author: MeENTEE, Circuit Judge. MOORE, Circuit Judge

text:
    Robert L. TURCOTTE, Administrator of the Estate of Gerard P. Turcotte, Plaintiff-Appellee, v. FORD MOTOR COMPANY, Defendant-Appellant.
    No. 73-1251.
    United States Court of Appeals, First Circuit.
    Argued Oct. 3, 1973.
    Decided Feb. 13, 1974.
    On Rehearing April 8, 1974.
    Moore, Circuit Judge, concurred and dissented in part, with opinion.

      Paul V. Reynolds, Providence, R. I., for defendant-appellant.
    John P. Dolan, Providence, R. I., for plaintiff-appellee.
    Before COFFIN, Chief Judge, McENTEE, Circuit Judge, and MOORE, Senior Circuit Judge.

       Of tlie Second Circuit, sitting by designation.

   MeENTEE, Circuit Judge.

Plaintiff, a Rhode Island citizen, filed this diversity suit in the United States District Court for Rhode Island, seeking to recover for the alleged wrongful death of his son. The decedent was a passenger in a 1970 Maverick, manufactured by defendant Ford Motor Company, when the car was struck by another car on the Massachusetts Turnpike near Millbury, Massachusetts and burst into flames. Decedent died in the fire. The owner of the Maverick was William J. Sullivan of Woonsocket, Rhode Island, who purchased it from Menard Ford Sales, Inc., of South Bellingham, Massachusetts. The driver was Sullivan’s son Michael. The operator of the other vehicle was a Massachusetts citizen.

At trial, plaintiff contended that Ford’s positioning of the gas tank in the 1970 Maverick in such manner that the tank’s top also served as the floor of the trunk constituted a defect in design which caused his son’s death by fire. Plaintiff did not argue that the alleged defect caused the collision. Instead, he contended that, upon collision, a properly-designed Maverick would not have burst into flames and that his son would otherwise have survived the initial impact. The case went to the jury on the theory of strict liability, and a verdict was returned for plaintiff in the amount of $500,000. The trial court entered judgment for that amount plus $61,315.-08 in interest. Ford’s motions for new trial and for alteration or amendment of the judgment were both denied. This appeal is based on a variety of issues.

I. Conflict of Laws

The threshold issue is whether the trial court correctly decided that Rhode Island’s wrongful death statute and its law on strict liability govern the instant case. Ford, a Delaware corporation, contends that Massachusetts law should have controlled. Applying the conflict of laws rules of Rhode Island, the forum state, see Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), we hold that Rhode Island law was properly invoked on both questions.

Rhode Island has abandoned the old lex loci delicti theory of conflict of laws, in which the law of the place of the tort governed, in favor of a modern “interest-weighing” approach. Woodward v. Stewart, 104 R.I. 290, 299, 243 A.2d 917, 923, petition for cert, dismissed, 393 U.S. 957, 89 S.Ct. 387, 21 L.Ed.2d 371 (1968). The Supreme Court of Rhode Island has summarized the interests it will consider under this new approach in a five-point guideline:

(1) Predictability of results.

(2) Maintenance of interstate order.

(3) Simplification of the judicial task.

(4) Advancement of the forum’s governmental interests.

(5) Application of the better rule of law.

Woodward v. Stewart, supra at 299-300, 243 A.2d at 923; see Leflar, Choice-Influencing Considerations in Conflicts Law, 41 N.Y.U.L.Rev. 267 (1966). We will consider these interests separately with respect to, first, the appropriate wrongful death statute and, second, the appropriate tort law.

Plaintiff brought this suit under the Rhode Island wrongful death statute, Gen.Laws of R.I. § 10-7-1 (1956) as amended, which measures damages by a quasi-compensatory standard with no ceiling on recovery. See D’Ambra v. United States, 481 F.2d 14, 19 (1st Cir. 1973), cert, denied, 414 U.S. 1075, 94 S.Ct. 592, 38 L.Ed.2d 482 (1973) (finding Rhode Island statute “partly punitive”). In contrast, the Massachusetts wrongful death statute, Mass.Gen. Laws Ann. ch. 229, § 2 (Supp.1973), measures damages by a purely punitive standard, i. e., solely by the degree of defendant’s culpability rather than plaintiff’s actual loss. Also, at the time of this collision recovery was limited to $50,000. See Tiernan v. Westext Transp., Inc., 295 F.Supp. 1256, 1263 (D.R.I.1969). Application of the Massachusetts statute would thus preclude the $500,000 judgment entered for the plaintiff.

Applying the Rhode Island interest-weighing approach to this conflict of laws, we find that the fourth factor listed above, advancement of the forum’s governmental interests, strongly points towards the Rhode Island wrongful death statute as more appropriate in the instant case. Rhode Island’s interest here is in seeing that plaintiff, its citizen, is adequately compensated for a wrongful death. While of course the forum has some interest in protecting its citizens in any situation, such interest is particularly compelling in a tort case involving substantial personal injury or death because failure there to provide adequate compensation could mean that the plaintiffs will later become burdens on the state. See Tiernan v. Westext Transp., Inc., supra at 1264. In the instant case, this Rhode Island interest would plainly be defeated if recovery were limited to $50,000 under the Massachusetts statute. The jury found actual loss of $500,000.

Moreover, consideration of Rhode Island’s interest in maintaining interstate order does not indicate contrary application of the Massachusetts statute. Under this heading, Rhode Island courts inquire whether another state’s law and policy would be “offended” by application of Rhode Island law. See Brown v. Church of the Holy Name of Jesus, supra, 105 R.I. at 329, 252 A. 2d at 180. Ford is not a Massachusetts corporation. Therefore, Massachusetts does not have as immediate an interest in making available the $50,000 recovery limitation in its statute as it would if defendant were a Massachusetts citizen. Similarly, in view of the fact that the conduct allegedly causing the injury, the design of the Maverick, occurred outside of Massachusetts, the punitive aspect of the Massachusetts wrongful death statute is of marginal relevance here. On the other hand, Massachusetts may have an interest in protecting noncitizen businesses, such as Ford, from unlimited wrongful death liability as a means of encouraging these businesses to continue operating in the state, providing local jobs and tax revenues. We first note in response to this interest that the existence of unlimited wrongful death liability in Rhode Island has not deterred Ford from continuing to supply automobile dealerships in that state. But in any event, we find that the Massachusetts interest in encouraging noncitizen business enterprises is weak in the instant case when compared to the Rhode Island interest in protecting its citizens from uncompensated harm.

The remaining three interests considered under the Rhode Island conflicts approach are either inconclusive or point to Rhode Island’s statute. Therefore, we hold that Rhode Island’s wrongful death statute properly governed the measure of damages in the instant case.

With regard to choice of appropriate strict liability law, we note first that it is somewhat unclear whether a conflict of laws in fact exists between Massachusetts and Rhode Island. Massachusetts courts apparently have never expressly adopted, or rejected, the doctrine of strict products liability. In the absence of relevant case lay, the trial court and the parties proceeded on the arguendo assumption that strict liability would not be a permissible basis for recovery in Massachusetts. In contrast, Rhode Island has expressly adopted this doctrine. Ritter v. Narragansett Elec. Co., 109 R.I. 176, 187, 283 A.2d 255, 261 (1971). Moreover, the trial court in the instant case held that, if presented with the issue, the Supreme Court of Rhode Island would interpret that doctrine as authorizing liability where defects in the design of an automobile do not cause a collision but rather exacerbate the injuries resulting therefrom. The court thus found a true conflict of laws between Massachusetts and Rhode Island on strict liability which the court resolved in favor of Rhode Island law. Reviewing this second conflicts decision, we, too, will assume arguendo that Massachusetts would not recognize strict products liability in any form. To resolve the conflict, we again apply Rhode Island’s interest-weighing approach.

Clearly Rhode Island has a significant governmental interest to advance by applying its own law on strict liability rather than the law of Massachusetts which denies recovery on that theory. Rhode Island’s interest is the protection of its citizens from defective products. Such citizens include plaintiff, his son, and Sullivan, the purchaser of the Maverick. Application of Massachusetts law would plainly defeat this Rhode Island interest.

At the same time, application of Rhode Island law would not appear to offend Massachusetts law and policy. We again note that Ford is not a Massachusetts corporation. Thus, even if we assume that Massachusetts’ failure to adopt strict products liability represents an intention to protect that state’s manufacturers from excessive liability, Ford is outside of the protected class. Even if we assume a Massachusetts interest in encouraging noncitizen manufacturers to sell their products in the state, such interest is insubstantial when the product here was sold to a Rhode Island citizen and another Rhode Island citizen allegedly died as a result of a defect in it. Massachusetts’ undeniable interest in controlling driving behavior on its highways — a factor which caused the Supreme Court of Rhode Island to apply Massachusetts negligence law to a Massachusetts collision in the Woodward case, supra, 104 R.I. at 300-301, 243 A. 2d at 923-924 — -is also not a significant consideration here. Where plaintiff complains of defective design which occurred in Michigan on a car sold to a Rhode Island resident, the fact that the alleged defect had tragic results on a Massachusetts highway is something of a fortuity. The causes of the collision in Massachusetts are not at issue. Instead plaintiff alleges that once the. collision occurred, from whatever cause, the defect which existed in Sullivan’s car caused the death of his son. Massachusetts has no significant interest in adjudicating a claim of that nature.

The remaining three interests considered under the Rhode Island conflicts approach also indicate application of this state’s strict liability law. We therefore hold that the trial court correctly chose to apply Rhode Island law on strict liability.

II. Strict Liability

We now review the trial court’s holding that under Rhode Island law automobile manufacturers can be held strictly liable for defects in design which do not cause highway collisions but instead exacerbate injuries therefrom. This precise question has never been considered by the Rhode Island courts.

We begin our analysis with the leading Rhode Island case of Ritter v. Narragansett Elec. Co., supra. The Supreme Court of Rhode Island there incorporated into state law the doctrine of strict products liability as expressed in Restatement (Second) of Torts § 402A (1965). Id., 109 R.I. at 188, 283 A.2d at 261. See generally Merlino, Products Liability — Revolution in the Law, 22 R. I. B.J. 9 (1973).

The Ritter court construed this rule as contemplating, “first, that there must be a defect in design or manufacture which makes the product unsafe for its intended use, and second, that liability does not attach unless the plaintiff was using the product in a way in which it was intended to be used when he was injured by it.” 109 R.I. at 190, 283 A.2d at 262 (emphasis added); see Greenman v. Yuba Power Prods., Inc., 59 Cal.2d 57, 64, 27 Cal.Rptr. 697, 701, 377 P.2d 897, 901 (1963).

Ford argues that since no automobile manufacturer or consumer would rationally intend his car to be involved in a highway collision, the defect in design alleged in the instant case falls outside the scope of the strict liability doctrine as construed in Ritter. This pinpoints the crucial issue before us, namely, whether under Rhode Island law the tort concept of “intended use” encompasses foreseeable consequences of normal automobile use, such as collisions, even though such consequences are not literally intended or desired.

Among other jurisdictions there has developed a split in authority on this question, symbolized by the conflicting cases of Evans v. General Motors Corp., 359 F.2d 822 (7th Cir. 1966), cert, denied, 385 U.S. 836, 87 S.Ct. 83, 17 L.Ed. 2d 70 (1967), and Larsen v. General Motors Corp., 391 F.2d 495 (8th Cir. 1968). In Evans, the Seventh Circuit held that under Indiana law “[t]he intended purpose of an automobile does not include its participation in collisions with other objects, despite the manufacturer’s ability to foresee the possibility that such collisions may occur.” 359 F.2d at 825. The court therefore affirmed dismissal of a complaint alleging negligence, breach of implied warranty and strict liability in a fact situation analogous to the case at bar. Accord, Shumard v. General Motors Corp., 270 F.Supp. 311 (S.D.Ohio 1967) (construing Ohio law); Willis v. Chrysler Corp., 264 F.Supp. 1010 (S.D.Tex.1967) (construing Texas law); Walton v. Chrysler Corp., 229 So. 2d 568 (Miss.1969).

However, the Eighth Circuit in Larsen, construing Michigan law, rejected the Evans position as “much too narrow and unrealistic.” 391 F.2d at 502.

“While automobiles are not made for the purpose of colliding with each other, a frequent and inevitable contingency of normal automobile use will result in collisions and injury-producing impacts. No rational basis exists for limiting recovery to situations where the defect in design or manufacture was the causative factor of the accident, as the accident and the resulting injury, usually caused by the so-called ‘second collision’ of the passenger with the interior part of the automobile, all are foreseeable.”

Id.; see 80 Harv.L.Rev. 688, 689 (1967). Although Larsen was a negligence ease, other courts have carried over its rejection of the narrow Evans view of “intended use” to the strict liability area. See, e. g., Bremier v. Volkswagen of America, Inc., 340 F.Supp. 949 (D.D.C.1972) (construing Maryland law); Dyson v. General Motors Corp., 298 F.Supp. 1064 (E.D.Pa.1969) (construing Pennsylvania law).

We agree with the trial court that Rhode Island would adopt the Larsen interpretation of “intended use” in construing the doctrine of strict products liability. A literal Evans-type interpretation of “intended use” fails to recognize that the phrase was first employed in early products-liability cases such as Greenman, supra, merely to illustrate the broader central doctrine of foreseeability. The phrase was not meant to preclude manufacturer responsibility for the probable ancillary consequences of normal use. See Hall v. E. I. Du Pont De Nemours & Co., 345 F. Supp. 353, 363 (E.D.N.Y.1972). Instead, a manufacturer “must also be expected to anticipate the environment which is normal for the use of his product and ... he must anticipate the reasonably foreseeable risks of the use of his product in such an environment.” Spruill v. Boyle-Midway, Inc., 308 F.2d 79, 83-84 (4th Cir. 1962); cf. Raymond v. Riegel Textile Corp., 484 F. 2d 1025 (1st Cir. 1973) (manufacturer held strictly liable where nightgown burst into flames within two seconds of contact with hot grill of electric range). Larsen and its progeny have recognized that the “environment” in which cars are used, our nation's crowded, high-speed highways, makes involvement in collisions foreseeable to manufacturers as an inevitable consequence of normal use and thus imposes upon them a duty to guard against needlessly aggravated injuries.

Indeed, the Ritter case itself contains a similar construction of the “intended use” concept, although not in an automobile context. In that case, a four-year-old girl opened the drop-type oven door of an electric range and stood upon it so that she could see into a pot on the top of the range. Her weight upon the opened oven door caused the range to topple over upon her and her sister. The action against the manufacturer and the distributor of the range alleged that the range’s capacity to tip over when weights equal to that of the child were placed on the oven door constituted a defect in design for which defendants were liable on theories of negligence and strict liability. Obviously, an oven door is not intended to serve as a stepping-stool for children. Yet in its opinion remanding the case for trial on both theories, the Supreme Court of Rhode Island rejected defendants’ contention that the child’s use of the oven door constituted an “abnormal” or “unintended” use as to which there could be no liability. “[The trial judge] concluded that the jury could find from [the] evidence that [the manufacturer] knew that as a result of the design of the range the danger in the use of the oven door as a shelf was foreseeable and that the jury could have found that it had been negligent in failing to give notice or warning that such a condition would result from such a use of the oven door. We agree.” 109 R.I. at 185, 283 A.2d at 260.

In view of the Ritter holding on “intended use,” it is difficult to see how the Rhode Island courts could reject the similar Larsen approach to “intended use” in the automobile context. We are also mindful of the following language from a Vermont decision, Rothberg v. Olenik, 128 Vt. 295, 305, 262 A.2d 461, 467 (1970), which was adopted by the Supreme Court of Rhode Island in Padu-la v. J. J. Deb-Cin Homes, Inc., 298 A.2d 529, 531 (R.I.1973):

“The law should be based upon current concepts of what is right and just and the judiciary should be alert to the never-ending need for keeping its common law principles abreast with the times. Ancient distinctions which make no sense in today’s society and tend to discredit the law should be readily rejected. . . .”

Ford has suggested that adoption of the Larsen concept of “intended use” in automobile cases will result in its having to produce expensive armored tanks so as to avoid liability for defective design. But this need not be the result. First, plaintiff must still prove that the particular car’s design constituted a “defective condition unreasonably dangerous” to the user, and that such defect was the actual and proximate cause of injuries beyond those caused by the collision itself. Ford claims that sympathetic juries will shirk their responsibilities in cases of serious injury and impose liability on the manufacturer no matter what the state of the design or the ferocity of the particular collision. But our review of cases to date shows that juries continue to confound the cynical. For example, both Marshall v. Ford Motor Co., 446 F.2d 712 (10th Cir. 1971) (Oklahoma law), and Gray v. General Motors Corp., 434 F.2d 110 (8th Cir. 1970) (Minnesota law), are cases where juries given Larsew-type instructions on “intended use” nevertheless returned verdicts for defendant car manufacturers because they found the particular cars were not defectively designed. Moreover, an arbitrary jury verdict on the defect or causation issues can be rejected by trial or appellate courts as not supported by the evidence.

Second, the defense of assumption of risk remains viable in products liability cases. See Restatement (Second) of Torts § 402A, Comment n (1965). Thus, where a design defect is apparent or made known to the automobile purchaser, an action alleging such defect as the cause of injury cannot lie. Cf. Burkard v. Short, 28 Ohio App.2d 141, 148, 275 N.E.2d 632, 636-637 (1971) (rejecting liability for obviously unpadded dashboard). Automobile manufacturers might often relieve themselves of design liability, at least when the purchaser is plaintiff, if they fully informed such purchaser in advance of the relative safety merits and demerits of their cars as compared to other models.

III. Damages

Our holdings in the first two sections of this opinion affirm the jury verdict of liability on the part of Ford. We now consider issues concerning the jury’s award of $500,000 in damages. Ford contends that the compensation provision of the Rhode Island wrongful death statute, Gen.Laws of R.I. § 10-7-1.1 (Supp.1972), was improperly applied by the plaintiff’s expert witness on the question of damages. We agree, and remand the case for a new trial on the damages issue only.

The Rhode Island wrongful death statute is not a true survivor’s statute on the order of Lord Campbell’s Act, 9 & 10 Viet., ch. 93 (1846), or the Federal Employers’ Liability Act, 45 U.S.C. § 51 et seq. (1970). In other words, the Rhode Island statute does not measure damages by the amount the surviving plaintiff could expect to have received from decedent had he lived. Instead, the Rhode Island statute is an estate-type statute, which thinks of the death in terms of economic loss to the decedent rather than to his survivors. Under this type of statute, the lifetime earnings of the decedent are projected, lifetime expenses are estimated and deducted, and the present value of the resulting sum is awarded to the plaintiff. See D’Ambra v. United States, supra at 16 of 481 F. 2d. The estate-type method of computing damages was initially established in Rhode Island in McCabe v. Narragansett Elec. Lighting Co., 26 R.I. 427, 59 A. 112 (1904). In 1971, in apparent response to a decision by this court, Williams v. United States, 435 F.2d 804 (1st Cir. 1970), the Rhode Island legislature codified the estate-type computation method by enacting § 10-7-1.1.

In challenging the size of the verdict, Ford raises three issues concerning § 10-7-1.1: (1) was a projection of decedent’s lifetime income properly based on a government publication which encompassed all college graduates, including those who also attend graduate or professional schools? (2) was consideration of income taxes properly omitted in determining decedent’s lifetime expenses? (3) were future inflation and increases in productivity properly accounted for?

The first issue has little merit. At trial Mark Schupack, an economics professor at Brown University, testified as an expert witness for plaintiff with respect to the probable lifetime earnings and expenses of decedent. Schupack presented the jury with a series of calculations based on varying factual assumptions, first, as to decedent’s future education and career, and second, as to future prevailing interest rates. Ford contends it was error for Schupack, when making the factual assumption that decedent would have been a college graduate, to project future earnings based on a Bureau of Census publication which covered all college graduates, including those with postgraduate education. It is clear that decedent stood a good chance of attending and graduating from a four-year college. He had good grades and an outstanding athletic record. Indeed, the most poignant aspect of the case is that decedent was en route with three friends to look over the University of Massachusetts campus at Amherst when the crash and fire which took his life occurred.

Although we have no way of knowing for sure, it is possible that decedent would have gone on beyond college to some form of postgraduate education. But more important, the fact that the census publication relied upon by Schu-pack included college graduates with postgraduate education does not mean that the resulting income figures were much higher than they would have otherwise been. As Schupack noted at trial, great numbers of persons with graduate degrees, such as teachers, earn less than the average person with only a bachelor’s degree. The Rhode Island statute obviously requires a great deal of speculation. It requires the judge and jury to take on “the joint role of soothsayer and mathematical analyst in order to foretell what the future held for the deceased.” Romano v. Duke, 304 A.2d 47, 51 (R.I.1973). In this context, we cannot find that Schupack’s reliance on the census averages for all college graduates was so inconsistent with decedent’s reasonable prospects that their admission into evidence constituted an abuse of discretion by the trial court. See Krall v. Crouch Bros., 473 F.2d 717, 719 (8th Cir. 1973) (per curiam).

However, on the issue of income taxes we feel there was error. To compute decedent’s lifetime expenses, as required by the Rhode Island statute, Schupack reduced each annual income figure he projected by one-fourth. This 25% reduction was intended to encompass the costs of housing, food, clothing, personal and medical care, tobacco and alcoholic beverages attributable to the husband in a five-person family. Schupack made no further reduction in projected earnings for federal and state income taxes, and Ford contends that this was error. We agree. Indeed, the trial court indicated that it too would agree, if it were not for a decision by this court, Boston & Me. R.R. v. Talbert, 360 F.2d 286, 291 (1st Cir. 1966), which the trial court felt precluded deduction of income taxes.

However, our decision in Talbert, a federal case, did not control the trial court’s holding on the admissibility of income tax evidence under Rhode Island law. The “twin aims” of the doctrine of Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), are the “discouragement of forum shopping and avoidance of inequitable administration of the laws.” Hanna v. Plumer, 380 U.S. 460, 468, 85 S.Ct. 1136, 1142, 14 L.Ed.2d 8 (1965). Under Erie, a state rule should be applied in a diversity case if it “would have so important an effect upon the fortunes of one or both litigants that failure to enforce it would be likely to cause a plaintiff to choose the federal court.” Id. at 468 n. 9, 85 S.Ct. at 1142. In the instant case, if Rhode Island law required evidence of income taxes in computing wrongful death damages, yet the federal district court in Rhode Island barred such evidence in diversity cases, no rational plaintiff who had the choice would ever bring a wrongful death action in the state courts. The difference in wrongful death recoveries between the two forums would be staggering. Therefore, under Erie, state law must control. Cf. Bin-ney v. United States, 460 F.2d 263, 264 (9th Cir. 1972) (per curiam).

Considering the matter of income taxes solely in the context of Rhode Island law, we hold that the failure of plaintiff to present evidence on the subject constituted error. The trial court itself noted that the express authorization in § 10-7-1.1 of evidence of inflation and other “economic trends” resulted in an unjustifiably large verdict because income tax evidence was excluded. The admittedly speculative nature of income tax evidence cannot be deemed a barrier to its admissibility under Rhode Island law. Surely the forecasting of future inflation rates is, if anything, more speculative than the forecasting of future tax rates.

Moreover, the recent decision by the Supreme Court of Rhode Island in Romano v. Duke, supra, would seem to insist upon consideration of future income taxes in computing damages under § 10-7-1.1. There the court held that prospective business expenses of a self-employed decedent were properly deducted from his prospective earnings. It discussed the new statute as follows:

“Section 1 of the 1971 amendment is the General Assembly’s answer to the Williams case. There, the legislators made it clear that any probable expenditures made for the support of the decedent’s dependents are to be disregarded and that, in finalizing an award, evidence concerning the future trend of the earnings, be it inflationary or deflationary, may be considered. Before any such award can be finalized, evidence must be produced as to all of' the expenses the deceased would have had to incur to produce that estimated amount of his future earnings.”

304 A.2d at 50 (emphasis in the original). It almost goes without saying that income taxes are substantial and inevitable expenses which the decedent would have had to incur to produce the amounts of future earnings estimated by Schupack at trial. In the calculations based on the assumption that the decedent would have been a college graduate, deduction of future taxes would have reduced the final net earnings by a substantial amount, even assuming the use of joint-return rates. In ordering a new trial as to damages, we expect that witnesses will discuss the past trends in federal and state income tax rates as a means of forecasting the future, in the same manner that Schupack forecast future inflation and productivity rates at the initial trial!

We next turn to Ford’s contentions concerning the accounting at trial for future inflation and productivity increases. Ford argues that Schupack, after reducing decedent’s projected lifetime net earnings to their present value, then simply compounded that figure by an annual rate of 5%% to reflect his forecast of future annual inflation (2%'%) and productivity increase (3%). If Schupack in fact did so, he committed a mathematical error which significantly increased his final damages calculations beyond what they should have been. An example using highly-simplified sums demonstrates this. However, the record is unclear as to precisely how Schupack made his final adjustments for inflation and productivity. We cannot tell whether in fact he made the error which Ford suggests.

It does seem clear, however, that the Rhode Island damages statute does not require adjustments for inflation and productivity to be made only after projected earnings are reduced to present value. The sentence in paragraph 3 of § 10-7-1.1 which authorizes consideration of “economic trends,” see n. 14, is best interpreted as a general observation on the overall computation process. Therefore, to avoid the possibility of error suggested above, we think it advisable, upon remand, that decedent’s projected lifetime earnings and expenses be adjusted to reflect future inflation and increases in productivity before the final net earnings figure is reduced to present value.

IV. Joint Tortfeasor Release

The final issue in this appeal concerns the effect of a joint tortfeasor release on the extent of Ford’s liability.

Prior to trial, Ford commenced a third party action against William and Michael Sullivan, the owner and driver of the Maverick, seeking contribution pursuant to Rhode Island’s Uniform Contribution Among Joint Tortfeasors Act. Gen.Laws of R.I. § 10-6-1 et seq. (1956), as amended. Subsequently, the plaintiff, under Fed.R.Civ.P. 14, brought a direct claim against the Sullivans for negligence. However, before any evidence was heard, plaintiff executed a joint tortfeasor release in favor of the Sullivans for a consideration of $10,-000. As a consequence, both the direct claim and Ford’s third party complaint against the Sullivans were, with the acquiescence of all parties dismissed with prejudice.

Ford contends that the release thus executed by plaintiff should operate to reduce the judgment against it by the “statutory pro rata share” of the Sullivans’ liability, asserted to be one-half of the awarded damages. Precisely how Ford arrived at a one-half reduction is■ not clear, since the evidence at trial contained no reference whatsoever to the relative proportionate shares of liability attaching to Ford and the Sullivans. As the trial court correctly determined below, before the release may operate in defendant’s favor, an apportionment of legal liability must be made. The release, far from establishing any percentage of liability on the part of the Sullivans, expressly indicates that it “is not to be construed as an admission of liability, but is a compromise of a disputed claim.” Thus, Ford’s attempt to reduce the judgment by one-half on the basis of the executed release has no merit.

The finding of liability is hereby affirmed. The award of damages is vacated and the case is remanded to the district court for a new trial on that issue only.

MOORE, Circuit Judge

(concurring in part and dissenting in part).

I cannot bring myself to subscribe to or accept a doctrine that “our nation’s crowded, high-speed highways makes involvement in collisions foreseeable to manufacturers as an inevitable consequence of normal use” of an automobile. The collision here was with such force as to cause the gas tank of the vehicle struck from the rear to burst into flames. Even assuming that there was a “defective condition” in that the gas tank’s top was a part of the floor of the ' car, to create liability it must have been “unreasonably dangerous.” Collisions foreseeable, yes, but collisions of the type before us, no. It would be hard to imagine any automotive vehicle, requiring gasoline for propulsion purposes, being so designed as to avoid the possibility of a tank fire or explosion when violently struck in collision. Even army tanks caught on fire after running over field mines with a resulting explosion. In short, I think some legal significance should be given to the adverb “unreasonably.” Nor can I reconcile “intended use” with collisions which “are not literally intended.”

I recognize two opposing and conflicting philosophies which have developed in this field which may be referred to respectively as Evans and Larsen Each has its own following (see cases cited in the majority opinion). What the highest court of Rhode Island would decide if confronted with a state of facts similar to those presented here, I do not know. I can only express my views that the Evans rationale to me is far more consistent with (1) the law in this field as it has developed over the years and (2) common sense as applied in a pragmatic way than Larsen. Nor do I find Ritter conclusive although, of course, I must recognize that it has carried “foreseeability” well beyond previous Rhode Island decisions.

Despite my, of necessity, inconclusive views as to liability, I concur that there should be a new trial on the issue of damages. I differ only from my colleagues in believing that the method of determining damages, now having been codified in Rhode Island, Gen.Laws of R.I. § 10-7-1.1 (Supp. 1972) should be left to the discretion of the trial judge on remand both as to the evidence admitted and as to the instructions to the jury thereon. Since as the majority state: “The Rhode Island statute obviously requires a great deal of speculation.”, I would leave to the future trial judge the not-too-enviable task of endeavoring to reduce speculation to a minimum. In sum, except as necessary in the field of taxes, I would give the trial judge free rein without appellate comment to accept or reject such evidence as he may believe to be relevant to the damage issue.

MEMORANDUM AND ORDER ON PETITION FOR REHEARING

We granted Ford’s petition for rehearing on the final issue only: impact of the joint tortfeasor release. Upon consideration of supplemental briefs filed by both parties, we adhere to our original position.» However, we wish to clarify our holdings as follows:

No determination of negligence on the part of the Sullivans has yet been made. The settlement and release between the Sullivans and Turcotte were not disposi-tive of this issue. Therefore, they cannot at this time be considered joint tort-feasors within the meaning of Gen.Laws of R. I., § 10-6-2 (Supp. 1972). See Theobald v. Angelos, 44 N.J. 228, 208 A. 2d 129 (1965); Swigert v. Welk, 213 Md. 613, 133 A.2d 428 (1957); Davis v. Miller, 385 Pa. 348, 123 A.2d 422 (1956). While these cases concerned the right to bring into or keep in a tort litigation a putative joint tortfeasor who had given a release, their recognition of the importance to the defendant of retaining the opportunity to determine the culpability of the settling tortfeasor is also a recognition of the straits in which a defendant is placed if he allows settling tortfeasor to be absent. See Mazer v. Lipshutz, 360 F.2d 275 (3d Cir. 1966). While Pulvari v. Greyhound Corp., 287 F.Supp. 104 (D.D.C.1968) arguably takes a different view, we follow what we deem to be the preponderance of authority.

The cited cases indicate that despite the settlement and release the Sullivans could and probably should have been retained as parties in the original trial so that their legal liability, if any, could then have been established. Instead, Ford acquiesced in the dismissal of the Sullivans as parties. As we said in n. 22 of the original opinion, we leave it to the district court to determine if Ford is now barred from bringing a separate action against the Sullivans which might determine whether they were negligent and, if so, whether they were joint tort-feasors with respect to Gerard Tur-cotte’s death. Should these hurdles be surmounted, there will remain the question of the basis of apportioning damages. We leave this to the district court and another day.

      . Initially, plaintiff’s complaint also advanced theories of negligence and breach of warranty. However, these counts were dropped at the outset of trial. Plaintiff also brought an action against William and Michael Sullivan, alleging negligence. This claim was settled prior to trial, and a joint tortfeasor release was executed by plaintiff in favor of the Sullivans for a consideration of $10,000. The release is further discussed infra.

      . In a later case, Brown v. Church of the Holy Name of Jesus, 105 R.I. 322, 326-327, 252 A.2d 176, 179 (1969), the Rhode Island court listed four “factors,” drawn from the Restatement (Second) of Conflicts, which it would also consider in weighing the five interests set forth in Woodward:

      (a) the place where the injury occurred,
      (b) the place where the conduct causing the injury occurred,
      (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and
      (d) the place where the relationship, if any, between the parties is centered.

        See Restatement (Second) of Conflict of Laws § 145(2) (1971). We too will refer to these factors where relevant, in considering the five general interests of the Rhode Island approach.

      . In Woodward, the Supreme Court of Rhode Island made it clear that separate analyses of these issues are necessary. On the facts of that ease, also involving an automobile collision in Massachusetts, the court held that Rhode Island’s wrongful death statute would govern the measure of damages but Massachusetts negligence law would govern defendants’ conduct. Id., 104 R.I. at 301, 243 A.2d at 923-924.

      . The current limit on recovery under the Massachusetts wrongful death statute is $200,000. Mass.Gen.Laws Ann. ch. 229, § 2 (Supp.1973).

      . The trial court also considered the possible applicability of the Michigan wrongful death statute, Mich.Stat.Ann. § 27A.2922 (Supp. 1973), M.C.L.A. § 600.2922, because Michigan was the place of the car’s manufacture. However, there is no substantive difference between the Michigan and Rhode Island statutes. Both apply compensatory measures of damages with no ceilings on recovery. Hence, between those two statutes there is no true conflict of laws. See Le-flar, True “False Conflicts,” Bt Alia, 48 B. U.L.Rev. 164, 171 (1968).

      . The first listed interest, predictability of results, refers to the commendable policy of enabling parties to know at the time they enter a transaction that it will produce the same set of socio-economic consequences regardless of where disputes occur. Leflar, supra at 282-83; cf. Brown v. Church of the Holy Name of Jesus, supra at 329, 252 A.2d at 180. As applied to the instant case, this interest compels us to inquire whether Ford had a reasonable expectation when it transferred the Maverick to a Massachusetts dealership that a wrongful death action arising from alleged defects in the car would be brought under the Massachusetts statute and whether Ford planned the transaction accordingly. We cannot find that such reasonable expectation or planning existed. Under either the old lex loci delicti approach to conflicts law or the modern interest-weighing approach, it was at least as likely that actions arising from the design of a car sold to a Rhode Island resident would be brought under Rhode Island’s statute as under Massachusetts’ statute, even though such car was purchased in Massachusetts. Moreover, although Ford has not provided us with its insurance rate figures, we note that most interstate businesses calculate insurance rates on the assumption that there will be no state-imposed ceilings on wrongful death recoveries, contrary to Massachusetts law. See S. Speiser, Recovery for Wrongful Death § 13:6, at 730 (1966) ; cf. Leflar, supra at 311.
      The interests of simplification of the judicial task and application of the better rule of law also point to Rhode Island’s statute. Rhode Island courts are probably more adept at computing damages under their own compensatory standard ’ than under Massachusetts’ punitive standard and it is clear the Supreme Court of Rhode Island would find the compensatory measure with no ceiling to be the better rule of law. Cf. Rosenthal v. Warren, 475 F.2d 438, 445 (2d Cir. 1973), cert, denied, 414 U.S. 856, 94 S.Ct. 159, 38 L.Ed.2d 106 (1973) ; Tiernan v. Westext Transp., Inc., supra at 1264 of 295 F.Supp.; S. Speiser, supra § 7:4 (“The most remarkable facet of the continued existence of wrongful death damage limitations is the complete absence of logical support for them.”)

      . The court was by no means foreclosed from holding that Massachusetts would adopt the doctrine of strict liability in tort if presented with the opportunity. Cf. Oresman v. G. D. Searle & Co., 321 F.Supp. 449, 457 (D.R.I.1971) (accurately predicting, prior to Ritter, that Rhode Island would adopt the doctrine of strict liability in tort).

      . Predictability of results does not appear to be an important interest here. Ford could not reasonably foresee or plan that its liability for defects in a car delivered to a Massachusetts dealership and sold to a Rhode Island resident would be governed by Massachusetts law rather than Rhode Island law. Under either the lex loci delicti or the interest-weighing approach, Rhode Island law was at least as likely to govern. Ford has not provided the court with its specific insurance rates, which might have indicated that it planned otherwise. We note that generally products liability insurance is computed on a national basis, not state-by-state. See McCreight, The Actuarial Impact of Products Liability Insurance Upon Choice of Law Analysis, 88 Ins.L.J. 335, 342-43 (1972).
      Simplification of the judicial task might seem to point to application of Massachusetts law because obviously it is simpler to apply a rule denying any recovery on strict liability grounds than to grapple with the intricacies of that doctrine. But Rhode Island’s courts, having adopted strict liability, have committed themselves to dealing with its interpretation in difficult cases. Cf. Brown v. Church of the Holy Name of Jesus, supra, 105 R.I. at 329-330, 252 A.2d at 180-181 (rejecting proposition that simplification of task resulting from application of Massachusetts charitable immunity doctrine warrants that outcome). With regard to the better rule of law, the Ritter case supra, makes clear Rhode Island’s approval of the doctrine of strict liability. And we hold today, infra, that the Rhode Island courts would extend that doctrine to encompass strict liability for design defects.

      . Like Rhode Island, Michigan’s courts have adopted the doctrine of strict liability but have not yet had occasion to accept or reject extension of that doctrine to encompass liability for defective design which exacerbates injury resulting from collisions. But see Larsen v. General Motors Corp., 391 F.2d 495 (8th Cir. 1968) (construing Michigan law). However, even if we assume that Michigan would reject liability for defective design and thus conflict with Rhode Island, the Rhode Island interest-weighing approach to conflicts clearly points towards application of Rhode Island strict liability law where the car was sold to a Rhode Island citizen. Michigan’s single contact here is that the car was designed there. A holding that the law of the state of design must govern would mean that Michigan’s courts would in effect be deemed the single source of law on defective automobile design in this country. Cf. Hardman v. Helene Curtis Indus., Inc., 48 Ill.App.2d 42, 59, 198 N.E.2d 681, 689 (1964).

      . It is clear that strict liability applies under Rhode Island law when a defect is alleged to have caused an automobile collision. See Kelly v. Ford Motor Co., 290 A.2d 607, 608-609 (R.I.1972).

      . “Special Liability of Seller of Product for Physical Harm to User or Consumer
      (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
      (a) the seller is engaged in the business of selling such a product, and
      (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
      (2) The rule stated in Subsection (1) applies although
      (a) the seller has exercised all possible care in the preparation and sale of his product, and
      (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.”

      . We reject, however, Ford’s contention that the jury verdict in the instant case was not supported by the evidence. An expert witness who examined the car testified that the gas tank design constituted a “defective condition unreasonably dangerous” to the user, taking into account the safer tank design of comparable cars manufactured at the time and the danger of fire created by the Maverick’s design. The expert further testified that but for the Maverick’s design the fire which killed decedent would not have entered the interior of the car. The jury was entitled to accept these conclusions.

      . Of course, a purchaser might not be found to have assumed the risk of a known defect if the defect also existed in all other models, so that he had no meaningful choice on the matter. More generally, despite the statement in Comment n of the Restatement, some states may choose to abolish or greatly limit the defense of assumption of the risk in the purchaser-seller situation, choosing to view injury there as a casualty incident to a profitable business enterprise equipped to distribute the costs of enterprise among its beneficiaries according to principles of insurance. 2 F. Harper & F. James, The Law of Torts § 21.5, at 1182-83 (1956).

      . Gen.Laws of R.I. § 10-7-1.1 (Supp.1972) : “Pecuniary damages — I-Iow determined.— Pecuniary damages to the beneficiaries described under § 10-7-2 of this chapter [“Action by executor or administrator, etc.”] and recoverable by such persons shall be ascertained as follows:
      1. Determine the gross amount of the decedent’s prospective income or earnings over the remainder of his life expectancy, including therein all estimated income he would probably have earned by his own exertions, both physical and mental.
      2. Deduct therefrom the estimated personal expenses that the decedent would probably have incurred for himself, exclusive of any of his dependents, over the course of his life expectancy.
      3. Reduce the remainder thus ascertained to its present value as of the date of the award. In determining said award, evidence shall be admissible concerning economic trends, including but not limited to projected purchasing power of money, inflation and projected increase or decrease in the cost of living.”

      . The record also includes letters to decedent from Brown University’s admissions office and from its assistant basketball coach, both of which indicate that decedent was being sought by that highly-regarded school.

      . The court expressed its thoughts as follows :
      “There is no Rhode Island precedent on this issue. And federal courts, in federal causes of action or where state law is cited, have espoused a variety of approaches. [Citations omitted! The position taken by the First Circuit in a wrongful death action under the Federal Employees [sic] Liability Act is that evidence of taxes is properly excluded. Boston and Maine R. R. Co. v. Talbert, 360 F.2d 286 (1st Cir. 1960 [sic]). In support of its ruling, the Court cited Stokes v. United States, 144 F.2d 82, 87 (2d Cir. 1944) which found that such deductions are too conjectural.
      “Because the statement of the First Circuit pertains to the nature of the evidence as the basis of its inadmissibility, I do not find that the fact that Boston and Maine R.R. Co. v. Talbert, supra, was a federal cause of action while the case before me is based on state law constitutes a significant distinction. Under the teachings of this First Circuit case, I therefore believe I am bound tb rule that far from the lack of evidence on taxes constituting a failure of proof on the part of the plaintiff, such evidence is inadmissible.
      “I do feel constrained to remark, however, that in the context of the Rhode Island Wrongful Death Laws, I am convinced that a rule in which it would constitute error on the part of the plaintiff not to submit evidence of the erosion of income by taxation is by far the better rule. Given that economic trends are a factor under R.I.G.L. 10-7-1.1 in the computation of damages, whatever savings accrue to the plaintiff by the exclusion of evidence on the ‘taxation bite,’ is spiraled by the inflation multiplier. In a case such as the one at hand, in which earnings were projected for a forty-three year time span, it is readily apparent that a significant percentage of damages must be attributable to the savings on taxes. Before the heavy burden of shouldering such damages should be imposed on the defendant, a court should be able to justify such a rule on the basis of compelling policy arguments. I do not find such a convincing rationale in support of the exclusion of evidence in taxes; rather, I find that the argument for the inclusion of such evidence is persuasive.”

      . Moreover, neither of the cases on which we relied in Talbert involved state law. See Stokes v. United States, 144 F.2d 82 (2d Cir. 1944) (general maritime law); Chicago & N.W. Ry. v. Curl, 178 F.2d 497 (8th Cir. 1949) (FELA).

      . The inflation and income tax factors can be thought of as countervailing forces in the computation of wrongful death damages. For example in McWeeney v. New York, N.H. & H. R.R., 282 F.2d 34, 38 (2d Cir.), cert, denied, 364 U.S. 870, 81 S.Ct. 115, 5 L.Ed.2d 93 (1960) the court in part justified its refusal to allow consideration of income taxes by its simultaneous refusal to allow consideration of inflation.

      . Ford does not quarrel with Schupack’s selection of the 2%% and 3% rates, which were derived from his study of past long-term inflation and productivity increase rates.

      . Assume that a person was entering a hypothetical profession whose salary scale was such that his net earnings at the end of Year One would be $10,000, and at the end of Year Two would be $20,000. Assume further that the annual interest rate is 5%, and that the combined annual inflation-productivity rate is also 5%.
      Applying the method which Ford contends that Schupack used at trial, we add the two net earnings figures to obtain total net earnings of $30,000. If we then reduce this two year total to present value at the 5% interest rate and then adjust it upward to reflect the 5% inflation-productivity rate, we would naturally arrive at a final figure of $30,000.
      In contrast, if we accounted for the inflation and productivity increases in the initial determination of net earnings, we would get the following result. Net earnings at the end of Year One would be increased to $10,500. Net earnings at the end of Year Two would be increased to $22,050. Total adjusted net earnings would therefore be $32,550. The present value of this two year total at an annual interest rate of 5% is just over $29,500. Thus, there is a discrepancy favoring the plaintiff of close to $500 over a two year period. Over the forty-three year period if Schupack in fact made this error, the discrepancy would surely be far greater.

      . In pertinent part, the release executed by plaintiff states:
      “I further agree that all claims or damages recoverable by me against all other persons, firms or- corporations jointly or severally liable to me in tort for said damages, are hereby reduced to the extent of the statutory pro rata share of said William Sullivan and Michael Sullivan under the Uniform Contribution Among Tort-feasors Act, of all such damages so recoverable by me against all such other joint tortfeasors.”
      Apparently, this clause was inserted into the release agreement in an attempt to insulate the Sullivans from possible rights of contribution which may subsequently have accrued to Ford through payment of an adverse judgment. See Gen.Laws of R.I. § 10-6-8 (1956). Despite the possibility of prejudice to its rights, Ford seems to have accepted the appropriateness of the release by agreeing to dismiss its third party action against the Sullivans.

      . The trial court suggested that Ford must commence a new suit, presumably against the Sullivans, in order to determine their proportionate share of liability. Whether or not such a suit can be maintained, in view of the dismissal with prejudice of Ford’s third party complaint, is a matter upon which we pass no judgment.

      . Evans v. General Motors Corp., 359 F.2d 822 (7th Cir. 1966), cert, denied, 385 U.S. 836 (1967).

      . Larsen v. General Motors Corp., 391 F.2d 495 (8th Cir. 1968).

      . Ritter v. Narragansett Elec. Co., 109 R.I. 176, 283 A.2d 255 (1971).


source: Caselaw Access Project

author: ROSS, Circuit Judge.

license: Public Domain

text:
    The NATIONAL CASH REGISTER COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 73-1188.
    United States Court of Appeals, Eighth Circuit.
    Submitted Dec. 10, 1973.
    Decided March 13, 1974.

      D. J. Sullivan, St. Louis, Mo., for petitioner.
    Paul J. Spielberg, Atty., N.L.R.B., Washington, D. C., for respondent.
    Before GIBSON and ROSS, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       The Honorable TALBOT SMITH, Senior District Judge, Eastern District of Michigan, sitting by designation.

   ROSS, Circuit Judge.

National Cash Register Company (NCR) filed a Petition for Review of an Order of the National Labor Relations Board (NLRB) which determined that NCR had violated Sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and 158(a)(5), in its New York City, Detroit and Duluth branches and which ordered NCR to bargain with the union at those locations. The NLRB cross-petitioned for enforcement of its order. We grant enforcement of the order as it relates to the 8(a)(1) violations, but decline enforcement of the balance of the Board’s order.

NCR is a national organization with branch offices in 211 locations. In late 1969 and early 1970 union elections were held in NCR’s Duluth, New York City and Detroit branches, as a result of which the Business Machine Technicians and Engineers Association affiliated with Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees, AFL-CIO (hereinafter the union or BRAC), was certified as the collective bargaining agent for the technical service representatives (TSR) employed by NCR at those three locations. BRAC also was the certified collective bargaining agent for TSR at six other NCR branch offices not directly relevant to this case. On May 8, 1970, the union and NCR reached agreement on a collective bargaining contract for the calendar year 1970, which covered the units at Duluth, Detroit and New York. These contracts were due to expire on December 31, 1970, and the union notified NCR on October 16, 1970, that it desired to change and modify the contract. Because of events hereinafter described, no negotiations were held on the proposed revisions to the 1970 contract.

On July 20, 1970, BRAC filed identical charges in three different regional offices alleging 8(a)(1) violations by' the company at Duluth, New York and Detroit. The allegations were that NCR, in conducting individual performance appraisals and interviews, was making promises and threats or coercing employees to leave the union.

On October 22, 1970, employees in the Detroit unit filed a petition for a decer-tification election to determine if BRAC still represented a majority of the members of the unit. A similar petition was filed by members of the New York unit the next day. Because of the existence of the unfair labor practice charges, the petitions were held in abeyance pursuant to the Board’s “blocking charge” rule. A petition for a decertification election at the Duluth branch was apparently filed on June 4, 1971, during the pen-dency of these proceedings. The Board dismissed all of these decertification petitions.

On November 3, 1970, the New York charges were withdrawn pursuant to a settlement agreement between NCR and the Regional Director and the required notice was posted. On November 5, 1970, the Board advised the union that it was dismissing the charges relating to Detroit and Duluth. The union, as the charging party, was not a party to the settlement agreement, and appealed the withdrawal and dismissal of all three charges to the General Counsel of the Board. On February 26, 1971, the General Counsel sustained the appeals of the union and the cases were remanded to the New York Regional Director for further proceedings. On April 8, 1971, the Regional Director in New York filed a complaint charging 8(a)(1) violations and consolidating the three cases, but did not charge refusal to bargain. In May, 1971, the union filed refusal to bargain charges as to New York and Detroit and then amended the charges to include ^an allegation of illegal unilateral wage increases. An amended, consolidated complaint was filed by the Regional Director on August 11, 1971, charging 8(a)(1) violations in Duluth, Detroit and New York, and also charging a refusal to bargain and illegal unilateral wage increases in New York and Detroit. It further alleged that the conduct of NCR induced employees to file decertification petitions in New York and Detroit and that NCR “attempted to induce” employees to file a decertification petition in Duluth.

Hearings were conducted by an Administrative Law Judge in New York, Detroit and Duluth, and his decision and recommended order were issued June 26, 1972. In that decision, the Administrative Law Judge found NCR had violated 8(a)(1) of the Act as charged; that there was not sufficient proof to show that NCR had encouraged or caused the filing of the decertification petitions in New York and Detroit; that there was no evidence to support the allegation of “attempting to induce” the filing of the decertification petition in Duluth; and that there had been unlawful refusals to bargain, together with illegal unilateral pay increases in New York and Detroit. The recommended order included the standard requirements of ceasing and desisting from further violations of 8(a)(1); a bargaining order as to New York and Detroit; and the usual posting of notices relating thereto.

On February 28, 1973, the Board issued its decision and order which upheld the determination of the Administrative Lav/ Judge that there had been 8(a)(1) violations in all three locations and unlawful refusals to bargain coupled with illegal unilateral pay increases in New York and Detroit. However, it also held that this illegal conduct of NCR induced the filing of the decertification petitions in all three cities and thus the Board extended the bargaining order to Duluth as well as New York and Detroit. It is this order that NCR has petitioned this Court to review and which the Board has asked us to enforce.

8(a)(1) Violations.

The gist of the charges of coercion and restraint by NCR was two-fold. First, it was alleged that Peter Pampa-lone, a supervisor of NCR, had urged 15 of the over 200 TSR in the New York unit to have the union accept a one-year contract so that they could have the union decertified earlier; he outlined the procedure for filing a decertification petition and informed them they would obtain retroactive increases in pay by bringing about such decertification. Secondly, it was argued that during performance appraisal interviews at all three branches, NCR, through its supervisors who ■ conducted the interviews, indicated that the employees would be entitled to raises under the merit plan then in effect in its nonunion branches, but that such merit increases could not be given because of the union contract then in effect at the three branches.

We have examined the record, including the testimony of all the witnesses set forth in the appendix and the Administrative Law Judge’s decision, and reluctantly conclude that there is substantial evidence to support his determination that these acts did occur and that they constituted restraint, coercion, threats or promises of benefit in violation of the Act. We say “reluctantly” for three reasons: First, there are major disputes in the testimony as to what actually took place when the term of the proposed contract was discussed, all of which disputes were resolved in favor of the union witnesses. Secondly, a relatively small number of employees were involved in this meeting and there was no proof that the matters discussed actually had any effect on either the term of the contract or the filing, later, of the decertification petitions. And finally, the determination that the remarks that were made in the performance appraisal meetings constituted threats, coercion, restraint or promises of benefit is highly speculative. However, the determination of the coercive nature of employer statements must be left, in the first instance, to the trier of facts, N.L.R.B. v. Virginia Electric & Power Co., 314 U.S. 469, 479, 62 S.Ct. 344, 86 L.Ed. 348 (1941), and his determination will not ordinarily be disturbed if there is substantial evidence in the record to support his determination. In balancing the countervailing employer and employee interests, a trier of fact

[m]ust take into account the economic dependence of the employees on their employers, and the necessary tendency of the former, because of that relationship, to pick up intended implications of the latter that might be more readily dismissed by a more disinterested ear.

N.L.R.B. v. Gissel Packing Co., 395 U.S. 575, 617, 89 S.Ct. 1918, 1942, 23 L.Ed.2d 547 (1969). We therefore grant enforcement as to the 8(a)(1) violations.

Petitions for Decertification.

The Administrative Law Judge held that no evidence had been adduced at the hearing showing any involvement of NCR in the filing of the petitions for decertification in New York or Detroit, and that there was no evidence that NCR “attempted to induce” the Duluth employees to file a decertification petition. He therefore recommended dismissal of all of these charges. The Board, however, determined that NCR’s “efforts in all three cities to demonstrate to the employees the advantages that would accrue to them without union representation had the intended effect of inspiring the decertification petitions filed in these cities. . . .” And it concluded “that the filing of the decerti-fication petitions was both the intended and direct product of the Respondent’s misconduct.”

Our examination of the record leads us to the same determination made by the Administrative Law Judge. There was absolutely no evidence, let alone substantial evidence, upon which the Board’s determination could have been made. The only evidence on the subject was to the effect that NCR did nothing to encourage the filing of the petitions. The person who circulated the New York petition specifically disclaimed such pressure. He was not present when the supervisor was alleged to have discussed decertification procedures and testified that his information came solely from a representative of the Board. No person who signed any of the petitions for decertification testified concerning being present at the meeting of the 15 TSR with Mr. Pampalone or to being given a performance appraisal. The conclusion of the Board is based solely on an impermissible inference and cannot be upheld on the basis of the record before us. See generally Acme Products, Inc. v. N.L.R.B., 389 F.2d 104, 106 (8th Cir. 1968).

Bargaining Order.

Section 8(a)(5) requires the employer to bargain in good faith with the collective bargaining representative. However, an employer may justifiably refuse to bargain with the union when it has a good faith doubt that the union represents a majority of its employees. Brooks v. N.L.R.B., 348 U.S. 96, 104, 75 S.Ct. 176, 99 L.Ed. 125 (1954); N.L.R. B. v. Little Rock Downtowner, Inc., 414 F.2d 1084, 1091 (8th Cir. 1969); N.L. R.B. v. Arkansas Grain Corp., 390 F.2d 824, 828 (8th Cir. 1968); Terrell Machine Co., 173 NLRB No. 230, 70 LRRM 1049, 1049-50 (1969), enforced, 427 F.2d 1088, 1090 (4th Cir.), cert, denied, 398 U.S. 929, 90 S.Ct. 1821, 26 L.Ed.2d 91 (1970). In the absence of unusual circumstances and where a union has been certified as the exclusive bargaining unit, then under the “certification year rule” the majority status of that union is irrebuttably presumed for a reasonable period, ordinarily one year after certification. Brooks v. N.L.R.B., supra, 348 U.S. at 98, 75 S.Ct. 176; Franks Bros. Co. v. N.L.R.B., 321 U.S. 702, 705, 64 S.Ct. 817, 88 L.Ed. 1020 (1944). After the expiration of the year or a reasonable period, the presumption of majority status continues, but is then normally rebuttable by a showing that the union no longer commands a majority, or by the employer’s production of sufficient evidence to cast serious doubts thereon, in which event the presumption then loses its force and the General Counsel must come forward with the evidence that on the refusal to bargain date the union in fact did represent a majority of employees in the appropriate unit, N.L.R.B. v. Little Rock Downtowner, Inc., supra, 414 F.2d at 1091, or that the refusal to bargain was not predicated upon a good faith and reasonably grounded doubt of the union’s continued majority status. Terrell Machine Co., supra, 427 F.2d at 1090; N.L.R.B. v. Arkansas Grain Corp., supra, 390 F.2d at 828.

Here the company sought to avoid its bargaining responsibility by interjecting a good faith doubt of the union’s majority status. It grounded this doubt upon four factors:

1) the filing of decertification petitions in New York and Detroit supported by the requisite 30 percent showing of interest.

2) the fact that fewer employees elected to have their union dues checked off than had done so a year previously. In the New York branch, checkoff authorizations ranged from only 25 percent to 38 percent of the total employees in the bargaining unit. The range in Detroit was broader, climbing from a low of 22 percent and peaking at a high of 46 percent of the employees in the unit.

3) employee turnover problems. Available figures indicate that in New York, a total for the year in •question of 71 terminations of 222 employees was reported, slightly less than 32 percent. No testimony on the Detroit turnover rate was offered into evidence.

4) union resignations. Forty-seven letters from New York City employees resigning from the union were introduced into evidence by NCR. A total of 50 different signatures were received either by the employer or the union at that branch. Thirteen resignations were received from union members in the Detroit unit.

The law judge considered those elements seriatim and concluded that none of them individually would constitute a sufficient basis for a good faith refusal to bargain. While the Board’s separate analyses are arguably supportable, when they are considered together we believe that good faith doubt has been demonstrated at least to the point of requiring the General Counsel to come forward with evidence that the union did represent a majority of the employees in the unit on the refusal to bargain date. This the General Counsel did not do.

Most doubtful is the Board’s rejection of a permissible inference from the filing of the decertification petitions. Both of those petitions were supported by a requisite 30 percent showing of interest. That fact alone would justify an employer in declining to bargain further with the bargaining representative pending disposition of the decertification request, Telautograph Corp., 199 NLRB No. 117, 81 LRRM 1337 (1972), provided the loss of majority status was not attributable to the employer’s own unfair practices. Medo Photo Supply Corp. v. N.L.R.B., 321 U.S. 678, 687, 64 S.Ct. 830, 88 L.Ed. 1007 (1944); Frank Bros. Co. v. N.L.R.B., supra, 321 U.S. at 704-705, 64 S.Ct. 817; N.L.R.B. v. Little Rock Downtowner, Inc., supra, 414 F.2d at 1091 n.4. The existence of an unfair labor practice prior to the refusal to bargain interjects an element of uncertainty about whether the employer thus caused the possible loss of majority. But if it is shown the unfair labor practice did not significantly contribute to the loss of status, the employer may avoid a bargaining order. N.L.R.B. v. Nu-Southern Dyeing & Finishing, Inc., 444 F.2d 11, 15-16 (4th Cir.1971); Fremont Newspapers, Inc. v. N.L.R.B., 436 F.2d 665, 672-673 (8th Cir.1970); Ingress-Plastene, Inc. v. N.L.R.B., 430 F.2d 542, 547 (7th Cir.1970). We have previously held that there is not substantial evidence on the record as a whole to support the conclusion that the company’s unfair labor practices induced the filing of the decertification petition. The record likewise fails to disclose any substantial evidence from which a permissible inference could be made that the unfair labor practices contributed generally to the possible loss of majority status by the union. Since the decertification petitions were supported by a showing of interest by the requisite 30 percent of employee signatures, NCR could properly base a good faith doubt of majority status upon the filing of these decertification petitions.

The remainder of the Board’s analysis is more sound. Noncompulsory union checkoff authorizations have been held in other circumstances not to provide an adequate basis for good faith doubt of majority status, for employees for various reasons unconnected with their desire to have a union represent them, may fail to execute the checkoff authorization. N.L.R.B. v. Gulfmont Hotel Co., 362 F.2d 588, 592 (5th Cir.1966). Thus, there may be little relationship between the checkoff list and the number of union supporters. Courts have also held that employee turnover alone does not justify refusal to bargain. N.L.R.B. v. Little Rock Downtowner, Inc., supra, 414 F.2d at 1091; Printers Service, Inc., 175 NLRB No. 120, 71 LRRM 1078, 1079 (1969), enforced, 434 F.2d 1049 (6th Cir.1970). Nevertheless it is clear that a turnover in the numbers shown here could conceivably affect the majority status of a bargaining representative. Finally, reliance on decline in union membership alone has also been held not to justify a refusal to bargain. Medo Photo Supply Corp. v. N.L.R.B., supra, 312 U.S. at 687, 64 S.Ct. 830; N.L.R.B. v. Phil-Modes, Inc., 396 F.2d 131, 132 (5th Cir.1968). But see Collins & Aik-man Corp. v. N.L.R.B., 395 F.2d 277, 283 (4th Cir.1968).

Nevertheless whether or not any one of the above factors would itself support an objective good faith doubt, it is not true that all reasons collectively would be insufficient. In Ingress-Plastene, Inc. v. N.L.R.B., supra, 430 F.2d at 546-547, the Seventh Circuit stated:

Athough the Board attacks each of the reasons advanced by the company in support of its good faith doubt of the union’s majority status, the company does not rely on any one reason alone, but rather on all as a whole. We think the entire record, including evidence against the Board’s position as well as in favor of it supports the company’s position. We note that the union’s majority has never actually been asserted by the Board and, in fact, is in serious doubt from the record.

(Citations omitted.) We agree with the reasoning of the Seventh Circuit and hold that, as in Ingress-Plastene, Inc., the entire record shows that the company refused to bargain based upon a good faith doubt of the union’s majority status.

Unilateral Wage Increase.

The Board concluded that the unilateral wage change granted by the company after refusal to bargain was an unfair labor practice. Unilateral changes may violate the Act. N.L.R.B. v. Katz, 369 U.S. 736, 745, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); N.L.R.B. v. Little Rock Downtowner, Inc., supra, 414 F.2d at 1092. However, where such unilateral changes follow a good faith refusal to bargain or where necessary to maintain the status quo, then they are not violative of 8(a)(5). N.L.R.B. v. Ralph Printing & Lithographing Co., 433 F.2d 1058, 1062 (8th Cir.1970), cert, denied, 401 U.S. 925, 91 S.Ct. 883, 27 L. Ed.2d 829 (1971); McGraw-Edison Co. v. N.L.R.B., 419 F.2d 67, 77 (8th Cir. 1969); N.L.R.B. v. J. H. Rutter Rex Manufacturing Co., 415 F.2d 1133, 1135 (6th Cir. 1969); N.L.R.B. v. Little Rock Downtowner, Inc., supra,, 414 F.2d at 1092-1093 n.6; N.L.R.B. v. Downtown Bakery Corp., 330 F.2d 921, 927 (6th Cir.1964). In this ease our determination that there was no bad faith refusal to bargain requires us to likewise decline to enforce this portion of the Board’s order.

For the reasons hereinbefore expressed the Board’s finding of unfair labor practices based upon the supervisor’s conduct in the meeting with 15 employees and the other supervisors’ conduct during performance appraisals is affirmed. The Board’s order pertaining to the posting of remedial notices relating to the 8(a)(1) violations is likewise enforced. Enforcement is denied for the bargaining orders for New York, Detroit, and Duluth and for the portion of the Board’s order relating thereto.

      . The New York petition was dismissed on April 15, 1971; the Detroit petition was dismissed on April 20, 1971; the Duluth petition was dismissed on April 2, 1973.

      . The decertification petition filed by the employees at Duluth is not in evidence but there is some indication in both briefs that 14 of the 17 unit employees supported it. Ordinarily we would not accord any weight to facts not a part of the record, but here the Board amended the Administrative Law Judge’s recommended order to include a bargaining order for Duluth even though no 8(a)(5) violation was charged as to that branch and no proof relating thereto was therefore adduced by NCR at the hearing.


author: IRVING R. KAUFMAN, Chief Judge:

text:
    AMERICAN AIRLINES, INC., Plaintiff-Appellant, v. REMIS INDUSTRIES, INC., Defendant-Appellee.
    No. 568, Docket 73-1960.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 27, 1974.
    Decided March 15, 1974.
    Paul E. Konney, New York City (Jacob Oliver, New York City, and Debe-voise, Plimpton, Lyons & Gates, New York City, of counsel), for plaintiff-appellant.
    Richard L. Bond, New York City (Marshall, Bratter, Greene, Allison & Tucker, New York City, of counsel), for defendant-appellee.

      Before KAUFMAN, Chief Judge, FEINBERG and MULLIGAN, Circuit Judges.
   IRVING R. KAUFMAN, Chief Judge:

The importance of the question presented on this appeal cannot be gauged by reference to the relatively small amount in controversy. Indeed, the more than fourteen thousand dollars of disputed liability arising from the unauthorized use of an executive’s Air Travel Card, issued to Remis Industries, Inc., pales in significance when viewed in the light of the sums which may well depend on our determination of the ambit of statutory credit card protection afforded by the 1970 amendment to the Truth in Lending Act. Since we find that the credit card abuses which Congress sought to eliminate plague all cardholders without meaningful distinction, we decline to interpret Congress’s enactment in a way that would sap the strength of the statutory safeguards it provided. It is our belief that by arbitrarily confining the scope of the Truth in Lending Act’s application to a limited class of cardholders, we would undermine Congress’s purpose to afford a broad’er and more meaningful protection to all who enter the credit card domain.

Remis Industries is a Massachusetts corporation engaged in the sale of hides and other equine by-products. Since 1943 its personnel have been using Air Travel Cards which, although issued in this instance by American Airlines, are accepted by all airlines for the purchase of tickets on credit. Remis entered into a “Universal Air Travel Plan Subscriber’s Contract” with American and in May, 1971 forwarded a “Request for Travel Cards” form to American in New York. On May 19, American approved the renewal of its contract with Remis and soon thereafter issued new Air Travel Cards, including one for use by Abraham Lerner, Remis’s Vice President and General Manager.

In August, 1971 Lerner received a call from a Royal Dutch Airlines representative informing him that there had been an error in the billing of six round-trip tickets from Miami to Curacao charged to his Air Travel Card on August 6. Since Lerner had not purchased these tickets, he immediately realized that his Air Travel Card had either been lost or stolen. Because of this, he promptly notified American of the card’s loss.

Much to Lerner’s chagrin, he soon learned that airline tickets totaling $14,008.16 had been charged to his Air Travel Card during the period of its loss and prior to his notification of American. When American duly requested payment of this amount from Remis, the company refused to pay because the charges stemmed from an unauthorized use of the credit card.

American filed suit against Remis in February, 1972 in New York State Supreme Court. On March 6, 1972, Remis removed the action to United States District Court for the Southern District of New York on grounds of diversity, 28 U.S.C. § 1441. In its answer to the complaint, Remis contended that the amount in issue resulted from an unauthorized use of Lerner’s Air Travel Card; that American was negligent in permitting the card’s unauthorized use; and that, in any event, under either Massachusetts law or New York law, liability for the unauthorized use of a credit card was limited to $50.

With the issues joined, American moved for summary judgment. It argued that the “Universal Air Travel Plan Subscriber’s Contract” signed by Remis obligated the company to pay for all tickets charged to its account prior to the receipt by American of notice that an Air Travel Card had been lost. The various affirmative defenses raised by Remis, American contended, were insufficient as a matter of law.

On August 8, 1972, in an opinion reported only in 4 CCH Cons.Cred.Guide jf 99,123, Judge Cannella denied the motion. Finding New York law to be applicable, he held that American had failed to comply with the conditions precedent to the recovery of charges resulting from the unauthorized use of a credit card, limited in any case to $50, as contained in N.Y.G.B.L. § 512. Moreover, in so doing, Judge Cannella rejected American’s assertion that § 512 was not applicable in this instance because that section, by its language, extends protection only so far as the federal Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. — which in turn, argued American, does not apply to credit cards issued to corporations or to credit cards used for business or commercial purposes.

Following Judge Cannella’s decision, the parties stipulated that his order would be considered as granting partial summary judgment to Remis dismissing the complaint in excess of $50, and that the balance of the claim would be voluntarily dismissed by American. On April 23, 1973, this stipulation was embodied in an order issued by Judge MacMahon and, with no claim remaining to be litigated, American appealed from the April 23rd order as a final order pursuant to 28 U.S.C. § 1291.

Although we cannot agree with the rationale of Judge Cannella’s opinion, we believe his conclusion — that Remis’s maximum liability for the unauthorized use of its Air Travel Card is $50 — is correct. Accordingly, we affirm.

I

We begin by examining N.Y.G.B.L. § 512 upon which Judge Cannella relied as the exclusive determinant of Remis’s potential liability. That section states:

A provision which imposes liability upon a holder for a cash advance or loan or for the purchase or lease of property or services obtained by the unauthorized use of a credit card shall not be enforceable to the extent that it imposes a greater liability upon the holder than is imposed under the provisions of the act of Congress entitled “Truth in Lending Act” and the regulations thereunder, as such act and regulations may from time to time be amended.

McKinney’s Cons.Laws of N.Y. Cumulative Pocket Suppl. for 1973-1974. The reference to the Truth in Lending Act is quite clear. Judge Cannella construed that reference as defining the dollar amount of maximum liability under New York law — $50, pursuant to § 133(a) of the Truth in Lending Act, 15 U.S.C. § 1643(a) — but not the scope of section 512’s coverage. That, he concluded, was governed by the definitions contained in the New York Act, N.Y.G.B.L. § 511, which on their face include all credit card holders, natural persons as well as corporations, without exception. Thus, without interpreting the range of the Truth in Lending Act as a whole, the district judge determined that § 512 imposed a liability limitation on the Air Travel Card issued to Remis. It is a well-settled principle of statutory construction that the plain language of a statute offers the primary guidance to its meaning. Indeed, the New York Court of Appeals has said:

[Where] the language found in the statute is clear and unambiguous, . the intent of the framers “is to be sought first of all, in the words and language employed, and if the words are free from ambiguity and doubt, and express plainly, clearly and distinctly, the sense of the framers of the instrument, there is no occasion to resort to other means of interpretation.” McCluskey v. Cromwell, 11 N. Y. 593, 601-602.

Meltzer v. Koenigsberg, 302 N.Y. 523, 525, 99 N.E.2d 679 (1951). See also Roosevelt Raceway v. Monaghan, 9 N.Y. 2d 293, 304, 213 N.Y.S.2d 729, 174 N.E. 2d 71 (1961); Daniman v. Board of Education, 306 N.Y. 532, 543, 119 N.E.2d 373 (1954). We believe that the clear language of § 512, by referring without qualification to the “provisions of the act of Congress entitled “Truth in Lending Act’,” simply does not support the selective incorporation approach adopted below. Accordingly, although New York’s statutory definitions are sufficiently broad to cover Remis, and the statutory predecessors of § 512 applied without distinction to corporate and individual credit card holders, we believe that the language of the present statute requires a determination of Remis’s liability under the Truth in Lending Act. If New York intended a more restricted applicability of that Act, as Remis urges, it is for the New York legislature and not this Court to amend the statute.

II

When the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. was enacted on May 29, 1968, it contained no reference to credit card transactions. Rather, its limited though important purpose was, in the words of the Act itself, “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.” 15 U.S.C. § 1601.

The statement of purpose reveals that Congress was focusing its attention on credit transactions involving the consumer — transactions “in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transactions are primarily for personal, family, household, or agricultural purposes.” 15 U.S.C. § 1602(h). Corporate debtors or individuals who secure credit for business or commercial purposes were thought to be amply sophisticated — that is, sufficiently able to satisfy the Act’s goal of utilizing credit in an “informed” manner, 15 U.S.C. § 1601— so that mandatory disclosure requirements were not warranted for that genre of credit transaction. See Warren & Larmore, Truth in Lending: Problems of Coverage, 24 Stan.L.Rev. 793, 809-810 (1972). And, in fact, the report of the Senate Committee on Banking and Currency states in pertinent part:

Most businesses or corporations are in a good position to judge the relative worth of alternate credit plans and by and large do not require the special disclosure protections provided by the bill.

S.Rep. No. 392, 90th Cong., 1st Sess. 7 (1967). Accordingly, to implement this view, the Truth in Lending Act includes a provision, 15 U.S.C. § 1603, which reads, in relevant part:

This subchapter does not apply to the following:

(1) Credit transactions involving extensions of credit for business or commercial purposes, or ... to organizations [defined to include corporations and partnerships].

Although the original Truth in Lending Act included no provisions governing the expanding world of credit card use, the House of Representatives, at least, had begun to examine this aspect of the credit field as early as 1967. In that year, Representative Wright Pat-man introduced the first bill, H.R. 12646, 90th Cong., 1st Sess. (1967), designed to regulate the mailing of unsolicited credit cards, and chaired the hearings before the House Committee on Banking and Currency on this subject. See Weistart, Consumer Protection in the Credit Card Industry: Federal Legislative Controls, 70 Mich.L.Rev. 1476, 1483-1485 (1972). The following year, the Senate commenced an investigation of the credit card field, the initial hearings beginning in October, 1968 before the Subcommittee on Financial Institutions of the Senate Committee on Banking and Currency, 90th Cong., 2d Sess. (1968). Id. at 1485-1486 n. 37. By 1970, these hearings bore fruit in the form of legislation, the purposes of which were threefold: (1), to prohibit the distribution of unsolicited credit cards; (2), to limit the liability of a cardholder for the unauthorized use of his card to $50; and (3), to make the fraudulent use of a credit card a crime punishable by a fine or imprisonment or both. For its own esoteric reasons, Congress enacted this legislation as an amendment to the Truth in Lending Act, adding definitional subsections, 15 U.S. C. §§ 1602(j-o), and substantive sections, 15 U.S.C. §§ 1642-1644.

Section 1643(a), of principal concern in this case, states, in pertinent part:

A cardholder shall be liable for the unauthorized use of a credit card only if the card is an accepted credit card, the liability is not in excess of $50 ., and the unauthorized use occurs before the cardholder has notified the card issuer that an unauthorized use of the credit card has occurred or may occur as a result of loss, theft, or otherwise.

The term “cardholder” is broadly defined as “any person to whom a credit card is issued,” 15 U.S.C. § 1602 (m); with the term “person” defined in the Act’s original definitions as “a natural person or an organization,” 15 U.S.C. § 1602(d), and “organization” defined to include a corporation, 15 U.S.C. § 1602(c). Thus, upon putting together this definitional jigsaw puzzle, one finds that § 1643(a) protects all credit card holders — individual and corporate alike. Clearly, this would appear to limit Re-mis’s liability from the unauthorized use of its Air Travel Card to $50.

American argues, however, that we must read § 1643(a), which after all was an amendment to the Truth in Lending Act, in the light of § 1603, the section to which we have already referred, which exempts from the Act’s purview “credit transactions involving extensions of credit for business or commercial purposes, or . . .to organizations.” American’s brief accordingly urges that

[S] ince it is beyond dispute that American extended credit to ■ Remis Industries for business or commercial purposes, and that Remis Industries is a corporation, the exemption contained in section 104 of the Truth in Lending Act [15 U.S.C. § 1603] precludes Re-mis Industries from invoking the limitation of liability contained in section 133 [15 U.S.C. § 1643(a)],

American’s argument founders not only on well-established principles of statutory construction but also on the uniform and contrary interpretation of the relationship between § 1603 and the 1970 credit card amendment voiced by both the Federal Reserve Board, see 37 Fed.Reg. 24339, and the Federal Trade Commission, see In re Credit Card Service Corp. d/b/a Credit Card Service Bureau, CCH Trade Reg.Rep. f[ 20, 215 <Jan. 19, 1973), appeal docketed, No. 73-1357, D.C.Cir. (Apr. 6, 1973). The rule of statutory construction to which we turn in this instance has been enunciated as follows:

[T] he provisions introduced by the amendatory act should be read together with the provisions of the original section that were . . . left unchanged, as if they had been originally enacted as one section. Effect is to be given to each part, and they are to be interpreted so they do not conflict. If the new provisions and the ... unchanged portions of the original section cannot be harmonized, the new provisions should prevail as the latest declaration of the legislative will.

1A J. Sutherland,' Statutes and Statutory Construction, jf 22.34, p. 196 (4th ed. C. Sands 1972). We are of the view that by applying § 1603 to limit the scope of both the original disclosure provisions of the Truth in Lending Act and the credit card provisions added in 1970, as American suggests, we would produce such statutory obfuscation that it would surely thwart the intent of Congress. To avoid this cacophony, § 1603 cannot be construed as circumscribing the salutary protection afforded by the credit card amendment.

We note, for example, that application of § 1603 to § 1643(a) would raise a threshold question for which the Act at least provides no ready answer: at what point in the credit card process does a transaction involving the extension of credit occur? Since the likely response is at the time the credit card issues, confusion would prevail over the classification of cards issued to natural persons. Were the cards issued for business or commercial use and thus excluded from protection, or were they for personal use and hence covered under § 1643(a)? To be sure, a predominant use test might provide a solution, cf. Brill v. Newport National Bank, 4 CCH Cons.Cred.Guide If 99,057 (S.D.N.Y. 1973). But the extensive, overlapping use of some types of credit cards, e. g. to purchase gasoline or meals in a restaurant, would make this test wholly unwieldy in application.

In addition to producing needless uncertainty, engrafting the scope limitations of § 1603 upon the 1970 credit card provisions would replace the uniform safeguards demanded by the nature of the problems which Congress addressed with a crazy-quilt design of cardholder protection. The “deep pocket” theory might provide a superficial basis for distinguishing corporate from individual cardholders. But, more persuasive considerations, such as the preferential position of the card issuer to insure against the risk of card loss, see Weistart, supra at 1517, and the incapacity of corporations and individuals alike to prevent the unsolicited distribution of credit cards, suggest that Congress intended to protect all credit card holders without exception.

Nor do we find particularly cogent American’s argument that, unlike consumers, corporations and individuals who use credit cards for business or commercial purposes do not need the statutory safeguard of limited liability for they are capable of apportioning the risk of loss by contract. Indeed, the facts here furnish a convincing answer to this contention. In order to obtain its Air Travel Cards, Remis was required to sign a contract entitled “Universal Air Travel Plan Subscriber’s Contract.” (emphasis added). It would not be illogical to presume, based on this appellation, that, in the case of Air Travel Cards and, we suspect, in the credit card field in general, bargaining is a rather euphemistic characterization of what is essentially a take-it-or-leave-it method of contract formulation. Thus, any differential in bargaining power or sophistication among cardholders would appear to be effectively neutralized by the use of form contracts in lieu of negotiation.

Finally, a statutory construction limiting the applicability of the § 1603 exemptions to the Truth in Lending Act as originally enacted, is surely buttressed by the concurrence of both the Federal Reserve Board and the Federal Trade Commission in that interpretation. The Board, charged with prescribing regulations pursuant to the Act, 15 U.S.C. § 1604, amended its so-called “Regulation Z” to make explicit that the Act’s protection extends to corporate cardholders as well as to cards issued for business or commercial purposes. 12 C.F.R. § 226.-13(a)(4) (1973) (amended Nov. 2, 1972). Although this amendment was adopted subsequent to the transaction at issue, the timing does not detract one whit from the relevance of the Board’s views. The language of the amendment is precise in stating that the amendment’s purpose was merely to clarify the existing statutory language. See 37 Fed.Reg. 24339 (1972). Similarly the Federal Trade Commission, the agency with primary enforcement responsibilities under the Truth in Lending Act, 15 U.S.C. § 1607, has also held that the Act’s credit card provisions apply to all cardholders. In re Credit Card Service Corp. d/b/a Credit Card Service Bureau, supra. Since these administrative expressions concerning the Act’s proper construction should be given great weight, Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 210, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972), and especially so, where, as here, Congress delegated broad power to the supervising agencies, Mourning v. Family Publications Service, Inc., 411 U.S. 356, 371-373, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973), we believe that any abstruseness caused by the Truth in Lending Act’s ambiguities should be resolved in favor of these sound agency interpretations. Accordingly, we hold that § 133(a) of the Truth in Lending Act, 15 U.S.C. § 1643(a), limiting liability exposure to $50 where the credit card use has been unauthorized, applies to all credit card holders. We therefore affirm.

      . Since neither party disputes Judge Cannel-la’s finding that New York law governs here, we have no occasion to examine the validity of that finding on this appeal.

      . “Holder” is defined in § 511(4) as:
      a person to whom such a credit card is issued or who has agreed with the issuer to pay obligations arising from the use of a credit card issued to another person ;
      And, “person,” in turn, § 511(2), as :
      an individual, corporation, partnership or association, two or more persons having a joint or common interest or any other legal or commercial entity.

      . No legislative history could be found to illuminate congressional intent with respect to the relationship, if any, between § 1603 and the 1970 credit card amendment. Appellant proffers two statements by Senator Prox-mire, both uttered during hearings conducted more than one year following passage of the credit card legislation on a bill at best distantly related to the credit card provisions here in question, in which he suggests that further amendment of the Truth in Lending Act would be required to eliminate the applicability of § 1603 to the credit card provisions. See Hearings on S. 652 Before the Subeomm. on Banking, nousing and Urban Affairs, 92nd Cong., 1st Sess., at 78, 113 (1971). Suffice to say, as the Court did in United States v. Philadelphia National Bank, 374 U.S. 321, 348-349, 83 S.Ct. 1715, 1733, 10 L.Ed.2d 915 (1963) quoting United States v. Price, 361 U.S. 304, 313, 80 S.Ct 326, 4 L.Ed.2d 334 (1960):
      [T]he views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.

      . The alternative would be at the time the credit card is used. Appellant can hardly find solace in this choice however, for it would then appear even more clearly that § 1603 does not apply to § 1643(a) since the unauthorized use of a credit card does not result in an extension of credit to the “cardholder." Thus, the exemptions contained in § 1603 would have no relevance to § 1643(a) —unless, of course, one must look to the unauthorized user to determine whether credit has been extended for business or commercial purposes as distinguished from personal needs.