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What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
We hold that the basic position of recognizing and accepting jurisdiction in this matter by the District Court is sound and that said jurisdiction has been properly exercised. As to the scope of the relief to plaintiff, The Susquehanna Corporation, we agree that it is entitled at this time to the proxy statements and to copies of the minutes of the directors meetings of the General Refractories Company at which the transaction here involved was considered. We will retain plaintiff’s application for certain further specific information in abeyance until after the proxy statements have been made available to plaintiff. In the event the said statements be deemed insufficient by plaintiff it may make application to this Court on notice to the defense for enlargement of the relief allowed. There should be no difficulty in working out a reasonable timetable by and between the parties. If, however, the necessity should arise, either party on notice may bring this element of the case before this Court.
The order of the District Court of February 11, 1966 is affirmed with respect to Paragraphs 1 and 2. Decision is reserved as to Paragraph 3 of said order.
Judge Hastie believes that the plaintiff is not entitled to the preliminary proxy material which the defendant General Refractories Company has filed with the Securities and Exchange Commission and that its right, if any, to other information should be determined by the District Court after the defendant’s proxy material shall have been published and in the light of that publication. Accordingly, Judge Hastie agrees that the plaintiff is not now entitled to the requested additional material and information, but otherwise he dissents from the present disposition of this appeal.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SEYMOUR, Circuit Judge.
Gordon and Sharon Flygare appeal the denial of confirmation of their Chapter 13 bankruptcy plan. They argue that the denial was based on an erroneous construction of the “good faith” requirement of 11 U.S.C. § 1325(a)(3) (Supp. IY 1980). We agree and remand for further proceedings.
The Flygares first filed a Chapter 13 petition in April 1980. The bankruptcy court denied confirmation and dismissed the case in June. The Flygares filed a second petition in July 1980. The second plan was similar to the first; however, the length of the plan was increased from thirty-six months to fifty months. At the confirmation hearing, the second plan was modified to extend for sixty months. The plan also provided for payment of a larger sum to cure the Flygares’ default on their home mortgage. Under the plan, the unsecured creditors would be paid approximately three percent of their claims.
The bankruptcy court denied confirmation for two reasons. First, it held that the plan was “essentially similar to the earlier plan” which had been denied confirmation. Rec., vol. II, at 17. Second, it found that “a payment of 1 percent or 2 percent to creditors on the facts of the case is not a meaningful payment as required under the good faith provisions of Chapter 13.” Id. at 18. With respect to the latter holding, the court specifically relied on its prior decision in In re Iacovoni, 2 B.R. 256 (Bkrtcy.D.Utah 1980). The Flygares appealed to the district court, which cited Iacovoni and affirmed the bankruptcy court’s order. This appeal followed.
Chapter 13 of the Bankruptcy Code, 11 U.S.C. §§ 1301-1330 (Supp. IV 1980), contains liberalized provisions that enable certain debtors to repay all or a percentage of their debts according to a court-approved plan. Rather than having to surrender all non-exempt assets for distribution to creditors as required by Chapter 7, 11 U.S.C. §§ 701-728 (Supp. IV 1980), Chapter 13 debtors make payments to creditors out of future income over a three-to-five year period, 11 U.S.C. § 1322(e), after which they are entitled to a broad discharge of their obligations, 11 U.S.C. § 1328(a). The bankruptcy court must confirm a Chapter 13 plan if it meets the criteria Congress set out in section 1325(a). We are concerned here with the meaning of the section 1325(a)(3) requirement that “the plan has been proposed in good faith and not by any means forbidden by law.”
In In re Iacovoni, the bankruptcy court considered eight Chapter 13 plans that proposed nominal or in some cases no payments to unsecured creditors. The court construed the “good faith” requirement of section 1325(a)(3) to mean “a good faith effort to make meaningful payment to holders of unsecured claims.” 2 B.R. at 267 (emphasis added).
“A proposal of meaningful repayment must be made, in light of the debtor’s particular circumstances, even, when, as in these cases, all of the debtor’s assets are exempt. If no meaningful repayment can be proposed, the debtor is not entitled to Chapter 13 relief.”
Id. at 268.
The meaning of “good faith” in section 1325(a)(3) has engendered no small controversy among the bankruptcy courts. Compare, e.g., In re Iacovoni with, e.g., In re Cloutier, 3 B.R. 584 (Bkrtcy.D.Colo.1980). See 5 L. King, Collier on Bankruptcy ¶ 1325.01[c] at 1325-8.6 (15th ed. 1982) (“With the possible exception of the ‘adequate protection’ test, the controversy concerning good faith under Chapter 13 has resulted in more litigation than any other issue to have arisen during the year immediately following the effective date of the Bankruptcy Code.”).
The various bankruptcy court interpretations of the “good faith” requirement fall into three broad categories. See United States v. Estus (In re Estus), 695 F.2d 311, 314-16 (8th Cir.1982). In re Iacovoni is an example of cases holding that good faith requires substantial or meaningful repayment to unsecured creditors. Id. at 314. Cases at the other extreme seem to attach little independent meaning to the “good faith” requirement of section 1325(a)(3). These cases look only to the requirement of section 1325(a)(4) that Chapter 13 creditors receive as much as they would receive under Chapter 7. Because many consumer debtors have no nonexempt assets, their unsecured creditors would receive nothing in a Chapter 7 liquidation and hence a Chapter 13 plan providing for no payments to unsecured creditors would meet the subsection (a)(4) test. Id.
Those cases adopting a “middle road” approach do not find the amount of the payment dispositive of the issue of good faith. Id. at 315-16.
“These courts do not automatically reject a plan which proposes nominal payments to unsecured creditors, but neither do they automatically confirm a plan as meeting the subsection (a)(3) good faith requirement if the subsection (a)(4) ‘best interests’ test is met. Instead these courts reason that a finding of good faith requires an inquiry, on a case-by-case basis, into whether the plan abuses the provisions, purpose or spirit of Chapter 13.”
Id. at 315.
Six circuits have recently considered the divergent views of the bankruptcy courts, and all of them have adopted some formulation of the “middle road” approach. Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir.1983); In re Estus, 695 F.2d 311; Deans v. O’Donnell (In re Deans), 692 F.2d 968 (4th Cir.1982); Barnes v. Whelan (In re Barnes), 689 F.2d 193 (D.C.Cir.1982); Goeb v. Heid (In re Goeb), 675 F.2d 1386 (9th Cir.1982); Ravenot v. Rimgale (In re Rimgale), 669 F.2d 426 (7th Cir.1982). We also conclude that this analysis is appropriate.
“[T]he proper inquiry should follow the analysis adopted by the Fourth Circuit [In re Deans, 692 F.2d 968]: whether the plan constitutes an abuse of the provisions, purpose or spirit of Chapter 13. The bankruptcy court must utilize its fact-finding expertise and judge each ease on its own facts after considering all the circumstances of the case. If, after weighing all the facts and circumstances, the plan is determined to constitute an abuse of the provisions, purpose or spirit of Chapter 13, confirmation must be denied.
“Certainly an important factor the courts must weigh in their analysis is the percentage of payment to unsecured creditors which the plan proposes. A low percentage proposal should cause the courts to look askance at the plan since repayment is one purpose of a Chapter 13 plan. However, the amount of the proposed repayment to unsecured creditors is only one of the many factors which the courts must consider in determining whether the plan meets the statutory good faith requirement. Other factors or exceptional circumstances might exist which would preclude a finding of bad faith even though only a nominal repayment to unsecured creditors is proposed.”
In re Estus, 695 F.2d at 316-17.
We adopt the factors the Eighth Circuit listed as relevant to a determination of good faith. We reproduce them here for guidance on remand:
“(1) the amount of the proposed payments and the amount of the debtor’s - surplus;
(2) the debtor’s employment history, ability to earn and likelihood of future increases in income;
(3) the probable or expected duration of the plan;
(4) the accuracy of the plan’s statements of the debts, expenses and percentage repayment of unsecured debt and whether any inaccuracies are an attempt to mislead the court;
(5) the extent of preferential treatment between classes of creditors;
(6) the extent to which secured claims are modified;
(7) the type of debt sought to be discharged and whether any such debt is non-dischargeable in Chapter 7;
(8) the existence of special circumstances such as inordinate medical expenses;
(9) the frequency with which the debt- or has sought relief under the Bankruptcy Reform Act;
(10) the motivation and sincerity of the debtor in seeking Chapter 13 relief; and
(11) the burden which the plan’s administration would place upon the trustee.”
Id. at 317. This list is not exhaustive, and the weight given each factor will necessarily vary with the facts and circumstances of each case.
In its determination that the Flygares’ plan was not in good faith, the bankruptcy court made no findings but only cited its earlier decision in In re Iacovoni. The record contains no evidence that the court considered any factor other than the small percentage of payment to unsecured creditors. The court’s summary treatment of the Flygares’ petition indicates that it was applying a per se rule. We agree with the Eighth Circuit that “[a] per se minimum payment requirement to unsecured creditors as an element of good faith would infringe on the desired flexibility of Chapter 13 and is unwarranted.” In re Estus, 695 F.2d at 316 (footnotes omitted).
Accordingly, we reverse and remand for further proceedings consistent with this opinion.
. The trustee urges us to affirm on this ground. She argues: “Where the issue of the adequacy of the plan is essentially identical since the plan is not significantly different, the doctrine of res judicata should be determinative of the issue.” Brief of Respondent at 22. We disagree with this assertion. If nothing else, the fact that the second plan was for 60 months renders it sufficiently different from the first, which was for 36 months.
. Section 1325(a) provides:
“The court shall confirm a plan if—
(1) The plan complies with the provisions of this chapter and with other applicable provisions of this title;
(2) any fee, charge, or amount required , under chapter 123 of title 28, or by the plan,
to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by law;
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan—
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and
(6) the debtor will be able to make all payments under the plan and to comply with the plan.
11 U.S.C. § 1325(a) (Supp. IV 1980).
. The record contains no indication that the Flygares proposed their plan in bad faith. The plan showed Gordon Flygare’s take-home pay as $1,840 per month. Monthly expenses for the Flygares and their six children totaled $1,720, leaving a surplus of $110 per month. From that the Flygares proposed to make payments under the plan of $106 per month for five years. See Goeb v. Heid (In re Goeb), 675 F.2d 1386, 1391 (9th Cir.1982). Cf. In re Tanke, 4 B.R. 339 (Bkrtcy.D.Colo.1980) (confirmation of plan denied for lack of good faith where debtors had monthly uncommitted income of $901.65 yet proposed to pay only $160.00 per month, including only $1.00 to unsecured creditor whom they had defrauded).
. See 5 L. King, Collier on Bankruptcy ¶ 1325.-01 [c] at 1325-8.5 (“There is nothing in the statutory language or the legislative history either of the Bankruptcy Act or of the Bankruptcy Code, nor is there anything in the case law decided under the Bankruptcy Act, to suggest that ‘good faith’ was intended to play any role whatever in determining the quantum of payments or dividends to be proposed by the plan.”).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WISDOM, Senior Circuit Judge:
This case requires this Court to consider once again when an employer’s business justification for terminating an employee is a pretext for age discrimination. Doris Stamey alleges that Southern Bell, her employer for 88 years, had placed older workers in a nonmanagerial job category destined to become obsolete; younger workers doing comparable were given managerial jobs insulated from reductions in the workforce. She sued under the Age Discrimination in Employment Act (ADEA), contending both that Bell had unfairly terminated her and that it had unfairly denied her a promotion into the managerial position. The jury found for Stamey on her termination complaint, but the judge granted a directed verdict on her promotion claim. Bell filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. The trial judge denied Bell’s motion. Bell appeals. Sta-mey cross-appeals the judge’s directed verdict on her promotion claim and part of the remedy. We affirm the judge’s denial of Bell’s motions and reverse as to Stamey’s cross-appeal.
I.
Doris Stamey began her employment with Southern Bell as a long-distance operator in June 1943 when she was eighteen years old. After 10 months she was assigned to a training position, to train long-distance operators on company techniques and equipment. In 1955 Mrs. Stamey was assigned to the position of PBX Operator. In this position she visited customers’ places of business to explain how Southern Bell’s services might best be used by the customer and to instruct the customers on the use of their Private Board Exchanges. This job required both in-depth knowledge of Bell’s services and the ability to adapt Bell’s services to the customer’s workplace. The record indicates that Stamey performed it well; the company assigned her to its best customers.
In 1973, Bell restructured its customer service system. It established two new job titles: “Service Advisor”, a non-management position involving no direct customer contact, and “Chief Service Advisor”, a managerial position supervising the Service Advisors and exclusively in charge of direct customer contact. Almost every PBX Instructor over the age of forty, including Stamey, became a Service Advisor. Sta-mey was then 48. After 1978, Bell gradually phased out Service Advisors by transferring them to other jobs. In 1981, Bell announced it would eliminate the position entirely. Stamey was then 56.
From 1973 until 1981, Stamey requested promotion to the Chief Service Advisor position but she was never promoted or offered the opportunity to train for the promotion. When Bell announced the elimination of the Service Advisor position, it offered Stamey the option of transfer to “any available equal or lower paying job”. The jobs offered included entry-level receptionist, entry-level clerk, and typist.
In June 1981, Stamey filed charges of age discrimination with the EEOC. Several months afterward, Bell announced that it had reassessed its needs and determined that it needed one Service Advisor and that Stamey would be it. Stamey returned to work at Bell. Early on her first day back at work, she completed a form withdrawing her EEOC charges. Bell employees had already filled in the form except for her signature.
Six months later, in December 1982, Bell informed Stamey that it was eliminating her Service Advisor position. It then offered her early retirement or transfer to another job. Bell did not specify what job Stamey might take as an alternative to retirement, although it advised her that whatever job she took would pay less than the Service Advisor position. She was told to consider her options during her month-long holiday that began at the end of 1982.
Stamey never learned what other jobs Bell was willing to offer her. The afternoon before her holiday began, two of her supervisors entered her office and requested that she turn over her keys. During her vacation, but before she had decided to take early retirement, a Bell employee called her at home to ask her to complete her retirement papers. Upon her return at the end of her vacation, but (again) before she had made her decision, she found that her office and work had been assigned to a Chief Service Advisor transferred from another office. Stamey’s supervisors had been aware of the impending arrival of this managerial employee when they took Sta-mey’s keys.
Stamey signed her retirement papers that same month. On the form announcing her decision to retire, she listed her reason for retiring as, “No job offer, replaced by management person from South Carolina”. Six months later, in June 1983, she filed a second complaint with the EEOC, charging that Bell discriminated against her because of her age and that Bell retaliated against her for filing her first complaint with the EEOC. The EEOC gave her a right to sue letter, and she filed this action in December 1983.
The district court directed a verdict for Bell on Stamey’s charge that Bell failed to promote her to Chief Service Advisor because of her age. After a four-day trial, the jury found (1) that Bell’s elimination of Stamey’s Service Advisor position was a “constructive discharge”; (2) that Stamey was constructively discharged in retaliation for her filing of a complaint with the EEOC; (3) that Stamey was constructively discharged because of her age; and (4) that Bell was guilty of pay discrimination because the disparity in benefits between Service Advisor and Chief Service Advisor was determined by age rather than by any difference in work performed.
The district court entered judgment for Stamey accordingly. As part of her relief, the district court ordered that Stamey receive a nondiscriminatory salary from Bell until it reinstated her in a nonmanagement position comparable to the (now defunct) Service Advisor job. Bell then offered Sta-mey a nonmanagement job with the same pay as a Chief Service Advisor. She refused it, asking for a management position. The district court found her refusal “unreasonable” and terminated her right to the continuation of her salary.
Bell appeals the denial of its motion for judgment notwithstanding the verdict and a new trial, contending that there was a business justification for the restructuring and that Stamey was not qualified to be a Chief Service Advisor. Stamey cross-appeals, contending (1) that the district court should not have granted the directed verdict for Bell on the promotion claim; (2) that the district court should have ordered her reinstated as a Chief Service Advisor rather than reinstatement in a nonmanag-erial position comparable to the (now defunct) Service Advisor job; and (3) that it was not “unreasonable” for her to decline reinstatement in a nonmanagerial job.
II.
This court should approve Bell’s appeal of its motions for judgment notwithstanding the verdict only if Bell has presented evidence on its behalf so compelling that “reasonable men could not arrive at a contrary verdict”. In determining whether Bell has met this standard,
the court should consider all of the evidence—not just that evidence which supports the non-mover’s case—but in the light and with all reasonable inferences most favorable to the party opposed to the motion.
At each step, of course, we defer to the findings of fact reached in the trial court.
As in other cases of employment discrimination, an action under the ADEA is a three-step process. First, the plaintiff must establish a prima facie case. Second, the defendant has the burden of proving that legitimate, nondiscriminatory reasons controlled its decision. Finally, the plaintiff then has the burden of demonstrating that the reasons advanced by the defendant were pretextual.
A. Stamey Presented A Prima Facie Case
A prima facie case under the ADEA contains four requirements: (1) the plaintiff must belong to the “protected group” consisting of employees between the ages of 40 and 64; (2) her status as an employee must be adversely affected; (3) she must be replaced by someone outside the protected group; and (4) she must be qualified for the job denied her. Bell denies that Sta-mey was discharged; that she was replaced; and that she was qualified to work as a Customer Service Advisor. In short, Bell contends that Stamey has failed to establish the second, third, and fourth components of a prima facie case.
1. Stamey Was Adversely Affected
Bell avers that Stamey chose retirement and that, consequently, she was not terminated. Bell’s evidence consists only of several admissions from Stamey that she preferred retirement to the jobs available to her. Stamey counters with ample evidence that she was terminated.
Stamey testified that she found the particular jobs Bell offered her before she filed her first EEOC complaint (entry-level receptionist, entry-level clerk, typist) “humiliating” and “insulting”. The second time Bell tried to eliminate her Service Advisor job, it did not specify the other jobs she might take as an alternative to early retirement; it said only that they would be lower paying jobs. In the light of Bell’s earlier offers, a jury could reasonably conclude that any job it would offer her would be demeaning to one with 38 years of experience in advising customers.
Further, Stamey presented evidence that her supervisor demanded her office keys weeks before she was to make her “choice” about early retirement, that Bell did not eliminate her position as it contends but rather just changed the title, and that her replacement was already “at her desk, doing her work” before she had formally “chosen” to retire. From this evidence, a jury could reasonably conclude that Bell used direct coercion to force Stamey to “choose” retirement.
In any event, Stamey can prevail even if the evidence does not support an inference that she was terminated or constructively discharged. The Act forbids far more than merely discriminatory discharge and hiring practices. It states:
It shall be unlawful for an employer— (1) to fail or refuse to hire or to discharge any individual or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s age;
(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunity or otherwise adversely affect his status as an employee, because of such individual’s age
A reasonable jury could conclude that Stanley's treatment came within these terms.
2. Stamey Was Replaced
Stamey presented evidence that upon her return to Bell after her December 1982 vacation, someone else was already “at her desk, doing her work”. Bell responds that the employee Stamey observed was doing different work. A jury could reasonably have concluded that Stamey was replaced. In other parts of her case, she presented evidence establishing that Customer Service Advisors did the same work as nonmanagement Customer Advisors. Further, she testified that she observed the woman in her office doing the work she would have been doing had she not been terminated. Bell produced no counter-evidence.
3. Stamey Was Qualified
Bell next disputes that Stamey has established the final prong of the McDon nell Douglas test. It argues that Stamey was not qualified for promotion to the managerial “Chief Service Advisor” position. A reasonable jury could have concluded otherwise. Stamey presented evidence that she was already doing much of the same work as a “Chief Service Advisor”. Much of Stamey’s “nonmanagerial” work was clerical; one young manager admitted under cross examination that her “managerial” tasks were actually clerical in nature. Stamey proved herself capable of even the less mundane “managerial” chores. For example, one post-reorganization customer praised Stamey for a presentation she made after having had very little time to prepare; Stamey’s supervisor was to have made the presentation but found she could not prepare herself in the short time allowed. These examples fit well into a larger pattern, where the Service Advisors trained the Chief Service Advisors and often advised them on a daily basis. The similarity in qualifications for the jobs may have grown out of one aspect of Bell’s reorganization. The new Chief Service Ad-visors no longer visited customer’s workplaces. Instead, employees of Bell’s customers attended training sessions at Bell, then returned to their workplaces. In this system, the onus of adapting Bell’s services to the customers’ work environments shifted slightly to the trained employees of the customers; it was perhaps inevitable that the new Chief Service Advisors would have less reason to acquaint themselves with the intricacies of Bell’s equipment than had the PBX Instructors who were by then their subordinates. The jury could conclude that Stamey established that the qualifications for the “Chief Service Advis- or” position were not really higher than those for the “Service Advisors”. This, considered with the evidence of general discrimination against older employees, provides a sufficient basis for the jury’s verdict on age and pay discrimination. We therefore hold that Stamey did present a prima facie case that Bell discriminated against her because of her age.
B. Bell Did Not Rebut the Prima Fa-cie Case
Bell next argues that any adverse effect suffered by Stamey derived from legitimate, nondiscriminatory business decisions. Throughout the 1970’s an increasing percentage of its customers turned to systems more sophisticated than the PBX systems familiar to Mrs. Stamey. The 1973 decision to bifurcate its customer service program reflected its anticipation of this trend, Bell avers. As customers switched to newer machines, demand for advice on the older PBX models declined, giving Bell a legitimate, business reason to scale back that portion of its customer service operation. Bell contends that its concerns about changes in the system resulted in the force reduction that prompted Sta-mey’s first EEOC complaint in 1981 and again in 1982, when Bell notified Mrs. Sta-mey that it intended to eliminate her position entirely. In short, Bell argues, Mrs. Stamey was not replaced but was instead caught in a reduction in its workforce.
Bell here focuses myopically on its immediate decision to transfer or demote Mrs. Stamey and leaves in the background the restructuring of its workforce. Mrs. Sta-mey presented uncontroverted evidence that the former PBX Instructors were generally older. All of them became Service Advisors, non-management positions without customer contact. The new Chief Service Advisor positions were filled principally by younger new-hires. Stamey also presented evidence that as the 45 (generally older) Service Advisors were phased out, only five became Chief Service Advisors; all of those promoted were under 40. In fact, according to Stamey’s evidence, since 1963, no nonmanagement employee over 50 in the PBX customer service program had been promoted to management and that, from 1973 to 1978, no nonmanagement employee over the age of 40 was promoted to management.
In response, Bell asserts only vague “business reasons” for the restructuring. In particular, Bell does not respond to Sta-mey’s evidence that in practice, a Chief Service Advisor did not require higher qualifications than a Service Advisor.
Bell’s rebuttal argument can succeed only on a foreshortened horizon. A broader perspective reveals that Bell attempted to present a youthful image to its customers. Mrs. Stamey presented evidence that her inability to win promotion within Bell resulted directly from this earlier reorganization of Bell’s customer service program. One witness testified:
I don’t think she [Stamey] was seriously considered for promotion because she did not fit with the image that they [Bell] were wanting to project of the department at the time ... There was a pattern set in the department whereby some of the older women were never ... seriously considered for promotion.
The effect of Bell’s restructuring violates a central teaching of this Court’s decisions in ADEA cases. An employer may not organize its workforce to expose older employees to reductions while insulating younger employees. In Williams v. General Motors Corporation, Judge Hill correctly noted that an “employee-rotation plan that effectively shifted ‘protected’ workers into jobs likely to bear the brunt of a reduction in force” would signal age discrimination. The strength of Stamey's evidence contrasts with the weakness of statistical evidence in Goldstein, where approximately half of the employees promoted in Goldstein (including Goldstein’s own replacement) were over forty years old. This Court rejected Goldstein’s statistical evidence because it did not establish that the company had started a “youth movement”. Stamey has done so. We therefore conclude that Bell has not met its burden of rebutting Stamey’s prima facie case. Accordingly, we affirm the trial judge’s refusal to grant Bell’s motion on Stamey’s termination claim.
C. Bell Retaliated Against Stamey
Bell also appeals the judge’s refusal to grant its motion as to Stamey’s retaliation claim. It denies any “settlement” of Stamey’s first complaint. Stamey, however, offered evidence from which a jury could conclude that there was such a “settlement” and that Bell reneged on it. Until her 1981 EEOC charge, Bell insisted that the position of Customer Instructor (filled by Stamey and some fifty others) needed to be eliminated. After she filed the charge, however, Bell made a “reassessment” and came to the convenient conclusion that it would continue to need one Customer Instructor and that Stamey should be it. The very day that Stamey returned to her (now unique) job as Customer Instructor, she was presented with EEOC forms, already typed, withdrawing her charges against Bell.
Less than a year later, Bell’s “need” for a lone Customer Instructor evaporated. Bell contends that “this was prompted by the anticipated transfer of business marketing [including PBX service] to American Bell” as part of the AT & T divestiture. Stamey points out that the transfer of these functions did not actually occur until 1984. Whatever triggered the elimination of her job, the direct evidence discussed above strongly suggests that Bell thereafter unceremoniously pushed her into early retirement.
III.
A. The Trial Judge Erred In Ordering A Directed Verdict Against Stamey On Her Claim That Bell Illegally Failed to Promote Her
Stamey can sue only for age discrimination violations occurring within 180 days of the filing of her June 1983 complaint with the EEOC. Accordingly, to present the jury with the question of discriminatory refusal to promote, Stamey must show that she was passed over for promotion to Chief Service Advisor in favor of a younger employee in the 180 days before she filed her June 1983 complaint with the EEOC. The district court directed a verdict for Bell on this issue because Stamey admitted that Bell promoted no one to Chief Service Advisor during this period.
Stamey argues that Bell’s replacement of her with a Chief Service Advisor, younger than Stamey and transferred from another office, should suffice for the 180-day requirement. Bell responds that this Sta-mey’s replacement was already a Chief Service Advisor and thus, was not “promoted”.
The formalism Bell urges in the construction of the 180-day rule runs counter to the remedial scheme of the Act. Sta-mey, a Service Advisor, was replaced with a Chief Service Advisor. This upgrading of her position is plainly a promotion opportunity. It could not be plainer that Stamey was passed over for that opportunity by being terminated. The evidence appears adequate for a jury to find that Bell denied Stamey a promotion to “Chief Service Ad-visor” because of her age.
B. The Trial Judge Erred In Ordered Stamey To Accept A Eon-Managerial Position With Bell
The district court ordered Stamey reinstated in a non-managerial position at a nondiscriminatory salary. Because the jury found Bell guilty of salary discrimination, but (because of the partial directed verdict) did not find Bell guilty of a discriminatory refusal to promote Stamey to Chief Service Advisor, this remedy is consistent with the verdict. We have found, however that the trial judge erred in directing the partial verdict for Bell. Hence, Stamey’s refusal of the reinstatement Bell offered would not be “unreasonable” and her salary should not have been discontinued. We remand this aspect of the case to the district judge to determine whether Sta-mey at this point deserves reinstatement as a Chief Service Advisor or whether monetary damages 'are sufficient.
IV.
We affirm the judgment against Bell but reverse as to Stamey’s cross-appeal. Accordingly, the judgment of the trial court is AFFIRMED in part, REVERSED in part, and REMANDED for proceedings consistent with this opinion.
. 29 U.S.C. § 621 et seq.
. In subsequent reorganizations, "Service Advis- or" was renamed "Customer Instructor" and “Chief Service Advisor” became “Associate Supervisor, Service Advisor Complex”. The duties of the two positions remained about the same.
. Stamey would not have suffered immediate financial loss. Bell guarantees its employees their original salary for up to four years after transfer to a lower-paying job.
. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc).
. Id.
. See, e.g., Reynolds v. CLP Corp., 812 F.2d 671, 674-75 (11th Cir.1987).
. Goldstein v. Manhattan Ind. Inc., 758 F.2d 1435, 1443 (11th Cir.), cert. denied, 474 U.S. 1005, 106 S.Ct. 525, 88 L.Ed.2d 457 (1985).
. See, e.g., Archambault v. United Computing Systems, Inc., 786 F.2d 1507, 1512 (11th Cir.1986).
. Id.
. This standard for a prima facie case derives from McDonnell Douglas Corporation v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668, 677 (1973). See, e.g., Reynolds, 812 F.2d at 674 (applying McDonnell Douglas in ADEA case).
. Employees may be constructively discharged by a demeaning demotion or transfer. See Williams v. Caterpillar Tractor Co,, 770 F.2d 47 (6th Cir.1985).
.Beil makes much of a distinction between termination and "constructive discharge". Bell argues that Stamey must show she was terminated because she did not plead constructive discharge in her complaint. At oral argument, Bell’s counsel suggested that "constructive discharge” complaints were appropriate when an employee offered "subjective” reasons for finding working conditions so difficult or unpleasant that she felt compelled to resign; "termination”, he said, was appropriate where there were “objective” justifications for the employee’s decision to leave a job. Bell presents neither authority nor reasoning for distinguishing the proof required for constructive discharge from that needed for termination.
A plaintiff alleging constructive discharge must establish that the terms and conditions of employment were so onerous that a reasonable person would feel compelled to resign. See, e.g., Houghton v. McDonnell Douglas Corp., 553 F.2d 561 (8th Cir.1977), cert. denied, 434 U.S. 966, 98 S.Ct. 506, 54 L.Ed.2d 451 (1978). The reasonable person standard injects objectivity into a jury’s deliberations over complaints of constructive discharge, thereby blurring the line between subjective and objective so much as to make Bell’s distinction useless. In addition, we see little reason to deny Mrs. Stamey the fair inference from the evidence that she was constructively discharged simply because she did not plead it. Placing so much weight on the pleadings would run contrary to the broad remedial purposes of the ADEA and to the spirit of the Federal Rules of Civil Procedure. Finally, because the evidence supports an inference that she was terminated, Bell’s argument amounts to nothing more than a squabble over wording.
. 29 U.S.C. Section 623(a) (emphasis added).
. Bell’s argument foreshadows its contention that Stamey was not replaced, but that her position was eliminated as a result of changes in its business. Bell therefore asks this court to regard Mrs. Stamey’s case under the tests applicable to work force reduction. This argument is discussed at greater length in Section IIB.
. See n. 10.
. This does not explain why one group consisted of nonmanagerial employees while employees in the other group were granted managerial status.
. Bell also fails to address the proper argument. It stresses that there was no discrimination by age within the ranks of the Service Advisors. Mrs. Stamey does not contest this conclusion. She argues instead that older workers were excluded from the Chief Service Advis- or category. The proper comparison, then, is not among the Service Advisors but between them and the Chief Service Advisors. See, e.g., Lindsey v. Southwestern Bell Telephone Co., 546 F.2d 1123, 1124 (5th Cir.1977) (ADEA claims require comparison of employees selected for position with those available in the entire employee group).
. 656 F.2d 120 (5th Cir. Unit B 1981).
. 656 F.2d at 130 n. 15. Williams discussed the evidence a plaintiff must present to establish a prima facie case. Its discussion is nonetheless applicable. See also McCorstin v. United States Steel Corp., 621 F.2d 749, 754 (5th Cir. Unit B 1981) ("[A] pattern of terminating older workers when a reduction in force occurred” allows the inference that an employer’s nondiscriminatory reasons were pretexts for discrimination); cf. McCuen v. Home Insurance Co., 633 F.2d 1150, 1150-51 (5th Cir. Unit B 1981).
. 758 F.2d at 1444.
. Id.
. 29 U.S.C. § 626(d)(1).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DOBIE, Circuit Judge.
The Pacific-Atlantic Steamship Company, as owner of the American motorship Oregon filed under the Public Vessels Act, 46 U.S.C.A. §§ 781-799, in the United States District Court for the Eastern District of Virginia, a libel in admiralty against the United States, in connection with the sinking of the Oregon after a collision between that vessel and the New Mexico, a battleship of the United States Navy. Intervening libels were filed by E. J. Lavino and Company and by Defense Supplies Corporation, owners of the Oregon’s cargo. The United States filed a cross-libel for the damage to the New Mexico. The intervening libel of Defense Supplies Corporation was withdrawn before trial.
The District Court adjudged that, the collision “was caused entirely by faults and errors in navigation on the part of the Oregon,” and decreed that the Pacific-Atlantic Steamship Company, as owner of the Oregon, is “entitled to limitation of its liability to the value of its interest in the Oregon and its pending freight.” Further, it was ordered by the District Court that the intervening libelants are not entitled to any recovery from the Pacific-Atlantic Steamship Company, that there could be no recovery by any party against the United States, and that the United States recover its damages by reason of the collision from the Pacific-Atlantic Steamship Company, subject to this Company’s right to limitation of liability. An appeal has been taken to us by the libelant, Pacific-Atlantic Steamship Company, and by the intervening li-belant, E. J. Lavino and Company.
The collision between the Oregon and the New Mexico occurred about 4:42 A.M. on December 10, 1941, in the Atlantic Ocean at a point approximately forty miles south of the Nantucket Shoals Lightship. The New Mexico was preceded by a screen of three destroyers, the Hughes, the Sims and the Russell. The three destroyers were on the arc of a circle, each about 2,000 yards distant from the New Mexico, with the Hughes almost dead ahead of the New Mexico, the Sims on the New Mexico’s port bow, about 20 degrees forward of the battleship’s- port beam, and the Russell on the New Mexico’s starboard bow, about 20 degrees forward of the battleship’s starboard beam.
Due to war conditions, all of the vessels here concerned were blacked out, running without lights. The four naval vessels, according to plan, were zigzagging. Their base course was 236 degrees true (about southwest by west); but, just before the collision, on a leg of the zigzag, they were on a course 216 degrees true, proceeding at a speed of 14 knots. The course of the Oregon was 340 degrees true (about north-northwest) and her speed was just over 13j/j> knots.
At the time of the collision, the sky was overcast; the moon was obscured by broken clouds of moderate density, with some diffusion of light through the clouds, and there was neither rain nor fog. The visibility was-described by some witnesses as “good,” by others as “fair.” Captain Gillette of the Oregon, placed the range of visibility at from 11/2 miles to 2 miles for such an unlighted object as a ship. According to the witnesses on the New Mexico, it was placed for the naked eye at 2 miles, with binoculars at from 2/¿ or 3 miles to 4 miles.
When the Oregon entered the arc of the destroyer screen, she was between the Hughes and the Sims, with the Hughes to the Oregon’s port and the Sims to the Oregon’s starboard. At this time, the Hughes was closer to the Oregon than the Sims, and the Russell was, of course, the most distant of the three destroyers.
As is quite usual in cases of this kind, there are grave discrepancies in the testimony of the various witnesses as to precisely what happened, and when and where and why, just before the collision. The elaborate and able opinion filed by the District Judge contains a searching analysis of the vital parts of the testimony, with extended findings of fact and conclusions of law appropriately based on these findings.
First, we review briefly the testimony given by the witnesses on the Oregon. Captain Gillette testified that he, the second officer and a lookout were on the starboard side of the bridge, keeping an alert watch, while able seaman Jackson was at the wheel. They observed a dark object (which was, of course, the New Mexico) bearing about 4 points on the starboard bow and about a mile or less distant. Immediately the running lights of the Oregon were turned on in pursuance of Captain Gillette’s order, and, about 15 or 20 seconds later, the New Mexico turned on her running lights-. According to Captain Gillette, he could not determine the course of the New Mexico until her lights came on and, accordingly, he could not until then perceive that the two ships were on intersecting courses.
Captain Gillette estimated the distance between the Oregon and the New Mexico, when the latter’s lights came on, to be about one-third of a mile. He immediately ordered the helm “left” and a second or so later “hard left,” in the belief that such conduct offered the best chance of avoiding an imminent collision, and he hoped the New Mexico would cooperate by turning to her right. He admitted that he gave no signal whatever to indicate his intention to make this turn, and that he made no effort to reduce his speed until the moment of impact, when he ordered full astern for the Oregon’s engines. He stated that the collision occurred about one minute, or less, after he gave the “left” order.
At the time of the collision, according to Captain Gillette, the Oregon had turned about 40 degrees and was approximately a ship’s length to the left of her original course; while the New Mexico, which just a few seconds before had veered to her right, had swung about 10 degrees. This resulted in the New Mexico’s bow striking the starboard side of the Oregon, forward of her bridge, at an angle of about 45 degrees. He fixed the time of the collision at 4:43 A.M.; and estimated the elapsed time between the first sighting by the Oregon of the dark loom of the New Mexico and the collision at about 1^4 minutes.
The evidence indicates that no one on the Oregon saw any of the destroyers until the Oregon started her left turn just before the collision. Then the lights on the Hughes were seen.
The second mate of the Oregon and the seaman, who were on the Oregon’s bridge with Captain Gillette, could not testify, as they were both drowned when the Oregon sank. The testimony of Jackson, who was at the wheel of the Oregon, followed, with some variations, the same general line as the evidence of Captain Gillette. His estimate of the elapsed time between the first sighting of the loom of the New Mexico by the Oregon and the collision was “not much over a minute,” and the time interval between the start of the Oregon’s turn to the left and the collision as “not more than half a minute.” Jackson admitted his inability to make any accurate estimate of the distance at any time between the Oregon and the New Mexico, beyond his statement that, when the New Mexico first showed her lights, the two vessels were then “very close.”
Next we comment upon the evidence on behalf of the New Mexico given by those on that vessel and those on the destroyers. Lieutenant (jg) Waliszewski was the New Mexico’s officer of the deck. Through his binoculars he picked up the loom of a vessel (which was the Oregon) bearing about 45 degrees off the port bow of the New Mexico at a distance which he estimated to be between 5,000 and 6,000 yards, and he testified that this vessel appeared to be at least 2,000 yards ahead of and beyond the Sims. He called the strange vessel to the attention of Lieutenant Krick, supervisor of the watch on the New Mexico. While Waliszewski and-Krick were discussing the strange vessel, the lights of the Oregon came on.
Thereupon, Krick ordered the lights of the New Mexico turned on and directed that Captain Brown, asleep in his sea cabin just a few -steps away, be called. There was testimony by the officers concerned as to the following intervals of time: from Wal-iszewski’s sighting of the loom of the Oregon until the latter showed her lights, 2 or 3 minutes; from the lighting of the Oregon until the lighting of the New Mexico, less than 20 seconds; from the time Waliszew-ski started for Captain Brown until the Captain appeared on the bridge, 20 or 30 seconds.
Krick estimated the distance between the New Mexico and the Oregon, at the time the latter’s lights came on, as about 3,000 yards. Captain Brown, when he first saw the Oregon with his naked eye, estimated her distance at from 2,000 to 2,500 yards1, and that when he procured his binoculars and observed the Oregon, she was about 2,000 yards away. There was further testimony by Captain Brown that, without changing the New Mexico’s course or speed, he kept the Oregon under close observation for 3 or 4 minutes and that the Oregon, during that period, made no change in course or speed.
Captain Brown testified that when the distance between the two vessels was about 700 yards, he realized “that the Oregon could not avoid a collision by her own efforts,” so he gave the order: “Right full, full speed astern,” hoping that by swinging the New Mexico to the right and slackening her advance, a collision might be avoided. A blast was blown on the New Mexico’s ■siren and a general alarm was sounded. The time between Captain Brown’s order and the collision was estimated at a minute or slightly more.
Witnesses on the New Mexico testified that after the New Mexico had begun her swing to the right, and just before the collision, the Oregon began her swing to her left; that the New Mexico had swung about 350 yards to the right of her original course; that the collision occurred at 4:42 A.M.; that the New Mexico’s bow struck the starboard side of the Oregon at an angle of from 20 to 30 degrees; that from the moment the course of the Oregon could be ascertained by those on the New Mexico, the two ships seemed to be on probable collision courses. One signalman on the New Mexico ventured an estimate of the distance between the New Mexico and the Oregon, when the' lights of the latter came on, at 1,500 yards.
Testimony was given by officers on all three of the destroyers. Lieutenant Farley, officer of the watch on the Sims, stated that at -about 4:35 A.M. he was notified by the port lookout that an unlighted vessel (the Oregon) had been sighted at approximately 355 degrees relative bearing. The then distance of the Oregon from the Sims was estimated at about 4,000 yards. The presence of this strange vessel was reported to the division commander of the destroyers, who was on the Hughes, and the signalman on the Sims was ordered, by means of the blinker tube, to challenge the strange vessel. The Oregon continued her course with no acknowledgment of, or response' to, this signal. -When the lights appeared on the Oregon, she was estimated to be about 1,500 yards. distant from the Sims. Lieutenant Farley could not, with any fair degree of accuracy, fix the time interval between the many occurrences just prior to the collision but contented himself with the estimate of “within 10 minutes or less” between the first sighting of the Oregon and the sounding of the siren on the New Mexico.
Evidence was given by Captain Ramsey and . signalman Dickinson of the' Hughes. The former testified that when he first saw the lights of the Oregon, she was about 2,200 yards from the New Mexico, and that, when the lights appeared on the New Mexico, the distance between the two vessels had been lessened to about 2,000 yards. Dickinson stated that he continuously challenged the Oregon with the blinker tube for one or two minutes, without receiving any response. His estimate of the distance between the Hughes and the Oregon when the two vessels passed each other was 1,500 yards and he stated that the Hughes was then on her station 2,000 yards from the New Mexico.
Lieutenant Hart, officer of the deck on the Russell, added little testimony that was-important. When he was informed by the Sims of the sighting of the Oregon, he located the Oregon through his binoculars,, and the Oregon, then unlighted, appeared to be bearing slightly more than 45 degrees-off the port bow, and to be beyond the destroyer screen.
It would unduly prolong this opinion if an attempt were made to analyze the testimony of many other witnesses who gave evidence in this tragedy of the sea. Libel-ants stress the expert testimony given by Admiral Ainsworth and attempt to make much of the discrepancies, variations and even contradictions shown in the entries in the log books of the New Mexico and the destroyers. As the District Judge pointed out, these might well “be attributable to the conditions under which the entries were made * * *. They were all made after the happenings and represent the different writers’ recollection of the time and sequence of the various events. Under such conditions, it is to be expected that differences in estimates óf time intervals would appear in the different logs.”
Counsel for libelants lay great stress on the failure of the United States to call as witnesses certain specifically named persons: Lieutenant Gentry and quartermaster’s striker Hoover of the New Mexico and Lieutenant Moyer of the Hughes. The District Court, recognizing the general principle that “when a litigant fails to offer witnesses who are available a court may draw the inference that their testimony .would not be helpful,” went on to hold: “But when there are a dozen witnesses to an event and two of them are not called to testify, I know of no authority which compels a court to discredit entirety the testimony of the other ten.” We must sustain that ruling under the circumstances of this case.
We think, too, the District Court did not err in denying the motion of appellants to require the production of the record of the trial before a Navy Court after the collision. The courts have often dealt with the privileged status of such records. And here the United States cooperated rather handsomely in enabling libelants to present their side of this case. The searching interrogations of libelants were all answered; the logs, ships’ records and voyage reports were produced, with the Navy’s permission sought and obtained. The United States disclosed the testimony before the Navy Court of each witness who was called. And there is even evidence, in the record that counsel for the Oregon expressed satisfaction with this arrangement.
Ample authority for this action of the District Court is found in the cases. See, The Wright and the Papoose, D.C.E.D.N.Y., 2 F.Supp. 43; The Australian Star, D.C.S.D.N.Y.1946, A.M.C. 542; Maryland ex rel. Kent v. United States, (D.Md.) 1947 A.M.C. 1338; Anglo-Saxon Petroleum Co. v. United States, D.C., 78 F.Supp. 62. Cf. Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451; Admiralty Rule 32, 28 U.S.C.A.; 46 U.S.C.A. § 795; Newell v. Phillips Petroleum Co., 10 Cir., 144 F.2d 338, 340; Bank Line, Limited v. United States, 163 F.2d 133, on remand, 76 F.Supp. 801.
This brings us to the heart of the case: the District Court’s findings of fact and conclusions of law, which absolved the New Mexico and the three destroyers of negligence contributing to the collision and placed the blame and fault solely on the Oregon. Conclusion of law No. 1 held applicable the Starboard Hand Rule of the International Rules of Navigation; Conclusion No. 2 negatived the existence of any emergency or special circumstances (under Article 27, 33 U.S.C.A. § 112) which either rendered these rules inapplicable or justified a departure from them; Conclusion No. 3 imposed upon the Oregon, as the burdened vessel, the duty to keep out of the way of the New Mexico; while Conclusion No. 4 emphasized the duty of the New Mexico, the privileged vessel, “to maintain her course and speed until such time as it became apparent to her that a collision could not be averted by the action of the Oregon alone.”
Vital Conclusion of Law, No. 5 reads:
“5. The Oregon was in fault in the following respects, which were the direct and proximate, and sole causes of the collision :
(a) She failed to keep a proper lookout.
(b) She failed to take proper precautions when she first sighted the New Mexico on her starboard side.
(c) After the ships were lighted and it was disclosed that they were crossing courses, she continued her course and speed and failed to make any effort to keep out of the way of the New Mexico and to avoid crossing ahead while there was adequate time to have taken avoiding action.
(d) When turning to her left immediately before the collision, she failed to give any warning of her change of course.”
There is ample evidence to support the finding [(a) above] that the Oregon failed to keep a proper lookout. This is inescapable if we accept (as the District Judge did not) the testimony of those on the Oregon with respect to the distance at which the New Mexico was first, sighted. Even, however, if this evidence be disregarded, and ,if the Oregon and the New Mexico were much further apart when the Oregon first sighted the loom of the New Mexico, the evidence here points clearly to a lack of care on the part of the lookouts of the Oregon. By Captain Gillette’s admission, the range of visibility for an unlighted vessel was between one and one-half miles and two miles; other witnesses indicated an even longer range.
Though the New Mexico was larger than the Oregon, with the loom of the battleship more easily visible, the New Mexico sighted the Oregon an appreciable length of time before the Oregon saw the battleship. The New Mexico, the Sims and the Hughes sighted the Oregon at distances of from 3,000 to 5,000 yards. Although the Oregon passed into the screen between the destroyers Sims and Hughes at a distance necessarily not more than 1,300 yards from one of them (the evidence indicates that she passed closer than this to the Hughes), no one on the Oregon saw any of the destroyers until the Oregon started her left turn immediately before the collision. Witnesses on behalf of the Oregon, moreover, stated that she never saw the signals directed at her by blinker tube from the destroyer.
Probably the most important question in this case, and the one most strongly emphasized by counsel, is whether or not, under the circumstances here existing, the Starboard Hand Rule is applicable. “The International Rules for Navigation at Sea” provide:
Article 19, 33 U.S.C.A. § 104. “When two steam vessels are crossing, so as to involve risk of collision, the vessel which has the other on her own starboard side shall keep out of the way of the other.”
Article 21, 33 U.S.C.A. § 106. “Where, by any of these rules, one of two vessels is to keep out of the way the other shall keep her course and speed.
“Note. — When, in consequence of thick weather or other causes, such vessel finds herself so close that collision can not be avoided by the action of the giving-way vessel alone, she also shall take such action as will best aid to avert collision.”
Article 22, 33 U.S.C.A. § 107. “Every vessel which is directed by these rules to keep out of the way of another vessel shall, if the circumstances of the case admit, avoid crossing ahead of the other.”
Article 23, 33 U.S.C.A. § 108. “Every steam vessel which is directed by these rules to keep out of the way of another vessel shall, on approaching her, if necessary, slacken her speed or stop or reverse.”
Article 27, 33 U.S.C.A. § 112. “In obeying and construing these rules due regard shall be had to all dangers of navigation and collision, and to any special circumstances which may render a departure from the above rules necessary in order to avoid immediate danger.”
Article 29, 33 U.S.C.A. § 121. “Nothing in these rules shall exonerate any vessel, or the owner or master of crew thereof, from the consequences of any neglect to carry lights or signals, or of any neglect to keep a proper lookout, or of the neglect of any precaution which may be required by the ordinary practice of seamen, or by the special circumstances of the case.”
The New Mexico contends that the Starboard Hand Rule applies, which would make her the privileged vessel (and the District Court so held); while the Oregon insists that here was a case of sudden circumstances or emergency falling under the Note, above set out. If the Starboard Hand Rule does control, it is, of course, quite clear that the New Mexico was the privileged vessel and the Oregon the burdened vessel.
In this connection, very important are the District Court’s Findings Of Fact Nos. 4, 5 and 6:
“4. The Oregon sighted the loom of the New Mexico when about one mile or a little more distant from the latter. On sighting the New Mexico the Oregon immediately turned on her lights and within 20 seconds thereafter the New Mexico became lighted. Both vessels became lighted when they were from 1500 to 2200 yards apart.
5. When both vessels became lighted it was apparent, or should have been apparent, to each of them that they were on crossing and probably collision courses. At all times the Oregon’s bearing from the New Mexico was well on the latter’s port bow and the New Mexico was bearing well on the Oregon’s starboard bow.
6. When both vessels had become lighted and it was apparent to both that they were on crossing courses, the Oregon had adequate time to avoid crossing ahead of the New Mexico by stopping or slackening her speed or by turning to her right. However, the Oregon, from the time of sighting the New Mexico and thereafter, continued her course and speed until approximately a minute before the collision when she turned to her left across the course of the New Mexico in an attempt to avoid collision. The Oregon at no time prior to the collision slackened her speed nor did she give any signal of her intentions or plan of conduct.” There is ample evidence in the record to sustain these findings, which we cannot hold to be clearly erroneous, and they furnish adequate basis for the District Court’s Conclusions of Law No. 5, (b), (c) and (d) set out above.
We think that the failure of the Oregon, under the Starboard Hand Rule, to take, as the burdened vessel, prompt and proper avoiding action (when there was time and opportunity for this) was the primary cause of the collision.
The Oregon, too, was (as the District Judge held) at fault when, immediately before the collision, she failed to give a warning signal of her course change to port. According to the captain of the Oregon, this desperate manoeuver was undertaken in the hope that the New Mexico might cooperate by turning to her (New Mexico’s) starboard; but the New Mexico’s captain could undertake no intelligent cooperation here so long as he was ignorant of what the Oregon would do.
The New Mexico was not at fault in holding her course and speed; for this was her duty under the Starboard Hand Rule. Many cases have set out the imperative nature of this duty and the importance of its observation by the privileged vessel. Thus, in The Norfolk, D.C., 297 F. 251, 255, modified on other grounds, Phillips v. Clyde S. S. Co., 4 Cir., 17 F.2d 250, District Judge (now Circuit Judge) Soper succinctly said: “This duty is as definite and precise as the duty of the burdened vessel to keep out of the way.” And District Judge Watkins, speaking for our Court in The Piankatank, 4 Cir., 87 F.2d 806, 810, crisply stated:
“Where two courses are open to a vessel, and particularly to the privileged vessel, one to follow the prescribed rules and the other to depart from them, the duty is imperative to observe the rules, and to assume that an approaching vessel will do likewise, until after the danger has become so manifest as to show that there is no proper choice of judgment other than that of departing from the rules. Any other course would lead to confusion and be a most prolific source of accidents. Indeed the rule is so imperative that it does not give a navigating officer any general latitude as to obeying the rules, and permits a departure only when necessary to avoid immediate, and not remote or problematical, danger, and then only to the extent required to accomplish that object.”
In Belden v. Chase, 150 U.S. 674, 699, 14 S.Ct. 264, 272, 37 L.Ed. 1218, it was said:
“Obedience to the rules is not a fault, even if a different course would have prevented the collision; and the necessity must be clear, and the emergency sudden and alarming before the act of disobedience can be excused. Masters are bound to obey the rules, and entitled to rely on the assumption that they will be obeyed, and should not be encouraged to treat the exceptions as subjects of solicitude, rather than the rules.”
To the same effect, see Marsden, Collisions at Sea, a standard English authority, 7th Ed., page 344; Farwell, The Rules of the Nautical Road, 2nd. Ed. 1944, page 214; Laboyteaux, The Rules of the Road at Sea, 170. And see, also, The Albert Dumois, 177 U.S. 240, 249, 20 S.Ct. 595, 44 L.Ed. 751; The Oregon, 158 U.S. 186, 15 S.Ct. 804, 39 L.Ed. 943; Matron Navigation Co. v. Pope & Talbot, Inc., 9 Cir., 149 F.2d 295, certiorari denied 326 U.S. 737, 66 S.Ct. 46, 90 L.Ed. 439; The Fred B. Dalzell, Jr., 2 Cir., 45 F.2d 580, 581; The Manaway, D.C., 257 F. 476, 477; Yang-Tsze Insurance Association v. Furness Withy & Co., 2 Cir., 215 F. 859, certiorari dimissed 242 U.S. 430, 37 S.Ct. 141, 61 L.Ed. 409.
There is no merit in the contention that merely because, at some time prior to the collision, the vessels were all blacked out the Starboard Hand Rule does not apply. See, The Jarrix, 1 Lloyd’s List L.R. 93, 95; The F. J. Wolfe, 79 Lloyd’s List L.R. 111. When the lights of the Oregon and the New Mexico came on, and the courses of the two vessels were thus ascertainable, the Oregon should have realized the situation as one governed by the Starboard Hand Rule and, as the burdened vessel, when there was ample time and opportunity, should have promptly taken proper avoiding action. There was then time for seamanly appraisal of the situation and seamanly action by the Oregon in the light thereof, which would have prevented the collision. As was said in Cuba Distilling Co. v. Grace Line, Inc., 2 Cir., 143 F.2d 499:
“But no emergency will excuse the absence of all clear thinking; after all, men, charged with responsibilities of command, must not be wholly incapacitated for sound judgment when suddenly thrust into peril. Part of their equipment for their duties is some ability to think, be the situation ever so sudden and so grave.”
There are cases suggesting that the Starboard Hand Rule is not to be strictly applied in blackout conditions but that this rule is grounded in what might be called the normal conditions of navigation. Any general statements in the opinions in those -cases must be read in connection with the inhibiting effect of the absence of lights in the special situations therein found to exist. And those situations were quite different from the facts ■ of the instant case before us. See, Publicover v. Alcoa Steam Ship Co., 2 Cir., 168 F.2d 672; Lind v. United States, 2 Cir., 156 F.2d 231; The Pierre Loti, 78 Lloyd’s List L.R. 193; The Dominion Monarch, 71 Lloyd’s List L.R. 110, affirmed 73 Lloyd’s List L.R. 229. Cf. Oriental Trading & Transport Co. v. Gulf Oil Corporation, 2 Cir., 173 F.2d 108.
Here, Captain Gillette testified that the bearing of the New Mexico remained constant from the time of sighting until her lights were seen. This indicated that, if the vessel was approaching, she was on a collision course, and, as she was on the starboard bow of the Oregon, it was the duty of the latter to stay out of her way. A prudent seaman would not have waited to ascertain whether a dark vessel to starboard was approaching or going away, but would have acted immediately to get off the possible collision course.
Nor did the District Judge err in absolving the New Mexico from fault in failing to show her lights earlier. Imperative wartime orders, for the blackout of vessels cannot be lightly ignored. And such orders would indeed be of little use, if a battleship, immediately upon sighting the loom of a vessel of unknown nature and nationality, ■ must turn on her running lights. See Petition of United States (The Friar Rock), D.C., 69 F.Supp. 538, 542. There must be a balancing of two perils, wartime attack and collision, to determine which is dominant. As was said by District Judge Goddard, in The Corozal, D.C., 62 F.Supp. 123, 126:
“When confronted with a situation of special circumstances, such as the imminent danger of collision, it is the duty of a vessel, even when proceeding without lights pursuant to orders of the Navy, to promptly 'tarn oii her running lights to warn the other vessel of her position and heading.” (Italics ours.)
And, as we have held, after the lights of both vessels, the Oregon and the New Mexico, came on, there was ample time and opportunity for effective avoiding action by the Oregon. ,
No just complaint can be made of the action of Captain Brown of the New Mexico immediately prior tp. the collision, which was taken only when it was apparent to him that it was too late for the Oregon to avert a collision by her own action. He then put the New Mexico under full right rudder, with full back on all her engines, and sounded one blast on her siren. It seems a fair assumption on his part, particularly in the absence of any signal from the Oregon, that the Oregon would steer right rather than left. And courts are rather unwilling to judge strictly the avoiding action taken by the privileged vessel, when, as here, this action must be taken in extremis due to the fault of the burdened vessel. See, Wilson v. Pacific Mail Steam Ship Co., 276 U.S. 454, 48 S.Ct. 369, 72 L.Ed. 651; The Piankatank, 4 Cir., 87 F.2d 806, 809-810; Matson Navigation Co. v. Pope & Talbot, Inc., 9 Cir., 149 F.2d 295; The Nordpol, 2 Cir., 84 F.2d 3, certiorari denied 299 U.S. 586, 57 S.Ct. 111, 81 L.Ed. 432.
This brings us to the charge, first made by appellants in their amended libels, of negligence, contributing to the collision, on the part of the destroyers. As the District Judge found, this charge, too, is without substance. When the Oregon was sighted, before her lights came on, she was challenged by the Sims on Oregon’s starboard and the Hughes on her port, by means of the blinker tube which is credited with an effective range of 4 miles. This challenging continued until after both the Oregon and New Mexico had shown their lights. Those on the Sims and the Hughes then had every reason to believe that the signals of the blinker tubes had been perceived by the Oregon, and that with the Oregon and New Mexico both lighted and still distant enough to avoid any collision, there was no hazard which called for further action from the destroyers. Indeed, any further signalling by the destroyers might well have harmed the Oregon by diverting the attention of her officers to the destroyers and away from the New Mexico.
Little need be said as to the conduct of the naval vessels after the collision. Indeed, appellants do not seem seriously to stress this point. The search-light of the New Mexico disclosed the damage to the Oregon. For about a,n hour, the naval vessels manoeuvered in the vicinity of the collision. The Sims was ordered to escort the Oregon as long as was necessary, when the Oregon decided to proceed on her way. And the Sims remained with the Oregon until about 10:30 A.M., when Captain Gillette of the Oregon informed the Sims that the assistance of the Sims was no longer needed. Whereupon, the Sims rejoined the formation of the other naval vessels.
We must sustain the District Judge’s conclusion that the Captain of the Oregon was free from negligence in either his decision to make for the port of Boston or his seamanship in attempting to carry out that decision. At about 10:30 A.M. the Oregon was off the Nantucket Shoals Lightship, she was making good speed, practically all water had been pumped from her holds and conditions of sea and weather were favorable. And Captain Gillette had no reason to anticipate the unfavorable change in the weather which began about an hour later, and steadily became worse until the sinking of the Oregon in the early afternoon.
For the reasons hitherto set out, the decree of the District Court is affirmed.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CUMMINGS, Circuit Judge.
These appeals were generated by a suit for refund of federal income taxes assessed and collected for the years 1958 through 1963. After a jury trial, judgment was entered for taxpayer in the sum of $68,194.39, plus statutory interest, with each party to pay its own costs. The taxpayer was considered entitled to capital gains treatment on the gain from the sale of Florida land during 1958 and the years 1960 through 1963 because the jury found that the property sold during those years was not held primarily for sale to customers in the ordinary course of business. On the other hand, as to 1959, the jury’s verdict was in favor of the Government on the ground that the property sold in 1959 was held primarily for sale to customers during the ordinary course of business. The Government appealed with respect to all years except 1959, and taxpayer has cross-appealed with respect to that year.
In 1947, taxpayer, a resident of Ev-anston, Illinois, retired and purchased a winter home in Clearwater, Pinellas County, Florida, but his permanent residence continued to be in Evanston. From 1947 to 1952, he purchased 2,300 acres of land in two large tracts from private parties and 5,700 lots principally from the State of Florida at tax sales, all in Pinellas County. He hoped for a dramatic increase in their value because an anticipated population increase would cause a substantial demand for the land he had purchased in a depressed market in a limited peninsular area.
Taxpayer testified that these properties were purchased for investment rather than for a land-sale operation. He did not notice the land for sale nor place nor authorize the placing of signs thereon, nor otherwise promote its sale. He did not give brokers listings for its sale. He only held a broker’s license during part of 1951 and 1952. He made no improvement on the land and voted against special assessments for improvements. If he made any effort to sell his property, he could have sold it all in three to five years. The amount of land he sold as a reluctant seller averaged less than 1% of his holdings per year, and he received a price two or three times above what other owners obtained. During the critical 1958-1963 period, taxpayer was not even usually in Florida except during part of the winters of 1958 and 1959. The unsolicited offers to purchase his land were therefore forwarded to him in Illinois after the interested purchasers ascertained ownership from Pinellas County land records.
Taxpayer accepted offers where the price would reflect appreciation at least equal to what he considered the investment value. Although his average purchase price of lots sold during the taxable years was approximately $90, the average selling price was approximately $1650. During the same six-year period, 20% of the lots and 5 parcels of acreage, accounting for approximately one-third of his gain during the period, resulted from sales made under threat of condemnation.
In 1962, after a jury trial, taxpayer won a similar tax refund suit with respect to Pinellas County land sold in 1951 and 1952. Thereafter, the Government asserted deficiencies against taxpayer for 1958 through 1963, on the same ground as in the 1962 suit, namely, that his gain was taxable as ordinary income because he held the property for sale to customers in the ordinary course of business.
The following table reveals the basic facts of the 1958-1963 land sales:
The Government introduced evidence of the taxpayer’s sales of real estate in Pinellas County during 1953 through 1957, showing, for example, that in 1953, 142 lots and one parcel had been sold in 32 transactions, and in 1957, 60 lots and 3 parcels had been sold in 31 transactions. Testimony presented by the Government also showed that a seller’s market existed with respect to Pi-nellas County land in 1958 through 1961, making extensive advertising unnecessary. One of the Government’s witnesses was Thomas Black, who had managed taxpayer’s Florida real estate operations from 1947 through 1951. Black, who left Florida in 1952, had been the Government’s principal witness in the 1962 trial. Perhaps because Black testified about an earlier period, the jury must have disregarded or discounted the bearing of his testimony about taxpayer’s prior extensive sales campaigns with respect to his Pinellas County real estate.
Under Section 61 of the Internal Revenue Code of 1954, taxpayer was required to report as a part of his income all “Gains derived from dealings in property.” Such gains are entitled to capital gain treatment if the profits are from the sale of capital assets. Under Section 1221(1) of the Code, property is excluded from the definition of a capital asset if it is “property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business.” Therefore, the jury issue here was whether the land sold in 1958-1963 was held by taxpayer as an investment or primarily for sale to customers in the ordinary course of his trade or business. In the leading ease of Malat v. Riddell, 383 U.S. 569, 572, 86 S.Ct. 1030, 1032, 16 L.Ed.2d 102, the Supreme Court explained that the purpose of Section 1221(1) of the Internal Revenue Code of 1954 was to differentiate between profits and losses “arising from the everyday operation of a business” and “the realization of appreciation in value accrued over a substantial period of time.” The Court rejected the Government’s view that “primarily” means a “substantial” purpose and instead held it means “of first importance” or “principally.” In the present case, applying the Malat test, the jury in effect concluded that except in 1959, taxpayer’s gains did not arise “from the everyday operation of a business.” The Government apparently recognizes that this type of case is largely factual (Nadalin v. United States, 364 F.2d 431, 439, 176 Ct.Cl. 1032 (1966)) and does not claim that the jury’s adverse verdicts as to the five taxable years lost by the Government were unsupported by the evidence. Instead, it has launched a highly technical attack on certain of the instructions to the jury and has charged that the trial court erroneously applied the collateral estoppel doctrine.
Instructions
The Government does not quarrel with most of taxpayer’s instruction No. 10(3) telling the jury that one of the factors to be considered in determining whether the plaintiff’s land was held primarily for investment or for sale to customers in the ordinary course of a trade or business was the frequency and continuity and number of plaintiff’s properties sold in each year involved in the lawsuit. However, the Government objects to an addendum to this instruction that the jury should consider the sales activity “in relation to his [taxpayer’s] total holdings.” In Chandler v. United States, 226 F.2d 403, 404 (7th Cir. 1955), we noted that of an original holding of a million acres of Texas land, taxpayers had engaged in 536 separate sales transactions in selling 290,000 acres for $5,000,000 in the taxable years involved. This Court stated (at page 406):
“But the market place is hardly glutted with prospective buyers clamoring for million acre tracts. It seems odd to penalize this taxpayer because it actively sought to dispose of these holdings. Defendant would insist that [taxpayer] Capitol sit idle, wishing for a buyer or buyers, under the threat that any selling effort would result in deprivation of capital asset treatment.”
Similarly, in Goldberg v. Commissioner of Internal Revenue, 223 F.2d 709, 712, 713 (5th Cir. 1955), the Fifth Circuit, reversing a Tax Court decision that houses sold were held for sale to customers in the ordinary course of trade or business, adverted to the number of units in the entire project and mentioned that the project was a large one. Thus of the 111 housing units, the court noted that only 2 had been sold in 1943 and 2 in 1944, and only 17 in 1945, although 90 were sold in 1946, the taxable year. 223 F.2d at 711. On the other hand, we agree with the Government that the retention of massive holdings by large-scale real estate operators of course does not insure capital gains treatment for the tracts sold. But we cannot say that the seven factors admittedly properly embodied in instruction 10 were fatally infected by the explanatory comment as to the third factor that the jury should consider the frequency, continuity and number of taxpayer’s sales “in relation to his total holdings,” particularly since the judge told the jury that “No single one of the [seven] factors outlined, standing alone, is controlling * *
The Government next complains that in instruction 10(3) the trial court told the jury to consider “the frequency and continuity and number of plaintiff’s properties sold in each year involved in this lawsuit” when determining whether plaintiff’s land was held primarily for investment or for sale to customers in the ordinary course of trade or business (emphasis supplied). The Government complains that the jury should have been permitted to consider sales in prior years. However, no objection was made to this portion of instruction 10(3), so that we may not now consider it. Fed.R.Civ.Proc. 51. Moreover, the instruction did not confine the jury to the taxable years, and indeed the Government was permitted to introduce pertinent evidence with respect to the five years immediately preceding the years in suit.
The Government also asserts that the district court should have given the jury the following instruction:
“In determining whether the sales activity over a period of time was continuous, you may look not only to the sales made during the years in question, namely, 1958 through 1963, but also to the sales made in the prior years, namely, 1948 through 1957.”
However, that instruction assumes that there was “sales activity” on the part of • the taxpayer and was therefore improper.
In instruction 10 as to whether the plaintiff’s land was held primarily for sale to customers in the ordinary course of trade or business, the fourth factor submitted for the jury’s consideration was “whether the plaintiff replaced the property sold with additional and continuing purchases of real estate.” As to this factor, the court gave an explanatory comment that the jury “should consider the frequency and continuity of plaintiff’s purchases of property during the years in question in relation to his sales during those years * * *.” The Government complains that the court should have added to this instruction that “A taxpayer may hold enough land to do a large business without having to buy any more.” The suggested addition implies taxpayer’s land holdings alone might constitute business activity. Furthermore, the size of the business is insufficient to transfer a taxpayer’s land activities into a business. See Chandler v. United States, 226 F.2d 403, 406 (7th Cir. 1955). Therefore, it was unnecessary to add the sentence requested by the Government.
The Government’s last complaint about instructions is the court’s failure to give the following portion of its requested instruction 18:
“Where there is a seller’s market, that is where purchasers seek out the seller, it is not essential that active sales promotion be demonstrated in order to prove that the plaintiff is engaged in the business of selling real estate.”
It is true that where other factors cumulatively demonstrate that a taxpayer is engaged in the business of selling real estate, the absence of sales promotional activity due to the existence of a seller’s market will not overcome the thrust of the other indicators. Patrick v. Commissioner of Internal Revenue, 275 F.2d 437, 439 (7th Cir. 1960). On the other hand, where other factors indicate that real estate is held primarily for investment purposes, the absence of any need to advertise and solicit purchases because of the market condition will not rebut the investment-holding conclusion. Scheuber v. Commissioner of Internal Revenue, 371 F.2d 996, 998-999 (7th Cir. 1967). These statements are simply corollaries of the principle that of the seven relevant factors, no single one is controlling. Patrick v. Commissioner of Internal Revenue, supra; Scheuber v. Commissioner of Internal Revenue, supra, 371 F.2d at 998. The fifth factor given for the jury’s consideration in instruction 10 was “the extent of the sales, development and promotional activity of the plaintiff.” Later in instruction 10 the trial court told the jury that “No single one of the factors outlined, standing alone, is controlling in determining whether the property was held as a capital asset and was being liquidated at the time of sale, or was being held primarily for sale to customers in the ordinary course of the trade or business of selling real estate.” This states and satisfies the law. The requested instruction 18 is superfluous and in its superfluity, as well as in its phraseology, it tends to give undue significance to the existence of a seller’s market, over which the taxpayer had no control. Therefore, it was properly rejected.
Despite the fact that we might have initially ruled differently than the trial judge with respect to the instructions, our study of the instructions as a whole reveals that the jury was properly told to consider appropriate factors in determining if the gains were from a business or from long-term appreciation, and that no one factor was controlling. This was sufficient. See 3B Mertens, Law of Federal Income Taxation, § 22.15. The fact that the jury found for the Government in 1959 tends to indicate that the instructions as a whole were fair to the Government, and more is not required. Garrett v. Campbell, 360 F.2d 382, 386 (5th Cir. 1956).
Collateral Estoppel
Over the Government’s objection that it was irrelevant and immaterial, taxpayer was permitted to introduce a certified copy of the judgment and pleadings in the 1962 case in which a jury had found that in 1951 and 1952 his Florida property was not held primarily for sale to customers in the ordinary course of business. The Government cannot seriously argue that information as to the sales in 1951 and 1952 was irrelevant and immaterial, for the Government itself succeeded in introducing evidence as to like sales from 1953 to 1957. The trial court subsequently instructed the jury that the 1962 jury verdict favoring taxpayer as to the years 1951 and 1952 was “a factor you may take into consideration in determining whether the plaintiffs [taxpayer] held the property sold in the years 1958-1963 as a long-term investment or held primarily for sale to customers.” Obviously the jury did not feel boxed in by this instruction, for it found for the Government in 1959. Nevertheless, the Government asserts that this instruction on the 1962 judgment that was admitted into evidence amounted to the improper imposition of the doctrine of collateral estoppel against it as to the taxable years 1958-1963. Collateral estoppel was not really involved since the prior judgment foreclosed no litigable issue in this case and the relevant facts are separable. Commissioner of Internal Revenue, v. Sunnen, 333 U.S. 591, 601, 68 S. Ct. 715, 92 L.Ed. 898; Jackson v. King, 223 F.2d 714, 718-719 (5th Cir. 1955). The question is one of the probative significance of the judgment. The trial judge instructed the jury that the 1962 determination was merely “a factor” to consider in its deliberations as to 1958-1963. This was appropriate, for even the Government concedes that the 1962 judgment represented a final determination of the fact that the 48 lots sold in 1951 and the 74 lots sold in 1952 were not held primarily for sale to customers in the ordinary course of business. In making its decision as to 1958 and subsequent years, the jury could properly start with the proposition that the taxpayer held lots sold in 1951 and 1952 as an investment. See Thomas v. Commissioner of Internal Revenue, 324 F.2d 798, 799-800 (5th Cir. 1963); Ryman v. Tomlinson, 56-2 USTC ¶ 9741 (S.D.Fla. 1956); Fritz v. Thompson, 38 T.C. 153, 164-166, affirmed, 323 F.2d 122 (5th Cir. 1963); see also Kortz v. Guardian Life Ins. Co., 144 F.2d 676, 678 (10th Cir.), certiorari denied, 323 U.S. 728, 65 S.Ct. 63, 89 L.Ed. 584 (1944). Additionally, the Government in effect complains of a double standard because the trial court refused to admit proffered evidence as to the level of taxpayer’s sales activity in years prior to 1952. But the ground of remoteness justified the trial court’s refusal to receive evidence as to the taxpayer’s sales activities for the years 1948-1952.
Taxable Year 1959
Taxpayer argues that the jury verdict may not stand in favor of the Government as to his gains in 1959. However, the jury would be justified in considering that the number of lots sold and the number of transactions were much higher in 1959 than in the other years in question. The profit was higher than in any year except 1962, which involved only 7 lots, 5 transactions and 3 parcels. See Table supra. Even a witness for the taxpayer agreed that a seller’s market existed during 1959, thus making extensive advertising unnecessary in that year. Moreover, the Government submitted impeachment evidence showing unreported and under-reported 1959 income as to four deeds, possibly totalling as much as $30,800. In our view, the evidence as to 1959, together with all reasonable inferences which might be drawn therefrom, when viewed in the light most favorable to the Government, warranted submission of the case to the jury. Therefore, the jury verdict may not be disturbed. Appleman v. United States, 338 F.2d 729, 730 (7th Cir. 1964). Since the Government has not shown that the verdict as to 1959 represents a compromise, we would not be warranted in setting it aside on such speculation. Cf. National Fire Ins. Co. of Hartford v. Great Lakes Warehouse Corp., 261 F.2d 35, 38 (7th Cir. 1958); 6A Moore’s Federal Practice, ¶ 59.08 [4] pp. 3793-3794.
The judgment for all six taxable years is affirmed, each party to bear its own costs.
. Carl E. Koch will be referred to as the taxpayer, for Paula Kocli is a party merely through having signed a joint income tax return for the years in question.
. This test is akin to the dominant motivation test just adopted by the Supreme Court as to whether a bad debt is a business or nonbusiness obligation. United States v. Genares, 405 U.S. 93, 92 S.Ct. 827, 31 L.Ed.2d 62; see also Niblock V. Commissioner of Internal Revenue, 417 F.2d 1185 (7th Cir. 1969).
. See note 4 infra.
. The fifth factor, together with the court’s explanatory comment, covered two different activities, vie. (1) developments and improvements and (2) advertising and selling activities, thus presenting seven factors in all to the jury.
. Therefore, there was no conflict with The Evergreens v. Nunan, 141 F.2d 927, 931 (2d Cir. 1944), where Judge Learned Hand observed that “no fact decided in the first [suit] * * * conclusively, establishes * * * anything except a fact ‘ultimate’ in that [second] suit.”
. Although taxpayer prevailed as to five years, the Government prevailed as to 1959, one of the two significant years. In such circumstances, it would be inappropriate to disturb the trial court’s discretion in taxing costs. See 6 Moore’s Federal Practice, ¶ 54.70 [4] and [5].
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
PER CURIAM.
Oral argument in the instant case was heard by this panel on December 8, 1981. On January 5, 1982, we filed an opinion in which we dismissed the appeal for lack of appellate jurisdiction. We subsequently granted rehearing before the panel, and we now file this superseding opinion, in which we conclude that appellate jurisdiction exists. By order of this court dated February 21, 1982, the panel’s opinion filed and judgment entered on January 5, 1982 has been vacated. For the reasons stated below, we will affirm the judgment of the district court.
FACTS
Api>ellant Gregson & Associates Architects brought suit in the federal district court for the District of the Virgin Islands seeking relief on contract and quantum meruit theories for architectural services it claimed to have provided to the Government of the Virgin Islands. The district court found that no valid contract existed, and that quantum meruit recovery was unavailable because no benefit was shown to have accrued to the government. Gregson now appeals the judgment entered in favor of the defendant Government of the Virgin Islands.
JURISDICTION
The threshold issue is that of timeliness of this appeal. Fed.R.App.P. 4(a)(1) provides in part:
In a civil case in which an appeal is permitted by law as of right from a district court to a court of appeals the notice of appeal . .. shall be filed with the clerk of the district court within 30 days after the date of entry of the judgment or order appealed from ....
Judgment was entered by the district court in this case on February 26, 1981. The notice of appeal was not filed until April 6, 1981, more than thirty days after this judgment. Appellant contends, however, that the district court’s order of February 26, 1981 did not constitute a “judgment” within the meaning of Rule 4 since the court’s order did not meet the requirements of Fed.R.Civ.P. 58. Rule 58 provides in part that “[ejvery judgment shall be set forth on a separate document.”
In the instant ease, the judgment of the district court was set forth within a four-page document including a memorandum opinion by the court. The district court’s order of February 26 carried the heading “MEMORANDUM OPINION AND JUDGMENT.” On the last of the four pages of the document there appeared a separate heading, “JUDGMENT,” under which the judgment of the court was stated. The document was entered on the court’s docket. Furthermore, appellant admitted at oral argument that it had understood the February 26 order as containing the judgment of the district court. Indeed, the very notice of appeal at issue here, filed by appellant, provides:
NOTICE IS HEREBY GIVEN that GREGSON & ASSOCIATES ARCHITECTS, Plaintiff/Intervenor-Appellant, hereby appeals to the Third Circuit Court of Appeals from the Judgment entered in this court on the 26th day of February, 1981.
In United States v. Indrelunas, 411 U.S. 216, 93 S.Ct. 1562,36 L.Ed.2d 202 (1973), the Supreme Court discussed the purpose of the separate document requirement:
The reason for the “separate document” provision is clear from the notes of the advisory committee of the 1963 amendment. [Citation omitted.] Prior to 1963, there was considerable uncertainty over what actions of the District Court would constitute an entry of judgment, and occasional grief to litigants as a result of this uncertainty.
Id. at 220, 93 S.Ct. at 1564. The provision, the Court held, was a “ ‘mechanical change’ that must be mechanically applied to avoid new uncertainties as to the date on which a judgment is entered.” Id. at 222, 93 S.Ct. at 1565.
Five years later, in Bankers Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978), the Court reiterated the purpose behind the rule:
The sole purpose of the separate-document requirement, which was added to Rule 58 in 1963, was to clarify when the time for appeal ... begins to run.... The separate-document requirement was thus intended to avoid the inequities that were inherent when a party appealed from a document or docket entry that appeared to be a final judgment of the district court only to have the appellate court announce later that an earlier document or entry had been the judgment and dismiss the appeal as untimely.
Id. at 384-85, 98 S.Ct. at 1119-20. While ostensibly adhering to the Indrelunas requirement of mechanical application of the separate document rule, the Bankers Trust court examined the facts of the case before it and ruled that appellate jurisdiction existed even though no separate document had been filed. The Court noted that “the District Court clearly evidenced its intent that the opinion and order from which an appeal was taken would represent the final decision in the case. A judgment ... was recorded in the clerk’s docket.” 435 U.S. at 387, 98 S.Ct. at 1121. Furthermore, the Court stated, the appellee obviously did not object to the taking of an appeal in the absence of a separate judgment. Under the circumstances, the Court deemed the parties to have waived the separate document requirement. Id. at 387-88, 98 S.Ct. at 1121-22.
Similarly, in International Brotherhood of Teamsters Local 249 v. Western Pennsylvania Motor Carriers Association, 660 F.2d 76 (3d Cir. 1981), we refused to require literal compliance with the separate document requirement of Rule 58. Rather, “[o]ur review of the record satisfie[d] us that the district court intended its ... order to serve as its judgment in the instant case.” 660 F.2d at 80. Thus, in Teamsters Local 249, as in Bankers Trust, the purposes of the separate document rule would not be served by its application.
The separate document requirement was clearly intended to rescue an appellant who fails to recognize the final judgment of the district court as a final judgment. But appellant does not claim that he was uncertain about whether the February 26 order was the district court’s final judgment. To the contrary, appellant asserts that he “incorrectly” believed that the order was the final judgment. Appellant was not incorrect. The document was in fact the final judgment; it was docketed and treated as such by the court and by both parties. Under these particular facts, it would seem that no purpose of the separate document rule would be served by allowing appellant more than the thirty days he thought he had.
Nevertheless, we are constrained by the Supreme Court’s decision in Indrelunas to apply the separate document requirement in this case. The court of appeals in Indrelunas had engaged in an analysis of the purpose of the requirement; it then examined the facts surrounding the Government’s filing of the notice of appeal in that case:
This Notice, filed some eight months pri- or to the February motion for entry of judgment, indicates to this court that the government believed the case to be ripe for appeal following the District Court’s directive that entry of judgment be made and there be judgment on the verdicts as so entered. In this case there was nothing left to be done by the court and everyone involved so understood the judgment to be final. It would, therefore, be somewhat absurd to hold that although all the parties involved understood the case to be at an end, the time limits for appeal would not begin to run until some undetermined point in the future when a formal document was included in the file. In our opinion, the crucial element is that the parties understood the original decision to be final. This understanding, together with the entry of judgment on the docket, considered in context with the foregoing interpretation of the present Rule 58, Fed.R.Civ.P., lead us to the conclusion that the government’s appeal in this case is untimely. A holding to the contrary would, in our opinion, allow undue advantage to be taken of a revision in Rule 58 which was intended to clarify and speed-up the entry of judgment, not provide an avenue for prolonging litigation. For example, if we were to find that such a formal document is an absolute necessity in every case, there would undoubtedly be cases that could remain appealable ad infinitum, notwithstanding the fact that all parties involved believed the case to be at an end. We, therefore, dismiss the defendant’s appeal.
Foiles v. United States, 465 F.2d 163, 168-69 (7th Cir. 1972), rev'd sub nom. United States v. Indrelunas, 411 U.S. 216, 93 S.Ct. 1562, 36 L.Ed.2d 202 (1973) (footnote omitted). The reasoning of the Seventh Circuit applies with equal force to the facts in the instant case; however, it was exactly this kind of “case-by-case tailoring” of the separate document requirement which was expressly rejected by the Supreme Court when it reversed the court of appeals in Indrelunas.
Thus, because the final judgment of the district court was not entered on a separate document, the thirty-day period prescribed by Fed.R.App.P. 4(a)(1) never began to run. Appellant’s notice of appeal cannot be untimely, and we conclude that appellate jurisdiction exists in this case.
APPELLANT’S CLAIMS
The district court, sitting without a jury, found that no valid contract existed between appellant and the Government of the Virgin Islands, and, because no benefit was shown to have accrued to the government, that quantum meruit recovery was unavailable. Our review of the record supports the district court’s conclusions.
Therefore, the judgment of the district court will be affirmed.
. Our review of the relevant case law convinces us that this order does not satisfy the Rule 58 requirement that “[e]very judgment shall be set forth on a separate document.” See, e.g., Calmaquip Engineering West Hemisphere Corp. v. West Coast Carriers Ltd, 650 F.2d 633, 635-36 (5th Cir. 1981); Caperton v. Beatrice Pocahontas Coal Co., 585 F.2d 683, 689 (4th Cir. 1978).
. The docket entry reads: “Memorandum opinion and judgment entered by Clarence C. Newcomer, sitting by designation granting judgment on behalf of the defendant Government of the Virgin Islands, filed.” The docket entry is dated February 26, 1981.
. Appellant’s Petition for Rehearing at 8.
. 411 U.S. at 221, 93 S.Ct. at 1564.
. As discussed supra, the lack of a separate document does not preclude us from recognizing the existence of an appealable final judgment. See, e.g., Bankers Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978); International Brotherhood of Teamsters Local 249 v. Western Pennsylvania Motor Carriers Ass’n, 660 F.2d 76 (3d Cir. 1981).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION
PER CURIAM:
The detailed history of the subject controversy, to this time, is carefully set forth in four reported opinions of the District Court. 330 F.Supp. 536 (N.D.Cal.1971); 340 F.Supp. 1351 (N.D.Cal.1972); 360 F.Supp. 733 (N.D.Cal.1973); and 369 F.Supp. 77 (N.D.Cal.1973).
The suit, a civil rights class action instituted pursuant to 42 U.S.C. §§ 1981 and 1983, was originally filed in the District Court on June 24, 1970. The appel-lees sought to remedy a condition that then existed, i. e., that of the 1800 firemen then employed by the San Francisco, California Fire Department, only four were blacks. In its first opinion, 330 F.Supp. 536, the court found that the written examination employed by the Fire Department to select new firemen from job applicants had a discriminatory effect. Concluding, however, that the discriminatory practice was not shown to have been intentional or invidious, the court declined to issue an injunction but reserved the power to make any such additional orders as it might deem necessary in the future. This disposition was apparently induced, in part, because of the expressed willingness of the appellants to so modify their previously existing selective process so as to eliminate its discriminatory effects. The principal object was the revision of the appellant’s previously existing “Fireman H-2” written examination so as to make then truly job-related. Delay after delay ensued. The court eventually remarked that “. . . the San Francisco Civil Service Commission has three times failed . to demonstrate, as required by law, that its challenged Fireman H-2 written examinations have been truly job-related.” 369 F.Supp. at 79. The court remarked further:
“The Commission’s dilatoriness in these matters and apparent stubborn insistence upon arguments and alternatives which this court has repeatedly found unacceptable, have created an intolerable situation; the adequacy of Fire Department manpower for the safety of the City is coming into question . .
369 F.Supp. at 80.
In its fourth opinion, from which the above quotations are extracted, the court found that of the then existing 512 qualified applicants for Fireman H-2 positions, 118 were of so-called minority derivation and 394, non-minority. The court thereupon decreed that pending a further Order, the Commission should “forthwith fill existing Fireman H-2 vacancies — one (1) qualified minority applicant and one (1) qualified non-minority applicant alternatively from sublists of qualified minority and qualified non-minority applicants — until the sublist of qualified minority applicants has been exhausted.” 369 F.Supp. at 81. It is from this Order that the appellants appeal.
The appellees cross-appeal from the District Court’s subsequent refusal to make its temporary one-to-one hiring arrangement permanent.
The appellants did not seek a stay of the District Court’s Order pending appeal. Rather, they complied with the Decree’s directive. We learned this for the first time during the oral argument of the cause. We suggested from the Bench that the appeal had become moot. The only response of the appellants, as well as of the Intervenor, to our suggestion was that the controversy remained alive because 10 of the 118 minority applicants had declined offers of Fireman H-2 positions that had been tendered to them by the appellants. This response to the court’s suggestion of mootness is not acceptable. The District Court’s Order should be fairly interpreted as requiring no more than bona fide offers of employment to the 118 applicants for the vacant Fireman H — 2 positions — not the acceptance of the offers by all of the qualified minority applicants. This being our interpretation of the District Court’s Order, we conclude that there remains no live and existing controversy in respect to the particular Order from which the appellants appeal.
On this appeal, the appellants assert that the District Court’s Order mandates the employment of a racial preference in violation of the equal protection clause of the Fourteenth Amendment to the United States Constitution. Since the District Court’s Order has been fully effected, however, no decision that we could now render as to the Order’s constitutionality could alter the parties’ rights and obligations under the Order. See DeFunis v. Odegaard, 416 U.S. 312, 94 S.Ct. 1704, 40 L.Ed.2d 164 (1974); North Carolina v. Rice, 404 U.S. 244, 92 S.Ct. 402, 30 L.Ed.2d 413 (1971). It is purely speculative as to whether the appellees might seek, or the District Court might grant, an order of similar effect in the future. It is more likely, we think, given the passage of time, that the appellants will have performed an acceptable job-relatedness validation of their already-revised written examination for firemen applicants. Therefore, such extraordinary relief as that contained in the Order here appealed, aimed solely at the dilatory tactics of the appellants and the critical shortage of firemen that existed in 1973, will, in all probability, be unnecessary. See SEC v. Medical Committee for Human Rights, 404 U.S. 403, 92 S.Ct. 577, 30 L.Ed.2d 560 (1972). Accordingly, the principal appeal is dismissed as moot, and we express no opinion as to the constitutional validity of the District Court’s Decree.
As to the cross-appeal, a District Court, sitting in equity, is vested with the widest latitude in exercising its discretion in respect to the vacating or modification of an equitable decree. From the record before us we are not persuaded that the court clearly abused its discretion in denying to the cross-appellants, at the time they made their application for permanent relief, the modified decree which they sought. We therefore affirm the Order that the cross-appellants here challenge.
All parties to the appeal and cross-appeal, including the intervening union, shall bear the costs which they, respectively, have incurred in connection with the proceedings in this court.
So ordered.
. It is recited in one of the District Court’s opinions that at the time of the 1970 census, San Francisco’s racial composition was 43 percent minority (15 percent black and 28 percent other minority). 369 F.Supp. at 79 n. 1.
. Since a finding of mootness would deprive our court of jurisdiction, there no longer being an actual “case or controversy,” U.S.Const. art. Ill, § 2, we are obligated to consider the question of mootness, even though it was not raised by the parties. See Sosna v. Iowa, 419 U.S. 393, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MINTON, Circuit Judge.
This is a suit to enjoin the infringement of a patent and to recover damages therefor; and in the alternative, for the same relief for alleged unfair competition. The trial court found the patent invalid and the charges as to unfair competition not' sustained, and dismissed the complaint. The plaintiff appeals.
The first question we are required to decide is as to the validity of the patent. If the patent is valid, infringement is admitted.
The patent No. 126,548 was issued April 8, 1941, to John W. Wilson on his application filed February 4, 1941, and the plaintiff is now the owner thereof. The term of the patent is for three and one-half years, and covers a design for a lamp table known in the plaintiff’s line of merchandise as No. 510. In the application for the patent, the applicant amended the dominant features clause therein to read: “The dominant features of the design comprise a table provided with a top having rolled ends, the sides below the top having lower edges that converge toward the rolled ends beginning at a medial point, there being curved legs that extend downwardly from said top which are provided with carved motifs at their upper ends.”
The Patent Office called attention to Furniture Age, a trade publication, of February 1940, and a table which the plaintiff was then manufacturing, and advertising and offering for sale in this publication. This was a cocktail table, No. 456. The Patent Office rejected the application on February 18, 1941 for the following reason: “The design is lacking in patentable invention as it involves a mere modification of the top and legs of the tall table along the lines clearly taught in the low table of the publication reference.”
The Patent Office also recommended that the dominant features clause be eliminated. On March 6, 1941, applicant amended his application by cancelling out the dominant features clause, and raised the question that although the issue of Furniture Age in question was the February 1940 issue, the date of this issue was not conclusive proof that it was actually published more than a year before the filing date of the application, February 4, 1941.
The Patent Office responded with a copy of Furniture Age of January 1940 with the same advertisement in it, and again advised the elimination of the dominant features clause, stating:
“The present ‘dominent (sic) features’ clause should accordingly be canceled or amended so as to confine it to a new feature or features which distinguish it in an ornamental sense from the cited art. * * *
“As presented, the design is lacking in patentable invention as it involves a mere modification of the top and legs of the tall table along the lines clearly brought out in the low table of the January, 1940 ‘Furniture Age’ publication reference.”
The Patent Office had overlooked the applicant’s amendment of March 6, 1941, eliminating the dominant features clause, but it nevertheless pointed out the unpatentability of the design. The Patent Office, after having had called to its attention the elimination of the dominant features clause, granted the patent.
If the application with the statement of the dominant features of the design in it spelled unpatentability because they read upon a design that was public property, it is difficult for us to understand how the striking out of the statement of the dominant features makes it patentable. It is apparent that the dominant features, the essence of the design of lamp table No. 510, read squarely upon and are the dominant features of cocktail table No. 456. In other words, lamp table No. 510 is cocktail table No. 456 with a shorter, narrower top and longer legs, and with a shelf about half-way between the top and the floor. Nothing is claimed for the shelf, and could not be, as it is as old as the type of table itself.
Was this “invention” ?' We think not. Design patents, like mechanical patents, must show originality and the exercise of inventive faculty. It is not sufficient to take old designs or forms and adapt them to new purposes. As we said in Howell Co. v. Royal Metal Mfg. Co., 7 Cir., 93 F.2d 112, 113:
“To entitle a party to the benefit of the statute, 35 U.S.C.A. § 31, the device must not only be new, but inventively new. The readaptation of old devices or forms, however convenient, useful, or beautiful they may be in their new roles, is not invention. Smith v. Whitman Saddle Co., 148 U.S. 674, 13 S.Ct. 768, 37 L.Ed. 606.
“We are of the opinion that the present case comes within the rule thus announced, and that plaintiff’s particular redesign or recreation exhibited no invention. In view of the prior art, only the ordinary skill of a "designer of chairs was necessary, in order to achieve the design of the patent.”
Again, in S. Dresner & Son, Inc., v. Doppelt et al., 7 Cir., 120 F.2d 50, 51, we stated: “By the terms of the present Act patentable design for an article of manufacture must be characterized by an invention of a new, original and ornamental design. The mere production of such a design is not sufficient. The word ‘produced’ which appeared in the earlier enactments has disappeared from the present Act, and there is no authority to substitute it for the word ‘invented,’ and thereby qualify the usual concept of invention. However, the words ‘invented’ and ‘new’ and ‘original’ must be construed together in applying the usual rule that there must be an exercise of inventive genius, which precludes the grant of patent monopoly upon the exercise of mere skill of an ordinary designer who is chargeable with knowledge of the prior art.”
The plaintiff did not invent the design of the lamp table No. 510. It produced, it from the prior art design of cocktail table No. 456. The reducing of the size of the table, lengthening the legs and putting in the shelf were the exercise of the mere skill of an ordinary designer in the trade. The ideas were old and at hand; the skilled designer had only to use them. The use made of them in the instant case did not introduce a new creation. The trial court properly held that the patent was invalid.
This brings us to a consideration of the second phase of the case: Was there unfair competition? The defendant frankly admits it copied the plaintiff’s table. If the plaintiff never had a patent, then the mere act of copying did not amount to unfair competition. After a patent expires, one may copy it. It then belongs to the public. The patentee’s monopoly is gone. Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 16 S.Ct. 1002, 41 L.Ed. 118. If one never had a patent, the situation is exactly the same. Copying a design not patentable is not unfair competition. Sinko v. Snow Craggs Corp., 7 Cir., 105 F.2d 450.
There is no evidence that the defendant represented its goods as the goods of the plaintiff. In other words, there was no act of “palming off” by the defendant. It is argued by the plaintiff that even though the patent was invalid, the defendant by copying it had put it in the power of its dealers to “palm off” .the defendant’s table as the plaintiff’s — in other words, that the defendant was guilty of “contributory” unfair competition.
It is admitted that the Illinois law governs this issue. We have found no case decided by Illinois courts or elsewhere that recognizes the existence of this novel doctrine of “contributory” unfair competition. If one does what he has a legal right to do, as in the case at bar, copying an article of merchandise that is not covered by a valid patent, but does not represent the copies as the product of the party making the original and does nothing in the merchandising of the goods to induce one’s customers to engage in “palming off” or to indicate to them how they may “palm off” the copy as the product of the original maker, such conduct is not illegal and does not amount to unfair competition, nor could it be stretched into the novel doctrine of “contributory” unfair competition. Even in contributory infringement of a patent, the infringer can be liable as such only when he knowingly participates in the infringement. Mid-Continent Investment Co. v. The Mercoid Corporation, 7 Cir., 133 F.2d 803.
The essence of unfair competition is fraud. Hughes v. West Publishing Co., 225 Ill.App. 58, 66; Ambassador Hotel Corp. v. Hotel Sherman Co., 226 Ill.App. 247, 265. And like fraud, it is never presumed, and its existence must be established by a clear preponderance of the evidence. Ball v. Siegel, 116 Ill. 137, 147, 4 N.E. 667, 56 Am.Rep. 766; Stevens-Davis Co. v. Mathers Co., 230 Ill.App. 45.
Since there was no actual “palming off” by the defendant, or evidence that it knowingly did anything to induce or assist another to do so, there can be no unfair competition unless the plaintiff has clearly established that its table had acquired in the trade a secondary meaning, in which event the mere copying may be unfair competition. To establish secondary meaning, the article itself must be so clearly identified with its source that its supply from any other source is clearly calculated to deceive the public and lead it to purchase the goods of one for that -of another. Sinko v. Snow Craggs Corp., 7 Cir., 105 F.2d 450. To acquire a secondary meaning in the minds of the buying public, an article of merchandise when shown to a prospective customer must prompt the affirmation, “That is the article I want because I know its source,” and not the negative inquiry as to, “Who makes that article ? ” In other words, the article must proclaim its identification with its source, and not simply stimulate inquiry about it. Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 83 L.Ed. 73.
The plaintiff'has been in the business of manufacturing high-grade furniture for seventy years, and enjoys a good reputation. Table No. 510 first appeared in April, 1940. It had no marks of identity as to the source, except a plate underneath the top and the number 510 branded into the bottom of the shelf. In the year and a half the table was on the market, the plaintiff had been able to market less than a thousand of them, most of which were sold in New York. There was evidence of two or three dealers that a few customers came in and asked for Zangerle & Peterson lamp tables and described the design. While this tends to show that these few customers knew the plaintiff made such a table, it does not show whether these customers desired merely a lamp table of this design, or one made by Zangerle & Peterson. There was also evidence that one customer saw the plaintiff’s table in a Fifth Avenue shop in New York and liked it. She inquired the name of the manufacturer and was told it was Zangerle & Peterson. She shopped around and finally bought two of the defendant’s tables at another place. She did not ask and was not told who manufactured the tables she bought. She picked out the table she liked. Whether it was because of the design or the maker does not appear.
We have considered all of the evidence in this case, and we are satisfied that the trial court’s finding that the plaintiff’s lamp table No. 510 had not acquired a secondary meaning in the trade is not clearly erroneous. In the absence of actual “palming off” or the existence of a secondary meaning in the trade, the copying by the defendant of the plaintiff’s unpatented design did not amount to unfair competition. Where no one has the exclusive right to the use of a design, all may use it with impunity, so long as the public is not misled in the methods of marketing the product. Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 119, 59 S.Ct. 109, 83 L.Ed. 73.
The trial court did not err in entering judgment dismissing the plaintiff’s com-' plaint. The judgment is affirmed.
35 U.S.C.A. § 73.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KALODNER, Circuit Judge.
Three questions are presented by this petition of the National Labor Relations Board for enforcement of its order of August 31, 1945, against the respondent, an Illinois corporation operating a meat packing plant at Jersey City, New Jersey. The Board’s jurisdiction is conceded.
The three questions involved are: (1) whether certain plant clerks and standards department checkers are “employees” within the meaning of the Act; (2) whether the Board could properly certify as the exclusive bargaining representative of a. unit including the plant clerks and checkers a union, of which a coaffiliate represents respondent’s production and maintenance employees, a.nd order respondent to bargain collectively with the union so certified; (3) whether the Board in its discretion xnay require respondent to bargain collectively with the Union which represented a majority of the employees in the certified unit at the time of respondents refusal to bargain, despite the Union’s loss of majority status after respondent failed to bargain for an unbroken period of approximately two years.
The Board’s order was based on findings that respondent, in violation of Section 8(1) and (5) of the Act, refused to bargain collectively with United Packinghouse Workers of America, Local 49-A (C.I.O.), herein called the Union, as the exclusive representative of what the Board determined to be an appropriate unit composed of clerical employees at its Jersey City plant. The Board’s order required respondent to cease and desist from the unfair labor practices found and from any related conduct, to bargain collectively with the Union upon request, and to post notices as hereinafter discussed.
It appears that on December 2, 1943, the Union filed its representation petition under Section 9 of the Act with respect to a group of employees', including plant clerks and standards department checkers. The Trial Examiner of the Board conducted a hearing on February 16, 1944, attended by Iho Union and the respondent. On April 29, 1944, the Board issued a Decision and Direction of Election in which it found that the plant clerks and standards department checkers were not managerial employees as contended by respondent and that these employees, together with certain other employees constituted a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act.
On May 24, 1944, an election was conducted and the Board on June 5, 1944, issued a certificate of representation in which it found that of approximately 29 eligible voters, 20 cast valid votes for the Union and three against it. It may be noted that no objections to the election were filed by the respondent. The certification of the Union as the exclusive bargaining representative of the employees in the unit was in conformity with the provision of Section 9(a) and (c) of the Act.
On November 16, 1944, the respondent advised the Union of (a) its refusal to bargain with it on matters relating to plant clerks, and of (b) its intention to seek Court review of any Board order that might issue because of respondent’s refusal to negotiate. The respondent in doing so took the position that the unit included individuals who were part of management and whose duties were supervisory in character, so that they were not “employees” under the Act; further, that in any event they should not be represented by the same union as the company’s production employees, and finally that the unit was too heterogeneous to be valid. The Union thereupon filed charges that respondent had refused to bargain with it and proceedings were commenced under Section 10(c) of the. Act.
The Board thereupon issued a complaint against the respondent and on March 21 and 22, 1945, hearings were held before a Trial Examiner. At the hearings' upon the complaint, respondent admitted its refusal to negotiate with the Union. On April 6, 1945, the Intermediate Report of the '¡’rial Examiner was filed. The report found that “ * * * the Union was the duly designated bargaining representative of a majority of the employees in the aforesaid bargaining unit * * * ” and was therefore “ * * * the exclusive representative * * It also found that the respondent “ * * * has refused to bargain collectively with the Union as the exclusive representative of its employees in an appropriate unit and has thereby interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act.”
Subsequently, on August 31, 1945, the Board issued its Decision and Order affirming its previous finding in the representation proceedings and finding further that the respondent’s refusal to bargain with the Union constituted a statutory violation. The respondent was ordered, among other things, to bargain collectively with the Union upon request. For the reasons previously stated the respondent continued to refuse to do so.
The Board did not file its petition for enforcement of its order and a transcript of the record in the representation and the complaint proceedings until September 12, 1946.
The respondent’s answer raised a number of objections to the Board’s order and to the conduct of proceedings before the Board.
On November 14, 1946, before respondent’s brief on these issues was due for filing, a communication was presented to Mr. W. R. Moffat, Superintendent of the Jersey City plant of the company. This communication read as follows: “We the undersigned plant clerks and checkers do hereby state, that we do not wish to be represented by unionism in this plant.”
The communication was signed by 20 of the 25 persons in the positions comprising the unit which the Board found appropriate in its decision of April 29, 1944.
In view of this communication the respondent, on November 25, 1946, filed with this Court a motion for leave to adduce additional evidence material to this cause, under Section 10(e) of the Act, 29 U.S.C.A. § 160(e).
In its motion, respondent averred as follows : that of the 20 persons who signed the above communication,. 13 were not on its payroll at the time of the election on May 24, 1944; of these, 9 were former employees who were serving in the armed forces of the United States at the time of the election and who had since returned to its staff; seven of these 9 occupied positions which would have rendered them eligible to vote at the time of the election if they had not been in military service — -two of them occupied such positions since their return' from military service; another of these 13 persons was in its employ at the time of the election but was not in the alleged unit and was therefore ineligible to vote; he was subsequently transferred to a position which placed him within the alleged unit; two additional persons in this group of 13 were hired and one was transferred to its Jersey City plant since the election and after all hearings were concluded in these proceedings ; the remaining seven of the 20 persons who signed the communication were eligible to vote in the election of May 24, 1944.
Argument on the respondent’s motion was heard by this Court on December 16, 1946. At the time the respondent asserted that it was prepared to prove that the foregoing changes in personnel occurred in the normal course of business, replacement of women— who had temporarily occupied these positions during wartime — by men. Respondent urged that the purposes' of the Act would not be served by compelling it to bargain with the Union as the sole representative of its employees in complete disregard of the wishes of the majority of these employees. In reply, counsel for the petitioner advised the Court that assuming that the respondent established by evidence adduced at a hearing all of its allegations as to the Union’s loss of majority, the petitioner would reaffirm its order of August 31, 1945, and again direct the respondent to bargajn with the Union.
In view of the position taken by the petitioner, this Court on December 20, 1946, 158 F.2d 670, deferred ruling on respondent’s motion, stating: “ * * * It appears to us that a remand for the purpose of adducing additional testimony would be a useless gesture, at this point, and result only in delay in a case which has already been pending too long. It is, therefore, our conclusion not to grant the motion at this time, but to preserve the right of the respondent to argue his legal point as though the evidence had been adduced.”
The parties are agreed that in determining the question of change of status “ * * the case is now to be treated as if the requested remand had taken place, the facts sought to be adduced had been found by the Board, and the Board had formally decided that it would effectuate the policies of the Act for respondent to bargain collectively on request with the Union * * * ” (page 1, Petitioner’s Reply Brief).
Discussion
As to the first question presented — whether certain plant clerks and standards department checkers are “employees” within the meaning of the Act:
The core of the respondent’s contention with respect to this issue is that the plant clerks and standards department checkers perform duties supervisory in character so as to “ * * * clearly align these employees on the management side * * * ” and that they are not “employees” but rather “employers” under the Act, and therefore not subject to the collective bargaining provisions of the Act.
The petitioner takes the position that none of the employees involved perform supervisory duties and that there was ample evidence to sustain the finding that they were not invested with managerial functions. In support of its position petitioner cited National Labor Relations Board v. Armour & Co., 10 Cir., 1,54 F.2d 570, cer-tiorari denied 67 S.Ct. 92, as being “on all fours” with the instant case.
The ruling of the Supreme Court in Packard Motor Car Company v. National Labor Relations Board, 67 S.Ct. 789, 791, makes discussion of this question academic. In that case, it was contended that foremen are not “employees” because they perform supervisory functions. Rejecting the contention the Supreme Court held that they were stating: “The privileges and benefits of the Act are conferred upon employees, and § 2(3) of the Act, so far as relevant, provides ‘The term “employee” shall include any employee * * * ’ 49 Stat. 450. The point that these foremen are employees both in the most technical sense at common law as well as in common acceptance of the term, is too obvious to be labored. The Company, however, turns to the Act’s definition of employer, which it contends reads foremen out of the employees class and into the class of employers. Section 2(2) reads: ‘The term “employer” includes any person acting in the interest of an employer, directly or indirectly * * ’ 49 Stat. 450. The context of the Act, we think, leaves no room for a construction of this section to deny the organizational privilege to employees because they act in the interest of an employer.”
Further, the Supreme Court in its most recent expression on the subject has ruled that “it is elementary that the Board has the duty of determining in the first instance who is an employee for purposes of the National Labor Relations Act and that the Board’s determination must be accepted by reviewing courts if it has a reasonable basis in the evidence and is not inconsistent with the law.” (Emphasis supplied.) National Labor Relations Board v. E. C. Atkins and Company, 67 S.Ct. 1265, 1268.
Citing the Packard Motor Car Company decision, the Supreme Court in the Atkins case sustained the Board’s ruling that private plant guards who were civilian auxiliaries to the Army’s military police were “employees” within the meaning of the Act.
Said the Court in discussing the question of the Board’s primary power to determine who is an “employee” under the Act: “ * * * Realizing that labor disputes and industrial strife are not confined to those who fall within ordinary legal classifications. Congress has not attempted to spell out a detailed or rigid definition of an employee or of an employer. The relevant portion of § 2(3) simply provides that ‘The term “employee” shall include any employe, * * *.’ In contrast, § 2(2) states that ‘The term “employer” includes any person acting in the interest of an employer, directly or indirectly, * * *.’ As we recognized in the Hearst case [National Labor Relations Board v. Hearst Publications, 322. U.S. 111, 64 S.Ct. 85, 88 L.Ed. 1170], the terms ‘employee’ and ‘employer’ in this statute carry with them more than the technical and traditional common law definitions. They also draw substance from the policy and purposes of the Act, the circumstances and background of particular employment relationships, and all the hard facts of industrial life.
“And so the Board, in performing its delegated function of defining and applying these terms, must bring to its task an appreciation of economic realities, as well as a recognition of the aims which Congress sought to achieve by this statute. This does not mean that it should disregard the technical and traditional concepts of ‘employee’ and ‘employer’. But it is not confined to those concepts. It is free to take account of the more relevant economic and statutory considerations. And a determination by the Board based in whole or in part upon those considerations is entitled to great respect by a reviewing court, due to the Board’s familiarity with the problems and its experience in the administration of the Act.
“ * * * In the absence of some compelling evidence that the Board has failed to measure up to its responsibility, courts should be reluctant to overturn the considered judgment of the Board and to substitute their own ideas of the public inter-gst ^ ^ ^
It is clear that under the rulings in the Packard Motor Car Company and the Atkins cases the respondent’s contentions must fail. The record discloses that there was a “reasonable basis” for the Board’s determination and that it was in accordance with the law as declared in the two cases cited.
As to the second question presented: Whether the Board could properly certify as the exclusive bargaining representative of a unit including the plant clerks and checkers a union, of which a coaffiliate represents respondent’s production and maintenance employees, and order respondent to bargain collectively with the union so certified.
The respondent’s position on this question may be summarized as follows:
The plant clerks and standards department checkers are not “employees” under the Act; the clerks and checkers' are supervisory employees and the Board itself had excluded from the supervisory unit “all supervisory employees with authority to hire, promote, discharge, discipline, or otherwise effect changes in the status of employees, or effectively recommend such action” ; the clerks, checkers, storeroom clerk and commissary employees performed different duties and functions and their inclusion in one unit was erroneous, the clerks and checkers could not, in any event, be represented by a union 'or affiliate of a union which also represented the production or maintenance workers because they would otherwise be subjected to conflicting interests.
Petitioner’s position is as follows:
The Board’s finding that the clerks and checkers, together with the storeroom clerk and commissary employees constituted a unit appropriate for the purpose of collective bargaining within the meaning of Section 9(b) of the Act was amply supported by the evidence; the Board had no power to deny certification to the Union solely because its coaffiiliate also represented respondent’s production employees; the Board’s certification of the Union as the exclusive representative of respondent’s clerical employees was a reasonable exercise of discretion.
Recent decisions by the Supreme Court on the question of certification are dispositive of the respondent’s contentions.
Discussing the Board’s discretion to determine appropriate units the Supreme Court in the Packard Motor Car Company case, supra, stated: “Section 9(b) of the Act confers upon the Board a broad discretion to determine appropriate units. * * Our power of review also is circumscribed by the provision that findings of the Board as to the facts, if supported by evidence, shall be conclusive. § 10(e), 49 Stat. 454. So we have power only to determine whether there is substantial evidence to support the Board, or its order oversteps the law. (citing cases) * * * The issue as to what unit is appropriate for bargaining is one for which no absolute rule of law is laid down by statute, and none should be by decision. It involves of necessity a large measure of informed discretion and the decision of the Board, if not final, is rarely to be disturbed. * * * ” (Emphasis supplied.)
The respondent’s contention that the petitioner erred in grouping in the same unit clerks and checkers with the storeroom clerk and commissary employees and permitting them to be represented by a union or affiliate of a union which also represented production and maintenance workers, is effectively disposed of by the Supreme Court’s ruling in National Labor Relations Board v. Jones & Laughlin Steel Corporation, 67 S.Ct. 1274, 1278.
Said the Court:
“Unanswered by the Atkins decision, (supra), however, is the question whether the militarization of the plant guards precluded the Board from grouping the guards in a separate unit and permitting them to choose as their bargaining representative a union which also represented production and maintenance employees. To that issue, which is the primary one raised by this case, we now turn.
“The Board, of course, had wide discretion in performing its statutory function under § 9(b) of deciding ‘the unit appropriate for the purposes of collective bargaining.’ Pittsburgh Plate Glass Co. v. National Labor Relations Board, 313 U.S. 146, 61 S.Ct. 908, 85 L.Ed. 1251. It likewise has discretion to place appropriate limitations on the choice of bargaining representatives should it find that public or statutory policies so dictate. Its determinations in these respects are binding upon reviewing courts if grounded in reasonableness. May Department Stores Co. v. National Labor Relations Board, 326 U.S. 376, 380, 66 S.Ct. 203, 206, 90 L.Ed. 145. A proper determination as to any of these matters, of course, necessarily implies that the Board has given due consideration to all the relevant factors and that it has correlated the policies of the Act with whatever public or private interests may allegedly or actually be in conflict”. (Emphasis supplied.)
Applying the rules staled we find that there was substantial evidence supporting the Board’s unit determination and its certification of the Union as the exclusive bargaining representative of the unit, and further that such certification was a reasonable exercise of discretion on the part of the Board, and consistent with the law.
As to the remaining question — the Union’s loss' of majority status :
The respondent’s position is that the change of status occurred due to re-employment of veterans and changes in personnel in the normal course of business without any interference, coercion or even suggestion on its part; that the purposes of the Act would not be served by compelling it to bargain with the Union in complete disregard of the wishes of the majority of its present employees; that the respondent has had a good labor record; that the sole “unfair labor practice” charged against it was its refusal to abide by the Board’s alleged invalid finding that the clerks and checkers were “employees'” under the Act and its alleged improper certification of the unit and Union; that its refusal to abide by the result of the representation proceeding under Section 9(c) and the complaint proceeding under Section 10(b) of the Act was “necessitated by the procedure set forth in the Act to test the validity of the Board’s unit determination”; that, for the latter reason, the doctrine that an intervening loss of majority does not relieve an employer of the remedial obligation to bargain with a union in compliance'with the Board’s prior order is inapplicable.
The petitioner’s position isThe petitioner’s position is that the Board may in its discretion require respondent to bargain collectively with the certified un-iou which suffered a loss of majority following respondent’s refusal to bargain; that the Board properly found that respondent’s initial refusal to bargain with the Union was in violation of the Act and that it properly determined that there was a direct causal relationship between respondent’s refusal to bargain and the Union’s failure to retain its majority.
The vulnerable point in respondent’s position is its contention that under the Act it could only test the validity of the Board’s determinations and orders in the representation and complaint proceedings by refusing compliance. That is not the law. Under Sectidn 10(f) of the Act, 29 U.S.C.A. § 160(f) “Any person aggrieved by a final order of the Board * * * may obtain a review of such order in any circuit court of appeals of the United States * * * b} filing in such court a written petition praying that the order of the Board be modified or set aside.”
The Board’s order of August 31, 1945 was a final order within the meaning of Section 10(f) of the Act. The record discloses that more than a year intervened between the issuance of the order and September 12, 1946 when the Board petitioned this Court for enforcement. During this period the respondent was in non-compliance and it failed to apply for modification or vacation of the Board’s order. The asserted, change of status did not occur until November 14, 1946.
The rule that a Board’s certification cannot be disregarded by an employer and that the certification is valid until declared invalid or replaced by the Board, is well-settled: National Labor Relations Board v. May Department Stores Company, 8 Cir., 146 F.2d 66, 70 and the cases cited therein, (affirmed with modifications 326 U.S. 376, 66 S.Ct. 203, 90 L.Ed. 145).
In view of the above the respondent’s position must be considered in the light of the principles enunciated by the Supreme Court in International Association of Machinists v. National Labor Relations Board, 311 U.S. 72, 61 S.Ct. 83, 85 L.Ed. 50, and Franks Bros. Co. v. National Labor Relations Board, 321 U.S. 702, 64 S.Ct. 817, 88 L.Ed. 1020.
In the Machinists case, the Supreme Court sustained the established policy of the Board with reference to change of status, as enunciated in the Matter of Karp Metal Products Company, 51 N.L.R.B. 621.
Said the Court, 311 U.S. at page 82, 61 S.Ct. at page 89, 85 L.Ed. 50:
“ * * * Where as a result of unfair labor practices a union cannot be said to represent an uncoerced majority, the Board has the power to take appropriate steps to the end that the effect of those practices will be dissipated. That necessarily involves an exercise of discretion on the part of the Board — discretion involving an expert judgment as to ways and means of protecting the freedom of choice guaranteed to the employees by the Act. It is for the Board, not the courts, to determine how the effect of prior unfair labor practices may be expunged. National Labor Relations Board v. Pennsylvania Greyhound Lines, 303 U.S. 261, 271, 58 S.Ct. 571, 82 L.Ed. 831, 115 A.L.R. 307; National Labor Relations Board v. Falk Corp., 308 U.S. 453, 461, 60 S.Ct. 307, 84 L.Ed. 396. It cannot be assumed that an unremedied refusal of an employer to bargain collectively with an appropriate labor organization has no effect on the development of collective bargaining. See National Labor Relations Board v. Pacific Greyhound Lines, 303 U.S. 272, 275, 58 S.Ct. 577, 578, 82 L.Ed. 838. Nor is the conclusion unjustified that unless the effect of the unfair labor practices is completely dissipated, the employees might still be subject to improper restraints and not have the complete freedom of choice which the Act contemplates. Hence the failure of the Board to recognise petitioner's notice of change was wholly proper. National Labor Relations Board v. Bradford Dyeing Ass’n, 310 U.S. 318, 339, 340, 60 S.Ct. 918, 929, 84 L.Ed. 1226.
“Sec. 9 of the Act provides adequate machinery for determining in certification proceedings questions of representation after unfair labor practices have been removed as obstacles to the employees’ full freedoxn of choice.” (Emphasis supplied.)
In the Franks Bros. Co. case, supra, the Supreme Court held that the Board acted within its statutory authority in ordering the employer to bargain collectively with the Union which had lost its majority after the employer had refused to bargain with it. In that case the change of status occurred during the pendency of the complaint proceedings'. The Board found that the Union’s lack of a majority was “not determinative of the remedy to be ordered” [321 U.S. 702, 64 S.Ct. 818], Discussing the Board’s action the Court stated, 321 U.S. at page 704, 64 S.Ct. at page 818, 88 L.Ed. 1020:
“ * * * Out of its wide experience, the Board many times has expressed the view that the unlawful refusal of an employer to bargain collectively with its employees’ chosen representatives disrupts the employees’ morale, deters their organizational activities, and discourages their membership in unions. The Board’s study of this problem has led it to conclude that, for these reasons, a requirement that union membership be kept intact during delays' incident to hearings would result in permitting employers to profit from their own wrongful refusal to bargain. See e. g., Matter of Inland Steel Co., 9 N.L.R.B. 783, 815, 816; Matter of P. Lorillard Co., 16 N.L.R.B. 684, 699, 701. One of the chief responsibilities of the board is to direct such action as will dissipate the unwholesome effects of violations of the Act. See 29 U.S.C. § 160(a) and (c), 29 U.S.C.A. § 160(a,c). And, Tt is for the Board not the courts to determine how the effect of prior unfair labor practices may be expunged.’ International Association of Machinists v. National Labor Relations Board, 311 U.S. 72, 82, 61 S.Ct. 83, 85 L.Ed. 50.
“That determination the Board has made in this case and in similar cases by adopting a form of remedy which requires that an employer bargain exclusively with the particular union which represented a majority of the employees at the time of the wrongful refusal to bargain despite that union’s subsequent failure to retain its majority. * * * That the Board was zoithin its statutory authority in adopting the remedy zohich it has adopted to foreclose the probability of such frustrations of the Act seems too plain for anything but statement. See 29 U.S.C. § 160(a) and (c), 29 U.S.C.A. § 160(a, c). * * *” (Emphasis supplied.)
In Oughton v. National Labor Relations Board, 3 Cir., 118 F.2d 486, at page 497, in which we applied the ruling in the Machinists case relating to change of status, we said: " * * * The Machinists case points out the immateriality of an asserted loss of a bargaining agent’s majority to the issue raised by a complaint based upon the employer’s unfair labor practices, except, of course, in so far as the Board in its uncontrolled discretion may deem the agent’s status worthy of investigation and consequent action. And, where the Board passes over the agent’s support as being presently of no moment, the Act, as observed in the Machinists case, provides other procedure for the resolution of the independent prob» lem. * * * ”
The respondent attempts to distinguish the instant case from the Franks Bros. Co. and Oughton cases. It urges that here it is not charged with any unfair labor practice except a “technical” refusal to bargain with the Union, based on its desire to obtain a judicial determination of the validity of the certified unit, whereas in the cases mentioned there was active opposition by the employer to the Union, including threats to shut down if the employees joined the Union. We cannot subscribe to the respondent’s urging on this score. The excerpt above quoted from the Franks Bros. Co. case clearly discloses that the Supreme Court directly and unequivocally premised its decision on the employer’s refusal to bargain.
In the Oughton case we too, premised our ruling on the employer’s refusal to bargain.
In Semi-Steel Casting Company of St. Louis v. National Labor Relations Board, 160 F.2d 388, 392, the United States Court of Appeals for the Eighth Circuit held that “ * * * the union’s loss of majority status, during the course of the proceedings before the Board on the charge of unfair labor practices against the company, if established, does not invalidate the order of the Board.” The Court cited National Licorice Company v. National Labor Relations Board, 309 U.S. 350, 60 S.Ct. 569, 84 L.Ed. 799 the Franks Bros. Co. and Machinists cases, and Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct. 830, 88 L.Ed. 1007.
In the Semi-Steel Casting Company case the only unfair labor practice involved was the refusal to bargain. The latter was premised on the employer’s contention that the Board had erred in the conduct of an election to select the bargaining representative.
Similarly in National Labor Relations Board v. Central Dispensary & Emergency Hospital, 79 U.S.App.D.C. 274, 145 F.2d 852, certiorari denied 324 U.S. 847, 65 S.Ct. 684, 89 L.Ed. 1408, no unfair labor practice —other than the refusal to bargain — was involved.
The instant situation is singularly akin to that in the Central Dispensary case.
There a charitable institution refused to recognize the Board’s certification in December, 1942," under the belief that it was not subject to the Act. Six months later the Board issued its "Cease and Desist order and a year thereafter instituted enforcement proceedings before the United States Court of Appeals, District of Columbia. In the enforcement proceeding, the Court refused to grant a motion for leave to adduce additional evidence designed to establish the Union’s loss of majority status. Said the Court, 145 F.2d at page 854:
“ * * * We consider this evidence irrelevant under the circumstances of the present case. The certification of the union which contains the finding that at that time the union was representative was issued by the Board in December, 1942. Six months later the Board'issued an order to cease and desist from refusing to bargain collectively. At that time the respondent had the right to appeal to this court under Section 10(f) of the Act. Respondent also had a right to petition the Board at that time for a hearing on whether the six months’ delay in issuing the order had created a change in the representative character of the union. Respondent took neither of these steps. While the Board delayed over a year in bringing the case before us for enforcement, respondent cannot now take advantage of that fact because during the entire period it lay within its own power to seek relief.
“There is, therefore, nothing in this case which takes it out of the rule laid down by the Supreme Court in Franks Brothers Co. v. National Labor Relations Board, where the Court held that there was no requirement that union membership be kept intact during delays incident to hearing on the question of union representation. * * * ” (Emphasis supplied.)
The respondent relies on National Labor Relations Board v. Inter-City Advertising Company, 154 F.2d 244, where the United States Circuit Court of Appeals for the Fourth Circuit denied the Board’s petition for enforcement. While the petitioner has stressed several distinguishing factors we need only say that we are not in accord with the majority view in the Inter-City case and agree instead with the views expressed by Judge Dobie in his dissenting opinion.
Finally, the respondent urges that granting of the petition for enforcement of the Board’s order will deprive the respondent’s employees of the exercise “of full freedom of association, self-organization, and designation of representatives of their own choosing” as prescribed by Section 1 of the Act.
The Supreme Court in the Franks Bros. Co. case, supra, gave dispositive answer to that specific contention in the following statement, 321 U.S. at page 705, 64 S.Ct at page 819, 88 L.Ed. 1020:
“* * * Contrary to petitioner’s suggestion, this remedy, as embodied in a Board order, does not involve any injustice to employees who may wish to substitute for the particular union some other bargaining agent or arrangement. For a Board order which requires an employer to bargain with a designated union is not intended to fix a permanent bargaining relationship without regard to new situations that may develop. See Great Southern Trucking Co. v. National Labor Relations Board, 4 Cir., 139 F.2d 984, 987. But, as the remedy here in question recognizes, a bargaining relationship once rightfully established must be permitted to exist and function for a reasonable period in which it can be given a fair chance to succeed. See National Labor Relations Board v. Appalachian Electric Power Co., 4 Cir., 140 F.2d 217, 220-222; National Labor Relations Board v. Botany Worsted Mills, 3 Cir., 133 F.2d 876, 881, 882. After such a reasonable period the Board may, in a proper proceeding and upon a proper showing, take steps in recognition of changed situations which might make appropriate changed bargaining relationships. Id.; see 29 U.S.C. § 159(c), 29 U.S.C.A. § 159(c). * * *” (Emphasis supplied.)
It may well be that the Board after a reasonable period has elapsed may reappraise the situation and take appropriate action in view of the fact that the respondent has been guilty of no “unfair labor practice” other than the failure to comply with the Board’s order for the express purpose of testing its validity, but as pointed out in the Central Dispensary case, “This is a matter lying within the discretion of the Board.”
In view of the foregoing, we conclude that the Board was within its statutory authority in requiring the respondent to bargain exclusively with the Union despite its failure to retain its majority.
One final question remains — the scope of the Board’s order.
The respondent takes vigorous exception to Paragraph 1(b) of the Board’s order, asserting that it was completely unjustified and unsupported by the evidence. That paragraph, together with Paragraph 1(a), which enjoins refusal to bargain, is set out below.
The challenged order was made prior to the decision of the Supreme Court in May Department Stores Co. v. National Labor Relations Board, supra. The petitioner, in conformity with the delimitation of the Board’s order by the Court in that case, suggests the modification of the Board’s existing order by striking Paragraph 1(b) and adding to Paragraph 1 (a) of the order the clause “or from any other acts in any manner interfering with the representative’s efforts to negotiate for or represent the above-named employees as bargaining agent.”
In support of its objections to Paragraph 1(b) the respondent stresses that the only unfair labor practice charged is its refusal to bargain collectively with the Union, the purpose of which was to test the validity of the Board’s unit determination.
The applicable rule is stated as follows in National Labor Relations Board v. Express Publishing Co., 312 U.S. 426, at page 437, 61 S.Ct. 693, 700, 85 L.Ed. 930: “ * * * We hold only that the National Labor Relations Act does not give the Board an authority, which courts cannot rightly exercise, to enjoin violations of all the provisions of the statute merely because the violation of one has been found. To justify an order restraining other violations it must appear that they bear some resemblance to that which the employer has committed or that danger of their commission in the future is to be anticipated from the course of his conduct in the past. * * * ” (Emphasis supplied.)
Citing with approval the Express Publishing Co. case, the Supreme Court said in the May Department Stores Co. case, 326 U.S. at page 392, 66 S.Ct. at page 213, 90 L.Ed. 145: “ * * *. While the Board has been delegated initially the exclusive authority to prevent unfair labor practices, courts, which are called upon to enforce such orders by their own decrees, may examine its scope to see whether on the evidence they go so beyond the authority of the Board as to require modification as a matter of law before enforcement. Section 10(a) and (e). * * * ”
While in the May Department Stores Co. case the Supreme Court struck Paragraph 1(b) of the Board’s order and amended Paragraph 1(a) as suggested by petitioner here, the factual situation differs in the two cases.
In the May Department Stores Co. case the employer, persisting in its refusal to bargain with the representatives of a certified unit of a small group of its employees, took steps unilaterally to secure the approv-. al of the National War Labor Board of a voluntary wage increase for all of its 4500 employees, including employees in the unit represented by the Union. The Board, the Circuit Court of Appeals and the Supreme Court all found that the employer’s action constituted a violation of Section,8(l)-
Said the Supreme Court, 326 U.S. at pages 383, 384, 385, 66 S.Ct. at page 208, 90 L.Ed. 145: * * It is settled law that the Labor Relations Act makes it an employer’s duty to bargain collectively only with the duly recognized or accredited representative of the employees. Disregard of this duty violates § 8(1) of the Act. Section 9(a). Medo Photo Supply Corp. v. National
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SIBLEY, Circuit Judge.
This appeal is taken from a judgment for damages for a death caused by negligent injury inflicted on November 4, 1933, in the Canal Zone. The bill of exceptions contains no evidence and no general recital of the effect or tendency of it. The exceptions reserved and now insisted on relate only to instructions to the jury given and refused touching the negligence of the defendant and of the person for whose death the suit was brought. From the earliest times it has been held that abstract principles are not to be charged, but such charges only are to be given as are supported by the evidence and are appropriate to the case. Hamilton v. Russell, 1 Cranch, 309, 2 L.Ed. 118; Irvine v. Irvine, 9 Wall. 617, 618, 19 L.Ed. 800; Dwyer v. Dunbar, 5 Wall. 318, 18 L.Ed. 489; Merchants Insurance Co. v. Baring, 20 Wall. 159, 22 L.Ed. 250. Our rule X (2) limiting the evidence in a bill of exceptions to so much as may be necessary to present the questions of law involved does not dispense with all the evidence when trial rulings are challenged. Instructions requested may have been refused for some want of adjustment to the evidence. Those given, even if in some respects inaccurate, may have been harmless. Some statement of the evidence to which instructions relate is generally requisite to a consideration of error respecting them. Worthington v. Mason, 101 U.S. 149, 25 L.Ed. 848; Phoenix Life Ins. Co. v. Raddin, 120 U.S. 183, 184, 7 S.Ct. 500, 30 L.Ed. 644; New York, L. E. & W. R. Co. v. Madison, 123 U.S. 524, 8 S.Ct. 246, 31 L.Ed. 258. We would be well justified in affirming this judgment without further examination. One point, however, and the main one argued, we are urged to decide as fairly made, though without express certification of the evidence relating to it. The declaration alleges that the deceased stepped off the edge of the Panama Railroad Company’s pier in the Canal Zone wbjle looking after a loading by night of freight, and was killed, due wholly to the railroad company’s negligence in not sufficiently lighting the pier to make it safe. Ten thousand dollars damages were claimed. The answer denies nearly everything, and affirms that the pier was properly lighted and safe, and if deceased fell it was due entirely to his negligence. The verdict is for $7,000. The bill of exceptions shows that the court over objection charged in s,ub‘stance that if deceased was negligent and his negligence contributed to cause his death the suit would not be defeated, but the damages should be reduced in proportion to the negligence to be imputed to the deceased. Appellant contends that we must assume that there was evidence to show negligence on the part of the deceased, since the judge charged on that subject, and that having charged on it he was bound to charge correctly, the correct law being that contributory negligence bars recovery. In view of the nature of the case as disclosed by the pleadings and the amount of the verdict, we will examine the point of law, the more readily since no different judgment will be reached.
The law of the Canal Zone at the time of the occurrence in question is stated in section 595 of the Civil Code of the Canal Zone which became of force October 1, 1933, now appearing as section 977 of the Civil Code of the Canal Zone of 1934, as follows: “Want of ordinary care on the part of the injured person shall not bar a recovery, but the damages shall be diminished by the court or jury in proportion to the want of ordinary care attributable to such person.” The English common law that contributory negligence bars recovery has never been the law in the Canal Zone. Had the deceased been injured instead of killed, in his suit for damages his contributory negligence would not have defeated him but only reduced proportionately his recovery. In Panama R. Co. v. Rock, 266 U.S. 209, 45 S.Ct. 58, 69 L.Ed. 250, it was held that in the Canal Zone there was no civil liability for causing the death of a human. Congress then passed the Act of Dec. 29, 1926, 44 Stats, vol. 2, p. 927, material parts of which are copied in the margin, now embraced in Code of Civil Procedure of the Canal Zone 1934, § 131. This statute, applying only to the Canal Zone, distinctly says that the liability to an action for death shall exist whenever any wrongful act or neglect would, if death had not ensued, have entitled the injured person to maintain a suit and recover damages in respect thereof. The right of the injured person to recover had he lived is made the test of the right to recover for his death. Since in the Canal Zone the injured person’s contributory negligence would not defeat him, but would only reduce the recoverable damages, persons entitled to sue for his death would not be wholly defeated. But naturally and reasonably the damages for death ought to be affected by the contributory negligence of the deceased, and since it does not defeat recovery, it ought to reduce it according to the spirit of the law of the Canal Zone on that subject. The statute, Code Civ.Proc. § 131 (4), provides on the subject of damages that “The court or jury shall award such damages as it shall deem to be a fair and just compensation assessed with reference to pecuniary injury, resulting from such death. * * * ” We consider this to be the measure when full damages are recoverable, but that in cases of contributory negligence by the decedent there should be a proportionate reduction of the damages, as the court in this case instructed the jury. Compare Florida Central & P. R. Co. v. Foxworth, 41 Fla. 1, 25 So. 338, 339, 79 Am.St.Rep. 149; Stringfellow v. Atlantic Coast Line R. Co., 290 U.S. 322, 323, 54 S.Ct. 175, 78 L.Ed. 339; Id. (C.C.A.) 67 F.(2d) 1012; Artenberry v. Southern Ry. Co., 103 Tenn. 266, 52 S.W. 878.
Judgment affirmed.
In Nelson v. Jadrijevics (C.C.A.) 59 F.(2d) 25; Id. (C.C.A.) 68 F.(2d) 631, certiorari denied 292 U.S. 652, 54 S.Ct. 882, 78 L.Ed. 1501, we applied to a suit for personal injuries suffered in 1931 the substantially equivalent provision of article 2357 of the Civil Code of Panama which was repealed as to the Canal Zone by the Code of 1933, above mentioned.
“Section 7. (a) Whenever by any injury done or happening within the Canal Zone the death of a person shall be caused by wrongful act, neglect, or default, and the act, neglect, or default is such as would, if death had not ensued, have entitled the party injured (or, in the case of a married woman, have entitled her or her husband, either individually or jointly) to maintain an action and recover damages in respect thereof, the individual who or corporation, company, or association which would have been liable if death had not ensued shall be liable to an action for damages notwithstanding the death of the person injured, and even though the death shall have been caused under such circumstances as amount in law to a felony. * * *
“(d) In an action under this section the jury shall award such damages as it shall deem to be a fair and just compensation assessed with reference to the pecuniary injury, resulting from such death,” etc.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STALEY, Circuit Judge.
The National Labor Relations Board has found that the Bethlehem Steel Company (Shipbuilding Division) violated § 8(a) (5) and (1) of the National Labor Relations Act. The case is here on petitions for review filed by both the company and the charging union, Industrial Union of Marine and Shipbuilding Workers of America, AFL-CIO, and on the cross-petition of the Board for enforcement of its order. The employer asserts that the Board’s findings are unwarranted, while the union contends that the Board should have found additional violations.
The circumstances giving rise to this proceeding occurred during the summer of 1959 when Bethlehem and the union were negotiating a new collective bargaining agreement to cover hourly-paid employees at the company’s east coast shipyards. A prior agreement, executed in 1956, had an expiration date of July 31, 1959. The union made an oral presentation of its bargaining demands on July 7, 1959. These included, among others, a proposed change in the formula for adjusting wages to the cost of living, increases in premium pay and vacation benefits, an extension of the scope of the arbitration clause, and changes which would give an increased emphasis to seniority in determining layoffs. The following day the company presented its proposed new contract (described as the White Book in the record), together with a written statement explaining its position. This detailed plan included elimination of the cost of living adjustment, a reduction in premium pay, limitations on the scope of the arbitration clause, and alterations in the grievance procedure. The latter contained a clause requiring the signature of each employee involved before a grievance could be processed. The reason assigned for this was that “under our current agreement we have been flooded with grievances.” The thrust of the company’s explanatory statement was that competitive conditions necessitated these proposals. Discussion of the basic wage structure was postponed pending resolution of these issues.
The parties conferred frequently during the next few weeks but there was little progress in the bargaining. The company stressed the economic cost of the union’s proposals, while the latter rejected this argument on the ground that the employer was not in a competitive business to any substantial degree. On July 28, 1959, Bethlehem informed the union that if no agreement were reached by July 31 (the termination date of the 1956 contract), it would discontinue the grievance and arbitration procedure provided for in the old contract, would no longer give preferential seniority to union representatives, and would not comply with the union shop and checkoff clauses. Since no agreement was reached by August 1st, this was done. *
On August 11, the company informed the union and the employees that it was putting into effect all of its White Book proposals with respect to the hourly-paid unit, except, inter alia, those relating to arbitration, preferential seniority, and the union shop and checkoff. This plan was effectuated August 13, 1959. A strike followed in January 1960, and was still in existence at the time of the hearing before the trial examiner in March of that year.
The trial examiner found that Bethlehem had violated § 8(a) (5) and (1) by insisting on the clause requiring the signature of individual employees on grievances. However, he concluded that none of the other acts of the company were unlawful, and further determined that the employer was not guilty of subjective bad faith in its course of conduct throughout the negotiations. The unilateral changes of August 13 were held not to constitute an unfair labor practice because the parties by this time had reached an impasse in bargaining.
Initially, the Board adopted the conclusions and recommendations of the trial examiner. 133 N.L.R.B. 1347 (1961). However, in a supplemental decision, 136 N.L.R.B. 1500 (1962), it found that the company had also violated § 8(a) (5) by depriving union representatives of their seniority rights and by unilaterally abandoning the grievance procedure of the expired contract and substituting its own procedure in lieu thereof. The Board adhered to its prior conclusion that the totality of Bethlehem’s conduct did not evince bad faith bargaining.
At the threshold, Bethlehem urges that it was relieved of any obligation to bargain with the union because the latter’s demands covered an inappropriate unit, i. e., one which included personnel classifiable as supervisors, and thus not within the purview of the statute. See 29 U.S. C.A. § 152(3). This challenge relates to the union’s proposal that the bargaining unit include both hourly-paid and salaried “snappers”. The parties had agreed in the 1956 contract that the former should be included and the latter excluded. Bethlehem now asserts that bothfl. are supervisors.
We agree, as did the Board, with the trial examiner that “this is more an apparent than a real issue in this case,” and that “placement of the snappers could in no event affect any of the issues raised by the complaint.” Indeed, as the examiner noted, “The Respondent [Bethlehem] also conceded that whether the snappers in question be included in the bargaining unit or excluded, in either event the Union in fact represented a majority of the employees at all times, as it does now.” In these circumstances, we think the employer’s position is not tenable. Brewery & Beverage Drivers Local 67 v. NLRB, 103 U.S.App.D.C. 190, 257 F.2d 194 (1958).
f Bethlehem’s more fundamental contentions are that its grievance-signatory plan, and its discontinuance of preferential seniority for union officials and aban- / donment of the grievance and arbitration / machinery at the' expiration of the 1956 (-agreement did not violate the statute.
With respect to the grievance-signatory plan, the company advances two arguments: (1) there is no evidence that this was made a condition of reaching agreement; and (2) the proposal is a mandatory subject of bargaining. The record and the findings of the trial examiner make it abundantly clear that Bethlehem vigorously insisted that the substance of this proposal be incorporated in any new labor contract. But the employer urges that at no time did it state that this was a sine qua non of agreement. It says that since, as hereinafter more fully discussed, the Board found that there was an impasse on all disputed matters, it could not have concluded that insistence on this particular clause barred an accord.
The argument does not withstand analysis. It was not necessary for the Board to find that the company’s insistence on this proposal was the sole cause of the failure to reach agreement. If the proposal is not a mandatory bargaining subject, insistence upon it was a per se violation of the duty to bargain. NLRB v. Wooster Division of Borg-Warner Corp., 356 U.S. 342, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958); NLRB v. Davison, 318 F.2d 550 (C.A. 4, 1963). Any other rule would permit insistence upon a non-mandatory item so long as there were any dispute as to mandatory topics. As the Supreme Court held in Borg-Warner, 356 U.S. at 349, 78 S.Ct. at 722:
“We agree with the Board that such conduct [insistence on a non-mandatory topic] is, in substance, a refusal to bargain about the subjects that are within the scope of mandatory bargaining.”
We turn now to the second aspect of the employer’s argument on this point, i.e., the proposal is a mandatory bargaining subject. In accordance with § 8(d) of the Act, the Supreme Court has defined mandatory subjects as those within the phrase “wages, hours, and other terms and conditions of employment.” NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); NLRB v. Wooster Division of Borg-Warner Corp., supra. It is clear to us that Bethlehem’s proposal does not come within the scope of that phrase. Although at first glance it might appear to be a “condition of employment,” actually the effect of the proposal is to limit the union’s representation of the employees and not to condition the employees’ employment. Cf. NLRB v. Davison, supra.
Under § 9 (a) the union is the exclusive representative of the employees “in respect to rates of pay, wages, hours of employment, or other conditions of employment.” 29 U.S.C.A. § 159(a). Bethlehem’s proposal which would restrict the union’s role in the prosecution of grievances to those complaints which had been signed by individual employees clearly limits this representation. The company acknowledges the union’s rights with respect to the prosecution of grievances, but seeks solace in the proviso to § 9(a) which grants individual employees the right to adjust grievances without the intervention of the representative so long as the adjustment is not inconsistent with the collective bargaining contract.
We find nothing in this section to support the company’s position. Indeed, the proviso itself requires that the union be given opportunity to be present at the adjustment. In short, the fact that individual employees have the right to adjust their own grievances does not mean that an employer can restrict the union’s statutory rights by requiring that each grievance be signed by the employee involved. Such a limitation is not -within the statutory definition of mandatory bargaining subjects. Like the pre-strike ballot clause in Borg-Warner, “it substantially modifies the collective-bargaining system provided for in the statute by weakening the independence of the ‘representative’ chosen by the employees. It enables the employer, in effect, to deal with its employees rather than with their statutory representatives.” 356 U.S. at 350, 78 S.Ct. at 723. As the Board cogently points out in its brief, such a clause would preclude the union from prosecuting flagrant violations of the contract merely because the employee involved, due to fear of employer reprisals, or for similar reasons, chose not to sign a grievance. Hence, redress for a violation would be made contingent upon the intrepidity of the individual employee.
The fact that there are other labor contracts in this industry requiring employee signatures on grievances is not significant. Non-mandatory subjects may lawfully be included in collective bargaining contracts if the parties agree to them. NLRB v. Wooster Division of Borg-Warner Corp., 356 U.S. at 349, 78 S.Ct. at 722. Bethlehem’s reliance on Elgin, Joliet & Eastern Railway v. Burley, 325 U.S. 711, 65 S.Ct. 1282, 89 L.Ed. 1886 (1945), aff’d, 327 U.S. 661, 66 S.Ct. 721, 90 L.Ed. 928 (1946), is misplaced. That case simply holds that a bargaining representative can compromise accrued monetary claims of individual employees only if the employees have authorized it to do so.
The Board concluded that Bethlehem did not violate the statute when, upon the expiration of the 1956 agreement, it discontinued enforcement of the union shop and checkoff. In this court the union does not seriously press its contention that this was error. In any event, we agree with the reasoning of the Board. The right to require union membership as a condition of employment is dependent upon a contract which meets the standards prescribed in § 8(a) (3). The checkoff is merely a means of implementing union security. Since there was no contract in existence when the company discontinued these practices, its action was in conformity with the law. Cf. NLRB v. International Union, United Automobile Workers, 297 F.2d 272 (C.A. 1, 1961); Communications Workers v. NLRB, 215 F.2d 835, 839 (C.A. 2, 1954). Moreover, the checkoff clause of the 1956 contract expressly provided that it should remain in effect only so long as the agreement was extant.
Bethlehem makes a tripartite challenge to the Board’s determination that the company violated § 8(a) (5) by unilaterally abrogating the preferential seniority rights of union representatives and by altering the prior grievance procedure. It urges that its action was a legitimate use of economic pressure, that these matters are not mandatory bargaining subjects, and that they, like the union shop and checkoff provisions, cannot be enforced unless there is an agreement in effect.
Clearly, the first argument is contingent upon the validity of the second, i.e., whether the company made a permissible use of economic weapons depends upon whether these matters are mandatory bargaining subjects, and thus not subject to unilateral change.
We agree with the Board that both seniority rights and a grievance procedure are within the phrase “wages, hours, and other terms and conditions of employment” and hence are mandatory bargaining subjects. NLRB v. Proof Co., 242 F.2d 560 (C.A. 7, 1957) (seniority) ; NLRB v. Century Cement Mfg. Co., 208 F.2d 84 (C.A. 2, 1953) (grievance procedure and seniority). See also, United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 577-585, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); Ford Motor Co. v. Huffman, 345 U.S. 330, 336-337, 73 S.Ct. 681, 97 L.Ed. 1048 (1953); Aeronautical Industrial District Lodge 727 v. Campbell, 337 U.S. 521, 528, 69 S.Ct. 1287, 93 L.Ed. 1513 (1949); Annot. 12 A.L.R.2d 265, 272-273. Accordingly, the company’s unilateral action with respect to them was unlawful. NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). The fact that there was no agreement in effect at the time does not alter our conclusion. As we have previously stated, Bethlehem was justified in discontinuing enforcement of the union shop and checkoff because these conditions are wholly dependent upon the existence of an agreement conforming to the § 8(a) (3) proviso. The company’s abrogation of seniority rights and its alteration in the grievance and arbitration procedure, however, finds no such protection in the statute. The vice in this was not the refusal to comply with the provisions of an agreement which had already expired, but the unilateral elimination of accrued seniority rights, and the substitution of a new employer-devised grievance procedure in lieu of the one which existed under the expired contract.
Two additional contentions of the employer merit only brief comment. It is said that because the union was given notice of these proposed changes and an opportunity to bargain with respect thereto, Bethlehem was justified in implementing them on August 1st. But the employer concedes that it was not until July 28 that the union was notified that these changes were to be effected only three days later. Until that time the company’s own proposed contract included provisions for preferential seniority and a formal grievance procedure. In this setting, it can hardly be said that the union was given the bargaining opportunity to which it is entitled under NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); and NLRB v. Crompton-Highland Mills, Inc., 337 U. S. 217, 69 S.Ct. 960, 93 L.Ed. 1320 (1949). Similarly wanting in merit is the argument that the changes were permissible because “purely temporary and not for the purpose of effecting a permanent change in terms of employment, but for the purpose of putting legitimate economic pressure on the Union.” Regardless of how characterized, the changes altered conditions of employment and were therefore unlawful.
The union urges that the company’s unilateral imposition of the White Book on August 13, 1959, constituted a per se violation of § 8(a) (5). Additionally it makes a broad frontal attack on the failure of the Board to find Bethlehem guilty of bad faith bargaining during the entire course of the 1959 negotiations. Because we hold that the Board’s determination that Bethlehem was legally justified in imposing its own terms and conditions of employment on August 13 was premised on an erroneous view of the law, we find it unnecessary to consider the union’s alternative argument.
The Board concedes that the employer’s action of August 13 would ordinarily constitute a violation of the Act as a matter of law. NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); NLRB v. Crompton-Highland Mills, Inc., 337 U.S. 217, 69 S.Ct. 960, 93 L.Ed. 1320 (1949); May Dept. Stores Co. v. NLRB, 326 U.S. 376, 66 S.Ct. 203, 90 L.Ed. 145 (1945); Quaker State Oil Refining Corp. v. NLRB, 270 F.2d 40, 45-46 (C.A. 3), cert. denied, 361 U.S. 917, 80 S.Ct. 261, 4 L.Ed.2d 185 (1959) ; NLRB v. George P. Pilling & Son Co., 119 F.2d 32, 38 (C.A. 3, 1941). It urges, however, that the parties by this time had reached a bargaining impasse, thereby justifying unilateral action. But it is manifest that there can be no legally cognizable impasse, i.e., a deadlock in negotiations which justifies unilateral acttion, if a cause of the deadlock is the failure of one of the parties to bargain in good faith. NLRB v. Yutana Barge Lines, Inc., 315 F.2d 524, 529-530 (C.A. 9, 1963); NLRB v. Herman Sausage Co., 275 F.2d 229, 234 (C.A. 5, 1960) ; NLRB v. Andrew Jergens Co., 175 F.2d 130, 136 (C.A. 9, 1949); Vanneette Hosiery Mills, 114 N.L.R.B. 1107, 1126 (1955). See also, NLRB v. Crompton-Highland Mills, Inc., supra, and Bowman, An Employer’s Unilateral Action — An Unfair Labor Practice?, 9 Vand.L.Rev. 487, 501 (1955-1956). Here, the company was guilty of acts which the Board forcefully contends, and we have held, to be a violation of its duty to bargain less than two weeks before the August 13 changes. Not only was this prior action unlawful, but it consisted of the very conduct, a unilateral alteration in the conditions of employment, which the Board now asserts was justified on August 13.
The sole reason advanced for the finding of an impasse is that the union had also adopted an attitude of “fixed and stoney inflexibility” and that, “[a]s the days wore on, adamancy only became stronger and stronger.” In the words of the trial examiner:
“With this sort of testimony by the Union witnesses themselves, and the complete failure to reach agreement on anything worth speaking about after all these negotiating sessions, there is no doubt that the parties were finished with talking. They were at an absolute impasse.”
But it is not contended that the union’s adamant position was in any sense a violation of its duty to bargain. Indeed, in view of the company’s unlawful insistence on its grievance-signatory plan and its unilateral alteration of the conditions of employment on August 1st, the union’s position was completely justified. In this regard, our decision in NLRB v. International Ladies’ Garment Workers’ Union, 274 F.2d 376, 78 A.L.R.2d 963 (C.A. 3, 1960), is particularly apposite. We there held that a union was justified not merely in maintaining an adamant position at the bargaining table, but in refusing to negotiate with a representative of an employer’s association who had previously held union office. Thus the Board in this case failed to view the union’s inflexible position and the August 13 imposition of the White Book in the light of the company’s prior violations of its duty to bargain.
Despite its determination that the company’s action of August 1st was so inimical to our national labor relations policy as to constitute a per se violation of the Act, the Board now contends that this was only a “technical violation.” But such a euphemistic description cannot be so easily employed to reconcile the inconsistency in logic in the Board’s decision. The fact remains that the August 1st changes were unfair labor practices as a matter of law. Moreover, not only had the company not purged itself of its earlier violations by the time it implemented the White Book on August 13, but it concedes, and the record shows, that it did not institute its new grievance plan until that very day.
There are additional factors which conclusively refute the Board’s contention, pressed at oral argument, that the “technical” violations of August 1st were innocently committed. In a prior case the Board held that Bethlehem had violated § 8(a) (5) in 1947 by insisting on a proposal which would give each employee the right to take up a grievance with his foreman without the union steward being present. In the Matter of Bethlehem Steel Company, Shipbuilding Division, 89 NLRB 341, (1950), reversed on other grounds, Bethlehem Steel Co. v. NLRB, 191 F.2d 340 (D.C.Cir. 1951). A stipulation of the parties reveals that in 1956 the company suspended the seniority rights of union officials as well as the procedure for the adjustment of grievances. The union thereupon filed unfair labor practice charges. When a new contract was executed these charges were withdrawn pursuant to a memorandum of agreement. Considering the similarity between its prior conduct and that presented here, it cannot be said that the company was unaware of the questionable nature of its action.
The Board cites NLRB v. Katz, 369 U.S. 736, 741-742, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962), for the proposition that whether an impasse exists is a question of fact for its determination. Certainly whether the parties have reached a deadlock in negotiations is a factual matter, but whether such a deadlock legally justifies a unilateral alteration in the conditions of employment is at the very least a mixed question of law and fact.
The union urges that we direct the Board to include in its order a “back pay” award to those employees who were injured by the company’s action. However, because we hold only that the Board, erred in law in failing to give proper consideration to the circumstances, particularly the unfair labor practices, which preceded the imposition of the White-Book, we shall remand the case for further consideration in the light of this, opinion. Of course, this is to include the issuance of an order which will effectuate the policies of the Act.
The petition for enforcement will be denied and the cause remanded for further proceedings in conformity with this, opinion.
. Ҥ 158. Unfair labor practices.
“(a) It shall be an unfair labor practice for an employer—
“(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;
“(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.” 29 U.S.C.A. § 158.
. Negotiations covering salaried employees were also being conducted at this time, bi't since these were largely contingent upon the discussions concerning the hourly-paid employees, we shall concern ourselves only with the hourly-paid unit.
. Ҥ 158. Unfair labor practices
* * * * * *
•‘(4) For the purposes of this section, to bargain collectively is the. performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment * * 29 U.S.C.A. § 158.
. The Board properly rejected the examiner’s holding that these topics, though mandatory bargaining subjects, are not terms and conditions of employment. As we have previously indicated, the latter is merely a part of the statutory definition of the former.
. In addition to contesting the Board’s finding on this score, the union argues that the necessary inference in it is that the impasse arose between August 1 and August 11. The basis for this is that if there were a bona fide impasse prior to August 1, the Board could not have found that Bethlehem violated the Act by its actions on that date. In its brief the Board questions this rationale, but at oral argument counsel for the Board was unable to state at wbat point the impasse occurred. Because of our decision, we find it unnecessary to determine this issue. We might note, however, that logic supports the union’s position.
. Although the parties have, used the term impasse rather loosely to describe any deadlock in negotiations, regardless of how caused, we shall employ it in this opinion only in this strict legal sense.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MANION, Circuit Judge.
In June of 1985 Joseph Basile pleaded guilty to various drug-related offenses. He received a sentence of twenty-two years in prison plus a special parole period of three years. In June of 1992, after an unsuccessful attempt to obtain a favorable parole decision from the United States Parole Commission, Basile filed a motion to correct his sentence pursuant to 28 U.S.C. § 2255. He raised three claims, but he advances only one of them on appeal: that the sentencing court violated Federal Rule of Criminal Procedure 32(c)(3)(D) by neglecting to resolve a factual dispute that arose during sentencing and by failing to attach its finding to the presentence report. The district court denied Basile’s § 2255 motion. For the reasons that follow, we affirm.
I. Background
Basile pleaded guilty to one count of conspiring to distribute cocaine and to possess with intent to distribute cocaine in violation of 21 U.S.C. § 846, two counts of possessing with intent to distribute cocaine in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2, and one count of traveling interstate to promote unlawful activity in violation of 18 U.S.C. § 1952(a)(3). The charges against Basile stemmed from his involvement in the cocaine distribution business of Anthony Pip-ito. . Pipito sold about five, kilograms of cocaine per month in the year prior to his arrest in November of 1984. During this period of time he also obtained more than thirty kilograms of cocaine from his suppliers in Florida and California. Basile was one of Pipito’s biggest customers. He also was Pip-ito’s assistant. His duties included strong-arming customers into paying their drug-related debts and transporting cocaine from Florida to Milwaukee.
Basile was sentenced in December of 1985, nearly two years before the Sentencing Guidelines went' into effect. He disputed three items in the presentence report, but only one of them is relevant to this appeal. The report contained competing interpretations of a small portion of a taped conversation between Pipito and Basile during which Basile mentioned “forty-four pounds.” The government claimed that Basile was referring to the amount of cocaine that he had personally delivered to Pipito. Basile vehemently disagreed and maintained that the government had interpreted the reference to forty-four pounds without considering the context in which it was made. He claimed that when he mentioned the forty-four pounds he was arguing about money that Pipito owed him, and he was referring to the amount of cocaine that he had seen in Pipi-to’s possession, not to the amount that he had delivered. Neither Basile nor the district court requested that the government produce the transcript of the entire conversation. The court imposed a sentence of concurrent terms of eighteen, fifteen, and eight years in prison for the conspiracy and possession charges, and. a consecutive term of four years in prison for the charge of traveling interstate to promote criminal activity, plus a special parole period of three years. Basile did not appeal his sentence.
In March of 1991 Basile was given an initial parole hearing. The panel of examiners issued a Notice of Action rating the severity of Basile’s offense as “category eight” because he conspired to distribute more than 18.75 kilograms of cocaine. He was assigned a “salient factor score” of five. The upshot was that Basile would have to serve at least 150 months before he could be released from prison. Basile appealed to the United States Parole Commission, which affirmed the panel’s decision. He subsequently filed a motion to reconsider with the Commission pursuant to 28 C.F.R. § 2.28(a) (1991), which was denied. In June of 1992 Basile filed a motion to correct his sentence pursuant to 28 U.S.C. § 2255. In this motion Basile alleged that 1) the district court had failed to comply with Federal Rule of Criminal Procedure 32(c)(3)(D) by not resolving the dispute about the forty-four pounds of cocaine and attaching a record of its finding to the presentenee report; 2) the government should have disclosed to him the full transcript of the taped discussion during which the reference to forty-four pounds of cocaine was made; and 3) the court unduly relied on Basile’s prior criminal record. The district court denied Basile’s motion after concluding that Basile could have raised any of these claims on appeal, and that he could show neither cause for not having done so nor prejudice resulting from the alleged errors.
II. Analysis
The only claim that Basile advances on appeal is that the sentencing court violated Federal Rule of Criminal Procedure 32(c)(3)(D) by not resolving the dispute about the forty-four pounds of cocaine and attaching its finding to the presentence report. Certainly this claim would be cognizable if Basile had raised it in a direct appeal of his sentence. See Levesque v. Brennan, 864 F.2d 515, 517 (7th Cir.1988). But Basile did not. Instead he raised his claim in a motion for postconviction relief. As a result, his grounds for relief are narrower than they would be on direct appeal. Davis v. United States, 417 U.S. 333, 346-47, 94 S.Ct. 2298, 2305-06, 41 L.Ed.2d 109 (1974); Sunal v. Large, 332 U.S. 174, 178-79, 67 S.Ct. 1588, 1590-91, 91 L.Ed. 1982 (1947). Basile must show that his sentence “was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack.” 28 U.S.C. § 2255.
It is clear from this language that a mere, “technical” violation of Rule 32 cannot be corrected in a proceeding under § 2255. The.Supreme Court so held in Hill v. United States, 368 U.S. 424, 427, 82 S.Ct. 468, 470-71, 7 L.Ed.2d 417 (1962). The mere violation of a Federal Rule of Criminal Procedure is not, in the language of § 2255 itself, a jurisdictional or a constitutional error. Nor does such a violation rise to the level of a “fundamental defect” that results in a “complete miscarriage of justice” or “an omission” that is “inconsistent with the rudimentary demands of fair procedure.” Id. at 428, 82 S.Ct. at 471; cf. Scott v. United States, 997 F.2d 340, at 342 (7th Cir.1993) (misapplication of Sentencing Guidelines did not rise to level of “complete miscarriage of justice”). Basile can seek relief via § 2255 for the alleged violation of Rule 32(c)(3)(D) only to the extent that he claims that the violation deprived him of due process of law. See Johnson v. United States, 805 F.2d 1284, 1287-88 (7th Cir.1986). In other words, if what Basile is complaining about is a violation of a Federal Rule of Criminal Procedure and not a violation of the Due Process Clause of the Fifth Amendment, he has not raised a ground for relief under § 2255.
Basile does not argue here, nor did he argue before the district court, that the sentencing court’s alleged failure to comply with Rule 32 deprived him of due process of law; rather, from the beginning he has focussed entirely upon the “technical” requirements of Rule 32. In his § 2255 motion he claimed that he was entitled to relief because the sentencing court “failed to follow the provisions of Rule 32(c)(3)(D) of the Federal Rules of Criminal Procedure.” On appeal, Basile makes a single argument: the sentencing court failed to comply with Rule 32 and, for that reason, we must vacate his sentence and remand for resentencing. In support of this argument, he states that “strict compliance with Federal Rule of Criminal Procedure 32(c)(3)(D) is mandatory,” and that Rule 32 requires that a written record of the sentencing court’s findings be attached to the pre-sentence report. These statements may be truisms, and his assertion that the sentencing court did not comply with Rule 32 may be correct. Nevertheless, Basile cannot obtain relief under § 2255 unless the gravamen of his claim is that in failing to resolve the dispute over the forty-four pounds of cocaine and in failing to attach its finding to the presentence report the sentencing court denied him due process of law. Johnson, 805 F.2d at 1288. Because Basile has confined his arguments to the issue whether the sentencing court violated Rule 32(c)(3)(D), the gravamen of his claim is due process, only if due process and Rule 32 may be considered coextensive.
Nevertheless, it is clear that due process and Rule 32 are not coextensive. A criminal defendant has been denied the protections of Rule 32(c)(3)(D) if a sentencing court fails to make a finding regarding the accuracy of a challenged' factual matter or determines that no reliance will be placed on that factual, matter at the time of sentencing. But he has not been denied due process unless, in imposing the sentence,' the court relied on false information. United States v. Tucker, 404 U.S. 443, 447, 92 S.Ct. 589, 591-92, 30 L.Ed.2d 592 (1972). It follows that a sentencing court can run afoul of Rule 32(c)(3)(D) without depriving a defendant of due process of law. All that Basile has alleged is that the sentencing court failed to comply with the requirements of Rule 32(c)(3)(D). The gravamen of his claim is not due process. We therefore must conclude that Basile’s claim is not cognizable under § 2255.
The district court’s judgment denying Ba-sile’s § 2255 motion is Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
SEITZ, Circuit Judge.
This is an appeal from a judgment entered by the district court on a jury verdict for plaintiff and from an order of the district court denying appellant’s motions for a judgment n. o. v., for a new trial, and for an amendment of judgment.
Plaintiff, William R. Beavers, Administrator of the Estate of Malcolm R. Mason, commenced a diversity action under the Pennsylvania Survival and Wrongful Death Acts against West Penn Power Company (West Penn) and appellant, Bell Telephone Company of Pennsylvania (Bell). Malcolm R. Mason (decedent), aged ten, was killed when he came into contact with a high tension wire while climbing a tree near the edge of his parents’ property. The wire was owned and maintained by West Penn and was, pursuant to the terms of an agreement between the defendants, strung on poles owned by Bell. Plaintiff alleged that West Penn was negligent in maintaining its wires and the poles to which they were attached, in failing to insulate the wires, in failing to notify decedent’s parents of a dangerous condition existing on their property, and in failing to exercise the degree of care owing to the public generally. He also alleged that West Penn was a trespasser since its wires were outside the utility easement on the Mason property.
Plaintiff claimed that Bell was negligent in failing to properly install, maintain, and/or inspect the telephone poles and the attached wires, in using defective poles, in failing to warn decedent’s parents of a dangerous condition existing on their property, and in failing to exercise the degree of care it owed to decedent. He also alleged that Bell was a trespasser since its poles leaned outside the utility easement on the Mason property. Bell denied the allegations of negligence and trespass and claimed that the decedent was guilty of contributory negligence.
Bell also filed a third-party complaint against decedent’s parents, alleging that they were negligent in the supervision of decedent and in failing to warn West Penn or Bell of an allegedly dangerous condition on the Mason property. Bell claimed that the parents were liable over to it for any sums for which Bell might be liable or, alternatively, that it was entitled to contribution from them. The parents denied Bell’s allegations and set up the intra-family tort immunity doctrine as a defense.
The trial judge ruled as a matter of law that West Penn and Bell were engaged in a joint venture with regard to the maintenance of the electric transmission line involved and instructed the jury to impute the negligence of Bell or West Penn to the other. In connection with the trespass issue he ruled, contrary to Bell’s contention, that Bell’s easement was limited to a 10-foot strip upon the Mason property along the northeast boundary line of the property.
In answer to special interrogatories the jury found that the negligence of West Penn muL Bell and the negligence of the parents caused the death of decedent; that decedent was free from contributory negligence; that the point at which decedent met his death was on his parents’ property but more than 10 feet from the northeast boundary line of such property; and that the damages sustained by the estate as a result of the death were $85,000. Judgment in that amount was entered against Bell and West Penn. Judgment in favor of the parents was entered on Bell’s third-party complaint. After the denial of its motions Bell appealed. West Penn settled with plaintiff after the entry of the judgment and thus is not a party to the appeal.
Bell first asserts that the district court erred in denying its motion for a judgment n. o. v. as to plaintiff’s judgment against it. The evidence presented at the trial, which will be discussed hereinafter, demonstrates that it would not be unreasonable for a jury to find that the acts of Bell constituted either a trespass or negligence which proximately caused the death of decedent. Therefore, it was not error for the district court to deny Bell’s motion for judgment n. o. v. We now consider whether a new trial is required.
Bell assigns as error the ruling of the district court that it and West Penn were engaged in a joint venture in regard to the electric transmission line involved in this case. The court charged the jury that “because the electric transmission line involved in this case was maintained by the two corporations, they were engaged in a joint venture. And therefore for the purposes of this case and under the evidence in this case, each of them is equally liable for the actions or failure to act of either or both of them.” As a result of this instruction we think it is clear that the jury was permitted to impute the negligence of Bell or West Penn to the other. Was this error?
In order to impute negligence under the controlling Pennsylvania law the plaintiff was required to establish a joint venture. Joint venture is an amorphous legal doctrine. It is sometimes said to be an association of parties to engage in a single business enterprise for profit. It may arise from an express contract or may be implied from the acts and conduct of the parties. To constitute a joint venture under Pennsylvania law certain factors are essential: 1) each party must make a contribution of capital, materials, services or knowledge; 2) profits must be shared; and 3) there must be a joint proprietary interest in and right of mutual control over the subject matter of the enterprise. Richardson v. Walsh Constr. Co., 334 F.2d 334 (3d Cir. 1964); McRoberts v. Phelps, 391 Pa. 591, 138 A.2d 439 (1958). What are the facts here?
In 1933 Bell entered into an agreement with West Penn by which each was given the right to use the other’s poles to string its wires. The agreement was clearly designed to prevent the unsightly and uneconomical duplication of utility poles. Under the agreement, ownership of jointly used poles remained in the original owner as did the exclusive obligation to maintain them. Bell was entitled to reimbursement from West Penn for a share of the maintenance expenses unless the need for maintenance was due to conditions for which Bell alone was responsible. In the instant case, while West Penn was permitted to use Bell’s poles in stringing its wire, ownership of the poles remained with Bell. From these provisions of the agreement we are unable to find that Bell and West Penn had a joint proprietary interest in or right of mutual control over the subject matter of their agreement. Consequently, we can find no permissible basis under Pennsylvania law of joint venture for here imputing West Penn’s negligence to Bell solely by virtue of the relationship created by their agreement.
Plaintiff, citing 29 C.J.S. Electricity § 57, at 1130, asserts that “a present danger caused by present maintenance of wiring in a negligent manner concurring with present negligence of another, both creating the conditions causing the mishap, renders both liable.” Assuming the correctness of the statement of the law, such a rule, absent imputed negligence, still requires proof of independent negligence or trespass and causation on the part of both parties.
We conclude that the district court erred when it charged the jury on a theory of joint venture. Since the jury may have here found Bell liable on this erroneous theory, we must of necessity reverse the judgment of the district court against Bell. Because the case must be retried, in the interest of justice we address ourselves to other alleged trial errors.
Bell assigns as error the district court’s ruling that Bell’s easement upon the Mason property was limited to 10 feet along the northeast boundary of the property. The district court submitted the following special interrogatory to the jury: “Was the point at which Malcolm Mason met his death more than 10 feet from the northeasterly boundary line of the property of Robert S. Mason and Irene M. Mason?” The jury’s answer was “yes.” This interrogatory was presumably submitted to the jury in order to determine whether the location of the electric wire at the time of the accident made Bell and/or West Penn trespassers. The trespass to land issue is important because under Pennsylvania law such a trespasser becomes liable for personal injuries resulting from the trespass whether the injury is proximate or indirect. It matters not whether the trespass resulted from an innocent mistake on the part of the trespasser. Kopka v. Bell Telephone Co., 371 Pa. 444, 91 A.2d 232 (1952). Again we look to the facts.
Bell acquired an easement on the Mason property by an agreement executed on December 5, 1941 between William F. Sullivan (grantor) and Bell. This agreement gave Bell the right to maintain its lines and poles upon the grant- or’s land, then recorded as the Mount Vernon Plan of Lots. The agreement stated that “(t)he approximate location of said poles and anchors is more fully shown on a plan marked 19137-M. * * *” The plan marked 19137-M shows lot 32, the property in question which was later purchased by the Masons, with the poles and anchors with which we are concerned placed in the corners of the northeast boundary line. The plan shows that one of the poles has two anchors attached to it each extending a distance of 10 feet from the pole to the boundary of the Masons’ property.
A development plan recorded by Sullivan was also introduced into evidence. This plan specifically shows a 10-foot strip dedicated as an easement for public utilities extending along the northeast boundary of what later became the Masons’ property. This plan was recorded prior to the date when Bell entered into the easement agreement with Sullivan. However, the development plan was not incorporated into the plan marked 19137-M, and thus not into the easement agreement. But did the easement agreement create a 10-foot easement? The agreement did not have a 10-foot limitation. In the absence of a definite limitation upon the easement rights acquired, their limits must be determined according to the doctrine of practical construction; hence, under Pennsylvania law, acquiescence in the actual location of the poles and their attached apparatus will define the extent of the easement rights granted. Hogg v. Bailey, 5 Pa.Super. 426, 433 (1897); Pennsylvania Water & Power Co. v. Reigart, 127 Pa.Super. 600, 193 A. 311 (1937); accord, United States ex rel. and for Use of Tennessee Valley Authority v. An Easement & Right of Way, 182 F.Supp. 899, 902 (M.D.Tenn.1960). Thus the actual location of the poles as originally placed in 1941 defined the scope of the original easement. It follows that the district court erred when it formulated one of its special interrogatories to the jury on the basis of its ruling that Bell had a 10-foot easement. Such error was prejudicial to Bell because the evidence, if believed, showed that in 1941 the poles were partly outside the claimed 10-foot easement.
The evidence at trial indicates that at some time after the poles were placed on the property one of them tilted so that its top was more than two feet further into the Mason property than when originally located. Since, as has been indicated, the original placement of the poles defined the limits of the easement, the question arises as to whether the leaning of the pole to that extent placed it and the fatal electric wire beyond the ambit of the original easement. We think that if the jury were to accept plaintiff’s testimony as to the degree of tilt, it would follow that Bell had exceeded the limits of the original easement. In that ease Bell was guilty of a trespass unless it established under Pennsylvania law that the tilt had existed for a sufficient period to create a prescriptive right in that position of its poles. These issues must be resolved by the jury on the new trial of plaintiff’s trespass claim.
Bell next asserts that the district court erred in denying its motion to amend the judgment in favor of the Masons as third-party defendants. The district court held that Bell was not entitled to contribution from the Masons because, although the Masons were found negligent, Bell was guilty of a tes-pass and as a trespasser it had commit-ed an illegal act and was thereby precluded from seeking contribution. Since the contribution issue will arise again, we consider the correctness of the district court’s ruling.
Since the appellate courts of Pennsylvania have not spoken to this question, we must “predict” the applicable Pennsylvania law. In this connection, we need not review the present status of the Pennsylvania law at length as it is set forth in Cage v. New York Cent. R. R., 276 F.Supp. 778, 788-791 (W.D.Pa.), aff’d per curiam, 386 F.2d 998 (3d Cir. 1967). The court there concluded that Pennsylvania would hold that a tortfeasor found guilty of wanton and willful misconduct could not enforce a right of contribution against one specifically found guilty only of simple negligence in the same accident. The necessary implication of this decision is that Pennsylvania would not automatically grant contribution under its Contribution Act.
Would Pennsylvania decide that Bell’s actions constituted such wanton misconduct as to require the denial of contribution where the other party is guilty of only simple negligence? The trespass and/or negligence, if found, involved the projection of an inherently and highly dangerous instrumentality, a bare electric wire carrying 4000 volts, through a tree located on private residential property. The record also shows that Bell admitted by way of an answer to an interrogatory that in 1955 it received a report that one of the poles in question was leaning. It presumably did nothing because one of its witnesses testified that a tilt of 2 feet 5 inches at the top of the pole was not excessive. We think this evidence would justify a jury in finding wanton misconduct from the existence of a risk of which Bell must be taken to have been aware and which it disregarded by intentional conduct of an unreasonable character out of a conscious indifference to its consequences. Such a finding would require the district court to deny contribution. We think the district court’s ruling on this issue was erroneous because it made the mere fact of trespass, no matter how innocent, the basis for denying contribution.
The judgment of the district court on the jury verdict, aá against Bell, will be reversed; the judgment of the district court denying Bell’s motion for judgment n. o. v. will be affirmed; its judgment denying Bell’s motion for a new trial will be reversed and case remanded for a new trial; and its order denying Bell’s motion to amend the third-party judgment will be vacated and the matter remanded for proceedings consistent with this opinion.
. 20 P.S. § 320.601, 12 P.S. §§ 1601 et seq. respectively.
. Originally the district court awarded $2,575 on behalf of the decedent’s parents for funeral and burial expenses under the Wrongful Death Act. On Bell’s motion, by amendment, the court struck this portion of the judgment because of the jury’s determination, hesitantly accepted by the court, that the decedent’s parents were negligent. The parents did not appeal this ruling.
. The court submitted the following special interrogatory to the jury based on this charge: “Was there any negligence on the part of West Penn Power Company and Bell Telephone Company of Pennsylvania which caused the death of Malcolm Mason on April 22, 1965?” The jury’s answer was “yes.”
. We recognize that Brenneis v. Marley, 5 Pa.Dist. and Co.2d 20, 23-25 (1955) appears to hold to the contrary. We feel compelled to follow our court’s “prophecy” as to the Pennsylvania law as found in Cage. To the extent the dictum in Duckworth v. Ford Motor Co., 320 F.2d 130 (3d Cir. 1963) is in conflict with Cage, we consider Cage more compelling. See Fenton v. McCrory Corp., 47 F.R.D. 260 (W.D.Pa.1969).
. See Skoda v. West Penn Power Co., 411 Pa. 323, 191 A.2d 822 (1963); Karam v. Pennsylvania Power & Light Co., 205 Pa.Super. 318, 208 A.2d 876 (1965).
. Evans v. Philadelphia Transp. Co., 418 Pa. 567, 212 A.2d 440 (1965); see Thompson v. Pennsylvania Power Co., 402 F.2d 88 (3d Cir. 1968).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CARDAMONE, Circuit Judge:
Plaintiff Genesco, Inc., (Genesco), a manufacturer of tailored clothing, brought this damage action in the United States District Court for the Southern District of New York (Lowe, J.), against two of its principal fabric suppliers, alleging essentially that they had conspired with one of its high-ranking employees to supply it with overpriced, damaged, and unsuitable goods. Defendants T. Kakiuchi & Co., Ltd. (Kakiu-chi-Japan) and T. Kakiuchi America, Inc. (Kakiuchi-America), moved to stay the proceedings pending arbitration, which the district court denied except as to two claims against Kakiuchi-America. Both Kakiuchi defendants appeal the denial of their stay motions, and Genesco cross-appeals from the grant of the stay as to Kakiuchi-Amer-ica’s two claims.
FACTS
Genesco is an American corporation engaged in the manufacture and distribution of tailored clothing throughout the United States. Kakiuchi-Japan, a Japanese corporation, exports fabric or “piece goods” to textile manufacturers and distributors. Kakiuchi-America, an American corporation wholly owned by Kakiuchi-Japan, is Kakiuchi-Japan’s agent in the United States. Genesco obtains fabric for its manufacturing operations from Japan, Korea, and Great Britain, and began purchasing piece goods from Kakiuchis Japan and America, both of which have contacts in the textile business in those areas. These piece goods were purchased pursuant to a series of written orders and confirmation notices, together forming the parties’ purchase and sales agreements. Each sales agreement contained an arbitration provision.
In 1979 the Kakiuchi defendants allegedly entered into a conspiracy with Genes-co’s vice-president of purchasing. In exchange for substantial payments, this official allegedly arranged to purchase all of Genesco’s Japanese or English-origin piece goods solely from Kakiuchi-Japan or its affiliates. Genesco maintains that its employee also improperly approved the purchase of overpriced, damaged, unsuitable, or noncompetitive piece goods. Upon discovering this scheme, Genesco filed suit against Kakiuchis Japan and America raising fraud, Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(a), (c), and (d) (1982), Robinson-Patman Price Discrimination Act, 15 U.S.C. § 13(c) (1982), unjust enrichment, tortious interference with contractual relations, money had and received, and unfair competition claims. Kakiuchis Japan and America then moved pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (1982) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. No. 6997, reprinted at 9 U.S.C.A. § 201 note (West Supp. 1986), to stay the action pending arbitration. The district court judge referred the motions to a federal magistrate who issued his Report and Recommendation on March 5, 1986. On July 30, 1986, based on this recommendation, the district court granted Kakiuchi-America’s motion to stay the fraud and RICO claims, denied its motion to stay the other claims, and denied Kakiu-chi-Japan’s motion in toto. On September 23, 1986, the district court certified the arbitration question for immediate appeal pursuant to 28 U.S.C. § 1292(b) (1982). We have jurisdiction over the legal claims on this appeal under 28 U.S.C. § 1292(a)(1), see Paine, Webber, Jackson & Curtis, Inc. v. Chase Manhattan Bank, 728 F.2d 577, 579 n. 2 (2d Cir.1984) and over the equitable claims under 28 U.S.C. § 1292(b).
DISCUSSION
The United States Arbitration Act (the Act), codified at 9 U.S.C. §§ 1-14, reflects a legislative recognition of “the desirability of arbitration as an alternative to the complications of litigation.” Wilko v. Swan, 346 U.S. 427, 431, 74 S.Ct. 182, 185, 98 L.Ed. 168 (1953). The Act, “reversing centuries of judicial hostility to arbitration agreements,” Scherk v. Alberto-Culver Co., 417 U.S. 506, 510, 94 S.Ct. 2449, 2453, 41 L.Ed.2d 270 (1974), was designed to allow parties to avoid “the costliness and delays of litigation,” and to place arbitration agreements “upon the same footing as other contracts...” H.R.Rep. No. 96, 68th Cong., 1st Sess. 1, 2 (1924); see also S.Rep. No. 536, 68th Cong., 1st Sess. (1924). To achieve these goals, it provides that written provisions to arbitrate controversies in any contract involving commerce “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 2 is “a congressional declaration of a liberal federal policy favoring arbitration agreements____” Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). The Act also provides in § 3 for a stay of proceedings where the court is satisfied that the issue before it is arbitrable under the agreement, and § 4 of the Act directs a federal court to order parties to proceed to arbitration if there has been a “ ‘failure, neglect, or refusal’ of any party to honor an agreement to arbitrate.” Scherk, 417 U.S. at 511, 94 S.Ct. at 2453. These provisions are mandatory: “[b]y its terms, the Act leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985) (original emphasis).
Given these statutory directives, a court asked to stay proceedings pending arbitration in a case covered by the Act has essentially four tasks: first, it must determine whether the parties agreed to arbitrate, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985); second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable, see Mitsubishi, 105 S.Ct. at 3355; and fourth, if the court concludes that some, but not all, of the claims in the case are arbitrable, it must then determine whether to stay the balance of the proceedings pending arbitration. With these tasks in mind, we consider first whether Genesco and the Kakiuchi defendants agreed to arbitrate their disputes.
I The Agreement to Arbitrate
In each sales transaction Genesco submitted a written purchase order to Kakiu-chi-Japan which then returned to Genesco a written sales confirmation form. On the back of the form is set forth a comprehensive list of terms and conditions. Among these terms and conditions, Clause 14 provides, in relevant part:
All claims and disputes of whatever nature arising under this contract shall be settled amicably as far as possible, but in case of failing it shall be referred to [arbitration in Japan before the Japan Commercial Arbitration Association].
Genesco received these forms without objection, and returned a number of them to Kakiuchi-Japan with the initials or signature of a high-ranking officer. When it returned items Genesco also acknowledged the sales confirmation forms by referring to them in the return notices.
Genesco and Kakiuchi-America transacted business through a similar exchange of purchase orders and confirmation notes. On the bottom of the front side, Kakiuchi-America’s sales confirmation note states: “THIS CONTRACT IS SUBJECT TO ALL THE TERMS AND CONDITIONS ON THIS AND THE REVERSE SIDE THEREOF, INCLUDING THE PROVISIONS OF PARAGRAPH 7 PROVIDING FOR ARBITRATION OF ALL DISPUTES.” The arbitration clause on the reverse side states in relevant part:
Any controversy arising out of or relating to this contract or any modification or extension thereof, including any claim for damages and/or rescission shall be settled by arbitration before a panel of three arbitrators in New York City.
Again Genesco received these forms without objection and returned a number of them with its signature.
Based on these exchanges and after a detailed review of the voluminous eviden-tiary submissions, the district court found that Genesco had agreed to arbitrate its disputes under both the signed and unsigned agreements with both the Kakiuchi defendants. We see no reason to disturb this factual finding. Fed.R.Civ.P. 52(a); see In re Hart Ski Manufacturing Co., 711 F.2d 845, 846 (8th Cir.1983) (whether the parties have agreed to arbitrate is a factual question); Hanes Supply Co. v. Valley Evaporating Co., 261 F.2d 29, 34-35 (5th Cir.1958) (same).
In enacting the federal Arbitration Act, Congress created national substantive law governing questions of the validity and the enforceability of arbitration agreements under its coverage. See Mitsubishi, 105 S.Ct. at 3354; Moses H. Cone, 460 U.S. at 24, 103 S.Ct. at 941; Varley v. Tarrytown Associates, Inc., 477 F.2d 208, 209 (2d Cir.1973). Hence whether Genesco is bound by the arbitration clause of the sales confirmation forms is determined under federal law, which comprises generally accepted principles of contract law. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 1806, 18 L.Ed.2d 1270 (1967); In re Hart Ski Manufacturing, 711 F.2d at 846; Fisser v. International Bank, 282 F.2d 231, 233 (2d Cir.1960); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 406 (2d Cir.1959), cert. dismissed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37 (1960); but see Supak & Sons Manufacturing Co. v. Pervel Indus., Inc., 593 F.2d 135, 137 (4th Cir. 1979).
Under general contract principles a party is bound by the provisions of a contract that he signs, unless he can show special circumstances that would relieve him of such an obligation. See Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350, 1352 (11th Cir.1986) (per cu-riam); N & D Fashions, Inc. v. DHJ Industries, Inc., 548 F.2d 722, 727 (8th Cir. 1976). Here, the district court found that Genesco was an experienced textile concern with economic power equal to that of Kaki-uchi-Japan. It also found no impediment to the validity of the agreement. On the contrary, the widespread use of arbitration clauses in the textile industry puts a contracting party, like Genesco, on notice that its agreement probably contains such a clause. See N & D Fashions, 548 F.2d at 726 & n. 8; Avila Group, Inc. v. Norma J. of California, 426 F.Supp. 537, 541 n. 10 (S.D.N.Y.1977). Thus, the district court properly concluded that Genesco' was bound to arbitrate disputes arising under the signed sales confirmation forms. Gen-esco does not contest these findings, but claims instead that it never specifically agreed to the arbitration clauses. Such misapprehends our inquiry. We focus not on whether there was subjective agreement as to each clause in the contract, but on whether there was an objective agreement with respect to the entire contract. See N & D Fashions, 548 F.2d at 727.
As to the unsigned forms it is well-established that a party may be bound by an agreement to arbitrate even absent a signature. See, e.g., McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519, 524 (2d Cir.1980). Further, while the Act requires a writing, it does not require that the writing be signed by the parties. See 9 U.S.C. § 3; Medical Development Corp. v. Industrial Molding Corp., 479 F.2d 345, 348 (10th Cir.1973); Fisser, 282 F.2d at 233. Thus, the district court did not err in finding that in this long standing and on-going relationship Genesco agreed to arbitrate disputes arising under the unsigned sales confirmation forms as well. See Imptex International Corp. v. Lorprint Inc., 625 F.Supp. 1572 (S.D.N.Y. 1986). In short, Genesco agreed to arbitrate all disputes arising from purchase agreements with both Kakiuchis. We turn now to examine the scope of that agreement.
II The Scope of The Arbitration Agreement
Relying on the magistrate’s recommendations — which only discussed the arbitrability of the fraud and RICO claims — the district court found that none of the claims against Kakiuchi-Japan fall within its arbitration provision. As to Kakiuchi-America, it determined that only the common law fraud and RICO claims were within its arbitration clause. Hence, it concluded that Genesco’s other claims against Kakiuchi-America were not subject to arbitration. We review these rulings de novo. Mediterranean Enterprises, Inc. v. Ssangyong, 708 F.2d 1458 1462-63 (9th Cir.1983); see Lorber Industries of California v. Los Angeles Printworks Corp., 803 F.2d 523 (9th Cir.1986) (denial of motion to compel arbitration is subject to de novo review); Zolezzi v. Dean Witter Reynolds, Inc., 789 F.2d 1447, 1449 (9th Cir.1986) (order compelling arbitration is subject to de novo review).
In determining whether a particular claim falls within the scope of the parties’ arbitration agreement, we focus on the factual allegations in the complaint rather than the legal causes of action asserted. See Mitsubishi, 105 S.Ct. at 3352 n. 9, 3353 n. 13. If the allegations underlying the claims “touch matters” covered by the parties’ sales agreements, then those claims must be arbitrated, whatever the legal labels attached to them. See id. at 3353 n. 13. Applying this test, the parties each paint a different picture of the controversy: Genesco maintains that conspiracy and bribery are at the heart of its complaint, while the Kakiuchi defendants claim that overcharges and defective goods — all relating to the contract — are the crux of Genes-co’s suit. An examination of the factual allegations in the complaint reveals that both are essentially correct.
Genesco brought eight separate common law and statutory claims for relief against Kakiuchi-Japan and seven against Kakiu-chi-America, all based on the same central factual allegations. These allegations state that the defendants overcharged Gen-esco over an extended period of time for the piece goods it had purchased from them under the purchase and sale agreements. Genesco claims that it later discovered that the prices paid were substantially above fair market value and that the piece goods were unsuitable, obsolete, out-of-season, or damaged. Defendants accomplished these overcharges and inappropriate sales, Gen-esco asserts, by conspiring with and bribing its vice-president for purchasing. Both conspiracy and damaged goods are asserted throughout the complaint, suggesting both tort and contract causes of action. This dual contractual and tortious nature of the action creates a difficult arbitrability question. Hence, we look to recent Supreme Court precedent for guidance.
Where, as here, a determination has been made that parties have entered into binding and enforceable agreements to arbitrate their disputes, the Supreme Court has made it evident that questions regarding the scope of the arbitration provision must be addressed:
With a healthy regard for the federal policy favoring arbitration... the Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.
Moses H. Cone, 460 U.S. at 24-25,103 S.Ct. at 941. This “emphatic federal policy in favor of arbitral dispute resolution” “applies with special force in the field of international commerce.” Mitsubishi, 105 S.Ct. at 3356-57.
We expressed the same view in S.A. Mineracao da Trindade-Samitri v. Utah Int’l, Inc. (“Samitri”):
The federal policy favoring arbitration requires us to construe arbitration clauses as broadly as possible. “[DJoubts as to arbitrability should be ‘resolved in favor of coverage,’... language excluding certain disputes from arbitration must be ‘clear and unambiguous’ or ‘unmistakably clear’ and... arbitration should be ordered ‘unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’ ”
745 F.2d 190, 194 (2d Cir.1984) (quoting Wire Service Guild v. United Press Int’l, 623 F.2d 257, 260 (2d Cir.1980) (quoting International Ass’n of Machinists and Aerospace Workers, AFL-CIO v. General Electric Co., 406 F.2d 1046, 1048 (2d Cir. 1969))). We now examine the specific claims for relief raised in the complaint more closely, mindful that doubts must be resolved in favor of arbitrability.
A. The Statutory Claims
To determine the arbitrability of Genes-co’s statutory claims under RICO and Robinson-Patman, we must first decide whether these claims are included within the scope of the arbitration clauses and then whether these claims are arbitrable as a matter of law.
1. Scope of the Arbitration Clauses as to RICO
In Count III, Genesco alleges that defendants Kakiuchis Japan and America conspired with others to defraud and injure Genesco in its business through a pattern of racketeering activity in violation of the civil RICO statute, 18 U.S.C. § 1962(a), (c), and (d). Genesco asserts wire fraud, 18 U.S.C. § 1343, mail fraud, § 1341, and illegal interstate and foreign transportation as the predicate acts for this claim. More specifically, Count II states that the defendants caused to be delivered “confirmations, invoices and other documents relating to transactions necessary to defraud, or unlawfully obtain money and property, from Genesco” and caused to be sent in interstate and foreign commerce telexed messages, telephone calls, and wire transfers of funds from Genesco in furtherance of the conspiracy. The complaint also explains that the mailed invoices were fraudulent because they were “at prices substantially in excess of the fair market value” of the piece goods, for piece goods “unsuitable for use [by Genesco] in its tailored clothing operations”, and for “obsolete, out-of-season, defective or damaged” piece goods. Because the specific language of the two arbitration provisions differ, we consider the arbitrability of the claims against Kakiuchis Japan and America separately.
We find that the parties’ arbitration clause encompasses Genesco’s RICO claim against Kakiuchi-Japan. The wire, mail, and transportation fraud allegations which form the predicate acts of Genesco’s RICO claim all derive from the parties’ transactions under the sales agreements. Genesco’s theory is, in essence, that Kakiuchi-Japan, through the improper use of the mails, telephone, and other modes of communication, fraudulently sold it piece goods which did not meet the standards and prices of the parties’ sales agreements. Examining the complaint and bearing in mind that ambiguities in scope should be resolved in favor of coverage, Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct. at 941, particularly in the international context, Mitsubishi, 105 S.Ct. at 3357, we conclude that Genesco’s RICO claim against Kakiuchi-Japan “arises under” the parties’ sales agreements. Because Kakiuchi-America’s arbitration clause is even broader than Kakiuchi-Japan’s clause, Genesco’s RICO claim against Kakiuchi-America a fortiori is one “arising out of” or “relating to” the parties’ sales agreements.
2. Arbitrability of RICO Claims
Having determined that Genesco’s civil RICO claims fall within the arbitration clauses, we must next decide as a matter of law whether Congress intended RICO claims to be nonarbitrable. This question has generated much controversy in recent years, resulting in both intercircuit, compare, e.g., Mayaja, Inc. v. Bodkin, 803 F.2d 157 (5th Cir.1986) (arbitrable), petition for cert. filed, 55 U.S.L.W. 3523 (Jan. 14, 1987) (No. 86-1160) with, e.g., Page v. Moseley, Hallgarten, Estabrook & Weeden, Inc., 806 F.2d 291 (1st Cir.1986) (nonarbitrable), and intracircuit conflicts. Compare, e.g., Rhoades v. Powell, 644 F.Supp. 645 (E.D.Cal.1986) (nonarbitrable) with Sacks v. Dean Witter Reynolds, Inc., 627 F.Supp. 377 (C.D.Cal.1985) (arbitrable) and compare also Preston v. Kruezer, 641 F.Supp. 1163 (N.D.Ill.1986) (nonarbitrable) with Steinberg v. Illinois Co. Inc., 635 F.Supp. 615 (N.D.Ill.1986) (arbitrable). The debate has come, in large part, in response to the Supreme Court’s decision in Mitsubishi, which signaled a new approach to the arbitrability of statutory claims. Thus, Mitsubishi prompted many courts to rethink their stance on the arbitrability of RICO claims. For example, the Fifth Circuit at first held RICO claims to be nonarbitrable, Smoky Greenhaw Cotton Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 785 F.2d 1274 (5th Cir.1986) (Green-haw I), but then remanded the issue to the district court for full briefing on the ground that Mitsubishi cast doubt on its initial decision. Id. at 1282 (per curiam) (Greenhaw II). On later appeal, the Fifth Circuit affirmed the district court and held RICO claims to be arbitrable. Smoky Greenhaw Cotton Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 805 F.2d 1221 (5th Cir.1986) (Greenhaw III); see also Development Bank of the Philippines v. Chemtex Fibers Inc., 617 F.Supp. 55, 56-57 (S.D.N.Y.1985) (rethinking holding of district court in Samitri that RICO claims are nonarbitrable in light of Mitsubishi).
In Mitsubishi, the Supreme Court held that nothing in the nature of the federal antitrust laws prohibits parties from agreeing to arbitrate antitrust claims arising out of international commercial transactions. 105 S.Ct. at 3355-61. In so holding, the Supreme Court stated that there is no per se presumption against arbitration of statutory claims. Id. at 3353. The Court warned against “disfavoring agreements to arbitrate statutory claims” and ignoring the “hospitable inquiry into arbitrability”, and explained that the parties, having made the bargain to arbitrate, should be bound by it unless Congress itself has evinced an intention to preclude arbitration of the statutory rights at issue. Id. at 3355. Thus, rather than drawing presumptions regarding the arbitrability of statutory claims as courts have done in the past, see, e.g., American Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821 (2d Cir. 1968), examined in Mitsubishi, 105 S.Ct. at 3355-61, we now must deduce from the text or legislative history of the federal statute in question evidence of an affirmative congressional protection of the right to a judicial forum. Mitsubishi, 105 S.Ct. at 3355. Absent that evidence, nothing prevents a court from concluding that Congress aimed to allow the arbitration of these claims.
Genesco argues that we have already held RICO claims to be nonarbitrable in both McMahon v. Shearson/American Express, Inc., 788 F.2d 94 (2d Cir.), cert. granted, — U.S. -, 107 S.Ct. 60, 93 L.Ed.2d 20 (1986) and Samitri, 745 F.2d 194. We cannot fully agree. McMahon held that RICO claims asserted in the context of domestic commercial transactions are nonarbitrable as a matter of law. 788 F.2d at 98-99. McMahon did not decide the arbitrability of RICO claims in the international context. In fact, McMahon explicitly distinguished the domestic case before it from the Supreme Court’s teachings in the international arena. Thus, the McMahon court implicitly recognized Mitsubishi ’s applicability to RICO claims arising in an international context. See id. Indeed, the Supreme Court has drawn a similar distinction between international and domestic contexts in the area of securities claims. Compare Scherk, 417 U.S. 506, 94 S.Ct. 2449 (international securities claim arbitrable) with Wilko, 346 U.S. 427, 74 S.Ct. 182 (domestic securities claim non-arbitrable). Thus, while McMahon does in fact govern any domestic RICO claims Gen-esco may have, it does not apply to international RICO claims.
Nor did we squarely address the arbitra-bility of international RICO claims in Sam-itri. In Samitri, the district court held that RICO Act claims were not arbitrable. 576 F.Supp. 566, 574 (S.D.N.Y.1983), aff'd on other grounds, 745 F.2d 190 (2d Cir. 1984). The district court analogized RICO claims to antitrust claims which, before Mitsubishi, courts had long held to be nonarbitrable. See, e.g., Cobb v. Lewis, 488 F.2d 41, 47 (5th Cir.1974); Helfenbein v. International Indus., Inc., 438 F.2d 1068, 1070 (8th Cir.), cert. denied, 404 U.S. 872, 92 S.Ct. 63, 30 L.Ed.2d 115 (1971). Relying on the American Safety doctrine which states that the pervasive public interest in the enforcement of certain federal statutes makes claims arising under those statutes nonarbitrable, see American Safety, 391 F.2d at 827-28, the district court reasoned that, like antitrust laws, RICO Act enforcement not only affects the individuals involved, but also effectuates important societal policies, including the eradication of organized crime. 576 F.Supp. at 574-76. Because of this strong public interest, the district court concluded that RICO claims are nonarbitrable. Id. Because the parties did not challenge this portion of the district court’s opinion on appeal, see 745 F.2d at 193, we had no opportunity to review the lower court’s holding that international RICO claims are nonarbitrable under the American Safety doctrine. Therefore, though Samitri arose in an international context, we have yet to decide whether international RICO claims are arbitrable.
To determine whether RICO is arbitrable in the international context we must evaluate RICO under the Mitsubishi analysis. In order for a statutory claim to override the strong federal policy in favor of arbitration, the party opposing arbitration must show that Congress reserved a federal forum to vindicate rights under that statute. Mayaja, 803 F.2d at 161; see Mitsubishi, 105 S.Ct. at 3355. In short, Genes-co must demonstrate that Congress planned to make an exception to the Arbitration Act for RICO claims, see Mitsubishi, 105 S.Ct. at 3355, which must be deducible from either RICO’s text or legislative history. Id. We examine each in turn.
RICO provides a private civil action to recover treble damages for injury caused by a violation of its substantive provisions. § 1964(c). It contains no anti-waiver provision prohibiting parties from voluntarily relinquishing a judicial forum. Mayaja, 803 F.2d at 164; Jacobson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 797 F.2d 1197, 1202 (3rd Cir.), petition for cert. filed, 55 U.S.L.W. 3259 (Sept. 25, 1986) (No. 86-487); cf. Wilko, 346 U.S. at 437, 74 S.Ct. at 188 (anti-waiver provision reveals congressional intent to bar arbitrability of securities actions under the Securities Act of 1933). Nothing in the statutory language suggests that RICO claims are to be excluded from the dictates of the Act. We turn then to the legislative history.
Added to the House version of the bill after the original bill had been passed by the Senate, the private treble-damages provision of RICO, codified as § 1964(c), received relatively little discussion in either House. Mayaja, 803 F.2d at 164; see Sedi-ma S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 3280, 87 L.Ed.2d 346 (1985). Nor did the legislative debate address the arbitrability of claims brought under § 1964(c). Accord Mayaja, 803 F.2d at 164; Jacobson, 797 F.2d at 1202 (“[Tjhere is no legislative history suggesting that Congress ever considered whether RICO civil claims should be arbitrated.”).
Because Congress failed to comment on arbitrability, we examine the purposes underlying § 1964(c) to determine whether— due to an inherent conflict between those purposes and the arbitration of such claims — Congress implicitly intended RICO claims to be nonarbitrable. See Mitsubishi, 105 S.Ct. at 3355, 3358-60 (examining, in the absence of an explicit statement of congressional intent as to arbitrability, congressional policies behind § 4 of the Clayton Act); cf. McDonald v. City of West Branch, 466 U.S. 284, 290, 104 S.Ct. 1799, 1803, 80 L.Ed.2d 302 (1984) (holding that § 1983 claims are nonarbitrable because arbitration “cannot provide an adequate substitute for a judicial proceeding” in achieving § 1983’s objectives); Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 742-45, 101 S.Ct. 1437, 1445-47, 67 L.Ed.2d 641 (1981) (finding congressional intent that Fair Labor Standards Act of 1938 claims be nonarbitrable because of conflict between arbitration and FLSA’s purposes); Alexander v. Gardner-Denver Co., 415 U.S. 36, 56, 94 S.Ct. 1011, 1023, 39 L.Ed.2d 147 (1974) (“The purpose and procedures of Title YII indicate that Congress intended federal courts to exercise final responsibility for enforcement of Title VII; deferral to arbitral decisions would be inconsistent with that goal.”).
The legislative history of § 1964(c) reveals three recurrent congressional purposes: First, Congress’ primary purpose in enacting § 1964(c) was to compensate the victims of organized crime. Representative Steiger, who proposed the addition of a private treble-damages action, emphasized that “those who have been wronged by organized crime should at least be given access to a legal remedy.” Sedima, 105 S.Ct. at 3280 (quoting Hearings on S. 30, and Related Proposals, before Subcommittee No. 5 of the House Committee on the Judiciary, 91st Cong., 2d Sess., 520 (1970) (hereinafter cited as House Hearings)). During the congressional debates on § 1964(c), Congressman Steiger made his point even more forcefully: “[i]t is the intent of this body, I am certain, to see that innocent parties who are the victims of organized crime have a right to obtain proper redress____ It represents the one opportunity for those of us who have been seriously affected by organized crime activity to recover.” Mayaja, 803 F.2d at 165 (quoting 116 Cong.Rec. 35,346-47 (1970)); see also Sedima, 105 S.Ct. at 3286 (Congress expressly admonished that RICO is to “be liberally construed to effectuate its remedial purposes” which are nowhere more evident than in § 1964(c) (quoting RICO, Pub.L. 91-452, § 904(a), 84 Stat. 947) (emphasis added)). The provision’s secondary purpose was to deter organized crime: “[i]n addition, the availability of such a remedy would enhance the effectiveness of title IX’s [i.e., RICO’s] prohibitions.” Mayaja, 803 F.2d at 164 (quoting House Hearings, supra, at 520). Thus, § 1964(c) is primarily a compensatory and secondarily a deterrent measure. The House passed the bill as proposed, 116 Cong.Rec. at 35,363-64; Sedima, 105 S.Ct. at 3281, and the Senate adopted the bill as amended in the House. 116 Cong.Rec. at 36,296; Sedima, 105 S.Ct. at 3281.
The third important congressional theme was to model § 1964(c) after § 4 of the Clayton Act. In fact, the RICO treble-damages language of § 1964(c) tracks virtually word for word the similar provision of § 4 of the Clayton Act, 15 U.S.C. § 15. As the Supreme Court observed: “[t]he clearest current in [RICO’s] history is the reliance on the Clayton Act model, under which private and governmental actions are entirely distinct.” Sedima, 105 S.Ct. at 3282; Mayaja, 803 F.2d at 165 (“[S]ection 4 of the Clayton Act... [was] recurrently invoked during the congressional discussion of RICO’s private treble damages provision.”).
Given Mitsubishi’s analysis, Congress’ reliance on § 4 of the Clayton Act is particularly relevant to the arbitrability question before us. In Mitsubishi, the Supreme Court examined the legislative purposes behind § 4 in order to determine the arbitra-bility of antitrust claims brought under that section. 105 S.Ct. at 3358-60. Undertaking the same analysis we undertake today, the Court found that “[notwithstanding its important incidental policing function, the treble-damages cause of action... seeks primarily to enable an injured competitor to gain compensation for that injury.” Id. at 3359. Emphasizing the priority of compensatory function of § 4 over its deterrent function, the Court found no congressional intent to preclude arbitration of antitrust claims. Id. (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977)).
Genesco raises two objections to arbitrability, contending that RICO’s complexity warrants its nonarbitrability and that public interest in the enforcement of RICO precludes its arbitration. Neither argument has merit. Complexity, of course, is not a reason to deny arbitrability. See Mitsubishi, 105 S.Ct. at 3355, 3357-58. In addition, after Mitsubishi, “determining statutory claims to be nonarbitrable on the basis of some judicially recognized public policy rather than
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LEWIS, Circuit Judge.
This case reaches the court upon the petition of Rocky Mountain Natural Gas Company, Inc., to review and set aside in part an order of the National Labor Relations Board requiring Rocky Mountain to take remedial action for violation of section 8(a) (1) and (3) of the Labor Management Relations Act (29 U.S.C. § 158(a) (1), (3)). The Board cross-petitions for enforcement of its order. Rocky Mountain contends that the record as a whole does not support the Board’s order in those aspects where the Board refused to follow the recommendations of its trial examiner and particularly in regard to the Board finding, contrary to that of the trial examiner, that petitioner had discriminatorily discharged two employees, Welch and Dick, for protected union activity and in violation of section 8(a) (3) of the Act.
Rocky Mountain is a Colorado corporation engaged primarily in the distribution of natural gas to industrial and domestic consumers. Prior to 1958 its distribution area was restricted to a limited area on the Western Slope in Colorado. In 1959, Rocky Mountain bought the assets of Domestic Propane Company of Delta, Colorado, a company engaged in the sale of liquified petroleum to like consumers. Rocky Mountain retained the employees of Domestic, chiefly gas-fitters, and thereafter the company operated in divisions. One division, under the regulatory control of the Public Utilities Commission of Colorado, continued the distribution of natural gas; another division, free of state control, continued the sale of propane and also performed the labor necessary to complete conversions in the systems of those consumers who could be persuaded to change from other fuels to natural gas. Separate records were kept by management for each operational division of the company.
As was to be expected, more than half of Rocky Mountain’s potential customers converted to natural gas as soon as that fuel became available. Thereafter the number of conversions slackened and the need for labor crews became less for such work. Very few conversions were made during the heating season. In late 1960, the company had to begin transferring funds from other divisions to the propane division in order to meet payrolls and other costs. The propane division had a net operating loss of $14,-229.00 for the year 1961. A study of the over-all conditions led management to the decision to make a transfer of employees and a reduction in the number of employees working as gas-fitters for the propane division in the Delta area. The reduction was originally planned for November, 1961, but was later delayed and was actually effectuated after Christmas. From this broadly stated operational background and supplemented by much detail, the trial examiner found that economic justification existed for a cut in the number of employees working as gas-fitters at Delta; the decision of the Board criticizes but does not reject the finding and the Board decision is not based upon lack of economic need. We unqualifiedly accept the premise of the existence of economic justification for a reduction of force. The premise does not, ipso facto, negative a violation of the Act in the method of accomplishing a reduction in labor force.
During the period of operational adjustment and expansion of Rocky Mountain on the Western Slope the employees in the propane division were justifiably concerned about their own welfare and security. The employees were unorganized and were not enjoying some benefits available to employees in other divisions. After rather a prolonged period •of informal discussions among the employees, followed by a series of more formal meetings, a majority of the employees voted to, and did, organize a union in November, 1961.
Management, of course, became aware of the employee organizational efforts; and the employees were made aware of the company’s claim of economic distress. Each of the section 8(a) (1) violations premising the Board order is based upon a different incident occurring during this period when conflict of interest seems to be inevitably assumed.
The report of the trial examiner analyzes in commendable detail each such incident and concludes that in some instances the conduct of management constituted an unfair labor practice and that in other instances it did not. The Board adopted the report to the extent it determined the existence of violations but rejected the recommendation of the examiner in each instance where the acts of management were reported as not violations. From our examination of the record we note nothing novel or unusual regarding this aspect of the case which would require a detailed discussion of the facts or law. Such discussion is usually profitless. N. L. R. B. v. Twin Table & Furniture Co., Inc., 8 Cir., 308 F.2d 686. Sufficient it is to say that the record as a whole readily supports the order of the Board in those matters in which it follows the report; and, in those matters where it does not, with one rather minor exception, the Board has but drawn different inferences from the evidence. This the Board may do even though the finding of the examiner is not clearly erroneous. Universal Camera Corp. v. N. L. R. B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456; N. L. R. B. v. Wichita Television Corp., 10 Cir., 277 F.2d 579. The single exception lies in the finding by the Board that an inquiry made by the company service manager Boyd from the employee Welch as to the names of the union officers was coercive. The trial examiner had found the inquiry to be but casual, without coercive effect in intent or fact, and that at such times Boyd did not have the inherent capacity to coerce Welch. The Board finds the question to be coercive because of the “various other violations by the Respondent.” “Carry-over” intent is an inadequate premise for the determination of a violation of the Act where the accused conduct is inherently innocent and harmless. The record does not support the Board in this particular.
The circumstances surrounding the discharge of employees Welch and Dick presents more than a routine controversy. The trial examiner found the discharges to be non-discriminatory and the Board again found otherwise and that a section 8(a) (3) violation was involved. Each finding considers the undisputable facts that both Welch and Dick were qualified workers from a technical view and both were very active in union activities. Dick was president of the Union and Welch was treasurer. And certain it is that the discharge of union officers during a period of union activity when the officers are qualified workers is a circumstance of suspicion which may rise to a justified inference of violative discrimination. But it is equally certain that active union participation by the most qualified employee is not an impenetrable shield against discharge. Union activity cannot be the basis of discharge but active unionists may be discharged for other reasons. E. g., N. L. R. B. v. South Rambler Co., 8 Cir., 324 F.2d 447; N. L. R. B. v. United Parcel Service, Inc., 1 Cir., 317 F.2d 912; N. L. R. B. v. Local 294, International Bhd. of Teamsters, 2 Cir., 317 F.2d 746. And in the case at bar the issue must thus be determined by the degree of significance to be given to Rocky Mountain’s explanation of the reason for the discharge of Welch and Dick.
As earlier stated, economic conditions justified a reduction in force of the gas-fitters employed by Rocky Mountain. Witnesses for the company, expressly credited by the trial examiner, explained the plan formulated by management to accomplish the reduction. Each company district in the propane division was assigned a quota of the number of men that could be retained. Each district manager was allowed to select the men he wanted to retain or be transferred to his district. The last district to act under the plan was the district at Delta. The quota for the district was three pipe-fitters. Five were then employed at Delta: Lewis, Chappell, Morris, Welch and Dick. Each was a member of the Union and four were officers. Dick was president, Chappell was vice president, Lewis was secretary and Welch was treasurer. Each of the five was an experienced technical worker. Lewis, Chappell and Morris were retained and Welch and Dick discharged. The witness Sieverson, Delta district manager, testified that he made his selections based upon his opinion of ability, versatility and public relations capacity. He though Welch had some weakness in customer relations and he told of an instance of personal disagreement with Dick regarding a pipe installation where Dick had challenged his judgment. The witness stated unequivocally that union matters had not affected his judgment.
The probative force that should be given an examiner’s report reaches its highest significance when an issue turns upon credibility. Universal Camera Corp. v. N. L. R. B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456. The examiner here credited the testimony of witnesses who completely negatived the claim of discrimination in the discharge of Welch and Dick. Although the operation of the plan resulted in the discharge of two qualified men who were active in union affairs, and thus accomplished a suspect result, it is apparent that the discharge of any two of the five employees would be equally suspect when examined by circumstance alone. The acceptance by the Board of circumstance in view of the trial examiner’s determination of credibility does not find substantial support in the record.
The order of the Board is set aside to the extent it finds the Boyd-Welch inquiry to be violative of the Act and the discharge of Welch and Dick to be violative of the Act; in all other regards the petition of the Board for enforcement of its order is granted.
. 140 NLRB No. 113.
. Rocky Mountain Gas Workers Union, an independent labor organization. At a later time, the members voted to disband their organization.
. The Board also added some specific violations which were fully developed as issues at the hearing but which the examiner treated as not within the charges. We find no error in this regard
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ON PETITION FOR REHEARING
PIERCE, Senior Circuit Judge:
We grant the petition for rehearing of plaintiffs Warren Weil and Maria Galuppo. In our prior opinion, 913 F.2d 1045 (2d Cir.1990) (“Weil II”), familiarity with which is assumed, we reversed the district court’s judgment that a partial termination of the Retirement Plan for Salaried Employees of The Terson Company, Inc. (“Plan”) had occurred under 26 U.S.C. § 411(d)(3) when 33.4% of the Plan participants were discharged from their jobs in 1981. We held that in determining whether a partial termination had occurred, the district court should have focused only on the terminated plan participants whose benefits had not vested and that the ratio of terminated non-vested participants over total plan participants yielded a percentage, 16.4%, which did not qualify as a significant percentage on the facts presented.
After plaintiffs filed a petition for rehearing, we invited the Internal Revenue Service (“IRS”), the agency responsible for administering the partial termination statute, to submit a brief as amicus curiae and requested that defendants respond. The IRS has informed us that it believes a partial termination may occur if there is “a significant contraction of a plan, such as a significant reduction in the number of plan participants” and “all terminated participants, both vested and non-vested, should be counted in determining whether a partial termination has occurred.” Brief for Amicus at 6. The IRS thus measures partial terminations using the ratio of terminated plan participants (vested and non-vested) over total plan participants. Furthermore, the IRS states that it has used this ratio in previous revenue rulings and that its long-standing position is expressly set forth in its Plan Termination Handbook contained in the Internal Revenue Manual, Ch. 252(7) (Apr. 20, 1990), reprinted in 4 Administration Internal Revenue Manual (CCH) at 21.151. Id. at 8-9. Because serious questions as to the correctness of our holding have been raised, we believe it is necessary to reconsider how partial terminations should be measured.
When a court interprets a statute that has been construed by the administering agency, it must first ask:
whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984) (footnotes omitted); accord Mead Corp. v. Tilley, 490 U.S. 714, 722, 109 S.Ct. 2156, 2161-62, 104 L.Ed.2d 796 (1989). Moreover, “ ‘[t]o uphold [the agency’s interpretation] “we need not find that [its] construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.” ... We need only conclude that it is a reasonable interpretation of the relevant provisions.’ ” Aluminum Co. of Am. v. Central Lincoln Peoples’ Util. Dist., 467 U.S. 380, 389, 104 S.Ct. 2472, 2479, 81 L.Ed.2d 301 (1984) (emphasis in original) (quoting American Paper Inst., Inc. v. American Elec. Power Serv. Corp., 461 U.S. 402, 422-23, 103 S.Ct. 1921, 1932-33, 76 L.Ed.2d 22 (1983) (quoting Unemployment Compensation Comm’n v. Aragon, 329 U.S. 143, 153, 67 S.Ct. 245, 250, 91 L.Ed. 136 (1946))); see Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. at 2782 n. 11; see also Blum v. Bacon, 457 U.S. 132, 141, 102 S.Ct. 2355, 2361, 72 L.Ed.2d 728 (1982) (interpretation of agency that administers statute is entitled to substantial deference).
The original provision governing terminations, 26 U.S.C. § 401(a)(7), was added to the Internal Revenue Code as part of the Self-Employed Individuals Tax Retirement Act of 1962, Pub.L. No. 792, § 2(2), 76 Stat. 809 (1962). As enacted in 1962, § 401(a)(7) provided in pertinent part:
A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that, upon its termination or upon complete discontinuance of contributions under the plan, the rights of all employees to benefits accrued to the date of such termination or discontinuance, to the extent then funded, or the amounts credited to the employees’ accounts are nonfor-feitable.
In its report on § 401(a)(7), the Committee on Ways and Means stated: “This new provision adds to the statute a requirement which has been in the Treasury regulations for many years.... [T]he bill precludes the possibility that contributions for employees which have been deducted for income-tax purposes may revert back to the employer.... This requirement should serve to prevent abuses resulting from termination of plans.” H.R.Rep. No. 378, 87th Cong., 1st Sess., reprinted in 1962-3 C.B. 261, 269. Presumably, intending to achieve this goal on a much broader basis, Congress made § 401(a)(7) applicable to all retirement plans, including plans provided by corporations, not merely to those that covered owner-employees. Id. at 275-76; S.Rep. No. 992, 87th Cong., 1st Sess., reprinted in 1962-3 C.B. 303, 328.
When Congress enacted § 401(a)(7) in 1962, it apparently did not contemplate the concept of partial termination. Then in 1963, in a treasury regulation, the Secretary of the Treasury explicitly introduced the concept of partial termination by defining termination as used in § 401(a)(7) to include “both a partial termination and a complete termination of a plan.” Tres.Reg. § 1.401-6(b)(2) (1963). Thereafter, § 401(a)(7) governed partial terminations.
Eleven years later, as part of the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461 (1988), Congress enacted 26 U.S.C. § 411(d)(3), which explicitly refers to partial termination, merely to restate then-existing § 401(a)(7) and to codify the definition of termination in Treasury Regulation § 1.401-6(b)(2). Anderson v. Emergency Medicine Assocs., 860 F.2d 987, 991 (10th Cir.1988). The legislative history of § 411(d)(3) states: “[T]he rule of full immediate vesting is still to apply in the case of a termination, or partial termination of a plan.” H.R.Conf.Rep. No. 1280, 93rd Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Admin.News 5038, 5058; see S.Rep. No. 383, 93rd Cong., 2d Sess., 1974 U.S.Code Cong. & Admin.News 4890, 4935.
Section 411(d)(3), which is the subject of our particular concern herein, provides in relevant part:
a trust shall not constitute a qualified trust under section 401(a) unless the plan of which such trust is a part provides that—
(A) upon its termination or partial termination,
the rights of all affected employees to benefits accrued to the date of such termination, partial termination, or discontinuance, to the extent funded as of such date, or the amounts credited to the employees’ accounts, are nonforfeitable.
Although Congress did not provide a definition of partial termination, the House and Senate Reports state that “[e]xamples of a partial termination might include, under certain circumstances, a large reduction in the work force, or a sizeable reduction in benefits under the plan.” H.R.Rep. No. 807, 93rd Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Admin.News 4670, 4731; S.Rep. No. 383, 93rd Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Admin.News 4890, 4935. In addition, the corresponding Treasury Regulation provides in part:
Whether or not a partial termination of a qualified plan occurs (and the time of such event) shall be determined by the Commissioner with regard to all the facts and circumstances in a particular case. Such facts and circumstances include: the exclusion, by reason of a plan amendment or severance by the employer, of a group of employees who have previously been covered by the plan; and plan amendments which adversely affect the rights of employees to vest in benefits under the plan.
Treas.Reg. § 1.411(d)-2(b)(l) (1977).
In Weil II, we speculated that the primary congressional purpose of the partial termination statute was to protect the pension benefits of non-vested participants. 913 F.2d at 1050-51. It seemed logical to the district court and to us to consider only non-vested participants in a partial termination inquiry, since it was their rights to accrued benefits that were imperiled.
After further reflection upon the legislative history of the partial termination provisions, we are persuaded that the legislative intent behind § 411(d)(3) is ambiguous, and it is equally arguable that in enacting this section, Congress mainly intended to prevent employers from abusing pension plans to reap tax benefits. For example, the Third Circuit, in at least one case, has concluded that “[§ 411(d)(3)] is intended to prevent employers from maintaining pension plans for the purpose of deferring income, and thereby reducing their taxes, rather than for the purpose of providing retirement benefits for employees.” Bruch v. Firestone Tire & Rubber Co., 828 F.2d 134, 151 (3d Cir.1987), aff'd in part and rev’d in part on other grounds, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In reaching that conclusion, the court reasoned that Congress pursued the goal of protecting employees from dismissals motivated by an employer’s desire to avoid paying pension benefits in other sections of ERISA and that “[ajttributing this goal to the partial termination provisions as well makes the partial termination provision seem both superfluous and clumsy.” Id. The Third Circuit’s analysis of the purpose of the partial termination provisions, however, has varied. See Chait v. Bernstein, 835 F.2d 1017, 1021 (3d Cir. 1987) (§ 411(d)(3) “defines termination for the purpose of vesting certain unvested employee benefits for workers who would otherwise be left out in the cold after a drastic and sudden change in the plan”); Vornado, Inc. v. Trustees of the Retail Store Employees’ Union Local 1262, 829 F.2d 416, 418 n. 2 (3d Cir.1987) (“The statute’s aim is to force employers to include language favorable to employees in the plan.”); United Steelworkers v. Harris & Sons Steel Co., 706 F.2d 1289, 1298 (3d Cir.1983) (discussing partial termination in terms of conditioning tax benefits upon employers’ compliance with rules designed to benefit employees; “[r]ules governing the effect of a ‘partial termination’ in the tax sense serve the purpose of helping to ensure that employees will not be deprived of their anticipated benefits”).
Based upon the conflicting interpretations by our sister circuit and upon our own reassessment as well, it appears to us that the legislative purpose behind § 411(d)(3) is far from clear. See Vornado, 829 F.2d at 418 n. 2 (“the purpose underlying § 411(d)(3) is not altogether obvious”); Bruch, 828 F.2d at 151 (“[I]t is not easy to divine the purpose of § 411(d)(3). Without a clear sense of the provision's purpose it is difficult to decide what should and should not constitute a partial termination. Clarification from Congress or the Internal Revenue Service as to the purpose of this provision would make it substantially easier to enforce.”). Finally, we recognize that the statute itself is entirely silent regarding how a partial termination is to be measured.
Having concluded that the congressional purpose behind the partial termination statute is unclear and that the statute is silent regarding the measurement of a partial termination, we next consider whether the IRS’ position is based on a permissible construction of § 411(d)(3). In our view, the IRS’ interpretation of § 411(d)(3) — that a partial termination occurs when there is a significant contraction of the plan, and therefore, all terminated plan participants must be considered in a partial termination inquiry — is a reasonable construction in light of the examples provided in the House and Senate Reports (“a large reduction in the work force, or a sizeable reduction in benefits under the plan”). Those examples suggest that Congress regarded a partial termination to be a sudden and dramatic change in the plan as a whole. Moreover, the language used in the treasury regulations, which refers to the exclusion of employees who have been covered by a plan, additionally supports the IRS’ position. We also find significance in the fact that no distinction was made between vested and non-vested plan participants in these sources. We therefore apply the ratio utilized by the IRS and, as the district court found, conclude that the Plan was partially terminated in 1981 when 33.4% of the Plan participants were discharged. Accordingly, we reinstate the district court’s order that defendants purchase annuities sufficient to provide benefits to plaintiffs equivalent to the actuarial present value of their benefits and its award of attorneys’ fees, costs and disbursements under 29 U.S.C. § 1132(g)(1) (1988), plus post-judgment interest.
In their answer to the petition for rehearing, defendants urge that the IRS is establishing a new rule that should be applied only prospectively. They argue that since they detrimentally relied on a 1981 determination letter — in which the IRS considered only non-vested participants in concluding that no partial termination had occurred during the years 1975-1980 — the IRS’ retroactive application of its “all-terminee analysis” would be an abuse of discretion. Even if the IRS has established a new rule, we are constrained to reject defendants’ argument by Dickman v. Commissioner, 465 U.S. 330, 104 S.Ct. 1086, 79 L.Ed.2d 343 (1984). There, plaintiffs argued that the Commissioner’s retroactive application of the changed interpretation of a tax law was manifestly unfair, since they detrimentally relied on the original, longstanding interpretation of the law in planning their financial affairs. The Court disagreed:
Even accepting the notion that the Commissioner’s present position represents a departure from prior administrative practice, which is by no means certain, it is well established that the Commissioner may change an earlier interpretation of the law, even if such a change is made retroactive in effect. E.g., Dixon v. United States, 381 U.S. 68, 72-75 [85 S.Ct. 1301, 1304-05, 14 L.Ed.2d 223] (1965); Automobile Club of Michigan v. Commissioner, 353 U.S. 180, 183-184 [77 S.Ct. 707, 709-10, 1 L.Ed.2d 746] (1957). This rule applies even though a taxpayer may have relied to his detriment upon the Commissioner’s prior position. Dixon v. United States, supra [381 U.S.] at 73 [85 S.Ct. at 1304], The Commissioner is under no duty to assert a particular position as soon as the statute authorizes such an interpretation. See also Bob Jones University v. United States, 461 U.S. 574 [103 S.Ct. 2017, 76 L.Ed.2d 157] (1983).
Id. at 343, 104 S.Ct. at 1094 (footnotes omitted). Accordingly, it is our judgment that defendants’ “detrimental reliance” argument is unavailing. See id.; Commissioner v. Miller, 914 F.2d 586, 591-92 (4th Cir.1990); Cohen v. Commissioner, 910 F.2d 422, 427-28 (7th Cir.1990); Heitzman v. Commissioner, 859 F.2d 783, 786 (9th Cir.1988); Canton Police Benevolent Ass’n v. United States, 844 F.2d 1231, 1236-38 (6th Cir.1988); Consolidated Edison Co. v. United States, 782 F.2d 322, 325 (2d Cir.1986) (per curiam); Fogarty v. United States, 780 F.2d 1005, 1011 (Fed. Cir.1986); Becker v. Commissioner, 751 F.2d 146, 150 (3d Cir.1984); Yarbro v. Commissioner, 737 F.2d 479, 483 (5th Cir. 1984), cert. denied, 469 U.S. 1189, 105 S.Ct. 959, 83 L.Ed.2d 965 (1985).
Defendants also contend that the plaintiffs failed to prove that the Plan was sufficiently funded at the time of the partial termination to provide benefits. We see no error in the district court’s conclusion, based upon recommendations by the IRS, which the court sought with the consent of the parties, that the Plan was sufficiently funded at the time of the partial termination.
Finally, we conclude the district court did not abuse its discretion in any way regarding its award of attorneys’ fees.
We have considered plaintiffs’ and defendants’ remaining arguments and find them to be without merit.
The petition for rehearing is granted. Parts III and IV of the prior opinion of this Court are vacated, and the judgment of the district court is affirmed.
. The Handbook was first brought to this Court's attention in plaintiffs' petition for rehearing. In their petition, plaintiffs also refer us to footnote two of a General Counsel Memorandum in which the "percentage reduction in [plan] participation” was measured "by dividing the total participant terminations during the plan year by the sum of the employee-participants at the beginning of the plan year plus the participants added during the plan year.” Gen. Couns.Mem. 39344 (Oct. 16, 1984).
. Section 401(a)(7) currently provides: "A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part satisfies the requirements of section 411 (relating to minimum vesting standards)." 26 U.S.C. § 401(a)(7) (1988).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WALLER, Circuit Judge.
The Plaintiffs, citizens of Mexico, claiming an interest in oil lands under a grant from the kingdom of Spain, and a right to recover for their portion of the minerals taken from the lands, have appealed from an adverse decree.
The lands lie between the Nueces and Rio Grande rivers in Texas. The original grantee from the kingdom of Spain conveyed the lands in 1811 to Pedro Ygnacio Garcia, a remote ancestor of the Plaintiffs, and likewise a citizen and resident of Mexico.
The Plaintiffs contend that the land between the Nueces and Rio Grande rivers was never under the jurisdiction of the United States nor of the State of Texas until same were ceded by the treaty of Guadalupe Hidalgo on February 2, 1848; that the lands involved in this suit are within the area so ceded and are within the protection of Article VIII in the treaty requiring title of Mexican citizens to such lands to be “inviolably respectéd;” and that by that article of the treaty the lands involved in this suit were secured against the passage by Congress or by the Legislature of Texas of any statutes of limitation, forfeiture, or prescription whereby Mexican citizens, not established in Tex-as, might lose title and possession of such lands. Plaintiffs concede that they cannot recover if the statutes of limitation of Texas can he lawfully applied.
That part of Article VIII of the treaty which provoked this controversy announced that: “In the said territories, property of every kind, now belonging to Mexicans not established there shall be inviolably respected. The present owners, the heirs of these, and all Mexicans who may hereafter acquire said property by contract, shall enjoy with respect to it, guarantees equally ample as if same belonged to citizens of the United States.” (9 U.S.Statutes at Large, 922 et seq.)
Considering the narrowness of the controlling question, as we view it, a remarkable amount of historical knowledge and legal learning has been expended in the discussions. The views of counsel and of the lower court have been elaborately presented. Nevertheless, the case seems to require from us no extended discussion in order to vindicate the soundness of the conclusions which we have reached.
Our answer is found in the words of the treaty rather than in the pages of history. It would not be fatal to the correctness of our conclusion were it to be conceded that the lands between the Nueces and the Rio Grande did not come under the suzerainty of the Republic of Texas, or the United States of America, until they were ceded in and by the treaty of Guadalupe Hidalgo, and that the' State of Texas never acquired jurisdiction over these until the passage by Congress of the Compromise Agreement of 1850. 48 U.S.C.A. § 1451 et seq.
Antecedent to a construction of the pertinent passage of the treaty it would seem profitable to consider the relation of treaties generally to federal and state constitutions and statutes.
Clause' 2 of Article VI of the Constitution of the United States provides that: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
A treaty lawfully entered into stands on the same footing of supremacy as does the Constitution and Laws of the United States. It is generally self-operating in that it requires no legislation by either Congress or the state. Asakura v. Seattle, 265 U.S. 332, 44 S.Ct. 515, 68 L.Ed. 1041. A treaty must be regarded as a part of the law of the state as much as are the state's own statutes and it may override the power of the state even in respect of the great body of private relations which usually fall within the control of the state. The treaty-making power might even be superior to those powers which are reserved to the states. State of Missouri v. Holland, 252 U.S. 416, 40 S.Ct. 382, 64 L.Ed. 641, 11 A.L.R. 984.
But while there is no express limitation in the federal Constitution upon the treaty-making power, nevertheless it is not unlimited. It is subject to prohibitions within that Constitution against the state, or federal government. The treaty-making power does not extend “So far as to authorize what the constitution forbids”. Geofroy v. Riggs, 133 U.S. 258, 10 S.Ct. 295, 297, 33 L.Ed. 642; Asakura v. Seattle, supra; Missouri v. Holland, supra; The Cherokee Tobacco, 11 Wall. 616, 78 U.S. 616, 20 L.Ed. 227.
In United States v. Fox, 94 U.S. 315, 24 L.Ed. 192, it was stated: “The power of the State to regulate the tenure of real property within her limits, and the modes of its acquisition and transfer, and the rules of its descent, and the extent to which a testamentary disposition of it may be exercised by its owners, is undoubted. It is an established principle of law, everywhere recognized, arising from the necessity of the case, that the disposition of immovable property, whether by- deed, descent, or any other mode, is exclusively subject to the government within whose jurisdiction the property is situated. McCormick v. Sullivant, 10 Wheat. 192, 202, 6 L.Ed. 300. The power of the State in this respect follows from her sovereignty within her limits, as to all matters over which jurisdiction has not been expressly or by necessary implication transferred to the Federal government. The title and modes of disposition of real property within the State, whether inter vivos or testamentary, are not matters placed under the control of Federal authority. Such control would be foreign to the purposes for which the Federal government was created, atid would seriously embarrass the landed interests of the State.”
See also Pennoyer v. Neff, 95 U.S. 714, 715, 24 L.Ed. 565.
Is the contention of the Plaintiffs that the treaty forever takes from the State of Texas the power to enact statutes of limitation or other statutes that might adversely affect the title or possession of Mexicans and Texas citizens alike, inconsistent with the general rule of international law that in case of the division of an empire the power to regulate and control property passes to the new sovereign of the area involved? Would the interpretation of the treaty sought by the Plaintiffs be out of harmony with the dual sovereignty plan of government under which the states have the exclusive right to pass laws regulating the alienation, tenure, title, and possession of lands within their boundaries? Would the requirement that the property of a non-resident alien be free from statutes of limitation or state regulation while that of a citizen of the state where the lands are located should be subject to such statutes, be inconsonant with the general concept of the equal protection of the law and likewise repugnant to the general purpose of the last sentence of Article VIII of the treaty?
We propound these thought-provoking questions not for the purpose of answering them but only for the purpose of showing the chasms of doubt into which the path laid out by Appellants might lead us.
We should seek to avoid, if possible, a decision adjudging a treaty to be in conflict with the Constitution. It is not necessary to a decision in this case for us to pass upon the question of whether the treaty is violative of the prohibitions of the federal Constitution, as we would be compelled to do if the treaty required the construction contended for by Appellants.
Concededly, for a century Mexico has had no suzerainty over the areas in which these lands are situated. Whether the lands involved were ceded or conquered, they have been a part of the United States for at least 100 years and a part of the State of Texas at least since the enactment of the Compromise Agreement of 1850. Whether by cession or conquest, they were split away from the Mexican nation so that there was a substitution of sovereignty under which all laws theretofore in force which were in conflict with the political character and constitutional institutions of the substituted sovereign lost their force. Vilas v. Manilla, 220 U.S. 345, 31 S.Ct. 416, 55 L.Ed. 491; Chicago, Rock Island & Pacific Railway v. McGlinn, 114 U.S. 542, 5 S.Ct. 1005, 29 L.Ed. 270.
The Supreme Court, in Airhart v. Massieu, 98 U.S. 491, 25 L.Ed. 213, said: “The separation of Texas from the Republic of Mexico was the division of an Empire.”
In Leitensdorfer et al. v. Webb, 20 How. 176, 61 U.S. 176, 15 L.Ed. 891, the Court, in discussing property rights after the acquisition by military force, said: “By this substitution of a new supremacy, although the former political relations of the inhabitants were dissolved, their private relations, their rights vested under the government of their former allegiance, or those arising from contract or usage, remain in full force and unchanged, except so far as they were in their nature and character found to be in conflict with the, Constitution and laws of the United States, or with any regulations which the conquering and occupying authority should ordain.” (Emphasis added.)
This principle should apply in this case unless the treaty clearly provides the contrary.
We are convinced, however, as was the lower Court, that there is nothing in the treaty that suggests that the property of Mexican citizens would not be subject to the valid, and non-discrimiñátory, property laws of the State of Texas. The phrase “inviolably respected,” even if singled out for construction, does not carry with it the significance urged by the Plaintiffs. The phrase must be read in connection with the rest of the paragraph wherein the phrase is further explained by the statement that all Mexicans, whether presently owning, or subsequently acquiring, property, shall enjoy, with respect to it, guarantees equally as ample as those of citizens of the United States.
Even though we detach the phrase “properties of every kind, now belonging to Mexicans, .not established there, shall be inviolably respected” and construe it separately, or unrelatedly to the last sentence, Plaintiffs would gain nothing thereby. Although much stress is laid by Plaintiffs upon the word “inviolably,” is there a real, or substantial, distinction between a statement that property belonging to Mexicans shall be “respected” and a statement that property belonging to Mexicans shall be “inviolably respected?” It would seem that titles that are “respected” would be as secure as ‘those that were “inviolably respected.’
We regard the phrase as a covenant on the part of the United States to respect from thenceforth any title that Mexicans then had, or might thereafter acquire, to property within the region, but not that it would guarantee that those Mexicans would never lose their title to persons by foreclosure, sales under execution, trespasses, adverse possession, and other nongovernmental acts. It has been held in Chadwick v. Campbell, 10 Cir., 115 F.2d 401, that the treaty of Guadalupe Hidalgo did not protect against ad valorem taxes on the land of a Mexican, within the ceded area.
The principles of international law impose substantially the same obligation to respect property rights within annexed territory as did Art. VIII of the treaty of Guadalupe Hidalgo. United States v. O’Donnell, 303 U.S. 501, 58 S.Ct. 708, 82 L.Ed. 980.
Since the obligation of the treaty was substantially the same as is required by international law, and since international law does not prohibit the successor sovereign from subsequently enacting legislation in due course as to title to lands, there seems to be no reason to hold that the treaty prohibited this merely by the use of the word “inviolably.”
The fundamental purpose of that provision of the treaty was to secure Mexicans in their title and to guarantee to them in that respect the same protection of law that it extended to the citizens of the United States. Baldwin v. Goldfrank, 88 Tex. 249, 31 S.W. 1064, text, 1067; Chadwick v. Campbell, supra; Ely’s Adm’r v. United States, 171 U.S. 220, 18 S.Ct. 840, 43 L.Ed. 142; Leitensdorfer v. Webb, supra; Todok v. Union State Bank, 281 U.S. 449, 50 S.Ct. 363, 74 L.Ed. 956.
It should not be overlooked that the main purpose of statutes of limitation relating to land is to put titles at rest, and that such statutes are great healers of weak titles, the benefits of which, under the treaty and under the statutes of Texas, were available to Mexicans and Texans alike.
Since we are of the opinion that Article VIII of the treaty does not prevent the passage by the State of Texas of reasonable and non-discriminatory statutes regulating the title and possession of land, and since it is conceded that if this be true, adverse possession by Defendants- and their predecessors in title has long since ripened into a title by limitation, there is no necessity for us to consider the question as to whether or not the lands between the Nueces and Rio Grande rivers were ceded by the treaty or were already under the jurisdiction, and within the domain, of the Republic of Texas, nor whether Texas acquired no jurisdiction over the land until after the passage of the Compromise Agreement between the United States and Texas, September 9, 1850. Certain it is that the lands in question are now within the boundaries of the State of Texas, and it is immaterial whether the lands were” acquired by the surrender of Santa Anna or ceded by the treaty of Guadalupe Hidalgo, or whether,, as was decided in McKinney v. Saviego, 18 How. 235, 15 L.Ed. 365; Basse v. City of Brownsville, 154 U.S. 610, 14 S.Ct. 1195, 22 L.Ed. 420; and State v. Bustamente, 47 Tex. 320, they had been acquired by the Republic of Texas prior to the making of the treaty of Guadalupe Hidalgo.
The provisions of the treaty do not save the Appellants from the fatal effect of the passage of time under the statutes of limitation of the State of Texas.
The judgment is affirmed.
Amaya v. Stanolind Oil & Gas Co., D.G., 62 F.Supp. 181.
The footnote at page 510 of 303 U.S., at page 714 of 58 S.Ct. states: “The ob- . ligation imposed by the principles of international law to respect pi’operty rights within annexed territory is substantially that recognized by the treaty, (citing cases) and comprehends not only formal gx’ants ‘but also any concession, waxvant, order or permission to survey, possess or settle, whether evidenced by writing or parol, or presumed from possession.’ ”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
The petition to set aside the Board’s order in No. 14,015 should be denied and the Board’s petition for enforcement in No. 14,093 should be granted in accordance with the opinion of the National Labor Relations Board, 118 N.L.R.B. No. 14. We do not necessarily adopt all of the reasoning of the Board, particularly that regarding the liability of the International Union. We do, however, agree with the results reached.
Petition denied in No. 14,015.
Petition granted in No. 14,093.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KILEY, Circuit Judge.
The National Labor Relations Board found that State Farm Mutual Automobile Insurance Company violated Sections 8(a) (5) and (1) of the National Labor Relations Act by refusing to bargain with the Insurance Workers International Union, AFL-CIO, which had been certified to represent a unit of employees. The Board ordered the Company to bargain with the Union. The Company petitioned this court to review and set aside the Board’s order, and the Board cross-petitioned for enforcement of its order. A panel of this court, in an opinion (one judge dissenting) issued August 8, 1968, set aside the Board’s order. Subsequently, this court granted the Board’s petition for rehearing en banc. We now enforce the Board’s order.
Petitioner is a multi-state insurance company. All of its business decisions, such as job benefits, holidays, overtime, sick leave, recruitment and salary ranges are made at its home office in Blooming-ton, Illinois. Petitioner is divided into twenty-one regions across the country. The Northeastern Region, pertinent to this ease, comprises New York, New Jersey, and the New England states, and its headquarters is at Wayne, New Jersey. It is headed by a regional vice-president assisted by two deputy regional vice-presidents. The vice-president directs all operations in the region, including recruitment, interviewing job applicants, promotions, and salaries.
The Northeastern Region is divided into four divisions, including two automobile insurance divisions, one covering New York and the other New Jersey and New England. A division manager, who is responsible for overseeing the claim processing operations of the company, heads each division. He also makes salary and employment recommendations to the regional vice-president.
The New York automobile division is divided into four districts, each headed by a division claims superintendent, who is in charge of about five offices and supervises about thirty-five adjusters. The responsibilities of a divisional claims superintendent include: supervising the instruction of claims personnel under his jurisdiction; training the claims supervisory personnel; examining claims files; recommending company action concerning promotion, salary changes, hiring, and disciplinary action; interviewing and initially screening applicants for claims agent jobs; administering the over-all day to day claims handling within his jurisdiction; and visiting the claims field offices.
The proceedings before us began with a representation petition filed by the Union. The Company moved to dismiss the petition on the ground of inappropriateness of the unit. The Board rejected both the Union’s contention that the smallest appropriate unit was a single claims office, and the Company’s contention that the smallest appropriate unit was the Northeastern Region, or, alternatively, the New York State unit. The Board designated “the divisional unit of employees supervised by a divisional superintendent” as the smallest appropriate unit.
Thereafter the Board conducted representational elections in two claims districts in New York. In the unit before us, the Union won the election and was certified as the bargaining representative.
The Union then requested the Company to bargain. The Company refused on the ground that the unit found by the Board was inappropriate. The Union filed an unfair labor practice charge alleging an unlawful refusal to bargain. The General Counsel issued a complaint, and the Company’s response admitted the refusal to bargain, reasserting the inappropriateness of the unit. The Board granted the General Counsel’s “Motion for Summary Judgment and Judgment on the Pleadings,” over the Company’s objection that it was entitled to a further hearing on the appropriate unit and issued the order which is now before this court.
The Company contends that the order should be set aside because the unit determination is unreasonable and the Board’s refusal to hold the further hearing requested by the Company violated Section 10(b) of the National Labor Relations Act.
The Board has a wide discretion in designating appropriate units. It is not required by the Act to choose the most appropriate unit, but only to choose an appropriate unit within the range of several appropriate units in a given factual situation. The Board may look to various factors to determine what units are appropriate. The company organization, the numerical size of the unit, the geographical distribution of the employees in the unit, the type of work done by the employees in the unit, the responsibilities of the unit supervisor, the organizability of the unit, and the extent to which the unit has already been organized, are all revelant considerations and no one factor is determinative. NLRB v. Metropolitan Life Ins. Co., 380 U.S. 438, 85 S.Ct. 1061, 13 L.Ed.2d 951 (1965). Section 9(b) itself states that the unit shall be chosen “in order to assure to employees the fullest freedom in exercising the rights guaranteed by this Act.” Where the facts underlying a Board determination of an appropriate unit are not contested, the Board’s determination will not be overturned unless it is arbitrary or unreasonable. May Dept. Stores Co. v. NLRB, 326 U.S. 376, 66 S.Ct. 203, 90 L.Ed. 145 (1945); NLRB v. Krieger-Ragsdale & Co., 379 F.2d 517 (7th Cir. 1967), cert. denied, 389 U.S. 1041, 88 S.Ct. 780, 19 L.Ed.2d 831 (1968).
The unit chosen by the Board in this case contains about thirty-five employees who do similar work under similar conditions; geographically the unit, on the average, covers one-fourth of New York State; the Union has successfully organized one of the units; the leader of the unit chosen is the Company official who directly controls and supervises the day to day work of the employees; under the Company’s organization the next larger unit would, on the average, cover a multi-state area; the smallest unit under the Company’s organization which has a leader, the regional vice-president, with any formal control over employee policy would cover all of New York, New Jersey, and New England; and the smallest unit where there is substantial control over employee policy, the Bloomington Home Office, is nation-wide. Under these circumstances, the reasonableness of the Board’s determination is clear.
The fact that the next largest unit available under the Company’s organizational structure covers a multi-state area is of particular significance. In 1944 the Board adopted a policy of refusing to authorize an appropriate unit in the insurance industry which was less than state-wide, on the theory that this would promote the organization of employees by unions. Metropolitan Life Ins. Co., 56 N.L.R.B. 1635 (1944). The Board, however, subsequently abandoned this rule because
As a practical matter * * * such state-wide or company-wide organization has not materialized, and the result of the rule has been to arrest the organizational development of insurance agents to an extent certainly never contemplated by the Act, or for that matter by the Board that decided the Metropolitan Life case. Quaker City Life Ins. Co., 134 N.L.R.B. 960, 962 (1961).
Adoption of the Company’s position here would prevent the Board from choosing a less than state-wide unit for bargaining and would therefore “arrest the organizational development of insurance agents” in highly centralized insurance companies and would prevent the employees from enjoying “the fullest freedom in exercising the rights guaranteed by” the National Labor Relations Act, 29 U.S.C. 159(b). The Quaker City rationale also refutes the Company’s alternative contention that the most appropriate unit covers all of New York State.
Finally, the Board’s decision is consistent with other Board decisions that the courts have previously approved. NLRB v. Quaker City Life Ins. Co., 319 F.2d 690 (4th Cir. 1963); Singer Sewing Machine Co. v. NLRB, 329 F.2d 200, 12 A.L.R.3d 775 (4th Cir. 1964). In Quaker City the duties of the head of the unit chosen as appropriate by the Board were described by the court as follows:
The District Manager generally supervises the day to day operations of the office, operating under general rules set by the home office. He recommends the hiring, firing, and disciplining of the office employees and he may, under certain conditions, fire summarily. He trains the local employees, and, within limits set out by the company, makes recommendations as to promotions, increases and allowances.
That authority does not significantly differ from the authority of the divisional claims superintendent in the case before us, and in Quaker City the Board’s choice of an appropriate bargaining unit was approved. Moreover, in Quaker City the district manager had only six employees under him, while the supervisor in this case has approximately five times that number. The head of the unit in Singer also had substantially the same power as the divisional claims superintendent here, and in that case the Board’s unit determination was also approved.
The Company relies mainly on NLRB v. Frisch’s Big Boy Ill-Mar. Inc., 356 F.2d 895 (7th Cir. 1966), and on NLRB v. Purity Food Stores, Inc., 376 F.2d 497 (1st Cir.), cert. denied, 389 U.S. 959, 88 S.Ct. 337, 19 L.Ed.2d 368 (1967). In Frisch this court rejected the Board’s determination that a single retail store was an appropriate unit, where the Company had ten stores in Indianapolis, Indiana. The store managers there had considerably less authority than the district managers here. Yet the court recognized that an eleventh store located sixty miles away in Muncie, Indiana, might constitute, a separate bargaining unit.
In Purity the First Circuit rejected the Board’s determination that a single retail outlet constituted an appropriate unit where the Company operated a chain of seven outlets, all located within thirty miles of the Company’s central office. The court stated that Purity was “a small, compact, homogeneous, centralized and integrated operation” and that “the ‘independence’ of the stores * * * amounts to no more than a few miles of physical separation.” Neither of these cases is controlling or persuasive on the facts here.
The Board states that in each similar case since Quaker City it has relied primarily upon the “autonomous” character of the “single district office” and the “over-all immediate supervision” exercised by the district office manager. In each ease, on different facts, the district office head may possess varying degrees of autonomy depending upon the degree to which he may exercise significant managerial power over the employees he superintends. We think the Board could find sufficient autonomy and supervisory authority here to justify its choice of an appropriate unit.
The Board did not abuse its discretion in entering the order before us, and the order does not offend the Act’s limitation that designation of an appropriate unit must not be controlled by the extent to which the unit has already been organized. NLRB v. Quaker City Life Ins. Co., 319 F.2d 690 (4th Cir. 1963). We conclude that we should not set aside the Board’s order on the ground that the unit chosen was inappropriate.
In opposing the General Counsel’s motion for summary judgment, the Company moved for an order transferring the ease to a Trial Examiner for further hearing on the unit issue. The Board denied the motion, finding that no issue had been presented requiring a hearing. In the Board’s view, the factual issues concerning the appropriateness of the unit were resolved in the representation proceeding, and absent newly discovered or previously unavailable evidence, the issues need not be relitigated.
The Company insisted that since the Board, in the representation proceeding, chose as appropriate a unit advocated by neither party, the Company did not present evidence in its possession with respect to that unit. The Company claimed it was entitled to an opportunity to present this evidence in the unfair labor practice proceedings.
The Board denied the further hearing on two grounds: It stated that the evidence sought to be introduced was available at the representation proceeding, and the Company’s failure to produce it at that time precluded introduction of the evidence on the same issue in the unfair labor practice proceeding. The Board also concluded that the proffered evidence was merely cumulative to evidence heard in the representation proceeding. We agree with the Board. NLRB v. International Die Sinker’s Conference, 402 F.2d 407, 411 (7th Cir. 1968).
A representation proceeding is not adversary in the usual sense, but is designed primarily to enable the Board to fulfill its statutory function with respect to the certification of bargaining representatives. Part of the function is, of course, determination of an appropriate bargaining unit. When that determination is an issue in a lepresentation proceeding, all persons concerned have the duty to produce all information relevant to the issue. The Board’s determination is not confined to the units suggested by the parties, but it may choose any unit which it reasonably deems appropriate. Local 620, Allied Industrial Workers of America v. NLRB, 375 F.2d 707, 710-11 (6th Cir. 1967); S. D. Warren Co. v. NLRB, 353 F.2d 494, 499 (1st Cir. 1965).
The issue of an appropriate unit was the subject of an extensive hearing in the representation proceeding. There was substantial evidence introduced of the entire organizational structure of the Company. Having failed to produce relevant evidence it possessed in that proceeding, the Company had no right to another opportunity to present evidence at the expense of the exercise of the employees’ collective bargaining rights. Rockwell Mfg. Co., Kearney Div., v. NLRB, 330 F.2d 795, 797-798 (7th Cir. 1964).
The evidence proffered in the unfair labor practice hearing was intended to show that the unit chosen in the representation hearing was subject to change in the geographical area supervised by divisional claims superintendents. But in the representation proceeding it was specifically found that “The number of these superintendents in each division is subject to change according to the volume of business and geographic distribution of field claims offices in the division; * * * ” The Board, therefore, did not abuse its discretion in denying the motion for a further hearing, as no useful purpose would have been served by receiving the Company’s evidence. Pittsburgh Plate Glass Co. v. NLRB, 313 U.S. 146, 157-158, 61 S.Ct. 908, 85 L.Ed. 1251 (1940).
Having concluded that none of the grounds urged by the Company for setting aside the order is valid, the Board’s order will be enforced.
MAJOR, Senior Circuit Judge, dissents, with which HASTINGS, Senior Circuit Judge, concurs.
I feel obliged to dissent from the majority opinion rendered on the Board’s petition for rehearing en banc which allows the Board’s petition for enforcement, thereby nullifying the August 8, 1968 panel decision of this court.
This dissent is directed squarely at the decision under review, with the findings and conclusions contained therein. I am not concerned with the many cases which stand for the well recognized proposition that our scope of review is limited and that the Board has a wide discretion in determining an appropriate bargaining unit. Such cases are not controlling here because the Board’s order, in my view, is based upon a fallacious premise and its decision is clearly erroneous, arbitrary and capricious.
Furthermore, I am not impressed with the Board’s two-fold argument in support of its unit determination, apparently embraced by the majority, (1) that it is in accordance with its policy, and (2) that owing to the circumstances of the case it would have great difficulty in determining a more appropriate unit. I realize the Board’s policy is entitled to serious consideration but I disagree with the idea that it can be utilized as a substitute for facts, which it appears the Board would have us do. Likewise, the fact that the Board might have difficulty in determining some other unit as appropriate furnishes no justification for its determination that the unit under consideration is appropriate.
In the beginning it is well to keep in mind what the Board characterizes as the descending supervisory chain: (1) the company’s home office at Blooming-ton, Illinois; (2) its regional office at Wayne, N. J.; (3) its division managers; (4) its divisional claims superintendents, and (5) its claims superintendents. The functions of each link of this chain are described in the Board’s decision as follows:
“National personnel policies are determined at the home office in Bloom-ington ; sick leave, group medical, life, and other insurance programs, vacations, credit unions, travel allowances, promotion procedures, and similar conditions and benefits of employment. These policies are effectively construed and implemented by the several regional offices. Against the background of policies and practices established by the home office, decisions as to the applicability of these policies and procedures to claim representatives are made by the regional supervisory authorities. Ultimately, most of the final decision-making authority in each Region is vested in the office of the Regional Vice-President. For instance, the Region makes annual reviews of the performance of each employee, for the purpose of determining whether he should be granted a salary increase (within a range predetermined by the home office). The Claim Superintendent will fill out a form to initiate such reviews, giving its comments and recommendations. The Divisional Superintendent will then make his recommendation in the portion of the form designed for his entry. Finally, the Division manager will add his recommendation, and the form will then be submitted to the office of the Regional Vice-President, where this official or his deputy will approve or disapprove the increase.” (Italics supplied.)
It states:
“Looking primarily to the autonomous character of the single district office petitioned for in Quaker City [134 N.L.R.B. 960], and the overall immediate supervision exercised by the district office manager, we concluded that a unit consisting of the employees in the district office was an appropriate bargaining unit. Since that case, we have found appropriate other single-office units which exhibited a similar degree of autonomy, and have also authorized groupings of single offices where considerations of geography or the employer’s administrative structure lent coherence to such multiple-office units.” (Italics supplied.)
Then follows the heart of the decision:
“The evidence of record in the case before us presents a significantly different picture of field operating procedure from that developed in the insurance agents cases cited above. It seems clear that the smallest component of the Employer’s business structure which may be said to be relatively autonomous in its operation is not the field claims office, but rather the divisional unit of employees supervised by a Divisional Superintendent. By virtue of the managerial authority reposed in the three Divisional Superintendents, who represent a supervisory focal point for their respective groups of 39, 32, and 29 claim representatives, these functionaries appear to exercise powers most closely analogous to those possessed by the district office managers in the earlier cases. A finding, therefore, that bargaining units could properly be demarcated by the supervisory jurisdiction of each Divisional Superintendent would be wholly in keeping with the principles applied in the insurance agents cases.” (Italics supplied.)
Thus, the Board concedes that the operating procedure in this case “presents a significantly different picture” from that of the insurance agents cases upon which it relies, but nevertheless concludes that its unit determination “would be wholly in keeping with the principles” applied in such cases.
Neither on brief nor in oral argument before this court did the Board criticize or take issue with a statement contained in our panel decision:
“The Board’s reasoning rests upon two premises: (1) the unit determination was ‘relatively autonomous in its operation,’ and (2) ‘the managerial authority reposed in the three Divisional Superintendents.’ It is significant to note that the Board did not find that the unit was autonomous but only that it was ‘relatively’ so, without explanation as to why the qualifying word. Perhaps the explanation can be found in the dictionary, which defines ‘autonomous’ as ‘having the right or power of self-government; undertaken or carried on without outside control; existing or capable of existing independently.’ Webster’s Seventh New Collegiate Dictionary.”
In my judgment, the record is devoid of any proof that the unit determined by the Board possessed autonomy, “relative autonomy” as found in its decision, or “substantial autonomy” as stated in its brief. On the contrary, the record clearly demonstrates that the unit determined was non-autonomous.
The Board in its decision states that “sick leave, group medical, life and other insurance programs, vacations, credit unions, travel allowances, promotion procedures, similar conditions and benefits of employment” are established in the home office and “are effectively construed and implemented by the several regional offices.” The Board further found that “decisions as to the applicability of these policies and procedures” are “vested in the office of the Regional Vice President.”
Further support for the view that the divisional claim superintendents were without managerial authority to resolve issues subject to collective bargaining is shown by a statement in the Board’s original brief:
“Most of the final decision-making authority in each Region ultimately resides in the office of the regional vice president. Thus, for example, the Region annually reviews each claims representative’s performance for the purpose of determining whether he should be granted a salary increase (within a range established by the home office in Bloomington). The claim superintendent initiates such reviews by filling out a prescribed form, in which he includes comments and recommendations. In turn, the divisional claim superintendent will add his recommendation in the portion of the form designated for such use. Finally, the division manager will add his recommendation, and the form will then be submitted to the office of the regional vice president or his deputy will make the final decision.” (Italics supplied.)
In short, the divisional claim superintendents were without authority to make any decisions on matters which might be involved in collective bargaining. On such matters they accepted recommendations from those below (claim superintendents) ; approved or disapproved and passed them on to those above (division managers), and received orders and directions from those above which they executed in an administrative but not in a managerial capacity.
There are numerous court decisions which support the view that the autonomous nature of the unit determined and the managerial authority of the divisional claim superintendents, admittedly the basis for the Board’s decision, should be rejected.
In N.L.R.B. v. Frisch’s Big Boy Ill-Mar, Inc., 356 F.2d 895, this court refused to enforce the Board’s order concerned with a single restaurant in an integrated chain because the unit designated was inappropriate. The main issue in the case was whether the unit determined was autonomous, as found by the Board. Relative to this issue we stated (page 896):
“The only factual contention made by petitioner [the Board] which requires notice is that each restaurant has ‘autonomy’ because each restaurant manager has certain powers. However, the undisputed facts appearing in the record show that a common labor policy affecting all employees is formulated and administered by the president, as chief executive, and certain other officers of the corporations. Reporting to him are three area supervisors each of whom has a share of the Indianapolis restaurants to cover. These area supervisors visit the restaurants frequently.” (Italics supplied.)
In deciding this issue we stated (page 897):
“It is evident to us that the decisions left to the managers do not involve any significant element of judgment as to employment relations. * * *
“It is obvious to us that none of the store managers will be deciding questions affecting the employees in the context of collective bargaining.” (Italics supplied.)
The majority opinion, in the attempt to distinguish this case on its facts, states, “The store managers there had considerably less authority than the district managers here.” With this statement I disagree but, in any event, the pertinent point is the court’s reasoning and conclusion, which read as though written for this case.
In N.L.R.B. v. Purity Food Stores, Inc., 376 F.2d 497, 501, the First Circuit cited with approval our opinion in Frisch’s and refused to enforce the Board’s order on the ground that its unit determination was inappropriate. The Board found a single supermarket to be an appropriate bargaining unit, based on the authority of the manager and the autonomy of the store. In rejecting the Board’s determination the court stated (page 500):
“The Board rested its conclusion basically on lack of store-wide bargaining history and on its view that the Peabody store was so economically independent of the other retail stores and possessed such ‘significant autonomy’ within the respondent’s over-all operation that separation of that store from the others for purposes of collective bargaining would not obstruct centralized control and effective operation of the chain. We cannot agree.” (Italics supplied.)
The Board in its brief, in support of the instant petition, states:
“ * * * individual cases in which the courts of appeals have set aside such determinations as arbitrary or capricious may be regarded either as proper reversals of administrative action, under all the circumstances, or as aberrational abuses of judicial power.”
In a footnote the Board states:
“For purposes of the instant petition for rehearing, it is irrelevant whether the Court’s decision in N.L.R.B. v. Frisch’s Big Boy Ill-Mar, Inc., 356 F.2d 895 (1966) is regarded as the former or the latter.”
While the Board does not state in which category it places this court, the implication is plain. Even so, our feelings are soothed by the opinion of the Fifth Circuit in N.L.R.B. v. Davis Cafeteria, Inc., 396 F.2d 18. In that case the court refused to enforce the Board’s order on the ground that the bargaining unit selected was inappropriate. Referring to Frisch’s and Purity, the court stated (page 20):
“In view of the elucidating opinions in the Purity Foods case, in N.L.R.B. v. Frisch’s Big Boy Ill-Mar, Inc., supra, * * * it would serve no precedental value for us to repeat what we have previously said, or what the First and Seventh Circuits have already so well said. In the circumstances of this case, labor policy is centrally determined, and where local managers do not have authority to decide questions which would be subjects of collective bargaining, the two respondent cafeterias do not constitute an appropriate bargaining unit.” (Italics supplied.)
Called to our attention subsequent to the instant hearing en banc is a decision of the Second Circuit in N.L.R.B. v. Solis Theatre Corp., and Interboro Circuit, Inc., 403 F.2d 381, decided November 14, 1968. In that case the court refused enforcement of the Board’s order on the ground that the Board improperly determined the bargaining unit. Concluding its statement of the facts, the court stated (page 383):
“It appears, therefore, that instead of being in a decision making position, the ‘manager’ has little or no authority on labor policy but is subject to detailed instructions from the central office.
“The Courts of Appeals have been reluctant to sanction bargaining units whose managers lack the authority to resolve issues which would be the subject of collective bargaining.”
Following this statement, the court cites with approval our opinion in Frisch’s, the First Circuit opinion in Purity, and the Fifth Circuit opinion in Dams.
I would deny enforcement of the Board’s order for reasons so clearly revealed in its decision.
. 29 U.S.C. §160
sjí $ 5}C 8}í }¡í The person so complained of shall have the right to file an answer to the original or amended complaint and to appear in person or otherwise and give testimony at the place and time fixed in the complaint. * * * * *
. In Singer the Board’s order was denied enforcement on other grounds.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ANDERSON, Circuit Judge:
Certified Industries, Inc., takes this appeal from an order of the District Court for the Southern District of New York granting the application of the United States for a preliminary injunction which enjoined Certified from proceeding with its action in the New York State Supreme Court to foreclose a lien pending a final determination of the present action brought by the United States.
On September 10, 1962, Carol Management Corporation engaged Meteor Concrete Corporation to supply labor, materials and equipment for the improvement of certain real property at 70 Park Avenue in New York City. The contract price was $80,000. Meteor, in turn, contracted with Certified for the concrete necessary for the making of the improvements at an agreed price of $11,940.69.
After Meteor had been paid $72,981 and had only partially performed, it defaulted on the principal contract. Carol, or its successors, then completed the contract at a cost of $3,541.41, leaving a balance of $3,477.49 due to Meteor. Certified claims that the sub-contract for the concrete was fully performed but that Meteor failed to pay the balance of $3,-025.69 due on the contract price. The present action stems from the claim of the United States that Meteor did not remit withholding, social security and unemployment compensation taxes due and owing to the United States based upon work attributable to Meteor’s contract with Carol. The amount of the tax claim is $3,891.01.
On July 15, 1963, Certified caused a mechanic’s lien to be filed and gave the required statutory notice, pursuant to the New York Lien Law, McKinney’s Consol.Laws, c. 33, on the 70 Park Avenue property to the extent of its unpaid claim against Meteor. An action to foreclose that lien was commenced in the Supreme Court of New York on June 11, 1964. Pursuant to § 19 of the New York Lien Law, Doral Park Avenue Hotel Corporation, Carol’s successor, filed with the clerk of the state court an undertaking of Continental Casualty Company that it would pay any judgment recovered in an action to foreclose the mechanic’s lien. In accordance with subdivision (4) of § 19, the lien was discharged upon the filing of the bond.
The present action was brought in the Southern District of New York by the United States on June 30, 1965. The United States does not assert a tax lien in this action, but proceeds on the theory that it is entitled to have a trust imposed on the funds owed to Meteor by Carol under the “trust fund” provisions of Artiele 3-A of the New York Lien Law. This action is the only one in which all of the possible known claimants are parties, although it would appear from the record that the United States had knowledge of the state court proceedings and considered the possibility of attempting to intervene therein.
Certified moved for summary judgment m the state court foreclosure action in the early part of September, 1965. On September 15, 1965, the United States applied for an order of the United States District Court asking Certified to show cause why a preliminary injunction, barring Certified from proceeding with its foreclosure action and its motion therein for summary judgment, should not issue pursuant to Rule 65 of the Federal Rules of Civil Procedure. The application for a preliminary injunction was granted on October 5, 1965 and Certified appeals from that order. 28 U.S.C. § 1292(a)(1).
The appeal raises a difficult question with regard to federal-state relations. We begin with the premise that the anti-injunction statute, 28 U.S.C. § 2283, which prohibits a federal court from granting “an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments,” does not apply where the United States, as a party in interest, seeks such a stay. Leiter Minerals, Inc. v. United States, 352 U.S. 220, 226, 77 S.Ct. 287, 1 L.Ed.2d 267 (1957). That decision does not mean, however, that a stay is automatically granted simply on the application of the United States. After enunciating the principle above stated, the Supreme Court went on to say that it was also necessary to inquire “whether the granting of an injunction was proper in the circumstances of this case.” Leiter Minerals, Inc. v. United States, supra, at 226, 77 S.Ct. at 291.
The United States is not entitled to an injunction staying state court proceedings where the state court is the first court to assume jurisdiction over the subject matter property of an action in rem or quasi in rem. United States v. Bank of New York & Trust Co., 296 U.S. 463, 477, 56 S.Ct. 343, 80 L.Ed. 331 (1936); Penn General Casualty Co. v. Com. of Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935). On the other hand, the mere fact that certain property in possession or custody of the state court is indirectly related to the action in the federal court is not a bar to the exercise of federal jurisdiction “where the final judgment does not undertake to interfere with the state court’s possession save to the extent that the state court is bound by the judgment to recognize the right adjudicated by the federal court.” Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 298, 90 L.Ed. 256 (1946). In that case, the Supreme Court held that it was proper to exercise jurisdiction where the Alien Property Custodian sought a judgment ordering the executor of an estate being administered in California to pay over the net estate.
The principle applied in Markham v. Allen, supra, is derived from a line of cases which hold that the exercise of jurisdiction over property by one court does not prevent other courts from rendering “any judgment not in conflict with that court’s authority to decide questions within its jurisdiction and to make effective such decisions by its control of the property.” United States v. Klein, 303 U.S. 276, 281, 58 S.Ct. 536, 538, 82 L.Ed. 840 (1938). The actions “to adjudicate rights” of which the Court speaks in Markham v. Allen, supra, are not in rem actions, but those in which the “judgments therein do not deal with the property and order distribution; they adjudicate questions which precede distribution.” Commonwealth Trust Co. of Pittsburgh v. Bradford, 297 U.S. 613, 619, 56 S.Ct. 600, 602, 80 L.Ed. 920 (1936).
There can be little doubt that the initial foreclosure proceeding in the state court was a proceeding in rem, Quimby v. Sloan, 2 E.D.Smith 594, 607, 2 Abb. Pr. 93 (Ct.Common Pleas, 1855), an action in which Certified sought to enforce “an interest in the property improved.” Rapid Fireproof Door Co. v. Largo Corp., 243 N.Y. 482, 486, 154 N.E. 531, 534 (1926). Thus, the present Lien Law provides that the mechanic’s lien is- “upon the real property improved” and that an action to foreclose the lien is governed by “[t]he provisions of the real property actions and proceedings law relating to actions for the foreclosure of a mortgage upon real property.” It is, therefore, quite clear that if the bond of Continental Casualty had not been substituted for Certified’s mechanic’s lien in the state proceedings, the federal court would have been powerless to interfere with the state proceedings. United States v. Bank of New York & Trust Co., supra; Penn General Casualty Co. v. Com. of Pennsylvania, supra.
We are, therefore, presented with the question of whether, in the light of the decisions discussed above, the substitution of the bond for the mechanic’s lien so altered the character of the state lien foreclosure proceeding that it could be stayed by a federal court. We think that it did not.
After the discharge of a lien by the substitution of a bond, the action continues in form as a foreclosure proceeding for purposes of establishing the validity of the lien. Berger Mfg. Co. v. City of New York, 206 N.Y. 24, 30, 99 N.E. 153 (1912); Hall v. Carl G. Ek & Son Constr. Co., 17 A.D.2d 558, 236 N.Y. S.2d 555, 558-559 (4th Dept., 1963), aff’d, 13 N.Y.2d 825, 242 N.Y.S.2d 352, 192 N.E.2d 227 (1963). In effect, the filing of the undertaking with the clerk merely shifts the lien from the real property to the bond, thereby enabling the owner of the realty to free his property from the incumbrance of the lien. It is clear, however, that the right to recover on the undertaking is not personal. Milliken Bros., Inc. v. City of New York, 201 N.Y. 65, 74, 94 N.E. 196 (1911). The action remains in equity and, although the surety may be joined as a defendant for convenience sake, the plaintiff may continue his action after substitution of the bond without making the surety a party though any judgment therein will be conclusive upon the surety. Harley v. Plant, 210 N.Y. 405, 409-410,104 N.E. 946 (1914).
In Morton v. Tucker, 145 N.Y. 244, 249, 40 N.E. 3, 4 (1895), the New York Court of Appeals declared that “the bond should take the place of the property, and become the subject of the lien, in the same form and manner as is provided for in the case of the payment of money into court, or the deposit of securities under an order of the court after action brought.” The alternative ways of posting security discussed in Morton v. Tucker, supra, are provided in Sections 19 and 20 of the Lien Law as statutory procedures by which the owner of property subject to a mechanic’s lien can free his realty from the incumbrance of the lien. Where a county commissioner receives monies pursuant to § 20 of the Lien Law, the money “is considered as paid into court” and “[t]he commissioner holds the fund subject to its orders.” World Steel Products Corp. v. Ogden Gardens, 120 N.Y.S.2d 553, 554 (Sup.Ct. Westchester Co., 1963).
The bond or undertaking “does not change the relation or rights of the parties otherwise than in substituting its obligations for the fund subject to the lien, and it was not within the legislative purpose in permitting the substitution to deteriorate the lienor’s rights.” Harley v. Plant, supra, 210 N.Y. at 410, 104 N.E. at 947. There can be no distinction made in this situation between the effect of a bond and the effect of a deposit as a substitute for the realty as security for Certified’s lien. It is apparent that the New York courts would not make such a distinction. The substitution, whether it be by deposit or bond, does not fundamentally transform the in rem foreclosure action, in which there is a res under the control of the state court, into an in personam proceeding that can be stayed by another court.
The preliminary injunction order of the District Court is not saved by Leiter Minerals, Inc. v. United States, supra. The Supreme Court in that case indicated that where the United States' position is “defensive” it should be able to choose its forum “even though the state litigation has the elements of an action characterized as quasi in rem.” Certified’s assertion of its lien in the state court is not, however, either a direct or an indirect challenge to the right of the United States to retain funds or title to property in its possession at the commencement of the state proceeding. The present case is more akin to United States v. Bank of New York & Trust Co., supra, of which the Supreme Court said “[i]n remitting the United States to the state court, the Court saw no ‘impairment of any rights’ or ‘any sacrifice of its proper dignity as a sovereign.’” Leiter Minerals, Inc. v. United States, supra, 352 U.S. at 227, 77 S.Ct. at 291.
The United States, however, seeks to bring the facts of this case within Leiter Minerals by arguing both that it is only in the federal court where all claimants are parties and that the federal court is the only court in which all of the issues can be tried. The contention is made that under a recent unreported state decision, Charles V. Castaldo Constru. Corp. v. Tinley Management Corp., Civil Court of the City of New York, New York County, Index No. 150639/1963 (1965), the United States would not have been allowed to intervene in Certified’s foreclosure action, and therefore, the federal court is the only court that can supply the requested relief. The Castaldo case is clearly distinguishable. Although the United States presumably attempted to intervene as of right upon a timely motion under New York Civil Practice Law and Rules § 1012, the court in Castaldo concluded that the United States could not invoke Article 3-A in order to collect its tax claim. It might also have chosen, in its discretion, to deny the motion as untimely since it came after judgment. But whatever the right of the United States to intervene in the foreclosure action may have been, it was protected by its right to bring an Article 3-A proceeding in the state court. In any event, we do not reach the merits of the Article 3-A claim of the United States, but conclude only that the right of the United States to intervene for the purpose of asserting such a claim in a foreclosure action has not been conclusively determined by the New York Courts.
As to the second facet of the claim made under Leiter Minerals, it is true that the federal court is now the only court in which all of the issues can be determined since the statute of limitations on an Article 3-A cause of action has expired. The “sovereign dignity” concept does not, however, call for protection of the United States from its own mistake in failing to make its claim by way of intervention in, or the commencement of, a state proceeding where its sole claim for relief is made under a state statute. To hold to the contrary would render meaningless the principles of comity that underlie federal-state relations in the administration of justice 'which the Supreme Court has recognized and considered in each of the injunction cases.
Finally, we find that the principle summarized in Markham v. Allen, supra, is also inapplicable. The United States seeks not merely an adjudication of its rights relative to those of Certified but an injunction which, in barring Certified from proceeding with its motion for summary judgment, directly interferes with and is in conflict with disposition of the fund under control of the state court.
The order of the District Court is reversed.
. Certified had, in turn, sub-contracted with another who, in fact, supplied Meteor with the concrete. Certified's sub-contractor, as the actual supplier, filed the lien and gave the notice; but, on receiving payment from Certified, assigned its claim and lien to Certified, who throughout the present case appeared as assignee.
. Leiter Minerals, Inc. v. United States, supra, 352 U.S. at 228, 77 S.Ct. at 292, indicates that where the position asserted by the United States is defensive, it may he allowed to choose its forum “even though the state litigation has the elements of an action characterized as quasi in rem.” The position of the United States in this action is not, however, a defensive one.
. New York Lien Law, § 3.
. New York Lien Law § 43.
. Raising the technical distinction to a substantive level would not only have an apparently unintended effect on plaintiff’s rights, but would create problems in the administration of justice.
It seems that an owner may first make a deposit and then recover the deposit during the proceedings by substituting a bond. Application of Tumac Realty Corp., 203 Misc. 649, 123 N.Y.S.2d 642 (City Ct. New York, 1952). The rule contended for by the United States would lead to confusion and possible collusion in that situation, i. e., a claimant with priority under Article 3-A might well have enough at stake to make it worthwhile to entice the owner-defendant to make the second substitution so that the late claimant could assert the prior claim in another action after enjoining the first action.
. 352 U.S. at 228, 77 S.Ct. at 292.
. See, e. g., Krenitsky et al. v. Ludlow Motor Co., Inc., 276 App.Div. 511, 96 N.Y.S.2d 102, appeal denied, 277 App.Div. 800, 97 N.Y.S.2d 385, reargument and appeal denied, 277 App.Div. 953, 99 N.Y.S.2d 612 (3d Dept., 1950), appeal dismissed, 301 N.Y. 609, 93 N.E.2d 497 (1950).
. The United States itself indicates in its brief that it has appealed in Castaldo.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BOWNES, Circuit Judge.
In this Title VII discriminatory discharge case, based on 42 U.S.C. § 2000e, plaintiff, Dr. Kent Earnhardt (Earnhardt), convinced the district court that his employment with the Commonwealth of Puerto Rico was terminated because of invidious national origin discrimination and the court awarded him his lost salary as damages. Defendant Commonwealth of Puerto Rico (Commonwealth) appeals, maintaining that the district court, 582 F.Supp. 25, erred in concluding the plaintiff was fired as a result of discriminatory animus. Plaintiff Earnhardt cross-appeals the denial of a Federal Rule of Civil Procedure 59(e) motion to amend the back pay judgment to include prejudgment interest and a liquidated sum for loss of fringe benefits.
The court’s subsidiary findings of fact and its ultimate determination of liability are amply supported by the evidence. Because the findings rest on a strong evidentiary base, we rehearse only the factual highlights.
Earnhardt, who was born in the continental United States, was hired by the Commonwealth of Puerto Rico Health Department (Department) by contract dated October 24, 1975. The decision to hire Earnhardt was made by Dr. Antonio Silva Iglecia (Silva), who at that time was Assistant Secretary of Health for the Family Planning Division. The contract, under which he was to work ninety-five hours per month, expired on June 30, 1976. Shortly before that date, the contract was renewed for an additional year. In September 1976, the new contract was amended to allow for prorated sick leave and vacation time.
During his tenure with the Department, Earnhardt worked closely with Silva, preparing speeches and other policy statements. He represented Silva and the Department at an international conference on population and worked on various research projects. Earnhardt subsequently became subdirector of the Planning and Development Division under Sandra Quinones Lopez (Quinones) in July of 1976. Earnhardt’s contract was terminated later that year by a memorandum dated December 20, 1976, stating that clause 11 of the contract was the basis for the termination. Clause 11 provided that either party had the right to terminate the contract on thirty days’ notice, No reason was given to Earnhardt for the contract termination; Silva testified that he had invoked clause 11 so that the termination would not have to be justified by specific reasons.
The district court found as follows. Earnhardt, the only continental American working in the Family Planning Program, was frequently reminded of this by being addressed as “gringo” by his supervisors and co-workers rather than by his name. He was criticized upon occasion for being “muy Americano” (“very American”). “There existed in the workplace a sense that ‘Americans’ were outsiders, and that Earnhardt was one of them.” Earnhardt’s supervisor, Silva, who signed the termination memorandum, was “overly sensitive to professional differences of opinion when they came from ‘Americans.’ ” This was evidenced by a memorandum couched in ethnic terms from Silva responding to a critique by a team of evaluators from the U.S. Department of Health, Education, and Welfare and by comments Silva made to Earnhardt.
The Commonwealth contends that low productivity was the cause of Earnhardt’s termination rather than any discriminatory animus of his supervisors and co-workers. We agree with the district court that this profferred reason is not credible: “The overall impression we get from the memorandums submitted [into] evidence is that the plaintiff was a worker whose goal was to get on with his work and accomplish it in the most efficient manner possible.” The district court further found that some work rules were applied strictly and inflexibly to the plaintiff in contrast to the flexible application afforded Puerto Rican and Latin American employees in the Division.
Moreover, defendant’s own evidence was inconsistent on the reason for the firing. Silva testified that the reason Earnhardt was fired at this particular time lay in the incumbent government’s desire to turn over to the incoming administration, to which it had lost the election, only the best employees in the division. Yet there is no evidence that any other employee was terminated, or, for that matter, even evaluated at this time. The district court found that Earnhardt’s discharge was in direct violation of a Puerto Rican law which forbids Commonwealth agencies from effectuating any change in the personnel status of any employee during the sixty days before and sixty days after a general election. See 3 L.P.R.A. § 1337; see also Ortiz v. Alcade de Aguadillo, 107 D.P.R. 819 (1978). It was during this sixty-day period that Earnhardt received his termination notice.
Our review of the record convinces us that the district court’s findings were not only not clearly erroneous, but were clearly correct. We, therefore, turn to the plaintiff’s cross-appeal, which questions the summary denial of liquidated fringe benefits and prejudgment interest despite the judgment in his favor.
Plaintiffs Cross-Appeal
Earnhardt submitted a timely Rule 59(e) motion, Fed.R.Civ.P. 59(e), to amend the judgment to include within the back pay award prejudgment interest and liquidated fringe benefits, and to fix a sum certain as the amount of judgment. In his proposed findings and judgment submitted to the court after trial, Earnhardt had omitted these requests and petitioned solely for the value of his employment contract with the Commonwealth, at the rate of $850 per month, which was awarded him. Earnhardt’s 59(e) motion was denied.
Where a district court rejects a motion to alter or amend a judgment, the standard of review is whether there was an abuse of discretion. Robinson v. Watts Detective Agency, 685 F.2d 729, 743 (1st Cir.1982). Although the district court gave no reason for the denial of the motion, it was not required to do so under the rules and we must assume that the motion received careful consideration. The determination of the amount of damages is, absent legal error, a matter for the finder of fact. It cannot be said that either prejudgment interest or an award for lost fringe benefits must, as a matter of law, be part of the damages awarded in a Title VII case. The question of whether they are necessary to make a plaintiff whole is within the discretion of the district court. This is especially so when the request for such an award comes as an afterthought by the plaintiff. The district court did not abuse its discretion in denying the Rule 59(e) motion.
The judgment of the district court is affirmed in all respects.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GRIFFIN B. BELL, Circuit Judge:
This appeal is from a declaratory judgment entered for Dr. Riley, the defendant in a suit brought by the insurance company to settle coverage under a malpractice endorsement to a public liability insurance policy. Subsequent to the filing of the declaratory judgment action, Dr. Riley prevailed in the three suits which had been brought against him by a former patient and her husband. This obviated all questions except his claim for attorneys fees and costs incurred in defending the three suits and in defending the declaratory judgment action.
Prior to filing the declaratory judgment action, the insurance company had undertaken the defense of the first suit against Dr. Riley. It was filed by the former patient. Some months later the insurance company withdrew from the defense on the ground that no coverage was afforded under the policy. The defense was taken over by Dr. Riley’s personal counsel who had been in the case from the beginning to protect the doctor’s interest since the suit was for an amount above the limits of the policy. The two additional suits were filed after the declaratory judgment action had been filed; another by the patient, and one by her husband. Dr. Riley’s personal counsel also defended these.
The court awarded the attorneys fees and costs incurred in the defense during the period after the insurance company withdrew its defense in the first suit, and in the defense of the other two suits. The insurance company contends that it owed the doctor nothing and this forms the issue on its appeal. The court refused to award attorneys fees and costs to Dr. Riley for his personal representation in the first suit during the period prior to the time the. insurance company withdrew, and also refused the prayer for fees and costs incurred in defending the declaratory judgment action. This refusal forms the subject matter of the cross-appeal taken by Dr. Riley. On the appeal, we affirm as to the award on the first suit, and reverse as to the other two suits. We affirm on the cross-appeal.
I.
The controversy centers around coverage and estoppel. The malpractice endorsement was effective on and after December 22, 1958. The patient sued the doctor in January 1960 for allegedly having failed to diagnose her tubercular condition while she was under his care beginning in October 1957. The suit did not set out a treatment termination date but merely alleged that in March 1959 another doctor discovered her tubercular condition. The suit on its face thus indicated that the insurance company owed the doctor at least a defense.
Immediately after service of the first suit, Dr. Riley’s personal counsel contacted the Jonesboro, Georgia agent the insurance company, advised him of the suit, and that the date of the last treatment of the patient by Dr. Riley was the very date that the policy became effective, December 22, 1958. The insurance agent contacted the company’s adjuster in Atlanta regarding the suit and advised him that the doctor had last treated the patient on December 22, 1958. There is some evidence that he was told that the treatment on that day was for pleurisy although the testimony could have referred to prior treatment for pleurisy which was the fact. The December 22 treatment was simply to remove sutures following an earlier breast operation which had been performed on the patient in Atlanta by another doctor. There was no treatment whatever for pleurisy. The patient telephoned the doctor a few days after December 22 to learn that a tumor which had been removed in the operation was not malignant. There was no other contact thereafter between the patient and the doctor. The doctor had last given diagnostic treatment to the patient in November 1958 when the tumor was discovered and she was referred to the Atlanta surgeon. With these facts at hand, the insurance company accepted coverage, sought no reservation of rights, and assumed the defense of the suit. Dr. Riley insisted on a letter from the insurance company that it had accepted coverage and such a letter was written on January 25, 1960. of
Dr. Riley then employed personal counsel, at his own expense, to assist insurance counsel in the defense of the suit because the damages claimed exceeded the policy limits. There was no discussion of coverage between his lawyer and the insurance company’s lawyers and matters went along normally until August 23, 1960 when the deposition of the patient was taken. Her testimony made it crystal clear that her claim against Dr. Riley was based upon his alleged negligence between October 1957 and November 1958, a period outside the coverage of the policy. The insurance company notified Dr. Riley by letter dated August 31, 1960 that there was no coverage under the policy, and that it was withdrawing from further participation in the suit.
Dr. Riley immediately demanded that the company resume the defense and pay any judgment that might be rendered against him up to the limits of the policy. The company refused and its counsel withdrew from the suit.
The suit for declaratory judgment against Dr. Riley was filed on November 8, 1960. As stated, the patient’s first suit was then pending. Thereafter the patient’s husband sued Dr. Riley for loss of services and consortium and for medical expenses. The insurance company offered to defend the suit under a reservation of rights but its offer was declined. The first suit filed by the patient having been dismissed in the meantime for lack of diversity jurisdiction, she then filed another suit. The insurance company also offered to defend this suit under a reservation of rights but the offer was likewise declined. This suit was dismissed as being barred by the statute of limitations and the husband’s suit was dismissed for want of prosecution. At this point, any question of responsibility for a judgment to the patient or her husband was eliminated from the declaratory judgment case. Dr. Riley amended his answer to assert a counterclaim wherein he sought to recover all attorneys fees and expenses incurred by him in connection with the three malpractice suits and the declaratory judgment action. The District Court then entered its judgment as heretofore stated.
II.
We will first dispose of the cross-appeal. The insurance company withdrew from the defense of the first suit on August 31, 1960. Its defense had been full and complete to that point and the doctor’s counsel was participating in the case only because of the suit claiming damages in excess of the policy limits. The District Court properly denied Dr. Riley his attorneys fees and expenses incurred prior to the date the insurance company withdrew, August 31, 1960. We know of no theory whereunder the insurance company could be cast with these personal expenses of the doctor, and no authority is cited in support of such a recovery.
Dr. Riley also asserts on the cross-appeal that he was entitled to recover attorneys fees for the defense of the declaratory judgment action and for the prosecution of his cross claim against the insurance company for expenses. The law is- settled in Georgia that attorneys fees and expenses may not be recovered in such a case in the absence of showing bad faith in filing the suit for declaratory judgment, or that the insurance company was stubbornly litigious. Maryland Casualty Co. v. Sammons, 1940, 63 Ga.App. 323, 11 S.E.2d 89. The proof here falls far short of such a showing. See also Milwaukee Mechanics Insurance Co. v. Davis, 5 Cir., 1952, 198 F.2d 441. Dr. Riley was not entitled to recover attorneys fees or expenses in the declaratory judgment action. The judgment of the District Court on the cross-appeal is affirmed in all respects.
III.
Dr. Riley depends on the doctrine of estoppel to sustain his claim that the insurance company should pay the cost of his defense. This is a diversity case and we take our law on the estoppel doctrine from the Georgia courts. In State Farm Mutual Automobile Insurance Company v. Anderson, 1961, 104 Ga.App. 815, 818, 123 S.E.2d 191, the court said:
“ * * * It is the law of Georgia and * * * ‘the general rule supported by the great weight of authority * * * that if a liability insurer, with knowledge of a ground of forfeiture or noncoverage under the policy, assumes and conducts the defense of an action brought against the insured, without disclaiming liability and giving notice of its reservation of rights, it is thereafter precluded in an action upon the policy from setting up such ground of forfeiture or noncoverage. * * * ’ ”
This rule was first enunciated in Georgia in the case of Jones v. Georgia Casualty & Surety Company, 1953, 89 Ga.App. 181, 79 S.E.2d 861. That case goes on to say that the insurer’s conduct in going forward with the defense operates as an estoppel to later contest an action upon the policy regardless of the fact that there has been no misrepresentation or concealment of material fact on its part, and notwithstanding the facts may have been within the knowledge of the insured equally as well as within the knowledge of the insurer. Good faith in such a case is not an issue, and prejudice to the insured by the assumption and the conduct of the defense is conclusively presumed.
In Gant v. State Farm Mutual Automobile Insurance Company, 1964, 109 Ga.App. 41, 134 S.E.2d 886, the court reiterated the estoppel rule, swpra, but pointed out that where the fact or facts giving rise to the forfeiture or non-coverage come to light only after the insurer enters upon a defense of a suit, the estoppel would not arise since knowledge of such facts on the part of the insurance company before it enters upon the defense is essential to any estoppel. Where the “ * * * insurer has knowledge of the facts but does not feel safe in making a determination as to a proper course of action it may enter upon a defense under a reservation of rights and then seek a declaratory judgment. The reservation may be effected by an agreement between the insurer and the insured or by the giving to the insured of proper notice of its position by the insurer”. (109 Ga.App. at pp. 43, 44, 134 S.E.2d at p. 888.)
This statement of law poses the issue here. The insurance company sought no reservation of rights in connection with the first suit. Rather, it accepted coverage. Was it sufficiently on notice regarding the question of non-coverage by reason of knowing the treatment dates and the type of treatment administered to give rise to an estoppel? The District Court found that the insurance company had sufficient notice through the advice given by Dr. Riley’s counsel to the local insurance agent, and in turn by him to the adjuster, that Dr. Riley had last seen the patient on December 22, 1958. Such further investigation, if any, as was made by the insurance company thereafter is not disclosed in the record. Coverage was discussed and the insurance company made a considered decision, orally and in writing, that there was coverage and then undertook the defense. It took no action whatever to protect its position. Under the Georgia law an estoppel arose against the insurance company insofar as the first suit by the patient against Dr. Riley is concerned. We affirm the judgment of the District Court to the extent that it pertains to that suit.
The insurance company relies on a line of cases which hold that where the complaint does not expressly allege facts which put the asserted liability within the terms of the policy but contemplates an injury which may be within the policy, the promise to defend contained in the policy makes it the duty of the insurance company to undertake the defense until it can be shown that the claim is not covered. Lee v. Aetna Casualty & Surety Company, 2 Cir., 1949, 178 F.2d 750; Pittsburgh Plate Glass Company v. Fidelity and Casualty Company of New York, 3 Cir., 1960, 281 F.2d 538; Boutwell v. Employers’ Liability Assurance Corp., 5 Cir., 1949, 175 F.2d 597; Sears Roebuck & Co. v. Travelers Insurance Company, 7 Cir., 1958, 261 F.2d 774; and Upper Columbia River Towing Company v. Maryland Casualty Company, 9 Cir., 1963, 313 F.2d 702. These cases are not in point. They do not involve factual situations where the insurance company, as the District Court found here, was on notice that coverage was in doubt. They are consistent with Gant v. State Farm Mutual Automobile Insurance Company, supra, which requires knowledge, prior to assuming or going forward with the defense, to give rise to an estoppel. The key is that the insurance company must act to reserve its rights at the time it receives notice that the claim in issue is not or may not be covered.
This leaves for decision that part of the judgment which imposed the attorney fees and cost incurred by Dr. Riley in defending the suit filed by the patient’s husband and the second suit filed by the patient. In each of these cases the insurance company immediately tendered a defense under a reservation of rights and did not go forward with the defense when the tenders were refused. It is not estopped under these facts and under the Georgia cases above cited but, on the other hand, reserved and preserved its rights as the law provides until the question of coverage could be settled in the declaratory judgment action. It is undisputed that the policy afforded no coverage for the alleged malpractice which formed the basis of the suits. There being no coverage, and the insurance company having preserved its position, it follows that the District Court erred in awarding attorneys fees and expenses to Dr. Riley for the defense of these two suits.
The judgment is reversed to this extent and the case remanded so that the judgment may be corrected to eliminate the attorneys fees and expense awarded in connection with these two suits. Otherwise, the judgment is affirmed on the appeal and cross-appeal.
.Affirmed in part; reversed in part; and remanded for further proceedings not inconsistent herewith.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CHRISTENSEN, District Judge.
Lazy D Grazing Association (hereinafter Lazy D) appeals and Terry Land and Livestock Company, Inc. (hereinafter Terry) cross-appeals from a district court judgment that declared the respective interests of the parties in the mineral estate underlying land conveyed by Terry to Lazy D. The validity of that judgment depends upon a proper interpretation of a mineral interest reservation in the context of the following circumstances.
The conveyance to Lazy D, executed in 1965 and consisting of 21,920 acres of land, was part of a larger transaction between Terry and five other grazing associations. The purpose of the conveyances was to provide summer grazing for livestock owned by individual members of the six grazing associations. Each grazing association participated in the negotiations for the sale, which resulted in six separate, but identical deeds. Each deed contained a clause reserving “all gas, casinghead gas, oil, and other minerals valuable as a source of petroleum in and under said lands....”
This action was initially brought by Lazy D to determine the rights of the parties to coal under the reservation clause. However, during the course of the proceedings, Lazy D expanded its complaint to seek a declaration of the meaning of the reservation clause as to all minerals underlying the land and asked that it be named owner of all minerals except gas, casinghead gas, oil and other minerals valuable as a source of petroleum. After the trial Terry amended its answer and counterclaim to conform to its view of the evidence, asking that it be declared the owner of all minerals except surface sand and gravel.
In a pretrial proceeding, the trial judge ruled that the reservation clause was ambiguous, a ruling to which neither party objected. Both parties presented extrinsic evidence bearing on the actual intent behind the reservation language. After considering the evidence, the trial judge entered judgment, declaring that Terry was the owner of all gas, casinghead gas, oil and other minerals — including coal and oil shale — which were valuable as a source of petroleum in 1965 or which had a prospective value as a source of petroleum on that date. Lazy D was declared the owner of all other minerals.
Undergirding this holding are a number of findings of fact and conclusions of law, which one or the other of the parties disputes on this appeal. The trial judge clarified his earlier ruling that the reservation clause was ambiguous by concluding that as to minerals valuable as a source of petroleum the reservation clause was ambiguous, but as to other minerals not valuable as a source of petroleum the clause was not ambiguous; the latter class of minerals was clearly not reserved by the reservation clause and passed to Lazy D under the deed. He found that the parties intended to reserve to the seller all minerals having present or prospective value as a source of petroleum. He further found that oil shale and coal were prospectively valuable as sources of petroleum on the date of the deeds and were intended to be reserved.
Lazy D’s Appeal
Lazy D contends that the trial court erred in concluding that coal was reserved by the reservation clause. It argues that it was error to rule that the reservation clause was ambiguous as to coal and contends that the court should have held that the clause, as a matter of law, did not reserve coal. It asserts that the coal underlying its land can be removed only by strip mining, a method of extraction that would destroy the value of the surface for the grazing and agricultural purposes for which the land was purchased.
A number of courts have ruled that a broad grant or reservation of mineral interests does not include a mineral which is not specified in the grant or reservation when the only means of extracting the mineral would destroy the surface. E. g., Cumberland Mineral Co. v. United States, 513 F.2d 1399 (Ct.Cl.1975); Wulf v. Shultz, 211 Kan. 724, 508 P.2d 896 (1973); Acker v. Guinn, 464 S.W.2d 348 (Tex.1971); Farrell v. Sayre, 129 Colo. 368, 270 P.2d 190 (1954); and Carson v. Missouri Pacific Railroad, 212 Ark. 963, 209 S.W.2d 97 (1948). Contra, Christman v. Emineth, 212 N.W.2d 543 (N.D.1973). If such a reservation were interpreted to include minerals that could be extracted only by destroying the surface, the reservation might engulf the grant leaving the surface estate owner with an empty property right. See Carson v. Missouri Pacific Railroad, 212 Ark. 963, 209 5. W.2d 97, 99 (Ark.1948). It has been reasoned that if the parties had intended such a result, they would have explicitly said so by specifying the mineral in the reservation clause.
Lazy D contends that the trial court should have applied this reasoning and concluded that coal was not reserved under the reservation clause without considering extrinsic evidence of the parties’ intent. A difficulty with this contention is that Lazy D failed to present evidence that the coal must be removed by a method that would destroy the surface. Two witnesses suggested that there were outcroppings of coal on the land, but neither specified how extensive these outcroppings were. Other witnesses testified that there were deep veins of coal under the land and that previous coal mining on the land had been undertaken by an underground method. There was no evidence of what percentage of the surface would be affected if strip mining were required to remove the surface coal. Such a record does not invoke a doctrine designed to protect against an uncontemplated “utter destruction” of the surface owner’s estate. Holloway Gravel Co. v. McKowen, 200 La. 917, 9 So.2d 228 (1942). Here there is no showing that substantial destruction of the surface will result from strip mining operations.
Properly rejecting Lazy D’s contention regarding strip mining, the trial court went on to conclude that the reservation clause was ambiguous. In assessing whether this conclusion was correct, we may look to the Wyoming Supreme Court’s definition of an ambiguous contract: An “ambiguous contract is one capable of being understood in more ways than one. It is an agreement which is obscure in its meaning, because of indefiniteness of expression, or because a double meaning is present.” Bulis v. Wells, 565 P.2d 487, 490 (Wyo.1977). Here, the focus is on the ambiguity of the word “valuable.” Lazy D argues that the term has the meaning attributed to it under the Federal Mineral Land Statutes — that of present marketability, i. e., can the coal presently be extracted from the ground, converted into petroleum and marketed at a price competitive with petroleum from other sources. On the other hand, Terry contends that the term is not limited to present marketability, but rather includes minerals that will in the future become marketable as a source of petroleum. Given this dispute as to the meaning of the word, the trial court properly determined that the clause was ambiguous.
Lazy D next contends that the trial court erred in finding that the parties intended to reserve coal. It disputes two particular findings: 1) that the parties intended to reserve minerals having prospective value as a source of petroleum and 2) that the testimony of the witnesses established that the parties intended to reserve coal. Such findings of fact must be sustained unless they are not supported by substantial evidence. Evensen v. Pubco Petroleum Corp., 274 F.2d 866 (10th Cir. 1960).
Expert witnesses for both parties testified that coal was not in 1965, nor is it now, presently valuable as a source of petroleum in the United States, since it is not competitive with other sources. But all agreed that, given the current oil shortage, it will become valuable as a source of petroleum in the future. The dispute is then whether the parties intended to reserve only minerals that are presently valuable as a source of petroleum or to include minerals that have prospective value as such a source.
Pointing to the “prudent man” and “present marketability” definition of “valuable” under the Federal Mineral Land Statute, Lazy D argues that the trial court erred in concluding that the parties intended to reserve minerals with only prospective value as a source of petroleum. The federal law permits citizens to locate “valuable” mineral deposits on federal land. 30 U.S.C. § 22. The courts have developed standards for determining whether a mineral deposit is valuable. The prudent man and marketability tests require a claimant to show that “a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine,” and that, at the time of discovery, the mineral could be marketed at a profit. U. S. v. Coleman, 390 U.S. 599, 602, 88 S.Ct. 1327, 1330, 20 L.Ed.2d 170 (1968). Lazy D asserts that this meaning of “valuable” should be applied in the present case, reasoning that the long-standing definition of the term indicates that it is the most reasonable interpretation of the word and might well have influenced the parties when they were drafting the reservation.
In interpreting rights under the federal statute, the courts have developed the present marketability test to implement the intent of Congress. As the United States Supreme Court has explained,
Under the mining laws Congress has made public lands available to people for the purpose of mining valuable mineral deposits and not for other purposes. .. .
The marketability test ... has the advantage of throwing light on a claimant’s intention, a matter which is inextricably bound together with valuableness. For evidence that a mineral deposit is not of economic value and cannot in all likelihood be operated at a profit may well suggest that the claimant seeks the land for other purposes.
U. S. v. Coleman, 390 U.S. 599, 602-03, 88 S.Ct. 1327, 1330 (1968). The interpretation of “valuable” under these statutes casts little light upon what the private parties in this context intended when they used the term.
There is no indication in the record that the parties or their attorneys gave thought to the interpretation of the word “valuable” under the federal statute. Michael Fur-bush, attorney for Terry and drafter of the reservation clause, testified that in drafting the clause he intended to include coal and “anything else you could squeeze a drop of oil out of.”
Three other witnesses, each of whom participated in negotiating the terms of the sale, testified that the parties intended to reserve all minerals except surface sand and gravel. Significantly, two of these witnesses were representatives of grazing associations that purchased land in the same transaction and under deeds identical to Lazy D’s. The only witness whose testimony rebutted this assertion was Robert Ruyle, the attorney representing the grazing. associations in the negotiations. He testified that the parties did not intend to reserve coal and that early on in the negotiations the word coal was deleted from a preliminary draft of the deed at his objection. Furbush, the attorney for Terry, admitted that the original draft did contain the word coal and that Ruyle objected to that language. However, he denied that the substitution of the final version for the language containing specific reference to coal was made with the intent of deleting coal from the reservation. Rather, he testified that Terry’s response to Ruyle’s objection was that coal would be reserved. He explained that the substitution was an attempt to cover all minerals that might be sources of petroleum, rather than running the risk of omitting such a mineral in a list of specific minerals. The trial judge found that Ruyle’s testimony was not credible, a judgment with which we cannot quarrel. Ruyle’s testimony suggested that he had very little independent recollection of the negotiations, and four other witnesses contradicted his testimony.
The trial court’s findings on this phase of the case, involving as they did issues of fact, were not clearly erroneous and must be sustained.
Terry’s Cross Appeal
Terry contends the trial court should have ruled that the reservation clause was ambiguous as to its inclusion of all minerals, not just as to minerals valuable as a source of petroleum. Terry further argues that the court should then have given determinative weight to the testimony that the parties intended to reserve all minerals except sand and gravel. We believe the trial court correctly ruled that in this respect the reservation clause was not ambiguous and that by its express terms it did not reserve all minerals except sand and gravel.
Terry attacks the lower court’s assumption that only minerals that can be converted into petroleum are sources of petroleum. It reasons that a mineral can be a “source” of petroleum in two ways: 1) It can be converted into petroleum and 2) it can be a depository for petroleum in the ground. It argues that this double meaning renders the entire clause ambiguous.
Terry thus asks for an interpretation of the language “source of petroleum,” without consideration of the context in which the language was used. Here our task is not to determine what the phrase means in the abstract, but rather what these parties intended the phrase to mean to the extent this may be seen from an examination of the writing and the context in which it was used. To do this, we must examine the language of the entire reservation clause, the nature of the subject matter and the circumstances of the parties. See Bulis v. Wells, 565 P.2d 487, 490 (Wyo.1977), and Dawson v. Meike, 508 P.2d 15 (Wyo.1973).
The parties’ enumeration of the specific minerals, “gas, casinghead gas, [and] oil,” qualifies the more general language, “and other minerals valuable as a source of petroleum.” Under the ejusdem generis rule of construction, general terms in a reservation clause are construed to include only minerals that are similar in nature to minerals that are specified. Sloan v. Peabody Coal Co., 547 F.2d 115 (10th Cir. 1977). Underlying this rule is the commonsense rationale that the parties, by enumerating specific minerals, have indicated they are primarily interested in reserving minerals that are similar in character to those specified. Here the enumeration of petroleum-like minerals indicates the parties intended to include within the more general language, “and other minerals valuable as a source of petroleum,” only minerals that are similar in character to petroleum or that may be converted into petroleum. Thus we reject Terry’s contention that the phrase “source of petroleum” necessarily includes all minerals serving as depositories for petroleum, since such minerals may or may not be similar in nature to petroleum.
The interpretation urged by Terry encounters other difficulties when examined in light of the nature of the subject matter and the circumstances of the parties. Testimony elicited at trial suggests that when the parties entered into the mineral reservation they were uncertain of the geologic and mineral formations underlying the land. Under Terry’s interpretation the parties could not know what kinds of minerals were reserved until extensive geologic exploration was completed. It would be an unlikely situation for them intentionally to bargain for a reservation the scope and application of which could be determined only by an unknown geologic formation of the land.
We agree with the trial court’s implicit determination that the language, “other minerals valuable as a source of petroleum” is limited in application under the circumstances of this case to minerals that can be converted into petroleum, and with its decision that the clause excluded from the reservation minerals that are not valuable as a source of petroleum.
AFFIRMED.
. The reservation clause reads in its entirety: EXCEPTING and RESERVING therefrom however, unto TERRY LAND AND LIVESTOCK COMPANY, INC., party of the first part, its successors and assigns, all gas, casinghead gas, oil, and other minerals valuable as a source of petroleum in and under said lands and appurtenances thereto, together with the right of ingress and egress at all times for the purpose of mining, drilling, exploring, operating and developing said lands for gas, casinghead gas, oil and other minerals valuable as a source of petroleum in and under said lands, and storing, handling, transporting and marketing same therefrom with the right to remove all property and improvements placed thereon by party of the first part, its successors and assigns.
. In the trial court Lazy D asked for a declaration as to the ownership of all minerals underlying the land; however, it has restricted its appeal to the trial court’s determination that coal was reserved to Terry.
. Lazy D makes this contention for the first time in this appeal. It did not object below to the trial court’s ruling that the clause was ambiguous as to the reservation of coal nor to the introduction of extrinsic evidence. Because we agree with the trial court’s ultimate holding, we are not constrained to insist upon any technical preclusion of Lazy D’s argument here. But see Stephens Industries, Inc. v. Haskins and Sells, 438 F.2d 357 (10th Cir. 1971). Cf. Bulis v. Weils, 565 P.2d 487 (Wyo.1977).
. The Wyoming court apparently has not addressed this question.
. See Rocky Mountain Mineral Law Foundation, American Law of Mining § 15.16, at 167 (1979).
Professor Kuntz in a well-reasoned article argues that the rule is an arbitrary one, resulting in a bonus for the surface owner. He suggests that the better approach is to determine what minerals the parties intended to reserve without the aid of an artificial presumption, and then determine whether the parties intended to allow strip mining. Under this approach the possible destruction of the surface would be relevant to a determination of whether the parties intended to allow strip mining. The latter approach has the advantage of protecting against an unintended destruction of the surface estate, without awarding the surface owner the equally unintended bonus of mineral ownership. Kuntz, Law Relating to Oil and Gas in Wyoming, 3 Wyo.L.J. 107, 116 (1948). For a discussion of another criticism of the rule dealing with title examination problems, see Prendergast, The Texas Enigma— When is a Mineral Not a Mineral?, 23 Rocky Mtn.Min.L.Inst. 865 (1977).
. Initially, we note that while some courts apply this rule as a matter of law, others view it as a means to determine the parties’ intent. Under the latter approach the fact that the mineral will be removed by open pit or strip mining is only one factor in determining whether the parties intended to include a mineral in the reservation. See e. g.. Southern Title Co. v. Oller, 595 S.W.2d 681 (Ark. 1980). Contra, Reed v. Wylie, 554 S.W.2d 169 (Tex. 1977). Since Lazy D has not established a factual basis for applying either standard, we here need not choose between the two approaches.
. In Texas it has been ruled that if a surface owner establishes that any of the disputed mineral lies at or near the surface, the surface owner retains title to all of the mineral. Reed v. Wylie, 554 S.W.2d 169 (Tex. 1977). No Wyoming case suggests such a result, and we will accept the implication from the ruling of the experienced Wyoming trial judge that local law does not follow the Texas rule. See, Sloan v. Peabody Coal Co., 547 F.2d 115 (10th Cir. 1977). Moreover, we note that any such rule would carry itself beyond its rationale. If only a small portion of the mineral lies at the surface, the removal process might not unreasonably interfere with the use of the surface. Whenever a mineral estate is severed from the surface, the surface owner must expect that even underground mining could affect his use of the surface to some degree. In the absence of evidence that removal of the surface minerals will result in an unreasonable destruction of the surface, it cannot be presumed under the circumstances of this case that the parties intended to leave the minerals with the surface estate so as to preserve the surface.
. 30 U.S.C. §§ 22, et seq.
. As will be discussed below, the definition of valuable under the federal statute is not conclusive of what the parties meant when they used the term.
. Furthermore, there have been exceptions to the present marketability rule on the issue of discovery under the federal statute, suggesting that the word can reasonably be construed to include minerals having prospective value. In Andrus v. Shell Oil Co., 446 U.S. 657, 100 S.Ct. 1932, 64 L.Ed.2d 593 (1980), the Supreme Court was called upon to determine whether locations of oil shale made prior to the 1920 Mineral Leasing Act, which withdrew oil shale from discovery under the 1872 general mining law, were valid even though oil shale at that time had no present marketability. The Supreme Court ruled that the locations were valid, noting the long-standing administrative interpretation that had included oil shale within the Act even though there had never been a profitable market for it. The Court quoted from a 1927 Department of Interior decision, which indicated that oil shale, the value of which is tied to its capacity to be converted into petroleum, should be treated differently than other minerals:
While at the present time there has been no considerable production of oil shales, due to the fact that abundant quantities of oil have been produced more cheaply from wells, there is no possible doubt of its value and of the fact that it constitutes an enormously valuable resource for future use by the American people.
48 U.S.L.W. at 4604 (quoting Freeman v. Summers, 52 L.D. 201 (1927)). In Shell Oil the court recited a long history of administrative interpretation indicating that when considering whether a mineral is valuable as a source of petroleum both its present and prospective value may be considered. Thus, the present marketability test is not the only reasonable interpretation of the word “valuable.” This interpretation further suggests that when determining whether a mineral is valuable as a source of petroleum, prospective value should be considered.
. The view of the trial court that a reservation clause may be ambiguous as to whether one class of minerals is reserved but unambiguous as to the reservation of other minerals finds support in Wyoming law. In Dawson v. Meike, 508 P.2d 15 (Wyo.1973), the Wyoming Supreme Court ruled as a matter of law that a clause reserving a one-half undivided interest “of all of the oil, gas and kindred minerals” did not reserve uranium, but that it could not be determined as a matter of law whether the clause reserved coal.
. While evidence of a party’s intent is admissible to ascertain the meaning of an ambiguous contract, it may not be used to alter plain and unequivocal language, which must be applied as a matter of law. See Bowen v. Korell, 587 P.2d 653, 656 (Wyo.1978) and Bulis v. Wells, 565 P.2d 487 (Wyo.1977).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CLARK, Chief Judge:
Defendants Sea Level International, Inc. (Sea Level), and C.S.I. International, Inc. (C.S.I.), appeal the judgment of the district court finding them liable for damages sustained to a pipeline owned by the plaintiff, Marathon Pipe Line Company (Marathon). Sea Level and C.S.I. contend that co-defendant Oceanonics, Inc. (Oceanonics), is contractually obligated to indemnify them for their liability stemming from the pipeline damage. Sea Level and C.S.I. also contend that the district court failed to make material findings regarding Oceanon-ics’ contractual duties and duty to exercise reasonable care. Finally, Sea Level and C.S.I. contest the amount of damages claimed by Marathon and awarded by the court and the award of prejudgment interest. We affirm the judgment of the district court in all respects.
I. Background
In July 1983, Texas Eastern Transmission Corporation (TETCO) commenced work on a project to change the protective system guarding one of its natural gas pipelines in the Gulf of Mexico. TETCO contracted with Sea-Con Services, Inc. (Sea-Con), to perform the necessary construction work. Sea-Con, in turn, secured the services of the workboat M/V SEA LEVEL II to transport material and personnel and to function as a work platform for the construction project. The SEA LEVEL II was owned and operated by appellants Sea Level and C.S.I.
TETCO’s pipeline was connected to the northeastern side of a fixed platform located in East Cameron Block 321. Marathon also owned two pipelines connected to the same fixed platform. The pipeline that ultimately sustained the damage ran in a southeasterly direction along the Gulf floor. TETCO contracted with Oceanonics to locate all submerged pipelines in the vicinity of the platform and mark them with buoys. Before the SEA LEVEL II arrived at East Cameron Block 321, an Oceanonics survey crew, aboard the M/V RAINDROP, located and marked the pipelines in the area with styrofoam buoys dropped at 500 to 800 feet intervals along the pipeline routes.
The SEA LEVEL II arrived at the platform site on July 2, 1983. Peter McCormick, the Oceanonics employee responsible for locating and marking the pipelines, boarded the vessel to confer with the SEA LEVEL II’s captain, Gerald Turner, about the location of the various pipelines. Turner then set out the SEA LEVEL II’s four anchors in the vicinity of the platform without incident.
It was later decided that the vessel should be repositioned. On the morning of July 3, 1983, McCormick boarded the SEA LEVEL II in order to discuss the repositioning of the vessel. Representatives from both TETCO and Sea-Con were also present. Turner advised McCormick and the other representatives that the vessel had to be repositioned in such a way that one of the vessel’s anchors would cross one of Marathon’s pipelines. Turner asked McCormick to verify the position of one of the buoys, which he estimated was 400 feet away from the SEA LEVEL II. McCormick advised against dropping the anchor so close to the pipeline, since it was Ocean-onics’ policy, for safety purposes, to maintain a distance of at least 1,000 feet between a pipeline and an anchor when the anchor line crossed the pipeline. Despite McCormick’s advice and Turner’s own concern regarding the placement of the anchor, Turner decided to position the anchor across the pipeline at this location.
Shortly after the anchors were set, work ceased on the construction project and the SEA LEVEL II was ordered to return to shore for supplies. Turner ordered the retrieval of the four anchors. The crew raised three of the anchors routinely, but could not retrieve the fourth which had been dropped across Marathon’s pipeline. After much speculation as to what was causing the problem and several unsuccessful attempts to winch the anchor aboard, the anchor cable was cut.
On July 20, 1983, Marathon commissioned a sidescan sonar of the seabed in the vicinity of the lost anchor. The sidescan sonar confirmed that the anchor was lodged in Marathon’s pipeline and further indicated that 400 feet of the pipeline had been displaced from its trench to a maximum distance of 25 feet. On August 9, 1983, Marathon sent a diver down to inspect the damaged portion of the pipeline and to conduct ultrasonic testing at various locations along the displaced portion. During the course of this inspection, the diver found damage to the protective coating of the pipeline. The diver further reported finding two “flat spots” along the displaced portion of the pipeline. Finally, on August 16, 1985, Marathon retained Brown and Root, a survey firm, to perform a stress analysis on the pipeline with respect to its relocation and displacement. As a result of its analysis, Brown and Root concluded that the pipe had exceeded its yield strength during the movement. Brown and Root verbally recommended that some 60 feet of the pipeline be replaced.
Based in large part on this report, Marathon decided to replace rather than repair the damaged pipeline. It further decided to replace the entire 400-foot section of the pipeline displaced by the anchor rather than replace only the 60-foot portion and incur the additional expense of repairing the coating damage along the remaining portion.
The district court found that defendants TETCO and Sea-Con were not liable for the damage to the pipeline and that Oceanonics was not responsible for Marathon’s damages. It found that Oceanonics was hired only to locate and mark the pipelines, not to place the SEA LEVEL II’s anchors. The court reasoned that if Oceanonics had to place the anchors, the cost would have been greater, more sophisticated equipment would have been used, and Oceanon-ics would have taken control of the vessel and given the order where to position the anchors. The court noted that Captain Turner gave the order to drop the anchor based on his own decision, and found that any advice on McCormick’s part with respect to the proper positioning of the anchors was gratuitous. In addition, the court observed that McCormick expressed his disapproval of the planned anchoring operation.
With respect to the amount of damages, the district court found Marathon’s decision to replace the entire 400-foot segment of the pipeline to be reasonable under the circumstances. The court thus awarded Marathon the total amount it had expended in replacing the damaged segment, which was $530,607.67. The court also awarded prejudgment interest from the date of the casualty.
Sea Level and C.S.I. appeal the judgment with respect to both liability and damages.
II. Cross-Claims Against Oceanonics
Sea Level and C.S.I. raise a variety of issues in their attack on the district court’s holding that Oceanonics was not responsible for the pipeline damage. They contend that the court erred in characterizing McCormick’s advice on the positioning of the SEA LEVEL II’s anchors as “gratuitous.” They assert that Oceanonics’ activities with respect to the anchor placement were subject to the provisions of the TET-CO/Oceanonics contract. They argue that, since the activities were within the scope of the contract, the contract obligated Ocean-onics to indemnify Sea Level and C.S.I., as subcontractors of TETCO, for all accidents including property damage “occurring in connection with, arising out of, or in any wise incident or related to” Oceanonics’ services under the contract. Sea Level and C.S.I. interpret this indemnification language as broad enough to obligate Ocean-onics to indemnify them even if McCormick’s assistance in placing the anchors was properly characterized as gratuitous and not directly required by the contract. Sea Level and C.S.I. also contend that Oceanonics breached its contractual warranty to perform its services in a workmanlike manner and that the court erred by failing to consider this issue. Similarly, they claim the court erred by not making material findings with respect to whether Oceanonics breached its contractual duty to “maintain” the buoys in an accurate position and whether, assuming McCormick’s advice was gratuitous, McCormick failed to render such advice with reasonable care.
A.
The district court found that it was the duty of Captain Turner to position the anchors and that Oceanonics was not contracted to place the anchors. The court found that Turner was negligent in performing his duty — that he knew or should have known of the risks involved in placing one of his anchors across Marathon’s pipeline. It was Turner’s negligence that caused the damage. This was the basis for imposing liability on Sea Level and C.S.I.
On appeal the findings of the district court are not to be set aside unless clearly erroneous. Fed.R.Civ.P. 52(a); Pullman-Standard v. Swint, 456 U.S. 273, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982); McAllister v. United States, 348 U.S. 19, 75 S.Ct. 6, 99 L.Ed. 20 (1954); Williams v. Reading & Bates Drilling Co., 750 F.2d 487, 489 (5th Cir.1985). The court’s finding that Turner was negligent and that this negligence was the sole cause of the pipeline damage finds much support in the record and is not clearly erroneous.
Oceanonics’ contract with TETCO contains a warranty that services under the contract will be done in a workmanlike manner. Sea Level and C.S.I. argue that the district court failed to consider whether Oceanonics breached this warranty of workmanlike performance. The problem for this contention is that the district court correctly found that Oceanonics did not undertake any services that caused the damage here. The sole basis for liability was Turner’s negligent decision to position the anchor across the pipeline. Implicitly, the district court found that any alleged breach of Oceanonics’ warranty of workmanlike performance could not have caused the pipeline damage. This finding is not clearly erroneous.
Sea Level and C.S.I. next argue that Oceanonics was contractually obligated to maintain the buoys in an accurate position. They assert that the court misinterpreted Oceanonics’ duty under the contract to maintain the buoys when it stated that Oceanonics was hired by TETCO “to simply locate and mark the pipelines in the vicinity.” Because the court did not recognize this contractual duty, they contend, the court made no factual finding as to Ocean-onics’ alleged failure to maintain the markers in an accurate position. Oceanonics counters that there was no evidence presented at trial to show that Oceanonics failed to maintain the buoys accurately. Sea Level and C.S.I. respond that Turner dropped the anchor 400 feet away from a buoy and that the anchor latched onto the pipeline. They assert that this occurrence by itself is sufficient to show that the marker was either misplaced or inaccurately maintained.
Sea Level and C.S.I. once again ignore the express holding of the district court that Turner’s negligence caused the damage to the pipeline. Even if the buoy markers were not accurate, Turner knew or should have known of the risks involved in placing the anchor across Marathon’s pipeline. The court’s finding that McCormick advised against placing the anchor across the pipeline and that he recommended it be placed at least 1000 feet away from the line supports the court’s finding of fault. Turner took the risk of not insisting upon a clearance greater than 400 feet, and this negligent decision to place the anchor across the pipeline with an insufficient clearance caused the pipeline damage. The court’s finding of causation is not clearly erroneous and is controlling.
Finally, Sea Level and C.S.I. argue that the court failed to address the issue whether McCormick exercised reasonable care when he gratuitously assisted in the anchor placement. This issue also becomes immaterial when viewed in the context of the court’s conclusion that Turner’s negligent decision caused the damage. It is irrelevant whether McCormick’s gratuitous advice was rendered with reasonable care, because, even if his advice was not reasonable, it did not cause the accident.
The court, by holding Sea Level and C.S.I. solely liable, implicitly found contrary to their interests with respect to these claimed omissions of material findings. The various codefendants raised many factual issues at trial. By imposing liability on one party (Sea Level and C.S.I.) the court necessarily and by implication found that Oceanonics did not cause or contribute to the mishap.
Sea Level and C.S.I. cite Ionmar Compania Naviera v. Olin Corp., 666 F.2d 897 (5th Cir.1982), in which this court remanded the case because the district court failed to make material findings. We recognized, however, that a district court sitting without a jury is not required “to state its findings of fact at great length and in detail; rather, it [is only] required ... to state them with sufficient detail to indicate the factual basis for its ultimate conclusions of law.” Id. at 903. See also Fed.R.Civ.P. 52(a). The district court, as the finder of fact, cannot be expected to address in its written opinion all conceivable factual issues. Clearly no express findings are required as to issues which are necessarily disposed of by the rulings made.
B.
Sea Level and C.S.I. cite language in the contract obligating Oceanonics to “perform all work requested by” TETCO. To define requested work, they refer to a provision of the contract obligating Oceanonics to furnish labor and supplies among other items “for offshore pipeline location survey services, as required for” the overall construction project on the pipeline. These services further include “the correct placement of the marker buoys and maintenance of such buoys.” The contract, however, makes no mention of a duty to assist the primary contractor or subcontractors in positioning the anchors of vessels. In the absence of any express or implied undertaking, we refuse to read Oceanonics’ obligations as including a duty to assist in placing the SEA LEVEL II’s anchors. The court did not err in characterizing McCormick’s advice as gratuitous.
Sea Level and C.S.I. nevertheless assert that, assuming the services performed by Oceanonics in connection to the anchor placement were not required by the TET-CO/Oceanonics contract, Oceanonics is still contractually obligated to indemnify Sea Level and C.S.I. as subcontractors of TET-CO for the pipeline damage. Sea Level and C.S.I. refer to the following contract provision:
When any part of the work is to be performed offshore or from boats or barges, Contractor [Oceanonics] agrees to protect, defend, indemnify and save Company [TETCO] and Primary Contractor and any contractor or subcontractor of either of said parties performing work in connection with the work described in this Contract, harmless from and against all claims, demands, damages, losses, expenses, costs, liabilities, injuries, and causes of action of every kind and character arising in favor of any person or persons, including without limitation employees and agents of Contractor, Company, Primary Contractor, or said contractors or subcontractors, or the families of any such employees or agents, by reason of death or personal injury to persons or damage to or loss of property occurring in connection with, arising out of, or in any wise incident or related to Contractor’s performing services and operations under this Contract, regardless of whether earned by negligence of Company, and/or Primary Contractor, and/or contractors or subcontractors of either of said parties; and Contractor shall defend any and all actions based thereon at Contractor’s sole cost and expense and shall pay all costs, attorney’s fees, and other expenses arising therefrom.
Sea Level and C.S.I. urge that the damage to Marathon’s pipeline occurred in connection with, arose out of, or was related or incident to services performed by Oceanon-ics under its contract with TETCO. Sea Level and C.S.I. submit that this court has interpreted similar clauses in maritime contracts to encompass a wide range of activities related to an indemnitor’s contractual services. See, e.g., Fontenot v. Mesa Petroleum Co., 791 F.2d 1207 (5th Cir.1986); Hicks v. Ocean Drilling & Exploration Co., 512 F.2d 817 (5th Cir.1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 639 (1976). They also stress that this duty to indemnify is not dependent on whether Oceanonics caused the damage.
The district court correctly reasoned that, since Oceanonics did not contract to place SEA LEVEL II’s anchors, the above quoted indemnity provision created no obligation on Oceanonics’ part to indemnify Sea Level and C.S.I. Indemnity is not owed merely because the latter were negligent subcontractors of TETCO.
Sea Level and C.S.I. urge that precedents in this Circuit support a broad construction of “occurring in connection with” language in indemnity provisions. See, e.g., Fonte-not, 791 F.2d at 1214. They compare the facts of this case with facts of other cases which typically have obligated the indemnifying party to pay an indemnitee for its liability arising from an incident not caused by the indemnitor. This view of the contract, however, would have us read the “occurring in connection with” language to cover a limitless number of unforeseeable casualties that might have occurred during the pendency of the construction work on TETCO’s pipeline. The contract language in question, while broad, cannot be read in a vacuum to apply to any situation for which a colorable argument could be made that loss of property was somehow related to Oceanonics’ services under the contract.
We decline to characterize the damage to Marathon’s property as “occurring in connection with, arising out of, or in anywise incident or related to [Oceanonics’] performing services under” the TET-CO/Oceanonics contract in the absence of any indication that TETCO sought and Oceanonics agreed to such an unusual undertaking. This court has refused to extend the reach of an indemnity provision beyond the intent of the parties to the agreement where the undertaking urged would create “an unusual and suprising obligation.” Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir.1981).
The language used makes it plain that TETCO intended to draft the indemnity provision to cover all conceivable situations in which it might incur liability. The limit of that potential liability, however, was accidents that might occur during Oceanon-ics’ performance of contract services. TETCO could have no interest in requiring Oceanonics to protect other subcontractors from their own negligence when that negligence was independent of the performance of Oceanonics’ contract.
This view of the TETCO/Oceanonics indemnity provision finds additional support in the record. Sea Level and C.S.I. have consistently maintained throughout this litigation that Oceanonics was at least partially responsible for the pipeline damage. Their argument before the district court that the indemnity provision applied was predicated on Oceanonics’ alleged breach of a contractual duty or a duty to exercise reasonable care. That court found otherwise. On appeal, Sea Level and C.S.I. continue to predicate Oceanonics’ duty to indemnify on Oceanonics’ involvement in a joint effort to change TETCO’s protective system guarding its natural gas pipeline. The district court’s finding, which we affirm, that Oceanonics’ involvement in such an effort — marking all pipelines — did not cause the accident and did not contribute to Turner’s decision to drop the anchor across Marathon’s pipeline also ends the viability of this position.
III. Claims Against Marathon
Sea Level and C.S.I. contest the amount of damages claimed by Marathon and awarded by the district court. They assert that Marathon’s decision to replace the entire 400-foot section of the pipeline was not reasonable. Sea Level and C.S.I. also argue that an award of prejudgment interest from the date of the casualty was inappropriate since the damaged pipeline was kept in full production from the date of the accident until repairs commenced.
A.
Sea Level and C.S.I. contend that Marathon did not act reasonably in replacing the 400-foot section of the pipeline. They argue that Marathon did not mitigate its damages, expending four times the amount necessary to return the property to its pre-accident form. They further assert that Marathon conducted a “secret survey” of the damaged pipeline and denied them the opportunity to inspect the property before repairs commenced. They also claim that they were denied the opportunity to analyze the tests and surveys and to conduct further tests of their own on the damaged pipeline. Had they had such an opportunity, Sea Level and C.S.I. submit, they could have demonstrated inaccuracies and incorrect assumptions in the information relied on by Marathon in replacing the entire 400-foot section.
The burden rests with the wrongdoer to show that the victim of tortious conduct failed to mitigate damages. Tennessee Valley Sand & Gravel Co. v. M/V DELTA, 598 F.2d 930, 933 (5th Cir.1979). The tortfeasor must demonstrate (1) that the injured party’s conduct after the accident was unreasonable and (2) that the unreasonable conduct had the consequence of aggravating the harm. Id. In an admiralty action, the district court’s determination of damages, including its consideration of the above criteria, is a factual finding subject to the clearly erroneous standard of review. See Gele v. Wilson, 616 F.2d 146 (5th Cir.1980).
The district court first determined that Marathon’s decision to replace the 60-foot portion of displaced pipeline was not unreasonable and did not have the consequence of aggravating the harm. It examined the basis for Marathon’s decision — the diver’s report based on visual inspection and the Brown and Root stress analysis recommending replacement of this portion — and concluded that Marathon’s reliance on these reports was reasonable. The district court recognized two additional bases for Marathon’s decision: (1) Marathon’s reliance on its past experience with two pipelines which had sustained anchor damage and which eventually ruptured; and (2) Marathon could have been found strictly liable for any damages caused by oil pollution resulting from a rupture of a displaced oil pipeline pursuant to federal law.
The court further noted that any inaccuracies in the diver’s report or Brown and Root’s analysis would be irrelevant for purposes of determining reasonableness. The district court recognized, for example, that no “flat spots” were found on the replaced section of pipeline after it was inspected on shore. It also noted a flaw in Brown and Root’s stress analysis — the assumption that a single point load deflected the pipeline 25 feet. (The evidence later showed that the anchor slid along the pipeline for a distance of approximately 175 feet before coming to rest at its eventual location.) However, the court found that neither of these inaccuracies were sufficient to render Marathon’s conduct unreasonable.
The court then concluded that the decision to replace the entire 400-foot section was reasonable because the evidence showed that this alternative was more economical than replacing only 60 feet of pipe and repairing the coating damage on the remaining portion. Accordingly, Marathon was awarded the entire amount that it had expended in replacing the pipeline section.
We find that the district court’s determination of damages had a firm basis in the evidence and is not clearly erroneous. We are not persuaded by the argument urged by Sea Level and C.S.I. that Marathon conducted a “secret survey” which prevented them from bringing alleged inaccuracies in the reports to the attention of Marathon. Sea Level and C.S.I. maintain that Marathon denied them and their underwriters the opportunity to analyze the tests and reports and to conduct tests of their own before repairs. They cite cases in this Circuit which they contend stand for the proposition that when a party conducts a survey of its own and refuses to permit a joint survey courts view the plaintiff’s eventual damage claims with suspicion. See e.g., Florida East Coast Railway Co. v. Revilo Corp., 637 F.2d 1060, 1067 (5th Cir.1981); Delta Marine Drilling Co. v. M/V BAROID RANGER, 454 F.2d 128, 130 (5th Cir.1972).
The facts in the case at bar do not support such a claim. Opposing the contention of Sea Level and C.S.I. that Marathon prevented their having input in the decisions regarding repairs is the evidence showing that neither Sea Level and C.S.I. nor its underwriters requested a joint survey or other means of examination until after all Marathon’s inspections of the damaged pipeline were completed. The district court considered this conflicting evidence' and concluded that Marathon’s conduct was not unreasonable. This finding is supported by the record and is not clearly erroneous.
B.
Sea Level and C.S.I. challenge the district court’s award of prejudgment interest. They argue that interest should not have been awarded from the date of the mishap, since Marathon operated the damaged pipeline with no reduction in pressure for two months after the accident. The pipeline section was then replaced during a shutdown, which was scheduled by Marathon before the accident occurred.
The award of prejudgment interest in an admiralty action is committed to the sound discretion of the district court. Curry v. Fluor Drilling Services, Inc., 715 F.2d 893, 896 (5th Cir.1983). Sea Level and C.S.I. concede that interest will usually be awarded in this Circuit from the date of the incident. King Fisher Marine Service, Inc. v. NP SUNBONNET, 724 F.2d 1181, 1187 (5th Cir.1984); American Zinc Co. v. Foster, 441 F.2d 1100 (5th Cir.1971), cert. denied, 404 U.S. 855, 92 S.Ct. 99, 30 L.Ed.2d 95. They nevertheless urge the rule be changed to disallow interest where the accident results in a loss that is less than total and allow interest only from the date that the injured party pays for the repairs. See THE HYGRADE NO. 24, Inc. v. THE DYNAMIC, 233 F.2d 444 (2d Cir.1956).
We are bound by the law of this Circuit. Furthermore, we are not persuaded that this case is so unusual that we should recognize an exception to the rule. Sea Level and C.S.I. suggest that prejudgment interest from the date of the casualty will somehow put Marathon in a better position than it would have been in had the accident not occurred, because it did not incur any expense until two months afterwards. This is simply not the case. Marathon incurred a variety of post-accident/pre-repair expenses related to the investigation of the damage. In addition, had Marathon been forced to defer production from the date of the mishap until repairs were feasible, it could have sued the defendants for additional damages due to deferred production losses. By waiting until the scheduled shutdown to commence repairs, Marathon may have minimized the amount of damages. The award of prejudgment interest in this case was well within the discretion of the district court.
IV. Summary
The damage to Marathon’s pipeline was caused by Captain Turner’s negligent decision to position the anchor across the pipeline. It was not related to Oceanonics’ services under its contract with TETCO. Oceanonics was not obligated to indemnify Sea Level and C.S.I. for their own independent negligence. The district court properly interpreted the TETCO/Oceanonics contract as not requiring Oceanonics to assist in positioning the SEA LEVEL II’s anchors and the court thus did not err in characterizing McCormick’s advice with respect to the anchor placement as gratuitous. The district court did not err in failing to make findings as to Oceanonics’ alleged breach of its warranty of workmanlike performance, its contractual duty to maintain the marker buoys, or McCormick’s duty to exercise reasonable care when acting gratuitously. Finally, the court’s determination of damages is not clearly erroneous and its award of prejudgment interest was not an abuse of discretion.
AFFIRMED.
. Emphasis added.
. See, e.g., Hicks, 512 F.2d 817; Day v. Ocean Drilling and Exploration Co., 353 F.Supp. 1350 (E.D.La.1973); Todd v. James E. Dean Marine Divers, Inc., 325 F.Supp. 18 (E.D.La.1971), aff’d, 453 F.2d 1313 (5th Cir.1972) (per curiam).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WESLEY E. BROWN, Senior District Judge.
Appellant Sharon Johnson, Warden for the State of New Mexico, appeals the order of the United States District Court for the District of New Mexico, granting Shirley Burton’s petition for a writ of habeas corpus. Mrs. Burton cross-appeals from the order insofar as it denied some of the claims for relief contained in her federal petition.
Shirley Burton admitted that in the early hours of August 14, 1983, she shot and killed her husband, Robert Burton, in Roswell, New Mexico. She claimed that she did so because she believed from his past actions that she and her children were in immediate danger of great bodily harm, sexual abuse and death at the hands of her husband. She presented evidence of Robert’s repeated physical, sexual and verbal assaults upon her and her two children, together -with evidence that she suffered from “battered woman’s syndrome,” which contributed to her belief that she had to kill her husband in order to protect her children and herself from continued abuse. The state introduced evidence that Robert did not abuse his family, and that Mrs. Burton, having carefully planned the murder in advance, did not act in defense of herself and children. The jury convicted Mrs. Burton of murder in the first degree, and she was sentenced to life imprisonment.
The issues presented in this appeal concern the manner in which the state trial court conducted the voir dire of the jury panel, and the discovery after trial that one of the jurors who served on the case was the victim of mental and physical abuse by her husband, and that this juror’s children had also been abused by their father. Other issues involve the propriety of instructions and the claim that alleged cumulative error denied Mrs. Burton’s right to fair trial.
The federal district court adopted the findings of the magistrate and found that Mrs. Burton’s right to an impartial jury had been denied because a woman who served on the jury had suffered abuse in her own family. In addition, the court found that inadequate voir dire proceedings denied Mrs. Burton’s right to an impartial jury and fair trial. The state elected not to retry Mrs. Burton within the 90 days allotted by the federal district court, she was released from custody, and is free pending this appeal.
The circumstances of the voir dire and other state court proceedings relating to Mrs. Burton’s trial and conviction may be described as follows:
Because of the nature of her defense, Mrs. Burton’s counsel filed a pretrial motion for individual, sequestered questioning of the jury panel on subjects pertaining to physical, emotional and sexual abuse of wives and children. Attached to this motion was an affidavit of an expert in group dynamics and the jury selection process which related to the hesitancy of people to speak about sensitive subjects when others are present. It was the opinion of this expert that “(i)n a trial with inflammatory issues and one in which potentially many of the members of the venire have attitudes or prejudices that could be hidden during the voir dire, the only possibility of obtaining a fair trial would be through extensive, open-ended, attorney-conducted, sequestered voir dire.” Vol. I, State Record, Page 100, Affidavit of Bennett.
At a hearing on this motion, the defense presented expert testimony to the effect that in the area of sensitive topics, members of the venire tend to make socially acceptable statements, and that in order to inquire into such topics as sexual abuse and wife beating, each prospective juror should be questioned separately, outside the hearing of other prospective jurors. This expert testified that over 20% of the American adult population has personally encountered a sex abuse or wife-battering situation, and that such people are not able to evaluate evidence of similar situations in an objective manner because an abused person tends to blame herself, and thus would judge the defendant in this case more harshly than would a juror without such personal experience or exposure to an abusive situation. Tape 2, 7/19/84, State Record.
The trial judge denied the defense motion to sequester and question each juror privately on sensitive matters. Instead, the court divided the jury panel into two groups, each to be voir dired as a whole, with a statement by the court advising that any juror could answer questions in private. Each party’s voir dire was to be limited to one hour, with a possible extension if the attorney used his time “diligently.” The defense request that the panel be required to complete a jury questionnaire was denied.
The panel was divided into two groups with 29 prospective jurors in each. The court informed the first group that they could answer questions in private, but that he preferred answers in open court because inquiries in chambers were difficult. Tapes 1 and 2, 7/24/84, State Record. Any juror who had discussed the case was questioned in chambers. Defense counsel questioned this panel about their attitudes concerning child abuse and neglect, and asked the entire panel if any of them had seen the effects of child abuse. Four answered affirmatively and discussed their experiences. Wife abuse was also discussed and counsel sought juror’s opinions on self defense, etc. Defense counsel was stopped after one hour, and his request for more time to examine the panel about their knowledge of Robert Burton, potential witnesses and exposure to publicity was denied upon the ground that counsel had not been “diligent.” Tape 5, and Chambers Tapes C & D, 7/24/84.
One of the jurors in this panel, Lisa Zoeller, told the court in chambers that she could not be an impartial juror because her father had abused her mother and the children, but her mother had not killed her father. Chambers Tape C. The juror Zoel-ler was excused by the court for “Cause.” Vol. II, State Record, p. 191.
There was a similar voir dire of the second group, except that this time, the court asked more specific questions about publicity and their knowledge of prospective witnesses. Defense counsel told the members of this panel that any questions on sensitive subjects could be answered privately in chambers, and he then discussed child abuse, rape, wife beating, the reporting of violent acts against women and the subject of self-defense. Defense counsel specifically asked which jurors had personally seen the effects of child abuse. Carolyn Green answered that she had worked for a school where most of the staff and children had been abused in some way, describing the effects of child abuse which she had observed. Counsel then asked whether anyone else had “seen those kinds of, (sic), or had contact with child abuse or sexual abuse?”. There was no answer. Tape 8, State Record. Counsel again asked at a later time if there were “anybody else who has anything that they’d like to share either with the court individually or with me at this time in terms of the things we’ve talked about?... We’ve talked about child abuse. We’ve talked about battered wives and other things.” There was no response. No member of this panel discussed abuse in chambers. The defense challenged juror Green for cause upon the ground that she had experienced violence in her home, rape, and contact with abused children. The challenge for cause was granted, and Green was removed from the panel. Another juror in this panel, Mrs. Russell, was excused by the Court for cause because of her opinions about child abuse after having read an El Paso Times article. Vol. II, State Record, pp. 190 and 329.
At trial Shirley Burton and other witnesses testified about the violent and abusive nature of Robert Burton. The jury heard evidence that during prior marriages, Burton had beaten two other wives and raped one of them, and had sexually molested a stepdaughter. Defendant Shirley Burton testified that during her marriage to Robert Burton she was beaten, raped and sodomized by her husband, and that he frequently beat their son, Gene, and her daughter, Elizabeth whom he had legally adopted. The children were beaten with fists, whips, rope, halter, belts, or whatever was handy. Mrs. Burton testified that she had tried to leave Robert several times, but had returned because of threats to her children, and that she had not contacted the police for protection because of his threats of retaliation if she did so. In January, 1983, Mrs. Burton learned that Robert had been sexually molesting Elizabeth and his son Gene for the past ten years. At trial, Elizabeth testified that her father had raped her twice and attempted to rape her on other occasions. Mrs. Burton obtained a gun and hid it under the mattress on her side of the bed, but Robert found it. The abuse continued. In May, 1983, Mrs. Burton returned home and found Robert attempting to rape Elizabeth. Mrs. Burton was then badly beaten and sodomized. In June, 1983, Robert cut Mrs. Burton with a knife and stitches were required. On August 12, 1983, Robert again attacked Elizabeth, and knocked her to the ground. On August 13, Mrs. Burton traveled 70 miles to Ruidoso and obtained a gun. She testified that her purpose was to stop Robert from hurting or killing her children and herself. She stopped on her way back home to Roswell and test-fired the gun. When she arrived in Roswell she parked three blocks from home, walked through the back gate, entered the patio door, and walked into the bedroom. She testified that Robert looked at her, said “If you’re going to use that thing, use it,” and rolled toward her. She fired several times, Robert jumped up and then fell, shouting obscenities. Mrs. Burton then ran out and drove back to her friends in Ruidoso. When police arrived at 3:00 a.m. on August 14, Robert was standing at the doorway. He told the police that it was too dark for him to see who shot him. He died later from three bullet wounds.
The defense presented expert testimony concerning “battered woman’s syndrome” and the effects of long-term domestic violence. It was the experts’ opinions that Shirley Burton lived in constant fear for herself and children and that she believed her only recourse was to kill her husband.
The jury returned its verdict of first-degree murder on August 9, 1984. On August 29, the defense filed a motion for new trial, complaining, among other grounds, of inadequate voir dire of the jury, which was conducted in groups too large for meaningful discussion, and of the failure to give the defense adequate time to inquire into serious issues. The affidavit of Michael L. Stout, attorney for Shirley Burton, which accompanied the motion for new trial, informed the court in this manner: (Vol. II, State Record, pp. 298-299)
“I have contacted several jurors who sat during the trial of this cause and have discovered the following information:
A. At least three of the jurors have been close to situations concerning abuse of some sort which was not discussed during jury selection, including Mr. Smoot and Ms. Gonzales, as shown by their affidavits.
B. One juror, Ms. Townsend, stated that she had knowledge of abuse in a very “close relationship” to her. She stated that the person, though battered, is still alive and hasn’t killed anyone. As a result of her knowledge she believes that battered people can cope with the situation without resorting to violence. She believes that this knowledge served as a springboard to her opinion that Shirley Burton ‘could have handled’ her situation without killing.
C. One juror stated that she has been the subject of long-standing abuse and is still married to the abuser, that the relationship is not as abusive as it once was, and that she did not wish to share the information in public for fear of harming her relationship or her family. Also her youngest child is presently seeing a counselor for emotional problems connected to the child’s observation of the abuse of the juror and her other children. I would prefer to give the juror’s name privately so as to not endanger her or her family.”
The motion for new trial was denied on September 4, 1984. (Vol. II, State Record, p. 306).
On September 5,1984, the defense filed a second motion for new trial, reiterating that “Persons who have had experiences relevant to the issues in this case and which affect their impartiality in a case of this nature served as jurors in this case,” in violation of Mrs. Burton’s right to trial by impartial jurors. Vol. II, State Record, pp. 308-309.
In connection with this motion for new trial, the defense presented an affidavit filed October 1, 1984, from one juror, identified as “S.G.G.” or “Mrs. G,” who stated that she had “been the subject of wife abuse in the past and (is) presently subject to abuse to a lesser degree.” This juror stated that her husband had a violent temper and verbally and physically abused the family, at one time hitting his son across the back with a golf club, which resulted in the need for medical attention. One of her children was seeing a counselor for emotional difficulties related to the abuse. This juror requested that her name and testimony be kept secret because she feared her husband might abuse her and her children if he found out that she was making this statement.
At this hearing in chambers “Mrs. G” testified that when the panel was asked about child abuse during voir dire, that she did not “connect” her own experiences with the discussion and that she tried not to think about her own situation. (Tape 1, 10/1/84). It is significant that in October, two months after the trial, Mrs. G still feared that her husband would find out about her testimony and would harm her or her family.
The audiotape of this testimony in chambers reveals that even in that in camera setting the juror was struggling with fear and great emotional distress because of her own abusive situation.
On October 9, the trial court denied the motion for new trial, finding that: (Vol. II, State Record, p. 837)
“1. None of the jurors was incapable of performing his or her duties as a juror.
“2. No juror, after being asked, withheld relevant information during voir dire.”
Mrs. Burton’s conviction was affirmed by the Supreme Court of New Mexico. That court found that defendant was not denied the opportunity to ask all relevant questions of the jury panel and that the trial court did not abuse its discretion in refusing to permit extensive questioning by defense counsel. That court further found that defendant had failed to establish partiality on the part of the juror, Mrs. G, that “no evidence is presented to demonstrate any prejudice” to defendant, and that there was no error in denying a new trial.
Mrs. Burton’s federal application for a writ of habeas corpus was reviewed by William W. Deaton, United States Magistrate for the District of New Mexico, and his findings were adopted by the district court. The magistrate found that under the evidence, the situation of the juror, Mrs. G, was such that it made her impliedly biased, no matter how impartial she professed to be, and that Mrs. Burton had been deprived of her right to an impartial jury. In addition, the magistrate found that the one-hour restriction on voir dire and the refusal to allow sequestered voir dire, deprived the petitioner of her right to due process and an impartial jury.
The right to trial by an impartial jury is a fundamental concept of due process. That right, and the duty of strict inquiry into its application, were discussed in Irvin v. Dowd, 366 U.S. 717, 81 S.Ct. 1639, 6 L.Ed.2d 751 (1961), where it was found that pretrial publicity had tainted the jury panel:
England, from whom the Western World has largely taken its concepts of individual liberty and of the dignity and worth of every man, has bequeathed to us safeguards for their preservation, the most priceless of which is that of trial by jury.... In essence, the right to jury trial guarantees to the criminally accused a fair trial by a panel of impartial, “indifferent jurors.... “A fair trial in a fair tribunal is a basic requirement of due process.” _In the ultimate analysis, only the jury can strip a man of his liberty or his life. In the language of Lord Coke, a juror must be as “indifferent as he stands unsworn”_ His verdict must be based upon the evidence developed at the trial.” (366 U.S. at 1642, 81 S.Ct. at 721, 6 L.Ed.2d at 755). (citations omitted)
While jurors need not be totally ignorant of the facts and issues involved, that fact does not foreclose inquiry into whether there has been a deprivation of due process of law. Irvin v. Dowd, supra, 366 U.S. at 723-24, 81 S.Ct. at 1642-43, 6 L.Ed.2d at 756.
In a civil case tried in a federal district court, a juror’s son had sustained injury in an accident. The juror did not respond to a voir dire inquiry concerning “previous injuries... that resulted in any disability or prolonged pain or suffering” to a juror’s immediate family. The court of appeals found that the failure to respond had prejudiced plaintiffs’ right of peremptory challenge. On appeal, the Supreme Court found that the fact that a juror might have been peremptorily challenged was not alone sufficient to reverse a conviction, and that in order to be entitled to a new trial in such a situation, “a party must first demonstrate that a juror failed to answer honestly a material question on voir dire, and then further show that a correct response would have provided a valid basis for a challenge for cause.” McDonough Power Equipment v. Greenwood, 464 U.S. 548, 556, 104 S.Ct. 845, 850, 78 L.Ed.2d 663, 671 (1984) (emphasis supplied).
In Baca v. Sullivan, 821 F.2d 1480 (10th Cir.1987) the McDonough rule was applied in ruling on a habeas corpus petition filed by a state defendant who complained that a juror’s incorrect answers on a jury questionnaire and his failure to answer an oral question during voir dire, so prejudiced his right to exercise peremptory challenges that he was denied a fair trial. The jury questionnaire asked if any member of the juror’s family at present or in the past was or had been a member or employee of any law enforcement agency. Juror Beserra, who served as jury foreman, answered “no,” although his brother had recently retired after working more than 30 years as a police officer. On voir dire the panel was asked “Are there any persons on this panel who have either a relative or a close friend who might work for a police department either in Albuquerque or some other city?”. Eight people responded, but the juror Beserra remained silent, even though another juror mentioned that his brother was a retired military police chief.
In Baca, a panel of this court found that defendant had “failed to demonstrate that Beserra was partial or that defendant was denied his constitutional right to be tried by an impartial jury.” 821 F.2d at 1483. In so doing, the court reviewed the state of the law in this manner:
Although a prima facie showing of impairment of a party’s peremptory challenges may entitle that party to an evi-dentiary hearing.... “(t)he fact that (the) juror... might have been peremptorily challenged by defendant is not alone sufficient to reverse defendant’s conviction,” Williams v. United States, 418 F.2d 372, 377 (10th Cir.1969). In McDonough Power Equip., Inc. v. Greenwood,... the Supreme Court stated that “it ill serves the important end of finality to wipe the slate clean simply to recreate the peremptory challenge process because counsel lacked an item of information which objectively he should have obtained from a juror on voir dire examination.”
“A party who seeks a new trial because of non-disclosure by a juror during voir dire must show actual bias.” United States v. Perkins, 748 F.2d 1519, 1532 (11th Cir.1984), either “by express admission or by proof of specific facts showing such a close connection to the circumstances at hand that bias must be presumed.” id. (quoting United States v. Nell, 526 F.2d 1223, 1229 (5th Cir.1976)). “(T)he remedy for allegations of juror partiality is a hearing in which the defendant has the opportunity to prove actual bias.” Smith v. Phillips, 455 U.S. 209, 215 [102 S.Ct. 940, 945, 71 L.Ed.2d 78 (1982)]- “At such a hearing, evidence of dishonesty and the subject matter of the nondisclosed information are relevant to the inquiry into alleged partiality.” 821 F.2d at 1483.
In finding that there had been no denial of a fair trial, since the defendant failed to demonstrate that Beserra was partial, the Baca court noted that defendant did not contend that he was not given a full, fair and adequate evidentiary hearing, that the trial court found that juror Beserra was not partial, a finding entitled to the presumption of correctness, and that this finding was in fact supported by the record. In this respect, the court observed that the oral question at voir dire was presented in the present tense, so that Beserra had no objective duty to respond since his brother was no longer in law enforcement.
In the very recent case of United States v. Gillis, 942 F.2d 707 (10th Cir.1991), a federal defendant alleged that he had been denied a fair trial because members of the venire panel also sat on a panel in an earlier case in which he was tried on another narcotic charge, involving different conspirators. The defendant’s challenge of the entire panel for cause was denied and during voir dire, the trial judge did not inquire about knowledge gained from the first charge — instead, the jurors were asked generally if they knew “of any reason whatsoever” which could impair their impartiality. This court found that the “risk of a biased jury was significant,” that the trial court had failed to conduct an adequate examination “to negate the risk of prejudice,” and that a new trial was required.
State court findings relating to juror bias “are factual determinations to which the presumption of correctness under 28 U.S.C.A. Section 2254(d) apply, although the constitutional standard of jury impartiality is a question of law.” Patton v. Yount, 467 U.S. 1025, 1037 n. 12, 104 S.Ct. 2885, 2891 n. 12, 81 L.Ed.2d 847, 857 n. 12 (1984); Lincoln v. Sunn, 807 F.2d 805, 815-816 (9th Cir.1987). In Lincoln, supra, the state prisoner alleged that he was denied a fair trial because of excessive pretrial publicity. While noting that a “preconceived notion as to the defendant’s guilt or innocence, without more, does not rebut a juror’s presumed impartiality, as long as the juror can lay aside his or her impression and render a verdict on the evidence,” the court observed that “a juror’s assertion of impartiality is not dispositive, if the defendant can demonstrate ‘the actual existence of such an opinion in the mind of the juror as will raise the presumption of partiality.’ ” 807 F.2d at 815. In Lincoln, the circuit held that the district court had an independent duty to ascertain whether the presumption of correctness should attach to the state court factual findings, and remanded the case for this purpose.
The state court finding that “No juror, after being asked, withheld relevant information during voir dire,” and that “None of the jurors was incapable of performing his or her duties as jurors,” is presumed to be correct unless “the Federal court on a consideration of such part of the record as a whole concludes that such factual determination is not fairly supported by the record.” 28 U.S.C.A. Section 2254(d)(8). Braley v. Shillinger, 902 F.2d 20 (10th Cir.1990), Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982). In Smith, a juror who sat on the state jury which convicted Phillips of murder applied for a job as an investigator in the prosecutor’s office during the trial. The prosecutor withheld the information from the trial court and defense counsel until after the trial. Following a hearing, the trial judge found that the juror’s application was an “indiscretion,” but that it did not reflect a premature conclusion of guilt or prejudice against the defendant, “or an inability to consider the guilt or innocence” of the defendant based solely upon the evidence.
In finding no merit to Phillips’ due process claim, the Supreme Court found the state trial court’s findings to be “presumptively correct” under 28 U.S.C.A. Section 2254(d), and not to be disturbed “unless the federal habeas court articulates some basis for disarming such findings of the statutory presumption that they are correct and may be overcome only by convincing evidence.” As to Phillips’ claim, the Supreme Court noted that neither the federal district court, nor the court of appeals took any issue with the findings of the state court.
During the murder trial in the Braley case, supra, 902 F.2d 20, defense counsel received anonymous calls reporting that two jurors knew the victim’s father, and that the father had two of the jurors “in his pocket.” Affidavits were filed after trial indicating that the two jurors initially refused to vote for anything less than first-degree murder, and that these jurors eventually swayed the jury to a verdict of second-degree murder instead of manslaughter. At a hearing, the father and the two jurors testified and denied any contact or improper influence and the trial court denied the motion for new trial. The denial of habeas corpus relief was affirmed by a panel of this court upon a finding that the case was governed by the Smith decision, and that the petitioner had failed to establish any exception to the presumption provided by Section 2254(d).
In Mrs. Burton’s case, the federal district court determined that the record did not support the conclusions of the state trial court. Our review of the record is in accord, and we here quote those findings in some detail, since they fairly summarize the state court proceedings: (Vol. II, Federal Record, Item 45, Magistrate’s Amended Proposed Findings and Recommended Disposition, pp. 7-9):
13. In this case, the juror testified that when asked about child abuse she did not connect her abusive experiences with the voir dire discussion and that she tried not to think of her own situation by pushing her thoughts of her abusive experiences to the edge of her consciousness. Tape 1 (Chambers Oct. 1, 1984). The trial court found that the juror had honestly (not consciously) failed to mention her family’s history of abuse during voir dire. The record, however, does not fairly support that finding of honesty. The voir dire centered around the topics of child and wife abuse. If so requested by a juror, the trial court permitted individual questioning on these sensitive topics. Yet the juror did not speak up at that time. Nonetheless, the juror was conscious of the fact that her family situation was abusive when she submitted an affidavit after the trial describing her situation. Affidavit of S.G.G. (filed Oct. 1, 1984). Under these circumstances, it is hard to believe that the juror honestly answered the abuse voir dire questions. Had the juror spoken up, she would have been dismissed for cause as two other jurors had been who had revealed substantial exposure to family abuse. Since the record does not fairly support a presumption of correctness of the trial court’s finding that the juror was honest, that presumption is overcome. Thus McDon-ough applies and petitioner is entitled to a new trial.
Assuming that the juror had answered the voir dire question honestly, the record still would not have fairly supported the presumption of correctness of the trial court’s finding of juror impartiality under Baca. Although the juror did not admit to bias, the facts in her case show such a close connection to the petitioner’s that bias must be presumed. First, the juror’s affidavit stated that she has “been the subject of wife abuse in the past and (is) presently subject to abuse to a lesser degree.”... She also stated in her affidavit that her “youngest child is presently seeing a counselor for emotional difficulties which are related to the abuse that my other children and I have received and which he has witnessed.”... Moreover, the juror testified that her husband has a violent temper that results in his hitting and verbally abusing the family... For example, her husband at one time hit her son across the back with a golf club... The juror also indicated that she wanted her affidavit and testimony kept secret, because she feared her husband might do something bad to her and her children should he find out... Furthermore, a forensic psychologist testified that people exposed to abuse would almost always unfairly judge a case involving abuse.
Whether a juror’s bias may be implied from the circumstances is a question of law for this court. Smith v. Phillips, 455 U.S. 209, 222, n*, 102 S.Ct. 940, 949, n*, 71 L.Ed.2d 78 (1982) (J. O’Connor, concurring); Cummings v. Dugger, 862 F.2d 1504, 1509 (11th Cir.1989). Doubts regarding bias must be resolved against the juror. United States v. Nell, 526 F.2d 1223, 1230 (5th Cir.1976), where the rule was so aptly expressed in this manner:
We have no psychic calibers with which to measure the purity of the prospective juror; rather, our mundane experience must guide us to the impartial jury promised by the Sixth Amendment. Doubts about the existence of actual bias should be resolved against permitting the juror to serve, unless the prospective panelist’s protestation of a purge of preconception is positive, not pallid.
We will not discuss at length the similarities of the experiences of Mrs. Burton and the juror, Mrs. G. It is sufficient to note that the abuse, both mental and physical, continued over a long period of time and that the juror, at the time of trial, was living in an abusive situation, fearing her husband’s violent temper even at the time she was testifying in chambers. Petitioner has presented a number of cases involving implied bias in situations which are similar to those we have here. In United States v. Eubanks, 591 F.2d 513, 517 (9th Cir.1979), the court found that the fact that a juror’s sons used heroin barred any inference that juror could be impartial in a case in which defendants were charged with distributing heroin; in Jackson v. United States, 395 F.2d 615 (D.C.Cir.1968), a juror was presumed to be biased because he had been a lover in a love triangle similar to the one involved in the case at issue; in United States v. Allsup, 566 F.2d 68, 71-71 (9th Cir.1977) and United States v. McCorkle, 248 F.2d 1 (3rd Cir.1957), cert. den. 355 U.S. 873, 78 S.Ct. 121, 2 L.Ed.2d 77, rehearing denied, 355 U.S. 908, 78 S.Ct. 329, 2 L.Ed.2d 263, (1957), jurors were found to be biased because of their banking ties and robbery experience in cases involving bank robberies; and in State v. LaRue, 722 P.2d 1039, 1042 (Hawaii 1986), it was found that a victim of child abuse could not be impartial in a case involving sexual abuse of a minor.
Here, the record is clear that Mrs. G was dishonest in her response to questions on voir dire — this is true whether or not she simply did not, or could not respond properly because of her own emotional distress. This dishonesty, of itself, is evidence of bias. See U.S. v. Colombo, 869 F.2d 149, 152 (2d Cir.1989); Consolidated Gas & Equipment Co. of America v. Carver, 257 F.2d 111, 115 (10th Cir.1958); U.S. v. Scott, 854 F.2d 697, 699 (5th Cir.1988).
We likewise find that Mrs. G’s failure to respond on voir dire denied Mrs. Burton a fair trial under the McDonough test, for it is clear that the juror did fail to answer a material question, and that a correct response would have provided a basis for a challenge for cause. Had Mrs. G responded honestly, she would have been excused for cause. That is exactly what happened to jurors Green and Zoeller who revealed their exposures to family and child abuse.
We find that the record establishes that Mrs. G’s silence and the inherently prejudicial nature of her own family situation deprived Mrs. Burton of her right to a fair trial by an impartial jury, and that she is entitled to a new trial. Because of our finding on this issue, we need not and do not reach any other issues in the case.
The judgment of the district court requiring a new trial is AFFIRMED.
Honorable Wesley E. Brown, United States Senior District Judge, District of Kansas, sitting by designation.
. Prior to trial, Mrs. Burton was offered a 7 year sentence in return for a plea of murder in the second degree. She declined this offer and proceeded to trial. See Exhibits to Item 49, Volume II Record, U.S. District Court.
On this appeal, there are two volumes of records from the District Court of Chaves County, New Mexico and the New Mexico Supreme Court, and 121 audiotapes of trial proceedings in Chaves County. In addition, there are two volumes of records arising from the federal habeas corpus proceedings in the District Court for the District of New Mexico.
These records will be referred to hereafter as "state records” or "federal records”.
. This motion requested that the court order individual voir dire on issues of publicity, child abuse and battered wives; that voir dire on other subjects be conducted in groups of 6 prospective jurors; and that the voir dire process be sequestered so that no other prospective jurors would be present except those being questioned.
. Vol. I, State Record, Motion for Supplemental Jury Questionnaire, filed 7/23/84. This questionnaire was designed to elicit general background information on each juror, so that during voir dire the defense counsel could concentrate his questions on wife and child abuse, and jurors’ attitudes towards justifiable homicide, etc.
. As noted, there was a conflict in the evidence concerning Mrs. Burton’s motive in shooting her husband, and the state presented evidence that Robert Burton was a law-abiding, esteemed member of the community, without a reputation for violence. It should be noted that Mrs. Burton’s testimony regarding physical abuse of herself and her children was corroborated by several witnesses. The Court has summarized the evidence presented by the defense for the purpose of evaluating the claim of juror bias and lack of impartiality.
. Dr. Jeffrey Collins, a psychiatrist, and Dr. Rap-paport, a clinical psychologist testified concerning Mrs. Burton’s state of mind at the time she killed her husband.
. There is no audiotape in the record for the hearing held September 4, 1984.
. Tapes relating to Mrs. G's testimony in chambers have been sealed to protect her anonymity. The trial court ordered that the following affidavits should be sealed and not opened unless by order of the District or Supreme Court of New Mexico: (Vol. II, State Record, p. 396)
Four Jurors, filed 9-7-84
Michael L. Stout, filed 9-7-84
Beth Owens, filed 9-7-84
"One Juror”, filed 10-1-84
Michael L. Stout, filed 10-3-84
The affidavits of Beth Owens, and the “Four Jurors" are not included in the state record filed in this appeal.
. Of 32 prospective jurors on the panel at the second trial, at least 15 were present at the selection of the other jury one month previously. Three persons present on both panels served as trial jurors in the second trial. They had been excused during the voir dire examination at the first trial.
. Mrs. G was a member of the second group of jurors which was voir dired.
. As previously noted, the McDonough test for obtaining new trial because of the absence of an impartial jury requires that during voir dire a juror failed to honestly answer a material question, and secondly, that a correct response to voir dire questions would have formed a valid basis for a challenge for cause.
Actual bias may be found either by an express admission, or by proof of specific facts which show such a close connection to the facts at trial that bias is presumed. Baca v. Sullivan, supra, 821 F.2d 1480, 1483.
. The State relies upon Brown v. United. States, 356 F.2d 230 (10th Cir.1966), where the brother of a juror had been murdered some years before trial. The court found no violation of the right to impartial trial where there was no evidence in the voir dire proceeding of the juror's relation to his brother and no information about how the brother's murder had affected the juror. The voir dire question concerned attacks upon the jurors "immediate family" and defense counsel did not explain what he meant by "immediate family". In finding there was no abuse of discretion in denying a new trial, the court noted that “(t)he record here does not disclose that the juror either failed to
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PELL, Circuit Judge.
This appeal arises from a judgment entered in favor of the plaintiff-appellee Klockner, Inc. (Klockner) following a three-day bench trial of Klockner’s diversity claim that Federal Wire Mill Corporation (Federal), anticipatorily breached a contract for the purchase of 1,800 tons of wire rods. The district court entered damages in favor of Klockner in the amount of $658,306.40. The court also denied Federal’s counterclaim, which sought damages for a breach of warranty.
Federal raises a number of issues on this appeal. First, it contends the court erred as a matter of fact and law in finding that the 1,000 tons of 6.35 millimeter (mm) wire rods delivered on October 10, 1974, were not sold by sample. Second, Federal contends the failure of the rods to conform to the sample, and other defects of the rod, constituted a breach of express and implied warranties, and entitled Federal as a matter of law to rescind the contract. It was therefore error to deny Federal’s defenses and counterclaim based on the breach of warranties. Third, Federal contends the trial court made numerous clearly erroneous findings of fact. Specifically, it assigns as error the following findings: that the parties entered a separate additional oral contract for the sale of Japanese-manufactured 5.5 mm rods; that the testimony of Dr. Blanche Schafroth, Federal’s Executive Vice-President and chief operating officer, was incredible while independent testimony of other witnesses which corroborated her testimony was credible; that the subject of a November 7, 1974, meeting between the parties was not the defects of the October 10 shipment of 6.35 mm wire rods; that the October 10 rods were not defective; and that Federal never notified Klockner of its claim that the October 10 rods were defective. Finally, Federal contends that even if the court did not err in finding for Klockner on its complaint, the damages awarded were excessive.
I. The Trial Court’s Findings of Fact.
A. The Court’s Affirmative Findings.
The trial court made the following findings of fact. The plaintiff Klockner is a New York corporation engaged in the purchase and sale, through import and export, of steel mill products. The defendant Federal is a Nevada corporation engaged in the manufacture of steel wire and wire products, with its principal place of business in Herrin, Illinois.
In July 1974, Schafroth ordered 1,800 tons of 6.35 mm diameter wire rods from the plaintiff Klockner, in a telephone conversation with Rolf Mainz, Klockner’s Chicago district manager. Federal confirmed the order by written purchase order, number 5836, dated July 10, 1974. Klockner confirmed the order on July 12, by its written acknowledgment number 4655.
The rods were to be rolled in Germany in the fourth quarter of 1974 and delivered some six weeks thereafter at a price of $23.75 per hundredweight. By letters of August 1 and 2, 1974, the parties confirmed their oral agreement to amend p.o. 5836 to consist of 1,080 tons of 6.35 mm rods, and 720 tons of 5.5 mm rods. On July 31 Klockner delivered a sample of 6.35 mm rods, “as per our order... 4655,” and it ran smoothly through Federal’s wire drawing machinery. Federal then paid for the sample.
On October 1,1974, Mainz sent Schafroth a letter confirming that Federal would receive 1800 tons under p.o. 5836. Klockner again wrote to Federal on October 16,1974, with reference to p.o. 5836 but Federal did not respond.
In October and November of 1974 the price of wire rod dropped precipitously, and during October Schafroth called Mainz and attempted to cancel p.o. 5836. Mainz replied that delivery had already begun, with the rods already on the ocean, and that a valid contract was in effect.
On November 7, 1974, Mainz and Wolfgang Sander, Vice-President of Klockner, met with Schafroth at the Federal plant. The trial court noted that the evidence at trial was conflicting as to what was discussed at the meeting, but concluded that Klockner’s testimony provided “the only possible credible version of what took place.” Klockner’s testimony established that both a prior order of 7 mm wire rod, p.o. 5835,- and p.o. 5836 were discussed at this meeting. As to p.o. 5836, the Klockner representatives indicated that they had begun delivery and that Schafroth could not now cancel the contract. Mainz and Sander indicated to Schafroth that if Federal would not accept p.o. 5836, Klockner’s only recourse would be a lawsuit. Schafroth replied, “Then sue me.” Klockner attempted to contact Federal by certified mail in January and February 1975, “in an attempt to give Federal ‘one further opportunity to fulfill (its) contractual obligation.’ ” Both letters were refused by Federal, and Klockner eventually resold the steel to various companies at the then prevailing, substantially lower, market price of $11.00 per hundredweight.
B. Federal’s Version.
After finding the above facts, the trial court turned to and expressly repudiated the version of the facts upon which Federal’s defenses and counterclaim were based. Federal’s version of the facts required that p.o. 5836 be placed in the context of a series of orders Federal placed with Klockner in July and August of 1974.
The first of these orders was Federal p.o. 5826, issued on July 3, 1974, which sought 3,000 tons of 6.35 mm wire rods, delivery as soon as possible. However, when it became apparent that production schedules would not permit the immediate shipment of the entire order, Federal issued three new purchase orders to replace p.o. 5826. These were:
(1) p.o. 5835 for 500 tons of 7.0 mm rods delivered as soon as possible (Klockner acknowledgment no. 4526);
(2) p.o. 5826 (amended) for 1,000 tons of 6.35 mm rods delivered before the close of navigation on the St. Lawrence Seaway (Klockner acknowledgment no. 4653); and
(3) p.o. 5836 for 1,800 tons of 6.35 mm rods delivered from fourth quarter rolling 1974 (Klockner acknowledgment no. 4655).
The 500 tons of 7.00 mm rods under p.o. 58,35 were delivered in the middle of July 1974, but assertedly did not work on Federal’s drawing machines. Federal notified Klockner of the problem, and while continuing its efforts to use the rods, paid for them on July 25, 1974. In September Klockner issued a credit memo for the rejected 7.0 mm rods, which were then sold to another customer. This transaction is not at issue in this litigation, and has relevance only as establishing the past practices of the parties.
The parties entered another transaction on July 12, 1974, when Mainz called Schafroth and told her he had found 1,000 tons of Japanese-manufactured 5.5 mm rods available for immediate delivery. Schafroth asked that a sample be shipped, and when it proved satisfactory, requested in early August 1974 that the rest of the rods be shipped. Klockner then issued an acknowledgment, no. 4692, confirming placement of the order, “as per trial lot,” and shipped the rods. The acknowledgment referenced Federal p.o. 3448, although Federal had issued no written purchase order, and its purchase order 3448 had actually been issued some years earlier to another manufacturer in a completely unrelated transaction. Federal logged the Japanese-manufactured 5.5 mm rods into its internal records under p.o. 5826 (amended), which had specified German 6.35 mm rods from the September 1974 rolling. Federal did not notify Klockner that it considered the Japanese rods to have been shipped under p.o. 5826 (amended). Federal paid for the rods with the credit memo issued in connection with the 7.0 mm rods in September 1974.
As noted above, at the end of July, 1974, Federal received a sample of 6.35 mm wire, followed in November by delivery of 1,000 tons of such wire. Federal contends that this latter delivery was pursuant to p.o. 5836, and that the wire rods were defective, did not conform to the sample shipped in July, and were rejected by Federal in the meeting of Federal and Klockner personnel on November 7, 1974. Federal’s basis for considering the October shipment part of p.o. 5836 is its contention that the July shipment of Japanese rods was not pursuant to any separate oral agreement, but rather was a substitute shipment for 5826 (amended). Thus the 1,000 tons of wire delivered in October were not delivered pursuant to 5826 (amended), as Klockner claims, for that order had already been filled. Rather, they were shipped pursuant to p.o. 5836, the only remaining unshipped contract with Klockner. Federal further contends that the November 7, 1974 meeting centered on the defects of the October shipment of 6.35 mm rods.
Five days after the November 7, 1974, meeting, Federal issued a check for the invoice amount of the October 1,000 ton shipment. Federal contends its payment was for p.o. 5836, and that payment was made solely to take advantage of a prompt payment discount, and in the belief that Klockner would provide credit for the rods, as it had done in the prior instance with the 7.0 mm rods. The typed voucher accompanying the check indicated that it was in payment of p.o. 5826. The copy of the voucher retained by Federal for its records was altered by the handwritten superimposition of the numeral 3 over the typed numeral 2. Federal contends this correction to its internal records, which does not appear on the copy which was mailed to Klockner attached to the check, demonstrates that the rods were indeed received pursuant to p.o. 5836, and thus that the claimed breach of warranty defense and counterclaim relate to that contract. Schafroth conceded that Klockner had never been notified of the correction of the voucher.
Federal also submitted evidence that it was damaged by the breach of warranty, in that it was required to purchase wire rods to replace the defective 1,000 tons, and further that it was forced to dispose of the defective rods at a substantial loss.
The trial court’s findings on Federal’s version of the facts specifically rejected the notion that the Japanese-manufactured 5.5 mm rods were a substitute for the German-manufactured rods under p.o. 5826 (amended), and found rather that the Japanese-manufactured rods were the subject of an entirely separate oral contract. It found therefore that the October 10th 6.35 mm rods were delivered and paid for under p.o. 5826 (amended). The court based those findings on “documents and the testimony of credible witnesses.” The court rejected Schafroth’s version of the facts as “too much to believe,” and found the testimony of Schafroth herself, “incredible.”
The court further found that the October 10 shipment was in conformity with the specifications of p.o. 5826, and that there was no justification for refusing to accept delivery of or to pay for the rods. The rods under p.o. 5826 were not delivered pursuant to a sale by sample, because no sample was delivered under p.o. 5826. Although a sample was sent under p.o..5836 (the Klockner invoice specifically referenced its acknowledgment 4655, which acknowledged p.o. 5836), because there was no delivery on that order due to Federal’s anticipatory breach, any failure to conform to that sample was not a valid defense.
Finally, the court concluded that no notice was given of any alleged defect in the rods delivered on October 10,1974, pursuant to p.o. 5826 (amended), subsequent to Federal’s payment in full on November 12, 1974, until Federal entered its counterclaim in its answer to Klockner’s complaint in the instant litigation.
II. The Standard of Review.
As a preliminary matter, we note that our review of a trial court’s findings of fact is limited to the well-established “clearly erroneous” test of Fed.R.Civ.P. 52(a). Such findings will not be set aside unless the reviewing court, after reviewing the evidence, is left with the definite and firm conviction that a mistake has been committed. Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1199, 4 L.Ed.2d 1218 (1960); see Indiana State Employees Association v. Negley, 501 F.2d 1239, 1241-42 (7th Cir. 1974). When such findings turn heavily upon issues of credibility, the trial court’s ability to view the witnesses’ demeanor and assess their credibility heightens the reluctance of the appellate court to substitute its judgment on the cold record for that of the trier of fact, and the burden of establishing error is commensurately increased. Negley, 501 F.2d at 1242.
The clearly erroneous test is also employed in reviewing documentary evidence, Luksus v. United Pacific Insurance Co., 452 F.2d 207 (7th Cir. 1971), and in evaluating the factual element of mixed questions of law and fact. Negley, 501 F.2d at 1241 — 42. With this standard in mind, then, we turn to Federal’s assignments of error.
III. The Manifest Weight of the Evidence on the Question of Anticipatory Breach.
Federal’s contention that the court erred in finding that Federal anticipatorily breached its contract with Klockner is primarily based upon claims that the court’s findings were against the manifest weight of the evidence. We first turn our attention to the court’s findings that the parties entered a separate oral contract for the Japanese-manufactured 5.5 mm rods, and that Sehafroth’s testimony was incredible despite other testimony which seemed to corroborate her testimony.
A. The Japanese-Manufactured Rods.
Federal contends the court erred in finding a separate oral contract for the sale of the 5.5 mm Japanese-manufactured rods because such a finding is without support in the record. The trial court judge based his finding both upon the documentation of the transaction, and on his assessment of Schafroth’s credibility.
Federal’s first contention is that no purchase order numbered 3448, which was the purchase order Klockner acknowledgment 4692 assigned to the Japanese-manufactured rods, was ever issued by Federal to Klockner, and that its number 3448 had been issued in connection with an order of paper products shipped and paid for some years prior. Further, it points out that Mainz and Sander conceded that Klockner never received a written p.o. from Federal for the Japanese-manufactured rods, and contend that the court’s finding that p.o. 3448 was the basis of a separate oral contract was based in large part on a chart entered into evidence by Klockner which summarized Klockner’s view of the transactions between the parties.
Federal further contends that the court then compounded its error by characterizing as unbelievable Schafroth’s version of what was at best a misunderstanding between the parties. It contends Schafroth’s testimony on this transaction was not inherently incredible, but rather reflects Federal’s understanding and intent in entering the transaction. Finally, Federal contends that Klockner’s acknowledgment no. 4692 was an insufficient writing to take the transaction out of the Statute of Frauds, and thus that the court’s finding that Federal’s Statute of Frauds defense could not stand was erroneous.
We may dispose of this final objection expeditiously. The Illinois Statute of Frauds is satisfied when “a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents.” Ill.Rev.Stat. ch. 26, § 2-201(2). Unlike the offer in R. S. Bennett & Co. v. Economy Mechanical Industries, Inc., 606 F.2d 182, 186 (7th Cir. 1979), relied upon by Federal, Klockner acknowledgment no. 4692 clearly evidences that the parties have already “made a deal,” and would in itself suffice to bind Klockner if enforcement were sought against it. It was therefore sufficient to satisfy the requirements of the Statute of Frauds. See Automotive Spares Corp. v. Archer Bearings Co., 382 F.Supp. 513 (N.D.Ill.1974).
We also find support for the court’s interpretation of the documentary evidence. As the court noted, although Schafroth testified that Federal kept meticulous records of its transactions, orders 3448 and 5826 were very dissimilar, and there is no indication in the Federal records of how 3448 became 5826. We are not persuaded by the fact that Federal p.o. 3448 had been issued for a prior purchase in light of the fact that the original contract was made by telephone. The p.o. number assigned to the contract by Klockner is essentially irrelevant. What is crucial is that the documentary evidence surrounding the transaction establishes that the parties entered an oral agreement, later confirmed by written acknowledgment, for rods of a different size from p.o. 5826 (amended), from a different country of origin, to be shipped at a different date, and specifying a different price. Finally, the court noted, the payment which Federal issued for the Japanese-manufactured rods matched perfectly with the invoices for the three separate shipments of that steel, all of which were issued under and explicitly referenced p.o. 3448. We cannot find error in the court’s conclusion that this documentary evidence established that the parties entered into a completely separate transaction for the Japanese-manufactured rods.
Finally, and of considerable significance, the court relied upon its assessment of the testimony of Schafroth as to the disputed transaction. The court noted, “After sitting through three days of trial, this Court concludes that the story woven by Dr. Schafroth was in a word, incredible.” We are not persuaded to the contrary by the assertions of Federal’s brief, which go primarily to Schafroth’s intentions and understanding concerning the Japanese-manufactured steel. We note again that our standard of review is not whether the testimony is inherently implausible, as Federal suggests, but rather is whether the trial court’s interpretation of the testimony is clearly erroneous. After reviewing Schafroth’s explanation of the documentation of the transaction we are left with the feeling that the version credited by the trial court is fully supported by the documents themselves, and more believable than the Federal explanation. We therefore find no error in the court’s conclusion that the Japanese-manufactured rods were the subject of a separate oral contract, and not a substitute for p.o. 5826 (amended), and therefore that the October 10 rods were delivered pursuant to p.o. 5826 (amended).
B. The Credibility of Schafroth’s Testimony.
The primary ground upon which Federal attacks the trial court’s findings based on Schafroth’s credibility is that its ruling that her testimony was incredible conflicts with its finding that witnesses who corroborated her story were credible. As noted above, the trial court’s ruling on Schafroth’s credibility in relation to the order of Japanese-manufactured rods was fully supported by the documentary evidence. No independent testimony corroborated Federal’s claim. As to Federal’s breach of warranty defenses and counterclaim, the issue of Schafroth’s credibility in that respect is treated in part IV, below.
We turn, then, to the two major pieces of evidence the court relied upon in assessing Schafroth’s credibility: (1) the “internal correction” of Federal’s voucher for the October 10th 6.35 mm rods from 5826 to 5836; and (2) Federal’s payment of over $504,000 for the allegedly defective rods. Both of these factors, we think, should also be viewed in the light of the incentive that the drop in steel price provided for Federal to desire to get out of its contract.
In determining that the October 10th shipment of 6.35 mm rods was made pursuant to 5826 (amended), the trial court noted the appearance of p.o. number 5826 on the voucher accompanying Federal’s payment. The court placed “particular emphasis” on a comparison of the copy of that voucher sent to Klockner and that retained by Federal, which had been altered, as noted above, to read 5836. In rejecting Schafroth’s testimony that this was merely an internal correction, the judge noted that Schafroth admitted that no attempt had been made to inform Klockner that the check was mistakenly recorded. In light of this fact, and the other documentary evidence regarding the Japanese-manufactured rod transaction, we believe the court was justified in finding Schafroth’s version of the facts incredible.
The court also found it “beyond belief” that Federal would make payment of more than a half million dollars five days after claiming to have told the shippers of the product that it was entirely unworkable. Federal contends that this finding ignores the past practices of the parties as exemplified by the manner in which the parties had earlier dealt with the 7.0 mm rods. The parties’ course of dealing with the 7.0 mm rods was not, however, comparable to this latter situation. The 7.0 mm rods arrived at Federal in mid-July, and were paid for on July 25. Federal notified Mainz of the defect during the third week of July; Mainz suggested that they continue to try the rods and let him know further, which Federal did. Thus Federal was still attempting to use the 7.0 mm rods when they made payment for them. This differs radically from the situation in November involving the 6.35 mm rods. Schafroth’s testimony was that Federal had utterly repudiated the rods at the November 7 meeting, and sought to cancel the order at that time. There was no question of attempting to continue trying to use the rods, as there had been in the previous situation. We do not find erroneous the trial court’s view that payment is not consistent with this scenario, but is rather more consistent with a situation in which no defect or notice of defect existed.
We must, therefore, reject Federal’s contention that the trial court erred in its assessment of Schafroth’s credibility. On the contrary, we are persuaded that the trial court’s reconstruction of the confusing facts underlying this suit is the most plausible one that could be drawn from the documents and testimony. We conclude therefore that the trial court did not err in holding that Federal’s refusal of p.o. 5836 was an anticipatory breach of the contract formed between the parties for the sale of 6.35 mm wire rods. We turn our attention next to Federal’s defenses and counterclaim based on allegations of breach of express and implied warranties.
IV. Federal’s Breach of Warranty Defenses and Counterclaim.
Federal contends that the 6.35 mm rods delivered on October 10,1974, failed to conform to the express warranty made by delivery of a sample, and to implied warranties of fitness for a particular use. If such breach of warranties did in fact occur, Federal contends that not only would Klockner’s recovery on its claim be foreclosed, but Federal would be entitled to recover on its counterclaim. Because the buyer’s failure to notify a seller of a breach of warranty within a reasonable time bars any remedy against the seller, we turn first to the question whether the trial court erred in ruling that Federal had failed to give such notice, and that recovery was therefore barred.
Section 2-607(3)(a) of the Uniform Commercial Code, Ill.Rev.Stat. ch. 26, § 2-607(3)(a), requires that “the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy.” The trial court held that Federal’s breach of warranty defenses and counterclaim were barred under this section, relying on Canada Maple Exchange, Ltd. v. Scudder Syrup Co., 223 Ill.App. 165 (1921).
Canada Maple Exchange presented facts very similar to those of the instant case. The seller of a carload of sugar sued for the balance of the purchase price, and the buyer counterclaimed for breach of warranty. The Illinois Appellate Court affirmed the dismissal of the buyer’s counterclaim, noting that no evidence in the record showed that any notice was given of the alleged breach of warranty until the counterclaim was filed to the seller’s suit for the price, more than one year after the delivery of the sugar. 223 Ill.App. at 168. Although Canada Maple Exchange was decided prior to Illinois’ adoption of the UCC, under § 49 of the Uniform Sales Act, the Illinois Code Comment to § 2-607(3)(a) notes that the section “continues the rule of USA § 49,” and cites Canada Maple Exchange with approval. Ill.Ann.Stat. ch. 26, § 2-607(3)(a) (Smith-Hurd). The trial court found similarly here that Federal’s silence on the putative defects of the wire rods until it filed its counterclaim in this suit, some eight months after delivery, barred recovery under 2-607(3)(a).
Federal asserts the trial court erred in so holding in two respects: first, that such a holding is inconsistent with the findings of the court’s order that during October Schafroth called Mainz and attempted to cancel p.o. 5836, and again, that Schafroth telephoned Mainz and told him that she did not want delivery of the 1,800 tons of wire rods; second, that the manifest weight of the evidence demonstrates that Federal personnel had cancelled the contract. Specifically, Federal cites in support of its contention that the holding is clearly erroneous: Sander’s testimony that the reason he went to Herrin in November was the cancellation of the contract; Klockner’s certified letter of January, 1975, which refers to Schafroth’s oral cancellation of the contract; Schafroth’s telephone complaints prior to November 7, 1974; the notice given to Klockner personnel at the November 7,1974, meeting as testified to by Schafroth and two other witnesses; and, Sander’s testimony of an offer of a double annealing allowance on 6.35 mm rods at the November 7 meeting. We are unpersuaded by these claims of error.
The court’s finding that Federal attempted to cancel p.o. 5836 is not inconsistent with its holding that Federal gave no notice of any alleged defects in the rods, when it is remembered that the trial court held that the October 10 shipment was made under p.o. 5826 (amended). Thus any attempted cancellation of p.o. 5836 was unrelated to the October 10 rods, and cannot give rise to any inference that those rods were defective or that Federal gave notice to Klockner to that effect. These oral attempts at cancellation are rather highly consistent with the trial court’s version of the facts, in which Federal attempted to cancel p.o. 5836 following the precipitous decline in rod prices, and repudiated and anticipatorily breached that contract when Klockner indicated it would perform in accord with its provisions.
Nor is the court’s conclusion against the weight of the evidence. Sander’s testimony, the Klockner letter, and Schafroth’s telephone calls prior to November 7 all support the finding that Federal attempted to cancel p.o. 5836, which had not yet been received. As to the testimony of the Federal witnesses concerning the November 7 meeting, the court found Schafroth’s testimony incredible. The court remarked:
Accepting for argument’s sake, the fact that the 1,000 tons, were, in fact, order 5836, and were, in fact defective, the Court finds it beyond belief that five days later, on Novémber 12,1974, Federal made a check to Klockner for $504,853.98 (apparently, according to Federal’s version, for the 1,000 defective tons already delivered under # 5836).
Neither is there sufficient support in the testimony of the two other Federal witnesses who testified about the November 7 meeting to overturn the trial court’s finding. The court found them “credible,” but rejected their testimony as based in large part upon information supplied to them by Schafroth. We agree. Cross-examination of the Federal witnesses made it clear that their testimony was largely based on prior testimony in the trial, or upon information as to p.o. numbers the witnesses had received from Schafroth, rather than upon their own recollection of the events of the 1974 meeting. There was also testimony to the contrary, which the trial court credited, from Mainz and Sander. There was no written documentation of any written notice to Klockner nor indeed, of any defect in the rods. There was also evidence that the annealing allowance Federal relies upon to demonstrate Klockner’s knowledge of the defects in the 6.35 mm rod was in fact proposed by Schafroth as a possible method of reducing the price on the as yet unshipped p.o. 5836.
We thus find substantial support in the record for the trial court judge’s findings. We are left with the firm conviction that he properly evaluated the credibility of the witnesses and entered appropriate findings of fact on that basis on the issue of notice. We hold, therefore, that the trial court properly ruled that any defense or counterclaim based on breach of warranty was barred by § 2-607(3)(a), Ill.Rev.Stat. ch. 26. In light of that holding, we need not reach any issue of whether the court ruled properly on whether the October 10 shipment of rods was in fact in breach of any express or implied warranty.
V. Damages.
The trial court judge computed Klockner’s damages under U.C.C. § 2-708, Ill.Rev.Stat. ch. 26, § 2-708, which provides that the measure of damages is the difference between the contract price and the market price at the time and place of delivery plus any incidental damages. He relied oh evidence that Klockner had made nine sales of the repudiated rods between June and October 1975 at an average price of $11.00 per hundredweight, which was $12.75 less than the contract price. That resulted in damages of $505,960.63. The court also added incidental storage damages of $12,-050.97, and interest of 5% per annum, pursuant to Ill.Rev.Stat. ch. 74, § 2, for a total judgment amount of $658,306.40.
Federal asserts that this computation grossly overstates the damages. Federal contends that the court erroneously assumed that the price received by Klockner was the market price at the time and place for tender, and that the market price should have been set at the market price in November, 1974 in Herrin, Illinois, which was established by the price Federal was obliged to pay for replacement rods. It also challenges the award of the storage charges from November 1974 to January 1975, on the ground that the rods were not tendered, at Klockner’s choice, until that latter date. Federal also asserts that no damages at all should have been awarded for the 1,000 tons of rods which remained in Germany, since Klockner never took title to those rods, and never tendered them to Federal. Even if some amount were awarded for the untendered rods, Federal claims it should be either limited to Klockner’s lost profits on the rods, or reduced by the amount of the reduction in price Klockner received from the manufacturer on account of Federal’s repudiation.
A. The Calculation of the Market Price and Incidental Damages.
Section 2-610(a) of the Uniform Commercial Code, Ill.Rev.Stat. ch. 26, § 2-610(a), provides:
When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may
(a) for a commercially reasonable time await performance by the repudiating party...
The determination of what constitutes a commercially reasonable time is a question of fact, and we do not find error in the trial court’s computation of the market price by reference to Klockner’s sales from June to October 1975. There was evidence that Federal disposed of the allegedly defective rod at $10.50 per hundredweight, and that that price was within the market range during the relevant time period. Assessment of the price at the more generous price of $11.00 per hundredweight is also within the market range, and accurately pegs Klockner’s actual loss on the resale of the repudiated rods. We thus find no error in the computation of the market price.
Nor do we find error in assessment of the storage charges. Federal’s repudiation of the rods occurred in November. Klockner had the rods at Memphis ready for delivery, clearly intended to deliver them beginning at that time, and would have done so but for Federal’s anticipatory repudiation. In those circumstances it was not error for the trial court to award incidental damages for storage.
B. Damages on the 1,000 Tons Remaining in Germany.
As a preliminary matter we note that the entire contract amount was clearly tendered to Federal at the very latest by Klockner’s letter of January 22, 1975. This was sufficient tender under Illinois law, Norton Iron Works v. Wilson Steel Products, Co., 232 Ill.App. 523 (1924) (decided under USA § 51; 2-503 continues same policy, Illinois Code Comment § 2-503, Ill.Ann. Stat. ch. 26, § 2-503 (Smith-Hurd)). Denison Mines, Ltd. v. Michigan Chemical Co., 469 F.2d 1301 (7th Cir. 1972), relied on by Federal, is inapposite for there it was determined that, unlike this case, no tender had been made and recovery was barred on that basis.
Nor are we convinced by Federal’s claim that Klockner never assumed title to the goods. There is no evidence in the record that Klockner did not assume title, and, in any event, the letter of January 22, 1975, shows that Klockner was, in the words of the Norton Iron Works court, “ ‘ready and willing to deliver the goods.’ That is all the statute requires.” 232 Ill.App. at 530. This is a sufficient basis to warrant the trial court’s award of damages for the whole amount of the contract.
Finally we conclude the court did not err in not reducing the amount of damages by the manufacturer’s reduction in price to Klockner following Federal’s breach. This issue is well-settled under Illinois sales law. See Illinois Code Comment, Ill.Ann.Stat. ch. 26, § 2-708 (Smith-Hurd) (citing with approval Kadish v. Young, 108 Ill. 170 (1883)).
VI. Conclusion.
We therefore conclude, for all the aforementioned reasons, that the trial court did not err in ruling in favor of Klockner and against Federal, and awarding damages of $658,306.40. The judgment is, therefore,
Affirmed.
. This court has on occasion indicated that a less exacting application of the clearly erroneous standard of review might be appropriate in a “paper case,” where the evidence presented to the trial court is primarily documentary. See, e. g., City of Mishawaka v. American Electric Power Co., 616 F.2d 976, 979-80 (7th Cir. 1980), cert. denied, 449 U.S. 1096, 101 S.Ct. 892, 66 L.Ed.2d 824 (1981). The case at bar, although involving substantial documentary evidence, turns heavily upon the trial court’s credibility assessments of the live testimony, and thus is not an appropriate instance for such heightened review. Lektro-Vend Corp. v. Vendo Co., 660 F.2d 255 at 263 & n.8 (7th Cir. 1981).
. We cannot agree with Federal’s contention that this chart, Defendant’s Exhibit 36-A, was not supported by the evidence. The chart was a summary of documents, each of which had been entered into evidence independently and was itself admitted into evidence under Fed.R. Evid. 1006 as an aid to the court. Federal’s only objection at trial to the admission of the chart was that p.o. no. 3448, which appeared on the chart, was not received from Federal, but “was somehow arrived at by Klockner and subsequently used throughout this transaction.”
. Even were we to accept Federal’s contention that it notified Klockner of the defects at the November 7 meeting, Klockner would have been justified in believing that full payment of half a million dollars five days later constituted an acceptance of the rods under Ill.Rev.Stat. ch. 26, § 2-606(l)(a), which provides that acceptance occurs when a buyer signifies to the seller that he will retain nonconforming goods in spite of their nonconformity. Section 2-607(3)(a) requires that notice of breach be provided after the acceptance. Genuine Panama Hat Works, Inc. v
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MORRIS SHEPPARD ARNOLD, District Judge.
The U.S. Department of Health and Human Services (HHS) oversees Medicare payments to doctors and hospitals. See 42 U.S.C. § 902, § 1395kk(a). As part of its oversight responsibilities, HHS is authorized to exclude doctors and hospitals from eligibility for Medicare payments if services have been provided that are substantially in excess of need or fail to meet professional standards. See 42 U.S.C. § 1395y(d)(l)(C). To determine whether to exclude doctors and hospitals from eligibility, HHS uses reports submitted by regional and statewide peer review organizations, See 42 U.S.C. § 1395y(g). The HHS office with the specific responsibility for making such determinations is called the Health Care Financing Administration (HCFA).
In December, 1978, HCFA notified the regional peer review group for southeastern Missouri that the patient discharge rates in that region indicated the possibility of abuses in claims for Medicare payments. The regional peer review group began an investigation that eventually focused on the Poplar Bluff Hospital and the doctors with admitting privileges there. Soung Kwoun is one of those doctors. Following the investigation, the regional peer review group recommended to the statewide peer review group that the hospital change some of its procedures and that Dr. Kwoun be excluded from eligibility for Medicare payments for ten years. The statewide peer review group adopted the recommendation of the regional peer review group and then transmitted the report and recommendations to HCFA in March, 1980.
In September, 1980, HCFA notified Dr. Kwoun of the recommendation and advised him of his right to oppose it. After an informal hearing in December, 1980, and additional consideration of the peer review group report and Dr. Kwoun’s responses to it, HCFA adopted the recommendation. In September, 1981, HCFA officially excluded Dr. Kwoun from eligibility for Medicare payments for a period of ten years. Dr. Kwoun then asked for a formal hearing before an administrative law judge. The administrative law judge reversed the ex-elusion, citing procedural and substantive errors by HCFA, especially the reliance of HCFA on informal discussions with members of the regional peer review group as the basis for excluding Dr. Kwoun. The administrative law judge then ordered Dr. Kwoun’s reinstatement to eligibility for Medicare payments.
Dr. Kwoun subsequently brought this action against certain HCFA employees, members of the regional and statewide peer review groups, two state officials involved in state proceedings brought against Dr. Kwoun as a result of the recommendation of the peer review group, and the insurance company that administers the Medicare payments program under contract with the government. Dr. Kwoun claimed that the HCFA employees deprived him of certain property and liberty interests without due process and subjected him to malicious prosecution and extreme and outrageous conduct. He asserted that the members of the regional and statewide peer review groups and the state officials deprived him of equal rights under the law to make and enforce contracts and conspired to deprive him of the equal protection of the laws. His complaint against the peer review group members and the state officials also contained counts for malicious prosecution and extreme and outrageous conduct. Finally, Dr. Kwoun claimed that the state officials deprived him of certain property and liberty interests without due process.
The HCFA employees moved for summary judgment on the basis of absolute immunity. The district court denied the motion. Three of the HCFA employees appeal the denial of absolute immunity. While the HCFA employees’ appeal was pending, the district court dismissed, 632 F.Supp. 1091, sua sponte, the case against all defendants on the ground of qualified immunity. The plaintiffs appeal these dismissals. We affirm the orders of dismissal of all defendants but do so on the ground of absolute rather than qualified immunity.
I.
We turn first to the federal defendants— the HCFA employees. Defendant Frank Kram is the HCFA employee who reviewed the peer review group report and accepted its recommendation to exclude Dr. Kwoun from eligibility for Medicare reimbursement. Defendant Don Nicholson is the HCFA employee who signed the notice of proposed exclusion; defendant Ralph Howard is the HCFA employee who signed the final decision excluding Dr. Kwoun. Apparently the acts of defendant Kram are the primary focus of attention; the complaint is cryptic on this point, and the only specific allegation against defendants Nicholson and Howard in the plaintiffs’ brief is that their conduct “was in a line with the earlier conduct of Kram * * * and furthered and reinforced the previous lack of arms’ length dealing.”
While the regional peer review group was investigating Dr. Kwoun, but before it submitted its report to HCFA, defendant Kram apparently met with the members of the investigating committee in the offices of the statewide peer review group and discussed the investigation of Dr. Kwoun. The administrative law judge found that the report of the peer review group did not meet the substantive due process requirements set forth in the applicable policy manual and federal regulations. He found in addition that Dr. Kwoun had been denied substantive due process because defendant Kram’s adoption of the recommendation to exclude him from eligibility for Medicare payments was based at least in part on defendant Kram’s discussions with members of the regional peer review group before the report was issued and not on the report itself.
Barr v. Matteo, 360 U.S. 564, 575, 79 S.Ct. 1335, 1341, 3 L.Ed.2d 1434 (1959) (plurality opinion), grants absolute immunity from common-law tort claims to federal officials acting “within the outer perimeter of [their] line of duty.” Our court has described absolute immunity from common-law torts as applying to acts connected “ ‘ * * * more or less * * * with the general matters committed by law to the officer’s control or supervision, and not * * * manifestly or palpably beyond his authority.' ” Bushman v. Seiler, 755 F.2d 653, 655 (8th Cir.1985), quoting Norton v. McShane, 332 F.2d 855, 859 (5th Cir.1964), cert. denied, 380 U.S. 981, 85 S.Ct. 1345, 14 L.Ed.2d 274 (1965). The plaintiffs contend that defendant Kram (and by extension defendants Nicholson and Howard, those officials having relied on defendant Kram’s recommendation) acted outside the scope of his authority because defendant Kram was involved in discussions with members of the regional peer review group before its report was issued.
The first mention of HCFA in the regulations governing the imposition of exclusion sanctions under the Medicare program provides that a peer review group is to submit a report on violations to HCFA after an investigation of possible violations. See 42 C.F.R. § 474.3(b), § 474.8(a). Following submission of a peer review group report, HCFA is to determine whether a violation has occurred and is to provide notice to the alleged violator of the proposed exclusion. See 42 C.F.R. § 474.10(a), § 474.10(c). There is no mention of HCFA involvement prior to the issuance of a peer review group report.
On the other hand, there is no explicit prohibition of such involvement either. Furthermore, HHS is charged with the duty of “promoting the effective, efficient, and economical delivery of health care services, and of promoting the quality of services of the type for which [Medicare] payment may be made.” See 42 U.S.C. § 1395y(g). HHS also has the authority to contract with peer review groups in order to carry out its duties. Id. All parties agree that it was HCFA that notified the regional peer review group of data indicating possible Medicare abuses. It seems apparent, then, that any involvement of HCFA employees in a peer review group investigation after that notification would be within the scope of their authority.
Even if acceptance of the recommendation to exclude was based on improper factors (such as consideration of matters outside the peer review group report), that does not make the earlier actions of the HCFA employees outside the scope of their authority; it merely makes the acceptance of the recommendation incorrect. The federal defendants are therefore entitled to absolute immunity from common-law tort claims.
A more difficult question is how to categorize the purpose of the duties of the HCFA employees in the context of the process for imposing exclusion sanctions on possible violators of the rules governing Medicare payments. The courts have recognized that the reasons for granting absolute immunity to federal officials from common-law tort claims — to protect them “in the execution of their federal statutory duties from criminal or civil actions based on state law,” Butz v. Economou, 438 U.S. 478, 489, 98 S.Ct. 2894, 2902, 57 L.Ed.2d 895 (1978) — do not apply to claims based on violations of constitutional law. Id. at 495, 98 S.Ct. at 2905.
In most cases, “federal executive officials exercising discretion are entitled only to * * * qualified immunity” from constitutional claims. Id. at 507, 98 S.Ct. at 2911. Absolute immunity from constitutional claims is to be granted only in “those exceptional situations where it is demonstrated that [such] immunity is essential for the conduct of the public business.” Id. The determination of when such exceptional situations exist is a “ ‘functional’ ” one, Harlow v. Fitzgerald, 457 U.S. 800, 810, 102 S.Ct. 2727, 2734, 73 L.Ed.2d 396 (1982), and “[t]he burden of justifying absolute immunity rests on the official asserting the claim.” Id. at 812, 102 S.Ct. at 2735.
“[J]udieial, prosecutorial, and legislative functions require absolute immunity,” id. at 811, 102 S.Ct. at 2734, and therefore “agency officials performing certain functions analogous to those of a prosecutor” are entitled to absolute immunity. Butz, 438 U.S. at 515, 98 S.Ct. at 2915. The Supreme Court has held only that in “initiating a prosecution and in presenting the [case against the defendant]” — those prosecutorial functions “intimately associated with the judicial phase” of his duties — is a prosecutor entitled to absolute immunity. Imbler v. Pachtman, 424 U.S. 409, 430-31, 96 S.Ct. 984, 944-95, 47 L.Ed.2d 128 (1976). Whether a prosecutor acting as “an administrator or [an] investigative officer rather than * * * an advocate” is entitled to absolute immunity is a question that the Court has expressly reserved. Id.
The federal defendants argue that the process of deciding whether to impose exclusion sanctions on a person under the Medicare program is analogous to an agency decision on whether to initiate administrative proceedings against a person in order to suspend or revoke his federal registration as a commodities futures merchant, see Butz, 438 U.S. at 481, 98 S.Ct. at 2897, or in order to impose professional disciplinary sanctions, see Austin Municipal Securities, Inc. v. National Association of Securities Dealers, Inc., 757 F.2d 676, 689 (5th Cir.1985). They therefore argue that actions taken prior to the formal hearing before the administrative law judge (defendant Kram’s allegedly improper consultation with members of the regional peer review group in January, 1980, and the failure to give adequate notice to Dr. Kwoun in December, 1979, of the fact that he was being considered for exclusion sanctions) occurred in the context of essentially advocatory prosecutorial duties — “deciding whether a proceeding should be brought and what sanctions should be sought,” Butz, 438 U.S. at 515, 98 S.Ct. at 2915, against “a specific target,” Gray v. Bell, 712 F.2d 490, 501 (D.C.Cir.1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1593, 80 L.Ed.2d 125 (1984).
We agree. The statutes and regulations governing the exclusion sanctions process obviously anticipate the possibility of a formal adjudicative hearing before an administrative law judge designated by the appeals council of HHS. See 42 U.S.C. § 1395y(d)(3) and 42 C.F.R. § 474.10(g)(1), § 405.1533. The hearing is de novo, and HCFA has the burden of proof. Appeal of the decision of the administrative law judge is to the appeals council of HHS. See 42 C.F.R. § 405.1561. Judicial review of the appeals council decision is a possibility. See 42 U.S.C. § 1395y(d)(3).
The federal defendants further argue that their alleged misconduct during the formal hearing before the administrative law judge was clearly advocatory. We agree. An agency official’s presentation of evidence in an agency hearing is protected for the same reasons that a prosecutor’s presentation of evidence before a court is protected. Butz, 438 U.S. at 517, 98 S.Ct. at 2916.
Because the actions of the federal defendants at all relevant times were prosecutorial in nature, those defendants are entitled to absolute immunity from constitutional claims. The dismissal orders of the district court as to the federal defendants are therefore affirmed.
II.
The SEMO defendants include the regional peer review corporate body, the statewide peer review corporate body, the directors and officers of both groups, the regional peer review group representative to the statewide peer review group, the members of the regional peer review group investigation oversight committee, the Poplar Bluff Hospital review coordinator for the regional peer review group, the physician advisers to Poplar Bluff Hospital appointed by the regional peer review group, and the members of the regional peer review group investigating team specifically assigned to Dr. Kwoun. These defendants argue that because they were participating in a review process established and governed by federal law, they are federal actors for the purpose of any analysis of their activities in relation to the investigation of Dr. Kwoun. We agree.
HHS is authorized to contract with peer review groups to carry out its duty to promote “the effective, efficient, and economical delivery of health care services, and [to promote] the quality of services of the type for which [Medicare] payment may be made.” See 42 U.S.C. § 1395y(g). Medicare payments may not be made for items or services that are not “reasonable and necessary for the diagnosis or treatment of illness or injury.” See 42 U.S.C. § 1395y(a)(l)(A). When a peer review group does undertake such a contract, the peer review group “must * * * review some or all of the professional activities * * * of physicians * * * in the provision of health care services and items for which [Medicare] payment may be made * * * for the purpose of determining whether * * * [those] services and items are * * * reasonable and medically necessary and whether such services and items are not allowable under * * * section 1395y.” See 42 U.S.C. § 1320c-3(a)(l)(A). The peer review group is to determine, on the basis of its review, whether Medicare payments are to be made for the services reviewed. See 42 U.S.C. § 1320c-3(a)(2). The determination of the peer review group is conclusive as to Medicare payments unless it is changed by reconsideration of the peer review group. See 42 U.S.C. § 1320c-3(a)(2)(C). In other words, HHS essentially uses the peer review group as a consultant that recommends whether or not a doctor should continue to be eligible for Medicare reimbursements.
Consultants who investigate whether the services provided by doctors are necessary and eligible for Medicare reimbursement have been held to be “governmental agents for immunity purposes.” Bushman v. Seiler, 755 F.2d 653, 655 (8th Cir.1985) (defendant was consultant to insurance company that was Medicare carrier for HHS). See also Gross v. Sederstrom, 429 F.2d 96, 99 (8th Cir.1970) (defendants were elected committee members who investigated farmer’s eligibility for grain program for federal Agricultural Stabilization and Conservation Service; held to be federal officials for immunity purposes in suit resulting from denial of farmer’s application for participation). The SEMO defendants were therefore acting as federal officials for immunity purposes.
As federal officials for the purpose of an analysis of eligibility for immunity, the SEMO defendants are immune from common-law tort claims if their actions were not “ ‘ * * * manifestly or palpably beyond [their] authority.’ ” Bushman, 755 F.2d at 655, quoting Norton v. McShane, 332 F.2d 855, 859 (5th Cir.1964), cert. denied, 380 U.S. 981, 85 S.Ct. 1345, 14 L.Ed.2d 274 (1965). The plaintiffs apparently concede that the actions of the SEMO defendants were within the authority given by the statute, since their argument concentrates on the assertion that the SEMO defendants are not federal officials. Furthermore, although the administrative law judge found that the peer review group report was deficient and even inaccurate in several respects, he made no finding that the SEMO defendants had investigated Dr. Kwoun in any manner not authorized by statute or by their contract with HHS. We hold, therefore, that the SEMO defendants are absolutely immune from the common-law tort claims asserted against them.
The SEMO defendants argue that they are also entitled to immunity from constitutional claims because their actions were essentially prosecutorial in nature. They contend that the peer review groups are analogous to the professional organizations to whom absolute immunity from constitutional claims has been granted when disciplinary actions have resulted in a lawsuit by the person disciplined. See, e.g., Austin Municipal Securities, Inc. v. Na tional Association of Securities Dealers, Inc., 757 F.2d 676, 689 (5th Cir.1985) (prosecutorial and adjudicative functions of securities dealers’ association disciplinary committee); Clulow v. State of Oklahoma, 700 F.2d 1291, 1298 (10th Cir.1983) (prosecutorial function of bar disciplinary committee); and Simons v. Bellinger, 643 F.2d 774, 782 (D.C.Cir.1980) (prosecutorial and adjudicative functions of bar committee on unauthorized practice of law). We agree.
Peer review groups that are eligible to contract with HHS must be “composed of a substantial number of the licensed doctors of medicine and osteopathy engaged in the practice of medicine or surgery in the area and who are representative of the practicing physicians in the area” and must be judged by HHS to be “able * * * to perform reviews of the pattern of quality of care in an area of medical practice where actual performance is measured against objective criteria which define acceptable and adequate practice.” See 42 U.S.C. § 1320c-l(l)(A), § 1320c-l(2). In conducting reviews under contract with HHS, the peer review groups are to “apply professionally developed norms of care, diagnosis, and treatment based upon typical patterns of practice within the [relevant] geographic area * * * taking into consideration national norms where appropriate.” See 42 U.S.C. § 1320c-3(a)(6). The norms with respect to treatment for particular illnesses or health conditions are to include “the types and extent of the health care services which * * * are considered within the range of appropriate diagnosis and treatment of such illness[es] or health condition^], consistent with professionally recognized and accepted patterns of care.” See 42 U.S.C. § 1320c-3(a)(6)(A).
In other words, the medical peer review groups are organizations of professionals charged with the task of evaluating the performance of members of their profession. Thus, although medical peer review groups are not associations of professionals supervised by a licensing body, see, e.g., Austin Municipal Securities, Inc., 757 F.2d at 680, and Clulow, 700 F.2d at 1297, they are nonetheless very similar to such associations. Furthermore, although medical peer review groups do not control a professional’s ability to practice in all contexts, see, e.g., Simons, 643 F.2d at 781 (bar committee has power to disbar attorneys), they do control to some extent a professional’s ability to practice in a particular class of cases — those that involve claims for Medicare reimbursement. See 42 U.S.C. § 1320c-3(a)(2)(C), § 1395y(d)(3) (determination of peer review group on eligibility for Medicare reimbursement is conclusive unless changed by reconsideration of peer review group, formal hearing decision of administrative law judge, decision of appeals council of HHS, or judicial review). Thus medical peer review groups are very similar to bar committees that control whether a lawyer may practice before certain courts. See, e.g., Simons, 643 F.2d at 775.
Absolute immunity from even constitutional claims was granted to the securities dealers’ association disciplinary committee in Austin Municipal Securities, Inc., 757 F.2d at 689, and to the bar disciplinary and practice committees in Clulow, 700 F.2d at 1298, and Simons, 643 F.2d at 782. Such immunity was granted because each committee’s function shared the characteristics of the judicial process, because an unfavorable recommendation from each committee had the potential of provoking a retaliatory lawsuit, and because the subject of each committee’s actions had adequate opportunity to challenge those actions through judicial review. See Austin Municipal Securities, Inc., 757 F.2d at 689, Clulow, 700 F.2d at 1298, and Simons, 643 F.2d at 782, all incorporating the tests specified in Butz v. Economou, 438 U.S. 478, 513 and 515-16, 98 S.Ct. 2894, 2914 and 2915-16, 57 L.Ed.2d 895 (1978).
We find that the review activities of the medical peer review groups at issue here— those entrusted to them by Congress so that the Medicare program can function effectively, efficiently, and economically, see 42 U.S.C. § 1395y(g) — are similar enough to the review activities of the disciplinary and practice committees declared to be immune in the cases discussed above that similar protection should be extended.
We are not unmindful of the problems that may arise from the extension to medical peer review groups of absolute immunity from both common-law tort claims and constitutional claims. We are convinced, however, that in order for the Medicare program to work effectively, efficiently, and economically, see 42 U.S.C. § 1395y(g), some controls on quality of care must be exercised. We are also convinced that the exercise of controls on quality of care greatly increases the benefits derived from the Medicare program by both the individual Medicare patients and our society as a whole. We are further convinced that the only way to ensure both the effectiveness of the peer review system and the willingness of private doctors to participate in it is to insulate them from damage claims that may result from that work. The alternative to the use of private doctors to review medical decisions is the use of agency officials, who are much less likely to possess the expertise to evaluate such medical decisions. The use of agency officials to review medical decisions would almost certainly lead to a far less effective, efficient, and economical Medicare program. In short, we are convinced that absolute immunity is “essential for the conduct of the public business,” Butz, 438 U.S. at 507, 98 S.Ct. at 2911, in this critical health care area. The availability of administrative and judicial review serves as a check against abuse of the power inherent in the peer review system and against mistakes or sloppiness in that system. A further check over the long run is the power of HHS to terminate its contract with any peer review group. See 42 U.S.C. § 1320c-2(c)(6).
We therefore hold that the SEMO defendants are absolutely immune from constitutional claims as well as common-law tort claims. The dismissal orders of the district court as to the SEMO defendants are affirmed.
III.
We turn last to the two state officials involved in state proceedings brought against Dr. Kwoun as a result of the recommendation of the peer review groups. Defendant W.F. Montgomery is the deputy director for medical services of the Missouri Department of Social Services; defendant Gary Clark is the executive secretary of the Missouri State Board of Registration for the Healing Arts.
The Missouri Department of Social Services received a copy of the peer review group report that was submitted to HCFA. On the basis of that report, the Missouri Department of Social Services suspended Dr. Kwoun from eligibility for payments under the state Medicaid program. Defendant Montgomery was apparently the state officer who initiated the suspension.
The Missouri State Board of Registration for the Healing Arts — the state licensing body for doctors, see Mo.Ann.Stat. § 334.-120 (Vernon 1987), which has the power to suspend or revoke a doctor’s license, see Mo.Ann.Stat. § 334.100 (Vernon 1987)— also received a copy of the peer review group report that was submitted to HCFA. On the basis of that report, the Missouri State Board of Registration for the Healing Arts initiated proceedings to suspend or revoke Dr. Kwoun’s license to practice medicine in Missouri. Defendant Clark, as the executive secretary of the board, was apparently the officer who initiated the proceedings for the board. He is considered an administrative officer (rather than a clerical employee). See Mo.Ann. Stat. § 334.123 (Vernon 1987) and Mo.Ann. Stat. § 620.010.15(4) (Vernon 1987).
Defendant Montgomery’s suspension of Dr. Kwoun from eligibility for state Medicaid payments is clearly an act that was performed under the discretionary powers of his position; similarly, defendant Clark’s act in initiating license suspension/revocation proceedings against Dr. Kwoun is clearly an act that was performed under the discretionary powers of his position. Each is therefore immune under Missouri law from the common-law tort claims asserted against him. Kanagawa v. State by and through Freeman, 685 S.W.2d 831, 835 (Mo.1985) (en banc).
The analysis of absolute immunity from constitutional claims for these state defendants is the same as that applicable to federal defendants. Butz v. Economou, 438 U.S. 478, 504, 98 S.Ct. 2894, 2909, 57 L.Ed.2d 895 (1978). We therefore find that each is also immune from the constitutional claims asserted against him.
The process of deciding whether to impose a state Medicaid exclusion sanction, the process of deciding whether to initiate a license suspension/revocation proceeding, and the process of deciding whether to impose a federal Medicare exclusion sanction are all of a kind. Each is essentially an advocatory prosecutorial function — “deciding whether a proceeding should be brought and what sanctions should be sought,” Butz, 438 U.S. at 515, 98 S.Ct. at 2915, against “a specific target,” Gray v. Bell, 712 F.2d 490, 501 (D.C.Cir.1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1593, 80 L.Ed.2d 125 (1984). Indeed, the administrative and judicial review available under Missouri law is similar to that available under federal law. See Mo.Ann.Stat. § 621.055.1 (Vernon 1987), Mo.Ann.Stat. § 536.100 (Vernon 1953) (review of exclusion from state Medicaid program); Mo. Ann.Stat. § 334.100.2 and § 334.100.3 (Vernon 1987), Mo.Ann.Stat. § 621.100, § 621.-110, and § 621.145 (Vernon 1987), and Mo. Ann.Stat. § 536.100 (Vernon 1953) (review of suspension/revocation of license to practice medicine); and 42 U.S.C. § 1395y(d)(3) (review of exclusion from federal Medicare program).
The orders dismissing the state defendants, along with the orders dismissing the federal defendants and the SEMO defendants, are therefore affirmed.
. The regional peer review group is known as the Southeast Missouri Professional Standards Review Organization (SEMO).
. The other plaintiffs are corporate entities in which Dr. Kwoun has an interest.
. The statewide peer review group is known as the Missouri Statewide Professional Standards Review Council.
. The insurance company was dismissed on grounds other than those involved in these appeals; its dismissal was not appealed.
. The HCFA employees are collectively referred to by the parties as the federal defendants.
. The members of the regional and statewide peer review groups are collectively referred to by the parties as the SEMO defendants.
. A fourth HCFA employee was named as a defendant but did not appeal.
. Because HCFA failed to follow certain procedural requirements relating to notice to Dr. Kwoun in December, 1979, of the proposed exclusion, the federal defendants are also charged with denying Dr. Kwoun procedural due process. These allegations are apparently included only as a basis for the constitutional claims against them. In addition, the federal defendants are charged with various misconduct during the hearing before the administrative law judge. These charges are also apparently included only as a basis for the constitutional claims against them.
. The dissent would remand to the district court for a determination of which federal defendants’ duties can be characterized as prosecutorial or adjudicative. Affidavits and exhibits already submitted by the federal defendants to the district court, however, establish that each one had the authority to "initiate or continue a proceeding subject to agency adjudication.” Butz v. Economou, 438 U.S. 478, 516, 98 S.Ct. 2894, 2916, 57 L.Ed.2d 895 (1978).
. “The decision to initiate administrative proceedings against an individual * * * is very much like the prosecutor’s decision to initiate or move forward with a criminal prosecution. An agency official, like a prosecutor, may have broad discretion in deciding whether a proceeding should be brought and what sanctions should be sought.” Butz, 438 U.S. at 515, 98 S.Ct. at 2915. ”[T]hose officials who are responsible for the decision to initiate or continue a proceeding subject to agency adjudication are entitled to absolute immunity * * * for their parts in that decision.” Id. at 516, 98 S.Ct. at 2916.
. The complaint does not specify whether the individual SEMO defendants are sued in their individual or their official capacity. However, our conclusions about the nature of the exclusion sanctions process and the role of peer review groups within that process make that question irrelevant. In addition, it turns out that some of the individual SEMO defendants either were not associated with the peer review groups at the relevant times, did not participate in the investigation of Dr. Kwoun, or participated only as expert witnesses in the formal hearing before the administrative law judge. Our conclusions about the nature of the exclusion sanctions process and the role of peer review groups within that process make it unnecessary for us to make separate rulings as to the different classes of SEMO defendants.
. Once HHS acts on the recommendation of the peer review group, a formal hearing before an administrative law judge is available for review of the action taken by HHS, with eventual judicial review also available. See 42 U.S.C. § 1395y(d)(3).
. The dissent relies on a statutory provision, 42 U.S.C. § 1320c-6(b), in arguing that the SEMO defendants are entitled only to qualified immunity. Legislative history on this provision, in either its current or previous incarnation, is sparse. The legislative history for the entire peer review statute currently in effect refers to the intent of Congress to exempt peer review reports from coverage under the Freedom of Information Act. See H.RXonf.Rep. 760, 97th Cong., 2d Sess. 443, reprinted in 1982 U.S.Code Cong, and Admin.News 781, 1223. This exemption was probably a statement of agreement with the conclusions of the court in Public Citizen Health Research Group v. Department of Health, Education, and Welfare, 668 F.2d 537, 544 (D.C.Cir.1981), that, for FOIA purposes, peer review groups were not intended to be, do not qualify as, and should not be considered to be government agencies. However, it also supports the conclusion that Congress, unaware that the courts would find some consultants advising government agencies to be federal actors for immunity purposes (as opposed to FOIA purposes), originally considered the members of peer review groups to be private parties and sought to protect them to some extent from civil liability. In other words, the statute was an effort to extend some protection to people who were thought to have none, rather than an attempt to restrict protection already acknowledged to exist. See, e.g., S.Rep. 1431, 91st Cong., 2d Sess. 162 (1970) ("The amendment provides protection from civil liability for those engaged in required review activities ****”) (in reference to an early incarnation of the statute) (emphasis added). Once such consultants were considered federal actors for immunity purposes, of course, they became eligible for absolute immunity because of the prosecutorial or adjudicative function of their duties. The statutory provision is now superfluous for anyone except a consultant who would not be considered a federal actor for immunity purposes or one, classified as a federal actor for immunity purposes, whose duties would not be considered prosecutorial or adjudicative.
. Such a termination is not subject to judicial review. See 42 U.S.C. § 1320c-2(f).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
ROSENN, Circuit Judge.
These appeals present questions concerning the due process rights of students in the public schools who are temporarily removed and transferred because of behavioral problems from their regularly assigned school to another school designed to meet the needs of such students. This is the second occasion for us to consider issues arising from a dispute over disciplinary procedures to be used in the public schools in the City of Erie, Pennsylvania. Because the details of the protracted litigation in this case are set out at length in our earlier opinion, Jordan v. School District of City of Erie, Pa., 548 F.2d 117 (3d Cir. 1977), it will suffice here to relate merely the heart of the matter.
In early 1973, plaintiffs commenced this action on their own behalf and on behalf of similarly situated students in the. Erie School District against the Board of Education of the City of Erie (“the Board”) and the Erie Education Association (“the Association”), an organization of school teachers in the Erie School District. In essence, plaintiffs alleged that the school district’s disciplinary procedures, involving the transfer of students from their regularly assigned schools to the New Directions Center, a facility designed especially to meet the needs of disruptive students, deprived students of their due process rights under the fourteenth amendment. After considerable pre-trial maneuvers, the parties (including the Commonwealth of Pennsylvania as intervenor-plaintiff) succeeded in negotiating a consent decree, approved by the district court on February 5, 1974. Briefly, the consent decree provided for notice of the proposed disciplinary action to the student and his parents, and for informal and formal hearings concerning the decision to transfer.
Over a year later, in April 1975, plaintiffs and the Commonwealth, alleging numerous violations of the consent decree, filed a joint Motion for Contempt against the Board and the Association. In July 1975 the Association similarly moved the court to impose sanctions on the School Board. After consideration of the motions, the district court found the Board in contempt for failure to comply with the consent decree.
In December 1975, the district court held hearings, in response to a motion by the Board, to modify the consent decree in light of the Supreme Court’s then recent decision in Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975). The district court ruled that it had no power to unilaterally modify the consent decree, but would vacate it unless the parties would agree to a modification. The parties failed to reach an agreement, and the court’s order vacating the consent decree was appealed to this court in Jordan v. School District of City of Erie, Pa., supra. We reversed, concluding that a district court has the power to modify a decree “if a change in the law alters the operative conditions affected by the decree.” 548 F.2d at 122. Therefore, we directed the district court to “effect such modification of the consent decree, if any” as required by Goss v. Lopez. Id.
Upon remand, the district court requested further argument concerning modification of the consent decree, and directed the parties to submit proposed modifications. At a hearing held on April 7, 1977, the class action plaintiffs and the Commonwealth argued in favor of modification, suggesting the addition of the following three paragraphs:
32. Notwithstanding anything to the contrary contained herein, no student shall be removed from class for disciplinary reasons until after notice of proposed action and basis therefor and opportunity to explain his version of the occurrence or occurrences at the informal meeting with the building principal as provided in paragraphs 2 and 3 or if in the judgment of the classroom teacher and the principal a student’s presence poses a continuing danger to persons or property or an ongoing threat of disrupting the academic process, the student may be immediately removed from the class or from the school. In such cases, the procedures for notice and informal meeting with the principal shall be immediately implemented so that the informal meeting with the principal shall be held no later than three school days following the alleged occurrence forming the basis for the procedures.
33. Notwithstanding anything to the contrary herein, students who are recommended to be transferred out of the New Directions Center by the Principal of the New Directions Center shall be placed in his or her regular school without the necessity of further hearings provided the student has attended at least six weeks at the New Directions Center and the principal of the New Directions Center or a staff member designated by him has discussed the student’s problems with the teacher and disciplinary committee at the time of his return to his regular school stating the reasons for the action.
34. When a student who has attended the New Directions Center for at least six weeks desires to be transferred out of the New Directions Center contrary to the wishes of the principal of the New Directions Center, the procedure outlined herein for Hearing I and Hearing II shall apply and be put into immediate effect upon receipt of written notice from the student or his or her representative. Under no circumstances shall a student be forced to attend the New Directions Center for a consecutive period longer than one full year.
The district court entered a final order on June 22,1977, modifying the decree by adding paragraph 32, as suggested by plaintiffs, but excluding their suggested paragraphs 33 and 34.
The Association appeals contending that the consent decree as originally approved need not have been modified in light of Goss v. Lopez. Plaintiffs and the Commonwealth argue in favor of including paragraph 32, and cross-appeal the district court’s exclusion of paragraphs 33 and 34.
We reverse in part and affirm in part.
The threshold question before us is whether the principles of Goss v. Lopez require any modification of the consent decree, as originally drafted. To answer that question, we will first examine the language of Goss, and then we will analyze the provisions of the consent decree to determine the scope of Goss’s applicability, and to measure the extent of the rights provided against the Goss yardstick.
Goss v. Lopez involved an Ohio statute which empowered the principals of Ohio public schools to suspend a student for misconduct for up to ten days, provided that notice is given the student’s parents within 24 hours, stating the reasons for the action. Plaintiffs, nine public high school students who had been suspended pursuant to this statute, brought a class action against the Columbus, Ohio, Board of Education, seeking, inter alia, a declaration that the Ohio statute permitting such suspensions was unconstitutional because it empowered school officials to deprive students of their right to an education without a hearing in violation of the due process guarantees of the fourteenth amendment. A three-judge federal court held that plaintiffs were denied due process of law because they were suspended without a hearing either prior to suspension or reasonably soon thereafter.
The Supreme Court affirmed, concluding that students faced with suspension from a public school have property and liberty interests that qualify for protection under the fourteenth amendment. The Court reasoned that although “Ohio may not be constitutionally obligated to establish and maintain a public school system,” Ohio’s statutorial grant to students of the right to a public education created a property interest in that education which could not be withdrawn without adherence to minimum standards of due process. 419 U.S. at 573-74, 95 S.Ct. at 736. Furthermore, the Court noted that the possible damage to a student’s reputation that could flow from suspension based on charges of misconduct, e. g., interfering with later educational and employment opportunities, implicated fourteenth amendment protection of liberty interests: “It is apparent that the claimed right of the State to determine unilaterally and without process whether misconduct has occurred immediately collides with the requirements of the Constitution.” 419 U.S. at 575, 95 S.Ct. at 736. Finally, the Court held that neither the property interest in education temporarily denied nor the liberty interest in reputation were so de minimis as not to merit constitutional protection, reasoning, “the total exclusion from the educational process for more than a trivial period, and certainly if the suspension is for 10 days, is a serious event in the life of the suspended child.” 419 U.S. at 576, 95 S.Ct. at 737.
In prescribing just how much process a student facing suspension is due, the Court held that, “the student [must] be given oral or written notice of the charges against him and, if he denies them, an explanation of the evidence the authorities have and an opportunity to present his side of the story.” 419 U.S. at 581, 95 S.Ct. at 740. The Court found no need to require a formal hearing, determining that “an informal give-and-take between student and disciplinarian” id. at 584, 95 S.Ct. at 741, would be sufficient to guard against unjustified disciplinary action. As for the timing of the rudimentary hearing, the Court indicated that, ordinarily, hearings should precede a student’s removal from school. The Court recognized, however, that:
there are recurring situations in which prior notice and hearing cannot be insisted upon. Students whose presence poses a continuing danger to persons or property or an ongoing threat of disrupting the academic process may be immediately removed from school. In such cases, the necessary notice and rudimentary hearing should follow as soon as practicable . . .
Id. at 582, 95 S.Ct. at 740.
Under Article V(H) of the Master Contract, entered into between the School District and the Association, “the principal responsibility for maintaining discipline remains with the teacher.” The same contractual provision empowers teachers to remove disruptive students from the regular classroom or school when, “in the professional judgment of the teacher, normal corrective measures have been ineffective in bringing about satisfactory improvement.” In order to provide due process for students transferred out of the school for disciplinary reasons, the parties developed procedures which were ultimately embodied in the consent decree.
Under the original consent decree, transfers for disciplinary purposes may be accomplished only after prior notice and hearing, except in special situations when students are disruptive and, in the professional judgment of the teacher, normal corrective measures are ineffective. In the event a student is removed from a required class, the consent decree provides that, if there is no similar required class within the school building, the removal should be deemed a recommendation for transfer and thereupon the procedures provided in the consent decree shall apply, including notice, the right to an informal meeting, and formal hearings. See appendix, infra, introductory paragraph.
The district court held that the failure of the consent decree to provide specifically for notice and an opportunity for explanation prior to removal from class for disciplinary reasons or for notice and. a rudimentary hearing to follow as soon as practicable for students “whose continuing presence poses continuing danger to persons or property or threatens disruption of the school process” rendered the decree deficient under Goss v. Lopez. It therefore directed that paragraph 32 be added to the consent decree.
Paragraph 32 requires that before a teacher can remove a student from class, notice, an explanation of the basis for the removal and an opportunity for the student to offer his version at an informal meeting with the building principal must be given. Only if, in the judgment of both the classroom teacher and the principal, the student’s presence proves a continuing danger to persons or property or an ongoing threat of disrupting the academic process, may he be immediately removed from the class or school with the hearing to follow within three days. Thus, the effect of paragraph 32 is to neutralize the ability of a teacher acting alone to remove a disruptive student or one who poses a continuing danger to persons or property unless he or she first gives notice and the opportunity for an informal hearing.
The maintenance of “order and reasonable decorum in school buildings and classrooms is a major educational problem, and one which has increased significantly in magnitude in recent years,” (footnote omitted). Goss v. Lopez, Id. at 591-92, 95 S.Ct. at 745 (Powell, J. dissenting). The educational training, character-shaping of students and the maintenance of discipline in the classroom depends largely upon the capabilities and talents of the teacher. And the preservation of order in the classroom may depend upon the teacher’s ability to cope promptly with a student disciplinary problem. “Events calling for discipline are frequent occurrences and sometimes require immediate, effective action.” Goss v. Lopez, Id. at 580, 95 S.Ct. at 739. The Association vigorously contends that the modification effectively removes the teacher from any determination of classroom discipline and destroys any right of the teacher to control the classroom and that the original consent decree adequately complies with Goss v. Lopez. The plaintiffs and the Commonwealth, on the other hand, contend that Goss requires the modification (para. 32) of the decree to allow for an immediate rudimentary hearing and for the principal to play the primary role in the process. As a federal court, our concern is only with the constitutionally protected rights of the parties, not with the operational and educational problems besetting complex public school systems in modern times.
The consent decree meets or exceeds in most respects due process rules enunciated by Goss. When a student faces removal from his regularly assigned classroom, and the consequential recommendation for transfer, the consent decree requires the principal to give written notice to both the student and his parents — in person or by certified mail — detailing the reasons for the proposed transfer. See appendix, infra, par. 1 — 4. Furthermore, the provisions of the consent decree provide for an informal meeting between the student, his parents, and the principal before the transfer, as well as two formal hearings at which evidence may be presented and witnesses examined. See appendix, infra, par. 3 — 17. In fact, a number of the provisions of the consent decree go far beyond the rudimentary precautions required by Goss. See appendix, par. 6, 8-19, 24. Although there is no provision in the consent decree for notice or a hearing before a disruptive or dangerous student is physically removed from class, Goss indicated none is required as long as such removal is followed by appropriate notice and hearings,. as is the case here. See appendix infra introduction.
Although the parties to this proceeding appear to be concerned only with removal of disruptive students from a required class, it is possible under the language of the consent decree for a school disciplinarian to remove for disciplinary reasons a non-disruptive student or one whose presence does not pose a continuing danger to persons or property. In such circumstances, remote as they may be, the consent decree does not provide for notice, explanation of the basis for removal, and an opportunity for the student to offer his version of the incident triggering the disciplinary action prior to removal. We therefore direct the district court to add the following language as paragraph 32 to the consent decree:
32. Notwithstanding anything to the contrary contained herein, a student whose presence poses no continuing danger to persons or property or an ongoing threat of disrupting the academic process shall not be removed from class for disciplinary reasons until after notice of proposed action and basis therefor and opportunity to explain his version of the occurrence or occurrences at the informal meeting with the building principal as provided in paragraphs 2 and 3.
We conclude that the consent decree as thus amended conforms to the due process requirements of Goss, and we are satisfied that the students subject to its disciplinary procedures will receive sufficient due process protection. Inasmuch as paragraphs 33 and 34 are only concerned with retransfers from the special facility to the student’s regular classroom, Goss does not extend to these provisions. Because we hold that paragraphs 33 and 34 are not mandated by Goss v. Lopez, and because they involve essentially internal matters of school policy upon which a federal court should hesitate to pass judgment, we need not address their merits.
We will modify the order of the district court directing the addition of paragraph 32 as stated by it to the consent decree, and we will affirm the order of the district court excluding paragraphs 33 and 34. Each party will bear his or its own costs in case No. 77-2138. Costs in cross-appeal No. 77-2137 will be taxed in favor of Erie Educational Association, appellee.
APPENDIX
CONSENT DECREE
And Now, this 5th day of February, 1974, subject to the approval and Order of the Court, it is agreed by the parties hereto that:
Whenever it is recommended that a student be transferred from his/her regularly assigned school building to another school building for disciplinary reasons as provided in Article V. [sic] Section H of the 1972-74 Master Contract between the Board of Education of the City of Erie and the Erie Education Association, ... or whenever a student is removed from a required class and there is no similar required class within that building this shall be deemed to be a recommendation for transfer as provided herein. This shall be done in accordance with the following procedures:
1. Notice of the proposed action shall be given in writing to the parent or guardian and student either (a) at a consultation or conference with the parent or guardian or (b) by certified mail to the parent or guardian (addressee only, return receipt requested).
2. The notice, signed by the building principal, and forwarded within three (3) school days, shall describe the proposed action in detail, including a clear and full statement of the reasons upon which such transfer is proposed and the proposed new assignment.
3. The notice shall inform the parent or guardian and student of his/her right to an informal meeting with the building principal and other professional staff. At such informal meeting the building principal shall furnish a copy of the procedures set forth herein and the principal shall verbally explain to the parent or guardian and student their due process rights described therein.
4. The notice shall inform the parent or guardian and student of his/her right to contest the proposed transfer at Hearings (described below) before the proposed transfer takes place.
5. If the notice of the proposed action is given to the parent or guardian at a consultation with the parent or guardian and student, the parent or guardian and student may, within five (5) calendar days of the consultation or conference request a hearing by so indicating in writing to the School District.
If notice of the proposed action is given by certified mail, the parent or guardian and student must fill in the form requesting a hearing and return the same to the School District within five (5) days of receipt of the notice.
6. The parent or guardian and student have a right to a hearing (Hearing I) before an At-Large Committee composed of one administrator and two employees of the School District selected by the Erie Education Association. None of the members of this At-Large Committee shall be from the student’s school building. The members of the At-Large Committee shall serve on a rotating basis. The list of administrators who shall serve on the At-Large Committee shall be provided by the School District. The list of employees of the School District who shall serve on the At-Large Committee shall be provided by the Erie Education Association.
7. Hearing I shall be scheduled not sooner than three (3) days and not later than ten (10) school days from the receipt of the request for a hearing from the parent or guardian and student.
8. All parties or their representatives have a right at Hearing I to present their own evidence including witnesses and to confront and examine any School District official, employee, or agent or any other person giving information relevant to the student’s case at the At-Large Committee. Before Hearing I takes place, the parent or guardian shall have the right to examine the student’s school records, any tests or reports upon which said transfer is proposed and the names of any School District official, employee, or agent or any other person who will give relevant information to the At-Large Committee at Hearing I.
9. No later than five (5) school days after Hearing I, the At-Large Committee, by majority vote, shall render a decision in writing which shall be accompanied by written findings of fact upon which the decision is based. This decision binding on all parties, and a notice of right to appeal shall be sent by certified mail to the parent or guardian and student. In the event the At-Large Committee decides that a transfer is not warranted, the student shall be returned to his regularly scheduled classes within the building.
10. The notice of the right to appeal the decision of Hearing I shall inform the parent or guardian and student of his/her right to be represented at Hearing II by any person of his/her choosing, including legal counsel, of his/her right to examine before the hearing the student’s school records, any tests or reports upon which the proposed transfer may be based, of his/her right to present evidence and witnesses of his/her own, including expert medical, psychological and educational testimony of his/her rights to confront and cross-examine any School District official, employee, or agent or any other person giving information relevant to the student’s case to the hearing examiner.
11. The notice of the right to appeal the decision of Hearing I shall also inform the parent or guardian and student of the availability of various organizations, such as Erie County Legal Services, to assist them in connection with Hearing II and provide the address and telephone number of such organizations in the notice.
12. Hearing II shall be a de novo hearing.
13. The impartial hearing examiner at Hearing II shall be a representative of either the Bureau of Mediation or the American Arbitration Association. Such hearing examiner shall be paid by the School District. The hearing examiner shall be selected from a list of five (5) members, the School District striking one name and the parent or guardian and student or his/her representative striking the next, and continuing in like manner until one name remains.
14. Hearing II shall be scheduled not sooner than five (5) days and not later than ten (10) days after the decision of Hearing I is mailed to the parent or guardian and student.
15. Before Hearing II, all parties or their representatives shall have the right to examine the student’s school records, any tests or reports upon which said transfer is proposed and the names of any School District official, employee, or agent or any other person who will give relevant information to the impartial hearing examiner.
16. All parties or their representative shall, at Hearing II, have the right to corn-pel the attendance of and to question any person who has given any information to the School District relevant to the proposed transfer for disciplinary reasons.
17. All parties or their representative, shall, at Hearing II have the right to present evidence and testimony, including expert medical, psychological, or educational testimony.
18. No later than five (5) days after Hearing II, the hearing examiner shall render a decision in writing which shall be accompanied by written findings of fact upon which the decision is based and which shall be sent by registered mail to the parent or guardian and student, the School District and the Erie Education Association or their respective representative.
19. If the decision of the At-Large Committee in Hearing I is that the student is to be transferred, and the student exercises his/her right to appeal to Hearing II, then the student shall be transferred until the hearing examiner at Hearing II renders a final decision.
******
24. A stenographic, transcribed, or taped record of both Hearing I and Hearing II shall be made and shall be available to the parent or guardian and student or his/her representative. Said record must be retained intact by the School District for a period of not less than three (3) years.
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. The pertinent provisions of the consent decree are set forth in the appendix attached hereto.
. The parties and the district court agree that the consent decree does not deal with suspensions and expulsions. The answer of the School District to the complaint specifically denies that the procedure set forth in Article V(H) is applicable to suspension or expulsion of students. At the argument on the proposed modification of the consent decree, counsel for the school district, John W. Beatty, responded to Judge Knox’s interrogation as to the scope of the consent decree:
THE COURT: Let me ask you this there is nothing in this decree that gives the School Board the power to expel a student?
MR. BEATTY: No, I don’t see it covering that area.
THE COURT: The Principal can suspend for ten days, is that right?
MR. BEATTY: Yes, sir, I don’t see that that is involved with their whole litigation.
MR. BEATTY: . . . [M]any school students who are disciplinary problems are expelled in a due process hearing but here we have quite an extensive operation in which we try to give them special care. .
****:+:*
THE COURT: Counsel for the Commonwealth, do you concur in Mr. Beatty’s position?
MR. HOLLORAN: Yes, I have a couple of points I would like to mention. I think what Mr. Beatty says is adequate
Mr. Levin, Attorney for the Association, also expressed the view that “[w]e are not talking in terms of suspension, we are talking in terms of a transfer.”
In its memorandum of December 31, 1975, vacating the consent decree, the district court also recognized that the consent decree was not dealing with the suspension or expulsion as such “but with disciplinary transfers.”
. Under the consent decree, if a disruptive or dangerous student is physically removed from a required class before notice and informal meeting with him and there is no similar required class within that school building, his removal “shall be deemed a recommendation for transfer” to a special education center designed by the Erie School System to aid disruptive students in handling their behavioral and learning problems. The student thereupon becomes entitled to written notice within three school days signed by the principal with detailed reasons for the action and it shall notify the student of his right to an informal meeting with the building principal and the other due process procedures structured in the consent decree for transfer candidates. The temporary removal from the classroom of a disruptive or dangerous student pending his exercise of the due process procedures provided in the consent decree for his protection is merely a part of the pretransfer process from one learning environment to another.
. The School Board contends, as an alternative ground for modification, that the disciplinary actions involved here must be taken by the principal, superintendent or the school board, as required by Pennsylvania law, Pa.Stat.Ann. tit. 24, § 13-1318. That statute reads as follows:
Every principal or teacher in charge of a public school may temporarily suspend any pupil on account of disobedience or misconduct, and any principal or teacher suspending any pupil shall promptly notify the district superintendent, supervising principal, or secretary of the board of school directors. The board may, after a proper hearing, suspend such child for such time as it may determine, or may permanently expel him. Such hearings, suspension, or expulsion may be delegated to a duly authorized committee of the board.
We agree with the district court that par. 2 and 3 of the consent decree, see appendix, infra, do provide for action by the principal. Furthermore, this statute does not appear to apply in this case, as its language is framed in terms of suspension and expulsion, not a disciplinary in-system transfer.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KING, Circuit Judge:
Evalynn Jordan Hester, Individually and as Executrix of the Estate of Bayless Milton Hester, III (collectively, the “Debtors”), appealed to this court the order (the “Order Denying Stay”) of the district court entered on March 27, 1990, denying the Debtors’ motion for stay of a bankruptcy court order pending appeal. The order that the Debtors are appealing to the district court is styled “Order for Disgorgement of Funds and for Appointment of Chapter 11 Trustee” (the “Disgorgement Order”) and was entered by the bankruptcy court on February 12, 1990. Presently pending before this panel is a motion by the Debtors for stay of the Disgorgement Order pending its appeal to the district court.
I. Facts and Procedural Background.
The Debtors’ bankruptcy case has been pending for more than two years in the Wichita Falls Division of the Northern District of Texas. The bankruptcy case was filed by Bayless Manning Hester, III and Evalynn Jordan Hester, his wife. During the pendency of the case, Mr. Hester died. The case was filed under Chapter 11 of the Bankruptcy Code, and the Debtors continued in possession to conduct their family-owned and operated business, which consists of the production of oil and gas. The Debtors filed in 1987 and ever since have pursued what appears to be a lender liability action against the predecessor in interest of NCNB Texas National Bank (the “Bank”), the Federal Deposit Insurance Corporation, and Joseph N. Prothro, individually, in the District Court for the Northern District of Texas. The Bank is a secured creditor of the Debtors with a claim in excess of four million dollars. Substantially all of the Debtors’ income-producing oil and gas properties are pledged to the Bank. The Debtors’ Chapter 11 case appears to have moved along. Two plans of reorganization and related disclosure statements have been filed, one by the Debtors and one by the Bank.
The Bank’s Amended Motion for Disgorgement of Unauthorized Payments (the “Disgorgement Motion”) was filed in the bankruptcy court on January 4, 1990. It alleged that the Debtors had transferred to James Craig Dodd (“Dodd”), a lawyer, during October and November of 1989, a total of approximately $30,000. The Disgorgement Motion recognizes that the transfers were reflected in the Debtors’ operating reports for those months. The Disgorgement Motion alleges that the transfers were improper because they were not preceded by a fee application as required by the Bankruptcy Code. The Disgorgement Motion further alleges that the Debtors’ request to employ Dodd in the case had been disallowed by the bankruptcy court. Finally, the Disgorgement Motion alleges that the funds used to pay Dodd, in all likelihood, constitute cash collateral of the Bank that cannot be distributed to pay administrative claims absent compliance with the Bankruptcy Code. Respecting the cash collateral problem, the motion states:
Therefore, the payment to Mr. Dodd constitute [sic] other abuses of the cash collateral of NCNB Texas in violation of 11 U.S.C. § 363. Other abuses are outlined in the Motion to Restrict Debtor’s Use of Cash Collateral [the Cash Collateral Motion referred to infra ] and other relief filed by NCNB Texas. The repeated violations of the requirements and protections of the Bankruptcy Code clearly constitute cause for the appointment of a Trustee pursuant to 11 U.S.C. § 1104.
Insofar as relief is concerned, the Disgorgement Motion asks the following: first, that Dodd be required to refund all post-petition payments that he received from the Debtors; second, that Dodd be required to show cause why he should not be held in contempt of court for his participation in the unauthorized transfers; third, that the Bank be authorized to prosecute any litigation against Dodd that may be required to return the funds to the estate; and fourth, for such other and further relief to which the Bank may show itself justly entitled. Conspicuously absent from the Disgorgement Motion is a specific request for the appointment of a trustee for the Debtors’ estate.
The Debtors’ answer admits the factual allegations of the Disgorgement Motion regarding the payments to Dodd and the lack of authorization thereof and claims that the amounts transferred were expenses incurred by Dodd in representing the estate in its lender liability suit against the Bank. The answer asserts that the payments were made inadvertently and emphasizes that they were disclosed in the Debtors’ operating reports. Finally, the answer denies that cause exists to appoint a trustee.
At the hearing held on February 1, 1990, on the Disgorgement Motion, counsel for the Bank began by stating simply that the Disgorgement Motion asks for disgorgement of payments to Dodd. Mrs. Hester testified that she had made the payments to Dodd in reimbursement of his expenses in connection with the Debtors’ suit against the Bank and that she had not understood that the Debtors had to get permission from the bankruptcy court before it could reimburse those expenses. She testified that she now understood that and that no further payments would be made without the requisite approval. Testimony from two other witnesses, daughters of the Debtors who performed bookkeeping functions for the Debtors, addressed payments made by the Debtors to Dodd and to other professionals (an engineer and a geologist) in connection with the Debtors’ oil and gas operations. At the conclusion of the testimony, the court ordered disgorgement of approximately $36,000 from Dodd.
The court went on to state that the Disgorgement Motion “requests] appointment of a Trustee under Section 1104 of the Bankruptcy Code” and ordered the United States Trustee to name a trustee immediately. Somewhat later, the court stated that “[t]here has been every indication there’s been use of unauthorized cash collateral and all three people said they had no idea what that means.” Counsel for the Debtors objected to the appointment of a trustee on the ground that it would seriously injure the Debtors and on the further ground that none of the usual reasons for appointing a trustee, other than the payment of approximately $36,000 in expenses to Dodd, had been heard. The court responded as follows:
[Ejverytime we come to Wichita Falls, we have three to four hours of extremely complicated hearings where alleged mis-dealings and misappropriations out of the estate funds are made....
I’ve got to have somebody that I can look to tell me, A, B, C, tell me what’s being done, what's not being done, what's proper, what’s not proper in this case.
Otherwise, we’re going to have to add another day a month to come up here just to have Hester hearings, and I’m not going to do that.
During oral argument with a member of this panel, counsel for the Debtors and the Bank advised that the next item on the bankruptcy court’s docket on February 1, 1990, was a motion (the “Cash Collateral Motion”) filed by the Bank in November 1989 alleging that the Debtors had violated the terms of a cash collateral order entered by the bankruptcy court in August 1988 by making unauthorized payments to administrative priority claimants and to attorneys and other professionals without seeking prior court approval. Included in the alleged improper payments are several to the Debtors’ bankruptcy counsel. The Cash Collateral Motion asks the court to segregate the Bank’s collateral and to prohibit the Debtors from using the collateral without the Bank’s specific prior authorization. The Cash Collateral Motion also asks for an accounting by the Debtors of their use of cash collateral, for the return of any unauthorized payments and, last of all, for the appointment of a trustee. This court was advised that the Debtors and the Bank were prepared to go forward on the Cash Collateral Motion and to present evidence, pro and con, on the matters covered by it and the various types of relief sought, including the appointment of a trustee. Needless to say, the hearing on the Cash Collateral Motion was aborted when the bankruptcy court appointed a trustee following the hearing on the Disgorgement Motion.
The trustee was appointed shortly after the entry of the Disgorgement Order and approximately 45 days before the Debtors’ suit against the Bank was set for trial. A motion to the bankruptcy court for a stay of the Disgorgement Order was denied.
The Debtors turned then to the district court, filing a motion for a stay pending appeal of the Disgorgement Order. The motion began by noting that under section 1104 of the Bankruptcy Code, a trustee may be appointed in a Chapter 11 case only on motion of a party in interest or the United States Trustee and only after notice and hearing and only “for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, ... or similar cause,” 11 U.S.C. § 1104(a)(1), or “if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate,” 11 U.S.C. § 1104(a)(2). The motion alleges that the appointment of a trustee was made in the Disgorgement Order without a motion, without notice or a hearing, and without a showing of “cause” or that it was in the best interest of creditors or the estate. The motion went on to point out that, as might have been predicted for a number of reasons, including the imminence of the trial setting in the Debtors’ suit against the Bank, the trustee so appointed had promptly entered into a compromise and settlement of the Debtors’ suit against the Bank which involved the disposition of the major assets of the Debtors’ estate. The motion alleged that the trustee and the Bank did not propose to comply with the Bankruptcy Code vis-a-vis the compromise in that the compromise had the effect of foreordaining the terms of a plan of reorganization without compliance with those sections in Chapter 11 of the Bankruptcy Code relating to the preparation of a plan and disclosure statement and the submission of the same to a vote of affected creditors and equity owners. See In re Braniff Airways, 700 F.2d 935 (5th Cir.1983).
In the Order Denying Stay, the district court denied a stay of the Disgorgement Order. The court held that the notice of the possible appointment of a trustee given to the Debtors, specifically the sentence in the Disgorgement Motion alleging that cause existed for the appointment of a trustee and the request for other and further relief, satisfied constitutional due process requirements. On the subject of the appointment of a trustee, the court held that the appointment and the trustee’s actions are reviewable upon appeal, and that the Debtors’ allegation of lack of good cause, even if true, was therefore not sufficient to show a substantial threat of irreparable injury.
II. Jurisdiction.
We begin by noting that we lack jurisdiction over an appeal from the Order Denying Stay. The court of appeals exercises jurisdiction of “appeals from all final decisions, judgments, orders, and decrees” of the district courts in bankruptcy matters. 28 U.S.C. § 158(d). Because the Order Denying Stay was not a final order, we lack jurisdiction of the appeal. See National Bank of Commerce v. Barrier (In re Barrier), 776 F.2d 1298 (5th Cir.1985). Additionally, we cannot review the Order Denying Stay pursuant to 28 U.S.C. § 1292, governing interlocutory appeals, because the bankruptcy appellate scheme embedded in 28 U.S.C. § 158 clearly supersedes 28 U.S.C. § 1291, and, by inference, also supersedes section 1292. See Barrier, 776 F.2d at 1299.
Under this court’s decision in Barrier, mandamus is the only remedy available to the Debtors seeking relief from the Order Denying Stay. Our decision in In re First South Savings Association, 820 F.2d 700, 707 (5th Cir.1987), sets forth the standard that we apply in considering applications for mandamus: “[wjhen a matter is entrusted to the discretion of the district court, mandamus will not issue absent a clear abuse of discretion amounting to a judicial usurpation of power.” Treating the Debtors’ notice of appeal and motion for stay of the Disgorgement Order as an application for a writ of mandamus directing the district court to enter a stay of the Disgorgement Order, we deny the application. Cf. Ramirez v. Rivera-Dueno, 861 F.2d 328, 334 (1st Cir.1988) (“While the district court’s order is, therefore, not ap-pealable, we exercise our discretion to treat defendants’ appeal as a petition for mandamus under the All Writs Act.”), cert. denied, sub nom. Quinones v. Lema-Moya, — U.S. -, 110 S.Ct. 73, 107 L.Ed.2d 40 (1989); In re Allen, 896 F.2d 416 (9th Cir. 1990) (“We may construe an appeal [from a nonfinal or appealable bankruptcy court order] as a petition for a writ of mandamus.”) For the reasons hereinafter set forth, we do not believe that it can be said that the district court engaged in a usurpation of judicial power in denying a stay of that order. In so holding, however, we note that certain procedural aspects of the Debtors’ bankruptcy case cause us serious concern. We have already identified some, and we will address others briefly for whatever help that may provide to the district court in considering the appeal of the Disgorgement Order and the possible appeal of the order relating to the compromise of the Debtors’ suit against the Bank.
III. Mandamus.
We turn now to the question whether the district court in entering the Order Denying Stay, a matter entrusted to its discretion, so clearly abused its discretion as to amount to a judicial usurpation of power. The Debtors point to three factors militating in favor of an affirmative answer to that question. First, they argue to us, as they did to the district court, that the appointment of the trustee was made without a motion, without a hearing and without proper notice. Clearly, a strong case can be made for the Debtors’ position. A comparison of the Disgorgement Motion with the Cash Collateral Motion following it on the docket, which specifically asked, inter alia, for the appointment of a trustee, supports the Debtors’ argument. Furthermore, at the hearing on the Disgorgement Motion, there is no indication that the bankruptcy court considered whether the level of mismanagement shown by the transfers to Dodd and others, when viewed in the context of the Debtors’ overall management of the estate, was sufficient to warrant the expense, the major disruption and the change in direction of the case that would in all likelihood result from the appointment of a trustee. There is no indication that lesser remedies, such as those requested in the Cash Collateral Motion, were considered and rejected as inadequate.
The Debtors next argue that the appointment of a trustee was made without a showing of cause or that the best interest of the parties was thereby served, all as contemplated by section 1104(a) of the Bankruptcy Code. This argument is intertwined with the argument on the adequacy of the hearing. The Debtors recognize what they admitted at the hearing, i.e., that improper transfers had been shown. But whether such transactions amount to cause per se for the appointment of a trustee is a separate question. The opinion of the Court of Appeals for the Fourth Circuit in Committee of Dalkon Shield Claimants v. A.H. Robins Co., Inc., 828 F.2d 239 (4th Cir.1987), is instructive on this point. In Robins, there was ample evidence of the payment by the debtor of pre-petition claims without court approval or knowledge. The district court, however, refused to appoint a trustee under section 1104(a), choosing instead certain lesser remedies. The Fourth Circuit noted that the district court had made the correct inquiry:
The [district] court noted that a trustee is needed where fraud or mismanagement arise but stated that it did not find such problems in this case. Moreover, the court said:
As stated in In Re General Oil Distributors, Inc., 42 B.R. 402 (Bankr. 1984) [sic], although the word “shall” in Section 1104(a) circumscribes the Court’s discretion, the concepts of incompetence, dishonesty, gross mismanagement and even fraud all cover a wide spectrum of conduct. While under 1104(a)(1) the Court is not directly called upon to weigh the cost and benefits of appointing a trustee, it nevertheless cannot ignore competing benefit and harm that such appointment may place upon the estate. Coupled with those concerns is the overriding philosophy of Chapter 11, which is to give the debtor a second chance. Consistent with such a philosophy is this court’s finding that current management should be permitted to identify and correct its past mistakes.
The court stated that it found the present management capable and amenable to a fair and expeditious plan to compensate claimants. The court further stated that the appointment of a trustee was neither “necessary [n]or desirable” and might “impede” present reorganization efforts.
Id. at 240-41.
The Fourth Circuit, like the district court, recognized that Robins’ conduct was improper and warranted a civil contempt sanction. It stated:
But a policy of flexibility pervades the bankruptcy code with the ultimate aim of protecting creditors. A determination of cause, therefore, is within the discretion of the court and due consideration must be given to the various interests involved in the bankruptcy proceeding. “[T]he concepts of incompetence, dishonest, gross mismanagement and even fraud all cover a wide range of conduct. Implicit in a finding of incompetence, dishonest, etc., for purposes of section 1104(a)(1), is whether the conduct shown rises to a level sufficient to warrant the appointment of a trustee.” General Oil, 42 B.R. at 409. Obviously, to require the appointment of a trustee, regardless of the consequences, in the event of an act of dishonesty by the debtor, however slight or immaterial, could frustrate the purpose of the Bankruptcy Act. Section 1104(a)(1), therefore, must be construed, if possible, to make it harmonious with the Act in its entirety. Such a construction requires that the courts be given discretionary authority to determine whether conduct rises to the level of “cause.”
Id. at 242. The Fourth Circuit concluded that the district court did not err in declining to find cause or abuse its discretion in refusing to appoint a trustee.
In this case, as in Robins, the transfers made by the Debtors could, but need not necessarily, amount to “cause.” What was required was a determination by the bankruptcy court whether the incompetence and mismanagement evidenced by the transfers, in the context of the management and direction of the entire case, rose to a level sufficient to warrant the appointment of a trustee. Involved in that determination is a consideration whether lesser remedies would have sufficed. Arguably, the bankruptcy court considered all these factors in reaching its decision to appoint a trustee, but the record contains little indication of a broad-gauged evaluation.
Finally, the Debtors argue that irreparable injury will result if the appointment of the trustee is not stayed. They are particularly disturbed by the compromise of their suit against the Bank which took shape with remarkable speed and was approved by the bankruptcy court following extremely abbreviated notice. See note 3 supra. The district court noted that the actions of the trustee (including the compromise) are appealable, and a few unquestionably are. But many are not, and the overall sea-change in the case resulting from the appointment of a trustee may never be remedied — even if the appointment of the trustee is ultimately reversed on appeal.
In summary, the district court may have been wrong in deciding not to stay the appointment of the trustee. To put it somewhat differently, had we been in the district court’s place, we might have exercised the discretion vested in that court differently than the district court exercised it. But mandamus is not a means of correcting the district court’s unappealable orders, assuming arguendo that correction is needed. Ramirez v. Rivera-Dueno, 861 F.2d at 334 (“[W]e do not readily utilize the writ of mandamus as a means of correcting a district court’s unappealable orders.”); Powers v. Chicago Transit Auth. 846 F.2d 1139, 1143 (7th Cir.1988). Mandamus is, instead, “an extraordinary remedy, to be reserved for extraordinary situations.” Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 108 S.Ct. 1133, 1143, 99 L.Ed.2d 296 (1988); see generally In re United States Dept. of Defense, 848 F.2d 232 (D.C.Cir.1988). If the district court erred here, we cannot say that it amounted to a judicial usurpation of power.
Although we are concerned with what may be several instances of arbitrary action by the bankruptcy court, we note that as an appellate court, two levels removed from the events described in this opinion, we are in no position to assess the merits of the bankruptcy court’s decisions. We neither express, nor intimate, any views whatsoever on the merits. The bankruptcy court functions as an adjunct of the district court and, indeed, the constitutionality of the bankruptcy court’s jurisdiction rests on that fact and on the careful supervision that the district court is bound to provide over the bankruptcy court. It is to the district court that bankruptcy court litigants must turn in the first instance for careful review of the bankruptcy court’s actions.
IV. Conclusion.
Treating the Debtors’ notice of appeal and motion for stay of the Disgorgement Order as an application for a writ of mandamus, it is denied.
Temporary stay VACATED; petition for mandamus DENIED.
. The circumstances surrounding Dodd’s appointment as counsel for the Debtors in their suit against the Bank and the bankruptcy court's decision to vacate that appointment are, to say the least, another curious aspect of this case. The parties report that in 1987, after the Debtors’ bankruptcy case was filed, the bankruptcy court apparently signed an order authorizing Dodd to represent the Debtors in their suit against the Bank. For some unknown reason, that order was never entered on the bankruptcy court’s docket. However, Dodd proceeded to prepare the case for trial, spending (according to bankruptcy counsel for the Debtors) several hundred hours on that project. In November 1989, the Bank alleged, whether by motion or ore terms is unclear, that Dodd had a conflict of interest in that he had represented the Debtors’ daughters when their depositions were taken. No hearing was held on the Bank's allegations. Instead, the bankruptcy court, when presented with the Bank’s allegations and told that its order appointing Dodd had never been entered, simply vacated the order of appointment, leaving the Debtors without representation in their suit against the Bank. See 11 U.S.C. § 327(e). The bankruptcy court, when asked whether its decision to vacate Dodd’s appointment meant that Dodd could no longer represent the Debtors in the district court suit, is reported to have responded that it was not up to the bankruptcy court to say who could practice before the district court. Apparently, Dodd has continued in his role as counsel for the Debtors in the district court. The trustee for the Debtors’ estate, appointed under the circumstances described in the text infra, evidently sought Dodd’s advice and counsel in connection with the proposed settlement of the Debtors’ suit against the Bank, also described infra. In spite of the fact that Dodd is no longer authorized to represent the Debtors’ estate in the suit, the trustee is critical, in his response to the Debtors’ motion pending before this court, of the fact that Dodd (because of a family crisis) has not responded to the trustee’s request for his help in investigating the suit and determining its worth.
. The Debtors attached Dodd's statement of expenses to their answer. Included therein is an item likely to cause apoplexy to a bank defending a lender liability suit — $475 for a seminar entitled "The Prosecution and Defense of a Lender Liability Lawsuit.”
. A subsequent motion filed by the Debtors in the bankruptcy court, seeking a continuance of the hearing on the trustee’s motion to compromise the Debtors' claim against the Bank and others, notes that on March 21, 1990, the bankruptcy court had granted an ex parte motion shortening the time for notice of the hearing on the compromise from twenty days, as contemplated by Bankruptcy Rule 2002(a), to seven days. Bankruptcy Rule 9006(c) permits the bankruptcy court "for cause shown" in its discretion, with or without motion or notice, to reduce the notice period, and ex parte motions for material reductions in the notice period are routinely granted by bankruptcy courts. That practice greatly increases the potential for the elimination of effective notice of a hearing; and even where notice is received, the time required for preparation of an adequate response is virtually lost, all to the benefit of the movant and to the severe detriment of any party in interest taking a position adverse to that of the movant. The exhortations of Timbers notwithstanding, bankruptcy courts should review ex parte motions to reduce the notice period carefully to be certain that there is, indeed, good cause for the handicap to the respondents and to the court’s information-gathering capacity that is likely to result. In the case at hand, the motion seeking a continuance of the hearing argued that the combination of a shortened notice period and inadequate disclosure of the effect of the compromise on the Debtors' estate could be extremely destructive of the estate and the interests of all parties in interest except the Bank. The motion for a continuance was denied.
. If the district court concludes that the Disgorgement Motion did not request the appointment of a trustee with sufficient particularity to satisfy section 1104(a) of the Bankruptcy Code, then the court will be required to address the issue whether a bankruptcy court can sua sponte appoint a trustee, a question not yet decided in this circuit. See 5 Collier on Bankruptcy 1104.01 (15th ed. 1989); Cournoyer v. Town of Lincoln, 790 F.2d 971, 972 n. 1 (1st Cir.1986).
. One reason, perhaps, that the hearing was so circumscribed can be traced to what may have been the lawyers' belief that all those factors would be explored at the hearing on the Cash Collateral Motion to be held immediately after the hearing at issue here.
. We suggest, but suggest only, that the Debtors’ appeal of the Disgorgement Order be given expedited review by the district court so as to minimize the damage to the Debtors' case that may result from the appointment of a trustee if that appointment was erroneous.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
THOMAS, Circuit Judge, delivered the-opinion of the Court.
This is a suit for an injunction and for damages and profits for the alleged infringement of a copyright under the Act of' July 30, 1947, c. 391, 61 Stat. 652, 17 U.S. C.A. § 101. The defendants moved for judgment on the pleadings on the ground that Exhibit 1 attached to plaintiff’s petition and made a part thereof, being a copy of' plaintiff’s alleged copyrighted book, shows conclusively that the title page is on the front cover of the book and that no notice-of copyright has been applied on the title-page or on the page immediately following-as required by 17 U.S.C.A. § 20.
Upon the filing of the motion the court announced that it would regard and treat the motion as a motion for summary judgment and that the parties should and could introduce evidence bearing upon the issue-of copyright, which issue was presented by the pleadings. The parties thereupon introduced in evidence a copy of the book: claimed by plaintiff to have been infringed: by defendants.
The court made findings of fact and conclusions of law and entered Judgment for defendants, and plaintiff appeals.
The court found that plaintiff received a certificate of registration from the Register of Copyrights of the United States 'for the book involved dated June 22, 1948; that the title of the publication claimed to have been infringed is stated in the complaint to be “1948-49 Kossuth County TAM Service”; and that no other title 'is given in the complaint ; that the only place where the quoted title appears in the book is on the leaf which constitutes the front cover of the book; that the leaf which 'constitutes the front cover of the book is the title page thereof; and that no notice of copyright was given by plaintiff on the title page nor o.n the page immediately following on any copy of the book claimed to 'be infringed.
And the court concluded that the notice of copyright given did not comply with the provisions of 17 U.S.C.A. § 20; and that failure to comply therewith prevents the plaintiff from recovering and is determinative of the case.
The parties agree that the only question for decision is whether the title page of plaintiff’s book is page 3, as claimed by plaintiff, or the front cover, as found by the court and claimed by defendants.
'Title 17 U.S.C.A. § 20 provides: “The notice of copyright shall be applied, in the case of a book or other printed publication, upon its title page or the page immediately following * * *. One notice of copyright in each volume * * * published shall suffice.”’
While a slight variation from the form of notice may not be fatal there must be no substantial deviation. To be legally effective the notice must satisfy the prescriptions of the statute. Advertisers Exchange, Inc., v. Anderson, 8 Cir., 144 F.2d 907; Higgins v. Keuffel, 140 U.S. 428, 434, 11 S.Ct. 731, 35 L.Ed. 470; Mifflin v. R. H. White Company, 190 U.S. 260, 264, 23 S.Ct. 769, 47 L.Ed. 1040.
The plaintiff contends that the court erred: (1) in determining the title of the book; (2) in holding that the only place -where the title appears is on page 1, or the front cover page; (3) that the front cover is the title page; and (4) that no notice of copyright was given by plaintiff on the title page.
The only evidence before the court was a copy of the book itself. The court’s findings are based upon the complaint and the copy of the book in evidence. The book is a comparatively small book bound with a paper cover.
In paragraphs 2 and 5 of the complaint it is averred that the book is entitled: “1948-49 Kossuth County TAM Service.”
On the front cover is printed in bold type:
“1948-1949
“Kossuth County, Iowa
“TAM Service.”
The inside of the front cover contains no printed matter. Page 1 contains a map of Kossuth County, Iowa, only. Page 2 is blank, containing no printed matter.
Page 3 contains a full page of printed text at the top of which appears in lower case type what plaintiff contends is the title, as follows:
“The 1948-1949
“Rural TAM
“For Kossuth County, Iowa.”1
At the bottom of this page is the copyright notice as follows: “Copyright 1948, R. C. Booth Enterprises, Harlan, Iowa.”
In determining whether the front cover page or page 3 of the book is the title page the court of necessity was required to consider the printed texts of those pages and the arrangement of the printed matter thereon and their general appearance. And since there was a substantial difference between them in every respect the court was justified in considering the claim of plaintiff set out in the complaint. Applying these tests, we cannot say that the finding that the front cover page is the title page is erroneous. The finding is supported by substantial evidence and is in accord with the averments of the complaint. In this situation the plaintiff should not be heard to complain. Toksvig v. Bruce Pub. Co., et al., 7 Cir., 181 F.2d 664, 666.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BAUER, Circuit Judge.
This is an appeal by Darlene Shidaker from an adverse judgment entered below in favor of Paul N. Carlin in his capacity as Postmaster General of the United States Postal Service. Shidaker, a postal employee, claims that the Postal Service denied her a promotion because she is a woman and then demoted her for challenging that promotion denial as discriminatory. We reverse and remand for further consideration the district court’s finding that Shidaker’s promotion denial was not discriminatory. We affirm, however, the district court’s finding that Shidaker’s demotion was not retaliatory.
I.
Shidaker was Acting Postmaster and then Postmaster of Kenilworth, Illinois from 1962 through 1982. In this position she was in pay scale category PES-18.
In 1977 Shidaker applied for vacant postmaster positions at Glenview, Palatine, and Franklin Park, Illinois. These positions were PES-22 positions. Ninety-two postal employees (the Postal Service follows a policy of promoting from within) applied for the vacant postmaster positions. Shidaker was the only female applicant. Shidaker was not promoted to any of the positions. The lower court found that two of the men who were promoted were better qualified than Shidaker and that the other promotee was as qualified as Shidaker.
In 1978 Shidaker filed an Equal Employment Opportunity (“EEO”) complaint alleging that she was denied promotion to the PES-22 postmaster positions on the basis of sex. In 1980 an Equal Employment Opportunity Commission Complaint Examiner held a hearing on Shidaker’s complaint. In September 1982 the Complaint Examiner issued a decision on the complaint finding that Shidaker was denied promotion on the basis of sex. In October 1982 the Postal Service’s Regional Director for Employment and Labor Relations Central Region notified Shidaker that the Postal Service was rejecting the Examiner’s decision.
On February 8, 1982 Shidaker received a “Proposed Notice of Reduction in Grade” from her immediate supervisor, Frank J. Santoro. Santoro’s notice proposed that Shidaker be reduced from Postmaster, Kenilworth, PES-18, to distribution clerk, PES-5, because of alleged official misconduct. The notice informed Shidaker that she had the right under Postal Service regulations to answer the charges in the notice. The notice told her to direct her response to Santoro’s superior, Richard Koenigs, District Manager of the Northern Illinois District, the official who would initially decide whether the demotion would occur.
Shidaker responded to Santoro’s notice in two ways: she sent a letter to Koenigs answering the charges, and she filed a second EEO complaint. This complaint alleged that the proposed reduction in grade was in retaliation for her filing the first complaint challenging the promotion denial.
After Shidaker had answered Santoro’s charges in her letter to Koenigs, Santoro wrote Koenigs a personal letter. In his letter Santoro responded to Shidaker’s answers, alleged an additional ground for demoting Shidaker, and urged Koenigs to approve Shidaker’s reduction in grade “for the good of the Service.” Shidaker was unaware of this letter until after Koenigs approved her demotion.
Shidaker was eventually demoted to distribution clerk, PES-5. Shidaker filed an administrative appeal with the Postal Service from this reduction in grade and was accorded a full de novo hearing before a hearing officer appointed to examine the merits of her appeal. Shidaker was given a chance to respond to all charges and evidence including Santoro’s letter to Koenigs. After the hearing, the Postal Service informed Shidaker by letter that the charges against her were supported by the evidence and that the demotion was warranted.
Shidaker sued the Postal Service in the United States District Court for the Northern District of Illinois, Eastern Division. Her complaint is in two counts. Count I alleges discriminatory failure to promote under Title YII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-16 and 39 U.S.C. § 409. Count II seeks review of Shidaker’s administrative appeal of her demotion.
The district court made findings adverse to Shidaker on both counts and entered judgment accordingly. As regards Count I, the district court found that Shidaker failed to establish a prima facie case of discriminatory impact. The court found that Shidaker did make a prima facie showing of disparate treatment, but also found that the Postal Service demonstrated legitimate nondiscriminatory reasons for not promoting Shidaker that were not pretextual. Shidaker’s discrimination count was thus found to be without merit. As regards Count II, the district court found that there was substantial evidence to support the Postal Service’s finding that Shidaker was demoted for misconduct and poor performance and not in retaliation for challenging her promotion denial. The court also found that the Postal Service’s administrative review of Shidaker’s appeal was in adequate compliance with its own procedural regulations. This appeal followed.
II.
Shidaker makes two main arguments on appeal, one charging error in the trial court’s treatment of her discrimination claim and the other charging error in its treatment of her retaliation claim. First, Shidaker argues that the district court erroneously found that she failed to make a prima facie showing of discriminatory impact. She argues that when an employer follows the policy of promoting from within (that is, fills high level positions with lower level employees rather than bringing in “laterals”), a plaintiff need only show statistical evidence of an imbalance between the percentage of a minority occupying high level positions and the percentage of that minority occupying lower level positions in order to make a prima facie case of discriminatory impact. Second, Shidaker claims that Santoro’s letter to Koenigs was an ex parte communication that violated the Postal Service’s regulatory procedures and denied Shidaker due process of law.
We agree with Shidaker that she made an adequate prima facie showing of discriminatory impact. We therefore reverse the district court’s findings and judgment to the contrary, and remand Shidaker’s discriminatory impact claim for further consideration. We affirm the district court’s judgment in all other respects, however, including its finding that despite Santoro’s letter to Koenigs the Postal Service adequately complied with its own procedural regulations when demoting Shidaker.
A.
The district court incorrectly found that Shidaker failed to make a prima facie showing of discriminatory impact. Once Shidaker proved that the Postal Service promotes from within and introduced statistical evidence showing that there is a gross disparity between the percentage of women occupying lower level positions and upper level positions, she made a sufficient prima facie showing of discriminatory impact. She need not, as the district court apparently thought, Shidaker v. Bolger, 593 F.Supp. 823, 835 (N.D.Ill.E.D. 1984), make a further showing of the percentage of female applicants for upper level positions or the percentage of lower level female employees qualified for upper level positions.
To make a prima facie showing of discriminatory impact Shidaker need only present evidence that the Postal Service’s promotion practices, although facially neutral, select promotees “in a significantly discriminatory pattern”. Dothard v. Rawlinson, 433 U.S. 321, 329, 97 S.Ct. 2720, 2726-27, 53 L.Ed.2d 786 (1977); Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975). This evidence may be, and most often is, statistical in nature. New York City Transit Authority v. Beazer, 440 U.S. 568, 584, 99 S.Ct. 1355, 1365, 59 L.Ed.2d 587 (1979); Teamsters v. United States, 431 U.S. 324, 339-40, 97 S.Ct. 1843, 1856, 52 L.Ed.2d 396 (1977). Only in very limited instances may a court find discriminatory impact from non-statistical evidence. Dothard v. Rawlinson, 433 U.S. 321, 330, 97 S.Ct. 2720, 2727, 53 L.Ed.2d 786 (1977); Carpenter v. Board of Regents, 728 F.2d 911, 914 (7th Cir.1984).
[3,4] Gross disparity between the racial or gender composition of the relevant labor pool and the composition of the group occupying the positions in question can, by itself, make a prima facie case of disparate impact. Mozee v. Jeffboat, 746 F.2d 365, 372 (7th Cir.1984); Clark v. Chrysler, 673 F.2d 921, 927 (7th Cir.1982), cert. denied, 459 U.S. 873, 103 S.Ct. 161, 74 L.Ed.2d 134 (1982) ; Movement for Opportunity and Equality v. General Motors, 622 F.2d 1235, 1244-45 (7th Cir.1980); See also, Hazelwood School District v. United States, 433 U.S. 299, 97 S.Ct. 2736, 53 L.Ed.2d 768 (1977). Where a company is shown to promote from within, the relevant labor pool for upper level positions is the group of employees from which promotees will be drawn. Hazelwood, 433 U.S. at 308 n. 13, 97 S.Ct. 2742 n. 13; Mozee v. Jeffboat, 746 F.2d 365, 372 (7th Cir.1984); Movement for Opportunity and Equality v. General Motors, 622 F.2d 1235, 1258 (7th Cir.1980); Paxton v. Union National Bank, 688 F.2d 552, 563-64 (8th Cir.1982), cert. denied, 460 U.S. 1083, 103 S.Ct. 1772, 76 L.Ed.2d 345 (1983) ; Fisher v. Procter & Gamble Mfg., 613 F.2d 527, 544 (5th Cir.1980), cert. denied, 449 U.S. 1115, 101 S.Ct. 929, 66 L.Ed.2d 845 (1981). Thus, where the plaintiff can show that the employer promotes from within, evidence of a gross disparity between the percentage of a minority in upper and lower level positions is sufficient to make a prima facie case of disparate impact. Mozee v. Jeffboat, 746 F.2d 365, 372 (7th Cir.1984); Segar v. Smith, 738 F.2d 1249, 1276-77 (D.C.Cir.1984), cert. denied sub nom. Meese v. Segar, — U.S. -, 105 S.Ct. 2357, 86 L.Ed.2d 258 (1985); Fisher v. Procter & Gamble Mfg., 613 F.2d 527, 544 (5th Cir.1980).
Once a plaintiff makes a prima facie showing with statistics of this nature, the burden shifts to the defendant to rebut the inference of discrimination raised by these statistics. Washington v. Davis, 426 U.S. 229, 241, 96 S.Ct. 2040, 2048, 48 L.Ed.2d 597 (1976). Defendants may rebut a statistical prima fade showing of disparate impact with statistical evidence of their own that is “more refined, accurate and valid”, Movement for Opportunity and Equality v. General Motors, 622 F.2d 1235, 1245 (7th Cir.1980); Teamsters v. United States, 431 U.S. 324, 339-40 and 360, 97 S.Ct. 1843, 1856, and 1867, 52 L.Ed.2d 396 (1977), or by showing that the challenged standards causing the discriminatory pattern are job related. Washington v. Davis, 426 U.S. 229, 246-47, 96 S.Ct. 2040, 2050-51, 48 L.Ed.2d 597 (1976); Griggs v. Duke Power, 401 U.S. 424, 431, 91 S.Ct. 849, 853, 28 L.Ed.2d 158 (1971).
Thus, it is not up to Shidaker to proffer evidence of lower level female employees’ qualifications or evidence of the percentage of lower level female employees who applied for upper level positions. The burden is now on the Postal Service to bring forward evidence that few women occupying lower level positions have applied for upper level positions or are qualified for upper level positions, or to bring forward evidence of the job-relatedness of its promotion standards.
We must, therefore, remand Shidaker’s discriminatory impact claim for further consideration by the district court. If the Postal Service can come forward with evidence of a low percentage of female applicants for upper level jobs or evidence of the lack of qualifications of women in lower level positions, the Service might possibly rebut the inference of discrimination that arises from Shidaker’s prima facie statistical showing. The Service might also be able to show the job-relatedness of its promotion standards. These determinations are best left in the discretion of the district court on remand, Soria v. Ozinga Bros., 704 F.2d 990, 995 n. 6 (7th Cir.1983), and are not properly before us for review.
B.
The district court correctly found that the demotion procedure was in adequate compliance with Postal Service regulations. We reject Shidaker’s claim that Santoro’s letter to Koenigs was an ex parte communication that “voided” the demotion decision.
Shidaker alleges that the demotion procedure violated Postal Service regulations and thereby denied her due process. Specifically, Shidaker claims that Santoro’s personal letter to Koenigs, sent after Shidaker responded to Santoro’s notice of reduction in grade, was in violation of § 661.5 of the Postal Service’s Disciplinary, Grievance and Appeal Procedures. That section provides that employees are to have notice and a chance to respond to charges against them when they are the subject of a proposed adverse action. Shidaker claims that this section was violated by Santoro’s letter because Santoro’s letter alleged an additional ground for demoting Shidaker and Shidaker was unaware of that letter until after Koenigs made the decision to demote her. The Postal Service apparently concedes that § 661.5 was violated here, and we, therefore, assume that it was.
It is well-settled that an agency must abide by its own regulations when discharging or disciplining an employee. Vitarelli v. Seaton, 359 U.S. 535, 539-40, 79 S.Ct. 968, 972-73, 3 L.Ed.2d 1012 (1959); Service v. Dulles, 354 U.S. 363, 389, 77 S.Ct. 1152, 1165, 1 L.Ed.2d 1403 (1957); Accardi v. Shaughnessy, 347 U.S. 260, 268, 74 S.Ct. 499, 503, 98 L.Ed. 681 (1954). Every minor deviation from procedural guidelines, however, does not amount to a denial of procedural due process sufficient to vitiate the entire administrative proceeding. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519, 558, 98 S.Ct. 1197, 1219, 55 L.Ed.2d 460 (1978); County of Del Norte v. United States, 732 F.2d 1462, 1467 (9th Cir.1984), cert. denied sub nom. Assoc, of Cal. Water Agencies v. United States, — U.S. -, 105 S.Ct. 958, 83 L.Ed.2d 964 (1985); Boylan v. United States Postal Service, 704 F.2d 573, 577 (11th Cir.1983), cert. denied, 466 U.S. 939, 104 S.Ct. 1916, 80 L.Ed.2d 464 (1984); Doe v. Hampton, 566 F.2d 265, 277 (D.C.Cir.1977). The question becomes one of determining the seriousness of the error by looking to possible prejudice resulting from siich error. Vermont Yankee Nuclear Power, 435 U.S. at 558, 98 S.Ct. at 1219; United States v. Lovasco, 431 U.S. 783, 790, 97 S.Ct. 2044, 2048, 52 L.Ed.2d 752 (1977); Dozier v. United States, 473 F.2d 866, 868 (5th Cir. 1973); Wathen v. United States, 527 F.2d 1191, 1200 n. 9, 208 Ct.Cl. 342 (1975), cert. denied, 429 U.S. 821, 97 S.Ct. 69, 50 L.Ed.2d 82 (1976).
If the procedure is found substantially defective because likely to prejudice the rights of individuals subjected to that procedure, the substantive merits of Shidaker’s particular retaliation claim are irrelevant. Greene v. United States, 376 U.S. 149, 161-62, 84 S.Ct. 615, 622, 11 L.Ed.2d 576 (1964); Sullivan v. Dept. of the Navy, 720 F.2d 1266, 1273-74 (Fed.Cir. 1983); Ryder v. United States, 585 F.2d 482, 487-88, 218 Ct.Cl. 289 (1978). We are thus unconcerned with whether, absent the ex parte communication from Santoro to Koenigs, Koenigs would have reached the same decision to demote Shidaker. The test is not whether the procedural defect caused actual prejudice to the rights of the party before the court. Greene v. United States, 376 U.S. 149, 161-62, 84 S.Ct. 615, 622, 11 L.Ed.2d 576 (1964); Simmons v. United States, 348 U.S. 397, 405-06, 75 S.Ct. 397, 401-02, 99 L.Ed. 453 (1955). The test is an objective one, whether the particular procedural defect is so substantial and so likely to cause prejudice that no claimant can fairly be required to be subjected to adverse action under such a flawed proceeding. United States v. Lovasco, 431 U.S. 783, 790, 97 S.Ct. 2044, 2048, 52 L.Ed.2d 752 (1977); Vitarelli v. Seaton, 359 U.S. 535, 540-46, 79 S.Ct. 968, 973-76, 3 L.Ed.d 1012 (1959); Sangamon Valley Television v. United States, 269 F.2d 221, 224 (D.C.Cir.1959).
Although we view this as a close case, we cannot say that the letter from Santoro to Koenigs was such a serious departure from Postal Service procedures that it vitiated the entire process. Even though this was an ex parte communication and in violation of Postal Service regulations, the defect was not so substantial that it would unfairly prejudice the rights of claimants reviewed undér procedures having this defect.
Certainly other cases have found that certain ex parte communications from an adversary to a neutral administrative decision-maker in the context of an employee discharge or demotion were by themselves procedural defects substantial enough to vitiate the entire administrative proceeding. Sullivan v. Department of the Navy, 720 F.2d 1266 (Fed.Cir.1983); Ryder v. United States, 585 F.2d 482, 218 Ct.Cl. 289 (1978); Camero v. United States, 375 F.2d 777, 179 Ct.Cl. 520 (1967); Sangamon Valley Television v. United States, 269 F.2d 221 (D.C.Cir.1959). We cannot, however, conclude from these cases, as Shidaker argues, that every ex parte communication is sufficient by itself to undermine the integrity of an administrative proceeding. Many other cases have found ex parte communications in administrative proceedings to be harmless error. Pinar, v. Dole, 747 F.2d 899, 906 (4th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 2019, 85 L.Ed.2d 301 (1985); Chrysler Corp. v. Federal Trade Commission, 561 F.2d 357, 362 (D.C.Cir.1977); Doe v. Hampton, 566 F.2d 265 (D.C.Cir.1977); Korman v. United States, 462 F.2d 1382, 1388,199 Ct.Cl. 78 (1972); Salter v. United States, 412 F.2d 874, 188 Ct.Cl. 524 (1969). Not every ex parte communication is a procedural defect so substantial and so likely to cause prejudice that it entitles the claimant to an entirely new administrative proceeding.
Several aspects of this ex parte communication convince us that it is not such a substantial procedural error that Shidaker or other claimants subjected to such a defective procedure are entitled to a new proceeding. First, the degree of departure from regulatory guidelines was minor. The regulations did not guarantee Shidaker that Santoro would not respond to her answer. They simply gave her the right to answer all charges and allegations made against her before the demotion decision would be made. Therefore, Santoro’s letter violated Postal Service procedures only to the extent that it alleged an additional ground for demoting Shidaker. This it did in one sentence stating that “[Shidaker’s] community relations also leave much to be desired as evidenced by correspondence previously submitted to you.” Although the Postal Service apparently admits that this single sentence was in violation of regulations, we do not find that it amounts to the type of extended, substantial, and adversarial ex parte communication in blatant violation of known procedural guidelines that has been found fatally defective in other cases. Sullivan v. Department of the Navy, 720 F.2d 1266 (Fed.Cir.1983) (supervisor, angered by employee’s filing of grievance against him, instigated investigation by FBI and Naval Investigative Service into employee’s work habits, directed department head to recommend employee’s removal on basis of evidence discovered in investigation, encouraged hearing officer by ex parte communication to recommend employee’s removal, and encouraged reviewing officer by repeated ex parte phone calls to finalize employee’s removal); Ryder v. United States, 585 F.2d 482, 218 Ct.Cl. 289 (1978) (supervisor, who had recommended employee for discharge on grounds of inefficiency, wrote a lengthy signed ex parte statement to the officer who was reviewing the hearing examiner’s findings, which statement the officer adopted in toto); Camero v. United States, 375 F.2d 777, 179 Ct.Cl. 520 (1967) (attorney, who represented agency at hearing reviewing agency’s discharge of employee, engaged in on-going ex parte discussion of case with officials who reviewed that hearing committee’s recommendation); Brown v. United States, 377 F.Supp. 530 (N.D.Tex.1974) (prosecutor for agency that discharged employee flew with hearing officer to hearing, discussed case with hearing officer on plane, stayed in hearing officer’s hotel, and discussed case after hearing with hearing officer in car on way back to airport).
Second, the “additional ground” alleged in Santoro’s letter was “additional” to the charges in the “Proposed Notice of Reduction in Grade” but was cumulative to other information that Koenigs had already reviewed in regard to Shidaker’s performance. Santoro’s letter itself reveals that Shidaker's poor community relations were “evidenced by correspondence previously submitted.” We thus view Santoro’s ex parte communication less harshly since there is less concern with claimants being unaware of evidence and charges against them when evidence is cumulative to that already before the decision-maker. Doe v. Hampton, 566 F.2d 265, 277 (D.C.Cir.1977) (harmless error where evidence, obtained in violation of regulations and to which claimant had no chance to respond, was cumulative); Dozier v. United States, 473 F.2d 866, 868 (5th Cir.1973) (same); Salter v. United States, 412 F.2d 874, 877-78, 188 Ct.Cl. 524 (1969) (ex parte communication harmless error where evidence submitted thereby is cumulative).
Third, the minor procedural error of Santoro’s ex parte communication was mitigated by Shidaker’s knowledge of it, and chance to respond to it, in the full de novo hearing at which Koenig’s decision was reviewed. We certainly acknowledge that an ex parte communication can be so prejudicial that it cannot be “cured” by subsequent review. Sullivan, 720 F.2d at 1273; Ryder, 585 F.2d at 486-87. Where the communication is already unlikely to do any harm, however, we are reluctant to require a reviewing agency that discovers a minor procedural error to reinstitute an entirely new proceeding rather than rectify that error by giving the employee full opportunity to respond to the new charges and evidence in the communication. Here, Shidaker knew of the existence and contents of Santoro’s letter to Koenigs before the full de novo hearing reviewing her demotion. She had full opportunity to respond to the additional charge and present evidence to the contrary. Whatever damage might possibly have been done by the ex parte communication Shidaker had full opportunity to undo.
Finally, we are reluctant to apply a stringent procedural standard in this particular case since we are not firmly convinced that the regulations give Shidaker the right to have Koenigs act as a neutral decision-maker. Shidaker was certainly entitled to have Koenigs consider her response to charges against her. This, however, would be a sensible requirement for any agency concerned with demoting only those employees who deserve such adverse action. The regulations can thus be interpreted in two ways: as allowing Koenigs to act adversely to Shidaker in the interest of the Postal Service, or as giving Shidaker the right to have Koenigs act as a neutral decision-maker. Santoro clearly was not required to act neutrally towards Shidaker while the hearing examiner reviewing Koenigs’ decision clearly was. The problem is that Koenigs’ function lies somewhere in between these two roles of the Postal Service in the administrative review process. Although we do not rest our decision solely on this basis, Koenigs’ uncertain role as neutral decision-maker makes us unwilling to apply the high standard of procedural protection designed for adjudicatory proceedings.
III.
We find Shidaker’s other bases for appeal to be completely without merit. The district court’s findings as to the promotees’ qualifications were not undermined by the fact that documents underlying the promotion committee’s decision are now unavailable, and there is sufficient evidence to find that Shidaker was demoted for misconduct and poor performance and not in retaliation for challenging her promotion denial as discriminatory.
The judgment of the district court finding that Shidaker failed to make a prima facie showing of discriminatory impact is reversed, and Shidaker’s disparate impact claim is remanded for further consideration. On remand, Circuit Rule 18 will not apply. The district court’s judgment in all other respects is affirmed.
. The district court summarized Shidaker's statistical evidence as follows:
The statistics presented to the Court are as follows: In November, 1974, women held 20.8% of the positions in the Postal Service workforce. The percentage had moved to 23.5% by November, 1980. Nationally, women held 11.5% of the positions at PES 15 and above in January, 1980.
In 1978, the year of Shidaker’s failed promotion, women occupied 23 of the 108 postmaster positions in the North Suburban MSC, or 21.1% of the total postmaster positions.
However, none of the women postmasters were rated higher than PES 20 and 15 of them were at level PES 15 or lower. Additionally in 1977-78 a total of 2,008 women were employed in the North Suburban MSC,- 29.4% of the entire Postal Service workforce in the area. Despite that overall percentage, only four women or 5% were rated in positions of PES 19 or higher. Grossly, the disparities could be significant.
Shidaker v. Bolger, 593 F.Supp. 823, 835 (N.D.Ill. E.D.1984).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WOODROUGH, Circuit Judge.
This is an appeal by certain unsecured creditors of the bankrupt General Utilities Company from an order confirming the sale of the assets of the bankrupt estate to Stern Bros. Investment Company. The sale in question was made February 8,1933, and was on that date confirmed b'y the referee. A petition for review was filed and on March 21, 1933, the District Court confirmed the sale (Judge Otis sitting). Thereafter an appeal to this court was taken from the order of confirmation by the 'same parties who now prosecute the present appeal. On consideration of the former appeal, this court expressed no opinion as to the validity of the sale, but reached the conclusion that there had been an abuse of power by the referee in that he had denied the unsecured creditors an opportunity to be heard fully upon the question of the approval of the sale, and that the parties should be restored to the position which they occupied prior to the confirmation of the sale by the referee on February 8, 1933. The ease was remanded with directions that the unsecured creditors be given a full and fair opportunity to be heard upon the question of the confirmation of the sale. (C. C. A.) 66 F.(2d) 137. After the remand, notice of hearing on the matter of confirmation was given and hearings were had before the referee extending over several days, in the course of which the trus-tee was examined and testified at great length and much testimony claimed to have a bearing on the. question of the confirmation of the sale was offered and heard by the referee. After the hearing before the referee and on September 15,1933, the referee again ordered confirmation of the sale to Stern Bros. Investment Company, finding that the sale was in all respects fairly made and for the best price and upon the best terms available to the trustee. After the referee had for the seeond time confirmed the sale to Stern Bros. Investment Company, the unsecured creditors petitioned the District Court for review and also applied for a re-reference to the referee on the grounds that the referee had failed to make a proper summary of the evidence and for the purpose of correcting or supplementing the record. It was also represented to the District Court, among other things, that since the date of the hearing, the petitioners had caused á certain report and valuation of the properties, which was in the course of preparation during the hearing before the referee, to be finally completed, and that “one McKee of Brokaw, Dixon, Garner & McKee, geologists and engineers enjoying a national reputation, i; * * stated that * *■ * a cash bid for these properties would be made upon the report and valuation” and “that said McKee was of the firm opinion that the said bid would be a cash bid, would be a cash offer substantially greater than the bid of Stern Brothers Investment Company.” It was also alleged that “an offer to purchase has been prepared and it is desired to submit this to the referee on re-reference of this cause. This offer to purchase is for a cash consideration of $300,000.00 * * * it is signed by George MeBlair.”’ On the hearing before District Judge Otis, he found that the referee had sent up with his certificate to the District Court a complete transcript of all the testimony taken at the hearing before him, including approximately 1,000 pages of testimony, but acceded to the complaint that the referee had not certified to the judge a summary of the evidence relating to the questions presented in conformity with General Order in Bankruptcy 27 (11 USCA § 53). The court ordered the referee to make summaries in accordance with the rules, and also ordered the referee to hear evidence on the question whether there was then any prospective bidder ready to make a better cash offer than that of the Stem Bros. Investment Company4
Upon the re-reference so ordered and on December 20, 1933, a further hearing was had before the referee, at which hearing George McBlair was the only person appearing for the purpose of making any offer or proposal to bid. He filed a written document entitled “Offer of George McBlair to purchase property of General Utilities,” which was analyzed and compared by the referee and found to be no better bid than that of Stern Bros. Investment Company. On December 23, 1923, after this hearing before the referee, George McBlair filed an affidavit of prejudice in the District Court charging that Judge Otis had personal bias and prejudice against him and the unsecured creditors for whom he was attorney in fact, and, thereafter, on December 26, 1933, an affidavit in very similar terms and for the same purpose was filed by one U. S. Hannum, a general creditor of the estate in the sum of $2,000.
Motions to strike the affidavits as insufficient in law were sustained and Judge Otis reviewed the order of the referee confirming the sale for the second time and sustained the findings and conclusions of the referee and confirmed the sale. On this appeal from the. final order of Judge Otis it is presented that there was error in striking the affidavits of bias and prejudice and in the refusal of Judge Otis to hear additional oral testimony offered at the hearing upon the petition to review the referee’s order of confirmation and the exceptions and objections taken to the action of the referee and that there was error in refusing to sustain the various exceptions and objections to the action of the referee and his confirmation of sale.
We consider first the question whether Judge Otis properly retained jurisdiction of the case. It appears that each of the affidavits of bias and prejudice presented to him contained what purports to be a certificate of counsel signed by one Horace D. Payne, describing himself therein as counsel of record for the affiant to the effect that “he prepared the document and is informed as to the proceedings,” and he certifies “that the affidavit and application for the designation of another judge are made in good faith and not for the purpose of delay or hindrance of the proceedings.” At the hearing of the motions to strike the affidavits, testimony was offered that the said Horace D. Payne was not a member of the bar of the District Court for the Western District of Missouri on or before the times when the affidavits and certificates were made or filed and, thereupon, the said Horace D. Payne, being present before the court, admitted that he had never been enrolled as such member of the bar of the federal court for the Western District of Missouri at the times the affidavits and the certificates were made or filed. The section of the applicable statute (section 21 Judicial Code, title 28 USCA § 25) provides that “no such affidavit [an affidavit of bias and prejudice] shall be filed unless accompanied by a certificate of counsel of ‘record that such affidavit and application are made in good faith.” The phrase “counsel of record” in the statute means an attorney at law admitted to the bar of the court who has been counsel of record in the case. One who is not a member of the bar cannot be counsel of record even though the record on its face may show he had undertaken to appear as counsel. Since Mr. Payne was not on the date of the filing of either of the affidavits a member of the bar of the court, he could not then or at any earlier time have been counsel of record in the ease for either of the affiants. The purpose of the provision of the statute requiring certificate of good faith by counsel of record is that the court may be assured that the affidavit is made in good faith through the certificate to that effect made by one who is a sworn officer of the court, regularly admitted as an attorney to practice at the bar of the court. The requirement is not technical. It is one of the essential requirements of the statute. As the affidavits were not certified to be made in good faith by counsel of record, the motions to strike them for insufficiency in law were properly sustained and Judge Otis “having,” as he stated, “no consciousness whatever of any prejudice against any of the parties or in favor of any,” the duty to continue with the hearing oil the matter of confirmation of the sale remained upon Judge Otis. Klose v. United States (C. C. A. 8) 49 F.(2d) 177; Cuddy v. Otis (C. C. A. 8) 33 F.(2d) 577; Morse v. Lewis (C. C. A. 4) 54 F.(2d) 1027; Saunders v. Piggly Wiggly Corp. (D. C.) 1 F.(2d) 582; Benedict v. Seiberling (D. C.) 17 F.(2d) 831; Ex parte Fairbank Co. (D. C.) 194 F. 978.
Passing to the matter of the confirmation of the sale, we take up the assignments of error based upon the claim that the trial court erroneously refused to receive testimony offered in opposition to the confirmation of the sale at the hearing had on February 2, 1934. The record discloses that on that date the ease came on for hearing before the District Judge on the report of the referee confirming sale and the exceptions thereto, and the court declared that he would not then accord a trial de novo nor receive further evidence. Some forty-one separately stated and numbered offers to prove by oral testimony were thereupon made, and refused by the court.
It appears from the record, however, that before the ease reached this point when the cotfrt declared that he .would not receive evidence, the referee had accorded all parties interested in the sale or purchase of bankrupt’s assets full opportunity to be heard; that the unsecured creditors had availed themselves of the opportunity; and that a .thousand pages of testimony had been taken; all of which was before the trial court at the hearing on the report of the referee and the exceptions. It also appears that the trial court had heard applications for re-reference and that the referee, upon such re-references, had heard additional testimony.
The offers to prove are before us and have been examined. The witnesses from whom the oral evidence was proposed to be elicited were the trustee in bankruptcy and one Anderson, who had been long connected with the bankrupt estate, both being witnesses who had been at all times available to the unsecured creditors, the trustee himself having been on the witness stand for several days. We find nothing in the circumstances under which the proposed testimony was obtained or in the testimony itself to- require the trial court to hear or consider it at the time it was offered. None of it tended to establish that there was any reason to believe that any responsible bidder had been or could be found who would pay more for the assets of the bankrupt than Stern Bros. Investment Company. Although it was the intention of this court, clearly expressed in the former opinion, that all parties should have a right to be heard in respect to confirmation of the sale, it was not intended that the orderly procedure by original trial before the referee with review in the District Court should be abrogated or that the case should in all stages be for trial de novo.
The trial court properly proceeded to pass upon the order of confirmation of sale and the exceptions and objections thereto and the proceedings and evidence certified therewith. None of the assignments of error based upon the refusal to hear the offered testimony at that time is sustained.
As the matter of the bid of George Me-Blair was brought intb the proceedings after the referee had made and reported his second confirmation of sale, we next consider the assignments of error assailing the findings and conclusions concerning that bid and its rejection. The evidence is that Mr. Me-Blair was chairman of a committee constituted to represent a large number of the unsecured creditors of the estate and that he had been very actively concerned in the bankruptcy administration of the estate throughout, and was informed as to the assets of the bankrupt and the conduct of the administration by the receivers and the trustee, including the attempts of the trustee to sell the assets and of various persons to acquire them. The record discloses no bid or proposal from him until he submitted his written offer before the referee on December 20, 1933, more than ten months after the assets had been sold to Stern Bros, and the sale confirmed. The fact that Mr. McBlair was desirous of making a bid was first brought to the trial court’s attention on November 6, 1933, after the referee had confirmed the sale to Stem Bros, the second time on September 18, 1933. The court said:
“The application for re-reference sets out that if a re-reference is granted proof may be made that a substantially ‘larger amount ¿light be realized for the assets of the bankrupt than will be realized under the sale to Stern Bros. Investment Company. A large majority of the general creditors appear to believe that the amount bid by Stern Bros, is inadequate and that the properties are worth much more and can be sold for much more. * * * It is set up in the application for re-reference that a showing can now be made of two really cash offers for the assets of the bankrupt. One of them is described as an offer to purchase for ‘a cash consideration of $300,000.00’ (the McBlair bid). Another is described as a cash bid by one Butterworth of an amount of $350,000.-00. These promised showings are described in the application for re-reference as newly discovered evidence. * ^ * A belated and new cash offer now made might not in any event justify the setting aside of the referee’s order of confirmation; * * * if there is really a prospective bidder who stands ready now to make a cash offer substantially greater than that of Stern Brothers this court desires to know it.”
The order of the court was that the referee should hear such evidence as may be submitted to him tending to prove that substantially larger cash offers for the assets of the bankrupt were made than that made by Stem Bros. Investment Company. Accordingly, re-reference was made and further opportunity to submit bids before the referee was given and McBlair presented his bid. The referee had made the requirement, which we find to be reasonable,, that the amount required to be deposited with proof of any bid should be $50,000 in cash or cer-, titled checks (this sum having also been required as a deposit from other bidders), to be forfeited in case the bidder failed or refused to comply with the terms of his bid in the event of acceptance and confirmation of sale to such bidder. Instead of depositing gueh cash or certified chock as required, Mr. McBlair deposited an assignment of allowed claims against the bankrupt estate of the face amount of $19,800, neither of which claims were cash or the equivalent of cash, and a check for $15,000. The check was conditioned by indorsement that payment was to be made only if, as, and when the offer to purchase by George McBlair is accepted and properties bid upon conveyed to McBlair. The bid of McBlair contained specific reservations of bidder’s right to deposit liens or administrative claims in part payment of the purchase price. It also specifically excepted from inclusion in the offer to purchase parcels of property covered by certain lien claims, some allowed and some then pending allowance. The bidder offered to purchase only a part of the property covered by particular liens and excluded the remainder of the property covered by the same lien in certain instances. The McBlair bid, after reciting that certain credits on aceouht of net earnings of the property should accrue to him on his bid as a result of specifying a certain cut-off date, stated that his information was that such total accruals amounted to $71,000. Mr. McBlair did not offer testimony to establish that net earnings had amounted to such sum and our study of the evidence presented at the hearing on confirmation of sale has satisfied us that the referee is supported in his finding that the bidder’s statements of accruals are greatly in excess of the actual amount. The evidence fully sustains the findings of the referee and the trial court that the proposed offer of George McBlair was insufficient; that it was impracticable to divide the property according to said proposed offer because of overlapping liens without serious loss; that it was not accompanied by sufficient deposit; and that the deposit made by MeBlair with the restrictions placed thereon was insufficient and inadequate to insure performance of his offer to purchase. We are persuaded that no ground for upsetting the sale to Stern Bros. Investment Company was developed in the record by any proceedings had or offers of proof made after the order of confirmation was made by the referee on September 15, 1933.
It is urged through many assignments of error and in the briefs of appellants that the sale of the bankrupt’s assets was not necessary or for the best interests of creditors and it is still urged upon us that the trustee ought to be permitted to continue to operate the business; and that we should take into consideration “the fact that by reason of the economic depression and financial stringency it was difficult, even well-nigh impossible, to obtain a higher cash bid.” We do not find that the question was open at the time of the hearing before the referee in August and September of 1933. On December 22, 1932, the trustee had duly filed his petition for order of sale, specifying in detail the property and assets, in which he presented to the court under oath that the properties of the estate had been rapidly deteriorating in value and required the expenditure of large sums of money to properly develop, maintain, and improve them, and that the continuing operation of the properties by the trustee was rapidly becoming a real hazard to the interests of the creditors of the estate; the properties of the estate had received the widest advertisement for sale; that the trustee was reasonably familiar with all of the prospective buyers at the time; and that the creditors were all thoroughly familiar with the immediate necessity for a new sale; and that the creditors had already made exhaustive and extensive study of the particular properties of the estate and of their present value and that the trustee was of the opinion that the creditors of the estate would be benefited by a sale of said property within a minimum of time-and hy private sale for cash only. The order of the referee made on January 19, 1933, commanding private sale of the assets of the bankrupt, was made at a general meeting of the creditors when there were present the trustee and attorneys Representing the general creditors, and many creditors in person, as well as many lien claimants appearing by respective attorneys and in person, and other parties in interest appearing by attorneys and in person. It was the fourth order to sell made by the referee and it does not appear that any direct attack was ever made upon the finding and order that the property should then be sold at private sale. There is no substantial testimony to show that the order was improvidently made, although it is now argued by appellants that the operations of the properties under court authority have resulted in very large net profits and betterment of the estate (a matter to be later discussed), and therefore that it is not necessary to sell the property. It must be conceded that at the time the sale was ordered the trustee’s verified showing of the necessity to sell was fully acquiesced in by all the appellants and no exception was taken to the showing of the trustee “that said creditors are all thoroughly familiar with the immediate necessity for a new sale.” Our study of the evidence which has been brought up also convinces that the order to sell was necessary and proper.
Other assignments of error are based on the claim that the trustee made the sale to Stern Bros. Investment Company under circumstances amounting to duress or that the sale was not his free and voluntary act. There was some testimony to show that at and for some months prior to the time when the trustee finally appended his signature to the contract he was laboring under extreme difficulties to deliver gas to the town of'Liberty, Mo., his supply of gas having failed ■in severe cold weather, and that, while he was so laboring, a representative of the purchaser told him that if he sold the properties his troubles would be over, or words to that effect. But the trustee’s testimony convinces that his negotiations for the sale to Stern Bros, were conducted by himself and his attorney, Mr. Bundsehu, with the attorneys for Stern Bros, with orderly and businesslike deliberation. He testified:
“I negotiated with Mr. Page (attorney for Stern Brothers) several times and some two or three days prior to the final signing went over and discussed the terms and provisions of the proposed bid with (Mr. Thomson, attorney for Stern Brothers); it seems to me that we reached this kind of understanding, that we all met as near as we could on terms, leaving the amount open, as I recall it; each receded from his position on certain points and maintained his position on other points until a certain form" of contract was obtained; after certain changes were suggested by me and (Mr. Thomson) I wanted a bid of $350,000. Mr. Page was prepared to bid $300,000 including the meter deposits and was not prepared to pay any more; I said I would try $340,-000 as I recall, and then as I recall it we agreed that we couldn’t make a deal, that 1 could go elsewhere and have the fullest good ■will from Stern Brothers and everybody.”
Thereafter the parties again met, inserted the purchase price, and executed the contract according to the terms that had been previously agreed upon. The trustee further testified that he did not allege any fraud in procuring his signature to the contract. There was no testimony whatever of any coercion or duress practiced by the purchaser, Stern Bros. Investment Company. ' We conclude on consideration of all the testimony on this matter that the sale was entered into without duress and was the free and voluntary act of the trustee in the exercise of his best judgment.
Further assignments present the complaint that the contract of sale imposes conditions upon the trustee impossible of performance on his part and evidences an option rather than a contract of sale. This contention also appears to be without merit. The sale contract is short and no uncertainties or ambiguities are pointed out. It contains a recital .that the properties contracted to be sold are being operated by the seller for the supplying of gas to its various patrons and include certain franchises granted by the cities and towns in which the seller is supplying and distributing gas and certain gas purchase contracts, a list being attached. The seller represented that all said franchises and gas purchase contracts were then in full force and effect and it was provided that if any of the said franchises or gas purchase contracts was, in fact, then ineffective, or in case a party thereto should' challenge the validity, sufficiency, or present operative force thereof, the buyer might, at its option, at any time prior to the final closing date of the contract terminate the contract. This condition was not different in substance and effect from the customary reservation to the buyer of a short time to satisfy himself of the validity of title offered him. At the time of the hearing on confirmation before the referee, the purchaser, through its attorney, declared itself satisfied as to the condition of the franchises and gas purchase contracts referred to, and waived anything further with respect to their acceptance. The sales contract also contains the provision that the contract was conditioned upon the ability of the buyer to procure the approval of the Public Service Commissions of the state of Missouri and of the state of Kansas of the purchase of said properties, and the continued operation thereof by the buyer or its designee and assignee as the buyer may prefer. The properties involved in the sale constitute public utilities in the states of Missouri and Kansas ■which, under the laws of those states, are subject as to sale and operation to jurisdiction of the Public Service Commissions. This provision of the contract of sale is a reasonable and proper one, having been included in practically all of the offers and proposals made to the trustee. Procuring the authority for such a purchase from the Public Service Commissions of these states is •merely a preliminary though necessary step under the laws of these states to the acquisition of such properties. The evidence is that the Public Service Commission in Kansas has made the necessary record of approval to the nominee of Stern Bros. Investment Company and that the Public Service Commission of Missouri is merely waiting final confirmation, of the sale before it takes action. The •contract between the trustee and Stern Bros. Investment Company is not an option but a contract of sale and obliges the purchaser to receive and pay for the property conditioned now solely upon the approval by the state authorities referred to.
Under other assignments appellants contend that the Stem Bros. Investment Company bid was not the best bid. In this connection the several offers and the efforts which have been made by C. O. Moore to acquire the property are elaborately discussed. As stated in our former opinion, Mr. Moore was a successful bidder for the property under the second order of sale and deposited $100,-000 with his bid. He defaulted on his contract and default was taken against him and the sale that had been made to him was set aside. Since then, both before and after the sale to Stem Bros., he has endeavored to h'ave his original bid reinstated or to become the purchaser under new offers or bids. The record satisfies that each of his proposals and offers has been given careful hearing and consideration, but the evidence fully supports the final conclusion of the referee and of the trial court that Mr. Moore was not in financial position to buy the properties. There is no claim that he has money of his own to buy them with and he declined at a meeting of creditors before the referee to state upon what his expectations of getting the money in the future were based. He made disclosure to the referee, upon which disclosure the referee found without any contradiction in the record, that “iti is very apparent from Mr. Moore’s own statement that he does not now have any possible commitments of reasonably good prospects in the future out of which he will get his securities to carry out his contract within the time contemplated.” There is no ground shown by the evidence to expect a better sale to Moore than has been made to Stern Bros. Investment Company.
At the hearing on confirmation before the referee, the trustee testified that with the exception of Moore and Butterworth, he had no other firm bids for the properties. Though we do not find any serious contention by appellants that the Butterworth bid was a better bid than that of Stern Bros., or that the properties should be sold to Butterworth, we have considered the bid and the circumstances surrounding it. It included a scheme for the organization of a corporation which would own and operate the properties and which would issue securities, and a condition of the bid was that the Public Service Commissions should approve the issuance of the securities. Furthermore, it was made after the trustee had closed the sale to Stem Bros. We think the referee rightly analyzed and compared the bid with others and properly rejected it.
The trustee produced at the hearing on confirmation a long list of those he deemed to be prospective purchasers of the properties and he was examined and testified as to the offers and bids that he had received. It is evident from the record that the trustee constantly endeavored to' find purchasers for the properties, and he testified: “I have tried every day to get purchasers.”
The record convinces that not only has no better bid than that of Stern Bros, been obtained before the hearing on the confirmation in August and September of 1933, but that in spite of the utmost efforts that were afterwards made, no better bid has been obtainable.
Appellants further argue that the sale to Stern Bros. Investment Company was made at a price so grossly inadequate in view of the real value of the property that it should be set aside. It is contended that the operation of the properties under the supervision of the court has produced very large net profits; that “the property, during the financial emergency and economic depression weathered the storm with decisive economic strength”; and that its value has been greatly enhanced by additions and betterments. The record does not bear out the contentions. It does not contain any full or complete profit and loss accounting of the business carried on by the receivers and the trustee. The income tax 'return of the estate for the year ending December 31, 1932, immediately prior to the sale of the property to Stern Bros., disclosed no net income for taxation, but a loss of some $13,000. It is said that these figures were arrived at by deducting $34,365.71 for depletion and depreciation and that such deduction, although proper, should not be made in considering the point contended for. But there is convincing testimony of depletion of gas wells under the trustee’s operation and of losses and burdens from inability to deliver gas and it is noted that in the income tax return some undetermined court costs and allowances were not included. It is stated in the brief of appellants that “total allowances, fees and costs in this ease will approximate $150,000, additional referee and trustee fees, which is in the near neighborhood of the price to be paid for this estate by the alleged purchaser.” We do not find these figures in the record nor any other final computation of such items, but do not doubt that the total of the amounts referred to will reach a large sum. In the argument that the properties were being profitably operated, isolated months of operation following the cut-off date of November 21, 1932, are pointed to as being very profitable, but the account is not fully made up and the uncertain- costs and allowances are left out. We are constrained to note also the testimony of the trustee “that he could not pay all of the taxes that accrued since he had been trustee on all the properties from the cash that he had on hand and still continue to operate.” He says, “Give me freedom of the properties with the 'right to liquidate certain property, I could pay, I don’t mean today, all the taxes amounting to $18,-000, on all properties, which include the 1933 taxes.” Without going into the minutia of the evidence, we are not persuaded that there can be found in any showing as to great net earnings of the properties under the direction of the court, any substantial proof that the sale to Stern Bros, was at a grossly ihadequate price.
In the early stage of this bankruptcy, earnest endeavor was made to effect composition with creditors. The plan was to organize a corporation which would issue stocks, common and preferred, and bonds to be underwritten and sold to the public. The composition failed, but it illustrates the kind of financing to which it was thought the utility properties of the bankrupt adapted themselves. The possibilities of such financing attracted interest and attempts to buy from persons who did not have the money themselves, and a heavy responsibility was imposed upon the trustee and referee, shared by the trial court, to weigh the proposals, offers, and bids in selecting the best for acceptance. Despite the clash of interests in this long litigation, no charges of bad faith are made against the trustee or that he failed to do his honest best to get the best possible bid or in closing with the purchaser. On the question of the real value of the properties, therefore, and what they ought to sell for, we. attach importance to the sworn showing and the testimony of the trustee. When he petitioned the court for an order of sale in December of 1932, he suggested that an upset price of $300,000 be set by the court, which shows he must have believed that such price, though doubtless less than he hoped to get, was not “grossly inadequate.” He coupled with the suggestion the condition that the cut-off date should be November 21, 1933, and that the purchaser should assume payment of the meter deposits, exactly as was specified in the sale to Stern Bros. Furthermore, the suggestion of the upset price brought the belief of the trustee directly home to the knowledge of all of the appellants herein, and they acquiesced in the further order of sale without protest. Also the sworn statement of the referee, on making the sale, that he had used reasonable diligence to sell the properties and that in his opinion the sale to Stem Bros, was the best cash offer that he was able to obtain, persuade that such was his belief at the time. A point is made of the fact that when the trustee was called as a witness at the hearing on confirmation before the referee in August and September of 1933, more than six months after he had made his sworn return, he refused to recommend confirmation of the sale. He did not deny that he had made every reasonable effort to sell the properties at the best possible price, nor that the Stern Bros.’ bid was the best that he had been able to obtain. Wo think his testimony reaffirms his sworn return as to those vital matters. But it was his thought that the responsibility for confirmation or refusal to confirm the sale rested upon the court and not on him, and his attitude was that if a better deal for the creditors c-ould be had, he would be for it, he wanted to hear the evidence. His testimony also reflects that he then thought that if ho could be continued in control and operation of the property, he could ultimately work out more for the creditors. On this basis, he would not recommend the confirmation of the sale. Such hopes, however, developed so long after sale, were not controlling upon the court.
Appraisals have been made of the properties reflecting a much greater value than that obtained on the sale. It is undoubtedly true, as stated by Judge Otis in his opinion of November 22, 1933, that “a large majority of the general creditors appear to believe that the amount bid by Stern Brothers is inadequate and that the properties are worth much more and can be sold for much more,” but such beliefs, however honest, as well as the opinions of expert engineers and appraisers, avail nothing against the stern fact that a better bid was not to be had.
The trustee in bankruptcy has not joined in this appeal, but made a statement at the oral argument and filed a brief. He urges, among other things, that this court should take into consideration the question whether Mr. C. O. Moore lias any claim upon the $100,000 which he deposited to secure the bid made by him in July of 1932. Consideration of the same question is also asked for by appellants and claimed by them to be material to our determination of the appeal. Mr. Moore is not a party to this appeal and the court declines to comment upon the matter. We find that the question whether Mr. Moore does or does not have such a claim is without bearing on the question whether the sale to Stern Bros. Investment Company should bo confirmed.
The assignments of error herein cover some 38 pages of the brief and it has not been possible within the compass of an opinion to discuss them individually. They are not in compliance with the requirements of rule 11 of this court. Though it is undisputed that the findings and conclusions of the trial court fully sustain its judgment, errors are not assigned separately to the particular findings or conclusions, as required, but the assignments are laid in the form of arguments and reasons addressed to this court. But we have considered upon all the grounds argued whether confirmation of sale should be upset, and are persuaded that it should not.
On the whole record, wo are convinced that the parties have been accorded a full hearing as contemplated by law and by our former mandate; that the order commanding the sale was valid; that the sale was fairly made to the best obtainable bidder; that the contract was in proper form and evidenced a valid and binding sale subject to no unreasonable conditions; that there was no such gross inadequacy of price as would justify upsetting the sale; and that the sale was rightfully confirmed.
The order appealed from is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALLEN, Circuit Judge.
This appeal deals with the question whether one who has substantially appropriated a trade name and advertising slogan and has knowingly imitated a building of peculiar style, with knowledge of their previous use in the same business by anothér, can enjoin the originator from using its own style of building, trade name and slogan in territory in which the junior user first operated, and whether the originator in turn can enjoin' the junior user from such use.
Appellant filed its bill of complaint, seeking relief from alleged unfair competition. Appellee filed a cross-bill, seeking similar relief. The cause was referred to a special master, who filed a report recommending that a decree be entered in favor of appellee. The District Court confirmed the master’s report, made findings of fact and conclusions of law, and permanently enjoined appellant as prayed in the cross-petition.
Both parties operate stands for the sale of hamburger sandwiches and other food products in Detroit, Michigan, each using a white structure designed like a miniature castle. As each party pleads that the names, types of buildings and advertising slogans are so similar as to mislead and deceive the public, confusion is .conceded. Appellant entered Detroit in 1928 and appellee in 1929.
Appellee’s predecessors began business in Wichita, Kansas, in 1921. The business expanded from Wichita through Omaha, Kansas City, St. Louis, Louisville, Cincinnati, Indianapolis, Minneapolis and St. Paul, later entering Detroit, Chicago, Columbus, Newark and New York. It now includes 120 stands in the major cities of eleven states. Since commencement of its business appellee has called its stands “White Castle,” and its slogan has been “Buy ’Em By the Sack.”
In 1926 appellant’s predecessors and organizers began business in Milwaukee, Wisconsin, using a building similar in design to appellee’s, under the name “White Tower,” and the slogan “Take Home a Bagful.” Appellant’s organizers had been attracted to the possibilities.of such a business by appellee’s success in Minneapolis. They deliberately used one of appellee’s stands as a model, obtained measurements and photographs thereof, and later secured plans and specifications of appellee’s building and gave them to their architect. Appellant employed one of appellee’s countermen at four times the salary received from appellee, to install the equipment. It was a part of the consideration for his employment that he should give information about the White Castle methods. He came into appellant’s service equipped with a White Castle hamburger paddle, with specimens of the peculiar metal used in the White Castle griddle, and with appellee’s accounting forms. Thus appellant secured access to, and in the main adopted, appellee’s business methods.
The District Court found that appellee’s food products, trade name, slogan, and style of building were known in Detroit and to the purchasing public of that city before appellant located there, and that Detroit was at that time within the normal scope of expansion of appellee’s business, and that appellee then had substantial good will in that city. These findings were based upon testimony that appellee advertised in various newspapers, trade journals and over the radio, and also upon the testimony of residents of Detroit who had known of the White Castle lunchrooms prior to the opening of the White Tower stands.
Appellant vigorously urges that there was no evidence to support these findings. We cannot agree with this contention. Appellee’s expansion into the cities east and north of Wichita, as found by the court, was made pursuant to a plan formed in 1921 by which it proposed to locate in cities where its name, slogan and style of architecture were already known, either because of their proximity or because there was flow of travel between them and cities in which it was already located. This plan was pursued with such success that when in 1926 appellant opened its stand in Milwaukee, it did so because it had observed the popularity of appellee’s business and desired to profit by its good will. We cannot ignore the fact that appellee established its stands along arterial highways, with the result that the traveling public carried its reputation to far distant points, and by personal recommendation 'its 'good ?name (became an asset in Detroit. (Good -will may 'be defined as the favorable consideration shown by the purchasing ipublic to goods known to emanate from ¡a particular source. While its existence may be shown by proof of actual successful operation, it may also be shown by proof of the reputation which arises from such operation. It may exist in territory where -no business is done by the possessor of the good will. Cf. Buckspan v. Hudson’s Bay Co., 22 F.(2d) 721 (C.C.A.5). The right of the owner of good will to be protected is not limited to the prevention of actual market competition. Wisconsin Electric Co. v. Dumore Co., 35 F.(2d) 555 (C.C.A.6). In that case this court held that the doctrine of protection against unfair competition “extends to all cases in which one party fraudulently seeks to sell his goods as those of another.”
While the trade names of both parties were registered as trade marks, the pleadings were framed and the trial was conducted on the theory of unfair competition, and it was upon this ground that the relief was granted. Unfair competition is “a convenient name for the doctrine that no one should be allowed to sell his goods as those of another.” Vogue Co. v. Thompson-Hudson Co., 300 F. 509, 512 (C.C.A.6). Appellant having deliberately imitated the peculiar characteristics of appellee’s business, and adopted its system, seeks to exclude appellee from using its own style of building, name and slogan in Detroit upon the ground that appellant first did business in that city.
The general rule is that priority of adoption of a trade name or distinctive advertising feature gives exclusive right to their use. Delaware & H. Canal Co. v. Clark, 13 Wall. 311, 322, 20 L.Ed. 581; Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 415, 36 S.Ct. 357, 60 L.Ed. 713; United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 100, 39 S.Ct. 48, 63 L.Ed. 141. Appellee has the exclusive right to the name “White Castle,” to its style of building and its slogan within its normal territory. If Detroit lies within that territory, appellant is guilty of unfair competition, .for it palms off its food products as those of appellee. Cf. Western Oil Refining Co. v. Jones, 27 F.(2d) 205 (C.C.A.6). Appellant claims that it is entitled to an injunction under the established exception £o jthis .rule, .which is that where the junior user has 'innocently built up a business in a market remote from that of the originator, he may not be restrained though his monopoly is restricted to the territory of its use. Hanover Star Milling Co. v. Metcalf, supra; United Drug Co. v. Theodore Rectanus Co., supra. However, these decisions, which adopt the exception, are to be distinguished, for in both the junior user had no knowledge of the originator’s trade mark and no intention to copy it. The court in United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, at page 101, 39 S.Ct. 48, 52, 63 L.Ed. 141, quotes with approval from the Hanover Milling Co. Case, as follows: “But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like.” We think such design was present in the instant case. In the Ilanover Milling Co. Case there were two causes. In one the second user was protected in new territory where the trade mark was used in good faith, but in the other, where fraudulent intent was indicated, the junior user was enjoined. The second holding supports the denial of appellant’s prayer for injunction.
Appellant relies on certain decisions which apparently reach a different conclusion because of their peculiar facts. Thus when the original adopter consents to the operation by the junior user, or limits its own territory, the injunction against the junior user is denied. American Trading Co. v. H. E. Heacock Co., 285 U.S. 247, 52 S.Ct. 387, 76 L.Ed. 740. In that case the junior user secured permission from the prior user to register its trade mark under the statute of the Philippine Islands and developed a local trade in the Islands. The court held that the junior user would not be enjoined in its own territory. Obviously since the prior user consented to the registration of its trade mark it consented to the development of the junior user’s business in the Philippine market. The same rule was applied in Nisley Shoe Co. v. Nisley Co., 72 F.(2d) 118 (C.C.A.6), where the junior user was protected in territory not occupied by the prior user. The prior user had consented to and encour aged the use of the trade name and the owner of the prior user corporation was president of the junior user corporation. These facts created an estoppel against the prior user.
The federal decisions generally hold that a junior user with inimical design, seeking to encroach upon another’s established good will, will not only be refused relief, but will itself be enjoined. Western Oil Refining Co. v. Jones, supra; R. H. Macy & Co., Inc. v. Colorado Clothing Mfg. Co., 68 F.(2d) 690 (C.C.A.10) ; Sweet Sixteen Co. v. Sweet “16” Shop, Inc., 15 F.(2d) 920 (C.C.A.8). We apply this rule to the instant case.
The decree is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
FRIENDLY, Circuit Judge:
This appeal from a judgment of the District Court for the Western District of New York relating to the Medicaid program raises close questions, described below, which are of great concern to the “medically needy” on the one hand, and the State of New York and the United States on the other.
The Proceedings Below and in this Court
This action was brought by Gloria Dejesus, a citizen of the United States and a resident of Monroe County, New York, against Cesar Perales, Commissioner of the New York State Department of Social Services, and W. Burton Richardson, Director of the Monroe County Department of Social Services.
The statutory background is as follows: Medicaid, enacted in 1965 as Title XIX of the Social Security Act (the Act), 42 U.S.C. § 1396 et seq. (1982), is a co-operative federal/state cost-sharing program designed to enable participating states to furnish medical assistance to persons whose income and resources are insufficient to meet the costs of necessary medical care and services. There are two sets of eligible persons. The “categorically needy” are persons eligible for cash assistance under two federal programs: Aid to Families with Dependent Children (AFDC), § 601 et seq., and Supplemental Security Income (SSI), § 1381 et seq. Participating states must provide Medicaid coverage to the categorically needy, § 1396a(a)(10)(A). The “medically needy” are persons who meet the non-financial eligibility requirements for cash assistance under AFDC or SSI, but whose income or resources exceed the financial eligibility standards of the relevant program. This appeal concerns persons who, but for income or resources, would qualify for AFDC; they are known as “AFDC-related medically needy.” Participating states may, at their option, provide Medicaid coverage to the medically needy, § 1396a(a)(10)(C). States that do so must establish “reasonable” Medicaid income standards for testing financial eligibility and must use “flexibility” in the application of these standards by allowing medically needy persons whose income exceeds the standard to “spend down” their excess income by incurring medical expenses equal to or greater than the excess, § 1396a(a)(17). Persons who meet their spend-down for a given period are eligible to receive Medicaid for the remainder of that period without any further spend-down.
New York joined the Medicaid program in 1966, authorizing the New York State Department of Social Services (NYSDSS) to establish a Medicaid plan covering both the categorically and the medically needy, 1966 N.Y. Laws, ch. 256, as amended N.Y.Soc. Serv. Law § 363 et seq. Defendants submitted below an affidavit of Richard T. Cody, Assistant Commissioner in the Division of Medical Assistance of NYSDSS, which supplied information, much of it uncontested, about the operation of Medicaid in New York. To determine the amount that an AFDC-related medically needy person is required to spend down before becoming entitled to Medicaid coverage of inpatient hospital expenses, NYSDSS computes the person’s monthly excess income prospectively for a period of six months. 18 New York Code Rules & Regulations § 360.5(d)(1) (1985) [hereafter N.Y.C.R.R.]. If the person’s prospective income changes during the spend-down period, the spend-down is adjusted to reflect the actual amount of income available to him. After the person has incurred medical expenses equal to his spend-down, he will be eligible to receive Medicaid for the remainder of the spend-down period. In contrast, NYSDSS determines financial eligibility for AFDC by measuring a person’s income for a single month against the cash assistance standard for one month, § 602(a)(13)(A)(i). If the person qualifies for AFDC in a given month, he is categorically needy and is entitled to full Medicaid coverage of all medical expenses, including inpatient hospital expenses, incurred in that month.
The complaint alleges that Mrs. DeJesus’ family consists of her husband and his three minor children. Their gross income, consisting of her husband’s workman’s compensation and social security disability benefits, amounted to $729.77 per month, as compared with New York’s income standards for Medicaid and for cash assistance in 1984 of $575 and $578.93 per month, respectively. Since NYSDSS must use the higher of the two standards in determining eligibility for Medicaid, 18 N.Y.C.R.R. § 360.5(c)(7), it calculated the family’s excess income to be $151 per month and their spend-down for inpatient hospital care to be six times this, or $906. The complaint further alleges that in October 1984 Mrs. DeJesus and one of the children were found to require surgery, apparently of non-emergency character, but that the operations had to be canceled because the family was unable to pay a preadmission deposit equal to their entire spend-down of $906. Later, after being informed that New York’s six-month spend-down requirement would be challenged in the courts, another hospital agreed to perform the operation on plaintiff upon payment of a preadmission deposit equal to her spend-down for one month, or $151.
This action was brought as a class action on behalf of Mrs. DeJesus and “a class consisting of all AFDC-related medically needy applicants for or recipients of Medicaid who have been, are being or will be subjected to defendants’ six-month spend-down requirements in order to qualify or requalify for Medicaid benefits” for inpatient hospital care. Plaintiff alleges that New York’s six-month spend-down requirement violates § 1396a(a)(10)(C)(i)(III), which provides that a state’s plan to furnish Medicaid to the medically needy must set forth
the single standard to be employed in determining income and resource eligibility... and the methodology to be employed in determining such eligibility,... which shall be the same methodology which would be employed under... the appropriate State [cash assistance] plan... to which such group is most closely categorically related...,
and § 1396a(a)(17), which provides that the plan must
include reasonable standards (which shall be comparable for all groups...) for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of ¡this subchapter, (B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient... [and] (C) provide for reasonable evaluation of any such income or resources ____
After answer the parties stipulated to class certification. Both sides then moved for summary judgment. Plaintiff’s motion was supported by affidavits of her attorney and herself, which added nothing to the complaint except that Mrs. Dejesus had agreed to pay the hospital performing the surgery the balance of $755 on her six-month spend-down if the court did not order payment by Medicaid.
Defendants’ motion was supported by the Cody affidavit mentioned above. Cody averred that his colleagues in the Division of Medical Assistance had not received complaints from the medically needy that they were unable to receive necessary hospital care because of the computation of the spend-down, and that in 1984 approximately $175,000,000 had been spent in providing hospital care to the AFDC-related medically needy. He referred to § 2805-b of New York’s Public Health Law, which requires every general hospital to admit any person in need of immediate hospitalization with all convenient speed and not to question such person or any member of his or her family concerning insurance, credit or payment of charges before admission. He also pointed out that the medically needy may have their spend-down forgiven by a hospital under the Hill-Burton Act, § 291 et seq. See Gadway v. Blum, 567 F.Supp. 772 (N.D.N.Y.1983).
Cody also stated that the Bureau of Budget Management in NYSDSS had estimated that changing from a six-month to a one-month spend-down for AFDC- and SSI-related recipients would cost from $25,000,-000 to $30,000,000 annually simply as a result of the % reduction in spend-down amounts that such a change would bring for the medically needy currently receiving Medicaid. Beyond that, a change to a one-month spend-down would substantially increase the number of people with excess income who would be eligible to receive Medicaid. NYSDSS projected the total additional expenditure at $78,000,000 annually-
Both sides submitted 'briefs and largely rested upon them. The judge then announced, “I am going to grant the Plaintiff’s motion for summary judgment for the reasons cited in Plaintiff’s Memorandum of Law.” On April 19, 1985, judgment was entered ordering that the action be maintained as a class action; decreeing “that defendants’ policy.and practice of using a six-month period for calculating the income of AFDC-related medically needy applicants for and recipients of Medicaid, pursuant to 18 N.Y.C.R.R. § 360.5(d)(1) violates 42 U.S.C. § 1396a(a)(10)(C)(i)(III) and 42 U.S.C. § 1396a(a)(17);” and ordering “that defendants, their agents, employees and assigns are permanently enjoined from using a longer period for calculating the income of AFDC-related medically needy applicants for and recipients of Medicaid, than is used for AFDC recipients categorically eligible for public assistance and Medicaid.” Defendants were further ordered to “cause retroactive benefits to be paid for class members who in the past have had spend-downs computed under the policy challenged in this action in accordance with a plan to be submitted by counsel for plaintiffs and defendants.” The court directed that plaintiffs should receive attorney’s fees from defendant Perales on motion of plaintiffs after the termination of any appeals from the judgment. Upon the filing of a notice of appeal, enforcement of the judgment was to be stayed until April 30, 1985, or such further period as this court might grant. Counsel later agreed to an extension of the stay pending an appeal, which we expedited at their request. The Secretary of the United States Department of Health and Human Services (HHS) filed a brief as amicus curiae pursuant to FRAP 29 in support of appellants and was allowed to participate in oral argument.
Discussion
This appeal requires the interpretation of a statute of unparalleled complexity. The conditions which a state Medicaid plan must meet, now specified in § 1396a(a), have grown from the original twenty-two in the 1965 Act to forty-six, almost all of which contain a number of subdivisions, exceptions and qualifications. The Supreme Court has characterized the Social Security Act as “among the most intricate ever drafted by Congress” and has quoted with approval our observation in Friedman v. Berger, 547 F.2d 724, 727 n. 7 (2 Cir.1976), cert. denied, 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378 (1977), that the Act is “almost unintelligible to the uninitiated.” Sckweiker v. Gray Panthers,.453 U.S. 34, 43,.101 S.Ct. 2633, 2640, 69 L.Ed.2d 460 (1981). In endeavoring to penetrate this maze, courts must guard themselves against the temptation of allowing a literal reading of a relatively recent amendment to set at naught the experience of administrators acquired over a score of years.
The basic thrust of the argument made by New York and supported by the Secretary is that, in the very nature of things, as must have been known by Congress, there cannot be identity in treatment between categorically needy persons eligible for AFDC and the AFDC-related medically needy. Persons eligible for AFDC in a given month are, by definition, earning no more in that month than is required for the basic necessities of life, excluding medical expenses. If they also incur medical expenses during that month, they must immediately receive Medicaid, since otherwise payment of these medical expenses would eat into funds required for basic necessities. The AFDC-related medically needy differ in that their monthly income is deemed more than sufficient to pay for the basic necessities of life — in Mrs. Dejesus’ case by a marginal amount, in other cases by more. Plaintiff therefore does not dispute the propriety of a state’s insisting that the AFDC-related medically needy make available their excess income to meet incurred medical expenses before becoming eligible to receive Medicaid benefits. Once they have spent down their excess income, but only then, are they in roughly the same position as persons eligible for AFDC: any further expenditures for medical expenses would have to come out of funds required for basic necessities. Indeed, § 1396a(a)(17), which has been part of Title XIX in practically the same form since its enactment, see Pub.L. No. 89-97, § 1902(a)(17), 79 Stat. 346 (1965), and provides that a state Medicaid plan must
include reasonable standards (which shall be comparable for all groups...) for determining eligibility for and the extent of medical assistance under the plan... and provide for flexibility in the application of such standards with respect to income by taking into account, except to the extent prescribed by the Secretary, the costs (whether in the form of insurance premiums or otherwise) incurred for medical care or for any other type of remedial care recognized under State law • • • }
expressly requires states to allow the medically needy the opportunity to qualify for Medicaid by spending down their excess income. The dispute in this case is whether a state may permissibly decide that when the AFDC-related medically needy incur a certain type of medical expense— here, for inpatient hospital care — the spend-down should be calculated by taking into account a family’s projected income over a six-month period, rather than over the one-month period that the state must use, § 602(a)(13)(A)(i), in determining whether a family is eligible for AFDC.
New York has required a six-month spend-down for coverage of inpatient hospital expenses in one form or another since the inception of its Medicaid program. NYSDSS defends this requirement as necessary to target limited public funds for medical assistance at those who need it most. NYSDSS notes that inpatient hospital care is generally much more expensive than other types of medical care, and individuals tend to incur the costs of inpatient hospital care on a lump-sum basis within a single month even if the care itself extends over a longer period. Using a one-month spend-down for inpatient hospital expenses, NYSDSS maintains, would mean that individuals with relatively high monthly incomes might qualify for Medicaid coverage of a substantial part of a larger hospital bill received in a single month, even though such individuals would have excess income in subsequent months that could be used to help pay the bill. In contrast, with its six-month spend-down requirement NYSDSS ensures that only the “most” needy of the medically needy will receive Medicaid benefits, since by definition their excess income is so little that even six months’ worth is insufficient to pay significant incurred hospital expenses.
The Secretary’s regulations plainly permit what New York has done. 42 C.F.R. § 435.831 (1984), entitled “Income Eligibility,” says:
The [state Medicaid] agency must determine income eligibility of medically needy individuals in accordance with this section. The agency must use a prospective period of not more than 6 months to compute income.
Subdivision (c) provides that if countable income exceeds the applicable income standard, the state agency must deduct, in a certain order, various incurred medical expenses. Subdivision (d), entitled “Eligibility based on incurred medical expenses,” provides that “[o]nce deduction of incurred medical expenses reduces income to the income standard, the individual is eligible for Medicaid.”
“Comparability ”
We see little force in plaintiffs contention that New York’s six-month spend-down requirement violates the “comparability” language of § 1396a(a)(17). Although § 1396a(a)(17) — a single sentence stretching over 54 lines in the United States Code — achieves a degree of incomprehensibility unusual even for Title XIX, at bottom it is a general command that states fix reasonable income eligibility standards for the medically needy. These standards are to be generally the same as in the AFDC and SSI programs. See, e.g., Beltran v. Myers, 701 F.2d 91 (9 Cir.) (transfer of assets rule for Medicaid invalidated), cert. denied, 462 U.S. 1134, 103 S.Ct. 3115, 77 L.Ed.2d 1369 (1983); Calkins v. Blum, 675 F.2d 44 (2 Cir.1982) (different income disregards held invalid); Caldwell v. Blum, 621 F.2d 491 (2 Cir.1980) (transfer of assets rule for Medicaid invalidated), cert. denied, 452 U.S. 909, 101 S.Ct. 3039, 69 L.Ed.2d 412 (1981); Fabula v. Buck, 598 F.2d 869 (4 Cir.1979) (same); Greklek v. Toia, 565 F.2d 1259 (2 Cir.1977) (different treatment of work-related expenses held invalid), cert. denied, 436 U.S. 962, 98 S.Ct. 3081, 57 L.Ed.2d 1128 (1978). However, since the very purpose of § 1396a(a)(17) is to regulate the standards under which persons having incomes higher than allowed in the cash assistance programs may still qualify for Medicaid, it cannot be read to require that the standards must be the same as those in the cash assistance programs in all respects. The direction is that the standards shall be “comparable,” not identical, for all groups. Comparison invites an examination of differences as well as resemblances. As the Supreme Court pointed out in Schweiker v. Hogan, 457 U.S. 569, 587, 102 S.Ct. 2597, 2608, 73 L.Ed.2d 227 (1982), the comparability provisions of Title XIX, including those in § 1396a(a)(17), “did not require that the medically needy be treated comparably to the categorically needy in all respects.” Furthermore, as previously pointed out, § 1396a(a)(17) invites “flexibility” in applying income standards to the medically needy by taking into account their costs of medical care, except to the extent prescribed by the Secretary. Read together, the requirements of “comparability” and “flexibility” imposed by § 1396a(a)(17) simply do not mandate the rigidly identical treatment of categorically and medically needy Medicaid recipients for which plaintiff contends.
“Same Methodology”
With this behind us, we turn to the more difficult question raised under the “same methodology” language of § 1396a(a)(10)-(C)(i)(III) [hereafter, for simplicity, “III”]. A review of the legislative development is essential.
The counterpart of today’s § 1396a(a)(10)(C)(i) in the 1965 Act was § 1902(a)(10)(B)(i). This said that if a state chose to extend medical assistance to the medically needy it must provide
for making medical or remedial care and services available to all individuals who would, if needy, be eligible for aid or assistance under any... State [cash assistance] plan and who have insufficient (as determined in accordance with comparable standards) income and resources to meet the costs of necessary medical or remedial care and services____
79 Stat. 345. While this provision demanded that a state’s Medicaid plan use comparable criteria in calculating income and resources for the categorically and the medically needy, it imposed no requirement for how such plans should determine whether a medically needy person’s income and resources were insufficient to meet medical costs. Congress’ concern here, like in § 1902(a)(17) of the 1965 Act, as amended § 1396a(a)(17), was that the medically needy should receive medical assistance if — but only if — medical expenses reduced their income to or below the eligibility level set for the state’s cash assistance programs. See supra note 6.
The Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub.L. No. 97-35, 95 Stat. 357, replaced what had been § 1902(a)(10)(B)(i) of the 1965 Act, as amended § 1396a(a)(10)(C)(i) (1976 ed.), with a much simplified version, which required only that a state’s Medicaid plan for the medically needy “must include a description of... the criteria for determining eligibility of individuals in the [medically needy] group for... medical assistance.” § 2171(a)(3), 95 Stat. 807. HHS read this change as authorizing it to allow states to use income and resource criteria for the medically needy different from those applicable to the categorically needy and promulgated regulations accordingly. These regulations had nothing to do with the treatment of excess income for the medically needy or with the calculation of spend-downs. See Medicaid Program; Medicaid Eligibility and Coverage Criteria, 46 Fed. Reg. 47,976 et seq. (1981). The Secretary explained the theory of the new regulations as follows:
Treatment of Income and Resources
1. Provisions: States are no longer required to apply a uniform methodology for treating income and resources in such matters as deemed income, interest, court-ordered support payments, and infrequent and irregular income. Rather, the State plan must specify the methodology that will be used; and that methodology must be reasonable. (See 42 CFR 435.850-435.852 and 436.850-436.852, as added by this final rule).
2. Discussion: Before the 1981 Amendments, the methodology for treatment of income and resources of the medically needy depended on the individuals’ relationship to a specific cash assistance program. For example, the methodology for deeming the income of medically needy aged, blind, and disabled was taken from the SSI program. This was based on the former wording of section 1902(a)(10) of the Act that described the medically needy, in part, as individuals who “except for income and resources” would be eligible for cash assistance and for Medicaid as categorically needy. Furthermore, section 1902(a)(17)(C) of the Act required that the methodology for the treatment of income and resources be reasonable and gave the Secretary authority to prescribe standards regarding that methodology.
Section 2171 of the 1981 Amendments revised the Medicaid statute so that the direct linkage between the cash assistance programs and the medically needy is no longer explicit. (The statute no longer defines the medically needy as those who would be categorically needy “except for income and resources”). Therefore, we have concluded that the State need not adopt the methodology of a related cash assistance program in treating income and resources of the medically needy. Rather, the State may develop its own. However, section 1902(a)(17)(C) of the Act has not been amended. Consequently, these final regulations require that the State must use a methodology for the treatment of income and resources that is reasonable.
Id. at 47,980.
Congressional displeasure with the Secretary’s regulations, see, e.g., 127 Cong. Rec. H7052 (daily ed. Oct. 6,1981) (remarks of Rep. Waxman), resulted in the enactment of the “same methodology” requirement of III. See Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub.L. No. 97-248, § 137(a)(8), 96 Stat. 324, 378. The House Report accompanying TE-FRA explained the intent behind the amendment:
The 1981 Reconciliation Act gave the States certain specified flexibility in designing their medically needy programs.
They are no longer required to cover all eligibility groups, e.g., aged, blind, or disabled persons and families with dependent children. They are no longer required to provide the same benefit package to each group they choose to cover. However, the 1981 Reconciliation Act made no changes in the applicable income and resource eligibility rules.
Unfortunately, the Department, in its interim final rule of September 30, 1981, 46 Fed.Reg. 47976, assumed that the conferees had intended to give the States extensive flexibility in this area as well. This is simply incorrect. When the Statement of Managers of the conference committee report spoke of providing the States “with flexibility in establishing eligibility criteria and scope of services within the medically needy program to address the needs of different population groups more appropriately,” (H.R.Rep. 97-208, p. 971), it was referring to the service package and coverage group provisions, not inviting a wholesale rewriting of current income and resource standards and methodologies. This amendment makes clear that the Department had no authority to alter the rules that applied before September 30, 1981, with respect to medically needy income levels, medically needy resource standards, and the methodology for treating medically needy income and resources. The Committee bill reaffirms the financial requirements previously in effect for the medically needy (42 C.F.R. sec. 435.800-435.845).
H.R.Rep. No. 757, Part I, 97th Cong., 2d Sess. 13 (1982).
According to the Secretary, this history makes clear that the “same methodology” language of III was intended to invalidate provisions in HHS’s 1981 regulations permitting the income and resource standards
in state Medicaid plans to deviate from those used in the AFDC and SSI programs in “such matters as deemed income, interest, court-ordered support payments, and infrequent and irregular income,” 46 Fed. Reg. 47,980 (1981), and to require use of the same methodologies for determining these matters in all of the relevant programs. Congress, in enacting III, did not at all intend to affect HHS’s regulations dealing with the treatment of excess income and the calculation of spend-downs— regulations which the Secretary had not altered following OBRA and which, in her view, the last sentence of the House Report quoted above expressly reaffirmed.
The Secretary’s reading is by no means implausible. In Medicaid lingo, the spend-down is not part of the “standard to be employed in determining income and resource eligibility.” That standard, so far as concerns income, is whether an applicant’s monthly income after deduction of various expenses (other than medical expenses) and disregards is not more than the Medicaid income level set by the state. The spend-down is not part of this standard; rather, it is the method by which a family that does not meet the standard can nonetheless bring its excess income down to the level required for inclusion in the Medicaid program. There is no dispute that before being confronted with inpatient hospital expenses the DeJesus family did not meet “the single standard to be employed in determining income... eligibility.” The question is how many months’ excess income the state may require the DeJesus family to make available for payment of medical expenses before deciding that the family has reached the income level at which Medicaid coverage of further medical expenses should begin.
This is a problem as to which the Act seems to be silent. While in one sense New York’s six-month spend-down requirement may be a “methodology,” Congress can hardly have regarded it as such for purposes of III: since the spend-down has no counterpart in the eligibility methodologies of the cash assistance programs, it would have been tautologous for Congress to direct that states calculate spend-downs using “the same methodology” as they use in determining eligibility for those programs. Given the history showing that Congress was aiming its shafts in TEFRA at actions of the Secretary involving quite different matters, and indeed arguably was approving the Secretary’s pre-OBRA regulation permitting a spend-down of up to six months (a regulation that had gone unchallenged for over 17 years), we cannot say that the Secretary’s construction is untenable, although we recognize that a different one also might not be.
This conclusion is all that is required to sustain the Secretary’s position that New York’s six-month spend-down requirement, 18 N.Y.C.R.R. § 360.5(d)(1), is authorized by HHS’s longstanding regulation providing that “[a state Medicaid] agency must use a prospective period of not more than 6 months to compute income.” 42 C.F.R. § 435.831 (1984). As the Supreme Court said in Gray Panthers, supra, 453 U.S. at 43, 101 S.Ct. at 2640, “Perhaps appreciating the complexity of what it had wrought, Congress conferred on the Secretary exceptionally broad authority to prescribe standards for applying certain sections of the [Social Security] Act.” Title XIX of the Act is shot through with references delegating the formulation of standards to the Secretary. Especially relevant for our purposes, § 1396a(a)(17), in addition to authorizing the Secretary to prescribe the extent to which states must take the costs of medical care into account in determining the eligibility of the medically needy, directs the Secretary to set standards which the states must follow in determining how much income is “available” to medically needy applicants for Medicaid, § 1396a(a)(17)(B). The Court recognized the import of this in Gray Panthers, supra, 453 U.S. at 44, 101 S.Ct. at 2640, declaring that
[i]n view of this explicit delegation of substantive authority, the Secretary’s definition of the term “available” is “entitled to more than mere deference or weight,” Batterton v. Francis, 432 U.S. [416], at 426 [97 S.Ct. 2399, 2406, 53 L.Ed.2d 448]. Rather, the Secretary’s definition is entitled to “legislative effect” because, “[i]n a situation of this kind, Congress entrusts to the Secretary, rather than to the courts, the primary responsibility for interpreting the statutory term.” Id., at 425 [97 S.Ct. at 2405]. Although we do not abdicate review in these circumstances, our task is the limited one of ensuring that the Secretary did not “excee[d] his statutory authority” and that the regulation is not arbitrary or capricious. Id., at 426 [97 S.Ct. at 2406],
Even when the Secretary has not been delegated the authority to adopt “regulations with legislative effect,” as he was in Batterton v. Francis, 432 U.S. 416, 97 S.Ct. 2399, 53 L.Ed.2d 448 (1977), courts must exhibit particular deference to the Secretary’s position with respect to legislation as intricate as Title XIX. See Connecticut Department of Income Maintenance v. Heckler, — U.S.-, 105 S.Ct. 2210, 2215, 85 L.Ed.2d 577 (1985). We should not be astute to find a provision in a state plan authorized by the Secretary’s regulations requiring that six months’ rather than one month’s income should be taken to measure the spend-down required to enable the medically needy to receive Medicaid to be a “methodology” for determining eligibility if those versed in the terminology of the Medicaid program and responsible for its efficient administration not unreasonably say it is not.
We recognize that although the Secretary’s regulation permitting up to a six-month spend-down stood unchallenged for over 17 years, there has been a spate of recent decisions disapproving it, all in line with that rendered below. See Hogan v. Heckler, 597 F.Supp. 1106 (D.Mass.1984) (invalidating six-month spend-down for SSI-related medically needy), now pending on appeal in the First Circuit; Coleman v. Miller, No. 82-0-6259 (N.D.Ill. Feb. 23, 1984) (invalidating six-month spend-down for AFDC-related medically needy); Allen v. Petit, No. 85-0025-P (D.Me. June 3,1985) (invalidating six-month spend-down for both SSI-related and AFDC-related medically needy); Rivera v. Commissioner of Public Welfare, 395 Mass. 189, 479 N.E.2d 639 (Mass.1985) (invalidating six-month spend-down for AFDC-related medically needy); see also Brogan v. Miller, 537 F.Supp. 139 (N.D.Ill.1982) (invalidating six-month spend-down for SSI-related medically needy under § 209(b)). We have carefully examined these opinions, but respectfully disagree with them for the reasons stated in this opinion. Our own cases, Calkins v. Blum, 675 F.2d 44 (2 Cir.1982); Caldwell v. Blum, 621 F.2d 491 (2 Cir.1980), cert. denied, 452 U.S. 909, 101 S.Ct. 3039, 69 L.Ed.2d 412 (1981); Greklek v. Toia, 565 F.2d 1259 (2 Cir.1977), cert. denied, 436 U.S. 962, 98 S.Ct. 3081, 57 L.Ed.2d 1128 (1978), relied on by appellee, simply require the computation of income and deductible expenses on the same basis for the categorically and the medically needy — a point conceded by the State and not at issue here.
The judgment is reversed, with instruction to grant defendants’ motion for summary judgment.
. We are told that the other two states in this circuit have Medicaid plans for the medically needy resembling New York's in the respects here relevant, as do some 20 other states. Questions relating to the Massachusetts statute similar to those here at issue are pending before the First Circuit in Hogan v. Heckler, argued June 4, 1985.
. All section references will be to 42 U.S.C. (1982) unless otherwise stated.
. Congress created SSI in 1972, Pub.L. No. 92-603, 86 Stat. 1465, to replace three existing categorical assistance programs — Old Age Assistance, § 301 et seq. (1970 ed.); Aid to the Blind, § 1201 et seq.; and Aid to the Permanently and Totally Disabled, § 1351 et seq. These programs, together with AFDC, had previously been state-administered with state eligibility standards. SSI, however, was a federally administered program with a federal eligibility standard that was often much easier to meet than the prior state standard. Since eligibility for SSI confers automatic eligibility for Medicaid, Congress was concerned that the less restrictive federal standard would dramatically increase the states' shares of Medicaid costs. See Schweiker v. Gray Panthers, 453 U.S. 34, 38, 101 S.Ct. 2633, 2637, 69 L.Ed.2d 460 (1981). To meet this problem, Congress allowed states to elect to retain their more restrictive pre-1972 eligibility standards for determining whether new SSI recipients qualified for Medicaid. This election became known as the "§ 209(b) option.” States choosing the § 209(b) option must, however, allow persons who are eligible for SSI but whose income exceeds the more restrictive state Medicaid income standard to spend down their excess income by incurring medical expenses, § 1396b(f). State regulations implementing this spend-down requirement, which operates in the same fashion as the spend-down requirement of § 1396a(a)(17), have been challenged recently on grounds similar to those advanced here. See Brogan v. Miller, 537 F.Supp. 139 (N.D.Ill.1982).
. In addition to being "reasonable,” Medicaid income standards must be based on family size and be uniform for all persons in a covered group. 42 C.F.R. § 435.811 (1984). A state's Medicaid income standard is presumptively reasonable if it at least equals the highest income standard used to determine eligibility for the state’s cash assistance programs. Id. § 435.-812(b).
. "Incurred medical expenses” are expenses for which a medically needy individual becomes liable, whether or not such expenses are ever actually paid. See Gadway v. Blum, 567 F.Supp. 772, 775 (N.D.N.Y.1983).
. Congress wrote the flexible standards requirement into § 1902(a)(17) of the 1965 Act, as amended § 1396a(a)(17), to correct what it believed was a major failure in the existing Kerr-Mills program, Pub.L. No. 86-778, 74 Stat. 987 (1960), which Medicaid had been designed to replace. As the report of the House Ways and Means Committee accompanying the 1965 Act explained:
The bill also contains a provision designed to correct one of the weaknesses identified in the medical assistance for the aged program. Under the current provisions of Federal law, some States have enacted programs which contain a cutoff point on income which determines the financial eligibility of the individual. Thus, an individual with an income just under the specified limit may qualify for all of the aid provided under the State plan. Individuals, however, whose income exceeds the limitation adopted by the State are found ineligible for the medical assistance provided Under the State plan even though the excess of the individual's income may be small when compared with the cost of the medical care needed.
H.R.Rep. No. 213, 89th Cong., 1st Sess. 68 (1965); see also 111 Cong.Rec. 15,876 (July 8, 1965) (remarks of Sen. McNamara).
. The first such provision was filed with the New York Secretary of State on March 31, 1966, as subdivision (c) of 18 N.Y.C.R.R. § 360.5, entitied “Determination of net available income and utilization of any excess." Subdivision (c) provided:
The excess income shall be utilized in the following manner for the following care and services:
(1) In hospital care cases:
the excess income for a period of six months shall be paid to the hospital or to the local agency as a refund in
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ORDER.
This case is before the Court upon the petition of J. C. Penney Co., Inc., to review an order of the National Labor Relations Board and upon the cross-petition of the Board to enforce the order. The decision and order of the Board are reported at 162 N.L.R.B. No. 144. The intervenor has filed a brief urging enforcement.
The Court holds that the findings of fact of the Board are supported by substantial evidence on the record considered as a whole.
It is ordered that the order of the Board be and hereby is enforced.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This direct criminal appeal was taken by appellant Royal Kenneth Hayes following his conviction by a jury and a sentence of two years by the court. The charge was that on or about the fourth day of January, 1975, the appellant, after having been convicted of a felony in the State of Minnesota, received in commerce, or affecting commerce, a firearm in violation of Title 18 Appendix, United States Code, section 1202(a)(1). The indictment originally charged defendant with possession, as well as receiving under the statute. However, a motion for acquittal on the former charge was granted on the grounds that the Government had failed to establish the necessary interstate nexus.
The appellant asked this Court to reverse the conviction on three grounds: (1) that the conviction should be set aside because the appellant had legal advice that his “statutory pardon” under Minnesota’s general rehabilitation statute meant that he could carry a firearm; (2) that the jury was improperly instructed that the weapon had moved in interstate commerce; and (3) that the testimony of his wife was improperly received in evidence. We find no reversible error and affirm the conviction.
The parties stipulated that the weapon in question was shipped interstate from the Colt Firearms Company, Hartford, Connecticut, to the Worldwide Holiday Store in Minneapolis, Minnesota, in December 1967. It was further stipulated that the appellant, Mr. Hayes, previously had been convicted of a felony in 1963. The appellant’s employer identified the weapon in question and also a bill of sale, which indicated that the weapon had been sold to Judith Lynne Hayes, the wife of appellant, on November 8, 1974.
The weapon with which we are concerned was taken from the defendant by a bouncer at the Roaring Twenties Cellar Bar in the early morning hours of January 4, 1975, immediately after another individual had been shot and killed in the establishment.
As a result of that killing, the defendant was charged with murder in the state courts and was acquitted. In the course of the trial of that case the defendant called Mrs. Hayes, as a witness, as he had a right to do under Minnesota law, and she testified that she had the pistol in her possession when she and her husband came to the establishment above mentioned, and that she turned the weapon over to him to hold for her while she went to the restroom.
In connection with the trial of the instant case, the Government sought to subpoena Mrs. Hayes as a witness but was unable to obtain service. Over the objection of the defendant the Government was permitted to read into evidence a transcript of the testimony that the wife had given in the murder trial. When her testimony was given in that trial, it was exculpatory as far as the defendant was concerned, but in the context of this case it was highly incriminating.
Testimony was offered by Hayes that he had received a discharge order from the Minnesota Department of Corrections which expunged his conviction and that he had been advised by a member of the State Parole Board that he was a free man and could live a normal life. Additional testimony of Mr. Hayes’ lawyer was offered that he advised Mr. Hayes he could own or possess a gun. This testimony was excluded by the district court and an instruction that appellant had acted on advice of counsel was refused by the district court.
This Court has held previously in the case of United States v. Mostad, 485 F.2d 199 (8th Cir. 1973), that a person who has been convicted of a felony and restored to all civil rights and to full citizenship, pursuant to an automatic state general rehabilitation statute, may be convicted of a violation of section 1202(a)(1) for the reason that a state statutory pardon does not remove disabilities of persons previously convicted of a felony from receiving or possessing firearms and the Government need not prove specific intent to violate the law or knowledge on the part of the defendant that he is violating the law. The same ruling was made in United States v. Kelly, 519 F.2d 794 (8th Cir.), cert. denied, 423 U.S. 926, 96 S.Ct. 272, 46 L.Ed.2d 254 (1975). In the case of United States v. Powell, 513 F.2d 1249 (8th Cir. 1975), this Court further held that the district court properly refused an instruction that a defendant had acted on advice of counsel, since this is not a defense. Based on these cases, the district court properly excluded the testimony concerning appellant’s restoration of citizenship, the advice he received from counsel, and any instructions relating to advice of counsel.
The second error assigned by appellant was the instruction given by the district court concerning interstate commerce on the ground that it constitutes a directed verdict of guilty as to an essential element of the crime, the receipt of the firearm in interstate commerce or affecting interstate commerce. The instruction reads as follows:
The offense charged in the one Count of the Indictment has three essential elements, as follows:
First: That the defendant was previously convicted of a felony in a state court in the United States;
Second: That thereafter the defendant knowingly received a firearm in the State of Minnesota:
Third: That the receipt of the firearm was in commerce or affecting commerce.
******
The parties have agreed or stipulated that the defendant was previously convicted of a felony in the State of Minnesota and that the firearm involved in this charge has been previously transported in interstate commerce from Connecticut to the State of Minnesota. You may accept these stipulated facts as established.
* * Hs * * *
A defendant receives a firearm in commerce or affecting commerce if the firearm received has previously traveled in interstate or foreign commerce. Commerce means travel, trade or transportation among the several states or between any foreign country and any state. If a defendant receives a firearm which has so traveled across a state line, his receipt is one affecting commerce. Knowledge of the interstate or foreign commerce is not necessary to proof of the offense.
The foregoing is a proper instruction and it leaves to the jury the determination of whether or not the receipt of the firearm was in commerce or affecting commerce. In United States v. Bass, 404 U.S. 336 at page 350, 92 S.Ct. 515 at page 524, 30 L.Ed.2d 488 (1971), the Court stated:
* * * the offense of “receiv[ing] . in commerce or affecting commerce,” * * * we conclude that the Government meets its burden here if it demonstrates that the firearm received has previously traveled in interstate commerce.
As has been seen, the Government was permitted to introduce over the objection of the defendant the transcript of the testimony of Mrs. Hayes given in the course of the murder trial. Defendant contends that this action violated his privilege as a husband of not having his wife testify against him. The Government argues that when the defendant called his wife as a witness in the murder trial, he effectively waived his privilege against the use of that testimony against him in the context of a later criminal trial on another charge, and that since the wife was unavailable as a witness, the transcript of her former testimony was admissible. See Federal Rules of Evidence, Rules 804(a)(5) and 804(b)(1).
We have no trouble with the use of the transcript, as such, in lieu of the ore tenus testimony of the wife. But a serious question is presented as to whether the use of the testimony over the objection of the defendant violated his marital privilege.
However, we find it unnecessary to answer that question because we are satisfied that if the district court erred in admitting the transcript, the error was harmless.
The weapon was taken from the person of the defendant by the bouncer at the night club. The defendant was not a manufacturer of firearms, and he obviously received the pistol from someone. Cf. United States v. Kelly, 519 F.2d 251 (8th Cir. 1975). The parties stipulated that the pistol had moved in interstate commerce, and there was undisputed evidence to the effect that Mrs. Hayes had purchased the weapon on November 8, 1974, slightly less than two months before the date of the offense charged. We think that in view of the stipulation, the evidence that Mrs. Hayes had bought the gun in November 1974, and the fact that the weapon was taken from the defendant on January 4, 1975, the jury could properly have inferred without the testimony of Mrs. Hayes that the defendant received the gun from her in some manner between November 8, 1974 and January 4, 1975. The Government was not required to prove the exact date on which the defendant received the weapon. See United States v. Baumgarten, 517 F.2d 1020 (8th Cir.), cert. denied, 423 U.S. 878, 96 S.Ct. 152, 46 L.Ed.2d 111 (1975); United States v. Arradondo, 483 F.2d 980 (8th Cir. 1973), cert. denied, 415 U.S. 924, 94 S.Ct. 1428, 39 L.Ed.2d 480 (1974).
We find no basis in this case for reversal of appellant’s conviction.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WEICK, Circuit Judge.
We are required in this diversity case to determine the applicable Ohio statute of limitations governing an action by a subro-gated insurer against a bailee to recover the value of personal property injured by fire. The case was tried by the District Judge without a jury, and in a published opinion he adopted findings of fact and conclusions of law. He followed the decision of the Supreme Court of Ohio in Andrianos v. Community Traction Co., 155 Ohio St. 47, 97 N.E.2d 549 (1951), and the decision of this Court in Sears, Roebuck & Co. v. Cleveland Trust Co., 355 F.2d 705 (6th Cir. 1966), and held that the action was governed by Ohio’s two-year statute of limitations, Ohio Rev. Code § 2305.10. Underwriters at Lloyd’s etc. v. Peerless Storage Co., 404 F.Supp. 492 (S.D.Ohio 1975). Although the insured’s proof of loss on the insurer’s form was dated June 2, 1971, the insurer did not file suit until about three and one-half years after the date of the fire. It was therefore barred by the statute of limitations. The District Judge dismissed the action and the plaintiffs have appealed. We affirm.
There was no substantial dispute as to the facts.
Norton-Simon, Inc. and McCall Publishing Company (McCall) entered into a verbal month to month storage agreement with the defendants, Peerless Storage Company and Peerless Transportation Company (herein referred to jointly as Peerless), in which agreement Peerless agreed to store in its Warehouse Number 15 in Dayton, Ohio, a quantity of Norton-Simon’s and McCall rolled paper stock.
On February 27, 1971 a fire destroyed Warehouse 15. The paper stock was damaged extensively, with losses valued at $850,096. No proof was offered as to the cause of the fire but there was substantial evidence that the warehouse had no sprinkler system and no fire walls, and was operated in violation of fire codes. Norton-Simon and McCall were able to recoup only $8,000 in salvage value from its damaged property.
Subsequently Underwriters at Lloyd’s (Lloyd’s) paid Norton-Simon and McCall $750,096. for the loss and damage to said rolled paper stock caused by the fire, against which Lloyd’s had insured under its policy of fire insurance. By reason of this payment Lloyd’s became subrogated to the rights of Norton-Simon and McCall against the defendants for recovery of the loss and damage to the paper stock. Norton-Simon and McCall incurred an uninsured loss of $100,000.
On June 25, 1974 Lloyd’s filed a suit against Peerless in the Federal District Court, some forty months after the fire, claiming damages of $750,096. The complaint alleged that Peerless had breached the oral bailment contract by its failure “to exercise good faith and reasonable skill and diligence in discharging its obligations and responsibilities under said agreement.” In July, 1975 Norton-Simon and McCall intervened as co-plaintiffs under Fed.R.Civ.P. 24(b) claiming damages for $100,000 on the uninsured portion of the loss allegedly resulting from Peerless’ breach of contract.
On October 17, 1974 the District Court entered an order denying Peerless’ motion for summary judgment.
In its published opinion, however, the District Court held that plaintiffs had established a prima facie case of liability and that Peerless as bailee had failed to rebut the plaintiffs’ prima facie case. The District Court, as noted above, ruled that the two-year limitation in § 2305.10 was applicable.
The two Ohio statutes of limitation under consideration provide as follows:
§ 2305.07 Contract not in writing.
Except as provided in section 1302.98 of the Revised Code, an action upon a contract not in writing, express or implied, or upon a liability created by statute other than a forfeiture or penalty, shall be brought within six years after the cause thereof accrued.
§ 2305.10 Bodily injury or injury to personal property.
An action for bodily injury or injuring personal property shall be brought within two years after the cause thereof arose.
Plaintiffs argue that § 2305.10 does not apply to the present cause of action. They contend that the case of Andrianos v. Community Traction Co., supra, is limited to cases involving bodily injuries and injuries to personal property, and not to cases involving predetermined arm’s-length bargained contractual rights and obligations. Plaintiffs assert also that § 2305.10 does not apply to causes of action as in the present case for violation of rights in personal property or for violation of rights arising out of an injury to personal property, but rather that § 2305.10 applies to actions involving injury to persons or tangible things, which actions arise generally in situations where there is fortuitous damage to personal property such as damages resulting from an automobile collision. Peerless, on the other hand, maintains that the Andrianos decision controls in suits to recover damages for injury to personal property irrespective of the form of the action filed.
In Andrianos a bus passenger suffered bodily injuries when the bus driver struck a pillar or stanchion of a viaduct. Nearly four years after the accident the passenger sued the common carrier for violation of an implied contract to provide safe carriage, claiming $30,000 damages. The sole issue before the Ohio Supreme Court was whether the six-year statute of limitations for bringing a contract action under Section 11222 of the General Code (now Ohio Rev. Code § 2305.07), or the two-year statute of limitations on bodily injury under Section 11224-1 of the General Code (now Ohio Rev.Code § 2305.10), applied to the cause of action.
The Court ruled that the latter statute was applicable and dismissed the cause of action. It adopted what it termed the “majority rule” as follows:
The rule prevailing in by far the larger number of jurisdictions is that where a statute, specific in terms, limits the time within which an action for “injuries to the person” or “bodily injury” may be brought, such statute governs all actions the real purpose of which is to recover for an injury to the person, whether based upon contract or tort, and a general statute, limiting the time for bringing an action growing out of a contractual relationship, is without application. (Id., 155 Ohio St. at 50, 97 N.E.2d at 552.)
The Court also held that the two-year statute of limitations applied to all actions concerning bodily injury regardless of the form of action brought. The Andrianos Court noted at 51, 97 N.E.2d at 552:
No matter what form is adopted, the essence of the action is the wrongful injury, and that it arose from the breach of an express or implied contract is immaterial.
Thus, the limitation statutes are concerned with the nature or subject matter of the cause of action, even though the plaintiff may choose whether to sue for damages under a contract or under a tort theory.
The Court concluded at 53, 97 N.E.2d at 553:
In conclusion, Section 11224-1, General Code, is complete in itself and suggests no legislative intent to distinguish between bodily injuries directly and forcibly caused under circumstances where no contractual relationship exists between or among the persons concerned and those resulting from a breach of contract. Until such time as the General Assembly sees fit to make such distinction by an enactment carrying appropriate language to accomplish that purpose, this court must accept and apply the statute as it exists, regardless of hardship to a particular litigant.
It is manifest from a perusal of the amended petition that this is an action for damages upon a claim for bodily injury. It was instituted after the expiration of two years from the date upon which liability arose, and it comes squarely within the two-year limitation prescribed by Section 11224 — 1, General Code. (Footnote added)
Because § 2305.10 refers to injury to personal property as well as bodily injury, it is clear that the Andrianos case applies to both situations. Farbach Chem. Co. v. Commercial Chem. Co., 101 Ohio App. 209, 211-12,136 N.E.2d 363 (1956). See generally, 34 Ohio Jur.2d Limitation of Actions § 30 (1958).
The Ohio lower courts have developed Ohio case law since the Andrianos decision and have applied the limitation of § 2305.10 to cases where contracts have been involved, even to an oral bailment contract such as in the present case.
For example, the Andrianos case was followed, applying § 2305.10, in a case involving violations of a written car-rental agreement in which a rented automobile had been damaged. National Car Rentals v. Allen, 1 Ohio App.2d 321, 204 N.E.2d 554 (1964).
In Bauman Chevrolet, Inc. v. Faust, 66 Ohio Law Abs. 145, 113 N.E.2d 769 (Ct. of Common Pleas of Erie County 1953), the plaintiff sued for breach of an oral bailment contract for the bailee’s alleged failure to return an automobile in as good condition and repair as when the bailee took possession thereof; the car had been damaged beyond repair. The Court relying on the Andrianos decision, applied the two-year statute of limitations under Section 11224-1 of the General Code (now § 2305.10) holding that “a cause of action for damages to personal property arising out of a bailment contract, is governed by [that statute].” Id. at 147, 113 N.E.2d at 771.
Moreover, this Court in the case of Sears, Roebuck & Co. v. Cleveland Trust Co., 355 F.2d 705 (6th Cir. 1966), relied on the Andrianos decision and applied the statute of limitations under § 2305.10 to a lessee’s contract suit for the lessor’s alleged breach of its covenant to deliver a leased building to the lessee in good condition and repair, and for damages to personal property resulting therefrom. Among other things, the Court quoted the following from the District Court’s decision in Tomle v. New York Cent. R.R., 234 F.Supp. 101, 104 (N.D. Ohio 1964):
The Andrianos opinion continues on in language equally forceful and unequivocal to reinforce the Ohio Supreme Court’s pronouncement that the two-year statute of limitations applies to any and all actions to recover for personal injuries. In light of the Andrianos decision, plaintiff’s contention that he is entitled to the benefit of the six-year statute must be rejected. (355 F.2d at 707)
Cf. Mahalsky v. Salem Tool Co., 461 F.2d 581 (6th Cir. 1972) (two-year statute of limitations on injury to personal property applied to claim of express and implied warranties arising out of a sale of an alleged defective augering machine), and Levin v. Bourne, 117 Ohio App. 269, 192 N.E.2d 114 (1962) (§ 2305.10 applicable to automobile negligence suit against minor’s parents for alleged bodily injuries).
In 34 Ohio Jur.2d Limitation of Actions § 31 (1958) it is stated, in part:
§ 31. Bailments. If a breach of a bailment contract by the bailee gives rise to a situation where the action may be brought either in tort or contract, the bailor may elect which remedy he will pursue. Irrespective of the remedy chosen by the bailor, however, where the purpose of the action is solely to recover damages for injury to personal property, such action is governed by the statute of limitations relating to the recovery of damages for injury to personal property, namely, the 2-year statute, and not those relating to recovery of damages for the breach of contract. [Footnotes omitted]
Therefore it is clear that § 2305.10 is applicable to an action arising out of a breach of an oral bailment contract, even where the breach occurred due to a fortuitous situation of fire, as here, and it is equally clear that the pivotal decision in this area of law is the Andrianos case.
In the present case the plaintiffs had the option to sue either under a tort theory for injury to Norton-Simon’s and McCall’s personal property, the rolled paper stock, or under a contract theory for breach of the oral bailment contract. Although the plaintiffs chose the latter option, this Court is bound, under the doctrine of Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), by Ohio substantive law which applies the rule in Andrianos to suits for injury to personal property. It matters not that the case involves a large sum of money or that it will take time to investigate. Since the proof of loss was dated June 2,1971 it appears that the insurer had plenty of time to investigate. Plaintiffs offered no proof that they could not, in the exercise of ordinary diligence, have filed within the two-year statutory period, the same type of short complaint which was filed in the present case.
Here the sole purpose of plaintiffs’ lawsuit was to recover damages for the paper destroyed in the fire, and this Court holds that when the complaint is stripped of its legal terminology, plaintiffs’ cause of action in substance and effect was one for recovery of injury to personal property, and not, as plaintiffs contend, for violation of rights in personal property or for violation of rights arising out of an injury to personal property.
This holding does not mean that in every case wherein personal property has been damaged a suit in contract may not lie which applies a limitation different from § 2305.10. See, e. g., Schulz v. Allstate Ins. Co., 17 Ohio Misc. 83, 244 N.E.2d 546 (Ct. of Common Pleas of Franklin County 1968). There are various cases under Ohio law wherein the cause of action sounded in contract and in no way sought recovery for injuries to body or personal property or where recovery under a tort theory was incidental to the lawsuit. The following cases are examples of this principle and are distinguishable from both the case at bar and the Andrianos decision.
In R. & H. Cartage Co. v. Fought, 111 Ohio App. 230, 171 N.E.2d 369 (1960), the Court applied the fifteen-year statute of-limitations in a suit for a breach of a contract of indemnity for negligence in making delivery of a cargo shipment (spoilage and delay in delivery). The subrogee had already paid the shipper for any losses, but the cause of action did not arise “until the refusal of the defendant to comply on demand under the terms of its contract” covering the shipment with the lessee. Id. at 232, 171 N.E.2d at 371.
In Farbach Chem. Co. v. Commercial Chem. Co., 101 Ohio App. 209, 136 N.E.2d 363 (1956), the Court applied the six-year statute of limitations to a suit for an alleged breach of contract warranting good workmanship — the defendant allegedly failed to remove an offensive substance from brake fluid. The Court said at 213, 136 N.E.2d at 366:
The language of Section 2305.10, Revised Code, implies [sic] a positive injury to the property, not a negative contractual failure to render a product harmless.
The latter situation was the circumstance in the Farbach case.
Lastly, the Court in American Ins. Group v. McCowin, 7 Ohio App.2d 62, 218 N.E.2d 746 (1966), applied the limitation in § 2305.-07, rather than the limitation in § 2305.10, in a suit between an employer’s insurance carrier (subrogee) and an employee’s admin-istratrix because the cause of action rested upon an implied contract of indemnity pursuant to the doctrine of primary and secondary liability. The insurance company had paid damages to a third party for personal injuries sustained by that party caused by the employee’s negligent operation of an automobile.
Cf. Val Decker Packing Co. v. Corn Prods. Sales Co., 411 F.2d 850 (6th Cir. 1969) (action for breach of implied warranty of merchantability or fitness for a particular purpose pursuant to a written sales contract governed by the four-year statute of limitations specifically provided for under the Ohio Uniform Commercial Code).
Plaintiffs also argue in the alternative that the cause of action here is based upon an implied contract of indemnity, and thus the six-year limitation in § 2305.07 is applicable. Plaintiffs rely generally on this Court’s decision in Ohio Cas. Ins. Co. v. Ford Motor Co., 502 F.2d 138 (6th Cir. 1974), which was an opinion by a divided Court.
In the Ohio Casualty case plaintiff insurance company paid damages to injured third parties who had suffered personal and property damages when the brakes on the insured’s truck failed because of an alleged defect. The insurance company, as subro-gee to the rights of the insured, then sued the automobile manufacturer upon an implied contract of indemnity. The insurance company claimed that it was secondarily liable for the wrongful injuries while the automobile manufacturer was primarily liable as the party who actually created the wrong. Because the settlement payments were all made more than two years before the suit for subrogation was filed, but, with one exception, within six years of the filing of the complaint, the issue arose over what statute of limitations applied to the cause of action. This Court ruled that the real purpose of the action was “to obtain indemnification for monies paid to the injured third persons who suffered the damage” rather than “to gain compensation for personal injury or property damage.” Id. at 140. Thus the six-year limitation for contracts in § 2305.07 was held applicable “to an action for indemnification arising where a party secondarily liable has been compelled to pay damages that should have been borne by a party primarily liable . . ..” Id. at 141.
However, the situation here is different. As recognized by the District Court, plaintiffs have proceeded upon the theory of a breach of an oral bailment contract, and not as an action for indemnification. The real purpose of plaintiffs’ action was to recover for injury to personalty. Moreover there is no primary-secondary liability involved in the present case. Lloyd’s, as subrogee, has no rights greater than those of the insured, Norton-Simon and McCall. As noted by the Court in the Ohio Casualty case:
Of course, the insurance company, as subrogee, has no greater rights against Ford — no longer time in which to commence an action — than the insured would have had if he, instead of the insurance company, had- paid the claim and sued appellee for indemnification. 50 O.Jur.2d Subrogation § 26. (502 F.2d at 139)
Because Norton-Simon and McCall were limited to the two-year limitation in § 2305.10, so also was Lloyd’s.
We are of the opinion that the Supreme Court of Ohio would adhere to its decision in Andrianos, and approve the subsequent appellate decisions applying it to personal property damage. Cf. United States Fidelity & Guar. Co. v. Truck & Concrete Equip. Co., 21 Ohio St.2d 244, 257 N.E.2d 380 (1970).
For the reasons stated above, plaintiffs were barred from bringing their cause of action because of the running of the two-year statute of limitations in § 2305.10, and thus their cause of action was properly dismissed. The judgment of the District Court is affirmed.
. The syllabus in the Andrianos case, which is the law of the case in Ohio, states:
1. A special statutory provision which relates to the specific subject matter involved in litigation is controlling over a general statutory provision which might otherwise be applicable.
2. Section 11224-1, General Code, providing that an action for bodily injury shall be brought within two years after the cause thereof arose, governs all actions the real purpose of which is to recover damages for injury to the person and losses incident thereto and it makes no difference whether such action is for a breach of contract or strictly in tort. The limitation is imposed on
the cause of action and the form in which the action is brought is immaterial.
3. Where a fare-paying passenger sustains bodily injury during his transportation by a common carrier of passengers and thereafter institutes an action against the carrier to recover damages for such injury and the results thereof based on a claimed breach of the implied contract for safe carriage, the two-year limitation for bringing an action prescribed by Section 11224-1, General Code, is controlling and not the six-year limitation contained in Section 11222, General Code, relating to an action on an implied contract.
. But see Slick Airways, Inc. v. Reinert, 114 Ohio App. 124, 175 N.E.2d 844 (1961), for a case which applied the statute of limitations for a contract action wherein a tort action was possible without discussing the Andrianos decision.
See also Schiffman v. Itts, 88 Ohio Law Abs. 389, 183 N.E.2d 423 (Ohio App.1961), wherein the Court refused to apply the two-year statute of limitations under § 2305.10 in a suit for a breach of a bailment contract because the defendant never affirmatively raised the defense of the statute of limitations.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
AUGUSTUS N. HAND, Circuit Judge.
On December 7, 1945, and for some time prior thereto, the defendant Fiedorczyk operated a garage and in connection therewith sold used cars. Prior to December 7, 1945, the defendant Fiedorczyk purchased a policy of limited garage liability insurance from Shelby Mutual Casualty Company of Shelby, Ohio, the plaintiff herein. That policy provided protection only for Fiedorczyk personally, or for his duly authorized agent when operating an automobile in connection with the business of the garage.
On December 7, 1945, and while the garage liability insurance policy was in force, Fiedorczyk sold a used car for $200 to one Michael Albino. The sale was completed on December 7, and Albino took delivery of the car. About a week later, Albino paid $100 still remaining due on the purchase price. He had some difficulty with the starter mechanism of the car and brought it back to Fiedorczyk to have the starter repaired. Fiedorczyk undertook these repairs, completed the job and, on the afternoon of December 27, 1945, returned the car to Albino; Later on the afternoon of that day Albino, while driving the car, struck and injured the defendant Richmond in Plainville, Connecticut. Albino had no insurance to cover this accident. At the time of the accident, he was on an errand of his own, which had nothing to do with the business of Fiedorczyk. Subsequently, Albino and Fiedorczyk conspired to cook up a story whereby Fiedorczyk’s garage liability insurance would cover the operation of the car by Albino.
Richmond brought suit against Fiedorczyk in the Superior Court for Hartford County, Connecticut. The insurance company furnished attorneys to defend the action on ¡behalf of Fiedorczyk, as required by the policy, but notified Fiedorczyk that the case was handled under a reservation of rights and that it would pay no judgment rendered. It also notified Richmond’s counsel and the judge presiding over the action in the Superior Court that the case was handled under a reservation of rights and that no judgment rendered would be paid by it. The court rendered judgment in favor of Richmond against the defendant Fiedorczyk in the amount of $14,500. This judgment the insurance company refused to pay, and thereafter brought this action in the United States, District Court for the District of Connecticut to determine its liability under the insurance policy. The trial court found that under the facts as they now appear there was no coverage but held that the insurance company was collaterally estopped from relitigating the facts. The court also found that there was a lack of the cooperation required by the policy, 'but held the insurance company es-topped to raise this defense against Richmond because it had withheld material evidence concealed by its counsel which, if disclosed, would have made it plain to Richmond’s attorney that the burden and expense of the action against Fiedorczyk were useless.
1. As to coverage, Richmond argues that since facts which would show coverage of the insured were established in the previous litigation between the insured represented by the insurance company’s counsel on the one side, and Richmond on the other, the insurance company should be prevented, by the rules of collateral estoppel, from relitigating those facts. It is true that the Connecticut courts have recognized the general principle that one who controls litigation in his own interest is bound as to facts litigated even though he was not a party to the proceeding. Courts in other jurisdictions have applied this general rule to an insurance company which defends an action for its insured, apparently without regard to whether or not the company was required to do this by the policy. But the insurance company contends that where, as in the present case, it reserved its rights the Connecticut courts have held that collateral estoppel may not be asserted by the injured party against the insurance company. An analysis of the Connecticut decisions cited does not make this altogether clear. In Rochon v. Preferred Accident Ins. Co., 118 Conn. 190, 171 A. 429, it was held that the injured party may not assert res judicata against the insurance company until he has shown that the party whom he sued in the first action was covered by the insurance policy, for until then it could not be said that the relationship of insured and insurer existed, and that the insurance company was in privity with the defendant in the first action. It does not appear in this opinion that the insurance company defended the first action, or that the injured party sought to invoke the doctrine of res judicata on that ground, or even that all the facts going to coverage were previously litigated. More in point is the case of Manthey v. American Automobile Ins Co., 127 Conn. 516, 18 A.2d 397. There the insurance company did defend the first action, under a reservation of right. The unsuccessful defendant in that prior action, who contended he was insured, sued the company and argued that on the issue of coverage it was bound by facts litigated in the previous action, in which it had participated. The court ruled that the company had not waived its right to assert non-coverage, because it had made a timely reservation of its rights. The court also held that the insurance company was not bound on the issue of coverage by the litigation in the first action. As we read the opinion, the reason for the latter ruling was the absence of any adversary proceeding between the insurance company and the insured in the first action; no “issue” as to facts going to coverage was litigated in the prior action between the insurance company and the person claiming to be insured, for the litigation was between them on one side and the injured party on the other. Compare Restatement of Judgments §§ 82, 84, Comment h. Nevertheless the language used in Manthey v. American Ins. Co., supra, was not as clear as it might be, and it Js possible that the court had some more sweeping prohibition in mind, and the trial judge seems to have taken that view of the decision. Whatever the meaning of the language used, it cannot be said that the Connecticut courts have conclusively held that an injured party may not assert collateral estoppel against an insurance company which had controlled the defense in the prior litigation after reservation of its rights. In our view of the case, however, we need not pass on this question, nor on the possible effect of the language used in the Connecticut subrogation statute,’ under which Richmond is here claiming.
2. Even if the insurance company should lose on its defense of non-coverage, yet Richmond may not recover if the cornpany succeeds in its second defense of noncooperation.
.The court below held that Fiedorczyk neglected to cooperate with the insurance company, as required by the policy, through concealing from the company his false report to the Connecticut Motor Vehicle Department that he was the owner of the car at the time of the accident and also through executing a bill of sale of the car to one Cavanaugh when as a matter of fact the car did not then belong to the insured, but to Albino. These facts were not disclosed to the. company until late in the progress of the trial in the Connecticut State Court.
The trial judge in the principal case stated that there was a partial waiver of the defense of non-cooperation when Fiedorczyk on January 3, 1946, made known his cooked-up story . to the company’s agent, but said that there could be no waiver of any defense arising out of his concealment of the statement to the Connecticut Motor Vehicle Department or out of the deed of the car to Cavanaugh, for the company had no knowledge of the existence of those documénts. The judge added that: “This concealment would ordinarily be sufficient ground for a defense of non-cooperation * * * for the statements seriously affected its position in defense or settlement of Richmond’s claim.” He further said, however, that even though there could Ibe no waiver as to those statements, the company was in no position to make use of the non-cooperation defense, for its conduct in concealing the conspiracy, particularly after testimony at the trial disclosed the existence of the two documents, led Richmond through a long and expensive course of litigation which could have been avoided by abandonment or settlement of the claim but for its effort to suppress the facts. In accordance with this theory, the trial judge made the following findings of fact:
“35. Plaintiff Shelby concealed from Richmond, throughout the trial in Superior Court, the evidence of the conspiracy in its hands.
“36. Richmond was induced to continue his litigation by the failure of Shelby to reveal that evidence.”
Shelby argues that Finding 36 is not supported by the record. Richmond’s attorney did not testify in this proceeding, and the finding that he. was induced by Shelby to continue the litigation was presumably inferred from all the evidence of what took place. The inference, however, is very inconclusive. Had the insurance company put its agents on the stand to testify to the “cooked-up story” which Fiedorczyk had initially told them, the jury might nevertheless have chosen to disbelieve them and, in the light of the conflicting evidence, find Fiedorczyk liable. Indeed, in his brief Richmond’s attorney himself suggests that he might still have chosen to go to the jury on the basis of the evidence in his hands. We are not even convinced that the introduction of evidence by the insurance company’s agents of the “cooked-up story” would have strengthened the defense against Richmond, for the public documents filed by Fiedorczyk, which were all against his own apparent interest, would seem to have been far stronger proof against him than anything the insurance company could have offered by way of explanation. We do not believe that the failure to offer evidenee as to the “cooked-up story”, when so much stronger evidence was on Richmond’s side, induced Richmond to continue his litigation, and we reject Finding 36 as unfounded.
But even if Finding 36 should be regarded as substantiated, it does not follow that Richmond is entitled to the relief accorded him in the court below. The trial judge, in support of his position, referred to Goergen v. Manufacturers Casualty Ins. Co., 117 Conn. 89, 166 A. 757. In that case an insurance company defended its insured without filing a reservation of rights, either before the trial, or after the trial had commenced, upon learning that the insured was not cooperating. In a subsequent action by the injured party against the insurance company, it was held that the company had waived its defense of non-cooperation apparently because, by its conduct, it had held itself out to the injured party as willing to pay the judgment, and because as a result of those representations the injured party had continued his suit against the insured.
The facts here are quite different. Before defending the suit against Fiedorczyk, Shelby notified Richmond that it would not pay any judgment against Fiedorczyk, and at no time afterwards did it hold itself out to Richmond as so willing. We need not concern ourselves with the precise terms of the letter of reservation to Fiedorczyk or with the latter’s understanding of it, for it is the effect of Shelby’s conduct on Richmond with which we are concerned. It is true that the Connecticut courts intimated that even a reservation of rights may sometimes be ineffective to prevent a waiver if the insurance company performed acts which were inconsistent with the reservation. But here Shelby had not acted in a way that was inconsistent with its reservation of rights, for the most that can be said against Shelby is that it induced Richmond to continue the suit against the insured by conducting a weaker defense than might have been interposed for Fiedorczyk. It never intimated that its own defenses had been abandoned, and never in fact conducted a defense that can be regarded as negligent.
The effect of the judge’s decision was practically to do away with the defense of non-cooperation merely because Shelby was thought to have defended the case against Fiedorczyk in a way weaker than might have been employed. We do not believe that this was a ground for an estoppel where it was perfectly clear to Richmond that Shelby did not intend to pay any judgment against Fiedorczyk. We, therefore, hold that the insurance company did not by its conduct of the Connecticut trial after it had first learned of Fiedorczyk’s earlier non-cooperation waive that defense or estop itself from asserting it.
Judgment of the trial court reversed with directions to enter judgment for the plaintiff.
. Section 4231 of the General Statutes of the State of Connecticut, Revision of 1930, provides in part as follows:
“Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment shall not be satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment.”
. See Basta v. United States Fidelity & Guaranty Co., 107 Conn. 446, 140 A. 816, 818.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BOGGS, Circuit Judge.
In August 1989, Jack Abrams filed suit for conversion in the Kentucky courts against the Federal Deposit Insurance Corporation (“FDIC”) in its corporate capacity. After the suit was removed to federal court, the district court granted summary judgment for the FDIC and Abrams appealed. For the reasons that follow, we affirm the district court’s judgment in part and reverse in part.
I
This suit arose from the failure of the Peoples Bank of Olive Hill in December 1987. The FDIC was appointed receiver for the failed bank, and subsequently sold some of the Bank’s assets to the FDIC acting in its corporate capacity. Included in the assets sold to FDIC-corporate were a loan from the Bank to Abrams and a contract settling a prior deficiency on that loan. Despite the settlement contract, FDIC-corporate alleged that Abrams still owed money on the loan. FDIC-corporate then seized Abrams’s remaining account at the Bank, worth approximately $6,000, and applied the $6,000 as a setoff against the money allegedly owed on the loan.
The loan was first contracted in 1976 as a mortgage on Abrams’s house for $59,-332.96 with a 9V2% interest rate. By 1980, it was clear that Abrams was in default. Accordingly, the Bank filed suit for foreclosure. In December 1980, Abrams and the Bank settled the suit by signing a contract. The contract reads in pertinent part:
1. [Abrams] agrees to execute to [Peoples Bank] a deed of conveyance for the property set out in the mortgage securing the heretofore mentioned note.... 3. [sic] [Peoples Bank] agrees to attempt to sell said property for a fair market price. 3. [Abrams] agrees to be responsible for and agrees to pay the deficiency, if any, remaining from the proceeds after the proceeds from the sale of said property is applied to the indebtedness as heretofore set out. 4. [Peoples Bank] agrees to forego executing suit for foreclosure upon said note and mortgage upon execution of this contract.
The contract was signed and the suit dismissed. Abrams also deeded his house over to the Bank. The deed contained a stated consideration of $71,592.63.
The Bank subsequently sold the house to Carmel Stevens, but is unclear what the Bank received for the house. The deed to Stevens includes a stated consideration of $72,000. It is undisputed that Stevens paid for Abrams’s house with a combination of money and another house that the Bank could later resell. The records provided to us on appeal do not clearly establish what the Bank actually received from Stevens, nor how much the Bank ultimately received on the house received in trade.
Abrams argued in his motion opposing summary judgment that he owed no money on the loan, thereby making the setoff an illegal conversion. He contended that the president of the Bank, Barry Knipp, told him in 1981 after the transaction with Stevens that the contract was “at an end,” and that he was no longer liable for any deficiency. No writing memorializing this agreement has been found, but it is undisputed that the Bank made no effort to collect any money from Abrams after the Stevens transaction. Abrams also contended that this agreement was merged in the deed, and that the FDIC had failed to establish conclusively the existence and amount of any deficiency on the original loan.
The FDIC responded to Abrams’s contentions. First, the FDIC argued that Abrams could not rely on Knipp’s oral representation because of 12 U.S.C. § 1823(e) and D’Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942). Second, the FDIC argued that the doctrine of merger by deed did not relieve Abrams of any responsibility for any deficiency because the doctrine precludes reliance on any pri- or agreements not contained in the deed itself. It does not incorporate unstated agreements related to the deed. Third, the FDIC produced an affidavit from one of its employees averring that Abrams was indebted to the Bank for $19,822.63 in connection with the loan and the Stevens transaction. The affidavit contained no Bank records to substantiate the claim.
Abrams also made a discovery request for “all resolutions of the board of directors of the Peoples Bank of Olive Hill, minutes of all board meetings of the Peoples Bank of Olive Hill, and resolutions and all notes of the loan committee of the Peoples Bank of Olive Hill from October 1980 through December 1987.” The FDIC did not comply fully with this request, citing Privacy Act concerns pertaining to other persons who did business with the Bank whose names and affairs would appear in these records. Instead, the FDIC gave Abrams all of those minutes from the requested time period of the board of directors and the loan committee that mentioned Abrams or the foregoing affairs in any way.
The district court accepted all of the FDIC’s arguments, ruling that the FDIC had complied with the discovery request and granting it summary judgment. Abrams appealed from the summary judgment order and the denial of his discovery request.
II
A
We affirm those portions of the district court’s judgment denying Abrams the ability to contest his liability under the loan based on his alleged agreement with Knipp. We also affirm the district court’s ruling that the FDIC had complied with Abrams’s discovery request. We reverse the district court’s determination that the FDIC had conclusively proved that Abrams owed money on the loan and that such amount was in excess of the amount Abrams had remaining in his bank account, holding instead that a material issue of fact remains on this issue.
B
Knipp’s alleged promise in 1981 not to collect any deficiency remaining under Abrams’s loan and contract cannot prevent the FDIC from relying on the literal words of the loan and contract to collect that deficiency. It is well settled that an oral “side agreement” to an asset, tending to dimmish the FDIC’s interest in that asset, cannot defeat or diminish an otherwise valid obligation contained in the Bank’s records. D’Oench, Duhme, 315 U.S. at 458-60, 62 S.Ct. at 679-81; 12 U.S.C. § 1823(e). Such “side agreements” are not permitted to alter the written terms of the document creating the obligation because such agreements, not appearing in the bank’s records, would have a tendency to deceive the bank examiners as to the true value of the bank’s assets even if an intent to deceive the examiners was not present. Langley v. Federal Deposit Insurance Corporation, 484 U.S. 86, 91-92, 108 S.Ct. 396, 401, 98 L.Ed.2d 340 (1987); D’Oench, Duhme, 315 U.S. at 459, 62 S.Ct. at 680; Hall v. Federal Deposit Insurance Corporation, 920 F.2d 334, 340 (6th Cir.1990), cert. denied, — U.S. -, 111 S.Ct. 2852, 115 L.Ed.2d 1020 (1991); First State Bank v. City and County Bank, 872 F.2d 707, 715 (6th Cir.1989). We have held that the FDIC may assert the D’Oench, Duhme doctrine in actions brought against it as well as in actions brought by the FDIC. Hall, 920 F.2d at 340.
No agreement which tends to diminish or defeat the interest of the Corporation [FDIC] in any asset acquired by it under this section or section 1821 of this title, either as security for a loan or by purchase or as receiver of any insured depository institution, shall be valid against the Corporation unless such agreement—
(1) is in writing,
(2) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,
(3) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and
The Abrams-Knipp agreement, presuming that it was made, is precisely the sort of agreement against which D’Oench, Duhme and § 1823(e) are aimed. See Langley, 484 U.S. at 93, 108 S.Ct. at 402; First State Bank, 872 F.2d at 717 (“[W]e hold that the D’Oench estoppel doctrine precludes the enforcement of any oral agreement that is in contradiction with representations made to the FDIC”). It purports to annul an obligation that would otherwise appear to be valid based on the information in the bank’s records. It would tend to deceive bank examiners because the examiners would assume that Abrams still owed the money on the loan and contract. It meets none of the requirements imposed by § 1823(e) that would permit it to be asserted against the FDIC: it is not in writing; it was not entered into contemporaneously with the acquisition of the asset by the bank; it was not approved by any official committee of the bank; and, it was not contained in the bank’s records. As it is undisputed that the FDIC has an interest in the collection of the loan, having purchased it in its corporate capacity, both D’Oench, Duhme and § 1823(e) deny Abrams any recourse to the Knipp agreement.
C
Abrams contends that the doctrine of merger by deed independently prevents him from being liable for any remaining deficiency. He contends that the doctrine mandates that any oral agreements made in connection with the making of a deed are automatically included in the deed. Therefore, he argues that Knipp’s oral agreement that Abrams would not be responsible for any deficiency is contained in the deed and is binding on the FDIC.
(4)has been, continuously, from the time of its execution, an official record of the depository institution.
This contention is for many reasons utterly meritless. The primary reason this argument is meritless is because it misstates the doctrine of merger by deed. The doctrine does not give effect to any oral agreement made in connection with the making of a deed not written therein; it nullifies any oral agreement not included in the deed, even if made in connection with the making of the deed. Ferguson v. Cussins, 713 S.W.2d 5 (Ky.App.1986); Borden v. Litchford, 619 S.W.2d 715 (Ky.App.1981). See Humphries v. Haydon, 297 Ky. 219, 179 S.W.2d 895 (App.1944) (collecting cases). Therefore, the doctrine would bar consideration of Knipp’s promise because the promise was not formally included in the deed even if it were applicable to this case.
D
We also affirm the district court’s ruling that the FDIC complied with Abrams’s discovery request. We review district court rulings on discovery motions under an abuse of discretion standard. Theunissen v. Matthews, 935 F.2d 1454, 1465 (6th Cir.1991); Scales v. J.C. Bradford and Co., 925 F.2d 901, 907 (6th Cir.1991); City of Mt. Clemens v. U.S.E.P.A., 917 F.2d 908, 914 (6th Cir.1990). “Abuse of discretion is defined as a definite and firm conviction that the trial court committed a clear error of judgment.” Monnette v. AM-7-7 Baking Co., Ltd., 929 F.2d 276, 280 (6th Cir.1991).
Our review of the evidence does not leave us with a firm conviction that the district court abused its discretion. The request was extremely broad, and was essentially a fishing expedition to permit the plaintiff to examine every piece of paper in the Bank’s possession to find evidence that the loan committee had discussed matters pertaining to the loan and contract. The FDIC had reason to guard the privacy of other Bank clients whose affairs would become known to plaintiff and his counsel if the discovery request were enforced literally. The FDIC has produced what it says is every document mentioning Abrams, the loan, or the Stevens transaction, and Abrams has provided no evidence to suggest even remotely that there might be some evidence the FDIC has not turned over. In light of this, the district court’s ruling was not definitely in error.
Ill
We reverse the court’s grant of summary judgment, however, because we hold that a genuine issue of material fact exists regarding the existence and the amount of any deficiency owed by Abrams to the Bank.
The FDIC may avoid a judgment for Abrams for conversion only if it had the legal right to seize his savings account. The only source presented to this court for such a right is 12 U.S.C. § 1822(d), which permits the FDIC to withhold payment on that part of an insured bank account that can provide payment for any liability the accountholder has at the same bank. Thus, to be granted summary judgment, the FDIC must show that there is no genuine issue of material fact that (a) Abrams had an outstanding liability at the Peoples Bank at the time his account was seized, and (b) that the amount of that liability equalled or exceeded the amount seized from his account.
The FDIC has offered only one piece of evidence regarding the existence and amount of the deficiency: an affidavit of one of its employees responsible for the matters involved in this case, Michael Hall. Hall’s affidavit simply states, in pertinent part:
3. That at the time of said Bank failure, the Bank’s records showed that Plaintiff Jack H. Abrams was justly indebted to the Bank pursuant to a promissory note dated October 18, 1976 (a true copy of which is labeled Exhibit A and annexed to FDIC’s Motion for Summary Judgment) and a contract dated December 10, 1980 (a true copy of which is labeled Exhibit B and annexed to FDIC’s Motion for Summary Judgment filed Herewith) in the amount of $19,822.63.
This single conclusory phrase, unsupported by any attached Bank records and without any explanation of how the amount owed was derived, is the only evidence ever offered by the FDIC to establish the existence and amount of the alleged deficiency.
Skimpy as it is, this affidavit is based upon personal knowledge of the affiant and is sufficient under Rule 56, Fed.R.Civ.P., to meet the moving party’s burden to show there is no genuine issue of material fact regarding the existence and the amount of the deficiency. If Hall’s affidavit were un-refuted, and if Abrams offered no other evidence pertaining to the existence or the amount of the deficiency, there would be no evidence sufficient to permit a rational jury to find that the FDIC did not have a legal right to seize Abrams’s account, and therefore was liable for conversion. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). See also Federal Deposit Insurance Corporation v. Armstrong, 784 F.2d 741, 745 (6th Cir.1986) (unrefuted FDIC employee affidavits sufficient to support grant of summary judgment for FDIC); Federal Deposit Insurance Corp. v. Investors Associates X., Ltd., 775 F.2d 152, 156 (6th Cir.1985) (same).
Abrams offered two pieces of evidence in response to Hall’s affidavit. First, Abrams submitted his own affidavit pointing out that both deeds involved in this case — the one executed by Abrams in 1980 in favor of the Bank, and that executed in 1981 by the Bank in favor of Stevens— included a stated consideration. The deed he executed in favor of the Bank had a stated consideration of $71,592.63, and the deed the Bank executed in favor of Stevens showed a stated consideration of $72,000. In light of the fact that the original loan was for just over $59,000, it can be said that a jury could rationally conclude that the exchange and/or the resale of the house satisfied the obligation. Second, Abrams noted in his motion to vacate summary judgment that the affidavit was unsupported by bank records, and that the stated consideration in the first deed could be found to be precisely the amount owed by Abrams when he signed the deed and the contract.
While the stated consideration in the first deed cannot by itself establish a genuine issue regarding the existence or amount of the deficiency, with the addition of the stated consideration in the second deed, that issue is established. The first deed’s consideration cannot establish that fact because of the terms of the contract. The contract clearly stated that Abrams agreed to be liable for any deficiency “remaining after the proceeds from the sale of said property is applied to the indebtedness.” The stated consideration in the first deed clearly cannot have eliminated the debt because the contract signed along with the deed envisions that only the proceeds from resale of the property are to be applied against the debt, not the pre-resale estimated value of the property itself. As a rational jury could not find for Abrams based on the theory that the first deed’s stated consideration conclusively eliminated Abrams’s obligation to pay, that fact cannot create a genuine issue of material fact sufficient to defeat a motion for summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.
The second deed’s stated consideration, however, could be found to have created that issue. There is nothing in the record before us that disputes that this amount was received by the Bank. The Bank records before us in the record do not clarify matters at all. They show the following entries regarding the Stevens transaction:
1) A statement from a meeting of the board of directors on November 12, 1981 that Stevens was to purchase Abrams’s house for $32,000 plus another house, which was appraised at $40,000;
2) A statement entitled “Other Real Estate as of December 31, 1982” showing an entry for a home “Jack Abrams” in “Amount” $41,192.63 and a “Sales Price” of $44,000.00;
3) A statement, apparently from December 1982 or January 1983, referring to Abrams’s home acquired in December 1980. This statement gave an appraised value for the house of $40,000 as of June 29, 1981, a “Gross Amount” of $42,-323.63, a “curtailment” of $1,130.00 as of June 28, 1982, a “Current Book Amount” of $41,192.63, and a “Sales Price” of $35,000;
4) A similar statement, apparently from July 1983, showing the same “Gross Amount,” a new “Curtailment” of $7,073 as of July 19, 1983, a new “Current Book Amount” of $30,000.37, and the same “Sales Price”;
5) A statement of unknown date entitled “Assets Subject to Adverse Classification” showing an entry for “Other Real Estate: Abrams.” Under the heading “Substandard” is the amount $30,000, and under the heading “Less” is the amount $7,073.
We have been unable to determine from the provided records how the FDIC arrived at its figure of a deficiency of $19,822.63. In the absence of Bank records clearly substantiating the FDIC’s calculation, a jury could rationally conclude that the entire proceeds of the Stevens exchange— including the estimated value of the Stevens house — was applied against the indebtedness. It could conclude from the similarity of amounts in the two stated considerations that Abrams owed approximately $72,000 when he signed the contract and deeded his house over to the Bank, and that the Bank received approximately $72,-000 in total from Stevens in the resale of Abrams’s house. Therefore, Abrams has provided sufficient evidence to permit a rational jury to find that the FDIC’s defense to his claim of conversion is not valid, and that the FDIC is therefore liable for the amount seized. Based on that evidence, there remains a genuine issue of material fact for resolution at trial.
IV
The district court’s ruling that the FDIC complied with Abrams’s discovery order is AFFIRMED. The district court’s order is affirmed in so far as it prevents Abrams from asserting his oral side agreement with Knipp to prevent the seizure of his account, and in so far as it holds that the Abrams receives no protection from the doctrine of merger by deed. However, as a grant of summary judgment cannot stand in the face of evidence that would be sufficient to permit a rational jury to find for the non-moving party, the district court’s judgment is REVERSED, and this case REMANDED to the district court for further proceedings not inconsistent with this opinion.
. 12 U.S.C. § 1823(e) reads as follows:
. In fact, the agreement at issue in D'Oench, Duhme was also one to refrain from calling for payment upon a note. The inability of a party to rely on an oral agreement suspending or cancelling payment on an otherwise valid note was so well established by 1987 that the Lang-leys conceded that section 1823(e) prevented them from relying on such agreements. See Langley, 484 U.S. at 89 n. 1, 108 S.Ct. at 400 n. 1.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KILKENNY, Circuit Judge:
The appellant was indicted, tried by a jury, and convicted of armed bank robbery in violation of 18 U.S.C. § 2113(a) and (d). We affirm.
BACKGROUND
On November 3, 1976, Laverne Schultz, a teller at the Crocker National Bank, San Francisco, California, activated bank surveillance cameras as she was being robbed. An hour after the robbery, she and another employee, Matthew Parks, gave descriptions of the robber to the Federal Bureau of Investigation [FBI]. The following day, Schultz and Parks also identified the man in the surveillance photographs as the robber. Since the identity of the robber was not yet known, the FBI distributed the surveillance photographs to various law enforcement officials.
On December 7,1976, a correctional officer alerted the FBI when he concluded that the appellant was the man shown in these photographs. A six photograph photospread was prepared and .ready for showing two days later. From the spread, Schultz identified the appellant’s picture as the one who “could be the man who held me up.” Parks identified the appellant’s picture as “the most likely suspect.” On the same day, an informant positively identified the appellant from the surveillance photographs and recognized the clothes he was wearing therein. The next day [December 10,1976], the FBI, based upon an affidavit, obtained a search warrant for the appellant’s apartment. They seized, inter alia, some shoes and a briefcase that were allegedly used in the robbery.
Additional facts necessary for disposition of the appellant’s claims will be discussed below.
ISSUES
I. Were the photographic identification procedures constitutionally infirm?
II. Were the shoes and briefcase erroneously admitted into evidence?
III. Did the trial court err in allowing the testimony of an expert in photographic comparison that in his opinion the shoes and briefcase found in the apartment were the same ones depicted in the surveillance photographs?
IV. Did the trial court err in its instructions on eyewitness identification?
I.
The appellant suggests that the photographic identification procedures were so impermissibly suggestive as to taint the in-court identifications. He relies upon the alleged inconsistent descriptions given by Schultz and Parks to the FBI, consisting of the fact that neither commented upon his beard at the time of the robbery, and the fact that neither was able to identify him at a corporeal lineup [without his beard]. His claim is aptly summarized and disposed of by the trial court:
“. . . Defendant contends that this photographic spread was impermissibly suggestive for three reasons: (1) three of the six Negro male individuals depicted appear to be significantly younger than defendant; (2) only defendant and two others appear to have afrostyle haircuts; and (3) only defendant appears to have a beard.
An identification . . . must be suppressed when the line-up is so impermissibly suggestive as to result in a substantial likelihood of irreparable misidentification. Simmons v. United States, 390 U.S. 377[, 88 S.Ct. 967, 19 L.Ed.2d 1247] (1968). In the case at bar, an examination of the photographic spread demonstrates that the pictures are not impermissibly suggestive. No significant difference in age is discernible in the photographs. Five out of six of the photographs depict individuals wearing hair styles similar to that of defendant. Half of the photographs depict individuals wearing beards. All of the photographs depict individuals with facial hair. . . ”
We have examined this photospread and agree with the trial court’s finding, whether reviewable as fact or law, United States v. Higginbotham, 539 F.2d 17, 23 (CA9 1976), that the pictures are not impermissibly suggestive. The procedure was here necessary, United States v. Calhoun, 542 F.2d 1094, 1104-5 (CA9 1976), and not unduly suggestive, United States v. Freie, 545 F.2d 1217, 1224 (CA9 1976), cert. denied 430 U.S. 966, 97 S.Ct. 1645, 52 L.Ed.2d 356 (1977). It follows a fortiori that there was no substantial likelihood of irreparable misidentifieation. See Manson v. Brathwaite, — U.S. —, 97 S.Ct. 2243, 53 L.Ed.2d 140 (6/16/77).
Even if there were some suggestiveness, we think that the in-court identifications are possessed of sufficient reliability to render them admissible. Manson, supra, at-, 97 S.Ct. 2243. Beyond that, the factors urged by the appellant were considered by the jury and
. [w]e are content to rely upon the good sense and judgment of American Juries, for evidence with some element of untrustworthiness is customary grist for the jury mill. . . . ” Id. at -, 97 S.Ct. at 2254.
This contention is without merit.
II.
Under this assignment of error, the appellant makes the same arguments that he made below. In denying the motion to suppress, we think that the trial court correctly analyzed this issue.
On the appellant’s claim that the facts in the affidavit are stale, and, therefore, insufficient to support a finding of probable cause, the trial court found the following:
“The bank robbery charged in the indictment occurred on November 3, 1976, and the search warrant in question was issued on December 10, 1976. Approximately six weeks elapsed between the bank robbery and the issuance of the warrant. However, defendant was not identified as the possible bank robber until December 7, 1976 [cite]. Further, it was not until December 9, 1976, that plaintiff was identified by an informant as owning the clothes which were worn by the bank robber. This informant also disclosed the defendant’s address on that date [cite]. The test for judging the timeliness of a search warrant is whether there is sufficient basis to believe, based upon a continuing pattern of conduct or other good reasons, that the items to be seized are still on the premises. Sgro v. United States, 287 U.S. 206, 207 [, 53 S.Ct. 138, 77 L.Ed. 260] (1932). In the instant case, the affidavit states that the clothing to be seized was owned by defendant and that defendant was observed wearing the clothing on numerous occasions [cite]. These statements supply a sufficient basis to believe that the items sought by the warrant were located on the premises to be searched at the time the warrant was executed. The information contained in the warrant, therefore, was not stale.”
As to the affidavit, we have viewed it in a common sense and nontechnical manner, United States v. Ventresca, 380 U.S. 102, 109, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965), and hold that the above findings are proper and fully supported by the case law. See United States v. DiMuro, 540 F.2d 503 (CA1 1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 733, 50 L.Ed.2d 749 (1977) [information in affidavit more than four months old]; United States v. Rosenbarger, 536 F.2d 715 (CA6 1976), cert. denied,-U.S.-, 97 S.Ct. 2920, 53 L.Ed.2d 1060 (1977); United States v. Bowers, 534 F.2d 186, 192 (CA9 1976), cert. denied, 429 U.S. 942, 97 S.Ct. 360, 50 L.Ed.2d 311 [almost six weeks between crime and search warrant]; United States v. Steeves, 525 F.2d 33 (CA8 1975) [information in affidavit more than 87 days old — warrant sought, inter alia, the clothes worn in the robbery]; United States v. Rahn, 511 F.2d 290 (CA10 1975), cert. denied, 423 U.S. 825, 96 S.Ct. 41, 46 L.Ed.2d 42 [information in affidavit nearly- two years old].
The appellant also maintains that there was no probable cause for the search because the affidavit did not connect him with the premises to be searched, with the offense, or with the items to be seized. This claim is frivolous. See United States v. Ventresca, supra. As stated by the trial court:
. . This claim is without merit. The affidavit identifies the clothing to be seized as having been worn by the bank robber. It identifies the defendant as owning the clothing, and links the clothing to his address [cite]. The affidavit also describes this clothing with particularity, along with a handgun, bait money, and a folding case [cite].”
Based upon the detailed recitations in the affidavit, and the fact that the FBI agents had independently observed the appellant enter the apartment that was to be searched, we hold that there was probable cause to believe that the challenged items [the shoes and the briefcase] would be in the appellant’s residence. See Steeves, supra, 525 F.2d at 38. They were, therefore, properly admitted in evidence by the trial court.
III.
FBI Agent Avignone, an expert in the field of questioned documents and photographic comparison, testified during the course of the trial that the shoes and briefcase found in the search were “most probably” the same as those depicted in the bank surveillance photographs. The appellant relies upon United States v. Burke, 506 F.2d 1165 (CA9 1974), cert. denied, 421 U.S. 915, 95 S.Ct. 1576, 43 L.Ed.2d 781 (1975), for the proposition that this was reversible error to so encroach upon the province of the jury.
In Burke, the court found error, albeit nonprejudicial, in allowing the testimony of an expert comparing photographs of the defendant taken after his arrest with photographs taken by the bank surveillance cameras. His testimony related to similarities in physical characteristics and wearing apparel, matters the court felt were “within the province and capability of the jury guided by argument of counsel on both sides.” Id. at 1170.
Avignone’s testimony here was technical/specialized, cf. United States v. Green, 525 F.2d 386, 391-2 (CA8 1975) [same witness], and clearly helpful to the jury. Rule 702, F.R.E., did not become effective until after the disposition of the cases relied upon by the appellant and it authorizes the procedure here employed. After detailing the qualifications of Agent Avignone as an expert in photographic comparison and examination of questioned documents, the government submitted the witness as an expert. The appellant declined the opportunity to cross-examine on the qualifications of the witness. It is clear from the record that the trial court found that the witness did qualify as an expert. We cannot say that there was an abuse of discretion. Burlington Northern Inc. v. Boxberger, 529 F.2d 284 (CA9 1975); United States v. Oliver, 525 F.2d 731 (CA8 1975), cert. denied, 424 U.S. 973, 96 S.Ct. 1477, 47 L.Ed.2d 743 (1976).
Moreover, the testimony of Pamela Alexandra, the appellant’s one time housemate, clearly associates the appellant with the shoes under scrutiny and with the surveillance photographs. She recognized the shoes and the jacket worn by the appellant in the surveillance photographs. After an examination of the shoes at trial, she told the jury that she had seen the appellant drip that color yellow paint on them when they were painting their kitchen [the same paint drips compared by Avignone]. Additionally, she specifically identified, from the surveillance photographs, various facial and physical characteristics of the appellant. Consequently, if there was an error in the admission of Avignone’s testimony, it was harmless under the provisions of Rule 52(a), F.R.Crim.P. See also United States v. Pratt, 531 F.2d 395 (CA9 1976) [same witness]; United States v. Brown, 501 F.2d 146 (CA9 1974), reversed on other grounds, 422 U.S. 225, 95 S.Ct. 2160, 45 L.Ed.2d 141 (1975); United States v. Trejo, 501 F.2d 138 (CA9 1974).
IV.
The appellant requested detailed instructions on identification testimony, the so-called “Telfaire” instruction, United States v. Telfaire, 152 U.S.App.D.C. 146, 469 F.2d 552 (1972). A part of this instruction was given by the trial court, but the appellant claims that the court erred in not giving his requested instruction in full.
At the outset, the appellant is confronted with the well established rule that the giving of jury instructions on identification rests largely within the discretion of the trial judge. See, e. g., United States v. Sambrano, 505 F.2d 284, 286 (CA9 1974), cf. Trejo, supra, 501 F.2d at 140. Moreover, this court has repeatedly declined to require the use of the Telfaire instruction. See United States v. Masterson, 529 F.2d 30, 32 (CA9 1976), cert. denied 426 U.S. 908, 96 S.Ct. 2231, 48 L.Ed.2d 833 (1976).
We find the above authority controlling. The trial court went beyond that which was approved in Masterson by admonishing the jury that identification testimony “should be considered with great caution and weighed with great care.” There can be no abuse of discretion under these circumstances.
CONCLUSION
The appellant had a fair trial in the district court. The judgment of conviction must accordingly be affirmed.
IT IS SO ORDERED.
. Disapproved on another point, Scarborough v. United States, -U.S.-, 97 S.Ct. 1963, 52 L.Ed.2d 582 (1977).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
Opinion for the Court filed by Circuit Judge D.H. GINSBURG.
D.H. GINSBURG, Circuit Judge:
Soft Drink Workers Union Local 812 petitions for review of the National Labor Relations Board’s ruling that it violated § 8(b)(7)(B) of the National Labor Relations Act, 29 U.S.C. § 158(b)(7)(B), which prohibits recognitional picketing within twelve months of a valid election. The Board cross-petitions for enforcement of its order that the Union cease and desist from such activity. The principal issue between the parties is whether the Board properly interpreted the statute to bar picketing by a formerly incumbent union that has been defeated in a Board election. We uphold the Board’s interpretation, and accordingly deny the Union’s petition for review and grant the Board’s cross-petition for enforcement.
I. Background
When the collective bargaining agreement between the Union and the Pepsi-Cola Newburgh Bottling Company expired in 1989 without the parties having reached an agreement on a new contract, the Union called a strike and all of the 85 or so employees in the bargaining unit walked out. The Employer hired replacement workers, resumed operations, withdrew its recognition of the Union, and when the Union persisted in picketing its premises, petitioned the NLRB for a representation election.
The Union, disclaiming any desire to represent the entire bargaining unit (which now consisted of both the strikers and the replacements), and asserting its interest in representing only the striking workers, refused to participate in the election and sought to have its name removed from the ballot. The Regional Director of the NLRB rejected the Union’s disclaimer argument and denied its request to be removed from the ballot. The result of the election, which the Union boycotted, was 113-1 against its continuing to represent the bargaining unit employees. The Union raised no objection to the election, and the Regional Director accordingly decertified it as the representative.
Undaunted, the Union continued to picket the Employer, using the same signs and leaflets as it had before the election. As the parties stipulated, the Union’s position was (and is) that “it is on strike to secure the return of the positions of the strikers with the employer and to negotiate terms and conditions under which they will work upon their return to employment.” The Employer then charged that the Union’s post-election picketing violated § 8(b)(7)(B) of the Act, and the Board’s General Counsel issued an unfair labor practice complaint. The Union responded that § 8(b)(7)(B) does not apply to picketing initiated by an incumbent union engaged in a lawful economic strike, pointing to the Board’s similarly limited interpretation of § 8(b)(7)(C), which also regulates recogni-tional picketing. In addition, the Union challenged the validity of the election, on the ground that the Employer had padded the rolls by hiring an excessive number of replacements in order to obtain a majority vote against the Union.
The AU held (1) that the Union is not exempt from § 8(b)(7)(B), notwithstanding its status as an incumbent when it started picketing, and (2) that it is precluded from challenging the validity of the election in the unfair labor practice proceeding because “voter eligibility issues ... could have been litigated in the underlying representation proceeding.” Accordingly, the ALJ revoked the Union’s subpoenas of the Employer’s personnel records. The ALJ subsequently held that the Union violated § 8(b)(7)(B) of the Act, and the Board affirmed, ordering the Union to cease and desist from picketing and to take certain affirmative steps.
II. RECOGNITIONAL PICKETING
The Union argues principally that the recognitional picketing prohibited by § 8(b)(7)(B) does not include picketing begun by a recognized union in support of a peaceful economic strike. In what seems to be almost an afterthought, the Union adds that a contrary interpretation would violate the First Amendment to the Constitution of the United States.
The statutory aspect of this argument is based upon case law describing “blackmail picketing,” i.e., recognitional picketing by a minority union, as “the evil with which Congress was predominantly concerned” in § 8(b)(7)(C), Dayton Typographical Union No. 57 v. NLRB, 326 F.2d 634, 636 (D.C.Cir.1963), and upon the Board’s interpretation of § 8(b)(7)(C) not to proscribe picketing by an incumbent union. Warehouse Employees Union No. 570 (Whitaker Paper), 149 NLRB 731, 735 (1964). The Union argues that “[s]ince the policies and purposes underlying § 8(b)(7) are equally applicable to § 8(b)(7)(C) ... as they are to § 8(b)(7)(B),” the two sections require a parallel interpretation. And the picketing in this case, the Union argues, was merely the continuation of a lawful economic strike begun by an already recognized union, and not an attempt by a minority union to “blackmail” its way to recognition.
The Union’s statutory argument enters the lists against long odds. At the outset, the Union concedes that “a literal reading of the language of § 8(b)(7) would appear to bar the picketing conducted in this case,” and that there is no specific legislative history or other evidence of congressional intent to create an exception to the plain meaning of that language. In addition, the NLRB provides a perfectly reasonable basis in policy — the congressional desire to guarantee a period of repose following a valid election — for its uniform application of § 8(b)(7)(B) against recognitional picketing, whether that of a former incumbent or that of a newcomer.
Against these considerations, the Union offers the Board’s own supposedly inconsistent interpretation of § 8(b)(7)(C). In Whitaker Paper, the union struck and began to picket after negotiations over a new collective bargaining agreement had reached impasse. The company hired replacements and claimed a good faith doubt as to the union’s majority status, but neither the company nor the union petitioned for an election. The union continued its picketing, and the employer filed a § 8(b)(7)(C) charge. The Board found no violation, relying heavily upon Building and Construction Trades Council of Santa Barbara County (Sullivan Electric Co.), 146 NLRB 1086 (1964), in which it had determined that the phrase “recognize or bargain” in § 8(b)(7) was “intended to proscribe picketing having as its target forcing or requiring an employer’s initial acceptance of the union as the bargaining representative of his employees.” 146 NLRB at 1087 (emphasis added). There is room for doubt whether Whitaker Paper is consistent with current Board policy under § 8(b)(7)(C). See Hasset Storage Warehouse, Inc., 287 NLRB 735, 739 (1987) (“the prohibitions of Section 8(b)(7)(C) are not limited to ‘initial’ recognitional activities, by [sic] that they also extend to recog-nitional activities by a union to re-establish lawfully withdrawn recognition”); cf. Penello v. Warehouse Employees Union Local 570, 230 F.Supp. 900, 904 (D.Md.1964) (§ 10(i) injunction proceeding arising out of same dispute as Whitaker Paper: “This Court finds no justification in the statute, the legislative history or the cases interpreting the statute, for limiting sec. 8(b)(7) to picketing having as its target forcing or requiring an employer’s initial acceptance of the union”). The Board has never repudiated Whitaker Paper, however, and distinguished it in deciding this case.
The Board’s present interpretations of §§ 8(b)(7)(B) and (C) are based upon the difference between picketing when there is no Board election in the picture and picketing that occurs immediately after the Board has held an election. Under the Board’s approach, an employer’s good faith but untested doubts concerning an incumbent union’s majority status are not sufficient to put that union on the same footing as a stranger seeking “initial acceptance,” whereas a valid election in which a majority of the employees reject the union has precisely that effect. This latter conclusion is fully consistent with the general purposes of § 8(b)(7):
first, to encourage prompt resort to the election machinery, rather than protracted picketing, as the method for resolving representation questions; [and] secondly, to eliminate recognitional picketing where resort to the election machinery is barred either by a recent election or by a collective bargaining agreement with another union.
Meltzer, Organizational Picketing and the NLRB, 30 U.Chi.L.Rev. 78, 83 (1962). See Dayton Typographical, 326 F.2d at 646 (“purpose of Congress in passing Section 8(b)(7) [was] the encouragement of elections under the aegis of the Board”). That the Board (in Whitaker Paper) thought that the picketing of a union about which the employer had merely a good faith doubt as to its majority status was not intended to force the employer to “recognize or bargain” within the meaning of § 8(b)(7)(C) does not imply that such purpose is absent, for purposes of § 8(b)(7)(B), when the picketing occurs after the union has undeniably lost any claim to the status of majority representative.
We note that the Tenth Circuit has considered and rejected another union’s identical attempt to import the Board’s interpretation of § 8(b)(7)(C) into its reading of § 8(b)(7)(B). NLRB v. Lawrence Typographical Union No. 570, 376 F.2d 643 (1967). As that court pointed out, a previously recognized union, having lost a valid election, “occupies no better position than the union which has, through a Board election, sought and failed to have itself accepted initially as the bargaining representative.” Id. at 653 (emphasis in original). The election wipes the slate clean; the losing union’s status as an “incumbent” is terminated and can afford it no protection from the clear command of § 8(b)(7)(B). To hold otherwise
would invite a losing incumbent union to resort to such picketing as a pressure tactic to wrest the representative status and recognition which it was denied by the employees’ freely expressed choice at the ballot box, would unstabilize [sic] the situation for a period of 12 months during which no new election could be held in accordance with Section 9(c)(3), and would subvert and nullify the very purpose for which Section 8(b)(7)(B) was enacted.
Id. (quoting the trial examiner in the underlying decision). We agree.
The Union next invokes a principle of statutory construction crafted in order to minimize conflicts between the Congress and the First Amendment to the Constitution: the court should not impute to the Congress an intent to restrict peaceful picketing unless the legislature has targeted an “isolated evil” that it wishes to curb, and in so doing has clearly expressed the scope of the restriction. NLRB v. Fruit & Vegetable Packers and Warehousemen (Tree Fruits), 377 U.S. 58, 62-63, 71, 84 S.Ct. 1063, 1065-66, 1070, 12 L.Ed.2d 129 (1964). The Board’s interpretation of § 8(b)(7)(B) is consistent with this principle. The statute is clear in creating a twelvemonth period of repose following a valid election, during which time recognitional picketing is generally barred. This is a precise and direct response to the “evil” of a union that seeks to harass its way to recognition after the employees have rejected it as their representative and while § 9(c)(3) of the Act remains a bar to holding a second election. See Lawrence Typographical Union No. 570, 158 NLRB 134 (1966).
The Union appeals also to a higher authority: “It is hornbook law,” we are told, “that if § 8(b)(7)(B) is so construed, then the section has to be deemed to abridge freedom of speech in violation of the First Amendment.” The Union fails to cite even a hornbook, however, and the law to be found in the law reports leads us to conclude that § 8(b)(7)(B), as construed, is within constitutional bounds. Cf. Building Service Employees Int’l Union, Local 262 v. Gazzam, 339 U.S. 532, 540, 70 S.Ct. 784, 788, 94 L.Ed. 1045 (1950) (state injunction barring post-election picketing seeking recognition of a defeated union does not violate First Amendment); Miller v. United Food and Commercial Workers Union, Local 498, 708 F.2d 467, 471 (9th Cir.1983) (“Courts of Appeals have uniformly upheld [against first amendment challenge] the section 8(b)(7)[C] restriction against picketing for recognitional purposes as a legitimate exercise of that authority to promote labor democracy and the orderly settlement of representational controversies”) (citing, inter alia, Dayton Typographical, 326 F.2d at 649). Thus, again in accord with the Tenth Circuit, we reject the Union’s arguments for disallowing the Board’s interpretation of § 8(b)(7)(B). Lawrence Typographical, 376 F.2d at 654.
Finally, the Union argues that because it has consistently disavowed recognition as an objective, its picketing was not recogni-tional but only “in furtherance of an economic strike.” When the picketing began, the Union was the recognized bargaining representative of the employees; the picketing was indeed in furtherance of an economic strike. Once the Union lost its status as the bargaining representative, however, the Union’s continued picketing for the admitted purpose of bargaining on behalf of the striking employees was necessarily also recognitional because the Union’s right to bargain is dependent upon the Employer’s obligation to recognize it as the bargaining representative of the employees. The objection is therefore frivolous.
III. Preclusion of Election Challenge
The Union next argues that it is entitled to subpoena evidence relevant to the validity of the election for use in defending itself in this unfair labor practice proceeding. NLRB Rule 102.67(f), 29 C.F.R. § 102.67(f), generally precludes a party’s litigating in an unfair labor practice proceeding any issue that it could have raised in the representation proceeding, see NLRB v. Mar Salle, Inc., 425 F.2d 566, 572 (D.C.Cir.1970). The Union, however, claims the benefit of the exception, established in Board precedent, where there is new or previously unavailable evidence to support the challenge to the election. See Teamsters Local 911 (General Felt), 275 NLRB 980, 981 (1985). In this, the Union overlooks an important qualification on the availability of that exception: “the Respondent must have made some effort to obtain the evidence at the time of the [representation] hearing.” Id.
The Union’s failure to inquire into the Employer’s alleged payroll (and therefore election roll) padding prior to the representation proceeding bars it from raising the issue now. Prior to the. election, the Union had been given an Excelsior list showing the names and addresses of all the replacement workers. Both the number of replacement workers and their possible effect upon the election were thus apparent to the Union as of the time of the representation proceeding. Having failed then to raise its objection to the election, or to “ma[k]e some effort to obtain the evidence” necessary to make good such an objection, the Union cannot be heard now to complain of its preclusion.
IV. Conclusion
In sum, we find that the agency interpreted the statute in a manner that is reasonable and consistent with both its plain language and the First Amendment, and properly applied its own procedural rule. The petition for review is therefore denied, and the cross-petition for enforcement is granted.
So ordered.
Sections 8(b)(7)(B) and (C) provide that it shall be an unfair labor practice
to picket or cause to be picketed ... any employer where an object thereof is forcing or requiring an employer to recognize or bargain with a labor organization as the representative of his employees ... unless such labor organization is currently certified as the representative of such employees:
******
(B) where within the preceding twelve months a valid election under section 9(c) has been conducted, or
(C) where such picketing has been conducted without a petition under section 9(c) being filed within a reasonable period of time not to exceed thirty days from the commencement of such picketing....
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Adan M. Masga and his children appeal from an adverse determination of the ownership of land on the Island of Rota. They contend that his children were not given notice of a hearing conducted by the Land Commission of the Trust Territory of the Pacific Islands. They say that Masga's daughter had been appointed as his representative and that the appellee took advantage of her absence to obtain Masga's land by trickery.
In the late 1960's and early 1970's, Adan M. Masga showed signs of what the trial court characterized as "mental disorientation." One such sign was his sale of some land for inadequate consideration. Accordingly, Adan's children-appellants Carmen M. Pangelinan, Santiago C. Masga and Adan C. Masga, Jr.-took steps in March 1972 to obtain power to act on his behalf in his land dealings. Adan swore to an "affidavit" appointing his daughter Carmen "land trustee of all my properties on Rota • ." and executed a power of attorney granting Carmen the power to act for him in his land dealings. The "affidavit" was prepared by a member of the Land Commission and was filed with the Commission.
Shortly before he executed these documents, Adan applied to the Land Commission for registration of a parcel of land on the island of Rota that he lived on and farmed. The Land Commission has jurisdiction to determine and register title to land in the Trust Territory. See Trust Terr.Code §~ 101-120 (1980).
The Land Commission conducted a hearing on Adan's application in October 1972. Neither Carmen nor either of Adan's other children received notice of or were present at the hearing. At the hearing Adan signed an "affidavit" granting the parcel to appellee Antonia M. Tudela. The Commission in due course issued a Determination of Ownership recognizing Tudela as the owner of the parcel.
Appellants appealed the Commission's determination to the Commonwealth Trial Court. The trial court set aside the Commission's action, holding that the Commission should have given Adan's children notice of the hearing. Tudela appealed the trial court's decision to the Appellate Division of the District Court for the Northern Mariana Islands which reinstated the Land Commission's Determination of Ownership. This appeal followed. We have jurisdiction under 48 U.S.C. § 1694c (Supp. V 1981). See Camacho v. Civil Service Commission, 666 F.2d 1257 (9th Cir.1982).
Appellants contend that 67 Trust Terr. Code § 11O(1)(c), which provides that notice of land registration hearings is to be served "upon all parties shown by the preliminary inquiry to be interested . . .," gave Carmen a right to notice of the hearing.
We disagree. The actual notice of the hearing that Adan received satisfies § 110. Appellants argue only that Carmen's capacity as Adan's representative in land matters made her an "interested party" entitled to notice under § 110. But because Adan, her principal, received notice of the hearing, Carmen cannot complain that she, as agent, failed to receive notice.
If Adan had been adjudicated an incom-~ petent and a guardian had been appointed for him, § 110 might require that notice be given to his guardian. See, e.g., Hickey v. Naruth Realty Corp., 71 A.D.2d 668, 419 N.Y.S.2d 12 (1979); Goetz v. Gunsch, 80 N.W.2d 548 (N.D.1957); 41 Am.Jur.2d Incompetent Persons § 114. Carmen, however, was not his guardian. Moreover, the trial court did not find that Adan was incompetent at the time of the hearing. It found only a "serious question" as to his competency, which, as the Appellate Division of the District Court noted, falls short of a finding of incompetency. Therefore, there is no need to decide in this case whether notice to an incompetent person without a guardian satisfies § 110.
Title 67 Trust Terr.Code § 113 directs the Commission to appoint a guardian to represent any person that the Commission finds incompetent. The Commission did not abuse its discretion by failing to inquire into Adan’s competency at the time of the hearing. First, as the trial court found, Adan “may have appeared to be acting in a normal manner and in possession of his mental faculties” when he appeared at the hearing. Second, the “affidavit” that Adan filed with the Commission appointing Carmen his “land trustee” would not have given the Commission reason to question Adan’s competency. For all the Commission knew, the appointment had been made for the sake of convenience rather than out of concern for Adan’s competency, because Adan had himself executed the document, suggesting that he was competent to manage his affairs.
The judgment of the Appellate Division of the District Court of the Northern Mariana Islands is affirmed.
. Mr. Masga's name is variously spelled as Adam, Adan, and Aldan.
. The island of Rota is now part of the Commonwealth of the Northern Mariana Islands. The portions of the Trust Territory Code dealing with land registration have been replaced by the N. Mar. I. Land Commission Act of 1983, P.L. 3-79 (October 11, 1983), codified at ~`LMar.I. Code §~ 4211-4252 (1984)).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Appellant, an alien seaman, filed a complaint in the district court seeking review of an order of the Department of Justice, Immigration and Naturalization Service, to deport him. A temporary restraining order was issued and the Government moved for summary judgment. The application for injunction and the Government’s motion were combined for hearing at which time appellant testified. Following that testimony his counsel advised the court he would "‘[r]est on the record as presented to the Immigration authorities plus what the plaintiff testified to today.” What actually took place was in effect a final hearing on the merits of appellant’s complaint. There is no contention that any other or further evidence should have been or could have been presented on behalf of the appellant.
It is urged for appellant that he was illegally arrested and subjected to illegal search and seizure, that the deportation proceeding should have been conducted by a hearing examiner under the' Administrative Procedure Act, 5 U.S.C.A. § 1001 et seq. and that the deportation order was not based upon reasonable, substantial and probative evidence.
The deportation proceedings were properly heard before a Special Inquiry Officer. Section 242(b) Immigration and Nationality Act, 8 U.S.C.A. § 1252(b); 8 U.S.C.A. § 1101(b); 8 .C.F.R. § 9.1(b). And see Marcello v. Bonds, 1955, 349 U.S. 302, 75 S.Ct. 757. The record is clear that, as found by the district court, there was no illegal arrest or illegal search and seizure. In the situation, under 8 U.S.C.A. § 1357(a) (1, 2) the patrol inspectors were entitled to interrogate appellant and to arrest him in the reasonable belief he was in this country illegally. Appellant himself testified that the documents now asserted to have been illegally seized from him were given by him voluntarily to the inspectors. They consisted of appellant’s passport and a personal letter.
The proofs are conclusive that appellant is in this country without an unexpired immigration visa and had the intention of staying as long as he could. He is here illegally. 8 U.S.C.A. § 1181 (a).
The judgment of the district court will be affirmed.
. 1955, 132 F.Supp. 754.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
The appellant was indicted for murder under 18 U.S.C.A. § 1111. Thereafter he entered a plea of not guilty. Subsequently on the date set for trial he appeared with his court-appointed counsel. He withdrew the plea of not guilty and entered a plea of guilty to the charge of second degree murder. On that plea the Court sentenced him to life imprisonment.
A year and a half later he filed a motion stated to be pursuant to F.R.Crim.P. 33, 18 U.S.C.A. for a new trial based on newly discovered evidence. In reality the complaint was that the Government offered no evidence and that the testimony of the witnesses as to the altercation resulting in the homicide as well as the doctors’ medical opinions on the cause of death should have been offered. While it is expressed in an inartful way we treat the papers as though they state that had this been done, the Trial Court would not have found him guilty.
But a plea of guilty is a judicial admission of all of the elements of the crime and no proof is needed. Newalk v. United States, 5 Cir., 1958, 254 F. 2d 869. So long as the plea of guilty having these legal consequences stands these matters are foreclosed. A motion for new trial, F.R.Crim.P. 33, would not be the way of raising the question of the validity of the plea of guilty. But treating all of the papers as a 28 U.S.C.A. § 2255 proceeding as appellant has urged us to do, there is nothing in the moving papers showing anything which would require a hearing or which would entitle him to relief from the judgment of conviction upon his plea of guilty.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DENISON, Circuit Judge.
These cases can best be considered by one opinion, all the judges in each case concurring. They are patent cases, affecting the lubrication of metal bearings, and particularly those of automobiles. The universality of the automobile has made this a problem with which thousands must be somewhat familiar, where formerly only here and there a few of those engaged in mechanical pursuits were concerned. This change in the size of the community affected does not change the inherent character of the problem, but gives a different color, perhaps to a substantial extent, to the questions of utility involved. Prom the beginning of the automobile use until about. 1917, lubrication at the points where heavy oil or grease was the proper medium had been effected mostly through the so-called grease cup. The conduit leading to the point of final lubrication was, at its beginning at the outer and accessible location, enlarged into a serew-tjireaded opening. The grease cup was turned into this and might remain permanently attached. This grease cup was closed by a removable cap; the interior being filled with grease, the cap or a plunger contained in the cup was turned down, whereby the grease was driven through the conduit to the bearing. It was also common, where the outer opening was in a relatively inaccessible spot or where large amounts of grease were to be used, to close the opening with a removable cap, and upon the removal of that cap, or when desired upon the removal of the grease cup, what was called a grease gun was employed. This was a cylinder in which a plunger was forced along driving the grease out of the cylinder and grease gun through a coupling, often flexible, the end of the coupling being screwed into the threaded opening which led to the point of lubrication.
It is obvious, and was a matter of common observation, that these methods of lubricating were very greasy and dirty. Even if the work was not done in a garage, grease was likely to be left smeared about, where it would come in contact with the clothes of the user, and the vast number of men and women who must do this work themselves were forced to put on old clothes and gloves every time some greasing was necessary, even on the road, or else suffer damage; also the old grease commonly became dirty and hardened on the bearing or in the conduit and very difficult to remove by any simple available means. Thus there was undoubtedly a great and growing demand for many years for some method or device for this kind of lubrication, which would be efficient and cleanly and so simple that it could be used by the ordinary run of ear owners anywhere and at any time.
It is this demand which, in a commercial way, was first met and seems to have been, at least for the time being, fully satisfied by the device and plan known under the trade name of the Alemite high pressure system. By this system all the grease cups were removed and in their places were put devices, which contained little or no grease reservoir, but merely extended the conduit above the surface of the main member. They were identical in size and form, so that each one was just like any other, no matter in what part of the machinery it was found. They will be more particularly described hereafter, but in the most used form, each one carries a pin driven transversely through it and projecting at each side into the open. Hence they have taken, in this trade and in this litigation, the name of pin fitting. In connection with them there was supplied a device of general similarity to the old grease gun, but with changes adapted to make it peculiarly appropriate for this connection. It was provided at its nozzle with slots for engaging with the arms of the pin fittings to make a union of the bayonet joint type. Special construetions to be described tended to prevent' the extrusion of excess grease. The hose of the compressor could therefore be attached, by effective and grease-tight joints, instantly to any fitting anywhere, no matter how relatively inaccessible, the grease forced into the bearing even if a very high pressure was necessary, and the coupler could be instantly removed and attached to the next fitting.
No doubt the system was quick, efficient, and cleanly, far beyond anything in commercial use. It was probably first manufactured in 1916. In 1917 one of the strong automobile companies adopted it as standard equipment, by which is meant that when the automobile leaves the factory, all its greasing points are provided with these fittings instead of the old grease cups, and the compressor and coupler go along as part of the tool equipment. The system proved so acceptable to the public that in 1923 it had « been adopted as standard equipment by 85 per cent, (in number) of the automobile manufacturers in the country; but several of the largest manufacturers had not so accepted it. Hence all the older machines still in use, and all those being put out by these larger manufacturers, were still provided with the old grease cups or with threaded openings in which either grease cups or the Alemite fittings could be inserted, and these automobiles continued to furnish a general market for which the Alemite system could be sold. There was use also in other machinery. The total amount of sales has been and continues to be very large. The question involved in this litigation is, to how much patent protection, if any, the proprietors of this business are entitled.
The patents upon which whatever rights they have are based, and so far as involved in any of these appeals, are Winkley reissue 14,667, dated June 10, 1919, and reaching back to the original application of May 1, 1916, for a “lubricating system”; G-ullborg, for “lubricating means,” No. 1,307,734, issued to him June 24, 1919, upon an application filed December 21,1918; and Manzel, for “lubricating system,” numbered 1,459,-662, dated June 19, 1923, upon an application filed August 18, 1920.
Winkley contemplates using a fluid lubricant rather than a heavy grease; but, as these are only other terms for light and heavy oils, the patent is not necessarily for that reason inapplicable. Winkley provided a compressor with a movable piston, which forced oil under pressure into a discharging flexible hose, which carried it to the coupler for passing on into the fitting. This coupler comprised primarily an external easing cylinder or barrel with a central bottom orifice, and, sliding' vertically within the barrel, a secondary cylinder (which Winkley called a cup) having a central orifice in its hopper bottom adapted to project downward through the orifice in the barrel. The top of this interior cylinder was closed and its vertical motion was controlled by a spring interposed between the cup top and the barrel top whereby normally the cup would be forced downwardly, so that its hopper bottom would project, but would remain capable of a substantial, though limited, upward motion against the spring.
The oil-carrying flexible hose was connected to a circular opening through the side wall of the barrel, and at this point there was a slotted vertical opening through the cup well, whereby the passage of the oil from the hose to the cup would continue in spite of the cup’s vertical motion in the casing. The center orifice in the bottom of the cup was normally closed by a eheek valve, the upward stem of which was surrounded by an actuating spring, carried up to the under side of the cup cover; but the lower part of this cheek valve was carried on downwardly and when the valve was closed projected through and below the opening in the cup bottom. This coupler easing was also provided with downwardly projected and horizontally diverging claws, which were adapted to pass under appropriate shoulders in the head of the fitting below. The parts were so proportioned that when the two were thus clamped together, the head of the fitting would contact with and press upwardly the downwardly projecting valve stem, thus opening the eheek valve ■ in the cup. / This initial upward motion would be limited and stopped when the top of the fitting and the projecting bottom of the cup came together; but inaccuracies in the sizes and the slight irregularities of manufacture or of wear would be met, and the efficiency of the seal promoted, by the further upward motion of the cup in its recession against its spring resistance. Pressure applied to the oil column would then open the spring check valve in the fitting and the oil would flow through the lower conduit to the bearing. There was, therefore, at the joint between the two parts, the primary seal effected by the gripping, but unadjustable, contact of the claws and shoulders and the secondary reinforcing contact effected by the spring-pressed resistance of the sliding cup.
In the Lyman case, claims 6 and 12 of Winkley are in issue. In the O. K. case, many other claims are formally in issue, but the brief of counsel for the patents in this court alleges infringement only of claim 12. Many of the claims (including 6) include as an element the cheek valve whieh closes the lower or final orifice of this sliding member, the cup. The plaintiff in its commercial Ale-mite structures, and Lyman and the O. K. in theirs, make no use of any such valve in that location. Such structures all use a check valve at the opening into the sliding cup member; but claim 6 expressly calls for this valve at the discharge orifice of this member; and we agree that it is not infringed by any of the defendants’ structures shown.
. Claim 12 reads thus: “The connection with a lubricant receptacle of means for Supplying the lubricant thereto under pressure, comprising a conduit having means for detachably securing it to said receptacle, a perforated member yieldably mounted in said first named means, for contacting with one end of said receptacle to seal the connection between said conduit and said receptacle, and spring means for yieldingly holding said yieldably moimted • means in contact with.said receptacle.” This claim has evidently been selected for prosecution because in some particulars it is not so broad as some others, and yet is believed to be broad enough to" cover the defendants’ structures involved. One of the courts below apparently thought that the claim description of the sliding cup element should be restricted to substantially the form of Winkley’s sliding cup, having complete sides and top, and having the spring pressure applied from outside. It is plain that this claim and the group of which it is a member intended to. eliminate the cup orifice cheek valve as an element of the combination and to cover more broadly the remainder of the device as it would operate without any exit valve. There is no reason why, in a proper ease, this might not be done, since if this member were not inverted, or if the exit were small enough and the oil heavy enough not to run out, this valve would be only an addition to the structure, commonly useful, but often not necessary.
The defendants’ structures undoubtedly respond to this claim, excepting that they have cut away the top and part of the sides of the sliding cup member, so that it slides in the casing more as a piston plunger and is yieldably held to its lowermost position by a spring extending from its bottom up to the top of the casing. One court below thought this not the equivalent of Winkley’s cup. Of course, this depends upon the proper scope of equivalency; the language of the claim is amply broad enough to include this mutilated form. Unless for the matters hereafter stated, we see no reason to limit this claim to this extent. Unless -for those matters, Winkley did something entirely new when he provided for that compound joint and seal, between the meeting conduit members, which first made positive connecting grip between the pérmanent parts of the two and then added an intensive seal, provided by contact between the firm surface of the lower member and the yieldably retreating, but downwardly pressing sliding element of the other member, both in a combination which contemplated the passage of the lubricant through the sealed joint so made with the resulting protection against extrusion of the oil.
If this is what he did, Winkley ought not to be restricted to the particular form of his sliding member. The top and sides of his cup are quite clearly of little or no importance to its function. Its closed form prevents the oil from escaping through the sliding fit between cup and casing, but so long as the lower part of the cup is retained and given a tight sliding joint, the same result is maintained. The only other use of the complete form of the cup is that its top makes an abutment for one end of its pressing spring, but this abutment can just as well be anywhere else on the cup, or on its bottom. We must therefore inquire whether the state of the art prevents giving this normal scope of equivalency. In our judgment, most of the matters relied upon for this limiting effect are at once seen to be ineffective when we observe that they sought to use one means only for their complete union. They do not show a slidably mounted sealing member, wholly independent of and supplemental to the mechanical primary gripping means. The probably memoriona distinction, perhaps alone effecting satisfactory commercial utility, is that no single action quick detachable means can adjust itself, as against mechanical imperfections of construction or wear, to maintain continuously an efficient sealing for a high pressure lubricating device.
An argument, much relied upon, against finding a reasonably broad invention in this novel construction is that Winkley’s spring-pressed sliding member is merely a resilient element and that the gasket or washer of the old screw thread unions is an equivalent resilient element. We think not. A stationary packing, crowded against its support by an advancing screw head, makes a tight joint, for the time, and while not disturbed, but when compressed or worn by long or frequent use, the screw must be further advanced, or the joint leaks. With the quick detachable grip of the present form, there can never be any such advancement. The automatic supplementary adjustment which Winkley provided, was necessary to the best effectiveness of the quick detachable, grip. Other distinctions also exist. It may be said, as usual in such eases, that the defendants are at liberty to use a screw thread and gasket union. One of the defendants tried to, but gave it up, and adopted the secondary sliding element, giving the automatically adjustable intensive seal.
It is next contended that Winkley is but an aggregation. Counsel seem to mean both that it is an aggregation as distinguished from a true combination and that it is a mere selecting of existing elements and putting them together in a way which, though it *may produce a true combination, does not involve invention. Both claims will be considered. It is doubtless true that the compressor, the coupler and the fitting are not always dependent on each other. Each has useful functions not necessarily associated with the others; but the fact that they are not always in combination does not demonstrate mere aggregation when they are used together. The device is for the purpose of forcing lubricant into an interior bearing, and the situation at the moment of use must determine the character of the association of the parts.
It is not necessary that the mutual interaction should be constant; the modification of one element by another during one of the successive steps of the unitary operation is sufficient to make a true combination. Egry Co. v. Standard Co., C. C. A. 6, 267 F. 186, 191. Here we find that as the oil progresses under pressure from the advancing compressor it is received into and through the fitting, which has its valve opened by the pressure, and it passes through the joint between coupler and fitting, which is constantly held together by the opposed clamps and which is sealed by the spring-pressed sliding element. We find no room to doubt the existence' of a combination, as distinguished from that aggregation where two elements of the combination are never in use at the same time, like the lead pencil point and eraser tip (Reckendorfer v. Faber, 92 U. S. 347, 23 L. Ed. 719), or where the action of one only indicates but takes no modifying part in producing the action of the other, like the ajutage (Gas Machinery Co. v. United Gas Improvement Co., C. C. A. 6, 228 F. 684, and cases cited).
The question whether Winkley did more than exercise mere mechanical skill in selecting and putting together existing elements is the most serious objection made to this patent; but we do not regard it as fatal. It brings us to the Alley British patent of 1906, and the Barcus United States patent No. 1,-117,762 of 1914. (Piquerez is not old enough to need consideration here.) Alley was for a grease gun for this general purpose. He had the idea that he would substitute for the old grease cup a fitting which would, project above the main member and be suitable for engagement with a nozzle at the end of the flexible hose attached to a grease compressor. He did not very clearly disclose, but he apparently contemplated, using identical fittings in place of all his grease cups, whereby the nozzle could be moved from one to another. He made a screw-threaded connection between nozzle and fitting, although he added to the description a general suggestion that a bayonet joint connection might be substituted. His nozzle was without any secondary resilient sealing means for its joint with the fitting; indeed, he did not shbw even a packing for this -purpose; and if he used a high pressure and the screw threads were adapted to quick attachment, extrusion of the grease would be probable.
Barcus was dealing withi a coupling for two lengths of water hose, apparently for large hose to be attached to a fire hydrant, because his device is too elaborate for lawn or garden use. This device is the only one before Winkley, found in any somewhat analogous art, in which there was a claiming connection supplemented by.anything in the nature of a spring-pressed, tight-sealing, element. In a general way, this element in Barcus resembles that of Winkley and of defendants. Each section of hose carries a coupler head between which heads there is a primary connection of the bayonet joint character. The outer head carries an annular sliding member which is spring-pressed toward the open end and, as the inner coupling member enters the outer head, it meets this spring-pressed sliding member and push-' es it back. The spring pressure tends to. maintain the proper sealing contact between the two coupler heads. It can well be said that, if some one had told Winkley to put the Barcus sliding member into the nozzle of the Alley hose, the necessary adaptation of parts necessary to produce Winkley’s own result would have been within the range of mechanical skill. It is in the conception of the transfer, followed by reduction to practice, that inventive merit is to be found, if anywhere; and we think it is. The transmission of water through a hose coupling where it would have unobstructed flow and where the connection once made remains unbroken during a substantial operation, and where the loss of some of the water at the. joint 'is of little consequence, directly or indirectly, does not present the same problems as the transmission of a small amount of oil through obstructed openings where a perfect seal is of primary rather than of secondary importance. It is true that both use couplings, and in that sense, the arts are analogous, but the conditions surrounding their use are different. The propriety of going to a fire hose to see how to get grease into a fitting is not wholly apparent.
Nor do we think that, even if both structures were observed, the advisability of the transfer of this element would be obvious. The Barcus sliding element is complicated. It consists of a ring or sleeve, sliding in the interior of the outer coupling, and wholly outside the main, unobstructed passage. It carries a cup-shaped washer, for sealing contact with the longitudinal walls, and held in place by a screw ring. The spring which makes it resilient is also wholly outside the main passageway, so as not to obstruct it, and is held against an annular shoulder in the coupler. It does not bear against the top closure of the nozzle, because there is no such closure — indeed, there is no nozzle at all. More than all, claim 12 indicates the change from Barcus open sliding tube to Winkley’s “perforated member,” with its relatively small central opening, obstructed from the sides to the perforation. There is no “lubricant receptacle,” nor “means for supplying the lubricant thereto.” In a fair sense, a new’result was produced by Winkley. Of course, it may be said that each (Bareus and WinHey) only passed a fluid element through a joint without leakage; but in the forms by which WinHey adopted this idea, and upon which adoption Gullborg based his development, they produced an unprecedentedly efficient lubricating device, adapted to the particular problems of the automobile and similar uses; and it swept the field.
Defining the phrase broadly enough, it will almost always appear that there was no “new result”; but the “new result” of Loom Co. v. Higgins, 105 U. S. 580, 26 L. Ed. 1177, was not to make cloth, but to make it faster — increased efficiency. Upon the whole, and applying as best we can the rule in such eases, we think there was invention in taking the sliding element from the water hose coupling of Bareus, modifying it as necessary, and using it in the grease gun nozzle of Alley. Considered as a matter of mere double use, we think the patent sustainable under the discussion of authorities found in our opinion in Weir Frog Co. v. Porter (C. C. A.) 206 F. 670, 675. “The physical change * * * signified transformation of one thing into another.” We have sustained as inventive generally similar adaptations of existing old elements to a new utility. Star Brass Works v. General Elec. Co. (C. C. A.) Ill E. 398; Herman v. Youngstown Car Mfg. Co. (C. C. A.) 191 F. 579, 582, 583, and eases cited. We have also found invention in the adaptation, to automobile problems, of formerly known mechanical means. Cadillac Co. v. Austin (C. C. A.) 225 F. 983, 991; American Ball Bearing Co. v. Finch (C. C. A.) 239 F. 885, 889; Inland Mfg. Co. v. American Wood Rim Co. (C. C. A.) 14 F.(2d) 657.
We now come to the Gullborg patent. The relations between WinHey and Gullborg are, in our opinion, those typical between a relatively generic patent and a specific improvement thereon. The improvement has contributed substantially to the public acceptance; perhaps the form shown in the generic patent has never been put upon the market and had some deficiencies which would have interfered with any general use unless perfected by the later patent; whatever inferences for patentable novelty come from commercial success and public acceptance belong to them jointly, because the article marketed traces origin to both; to attempt to apportion the credit is not required nor feasible.
Gullborg’s improvement pertained to the form and resulting functions of Winkley’s spring-pressed element for completing the seal. In place of Winkley’s cup, with top and sides complete, Gullborg substituted a cup-shaped perforated washer, which was spring-pressed into sealing contact with the head of the fitting. The additional functions gained by this change in form were two: The first was that after the initial sealing was effected by the spring pressure, it was intensified and made more efficient by the pressure developed in the liquid itself. The second was that by reason of the peculiar shape of the sliding member, and after it had been by the pressure of the fitting pushed up a substantial distance, upon the“ disunion of the parts the spring would throw it sharply down to its position of rest, leaving a vacuum behind it, and an upward inrush of air into this vacuum through the restricted opening would create a suction which would pull up into the opening the grease which at the moment of disunion had been below the opening, and which otherwise wotdd smear up the parts and impair the cleanliness of operation.
The first of these meritorious functions is not fanciful. Its existence is not only apparent from inspection, but tests show that the same pressure which is developed in the conduit below the fitting — as much as 1,000 pounds if need be — is also developed above and against the contacting bottom of this cup washer; and the actual efficiency in this pressure is demonstrated by the test showing that, while it is maintained, the fitting head and the lower side of the washer cannot be disturbed in their adherence without considerable force, while, when the pressure is removed, they would, except for the bayonet joint, drop apart. As to the second functional merit, its theoretical existence is apparent. Its actual existence in substantial degree seems to be demonstrated by high-pressure experiments and by the concurrence of the undisputed testimony that the claimed result does occur and that this is one of the efficient causes why the device has had its great success.
Considering only WinHey, we have no doubt of the practical merit in the Gullborg improvements; but after WinHey had shown the way, by adopting Barcus’ sealing member to use in a grease gun, the field of invention for subsequent improvements was thereby narrowed. However, it is plain that Gullborg did more than merely adopt the Barcus idea in the environment provided by WinHey.
One of these improvement functions Barcus did not suggest — much less perform. He had no restricted opening of any kind through the bottom of his sliding member. Hence the creation of any vacuum back of it, with the resulting indrawing suction, was impossible. The other improvement function, the added seal from inherent pressure, is found in Barcus. He says nothing about it, as his referenee to the lubricant pressure seal plainly refers to the sliding contact upon the sides; but it is this pressure which is exerted, through the interposed washer, to force the inner coupling member down, so that its pins are held in the depression of their corresponding slots. In this respect Gullborg used Barcus’ form more closely than WinHey did. Gullborg’s specific changes gave more sealing surface between fitting and sliding member than Barcus did; but we see nothing in this, except a change in degree. So far, therefore, as any claim in Gullborg depends upon this suction result, it is valid; so far as it must rest solely for its novelty upon the pressure produced adhesion, it is invalid. Of the claims in suit, Nos. 1, 2, 3, 4, 7, and 8, by their reference to a perforated sliding disc or cup washer, or means for removing excess lubricant, sufficiently imply dependence upon the con-, struetion which will give this novel suction effect. In claim 12 there is no novelty over WinHey, excepting that the interposed gasket is held against one of the members by the pressure of the lubricant.. This claim, for the reasons just stated, is invalid.
We see no reason for denying the patentable novelty of Gullborg’s particular form of -fitting, by reason of which it has come to be called a pin fitting, and by which the same pin which furnished bearings for the slot, was made to pass through the fitting and furnish an abutment for the valve closing spring; but it is only this complete eombi'nation that can be patentable. When the pin becomes merely arms projecting from each side, and the spring abutment is otherwise furnished, we have only the already common bayonet joint member. It follows that claims 14 and 15 are valid.
We see no invalidity in claim 7. It calls for the coupler member, including the perforated cup leather which is its novel characteristic, and in combination with any suitable coupled member leading to the bearing. This subassembly performs by itself a step in the operation and develops the new suction function; and we see no reason why it should not be covered by a claim which includes the associated means only by general terms. Whether there are distinctions which support the independence of each of the claims named, is not practically important.
The Manzel patent in suit in the Lyman Case was by the court below held to' be of such narrow scope as not to be infringed. We think a more satisfactory and quite inevitable conclusion is that, without going beyond comparison with the other patents in suit, Manzel discloses nothing patentable. He uses Gullborgs’ general construction, save that he makes a loose fit rather than a tight one between the outer and inner members of the bayonet joint coupling, and that the head of the fitting in contact with the sealing gasket is very slightly rounded. It is said that by these changes he avoids danger of breaMng the seal if the two parts get out of alignment. We see nothing but ordinary sHll — very ordinary — in giving a little play between two parts and in making a part to wHeh a flexible washer is to be applied a bit rounding instead of flat.
We find infringement of claim 12 of the WinHey patent, through the sales by Lyman and the O. K. Company of their several forms of the complete "apparatus. This can probably be called direct infringement, although, if it might be thought that there was no infringement until the user coupled the parts together and gave them their joint operation, these same sales would undoubtedly be contributory infringement, not here distinguishable in its effect from the direct kind. The application of various Gullborg claims to the different structures of 'defendants, as a matter of direet infringement, can be made upon settling the decrees below.
The remaining question raised by the Larkin appeal, and common also to the Lyman and the O. K. Company cases, is called the question of repairs and replacements. It arises because the large part, if not the bulk, of the sales of the manufacturing defendants, has been either of fittings or of compressors alone, and it is said that purchasers of the patent combination from, Winkley and Gullborg have the right to buy repairs and replacement parts from others. The contention has been most elaborately argued and has produced some confusion in results. We cannot see how the record presents any such question. The distinction between the repair or replacement which the purchaser of the patented article may make, and the renewal which he may not make, is not always easy to draw; but there is here no occasion to make the effort. If the owner of an automobile, which has been supplied by the patentee with the fittings and compressor of the patents, finds that either fittings or compressor breaks or develops some operating defect, the question whether new ones could be substituted without the patentee’s consent would very likely depend upon whether the old ones had performed their reasonably expected term of service. If the purchaser sells his compressor, or it is lost or stolen, it is hard to see on what principle he has license to make himself a new one; but for the purposes of this opinion it may be assumed that he has. It may also be so assumed that, if a fitting gives out, the owner may replace it with a new one bought from some one else; but there can be no plausible claim that, becáuse the patentees have sanctioned the use of the invention upon 10 bearings of an automobile by furnishing the means therefor, the owner thereby has a license to get the same means for some other source for using the invention upon 20 or 30 more bearings.
Some of the evidence naively assumes that the right of “replacement” means the right of installing in the place of the old grease cups; and while the phrase is not by others so misunderstood, we find no evidence that any substantial demand exists for any of these parts, excepting for new and additional installation. The defendants have been selling the parts, especially the fittings, in immense numbers. Sales were made to dealers and to garage men, who sell or install where they please; the defendants cannot control the use made thereafter, if they would. Their notice on the container, “These fittings are to be used only for repair and replacement,” is utterly futile; and to suppose that any substantial fraction of these parts is needed for or sold for or used for repairs or replacements would be an unfounded guess contrary to the well known facts. The contention might as well have been urged in the Leeds & Catlin Case, infra. Doubtless occasionally a record broke before it was worn out and the owner might have had the right to replace it.
Such an occasional, possibly rightful replacement’by the user would have been as sound a basis for permitting the general manufacture and sale of records there enjoined, as is the occasional instance here of a broken fitting or a defective compressor to support defendants’ unlimited manufacture and sale of' fittings separately or compressors separately. No doubt, if a patented device which includes a normally and frequently removable element is in general use, not only may the licensed users carry this part in stock for their anticipated necessities, but others may offer it for sale to those who may thus lawfully use. This is not such a ease.
The substantial basis, so far as there was any, for a theory which would permit defendants to sell pin fittings, suitable and intended for eventual use in such connection with a compressor that the use would bring about infringement of the patents, was not the right of “repair and replacement” at all, but the alleged right to sell an unpatented article in spite of the infringing use of it which is to be made — an exception to the rule of contributory infringement. Where such article was of a temporary and consumable character, like the paper roll (Morgan Envelope Co. v. Albany Perforated Wrapper Paper Co., 152 U. S. 425, 14 S. Ct. 627, 38 L. Ed. 500; Heyer v. Duplicator, 263 U. S. 100, 44 S. Ct. 31, 68 L. Ed. 189), it might be freely made and sold by others, even though it had been — perhaps improperly — made an element of the claims to the device in which it was consumed. Where the element was not intended to be consumed but was to remain a. part of the combination during the expected life of the device, the right to duplicate it was perhaps in dispute.
Then arose the Leeds & Catlin Co. Case, 213 U. S. 301, 29 S. Ct. 495, 53 L. Ed. 805. The claim of the patent covered the combination between the talking machine disc record, having grooves of a peculiar character, and the reproducing stylus and diaphragm mounted in a peculiar manner. Coaction between the peculiar characteristics of each caused the audible sound reproduction. This patent belonged to the Victor Company, and the established practice was to sell the reproducing device without the record. The buyer then or later could separately buy as many records as he wished. The infringement occurred only when the purchaser put the two parts into co-operation and produced the resulting joint effect — just as here. The Leeds & Catlin Company manufactured a reproducing device which did not meet the terms of the patent claim as to that device, and then marketed in large numbers disc records, ostensibly for use in its own device, whereby there would have been no infringement, but actually for use in connection with the patent apparatus which the Victor Company had sold to the public, whereby infringement would result. Although the record so sold by Leeds & Catlin was an unpatented article, the Supreme.Court held that its sale was beyond the rights of its maker and constituted contributory infringement of the patent.
The case is on all fours with the present one. The time may come when compressors which do not respond to the Winkley and •Gullborg claims, but which can be used with the plaintiff’s fittings, will be upon the market and in use to a considerable extent. When that time comes, the inference that defendants are selling their fittings for use only in the patented combination would be Jess strong. The question of contributory infringement might then have a different aspect; but at present that contingency is academic. To say that the fittings are intended for such innocent use is to propound •the same subterfuge which the Supreme Cburt looked through as to the disc records.
It is true that in the Leeds & Catlin Case, the court said that the greater part of the inventive merit in the combination was found in the peculiarities of the record disc, while ■in the present ease we find more novelty-in the coupler; but there can be no distinction •in principle resting on this difference. The fitting here and the disc there alike, independently considered, were unpatented, and probably broadly unpatentable, save in combination with the other associated member; and each alike was vital to the intended action, because neither one was operative without the partner which completed the infringement.
We may assume (for opinion purpose) that the principle of the Leeds & Catlin Case does not extend to a case where a common and previously known article of manufacture had been more or less improperly brought into the combination claim. Not only would there be an éxisting market for other uses, which would prevent, or tend to prevent, the inference of intended infringement; but it is unnecessary here to consider manufacturing rights in any device of standard form. When defendants put out their pin fittings, nothing resembling them was upon the market excepting the plaintiff's which had. come into such general use, as above stated. It was natural that the plug should have been made of the same external size and thread as plaintiff’s, because the grease cup tap holes had been standardized; but in other respects defendants’ selection of precise form, size, and shape could have nó purpose, except to enable.them to be joined with plaintiff’s compressors for the practice of the patented invention. The pin fitting is not a mere inert conduit which has nothing to do with the characteristic features of the lubricating operation. It must make precisely the proper coupling with the coupler. It must present a suitable sealing surface. Its closure ball must be held open by the lubricant pressure during the operation and be seated at its end, and this simultaneous seating co-operates with the suction effect in the coupler to prevent drawing grease back out of the fitting.
We conclude that for the ear owner or the garage man to buy fittings, and therewith equip additional bearings to be lubricated by the patented combination, is well described by the
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SIMONS, Circuit Judge.
Begun by bill for specific performance of a contract for the assignment of patent rights by the inventor to a manufacturer, the controversy revolves about the construction and scope of the contract and the right of the plaintiff to the relief prayed. The court dismissed the bill and granted an injunction upon the cross-bill, restraining the plaintiff from interfering with the defendant’s enjoyment of the inventions involved.
The appellant is a manufacturer at Salem, Ohio, engaged in the stamping of sheet metal and the fabrication of sheet metal products, including evaporators for refrigerating devices. The appellee had invented an improvement in a refrigeration evaporator and float valve assembly to be made of sheet steel, and prior to May 1, 1930, had applied for patents thereon. He negotiated with the appellant, with the result that the latter, after investigation, entered into a contract with him, by the terms of which the patent applications were assigned to the appellant and ripened into patents Nos. 1,893,321 and 1,798,652, subsequently reissued as reissue patents Nos. 19,136 and 18,182. In the preamble to the contract is expressed the desire of the appellant to obtain the inventions specifically referred to, “and any improvements or additions thereto.” Though no specific covenant appears in the body of the instrument expressly obligating the inventor to assign future inventions or subsequently granted patents, to the manufacturer, there are, however, incidental references to improvements from which, it is argued, that the clear intention of the parties to the instrument was that all later inventions relating to refrigeration evaporators are within its scope and that the contract imposes upon the inventor an obligation to assign when and if patents therefor issue.
Between December, 1932, and October 3, 1934, Booth conceived of a new way of making evaporators by extruding metal. This he explained to representatives of the appellant and to the patent attorney who had acted for both parties in the original patent proceedings, and he was asked to expound his concept to the appellant’s chief engineer so that an investigation might be made to determine whether there was merit in the new idea. Booth insisted, however, that he would have to have a new financial arrangement, and it was agreed .that he should be reemployed by the appellant for a period of sixty days at a stated salary, plus expenses, Booth having been earlier employed but released in the exercise of an option" contained in the agreement. The appellant made careful investigation of Booth’s invention for a period of 58 days; found two difficult problems involved, one, a welding problem, and the other a problem of securing extruded metal in sufficient quantities and at a price permitting profitable manufacture in a competitive market.
On November 15, 1934, a report was made by the vice-president of the appellant, to the effect that while Booth’s idea was attractive, it was impractical from a manufacturing standpoint; involved prohibitive expense, and a process so costly that the matter was closed so far as Mullins was concerned, unless Booth could think of something else. On November 30th, two days before the expiration of the agreed investigatory period, Mullins’ chief engineer reported that aluminum could not be extruded with holes; that it was impossible to extrude a section having a plurality of holes; that the cost was prohibitive; that the invention was no improvement over the existing method practiced by Mullins; and that Mullins was not interested in acquiring the invention. Thereupon, Mullins advised Booth that his invention was not practical; that it did not want it; and that he would be removed from the payroll.
Shortly thereafter, however, Mullins undertook a further investigation, and Booth was restored to the payroll at an increased salary. In December it was determined that the Bohn Aluminum and Brass Company could extrude metal in sufficient quantities, and at an appropriate price. Sample evaporators were made embodying Booth’s invention and an effort was made to induce the principal manufacturers of refrigerators to contract for the new evaporators, but without success. On July 18,1936, Mullins notified Booth that because his evaporator was not acceptable to the trade he would be released from the Mullins payroll, and Booth left Mullins’ employ on August 1st. Late in 1939 the Bohn Aluminum Company put upon the market an extruded aluminum evaporator, whereupon Mullins demanded an assignment of .the patent, and failing to obtain it, began the present suit praying for specific performance and asserting Booth’s obligation to assign the patent to it as one for an improvement on the patents referred to in the 1930 contract and so coming within its scope.
The court found that Booth had verbally offered his invention to the plaintiff; had allowed it sixty days within which to investigate and determine whether it wanted it as provided in the agreement; and that prior to the expiration of the period, Mullins had definitely rejected the invention and that it was immaterial whether Booth had offered it under the terms of the contract or as the subject matter of a new contract, and that Booth was definitely released from his obligation to assign under the original agreement. It further found that Mullins had never accepted the invention, and had manifested no interest in it from July, 1936, to late 1939, when the Bohn Company came out with its evaporators. It concluded, as a matter of law, that the extruded evaporator was a new invention, entirely separate and distinct from the inventions covered by the contract; that it was not for a mere improvement upon the inventions referred to therein; and that none of its claims read upon any of the claims in the original patents. It concluded, therefore, that the agreement of May 1, 1930, did not impose an obligation on Booth to assign his inventions upon the extruded metal evaporator or upon the heat exchange unit, and that in any event the controversy between the parties as to the construction and scope of the agreement, having begun in October, 1934, and no sufficient excuse appearing for the plaintiff’s delay in bringing suit until February 19, 1940, Mullins was barred by laches from the equitable relief for which it prayed.
For an understanding of the nature of the controversy as to the scope of the original agreement, it is necessary to know that the sheet metal evaporator, invented by Booth prior to May 1, 1930, was not a basic invention for an evaporator, but was for a mere improvement over the prior art. It related to a sheet metal evaporator manufactured by a new process, whereby a piece of flat rolled steel was placed in a press or stamping machine and corrugated, the corrugated sheet being then superimposed upon a piece of flat sheet metal, and the contact points welded so that .the corrugations became tubes through which the refrigerants were to pass. From this sheet was also formed the header and the sheet was then folded to shape to form the evaporator.
Booth’s 1934 invention for extruding metal to make an evaporator departed from this practice. A billet of metal is heated to a plastic state, placed in a die contained in a hydraulic press, the shape of the die being the shape of the wall structure. Pressure is then applied to the billet to force the plastic material through the die to form the sections in one piece with the conduits therein.
The first question is whether Booth’s second invention was an improvement upon the inventions that formed the subject matter of the original contract. Booth did not invent the refrigerator as such — that was old in the art. He did invent a sheet metal evaporator with walls formed by a doubled sheet of steel within which, by the superimposing of a corrugated sheet upon a flat sheet, are the passages for the circulation of refrigerants, rendering unnecessary other expedients to provide for their circulation. In its broadest sense the term “improvements” is all-inclusive, and if used broadly would comprehend any advance in the art. But Booth did not undertake, nor does the appellant go so far as to argue that he did undertake, to assign to Mullins all future inventions dealing with refrigerator elements. Courts of equity are loath to give their aid by construction to a contract, the enforcement of which will constitute a mortgage for life on the inventor’s brain, and bind all his future products. Independent Electric Co. v. Jeffrey, C.C.Ohio, 76 F. 981; Aspenwall Manufacturing Co. v. Gill, C.C.N.J., 32 F. 697.
Nor did Booth invent the evaporator per se. Had he been a pioneer in this branch of the art, it might, with more persuasiveness, be argued that any invention Booth might later make dealing with evaporators which produced a new result or contributed to speed or economy of manufacture, might be an improvement. But Booth’s original inventions were confined to narrow compass, they were of sheet metal evaporators of definite and precise form, and fabricated as the result of a carefully defined process. Had he thereafter made an invention in the more limited field of sheet metal evaporators, such invention might well have been considered an improvement upon the inventions covered by the agreement.
That Booth, in his earlier applications and patents, was concerned with a sheet metal evaporator, and that that is what Mullins sought and obtained, is not only clearly demonstrated by the situation and practices of the parties, but by the contract itself. Mullins was engaged in manufacture or assembly, or both, of sheet steel products. These were the result of the commonly known “stamping processes.” Mullins was fully equipped to manufacture the original Booth evaporator. It was neither equipped for nor experienced in extruding metal. The problems presented by Booth’s later invention, in bringing commercial realization to Booth’s inventive concept, were not problems that could be or were solved by Mullins. But aside from this, the recitals in the contract itself clearly indicate what Mullins expected to receive, and what Booth obligated himself to convey, if we concede that the contract covers improvements in the absence of a specific covenant relating thereto. In the 21st paragraph of the agreement is the following: “Mullins agrees in consideration of Booth bringing the idea of the sheet. metal evaporator to them for development and sale, to pay to Booth * * The extruded metal evaporator invention of Booth was not an improvement on the sheet metal evaporator that was Booth’s earlier invention — it was a new invention and Booth was not obligated to assign to Mullins his patent thereon. To sustain a decree for specific performance, the contract not only should be clear and unambiguous, but the evidence in relation to the acts alleged to have been done under it and necessary to give it effect should be clear and convincing. Jenkins Petroleum Process Co. v. Sinclair Refining Co., D.C., 32 F.2d 247; Id., 1 Cir., 32 F.2d 252, affirmed 289 U.S. 689, 53 S.Ct. 736, 77 L.Ed. 1449, 88 A.L.R. 496. Neither in the contract nor in the attendant circumstances bearing upon the intention of the parties, is there that clarity and conviction compelling proof of Booth’s obligation .to justify a decree for specific performance.
But if we are wrong in this Mullins still must fail. The court found that there was rejection of Booth’s offer of his extruded invention, whether offered under the original contract or coupled with insistence upon a new contract; that if there was a second offer it was not at any time accepted, and that there was an unexplained delay in demanding assignment for a number of years subsequent to its presentation and after it had been reduced to practice. The evidence supports the findings, and the findings, the conclusion. We recognize that this is an equity case, and that there is no conclusiveness in the lower court’s decision on the controversial facts. We have given careful consideration, however, to the entire record. The court below heard and saw the witnesses, and had advantages superior to ours to determine credibility and the weight of evidence. We are unable to say that the results reached are erroneous.
True, it is, that courts have refused to recognize mere delay as a bar to the pursuit of an equitable remedy when there has been no disadvantage resulting to the other party from such delay. The principle asserted is so well understood that citation or discussion of authorities is unnecessary. But the plaintiff’s insistence that it is entitled to a decree for specific performance because Booth suffered no disadvantage by its failure to enforce assignment for a period of years, must be rejected. There was a controversy between the parties as to whether the new invention came within the contract. It was meritorious and not merely colorable. Mullins insisted that the new concept was within the contract — Booth contended that it proclaimed a new invention. Until that controversy was terminated, there was a cloud upon Booth’s title. He could manufacture,, or license others to manufacture under his application or patent, only at his peril. This is made still more clear by the appellant’s^ present insistence that even if it does not have the legal title to the Booth invention, it has an equitable title thereto. Until the controversy was terminated, either by arbitration or litigation, Booth’s rights were uncertain, and his plans for exploiting a now concededly valuable invention, hampered and delayed. True it is, also, that Booth in 1939 did do something to promote his invention, but that was only after the lapse of years had dimmed the threat to it. If Mullins did not want his invention somebody else might, and he was entitled to know, beyond peradventure, the validity of Mullins’ claim to it. His disadvantage in the interim clearly appears.
The contention that during substantially the entire period of delay Booth had but an application, and so n<J property right to assign that Booth could demand, is, of course, not persuasive. The right of Booth to his invention while his application is pending is an inchoate right, which matures as property when the patent issues, and it may have great prospective value. It must be remembered that the entire contract, including Booth’s employment by Mullins, was founded upon no greater interest in property than is represented by patent applications. Mullins’ explanation for delay, based upon its aid exerted in securing the patent grants .through its attorney and at its expense is likewise rejected. Booth desired to have his own patent counsel file the application, and permitted it to be done by Mttllins only upon an agreement that his position that the patent did not come within the contract would not thereby be prejudiced. To this Mullins agreed, and we refuse to consider .the argument that the delay was contributed to by Booth by reason of the “no prejudice” agreement.
One word more is necessary, in ail fairness to the District Judge, for us to say. Repeatedly, in brief and argument, it is urged that the court below failed to give full consideration to the evidence, and to the proposed findings of fact submitted by the parties, and reiterated is the implication that, if it had, a different result would have followed. The record lends no support to this manner of presentation nor to any inference that there was departure by the court from that careful and painstaking attention to issues and proofs that, through the years, we have been led to expect from the district of adjudication under its present governance.
The decree below is affirmed.
8th: This license agreement shall remain in force throughout the term of any and all patents coming within this agreement as a result of applications for Letters Patent, or any re-issues, to be filed for said inventions and improvements thereon unless otherwise terminated as herein provided for.
13th: It is further agreed that Mullins shall have the right to grant sub-licenses under this agreement and to make, use and/or sell evaporators and float valve assemblies or other devices utilizing the aforesaid inventions or any improvements thereon, and that Mullins shall be responsible to Booth for the payment of royalties thereon the same as if made and sold by Mullins.
16th: It is further agreed that all expense in connection with the preparation and prosecution of applications covering the aforesaid inventions relating to evaporators, float valve assemblies or other devices for household and commercial refrigeration and the methods in connection therewith and any improvements made thereon hy either party to this agreement, shall be paid for by Mullins and shall come within the terms of this agreement and Booth further agrees to have such applications diligently prosecuted to fully protect Mullins in its monopoly.
17th : It is further understood and agreed that Mullins shall have the right to apply for foreign patents upon said devices covered by this agreement or any improvements thereon.
In the event after Booth has formally offered in writing to Mullins certain refrigeration devices which he thinks should be patented and Mullins declines to accept said offer within sixty (60) days, then Booth is free to apply for said patents at his own expense and to use said patents as he may desire and may dispose of said patents without any claim of Mullins whatsoever.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STEVENS, Circuit Judge.
The Commission held that the acquisition by Avnet of two competing manufacturers of parts which are sold to re-builders of automotive electrical units violated § 7 of the Clayton Act, as amended. Avnet argues that it did not have a fair opportunity to meet the Commission’s prima facie case because it did not anticipate the Commission’s narrow definition of the relevant product market, and, in any event, that the evidence is insufficient to satisfy the Commission’s initial burden on the relevant market issue. We find no unfairness in the way the case was tried and have no difficulty in concluding that the evidence adequately supports the Commission’s findings.
As a preface to our discussion of Av-net’s principal contentions, we shall briefly summarize the Commission’s description of the industry, review the history of the proceedings, and identify the evidence which, according to Avnet, it was unable to present.
I.
Among the automobile parts which may need to be replaced or repaired as a car ages are electrical units, such as generators, alternators, starters and voltage regulators. These “automotive electrical units,” (“AEU’s”) are made by original equipment manufacturers (“OEM’s”) and by rebuilders. OEM’s include the major automobile companies and other firms that produce equipment for installation on new vehicles. They sell replacement units to warehouse distributors (“WD’s”), who in turn resell individual units, as well as components of such units, to retailers such as repair shops, service stations, garages and car dealers.
The record in this case demonstrates that the prices at which WD’s sell new AEU’s are significantly higher than the prices at which comparable AEU’s can be rebuilt and sold at a profit. A used unit may be dismantled, cleaned and reassembled with such substitute components as may be needed. Such rebuilding may take place in repair shops where one unit at a time is put back in working order for an individual customer (“custom rebuilding”), or in a production-line operation where units are rebuilt in large quantities and then sold to jobbers for distribution to the retail trade (“production-line rebuilding”). There are about 150 or 200 production-line rebuilders in the entire country.
The “rebuilders supply industry” includes the firms which sell new components to rebuilders of AEU’s. Counsel for the - Commission consistently contended that the industry is composed of only 16 or 17 principal manufacturers with aggregate annual sales of about $20 million. The alleged violation resulted from the combination of IPM, the largest, and Valley Forge, the third largest, of these firms. Before the combination, IPM had sales of over $11 million and Valley Forge’s were almost $2 million. Avnet acquired the assets of Valley Forge as of July 31, 1964, and those of IPM as of January 31, 1965. After the second acquisition, Avnet’s sales represented about two-thirds of the total in the market as viewed by the Commission.
II.
Both the complaint, which issued on April 1, 1969, and the amended complaint of December 1, 1969, alleged that 16 firms, of which IPM and Valley Forge were the largest and third largest, supplied virtually the total value of equipment and parts furnished to rebuilders.
The evidentiary hearing commenced on February 1, 1971. During the preceding 16 months, the parties conducted pretrial discovery, argued about the adequacy of Avnet’s compliance with discovery orders, stipulated about certain facts and issues, and agreed that, in advanee of trial, each would provide the other with a list of witnesses and copies of proposed exhibits.
From the outset Avnet disputed the Commission’s position that the market was composed of 16 principal firms. It attempted, in three different ways, to develop evidence that the 16 firms have so many competitors that their sales do not comprise a relevant market or sub-market. First, Avnet requested the Hearing Examiner to issue subpoenas to the 14 competitors of IPM and Valley Forge calling for disclosure of their customer lists, and thereafter to subpoena all those customers to learn their sources of supply. The Hearing Examiner quite properly rejected this request and directed Avnet, at least as an initial matter, to make its own inquiries of the customers of IPM and Valley Forge. Second, according to Avnet’s counsel, Avnet did attempt to develop evidence by a study of its own records and by interviewing its customers; presumably the results of those efforts were later incorporated in Avnet’s presentation of evidence at the trial. Third, well after the trial was under way, through conversations with its sales personnel and through an independent market research study, Avnet sought to prove that the volume of business handled by custom rebuilders was so enormous that, by inference, there must be such a significant total volume of sales by rebuilder suppliers that the statistics relating to the 16 firms identified by the Commission should be disregarded as essentially meaningless. The Hearing Examiner excluded the market study for procedural reasons.
On the basis of the voluminous evidence in the record, the Hearing Examiner concluded that the acquisition violated § 7 of the Clayton Act and recommended an order requiring Avnet to divest IPM. He found that the relevant market included the sale of new components by rebuilder suppliers to rebuilders and that the contours of the market were fairly delineated by the sales of the 16 principal suppliers to 150 to 200 production-line rebuilders. In so finding, he resolved the “sharp disagreement between the parties over the meaning of the term ‘rebuilder’ as used in paragraph 1(b) of the complaint.” His market analysis and conclusion summarizing competitive impact of the acquisition were corroborated in large part by an opinion expressed by a Valley Forge executive in memoranda outlining the advantages to Avnet of the acquisition of IPM.
In a carefully prepared opinion by Chairman Kirkpatrick, the Commission approved the findings and order proposed by the Hearing Examiner. Commissioner Dennison dissented on the ground that complaint counsel had not met their burden of demonstrating the size and dimensions of the relevant line of commerce.
III.
The record contains a great deal of testimony by rebuilder suppliers and by production-line rebuilders. It is clear that the production-line rebuilders could not survive without an adequate source of supply of new parts. Because the prices charged by OEM’s and WD’s are so high, the production-line rebuilders must obtain such parts from rebuilder suppliers. The testimony indicates that they relied primarily on IPM, Valley Forge and two other suppliers for these parts.
Unlike production-line rebuilders, who operate at a manufacturing level and sell largely to jobbers, custom rebuilders operate at the retail level dealing directly with consumers. At that level, particularly since their charges cover their labor and specialized expertise, they can afford to purchase OEM parts from WD’s. They may, of course, also purchase new, used, or rebuilt components from other sources, including rebuilder suppliers. We know that some of the rebuilder suppliers sell either nothing, or at most very little, to custom rebuilders, and we also know that IPM makes some sales to custom rebuilders. But the record does not tell us what portion of the rebuilder suppliers’ total sales, or even what portion of IPM’s or Valley Forge’s total sales, were to custom rebuilders rather than production-line rebuilders.
Avnet contends that such information is of critical importance in appraising the Commission’s definition of the relevant market, and that it was prevented from developing such evidence as well as any other evidence identifying the dimension of the business of supplying custom re-builders throughout the country, by the Commission’s failure to give it adequate notice that the Hearing Examiner, and ultimately the Commission, would decide that the term “rebuilders” includes only production-line operators and excludes custom rebuilders. As we understand Avnet’s principal argument, which is phrased in terms of a “denial of administrative due process,” if its counsel had understood the theory of complaint counsel’s case they would have proved (a) that for the purposes of this case, any distinction between production-line re-builders and custom rebuilders is invalid, and (b) that the inclusion of sales to custom rebuilders would so enlarge the relevant market as to undermine completely the Commission’s prima facie case. Specifically, Avnet contends that it would not have waited so long (1) to develop evidence from its own sales personnel describing the 3,300 customers of IPM who are not production-line re-builders, and (2) to obtain a market study delineating the volume done by custom rebuilders.
IV.
We find Avnet’s “administrative due process” argument unpersuasive. It relies largely on the fact that both the amended complaint and a trade practice rule promulgated by the Commission contain a functional definition of the term “rebuilder” which can be read to include custom rebuilding as well as production-line rebuilding, and on the further fact that the amended complaint described the demand side of the market as “highly fragmented,” and referred to IPM’s sales “to over 5,000 independent distributors and rebuilders.”
Avnet had no reason to rely on the trade practice rule as significant in this proceeding. The rule relates to the manner in which rebuilt units must be labeled when they are sold. Since, by hypothesis, custom rebuilding does not involve the sale of any such unit, but rather the reconstruction of the customer’s property, the rule is, in terms, inapplicable to the issue here.
Avnet’s reading of the complaint was, however, reasonable. The reference to “over 5,000” customers of IPM certainly implied that all of IPM’s sales were intended to be treated as within the relevant market; since presumably some of those sales were to custom rebuilders, one might well infer that the market was intended to include all custom re-builders. But even if Avnet’s counsel did originally assume that complaint counsel intended to treat all sales to custom rebuilders as part of the relevant market, it soon became manifest that the critical question in the case was whether or not counsel was correct in using the list of 16 firms to outline a relevant market. Arguably, but by no means necessarily, the answer to that question would be affected by the definition of the term “rebuilder” and, more narrowly, by whether sales to custom rebuilders would be treated as relevant. For that reason, as the Examiner found, a “sharp dispute” between the parties developed over the proper definition of that term. The portions of the record which are before us do not indicate precisely when that dispute developed. We are not at all persuaded, however, that the dispute arose so late in the proceeding that Av-net was powerless to muster evidence or argument to meet complaint counsel’s case.
We note that Avnet’s argument before the Hearing Examiner anticipated complaint counsel’s position that only sales to production-line rebuilders were relevant. We also find no discussion in Chairman Kirkpatrick’s opinion for the Commission of any claim that Avnet was surprised by the definition of the term “rebuilder.” The Commission did explain in detail its agreement with the Examiner’s exclusion of custom rebuilding from the demand side of the market and with his procedural and evidentiary rulings. But Chairman Kirkpatrick’s opinion does not even mention the inadequate notice argument that Avnet advances in this court.
Without further belaboring the point, we merely state that our review of the record convinces us that Avnet’s counsel had sufficient understanding of the issues, and sufficient time to prepare Av-net’s defense, to require rejection of the argument that they were denied administrative due process when the Hearing Examiner accepted complaint counsel’s definition of the term “rebuilder.” The test of fairness as stated in Cella v. United States, 208 F.2d 783, 789 (7th Cir. 1953), cert. denied, 347 U.S. 1016, 74 S.Ct. 864, 98 L.Ed. 1138, and L. G. Balfour Company v. F. T. C., 442 F.2d 1, 17 — 19 (7th Cir. 1971), was easily met.
V.
We also find no merit in the argument that the Commission relieved complaint counsel of the burden of proving the size of the relevant market and thereby deprived Avnet of administrative due process. The Examiner did not purport to make any such ruling. On the contrary, he found that the census data, the industry witnesses’ testimony, the sales data for the 16 principal rebuilder suppliers, and the corroborating expressions of opinion in memoranda prepared by the witness Fischer, an executive of Valley Forge, constituted sufficient evidence on which to predicate the conclusion that complaint counsel had met their burden of proof.
VI.
At pages 42-57 of its brief, Avnet argues that the Commission erred on the merits by artificially limiting the relevant market in two respects: first, by excluding sales to customer rebuilders, and second, by excluding sales of used and rebuilt parts.
The second exclusion was manifestly correct. The Commission found that prices for rebuilt or reconditioned used components varied from 25% to 50% below the prices for comparable new items. Moreover, it noted the absence of any substantial interaction in price between the two lines. These factors are sufficient to support the finding that they should be placed in different sub-markets. See Brown Shoe Co., Inc. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510; United States v. Aluminum Company of America, 377 U.S. 271, 276, 84 S.Ct. 1283, 12 L.Ed.2d 314; cf. United States v. Aluminum Company of America, 148 F.2d 416, 425 (2d Cir. 1945).
We are also persuaded that the omission of sales to custom rebuilders was not error. The Commission, of course, has the initial burden of explaining why a particular group of buyers or sellers should not be included within the relevant market. In this case the Commission met that burden by proving that custom rebuilders and production-line re-builders perform significantly different functions and operate at significantly different levels of distribution within the overall market for the repair or replacement of AEU’s. The custom rebuilder is primarly a retailer of services; the production-line rebuilder is a manufacturer of products which are sold largely to jobbers, and presumably to retailers as well. In our opinion, the clear functional difference between the two groups of rebuilders provides an adequate prima facie basis for placing them in different submarkets.
It is, of course, entirely possible that the rebuilder suppliers may sell sufficient quantities of parts to custom re-builders at prices comparable to those charged to production-line rebuilders to support the conclusion that such sales should be treated as part of the relevant market. If that be the fact, however, since the Commission satisfied its initial burden it was incumbent upon Avnet to prove that the custom rebuilders made purchases from competitors of IPM and Valley Forge in significant volume. That burden could not be discharged by evidence concerning purchases of used or rebuilt parts, or by evidence of purchases of OEM parts from WD’s. The testimony of the industry witnesses indicated that the volume of purchases by custom rebuilders from the principal rebuilder suppliers was not significant. It therefore seems improbable that detailed evidence concerning the volume of sales of new parts to custom rebuilders by re-builder suppliers would be significant. But even assuming that it might be, Av-net did not make a timely, or a complete, offer of proof showing the amount of its own, or of any of its competitors’, sales to custom rebuilders. Quite clearly, Av-net did not overcome the Commission’s prima facie showing that purchases by custom rebuilders were not part of the relevant market.
The Commission’s analysis of this aspect of the case is corroborated by statements made by a vice-president and director of Avnet in a pre-acquisition memorandum. That memorandum states, in part:
The acquisition of IPM would serve chiefly to remove our most major competitor from the scene. This would reduce to an overwhelming extent the price competition that is a major factor in the industry. In many cases severe competition has held profit margins on key items to a reduced level owing to the ability of two firms to offer substantially the same item at the same price. IPM has been very active in offering preferential discounts to large customers which Valley Forge has been obliged to meet. It is recognized by both Valley Forge and IPM that we must retain a reasonable share of the business from the larger users for they represent the primary target of any substantial tooling. We both recognize that large customers are necessary for our continued growth. This has produced a situation where the large customer has used his position to play off one against the other. In this situation Maremont has been the chief offender and has used their purchasing power in the most effective manner.
Quite plainly this comment supports the inference that competition for the patronage of the production-line rebuilders was of paramount importance to the re-builder suppliers and tends to justify discounting the significance of their sales to custom rebuilders.
VII.
Finally, Avnet objects to the portions of the order which require (1) divestiture of IPM rather than Valley Forge, and (2) Commission approval of any acquisition by Avnet of a supplier of used or rebuilt parts during the next 10 years.
Deference must be accorded to the Commission in fashioning the appropriate remedy. See Papercraft Corp. v. F. T. C., 472 F.2d 927 (7th Cir. 1973), and cases cited at 933 n. 17. Since it was the acquisition of IPM, rather than the earlier acquisition of Valley Forge, which violated the statute, and since the record indicates that Avnet has caused Valley Forge to emphasize expansion in its ignition parts business rather than the re-builders supply business, it was manifestly appropriate for the Commission to order divestiture of IPM.
We are also persuaded that even though the competition between used or rebuilt parts and new parts is not sufficiently intense to require the former to be treated as part of the relevant market for purposes of determining whether a violation occurred, it was nevertheless permissible for the Commission to consider the significance of that competition, together with Avnet’s past history of acquisitions, in defining the scope of Avnet’s obligation to obtain Commission approval of future acquisitions. We are unwilling to say that this portion of the remedy does not have a “reasonable relation to the unlawful practices found to exist.” Federal Trade Commission v. National Lead Co., 352 U.S. 419, 429, 77 S.Ct. 502, 1 L.Ed.2d 438.
Accordingly, we affirm and enter judgment enforcing the order of the Commission.
. The pertinent portion of Section 7 of the amended Clayton Act, 64 Stat. 1125 (1950), 15 U.S.C. § 18 (1970), provides:
“No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”
The Commission’s decision is reported at 82 F.T.C. 444 (1973). ,
. The substitute components may themselves be either new or used or rebuilt.
. The parties agree that the relevant geographic market in this case is nationwide.
. The following table lists the firms in complaint counsel’s market with their sales to rebuilders. It will be noted that the Hearing Examiner has included 17 firms, although complaint counsel initially contended that only 16 were sufficiently significant to be relevant.
In addition, the Hearing Examiner and the Commission both noted that in 1964, Ford, Chrysler and General Motors had sales to authorized rebuilders which amounted to about 3% of the foregoing total.
. The amendment excluded from the relevant line of commerce (1) the supply of used (as opposed to new) parts for rebuilt AEU’s, and (2) the sale of parts by OEM’s to “authorized rebuilders.” An “authorized rebuilder” is one, who, pursuant to specific agreement with an OEM, is authorized to rebuild that firm’s units. Although Avnet challenged the latter exclusion, the Commission noted that it related to only about 3% of total industry sales.
. Avnet’s answer denied the allegations in paragraph 15 of the complaint. Moreover, Avnet stipulated that one of the contested issues was: “Whether sixteen firms supplied virtually the total volume of equipment and new parts furnished to rebuilders in 1964?”
. See Papercraft Corp. v. F. T. C., 472 F.2d 927, 930 (7th Cir. 1973).
. The pretrial order required Avnet to list its exhibits by January 25, 1971. The Commission completed its case on February 25, 1971, and the trial was then recessed until May 6, 1971, to give Avnet time for additional discovery and preparation. On April 19, 1971, Avnet employed United States Testing Company, Inc. to conduct a survey, but made no disclosure of that fact until July 9, 1971, when it moved to amend its list of proposed exhibits. The Hearing Examiner denied the motion as untimely, emphasizing Avnet’s past failure to act with appropriate diligence and candor in the preparation of the matter for trial.
. See findings 18^10, 82 F.T.C. at 402-407, where the Examiner substantially equates the terms “rebuilder” and “production-line re-builders,” on the one hand, and “repair shops” and “custom rebuilders,” on the other, to exclude custom rebuilders from the demand side of the market.
. The testimony of some representatives of the rebuilder suppliers made it quite clear that their sales to custom rebuilders were not significant. See, for example, the testimony of the witnesses Flynn (App. 591-592, 593-594), Kamber (App. 617), Green (App. 602), Winters (App. 663), and McCullough (App. 686).
. Since IPM has a list of 3,500 customers and since there are only 150 or 200 production-line rebuilders in the country, it is fair to infer that at least some of IPM’s customers were custom rebuilders. Of course, the number of customers tells us little about their volume of purchases. There is a stipulation in the record describing IPM’s sales to 49 customers with individual annual purchases ranging from $23.25 to $5,165.44. These figures are to be contrasted with IPM’s total sales of over $11 million. We have not found any evidence, or any offer of proof, by either party establishing the dollar value of sales by IPM or Valley Forge to production-line and custom rebuilders, respectively.
. In its brief at page 28 and footnote 22, Avnet states:
“First, because Avnet lacked adequate notice, it was unable to develop and present vital evidence to support its contention that sales to all the kinds of rebuilders reflected on IPM’s list of 3,500 active customers should be included in the relevant market. If the Commission’s Amended Complaint had charged that only sales to a definite class of ‘production-line rebuilders’ were to be included in the market, Avnet would have had the opportunity to survey its active customers to ascertain which among them fit the Commission’s definition of production-line rebuilders, to ascertain its sales to such rebuilders, to elicit evidence regarding their other suppliers, to demonstrate that these rebuilders compete directly with other kinds of rebuilders, and to conduct those additional inquiries which would be reasonably expected to yield relevant evidence regarding the validity of the Commission’s restrictive definition of the term ‘rebuilder.’ No such discovery efforts were undertaken by Avnet — for the sole reason that it was not given fair notice by the Commission that such inquiries were either required or relevant.
Fragmentary evidence on many of these issues is contained in the record. Av-net maintains, for example, that the record demonstrates the existence of real competition for the ultimate consumer’s dollar between custom rebuilt and production-line rebuilt electrical units, (see, e. g., RPF 215-22, App. Vol. IV,. and the transcript references contained therein.) The point in the text, however, is that Avnet was denied any opportunity during the prehearing stages of this proceeding to develop the kind of comprehensive evidence necessary to demonstrate the invalidity of the arbitrary definition of rebuilder subsequently adopted by the Hearing Examiner and the Commission.”
. Avnet contends that its survey would have shown a market for new, rebuilt and used parts of more than $300 million and, if admitted, would have rebutted the Commission’s evidence tending to prove a relevant market of only about $20 million. We have examined the study identified as Respondent’s Exhibit 88 (Rejected); we find no offer of supplementary expert oral testimony. For at least three reasons, the rejected exhibit does not appear to us to be inconsistent with the Commission’s analysis of the market. First, it apparently includes sales of rebuilt AEU’s which include used and rebuilt, as well as new, components; second, it apparently includes sales of custom rebuilt units which include components purchased from WD’s and, therefore, indirectly from OEM’s; and third, its price analysis is directed to the retail market, whereas IPM, Valley Forge, and their competitors were selling to companies engaged in the manufacturing business who sold largely to jobbers, who in turn would resell to retailers. We find nothing in the study shedding any light on the magnitude of sales at the level at which IPM and Valley Forge sold. We are inclined to attach greater significance to Avnet’s failure to make a timely offer of a breakdown of its own sales to custom rebuilders and production-line rebuilders than to any extrapolation suggested by the rejected offer.
. The FTC rule provides that a product cannot be identified as “rebuilt” or “remanufactured” unless it has been
“dismantled and reconstructed as necessary, all of its internal and external parts cleaned and made free from rust and corrosion, all impaired, defective or substantially worn parts restored to a sound condition or replaced with new, rebuilt or unimpaired used parts, all missing parts replaced with new, rebuilt or unimpaired used parts, and such rewinding or machining and other operations performed as are necessary to put the industry product in sound working condition.” 16 C.F.R. § 62.3(b) (1974) (footnotes omitted).
The rule also provides that units can be sold as “rebuilt” only after they have undergone this process and are labeled as rebuilt. Units which are not sold, or are not sold “to the trade,” need not be labeled if it is “clearly understood by all purchasers . . . that the products, or parts thereof . . . have been used.” 16 C.F.R. § 62.1(b)(1).
. See App. 220.
. See 82 F.T.C. at 448 et seq. The Commission stated:
“Throughout the proceeding below and on appeal, respondent has contended that the term ‘rebuilder’ refers to all firms that engage in the physical operation of disassembling a unit, cleaning, testing, replacing or reconditioning defective or worn parts, and reassembling and testing the finished product.” 82 F.T.C. at 449 (Emphasis added).
This statement provides a sufficient basis for distinguishing Rodale Press, Inc. v. F. T. C., 132 U.S.App.D.C. 317, 407 F.2d 1252, 1255-6 (1968), and Bendix Corporation v. F. T. C., 450 F.2d 534 (6th Cir. 1971), both of which involved a complete change in theory at the Commission level.
. See 82 F.T.C. at 468-473.
. In Celia we stated:
“In an administrative proceeding it is only necessary that the one proceeded against be reasonably apprised of the issues in controversy, and any such notice is adequate in the absence of a showing that a party was misled.”
In Balfour we stated:
“As the Commission case against petitioners unfolded, there was a ‘reasonable opportunity to know the claims of the opposing party and to meet them.’ ” 442 F.2d at 19.
. In United States v. Connecticut National Bank, 418 U.S. 656, 94 S.Ct. 2788, 41 L.Ed.2d 1016 (1974), the Supreme Court characterized the quality of the government’s burden of proving the contours of the relevant geographic market as its “role to come forward with evidence delineating the rough approximation of localized banking markets . . .” 418 U.S. at 669, 94 S.Ct. at 279. Presumably a similar “rough approximation” may be sufficient to make out a prima facie case on the relevant product market issue.
. Respondent is incorrect in its statement that the Commission ignored the fact that the commonly quoted “exchange price” for rebuilt parts includes a used core as part of the purchase price. Avnet’s brief at page 55. See Commission opinion at 82 F.T.C. 457--158.
. As the Commission noted in its opinion: “The facts found by the judge demonstrate that production-line rebuilders sell a product, not a service, to entirely different classes of customers at different distribution levels using completely different pricing methods.” 82 F.T.C. at 450.
. This conclusion is buttressed by the fact, as stated by the Commission, that “while production-line rebuilders could not operate without a supply of new parts from rebuilder suppliers, custom rebuilders buy their new parts primarily from OEM wholesale distributors at prices 20-40 percent higher than those charged by the rebuilder suppliers.” 82 F.T.C. at 450. The Commission added the following footnote at this point in its opinion:
“13 Although the judge in his initial decision made no finding as to the differential, between the prices charged to rebuilders by wholesalers and those charged by rebuilder suppliers, the testimony cited by the judge demonstrates that WD prices to rebuilders were at least 20-40 percent higher than rebuilder supplier prices. For example, the President of Precision Field Coil noted that WD prices for General Motors’ field coils were $4.41 while Precision sold to rebuilders at $2.76. (Tr. 538-39). One of the nation’s largest rebuilders testified that IPM’s prices were at least 20 percent cheaper than WD prices. (Tr. 843). The President of Valley Forge indicated that Valley Forge and IPM generally sold at a price 70 percent off OEM list price while jobbers sold at a 50 percent discount. (CX 37e). Thus, jobbers sold at prices over 60 percent greater than those of rebuilder suppliers.”
Unquestionably the substantial price differentials make it appropriate to exclude the sales by OEM distributors to custom rebuilders from the market under study in this case. It necessarily follows, therefore, that it would have been inappropriate to include all sales to custom rebuilders in the relevant market.
. See, e. g„ App. 591-592, 594, 602, 617, 663, 686.
. Accordingly, the IPM assets have been “held . . contrary to the provisions of [§ 7 of the Clayton Act].” See United States v. ITT Continental Baking Co., 420 U.S. 223 at 240, 95 S.Ct. 926, 43 L.Ed.2d 148 (1975), and cases cited therein.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALSCHULER, Circuit Judge
(after stating the facts as above). The single issue raised by appeal 3788 is whether, under clause 17 of James’ will, the bequest to George of the residue of the personal property became vested in George on James’ death; for, if it did not, then, upon George predeceasing James’ widow, the bequest would lapse, and pass as intestate estate to James’ widow, as his sole heir at law. The District Court held that the bequest to George vested, and passed under his will. .The law of Indiana, so far as it has been declared thereon, will control.
Whether a bequest is vested or contingent is primarily to be determined by the intent of the testator, as manifested by his will. While a contingent interest, created by apt words, will be upheld by the court (Alsman v. Walters, 184 Ind. 565, 106 N. E. 879, 111 N. E. 921), testamentary grants will be treated as vested unless the testator’s intention to the contrary appears (Bruce et al. v. Bissell et al., 119 Ind. 525, 529, 22 N. E. 4,12 Am. St. Rep. 436; Aldred v. Sylvester, 184 Ind. 542, 548, 111 N. E. 914; Burrell v. Jean et al., 196 Ind. 187,146 N. E. 754).
The contention thereon for appellant is that “the interest of George Sweetser was contingent upon the prior payment of all legacies and bequests in full and the ascertainment of the existence of a surplus.”
True it is, the enjoyment of the bequest was postponed until the widow’s death; but this is so wherever a life estate intervenes. Uncertainty of the time of the life tenant’s death — an event which was certain to occur at some time — does not prevent the immediate vesting of the estate in remainder. As said Aldred v. Sylvester et al., supra, “words of postponement are presumed to relate to the beginning of the enjoyment of the estate, rather than to its vesting.”
Nor does the fact that the surplus going to the remainderman is what remains after payment of specified legacies upon the death of the life tenant, make the remainder contingent. These conditions go to the extent, of the estate which the remainderman will take, which would be no less true if the specified contingency were only the prior payment, of decedent’s debts. These, as well as legacies, would of course-reduce the surplus, and might even extinguish it; but such conditions do not make the bequest of the remainder contingent, nor postpone its immediate vesting-in the specified remainderman.
In Heilman et al. v. Heilman et al., 129 Ind. 59, 28 N. E. 310, where the widow was given a life estate, with power of disposition of real estate, whereby it was uncertain what, upon her death, would be left for the remain-derman, the court held that for this reason alone the estate in remainder was not contingent. And in Raub et al. v. Rodabaugh, 185 Ind. 513,112 N. E. 1003, it was held that provision for prior payment of debts and legacies out of an estate did not interfere with the vesting of the fee of the remainder. Other Indiana eases indicating generally that, under circumstances more or less like those here shown, the estate in remainder becomes at once vested, are Allen et al. v. Mayfield, 20 Ind. 293; Tindall et al. v. Miller et al., 143 Ind. 337, 41 N. E. 535; Aspy et al. v. Lewis et al., 152 Ind. 493, 52 N. E. 756.
Appellants contend that intervention of a trust to pay the income to the life tenant and convert the fund into cash, and pay specific legacies, requires the conclusion that the bequest of the surplus is contingent and does not vest, under authority of Citizens’ Loan & Trust Co. v. Herron, 186 Ind. 421,115 N. E. 941. Without quoting the quite lengthy will there in issue, it is clear to us that it did impose upon the vesting of the remainder, conditions of such uncertainty that it was properly held the bequest of the remainder was not vested.
We see nothing in clause 17, or any other part of James’ will, that leads us to conclude the testator intended thereby to create a contingent rather than a vested estate in his brother George of the surplus of at least the personal estate, and in view of the disposition of the law to favor vesting at the earliest time, we hold that the District Court was right in finding that it did so vest in George, and passed under his will.
Appeal No. 3759 involves, first, the question of the fee to the real estate, which the District Court held to be intestate property,' passing to James’ widow as his sole heir at law.
Clause 4, wherein he gives to the widow all his real estate for the term of her natural life, is the only place in the will where real estate is specifically mentioned. The law does not favor the conclusion of partial intestacy, and such will not be decreed unless the will clearly indicates a failure to make disposition of some portion of the estate. Skinner v. Spann, 175 Ind. 672, 93 N. E. 1061, 95 N. E. 243; Alsman v. Walters, 184 Ind. 565,106 N. E. 879, 111 N. E. 921.
The conclusion of intestacy follows from the failure to make disposition of property, even though it is apparent from the will that the testator intended no further provision for the person to whom the fact of intestacy will send it. Doe v. Lanius, 3 Ind. 441, 56 Am. Dec. 518; Thomas v. Thomas, 108 Ind. 576, 9 N. E. 457.
Appellants rely on clause 17 of the will as indicating that the fee was devised to George; and it is plain that, if such is not the effect of clause 17, the fee is intestate property. The various clauses creating and defining the trust deal only with the personal property, all of which, save the household property, passed to the executors for the purposes of the trust.
It is the contention of appellants that the term “surplus,” as used in clause 17, is not limited to personal property, but applies to the entire estate, including the fee of realty. It is extremely doubtful, whether this word of itself can be construed to include any but the trust property, which does not embrace the real estate; and this use of the word “surplus” would scarcely rescue the fee of the real estate from the conclusion of intestacy.
But following the bequest to George of the surplus of the trust property is the phrase “as the residuary legatee herein.” This was not necessary to give him the surplus remaining of the trust property, the preceding words having already fully accomplished that manifest purpose. What, if any, further purpose or effect do these added words import? It is elementary that every part of a will should, if possible, be given effect.
Had there been an independent clause containing no more than the words, “I name my brother George Sweetser as residuary legatee herein,” it would, as against the conclusion of intestacy, have been all-sufficient to pass the testator’s otherwise undisposed of estate. Such words alone, without other specific grant, have been held sufficient to pass residual estate. Dann v. Canfield, 197 Mass. 591, 84 N. E. 117,14 Ann. Cas. 794.
We see no reason why the word “herein” should be limited in its application to seventeenth clause. It is reasonable to assume that the testator’s employment of the word contemplated the entire will and his entire estate. Employment in this relation of the expression “as residuary legatee herein” seems to indicate a state of mind on the part of the testator that, apart from any particular clause of the will, he considered George as his residuary legatee in the full sense in which that term is popularly and frequently employed in wills; not in relation to any class or kind of his estate, but the whole of it not otherwise disposed of by the will. It is well understood that the word “legatee,” although technically used in connection with personal property, is not so limited, and is quite commonly employed interchangeably with “devisee,” or other terms in strictness more applicable to testamentary grants of realty. Laing v. Barbour 119 Mass. 523, 525; Dann v. Canfield, supra.
The fact of granting his widow a life estate in his realty persuasively indicates that he did not intend so purposeless a devise as this would be, if he further intended intestacy as to the fee, whereby the widow, as his sole heir at law, would at once come into complete ownership and dominion. His very ample provision for her in the life use of his personalty, inventoried at about $150,000, to say nothing of her life estate in the realty, and full title of the household effects, does not raise a suggestion of intent to make further provision for her, but the more easily admits of the conclusion that the phrase, “as residuary legatee herein,” indicated an intent that George, his brother whom he named executor, and who was interested with him in the brick concern, should hold that relation as to all his residual property of every kind.
We are of opinion that the fee of the realty was not intestate estate, but that it was devised to George, and passed under his will. This brings us to the other question involved in this appeal, as to that part of the decree which deals with the 2,100 shares of the corporate stock which issued to the trustee for the James Sweetser interest in the special partnership. The decree awarded 593 shares to appellants as owners of the corpus of the James Sweetser interest, and 1,507 shares to Bred M. Sweetser, as executor of the will of Emma Sweetser, deceased, as Emma’s part of the profits and income of the eorpus.
The theory upon which this division was made seems to be that at the time of James SweetseBs death his two-thirteenths interest in the partnership comprised his $30,000 of capital investment, plus $13,953.94 of earned undistributed net profits then attributable to his share; the total, $43,953.94, being considered the then eorpus. The net profits attributable to the share, accumulating from time to time during the 16 years preceding the incorporation, ascertained and shown by the partnership books, but remaining- undistributed, were $111,857.64, and it was evidently considered that these two amounts, representing together the 2,100 shares of stock issued for this interest in the partnership, should share ratably therein, and the division made of the stock reflects this theory.
Bor appellants it is contended that the special partnership was, to all intents and purposes, a corporation; that the stockholders of a corporation are entitled, as income or profits upon their stock, only to such as comes by way of dividends declared by the corporation, and that the corporation has the right, in good faith, to accumulate a surplus whereby its business may be enlarged, its profits increased, and its stock beeome more valuable; that as between a life tenant, entitled to the profit and income of the stock, and a re-mainderman, any increase in value of the stock, by reason of such accumulation or retention of profits, becomes a part of the corpus, in which the life tenant has no interest. This is, in general, the conceded rule in the federal courts as to corporations, and we may assume would be here applied if this were a corporation. Gibbons v. Mahon, 136 U. S. 549,10 S. Ct. 1057, 34 L. Ed. 525. The master found that the same rule should be here applied as with corporations, and he held in his report that the undistributed accumulations of profits became part of the eorpus, and appellants were therefore entitled to all the shares of stock. This view the District Court rejected, evidently holding the concern • to have been a partnership, and that the partnership rule was applicable, viz. that the partnership net profits as earned and ascertained belong to the several partners in proportion to their interest.
Cases are cited whereunder organizations more or less similar have been held for certain purposes, such as taxation, to be in effeet corporations. But this concern must be considered in the light of the relations between the parties in interest, and this is dependent quite largely, if not wholly, upon the agreement between them. The agreement is in the general form provided by the Illinois Special Partnership Act. There were two general and six special partners, all contributing specified sums to the capital, beyond which the special partners were to have no liability, unless, indeed, they did any of those things which the act specified should make them liable as general partners. It was made in 1902 to continue for 20 years, with provision for survival in case of death of any of the partners, and for transfer of any interest, and it was pro-, vided that “all profits which may accrue to the said copartnership shall be divided” pro rata in proportion to the several interests; that there shall be an annual meeting of the partners the second Tuesday of December, and on receiving reports, as provided for, “the earnings of said copartnership shall be distributed in proportion to their holdings in said company,” and was provided that “an account of stock shall be taken, and an account between the said parties shall be settled as often as once in every year.”
It is plain enough, from this agreement, that no material accumulation of net profits was then contemplated; and even if the trustee, with the consent of Emma Sweetser, the life tenant, permitted a portion of the profits to remain in the business, it does not follow that thereby she lost the ownership of such undistributed net profits. She might even have estopped herself as against her copart-ners from taking such profits out of the business during the continuance of the partnership, but even this would not have transferred the ultimate right in such profits from herself to the remainderman.
As between these interests, the question of the ownership of these accumulated net profits is not dependent upon whether the profits might have been withdrawn by the partners or must remain in the business for use by the partnership. If we are correct in the assumption that the net earning's applicable to this share became the property of the life tenant, we see nothing in what she or the trustee did or failed to do whereby such right became forfeited. We hold that as between life tenant and remainderman, the former was entitled to the undistributed accumulated net profits.
Thus far we are in consonance with the decree thereon; but is it equitable to divide the stock upon the above indicated basis, or, indeed, to require any division of it? Can it truly be said that at the close of 1919 the corpus amounted to only $43,953.94? It is apparent from the evidence that the interests in this partnership had then acquired a value far greater than is represented by‘the original investment and the accumulation of undivided net profits shown by the books. There were originally, and from time to time acquired, large real estate holdings which had evidently greatly enhanced in value. There was the unusual situation of its properties — the proximity of shale and clay with fuel, and the transportation facilities — which seem to have given them peculiar and great earning capacity and advantage. Such advantages, although enhancing the valué of the corpus, are not profits or, income derived from the conduct of the business, and do not inure to the life tenant, entitled only to profits. Unquestionably at the close of 1919, when the partnership ceased, the elements referred to had contributed to make the shares far more valuable than they were when James died. There is evidence that at the later date the tangible assets were worth far more than even the $1,-365,000 par of the corporate stock which was then issued to the former partners, which amount in itself exceeds by nearly $400,000 the original investment, plus the entire accumulated undistributed net earnings. If the various shareholders be considered as entitled to the undistributed net earnings, there would still be present this increment of nearly $400,000 beyond the capital and earnings, to say nothing of the testified much larger actual value of the assets, all of which would attach to the corpus, and not be included in ■the category of undivided net profits and income.
Furthermore, the- master found that this business, as a going concern, then had a goodwill asset value of $1,000,000. When it is considered that during the 17 years preceding the incorporation the net earnings of this concern were considerably over $2,100,000, whereof about $1,400,000 had been paid to the partners, an estimated good-will value of $1,-000,000 is surely not wholly without foundation, and á proper proportion of such an element of value would likewise inure to the corpus. But, in view of the conclusion we have reached as to the equities of the parties, we need not further consider the element of good will, save as further indicating the fallacy of basing the division on a corpus or capital value in 1920 of James’ original investment, plus only the undistributed profits thereon at his death.
In further support of the decree hereon, it is urged that these accumulated net profits, together with the original corpus at the time of James’ death, helped not only to earn the large profits of the business, but also to produce the large accretions to the capital value of the concern, and being produced in part by the earnings to which James’ widow was entitled, her accumulated earnings should participate ratably in these accretions. If all of Mrs. Sweetser’s $112,000 of profits had been in the business as long as the $44,000 of corpus, there would be far more equity in the contention. But this amount is the accumulation of nearly 17 years.
The undistributed earnings for the first three years are nearly, if not quite, offset by losses. Thereafter accumulations in varying sums were added in each year, save two wherein small losses appear. The net earnings, distributed and undistributed, for the last few years of the period were particularly large. The accumulations did not serve to earn further profits or to produce capital accretions before the accumulations themselves were earned. The average amount of such undistributed profit investment for the whole period in question is a sum very greatly less than the accumulated $112,000 — perhaps less than half of it — whereas the $44,000 of original corpus was present during the entire accumulating period. This consideration alone would require a basis of division far more favorable to the corpus than found in the de- ' cree.
The contention that the life tenant is entitled to a proportion of the capital stock of the corporation because the profits she was entitled to have were by the trustee invested in or converted into the corporate stock, does not have great force when it is considered that the trustee was acting in such capacity, not only for James’ widow, but for the owners of the corpus as well. He could properly do or consent to nothing whereby the rights of either interest would be prejudiced to the advantage of the other. Having turned the corpus, to which James’ residuary legatee was ultimately entitled, into corporate stock (and, so far as the evidence shows, without their knowledge or consent), it is they who have the prime right to follow the investment. But it does not follow that the life tenant, by consenting that her undistributed net profits to which she was entitled, might pass into stock of the new corporation, becomes thereby entitled to a portion of the stock, in lieu of her right to have the undistributed net profits of this share.
It is readily conceivable that circumstances might exist in which, in order to do equity between the parties, a fair proportion of the corporate stock would have to be assigned her; but the situation here is plainly such that this does not appear to be necessary. The stock coneededly has value of several times its par, and appellants strenuously -insist that whatever equity appellees may have by reason of such undistributed profits, should be awarded in eash and not in corporate stock.
If the partnership business had been closed out and dissolved at the end of 1919, realizing, say, $1,365,000, which was then the testified minimum value of its net tangible assets, the amount to which James’ widow would then have been entitled to receive on account of the accumulated undivided net earnings, as between her and the remainderman, would have been not more than the amount of undivided profits attributable to James’ share, with possibly interest thereon. Nothing that she could then have done would have entitled her to more. If there is advantage in having this corporate stock, we find nothing that the remaindermen have done or failed to do wherefore, as against them, the life tenant should have any part of such advantage, instead of payment in full of her accumulated net profits.
The act of their trustee in receiving the 2,100 shares in lieu of the James Sweetser interest in the partnership, including the undivided profits, should not give the life tenant any more than the net profits of this share, regardless of the augmentation of the corpus. As between appellants and appellees, we are of opinion that full equity may be done by decreeing that the undistributed net profits of this share of the partnership he paid in cash, with interest thereon as hereinafter specified, and awarding appellants the 2,100 shares of corporate stock, subject to such payment.
As to interest, we are satisfied that under the extraordinary circumstances here appearing allowance should in equity be made the life tenant by way of interest — not upon the basis that the partnership would have been liable for interest, for the accumulation of the profits was evidently by consent of all the partners, each of whom proportionately benefited from their use in the business. While the life tenant was entitled to all the net profits and income from the share, the corpus no doubt had a distinct advantage and substantial accretion through the retention for use in the business of the undistributed profit, although it is evident that if this concern required funds it could have borrowed at usual interest rates. The life tenant doubtless also had realized added profit in the increased earnings of the partnership, made possible, in part, by this retention of the funds; but this should not serve to neutralize the equity arising from the consequent accretion to the corpus. Without having received these retained profits the life tenant nevertheless was required to bear some burden on account thereof, through being required to pay the annua] federal income tax on the full net profits of the share, including undistributed portion.
While such an equity cannot be measured with exactness, we are of opinion that in addition to paying the amount of accumulated undistributed net profits attributable to this share, it would achieve approximate equity to require the further payment of simple interest at 5 per cent, per annum upon each year’s accumulated undistributed net earnings of this share from end of each year in which the retained net profit accrued, up to time of payment.
The decree is reversed, and the cause is remanded to the District Court, with direction to enter a decree finding that James V. Sweet-ser died testate as to the fee of his real estate, and that by his will the fee thereof passed to George Sweetser, and upon the death of said George Sweetser unto appellants herein in appeal No. 3759, as in the last will and testament of George Sweetser provided; that the 2,100 shares of corporate stock of the Western Brick Company shall he by the surviving executor and trustee under James V. Sweet-sen’s will conveyed to the last-mentioned appellants herein, upon the condition and provided that within 90 days from the entry of the decree hereunder in the District Court, or within such further time as the District Court for good cause may grant, there he paid to Fred M. Sweetser, as executor of the last will of Emma Sweetser, deceased, or unto the clerk of the District Court for him, the sum of $111,857.64, together with simple interest at the rate of 5 per cent, per annum to be computed upon the amount of unpaid undistributed net earnings at and from the end of each year wherein the undistributed net earnings of such share shall have accrued, until such payment be made; that in case the-amount said is not paid, the said 2,100 shares of stock shall be sold under the direction of the District Court, and the proceeds shall be distributed and paid in the order following: First, the expense of such sale; second, the sum of $43,953.94, to be applicable on the corpus as aforesaid; third, to Fred M. Sweet-ser, as executor as aforesaid, the said amount of $111,857.64, with interest thereon, as above provided; and, fourth, the balance, if any, to constitute part of the aforesaid corpus, and to be distributed and paid out as such; that in all respects, save as herein otherwise indicated, the decree shall conform to that which was entered in this cause by the District Court.
The costs of these appeals shall be borne equally between the respective parties.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Appellant filed a motion with the District Court for the District of Kansas under Rule 35 of the Federal Rules of Criminal Procedure and under § 2255 of Title 28 U.S.C. Under his motion appellant urges that the evidence at the trial was insufficient to prove all of the elements of the offenses charged; that the instructions given by the court were not given separately on each of the two indictments which had been consolidated for trial; and that the court submitted improper forms to be used by the jury in returning a verdict.
The District Court denied appellant’s motion without a hearing stating that no factual issue was present which required a hearing, and the files and records showed conclusively that the appellant was not entitled to relief. The trial court stated that neither Rule 35 nor § 2255 could serve as an appeal. The appellant has taken this.
Appellant and another accused were indicted in two separate indictments charging two separate robberies of the same Kansas bank. One robbery took place on August 20, 1957, and the second on September 25,1957. The appellant was tried by a jury and found guilty under each indictment, and was sentenced to fifteen years on each of the two charges, the sentences to run consecutively. Appellant then appealed to this court from the guilty verdict, and the appeal is reported in Johnston v. United States, 10 Cir., 260 F.2d 345, cert. den. 360 U.S. 935, 80 S.Ct. 1454, 4 L.Ed.2d 1547.
Appellant thereafter in utilizing his post-conviction remedies to attack the sentence and convictions filed the following motions: A motion for reduction of sentence under Rule 35 was denied. Appellant then filed a motion under 28 U.S. C. § 2255, urging that the judge presiding at the trial had not been properly designated to try the ease. This motion was overruled. A second motion under § 2255 was then filed by the appellant on the ground that he was mentally incompetent to assist in his defense. Detailed hearings were had and this motion was denied. This action was affirmed in Johnston v. United States, 10 Cir., 292 F.2d 51. Appellant filed a third motion to vacate under § 2255 on the ground that he was denied the right of allocution. This was denied and appeal was taken, which is reported in Johnston v. United States, 10 Cir., 303 F.2d 343. Thereafter the motion here concerned was filed and denied by the trial court.
As indicated above, two separate indictments for the two separate robberies of the same bank were consolidated for trial. The trial court gave one set of instructions. The appellant complains that thereby there was a failure to instruct as to one of the indictments, and that this may be raised in this motion under Rule 35 of the Federal Rules of Criminal Procedure as a complete lack of instructions. The matters which the appellant here raises as to the instructions and as to the sufficiency of the evidence are those which are raised upon a direct appeal and must be so raised. Curry v. United States, 292 F.2d 576 (10th Cir.). The Supreme Court has stated in Hill v. United States, 368 U.S. 424, 82 S.Ct. 468, 7 L.Ed.2d 417, that the function of Rule 35 is a narrow one to permit the correction of an illegal sentence, and not to permit a reexamination of errors occurring during the trial. The sufficiency of the evidence and the objections to the instructions raised by the appellant in the case at bar are not matters which bear on the legality of the sentence, but instead relate only to asserted errors which occurred during the course of the trial. Appellant’s resourceful argument that there were no instructions at all on one indictment of the consolidated charges does not lead to a different conclusion. Such matters may not be raised by motion under Rule 35. As the trial court stated, a motion under Rule 35 cannot serve as an appeal. Willis v. United States, 289 F.2d 581 (8th Cir.), cert. den. 368 U.S. 856, 82 S.Ct. 93, 7 L.Ed.2d 53; Callanan v. United States, 274 F.2d 601 (8th Cir.), aff’d 364 U.S. 587, 81 S.Ct. 321, 5 L.Ed.2d 312; Funk-houser v. United States, 260 F.2d 86 (4th Cir.), cert. den. 358 U.S. 940, 79 S.Ct. 346, 3 L.Ed.2d 348.
The trial court was entirely proper in consolidating the two indictments at the trial and in giving one set of instructions. One of the indictments on which the appellant was charged, No. 10362, charged that the appellant in taking the stated sum of money from the bank did assault one Joyce Hutchinson by hitting her on the head with a gun and did put in jeopardy the lives of Thomas J. Lukomske, Ralph E. Dirksen, and Joyce Hutchinson by the use of dangerous weapons, to-wit, an automatic pistol and revolver. The indictment in No. 10363 charged that the lives of Ralph E. Dirksen, Thomas J. Lukomske, and Joyce Hutchinson were put in jeopardy by the use of dangerous weapons, to-wit, automatic pistols or revolvers. It was proper under these circumstances for the trial judge to give one set of instructions applicable to both of the indictments. The giving of but one set of instructions was not a failure to instruct the jury so as to render the guilty verdict on the second indictment a nullity, and thereby to render the sentence imposed thereunder illegal under Rule 35 as the appellant contends.
The trial court also properly held that a motion under § 2255 could not serve as an appeal. Carrillo v. United States, 332 F.2d 202, Tenth Circuit, May 1964; Emmett v. United States, 262 F.2d 70 (10th Cir.); Gaitan v. United States, 317 F.2d 494 (10th Cir.); Fennell v. United States, 313 F.2d 941 (10th Cir.).
There were no factual issues raised by the appellant’s motion under § 2255, and the trial court was correct in denying the motion without a hearing. As contemplated in 28 U.S.C.A. § 2255, this is a case where the files and records conclusively show that the appellant is entitled to no relief.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WIENER, Circuit Judge.
In this Louisiana diversity case, Plaintiff-Appellant Delta Truck & Tractor, Inc. (Delta) appeals the district court’s adverse summary judgments dismissing all but one of Delta’s claims. Also appealed is the district court’s directed verdict dismissing Delta’s remaining claim following a bench trial.
Delta, in its suit against Defendants-Appellees, J.I. Case Company, now a wholly-owned subsidiary of Tenneco, Inc. (Case), and International Harvester Company, now Navistar International Transportation Corp. (IH), sought damages for wrongful termination of its Dealership Agreement with IH following IH’s in globo transfer of its farm implement manufacturing and distribution business to Case. In our de novo review of the issues determined on summary judgment, we reach conclusions opposite those reached by the district court, particularly that court’s characterization of the transfer transaction between IH and Case as one in which IH went out of the farm implement business. We conclude instead that IH in fact sold its farm implement group or division to Case as a unitary, going business. For the reasons set forth below, we reverse the summary judgments and the directed verdict of the district court; render judgment in favor of Delta against IH and Case in solido (jointly and severally) on Delta’s breach of contract and third party beneficiary claims, and against IH on Delta’s claim against IH for breach of its duty of good faith; and remand the case to the district court for the sole purpose of determining the quantum of damages, interest and costs, including attorneys’ fees to the extent appropriate, owed to Delta by IH and Case, as well as such ancillary matters as may be required for the court to make such determinations.
I
FACTS
In 1962, Delta, a Louisiana corporation, became a franchise dealer of IH, itself an integrated manufacturer and distributor of farm implements and agricultural equipment. After meeting specified qualifying standards, Delta became a “XL” dealer of IH in 1976 and obtained a new dealer agreement with IH consistent with that status.
The new agreement (the Dealer Agreement), executed April 7, 1977, is the contract under consideration here. Among other things, the Dealer Agreement sets forth the conditions under which it could be terminated by either or both of the parties: 1) mutually, by written consent of both Delta and IH at any time; 2) unilaterally by Delta upon furnishing four months’ advance written notice to IH, with or without cause; and 3) unilaterally by IH upon furnishing six months’ advance written notice to Delta, but only for cause. For IH to have cause to terminate, either (a) Delta must (i) breach one of its obligations under the Dealer Agreement, (ii) be advised by IH of such breach, (iii) be given a reasonable opportunity by IH to rectify the breach, and (iv) fail to do so in a timely manner; or (b) IH must determine that a sufficient market for its products no longer exists in Delta’s trade area. (There is no contention by any party to this litigation that either of IH’s terminating causes as set forth in the Dealer Agreement ever occurred.) Notably absent from the exclusive list of causes that would give IH the right to terminate the Dealer Agreement unilaterally, unrelated to Delta’s breach of its obligations under the agreement, is the total cessation by IH of its farm implement and agricultural equipment business everywhere or the in globo sale or exchange of that business.
Section 2 of the Dealer Agreement states that the contract covers all agricultural equipment identified on IH’s price list. That section acknowledges that IH has the right, without incurring liability to the dealer, to make additions to and deletions from the price list, including deletions resulting from discontinued production of a line or lines of agricultural equipment. Notably absent from section 2 is any express or implied right of IH unilaterally to terminate all lines of agricultural equipment, i.e., to exit that market altogether, without incurring liability to the dealer.
For many years both before and after becoming a wholly-owned subsidiary of Tenneco, Inc., J.I. Case Company, Inc. competed directly with IH as a manufacturer and distributor of agricultural equipment. As will be noted, Case competed directly with IH in Delta’s trade area, primarily through the authorized Casé dealer for that area, Scott Truck and Tractor.
As a result of a general recession in the farm economy, IH suffered substantial losses in its agricultural equipment group from 1980 through 1984. On November 26, 1984, IH and Case executed a contract (the Purchase Agreement) in which IH agreed to sell and Case agreed to buy all assets of IH’s farm implement and agricultural equipment manufacturing and distribution business. Upon consummation of its purchase from IH, Case took over the manufacture of IH products, calling that line of agricultural equipment “Case-International.”
Prior to the IH sale to Case, each company had manufactured and distributed its own agricultural equipment through its own network of independent dealers. Delta was such a dealer for IH. Both IH and Case recognized that Case’s purchase of IH’s farm implement group or division would produce a number of “conflict areas” — bommon geographical trade areas in which a Case dealership and an IH dealership competed. Case therefore decided that, immediately following its purchase of IH’s farm implement business, it would offer a new dealership agreement for a combined Case-International dealership to one (but only one) dealer in each conflict area, effectively leaving the other dealer in such area with no access to either Case or IH merchandise and parts.
Case and IH recognized that each terminated dealer would be faced with the prospect of either finding a third manufacturer with which to affiliate or simply going out of the farm machinery business. With this in mind (and, we assume, with the expectation that in most instances the Case dealer would be the one to which the combined Case-International dealership would be offered), Case and IH included in the Purchase Agreement a provision addressing the post-sale status of the former IH dealers. Under this provision Case agreed that with respect to each IH dealer, Case would either offer the former IH dealer a Case-IH dealership agreement (thereby making the IH dealer the sole surviving dealer in the conflict area), or — if the IH dealer were not thus to “make the cut”— offer one alternative among consolidation, relocation, purchase or termination of the IH dealer’s operations, on terms at least as favorable as that Dealer would be entitled to receive upon termination of its Dealer Agreement with IH. Case also agreed with IH that in the further alternative that Case and an IH dealer could not reach an agreement by the closing date of the Purchase Agreement, Case would offer such IH dealer an interim dealership contract for a period reasonably required for Case and the former IH dealer to reach a mutually acceptable agreement on that dealer’s future status.
Delta fell within one of the several hundred conflict areas throughout rural Amer-ica. Case decided to grant the exclusive Case-International dealership within Delta’s area to Scott Truck & Tractor, the preexisting Case dealer in that locale and a direct competitor of Delta’s of long-standing. On January 15, 1985, Delta was informed by Case of its decision not to extend Delta a new Case-International dealership contract. Three weeks later Case and Delta met to consider a buy-out of Delta by Case but were unable to arrive at a mutually acceptable arrangement. The following day Delta was informed by letter from Case that it would make IH goods and parts available to Delta for 90 more days only. The letter also stated that negotiations for a termination agreement would continue, but for 30 days only, after which Case would do nothing more than repurchase Delta's whole goods and parts (incidentally, a statutory right of Delta to demand). Case thereafter maintained an account for Delta and provided Delta with IH parts and equipment.
Few if any additional discussions took place between Case and Delta until March 13, 1985 (after the 30 day negotiation period specified by Case had expired), at which time Delta demanded by letter that Case comply with Louisiana law by repurchasing all of Delta’s whole goods and parts. Case complied with that demand.
II
PROCEEDINGS
Delta filed suit in federal district court against IH and Case, proffering numerous claims arising from the termination of Delta’s IH dealership. Delta asserted claims of racketeering, antitrust violations, breach of contract, breach of stipulation pour autrui (Louisiana’s equivalent of a third party beneficiary contract), breach of fiduciary duty, breach of implied covenants of good faith and fair dealings, fraud, unfair trade practices, and non-compliance with Louisiana’s statutory provision covering dealership termination. Delta subsequently amended its complaint to allege that Case succeeded to IH’s contractual obligations under the Dealer Agreement, and that Case breached that agreement and was guilty of misrepresentation.
IH and Case moved for summary judgment, and Delta moved for partial summary judgment. The district court partially granted the IH and Case motions for summary judgments, dismissing all of Delta’s claims except the one grounded in the theory of third party beneficiary contract. On that one claim the district court ruled that, under section 5.2 of the Purchase Agreement, Case undertook “certain obligations” of IH to its former dealers even though Case did not expressly assume IH’s dealership contracts. As such, found the court (albeit without using express terminology of stipulation pour autrui or third party beneficiary), Delta could enforce the provisions of section 5.2 directly against Case.
Thereafter Case moved for partial summary judgment on the third.party beneficiary issue. Initially, that motion was denied, the district court finding a genuine fact issue in connection with Delta’s third party beneficiary claims under Delaware law — the law of choice stipulated by IH and Case in the Purchase Agreement. But after it requested and received additional briefing on the issue, the court recalled its prior ruling and granted Case’s motion in part. In the revised ruling, the district court stated that as Case had, under section 5.2(b) of the Purchase Agreement, elected not to offer Delta a new combined Case-International dealership agreement, Case had the option of exploring with Delta any of four alternatives (consolidation, relocation, purchase or termination); and that Case had properly pursued the termination alternative after unsuccessfully pursuing the purchase alternative. The district court held that under the termination alternative Case’s only obligation was to offer Delta a settlement on terms at least as favorable as those to which Delta would have been entitled upon termination of its IH Dealer Agreement.
The district court then concluded that the only issue remaining for trial was whether Case had failed to offer Delta an interim agreement as required by the second part of section 5.2(b) of the Purchase Agreement. But in a subsequent pre-trial ruling the district court held that of two remaining issues, the one that invoked Case’s obligation to offer Delta an interim agreement had evaporated when Delta made its statutory demand that its inventory of IH equipment and parts be repurchased.
The bench trial commenced less than a month later. Given the district court’s pri- or rulings, Delta’s only remaining claim was for the loss of a sale of five cotton pickers to one of its customers. At the conclusion of Delta’s case in chief the district court granted a directed verdict for IH and Case, ruling that inasmuch as Delta had failed to prove that the customer actually would have purchased the cotton pickers, Delta’s evidence was insufficient to support a judgment for damages. The district court then dismissed Delta’s action with prejudice.
Delta timely appealed the district court’s summary disposition of all claims except one and, as to that one claim, appealed the district court’s directed verdict. IH and Case cross appealed the district court’s holding that Delta could enforce section 5.2 of the Purchase Agreement as a third party beneficiary.
Ill
ANALYSIS
A. Summary Judgments Dismissing Delta’s Claims
1. Standard of Review
In reviewing a district court’s grant of a motion for summary judgment, we examine the record de novo. Our task is to determine, viewing the evidence and all reasonable inferences in the light most favorable to the non-movant, whether the movant has demonstrated that there is no genuine issue of material fact and that the movant was entitled to judgment as a matter of law. We also conduct a plenary review of applicable law; and when, as here, our jurisdiction and that of the district court is based on diversity of citizenship, we afford no deference to the district court’s state law determinations.
2. Delta’s Claims Against IH for Breach of Dealer Agreement
Delta asserts that the Dealer Agreement was unlawfully terminated by IH as a result of the transfer by IH of its entire agricultural equipment division — manufacturing facilities, inventory, trade name and other assets — in globo to Case. Delta complains that IH deliberately contracted with Case in a manner calculated to dimmish contractual obligations of IH to Delta under the Dealer Agreement, even though Delta was not a party to the Purchase Agreement.
The district court found that, although the Dealer Agreement specified several grounds upon which it could be terminated unilaterally by either party or jointly by both parties, that agreement neither expressly provided a fixed term or duration for its performance nor addressed the consequences of a unilateral withdrawal from the agreement by IH, either by ceasing to manufacture agricultural equipment or by disposing entirely of its agricultural equipment business. Relying principally on the provisions of La.Civ.Code Ann. art. 2054, one of several Civil Code articles setting forth rules for interpretation of contracts, the district court first concluded as a matter of law that, absent an express contractual provision for the duration of the Dealer Agreement, that contract should continue for a “reasonable period.” The district court then found that the period during which IH continued to manufacture agricultural equipment was the “reasonable period” for purposes of the Dealer Agreement’s duration. Stating the obvious — that the Dealer Agreement did not require IH to manufacture agricultural equipment forever — the district court held that when IH ceased manufacturing agricultural equipment, the Dealer Agreement terminated. As such, reasoned the district court, Delta was left with no cause of action against IH for breach of contract when the Dealer Agreement terminated as a result of IH’s cessation of manufacturing and selling agricultural equipment pursuant to its sale of that business to Case.
Although we do not quarrel with the determination that IH was not obligated to manufacture and distribute farm equipment forever and thus not obligated to maintain Delta as a dealer forever; and also agree that the reasonable period of IH’s obligation to maintain Delta as a dealer was until such time as IH might truly terminate its farm implement business, we disagree with the district court’s finding that IH did that. We find, to the contrary, that IH did not terminate its farm implement business but that it sold it lock, stock and barrel, as an ongoing business. In so doing, IH caused the termination of Delta’s Dealership Agreement, without cause, before the term of that agreement would otherwise have expired, a classic breach of contract.
Not surprisingly given the number of IH dealers affected by the transaction between IH and Case, this is not the first dispute concerning that transaction to make its way into court. Other IH dealers have sued on claims essentially identical to Delta’s in other jurisdictions. As the contracts considered by the courts in those cases were substantially identical to the Dealer Agreement here, those cases merit discussion.
In Groseth International, Inc. v. Tenne-co, Inc. a long-time IH dealer in South Dakota suffered the termination of its dealer status as a result of the IH/Case transaction and filed, among other claims, a breach of contract action against IH. The trial court granted summary judgment for IH on that claim, holding that section 2 of the dealer agreement gave IH the right to discontinue production of all lines of agricultural equipment without incurring any liability to Groseth. The Groseth trial court also held that, even absent section 2 of the dealer agreement, the doctrines of frustration of purpose and commercial impracticability would discharge IH from liability under the contract.
The South Dakota Supreme Court reversed, holding that the trial court had erred in concluding that section 2 of the dealer agreement authorized IH to discontinue completely all agricultural product lines without liability to Groseth. That supreme court held that even though section 2 stated that the price list could always change, there was an underlying assumption that IH would continue to market some group of agricultural products. Therefore, held that court, IH could not cancel the dealer agreement by operation of section 2 as that section did hot contemplate IH’s discontinuation of manufacturing and distributing agricultural equipment altogether.
The South Dakota Supreme Court also held that, as a matter of law, the doctrine of frustration of purpose did not discharge IH from its duty to perform under the dealer agreement. The court then reversed and remanded the case for a trial on the issue of commercial impracticability, holding that there existed material issues of fact on that question.
In Karl Wendt Farm Equip. Co. v. International Harvester Co., a former IH dealer in Michigan filed suit in federal district court alleging, inter alia, that IH breached its dealer agreement with Wendt. All other claims were disposed of before trial. At trial, the district court permitted IH’s defense of impracticability of performance to go to the jury, and the jury returned a verdict of no cause of action on the contract, adverse to Wendt. The district court denied Wendt’s motion for J.N.O.V./new trial but ordered a directed verdict in favor of Wendt on IH’s defenses of (1) frustration of purpose, (2) the ability of IH to cease production of all product lines under section 2 of the Dealer Agreement, and (3) an implied term limiting the duration of the contract. Wendt appealed the district court’s denial of its motion for J.N.O.V./new trial, arguing the invalidity of IH’s impracticability defense. IH cross-appealed the district court’s directed verdict on the viability of IH’s other defenses.
The Sixth Circuit held that, under Michigan law, the district court erred in permitting the jury to consider the impracticability defense and that Wendt was entitled to a directed verdict on that issue. The appellate court then addressed IH’s assertions on cross-appeal. First, the court agreed with Groseth in holding that frustration of purpose was not available as a defense. Again agreeing with Groseth, the Wendt court also held that section 2 of the dealer agreement did not serve as an alternative means for termination of the contract, especially in light of the existence of specific termination provisions in the contract.
Finally, the Wendt court addressed IH’s assertion that there is an implied term in every dealership agreement giving the manufacturer the freedom to go out of business, and that such an implied term gave IH a defense to the breach of contract action. IH cited the opinion of the district court in the instant case in arguing that the Sixth Circuit should likewise hold that Wendt’s dealer agreement automatically terminated when IH ceased manufacturing agricultural equipment. The Sixth Circuit, criticizing the decision of the district court in the instant case, held that IH had no defense under such a theory. The Wendt court stated that the evidence supported the conclusion that at the time the parties contracted, neither IH nor Wendt anticipated that IH would leave the agricultural equipment business completely. That court continued:
Implying a term which enables IH to terminate its franchise agreement unilaterally without following the termination conditions of the agreement and without incurring a breach places all the risk on the dealer. Rather, if economic circumstances require that IH leave the market for farm products, it should properly seek to terminate its agreement under the terms of the agreement.... As there is no evidence which suggests that IH sought to terminate its agreement with Wendt by mutual agreement under the terms of the agreement, the district court properly granted a directed verdict for Wendt on this defense.
We are not bound to follow either Gro-seth or Wendt, as those cases decided the issues under the laws of South Dakota and Michigan; we are bound here to apply Louisiana law. Furthermore, as the district court in the instant case held that IH had not breached the dealer agreement, it did not address, and hence we do not face, some of the issues decided by Groseth and Wendt — in particular, the defenses of frustration of purpose and impracticability of performance. Nevertheless, we find the opinions in those two cases helpful in our determination whether IH breached the dealer agreement when it sold its agricultural equipment division to Case without ensuring that Delta would be protected to the full extent of its contractual rights.
The Sixth Circuit in Wendt suggested that the district court in the instant case erred in holding that the Dealer Agreement terminated by implication when IH ceased personally to manufacture its agricultural equipment. IH construes that language in Wendt to mean that the Dealer Agreement obligated IH to perpetual performance regardless of the circumstances, a conclusion IH argues is unreasonable. IH argues further that, if such is the true meaning of Wendt, that opinion is fundamentally flawed because the Sixth Circuit failed to distinguish between IH’s decision to leave the agricultural equipment business altogether (which is not addressed in the dealer agreement) and a decision to terminate Delta or any other individual dealer (which is explicitly addressed in the dealer agreement).
We shall not attempt to interpret the true meaning of Wendt’s analysis of the district court’s opinion in the instant case. Our responsibility here is to review the instant decision “from scratch,” not to act as a super appellate court in review of the Sixth Circuit’s extra-territorial analysis of our trial court’s work. Nevertheless, we conclude that it is IH and the district court, not the Sixth Circuit, which have failed to make a fundamental distinction in this case — the distinction between a true business contraction or partial liquidation on the one hand and the outright sale or transfer of an active trade or business on the other.
In a true business contraction, an entity completely puts to an end one or more of its business pursuits. Such would be the case had IH discontinued its agricultural equipment business so that such business no longer existed; specifically, so that IH farm implements ceased altogether to be manufactured and sold. Clearly, however, that is not what occurred here; IH did not make a business contraction. Instead, it sold in globo its agricultural equipment manufacturing and distributing business, which continued — albeit under the aegis of Case — without so much as skipping the proverbial heart beat.
Under the terms of the Dealer Agreement, Delta could be terminated as a dealer only for cause. The issue whether the “reasonable” duration of the Dealer Agreement — which specified no term — is only as long as IH remained in the business of manufacturing farm equipment, is simply not material to our decision. As drafted, the Dealer Agreement presents a significantly different question, even though it sounds similar: Given no specified term and given the explicit termination provisions in the Dealer Agreement, does IH’s transfer of its agricultural implement manufacturing and distributing business, qua business, with the uninterrupted continuation of the manufacture and distribution of IH farm equipment, constitute cause for the manufacturer of such equipment— whether that be IH or its transferee — to terminate the Dealer Agreement as to Delta? Less an issue than a rhetorical question, the answer is a resounding “no!”
The fact remains that, as a direct result of the sale by IH to Case, Delta has been terminated as a dealer — without cause and through no fault of its own. IH cannot avoid its obligations under the dealer agreement by a sale of the business; because IH’s sale caused Delta to be terminated as a dealer in violation of the Dealer Agreement, IH has breached that agreement.
Nevertheless, IH argues speciously here as it did in Groseth and Wendt, that section 2 of the dealer agreement allows IH to discontinue its agricultural equipment business without liability to its dealers. IH contends that the holdings of Groseth and Wendt — that section 2 allowed IH to discontinue some, but not all, of its agricultural equipment lines — are illogical. In support of its argument, IH poses a hypothetical example in which IH phases out a different line of agricultural equipment every six months until only one line, for which there is no market in Delta’s area, remains. IH asserts that, as far as Delta is concerned, this scenario does not differ from one in which IH discontinues all of its agricultural equipment. That proposition is so ludicrous it will not be dignified with more than a flat rejection.
IH also argues that if, under Groseth and Wendt, IH is obligated to continue to manufacture at least one line of agricultural equipment, there is no guidance under the dealer agreement as to which line that must be. IH’s arguments so miss the mark that they approach frivolity, failing to recognize (or accept) the distinction between a true termination of the agricultural equipment business (i.e., the cessation of the manufacture of IH agricultural implements by anyone) and the sale of that continuing business to an erstwhile competitor. In the former situation, there would be no more IH agricultural equipment products manufactured by anyone to be distributed to anyone for sale to anyone. In the latter situation, IH products would continue to be manufactured, distributed and sold. It is clearly the latter situation with which we are faced here and which we hold constitutes a breach of the dealer agreement by IH when it results in the loss of dealership by a former dealer who has not breached the Dealer Agreement or otherwise given IH or IH’s successor cause to terminate the dealerships.
The key inquiry in this case is better understood if we ask not whether IH ceased to manufacture and sell agricultural equipment, but whether IH’s agricultural equipment ceased to be manufactured and sold. If only the former had occurred, IH may have been off the hook. But that simply is not what happened, or at least not all that happened. IH farm implements continued to be manufactured and distributed without interruption, so IH remained obligated to Delta. It did not wind down and terminate its manufacture and sale of agricultural equipment; it did not close factories; it did not dispose of land, buildings, machinery, raw materials, inventory, and the like, merely for scrap or salvage value or in some vast “going out of business” sale. It made a unitary transfer of those and all other elements of its farm implement business.
Even if we assume without deciding that the decision of IH to dispose of its agricultural equipment division was for bona fide business purposes, that disposition still did not produce a termination of such business. Irrespective of the tags and labels that IH and Case placed on the “asset purchase” of that business — whether for tax purposes, labor relations, or other reasons totally irrelevant to this consideration — that transaction was nonetheless a global sale of a going business, qua going business, carrying with it not merely tangible corporeal assets but all intangible, incorporeal attributes of the going business as well — not the least of which was the International Harvester brand name.
We hold that IH is responsible to Delta for all damages it suffered as a result of the loss of its dealership and thus its lawful right to sell and service IH equipment and parts in its designated trade area. IH breached the Dealership Agreement by transferring its ongoing farm implement business to Case in a manner that purported to vest Case with the legal right to terminate Delta’s farm implement dealership despite the total absence of cause. In so doing IH layed itself open to respond in damages to Delta for any net losses incurred in the event Case should terminate Delta without cause as defined in the Dealer Agreement and without compensating Delta fully for that breach of the Dealer Agreement. Issues of indemnity or contribution between IH and Case for causing IH thus to respond in damages are not before us; but clearly IH is obligated to Delta for its losses not otherwise compensated for by Case.
3. Delta’s Claims Against Case for Breach of the I.H. Dealer Agreement
Delta also alleges that as part of the purchase agreement between Case and IH, Case assumed IH’s rights and obligations under the dealer agreements. Section 1.2 of the purchase agreement defines the business acquired by Case as IH’s “agricultural equipment group [division] which is represented by the Purchased Assets, including... marketing in North America, through a large dealer organization.” (emphasis added). Delta argues that the only assets relating to the dealer organization are the dealer agreements. As Case acquired those dealer agreements and assumed IH’s obligations under them, Delta’s argument continues, Case is bound by the termination provisions of the dealer agreements; and as Delta was terminated as a dealer in a manner inconsistent with its Dealer Agreement, Case has breached that contract.
In further support of its argument that Case assumed IH’s obligations under the dealer agreement, Delta cites section 2.1(g) of the purchase agreement, which provides that Case assumed:
[a]ll liabilities arising out of any claim against [IH]... brought by any dealer... in the United States... which arises out of termination after the date of this Agreement of the contractual relationship of [IH]... with such dealer... (whether by the dealer or... by [IH])... or which otherwise results because of this Agreement or the transactions contemplated by this Agreement.
The district court rejected this argument because a provision in the purchase agreement listed “agreements with dealers” as a type of asset excluded from the purchase. The district court held that section 2.1(g) was an indemnity provision, requiring only that Case indemnify IH against claims brought by dealers. The district court concluded that Case could not and therefore did not breach Delta’s Dealer Agreement with IH because Case neither assumed nor acquired any of IH’s dealer agreements.
We recognize that the purchase agreement attempted expressly to exclude IH’s dealer agreements from the sale of IH’s agricultural equipment business. We find as a matter of law, however, that such language was merely an attempt to mask the reality of the transaction. Under section 5.2 of the purchase agreement, Case had the option to terminate Delta’s status as a dealer of IH agricultural equipment. Such a provision, though, is pregnant with its own obverse: If Case could opt to terminate, it could opt — here, through inaction— not to terminate; just another way of saying that Case could elect to retain, and insist upon the dealer’s beneficial performance of, any and all dealer agreements. Stated another way, it cannot be that Case could enjoy the power to terminate dealer status, which arose through a Dealer Agreement with IH, without acquiring all of the rights — and obligations — arising under the Dealer Agreement. One of those obligations was not to terminate the dealer without cause. As there is no contention that any of the express conditions justifying termination under the Dealer Agreement were satisfied, Case breached that agreement when it terminated Delta’s status as a dealer.
Our analysis of the nature of IH’s sale of its agricultural equipment business to Case leads inescapably to the conclusion that the parties to that transaction acted in concert and attempted to do indirectly what they could not do directly — terminate IH dealers without cause while avoiding or minimizing any financial responsibility and legal liability for such unlawful terminations. IH and Case knew that the transaction would result in a surfeit of dealers, and also knew that they were stuck with IH dealer agreements that did not allow for termination of IH dealers without cause. In an obvious act of damage control, IH and Case crafted the Purchase Agreement so as to disguise the effect of the transaction and avoid the troublesome provisions of the dealer agreements. The Purchase Agreement stated that Case did not assume or acquire the dealer agreements as part of the purchase; at the same time the Purchase Agreement gave Case the power to terminate former IH dealers. IH could not possibly confer on Case a power greater than IH possessed; Case could not obtain the power to terminate an IH dealer in the absence of some sort of contractual relationship between Case and that dealer.
When the Purchase Agreement is viewed in the cold light of reality, it is evident that IH and Case tried to make an end run around the Dealer Agreement between IH and Delta. They failed. We hold that Case is liable for breach of Delta’s Dealer Agreement by improper termination. As such, Case and IH are liable in solido (jointly and severally) for breach of that Dealer Agreement.
4. Delta’s Third Party Beneficiary Claims Against Case
As noted earlier, the district court initially found Delta was entitled to seek enforcement of the obligations undertaken by Case to IH’s dealers in section 5.2 of the Purchase Agreement between IH and Case, even though Case did not expressly assume the IH Dealership Agreements. When it denied motions by Case and IH for further summary judgment, the district court recognized the existence of a genuine issue of fact: whether Case had complied with its third party obligations undertaken in section 5.2 of the Purchase Agreement. But the court reiterated that, having ruled that Case did not assume the IH Dealership Agreements, Case was not bound by the conditions contained in those agreements concerning the grounds for termination of a dealer. On subsequent reconsideration, however, the district court — while continuing to maintain the position that Case was not bound by the termination provisions of the Dealer Agreement between IH and Delta — held that section 5.2 of the Purchase Agreement did constitute a third party beneficiary agreement under Delaware law.
In an effort to avoid third party beneficiary liability to Delta, Case insists here as it did in the district court that the express disavowal of third party beneficiary liability set forth in section 18.8 of the Purchase Agreement eschews a third party beneficiary result. The district court’s rejection of that contention by Case is correct. The specific provisions of section 5.2 clearly create a third party beneficiary obligation running from Case to IH dealers like Delta, trumping the general language of section 18.8.
Nevertheless, the district court concluded that, as to Delta, Case was only obligated to offer one of the four alternative arrangements listed disjunctively in section 5.2(b): consolidation, relocation, purchase, or termination. The district court found that Case had first explored the third option (purchase) and had negotiated, presumably in good faith, to no avail; after which Case nevertheless chose to exercise the fourth option (termination).
Continuing, the district court recognized that, as Case had pursued termination, it was obligated under section 5.2(b) to see to it that Delta’s termination was accomplished “on terms at least as favorable as such dealer would be entitled to receive upon termination under [the Dealer Agreement with IH].” The district court observed that the termination provision requires consideration of § 30 of the Dealer Agreement between IH and Delta which, concluded the district court, “sets out the minimum standard with which Case must comply.”
Up to that point we have no disagreement with the district court’s analysis. Our disagreement, and the point at which we find that the district court erred, is with its treatment of the § 30 standard as applicable equally to an unlawful termination (such as the termination of Delta’s dealership arrangement here) and to a lawful termination with cause as specified in the Dealer Agreement, e.g., no longer distributing in the dealer’s sales area or an active breach by the dealer which remains uncured. Clearly, the limited remedy of the dealer’s right to have its inventory equipment and parts repurchased upon termination applies only to lawful termination, i.e., by mutual consent of IH and Delta, or by Delta unilaterally with or without cause, or by IH unilaterally with specified cause— none of which occurred here. The measure of the obligation of IH — and thus Case— when termination is a breach of the Dealer Agreement is entirely different: full compensatory damages.
As we hold today that the obligation of IH under such circumstances is to respond monetarily to Delta in compensatory damages for the losses it experienced as a result of having its Dealership Agreement breached by unlawful termination under section 5.2 of the Purchase Agreement, Case can be responsible to no lesser extent. We and the district court agree that Case expressly obligated itself under section 5.2(b), whether as a Delaware third party beneficiary contract or a Louisiana stipulation pour autrui, to treat IH dealers such as Delta no less favorably than IH would be required to treat Delta upon termination of the Dealer Agreement. It is inescapable therefore that Case’s obligation to Delta is congruent with IH’s obligation to Delta. The fact that, in the Purchase Contract between IH and Case (to which Delta and the other IH dealers were not parties), the four alternatives contemplated by IH and Case as covering for the various types of arrangements that Case might propose are enumerated expressly, is of no legal significance whatsoever as between IH and Delta or Case and Delta. Just as we have held IH and Case contractually obligated in sol-ido to Delta for the losses it suffered when its right to sell and service IH agricultural parts and equipment was terminated by breach of contract, we hold, alternatively, that Case is obligated to Delta as a third party beneficiary to the same extent.
5. Breach of Duty of Good Faith
Delta claims that IH breached its duty to act in good faith in its performance under the Dealer Agreement. The district court, having determined that IH did not breach the Dealer Agreement, also found as a matter of law that IH fulfilled its duty to act in good faith under that contract. We disagreed with the former conclusion and now disagree with the latter. As we have noted, IH sold its agricultural equipment business to Case knowing that the transaction would result in the termination of IH dealers without cause. The Purchase Agreement even provided for “comfort letters.” For the reasons set forth in more detail in section III.A.3 above, we find that IH deliberately structured the transaction so as to leave the terminated IH dealers with little or no recourse against either IH or Case. IH argues that by including section 5.2 in the purchase agreement, it fulfilled its duty to act in good faith because that provision was designed to provide for the terminated dealers. On the contrary, that was the very provision which purported to give Case the right to terminate those dealers without cause and, at the same time, immunize IH. We find as a matter of law that IH breached its duty to act in good faith.
6. Fraud Claim Against IH
Delta alleges that IH committed fraud by representing to its dealers that it would remain in the agricultural equipment business “forever,” at the very time it was negotiating the sale of that business to Case. Such behavior is clearly duplicitous, but to constitute actionable fraud a promise or representation of future actions must be made “with the intention not to perform at the time the promise is made.” The district court held that “[bjeyond exhortation and allegation, Delta has produced no evidence which indicates that whenever IH repeated its commitment to the farm equipment business, IH intended otherwise.” After reviewing the record, we agree with the district court that Delta has failed to produce evidence of IH’s fraudulent intent sufficient to avoid summary judgment on this issue.
7. Breach of Fiduciary Duty Claim Against IH
Delta also alleges that IH breached a fiduciary duty in its dealings with Delta. This claim is easily dismissed. Louisiana law does not recognize a fiduciary relationship between a franchisor and a franchisee. Delta cites no Louisiana cases to support its claim. Summary judgment was proper on this issue.
8. Unfair Trade Practices Claims Against IH and Case
Delta claims that IH and Case violated the Louisiana Unfair Trade Practices and Consumer Protection Act (the “Act”). The district court dismissed these claims by holding that Delta had failed to show an injury to competition as the required by the Act. The Act provides a cause of action only for “consumers and business competitors.” Delta does not qualify as either a consumer or
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HUTCHESON, Circuit Judge.
This appeal is from a judgment on a directed verdict. The suit was for damages for the negligent killing ‘of plaintiff’s husband in- a collision between his truck and a bus owned by defendant.
Plaintiff pleaded that while plaintiffs decedent, in the exercise of due care, was driving his truck along a paved public highway in the state of Tennessee, some distance in the rear of and following the defendant’s bus, the bus suddenly and negligently, without warning or apparent reason therefor, turned to the left and came to a stop on the pavement so suddenly and so violently that plaintiff’s decedent, though in the exercise of due care, could not avoid a collision with it, resulting in the wrecking and overturning his truck and its and his destruction by fire.
In addition to the negligence in fact thus relied on, appellant pleaded and relied as negligence in law, on section 2690, Tennessee Code of 1932.
The District Judge, of the opinion that the statute quoted had no application, sustained defendant’s demurrer to so much of the petition as pleaded it. This ruling was duly excepted to and error assigned oil it.
Answering to the merits, defendant alleged that the accident occurred because, while its bus was slowing down for a passenger, the truck driven by plaintiff’s decedent came up at a rapid rate of speed and recklessly and negligently ran into the rear end of the bus.'
It further alleged that at the time the truck was struck the bus was slowing down, preliminary to a stop for a passenger some distance ahead, and that it had not yet come to a full stop. That its bus was brilliantly lighted; that the road where the collision occurred was straight for a half mile or more, and that if the driver of the truck had been in the exercise of an3¡- care whatever he could and should have seen the bus in front of him, and should have seen it was slowing down in plenty of time to avoid striking it. That the truck was far enough behind the bus, when the bus commenced to slow down, for it to have stopped before reaching the bus, had (he driver exercised any care whatever, but that no effort was made to slow the truck down or pass the moving bus until it was too late to avoid the collision, and that it occurred solely because of his negligence. In addition, it pleaded that the truck was, in violation of the statutes of Tennessee, going at more (ban 35 miles an hour at the time of (he collision.
On these pleadings the case went to trial. Plaintiff offered the testimony of three eyewitnesses, Rogers, Jay, and Bolden. The first two were in Rogers’ car coming up behind, and traveling faster than the truck and bus. In the way of overtaking and passing truck and bus they were in a position as they came up to see, and did see them both. They saw what each was doing and what occurred before and just at the time of the collision. Rogers’ testimony is that when he first saw the two vehicles the bus was some 75 or 100 feet ahead of the truck, when they went up the grade toward the scene of- the accident, the truck was gradually gaining on the bus. “I was running 40 or 50 miles an hour and was getting right smart closer. At the time of the collision I would say I was 100 to 125 feet behind the truck. I was running about 40 or 45 miles an hour and the bus and truck were each making about the same speed, 30 miles an hour. From the time I first sighted them I made up almost half the distance between them and me. As to noticing any trouble, I saw a slight shift of the lights of the front vehicle toward the center of the road, and immediately a second later, the truck shifted and the crash was on. The front vehicle made a turn to the left, a sudden turn. The truck then shifted immediately to the left. ' The lights of the bus shifted to the left and then the truck made a full turn.” He testified he did not see the bus stop. He could not see any effort to stop; he did not notice the bus slow down. It looked like as if there was a shifting of lights down on the edge of the road.
Jay, sitting in the back seat of Rogers’ car, testified substantially the same as he did as to the speed of the vehicles and their distance apart. He further testified: “The first thing I noticed I saw the red back light of the bus show up; that signalled stop. I saw the stop light flare up suddenly. When it did the truck light swerved to the left. Immediately the back light lit up the truck ' swerved to the left. I did not see the driver of the bus make any signal before the stop light appeared. I was facing the bus. The first thing I noticed was when the red stop light went on on the bus. At the time the stop light went on the truck was about 50 feet behind the bus. As to whether the bus slowed up I could not say. I saw the stop light go on and the bus swerve to the left.”
The other eyewitness, Bolden, lived on the highway at about the place where the collision occurred. He testified positively that he was standing on his front porch watching the bus come up when he saw it stop suddenly and turn to the left, throwing the light right on him; that it stopped right in the center of the concrete about one foot this side of
his stone wall. “I saw it was a sudden stop by the way the bus threw the passengers; it stopped quickly. The truck was about 50 or 75 feet behind the bus and the boy there did not want to hit it, I reckon, and he went to make this turn and he side-swiped the bus.”
This witness was subjected to a rigorous cross-examination on many matters. He was also examined' by the court. These examinations did develop some discrepancies on matters other than the stopping of the bus and what occurred then. There was no departure or variance from the material part of his testimony as to the sudden stopping of the bus and as to the accident itself. His testimony throughout was positive that the bus did not slow down and then stop, but that it stopped quickly and suddenly. That from the time the brake went on the bus it did not go any distance.
Other witnesses were offered as to other matters in the case, as to which there was no real dispute, in corroboration of the eyewitnesses’ testimony as to the physical situation and the facts of and surrounding the accident.
At the conclusion of plaintiff’s evidence the defense moved for a directed verdict on the grounds (1) that the evidence adduced is insufficient to show any negligence on the part of the defendant as charged in the petition; (2) that the undisputed evidence o'f plaintiff’s witnesses shows that plaintiff’s husband was guilty of contributory negligence, which proximately caused or contributed to his death; and (3) that the evidence shows unquestionably that by or in the exercise of ordinary care he could have avoided the collision in which he lost his life. The court sustained the motion and directed a verdict for defendant.
Appellant urges that this is the simple case of a suit for damages on the ground of negligence sufficiently pleaded and proven to take her case to the jury. Appellee on its part argues that the only evidence at all pointing to fault on its part is that of Bolden, and that this was so incredible in itself and so discredited by his testimony on cross-examination as to deprive it of any weight. Citing many authorities, it argues that it is the duty of the following -vehicle to watch out for the vehicle in front, and that in a head-end collision there is a heavy burden upon the following vehicle to show that it was without fault. It argues that the evidence not only fails to sustain that burden, but shows that the proximate cause of the collision was the want of care on the part of plaintiff’s decedent in following so closely behind the bus as to make collision with it certain in the event it should slow or stop.
Appellant, insisting that who was at fault in a head-end collision must, just as in the case of any other collision, be determined by the facts of each case, urges that here is a simple case of negligence sufficiently alleged and sufficiently proven to take . it to the jury. That that negligence is made out by the proof of the sudden slowing, the sudden swerving, to the left, and the sudden stopping of the bus on a public traveled highway without sufficient warning or signal to those following as to what it intended to do. She urges .that she not'Only proved this by Bolden, but she corroborated his testimony by that of two other eyewitnesses. She insists that whether Bolden’s testimony as he gave it was credible, whether on the whole case the defendant was or was not negligent, the plaintiff contributorily negligent, was for the jury.
We agree with appellant. All drivers of vehicles using the highways are held to the exercise of due care. A leading vehicle has no absolute legal position superior to that of one following. Each driver must exercise ordinary care in the situation in which he finds himself. The driver of the leading vehicle must exercise ordinary care not to stop, slow up, nor swerve from his course without adequate warning to following vehicles of his intention so to do. The driver of the following vehicle, in his turn, must exercise ordinary care to avoid collision with vehicles, both those in front and those behind him. Just how close to a vehicle in the lead a following vehicle, ought, in the exercise of ordinary care, be driven, just what precautions a driver of such a vehicle must in the exercise of ordinary care take to avoid colliding with a leading vehicle which slows, stops, or swerves in front of him, just what signals or warnings the driver of a leading vehicle must, in the exercise of due care, give before stopping or slowing up of his intention to do so, may not be laid down in any hard and fast or general rule. In each case except when reasonable minds may not differ, what due care required, and whether it was exercised, is for the jury. This is such a case.
In view of another trial, we think we should say that we agree with the view the District Judge took of the Tennessee parking statute. The bus was not parked or left standing within the meaning of that statute. The case appellant’s pleadings and proof make is one of negligent handling, in improperly causing the bus to suddenly slow, stop, and swerve to the left and stop without giving adequate and proper signals and warnings. The statute invoked has to do with parking and standing. It has no application here.
The judgment is reversed, and the cause is remanded for further and not inconsistent proceedings.
Note 1. “(a) No person shall park or leave standing any vehicle, whether attended or unattended, upon the paved or improved or main traveled portion of any highway, outside of a business or residence district, when it is imaeticable to park or leave such vehicle standing' off of the paved or improved or main-traveled portion of such highways; provided, in no event shall any person park or leave standing any vehicle, whether attended or unattended, upon any highway unless a clear and unobstructed width of not less than fifteen feet upon the main traveled portion of said highway opposite such standing vehicle shall be left for free passage of other vehicles thereon, nor unless a clear view of such vehicle shall be obtained from a distance of two hundred feet in each direction upon such highway.
“(b) Whenever any peace officer shall find a vehicle standing upon a highway in violation of the provisions of this section, he is authorized to move such vehicle or require the driver or person in charge of such vehicle to move such vehicle to a position permitted under this section. .
“ (c) The provisions of this section shall not apply to the driver of any vehicle which is disabled while on the paved or improved or main traveled portion of a highway in such manner and to such extent that it is impossible to avoid stopping and temporarily leaving such vehicle in such position.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HASTINGS, Senior Circuit Judge.
This is an appeal from a judgment of the district court, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C., dismissing defendants’ counterclaim and third-party complaint. We reverse and remand to the district court with directions to reinstate the counterclaim and third-party complaint.
Plaintiffs were the owners of five racing horses which were brought to the Arlington Park Race Track owned by the Arlington Park Jockey Club (Club), by plaintiffs’ horse trainer, Tracey Bougan, in connection with a race. In order to secure stables for the horses, Bougan signed, as the applicant, a “1971 Stall Application,” which is included as an appendix to this opinion. A note under the signature stated that a trainer signing the application represented that his signature was authorized by and was on behalf of the horse owners. The application stated that in consideration for the Club’s provision of certain facilities and services to the applicant without charge, including “fire and police protection,” the applicant agreed that the Club would assume “no responsibility for loss or damage by fire to animals . . . located on the Premises.” The application further stated that the Club was free from liability “whether or not such injury, loss or damage is caused by the negligent acts or omissions” of the Club, its employees or agents. The applicant also agreed to indemnify the Club from any liability for damage to the applicant’s animals in connection with the use of the Club’s property. On June 3, 1971, the five horses were killed in a barn fire.
Plaintiffs brought an action against the Club for damages in the amount of $310,500 for the loss of the horses, alleging that the Club had been negligent in maintaining a fire hazard and in failing to provide adequate fire alarms and fire fighting equipment. Jurisdiction is based on diversity of citizenship and the law of Illinois is controlling.
The Club filed a third-party complaint against Bougan, alleging that if he did not have authority to sign the application as- agent for the plaintiffs then he was personally liable for whatever the plaintiffs might recover from the Club. The Club also filed a counterclaim against the plaintiffs alleging that they were bound by Bougan’s actions and therefore required to indemnify the Club from any judgment awarded to the plaintiffs.
Plaintiffs and the Club each moved for summary judgment on the Club’s affirmative defense that the stall application exculpated it from liability for the loss of the horses. The district court granted the plaintiffs’ motion for summary judgment and denied the Club’s motion. The court reasoned that since the Club had undertaken to provide fire protection, it was not clear that the intent of the agreement was to put the entire risk of fire loss on the plaintiffs. The court dismissed the Club’s third-party complaint and counterclaim, sua sponte, on the grounds that they were dependent upon the validity of the exculpation and indemnification provisions. The court granted the Club’s motion for a finding under Rule 54(b) of the Federal Rules of Civil Procedure that the two dismissals were immediately appealable. Thus, this is an appeal only from the dismissals of the third-party claim and counterclaim. However, because those dismissals were based on the same question of law as the partial summary judgment, the issue here is the same.
The question is whether, under Illinois law, a contract which provides for fire protection, but which also provides for indemnification and exculpation of the promisor from liability for fire losses, even if due to its negligence, is effective to free the promisor from liability for damages caused by fire.
Under Illinois law, courts will enforce contractual clauses exempting a party from liability for its own negligence, if it is clear from the contract that the parties’ intent was to shift the risk of loss, “unless (1) it would be against the settled public policy of the State to do so, or (2) there is something in the social relationship of the parties militating against upholding the agreement.” Jackson v. First National Bank, 415 Ill. 453, 460, 114 N.E.2d 721, 725 (1953). Our court recently reviewed the state law on this question and said:
[I]n Illinois, at least when contracts between parties of relatively equal bargaining strength are being construed, the risk that a party will be guilty of negligence is treated like any other commercial risk that may cause harm to the other party to a commercial transaction. In the evaluation of foreseeable commercial risks, Illinois seems to attach greater importance to the commercial interest in certainty than to the policy of deterring negligence. Gates Rubber Co. v. USM Corp., 7 Cir., 508 F.2d 603, 614 (1975) (Footnote omitted).
Although there are a number' of Illinois cases construing exculpatory clauses, a recent decision on the subject by the Illinois Supreme Court suggests that reference to those cases will not be useful in determining the parties’ intent in a particular case. The court said:
We have examined the authorities cited by the parties . . . and conclude that the contractual provisions involved are so varied that each must stand on its own language and little is to be gained by an attempt to analyze, distinguish or reconcile the decisions. The only guidance afforded is found in the accepted rule of interpretation which requires that the agreement be given a fair and reasonable interpretation based upon a consideration of all of its language and provisions. Tatar v. Maxon Construction Co., 54 Ill.2d 64, 67, 294 N.E.2d 272, 273-274 (1973).
In the instant case, the language is explicit that the Club is not to be liable for fire losses due to its negligence. The question is whether, as the district court suggested, the fact that the Club agreed to provide fire protection' somehow makes this otherwise explicit clause ambiguous or inconsistent.
On this question the Illinois law is also clear. The courts have repeatedly upheld exculpatory clauses relieving a party from liability for negligence in performing a contractual obligation. For example, in Morrow v. Auto Championship Racing Association, Inc., 8 Ill.App.3d 682, 291 N.E.2d 30 (1972), the defendant contracted to permit the plaintiff to participate in the defendant’s stock car race. The plaintiff signed an agreement releasing the defendant from all liability for any injury sustained at the race track. While the plaintiff was in the pits working on his car, another car in a race went out of control and careened into the pit and seriously injured him. Plaintiff sued the defendant for damages claiming negligence in conducting races at an unsafe track. The appellate court reversed a judgment for the plaintiff and held that the release was a bar to the plaintiff’s suit.
Similarly, in Owen v. Vic Tanny’s Enterprises, 48 Ill.App.2d 344, 199 N.E.2d 280 (1964), an exculpatory clause relieving defendant from liability for personal injuries contained in a gymnasium membership contract was held to bar a suit by a member who had been injured in a fall, allegedly due to the negligent maintenance of the floor adjacent to the swimming pool. See also Bers v. Chicago Health Clubs, Inc., 11 Ill.App.3d 590, 297 N.E.2d 360 (1973) (abstract only).
Further, in Halperin v. Darling & Co., 80 Ill.App.2d 353, 225 N.E.2d 92 (1967), the Illinois court said, in dicta, that if a contract clearly so stated, a party could indemnify itself for damages arising out of its own negligence in performing a service it was contractually obligated to provide. In that case a lessor of a truck agreed to maintain the truck and the lessee agreed to hold the lessor harmless from any liability arising from operation of the truck. The truck was involved in a collision when its brakes, allegedly negligently maintained, failed. The court held that the lessor was only free from damages arising from operation of the truck and not from maintenance. The court further stated that if the lessor had included damages arising from maintenance in the exculpatory clause it would have succeeded in being free from liability for the collision.
In the instant case the broad exculpatory language of the stall application expressly included loss or damage by fire to animals whether or not caused by the Club’s negligent acts or omissions to act. When there is such clear contractual language expressing the intent of the parties Illinois courts will not abrogate it. This was a contract between businessmen and it reflected good business judgment to place the risk of loss upon the party who could least expensively insure against it. It is unlikely that the Club would provide stable facilities free of charge if by doing so it incurred liability for damage to horses of substantial but unknown value. The cost of insurance would be greater for the Club than for the horse owners because the Club could not accurately predict the number and value of the horses that would be housed in its facilities from time to time.
The district court and plaintiffs cited Shelby Mutual Insurance Co. v. City of Grand Rapids, 6 Mich.App. 95, 148 N.W.2d 260 (1967), which held that a fire protection clause vitiated an exculpatory clause. This case is not, of course, an expression of Illinois law and, in our judgment, does not support the district court’s holding. In Shelby, for a stipulated charge, the city agreed to supply fire protection to a family outside the city limits. However, the contract provided that the city would not be liable for losses due to its negligence or its failure to furnish adequate fire protection. When the family notified the fire department of a fire at its home, the dispatcher refused to send any fire fighting equipment. The city argued that the exculpatory clause relieved it from liability. The court disagreed. It held that the clause released the city from liability for failure to provide adequate protection but that there would be liability if it furnished no protection. If the contract were construed as the city argued it should be, it would be entirely illusory. This is not the situation in the instant case. There is no allegation here that the Club provided no fire protection. It would not be an illusory contract to agree to provide protection but be exculpated from negligence. The contract would still require that some fire protection be rendered.
Our review of Illinois law indicates that exculpatory clauses are not invalid merely because they disclaim liability for negligent performance of a contractual obligation. Under Illinois law, however, even if the parties intended exculpation, the agreement would not be enforced if there was something in the social relationship between the parties militating against upholding the agreement or if it would be against the settled public policy of the state to do so. Jackson v. First National Bank, supra. Here the parties’ relationship was that of businessmen dealing at arm’s length. There was no relationship such as that of employer-employee or common carrier-passenger that would call for an exception to the general rule on exculpatory clauses. The district court found it unnecessary to reach the question of whether the clause was unenforceable as against public policy because of its holding that the clause was invalid since it attempted to release a party from negligent performance of a contractual duty. Since we disagree with that holding we reach the question of public policy.
The public policy issue was briefed and argued by the parties on appeal. It is plaintiffs’ contention that the exculpatory clauses violate public policy because state licensing of race tracks creates a public duty to provide fire protection. Illinois courts, however, have applied a strict test in determining when public policy interests will invalidate a contract. In Schnackenberg v. Towle, 4 Ill.2d 561, 565, 123 N.E.2d 817, 819 (1954), cert. denied, 349 U.S. 939, 75 S.Ct. 785, 99 L.Ed. 1267 (1955), the Illinois Supreme Court stated:
It has often been said that the public policy of the State is to be found in its constitution and its statutes, and when eases arise concerning matters upon which they are silent, then in its judicial decisions and the constant practice of government officials. Courts will not look to other sources to determine the public policy of a State.
See also, Bruno v. Gabhauer, 9 Ill.App.3d 345, 292 N.E.2d 238 (1972); Erickson v. Wagon Wheel Enterprises, Inc., 101 Ill.App.2d 296, 242 N.E.2d 622 (1968). The test is not satisfied merely by showing that the state regulates the business which made the contract.
Plaintiffs have not pointed out any constitutional or statutory provisions or any decisions of Illinois courts which indicate that it would violate public policy to permit race track owners to exculpate themselves from liability to horse owners for fire losses. Where the legislature has wanted to invalidate exculpatory clauses in particular kinds of contracts it has done so. In 1971, for example, statutes were enacted declaring void as against public policy exculpatory clauses in leases, Ill.Rev.Stat. ch. 80, § 91 (1973), and in construction contracts, Ul.Rev. Stat. ch. 29, § 61 et seq. (1973). In circumstances not covered by such statutes, Illinois courts have declined to find exculpatory clauses to be violative of public policy. See, e. g., Morrow v. Auto Championship Racing Association, Inc., 8 Ill.App.3d 682, 685-686, 291 N.E.2d 30, 33 (1972) (stock car racing); Erickson v. Wagon Wheel Enterprises, Inc., 101 Ill.App.2d 296, 301, 242 N.E.2d 622, 625 (1968) (horsebackriding); Owen v. Vic Tanny’s Enterprises, 48 Ill.App.2d 344, 348, 199 N.E.2d 280, 282 (1964) (gymnasium). Plaintiffs have not succeeded in demonstrating that the exculpatory clauses in the stall application are “so pregnant with evil as to be against public policy.” Schnackenberg v. Towle, supra, 4 Ill.2d at 565, 123 N.E.2d at 819.
In light of the foregoing we hold that under Illinois law the subject exculpatory and indemnification language is valid and enforceable. We reverse and remand to' the district court with directions to reinstate the counterclaim and the third-party complaint and for further proceedings not inconsistent with this opinion.
Reversed and remanded with directions.
APPENDIX
1971 STALL APPLICATION
The undersigned owner(s) of the above named horses (hereinafter called the “Applicant”), hereby make(s) application to the Principals (as this term is defined below) for a permit to use stalls and the facilities at Arlington Park (hereinafter called the “Premises”). The term “Prin-cipals” shall mean and include . The Arlington Park and Washington Park Jockey Clubs, both being divisions of Chicago Thoroughbred Enterprises, . In consideration of the granting of such stall space and of the furnishing of the use of the track for training purposes, the furnishing of water, electricity, fire and police protection and the removal of manure, garbage and various other services, all without cost or charge to the Applicant, the Applicant does hereby covenant and agree as follows:
* * * * * *
2. Cooking and smoking is prohibited in stalls or tack rooms. Applicant acknowledges and agrees that the Principals assume no responsibility for loss or damage by fire, theft or accident to persons, animals, equipment, vehicles or any other property located, on the Premises.
* * * * * *
6. Applicant agrees that neither the Principals nor the directors, officers, employees and agents of any of them, shall be liable under any circumstances for any loss or damage whatsoever, whether direct, indirect, consequential or resultant, including without limitation, death, personal injury or death of or injury to animals, and loss or damage to any property whatsoever, directly or indirectly arising out of or resulting from or connected with the use by the Applicant, owners, trainers, jockeys and their respective employees, agents and animals, of any portion of the Premises or of any property (including motor vehicles) owned, leased or controlled by the Principals, for any purpose or in any manner whatsoever, including, without limitation, racing, training or transportation, and whether or not any such injury, loss or damage is caused by the negligent acts or omissions to act on the part of any Principal or the respective directors, officers, employees and agents of any Principal. All risks involved in connection with any act or failure to act referred to in this paragraph or arising directly or indirectly from the assignment to or utilization by the Applicant of stall space or the use of any portion of the Premises are assumed solely, fully and completely by the Applicant, his jockeys, servants, employees and agents.
7. Applicant agrees to defend, protect, save harmless and indemnify the Principals, and their respective directors, officers, employees and agents, from any and all liability, suits, claims, demands, damages, fees, costs and expenses, arising out of or claimed to arise out of or resulting from or claimed to have resulted from any injury or damage to the person, animals or property of the Applicant, his agents, employees, contractors or any other party rendering any service to the Applicant, in connection with the use by the Applicant, his agents, employees, contractors or any other party rendering any service to the Applicant, of any portion of the Premises or of any property (including motor vehicles) owned, leased or controlled by the Principals, for any purpose or in any manner whatsoever, including, without limitation, racing, training, or transportation, whether or not any such injury or damage is caused by the negligent acts or omissions to act on the part of any Principal or the respective directors, officers, employees and agents of any Principal. * * * * * *
/s/ Tracey Bougan
Applicant/Trainer’s Signature
NOTE: If this Application is signed other than by the owner or owners of each of the horses named on the face side hereof, the trainer signing this Application represents that he is authorized by each such owner to sign this Application and further represents that he has signed this Application on behalf of each such owner.
. Rule 54(b), Fed.R.Civ.P., provides in pertinent part, “When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, 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.”
. Our court has often in the past noted that Illinois law permits a party to indemnify itself from the consequences of its own negligence. See, e. g., Granite City Steel Co. v. Koppers Co., 7 Cir., 419 F.2d 1289, 1290 (1969); Halverson v. Campbell Soup Co., 7 Cir., 374 F.2d 810, 812-813 (1967); Spurr v. LaSalle Construction Co., 7 Cir., 385 F.2d 322, 330 (1967), all citing Bentley v. Palmer House Co., 7 Cir., 332 F.2d 107, 109-111 (1964). See also, Chicago R. I. & P. R. R. v. Chicago, B. & Q. R. R., 7 Cir., 437 F.2d 6, cert. denied, 402 U.S. 996, 91 S.Ct. 2173, 29 L.Ed.2d 161 (1971).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DUNIWAY, Circuit Judge:
The appeal in this action is from an •order dismissing the action “for lack of jurisdiction over the subject matter.” The order was based entirely upon the complaint. Plaintiffs and appellants are a retail clerks’ union and its secretary. Defendants and appellees are a number •of concerns, each of which is alleged to have entered into a collective bargaining agreement with the union. The individual plaintiff, secretary of the union, alleges that he fairly and adequately represents the interests of the union and of •all members of the bargaining unit, who ■are too numerous to be named and brought before the court individually. It is alleged that there are approximately 3,000 employees covered by the agreements.
The dispute arises out of Article YI, paragraph 2 of the agreements which provides for a cost of living wage adjustment “beginning April 1, 1961 and on each April 1 and October 1 thereafter.” In essence, the paragraph provides for an upward adjustment based upon the Bureau of Labor Statistics consumer price index for Los Angeles on such dates, as compared with such index for November, 1958. It is further alleged that an upward adjustment became payable (1 cent per hour for all employees except box boys and l/j. cent per hour for box boys) on April 1, 1961, and that the defendant' employers have failed and refused to comply with the agreement by making this upward adjustment on that date. In a second count of the complaint the same allegations are repeated, and it is further alleged that a dispute has arisen between the parties as to the dates on which, or as of which, the cost of living increase is to be computed. The plaintiffs prayed for a judgment requiring the defendants to comply with the agreement by making the required cost of living adjustment retroactive to April 1, 1961, or in the alternative, for declaratory judgment that April 1, 1961 is the date for computing and paying the cost of living increase.
The court based its grant of the defendants’ motion to dismiss upon two grounds, each of which is here claimed to support the judgment.
The first ground is that the action is, in essence, an attempt by the union to enforce individual wage claims of its members and that such an action does not fall within the jurisdiction conferred upon the district court by section 301(a) of the Labor-Management Relations Act (29 U.S.C. § 185(a)) Appellees rely upon Association of Westinghouse Salaried Employees v. Westinghouse Elec. Corp., 1955, 348 U.S. 437, 75 S.Ct. 489, 99 L.Ed. 510 and subsequent lower court decisions that rely upon it.
We think that, by reason of certain recent decisions of the Supreme Court, this contention of appellees is a short horse that is soon curried. In Smith v. Evening News Ass’n, 1962, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246, an individual employee, a member of a union having a collective bargaining contract with the defendant employer, brought an action on his own behalf and as an assignee of 49 other members, in a state court for breach of a collective bargaining contract. He charged that other employees belonging to a different union were on strike, and that the employer allowed non-union employees to work, but did not permit him and his assignors to work, in violation of a clause in the contract stating: “[Tjhere shall be no discrimination against any employee because of his membership or activity in the Guild.” There it was sought to uphold a judgment of dismissal in reliance upon the Westinghouse case, but the Court, in an opinion by Mr. Justice White, said:
“However, subsequent decisions here have removed the underpinnings of Westinghouse and its holding is no longer authoritative as a precedent. Three of the Justices in that case were driven to their conclusion because in their view § 301 was procedural only, not substantive, and therefore grave constitutional questions would be raised if § 301 was held to extend to the controversy there involved. However, the same three Justices observed that if, contrary to their belief, ‘Congress has itself defined the law or authorized the federal courts to fashion the judicial rules governing this question, it would be self-defeating to limit the scope of the power of the federal courts to less than is necessary to accomplish this congressional aim.’ Id. [348 U.S.], at 442 [75 S. Ct. at 99 L.Ed. 510], Textile Workers [Union] v. Lincoln Mills, 353 U. S. 448 [77 S.Ct. 912, 1 L.Ed.2d 972], of course, has long since settled that § 301 has substantive content and that Congress has directed the courts to formulate and apply federal law to suits for violation of collective bargaining contracts. There is no constitutional difficulty and § 301 is not to be given a narrow reading. Id. [353 U.S.], at 456, 457 [77 S.Ct. at 917, 918, 1 L.Ed.2d 972]. Section 301 has been applied to suits to compel arbitration of such individual grievances as rates of pay, hours of work and wrongful discharge, Textile Workers [Union] v. Lincoln Mills, supra; General Electric Co. v. Local 205, UEW, 353 U.S. 547 [77 S.Ct. 921, 1 L.Ed.2d 1028]; to obtain specific enforcement of an arbitrator’s award ordering reinstatement and back pay to individual employees, United Steelworkers [of America] v. Enterprise Wheel & Car Corp., 363 U.S. 593 [80 S.Ct. 1358, 4 L.Ed.2d 1424]; to recover wage increases in a contest over the validity of the collective bargaining contract, Dowd Box Co. v. Courtney, supra; [1962, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483] and to suits against individual union members for violation of a no-strike clause contained in a collective bargaining agreement. Atkinson v. Sinclair Refining Co., supra. [1962, 370 U.S. 238, 82 S.Ct. 1318, 8 L.Ed. 2d 462]
“The concept that all suits to vindicate individual employee rights arising from a collective bargaining contract should be excluded from the coverage of § 301 has thus not survived. The rights of individual employees concerning rates of pay and! conditions of employment are a major focus of the negotiation and administration of collective bargaining-contracts. Individual claims lie at. the heart of the grievance and arbitration machinery, are to a large degree inevitably intertwined with, union interests and many times precipitate grave questions concerning-the interpretation and enforceability of the collective bargaining contract, on which they are based. To exclude these claims from the ambit of § 301 would stultify the congressional policy of having the administration of collective bargaining contracts accomplished under a uniform body of federal substantive law. This we are unwilling to do.”
There was only one dissent. In accord is General Drivers, Warehousemen and Helpers, Local Union No. 89 v. Russ & Company, 1963, 372 U.S. 517, 83 S.Ct. 789, 9 L.Ed.2d 918 in which the Court, expressly repeated its statement regarding Westinghouse, that “its holding is no longer authoritative as a precedent.” (See also International Union, United Auto, Aircraft and Agr. Implement. Workers of America, UAW, A.F.L.-C.I. O. v. Textron, Inc., 6 Cir., 1963, 312 F.2d 688).
The type of case here before us comes precisely within the terms of section 301(a); it also falls within its policy, which is to make collective bargaining agreements enforceable in the district courts.
In Dowd Box Co. v. Courtney, 1962, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483, the Supreme Court said:
“The Labor Management Relations Act of 1947 represented a far-reaching and many-faceted legislative effort to promote the achievement of industrial peace through encouragement and refinement of the collective bargaining process. It was recognized from the outset that such an effort would be purposeless unless both parties to a collective bargaining agreement could have reasonable assurance that the contract they had negotiated would be honored. Section 301(a) reflects congressional recognition of the vital importance of assuring the enforceability of such agreements.”
The alternative would be to require each of the 3,000 or so employees involved to file suits in the state court, and there would, at least, be a question as to whether one or more of them could represent the others. To require separate suits, perhaps as many as 3,000, each involving back wages amounting to 1 cent or y2 cent per hour, does not seem to us to be sensible administration of justice. Moreover, such a relegation of individual employees or groups of employees to separate suits would defeat the purpose of section 301(a). The objective being to secure enforcement of collective bargaining agreements, the parties to those agreements, i. e., the union and the employer, should be the primary enforcing parties, rather than individual employees who are beneficiaries of, but not parties to, the agreements. Benefits flow to them from the performance of the agreement; obligations are imposed on them by it; that is what they expect when they authorize the union to bargain for them. It would be a rude shock to them, and could well weaken their confidence in the union, in the agreement, and in the collective bargaining process, to find that the union could not enforce the agreement, and that each of them was expected to resort, individually, to the courts, if the agreed upon wages were not paid to them.
We do not suggest that an employee whose employment is covered by a collective bargaining agreement has no remedy of his own if the employer fails to pay him a wage increase provided for in the agreement. Whether his remedy, as an individual, is by suit or through a proceeding established by the agreement may depend upon the terms of the agreement. If the union is prosecuting an action such as the one before us, we presume that the court’s power would extend to the prevention of separate suits, by individual members of the union, to obtain the same result. The prevention of a multiplicity of suits is an old head of equity jurisdiction. Nor need we consider whether the union could maintain an action where the only claimed violation was failure to pay the wage increase to a particular employee, or particular employees, when the employer recognized and carried out his obligation toward employees as a group, but claimed that particular facts, peculiar to the employees involved, as individuals rather than as members of the bargaining unit, excused performance as to them. This is not such a case. Even in such a case, the terms of the collective bargaining agreement might settle the question.
Under the circumstances, we think it unnecessary for us to decide whether decisions of other circuits relied upon by appellee, or our own decision in Silverton v. Valley Transit Cement Co., 9 Cir., 1957, 249 F.2d 409, are distinguishable. In Silverton, we relied upon Westinghouse which, as the Supreme Court has said, is no longer authoritative.
The other ground upon which the trial court rested its decision is that the complaint seeks, in substance, a mandatory injunction, and that this is prohibited by the Norris-LaGuardia Act (29 U.S.C. § 101 et seq.) While the writer ■of this opinion agrees with the view expressed by the 7th Circuit in Brotherhood of Locomotive Engineers v. Baltimore & Ohio R. Co., 7 Cir., 1962, 310 F.2d 513 that the purpose of Norris-LaGuardia was to protect only employees and unions, except for two isolated exceptions appearing in section 3(a, b), (29 U.S.C. § 103 (a, b)), and in section 4(b), (29 U.S.C. § 104(b)), it is not necessary for us in this case to go so far. We do not think that an order directing an employer to comply with a collective bargaining contract, in a setting in which none of the things described in the Norris-LaGuardia Act has occurred, even though it might technically be called an injunction, is the kind of an injunction contemplated by that Act. It certainly does not fall within the purposes of the Act as stated in section 2 (29 U.S.C. § 102).
The Supreme Court has not passed upon the question that is before us. Tending to support our views is Textile Workers of America v. Lincoln Mills, 1957, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972. There, the action was by a union against an employer. The Court held, in an opinion by Mr. Justice Douglas, that section 301(a) “authorizes federal courts to fashion a body of federal law for the enforcement o| these collective bargaining agreements and includes within that federal law specific performance of promises to arbitrate grievances under collective bargaining agreements.” (353 U.S. p. 451, 77 S.Ct. p. 915, 1 L.Ed.2d 972.)
As to the Norris-LaGuardia Act, the Court said:
“The question remains whether jurisdiction to compel arbitration of grievance disputes is withdrawn by the Norris-LaGuardia Act, 47 Stat. 70, 29 U.S.C. § 101. Section 7 of that Act prescribes stiff procedural requirements for issuing an injunction in a labor dispute. The kinds of acts which had given rise to abuse of the power to enjoin are listed in § 4. The failure to arbitrate was not a part and parcel of the abuses against which the Act was aimed. Section 8 of the Norris-LaGuardia Act does, indeed, indicate a congressional policy toward settlement of labor disputes by arbitration, for it denies injunctive relief to any person who has failed to make ‘every reasonable effort’ to settle the dispute by negotiation, mediation, or ‘voluntary arbitration.’ Though a literal reading might bring the dispute within the terms of the Act (see Cox, Grievance Arbitration in the Federal Courts, 67 Harv.L.Rev. 591, 602-604), we see no justification in policy for restricting § 301(a) to damage suits, leaving specific performance of a contract to arbitrate grievance disputes to the inapposite procedural requirements of that Act.”
We think this reasoning equally applicable here, although the case for holding that Norris-LaGuardia does not apply to a decree requiring arbitration is perhaps a little stronger, in view of the language of section 8 of that Act, (29 U.S.C. § 108) referred to above by Mr. Justice Douglas. But surely section 301, as the review of its legislative history which is set forth in Mr. Justice Douglas’ opinion shows, is not limited, in its strong policy of “promoting collective bargaining that ended with agreements not to strike” (353 U.S. p. 453, 77 S.Ct. p. 916, 1 L.Ed.2d 972), and of making such agreements “equally binding and enforceable on both parties.” (353 U.S. p. 454, 77 S.Ct. p. 916, 1 L.Ed.2d 972), to agreements to arbitrate. At the least, Lincoln Mills seems to us to require a construction of Norris-LaGuardia that will give as great a scope to section 301 as can fairly be said to be consistent with Norris-LaGuardia.
In Lincoln Mills, Mr. Justice Douglas also said:
“The congressional policy in favor of the enforcement of agreements to arbitrate grievance disputes being clear, there is no reason to submit § 7 of them to the requirements of the Norris-LaGuardia Act.”
The same is true here. We cannot believe that Norris-LaGuardia was intended to apply to a remedy such as is here involved. Anyone who lived through the times in which Norris-LaGuardia was enacted in 1932 cannot but know that it was directed primarily at the then widespread use of the labor injunction as a means of defeating the efforts of labor to organize and bargain collectively. See, for example, Frankfurter and Greene, “The Labor Injunction.” We are confident that the sort of remedy against an employer, to enforce a collective bargaining contract, that is here involved, had not occurred to anyone in those troubled times as being within the sweep of the Act. Even Mr. Justice Frankfurter, who dissented at his usual length in Lincoln Mills, did not rest his dissent on N orris-LaGuardia.
Lincoln Mills was followed in General Electric Co. v. Local 205, UEW, 1957, 353 U.S. 547, 77 S.Ct. 921, 1 L.Ed.2d 1028.
The next significant cases are Sinclair Refining Co. v. Atkinson, 1962, 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440 and Atkinson v. Sinclair Refining Co., 1962, 370 U.S. 238, 82 S.Ct. 1318, 8 L.Ed.2d 462. In Sinclair Refining, the employer sought to enjoin work stoppages and strikes that were claimed to be in violation of a no-strike and arbitration provision of a collective bargaining contract. The Court held that such an injunction was improper, because the action did involve a “labor dispute” as defined in section 13 of Norris-LaGuardia (29 U.S.C. § 113) and the conduct complained of fell within the conduct described in section 4 (29 U.S.C. § 104). It also expressly held that section 301 did not repeal or modify Norris-LaGuardia in this respect. It found a congressional intent “to retain completely intact the anti-injunction prohibitions of the Norris-LaGuardia Act in suits brought under § 301.” (370 U.S. p. 210, 82 S.Ct. p. 1337, 8 L.Ed.2d 440) But it also distinguished Lincoln Mills, using the following language:
“There the Court held merely that it did not violate the anti-injunction provisions of the Norris-LaGuardia Act to compel the parties to a collective bargaining agreement to submit a dispute which had arisen under that agreement to arbitration where the agreement itself required arbitration of the dispute. In upholding the jurisdiction of the federal courts to issue such an order against a challenge based upon the Norris-LaGuardia Act, the Court pointed out that the equitable relief granted in that case — a mandatory injunction to carry out an agreement to arbitrate — did not enjoin any one of the kinds of conduct which the specific prohibitions of the Norris-LaGuardia Act withdrew from the injunctive powers of United States courts. An injunction against work stoppages, peaceful picketing or the nonfraudulent encouraging of those activities would, however, prohibit the precise kinds of conduct which subsections (a), (e) and (i) of § 4 of the Norris-LaGuardia Act unequivocally say cannot be prohibited.
**#**•»
“At the most, what is involved is the question of whether the employer is to be allowed to enjoy the benefits of an injunction along with the right which Congress gave him in § 301 to sue for breach of a collective agreement. And as we have already pointed out, Congress was not willing to insure that enjoyment to an employer at the cost of putting the federal courts back into the business of enjoining strikes and other related peaceful union activities.”
This is a far cry from a holding that a case like that now before us falls within Norris-LaGuardia. We think that the Court’s opinion meant what it said when it spoke of conduct “which the specific prohibitions of the Norris-LaGuardia Act withdrew from the injunctive powers of United States courts.” And we think that this case does not involve such conduct. We think it particularly significant that Mr. Justice Brennan, speaking for himself and Justices Douglas and Harlan, treated the decision as indicating that, while conduct falling within section 4 of Norris-LaGuardia cannot be enjoined in a section 301 case, the same is not true of section 7 of Norris-LaGuard-ia (370 U.S. pp. 219-220, 82 S.Ct. pp. 1341-1342, 8 L.Ed.2d 440).
Here we cannot find any “specific provision” of the Norris-LaGuardia Act de-nning conduct that would be “enjoined” by the type of “injunction” sought in this case. The appellees point to section 4(c) (29 U.S.C. § 104(c)), but we think it not applicable. We find nothing in its language, which refers primarily to “strike or unemployment benefits or insurance,” that specifically bars an order directing an employer to carry out a provision in a collective bargaining contract relating to wages. In this case we have a “labor dispute,” as defined in section 13, only in the most refined and technical sense. There is nothing in the complaint to suggest that either party is here using its economic powers in any way to bring pressure upon the other. Here, there is a mere disagreement as to the meaning and effect of certain terms of the contract. This we think, is not the type of “labor dispute” to which Norris-La-Guardia is directed. On its facts, this case is much closer to Lincoln Mills than it is to Sinclair Refining.
In view of Lincoln Mills, supra, and of Smith v. Evening News Ass’n, quoted supra, we cannot hold that appellants must comply with section 7 of Norris-LaGuardia (29 U.S.C. § 107), even though the dispute here involved arguably falls within the literal language of section 13 (29 U.S.C. § 113). If Norris-LaGuardia deprives the court of jurisdiction in a case such as this, then, it seems to us, some of the decisions cited by the Supreme Court in support of its holding in Smith v. Evening News Ass’n, supra, and especially Lincoln Mills, must have been wrongly decided. Yet there is not a word in the opinion in Sinclair Refining Co., supra, casting doubt upon the correctness of any of those decisions, which are cited with approval in Smith. It is true that Norris-LaGuardia was not considered in Smith, but we cannot attribute to the Supreme Court an intention to perpetuate decisions that permit suits under section 301 when such suits are, in its view, not permissible by reason of Norris-LaGuardia.
Our view is that we must hold, under Lincoln Mills and Sinclair Refining, when read with Smith, that if conduct sought to be compelled does not fall within the “specific provisions” of Norris-LaGuardia, but the suit does fall within section 301, then Norris-LaGuardia does not apply to the suit at all. Insofar as Publishers’ Ass’n of N. Y. City v. New York Mailers Union, 2 Cir., 1963, 317 F.2d 624, cert. granted, 375 U.S. 901, 84 S.Ct. 192, 11 L.Ed.2d 142, may be thought to be contrary to the views here expressed, we decline to follow it.
Moreover, as Sinclair Refining and its companion case, Atkinson, supra, show, even if we are in error as to the first count in the present case, which seeks specific enforcement, the court could still proceed under the second count, which seeks, not an injunction, but only declaratory relief. Cf. Publishers’ Ass’n of N. Y. City v. New York Mailers Union, supra.
We hold that the court had jurisdiction under section 301 of the Labor-Management Relations Act, as amended, and that the Norris-LaGuardia Act did not deprive the court of jurisdiction to grant any of the relief prayed for in the complaint.
The order is reversed and the matter is remanded for further proceedings not inconsistent with this opinion.
. “(a) Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.”
. The Smith case is nevertheless apropos, because it has been held that state and federal courts have concurrent jurisdiction in section 301 cases. Dowd Box Co. v. Courtney, 1962, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483.
. Dowd Box Co., cited in Smith, is not here in point, as it involved an action in a state court. There, the Supreme Court reserved the question as to whether Norris-LaGuardia applies to such a case.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MURNAGHAN, Circuit Judge:
We are presented with several difficult questions regarding the scope of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the power of the federal courts to fill in the interstices of this comprehensive and labyrinthine statute. Specifically, we address whether the Provident Life & Accident Insurance Co. (“Provident”) may recover monies advanced to one of its plan participants, Mary J. Waller, after she was injured in an auto accident. In response to Provident’s action under ERISA for recovery of the advanced benefits, the district court concluded that Provident was not entitled to reimbursement because it did not comply with one of the provisions of the ERISA-governed plan. On Provident’s appeal, we conclude that a failure to repay this advance would unjustly enrich Waller and contradict the intent of both ERISA and the plan. Accordingly, we reverse the order of the district court and enter judgment for Provident.
I.
Waller was employed by Burlington Industries and a participant in its qualified self-funded employee benefit plan, which is administered by Provident. The plan pays life, medical and disability benefits to or on behalf of its participants, such as Waller. However, the plan specifically provides in an “Acts of Third Parties” provision that
Medical and disability benefits are not payable to or for a person covered under the Group Plan when the injury or illness to the covered person occurs through the act or omission of another person. However, payment for medical care expenses... for an injury or illness in which a third party is liable may be advanced by Provident. For this to happen, the covered person must sign an agreement to repay the Group Plan in full any payments advanced... from the judgment or settlement he or she receives....
(Emphasis added.)
On February 21, 1986, Waller was injured in a car accident in which she was not at fault. On Waller’s written request, Provident advanced her $5,922.53 in medical expenses despite never obtaining a signed repayment agreement. Waller later recovered damages from the third party in excess of what the plan paid out to her. After Waller refused to reimburse the plan, Provident brought an action under ERISA, 29 U.S.C. § 1132(a)(1)(B), (e)(2) (1982), for recovery of the advanced monies plus costs and attorney’s fees. Although admitting to receiving the money from a third party, Waller filed an answer questioning the district court’s jurisdiction under § 1132(a)(1)(B). She also filed a counterclaim under § 1132(a)(1)(B) requesting a declaratory judgment that the Virginia anti-subrogation statute, Va.Code Ann. § 38.2-3405, precluded reimbursement and was not preempted by ERISA. Finally, Waller requested class certification on behalf of all plan beneficiaries who had repaid money advanced by Provident.
The district court denied Waller’s motion to certify the class but denied Provident’s motion for summary judgment and entered judgment in favor of Waller. The district court found that although ERISA preempted the Virginia anti-subrogation provision, Provident’s failure to require Waller to sign the repayment provision constituted noncomplianee with the terms of the plan and therefore barred its recovery of advanced expenses. Provident appeals that conclusion and Waller appeals the district court’s denial of class certification.
II.
In its complaint, Provident alleged federal jurisdiction under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (West 1985). Waller maintains that § 1132(a)(1)(B) does not provide a federal cause of action for plan administrators. We agree, but nonetheless conclude that the district court had jurisdiction under the federal question provision.
A.
Section 1132(a)(1)(B) provides, in relevant part, that “[a] civil action may be brought... by a participant or beneficiary... to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan” (emphasis added). Here, Provident was neither a participant nor beneficiary but rather the administrator of Burlington’s self-funded plan. Although we have not yet addressed the scope of § 1132(a), most of our sister circuits have limited federal jurisdiction to the suits by the entities specified in the statute. See, e.g., Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286, 1288-89 (5th Cir.1988) (“Where Congress has defined the parties who may bring a civil action founded on ERISA, we are loathe to ignore the legislature’s specificity.”); Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir.) (“legislature [did not] intend[] to grant subject matter jurisdiction over suits by employers, funds, or other parties not listed in § 1132[a]_”), cert. denied, 464 U.S. 845, 104 S.Ct. 148, 78 L.Ed.2d 138 (1983). Such a conclusion is amply supported by the Supreme Court’s decision in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 21, 103 S.Ct. 2841, 2852, 77 L.Ed.2d 420 (1983), which noted that “[t]he express grant of federal.jurisdiction in ERISA is limited to suits brought by certain parties... as to whom Congress presumably determined that a right to enter federal court was necessary to further the statute’s purposes.” Finally, at least two courts specifically have concluded that plan administrators may not bring suit under § 1132(a)(1)(B) of ERISA. See Great Lakes Steel v. Deggendorf 716 F.2d 1101, 1104 (6th Cir.1983); In Re Sheppard, 658 F.Supp. 729, 734 (C.D.Ill.1987). We find ourselves in agreement with this view, and so conclude that Provident cannot bring suit under § 1132(a)(1)(B).
B.
Ordinarily, the failure to state the federal statutory or constitutional provision under which a claim arises warrants dismissal for lack of subject matter jurisdiction. However, it is well settled that courts may excuse pleading defects if the facts alleged in the complaint and the relief requested demonstrate the existence of a substantial federal question. See Schlesinger v. Councilman, 420 U.S. 738, 744 n. 9, 95 S.Ct. 1300, 1306 n. 9, 43 L.Ed.2d 591 (1975) (§ 1331 “nowhere mentioned” in complaint but facts “demonstrate the existence of a federal question”); Blue v. Craig, 505 F.2d 830, 844 (4th Cir.1974) (“[I]f facts giving the court jurisdiction are set forth in the complaint, the provision conferring jurisdiction need not be specifically pleaded.”) (quoting Williams v. United States, 405 F.2d 951, 954 (9th Cir.1969)); 5 C. Wright & A. Miller, Federal Practice 6 Procedure: Civil § 1209, at 92 (1969 & Supp.1989) (“failure to name the particular statute... under which the action arises is not fatal if the remainder of the complaint shows that a federal question actually is involved or relied upon by the pleader”). We believe that the balance of Provident’s complaint demonstrates that a federal question is involved, see 28 U.S.C. § 1331(a) (1982).
Section 1331(a) provides that district courts “shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States.” A suit “arises under” federal law if federal law creates the cause of action. American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916); Cook v. Georgetown Steel Corp., 770 F.2d 1272, 1274 n. 2 (4th Cir.1985). Although the issue was at one point in doubt, see T.B. Harms Co. v. Eliscu, 339 F.2d 823, 827-28 (2d Cir.1964) (Friendly, J.), cert. denied, 381 U.S. 915, 85 S.Ct. 1534, 14 L.Ed.2d 435 (1965), there is no longer any question that the word “laws” in § 1331(a) embraces claims founded upon federal common law. In Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 5.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972), the Supreme Court concluded that “§ 1331 jurisdiction will support claims founded upon federal common law as well as those of a statutory origin.” City of Milwaukee involved a public nuisance suit brought by the State of Illinois against four Wisconsin cities and a city sewage commission for dumping raw sewage into Lake Michigan. The Court, asked to exercise its original jurisdiction because a state was a party, declined but instead found federal question jurisdiction. The Court held that because Congress had federalized the area of water pollution with the Water Pollution Control Act of 1972, federal courts could impose remedies that fell within the interstices of this act using a federal common law of nuisance. The Court concluded that such a suit arose under the “laws” of the United States. 406 U.S. at 100-04, 92 S.Ct. at 1391-93.
Citing City of Milwaukee, several courts have held that ERISA actions governed by federal common law “arise under” federal law for purposes of § 1331. See Airco Industrial Gases v. Teamsters Health & Welfare Pension Fund, 850 F.2d 1028, 1033 (3d Cir.1988); Whitworth Bros. Storage Co. v. Central States Pension Fund, 794 F.2d 221, 236 (6th Cir.), cert. denied, 479 U.S. 1007, 107 S.Ct. 645, 93 L.Ed.2d 701 (1986); Northeast Dep’t ILGWU v. Teamsters Local Union No. 229, 764 F.2d 147, 154-59 (3d Cir.1985) (opinion of Becker, J.). Cf. Award Service, Inc. v. Northern Calif. Retail Clerks Unions, 763 F.2d 1066, 1068 (9th Cir.1985) (district court had § 1331 jurisdiction for purposes of determining whether employer had implied cause of action under ERISA), cert. denied, 474 U.S. 1081, 106 S.Ct. 850, 88 L.Ed.2d 890 (1986). One commentator has cited City of Milwaukee for the proposition that “federal common law supports federal question jurisdiction in the district courts in exactly the same way as other federal law does.” Field, Sources of Law: The Scope of Federal Common Law, 99 Harv.L.Rev. 881, 897 (1986); see also Merrill, The Common Law Powers of Federal Courts, 52 U.Chi. L.Rev. 1, 40-46 (1985).
As to the situation presented sub judice, both Aireo Industrial Gases and Whit-worth are particularly instructive. In Air-eo, an employer sued an employee benefit plan seeking to recover, under the equitable doctrine of unjust enrichment, over-payments made by mistake. After the district court found federal question jurisdiction and granted relief for the plaintiff, the Third Circuit affirmed on the jurisdictional point. Writing for a unanimous panel, Judge Higginbotham stated that ERISA’s broad preemption provision, 29 U.S.C. § 1144(a), “require[s] the application of federal legal principles for its disposition in this case, that is, federal common law principles.” 850 F.2d at 1033. Thus, the court concluded that “we agree with [the district court’s] conclusion that section 1331 conferred upon it subject matter jurisdiction to determine the existence of a federal common law cause of action based on unjust enrichment.” Id. at 1034 (emphasis added).
Similarly, in Whitworth, an employer sued under the contract doctrine of restitution to recover payments mistakenly made to a retirement plan. Because the employer was neither a plan participant, beneficiary, or fiduciary, the Sixth Circuit concluded that the plaintiff could not premise jurisdiction on the face of the ERISA statute. 794 F.2d at 227. However, because the restitution claim could only be decided under federal common law given ERISA’s preemption clause, the court held that plaintiff’s claims “arise under federal law pursuant to 28 U.S.C. § 1331.” Id. at 233.
As in Aireo and Whitworth, this appeal presents an application of federal common law. There is little question that Provident’s claim of unjust enrichment may not be predicated on state law given ERISA’s broad preemption provision. See 29 U.S. C.A. § 1144(a) (West 1985) (“the provisions of [ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan_”). The Supreme Court has interpreted this provision to preempt state common law contract and tort claims because they “relate to” an employee benefit plan, see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987), and we cannot see how a different result could ensue from a claim for unjust enrichment. See Airco Industrial Gases v. Teamsters Health & Welfare Pension Fund, 618 F.Supp. 943, 950 n. 6 (D.Del.1985) (“existence of a federal common law action for unjust enrichment preempts plaintiffs claimed state law action”). Having established ERISA’s applicability, we must then focus on common law remedies because ERISA does not provide an explicit remedy for Provident. Although it has been well recognized for years, both the Supreme Court and this circuit recently gave express authorization for federal courts to “develop a ‘federal common law of rights and obligations under ERISA-regulated plans.’ ” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 954, 103 L.Ed.2d 80 (1989) (quoting Pilot Life, 481 U.S. at 56, 107 S.Ct. at 1558); see also U.S. Steel Mining Co. v. District 17, United Mine Workers of America, 897 F.2d 149, 152 (4th Cir.1990) (“the drafters of ERISA authorized courts to develop federal common law”). Here, we must undertake precisely the task outlined in Firestone and already performed in a different context in Steel Mining, i.e., develop and add to the growing federal common law of ERISA rights and obligations.
Our holding today that the creation of ERISA federal common law establishes “arising under” jurisdiction is not without boundaries, however. The mere invocation by a plaintiff of § 1331 and federal common law is not enough, by itself, to confer federal question jurisdiction. For example, a more specific statutory provision conferring exclusive jurisdiction elsewhere would supersede the application of § 1331. E.g., Connors v. Amax Coal Co., 858 F.2d 1226, 1230 (7th Cir.1988) (Longshore and Harbor Workers’ Compensation Act supplants application of § 1331 and ERISA in disputes concerning specific medical expenses). Rather, we hold, as did the Third Circuit in Airco, 850 F.2d at 1033, that federal question jurisdiction exists pursuant to ERISA only where the issue in dispute is of “central concern” to the federal statute. Such a conclusion is supported both by Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), and Shaw v. Delta Air Lines, 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), two cases decided the same day that address the existence of federal jurisdiction over claims that relate to ERISA.
In Franchise Tax Board, a state taxing authority brought suit against an ERISA-qualified benefit trust fund seeking damages and a declaration that its authority to levy was not preempted by ERISA. Despite the fact that the state did not fall within the parties allowed to sue under § 1132(a), the state argued that any action that required an interpretation or application of ERISA “arose under” the laws of the United States and created § 1331 jurisdiction. Writing for a unanimous Court, Justice Brennan did not agree, and held that despite the statute’s broad scope, the Congress did not intend for ERISA to preempt every cause of action relating to benefit plans. Thus, the Court concluded, “a suit by state tax authorities... does not ‘arise under’ ERISA... [because] the State’s right to enforce its tax levies is not of central concern to the federal statute.” 463 U.S. at 25-26, 103 S.Ct. at 2855.
Despite the Court’s refusal to invoke federal question jurisdiction in Franchise Tax Board, its decision should not be read as a rejection of the application of § 1331 to other claims governed by ERISA, especially those that require application of federal common law. The situation presented in Franchise Tax Board was unusual (as it involved the state taxing power and an entity not subject to ERISA regulation), and so the Court was not faced with and did not decide whether federal question jurisdiction could be predicated on the basis of federal common law in accordance with City of Milwaukee. In contrast, Delta Air Dines represented a more typical ERISA action as there several companies subject to ERISA regulation brought declaratory judgment actions alleging that ERISA preempted several state benefit laws. Noting the difference from Franchise Tax Board, which the Court said “d[id] not call into question the lower courts’ jurisdiction to decide these cases,” the Court held that the plaintiffs “present[ed] a federal question over which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve.” 463 U.S. at 96 n. 14, 103 S.Ct. at 2899 n. 14. See also Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-67, 107 S.Ct. 1542, 1546-48, 95 L.Ed.2d 55 (1987) (claim of ERISA preemption that is also within scope of § 1132(a) arises under laws of United States for purposes of § 1331).
We read Franchise Tax Board and Delta Air Lines to provide, “at a minimum,” Airco, 850 F.2d at 1033 n. 5, for federal question jurisdiction under ERISA where the issue presented, whether it be the creation of federal common law or the interpretation of a specific ERISA provision, is of “central concern” to the statute. We believe the instant case meets this condition. As will be shown below, the issue of whether federal courts should impart unjust enrichment principles into the gaps left by ERISA is one that has divided the courts. Similarly, the issue of whether employers and plan administrators should receive the benefit of these common law principles requires an examination of several collateral ERISA provisions as well as the concerns behind the formulation of the statute. Consequently, we conclude that “the absence of an express statutory grant of jurisdiction in § 1132 of ERISA is, under the rationale of [City of Milwaukee ], irrelevant, and this claim may be adjudicated in federal court pursuant to 28 U.S.C. § 1331(a).” Northeast Department, 764 F.2d at 155.
III.
Having established that federal question jurisdiction exists and that the dispute is governed by the federal common law of ERISA, we must now consider whether such common law should include the unjust enrichment remedy sought by Provident. Like many issues that involve ERISA, the federal courts are divided over the creation of a federal common law of unjust enrichment. Compare Cummings By Techmeier v. Briggs & Stratton, 797 F.2d 383, 390 (7th Cir.1986) (courts should only invoke federal common law of unjust enrichment in “limited circumstances”), and Van Orman v. American Ins. Co., 680 F.2d 301, 312 (3d Cir.1982) (no federal common law cause of action under doctrine of unjust enrichment when “such a right would override a contractual provision”), and Amato v. Western Union Int’l, 773 F.2d 1402 (2d Cir.1985) (no ERISA common law of unjust enrichment in “circumstances of this case”), with Airco Industrial Gases v. Teamsters Health & Welfare Pension Fund, 618 F.Supp. 943, 950 (D.Del.1985) (included within grant of authority to create federal common law “is the power, in appropriate circumstances, to order restitution to prevent unjust enrichment”), with Morales v. Pan American Life Ins. Co., 718 F.Supp. 1297, 1301 (E.D.La.1989) (“[cjreation of a federal common law of unjust enrichment... would be inconsistent with ERISA’s terms and policies.”). Cf. Whitworth, 794 F.2d at 235-36 (finding federal common law cause of action by employer to recover mistakenly paid pension contributions); Dime Coal Co. v. Combs, 796 F.2d 394, 397-99 (11th Cir.1986) (reaching contrary conclusion to Whitworth).
A.
When entering the fray, we must keep in mind two points. The first involves general concerns about ERISA and federal common law. Despite the power of the federal courts to fill in the interstices of ERISA, we must respect the fact that Congress in creating ERISA has “established an extensive regulatory network and has expressly announced its intention to occupy the field.” Van Orman, 680 F.2d at 312. Accordingly, we must proceed cautiously in creating additional rights under the rubric of federal common law, and remember that we do not possess carte blanche authority to “use state common law to re-write a federal statute.” Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir.1986).
It was such concerns that prompted Judge Butzner to announce recently that “we are constrained to fashion only those remedies that are appropriate and necessary to effectuate the purposes of ERISA.” U.S. Steel Mining Co. v. District 17, United Mine Workers of America, 897 F.2d 149, 153 (4th Cir.1990). In Steel Mining, an employer and a pension fund, relying on § 1132(a) of ERISA, sought to recover ex-tracontractual restitution and attorney’s fees from a union. The employer and fund had paid these costs pursuant to a West Virginia statute that was subsequently declared to be preempted by ERISA. Declining to engraft a remedy for extracon-tractual restitution under the guise of federal common law, the court noted that “Congress did not intend that federal courts should develop common law to decide... issues that bear at best a most attenuated relation to the purposes of ERISA.” 897 F.2d at 153.
In addition, we also recognize the concerns that have prompted several courts to decline to impose a federal common law of unjust enrichment. In Cummings By Techmeier v. Briggs & Stratton, 797 F.2d 383, 390 (7th Cir.1986), the Seventh Circuit held that fashioning a federal common law unjust enrichment doctrine, although permissible in other circumstances, was inappropriate when it would override a contractual provision in a pension plan. Since the “enrichment” in Cummings By Techmeier was authorized by the express terms of the plan, the court concluded that it would not vindicate any “important statutory policy” to supplement the defined remedies in ERISA. 797 F.2d at 390-91. Similarly, in Van Orman v. American Ins. Company, 680 F.2d 301, 312 (3d Cir.1982), the Third Circuit held that plan participants were not entitled, under the doctrine of unjust enrichment, to portions of an actuarial plan surplus. Writing for the court, Chief Judge Seitz stated that because the plan document did not afford the plaintiffs any right to the surplus, contravening the provision would “require[ ] a particularly strong affirmative indication that such a [common law] right would effectuate a statutory policy.” 680 F.2d at 313. Finally, we note the decision in Morales v. Pan American Life Ins. Co., 718 F.Supp. 1297, 1301 (E.D.La.1989), which held that “[q]uasi-contractual remedies [such as unjust enrichment] have no place where there is a contract between the parties.” 718 F.Supp. at 1301.
B.
Recognizing these caveats, we nonetheless conclude that fashioning a federal common law rule of unjust enrichment is appropriate in the circumstances of this case. In developing this rule, we look to the plan contract itself, the statutory policies of ERISA, and state law. See Fox Valley & Vicinity Construction Workers Pension Fund v. Brown, 897 F.2d 275, 281 (7th Cir.1990) (en banc). Unlike the plan documents in Cummings By Techmeier, which explicitly authorized the enrichment, and the one in Van Orman, which was silent as to the plan surplus, the plan contract in the present case provided for repayment of the advanced monies. Thus, the creation of a common law remedy here would further the contract between the parties and effectuate the clear intent of Provident’s “Acts of Third Parties” clause. Second, the remedy is in accord with the statutory provision in ERISA that allows for the return of mistakenly paid contributions made by employers to multiemployer plan funds. See ERISA § 403(c)(2)(A), 29 U.S.C. § 1103(c)(2)(A). Recently, several courts have cited to § 1103(c)(2)(A) in creating a common law remedy for employers in their suits to recover erroneous payments to pension funds. See, e.g., Plucinski v. I.A.M. Nat’l Pension Fund, 875 F.2d 1052, 1058 (3d Cir.1989) (“if we did not recognize this cause of action it could lead to severely inequitable results that we do not believe were intended by Congress”). Although the payment made by Provident was probably not mistakenly advanced, § 1103(c)(2)(A) indicates a desire to ensure that plan funds are administered equitably and that no one party, not even plan beneficiaries, should unjustly profit. Cf. Carl Colteryahn Dairy, Inc. v. Western Pennsylvania Teamsters & Employers Pension Fund, 847 F.2d 113, 122 (3d Cir.1988) (the rule that “a party should not be allowed to profit from its own wrongs” is “particularly apposite when dealing with [ERISA]” because Congress has emphasized the “equitable character” of these plans). As in the Plucinski case, reaching a contrary result would “discourage some employers from operating ERISA qualifying plans. It thus furthers the purposes of ERISA to recognize this cause of action.” 875 F.2d at 1058.
Finally, the facts of the instant case fit the archetypal unjust enrichment scenario. As Provident repeatedly reminds us, the result in this case is an inequitable one; the record indicates that Waller received a double recovery despite knowing about the plan’s reimbursement provision, and despite the absence of a requirement that Provident’s payment be made in the first place. Consequently, Provident argues, it is entitled to recover under a quasi-contractual theory. In Virginia, the “law will imply a promise to pay for goods received,” Kern v. Freed Co., 224 Va. 678, 680, 299 S.E.2d 363, 365 (1983), and several cases recognize the related theory of quantum meruit, which holds that when one party performs services at the request of the other party to a contract, “the law creates an obligation, which is an implied-at-law contract, to pay a reasonable compensation_” Humphreys Railways v. F/V Nils S, 603 F.Supp. 95, 98 (E.D.Va.1984). As summarized by a national commentator, three elements encompass the equitable remedy of unjust enrichment and quasi-contract: the plaintiff must show that (1) he had a reasonable expectation of payment, (2) the defendant should reasonably have expected to pay, or (3) society’s reasonable expectations of person and property would be defeated by nonpayment. C. Kaufman, Corbin on Contracts § 19A, at 50 (Supp.1989).
In the instant case, all three elements are apparent. Provident reasonably expected to be reimbursed for its rather liberal advancements; Wailer clearly was aware of the plan's "Acts of Third Parties" provision when she requested and then accepted the benefits; and the interests of society, as reflected by the goals of ERISA and efficient plan administration, would be served by allowance of an equitable remedy. Accordingly, we hold, in the circumstances of the case, that it is appropriate for a federal court to weave into the statutory fabric of ERISA the federal common law remedy of unjust enrichment.
REVERSED.
. The record is silent on why the agreement was never signed by Waller. Provident states only that the benefits were advanced “at [Waller’s] request.” Appellant’s Br. at 3.
. An affidavit submitted by Burlington’s group benefits manager demonstrated that Waller also knew of the "Acts of Third Parties" provision.
. In the “definitions" section of ERISA, the term "participant" is described as “any employee... who is or may become eligible to receive a benefit of any type from an employee benefit plan....” 29 U.S.C.A. § 1002(7) (West Supp. 1990). A beneficiary is described as “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S. C.A. § 1002(8) (West Supp.1990). The term "administrator” means "the person specifically so designated by the terms of the instrument under which the plan is operated; [or]... the plan sponsor....” 29 U.S.C.A. § 1002(16)(A) (West Supp.1990).
.The only circuit holding a contrary view is the Ninth, which held in Fentron Indus. v. National Shopmen Pension Fund, 674 F.2d 1300, 1304 (9th Cir.1982), that certain “non-enumerated” parties have standing to sue under § 1132(a)(1)(B). However, Fentron has been widely criticized and narrowed within its own circuit. See Associated Builders & Contractors v. Carpenters Vacation & Holiday Trust Fund, 700 F.2d 1269, 1278 (9th Cir.) (limiting Fentron to confer standing only where "specific and personal” injuries alleged), cert. denied, 464 U.S. 825, 104 S.Ct. 94, 78 L.Ed.2d 101 (1983).
. It is probable, however, that Provident could have sued under § 1132(a)(3), which provides that
"[a] civil action may be brought... by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchap-ter or the terms of the plan.
29 U.S.C.A. § 1132(a)(3) (West 1985) (emphasis added). Recently, we concluded in an analogous ERISA situation that a plan administrator “is clearly a fiduciary." U.S. Steel Mining Co. v. District 17, United Mine Workers of America, 897 F.2d 149, 152 (4th Cir.1990). That conclusion is bolstered by a recent Department of Labor regulation, which states that “a plan administrator... must, by the very nature of his position, have 'discretionary authority [and fiduciary status].' ” 29 C.F.R. § 2509.75-8 (1989).
. Although the ERISA provision not referred to in Provident’s complaint, 29 U.S.C. § 1132(a)(3), may also provide a route to federal jurisdiction, there is seemingly little or no authority with regard to that question. Accordingly, in this case, we prefer to ground federal jurisdiction under the federal question provision.
. A question does exist, however, as to whether ERISA preempts the Virginia anti-subrogation provision, Va.Code Ann. § 38.2-3405 (Michie 1986 Repl.). Provident argues, and the district court agreed, that preemption is appropriate; conversely, Waller contends that the Virginia provision is controlling and requires a judgment in her favor. Despite the district court's finding that the anti-subrogation statute "without reservation” meets the test for preemption outlined in Shaw v. Delta Air Lines, 463 U.S. 85, 97-99, 103 S.Ct. 2890, 2900-01, 77 L.Ed.2d 490 (1983), we note that the issue of whether state anti-sub-rogation provisions are preempted by ERISA has divided the courts. Compare FMC Corp. v. Holliday, 885 F.2d 79, 89-90 (3d Cir.1989) (ERISA did not preempt Pennsylvania anti-sub-rogation provision because law did not address a "core type of ERISA matter”), cert. granted, — U.S. -, 110 S.Ct. 1109, 107 L.Ed.2d 1017 (1990), with United Food & Commercial Workers & Employers Arizona Health & Welfare Trust v. Pacyga, 801 F.2d 1157, 1160 (9th Cir.1986) (Arizona’s anti-subrogation law “relates to” benefit plans and so is preempted).
We are saved from weighing in on the issue because we conclude that no subrogation situation is presented here. Typically, subrogation in the tortfeasor context involves the insurer stepping into the shoes of the insured and attempting to recover from the third party who caused the injury. See 16 Couch on Insurance 2d § 61:172 (Rev. ed. 1983). The instant case, however, concerns a dispute over the terms of the insurance contract itself, and this contract does not provide for subrogation against a third party. All Provident seeks here is the money it paid out to the insured; it does not seek to step into Waller’s shoes and proceed against the third party tortfeasor. Consequently, the Virginia anti-subrogation provision is inapplicable, and so we do not reach the preemption issue.
In light of that consideration, if preemption through ERISA had not occurred and we were thrown back on the Virginia law, the situation, as later explanation in the opinion indicates, is one calling for application under Virginia law of unjust enrichment principles.
. In Northeast Department ILGWU v. Teamsters Local Union No. 229, 764 F.2d 147, 165-167 (3d Cir.1985), all three panel members reached different conclusions regarding the effect of Franchise Tax Board and the jurisdictional basis of a claim brought by one employee benefit plan against another. Judges Becker and Sloviter agreed that § 1331 provided the basis for jurisdiction over a question implicating ERISA, but District Judge Fullam, sitting by designation, held that the express jurisdictional grant of § 1132(a)(1)(B) provided the appropriate basis. However, Judges Becker and Sloviter disagreed as to the reasons for § 1331 jurisdiction. Interpreting City of Milwaukee, Franchise Tax Board and Delta Air Lines, Judge Becker held, as we do here, that a claim requiring the application of federal common law arises under the laws of the United States. Disagreeing, Judge Sloviter argued that Franchise Tax Board “expressly rejected" the view that "arising under" jurisdiction may be created when federal common law supplies the rule of decision. 764 F.2d at 165-66 (Sloviter, J., concurring). Rather, Judge
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MESKILL, Circuit Judge:
This is an appeal from a judgment entered in the United States District Court for the Southern District of New York, Duffy, J, granting the motion of plaintiff-appellee Grocery Manufacturers of America (GMA) for preliminary and permanent injunctive relief. The district court, in a decision reported at 581 F.Supp. 658 (S.D. N.Y.1984), enjoined the enforcement of N.Y.Agric. & Mkts.Law § 63 (section 63), which it found invalid on federal preemption and Commerce Clause grounds.
We affirm in part and reverse in part.
Background
This litigation involves state and federal regulatory schemes that require descriptive labeling of cheese alternatives: products composed wholly or partly of food that looks, smells and tastes like cheese, but is not, in fact, cheese. The major focus of the dispute concerns the use and meaning of the modifier “imitation” as applied to these products. A brief discussion of cheese-making is in order.
Real cheese is made from milk with its milkfat content intact. Cheese alternatives may be made in two ways. One method begins with either milk from which the milkfat has been removed or casein, natural milk protein extracted from milk. The altered milk or casein is then combined with vegetable oil, which substitutes for milkfat. This type of alternative cheese is lower in calories and cholesterol than real cheese. It sells at prices fifty to sixty percent lower than real cheese. The other type of alternative cheese is chemically similar to real cheese but is made wholly or in part with substitute dairy products. This is presumably even less expensive to manufacture than the former. Vitamins and minerals may be added to raise the nutritional level of alternative cheese. Record of Administrative Rulemaking Proceedings in the Adoption of Imitation Cheese Labeling Regulations (before the New York Department of Agriculture and Markets), Record Doc. # 6 at 152-60.
Alleging that New York’s imitation cheese law was in conflict with federal labeling requirements and with the Commerce Clause, GMA commenced this litigation with a complaint requesting injunctive and declarative relief against defendants-appellants New York Department of Agriculture and Markets and the department’s Commissioner, Joseph Gerace (collectively New York). New York counterclaimed and included as additional defendants the United States Department of Agriculture (USDA); the United States Department of Health and Human Services (HHS), the bureaucratic parent of the Food and Drug Administration (FDA); and the respective department secretaries. The counterclaim sought to have 21 C.F.R. § 101.3 (1984), the federal regulation that defines the term “imitation” for purposes of food package labeling, declared invalid.
The text of New York’s section 63, enacted in 1982, is set out in the margin. 23Brief-ly, it requires that alternative cheese products feature labels that display prominently the descriptive term “imitation.” It also directs that anyone who sells prepared foods containing cheese alternatives, whether for carry out or for consumption on the premises, must display a sign that discloses in three inch letters those foods that contain “imitation cheese.” Further, it provides that restaurant menus must append the words “contains imitation cheese” to the item designation of any offering containing alternative cheese. And, finally, alternative cheese products available for use by customers on the premises — as, for example, something resembling grated par-mesan — must be conspicuously labeled as “imitation cheese.”
Section 63 does not define imitation. The regulations promulgated pursuant to the statute define “imitation cheese” as any food simulating “cheese” as described or standardized by regulation but failing to meet that description or standard. N.Y. Admin.Code tit. 1, § 18.1(c). Neither the statute nor any of its regulations is concerned with nutritional values.
The federal scheme implicated here, which establishes the requisite information content of package labels for foods shipped in interstate commerce, involves three federal statutes and two federal agencies. Food labeling generally is governed on the federal level by the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 301 et seq. (1982), and its regulations, which come under the administrative aegis of the FDA. The FDCA does not contain any express preemption language.
The labeling of meat and poultry products shipped in interstate commerce is specifically controlled by the Federal Meat Inspection Act (FMIA), 21 U.S.C. § 601 et seq. (1982), and the Poultry Products Inspection Act (PPIA), 21 U.S.C. § 451 et seq. (1982), and their respective regulations, 9 C.F.R. § 317 et seq. (1984). The FMIA and the PPIA are administered by the USDA. Both statutes contain substantially identical preemption language which permits some concurrent state enforcement but prohibits state “[m]arking, labeling, packaging, or ingredient requirements in addition to, or different than, those” mandated by federal law. 21-U.S.C. § 678 (FMIA); see also 21 U.S.C. § 467e (PPIA).
The FDCA specifically prohibits, among other things, misbranded foods. Under the FDCA, a food is misbranded if it is sold under the name of any other food, 21 U.S.C. § 343(b), or if it purports to be a food, such as cheese, for which a standard of identity has been prescribed by regulation and it does not conform exactly to that standard, 21 U.S.C. § 343(g). In addition, a food that “is an imitation of another food” is misbranded unless its label contains the word “imitation” in prominent letters immediately preceding the name of the food imitated. 21 U.S.C. § 343(c).
The FDCA does not define imitation; that task was accomplished by regulation in 1973. An imitation food is defined as a food which “is a substitute for and resembles another food but is nutritionally inferi- or to that food.” 21 C.F.R. § 101.3(e)(1). Nutritional inferiority is determined by comparing the percentages of so-called “essential nutrients” in the substitute to those in the food for which it substitutes. 21 C.F.R. § 101.3(e)(4). The essential nutrients are protein and the nineteen vitamins and minerals for which the federal government has established recommended daily allowances (U.S. RDAs). Id.; § 101.-9(c)(7)(iv). Basically, if the substitute contains less of any essential nutrient present to a measurable degree in the food substituted for, the substitute must be labeled with the word “imitation.”
A nutritionally equivalent or superior substitute food would be misbranded under federal law if it was labeled with the term “imitation.” Such foods must be identified by an appropriate common or usual name or, if none exists, a descriptive term. The fact that such foods are substitute foods would thus be evident from the foods’ labels, albeit less so than if the word “imitation” was used.
The FMIA and the PPIA contain mis-branding provisions essentially identical to the FDCA’s. Compare 21 U.S.C. § 453(h) (PPIA) and § 601(n) (FMIA) with 21 U.S.C. § 343 (FDCA). Unlike the FDCA, both the PPIA and the FMIA, to prevent misbrand-ing, require that all proposed labels be reviewed and approved by USDA agents prior to use. 21 U.S.C. § 457(c) & (d) (PPIA); § 607(d) & (e) (FMIA). Neither the text of nor the regulations under either the FMIA or the PPIA define imitation. However, the USDA avers that it has adopted the FDA’s definition.
Thus federal labeling requirements for alternative cheese products and for meat and poultry products containing cheese alternatives are uniform. If the product is nutritionally inferior to the food it resembles, it must be labeled “imitation.” If, however, it is nutritionally equivalent or superior to its model, it would be misbrand-ed if it was labeled “imitation.”
In the court below, the parties agreed and the district judge found that there were no unresolved material issues of fact. 581 F.Supp. at 661. The judge therefore deemed summary judgment as to GMA’s motion for preliminary and permanent in-junctive relief appropriate. Id. Accordingly, the court held that New York’s labeling requirements as applied to alternative cheese were preempted by the FDCA because the federal requirements, as applied in compliance with the FDA’s definition of imitation, and the state requirements were in actual conflict. Further, it held that the state labeling requirements as applied to meat and poultry products containing alternative cheese were preempted by the FMIA and the PPIA because the USDA’s adoption of the FDA’s definition of imitation created actual conflict between the state and federal schemes and, also, because of the express preemption language in the federal statutes. Finally, the district court held that the sign, menu and container provisions were invalid because they placed an undue burden on interstate commerce in violation of the Commerce Clause.
On appeal, New York challenges all three of the district court’s conclusions. It argues that the state labeling provisions are not preempted by the FDCA because the federal regulation defining imitation violates the meaning and purpose of the FDCA and is therefore invalid. Invalidation of the regulation, of course, would vitiate the actual conflict between the state and federal schemes. New York also maintains that even if the definition is valid under the FDCA, the USDA’s adoption of the definition was procedurally defective. Thus, New York reasons, the state statute is not in conflict with either the FMIA or the PPIA. Further, New York claims that the requirements of the state statute fall outside the reach of the preemption provisions of the FMIA and the PPIA. And finally, New York contends that the sign, menu and container provisions do not violate the Commerce Clause.
Discussion
I. Federal Preemption
A. Generally
The preemption doctrine is rooted in the Supremacy Clause of the United States Constitution, Art. VI, cl. 2. Its application compels judicial divination of congressional intent. Preemption is mandated in two general contexts: when a state legislates in a field that Congress intended to occupy totally and when the state and federal laws actually conflict.
Any state law intruding upon an area that Congress intended to control exclusively is preempted, “whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose.” Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). Absent explicit preemption language, congressional intent to occupy the field regulated may nevertheless be inferred on the basis of the pervasiveness of the federal scheme, the dominance of the federal interest involved or because the federal statute in combination with the nature of its directives reveals the purpose to preclude state action. Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947).
“Even where Congress has not entirely displaced state regulation in a specific area, state law is pre-empted to the extent that it actually conflicts with federal law.” Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, 461 U.S. 190, 204, 103 S.Ct. 1713, 1722, 75 L.Ed.2d 752 (1983). An actual conflict exists “when it is impossible to comply with both state and federal law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 [83 S.Ct. 1210, 1217, 10 L.Ed.2d 248] (1963), or where the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress, Hines v. Davi-dowitz, 312 U.S. 52, 67 [61 S.Ct. 399, 404, 85 L.Ed. 581] (1941).” Silkwood v. Kerr-McGee Corp., — U.S.-,-, 104 S.Ct. 615, 621, 78 L.Ed.2d 443 (1984).
Moreover, preemption is compelled not only when the conflict involves a federal statute, but also when it involves valid federal regulations. Provided that they are reasonable exercises of an agency’s duly authorized discretion and not in conflict with congressional intent, United States v. Shimer, 367 U.S. 374, 381-82, 81 S.Ct. 1554, 1559-60, 6 L.Ed.2d 908 (1961), “[f]ederal regulations have no less preemptive effect than federal statutes.” Fidelity Federal Savings & Loan, 458 U.S. at 153, 102 S.Ct. at 3022; accord Blum v. Bacon, 457 U.S. 132, 145-46, 102 S.Ct. 2355, 2363-64, 72 L.Ed.2d 728 (1982).
B. The FDCA
The preemptive effect of the FDCA depends entirely on whether the FDA’s definition of imitation is valid and therefore entitled to our deference. Characterizing 21 C.F.R. § 101.3(e) as an attempt to administratively amend the FDCA, New York argues that we should disregard the regulation and give the word imitation its ordinary meaning.
New York’s challenge to the FDA regulation is grounded in the language, legislative history and, most particularly, the pre-1973 (i.e., prior to the promulgation of 21 C.F.R. § 101.3(e)) judicial construction of the FDCA and its predecessor statutes. The fulcrum of the state’s argument is the United States Supreme Court decision in 62 Cases of Jam v. United States, 340 U.S. 593, 71 S.Ct. 515, 95 L.Ed. 566 (1951). That litigation involved a product labeled “Delicious Brand Imitation Jam” which the government claimed was misbranded because it resembled fruit jam but contained less than the federally standardized amount of fruit. The controversy actually involved a perceived conflict between the FDCA subsection deeming a food mis-branded if it substituted for and resembled another food but was not labeled “imitation” and the subsection deeming a food misbranded if it purported to be a food that had been standardized by regulation. In concluding that the product purported to be not fruit jam but imitation jam and, therefore, that it was not misbranded, the Court reasoned that “the ordinary meaning of the statute” should control. 340 U.S. at 600, 71 S.Ct. at 520.
The 62 Cases of Jam Court discussed and distinguished an earlier Supreme Court case relied on by New York and also decided under the FDCA, Federal Security Administrator v. Quaker Oats Co., 318 U.S. 218, 63 S.Ct. 589, 87 L.Ed. 724 (1943). 62 Cases of Jam, 340 U.S. at 598-99, 71 S.Ct. at 519. In upholding the government’s contention that a food was misbranded even though its label disclosed the presence of a nondeleterious substance that was not a standard ingredient, the Quaker Oats Court explained that the purposes of the FDCA went beyond mere prohibition of false and misleading labeling. Such prohibition alone could not
protect the consumer from “economic adulteration,” by which less expensive ingredients were substituted, or the proportion of more expensive ingredients diminished, so as to make the product, although not in itself deleterious, inferior to that which the consumer expected to receive when purchasing a product with the name under which it was sold.
318 U.S. at 230, 63 S.Ct. at 596. To guard the integrity of food products, the act authorized promulgation of standards of identity, requiring “informative labeling only where no such standard had been promulgated, where the food did not purport to comply with a standard, or where the regulations permitted optional ingredients and required their mention on the label.” Id.
New York also refers us to United States v. 651 Cases, More or Less, of Chocolate Chil-Zert, 114 F.Supp. 430 (N.D.N.Y. 1953) (Chil-Zert), which, drawing on the Supreme Court precedents, attempted to flesh out the judicial definition of imitation. “The word connotes inferiority in the sense that [the product] is cheapened by the substitution of ingredients[;]” the result is “something less than the genuine article.” Id. at 432 (citations omitted).
New York correctly notes that the FDA’s regulatory definition of imitation is at odds with the judicial gloss placed on the term. Consequently, the state avers, we should disregard the definition and follow the reasoning of Swift & Co. v. Walkley, 369 F.Supp. 1198 (S.D.N.Y.1973), decided under the FMIA. The Swift Court acknowledged that the USDA, in approving a label for a frankfurter-like product that did not contain the word “imitation,” had relied on the findings of the White House Conference on Food, Nutrition and Health Final Report 120 (1969), J.App. at 139 (White House Report), particularly that “[consumers are reluctant to purchase products labelled ‘imitation’ even though the products are very good and highly nutritious.” 369 F.Supp. at 1200 (quoting USDA official’s affidavit). Nevertheless, the court rejected the USDA’s position and upheld the state’s ban on the sale of the product because, lacking the modifying “imitation frankfurters,” the product was misbrand-ed.
If we were addressing the validity of the FDA regulation in or about 1973, the year of its promulgation, we might be inclined to reject it. But the regulation has been in effect for eleven years. Congress’ failure during this period to alter the relevant statutory language or to otherwise condemn the regulatory definition, while not a fail-safe guide, allows us at least to infer that it has acquiesced in the FDA’s construction. See, e.g., Haig v. Agee, 453 U.S. 280, 300, 101 S.Ct. 2766, 2778, 69 L.Ed.2d 640 (1981); United States v. Rutherford, 442 U.S. 544, 554 & n. 10, 99 S.Ct. 2470, 2470 & n. 10, 61 L.Ed.2d 68 (1979); Zemel v. Rusk, 381 U.S. 1, 11, 85 S.Ct. 1271, 1278, 14 L.Ed.2d 179 (1965); Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 313, 53 S.Ct. 350, 357, 77 L.Ed. 796 (1933); Costanzo v. Tillinghast, 287 U.S. 341, 345, 53 S.Ct. 152, 153, 77 L.Ed. 350 (1932); but see SEC v. Sloan, 436 U.S. 103, 119-21, 98 S.Ct. 1702, 1712-13, 56 L.Ed.2d 148 (1978). Moreover, the two courts of appeals that have considered the regulation have upheld its validity. National Milk Producers Federation v. Harris, 653 F.2d 339 (8th Cir.1981); Federation of Homemakers v. Schmidt, 539 F.2d 740 (D.C.Cir. 1976).
We could scarcely improve on the D.C. Circuit’s perspicacious decision in Federation of Homemakers sustaining the FDA’s definition against a challenge brought by a national consumer group. Addressing arguments similar to those raised by New York, the court explained that the earlier and undeniably reasonable judicial construction of imitation did not “prevent the promulgation of an equally reasonable definition by the agency charged with administering the [FDCA].” 539 F.2d at 743. We concur with that court; “our deference to the enforcing agency’s interpretation limits our review to determining only whether the regulation violates the language of the statute or is arbitrary and capricious.” Id. The FDA’s regulation furthers the twin goals of “better informing consumers so that they may exercise a knowledgeable choice of differing foods within general categories” and “encouraging manufacture of nutritional food products;” it is both reasonable and within the ambit of the agency’s discretion. Id. at 744; accord White House Report at 120, J.App. at 139.
Unless contrary to the indications of the statute itself, see SEC v. Sloan, 436 U.S. at 117-19, 98 S.Ct. at 1711-12, the construction and application of a statute by the agency charged with its administration is entitled to substantial deference. Blum v. Bacon, 457 U.S. at 141, 102 S.Ct. at 2361; United States v. Rutherford, 442 U.S. at 553, 99 S.Ct. at 2475; Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). The FDA’s definition of imitation is entitled to our deference.
Thus, as applied to alternative cheese, the New York labeling scheme is in direct conflict with its federal counterpart. Including the term “imitation” on the label of a nutritionally superior alternative cheese in order to comply with New York law, would render the product misbranded under federal law. Compliance with both the state and federal requirements is impossible. To the extent that it attempts to regulate the labeling of alternative cheese, the New York law is preempted.
C. The FMIA and the PPIA
Whether the New York law as applied to meat and poultry products that contain alternative cheese is also preempted requires us to determine whether the reach of the preemption provisions of the FMIA and the PPIA extends to the New York labeling requirements. This inquiry requires us to decide, also, whether the USDA’s adoption of the FDA’s regulatory definition of imitation was valid.
New York argues that the adoption was improper because it was not in accordance with the rulemaking provisions of the Administrative Procedure Act, 5 U.S.C. § 551 et seq. (1982). The district court determined, and the federal parties agree, “that the USDA’s imitation food policy is more akin to a statement of general policy or an interpretive rule than to a rule which requires formal notice and comment proceedings.” 581 F.Supp. at 665. The federal agencies also claim that the USDA’s action could be correctly characterized as an express adoption of a standing policy through adjudication.
It is well established that an agency may adopt prospective rules of general effect through either rulemaking or adjudication; the choice of method rests within the discretion of the agency. E.g., NAACP v. FPC, 425 U.S. 662, 668, 96 S.Ct. 1806, 1810, 48 L.Ed.2d 284 (1976); NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95, 94 S.Ct. 1757, 1769-72, 40 L.Ed.2d 134 (1974); SEC v. Chenery Corp., 332 U.S. 194, 202-03, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947); New York State Commission on Cable Television v. FCC, 669 F.2d 58, 62 n. 9 (2d Cir.1982). In support of its claim of adoption through adjudication, the USDA cites In re Castleberry’s Food Co., 40 Agrie. Dec. 1262 (1981), a USDA adjudicative proceeding under the FMIA, which expressly adopted what it identified as agency practice: use of the FDA definition of imitation in the case-by-case approval of food labels. Id. at 1277-78. Indeed, as the court in Swift & Co. v. Walkley, 369 F.Supp. at 1200, indicated, the agency had begun narrowing the application of the term “imitation” as early as 1970, just after the issuance of the White House Report. Moreover, formal notice and comment rulemaking procedures concerning the practice were initiated on or about August 5, 1983. 48 Fed.Reg. 35,654 (1983). The initiating notice explained that
[t]he proposed disclosure requirement for substitute and imitation cheese ingredients would not affect current requirements for “imitation” labeling. Thus, for example, in addition to the disclosure statement concerning its cheese content, any standardized meat product whose required ingredients include “cheese” would still be required to bear “imitation” labeling, if the use of imitation cheese caused the product to be nutritionally inferior to the standardized product.
Id. at 35,658.
Even if it should be classified as an interpretive rule or a statement of general policy, rather than as a formal rule adopted via adjudication, the USDA’s practice of following the FDA definition of imitation when reviewing meat and poultry product labels is valid. The distinctions between formal rules and interpretive rules or general statements of policy are often vague. Noel v. Chapman, 508 F.2d 1023, 1029-30 (2d Cir.), cert. denied, 423 U.S. 824, 96 S.Ct. 37, 46 L.Ed.2d 40 (1975); Pacific Gas & Electric Co. v. FPC, 506 F.2d 33, 37-40 (D.C.Cir.1974). But we need not explore the nuances. If the USDA’s practice is merely interpretive, it is a reasonable interpretation and therefore entitled to judicial respect. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566, 100 S.Ct. 790, 797, 63 L.Ed.2d 22 (1980); National Nutritional Foods Association v. Weinberger, 512 F.2d 688, 696 (2d Cir.), cert. denied, 423 U.S. 827, 96 S.Ct. 44, 46 L.Ed.2d 44 (1975). And, while we recognize that we are not bound by interpretive rules, American Postal Workers Union v. United States Postal Service, 707 F.2d 548, 560 (D.C.Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 1594, 80 L.Ed.2d 126 (1984); Board of Education v. Harris, 622 F.2d 599, 612-13 (2d Cir.1979), cert. denied, 449 U.S. 1124, 101 S.Ct. 940, 67 L.Ed.2d 110 (1981), we discern no reason to reject the USDA’s longstanding interpretation of the FMIA and PPIA misbranding provisions. Cf. United States v. Clark, 454 U.S. 555, 565, 102 S.Ct. 805, 811, 70 L.Ed.2d 768 (1982) (“Although not determinative, the construction of a statute by those charged with its administration is entitled to great deference, particularly when that interpretation has been followed consistently over a long period of time.”). Consequently, the New York requirements are “different from” the federal requirements, as administered, and they are therefore preempted.
Notwithstanding the conflict created by its use of “imitation,” the New York law imposes other labeling requirements that are “in addition to[ ] or different than” the federal requirements. The preemption language of the. FMIA, essentially identical to that in the PPIA, was addressed by the Supreme Court in Jones v. Rath Packing Co., 430 U.S. at 528-32, 97 S.Ct. at 1311-13. The Court had before it the federal and California standards of accuracy for net weight labeling. California’s inspection sampling technique implicitly permitted the inevitable slight deviations resulting from the manufacturing process. But it did not allow for weight loss “resulting from moisture loss during the course of good distribution practice.” Id. at 531, 97 S.Ct. at 1312. In contrast, the USDA had interpreted the FMIA to permit reasonable variations, including such moisture loss. Id. at 529, 97 S.Ct. at 1311. Thus, the Court held that the California regulations were explicitly preempted by the FMIA. Id. at 532, 97 S.Ct. at 1313.
Analogously, New York’s section 63 mandates the precise size of the letters in and relative location of the word “imitation” on package labels. These requirements do not comport exactly with the federal specifications. Therefore, the state requirements are preempted.
II. Commerce Clause
Our preemption holdings make it unnecessary for us to determine whether the New York labeling provisions are invalid under the Commerce Clause as well. Accordingly, we direct our Commerce Clause analysis only to the New York sign, menu and container provisions, subsections 3, 4 and 5 of section 63.
The Supreme Court has mapped our course quite clearly:
Where [a state] statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Huron Cement Co. v. Detroit, 362 U.S. 440, 443 [80 S.Ct. 813, 815, 4 L.Ed.2d 852], If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.
Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970).
The district court correctly determined that the New York law regulates evenhandedly. 581 F.Supp. at 670. The state requirements do not distinguish between alternative cheese products from in-state manufacturers and those from out-of-state manufacturers. And, to the extent that they indirectly advantage the dairy industry, that effect is not necessarily limited to in-state dairy producers.
Further, the local interest which the New York scheme was designed to protect is a legitimate one. States have traditionally acted to protect consumers by regulating foods produced and/or marketed within their borders. E.g., Florida Lime & Avocado Growers v. Paul, 373 U.S. 132, 144, 83 S.Ct. 1210, 1218, 10 L.Ed.2d 248 (1963). Under federal law, foods packaged for wholesale or retail marketing are labeled to indicate that they fit into one of three categories: real cheese, alternative cheese that meets or exceeds federal nutritional guidelines or alternative cheese that falls below nutritional guidelines. New York has determined that patrons of food service establishments and restaurants — heretofore wholly uninformed as to the composition of any cheese-like substance served to them — are entitled to know at least whether they are buying real cheese or a cheese alternative. The record shows that health and nutrition professionals strongly disagree about the intrinsic value of the federal nutritional guidelines applied to alternative cheese products. See, e.g., In re Considering the Adoption of Regulations Relating to Labeling and Notification Required Prior to the Serving of Imitation Cheese, Imitation Cheese Food and Products Containing Imitation Cheese or Imitation Cheese Food, J.App. at 45, 50 (rejecting federal government’s nutritional equivalency arguments); Record of Administrative Rulemaking Proceedings in the Adoption of Imitation Cheese Labeling Regulations, vol. 2 at 557-59, Record Doc. # 7 at 557-59 (reproducing Kotula & Briggs, “The Nutritional Aspects of Imitation and Substitute Foods,” 46 Nutrition News, no. 1 at 1-3 (Feb.1983), which rejects the premise of the federal government’s nutritional equivalency arguments). The very existence of this controversy persuades us that New York’s nutritional concerns are not unreasonable. In addition to promoting those concerns, the state requirements are intended to prevent deception and unfair competition, to promote honesty and fair dealing and to permit consumers to clearly discern whether they are buying real cheese or not. We believe that the sign, menu and container provisions effectuate a legitimate, local public purpose.
The final step of our Commerce Clause analysis requires us to balance the local interest served against the burden imposed on interstate commerce by the disputed sections. Interestingly, the federal government did not join in GMA’s challenge to the sign, menu and container provisions. Neither did the operators of any restaurants or food service establishments, though they are surely the persons most directly affected by these provisions.
The only evidence in the record establishing a connection between the provisions and interstate commerce comprises three affidavits. The affidavits, at bottom, claim but a single impact on commerce: restaurants and food service establishments will discontinue the use of alternative cheese products rather than comply with the sign, menu and container provisions. Of those filed, only the affidavit of Olindo DiFrancesco, President of Olindo’s Food, Inc., really supports the alleged purchasing shift, J.App. at 401; the others are merely conclusory, see affidavit of George W. Cawman, J.App. at 201; affidavit of Thomas Brennan, J.App. at 417. Olindo’s Food, Inc. distributes foods, including cheese and cheese alternatives, to restaurants, pizza parlors and grocery stores. According to DiFrancesco, prior to passage of the New York law, most of the pizzerias that purchased from Olindo’s Food used a mozzarella substitute. After the law’s passage, however, sales of the cheese alternative began to decline. Naming two specific customers (representing thirty-seven pizza parlors) who discontinued such purchases, DiFrancesco averred that his sales of cheese alternatives have dropped from 12,-000 to 2,000 pounds per week or approximately $7,500 per week. His losses have not been offset by increases in sales of real mozzarella. Ironically, Olindo’s Food is located in New York State.
The facts are not disputed in this case. Thus, we accept that sales of cheese alternatives to food service establishments have declined. But this decline is susceptible of at least two interpretations. One is that the sign, menu and container requirements are so onerous that food service establishments and restaurants are willing to use real cheese and thus forego the advantages of cheese substitutes, economic and otherwise, rather than comply. Equally probable, however, is that food service establishment operators and restauranteurs will not use less expensive cheese alternatives in place of real cheese if they have to disclose that use to customers.
GMA relies substantially on American Meat Institute v. Ball, 550 F.Supp. 285 (W.D.Mich.1982), aff'd on other grounds sub nom. American Meat Institute v. Pridgeon, 724 F.2d 45 (6th Cir.1984), for its Commerce Clause argument. That decision struck down a Michigan law that required federally inspected meats not in compliance with Michigan ingredient requirements to be accompanied by a prominent placard stating, in part, “The following products do not meet Michigan’s high meat ingredient standards but do meet lower federal standards.” Id. at 286 n. 1. However, in that case the court found that the federal standards, in many respects, were actually higher than Michigan’s and that the required placard was thus not only misleading but wrong. Accordingly, it held that the state law did not promote a legitimate state interest and, therefore, that it violated the Commerce Clause.
The New York sign, menu and container provisions do not produce such an inaccurate or misleading result that they fail to serve a legitimate state purpose. And although complying with the sign posting requirement will certainly not enhance the decor of most restaurants, that negative is not a violation of the Commerce Clause. Indeed, consumers seeking low cholesterol foods may be benefited by the prominence of the signs. The disputed provisions here are the result of legislative choices. The arguments against the provisions “relate[ ] to the wisdom of the statute, not to its burden on commerce.” Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 128, 98 S.Ct. 2207, 2215, 57 L.Ed.2d 91 (1978). That wisdom is better reconsidered in Albany than Foley Square.
A state regulatory scheme “is not invalid simply because it causes some business to shift from a predominantly out-of-state industry to a predominantly instate industry. Only if the burden on interstate commerce clearly outweighs the State’s legitimate purposes does such a regulation violate the Commerce Clause.” Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 474, 101 S.Ct. 715, 729, 66 L.Ed.2d 659 (1981) (emphasis added). The disputed provisions place a relatively minor burden on commerce and advance an important state interest. We are not persuaded that the use of a term other than “imitation” or the
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WOODROUGH, District Judge.
This appeal is taken to reverse an order of the trial court appointing receiver for the Continental National Bank. The order was made in a suit brought by a judgment creditor of the bank in the nature of a creditor’s bill to enforce the judgment against the bank’s assets and to recover against the shareholders on their liability for any deficiency. The bank had discontinued its ordinary business and turned its assets over to a committee of its own shareholders for voluntary liquidation before the plaintiff’s judgment was obtained, and the members of the committee as well as the bank and its shareholders were all made parties defendant in the bill. The application for the appointment of receiver was heard upon the verified bill and the objections to the appointment of receiver, and there was some colloquy between the court and counsel. the application for the appointment of receiver has been certified to us by the trial judge.
It appeared to the trial judge from the pleadings and the admissions of the parties that the plaintiff had a judgment against the bank from which the bank had appealed to the Supreme Court of Missouri, and that court had affirmed the judgment; that the assets in the hands of the shareholders’ committee were insufficient to pay the judgment and interest; that the directors of the bank and the liquidating committee were denying the validity of the judgment and refusing to recognize it, and some assets of the bank had been liquidated and paid to shareholders with full knowledge of the existence of the plaintiff’s claims. There were strenuous denials that the shareholders’ committee had been guilty of any mismanagement of their trust, and it was urged that they were the ones best qualified to carry out the liquidation. A principal contention was further that the judgment of the plaintiff had been obtained by fraud and was void.
We think the trial court in passing upon the propriety of appointing receiver rightly indulged the presumption that the plaintiff’s judgment was valid [Brictson Mfg. Co. v. Close (C. C. A.) 25 F.(2d) 794], that it rightly considered the bank’s liquidating eom- ' mittee to be in the position of trustees for the creditors, and that the action of the committee in liquidating assets and paying dividends to shareholders when the assets were insufficient to pay the judgment and interest justified appointing a receiver. The order to impound the bank’s assets in the hands of receiver pendente lite was clearly within the court’s jurisdiction and in the exercise of sound discretion. Adequate security was exacted, and there was no error.
After receiver was appointed, the defendant bank and its liquidating committee objected to the person selected on the ground of interest. The court stated he would defer consideration of that objection until determination of this appeal. It appears that Mr. John E. Cahill, named by the court to be receiver, is a deputy finance commissioner of the state of Missouri in charge of liquidation of the judgment creditor plaintiff, and is identified with and assisting the plaintiff in this litigation.' It would seem, therefore, that in his official position he has an interest in the litigation, and that some other suitable and wholly disinterested person should be appointed by the trial court.
Order for receiver is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MAGRUDER, Chief Judge.
The appeal is from an order of the United States District Court for the District of Puerto Rico entered August 16, 1957, denying a motion under 28 U.S.C. § 2255 to vacate four separate judgments of conviction and sentence imposed for various narcotics violations under the Narcotic Drugs Import and Export Act, 21 U.S.C.A. § 171 et seq. and under the Marihuana Tax Act as now embodied in the Federal Revenue Code, 26 U.S.C. § 2590 et seq.
At our session in San Juan on February 7, 1958, the case was submitted to us without oral argument on the record and briefs and on the arguments in Moreno Rios v. United States, 1 Cir., 256 F.2d 68. The decision of this court handed down today in the Moreno case is controlling in the ease at bar so far as concerns the applicability to the Commonwealth of Puerto Rico of the provisions of the Federal Narcotic Drugs Import and Export Act. Certain further comments are necessary because of additional issues present in this case.
As to the Marihuana Act, this was passed by Congress under the taxing power. If applicable to Puerto Rico, it applies there in the same way it applies to the States of the Union. But under the guise of exercising the taxing power, the Act makes criminal certain transactions in marihuana entirely local in nature without reference to whether the marihuana had been previously imported. Some day we may have to decide whether such an exercise of the taxing power by the Congress is inconsistent with the local autonomy vested in the Commonwealth Government by Public Law 600 (64 Stat. 319, 48 U.S.C.A. § 731b et seq.) and by the ensuing Constitution adopted by the people of Puerto Rico. Cf. United States v. Figueroa Rios, D.C.D.P.R.1956, 140 F.Supp. 376; Trigo Bros. Packing Corp. v. Davis, D.C.D.P.R.1958, 159 F.Supp. 841. We do not have that problem here, because Puerto Rico has clearly manifested consent to this exercise of power.
In United States v. Marquez Estrada, an unreported opinion entered December 21, 1956, the court below had before it this question of the applicability of the Marihuana Act to the Commonwealth, and it found consent in the referendum by the people of Puerto Rico in which they accepted the terms of the “compact” offered to them by Public Law 600’. As we pointed out in the Moreno case, that “compact” left in force as a term of the Puerto Rican Federal Relations Act a provision of § 9 of the Organic Act of 1917, as amended, which reads in part as follows: “The statutory laws of the United States not locally inapplicable, except as hereinbefore or hereinafter otherwise provided, shall have the same force and effect in Puerto Rico as in the United States, except the internal revenue laws other than those contained in the Philippine Trade Act of 1946”. (48 U.S.C.A. § 734, 60 Stat. 158) The argument is that, since the Marihuana Act undoubtedly applied to Puerto Rico prior to the creation of the Commonwealth, and since its application in Puerto Rico is the same as its application in the states, the people of Puerto Rico by accepting the terms of the compact have in effect ratified the future application of the Marihuana Act to Puerto Rico. But it may be urged that § 9 of the Organic Act, as thus continued in effect, contained an exception to the “internal revenue laws”; and therefore that the people of Puerto Rico by ratifying the “compact” have not thereby consented to the purely local application of this taxing act. To this argument an answer is possible that the Marihuana Act, as embodied in the Internal Revenue Code, is only in form an internal revenue act, but in greater part is a regulatory measure, with the raising of revenue only subordinate and incidental. See United States v. Sanchez, 1950, 340 U.S. 42, 44, 71 S.Ct. 108, 95 L.Ed. 47.
But we do not need to rely upon the foregoing line of thought, for the consent of Puerto Rico to the local application of the Marihuana Act has otherwise been unequivocally manifested.
As we pointed out in the Moreno case, from the time of its original enactment in 1937 the Congress had the clear intention to apply the Marihuana Tax Act to Puerto Rico. This intention persisted when the Congress in 1939 incorporated the provisions of the Marihuana Tax Act into the Internal Revenue Code. And even when the Congress came to revise the Revenue Code in 1954, 26 U.S.C. § 4741 et seq., which was after the Commonwealth of Puerto Rico came into being, it is clear that the Congress expressed a definite intention that the Act should continue to be applicable in that area. Pursuant to § 2603 of the Internal Revenue Code (53 Stat. 283), the administration of the Marihuana Act in Puerto Rico, including the collection of the special taxes and the issuance of the order forms, is delegated to the appropriate internal revenue officer of that government. The Puerto Rican Government undertook the execution of this task of administration, and there has been complete liaison and cooperation between the federal and Puerto Rican officers having to do with narcotics enforcement legislation. No conflict has arisen as between the administration of the Marihuana Tax Act of 1937, where whatever revenue is raised goes to the Puerto Rican Treasury, and the Puerto Rican Uniform Narcotic Drug Act. 24 L.P.R.A. §§ 951-972. Nor did this cooperation come to an end when Puerto Rico became a commonwealth. In fact, beginning with the first legislative assembly, under the Commonwealth, Puerto Rico has continued to appropriate money for the operation of the Narcotics Bureau in the Puerto Rican Treasury Department.
One of the grounds under 28 U.S.C. § 2255 for setting aside three of the four convictions was that the court made only a “pro forma” appointment of counsel, whose representation of the accused was so incompetent and ineffective as to amount to a denial of counsel to which the accused was entitled under the Sixth Amendment. This accusation was not involved in the first of these cases, where the defendant had pleaded guilty. The record shows that the court originally appointed Benjamin Ortiz, a recently resigned member of the Supreme Court of Puerto Rico, to represent the indigent accused, and Ortiz was present at the arraignment. Later, however, because of the defendant’s dissatisfaction with Ortiz, he was replaced by Alvaro Calderon, Esq., in two of the cases, and by Luis F. Cuyar, Esq., in the third. At the trial these counsel engaged in vigorous cross-examination of the government witnesses, though probably for prudential reasons they did not put the defendant on the stand. At the conclusion of the consolidated trial the judge thanked counsel for their intelligent efforts to make the best defense that in the circumstances they could make.
These attacks upon the competency of counsel are not received with much sympathy by the courts. See Walker v. United States, 7 Cir., 1955, 218 F.2d 80; Ford v. United States, 6 Cir., 1956, 234 F.2d 835, 837; United States ex rel. Swag-gerty v. Enoch, 7 Cir., 1957, 245 F.2d 229; United States v. Miller, 2 Cir., 254 F.2d 523. Certainly the judge who presided at the trial, and thus was perfectly well aware of the services rendered by court-appointed counsel, had no obligation to call a hearing on the defendant’s § 2255 motion, in order to waste time while the defendant undertook to make specific his vague general allegations of counsel’s inadequacy. On this branch of the case we close with a quotation from Adams v. United States, 1955, 95 U.S.App.D.C. 354, 222 F.2d 45, at page 48:
“For these reasons, we cannot say the District Court erred in denying without a hearing appellant’s motion under Section 2255. There was no legal point which required discussion or an explicit ruling; there was no genuine issue of material fact which required an evidentiary hearing. Summary disposition of futile and groundless motions is permissible under the terms of the statute, when ‘ “the motion and the files and records of the case conclusively show that the prisoner is entitled to no relief” ’. [Morales v. United States, 1 Cir., 1951, 187 F.2d 518, 519.] We are satisfied from our own examination of ‘the motion and the files and records of the case’, as placed before us, that this statutory provision was applicable here. It seems evident that the District Court, though it does not expressly state so in the record, made a like examination and came to a like conclusion. Cf. Birtch v. United States, 4 Cir., 1949, 173 F.2d 316, certiorari denied 337 U.S. 944, 69 S.Ct. 1500, 93 L.Ed. 1747; Morales v. United States, supra; Garcia v. United States, 9 Cir., 1952, 197 F.2d 687; United States v. Fleenor, 7 Cir., 1949, 177 F.2d 482. It would have been better practice for the District Judge to have made a statement on the record to the effect that the motion and the files and records of the case conclusively showed that the prisoner was entitled to no relief under Section 2255: such a statement, made on the trial court’s responsibility and conscience as a judge, would have advised this court on the record that the trial court in denying the motion had in mind the statutory standard. But we see no need to remand for that purpose.”
A judgment will be entered affirming the order of the District Court.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CELEBREZZE, Senior Circuit Judge.
This diversity case deals with the ability of an unsuccessful bidder to challenge the decision by a municipality to award a public contract to another bidder. Owen of Georgia, Inc. submitted the low bid for the structural steel portion of a contract to build the Shelby County Criminal Justice Center for Shelby County, Tennessee. The contract was awarded to the second-lowest bidder for the steel package, PidgeonThomas Iron Company. Owen then filed this lawsuit seeking to have the contract between Pidgeon-Thomas and Shelby County declared null and void; to require Shelby County to award the contract to Owen; or to have Shelby County compensate Owen for expenses and lost profits resulting from the award of the contract to Pidgeon-Thomas instead of Owen. The district court concluded that Owen lacked standing to seek mandamus, injunctive relief, or damages, but did have standing to seek declaratory relief. Interpreting the bidding procedure requirements of the Shelby County Restructure Act, the district court proceeded to issue a declaratory judgment holding the award of the contract to Pidgeon-Thomas invalid and void. We reverse the district court’s decision that Owen lacks standing to sue, affirm the district court’s issuance of declaratory relief, dismiss as moot the claims for mandamus and injunctive relief, and remand for a determination of damages.
I.
The facts are virtually undisputed. In 1977, Shelby County, through its legislative branch, decided to construct a Shelby County Criminal Justice Center under the supervision of a construction manager who would supervise the erection of the complex. In due course, the county advertised for bids on the various components of the project which was budgeted at $38,000,000.00 and divided into about 90 “bid packages”. Bid package 0500 dealt with structural and miscellaneous steel. Five companies submitted bids on bid package 0500 in March, 1977; Pidgeon-Thomas submitted the lowest bid and Owen, the third lowest bid.
All of the bids exceeded the budgeted amount. Roy Nixon, Mayor of Shelby County, instructed his architect to review Pidgeon-Thomas’ bid with company officials in an effort to reduce the overall amount of the bid. The county’s architect and engineer negotiated with Pidgeon-Thomas, changing the specifications to reduce the cost of the steel package. Even after such reductions, however, the Mayor concluded that Pidgeon-Thomas’ bid was still too high, and, therefore, he rejected all bids on that package.
Shelby County then advertised for new bids with changed specifications, indicating that the negotiations with Pidgeon-Thomas would not put any other company at a competitive disadvantage. Bid package 0500 now included only structural steel, with the miscellaneous steel comprising a separate package. When the new bids were opened on May 11, 1977, Owen’s bid of $2,585,000.00 was the lowest bid. PidgeonThomas was the second lowest bidder at $2,625,625.00.
Shortly thereafter, Mayor Nixon instructed the county architect to award the 0500 contract to Pidgeon-Thomas even though Owen was the low bidder. Mayor Nixon purportedly rejected Owen’s bid in favor of Pidgeon-Thomas for two reasons. First, Shelby County was committed to an affirmative action program which included participation by disadvantaged minorities in the construction of the Criminal Justice Center. This policy was expressed in general terms to all bidders, and all bidders were required to submit statistical reports to Shelby County regarding the status of minority employment in their businesses. The reports filed by Owen and Pidgeon-Thomas reflected that Pidgeon-Thomas employed a higher proportion of minorities than did Owen. Second, it was allegedly the policy of Shelby County to encourage participation by local Shelby County firms in the construction of county projects. Pidgeon-Thomas is a local Shelby County firm; Owen is a Georgia firm. For these two reasons the Mayor rejected Owen’s bid and recommended to the County legislative body, the Quarterly Court, that Pidgeon-Thomas be awarded the contract for package 0500. Before this recommendation was forwarded to the Quarterly Court, however, PidgeonThomas agreed to reduce its bid to a figure identical to Owen’s bid. In addition, the specifications were changed to provide that the County would itself purchase the steel and make an adjustment for sales tax.
On May 16,1977, Mayor Nixon submitted a resolution to the Quarterly Court recommending that the bid for structural steel be awarded to Pidgeon-Thomas. At that time the Quarterly Court was not advised that Owen was originally the low bidder, that Pidgeon-Thomas had reduced its bid to match Owen’s low bid, or that PidgeonThomas was chosen because it was a local concern with the better minority employment record. The Quarterly Court proceeded to approve the contracts for the construction of the Criminal Justice Center. Among those contracts approved was that of Pidgeon-Thomas.
When Owen learned of the contract award to Pidgeon-Thomas, it objected and through its attorney contacted Mayor Nixon to request reconsideration since Owen was the low bidder. As a result of Owen’s objections, the issue was resubmitted to the Quarterly Court on June 23, 1977. Owen’s attorney appeared and challenged the May- or’s rationale for preferring Pidgeon-Thomas. Nevertheless, a motion to substitute Owen for Pidgeon-Thomas on bid package 0500 was rejected by the Quarterly Court. The Mayor subsequently executed a contract with Pidgeon-Thomas for the structural steel package.
On the above facts, the district court found that Owen lacked standing to seek or obtain mandamus, injunctive relief or damages because there was no evidence of fraud or bad faith on the part of the defendants. The trial court then decided that Owen did have standing to seek a judgment declaring the contract void. The applicable section of the Shelby County Restructure Act provides:
All open market purchase orders or contracts shall be awarded to the lowest bidder who is financially responsible, taking into consideration the qualities of the articles to be supplied, their conformity to specifications, their suitability to the requirements of the County government, and the delivery terms. Any and all bids may be rejected for good cause.
The trial court proceeded to hold that the term “good cause”, as set out in the second sentence of the Act, permits rejection of the low bid only in the circumstances delineated in the first sentence of the Act. Although the District Judge found no fraud or bad faith on the part of any of the defendants, and found no loss to the taxpayers of Shelby County, he held that the contract was awarded in violation of the competitive bidding procedures required under the Shelby County Restructure Act. He therefore held the contract award to Pidgeon-Thomas invalid. Owen now appeals the ruling that it lacks standing to seek or obtain preventive, specific or monetary relief. Defendants appeal the ruling that Shelby County’s award of the steel package to Pidgeon-Thomas was not authorized by the Shelby County Restructure Act.
II. STANDING
The district court, while recognizing a split of authority on the standing issue and the absence of any Tennessee decisions dealing with the issue raised in the present case, held that under the “unusual circumstances” of this case Owen lacked standing to challenge Shelby County’s award of the contract to Pidgeon-Thomas. To reach this result, the court relied upon the broad discretion conferred upon elected officials by Tennessee law and upon the absence of fraud, bad faith or surplus cost to the taxpayers. Although a few courts have proffered the absence of bad faith by the solicitor as a rationale for denying an aggrieved bidder standing, see Standard Engineers and Constructors, Inc. v. United States EPA, 483 F.Supp. 1163,1168 (D.Conn.1980); Menke v. Board of Education of West Burlington, 211 N.W.2d 601 (Iowa 1973), this factor is not dispositive of the question. Our role in this diversity action is to determine the ruling that we believe the highest Tennessee court would adopt.
The Tennessee courts have not directly addressed the issue of whether an unsuccessful bidder, such as Owen, has standing to challenge action of an awarding authority which is asserted to be in violation of a state or local statute. Several decisions, however, treat the issue of standing in related contexts. Particularly instructive is Knierim v. Leatherwood, 542 S.W.2d 806 (Tenn.1976), where the court held that a private citizen has standing to bring suits to protect public roads when that citizen has sustained special injury or damage. In Knierim the Tennessee Supreme Court overruled a case decided three-quarters of a century before which denied standing to private residents seeking to enforce the rights of the public in roads and bridges. The Knierim court rejected the older, narrow approach as being “in conflict with the rationale, reasoning and result of countless subsequent cases decided by our courts.” Id. at 810. Only when the complaining party has no special pecuniary or proprietary interest in the public road will he or she lack standing.
The court noted that the doctrine of standing in Tennessee law is essentially judge-made with no hard and fast rules, and the purpose of the doctrine is to make certain that the proper party is advancing the claim. Thus, property owners whose land abuts a public road have acute and compelling rights in a highway which are not common to the public generally. The focus in Knierim is thus on whether the plaintiff has a special interest defined in terms of potential, or realized, injury. Here, a private citizen would be hard pressed to demonstrate any monetary injury from the award of the contract to Pidgeon-Thomas, since Pidgeon-Thomas lowered its bid, after the bids were opened, to match the low bid of Owen. Having Pidgeon-Thomas provide the structural steel for the Criminal Justice Center worked no apparent financial harm to the taxpaying citizens of Shelby County. In stark contrast to this absence of injury is the situation of a low, qualified bidder — here Owen — which suffers serious adverse economic consequences from illegal action. Not only is the low bidder deprived of anticipated profits, but the deprivation “throws an undue overhead burden on the remainder of the contractor’s work and may cause the contractor to lose key field personnel that it cannot readily employ.” Funderburg Builders v. Abbeville City Memorial Hospital, 467 F.Supp. 821, 825 (D.S.C.1979). Under the Knierim rationale, Owen’s special pecuniary interest gives it standing to contest the contractual grant to PidgeonThomas as illegal under the bidding procedures of the Shelby County Restructure Act.
We believe this approach to the standing doctrine is consistent with the developments charted by the Tennessee courts. Indeed, it has long been the law in Tennessee that private citizens, as such, can maintain an action complaining of the wrongful acts of public officials if they aver a special interest or a special injury not shared by the public. Bennett v. Stutts, 521 S.W.2d 575, 576 (Tenn.1975); Badgett v. Broome, 219 Tenn. 264, 409 S.W.2d 354 (1966); Skelton v. Barnett, 190 Tenn. 70, 227 S.W.2d 774 (1950); Patton v. City of Chattanooga, 108 Tenn. 197, 65 S.W. 414 (1901).
The aim of these cases is to insure that the appropriate party, one uniquely positioned by virtue of status or injury, is cast in the role of plaintiff. Subsequent decisions confirm this interpretation. In Corporation of Collierville v. Fayette County Election Committee, 539 S.W.2d 334 (Tenn. 1976), the court, characterizing standing as a “perennial problem”, held that only a municipal body, not a private citizen, has standing to sue to invalidate the charter of a proposed city. Since the establishment of a city is an inherently public matter, it may only be redressed in an action brought by a representative of the state. In Payne v. Ramsey, 591 S.W.2d 434 (Tenn.1979), a Republican candidate in a general election was denied standing to contest his Democratic opponent’s eligibility to have been a candidate in the Democratic primary. The correct parties to prosecute such an action, the court noted, were designated by statute as the Democratic candidate’s primary opponents. See also Dobbins v. Crowell, 577 S.W.2d 190, 193 (Tenn.1979).
Even looking beyond Tennessee law to the recent restrictive decisions of the Supreme Court we would find that Owen would have standing. As a prospective, and here the low bidder for Shelby County business, Owen clearly has economic interests at stake which give it standing. Its injury in fact is loss of business and profits which is “fairly traceable to the defendants acts or omissions.” Village of Arlington Hts. v. Metropolitan Housing Development Corporation, 429 U.S. 252, 261, 97 S.Ct. 555, 561, 50 L.Ed.2d 450 (1977). Since Owen was qualified and capable of performing the work, its injury is a type “likely to be redressed by a favorable decision.” Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976). A helpful analogy is the decision last term in Fullilove v. Klutznick, 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980), where several associations of construction contractors filed suit for declaratory and injunctive relief alleging that they had sustained economic injury due to enforcement of the Minority Business Enterprise (MBE) provisions of the Public Works Employment Act of 1977. The MBE provisions required that at least 10% of federal funds granted for local public works projects be used by the state or local grantee to procure services or supplies from businesses owned by minority group members even though they might not be the lowest bidders. Although the Supreme Court did not rule on the issue of standing, it apparently accepted as sufficient the petitioners’ allegations that in several instances they sustained economic injury because one of their members would have been awarded a public works contract but for enforcement of the MBE provisions. 448 U.S. at 480 n.71,100 S.Ct. at 2776 n.71. See also Central Alabama Paving, Inc. v. James, 499 F.Supp. 629 (M.D.Ala.1980). In the present Case, Owen alleges that it, as low bidder, would have received the structural steel contract but for the invocation of the minority employment and local concern policies by Shelby County. This loss of business is sufficient to convince us that the Tennessee courts would conclude Owen has standing.
Our conclusion that Owen has standing is also consistent with the majority of federal court decisions, which have held that unsuccessful bidders for government contracts have standing to invoke judicial review of adverse procurement decisions. Sea-Land Service, Inc. v. Brown, 600 F.2d 429, 432 (3rd Cir. 1979); Kinnett Dairy, Inc. v. Farrow, 580 F.2d 1260, 1265 (5th Cir. 1978); Cincinnati Electronics Corp. v. Kleppe, 509 F.2d 1080, 1086 (6th Cir. 1975); Airco, Inc. v. Energy Research and Development Administration, 528 F.2d 1294, 1296 (7th Cir. 1975); Armstrong & Armstrong v. United States, 514 F.2d 402, 403 (9th Cir. 1975); Wilke v. United States, 485 F.2d 180, 182-83 (4th Cir. 1973); Scan well Laboratories, Inc. v. Shaffer, 424 F.2d 859, 866-68 (D.C. Cir.1970); cf. Image Carrier Corp. v. Reame, 567 F.2d 1197, 1201 (2d Cir. 1977); contra, Edelman v. Federal Housing Association, 382 F.2d 594, 597.(2d Cir. 1967); Self-Powered Lighting, Ltd. v. United States, 492 F.Supp. 1267, 1272 (S.D.N.Y.1980).
Accordingly, we hold that Owen has standing to contest the award of the contract to Pidgeon-Thomas.
III. AUTHORITY UNDER STATE LAW
The Shelby County Restructure Act mandates that the contract “shall be awarded to the lowest bidder who is financially responsible... ”, but also provides that “Any and all bids may be rejected for good cause.” Owen of Georgia is, by the defendants’ own admission, financially responsible. The sole reasons given by Mayor Nixon for rejecting Owen’s low bid in favor of Pidgeon-Thomas were that Pidgeon-Thomas was a local concern, whereas Owen was an out-of-state firm, and Pidgeon-Thomas’ minority employment record was superior to that of Owen’s.
Shelby County contends that justification for its rejection of Owen is provided by that sentence in the Restructure Act which permits rejection of any and all bids for “good cause.” To the county, Owen’s status as an out-of-state contractor with a less impressive minority employment record constituted good cause for disqualifying Owen from receiving the contract. In support of this open ended reading of the statute, Section 1.01 of the Restructure Act is cited. That section provides that “limitations on the power of county government shall be strictly construed, and that grants of power to county government shall be liberally construed.” The District Court rejected the approach urged by the county and held that the term “good cause” referred solely to those reasons or circumstances delineated in the first sentence of the paragraph. Under this interpretation, the only grounds on which a bid may permissibly be rejected are that the bidder is not financially responsible; the bidder offers to furnish inferior quality merchandise or materials; the bidder’s proposal is not in conformity with the specifications; the bidder offers supplies or articles that are not suitable to the requirements; or the bidder’s delivery terms are objectively inferior or substantially less desirable than another acceptable bidder.
Both constructions are too extreme. Under Tennessee law a court should construe a statute so that no part will be inoperative, superfluous, void or insignificant and that one section will not destroy another. In re Gasteiger, 471 F.Supp. 13 (D.C.Tenn.1977); Tidwell v. Collins, 522 S.W.2d 674 (Tenn.1975). Where doubt exists, a statute is not to be extended by implication, or enlarged by construction so as to embrace matters not specifically covered therein. National Life & Ace. Ins. Co. v. United States, 381 F.Supp. 1034 (D.C. Tenn.), aff’d 524 F.2d 559 (6th Cir. 1974). Furthermore, the statute must be construed so that the intention or purpose of the legislature is ascertained and given effect. Jackson v. Tennessee Valley Authority, 462 F.Supp. 45 (D.C.Tenn.), aff’d 595 F.2d 1120 (6th Cir. 1979); State v. Doe, 588 S.W.2d 549 (Tenn.1979); Parkridge Hospital, Inc. v. Woods, 561 S.W.2d 754 (Tenn.1978); Dorrier v. Dark, 537 S.W.2d 888 (Tenn.1976). It is beyond cavil that the primary objective is to promote the public interest by obtaining the lowest possible price that competition among responsible bidders can secure. See State v. Dugger, 172 Tenn. 281, 111 S.W.2d 1032,1034 (1938); Johnson City v. Carnegie Realty Co., 166 Tenn. 655, 64 S.W.2d 507, 508 (1933). The overriding fiscal policy behind the Restructure Act demonstrates that the interpretation urged by Shelby County that it may arbitrarily reject a low bid by merely reciting the statutory language “good cause”, and injecting previously unannounced criteria to provide meaning to the phrase, would be contrary to the intent of the statute. This conclusion is reinforced by the express limitations imposed by the statute on the awarding authority’s ability to reject the lowest bid. These constraints should not be interpreted out of the statutory language. We do not believe that the Tennessee courts would construe the Act as granting unlimited discretion to the County to award contracts based upon some undefined and elusive concept of “good cause”.
A contrary conclusion would require us to ignore the mandatory language of the Restructure Act and would render the factors outlined in the Act as valid grounds for rejection mere surplusage. To accept Shelby County’s argument that it has an absolute right to reject the lowest responsible bidder based upon uncodified policies, and may do so merely by invoking the magic words “good cause”, would be to give no meaning to the statutory language that “all... contracts shall be awarded to the lowest bidder who is financially responsible, taking into consideration... (the enumerated factors).”
The narrow construction adopted by the District Court, allowing consideration of only the factors which are expressly codified, suffers from the same infirmity. Under such an interpretation the “good cause” provision is rendered inoperative, for if “good cause” is held to include only the enumerated factors, the phrase becomes superfluous. Our task is to construe the Restructure Act in a manner which preserves the integrity of each clause while keeping the statute internally consistent. Tidwell v. Collins, supra. Two canons of statutory construction provide a method for harmonizing the provisions of the Restructure Act. The ejusdem generis rule of statutory construction provides that where general words follow specific words in an enumeration describing the legal subject, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words. 2A Sutherland, Statutory Construction, (4th ed. C. Sands 1973) Sec. 47.17; see also City of Knoxville v. Brown, 195 Tenn. 501, 260 S.W.2d 264 (1953). Concomitantly, the maxim noscitur a sociis (“it is known from its associates,” Black’s Law Dictionary 1209 (Rev. 4th Ed. 1968)) acknowledges that general and specific words are associated with and take color from each other, restricting general words to a sense analogous less general. See e. g. Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307, 81 S.Ct. 1579, 1582, 6 L.Ed.2d 859 (1961); Reed v. Long, 327 F.2d 611, 614-15 (6th Cir. 1964). For example, in Third National Bank v. Impac Limited, Inc., 432 U.S. 312, 97 S.Ct. 2307, 53 L.Ed.2d 368 (1977), the Supreme Court affirmed a decision of the Tennessee Supreme Court, citing the familiar principle that words grouped in a list should be given related meaning and applying it to an issue of statutory construction regarding a state court’s issuance of a temporary injunction against a national bank.
Applying these rules to the Restructure Act allows the meaning and boundaries of the term “good cause” to be gathered from context. In this respect, the “good cause” provision entitles the County to reject bids on grounds other than those specifically enumerated in the Restructure Act. However, the phrase “good cause” must be read ejusdem generis to refer to other factors of the same genre as those enumerated by the specific words. While a bid may be rejected for reasons other than those enumerated, the County must cite factors similar to the ones listed, i. e., factors which go to the heart of the contract. In order for rejection to be based on the “good cause,” the proffered reason must relate to something which affects the County’s bargain to substantially the same degree that, for example, inferior quality goods or non-conforming goods affect it. Poor workmanship on a previous job is one example of such a factor.
The reasons cited by the County in the present case — that Pidgeon-Thomas employs a higher proportion of minorities and is a local concern — do not constitute “good cause” for rejecting the other bid. These factors simply do not affect the County’s bargain to the same extent that factors such as those specifically enumerated affect it. They are important ancillary concerns; however, in considering them the County strays farther from the primary purpose of the Restructure Act than a proper construction of the Act permits. These concerns are not recognized in state or local statutes, but represent the County’s beliefs on controversial social and economic questions. The County’s affirmative action program, expressed in Sec. 7 of the Restructure Act, insures that prospective bidders comply with the fair employment practices specified by the EEOC. It also permits the County Department of Equal Opportunity Compliance to compile statistics regarding minority participation in the work forces of potential bidders. The statute does not provide that a bidder’s proportionate minority employment is a factor which will be taken into consideration when awarding a County contract. Rather, it operates as a qualifying mechanism; a finding of compliance with the Act renders a firm eligible to submit a bid. Both Owen and PidgeonThomas were found to be in compliance and that finding ends the role of Sec. 7 in contract awards. Even further astray from the legitimate reasons under the Act for rejecting Owen’s bid is the County’s “local concern” policy, which appeared only as an ex post facto justification for awarding the contract to Pidgeon-Thomas. The Restructure Act as well as the bid advertisements are silent as to any preference for local firms. Shelby County never notified prospective bidders of its intent to favor local businesses when awarding County contracts. Moreover, the defendants have not drawn our attention to any other of the 90 bid packages where these policies were enforced. The district court was correct in concluding that if two contractors furnish the requisite element of financial responsibility, and one contractor’s bid is lower than that of the other, the awarding authority may not disregard the low bid on the ground that the more expensive bidder has greater minority employment or is a local concern. The Shelby County Restructure Act does not embody a concept of “relative superiority” which allows award of the contract to some other bidder because he was “better qualified” than the lowest bidder. Our construction of the Act, however, allows the County the necessary flexibility by permitting rejection of a bid for “good cause” when the good cause is in the nature of the specific provisions.
While the County certainly has the authority to reject all bids, as it did when the first bids were submitted here, contracts subject to the provisions of the Restructure Act cannot properly be awarded to a party other than the lowest responsible and eligible bidder unless that bidder is disqualified on the basis of an enumerated criterion or similar “good cause” reason. See Associated General Contractors of Cali fornia v. San Francisco Unified School District, 616 F.2d 1381, 1385 (9th Cir.) cert. denied sub nom.; National Ass’n of Minority Contractors v. Ass’n of General Contractors, - U.S. -, 101 S.Ct. 783, 66 L.Ed.2d 603 (1980); Funderberg Builders v. Abbeville City Memorial Hospital, 467 F.Supp. 821, 824-25 (D.S.C.1979); Ingelwood-Los Angeles County Civic Center Authority v. Superior Court, 7 Cal.3d 861, 103 Cal.Rptr. 689, 500 P.2d 601 (1972); Commonwealth v. Gill, 5 Mass.App. 337, 363 N.E.2d 267, 270 (1970). Since Shelby County did not justify its rejection of Owen on any permissible ground, that rejection was clearly wrong and the award of the contract to Pidgeon-Thomas invalid.
IV. REMEDIES
As a general rule, a declaratory judgment and an injunction are the only adequate means of protecting the public interest, the integrity of the competitive bidding process, and the rights of the individual bidder. Owen obtained declaratory relief in the court below, but was denied the preventative relief it sought — an injunction forbidding the award of the contract to Pidgeon-Thomas. It is now too late for injunctive relief to be effective because at oral argument we were informed that construction of the Criminal Justice Center was substantially complete. Accordingly, we dismiss as moot Owens’ claims for injunctive relief. For the same reason, we also dismiss as moot the claim for mandamus, without ruling on the availability of this type of relief.
Despite the unavailability of specific or preventative relief, there remains the question of damages. With a great degree of conviction but seemingly little theoretical acumen, Owen sought to recover the expenses it incurred in its unsuccessful participation in the competitive bidding process, the costs incurred in its litigation to set aside the award of the contract to PidgeonThomas, and the profits it allegedly lost by reason of its failure to obtain the award of the contract. Shelby County contends that such a cause of action against it cannot be recognized in view of the overwhelming authority that the competitive bidding requirements of contracts for public works exist to protect the public rather than the bidders. The County notes that Owen could not have compelled the Quarterly Court to award the contract to it because of the provision in the Restructure Act which permits rejection of all bids. We agree that, in line with the Act, Shelby County was not obligated to actually award the contract to a bidder regardless of the bid price. Owen, even as the lowest responsible bidder, had no vested or contractual right to the award of the contract. This absence of any entitlement to the contract compels us to conclude that Owen cannot recover anticipated profits as damages as it never entered into the contract, and could not command that it receive the contract under which it would have made such profits. See e. g. Excavation Construction, Inc. v. United States, 494 F.2d 1289, 1290, 204 Ct.Cl. 299 (1974); Funderburg Builders, supra, 467 F.Supp. at 825.
This conclusion, however, does not leave Owen without any remedy for the violation of the Act’s competitive bidding section by Shelby County. By virtue of those bidding procedures, the County invited bidders to respond. Those procedures protect the local government’s interest as well as the interests of those who respond to the County’s invitation. The public contracting authority is able to obtain the lowest price for its work from a pool of qualified bidders, and all contractors are placed on an equal footing in the competition to gain the contract. All bidders are assured by the Act that their bids will receive fair and honest consideration. This, too, serves the public interest. “The number of bidders, and thus the range of choice available to an awarding authority, may well be reduced if it were to be assumed by prospective bidders that such an authority would not abide by the applicable statutes in making its awards.” Paul Sardella Construction Co. v. Braintree Blousing Authority, 3 Mass.App. 326, 329 N.E.2d 762 (1975), aff’d 371 Mass. 235, 356 N.E.2d 249 (1976). Indeed, it is doubtful that many contractors would bid at all knowing the deck was stacked against them.
In its solicitation of bids pursuant to the Restructure Act, Shelby County clearly promised to award the contract to the lowest financially responsible bidder if it awarded the contract at all. Each prospective bidder could justifiably expect that his proposal would receive fair consideration consistent with this promise. We believe that the Tennessee courts would find that Owen’s reasonable and detrimental reliance upon this promise entitles it to damages under the theory of promissory estoppel. The elements of promissory estoppel are set forth in the decision of Foster & Creighton Co. v. Wilson Contracting, 579 S.W.2d 422 (Tenn.App.1978) where the court adopted the generally accepted definition:
Where one makes a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee, and where such promise does in fact induce such action or forebearance, it is binding if injustice can be avoided only by enforcement of the promise.
Shelby County promised to award the contract to the lowest financially responsible bidder in the event it awarded the contract at all, and in reliance on this promise Owen submitted its bid. This created a type of informal contract, requiring neither consent nor consideration, between Shelby County and Owen (as well as all the other bidders) to award the contract to Owen as the lowest responsible bidder unless it rejected all bids. Consequently, Owen became entitled to damages when Shelby County breached this informal contract by awarding the contract to Pidgeon-Thomas.
Owen may recover in promissory estoppel those damages it sustained by reason of its justifiable reliance upon the County’s promise — in other words, the expenses it incurred in its unsuccessful participation in the competitive bidding process as well as the costs incurred in its successful attempt to have the award to PidgeonThomas rescinded as having been made in violation of the statute. The initial determination of the amount of damages, however, must rest with the trial court. Accordingly, the case is remanded to the district court to conduct such proceedings as it deems proper for ascertaining the amount of damages which Owen shall receive from the County under the doctrine of promissory estoppel as outlined by this court.
The district court’s holding that Owen had no standing to sue is reversed, the declaratory judgment issued below is affirmed for the reasons stated above, the claims for an injunction and mandamus are dismissed as moot, and the case is remanded to the district court for a determination of the damages sustained by Owen in preparing and submitting its second bid for package 0500 and in challenging the award of the contract by Shelby County to PidgeonThomas.
Costs will be taxed to the defendant-appellants — cross-appellees.
. Both Owen and Pidgeon-Thomas were found to be in compliance with EEOC and OFCC regulations — a prerequisite for eligibility to bid for Shelby County Government contracts.
. The record does not reflect that this policy was published in order to notify the bidders.
. The County also agreed to indemnify Pidgeon-Thomas for any sales tax that might be assessed against Pidgeon-Thomas.
. The prevailing policy was to liberally construe municipal powers. The Shelby County Restructure Act, Article 1, Section 1.01 provides: It is the intent of this chapter that the limitations on the powers of the County government shall be strictly construed; and that grants of power to County government shall be liberally construed.
. We reject the boot-strap argument advanced by the defendants that any illegality in the bidding award procedures was rectified when Pidgeon-Thomas lowered its price to match that of Owen’s. While this action may insure that no additional costs are imposed upon the taxpayers, it destroys the nature of competitive bidding and circumvents the requirements of the Shelby County Restructure Act.
. As the issues are not before us, we refrain from deciding whether a taxpaying citizen or a qualified, unsuccessful bidder who is not the low bidder would have standing to challenge the award of a public contract under the circumstances present here.
. Cf. Boatland, Inc. v. Brunswick Corp., 558 F.2d 818 (6th Cir. 1977) (term “good cause” as used in the Wisconsin Fair Dealership Law allowing cancellation of dealership agreements for good cause was not unconstitutionally vague because it was fully and precisely defined by statute so as to give the grantor of the dealership adequate notice as to when it would be violating the Act by attempting to cancel a dealership without good cause).
. The language in the advertisement and bidding document reserving the discretion to “reject any and all bids” and to award the contract regardless of by whom bid or how bid cannot change the result. The instructions to bidders contained the following language: “The qwner reserves the right to select an award of a contract on or to reject any package or grouping of packages by any bidder or bidders as the owner may choose regardless of by whom bid, how bid, time bid, or sequence of bid so long as any award falls within the valid bid time period set out herein.”
The advertisement for bids informed all prospective bidders that “the owner reserves the right to reject any or all proposals and to waive any informalities.” Insofar as these instructions are inconsistent with the Shelby County Restructure Act, they must be disregarded. The Act, not the bid advertisement, constitutes the law controlling the award of the contract.
. Section 7 provides that the County Department of Equal Opportunity Compliance shall:
(a) Review and implementation of fair employment practices, as specified by Equal Employment Opportunity Commission guidelines, in all departments of County Government under the jurisdiction of the County Commission or County Mayor, if there be one;
(b) Update and monitor and effective affirmative action program;
(c) Review all proposed contracts in which County funds are expended to insure that nondiscriminatory employment practices are being executed on all levels of employment as specified by Equal Employment Opportunity Commission and Labor Department regulations;
(d) Investigate claims and complaints of discriminatory practices arising in County Government departments under the jurisdiction of the County Commission, or County Mayor, if there be one;
(e) Design, implement and monitor programs to increase minority business participation in the letting of county contracts;
(f) Such other duties as may be required by the County Commission, or County Mayor, if there be one; (g) The Director shall have the power to require each firm or business contracting with the county to submit with their proposals and/or bids statistics revealing the percentage and number of minorities at all levels of said firm or business.
. The dissent agrees that our task is to construe the term “good cause” in a manner which does not render the preceding language of the Act superfluous. The dissenting opinion states'that “The reasons proffered
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION
WILKINSON, Circuit Judge:
This case arises from a local zoning dispute in Bel Air, Maryland. Appellant Robert Biser claims that the Town of Bel Air deprived him of substantive due process when it denied him a “special exception” that would have permitted him to construct two commercial office buildings in an area zoned for residential use. The Circuit Court for Harford County, Maryland held that the Town was equitably estopped from denying Biser his special exception, which that court ordered the Town to grant. After completing his office buildings, Biser filed this suit under 42 U.S.C. § 1983, claiming $1 million in damages from the Town’s delay in granting the special exception. The district court dismissed the complaint for failure to state a claim. 778 F.Supp. 249. We believe that neither the relevant zoning laws nor the ruling of the Circuit Court of Harford County was sufficient to confer a cognizable property interest upon Biser. We thus agree with the district court that this local land use dispute does not belong in federal court.
I.
The complaint alleges these facts. Robert Biser owns a tract of real property located at the corner of Vale Road and Rockspring Avenue in the Town of Bel Air, Maryland. That area has been zoned “R-2” (General Residence), restricting buildings in that area to residential use.
Local ordinances provide for commercial office use in residential areas under certain conditions, if the local Board of Appeals approves a special exception. Maryland law authorizes the Board of Appeals to decide appeals from decisions by administrative officials as well as to grant special exceptions from certain ordinances. Md. Ann.Code art. 66B, § 4.07(d).
In August 1988, Biser contacted Carol Deibel, Director of Planning and Community Development in Bel Air. He sought her assistance in obtaining a special exception from the residential zoning restrictions. Deibel reviewed Biser’s preliminary plans for two office buildings and informed him that his plans required setback variances. Deibel suggested that Biser apply for the setback variances, obtain building permits, construct the buildings, and then request the special exception. Deibel informed Bis-er that the buildings would have to be built before they could be approved for a special exception.
Biser presented his plans at a meeting of the Board of Appeals on September 27, 1988. He informed the Board of his development plans and his desire to ascertain whether there were any impediments to those plans. The Board expressed no objections to Biser’s plans and approved the setback variances.
Biser then submitted his completed building plans with his applications for building permits to the Town’s Assistant Planner. The building permits were approved on June 27,1989, but only after the references to “commercial office buildings” in the applications were struck out and replaced with “dwellings.”
After construction had begun, Biser sought approval in August 1989 for his storm water management plans. Town employees informed him that the storm water management plans could not be approved until the Board granted a special exception. Biser again contacted Deibel to ascertain what would be required to secure a special exception. Deibel informed Biser that he could apply for a special exception as long as the buildings were “under roof” and their windows had been installed. Bis-er completed this construction and applied for a special exception at the Board’s meeting on September 26, 1989. The Board did not issue a decision at this meeting.
Two days later, the Town’s Superintendent of Public Works issued a “stop-work” order. The order stated that the buildings did not comply with the Building Code’s requirements for single family dwellings. Biser protested this order without success. In order to avoid further delays, he installed the kitchen and bathroom facilities necessary to comply with the order. The order was lifted on October 16, 1989.
The Board met again on October 24, 1989 to consider Biser’s application for a special exception, which the Board denied. Biser appealed the denial to the Circuit Court for Harford County. The Circuit Court found that the ordinance authorizing special exceptions was ambiguous as to whether use and occupancy permits must be presented before the special exception for conversion of a dwelling to office use could be granted. That court further found that Biser had relied to his detriment on the Town’s approval of his building permits, and went on to hold that the Town was equitably estopped from denying Biser his special exception. The Circuit Court remanded to the Board with instructions to grant the special exception. The Town complied with that order forthwith.
After some further delay in the permitting process, Biser completed his office buildings. He then filed this suit under 42 U.S.C. § 1983, claiming that he had been denied due process by the Town’s delay in granting his special exception. Biser also made two state law claims based on the same facts. The district court dismissed with prejudice the federal count for failure to state a claim, and declined to exercise pendent jurisdiction over the state claims, which the court dismissed without prejudice. Biser appeals from the complaint’s dismissal. The Town cross-appeals, contending that the state claims should have been dismissed with prejudice.
II.
In order for Biser to state a substantive due process claim, he must first demonstrate that he possesses a “cognizable property interest, rooted in state law,” in the lost benefit. See Scott v. Greenville County, 716 F.2d 1409, 1418 (4th Cir.1983). We do not believe that Biser held a property interest in the special exception before it was granted by the Board. A property interest requires more than a “unilateral expectation” that a permit or license will be issued; instead, there must be a “legitimate claim of entitlement.” See Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). In applying this standard of entitlement, we have held that if a local agency has “[a]ny significant discretion” in determining whether a permit should issue, then a claimant has no legitimate entitlement and, hence, no cognizable property interest. Gardner v. Baltimore Mayor & City Council, 969 F.2d 63, 68 (4th Cir.1992).
Here the Board of Appeals had significant discretion in deciding whether to grant Biser’s application for a special exception. In making its decision, the Board had to determine whether granting the exception “would adversely affect the public health, safety, security, morals or general welfare, or would result in dangerous traffic conditions or would jeopardize the lives or property of people living in the neighborhood.” Town of Bel Air Zoning Ordinance, No. 208 art. 16.042. It is difficult to imagine a more flexible standard. Moreover, the ordinance requires the Board to consider eighteen separate factors in making this determination. Id. See also Heath v. Mayor and City Council of Baltimore, 187 Md. 296, 49 A.2d 799, 803 (1946) (noting discretion of local Boards of Appeals in granting special exceptions). In every respect then, the Board of Appeals possessed significant discretion under Gardner in deciding whether to grant special exceptions. Biser had only a unilateral expectation that he would receive the special exception. He possessed no legitimate claim of entitlement, and thus no property right cognizable under the due process clause. The fact that Biser believes that the Board acted arbitrarily on his application does nothing to change the fact that he was not deprived of any entitlement or right.
III.
Biser contends, however, that the Circuit Court of Harford County created a state-law property interest when it held that the Board of Appeals was equitably estopped from denying him the special exception.
We disagree. Under Maryland law, equitable estoppel of a municipal corporation requires (1) an official act taken within the scope of authority; (2) an ambiguous statute or ordinance; and (3) detrimental reliance by a third party. See Permanent Fin. Corp. v. Montgomery County, 308 Md. 239, 518 A.2d 123, 127-29 (1986). Equitable estoppel prevents “a defendant from relying upon a right of property, of contract or of remedy both at law or in equity.” Kline v. Lightman, 243 Md. 460, 221 A.2d 675, 684 (1966). Here the Board was estopped from asserting its legal right to deny the special exception. Estoppel does not, however, give rise to any affirmative duties. Leonard v. SavA-Stop Services, Inc., 289 Md. 204, 424 A.2d 336, 339-40 (1981).
A subsequent order by a court of equity estopping a municipality from relying on its legal right does not represent a legitimate claim of entitlement. In order to justify substantive due process protection, the legal right to a permit must exist before the local agency denies the permit application — the claim of entitlement must come from “an existing legislative or administrative standard.” Dean Tarry Corp v. Friedlander, 826 F.2d 210, 213 (2d Cir.1987) (emphasis added). Equitable estoppel does not recognize a pre-existing legal right; rather, estoppel bars a defendant from asserting a legal right that it would otherwise be entitled to enforce, based on that party's conduct. Fitch v. Double “U” Sales Corp., 212 Md. 324, 129 A.2d 93, 101 (1957) (“Equitable estoppel operates to prevent a party from asserting his rights under a general technical rule of law, when that party has so conducted himself that it would be contrary to equity and good conscience to allow him to do so.”). Arbitrary conduct standing alone does not create a legitimate claim of entitlement, even if it later leads to a state court judgment. See Gardner, 969 F.2d at 71 n. 3. Thus, the fact that Biser obtained a state court order, enforceable by that court’s power of contempt, barring the Board of Appeals from denying his application for a special exception, does not mean that he had a preexisting legal right to that special exception.
Moreover, an equitable doctrine premised on statutory ambiguity does not rise to the level of “either a certainty or a very strong likelihood that the application would have been granted,” which is necessary to state a legitimate claim of entitlement. See Yale Auto Parts, Inc. v. Johnson, 758 F.2d 54, 59 (2d Cir.1985). Far from being a general rule of law whose application can be predicted, estoppel derives from a court of equity’s duty to do justice, and it necessarily “depends upon the facts and circumstances in each case.” Liberty Mut. Ins. Co. v. American Auto. Ins. Co., 220 Md. 497, 154 A.2d 826, 828 (1959). Biser could not have anticipated at the time of his application for a special exception that a court of equity would later preclude the Board from asserting its legal right to deny that application. The equitable doctrine of estoppel thus did not give Biser a basis for believing that there was a “very strong likelihood” that his application would be granted.
IV.
Finally, we note that Biser asserted state claims based on these same facts, for which he claims the same damages. Those claims were dismissed without prejudice, and Biser remains free to pursue them in state court. The Town of Bel Air has cross-appealed, claiming that the district court erred in dismissing Biser’s state law claims without prejudice. We find no abuse of discretion here. In fact, the district court’s order of dismissal properly left a local controversy for local resolution. The Circuit Court for Harford County has already given Biser relief once, and we see no reason why the Maryland courts are now inadequate to hear his current grievances. As we emphasized in Gardner, the proper forum for local land-use disputes is state, not federal, court. 969 F.2d at 69.
For the above reasons, the judgment of the district court is
AFFIRMED.
. The local ordinance provides, subject to the approval of the Board of Appeals, for
conversion of a dwelling or part thereof into the office or studio of one or more physicians, surgeons, dentists, musicians, artists, lawyers, architects, engineers, teachers, insurance agents, real estate agents, photographers, accountants or other professionals; provided that the exterior residential appearance of the building shall be retained, that no floodlighting shall be used and adequate off-street parking areas shall be provided to accommodate all personnel and patrons. The Board of Appeals may impose further conditions pursuant to Section 16.0443 of this Ordinance in order to protect the neighborhood, adjacent properties and community.
Town of Bel Air Zoning Ordinance No. 208, art. 7.06.
. To the extent that Roy v. City of Augusta, Maine, 712 F.2d 1517, 1522 (1st Cir.1983), implies otherwise, we respectfully disagree. A state court judgment is something to be enforced through the state’s judicial process, including its powers of contempt. Every state court judgment does not provide a would-be plaintiff with a cognizable property right under 42 U.S.C. § 1983, and every alleged delay in the enforcement of the mandate does not provide a plaintiff with a claim of deprivation without due process of law. To hold otherwise would assign the federal courts the role of ombudsmen in monitoring the execution of state judgments, a role Congress surely did not envision in passing this statute, and one that would be destructive of federal-state relations.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Plaintiff-appellant Bowen originally filed this action in 1976, pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., seeking declaratory, injunctive and monetary relief allegedly due because defendant General Motors Corporation (GM) discriminated against him in respect to training, promotions and other conditions of employment which resulted in his discharge. Additionally, Bowen’s complaint alleged that GM discriminated against blacks as a class in a similar manner. The district court certified a class which consisted of all “Negro persons who are now employed or were employed by [GM] as sales representatives since March 1, 1969.”
After trial, the district court, 542 F.Supp. 87, granted judgment to GM both as to Bowen’s individual suit and the class action. On appeal, 652 F.2d 56 (6th Cir.), we affirmed the dismissal of the plaintiff’s individual suit concluding that he had failed to demonstrate that the reasons offered for his discharge were pretextual. We also noted that the statistics presented by the plaintiff on behalf of the class were inadequate since they failed to provide a basis from which the court could determine the discriminatory impact of the defendant’s practices. However, before ruling on the class claims, we remanded the case to the district court for a determination of whether the plaintiff Bowen was an adequate representative for the class. We also directed the district court to conduct a hearing, after providing sufficient notice to the class, and report its findings back to this Court. The unpublished order of this Court, dated July 30, 1981, is cited at 663 F.2d 1070 and appears as an appendix to this opinion. The district court has now submitted such a report for our consideration. This report is published at 542 F.Supp. 94 (N.D.Ohio 1981). For the reasons stated below, we conclude that the plaintiff was an adequate representative, and therefore our original dismissal of this action should be binding upon the absent class members as well.
Generally, the absent and unnamed members of a class are bound by a judgment rendered in a properly certified class action. Grigsby v. North Mississippi Medical Center, 586 F.2d 457, 461-62 (5th Cir. 1978). However, when the class representative fails to provide adequate and fair representation, due process requires that the judgment have no res judicata effect as to them. Hansberry v. Lee, 311 U.S. 32, 44-46, 61 S.Ct. 115, 119, 85 L.Ed. 22 (1961); Nathan v. Rowan, 651 F.2d 1223, 1227 (6th Cir. 1981). In making such a determination, a court must take into consideration (1) whether the named representative has a common interest with the absent members of the class, and (2) whether the class representative vigorously pursued the interests of the class through the use of competent and qualified counsel. Senter v. General Motors Corporation, 532 F.2d 511, 524-25 (6th Cir.), cert. denied, 429 U.S. 870, 97 S.Ct. 182, 50 L.Ed.2d 150 (1976).
In his report, the district court judge, after reviewing the record and the testimony at the hearing, concluded that the plaintiff Bowen satisfied these criteria and thus was an adequate representative of the class. Our review indicates that this conclusion is fully supported by the record. The record clearly evidences that Bowen was a member of the class, had a similar stake in the outcome of the litigation and had a sufficient familiarity with the conditions challenged on behalf of the class. Id. Moreover, Bowen vigorously pursued the interests of the class by undertaking, at substantial monetary expense to himself, a reasonable investigation of the class claims. Further, through his counsel, he presented the class claims at trial. Finally, we take special note of the fact that no member of the certified class' raised, in oral or written fashion, any objection concerning Bowen’s status as the class representative. Bowen was an adequate representative.
Therefore, after a consideration of the record, briefs, petitions for rehearing and arguments of counsel, we find that the class has failed to provide any statistics from which the Court can conclude that the defendant’s practices had a discriminatory impact. Finding no other error, we affirm the dismissal of the class claims with prejudice.
Accordingly, the judgment of the district court is AFFIRMED.
APPENDIX
NO. 79-3388
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
Robert Bowen,
Plaintiff-Appellant,
v.
General Motors Corporation,
Defendant-Appellee.
Amended Order
(Filed July 30, 1981)
Before MARTIN and JONES, Circuit Judges, and PHILLIPS, Senior Circuit Judge.
Robert Bowen appeals from a judgment in favor of the defendant, General Motors Corporation.
Bowen filed this action alleging that he had been discharged in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. He also alleged that General Motors discriminated against him, and blacks as a class, in training, promotions, transfers, moving, and evaluations, and that General Motors retaliated against black employees who filed charges of discrimination with state and federal agencies.
In this appeal, Bowen asserts that the district court erred: (1) in holding that Bowen failed to show his discharge for record falsification was pretextual, and (2) in rejecting his statistical evidence of racial discrimination.
In 1952, Bowen was hired as an hourly worker in General Motors’ AC Sparkplug division. In 1969, he was promoted into the sales force as a sales representative. He was given two weeks of training in Flint, Michigan. Then he was assigned to Cleveland.
Bowen’s job as a sales representative was to promote AC products to service stations and garage owners. If a sales representative makes a sale he takes an order and fills out an order form. He sends copies of the form to the regional office. In addition, the sales representative keeps a record of all stations he visits and at the end of the week he sends this record to the regional office.
In 1969, Bowen’s evaluation ranged from average to good. In 1969 and 1970, he was sent on trips to Puerto Rico, Spain and Ireland. He testified that these were prizes for his performance in sales contests.
In September 1970, Bowen was transferred from Cleveland to Canton. His manager, Billy Howlett, gave Bowen a low performance evaluation. Bowen felt under pressure to improve. From July through September 1972, he took a medical leave of absence. When he returned, his performance failed to improve. In January 1973, Bowen was told he had to improve his ratio of sales to visits, and he was placed on probation.
The day after Bowen was placed on probation, he began to falsify his call reports (the reports on how many dealers he visited). He listed customers he had not visited and sales he had not made.
From January 13, 1973, until March 13, 1973,- Bowen continued to falsify his reports. On March 13, 1973, Bowen was interviewed by Howlett and the General Manager of AC’s Salaried Personnel Department. They confronted Bowen with the falsified reports. Bowen admitted he falsified the reports.
On March 14,1973, Bowen was suspended without pay. On March 22, 1973, he was discharged.
Bowen filed charges with the EEOC and then filed this action. The district court held that Bowen failed to show that he was discriminatorily discharged and that he did not present reliable statistical evidence to show that General Motors discriminated against blacks as a class.
Bowen contends that the district court erred in holding that he failed to show that his discharge for falsifying records was pretextual. We disagree.
Bowen did introduce evidence that the falsification of reports was a widespread practice, and that it was condoned by at least some managers. But the district court concluded “AC management was, however, unaware of the practice and did not condone it.” We cannot say that this finding was clearly erroneous. The district court did not err in finding that Bowen’s discharge was not pretextual.
Bowen also contends that the district court erred in rejecting statistical proof that blacks were discriminated against in promotions and that blacks either quit or were discharged in disparate numbers. The district court concluded that the statistical evidence on promotions was inadequate because it did not measure the number of Blacks in the hiring pools for promotion positions. It also rejected statistical evidence on the disparate numbers of blacks who were discharged because the statistics did not distinguish between blacks who quit and those who were discharged. The district court ultimately concluded that: “No showing of disproportionate impact was made. There were no reliable statistics presented from which the Court could determine the impact of defendant’s practices on blacks and whites.”
The statistical proof presented failed to present an adequate picture of General Motors’ practices or their effect. The court properly concluded that they were not reliable.
From this record we are unable to determine the adequacy of class representation. Therefore, pursuant to the remand procedure employed by the Fifth Circuit in Grigsby v. North Mississippi Medical Center, 586 F.2d 457, 461-62 (5th Cir. 1978), the case is remanded to the district court where a hearing shall be held with full and adequate written notice, as to time, place and purpose, to each class member. The district court shall report the results of this hearing to this Court prior to January 1, 1982.
Final action on the petition for rehearing is reserved until receipt of the report of the district court. The dismissal of Bowen’s individual action is affirmed.
The judgment of the district court is affirmed as modified.
ENTERED BY ORDER OF THE COURT
/s/ JOHN P. HEHMAN Clerk
. This is an amended order issued in response to General Motors Corporation’s petition for rehearing,
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BUTZNER, Circuit Judge:
Florida Steel Corp. petitions for review of an order of the National Labor Relations Board and the Board cross petitions for enforcement. The proceeding involves three unrelated findings of unfair labor practices. The complaint alleged that the company violated sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act, as amended, by laying off employees in January, 1975, without consulting with the union representing those employees and by refusing to furnish the union with information concerning the layoff. The complaint also charged that the company had violated these provisions of the Act by unilaterally instituting a schedule change during September, 1976. Finally, the complaint alleged that the company violated sections 8(a)(1) and 8(a)(3) when it fired a union sympathizer, Bobby Keziah.
After a hearing, an administrative law judge found that none of the charges was sustained by the evidence, and dismissed the complaint. The Board’s general counsel and the union then filed exceptions. The Board adopted the administrative law judge’s conclusion that the general counsel had failed to prove that, the company refused to bargain with the union about its decision to lay off the employees. However, the Board held that the company had violated sections 8(a)(1) and 8(a)(5) by “failing and refusing to furnish the Union with information . . . regarding the effects of the layoff ... [and] by failing and refusing to bargain about the effects of said layoff.” The Board reversed the decision of the administrative law judge with respect to the schedule change and the discharge of Keziah. In addition to customary cease and desist provisions and a requirement that a notice of violation be posted in all of the company’s plants, the Board’s order directed the company to reinstate Keziah with backpay, to furnish the information requested by the union to the extent that it relates to the effects of the layoffs, and to bargain about those effects. Florida Steel Corp., 235 N.L.R.B. No. 129 (April 14, 1978). We enforce the Board’s order except insofar as it relates to the firing of Keziah.
I
The company manufactures steel at several locations, including Croft, North Carolina. The production and maintenance employees at the Croft plant are represented by the United Steelworkers of America. During the period of the alleged unfair labor practices, there was no collective bargaining agreement in force.
The company laid off some employees for economic reasons, by seniority, in October, 1974. At a regular negotiating session on November 7, the company’s spokesman told the union negotiator that economic conditions might force more layoffs in the future. At sessions on December 4 and 5, the company advised the union that business conditions were deteriorating so rapidly that a layoff in January appeared to be inevitable. On December 16, the company decided to lay off a large group of employees for economic reasons, beginning on January 2, 1975. On December 17, the company sent the union a letter setting forth the nature of the planned layoff, the date it would be effective, and the approximate number of employees involved. The letter also stated that the layoff would be done by seniority. On December 20, the company notified the union that a list of the employees to be laid off had been prepared and the ' company offered to discuss it. Because of prior commitments, the union negotiator was unable to meet with the company until after the date that had been set for the layoff to begin. The union requested a postponement of the layoff so that the union could negotiate about the layoff and its effects, and asked the company to supply answers to certain written questions as soon as possible. The questions dealt with the reasons for the layoff, the sources the company had relied upon in reaching the decision, the extent to which orders were being shifted from the Croft plant to other com-pañíes or to other plants belonging to the company, and the possibility of employing laid-off workers at the other plants. •
The company declined to postpone the layoff. In a letter to the union on January 3, the company added that it did not “feel that the information requested is pertinent to the negotiations.” The company said: “The effects of the decision [to lay off employees] are subject to bargaining, and that is what the company offered to do. When you declined this offer, then the layoff was made by straight seniority.” Fifty-eight employees were laid off during January, and the company never supplied the information which the union had requested.
The administrative law judge held that the company had no obligation to supply the information. He found that the only role which the union sought to play in connection with the layoff was to formulate options such as shared work plans and to attempt to convince the company to elect such a plan instead of a layoff. He also found that the data sought by the union “related principally to the necessity for a layoff in light of activities at [the company’s] other steel mills and the process by which a decision to have a layoff was reached.” He concluded that “since the facts requested were not necessary to the role which the Union sought to play at that • time, [the company] did not violate the Act when it refused to furnish them.”
The Board rejected this part of the administrative law judge’s decision. The Board reasoned as follows:
It is well established . . . that Section 8(a)(5) of the Act imposes on an employer the duty to furnish a union, upon request, information relevant and necessary to enable it to intelligently carry out its statutory obligations as the employees’ exclusive bargaining representative. And, under the standard of relevancy as applied by the Board and the courts, it is sufficient that the Union’s request for information be supported by a showing of “probable” or “potential” relevance. In the instant case, the information requested by the Union in its letter of December 20, to the extent that it concerned matters such as whether [the company] had policies for offering jobs at its other locations to the employees involved in the layoff and whether it planned to hire production and maintenance employees at its other locations, was clearly relevant and necessary to the Union’s proper performance of its statutory obligations in representing the employees with respect to the effects of the layoff. Furthermore, in light of the Union’s request for information, relating at least in part to the effects of the layoff and its indications to Respondent that it desired to negotiate about the “overall decision” and “any aspects of the situation,” it is clear that the role which the Union sought to play at the time was not limited to representing the employees solely with respect to the decision to layoff itself. We, therefore, conclude that, by refusing to furnish information concerning the effects of the layoff, Respondent violated Section 8(a)(5) and (1).
235 N.L.R.B. No. 129, slip op. at 5.
In urging us to set aside this conclusion of the Board, the company concedes that it had the obligation to supply relevant information to the union but argues that “relevancy in this case depends on an accurate picture of . ‘the role which the Union sought to play at the time’ it made the request for information.” The company stresses that the Board must defer to the findings of the administrative law judge and urges us to adopt the examiner’s view of relevancy. The company also emphasizes that the union did not request additional information when it was notified in early November of the possibility of a layoff or when it was notified in early December that a layoff was virtually certain to occur. The company concludes from this that
[i]n reality the Union, for all practical purposes, sought to play no role at all in connection with the January 1975 layoff, except perhaps lay the groundwork for the charges filed in this case. . For these reasons the information was neither relevant nor necessary and it could not have been a violation for the Company not to provide it.
We consider first the extent to which the Board was bound to follow the administrative law judge’s findings and conclusions regarding the relevancy of information sought by the union. The responsibility for deciding whether an unfair labor practice has been committed is placed on the Board itself, not on the hearing officer. Universal Camera Corp. v. NLRB, 340 U.S. 474, 492, 71 S.Ct. 456, 95 L.Ed. 456 (1951); see 29 U.S.C. § 160(c). The findings and conclusions of an administrative law judge are parts of the record in an unfair labor practices case, and the Board is not free to disregard them. However, they are entitled only to the weight that they reasonably command. The proper weight “depends largely on the importance of credibility in the particular case.” 340 U.S. at 493-96, 71 S.Ct. at 469.
Applying this standard, we think the findings and conclusions of the administrative law judge regarding relevancy were entitled only to whatever weight they may attain because of the persuasive force of their logic. The union’s right to obtain information depends on the scope of its statutory duties as bargaining agent. This reduces to a question of policy. Its resolution is primarily the responsibility of the Board, not the administrative law judge. Any dispute in this case as to “the role which the Union sought to play at the time it made the request for information” had nothing to do with the credibility of witnesses. It called only for an evaluation of letters written by the union to the company. Since credibility was not germane, the weight to be accorded the administrative law judge’s conclusions was minimal.
Section 8(a)(5) of the Act imposes on an employer a broad duty to furnish relevant information to its employees’ bargaining agent. This duty is rooted in recognition that union access to such information can often prevent conflicts which hamper collective bargaining. Cf. NLRB v. Acme Industrial Co., 385 U.S. 432, 438-39, 87 S.Ct. 565, 17 L.Ed.2d 495 (1967). The standard of relevancy is considerably less stringent than that applicable to adjudicative proceedings. In the words of the Supreme Court, it is a “discovery-type standard” rather than a trial standard. Information must ordinarily be furnished if there is a “probability” that it is relevant. See 385 U.S. at 437, 87 S.Ct. 565.
The Board’s determination of relevancy is entitled to considerable deference in the courts. This is so regardless of whether the ruling is viewed as a finding of fact which is conclusive if supported by substantial evidence or as a mixed question of law and fact in an area of substantial Board expertise. San Diego Newspaper Guild v. NLRB, 548 F.2d 863, 867 (9th Cir. 1977).
We need not explore the outer limits of relevancy in this case. It is clear that data concerning possible employment of laid-off workers at other plants meets the Acme criteria for relevancy. Any possibility of shifting workers from the Croft plant to another plant was relevant to the effects of the layoff and well within the proper scope of mandatory bargaining.
In an effort to show that the information requested by the union was irrelevant to any role that the union was actually attempting to play, the company emphasizes an assertion that the union had “minimal concern” about the impending layoff prior to receiving the company’s letter of December 17. This argument, however, places the cart before the horse. The “discovery” standard of relevancy applies precisely because the union cannot decide what role it will seek to play until it obtains concrete, adequate information.
The company also suggests that the failure of the union negotiator to meet with the company immediately upon his receipt of the company’s letter amounted to a waiver of any rights the union may have had to obtain the information. As Professor Gorman has pointed out, however, “In order that the union be deemed to waive its statutory right to information, its relinquishment of the right must be knowing, clear and unequivocal.” Basic Text on Labor Law: Unionization and Collective Bargaining 418 (1976). The record contains no substantial evidence of waiver. The union steadfastly insisted on its right to receive the information. The union negotiator’s unavailability in December was due to prior engagements which he had explained to the company. On this record, the Board’s conclusion that the company’s failure to provide any of the information sought by the union improperly interfered with the union’s performance of its statutory responsibilities is supported by substantial evidence.
The petition for review is denied as to the portions of the Board’s order which deal with the January, 1975, layoff.
II
The Board found that the company violated sections 8(a)(1) and 8(a)(5) “by unilaterally instituting a schedule change for the duration of the week of September 12, 1976, without prior notice to or consultation with the Union.” The company frankly concedes that it altered the work schedule of rolling mill employees at the Croft plant for the week in question without notice to the union. The company argues, however, that its action was an unintentional “minor slip-up” that does not justify a remedial order.
Regardless of whether the company acted in bad faith, its unilateral change in working conditions deprived the union of an effective opportunity to bargain. Accordingly, it violated the Act. See NLRB v. Katz, 369 U.S. 736, 742-43, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). The decision whether •or not to prosecute a violation of the Act is committed to the discretion of the Board’s general counsel. 29 U.S.C. § 153(d). The petition for review is therefore denied as to this portion of the Board’s order.
III
The Board concluded that the company violated sections 8(a)(3) and 8(a)(1) when it discharged Bobby Keziah. The Board found that the company had seized upon the fact that Keziah broke into a locked company office as a pretext to fire him because of his union activities and because he had filed grievances. We deny enforcement of the relevant portions of the Board’s order.
Keziah, who worked for the company for over six years, was known by the company to be an active union adherent. He was employed as a furnace “heater” on the night shift at the steel rolling plant. Due to an increase in production, Keziah was required to change his work hours beginning in April, 1976. The company directed him to report for work two hours before his regular shift in order to start the furnace. Keziah and some maintenance personnel were the only people in the plant between the end of the day shift at 4:00 p. m. and the beginning of the night shift at midnight. Keziah was inconvenienced by the change in hours, and he asked James Becker, the superintendent of the mill, for a transfer to the day shift. Becker refused to transfer him, and Keziah filed two grievances on April 27 naming Becker.
In August, 1976, the company became concerned about sabotage in the plant which appeared to be occurring during the period between the day shift and the night shift. Becker asked James Summerlin, a supervisor at the plant, to forego part of his summer vacation in order to observe the mill during the hiatus between the shifts.
On the first night of his vigil, Summerlin hid on the roof of the shift supervisor’s office. From that point, he had a good view of the floor of the mill, although he could not see the door of the supervisor’s office. Summerlin saw nothing suspicious until Keziah entered. Keziah approached the office with his plastic identification card in his hand and disappeared from Sum-merlin’s view. Shortly thereafter, Sum-merlin heard the door of the office rattle and Keziah reappeared. The next night, from the same vantage point, Summerlin saw Keziah approach the office and disappear, after which Summerlin heard the door rattle. Five minutes later, Keziah reappeared and the door slammed.
Summerlin reported the events to Becker and stated that he suspected Keziah was breaking into the supervisor’s office by forcing the bolt with his employee identification card. Becker in turn reported to his superiors. They decided that Summerlin and Becker would wait in the shift supervisor’s office on the next night on which Keziah was scheduled to work. On that night, Summerlin and Becker went to the office in advance, locked the door, and waited with the lights out. Keziah entered the office shortly thereafter. When Becker asked Keziah what he was doing in a locked office, Keziah denied that it had been locked and attempted surreptitiously to turn the latch to its unlocked position. The next morning, the division manager fired Keziah.
In the proceeding before the Board, the general counsel contended that the real reason for the discharge was Keziah’s union activities. The general counsel sought to prove that Becker and Summerlin falsely claimed that the office door was locked in order to justify firing Keziah.
The administrative law judge found that Becker and Summerlin had told the truth when they testified that the door was locked and that Keziah had lied with respect to this crucial issue. He concluded that “the General Counsel has failed to prove by a preponderance of the evidence on the record considered as a whole that [the company’s] motive for discharging Bobby Ray Keziah on August 31, 1976, was one proscribed by Section 8(a)(3) and (1) of the Act.”
The Board accepted the administrative law judge’s finding that Keziah broke into the office. Nevertheless, the Board went on to find that the reason for the discharge was pretextual and therefore that the company violated sections 8(a)(3) and 8(a)(1). The Board relied on the company’s knowledge of Keziah’s union activities; on Becker’s knowledge that Keziah had filed grievances against him in April; on the timing of the surveillance which coincided with Keziah’s presence in the plant; and on the company’s imposition of the drastic sanction without previously warning Keziah. The Board reasoned that the fact that an employee has performed misdeeds does not excuse a discharge that is motivated by anti-union reasons and concluded:
While we do not condone the forced entry into the supervisor’s office, ... it is clear that [the company] merely seized upon the incident as an opportunity to rid itself of an open and active union adherent who, additionally, had filed grievances against one of its supervisors.
235 N.L.R.B. No. 129, slip op. at 13. On appeal, the Board argues that “the Company’s long history of often unlawful resistance to organizing efforts by the very union which Keziah had so whole-heartedly supported” also supports the finding that the discharge was motivated by anti-union animus.
The scope of section 8(a)(3) of the Act is well settled. As we said in NLRB v. Consolidated Diesel Electric Co., 469 F.2d 1016, 1024 (4th Cir. 1972):
A discharge, whether the cause be good or bad and whether it be deemed harsh or lenient discipline, offends the Act only if discriminatorily motivated on account of union activity or, to state it another way, there must be an unlawful intent in the discharge. And the burden of establishing such discriminatory or unlawful intent, it is settled, falls on the General Counsel. When a cause other than union activity exists for the discharge, illegal motive cannot be based merely on the discharged employee’s union organizational activity; and by offering only such proof, the General Counsel does not sustain his burden.
In NLRB v. Patrick Plaza Dodge, Inc., 522 F.2d 804, 807 (4th Cir. 1975), we explained the burden of proof as follows:
If in fact there was no cause for discharge, there may well be an inference that the assigned reason was pretextual. But when cause exists, the Board must show “an affirmative and persuasive reason why the employer rejected the good cause and chose a bad one.” “[E]vidence * * * which gives equal support to inconsistent inferences” is not enough. Were the rule otherwise, any employee who had been guilty of conduct warranting discharge could protect himself by openly engaging in union activities, and run for luck .
Applying these standards, we conclude that the Board’s decision cannot stand.
To begin with, Keziah’s conduct furnished good cause for his discharge. The Board found that Keziah and other employees frequently entered the same office when the door was unlocked “during regular shift hours” and that information contained in written messages which were left in the office for Keziah’s shift supervisor was “helpful, if not necessary” to Keziah in the performance of his duties. There is no evidence, however, that the company tolerated forced entry by employees into the office when it was locked between shifts. In addition, Keziah’s false denial that the door was locked establishes that he knew he had no right to be there. The company unquestionably has the right to discipline employees who are guilty of wrongful acts in relation to company property. Maryland Drydock Co. v. NLRB, 183 F.2d 538, 540 (4th Cir. 1950).
The harshness of the sanction, in itself, affords no grounds for relief. NLRB v. Consolidated Diesel Electric Co., 469 F.2d 1016, 1024 (4th Cir. 1972). Accordingly, the burden of proof fell on the general counsel to show that the firing was actually motivated by anti-union animus. NLRB v. Patrick Plaza Dodge, Inc., 522 F.2d 804, 807 (4th Cir. 1975). There was no evidence that the company ever applied penalties less severe than discharge in any case involving similar or more serious misconduct on the part of another employee. As we have noted, the Board relied entirely on circumstantial evidence of unlawful intent. When viewed in the light of the company’s legitimate and nondiscriminatory reason for discharging Keziah, we think the evidence of wrongful intent is outweighed to the point that it is not substantial. See Maphis Chapman Corp. v. NLRB, 368 F.2d 298, 305 (4th Cir. 1966). The timing of the surveillance plan is not substantial evidence. The administrative law judge and the Board both accepted the testimony that the surveillance was instituted in order to detect saboteurs, rather than to entrap Keziah. The surveillance gave the company reason to suspect that Keziah was breaking into the office. The company is not to be faulted for seeking proof. The fact that the company fired Keziah immediately after it obtained conclusive proof of his misconduct favors the company, not the Board. Compare Star-brite Furniture Corp., 226 N.L.R.B. 507, 509 (1976) (three-week delay between wrongful act and discharge supports a finding of violation).
The crucial flaw in the Board’s conclusion is a total absence of a causal connection between the firing and anti-union animus. Without such a connection, evidence that the company knew of Keziah’s union sympathies, that Keziah had filed grievances against Becker, and that the company had a general anti-union bias is of no avail. NLRB v. Florida Steel Corp., 586 F.2d 436, 447-48 (5th Cir. 1978).
We conclude that the general counsel failed to carry his burden. We hold that the company had good cause to fire Keziah and that the Board’s findings and conclusions on this issue are not supported by substantial evidence on the record as a whole. The relevant parts of the Board’s order will not be enforced.
Accordingly, we enforce the order of the Board except insofar as it relates to the alleged violation of section 8(a)(3) in the discharge of Bobby Keziah. To that extent, we deny enforcement.
29 U.S.C. §§ 158(a)(1), (5).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BATCHELDER, Circuit Judge.
Defendant-appellant, James Everett Perry, appeals his conviction and sentence for armed bank robbery under 18 U.S.C. § 2113(a) and (d). We reverse the conviction as to § 2113(d), affirm the conviction as to § 2113(a), and remand for resentenc-ing under § 2113(a).
I.
On May 28, 1991, the Tug Valley Branch of the Pikeville National Bank in South Williamson, Kentucky, was robbed. A man with dark hair and a mustache and wearing a gray suit entered the bank. He approached teller Karen Cochran, who was on the telephone at the time, opened up his jacket, and told her to hang up the phone. Cochran complied. At trial, Cochran testified that she believed the robber had a gun because, when he opened his jacket a second time, “he stuck his hand [in] like he was going to get something out.” Cochran never saw a weapon but testified that she was afraid to look down at the robber’s hands for fear she would see a weapon. The robber warned Cochran not to alert anyone.
The robber told Cochran to hand over her $100, $50, and $20 bills. She complied and asked the robber if that was all. The robber responded no and instructed her to give him the $10 and $5 bills as well. She did so. The robber walked out of the bank with $3,057. The robbery was filmed by the bank’s surveillance camera.
Earlier the same day, an individual fitting the description of the robber had been seen in the lobby of a nearby bank, the First National Bank of Pikeville. The individual appeared suspicious. When he left that bank, a teller recorded a description of his vehicle and the license plate number. Shortly after the robbery of the Pikeville National Bank, this vehicle was discovered in a nearby parking lot. The owner of the vehicle was identified as Judy Nichols. She informed police that she had loaned the truck to Ezekiel Canterbury.
When Canterbury returned to the truck sometime after the robbery, police questioned him. Initially, Canterbury fabricated a story and denied knowing about the robbery, but then he admitted he had lied to them. Canterbury told the police that Perry had stayed at his house, that he had given Perry a ride to the bus station, and that Perry admitted he had robbed a bank. According to Canterbury, Perry gave him $500 from the proceeds of the robbery. Canterbury also informed police that Perry admitted he had carried a wooden gun into the bank and intended to display the gun, but that it had gotten stuck in his pants when he tried to remove it during the robbery. Canterbury led police to the wooden gun.
The police caught up with Perry at the home of a relative. When the police arrived, Perry, in an apparent effort to hide the bank robbery proceeds, tossed the money into a box and shoved the box against a wall. Upon being questioned, Perry initially denied knowledge of the bank robbery and stated that he had not been in the South Williamson area, where the subject bank was located, for two years. The police recovered $370 (allegedly bank robbery proceeds) from Perry’s girlfriend, to whom Perry, using an alias, had sent the money.
A day or so after the robbery, the police showed Karen Cochran a number of photographs. She identified two photographs as those of the man who had robbed her. After she identified the individual, she was informed that she had identified the suspect, Perry.
On June 6, 1991, Perry was charged, in a one-count indictment, with violating 18 U.S.C. § 2113(a) and (d). On September 23, 1991, Perry made a motion to suppress the photo identification. After a hearing, the district court denied the motion. Perry was tried before a jury. The district court instructed the jury separately on § 2113(a), the bank robbery statute, and § 2113(d), an enhancement provision that provides enhanced penalties for bank robbery involving assault or use of a dangerous weapon or device. However, the court declined to instruct the jury on the lesser included offense of bank larceny, 18 U.S.C. § 2113(b). Perry was convicted under § 2113(a) and (d). On December 10, 1991, the district court sentenced Perry to 97 months incarceration. This sentence, which was at the bottom of the applicable sentencing range under the United States Sentencing Guidelines, was based on a total offense level that included a two-level enhancement for obstruction of justice and a three-level enhancement for possession of a firearm during a robbery. Perry timely appealed.
II.
A.
Perry contends that the evidence was insufficient to support his conviction for the use of a dangerous weapon or device to rob a bank in violation of 18 U.S.C. § 2113(a) and (d). We agree that the evidence will not support a conviction under § 2113(d), but find that the evidence was more than sufficient to support defendant’s conviction under § 2113(a).
We review a sufficiency of the evidence challenge to determine “whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” United States v. Brown, 959 F.2d 63, 67 (6th Cir.1992) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979)) (emphasis by Jackson court). See also United States v. Harris, 792 F.2d 866, 868 (9th Cir.1986) (upholding against sufficiency of the evidence challenge a conviction under § 2113(d)).
Section 2113 reads, in part, as follows:
§ 2113. Bank robbery and incidental crimes
(a) Whoever, by force and violence, or by intimidation, takes, or attempts to take, from the person or presence of another, or obtains or attempts to obtain by extortion any property or money or any other thing of value belonging to, or in the care, custody, control, management, or possession of, any bank, credit union, or any savings and loan association; ...
******
Shall be fined not more than $5,000 or imprisoned not more than twenty years, or both.
(b) Whoever takes and carries away, with intent to steal or purloin, any property or money or any other thing of value exceeding $100 belonging to, or in the care, custody, control, management, or possession of any bank, credit union, or any savings and loan association, shall be fined not more than $5,000 or imprisoned not more than ten years, or both;
(d) Whoever, in committing, or in attempting to commit, any offense defined in subsections (a) and (b) of this section, assaults any person, or puts in jeopardy the life of any person by the use of a dangerous weapon or device, shall be fined not more than $10,000 or imprisoned not more than twenty-five years, or both.
In McLaughlin v. United States, 476 U.S. 16, 106 S.Ct. 1677, 90 L.Ed.2d 15 (1986), the Supreme Court held that an unloaded gun is a “dangerous weapon” within the meaning of § 2113(d). The Court articulated three reasons for finding that an unloaded gun is a dangerous weapon:
First, a gun is an article that is typically and characteristically dangerous; the use for which it is manufactured and sold is a dangerous one, and the law reasonably may presume that such an article is always dangerous even though it may not be armed at a particular time or place. In addition, the display of a gun instills fear in the average citizen; as a consequence, it creates an immediate danger that a violent response will ensue. Finally, a gun can cause harm when used as a bludgeon.
Id. at 17-18, 106 S.Ct. at 1678 (footnote omitted).
Following McLaughlin, at least three courts of appeals, including this Court, have concluded that a toy gun is also a dangerous weapon. See United States v. Medved, 905 F.2d 935 (6th Cir.1990), cert. denied, 498 U.S. 1101, 111 S.Ct. 997, 112 L.Ed.2d 1080 (1991); United States v. Cannon, 903 F.2d 849 (1st Cir.), cert. denied, 498 U.S. 1014, 111 S.Ct. 584, 112 L.Ed.2d 589 (1990); United States v. Martinez-Jimenez, 864 F.2d 664 (9th Cir.), cert. denied, 489 U.S. 1099, 109 S.Ct. 1576, 103 L.Ed.2d 942 (1989).
In Medved, we agreed with the reasons articulated by the Ninth Circuit for concluding that a toy gun is a “dangerous weapon or device”:
“A robber who carries a toy gun during the commission of a bank robbery creates some of the same risks as those created by one who carries an unloaded or inoperable genuine gun. First, the robber subjects victims to greater apprehension. Second, the robber requires law enforcement agencies to formulate a more deliberate, and less efficient, response in light of the need to counter the apparent direct and immediate threat to human life. Third, the robber creates a likelihood that the reasonable response of police and guards will include the use of deadly force. The increased chance of an armed response creates a greater risk to the physical security of victims, bystanders, and even the perpetrators. Therefore, the greater harm that a robber creates by deciding to carry a toy gun is similar to the harm that he creates by deciding to carry an unloaded gun.”
Id. at 940 (quoting Martinez-Jimenez, 864 F.2d at 666-67). Under the rationale of Medved, we conclude that the carved wooden gun that Perry possessed when he committed the bank robbery was a dangerous weapon or device under § 2113(d).
Section 2113(d) proscribes, not possession of a dangerous weapon or device, but the “assaultpngj” or “put[ting] in jeopardy the life [of] any person by the use of a dangerous weapon or device_” The government argues that had Karen Cochran not been afraid to look down at Perry’s hands while the robbery was occurring, for fear that he held a weapon, she might have seen a gun. According to the government, the potential for a higher level of force, because Perry possessed a concealed wooden gun, implicates § 2113(d), despite the fact that the wooden gun remained concealed throughout the robbery. However, there is no evidence in the record that Perry assaulted anyone with the wooden gun, that anyone, including Cochran, saw the gun, or that Perry even mentioned a gun during the robbery.
The display of a toy or wooden gun during a bank robbery constitutes “use.” See, e.g., Martinez-Jimenez, 864 F.2d at 667 (toy gun used where defendant held it by his side during robbery). Where a teller catches a glimpse of an object that the robber represents to be a gun, but that turns out to be an army knife, this also has been held sufficient to constitute use under § 2113(d). See United States v. Benson, 918 F.2d 1, 3 (1st Cir.1990) (“The verbal announcement and peek preview were sufficient to create an 'immediate danger that a violent response [would] ensue’....” (quoting McLaughlin, 476 U.S. at 18, 106 S.Ct. at 1678)); see also United States v. Crouthers, 669 F.2d 635, 638-39 (10th Cir. 1982) (where defendant and his cohort were, unbeknownst to victim, acting in concert to rob a bank, and defendant represented to victim that defendant’s cohort had a loaded gun in defendant’s back, even though victim did not see gun and gun was in fact unloaded, because a reasonable person in victim’s position would have believed his life was in jeopardy, evidence was sufficient to establish that victim’s life was put in jeopardy by the “use” of a dangerous weapon).
The government, however, has not cited, nor have we found, any cases in which a court has based liability under § 2113(d) solely on concealed possession of a nongen-uine gun. Some courts, in dicta, have intimated that possession of an unseen gun, or an object that is not identifiable as a gun, is insufficient to trigger the enhancement provisions of § 2113(d). See United States v. Wardy, 111 F.2d 101, 105 (2d Cir.1985) (“If the police had apprehended a bank .robber during the course of a robbery and subsequently discovered that he had carried a gun concealed in his belt or in a shoulder holster, a conviction under § 2113(d) would probably be unwarranted. But that is not the situation before us.”), cert. denied, 475 U.S. 1053, 106 S.Ct. 1280, 89 L.Ed.2d 587 (1986); United States v. Cobb, 558 F.2d 486, 489 (8th Cir.1977) (“We know of no case however, which has permitted the jury to convict under § 2113(d) on the mere inference that a partially concealed object was a loaded gun.... The testimony regarding the holes within the wrapped newspaper was sufficient to establish the element of intimidation and fear necessary for both § 2113(a) and § 2113(d); it was, however, insufficient to establish that a gun was in fact used in the robbery.”); cf Benson, 918 F.2d at 3 n. 5 (noting that the legislative history behind § 2113(d) indicates that the statute would cover, for example, the “use of a water bottle which [the] robber claimed to be nitroglycerin”).
We find the reasoning in Wardy and Cobb persuasive on this issue, and we conclude that notwithstanding the teller’s fear that the defendant might have been armed, Perry’s possession of a nongenuine gun which was concealed throughout the robbery did not constitute “use of a dangerous weapon or device” under § 2113(d). This conclusion is fully consistent with our reasoning in Medved. First, Perry did not brandish, display, or even allude to a gun. Under our analysis, it is irrelevant whether the teller experienced greater apprehension because she believed that the defendant might be armed. Cf. United States v. Robinson, 527 F.2d 1170 (6th Cir.1975). Second, absent evidence that any police officer or anyone in the bank was made aware that Perry possessed a gun, a more deliberate response by the police to the robbery on the basis that Perry was armed was not required. Finally, because no bank employees or customers knew of the concealed gun, there was no greater risk to the victim, bystanders, police, or robber.
We emphasize that our conclusion that “use of a dangerous weapon” does not include concealed possession of a toy gun Comports with the language of the statute. Section 2113(d) enhances the sentence for anyone who, in committing or attempting to commit bank robbery, “puts in jeopardy the life of any person by the use of a dangerous weapon.... ” Thus, “use” plainly connotes something more than “possession.” Congress could have provided for enhanced statutory penalties whenever a gun was “possessed.” Congress did not. Congress could have provided for enhanced statutory penalties whenever the perpetrator of a § 2113(a) or (b) offense caused his victim to fear that the victim’s life might be endangered because of a dangerous weapon. Congress did not. Neither the plain language of the statute nor case law construing this statute supports an extension of “use of a dangerous weapon” to.include the concealed possession of a nongenuine gun.
However, while we have held that on these facts the defendant’s conviction under § 2113(d) must be reversed, we also hold that the evidencé was clearly sufficient to permit any reasonable jury to find that the defendant violated § 2113(a). The evidence is clear that the defendant took from the bank teller money which was in the custody and control of the bank. And the evidence is clear that the defendant accomplished this taking by intimidation, which for purposes of § 2113(a) has been defined as “conduct and words calculated to create the impression that any resistance or defiance by the [teller] would be met by force.” United States v. Jones, 932 F.2d 624, 625 (7th Cir.1991). Indeed, this Court has held that
a jury would be justified in finding intimidation where a man clothed in a “leather coat” (so that a weapon could presumably be concealed) after waiting somewhat nervously in line, attempts, at best, a sham commercial transaction, and commands with the imperative “give” a teller to turn over “all [her] money.”
United States v. Robinson, 527 F.2d 1170, 1172 (6th Cir.1975) (citation omitted) (alteration in original). Accordingly, the defendant’s conviction on the charge of violating 18 U.S.C. § 2113(a) is affirmed.
By the same token, it is also clear from the record that the evidence does not support the instructing of the jury on § 2113(b), commonly known as bank larceny. Section 2113(b) is directed toward one who “takes and carries away, with intent to steal or purloin ... money ... in the care, custody, control, management or possession of any bank_” Defendant maintains that bank larceny is a lesser included offense of bank robbery, and that the district court erred in refusing to give the bank larceny instruction to the jury. We need not reach the issue of whether bank larceny is a lesser included offense of bank robbery, since there is no evidence in the record to support a finding that the lesser included offense of bank larceny, which lacks the element of force and violence or intimidation, was committed while the greater offense of bank robbery was not. See United States v. LaJoie, 942 F.2d 699, 701 (10th Cir.), cert. denied, — U.S.-, 112 S.Ct. 328, 116 L.Ed.2d 268 (1991). In short, no rational jury could have found that the teller in this case handed over the money to the defendant out of any other motivation than fear, and the district court did not err in refusing to give the requested instruction.
B.
Perry next argues that the trial court erroneously permitted the victim bank teller to testify regarding her out-of-court identification of him from a photo array which he claims was impermissibly suggestive. We agree with the trial court that the witness could testify in court as to her out-of-court identification of the accused, because the pre-trial identification procedures were not impermissibly suggestive.
Permitting a witness to testify at trial about his or her pre-trial identification of a defendant is altogether proper. Fed. R.Evid. 801(d)(1)(C); Anderson v. Maggio, 555 F.2d 447, 450 (5th Cir.1977). Thus, the bank teller’s testimony regarding Perry was proper, particularly because the previous out-of-court identification comported with constitutional standards. Perry contends that the out-of-court photo array used to identify him impermissibly distinguishes Perry from the other photos in that his photo does not have mug shot height lines in the background. Such an argument is unavailing. See Cikora v. Dugger, 840 F.2d 893 (11th Cir.1988) (although defendant was only one in photo line-up who appeared with height markings visible behind him, this fact alone did not induce the witness to pick out correct suspect).
C.
Finally, Perry argues that the district court erred in increasing his offense level, pursuant to U.S. Sentencing Guidelines § 3C1.1, for obstruction of justice. We review an enhancement under the Guidelines for clear error. United States v. Tucker, 925 F.2d 990, 991 (6th Cir.1991).
The district court, in enhancing Perry’s sentence, relied on three incidents. First, it cited Perry’s failure to comply with its order to be clean shaven at trial (to facilitate identification). Second, the court noted Perry’s attempt to conceal the evidence of the crime. Perry was at a relative’s house shortly after the robbery, and when he heard that the police were at the front door, he quickly threw some money and papers into a box and allegedly told his relative to take the money and hide it. Third, Perry sent some of the robbery proceeds to his girlfriend in Florida using aliases for both the sender and the addressee.
The obstruction of justice guideline reads in full, “If the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense, increase the offense level by 2 levels.” U.S.S.G. § 3C1.1. The Commentary to § 3C1.1 reads in pertinent part:
The following is a non-exhaustive list of examples of the types of conduct to which this enhancement applies:
* sjc >}: sfc * *
(d) destroying or concealing or directing or procuring another person to destroy or conceal evidence that is material to an official investigation or judicial proceeding ... or attempting to do so; however, if such conduct occurred contemporaneously with arrest ..., it shall not, standing alone, be sufficient to warrant an adjustment for obstruction unless it resulted in a material hindrance to the official investigation or prosecution of the instant offense or the sentencing of the offender;
U.S.S.G. § 3C1.1 Commentary, Application Note 3.
As to the first ground, the refusal to appear at trial clean shaven may warrant the enhancement. Perry attempted to disguise himself behind a full-grown beard and succeeded in part — the bank teller was unable to positively identify him in court. Although this had minimal evidentiary impact On the case because other evidence linked Perry to the crime, it is nonetheless an attempt to obstruct the prosecution of the case.
However, the second and third grounds for enhancement are contrary to the Guidelines. Perry’s hurried attempt to conceal the evidence as the police stood at the front door was “contemporaneous with arrest” and was not, in any way, “a material hindrance” to the investigation or prosecution of his case. Perry’s simultaneous request that his relative conceal the money he had just put in the box is part of the same incident and does not sufficiently change the nature of the act. This action fits squarely within the Commentary as an act not supporting the enhancement.
Likewise, by simply sending money (which Perry contends was never linked to the crime) to a girlfriend in Florida, Perry did not earn the obstruction of justice enhancement. At the time Perry sent the money, he had no knowledge that an investigation was underway, he did not subvert the investigation by his act, and he did not effect a delay in the prosecution of his crime. Even if this money was in fact the proceeds of the bank robbery, Perry’s spending it or giving it away does not come within the Guidelines’ purview without at least a minimal showing by the government that it was done with the purpose of interfering with investigation or prosecution of the crime. Furthermore, the use of aliases when mailing the money is not sufficient to tip the scales in favor of the enhancement. Cf. United States v. Wilson, 904 F.2d 234 (5th Cir.1990) (use of alias during commission of offense does not justify obstruction of justice enhancement).
We conclude that the district court improperly considered both the attempt to hide the proceeds and the mailing of money to Florida in enhancing Perry’s sentence. On remand and resentencing, the district court should consider whether the failure to appear clean shaven at trial is itself enough to justify the enhancement.
III.
Accordingly, we affirm the conviction under 18 U.S.C. § 2113(a), we reverse the conviction under 18 U.S.C. § 2113(d) and remand this case for resentencing.
. We acknowledge that courts, have broadly construed the term "use" in an analogous statute, 18 U.S.C. § 924(c), which enhances the sentence for anyone who "... during and in relation to a crime of violence or drug trafficking crime ... uses or carries a firearm....” See United States v. Christian, 942 F.2d 363, 368 (6th Cir.1991) ("Section 924(c)(1) reaches the possession of a firearm which in any manner facilitates the execution of a felony.”), cert. denied,—U.S. -, 112 S.Ct. 905, 116 L.Ed.2d 806 (1992). However, we have held that "... however broadly it may be construed, section 924(c) will not support conviction for mere possession of a firearm during the course of criminal conduct." United States v. Brown, 915 F.2d 219, 224 (6th Cir.1990).
We also acknowledge that a wholly concealed genuine firearm that "emboldens” a defendant may be “used" within the meaning of § 924(c), see id. at 224, and a toy gun may be both a “dangerous weapon" and “used" within the meaning of § 2113(d) where it was displayed although not brandished in an assaultive manner during a bank robbery by a defendant who carried it because he “felt secure with it” (suggesting to the Ninth Circuit that the defendant “may not have begun the robbery without it”). Martinez-Jimenez, 864 F.2d at 667. However, we are unable to stretch credulity or further extend the statute to reach the conduct of this defendant by holding that the wholly concealed possession of a toy gun would have so emboldened him during the robbery of the bank that such possession constituted the “use of a dangerous weapon.”
. Indeed, in contrast to § 2113(d), the sentencing guidelines provide that where a dangerous weapon, or an object that appears to be a dangerous weapon, see U.S.S.G. § 2B3.1, Commentary, Application Note 2, is "brandished, displayed, or possessed' during a robbery, a three-level sentence enhancement is proper. U.S.S.G. § 2B3.1(b)(2)(E) (emphasis added).
The base offense level for § 2113(a) offenses is 20. The base offense level for offenses under § 2113(a) and (d), together, also is 20. See U.S.S.G. § 2B3.1. Even though, here, § 2113(d) is inapplicable, a three-level enhancement for possession of a dangerous weapon is proper under § 2B3.1(b)(2)(E). Thus, our reversal of Perry's conviction under § 2113(d) will not affect Perry’s total offense level or the applicable sentencing range. However, were the erroneous § 2113(d) conviction allowed to stand, this conviction could have other consequences later, e.g., under the armed career criminal provisions of the Guidelines.
. With all due respect to the legal precedent in this area and the government's • commendable zeal in this particular case, we believe that to premise § 2113(d) liability, as the government does, on the proposition that had the teller not been afraid to look down at the robber's hands during the robbery for fear that the robber might have a gun, she might have seen what she might have believed was a real gun, is to engage in the "if we had some ham we could have a ham sandwich if we had some bread” school of statutory construction.
. The Ninth Circuit, for example, has ruled that bank larceny is not a lesser included offense of bank robbery because bank larceny contains a specific intent element, i.e., the intent to steal or purloin, which need not be proved in the bank robbery context. United States v. Gregory, 891 F.2d 732, 734 (9th Cir.1989).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
I
FACTS AND PROCEEDINGS BELOW
On January 16, 1980, the Crystal Palace Gambling Hall filed a Chapter 11 bankruptcy petition. On May 25, 1984, Crystal Palace and Mark Twain Industries (MTI) entered into an agreement whereby Crystal Palace would sell the casino to MTI. Pursuant to this purchase agreement, MTI deposited $450,000 into an escrow account on June 18 of that year.
Crystal Palace had filed a plan of reorganization on May 31, 1984, and on October 1 the district court ordered that the proposed plan be confirmed. In that order, the court stated that “[t]he effective date of the plan shall be the date the sale to Mark Twain Industries closes, which sale shall close not less than thirty (30) days from the entry of this Order.” For some reason, the district court’s order of October 1 was not entered until October 17.
On October 29, counsel for Crystal Palace approached the district court ex parte, without notice to MTI, and sought modification of the district court’s order. As a result, the district judge entered a second order modifying the terms of the first order from “not less than thirty days” to “[the] sale shall close by October 31,1984.” That order was entered on November 1 (the day after the order required the sale to close). On October 30, counsel for MTI filed a motion to extend the time for closing the sale until November 10.
On November 8, MTI petitioned for an expungement of the court’s October 29 order, and sought an order confirming the plan of reorganization. The court granted the motion, expunged its second order, and ordered the sale to occur “on or before ... November 16, 1984.”
Between November 9 and November 19, the debtor filed numerous motions. However, none of these motions sought clarification or reconsideration of the district court’s order that required the sale to close on November 16. On November 13; MTI deposited the purchase price ($4,500,000) with the escrow holder.
On November 15, Crystal Palace filed a notice of appeal from the court order that required sale on November 16. This appeal was entitled In re Crystal Palace Gambling Hall, Inc., Debtor, Crystal Palace Gambling Hall, Inc. vs. Mark Twain Industries, No. 84-2735. Crystal Palace did not seek a stay of the district court’s order pending appeal. On December 27, MTI filed a motion for dismissal of the appeal, and on February 21, 1985, the appeal was dismissed.
On November 16, 1984, the district court appointed a special master for the purpose of considering (1) MTI’s motion for an order to show cause why the debtor should not be held in contempt, (2) Crystal Palace’s motion requiring MTI to forfeit the earnest money deposit, and (3) Crystal Palace’s modified plan of reorganization.
On November 27, Crystal Palace signed an agreement with Margaret Elardi to sell the casino to her. Also on November 27, the special master filed his report and recommendations. Both parties filed objections to the special master’s report, and on December 31, the district judge issued an order as to the objections of both parties. In that order, the court generally adopted the master’s recommendations, and directed the appellants to immediately execute all the closing documents necessary to sell the casino to MTI. Contrary to the master’s recommendation, the judge found both Crystal Palace and its shareholders in contempt of court for failure to close the sale in conformity with his prior order. The judge ordered the debtor and shareholders to pay MTI “any reasonable amounts expended by it for interest on monies borrowed from November 16, 1984, until appropriate documents of sale are properly executed by the debtor ... in compliance with the present order.” The judge also expressed concern that he had been misled into signing the October 29, 1984 order.
The sale to MTI was finally concluded on January 11, 1985. On January 30, Crystal Palace filed a notice of appeal from the district court’s December 31 order, and on February 8, the shareholders joined in that appeal. On February 8, MTI also noticed its cross-appeal of the district court’s December 31 order.
II
JURISDICTION
As we have stated previously, “[w]here the contempt proceeding is the sole proceeding before the district court, an order of civil contempt finding a party in contempt of a prior final judgment and imposing sanctions is a final decision under section 1291.” Shuffler v. Heritage Bank, 720 F.2d 1141, 1145 (9th Cir.1983). The order is final for purposes of section 1291 “[e]ven though the size of the sanction imposed by the order depends upon the duration of contumacious behavior occurring after entry of the contempt order, ....” Id. Thus, the contempt order in this case is appealable. However, the filing of a timely notice of appeal is “mandatory and jurisdictional....” United States v. Robinson, 361 U.S. 220, 224, 80 S.Ct. 282, 285, 4 L.Ed.2d 259 (1960).
MTI alleges that the shareholders did not file a timely notice of appeal. Federal Rule of Appellate Procedure 4(a) states that notice of appeal “shall be filed with the clerk of the district court within 30 days after ... entry of the ... order appealed from____” Fed.R.App.P. 4(a)(1). The order appealed from was entered December 31, 1984, and MTI argues that since notice of appeal was not filed until February 8, 1985, well past the thirty day limit, it was untimely.
Generally, an notice of appeal must be filed within thirty days. However, under the circumstances of this case, the shareholders had fourteen days after Crystal Palace filed its appeal to file their notice of appeal. Federal Rule of Appellate Procedure 4(a)(3) states:
f a timely notice of appeal is filed by a party, any other party may file a notice of appeal within 14 days after the date on which the first notice of appeal was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period last expires.
The clear language of this rule indicates that this fourteen day period applies to “any other party” to a lawsuit. It does not distinguish between appellants and appellees. This was the viewpoint of those who drafted the rule. The 1966 committee note to this subsection states:
[t]he added time which may be made available by the operation of the provision is not restricted to cross appeals in the technical sense, i.e., to appeals by parties made appellees by the nature of the initial appeal. The exception permits any party to the action who is entitled to appeal within the time ordinarily prescribed to appeal within such added time as the sentence affords.
Leading commentators have stated that this rule “permits any party to the action ... such added time as the sentence affords.” 9 J. Moore, B. Ward, & J. Lucas, Moore’s Federal Practice ¶ 204.11[1] (2d ed. 1986) (emphasis added); see also id. at ¶ 203.25[3].
The appeal by the shareholders was filed within eight days of the initial appeal by Crystal Palace. Thus, even though thirty days had passed since the final judgment, the shareholders’ appeal was timely, pursuant to Fed.R.App.P. 4(a)(3). Thus, we have jurisdiction over the shareholders’ appeal.
Ill
STANDARD OF REVIEW
“A court has wide latitude in determining whether there has been contemptuous defiance of its order,” and we review a lower court’s decision to impose sanctions for contempt for an abuse of discretion. Gifford v. Heckler, 741 F.2d 263, 266 (9th Cir.1984). Under this standard, a contempt order will not be reversed unless we have a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached after it weighed the relevant factors. Fjelstad v. American Honda Motor Co., 762 F.2d 1334, 1337 (9th Cir.1985).
IV
ANALYSIS
A. The District Court’s Standard of Review.
The appellants argue that the district court must accept the master’s findings of fact unless they are clearly erroneous. We agree. See Fed.R.Civ.P. 53(e)(2); 9 C. Wright & A. Miller, Federal Practice and Procedure § 2614 (1971); Leader Clothing Company v. Fidelity and Casualty Company of New York, 237 F.2d 7, 11 (10th Cir.1956). The district court accepted all of the master’s findings of fact and conclusions of law except for the master’s conclusions concerning contempt.
Congress has determined that the power to hold a party in contempt is a discretionary power vested in the court whose order has been violated. “A court of the United States shall have power to punish by fine or imprisonment, at its discretion, such contempt of its authority ... as ... disobedience or resistance to its lawful writ, process, order, rule, decree, or command.” 18 U.S.G. § 401 (1982). The appellants in this case did not violate an order of the master, they violated an order of the district court. Thus, the discretion to hold the appellants in contempt remained in the district court and the master’s recommendations on that subject could not bind the court. The judge did not abuse his discretion by disregarding the master’s conclusion and imposing sanctions for contempt on the appellants.
B. The District Court’s Contempt Order.
Appellants argue that their actions were not contemptuous. They state that (1) exceptional circumstances justified their actions, and (2) MTI had not closed escrow within the thirty days provided for in the plan of reorganization.
1.
The appellants explain that they obtained a commitment from Margaret Elardi to purchase their assets for $690,000 more than MTI had agreed to pay and that these “exceptional circumstances” justified their decision not to transfer the property.
The special master seemed to agree with this “exceptional circumstances” analysis. He stated that “[t]he action of the Debtor in Possession in failing to conclude the sale was motivated by a desire to gain additional monies for its equity security holders and as of this time does not appear to be contemptuous in nature.”
The district court expressed doubts that these “exceptional circumstances” justified disobedience to a court order, particularly in light of its order filed November 8th requiring the sale to close on or before November 16,1984. We agree with the district court. The “exceptional circumstances” offered by the appellants are irrelevant. If a person disobeys a specific and definite court order, he may properly be adjudged in contempt. Shuffler v. Heritage Bank, 720 F.2d 1141, 1146 (9th Cir.1983). “A person fails to act as ordered by the court when he fails to take ‘all the reasonable steps within [his] power to insure compliance with the [court’s] order[ ].’ ” Id. at 1146-47 (quoting Sekaquaptewa v. MacDonald, 544 F.2d 396, 406 (9th Cir.1976), cert. denied, 430 U.S. 931, 97 S.Ct. 1550, 51 L.Ed.2d 774 (1977)). It does not matter what the intent of the appellants was when they disobeyed the court’s order. McComb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1949); Donovan v. Mazzola, 716 F.2d 1226, 1240 (9th Cir.1983), cert. denied, 464 U.S. 1040, 104 S.Ct. 704, 79 L.Ed.2d 169 (1984). Moreover, the contempt need not be willful. Perry v. O’Donnell, 759 F.2d 702, 704-06 (9th Cir.1985). Even though “[t]he sole question is whether a party complied with the district court’s order,” a party can escape contempt by demonstrating that he is unable to comply. Mazzola, 716 F.2d at 1240. That was not the case here. If the appellants believed that the district court incorrectly issued an order, their remedy was to appeal and request a stay pending the appeal. Maness v. Meyers, 419 U.S. 449, 458, 95 S.Ct. 584, 590, 42 L.Ed.2d 574 (1975); see also Chapman v. Pacific Telephone and Telegraph Co., 613 F.2d 193, 197 (9th Cir.1979). “Absent a stay, ‘all orders and judgments of courts must be complied with promptly.’ ” Mazzola, 716 F.2d at 1240, (quoting Maness v. Meyers, 419 U.S. 449, 458, 95 S.Ct. 584, 590, 42 L.Ed.2d 574 (1975)). Although both Crystal Palace and the shareholders appealed, no stay was obtained. A party cannot disobey a court order and later argue that there were “exceptional circumstances” for doing so. This proposed “good faith” exception to the requirement of obedience to a court order has no basis in law, and we reject the invitation to create such an exception. The appellants were not justified by exceptional circumstances in disobeying the court’s order.
2.
The appellants argue that they were “amply justified” in not executing the necessary documents, since MTI did not close escrow within the thirty days provided for in the plan of reorganization. They assert that MTI should have forfeited the earnest money deposit of $450,000.
This argument is without merit. The sale closed in a timely manner. Both the special master and the district judge found that the parties intended that the running of the thirty-day closing period should begin with the entry of the confirmation order as opposed to the issuance of the confirmation order. This finding is strongly supported by the record.
However, whether the sale closed in a timely manner, whether there were inconsistencies in the documents, whether the district court was correct, or whether the appellants thought they were justified in their legal position, all became irrelevant when the court filed its November 8th order. That order, in no uncertain terms, required Crystal Palace to execute the necessary documents by November 16. Thus, as of November 8, Crystal Palace had no legal justification for not executing the necessary documents. Again, the appellants’ only recourse was to appeal and obtain a stay pending the outcome of that appeal. No stay was obtained and the documents should have been executed. The appellants’ unreasonable subjective beliefs do not provide legal justification for their disobedience of a court order.
C. The District Court’s Actions,
Appellants also argue that the actions of the court caused confusion and that this confusion was the reason they did not comply with the order. In support of this proposition, Crystal Palace points out that the district judge referred two of its motions to the special master, and therefore, the judge apparently felt that these motions were of sufficient importance and complexity to require this reference. We reject the notion, that by referring these issues to a special master, the court somehow implied that the appellants’ motions were meritorious.
Furthermore, the appellants’ actions betray their allegations of confusion. After the district court ordered Crystal Palace to transfer the documents, Crystal Palace filed numerous motions, but not one of those motions requested either clarification or reconsideration of the court’s order. Nor did the appellants seek a stay while they challenged the court’s order on appeal.
Crystal Palace argues that “[wjhile a party is not free to disregard a lawful order of a court, a party may seek clarification of that order.” At the time the appellants decided not to execute the necessary documents, the district court’s order needed no clarification. The November 8th order explicitly stated that the sale must occur “on or before ... November 16, 1984.” If there had been any ambiguity or uncertainty earlier, that ambiguity ceased to exist when the November 8th court order was issued.
D. Sanctions.
The district court properly concluded that the appellants were in contempt of court. As a sanction, the court ordered that the debtor and its shareholders pay MTI “any reasonable amounts expended by it for interest on monies borrowed from November 16, 1984, until appropriate documents of sale are properly executed by the debtor ... in compliance with the present order.”
In its cross-appeal, MTI argues that the sanctions should include (1) $43,000 in loan fees, (2) the lost use of the purchase price for a two month period, (3) $80,000 in legal fees for “warding off appellants’ various legal attacks on the first order[,j” (4) legal costs in defending the appeal from the district court’s third order, “which this court found meritless and dismissed,” and (5) the two months of lost proceeds it would have otherwise obtained from the operation of the casino.
As we have stated previously, a sanction for “[cjivil contempt is characterized by the court’s desire to ... compensate the contemnor’s adversary for the injuries which result from the noncompliance.” Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 778 (9th Cir.1983). However, an award to an opposing party is limited by that party’s actual loss. United States v. United Mine Workers of America, 330 U.S. 258, 304, 67 S.Ct. 677, 701, 91 L.Ed. 884 (1947); Shuffler, 720 F.2d at 1148; Falstaff, 702 F.2d at 779.
We affirm the imposition of sanctions. The award of interest on monies borrowed by MTI to consummate the purchase of the casino was not an abuse of discretion. See Shuffler v. Heritage Bank, 720 F.2d 1141, 1148-49 (9th Cir.1983). However, the amount and nature of the sanctions imposed by the court are unclear.
We remand this case to the district court for a determination of the amount of the sanctions to be awarded and whether the sanctions shall include the loan fees, the lost use of the purchase price, attorney fees or the proceeds earned by the casino.
V
CRYSTAL PALACE’S MOTION TO STRIKE AND MOTION TO RECONSIDER
The appellants have filed a motion to strike portions of the Appellee’s answering brief. They state that a number of matters discussed in that brief are not properly before this court and should not be raised in the answering brief. They further argue that if they made procedural errors, MTI should have objected pursuant to Fed. R.App.P. 27(a) and (b).
Ninth Circuit Rule 13 requires that an opening brief recite the procedural posture of the case, what justification a party has for seeking attorney fees, and whether an appeal is properly before this court. The appellee’s brief did not go beyond the scope of this rule. The motion to strike is denied.
The appellants also urge us to reconsider our August 25 order, in which we denied their motion for an extension of time to file a reply brief. That motion is now moot. However, we note that the reply brief was due August 11, but the order gave the appellants until September 2 to file their brief. Thus, although the order denied an extension of time, the appellants actually received a twenty-two day extension.
VI
ATTORNEY FEES AND COSTS ON APPEAL
MTI argues that it is entitled to compensation for attorneys’ fees, costs, damages and other expenses incurred as a result of this appeal pursuant to Federal Rule of Appellate Procedure 38. Pursuant to Rule 38, a party may be entitled to attorney fees if an appeal is frivolous. We conclude that this appeal is not frivolous, and deny the award of attorney fees. Each party will bear its own costs.
VII
CONCLUSION
The district court properly found the appellants in contempt, and its ruling was not an abuse of discretion. We remand to the district court so it can determine the amount and nature of the sanctions to be imposed on Crystal Palace and its shareholders. The appellants’ motion to strike is denied, and the motion to reconsider is moot.
AFFIRMED AND REMANDED WITH INSTRUCTIONS. EACH PARTY WILL BEAR ITS OWN COSTS.
. Crystal Palace filed the following motions: motion for forfeiture of earnest money deposit, motion to extend time, motion to disqualify counsel, motion to continue hearing to take place on November 16, debtor’s objection to application for order compelling sale of property, motion for an order modifying the debtor’s plan of reorganization, debtor’s modified plan of reorganization, ex parte application for an order requiring MTI to forfeit earnest money deposit, debtor’s first modified plan of reorganization, brief re: rejection of postpetition executory contract.
. Even though the agreement with Elardi was not signed until November 27, the special master found that it was concluded on November 6.
. Although there is a conflict in the terms of several of the documents as to when this thirty-day closing period was supposed to begin running, three of the four documents that discuss this matter: paragraph 4 of the purchase agreement, the confirmation order (both of which were drafted by counsel for Crystal Palace), and article III of the plan of reorganization, all indicate that the transaction was supposed to occur within a period of time after entry of the order as opposed to issuance of the order,
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PARKER, Circuit Judge.
These are cross appeals in a suit in admiralty brought by British cargo owners against the Italian vessel San Giuseppe which arrived at the port of Norfolk, Va., on June 8, 1940, with cargo destined for London, England, and was interned at Norfolk as the result of the war between Great Britain and Italy, which began June 10th. The suit was for possession of the cargo and for damages sustained as the result of the necessity of transshipment. Decree was entered directing the delivery of the cargo to the owners but absolving the vessel from the damages claimed. The cargo owners appeal from that portion of the decree refusing them damages, contending that the vessel was guilty of deviation in putting into the port of Norfolk and was consequently liable as an insurer for damages sustained by the cargo. The vessel appeals from that portion of the decree charging her with the expense of unloading at Norfolk, contending that under the provisions of the bills of lading this was an expense to be borne by the cargo owners.
The San Giuseppe was an Italian steamship under time charter to the Continental Grain Company and sublet under a voyage charter to the Gans Steamship Line of New York. The voyage charter provided that she should have liberty to coal at Norfolk and Newport News. Early in June she took on a cargo of timber, staves, turpentine and tar at New Orleans, La. and Panama City, Fla., for delivery in London, England, and collected freight thereon in excess of $200,000. The master, in giving notice of readiness to load to the agents of the voyage charterer, had advised that he would call at Norfolk for bunkers, as he had been instructed to do by the time charterers. He left New Orleans with only 617 tons of bunkers aboard and had been instructed to have 600 tons when leaving Norfolk for the voyage across the ocean. He issued bills of lading in the name of the vessel covering the cargo and providing that same was to be transported by the vessel to London “with liberty to call at any port or ports, in or out of the customary order, to receive or discharge coal, cargo, passengers, or for any other purpose”. Because of war conditions, it was necessary for vessels bound for England to stop at some Atlantic port for sailing orders for the crossing of the ocean, as these were secret orders, were changed every three or four days and could not be communicated to the vessel at sea. While the vessel was at New Orleans, the master was notified by the British Consul there to get his sailing orders for crossing the Atlantic from the British Consul at Norfolk.
On June 8th, the San Giuseppe entered the port of Norfolk for bunkers and sailing orders. The master applied to the charterer’s agent for bunkers but did not take them on, as he was directed by the charterer’s agent to see the Italian consular agent at Norfolk, and was directed by the latter to remain in port until further orders. On June 10th he received a radio message from the Italian government advising of Italy’s entrance into the war and directing all Italian merchant vessels to seek the nearest neutral port and remain there. He consequently remained in Norfolk. If he had not put into Norfolk but had followed the direct route from the Gulf ports to London, he would have been 740 miles off shore at the time of the receipt of the radio message from the Italian government. Had he been in this position, it would have been his duty to turn about and make for the port of Norfolk, and he testifies that this is what he would have done.
The court below found “that in the shipping trade it has been considered over a long period of time to be a usual and reasonable practice of coal burning vessels similarly situated on voyages from Gulf ports to the United Kingdom or continental European ports to call at Norfolk for bunkers”. This was supported by the testimony of a large number of witnesses who were shown to have knowledge of the customs and practices of the trade. It was shown that more vessels coal at Norfolk and Newport News than at any other port on the Atlantic or Gulf coasts of the United States, that coal of superior quality is obtained there, that the price is much lower than at Gulf ports, and that from 1,800 to 2,000 ships a year call there for bunkers. The witness Meyer, president of Gans Steamship Line, the voyage charterer, testified that it was customary for vessels of his company to bunker at Norfolk on such voyages, that this practice had been followed by this vessel on two voyages immediately prior to this, and that marine insurers, who charge an additional premium for extra calls, make no such charge for a bunkering call at Norfolk. The witness Hasler of Norfolk who was arranging to bunker the vessel testified: “It is nothing unusual for a steamer loading general cargo in the Gulf and proceeding to the United Kingdom to call in at Hampton Roads on the homeward voyage to replenish her bunkers. That has been in vogue, to my knowledge, for the last thirty years, anyway”. The vessel’s master, Captain Saglietto, testified that the twenty ships of his company’s fleet, of which he is senior officer, bunker at Norfolk on all voyages from the Gulf to the United Kingdom or continental Europe. Sperling, an officer of Continental Grain, time charters of the vessel, testified: “The custom is usually to bunker at Hampton Roads after loading at the Gulf”. “Yes, over a period of six years (period of witness’ employment by Continental Grain) say about 90 per cent of our coal-burning vessels loading in the Gulf for either United Kingdom or the Continent bunkered at Norfolk”. Stevenson, president of Bulk Carriers Corporation and of Ocean Freighting and Brokerage Corporation, testified: “It has been quite the recognized custom for vessels loading in the Gulf bound for the United Kingdom to go via Hampton Roads for bunkers, * * * I consider it a reasonable practice”. The substance of the above testimony was reiterated by Schulze, president of Richard Meyer Company, Havens, an officer of the Strong Shipping Company, Gavigan, president of Funch Edye & Company, and Salz-mann, employed by the latter company in charge of its Gulf to Scandanavia operations.
There was no testimony in contradiction of the above, except that the cargo owners introduced a list- showing that only a little over 11 per cent of coal-burning vessels bound from Gulf ports for ports in the United Kingdom stopped at Norfolk for bunkers during the five and a half year period preceding the voyage in question. This list, however, did not show the vessels which put into Norfolk for some other purpose as well as for bunkers nor did it show vessels bound for continental ports which bunkered there, or which of the vessels came to the Gulf ports with sufficient bunkers for a return voyage, a frequent practice prior to the war on the part of vessels from European ports making a voyage and return to ports of the Gulf.
The bills of lading provided that the prepaid freight “shall be deemed fully and irrevocably earned upon receipt of the goods by the carrier”. They contained the usual “restraint of princes” provision and a war risk clause quoting a provision of the time charter to the effect that, if the vessel were prohibited from going to the port of discharge by the government of her flag, she should discharge the cargo at any other port covered by the charter party as ordered by the charterers and be entitled to freight as if she had discharged at the port to which she had been originally ordered. The cargo owners do not controvert that the effect of these protective clauses, if applicable, is to exonerate the vessel from liability for the damages claimed by them; but their contention is that the protective clauses are not applicable because, they argue, in calling at Norfolk the vessel was guilty of unreasonable deviation, the effect of which was to displace the protective clauses and render her liable for the damage sustained by the cargo owners, irrespective of whether there was or was not causal connection between deviation and loss. The court below held that the call at Norfolk was a reasonable deviation and that the vessel did not thereby forfeit the protection of the contract of carriage. It held, also, that a further reason for denying damages was the lack of causal connection between the alleged deviation and the loss.
We agree with the court below that there was no unreasonable deviation on the part of the vessel. Whether the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1304(4) has enlarged the scope of permissible departure from the course of the voyage, we need not stop to inquire. Prior to the passage of the act, a deviation was defined as a “voluntary departure without necessity or reasonable cause from the regular and usual course of the voyage”. 1 Bouv. Law Dict., Rawle’s Third Revision, p. 860; Hostetter v. Park, 137 U.S. 30, 40, 11 S.Ct. 1, 34 L.Ed. 568; Constable v. National Steamship Co. 154 U.S. 51, 66, 14 S.Ct. 1062, 38 L.Ed. 903. A departure from the regular course of the voyage through necessity or for reasonable cause was not, under the prior maritime law, a deviation forfeiting insurance or rendering the vessel an insurer; and, for the purposes of this case, we may assume that the words “reasonable deviation” as contained in the statute confer no greater liberty upon the vessel than she had under the rule of the maritime law prior to its enactment. When the liberty to call clause is taken into consideration, we think that the call at Norfolk cannot be considered either unreasonable or without necessity within the meaning of that rule.
It may be conceded that the evidence is not sufficient to establish a custom, within the technical meaning of that term, for vessels bound from Gulf ports to ports of the United Kingdom to call at Norfolk for bunkers. We think, however, that it does establish that such practice is not unreasonable and is within the “liberty to call” clause contained in the bill of lading. While that clause should not be construed as authorizing a complete departure from the general course of the voyage (Swift & Co. v. Furness, Withy & Co., D.C., 87 F. 345) it must certainly be interpreted as permitting a call for bunkers at a port within the general course of the voyage and ancillary thereto, if it is to be given any meaning whatever. The suggestion that such call is authorized only in cases of emergency, or where there is necessity for bunkering by stages, would deny it all meaning, as a call for bunkers, in the absence of the clause, would not amount to deviation under such circumstances. Nor is the vessel to be denied the benefit of the clause because of failure to take on sufficient bunkers for the entire voyage prior to its commencement. One of the manifest purposes of the clause is to give to the vessel some liberty of action with respect to coaling, so that she may avail herself of the privilege of calling for bunkers on the general course of the voyage at ports where coal may be obtained advantageously. As was well said by Cross, J., in the case of J. Peters v. Canada Sugar Refining Company, Montreal Law Reports, 2 Q.B. 420, where the charter party described the voyage from Havana to Montreal via the River St. Lawrence, and where the ship cleared Havana for Sydney with only enough coal to reach that point and stopped at Sydney for bunkers:
“The declaration that the vessel was in every way fitted for the voyage, did not contradict or exclude the exception in the charter that she was at liberty to call at any intermediate port for coal. The exception implied that the calling for coal was a convenient incident of the voyage which the ship might avail herself of, and a presumption that a full provision of coal at Cuba for the whole voyage might be inconvenient, and not a necessity; that a vessel was sufficiently sound and provided for a voyage when she had such supply of coal as suited the route, a complement being more suitably obtained at a call port where she reserved liberty to stop for a supply, besides which, it was the duty of the charterer, in order to protect himself, to have insured according to the terms which he had agreed to by the charter, making the same exception in the policy as was contained in the charter.”
Pertinent also is the recent decision of the House of Lords in the case of The Indian City, Reardon Smith Line, Ltd. v. Black Sea & Baltic General Ins. Co., Ltd., [1939] App.Cas. 562, referred to by the court below. In that case the vessel was on a voyage from Poti in the Black Sea to a port of the United States. Instead of taking on oil bunkers at Poti she called for same at Constantza in Rumania. The contract gave the vessel liberty to call for the purpose of bunkering. In holding that this did not constitute deviation, Lord Wright' said:
“In 1930 cheap fuel oil for bunkers became available at Constantza in Rumania. Constantza, thereupon, became largely used as a bunkering port in particular for vessels bound from the Black Sea on long ocean voyages. In 1932 and 1933, 114 oil-burning vessels called at Constantza for bunkering only. This figure shows the importance of the port as a bunkering port. It is not necessary to analyze closely what proportion of oil-burning vessels sailing through the Bosphorus on ocean voyages bunkered at Constantza. It is sufficient for purposes of this case to record what has been accepted on both sides, namely, that 25% of the whole number called and bun-kered at Constantza in the three and a quarter years before the casualty which overtook the Indian City. I emphasize these facts, because the position of Con-stantza as a usual and recognized bunker-ing port in the Black Sea seems to me to be a key point in the case. * * * In modern times in all long ocean voyages, the need to replenish bunkers (coal or oil) has to be considered. The doctrine of stages of the voyage which enables a shipowner to start with bunkers sufficient for the stage, so long as he fills up his bunkers at the next bunkering port, necessarily involves calling at that port, and also perhaps, later ports, in order to fulfill the recurring obligation to keep the vessel seaworthy in regard to bunkers. Thus to call at such ports has become an ordinary incident of the voyage. The need to do so may help to determine the general route, for instance, whether it is to be by the Cape of Good Hope or the Suez Canal. A shipowner is entitled, with certain limits determined by what is reasonable, to be guided in his choice of bunkering ports by considerations of cheapness and convenience. * * * He may decide to fill up his bunkers after sailing from the port of loading at some convenient port. He may decide to do this at Constantza, at Istanbul, or at Algiers, or at Oran, or at Ceuta, all of which are available bunkering ports, starting from the loading port with sufficient bunkers to take the ship to the next bun-kering port which he decides to use. In this way he selects the stage for bunker-ing. The vessel must be seaworthy for that stage, but it is the ship owner’s province to fix the stage, that is, to determine where he will bunker, so long as his decision is reasonable and usual. In the present case, as in the other voyages during the relevant period, the appellants selected Constantza as the bunkering port. Their case is that they had done so a great many times without objection and save in this one case without mishap. They relied on all the evidence to which I have briefly referred to support their claim that the route by Constantza is a usual route. The position therefore is that to call at some port for bunkers is no deviation, and the only question is whether Constantza is a usual and reasonable port of call for this purpose.
“I agree with Greer, L. J., that the evidence that 25% of oil-burning vessels sailing from the Black Sea on ocean voyages call at Constantza for bunkers is sufficient to show a usual route. The shipowner is not here attempting to prove a custom: To prove a custom he would have to show that it was uniform and universal in the trade, but that is not what is in question here. Nor need he show that other routes were not available, that is, that there were not alternative ports of call at which he might bunker. There are no doubt other available ports of call for this purpose, some, and perhaps all, of which would involve much less extra steaming. I think the shipowner is entitled to balance the cost to him of extra steaming against the cheapness or convenience of Constantza, so long as to do so is not unreasonable in regard to the interests 'of the charterer or any other persons who might be concerned.”
In point, too, is the supplemental opinion of Judge Learned Hand in The Blandon, D.C., 287 F. 722, 725, in which was involved an alleged deviation to Philadelphia to take on cargo on a voyage from New York to Valencia. In holding that this call did not constitute a deviation in the light of the liberty to call clause, Judge Hand said:
“In my earlier decision I neglected to observe the clause in the main body of the bill of lading; that point not being argued at the hearing or in the briefs. It is this: ‘With the liberty to call at any port or ports in or out of the customary route in any order.’ The question is whether this clause justified the ship in calling at Philadelphia, a deviation which I have held to have been otherwise unjustified. If these words are to mean anything at all, it seems to me that they must include such a stop as Philadelphia. True, it was not a stop on the customary route; at least, I must assume so on this record. Yet it was expressly agreed that the port might be ‘out of the customary route.’ What more limited sense can those words mean than a stop at a place some thirty hours away? It is said that the clause will allow only reasonable deviations, and this is indeed true, since such a clause is to be construed in its context. Swift & Co. v. Furness, etc. [Co.] (D.C.) 87 F. 345. For example, it might not' allow a side voyage to Tam-pico or Galveston; certainly it would not permit a call at Rio or Montevideo. But it must mean to give the ship permission to steam by a different route from that she was otherwise bound to take, besides giving her leave to make ports of call en route; i. e., ‘in * * * the customary route.’ Such permission involves delay, and was meant to involve delay.”
The law relating to “liberty to call” clauses was well summed up by the District Judge in W. R. Grace & Co. v. Toyo Kisen Kabushiki Kaisha, D.C., 7 F. 2d 889, 891, 892, affirmed 9 Cir., 12 F.2d 519, certiorari denied 273 U.S. 717, 47 S.Ct. 109, 71 L.Ed. 856, as follows:
“As' a conclusion from all the cases, it is apparent that the ‘general liberty1 clause is not treated as of ‘no effect.’ It is a stipulation of the parties, to be given effect, like other stipulations, in so far as it does not conflict with the Harter Act (Comp.St. §§ 8029-8035 [46 U.S.C.A. §§ 190-195]), or the general purpose and policy of the law, or the real intent of the contract between shipper and carrier. It may be fairly said that reservations by a carrier of general liberties of departure from the route of the contractual voyage must be read in due relation and subordination to the main commercial purpose of the contract of affreightment, and as a matter of law will justify only such deviations from that route as are consistent with that particular commercial purpose.
“The propriety of any particular deviation is a question of fact in each case and there is no fixed rule for such determination. It is a question of inherent reasonableness, and pertinent to the inquiry of the surrounding circumstances, namely, the commercial adventure, which is the subject of the contract, the character of the vessel, the usual and customary route, the natural and usual ports of call, the location of the port to which the deviation was made, and the purpose of the call thereat.”
See, also, the Nichiyo Maru, D.C., 14 F. Supp. 727, 729, affirmed 4 Cir., 89 F.2d 539; United States v. Los Angeles Soap Co., 9 Cir., 83 F.2d 875, 889; The Salvore, 2 Cir., 60 F.2d 683, 685; The Half Moon, D.C., 21 F.2d 447, affirmed Callister v. U. S. Shipping Board, etc., Corp., 2 Cir., 30 F.2d 1008; Dietrich v. U. S. Shipping Board E. F. Corp., 2 Cir., 9 F.2d 733; The Emelia S. dePerez, D.C., 287 F. 361, affirmed 2 Cir.,. 288 F. 1019; The Citta DiMessina, D.C., 169 F. 472; The Sidonian, D.C., 34 F. 805.
We find no binding authority to the contrary in the cases relied on by the cargo owners. The Willdomino, 272 U.S. 718, 47 S.Ct. 261, 262, 71 L.Ed. 491 was a clear case of deviation. The vessel cleared Pon-ía Delgada for New' York without sufficient coal for the voyage and then, after proceeding for five or six days on the course to New York, changed her course for North Sydney, Nova Scotia. The court held that proceeding for five or six days on the course for New York was a deviation from any permissible course to North Sydney, but did not hold that she might not have called at North Sydney under the terms of her bill of lading. On this point the court said: “Nothing in the present bills of lading suggests that the vessel might wander about the sea, heading first for one port, and then without adequate reason for .another. If the Willdomino had the privilege of going from Ponta Delgada to North Sydney and intended so to do, it was her duty to take the ordinary course. This she did not do.”
The Henry W. Cramp, 3 Cir., 20 F.2d 320 in no way involved the right to call for bunkers as an incident of the voyage under a liberty to call clause, but was the case of a sailing vessel which sailed from Pensacola, Florida for Genoa, Italy, and which put into Norfolk and stayed there for two months without any reason or excuse disclosed by the record. The case of Hurlbut v. Tumure, 2 Cir., 81 F. 208, affirming, D. C., 76 F. 587, is more nearly in point, but that was a case of general average. The vessel there had cleared from Cuba for New York with an insufficient supply of fuel and had been obliged to burn a part of her cargo and equipment to get into Newport News. What was decided was that the vessel could not throw into general average the cost of putting into the port of Newport News merely because the bills of lading gave l^er the right to call there. The court held that not having fulfilled her duty to take the usual supply of coal when sailing for New York, she must be deemed to have voluntarily taken the risk of putting into some port of call in order to make that supply good. Whether it would have constituted a deviation for the vessel to have-put into Newport News if she had sailed for that port with sufficient coal for the voyage was not directly involved.
There is another ground upon which the call at Norfolk is justified, not only as being reasonable, but also as being necessary in the prosecution of the voyage to London. The war between England and Germany was in progress and a crossing to England was fraught with the gravest danger to a vessel carrying a contraband cargo. Before a crossing of the ocean could be attempted, it was necessary for the vessel to call at an Atlantic port for sailing orders, so that she might know where to meet her convoy and protect herself in the meantime from the danger of German raiders and submarines. These orders could not be communicated to the vessel at sea because of the necessity for secrecy, and they could not be given her at New Orleans or Panama City because they were changed every few days. A call at some Atlantic port for such orders was, therefore, a necessary incident of the voyage; and, as Norfolk was the most convenient port and was the port at which bunkers were to be taken, a call there for sailing orders was directed by the British consul at New Orleans. Even if there had been no intention to take bunkers, a call at some Atlantic port would have been necessary, and Norfolk, being the nearest and most convenient, was the logical port at which to call. The intention to take bunkers there, even if a call for that purpose alone would not have been justified, cannot make the vessel guilty of a deviation in making the call for orders which she was under the necessity of making. To say that she would have stopped for bunkers whether she needed the orders or not is beside the point, for she must have stopped for orders whether needing the bunkers or not. In the absence of the “liberty to call” clause in the bill of lading, such necessary call in pursuance of the voyage could not be held a deviation. It was certainly not an unreasonable exercise of the privilege conferred by that clause.
Even without the necessity of calling for orders, we think that the call at Norfolk would have been justified by tjie prevailing war conditions. As a matter of fact war was only two days off when the call was made, and already Italian consuls were refusing to permit vessels in port to put to sea. For a vessel to seek port under such circumstances could hardly be held an unreasonable deviation from her voyage. The Kronprinzessin Cecilie 244 U.S. 12, 37 S.Ct. 490, 61 L.Ed. 960. That the captain may not, have known of the imminence of war, would not, we think, deprive the vessel of the right to rely upon the fact that, in calling at Norfolk, she in fact did precisely what she should have done in the light of existing circumstances. If she did what was right, she ought not be deprived of the benefit of right action because the captain may have acted more .wisely than he knew.
If the call at Norfolk were deemed a deviation, a grave question would be presented as to whether the damages claimed by the cargo owners would be recoverable; for unquestionably the damage resulting from transshipment must have been incurred by the cargo owners whether deviation by the vessel had occurred or not. The vessel, if she had continued on her direct course to London, would have been only 740 miles from Norfolk when the radio message was sent out announcing the war between Great Britain and Italy and directing Italian vessels to put into the nearest neutral port. It would have been her duty to obey this order; and her master testifies that he would have put into Norfolk as the nearest available port, the reasonable thing for him to do under the circumstances. While it is true that, upon a deviation, the vessel becomes an insurer of the cargo, the doctrine seems fairly well established that she is not liable for loss or damage which “must equally have occurred even if there had been no deviation”. Scrutton on Charter Parties and Bills of Lading, p. 310; Story on Bailments, 8th Ed., pp. 466, 467; Williston on Contracts, § 1096; James Morrison & Co. Ltd. v. Shaw, Savill & Albion, Ltd., [1916]. 2 K.B. 783; The Hermosa, 9 Cir., 57 F. 2d 20, 27; Maghee v. Camden, etc., R. Co. 45 N.Y. 514, 6 Am.Rep. 124; Memphis & C. R. R. Co. v. Reeves, 10 Wall. 176, 19 L.Ed. 909; The Ida, 2 Cir., 75 F.2d 278; Globe & Rutgers Fire Ins. Co. v. United States, 2 Cir., 105 F.2d 160, 166; The Caterina Gerolimich, D.C., 43 F.2d 248, 252. Since we are of opinion, however, that there was no deviation by the vessel, it is not necessary to decide this point.
On the appeal of the vessel, also, we think that the decree below should be affirmed. The vessel contends that cargo owners should bear the expense of discharging the cargo at Norfolk because of the provisions of paragraph 11 of the bill of lading, the pertinent portion of which is as follows:
“In the event of war or hostilities existing or threatened, the goods shall at all times be at the sole risk of the owners thereof of arrest, restraint, capture, seizure, detention or interference of any sort by any power; and the carrier and its representatives are privileged in their absolute discretion, if deemed advisable for the protection of the vessel or of any cargo or to avoid loss, damage, delay, expense, danger, either with or without proceeding to or toward the port of discharge or entering or attempting to enter or discharge the goods there, and whether such entry or discharge be permitted or not, to proceed to or remain at any other port or ports, including the port of shipment, once or oftener in any order or rotation retaining the goods on board or discharging the same at the risk and expense of the owners thereof at such port or ports at the first or. any subsequent call, and full freight and all other charges shall be paid by shipper, consignee, and/or owner, and the goods shall be subject to a lien therefor”.
The vessel, however, did not proceed under this clause of the bill of lading. She refused to discharge the cargo or to deliver it to the owners until ordered to do so by the court below; and the court ordered the delivery on the ground that the venture had been frustrated by war and that the owners were entitled to the possession of the cargo. Whose duty, then, was it to make delivery? If the goods had been carried to London, no question is made that both under the terms of the bills of lading and under the provisions of the Carriage of Goods by Sea Act that duty rested upon the vessel. Is the duty any less because war conditions have absolved her from making a portion of the voyage for which she has been paid? We think not. As pointed out by the court below, there is no showing that it would cost the vessel any more to discharge at Norfolk than at London, and there certainly is no reason to think that the cost of discharge at Norfolk is as great as the cost of discharge at London plus the cost of transportation across the ocean, of which the vessel has been relieved. In such situation, it is not unreasonable, we think, to require the vessel to bear the cost of unloading and thus to carry out to the extent of her ability the obligation which she has undertaken.
And we think that the burden of unloading in such situation is imposed upon the vessel and her owners by a reasonable interpretation of the provision of the war risk clause of the time charter quoted in the bill of lading. That clause is as follows :
“No bills of lading to be signed for any blockaded port and if the port of discharge be declared blockaded after bills of lading have been signed, or if the port to which the ship has been ordered to discharge either on signing bills of lading or thereafter be one to which the ship is or shall be prohibited from going by the government of the nation under whose flag the ship sails or by any other government, the owner shall discharge the cargo at any other port covered by the charter party as ordered by the charterers (provided such other port is not a blockaded or prohibited port as above mentioned) and shall be entitled to freight as if the ship had discharged at the port or ports of discharge to which she was originally ordered.” (Italics supplied.)
Here the vessel was prohibited from going to the port of discharge named in the bill of lading by the government of the nation under whose flag she was sailing. She was in a port covered by the charter. While the discharge was not ordered by the charterers, it was ordered by the court on motion of the cargo owners, who stood in the shoes of the charterers in so far as the duty of the vessel and her owners to discharge cargo was concerned. No authority is cited as to why the vessel should not bear the burden of discharging the cargo under such circumstances, and we know of none. On the contrary, we think that the spirit, if not the letter of the contract of carriage, places that burden upon the vessel and that in equity and good conscience that is where it belongs.
For the reasons stated, the decree appealed from will be affirmed both on the appeal and the cross appeal.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SOPER, Circuit Judge.
This appeal involved four patents relating to automatic stokers for coal-burning railroad locomotives. Plaintiff, who is the largest manufacturer of such stokers, has marketed two types, conveniently termed type A and type B. The general principles of both types of stokers are quite old and beyond the protection of any patents. The four patents in question are for specific parts in the construction of these stokers and for such specific parts in combination with other parts, as hereinafter explained.
The type A stoker consists of a horizontal conveyor screw, running in a trough beneath the locomotive’s tender, whereby the coal is carried forwardly to a transfer hopper, from which the coal is raised by two vertical or elevator conveyor screws, and means for dispersing coal from the top of the vertical conveyor screws to within the fire-box. The vertical screws rise at an incline from each other from the forward end of the horizontal screw to points on each side of the fire door. Because there is such a vertical conveyor on each side of the fire door, this type of stoker is generally called the “Duplex” type. These are the principle features of this stoker, but, of course, there are many other parts such as casings for the conveyors and mechanical means for operating them.
This type A stoker operates in the following manner: The coal falls by gravity through an opening along the bottom of the tender upon the horizontal conveyor screw and is carried forward by its rotary action to a point at the rear end of the locomotive’s boiler. Here the coal is forced upon the vertical conveyor screws which by their rotary action raise it to points on either side of the fire door. From the top of the elevator screws, the coal is blown by steam through some form of distributor tube or nozzle to all portions of the firebox.
The plaintiff company constructed over 7,000 of these type A stokers, which are still in use, but since 1931 it has manufactured almost exclusively the less complex type B stoker. There are approximately 4,000- of the latter in use on railroad locomotives.
The type B stoker resembles the type A in that it consists of a horizontal conveyor screw running in a trough beneath the tender, but the screw in the type B runs forward to a point beneath the firebed, and in place of the two vertical conveyor screws, there is a single unobstructed conduit or casing which forms an elbow at the forward end of the horizontal conveyor and rises thence vertically inside the boiler to a point above the fire. There are steam jets at the top of the vertical riser to scatter the coal over the fire.
The first patent is Lower patent No. 1,373,748. It calls for all the old principles and parts of a type A stoker with the single novel feature of an enlarged final flight or turn on the forward end of the horizontal conveyor screw. The purpose of the change is thus stated in the specification: “It is common practice for the fuel to be transferred from the tender to the locomotive by means of a screw conveyor working in a trough and conduit located below the tender floor and delivering to' a chambered body carried by the locomotive, from which it 'is elevated by one or more similar screws. It is important to the efficient working of the elevating screws that the fuel be under pressure as it is taken up and carried forward by them, thereby reducing the frictional action upon it of the vane of the elevating screw. It is, nevertheless, desirable that there be a free movement of the fuel in the horizontal or transferring conduit.” This patent is hereafter referred to as the “Duplex” patent.
The second patent is Lower patent No. 1,455,058 which also relates to type A stokers. This patent refers to the distributing tubes or nozzles through which coal is discharged by steam jets from the tops of the vertical or elevator screws into the firebox. The tubes extend from the upper ends of the elevator screws into the firebox and are provided with upper and lower forwardly projecting plates. The- bottom plate has an upstanding traverse lip or abutment on its forward end with laterally opening recesses immediately back of thijs abutment. The object of the patent is to provide a means for scattering the coal throughout the firebox when it is shot through the tube leading from the top of the vertical screws. The. upper strata of the coal passing through the distributor tube spreads out into a fan-shaped stream feeding the forward end and cornel's of the firebox; the lower strata strikes the abutment or lip on the forward end of the lower plate, bounces generally backward into the laterally opening recesses immediately back of the abutment, and rolls down these recesses as in a chute to the rear and rear corners of the fire box. This patent is hereafter called the “distributor tube” patent.
The third patent is Hunt patent No. 1,690,116 and relates to the type B stokers. The specification states: “In conveyors of this type and particularly those wherein the coal is moved beyond the end of the screw conveyor, upwardly through an unobstructed conduit to a point above the fire and is there distributed over the fire by steam jets, if the-conveyor screw at its forward end has only a single thread or flight, the delivery of the total from the mouth of the conduit is intermittent rather than continuous. The coal moves upward during a portion of each revolution of the screw and remains stationary during the remainder of the revolution. Continuous delivery of coal to the fire box is desirable and the main object of the present invention is to provide means for effecting this result. For this purpose, I provide the conveyor screw at its forward or delivery end with a plurality of threads so positioned as to produce a continuous delivery of coal through the upwardly extending conduit.”
The District Court’s finding that each member of the combination described in the claim is o'ld in the art of type B stokers except for the sole novej feature of having a plurality of threads at the delivery end of. the horizontal screw, . accurately describes this patent, hereafter called “double thread conveyor screw” patent.
The fourth patent is Hunt patent No. 1,724,593 and also relates to type B stokers. The specification states: “In stokers of the type where coal drops by gravity from a coal bin into a screw conveyor where it is engaged by the conveyor screw and moved forward, the conveyor screw may not operate effectively on a lump of coal that has a linear dimension greater than the pitch of the screw, because the screw can not get hold of it to move it. The main object of my invention is to improve the- construction of the conveyor screw at the points where it receives coal from the bin so that it will effectively engage unusually large, as well as smaller, lumps of coal and move the same.”
The sole improvement or novelty consists of a number of notches or projections on the thread of the horizontal conveyor screw which projections are provided with sharp radial edges adopted to engage and crush large pieces of coal. The District Court’s finding that this patent is an old type B stoker with notches on the horizontal conveyor screw accurately described it. This fourth patent will be referred to as the “notched conveyor screw” patent.
The defendant operates a general machine shop and foundry, and in the latter part of 1927 commenced to manufacture and sell to railroads unpatented parts to be used for maintenance and repair of locomotive stokers which had been sold to the 1 railroads by the plaintiff. Stokers are intricate machines with many parts which in normal service wear out, deteriorate or break. Frequent repairs and replacement parts are necessary to keep stokers in serviceable condition, and it is the established and necessary practice of railroads to keep in stock for future needs substantially all of such parts. It became the practice of defendant’s representative to visit the railroads and ascertain parts of stokers that defendant could make. This representative would also examine the railroad supply stores to ascertain what parts had patent markings, and no parts so marked were made by it. Defendant never constructed any stokers or assembled any parts, and the railroads used defendant’s parts solely 'for repair purposes except possibly in a single instance and then without the defendant’s knowledge.
Plaintiff also is actively engaged in this repair part business and even issues a manual purporting to teach the railroads the extent of wear on various stoker parts that can be safely tolerated before they need repair or replacement.
In 1929 the plaintiff notified the defendant that the construction of repair parts for its stokers infringed its patents, and on July 9, 1931, the plaintiff filed three suits against the defendant in the District Court for the Eastern District of Virginia. Preliminary injunctions were entered in each case by consent on July 24, 1931. The defendant discontinued its manufacture and sale of repair parts, and the three suits remained unanswered until April 23, 1937, at which time the District Judge, in clearing up the docket, ordered that the cases be brought to a final determination. Since the defendant had recently reentered the spare parts business and wished to continue the same the cases were consolidated and tried.
The District Judge made a thorough and exhaustive study of the patents and other questions involved, and wrote an opinion in which he held as to the validity and infringement of the four patents as follows: (1) All of the plaintiff’s combination claims in each of the four patents are invalid. (2) The “Duplex” patent is invalid whether it be regarded as a combination patent or as a patent for a horizontal conveyor screw with an enlarged final flight on its forward end. (3) The “distributor tube” patent is valid when limited to a tube having a lower plate with a transverse obstruction which abuts rather than deflects the lower strata of coal, but the repair tubes made by the defendant do not infringe. (4) The “double thread conveyor screw” patent is invalid whether it be regarded as a patent for a combination or a specific part. (5) The thirteen combination claims of the “notched conveyor screw patent” are invalid, but claim 14, relating to the screw itself, is valid, and was infringed by the defendant. (6) The manufacture and sale by the defendant of unpatented separate and unassembled parts for use in the repair of locomotive stokers purchased from the plaintiff did not constitute direct or contributory infringement of letters patent even though the parts were copied from parts listed and described in the plaintiff’s catalogue.
Since we are in accord with the last mentioned conclusion of non-infringement, we have no occasion to consider the validity of the patents. Even if it be assumed that one or more of the combination claims in the plaintiff’s patents are valid, it is not infringement for the defendant to manufacture repair parts old in the art, which are used exclusively for repair purposes and not for reconstructing the patented combination. Wilson v. Simpson, 9 How. 109, 13 L.Ed. 66; Automotive Parts Co. v. Wisconsin Axle Co., 6 Cir., 81 F.2d 125; General Motors Corp. v. Preferred Electric & Wire Corp., 2 Cir., 79 F.2d 621; Thomson-Houston Co. v. Kelsey Co., 2 Cir., 75 F. 1005; Slocomb & Co. v. Layman Mach. Co., D.C., 227 F. 94; 1 Walker, Patents, (6th Ed. 1929) Section 350. In General Motors Corp. v. Preferred Electric & Wire Corp. supra, it was said [79 F.2d 622]:
“Appellee manufactures devices as described in the patents as origihal equipment on motorcars it manufactures, as well as for motorcars others manufacture. It makes the same devices for repair parts and distributes them through a subsidiary corporation. Appellant sells, to jobbers, service stations, garages, and car owners, a substantial line of repair parts for ignition apparatus. It does not make or sell complete ignition systems, nor igniters, nor timer distributors, nor relatively durable or permanent parts thereof. It sells breaker arms with or without springs, contact brackets, or repair parts in timer distributors of appellee’s manufacture. These parts are susceptible to wear and destruction in operation. They are made so as to be readily detachable for replacement. It is the practice to replace rather than repair such parts.”
On these facts, the appellant was held not guilty of infringement. Another case directly analogous is Automobile Parts Co. v. Wisconsin Axle Co., supra, where the defendant, who made unpatented gears and shafts for use in the repair of plaintiff’s patented automobile axle, was held not to infringe.
The plaintiff does not contend that the manufacture and sale of parts to be used in the repair of a patented machine infringes a combination patent, but contends that the defendant by manufacturing virtually all the parts assists the railroads in the reconstruction of the machine. 'But the District Judge correctly found that there was no evidence of reconstruction or rebuilding of a stoker by a railroad (with the single exception mentioned) to such an extent as to justify the conclusion that the stoker was built anew rather than repaired, and upon this finding of fact it is clear that no infringement took place.
As we have seen, the District Judge held valid and infringed claim 14 of the “notched conveyor screw” patent, which claim covers a single member of a stoker, that is, a conveyor screw with projecting segments, but no appeal was taken from this holding. The District Judge also held valid, but not infringed, claims 1, 4 and 7 of the “distributor tube” patent, which claims describe as a separate member of the stoker the combination of a plate and abutment to govern the distribution of the fuel. We are in accord with this holding of non-infringement for, as the opinion of the District Judge shows, the device made by the defendant acts as a deflector rather than as an abutment.
The decree of the District Court is modified by omitting those parts which adjudicate the issues raised as to the validity of the claims of the patents in suit, this court expressing no opinion and making no adjudication on said issues and as so modified, the decree of the District Court is affirmed.
Modified and affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KEITH, Circuit Judge.
Plaintiffs appeal the district court order granting summary judgment to defendant B.F. Goodrich Company (BFG) in these personal injury and wrongful death actions. In each of the three consolidated cases, the plaintiffs alleged that they and/or their decedents were exposed to toxic chemicals while they or their decedents were employees of BFG at its plant in Louisville, Kentucky. The plaintiffs allege that the defendant intentionally, with wanton disregard for the health of plaintiff and plaintiffs’ decedents, concealed the serious health hazards associated with working in an environment containing vinyl chloride (“VC”). Plaintiffs allege that exposure to VC resulted in sickness, poisoning and emotional distress. In the cases involving Clarence Peerenboom and Robert Kitterman, plaintiffs allege that exposure to VC re-suited in the deaths of Peerenboom and Kitterman. The trial court refused to allow plaintiffs to amend their complaints to assert RICO violations. Furthermore, the trial court dismissed the plaintiffs’ personal injury and wrongful death actions because they were barred by Kentucky statutes of limitation. We affirm the district court’s judgment for the reasons set forth below.
The Peerenboom Plaintiffs
In 1974, Clarence Peerenboom filed a workers’ compensation claim stating that he had been injured by VC while working for BFG. Voluntary workers’ compensation payments were made to him by BFG from 1974 to 1980 in the amount of $26,-388. Peerenboom died on October 16,1980. His widow continues to draw weekly workers’ compensation payments in the amount of $69.75. No personal representative for the estate has ever been appointed. When the workers’ compensation complaint was filed, and again when the award was made, the Peerenbooms claim they were informed by BFG (workers’ compensation personnel) and defendant’s union attorney that they had no other legal course of action. On November 16, 1981, thirteen months after Mr. Peerenboom died, Mrs. Peerenboom filed suit as survivor and purported personal representative.
The Kitterman Plaintiffs
On July 23, 1976, Robert Kitterman filed a workers’ compensation claim stating that he had been injured by VC while working at BFG and that he discovered his condition in the fall of 1973. BFG contested the claim. The claim was denied because it was not a work related injury. Mr. Kitterman died on June 24, 1980. An autopsy revealed angiosarcoma of the liven After his death, a workers’ compensation award was made to his family. Like Mrs. Peerenboom, Mrs. Kitterman also dispensed with the administration of her husband’s estate. No personal representative has ever been appointed for Robert Kitterman’s estate. Mrs. Kitterman claims that she was advised on several occasions by agents of BFG, that she only had workers’ compensation as a legal remedy. Mrs. Kitterman also contends the attorney for the defendant’s union advised her that workmen’s compensation was her exclusive remedy. Mrs. Kitterman filed this wrongful death action as the survivor and purported personal representative of Robert Kitterman.
The Adkins Plaintiffs
In May 1974, Edgar Adkins filed a workers’ compensation claim alleging that he was injured by exposure to VC and loud noise while working for BFG. In his application, he stated that he had liver and internal damage. Mr. Adkins sought counsel from his lawyer in 1974 regarding any other claims he might have against BFG. On April 14, 1982, eight years after he learned of the injury, Mr. Adkins filed this personal injury action. The Adkins’ also claim that they were informed by the attorney for defendant’s union that the only legal recourse they had for the injuries sustained by Mr. Adkins was workers’ compensation.
Procedural History
On January 13, 1984, BFG moved for summary judgment in all three cases based on the statutes of limitations for personal injury and wrongful death actions. In an attempt to avoid the statutes of limitations, plaintiffs moved to amend their complaints to include allegations based on the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. (“RICO”). The trial court granted BFG’s motions for summary judgment in all three cases. The trial court also found that the plaintiffs presented no cognizable claims in their allegations regarding the RICO statute, and therefore denied their motions to amend initially and upon reconsideration. On appeal plaintiffs raise two issues. First, whether the district court erred in applying the statutes of limitations. Second, whether the district court erred in refusing to allow plaintiffs to amend their complaints to include RICO violations.
I.
KENTUCKY’S STATUTE OF LIMITATIONS
Plaintiffs argue that the district court incorrectly applied the statutes of limitations for their personal injury claims and wrongful death actions. Moreover, plaintiffs argue that due to advice received from a union attorney and/or statements made by an employee in the employee relations department, BFG is estopped from relying on the statutes of limitations. We will address each of these arguments.
A.
Person Injury Claims
On appeal plaintiffs contend that the district court erred in barring the personal injury claims pursuant to the statute of limitations. We do not agree. Kentucky Revised Statutes § 413.140(1), provides a one year statute of limitations for personal injury claims. The statute begins to run from the date “the plaintiff discovers or in the exercise of reasonable diligence should have discovered not only that he has been injured but also that his injury may have been caused by the defendant’s conduct.” Louisville Trust Co. v. Johns-Manville Products Corporation, 580 S.W.2d 497, 501 (Ky.1979). The cause of action accrues on the date of the injury to the person even though the full extent of the injury is not known for years later. Caudill v. Arnett, 481 S.W.2d 668 (Ky.1972).
The district court found that plaintiff and plaintiffs’ decedents knew of their illnesses, the reasons for them, and who caused them in the years 1973 and 1974. The district court also found that the plaintiff and plaintiffs’ decedents filed workers’ compensation claims specifically alleging that the claims were for injuries and illnesses suffered as a result of exposure to vinyl chloride and chemicals at BFG’s plant. Since it is uncontested that plaintiff and plaintiffs’ decedents discovered their injuries and that these injuries may have been caused by the defendant between 1973-1974, we find that the district court did not err in holding that the one year statute of limitation had expired when plaintiffs filed suit in 1981 and 1982.
Plaintiffs 'argue that the statute of limitations begins to run not from the date of discovery of injuries and who was responsible for them, but rather from the date plaintiffs discovered that they had a cause of action. This argument was rebutted by the Supreme Court of Kentucky in Conway v. Huff, 644 S.W.2d 333 (Ky.1983). In Conway, the court held that the date with which the statute begins to run “obviously ... must be with the discovery that a wrong has been committed and not that the party may sue for the wrong.” Conway, 644 S.W.2d at 334. Moreover, in Graham v. Harlin, Parker & Rudloff, 664 S.W.2d 945 (Ky.App.1983), the Kentucky Court of Appeals stated:
Perhaps it’s true that appellant did not know she had a cause of action at that time, but that is immaterial. The knowledge that one has been wronged and by whom starts the running of the statute of limitations ... not the knowledge that the wrong is actionable.
664 S.W.2d at 947.
Thus, we find that the district court did not err in holding plaintiffs’ personal injury actions were barred by Kentucky statute of limitations. To hold otherwise could vitiate the statute of limitations by allowing a plaintiff to plead a stale case merely because he did not see “the right lawyer” at the appropriate time, or by allowing a plaintiff to endlessly shop for a lawyer until he found one willing to take his case.
B.
Plaintiffs’ Wrongful Death Claims
Plaintiffs also contend that the. district court erred in barring their wrongful death actions pursuant to the statute of limitations. Again we do not agree. Kentucky Revised Statutes Section 413.180 and Section 241 of the Kentucky Constitution both provide that actions for wrongful death “shall be prosecuted by the personal representative of the deceased person” unless otherwise provided for by law. Kentucky Revised Statute Section 411.130(1) provides that the “action shall be prosecuted by the personal representative of the deceased.” It has been a long-standing requirement that the action must be filed by the legal personal representative of the estate within one year. Louisville & Nashville R.R. Co. v. Brantley’s Administrator, 106 Ky. 849, 51 S.W. 585 (1899). Further, if no valid personal representative is appointed within one year of the date of death, any action for wrongful death dies. Fentzka’s Adm’r v. Warwick Construction Co., 162 Ky. 580, 172 S.W. 1060 (1915). However, if a personal representative is appointed within one year of the date of death, he then is granted one year from the date of his appointment to file suit. If no suit is filed within that time, the action for wrongful death dies. Brantley’s Administrator, 106 Ky. at 854.
Finally, in Wheeler v. Hartford Accident & Indemnity Company, 560 S.W.2d 816 (Ky.1978), the Kentucky Supreme Court stated:
KRS 411.130 mandates that all actions for wrongful death be maintained by the personal representative of the deceased. The “wrongful-death statute”- has been a part of the general laws of this Commonwealth since 1893. Courts have consistently held that the right of action is in the personal representative exclusively.
Wheeler, 560 S.W.2d at 819.
In the instant ease, neither the Kitterman nor the Peerenboom plaintiffs complied with the above Kentucky requirements for appointing a personal representative. Clarence Peerenboom died on October 16, 1980. As the record indicates, on November 16, 1981, thirteen months after the date of death, the Peerenbooms filed suit. Although Mrs. Peerenboom signed a petition to dispense with administration of the estate, a legal personal representative of Mr. Peerenboom’s estate has never been appointed.
Robert Kitterman died on June 24, 1980. The record shows that Mrs. Kitterman filed a wrongful death action in her individual capacity on June 23, 1981. Although Mrs. Kitterman dispensed with the administration of her husband’s estate, Mrs. Kitterman has never been appointed the valid personal representative of her husband’s estate. Vassill’s Adm’r v. Scarsella, 292 Ky. 153, 166 S.W.2d 64 (1942). Therefore, since there has never been a valid personal representative of the deceased in either case, we hold that the district court did not err in finding both wrongful death actions barred by the statute of limitations.
Plaintiffs next argue that there are situations in which the interests of justice outweigh the rigorous reading of the word “shall” in the statute, as when the personal representative refuses to bring action. (KRS 411.130 states that an action for wrongful death shall be prosecuted by the personal representative.) In making the above argument, plaintiffs cite numerous Kentucky cases, including City of Louisville v. Hart’s Admr., 143 Ky. 171, 136 S.W. 212 (1911); Leach v. Owensboro City Ry. Co., 137 Ky. 292, 125 S.W. 708 (1910); McLemore v. Sebree Coal & Mining Co., 121 Ky. 53, 88 S.W. 1062, 28 Ky.Law Rept. 25 (1905).
However, these cases are distinguishable from the case at bar. Unlike the plaintiffs in City of Louisville, Leach or McLemore, there is no allegation in plaintiffs’ complaints that any personal representative here refused to bring action or perpetrated a fraud.
C.
BFG Is Not Estopped From Relying On the Statutes Of Limitations.
Plaintiffs next contend that BFG is es-topped from relying on the statutes of limitations because they were allegedly told by “agents” of BFG that their exclusive remedy was under the workers’ compensation statute. We also find this argument without merit. In Kentucky, the test of whether or not to apply estoppel to prevent a defendant from pleading the statute of limitations is set out in Miller v. Thacker, 481 S.W.2d 19 (Ky.1972). In Miller the court held that:
[T]he relevant inquiry should be whether or not under all the facts and circumstances the plaintiff was justified in relying upon the representations and activities of the [defendant] in delaying filing suit until time had run out.
Id. at 23 (emphasis added). Moreover, under Kentucky law a plaintiff is not entitled to rely upon the representations of his adversary regarding the law, as opposed to facts or promises to take care of the plaintiffs’ claims. Pospisil v. Miller, 343 S.W.2d 392 (Ky.1961). Jackson v. Jackson, 313 S.W.2d 868 (Ky.1958). To successfully estop the defendant from pleading the statute, the defendant’s “fraudulent action must be of a character to prevent inquiry or elude an investigation or otherwise mislead the party having [the] cause of action, and such party is under the duty to exercise reasonable care and diligence." Burke v. Blair, 349 S.W.2d 836, 838 (Ky. 1961) (emphasis added).
Plaintiffs argue that, because BFG “agents” told them that they had no other cause of action except for workers’ compensation, BFG should be estopped from pleading the statutes of limitations. We disagree. In the present case, the alleged misrepresentations to plaintiffs Adkins and Kitterman were not made by employees or agents of the defendant. The only “agent” mentioned in those plaintiffs’ affidavits is the attorney for the company union. Since that attorney was not an agent or employee of the company, we find that BFG cannot be estopped from pleading the statutes of limitations against the Adkins’ and the Kittermans’ stale claims.
Mrs. Peerenboom alleges that she was told by Karen Hicks, an employee of BFG in its employee relations department, that her only recourse was a workers’ compensation claim. However, the alleged statement of Ms. Hicks is not “of a character to prevent inquiry or elude an investigation or otherwise mislead the party having the cause of action.” Burke, 349 S.W.2d at 838. We believe that the plaintiffs were required to exercise reasonable diligence by consulting with their own lawyer to learn of the merits of their claims. Therefore, whether this statement was correct or incorrect, we find that the Peerenbooms were not entitled to rely on the “legal advice” of BFG’s employee relations department.
The cases relied upon by the plaintiffs are distinguishable. In both Chesapeake and N. Ry. v. Speakman, 114 Ky. 628, 71 S.W. 633 (1903), and Miller v. Thacker, 481 S.W.2d 19 (Ky.1972), the defendants or their agents misled the plaintiffs by promising compensation and then reversed their positions once the statute of limitations had run out. In the instant case, BFG, aside from paying Mr. Peerenboom’s workers’ compensation claim, has never promised the Peerenboom plaintiffs compensation.
Plaintiffs also incorrectly rely on Louisville and Nashville Railroad Company v. Disspain, 275 F.2d 25 (6th Cir.1960). In Disspain, an illiterate laborer injured his back while working on the railroad. The Louisville and Nashville Railroad Company sent him to its physician who told him nothing was wrong (a misrepresentation of fact — not law). It was only after the laborer visited another physician three and one-half years later that he learned of the damage the accident caused him. The court held that the defendant was estopped from pleading the statute of limitations. This allowed the plaintiff to bring suit when he discovered his injuries. However, the present case is clearly distinguishable. Not only are there no misrepresentations of fact, plaintiff and plaintiffs’ decedents discovered their injuries seven to eight years before they brought suit.
Finally, plaintiffs argue that “deliberate concealment by a defendant of the plaintiff[s’] cause of action will toll the statute of limitations.” Lashlee v. Sumner, 570 F.2d 107,110 (6th Cir.1978). However, we hold that the facts in the instant case do not indicate that BFG deliberately concealed plaintiffs’ cause of action.
II.
RICO VIOLATION
Plaintiffs argue that the district court misconstrued the RICO statute when it refused to permit them to file their amended complaints. We again disagree. Federal Rule of Civil Procedure 15(a) states that leave to amend a complaint “shall be freely given when justice so requires.” However, it is within the discretion of the court to grant or deny such leave. The district court stated that “[i]n another obvious attempt to forestall the running of the statute of limitations, plaintiffs have tendered amended complaints which attempt to assert a cause of action under the RICO statute,” 18 U.S.C. § 1961, et seq. Since RICO does not give the plaintiffs cognizable causes of action here, we agree with the district court that the interests of justice were served by denying the right to amend. See Louisville Trust Company v. Smith, 192 F.Supp. 396 (W.D.Ky.1961).
RICO is designed to give prosecutors an additional weapon against organized crime and to help protect legitimate businesses from infiltration by racketeers. See United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). We find that RICO is inapplicable to the instant case because the injuries complained of are not within the ambit of the statute.
The relevant portion of RICO states: Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.
18 U.S.C. § 1964(c).
At least one court has rejected the use of RICO in a personal injury case and has concluded personal injury actions are not within the ambit of the statute. Van Schaick v. Church of Scientology of California, Inc., 535 F.Supp. 1125 (D.Mass. 1982). As of this date, no court has applied RICO to a wrongful death action. Thus, we agree with the district court that since the amended complaints state no cognizable claims, the interests of justice are served by denying the right to amend.
Plaintiffs, however, argue that since the language of RICO was borrowed directly from the Clayton Act, the phrase “injury to business or property” should be interpreted identically for both Acts. Plaintiffs rely on the United States Supreme Court’s holding in Reiter v. Sonotone Corp., 442 U.S. 330, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979), that an expansive interpretation should be given to the phrase “injury to business or property”. Thus, for purposes , of the RICO statute, plaintiffs contend a cause of action should be granted to anyone suffering pecuniary injury as a direct result of a violation of RICO’s substantive provisions.
We do not accept plaintiffs’ broad interpretation of the RICO statute. The United States Supreme Court specifically stated in Reiter that: “The phrase ‘business or property’ also retains restrictive significance. It would, for example, exclude personal injuries suffered.” Reiter, 442 U.S. at 339, 99 S.Ct. at 2331 (emphasis added). In Sedima, S.P.R.L. v. Imrex Company, Inc., — U.S. -, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), Justice Marshall’s dissent stated that: “[T]he statute permits recovery only for injury to business or property. It, therefore, excludes recovery for personal injuries.” 105 S.Ct. 3292, 3297. Therefore, we find that the district court did not abuse its discretion when it denied plaintiffs’ proposed motions to amend their complaints to include RICO violations.
For the foregoing reasons, we affirm the judgment of Honorable Charles M. Allen’s dismissing plaintiffs’ personal injury and wrongful death actions and the denial of plaintiffs’ right to amend their complaints.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALDRICH, Chief Judge.
The single issue in this case is whether it was appropriate for the district court, as distinguished from the Secretary of Health, Education and Welfare, to determine and award plaintiff’s counsel a fee (“out of, and not in addition to * * * the benefits payable”) by virtue of section 206(b) (1) of the Social Security Act, 42 U.S.C. § 406(b) (1). No factual questions are involved. Plaintiff filed a claim for disability benefits and prosecuted it, unsuccessfully, pro se, through the Appeals Council. Thereafter he employed counsel, who filed a petition for review in the district court. The Secretary responded by moving for a remand. New administrative hearings were held, at which plaintiff’s counsel continued to represent him. Eventually plaintiff recovered, administratively, the full amount of the benefits claimed. Counsel then moved in the district court for an allowance of fees for the representation before the agency and his motion was allowed. The Secretary appeals.
Section 206(b) (1) was enacted in its present form in 1965, Pub.L. 89-97, 79 Stat. 403. Prior thereto it was held that under section 205(g), 42 U.S.C. § 405(g), the district court had implied power to award a fee. Sparks v. Celebreeze, 5 Cir., 1965, 342 F.2d 286. However, that case involved a fee for extensive court representation and did not raise the question whether the court’s allowance might include payment for services at the agency level. On this we find section 206(b) clear and explicit.
“(b) (1) Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation * *
“(2) Any attorney who charges, demands, receives, or collects for services rendered in connection with proceedings before a court to which paragraph (1) of this subsection is applicable any amount in excess of that allowed by the court thereunder shall be guilty of a misdemeanor * * (Ital. suppl.)
In our opinion this section codifies the implication which the court in Sparks found in section 205(g) and at the same time recognizes, expressly, the principle that a court is the appropriate one to determine the value of the services rendered before it, and by implication, that it is not for the court to determine the value of services rendered elsewhere.
For the services performed before the agency, the Secretary may award appropriate counsel fees. 42 U.S.C. § 406(a); 20 C.F.R. §§ 404.975-404.977a (1966). Section 206(b) (1) does not expressly revoke this provision. We see no point in considering it revoked pro tanto by implication. On the contrary, we see every reason for continuing the principle that the agency before whom services were rendered should be the one to determine their value. To the extent that Robinson v. Celebrezze, W.D. S.C., 1965, 248 F.Supp. 149, holds to the contrary, we do not accept it.
There is nothing singular in the fact that counsel who appears in two forums should apply to each for the aliquot part of his total fee. That is common practice where counsel obtains in a district court, and in an appellate court, a separate award for his services before each.
The judgment of the district court is vacated. Counsel may, if so minded, apply to that court for an allowance for services in drafting and filing the complaint. For compensation for the balance of his services counsel must make application to the Secretary.
. Concededly, counsel’s claim included services in connection with the filing of the complaint in the district court, but eoncededly, also, the bulk of the work was done before the agency. The parties agree that the matter before ús is the propriety of the court award for services rendered at the agency level.
. We find no basis for counsel’s statement to the district court, and seemingly accepted by it, that all an attorney can get from the Secretary is $50 a hearing. See Chernock v. Gardner, 3 Cir., 1966, 360 F.2d 257.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BIGGS, Circuit Judge.
The indictment in the cases at bar charges the appellants and others with a conspiracy to commit offenses against the United States in violation of Section 37 of the Criminal Code, R.S. § 5440, May 17, 1879, c. 8, 21 Stat. 4, March 4, 1909, c. 321, Sec. 37, 35 Stat. 1096, 18 U.S.C.A. § 88. Specifically the defendants below were charged with a conspiracy to manufacture, withdraw, transport, sell, remove, conceal and possess distilled spirits upon which revenue taxes had not been paid and to commit other crimes.
The United States contends that it has proved in accordance with the allegations of the indictment that the appellants Jake Sablowsky, Benny Sablowsky and Leonard Sablowsky, Sam Korenberg, Abe Shrinsky and Billy Birch, bought and procured nontaxpaid distilled spirits from persons operating illegal stills. Among these persons were the appellants Philip Piazza, James Totino, Fred Owens, Joe Parise, Sam Caldorni, Tony Caldorni, Sam Polito or Sam Epolito and Charles Murgie. The spirits so purchased from the persons named were sold to other individuals who operated speakeasies in and about Pittsburgh. Included in this last group are the appellants Harry Grob, Isaac Stein, Anderson Taylor and Nathan Sternberg.
The testimony through which the appellants were brought into the conspiracy and without which the United States could prove neither the conspiracy nor the appellants’ connection with it, was procured by government agents’ intercepting and divulging intrastate telephone communications between the parties to the conspiracy. Agents of the United States intercepted and recorded approximately sixteen hundred such telephone conversations. Five hundred or more of these intrastate communications were introduced in evidence during the course of the trial. Some of these conversations were in themselves criminal acts. If the communications referred to were properly admitted in evidence, the convictions of the appellants must be sustained. If the conversations were inadmissible, the. judgments of conviction must be reversed. The issue presented lor our determination is therefore a narrow one.
We state that 18 P.S. Pa. § 2014 makes it unlawful for any person connected "* * * with any telegraph or telephone line in this state * * * ” to divulge or cause to be known the contents of any message. It is apparent, however, that this statute refers solely to the acts of officers or employees of communication agencies within the State of Pennsylvania. We therefore must deal solely with the Federal Communications Act of 1934, June 19, 1934, c. 652, Section 1 et seq., 48 Stat. 1064 et seq., 47 U.S.C.A. § 151 et seq. Section 605 of the Communications Act, 47 U.S.C.A. § 605, provides:
“No person receiving or assisting in receiving, or transmitting, or assisting in transmitting, any interstate or foreign communication by wire or radio shall divulge or publish the existence, contents, substance, purport, effect, or meaning thereof, except through authorized channels of transmission or reception, to any person other than the addressee, his agent, or attorney, or to' a person employed or authorized to forward such communication to its destination, or to proper accounting or distributing officers, of the various communicating centers over which the communication may be passed, or to the master of a ship under whom he is serving, or in response to a subpena issued by a court of competent jurisdiction, or on demand of.other lawful authority; and no person not being authorized by the sender 'shall intercept any communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person; and no person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by wire or radio and use the same or any information therein contained for his own benefit or for the benefit of another not entitled thereto; and no person having received such intercepted communication or having become acquainted with the contents, substance, purport, effect, or meaning of the same or any part thereof, knowing that such ' information was so obtained, shall divulge or publish the existence, contents, substance, purport, effect, or meaning of the same or any part thereof, or use the .same or any information therein contained for his own benefit or for the benefit of another not entitled thereto: * * * ”,
It is apparent that the determination of the question .presented by the cases at bar turns upon the interpretation to be placed upon that portion of Section 605 in italics above. . The 'appellants contend that Congress in enacting this part of Section 605 intended to lay down a rule in respect to the admissibility of evidence in the Federal courts and by the language employed intended to prohibit and did prohibit the admission in evidence of communications procured by wire tapping whether the intercepted communications were interstate or intrastate in character. The United States contends, however, that by the express terms of the Communications Act the prohibitions of Section 605 may be applied only to interstate communications and since those at bar were intrastate in character they were properly admitted in evidence.
Turning now to an examination of Section 605 we find that its first clause, that lying prior to the first semicolon, prohibits employees of communication agencies from divulging any interstate or foreign communication except upon lawful authority. Next occurs the clause which the appellants contend prohibits the consideration by the jury of the intercepted communications in the case at bar. It will be noted that the qualifying phrase “interstate or foreign” is omitted before the word “communication” and that the clause upon its face prohibits the intercept- ■ ing or divulging of any communication whatsoever. The third clause obviously refers again to employees of communication agencies and provides that no person, not entitled, shall receive or divulge interstate or foreign communications or use them for his own benefit or for the benefit of others not entitled thereto. The fourth clause of the section provides that no person who has received an intercepted communication shall publish it or use it for his own benefit or for the benefit of others not entitled to receive it. This clause also omits the qualifying phrase “interstate or foreign” but refers simply to “such intercepted communication”, obviously the communication designated in the second clause of the section. It follows therefore that if the section be accepted at its face value it does in fact prohibit employees of communication agencies from divulging, except upon lawful authority, making use of; or permitting others to make use of any interstate or foreign communications. This is the gist of clauses one and three. The section also prohibits any person from intercepting, divulging or making use of any communication. Such is the gist of clauses two ant. four.
Section 1, 47 U.S.C.A. § 151, selling forth the purpose of the Communications Act, states that it is to regulate “* * * interstate and foreign commerce in communication by wire and radio * * * ”. Section 2, 47 U.S.C.A. § 152, provides that the provisions of the chapter shall apply “* * * to all interstate and foreign communication by wire or radio * * This section also provides that nothing in the chapter shall give the Communications Commission jurisdiction of intrastate carriers except in certain cases not pertinent here. Subsection (f) of Section 3, 47 U.S.C.A. § 153(f), defines “foreign communication” as communication from the United States to or from a foreign country or a mobile station outside of the United States. Subsection (h) defines a “common carrier” or a “carrier” as * * any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio * * * ”, Subsection (e) defines “interstate communication” but specifies that it does not “* * * include wire communication between points within the same State * * * ”. Section 301, 47 U.S.C.A. § 301, states that it is the purpose of the Act to maintain control by the United States over all the channels of interstate and foreign radio communication. Section 406, 47 U.S.C.A. § 406, provides that the district courts of the United States shall have jurisdiction to compel by mandamus carriers to furnish interstate or foreign communication facilities without discrimination to those who desire to use them.
The Act nowhere defines “communication”. The appellee contends that since the ordinary meaning of that word would include the conveyance of messages of any kind by any means, the phrase “any communication” contained in the second clause of Section 605 must be limited by an interpretation consistent with the express purposes of .the Act and therefore the clause must be deemed to refer to that class and only to that class of communications with which the Act purports to deal, namely interstate and foreign communications by wire or radio.
The section sub judice has been before the lower courts of the United States a number of times and has been construed by the Supreme Court in one case, viz., Nardone v. United States, 302 U.S. 379, 58 S.Ct. 275, 82 L.Ed. 314. We think-that a discussion of these cases will prove helpful in the expression of our opinion.
In United States v. Bonanzi, 94 F.2d 570, the Circuit Court of Appeals for the Second Circuit held that the provisions of Section 605 of the Communications Act rendered incompetent testimony respecting interstate communications and reversed a judgment of conviction of the appellants because the United States could not distinguish between the interstate communications and the intrastate communications in evidence. The court however did not pass upon the question of the admissibility in evidence of intrastate communications, simply assuming for the purposes of the decision that these were admissible.
In Valli v. United States, 94 F.2d 687, the Circuit Court of Appeals for the First Circuit passing upon the applicability of the provisions of Section 605 to intrastate communications procured by wire tapping by government agents held evidence of such intrastate communications to be admissible. The court held also that Section 99 of Chapter 272 of Massachusetts General Laws (Ter.Ed.) could not serve as a basis for excluding the testimony of an employee of the telephone company showing the installation of telephones at certain places of business. The learned Circuit Judge delivering the opinion of .the court referred to the limiting effect of Section 1 of the Communications Act, 47 U.S.C.A. § 151, to that of Section 2(a), 47 U.S.C.A. § 152(a), and to the first clause of Section 605, 47 U.S.C.A. § 605, which, since it purports to deal with employees of communication agencies, was within the purview of the decision. In a dissenting opinion Judge Morton stated [page 694J, “The Nardone Case, passing by the constitutional question, holds in substance that conduct which is regarded by the'public as so unethical that it is by statute specifically forbidden to persons generally is also forbidden to officers of the law, and that evidence obtained by officers in violation of such statutes will not be admitted in the federal courts.”
In United States v. Plisco, D.C., 22 F.Supp. 242, a decision by the District Court of the United States for the District of Columbia, motions were filed by certain defendants to quash search warrants and to suppress the evidence seized thereunder upon the ground that the material evidence upon which the warrants were issued was obtained by police officers by means of tapping wires and intercepting telephone communications passing between the defendants within the boundaries of the District of Columbia. The court, upon the authority of the Nardone Case, held that the material evidence so obtained was inadmissible in a criminal trial in a United States district court. In connection with this decision it must be borne in mind that subsection (e) of Section 3 of the Communications Act, 47 U.S.C.A. § 153(e), as we have stated defines “interstate communication” as communication “* * * from any State, Territory, or possession of the United States * * *, or the District of Columbia, to any other State, Territory, or possession of the United States * * * or the District of Columbia * * * ” and also states . that interstate communication “* * * shall not include wire communication between points within the same State, Territory, or possession of the United States, or the District of Columbia, * * It would seem to follow therefore that the decision of the learned District Judge construing the provisions of Section 605 in the light of the Nardone Case was based upon the conclusion that evidence concerning telephone communications intercepted by federal officers may not be received in a federal court irrespective of whether or not such communications are interstate communications within the purview of subsection (e). In reaching this conclusion as to the ruling of the court in the Plisco Case we are not unaware that the jurisdiction of Congress is plenary over the District of Columbia and that Congress has the power to prescribe a rule in respect to intercepting wire or radio communications within the District of Columbia different in character than that prescribed for the rest of the United States. Congress has not seen fit to do so, however, but by the definitions of the Communications Act has treated the District of Columbia in effect as if it were a state .of the United States.
To come now to the decision of the Supreme Court in Nardone v. United States, supra. In the cited case the Supreme Court granted certiorari from a decision of the Circuit Court of Appeals for the Second Circuit reported in 90 F.2d 630. The lower court had held that Section 605 did not serve to make evidence of intercepted interstate telephone conversations inadmissible in evidence. Mr. Justice Roberts, delivering the opinion of the Supreme Court, stated the question under consideration to be, “* * * whether, in view of the provisions of section 605 of the Communications Act of 1934, evidence procured by a federal officer’s tapping telephone wires and intercepting messages is admissible in a criminal trial in a United States District Court — * * * ”. He went on to state, “Section 605 of the Federal Communications Act provides that no person who, as an employe, has to do with the sending or receiving of any interstate communication by wire shall divulge or publish it or its substance to anyone other than the addressee or his authorized representative or to authorized fellow employes, save in response to a subpoena issued by a court of competent jurisdiction or on demand of other lawful authority; and ‘no person not being authorized by the sender shall intercept any communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person.’ * * *
“Taken at face value the phrase ‘no person’ comprehends federal agents, and the ban on communication to ‘any person’ bars testimony to the content of an intercepted message. Such an application of the section is supported by comparison of the clause concerning intercepted messages with that relating to those known to employes of the carrier. The former may not be divulged to any person, the latter may be divulged in answer to a lawful subpoena.”
In the cited case, the United States had contended that the provisions of Section 605 did not apply to federal officers engaged in their duties in bringing to justice violators of the law and urged that the Olmstead Case, Olmstead v. U. S., 277 U.S. 438, 48 S.Ct. 564, 72 L.Ed. 944, 66 A.L.R: 376, was governing in view of the fact that the provisions of Section 605 were practically identical with the corresponding section of the Radio Act of February 23, 1927, c. 169, § 27, 44 Stat. 1172.
In respect to this question Mr. Justice Roberts stated, “We nevertheless face the fact that the plain words of section 605 forbid anyone, unless authorized by the sender, to intercept a telephone message, and direct in equally clear language that ‘no person’ shall divulge or publish the message or its substance to ‘any person.’ To recite the contents of the message in testimony before a court is to divulge the message. The conclusion that the act forbids such testimony seems to us unshaken by the government’s arguments.”
Now it is. obvious that the question presented to the Supreme Court for its decision in the Nardone Case is a different one from that sub judice in the case at bar, since in the Nardone Case the intercepted communications were interstate in character. Moreover in the Nardone Case the Supreme Court passed upon the question of whether an exception in favor of the law enforcement officers of the United States should be granted in the face of the express language of Section 605. None the less the opinion in the Nardone Case casts illumination upon the question before us.
Our reason for so thinking is that the Nardone Case holds clearly that Section 605 creates a rule of evidence relating to the admission of intercepted wire communications sought to be divulged by officers of the United States in courts of the United States. No other interpretation can be placed upon this phase of the Nardone decision. It follows therefore that in the case at bar we must determine whether or not the rule of exclusion of evidence sought to be given by federal officers in courts of the United States is applicable to the testimony at bar of intercepted intrastate communications.
Before proceeding to express our views as to what we deem to be the correct interpretation of this question we should state that an examination of the Communications Act as a whole leads us to the inescapable conclusion that it was designed to the end that the Federal Communications Commission should have jurisdiction over and power to regulate within the terms of the Act all interstate and foreign communication and transmission of energy by wire and radio. Such is its primary purpose.
The Act contains six titles. The first contains general provisions relating to the application of the Chapter, the creation of the Commission and the designation of its powers and duties. 47 U.S.C.A. § 151 et seq. The second title relates to the common carriers engaged in interstate and foreign communication or transmission of energy by wire and specifies the duties imposed upon the Commission in respect to carriers. 47 U.S.C.A. § 201 et seq. The third title is like the second except that its provisions relate to communication or transmission of energy by radio as distinguished from communication or transmission by wire. 47 U.S.C.A. § 301 et seq. The fourth title contains procedural and administrative provisions. 47 U.S.C. A. § 401 et seq. The fifth title provides penal provisions and forfeitures. 47 U.S. C.A. § 501 et seq. The sixth and last title, in which Section 605 is written, contains miscellaneous provisions transferring jurisdiction of railroad telegraph lines from the Interstate Commerce Commission and Postmaster General to the Commission, repealing the Radio Act of 1927, making provision for the employment of officers and employees of the Federal Radio Commission, preserving pending suits, granting war powers to the President, and the rule of evidence set up by Section 605. 47 U.S.C.A. § 601 et seq.
It will be noted that the provisions of Section 605 are very different in their nature from those of the other sections of the Communications Act which in fact relate to the regulation of common carriers by wire and radio. The first and third clauses of Section 605 (as we have designated them), since they deal with acts prohibited to employees of communication agencies may be considered to be part of regulation of the carriers as well as constituting a rule of evidence. We think that this is so since it is apparent that the divulging of communications received in the course of their employment by employees of communication agencies might place a great burden upon interstate commerce. If the first and third clauses referred to are intended to relate to a phase of regulation as well as to constitute a rule of evidence, the limiting phrase “interstate or foreign” placed prior to the word “communication” in both of these clauses was aptly used by Congress to bring such regulation within the power of Congress under the Commerce clause. U.S.C.A.Const. art. 1, § 8, cl. 3. Upon the other hand the provisions of the second and fourth clauses of Section 605, which upon their face purport to relate to all persons, do not relate to the regulation of communication carriers and therefore constitute a rule of evidence in the purest sense. Congress must be deemed to have exercised its power within constitutional limitations. It possesses power to provide that Federal officers may not divulge intercepted intrastate wire communications in a district court of the United States. Such a construction limits the broad language of Section 605 in a manner consistent with the constitutional power of Congress. We therefore may conclude that such was the intention of Congress. Becker Steel Company v. Cummings, 296 U.S. 74, 79, 80, 56 S.Ct. 15, 80 L.Ed. 54; United States v. Butler, 297 U.S. 1, 6, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914; Hopkins Federal Savings & Loan Association v. Cleary, 296 U.S. 315, 333, 56 S.Ct. 235, 80 L.Ed. 251, 100 A.L.R. 1403; National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U.S. 1, 30, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352.
There is no helpful legislative history available in respect to Section 605 of the Communications Act or of the corresponding section (27) of the Radio Act of 1927. The provisions of Section 605 seem to have been lifted almost bodily from Section 27 of the Radio Act of 1927. Certain changes were made by Congress in the language of the Communications Act which it may be argued are pertinent to the question of construction before us. For example, Section 605 of the Communications Act substitutes the qualifying phrase “interstate or foreign” in lieu of the word “radio” as used in the Radio Act before the word “communication”. It can be argued that since radio communication may be intrastate as well as interstate, Congress in substituting the phrase for the word, made all the plainer the omission of the qualifying phrase from the second and fourth clauses of Section 605 thus pointing to the distinction between “interstate and foreign communication” and “any communication.” Conversely it can be argued that radio communication is a rarity when it may not be intercepted at a point across a state line from the sending station and that therefore in drafting an act, viz., the Communications Act, designed to relate to communications both by wire and radio, Congress merely substituted an appropriate phrase of limitation in effect no broader, than the qualifying word originally used. •
The express language of Section 2 of the Act, 47 U.S.C.A. § 152, should not be construed in such a manner as to limit the application of the provisions of Section 605 to interstate or foreign communications by wire or radio as was held in Valli v. United States, supra. The omission of the qualifying phrase “interstate or foreign” before the word “communication” in the second and fourth clauses of Section 605 is too significant. The provisions of Sectipn 2 of the Act, 47 U.S.C.A. § 152, which are general in that they purport to relate to the Act as a whole must give way before the specific and significant language of Section 605, later in order or arrangement in the Act. State of Missouri v. Ross, 299 U.S. 72, 76, 57 S.Ct. 60, 81 L.Ed. 46; Pennington v. Coxe, 2 Cranch 33, 2 L.Ed. 199; United States v. Jones, 131 U.S. 1, 9 S.Ct. 669, 33 L.Ed. 90; In re Slomka, 2 Cir., 122 F. 630, 631; Townsend v. Little, 109 U.S. 504, 512, 3 S.Ct. 357, 27 L.Ed. 1012; Kepner v. United States, 195 U.S. 100, 125, 24 S.Ct. 797, 49 L.Ed. 114, 1 Ann.Cas. 655; United States v. Daniels, 2 Cir., 279 F. 844, 849. No interstate or foreign communication by wire or radio may be deemed to escape the purview of the Act, but the provisions of Section 2 cannot be deemed to provide a limit to the scope of all of the provisions of the Act. We think that the conflict between the provisions of Sections 2 and 605 is more apparent than real. The words of Section 2 are not so inclusive as in fact to create a conflict with those of Section 605. Moreover it is a cardinal rule of statutory construction that effect is to be given if possible to every word, clause and sentence of a statute. United States v. Daniels, supra, page 849; Dwight & Lloyd Sintering Co. v. Reclamation Co., 2 Cir., 263 F. 315; Pillsbury Flour Milis Co. v. Great Northern Ry. Co., 8 Cir., 25 F.2d 66, 69; United States v. Greenfield Tap & Die Corporation, D.C., 27 F.2d 933, 934; North American Creamery Co. v. Willcuts, D.C., 38 F.2d 483. It is our duty in so far as it is practicable to reconcile the different provisions of the Act, to render them consistent and harmonious and give effect to each. Moreover yre are of the opinion that Congress intended the provisions of Section 605 as remedial and it is well established that statutes which are intended to be remedial in their nature are to be liberally construed. We hold therefore that Congress in enacting the rule of evidence embodied in Section 605 intended to provide and did in fact provide that evidence of intrastate communications procured by federal agents by tapping telephone wires is inadmissible in a district court of the United States.
We think that such an interpretation of the provisions of Section 605 is common sense. The ethical problem with which Congress was engaged and which it apparently sought to solve by enacting Section 605 is identical whether the communications intercepted and offered in evidence be interstate or intrastate in character. Nor would an interpretation of Section 605 commend itself to reason whereby certain intercepted communications could be received in evidence while others procured through the medium of an identical tapped line would be inadmissible.
In reaching this conclusion we are not unmindful of the additional burden which it will place upon law enforcement officers acting in good faith in the discharge of their duties. We may not allow this consideration, however, to affect what we deem to be the correct interpretation of the provisions of the statute.
The record discloses that no specific objections were taken by the appellants to the introduction in evidence of the testimony procured by wire tapping on the ground that such admission would constitute a violation of Section 605 of the Communications Act. Nor do the assignments of error deal with the question at bar. Following the decision of the Supreme Court in the Nardone Case argument was had upon the substantive questions of law involved in the interpretation of the provisions of Section 605 and the United States attorney raised no question as to our right to consider the substantial questions raised, the United States apparently desiring a determination upon the merits. It is our opinion that we may consider the substantive question presented and may determine it because to do otherwise would result in a miscarriage of justice since we look upon the admission of the wire tapping testimony in the cases at bar as plain error requiring reversal. Church v. Hubbart, 2 Cranch 187, 2 L.Ed. 249; Grau v. United States, 287 U.S. 124, 53 S.Ct. 38, 77 L.Ed. 212. Compare Ford v. United States, 273 U.S. 593, 47 S.Ct. 531, 71 L.Ed. 793.
Accordingly the judgments of conviction of the respective appellants are reversed and the causes are remanded for further action in accordance with this opinion.
The statute referred to is as follows: “In case any person, superintendent, operator, or [employee] who may in any capacity he connected with any telegraph or telephone line in this state, shall use or cause to be used, or make known or cause to be known, the contents of any dispatch sent from or received at any office in this state, or in any wise unlawfully expose another’s business or secrets, such person shall be deemed guilty of a misdemeanor, and upon being duly convicted thereof shall, for every such offense, be subject to a fine of not less than one hundred dollars or imprisonment not exceeding six months, or both or either, in the discretion of the court.”
Act of February 23, 1927, c. 169, See. 27, 47 Stat. 1172.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This is an appeal from the District Court’s denial, after an evidentiary hearing, of Petitioner’s motion under 28 U.S.C. § 2255 to vacate his 15-year sentence which was imposed after Petitioner pleaded guilty in June 1962 to charges of armed bank robbery.
The case was previously before this Court in Daugherty v. United States, 426 F.2d 263 (6th Cir. 1970), wherein this Court reversed the District Court’s denial of Petitioner’s § 2255 motion and remanded for an evidentiary hearing on Petitioner’s claims that his guilty plea was involuntary and that he was denied effective assistance of counsel. On remand, the District Court conducted an evidentiary hearing at which Albert Jones, Esq., and Lloyd Emery, Esq., Petitioner’s court-appointed counsel in the 1962 proceedings, and Petitioner, with his then court-appointed counsel, appeared as witness. After reviewing the transcript of the 1962 proceedings, the District Court concluded that Petitioner’s guilty plea was not involuntary and that Petitioner was not denied the effective assistance of counsel as alleged.
On the present appeal, Petitioner asserts that the District Court erred in concluding that he was afforded effective assistance of counsel. Specifically, Petitioner contends that the District Court should have granted his § 2255 motion because there was insufficient evidence introduced at the hearing to refute his allegations that his court-appointed counsel never informed him of the charges contained in the indictment and the maximum and minimum penalties thereunder, that they persuaded him to plead guilty with threats of the maximum penalty if he went to trial, that they promised him a lesser sentence if he pleaded guilty under a deal they had arranged with the District Judge, that they never questioned him about the case or his actual guilt or innocence, and that they ignored his statements that he desired to plead not guilty. Petitioner asserts that the District Court erred in relying on the testimony and reputations of his court-appointed counsel to refute the above allegations when in fact the two attorneys could not re-. member having served as counsel to Petitioner and his co-defendant in the 1962 proceedings. It is important to note, however, that Petitioner first filed his § 2255 motion in the District Court nearly seven years after he entered his guilty plea, and more than eight years had elapsed between the 1962 proceedings and the evidentiary hearing. In light of this passage of time, the District Court had no choice but to rely in part on the stature of the District Judge who accepted Petitioner’s guilty plea and the reputations of the court-appointed counsel, who testified that their practice was always to inform indigent defendants of the charges against them and the consequences of a guilty plea and that they had never arranged a deal with a trial judge nor persuaded a defendant to plead guilty when he had indicated his desire to go to trial. Hearing transcript at 38-42, 49-51. Moreover, the District Court had the opportunity to observe the demeanor of the witnesses at the hearing, and its Memorandum and Order reveals that the Court compared the testimony with the relevant entries in the transcript of the 1962 proceedings which raise some question as to the merit of Petitioner’s claims. We therefore con-elude that the District Court did not err in its conclusion that Petitioner failed to meet his burden of showing a denial of effective assistance of counsel asserted in the above allegations. See United States v. Breaton, 290 F.2d 856 (6th Cir. 1961); Edwards v. United States, 103 U.S.App.D.C. 152, 256 F.2d 707 (1958).
Petitioner further argues that even if the District Court was correct in its findings, this Court should grant the § 2255 motion solely on the basis of the apparently undisputed facts that counsel were appointed within a few hours of Petitioner’s guilty plea and that they conferred with Petitioner no more than thirty minutes prior to his plea. This Court, however, has held that absent a showing of prejudice to the defendant, the late appointment of counsel does not in itself constitute a denial of effective assistance of counsel. See e.g. Callahan v. Russell, 423 F.2d 450 (6th Cir. 1970); United States v. Moore, 419 F.2d 810 (6th Cir. 1969); United States v. Sisk, 411 F.2d 1192 (6th Cir. 1969), cert, denied, 396 U.S. 1018, 90 S.Ct. 584, 24 L.Ed.2d 509 (1970). And although we have recognized inherent prejudice to certain defendants who were forced to proceed to trial within an unreasonably short period after counsel was appointed or retained, Townsend v. Bomar, 351 F.2d 499 (6th Cir. 1965); United States v. Knight, 443 F.2d 174 (6th Cir. 1971), this Court has expressly refused to adopt a per se rule of reversible error requiring no showing of prejudice where a defendant has pleaded guilty after a late appointment of counsel. Callahan v. Russell, 423 F.2d 450, 454 (6th Cir. 1970). Upon the District Court’s findings, we conclude that Petitioner suffered no prejudice through the late appointment of counsel prior to his guilty plea at the 1962 proceedings.
The decision of the District Court is therefore affirmed.
. By an order of this Court filed September 2, 1971, the Government’s motion to dismiss for Petitioner’s failure to file a timely brief was referred to this panel. IVe have determined that the requirement under Rule 31, Fed.Rules App.Proc., should be waived with respect to Petitioner, and the Government’s motion is therefore denied.
. At the evidentiary hearing, Petitioner testified that “[Mr. Jones] just read the charges to me. I assume it was the indictment lie read from ... a piece of paper he had, but I never did see the indictment myself.” (Hearing transcript at 14.) At the 1962 proceedings, however, the District Court asked, “Are you familiar, Mr. Daugherty, with the charge in the two counts of this indictment; have you read the indictment and do you understand the charge ?” to which Petitioner responded “Yes, sir.” (1962 transcript at 5.) Although this and other examples of Petitioner’s tenor at the 1962 proceeding do not conclusively refute Petitioner’s allegations under his § 2255 motion, the District Court was clearly entitled to consider Petitioner’s statements at the 1962 proceedings in determining the merit of his present claims.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GARDNER, Circuit Judge.
Appellant, Frank Illingworth, was the owner and driver of a truck-tractor which, while it was being driven westward on Highway No. 6, about one mile east of South Amana, Iowa, became stalled while partly on the paved portion of the highway. A truck-trailer driven by appellee Laverne Carrington in a westerly direction collided with appellant’s stalled tractor. The tractor driven by appellee Carrington belonged to ap-pellee Industrial Molasses Corporation, which also owned the cargo of molasses being transported in the trailer attached to the tractor. Based upon claims of personal injuries or damage to property resulting from this accident two actions were brought, one by appellees Carring-ton and Industrial Molasses Corporation for personal injuries to Carrington and damages to property of Industrial Molasses Corporation, and the other by one Kenneth C. Koch doing business as Chilli-cothe Cartage Company, for damages to property.
In the action brought by Carrington and Industrial Molasses Corporation it was alleged in the complaint that defendant in that action, appellant here, was negligent in the following particulars: (a) in stopping, parking, or leaving standing, said truck upon the paved traveled part of U. S. Highway No. 6; (b) in failing to leave said truck stopped, parked or standing off of the paved or main traveled part of said Highway No. 6 and upon the shoulder of said highway; (c) in failing to leave a clear and unobstructed width of at least twenty feet of said Highway No. 6 opposite said parked or standing vehicle for the free passage of other vehicles, including plaintiff’s vehicle; (d) in failing to display a lighted fusee, lighted flares, red reflector electric lanterns, or red reflectors, when defendant’s tractor was stopped on the traveled portion of Highway No. 6; (e) in failing to display a red light visible to the rear from a distance of 500 feet, when the defendant’s tractor was parked or stopped upon Highway No. 6.
Illingworth, in his answer to the complaint, denied all charges of negligence charged in the complaint and by way of counterclaim charged the plaintiffs with negligence in the following particulars: (a) the failure to operate said tractor and trailer at such a rate of speed as to permit the same to be brought to a stop within the assured clear distance ahead; (b) the failure to have said tractor and trailer under control; (c) the failure to keep a proper lookout; (d) operating said tractor and trailer at a speed in excess of fifty miles per hour; (e) not driving said tractor and trailer at a careful and prudent speed under the conditions then existing; (f) failing at the time and place of said accident to use a distribution of light, or composite beam directed high enough and of sufficient intensity to> reveal persons and vehicles at a safe distance in advance of the vehicle which the plaintiff Laverne Carrington was then and there driving. The plaintiffs by reply put in issue all the allegations of negligence contained in Illingworth’s counterclaim.
In the action brought by Kenneth C. Koch, the complaint charged Illingworth with the same acts of negligence as alleged in the complaint of Carrington and Industrial Molasses Corporation, and in turn Illingworth by his answer denied all acts of negligence.
As the two actions grew out of the same accident, the court consolidated them for the purpose of trial and they were tried to the court and a jury on instructions to which certain exceptions hereinafter to be noted were saved by Illingworth, appellant herein. The jury returned a verdict in favor of Kenneth C. Koch and against Illingworth, and also returned a verdict against appellant on his counterclaim in the action brought by Carrington and Industrial Molasses Corporation. In due course the court entered judgments pursuant to these verdicts. Appellant moved for a new trial in each of the cases, which the court denied. Illingworth did not prosecute his appeal from the judgment in favor of Kenneth C. Koch, but settled same.
From the judgment in favor of ap-pellees on his counterclaim appellant seeks reversal on the ground that the court erred in the following particulars: (1) the trial court erred in refusing to give an instruction of Section 321.415, Code of Iowa (1954), as amended, I.C.A.; (2) the trial court erred in submitting a specification of negligence based solely on negative testimony; (3) the trial court erred in refusing to strike that portion of the testimony of the witness Hummel which was based on hearsay; (4) the trial court erred in submitting Instruction No. 12 to the jury; (5) the trial court erred in failing to give an instruction on disabled vehicles; (6) the trial court erred in submitting Instruction No. 13 to the jury.
It will be observed that the alleged errors complained of are errors in giving or refusing to give instructions or alleged errors in ruling on the admissibility of evidence. There is no challenge to the sufficiency of the evidence to sustain the verdict on which the court entered judgment dismissing appellant’s counterclaim on its merits. The court instructed the jury in great detail, the instructions being numbered from 1 to 23, both inclusive. Appellant challenges only three of these instructions; to wit, Instruction No. 11, Instruction No. 12, and Instruction No. 13. He also complains that the court erred in refusing two instructions requested by him.
We have given careful consideration to all the exceptions now urged to the court’s instructions and in doing so have considered the instructions as a whole with meticulous care and think they properly presented the issues to the jury and contained no prejudicial error. In view of our conclusion, hereinafter expressed, as to the effect to be given to Instruction No. 16, which was not objected to, we deem it unnecessary to review the alleged errors in the giving or refusing of other instructions. Instruction No. 16 given by the court reads as follows:
“If your verdict is in favor of Kenneth C. Koch on his claim against Frank Illingworth, you need not give consideration to the claim of Frank Illingworth against the Industrial Molasses Corporation and Laverne Carrington. Further, if your verdict is in favor of the Industrial Molasses Corporation and Laverne Car-rington on their claims against Frank Illingworth, you need not give consideration to the claim of Frank Illingworth against them. Under the applicable law if Kenneth C. Koch or the Industrial Molasses Corporation and Laverne Carrington recover against Frank Illingworth, he cannot recover against the Industrial Molasses Corporation and Laverne Carrington and you should thereupon return a verdict in their favor on his claim against them. If you find that the Industrial Molasses Corporation and Laverne Carrington or Kenneth C. Koch are not entitled to recover against Frank Illing-worth, you will then consider the claim of Frank Illingworth against the Industrial Molasses Corporation and Laverne Carrington.”
This instruction was not objected to by any of the parties to the action, and it is not alleged nor charged as error in appellant’s brief. It cannot therefore be reviewed on this appeal. Rule 51, Federal Rules of Civil Procedure, Title 28 United States Code; Palmer v. Miller, 8 Cir., 145 F.2d 926; Hall v. Aetna Life Ins. Co., 8 Cir., 85 F.2d 447. The allegations as to- negligence were common to both actions, as was also the evidence in support of the allegations of negligence. As the sufficiency of the evidence to sustain the verdict is not challenged, this instruction became the law of the case. Baker v. Chicago, B. & Q. R. Co., 8 Cir., 220 F.2d 721; Pierce Consulting Engineering Co. v. City of Burlington, 2 Cir., 221 F.2d 607; Kelly v. Emary, 242 Iowa 683, 45 N.W.2d 866; 53 Am.Jur. Trial, Sec. 844, p. 620; Barron and Holtzoff, Sec. 1106, p. 804. In this Instruction No. 16 the court specifically told the jury that if their verdict was in favor of Kenneth C. Koch on his claim against Illingworth they need not give consideration to the claim of Illingworth against Industrial Molasses Corporation and Carrington. The jury, as has been observed, returned a verdict in favor of Kenneth C. Koch and against Illingworth. In so doing the jury of necessity found appellant guilty of negligence in the particulars alleged in the complaint of the appellees in their action against appellant. As this finding of the jury conclusively precluded appellant’s right to recover on his counterclaim, we pretermit any further consideration as to other instructions given or refused by the court.
It is finally urged that the court erred in refusing to strike the testimony of an expert witness called by appellees to the effect that the right rear wheel of the Illingworth tractor was five feet, ten inches south of the north edge of the highway, for the reason that it was based on hearsay. The evidence was not objected to when given and there was no suggestion that sufficient foundation had not been laid for the opinion of the witness nor that the matter was not the proper subject of expert testimony, although that was apparent on the face of the question. This same question was urged on motion for new trial, in response to which the court said:
“As to Paragraph 2 of the Motions. The question asked Patrolman Ray Hummel was on its face an improper question. Thornbury v. Maley (1951) [242 Iowa 70] 45 N.W.2d 576; McKeever v. Batcheler (1934), 219 Iowa 93, 257 N.W. 567. If the proper objection had been made to it, i. e., that the question called for expert testimony on a subject which was not a proper subject for expert testimony, the objection would have been sustained and the evidence sought to be elicited by the question would have been barred from the record. The defendant chose not to object to the question and the evidence which was responsive to the question came in without objection. During the cross-examination it developed that possibly the evidence so received was excludable upon another ground. Although it is not clear that the evidence was excludable upon such other ground, yet, if it were, it would seem that the defendant’s action was belated in character.” .
No proper objection having been made to the testimony of this witness when offered, we think the court did not abuse its discretion in refusing to grant appellant’s motion to strike. Quite aside from the testimony of this expert witness there was other testimony as to the physical facts and circumstances, leaving no room for doubt that the appellant was stopped, at least temporarily, in the north half of the road in front of appellee. Appellant himself testified on direct examination that:
“Just when I rolled to a stop, I rolled it over so the right front wheel and the back right was off of the pavement. Both the right wheels were off the pavement. My tractor was facing northwest.”
And on cross-examination he testified that:
“I didn’t think it would be hazardous to stop on the traveled part of the highway for a minute or two. I figured I would get her to the shoulder first, but right at the immediate place where I went to pull over, there was a big ditch.”
We have considered all other contentions urged by appellant but think they are without merit, and we are convinced that the court committed no prejudicial error in the trial of this case and that appellant had a fair trial. The judgment appealed from is therefore affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LEVIN H. CAMPBELL, Circuit Judge.
Under the doctrine of relation back, an amended complaint can be treated, for purposes of the statute of limitations, as having been filed on the date of the original complaint. This diversity case presents several questions concerning choice of federal or state relation back law, the result dictated by that law, and the procedural mechanisms by which relation back questions may be raised and ruled upon.
I
On May 12, 1979, appellant George Pes-sotti suffered severe burns when gasoline fumes were ignited by the pilot light on his kitchen stove. Pessotti had been using gasoline as a solvent in order to remove his kitchen carpet, which was glued to the linoleum floor. On July 29, 1980, Pessotti filed a complaint in the District Court for the District of Massachusetts against Magic Chef, Inc., the manufacturer of the stove. Asserting that jurisdiction existed because of diversity of citizenship, Pessotti alleged that his injuries had been caused by Magic Chef's failure to warn him of the hazards of the stove’s continuously burning pilot light.
At a trial, which took place ten years later in the summer of 1990, Pessotti testified to having believed at the time he filed his complaint against Magic Chef that the manufacturer of the gasoline can was also responsible for his injuries. However, he said he had been unable to identify the manufacturer of the can until four years after filing suit, when, in late 1984, his expert discovered a roll of undeveloped photographic negatives in the files of the Westford, Massachusetts police department. This was apparently the first time anyone working on behalf of Pessotti had checked the police files, even though two police officers had investigated at the scene on the day of the accident. After developing the photographs, Pessotti determined that the can in which he had brought the gasoline into his kitchen had been manufactured by appellee Eagle Manufacturing Company. On January 11, 1985, Pessotti moved to amend his complaint to add Eagle as a defendant. The motion was allowed, and Pessotti filed an amended complaint on February 12,1985 and a corrected amended complaint on November 26, 1986. The amended complaints alleged that Eagle’s failure to warn him of the hazards of using gasoline near hidden ignition sources constituted negligence, breach of warranty and unfair or deceptive trade practices, in violation of Massachusetts common and statutory law.
The statute of limitations had expired in 1982 as to the negligence and warranty claims against Eagle, and in 1983 as to the unfair trade practice claim. When Pessotti moved successfully to amend his complaint so as to add Eagle as a defendant, and when the amended complaints were filed, the crucial question of whether or not the claims against Eagle would relate back to the date of the original complaint was left undecided. Nor did the court then consider whether Massachusetts or federal law should control that determination. The plaintiff raised these issues in a memorandum of law submitted in support of the amendment, but, as Eagle was not then a party, the amendment was allowed unopposed. Much later, during the trial proceedings in 1990, the district court commented that, pursuant to its normal practice under the Federal Rules of Civil Procedure, it had allowed the complaint to be amended subject to a later determination of whether it would relate back.
In its answer to Pessotti’s corrected amended complaint, Eagle pleaded that Pessotti’s claim was “barred by the applicable statutes of limitation and/or the doctrine of laches.” Eagle did not, however, move for judgment on this ground until after the trial commenced. During the interim, in January 1988, Pessotti settled with Magic Chef for $15,000, leaving Eagle as the sole defendant. A jury trial on Pessotti’s claims against Eagle was held in late July and early August 1990. At the close of plaintiff’s case, Eagle moved for a directed verdict on the grounds of limitations and laches, as well as of the insufficiency of the evidence and other grounds related to the merits of the action. A hearing was held at which the only limitations issue discussed was whether the amended complaint related back under either Massachusetts or federal law. The motion was denied, and the jury returned a verdict for the plaintiff. Judgment on the verdict was entered on August 9,1990. On the day following, Eagle filed a motion for judgment notwithstanding the verdict asserting grounds the same as those in its earlier motion for a directed verdict.
Regarding the alleged insufficiency of the evidence and other questions pertaining to the jury verdict, Eagle’s motion was denied. 774 F.Supp. 669. The district court ruled that Eagle’s motion had raised “close and debatable issues,” but that “the evidence [was] barely sufficient to present a jury question.” On the relation back issue, however, the court held for Eagle. It ruled that relation back was governed by Rule 15(c) of the Federal Rules of Civil Procedure, which clearly indicates that the amended complaint did not relate back to the date of filing of the original complaint. In the alternative, the court held that the same result would obtain under Massachusetts law. The district court also rejected Pessotti’s arguments that it was precluded from ruling on the relation back question because the matter had been presented for the first time in a motion for judgment notwithstanding the verdict several years after the court had allowed the complaint to be amended so as to bring in Eagle.
Pessotti presents several arguments on appeal. He challenges the timing and procedure of the court’s relation back ruling, arguing that the district court could not consider that question when it did because (i) if Massachusetts law controls, relation back was automatic once the amendment was allowed, (ii) judgment notwithstanding the verdict may only be granted on the merits of an action, not on a limitations defense, and (iii) Eagle was barred by waiver and estoppel from raising its limitations defense several years into the litigation. On the relation back question itself, Pessot-ti argues that Massachusetts law governs and causes his claim against Eagle to relate back to the time he sued Magic Chef. Eagle cross appeals, arguing that the district court erred in denying its motion on insufficiency of evidence and other merits grounds.
We uphold the district court’s determination that Pessotti’s claim against Eagle did not relate back and was, therefore, barred by the statute of limitations. In our view, the fact the court at first allowed the complaint to be amended so as to join Eagle as a defendant — ruling against plaintiff on relation back and limitations grounds only much later, when granting defendant’s motion for judgment notwithstanding the verdict — was not procedurally fatal. We also think that the court’s substantive disposition of the relation back question was correct under both Massachusetts and federal law. We need not, therefore, consider the choice of law question nor do we reach the legal sufficiency of plaintiff’s case.
II
A. Procedure and Timing Issues
We first consider Pessotti’s arguments concerning the timing and mechanics of the district court’s relation back decision.
Pessotti contends that Eagle forfeited its statute of limitations defense (including any right to object to the relation back of Pessotti’s claim) by failing promptly to contest the court’s order allowing the complaint to be amended. Pessotti’s argument rests on the twin assumptions that Massachusetts law controls the relation back issue, and that the district court was bound by a particular aspect of the Massachusetts relation back rule, to wit, that an amended complaint automatically relates back to the filing date of the original complaint. Under Pessotti’s theory, Eagle could not simply rely on its answer to the amended complaint to raise and preserve its statute of limitations defense. Rather, Eagle had to timely move the court to reconsider its order amending the complaint to include the new claim against Eagle. As this was not done, Pessotti argues, the amendment stood, and, under Massachusetts requirements, it automatically related back. Subsequent arguments about whether or not it related back were simply meaningless, since under Massachusetts law, amendments once allowed, always relate back, as a matter of black-letter law.
Pessotti’s argument only works, of course, if Massachusetts relation back law applies. If federal relation back law applies, the mere fact a court allowed an amendment to the complaint would not determine whether the amended complaint related back. Under federal law it is clear that the question whether Pessotti’s claim against Eagle related back remained open for later adjudication as a separate and distinct matter.
But even if Massachusetts relation back law is controlling here, we do not agree with Pessotti’s position that the court’s allowance of the amendment was a procedural event that permanently resolved the question of relation back. The district court, in its subsequent consideration of the relation back issue, commented that it had allowed the amended complaint, pursuant to the Federal Rules of Civil Procedure,
subject to later determination of the consequences of my allowance of the amendment. Surely, whether a federal court allows an amendment with a view to later determining its effect (given then unsettled questions of law), rather than considering all of the potential consequences of a proposed amendment before deciding whether to allow the motion to amend, it is a matter of procedural law on which a United States district court may apply federal rather than Massachusetts law. Accordingly, I rule that under federal law it is appropriate for me now to declare explicitly that my procedural order was not meant to decide, and did not have the effect of deciding, the unsettled question as to whether the amendment would relate back to the time of filing of the original complaint. My present ruling has the same legal effect as vacating my order of January 1985 [allowing the amended complaint], and if it is necessary to characterize it in this way in order to achieve the intended effect consistently with Massachusetts law, I hereby do so.
We think the district court analyzed the question properly. Even assuming, ar-guendo, that choice of law principles were later found to require application of Massachusetts substantive rules concerning relation back, the district court’s procedural matrix rests on federal law — and federal law treats amendment and relation back as raising separate issues. When and in what procedural setting a court rules on a particular question is normally a “procedural” issue controlled by a forum’s own law. Under “outcome determinative” principles, we doubt that a party would select a forum in these circumstances simply on the basis of whether a substantive relation back rule would be resolved at the time of amendment or later. See Hanna v. Plumer, 380 U.S. 460, 468-69, 85 S.Ct. 1136, 1142, 14 L.Ed.2d 8 (1965). Indeed, the cart would be put before the horse if, in order merely to determine when and in what setting it would resolve a relation back issue, a court had, first, to decide one of the grounds underlying the latter issue, i.e., choice of law. Rather we think the court should consult its own law in order to ascertain procedural ground rules of this sort.
Hence, here, the district court properly treated relation back as a separate question, in conformity with the scheme of the federal rules. At the time it allowed the amended complaint, it had no practical way of knowing whether federal or Massachusetts (or some other) law would ultimately control, and it had no intention of resolving relation back merely by allowing the amendment. Eagle timely raised the statute of limitations bar in its answer, and both parties and the court thereafter accepted that Eagle had objected to the allowance of the amended complaint on relation back grounds. Although he made related arguments concerning waiver and estoppel, Pessotti never argued in the district court that no proper objection had been raised. At hearings held on both the directed verdict and judgment notwithstanding the verdict motions, the parties argued extensively about both federal and Massachusetts law concerning relation back. Fully aware of the procedural distinction between Massachusetts and federal relation back law, and of the guiding substantive rules in both jurisdictions, the court then ruled in favor of Eagle. It would make no sense to hold that this ruling, rendered after full argument by both sides, was a nullity because no objection fully satisfying Massachusetts procedures had been raised at the time the complaint was amended.
Pessotti next argues that it was error for the district court to, in effect, vacate its earlier order allowing the amended complaint by granting a judgment notwithstanding the verdict. Pessotti claims that a motion for judgment notwithstanding the verdict is an improper vehicle for presenting a limitations related defense because such a judgment may be granted only where the evidence does not support the verdict on the merits. To support this proposition, Pessotti points to authorities stating that a judgment notwithstanding the verdict should be granted where no reasonable construction of the evidence could support the verdict. E.g., Conway v. Electro Switch Corp., 825 F.2d 593, 598 (1st Cir.1987). However, we read these authorities as stating only the standard for deciding a sufficiency of the evidence claim when such claim is presented in a motion for judgment notwithstanding the verdict, not as limiting the issues which can be presented via such a motion. Federal Rule of Civil Procedure 50(b) does not on its face limit the legal questions which may be raised, and we see no reason why a limitations defense may not be presented in a motion for judgment notwithstanding the verdict. See Borden v. Paul Revere Life Insurance Co., 935 F.2d 370, 376 (1st Cir.1991) (affirming a district court’s rejection of a limitations defense presented in a motion for directed verdict and ruled upon after judgment, without noting any procedural problem).
Pessotti also argues that Eagle should have moved for judgment sooner in the proceedings, rather than waiting several years to do so. To the extent that this argument is based on the doctrine of waiver, we reject it. Eagle’s assertion of a limitations defense in its answer made clear its intent to raise that defense. We need not decide whether it would be proper for a district court, in appropriate circumstances, to avoid wasted effort by requiring that a defense raised in a responsive pleading be argued and ruled upon before trial. Such a decision concerns the efficient management of the litigation and is properly left to the discretion of the district court. Here, the district court determined that it was appropriate to consider the defense at the end of trial proceedings. In the circumstances, we do not find any abuse of its discretion.
Finally, we also reject Pessotti’s related argument that, because of Eagle’s failure to move for judgment on limitations grounds early in the proceedings, Eagle was estopped to raise its limitations defense at the time it did. Pessotti claims that Eagle’s failure to assert its limitations defense earlier led him to believe that it would not do so, and that he relied to his detriment on this belief by settling with Magic Chef for a small amount, assuming that he could obtain a “meaningful recovery” against Eagle. Estoppel requires “reasonable reliance.” Phelps v. Federal Emergency Management Agency, 785 F.2d 13, 16 (1st Cir.1986). We simply do not think it would have been reasonable, absent some express representation by Eagle, for Pessotti to assume that Eagle would not pursue a defense it had pleaded. Furthermore, the merits of Pessotti’s claim were vigorously disputed by Eagle. Therefore, even assuming that it was reasonable for Pessotti to believe that Eagle would not pursue its limitations defense, it would still have been unreasonable for Pessotti, in deciding whether to settle with Magic Chef, to assume he could recover a significant amount from Eagle.
B. Relation Back
We have held above, notwithstanding structural differences between Massachusetts and federal relation back practice, that there was no error in the timing and procedure followed in making the relation back decision under the law of either jurisdiction. We next consider whether the district court erred substantively in deciding that the amended claim against Eagle did not relate back. We think not. It is not disputed that under Federal Rules of Civil Procedure 15(c) Pessotti’s amended complaint would not relate back. Because we find that the identical result obtains under Massachusetts law, we need not decide which law applied.
In 1988 the Massachusetts legislature enacted St.1988 c. 141, § 1, which allowed amendment of a complaint if the party requesting amendment sought “recovery for the injury for which the action was intended to be brought.” 1988 Mass.Acts c. 141 § 1, codified at Mass.Gen.L. ch. 231, § 51. The legislature further provided that the act was to apply to all actions pending as of July 14, 1988. 1988 Mass.Acts c. 141, § 2. This case would, therefore, be governed by that statute, which permits the amendment of a complaint to bring in a new party under a new theory of liability. As already noted, if an amended complaint is allowed, it automatically relates back. Mass.Gen.L. ch. 231, § 51.
Because relation back is automatic upon the allowance of an amended complaint, the factors which would counsel against relation back must be considered by the trial court in deciding whether to allow the amendment. Thus, the Massachusetts Supreme Judicial Court has stated:
[t]he decision whether to allow a motion to amend a pleading is a discretionary decision and depends upon a judge’s weighing of several factors. Factors to be considered in making such a decision include undue delay by the moving party, imminence of trial, and undue prejudice to the opposing party, [citations omitted].
Barbosa v. Hopper Feeds, Inc., 404 Mass. 610, 621-22, 537 N.E.2d 99, 106 (1989). Subsequent Massachusetts cases appear to provide that “undue delay” alone is a sufficient reason to deny the amendment of a complaint, and that an explicit showing of some other factor such as prejudice is not required. The Supreme Judicial Court recently held that “unexcused delay in seeking to amend is a valid basis for denial of a motion to amend.” Mathis v. Massachusetts Electric Co., 409 Mass. 256, 265, 565 N.E.2d 1180, 1185 (1991). Furthermore, the Massachusetts Appeals Court has held that “[t]he policies which support the extin-guishment of claims after limitations periods speak against allowing such amendments against new defendants.” Christopher v. Duffy, 28 Mass.App. 780, 785, 556 N.E.2d 121, 124 (1990). One of the policies of a statute of limitations is that a bright line cutoff is needed because one can never be sure whether or not the passage of time has prejudiced a defendant. This policy would, of course, counsel against requiring an explicit showing of prejudice. Nevertheless, because Massachusetts law on this question is not completely settled, we shall assume for present purposes that prejudice as well as undue delay is required before a court may deny an amendment under these circumstances. See id. at 784, 556 N.E.2d at 123 (“We need not consider whether undue delay in seeking amendment can on occasion be itself sufficient to warrant a court’s denying the leave”).
The district court expressly found that Eagle “was prejudiced by undue delay.” As a combination of prejudice and undue delay is sufficient reason under Massachusetts law for a court to refuse to allow an amendment, the district court’s decision may be overturned here only if this finding is clearly erroneous. Cf. Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 525, 536 N.E.2d 344, 350 (1989) (standard of review of findings of fact in bench trial is clear error). The district court’s finding of undue delay is supported by the record. Pessotti testified at trial that, at the time he sued Magic Chef, he believed the manufacturer of the can, as well as Magic Chef, was responsible for his injuries. However, he said he could not determine the manufacturer of the can because it had been thrown away on the day of the accident, and only when his expert discovered the negatives did he determine that Eagle had manufactured the can. The district court found that “with just a bit more diligence, plaintiff and others acting on his behalf would have discovered the crucial photographs long before the limitation period expired.” The police report, prepared on May 12, 1979, stated that “Officer] Chan-donait arrived and took photos. He also took possession of the can_” Pessotti’s neighbor, John Resnik, testified at trial that he had seen a police officer come out of Pessotti’s home carrying a gasoline can with a picture of an Eagle on the side. Given that the manufacturer’s identity could have been, and ultimately was, determined from the police report, and Pessotti’s neighbor recalled that the police had been on the scene and removed the can, we think the record supports the district court’s conclusion that Pessotti’s delay in naming Eagle was undue.
The district court’s finding of prejudice is likewise supported by the record. Pessotti argues that this finding was error because the only contested issue in the case concerned the adequacy of the warnings on the can, which did not depend on prompt investigation or fresh memories. Even though the trial centered on the adequacy of the warnings, however, there was significant evidence which did in fact depend on witnesses’ memories. Westford Police Sergeant David Hogg testified that an ambulance attendant had told him that Pessotti, immediately after the accident, said the fumes must have been ignited by the pilot light. This evidence tended to show that Pessotti knew his stove’s pilot light was on at the time of the accident, so that a warning on the gasoline can concerning the hazards of continuously burning pilot lights would have been superfluous. However, in subsequent testimony, Hogg stated that, after giving his original testimony, he had questioned its accuracy. He had then called the ambulance driver to discuss their conversation on the day of the accident, and noted his concerns to Pessotti’s lawyer and the court. As a result, Hogg was recalled and testified that it was he, not Pessotti, who had speculated that the fumes had been ignited by the pilot light. Sergeant Hogg’s changed testimony clearly damaged Eagle’s case. We cannot know what Sergeant Hogg would have said if the case had been tried earlier, but we think that, given the inconsistencies in this important testimony, presented eleven years after the incident, the district court did not clearly err in finding that Eagle had been prejudiced by Pessotti's four year delay in bringing it into the case.
Conclusion
Under Massachusetts law, the district court’s decision that the amended corn-plaint should not have been allowed was not an abuse of discretion. Nor did federal procedural law bar the district court from reconsidering its earlier order allowing amendment when it ruled on the motion for judgment notwithstanding the verdict. As the same result would obtain under federal relation back law, Eagle must prevail on its limitations defense. We need not consider, therefore, whether the evidence supports the verdict on the merits. The judgment of the district court in Pessotti’s appeal, No. 90-2182, is affirmed. As affirmance of the judgment in No. 90-2182 moots Eagle’s appeal in No. 90-2188, that appeal is dismissed. Costs are awarded to Eagle against Pessotti in No. 90-2182; both parties shall bear their own costs in No. 90-2183.
. “Any amendment allowed pursuant to this section or pursuant to the Massachusetts Rules of Civil Procedure shall relate to the original proceedings." Mass.Gen.L. ch. 231, § 51.
. Federal Rule of Civil Procedure 15(a) sets forth the conditions under which a party may amend his complaint without mentioning whether an amendment relates back. Rule 15(c) then provides the limited conditions under which an amended complaint will relate back. (It is undisputed those conditions were not met here.) Thus, unlike in Massachusetts, the mere allowance of an amendment does not resolve the relation back issue favorably to the amending party.
. In a memorandum submitted to the district court in opposition to the judgment notwithstanding the verdict, Pessotti argued that Eagle should have objected to the amended complaint soon after it was brought into the case in order to allow Pessotti to present evidence concerning lack of prejudice to Eagle. He also argued that Eagle was estopped to raise the issue, and that the allowance of the amended complaint was a discretionary ruling that could not be altered after judgment. In addition to rejecting these arguments, the district court ruled, sua sponte, that federal procedural law permitted it to reconsider its earlier ruling. However, the specific argument that no proper objection had been raised because Massachusetts law provides that an amended complaint automatically relates back was not presented to the district court.
. Pessotti also argues that Eagle's answer only asserted a limitations defense without noting the relation back issue or challenging the allowance of the amended complaint. We think it would have been unreasonable for Pessotti to assume that Eagle would not pursue its limitations defense because it did not immediately raise all the underlying arguments necessary to support that defense.
. While they do not merit extended discussion, we reject several additional arguments of Pes-sotti. First, it was not error to grant the judgment notwithstanding the verdict on relation back grounds because judgment had already been entered on the jury verdict. Pessotti argues that this would interfere with the finality of judgments or appear to have been motivated by a disagreement with the jury verdict on the merits. This argument ignores that the district court expressed grave doubts on the relation back question at the hearing on Eagle’s motion for a directed verdict, but decided to submit the case to the jury because a jury verdict for Eagle would moot the question. This is a common and well accepted practice, which did not constitute error. Second, we must reject Pessotti's argument that the decision to amend the complaint was, under Massachusetts law, a procedural decision which could not be changed after judgment. In addition to ignoring the district court’s reason for submitting the case to the jury, this argument ignores the fact that the court, unsure whether Massachusetts or federal law would apply, had only allowed the original complaint subject to a later determination as to whether the complaint would relate back. Third, we think that the issues presented in Eagle’s motion for judgment notwithstanding the verdict were preserved by its motion for a directed verdict. Although Eagle's motion for a directed verdict stated only that Pessotti's complaint was "barred by laches and/or the applicable statute of limitations” (among other merits related grounds), at a hearing on the motion the parties argued extensively about Massachusetts law concerning the amendment of complaints. Thus we reject Pessotti’s argument that the issue ruled upon by the court in the judgment notwithstanding the verdict had not been presented in Eagle’s motion for a directed verdict. Finally, we reject Pessotti’s argument that the district court should have imposed an abuse of discretion standard on itself in vacating its earlier order. If any ruling by the district court was entitled to deference by the district court itself, it was the judgment notwithstanding the verdict which, unlike the allowance of the amended complaint, was made after full briefing and argument.
. The choice of law question does not present an important or unsettled question of law, requiring resolution on that ground. In Marshall v. Mulrenin, 508 F.2d 39 (1st Cir.1974), this circuit held that Massachusetts law governed under very similar circumstances. Eagle now argues that Marshall has been overruled by Schiavone v. Fortune, 477 U.S. 21, 106 S.Ct. 2379, 91 L.Ed.2d 18 (1986). A proposed amendment to the Federal Rules of Civil Procedure— which, absent Congressional action to the contrary, will take effect December 1, 1991 — will explicitly provide that Marshall remains good law. See Proposed Amendment to Fed.R.Civ.P. 15(c) advisory committee's note, printed in Federal Civil Judicial Procedure and Rules (West 1991) (“[if Schiavone ] implies the contrary [of Marshall ], this paragraph is intended to make a material change in the rule”). Since the issue will be resolved by the amended rule, there is no need for this court to decide whether Marshall remained good law in the interim between Schiavone and the effective date of the amendment.
.This conclusion is not altered by the jury’s answer of "no” to the question ”[d]o you find that the plaintiff failed to provide defendant with reasonably timely notice of his claim?” This question was presented to the jury on a verdict form because Pessotti’s warranty claim under Massachusetts law required such notice. See Mass.Gen.L. ch. 106, § 2-607(3)(a). We need not decide whether the questions of "reasonably timely notice” for purposes of the warranty claim and "undue delay” for purposes of allowing the amended complaint are the same. The decision whether to allow the amended complaint was a discretionary decision to be made by the court. The court’s findings of fact in support of that decision are not altered by an allegedly inconsistent jury finding rendered for another purpose.
. The court overruled a hearsay objection to this evidence on grounds not relevant here.
. We do not think it is necessary to resolve the parties’ arguments over whether the problem with Sergeant Hogg’s testimony would have been prevented had Eagle deposed him as soon as it was brought into the case. Neither we, nor the trial court, nor Hogg himself can say whether this is true. We are satisfied that the possibility that Sergeant Hogg’s changed testimony prejudiced Eagle is sufficient to support the district court's finding of prejudice. Indeed, a specific finding of prejudice is only necessary on the assumption that Massachusetts law requires such a finding, and Pessotti’s argument points out the problems inherent in this requirement. If anything, Pessotti’s argument provides a strong reason to believe that a specific finding of prejudice could not feasibly be required by Massachusetts law.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALDRICH, Chief Judge.
These appeals raise the right of appellants to seek contribution, under R.I. Gen.Laws 1956, § 10-6-1 et seq., the Uniform Contribution Among Tortfeasors Act, from appellees for any amounts that may be found due from appellants to the plaintiff, the insurer of the party allegedly injured by appellants’ and appellees’ joint negligence. Appellees are J. J. O’Rourke and Ho-mans-Kohler, Inc.; appellants, Howard W. Holmes et al. and Air-Lite Products, Inc. The action originated as a suit by New Amsterdam Casualty Company, the insurer, seeking recovery from both appellants and appellees. Plaintiff alleged that during the construction of a building owned by, and being erected by, Gil-bane Building Company, a general contractor, a fire substantially damaged the building; that the fire was caused by the negligence of the several defendants; that plaintiff had been obliged under its contract of insurance to reimburse Gilbane, and was, by virtue of its payment, subrogated to the rights of Gilbane. In their answer appellants denied negligence on their part. In addition they filed cross-claims against appellees, asserting appellees’ negligence and claiming that if appellants were found negligent, so as to be accountable to the plaintiff, they were entitled to contribution from appellees.
Appellees moved for summary judgment with respect to the claims asserted against them by the plaintiff on the ground that plaintiff had also insured them, as Gilbane’s sub-contractors. Hence, they argued, for plaintiff as subrogee of Gilbane to recover against them would be in violation of its obligations as their insurer. The district court agreed, and granted appellees final summary judgments of dismissal, in accordance with F.R.Civ.P. 54(b). New Amsterdam Cas. Co. v. Homans-Kohler, Inc., D.R.I., 1969, 305 F.Supp. 1017. Appellees then moved for summary judgment of dismissal of appellants’ cross-claims against them, asserting that the Rhode Island Contribution statute was inapplicable. The district court granted final judgments of dismissal here, as well. New Amsterdam Cas. Co. v. Homans-Kohler, Inc., D.R.I., 1970, 310 F.Supp. 374.
Plaintiff did not appeal from the dismissal of its claim against appellees. Appellants appealed from the dismissal of their cross-claims. The plaintiff did not participate in these appeals, but after the oral argument, envisaging that a resolution of the rights of the appellants and appellees inter sese might affect the ultimate rights of the plaintiff, we entered an order permitting it to appear and brief its position on the issues herein considered. All parties are now before the court.
The court’s reasoning in dismissing the cross-claims was that in view of the fact that plaintiff had no right of recovery against appellees for their negligence, “it follows that there is no common liability in tort for said damages to [plaintiff by appellants and appellees]. In the absence of such common liability, they are not joint tortfeasors under said Act among whom a right of contribution exists under said Act.” 310 F.Supp., ante at 377. We do not read the act so narrowly. Section 10-6-2 defines joint tortfeasors as “persons jointly or severally liable in tort for the same injury * * The Rhode Island Court does not construe this as limited to situations in which all contributors are subject to direct suit by the plaintiff. In Zarrella v. Miller, 1966, 100 R.I. 545, 217 A.2d 673, the original plaintiff had been barred from suit against one of two allegedly negligent parties by an inter-spousal immunity rule. After the original plaintiff successfully sued the other party the court held contribution could be required from the immune but negligent spouse. It read the statute as enacting a broad equitable principle obligating all .who “negligently contributed to another’s injury,” and who are thus “culpable,” regardless of procedural defenses to direct suit.
In Zarrella the court regarded the interspousal immunity doctrine as insufficient to defeat this policy. Still less should a private contractual relationship which led Gilbane to assign its rights to plaintiff, or the further, fortuitous, fact that two of the alleged joint tortfeasors happened to have taken out insurance with this same plaintiff. It is true that we have recognized that a legislative intent may be found which overrides the general purpose of the contribution statute. Newport Air Park, Inc. v. United States, 1 Cir., 1969, 419 F.2d 342. We may so regard the result, if not always the reasoning, in the workmen’s compensation cases cited by appellees. No such exception, however, is apparent here and appellees cite no pertinent authority in support of one.
The district court’s interpretation of the statutory phrase “liable in tort” as demanding present liability to whoever is the particular plaintiff is inconsistent with other language of the statute itself. When it speaks in terms of the “same injury,” this must be the initial injury occasioned by the jointly negligent parties, not something definable in terms of who brings the suit. The injury in the case at bar, and the tort liability for negligent conduct, was to Gilbane, not to the insurer. No party, appellants or appellees, injured the plaintiff, in common or otherwise. Plaintiff’s claim is derivative, as subrogee, standing in all respects upon the rights and in the place of Gilbane. By our view of the statutory language, as well as under Zarrella, the district court’s question should have been not whether the defendants were jointly or severally liable to the plaintiff insurer, but whether they had jointly injured Gilbane, in whose shoes plaintiff stood.
The relationship of appellants and appellees vis-a-vis Gilbane, assuming the negligence of all of them, is a typical joint tortfeasor situation. We find nothing in the policy of the Act, or in its language, to make an exception depriving appellants of their right to seek contribution simply because appellees had personal insurance.
This does not mean that no consequence attaches to the insurance. There is a very substantial consequence. As a corollary to the district court’s holding that plaintiff cannot recover from appellees because it had insured against their negligence, appellees, in turn, will be able to obtain from plaintiff reimbursemnt for any loss incurred by having to contribute to appellants — instead of paying direct to Gilbane — by virtue of the statute. To avoid circuity of action, we hold that plaintiff cannot now recover against appellants to the extent that appellants could, in turn, compel contribution from appellees. See Maryland Cas. Co. v. Employers Mut. Liability Ins. Co., 2 Cir., 1953, 208 F.2d 731. Applying such reasoning, we can approve the district court’s result, dismissing appellants’ cross-claim against appellees, even though we hold the contribution statute applies. We protect the cross-claim rights, in effect, by allowing a set-off: in affirming that dismissal we rule that if plaintiff succeeds in its present action against appellants, and appellants establish the joint negligence of appellees, there must be set off what, absent appellees’ insurance, appellants can show they would have been able to recover from appellees by way of contribution.
. A bank had an interest, but its claim stood on the same footing, and for simplicity we disregard it.
. A third-party defendant, Pittsburgh Plate Glass Company, appeared and briefed an entirely new point. This is not involved in our present decision, was not in our notice, and hence was not briefed by other parties. We do not consider it.
. Plaintiff made, and still makes, some protest that the policy coverage did not extend to liability resulting from appellees’ negligence. The court’s dismissal necessarily involved a ruling to the contrary, and not having been appealed from, is now conclusive. We may add that if that decision was wrong, and plaintiff allowed it to become final by plaintiff’s failure to appeal, plaintiffs conduct amounted to a voluntary release of appellees. For reasons that we need not pursue, but starting from R.I.Gen.Laws § 10-6-8, contribution would still be required of appellees, and plaintiff would presently be no better off under that alternative.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALDRICH, Chief Judge.
This is a petition to review a judgment of the Board of Immigration Appeals affirming a denial of a certificate of citizenship and an order of deportation. The case presents the question whether a statute that was repealed in 1922 was unconstitutional so far as it affected the citizenship of the petitioner. The facts are undisputed. Petitioner’s mother was born in this country in 1901. In 1916 she married a Portuguese citizen and subsequently moved, apparently permanently, to Portugal. Petitioner was born in Portugal in 1931. Her father was a Portuguese citizen, but was not her mother’s husband. Her mother was divorced in 1932. Petitioner first came to this country in 1961.
By Act of March 2, 1907, ch. 2534, § 3, 34 Stat. 1228, petitioner’s mother by marrying a foreign national, lost her United States citizenship and acquired that of her husband. This law was repealed by Act of September 22, 1922, ch. 411, § 7, 42 Stat. 1022, but not retroactively. If born abroad to two foreign nationals petitioner obviously was not a United States citizen merely because her mother had once been one. Indeed, it is conceded that in 1931 petitioner would not have been a United States citizen even if her mother had retained her citizenship. Petitioner’s claim, so far as we could find it to have any merit, is based upon the Nationality Act of 1940, ch. 876, § 205, 54 Stat. 1139, which stated that persons in petitioner’s status are “held to have acquired at birth * * [the] nationality status” of the mother. This statute was repealed by the Act of June 27, 1952, ch. 477, § 403, 66 Stat. 280, but not retrospectively. Id., section 405(c).
Necessarily underlying the applicability of the 1940 Act to the petitioner is the contention that section 3 of the 1907 Act, in depriving her mother of citizenship on marriage, was unconstitutional. In Mackenzie v. Hare, 1915, 239 U.S. 299, 36 S.Ct. 106, 60 L.Ed. 297, a unanimous court upheld its constitutionality. It is true that this unanimity has not characterized the decisions of the last decade upholding Perez v. Brownell, 1958, 356 U.S. 44, 78 S.Ct. 568, 2 L.Ed.2d 603 (5-to-4; four opinions); Marks v. Esperdy, 1964, 377 U.S. 214, 84 S.Ct. 1224, 12 L.Ed.2d 292 (4-to-4), or holding unconstitutional, Trop v. Dulles, 1958, 356 U.S. 86, 78 S.Ct. 590, 2 L.Ed.2d 630 (5-to-4; four opinions); Kennedy v. Mendoza-Martinez, 1963, 372 U.S. 144, 83 S.Ct. 554, 9 L.Ed.2d 644 (5-to-4; four opinions); Schneider v. Rusk, 1964, 377 U.S. 163, 84 S.Ct. 1187, 12 L.Ed.2d 218 (5-to-3), congressional expatriation legislation. No majority has questioned the authority of Mackenzie, however, and, indeed, it has been relied upon in several recent decisions. Perez v. Brownell, supra; Savorgnan v. United States, 1950, 338 U.S. 491, 70 S.Ct. 292, 94 L.Ed. 287; see also Kennedy v. Mendoza-Martinez, supra, 372 U.S. at 187, 83 S.Ct. 554; cf. Perez v. Brownell, supra, 356 U.S. at 69-73, 78 S.Ct. 568 (Warren, C. J., dissenting).
Petitioner relies principally on Schneider v. Rusk, supra, for the proposition that Mackenzie is no longer law. The statute considered in Schneider was directed solely to naturalized citizens, and certainly basic to the decision was the court’s condemnation of this discrimination. It is true that the dissenting opinion expressed the view that the reasoning of the court extended a fortiori to the 1907 Act upheld in Mackenzie. The opinion of the court did not mention the earlier case, however.
It is clear that the decision itself in Schneider did not overrule Mackenzie. It is likewise apparent from the cases cited above that the limits of congressional authority to deprive citizens of their nationality have yet to be defined. We do not feel we should attempt to be the catalyst when to do so would involve express departure from a case which has never, in a majority opinion of the court, been questioned.
Petitioner’s other points do not warrant discussion.
Affirmed.
. “Sec. 3. That any American woman who marries a foreigner shall take the nationality of her husband. At the termination of tile marital relation she may resume her American citizenship, if abroad, by registering as an American citizen within one year with a consul of the United States, or by returning to reside in the United States, or, if residing in the United States at the termination of the marital relation, by continuing to reside therein.”
. This enactment is unusual in that it does not make residence in the United States before the foreign-born minor reaches a certain age a condition of citizenship. Compare prior act, Act of May 24, 1934, § 5, 48 Stat. 797, and the 1952 Act, 8 U.S.C. § 1401(b).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ROSS, Circuit Judge.
Georgia Wilson appeals from the judgment of the district court rejecting her claims in a foreclosure action. The foreclosure action was an action against the United States pursuant to 28 U.S.C. § 2410. This cause was removed from the Independence County, Arkansas, Chancery Court to the United States District Court pursuant to 28 U.S.C. §§ 1441(b) and 1444, at the request of the United States of America, acting through the Farmers Home Administration (FmHA). Other parties in this rather involved and complex proceeding are: The Federal Land Bank of St. Louis (Federal), First State Bank of Newport (State Bank), Bank of Newark (Newark), John Wilson and Georgia Wilson.
A. CLAIM OF FEDERAL:
On January 14, 1974, John and Georgia Wilson executed a promissory note to Federal in the sum of $20,000.00 with interest at the rate of 7V2% per annum. Under the terms of the note, Federal possessed the option to invoke a variable rate of interest if economic conditions warranted the action. Contemporaneously, the Wilsons executed a mortgage to Federal conveying the following property in Independence County to secure the promissory note:
Part of the West Half of Lot 5 of the Northeast Fractional Quarter of Section 5, Township 12 North, Range 4 West, of the 5th P.M.,' described as follows:
Commencing at the Southwest Corner of said Lot 5, thence East 264 feet to the point of beginning, thence North 330 feet, thence East 198 feet, thence South 330 feet, thence West 198 feet to the point of beginning.
On February 20, 1980, Federal filed a foreclosure action against the Wilsons in the Chancery Court of Independence County alleging that the Wilsons were in default in their payments on the note, that Federal had elected to accelerate the indebtedness and declare the entire principal indebtedness due, and praying for a judgment against the Wilsons for $21,828.10, interest due and reasonable attorney’s fees.
Federal made State Bank, FmHA and Newark party-defendants, asserting that these defendants were necessary parties since each claimed a security interest in the property in question.
B. CLAIM OF NEWARK:
On March 10, 1980, Newark filed its answer and “cross-complaint” alleging that on June 19, 1978, John Wilson executed and delivered to Newark a promissory note for $10,500.00; and that on August 22, 1978, John and Georgia Wilson executed to Newark a deed of trust as security for the note to the extent of $7,556.75.
Newark alleged that John Wilson had failed to make payments as promised and requested a judgment in rem against the Wilsons for $7,556.75, interest at the rate of 10% per annum from August 22, 1978, and reasonable attorney’s fees.
C. CLAIM OF FmHA:
John and Georgia Wilson obtained several loans from FmHA over a seven-year period. The initial loan was extended on January 9, 1974, and the most recent loan was made on February 24, 1978. On June 4, 1979, John Wilson filed a voluntary Chapter 7 bankruptcy petition; Georgia Wilson was not a party to this bankruptcy proceeding. When John Wilson filed his bankruptcy petition, FmHA was the holder of the following three unpaid promissory notes, each of which had been executed and delivered by John and Georgia Wilson:
DATE OF NOTE AMOUNT INTEREST RATE
Feb. 20,1976 $32,500.00 m%
Feb. 16,1977 16,174.64 8%
Feb. 16,1977 48,800.00 5%
The first two notes were secured by two junior real estate mortgages against the property involved in the foreclosure action (as well as a security interest in the farming equipment and crops of John Wilson and Georgia Wilson). The third note for $48,800.00 was secured only by farming equipment and crops.
In the fall of 1979, FmHA sought and obtained the abandonment by the bankruptcy trustee of the farming equipment in which FmHA had a security interest. The abandoned security items were sold at a public auction on February 12, 1980, and the net proceeds were applied to the Wilsons’ FmHA account. On the date of the chattel liquidation sale, FmHA was still the holder of the three unpaid promissory notes mentioned earlier: the $32,500.00 and $16,-174.64 notes, secured by junior real estate mortgages, and the $48,800.00 note secured only by perfected security interests in farming equipment and crops.
Instead of requesting the application of the liquidation sale proceeds to the $48,-800.00 loan, which was secured only by the equipment which was sold, the FmHA county supervisor, who did not have custody of the Wilsons’ file and assumed all three notes to be secured by real estate mortgages, instructed the FmHA finance office to pay the oldest loan in full and thereafter to pay the balance against the note bearing the higher rate of interest. Consequently, the net sale proceeds were initially credited to retire the $32,500.00 note and pay down the $16,174.64 note.
Realizing that the aforementioned allocation of the proceeds from the chattel sale was not in its best interest, FmHA, on January 23, 1981, reallocated the proceeds as follows: $19,573.37 as principal and $5,175.82 as interest to the note of February 20, 1976, and $12,855.57 as principal and $5,181.55 as interest to the note of February 17,1977. The effect of the reallocation was to increase the unpaid balance on the reamortized note of February 16,1977, from an unpaid balance of $3,323.49 as principal and interest at 8% per annum to an unpaid balance of $16,174.64 as principal and $6,519.03 as interest; and reduce the unpaid balance on the $48,800.00 note of February 17, 1977, from $26,354.67 as principal and $836.12 as interest to an unpaid balance of $9,130.73 as principal and $310.70 as interest.
FmHA did not seek any relief for the February 17, 1977 indebtedness in the foreclosure proceeding, since this note was not secured by the real estate involved.
D. CLAIM OF GEORGIA WILSON:
Mrs. Wilson asserted that she was awarded possession of the real property in question under the divorce decree terminating her marriage to John Wilson; because of this, she maintained that the foreclosure action by the mortgagees, Federal, Newark and FmHA is subordinate to her claim and right to possession of the realty. Mrs. Wilson also challenged FmHA’s and Newark’s claims, asserting usury as an affirmative defense. The court rejected all of Mrs. Wilson’s claims. On appeal, Mrs. Wilson contends that the district court erred:
1) in sustaining FmHA’s reallocation of proceeds from the sale of certain collateral,
2) in excluding certain evidence concerning appellant’s financial situation,
3) in holding that the Farm Credit Act of 1971 preempted Arkansas’ usury laws, and
4) in denying appellant’s claim to her residence and one half of a soybean crop.
I. Reallocation of Proceeds from Chattel Sale
The district court found that FmHA was not precluded from reallocating the proceeds from the sale of the farm equipment after discovering the mistake in the initial application. Appellant argues that the court erred; she contends that a creditor cannot change the application of proceeds once an account has been credited. In support of her argument, appellant cites 60 AM JUR 2d PAYMENT § 86 (1972): “By mutual agreement, the debtor and creditor may change the application of a payment * * * but only if the rights of third parties are not prejudiced.” In the case at bar, however, there is no risk of prejudice to any third party. The Bank of Newark originally contested the reallocation, but the district court rejected its claim, and the bank abandoned the claim on appeal.
A debtor desiring to avail himself of his right to direct the application of a payment must give the direction therefor either before or at the time of the payment; otherwise, the right is lost, because thereafter the money ceases to be his, and is no longer subject to his control. See St. Paul Fire & Marine Ins. Co. v. United States, 309 F.2d 22 (8th Cir.1962), cert. denied, 372 U.S. 936, 83 S.Ct. 883, 9 L.Ed.2d 767 (1963). Here, at the time the farm equipment was publicly auctioned, neither of the Wilsons requested that the FmHA appropriate the sale proceeds in any particular manner. A creditor can, absent clear direction otherwise, apply a payment from a debtor to any debt he chooses to maximize his security. Federal Deposit Ins. Corp. v. Freudenfeld, 492 F.Supp. 763, 770 (D.Wis.1980).
While it is often said that a creditor lacks the freedom to allocate involuntary payments made by a debtor that he has on receipt of a voluntary, unallocated payment, it is the right of the creditor to apply sums received from the debtor or for his account in such fashion as to give the creditor the utmost advantage of such security as the creditor may possess. And in the absence of any other creditor who would be prejudiced by such an allocation, the courts must respect this right of a secured creditor.
United States v. Pollack, 370 F.2d 79, 80 (2d Cir.1966).
We are mindful of the fact that reallocation is improper in some instances. Where an application of payment has been made and the debtor notified, the debt is discharged. Only assent of the parties can justify reapplication after the creditor has applied the payment and notified the debtor. Matter of S & W Exporters, Inc., 16 B.R. 941 (Bkrtcy.N.Y.1982). The district court pointed out, however, that the factor distinguishing the above case from the instant case is notice to the debtor. Here, the Wilsons had no notice of the misapplication and reallocation until after this litigation was commenced. In addition, Arkansas law recognizes a presumption that proceeds from a foreclosure sale will be applied to the indebtedness secured by the property sold:
When property is mortgaged to secure a debt, and afterwards this property is sold and the proceeds turned over to the mortgagee, the natural presumption is that both parties intend that the payment shall be applied on the mortgage debt, and the mortgagee has the right to apply the payment in that way, even though the mortgage debt be not due.
Lyon v. Bass, 76 Ark. 534, 89 S.W. 849 (1905). Furthermore, section III G of the security agreement involving the chattel and crops securing the $48,800.00 note provides in part:
Any payment made by Debtor may be applied on the note or any indebtedness to Secured Party secured hereby, in any order Secured party determines. (Emphasis added.)
The mere entry of a credit to a particular account is not conclusive evidence of an irrevocable application of the payment in the absence of notice to the debtor. In re Stacy, Wolf Hat Co., 99 F.2d 793 (2d Cir. 1938); In re Automatic Equipment Mfg. Co., 103 F.Supp. 427 (D.Neb.1952). In the instant case the district court reasoned that the combination of the state law presumption, the creditor’s contractual right and the absence of notice to the debtor provide the legal basis for FmHA’s reallocation. We agree.
II. Evidentiary Rulings
Appellant contends that the court erred in excluding evidence regarding her financial situation. The trial court received appellant’s testimony that she had no job, assets, or other source of income since her divorce in 1979. The court sustained an objection to the line of questioning; appellant’s counsel then stated that he had completed his questioning on that point anyway. Appellant now argues that the testimony was relevant and crucial to the issue of reallocation.
The trial court has broad discretion in determining the relevance of proposed evidence, United States v. Johnson, 516 F.2d 209, 214 (8th Cir.), cert. denied, 423 U.S. 859 [96 S.Ct. 112, 46 L.Ed.2d 85] (1975); United States v. Mitchell, 463 F.2d 187, 191 (8th Cir.1972), cert. denied, 410 U.S. 969 [93 S.Ct. 1449, 35 L.Ed.2d 705] (1973), and the admission or exclusion of such evidence will be overturned on appeal only if the court has abused its discretion. United States v. Kills Crow, 527 F.2d 158, 160 (8th Cir.1975) (per curiam).
United States v. Williams, 545 F.2d 47, 50 (8th Cir.1976).
Aside from a general conclusory allegation, appellant makes no claim that would support a finding of abuse of discretion. In light of the eases cited in the preceding section regarding reallocation, it is difficult to envision how appellant’s financial situation is of any consequence when pitted against the rights of a secured creditor. We find no abuse of discretion in the court’s evidentiary ruling.
III. Usury
In trial and post-trial proceedings, appellant offered six arguments to prove that the Federal Land Bank’s note and security were in violation of Arkansas’ usury provision, Article 19, Section 13 of the Arkansas Constitution. The court declined to make a factual determination of whether any of the items listed by appellant generated an interest rate in excess of Arkansas’ maximum rate of ten per cent per annum. Instead, the court based its decision on what we consider the pivotal issue: whether Congress intended to preempt the field of state usury laws when it enacted the Farm Credit Act of 1971, 12 U.S.C. § 2001 et seq. The court held that state usury provisions are inapplicable in credit transactions involving Federal Land Banks. Appellant contends that this holding was erroneous, asserting three grounds: 1) that the Federal Land Bank is not a federal government agency, 2) that Congress did not intend to preempt state usury law in passing 12 U.S.C. § 2015, and 3) that there is no conflict between the federal and state law in this situation.
The Federal Land Banks were established pursuant to the Farm Credit Act, 12 U.S.C. § 2001, et seq. Federal Land Banks are appendages of the United States. This is clearly stated in 12 U.S.C. § 2011: “The Federal land banks established pursuant to section 4 of the Federal Farm Loan Act, as amended, shall continue as federally chartered instrumentalities of the United States.”
Appellant’s second and third claims are equally lacking in merit.
As a general rule, there is no question that, when Congress legislates in an area in which it has constitutional authority, the laws of the states in the same field, to the extent that they are inconsistent with the federal law, must yield. International Union of United Automobile Workers v. O’Brien, 339 U.S. 454 [70 S.Ct. 781, 94 L.Ed. 978] (1950); Hanson v. Union Pacific R.R. Co., 160 Neb. 669, 71 N.W.2d 526 (1955).
Beatrice Production Credit Association v. Vieselmeyer, 376 F.Supp. 1391, 1392 (D.Neb. 1973). Federal Land Banks set interest rates pursuant to 12 U.S.C. § 2015, which provides:
§ 2015. Interest rates and other charges
Loans made by a Federal land bank shall bear interest at a rate or rates, and on such terms and conditions, as may be determined by the board of directors of the bank from time to time, with the approval of the Farm Credit Administration. In setting rates and charges, it shall be the objective to provide the types of credit needed by eligible borrowers at the lowest reasonable costs on a sound business basis taking into account the cost of money to the bank, necessary reserve and expenses of the banks and Federal land bank associations, and providing services to stockholders and members. The loan documents may provide for the interest rate or rates to vary from time to time during the repayment period of the loan, in accordance with the rate or rates currently being charged by the bank.
The statute plainly states that the directors of the bank will set interest rates with the approval of the Farm Credit Administration. There is no reference to state interest rate limits.
IV. Property Claims
Appellant submits that the court erred in denying her claim to possession of her residence unencumbered by the claims of all mortgagees. The court also denied her claim to one-half of the proceeds from the sale of a soybean crop. Appellant contends that she has dower rights in the residence and the soybeans.
A. Soybeans
The district court found that the state court, in dividing the Wilsons’ property, intended to award John Wilson all the assets from the farming operation, to the exclusion of any claims of Mrs. Wilson. The divorce decree states: “(8) The Court finds [John Wilson] shall be entitled to the proceeds of any settlement or recovery on pending claims or lawsuits concerning the farming operation.” Furthermore, it is settled Arkansas law that a husband may give a chattel mortgage in personalty without the consent of the wife; any dower interest of the wife is taken subject to the lien. Strang v. Strang, 258 Ark. 139, 148-49, 523 S.W.2d 887, 892 (1975).
B. Residence
The district court correctly denied appellant’s claim to the residence. Strang v. Strang, supra, is dispositive: “ * * * where property subject to division in a divorce case is mortgaged, each takes subject to the mortgage.” Id. at 148-49, 523 S.W.2d at 893. The court correctly denied appellant’s claim to the property.
We find no error in the district court’s judgment and accordingly, we affirm.
. The Honorable George Howard, Jr., United States District Court for the Eastern District of Arkansas.
. State Bank’s claims were rejected by the district court; it is not a party to this appeal.
. John and Georgia Wilson, the payors and mortgagors on the notes and mortgages involved, were formerly husband and wife. This marriage was terminated by an absolute divorce decree of the Independence County Chancery Court on October 26, 1979.
. The real property involved in this action was abandoned pursuant to an order of the bankruptcy court dated January 9, 1980, after the bankruptcy court found:
(T)here is no reasonable basis to believe there is any equity above liens and that said property * * * is abandoned and disclaimed as an asset in this case.
. Federal Land Bank of St. Louis v. Wilson, 533 F.Supp. 301 (E.D.Ark.1982).
. Section 13 provides:
All contracts for a greater rate of interest than ten percent per annum shall be void, as to principal and interest.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
AUGUSTUS N. HAND, Circuit Judge.
The plaintiff, a New Jersey corporation, brought this action against the defendant, a New York corporation, to recover “the agreed and reasonable value” of goods sold and delivered to the defendant, asking judgment for $20,634.98 and interest thereon from February 1, 1931. The defendant filed an amended answer to the complaint setting forth a separate and distinct defense to the alleged cause of action and four counterclaims. The plaintiff moved to dismiss all four counterclaims on the ground that none of them stated facts sufficient to constitute a cause of action, to dismiss the second counterclaim on the additional ground that it could not properly be interposed in the action, and to strike out the separate defense on the ground that it was insufficient in law upon its face. The District Court, by an order dated July 2, 1931, granted the motion and ordered that all four counterclaims be dismissed and the separate defense stricken out. In an opinion dated July 2, 1931, however, the District Court held that certain of the allegations in the first counterclaim might “form the basis of affirmative relief against the plaintiff,” and accordingly the order of dismissal gave the defendant leave to serve an amended answer in conformity with the directions in the opinion. The defendant filed exceptions to the order, and seasonably interposed a second amended answer, setting forth a single counterclaim, to which the defendant replied. The matter was referred by the court to a referee, who determined that the plaintiff was entitled to recover from the defendant the principal sum of $19,119.47, and that the defendant might set off the principal sum of $2,533:80 on the basis of its counterclaim. Interest was allowed on various fractions of the principal sums from various dates. The District Court confirmed the referee’s report, and judgment was entered for the plaintiff for $19,053.58. The defendant has appealed from the judgment in so far as it dismisses the second, third, and fourth counterclaims set forth in. the first amended answer. The plaintiff has taken a cross-appeal from so much of the judgment as allows the defendant a set-off on the basis of the counterclaim set forth in the second amended answer.
This litigation arises out of an agreement in-the form of a letter sent by the defendant to the plaintiff on February 1, 1929, “to confirm and set forth the terms of the agreement arrived at on January 22, 1929, between yourselves and our company,” and accepted by the plaintiff as expressing the agreement on February 25, 1929. By the terms of this agreement, the plaintiff, a manufacturer of radios and phonographs, appointed the defendant distributor of the plaintiff’s products in a designated territory, and agreed to appoint no other distributor, or to act as its own distributor, within that territory “while this agreement remains in effect.” The defendant might elect to discontinue handling and distributing the plaintiff’s products “at any time during the life of this agreement,” in which ease the plaintiff might appoint other distributors within the territory. The agreement further provided that: “We are to be free, if we so desire, to handle other radio, combination radio and phonograph, and phonograph products, including records, in said territory until June 1, 1930, and we are to advise you on February 1, 1930, whether or not we desire to “continue as distributors of your said products after June 1, 1930. If we advise you on. February 1, 1930, that we desire to continue to act as distributors of your said products, we shall continue, to act as such distributors in said territory, until February 1, 1933, with the understanding that during the period from June 1, 1930, to February 1, 1933, we will agree if you so desire, to handle only Edison radio, combination radio and phonograph, and phonograph products including records, and with the further understanding that if we so elect to extend the term of our distributorship to February 1, 1933, this agreement may be cancelled by either party on six (6) months written notice given at any time after December 1, 1930.”
The defendant duly exercised its option to extend the life of the agreement to February 1, 1933, and agreed, waiving a request from the plaintiff, to handle only Edison products. It is conceded that the defendant became bound to handle only radios and phonographs manufactured by the plaintiff. The parties acted under the agreement for several months during 1930. Other pertinent provisions of the agreement are as follows:
“If you” (the plaintiff) “should elect * * * to cancel this agreement and give us said six months’ notice, you mil, at our option, take over and assume the lease covering the premises occupied by us at 28 West 23rd Street, New York City, which runs to February 1, 1933, and will purchase the furniture and fixtures, reasonably comparable with the present furniture and fixtures, which we have installed in said premises at a price which shall be mutually agreeable, or in the event that the price cannot be mutually agreed upon, a third party, agreeable to both of us, shall be selected .as an arbitrator and the price determined by him shall be final and accepted by both of us and you will make payment for the said furniture and fixtures at the time this agreement terminates. It is further understood that in the event you elect to cancel this agreement and give us the said required notice, you will, upon the termination of the agreement, take back from us all the merchandise of your manufacture and purchased by us from you, which we then have on hand and which is new or saleable in the regular course of business as new, and will pay us for such merchandise the net cost to us of same. * * *
“All prices are to be F. O. B. your factory and the list prices are to be no greater than those made to other distributors; also discounts from list prices and for cash payments to be no less than that given to other distributors. It is also understood that if the prices of your said products are lowered at any time during the period of this agreement, we shall be refunded the difference between the cost to us under new prices and the cost to us under the old prices of any of such products which have been billed to us within the preceding ninety (90) days, which are on hand unsold, whether they are on hand in our establishment or whether they have been delivered to our dealers' and remain on hand unsold by them. * * *
“It is further understood that it is your intention to manufacture and that you will endeavor to have ready to market on or about June 1, 1929, a reasonably complete line of radio sots, phonographs or combination phonograph and radio sets to be sold at list prices commencing at or about One hundred and twenty-five dollars ($125.00) and ranging upwards in accordance with the type of such products, and it is your intention that these list prices shall be reasonably competitive with similar merchandise offered to the public by other manufacturers.”
On June 20, 1930, the defendant by letter indicated some dissatisfaction with the highpriee range of the plaintiff’s products, and asked whether the latter would insist that the defendant comply with the requirement that no other “make” of radio or phonograph should be handled by the defendant. The plaintiff by a letter dated June 25, 1930, replied that, unless the agreement under which the parties were acting should be substantially modified for the benefit of the plaintiff, the requirement that no other “make” might be handled would he insisted on. On July 11, 1930, the defendant by letter referred to the clause of the agreement stating the plaintiff’s “intention” to bring out “a reasonably complete line of radio sets, phonographs or combination phonograph and radio sets to be sold at list prices commencing at or about One hundred and twenty-five dollars ($125.00) and ranging upwards,” and called upon the plaintiff to furnish lower priced sets than had as yet been supplied. Ño answer to this communication appears in the record, but the referee found that the plaintiff had already on July 9, 1930, informed the defendant that it would not manufacture a cheaper linetef merchandise. The referee further found that the plaintiff did not consent to the defendant’s handling other makes, and that on August 6, 1930, the defendant notified the plaintiff that it had taken on and was handling the Clarion radio, which was not manufactured by the plaintiff. However, no protest was made by the plaintiff until nearly three months later, when, on November' 5, 1930, it informed the defendant by letter that the latter’s distribution of the Clarion radio “breaches in a vital respect your agreement with us” and that “we therefore notify you that our agreement is at an end.” To this letter the defendant replied on November 7, 1930, that: “We do not consider that your letter is proper notice to us of your cancellation of this agreement, and this is to advise you that we do not accept it as sueh.”
The goods for the agreed value of which this action is brought were all sold by the plaintiff to the defendant after the notice of cancellation of the agreement by the plaintiff and rejection of such notice by the defendant referred to above. These goods were sold pursuant to an offer by the plaintiff contained in a letter sent November 12¡, 1930, which made no reference to prior dealings or disputes between the parties, and was couched in the most cordial, not to say familiar, terms, and extended best wishes for “a bang-up holiday business.” This offer was accepted by the defendant in a letter dated November 22, 1930, and, accordingly the merchandise for the price of which this action is brought was delivered to the defendant by the plaintiff. The defendant admits that it is indebted to the plaintiff for this merchandise in an amount exceeding $17,000.
We shall deal first with the appeal taken by the defendant from the order and judgment of the District Court in so far as they dismiss the second, third, and fourth counterclaims set forth in the first amended answer.
Second Counterclaim.
The second counterclaim attempts to set forth a cause of action in tort for deceit. It alleged:
(1) That in order to induce the defendant to enter into the agreement, the plaintiff “falsely and fraudulently represented to the defendant and covenanted with the defendant * * * that it would manufacture and sell to the defendant a reasonably complete line of radio sets and other products to be sold at list prices commencing at or about $125.00 and ranging upwards in accordance with the type of such products, but being a cheaper line than the existing line of plaintiff’s products * *
(2) That the plaintiff after making the agreement “in order to deceive and defraud the defendant * * * falsely and fraudulently represented * * * that it was going to continue in the manufacture and sale of the radio sets; that it would not ‘dump’ its products and that it was in the business ‘for a long pull.’ ”
The second counterclaim also alleged that the “representations were false and were known to the plaintiff to be false when made and were made by the plaintiff with intent to deceive and defraud defendant by inducing the defendant * * to continue to purchase and stock plaintiff’s products which plaintiff had already manufactured and had on hand”; and alleged that defendant, “relying on the truth of such representations was induced to and did spend large sums of moneys for plaintiff’s goods, for advertising, advances to a large sales force, for credits and for promotion work, and refrained from carrying on other business which it could have engaged in for profit.” Finally, it alleged that the plaintiff fraudulently commenced to “dump” its radio sets “at prices which were so much less than the prices at which it was selling * * * to defendant * * * that the defendant could not sell the products which it had purchased from plaintiff in competition with the goods which had been so ‘dumped,’ ” and, in a letter dated December 15, 1930, announced to the defendant that it would retire fhom the radio business and did so retire. By reason of the foregoing, plaintiff claimed $150,000 damages.
This counterclaim incorporates by reference a letter from the plaintiff to the defendant which begins by saying: “This is to confirm and set forth the terms of the agreement * * * between yourselves and our company.” It is, therefore, a final memorial of the agreement of the parties and all the allegations about a contemporaneous oral agreement must under the parol evidence rule be disregarded. When the letter says, “It is understood that it is your intention to manufacture ■* * * a reasonably complete line of radio sets * * * to be sold at list prices commencing at about * * * $125.00,” it sets forth no promissory obligation or contractual relation, but an intention and nothing more, and affords no basis for recovery in contract. But the counterclaim sets forth a representation of an intention to manufacture cheap radio sets made to induce the defendant to enter into the agreement, that it was false and known to be false, was made to deceive the defendant and relied on by the latter to his damage-. If it had been alleged that the plaintiff after making such a representation as to its intention had failed to manufacture the cheap radio sets, the cause of action would be complete. Adams v. Gillig, 199 N. Y. 314, 92 N. E. 670, 32 L. R. A. (N. S.) 127, 20 Ann. Cas. 910; Ritzwoller v. Lurie, 225 N. Y. 464, 122 N. E. 634; Deyo v. Hudson, 225 N. Y. 602, 122 N. E. 635; Adams v. Clark, 239 N. Y. 403, 146 N. E. 642. The cause of action relied on is not that the plaintiff did not intend to do what it contracted to do when it induced the defendant to contract as in Continuous Zinc Furnace Co. v. American Smelting & Refining Co. (C. C. A.) 61 F.(2d) 958, for-it had never bound itself contractually to manufacture the-cheap radios. The tort here consists 'in a fraudulent representation of an intention to do something, though not contracted for, in order to induce the malting of the agreement.. There is, however, no allegation in the counterclaim (and the question arises wholly upon the pleading itself) that the plaintiff failed, to manufacture cheap radio sets, so the cause of action based on this item of the second counterclaim fails. There is no showing that the District Judge was requested to allow a repleader and no error is assigned because-of his failure to grant one.
The allegation that the plaintiff falsely represented that it would continue manufacturing and would not “dump” its products is-also unavailing. The representations are said to have been made after the contract was entered into, and not as an inducement to-the making of it. As we shall later show, the defendant was bound under the agreement to purchase the amount of its business requirements. Therefore, the on-Iy damage which could arise from these false representations would be that the defendant was thereby induced to purchase more goods than it was bound under the contract to take, and no such damage is alleged. The second counterclaim was properly dismissed.
Third Counterclaim.
The third counterclaim is based upon the allegation that the plaintiff, on December 15, 1930, announced to the defendant that it would retire from the radio business and would no longer manufacture radio sets; that it ceased operations on that date and thereby canceled the agreement and became liable to-purchase the furniture and fixtures and assume the lease and pay for the merchandise of plaintiff’s manufacture at 28 West Twenty-Third street as the agreement provided must be done if the plaintiff should give six months’written notice of cancellation after December 1, 1930. The counterclaim also sets forth that the plaintiff never gave the six months’’ notice called for by the agreement but, by announcing on December 15, 1930, that it. would no longer manufacture radio sets and' failing to manufacture the same, canceled the-contract on that date. It also alleges that the plaintiff failed to assume the lease and purchase the fixtures and pay for the products of plaintiff’s manufacture on hand, all to defendant’s damage in the sum of $102,340.
It is a fatal objection to this counterclaim that the announcement of cancellation of the agreement was given less than six. months before the date when the counterclaim was interposed so that the cause of action had not arisen when the counterclaim was asserted. Moreover, the cancellation provided for in the agreement was not a breach of contract by the plaintiff, and the breach of contract which occurred when the plaintiff ceased to manufacture and supply the business needs of the defendant was not the cancellation provided for in the agreement. Any damages arising out of a cancellation on notice would be entirely different from those arising out of a broach. The plaintiff had a right to choose which it would subject itself to and cannot be required to assume the lease and repay the plaintiff upon the theory that its announcement of retirement from business was the equivalent of notice of cancellation provided for in the contract. We think it clear that the third counterclaim cannot be sustained and was properly dismissed.
Fourth Counterclaim.
We have already said that the oral agreement between the parties merged in the letter, which is incorporated by reference in the fourth counterclaim. The question, therefore, arises, what is the proper interpretation and effect of the letter of the defendant on February 1,1929, which the plaintiff accepted and which constituted the agreement between the parties. The plaintiff contends that the letter simply set forth a course of proposed business dealings and that the only thing the parties agreed to do was to refrain from dealing with others for a definite period; that it did not contain any promise of the defendant to buy, or of the plaintiff to sell, any quantity of merchandise.
While the foregoing contention is not without some force, we think the letter by the defendant of February 1, 1929’, accepted by the plaintiff gave rise to an implied agreement that the plaintiff should sell the radio and other products described in the letter to the extent that .might be reasonably required to enable the defendant to carry on its business as distributor for the plaintiff, and that the defendant should purchase the same. If such was the contract, the plaintiff was not relieved from performing its obligations by going out of business. Wells v. Alexandre, 130 N. Y. 642, 29 N. E. 142, 15 L. R. A. 218.
Schnerb v. Caterpillar Tractor Co. (C. C. A.) 43 F.(2d) 920, was a decision by this court. Schnerb, who was the distributor, sought damages for breach by the defendant, who was the manufacturer, of its covenant .not to invade the territory that it had assigned to Schnerb. Schnerb asserted that the defendant had broken this covenant by selling tractors to the French government direct. The contract in that case consisted of a letter by the defendant to Schnerb which gave the latter “exclusive representation” in the sale of defendant’s tractors in certain territory, including France. The letter contained no promise to buy or sell. It might be argued, as here, that all that was left to the will of the parties. Nor did the letter set forth any definite number of tractors which it was proposed that Schnerb was to buy. It did provide, however, that a price “for the present” of a 60 horse power type of tractor should he $3,125 and that at all times the prices should be in keeping with those being charged other agents using a like amount of goods. In that ease we said in effect that there was an implied agreement by each party not to sell tractors in the other’s territory, that the defendant promised that the prices charged Schnerb should be in keeping with those charged other agents, and the defendant was under an implied obligation to fill Schnerb’s orders if the capacity of its plant permitted.
In Abrams v. George E. Keith Co. (C. C. A.) 30 F.(2d) 90, a manufacturer agreed to sell and deliver shoes to a customer at prices to be agreed on from time to time, and the customer undertook to resell the shoes, as the manufacturer’s agent, under the agreement that the customer should have the exclusive sale of the shoes of the manufacturer. It was argued that the contract was invalid for lack of mutuality, but the Court of Appeals of the Third Circuit held it valid and decided that when the manufacturer refused to fill orders furnished by the customer there was a breach of contract.
In Mills-Morris Co. v. Champion Spark Plug Co. (C. C. A.) 7 F.(2d) 38, 39, the plaintiff, who was a dealer in automobile accessories, agreed to keep on hand at all times a stock of the different types of spark plugs manufactured by the defendant and “sufficient to supply the requirements” of plaintiff’s regular trade, and also agreed that all of plaintiff’s purchases during the contract term should be at certain specified prices. Plaintiff further agreed to canvass the territory for customers and promote the defendant’s trade in every reasonable w7ay. The defendant did not agree in express terms to sell spark plugs to the plaintiff, but the Court of Appeals of the Sixth Circuit held that such an obligation was to be “implied” from the “undertakings and the requirements that it exacted of plaintiff” and that a repudiation of the agreement by the defendant gave rise to a good eanse of action on the part of the plaintiff.’
In Ehrenworth v. George F. Stuhmer & Co., 229 N. Y. 210, 128 N. E. 108, it was agreed betweeq the plaintiff and the defendant that the former should purchase, and the latter, should sell, all the pumpernickel which the plaintiff, who was a dealer in bread, required upon his route, and should pay therefor a price one cent less than the wholesale price and two cents less than the retail price. It was also agreed that the plaintiff was not to sell any other pumpernickel to its customers and that the defendant was to furnish plaintiff with such amount as his business required. The foregoing was held a valid contract not lacking in mutuality, although there was no express promise to purchase any particular amount of pumpernickel.
The decisions in Wood v. Lucy, Lady Duff-Gordon, 222 N. Y. 88, 118 N. E. 214; Moran v. Standard Oil Co., 211 N. Y. 187, 105 N. E. 217; N. Y. C. Iron Works Co. v. U. S. Radiator Co., 174 N. Y. 331, 66 N. E. 967; Wells v. Alexandre, 130 N. Y. 642, 29 N. E. 142, 15 L. R. A. 218; Horton v. Hall & Clark Mfg. Co., 94 App. Div. 404, 88 N. Y. S. 73; Phoenix Hermetic Co. v. Filtrine Mfg. Co., 164 App. Div. 424, 150 N. Y. S. 193; Jacquin v. Boutard, 89 Hun, 437, 35 N. Y. S. 496; Turner v. Goldsmith, L. R. 1 Q. B. (1891) 544, are to the same effect.
Plaintiff contends that the f oregoing eases are not in point because the defendant here was not an agent and there was no promise by plaintiff to supply the requirements of the defendant’s business. But the supposed difference seems tenuous. The letter on which the agreement between the parties is founded appointed the defendant plaintiff’s “distributor.” It provided that the appointment was to extend until February 1, 1933, but might be canceled by either party on or after December, 1930, upon six months’ written notice and that if the plaintiff gave such notice it should be required to assume the lease of the premises occupied by defendant which ran to February 1, 1933, and to purchase the furniture and fixtures therein and to take back and pay the cost of all merchandise of plaintiff’s manufacture which defendant might have on hand. It was also agreed that the plaintiff would not appoint any other distributor in its territory during the life of the contract and that, if desired, the defendant would only handle plaintiff’s products. It was provided that the prices to the defendant should be no greater than those made to ‘Other distributors, and that if prices were lowered after goods had been delivered to the defendant, certain rebates were to be allowed to it and its customers for all products unsold by it, or them, and purchased within ninety days. Provision was also made for discounts to defendant’s dealers, and defendant was required to send plaintiff reports of net billings, together with copies of invoices. It was agreed that plaintiff should pay one-half the cost of newspaper or magazine advertising incurred either by the defendant or its dealers in connection with the sale of plaintiff’s products. It was also agreed that the plaintiff should consult with defendant and give due consideration to its suggestions as to changes in designs and types of instruments and records which defendant might consider desirable and that the latter should offer suggestions based on its long experience which it wished to place at plaintiff’s disposal. We can see no distinction between a distributor’s contract of this kind and the so-called agency contracts in which it is apparently admitted that agreements to sell and purchase would be implied. Under the agreement of February 1, 1929, as extended, defendant was compelled to do no business in radio products within a specified territory except with plaintiff, and the contract plainly required co-operation. It would defeat its purposes if agreements to purchase and sell were not implied. While the word “requirements” was not used, it must be supplied to render what was plainly a contract founded on mutual promises intelligible and effective. The plaintiff, having appointed the defendant distributor and obtained from the latter a promise to deal exclusively in plaintiff’s products, would not fulfill its contract unless it to a reasonable extent filled defendant’s orders.
The decision in Schlegel Mfg. Co. v. Peter Cooper’s Glue Factory, 231 N. Y. 459, 132 N. E. 148, 150, is relied upon by plaintiff, but is clearly distinguishable. In that case the defendant, a manufacturer of glue, wrote a letter to the plaintiff saying it had entered the “contract for your requirements of 'Special B. V.’ glue for the year 1916, price to be 9i>1 per lb. terms 2% 20th to 30th of month following purchase. Deliveries to be made to you as per your orders during the year * * At the bottom of the letter, the plaintiff 'wrote: “Accepted.” But the plaintiff did not agree “to sell any of the defendant’s glue, to make any effort towards bringing about such sale, or not to sell other glues in competition with it.” As the court said: “The only obligation assumed by it was to pay nine cents a pound for such glue as it might order.” There was no appointment of an exclusive agent or distributor as in the ease before us. The buyer did not agree to handle only the seller’s products, but was a mere jobber engaged in no business requiring glue so that there was no ascertainable standard of “requirements.” Nassau Supply Co. v. Ice Service Co., 252 N. Y. 277, 169 N. E. 383.
In Smith v. Diem, 223 App. Div. 572 229 N. Y. S. 56, affirmed 249 N. Y. 590, 164 N. E. 595, the defendant promised to sell no cigars to any other dealer Ilian the plaintiff so long as the latter bought 10,000 per week. The plaintiff did not, as in our case, agree to buy of no other manufacturer. There was no more than a unilateral offer in a letter by the plaintiff, to which the defendant made no reply.
We think the contract set up in the fourth counterclaim is governed by the principles laid down in Schnerb v. Caterpillar Tractor Co. (C. C. A.) 43 F.(2d) 920; Abrams v. George E. Keith Co. (C. C. A.) 30 F.(2d) 90; Ehrenworth v. George F. Stuhmer & Co., 229 N. Y. 210, 128 N. E. 108; Turner v. Goldsmith, 1 Q. B. (1891) 544; and other decisions we have referred to, and that the judgment dismissing this counterclaim must, therefore, be reversed with leave to interpose an answer thereto, if the plaintiff should be so advised.
Amended First Counterclaim in Second Amended Answer.
As already stated, Judge Coxe dismissed the first counterclaim as well as the three others and allowed the defendant to amend it, whereupon it alleged the making of the agreement of February 1, 1929, and the extension thereof to February 3,1933, and set forth that it was provided in such agreement that if the prices of the plaintiff’s products wore lowered at any time there should be refunded to the defendant the difference between the cost under the new prices and the cost thereof under the old prices on all products which had been billed to the defendant within the preceding ninety days and were on hand unsold at the time of such reduction. The amended counterclaim further alleged that on or about October 15, 1930, plaintiff, without notice to the defendant, reduced its prices on its products and the defendant thereupon became entitled to a refund; that on or about that date the defendant had on hand certain products purchased by it from plaintiff and billed within the preceding ninety days on which the plaintiff had reduced its prices; that after the 15th day of October, and while the agreement was still in force, the defendant purchased from the plaintiff certain additional products of a class upon which the plaintiff had reduced its prices on or about the 15th day of October. That by reason of the aforesaid reduction in prices by the plaintiff, the defendant became entitled to a refund of a specified amount, no part of which had been paid. Plaintiff filed a reply to this amended counterclaim in which it alleged that shortly prior to November 5,1930, defendant commenced to distribute a radio known as the Clarion radio in the territory specified in the agreement; that this was not an Edison radio and was not manufactured by plaintiff; that defendant’s distribution of the Clarion radios was in violation of the agreement that defendant should handle only Edison products and constituted a breach of a vital and dependent covenant of the agreement between the parties; that on or about November 5, plaintiff served upon defendant a notice in writing whereby and because of the defendant’s breach in distributing the Clarion radios the agreement was terminated and plaintiff’s obligations thereunder ceased and were discharged. In accordance with the foregoing pleadings the defendant demanded refunds in amounts specified and the plaintiff demanded judgment dismissing the counterclaim.
The plaintiff contends that the sales of goods after plaintiff gave notice on November 5 that the distribution of the Clarion radios constituted a vital breach of the agreement which was thereby terminated constituted a new transaction outside of the contract, to which the provisions relating to refunds did not apply. The referee found that as early as August 6, 1930, the plaintiff was notified that the defendant was selling Clarion radios, and yet went on shipping its products to the defendant and doing business with the lattei’. We agree with his conclusion that such conduct was a waiver by the plaintiff of its right to terminate the contract for this breach and that under such circumstances its only remedy was to sue for any damages that it could prove by reason of the breach. Termination of the contract for this partial breach could only be had after reasonable notice to perform. We also agree with the referee that the later sales cannot be treated as transactions separate from the contract.
We have already said in this opinion that the agreement between the parties set forth in the letter of February 1, 192-9, constituted a valid contract of purchase and sale. When the deliveries of radio products in December, 1930, were made, the agreement was still in existence and as a matter of law they were bound to become subject to its terms. The plaintiff appeals from the decision of the issues raised by its reply to the amended first counterclaim on the ground that its notice of rescission on November 5 was effectual to cancel the agreement and that even if'the contract was still in force the goods were sold under an independent arrangement that included no right to refunds because of price reduction. We differ with both contentions. Continuance by the plaintiff of sales under the contract, and acceptance of performance by the defendant, amounted to an election to continue the contract and not to terminate it because of the breach. In such a situation no new consideration was required to prevent cancellation and plaintiff’s letter of November 5, 1930, was ineffectual to terminate the agreement. Champion Spark Plug Co. v. Automobile Sundries Co. (C. C. A.) 273 F. 74; Rosenthal P. Co. v. Nat. Folding B. & P. Co., 226 N. Y. 313, 123 N. E. 766; Brady v. Cassidy, 145 N. Y. 171, 39 N. E. 814; Tipton v. Feitner, 20 N. Y. 423; Panoutsos v. Raymond Hadley Corporation (1917) 2 K. B. 473; McNicholas v. Prudential Insurance Co., 191 Mass. 304, 77 N. E. 756; Williston on Contracts, §§ 682, 687.
Defendant quite properly replied to the letter of November 5, 1930, that it did not consider plaintiff’s letter a proper notice of cancellation of the agreement. As a matter of fact, the contract contained a clause, which we have already discussed, stating that it was plaintiff’s intention to put out a cheaper radio line. Defendant had constantly urged it to do this because cheaper sets were needed for the trade than those which the plaintiff was selling. The defendant never dealt in any radio of a price comparable to the plaintiff’s that did not originate with the latter. Under these circumstances, we think that the breach was partial. But whatever it was, the conduct of the plaintiff had precluded it from treating the contract as terminated until after giving the defendant a reasonable notice that it must cease selling the Clarion line and resume total performance.
We hold that the refunds were properly computed and the amount due .from the defendant was correctly reported by the referee. The amount of the judgment must, however, depend on what damages, if any, the defendant may be able to establish under itsjEourth counterclaim. The judgment is affirmed in so far as it' dismisses the first, second, and third counterclaim, and is reversed in so far as it dismisses the fourth counterclaim, with leave to the plaintiff to reply thereto within a time to be fixed by the District Court. The judgment is likewise reversed in so far as it adjudges that the plaintiff recover $16,585.67, interest and eosts, because the amount of the recovery by either party will depend on the result of the trial of the issues under the fourth counterclaim. When they are determined, judgment must be entered in accordance with the findings of fact heretofore made by the referee and the decision of the issues raised by the fourth counterclaim and the reply thereto. Parker Washington Co. v. Cramer (C. C. A.) 201 F. 878.
The ease is remanded, with directions to-proceed in accordance with the views expressed in this opinion.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MOORE, Circuit Judge:
This is an appeal by Dietrich Meyerhofer and Herbert F'ederman, plaintiffs, and their counsel, Bernson, Hoeniger, Freitag & Abbey, from an order of the United States District Court for the Southern District of New York, dated August 23, 1973, (a) dismissing without prejudice plaintiffs’ action against defendants, (b) enjoining and disqualifying plaintiffs’ counsel, Bernson, Hoeniger, Freitag & Abbey, and Stuart Charles Goldberg from acting as attorneys for plaintiffs in this action or in any future action against defendant Empire Fire and Marine Insurance Company (Empire) involving the same transactions, occurrences, events, allegations, facts or issues, and (c) enjoining Bern-son, Hoeniger, Freitag & Abbey and Stuart Charles Goldberg from disclosing confidential information regarding Empire to others. Intervenor Stuart Charles Goldberg also appeals from said order.
Defendants Empire, Gross, Kaplan, Phillips, Kratky, Lalich, Swick, Jennings, Jr., Sitomer, Sitomer & Porges, A. L. Sitomer, S. J. Sitomer and Robert E. Porges cross-appeal from the order insofar as that order failed to disqualify plaintiffs, Meyerhofer and Federman, from acting as class representatives of those who purchased the common stock of Empire, or to enjoin them from disclosing confidential information learned either from Bernson, Hoeniger, Freitag & Abbey or from Stuart Charles Goldberg.
The full import of the problems and issues presented on this appeal cannot be appreciated and analyzed without an initial statement of the facts out of which they arise.
Empire Fire and Marine Insurance Company on May 31, 1972, made a public offering of 500,000 shares of its stock, pursuant to a registration statement filed with the Securities and Exchange Commission (SEC) on March 28, 1972. The stock was offered at $16 a share. Empire’s attorney on the issue was the firm of Sitomer, Sitomer & Porges. Stuart Charles Goldberg was an attorney in the firm and had done some work on the issue.
Plaintiff Meyerhofer, on or about January 11, 1973, purchased 100 shares of Empire stock at $17 a share. He alleges that as of June 5, 1973, the market price of his stock was only $7 a share— hence, he has sustained an unrealized loss of $1,000. Am’d Compl. if 9a. Plaintiff Federman, on or about May 31, 1972, purchased 200 shares at $16 a share, 100 of which he sold for $1,363, sustaining a loss of some $237 on the stock sold and an unrealized loss of $900 on the stock retained.
On May 2, 1973, plaintiffs, represented by the firm of Bernson, Hoeniger, Freitag & Abbey (the Bernson firm), on behalf of themselves and all other purchasers of Empire common stock, brought this action alleging that the registration statement and the prospectus under which the Empire stock had been issued were materially false and misleading. Thereafter, an amended complaint, dated June 5, 1973, was served. The legal theories in both were identical, namely, violations of various sections of the Securities Act of 1933, the Securities Exchange Act of 1934, Rule 10b-5, and common law negligence, fraud and deceit. Damages for all members of the class or rescission were alternatively sought.
The lawsuit was apparently inspired by a Form 10-K which Empire filed with the SEC on or about April 12, 1973. This Form revealed that “The Registration Statement under the Securities Act of 1933 with respect to the public offering of the 500,000 shares of Common Stock did not disclose the proposed $200,000 payment to the law firm as well as certain other features of the compensation arrangements between the Company [Empire] and such law firm [defendant Sitomer, Sitomer and Porges].” Later that month Empire disseminated to its shareholders a proxy statement and annual report making similar disclosures.
The defendants named were Empire, officers and directors of Empire, the Sitomer firm and its three partners, A. L. Sitomer, S. J. Sitomer and R. E. Porges, Faulkner, Dawkins & Sullivan Securities Corp., the managing underwriter, Stuart Charles Goldberg, originally alleged to have been a partner of the Sitomer firm, and certain selling stockholders of Empire shares.
On May 2, 1973, the complaint was served on the Sitomer defendants and Faulkner. No service was made on Goldberg who was then no longer associated with the Sitomer firm. However, he was advised by telephone that he had been made a defendant. Goldberg inquired of the Bernson firm as to the nature of the charges against him and was informed generally as to the substance of the complaint and in particular the lack of disclosure of the finder’s fee arrangement. Thus informed, Goldberg requested an opportunity to prove his non-involvement in any such arrangement and his lack of knowledge thereof. At this stage there was unfolded the series of events which ultimately resulted in the motion and order thereon now before us on appeal.
Goldberg, after his graduation from Law School in 1966, had rather specialized experience in the securities field and had published various books and treatises on related subjects. He became associated with the Sitomer firm in November 1971. While there Goldberg worked on phases of various registration statements including Empire, although another associate was responsible for the Empire registration statement and prospectus. However, Goldberg expressed concern over what he regarded as excessive fees, the nondisclosure or inadequate disclosure thereof, and the extent to which they might include a “finder’s fee,” both as to Empire and other issues.
The Empire registration became effective on May 31, 1972. The excessive fee question had not been put to rest in Goldberg’s mind because in middle January 1973 it arose in connection with another registration (referred to as “Glacier”). Goldberg had worked on Glacier. Little purpose will be served by detailing the events during the critical period January 18 to 22, 1973, in which Goldberg and the Sitomer partners were debating the fee disclosure problem. In summary Goldberg insisted on a full and complete disclosure of fees in the Empire and Glacier offerings. The Sitomer partners apparently disagreed and Goldberg resigned from the firm on January 22, 1973.
On January 22, 1973, Goldberg appeared before the SEC and placed before it information subsequently embodied in his affidavit dated January 26,' 1973, which becomes crucial to the issues now to be considered.
Some three months later, upon being informed that he was to be included as a defendant in the impending action, Goldberg asked the Bernson firm for an opportunity to demonstrate that he had been unaware of the finder’s fee arrangement which, he said, Empire and the Sitomer firm had concealed from him all along. Goldberg met with members of the Bernson firm on at least two occasions. After consulting his own attorney, as well as William P. Sullivan, Special Counsel with the Securities and Exchange Commission, Division of Enforcement, Goldberg gave plaintiffs’ counsel a copy of the January 26th affidavit which he had authored more than three months earlier. He hoped that it would verify his nonparticipation in the finder’s fee omission and convince the Bernson firm that he should not be a defendant. The • Bernson firm was satisfied with Goldberg’s explanations and, upon their motion, granted by the court, he was dropped as a defendant. After receiving Goldberg’s affidavit, the Bern-son firm amended plaintiffs’ complaint. The amendments added more specific facts but did not change the theory or substance of the original complaint.
By motion dated June 7, 1973, the remaining defendants moved “pursuant to Canons 4 and 9 of the Code of Professional Responsibility, the Disciplinary Rules and Ethical Considerations applicable thereto, and the supervisory power of this Court” for the order of disqualification now on appeal.
By memorandum decision and order, the District Court ordered that the Bernson firm and Goldberg be barred from acting as counsel or participating with counsel for plaintiffs in this or any future action against Empire involving the transactions placed in issue in this lawsuit and from disclosing confidential information to others.
The complaint was dismissed without prejudice. The basis for the Court’s decision is the premise that Goldberg had obtained confidential information from his client Empire which, in breach of relevant ethical canons, he revealed to plaintiffs’ attorneys in their suit against Empire. The Court said its decision was compelled by “the broader obligations of Canons 4 and 9.”
There is no proof — not even a suggestion — that Goldberg had revealed any information, confidential or otherwise, that might have caused the instigation of the suit. To the contrary, it was not until after the suit was commenced that Goldberg learned that he was in jeopardy. The District Court recognized that the complaint had been based on Empire’s — not Goldberg’s — disclosures, but concluded because of this that Goldberg was under no further obligation “to reveal the information or to discuss the matter with plaintiffs’ counsel.”
Despite the breadth of paragraphs EC 4-4 and DR 4-101 (B), DR 4-101(C) recognizes that a lawyer may reveal confidences or secrets necessary to defend himself against “an accusation of wrongful conduct.” This is exactly what Goldberg had to face when, in their original complaint, plaintiffs named him as a defendant who wilfully violated the securities laws.
The charge, of knowing participation in the filing of a false and misleading registration statement, was a serious one. The complaint alleged violation of criminal statutes and civil liability computable at over four million dollars. The cost in money of simply defending such an action might be very substantial. The damage to his professional reputation which might be occasioned by the mere pendency of such a charge was an even greater cause for concern.
Under these circumstances Goldberg had the right to make an appropriate disclosure with respect to his role in the public offering. Concomitantly, he had the right to support his version of the facts with suitable evidence.
The problem arises from the fact that the method Goldberg used to accomplish this was to deliver to Mr. Abbey, a member of the Bernson firm, the thirty page affidavit, accompanied by sixteen exhibits, which he had submitted to the SEC. This document not only went into extensive detail concerning Goldberg’s efforts to cause the Sitomer firm to rectify the nondisclosure with respect to Empire but even more extensive detail concerning how these efforts had been precipitated by counsel for the underwriters having come upon evidence showing that a similar nondisclosure was contemplated with respect to Glacier and their insistence that full corrective measures should be taken. Although Goldberg’s description reflected seriously on his employer, the Sitomer firm and, also, in at least some degree, on Glacier, he was clearly in a situation of some urgency. Moreover, before he turned over the affidavit, he consulted both his own attorney and a distinguished practitioner of securities law, and he and Abbey made a joint telephone call to Mr. Sullivan of the SEC. Moreover, it is not clear that, in the context of this case, Canon 4 applies to anything except information gained from Empire. Finally, because of Goldberg’s apparent intimacy with the offering, the most effective way for him to substantiate his story was for him to disclose the SEC affidavit. It was the fact that he had written such an affidavit at an earlier date which demonstrated that his story was not simply fabricated in response to plaintiffs’ complaint.
The District Court held: “All that need be shown ... is that during the attorney-client relationship Goldberg had access to his client’s information relevant to the issues here.” See Ernie Industries, Inc. v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1973). However, the irrebutable presumption of Emle Industries has no application to the instant circumstances because Goldberg never sought to “prosecute litigation,” either as a party, compare Richardson v. Hamilton International Corp., 62 F.R.D. 413 (E.D.Pa.1974), or as counsel for a plaintiff party. Compare T. C. Theatre Corporation v. Warner Brothers Pictures, 113 F.Supp. 265 (S.D.N.Y.1953). At most the record discloses that Goldberg might be called as a witness for the plaintiffs but that role does not invest him with the intimacy with the prosecution of the litigation which must exist for the Emle presumption to attach.
In addition to finding that Goldberg had violated Canon 4, the District Court found that the relationship between Goldberg and the Bernson firm violated Canon 9 of the Code of Professional Responsibility which provides that:
EC 9-6 Every lawyer [must] strive to avoid not only professional impropriety but also the appearance of impropriety.
The District Court reasoned that even though there was no evidence of bad faith on the part of either Goldberg or the Bernson firm, a shallow reading of the facts might lead a casual observer to conclude that there was an aura of complicity about their relationship. However, this provision should not be read so broadly as to eviscerate the right of self-defense conferred by DR4101(C)(4).
Nevertheless, Emle Industries, Inc. v. Patentex, Inc., supra, requires that a strict prophylactic rule be applied in these cases to ensure that a lawyer avoids representation of a party in a suit against a former client where there may be the appearance of a possible violation of confidence. To the extent that the District Court’s order prohibits Goldberg from representing the interests of these or any other plaintiffs in this or similar actions, we affirm that order. We also affirm so much of the District Court’s order as enjoins Goldberg from disclosing material information except on discovery or at trial.
The burden of the District Court’s order did not fall most harshly on Goldberg; rather its greatest impact has been felt by Bernson, Hoeniger, Freitag & Abbey, plaintiffs’ counsel, which was disqualified from participation in the case. The District Court based its holding, not on the fact that the Bernson firm showed bad faith when it received Goldberg’s affidavit, but rather on the fact that it was involved in a tainted association with Goldberg because his disclosures to them inadvertently violated Canons 4 and 9 of the Code of Professional Responsibility. Because there are no violations of either of these Canons in this case, we can find no basis to hold that the relationship between Goldberg and the Bernson firm was tainted. The District Court was apparently unpersuaded by appellees’ salvo of innuendo to the effect that Goldberg “struck a deal” with the Bernson firm or tried to do more than prove his innocence to them. Since its relationship with Goldberg was not tainted by violations of the Code of Professional Responsibility, there appears to be no warrant for its disqualification from participation in either this or similar actions. A fortiori there was no sound basis for disqualifying plaintiffs or dismissing the complaint.
Order dismissing action without prejudice and enjoining Bernson, Hoeniger, Freitag & Abbey from acting as counsel for plaintiffs herein reversed. Upon cross-appeal by Empire, Gross, Kaplan, Phillips, Kratky, Lalich, Swick and Jennings, Jr., and cross-appeal by Sitomer, Sitomer and Porges, A. L. Sitomer, S. J. Sitomer and R. E. Porges insofar as said orders failed to enjoin plaintiffs from disclosing confidential information regarding Empire and to disqualify plaintiffs from representing themselves or a similar class of Empire stockholders, appeals dismissed. To the extent that the orders appealed from prohibit Goldberg from acting as a party or as an attorney for a party in any action arising out of the facts herein alleged, or from disclosing material information except on discovery or at trial, they are affirmed.
. Code of Professional Responsibility
Canon 4
A lawyer Should Preserve the Confidence and Secrets of a Client Ethical Considerations
EC 4-1 Both the fiduciary relationship existing between lawyer and client and the proper functioning of the legal system require the preservation by the lawyer of confidences and secrets of one who has employed or sought to employ him.
EC 4-4 The attorney-client privilege is more limited than the ethical obligation of a lawyer to guard the confidences and secrets of his client. The ethical precept, unlike the evidentiary privilege, exists without regard to the nature or source of information or the fact that others share the knowledge. A lawyer should endeavor to act in a manner which preserves the evidentiary privilege ....
EC 4^5 A lawyer should not use information acquired in the course of the representation of a client to the disadvantage of the client and a lawyer should not use, except with the consent of his client after full disclosure, such information for his own purposes ....
EC 4-6 The obligation of a lawyer to preserve the confidences and secrets of his client continues after the termination of his employment ....
Disciplinary Rules
DR 4-101 Preservation of Confidences and Secrets of a Client.
(A) “Confidence” refers to information protected by the attorney-client privilege under applicable law, and “secret” refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.
(B) Except when permitted under DR 4-101(0), a lawyer shall not knowingly:
(1) Reveal a confidence or secret of his client.
(2) Use a confidence or secret of his clienl to the disadvantage of the client.
(3) Use a confidence or secret of his client for the advantage of himself or of a third person, unless the client consents after full disclosure.
(C) A lawyer may reveal:
(4) Confidences or secrets necessary to establish or collect his fee or to defend himself or his employees or associates against an accusation of wrongful conduct.
Canon 9
A Lawyer Should Avoid Even the Appearance of Professional Impropriety Ethical Considerations
EC 9-1 Continuation of the American concept that we are to be governed by rules of law requires that the people have faith that justice can be obtained through our legal system. A lawyer should promote public confidence in our system and in the legal profession.
EC 9-6 Every lawyer owes a solemn duty to uphold the integrity and honor of his profession: to encourage respect for the law and for the courts and the judges thereof; to observe the Code of Professional Responsibility; to act as a member of a learned profession, one dedicated to public service; to cooperate with his brother lawyers in supporting the organized bar through the devoting of his time, efforts, and financial support as his professional standing and ability reasonably permit; to conduct himself so as to reflect credit on the legal profession and to inspire the confidence, respect, and trust of his clients and of the public; and to strive to avoid not only professional impropriety but also the appearance of impropriety.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
McWILLIAMS, Senior Circuit Judge.
Rhea Dawn Jones, widow of Kelly Jones, brought suit in the United States District Court for the District of Utah against New York Life & Annuity Corporation (New York Life), a Delaware corporation, as beneficiary under a policy of life insurance in the face amount of $100,000 issued to Kelly Jones by New York Life. Jurisdiction was based on diversity of citizenship. 28 U.S.C. § 1332(a)(1).
In her complaint, plaintiff alleged that before signing the application for insurance, Kelly Jones had in her presence “fully and truthfully disclosed all facts and information concerning [his] health history ... known to him in response to inquiries of defendant’s agent, who completed the application himself,” and that “[d]efen-dant’s agent knowingly or negligently omitted certain health information from the subject application despite having knowledge thereof from the responses given to his inquiries.” Plaintiff further alleged that New York Life issued its policy of whole life insurance in the face amount of $100,000 on the life of Kelly Jones with an inception date of August 8, 1984, and that plaintiff was named therein as beneficiary. It was further alleged in the complaint that Kelly Jones died on February 20, 1985, of natural causes and that thereafter New York Life “refused to pay all or any portion of the policy proceeds for the stated reason that [Kelly Jones] failed to disclose certain information concerning his previous health history in the application.”
In addition to seeking judgment for the face amount of the policy plus interest, plaintiff also sought punitive damages and, in support of that claim, alleged that the defendant’s denial of coverage was “willful, malicious, wanton or done with an intentional disregard for the rights and property of others.”
By answer, New York Life denied liability, alleging that it had rescinded the policy and had refunded premiums paid, with interest, after learning of fraudulent representations concerning Kelly Jones’ health history in the application for insurance. New York Life alleged that it had become aware of the fraudulent representations as the result of an investigation conducted subsequent to Kelly Jones’ death. By counterclaim, New York Life sought a judicial determination that the policy had been rescinded and that the defendant was relieved from all liability thereon.
The parties submitted to the district court a pretrial order, which was accepted by the court. The pretrial order contained a list of “Uncontroverted Facts,” which were “established by admissions in the pleadings or by stipulations of counsel.” The pretrial order also contained a recital of the contested issues of fact. At trial, numerous witnesses testified, and at the conclusion of the trial the district court took the matter under advisement. Some time later, the district court, in an unpublished 15-page opinion, made findings of fact and conclusions of law, the gist of which was that New York Life had improperly rescinded Kelly Jones’ life insurance policy and that his widow and beneficiary, Rhea Dawn Jones, was entitled to $100,000, the face amount of the policy. By amended judgment, the district court allowed the plaintiff prejudgment interest and accordingly entered judgment against New York Life for $164,300. In that amended judgment, the district court, without comment, stated that “plaintiffs claims for insurer bad faith, intentional infliction of emotional distress and punitive damages are dismissed, with prejudice and upon the merits.”
In No. 91-4184, New York Life appeals that part of the amended judgment which entered a judgment against it for $164,300. In No. 91-4202, plaintiff appeals that part of the amended judgment which dismissed her claim for punitive damages. 28 U.S.C. § 1291.
As indicated, the core of this dispute concerns the facts and circumstances surrounding the preparation and execution of the application for insurance, which took place in the Jones family residence. Present at that time were Kelly Jones, Rhea Dawn Jones, and the agent from New York Life, Richard Doerr. Also present were a brother and sister of Rhea Dawn Jones. Agent Doerr filled out the application.
Question No. 15 in the application reads as follows:
In last 2 years, has any such person had or been treated for (If “Yes” to (a) or (b), give name and full details in Quest. 18.)
(a) elevated blood pressure, heart murmur, irregular pulse, abnormal electrocardiogram, or diabetes?
(b) any lung, kidney, liver, pancreas, intestinal, circulatory, blood, brain, nervous system, or back disorder?
In response to question No. 15(a) in the application, the agent answered “No.” In response to question No. 15(b), the agent answered “Yes” and circled “back disorder.”
In response to question No. 18, which required “full details” if either question No. 15(a) or (b) was answered in the affirmative, agent Doerr wrote as follows:
# 15 Back injury, December ’82, complete recovery, Castleview Hospital, Dr. Potter, County Fairgrounds Rd., Price, Utah 84501.
Question No. 16 of the application read as follows:
In last 5 years, has any such person: (If “Yes” to (a) or (b), submit Conf. Form 17480 and give name if not Prop. Insured in Q. 18.)
(a) because of the use of alcohol or drugs, been counselled, treated, or hospitalized, or been absent from work or school?
(b) had any psychiatric, emotional, or mental health condition for which medical treatment or hospitalization was advised?
In response to both parts of question No. 16, agent Doerr answered “No.”
Based on the testimony of plaintiff and her sister, who was present at the time the application was prepared and executed, the district court found that Kelly Jones had in fact advised agent Doerr that he had high blood pressure and that agent Doerr had failed to note such in response to question No. 15(a). Agent Doerr testified that he had no specific recollection as to whether Kelly Jones disclosed his high blood pressure.
Based on the testimony of plaintiff and her brother, who also was present at the time the application was prepared and executed, the district court found that Kelly Jones had also advised agent Doerr that he had, from birth, suffered from Christmas Disease, a blood disorder similar to hemophilia, and that agent Doerr had again failed to properly record such in response to question No. 15(b).
As concerns question No. 16, the district court, on the basis of plaintiff’s testimony, found that agent Doerr had failed to ask Kelly Jones any question concerning alcohol or drug abuse and had nonetheless answered question No. 16 in the negative. Agent Doerr testified that he had no present recollection of having asked Kelly Jones that particular question.
The application was signed by agent Doerr, Kelly Jones, and Rhea Dawn Jones, although neither Kelly Jones nor Rhea Dawn Jones read the application before signing. Immediately above the three signatures appeared the following:
THOSE PERSONS WHO SIGN BELOW AGREE THAT:
1. All of the statements which are part of the application are correctly recorded, and are complete and true to the best of the knowledge and belief of those persons who made them.
2. No agent or medical examiner has any right to accept risks, make or change contracts, or give up any of NYLIC’s [New York Life Insurance Company] or NYLIAC’s [New York Life Insurance and Annuity Corporation] rights or requirements.
The district court found that at the time they signed the application both Kelly Jones and plaintiff knew that Kelly Jones suffered from high blood pressure and an incurable blood condition called Christmas Disease and that in 1983 Kelly Jones was counseled, treated and hospitalized due to his dependency on narcotic analgesic pain medication. The district court further found that New York Life issued a policy of life insurance in December 1984, effective August 8, 1984, on the life of Kelly Jones, that the policy, with a copy of the application attached, was received by plaintiff and the insured on February 13, 1985, and that Kelly Jones died on February 20, 1985, of arteriosclerotic cardiovascular disease. The district court further found that on June 7, 1985, New York Life sent plaintiff a notice of its rescission of the policy and a check for $56.09, a refund of the initial premium plus interest.
In its Findings of Fact and Conclusions of Law, the district court initially noted that the application contained at least two incorrect statements regarding Kelly Jones’ health history. We agree. In connection therewith, the district court observed that the plaintiff’s position was that these incorrect statements in the application were solely the fault of New York Life’s agent, Doerr, and that New York Life’s position was that the “source of the false representations” was Kelly Jones himself. Based on its findings regarding the facts and circumstances surrounding the preparation and execution of the insurance application, as discussed above, the district court concluded that Kelly Jones made no misrepresentation to agent Doerr, that the misrepresentations which were in the application were solely attributable to Doerr, and, further, that since Doerr was an agent for New York Life, his acts could not in anywise be attributed to Kelly Jones so as to bar plaintiff from recovery on the policy issued by New York Life.
The starting point of our discussion is Utah Code Ann. § 31-19-8(1), repealed in 1986, which provided as follows:
(1) All statements and descriptions in any application for an insurance policy or annuity contract, or for the reinstatement or renewal thereof, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless:
(a) fraudulent; or
(b) material either to the acceptance of the risk, or to the hazard assumed by the insurer; or
(c) the insurer in good faith either would not have issued the policy or contract, or would not have issued, reinstated, or renewed it at the same premium rate, or would not have issued, reinstated, or renewed a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise. (emphasis added)
The gist of the statute is that misrepresentations and omissions in an application for insurance will not prevent recovery under the policy unless such are: (1) fraudulent, or (2) material either to the acceptance of the risk or to the hazard assumed, or (3) the insurer would not have issued the policy if the true facts had been known to the insurer. In Berger v. Minnesota Mutual Life Insurance Company, 723 P.2d 388 (Utah 1986), the Utah Supreme Court held that the statutory grounds for rescission in Utah Code Ann. § 31-19-8(1) are disjunctive, not conjunctive, i.e. that an insurer need only prove one in order to invalidate the policy.
In its Conclusions of Law, the district court did recognize that, under the provisions of Utah Code Ann. § 31-19-8(1), New York Life “need only prove one of the grounds contained in § 31-19-8(1) in order for its rescission of the policy to be valid.” However, the succeeding conclusion of the district court was that “an insurer cannot avoid a policy by taking advantage of a misstatement in the application, material to the risk, not due to the insured’s bad faith,” citing J. Appleman, Insurance Law and Practice, § 9401 (1981). We believe this conclusion to be inconsistent with the meaning of the statute.
Although the district court did not discuss Theros v. Metropolitan Life Insurance Co., 17 Utah 2d 205, 407 P.2d 685 (1965), we find that case to have considerable bearing on the instant one. In that case, suit was brought on an insurance policy where the insurer refused payment based on misrepresentations in the application. It was conceded that certain answers to questions in the application were untrue and were material to the risk, that the insurer had relied on them, and that the insurer would not have issued the policy had it known the truth, at least not without a medical examination. In a pretrial hearing, the deposition of the insurer’s agent was published, in which the agent testified that he had filled out the application and, on his own initiative, had inserted false answers to questions in the application, although the insured had given him truthful information. The record did not affirmatively show that the insured had read the completed application before signing, and it was therefore apparently assumed that he had not. In this general setting, the state district court granted summary judgment for the insurer.
On appeal in Theros, the Utah Supreme Court affirmed the grant of summary judgment. In so doing, the Utah Supreme Court recognized as a “general rule” that “if an applicant gives truthful answers to the questions contained in the application, but they are falsely recorded by an agent of the insurer, then the latter cannot rely upon the falsity of such answers to avoid liability under the policy issued upon the application in the absence of fraud, collusion, actual knowledge of the insured or the existence of circumstances from which constructive knowledge of such falsity might be imputed to him.” 407 P.2d at 688.
At the same time, the Utah Supreme Court in Theros recognized what it also characterized as the majority rule—“that an insured is under a duty to read his application before signing it, and will be considered bound by a knowledge of the contents of his signed application.” Id. In connection therewith, the Utah Supreme Court spoke as follows:
The facts here presented provide absolutely no basis for applying any exception to the basic contract law. The record is devoid of any facts or circumstances that would indicate or imply that Theros was by fraud, accident, misrepresentation, imposition, illiteracy, artifice or device reasonably prevented from reading the application before signing it. Therefore, he is, by law, conclusively presumed to have read the application and his beneficiary is bound by the contents thereof It therefore follows that the lower court should be affirmed, (emphasis added)
As indicated, we read the district court’s initial and critical finding to be that Kelly Jones made no misrepresentation to agent Doerr, and that the misrepresentations in the application were those of Doerr, and that under the circumstances of the case Kelly Jones, and his widow, were in no wise bound by Doerr’s misrepresentations. We think such findings are at odds with the holding in Theros that where an applicant gives verbal responses to an insurer’s agent, who then fills out the application, the applicant has a duty to read the application before signing it and make certain his verbal responses have been correctly recorded, and that in the absence of fraud, accident, misrepresentation, imposition, illiteracy, artifice or device (any of which would reasonably prevent the applicant from reading the application before signing), the applicant, by his act of signing the application, “is, by law, conclusively presumed to have read the application and his beneficiary is bound by the contents thereof.”
In the instant case, nothing in the record indicates or suggests that Kelly Jones was somehow tricked or led into signing the application without reading it, and the district court did not find, or intimate, that such was the case. Kelly Jones simply signed the application without reading it, and, under Theros, he is bound by the misrepresentations contained therein.
However, even though Kelly Jones made misrepresentations in his application for insurance, under Utah Code Ann. § 31 — 19— 8(1), the plaintiff may still recover under the policy unless the insurer establishes that the misrepresentations were either fraudulent, or material to the risk assumed, or that the insurer would not have issued the policy if he had known the “true facts.” Since the district court held that Kelly Jones was not bound by agent Doerr’s misrepresentations, we do not regard the district court as having ruled on any of the three alternative statutory grounds by which New York Life could prevent recovery on the policy. On remand, the district court should consider and rule on those matters.
In this court, the plaintiff’s basic position is that even assuming that there were misrepresentations in the application, which Kelly Jones adopted by his act of signing the application, New York Life did not rely on the misrepresentations in issuing the policy, and that only after conducting its own, but limited, investigation of the matter, did it decide to issue the policy. In this regard, there is evidence that New York Life inquired of one of Kelly Jones’ doctors concerning any blood disorder and also required Kelly Jones to sign a subsequent statement that he had no blood problem.
We cannot tell from the record before us whether New York Life’s reliance on the misrepresentations in the application was an issue in the trial. The central issue in the district court certainly was whether Kelly Jones made misrepresentations in his verbal responses to agent Doerr’s questions, or whether Jones made truthful statements concerning his medical history and agent Doerr incorrectly recorded those responses, and, if the latter, whether Kelly Jones was bound by agent Doerr’s incorrect answers in the application.
The closest thing to suggesting nonreliance by New York Life on misrepresentations in the application appeared in paragraph 15 of the complaint, where plaintiff alleged that assuming misrepresentation or omission of fact in the application, New York was “estopped from claiming ignorance of such facts at the time it issued the subject policy by reason of the knowledge possessed by its agent Richard C. Doerr.” Also, in the pretrial order, one of plaintiff’s claims is said to be based on whether “defendant had a duty to conduct a reasonable investigation into the insured’s health history from information provided to its agent which inquiry would have disclosed the true facts.”
Be all that as it may, nothing indicates that the district court made any finding that in issuing the policy to Kelly Jones New York Life did not rely on the statements in the application and instead relied on its own investigation, or that New York Life was “on notice” and should have made a more complete check of the matter. We cannot find that the district court reached the issue upon which plaintiff has primarily relied in this court.
In line with the foregoing, we reject Jones’ suggestion that Hardy v. Prudential Insurance Company of America, 763 P.2d 761 (Utah 1988), requires affirmance. In that case, suit was brought on a policy of life insurance, and, on motion, summary judgment was entered for the insurer on the ground that the insured — not the agent — had made misrepresentations in the application. On appeal, the Utah Supreme Court reversed and held that whether the insured made misrepresentations in the application was a question of fact, not one of law. We parenthetically note that in thus holding, the Utah Supreme Court stated that it did not need to then decide whether a misrepresentation, “if any,” was fraudulent or material or whether the policy would have been issued if the insurer had known the true facts, as provided for in Utah Code Ann. § 31-19-8(1). In that general setting, the Utah Supreme Court stated that an insurer could not escape liability on a policy if it is established that “there should have been no actual reliance on applicant’s misrepresentations, concealment or omissions,” citing Major Oil Corp. v. Equitable Life Assurance Society of Utah State, 457 F.2d 596 (10th Cir.1972). In our case, whether the issue of “reliance” was before the district court is unclear, though it is clear that the district court did not rule on that particular question.
In her complaint, Jones sought punitive damages based on New York Life’s intentional infliction of emotional distress. The pretrial order identified one of plaintiff’s claims as based on “bad faith conduct.” In its findings and conclusions holding that plaintiff was entitled to judgment in the face amount of the policy, the district court did not mention plaintiff's claim for punitive damages. In the amended judgment, by which time plaintiff had apparently asked for a trial of her claim for punitive damages, the district court, without explanation, simply dismissed the claim for punitive damages with prejudice and on its merits.
By No. 91-4202, plaintiff appeals the dismissal of her claim for punitive damages, claiming that the trial of this matter was limited to the defendant’s counterclaim based on rescission and that her claim of punitive damages was reserved for future consideration, pending the outcome of defendant’s counterclaim. New York Life argues that plaintiff’s various claims and its counterclaim were all tried at the same time, and, alternatively, suggests that along the way plaintiff abandoned her claim for punitive damages.
We find nothing in the record to indicate why the district court dismissed plaintiffs claim for punitive damages. It would be difficult for us to affirm this order when we do not know the reason for it; therefore, that portion of the judgment dismissing the plaintiffs claim for punitive damages should be vacated and the claim for punitive damages remanded for further consideration, depending again, of course, on the ultimate determination of New York Life’s liability under the policy.
In No. 91-4184, the judgment is reversed and the cause remanded with the direction that further proceedings be consonant with the views herein expressed. In No. 91-4202, the judgment is vacated and the cause remanded with direction that further proceedings be consonant with the views herein expressed.
. As concerns question No. 15(b), the district court found, alternatively, that the recorded answer did not assert a fraudulent or material misrepresentation because it gave New York Life actual knowledge of the blood disorder in that checking the "yes” box for question No. 15(b) could have been construed to mean that Kelly Jones suffered all the ailments listed in question No. 15(b), including blood disorder, even though only "back disorder” was circled. We are not persuaded by this reasoning. It ignores the "explanation” in question No. 18 of the "yes" answer to question No. 15(b), where the only reference was to a "back injury” suffered in December 1982, from which there had been "complete recovery.” It also disregards the parties’ stipulation in the Pretrial Order that “[t]he facts set forth in the application, paragraph 15, ... are incorrect and misrepresent the true fact that Kelly R. Jones ... from his birth had a genetic blood condition known as Christmas Disease, a disorder related to hemophilia" (emphasis added).
. Immediately above the insured's signature on the application appeared the following printed statement: "I have read the foregoing answers before signing. They have been correctly written, as given by me, and are true and complete. There are no exceptions to any such answers other than as stated therein.” 407 P.2d at 687.
. As above stated, the district court in the instant case declared that "an insurer cannot avoid a policy by taking advantage of a misstatement in the application, material to the risk, not due to the insured's bad faith,” citing J. Appleman, Insurance Law and Practice, § 9401 (1981). The plaintiff in Theros also relied on that same language from Appleman. The Utah Supreme Court held, in effect, that such language was not controlling where the insured signed the application without reading it.
. On December 9, 1984, which was prior to the actual issuance of the policy, at the request of New York Life, Kelly Jones signed a statement wherein he stated he had "never been diagnosed or been treated for a blood condition." The district court found that although Jones “knew” he had Christmas Disease, he nonetheless had never been "diagnosed” or "treated" therefor, and hence his statement was technically correct.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
J. SPENCER BELL, Circuit Judge.
The petitioner, Virginia Electric and Power Company [hereinafter Vepco], seeks to set aside an interim order of the Federal Power Commission [hereinafter the Commission] entered under section 10(f) of the Federal Power Act. The order requires Vepco to pay a specified sum in partial satisfaction of its obligations for certain headwater benefits conferred by upstream dams constructed by the Government upon the petitioner’s Roanoke Rapids hydroelectric development project during the period between August 1, 1955, and December 31, 1962.
The petitioner’s project, which was constructed pursuant to a license issued by the Commission, commenced initial operations on July 18, 1955. At that time, the United States had in operation the upstream dams involved in this proceeding, both of which had begun operations in 1953. Pursuant to the mandate of the Act, an investigation was commenced by the Commission in 1956. Its purpose was to determine the amount of the annual charges which should be assessed against the petitioner’s project because of the headwater benefits conferred thereon by the Government’s upstream dams. Between 1956 and April of 1964, Vepco was kept informed of the progress of the study, and numerous conferences were held between members of the Commission’s staff and representatives of Vepco. In April of 1964, the staff prepared a report recommending that Vepco be assessed $983,300.00 for the benefits conferred by the upstream Government dams and $33,900.00 for the cost of making the study. Copies of the report were sent to Vepco for its comments. Vepco commented on the report and protested the headwater benefits assessment in a letter dated July 27, 1964. Two legal arguments against the assessment were advanced. First, it was contended that the Commission staff should have allowed an offset for re-regulation benefits provided to the Government by the Vepco project which Vepco claimed exceeded the amount of the headwater benefits and should, therefore, have resulted in no assessment against it. Second, it was asserted that the benefits should at least be split equally between the parties with the result that the Vepco charge would be one-half of the value of the net benefits accruing to its project. In the July 27 letter Vepco also submitted a figure of $559,900.00 as its computation of the value of the headwater benefits conferred upon it, assuming that the Commission had adopted a legally valid formula for its computations and that it was correct in rejecting the two legal arguments advanced by Vepco. Because of the legal questions raised in the July 27 letter, the staff submitted the matter of billing Vepco to the Commission.
On November 9, 1964, this court decided South Carolina Electric & Gas Co. v. Federal Power Comm., 338 F.2d 898. In that case both of the legal questions raised by Vepco in the July 27 letter were decided adversely to its contentions. The court also held that the formula used by the Commission (and utilized in computing the Vepco head-water benefits assessment here) was reasonable and lawful.
Subsequent to the judgment of this court in the South Carolina case, the Commission entered an order directing Vepco to pay $593,890 in partial satisfaction of its headwater benefits obligation. The order expressly recited that it was an interim billing based upon Vepco’s concessions in the July 27 letter regarding the quantity and value of the energy gain it derived from the upstream water flow regulation for the interval of the report. In its brief and in oral argument before us, Vepco has reiterated that it does not contest those facts. Nor, it seems, does Vepco now question the power of the Commission to enter an interim assessment as such. Its sole contention in its petition for a rehearing before the Commission and on this appeal is that the Commission had no authority to enter an order directing it to pay for any headwater benefits in the absence of a hearing and the compilation of a formal record which would occur at such a hearing.
We cannot agree with the petitioner’s contention. In view of Vepco’s concession, even now, of all the facts necessary to support the Commission’s order and of the Commission’s power to enter an interim billing order as such, we are at a loss to understand what would be gained by a formal hearing. The “record” before this court, which consists of extracts from the staff report and the correspondence of the parties, furnishes an ample factual basis for the petitioner’s arguments with respect to the points of law it has raised. The Commission, relying on this court’s thorough and exhaustive opinion in the South Carolina case, felt that it would have been futile to hold a hearing on purely legal questions which had been settled only so recently.
Neither the Federal Power Act nor the Commission’s regulations make an administrative hearing a condition precedent for an interim benefit assessment by the FPC. Nor, in our judgment, does due process require a hearing where, as here, no factual controversy exists and the litigant seeks merely to controvert the legal principles upon which the Commission acts, something he can readily do by exercising his statutory right of appeal to the federal courts. Cf. Lich-ter v. United States, 334 U.S. 742, 791, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948); Federal Communications Commission v. WJR, The Goodwill Station, Inc., 337 U.S. 265, 274, 69 S.Ct. 1097, 93 L.Ed. 1353 (1949).
The petition to review and set aside the interim assessment order is denied.
Petition denied.
. “(f) That whenever any licensee hereunder is directly benefited by the construction work of another licensee, a permittee, or of the United States of a storage reservoir or other headwater improvement, the Commission shall require as a condition of the license that the licensee so benefited shall reimburse the owner of such reservoir or other improvements for such part of the annual charges for interest, maintenance, and depreciation thereon as the Commission may deem equitable. The proportion of such charges to be paid by any licensee shall be determined by the Commission; The li- ' .censees or permittees affected shall pay to the United States the cost of making such determination as fixed by the Commission.
“Whenever such reservoir or other improvement is constructed by the United States the Commission shall assess similar charges against any licensee directly benefited thereby, and any amount so assessed shall be paid into the Treasury of the United States, to be reserved and appropriated as a part of the special fund for headwater improvements as provided in section 810 of this title.
“Whenever any power project not under license is benefited by the construction work of a licensee or permittee, the United States or any agency thereof, the Commission, after notice to the owner or owners of such unlicensed project, shall determine and fix a reasonable and equitable annual charge to be paid to the licensee or permittee on account of such benefits, or to the United States if it be the owner of such headwater improvement.” 16 U.S.C.A. § 803(f).
. Vepco did not seriously question the $33,900.00 assessment for the cost of making the headwater benefits study.
. Vepco also bad filed an amicus brief in the South Carolina ease.
. This petition was denied on February 11, 1965.
. 16 U.S.C.A. § 825 l.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PARKER, Circuit Judge.
This is a petition to review a decision of the Board of Tax Appeals which denied to the petitioner, Norfolk Southern Bus Corporation, the right to file a consolidated tax return with the Norfolk-Southern Railroad Company under section 141 of the Revenue Act of 1934. It is admitted that all of the stock of petitioner is owned by the railroad company and that the principal business of that company is that of common carrier by railroad. The only question in the case is whether the principal business of petitioner is “that of a common carrier by railroad”. The nature of that business was thus correctly described by the Board in its findings:
“Prior to and during 1934 the railroad company had lines running from Norfolk, Virginia, east to Virginia Beach, north to Cape Henry, and back to Norfolk, referred to as the Virginia Beach ‘Loop’, and generally south from Norfolk, Virginia, to Elizabeth City, Edenton, Plymouth, Washington, and New Bern, and westerly from Washington to Raleigh and Charlotte, with connecting lines to Fayetteville, Durham, Ellerbe, and Asheboro, all in North Carolina, and several other branch lines serving this general territory.
“The Virginia Beach ‘Loop’ of the railroad served all villages and towns between Norfolk, Virginia Beach, and Cape Henry. Prior to 1924 the principal mode of travel in the locality was on the railroad line, the roads being in poor condition. In or about 1924 the State of Virginia started building concrete roads paralleling the ‘Loop’ railroad. The railroad, faced with a possible loss of passenger business to independently organized and operated bus companies, organized the petitioner bus company in 1926 for the purpose of transporting passengers by bus and freight by trucks over the new highways paralleling the railroad. On the Virginia Beach ‘Loop’ the busses supplemented the railroad passenger service and during the winter months were substituted for the railroad service. Trucks operated by petitioner provided pick-up and delivery freight service in this area. The same fares were charged and the same tickets used from Norfolk to Virginia Beach, Cape Henry, and return. Likewise the same fares were charged and the same tickets used when a person traveled from Virginia Beach to Norfolk, such fares being published with the State Corporation Commission and with the Interstate Commerce Commission and approved by them. The dispatching of both trains and busses was done by officers or employees of the railroad. Schedules were staggered and the ticket purchased entitled the purchaser to travel either by railroad or by bus. Passengers, after purchasing tickets, generally used the transportation, either bus or rail, which left first in point of time.
“In 1931 on the branch from Norfolk to Munden, Virginia, there was one round-trip passenger and one round-trip freight train a day. Bus service replaced the railroad passenger service in 1932 or 1933. Truck service was substituted for freight rail service, the freight train being run twice a week, except during the potato season in the month of June, when it was run daily. *
“Service by bus and truck was instituted, generally paralleling the railroad from Norfolk south into North Carolina. Because of the fact that there was no highway across Albemarle Sound, the busses ran west from Edenton to Windsor and south from Williamston to Washington, North Carolina. They also ran from Williamston east to Plymouth along the Atlantic Coast Line Railroad and then east to Columbia, paralleling a branch line of the Norfolk-Southern Railroad Co. to Columbia and from Williamston west to Raleigh, under a contract with the Carolina Coach Co., which owned the franchise. Approximately one year after the bus service was instituted between Norfolk and New Bern, which generally parallels the railroad, the railroad company took off one of its trains which had been making the round trip daily.
“Interline tickets purchased and used on Pennsylvania Railroad lines were accepted on the busses as well as on the trains which the railroad company ran over the same route as its bus lines. The Columbia branch of the railroad from Williamston to Columbia, North Carolina, maintained a passenger service from Plymouth to Columbia which was unproductive. This was replaced by bus service, so that by 1934 petitioner operated under franchises busses and some truck lines on public highways parallel to the railroad over a large portion of the territory served by the railroad, with the exception of a comparatively short distance from Edenton west to Windsor and south from Williamston to Washington and from Williamston east to Plymouth.
“In 1934 one of the receivers of the railroad was president of the bus company. The general superintendent of the electric lines of the railroad was vice president and general manager of the bus company. The assistant secretary of the railroad was secretary of the bus company. Both companies had the same treasurer and general auditor. All the directors of the bus company were officers of the railroad. All officers of the bus company were on the railroad pay roll and their salaries were paid in the first instance by the railroad. The employees, except the bus drivers and trainmen, were the same for both the railroad and the bus company and the dispatching of both trains and busses was done by officers or employees of the railroad. The railroad in the first instance paid the administrative expenses of the bus company and, inasmuch as the administrative staff served both the railroad and the bus company, this expense was allocated to the bus company in the amount of approximatley $1,000 per month.”
Upon request of petitioner for additional findings, the Board supplemented the findings quoted by the following:
“Petitioner contends that the findings do not show why it was formed, why it was set up as a separate corporation, who furnished the capital and who has actually operated the buses. Notwithstanding the fact that the Division feels sufficient findings have been made to disclose these facts, it is now specifically found as a fact that petitioner was organized and operated for the purpose of transporting passengers by bus and freight by truck; that the legal department of the Norfolk-Southern Railroad Company advised its officers it could not own and operate such buses and trucks except through a separately incorporated company; that the railroad company furnished the original capital and it, or its receivers, own all of its capital stock; and that the petitioner, in the manner set out in the findings heretofore made, operated said buses and trucks in conjunction with said railroad company,”
Petitioner contends that, 'although it is not a railroad carrier, its principal business is that of a carrier by railroad in that its business is an integral part of the railroad’s carrier service, and that the bus and truck service maintained by it are intended to and do preserve, supplement and feed such railroad service. In other words, petitioner contends that it is a bus company engaged in the railroad business. We think, however, that what the evidence shows is not a bus company engaged in the business of a railroad company, but a railroad company through its subsidiary engaged in the business of a bus company. Whatever the purpose behind petitioner’s organization and operation, the fact is inescapable that its principal business is not that of common carrier by railroad but of common carrier by bus or truck. That this business is conducted in close cooperation with the business of the railroad company does not change its essential character.
Petitioner relies upon the decision of Interstate Commerce Commission in Scott Bros., Inc., Collection and Delivery Service, I. C. C. No. MC-2744; but we find nothing in that decision which in any way supports petitioner’s contention. In that case Scott Brothers, Inc., sought a permit under the Motor Carrier Act of 1935 (Part II of the Interstate Commerce Act, 49 U.S.C.A. § 301 et seq.) authorizing it to engage in local collection and delivery service for the Pennsylvania and Long Island Railroad Companies in the City of New York and vicinity. The application was denied on the ground that the service in which applicant proposed to engage was railroad common carrier service subject to Part I of the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq. The Commission distinguished such service from that of the sort here involved, quoting the definition of “common carrier by motor vehicle” from the Motor Carrier Act of 1935 followed by the following quotation from the decision of the Commission in Pick-Up and Delivery in Official Territory, 218 I. C. C. 441, viz.:
“In the foregoing language there is clearly expressed an intention to exclude the motor-vehicle operations of rail carriers from the definition of a common carrier by motor vehicle to the extent that these operations are subject to the provisions of the Interstate Commerce Act. In making this exception Congress may be presumed to have legislated with knowledge of the court decisions previously mentioned, holding that pick-up and delivery service is within the meaning of ‘transportation’ as defined in section 1(3) of the Interstate Commerce Act, as well as with knowledge of our own administrative findings to the effect that, while railroad terminal service by motor truck was subject to regulation under the Interstate Commerce Act, the use of motor trucks by railroads in line-haul service was not subject to that act. United States v. Bailey, 9 Pet. 238, 255 [9 L.Ed. 113]; National Lead Co. v. United States, 252 U.S. 140, 147 [40 S.Ct. 237, 64 L.Ed. 496].”
The Commission also quoted with approval the following passage from American Trucking Association v. United States, D.C., 17 F.Supp. 655, 657:
“And therefore we think that in the exception Congress intended to include under the provisions of part 2 intercity motor vehicle operations of railroads but at the same time to exclude, from that part, motor vehicle operations within terminal districts.”
As the principal business of petitioner was that of intercity motor vehicle operations and not local pick-up and delivery service, it is clear that it falls within Part II of the Interstate Commerce Act (the Motor Carrier Act of 1935) and not within Part I of the act covering railroad carrier service.
Petitioner contends that, in the light of its history, Section 141 of the Revenue Act of 1934, 26 U.S.C.A. § 141, should be construed to permit the filing of consolidated returns by a railroad company and a bus company occupying towards each other the relationship disclosed in this case. The language of the statute is unambiguous, however, and there Js no reason for resorting to the canons of interpretation to ascertain its meaning. These, as has been often said, are to be looked to for the purpose of resolving ambiguity, not for the purpose of creating it. If, however, we look to the history of the act, we find no intention on the part of Congress in conflict with the clear meaning of the language employed. Section 141 as originally drafted permitted the filing of consolidated returns by affiliated corporations, the report of the committee stating that, if consolidated returns were abolished, it “would be especially burdensome to many corporations such as railroads which are frequently obliged to maintain separate corporate structures in the several states in which they operate, although for all ordinary business and accounting purposes the subsidiaries form a single operating system”. In the course of the passage of the bill, Section 141 as reported was stricken out and the present section was substituted for it, the debates showing that the permission to file consolidated returns was retained to the limited extent permitted by the substituted section to provide for the case of railroads having separate corporate structures but forming a single operating system. There is no indication of any intention to accord the privilege to bus companies merely because they are affiliated with railroads and operated in connection with them.
For the reasons stated, the decision of the Board will be affirmed.
Affirmed.
The pertinent portion of Sec. 141, which is entitled “Consolidated Returns of Railroad Corporations”, is as follows:
“(d) Definition of ‘affiliated group.’ As used in this section an ‘affiliated group’ means one or more chains of corporations connected through stock ownership with a common parent corporation if—
“(1) At least 95 per centum of the stock of each of the corporations (except the common parent corporation) is- owned directly by one or more of the other corporations ; and
“(2) The common parent corporation owns directly at least 95 per centum of the stock of at least one of the other corporations; and
“(3) Each of the corporations is either (A) a corporation whose principal business is that of a common carrier by railroad or (B) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common carrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad.” 26 U.S.C.A. § 141(d) (1-3).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ROBB, Circuit Judge:
The appellant was convicted of unauthorized use of a motor vehicle in violation of 22 D.C. Code § 2204. At trial the case for the government was that on February 14, 1967 the appellant wrongfully appropriated and drove an automobile, was observed and pursued by the police at a high rate of speed, and was arrested after he abandoned the automobile and fled to the roof of a nearby apartment house. A police officer identified the appellant as the driver of the car and there was evidence that when arrested he had in his pocket the key to a telephone that was part of the car’s equipment. On the other hand the appellant denied that he had been in the car or had anything to do with it, or ever had the key in his possession, and he undertook to explain his presence on the roof of the apartment house. The appellant’s trial in the District Court took place on January 17 and 18, 1968.
Counsel for the appellant tells us that prior to his trial in the District Court the appellant was tried and acquitted in the Court of General Sessions on charges of reckless driving and speeding (D.C. Code § 40-605), and driving a motor vehicle after his permit had been suspended (D.C. Code § 40-489). Counsel states that these charges were based upon the alleged operation by the appellant on February 14, 1967 of the same automobile referred to in the indictment in the case before us, and that the only contested issue before the Court of General Sessions was whether the appellant was the driver of that automobile.. Counsel argues that the prosecution in the District Court was thus barred by the rule of collateral estoppel. A short statement of this rule as applied to criminal cases is that when a question of fact essential to the judgment is litigated and determined in a criminal prosecution, the determination is conclusive between the parties in any subsequent prosecution, although the offenses be different. Seal-fon v. United States, 332 U.S. 575, 68 S. Ct. 237, 92 L.Ed. 180 (1948); Hoag v. New Jersey, 356 U.S. 464, 470, 78 S.Ct. 829, 2 L.Ed.2d 913 (1958); Laughlin v. United States, 120 U.S.App.D.C. 93, 344 F.2d 187 (1965); United States v. Kramer, 289 F.2d 909 (2d Cir. 1961); United States v. DeAngelo, 138 F.2d 466 (3d Cir. 1943); People v. Cornier, 42 Misc.2d 963, 249 N.Y.S.2d 521 (Sup.Ct. 1964); cf. Moore v. United States, 120 U.S.App. D.C. 173, 344 F.2d 558 (1965); see Annot., 9 A.L.R.3d 203 (1966). Applying the rule to the facts of this ease, it is argued that the ruling of the Court of General Sessions was a conclusive determination that the appellant was not the operator of the motor vehicle in question and the judgment was therefore a bar to the subsequent prosecution for the unauthorized use of that vehicle.
(2] We find it unnecessary to consider the appellant’s argument. His contention is made for the first time in this Court. In the District Court he did not mention the judgment of the Court of General Sessions or even intimate to the district judge that the case might present a question of collateral estoppel. This was so, notwithstanding the fact that the appellant was represented in the Court of General Sessions and in the District Court by the same attorney. Under these circumstances we must decline to explore the point on this appeal. Had the matter been brought to the attention of the district judge he would have examined the record in the Court of General Sessions to determine whether it supported the defense of collateral estoppel. It is not the function of this Court, however, to make such an inquiry in an endeavor to establish facts which should have been developed in the District Court. United States v. Friedland, 391 F.2d 378 (2d Cir. 1968); 1 C.A. Wright, Federal Practice & Procedure § 193 (1969). Indeed, it has been held that even the defense of double jeopardy, a constitutional point, is waived unless raised in the District Court. Haddad v. United States, 349 F.2d 511 (9th Cir.), cert. den. 382 U.S. 896, 86 S.Ct. 193, 15 L.Ed.2d 153 (1965).
The appellant contends also that the district judge abused his discretion in denying a continuance. The argument has no merit. The record discloses that the appellant’s motion for continuance was made for the first time on the day of trial, January 17, 1968, upon the ground that “if he had a month’s continuance * * * he might possibly be able to find a witness in New Jersey.” The appellant had been free on personal recognizance since March 10, 1967 and had been represented by counsel since May 18, 1967. There was no showing of diligence in seeking out the witness. The matter of a continuance was within the discretion of the district judge and plainly he did not abuse that discretion. Neufield v. United States, 73 App.D.C. 174, 118 F.2d 375 (1941).
The judgment of the District Court is affirmed.
. Not counsel on this appeal.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
JAMES C. HILL, Circuit Judge:
These plaintiffs believe that they have been deprived of employment opportunities and benefits because they are black. Invoking the provisions of 42 U.S.C. §§ 1981 and 2000e et seq., they have sued both their employer, the Seaboard Coast Line Railroad Company (SCL) and the labor union which represents them, the United Transportation Union (UTU). The gravamen of their complaint is that SCL and UTU collectively bargained, inter alia, a seniority system which has perpetuated the allegedly illegal racial discrimination and has resulted in present violations of the federal laws. They have asked for both declaratory and injunctive relief as well as back pay.
The case was tried without a jury. Six of the plaintiffs testified. Additionally, plaintiffs read from two scholarly treatises, offered into evidence under Federal Rule of Evidence 1004, which discussed and analyzed racial issues germane to employment on the railroad generally. Essentially, plaintiffs’ evidence established that prior to the Civil Rights Act of 1964 blacks were excluded from certain jobs on the railroad and thus were unable to accumulate the seniority and other benefits available to their white contemporaries who worked in those particular positions. The evidence also demonstrated that because blacks were excluded in the past some are unable to compete with their white contemporaries for those positions today. Thus, plaintiffs insist, the advantages of the seniority system flow disproportionately toward whites and away from blacks.
The defendants did not rebut plaintiffs’ evidence establishing that blacks were once excluded from certain crafts. Rather, defendants attempted to demonstrate that no present violation of the federal laws has occurred. They showed that the seniority system is neutral both facially and as applied and insisted that a legitimate seniority system which does no more than continue the effects of pre-Civil Rights Act discrimination is not illegal.
Trial lasted two days. The district court, after considering all of the evidence, whether offered before trial or at trial, found the defendants liable. The seniority system, the court concluded, is facially neutral, but “the defendants perverted it by applying it to Blacks discriminatorily.” Record, vol. VII, at 201. Furthermore, the court con-eluded that the seniority “system has not been negotiated and maintained free from any illegal purpose.” Id. This, the court held, constituted a violation of Title VII. Nevertheless, the court granted relief to only some of the plaintiffs, because the others had not convinced the court that they had suffered from any discrimination.
Not all of the issues presented to the district court have been resolved; this, therefore, is an interlocutory appeal. Defendant UTU has appealed from the district court’s finding that the defendants violated the federal anti-discrimination laws. Three of the trainmen plaintiffs who were dismissed have filed cross-appeals, alleging they should not have been dismissed. We have divided the issues before us into four categories: (1) administrative prerequisites to pursuit of Title VII claims; (2) statutes of limitations applicable to the plaintiffs’ section 1981 claims; (3) issues focusing on the railroad’s seniority system; and (4) issues raised in the cross-appeal. For the reasons discussed below, we affirm in part, reverse in part, and remand for further proceedings.
I. Administrative Prerequisites to Title VII Claims
Above all else, the record before us reveals a convoluted and untidy presentation of these plaintiffs’ claims. We have a copy of one “Charge of Discrimination,” filed on October 13, 1972 by Scarlett, naming the Seaboard Coast Line Railroad and complaining that “the company and union seniority system perpetuates past discrimination against blacks in the present.” In an accompanying narrative, Scarlett described the event which prompted him to file the charge. Plaintiff’s Exhibit 1. The charge is marked “Case File No. TMM3-0356. It is not clear what developed from this charge. There is some suggestion that Scarlett received a response from the Equal Employment Opportunity Commission (EEOC); there is also some suggestion that the EEOC misplaced the charge. Record, vol. I, at 16, Exhibits A & B. There is nothing suggesting Scarlett sued.
In any event, it appears that Scarlett filed a second charge on February 27, 1976. We do not have a copy of the charge; we are told generally that it “eharg[ed] defendants with discrimination based on race.” Record, vol. I, at 1:4. Shortly thereafter, the EEOC sent Scarlett a Notice of Right to Sue. That notice is dated March 2, 1976; it is numbered TMM3-0356 (could this be a belated response to Scarlett’s 1972 charge?); it states that Scarlett’s charge (which one?) “has been dismissed for... failure to proceed”; it explains to Scarlett that he has “the right to sue the respondent(s) named in this case”; and it indicates that copies were sent to both SCL and UTU. Record, vol. I, at 16, Exhibit C. Scarlett claims that he received the notice on March 19, 1976. His complaint was filed June 15, 1976, eighty-eight days later.
Joining Scarlett in the complaint, however, are ten other plaintiffs. We are told that six of these plaintiffs filed charges with the EEOC on the same day Scarlett filed his second charge; another plaintiff filed a charge on May 10, 1976; two more filed charges on October 11, 1976. We do not have any of these charges. Even if one accepts that these charges exist, it is clear that three of them were filed after the plaintiffs had brought suit.
The complaint clearly establishes, however, that only Scarlett had been notified by the EEOC of his right to sue prior to the filing of the complaint. It is beyond argument that a prerequisite to a cause of action under Title VII is the exhaustion of administrative remedies, usually evidenced by the filing of a charge with the EEOC and the receipt of notice of the right to sue. 42 U.S.C. § 2000e-5(e) and (f). With this in mind, the district court dismissed the Title VII claims of all plaintiffs except Scarlett because they had not alleged individual compliance with the administrative prerequisites of Title VII. The court invited the plaintiffs to amend their complaint. Record, vol. I, at 33:7.
Meanwhile, however, plaintiffs moved to amend their complaint to include class allegations, suggesting in an accompanying memorandum that “the jurisdictional prerequisites becomes [sic] immaterial once plaintiffs’ complaint is amended to make it a class action. It has long been settled law in the Fifth Circuit that the jurisdictional prerequisites of Title VII are met if one class member has complied with them. Oatis v. Crown Zellerbach Corp., 398 F.2d 496 (5th Cir. 1968).” Record, vol. I, at 17:2. The motion to amend was granted, but apparently plaintiffs never followed through with a motion for class certification. For that reason, and also because SCL established that any potential class lacked the requisite numerosity, the district court denied class certification. Record, vol. II, at 73. Finally, or so it appeared, the district court held that even Scarlett had failed to satisfy the administrative prerequisites to maintenance of his Title VII claims. Consequently those claims were dismissed for failure to file a timely charge with the EEOC. Record, vol. II, at 76; vol. Ill, at 82. Eventually, on October 27, 1977, the entire complaint was dismissed with prejudice. Record, vol. Ill, at 102.
That judgment was later opened, primarily for substantive reasons, on plaintiffs’ Fed.R.Civ.P. 59(e) motion. Record, vol. Ill, at 110; vol. IV, at 127. The court also reconsidered its previous findings and concluded that Scarlett had filed a timely charge, since his allegations fell “ ‘within the accepted doctrine of continuing violations.’ ” Record, vol. IV, at 127:3 (quoting Clark v. Olinkraft, Inc., 556 F.2d 1219, 1221 (5th Cir. 1977)). The other plaintiffs, however, were not allowed to reassert their Title VII claims; the court concluded both that they had failed to allege that they had exhausted their administrative remedies and that they could not depend upon Scarlett’s exhaustion of his administrative remedies. Record, vol. IV, at 127:3-4.
Two and a half months later, plaintiffs moved to amend their complaint to allege satisfaction of the administrative prerequisites. Apparently, after receiving the court’s order dismissing the Title VII claims, plaintiffs (except Scarlett) “began what turned out to be a Herculean effort to obtain the necessary letters from an inexplicably balky EEOC.” Plaintiffs’ Memorandum in Support of Their Motions to Amend the Order of June 13, 1978, and for Leave to Amend and Supplement the Complaint, Record, vol. V, at 140:3. It seems that the EEOC had declined to issue the requisite notices because plaintiffs had already filed suit. Eventually, the remaining plaintiffs received right to sue notices.
Thus, the district court confronted a somewhat outlandish Title VII scenario: the lawsuit was filed after most of the named plaintiffs filed administrative charges but before any plaintiffs, except one, received notice that the administrative procedures had been concluded. The remaining plaintiffs, apparently assuming that they would be certified as a class and thus could depend upon the exhaustion allegations of one class member, declined to complete the administrative process. When this assumption proved faulty, the remaining plaintiffs completed the administrative process and asked the court for permission to amend the original complaint to allege that they had satisfied the administrative prerequisites, albeit after the complaint had been filed. The district court decided to allow the remaining plaintiffs to assert Title VII claims without alleging that they individually had exhausted their administrative remedies.
Basically, then, there are two issues regarding the ability of the plaintiffs to pursue their Title VII claims in the district court. (1) did Scarlett satisfy the administrative prerequisites to maintenance of his Title VII claim, and (2) if so, should the remaining plaintiffs be allowed to ride along?
Section 2000e-5(e) of Title 42 provides: “A charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred.... ” Courts, perhaps somewhat loosely, have referred to this 180-day requirement as a jurisdictional prerequisite. This court, however, has indicated that this requirement is in the nature of a statute of limitations and is not a prerequisite to subject matter jurisdiction. Coke v. General Adjustment Bureau, Inc., 640 F.2d 584 (5th Cir. 1981) (en banc). That view was recently affirmed by the Supreme Court in Zipes v. Trans World Airlines, Inc., - U.S. -, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982). In Zipes the court expressly held that the 180-day filing period for Title VII claims is not jurisdictional but serves instead the function of a statute of limitations. -U.S. at-, 102 S.Ct. at 1132.
Defendants argue that Scarlett did not file his charge with the EEOC within 180 days of any allegedly discriminatory act. The argument is not without merit. We do not have a copy of Scarlett’s 1976 charge, so it is impossible for us to determine what he alleges is the unlawful act which prompted it. We do have Scarlett’s 1972 charge, so we know what act prompted it; however, there is some suggestion that this lawsuit is not a product of that charge.
The district court, however, found a way around the limitations problem. It concluded that Scarlett has not alleged that he suffered from a particular discriminatory act. Rather, Scarlett has alleged that the seniority system perpetuates illegal discrimination, and thus that the defendants continually violate Title VII. Inevitably then, Scarlett argues, illegal discrimination has occurred within 180 days of the filing of the charge.
As this court has noted, “[c]ase law on the subject of continuing violations has been aptly described as ‘inconsistent and confusing,’ both prior to and since the Supreme Court’s decision in United Air Lines, Inc. v. Evans, 431 U.S. 553 [97 S.Ct. 1885, 52 L.Ed.2d 571] (1977).” Dumas v. Town of Mount Vernon, 612 F.2d 974 (5th Cir. 1980) Evans, undoubtedly, dealt a severe blow to the theory of continuing violations. Evans had been wrongfully terminated in 1968; she was rehired as a new employee in 1972. The issue before the Supreme Court was whether United Air Lines committed a second violation of Title VII by refusing to credit her with seniority for any period prior to 1972. The Court agreed with- Evans that the company’s seniority system gave present effect to a past act of discrimination. The Court concluded, however, that mere continuity of impact was not enough; Evans had to allege that a present violation supported her charge. Because she did not, her claim was dismissed. The Court explicitly stated: “[A] challenge to a neutral system may not be predicated on the mere fact that a past event which has no present legal significance has affected the calculation of seniority credit, even if the past event might at one time have justified a valid claim against the employer.” United Air Lines, Inc. v. Evans, 431 U.S. at 560, 97 S.Ct. at 1890.
Notwithstanding Evans, this court has endorsed the theory of continuing violations. Clark v. Olinkraft, Inc., 556 F.2d 1219 (5th Cir. 1977). We are persuaded, however, that Scarlett has not alleged a continuing violation that will pass muster under the Evans decision. The factual basis for any continuing violation in this case cannot be made consistent with the plaintiffs’ theory regarding the non bona fides of the defendants’ seniority system without running afoul of -Evans.
Specifically, plaintiffs contend that the taint in the seniority system, rendering it non bona fide under section 703(h) and thereby affording no immunity from liability, is the past perversion of that facially neutral system so as discriminatorily to deny black trainmen the right to be called for promotion to conductor. The continuing violation theory presupposes that if the seniority system itself is discriminatory, that system’s daily operation results in some actionable conduct within the 180-day limitations period. But if the system is discriminatory because it was selectively applied to promote whites and not blacks, the only consequence of past failures to call blacks for promotion is a current adverse impact on seniority-related benefits. This effect — that is, the continuing impact of past promotion discrimination — is not enough under Evans to support a continuing violation theory. Scarlett’s Title VII claim is therefore barred by his failure to file a charge within 180 days of an alleged discriminatory act or to present a challenge to the seniority system which constitutes a continuing violation.
The fate of the remaining, nonfiling plaintiffs in this nonclass action is linked to that of Scarlett. In Crawford v. United States Steel Corp., 660 F.2d 663 (5th Cir. 1981), this court allowed plaintiffs in a non-class action who had not individually exhausted their administrative remedies to proceed on the basis of another plaintiff’s timely filed EEOC charge. Because Scarlett has not satisfied these prerequisites, the Title VII claims of the remaining plaintiffs are likewise barred.
Although relief under Title VII is not available, the plaintiffs also brought suit under 42 U.S.C. § 1981. We turn now to examine whether the district court’s finding of liability may be affirmed under this statute.
II. Statutes of Limitations for Section 1981 Employment Discrimination Claims
The use of section 1981 as an avenue for redress of employment discrimination is not constrained by the administrative prerequisites held above to bar the Title VII claims in this case. The defendants contend, however, that relief under section 1981 is barred by the statute of limitations.
Because section 1981 contains no express limitation period, the controlling period is the most appropriate limitation provided in the state in which the action was filed. See Johnson v. Railway Express Agency, 421 U.S. 454, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975). Defendants object to the trial court’s application of the twenty year statute of limitations under Georgia Code § 3 — 704 to the plaintiffs’ claims for equitable relief under section 1981. The court also dismissed the plaintiffs’ claims for back pay as barred by the two-year limitation placed on recovery of wages by section 3 — 704. Defendants contend that this bifurcated application of section 3-704 is erroneous and that one limitation period — i.e., two years — should apply to the entire cause of action under section 1981. The defendants’ argument is foreclosed by a recent decision of this court. In Whatley v. Department of Education, 673 F.2d 873, 877 (5th Cir. 1982), we concluded that for purposes of § 1981 claims “§ 3-704 as written must be applied in a bifurcated manner so that an action for equitable relief is barred only after twenty years, but an action for back pay is barred after only two years.”
That a discriminatee litigating his section 1981 claim for equitable relief in Georgia may file suit any time within twenty years while a discriminatee in another state may have to act with more speed does not give us pause to reconsider our holding, as defendants urge. By failing to supply its own limitation for section 1981 claims, Congress has intended the application of whatever limitation the forum state provides for state actions most closely resembling these claims — be it one year or twenty. See Johnson v. Railway Express Agency, supra. Hence, the Georgia discriminatee is simply the beneficiary of the Georgia legislature’s largesse and Congress’ knowing inaction.
III. The Seniority System
Having determined that the applicable statute of limitations does not bar the plaintiffs’ section 1981 claim, we address the issue of liability under the statute. The district court concluded that some of the plaintiffs had established a prima facie case of promotion discrimination and were therefore entitled to seniority relief under section 1981. In reaching that conclusion the court rejected the contention that the difference in treatment could be justified as the product of application of a bona fide seniority system. The district court determined that, because SCL’s seniority system was maintained and continued in part for the purpose of discriminating against blacks, the system was not bona fide and therefore not immune under § 703(h) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e— 2(h).
The defendants attack the district court’s conclusion on two grounds: (1) the promotional practice or rule at issue is not a part of the railroad’s seniority system, and (2) even if it were, that system is bona fide within the meaning of section 703(h). We need not address these arguments because we find on other grounds that the protection of section 703(h) is not available to these defendants.
At the focal point of plaintiffs’ attack on the seniority system is a collective bargaining agreement provision regarding promotion from trainman to conductor. As it appeared in the 1951 bargaining agreement between UTU and the Atlantic Coast Line Railroad, a predecessor to SCL, that clause provided: “Trainmen will be in line of promotion dependent upon their qualifications and seniority. The senior trainman will be given preference if he desires it.” Plaintiffs’ Exhibit 35. A substantially similar clause appeared in the 1968 agreement between SCL and UTU: “Promotion will be from trainmen to freight conductor in the relative standing on the trainmen’s seniority roster. Trainmen having at least two years’ experience as such shall be in line for promotion.” Plaintiffs’ Exhibit 36. Conceding that this promotional policy is facially neutral, plaintiffs argued at trial, and the district court agreed, that SCL and UTU have applied it consistently to discriminate against black trainmen. Plaintiffs Scarlett, Starkes, J. Jones, Thomas, and Rood established trainmen seniority in the late 1930’s and early 1940’s. Nevertheless none was promoted to conductor until at least 1967. White trainmen, junior to these plaintiffs in trainman seniority, were called for promotion during that time, however.
According to the plain language of the statute, section 703(h) operates to immunize an employment practice which would otherwise constitute unlawful discrimination when the difference in treatment complained of is effected “pursuant to” a bona fide seniority system. In this case the differing treatment of black trainmen was not the product of applying the facially neutral provision regarding promotion. Rather, the discrimination was the result of the defendants’ consistent disregard of the applicability of that provision to black trainmen. Hence it cannot be said that the different treatment accorded the plaintiffs was “pursuant to” the seniority system, for quite the opposite occurred. The rights granted to the plaintiffs by the promotion provision were simply ignored. We therefore conclude that section 703(h) offers no immunity to the defendants and affirm the trial court’s judgment that those plaintiffs who established a prima facie case were entitled to seniority relief under section 1981.
IV. The Cross-Appeal
Three of the trainmen plaintiffs whose claims were dismissed by the district court — Bell, Odol, and Lindsey — have cross-appealed, questioning the propriety of their dismissal. The defendants contend that these plaintiffs should not be heard because this court lacks jurisdiction over the cross-appeal. Whether or not the precise order from which these plaintiffs filed a notice of cross-appeal is independently reviewable, a court of appeals may, in the interest of orderly judicial administration, review matters beyond that which supplies appellate jurisdiction. Mercury Motor Express, Inc. v. Brinke, 475 F.2d 1086, 1091 (5th Cir. 1973); see Myers v. Gilman Paper Co., 544 F.2d 837, 847 (5th Cir. 1977). Indeed, the Supreme Court has approved the power of an appellate court to reach other issues in a case properly before it on interlocutory appeal. See Deckert v. Independence Shares Corp., 311 U.S. 282, 287, 61 S.Ct. 229, 232, 85 L.Ed. 189 (1940). We proceed, therefore, to consider the propriety of dismissal.
The district court dismissed the employment discrimination claims of cross-appellants Bell, Odol, and Lindsey on the ground that each had failed to demonstrate that he applied for a job as trainman or was discouraged from applying by his knowledge of the defendants’ discriminatory hiring policy. The court cited McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), as support for its ruling that these plaintiffs had failed to meet their burden of proving a prima facie case. The cross-appellants do not argue that they did establish a prima facie case; rather, they maintain that the court applied the wrong legal standard regarding the respective burdens of proof and that their dismissal was premature. We disagree.
The district court appropriately relied on the burden of proof set forth in McDonnell Douglas for an individual, proceeding as an individual, who claims he is the victim of a racially discriminatory hiring decision. Notwithstanding our conclusion that the Title VII claims of all the plaintiffs are time-barred, the McDonnell Douglas standard was correctly invoked, Although McDonnell Douglas addresses the elements of a prima facie case under Title VII, this court has held that, given the similarity of a Title VII disparate treatment claim and a section 1981 claim, the evidence establishing a prima facie case under the former statute suffices to establish a prima facie case under the latter. Baldwin v. Birmingham Board of Education, 648 F.2d 950, 954-55 (5th Cir. 1981).
Moreover, even if, as the district court held, the plaintiffs’ Title VII claims were properly before the court, the use of the McDonnell Douglas allocation of the burden of proof, as opposed to any other manner of proceeding under Title VII, was appropriate. Cross-appellants have attempted to convince us that their suit is a “pattern and practice claim,” in which proof of a pattern of unlawful discrimination is established at the first, or liability, phase of trial and issues of individual entitlement to relief are reserved for the second stage. That label is inaccurate as applied to this case and cannot alter the fact that plaintiffs Bell, Odol, and Lindsey must prove their claim that they were discriminatorily refused positions as trainmen. This is not a “pattern and practice” suit by the government under section 707, 42 U.S.C. § 2000e-6, in which the government may postpone until the “remedial” stage of trial proof that each individual for whom it seeks relief was discriminatorily denied an employment opportunity. See International Brotherhood of Teamsters v. United States, 431 U.S. 324, 361-62, 97 S.Ct. 1843, 1867-68, 52 L.Ed.2d 396 (1977). Nor is this a private class action, in which a similar manner of proceeding with the production of evidence is appropriate. See Franks v. Bowman Transportation Co., 424 U.S. 747, 96 S.Ct. 1251, 47 L.Ed.2d 444 (1976) An individual proceeding as an individual under Title VII must prove the elements of a discriminatory hiring claim as set forth in McDonnell Douglas. This the cross-appellants failed to do.
In sum, we reverse the district court’s conclusion that the plaintiffs’ Title VII claims were not time-barred and affirm its application of Georgia’s twenty-year statute of limitations to the plaintiffs’ section 1981 claims for equitable relief, its finding of liability under section 1981, and its dismissal of the cross-appellants. We remand to the district court for further proceedings on the issues of equitable relief available under section 1981.
REVERSED IN PART; AFFIRMED IN PART; and REMANDED FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH THIS OPINION.
. Oliver W. Scarlett, H. B. Starkes, Franklin D. R. Bell, David Jones, M. L. Morgan, W. J. Odol, L. A. Waters, W. R. Lindsey, J. Wimyond Jones, Horace T. Thomas, and William D. Rood joined as plaintiffs in the single complaint. See Fed.R.Civ.P. 20. Morgan later withdrew. Although the complaint itself did not acknowledge any differences among the plaintiffs, later factual developments revealed that the remaining ten conveniently fell into two groups: (1) the “conductor plaintiffs” — Scarlett, Starkes, Rood, Thomas, and J. Jones — whose complaint developed from the fact that they had been denied promotion to the position of conductor in the late 1930’s and early 1940’s and (2) the “trainmen plaintiffs” — Bell, D. Jones, Lindsey, Odol and Waters — whose complaint developed from their initial employment in positions other than trainmen.
. The Seaboard Coast Line Railroad was formed in 1967 when the Atlantic Coast Line Railroad merged with the Seaboard Airline Railroad. Each plaintiff was initially employed by the Atlantic Coast Line Railroad.
. The United Transportation Union, established in 1969, is the successor to four craft unions: the Brotherhood of Railway Trainmen, the Order of Railway Conductors, the Brotherhood of Locomotive Firemen, and the Switchmen’s Union of North America.
. Specifically, plaintiffs asked for “a declaratory judgment that the policies and practices [of defendants] violated the provisions of 42 U.S.C. § 2000e et seq. and 42 U.S.C. § 1981” and “a permanent injunction enjoining defendants from maintaining or continuing the policies and practices of denying, abridging, withholding, conditioning and limiting or otherwise interfering with the rights of plaintiffs as provided by 42 U.S.C. § 2000e et seq. and 42 U.S.C. § 1981.” Even more specifically, plaintiffs asked the court to grant “a permanent injunction enjoining defendants from maintaining a seniority system which discriminates against black employees by depriving them of seniority which is enjoyed by white employees,” to grant “an order enjoining defendants from refusing to credit seniority gained by plaintiffs while working in formerly black jobs upon their transfer to formerly white jobs,” and to award plaintiffs “back pay in the amount they would have earned... if they had been able to exercise their accumulated seniority on the same terms and for the same purposes as white employees.” Complaint [[ 13, Record, vol. I, at 1.
. The six were J. Jones, Starkes, Scarlett, Thomas, D. Jones, and Lindsey. The plaintiffs also called William M. Sellers, a retired Atlantic Coast Line Railroad employee, and Samuel A. Baker, Jr., an employee of SCL and a local union representative, as witnesses.
. The two treatises were The Black Worker by Sterling D. Spere and Abram L. Harris, first published in 1930, and Negro Employment in Land and Air Transport, by Herbert R. Northrup, Howard W. Risher, Jr., Richard D. Leone and Philip W. Jeffress, published in 1971.
. The district court ruled that D. Jones, Rood, Scarlett, Starkes and Thomas are entitled to retroactive seniority. It dismissed the claims of four of the trainmen plaintiffs — Bell, Lindsey, Odol and Waters — because, it concluded, they had not made out a prima facie case of pre- or post-Act racial discrimination. Finally, it ruled that J. Jones’ claim for seniority relief was moot because he had retired from the railroad’s employ.
. The district court directed the parties to consider two additional issues focusing on relief: (1) any additional retroactive seniority to which D. Jones is entitled and (2) the back pay to which D. Jones, J. Jones, Rood, Scarlett, Starkes and Thomas are entitled.
. Scarlett explained how a white conductor “rolled” him from a preferable switchman’s job by invoking his conductor’s seniority, even though Scarlett had greater seniority as a switchman. The “job seniority” system made it possible for the white conductor to roll him, Scarlett said, because it maintained “preferential promotion rights for white employees over Negro employees” and “[t]he basis for exercising these rights was length of service in a classification from which Negro employees were historically excluded.” Plaintiff’s Exhibit 1.
Seniority on the SCL is established by time of service in a particular craft, such as trainman or conductor, rather than by time of employment generally. Because the craft of conductor was not open to blacks until the mid-1960’s, blacks were unable to begin to accumulate conductor seniority until then. Obviously, then, a white conductor who accepted the position during those years when blacks were excluded would rank senior in conductor seniority to a black who accepted the first conductor position open to him, even if the black had worked longer on the railroad. Undoubtedly, a black who had served many years as a trainman was reluctant to accept a conductor’s position, since he would have to forfeit his trainman seniority and begin at the bottom of the conductor seniority pole. In a purported attempt to encourage acceptance of promotions to conductor, the union and the railroad agreed to make it possible for a conductor to elect to work as a trainman and thus not forfeit any conductor seniority. This election was called “switching by preference,” and it was in this way that Scarlett was rolled from his switchman’s (trainman’s) position in 1972. Scarlett was unable to protect his job as switchman because the white conductor’s aggregate seniority was greater, and thus he was able to “switch by preference.” Scarlett, however, was unable to claim the vacant conductor’s position because he had not been able to accumulate enough conductor seniority, since that position had only recently become available to him.
. See note 1 supra (names of plaintiffs).
. Plaintiffs challenged the court’s conclusion that the seniority system was insulated from attack. See Section III infra (discussion of seniority system).
. Apparently, plaintiffs’ lawyer received a letter from the EEOC dated December 12, 1977, stating:
This is to advise that the subject charge has been closed by reason of the fact that the U.S. District Court now has jurisdiction.
Plaintiffs themselves (other than Scarlett and J. Jones) were sent similar letters on February 22, 1978.
We have been provided with a copy of a Court Order issued by the United States District Court for the Southern District of Georgia Waycross Division, Civil Action No. 576-32. This document clearly established that you are one of several plaintiffs who have filed suit against the Seaboard Coast Line Railroad Company under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1866 alleging maintenance of a discriminatory seniority system.
We are therefore, dismissing the above referenced charge because of no jurisdiction by this Commission.
We do not have copies of these letters; the district court clearly had read them, so we do not question their existence. See Record, vol. VI, at 182.
The district court at first concluded that these letters clearly indicated that the administrative process was at an end and, consequently, that they triggered the time limit within which plaintiffs had to sue. See Zambuto v. American Telephone & Telegraph Co., 544 F.2d 1333 (5th Cir. 1977). The district court refused to allow those plaintiffs who received such notice to amend, because the motion to amend was filed well beyond the 90 day limit. Record, vol. VI, at 171. The district court later changed its mind. Record, vol. VI, at 182.
. We do not have copies of these letters either. We are told, in Plaintiffs’ Recast Complaint, that plaintiffs received the notices on August 10, 1978 and September 25, 1978. Record, vol. I, at 183.
. Defendants’ raise other arguments, primarily factual in nature and focusing on the existence and contents of the various charges and administrative responses, that need not detain us. The district court, commendably we think, attempted to resolve these factual issues prior to trial, and there is enough in the record before us to support its conclusions. Cutliff v. Greyhound Lines, Inc., 558 F.2d 803 (5th Cir. 1977), does not compel us to conclude otherwise. In Cutliff plaintiff had offered absolutely no evidence indicating that he had filed an administrative complaint; we were unwilling to presume that a charge had been filed even though an administrative response had been received. In the instant case there is evidence indicating both that a charge had been filed and that a response had been received. See Record, vol. Ill, at 176, 187. Furthermore, there is evidence supporting the district court’s conclusion that both defendants, SCL and UTU, were properly before that court. See Record, vol. VII, at 201:2 n.2.
. In Coke we overwhelmingly endorsed the notion that an analogous 180-day requirement in the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 626(d)(1), is not related to the subject matter jurisdiction of a federal court, although satisfying it is a pre-condition to filing suit. 640 F.2d 584, 595 (5th Cir. 1981) (en banc). That holding, drawing as it did on Title VII cases for support, strongly implied that the Title VII filing requirement at issue here must be construed in like manner. See id. at 587 (noting the common purpose of Title VII and ADEA, the similar statutory schemes, and the identical filing periods).
. See note 9 & accompanying text supra.
. In Dumas we held that appellant’s claim was properly dismissed because it affirmatively appeared from the record that she complained about a specific act of alleged discrimination.
. The defense provided by section 703(h) reads in relevant part:
“[I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority... system,... provided that such differences are not the result of an intention to discriminate because of race.... ”
42 U.S.C. § 2000e-2(h) (1976). This court has construed section 703(h) to provide a defense to employment discrimination claims brought under 42 U.S.C. § 1981 as well as to actions brought under Title VII. Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1191 n.37 (5th Cir. 1977), cert. denied, 439 U.S. 1115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979). See note 23 infra.
. The district judge found that this practice persisted into the late 1960’s and early 1970’s. There is no contention that the defendants currently employ this tactic.
. See section III infra for a more thorough discussion of these allegations.
. That section provides:
All suits for the enforcement of rights accruing to individuals under statutes, acts of incorporation, or by operation of law, shall be brought within 20 years after the right of action shall have accrued: Provided, however, that all suits for the recovery of wages... shall be brought within two years after the right of action shall have accrued.
Ga.Code.Ann. § 3-704 (1975).
. Adjustment of seniority was held appropriate as to plaintiffs Scarlett, Starkes, Thomas, Rood, and D. Jones.
. Bona fide seniority systems which are protected by section 703(h) of Title VII, 42 U.S.C. §
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GODBOLD, Chief Judge:
Petitioner is a Georgia state prisoner convicted in 1975 and sentenced to death for murder, life imprisonment for rape, 20 years for kidnapping, and ten years for aggravated assault. The district court, 585 F.Supp. 1496, after an evidentiary hearing, granted the writ of habeas corpus on the ground of ineffective assistance of counsel at sentencing and denied relief on all other grounds. We affirm the denial of relief on the other grounds, vacate the judgment on the issue of ineffective counsel at sentencing, and remand for reconsideration of that issue under new standards handed down by the Supreme Court since the district court’s decision.
I. Facts
Petitioner Johnnie L. Johnson and co-perpetrator Jerry Sprouse approached two young women, Suzanne Edenfield, age 20, and Lynn Harrod, age 18, in Savannah, Georgia, after the women left a rock concert around 11 p.m. The two women agreed to smoke a joint (marijuana) with the men, and the four went to a park. After the four of them smoked two or three joints of marijuana and listened to a tape, the women set above to leave in their own car. Sprouse took a gun from the trunk of Johnson’s car and forced the women into Johnson’s car. The men bound the women’s hands behind them with wire. Suzanne gagged Lynn at the direction of the men. Johnson then gagged Suzanne and told her he would kill her if she made any noise.
Johnson drove to a wooded area outside of town. Once there he took Suzanne away from the car, disrobed her, and, the jury could find, raped her. Sprouse removed Lynn’s clothing and attempted to have intercourse with her in the back seat of the car, but was unable to complete the act. Johnson put some of Suzanne’s clothes back on her and brought her back to the car. At Sprouse’s direction Johnson again removed Suzanne’s clothing. Both of the women, nude and still bound, were ordered by Johnson to stand at the side of the road. Johnson got in his car and turned it around, then, according to Lynn, got out of the car and stood beside Sprouse, who was behind and at almost point blank range from the women. Johnson testified, however, that he remained in the car after turning it around. Lynn heard a gunshot and saw Suzanne fall to the ground, fatally wounded. Suzanne was struck by two shots, one to the head, one to the chest. A pathologist testified that probably she lived about 15 minutes. Two shots struck Lynn, wounding her. Lynn did not see which of the two men held the gun and fired the shots. The district judge found that most likely Sprouse was the triggerman.
Johnson and Sprouse left the scene in the car, taking with them all of the women’s clothing, which they threw out at various points. Lynn went to a nearby house, and police were called. The two men returned to town to wipe off fingerprints from the women’s car but did not find it. They threw the gun in a river, took Johnson’s car to South Carolina and burned it, and fled to South Dakota and then to Canada, in Sprouse’s car. The burned car was traced to Johnson. He and Sprouse returned to South Carolina and were arrested.
II. Excuse of Jurors for Cause
The district court considered the excusal for cause of veniremen Louis Bryan, Sam Coleman and Angus Henry and held that interrogation of each at trial revealed that under no circumstances conceivable at the time could he impose the death penalty on the defendant. We have examined the voir dire of these three persons, and it shows beyond question that the district court correctly held that the trial court properly excused them. All said unequivocally that they could not impose the death penalty. Georgia requires jurors to determine whether the death penalty is appropriate in the case. Fleming v. State, 240 Ga. 142, 240 S.E.2d 37 (1977). Under the law both before and after Wainwright v. Witt, — U.S. -, 105 S.Ct. 844, 83 L.Ed.2d 841 (1985), the district court was correct. See Adams v. Texas, 448 U.S. 38, 44, 100 S.Ct. 2521, 2526, 65 L.Ed.2d 581 (1980) (a juror wholly unable even to consider the death penalty in assessing sentence should be excused).
III. Evidence of Other Misconduct
The prosecution introduced over objection the testimony of witness Dan Lilly, a friend of Johnson’s, that about a week and a half before the crimes in question Johnson had mentioned to him that he (Johnson) and Sprouse recently had seen a couple of girls coming in and out at different clubs, that he (Johnson) wanted to have sex with them and said “if they didn’t want to do what he told them to, he was going to force them.” Lilly described how at a later occasion Johnson waved a pistol owned by Lilly, saying that as long as he had the pistol he could do what he wanted to. Johnson acknowledged the incident concerning Lilly’s pistol but stated that the conversation was limited to whether it was an antique.
Also introduced was testimony of Greg Yawn that a week and a half or two weeks before the crimes in question a magazine saleswoman came to Yawn’s house while Johnson was there, and Johnson mentioned to Yawn possibly raping her and using the gun because he didn’t want anyone to know about it. He invited Yawn to go along with him on the venture, but nothing further occurred.
The Supreme Court of Georgia pointed out that Johnson’s participation in the crimes was undisputed and that the foregoing testimony of similar misconduct was highly relevant to show his “bent of mind” to commit rape and to voluntarily participate in kidnapping and raping the two victims. Johnson, 250 S.E.2d at 399.
The district court correctly rejected Johnson’s contention that thig prior misconduct evidence improperly put his character in evidence (and, inferentially, that it was so fundamentally unfair that it violated due process).
IV. Ineffective Counsel at Trial
The district court considered an array of claims that counsel was ineffective at the guilt phase. Counsel had testified at the state habeas hearing. The court reviewed all of these claims under pre-Strickland v. Washington, — U.S.-, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), standards, and rejected all of them.
Defense counsel’s trial strategy cannot be faulted. The tactical choice was to recognize that Johnson participated in the kidnapping but to claim that he only attempted to rape Suzanne and that he did not participate in the shooting. It was, in effect, a recognition that conviction on some charges, and a prison sentence, were inevitable, and an attempt to escape the death penalty. It is difficult to see that counsel had any other rational choice. Johnson never claimed to have an alibi. In view of the actual events — the women’s car left in town, two nude and bound women abandoned on a remote road at night, both shot, one dead and the other alive and seeking help, the clothing of both taken away — the question was “who did it?” The surviving victim identified Johnson as driver of the car into which she and Suzanne had been forced and as a participant in the events that followed. She described the car, and her description tallied with Johnson’s car found burned in South Carolina. She identified articles of their clothing found at a place distant from the scene.
Johnson took the stand and gave his version. His contention that he only attempted to rape Suzanne was hardly credible since sperm was found in her body. He claimed that Sprouse fired the shots while he, Johnson, remained in the car after turning it around.
Petitioner’s suggestion that counsel somehow should have developed additional evidence that Johnson did not pull the trigger and that he only attempted to rape Suzanne is frivolous. The same is true of the contention that somehow he should have turned up evidence to rebut the testimony of Yawn and Lilly concerning Johnson’s respective statements to them (about girls going in and out of night clubs and about the magazine saleswoman). Johnson’s statements were made when no one else was present. Johnson acknowledged that the two conversations described by Yawn and Lilly occurred, and he could only seek to explain and soften his statements and the witnesses’ descriptions of the circumstances. With respect to the pistol incident, the evidence is unclear on whether others were present when the pistol incident occurred, but in the overall context of the trial Lilly’s testimony concerning Johnson’s statement about the pistol could not have affected the result. The Johnson/Sprouse stolen pistol was, without dispute, in the trunk of Johnson’s car, was seen in only Sprouse’s hand during the crimes, and the district court found that Sprouse most likely fired the shots.
The district court did not err in rejecting petitioner’s attack on the trial strategy and on counsel’s investigation of issues relating to guilt.
V. The Enmund Issue
Johnson raises a number of arguments under Enmund v. Florida, 458 U.S. 782, 102 S.Ct. 3368, 73 L.Ed.2d 1140 (1982), where the Supreme Court held that the Eighth Amendment barred the imposition of the death penalty “in the absence of proof that [the defendant] killed or attempted to kill, and regardless of whether [he] intended or contemplated that life be taken____” 458 U.S. at 801, 102 S.Ct. at 3379. We find no error.
Enmund was a felony murder case in which the Supreme Court examined the record to determine whether the Eighth Amendment permitted imposition of the death penalty on a defendant who aided and abetted a felony in the course of which the victims were killed. It concluded that the record did not justify a finding that Enmund had any intention of participating in or facilitating a murder, thus his level of culpability was not sufficient to justify imposition of the death penalty.
In the present case we are not required to make the Enmund examination. This is a malice murder case, in which the jury was instructed on malice murder. Its verdict necessarily established its finding of intent, in contrast to Enmund. Compare Ross v. Kemp, 756 F.2d 1483 (11th Cir.1985) (en banc), which like Enmund was a felony murder case and in which this court en banc accordingly examined the record to find if the defendant’s culpability satisfied the Eighth Amendment standards set out in Enmund. See also Drake v. Francis, 727 F.2d 990, 997 (11th Cir.1984); Henry v. Wainwright, 721 F.2d 990, 995 (5th Cir.1983). Green v. Zant, 738 F.2d 1529, 1534 (11th Cir.1984), was a malice murder case in which the court examined the evidence to see if it supported the jury finding of guilt on the charge. This was unnecessary. The Green court itself recognized that the case before it was “distinguishable from Enmund in that it was presented to the jury on a malice murder theory, rather than as felony murder.” Id. at 1534.
Finally, the jury was not required to make a specific finding on the defendant’s culpability. Ross, 756 F.2d at 1488.
VI. Use of Incriminating Statements
Incriminating statements made by petitioner to police shortly after his arrest were not improperly uséd at trial. They were first referred to by defense counsel in an affirmative effort to establish Johnson’s trial credibility. Johnson’s counsel asked him whether initially he had told police that Sprouse forced him to participate in the crimes and whether he now acknowledged that these statements were false. Johnson responded that he knew that lying would not help him and “I am here to tell the truth.” T. 213-14. Later the prosecution used one of the statements to bring out a single sentence uttered by defendant after he and Sprouse had left the area of the crimes, in which Johnson used a sexual expletive that, the prosecution said, demonstrated his attitude toward “the whole thing.” The only objection was to relevance. The exact sequence and circumstances of the statements given by Johnson are not revealed. Assuming he did not by his earlier use of one of the statements for his own tactical purposes, waive objections to a statement being used to bring out the particular sexual expletive incident, the use made by the prosecution was in context relatively trivial. Johnson’s actions spoke too loudly for a single expression of his post-event attitude to make much difference.
VII. Jury Instruction on Reasonable Doubt
The court charge on reasonable doubt is set out in the margin.
Later the court repeated the requirement of proof beyond reasonable doubt with respect to rape (T. 252, 253) and murder (T. 254), and then said:
I charge you that if you believe beyond a reasonable doubt that the defendant did, in this county, commit the crimes as charged of kidnapping, aggravated assault, rape, and murder, remembering again considering each separately as charged in separate Bills of Indictment, then you would be authorized to find the defendant guilty of that crime, considering each separately, the crime in each indictment. I charge you if you have a reasonable doubt that the defendant is guilty of the crimes charged, it would be your duty to give him the benefit of the doubt and find him not guilty.
T. 254-55. Petitioner contends that the phrase “If your minds are wavering, unsettled or unsatisfied, then that’s the doubt of the law and you should acquit” eliminates the requirement of reasonable doubt because “wavering, unsettled or unsatisfied” were not defined and there was no instruction as to the degree required with respect to each of these terms to constitute reasonable doubt. The Georgia Supreme Court held the charge not erroneous, Johnson, 295 S.E.2d at 69, and the district court declined to disturb this conclusion. We find in the record no objection to the charge.
Considering the overall charge, in which reasonable doubt was referred to over and over again, there was no error of constitutional dimension.
VIII. Instruction to Jury on Mitigating Circumstances
The trial court instructed the jury to determine whether the following aggravating circumstance, from O.C.G.A. 17-10-30(b)(7), (c) (1982), was proved beyond reasonable doubt:
The offense of murder was outrageously or wantonly vile, horrible or inhuman [sic] in that it involved torture, depravity of mind, or aggravated battery to the victim.
It instructed that the jury was authorized to consider all facts and circumstances in mitigation, and it defined mitigating circumstances as:
Mitigating circumstances are those which do not constitute a justification or excuse for the offense in question, but which, in fairness and mercy, may be considered as extenuating or reducing the degree of moral culpability.
T. 267.
The Georgia Supreme Court held this instruction sufficient. The district court declined to disturb this conclusion, and we affirm its action. The instruction is minimal but passes constitutional muster under Westbrook v. Zant, 704 F.2d 1487, 1502 (11th Cir.1983), and Tucker v. Zant, 724 F.2d 882, 891 (11th Cir.1984).
Moreover, the instruction sufficiently informed the jury, pursuant to Spivey v. Zant, 661 F.2d 464 (5th Cir.), cert. denied, 458 U.S. 1111, 102 S.Ct. 3495, 73 L.Ed.2d 1374 (1982), that even if it found an aggravating circumstance it could still recommend not to impose death. The court instructed:
If you should find aggravating circumstance or circumstances and not recommend mercy, then the defendant will be put to death by electrocution. If you should find aggravating circumstances or circumstance and recommend mercy, the defendant will be sentenced to life in prison.
T. 269. This instruction, together with the earlier instructions on mitigating circumstances, sufficiently told the jury it could recommend life imprisonment even if it found an aggravating circumstance. West-brook, 704 F.2d at 1502-03.
IX. Vague and Overbroad Application of Georgia Statute on Aggravating Circumstances
The only aggravating circumstance presented to the jury was subsection (b)(7) of the Georgia Statute, quoted above. The jury found, following the language of (b)(7):
We the jury, find the following statutory aggravating circumstances against the defendant: (a) The offense of murder was outrageously or wantonly vile, horrible, or inhuman in that it involved torture, depravity of mind, or aggravated battery to the victim. We fix the punishment of defendant at death.
2 Rec. 277.
The Georgia Supreme Court found:
The murder in this case was conducted in a methodical, execution-style fashion. The victim was disrobed at the time of the murder, and she had her hands tied behind her back. The murder itself was preceded by the rape of the victim. This clearly evinced a depravity of mind on the part of the defendant and involved torture to the victim. In both respects, it was outrageously and wantonly vile.
Johnson, 250 S.E.2d at 400. Other points not mentioned by the Georgia court were that Suzanne was threatened with death if she made outcry, taken to a remote spot and into the woods, stripped, partially re-clothed after the rape, then stripped again by Johnson at Sprouse’s instruction, and forced to stand nude at the side of the road.
In Godfrey v. Georgia, 446 U.S. 420, 100 S.Ct. 1759, 64 L.Ed.2d 398 (1980), the Supreme Court held that a death sentence had been imposed under so broad and vague a construction of § (b)(7) as to violate the Eighth and Fourteenth Amendments. The Court found that the facts of Godfrey, including that the victims had been killed instantaneously, did not satisfy Georgia Supreme Court decisions narrowing the scope of § (b)(7). Here, however, the facts as recited by the Georgia Supreme Court, and as supplemented above, do satisfy a properly narrowed construetion of § (b)(7). It is now well established under Georgia law that sexual abuse, including rape, may constitute “torture” for the purpose of finding an aggravating circumstance under § (b)(7). Green v. Zant, 738 F.2d 1529, 1540 (11th Cir.1984). A finding of aggravating circumstance under (b)(7) will therefore be upheld if there was a rape. [Carzell] Moore v. Zant, 722 F.2d 640, 642, 647-48 (11th Cir.1983), Brooks v. Francis, 716 F.2d 780, 783, 792-93 (11th Cir.1983). Subsection (b)(7) was not applied to Johnson in violation of his Eighth or Fourteenth Amendment rights.
X. Arbitrary and Capricious Application of the Death Penalty
At the evidentiary hearing the district court declined to order funds made available to petitioner to secure a copy of the transcript in McCleskey v. Zant, 580 F.Supp. 338 (M.D.Ga.1984), in order that the statistical data in that case be offered into evidence. Petitioner’s request was made orally during the evidentiary hearing, and the court denied it on the ground that the matter had not previously been presented and that the request came too late. This was within its discretion.
XI. Denial of Change of Venue
Johnson moved for change of venue with supporting newspaper extracts showing actions by county commissioners of the county of trial (Chatham County). The commissioners had adopted a resolution calling on judges of the county to impose maximum sentences permitted by law on persons convicted of crimes such as murder, armed robbery, rape, burglary and the sale of hard drugs, as the best deterrent to such crimes. Local judges and the bar association of Savannah, the principal city in the county, spoke unfavorably of the resolution. One commissioner then ran a newspaper ad asking citizens to send in a ballot expressing their views, and approximately 1400 persons indicated their support for the resolution and eight their opposition. The commissioner then publicly stated that “the will of the people is obvious.”
On the venue issue, the Georgia Supreme Court examined the extensive voir dire of jurors, more than 300 pages, and, applying Irvin v. Dowd, 366 U.S. 717, 81 S.Ct. 1639, 6 L.Ed.2d 751 (1961), found that the trial court did not abuse its discretion in denying the writ. Johnson, 250 S.E.2d at 399-400. The district court rejected the issue without discussion.
We find no error. Normally the denial of a motion for a change of venue is error only if the jurors had a preconceived notion as to the particular defendant’s guilt or innocence that they cannot lay aside. Murphy v. Florida, 421 U.S. 794, 799-800, 95 S.Ct. 2031, 2035-2036, 44 L.Ed.2d 589 (1975); Irvin, 366 U.S. at 722-23, 81 S.Ct. at 1642; Brooks v. Francis, 716 F.2d at 786. Here, the pre-trial publicity did not focus on Johnson at all nor even the question of guilty or innocence.
XII. Other Issues
In oral argument at the guilt phase the prosecutor stated, over objection, that “a dog, a dog, a male dog will not rape a female dog.” T. 30. If error at all, it was not such as to violate constitutional limitations. The district court was correct in rejecting this point.
The contention that death by electrocution violates the Eighth Amendment is frivolous.
XIII. Ineffective Counsel at Sentencing
The district court held counsel was ineffective at the sentencing phase, based upon the standards then in force in this circuit under Washington v. Strickland, 693 F.2d 1243 (5th Cir.1982) (Unit B). The Supreme Court has since reversed that case, Strickland v. Washington, — U.S.-, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), and established a higher threshold for ineffectiveness. We vacate the judgment on this issue and remand the case for reconsideration of the issue under the Strickland standards.
AFFIRMED in part, VACATED in part and REMANDED.
. The Georgia Supreme Court affirmed the convictions, Johnson v. State, 240 Ga. 649, 250 S.E.2d 394 (1978); denied a motion for extraordinary relief, Johnson v. State, 246 Ga. 474, 271 S.E.2d 789 (1980); and affirmed the denial of habeas corpus, Johnson v. Zant, 249 Ga. 812, 295 S.E.2d 63, cert. denied, 459 U.S. 1228, 103 S.Ct. 1236, 75 L.Ed.2d 469 (1983).
. Johnson and Sprouse had stolen the pistol from the home of a girl they knew.
. Johnson testified that he only attempted to rape her. However, Lynn testified that as soon as Suzanne was brought back to the car, she [Suzanne] told her she had been raped. Sperm was found in Suzanne’s body.
. Sprouse was tried and sentenced to death. The sentence was reversed for failure of the court to conduct a pre-sentence hearing, Sprouse v. State, 242 Ga. 831, 252 S.E.2d 173 (1979). He was resentenced to death and that sentence reversed for errors in exclusion of evidence, Sprouse v. State, 250 Ga. 174, 296 S.E.2d 584 (1982). He has not been sentenced a third time.
. The habeas petition questions the excusal of venireman Edward Green. But at the conclusion of his questioning the prosecution excused him by peremptory challenge. 5 Rec. 155.
. The prosecution argued to the jury that it did not know who pulled the trigger, but that [assuming Johnson did not] there was no outcry or objection from him.
. Whether under Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979), there is evidence sufficient to support the jury's conclusion is an issue not raised, and if it were we would reject it.
. In Fleming v. Kemp, 748 F.2d 1435 (11th Cir. 1984), the indictment charged malice murder. However, one sentence in the jury instruction said that malice was not necessary where the killing occurred in the commission of a felony. The court relied upon another part of the jury instruction to conclude that the instruction as a whole actually did require intent. Thus an examination of the level of culpability pursuant to Enmund was not necessary. In what appears to have been an excess of caution the court did, however, examine the record, not to independently determine whether the Enmund level of culpability was present but to further satisfy itself that the jury’s verdict necessarily embraced intent.
. A reasonable doubt means just what it says. It is the doubt of a fair-minded,' impartial juror honestly seeking the truth. It’s not an arbitrary or a capricious doubt, but is a doubt arising from a consideration of the evidence, from a conflict of the evidence or from a lack of evidence. It [sic] after giving consideration to all the facts and circumstances of the case, your minds are wavering, unsettled, or unsatisfied, then that’s the doubt of the law and you should acquit. If that doubt does not exist in your minds as to the guilt of the defendant, then you should convict.
T. 244-45.
. The district court has since decided the statistical issue in McCleskey, denying relief on the statistical issue, and its decision has been affirmed by this court. 753 F.2d 877 (1985).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
COFFEY, Circuit Judge.
The Secretary of the United States Department of Health and Human Services (“Secretary,” “HHS”) appeals the district court’s order granting summary judgment for the plaintiff-appellee, Loyola University of Chicago (“University”), on the issue of whether the Secretary improperly disallowed a portion of the University’s claim for reimbursement of clinical medical education costs under the Medicare statute. See 42 U.S.C. § 1395 et seq. The University cross-appeals the district court’s grant of summary judgment affirming the Secretary’s denial of its claim for reimbursement of the costs of University-employed medical residents and interns working in the University’s outpatient clinic. We affirm summary judgment for the University on the issue of reimbursement for clinical medical education costs and reverse summary judgment for the Secretary on the issue of reimbursement for residents’ and interns’ costs.
I.
Loyola University owns and operates the Foster G. McGaw Hospital (“Hospital”), the Burke Ambulatory Care Center (“BACC”) and the Stritch School of Medicine (“Medical School”) as separate entities within the Loyola University Medical Center (“LUMC”), located in Maywood, Illinois. The Hospital provides inpatient and emergency medical services whereas BACC is LUMC’s outpatient clinic. LUMC’s students, interns and resident physicians rotate through the various departments within the Hospital, as well as the BACC, in order to obtain the experience and training in patient care necessary for the Medical School’s medical programs to receive accreditation from the American Medical Association. While working in either the Hospital or the BACC, students, interns and residents are supervised and trained by physicians on the Medical School faculty (“faculty-physicians”). Only Medical School faculty-physicians are allowed to practice medicine and treat patients in the Hospital and in the BACC. Similarly, faculty-physicians, in addition to their teaching and research duties at the Medical School, are required as a condition of their employment with LUMC to practice medicine primarily at the Loyola University Medical Center facilities and in other facilities only after having received approval in writing from the chairman of the department in which the faculty-physician practices and the dean of the Medical School.
Because LUMC’s faculty-physicians engage in two distinct types of activities in the course of their employment — namely, providing teaching and research services to the Medical School and practicing medicine in the Hospital and in the BACC — they are compensated in two different ways. First, faculty-physicians receive a fixed salary from the Medical School for their teaching, research and administrative activities. Second, they receive a percentage of the revenue resultii.g from their own patient care activities in the LUMC facilities, determined pursuant to the terms of the Loyola Medical Practice Plan (“LMPP”), a faculty practice plan that all faculty-physicians are required to join as a condition of employment.
The University uses the LMPP as the vehicle for billing and collecting the fees for those receiving medical care and treatment in the LUMC facilities. Once a bill for medical services is generated, the LMPP apportions the revenue received between the University and the respective faculty-physicians on an agreed-upon contractual percentage basis. Specifically, after deducting the various administrative costs incurred from the patient’s billing, LMPP reimburses the University twenty-one percent of the remainder “for use of practice-related facilities” and four percent for the “Dean’s Development Fund.” Faculty-physicians performing the services receive the remaining seventy-five percent of the fee until such time as they have reached their annual maximum patient care “earnings ceiling” set forth in the LMPP. Thereafter, the faculty-physician receives only twenty-five percent of his patient care fees for the remainder of the fiscal year, with the remaining fifty percent being allocated to the “Research and Education” (“R & E”) account of the particular Medical School department in which the faculty-physician is a faculty member.
The permissible uses for funds paid to R & E accounts is also set forth in the LMPP agreement. Paragraph 10.0 of the LMPP states that such funds may be used for medical education and research operating and capital costs, including faculty member base salaries, education or research personnel salaries, research and educational supplies or equipment, scientific exhibits, publications expenses, travel to professional meetings (within the constraints of the University’s general travel policy and budget), fees and expenses of guest speakers, visiting professors and consultants, and renovation of space needed for education or research.
Under the Medicare statute, the University is entitled to reimbursement for the reasonable costs of medical services the Hospital provides to Medicare beneficiaries. 42 U.S.C. § 1395x(v)(l)(A). Under Medicare regulations, one of the costs which may be reimbursed is the cost of approved medical educational activities, including that portion of faculty salaries attributable to clinical education in the Hospital and stipends paid to medical residents and interns in accredited training programs. 42 C.F.R. § 405.421 (1982). Although the provider may include these expenses within its claim for reimbursement, reimbursement is available only for those costs net of “revenues it receives from tuition, and from grants and donations that the donor has designated for the activities.” 42 C.F.R. § 405.421(g)(1) (1982).
In order for a provider of health care services to obtain reimbursement under Medicare, it must enter into a contract with the Secretary wherein the provider agrees to furnish medical services to Medicare beneficiaries and the Secretary agrees to reimburse the provider for the reasonable costs thereof. 42 U.S.C. § 1395cc. The provider nominates a fiscal intermediary, a private organization also under contract with the Secretary, and files an annual cost report with the intermediary setting forth all the reimbursable costs incurred during the fiscal year. 42 U.S.C. § 1395h; 42 C.F.R. § 413.60 (1982). As the agent of the Secretary, the intermediary reviews the provider’s cost report and approves or disapproves payment for services rendered in compliance with the program’s fee schedule, regulations and guidelines set forth in the manuals published by the Health Care Financing Administration (“HCFA”), the agency within HHS charged with administering the Medicare program. 42 U.S.C. §§ 1395g and 1395x(v)(l)(A).
Pursuant to its contract with the Secretary, the University filed cost reports with its designated intermediary, Blue Cross Association/Health Care Service Corporation (the “Intermediary”), for fiscal years 1979, 1980, 1981, 1982 and 1983. The University claimed reimbursement for its overall costs of clinical medical education, including salaries paid to medical residents and interns working in the LUMC facilities. The Intermediary disallowed reimbursement for fifty percent of the costs attributable to the time the residents and interns spent in BACC. The Intermediary also reduced the University’s claimed overall clinical education costs by the amounts set aside under the LMPP for various R & E accounts in the Medical School. The Intermediary reasoned that these funds were restricted gifts and grants designated for payment of specific costs included within the University’s reimbursement claim.
The University appealed the Intermediary’s decision, referred to above, to the Provider Reimbursement Review Board (“PRRB”), a panel of five individuals appointed by the Secretary of HHS whose responsibilities include the mediating of “disputes between providers and intermediaries acting for [HHS].” St. John’s Hickey Memorial Hospital v. Califano, 599 F.2d 803, 813 n. 18 (7th Cir.1979). The PRRB sustained the Intermediary on the issue of costs attributable to the time the LUMC resident physicians and interns spent in BACC, finding that the clinic “was a separate revenue producing cost center similar to private physicians’ offices and was not a Medicare certified facility,” and ruled that no portion of the BACC resident and intern costs was reimbursable. On the issue of offset, a majority of the PRRB reversed the Intermediary’s adjustment to the University’s claim for clinical education costs, finding that the adjustment contravened Congress’ intent that “teaching hospitals and medical schools be able to derive a surplus from the patient care activities of faculty members.” The PRRB chairman dissented, finding that the faculty-physicians granted a portion of their professional fee earnings to the University to be used for purposes specified in the LMMP document, and thus, the provider (the Hospital) was essentially claiming Medicare reimbursement for the same costs. The chairman also asserted that the provider had failed to support its claim that Congress intended that teaching hospitals be allowed to derive a profit from patient care services, thus concluding that the contributed amounts had to be charged against the cost of the claimed educational activities pursuant to 42 C.F.R. § 405.421 (1982) and 42 C.F.R. § 405.423 (1982).
The Deputy Administrator of HCFA elected to review the PRRB’s decision, sustaining without comment the Board’s decision on the resident and intern stipend issue and reversing the majority’s conclusion on the issue of offset. In an opinion dated July 15, 1986, the Deputy Administrator agreed with the dissenting PRRB chairman that the funds generated by the faculty-physicians and distributed to the R & E accounts were restricted gifts and grants and were properly offset against the claimed educational expenses in order that they might be able to more properly determine an accurate “net cost” of the Hospital’s educational activities. The administrator’s decision constitutes the final decision of the Secretary of HHS. 42 U.S.C. § 1395oo (f)(1); 42 C.F.R. § 405.1875 (1982); 42 Fed.Reg. 13,062, 57,351 (1977).
On January 21, 1987, the University filed a complaint in the district court seeking judicial review of the Secretary’s final decision pursuant to 42 U.S.C. § 1395oo (f)(1). Both parties submitted motions for summary judgment and accompanying briefs. In its brief, the University set forth its contentions that the LMPP funds were neither gifts nor grants and that, even if they were, they were not restricted gifts or grants within the meaning of 42 C.F.R. § 405.423 (1982). With regard to its claim for the costs of residents and interns attributable to patient care performed in the BACC, the University argued that since the clinic was “part of the provider” (the Hospital), it was entitled to reimbursement for the costs of residents and interns working at the BACC.
The Secretary argued that, because Medicare is required to reimburse only a provider’s net operating costs, the funds allocated to the R & E accounts must be considered in determining the University’s net costs of teaching salaries paid to Medical School faculty members. The Secretary also argued that the funds transferred from the LMPP to the R & E accounts were restricted grants subject to offset pursuant to 42 C.F.R. § 405.423. On the second issue, the Secretary argued that the final agency decision denying reimbursement for the costs of residents serving in the BACC was justified because the clinic was neither a physical nor administrative part of the Hospital and, therefore, that portion of resident and intern stipends attributable to BACC was not reimbursable under Medicare Part A.
The district court referred the case to a magistrate, directing that he analyze and prepare a report and recommendation on the parties’ summary judgment motions. On October 28, 1987, the magistrate submitted his report, finding that the LMPP funds allocated to the Medical School’s R & E accounts were "not restricted by the physician-faculty member donors” and, therefore, were not “restricted grants, gifts, and endowment income under the regulations.” The magistrate thus concluded that the Secretary improperly adjusted the University’s claim for reimbursement of clinical medical education costs and recommended that the Secretary’s motion for summary judgment on this issue be denied and the plaintiffs’ motion for summary judgment be granted. Regarding the issue of resident and intern costs related to the BACC, the magistrate concluded that, because the BACC was neither a physical nor an administrative part of the Hospital, the University could not be reimbursed for costs associated with that entity. Accordingly, the magistrate recommended that Loyola’s motion for summary judgment on this issue be denied and the Secretary’s motion for summary judgment be granted.
On November 13, 1987, the district court adopted the report and recommendation of the magistrate and entered summary judgment for the University on the issue of offset and summary judgment for the Secretary on the issue of resident and intern costs attributable to BACC. After overruling the University's post-judgment objections to the magistrate’s recommendations, the court entered a final judgment on August 17, 1988.
On appeal, the Secretary argues that the trial court erred in reversing the Secretary's decision to reduce the University's claimed clinical medical education costs, maintaining that the amount set aside for research and education under the LMPP should be construed as restricted gifts and grants under 42 C.F.R. § 405.423 (1982). According to the Secretary, the court’s grant of summary judgment for the University allows the Hospital to be reimbursed for expenses, e.g., various research and education costs, that were covered by the amounts allocated to such accounts under the LMPP, thus violating the “net cost” principle of 42 U.S.C. § 1395x(v)(l)(A).
The University, although agreeing with the magistrate’s conclusion that the R & E funds were not restricted to payment of specific operating costs as designated by the donor of the funds, argues that the magistrate unnecessarily addressed the issue of whether the funds were restricted because the funds were neither gifts nor grants within the parameters of the Medicare regulations. In its cross-appeal, the University argues that the district court erred in granting summary judgment for the Secretary on the issue of the resident and intern costs attributable to the BACC. Specifically, the University contends that the BACC is “part of the provider,” thus mandating reimbursement for the portion of LUMC resident and intern stipends attributable to time spent therein, and that the Secretary’s denial of reimbursement would cause the cost of resident and intern services provided to Medicare beneficiaries in the BACC to be borne entirely by non-Medicare patients, which is expressly prohibited under 42 U.S.C. § 1395x(v)(l)(A).
II.
At the outset, we note that our standard of review in this case is limited. 42 U.S.C. § 1395oo (f)(1) limits review of the Secretary’s final decision on reimbursement matters by incorporating the standards of the Administrative Procedure Act, 5 U.S.C. § 701, et seq. Under the APA, the “Secretary’s decision may not be disturbed... unless it is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law; contrary to constitutional right, power, privilege or immunity; exceeding statutory jurisdiction, or falling short of statutory right; reached in violation of established procedure; or unsupported by substantial evidence.” Daviess County Hospital v. Bowen, 811 F.2d 338, 343 (7th Cir.1987); Bedford Medical Center v. Heckler, 766 F.2d 321, 323 (7th Cir.1985); St. Francis Hospital Center v. Heckler, 714 F.2d 872, 873-74 (7th Cir.1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971).
Moreover, it is well established that “[t]he Secretary’s interpretation of regulations issued pursuant to the complex and reticulated Medicare Act is entitled to considerable deference.” Adventist Living Centers, Inc. v. Bowen, 881 F.2d 1417, 1420-21 (7th Cir.1989); Homemakers North Shore, Inc. v. Bowen, 832 F.2d 408, 411 (7th Cir.1987); Lauer v. Bowen, 818 F.2d 636, 639 (7th Cir.1987); Bedford, 766 F.2d at 323. However, this “does not... shield [the Secretary’s decision] from a ‘thorough, probing, in-depth review.’ ” Memorial Hospital of Carbondale v. Heckler, 760 F.2d 771, 773 (7th Cir.1985) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971)). In addition, “a lesser degree of deference is required when reviewing a Secretary’s actions under the Medicare Act’s reimbursement provisions.... The regulations promulgated under the Medicare Act ‘must... take into account both direct and indirect costs and must avoid the result of shifting costs to non-Medicare patients.’ ” St. James Hospital v. Heckler, 760 F.2d 1460, 1470 (7th Cir.1985) (quoting St. John’s Hickey Memorial Hospital v. Califano, 599 F.2d 803, 813 n. 17 (7th Cir.1979)) (emphasis in St. James). With these standards in mind, we turn to the merits of the parties’ arguments.
III.
The first issue presented for our review is whether the Secretary’s decision to offset the Hospital’s claim for reimbursement of clinical education costs by the amount of faculty-physician patient care revenues allocated to the Medical School’s R & E accounts can be classified as arbitrary, capricious, or an abuse of discretion or is not supported by substantial evidence. Specifically, the Secretary determined that the funds allocated to the R & E accounts were “gifts and grants restricted for a specified purpose,” thus requiring a reduction in the Hospital’s claim for reimbursement under Medicare’s “net cost” principle. See 42 C.F.R. § 405.421(a) & (g) (1982).
The rule allowing offset for “restricted gifts and grants” is codified at 42 C.F.R. § 405.423 (1982), which provides:
“(a) Principle. Unrestricted grants, gifts, and income from endowments should not be deducted from operating costs in computing reimbursable costs. Grants, gifts or endowment income designated by a donor for paying specific operating costs should be deducted from the particular operating costs and group of costs.
(b) Definitions —(1) Unrestricted Grants, Gifts, Income from Endowment. Unrestricted grants, gifts and income from endowments are funds, cash or otherwise, given to a provider without restriction by the donor as to their use.
(2) Designated or Restricted Grants, Gifts and Income from Endowments. Designated or restricted grants, gifts, and income from endowments are funds, cash or otherwise, which must be used only for the specific purpose designated by the donor. This does not refer to unrestricted grants, gifts, or income from endowments which have been restricted for a specific purpose by the provider.
(c) Application. (1) Unrestricted funds, cash or otherwise, are generally the property of the provider to be used in any manner its management deems appropriate and should not be deducted from operating costs. It would be inequitable to require providers to use the unrestricted funds to reduce the payments for care. The use of these funds is generally a means of recovering costs which are not otherwise recoverable.
(2) Donor-restricted funds which are designated for paying certain hospital operating expenses should apply and serve to reduce these costs or group of costs and benefit all patients who use services covered by the donation. If such costs are not reduced, the provider would secure reimbursement for the same expense twice: it would be reimbursed through the donor-restricted contributions as well as from patients and third-party payers including the Title XVIII health insurance program.”
The rationale behind this rule is “[t]o prevent what would be in effect double reimbursement of [the provider’s] costs.... ” Heckler v. Community Health Services, 467 U.S. 51, 55, 104 S.Ct. 2218, 2221, 81 L.Ed.2d 42 (1984). However, a reduction of a provider’s claimed costs under section 405.423 is appropriate only when the three requirements of the regulation are satisfied. Specifically, the funds subject to offset must (1) qualify as “grants, gifts or income from endowments”; (2) be designated for paying specific operating expenses of the hospital; and (3) be restricted for such purposes by the donor of the funds. As noted above, the magistrate found that offset was inappropriate in this case because the restrictions placed on the funds allocated to the R & E accounts were restricted by the LMPP agreement rather than the LUMC faculty-physicians individually, the donors of these funds. This finding was adopted by the district court in granting summary judgment for the University on this issue. We agree with the magistrate’s decision that these funds were not donor-restricted. Moreover, from our review of the record we conclude that the funds were not “grants, gifts or income from endowments” under the Medicare statute nor were they designated for paying specific Hospital operating costs.
Since neither the Medicare statute nor regulations define “grants, gifts and income from endowments,” the Secretary contends that the R & E funds are grants, and the University has, conversely, presented extensive arguments under Illinois gift law. However, we conclude, as did the magistrate, that the regulation uses the terms “grant,” “gift,” and “endowment income” in combination to categorize funds or income-producing property donated to the provider in broad, rather than specific, terms. See Milford Memorial Hospital, Inc. v. United States, 675 F.2d 270, 272, 230 Ct.Cl. 76 (1982); Carbondale, 760 F.2d at 773. The Secretary’s reasoning and conclusion that the R & E funds can be classified as “grants, gifts or endowment income” are premised largely on the fact that these funds were derived from the faculty-physicians’ patient care billings. Although this fact is beyond dispute, it is not dispositive of the primary question of whether the funds are “gifts and grants” under section 405.423. The Secretary’s specific argument is that “the faculty-physicians have agreed to transfer funds generated by their services, funds to which they were otherwise entitled, to the University as consideration for employment with the University.” As an initial matter, we note that the Secretary has failed to explain how the LUMC faculty-physicians were “otherwise entitled” to the funds transferred to the R & E accounts. Regardless, this contention is belied by the LMPP document itself.
As noted above, LUMC faculty-physicians, as separate entities, do not bill on their own behalf for the medical services they generate and/or perform. Rather, the LMPP does the billing for all patient care and services rendered in the LUMC facilities and collects the revenues derived therefrom, either from the patients themselves or from third-party payors such as private insurers and Medicare. Thus, patient care revenues are paid directly to the LMPP, not to the individual faculty-physicians, and the revenues are distributed according to the formula set forth in the LMPP agreement. The agreement specifies the percentage of patient care billings to which the faculty-physicians are entitled; the remainder, including the funds ultimately distributed to the R & E accounts, is the property of the University.
Even assuming arguendo that the faculty-physicians were “otherwise entitled” to the R & E funds, which they were not, the Secretary’s argument is without support in the record. Essentially, the Secretary is arguing that the R & E funds are gifts and grants from the faculty-physicians because they have, by virtue of signing the LMPP agreement, made an assignment of future income to the University. However, the Secretary’s argument ignores the fact that if the distribution formula set forth in the LMPP document were an actual assignment of income, the funds allocated to the R & E accounts would constitute taxable income for the faculty-physicians, despite the fact that they never received these funds. See In re Kochell, 804 F.2d 84, 85 (7th Cir.1986) (“[I]n tax law a payment attributable to a person’s earnings that bypasses him and goes to his designees is taxed as a payment to him.”); accord In re Larson, 862 F.2d 112, 116 (7th Cir.1988). The University, in reporting the faculty-physicians’ patient care income for federal income tax purposes, reports that portion of the patient care revenues actually received by each faculty-physician. Patient care revenues attributable to that individual but distributed to the R & E accounts are not reported on the physician’s earnings statement (IRS Form 1099). Consequently, LUMC faculty-physicians do not report these revenues as income, nor do they claim charitable deductions for the amounts they supposedly donate to the University. Compare Rev.Rul. 70-161, 1970-1 C.B. 15; Rev.Rul. 69-275, 1969-1 C.B. 36; Rev.Rul. 66-377, 1966-2 C.B. 21. The record reflects that Internal Revenue Service audits of the University have not resulted in objections to this reporting practice. Thus, we reject the Secretary’s contention that the faculty-physicians granted a portion of their future income to the University. On the contrary, the fee distribution formula set forth in the LMPP agreement is more appropriately characterized as merely implementing the University’s policy of permitting physicians to retain a portion of their patient care billings as income. Thus, the funds allocated to the medical school R & E accounts cannot, in our opinion, be considered “grants, gifts or endowment income” as that phrase is used in the Medicare regulations. The Secretary’s finding to the contrary is not supported by substantial evidence in the record.
The Secretary’s finding that the funds were designated for paying specific operating costs of the Hospital is also without support in the record. In reaching the determination that offset was appropriate under 42 C.F.R. § 405.423 (1982), the Secretary merely found that “the funds were clearly restricted because they were designated specifically for research and education in the [LMPP] document.” The record before us is devoid of any finding stating that the restrictions the LMPP document placed on the funds were limited to specific operating costs of the Hospital, nor from our reading of the record could such a finding be made. In his brief, the Secretary himself admits that only “some of these purposes, such as the salaries of faculty members, are specific operating costs which are claimed by the provider....” Further, paragraph 10.0 of the LMPP document explicitly provides that the R & E “funds are available for the following purposes at the discretion of the chairman of the individual departments with the approval of the Dean” and goes on to list the costs, operating and otherwise, to which the funds may be applied. (Emphasis added). In other words, the medical school’s department heads had discretion to apply the R & E funds for any purpose listed in the document, whether it was a specific operating cost or another, more general category of expense incurred by the Hospital. Thus, we conclude that the R & E funds are not restricted to paying specific operating costs of the Hospital. The fact that the funds may, in some instances, be applied to defray some of the Hospital’s operating expenses is irrelevant. See Milford Memorial Hospital, Inc., supra; Board of Trustees of the University of Alabama v. Califano, [1979-1 Transfer Binder] Medicare & Medicaid Guide (CCH) ¶ 29,251 (N.D.Ala. August 11, 1978); Memorial Hospital v. Blue Cross and Blue Shield Association/Blue Cross of Rhode Island, PRRB Dec. No. 84-D2 [1984-1 Transfer Binder] Medicare & Medicaid Guide (CCH) ¶ 33,568 (October 7, 1983); Newton-Wellesley Hospital v. Aetna Life & Casualty, PRRB Dec. No. 78-D76, [1979-1 Transfer Binder] Medicare & Medicaid Guide (CCH) 1129,491 (November 13, 1978).
Finally, we agree with the magistrate that the funds allocated to the R & E accounts were restricted by the LMPP agreement rather than any action on the part of the LUMC faculty-physicians individually. The restrictions are contained in the LMPP agreement, which the physicians are required to sign as a condition of their employment, and the LMPP derives its authority over the R & E funds from the University. The Secretary argues that the faculty-physicians “ratified” the restrictions with their signing of the LMPP agreement and, further, that the faculty-physicians had ample opportunity to examine and express their disagreement with the restrictions before signing the LMPP agreement. We disagree with this argument because it is based on mere speculation and conjecture and ignores the fact that the only term in the LMPP agreement (which deals exclusively with patient care billing) which individual physicians can negotiate with the University is the amount of their annual earnings ceiling. We also note that the Secretary’s arguments that the R & E funds were donor-restricted are improper post hoc rationalizations attempting to justify the Secretary’s offset decision. In his decision, the Secretary for some unknown reason failed to address whether the restrictions on the LMPP funds were imposed by the faculty-physicians, whom it found to be the grantors of the funds, a necessary finding under section 405.423. Thus, under basic principles of administrative law, we cannot accept the Secretary’s post hoc arguments on appeal. As the Supreme Court has stated:
“ ‘[A] simple but fundamental rule of administrative law... is... that a reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such actions solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action.’ ”
Burlington Truck Lines Inc. v. United States, 371 U.S. 156, 169, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962) (quoting SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947)). See also Beloit Corp., Castings Div. v. NLRB, 857 F.2d 1154, 1159 (7th Cir.1988).
Accordingly, we hold that the Secretary’s decision to offset the University’s claim for reimbursement of clinical medical education costs by an amount equal to the funds allocated to the R & E account is not supported by substantial evidence in the record. Our review of the record reveals that none of the requirements for offset under 42 C.F.R. § 405.423 (1982) are satisfied in this case. We are convinced that the trial court properly granted summary judgment in favor of the University on this issue.
IV.
We next consider whether the Secretary’s denial of the University’s claim for reimbursement of the portion of stipends paid to LUMC resident physicians and interns attributable to the time they spent in the BACC was proper. As noted above, the Secretary denied reimbursement of these costs based on his finding that the BACC is not “part of the provider” and, thus, that the provider, the Hospital in this case, is not entitled to reimbursement for resident and intern costs associated with the operation of the BACC. The magistrate found that the Secretary’s determination that the BACC is not “part of the provider” was supported by substantial evidence, and the district court adopted this finding in granting summary judgment for the Secretary on this issue.
The University argues that the Secretary is not entitled to summary judgment because the language of the applicable Medicare regulations does not support his contention that, in order for the costs of the provider’s educational activities to be reimbursable, the activities must occur in a facility which is “part of the provider.” In defending his “part of the provider” rationale, the Secretary refers us to section 2020.8 of the HCFA Carriers Manual, which provides in part:
“There are situations where interns and residents render services in a facility (which for purposes of this paragraph includes clinics, physicians’ offices, and other patient care centers) to fulfill training program requirements. Where the facility is part of a provider, reimbursement is made on a reasonable cost basis [i.e., under Medicare Part A], Conversely, if the facility is not part of the provider, the services of the interns and residents are covered as physicians’ services reimbursable on a reasonable charge basis [i.e., under Medicare Part B]_”
The Secretary urges us to adopt section 2020.8’s “part of the provider” requirement which is, essentially, his interpretation of the regulations promulgated under the Medicare Act.
Although the Secretary’s interpretation of his own regulations is usually accorded substantial deference, see supra, section II., such deference is appropriate only if the Secretary’s interpretation of the regulations is consistent with the language of the regulations themselves. See Ensinger v. Director, OWCP, 833 F.2d 678, 679 (1987). The regulation governing reimbursement of the Hospital’s educational expenses in this case is codified at 42 C.F.R. § 405.421 (1982), which provides in pertinent part:
“(a) A provider’s allowable costs may include its net cost of approved educational activities....
(b) Definition — Approved Educational Activities. Approved educational activities means formally organized or planned programs of study usually engaged by providers in order to enhance the quality of patient care in an institution. These activities must be licensed where required by State law. Where licensing is not required, the institution must receive approval from the recognized national professional organization for the particular activity.
(c) Educational Activities. Many providers engage in educational activities including training programs for nurses, medical students, interns and residents, and various paramedical specialties. These programs contribute to the quality of patient care within an institution and are necessary to meet the community’s needs for medical and paramedical personnel. It is recognized that the costs of such educational activities should be borne by the community. However, many communities have not assumed responsibility for financing these programs and it is necessary that support be provided by those purchasing health care. Until communities undertake to bear these costs, the program will participate appropriately in the support of these activities. Although the intent of the program is to share in the support of educational activities customarily or traditionally carried on by providers in conjunction with their operations, it is not intended that this program should participate in increased costs resulting from redistribution of costs from educational institutions or units to patient care institutions or units.
jfc * * * * *
(e) Approved Programs. [This subsection refers to residency programs approved by the American Medical Association’s Council on Medical Education].”
From our reading of this regulation, we are unable to find within the above language a requirement that educational activities occur in the provider or a facility that is “part of the provider” in order for the activities to be deemed reimbursable under Medicare. Thus, because the Secretary’s “part of the provider” requirement is not contained in the regulations — regulations which the Secretary promulgated — we refuse to defer to the Secretary’s interpretation of the regulations in the HCFA Carriers Manual, see Community Hospital of Indianapolis, Inc. v. Schweiker, 717 F.2d 372, 375 (7th Cir.1983), and reject his interpretation that educational activities must occur in a facility that is “part of the provider” to qualify for Medicare reimbursement. Rather, we agree with the Sixth Circuit that “to be reimbursable under the plain language of [42 C.F.R. § 405.421 (1982) ], educational activities must (1) be approved programs; (2) contribute to the quality of patient care within an institution; and (3) not redistribute costs from educational to patient care institutions.” University of Cincinnati v. Bowen, 875 F.2d 1207, 1210 (6th Cir.1989). Thus, we must analyze the University’s claim for reimbursement in order to determine whether these criteria are satisfied.
There is no dispute that the University satisfies requirement number one— namely, that the educational activities are part of an approved program. The University’s residency program is accredited by the Liaison Committee on Graduate Medical Education of the American Medical Association, one of the criteria being that residents and interns receive outpatient diagnostic and treatment training and experience. LUMC residents and interns, as part of their training, rotate through the BACC, as well as various departments within the Hospital, to fulfill the AMA’s accreditation requirements.
With regard to the requirement that the University’s residency and intern program contribute to the quality of patient care within the Hospital, we again agree with the rationale of the University of Cincinnati case, which also involved the question of whether resident costs attributable to time spent in outpatient clinics were reimbursable under Medicare. As the Sixth Circuit aptly stated:
“Given that the outpatient clinic programs are accredited programs required as part of the residents’ training, they ipso facto contribute to the quality of care received by the Hospital’s Medicare patients. The skills and training received by the residents in the clinics are transferred back to the Medicare patients during the residents’ rotation within the Hospital.”
875 F.2d at 1211. This statement is equally applicable to the facts of this case given the relationship between the Hospital and the BACC. Patients examined and diagnosed at the BACC are frequently admitted to the Hospital to receive the prescribed treatment and any further diagnostic workup indicated on an inpatient basis. Similarly, discharged Hospital patients requiring followup care receive it at the BACC. Thus, the residents and interns, under the continued supervision of the faculty-physicians, are exposed to and trained in all aspects of patient care and the training they receive in the BACC unquestionably contributes to and enhances the quality of patient care
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
JOHN R. BROWN, Circuit Judge.
This is an appeal from a summary dismissal of a § 2255 petition for post-conviction relief from a 20-year sentence for violation of the narcotics laws by the sale of marihuana, 26 U.S.C.A. § 4742(a). The sentencing court dismissed it outright without any hearing on the ground that it appeared that the petitioner’s contentions “are frivolous and without merit, not in good faith, and state no valid ground upon which the relief sought might be granted.” Presumably the Court meant this as a paraphrase of the statute that “ * * * the files and records of the case conclusively show that [petitioner] is entitled to no relief * * 28 U.S.C.A. § 2255. The energetic efforts of Court-appointed counsel who had aided this Court by a brief, reply brief, and supplemental brief of the highest professional quality followed by oral arguments of like caliber, demonstrates to us just as conclusively that this was a case demanding a hearing. We accordingly reverse. As our reasoning requires that we discuss some phases of what might be brought out on a hearing, we would sound a special caveat: there are no prejudgments of the case and nothing said or unsaid, expressed or implied, is to be taken as a holding, or even an intimation, that upon such a hearing any particular action should or should not be taken. We order a hearing. What such a hearing compels is to be determined in the first instance by the District Court on that hearing. The propriety of any such order is for another day.
On the trial of the case leading to his conviction by a jury verdict of guilty, petitioner’s main defense was that of entrapment. This bears heavily on the matters set forth in the § 2255 motion for without all of the refinements which that concept unavoidably involves, the question is whether the accused did the act or whether police-enforcement officers got him to do the act.
In his § 2255 motion, elaborated on in his annexed affidavit, petitioner made these serious charges. He asserted that he did not have effective representation of counsel and because of this, evidence, vital and helpful to his defense, was withheld from the jury. The combination of these was such as to deprive him of the constitutionally guaranteed fair trial. These charges did not stand in mere broad conclusory terms. The operative facts were as detailed as the charges were emphatic. He set forth facts showing that on the trial of the criminal case, he was represented by counsel of his own choice whom we will call Mr. Barrister. But unknown to petitioner, Barrister was at that very time also the attorney for Glass, an officer on the Fort Worth Police Department assigned to duty on narcotics cases. At the very time of the criminal trial, Glass was the respondent in a Police Department proceeding concerning alleged improper use, handling, or disposition of narcotics by that officer. And subsequently, so petitioner stated, Glass was removed from the Police Force because of his illegal narcotic activities.
Demonstrating that the attack was not the sterile one of a defendant claiming that his lawyer could not give unfettered loyalty to his interests merely because he represented other people, good or bad, the motion went on to connect Glass up with petitioner’s case. In the plainest of words petitioner reviewed in great detail Glass’ conduct toward him. These included specific alleged incidents of Glass undertaking to extort money from petitioner by threats of baseless criminal charges; an approach by Glass in petitioner’s home, subsequent to the marihuana indictment but prior to trial, suggesting that if $500 was paid, Glass could persuade Meeks, the Government informer, not to testify. Moreover, petitioner, so he asserted, told Barrister about this and requested that Glass be called as a witness. Despite this, no effort was made by the attorney to bring this out or to call Glass on the trial.
In addition to these positive allegations of sufficiently detailed facts, the record of testimony of the criminal trial (which is properly available to trial and appellate courts in testing a § 2255 proceeding) demonstrated that Glass, though not called as a witness by either prosecution or defense, was a moving figure in the case against petitioner. The case as to each “buy” was “made” by Meeks, euphemistically referred to as a special employee, although ordinarily described as an informer. Gilmore v. United States, 5 Cir., 1958, 256 F.2d 565. The principal Federal Narcotics Agent, Gabrys, acknowledged that the initial contact with Meeks was through Glass who “arranged the introduction between [the Agent] and Meeks.” Again, when petitioner’s home was searched the Federal Agent and Glass supervised the search. Similarly, Police Officer Hardin acknowledged that Glass was in on the initial conversations among the Agents and the Officers. Questioned concerning the dropping of charges against Meeks, the informer, Officer Hardin stated that the discussions with Meeks were by Glass who had earlier introduced the Agents to Meeks, the prospective informer-witness. Hardin’s description of the search of petitioner’s home also named Gabrys and Glass.
The story told by these accumulated court papers is this bold and startling one. A lawyer, undertaking to represent an accused, finds that the best weapon to establish entrapment is to implicate another. Unfortunately, he cannot implicate such person because that person is also a client. Stated in these terms, it does not really matter whether Glass was, or was not, called as a witness, or whether, for that matter, as one analogous to a hostile witness in civil proceedings, he could have been called. Nor is it important that Glass, if called, may not have testified to things establishing petitioner’s innocence. Cf. Weaver v. United States, 8 Cir., 1959, 263 F.2d 577, 579, cert. denied, 359 U.S. 1014, 79 S.Ct. 1154, 3 L.Ed.2d 1038.
What was involved was the more basic thing. The Constitution assures a defendant effective representation by counsel whether the attorney is one of his choosing or court-appointed. Such representation is lacking, however, if counsel, unknown to the accused and without his knowledgeable assent, is in a duplicitous position where his full talents — as a vigorous advocate having the single aim of acquittal by all means fair and honorable — are hobbled or fettered or restrained by commitments to others. Glasser v. United States, 1942, 315 U.S. 60, 75, 62 S.Ct. 457, 86 L.Ed. 680; Ellis v. United States, 1958, 356 U.S. 674, 78 S.Ct. 974, 2 L.Ed.2d 1060; Johnson v. Zerbst, 1938, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461; Johnson v. United States, 1957, 352 U.S. 565, 77 S.Ct. 550, 1 L.Ed.2d 593; MacKenna v. Ellis, 5 Cir., 1960, 280 F.2d 592, affirmed on rehearing en banc, 289 F.2d 928; Birchfield v. United States, 5 Cir., 1961, 296 F.2d 120 [No. 18892, Nov. 17, 1961], Lott v. United States, 5 Cir., 1955, 218 F.2d 675; Craig v. United States, 6 Cir., 1954, 217 F.2d 355, 358, 359; Tucker v. United States, 9 Cir., 1956, 235 F.2d 238; United States v. Harris, S.D.Calif.1957, 155 F.Supp. 17; Berry v. Gray, W.D.Ky., 1957, 155 F.Supp. 494; Johns v. Smyth, E.D.Va., 1959, 176 F.Supp. 949.
Of course such things as this should never happen, and the place to stop it is the professional conscience of the advocate involved. A Court may not countenance it and must, on the contrary, take effective action just as we are certain the careful Judge below would have done had the facts been, known at or before the commencement of the criminal trial. But where this has been allowed to occur, either through a calloused conscience of the attorney, or ignorance of the true facts by the Judge, the trial is not the fair one demanded by the Constitution. And this is so without regard to the presence or absence of any action of a strictly governmental nature which can be ascribed to the prosecution as the transgressing agency or imputed to the trial court on traditional notions of error on the Judge's part.
The charges made in the § 2255 motion were both serious and legally significant. Could the Judge reject them without a hearing ? The answer to that is found in the words of the statute and the uniform decisions of this Court. The statute prescribes that “Unless the motion and the files and records of the case conclusively show that the prisoner is entitled to no relief * * *,” the Court after notice shall hold “a prompt hearing thereon” and “determine the issues * * * of fact * * * ” 28 U.S.C.A. § 2255.
Here no controversion of any kind was filed by the Government. The record— encompassing everything which the statute describes as the “files and records of the case” — simply did not touch one way or the other upon these charges made for the first time in the § 2255 papers. The Court, thus, had no means by which to say that the records conclusively showed such facts to be untrue. And we are certain that the Judge did not mean to imply that apart from the court records he knew them to be untrue. What the Judge did was somehow to reverse the demands of the statute which requires a hearing unless, to declare in effect that a hearing would not be held unless. He was perhaps led into this erroneous view by a failure to distinguish carefully between the new and serious matters asserted in the § 2255 motion and those previously urged and rejected by the same Judge in denying bail on the appeal from the original conviction and by this Court in dismissing that appeal as frivolous. Porter v. United States, 5 Cir., 1959, 272 F.2d 695.
Whether these serious assertions are or are not true, no one yet knows. But since the record does not demonstrate conclusively that they are not so, the trial Court, as we have many times held, was obligated to hold a hearing to ascertain the truth of these charges set forth with adequate factual particularity. Because this fundamental principle seems so often to be overlooked by busy, conscientious trial Judges as they do their level best to make sense out of so many of these informal, sometimes illegible, prisoner-composed papers, we set out this list of cases, in addition to others in this opinion, of the past decade. Callahan v. United States, 5 Cir., 1961, 297 F.2d 79 [No. 19015, Dec. 13, 1961]; Corbett v. United States, 5 Cir., 1961, 296 F.2d 131 [No. 18939, Nov. 29, 1961]; Alexander v. United States, 5 Cir., 1961, 290 F.2d 252; Meadows v. United States, 5 Cir., 1960, 282 F.2d 942, 943; Brown v. United States, 5 Cir., 1959, 267 F.2d 42; Steinberg v. United States, 5 Cir., 1958, 256 F.2d 143; Kennedy v. United States, 5 Cir., 1957, 249 F.2d 257; Gregori v. United States, 5 Cir., 1957, 243 F.2d 48; Parks v. United States, 5 Cir., 1956, 233 F.2d 321; Motley v. United States, 5 Cir., 1956, 230 F.2d 110; Williams v. United States, 5 Cir., 1955, 227 F.2d 48; Smith v. United States, 5 Cir., 1955, 223 F.2d 750; Sanders v. United States, 5 Cir., 1953, 205 F.2d 399; Ziebart v. United States, 5 Cir., 1950, 185 F.2d 124; James v. United States, 5 Cir., 1949, 175 F.2d 769.
It follows, therefore, that the cause must be remanded for a hearing and judicial determination of these charges involving knowledge and actions of petitioner, Glass, Barrister and perhaps others. Without undertaking to bluprint the hearing, it is obviously one which reasonably requires the presence of petitioner.
Reversed and remanded.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LEVIN H. CAMPBELL, Circuit Judge.
The National Labor Relations Board (the Board) petitions for enforcement, and St. Regis Paper Company (the Company) cross-petitions for review, of the Board’s decision and order finding that the Company had violated sections 8(a)(1), (3), and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1), (3), (5), and ordering the Company to cease and desist from repeating its violations of the Act, to take certain affirmative action, and to post an appropriate notice. The Board found that a maintenance garage at First Machias Lake, Maine (First Lake) constituted an accretion to an existing bargaining unit at the Company’s Bucksport, Maine garage. It therefore found that the Company violated sections 8(a)(5) and (1) by refusing to bargain over conditions at First Lake and refusing to apply the terms of the Bucksport contract to First Lake. It also found that two employees were discriminatorily transferred from First Lake to Bucksport because of their union membership, in violation of sections 8(a)(3) and (1), and that another employee was coerced into resigning from the union to avoid transfer, in violation of section 8(a)(1). The Board ordered the Company, upon request, to bargain with the union with respect to First Lake, to apply the Bucksport contract retroactively to First Lake, and to make the employees whole for any losses they may have suffered by the Company’s failure to apply the contract to First Lake in the past. It also ordered the Company, upon request, to return the transferred employees to First Lake.
I.
St. Regis is engaged in the manufacture and sale of pulp, paper, packaging, and other products. Its “Woodlands” division, headquartered at Bucksport, includes Maine and several other states. Logging operations in Maine supply wood to the Company’s mill at Bucksport. In 1958, following a Board-conducted election, the union was certified as the exclusive bargaining representative of a unit consisting of “all automobile mechanics located at the Woodlands garage, Bucksport, Maine.” At that time, all mechanics in the Woodlands division were based at the Bucksport garage. They serviced the Company’s trucks and log haulers, travelling as needed to logging sites in various parts of Maine. The collective bargaining agreement has always provided in its recognition clause that it covers “the employees in the Woodlands garage located at Bucksport, Maine.”
In 1967, the Company opened a garage at Colson Field, Maine. Two mechanics, Alton Norton and Ervin Googins, were assigned to work at Colson Field. Norton had originally worked at Bucksport; Googins may have as well. They were both union members. Other mechanics from Bucksport were also assigned to work at Colson Field from time to time. In 1974, the Company opened its First Lake garage and closed down the one at Colson Field. It transferred Norton and Googins to First Lake. By June 1975, Alfred Wood was also working as a mechanic at First Lake. He, too, was a union member, who may have worked at Bucks-port earlier. All these men were on dues checkoff. Colson Field and First Lake are each approximately 75 miles from Bucks-port; they are approximately 11 miles from each other. At various times, the Company also operated other garages distant from Bucksport and closer to its logging sites.
The union unsuccessfully attempted to expand the Bucksport contract’s recognition clause to include First Lake during the 1975 negotiations. On June 13, 1975, however, the Company did advise the union by letter that it “recognize[d] that the following three timberlands employees are represented by Lodge No. 1821: Ervin Googins, Alton Norton, Alfred Wood.” At that time, these were the only mechanics at First Lake.
Wayne Haslam, another union mechanic who had worked at Bucksport, was assigned to First Lake later that June. Subsequently, non-union mechanics were hired to work at First Lake. By November 1976, First Lake was staffed by four union and four non-union mechanics. The union again tried to amend the recognition clause to include First Lake during the 1976 Bucks-port negotiations. Again, it was unsuccessful, although the Company stated that the June 1975 letter was still in effect. As of the time of these negotiations, however, there were at least two non-union mechanics at First Lake.
The new 1976 Bucksport wage package was applied to First Lake; a paid lunch break included in the Bucksport agreement, however, was not. Norton and Wood filed a grievance over the matter, but the Company refused to arbitrate on the ground that the Bucksport contract did not apply to First Lake. The Board found that this refusal to apply the terms of the Bucksport contract to First Lake, and subsequent refusals to bargain over conditions at First Lake, violated sections 8(a)(5) and (1) because First Lake had become part of the Bucksport unit by operation of the doctrine of “accretion.”
In September 1976, two vacancies developed at the Bucksport garage. The Company chose the least senior union mechanics at First Lake for transfer to Bucksport. It did not consider transferring less senior non-union mechanics. In February 1977, another Bucksport vacancy appeared. Norton was informed that he would be transferred because he was the only union mechanic left at First Lake. He stated that he did not want to transfer and, indeed, did not want to continue as a mechanic at all for health reasons. He resigned from the union and was not transferred out of First Lake until he was assigned to a truck driver position in June 1977. The Board found that the transfers of Googins and Haslam violated sections 8(a)(3) and (1), and that Norton was coerced into resigning his union membership in violation of section 8(aXl).
More than five years have passed since the facts underlying the challenged decision took place and more than three years have passed since the Board first rendered the decision under review. Since that time, we have been informed by affidavits of the Company, which are not contested by the Board, that many changes have occurred. The Bucksport garage was closed in April 1980. First Lake was closed in February 1981. Some of its personnel and materials were transferred to Colson Field, which was reopened. There are currently three hourly mechanics assigned to Colson Field. None of them has ever been a member of the union or on dues checkoff while with the Company.
II.
The Board agreed with the ALJ that First Lake constituted an accretion to the Bucksport bargaining unit and that the Company therefore had a statutory duty to bargain with the union as representative of all mechanics at First Lake as well as at Bucksport. The accretion ruling is now disputed by the Company.
A group of employees is properly accreted to an existing bargaining unit when they have such a close community of interests with the existing unit that they have no true identity distinct from it. E.g., Universal Security Instruments, Inc. v. NLRB, 649 F.2d 247, 253 (4th Cir.), cert. denied, - U.S. -, 102 S.Ct. 506, 70 L.Ed.2d 380 (1981). A number of factors should be considered, such as similarity of working conditions, centralized management, collective bargaining history, employee interchange, and geographic distánce. See NLRB v. R. L. Sweet Lumber Co., 515 F.2d 785, 794 (10th Cir.), cert. denied, 423 U.S. 986, 96 S.Ct. 393, 46 L.Ed.2d 302 (1975). The ALJ concluded, on all the facts, that accretion was proper here. He supportably found that the work performed at First Lake was identical to that performed at Bucksport; that First Lake and Bucksport mechanics often worked together at various locations in the woods; that they were all under the supervision of the same person, whose office was at Bucksport; and that hiring and firing at First Lake were controlled from Bucksport. While other reasons mentioned by the ALJ seem more questionable, and the question seems close, we are satisfied that in light of the factors just stated, there was no abuse of discretion in the accretion determination. See NLRB v. R. L. Sweet Lumber Co., 515 F.2d at 794.
III.
A more troubling contention of the Company is that the Board’s order directing it to bargain with the union as representative of mechanics at First Lake is now so outdated as to be moot and incapable of enforcement. The Company has filed affidavits indicating that Bucksport and First Lake were closed in 1980 and 1981 respectively, and that the only garage still operating anywhere is at Colson Field, staffed by three hourly non-union mechanics, one salaried mechanic, and a working foreman. While courts of appeals, when reviewing Board proceedings, do not normally take into account changes in circumstances since the date of the Board proceedings under review, see, e.g., NLRB v. Cott Corp., 578 F.2d 892 (1st Cir. 1978), the changes here are so fundamental that they are not easily ignored. We realize, as the Board reminds us, that a bargaining obligation is not normally ended simply by relocation of the employer’s facilities. See NLRB v. Die Supply Corp., 393 F.2d 462, 467 (1st Cir. 1968). If we were to command enforcement of the order directing bargaining at First Lake, the Board says it will construe it so as to direct the Company to bargain with the union on behalf of the three hourly mechanics, not now members of the union, at Colson Field. But this would seem to require the Company to bargain in a unit at which there is little or no basis for assuming the-union today enjoys the support of any of the employees. Cf. NLRB v. Massachusetts Machine and Stamping, Inc., 578 F.2d 15, 18-19 (1st Cir. 1978); International Association of Machinists and Aerospace Workers v. NLRB, 498 F.2d 680, 683 (D.C.Cir.1974); NLRB v. Mid-dleboro Fire Apparatus, Inc., 590 F.2d 4, 8 (1st Cir. 1978). In such unusual circumstances, we think it proper to remand so that the Board may reconsider its order in light of present realities. Such an approach is consistent with that we have used in the past to avoid “immediately locking the parties into a lengthy [bargaining] relationship on the basis of ancient events.” NLRB v. H. P. Hood, Inc., 496 F.2d 515, 520 (1st Cir. 1974). On remand, the Board should consider whether circumstances justify the application of the bargaining order, now addressed to the defunct First Lake, to any location other than First Lake, and indeed, whether any purpose remains to be served by enforcing such an order at this time. If so, the Board should reword its order so as to make its scope and effect clear, identifying the location or locations to which it now applies. While lesser changes in orders are customarily made by the Board after a court of appeals has “enforced” an order, we are reluctant to issue the process of this court to enforce an order such as this whose current applicability and scope are so entirely in doubt, and whose obsolescence is a real possibility.
IV.
Turning to the section 8(a)(3) and (1) findings, related to the transfer of Goo-gins and Haslam, and the resignation from the union of Norton, we believe the Board was justified in its conclusions. The Company admitted that it chose the mechanics to transfer on the basis of their union membership. The Board was entitled to infer a discriminatory motive from this admission, and to discredit such reasons as the Company offered for its actions. The Board therefore committed no error in finding that the transfer of Googins and Haslam violated the Act. The evidence also supports the Board’s conclusion that Norton was coerced into resigning in order to avoid transfer back to Bucksport. We therefore uphold this conclusion as well.
The Board’s order will be enforced, except insofar as it orders, or may be interpreted to order, the Company to recognize or bargain with the union as representative of mechanics at First Lake or elsewhere, or to apply the terms and conditions of the collective bargaining agreement to such locations. With respect to these parts of the order, the case is remanded to the Board for further proceedings consistent with this opinion.
So ordered.
. District 99, Lodge No. 1821, International Association of Machinist and Aerospace Workers, AFL-CIO.
. These were Wood and Googins. Haslam, however, volunteered to transfer with Googins because they travelled together and he feared Wood would resign rather than transfer. Ha-slam was therefore transferred in Wood’s stead.
. The hearing before the ALJ was held in mid-1977, the ALJ’s report being issued a year later, July 10, 1978. The Board’s initial decision, which upheld the ALJ’s recommendations with minor changes, was issued December 11, 1978, 239 NLRB 688 (1978). It then reconsidered the section 8(a)(3) charge, and reaffirmed its original decision, on April 2, 1981, 255 NLRB 72 (1981).
. The Board adopted the ALJ’s conclusion on the First Lake accretion issue without analysis of its own. It also modified the ALJ’s findings to include non-supervisory mechanics on a newly created mechanical harvesting crew within the bargaining unit. The Company has not shown that it presented any arguments to the Board against this modification, either initially or via a motion for reconsideration. It is therefore foreclosed from challenging this finding at this time. See NLRA § 10(e), 29 U.S.C. § 160(e); NLRB v. Sambo’s Restaurant, Inc., 641 F.2d 794, 795-96 (9th Cir. 1981). In light of our remand for reconsideration of the bargaining order with respect to Colson Field, see infra, however, we think it appropriate for the Board to reconsider the order with respect to the mechanical harvesting crew as well, so that it may properly be assessed in light of present realities.
. The Company argues with some force that the First Lake mechanics were included in a 1975 election unit comprised of employees working at a number of different jobs throughout the Maine Woodlands area. The election, held in October 1975, was lost by the union. The Company argues that to accrete the First Lake mechanics to Bucksport would negate their freedom of choice, an important factor recognized by the Board in accretion situations, see, e.g., Melbet Jewelry Co., 180 NLRB 107 (1969). We are not, however, persuaded by this argument, for two reasons. First, there is no evidence that the First Lake mechanics were actually included in the Woodlands unit. Indeed, since at the time of the election all of the First Lake mechanics were transferees from Bucksport still on dues checkoff dating from their union membership there, it is not unreasonable to doubt whether anyone intended that they take part in the election. Second, the Melbet Jewelry principle is applicable to situations where the accreted unit could by itself constitute an election unit, rather than merely be part of another unit. There is thus no reason to suppose the freedom of choice of the First Lake mechanics would be better protected if they were part of the Woodlands unit than part of the Bucksport unit. In either case, they would be but a small part of a much larger group.
. We are informed that Googins is now deceased, so that part of the order requiring the Company to offer him reinstatement at First Lake is of course moot.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Contrary to the main argument advanced in the brief of plaintiff/appellant (ZANE), this case does not involve the issue of whether price fixing is unlawful per se —a proposition well established in the law at least since United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940) (horizontal) and Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911) (vertical). Cf. 4 P. Areeda and D. Turner, Antitrust Law, ¶¶ 104, 901 (1978, 1980). Rather, it raises the question of whether defendant/appellee Zell-Aire Corporation terminated the plaintiff, its distributor, as part of an unlawful effort to fix or to maintain resale prices or for independent, legitimate business reasons. Cf. Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 113-15 (3d Cir. 1980), cert. denied, 451 U.S. 911, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981); P. Areeda & D. Turner, supra at 1316 (1978). This question is one of fact, as to which we are not to set aside the finding of the district court unless it is “clearly erroneous.” Fed.R.Civ.P. 52(a). See Phillips v. Crown Central Petroleum Corp., 602 F.2d 616, 629 (4th Cir. 1979), cert. denied, 444 U.S. 1074, 100 S.Ct. 1021, 62 L.Ed.2d 756 (1980); Cromar Co. v. Nuclear Materials & Equipment Corp., 543 F.2d 501, 511 (3d Cir. 1976).
We have reviewed the record and we conclude that the district court’s finding against the plaintiff is adequately supported. We grant that plaintiff at trial made out a strong prima facie case that unlawful price fixing was behind its termination: its contract contained a resale price fixing clause; the letter of termination mentioned a failure to live up to this clause; and the incident that immediately led to termination involved price cutting on its part. Nonetheless, the defendant effectively rebutted that case. It showed, out of the mouth of plaintiff’s president, that defendant had never practiced or enforced resale price maintenance; it produced considerable evidence that plaintiff had failed to live up to its market development commitments; and it effectively tied the “price-cutting” features of the termination-provoking incident to other features such as misrepresentation and market neglect. This evidence allowed the trial judge reasonably to draw the inference that there was no effort to fix prices. All this evidence is reviewed in detail in the district court’s opinion, which, in turn, is well supported in the record.
Defendant Zell-Aire in turn appeals the district court’s denial of its counterclaim against ZANE. That counterclaim is based upon ZANE’s failure to live up to its contractual commitment to purchase $200,-000 worth of goods from Zell-Aire in 1981. The district court initially denied Zell-Aire’s claim on the ground that it had not offered evidence of damages — a denial which we take to mean that any evidence offered by Zell-Aire was inadequate. In responding to Zell-Aire’s motion to reconsider, the court added that, even if it assumed “arguendo," that the damage evidence was sufficient, Zell-Aire had not proved liability.
Zell-Aire does not point to any argument made after its opening statement related to counterclaim damages, nor did defendant make any effort to tie evidence introduced at trial to that claim. Rather, it now contends that the following two items were sufficient, if unrefuted, to prove its damages: 1) a letter showing that ZANE had fallen short of its promised $200,000 quota by about $91,000; 2) its own 1980 financial statement showing, among other things, a “gross profit” of $212,790 on gross “sales” of $704,964.
Under New Hampshire law (which the parties apparently accept as controlling, see generally Annot., 50 A.L.R.2d 227 (1956)), “[t]he burden of proving the extent and amount of such damages is placed upon the party seeking them,” Pugliese v. Town of Northwood Planning Board, 119 N.H. 743, 751-52, 408 A.2d 113 (1979); Grant v. Town of Newton, 117 N.H. 159, 162, 370 A.2d 285 (1977). And, here the trial court could reasonably find that Zell-Aire (the counterclaim plaintiff) failed to meet its burden of proof. Zell-Aire did no more than present a few figures that were highly ambiguous; it presented no witnesses nor did it make any argument to remove the ambiguity or to explain just how the figures proved the amount of damages caused by ZANE’s failure to meet its quota. Cf. Wilko of Nashua, Inc. v. Tap Realty, Inc., 117 N.H. 843, 850, 379 A.2d 798 (1977); Van Hooijdonk v. Langley, 111 N.H. 32, 34, 274 A.2d 798 (1971).
One source of ambiguity arises from the fact that the financial statement deals with 1980 and 1979, not 1981, the year at issue. The financial statement lists a “gross profit” figure for Zell-Aire of $212,790 on a gross “sales” figure of $704,964 for 1980. It lists different figures for 1979. The record contains evidence of significant price fluctuations and of poor business conditions in New England. Thus, there is little reason to believe that Zell-Aire’s 1981 prices and costs on the lost sales would have been similar enough to those of 1980 to have yielded similar “gross profits.” Moreover, even if one assumes that 1981 resembles 1980, the financial statement figures appear to be a national average. What reason is there for assuming that Zell-Aire’s profit margins were the same in New England as in the other regions where it sells? There is evidence of poor and fluctuating business conditions in New England, and of Zell-Aire’s specific interest in building up the New England market — all of which suggests geographically nonuniform price/cost relationships. Finally, for damage purposes, one is interested in net profits, not gross profits. Yet, the financial statement on its face indicates that to move from “gross” to “net” profit, one must subtract “general and administrative expenses” and that these expenses fluctuate annually. In 1979 they amounted to $66,000; in 1980, to $90,000; there is no evidence as to 1981. Nor is there any clear indication as to whether these “general and administrative expenses” change with increasing sales. Perhaps there is information in the record as to some, or all, of these points, but if so, we have not found it. One who bears a burden of proof must present the relevant information in usable form to the court, and that was not done here.
Thus, even without reaching the issue of liability (where, as the district court pointed out, there are additional reasons for doubting that Zell-Aire could prevail), the evidence presented on damages does not rise above the level of “speculation, conjecture or surmise.” Cf. J. H. Horne & Sons Co. v. Bath Fibre Co., 272 F.2d 8, 11 (1st Cir. 1959) quoting from Randall v. Peerless Motor Car Co., 212 Mass. 352, 99 N.E. 221 (1912). The trial court’s initial holding is fully supportable.
As to both the claim and the counterclaim, the judgments of the district court are
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BOWMAN, Circuit Judge.
Plaintiff in this diversity action is The Great Western Sugar Company (Great Western). Great Western is a Delaware corporation in the business of refining and selling beet sugar. Its principal place of business is in Denver. Defendants Mrs. Alison’s Cookie Company, Inc., St. Louis Bakers’ Co-Operative Association, Sugar Distributors, Inc., and Halben Food Manufacturing Company, Inc. are Missouri corporations based in St. Louis. Great Western sued defendants for breach of certain sales contracts. After a jury trial, judgment was entered in favor of Great Western and Great Western was awarded costs. Defendants appealed and Great Western filed a conditional cross appeal. We affirm in part, reverse in part, and remand the case to the District Court.
I. Facts
Each of the defendants had for many years prior to this case purchased Great Western sugar for use in their businesses. Great Western sugar was sold by sales representatives in Great Western’s Denver office and by a number of sugar brokers. The brokers handled sales to Great Western’s customers located outside the area serviced by the Denver sales representatives. During the relevant time period, Great Western sugar was sold in the St. Louis area exclusively through Harry Talbot, a broker who operated a sugar brokerage known as Sugar Marketing, Inc. Talbot apparently was for many years the only person with whom any of the defendants had direct contact concerning the purchase of Great Western sugar.
Prior to mid-1980, defendants purchased Great Western sugar through Talbot under two purchase formats: the sugar was sold either on a “spot” basis or pursuant to an oral “booking.” Spot purchases were onetime orders for sugar to be shipped almost immediately. The price for sugar purchased on a spot basis was the market price as of the day the sugar was ordered. A booking was an oral order for a large quantity of sugar to be shipped in increments over a period of time. Typically, bookings were made on a quarterly (three-month) basis, e.g., during the first quarter of a given year, sugar would be booked for the second quarter of that year. The price of the entire amount of booked sugar to be purchased in a quarter was set at the time of booking. Defendants scheduled delivery of and paid for the booked sugar as the need for it arose throughout the relevant quarter until, at the end of the quarter, they had taken delivery of the entire amount of sugar that had been booked for the quarter. Whether defendants were making a spot purchase or a booking, they placed their orders with Talbot.
In July or August 1980, Great Western discontinued the practice of selling sugar pursuant to oral bookings. Instead, Great Western began using written contracts known as letter agreements for quarterly sugar orders. Under this new arrangement, St. Louis customers still placed their quarterly orders with Talbot. Talbot then communicated the orders to Great Western’s Denver office. A given quarterly order included the amount of sugar to be purchased in the upcoming quarter as well as the proposed price at which all of the sugar for the upcoming quarter was to be billed. Providing Great Western accepted an order, a letter agreement incorporating its terms was prepared in the Denver office, signed by Great Western, and forwarded through Talbot to the customer. The customer was to sign its letter agreement and return it to Great Western. The scheduling of delivery and payment was to be handled in a manner similar to that under the booking arrangement. Spot purchases of sugar still could be made at any time and were handled in a manner that remained essentially unchanged.
Either simultaneously with or shortly pri- or to Great Western’s shift from the use of oral bookings to the use of letter agreements, another sales practice of Great Western was changed. Under the oral booking system, Great Western often had afforded customers including defendants “downside price relief” on their quarterly sugar orders. The possibility of downside price relief was very favorable to customers: if the market price of sugar rose during a quarter for which sugar had been booked, the customer still paid the lower price negotiated at the time of booking, but if the market price of sugar fell during a quarter for which sugar had been booked, the customer could request that the higher price negotiated at the time of booking be reduced to reflect the new, lower market price. Defendants always made arrangements for downside price relief through Talbot. Employees of Great Western testified that with the advent of the letter agreement system, it became company policy not to provide downside price relief. The record fails to establish, however, that Great Western communicated to defendants that there would be no downside price relief under the letter agreement system.
Defendant Mrs. Alison’s Cookie Company, Inc. signed a letter agreement with Great Western covering sugar purchases to be made during the fourth quarter of 1980. Additionally, during the fourth quarter of 1980, each of the four defendants signed separate letter agreements with Great Western for various amounts of sugar to be purchased during the first quarter of 1981. The critical dispute in this case involves these 1981 first quarter letter agreements (the contracts).
At the time the contracts were signed, the price of sugar was $47 per hundredweight and was expected to rise. Instead, by December 1980, the market price of sugar had fallen well below $47. In response to the declining market price of sugar, defendants contacted Talbot to discuss the possibility of securing downside relief from the $47 price term in the contracts. Talbot relayed defendants’ inquiries to Charles Walton, western regional sales manager of Great Western. Walton responded that he would have to check with his superiors before he could give Talbot an answer.
In preparing to call Talbot with Great Western’s response to defendants’ request for downside price relief, Walton asked office worker Kathy Kitzman whether or not defendants had signed and returned the contracts. On January 23, 1981, through inadvertance, Kitzman mistakenly told Walton that defendants had not signed and returned the contracts. Actually, the signed contracts were on file in Great Western’s office. Later that day, Walton telephoned Talbot. According to the testimony of both Talbot and Kitzman (who was standing next to Walton during this telephone conversation), Walton told Talbot that defendants would be held to the quantity term of the contracts but that they would be relieved of the $47 price term; the price to be applied to each order would be the market price as of the date the order was placed. Talbot noted in his own handwriting on the telex sheet containing the original terms of defendants’ contracts that the contract price had been so modified “per phone Chuck Walton.” Joint Appendix (J.A.) at 29. This notation also included the date “1-23-81.” Id. Talbot telephoned defendants within minutes after his conversation with Walton to tell them of the favorable modification.
Walton’s only testimony on this point is that he has no recollection of the January 23 phone conversation or of any phone conversation with Talbot concerning price relief for defendants on these contracts. Thus there is nothing from Walton, nor is there any other testimony, to cast doubt upon the evidence given by Talbot and Kitzman.
Defendants began to schedule delivery of sugar very shortly after Talbot told them that the contract price had been modified. Defendants assumed that these deliveries would be credited in fulfillment of their obligations under the 1981 first quarter contracts to purchase certain quantities of sugar. Meanwhile, only a few days after the January 23 phone conversation, Kitz-man informed Walton that she had “goofed” and that Great Western indeed had contracts on file signed by each of the defendants.
For two to three weeks Walton did nothing about the situation. Finally, one of Walton’s superiors, who suspected something was amiss with defendants’ contracts, confronted Walton, reminded him of Great Western’s new policy against downside price relief, and told him to let defendants know that they would be held to the original contract terms including the $47 price. Walton then telephoned Talbot and told him that a mistake may have been made and that Talbot should clarify with defendants that they were bound by the original contracts. Talbot refused to do so because he felt that no mistake had been made; Talbot believed that both Walton and he clearly understood that the purpose of their January 23 telephone conversation was to discuss modifying the price term of the contracts and that Walton had communicated approval of such a modification. Following Talbot’s refusal to inform defendants of Walton’s change of position, Walton telephoned defendants and told them that they had to honor their original contracts.
Defendants refused to comply with Great Western’s demands. While each of the defendants did purchase sugar from Great Western during the first quarter of 1981, Mrs. Alison’s Cookie Company, Inc., Sugar Distributors, Inc., and Halben Food Manufacturing Company, Inc. did not purchase any sugar at the $47 price. St. Louis Bakers’ Co-Operative Association purchased only 2016 of its 5000 hundredweight contract quantity at the $47 price.
Great Western filed separate lawsuits against defendants for breach of their 1981 first quarter contracts. Great Western also sued Mrs. Alison’s Cookie Company, Inc. for breach of its 1980 fourth quarter contract. The cases were consolidated. Judgment in favor of Great Western on all five contracts was entered by the District Court following a jury trial and costs were awarded to Great Western.
Defendants argue that the District Court should have granted their motions for a directed verdict or judgment notwithstanding the verdict because (1) the contracts were modified on January 23, 1981 and (2) defendants performed the modified contracts or were performing under them until Great Western anticipatorily repudiated the modified contracts. Defendants additionally claim that the District Court should have granted their motion for a new trial due to error in rulings by the court regarding issues of damages and due to erroneous jury instructions. Finally, defendants dispute the District Court’s award of costs to Great Western.
Great Western filed a conditional cross appeal to be considered if this Court does not affirm the judgment of the District Court. In its cross appeal, Great Western also challenges certain rulings of the District Court as to issues of damages and claims error in the District Court’s refusal to instruct the jury on the applicability of the statute of frauds to this case.
II. The 1980 Fourth Quarter Contract
At the outset, we note that the issues raised by the parties relate almost exclusively to the 1981 first quarter contracts. Defendant Mrs. Alison’s Cookie Company, Inc. makes only a minimal argument for reversal of the judgment against it on its 1980 fourth quarter contract with Great Western. We find this portion of the District Court’s judgment to be supported by the record and we find no related error of law. Thus we affirm the District Court’s judgment against Mrs. Alison’s Cookie Company, Inc. on the 1980 fourth quarter contract.
III. The 1981 First Quarter Contracts
Defendants’ ultimate view of this case is that they are entitled as a matter of law to judgment in their favor on the claims relating to the 1981 first quarter contracts because Great Western repudiated the contracts after they had been validly modified. Having reviewed the record and the arguments of the parties, we do not find defendants’ position to be established as a matter of law. Therefore we cannot say that defendants should have been granted a directed verdict or judgment notwithstanding the verdict. We do, however, find that defendants are entitled to a new trial because the jury did not have the opportunity to determine under correct instructions whether or not the contracts were modified.
When Walton telephoned Talbot on January 23, 1981, Walton thought that Great Western did not have in its possession 1981 first quarter contracts signed by defendants; Kitzman inadvertently had told Walton that Great Western had not received them when in fact the signed contracts were on file in Great Western’s office. Great Western contends that Walton therefore could not have discussed or agreed to a modification of contracts he believed did not exist. The District Court, apparently persuaded by Great Western’s reasoning, instructed the jury that
[i]f you believe at the time of his January 23, 1981 conversation with Harry Talbot, that Chuck Walton believed that there were no contracts between Great Western Sugar and the Defendants because the Defendants had not signed and returned them, you may find that there was no “meeting of the minds” between the Great Western Sugar Co. and the Defendants regarding their modification.
Instruction 19A, J.A. at 21.
Defendants argue that Instruction 19A told the jury that a unilateral mistake of fact on the part of Great Western was reason enough to find that the contracts were not modified and that this was a misstatement of the law. We agree with defendants and hold that the District Court committed reversible error by giving Instruction 19A.
The law is well settled that a contracting party generally may not escape its contractual responsibilities by claiming that it was unilaterally mistaken. See, e.g., Gaines v. Jones, 486 F.2d 39, 43 (8th Cir.1973), cert. denied, 415 U.S. 919, 94 S.Ct. 1418, 39 L.Ed.2d 474 (1974) (applying Missouri law). Exceptions to this rule are made, however,
[wjhere the mistake of one party is either known to the other party or is so obvious, under the circumstances, that it must have been known to him, and the mistake concerns a matter so vital that it can be said that the parties, because of miscalculation or false information, never actually agreed to the same proposition.
Frederick v. Union Electric Light & Power Co., 336 Mo. 1038, 82 S.W.2d 79, 86 (1935); Saline County v. Thorp, 337 Mo. 1140, 88 S.W.2d 183, 185 (1935).
Walton’s mistaken belief that Great Western did not possess contracts signed by defendants was entirely unilateral. Defendants knew that they had signed and returned the contracts and presumed the contracts to be in Great Western’s possession, where in fact they were. Moreover, there is no evidence that defendants knew of Walton’s mistaken belief nor is there any evidence that defendants must have known of this unilateral mistake. Thus, an exception to the general rule denying relief to a contracting party that claims it was unilaterally mistaken cannot be made in this case.
We view Walton’s mistaken belief as being immaterial. What must be carefully assessed in this case is not the effect of Walton’s undisclosed belief but the effect of the January 28 telephone conversation itself. “If [a party’s] words or acts, judged by a reasonable standard, manifest an intention to agree in regard to the matter in question, that agreement is established, and it is immaterial what may be the real but unexpressed state of [the party’s] mind on the subject.” Holmes v. Freeman, 150 S.W.2d 557, 562 (Mo.Ct.App.1941); Roper v. Clanton, 258 S.W.2d 283, 288 (Mo.Ct. App.1953). While we decline to say what final effect the telephone conversation should be given, we cannot allow it to be disregarded simply because, at the time the conversation took place, Walton was laboring under a factual misconception that was wholly his own.
The District Court’s instructions on the issue of unilateral mistake are simply irreconcilable. First the court gave Instruction 19, which told the jury that
[o]nce an agreement or modification to an agreement is reached between the parties, one of the parties cannot thereafter unilaterally change the terms of such agreement or modification because of such party’s mistake or misunderstanding.
J.A. at 21. Instruction 19 arguably can be construed as a statement by the District Court that a contracting party’s unilateral mistake generally is not a sufficient reason to excuse that party from its contractual obligations. Such a statement is in agreement with the applicable law which we have outlined supra pp. 521-522. Instruction 19, however, was immediately contradicted by Instruction 19A, which told the jury that it could view Walton’s unilateral mistake as a sufficient reason to find that there was no modification of the 1981 first quarter contracts. While Instruction 19 may be a correct statement of the general law, it appears almost as boilerplate. We do not believe that the perfunctory treatment in Instruction 19 of the unilateral mistake issue cures the highly fact-specific and legally incorrect treatment it received in Instruction 19A.
Defendants properly preserved for review the error in Instruction 19A on the issue of mistake by objecting to the instruction in accordance with Fed.R.Civ.P. 51. See Trial Transcript (Tr.) at 5-58. We find that Instruction 19A, even when viewed in light of the entire jury charge, Villanueva v. Leininger, 707 F.2d 1007, 1009-10 (8th Cir.1983), permitted the jury to reject defendants’ claim that the 1981 first quarter contracts were modified solely upon a belief by the jury that Walton was unilaterally mistaken. Instruction 19A thus misstated the law concerning a pivotal issue in the case and thereby may well have led the jury to a verdict it would not otherwise have reached. The potential that this is precisely what occurred is far too significant for this Court to ignore.
Defendants in their appeal and Great Western in its conditional cross appeal have challenged various rulings of the District Court on questions of damages and have challenged the District Court’s refusal to give certain requested jury instructions. With respect to these claims, our review of the case discloses no error on the part of the District Court. However, for the benefit of the parties and the court should this case again be brought to trial, we will comment briefly on one aspect of these additional claims.
The District Court identified as crucial questions in this ease whether Walton had authority on behalf of Great Western to modify the 1981 first quarter contracts and whether Talbot had authority on behalf of Great Western to communicate such modifications to defendants. See March 22, 1983 Order denying defendants’ motion for summary judgment and March 24, 1983 Order denying plaintiff’s motion for partial summary judgment, J.A. at 16; Tr. at 2-108 to 109, 4-29 to 30. Based upon our reading of the record, we are not convinced that it is important to determine whether Walton had authority to modify contracts on behalf of Great Western. The evidence indicates that Walton had to check with his superiors before he could respond to Talbot on the question of downside price relief for defendants and that Talbot knew this. See Tr. at 3-100. Thus, the appropriate question seems to be not whether Walton had authority to modify the contracts but whether he had authority to communicate assent to modification of the contracts. Furthermore, any inquiry as to Talbot’s authority may be unnecessary. Granted, if Talbot was Great Western’s agent, one might well ask whether Talbot had authority to communicate to defendants the information he had received from Walton. But if, as Great Western argues, Talbot was defendants’ agent, the question would be extraneous; in that case, authorized communication of Great Western’s willingness to modify the contracts by Walton to Talbot would have the same effect as such a communication by Walton to defendants themselves.
In any event, the District Court instructed the jury only generally and in a rather abstract way as to agency-related issues, see Instruction 20, J.A. at 24, and it rejected defendants’ proposed Instructions 29(a) and 29(b), J.A. at 22-23, which addressed such issues in detail. We do not find any error in Instruction 20 itself. Nor do we find that the District Court necessarily should have given the particular instructions proposed by defendants. We nevertheless acknowledge that carefully tailored, specific instructions probably would have been more helpful to the jury in resolving the issues before it than was Instruction 20 alone. Another jury may be called upon to decide this ease and agency-related issues may remain for its resolution. In that event, we encourage the District Court to give thorough instructions that will assist the jury in its effort to apply the law to the facts of this case.
IV. Conclusion
The judgment of the District Court against Mrs. Alison’s Cookie Company, Inc. on the 1980 fourth quarter contract is affirmed. The judgment of the District Court against defendants on the 1981 first quarter contracts is reversed and the case is remanded to the District Court for a new trial of the claims related to those contracts. The District Court’s award of costs to Great Western is reversed and remanded for a new determination of costs. Should any determination of costs be deemed appropriate at this time, the District Court must now consider that Great Western has prevailed only on its claim against Mrs. Alison’s Cookie Company, Inc. under the 1980 fourth quarter contract.
. Great Western recovered $9000 on its 1980 fourth quarter contract with Mrs. Alison’s Cookie Company, Inc. On the 1981 first quarter contracts Great Western recovered $60,000 from Mrs. Alison’s Cookie Company, Inc., $75,000 from St. Louis Bakers’ Co-Operative Association, $250,000 from Sugar Distributors, Inc., and $175,000 from Halben Food Manufacturing Company, Inc. The costs award totaled $12,-822.60. See J.A. at 18-20.
. This is not a case involving a mutual mistake, which is a mistake "common to both contracting parties, wherein each labors under the same misconception as to a past or existing material fact.” Czarnecki v. Phillips Pipe Line Co., 524 S.W.2d 153, 157 (Mo.Ct.App.1975).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HAYS, Circuit Judge.
This is an appeal from an order of the United States District Court for the Southern District of New York denying appellant’s petition for review of an order of the referee in bankruptcy and affirming that order. The referee’s order granted the application of the trustee of the bankrupt’s estate to recover, as preferential transfers, certain payments made by bankrupt to appellant and denied appellant’s claim under Section 60c of the Bankruptcy Act, 11 U.S. C. § 96(c) (1964) to a set-off for services rendered the bankrupt after receipt of the preferences. We affirm as to the preferential transfers and reverse and remand as to the set-off.
The appellant, a firm of attorneys and accountants, rendered services to the bankrupt over a period of years. The payments, amounting to $20,700, which the referee and the district court have held to constitute voidable preferences were reimbursement for those services. The payments were made within the four months preceding the date of the bankruptcy and at the time of receiving the payment appellant knew that Haupt was insolvent.
Appellant argues that the decision of the referee, affirmed by the district court, was in error because (1) the payments made to appellant by Haupt were not in satisfaction of antecedent indebtedness, (2) the trustee failed to establish that the payments depleted the bankrupt’s estate and were, therefore, preferential and (3), even if the payments constituted voidable preferences, appellant was entitled under Section 60c of the Bankruptcy Act to a set-off for services rendered after the payments were made.
Where there are concurrent findings of fact by the referee and the district court the findings are accepted by this court unless they are clearly erroneous. In re Ira Haupt & Co., 379 F.2d 884, 892 (2d Cir. 1967).
In the present ease the record supports the conclusion of the referee and the district court that Haupt’s payments in 1963 and 1964 to appellant amounting to $20,700 were for services rendered as tax advisers during the period from 1959 to 1963. In the case of the first bill rendered (for $14,000) the bill itself states that it is for past services and the following appears on it in the handwriting of a senior partner of appellant firm:
“Covering services from 1961 to November 30, 1963 * * *”
We reject as wholly unpersuasive appellant’s argument (characterized by the district court as “convoluted”) that “no debt existed until the bill was sent.” It is not credible that there was no understanding between Haupt and appellant that appellant would be reimbursed for its services. It is of no consequence that the exact amount of such reimbursement remained to be fixed at a later period. Haupt raised no question as to the amount, nor does the trustee.
Appellant’s second contention, that the payments by Haupt did not result in a depletion of the bankrupt’s estate, is based on the same rationale, i. e., that the payments were not made for an antecedent debt but for a present consideration. This contention obviously fails on the same ground as appellant’s first contention.
We conclude that there was no error in the holding of the referee and the district court that Haupt’s payments were made on account of an antecedent indebtedness and resulted in depletion of the estate.
After the payments which we have held to constitute voidable preferences were made, appellant performed further services for Haupt for which it received no payment. It is for reimbursement for these services that appellant claims a set-off of $11,600 against the trustee’s recovery on the preferential transfers.
Section 60c of the Bankruptcy Act, 11 U.S.C. § 96(c) (1964), on which appellant relies, provides:
“If a creditor has been preferred, and afterward in good faith gives the debtor further credit without security of any kind for property which becomes a part of the debtor’s estate, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him.”
We believe that the services rendered by appellant to Haupt are properly to be included within the meaning of the word “property” as that word is used in Section 60c. See Kass v. Doyle, 275 F.2d 258, 262 (2d Cir. 1960), where this court said:
“The trustee also urges that services cannot constitute ‘value’ within the meaning of § 70, sub. d(l). Such a view, in accord with that apparently taken in In the Matter of Autocue Sales & Distributing Corp., D.C.S.D.N.Y.1958, 167 F.Supp. 672, 674, must be premised on the assumption that the statute protects only those transactions which result in an immediate balance sheet increase in the assets of the debtor equal to the consideration paid out by him. We think that this is too circumscribed an interpretation of the statute; in our view it applies equally to transactions involving services. While it is true that the work performed by an attorney or an accountant or any other person rendering services is not directly reflected in the balance sheet in the same way that the purchase of stock in trade or a new machine would be shown in the inventory or fixed assets accounts, it can hardly be doubted that such services may be equally necessary to the debtor and may equally aid in the protection of the assets available for creditors in the event the bankruptcy petition should be approved. Moreover, insofar as the purpose of the section is to permit the bankrupt to carry on his day to day business affairs during the pendency of a petition, no rational distinction can be drawn between the use of services and the purchase of tangible property. One is as likely to be as necessary to the carrying on of the debtor’s affairs as the other. In the present case, representation of the corporation in grievance arbitration with its employees was quite as necessary to its continuing business as the purchase of gasoline to run its buses. * * * ”
Moreover we do not consider, as did the district court, that appellant’s services lost their character as property of Haupt’s estate because the work had to be redone. It appears that the work was not effective because Haupt’s employees had made erroneous entries in the books of the organization and had failed to make other necessary entries. Surely, if Haupt had purchased a machine which broke down because of errors made by Haupt’s employees in operating it, the machine, however unproductive it proved in fact to be, would constitute property within the meaning of Section 60c and the amount of credit extended for it would be a proper set-off under that section. We are unable to distinguish appellant’s services here from the machine in our hypothetical case. We hold therefore that appellant is entitled to set off its claim for services against the trustee’s recovery for preferential transfers. However, we are unable on the record before us to fix the amount of the allowable set-off. The district judge stated in his memorandum that time sheets submitted by appellant in support of its set-off claim were “unclear” and that work for previous tax years might be included. Because he believed that appellant was not entitled to any set-off at all it was unnecessary for the district judge to make any definite finding on these latter points. We therefore remand the case to the district court to compute the amount of the set-off allowable under our view of the applicable law, or to remand to the referee to make such computation.
. Actually in order to avoid the conclusion that Haupt’s payments were on account of an antecedent indebtedness, appellant would have to argue that no debt ever existed, even after Haupt received appellant’s bill.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WOODBURY, Chief Judge.
There is really very little substance i:n this appeal.
The plaintiffs brought identical, except for names, dates, etc., actions for breach of similar contracts entered into by each plaintiff with the defendant. The defendant counterclaimed against each plaintiff and the consolidated cases went to trial in the District Court sitting without a jury on stipulated facts. That court dismissed the plaintiffs’ complaints and appointed an auditor to examine the accounts of the parties and report the several amounts due from the plaintiffs to the defendant on its counterclaims. The plaintiffs undertook to appeal this action but we dismissed the appeal summarily for lack of appellate jurisdiction because the action of the court below was not a final judgment. The auditor held extensive hearings and filed a full report which the District Court approved over the plaintiffs’ objections, which it characterized as “frivolous and wholly without merit,” and gave judgment for the defendant in the amounts found by the auditor to be due it from each plaintiff with interest and costs including the auditor’s fees. The plaintiffs below have appealed from this judgment.
On various dates from 1949 to 1955 the defendant entered into similar commission sales agreements with the plaintiffs under which it consigned General Electric appliances to the plaintiffs for sale on commission. The bone of contention between the parties is whether or not the defendant had the right under these agreements to charge commissions back to the plaintiffs in the event an appliance sold by them was later repossessed. That is to say, the question is whether the defendant has the right under the contracts asserted by it in 1937, and acquiesced in by the plaintiffs throughout the life of their contracts, of charging back commissions to each plaintiff in the case of appliances sold by them and later repossessed and remitting to the plaintiffs only the net balance of the commissions due with the monthly statements of account it submitted to the plaintiffs. The District Court held that the defendant had that right as a matter of law under the commercial usage of the home appliance business in Puerto Rico, and the plaintiffs-appellants contend that this is error. Their argument is that the contracts themselves are so clear and explicit with respect to the payment of commissions on sales that resort may not be had to extrinsic considerations in aid of their interpretation.
The contracts provide that the defendant will pay the plaintiffs “ * * * for each completed sale, a commission specified in writing, which is understood to be part of this agreement, both parties agreeing that the schedule of commissions is subject to change, in which case the 'Sales Representative [the plaintiff] shall be given advance notice.” The contracts then go on to define a completed sale as (a) one made on credit approved in writing by the defendant; (b) one made by the plaintiff in which, in the case of a sale on credit, the plaintiff shall have an order duly signed and completed by the purchaser, a duly signed and completed contract of purchase and sale and the required down payment; and (c) completed “delivery and/or installation” of the appliance.
One can hardly suppose that the defendant would encourage its dealers to make instalment sales to hopelessly impecunious purchasers by agreeing to pay its dealers their full commission on each sale when “completed” as defined in the contract. That it had no such intention is evident from “Sales Instructions” which it is stipulated were issued by the defendant and notified to the plaintiffs from time to time during the lives of their contracts advising the plaintiffs that since 1937 it had always been the defendant’s practice “ * * * to charge back commissions in the event of being required to repossess.” And the plaintiffs for years agreed to this practice. It was part of the contracts by inclusion by reference as well as by practical interpretation of the parties. Under these circumstances if it was error for the court below to base its conclusion solely on local practice instead of using local practice as a makeweight for its conclusion, the error was harmless.
Very similar considerations serve to refute the appellants’ contentions that the court below misconstrued other provisions of the contracts. Detailed consideration of the contracts, the court’s construction of them, the stipulated facts with respect to the conduct of the parties under them and the appellants’ arguments would serve only to expand this opinion out of proportion to the seriousness of the issues tendered. It will suffice to say that an examination of the contracts in the light of the evidence discloses that the court below did not err in its interpretation.
The appellants’ further contentions deserve only brief notice.
Their contention that the court’s reference to the auditor was broader in scope than the reference to which they had agreed in the stipulation comes to nothing. The scope of any reference is within the sound discretion of the appointing court, and it cannot for a moment be said that the court in this case abused its discretion.
We cannot pass upon the appellants’ further contention that the court below erred in approving the auditor’s report for the reason that there is no sound factual basis for his findings and conclusions because the evidence before the auditor is not included in the appellants’ record appendix.
Their contention that the court below violated Rule 52(a), Fed.R.Civ.P., 28 U.S.C.A. by failing to make findings of fact of its own also comes to nothing, for the Rule specifically provides that the “findings of a master, to the extent that the court adopts them, shall be considered as the findings of the court.” Nor is there any substance to the appellants’ contention that the.court erred in requiring them to pay the auditor’s fee. Rule 53(a), Fed.R.Civ.P. provides: “The compensation to be allowed to a master shall be fixed by the court, and shall be charged upon such of the parties or paid out of any fund or subject matter of the action, which is in the custody and control of the court as the court may direct.” E. I. Du Pont De Nemours & Co. v. Purofied Down Products Corp., 176 F.Supp. 688, 701 (S.D.N.Y.1959). There is no evidence in the record to support the appellants’ bald assertion that the defendant’s records were so poorly kept that the auditor had to spend more time than necessary to strike the accounts so that in consequence his fee was larger than necessary.
Judgment will be entered affirming the judgment of the District Court.
. The parties stipulated as follows: “The practice of charging back commissions in case of repossessions has been generally used by other appliance distributors in Puerto Rico. Plaintiffs do contend as against said evidence that this fact is immaterial to the cases at bar.”
. Rule 53(a) provides: “As used in these rules the word ‘master’ includes a referee, an auditor, and an examiner.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
TALBOT SMITH, Senior District Judge.
The present action was instituted in the United States District Court for the District of Colorado by Florence Metcalfe, widow of John E. Metcalfe and administratrix of his estate, against the appellant, Atchison, Topeka and Santa Fe Railway Company, to recover damages under the Federal Employers’ Liability Act, 45 U.S.C. § 51 et seq., for a violation of the Safety Appliance Act, 45 U.S.C. § 1 et seq., which allegedly contributed to the injury and death of her husband. The jury returned a verdict in favor of appellee in the sum of $107,000 plus costs. From the judgment entered on the verdict and the order of the district court denying its motion for judgment notwithstanding the verdict or for a new trial, the Railroad appeals.
The principal question presented for review is whether there was sufficient evidence to support the jury’s findings that the Railroad violated § 2 of the Safety Appliance Act and that this violation was a cause, in whole or in part, of the injury and death of Metcalfe. Additionally, the Railroad attacks the jury’s award of damages as excessive.
On July 30, 1970, before dawn, Metcalfe was working in the Railroad’s Colorado Springs yards as foreman of a switch crew, a position he had held for eighteen years. The crew had coupled onto the front end of the switch engine, heading north on the team track, which runs generally north and south, a piggyback ear. The ultimate objective was to back the engine and the piggyback car to the south on the team track until reaching the wye track which, roughly speaking, forms a triangle to the west with the hypotenuse of the team track, and to proceed down the north leg of the wye track, eventually pushing the piggyback car onto the south leg of the wye track and thereby turning it around. En route to the wye track, a box car was coupled to the north end of the piggyback car. So constituted, the train continued backing until the engine and most of the piggyback car were situated on the north leg of the wye track. At this point Metcalfe informed his switch-man helper, Dwight Fields, that they would uncouple the box car and leave it stationary on the team track. Fields was positioned ten to twenty feet east of the train so as to pass signals around the curve from Metcalfe to the engineer. By means of a lever on the east side of the piggyback car, and without going between the ends of the cars, Metcalfe uncoupled the piggyback car and the box car. Having done so, he gave a back-up signal to Fields, and, after the engine and piggyback car had moved ten to twenty feet to the southwest, a stop signal. Then Metcalfe stepped between the cars and, facing north, opened the knuckle on the box car. Fields meanwhile had taken four or five steps towards the front of the train before glancing back at Metcalfe. Metcalfe was standing between the piggyback car and the box car and facing south or southeast. As Fields watched, he “dropped straight down out of sight.” Fields, as yet not alarmed, walked back to where Metcalfe had disappeared from view and found him pinned beneath the southeast wheel of the box car, six to fifteen feet north of the piggyback car.
After the arrival of an ambulance, it was decided to reeouple the piggyback ear and box car in order to move the box car northward and free of Metcalfe’s body. At this time it was noticed that the drawbar on the coupler of the piggyback car was slanted toward the east to such an extent that it was necessary to realign it, going between the cars to do so, in order to make the coupling.
Appellee claims that the jury was entitled to infer from these facts that Metcalfe, after he had opened the knuckle on the box car, noticed the misaligned drawbar on the piggyback car and was proceeding to adjust it when the box car moved southward, crushing him under one of its wheels. The necessity of going between the ears to adjust a misaligned coupler, according to appellee, constitutes a violation of § 2 of the Safety Appliance Act. The Railroad, in turn, contends that there is insufficient evidence that Metcalfe was between the cars for any purpose other than opening the knuckle on the box car and that, even if Metcalfe was proceeding to adjust the coupler, such action was premature. It is the Railroad’s position that the sole cause of the accident was Metcalfe’s negligence in stepping in front of the box car to open the knuckle without having chocked the wheels or set the brakes in a manner sufficient to prevent the box car from rolling.
The Federal Safety Appliance Act, adopted in 1893, forced the railroads to install appliances designed to eliminate some of the more hazardous aspects of railroad work. The Act did not, of itself, create a federal cause of action imposing civil liability upon the railroads for violations. Rather, it imposed sanctions in the form of monetary penalties. In 1908, however, Congress, via the Federal Employers’ Liability Act [FELA], provided railroad employees with a cause of action based on violations of the Safety Appliance Act. 45 U.S.C. § 51. The peculiar characteristics of this newly-created cause of action were described by Mr. Justice Brennan in Crane v. Cedar Rapids & I. C. R. R., 395 U.S. 164, 89 S.Ct. 1706, 23 L.Ed.2d 176 (1969), as follows:
“In such actions, the injured employee [or his or her personal representative in case of death] is required to prove only the statutory violation and thus is relieved of the burden of proving negligence. . . He is not required to prove common-law proximate causation but only that his injury resulted ‘in whole or in part’ from the railroad’s violation of the Act, . . . and the railroad is deprived of the defenses of contributory negligence and assumption of risk . . . . ” (citations omitted) 359 U.S. at 166, 89 S.Ct. at 1708.
The standard applied by federal courts in determining whether there is sufficient evidence to send a FELA case to the jury is significantly broader than the standard applied in common law negligence actions. As stated by the United States Supreme Court in Lavender v. Kurn, 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916 (1946), “Only when there is a complete absence of probative facts to support the conclusion reached does a reversible error appear.” See Rogers v. Missouri Pac. R. R., 352 U.S. 500, 77 S.Ct. 443,1 L.Ed.2d 493 (1957); Missouri-Kansas-Texas Ry. v. Hearson, 422 F.2d 1037 (10th Cir. 1970); Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969); Chicago R.I. & P.R.R. v. Melcher, 333 F.2d 996 (8th Cir. 1964); Prosser, Torts § 80, p. 536 (4th ed. 1971). To this standard, however, must be added the admonition found in Tennant v. Peoria & P.U. Ry., 321 U.S. 29, 64 S.Ct. 409, 88 L.Ed. 520 (1944): “The essential requirement is that mere speculation be not allowed to do duty for probative facts after making due allowance for all reasonably possible inferences favoring the party whose case is attacked,” See Missouri-Kansas-Texas Ry. v. Hearson, supra, 422 F.2d at 1041.
As already noted, appellee alleged that the Railroad violated § 2 of the Safety Appliance Act, 45 U.S.C. § 2, in that the coupler of the piggyback car was misaligned to such an extent as to preclude coupling automatically by impact.
Section 2 reads:
It shall be unlawful for any common carrier engaged in interstate commerce by railroad to haul or permit to be hauled or used on its line any car used in moving interstate traffic not equipped with couplers coupling automatically by impact, and which can be uncoupled without the necessity of men going between the ends of the cars.
There is no dispute but that all of the Railroad’s cars are equipped with “automatic couplers” in the sense that the cars can ordinarily be coupled together without men going between the ends of the cars. The coupling apparatus, however, permits limited movement of the drawbar from side to side in order to allow the cars, when coupled together, to pass around curves without derailment and to allow coupling on a curve. In some cases, the drawbar may move so far off-center as to preclude automatic coupling. In such cases, it is necessary to go between the cars to adjust the drawbar.
A substantial number of state and federal courts have found that a failure to couple automatically because of a misaligned drawbar is sufficient to sustain a finding that § 2 has been violated. San Antonio & A. P. Ry. v. Wagner, 241 U.S. 476, 36 S.Ct. 626, 60 L.Ed. 1110 (1916); Atlantic City R. R. v. Parker, 242 U.S. 56, 37 S.Ct. 69, 61 L.Ed. 150 (1916); Kansas City S. Ry. v. Cagle, 229 F.2d 12 (10th Cir. 1955), cert. denied, 351 U.S. 908, 76 S.Ct. 697, 100 L.Ed. 1443 (1956); Chicago, St. P., M. & O. Ry. v. Muldowney, 130 F.2d 971 (8th Cir.), cert. denied, 317 U.S. 700, 63 S.Ct. 526, 87 L.Ed. 560 (1942); Hampton v. Des Moines & Cent. I. R. R., 65 F.2d 899 (8th Cir. 1933); Hohenleitner v. Southern Pac. Co., 177 F. 796 (C.C.D.Or. 1910); Finley v. Southern Pac. Co., 179 Cal.App.2d 424, 3 Cal.Rptr. 895 (1960); Hallada v. Great Northern Ry., 244 Minn. 81, 69 N.W.2d 673, cert. denied, 350 U.S. 874, 76 S.Ct. 119, 100 L.Ed. 773 (1955); White v. Atchison, T. & S. F. Ry., 244 S.W.2d 26 (Mo.1951), cert. denied, 343 U.S. 915, 72 S.Ct. 648, 96 L.Ed. 1330 (1952); Chicago, R. I. & P. Ry. v. Ray, 67 Okl. 77, 168 P. 999 (1917), cert. denied, 246 U.S. 662, 38 S.Ct. 332, 62 L.Ed. 927 (1918); Kansas City, M. & O. Ry. v. Wood, 262 S.W. 520 (Tex.Civ.App.1924); McGowan v. Denver & R. G. W. R. R., 121 Utah 587, 244 P.2d 628, cert. denied, 344 U.S. 918, 73 S.Ct. 346, 97 L.Ed. 707 (1952).
The Railroad vigorously argues, however, that the fact that the drawbar on the piggyback car had to be realigned before it would couple with the box car does not establish that the piggyback car would not have automatically coupled, misaligned drawbar and all, with whatever car with which it would eventually have been coupled, but for the intervenimg accident. Similarly, the Railroad suggests that even if Metcalfe was attempting to realign the drawbar, such action was premature until it was determined with which car the piggyback ear would be coupled and whether realignment would be necessary under the circumstances.
The Railroad’s argument ignores, however, evidence from which the jury was entitled to infer that the piggyback car would not have successfully automatically coupled with any car without realignment of the drawbar. In reviewing the sufficiency of the evidence to support the jury verdict for appellee, of course, we must resolve all conflicts against appellant, and award appellee the benefit of such favorable inferences as the jury might reasonably have drawn. Chicago, St. P., M. & O. Ry. v. Muldowney, supra, 130 F.2d at 973.
According to Swede Nelson, the brakeman who adjusted the drawbar on the piggyback car before recoupling the piggyback into the box car, the drawbar on the former was out of line “to the extreme east.” In Hampton v. Des Moines & Cent. I. R. R., supra, 65 F.2d at 901, testimony that the drawbar was four or five inches out of line and that the drawbar would not couple on impact in that position “constituted substantial evidence that the coupler was defective.” See Geraghty v. Lehigh Valley, R. R., 70 F.2d at 303; White v. Atchison, T. & S. F. Ry., supra, 244 S.W.2d at 29-30. We find that the jury, or for that matter, Metcalfe, could have reasonably concluded that a drawbar misaligned “to the extreme east” would not couple on impact, particularly in view of the practice of the Railroad, as testified to by several of its employees, of keeping drawbars centrally aligned at all times, and of coupling on a straight track as opposed to a curved track whenever feasible.
Having determined the existence of probative facts to support the finding of the jury that § 2 was violated, we turn to the question of the sufficiency of the evidence to support a causal connection between the statutory violation and Metcalfe’s injury and death.
The quantum of evidence necessary to prove a causal connection in an FELA case was carefully considered in Rogers v. Missouri Pac. R. R., supra, Mr. Justice Brennan stating:
“Under this statute [FELA] the test of a jury ease is simply whether the proofs justify with reason the conclusion that employer negligence [or employer violation cf. the safety-appliance statutes] played any part, even the slightest, in producing the injury or death for which damages are sought. It does not matter that, from the evidence, the jury may also with reason, on grounds of probability, attribute the result to other causes, including the employee’s contributory negligence.” 352 U.S. at 506, 77 S.Ct. at 448.
See Missouri-Kansas-Texas Ry. v. Hearson, supra; Lane v. Gorman, 347 F.2d 332 (10th Cir. 1965).
Applying this test to the facts of the present case, we must agree with the trial court that appellee provided sufficient proof to sustain the finding of the jury that the statutory violation on the part of the Railroad contributed in some degree to Metcalfe’s injury and death. Metcalfe faced north to open the knuckle on the box car. When Fields glanced back at him, Metcalfe was facing south or southeast, a position consistent with appellee’s theory that Metcalfe intended to realign the drawbar on the piggyback car. It is clear that it was Metcalfe’s duty to realign drawbars when they moved so far out of line as to prevent coupling. The engineer of the train, Thomas Brooke, testified that although he had moved the train approximately twenty feet to the southwest, Metcalfe was found only twelve feet north of the piggyback car, permitting the inference that Metcalfe had walked some distance in the direction of the piggyback. In Geraghty v. Lehigh Valley R. R., supra, the sole fact that a railroad employee had stepped between the cars “as [if] to adjust a coupling” was held sufficient to support a causal connection between a defective coupler and the railroad employee’s injury and death. See Chicago, R. I. & P. Ry. v. Ray, supra; cf. Lavender v. Kurn, 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916 (1946); Tennant v. Peoria & P. U. Ry., supra, 321 U.S. at 35, 64 S.Ct. 409, 88 L.Ed. 520.
Language in Tennant v. Peoria & P. U. Ry., supra, appropriately summarizes our reasons for refusing to disturb the present verdict:
“The focal point of judicial review is the reasonableness of the particular inference or conclusion drawn by the jury. It is the jury, not the court, which is the fact-finding body. It weights the contradictory evidence and inferences, judges the credibility of witnesses, receives expert instructions, and draws the ultimate conclusion as to the facts. The very essence of its function is to select from among conflicting inferences and conclusions that which it considers the most reasonable. * * * That conclusion, whether it relates to negligence, causation or any other factual matter, cannot be ignored. Courts are not free to reweigh the evidence and set aside the jury verdict merely because the jury could have drawn different inferences or conclusions . . . . ”
321 U.S. at 35, 64 S.Ct. at 412.
Finally, the Railroad asserts that the verdict was so excessive as to suggest that it was the result of passion or prejudice on the part of the jury. We do not agree.
It is the well-settled rule in this circuit that “absent an award so excessive or inadequate as to shock the judicial conscience and to raise an irresistible inference that passion, prejudice, corruption or other improper cause invaded the trial, the jury’s determination of the fact is considered inviolate.” Barnes v. Smith, 305 F.2d 226 (10th Cir. 1962). See Brown v. Richard H. Waeholz, Inc., 467 F.2d 18 (10th Cir. 1972); Ketchum v. Nall, 425 F.2d 242 (10th Cir. 1970); Lane v. Gorman, supra, 347 F.2d at 335.
Under FELA, appellee was entitled to recover four separate items of damages: 1) the present value of financial contributions which the decedent would reasonably be expected to have given his wife and son had he lived; 2) the pecuniary value of services which his wife might reasonably have expected to receive from him in the future; 3) loss to the son during his minority of the training, nurture, education and guidance of his father; and 4) conscious pain and suffering of the decedent prior to death. See DeParq & Wright, Damages Under the Federal Employers’ Liability Act, 17 Ohio St.L.J. 430 (1956).
The jury’s verdict of $107,000 was a general one, so we have no way of knowing the specific amount allocated to each item. Nevertheless, the award as a whole falls well within the perimeters of reasonableness in this case. Appellee’s actuary computed the present worth of future contributions as $79,179.11. Metcalfe performed extensive services for his wife, including painting, carpentry, plumbing, gardening and caring for the family automobiles. He participated actively with his son in sports, school, church and 4-H activities. ,As to the pain and suffering he endured before his death, there was evidence that he remained conscious for at least fifteen minutes following the accident.
The Railroad raises two specific objections to appellee’s evidence on damages: 1) that Mrs. Metcalfe overestimated her husband’s actual monthly take-home pay i and 2) that future contributions were computed until Metcalfe would have reached retirement age instead of over his work-life expectancy.
According to the records of the Railroad, Metcalfe earned gross wages of $9,329.27 in 1969. Mrs. Metcalfe supplied an actuary with information from which he calculated that 59.95% of Metcalfe’s wages in 1969 had been contributed to his family. Regardless of any discrepancy between the information supplied by Mrs. Metcalf and a bank deposit slip introduced into evidence by the Railroad, we think the jury was entitled to adopt the actuary’s calculations. As testified to by several witnesses, Metcalfe was a singularly generous and unselfish husband and father.
Appellee’s actuary computed the loss of future contributions over a nine year period—until Metcalfe would have attained customary retirement age. The Railroad argues that the loss should have been measured over Metcalfe’s work-life expectancy, 7.92 years. We agree, however, with those authorities which take the position that work expectancy is just one more factor to be taken into consideration in determining what the decedent could have expected to earn in the future. See DePraq & Wright, supra, at 455; S. Speiser, Recovery for Wrongful Death § 3.14 (1966). The trial judge so instructed the jury.
Judgment affirmed.
. For a detailed description of couplers, see McGowan v. Denver & R.G.W.R.R., 121 Utah 587, 244 P.2d 628, 630 n. 2, cert. denied, 344 U.S. 918, 73 S.Ct. 346, 97 L.Ed. 707 (1952).
. The General Foreman of the Car Department of the Railroad, J. D. Martin, testified that automatic realigning, as opposed to automatic coupling, devices are still in the experimental stages, and have been installed on less than one per cent of railroad cars. He also testified that the Railroad has never received a citation for violation of the Safety Appliance Act from the Department of Transportation for failure to equip its cars with automatic religning devices.
The record is unclear as to the current state of automatic realigning devices throughout the entire railroad industry. Nor is it clear what other alternatives there may be to sending railroad employees between the ends of the ears to adjust misaligned couplers. Nevertheless, as has been repeatedly emphasized by the courts, “The ultimate end sought by the [Safety Appliance Act] is the coupling and uncoupling of cars used in interstate traffic without the necessity of going between them.” Hohenleitner v. Southern Pac. Co., 177 F. 796 (C. C.D.Or.1910). The obligations imposed upon the railroads by the Act are “absolute . . ., not based upon negligence.” Carter v. Atlanta & St. A.B. Ry., 338 U.S. 430, 434, 70 S.Ct. 226, 94 L.Ed.2d 236 (1949).
Bracketed material ours. See Coray v. Southern Pacific Co., 335 U.S. 520, 69 S.Ct. 275, 93 L.Ed. 208 (1949).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
The decision of the United States Board of Tax Appeals is affirmed for the reasons stated in its opinion, 46 B.T.A. 1184.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WESLEY E. BROWN, Senior District Judge.
In this civil rights action Sampath K. Hemmige, a school teacher, appeals from the judgment and order of the district court dismissing his employment discrimination claims against the Chicago Public School system which were brought under the provisions of 42 U.S.C. Sec. 2000e and 42 U.S.C. Sec. 1983. The defendants, members of the Board of Education of the City of Chicago, and various employees of the board, appeal a judgment in favor of Hemmige which awarded him $570.41 as damages for unpaid teaching hours.
Hemmige, an East Indian Hindu, was employed as a non-tenured, day-to-day substitute teacher in the Chicago Public Schools from the fall of 1977 through July, 1980, pursuant to temporary teaching certificates which were issued upon a yearly basis. His application for a temporary certificate for the 1980-1981 school year was denied in July, 1980, upon a finding that his teaching performance had been unsatisfactory. Hemmige contends that his teaching certificate was not renewed because of discrimination against his national origin and religion, and in retaliation for filing a complaint with the Equal Employment Opportunity Commission (EEOC). He also claims that he was denied procedural due process because he was not given a hearing on the decision not to renew his certificate.
Since an issue has been raised with respect to the appropriate scope of the judicial proceedings below, we first discuss in some detail the background of this case.
While Hemmige has been a teacher for more than thirty years, most of his teaching experience has been in India, Ethiopia and Canada. He has two Masters Degrees — one in English Literature, and the other in Education, and he is qualified as an expert in teaching English as a second language. In June, 1977, he moved to Chicago, Illinois and applied for a temporary teacher’s certificate with the Board of Education for the City. He was granted a certificate for the 1977-1978 school year, and was employed as a day-to-day substitute teacher. This was a non-tenured position whereby Hemmige was “on-call” on a daily basis as the need for substitute teachers might dictate. The temporary certificate expired by its own terms on August 31, at the end of each academic year, and in June, 1978, Hemmige reapplied for a certificate for the 1978-1979 school year. In a letter dated July 28, 1978, he was advised that a certificate was being denied due to an unsatisfactory teaching report.
On August 31, 1978, Hemmige filed a discrimination charge with the Illinois Fair Employment Practices Commission, claiming that he had been discriminated against because of his East Indian national origin. The school board subsequently issued a certificate for the 1978-1979 school year, and again, a certificate for the 1979-1980 school year. On June 13, 1980, Hemmige filed a charge of religious and national origin discrimination by defendants with the Equal Employment Opportunity Commission. In this charge Hemmige made the following allegations:
“I have been employed by the Chicago Board of Education as a Substitute Teacher since September 1979. (sic) On June 11,1980 while working at the above named facility (Montefiore High School) I was called a poor Hindu, Indian, told to get out, pushed, and not allowed to sign out by Daniel G. Griffin, Principal. The Board of Education employs more than 15 people.
“I was called names, pushed and told to leave without being allowed to sign out by Mr. Griffin because I had gone to the restroom. The Board of Education’s contract with the Chicago Teachers Union Sections 6-17,17-2 and 25-1 allow teachers to have a lunch period and a free period during the day. Teachers are not required to work more than 6 periods a day. There are at least five (5) minutes between classes for breaks.
“I believe that I have been discriminated against because of my national origin, East Indian, in that: I was not allowed to take a break during the day. After he learned that I had taken a break during class, Mr. Griffin pushed me and yelled, ‘poor Hindu, Indian get the hell out and go to your country. I won’t let you sign out.’ He also called the police. Officer Ramao ... asked Mr. Griffin to allow me to sign out. Mr. Griffin refused and at 2:20 p.m. I left the building.
“Mr. Griffin refused to allow me to sign out. He told me I would not be paid for the day.”
While this charge was pending, Hemmige applied for a temporary certificate for the 1980-1981 school year. In a letter dated July 18, 1980, Hemmige was informed by the Board that it would not renew his teaching certificate, citing seven unsatisfactory reports from various Chicago public schools.
After receiving a right to sue letter, Hemmige filed a pro se complaint in this action. He there complained of discrimination in race, color, sex, religion, and national origin, claiming that he had been ill treated in every respect. After counsel was appointed, a four count amended petition was filed, which claimed that defendants discriminated against him on the basis of national origin and Hindu religion, retaliated against him for filing the EEOC charge, denied due process by deciding not to renew the certificate, without prior notice or opportunity to be heard, and that the defendants had breached his contract by failing to pay him for all of his work.
On February 10, 1982, the District Court granted defendant’s motion to dismiss charges of alleged discrimination occurring prior to August 19, 1979 because they were not timely filed. The court noted that an incident which occurred at Moses Montefiore School on June 11, 1980, was the subject matter of the EEOC charge filed by Hemmige on June 13, 1980. The scope of the amended complaint, however, covered alleged discrimination from September, 1977 to September, 1980, and in addition, included a charge of retaliation for filing the 1980 charge. In determining the appropriate scope of the amended complaint, as it related to the EEOC charge, the trial court recognized that the scope of the judicial complaint is not limited to the precise facts set out in the EEOC charge — but rather “to the scope of the EEOC investigation which can reasonably be expected to grow out of the charge of discrimination.” See Jenkins v. Blue Cross Mut. Hospital Ins., Inc., 538 F.2d 164, 167 (7 Cir.1976), cert. denied, 429 U.S. 986, 97 S.Ct. 506, 50 L.Ed.2d 598, citing the standard applied in Danner v. Phillips Petroleum Co., 447 F.2d 159, 162 (5 Cir.1971):
“The correct rule to follow in construing EEOC charges for purposes of delineating the proper scope of a subsequent judicial inquiry is that ‘the complaint in the civil action * * * may properly encompass any * * * discrimination like or reasonably related to the allegations of the charge and growing out of such allegations ****.’ ” (Citing King v. Georgia Power Co., 295 F.Supp. 943, 947 (N.D.Ga.1968)).
The trial court found that the allegations of Count II of the amended petition, which related to a pattern of discrimination by defendant against minorities, vastly exceeded any investigation which could reasonably be expected to grow out of the charge of discrimination relating to the events at Montefiore High School on June 11, 1980. Accordingly, Count II was dismissed in its entirety.
Count I of the petition concerned several incidents of conduct which preceded the incident of June 11,1980. The court found that any alleged acts which occurred before August 19, 1979 (300 days before the EEOC charge was filed) were untimely under Section 706(e) of Title VII, 42 U.S.C. Sec. 2000e-5(e), which provides that:
“... (I)n a case of unlawful employment practice with respect to which the person aggrieved has initially instituted proceedings with a State or local agency with authority to grant or seek relief from such practice ... such charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred, or within thirty days after receiving notice that the State or local agency has terminated the proceeding under the State or local law, whichever is earlier____”
See Mohasco Corp. v. Silver, 447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980).
The retaliation claim was allowed to stand since the permissible scope of a judicial complaint includes any new acts occurring during the pendency of the charge before the EEOC.
Plaintiff contends that the allegations in Count I establish a “continuing violation” theory of discrimination and that the district court erred in dismissing allegations which concerned incidents occurring prior to August 19, 1979. In Stewart v. CPC International Inc., 679 F.2d 117, 120 (7th Cir.1982), this Circuit determined that a plaintiff can charge a continuing violation when the employer has engaged in a practice of discrimination, usually involving hiring or promotion practices, where it is difficult to fix the exact day a particular violation may have occurred, or where an employer has covertly followed a practice of discrimination. However, in Stewart we recognized that a finding of continuing discrimination must be based upon a present violation, within the relevant time period. In our discussion of United Air Lines, Inc. v. Evans, 431 U.S. 553, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977) we noted that:
“... the Supreme Court’s emphasis upon the need to show a present violation of Title VII indicates that an employer may be held liable for a continuing practice of discrimination ¿/the plaintiff can demonstrate that the practice has actually continued into the ‘present’ — that is, into the time period relevant to the date the charge of discrimination was filed. At least one discriminatory act must have occurred within the charge-filing period. Discriminatory acts that occurred prior to this period constitute relevant evidence of a continuing practice, and may help to demonstrate the employer’s discriminatory intent; and they will of course be used to determine the extent of the remedy that is in order____ But the prior discriminatory acts do not come into play at all unless the plaintiff can show in the first place that the discrimination is ‘presently’ continuing.” (679 F.2d at 121.) (Emphasis of the court)
Because we find that plaintiff failed to establish any incident of a “present” discrimination, there was no basis for consideration of the theory of “continuing discrimination.”
After our review of the transcripts and record, we agree with the trial court’s finding that the evidence in this case overwhelmingly establishes that plaintiff’s teaching certificate was not renewed because of his own failure as a substitute teacher, and not because of his national origin or religion, or because of any other discriminatory bias. In this connection, the court below made certain credibility determinations which were adverse to Hemmige’s position. For instance, plaintiff claimed that on June 11, 1980, Mr. Daniel G. Griffin, the Principal of Moses Montefiore School, called him “an ugly, poor old Indian,” and ordered him to leave the school without justification, all because of Griffin’s bias and prejudice against him. In giving evidence to the court, Mr. Griffin specifically denied calling plaintiff a name, or pushing him. Griffin testified that he ordered plaintiff to leave the school because he had left his class alone for an extended period of time, he used a telephone in a secretary’s office, instead of being in the washroom, as claimed, and that he was evicted from the premises only after plaintiff created a scene, indicating that he would not obey Mr. Griffin. In the face of this conflicting evidence, the trial court discredited plaintiff’s testimony, finding that Mr. Griffin was the one worthy of belief, and that his letter of June 11, 1980, was fully justified.
Other incidents reflected plaintiff’s inability to work with students. In December, 1979, an altercation occurred in a girls’ chorus class which Hemmige was conducting at Roosevelt High School. The principal, Ursula Blitzner, reported the incident in this manner:
a * * * *
The student claimed that the teacher (Hemmige) requested her to change her seat three times. She moved twice and balked the third time. The student alleged that the teacher pushed her out of the chair, and she fell to the floor.
The teacher claimed that he requested the student to move several times because she was disruptive, and he alleged that he did not in any way touch her or the chair.
“The mother of the student came to school. A conference was held with the teacher, student, parent, and principal. The same impasse was reached at the conference. The student was checked by the matron at the time of the alleged incident and reported no bruises.” (Ex. 31)
In March, 1980, Ms. Blitzner again found it necessary to report plaintiff’s behavior to the Director of Teacher Personnel: (Ex. 32)
“Mr. Sampath K. Hemmige ... was a substitute at Roosevelt High School on Friday, March 21, 1980. His ability to work with high school students is extremely limited; his method of classroom management is to order the students to leave the class and not return.
“I returned the students to his class during the morning session with the directions for our procedures for handling student discipline. During the afternoon session, he again ordered students out of his class. They alleged that he also used derogatory language.
“In addition, he insisted that he was not going to cover a class that I asked him to cover, because he was ‘overworked and paid a mere pittance by the Board of Education, and that he needed the period to rest.’ I persisted, and he did cover the class.
“Since this is the second incident that I have reported to your office about Mr. Hemmige, I request that he not be sent to Roosevelt High School at all.”
After reviewing the evidence the trial court resolved credibility questions in favor of Ms. Blitzner’s testimony concerning incidents at Roosevelt High School and found that her actions and reports were not inspired in any way by plaintiff’s national origin or ethnic attributes, but rather by his conduct as a substitute teacher.
Plaintiff also testified about an event which occurred at DuSable High School on May 21, 1980 when he allegedly was required to attend a “Gospel Choir,” and where the Principal, Judith Steinhagen, allegedly expressed a preference for a Jewish substitute. Although there was no contrary testimony, the trial court chose to discredit plaintiff’s testimony because he did not believe that plaintiff had testified truthfully as to a number of other material matters. In this respect, it was noted that plaintiff had testified in a manner “wholly contrary” to Ms. Steinhagen’s report dated May 21, 1980, received in evidence as Exhibit 34:
“Mr. Sampath Hemmige was a substitute teacher at our school today. All students were assigned to report to a music assembly beginning at 9:42 seated by division teachers. Mr. Hemmige brought a chair in from the lunchroom and sat blocking the fire aisle. When questioned he told me that he had no division — he did and had the program card showing same. He then sat in an auditorium seat but refused to remove the chair after several requests. Within two minutes after the musical presentation began — our reknown (sic) Gospel Choir — he left the auditorium.
“I followed him out and repeatedly explained his responsibility for supervision of his class. He refused to do so. I then told him that if he refused to discharge his duties he was released from DuSable.
“He refused to leave and loudly and publicly in the main office challenged my competency to be in charge of this, or any school and called me a prejudiced dictator. He further stated that he was present and supervising for the entire assembly. This is not true.
“I do not want him sent to DuSable and sincerely believe that some serious investigation should be made before he is given a temporary certificate for 1980-1981. He is unsatisfactory.”
Pursuant to school board policy, a conference concerning the unsatisfactory report of Ms. Steinhagen was held with plaintiff on June 13,1980. After he was given a copy of the report, he denied all charges, stating that the principal was a racist and had referred to him as an “Indian.” The conference report (Ex. 35) further related that:
“Mr. Hemmige contends that the principal requested that he perform duties which he feels are not in line with his-position as a teacher. He was advised of Board Rule 6-13 — Duties of Teachers.
“Mr. Hemmige was made aware of the role of the principal and his role as a teacher. He was advised to be circumspect in his relationship with principals.
“Mr. Hemmige was reminded that another unsatisfactory letter could cause his termination.”
As previously noted the unsatisfactory report from the DuSable principal was followed by another unsatisfactory report from Mr. Griffin, under date of June 11, 1980. On June 25, 1980 a conference was held with plaintiff regarding this letter, where he was again informed that while serving in a school as a day-to-day substitute teacher, he was under the jurisdiction of the local school principal.
Our lengthy review of the evidence which was before the trial court fully supports the finding that plaintiff was not a competent substitute teacher and this was why the Board did not renew his license. Likewise, the evidence did not support, “in any degree,” plaintiffs claim of unlawful discrimination, or retaliation against him because he had filed an EEOC charge.
Plaintiff contends that he possessed a property interest in his teaching certificate which was protected by the Fourteenth Amendment, and that he was deprived of his right to due process because the Board refused to renew his certificate without notice or an opportunity for hearing. Here, it is clear that plaintiff was a non-tenured, temporarily employed teacher. Under Illinois law, only tenured teachers are entitled to notice and hearing pending dismissal, and plaintiff’s expectation of employment was governed by his one-year temporary certificate. The union contract provided that the services of an unsatisfactory temporarily certificated teacher could not be terminated “until he has been given an unsatisfactory rating by at least two principals.” There were no agreements between plaintiff and the Board that his temporary teaching certificates would be issued on a continuing basis. Each certificate was limited to a one year term, and was not subject to automatic renewal. Under Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) and our decisions in McElearney v. University of Illinois, 612 F.2d 285 (7th Cir.1979); Smith v. Board of Education, 708 F.2d 258 (7th Cir.1983); and Eichman v. Indiana State University Board of Trustees, 597 F.2d 1104 (7th Cir.1979) plaintiff had no property interest in a temporary teaching certificate. Contrary to the situation found in Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972), there was no evidence that the Board’s rules or policies had fostered any expectation of continued employment. Likewise, our recent decision in Vail v. Board of Education, 706 F.2d 1435 (7th Cir.1984) affirmed by equally divided court, 466 U.S. 377, 104 S.Ct. 2144, 80 L.Ed.2d 377 (1984) may be distinguished, for there, the plaintiff had a two year employment promise.
The district court found that plaintiff was entitled to payment for overtime in the sum of $570.41. The ruling in this regard was preceded by this comment:
“Some of the testimony from the past or Board employees which I credited does support the conclusion that the plaintiff is wrong when he said he taught extra classes at the end of the school day. Some of the evidence suggests that there were no classes to be taught at the end of the day. Therefore, precluding the opportunity for the plaintiff to teach at that time.
“In any event, I am going to find in favor of the plaintiff and- award him overtime pay of $570.41 that he says he has coming. The plaintiff, at least, has some documentary evidence in support of that figure. It is not, in relative terms, a large amount and it is simply unworthy of a legal or judicial analysis on a day-today basis in order to reach some greater precision.”
We have reviewed the trial transcript and exhibits received in evidence in this case. The only evidence to support the award of overtime is plaintiffs self serving testimony and Exhibit 84, a “diary” of notes made by Hemmige concerning teaching assignments, travel notes, and other comments. The diary was written in the Hindi language and abbreviated English. Plaintiff testified that he marked his “overtime days” in this diary with an asterisk, although no times of arrival or departure are indicated. Plaintiff testified that his claim for overtime was based upon being asked to work extra classes, above his “normal load.” In this respect he claimed that the union contract governing overtime pay for substitute teachers provided for payment of $42.00 per day for a 6-hour day, and $50 per day for an 8-hour day, with certain increments after 100 days of service. (Ex. 56, p. 126) Hemmige claimed that he was not allowed to eat lunch at the Montefiore School, but the evidence shows that this was a closed campus and no teacher had a free lunch hour during the school day, which ended at 2:30. Teachers were then free to eat lunch or go home at that time. A similar situation existed at the Anderson School. In some instances, plaintiff claimed that he had to work after school hours until 4:30 p.m. but the testimony of principals was to the contrary— there were no classes lasting until 4:30, and plaintiff was not asked to take any extra classes at the end of the school day. Under the union contract a principal was allowed to assign teachers extra classes in emergency situations, and the first persons called upon for this service were the substitute teachers.
While the trial court found that plaintiff at least had “some” evidence on his overtime claim, there was no finding that such evidence was credible. The record is in fact to the contrary. The court did not “believe that the plaintiff has testified truthfully as to a number of material matters,” and found that plaintiff refused to take classes when he had an obligation to do so. Plaintiff had the burden of proof in establishing his breach of contract claim, and in our view he failed to offer sufficient credible evidence to support a finding that he was entitled to $570.41 in overtime pay.
The judgment entered in favor of all defendants and against the plaintiff on all claims of discrimination and retaliation is AFFIRMED. The judgment awarding plaintiff the sum of $570.41 on the issue of overtime pay is REVERSED.
. Under date of December 15, 1977, the principal of one Chicago School wrote to the substitute teacher division advising that Hemmige, in his judgment was “unsatisfactory.” “He refused to take an assignment to teach a class because he said he would not take more than five classes. This was an emergency since we were short of substitutes.”
"If he is not terminated, we certainly do not wish him sent here again.” (Ex. 24)
Under date of March 6, 1978, a principal from a second high school reported that Hemmige was reluctant to accept assignments offered to him and requested that he not be sent to that school again. (Ex. 27)
On June 12, 1978, a third principal reported that Hemmige became upset and created a scene in refusing to take an assigned class. This principal believed that Hemmige’s "actions and behavior were unprofessional” and he requested that Hemmige not be sent to that high school as a substitute in the future. (Ex. 26)
. In this discrimination charge Hemmige claimed that he had not received any oral or written reports regarding his teaching performance from principals; that no principal had ever observed him in a classroom teaching assignment, and that “Dr. Ellenbogen has stated to me that 'You are an Indian so I have terminated you.’" (Ex. 67)
. This letter, directed to the Substitute Teacher Center, was as follows:
“Please do not send substitute teacher Sam-path K. Hemmige ... to Montefiore in the future.
Today he left his class unattended and could not be found for a considerable period of time. He was finally discovered in a counselor’s office using a school telephone.
I told him at that time (1:15 p.m.) to sign out and that he would only be credited with a half day. He refused to sign out.
I called Sub-Center with the above information.” (Ex. 37)
. Under the provisions of the Chicago Teachers Union contract in force for September, 1979 through August 1981, which governed plaintiffs rights under a temporary teaching certificate, Section 39-4.3 provided that:
"When a temporarily certified teacher employed on a day-to-day basis receives an unsatisfactory rating, the Department of Personnel shall schedule a conference with such teacher to give him a written copy of the reasons and give him positive suggestions for improvement.
"The services with the school system of an unsatisfactory temporarily certificated teacher employed on a day-to-day basis shall not be terminated until he has been given an unsatisfactory rating by at least two principals, unless there is evidence of moral laxity or serious misconduct.” (Tr. Vol. 1, p. 16)
. During plaintiffs teaching appointments in Chicago, unsatisfactory reports were received from seven different schools. Conferences were held with him in January, 1978, February, 1979, and on the two occasions discussed in 1980.
. Here, of course, plaintiffs employment was not “terminated,” while his 1979-1980 certificate was in force.
. Other Exhibits purportedly summarized material in this diary, e.g., Exs. 71, 75, 76, 77 and 80.
. While teachers had no "free” lunch period they could eat with the students during the student lunch hour if they preferred.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALBERT J. HENDERSON, Circuit Judge:
Following approximately five years of litigation in the United States District Court for the Southern District of Florida encompassing two jury trials, one bench trial and countless motions and hearings, the appellants, a group of investors including Gerald Mason, Wesley Hardy, Donald Szabo and Richard Peterson (hereinafter collectively referred to as “Mason”) by this appeal, seek to reverse portions of the final judgment. The Burger King Corporation (“BKC”), the original plaintiff in the action, filed a cross-appeal to certain adverse rulings of the district court. Mason also filed a separate appeal from the attorney’s fee award and BKC again cross-appealed on this issue. After an exhaustive review of the evidence and each assignment of error, we affirm in part and remand in part for further proceedings.
I. Introduction
BKC, one of the largest franchisors of fast-food restaurants in the United States, maintained a business relationship with Mason for many years. As a result of this relationship, Mason acquired the right to establish Burger King restaurants in two major metropolitan areas and to develop other restaurants throughout the United States during the 1970’s. Mason’s territorial rights derived from two development agreements between the parties by which Mason obtained the exclusive authority to establish Burger King franchises in Pitts-burg and Kansas City. Over the years Mason purchased at least twenty-seven Burger King franchises under separate agreements. In connection with the development of some of the franchises, BKC provided financing to Mason for which Mason executed promissory notes. Mason incurred additional obligations for payments due under certain lease agreements with BKC, for supplies furnished on account and for royalties due under the franchise agreements. (The leases, accounts for supplies and royalties will be referred to as the “accounts”.)
The long standing Mason-BKC business association began to deteriorate in 1977 when BKC notified Mason of the cancellation of the two exclusive development agreements. In 1978, BKC filed this suit seeking a declaration that it had properly terminated the development contracts. Mason responded with a counterclaim for reinstatement and damages for the revocation. Afterwards, in 1979, BKC informed Mason that it was unilaterally terminating all twenty-seven of its Burger King franchises for failure to comply with the terms of the franchise agreements. Eventually, through amendments to the complaint and counterclaim, the suit filed in 1978 expanded to controversies concerning both the development and franchise agreements as well as demands arising from Mason’s liability on the promissory notes and the accounts.
In 1980 the case came on for trial and the issues were submitted to the jury on special interrogatories. The jury found that the development contracts were validly can-celled but that BKC wrongfully terminated twelve of the franchise agreements. Because of the equivocal nature of the jury’s verdict as to the remaining fifteen franchise terminations, the district court ordered a new trial on those agreements. The court also granted a new trial to BKC for a computation of damages resulting from Mason’s liability on the promissory notes and accounts. Since there was no genuine issue of fact as to the amount due on the promissory notes and accounts, the district court thereafter entered a summary judgment in favor of BKC for those damages. Before the second jury trial, BKC conceded its error in terminating one of the fifteen franchises left for trial. Also, during the second trial, the district court sustained, as a matter of law, the revocation of seven of the franchises. Thus, by concession or court order, eight of these fifteen terminations were eliminated from the jury’s consideration. After the second trial in 1981, the jury found, that BKC validly terminated six of the remaining franchises. Consequently, Mason prevailed in its efforts to nullify the terminations of fourteen of its franchises and BKC successfully defended the cancellation of thirteen franchise agreements.
Subsequent to the second jury trial, the district court held a bench trial on BKC’s claims for common law trademark infringement, unfair competition and breach of the franchise agreements based upon Mason’s post-termination use of the Burger King trademarks. The court awarded to BKC the profits earned from the franchises previously found to have been lawfully terminated for the breach of the franchise agreements.
Finally, the district court conducted a hearing on BKC’s application for attorney’s fees. The court awarded fees in accordance with the provisions of the development agreements, the notes, the leases and a Florida statute.
II. The 1980 Jury Verdict
In attacking the trial judge’s resolution of the 1980 jury verdict, Mason challenges the grant of a new trial limited to the issue of BKC’s damages on the promissory notes and the accounts. Second, Mason asserts that the district court also erred in ordering a new trial for a determination of the validity of BKC’s cancellation of the franchises not listed on the jury’s verdict form.
A. Did the jury compromise?
In its answer to Special Issue # 1, the jury found in favor of BKC on the promissory notes (valued at approximately $1,000,-000. 00), rejecting Mason’s affirmative defenses thereto. However, it awarded BKC only $1.00 as damages. Responding to Issue # 2, the jury sustained BKC’s right to recover on the accounts (valued at approximately $500,000.00) and found against the affirmative defenses. BKC was awarded $100,000.00 as “damages” for this item.
Neither party brought these inconsistent results to the district court’s attention until after the jury had been discharged and it was too late to resubmit the damages question to the jury. BKC eventually filed a motion for a clarification of the jury verdict on the promissory notes and the accounts. By this motion, BKC sought a judgment for the face amount of the debts, as shown by the evidence, plus the “damages” awarded by the jury. Alternatively, BKC moved for a judgment notwithstanding the verdict for the full amount of the obligations. The district court denied both motions and, instead, ordered a new trial limited to a computation of BKC’s damages on the promissory notes and the accounts. Subsequent to this order, BKC filed a motion for summary judgment supported by affidavits establishing its entitlement to the full amount of the debts. Since Mason submitted no evidence in opposition to the affidavits, the district court granted judgment to BKC for these liquidated amounts.
Mason contends that the jury’s inadequate award of damages signifies an improper compromise verdict because there was no dispute as to the correct amount due on the notes and accounts. Mason therefore claims that the liability and damages issues were inseparable and the trial judge erred in restricting a new trial to the question of damages.
Rule 59(a) of the Federal Rules of Civil Procedure provides that a new trial may be granted “on all or part of the issues.” The decision whether to grant a new trial is discretionary with the district court and will not be reversed absent an abuse of that discretion. See, e.g., Franks v. Associated Air Center, Inc., 663 F.2d 583, 586 (5th Cir.1981); Lucas v. American Manufacturing Co., 630 F.2d 291 (5th Cir.1980); Young v. International Paper Co., 322 F.2d 820, 822 (4th Cir.1963).
It is axiomatic, however, that a partial new trial may not be granted if it would infringe upon a litigant’s seventh amendment right to a jury trial. In Gasoline Products v. Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1930), the Supreme Court enunciated the standard which governs partial new trial practice:
[w]here the practice permits a partial new trial, it may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.
Id. at 500, 51 S.Ct. at 515, 75 L.Ed. at 1191. Applying Champlin Refining, the former Fifth Circuit Court of Appeals held that a jury verdict influenced by an improper compromise cannot stand and a complete new trial is required because liability and damages are inseparable. See, e.g., Lucas v. American Manufacturing Co., 630 F.2d 291, 294 (5th Cir.1980); Hatfield v. Seaboard Air Line R.R. Co., 396 F.2d 721, 724 (5th Cir.1968). Hence, if there is a compromised finding on liability, a separate trial on damages alone will not suffice — both liability and damages must be relitigated in a new trial. Id.
With this admonition in mind, we focus our attention on whether the district court abused its discretion in rejecting the compromise claim. “A compromise verdict is one where it is obvious that the jury compromised the issue of liability by awarding inadequate damages.” Freight Terminals Inc. v. Ryder System, Inc., 461 F.2d 1046, 1053 (5th Cir.1972). However, a review of the cases from the former Fifth Circuit Court of Appeals establishes that a nominal or inadequate finding of damages by itself does not automatically mandate the conclusion that the award was the product of a compromise verdict. See, e.g., Hadra v. Herman Blum Consulting Engineers, 632 F.2d 1242, 1247 (5th Cir.1980), cert. denied, 451 U.S. 912, 101 S.Ct. 1983, 68 L.Ed.2d 301 (1981); Davis v. Becker & Associates, Inc., 608 F.2d 621 (5th Cir.1979); Bassett Furniture Industries of North Carolina, Inc. v. NVF Co., 576 F.2d 1084, 1094 (5th Cir.), reh. denied with opinion, 583 F.2d 778 (5th Cir.1978); Parker v. Wideman, 380 F.2d 433, 437 (5th Cir.1967). Indeed, if inadequate damages was the sole test for a compromise, Rule 59(a) would have little or no purpose. Rather, our inquiry must concentrate on any indicia of compromise apparent from the record, Hatfield, 396 F.2d 721, 723-24, and other factors which may have caused the jury to return a verdict for inadequate damages. See Hadra, 632 F.2d 1242, 1244 n. 1. Only if the “totality of the circumstances” indicates that the issue sought to be excluded by a partial new trial is not separable from the error in the damage award, will a plenary new trial be authorized. See Williams v. Slade, 431 F.2d 605, 609 (5th Cir.1970).
Two former Fifth Circuit cases offer instructive examples of situations where the record contained adequate indications of compromise to warrant a complete new trial. In Hatfield, the court held that a jury verdict finding liability and awarding $1.00 in damages was the result of a compromise. The court found that under all the circumstances, including the jury’s confusion concerning contributory negligence and the fact that it took two days to return a verdict, there was strong support for the conclusion that the inadequate award of damages was the culmination of a compromise among the jurors. The former Fifth Circuit again determined that the jury probably compromised in Lucas v. American Manufacturing Co., 630 F.2d 291 (5th Cir.1980). In Lucas, the trial judge admonished the jury to return a verdict quickly because a hurricane was approaching the city. The jury did so, but after finding the defendant liable, awarded the plaintiff patently inadequate damages. On appeal, the Fifth Circuit remanded for a new trial on liability and damages. The court reasoned that in their haste to decide the case before the arrival of the hurricane, the jurors probably compromised, agreeing to find liability only if the damages were kept to a minimum.
By contrast, the court has rejected the compromise theory when the record discloses another basis for the improper award. For example, in Hadra v. Herman Blum Consulting Engineers, 632 F.2d 1242 (5th Cir.1980), cert. denied, 451 U.S. 912, 101 S.Ct. 1983, 68 L.Ed.2d 301 (1981), the jury found that the defendant had breached the plaintiff’s employment contract but awarded no damages. The district court ordered a new trial confined to the plaintiffs’ claim of damages for the breach. The Fifth Circuit affirmed the grant of a partial new trial. The court rejected the defendant’s contention that the jury verdict was the product of a compromise, thereby affirming the district court’s explanation that the failure to afford monetary relief could have resulted from an improper determination that the plaintiff failed to mitigate his damages by accepting alternative employment. See 632 F.2d at 1244, n. 1. In Hadra, the court emphasized that the defendant pointed to “no circumstances, such as those listed in Hatfield, that indicate the possibility of a compromise verdict... ”. Id. at 1246. Consequently, since there was sufficient evidence to support the jury’s finding of liability, the court held that it was proper to order a new trial limited to damages.
The record before us confirms our belief that the liability and damages issues were also separable in this instance. First, and foremost, the jury repeatedly found that Mason failed to establish its affirmative defenses, the only basis upon which Mason could escape liability. It did so in finding against Mason on the promissory notes and accounts; it rejected the affirmative defenses again when they were asserted as grounds for setting aside the terminations of the development agreements; and once more when they constituted the foundation for the counterclaim against BKC. We can come to no other conclusion than that the jury did not believe Mason’s allegations of economic coercion, fraudulent inducement or wrongful termination of the development agreements. Having clearly convinced the jury that these claims lacked merit, BKC should not have to defend against them again. Second, the record contains absolutely no indicia of a compromise other than the low amount of damages. After a long, protracted trial, the jury required only two to three hours to reach its verdict. It obviously was not deadlocked. The jury did not request additional instructions or attempt to qualify its verdict in any manner. Finally, as BKC points out, the award could be explained by reference to the use of the term “damages” on the special interrogatories. It is possible that the jury thought that BKC would receive payment on the promissory notes and accounts based solely on their finding that BKC was entitled to recover for these items and, therefore, any additional finding of “damages” would simply amount to a duplication. The “totality of the circumstances” simply do not point to a compromise verdict. Viewed in this factual and procedural setting, the district court did not abuse its discretion in ordering the partial new trial.
B. Franchise Termination Verdict Form
Special Issue # 5 sought a determination of the validity of BKC’s terminations of Mason’s franchise agreements. The jury could find: (a) BKC properly terminated all of the agreements; (b) BKC wrongfully terminated all of the agreements; or (c) BKC properly terminated the franchises listed in column one and wrongfully terminated the franchises listed in column two. The jury circled alternative (c), but after designating some franchise numbers under the properly terminated column, crossed them out and wrote “none”. The jury specified only twelve of the twenty-seven franchise agreements at issue in the wrongfully terminated column.
Again, neither party requested that the issue be resubmitted to the jury for clarification. As a result, the jury was discharged without the opportunity to correct these inconsistencies, leaving the district court with the difficult task of interpreting the verdict. In a post trial motion, BKC sought a judgment notwithstanding the verdict, claiming that the evidence established that all of the franchises had been properly cancelled. Alternatively, BKC asked for a new trial on all of the franchise terminations. As expected, Mason took the opposite position, asserting that the verdict correctly found that all of the franchises were wrongfully terminated. The district court rejected all of those contentions, instead ordering a new trial for the restaurants which were not listed in either column. In its order, the court stated that “[i]t [was] very uncertain... whether [the jury] made any determination as to the other restaurants [not listed]... [and] it would not serve the best interests of justice for the court to attempt to read the jury’s mind in an effort to resolve this ambiguity.” R. 3136.
Mason faults the trial court for its failure to construe these responses as a finding that all of the franchises had been wrongfully terminated. Emphasizing the district court’s duty to attempt to reconcile inconsistent special verdicts, Mason claims that the district court was required to so conclude because the jury’s answer that “none” were properly cancelled obviously indicates that the jury decided that all twenty-seven terminations were without legal cause. Mason makes this argument in spite of the fact that the jury did not select that alternative on the verdict form and only identified twelve franchises in that category.
As stated before, the district court has authority under Rule 59(a) of the Federal Rules of Civil Procedure to order a partial new trial. Even though more stringent appellate review is called for when the trial court orders a new trial, the abuse of discretion standard still controls our consideration of the decision. See, e.g., Williams v. City of Valdosta, 689 F.2d 964, 974 (11th Cir.1982); Rabun v. Kimberly-Clark Corp., 678 F.2d 1053 (11th Cir.1982).
A trial judge must make all reasonable efforts to reconcile an inconsistent jury verdict and “if there is a view of the case which makes the jury’s answers consistent, the court must adopt that view and enter judgment accordingly.” Griffin v. Matherne, 471 F.2d 911, 915 (5th Cir.1973). See, e.g., Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, 369 U.S. 355, 364, 82 S.Ct. 780, 786, 7 L.Ed.2d 798, 806-807 (1962); Aquachem Company, Inc. v. Olin Corp., 699 F.2d 516, 521 (11th Cir.1983); Miller v. Royal Netherlands Steamship Co., 508 F.2d 1103, 1106 (5th Cir.1975). The test employed in determining whether a conflict in the verdict can be reconciled is “whether the answers may fairly be said to represent a logical and probable decision on the relevant issues as submitted... ”. Griffin, 471 F.2d at 915. However, if the jury’s answers are so ambiguous or conflicting that they cannot be reconciled fairly, the trial court may not enter judgment thereon. Royal Netherlands Steamship Co. v. Strachan Shipping Co., 362 F.2d 691, 694 (5th Cir.1966), cert. denied, 385 U.S. 1004, 87 S.Ct. 708, 17 L.Ed.2d 543 (1967). A special verdict which does not resolve the essential facts, or does so in an inexplicable fashion, will not support a judgment. Prentice v. Zane’s Administrator, 49 U.S. (8 HOW.) 470, 484, 12 L.Ed. 1160, 1166 (1850); Hartnett v. Brown & Bigelow, 394 F.2d 438, 441, n. 2 (10th Cir.1968). Moreover, trial judges are not empowered to fill in facts omitted from the answer to a special interrogatory. Guidry v. Kem Manufacturing Co., 598 F.2d 402 (5th Cir.), reh. denied with opinion, 604 F.2d 320, 321 (5th Cir.1979). When an insurmountable inconsistency or ambiguity is perceived, the trial court may resubmit the issue to the jury before it is dismissed or order a new trial on some or all of the issues. Nordmann v. National Hotel Co., 425 F.2d 1103, 1106 (5th Cir.1970).
Without doubt, the response to special issue # 5 was both inconsistent and ambiguous. If the jury intended to find that all of the franchises had been wrongfully terminated, it could have selected alternative (b) — it did not. Thus, the choice of alternative (e) was inconsistent with its answer that none of the franchises had been properly terminated. More significantly, the answer does not resolve the disposition of over half of the franchises. As the district court observed, it is not clear what the jury found, if anything, with respect to the omitted franchises. The trial court properly declined to supply facts submitted for the jury’s determination but left unanswered. Guidry, 598 F.2d 402. Inconsistent dr ambiguous verdicts must be reconciled only if that can be accomplished from a fair reading of the verdict. Griffin, 471 F.2d at 915. Faced with this incompatible answer, we have no criticism of the district court’s exercise of its discretion in this instance.
III. Material Breach Instruction
In its cross-appeal, BKC challenges the finding that some of the franchises were wrongfully terminated. The source of this complaint is the district court’s instruction to the jury that a franchise could not be revoked absent a “material” breach of the particular agreement. This, BKC says, is an erroneous statement of Florida law. In essence, BKC urges that it was entitled to strictly enforce the termination provisions of the agreements without regard to the materiality of the alleged defaults.
Although the Florida courts have recognized that the terms of franchise agreements are enforceable, North Dade Imported Motors, Inc. v. Brundage Motors, Inc., 221 So.2d 170, 177 (Fla.Dist.Ct.App.), “it is elementary that the mere breach of an agreement which causes no loss... will not sustain a suit... for damages, much less rescission.” Block v. City of West Palm Beach, 112 F.2d 949, 952 (5th Cir.1940) (quoted in, Westcap Government Securities, Inc. v. Homestead Air Force Base Federal Credit Union, 697 F.2d 911, 913 (11th Cir.1983)). Pursuant to this rule, the Florida courts, and this court construing Florida law, have held that a party may not escape performance under a contract on the ground that a tender was not made by the date specified in the contract. Rather, a party who tenders late may enforce the contract with due allowance for any damage caused by the tardiness. See, e.g., Westcap Government Securities, Inc., 697 F.2d at 914; Blaustein v. Weiss, 409 So.2d 103 (Fla.Dist.Ct.App.1982); Jackson v. Holmes, 307 So.2d 470 (Fla.Dist.Ct.App.), cert. denied, 318 So.2d 404 (Fla.1975); Larsen v. Miami Gardens Dev. Corp., 299 So.2d 50 (Fla.Dist.Ct.App.1974); National Exhibition Co. v. Ball, 139 So.2d 489 (Fla.Dist.Ct.App.1962). Indeed, a Florida court has refused to countenance unilateral cancellation in that context even when the contract stipulated that time was of the essence. Jackson, 307 So.2d at 471-472. Thus, although as a general rule parties to a contract may strictly enforce its terms and the courts will not rewrite an agreement to undo the consequences of a bad bargain, see, e.g., Sapienza v. Bass, 144 So.2d 520 (Fla.Dist.Ct.App.1962), the Florida courts do not blindly sanction unilateral termination of contracts when a default causes no harm to the party seeking to avoid performance.
Consistent with this principle, the Florida courts have indicated that the materiality of a breach is relevant when a party seeks to terminate or rescind a contractual relationship. See, e.g., Callins v. Abbatecola, 412 So.2d 58 (Fla.Dist.Ct.App.1982) (when a party sought to terminate a real estate contract on the ground that the purchaser’s cheek was returned for insufficient funds, the court stated that “the question involved here is... whether [the tender of a bad check]... constituted such a material breach... as to justify... termination... ”. Id. at 59); Gittlin Companies, Inc. v. David & Dash, Inc., 390 So.2d 86 (Fla.Dist.Ct.App.1980) (rescission of distributorship contract was not justified when the defendant made direct sales in violation of the exclusive distribution provision of the distributorship agreement because the breach was not material or substantial). In Gittlin Companies, 390 So.2d at 86, the Florida court cited McAlpine v. Aamco Automatic Transmissions, Inc., 461 F.Supp. 1232 (E.D.Mich.1978), in support of its holding that an immaterial breach of a distributorship agreement did not excuse performance. The McAlpine opinion states the rule followed by the district court in this case:
A material breach would allow the franchisees to terminate their Franchise Agreements and discontinue future performance. An immaterial breach would allow the franchisees to sue for any damage caused, but they would still be bound to continue performance under the contract.
461 F.Supp. at 1249.
We conclude that the district court’s instruction comported with substantial Florida case law and reject BKC’s argument to the contrary.
IV. Post-Termination Trademark Use
A. Background
Each of the franchise agreements stipulates that upon termination of the franchise, the franchisee must discontinue use of the Burger King trademarks. Following the May 1979 unilateral cancellation of all 27 of Mason’s franchises, Mason sought an injunction to prohibit BKC from interfering with the operation of its restaurants as Burger King franchises. At the August 1979 evidentiary hearing on this motion, BKC advised the court that it would maintain the status quo, e.g. it would not force Mason to cease operating under the Burger King name, pending a final resolution of the franchise dispute. However, BKC conditioned this offer on its right to later pursue relief for the post-termination operation. Although Mason made no explicit response to this proposal, no further mention was made of this issue and Mason limited its proof and arguments to other remedies. Thereafter, BKC provided supplies to and accepted royalties from the Mason franchises during the litigation.
BKC amended its complaint to add a cause of action under the Lanham Act, 15 U.S.C. § 1114(l)(a), for Mason’s post-termination use of the Burger King trademarks. At the close of the 1980 jury trial, the district court granted Mason’s motion for a directed verdict on the Lanham Act claim. After doing so, the district court permitted BKC to again amend its complaint to include claims for common law trademark infringement, unfair competition and breach of contract based upon Mason’s use of the trademarks at any restaurants whose franchise revocations might be adjudicated valid in the second trial. Finally, following the second jury’s finding that certain franchises had been legally terminated, the district court proceeded with a bench trial on BKC’s common law trademark, unfair competition and breach of contract causes of action. The district court held that Mason breached the franchise provisions prohibiting use of the Burger King trademark after invalidation of the agreement. Concluding that Mason had been “unjustly enriched” by this breach, the district court awarded BKC the profits earned by Mason as a consequence of the post-termination operation of these franchises as “compensatory damages” for the violation. In this order, the court found that BKC did not consent to the post-termination use of the trademark.
B. Lanham Act Claim
By way of cross-appeal, BKC asserts that the district court erred in directing a verdict favorable to Mason during the first jury trial on its Lanham Act claim for post-termination trademark infringement. BKC maintains that it established the essential elements of federal trademark infringement when it proved that Mason displayed the Burger King marks after its right to do so had been revoked. We agree.
In order to prevail on a trademark infringement claim, the registrant must show that (1) its mark was used in commerce by the defendant without the registrant’s consent and (2) the unauthorized use was likely to cause confusion, or to cause mistake or to deceive. 15 U.S.C. § 1114(l)(a). Ordinarily, trademark infringement cases are predicated on the complaint that the defendant employed a trademark so similar to that of the plaintiff that the public will mistake the defendant’s products for those of the plaintiff. See, e.g., Exxon Corp. v. Texas Motor Exchange of Houston, Inc., 628 F.2d 500 (5th Cir.1980). Also, it is well established that “falsely suggesting affiliation with the trademark owner in a manner likely to cause confusion as to source or sponsorship constitutes infringement.” Professional Golfers Ass’n of America v. Bankers Life & Casualty Co., 514 F.2d 665, 670 (5th Cir.1975) (emphasis supplied). See also, Control Components, Inc. v. Valtek, Inc., 609 F.2d 763, 770 (5th Cir.), cert.. denied, 449 U.S. 1022, 101 S.Ct. 589, 66 L.Ed.2d 484 (1980). Thus, a trademark infringement case need not just involve imitation of the registrant’s mark. The unauthorized use of a trademark which has the effect of misleading the public to believe that the user is sponsored or approved by the registrant can constitute infringement. Professional Golfers Ass’n, 514 F.2d at 670. The Lanham Act cause of action was based on the theory that by using the Burger King trademarks after the trademark license had been cancelled, Mason falsely suggested that its restaurants were sponsored by and affiliated with BKC. Because this type of infringement is cognizable under the Lanham Act, we must examine BKC’s proof in light of the requirements of the statute.
Mason denies the use of BKC’s trademark without consent because after the terminations, BKC provided supplies bearing the Burger King trademarks and accepted royalties from the Mason group. This point was stressed on several occasions in the district court. Mason advanced this argument for the first time during the hearing on Mason’s motion for a directed verdict on the Lanham Act claim. The trial judge granted the motion without stating his reasons. Mason had insisted that a directed verdict was mandated because (1) BKC consented to the use of the trademark and (2) BKC did not show likelihood of confusion. Subsequently, BKC amended its complaint to allege common law trademark infringement, unfair competition and breach of contract arising from Mason’s post-termination use of the trademarks. BKC and Mason stipulated that any relief for these claims would be determined by the district court in a bench trial following the second jury trial if any of the franchises were found to have been properly terminated. At the subsequent bench trial, Mason asserted that BKC could not recover for common law trademark infringement because BKC consented to Mason’s continued use. The consent issue was finally resolved adversely to Mason by the district judge in his findings of fact rendered after the bench trial. The court found that rather than acquiescing in the infringement, BKC agreed at the August 1979 hearing that it would allow Mason to continue operating restaurants under the Burger King banner, provided that it retained its right to seek damages upon a later determination of its right to cancel any or all of the remaining franchises. The court found that Mason had “ratified” this proposal, and therefore, was estopped from claiming that BKC had agreed to the trademark use.
The trial court reasonably could infer that Mason acquiesced in BKC’s offer to permit Mason to continue to operate its restaurants upon the condition that BKC retained its right to recover for post-termination trademark infringement. Mason did not object to this approach and acted in a manner consistent with acceptance until the close of the 1980 jury trial. From our review of the record, we cannot say that a finding of estoppel under these circumstances was clearly erroneous.
Because Mason used the Burger King trademarks after the revocation of that right without BKC’s consent, a trademark infringement claim was established so long as the trademarks were employed in a manner that was likely to cause confusion, to cause mistake or to deceive. 15 U.S.C. § 1114(l)(a). Common sense compels the conclusion that a strong risk of consumer confusion arises when a terminated franchisee continues to use the former franchisor’s trademarks. A patron of a restaurant adorned with the Burger King trademarks undoubtedly would believe that BKC endorses the operation of the restaurant. Consumers automatically would associate the trademark user with the registrant and assume that they are affiliated. Any shortcomings of the franchise therefore would be attributed to BKC. Because of this risk, many courts have held that continued trademark use by one whose trademark license has been cancelled satisfies the likelihood of confusion test and constitutes trademark infringement. See, e.g., United States Jaycees v. Philadelphia Jaycees, 639 F.2d 134 (3d Cir.1981); Professional Golfers Ass’n v. Bankers Life & Casualty Co., 514 F.2d 665 (5th Cir.1975); Prompt Electric Supply Co., Inc. v. Allen-Bradley Co., 492 F.Supp. 344, 349 (E.D.N.Y.1980); National Board of YWCA v. YWCA of Charleston, S.C., 335 F.Supp. 615, 628-629 (D.S.C.1971). BKC proved that Mason employed the Burger King trademarks after its franchise agreements were properly cancelled. This use was without BKC’s consent and was likely to cause confusion. Accordingly, we hold that the district court erred in directing a verdict against BKC on its Lanham Act complaint and remand for a determination of the appropriate relief in conformity with 15 U.S.C. § 1117.
C. Damages for Breach of the Franchise Agreements
As pointed out earlier, the district court concluded that Mason breached the provisions of the franchise agreements which prohibited the post-termination use of the Burger King trademarks. Although BKC also argued that Mason was guilty of common law trademark infringement and unfair competition through the continued use of the trademark, the district court made no findings on those claims. Then, after ruling that BKC had not shown certain consequential damages from the post-termination use of the trademarks, the court awarded BKC the profits that Mason earned at the properly terminated franchises as “compensatory damages” for the breach. BKC complains that the trial court should have allowed consequential damages; Mason, on the other hand, alleges that the trial court erred in ordering it to disgorge the profits.
BKC’s assertions need not detain us long. It sought damages based on its contention that Mason’s continued operation damaged its reputation and thwarted its plans to expand in the areas in which Mason franchises were located. After considering BKC’s evidence in support of those damages, the district court determined that (1) BKC had not established that Mason had tarnished its image, and (2) BKC did not prove that Mason’s failure to close its stores prevented BKC from carrying out its marketing or development plans. Contrary to BKC’s suggestion, the district court did not deny damages because the amounts were uncertain — the court found that BKC did not prove that Mason’s actions caused the claimed harm.
This factual finding was not clearly erroneous. A reading of the record confirms that BKC did not prove with sufficient certainty that Mason’s continued operation caused the purported injury. While it is clear that a wrongdoer cannot escape liability simply because the harm he caused is difficult to value, see, e.g., ABC-Paramount Records, Inc. v. Topps Record Distributing Co., 374 F.2d 455 (5th Cir.1967), it is equally well established that a plaintiff must make a positive showing that the defendant was in fact responsible for the alleged damages. See, e.g., Asgrow-Kilgore Co. v. Mulford Hickerson Corp., 301 So.2d 441, 445 (Fla.1974). BKC simply failed to meet its burden of proof.
The award of profits is more troublesome. Mason and BKC focus their arguments on the propriety of ordering an accounting of profits for trademark infringement. As the parties recognize, a trademark infringer can be required to turn over the profits he earns during the period of the infringement subject to the discretion of the district judge and in light of the equities of the case. 15 U.S.C. § 1117. See, e.g., Maltina Corp. v. Cawy Bottling Co., Inc., 613 F.2d 582 (5th Cir.1980); Mead Johnson & Co. v. Baby’s Formula Service, Inc., 402 F.2d 19 (5th Cir.1968). However, the district court did not find that Mason infringed upon a trademark. Rather, faced with BKC’s claims for trademark infringement, unfair competition and breach of the franchise agreements, the trial judge found only that Mason violated the franchise agreements. For that infraction, the court awarded Mason’s profits as “compensatory damages.”
Although an award of the infringer’s profits can be an appropriate measure for damages for federal or state trademark infringement, e.g. Maltina Corp., 613 F.2d at 584-585; 15 U.S.C. § 1117; Fla.Stat.Ann. §§ 495.131, 495.141 (West 1972
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BARRETT, Circuit Judge.
Safeway Stores, Inc. (Safeway) seeks to set aside and the National Labor Relations Board (NLRB) seeks to enforce an NLRB order requiring Safeway to provide information to the Retail Clerks Union, Local No. 73, Retail Clerks International Association, AFL-CIO (Union) concerning the race and employment status of Tulsa, Oklahoma area Safeway employees.
At the time of the actions giving rise to this case, Safeway and Union were parties to a collective bargaining agreement covering 1500 employees. Article 26 of the agreement provided:
26.1 The Company [Safeway] and its representatives shall not discriminate against any employee on account of race, sex, creed, nationality, color, religion, age or on account of Union affiliation or on account of any legitimate Union activity.
26.2 The Union, its officers, and members shall not discriminate against any employee on account of race, sex, creed, nationality, or age.
[R., Vol. II, at p. 148].
On November 10, 1978 Union President Charles M. Nobles requested the following information from Safeway:
(1) The number of male and female employees, blacks, handicapped, Indians, and Spanish surnamed employees in each classification for all units covered by a contract between Safeway Stores, Inc. and this Local Union.
(2) The hourly wage rate for each such employee.
(3) The number of employees by race, sex, handicapped, and Spanish surname, who have less than 1 years’ seniority, 1-2 years’ seniority, 3-4 years’ seniority, 5-9 years’ seniority, 10-19 years’ seniority, and 20 or more years’ seniority.
(4) The number of persons hired in each classification during the 12-month period immediately preceding the effective date of the information covered in items 1 through 3 above, with a breakdown as to sex, race, handicap, and Spanish surname, showing the sex of all black and Spanish surnamed persons.
(5) The number of promotions or upgrades for the same 12-month period, broken down by race, sex, and Spanish-surnamed persons showing the job level of each upgraded employee prior to and subsequent to each such upgrade and the race, sex, and whether Spanish-surnamed for each of these upgraded employees.
(6) A list of all complaints and charges filed against Safeway Stores, Inc., Tulsa Division, under the Equal Pay Act, Title VII of the Civil Rights Act of 1964, Executive Order 11246, and state fair employment practices law and copies of each complaint or charge relating to employees in bargaining units covered by this Local Union, along with any related documents pertaining to the status of such charges, provided that you may delete therefrom the names of the charging parties.
(7) Copies of the most recent work force analyses filed under Executive Order 11246 and Revised Order 4 of the Office of Federal Contract Compliance Programs for or covering each store or location covered by this Local Union.
[R., Vol. II, at pp. 118-119],
On November 13, 1978, in response to Nobles’ request, Paul D. Johnson, branch manager of the Safeway Industrial Relations Department, asked Union to divulge the specific nature of the grievance giving rise to the request. Nobles informed Johnson that the information was necessary to ensure that Safeway was complying with the requirements of Article 26. Further, Nobles assured Johnson that Union would not publicly disclose any confidential information and would assume the photocopying costs. Despite these assurances, however, on February 9, 1979, Johnson informed Union that Safeway would provide none of the information.
Thereafter, on March 16, 1979, Union filed an unfair labor charge contending that Safeway, by refusing to comply with Union’s request, had failed to bargain collectively in violation of Sections 8(a)(1) and (5) of the National Labor Relations Act, codified at 29 U.S.C.A. §§ 158(a)(1) and (5) (West). The complaint was argued before an Administrative Law Judge (ALJ) who determined, on February 26, 1980, that Safeway was in violation of §§ 8(a)(1) and (5). Safeway excepted to the ALJ’s findings and sought review before the NLRB. On September 30,1980, the NLRB affirmed the ALJ’s determination and ordered Safeway to produce the requested information.
On appeal Safeway contends that the NLRB’s findings are erroneous because the information is not relevant to collective bargaining and because compiling the information would be unduly burdensome.
Unless unsupported by substantial evidence in the record considered as a whole, factual findings of the NLRB are binding and will not be disturbed on appeal. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951); Meredith Corp. v. NLRB, 679 F.2d 1332 (10th Cir. 1982); Crane Sheet Metal, Inc. v. NLRB, 675 F.2d 256 (10th Cir. 1982); American Safety Equip. Corp. v. NLRB, 643 F.2d 693 (10th Cir. 1981).
Safeway argues that, because Union has no duty under the National Labor Relations Act (NLRA) to uncover undetected discrimination, the information was not relevant to collective bargaining and Safeway could not be guilty of an unfair labor practice. A union, as a bargaining representative, is entitled to receive any information which is relevant to its obligation to administer a collective bargaining agreement. NLRB v. Whitin Machine Works, 217 F.2d 593 (4th Cir. 1954), cert. denied, 349 U.S. 905, 75 S.Ct. 583, 99 L.Ed. 1242 (1955). The test of relevancy is whether, under a liberal discovery-type standard, the information would aid the union in performing its statutory duties. NLRB v. Acme Industrial Co., 385 U.S. 432, 87 S.Ct. 565, 17 L.Ed.2d 495 (1967). Even when the information is objectively relevant, however, a union’s request may be denied if its compilation would be unduly burdensome or if the employer’s interest in its confidentiality outweighs the union’s interest. NLRB v. Truitt Mfg. Co., 351 U.S. 149, 76 S.Ct. 753, 100 L.Ed. 1027 (1956); Shell Oil Co. v. NLRB, 457 F.2d 615 (9th Cir. 1972); Emeryville Research Center, Shell Dev. Co. v. NLRB, 441 F.2d 880 (9th Cir. 1971).
The ALJ found, and the NLRB agreed, that the requested information was relevant to the administration of the collective bargaining agreement and therefore obtainable. In reaching this conclusion, the ALJ and the NLRB relied upon the reasoning in Westinghouse Electric Corporation, 239 N.L.R.B. 106 (1978), enforced as modified, Intern. Union of Electrical, Radio and Machine Workers, AFL-CIO-CLC v. NLRB, 648 F.2d 18 (D.C.1981), which involved a request for information nearly identical to the request in the present case. In Westinghouse the NLRB found that information concerning the ethnic background, sex, and employment status of employees, as well as lists of complaints and work force analyses was obtainable by a union to ensure that an anti-discrimination clause in the bargaining agreement was enforced. The NLRB’s findings were modified and enforced in Intern. Union of Electrical, Radio and Machine Workers, AFL-CIO-CLC v. NLRB, supra. We agree with the NLRB’s determination that the information was relevant.
Article 26 of the collective bargaining agreement provides that Safeway will not discriminate against its employees on the basis of sex, race, or age, etc. The court in International Union found that when anti-discrimination clauses are inserted into a bargaining agreement, the union has a duty to ensure that the contractual obligations are being met by the employer. We agree. Information pertaining to the anti-discrimination clause, such as the employment status, ethnic background and sex of employees, is therefore relevant to the union as administrator of the agreement and necessary to enable it to perform its duty. Refusal by an employer to supply this information is a violation of Section 8(a)(1) and (5) of the NLRA. International Union, supra.
Safeway contends that even if the information is relevant, Union has no right to it because the burden created by the time and expense of compiling the information outweighs Union’s interest. Safeway’s contention is unsupportable for several reasons. First, the only cost objection related by Safeway to Union involved the cost of photocopying the information. Union agreed to pay for those costs. Secondly, during the administrative hearing Gerry Espy, Safeway’s employee and public relations manager for the Tulsa Division, testified that much of the information could be extracted from the computer [R., Vol. I, pp. 57, 68, 71] or from other records in Safeway’s possession. Therefore, the burden to Safeway might have been exaggerated; in any event, it is not sufficient to overcome Union’s need for the information. Finally, the court in International Union found, and we agree, that time and pecuniary considerations, though not irrelevant, are not a basis for refusing to supply requested information. Negotiations concerning a means of reducing the employer’s burden are proper at the compliance stage but not at the request stage. International Union, supra.
The NLRB also found that the requested list of complaints and charges filed against Safeway and bargaining unit employees was relevant and obtainable by Union. In Westinghouse the NLRB found that the relevance of the complaint and charges was not obvious and required the Union to specify its need for the information. A showing that the information was necessary to ensure that the charges were not being adjusted by the Equal Employment Opportunity Commission to the exclusion of Union was sufficient to satisfy the demonstration of relevancy.
In the present case, the Union stated to Safeway that the charges related to several matters involving Union members pending under Title VII of the Civil Rights Act of 1964 and other statutes. The NLRB found, and we agree, that this rationale satisfied Union’s burden of establishing relevancy.
In Westinghouse the NLRB found, however, that, although the complaints involving bargaining unit employees were relevant, the names of the persons filing the complaints were not relevant. The NLRB therefore ordered the employer to supply copies of the complaints but to delete the names of the complainants therefrom. In reviewing Westinghouse, the court in International Union found that mere deletion of the complainants’ names did not sufficiently insure the confidentiality of the complaints or protect the privacy interests of the complainants. The court stated its concern that employees would be inhibited in filing their complaints if they knew that copies would be provided to their union representative or to fellow union members. The court held that the union could not obtain actual copies of the complaints, only a compilation of the numbers, types, dates and alleged bases of the complaints filed.
We do not perceive that permitting an employer to provide copies of complaints, with the complainants’ names deleted, substantially impairs the privacy interests of union members. A requirement that the complainants’ name be deleted is sufficient in our view to protect the members’ rights. We, therefore, decline to follow the holding of International Union in this regard and adopt instead the NLRB’s finding.
Safeway also argues that the requested Work Force Analyses (WFA) are not relevant and that the NLRB erred in requiring their production. A WFA is a listing of job titles within each department ranked from the lowest paid position to the highest paid position. The NLRB found that the WFAs essentially contained the same information as was requested in items 1-5. As the items in requests 1-5 were relevant, the WFAs, too, were relevant. We will not disturb the NLRB’s finding.
Finally, Safeway argues that it cannot provide information concerning handicapped employees because it does not have the information in its possession, and thus, under the principles enunciated in NLRB v. Rockwell-Standard Corp., Trans. & Axle Div., 410 F.2d 953 (6th Cir. 1969), cannot be compelled to comply with Union’s request. While it was established by Gerry Espy during the administrative hearing that Safeway’s computer did not contain a code identifying handicapped employees, there was evidence that alternative means of obtaining the information existed. Espy testified that Safeway had recently undergone an audit by the office of Federal Contract Compliance, and that one purpose of the audit was to identify handicapped employees. [R., Vol. I, pp. 58-59]. Nevertheless, without attempting to achieve a compromise, Safeway simply refused to supply Union with the information. Under Food Employer Council, Inc., 197 NLRB 651 (1972), Safeway had an obligation to provide the information that it possessed, even if not in the form requested, or to give Union access to the records so that it could compile the information. Safeway made no attempt to do either; thus, we agree with the NLRB that the information should be provided to Union.
The NLRB’s cross-application for enforcement of its order is granted.
. 29 U.S.C.A. §§ 158(a)(1) and (5) provide:
(a) It shall be an unfair labor practice for an employer—
(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;
(5) to refuse to bargain collectively with the representatives of his employees____
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DUNIWAY, Circuit Judge:
This action arises under the Federal Employers’ Liability Act, 45 U.S.C. §§ 51-60. Bafico, plaintiff below and appellant here, was employed by appellee in its Brooklyn Yards, Portland, Oregon, as a section worker maintaining appellee’s right of way. Appellee usually dispatched section gangs to the section of track assigned to them in a vehicle provided by appellee and driven by one of its employees. On June 11, 1962, in alleged violation of the “work and safety rules” requiring this practice, Bafico’s superior directed him to drive to his assigned section of track in his own vehicle. As Bafico was leaving Brooklyn Yards, a truck owned by Dad’s Root Beer Bottling Company of Portland proceeded through a stop light and struck his automobile, demolishing it and causing the injuries which resulted in his total and permanent disability.
Bafico first brought suit against Dad’s Root Beer in an Oregon state court. That action was settled for $16,500 on the morning set for trial. In return for the settlement payment, Bafico executed a “standard form” release, in the office of his own attorney and in the absence of the attorney for Dad’s Root Beer, which reads in pertinent part as follows:
“FULL AND FINAL RELEASE OF ALL CLAIMS
“KNOW ALL MEN BY THESE PRESENTS, that the Undersigned do(es) hereby acknowledge' receipt of a draft for Sixteen Thousand Five Hundred and no/100ths Dollars ($16,-500.00) which draft is accepted in full compromise settlement and satisfaction of, and as sole consideration for the final release and discharge of, all actions, claims and demands whatsoever, that now exist, or may hereafter accrue, against DAD’S ROOT BEER BOTTLING COMPANY OF PORTLAND, OREGON and any other person, corporation, association or partnership charged with responsibility for injuries to the person and property of the Undersigned, and the consequences flowing therefrom, as the result of an accident, casualty or event which occurred on or about the 11th day of June, 1962 at or near S. E. Harold Street and McLoughlin Boulevard and for which the Undersigned claims the said persons or parties are legally liable in damages; which legal liability and damages are disputed and denied, and;
“The Undersigned Warrants, that no promise or inducement has been offered except as herein set forth; that this Release is executed without reliance upon any statement or representation by the person or parties released, or their representatives, or physicians, concerning the nature and extent of the injuries and/or damages and/or legal liability therefor; that the Undersigned is of legal age, legally competent to execute this Release and accepts full responsibility therefor, and;
“The Undersigned Agrees, as a further consideration and inducement for this compromise settlement, that it is a full and final release of all claims and shall apply to all known and unknown and anticipated and unanticipated injuries and damages resulting from said accident, casualty or event, as well as to those now known or disclosed.”
The italicized matter in the foregoing quotation was added in blank spaces in the printed form; the release is signed by Luigi and Victoria Bafico, and by their attorney in his capacity as a notary public.
Approximately a year later Bafico brought this action, seeking recovery on the ground of appellee’s alleged negligence in sending him to his work station in his own automobile in breach of its own “work and safety rules.” He claimed that as an ultimate result of that negligence he lost $9,472 in wages, expended $344 for medicine and medical attention, and sustained general damages of $50,000, and sought judgment in the total sum of $59,816 and costs. After appellee raised the release as a defense, the district court granted Bafico’s motion for a separate trial on the segregated issue of the legal effect of that release.
That trial resulted in a judgment for appellee, based on findings and conclusions that (1) appellee had sustained its burden of proof that Bafico intended by the release to discharge it from liability; (2) the settlement received by Bafico from Dad’s Root Beer constituted full satisfaction for all injuries received in the accident; (3) appellee, if negligent at all, was a joint tort-feasor rather than an independent concurring or aggravating tort-feasor, and so was discharged from liability by the release executed to the other tort-feasor; and (4) the language of the release was unambiguous and the intention of the parties to the agreement, reflected in the preceding findings, was clear.
Bafico assigns all of these findings, and the trial court’s refusal to permit parol proof of Bafico’s “true” but uncommunicated intent when signing the release, as error.
The central question "presented is whether, under Oregon law and in the circumstances of this case, a release given to one tort-feasor may by the breadth of its language bar action against another alleged tort-feasor who contributed nothing to the settlement. A subsidiary problem is whether the trial court’s refusal to take evidence on the intent of a party to the release constitutes reversible error. Appellant seems to rely principally upon our decision in Rudick v. Pioneer Memorial Hospital, 9 Cir., 1961, 296 F.2d 316, in urging that the first question be answered no and the second yes.
In Rudick the plaintiff had been injured in an automobile accident. She alleged that she was subsequently negligently treated by the defending hospital and doctors. They urged that recovery against them was barred by the terms of a release signed by the plaintiff, which provided that in return for the settlement sum paid by the offending driver, he “and all other persons, firms and corporations in any way interested or concerned” should be released from liability arising out of “an automobile accident” which occurred “On or about the 25th day of May, 1957, in the vicinity of Mitchell, Oregon.” She had been advised to sign the release by her brother, a legal layman so far as the opinion shows, who had carried on negotiations with the driver’s insurer and discovered that the applicable policy limit was less than 20 percent above the sum for which plaintiff finally settled. On appeal, after a full consideration of the relevant Oregon decisions, we said that “the question is the clarity of the document to this appellant, knowing what she knew as to who the insured was and what the policy limits were,” and held that “to this layman” the document’s “apparent confinement of the release to a ‘certain accident, casualty or event which occurred on or about the twenty-fifth day of May, 1957, at or near Mitchell, Oregon, * * * ’ might very' well * * * have excluded a release of acts of negligence subsequently committed in a hospital in Prineville.” 296 F.2d at 320.
In the present case the situation is obviously different. Here the negligence of Dad’s Root Beer and the negligence, if any, of appellee materialized in a single accident, not in two occurrences of negligence separate in time and space. Here the release ran to Dad’s Root Beer “and any other person, corporation, association or partnership charged with responsibility for injuries to the person and property of the Undersigned” (emphasis added), not merely to “all other persons, firms and corporations in any way interested or concerned.” Here appellant was represented at all times, including the negotiation for settlement and signing of the release, by his own attorney, not by a layman. We think that in these circumstances, the trial court could properly infer that appellant knew what he was doing when he signed the release and could properly hold him bound by the literal, precise, unambiguous terms of the contract he signed. It follows that no investigation into his uncommunicated intent at the time of signing was required, for “the law in this jurisdiction [Oregon] does not permit contracts to be reformed merely because of uncommunicated mental reservations held by one of the parties at the time of execution.” Wheeler v. White Rock Bottling Co., 1961, 229 Ore. 360, 366 P.2d 527, 529.
In view of our disposition of this issue, consideration of the other questions raised becomes unnecessary.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
COFFIN, Chief Judge.
This suit arises from an action brought by the United States to recover its costs of cleaning up an oil spill. The spill occurred when the defendants’ oil tanker, the SS ZOE COLOCOTRONI ran aground about three miles off the southern coast of Puerto Rico and jettisoned more than 5000 tons of crude oil into the Caribbean in an attempt to refloat. The defendants moved for summary judgment in favor of the United States in the full • amount of the government’s claimed cleanup costs, $677,660.42, which judgment was granted. That left only three contested issues, the government’s claims for interest, statutory penalties and attorney’s fees. The court imposed full statutory penalties upon the defendants, awarded prejudgment interest at the rate of six per cent from the date the United States first notified defendants of the amount which was due, and denied the United States’ requests for attorney’s fees. The United States appeals 'from that judgment on two grounds. First, it argues that the prejudgment interest should have run from an earlier date, namely, when the United States first incurred its expenses and that it should have been computed at a higher rate. Second, it maintains that the court erred in denying its claims for fees. Not finding sufficient merit in either contention, we affirm the judgment below.
Little would be served by a detailed recitation of the events which transpired during the four and a half years that passed between the oil spill and the entry of judgment. In the context of the narrow legal issues raised by this appeal, we need not resolve the conflicting explanations the parties offer for that delay. The United States accuses the defendants of bad faith, “stonewalling”, and “contumacious obstinacy”; the defendants attempt to shift responsibility for the delay to the United States. Suffice it to say that the court’s findings show that the United States experienced considerable frustration in its attempts to secure the cooperation of the vessel owners and their insurers in the cleanup process.
1. Prejudgment Interest
Recognizing that the general rule in collision cases in admiralty is that interest is awarded from the date of the actual casualty or loss, see, e.g., Moore-McCormack Lines v. Amirault, 202 F.2d 893, 898 (1st Cir. 1953); Robinson on Admiralty § 114 at 850-51 & n.159 (1939), the court nonetheless concluded that “[t]he instant action cannot be blindly encased in the confines of a typical admiralty claim”, and that “[p]rior to the date when the Government first sent a bill, the claims were unliquidated and unascertained.” “Considering all the equities involved”, the court found that the United States would be adequately compensated by an award of prejudgment interest running from November 12, 1974, the date when a bill was first sent to defendants. The United States vigorously disputes the court’s power to depart from the strict admiralty rule in collision cases which, it claims, entitled it to interest from July 19, 1973, the date it incurred expenses in the cleanup.
Quite simply, we do not believe that this is the type of case in which the collision rule of prejudgment interest need apply. Unlike the numerous authorities cited to us by the United States, see, e.g., Socony Mobil Oil Co. v. Texas Coastal and International, Inc., 559 F.2d 1008 (5th Cir. 1977); Grace Line Inc. v. Todd Shipyards Corp., 500 F.2d 361 (9th Cir. 1974); Mid-America Transportation Co., Inc. v. Rose Barge Line, Inc., 477 F.2d 914 (8th Cir. 1973), this suit is not brought to recover damages for loss or injury to a vessel or cargo. See The President Madison, 91 F.2d 835, 846 (9th Cir. 1937) (“interest is necessary to make ‘just compensation’ for the loss of a vessel or the repairs, salvage expenditures, and the like caused by the tort of the colliding offender.”). Indeed, the United States does not seek recompense for any loss of its property damaged in a collision. Instead it seeks reimbursement for the expenses it incurred in cleaning up the oil spill. The terms of the collision rule, if not its underlying logic, are clear, see Moore-McCormack Lines v. Amirault, supra, 202 F.2d at 898; In re Great Lakes Dredge & Dock Co., 250 F. 916 (D.Mass.1917), and we hold that the rule need not have been applied to this factually distinguishable context. Relying on the more general policy of admiralty law that “the award of interest [on claims unliquidated in nature] lies in the discretion of the admiralty court”, Moore-McCormack Lines v. Amirault, supra, 202 F.2d at 898, we find no abuse in the allowance of prejudgment interest from the date the United States first presented a bill to the defendants. See generally Robinson v. Pocahontas, Inc., 477 F.2d 1048, 1052 (1st Cir. 1973); American Union Transport Co. Inc. v. Aguadilla Terminal, Inc., 302 F.2d 394, 396 (1st Cir. 1962).
We affirm as well the district court’s decision to award interest at a rate of six per cent, the highest rate permissible under the laws of Puerto Rico, P.R.L.A. tit. 31, §§ 3025, 4591 (1968). While a federal court is not bound by the forum’s local rate of interest, it is well established that it may use the law of the forum as its guide. Norris, The Law of Maritime Personal Injuries 3rd, § 173A (1979). The United States has not cited us to a single case in which a district court was reversed for refusing to award interest above the forum rate, and we decline to do so here. Its argument that a rate of six per cent is unrealistically low in today’s money market and therefore that it is “arbitrary for courts to follow such arbitrary rates” proves too much, for it seemingly would invalidate every award of interest guided by a forum rate. And in response to the United States’ claims that failure to assess the higher rate amounts to “a handsome reward for obstinacy”, we assume that these arguments were made to and considered by the court below, a forum which by this time is intimately acquainted with the conduct of the defendants. Contrary to the United States’ suggestions, the court did not state that it was without discretion to exceed the statutory rate. Instead it concluded that that rate “will not be exceeded” here. We are unpersuaded that the court abused its discretion by so deciding, a decision reached after “[cjonsidering all the equities involved”.
2. Attorney’s Fees
Noting that “[t]here is a first time for everything”, the United States claims that it is entitled to attorney’s fees. Its theory is that “at least when the United States collectively seeks to recover its citizens’ tax money, it should have the same rights as those citizens would have individually, notwithstanding that it does not have all their liabilities.”
Whatever the merits of this theory, its time for acceptance has not yet arrived. 28 U.S.C. § 2412 expressly provides:
“Except as otherwise specifically provided by statute, a judgment for costs, as enumerated in section 1920 of this title but not including the fees and expenses of attorneys may be awarded to the prevailing party in any civil action brought by or against the United States or any agency or official of the United States acting in his official capacity, in any court having jurisdiction of such action.” (Emphasis added.)
As the Supreme Court has ruled, “§ 2412 on its face, and in light of its legislative history, generally bars [attorneys’ fees] awards, which, if allowable at all, must be expressly provided for by statute.” Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 267-68, 95 S.Ct. 1612, 1626, 44 L.Ed.2d 141 (1975); see, e. g., Adams v. Carlson, 521 F.2d 168 (7th Cir. 1975); National Association of Regional Medical Programs v. Mathews, 179 U.S.App.D.C. 154, 156-57, 551 F.2d 340, 342-43 (1976), cert. denied, 431 U.S. 954, 97 S.Ct. 2674, 53 L.Ed.2d 270 (1977).
Despite the United States’ wholly unpersuasive assertion that § 2412 does not apply to fee requests by the United States, it is clear that that provision governs the case before us. Thus, absent specific and express authorization by statute, the United States may not recover its fees here. Neither the Federal Water Pollution Control Act nor the Rivers and Harbors Act provides such authorization to the United States, and we are cited to no other statute which could govern this suit. See Section 505(d) of FWPCA, 33 U.S.C. § 1365(d) (courts may award fees in citizen suits), construed narrowly in Save Our Sound Fisheries Ass’n v. Callaway, 429 F.Supp. 1136, 1139 — 40 (D.R.I.1977). The United States’ contention that the local Puerto Rican rule which permits attorney’s fees for obstinacy, 32 L.P.R.A., App. II, Rule 44.4(d), can be applied here is unequivocally refuted by the case law. See Sanabria v. International Longshoremen’s Ass’n, 597 F.2d 312 at 313-314 (1st Cir. 1979); F. F. Instrument Corp. v. Union de Tronquistas de Puerto Rico, 558 F.2d 607, 610 n.3 (1st Cir. 1977); Betancourt v. J. C. Penney Co., Inc., 554 F.2d 1206 (1st Cir. 1977). Accordingly, the district court did not err in denying attorney’s fees to the United States.
The judgment below is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GRONER, C. J.
This is an action brought in the District Court by Aleo Products, Incorporated (ap-pellee), against Interstate Engineering Company, Inc., and New Amsterdam Casualty Company, its surety (appellants), for the balance of the purchase price of steel pipe sold and delivered by Aleo to Interstate for use in a public improvement in the District of Columbia, pursuant to a proposal made by Aleo June 14, 1934, and confirmed September 20, 1934. The agreement provided for payment in full “not later than 200 days from date of'first shipment”. Shipments began November 20, 1934, and were completed in December, 1934. Interstate admitted receipt of the pipe, but sought to diminish the amount due therefor by claiming damages caused by delay in delivery. The lower court instructed the jury to find for the plaintiff in the full amount of the claim, with interest.
On this appeal, Interstate and the surety company charge error in the admission by the court in evidence of a series of letters from Aleo showing demands for payment and from Interstate in acknowledgment of tlie indebtedness. Also in the refusal of the court to direct a verdict in favor of Interstate, and in instructing the jury in favor of Aleo.
The grounds of Interstate’s objections to the. letters do not appear in the record, but we have examined the correspondence and are of opinion that all of it was relevant and properly a part of plaintiff’s case. In addition to this, the correspondence showed express admissions by Interstate relevant and proper in denial of its counterclaim.
Appellants’ main argument on this appeal is that the court erred in directing a verdict for appellee “on the theory of an account stated”. The basis of this argument is that the court, in directing a verdict for the plaintiff, said: “ * * * the defendant accepted the bills which the plaintiff rendered for the materials shipped, and agreed to pay those hills in full, making no claim or objection to them; so that this defendant must be treated as having assented to the bills rendered, or the bills rendered ha ve become, as we say, an account stated, not subject to objection later.”
Appellants insist the theory that the suit was brought on an account stated is not responsive to the pleadings. I f that was ihe theory of the decision, undoubtedly appellants are correct, for an account stated is treated as a new contract and is not necessarily conclusive of claims not intended to be. covered. Willis ton on Contracts (2d Ed.), §§ 1862, 1864; Stearns Company v. United States, 291 U.S. 54, 65, 54 S.Ct. 325, 78 L.Ed. 647; Chinn v. Lewin, 57 App.D.C. 16, 16 F.2d 512, 40 A.L.R. 1480. But we think the court’s language was not intended in a technical sense but merely as a method of conveying to the jury the idea that defendant, having received the pipe and thereafter without objection having agreed to pay for it, was presumed to have assented 5o the correctness of the amount due and waived the defenses which nearly two years later it attempted to set up. The use of the words — account stated — was merely a figure of speech which, in deference to the jury, the court thought they would likely understand as impelling his action in talcing the case from them.
The record shows the shipments of pipe began in November, 1934, and were completed in December, 1934 (except as to an “extra”, subsequently ordered). Plaintiff wrote defendant on January 10, 1935, enclosing statement of account and asking when payment might be expected. Defendant answered this communication January 16, acknowledging the correctness of the account and advising that it expected payment from the District of Columbia within 60 days. Later, on June 4, 1935, defendant wrote plaintiff:
“Just as soon as the line has been tested and payment made to us, we will forward you payment in full for this material.
“Thanking you for your co-operation in this matter, we are * * * ”
Again, on June 17, 1936, defendant wrote:
“We are exceedingly pleased to herewith attach Government check #474,567, in the amount of $33,350.35, endorsed to your order to apply on our account.
“We are vigorously pressing our claim against the District and we anticipate an early conclusion thereof. The balance of the account will be paid at said time.
“In closing, permit us to say that we are very appreciative of the patience which you have displayed.”
At no time during' the eighteen months’ correspondence did defendant or its surety intimate the .existence of any counterclaim for damages by delay in receipt of the pipe. While the authorities are not entirely uniform as to what conduct will amount to a waiver of counterclaim for damages, Williston on Contracts, § 704, we are of opinion that the absence of any protest for a period of almost two years, coupled with two written promises in the interim to pay in full, and a substantial payment expressly stated to be “on our account”, are sufficient to show a waiver as a matter of law. Kalamazoo Ice Co. v. Gerber, 6 Cir., 4 F.2d 235; Reid v. Field, 83 Va. 26, 1 S.E. 395; White v. T. W. Little Co., 118 Wash. 582, 204 P. 186; Minneapolis Threshing-Machine Co. v. Hutchins, 65 Minn. 89, 67 N.W. 807; Roby v. Reynolds, 65 Hun 486, 20 N.Y.S. 386. Cf. Restatement of Contracts, § 412. On this branch of the case, we have no doubt the holding of the District Court was correct.
This leaves for consideration only the calculation of interest. Appellee admits an inaccuracy of $13 in the computation, and agrees that the court may direct a remittitur as to this excess. With this exception, the computation was correct under the rule in Story v. Livingston, 13 Pet. 359, 10 L.Ed. 200. The judgment of the lower court is, therefore, affirmed, subject to the remittitur mentioned above.
Affirmed.
The question of waiver is now controlled by D.C.Code (Supp. Y), Tit. II, § 105), which is § 49 of tlie Uniform Sales Act, enacted for the District of Columbia in 1987, after the transactions involved in this case. 50 Stat. 29.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
J. JOSEPH SMITH, Circuit Judge.
From concurrent sentences of 5 years for conspiracy to forge and utter United States Savings Bonds and 7 years on 44 counts of aiding and abetting the forgery or the uttering of the forged bonds, entered in the Western District of New York, John O. Henderson, Judge, defendants Horace Rinaldi and Ralph Carbone appeal. Appellants, although no exceptions were taken to the charge at the time, claim plain error in the charge in four respects. They also claim error in denial of a motion for mistrial after a prejudicial question as to Rinaldi’s prior criminal record had been asked by the prosecutor of Rinaldi’s wife, and answered in the affirmative. We find no plain error in the charge, and find no prejudice to Carbone from the question asked Mrs. Rinaldi, but find error in the failure to grant a new trial to Rinaldi. We affirm the judgment as to Carbone, reverse and remand for new trial on the appeal of Rinaldi.
The Government’s evidence was in part as follows:
The U. S. Savings Bonds in question, owned by a Mr. and Mrs. Steffee of 1100 Grand Avenue, Plainfield, New Jersey, and kept in a metal box at that address, disappeared on the night of December 16, 1960. Rinaldi resided in East Orange, New Jersey, Carbone in Irving-ton, New Jersey. In late December, Rinadi, one Savo, Grace Insinnia and Patricia Cusano had a conversation about cashing bonds when Carbone should get out of a hospital. In early January they discussed with Carbone cashing bonds in New York state, for which Carbone could supply drivers’ licenses. On January 8, 1961 Rinaldi, Carbone, Savo, Grace Insinnia and Patricia Cusano drove from Newark, New Jersey to Buffalo, New York, carrying the bonds in the car. In Buffalo Mrs. Insinnia was dropped at her brother’s house. An apartment house in Buffalo was picked out, its zone number ascertained from a mailman and New York drivers’ licenses were prepared on blank forms in the name of Mrs. Steffee, payee on the bonds, but using the Buffalo apartment house address. The Cusano woman went into a Buffalo bank with 20 bonds to cash them but was refused, having only one half of a driver’s license. Receiving the second half of the license from Carbone she was successful in a second bank in an attempt to cash 15 of the bonds, receiving $1,209.20. She gave the money to Savo, received 20 more bonds and tried another bank, being unsuccessful this time because the license was not signed. The next day she was arrested while signing bonds which she was attempting to cash in another bank. The signature of the payee on each of the bonds was a forgery.
On trial Rinaldi’s wife was permitted to testify' on direct examination about her husband’s employment, health and family life, as well as to his whereabouts January 7, the latter in an apparent effort to contradict testimony as to a conference he purportedly attended at Savo’s residence on that day. On cross-examination the following occurred:
“Q. Mrs. Rinaldi, what other name is your husband known by?
A. Other than Horace?
“Q. Yes. A. Nickname?
“Q. Yes. A. Sonny.
“Q. Sudsy? A. Sometimes.
“Q. Has your husband ever been convicted of a crime? A. Yes.
“Mr. Pacini: If the Court please, I move for the withdrawal of a juror, and a mistrial. It is absolutely improper, incompetent, and Mr. Stenger knew that.
“The Court: This is a serious area that the District Attorney has approached. I deny your motion for a mistrial. I want to instruct the jury that you must malee a conscientious and serious effort to reject from your minds the question and the answer which this woman gave to (1213) the District Attorney’s inquiry. Now, you must make a conscientious effort to do that, because that is a completely improper examination of this witness. The other witness was asked that by the defense, that is his privilege, concerning the witness, Mrs. Car-bone. It is not the privilege of the Government to ask this woman concerning any record of her husband, if there was such. You don’t know anything about that. She has made an answer rapidly, and counsel has made a serious motion to declare a mistrial. I am relying on you, rather than grant that motion, to conscientiously and seriously take that out of your minds. It is a very serious concern that you have now. Do you wish anything further said?
“Mr. Pacini: No, your Honor.
“The Court: Proceed.”
The Government seeks to advance the claim that the question was proper because Rinaldi’s character had been put in issue on direct. There was, however, no reference in the testimony to his character. Of course, any conduct of an individual may bear to some degree on his character, but here only indirectly and not in any way to justify reference to any prior criminal record. Improper introduction of evidence of a defendant’s past criminal record is ground for a new trial. Cautionary instructions will not cure the error. Marshall v. United States, 360 U.S. 310, 79 S.Ct. 1171, 3 L.Ed.2d 1250 (1959); United States v. Tomaiolo, 249 F.2d 683 (2 Cir. 1957); United States v. Jacangelo, 281 F.2d 574 (3 Cir. 1960); Helton v. United States, 221 F.2d 338 (5 Cir. 1955). The conviction of Rinaldi must therefore be reversed and his case remanded for a new trial.
This error, however, cannot be said to have damaged Carbone. The only testimony as to his criminal record was that he had none. The jury were instructed to consider and return verdicts on each count as to each defendant separately, and did so. Carbone’s conviction must therefore stand unless there was reversible error in the charge.
In four instances defendants claim plain error in the charge: (1) a charge that a witness is presumed to be truthful, (2) that reasonable doubt must arise out of something tangible in the evidence, (3) a charge concerning determination of guilt of a Government witness not charged, and (4) a charge that the jury should not reveal how they stood until a unanimous verdict was returned in open court.
Taken as a whole the charge is plainly sufficient. If the language in the portions attacked, taken out of context, is in any way open to criticism, it could have been corrected had criticism of it been called to the attention of the court, or exception taken. Where no exception is taken, we will not consider alleged errors in the charge unless substantial prejudice resulted. United States v. Vasilaky, 168 F.2d 191 (2 Cir. 1948); United States v. Monroe, 164 F.2d 471 (2 Cir. 1947) cert. denied 333 U.S. 828, 68 S.Ct. 452, 92 L.Ed. 1113; Coffman v. United States, 290 F.2d 212 (10 Cir. 1960). The reference to a presumption that a witness is telling the truth, in conjunction with other instructions as to weighing testimony, plainly had no weakening effect on the presumption of innocence, as defendants fear, and was not clearly erroneous. The reference to tangible evidence as a basis for reasonable doubt would be questionable in the abstract, but here it was obviously used as an antonym of emotion, whim, fancy or caprice and so used was correct. Reference to the involvement of a witness not charged with the crime was called for, in order to meet the need for cautionary instructions on the weight to be given testimony of an accomplice, and certainly was not harmful to defendants. The attack on the instructions concerning jury secrecy as coercing unanimity is far fetched indeed. We find no error in the charge. Certainly there is here no plain error affecting substantial rights of defendants which the court is required to notice in spite of failure to make timely objection under Federal Rules of Criminal Procedure 52(b), 18 U.S.C.A.
Judgment affirmed as to defendant Carbone, reversed and remanded as to defendant Rinaldi.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
At the time when he was awaiting trial under an indictment in the Western District of Tenness.ee, Nolan Ray Williamson refused to obey an order of the District Court requiring him to give voice exemplars. When he persisted in his refusal, the District Court on December 27, 1972, adjudged him to be in contempt of court and ordered him incarcerated until he gave voice exemplars as ordered. This court granted a motion to dismiss the appeal from that decision in an unpublished order, No. 73-1495, dated November 13, 1973.
Prior to his incarceration for contempt of court, Williamson had been convicted and sentenced for a separate offense in the United States District Court for the Northern District of Georgia, Atlanta Division. He filed a complaint for declaratory relief, praying for a declaration that he is entitled to jail-time credit on his Georgia sentence for the time he has served in prison for contempt of court.
The District Court held he is not entitled to jail-time credit and dismissed the complaint. The present appeal is from that decision. Counsel was appointed to represent Williamson both in the District Court and in this court in this declaratory judgment proceeding. Counsel has filed an excellent brief in this court in support of Williamson’s contentions.
The record shows that at the time Williamson was adjudged to be in contempt of court, he was afforded every reasonable opportunity to change his mind and to give the voice exemplars as ordered. The District Judge stated in open court in the presence of Williamson that, in order that there would be no misunderstanding, he was making it plain that Williamson would receive no credit against federal criminal sentences for the jail time accruing while he was incarcerated for contempt of court.
We follow Anglin v. Johnston, 504 F.2d 1165 (7th Cir. 1974), cert. denied, - U.S. -, 95 S.Ct. 1353, 43 L.Ed.2d 440 (1975), in affirming the decision of the District Court. The facts in Anglin are squarely on point except the reason for which the civil contempt penalty was imposed.
Williamson contends that he is entitled to jail-time credit under 18 U.S.C. § 3568, which provides:
§ 3568. Effective date of sentence; credit for time in custody prior to the imposition of sentence
The sentence of imprisonment of any person convicted of an offense shall commence to run from the date on which such person is received at the penitentiary, reformatory, or jail for service of such sentence. The Attorney General shall give any such person credit toward service of his sentence for any days spent in custody in connection with the offense or acts for which sentence was imposed.
The fallacy in this argument is that Williamson’s civil contempt incarceration was not “in connection with the offense or acts for which sentence was imposed.”
To hold that Williamson has a right to jail-time credit under the facts of this case would interfere seriously with the power of District Courts to punish civil contempt by incarceration when the person who is guilty of contempt is under sentence for some other offense.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DUMBAULD, Senior District Judge.
This case involves the impact of the Lanham Trademark Act of July 5, 1946, 60 Stat. 427, 15 U.S.C. 1051 et seq., upon the geographical areas within which the parties are entitled to use the names “Subway” and “Armand’s Subway” in connection with their respective sandwich shops or restaurants.
Before that legislation trademark protection was part of the law of unfair competition, and the trade, not the mark as such, was protected. Hence the right to protection was limited to areas where it had been used and the claimant of the mark had carried on business. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 412-20, 36 S.Ct. 357, 60 L.Ed. 713 (1916).
After the Lanham Act, nationwide protection was extended to registered marks, regardless of the area in which the registrant actually used the mark, because under 15 U.S.C. 1072 registration constituted constructive notice to competing users. Dawn Donut Co. v. Hart's Food Stores, 267 F.2d 358, 362 (C.A.2, 1959). However, as held in that case, the protection is only potential in areas where the registrant in fact does not do business. A competing user could use the mark there until the registrant extended its business to the area. Thereupon the registrant would be entitled to exclusive use of the mark and to injunctive relief against its continued use by prior users in that area. Ibid., 360, 365.
After a mark has become incontestable after five years’ continuous use after registration (15 U.S.C. 1065), registration becomes conclusive evidence of the registrant’s exclusive right to use the mark except where one of seven specified “defenses or defects is established,” including, inter alia, “That the mark . . . was adopted without knowledge of the registrant’s prior use and has been continuously used . from a date prior to registration . Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved.”
Registration does not become incontestable with respect to a party whose prior use within a particular area dates from a time prior to publication of registrant’s mark pursuant to the Lanham Act. In such a case the prior user has exclusive use in the area where it has done business before the publication by registrant. 15 U.S.C. 1065; Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 578 F.2d 727, 731 (C.A.8, 1978); Holiday Inns, Inc. v. Holiday Inn, 364 F.Supp. 775, 785 (D.S.C.1973), aff’d 498 F.2d 1397 (C.A.4, 1974).
We proceed to application of these rules to the facts in the case at bar, as found by the District Court in a non-jury trial. The evidence adduced was conflicting and far from uniformly clear and credible, but for present purposes we may consider the following facts to have been established.
Plaintiff first used the mark “Subway” in August, 1968, in connection with its first restaurant in Washington, D. C. Since April 8, 1969, it has used the mark “Armand’s Subway,” not “Subway” simpliciter. Plaintiff holds an incontestable registration, issued September 29, 1970, for the mark “Armand’s Subway.”
Defendant began operating in Bridgeport, Connecticut, in 1965 under the name “Pete’s Submarines.” Soon it adopted the name “Subway,” systematically changing all its signs accordingly beginning in August, 1967. Defendant’s business is limited to “submarine sandwiches;” plaintiff also serves hamburgers and other items. Defendant’s advertising and decor emphasizes the theme of subway transportation, naming sandwiches IRT, BMT, and for other well-known subway systems.
Defendant filed an application for registration of “Subway” on May 13, 1974. On December 11, 1974, the Patent Office rejected the application because of conflict with plaintiff’s registration. This was the occasion of defendant’s first knowledge of plaintiff’s use of the mark. Defendant amended its application so as to provide for concurrent use. [See 15 U.S.C. 1052(d)]. The proceeding before the Patent Office is in abeyance pending decision of the instant litigation. Defendant declared its willingness to cease use of the mark in the Washington area. After knowledge of plaintiff’s registration, defendant expanded out of Connecticut, and by means of franchising, operates approximately 125 stores, in many States. Plaintiff has not expanded outside of the Washington area. In 1976 and 1977 (after knowledge of plaintiff’s registration), defendant established several outlets in the Washington area.
In view of the foregoing facts and legal rules, it would seem that defendant is entitled to exclusive use of the mark “Subway” in the Connecticut area. Similarly plaintiff is entitled to exclusive use of the mark “Armand’s Subway” in the Washington area. Plaintiff by virtue of prior registration is also entitled to nationwide use of that mark, unless such use in Connecticut would generate “confusion” with defendant’s rights based upon prior use of its mark there; but in no case would plaintiff be entitled to injunctive relief except in the area actually penetrated by plaintiff. Defendant’s expansion would be vulnerable if plaintiff should expand (assuming that infringement by reason of “confusion” were found to arise in the contested area).
The District Court, after correctly pointing out that the statutory test for trademark infringement under 15 U.S.C. 1114(1) is whether defendant’s use of a mark is “likely to cause confusion, or to cause mistake, or to deceive,” went on to inquire whether there would be “likelihood of confusion” arising from defendant’s use of the mark “Subway” in competition with plaintiff’s mark “Armand’s Subway.”
In reaching a negative answer to this question the District Court relied upon the assumption that “in sandwich language ‘Subway’ really refers to what some call a ‘Submarine Sandwich’ . . . ‘Armand’s’ is the name customers refer to. One would not go to ‘Armand’s’ and ask for an ‘Armand’s Subway Hamburger’ . but would ask for a hamburger, just as having gone to Armand’s because one liked his subway sandwiches, would ask for a subway . . . ” The District Court thus concluded also that plaintiff had “abandoned any right to the name ‘SUBWAY’ alone — if it could have established an exclusive right to such a name — and it cannot now complain of the use by another. In fact, one who had used it prior to plaintiff.”
The District Court accordingly held:
1. That the «mark “SUBWAY” is not subject to a registration under the evidence in this case.
2. That the use of the mark “SUBWAY” does not infringe upon the registered mark “ARMAND’S SUBWAY,” and would not confuse.
3. That Doctor’s was the first and pri- or use of the mark “SUBWAY.”
4. That even if it be conceded that there was any improper use of the registered mark “ARMAND’S SUBWAY” by using the mark “SUBWAY” in the District and Arlington, Doctor’s, having been the first user of the mark “SUBWAY,” plaintiff would only be entitled to injunc-tive relief upon a showing that there is confusion by the use of the mark, or that it interfered with plaintiff’s use and rights, and if and when such is shown, an injunction would only be proper in this case to enjoin use of such mark in Washington and Arlington.
5. The complaint is therefore DISMISSED.
On appeal plaintiff contends that injunc-tive relief should have been granted, upon the ground that defendant’s mark is likely to cause confusion, and hence infringement of plaintiff’s mark.
Both parties assign as error (and correctly, in our opinion) the trial judge’s conclusion that “Subway” refers merely to a “submarine sandwich.” From this it would follow that plaintiff’s mark is really merely the name “Armand’s.” It would also follow that defendant can not use “Subway” as a trade mark, because of its generic nature. This prejudges the outcome of defendant’s pending registration proceeding before the Patent Office (which is held in abeyance pending decision of the case at bar). These views of the trial judge prevented appropriate consideration and evaluation of the issue whether there was conflict or confusion between the respective marks “Armand’s Subway” and “Subway.”
It seems plain, however, that “Subway” could be (and, defendant urges, is) used in a fanciful manner suitable for trademark protection, based upon the literal meaning of the word as a transportation agency, a theme defendant emphasizes in advertising and decor. This can be demonstrated by assuming that instead of “Subway” a name were taken from another form of transportation, such as “Riverboat” or “Stagecoach.” Might there not be possible confusion between the marks “Riverboat” and “Armand’s Riverboat?” It should be noted that defendant objected to the use of the name “Saratoga Subway” by a competitor in Connecticut.
Accordingly the case must be remanded for appropriate determination of this issue, which is vital to the question of infringement. Perhaps it would be advisable for the District Court to stay its hand entirely with respect to the instant litigation until the Patent Office has determined whether defendant is entitled to registration of its mark “Subway” and if so under what conditions. The decision of the Patent Office, as well as stipulations and admissions by the parties in connection with the proceeding there, might simplify the remaining problems and perhaps entirely eliminate some matters (hopefully the whole litigation) from the necessity of subsequent judicial determination.
Remanded for appropriate proceedings in accordance with this opinion.
. In No. 78-1616 plaintiff, Armand’s Subway, Inc., is appellant; in No. 78-1617 defendants, Doctor’s Associates, Inc. and Mr. & Mrs. Robert J. Galliano, have appealed. For simplicity (the Gallianos being franchisees of Doctor’s in the Washington area) we shall speak of “defendant” in the singular.
. For an earlier opinion in the same case see 516 F.2d 846 (C.A.8. 1975).
. In delineating geographical areas for trademark use, whole States are the usual unit. Wrist-Rocket, supra, 578 F.2d at 732; Hanover Star Milling Co., supra, 240 U.S. at 416, 36 S.Ct. 357. This may be a historical survival of the origin of trademark protection as part of the law of unfair competition. Perhaps individual areas less than statewide might be appropriate under certain circumstances. The sandwich shops in the instant case draw walk-in trade from a small surrounding area. The manufacture of brick is another local industry, where high transportation costs limit penetration of a wide market.
. Injunctive relief under 15 U.S.C. 1116 must conform to “the principles of equity.” Also, infringement requires that use of the mark “is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. 1114(l)(a). Hence if the District Court, by application of appropriate criteria, finds that use of “Subway” by defendant, in the Washington area does not cause “confusion,” plaintiff would be entitled to no relief whatever in that area. Future in-junctive relief in other areas to which plaintiff might expand would also be precluded by absence of “confusion” between the marks.
. Subsidiary contentions were advanced, which in view of our disposition of the case, need not be discussed: (1) that injunctive relief should have been granted to enforce defendant’s agreement to abandon use of its mark in the Washington area; (2) that it was error to hold that, if there were any infringement, relief should be confined to the Washington area; (3) that defendant’s conduct was unfair competition and violated 15 U.S.C. 1125(a) prohibiting “false designation of origin;” and (4) that plaintiff should have been granted monetary damages and attorneys’ fees.
. This is the sole issue raised by defendant’s appeal.
. With respect to the sandwich business.
. There actually is a Riverboat Room at the William Penn hotel in Pittsburgh. The name “Chuck Wagon” is also in current use.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
Subsets and Splits