the problem, the statute should be construed to limit appointments followed by election to cases where the appointment is made to fill an unexpired portion of a term. If that be done then the law is clear:
... shall serve for the full term of office provided by law in case the appointment is to fill a vacancy in the office of a justice ... whose term has expired ...[3]
The appellant in this case contends that selection does not mean election and therefore a person elected, to the unexpired term of a justice will be Chief Justice whenever he has the shortest remaining time to serve. This would mean that one elected in November for a term which would end on the first Monday in January following would be the Chief Justice provided he defeated a justice who had been theretofore appointed to an unexpired term. An example would be in case the Chief Justice reached age 72 during February of his last year. The vacancy would be filled by appointment which would be good only until the fall election. The appointee could not be the Chief Justice before the election and so another justice would hold the position but only until the election. Then the Chief Justice would be ousted, by the November successful candidate.
The Chief Justice should be a man of experience and this is assured if only those chosen for a full ten year term are eligible for the position. It seems folly to permit one elected for a six week term to be the head of the Court.
The majority opinion has no difficulty in providing that the District Judges are appointed for a term of less than two years and then may run for a full term of six years. Would that opinion give Justice Hall the same privilege of running for a full term of ten years? Consistency should so require. Also is the term six years from election or six years from January following. The same question would relate to the Supreme Court Justice.
For the reasons stated above I would hold that Justice Hall is appointed for a full ten year term and should not be required to run for election this year.
HALL, J., being disqualified, does not participate herein.
NOTES
[1] Sec. 67-8-4.
[2] 28 Utah 2d 287, 501 P.2d 1079 (1972).
[1] L.U. 1967, ch. 35, § 7.
[2] U.C.A. 1953, 78-2-1.
[3] U.C.A. 1953, 20-1-7.6(d).
|
IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2015-CA-01867-COA
TIFFANY GRIFFIN APPELLANT
v.
GRENADA YOUTH LEAGUE APPELLEE
DATE OF JUDGMENT: 11/27/2015
TRIAL JUDGE: HON. C.E. MORGAN III
COURT FROM WHICH APPEALED: GRENADA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: STEVEN CRAIG PANTER
STACY EVERETT PEPPER
ATTORNEYS FOR APPELLEE: NAKIMULI ONI DAVIS-PRIMER
J. STEPHEN KENNEDY
NATURE OF THE CASE: CIVIL - PERSONAL INJURY
TRIAL COURT DISPOSITION: SUMMARY JUDGMENT GRANTED FOR
APPELLEE
DISPOSITION: AFFIRMED - 03/28/2017
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE LEE, C.J., FAIR AND WILSON, JJ.
WILSON, J., FOR THE COURT:
¶1. On April 28, 2012, Tiffany Griffin attended a charity baseball tournament held at
fields owned and maintained by the Grenada Youth League (GYL), a nonprofit corporation.
Griffin’s sons were on teams playing in the tournament. As she walked down a grassy hill
from the parking lot to the ballfields, Griffin fell and suffered a broken ankle. Griffin sued
GYL on a premises liability theory in the Grenada County Circuit Court. She alleges that she
fell because she stepped into a one-inch-deep “hole” that was obscured by grass that was
three or four inches high. The record does not include any photographs of the supposed
“hole,” and GYL denies that there was a “hole” anywhere in the vicinity. The circuit court
subsequently granted summary judgment for GYL. The court acknowledged that there is a
“dispute over whether there actually was a hole,” but the court ruled “that as a matter of law
the premises was reasonably safe and there was no dangerous condition or peril that required
a warning.” We agree and therefore affirm.
FACTS AND PROCEDURAL HISTORY
¶2. GYL owns and operates a twenty-three-acre park in Grenada with about ten youth
baseball and softball fields. GYL oversees youth leagues and occasionally hosts youth
tournaments at the park. GYL has only one paid employee and is otherwise run by
volunteers, including a volunteer board and president.
¶3. GYL’s president for the 2012 season, Jeff McWhorter, asked three or four board
members to serve on the grounds committee. Before the season, the committee inspected the
park and did not identify any issues or needed repairs.
¶4. Most of GYL’s board members are coaches, parents, or grandparents of children who
play baseball or softball at the park. Thus, most board members regularly attend games and
walk and inspect the premises while at the park. In addition, every board member has a key
to an equipment shed at the park, so any of them could easily fill a hole if one were found.
GYL hired a company called Yard Pro to cut the grass in the park during the 2012 season.
Yard Pro cut the grass on a weekly basis.
¶5. From Monday, April 23, to Saturday, April 28, 2012, GYL hosted its annual Frankie
Bailey Tournament at the park. The tournament, named in honor of a former player who died
2
from childhood cancer, serves as a fundraiser for both St. Jude Children’s Research Hospital
and GYL. There is no admission fee for the tournament, but attendees are encouraged to
make charitable donations. Yard Pro cut the grass the weekend before the tournament began
and again on Wednesday, April 25, 2012.
¶6. Griffin’s two sons played in GYL leagues and were playing in the tournament. Griffin
attended about six games during the tournament, including on Friday, April 27, and she had
been to the park many times in prior seasons. On April 28, Griffin arrived at the park around
11 a.m. She made a $5 donation when she entered and parked her car in a gravel parking lot
up a gently sloping grassy hill from the ballfields. The lot is framed by wooden light poles
laid sideways on the ground to form a twelve- to eighteen-inch-high boundary around the lot.
¶7. A paved walkway runs from the parking lot to the ballfields, but Griffin decided to
take a shortcut by stepping over one of the wooden poles and walking down the grassy hill
to the fields. There were no signs warning visitors not to walk down the hill, and McWhorter
acknowledged that people frequently walk down the hill. Griffin was wearing flip-flops and
carrying both a folding chair and a bag holding a bat and batting helmet.
¶8. Griffin testified in her deposition that she fell after stepping into a “hole” that was
“maybe an inch [deep], two inches max,” and “maybe four inches wide.” Griffin testified
that she did not see the “hole” because the grass was “overgrown,” by which she meant
“[t]hree to four inches” high. Griffin testified that when she stepped into the hole, she rolled
her ankle and fell to the ground.
¶9. McWhorter was working at the concession stand when he was told that someone had
3
fallen on the hill. When McWhorter reached the hill, he was told that Griffin had broken her
ankle, so he called for an ambulance.
¶10. After Griffin left in an ambulance, McWhorter and another board member surveyed
the area in which she fell. McWhorter testified that the grass was not overgrown and that
they did not find any “hole.” McWhorter testified that if there had been a hole in the area,
he would have noticed it because he walked through the area whenever he went to the
equipment shed. In addition, there had been no other reports of falls or holes in the area.
¶11. On September 9, 2014, Griffin filed a complaint against GYL alleging, inter alia,
negligence on a premises liability theory. Griffin alleged she “was a business invitee when
she entered onto the property owned by [GYL].” She alleged that she “was severely injured
when she stepped into a drainage ditch.” At her deposition, Griffin stated that she actually
stepped in a “hole,” not a “drainage ditch.”
¶12. On October 12, 2015, GYL filed a motion for summary judgment. In its motion, GYL
argued that Griffin was a licensee, not an invitee. In addition, GYL argued that even if
Griffin was an invitee, the premises was reasonably safe and that it did not breach any duty
to warn her of hidden dangers. In response, Griffin argued that she was a “public invitee”
and that disputes of fact on the issues of duty and breach precluded summary judgment.
¶13. On November 30, 2015, the circuit court granted summary judgment for GYL.1 The
court concluded that Griffin was a public invitee and that there was a dispute of fact as to the
1
On November 16, 2015, the court granted summary judgment for GYL on all non-
premises-liability claims in the complaint and on Griffin’s claim for punitive damages, all
of which Griffin had conceded at the hearing on GYL’s motion for summary judgment.
4
existence of a “hole”; however, the court ruled “that as a matter of law the premises was
reasonably safe and there was no dangerous condition or peril that required a warning.”
Griffin filed a timely notice of appeal.
DISCUSSION
¶14. We review an order granting summary judgment de novo. Pigg v. Express Hotel
Partners LLC, 991 So. 2d 1197, 1199 (¶4) (Miss. 2008). The movant is entitled to summary
judgment if there is no genuine issue of material fact. Glover ex rel. Glover v. Jackson State
Univ., 968 So. 2d 1267, 1275 (¶22) (Miss. 2007). But the mere existence of disputed facts
does not preclude summary judgment: “The focal point of our standard for summary
judgment is on material facts[,]” by which we mean those facts “that matter . . . in an
outcome determinative sense.” Simmons v. Thompson Mach. of Miss. Inc., 631 So. 2d 798,
801 (Miss. 1994). “The existence of a hundred contested issues of fact will not thwart
summary judgment where there is no genuine dispute regarding the material issues of fact.”
Sanders v. Advanced Neuromodulation Sys. Inc., 44 So. 3d 960, 965 (¶11) (Miss. 2010)
(quoting Moss v. Batesville Casket Co., 935 So. 2d 393, 399 (¶17) (Miss. 2006)).
¶15. On a motion for summary judgment, “[t]he evidence is viewed in the light most
favorable to the party opposing the motion.” Davis v. Hoss, 869 So. 2d 397, 401 (¶10) (Miss.
2004). However, “[t]he non-moving party may not rest upon mere allegations or denials in
the pleadings but must set forth specific facts showing that there are genuine issues for trial.”
Pigg, 991 So. 2d at 1199 (¶4) (quoting Massey v. Tingle, 867 So. 2d 235, 238 (¶6) (Miss.
2004)). In other words, “the non-movant cannot just sit back and remain silent, but he must
5
rebut by producing significant probative evidence showing that there are indeed genuine
issues for trial.” McMichael v. Nu-Way Steel & Supply Inc., 563 So. 2d 1371, 1375 (Miss.
1990) (quoting Newell v. Hinton, 556 So. 2d 1037, 1041 (Miss. 1990)).
¶16. To prevail in a premises liability case, a plaintiff must prove the elements of duty,
breach of duty, damages, and proximate causation. See Wilbanks v. Hickman, 198 So. 3d
393, 397 (¶10) (Miss. Ct. App. 2016). Thus, to avoid summary judgment, Griffin must show
there is a genuine issue of material fact as to each of these elements. See id.
¶17. “When a person is injured on the premises of another, the duty owed depends on
whether the person is an invitee, a licensee, or a trespasser at the time of the injury.” Rankin
v. Matthews, 197 So. 3d 933, 936 (¶7) (Miss. Ct. App. 2016). “A landowner’s only duty to
a licensee is to refrain from willfully or wantonly causing injury to him.” Id. at 937 (¶9). “A
landowner owes the highest duty to an invitee[,]” Keith v. Peterson, 922 So. 2d 4, 9 (¶10)
(Miss. Ct. App. 2005), but even so the landowner “is not an insurer of the invitee’s safety[.]”
Caruso v. Picayune Pizza Hut Inc., 598 So. 2d 770, 773 (Miss. 1992). Rather, a landowner
“owes a duty to an invitee to exercise reasonable care to keep the premises in a reasonably
safe condition and, if [he] is aware of a dangerous condition, which is not readily apparent
to the invitee, he is under a duty to warn the invitee of such condition.” Jerry Lee’s Grocery
Inc. v. Thompson, 528 So. 2d 293, 295 (Miss. 1988). Our Supreme “Court has recognized
two classes of invitees: public invitee or business invitee.” Hudson v. Courtesy Motors Inc.,
794 So. 2d 999, 1003 (¶11) (Miss. 2001).
¶18. “A public invitee is a person who is invited to enter or remain on land as a member
6
of the public for a purpose for which the land is held open to the public . . . .” Id. “On the
other hand, a licensee is one who enters upon the property of another for his own
convenience, pleasure or benefit pursuant to the license or implied permission of the owner.”
Clark v. Moore Mem’l United Methodist Church, 538 So. 2d 760, 763 (Miss. 1989). The
subtle distinction between a public invitee and a licensee is said to “lie[] in the difference
between an invitation and mere permission.” Id. at 764.2
¶19. The circuit court concluded that Griffin was a “public invitee” at the time of her
injury, but GYL argues that she was a mere licensee. If relevant and material facts are in
dispute, the plaintiff’s status “can be a jury question, but where the facts are not in dispute,
the classification becomes a question of law for the trial judge.” Hudson, 794 So. 2d at 1003
(¶11). However, for purposes of this appeal, we may assume that Griffin was a public
invitee. For even if she were an invitee, the circuit court correctly determined that GYL was
entitled to summary judgment.
¶20. A landowner owes an invitee a duty to keep the premises reasonably safe and to warn
the invitee of any dangerous conditions on the premises that are not readily apparent. Jerry
2
In Clark, the Mississippi Supreme Court held that “a church member who does not
exceed the scope of a church’s invitation, is an invitee while attending a church for church
services or related functions.” Clark, 538 So. 2d at 764. The Court reasoned: “Religious
bodies . . . expressly and impliedly invite members to come and attend their services and
functions. They hold their doors open to the public. While they do not charge admission
fees . . . , churches do depend on contributions . . . in order that they may continue to be open
to the public.” Id.; see also Alexander v. Jackson Cty. Historical Soc’y Inc., 227 So. 2d 291,
292 (Miss. 1969) (holding that visitors who paid for admission to a historical site under the
care and control of a local historical society were “public invitees”); City of Milton v.
Broxson, 514 So. 2d 1116, 1118 (Fla. 1st Dist. Ct. App. 1987) (holding that a spectator at
a softball game at a city park was a public invitee).
7
Lee’s Grocery, 528 So. 2d at 295. Unless the dangerous condition was created by the
landowner’s own negligence, the plaintiff must prove that the landowner had actual or
constructive knowledge of the condition. Id.; Jones v. Wal-Mart Stores E. LP, 187 So. 3d
1100, 1103 (¶12) (Miss. Ct. App. 2016); Stanley v. Boyd Tunica Inc., 29 So. 3d 95, 97 (¶9)
(Miss. Ct. App. 2010). Thus, “regardless of the invitee’s precise theory of premises liability,
proof that her injury was caused by a ‘dangerous condition’ is an essential element of her
claim.” Jones, 187 So. 3d at 1104 (¶12) (citing Stanley, 29 So. 3d at 97 (¶10)). “In other
words, a property owner cannot be found liable for the plaintiff’s injury where no dangerous
condition exists.” Stanley, 29 So. 3d at 97-98 (¶10) (quotation marks omitted); see also, e.g.,
Adcock v. Wal-Mart Stores E. LP, No. 3:10-cv-313-DPJ-FKB, 2011 WL 3047623, at *3
(S.D. Miss. July 25, 2011) (“It is axiomatic that no liability attaches absent a dangerous
condition.” (collecting cases)). The landowner “is not an insurer against all injuries[,]” and
mere proof that the invitee fell and was injured while on the premises is insufficient to
establish liability. Jerry Lee’s Grocery, 528 So. 2d at 295.
¶21. In the present case, Griffin argues that summary judgment should have been denied
because the hole that allegedly caused her to fall was a “dangerous condition,” and a
reasonable inspection of the premises would have revealed its existence. Thus, Griffin
argues, GYL at least had constructive knowledge of the hole and should have repaired it or
warned her of it. She also argues that GYL’s own claims that it regularly inspected the
premises support an inference that it had actual knowledge of the hole.
¶22. We conclude that Griffin’s claim fails as a matter of law because the alleged “hole”
8
simply was not a “dangerous condition” within the meaning of Mississippi premises liability
law. We recently addressed a similar issue in the context of a trip-and-fall in a parking lot.
We observed that sidewalks or parking lots often “contain cracks and changes in elevation,”
and we held that such “minor imperfections or defects” are not “hazardous conditions” for
purposes of a premises liability claim. Jones, 187 So. 3d at 1104 (¶14) (quoting Knight v.
Picayune Tire Servs. Inc., 78 So. 3d 356, 359 (¶9) (Miss. Ct. App. 2011)). A long line of
Mississippi cases holds that cracks and uneven pavement are not dangerous conditions; they
are simply issues that invitees “may normally expect to encounter as they traverse a parking
lot or sidewalk.” Id. at 1106 (¶17). “No property owner can be expected to maintain its
sidewalks in a perfectly level condition, and where the defect consists of some slight
variation between two adjoining paving blocks, no liability is imposed.” Id. at 1104 (¶14)
(quoting Bond v. City of Long Beach, 908 So. 2d 879, 881-82 (¶7) (Miss. Ct. App. 2005)).
¶23. The same reasoning applies—indeed, with even greater force—to the present case.
If a crack or uneven spot in a manmade sidewalk or parking lot is not a dangerous condition,
it necessarily follows that a very minor indentation or depression on the side of a grassy,
gently sloping hill also is not a dangerous condition. Griffin testified that the alleged “hole”
was “maybe an inch [deep], two inches max,” and “maybe four inches wide.” To accept
Griffin’s argument that such a “hole” amounts to a dangerous condition would impose on
landowners a duty to maintain all open lawns and fields in a perfectly level condition.
Mississippi law does not require that of a landowner, even in paved areas of the premises.
See Jones, 187 So. 3d at 1104 (¶14). No open, grass-covered space is going to be perfectly
9
level, not even a fairway on a golf course. Cf. Hoffman v. City of New Orleans, 771 So. 2d
217, 219 (La. Ct. App. 2000) (“One can hardly expect a public baseball outfield to be as
smooth and even as the green of a golf course. Like any grass covered field it is bound to
contain dips and inclines no matter what maintenance is performed.”). Mississippi law does
not impose liability based on a minor indentation on the side of a park’s grassy hill.
¶24. Griffin also alleges that she did not see the hole because the grass in the area was
“overgrown.” However, in her deposition she admitted that the grass, which had been
mowed only three days prior to her fall, was only “[t]hree to four inches” high, which is
hardly unusual. A one-inch-deep indentation is not transformed into a dangerous condition
simply because three to four inches of grass grows in the area.3
¶25. Because the “hole” that caused Griffin’s injury was not a dangerous condition, her
claim fails as a matter of law. Jones, 187 So. 3d at 1104 (¶12). Moreover, even if we
assumed that it was a dangerous condition, GYL would be entitled to summary judgment
because Griffin produced no evidence that would support a reasonable inference that GYL
created the hole or that it had actual or constructive knowledge of the hole. See Jones v.
3
Griffin relies heavily on Alexander, supra, but its facts are distinguishable. In that
case, the plaintiff was injured when she stepped into a five-inch-deep hole surrounding one
of several posts that the defendant Jackson County Historical Society had placed in the
ground to mark the boundary between the parking lot and the lawn of the Old Spanish Fort
in Pascagoula. Alexander, 227 So. 2d at 292. The hole was concealed by a “type of
crawling grass [that] had grown up around the post,” while “[t]he remainder of the yard was
smoothly mowed.” Id. Mississippi caselaw distinguishes between “naturally occurring
defects,” such as the hillside indentation at issue in this case, and unusual or unexpected
conditions created by the defendant, such as the hole at the Old Spanish Fort, which may
give rise to liability. See Jones, 187 So. 3d at 1105 (¶16) (quoting City of Natchez v.
Jackson, 941 So. 2d 865, 869-70 (¶¶5-9) (Miss. Ct. App. 2006)).
10
Imperial Palace of Miss. LLC, 147 So. 3d 318, 319-21 (¶¶5-12) (Miss. 2014). There was no
evidence, for example, that any other visitor had stumbled in the area, that GYL had received
prior complaints about the hill, or that the “hole” at issue had existed for any significant
length of time.
¶26. Likewise, there is no merit to Griffin’s argument that there is a triable issue of fact
with respect to GYL’s alleged failure to conduct reasonable inspections. GYL, of course,
maintains that it did conduct reasonable inspections of the park, and there is no evidence to
the contrary. But in any event, Griffin also “failed to put forth any proof that reasonable
inspections would have led to the discovery of the [one-inch-deep hole],” which, given the
lack of evidence presented, “could have been created . . . only minutes prior to the injury.”
Id. at 322 (¶15). Thus, Griffin failed to present evidence creating any genuine issue of
material fact as to GYL’s actual or constructive knowledge of the hole or that a reasonable
inspection would have revealed the hole. Accordingly, GYL was entitled to summary
judgment for this reason as well.
CONCLUSION
¶27. Griffin was injured when she tripped and fell as she walked down a grassy hill while
wearing flip-flops and carrying a folding chair and baseball equipment. She was on GYL’s
property, but a landowner is not an insurer or strictly liable for all injuries that occur on its
property, so mere proof that an invitee fell and was injured on the premises is not sufficient
to create liability. Griffin’s claim fails as a matter of law because the alleged one-inch-deep
indentation, or “hole,” that supposedly caused her to fall is not a dangerous condition. Under
11
Mississippi law, a landowner is not expected or required to keep open, grass-covered lawns
or fields in a perfectly level condition. Moreover, Griffin presented no evidence that GYL
had actual or constructive knowledge of the hole or that a reasonable inspection would have
uncovered it. Therefore, the circuit court properly granted GYL’s motion for summary
judgment.
¶28. THE JUDGMENT OF THE CIRCUIT COURT OF GRENADA COUNTY IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANT.
LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, ISHEE, CARLTON, FAIR,
GREENLEE AND WESTBROOKS, JJ., CONCUR.
12
|
890 F.Supp. 146 (1995)
William HOGAN, Plaintiff,
v.
Dr. RUSS, Dentist, SCF; Frank Tracy, Deputy of Administration, SCF; Louis Mann, Superintendent, SCF, Defendants,
No. 94-CV-230.
United States District Court, N.D. New York.
July 6, 1995.
*147 William Hogan Fallsburg, NY, pro se.
G. Oliver Koppell, Atty. Gen., State of N.Y., Dept. of Law (Darren O'Connor, Asst. Atty. Gen., of counsel), Albany, NY, for defendants.
*148 MEMORANDUM, DECISION AND ORDER
McAVOY, Chief Judge.
This matter was referred to Magistrate Judge Scanlon for a Report-Recommendation pursuant to a standing order dated November 12, 1986. This case is based on a civil rights complaint under 42 U.S.C. § 1983 in which plaintiff William Hogan alleges that he was denied adequate medical care in violation of his Eighth and Fourteenth Amendment rights. Plaintiff moves for a preliminary injunction forcing defendants to allow him to see a medical specialist (periodontist) to examine and treat his teeth at the state's expense. It should be noted here that defendants have stated that they would allow plaintiff to be examined and treated by a periodontist, but only at plaintiff's own expense. Defendants' have filed a cross motion pursuant to Rule 12(c) of the Federal Rules of Civil Procedure for judgement and dismissal on the pleadings.
In his Report-Recommendation, Magistrate Judge Scanlon recommended that the court deny plaintiff's motion for preliminary injunctive relief. He further recommended the court grant defendants' motion for judgement on the pleadings and that the complaint be dismissed.
Plaintiff filed objections to the Report-Recommendation on August 1, 1994. In his objections, plaintiff basically reiterates his original complaint of defendants' deliberate indifference to his medical needs.
1. Fed.R.Civ.P. 12(c).
A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Also, "[o]n a motion for judgment on the pleadings for failure to state a claim, the Court must assume the factual allegations of the non-moving party to be true, and resolve all inferences in his favor." Tomarkin v. Ward, 534 F.Supp. 1224, 1228 (S.D.N.Y.1982).
A. Plaintiff's Fourteenth Amendment Equal Protection claim.
As a preliminary matter, the court notes that plaintiff's Fourteenth Amendment claim was inadequately alleged in his initial complaint. His request that it be considered as a separate cause of action was only submitted in connection with his objections to the Magistrate Judge's Report-Recommendation. Under Rule 15 of the Federal Rules of Civil Procedure, it is questionable whether plaintiff would be allowed to raise this claim at this time. But, given the leniency and broad reading given to pleadings made by pro se plaintiffs, e.g., Haines v. Kerner, 404 U.S. 519, 519-21, 92 S.Ct. 594, 595-96, 30 L.Ed.2d 652 (1972) (holding that complaints drafted by pro se petitioners are to be held to less stringent standards than formal pleadings drafted by lawyers), this court will consider this complaint as formally raised, in compliance with plaintiff's own request.
Upon consideration, the court finds plaintiff's equal protection claim to be without merit given the fact that indigent persons are not a protected suspect class under the Equal Protection Clause of the Fourteenth Amendment. The United States Supreme Court has stated, "at least where wealth is involved, the Equal Protection Clause does not require absolute equality or precisely equal advantages." San Antonio Indep. Sch. Dist. v. Rodriguez, 411 U.S. 1, 24, 93 S.Ct. 1278, 1291, 36 L.Ed.2d 16 (1973). As such, "[a] century of Supreme Court adjudication under the Equal Protection Clause affirmatively supports the application of the traditional standard of review, which requires only that the State's system be shown to bear some rational relationship to legitimate state purposes." Id. at 40, 93 S.Ct. at 1300.
In the instant case, although it is surely in the state's best interest to maintain the health of incarcerated persons, the state also has a legitimate interest in drawing the line at some level or standard of medical treatment. In short, the state's interest in efficiently distributing its limited resources is sufficient reason not to provide extensive specialized medical care for inmates. See San Antonio Indep. Sch. Dist., 411 U.S. at *149 40, 93 S.Ct. at 1300 (admonishing interferences with the states' fiscal policies under the Equal Protection Clause). Accordingly, plaintiff's equal protection claim is dismissed pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.
B. Plaintiff's Eighth Amendment Claim.
Turning to plaintiff's Eighth Amendment claim, the court determines that even if all inferences are made in the light most favorable to plaintiff, this claim also fails. As noted in the Magistrate Judge's Report-Recommendation, in order to state a valid § 1983 Civil Rights action based on inadequate medical treatment, the plaintiff must allege "acts or omissions sufficiently harmful to evidence deliberate indifference to serious medical needs." Estelle v. Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 292, 50 L.Ed.2d 251 (1976). "[T]here must be some conduct that `shocks the conscience' or a `barbarous act.' A complete denial of, or intentional effort to delay access to, medical care, or a reckless or callous indifference to the safety of prisoners will support a claim under § 1983. However, there is no right to the medical treatment of one's choice if the prescribed treatment is based on applicable medical standards." McCloud v. Delaney, 677 F.Supp. 230, 232 (S.D.N.Y.1988). The Supreme Court decision in Estelle concluded that "deliberate indifference to serious medical needs of prisoners constitutes the `unnecessary and wanton infliction of pain' ... proscribed by the Eighth Amendment." Estelle, 429 U.S. at 104, 97 S.Ct. at 291 (citing Gregg v. Georgia, 428 U.S. 153, 173, 96 S.Ct. 2909, 2925, 49 L.Ed.2d 859 (1976)). Harm to a prisoner caused by accident, negligence or medical malpractice do not alone constitute the necessary deliberate indifference. Id. at 107-09, 97 S.Ct. at 292-93.
The facts of Estelle are somewhat similar to the facts of the present case. In Estelle, a prisoner was seriously injured when a 600 lb. bale of cotton fell on him. He filed a claim for inadequate medical care and alleged deliberate indifference under § 1983. The court stated,
[c]ertainly an X-ray of [plaintiff's] lower back might have been in order and other tests conducted that would have led to appropriate diagnosis and treatment for the daily pain and suffering he was experiencing.... A medical decision not to order an X-ray, or like measures, does not represent cruel and unusual punishment. At most it is medical malpractice, and as such the proper forum is in the state court.
Id. at 107, 97 S.Ct. at 293.
Similarly, in the present case, Dr. Russ' decision that further examination of plaintiff's teeth and gums was not necessary and that tooth extraction was a necessary and adequate remedy does not constitute deliberate indifference to plaintiff's medical needs. Defendants did not deny plaintiff the ability to obtain specialized medical attention. They merely stated that it was not prison policy to pay for such specialized care and that such care would be made available to plaintiff at his own expense. This case involves a prisoner being dissatisfied with the diagnosis of the prison physician. In United States ex rel. Hyde v. McGinnis, 429 F.2d 864, 868 (2d Cir.1970), the Second Circuit subjected a similar claim to Rule 12(c) dismissal where, as in this case, the plaintiff had not alleged any specific acts from which deliberate indifference could be inferred. See Tomarkin v. Ward, 534 F.Supp. 1224, 1229 (S.D.N.Y. 1982).
Plaintiff's only allegation of deliberate indifference stems from Dr. Russ' recommendation that plaintiff's four bad teeth be extracted without first having taken x-rays. The record indicates that Dr. Russ' recommendation was based on his diagnosis that severe bone loss in the plaintiff's mouth prevented the teeth from being saved. Plaintiff has submitted some medical authority in support of his claim that x-rays were necessary in order to determine the extent of bone loss. Even if this allegation was true, and assuming that defendant did make a wrongful diagnosis and recommendation, defendant's action still fails to constitute deliberate indifference. At best, plaintiff's claim would rise only to the level of negligence. As Estelle states, if a medical decision was negligent, it is not for the federal courts to decide and the appropriate forum would be the state courts. Estelle, 429 U.S. at 108, 97 S.Ct. at 293. As *150 such, plaintiff makes no viable claim for deliberate indifference and Fed.R.Civ.P. 12(c) dismissal is appropriate.
2. Plaintiff's motion for preliminary injunctive relief.
The basic rule behind the granting of a preliminary injunction is:
A party seeking preliminary injunctive relief must establish (a) that the injunction is necessary to prevent irreparable harm and (b) either that (i) it is likely to succeed on the merits of the underlying claim or (ii) there are sufficiently serious questions going to the merits of the claim as to make it a fair ground for litigation and that the balance of the hardships tips decidedly toward the movant.
Eng v. Smith, 849 F.2d 80, 81-82 (2d Cir. 1988). A preliminary injunction is an "extraordinary remedy that should not be granted except upon a clear showing that there is a likelihood of success and irreparable injury." Diversified Mortgage Investors v. U.S. Life Title Ins. Co., 544 F.2d 571, 576 (2d Cir.1976); see Hanson Trust PLC v. ML SCM Acquisition, Inc., 781 F.2d 264, 273 (2d Cir.1986); Medical Soc'y of New York v. Toia, 560 F.2d 535, 538 (2d Cir.1977). Where injunctive relief does not merely maintain the status quo, but rather grants the movant substantially all the relief he ultimately seeks, as is the case here, an even more stringent standard is required. The movant "must show a SUBSTANTIAL likelihood of success on the merits, i.e., that [his] cause is considerably more likely to succeed than fail (together, of course, with the requisite irreparable injury)." Eng, 849 F.2d at 82 (citing Abdul Wali v. Coughlin, 754 F.2d 1015, 1025-26 (2d Cir.1985)) (emphasis added).
As this court finds that both plaintiff's Eighth and Fourteenth Amendment claims fail to state a claim upon which relief can be granted, it is elementary that plaintiff does not meet the "likely to succeed on the merits" requirement for the issuance of a preliminary injunction. As such, the motion is denied.
As a final note, the court recognizes that, since the filing of this action, plaintiff has been transferred to the Sullivan Correctional Facility. The record indicates that on April 19, 1995, plaintiff filed another complaint alleging that the staff at the Sullivan facility is not providing him with adequate dental attention. The court, however, cannot take these allegations into consideration as part of the present case since they involve entirely different claims and defendants. As such, they are beyond the scope of his original complaint, and therefore, the court will not address them at this time.
For the foregoing reasons, the court hereby adopts the Report-Recommendation dated July 13, 1994 in its entirety. Plaintiff's motion for injunctive relief is denied, and defendants' motion for dismissal of the action on the pleadings is granted.
IT IS SO ORDERED.
|
Case: 18-60093 Document: 00514483193 Page: 1 Date Filed: 05/22/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 22, 2018
No. 18-60093
Lyle W. Cayce
Clerk
In Re: FRANCHISE SERVICES OF NORTH AMERICA, INCORPORATED,
Debtor
FRANCHISE SERVICES OF NORTH AMERICA, INCORPORATED,
Appellant
v.
UNITED STATES TRUSTEE; MACQUARIE CAPITAL (USA),
INCORPORATED; MICHAEL JOHN SILVERTON; DANIEL RAYMOND
BOLAND; BOKETO, L.L.C.,
Appellees
Appeal from the United States Bankruptcy Court
for the Southern District of Mississippi
Before KING, JONES, and GRAVES, Circuit Judges.
KING, Circuit Judge:
Under longstanding Supreme Court precedent, state law dictates the
procedures a corporation must follow to authorize a bankruptcy filing. When
those procedures place the decision in the hands of the corporation’s creditors,
some courts have allowed the bankruptcy to proceed even though the creditors
withheld consent. This case presents a related but distinct question: when the
certificate of incorporation requires the consent of a majority of the holders of
each class of stock, does the sole preferred shareholder lose its right to vote
Case: 18-60093 Document: 00514483193 Page: 2 Date Filed: 05/22/2018
No. 18-60093
against (and therefore avert) a voluntary bankruptcy petition if it is also a
creditor of the corporation?
In this case, the shareholder made a $15 million investment in exchange
for 100% of the debtor’s preferred stock. At the same time, the debtor
reincorporated in Delaware and amended its certificate of incorporation. As a
prerequisite to filing a voluntary bankruptcy petition, the amended certificate
requires the consent of a majority of each class of the debtor’s common and
preferred shareholders. Following the ill-fated acquisition of a new subsidiary,
the debtor filed for bankruptcy. Fearing that its shareholders might nix the
filing, it never put the matter to a vote. The sole preferred shareholder filed a
motion to dismiss the bankruptcy petition as unauthorized. But the debtor
argued that the shareholder had no right to prevent the filing. The
shareholder’s parent company, explained the debtor, was an unsecured
creditor by virtue of a $3 million bill the debtor refused to pay. The bankruptcy
court disagreed and dismissed the petition. On appeal, the debtor asks us to
reverse and to allow it to proceed with the bankruptcy.
We decline to do so. Federal law does not prevent a bona fide shareholder
from exercising its right to vote against a bankruptcy petition just because it
is also an unsecured creditor. 1 Under these circumstances, the issue of
corporate authority to file a bankruptcy petition is left to state law. The debtor
is a Delaware corporation, governed by that state’s General Corporation Law.
Finding nothing there that would nullify the shareholder’s right to vote against
the bankruptcy petition, we AFFIRM.
1 As we note later in this opinion, our holding goes no further. This case involves a
bona fide shareholder. The equity investment made by the shareholder at issue here was $15
million and the debt just $3 million. We are not confronted with a case where a creditor has
somehow contracted for the right to prevent a bankruptcy or where the equity interest is just
a ruse.
2
Case: 18-60093 Document: 00514483193 Page: 3 Date Filed: 05/22/2018
No. 18-60093
I.
The debtor in this case is Franchise Services of North America
(“FSNA”)—once one of the largest car rental companies in North America.
Among FSNA’s competitors is the Hertz Corporation. In 2012, the Hertz
Corporation was trying to consummate a merger with Dollar Thrifty
Automotive Group, Inc. Antitrust concerns prompted Hertz to sell one of its
subsidiaries, Simply Wheelz, LLC, better known under its trade name,
Advantage Rent-A-Car (“Advantage”).
FSNA decided to buy Advantage. To do so, it enlisted the help of an
investment bank, Macquarie Capital (U.S.A.), Inc. (“Macquarie”). Adreca
Holdings Corporation (“Adreca”), one of Macquarie’s subsidiaries, would first
buy Advantage from Hertz and then merge into FSNA. Adreca bought
Advantage in December 2012 and merged into FSNA in May 2013.
Macquarie created another fully-owned subsidiary to help finance the
transaction. Boketo, LLC (“Boketo”), was formed in 2012 to make a $15 million
investment in FSNA. In exchange for the capital infusion, FSNA gave Boketo
100% of its preferred stock in the form of a convertible preferred equity
instrument. Boketo’s stake in FSNA would amount to a 49.76% equity interest
if converted, making it the single largest investor in FSNA. As a condition of
the investment, FSNA in May 2013 reincorporated in Delaware and adopted a
new certificate of incorporation. The new certificate provides that FSNA may
not “effect any Liquidation Event” unless it has the approval of both “(i) the
holders of a majority of the shares of Series A Preferred Stock then
outstanding, voting separately as a class . . . , and (ii) the holders of a majority
of the shares of Common Stock then outstanding, voting separately as a class.”
Another section of the certificate clarifies that any “preparatory steps towards
or filing a petition for bankruptcy” falls within the ambit of “Liquidation
Event.”
3
Case: 18-60093 Document: 00514483193 Page: 4 Date Filed: 05/22/2018
No. 18-60093
FSNA agreed to pay Macquarie a $2.5 million “arrangement fee” and a
$500 thousand “financial advisory fee” for its services. Macquarie billed FSNA
for the arrangement fee in March 2013, shortly before the merger closed. That
fee remains unpaid and is the subject of litigation between the parties in other
forums. 2
Matters quickly took a turn for the worse. It turned out that FSNA had
bought a lemon. Advantage went into bankruptcy within a year, and FSNA
followed just a few years later. Advantage filed its petition under Chapter 11
of the Bankruptcy Code just six months after the acquisition. A sale of
substantially all of Advantage’s assets ensued, and the case was dismissed in
January 2016. In June 2017, FSNA filed its own voluntary petition under
Chapter 11. It did so without requesting or securing the consent of a majority
of its preferred and common shareholders.
Therein lies the rub. Macquarie and Boketo filed a motion to dismiss the
bankruptcy petition, citing FSNA’s failure to seek shareholder authorization.
FSNA countered that the shareholder consent provision was an invalid
restriction on its right to file a bankruptcy petition. It also asserted that the
provision violated Delaware law. The bankruptcy court held an evidentiary
hearing on the matter during which it heard live testimony from two witnesses.
Because Boketo was an owner, rather than creditor, of FSNA, the bankruptcy
court determined that conditioning FSNA’s right to file a voluntary petition on
Boketo’s consent was not contrary to federal bankruptcy policy. The court
likewise declined to deem the shareholder consent provision contrary to
Delaware law. It instead opted to leave that issue for the Delaware courts to
2 The parties’ briefing makes clear that the bankruptcy case is but one front in a larger
conflict. In one case in New York state court, Macquarie is suing to collect its fees. FSNA has
counterclaimed for its loss of capital value, blaming Macquarie for its tribulations. We need
not dwell on the details of the various hostilities. They do not affect our analysis of federal
bankruptcy law.
4
Case: 18-60093 Document: 00514483193 Page: 5 Date Filed: 05/22/2018
No. 18-60093
decide in the first instance. As a result, the court granted Boketo’s motion to
dismiss.
On FSNA’s motion, the bankruptcy court certified a direct appeal of its
order to this court pursuant to 28 U.S.C. § 158(d)(2)(A). After finding that
FSNA’s proposed questions were too narrow to warrant certification of a direct
appeal, the bankruptcy court certified the following three questions to this
court:
1. Is a provision, typically called a blocking provision or a golden
share, which gives a party (whether a creditor or an equity holder)
the ability to prevent a corporation from filing bankruptcy valid
and enforceable or is the provision contrary to federal public
policy?
2. If a party is both a creditor and an equity holder of the debtor
and holds a blocking provision or a golden share, is the blocking
provision or golden share valid and enforceable or is the provision
contrary to federal public policy?
3. Under Delaware law, may a certificate of incorporation contain
a blocking provision/golden share? If the answer to that question
is yes, does Delaware law impose on the holder of the provision a
fiduciary duty to exercise such provision in the best interests of the
corporation?
This court authorized the appeal. See 28 U.S.C. § 158(d)(2)(A).
II.
We review a bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. Ad Hoc Grp. of Timber Noteholders, LLC v. The
Pac. Lumber Co. (In re Scotia Pac. Co., LLC), 508 F.3d 214, 218 (5th Cir. 2007).
III.
Before moving to the merits of this case, we must first narrow the
questions presented. The bankruptcy court certified three broad questions to
this court, each of them involving the enforceability of “a provision, typically
called a blocking provision or a golden share.” As an initial matter, these terms
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are not synonymous, nor have they been precisely defined. Courts appear to
use the term “blocking provision” as a catch-all to refer to various contractual
provisions through which a creditor reserves a right to prevent a debtor from
filing for bankruptcy. See, e.g., In re Squire Court Partners Ltd. P’ship, 574
B.R. 701, 706-07 (E.D. Ark. 2017); cf. In re Lake Mich. Beach Pottawattamie
Resort LLC, 547 B.R. 899, 911 (Bankr. N.D. Ill. 2016) (describing “blocking
director” structures whereby secured creditors appoint directors with the
ability to veto a voluntary bankruptcy petition).
Generally speaking, a “golden share” is “[a] share that controls more
than half of a corporation’s voting rights and gives the shareholder veto power
over changes to the company’s charter.” E.g., SHARE, Black’s Law Dictionary
(10th ed. 2014); see also Mariana Pargendler, State Ownership and Corporate
Governance, 80 Fordham L. Rev. 2917, 2967 (2012) (noting that in the context
of formerly stated-owned entities, “[g]olden shares are essentially a special
class of stock issued to the privatizing government that grants special voting
and veto rights that are disproportionate to, or even independent of, its cash-
flow rights in the company”). As used in the bankruptcy context, the term
generally refers to the issuance to a creditor of a trivial number of shares that
gives the creditor the right to prevent a voluntary bankruptcy petition,
potentially among other rights. See, e.g., In re Intervention Energy Holdings,
LLC, 553 B.R. 258, 261-62 (Bankr. D. Del. 2016).
We need not dwell on whether this case involves a “blocking provision”
or a “golden share.” The facts do not fit neatly into either definition. Boketo
made a $15 million equity investment in FSNA. In return, FSNA issued
convertible preferred stock to Boketo, amounting to 100% of its preferred stock.
The preferred stock carried with it the right, granted in the certificate of
incorporation, to vote on certain corporate matters.
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We must therefore narrow the certified questions. The bankruptcy court
requested that we opine generally on the legality of “blocking provisions” and
“golden shares.” That we cannot do. “[T]he oldest and most consistent thread
in the federal law of justiciability is that the federal courts will not give
advisory opinions.” Flast v. Cohen, 392 U.S. 83, 96 (1968). The prohibition of
advisory opinions is a constitutional limit on the power of the courts. Id.; see
U.S. Const. art. III, § 2, cl. 1. The bankruptcy court’s statutory authority to
certify questions to this court does not include the authority to request advisory
opinions. True, in amending the law to allow direct appeal to the courts of
appeal, Congress anticipated that our review would focus on “unresolved
questions of law” rather than “fact-intensive issues.” See H.R. Rep. 109-31(I),
at 148-49 (2005), reprinted in 2005 U.S.C.C.A.N. 88, 206. But this does not
license us to answer a question of law divorced from the facts of the case before
us and broader than necessary to resolve that case.
We have declined to stray beyond the confines of the certified question
in at least one case. Peake v. Ayobami (In re Ayobami), 879 F.3d 152, 153 (5th
Cir. 2018). 3 But there is no prohibition against narrowing the certified
question—particularly where doing so would avoid rendering an advisory
opinion while still addressing an important question of law. We treat certified
questions under 28 U.S.C. § 158(d)(2)(A) “essentially as we treat certified
questions from district courts” under 28 U.S.C. § 1292(b). Crosby v.
Orthalliance New Image (In re OCA, Inc.), 552 F.3d 413, 418 (5th Cir. 2008).
Review under § 1292(b) looks to the entire certified order “and is not tied to the
particular question formulated by the district court.” Yamaha Motor Corp.,
U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996). This is because § 1292(b) provides
3 In Ayobami, “[w]e answer[ed] the certified question only,” declining to address
another question lurking in the background of the case. 879 F.3d at 153-55. We did not opine
on our ability to answer that question.
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for an appeal “from the order” and, thus, it is the order that is appealable, not
the certified question. Id. Just as § 1292(b) provides for an appeal “from the
order,” § 158(d)(2) provides for an “appeal of the judgment, order, or decree.”
28 U.S.C. § 158(d)(2); see Marshall v. Blake, 885 F.3d 1065, 1072 n.6 (7th Cir.
2018).
In this case, we decline to answer the bankruptcy court’s first certified
question regarding the enforceability of “blocking provisions” and “golden
shares” generally. “That question is appropriately reserved for a case in which
it is not hypothetical.” Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672
(2016). Instead we confine our analysis to whether U.S. and Delaware law
permit the parties to do what they did here: amend a corporate charter to allow
a non-fiduciary shareholder fully controlled by an unsecured creditor to
prevent a voluntary bankruptcy petition.
IV.
A bankruptcy case can be initiated in one of two ways. A qualified
“debtor,” see 11 U.S.C. § 109, can file a voluntary petition, see 11 U.S.C. § 301.
Or, subject to certain requirements and limitations, creditors can file an
involuntary petition against the debtor. 4 See 11 U.S.C. § 303(a)-(b). This case
concerns a voluntary petition filed under Chapter 11 of the Bankruptcy Code.
11 U.S.C. §§ 1101-74. A corporation like FSNA is a qualified debtor under
Chapter 11. See 11 U.S.C. § 109(a)-(b), (d). It may therefore file a voluntary
petition under that chapter. See 11 U.S.C. § 301. But a corporation cannot act
on its own; it can act only if authorized by appropriate agents. See, e.g., W.G.
Yates & Sons Const. Co. Inc. v. Occupational Safety & Health Review Comm’n,
459 F.3d 604, 607 (5th Cir. 2006). The Bankruptcy Code provides that an
4 Though not relevant to this case, the partners of a partnership or “a foreign
representative of the estate in a foreign proceeding concerning” the debtor may also file an
involuntary petition. See 11 U.S.C. § 303(b)(3)-(4).
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“entity that may be a debtor” may commence a voluntary case by filing a
petition. See 11 U.S.C. § 301(a). Still, when the entity is a corporation that can
act only through its agents, the Bankruptcy Code does not specify who may file
a petition on its behalf.
“In absence of federal incorporation, that authority finds its source in
local law.” Price v. Gurney, 324 U.S. 100, 106 (1945). State law thus determines
who has the authority to file a voluntary petition on behalf of the corporation.
See id. at 106-07; In re Nica Holdings, Inc., 810 F.3d 781, 789 (11th Cir. 2015).
If the petitioners lack authorization under state law, the bankruptcy court “has
no alternative but to dismiss the petition.” Price, 324 U.S. at 106. “It is not
enough that those who seek to speak for the corporation may have the right to
obtain that authority.” Id. Rather, they must have it at the time of filing. See
id. at 106-07. Absent a duly authorized petition, the bankruptcy court has no
power “to shift the management of a corporation from one group to another, to
settle intracorporate disputes, and to adjust intracorporate claims.” Id.
FSNA contends that even assuming Delaware law authorizes the
arrangement here, federal law would forbid it. Federal law forbids the
arrangement, in FSNA’s view, not because it is contrary to any specific statute
or binding caselaw, but instead because it violates a federal public policy
against waiving the protections of the Bankruptcy Code. Several courts of
appeals—though not this one—have opined that a pre-petition waiver of the
benefits of bankruptcy is contrary to federal law and therefore void. See In re
Thorpe Insulation Co., 671 F.3d 1011, 1026 (9th Cir. 2012) (“This prohibition
of prepetition waiver has to be the law; otherwise, astute creditors would
routinely require their debtors to waive.” (quoting Bank of China v. Huang (In
re Huang), 275 F.3d 1173, 1177 (9th Cir. 2002))); Klingman v. Levinson, 831
F.2d 1292, 1296 n.3 (7th Cir. 1987) (stating in dictum that “[f]or public policy
reasons, a debtor may not contract away the right to a discharge in
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bankruptcy”); Fallick v. Kehr, 369 F.2d 899, 904 (2d Cir. 1966) (stating in
dictum that “an advance agreement to waive the benefits of the [Bankruptcy]
Act would be void”). Boketo agrees that a debtor cannot contract away the
protections of bankruptcy. Moreover, this case does not involve a contractual
waiver of the right to file for bankruptcy or to a discharge. As this case is
framed, we can assume without deciding that such a waiver is invalid. We
leave the resolution of that issue for another case, one in which it is squarely
presented.
Instead, this case involves an amendment to a corporate charter,
triggered by a substantial equity investment, that effectively grants a
preferred shareholder the right to veto the decision to file for bankruptcy. In
FSNA’s view, this is just a wolf in sheep’s clothing—a creditor masquerading
as a bona fide equity owner. Boketo is fully controlled by Macquarie, meaning
the veto right in fact belongs to Macquarie—an unsecured creditor by virtue of
its unpaid fees. In support of its argument, FSNA cites a slew of bankruptcy
court cases. These cases all involve arrangements whereby a lender extracts
an amendment to the organization’s foundational documents granting the
lender a veto right in exchange for forbearance. See In re Lexington Hosp. Grp.,
LLC, 577 B.R. 676, 679-81, 684-86, 688 (Bankr. E.D. Ky. 2017) (denying motion
to dismiss where lender conditioned financing on grant of equity interest and
appointment of non-fiduciary blocking director with right to prevent
bankruptcy); In re Intervention Energy Holdings, 553 B.R. at 261, 266 (denying
motion to dismiss where lender conditioned forbearance on issuance of single
common unit in exchange for $1 and amendment of operating agreement to
require unanimous consent for bankruptcy); In re Lake Mich. Beach
Pottawattamie Resort, 547 B.R. at 903-04, 911-15 (denying motion to dismiss
where lender conditioned forbearance on appointment of lender as non-
fiduciary “special member” with right to prevent bankruptcy but without right
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to distributions or obligation to make capital contributions); In re Bay Club
Partners-472, LLC, No. BR 14-30394-RLD11, 2014 WL 1796688, at *3-6
(Bankr. D. Or. May 6, 2014) (denying motion to dismiss where lender requested
provision in operating agreement prohibiting filing voluntary petition before
all debts were paid in full).
None of these cases concerns the situation here. Even treating Boketo
and Macquarie as a single entity, 5 there is no evidence that their arrangement
was merely a ruse to ensure that FSNA would pay Macquarie’s bill. In 2012,
Macquarie, through Boketo, took a substantial equity stake in FSNA, buying
convertible preferred stock for $15 million. In 2013, Macquarie issued an
invoice for the $2.5 million arrangement fee. 6 FSNA would have us believe the
tail wags the dog. It strains credulity to believe that Macquarie made a $15
million equity investment just to hedge against the possibility that FSNA
might not pay a $3 million bill. We do not doubt that Macquarie would have
preferred to avoid the cost and inconvenience of trying to collect some portion
of its $3 million fee as an unsecured creditor in bankruptcy. 7 But if it was
anxious about whether FSNA would fail to pay the fee, then it was just
throwing good money after bad—$15 million of good money. FSNA points to no
5 The bankruptcy court found that Macquarie fully controlled Boketo and, as we do,
assumed for the sake of argument that the companies were one and the same. Although
FSNA derides Boketo as a “paper company,” there is nothing inherently improper or
suspicious about creating a limited liability entity in order to facilitate an investment. At the
hearing on this motion, both parties’ witnesses testified that this practice is “very common”
and “typical.”
6 It is not clear from the record when Macquarie billed FSNA for the $500 thousand
financial advisory fee.
7 Boketo’s position in bankruptcy is actually worse than Macquarie’s. Shareholders
are the residual claimants of the estate, see 11 U.S.C. § 726(a)(6), entitled only to whatever
remains after payment of the various secured and unsecured creditors, see id. §§ 507, 726; cf.
Torch Liquidating Tr. ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 385 (5th Cir.
2009) (“When a corporation is insolvent . . . its creditors take the place of the shareholders as
the residual beneficiaries of any increase in value.” (emphasis removed) (quoting N. Am.
Catholic Educ. Programming Found., Inc. v. Gheewalla, 930 A.2d 92, 101 (Del. 2007))).
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evidence that would allow us to set aside our incredulity and conclude that
Macquarie invested $15 million in FSNA to ensure payment of a $3 million
bill. 8
The Supreme Court held more than seventy years ago that corporate
authority to file for bankruptcy “finds its source in local law.” See Price, 324
U.S. at 106. FSNA has provided us no reason to depart from that general rule
in this case. There is no prohibition in federal bankruptcy law against granting
a preferred shareholder the right to prevent a voluntary bankruptcy filing just
because the shareholder also happens to be an unsecured creditor by virtue of
an unpaid consulting bill. “It is one thing to look past corporate governance
documents and the structure of a corporation when a creditor has negotiated
authority to veto a debtor’s decision to file a bankruptcy petition; it is quite
another to ignore those documents when the owners retain for themselves the
decision whether to file bankruptcy.” In re Squire Court Partners, 574 B.R. at
708; see also In re Glob. Ship Sys., LLC, 391 B.R. 193, 199, 203 (Bankr. S.D.
Ga. 2007) (holding that owner of 20% equity stake and $18 million debt “wears
two hats” and may exercise a right to prevent a voluntary bankruptcy petition).
In sum, there is no compelling federal law rationale for depriving a bona fide
equity holder of its voting rights just because it is also a creditor of the
corporation.
FSNA urges that even if a shareholder-creditor could hold a bankruptcy
veto right, such a right remains void in the absence of a concomitant fiduciary
duty. But FSNA offers no good legal or logical rationale for such a holding. No
statute or binding caselaw licenses this court to ignore corporate foundational
FSNA repeatedly alleges throughout its brief that Boketo was trying to force it to
8
draw on a $7.5 million Boketo line of credit. FSNA therefore labels Boketo a “potential”
creditor. But FSNA admits that it never drew on the line of credit, regardless of the pressure
it may have felt to do so. Consequently, the existence of the untapped line of credit is
immaterial to the outcome of this case.
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documents, deprive a bona fide shareholder of its voting rights, and reallocate
corporate authority to file for bankruptcy just because the shareholder also
happens to be an unsecured creditor. Cf. Price, 324 U.S. at 106 (“[U]nder the
Bankruptcy Act the power of the court to shift the management of a corporation
from one group to another, to settle intracorporate disputes, and to adjust
intracorporate claims is strictly limited to those situations where a petition has
been approved.”). The bankruptcy court opinions FSNA cites are not
controlling and not to the contrary. They involve creditors’ attempts to appoint
non-fiduciary officers and directors with the ability to prevent a bankruptcy
filing. See In re Lexington Hosp. Grp., 577 B.R. at 684-86 (holding veto right of
creditor-controlled LLC member invalid where the LLC’s governing documents
directed member to consider only the creditors’ interests); In re Lake Mich.
Beach Pottawattamie Resort, 547 B.R. at 913 (“The essential playbook for a
successful blocking director structure is this: the director must be subject to
normal director fiduciary duties . . . .” (emphasis added)). 9 As a matter of
federal law, fiduciary duties are not required to allow a bona fide shareholder
to exercise its right to prevent a voluntary bankruptcy petition.
This is not an advisory opinion, and our holding is limited to the facts
actually presented in this case. We hold simply that federal bankruptcy law
does not prevent a bona fide equity holder from exercising its voting rights to
prevent the corporation from filing a voluntary bankruptcy petition just
because it also holds a debt owed by the corporation and owes no fiduciary duty
to the corporation or its fellow shareholders. A different result might be
warranted if a creditor with no stake in the company held the right. So too
might a different result be warranted if there were evidence that a creditor
9 Contrary to the representations in FSNA’s brief, the bankruptcy court in In re
Intervention Holdings expressly declined to consider this issue. See 553 B.R. at 262-63.
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took an equity stake simply as a ruse to guarantee a debt. We leave those
questions for another day.
V.
We turn now to the main event: does Delaware law allow Boketo to
exercise the blocking right? Authority to file for bankruptcy is, after all, a
matter of state law. See Price, 324 U.S. at 106-07. This question has two parts.
First, whether Delaware law allows parties to provide in the certificate of
incorporation that the consent of both classes of shareholders is required to file
a voluntary petition for bankruptcy. Second, whether Delaware law would
impose a fiduciary duty on a minority shareholder with the ability to prevent
a voluntary bankruptcy petition.
A.
This is not a diversity case. But because we apply state law to determine
whether a corporate bankruptcy petition was properly authorized, the same
principles apply. In evaluating issues of state law, we look to the decisions of
the state’s highest courts. Temple v. McCall, 720 F.3d 301, 307 (5th Cir. 2013).
In the absence of a controlling decision, we make an “Erie 10 guess” as to how
the state’s highest court would resolve the issue. Id. Unless persuaded that the
state’s highest court would decide the issue differently, we also defer to the
decisions of the state’s intermediate appellate courts. Id.; see Howe ex rel. Howe
v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir. 2000). To determine corporate
authority to file for bankruptcy, we apply the law of the state of incorporation—
here, Delaware. See Price, 324 U.S. at 104 & n.1, 106.
B.
Under the Delaware General Corporation Law, a certificate of
incorporation “may” contain:
10 Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
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Any provision for the management of the business and for the
conduct of the affairs of the corporation, and any provision
creating, defining, limiting and regulating the powers of the
corporation, the directors, and the stockholders, or any class of the
stockholders, or the governing body, members, or any class or
group of members of a nonstock corporation; if such provisions are
not contrary to the laws of this State.
Del. Code tit. 8, § 102(b)(1). As a default rule, “[t]he business and affairs of
every corporation . . . shall be managed by or under the direction of a board of
directors.” Id. § 141(a). There is, however, an exception to the default rule: the
management prerogative rests with the board, “except as may be otherwise
provided in this chapter or in its certificate of incorporation.” Id. If the
certificate departs from the default rule, then “the powers and duties conferred
or imposed upon the board of directors by this chapter shall be exercised or
performed to such extent and by such person or persons as shall be provided
in the certificate of incorporation.” Id.
“Delaware’s corporate statute is widely regarded as the most flexible in
the nation.” Jones Apparel Grp., Inc. v. Maxwell Shoe Co., 883 A.2d 837, 845
(Del. Ch. 2004). Instead of dictating a rigid structure, “it leaves the parties to
the corporate contract (managers and stockholders) with great leeway to
structure their relations, subject to relatively loose statutory constraints.” Id.
“Sections 102(b)(1) and 141(a) . . . embody Delaware’s commitment to private
ordering in the charter.” Id. In light of that commitment and the “broad effect”
of these statutes, Delaware courts do “not lightly find that certificate
provisions are unlawful.” Id. at 845-46. A provision is not contrary to Delaware
law just because it withdraws traditional power from the board. The “obvious
purpose” of § 141(a) “is to permit (absent some conflict with Delaware public
policy) certificate provisions to withdraw authority from the board.” Id. at 852.
We nonetheless decline to resolve whether the shareholder consent
provision violates Delaware law. In the bankruptcy court, FSNA argued that
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the shareholder consent provision is invalid under Delaware law. On appeal,
however, FSNA has expressly waived any such argument, stating that the
“abstract question as to whether Delaware would ever allow a blocking
provision need not be debated.” When a party expressly waives an issue or
argument, we lack the benefit of adversarial briefing and generally decline to
consider the issue. See Procter & Gamble Co. v. Amway Corp., 376 F.3d 496,
499 n.1 (5th Cir. 2004). We have all the more reason to do so here. The parties
have not identified, and we have not discovered, any on-point Delaware cases.
We decline to decide in the first instance whether the Delaware General
Corporation Law would tolerate a provision in the certificate of incorporation
conditioning the corporation’s right to file a bankruptcy petition on shareholder
consent. 11 For the purposes of this case, we assume it would.
C.
FSNA contends that Delaware law would classify Boketo as a controlling
minority shareholder because of its ability to block a bankruptcy filing. As a
result, fiduciary obligations would arise, invalidating any attempt to exercise
the bankruptcy veto right. FSNA is wrong on both fronts.
1.
Under Delaware law, a shareholder is generally free to act in its self-
interest, unencumbered by any fiduciary obligation. See Ivanhoe Partners v.
Newmont Min. Corp., 535 A.2d 1334, 1344 (Del. 1987). But there are two
exceptions. “[A] shareholder owes a fiduciary duty only if it owns a majority
interest in or exercises control over the business affairs of the corporation.” Id.
Delaware law thus imposes fiduciary duties on two kinds of shareholders:
majority shareholders and minority controlling shareholders. See Kahn v.
Lynch Commc’n Sys., Inc., 638 A.2d 1110, 1113-14 (Del. 1994); Ivanhoe
11 The bankruptcy court declined to decide this issue for the same reason.
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Partners, 535 A.2d at 1344; see also Lewis v. Knutson, 699 F.2d 230, 235 (5th
Cir. 1983) (applying Delaware law). Boketo owns convertible preferred shares
that would amount to a 49.76% equity stake in FSNA if converted. That
interest, though formidable, is just shy of majority control. Boketo could
therefore only owe a fiduciary duty if it qualifies as a controlling minority
shareholder. See Weinstein Enters., Inc. v. Orloff, 870 A.2d 499, 507-08 (Del.
2005); Kahn, 638 A.2d at 1113-14.
The standard for minority control is a steep one. Potential control is not
enough. See In re Primedia Inc. Derivative Litig., 910 A.2d 248, 257 (Del. Ch.
2006). Instead, the shareholder must “dominat[e]” the corporation “through
actual control of corporation conduct.” Kahn, 638 A.2d at 1114 (emphasis
added) (quoting Citron v. Fairchild Camera & Instrument Corp., 569 A.2d 53,
70 (Del. 1989)); see Lewis, 699 F.2d at 235; cf. Solomon v. Armstrong, 747 A.2d
1098, 1117 n.61 (Del. Ch. 1999) (“[A] plaintiff must allege literal control of
corporate conduct.” (emphasis added)), aff’d, 746 A.2d 277 (Del. 2000)
(unpublished table disposition). The “actual control test” is not easily satisfied.
See In re KKR Fin. Holdings LLC S’holder Litig., 101 A.3d 980, 992 (Del. Ch.
2014), aff’d sub nom. Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del.
2015). A minority shareholder exercises “actual control” only when it has “such
formidable voting and managerial power that [it], as a practical matter, [is] no
differently situated than if [it] had majority voting control.” Id. (quoting In re
PNB Holding Co. S’holders Litig., No. CIV.A. 28-N, 2006 WL 2403999, at *9
(Del. Ch. Aug. 18, 2006)).
In making that determination, Delaware courts focus on control of the
board. See id. at 992-93 (first citing Superior Vision Servs., Inc. v. ReliaStar
Life Ins. Co., No. CIV.A. 1668-N, 2006 WL 2521426, at *4 (Del. Ch. Aug. 25,
2006); then citing In re Morton’s Rest. Grp., Inc. S’holders Litig., 74 A.3d 656,
665 (Del. Ch. 2013)). The shareholder’s command over the board must be “so
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potent that independent directors . . . cannot freely exercise their judgment,
fearing retribution.” In re Morton’s Rest. Grp., 74 A.3d at 665 (alteration in
original) (quoting In re PNB Holding Co., 2006 WL 2403999, at *9). In short, a
minority controlling shareholder must have “a combination of potent voting
power and management control such that the s[hare]holder could be deemed
to have effective control of the board without actually owning a majority of
stock.” Corwin, 125 A.3d at 307 (footnote omitted).
“A plaintiff who alleges domination of a board of directors and/or control
of its affairs must prove it.” Kaplan v. Centex Corp., 284 A.2d 119, 122 (Del.
Ch. 1971); see 12B William Meade Fletcher et al., Fletcher Cyclopedia of the
Law of Corporations § 5811.50 (perm. ed., rev. vol. 2017) (“There must be some
evidence demonstrating control, however, since the presumption is against
it.”). FSNA’s argument for a finding of control boils down to this: Boketo owned
preferred stock convertible to a 49.76% equity stake; it appoints two of the five
directors (that is, a minority); and it is seeking to exercise its veto right
(allegedly to squelch a lawsuit against its parent company). Although the size
of the shareholder’s equity stake is a factor in the analysis, it is not dispositive.
See In re PNB Holding Co., 2006 WL 2403999, at *9. “[T]he cases do not reveal
any sort of linear, sliding-scale approach whereby a larger share percentage
makes it substantially more likely that the court will find the stockholder was
a controlling stockholder.” In re Crimson Expl. Inc. Stockholder Litig., No.
CIV.A. 8541-VCP, 2014 WL 5449419, at *10 (Del. Ch. Oct. 24, 2014); see also
id. at *10 n.50 (collecting cases); compare, e.g., In re W. Nat’l Corp. S’holders
Litig., No. 15927, 2000 WL 710192, at *1, *29-30 (Del. Ch. May 22, 2000)
(granting summary judgment based on finding that 46% shareholder did not
exercise actual control), with Kahn, 638 A.2d at 1115 (“[N]otwithstanding its
43.3 percent minority shareholder interest, Alcatel did exercise actual control
over Lynch by dominating its corporate affairs.”).
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In other words, the size of Boketo’s stake is not enough. Instead, to
demonstrate that Boketo is a controlling shareholder, FSNA must prove that
Boketo actually dominated FSNA’s corporate conduct. See Kahn, 638 A.2d at
1114; Kaplan, 284 A.2d at 122-23.
In Kahn—the “seminal” controlling shareholder case, In re KKR Fin.
Holdings, 101 A.3d at 991—the Delaware Supreme Court found that a
shareholder exercised actual control “notwithstanding its 43.3 percent
minority shareholder interest.” 638 A.2d at 1115 (emphasis added). The board
in that case was considering both the renewal of management contracts and a
proposed merger. See id. at 1114-15. In each case, the minority shareholder
prevailed—“not because the [independent directors] decided in the exercise of
their own business judgment that [its] position was correct,” but because they
felt powerless in the face of its opposition. See id. Indeed, one of the
shareholder’s appointed directors told the other board members, “You must
listen to us. We are 43 [sic] percent owner. You have to do what we tell you.”
Id. at 1114. One of the independent directors testified that that statement
“scared [the independent directors] to death.” Id. Based on that evidence, the
Delaware Supreme Court affirmed the Chancery Court’s finding of actual
control. Id. at 1115.
Likewise, the Chancery Court found that a 40% shareholder was a
controlling shareholder in In re Cysive, Inc. Shareholders Litigation, 836 A.2d
531, 535, 552-53 (Del. Ch. 2003)—a case characterized by the Chancery Court
as “its most aggressive finding that a minority blockholder was a controlling
stockholder,” In re Morton’s Rest. Grp., 74 A.3d at 665. In addition to his
sizeable minority stake, the shareholder there was the company’s founder,
chief executive officer, and chairman. In re Cysive, Inc., 836 A.2d at 552. “He
[was], by admission, involved in all aspects of the company’s business . . . .” Id.
Moreover, several of his family members occupied high-level positions within
19
Case: 18-60093 Document: 00514483193 Page: 20 Date Filed: 05/22/2018
No. 18-60093
the company. Id. The shareholder’s “day-to-day managerial supremacy”
distinguished the case from cases in which the Chancery Court had found that
holders of even larger blocks of shares were not controlling shareholders. Id.
(citing In re W. Nat’l Corp., 2000 WL 710192, at *6).
Despite Boketo’s sizeable stake in FSNA, FSNA has pointed to no
evidence that Boketo exercises actual control. FSNA cites Boketo’s
appointment of two of its five directors as evidence of control. But the
appointment of a minority of directors—without more—is insufficient to
demonstrate actual control. Cf. In re Morton’s Rest. Grp., 74 A.3d at 665
(finding that shareholder’s 27.7% stake and control of two of ten board
members, “without more, does not establish actual domination of the board”).
FSNA has offered no evidence that, despite its minority board representation,
Boketo’s influence was so pervasive that it would qualify as a controlling
shareholder under Delaware law. See Corwin, 125 A.3d at 307; Kahn, 638 A.2d
at 1114-15; In re KKR Fin. Holdings, 101 A.3d at 992-93; In re Morton’s Rest.
Grp., 74 A.3d at 665.
FSNA also claims that Boketo exercises actual control by virtue of its
ability to prevent a voluntary bankruptcy filing by exercising its voting rights
as a 100% preferred shareholder. But what matters is the dominating
shareholder’s actual exercise of control, not just the theoretical possibility that
it might do so. See Kahn, 638 A.2d at 1114; In re Primedia Inc., 910 A.2d at
257; Solomon, 747 A.2d at 1117 n.61. FSNA has not alleged domination of its
day-to-day management. Instead, it claims only that Boketo seeks to exercise
its veto right, which is enough to show control in FSNA’s view. But the
assertion is self-refuting. Boketo never did manage to exercise its right to vote
one way or the other. FSNA’s board never put the matter to a vote; instead, it
simply adopted a resolution to file for bankruptcy without the shareholders’
consent. A controlling shareholder’s command of the board must be “so potent
20
Case: 18-60093 Document: 00514483193 Page: 21 Date Filed: 05/22/2018
No. 18-60093
that independent directors . . . cannot freely exercise their judgment, fearing
retribution.” In re Morton’s Rest. Grp., 74 A.3d at 665 (alteration in original)
(quoting In re PNB Holding Co., 2006 WL 2403999, at *9).
Such was not the case here. The FSNA board’s apparent ability and
willingness to act without Boketo’s consent undercuts the case for control.
Boketo’s inability to prevent the board from authorizing the filing—despite its
right to do so—disproves the existence of the type of “potent voting power and
management control” necessary to impose fiduciary obligations on a minority
shareholder. The mere existence of the right to control is not enough; Boketo
must have actually exercised it. See Kahn, 638 A.2d at 1114; In re Primedia
Inc., 910 A.2d at 257; Solomon, 747 A.2d at 1117 n.61. Nor does Boketo’s
intervention in the bankruptcy proceedings bolster the case for control. Indeed,
the very fact that Boketo had to resort to filing a motion to dismiss the
bankruptcy petition—an action hotly contested by FSNA in the bankruptcy
proceedings and on appeal—only emphasizes its inability to control FSNA. To
reuse a phrase: if Boketo is a controlling shareholder of FSNA, then the tail is
wagging the dog.
2.
Even assuming Boketo were a controlling shareholder, there is a more
fundamental defect in FSNA’s argument. The proper remedy for a breach of
fiduciary duty claim is not to allow a corporation to disregard its charter and
declare bankruptcy without shareholder consent. Absent a properly authorized
petition, the bankruptcy court has no “power . . . to shift the management of a
corporation from one group to another, to settle intracorporate disputes, and
to adjust intracorporate claims.” Price, 324 U.S. at 106.
In Price, the debtor defaulted on its bonds and then struck a deal with
its bondholders. Id. at 101. To placate them, it placed over 50% of its stock in
a voting trust controlled by the bondholders. Id. The bondholders then
21
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No. 18-60093
controlled the company and elected its directors. Id. A majority of the
shareholders tried to file a voluntary petition on the debtor’s behalf. Id. at 102.
The shareholders claimed that the voting trust was illegal and had expired by
its own terms anyway. Id. They also claimed that the directors were unlawfully
elected and had violated their fiduciary duties, thereby transferring to the
shareholders the right to control the company. Id. at 104. The court
acknowledged that the shareholders “may have [had] a meritorious case for
relief.” Id. at 107. But bankruptcy proceedings were not the appropriate venue
to seek a remedy for their grievances. See id. at 106-07. Their remedy, if any,
was under state law. See id. at 107.
Because we have already concluded that Boketo would not qualify as a
controlling shareholder under Delaware law, we need not (and do not) decide
whether it breached a fiduciary duty. Even if it had, the proper remedy is not
to deny an otherwise meritorious motion to dismiss the bankruptcy petition.
Instead, to the extent that Boketo breached any fiduciary duty owed as a
controlling shareholder, FSNA must seek its remedy under state law.
VI.
For the foregoing reasons, we AFFIRM.
22
|
IN THE SUPREME COURT OF MISSISSIPPI
NO. 2009-IA-01371-SCT
WILLIAM P. KNIGHT, II
v.
ERIC WOODFIELD
DATE OF JUDGMENT: 08/10/2009
TRIAL JUDGE: HON. ROBIN ALFRED MIDCALF
COURT FROM WHICH APPEALED: HARRISON COUNTY COUNTY COURT
ATTORNEY FOR APPELLANT: CHAD PATRICK FAVRE
ATTORNEY FOR APPELLEE: JOHN VERNON WOODFIELD
NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS
DISPOSITION: AFFIRMED AND REMANDED - 01/06/2011
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE CARLSON, P.J., RANDOLPH AND KITCHENS, JJ.
CARLSON, PRESIDING JUSTICE, FOR THE COURT:
¶1. Eric Woodfield filed a complaint alleging alienation of affections against William
Knight in the County Court of Harrison County. Knight filed a motion to dismiss for lack
of personal jurisdiction pursuant to Mississippi Rule of Civil Procedure 12(b)(2), which the
county court denied. We granted Knight’s petition for an interlocutory appeal. However,
having now considered the issues raised, we affirm the judgment of the county court.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶2. Eric Woodfield and his wife, Kristina Dokka, resided in Long Beach, Mississippi,
from July 2006 until their separation in April 2007. During this time, Dokka commuted from
her home in Mississippi to her job in Louisiana. Dokka was a coworker of William Knight,
a Louisiana resident.
¶3. Woodfield claims to have noticed a substantial change in his marital relationship with
Dokka in January 2007. He noticed that Dokka had become very protective of her cellular
phone, would not answer text messages around him, and would use the couple’s computer
for extended periods of time while she thought he was asleep. Woodfield also claims that
his sexual relationship with Dokka diminished during this time. This activity prompted
Woodfield to access Dokka’s cellular phone,1 where he discovered numerous text messages
from Knight as well as partially nude photos of Dokka which had been sent to Knight.
Woodfield also examined Dokka’s phone records and discovered that in February 2007, she
and Knight had talked for 120 minutes and had exchanged 131 text messages. In March
2007, Dokka spoke with Knight for 860 minutes and the two exchanged 807 text messages.
¶4. Knight and Dokka also exchanged numerous emails during this time. One email sent
by Knight to Dokka stated, “I refuse to feel guilty about falling for you,” and “[y]ou enter
marriage by choice and you can leave it by choice anytime you choose.” Dokka also stated
in an email that she “had fallen” for Knight.
1
Dokka’s cellular phone is registered in Louisiana and has a Louisiana telephone
number.
2
¶5. Upon discovering these communications between Knight and Dokka, Woodfield sent
Knight an email requesting that Knight stop pursuing Dokka because Woodfield was trying
to salvage his marriage. Knight continued communicating with Dokka despite Woodfield’s
request.
¶6. Knight admitted he was aware that Dokka and Woodfield were married and that
Dokka lived with Woodfield in Mississippi. Knight claims that he and Dokka were never
physically together in Mississippi while she was married to Woodfield.
¶7. Woodfield and Dokka separated on April 4, 2007, and were divorced on July 16,
2007. After the separation, Dokka moved to Louisiana. She and Knight are now married and
living in Louisiana. Woodfield is still a resident of Mississippi.
¶8. On January 15, 2008, Woodfield filed a complaint against Knight in the County Court
of Harrison County alleging alienation of affections. In his complaint, Woodfield alleged
that he had suffered loss of consortium as a proximate result of Knight’s actions. Knight
filed his first motion to dismiss for lack of personal jurisdiction on March 14, 2008, but the
trial court denied this motion due to incomplete discovery. On July 9, 2009, Knight filed a
second motion to dismiss, again alleging lack of personal jurisdiction. In his response to
Knight’s second motion, Woodfield claimed that the communications between Knight and
Dokka, while she was physically present in Mississippi, had resulted in his loss of
consortium, the damage of which had occurred entirely in Mississippi. The trial court denied
Knight’s second motion to dismiss, finding that the injury, if any, potentially occurred within
3
Mississippi due to the communications between Dokka and Knight while Dokka was located
in Mississippi.
¶9. The trial court granted Knight permission to seek an interlocutory appeal on this
matter because of “the advancements in technology and the unique nature of the tort of
alienation of affections.” We granted Knight’s petition for an interlocutory appeal, but upon
consideration of the issues raised, we now affirm the judgment of the trial court, finding that
Knight’s contacts with Mississippi were sufficient to establish personal jurisdiction for
Woodfield’s claim of alienation of affections.
DISCUSSION
¶10. Knight raises three issues on interlocutory appeal. For the purposes of this opinion,
we will address the following two issues: (1) whether a nonresident defendant’s acts of
communicating by email, text, and cellular phone with the plaintiff’s wife, which the plaintiff
claims to have caused the tort of alienation of affections, constitute the minimum contacts
necessary to exercise in personam jurisdiction over the nonresident defendant; and (2)
whether exercising personal jurisdiction in this case would offend traditional notions of fair
play and substantial justice.2
¶11. “We review jurisdictional issues de novo. When considering jurisdictional issues, the
Court sits in the same position as the trial court, ‘with all facts as set out in the pleadings or
2
The third issue is whether a nonresident defendant committed the tort of alienation
of affections when the plaintiff filed and received a divorce on the grounds of irreconcilable
differences. This is an issue for the trial court. Further, Knight’s Petition for Interlocutory
Appeal did not include this issue.
4
exhibits, and may reverse regardless of whether the error is manifest.’” Horne v. Mobile
Area Water & Sewer Sys., 897 So. 2d 972, 975 (Miss. 2004) (citing Rayner v. Raytheon Co.,
858 So. 2d 132, 133 (Miss. 2003)).
I. WHETHER A NONRESIDENT DEFENDANT’S ACTS OF
COMMUNICATING BY EMAIL, TEXT, AND CELLULAR
PHONE WITH THE PLAINTIFF’S WIFE, WHICH THE
PLAINTIFF CLAIMED TO HAVE CAUSED THE TORT OF
ALIENATION OF AFFECTIONS, CONSTITUTE THE
MINIMUM CONTACTS NECESSARY TO EXERCISE IN
PERSONAM JURISDICTION OVER THE NONRESIDENT
DEFENDANT.
¶12. This Court must conduct a two-step analysis when determining whether a Mississippi
court may exercise personal jurisdiction over a nonresident defendant. Horne, 897 So. 2d
at 976. First, we must determine whether the nonresident defendant is amenable to suit in
Mississippi by virtue of our long-arm statute. Miss. Code Ann. § 13-3-57 (Rev. 2002); Id.
(citing McDaniel v. Ritter, 556 So. 2d 303, 307 (Miss. 1989)). If so, then we must determine
whether the nonresident defendant is amenable to suit in our state consistent with the Due
Process Clauses of the state and federal constitutions. Horne, 897 So. 2d at 976 (citing
McDaniel, 556 So. 2d at 308).
A. Mississippi’s Long-Arm Statute
¶13. Mississippi’s long-arm statute states, in relevant part:
Any nonresident person . . . who shall commit a tort in whole or in part in this
state against a resident or nonresident of this state . . . shall by such act or acts
be deemed to be doing business in Mississippi and shall thereby be subjected
to the jurisdiction of the courts of this state.
Miss. Code Ann. § 13-3-57 (Rev. 2002) (emphasis added).
5
¶14. In order to determine whether our long-arm statute confers jurisdiction in this case,
we must decide whether Knight has committed a tort, in whole or in part, in Mississippi. We
previously have held that our long-arm statute extends to nonresident defendants who
commit the tort of alienation of affections in Mississippi. Camp v. Roberts, 462 So. 2d 726,
727 (Miss. 1985), overruled on other grounds by Saunders v. Alford, 607 So. 2d 1214 (Miss.
1992). The elements of the tort of alienation of affections are: “‘(1) wrongful conduct of the
defendant; (2) loss of affection or consortium; and (3) causal connection between such
conduct and loss.’” Fitch v. Valentine, 959 So. 2d 1012, 1025 (Miss. 2007) (quoting
Saunders, 607 So. 2d at 1215). In his complaint, Woodfield alleged that Knight’s actions
of texting, calling, and emailing Dokka while she was in Mississippi were the direct and
proximate cause of the alienation of affections. Taken as true, these allegations are sufficient
to show that Knight committed the tort, in whole or in part, in Mississippi. Accordingly, the
requirements of our long-arm statute are satisfied.
B. Minimum Contacts
¶15. The second step of the analysis is to determine whether the Due Process Clause allows
Mississippi courts to exercise jurisdiction over the nonresident defendant. Horne, 897 So.
2d at 976 (citing McDaniel, 556 So. 2d at 308). Federal law controls this inquiry. Id. The
Due Process Clause of the Fourteenth Amendment provides: “No State shall . . . deprive any
person of life, liberty, or property without due process of law . . . .” U.S. Const. amend. XIV.
Regarding the Due Process Clause and personal jurisdiction, the United States Supreme
Court has held:
6
[D]ue process requires only that in order to subject a defendant to a judgment
in personam, if he be not present within the territory of the forum, he have
certain minimum contacts with it such that the maintenance of the suit does not
offend traditional notions of fair play and substantial justice.
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945). “A
defendant has ‘minimum contacts’ with a state if ‘the defendant has purposefully directed his
activities at residents of the forum and the litigation results from alleged injuries that arise
out of or relate to those activities.’” Horne, 897 So. 2d at 979 (citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985)).
¶16. In Horne, this Court analyzed whether a nonresident defendant’s actions that
originated in another state, but were directed at Mississippi and caused harm within the State,
constituted minimum contacts for the purposes of the Fourteenth Amendment. Id. at 976.
In Horne, the Board of Water and Sewer Commissioners of the City of Mobile (BWSC)
released water from a reservoir in Alabama, which subsequently damaged real and personal
property in Mississippi. Id. at 974. The property owners filed suit against the BWSC, the
Mississippi Power Company, the Mobile Area Water and Sewer System, the City of Mobile,
and John Does A through J, alleging negligence, strict liability, nuisance, trespass, and
outrageous conduct. Id. The City of Mobile and the BWSC both filed motions to dismiss
pursuant to Rule 12(b)(2). Id. The chancellor granted the motions, and the property owners
appealed to this Court, arguing that Mississippi courts had in personam jurisdiction over the
nonresident defendants. Id. We reversed the chancery court, finding that the nonresident
defendants were amenable to in personam jurisdiction in Mississippi. Id.
7
¶17. When applying the minimum-contacts rule to the facts in Horne, this Court found that
“the City and [BWSC] ‘purposefully directed’ their activities toward Mississippi property
owners, by opening the spillway to its maximum capacity.” Id. at 979. Further, referring to
the deposition testimony of an engineer for the BWSC, this Court noted that “[t]here is no
question that the City and [BWSC] knew the water would flow into Mississippi.” Id. Based
on these findings, we determined that the nonresident defendants in Horne were amenable
to in personam jurisdiction in Mississippi courts. Id.
¶18. Similar to the nonresident defendants in Horne, Knight’s actions originated in a
neighboring state. From Louisiana, Knight called, sent text messages to, and emailed Dokka.
Importantly, Knight knew that Dokka resided with Woodfield in their marital home in
Mississippi. Knight and Dokka exchanged more than 900 text messages in the course of two
months. The two spent 980 minutes speaking to each other on the phone during the same
time period. Knight and Dokka also exchanged numerous emails, chronicling their
developing relationship.
¶19. We find that Knight’s emails, phone calls, and text messages are sufficient “minimum
contacts” with Mississippi for the purposes of our personal-jurisdiction analysis. Int’l Shoe
Co., 326 U.S. at 316. Knight “purposefully directed” his actions at a resident of the forum,
namely Dokka, and the current litigation results from the alleged injuries that “arose out of
or relate to” Knight’s actions. Burger King Corp., 471 U.S. at 472. In the current litigation,
Woodfield alleges that Knight’s actions were the direct and proximate result of Woodfield’s
injuries, specifically the alienation of Dokka’s affections. Again, for the sake of emphasis,
8
the tort of alienation of affections consists of three elements: (1) wrongful conduct by the
defendant; (2) loss of affection or consortium; and (3) causal connection between the
wrongful conduct and the loss. Fitch, 959 So. 2d at 1025. Taking Woodfield’s allegations
in his pleadings as true, which we must do in considering this issue, Knight’s phone calls,
emails, and text messages constitute the wrongful conduct that led to Woodfield’s alleged
injuries. Thus, Knight’s actions constitute sufficient minimum contacts, requiring us now
to analyze the second critical issue before us.
II. WHETHER EXERCISING JURISDICTION IN THIS CASE
WOULD OFFEND THE TRADITIONAL NOTIONS OF FAIR
PLAY AND SUBSTANTIAL JUSTICE.
¶20. Our final step in determining whether Knight is amenable to suit in Mississippi is to
determine whether maintenance of the suit offends traditional notions of “fair play and
substantial justice.” Burger King Corp., 471 U.S. at 476 (quoting Int’l Shoe Co., 326 U.S.
at 320). This analysis depends on: “(1) the forum state’s interest in adjudicating the dispute;
(2) the plaintiff’s interests in obtaining convenient and effective relief; (3) the interstate
judicial system’s interest in obtaining the most efficient resolution of controversies; and (4)
the shared interest of the several states in furthering fundamental social policies.” Id.
¶21. In applying these considerations to today’s case, we find that Mississippi has a strong
interest in adjudicating the dispute. Woodfield, a Mississippi resident, allegedly was injured
and his marriage ended because of Knight’s alleged actions. Mississippi has an interest in
providing a forum for its residents who are injured by nonresident defendants. See Estate
of Jones v. Phillips, 992 So. 2d 1131, 1142 (Miss. 2008). Mississippi’s interest is enhanced
9
because Louisiana does not recognize the tort of alienation of affections, making Mississippi
the only viable forum for Woodfield’s claims. Woodfield also has a strong interest in
adjudicating the dispute in Mississippi. By maintaining the suit in Mississippi, Woodfield
may obtain convenient and effective relief for his claim. Further, the interstate judicial
system’s interest in obtaining the most efficient resolution of controversies is not hampered
by maintenance of the present suit in Mississippi. Knight is a resident of Louisiana, and
maintenance of the suit in Mississippi will not create an extreme burden on him. Finally, this
Court has held that the purpose of the tort of alienation of affections is the “‘protection of the
love, society, companionship, and comfort that form the foundation of marriage . . . .’” Fitch,
959 So. 2d at 1019 (citing Bland v. Hill, 735 So. 2d 414, 417 (Miss. 1999)). Permitting
claims for alienation of affections protects the marriage relationship and provides a remedy
to those who have suffered loss of consortium as a result of the conduct of others. Id. at
1020. Thus, we find that the states would have a shared interest in furthering this
fundamental social policy. We therefore find that maintenance of this suit in Mississippi will
not offend “traditional notions of fair play and substantial justice.”
CONCLUSION
¶22. In sum, the County Court of Harrison County has personal jurisdiction over Knight
for the purposes of adjudicating Woodfield’s claim of alienation of affections against Knight.
If Woodfield suffered injuries due to Knight’s actions of emailing, calling, and sending text
messages to Woodfield’s wife, such injuries were suffered by a Mississippi resident in his
home state. These actions satisfy the Mississippi long-arm statute as well as the Due Process
10
Clauses of our state and federal constitutions. Thus, we find that the county court judge did
not err in denying Knight’s motion to dismiss; therefore, the judgment of the county court
is affirmed, and this case is remanded to the County Court of Harrison County for further
proceedings consistent with this opinion.
¶23. AFFIRMED AND REMANDED.
GRAVES, P.J., DICKINSON, RANDOLPH, LAMAR, KITCHENS AND
PIERCE, JJ., CONCUR. WALLER, C.J., DISSENTS WITH SEPARATE WRITTEN
OPINION JOINED BY CHANDLER, J.
WALLER, CHIEF JUSTICE, DISSENTING:
¶24. Because I would find that Woodfield fails to show that Knight had sufficient contacts
with Mississippi and that this State cannot constitutionally exercise personal jurisdiction over
Knight, I respectfully dissent.
¶25. “Minimum contacts” must occur between the defendant and the forum state and not
just between the defendant and a resident of the forum state. See McDaniel v. Ritter, 556 So.
2d 303, 309 (Miss. 1989). The plaintiff must prove that the defendant’s contacts were
“expressly aimed” at the forum state. Calder v. Jones, 465 U.S. 783, 789, 104 S. Ct. 1482,
79 L. Ed. 2d 804 (1984). Ultimately, the facts here do not show that Knight’s conduct was
ever purposefully directed towards Mississippi.
¶26. While Dokka and Woodfield moved to Mississippi, Dokka commuted to Louisiana,
where she worked for the same employer as Knight. All in-person contacts between Dokka
and Knight took place in Louisiana. All telephone conversations and text messages between
11
them were conveyed by or to Dokka’s Louisiana cell-phone number. In fact, Woodfield
stated that the some 900 text messages exchanged were from Dokka to Knight. The fact that
Dokka may have accessed e-mails in Mississippi is of no moment, as e-mails can be accessed
anywhere. The substance of the e-mails also suggests that Dokka independently chose to
leave the marriage. See Estate of Jones v. Phillips, 992 So. 2d 1131, 1141 (Miss. 2008)
(finding minimum contacts where nonresident doctor’s telephone call to resident had induced
resident to take specific course of action rather than to act independently).
¶27. Woodfield has not provided a sufficient basis to show that Knight purposefully
directed any conduct toward this state. Horne v. Mobile Area Water & Sewer Sys., 897 So.
2d 972, 979 (Miss. 2004). Since no minimum contacts exist, this State cannot exercise
personal jurisdiction. Accordingly, I would reverse the lower court’s judgment denying
Knight’s motion to dismiss.
CHANDLER, J., JOINS THIS OPINION.
12
|
964 A.2d 453 (2008)
REAM
v.
BASSETT.
No. 1509 MDA 2007.
Superior Court of Pennsylvania.
September 29, 2008.
Affirmed.
|
675 So.2d 371 (1996)
Ex parte Reneau L. GATES and Betty A. Gates.
(Re Reneau L. GATES and Betty A. Gates v. PALM HARBOR HOMES, INC., et al.)
1941351.
Supreme Court of Alabama.
January 26, 1996.
*372 Keith A. Howard of Howard, Dunn, Howard & Howard, Wetumpka, for Petitioners.
Michael L. Bell and Lee M. Hollis of Lightfoot, Franklin, White, L.L.C., Birmingham, for Palm Harbor Homes, Inc.
Dennis R. Bailey and William H. Webster of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for Bilo Homes, Inc., and Charles Costner.
SHORES, Justice.
Reneau L. Gates and his daughter Betty A. Gates sued Bilo Homes, Inc., Charles Costner, and Palm Harbor Homes, Inc., alleging fraud in the sale of a mobile home, breaches of various warranties, and negligent or wanton installation. Judge Sibley Reynolds, of the Elmore Circuit Court, stayed the action and ordered the parties to arbitrate. The Gateses have petitioned for a writ of mandamus directing Judge Reynolds to vacate his order. We deny the writ.
*373 The Gateses purchased from the defendant Bilo Homes, Inc., a double-wide mobile home that had been manufactured by Palm Harbor Homes, Inc. Charles Costner was the salesman and general manager for Bilo Homes, Inc. The Gateses, after experiencing several structural problems with the mobile home, learned that it was not a new home when they bought it but had been sold previously to another buyer. They sued on November 22, 1992, alleging several defects in the home, particularly that the two halves of the double-wide home did not properly join and that the steel I-beams supporting the home were damaged. Their complaint alleged breach of express and implied warranties, fraud, negligent or wanton installation, and violation of the Magnuson-Moss Warranty Act, 15 U.S.C. 2301 et seq.
Palm Harbor answered the complaint on December 19, 1994; Bilo Homes and Costner answered and counterclaimed on January 12, 1995. On February 15, 1995, Bilo Homes and Costner filed a motion to compel arbitration; subsequently, Palm Harbor filed a motion adopting and incorporating by reference the motion filed by Bilo and Costner. The trial court on May 15, 1995, entered an order compelling arbitration. This petition for the writ of mandamus followed.
The trial court's order compelling arbitration was based upon an arbitration clause found on the back of the "Manufactured Home Retail Installment Contract and Security Agreement" signed by the Gateses and by Costner in his representative capacity as general manager of Bilo Homes. The installment contract lists Bilo Homes as "Seller, Secured Party" and Green Tree Financial Corporation as assignee.[1] The arbitration clause reads as follows:
"17. ARBITRATION: All disputes, claims, or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration by one arbitrator selected by Assignee with consent of Buyer(s). This arbitration Contract is made pursuant to a transaction in interstate commerce, and shall be governed by the Federal Arbitration Act at 9 U.S.C. Section 1. Judgment upon the award rendered may be entered in any court having jurisdiction. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes. The parties understand that they have a right or opportunity to litigate disputes through a court, but they prefer to resolve their disputes through arbitration, except as provided herein. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY ASSIGNEE (AS PROVIDED HEREIN). The parties agree and understand that all disputes arising under case law, statutory law, and all other laws including, but not limited to, all contract, tort, and property disputes, will be subject to binding arbitration in accord with this Contract. The parties agree and understand that the arbitrator shall have all powers provided by the law and the Contract. These powers shall include all legal and equitable remedies, including, but not limited to, money damages, declaratory relief, and injunctive relief. Notwithstanding anything hereunto to the contrary [sic], Assignee retains an option to use judicial or non-judicial relief to enforce a security agreement relating to the Manufactured Home secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation secured by the Manufactured Home or to foreclose on the Manufactured Home. Such judicial relief would take the form of a lawsuit. The institution and maintenance of an action for judicial relief in a court to foreclose upon any collateral, to obtain a monetary judgment, or to enforce the security agreement shall not constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this Contract, including the filing of a counterclaim in a suit brought by Assignee pursuant to this provision."
*374 A petition for a writ of mandamus is the appropriate means by which to challenge a trial court's order compelling arbitration. Ex parte Alexander, 558 So.2d 364 (Ala.1990). Mandamus is an extraordinary remedy and requires a showing that there is: "(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Edgar, 543 So.2d 682, 684 (Ala.1989); Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala.1991); Ex parte Johnson, 638 So.2d 772, 773 (Ala.1994).
We note initially that we find no merit to the Gateses' contention that the defendants waived any right to proceed under the arbitration clause. While a party's substantial invocation of the litigation process is a factor that may tend to show that the party has waived the right to arbitrate, that factor must be accompanied by a showing that the party opposing arbitration has been prejudiced by the other party's participation in the litigation. Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So.2d 1 (Ala.1986). The motions to compel arbitration were timely filed, shortly after the United States Supreme Court ruled in Allied-Bruce Terminix Companies v. Dobson, 513 U.S. ___, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), and no prejudice to the plaintiffs has been shown in this case.
In Allied-Bruce Terminix, the United States Supreme Court held that the Federal Arbitration Act, 9 U.S.C. §§ 1-15, governs all contracts within Congress's Commerce Clause power. This holding significantly changed arbitration law in Alabama, because § 8-1-41(3), Ala.Code 1975, precludes the specific enforcement of a predispute arbitration agreement unless federal law preempts state law.
The United States Supreme Court's ruling in Allied-Bruce Terminix reversed an earlier decision by this Court holding that the FAA was inapplicable in that case because the connection between the termite protection agreement involved in that case and interstate commerce was too slight, specifically because the parties had not contemplated substantial interstate activity when they entered into the agreement. Allied-Bruce Terminix Companies v. Dobson, 628 So.2d 354, 356 (Ala.1993). In reversing the judgment of this Court, the United States Supreme Court held that the FAA did apply to the termite protection agreement and required enforcement of its arbitration provision, stating that the language of § 2 of the FAA, making enforceable an arbitration provision in "a contract evidencing a transaction involving commerce," is applicable "to the limits of Congress' Commerce Clause power." 513 U.S. at ___, 115 S.Ct. at 837; see Lopez v. Home Buyers Warranty Corp., 670 So.2d 35 (Ala.1995); Terminix International Co. Limited Partnership v. Jackson, 669 So.2d 893 (Ala.1995). See, Henry C. Strickland, Allied Bruce Terminix, Inc. v. Dobson: Widespread Enforcement of Arbitration Agreements Arrives in Alabama, 56 Ala. Law. 238 (1995).
Did the trial court properly compel arbitration? The answer to that question is a matter of contract interpretation, which is guided by considering the intent of the parties to the mobile home sales contract. Thus, the essential question is whether the arbitration clause in that contract applies to the Gateses' claims. Id.
The arbitration clause, quoted above, is very broad; it provides that "[a]ll disputes, claims, or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration."
The Gateses allege in their complaint that the defendants made misrepresentations and concealed material facts in order to induce them to purchase the mobile home and that they relied on the defendants' misrepresentations in signing the documents to purchase the home. They also allege that the defendants breached warranties made to them at the time of their purchase, and they allege that they have performed all of their obligations under their "contract" with the defendants. Thus, the Gateses' claims are asserted in connection with the installment *375 contract that sets forth the terms and conditions for financing the sale of the mobile home. The contract evidences a transaction involving interstate commerce. Thus, the FAA is applicable and preempts state law.
For the reasons stated above, and on the authority of the United States Supreme Court's ruling in Allied-Bruce Terminix, we hold that the trial court did not err in compelling arbitration of the Gateses' claims. The petition for the writ of mandamus is due to be denied.
WRIT DENIED.
KENNEDY and COOK, JJ., concur.
HOOPER, C.J., and MADDOX, J., concur in the result.
MADDOX, Justice, concurring in the result.
I concur in the result only because the judgment of the trial court is affirmed. I do not agree that Allied-Bruce Terminix Companies v. Dobson, [Ms. 1920473, Nov. 3, 1995] ___ So.2d ___ (Ala.1995), correctly states the federal law applicable to arbitration. See my special opinion in that case. ___ So.2d at ___.
NOTES
[1] Green Tree is not a defendant in this action.
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-14928
Non-Argument Calendar
________________________
D.C. Docket No. 6:09-cr-00248-PGB-KRS-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RAMON LOPEZ-ALVARADO,
Defendant-Appellant.
________________________
No. 18-14930
Non-Argument Calendar
________________________
D.C. Docket No. 6:18-cr-00080-PGB-KRS-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
Case: 18-14928 Date Filed: 05/01/2020 Page: 2 of 26
RAMON LOPEZ-ALVARADO,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(May 1, 2020)
Before WILSON, FAY and ANDERSON, Circuit Judges.
PER CURIAM:
Ramόn Lopez-Alvarado, a citizen of Mexico, appeals following his
convictions and sentences for illegally re-entering the United States after
deportation and failing to register as a sex offender under the Sex Offender
Registration and Notification Act (“SORNA”), and the revocation of his
supervised release for committing those two offenses. We affirm.
I.
In 2009, federal authorities charged Lopez-Alvarado with one count of
failing to register as a sex offender, in violation of 18 U.S.C. § 2250. CM/ECF for
the M.D. Fla, no. 6:09-cr-00248-PGB-KRS-1 (“Lopez-Alvarado I”). In 2012, he
pled guilty pursuant to a plea agreement. Based on the plea agreement’s factual
basis, he admitted that in 1998, he pled guilty in state court to three counts of
committing a lewd act upon a 12-year-old child, in violation of Florida Statutes §
2
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800.04. He likewise admitted to being deported to Mexico after those convictions,
but illegally re-entering the United States, which prompted the state court to find
him guilty of violating probation. He admitted to being sentenced for the
probation violation, serving part of that sentence, being deported again to Mexico,
and returning to the United States later without permission.
The district court sentenced Lopez-Alvarado to 15 months of imprisonment,
followed by five years of supervised release, which, in relevant part, prohibited
him from violating any federal, state, or local law and required him to register, in
any state in which he resided, with the state’s sexual offender registry and/or
SORNA. The district court entered a final judgment in Lopez-Alvarado I in
December 2012. He appealed; we affirmed in July 2013 after granting counsel
leave to withdraw pursuant to Anders v. California, 386 U.S. 738 (1967). United
States v. Lopez-Alvarado, 523 F. App’x 718 (11th Cir. 2013). Lopez-Alvarado
completed his custodial sentence and commenced his five-year supervised release
term shortly thereafter. He was later deported.
In 2018, authorities charged Lopez-Alvarado with additional violations.
First, in March 2018, the probation office sought to have him arrested, alleging, in
part, that he had returned to the country without permission in 2018. Proceedings
then commenced to revoke his supervised release in Lopez-Alvarado I.
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In April 2018, a federal grand jury charged Lopez-Alvarado with: (1)
illegally being present in the United States after being deported, in violation of 8
U.S.C. § 1326(a), (b)(2) (Count 1); and (2) knowingly failing to register as a sex
offender under SORNA, in violation of 18 U.S.C. § 2250(a) (Count 2). CM/ECF
for the M.D. Fla., no. 6:18-cr-00080-PGB-KRS-1 (“Lopez- Alvarado II”). Because
Lopez-Alvarado previously had been convicted of failing to register as a sex
offender and was on federal supervised release for that conviction, the probation
office also filed a petition alleging that he had violated the conditions of his release
by illegally returning to the United States.
Lopez-Alvarado appeared before a magistrate judge for a change of plea
hearing as to Count 2 and pled guilty; the magistrate judge recommended the
district court accept his plea. Both sides submitted notices that they had no
objections to the recommendation and the district court accepted his guilty plea to
Count 2.
Prior to trial on Count 1, the government moved to preclude Lopez-Alvarado
from raising, as a defense, that he became a naturalized citizen by taking or signing
an allegiance oath at a naturalization interview in 1995. The district court
ultimately ruled that it would be a factual issue for the jury to decide whether it
believed Lopez-Alvarado was invited to a ceremony to take the oath, whether the
absence of immigration records indicated that never occurred, and whether he took
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the oath and became a citizen. When asked by the district court for comments,
neither side objected to the court’s ruling.
At the jury trial, Charles Adkins, a senior immigration officer for the United
States Citizenship and Immigration Services (“USCIS”), 1 testified for the
government regarding Lopez-Alvarado’s “alien file,” also called an “A-file.”2
Adkins identified a notice to appear for removal proceedings issued to him in
August 1998; a December 1998 order from an Immigration Judge finding that
Lopez-Alvarado was removable, “ineligible for relief from removal,” and ordering
him removed to Mexico; a warrant for his removal, based on a final order from the
Board of Immigration Appeals, which demanded his physical removal from the
United States; and an execution page showing he was removed from the country
and walked across the border to Mexico on May 30, 2009. Adkins also testified
regarding another time Lopez-Alvarado entered the country and was removed, with
removal proceedings beginning around July 2012. Additionally, Adkins identified
Lopez-Alvarado’s birth certificate. Adkins testified that he searched USCIS’s
databases, which did not show that Lopez-Alvarado was ever a citizen or
naturalized, and, if he had applied for naturalization and been naturalized, the
1
On cross-examination, Adkins testified that USCIS previously was known as the Immigration
and Naturalization Service (“INS”).
2
An “A-file” is comprised of a whole immigration record, including an alien’s application,
enforcement documents, and anything else related to or affecting that alien’s immigration status.
5
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databases would have had a document reflecting such. On cross-examination,
Adkins testified that in 1995, a person applied for naturalization, afterwards they
were interviewed, and, after the interview, the application was approved, denied, or
“continued.” Adkins also testified, in part, that applicants did not take the
allegiance oath at the naturalization interview, rather only signed a document
acknowledging they understood it and, if approved to proceed to the swearing in,
an applicant received a letter telling them where and when to appear to take the
oath.
After the government rested its case-in-chief, Lopez-Alvarado moved for a
judgment of acquittal, arguing that the government had failed to show he was an
alien; the district court denied the motion. When the district court began
discussing the proposed jury instruction for Lopez-Alvarado’s defense, Lopez-
Alvarado objected to putting any burden of proof for the defense on him; however,
he agreed with the court that he had advanced an affirmative defense.
In his defense, Lopez-Alvarado called Ana Pardo, an Immigration and
Naturalization Service (“INS”) official from the Orlando office in 1995-96. She
testified that in the building that INS used at the time, if they conducted
naturalization ceremonies, they used the INS’s judge’s chambers. She stated that
they filled out a processing worksheet as the case was worked on and identified
Lopez-Alvarado’s 1995 application and processing form. She said that, at the
6
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interview, the processing sheet would be filled out with information like sex and
marriage status; the “C” in the action line of the processing sheet meant she
continued the case and she would have filled that out at the time of his interview
on December 6, 1995. She testified that an allegiance oath was not administered
during the interview, but they would give people an oath to tell the truth in their
application. The date of the final action in his case was March 12, 1996, and it was
her signature on the sheet; however, she did not have any independent recollection
of the events with Lopez-Alvarado, including denying his application. She also
testified that except for possibly military members going overseas on orders,
ceremonies did not occur right after the interview; she did not remember any
ceremonies taking place the same day as an interview, nor did she give the
allegiance oath. Pardo also described what a swearing-in ceremony conducted by
INS looked like, specifically that groups of 50 up to 1,000 would be brought in,
there would be guest speakers, often family and friends would attend, the oath
would be given, and the naturalization certificates were handed out at the end of
the ceremony.
Lopez-Alvarado took the stand. He admitted that he was a convicted felon.
As to his 1995 application, he testified that the first time he met with an INS
official was in February 1995; at that time, Pardo questioned him under oath and
afterwards asked where he wanted to take his citizenship oath. He was told to
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come back in December 1995 to take his oath. He said when he arrived, several
officers and Pardo were present; on cross-examination, he said “many people”
were at the ceremony, but they were INS officers and, if others were there to take
the oath, he did not know because he took the oath quickly and left. He said that
after the oath was administered, officials marked where he should sign that he had
taken the oath; on cross-examination, he stated that the oath he signed was the one
on his A-file processing sheet. He also said that they did not give him a certificate
on that date; he was told he would get a notice about picking it up, but he never
picked it up for various reasons.
After the defense rested, it renewed its motion for judgment of acquittal
based on the government’s failure to make out a prima facie case. The district
court denied the motion. It also explicitly found that Lopez-Alvarado had
committed perjury, stating “I do not find Mr. Alvarado’s testimony to be credible.
In fact, I find that he’s perjured himself.”
At the charge conference, the court stated that it wanted to make it clear to
the jury that the government did not have to disprove that the naturalization
ceremony took place, it only had to prove the elements of the offense; to “avoid
confusion,” it wanted to add that Lopez-Alvarado had the burden to prove his
affirmative defense. Lopez-Alvarado objected to having the burden; however, he
agreed that, if he did, it was by a preponderance of the evidence. The court
8
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ultimately instructed the jury that: “The Defendant has the burden of proving by a
preponderance of the evidence that he attended a public naturalization ceremony
before March 17, 2018, and took the oath of allegiance at that ceremony.” The
instructions required the government to prove his alien status beyond a reasonable
doubt.
The jury found Lopez-Alvarado guilty of Count 1; the district court entered
a verdict to this effect in August 2018. Before scheduling a sentencing hearing in
Lopez-Alvarado II, the probation office petitioned to revoke Lopez-Alvarado’s
supervised release in Lopez-Alvarado I. Lopez-Alvarado admitted that he had
violated his conditions of release based on his recent conviction for illegal re-entry
after deportation and for violating the law while on supervised release by failing to
register under SORNA.
Shortly thereafter, Lopez-Alvarado indicated that he wanted to withdraw his
guilty plea to Count 2 in Lopez-Alvarado II, and his admission to violating his
supervised release in Lopez-Alvarado I; this prompted defense counsel to move to
withdraw. A magistrate judge granted the motion to withdraw and appointed new
counsel, who moved to stay further proceedings in both cases until the Supreme
Court decided United States v. Gundy, 695 Fed. App’x 639 (2d Cir. 2017), cert.
granted, 138 S. Ct. 1261 (2018), a case challenging SORNA’s constitutionality
based on the non-delegation doctrine.
9
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In the meantime, Lopez-Alvarado formally moved to withdraw his Count 2
guilty plea, under Federal Rule of Criminal Procedure 11(d)(2)(B). The district
court denied the motion, noting that he was convicted on May 11, 1998, of
committing a lewd act upon a minor, he was required to register under SORNA,
and he failed to do so when he returned to Florida. Lopez-Alvarado also sought to
withdraw his admission to violating his supervised release in Lopez-Alvarado I.
The court denied that motion as well.
The district court held a sentencing proceeding and a final revocation
hearing on the same day. Based on a total offense level of 26 and a criminal
history category of IV, the court calculated Lopez-Alvarado’s guidelines range as
92 to 115 months of imprisonment. The district court found that, from his first
deportation through his current trial testimony, Lopez-Alvarado had shown “a
complete and utter disregard for the law,” and it was “not at all convinced that [he
was] mistaken in whether [he was] legally here, and the jury rejected that flatly”;
the court believed he would “continue to return and continue to violate the laws of
this country, if permitted to do so, and that is simply not acceptable.” It found the
guidelines insufficiently captured his risk to society and disregard for the law, and
it varied upward before sentencing him to 168 months as to Count 1 and 120
months as to Count 2, set to run concurrently. It imposed a five-year term of
supervised release, with three years for Count 1 and five years for Count 2, again
10
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served concurrently. Lopez-Alvarado’s counsel stated that “other than those
previously stated in this case, we don’t object.” For violating his terms of
supervised release, the district court announced that it was revoking his supervised
release and sentenced him to 12 months of imprisonment, concurrent to his total
sentence in Lopez-Alvarado II.
II.
A.
On appeal, Lopez-Alvarado argues that SORNA constitutes an
unconstitutional delegation of Congress’s power; consequently, he should have
been permitted to withdraw his guilty plea to the SORNA charge and his admission
to violating supervised release upon his violation of SORNA. We review issues of
constitutional law de novo. United States v. Ambert, 561 F.3d 1202, 1205 (11th
Cir. 2009). We will disturb the district court’s decision to deny a defendant’s
motion to withdraw a guilty plea only upon an abuse of discretion. United States v.
McCarty, 99 F.3d 383, 385 (11th Cir. 1996). We review a district court’s
conclusion that a defendant violated terms of his supervised release for an abuse of
discretion. United States v. Copeland, 20 F.3d 412, 413 (11th Cir. 1994). Issues
which a party does not “devote a discrete section of his argument to” are deemed
abandoned. United States v. Jernigan, 341 F.3d 1273, 1283 n.8 (11th Cir. 2003).
11
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In Ambert, we concluded that Congress “provided the Attorney General with
‘intelligible principles’ in” SORNA, “a policy framework” guiding the Attorney
General’s exercise of discretion, and “constrict[ed] the Attorney General’s
discretion to a narrow and defined category.” 561 F.3d at 1213. We rejected
Ambert’s argument that SORNA violated the non-delegation doctrine because the
Attorney General determined its retroactive applicability. See id. at 1212-15.
In Gundy v. United States, the Supreme Court considered whether SORNA’s
delegation, to the Attorney General, of the power to specify its applicability to
those convicted pre-SORNA violated the non-delegation doctrine. See Gundy v.
United States, 139 S. Ct. 2116, 2122 (2019). The Supreme Court held that this
delegation did not violate the non-delegation doctrine. See id. at 2121. Four
Justices joined the opinion and Justice Alito concurred in the judgment. See id.
at 2121, 2130-31. In his concurrence though, Justice Alito indicated that, if a
majority of the Court wished to do so, he supported reconsidering the Court’s
decades’ long approach to the non-delegation doctrine; however, he concurred with
the judgment in Gundy “because a majority is not willing to do” so. See id.
at 2130-31 (Alito, J., concurring). Justice Gorsuch, writing for the dissent,
12
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concluded that SORNA violated the non-delegation doctrine. 3 See id. at 2131-48
(Gorsuch, J., dissenting).
This Court is bound by “a prior panel’s holding unless and until it is
overruled or undermined to the point of abrogation by an opinion of the Supreme
Court or of this Court sitting en banc.” United States v. Gillis, 938 F.3d 1181,
1198 (11th Cir. 2019). This “rule applies regardless of whether the later panel
believes the prior panel’s opinion to be correct . . . .” Id.
Lopez-Alvarado has abandoned any argument aside from SORNA’s
constitutionality by not arguing it on appeal. See Jernigan, 341 F.3d at 1283 n.8.
Further, irrespective of the weight of authority Gundy should be given, Lopez-
Alvarado’s argument on this issue fails because our binding precedent remains
unaffected by Gundy and forecloses his argument that SORNA violates the non-
delegation doctrine. See Gillis, 938 F.3d at 1198; Ambert, 561 F.3d at 1212-15.
B.
Lopez-Alvarado argues that the district court erred in concluding that
whether he was a naturalized citizen and, by implication, the legality of his prior
deportations were factual questions for the jury to decide, rather than legal issues
3
In November 2019, although concurring with the denial of certiorari in Paul v. United States,
140 S. Ct. 342 (2019), which “raise[d] the same statutory interpretation issue” in Gundy, Justice
Kavanaugh wrote that Justice Gorsuch’s opinion “may warrant further consideration in future
cases.”
13
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for the district court to decide. “[I]t is a cardinal rule of appellate review that a
party may not challenge as error a ruling or other trial proceeding invited by that
party.” United States v. Silvestri, 409 F.3d 1311, 1327 (11th Cir. 2005) (quoting
United States v. Ross, 131 F.3d 970, 988 (11th Cir. 1997)). This doctrine “is
implicated when a party induces or invites the district court into making an error,”
and “precludes a court from invoking the plain error rule and reversing.” Id. (first
quoting United States v. Stone, 139 F.3d 822, 838 (11th Cir. 1998); and then
quoting Ford ex rel. Estate of Ford v. Garcia, 289 F.3d 1283, 1294 (11th Cir.
2002)).
When the doctrine is not applicable, un-objected to errors will be reviewed
under the “extremely high” plain error standard, requiring: (1) an error; (2) that is
plain or obvious; (3) which “affect[s] substantial rights in that it was prejudicial
and not harmless; and (4) the mistake [] seriously affect[ed] the fairness, integrity,
or public reputation of judicial proceedings.” Id. at 1337 n.17. Plain errors must
be “obvious” and “clear under current law.” See United States v. Lange, 862 F.3d
1290, 1296 (11th Cir. 2017) (quoting United States v. Humphrey, 164 F.3d 585,
588 (11th Cir. 1999)). “[T]here can be no plain error where there is no precedent
from the Supreme Court or this Court directly resolving it.” Id. (quoting United
States v. Lejarde-Rada, 319 F.3d 1288, 1291 (11th Cir. 2003)).
14
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In a prosecution for illegal re-entry after deportation, under 8 U.S.C.
§ 1326(a) and (b)(2), the government must prove four elements: (1) the defendant
was an alien when he committed the offense; (2) he previously had been deported
or removed; (3) he re-entered the United States after deportation; and (4) he lacked
the Attorney General’s express consent. See United States v. Valdiviez-Garza, 669
F.3d 1199, 1201 (11th Cir. 2012).
Section 1326 does not require, as an element, an alien’s previous deportation
be lawful, but an alien may collaterally attack the deportation under certain
circumstances. See United States v. Holland, 876 F.2d 1533, 1535-36 (11th Cir.
1989). Section 1326(d) limits an alien’s ability to collaterally attack an underlying
deportation order unless the alien meets three requirements: (1) he exhausted any
available administrative remedies to seek relief from the order; (2) the deportation
proceedings imposing the order deprived him “of the opportunity for judicial
review”; and (3) the order’s entry “was fundamentally unfair.” 8 U.S.C. § 1326(d).
Aliens have raised this collateral attack in motions to dismiss. See United States v.
Watkins, 880 F.3d 1221, 1223-24 (11th Cir. 2018); Zelaya v. Sec., Fla. Dep’t of
Corr., 798 F.3d 1360, 1363 (11th Cir. 2015), overruled in part on other grounds by
McCarthan v. Dir. of Goodwill Industries-Suncoast, Inc., 851 F.3d 1076 (11th Cir.
2017) (en banc). In a § 1326 prosecution, a citizenship defense to the alien
element does not necessarily challenge the other elements of the offense, including
15
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deportation, or the legality of the deportation. See Valdiviez-Garza, 669 F.3d
at 1201-03 (holding the government was collaterally estopped from proving the
defendant was an alien in a § 1326 prosecution where, in a prior § 1326
prosecution, the defendant contested the alienage element “with evidence that he
derived United States citizenship through his father,” the principal focus of the
prior trial was the citizenship element, and alienage was necessarily determined in
his favor).
The Supreme Court has held that the Illegal Immigration and Reform and
Immigrant Responsibility Act of 1996’s repeal of discretionary relief for aliens
convicted of certain crimes did not apply retroactively where the “convictions were
obtained through plea agreements and [for aliens] who, notwithstanding those
convictions, would have been eligible for § 212(c) relief at the time of their plea
under the law then in effect.” See INS v. St. Cyr., 533 U.S. 289, 326 (2001).
To the extent any error occurred by the district court permitting Lopez-
Alvarado to present to the jury his defense that he took the oath of allegiance at a
public ceremony, he invited such error by arguing before the district court for the
ability to submit this defense to the jury and cannot now complain of such error.
Silvestri, 409 F.3d at 1327. Prior to witnesses testifying, Lopez-Alvarado agreed
that his defense was a factual issue and should go to the jury. Nevertheless, even
considering the merits of his argument, the district court did not err in permitting
16
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the jury to decide the question of his alien status. At trial, Lopez-Alvarado
presented the defense that he took the oath of allegiance at a public ceremony and
became a naturalized citizen. This defense does not inherently challenge the
legality of his prior deportations, which also requires specific proof his defense did
not provide, and a citizenship defense does appear to be a fact for a jury to decide.
See 8 U.S.C. § 1326(d); Valdiviez-Garza, 669 F.3d at 1201-03.
C.
Lopez-Alvarado argues that his citizenship defense was not an affirmative
defense, and the district court erred in shifting the burden of proof from the
government to him on this issue, violating his due process rights. “We review the
legal correctness of a jury instruction de novo, but defer on questions of phrasing
absent an abuse of discretion.” United States v. Prather, 205 F.3d 1265, 1270
(11th Cir. 2000) (citations omitted). Harmless error also applies to jury
instructions. United States v. Webb, 655 F.3d 1238, 1249 n.8 (11th Cir. 2011). We
have applied harmless error analysis to jury instructions which improperly shifted
the burden of proof on an element to the defendant. See Davis v. Kemp, 752 F.2d
1515, 1519-21 (11th Cir. 1985) (en banc) (applying harmless error analysis to jury
instruction shifting homicide malice burden of proof to defendant). An error can
be harmless if the evidence of the defendant’s guilt was overwhelming, such “that
no rational jury, properly instructed on [that] element” could have acquitted the
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defendant. See United States v. Neder, 197 F.3d 1122, 1129 & n.7 (11th Cir. 1999)
(“[H]armless-error analysis requires us to focus on whether a jury rationally could
have reached a different verdict if properly instructed . . . .”); Kemp, 752 F.2d
at 1521.
The Due Process Clause requires the prosecution prove every element of the
offense beyond a reasonable doubt and “[t]he burden to prove or disprove an
element of the offense may not be shifted to the defendant.” United States v.
Deleveaux, 205 F.3d 1292, 1298 (11th Cir. 2000). Thus, where a defense merely
“has the effect of negating any element of the offense, the prosecution must
disprove that defense beyond a reasonable doubt.” Id. But, if “a defendant asserts
an affirmative defense that does not negate any element of the offense, the
defendant may be required to prove that defense by a preponderance of the
evidence.” Id. at 1298-99.
As an initial matter, this issue only addresses Lopez-Alvarado’s illegal re-
entry offense, because that is the sole count he went to trial on. Further, his
defense arguably negated an element of the offense, specifically his alien status.
See Valdiviez-Garza, 669 F.3d at 1201. As the government correctly concedes that
the jury instruction impermissibly shifted the burden of proof to him, we proceed
directly to harmless error analysis.
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Assuming error occurred, we conclude that Lopez-Alvarado is not entitled to
relief because any error was harmless, given that the government presented
overwhelming evidence of his alien status at trial. While Lopez-Alvarado testified
that he indeed attended such ceremony and took the oath, the documentary
evidence in his A-file and the testimony of Adkins and Pardo showed that this did
not occur. Adkins testified that USCIS’s databases did not show Lopez-Alvarado
ever became a naturalized citizen and identified his Mexican birth certificate. Both
Adkins and Pardo testified that applicants do not take the oath at their interview,
but merely sign the acknowledgement. Pardo testified that, at the interview,
Lopez-Alvarado’s application was “continued,” not approved, and she had
requested documents about his arrests. Both Pardo and Adkins testified to
naturalization ceremony process; Pardo described their size, and Adkins stated that
the ceremonies gathered multiple applicants, who sat and took the oath together,
the applicants received their citizen certificate that day, and that a certain form was
utilized for the ceremonies, which was not in Lopez-Alvarado’s A-file. Finally,
the jury, by convicting Lopez-Alvarado, implicitly deemed him incredible, and
may have taken the opposite of what he testified to as true, which it was entitled to
do. See United States v. Brown, 53 F.3d 312, 314 (11th Cir. 1995) (quoting Atkins
v. Singletary, 965 F.2d 952, 961 n.7 (11th Cir. 1992)) (noting that, by choosing to
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testify, the defendant “runs the risk that if disbelieved ‘the jury might conclude the
opposite of his testimony is true’”).
Because overwhelming evidence arguably showed that Lopez-Alvarado was
an alien, the district court’s error in improperly shifting the burden to him was
harmless,4 see Neder, 197 F.3d at 1129, 1129 n.7.
D.
Finally, Lopez-Alvarado argues that the district court erred during his
sentencing by imposing an obstruction of justice enhancement and that his
168-month total sentence is substantively unreasonable. We review a district
court’s interpretation and application of the Guidelines to the facts de novo.
United States v. Moran, 778 F.3d 942, 959 (11th Cir. 2015). However, factual
findings the district court made at sentencing are reviewed only for clear error. Id.
We have also said that, in most cases, we apply due deference when reviewing the
district court’s application of the guidelines to the facts, which is akin to clear error
review. United States v. Rothenberg, 610 F.3d 621, 624 (11th Cir. 2010). A
factual finding cannot be clearly erroneous when the factfinder chooses between
“two permissible views of the evidence.” United States v. Saingerard, 621 F.3d
1341, 1343 (11th Cir. 2010) (quoting United States v. Izquierdo, 448 F.3d 1269,
4
We take note of the fact that the district court also included in its instructions that the
government had the burden of proving beyond a reasonable doubt that Lopez-Alvarado was an
alien.
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1278 (11th Cir. 2006)). We also give a district court’s credibility determinations
made at sentencing “substantial deference.” United States v. Plasencia, 886 F.3d
1336, 1343 (11th Cir. 2018) (quoting United States v. Clay, 483 F.3d 739, 744
(11th Cir. 2007)), cert. denied, 139 S. Ct. 837 (2019).
We review a sentence’s reasonableness “under a deferential
abuse-of-discretion standard.” Gall v. United States, 552 U.S. 38, 41 (2007). A
court abuses its discretion when it (1) fails to consider relevant factors that were
due significant weight, (2) gives significant weight to an irrelevant or improper
factor, or (3) commits a clear error of judgment by balancing the proper factors
unreasonably. United States v. Kuhlman, 711 F.3d 1321, 1326-27 (11th Cir. 2013).
We reverse only when “left with the definite and firm conviction that the district
court committed a clear error of judgment in weighing the [18 U.S.C.] § 3553(a)
factors by arriving at a sentence that lies outside the range of reasonable sentences
dictated by the facts of the case.” United States v. Irey, 612 F.3d 1160, 1190 (11th
Cir. 2010) (en banc) (quoting United States v. Pugh, 515 F.3d 1179, 1191 (11th
Cir. 2008)).
Sentencing Guidelines § 3C1.1 enhances an individual’s offense level if “the
defendant willfully obstructed or impeded, or attempted to obstruct or impede, the
administration of justice with respect to the . . . prosecution, or sentencing of the
instant offense of conviction, and . . . the obstructive conduct related to [] the
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defendant’s offense of conviction and any relevant conduct . . . .” U.S.S.G.
§ 3C1.1. Commentary notes explain that it is not meant to punish any defendant
for exercising his constitutional right or denying guilt, unless he does so under oath
and commits perjury, and “court[s] should be cognizant that inaccurate testimony
. . . sometimes may result from confusion, mistake, or faulty memory and, thus, not
all inaccurate testimony . . . necessarily reflect[s] a willful attempt to obstruct
justice.” Id. cmt. n.2. This adjustment applies to perjury. Id. cmt. n.4.
Perjury, under this enhancement, is “giving ‘false testimony concerning a
material matter with the willful intent to provide false testimony, rather than as a
result of confusion, mistake, or faulty memory.’” Plasencia, 886 F.3d at 1346
(quoting United States v. Bradberry, 466 F.3d 1249, 1254 (11th Cir. 2006)).
Material evidence is that, which “if believed, would tend to influence or affect the
issue under determination.” Id. (quoting U.S.S.G. § 3C1.1 cmt. n.6). District
courts should include specific findings of “each alleged instance of obstruction by
identifying the materially false statements individually,” but generally finding the
enhancement applies is sufficient “if it encompasses all of the factual predicates
necessary for a perjury finding.” United States v. Singh, 291 F.3d 756, 763 (11th
Cir. 2002) (quoting United States v. Arguedas, 86 F.3d 1054, 1059 (11th Cir.
1996); and then quoting United States v. Lewis, 115 F.3d 1531, 1538 (11th Cir.
1997)).
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For a district court to find a defendant perjured himself four elements are
required: (1) testimony under oath; (2) which was false; (3) the testimony was
material; and (4) the testimony was “given with the willful intent to provide false
testimony and not as a result of a mistake, confusion, or faulty memory.” Id.
at 763 n.4. “With only a cold, paper record before it an appellate court is severely
hindered in evaluating whether a defendant perjured himself at trial.” United
States v. McDonald, 935 F.2d 1212, 1219 (11th Cir. 1991). By contrast, a trial
“court is uniquely situated to make such a determination because it heard all the
evidence and was able to observe a particular witness’ demeanor and behavior on
the witness stand.” See id.
In deciding the substantive reasonableness of a sentence, we look at the
totality of the circumstances to decide whether the sentence achieves § 3553(a)’s
stated purposes. United States v. Sarras, 575 F.3d 1191, 1219 (11th Cir. 2009).
Substantively unreasonable sentences include those where the district court relied
on any single § 3553(a) factor unjustifiably, did not consider relevant § 3553(a)
factors, or arbitrarily selected a sentence. See id. The party challenging a sentence
must show it is unreasonable in light of the § 3553(a) factors and the record.
United States v. Tome, 611 F.3d 1371, 1378 (11th Cir. 2010). District courts must
impose sentences sufficient, but not greater than necessary, to comply with
§ 3553(a)(2)’s purposes, including-the need to adequately deter criminal conduct,
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protect the public from further crimes by the defendant, and “reflect the
seriousness of the offense, to promote respect for the law, and to provide just
punishment for the offense”-as well as consider the other § 3553(a) factors,
including, inter alia, the offense’s nature and circumstances and defendant’s
history and characteristics. 18 U.S.C. § 3553(a)(1), (a)(2)(A)-(C). The weight
given to each § 3553(a) factor is within the district court’s sound discretion.
Kuhlman, 711 F.3d at 1327. When considering the § 3553(a) factors, district
courts may also consider previous criminal conduct encompassed by an
enhancement. United States v. Turner, 626 F.3d 566, 574 (11th Cir. 2010).
We do not presume that a sentence outside the guideline range is
unreasonable, but we will consider the extent of any variance and give “due
deference” to assess whether the § 3553(a) factors justified the variance’s extent.
Id. at 573-74 (quoting Gall, 552 U.S. at 51). District courts have to seriously
consider the extent of a variance and explain its propriety “in a particular case with
sufficient justifications.” See Gall, 552 U.S. at 46. The court’s justifications
“must be ‘compelling’ enough ‘to support the degree of the variance’ and complete
enough to allow meaningful appellate review,” but “an extraordinary justification”
is not required for a sentence outside the guideline range. United States v. Shaw,
560 F.3d 1230, 1238 (11th Cir. 2009) (quoting Gall, 552 U.S. at 50). A sentence
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imposed well below the statutory maximum penalty also indicates a reasonable
sentence. See United States v. Gonzalez, 550 F.3d 1319, 1324 (11th Cir. 2008).
Here, as to the enhancement, the district court adequately addressed its
perjury finding at sentencing, showing that each of the four elements were fulfilled
for a generalized perjury finding. See Singh, 291 F.3d at 763 & n.4. Lopez-
Alvarado falsely testified under oath about the naturalization ceremony and oath,
which was material because it went to the contested issue of whether he was an
alien; the district court found his testimony was intentional, willful, and not a
product of confusion via cross-examination. See Plasencia, 886 F.3d at 1346. In
light of our deference to credibility determinations at sentencing, the district
court’s decision to credit other witnesses’ testimony and apply the enhancement
was not clearly erroneous.
Additionally, the district court also did not abuse its discretion by imposing
the 53-month upward variance. That the 168-month total sentence remained far
below the 240-month statutory maximum on Count 1 indicates its reasonableness.
See Gonzalez, 550 F.3d at 1324. Further, the three reasons the district court
identified for varying upwards—his “complete disregard for the laws” of the
country, continued violation of “the law after serving lengthy prior sentences,” and
the need to protect the public—were all supported by evidence the district court
heard at sentencing and made clear by the district court during the hearing. That
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some of the district court’s reasons may have also been encompassed in his
guideline range calculation did not prevent the court from considering them again
in a variance and it was permitted to give greater weight to certain factors. See
Kuhlman, 711 F.3d at 1327; Turner, 626 F.3d at 574.
AFFIRMED.
26
|
478 F.Supp. 613 (1979)
Rosa Lee BRANTLEY, Plaintiff,
v.
Joseph A. CALIFANO, Jr., Secretary of Health, Education, and Welfare, Defendant.
Civ. A. No. 79-10-ALB.
United States District Court, M. D. Georgia, Albany Division.
August 21, 1979.
*614 Clifford L. Jolliff, Georgia Legal Services Program, Albany, Ga., for plaintiff.
D. L. Rampey, Jr., U. S. Atty., S. Elizabeth Conlin, Asst. U. S. Atty., Middle District of Georgia, Macon, Ga., for defendant.
OWENS, District Judge:
Defendant, the Secretary of Health, Education and Welfare, seeks to have dismissed as untimely an appeal brought by the plaintiff to review a final decision of the Secretary pursuant to 42 U.S.C.A. § 405(g).
The Secretary contends that plaintiff failed to commence a civil action in this court within sixty days after the mailing to her of notice of such decision. On August 14, 1978, the Appeals Council affirmed the decision of the administrative law judge (ALJ) denying disability benefits to plaintiff, and plaintiff was notified by certified mail of the decision and of her right to commence a civil action within sixty days. On October 14, 1978, plaintiff made a request to the Appeals Council asking the Council to review plaintiff's file in light of additional evidence. On November 14, 1978 the administrative law judge, after receiving additional evidence, determined that no change was warranted and that the file would not be reopened. On January 18, 1979, a civil action was filed in this court seeking review of the decision.
The sole issue before this court is whether the letter of the administrative law judge informing claimant that the file would not be reopened constitutes the final decision of the Secretary. If so, the request for review was timely filed and plaintiff's action must be allowed to proceed. If not, the request for review must be dismissed as untimely, leaving plaintiff to pursue those administrative remedies available to her.[1] It is the considered opinion of this court that the decision of the Secretary became final when the Appeals Council notified plaintiff of its decision on August 14, 1978. This decision is based upon interpretation of the Code of Federal Regulations. The C.F.R. provides in 20 C.F.R. § 404.957(a) that a decision of the Appeals Council which is otherwise final may be reopened within twelve months from the date of the notice of the initial determination to the party to such determination. (Emphasis added). The language, while giving the ALJ or Appeals Council the ability to reopen a case, is discretionary. The administrative review process as outlined in the Code of Federal Regulations does not require a reviewing official to reopen a case such as the one under consideration. The record indicates that neither the ALJ or Appeals Council reopened the case; their only action was to review the request for reopening the file. Therefore the denial of this request to reopen was not a "reopening" or "revision" necessitating a new sixty day statute of limitation for filing action in a civil suit as required by 20 C.F.R. § 404.962.
Plaintiff argues that this court should follow the decision in Funderburk v. Califano, 432 F.Supp. 657 (W.D.N.C.1977). In Funderburk, the claimant was denied benefits and submitted additional evidence after the Appeals Council had affirmed the denial of benefits to the claimant at the hearing level. The Council notified the claimant by letter that ". . . modification of action previously taken is not warranted.. . *615 Accordingly, the administrative law judge's decision dated July 30, 1976 stands as the final decision of the Secretary in this case." (Funderburk, at 658). Claimant then filed in U. S. District Court, whereupon the Secretary filed a motion to dismiss. The district court judge held that "[where] the council `carefully considered' the additional materials submitted" the council did reopen its prior decision. (Id.) The Funderburk court implies that its decision would have been to the contrary had the council simply stated its refusal to reopen its prior decision. Without deciding the correctness of the decision in Funderburk, we can harmonize Funderburk with the case at hand. The letter of the ALJ specifically states that he would not reopen his previous decision of May 12, 1978. The Appeals Council, unlike the Appeals Council in Funderburk, never affirmatively sought additional evidence. Therefore, the decision of the ALJ on May 12, 1978 constituted a simple refusal to reopen its prior decision and is not inconsistent with Funderburk.
This court likewise finds that this imposes no hardship upon plaintiff. Plaintiff at all times could have sought and still can seek an extension of the sixty-day statute of limitations. Failing that, she could have filed within the statutory time limits in the U. S. District Court, whereupon the court could, on good cause shown, order additional evidence to be taken before the Secretary. 42 U.S.C.A. § 405(g). To uphold plaintiff's claim would in effect allow extension of the statute of limitations which Congress did not anticipate. It could and would lead to hastily filed memoranda used as a device to create jurisdiction in federal district court; a proposition to which this court can not subscribe.
For the above stated reasons, the defendant's motion to dismiss should be and the same is hereby granted.
SO ORDERED, this 20th day of August, 1979.
NOTES
[1] 20 C.F.R. § 404.954 provides in part (a):
"Any party to a . . . decision of the Appeals Council may petition for an extension of time for filing a request . . . for commencing a civil action in a district court, although the time for filing such action has passed." (Emphasis added).
|
914 N.E.2d 784 (2009)
Fouchard GUILLAUME and Christine Guillaume, Appellants-Plaintiffs,
v.
HALL FARMS, INC., and Midwest Marketing Co., Inc., Appellees-Defendants.
No. 42A01-0904-CV-163.
Court of Appeals of Indiana.
August 19, 2009.
Publication Ordered October 1, 2009.
*786 Matt Parmenter, Vincennes, IN, Attorney for Appellants.
James L. Fischer, Jr., Curtis P. Moutardier, New Albany, IN, David L. Clark, Clark & Steedman, Evansville, IN, Attorneys for Appellees.
OPINION
BARNES, Judge.
Case Summary
Fouchard and Christine Guillaume appeal the trial court's grant of summary judgment in favor of Hall Farms, Inc., and Midwest Marketing Co., Inc. ("Midwest"). They also attempt an interlocutory appeal regarding the trial court's denial of their motion to amend the complaint. We affirm the grant of summary judgment and dismiss the failed interlocutory appeal.
Issues
The Guillaumes raise multiple issues, which we restate as:
I. whether Carolyn McCants was an employee of Midwest;
II. whether George Hilton was an employee of Midwest; and
III. whether the Guillaumes properly perfected for interlocutory appeal the issue regarding the denial of their request to amend the complaint.
Facts
Fouchard was part of a traveling crew of farm laborers. In August of 2003, he was picking watermelons at Hall Farms. At that time, Rick and James Smith of Midwest had had a business relationship with Mark Hall of Hall Farms for thirty years. Midwest purchased large quantities of watermelons from Hall Farms for distribution and sale. Midwest paid Hall Farms for the produce and deducted expenses for packaging and harvesting. Midwest also took a commission based on a per pound industry standard. The business arrangement between Hall Farms and Midwest was not reduced to writing.
When their business relationship began, Hall Farms was doing its own harvesting with local people. Eventually, it got harder to find laborers and Hall asked James Smith to "find us a crew." App. p. 300. Carolyn McCants was a licensed harvesting contractor and began working with Midwest and Hall Farms in 2000 or 2001. She assembled crews of seasonal farm workers, and would hire and fire her own crew. At some point McCants hired Fouchard. Midwest would provide a check to McCants based on the tons of watermelons harvested. Midwest did not directly pay any of McCants's employees. She did turn over her payroll records to Midwest because the Labor Department required it. Midwest quit working with McCants when the Smiths discovered she did not have worker's compensation coverage.
The day to day decisions regarding which fields would be picked were made by Rick or James Smith. Rick Smith instructed McCants on how many loads to harvest, he would check ripeness of the crop, and he would make sure produce was packed properly. If Midwest had any problems with the crew, Rick or James would discuss the issue with McCants or her foreman, not with the crew member.
*787 Hall Farms had no arrangements with McCants for harvesting other melons and the only arrangement was through Midwest. Hall Farms did not provide knives for cutting melons from vines, but it did provide tractors and wagons. On the first day of harvesting, a Hall Farms employee would move the tractors out to the fields, but after that the crews would move the farm implements throughout and between the fields. The crew members provided their own transportation to the fields each day. Sometimes Mark Hall would check the progress of McCants's crew, but as her crew was working Hall was busy supervising his own crew harvesting cantaloupes in other fields.
On August 21, 2003, another member of the crew, George Hilton, was driving a tractor pulling two flatbed wagons of watermelons. Fouchard was riding on one of the flatbed wagons. The Guillaumes allege that Hilton's driving caused the wagon to jerk, forcefully throwing Fouchard to the ground where he was seriously injured by the second wagon. Hall Farms owned the tractor and wagon involved in the accident.
On August 2, 2005, the Guillaumes filed a complaint alleging damages from Fouchard's injury against Hall Farms, Midwest, McCants, and Hilton. The complaint did not specifically allege the negligence of Hall Farms and Midwest; rather, it appears to impose vicarious liability by treating Hilton and McCants as employees of Midwest and/or Hall Farms and alleging Hilton and McCants were negligent.
Midwest moved for summary judgment on November 12, 2007, arguing that it did not employ Fouchard or Hilton and it could not be liable for the actions McCantsan independent contractor. Hall Farms made a similar summary judgment motion on December 7, 2007, arguing that it did not employ McCants or Hilton. The Guillaumes responded to both summary judgment motions by arguing that Hall Farms, Midwest, and McCants were engaged in a joint venture at the time of the injury. The Guillaumes also included theories of negligent entrustment and negligent supervision against Hall Farms and McCants. These new theories were also proposed in an amended complaint filed the same day. Midwest filed a reply in support of its summary judgment motion contending that a joint venture theory was unsupportable and the negligent entrustment and negligent supervision claims were time barred.
On March 17, 2009, the trial court granted Hall Farms's and Midwest's summary judgment motions, stating in its orders that each was a "final and appealable judgment and that there is no reason for delay in its entry." App. pp. 282, 284. That day the trial court also denied the Guillaumes' motion to amend their complaint. On March 24, 2009, the Guillaumes filed a motion to certify the denial of their motion to amend for interlocutory appeal. The trial court granted that motion. The Guillaumes did not seek certification of an interlocutory appeal with this court. This appeal followed.
Analysis
I. McCants's Employment Status
The Guillaumes argue that Hilton and McCants were employees of Midwest and, therefore, summary judgment in favor of Midwest was improper. To defeat the summary judgment in favor of Hall Farms, the Guillaumes assert that Hall Farms's liability is based on its joint venture with Midwest.[1]
*788 Summary judgment is appropriate only where the evidence shows there is no "genuine issue of material fact" and "the moving party is entitled to judgment as a matter of law." Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind.2009) (citing Ind. Trial Rule 56(C)). All facts and reasonable inferences drawn from those facts are construed in favor of the non-moving party. Id. at 1270. Once the moving party has sustained its initial burden of proving the absence of a genuine issue of material fact and the appropriateness of judgment as a matter of law, the non-moving party must designate specific facts in response to establish a genuine issue for trial. Id.
Midwest contends that McCants was an independent contractor, not its employee, and therefore, it has no liability for any alleged negligence of her or her crew members. See Moberly v. Day, 757 N.E.2d 1007, 1009 (stating the general rule that "a principal is not liable for the negligence of an independent contractor"). Generally, the question of whether one acts as an employee or an independent contractor is a question for the finder of fact. Snell v. C.J. Jenkins Enterprises, Inc., 881 N.E.2d 1088, 1090 (Ind.Ct.App. 2008). A court may properly determine a worker's classification, however, if the significant facts are undisputed. Id.
All of the parties use a seven-factor test to determine if an employee-employer relationship existed. See Argabright v. R.H. Marlin, Inc., 804 N.E.2d 1161, 1166 (Ind.Ct.App.2004), trans. denied. We instead will use a ten-factor test to assess McCants's employment status pursuant to our supreme court's direction in Moberly.[2]See Snell, 881 N.E.2d at 1091 (declining to use the seven-factor test even though the parties based their arguments on it). The Moberly court observed that the seven-factor test was designed to be used "for determining when a person is an employee of two different employers." Moberly, 757 N.E.2d at 1010 n. 3. We will use the seven-factor test to examine the relationship between Hilton and Midwest to determine if Hilton could possibly be considered an employee of both McCants and Midwest. Our task regarding McCants's status, however, is to determine whether she was an independent contractor or an employee of Midwest, which requires use of the ten-factor test. See id. We consider these ten factors and no single factor is dispositive:
a) the extent of control which, by agreement, the master may exercise over the details of the work;
b) whether or not the one employed is engaged in a distinct occupation or business;
c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
d) the skill required in the particular occupation;
e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
f) the length of time for which the person is employed;
g) the method of payment, whether by the time or by the job; h) whether or not the work is part of a the regular business of the employer;
*789 i) whether or not the parties believe they are creating the relation of master and servant; and
j) whether the principal is or is not in business.
Id. (citing Restatement (Second) of Agency § 220(a) (1958)).
A. Extent of Control over Details of Work
An employee is one "employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control." Walker v. Martin, 887 N.E.2d 125, 131 (Ind.Ct.App.2008) (quoting Restatement (Second) of Agency § 220(1)), trans. denied. An independent contractor, however, generally controls the method and details of the task and answers to the principal only as to the results. Id. It is clear that McCants only answered to Midwest regarding the results of the harvest but generally controlled her crew, their methods, and the details of the tasks.
Rick Smith would decide when certain fields would be picked and whether the watermelons were sufficiently ripe. James Smith would "look at the big picture" including other farms being harvested and check the packing sheds and fields daily in order to work with his suppliers. App. p. 304. The Smiths also periodically checked to make sure the packing of the melons was adequate. If one of the Smiths noticed that harvested melons were not properly ripened, they would point that out to McCants, who would in turn "rectify the situation" with her crew. Id. at 309. Midwest did not otherwise control the means by which McCants and her crew harvested the melons. The instructions and checks by Midwest were limited to these issues, because the Smiths had many other fields, workers, and farms to monitor and could not spend all their time directing McCants or her crew.
According to Hall, Rick's role was to "coordinate the picking and loading," but Rick did not actually supervise the workers in the crew. Id. at 257. There is no evidence that Midwest had any control in the composition of McCants's crews, the crew's shifts, or their assignments. McCants was responsible for disciplining the crew. This factor weighs in favor of McCants being an independent contractor.
B. Occupation or Business of Individual
McCants had a "crew leader's license from the Labor Department" and she was paid a set rate, which was calculated by the pound. Id. at 300. She moved her crews to various harvests in different geographic regions. McCants clearly had her own business and did not work exclusively for Midwest. This factor weighs in favor of her status as an independent contractor.
C. Kind of Occupation
This factor focuses on whether the kind of occupation involves work usually done under direction or an employer or by a specialist without supervision. Moberly, 757 N.E.2d at 1010. According to James Smith, McCants operated as an independent contractor. She was told what fields to harvest, but she would hire and fire her crew, keep track of the crew's hours, discipline them, and pay them. Hall no longer hired his own harvesters. Instead, he relied on Midwest to find McCants and then in turn for McCants to get the crew in and working during his season. This factor weighs in favor of McCants being an independent contractor.
D. Skill Required
According to the deposition of James Smith, a license from the Labor Department was required to run harvesting crews. Midwest expected McCants "to *790 harvest and package a quality watermelon." App. p. 320. "Skilled labor is often performed by an independent contractor." Walker, 887 N.E.2d at 132. McCants had a specific license and provided a specific skilled servicesupplying farm laborers during the appropriate season. This factor supports her classification as an independent contractor.
E. Supplier of Equipment, Tools, and Work Location
McCants provided the knives to her crew for cutting watermelons from the vine. Midwest provided the labels for the melons, conveyors, and shipping bins. Hall Farms supplied the tractors, wagons, and fuel. The work location included the fields at Hall Farms, some of which were on leased land. This factor is neutral.
F. Length of Employment
McCants worked for Midwest only from mid-July until Labor Day. It was seasonal employment, and she only worked with Midwest for two or three seasons. It was not a long term relationship and this factor favors McCants's status as an independent contractor.
G. Method of Payment
McCants was not paid an hourly wage. Instead she was paid a "set rate" which apparently varied each season and was "by the pound." App. p. 301. This type of payment is more typical of an independent contractor than of an employee. See Moberly, 757 N.E.2d at 1012 (citing the Restatement (Second) of Agency § 220(2) cmt.h. for the proposition that payment by the hour or month indicates employer-employee relationship). It is not clear how frequently she was paid. Midwest did not pay the crew, McCants did. She kept track of the crew's hours and determined their pay rates. Midwest was not involved in that process. By law, McCants had to pay her crew minimum wage and the Labor Department required copies of her payroll records to be kept with Midwest. This factor weighs in favor of McCants being an independent contractor.
H. Regular Business of Employer
"This factor considers whether or not the work at issue is part of the regular business of the employer." Walker, 887 N.E.2d at 133. Midwest was a company in the business of buying and distributing melons. Though harvesting melons was a necessary part of its business, Midwest did not engage in that endeavor. James did not even have the proper contractor's license from the Labor Department to engage in such a practice. This factor is neutral.
I. Belief of the Parties
"It is not determinative that the parties believe or disbelieve that the relation of master and servant exists, except insofar as such belief indicates an assumption of control by the one and submission to control by the other." Moberly, 757 N.E.2d at 1010 (quoting Restatement (Second) of Agency § 220(2), cmt. m). Rick referred to McCants as an independent contractor. He treated her as independent contractor and believed their business relationship to be one of dealing with an independent contractor. Neither Rick nor James professed any belief or assumption that they could control McCants or her business practice. Although the Guillaumes admit McCants's beliefs about the business relationship are unknown, they insist it must be inferred that McCants considered herself an employee of Midwest. Such an inference has no support in this record, and we will not make it. This factor slightly favors McCants being an independent contractor.
J. Whether the Principal is in Business
Midwest was in fact in business, engaged in procuring and distributing produce. *791 This lone factor favors employee status for McCants. See Moberly, 757 N.E.2d at 1013 (concluding that an employer engaged in business favors employee status for the worker); Walker, 887 N.E.2d at 134.
The facts set out above in discussing these ten factors are not in dispute. The Guillaumes did not submit evidence in the responses to the summary judgment motions to create questions of fact on these issues. A clear majority of these factors establish McCants as an independent contractor as a matter of law. Before concluding that summary judgment was properly granted for Midwest, however, we must also rule out the existence of an employment relationship between Hilton and Midwest.
II. George Hilton's Employment Status
To the extent that the Guillaumes claim Hilton was employed by Midwest, we must determine whether Hilton was an employee of both McCants and Midwest. Our supreme court instructs that in making such a determination, we weigh the following seven factors: (1) the right to discharge; (2) mode of payment; (3) supplying tools or equipment; (4) belief of the parties in the existence of an employer-employee relationship; (5) control over the means used in the results reached; (6) length of employment; and (7) establishment of the work boundaries. GKN Co. v. Magness, 744 N.E.2d 397, 402 (Ind.2001). The factors are balanced and great weight should be given to the right of the employer to exercise control over the employee. Id.
Midwest did not have the right to discharge Hilton. Rick explained that they could report a problem to McCants or her foreman, but that he would not personally deal with or discharge a member the crew. Hilton was paid by McCants. Midwest did not issue his pay, determine his pay, withhold taxes, or provide worker's compensation insurance for him. Hall Farms supplied the tractors and wagons and the crew had their own knives. Midwest supplied packing bins and conveyors for the packing the harvest.
Midwest treated McCants as an independent contractor and did not claim any member of her crew as its own employee. Midwest admitted to having control over which fields the crew picked and the quantity of harvest for each day, but Midwest did not control the workings of the members of the crew. If Midwest was unhappy with the ripeness of the harvest, they would report the issue to McCants, who would then rectify the situation.
The Guillaumes seem to contend that because Midwest dictated which fields should be picked each day and monitored the ripeness of the melons that this involvement amounted to direct control as an employer. We disagree. There is no evidence that Midwest had any control over Hilton or any other members of the crew individually. Midwest's directions dealt with the quality of the produce to be sold. It did not affect the workings of the crew, its shifts, or the individual member's role in the crew or workday duties. Hilton's crew only worked from mid-July until Labor Day, and thus, the employment was seasonal and not long term.
Our assessment of these factors points to a conclusion that an employment relationship did not exist between Hilton and Midwest. The undisputed facts demonstrate that Midwest did not employ McCants or Hilton and therefore could not be liable for any alleged negligence on their part. As such, summary judgment in favor of Midwest and Hall Farms was proper.
*792 III. Interlocutory Appeal: Trial Court's Denial of Motion to Amend
The trial court denied the Guillaumes' motion to amend their complaint on March 17, 2009. The Guillaumes were attempting to add theories of negligent supervision and negligent entrustment against McCants, Hall Farms, and Midwest. On March 24, they filed with the trial court a motion to certify that decision for interlocutory appeal, which was granted the same day. On April 1, 2009, the Guillaumes filed their notice of appeal listing all issues. However, they did not file a motion with this court pursuant to Indiana Appellate Rule 14(B) requesting this court to accept jurisdiction of the interlocutory issue. Rule 14(B) states that such a motion "requesting the Court of Appeals accept jurisdiction over an interlocutory appeal shall be filed within thirty (30) days of the date of the trial court's certification." Ind.App. R. 14(B)(2)(a). As such, we do not have jurisdiction over this issue and it must be dismissed. See Anonymous Doctor A v. Sherrard, 783 N.E.2d 296, 299 (Ind.Ct.App.2003) (dismissing an appeal when the appellant failed to petition the Court of Appeals to accept jurisdiction pursuant to Appellate Rule 14(B)).
The Guillaumes argue that Appellate Rule 66(B) should allow our court to accept jurisdiction of the issue at this stage. We disagree and have previously declined such suggestions. See Daimler Chrysler Corp. v. Yaeger, 838 N.E.2d 449, 450 (Ind.2005) (holding that Appellate Rule 66(B) does not authorize an interlocutory appeal that fails to comply with Appellate Rule 14). Because this issue is dismissed, we do not consider whether the trial court properly denied permission to amend the complaint. We therefore do not reach the purported, but failed, issues of negligence entrustment and negligent supervision.
Conclusion
Neither McCants nor Hilton were employees of Midwest, and therefore summary judgment in favor of Midwest and Hall Farms was proper. Consideration of the issue of whether the trial court properly denied the Guillaume's motion to amend their complaint is not properly before us on appeal and must be dismissed. We affirm.
Affirmed.
NAJAM, J., and KIRSCH, J., concur.
ORDER
Appellee Hall Farms, Inc., by counsel, has filed a Motion to Publish Memorandum Decision.
Having reviewed the matter, the court FINDS AND ORDERS AS FOLLOWS:
1. Appellee's Motion to Publish Memorandum Decision is GRANTED. This Court's opinion handed down in this cause on August 19, 2009, marked Memorandum Decision, Not for Publication, is now ORDERED PUBLISHED.
NAJAM, KIRSCH, BARNES, JJ., concur.
NOTES
[1] We need not reach this argument because we conclude neither McCants nor Hilton were employees of Midwest. Without that employment relationship, liability cannot be extended to Midwest and then onto Hall Farms through any sort of joint venture situation, even if such a situation existed.
[2] The Guillaumes reference the ten-factor test in their reply brief.
|
329 S.W.2d 338 (1959)
MANHATTAN FIRE & MARINE INSURANCE COMPANY, Appellant,
v.
G. H. MELTON, Appellee.
No. 7165.
Court of Civil Appeals of Texas, Texarkana.
October 20, 1959.
Rehearing Denied November 17, 1959.
*339 Hardy Moore, Paris, for appellant.
Howard S. Smith, Sulphur Springs, Woodrow H. Edwards, Mt. Vernon, for appellee.
FANNING, Justice.
G. H. Melton, appellee herein, sued appellant insurance company on a policy of fire and extended coverage insurance, claiming that his residence in Sulphur Springs was damaged on May 23, 1957, by windstorm, hail and wind-driven rain, and recovered judgment for $982.50, pursuant to a jury verdict upon special issues. Appellant insurance company's motion for new trial was overruled and it has appealed.
Appellant presents two points upon appeal. Its first point reads as follows:
"The error of the trial court in its charge to the jury in applying as the measure of damages the cost of repairs instead of requiring damages to be measured within the framework of the value of the property at the time of loss, ascertained with proper deduction for depreciation, which would have been much less than the cost of repairing or replacing the property, liability being limited to the smaller of the two accounts."
Appellee counters appellant's first point with his counterpoints 1, 2 and 3, as follows:
"1. The trial court was correct in charging as it did on cost repair, since actual cost, less depreciation, if lower than cost of repair, is a limitation of liability on the part of defendant and the limitation of liability was not affirmatively pleaded.
"2. Actual cost less depreciation is not a proper measure of damages in the instant case because it is impracticable to use such measure.
"3. By failing to insist on plaintiff using actual cost, less depreciation, while the case was pending from September 25, 1957, until trial time, defendant waived its right to rely on such measure of damages."
*340 The policy sued upon provided maximum coverages of $4,000 on appellee's residence building and $2,500 on appellee's household goods and contained among others the following provisions:
"Subject to Article 6.13 of the Texas Insurance Code1951, liability hereunder shall not exceed the actual cash value of the property at the time of loss, ascertained with proper deduction for depreciation; nor shall it exceed the amount it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for loss resulting from interruption of business or manufacture; nor shall it exceed the interest of the insured, or the specific amounts shown under `Amount of Insurance.'"
Article 6.13 of the Texas Insurance Code, V.A.T.S., is not applicable to the case at bar because it was undisputed that the loss to the dwelling in question was not total but was only partial.
The only measure of damages pleaded by plaintiff in his original petition filed September 6, 1957, was as follows:
"By reason of said windstorm and hail, and as a direct result thereof, all of the aforesaid damage was done, and the actual and necessary cost of repairing and replacing the property so damaged with material of like kind and quality within a reasonable time after such loss was and is the total sum of $1,212.14."
By trial amendment plaintiff pleaded the identical measure of damages, however raising the amount from $1,212.14 to $1,329.54.
Defendant in its amended answer, filed January 26, 1959, which is the only pleading of defendant shown in the record, which answer contains no special exceptions to the measure of damages pleaded by plaintiff, generally denies the allegations of plaintiff's original petition and makes certain special denials. We quote from said amended answer as follows:
"1. Defendant denies all and singular the allegations in said petition contained, and demands strict proof.
"2. Defendant denies the plaintiff's house at 907 South Davis Street, Sulphur Springs, Texas, was damaged by windstorm, hail or rain on the 23rd day of May, 1957, denies that the damage which occurred was insured against according to the terms and provisions of the policy of insurance described in plaintiff's petition, and says any damages claimed by plaintiff then to have occurred did in fact occur, in whole or in part, on a prior and different occasion, and prior to the issuance of defendant's contract of insurance to the plaintiff. Defendant's policy of insurance provided in part that only direct loss by windstorm, hurricane or hail was insured against, and not loss caused by rain, wind driven or otherwise, unless wind or hail first made an opening in the walls or roof of the building, in which event the defendant should be liable only for such loss to the interior of the building as was caused immediately by rain entering through such opening, and said contract of insurance further obligated plaintiff as the insured person to protect the property after loss from further damage. None of the foregoing provisions and conditions was observed or complied with by plaintiff, and defendant accordingly pleads the same in bar and diminution of plaintiff's recovery.
"Wherefore, defendant prays that plaintiff take nothing by his suit, and that it go hence without day with its cost."
*341 Defendant nowhere affirmatively pleaded that the actual cash value of the property in question, less depreciation, was less than the measure of damages pleaded by plaintiff, and nowhere pleaded the policy provisions in question as a limitation upon the amount of damages to be recovered by plaintiff.
We think it is clear that the above quoted policy provision is a limitation upon the amount of damages for which the insurance company may be liable. In this connection, see Home Ins. Co. v. Fouche, Tex.Civ.App., 149 S.W.2d 977, 978, and authorities therein cited, wherein it is stated:
"The contract of insurance sued upon contains the following provisions: `This Company's liability for loss or damage to the automobile shall not exceed the actual value thereof at the time any loss or damage occurs and the loss or damage shall be ascertained or estimated accordingly, with the proper deduction for depreciation however caused, and without compensation for loss of use, and shall in no event exceed the limit of liability, if any, stated in Item 3 of the Declarations, nor what it would then cost to repair or replace the automobile, or parts thereof, with other of like kind and quality, such ascertainment or estimate shall be made by the insured and this Company, or if they differ, then by appraisal as hereinafter provided.' The above quoted provisions constitute limitations upon the amount for which the insurer may be held liable. American Indemnity Co. v. Jamison, Tex.Civ.App., 62 S.W.2d 197; Home Ins. Co. v. Ketchey, Tex.Civ. App., 45 S.W.2d 350; Maryland Motor Car Ins. Co. v. Smith, Tex.Civ. App., 254 S.W. 526; Automobile Underwriters of America v. Radford, Tex.Civ.App., 293 S.W. 869; Northern Assurance Co., Ltd. v. Herd, Tex. Civ.App., 273 S.W. 884." (Emphasis added.)
Also in this connection see Am. Fire & Cas. Co. v. Scott, Tex.Civ.App., 228 S.W. 2d 324, 326, wherein it is stated:
"* * * The burden was on appellee to prove the cost of repairing the car with parts of `other like kind and quality, with deduction for depreciation,' this being a limitation of liability expressly pleaded by appellant. Rule 94 Texas Rules of Civil Procedure; * * *"
There was no pleading by either plaintiff or defendant as to actual cash value, less depreciation, as a measure of damages, or by defendant as a limitation upon liability, and likewise no issue on the matter was submitted to the jury (although requested by appellant) and this issue was not tried by consent of the parties and without objection. We are of the opinion that under the record in this case appellee's first counterpoint should be sustained under the authority of the case of T.I.M.E., Inc. v. Maryland Casualty Co., 157 Tex. 121, 300 S.W.2d 68, 72, and we quote from the Supreme Court's opinion in the T.I.M.E. case, supra, as follows:
"Petitioner contends that respondent lost its right to urge as a defense that Munroe was not an insured because it did not specifically allege in its answer that he was not an insured under the terms of the policy and did not assert that fact as a defense to the suit until it filed its second motion for judgment notwithstanding the jury's verdict. The question is governed by Rule 94, Texas Rules of Civil Procedure. That Rule requires affirmative pleading of certain defenses and continues: `Where the suit is on an insurance contract which insures against certain general hazards, but contains other provisions limiting such general liability, the party suing on such contract shall *342 never be required to allege that the loss was not due to a risk or cause coming within any of the exceptions specified in the contract, nor shall the insurer be allowed to raise such issue unless it shall specifically allege that the loss was due to a risk or cause coming within a particular exception to the general liability; provided that nothing herein shall be construed to change the burden of proof on such issue as it now exists.'
"Respondent argues that the matter of who is insured under a policy of insurance is a part of the insurer's `basic promise', and that it was not the purpose of the quoted provisions of Rule 94 to require an insurer to allege that the person inflicting an injury was not covered by the basic promise. In support of its argument respondent cites Alamo Cas. Co. v. Richarson, Tex.Civ.App., 235 S.W.2d 726, writ refused, n. r. e., and Preferred Life Ins. Co. v. Stephenville Hospital, Tex.Civ.App., 256 S.W.2d 1006, no writ history. The case first cited undoubtedly lends support to respondent's position. Petitioner, on the other hand, argues that the quoted provisions of Rule 94 require an insurer to plead specifically all exceptions to its `general liability' under a policy and that paragraph (a) of Section III provides an exception to respondent's general liability. In support of its argument petitioner cites National Security Life & Casualty Co. v. Benham, Tex.Civ. App., 233 S.W.2d 334, writ refused, n. r. e.; Camden Fire Ins. Ass'n v. Moore, Tex.Civ.App., 206 S.W.2d 104, writ refused, n. r. e., and National Life & Accident Ins. Co. v. Leverett, Tex. Civ.App., 215 S.W.2d 939, writ dism. We do not regard any of the cases cited by the parties as binding on this Court in its construction and application of the Rule and consequently see no need to analyze them.
"Before the adoption in 1941 of our present Rules of Civil Procedure a system of pleading had developed in this state in which there was much `sand-bagging' of courts as well as of opposing litigants. The pleading device known as a `general demurrer' coupled with the general denial method of putting in issue rebuttal defenses and defenses based on exceptions and exclusions led to innumerable reversals, interminable delays and unnecessary expense. In adopting the Rules of Civil Procedure this Court sought to eliminate these roadblocks to a sound administration of justice. The general demurrer was abolished. Rule 90, Texas Rules of Civil Procedure. By Rule 279 a party was denied the right to a submission of special issues on rebuttal defenses in the absence of special pleading. Luther Transfer & Storage, Inc. v. Walton, 156 Tex. 492, 296 S.W.2d 750, 60 A.L.R.2d 1087. In the same spirit the quoted provisions of Rule 94 were intended to eliminate hidden defenses to liability based on exceptions contained in insurance policies. The ultimate object of all of these changes in rules of pleading was to require a litigant, in so far as was reasonably possible, to put openly in issue on the trial of a case all of the reasons, in fact and in law, why the other party should not prevail.
"Before the adoption of the Rules of Civil Procedure one suing on or for benefits under a policy of insurance was required to negative, in his pleading as well as in his proof, all of the policy exceptions to liability. Failure to do so was fatal. * * * The quoted provisions of Rule 94 were intended to supersede this rule of pleading established by court decisions.
"Rule 94 requires an insurer, on penalty of waiving the issue, to allege specifically that the loss was due to a risk or cause coming within a particular exception to its general liability. The exceptions which the insurer must specifically plead are those which limit its *343 general liability for loss caused by the general hazards covered by the policy. In this case the general hazard covered by the policy, as applied to the facts, was the hazard of accidental injuries inflicted on persons through the use of the Ford automobile. Respondent's general liability was to pay on behalf of Munroe all sums he became obligated to pay as damages for such accidental injuries. By paragraph (a) of Section III respondent limited its general liability by providing, in effect, that the hazard of accidental injury to a fellow employee, in the course of his employment, arising out of the business of the employer was not covered by the policy. It thus appears that the provision limiting respondent's liability contained in paragraph (a) was precisely the type of limiting provision which respondent was required to plead on penalty of waiving its right to urge that provision as a defense to the suit.
"Respondent argues, ultimately, that whether an exclusionary clause is a part of the `basic promise' which the insurer is not required to plead or is an exception to general liability which the insurer is required to plead is `usually entirely up to the draftsman' of the policy, and depends on the section of the policy under which the clause is placed. Under that theory the quoted provisions of Rule 94 could be nullified by including all exceptions to general liability under the definition of an insured. We cannot approve a theory that would accomplish that result.
"The judgments of the Court of Civil Appeals and trial court are reversed and the cause is remanded to the trial court for the entry of judgment for petitioner." (Emphasis added.)
The evidence shows that plaintiff's damages were partial, that he sustained damages to the roof (and understructure thereof) of his dwelling house, to wallpaper within his house and to doors, windows and facings of his house. Plaintiff presented proof of his various damages in accordance with the measure of damages he specially pleaded and the jury in response to the damage issues submitted found that the reasonable costs of repair of these items of damages in Hopkins County, Texas, with material of like kind and quality within a reasonable time after said loss, were the various amounts shown therefor in the record, and the trial court after making certain deductions provided by the policy, entered judgment for plaintiff for $982.50, which was less than the amounts of damages testified to by plaintiff's witnesses. Appellant does not present any points attacking these findings of the jury on the grounds of "no evidence," "insufficient evidence" or that such findings were "so contrary to the overwhelming weight and preponderance of the evidence as to be manifestly wrong and unjust."
Defendant objected to the damage issues submitted by the trial court and requested the following issues which were refused by the trial court:
"What do you find from a preponderance of the evidence was the actual cash value of the roof on plaintiff's house on May 23, 1957, immediately prior to the loss, if any, figured with proper deduction for depreciation.
"What do you find from a preponderance of the evidence was the actual cash value of the paper on the ceilings and walls of such rooms of plaintiff's house as you may find from a preponderance of the evidence were damaged by hail or windstorm on May 23, 1957, immediately prior thereto, figured with proper deduction for depreciation.
"What do you find from a preponderance of the evidence was the actual cash value of such of the doors, windows and facings of plaintiff's house as you may find necessarily needed replacement on account of damage thereto on May 23, 1957, immediately prior *344 to such damage, figured with proper deduction for depreciation."
In the ordinary case where the pleadings and the evidence authorized same, appellant's requested issues would be the proper measure of damages to submit to the jury. See Home Ins. Co. v. Fouche, supra, and American Indemnity Co. v. Jamison, Tex.Civ.App., 62 S.W.2d 197. However, it has been frequently held that in proper cases where it is impracticable to determine the market value of the property damaged, the cost of reproduction, replacement or repair with materials of like kind and quality within a reasonable time after the loss are proper factors to be considered in determining the amount of loss to be paid to the insured. In this connection see the following authorities: 61 A.L.R.2d 714, 715; 45 C.J.S. Insurance § 917, pp. 1019-1020; Texas Moline Plow Co. v. Niagara Fire Ins. Co., 39 Tex.Civ.App., 168, 87 S.W. 192.
In 61 A.L.R.2d at pages 714-715, supra, it is stated:
"The cases discussed in this annotation are concerned with the provision in an insurance policy limiting the liability of the insurer to the `actual cash value' of the insured property at the time of loss.
"As the cases hereinafter set out indicate, the actual cash value clause in policies does not purport to fix any rule for determining loss, but simply imposes a limitation upon the amount which may be awarded in any case.
"Where property is of such nature that its market value can be readily determined, market value has frequently been applied as the test or criterion of actual cash value of property at the time of loss, under policies insuring to that extent. In a few cases, the courts although recognizing that the market value test would ordinarily be applicable, have refused to apply it where, under the existing circumstances, this test of actual cash value would fail to properly indemnify the insured. Another test or criterion, which has been employed in a great number of cases to ascertain the actual cash value of the insured's property at the time of loss, is the replacement or reproduction cost of the property lost.
"In recent years, a number of courts, seeking to effectuate more complete indemnity, have adopted a third method, the broad evidence rule, to determine actual cash value of property at the time of loss. Under this rule, the trier of facts may consider any evidence logically tending to the formation of a correct estimate of the value of the insured property at the time of loss.
"Generally, it may be said that the proper test or criterion of actual cash value in a particular case depends upon the nature of the property insured, its condition, and other circumstances existing at the time of loss." (Emphasis added.)
In 45 C.J.S. Insurance § 917, pp. 1019-1020, supra, it is stated:
"It has been said that all the courts have experienced great difficulty in construing policy provisions where a partial loss has been suffered. In case of a partial loss, the insurer is liable under the ordinary policy, to pay the full amount of the loss or damage, not exceeding the amount of insurance specified in the policy. This rule applies notwithstanding the valued-policy law, which applies, as discussed supra § 916, only where there has been a total loss, insurer being liable under a valued policy, in case of a partial loss, in proportion to the valuation of all property of the same class.
"In the absence of different provisions in the policy, the measure of recovery for a partial loss is the difference between the value of the property *345 immediately before the fire and its value immediately thereafter. It has been held that such measure is the reasonable cost of restoring or repairing property damaged solely by fire to as good condition as before the fire, and not the amount actually expended for repairs." (Emphasis added.)
Applying the above principles of law to the facts in this case we have reached the conclusion that it would have been impracticable under the facts in this case to determine the actual cash value (ascertained with proper deduction for depreciation) of the old roof on plaintiff's house which did not leak and was still giving good service when it and its understructure were partially damaged, and of plaintiff's wallpaper which was usable and dependable until it was partially damaged, and of plaintiff's used doors, windows and facings which were usable and dependable until they were partially damaged. While the damages awarded by the jury may perhaps appear to be liberal, they are less than the amounts testified to by appellee's witnesses, and as hereinbefore stated, appellant has raised no points attacking the sufficiency of the evidence to support said amounts. It is our opinion that under this record appellee's second counterpoint should be sustained.
We are also of the further opinion that appellee's third counterpoint should be sustained under this record. In this connection see the case of North River Ins. Co. v. Rippy, Tex.Civ.App., 23 S.W.2d 853.
Appellant's first point is deemed as not presenting reversible error under the record in this case and is respectfully overruled.
Appellant's second point reads as follows:
"The trial court's error in permitting plaintiff to introduce in evidence a copy of the Sulphur Springs newspaper giving an account of the windstorm on May 23, 1957, over defendant's objection it was hearsay."
The newspaper article in question, while hearsay and while giving a more detailed account of the storm, was largely and in the main cumulative of other (unobjected to) evidence already in the record to the effect that there was a severe storm in Sulphur Springs on the day in question. Mr. Bowersock, the agent of appellant insurance company, a witness for defendant, admitted knowledge of the storm and among other things testified as follows:
"Q. Mr. Bowersock, you adjusted, investigated, inspected many losses which you were satisfied occurred in Sulphur Springs on the 23rd day of May, 1957, didn't you? A. Yes.
"Q. All right. Throughout the city, didn't you? A. Yes sir.
"Q. Damage to houses in the south part of town as well as the north part, didn't you? A. Yes sir.
"Q. Yes. Damage to roofs by wind in the south part of town as well as in the north, didn't you? A. Yes.
"Q. In fact, you know, don't you, that the City of Sulphur Springs, on the 23rd day of May, 1957, the date that the damages were alleged to have occurred in this lawsuit, that the worst windstorm in years slammed into Sulphur Springs on that Thursday morning, don't you? A. Yes sir.
"Q. * * * All right, sir. Now, don't you know that the winds ripped trees, roofs and signs from buildings? A. True.
"Q. And rain fell in torrents? A. I am not sure about the rain.
"Q. All right. Don't you know that tornado funnels were reported sighted in the sky by several persons on that morning? A. I think that's correct.
"Q. Don't you know the power lines shorted out on account of under *346 the impact of falling tree limbs throughout the city? A. True.
"Q. Don't you know it was of such voracity that some parents rushed to school to take home their children?
"Mr. Moore: Isn't this going a little far afield, Your Honor?
"Mr. Smith: Asking if he knows.
"The Court: It's limited to the witness' knowledge, I will let him answer.
"The Witness: You say voracity but you meant velocity.
"Q. Maybe I'm in error, I mean that it was so severe. A. All right, yes.
* * * * * *
"Q. Did you know that it was of such severity that two line crews from your own city of Paris came to Sulphur Springs that afternoon to help straighten up the damage so the people of this city could have power? A. I didn't know but I saw some extra crews here.
"Q. All right. Did you know that it was of such severity that some 200 sections of sheet iron were blown off the west room of the main building of the Red Star Fertilizer Plant here in Sulphur Springs that day? A. Yes sir."
Also Ralph Hill, a weather observer and witness for defendant had also previously testified as to the severity (and various details) of the storm in question. Likewise some of appellee's witnesses had already testified as to the severity of the storm in question and various details with respect thereto.
After carefully considering the matter complained of in appellant's second point in the light of the record as a whole in this case, it is our considered judgment that the matter complained of therein was not reasonably calculated to cause and probably did not cause the rendition of an improper judgment in this cause. See the following authorities: Rules 434 and 503, Texas Rules of Civil Procedure; Condra Funeral Home v. Rollin, Tex., 314 S.W.2d 277; Walker v. Texas Emp. Ins. Ass'n, 155 Tex. 617, 291 S.W.2d 298; Goforth v. Alvey, 153 Tex. 449, 271 S.W.2d 404; Aultman v. Dallas Ry. & Terminal Co., 152 Tex. 509, 260 S.W.2d 596. Appellant's second point is deemed as not presenting reversible error under this record and is respectfully overruled.
Finding no reversible error in the record, the judgment of the trial court is affirmed.
|
968 F.2d 707
36 ERC 1311, 23 Envtl. L. Rep. 20,055
AETNA CASUALTY AND SURETY COMPANY, Appellant,v.GENERAL DYNAMICS CORPORATION, Appellee.AETNA CASUALTY AND SURETY COMPANY, Appellee,v.GENERAL DYNAMICS CORPORATION, Appellant.
Nos. 91-2252, 91-2254.
United States Court of Appeals,Eighth Circuit.
Submitted Jan. 9, 1992.Decided July 6, 1992.Rehearing Denied Sept. 2, 1992.
James E. Rocap, Washington, D.C., argued (Niki Kuckes and D. Bradley Clements, Washington, D.C. and Robert T. Haar, St. Louis, Mo., on the brief), for appellant.
James T. Price, Kansas City, Mo., argued (Thomas J. Wilcox and Marilyn P. Dunn, Kansas City, Mo., and Thomas E. Douglass and Bruce D. Ryder, St. Louis, Mo., on the brief), for appellee.
Before WOLLMAN and BEAM, Circuit Judges, and VAN SICKLE,* Senior District Judge.
WOLLMAN, Circuit Judge.
1
Aetna Casualty and Surety Company appeals, and General Dynamics Corporation cross-appeals, from the district court's1 declaratory judgment interpreting four comprehensive general liability insurance policies. We affirm in part and reverse and remand in part.
2
Between May 1, 1975, and July 1, 1978, Aetna issued four consecutive comprehensive general liability insurance policies (CGLs) to General Dynamics. Each of the four policies provides that Aetna will indemnify General Dynamics only for those "sums which the insured shall become legally obligated to pay as damages because of ... bodily injury or property damage." Each policy further provides that Aetna shall have "the right and duty to defend any suit against the insured seeking damages on account of such bodily injury [or] property damage." Each policy also contained the following exclusionary provision:
This insurance does not apply:
3
... to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
4
After being served with lawsuits concerning environmental contamination at seven sites and with letters from federal and state environmental protection agencies or from private parties demanding that it clean up environmental wastes at nine other sites (the sixteen sites being located in eight different states), General Dynamics forwarded to Aetna notice of these lawsuits and environmental protection agency letters and demanded that Aetna provide a defense of the actions and reimburse any sums paid by General Dynamics to resolve the matters. In response, Aetna denied coverage as to two of the sites, but agreed to defend the other lawsuits under a reservation of rights. Aetna later withdrew its defense commitment and filed this action for declaratory judgment in November of 1988.
5
The district court held that the case was not ripe as to four of the sixteen sites because no suit had been filed nor any settlements achieved at the four sites. As to the remaining twelve sites, the district court applied this court's decision in Continental Insurance Co. v. Northeastern Pharmaceutical & Chemical Co., 842 F.2d 977 (8th Cir.) (en banc ), cert. denied, 488 U.S. 821, 109 S.Ct. 66, 102 L.Ed.2d 43 (1988) (NEPACCO ). The district court held that Aetna had no duty to defend or indemnify General Dynamics in connection with suits seeking solely the recovery of environmental response costs because the CGL term "damages," under Missouri law, does not include equitable relief. At six of the twelve sites, however, claims were included for damage to natural resources. As the district court noted, under NEPACCO claims for natural resource damages are claims for "damages." Id. at 983-84, 987. The district court then determined that the CGL's pollution exclusion did not exempt Aetna from its duty to defend claims for natural resource damages at the six sites. It reasoned that the words "sudden and accidental" mean only "unexpected."
6
The district court also determined that Aetna's duty to defend General Dynamics against "any suit ... seeking damages" was not triggered by the demand letters issued by the Environmental Protection Agency and its state counterparts in Massachusetts and New Hampshire. Finally, the district court concluded that Aetna was not obligated to pay for defense costs at four sites on the basis of promises not contained in the CGLs.
AETNA'S APPEAL
I.
7
Aetna contends that the district court improperly interpreted the pollution exclusion clause in the CGLs. As set forth above, this exclusion forecloses coverage for all discharges, dispersals, releases, and escapes of pollutants that are not "sudden and accidental." The district court found the term "sudden" to be ambiguous and concluded that a "sudden" discharge, dispersal, etc., may include events occurring over a long period of time, as long as the resulting damage is "unexpected."
8
A number of courts have found the pollution exclusion to be unambiguous and have concluded that "sudden" connotes a temporal element and requires that the pollution-causing event be abrupt, not gradual. See, e.g., Hartford Accident & Indemnity Co. v. United States Fidelity and Guaranty Co., 962 F.2d 1484 (10th Cir.1992) (Utah law); Liberty Mut. Ins. Co. v. Triangle Indus., Inc., 957 F.2d 1153, 1157 (4th Cir.1992) (New Jersey law); Northern Ins. Co. of N.Y. v. Aardvark Assoc., Inc., 942 F.2d 189, 192-94 (3d Cir.1991); A. Johnson & Co. v. Aetna Cas. & Sur. Co., 933 F.2d 66, 72-73 (1st Cir.1991); Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39, 42 (2d Cir.1991); Florida Aerospace v. Aetna Cas. & Sur. Co., 897 F.2d 214, 219 (6th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 284, 112 L.Ed.2d 238 (1990); Olin Corp. v. Insurance Co. of N. Am., 762 F.Supp. 548, 560 (S.D.N.Y.1991); Liberty Mut. Ins. Co. v. SCA Serv., Inc., 412 Mass. 330, 588 N.E.2d 1346, 1349 (1992).
9
Some courts have reached a contrary result, holding that "sudden and accidental" means only unexpected or unintended. See, e.g., CPC Int'l Inc. v. Northbrook Excess and Surplus Ins. Co., 962 F.2d 77 (1st Cir.1992) (New Jersey law); New Castle County v. Hartford Accident and Indemnity Co., 933 F.2d 1162 (3rd Cir.1991) (Delaware law).
10
As stated above, Missouri law requires courts to give the terms of an insurance contract their plain meaning. NEPACCO, 842 F.2d at 985. In addition, Missouri law requires that all the terms of an insurance contract be given meaning. Harnden v. Continental Ins. Co., 612 S.W.2d 392, 394 (Mo.Ct.App.1981) (citation omitted). "[T]he courts are practically agreed that the words 'accident' and 'accidental' mean that which happens by chance or fortuitously, without intention or design, and which is unexpected, unusual and unforeseen." St. Paul Fire & Marine Ins. Co. v. Northern Grain Co., 365 F.2d 361, 364 (8th Cir.1966).
11
The pollution exclusion denies coverage unless the discharge is both sudden and accidental. The district court held that the phrase includes unexpected events occurring over an extended period of time. Since "accidental" includes the unexpected, however, the district court's construction gave no effect to the word "sudden." The term "sudden," we believe, "when considered in its plain and easily understood sense, ... is defined with a 'temporal element that joins together conceptually the immediate and the unexpected.' " The Upjohn Company v. New Hampshire Ins. Co., 438 Mich. 197, 476 N.W.2d 392, 397-98 (1991). Indeed, assigning meaning to both "sudden" and "accidental" eliminates any perceived ambiguity. The district court found "sudden" to be ambiguous because it could mean abrupt or unexpected. Because "accidental" includes the unexpected, however, "sudden" must mean abrupt. To hold otherwise would render the word "sudden" superfluous. See Hartford Accident & Indemnity Co. v. United States Fidelity and Guaranty Co., 962 F.2d 1484 (10th Cir.1992) (Utah law) ("We think the 'annexation' of 'sudden' to 'accidental' is precisely the issue: reading 'sudden' without a temporal component renders 'accidental' redundant." 962 F.2d at 1488.). Accordingly, we hold that the district court erred in its interpretation of the pollution exclusion clause and that it should have declared that the clause relieves Aetna of liability for the events described therein.II.
12
Aetna also contends that the district court erred by holding that because no suits had yet been filed nor any settlements reached with respect to four of the sixteen sites, Aetna's declaratory judgment action was not ripe for adjudication as to those sites.
13
Aetna argues that since General Dynamics had made a clear demand for payment of defense and indemnity costs with respect to each of the four sites and because Aetna disputed those demands, there is a live justiciable controversy between the parties sufficient to invoke the jurisdiction of the district court. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937). General Dynamics does not address this issue on appeal; apparently it concedes that the district court's decision was in error. We agree with Aetna that a live justiciable controversy exists between the parties and hold that Aetna's suit is ripe with respect to the four sites.
GENERAL DYNAMICS' CROSS-APPEAL
I.
14
General Dynamics first argues that a recent decision from another circuit collaterally estops Aetna from denying that the term "damages," under Missouri law, includes environmental response costs. In Independent Petrochemical Corp. v. Aetna ("IPC" ), 944 F.2d 940 (D.C.Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1777, 118 L.Ed.2d 435 (1992), the District of Columbia Circuit, interpreting Missouri law, held that the term "damages" in an insurance contract includes environmental response costs. General Dynamics now asserts that Aetna is precluded from denying liability in the instant case. We disagree.
15
The doctrine of collateral estoppel bars re-litigation of an issue when: (1) the issue in the prior adjudication was identical; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party in the prior adjudication; and (4) the estopped party had a full and fair opportunity to be heard on the adjudicated issue. Oldham v. Pritchett, 599 F.2d 274, 279 (8th Cir.1979). It does not matter that General Dynamics was not a party to the prior suit, as non-parties to the original judgment may raise collateral estoppel offensively against losing parties. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Likewise, General Dynamics may properly raise the collateral estoppel defense for the first time on appeal. Collateral estoppel may be raised at any stage of the proceedings, so long as it is raised at the first reasonable opportunity after the rendering of the decision having the preclusive effect. See Cotton States Mut. Ins. Co. v. J.O. Anderson, 749 F.2d 663, 665 (11th Cir.1984) (Collateral estoppel defense not waived when first raised at oral argument); Lujan v. United States Dept. of the Interior, 673 F.2d 1165, 1168 (10th Cir.), cert. denied, 459 U.S. 969, 103 S.Ct. 297, 74 L.Ed.2d 279 (1982) (collateral estoppel argument not waived when first raised in supplemental appellate brief).
16
Although General Dynamics has satisfied the Oldham standard's technical requirements for collateral estoppel, we conclude that allowing it to assert collateral estoppel offensively would be unfair.
17
The decision to allow offensive collateral estoppel has been left to the broad discretion of the courts, with the recognition that there are situations in which its use would be unfair. Parklane, 439 U.S. at 331, 99 S.Ct. at 651; see also Setter v. A.H. Robins Co., 748 F.2d 1328 (8th Cir.1984) (offensive collateral estoppel not applied in face of inconsistent prior judgments). This is such a situation. Recently, we decided the issue of liability for response costs in Aetna's favor, albeit under Arkansas law,2 in Grisham v. Commercial Union Insurance Co., 951 F.2d 872 (8th Cir.1991). Aetna has prevailed on this issue in other jurisdictions as well. See, e.g., A. Johnson & Co. v. Aetna Casualty & Surety Co., 741 F.Supp. 298 (D.Mass.1990), aff'd, 933 F.2d 66 (1st Cir.1991).
18
We further note that ruling in favor of General Dynamics on this issue would require us to apply a principle of law this court rejected in NEPACCO, Grisham, and Parker-Solvents v. Royal Ins. Co., 950 F.2d 571 (8th Cir.1991). Therefore, we hold that Aetna is not estopped from arguing that our decision in NEPACCO controls this case.
II.
19
General Dynamics next argues that our decision in NEPACCO does not apply to this case. Put another way, we must determine whether the interpretation of the term "damages" in these CGLs is controlled by our decision in NEPACCO.
20
General Dynamics asserts that NEPACCO does not apply, for three reasons: 1) the term "damages" has a different plain meaning with respect to Aetna's CGL than it did with respect to the insurer's in NEPACCO, and extrinsic evidence should be allowed to demonstrate this; 2) the claims for response costs in this case include state law, common law tort, contribution, and natural resource damage claims, as well as the federal causes of action at issue in NEPACCO; and 3) two lower state court decisions cast doubt on the NEPACCO analysis of Missouri law.
21
In NEPACCO we stated: We hold "that the plain meaning of the term 'damages' used in the CGL policies refers to legal damages and does not cover cleanup costs." 842 F.2d at 985. We determined that "the term 'damages' is not ambiguous in the insurance context." Id. The policy language in this case is the same as the language at issue in NEPACCO. Because NEPACCO's holding is not limited in application to a particular insurance contract, nor is the term "damages" ambiguous, extrinsic evidence may not be considered. Property Tax Research Co. v. Falstaff Brewing Corp., 708 F.2d 1333, 1336 (8th Cir.1983) (court could not consider extrinsic evidence to "vary the unambiguous terms of an integrated written document"). Thus, General Dynamics' first contention must be rejected.
22
As to General Dynamics' second argument, the district court held that "[a]lthough the causes of action are based on state statute or common law, rather than CERCLA, the relief sought is still equitable in nature" because the causes of action "seek either reimbursement/restitution or payment of clean-up costs associated with the clean-up of the various sites." We agree. Because these causes of action are "essentially equitable actions for monetary relief in the form of restitution or reimbursement of costs," NEPACCO, 842 F.2d at 987, CGL coverage is precluded. To hold otherwise would undermine the rationale adopted in NEPACCO, which distinguished between legal and equitable damages. Id. The CGL does, however, cover any legal claims asserted against General Dynamics. Id.
23
Third, General Dynamics argues that two post-NEPACCO state court decisions demonstrate that this court's prediction of Missouri law has "go[ne] awry." The first, Hyatt Corp. v. Occidental Fire & Casualty Co., 801 S.W.2d 382 (Mo.Ct.App.1990), a personal injury case, held, citing a federal district court case from Michigan and a Wisconsin Supreme Court decision, that attorney fees in connection with a settlement award are "damages" for insurance coverage purposes. Hyatt stated that "damages" would be understood by an insured to "provide coverage for all forms of civil liability." Id. at 394. The opinion makes no reference to NEPACCO. The second decision, Cooper Indus. v. American Mutual Liability Ins. Co. (Mo.Cir.Ct.1989), allowed a third-party innocent purchaser of property to recover response costs as damages. After ostensibly rejecting NEPACCO's analysis of Missouri law, the Cooper court ruled that the term "damages" does not include a suit by the EPA for equitable relief by way of injunction.
24
Although decisions of a state's intermediate appellate courts are not binding upon us, they are persuasive authority, and we must follow them when they are the best evidence of what the state's law is. Garnac Grain Co., Inc. v. Blackley, 932 F.2d 1563, 1570 (8th Cir.1991). See 19 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4507, at 94-95 (1982).
25
We do not find Hyatt and Cooper to constitute persuasive evidence that the law of Missouri is, or would be held to be by the Supreme Court of Missouri, different from that as expressed in NEPACCO. As indicated above, Hyatt did not even refer to NEPACCO, and Cooper, although certainly critical of NEPACCO, reaches a result on its facts not inconsistent with NEPACCO. Accordingly, we find no basis upon which to hold that NEPACCO's holding is contrary to Missouri law, either as proclaimed or as clearly predictable.
III.
26
General Dynamics also argues that the district court erred in ruling that the EPA demand letters were not "suits" which triggered Aetna's duty to defend. We cannot agree.
27
The CGL policies provide that "[Aetna] shall have the right and duty to defend any suit against [General Dynamics] seeking damages on account of ... property damage" (emphasis added). As indicated above, General Dynamics received demand letters from the EPA and from the states of Massachusetts and New Hampshire stating that General Dynamics was potentially responsible for contamination and should notify the EPA or its state counterpart of its willingness to voluntarily participate in cleanup measures and negotiations. If General Dynamics did not do so, stated the demand letters, the EPA and the states would initiate further appropriate response actions, including possible civil actions against General Dynamics. The district court determined that "suit" means an action in court, not an administrative action, and ruled that the EPA demand letters did not trigger Aetna's duty to defend. General Dynamics counters by arguing that this interpretation is unduly narrow and should include any coercive proceeding in which legal claims or rights are asserted against it.
28
With respect to the definition of the word "suit," General Dynamics relies on various cases from other jurisdictions that support its interpretation. See, e.g., Aetna Cas. & Sur. Co., Inc. v. Pintlar Corp., 948 F.2d 1507 (9th Cir.1991); Avondale Indus., Inc. v. Travelers Indem. Co., 887 F.2d 1200 (2nd Cir.1989), cert. denied, 496 U.S. 906, 110 S.Ct. 2588, 110 L.Ed.2d 269 (1990); A.Y. McDonald Indus. v. Insurance Co. of North America, et al., 475 N.W.2d 607 (Iowa 1991) (stating that the majority of courts construe the term "suit" to include any attempt to gain an end by a legal process). See also Judge Selya's masterly discussion and analysis of this issue in Ryan v. Royal Ins. Co. of America, 916 F.2d 731, 735-36 (1st Cir.1990) (the term "suit" does not necessarily require that a civil lawsuit be filed before the duty to defend arises).
29
Other cases have held that demand letters similar to those received by General Dynamics in this case do not constitute the functional equivalent of a suit for damages. See, e.g., Maryland Cas. Co. v. Armco, Inc., 822 F.2d 1348, 1354 (4th Cir.1987), cert. denied, 484 U.S. 1008, 108 S.Ct. 703, 98 L.Ed.2d 654 (1988) (directives from regulatory agency, indicating possibility of CERCLA liability, do not trigger duty to defend); Arco Indus. Corp. v. Travelers Ins. Co., 730 F.Supp. 59, 68 (W.D.Mich.1989) (Michigan law) ("In plain language, the term [suit] refers to court proceedings."); Patrons Oxford Mut. Ins. Co. v. Marois, 573 A.2d 16, 20 (Me.1990) (Maine law) (state environmental agency directive to compel cleanup not a "suit seeking damages.").
30
We believe that a reading of the CGL language in context militates in favor of Aetna's position. The CGL language imposes upon Aetna a duty to "defend any suit ... seeking damages." Missouri law, in turn, requires us to give the terms of an insurance contract their plain and ordinary meaning.3 NEPACCO, 842 F.2d at 985. The demand letters in this case did not seek damages; rather, they sought to have General Dynamics participate in, and negotiate, the clean up of the various sites. Although it is a close question, in the light of the requirement of Missouri law that the terms of an insurance contract be given their plain and ordinary meaning, we conclude that the district court did not err in ruling that the demand letters did not constitute suits for damages within the meaning of Missouri law. We add that this court's analysis in NEPACCO strongly supports, if not requires, this approach. In so holding, we do not overlook the serious consequences that such demand letters may entail. See, e.g., Insurance Co. of North America v. Syntex Corp., 964 F.2d 829, 830-31 (8th Cir.1992).
IV.
31
General Dynamics next argues that the district court erred by failing to enforce certain oral promises. Aetna and the Insurance Company of North America ("INA") orally promised to jointly pay General Dynamics $300,000 for defense costs at one of the sites, Aetna agreeing to pay $75,000 and INA $225,000. In return, General Dynamics agreed to release Aetna and INA from all past and future claims for indemnity and defense costs in connection with the site. INA subsequently paid $300,000 to General Dynamics. The district court determined that since General Dynamics received the entire $300,000 due under the agreement, it suffered no damages based on Aetna's failure to pay the $75,000.
32
General Dynamics argues, however, that INA's payment of an additional $75,000 stemmed from a separate agreement with General Dynamics and was not meant to discharge Aetna from its obligations. Thus, it claims that it is still entitled to $75,000 from Aetna under the original settlement agreement.4 We do not agree. In return for payment from Aetna and INA of $300,000 in the aggregate, General Dynamics released both Aetna and INA from all past and future claims. General Dynamics received its $300,000, and Aetna is thus released from all claims by virtue of the agreement.
33
General Dynamics also argues that the district court erred by failing to enforce agreements to investigate and participate in the defense of claims asserted against General Dynamics in various judicial and administrative proceedings. Aetna's agreement to provide coverage was subject to its reservation of rights. The three letters upon which General Dynamics bases this claim use the same language: "we agree to investigate and participate in the defense of this claim under a full reservation of rights to disclaim coverage at a later date." Joint Appendix 272, 276, 278.
34
General Dynamics contends that although Aetna reserved all of its contractual rights, Aetna is bound to pay all investigation and defense costs up to the time when it decided not to provide coverage for such costs, i.e., when Aetna filed this action. We do not agree. Once Aetna disclaimed coverage, subject to General Dynamics' rights under the CGL, Aetna was not responsible for defense or investigation costs based on these letters.
CONCLUSION
35
That portion of the district court judgment which declares that Aetna is not obligated to indemnify or defend General Dynamics with respect to the sites other than the New York City Landfills sites and the New York Review Avenue site is affirmed. That portion of the judgment which declares that the claims and counterclaims relating to the Maxey Flats site, the Tucson Airport site, the Quincy Shipyard site, and the Norwich Iron and Metal site are not justiciable is reversed, as is that portion of the judgment which declares that Aetna is obligated to defend General Dynamics in the New York Landfills site and the Review Avenue site cases. The case is remanded to the district court for such further proceedings as are consistent with the views set forth in this opinion.
*
The HONORABLE BRUCE M. VAN SICKLE, United States Senior District Judge for the District of North Dakota, sitting by designation
1
The Honorable Roy W. Harper, Senior United States District Judge for the Eastern District of Missouri
2
The district court in Parker Solvents v. Royal Insurance Co., infra, held that the governing principles of insurance law are the same in Arkansas and Missouri
3
The district court found, and the parties agree, that Missouri law governs resolution of the coverage issues in this case
4
General Dynamics argues in the alternative that it has been damaged because it did not receive the $300,000 payment until two years after the date of the agreement. Thus, it argues that it is entitled to statutory interest for this time period. As this argument was not presented to the district court, it is not properly before us. See Daley v. Webb, 885 F.2d 486, 488 (8th Cir.1989)
|
826 So.2d 536 (2002)
T.W., a child, Petitioner,
v.
Ken JENNE, as Sheriff for Broward County, Florida, and the State of Florida, Respondents.
No. 4D02-3737.
District Court of Appeal of Florida, Fourth District.
October 4, 2002.
Alan H. Schreiber, Public Defender, and Donald J. Cannarozzi, Assistant Public Defender, Fort Lauderdale, for petitioner.
Robert A. Butterworth, Attorney General, Tallahassee, and Don M. Rogers, Assistant Attorney General, West Palm Beach, for respondents.
KLEIN, J.
Petitioner seeks a writ of habeas corpus as he is now being held without bond in the Broward County jail. At the time of his arrest for possession of cocaine with intent to deliver and resisting arrest without violence he was fifteen years old but represented that he was eighteen. He did so in order to be immediately released on bond because otherwise he could have been retained in juvenile detention up to twenty-one days.
As he anticipated, he was released on bond, but was rearrested for failing to appear at his arraignment and jailed without bond. He then filed an emergency *537 motion for the court to determine that he was a juvenile and for subsequent treatment as a juvenile. The trial court denied the motion.
The state relies on Williams v. State, 754 So.2d 67 (Fla. 4th DCA 2000) in which a juvenile lied about his age, failed to disclose it at his plea conference, and obtained a favorable sentence of probation. After violating his probation, he was sentenced to 364 days in jail. The defendant's mother then told his lawyer he was only sixteen years old, and his lawyer moved to vacate the conviction and sentence. At the hearing on the motion to vacate the defendant explained that he misrepresented his age in order to bond out as an adult rather than being held as a juvenile. The trial court denied the motion, and we affirmed, holding that lying about his age in order to secure a desired bond, in combination with failing to disclose his true age at the plea conference in order to obtain a favorable sentence of probation, amounted to a waiver of his right to be treated as a juvenile.
Williams relied on Smith v. State, 345 So.2d 1080 (Fla. 3d DCA 1977), in which the court held that a juvenile who lied about her age in order to receive a more lenient adult sentence of probation was estopped from later challenging that sentence on the ground that she was a juvenile. We distinguished Whittington v. State, 543 So.2d 317 (Fla. 1st DCA 1989), in which the juvenile lied about his age because in that case there was no indication that the juvenile's treatment as an adult benefitted him with a more lenient sentence.
The present case is distinguishable from Williams because petitioner is attempting to correct his misrepresented age early in the proceedings, rather than after receiving the benefit of a more lenient sentence as an adult than he might have received as a juvenile. As the court noted in Whittington, the juvenile justice statutes grant juveniles the right to be treated differently from adults. We conclude that, at this stage of the proceedings, petitioner did not unalterably waive that right and grant the writ.
POLEN, C.J., and MAY, J., concur.
|
986 So.2d 606 (2008)
ROBERTS
v.
STATE.
No. 1D07-0691.
District Court of Appeal of Florida, First District.
July 25, 2008.
Decision without published opinion. Affirmed.
|
52 F.3d 313
Edwin A. Camachov.Jetro Cash and Carry Corp., Anthony Angeonelli, AnthonyRivera, Peter Salem, Thomas Fisher
NO. 93-5684
United States Court of Appeals,Third Circuit.
Mar 22, 1995
Appeal From: D.N.J., No. 93-cv-01790,
Barry, J.
1
AFFIRMED.
|
742 F.2d 1433
McDonaldv.H.H.S.
83-6046
United States Court of Appeals,Second Circuit.
6/7/83
1
E.D.N.Y.
AFFIRMED
|
(Slip Opinion) OCTOBER TERM, 2010 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MONTANA v. WYOMING ET AL.
ON EXCEPTION TO REPORT OF SPECIAL MASTER
No. 137, Orig. Argued January 10, 2011—Decided May 2, 2011
Article V(A) of the Yellowstone River Compact ratified by Montana,
Wyoming, and North Dakota provides: “Appropriative rights to the
beneficial uses of the water of the Yellowstone River System existing
in each signatory State as of January 1, 1950, shall continue to be en
joyed in accordance with the laws governing the acquisition and use
of water under the doctrine of appropriation.” 65 Stat. 666. Montana
filed a bill of complaint, alleging that Wyoming breached Article V(A)
by allowing its upstream pre-1950 water users to switch from flood to
sprinkler irrigation, which increases crop consumption of water and
decreases the volume of runoff and seepage returning to the river
system. Thus, even if Wyoming’s pre-1950 users divert the same
quantity of water as before, less water reaches downstream users in
Montana. Concluding that the Compact permits more efficient irri
gation systems so long as the conserved water is used to irrigate the
same acreage watered in 1950, the Special Master found that Mon
tana’s increased-efficiency allegation failed to state a claim. Montana
has filed an exception.
Held: Because Article V(A) of the Compact incorporates the ordinary
doctrine of appropriation without significant qualification, and be
cause in Wyoming and Montana that doctrine allows appropriators to
improve their irrigation systems, even to the detriment of down
stream appropriators, Montana’s increased-efficiency allegation fails
to state a claim for breach of the Compact under Article V(A). Pp. 4–
19.
(a) Background appropriation law principles do not support Mon
tana’s position. The doctrine of appropriation provides that rights to
water for irrigation are perfected and enforced in order of seniority,
starting with the first person to divert water from a natural stream
and apply it to a “beneficial use.” Once perfected, that water right is
2 MONTANA v. WYOMING
Syllabus
senior to any later appropriators’ rights and may be fulfilled entirely
before the junior appropriators get any water. However, junior ap
propriators do acquire rights to the stream basically as it exists when
they find it. Under this no-injury rule, junior users may, subject to
the fulfillment of the senior users’ existing rights, prevent senior us
ers from enlarging their rights to the junior users’ detriment. Here,
the question is whether a switch to more efficient irrigation with less
return flow is within Wyoming’s pre-1950 users’ existing appropriat
ive rights or is an improper enlargement of that right. Although the
law of return flows is an unclear area of appropriation doctrine, the
Special Master correctly concluded that Wyoming’s pre-1950 users
may switch to sprinkler irrigation. Pp. 4–16.
(1) A change in irrigation methods does not appear to run afoul of
the no-injury rule in Montana and Wyoming, which generally con
cerns changes in the location of the diversion and the place or pur
pose of use. Thus, an appropriator may increase his consumption by
changing to a more water-intensive crop so long as he makes no
change in acreage irrigated or amount of water diverted. Ordinary,
day-to-day operational changes or repairs also do not violate the rule.
Consumption can even be increased by adding farm acreage, if that
was part of the plan from the start, and diligently pursued through
the years. Irrigation system improvements seem to be the same sort
of changes. This view is consistent with the fact that by 1950 both
States had statutes regulating certain changes to water rights, but
neither required farmers to take official action before adjusting irri
gation methods. Cases in both States frequently describe the no
injury rule as applying to changes in point of diversion, purpose of
use, and place of use. The abundance of litigation over such
changes—and the absence of any litigation over the sort of change at
issue here—strongly implies that irrigation efficiency improvements
were considered within the scope of the original appropriative right.
Pp. 8–10.
(2) The doctrine of recapture—which permits an appropriator
who has diverted water for irrigation to recapture and reuse his own
runoff and seepage before it escapes his control or his property—also
supports treating irrigation efficiency improvements as within the
original appropriative right. Montana and Wyoming cases appear to
apply this basic doctrine without any qualification based on whether
the return flow would re-enter the original stream or not. By using
sprinklers instead of flood irrigation, Wyoming’s pre-1950 water us
ers effectively recapture water. The sprinklers reduce loss from
seepage and runoff and are simply different mechanisms for increas
ing the volume of water available to crops without changing the
amount of diversion. Pp. 10–15.
Cite as: 563 U. S. ____ (2011) 3
Syllabus
(3) This conclusion is consistent with the view of water law
scholars who have considered the question presented in this case.
Pp. 15–16.
(b) Also unpersuasive is Montana’s argument that, if background
appropriation law principles do not support its position, Article V(A)’s
“beneficial use” definition nonetheless restricts the scope of pre-1950
appropriative rights to the net volume of water that was actually be
ing consumed in 1950. Pp. 16–19.
(1) “Beneficial use” is “that use by which the water supply of a
drainage basin is depleted when usefully employed by the activities
of man.” 65 Stat. 665. Montana contends that the term means the
amount of depletion, and thus any activity increasing Wyoming’s pre
1950 depletions beyond pre-1950 levels exceeds Article V(A)’s scope.
Pp. 16–17.
(2) Nothing in the Compact’s definition suggests such an inter
pretation. A plain reading indicates that “beneficial use” is a type of
use that depletes the water supply. This view is supported by the
circumstances in the signatory States when the Compact was
drafted. At that time, Wyoming had a statutory preference for irriga
tion, a depletive use, over power generation, a nondepletive use. It
thus it makes sense for the Compact to protect irrigation uses that
were legislatively favored and represented the predominant use of
the Yellowstone River system. Montana’s reading, by contrast, would
drastically redefine the term. The amount of water put to “beneficial
use” has never been defined by net water consumption. In irrigation,
that amount has always included a measure of necessary loss, e.g.,
runoff or evaporation. If the Compact’s definition were meant to
drastically redefine “beneficial use,” this Court would expect far more
clarity. Moreover, if the Compact effected a dramatic reframing of
ordinary appropriation principles, the rest of Article V(A), which ex
pressly states that “the laws governing the acquisition and use of wa
ter under the doctrine of appropriation” control, would make little
sense. Pp. 17–18.
(3) If Article V(A) were intended to guarantee Montana a set
quantity of water, it could have done so plainly, as done in other
compacts, e.g., the Colorado River Compact of 1922. Pp. 18–19.
Exception overruled.
THOMAS, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and KENNEDY, GINSBURG, BREYER, ALITO, and SOTOMAYOR, JJ.,
joined. SCALIA, J., filed a dissenting opinion. KAGAN, J., took no part in
the consideration or decision of the case.
Cite as: 563 U. S. ____ (2011) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 137, Orig.
_________________
STATE OF MONTANA, PLAINTIFF v. STATE OF
WYOMING AND STATE OF NORTH DAKOTA
ON EXCEPTION TO THE REPORT OF THE SPECIAL MASTER
[May 2, 2011]
JUSTICE THOMAS delivered the opinion of the Court.
This case arises out of a dispute between Montana and
Wyoming over the Yellowstone River Compact. Montana
alleges that Wyoming has breached Article V(A) of the
Compact by allowing its pre-1950 water appropriators to
increase their net water consumption by improving the
efficiency of their irrigation systems. The new systems,
Montana alleges, employ sprinklers that reduce the
amount of wastewater returned to the river, thus depriv
ing Montana’s downstream pre-1950 appropriators of
water to which they are entitled. The Special Master has
filed a First Interim Report determining, as relevant here,
that Montana’s allegation fails to state a claim because
more efficient irrigation systems are permissible under the
Compact so long as the conserved water is used to irrigate
the same acreage watered in 1950. We agree with the
Special Master and overrule Montana’s exception to that
conclusion.
I
From its headwaters in Wyoming, the Yellowstone River
flows nearly 700 miles northeast into Montana and then
North Dakota, where it joins the Missouri River. Several
2 MONTANA v. WYOMING
Opinion of the Court
of its tributaries, including the Clarks Fork, Tongue,
Powder, and Bighorn Rivers, also begin in Wyoming and
cross into Montana before joining the main stem of the
Yellowstone River. This river system’s monthly and an
nual flows, which are dictated largely by snow melt, vary
widely. In 1964, for example, the flow in the Tongue and
Powder Rivers was nearly 10 times the 1961 flow. App.
936. As the rivers came into heavy use for irrigation, it
became expedient to build water storage facilities for
preserving the heaviest flows. See First Interim Report of
Special Master 6 (hereinafter Report).
Before funding new water storage facilities, Congress
sought agreement as to the allocation of the Yellowstone
River system among Wyoming, Montana, and North Da
kota. In 1932, Congress granted the States permission to
negotiate a compact. See Act of June 14, 1932, ch. 253, 47
Stat. 306. Draft compacts were produced in 1935, 1942,
and 1944, but none was fully agreed upon. Finally, in
1951 Montana, Wyoming, and North Dakota ratified the
Yellowstone River Compact, and Congress consented to it.
Act of Oct. 30, 1951, 65 Stat. 663.
The Yellowstone River Compact divides water into three
tiers of priority. First, Article V(A) provides: “Appropria
tive rights to the beneficial uses of the water of the Yellow
stone River System existing in each signatory State as of
January 1, 1950, shall continue to be enjoyed in accor
dance with the laws governing the acquisition and use of
water under the doctrine of appropriation.” Id., at 666.
Second, Article V(B) allocates to each State the “quantity
of that water as shall be necessary to provide supplemen
tal water supplies” for the pre-1950 uses protected by
Article V(A). Ibid. Third, “the remainder of the unused
and unappropriated water” of each tributary is divided by
percentage: Wyoming receives 60% of the remaining water
in the Clarks Fork River, 80% in the Bighorn River, 40%
in the Tongue River, and 42% in the Powder River; the
Cite as: 563 U. S. ____ (2011) 3
Opinion of the Court
rest goes to Montana. Id., at 666–667.
In February 2008, we granted Montana leave to file a
bill of complaint against Wyoming for breach of the Com
pact. 552 U. S. 1175. Montana alleged that Wyoming had
breached the Compact by consuming more than its share
of the Tongue and Powder Rivers. Bill of Complaint 3,
¶8. Specifically, Montana claimed that Wyoming was ap
propriating water for a number of new, post-1950 uses:
irrigating new acreage; building new storage facilities;
conducting new groundwater pumping; and increasing con
sumption on existing agricultural acreage.1 Id., at 3–4,
¶¶ 9–12. According to Montana’s complaint, the Compact
did not permit Wyoming to use water for any of these
practices as long as Montana’s pre-1950 users’ rights
remained unfulfilled. Id., at 3, ¶8.
In response, Wyoming filed a motion to dismiss the
complaint. We appointed a Special Master and referred
the motion to him. 555 U. S. __ (2008). After briefing and
argument, the Special Master recommended that we deny
Wyoming’s motion, because at least some of Montana’s
allegations state a claim for relief. The Special Master
found that “Article V of the Compact protects pre-1950
appropriations in Montana from new surface and ground
water diversions in Wyoming, whether for direct use or for
storage, that prevent adequate water from reaching Mon
tana to satisfy those pre-1950 appropriations.” Report 14–
15. But the Special Master agreed with Wyoming that
Montana’s allegations regarding “efficiency improvements
——————
1 Montana has since clarified that increased consumption on existing
acreage refers to the use of more efficient irrigation systems. The
“efficiency” of irrigation for our purposes refers to the amount of
wastewater that is lost, for example, to evaporation, seepage, runoff, or
deep percolation. Some of the lost water returns to the river and is
later available for downstream users. A more efficient irrigation
system loses less water; thus, though it may draw the same volume of
water from the river, net water consumption is increased.
4 MONTANA v. WYOMING
Opinion of the Court
by pre-1950 appropriators in Wyoming” do not state a
claim for relief. Id., at 15. The States did not object to
most of the Special Master’s findings, and we have issued
orders accordingly. See 562 U. S. __ (2010); 562 U. S. __
(2010). Montana has filed an exception to the Special
Master’s rejection of its increased-efficiency allegation. It
is this exception that is before us.2
II
Article V(A) of the Compact states that “[a]ppropriative
rights to the beneficial uses of [water] . . . existing in each
signatory State as of January 1, 1950, shall continue to be
enjoyed in accordance with the laws governing the acquisi
tion and use of water under the doctrine of appropriation.”
Montana claims that its pre-1950 appropriators’ rights are
not “continu[ing] to be enjoyed” because upstream pre
1950 appropriators in Wyoming have increased their
consumption by switching from flood to sprinkler irriga
tion. Montana alleges that sprinkler systems increase
crop consumption of water and decrease the volume of
runoff and seepage that returns to the Tongue and Powder
rivers by 25% or more.3 See Montana’s Exception and
Brief 3 (hereinafter Brief for Montana). As a result, even
if Wyoming’s pre-1950 water users divert the same quan
tity of water as before, less water reaches Montana. Ac
cording to Montana, Article V(A) prohibits Wyoming from
allowing this practice when it deprives Montana’s pre
——————
2 Montana also raised an exception to the Special Master’s finding
that if Montana can remedy the shortage of water to its pre-1950 users
by curtailing its post-1950 uses without “prejudic[ing] Montana’s other
rights under the Compact,” then an intrastate remedy is “the appropri
ate solution.” Report 15. We recommitted this exception to the Special
Master. 562 U. S. __ (2010).
3 For purposes of resolving Wyoming’s motion to dismiss, we take as
true Montana’s allegation that the new sprinkler systems actually
reduce return flow to the rivers. Wyoming has not conceded that this is
true. See Wyoming’s Reply to Montana’s Exception 35, n. 6.
Cite as: 563 U. S. ____ (2011) 5
Opinion of the Court
1950 users of their full water rights.
The question, therefore, is whether Article V(A) allows
Wyoming’s pre-1950 water users—diverting the same
quantity of water for the same irrigation purpose and
acreage as before 1950—to increase their consumption of
water by improving their irrigation systems even if it
reduces the flow of water to Montana’s pre-1950 users.
Montana makes two basic arguments: that background
principles of appropriation law, to the extent they are
incorporated into the Compact, do not allow such an in
crease in consumption; and that even if they do, the terms
of the Compact amended those principles in Montana’s
favor. The Special Master rejected these arguments, and
so do we.
A
Because Article V(A) of the Compact protects
“[a]ppropriative rights to the beneficial uses of [water]” as
of 1950 “in accordance with the laws governing the ac-
quisition and use of water under the doctrine of appro
priation,” we begin with an overview of appropriation
doctrine.4 As the Special Master explained, if “[a]p
propriation law clearly proscribe[s] increases in consump
tion on existing acreage to the detriment of downstream
appropriators, the Compact arguably would prohibit
Wyoming from allowing its appropriators to make
——————
4 As with all contracts, we interpret the Compact according to the
intent of the parties, here the signatory States. We thus look primarily
to the doctrine of appropriation in Wyoming and Montana, but, like the
States, we also look to Western water law more generally and authori
ties from before and after 1950. The States appear to have assumed
that the doctrine has not changed in a way directly relevant here. We
therefore do not decide whether Article V(A) intended to freeze appro
priation law as it stood in 1949, or whether it incorporates the evolution
of the doctrine over time, allowing Compact-protected rights to grow or
shrink accordingly. We resolve the matter of Montana’s exception
without prejudice to that issue. See Report 39–40.
6 MONTANA v. WYOMING
Opinion of the Court
such increases to the detriment of Montana’s pre-1950
uses.” Report 65.
As is typical west of the 100th meridian, the doctrine of
appropriation has governed water rights in Montana and
Wyoming since the 1800’s. See, e.g., Basey v. Gallagher,
20 Wall. 670, 683 (1875). As relevant here, the doctrine
provides that rights to water for irrigation are perfected
and enforced in order of seniority, starting with the first
person to divert water from a natural stream and apply it
to a beneficial use (or to begin such a project, if diligently
completed). See Hinderlider v. La Plata River & Cherry
Creek Ditch Co., 304 U. S. 92, 98 (1938); Arizona v. Cali
fornia, 298 U. S. 558, 565–566 (1936); Wyo. Const., Art. 8,
§3 (“Priority of appropriation for beneficial uses shall give
the better right”). The scope of the right is limited by the
concept of “beneficial use.” That concept restricts a farmer
“to the amount of water that is necessary to irrigate his
land by making a reasonable use of the water.” 1 C.
Kinney, Law of Irrigation and Water Rights §586, pp.
1007–1008 (2d ed. 1912) (hereinafter Kinney) (internal
quotation marks omitted); see also Bailey v. Tintinger, 45
Mont. 154, 176–178, 122 P. 575, 583 (1912); Quinn v. John
Whitaker Ranch Co., 54 Wyo. 367, 376–380, 92 P. 2d 568,
570–571 (1939). Once such a water right is perfected, it is
senior to any later appropriators’ rights and may be ful
filled entirely before those junior appropriators get any
water at all.
For our purposes, Montana’s pre-1950 water users are
similar to junior appropriators. As between the States,
the Compact assigned the same seniority level to all pre
1950 water users in Montana and Wyoming. See Brief for
Montana 23; Brief for United States as Amicus Curiae 12.
But as Montana concedes, precisely because of this equal
seniority, its downstream pre-1950 users cannot stop
Wyoming’s upstream pre-1950 users from fully exercising
their water rights. Thus, when the rivers are low, Mon
Cite as: 563 U. S. ____ (2011) 7
Opinion of the Court
tana’s downstream pre-1950 users might get no water at
all because the equally senior users upstream in Wyoming
may lawfully consume all of the water. Tr. of Oral Arg.
51.
Junior appropriators are not completely without rights,
however. As they come online, appropriators acquire
rights to the stream basically as it exists when they find
it. See 2 Kinney §803, at 1403–1404. Accordingly, subject
to the fulfillment of all senior users’ existing rights, under
the no-injury rule junior users can prevent senior users
from enlarging their rights to the junior users’ detriment.
1 W. Hutchins, Water Rights Laws in the Nineteen West
ern States 573 (1971) (hereinafter Hutchins).
Montana’s pre-1950 users can therefore “insist that
[Wyoming’s pre-1950 users] confine themselves strictly
within the rights which the law gives them, that is, to the
amount of water within the extent of their appropriation
which they actually apply to some beneficial use.” 2
Kinney §784, at 1366. That general proposition is undis
puted; the dispute here is in its application. Is a switch to
more efficient irrigation with less return flow within the
extent of Wyoming’s pre-1950 users’ existing appropriative
rights, or is it an improper enlargement of that right to
the detriment of Montana’s pre-1950 water users?
As the Special Master observed, the law of return flows
is an unclear area of appropriation doctrine. Report 65
(citing Trelease, Reclamation Water Rights, 32 Rocky Mt.
L. Rev. 464, 469 (1960)). The States have not directed us
to any case on all fours with this one. Indeed, “[n]o west
ern state court appears to have conclusively answered the
question.” Report 65.
Despite the lack of clarity, the Special Master found
several reasons to conclude that Wyoming’s pre-1950 users
may switch to sprinkler irrigation. He found that the
scope of the original appropriative right includes such a
change so long as no additional water is diverted from the
8 MONTANA v. WYOMING
Opinion of the Court
stream and the conserved water is used on the same acre
age for the same agricultural purpose as before. We agree
with the Special Master.5
1
First, although the no-injury rule prevents appropria
tors from making certain water-right changes that would
harm other appropriators, a change in irrigation methods
does not appear to run afoul of that rule in Montana and
Wyoming. See id., at 69. Because each new appropriator
is entitled to the stream as it exists when he finds it, the
general rule is that “if a change in these conditions is
made by [a senior] appropriator, which interferes with the
flow of the water to the material injury of [the junior
appropriator’s] rights, he may justly complain.” 2 Kinney
§803, at 1404.
But the no-injury rule is not absolute; it generally con
cerns changes in the location of the diversion and the
place or purpose of use. Quigley v. McIntosh, 110 Mont.
——————
5 The lack of clarity in this area of water law highlights the sensitive
nature of our inquiry and counsels caution. Our original jurisdiction
over cases between States brings us this dispute between Montana and
Wyoming about the meaning of their congressionally approved Yellow
stone River Compact. See U. S. Const., Art. III, §2, cl. 2; 28 U. S. C.
§1251(a). Yet, because the Compact references and the parties direct
us to principles of appropriation doctrine, we find ourselves immersed
in state water law. See n. 4, supra. Our assessment of the scope of
these water rights is merely a federal court’s description of state law.
The highest court of each State, of course, remains “the final arbiter
of what is state law.” West v. American Telephone & Telegraph Co., 311
U. S. 223, 236 (1940). We recognize that appropriation doctrine contin
ues to evolve, and there are reasonable policy arguments in favor of
both States’ positions here. But it is not this Court’s role to guide the
development of state water regulation. See id., at 237 (“[I]t is the duty
of [federal courts] in every case to ascertain from all the available data
what the state law is and apply it rather than to prescribe a different
rule, however superior it may appear from the viewpoint of ‘general
law’ ”). Our decision is not intended to restrict the States’ determina
tion of their respective appropriation doctrines.
Cite as: 563 U. S. ____ (2011) 9
Opinion of the Court
495, 505, 103 P. 2d 1067, 1072 (1940) (“[P]lace of diver
sion, or place or purpose of use, may be changed only if
others are not thereby injured” (internal quotation marks
omitted)); see also 1 S. Wiel, Water Rights in the Western
States §498, p. 532 (3d ed. 1911) (hereinafter Wiel); Mont.
Code Ann. §89–803 (1947); Wyo. Stat. Ann. §41–3–104
(1977). Accordingly, certain types of changes can occur
even though they may harm downstream appropriators.
See D. Getches, Water Law in a Nutshell 175 (4th ed.
2009) (hereinafter Getches). For instance, an appropriator
may increase his consumption by changing to a more
water-intensive crop so long as he makes no change in
acreage irrigated or amount of water diverted. See id., at
183; East Bench Irrig. Co. v. Deseret Irrig. Co., 2 Utah 2d
170, 179, 271 P. 2d 449, 455 (1954) (assuming that farm
ers may “legally increase the quantity of water consumed
in irrigating their lands by changing to more water con
suming crops” and adding that “it would be difficult to
prevent . . . such increased consumptive use”). Ordinary,
day-to-day operational changes or repairs also do not
violate the no-injury rule. See, e.g., 1 Wiel §56, at 51
(“Would the fact that my pump has for years dripped
water onto a neighbor’s ground give him a right to say
that my pump must go on leaking?”). Consumption can
even be increased by adding farm acreage, so long as that
was part of the plan from the start, and diligently pursued
through the years. See Van Tassel Real Estate & Live
Stock Co. v. Cheyenne, 49 Wyo. 333, 357–359, 54 P. 2d 906,
913 (1936) (per curiam); 1 Hutchins 377–378; St. Onge v.
Blakely, 76 Mont. 1, 22–24, 245 P. 532, 539 (1926).
Improvements to irrigation systems seem to be the sort
of changes that fall outside the no-injury rule as it exists
in Montana and Wyoming. Those changes are not to the
“place of diversion, or place or purpose of use,” Quigley,
supra, at 505, 103 P. 2d, at 1072, and thus seem to be
excluded, much like crop changes or day-to-day irrigation
10 MONTANA v. WYOMING
Opinion of the Court
adjustments or repairs. This is also consistent with the
fact that by 1950 both States had statutes regulating
certain changes to water rights, but neither required
farmers to take official action before adjusting irrigation
methods.6 See Report 69–70, 87; id., at 69 (they “do not
generally have procedures for overseeing changes in water
efficiencies stemming from crop shifts or irrigation im
provements where there are no formal changes in the
underlying water rights”). Like the Special Master, we
find this to be persuasive evidence that the States consid
ered such changes permissible.
Montana argues that, regardless of the statutes, private
lawsuits could be brought to challenge such efficiency
changes. But it has not provided a single example from
either State. Instead, Montana and Wyoming cases typi
cally describe the no-injury rule as applying to changes in
point of diversion, purpose of use, and place of use. See,
e.g., Maclay v. Missoula Irrig. Dist., 90 Mont. 344, 355–
357, 3 P. 2d 286, 291 (1931); Thayer v. Rawlins, 594 P. 2d
951, 955 (Wyo. 1979). The abundance of litigation over
such changes—and the absence of any litigation over the
sort of change at issue here—strongly implies that irriga
tion efficiency improvements do not violate the no-injury
rule and were considered within the scope of the original
appropriative right.
2
The doctrine of recapture also supports treating im
provements in irrigation efficiency as within the original
appropriative right. Under this doctrine, an appropriator
who has diverted water for irrigation purposes has the
right to recapture and reuse his own runoff and seepage
——————
6 Mont. Code Ann. §89–803 (1947); Wyo. Stat. Ann. §71–401 (1945)
(water rights “cannot be detached from the lands, place or purpose for
which they are acquired” outside of specific exceptions); see also 1885
Mont. Laws p. 131, §3.
Cite as: 563 U. S. ____ (2011) 11
Opinion of the Court
water before it escapes his control or his property.7 An
appropriator is entitled to the “exclusive control [of his
appropriated water] so long as he is able and willing to
apply it to beneficial uses, and such right extends to what
is commonly known as wastage from surface run-off and
deep percolation, necessarily incident to practical irriga
tion.” Ide v. United States, 263 U. S. 497, 506 (1924)
(internal quotation marks omitted); see also Arizona Pub.
Serv. Co. v. Long, 160 Ariz. 429, 437–438, 773 P. 2d 988,
996–997 (1989) (“No appropriator can compel any other
appropriator to continue the waste of water which benefits
the former. If the senior appropriator, through scientific
and technical advances, can utilize his water so that none
is wasted, no other appropriator can complain”).
Montana contends that this rule does not apply when
the runoff or seepage water would, if not recaptured,
return to the same stream from which it was originally
drawn. There is some support for Montana’s position—
that a beneficial user may not reuse water at all, even
while it is still on his property, if it otherwise would flow
back to the same stream—especially in Utah and Colorado
cases. See Deseret Irrig. Co., supra, at 180–182, 271 P. 2d,
at 456–457; Estate of Steed v. New Escalante Irrig. Co.,
846 P. 2d 1223, 1226 (Utah 1992); Comstock v. Ramsay, 55
Colo. 244, 252–258, 133 P. 1107, 1110–1111 (1913).8 But
other authorities draw no such exception based on where
the runoff or seepage is heading. See 2 Hutchins 580–582
——————
7 And in some narrowly defined circumstances, he retains this right
even after the water leaves his property. See 1 Wiel §§38–40, at 37–43.
8 Colorado has a relatively unique doctrine of recapture. See Hoese,
Comment, Recapture of Reclamation Project Ground Water, 53 Cal.
L. Rev. 541, 544, n. 18 (1965) (noting the general doctrine of recapture,
and adding that “[t]he Colorado rule, however, is to the contrary”);
United States v. Tilley, 124 F. 2d 850, 858 (CA8 1941) (allowing recap
ture by the original appropriator under Nebraska law, and noting
Colorado’s opposite rule).
12 MONTANA v. WYOMING
Opinion of the Court
(asserting that, even in Utah, “where the original appro
priator retains possession and control of the waste and
seepage water from irrigation of his lands, he is entitled to
reuse these waters for his own benefit and need not return
them to the channel from which they were diverted” (em
phasis added)); Getches 139–145; Woolman v. Garringer, 1
Mont. 535 (1872). And Montana cites no case from either
State here in which a court has recognized, much less
found controlling, the idea that a water user may not
reuse his own wastewater while it is still on his property
simply because it otherwise would return to the original
stream.
In fact, Montana and Wyoming appear to apply, without
qualification, the basic doctrine that the original appro
priator may freely recapture his used water while it re
mains on his property and reuse it for the same purpose
on the same land. For example, in Binning v. Miller, 55
Wyo. 451, 102 P. 2d 54 (1940), a man was diverting water
from a creek fed largely by irrigation runoff and seepage
from Binning’s property. Although the court found that
the man had a right to that water once Binning’s runoff
and seepage had become a natural stream, it noted that
his right remained subject to Binning’s right “to use the
water above mentioned for beneficial purposes upon the
land for which the seepage water was [originally] appro
priated.” Id., at 477, 102 P. 2d, at 63. In a later case, the
court explained that the man could not “secure a perma
nent right to continue to receive the water” because
Binning “might find better ways of utilizing the water on
the same land so that less waste and seepage would oc
cur.” Bower v. Big Horn Canal Assn., 77 Wyo. 80, 101, 307
P. 2d 593, 601 (1957).
Similarly, in Bower v. Big Horn Canal Assn., the court
held that Bower could appropriate water as it seeped
across his property from the Big Horn Canal toward a
nearby river. Id., at 102–104, 307 P. 2d, at 602. The court
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Opinion of the Court
added, however, that Bower’s right was subject always to
the Big Horn Canal’s right: “No appropriator can compel
any other appropriator to continue the waste of water
which benefits the former.” Id., at 101, 307 P. 2d, at 601.
Importantly, the court noted that “[i]f the senior appro
priator by a different method of irrigation can so utilize
his water that it is all consumed in transpiration and
consumptive use and no waste water returns by seepage
or percolation to the river, no other appropriator can
complain.” Ibid.
Finally, in Fuss v. Franks, 610 P. 2d 17 (Wyo. 1980),
water was seeping from Fuss’ property and into a pit in a
public right of way. Franks was the first to appropriate
the water from the pit. The court upheld Franks’ appro
priation right because the water had already escaped from
Fuss’ property. The court said that the “owner of land
upon which seepage or waste water rises has the right to
use and reuse—capture and recapture—such waste wa
ters,” but only before the water escapes his land, and “for
use only upon the land for which the water forming the
seepage was originally appropriated.” Id., at 20 (internal
quotation marks omitted). Fuss thus had no superior
right to the water that had left his property, and espe
cially not for reuse on other lands.
The law in Montana is similar. The Montana Supreme
Court has explained that “the general rule . . . is that the
owner of the right to use the water—his private property
while in his possession,—may collect it, recapture it, be
fore it leaves his possession.” Rock Creek Ditch & Flume
Co. v. Miller, 93 Mont. 248, 268, 17 P. 2d 1074, 1080
(1933); see also A. Stone, Montana Water Law 66 (1994)
(noting that, according to the “early cases,” while “the
water is still seeping and running off one’s own land, the
landowner is free to recapture and further use it”).
The right of recapture discussed in these authorities is
broad. As the Special Master recognized, the “language of
14 MONTANA v. WYOMING
Opinion of the Court
the Wyoming Supreme Court . . . was expansive” in
Binning, Bower, and Fuss, and “all appear to hold that an
appropriator in Wyoming can increase his water use effi
ciency by recovering runoff on his property or through
other means so long as the increased consumption is on
the same land to which the appropriative right attaches.”
Report 81; see also id., at 78–85; Thompson, Case Note,
Water Law—Reusing Irrigation Waste Water on Different
Lands: A Warning to Get a New Permit, Fuss v. Franks,
610 P. 2d 17 (Wyo. 1980), 16 Land & Water L. Rev. 71, 76
(1981) (concluding that in Wyoming, “a prior appropriator
can at anytime, utilize irrigation methods that are totally
consumptive, such as pumping the collected waste water
back to the top of the field or installing a sprinkler system,
thereby eliminating all waste of water”); Jones, Note,
Rights of the Original Appropriator to Recapture Water
Used in Irrigation, 11 Wyo. L. J. 39 (1956); Wille, Note,
The Right to Use Waste Water Before It Re-enters the
Stream, 12 Wyo. L. J. 47, 48 (1957).
The Wyoming and Montana doctrine of recapture
strongly suggests that improvements in irrigation effi
ciency are within the original appropriative right of Wyo
ming’s pre-1950 water users. By using sprinklers rather
than flood irrigation, those water users effectively recap
ture water. The sprinklers, by reducing loss due to seep
age and runoff, operate much like, if more efficiently than,
cruder recapture systems involving ditches or pits. They
are simply different mechanisms for increasing the volume
of water available to the crops without changing the
amount of diversion. Binning, Bower, and Fuss expressly
acknowledged that in such situations, lower appropriators
who have perfected their own appropriative rights are
nonetheless at the mercy of the property owners from
which their water flows. See 55 Wyo., at 474–477, 102
P. 2d, at 63; 77 Wyo., at 100–104, 307 P. 2d, at 601–602;
610 P. 2d, at 20.
Cite as: 563 U. S. ____ (2011) 15
Opinion of the Court
3
Our conclusion is consistent with that of water law
scholars who have considered the specific question pre
sented in this case. One scholar asserted: “[O]f course,
increasing efficiency at one site may reduce the amount of
water available to downstream users who may rely on
return flows from other users. [Wyoming] law, however,
does not preclude more efficient uses merely because a
downstream user may be injured.” Squillace, A Critical
Look at Wyoming Water Law, 24 Land & Water L. Rev.
307, 331 (1989); see id., at 331, n. 156 (“For example, a
farmer who traditionally consumes only 50% of the water
applied to his land is free to change his crop or method of
applying water so as to increase his consumption to 60%”);
see also Thompson, supra, at 76 (“[A] prior appropriator
can at anytime . . . instal[l] a sprinkler system, thereby
eliminating all waste of water”). And a national hornbook
on water law has observed:
“The rule allowing recapture and reuse of salvaged
water on the original land can result in more water
being consumed. For instance, if a water user is con
suming less than the permitted amount of water and
plants a more water-intensive crop or puts in a more
efficient irrigation system, most or all of the water
that had previously been returned to the stream
might be consumed. This can deprive other appro
priators of water on which they depend but it is al
lowed since it is technically within the terms of the
original appropriation.” Getches 143–144.
Montana has not identified any scholars who have reached
the opposite conclusion.
For all of these reasons, we hold that the doctrine of
appropriation in Wyoming and Montana allows appro
priators to improve their irrigation systems, even to the
detriment of downstream appropriators. We readily ac
16 MONTANA v. WYOMING
Opinion of the Court
knowledge that this area of law is far from clear. See
supra, at 7. But the apparent scope of the no-injury rule
in Wyoming and Montana, the doctrine of recapture and
its broad reach in Wyoming and Montana case law, and
the specific conclusions of water law scholars all point in
the same direction, which also comports with the Special
Master’s exhaustive discussion and findings. Accordingly,
if Article V(A) simply incorporates background principles
of appropriation law, it allows Wyoming’s pre-1950 water
users to improve their irrigation efficiency, even to the
detriment of Montana’s pre-1950 users.
B
Montana, however, takes another tack. It argues that
even if background principles of appropriation law do not
support its position, Article V(A) of the Compact does not
protect the full scope of ordinary appropriative rights.
Montana claims that the Compact’s definition of “benefi
cial use” restricts the scope of protected pre-1950 appro
priative rights to the net volume of water that was actu
ally being consumed in 1950. We agree with the Special
Master that this argument also fails.
1
Article V(A) protects “[a]ppropriative rights to the bene
ficial uses of . . . water.” “Beneficial use,” in turn, is de
fined in Article II(H) as “that use by which the water
supply of a drainage basin is depleted when usefully em
ployed by the activities of man.” 65 Stat. 665. Montana
contends that “beneficial use” is thus defined as the
amount of depletion. According to Montana, any activity
that increases pre-1950 water users’ depletions in Wyo
ming beyond pre-1950 levels exceeds the scope of the
appropriative rights that Article V(A) protects. See Brief
for Montana 25–28. On this basis, Montana asserts that
the Compact requires (subject to river conditions) that the
Cite as: 563 U. S. ____ (2011) 17
Opinion of the Court
same quantity of water that was reaching Montana as of
January 1, 1950, continue to do so. Id., at 26.
2
We acknowledge that “beneficial use” refers to a type of
use that involves some depletion, as all irrigation does.
See Report 61. The part of the Compact’s definition of
“beneficial use” that refers to depletion—“that use by
which the water supply . . . is depleted”—is fairly clear. It
begins with “that use,” and the words that follow merely
explain that “that use” must be a use that “deplete[s]” the
“water supply.” Nothing in the language suggests that
“beneficial use” means a measure of the amount of water
depleted. A “beneficial use” within the meaning of the
Compact, therefore, is a type of use that depletes the water
supply.
This plain reading makes sense in light of the circum
stances existing in the signatory States when the Compact
was drafted. At that time, Wyoming had a statutory
preference for irrigation, a type of depletive use, over
power generation, a nondepletive use. Wyo. Stat. Ann.
§71–402 (1945). It makes sense that the Compact would
have been written to protect the irrigation uses that were
legislatively favored and represented the predominant use
of the Yellowstone River system. See Tr. of Oral Arg. 45–
47; 65 Stat. 663 (Compact Preamble) (noting that the
Compact recognizes “the great importance of water for
irrigation in the signatory States”).
Montana’s reading of the Compact, by contrast, does not
follow from the text and would drastically redefine the
term “beneficial use” from its longstanding meaning. The
amount of water put to “beneficial use” has never been
defined by net water consumption. The quantity of water
“beneficially used” in irrigation, for example, has always
included some measure of necessary loss such as runoff,
evaporation, deep percolation, leakage, and seepage (re
18 MONTANA v. WYOMING
Opinion of the Court
gardless of whether any of it returns to the stream). So,
water put to “[b]eneficial use is not what is actually con
sumed, but what is actually necessary in good faith.” 1
Wiel §481, at 509; see also Trelease, The Concept of Rea
sonable Beneficial Use in the Law of Surface Streams, 12
Wyo. L. J. 1, 10 (1957) (listing irrigation as a beneficial
use and noting that “the method of application, by flood
ing, channeling, or sprinkling, is immaterial”); J. Sax, B.
Thompson, J. Leshy, & R. Adams, Legal Control of Water
Resources 131 (4th ed. 2006) (discussing normal irrigation
practices and observing that the amount of water put to
beneficial use “is often considerably more than the quan
tum actually consumed”).
If the Compact’s definition of “beneficial use” were
meant to drastically redefine the term into shorthand for
net water consumption, we would expect far more clarity.
For example, the Compact could have stated that it would
protect “only ‘the amount of water consumed for a benefi
cial use in each signatory state as of January 1, 1950.’ ”
Report 60. Or it could have defined “beneficial use” as the
“volume by which the water supply . . . is depleted.” More
over, if the Compact effected a dramatic reframing of
ordinary appropriation principles, the rest of Article V(A),
which expressly states that “the laws governing the acqui
sition and use of water under the doctrine of appropria
tion” control, would make little sense.
We agree with the Special Master that the definition of
beneficial use in the Compact is unremarkable. Arti
cle V(A) does not change the scope of the pre-1950 appro
priative rights that it protects in both States.
3
Finally, if Article V(A) were intended to guarantee
Montana a set quantity of water, it could have done so as
plainly as other compacts that do just that. By 1950,
Wyoming itself had entered into at least one compact that
Cite as: 563 U. S. ____ (2011) 19
Opinion of the Court
defined water rights in terms of depletion. The Colorado
River Compact of 1922 apportioned 7,500,000 acre-feet of
water per year for “the exclusive beneficial consumptive
use” of several upstream States, including Wyoming. That
compact specifically added that “[t]he States of the Upper
Division will not cause the flow of the river at Lee Ferry to
be depleted below an aggregate of 75,000,000 acre feet for
any period of ten consecutive years . . . .” National
Resources Planning Bd., Water Resources Comm., Inter
state Water Compacts, 1785–1941, p. 8 (1942). See also
Republican River Compact (1943), Kan. Stat. Ann.
§82a–518 (1997) (allocating water by the acre-foot for
beneficial consumptive use in Kansas, Nebraska, and
Colorado). And, even here in the Yellowstone River Com
pact, Article V(B) unambiguously apportions the third tier
of Yellowstone River system water by percentage. 65 Stat.
666. The notion that Article V(A) accomplishes essen-
tially the same sort of depletive allocation with language
that has a different and longstanding meaning is simply
unpersuasive.
* * *
We conclude that the plain terms of the Compact protect
ordinary “[a]ppropriative rights to the beneficial uses of
[water] . . . existing in each signatory State as of January
1, 1950.” Art. V(A), ibid. And the best evidence we have
shows that the doctrine of appropriation in Wyoming and
Montana allows appropriators to improve the efficiency of
their irrigation systems, even to the detriment of down
stream appropriators. Montana’s allegation that Wyo
ming has breached Article V(A) of the Compact by allow
ing its pre-1950 water users to increase their irrigation
efficiency thus fails to state a claim. Accordingly, Mon
tana’s first exception to the Special Master’s First Interim
Report is overruled.
It is so ordered.
20 MONTANA v. WYOMING
Opinion of the Court
JUSTICE KAGAN took no part in the consideration or
decision of this case.
Cite as: 563 U. S. ____ (2011) 1
SCALIA, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 137, Orig.
_________________
STATE OF MONTANA, PLAINTIFF v. STATE OF
WYOMING AND STATE OF NORTH DAKOTA
ON EXCEPTIONS TO THE REPORT OF THE SPECIAL MASTER
[May 2, 2011]
JUSTICE SCALIA, dissenting.
Thanks to improved irrigation techniques, Wyoming’s
farmers and cattlemen appear to consume more of the
water they divert from the Yellowstone River and its
tributaries today than they did 60 years ago—that is to
say, less of the diverted water ultimately finds its way
back into the Yellowstone. The Court interprets the Yel
lowstone River Compact (Compact), see Act of Oct. 30,
1951, ch. 629, 65 Stat. 663, to grant those Wyomans* the
right to increase their consumption so long as they do not
increase the volume of water they diverted beyond pre
1950 levels. Thus, it holds, Montana cannot complain that
the increased consumption interferes with its residents’
pre-1950 appropriative water rights. I disagree because
the Court’s analysis substitutes its none-too-confident
reading of the common law, see ante, at 7–8, and n. 5, for
the Compact’s definition of “beneficial use.”
The doctrine of appropriation allocates perpetual water
rights along a river, on a “first in time[,] . . . superior in
right” basis, Wyoming v. Colorado, 259 U. S. 419, 459
(1922), to those who divert its flow and apply the water to
a beneficial use. See Hinderlider v. La Plata River &
——————
* The dictionary-approved term is “Wyomingite,” which is also the
name of a type of lava, see Webster’s New International Dictionary
2961 (2d ed. 1957). I believe the people of Wyoming deserve better.
2 MONTANA v. WYOMING
SCALIA, J., dissenting
Cherry Creek Ditch Co., 304 U. S. 92, 98 (1938). The
“beneficial use” requirement does most of the legal work.
It marks the types of uses that confer an appropriative
right—irrigation being a paradigmatic example, see
United States v. Willow River Power Co., 324 U. S. 499,
504, n. 2 (1945); and it “measure[s]” the extent of an ap
propriator’s claim, see Ide v. United States, 263 U. S. 497,
505 (1924); A. Tarlock, Law of Water Rights and Re
sources §§5:66, 5:68–5:69, pp. 5–130.3, 5–130.9 to 5–
130.10 (2010). At common law, an appropriator claims the
volume of water diverted and “reasonably required” by his
intended use. Id., §§5:65–5:66, at 5–127, 5–130.2; see
Quinn v. John Whitaker Ranch Co., 54 Wyo. 367, 377–378,
92 P. 2d 568, 570–571 (1939).
The Compact borrows the concept of appropriation to
define the rights of pre-1950 water users along the Yel
lowstone River and its tributaries. Article V(A) promises
that “[a]ppropriative rights to the beneficial uses of the
water of the Yellowstone River System existing in each
signatory State as of January 1, 1950, shall continue to be
enjoyed in accordance with the laws governing the acquisi
tion and use of water under the doctrine of appropriation.”
65 Stat. 666. Article II(H) elaborates that a “Beneficial
Use” is one “by which the water supply of a drainage basin
is depleted when usefully employed by the activities of
man.” Id., at 665 (emphasis added).
Like the common law, this definition lays out the types
of uses that qualify as beneficial and the volume of water
an appropriator may claim through his beneficial use. But
the Compact’s focus on whether a use depletes a river’s
water supply—not whether it diverts the river’s flow—
significantly limits the volume of water to which Wyoming
is entitled. For purposes of the Compact, Wyoming may
lay claim only to its beneficial users’ net consumption of
water, that is, the volume of water diverted from the river
minus the volume that flows (or seeps) back into the
Cite as: 563 U. S. ____ (2011) 3
SCALIA, J., dissenting
river’s channel.
This interpretation, and only this interpretation, gives
meaning to the definition’s use of the word “depleted.” I
cannot write off as an accident the choice of this word
rather than the word consistently used elsewhere in the
Compact: “diverted.” See Sosa v. Alvarez-Machain, 542
U. S. 692, 711, n. 9 (2004). The Compact’s authors knew
how to use “diverted” and “diversion” when they wanted
to. Those two words appear repeatedly in other provisions
of the Compact, see Arts. II(G); V(B), (C); VII(A), (C), (D),
65 Stat. 665–668; and the Compact defines them in the
sentence immediately preceding the definition of “benefi
cial use.” See Art. II(G), id., at 665. But the Compact’s
authors chose to define beneficial use in terms of deple
tion—the first and only time the Compact uses any deriva
tive of the word “deplete.” It is in my view a clear indica
tion that the Compact intends to break from the common
law’s focus on diversion.
The Court reduces the Compact’s deliberate use of “de
pleted” to an inconsequential slip of the pen. According to
today’s majority, Article II(H) speaks only to the types of
uses that confer appropriative rights. “Nothing in the
language,” it says, “suggests that ‘beneficial use’ means a
measure of the amount of water depleted.” Ante, at 17.
This is incomprehensible. On the Court’s own interpreta
tion “beneficial use” not only defines the types of uses that
confer appropriative rights, but also determines the vol
ume of water to which the rights attach—viz., only that
volume put to one of the specified types of uses. The only
question before us is whether “beneficial use” measures
the volume diverted or the volume depleted—and the
language of the Compact makes that clear.
The Court provides no plausible explanation for use of
the word “depleted” instead of “diverted.” Its best effort
is the suggestion that the word was used to ensure that
hydroelectric power generation and other disfavored,
4 MONTANA v. WYOMING
SCALIA, J., dissenting
nondepletive uses do not confer appropriative rights. See
ibid. That is highly unlikely, for two reasons. First, rely
ing on a subtle distinction between depletion and diversion
would be one of the clumsiest ways imaginable to accom
plish that simple goal, if it was not already accomplished
by other provisions of the Compact. One would instead
have expected the Compact simply to exclude the disfa
vored uses from the “usefu[l] . . . activities of man,”
Art. II(H), 65 Stat. 665, which confer appropriative rights.
Cf. Mont. Code Ann. §85–2–102(4) (2009) (listing types of
beneficial uses). Second, and even more conclusively,
hydroelectric generation, water wheels, and mill races—
the allegedly disfavored uses Wyoming and the United
States offer up to explain the word “depleted”—are already
excluded from appropriative rights (and probably from any
need for appropriative rights) by the Compact’s definition
of diversion: “the taking or removing of water from the
Yellowstone River or any tributary thereof when the water
so taken or removed is not returned directly into the
channel of the Yellowstone River or of the tributary from
which it is taken.” Art. II(G), 65 Stat. 665. The modifying
clause seems specifically designed to exclude hydroelectric
dams, water wheels and mill races, which, when they
divert water from the Yellowstone or its tributaries, “re
tur[n it] directly into the channel . . . from which it is
taken.”
The Court objects to my interpretation because the word
“depleted” lacks the “clarity” necessary to “drastically
redefine the term ‘beneficial use’ from its longstanding
meaning,” ante, at 17. According to the Court, “[t]he
amount of water put to ‘beneficial use’ has never been
defined by net water consumption.” Ibid. Before making
this statement, the Court has spent some 10 pages, ante,
at 7–16, conducting a “sensitive . . . inquiry [that] counsels
caution”; into a field (state water law) where the answer of
this Court is not conclusive and hence not ipso facto cor
Cite as: 563 U. S. ____ (2011) 5
SCALIA, J., dissenting
rect (“it is not this Court’s role to guide”); resulting in the
Court’s best guess concerning “an unclear area of appro
priation doctrine”; answering a question which “ ‘[n]o
western state court [not even a lower court] appears to
have conclusively answered.’ ” Ante, at 7–8, and n. 5. The
Court calls that hitherto unanswered question “the law of
return flows,” ante, at 7, but it can more accurately be
described as the question whether the volume of water to
which an appropriator acquires rights is the entire volume
diverted for a beneficial use, or rather only the volume
depleted by the beneficial use. Which is to say that “bene
ficial use” has never had the “longstanding meaning” the
Court posits. If it has in the past been assumed to refer to
all water diverted from the stream rather than all water
depleted from the stream, that is only because the issue of
which of the two it means has never arisen. I find it quite
extraordinary that the Court should expend such heroic
efforts (imagine how many cases had to be read!) answer
ing a state water-law question that no court of any West
ern State has ever answered—a question that would cross
a Rabbi’s eyes—when the text in front of us provides
the clear answer insofar as this Compact is concerned:
“depleted.”
The Court suggests that if the Compact’s authors
wanted to break from (what it considers) the common law,
they should have defined beneficial use as the “volume by
which the water supply . . . is depleted.” Ante, at 18 (in
ternal quotation marks omitted). That objection seems to
me to have little force when the Court cannot explain what
work “depleted” is supposed to do other than indicate
precisely the same concept more concisely. And the
Court’s helpful drafting tip proves that speaking with
greater clarity is not so easy. Following the Court’s advice
would make nonsense of Article V(B) of the Compact.
That provision allocates a fixed percentage “of the unused
and unappropriated water” of various tributaries to each
6 MONTANA v. WYOMING
SCALIA, J., dissenting
State for post-1950 “storage or direct diversions for benefi
cial use on new lands or for other purposes.” 65 Stat. 666.
But if “beneficial use” in this last phrase means “the vol
ume of water by which . . . the water supply is depleted,”
the provision makes no sense. It would allocate a fixed
percentage of unused and unappropriated water for “a
volume of water by which the water supply is depleted.” It
makes perfect sense, of course, if “beneficial use” means all
uses that deplete the stream.
The Court also wonders why, “if Article V(A) were in
tended to guarantee Montana a set quantity of water,” it
did not “d[o] so as plainly as other” interstate water com
pacts “that do just that.” Ante, at 18. This is a straw man.
Montana does not demand a precise volume of water each
year; nor does it insist that its pre-1950 water users al
ways receive enough water to satisfy their pre-1950 needs.
It merely asks that its pre-1950 water users occupy the
same position relative to Wyoming’s pre-1950 users in
2011 as they did in 1950—that whatever would have
flowed back into the Yellowstone after Wyoming appro
priators’ beneficial uses in 1950 if the river then had this
year’s flow, will also flow back this year. See Tr. of Oral
Arg. 13, 16, 24. In dry years, that may mean some Mon
tanans will have to make do with less or go without.
Because I think the Court’s disposition disregards the
text of the Compact, I respectfully dissent.
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