text:
    UNITED STATES of America, Plaintiff-Appellee, v. Michael Jerome BELL, Defendant-Appellant.
    No. 74-3599
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    April 4, 1975.
    Rehearing Denied May 13, 1975.
    Richard S. Rhodes, Orlando, Fla., for defendant-appellant.

      John L. Briggs, U. S. Atty., Jacksonville, Fla., Harrison T. Slaughter, Jr., Orlando, Fla., for plaintiff-appellee.
    Before COLEMAN, AINSWORTH and SIMPSON, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et at, 5 Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

Michael Jerome Bell seeks reversal of his conviction for possession with intent to distribute and distribution of heroin, Title 21, U.S.C. § 841(a)(1). He alleges (1) that the court erred in excluding certain defense impeachment evidence, (2) that evidence of other unrelated crimes should not have been received, and (3) that the prosecutor commented on his failure to testify. Upon review of these alleged errors we find them to be without merit and affirm.

Appellant was charged with eight counts of possession and distribution of heroin on February 7 and 11, 1974, and convicted by the jury as to six counts, with two counts, Counts 3 and 7, going out by directed judgment of acquittal. Concurrent confinement sentences of eight years were imposed by the court, with a special parole thereafter of six years. The transactions all occurred in the ABC Lounge in Orlando, Florida. Appellant sold heroin to undercover agents Forrest Beverly and Marilyn Jones. After he sold them the heroin, he arranged for them to buy cocaine from Nathaniel Johnson, who testified against him at trial.

At trial the court excluded impeachment testimony concerning agent Beverly as being too remote in time. Appellant was attempting to prove that at a party in late March 1974, about six weeks after the period involved in the charges against Bell, Beverly was smoking marijuana. He also sought to introduce evidence concerning certain other complaints and arrests made by Beverly, alleging they contained inconsistent dates and times. Appellant also alleges that testimony concerning Johnson’s sale of cocaine on the same occasion as one of the heroin transactions to the agents should have been excluded.

Finally, on redirect, after defense counsel had established there were no other persons in the agents’ office who could corroborate that Bell was present on the 7th and 11th, the prosecutor asked Beverly who was able to corroborate Bell’s presence on the 7th and 11th, to which the agent replied, “Nathaniel Johnson and Michael Bell”. Appellant argues that this was a comment on his failure to testify.

Appellant argues he should have been allowed to impeach the testimony of Beverly that he did not use and had never used narcotic drugs, by the testimony of other persons who would testify that he had smoked marijuana at a party, in March, as related above, some six weeks after the incidents that were the basis of this charge. Appellant also sought to introduce discrepancies in the dates of some complaints, concerning unrelated drug matters, that Beverly had made. The court ruled such testimony irrelevant and immaterial, and too remote in time from the illegal acts charged.

A district court has wide discretion in determining relevance and materiality, and its ruling will not be disturbed in the absence of an abuse of discretion. United States v. Allison, 5 Cir. 1973, 474 F.2d 286, 288-289, vac. on other grounds, 490 F.2d 79, and the cases cited therein. Appellant has made no showing of an abuse of the court’s discretion. The agent testified that such charges were often made against him in his work. His testimony as to the drug transactions was corroborated by that of another agent. As to the discrepancies in the formal complaints lodged in other drug matters by Beverly, those matters were entirely unrelated to the matter at hand. They were collateral issues, impeachment as to which is not permitted. See McCormick, Evidence, 2d ed. 1972, § 47.

Appellant’s argument — that the response that he and his co-defendant Nathaniel Johnson were the only ones who could corroborate his presence at the sale of heroin, other than the DEA Agents — was a comment on his failure to take the stand, is also without merit. Appellant had opened the door to such inquiry by his questions of the agent on cross. The agent’s response was only cumulative of what he had been testifying to all along, that appellant had sold him drugs. The prejudicial effect, if any, of the alleged improper question was slight while the evidence of guilt was overwhelming. See United States v. Rhoden, 5 Cir. 1972, 453 F.2d 598.

Appellant next alleges the court erred in allowing testimony of the DEA agents that appellant had arranged for them to buy cocaine from Nathaniel Johnson, an unrelated drug transaction. Agent Beverly testified that immediately after he bought heroin from Bell, he made another drug purchase of cocaine from Nathaniel Johnson, who had been introduced to him by appellant. Johnson’s testimony was similar. The court allowed the testimony in for the limited purpose of identification, and so instructed the jury. The government had attempted to bring out such testimony on direct, but was not allowed to. On cross, defense counsel asked what drug purchases agent Beverly made on February 7th, to which he replied from Bell and Nathaniel Johnson. On re-direct the agent described the sale by Johnson and how Bell introduced them.

The government argues that the testimony involved was as to the res gestae of the crime, while appellant argues it concerned unrelated crimes and thus prejudiced him. Weighing together the circumstances here, together with all the evidence and testimony, and the instructions given, any error in the admission of the evidence was harmless beyond reasonable doubt. In the circumstances of this case, we are convinced that the substantial rights of Bell were not affected. The evidence of appellant’s guilt is strong, clear and convincing. See Kotteakos v. United States, 1946, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557.

The evidence amply warrants the finding of guilt and we perceive no prejudicial error of law in the trial.

Affirmed.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    John WEBB, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 74-3836
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    March 18, 1975.

      John Webb, pro se.
    D. Broward Segrest, Asst. U. S. Atty., Montgomery, Ala., for respondent-appellee.
    Before GEWIN, GOLDBERG and DYER, Circuit Judges.

       Summary Calendar case; Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409.

   PER CURIAM:

Petitioner seeks release from prison under 28 U.S.C. § 2255. He makes four contentions. He contends that his rights were violated when the prosecutor questioned a witness about his previous crimes. He also contends that the federal trial court judge violated his rights in allowing the questioning. These two issues were raised in petitioner’s direct appeal, United States v. Webb, 5 Cir. 1972, 463 F.2d 1324, cert. denied 409 U.S. 986, 93 S.Ct. 338, 34 L.Ed.2d 251, and we are thus foreclosed from reconsidering them here, Lacaze v. United States, 5 Cir. 1972, 457 F.2d 1075 at 1078, cert. denied 409 U.S. 921, 93 S.Ct. 251, 34 L.Ed.2d 180. Petitioner also argues that he was not effectively assisted by counsel, and that he was denied access to the trial court’s hearing, in chambers, of a severed co-defendant’s motion for a continuance. But petitioner was not denied effective assistance of counsel and the hearing to which he refers had nothing to do with the merits of his own case. The district court’s denial of petitioner’s motion is affirmed.

Affirmed.


text:
    Antonio P. ROSADO, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 74-3043
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    April 4, 1975.

      Bill F. Payne, Boise, Idaho (Court appointed), for petitioner-appellant.
    Anthony J. P. Farris, U. S. Atty., James R. Gough, Asst. U. S. Atty., Houston, Tex., for respondent-appellee.
    Before THORNBERRY, MORGAN and RONEY, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et at, 5th Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

In a nonjury trial, a district court convicted Rosado of failure to pay the marihuana transfer tax, in violation of former 26 U.S.C. § 4744(a)(2), Acts Aug. 16, 1954, ch. 736, 68A, Stat. 562. Rosado now moves under 28 U.S.C. § 2255 to vacate his conviction and sentence for two reasons: (1) an unkept plea bargain rendered his guilty plea involuntary, and (2) his attorney’s conflict of interest denied him effective assistance of counsel. We hold the district court properly denied Rosado’s § 2255 motion without a hearing.

Rosado alleges a plea bargain between his counsel and United States attorney to keep his sentence between three and five years, with the emphasis on the three. He claims that the district judge’s imposition of a ten year sentence so frustrated his expectations that it made his guilty plea involuntary. In Bryan v. United States, 492 F.2d 775 (5th Cir. 1974), the en banc court set out the standards for determining Rosado’s claim. Examination of the transcript of the guilty plea hearing will disclose whether “the files and records of the case conclusively show that the prisoner is entitled to no relief” upon his allegations. See 28 U.S.C. § 2255. The transcript of Rosado’s guilty plea hearing conclusively shows that the district court complied with Fed.R.Crim.P. 11. The judge specifically asked Rosado if he knew that he could receive a minimum of two years and a maximum of ten years confinement and a $20,000 fine for a first offense. The court further informed Rosado that the maximum sentence for a second or subsequent offense was forty years with a $20,000 fine. Rosado replied that he was aware of those penalties, and stated under oath that he was pleading guilty freely and voluntarily in the exercise of his own good judgment. The court further informed Rosa-do that he had a complete defense under Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57 (1969), to the charge. Rosado stated in open court that he was aware of the defense, yet still desired to waive it and plead guilty.

Rosado also signed a sworn statement that included the following declarations:

III. I understand the elements of the offense and I am entering this plea of guilty freely, voluntarily, in the exercise of my own good judgment, and because I am guilty. This is not the result of a bargain or trade-out with the prosecution.
IV. I have received no promises of leniency, that other charges against me would be dropped, or of any other nature from my own attorney, from the attorney of the United States, or from any other person to induce me to plead guilty.
VII. I understand that any statement by my own attorney, by the attorney for the United States, or by any other person as to what sentence I might receive is not binding on the Court.

In this case, as in Bryan, the district court scrupulously followed the procedures under Fed.R.Crim.P. 11 before accepting Rosado’s guilty plea. Since the hearing transcript conclusively shows that Rosado was not entitled to any relief on his involuntary guilty plea claim, the district court properly denied an evidentiary hearing. Frank v. United States, 501 F.2d 173 (5th Cir. 1974); Bryan v. United States, 492 F.2d 775 (5th Cir. 1974).

Rosado also claims that his retained counsel was ineffective because of a conflict of interest created when the district court appointed Rosado’s attorney to represent his co-defendant. But Rosa-do’s characterization of the district court’s action is inaccurate. On August 5, 1970, Rosado and his co-defendant, Guzman, appeared in the district court represented by Mr. Rocha. At that time Rocha announced that Guzman had not been able to raise the fee. However, he stated that he would continue to represent Guzman because of his familiarity with the case. At no time did the district court appoint Rocha as Guzman’s attorney.

Even if the appointment had been made, Rosado’s motion does not make the required showing of prejudice. See United States v. Pine, 452 F.2d 507 (5th Cir. 1971). Rosado complains that Guzman’s plea bargain was kept but his was not. Guzman received a five year sentence, as compared to Rosado’s ten year term. However, the transcript of the proceedings indicates that this was Guzman’s first offense. Rosado had a prior criminal record and an outstanding detainer from Illinois. Thus it is quite understandable that Rosado received the harsher sentence. Rosado’s counsel actively participated in the Rule 11 hearing. His conduct cannot be characterized as so grossly deficient as to render the proceedings fundamentally unfair. See Fitzgerald v. Estelle, 505 F.2d 1334 (5th Cir. 1975). The district court properly denied an evidentiary hearing on both of Rosado’s claims.

Affirmed.

      . The indictment also charged Rosado with three counts of importation of marihuana in violation of former 21 U.S.C. § 176a, Act Feb. 9, 1909, ch. 100, § 2(h). The prosecution dropped those counts when Rosado entered his guilty plea.


author: GEWIN, Circuit Judge:

text:
    In re Grand Jury Proceedings. UNITED STATES of America, Plaintiff-Appellee, v. Douglas STEVENS, Defendant-Appellant.
    No. 75-1320.
    United States Court of Appeals, Fifth Circuit.
    March 21, 1975.
    Rehearing and Rehearing En Banc Denied April 28, 1975.

      Richard M. Gale, Miami, Fla., Alan E. Weinstein, Miami Beach, Fla., for defendant-appellant.
    Marty Steinberg, Sp. Atty., U. S. Dept, of Justice, Miami, Fla., R. H. Wallace, Jr., Dept, of Justice, Washington, D. C., for plaintiff-appellee.
    Before GEWIN, GOLDBERG and DYER, Circuit Judges.
   GEWIN, Circuit Judge:

This appeal concerns the legitimacy of incarceration of a grand jury witness under the district court’s civil contempt power, 28 U.S.C. § 1826. The witness in question, ruled in contempt and imprisoned because he refused to answer questions after a grant of “dse” immunity pursuant to 18 U.S.C. § 6002, challenges the district court’s order on the grounds that the government secured information for questioning him through illegal electronic surveillance and that the grand jury lacked authority to compel his testimony. Finding these contentions unpersuasive, we affirm.

A grand jury empanelled in the Southern District of Florida first subpoenaed the appellant Stevens to appear before it in May 1974. He appeared but refused to testify, asserting the Fifth Amendment privilege against self-incrimination. The district court, acting at the government’s request, thereupon immunized him under 18 U.S.C. § 6002 and ordered that he give testimony before the grand jury which had subpoenaed him, “as well as any subsequent Grand Jury, proceeding or trial.” Stevens subsequently reappeared before the grand jury but again declined to answer all but preliminary questions concerning his name, address and occupation. He was immediately brought before the district court, adjudged in contempt, and imprisoned under 28 U.S.C. § 1826. He remained in jail until November 21, 1974, the date on which the grand jury term expired. Stevens does not now contest the validity of this initial incarceration.

On November 5, 1974, several weeks prior to his release, and during the term of the initial grand jury, Stevens received a subpoena to testify before a second grand jury which was to convene on November 26, 1974. He responded by filing a motion to quash the subpoena on the grounds that a grand jury had power only to subpoena witnesses for testimony during the course of its own term and could not order a witness to appear before a grand jury not yet empanelled. The motion was denied.

On December 10, 1974, Stevens appeared before the second grand jury. Although reminded that he was testifying under a grant of immunity, he would state only his name and address and indicate that he was not an American citizen. He refused to answer any further questions, claiming First, Fourth and Fifth Amendment privileges, and asserting that the questions asked him were based on information obtained by an “illegal wiretap.”

Its patience exhausted, the government again petitioned the district court to rule Stevens in contempt for refusing to testify. In his defense Stevens argued, among other things, that “the questions asked him by the Government before the Grand Jury and which he refused to answer were the. primary product of an unlawful act or were predicated on the results obtained by the exploitation of an unlawful act as defined in ... 18 U.S.C., Section 3504(b).” Specifically, his pleading contended that

the questions asked him before the Grand Jury, as presented in open court by the Government were based on an illegal interception of conversations of his which occurred on telephone numbers (305) 866-4870 and 861-8921 and telephone numbers (305) 754 — 1279 and 751-0066. In addition to being an aggrieved party based on the fact that the witness’ conversations on these phones were intercepted, the witness had a proprietary interest in the premises where the latter two -phone numbers were located.
Every question asked the witness stemmed from the unlawfully intercepted conversations of himself and others.

During a hearing held to consider the contempt citation, government counsel orally admitted that federal authorities had indeed tapped the telephones described by Stevens in order to gain information for a prior investigation but insisted that the district court had already determined the legality of those wiretaps in the case of United States v. Sklaroff, No. 74-267 — Cr — CA (S.D.Fla., Oct. 23, 1974). Government counsel further admitted that the Sklaroff wiretap may have formed the basis for some of the questions asked Stevens before the grand jury, and offered to the court for its in camera inspection all materials on which the questions were based.

At this point Stevens indicated to the court for the first time that he had been the victim of additional illegal electronic surveillance, apart from the Sklaroff wiretap. He sought to substantiate his claim of additional illegal surveillance during the following colloquy:

DEFENSE COUNSEL: Mr. Stevens, I direct your attention to one of the questions asked to you about certain people and conversations that may have taken place at the Pagoda Restaurant, coupled with the questions which were asked to you of other people’s financial interests in gambling ventures. Did you, sir, have any private communications about this with a person known as Martin Sklaroff?
******
STEVENS: Yes, sir.
DEFENSE COUNSEL: Where did this conversation take place?
STEVENS: In the privacy of my office.
DEFENSE COUNSEL: Which office?
STEVENS: In the Pagoda Restaurant.
DEFENSE COUNSEL: Was it on the telephone?
STEVENS: No.
DEFENSE COUNSEL: Who was present at this conversation other than you and Mr. Sklaroff?
STEVENS: Just the two of us.

The court then permitted Stevens to state for the purposes of his § 3504 claim that the questions asked him before the grand jury must have come from unlawful interception of private conversations with Sklaroff not occurring over the telephone.

Government counsel orally denied knowledge of any other electronic surveillance. Stevens asked that the government make a formal § 3504 response to his allegation of illegal surveillance and the government attorney subsequently filed the following unsworn, written denial at the court’s direction:

Now Comes the Government and responds to this witness’ request under 18 U.S.C. 3504. The Government responds that any questions asked of this witness that emanated from electronic interceptions emanated from electronic interceptions in the case of United States v. Sklaroff, No. 74-267-Cr-CA. No other questions were based on any other electronic surveillance.
Furthermore, under 18 U.S.C. 3504 United States denies the occurrence of any unlawful act to obtain information about questions asked of this witness in the Grand Jury.
/s/ Marty Steinberg
Special Attorney
U. S. Department of Justice

In adjudging Stevens in contempt for failing to answer questions before the grand jury, the district court concluded that the witness’s § 3504 claim of unlawful electronic surveillance was adequately met by “the Government’s willingness to state for the record that no illegal electronic surveillance was conducted which would form the basis for any questions posed to this witness before the Grand Jury.”

Stevens advances three reasons for reversal of the contempt order: (1) the government’s unsworn denials that it had not used illicit electronic surveillance to gather information concerning Stevens did not satisfy the requirements of 18 U.S.C. § 3504; (2) the initial grand jury lacked authority to issue a subpoena compelling his appearance before a grand jury not yet empanelled; and (3) the government was obliged to permit him to inspect the authorization and supporting affidavits for the wiretaps used to gather evidence against him.

The most perplexing issue before us concerns the adequacy of the government’s denial of the use of unlawful electronic surveillance. § 3504, stating merely that the party opposing the claim of illegal surveillance must “affirm or deny” the commission of any unlawful act, does not specify the proper mode of such affirmance or denial. Stevens suggests that a denial must be made by sworn affidavit with the affiant specifying in detail that he personally determined from inquiries with all relevant governmental agencies that no agency involved with the investigation conducted any unlawful surveillance. The government counters in essence that when the witness’s claim of illegal surveillance is general and unsubstantiated, § 3504(a)(1) is satisfied by a general denial made in good faith.

Stevens purports to find support for his position in two decisions of this court considering the adequacy of the government’s § 3504 denial. See In re Tierney, 465 F.2d 806 (5th Cir. 1971); Beverly v. United States, 468 F.2d 732 (5th Cir. 1972). Both cases uphold the sufficiency of the government’s denial, but Stevens argues that in so doing, they establish rather strict standards for reviewing a § 3504 response. In Tierney, we approved a denial given under oath with the government counsel making the denial subject to cross examination. The affidavit stated that the Department of Justice had checked with all government agencies which could have been connected with the investigation, including the Department of the Treasury and its subsidiaries, the Bureau of Narcotics and Dangerous Drugs, and the F.B.I. and found that no electronic surveillance had been conducted. The Beverly court concluded that § 3504 was satisfied by the government attorney’s affidavit containing the “conclusory statement” that an inquiry of “appropriate Federal Government agencies” revealed no electronic surveillance of the complaining party. While we noted that this affidavit in Beverly was “far from a ‘model’ either in terms of its scope or forthrightness,” we rejected the witness’s contention that the procedure followed in Tierney — an affidavit specifying by name the agencies checked, with the affiant subject to cross examination — was the sine qua non of an effective § 3504 denial. 468 F.2d at 744-45.

The appellant’s reliance on Tierney and Beverly is clearly misplaced. A significant aspect of both those decisions is their failure to specify any indispensable ingredients of an effective § 3504 denial. While as in Beverly, the government’s general and unsworn response may not be a “model”, it is not necessarily fatally defective.

Since this court has not yet formulated precise standards for measuring the validity of a § 3504 response, we turn for guidance to the recent pronouncements of other circuits. Decisions in the First, Third and Ninth Circuits indicate that the imprecise language of § 3504 permits non-specific denials,- especially when the party asserting illicit surveillance makes a general, unsubstantiated allegation of unlawfulness. In In re Mintzer, 511 F.2d 471 (1st Cir. 1975) [No. 74-1388, Dec. 26, 1974], the First Circuit rejected a grand jury witness’s assertion that a valid § 3504 denial must be based on a thorough search of federal and state records to determine the possible existence of unlawful surveillance. According to that court,

[w]hile we think this, at least as to federal authorities, is a salutary practice, and may be mandated in other contexts, see Gelbard v. United States, 408 U.S. 41, 56 [92 S.Ct. 2357, 33 L.Ed.2d 179] (1972), we also think that at this proceeding all that can be required is that those conducting the grand jury proceeding affirm that they have no knowledge of and have not in any way employed other taps in formulating lines of inquiry or questions to be posed to the witness.

511 F.2d 472, n. 2. In United States v. D’Andrea, 495 F.2d 1170 (3d Cir. 1974), the Third Circuit sustained the government’s unsworn denial after the witness had come forward “with no more than a bald accusation of illegality.” 495 F.2d at 1174, n. 12. The Ninth Circuit decision in United States v. See, 505 F.2d 845 (9th Cir. 1974) adopts a fluid standard under which the adequacy of the government’s denial depends on the specificity of the witness’s allegation of illegality:

[B]ecause responding to ill-founded claims of electronic surveillance would place an awesome burden on the government, a claim of government electronic surveillance of a party must be sufficiently concrete and specific before the government’s affirmance or denial must meet . . . [factual, unambiguous and unequivocal]. Accordingly, a general claim requires only a response appropriate to such a claim.
The record discloses that the appellants’ claim of electronic surveillance of them was vague to the point of being a fishing expedition. The government’s response to the claim was more than adequate.

The Ninth Circuit’s conclusion that a general allegation of illegality merits only a general denial is both logical and realistic. § 3504, even as discussed in Gelbard, supra, note 2, was never intended to permit a witness to thwart the progress of grand jury proceedings by the mere conclusory and unsubstantiated assertion of illegal surveillance. A contrary conclusion could arm a recalcitrant witness with the capability to delay and impede legitimate grand jury investigations.

In the instant case, government counsel made forthright albeit unsworn oral and written' denials of illegal surveillance. The written response was made at the direction of the court. As we noted in Beverly, district courts must balance the right of witnesses to be free from unwarranted surveillance with the right of the government to operate grand juries in an effective manner; such courts must be given “wide latitude” in evaluating claims of unlawful surveillance. We conclude that the district court did not abuse its discretion in determining that the government’s general denial, when viewed in context of Stevens’ general and unsubstantiated assertions of illegality, satisfied § 3504.

We also sustain the validity of the subpoena ordering Stevens’ appearance before the second grand jury. Stevens contends that the November 5 subpoena was ineffective since it related to a grand jury not in existence at the time of its issuance. The appellant misconceives the nature of a grand jury. It is not an independent, self-contained entity whose powers vanish when the jury’s term expires. On the contrary, a grand jury is essentially an agency of the court, and exercises its powers under the authority and supervision of the court. As the Supreme Court stated in Brown v. United States, 359 U.S. 41, 79 S.Ct. 539, 3 L.Ed.2d 609 (1959):

A grand jury is clothed with great independence in many areas, but it remains an appendage of the court, powerless to perform its investigative function without the court’s aid, because powerless itself to compel the testimony of witnesses. It is the court’s process which summons the witness to attend and give testimony, and it is the court which must compel a witness to testify if, after appearing, he refuses to do so.

359 U.S. at 49, 79 S.Ct. at 546, 3 L.Ed.2d at 616. See also Levine v. United States, 362 U.S. 610, 80 S.Ct. 1038, 4 L.Ed.2d 989 (1960). Cf. Rule 17(a), F.R. Crim.P. As the power to summon witnesses before a grand jury ultimately emanates from the court itself, it is insignificant in the instant case that the subpoena was issued prior to the empanelling of the second grand jury.

Stevens’ final contention on appeal is that the government improperly denied him the opportunity to inspect various documents relating to the validity of the Sklaroff wiretap. The government responds that the legitimacy of that particular wiretap was established in a prior adjudication and that it may not now be relitigated.

Stevens inappropriately relies on In re Lochiatta, 497 F.2d 803 (1st Cir. 1974) for the proposition that a district court considering a § 1826 contempt citation may review the lawfulness . of all relevant electronic surveillance. While this may be a legitimate proposition when a court is confronted with a claim of illegality of a wiretap for the first time, it is certainly not controlling in a situation where the validity of the surveillance was established in a prior proceeding. In this case, Stevens seeks additional review of the legitimacy of the Sklaroff wiretap which has already been challenged and approved. In view of this, we need not further evaluate the merits of Stevens’ allegation of invalidity. The mandate of this Court shall issue immediately.

Affirmed.

      . 28 U.S.C. § 1826 provides:
      (a) Whenever a witness in any proceeding before or ancillary to any court or grand jury of the United States refuses without just cause shown to comply with an order of the court to testify or provide other information, including any book, paper, document, record, recording or other material, the court, upon such refusal, or when such refusal is duly brought to its attention, may summarily order his confinement at a suitable place until such time as the witness is' willing to give such testimony or provide such information. No period of such confinement shall exceed the life of—
      (1) the court proceeding, or
      (2) the term of the grand jury, including extensions, before which such refusal to comply with the court order occurred, but in no event shall such confinement exceed eighteen months.
      (b) No person confined pursuant to subsection (a) of this section shall be admitted to bail pending the determination of an appeal taken by him from the order for his confinement if it appears that the appeal is frivolous or taken for delay. Any appeal from an order of confinement under this section shall be disposed of as soon as practicable, but not later than thirty days from the filing of such appeal.

      . In Gelbard v. United States, 408 U.S. 41, 92 S.Ct. 2357, 33 L.Ed.2d 179 (1972), the Supreme Court held that witnesses were entitled to invoke the statutory prohibitions of 18 U.S.C. § 2515 as a defense to contempt charges brought against them for refusing to testify before a grand jury. § 2515 prohibits the use in any proceeding of information or evidence derived from unlawful interception of wire or oral communication. Gelbard indicated that its holding was substantiated by 18 U.S.C. § 3504.

      . 18 U.S.C. § 3504 provides in pertinent part: (a) In any trial, hearing, or other proceeding in or before any court, grand jury, department, officer, agency, regulatory body, or other authority of the United States—
      (l)'upon a claim by a party aggrieved that evidence is inadmissible because it is the primary product of an unlawful act or because.it was obtained by the exploitation of an unlawful act, the opponent of the claim shall affirm or deny the occurrence of the alleged unlawful act;
      ******
      (b) As used in this section “unlawful act” means any act the use of any electronic, mechanical, or other device (as defined in section 2510(5) of this title) in violation of the Constitution or laws of the United States or any regulation or standard promulgated pursuant thereto.

      . Government counsel asserted orally during the contempt hearing that the telephones referred to by the defense were not on the premises of or in any way controlled by Stevens but were the telephones of one Martin Sklaroff. The legality of these wiretaps was established in a prior judicial proceeding.

      . The written denial was submitted to the court as a formal pleading. While the response was not a sworn affidavit, the government attorney who signed the denial was acting as an officer of the court and was bound by the requirements of Rule 11, Federal Rules of Civil Procedure:
      The signature of an attorney constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is good ground to support it; and that it is not interposed for delay. . For a wilful violation of this rule an attorney may be subjected to appropriate disciplinary action.

      . The appellant argues that he should be entitled to examine the application of the Attorney General or his designate for the wiretap, the affidavits in support of the court order, the wiretap order itself, and an affidavit submitted by the government indicating the length of the time the surveillance was conducted.


author: RONEY, Circuit Judge:

text:
    UNITED STATES of America and Edward P. Cory, Revenue Agent, Internal Revenue Service, Petitioners-Appellees, v. SUN FIRST NATIONAL BANK OF ORLANDO and Clifford M. Hames, Respondents-Appellants.
    No. 74-1453.
    United States Court of Appeals, Fifth Circuit.
    April 4, 1975.
    Rehearing and Rehearing En Banc Denied May 16, 1975.
    J. Thomas Cardwell, Orlando, Fla., for respondents-appellants.
    John L. Briggs, U. S. Atty., Harrison T. Slaughter, Jr., Asst. U. S. Atty., Orlando, Fla., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Chief, Appellate Sec., Dennis M. Donohue, John P. Burke, William A. Whitledge, Attys., Tax Div., Dept, of Justice, Washington, D. C., for petitioners-appellees.
    Before BELL, AINSWORTH and RO-NEY, Circuit Judges.
   RONEY, Circuit Judge:

Sun First National Bank of Orlando and Clifford M. Hames, its Vice-President and Trust Officer, appeal from the district court’s enforcement of a Section 7602 administrative summons of the Internal Revenue Service issued by Revenue Agent Edward P. Cory. We affirm.

The summons was issued in the matter of the tax liability of thirty-two named trusts handled by the bank’s trust department and soüght production of the following:

“As to each of the Trusts set forth on the attached list for which the bank has fiduciary responsibilities, the retained copy of Form 1041 (Fiduciary Income Tax Return) filed by the bank as trustee for the years 1970 and 1971; the trust declaration or instrument establishing or creating the trust; all records of income and disbursements of each trust; records in connection with the investment of trust funds; records of assets contributed to the trust; your Trust Committee minutes relevant to each trust; and the Employer Identification Number of each of the trusts.”

The two questions raised by Sun on appeal from the judgment enforcing this summons are: first, whether an IRS summons seeking production of a random sample of records of a bank’s trust accounts is authorized under 26 U.S.C.A. § 7602 and second, whether an IRS summons seeking production of a random sample of records of a bank’s trust accounts violates the Fourth Amendment. We limit our consideration of this case to these two attacks on the summons. The attacks fail because the facts as they appear in the record do not support the basic premise of arbitrariness implicit in the questions posed. Our affirmance of the enforcement, therefore, does not squarely confront the import of the questions.

Respondents’ opposition to the summons is based on the factual situation in which it was issued. Early in 1973 the IRS undertook an audit of the consolidated income tax return for the First at Orlando Corporation, a bank holding company controlling thirty-seven banks with assets of over 1.7 billion dollars. As a part of this larger audit Revenue Agent Edward P. Cory directed the audit of Sun First National Bank of Orlando, the lead bank of the holding company. Sun was very cooperative, providing free access to the IRS for most of its records, including those records of its Trust Department which Sun considered relevant to the IRS review of First at Orlando’s tax liability. The information provided which related to the Trust Department included data on its common trust fund, the minutes of the Trust Committee meetings, the tax identification numbers of certain accounts, records of the amount of income and expenses received by and incurred by Sun in managing the common trust fund, and other requested materials. It was only when Cory requested information concerning certain individual trusts that Sun balked at the IRS request.

Cory and his supervisor, prior to the beginning of the examination of Sun’s records, had determined that in the Trust Department phase of the audit the IRS would examine the common trust fund and audit the interest equalization taxes reported by Sun, as fiduciary, in respect to the various trusts it managed. See Int.Rev.Code of 1954, §§ 4911 — 4920. From the information which the bank freely provided, Cory extracted the names of approximately 150 individual trusts. He then selected a random sample of these trusts for closer examination to evaluate Sun’s performance of its duties to the IRS with respect to these trusts. The bank was requested to furnish Cory the bank’s retained copy of the Form 1041 Fiduciary Income Tax Return of each of the thirty-two accounts. Sun offered, through its trust officer, Clifford M. Hames, to provide copies of the requested returns with the top portions, containing the names of the trusts, blanked out. This offer made Cory suspicious as to the accuracy of the fiduciary returns, and he decided, with the concurrence of his supervisor, to examine more closely these trusts and the data which the bank had to support its information returns. Accordingly, Cory served Hames with an IRS summons on May 14, 1973. The summons directed Hames to appear before Cory on May 29, 1973, to testify regarding the thirty-two trusts, and to bring with him, as to each trust for which Sun had fiduciary responsibilities the documents and records set forth.

After consulting with its legal counsel, Sun refused to obey the summons, asserting that the requested materials were not relevant to the ongoing audit of First at Orlando’s consolidated return. Sun felt that its fiduciary relationship with the trusts impelled it to protect them and their beneficiaries from what it considered a “fishing expedition” by the IRS. After the case was reviewed by the Department of Justice at the request of the IRS, the United States sought enforcement of the summons in federal district court. See Int.Rev.Code of 1954, § 7402(b).

The district court held a hearing on the motion for enforcement, at which only Agent Cory testified. The court found that there was underway a good faith audit of the tax liability of the trusts sufficient to justify enforcement of the summons, which sought information relevant to that investigation.

Our review requires us to accept the facts found by the district court unless clearly erroneous, under F.R.Civ.P. 52(a), and to review the court’s compliance with the mandates of United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964) and United States v. Bisceglia, 420 U.S. 141, 95 S.Ct. 915, 43 L.Ed.2d 88 (1975). Once a summons is challenged it must be scrutinized by a court to determine whether it seeks information relevant to a legitimate investigatory purpose and is issued in good faith. This is the precise scrutiny that was afforded by the district court. Agent Cory testified that:

“The purpose of this specific summons is to secure information to determine that all appropriate tax returns were filed by these 32 trusts to determine also that the tax liability on these trusts had been properly computed and to secure information pertaining to the assets, so if there is any tax liability, unpaid tax liability, we would be able to secure payment.”

Upon further examination of the witness, an exchange over the Government’s objection to the scope of cross-examination brought the following comment from the respondents’ attorney:

“MR. CARDWELL: Your Honor, this is one of the points of great confusion to me as to whether in fact this whole thing started out, whether they are auditing the bank for purposes of determining whether there is any income tax liability on the part of the bank or whether, in fact, the government is seeking pursuant to some independent investigation of some other question in the context of this audit, get hold of these fiduciary records in the bank. As the Court may recall from my memorandum, I raised that question. That, of course, is the purpose of the last question of Mr. Cory to try to shed some light on that.”

Thereupon the court overruled the objection stating that “I think the Court has the obligation to find out all the facts.” To this end the Court recalled the witness and had this exchange:

“THE COURT: In connection with these 32 trust accounts, is there anything else being done by the Internal Revenue Service to audit any of these accounts other than your seeking to get these documents?
“THE WITNESS: To my knowledge there is no other assignment except to me. Now, I have been assigned the responsibility of examining these entities for income tax and other liabilities. They have assigned it to me, Sir.
“THE COURT: Are you investigating the individual tax returns of any of the beneficiaries of these trusts?
“THE WITNESS: At this time, no, Sir.
“THE COURT: None has been authorized?
“THE WITNESS: Not at this time, Sir.
“THE COURT: Well, if a person is a beneficiary of a trust and gets income from a trust in order to be able to fully ascertain if such person owed any income tax to the government, wouldn’t the government have to take into consideration the person’s income outside of the trust, the income as well as that that might be received from the trust?
“THE WITNESS: Yes, but in this aspect we are examining the income tax liability of the trust and we are also examining any information returns that the trust might be required to file showing the taxable portions to the beneficiaries. To this extent we would not need to see the beneficiaries’ tax return or contact them. We would be there verifying that the records of the trust agree with the information returns and the returns filed with us.
“THE COURT: You are seeking just to audit what, if any, income tax is owed by the trust itself as distinguished from the beneficiary?
“THE WITNESS: At this time, yes, Sir.”

The respondents made no attempt to narrow the scope of the summons as it applied to the trusts, offered no witnesses or other evidence bearing on the Government’s purpose, offering only a broad attack against the entire summons. Whereupon the court correctly stated its responsibility and made its findings of fact, as follows:

“I believe all the government has to show is that there is a good faith audit under way as to the documents, which is under way as to the tax entity concerning which the documents are sought and that the documents sought must be - - the information must be relevant and material or likely to be relevant and material. The good faith of the audit of these individuals accounts is subject to some suspect in view of the way in which it arose and it portends some apprehension as to such tactics, where they are resorted to because of an apparent dissatisfaction with the party seeking to stand on his rights, but apparently, as this case reaches this Court, there is sufficient audit under way as to each of these accounts which would permit these records and documents, the information to be secured because not only is there the testimony of the agent but the government has represented that this matter has been reviewed by the Treasury and the Department of Justice which carries with it to me evidence that there has been more than one agent’s desire to secure this information, but I again say that audits ought to be instigated for more reason that dissatisfaction with the fact that a person or entity has required the government to seek from its own records documents which it has or should have.
“So, I will require the enforcement of the summons of those comments.” (emphasis added).

We find no error. Based on the district court’s finding that there was a good faith audit of the trusts underway and that the documents sought were relevant to that investigation, we affirm. We express no view on whether the documents would have been properly subject to summons if the only ongoing investigation was of Sun. Compare United States v. Humble Oil & Refining Co., 488 F.2d 953 (5th Cir. 1974), cert. applied for 43 U.S.L.W. 3079 (U.S. June 4, 1974) (No. 73-1827), with United States v. Carter, 489 F.2d 413, reh. denied, 504 F.2d 428 (5th Cir. 1974); see United States v. Bisceglia, 420 U.S. 141, 95 S.Ct. 915, 43 L.Ed.2d 88 (1975).

This Court has consistently upheld otherwise valid Internal Revenue summonses against Fourth Amendment challenge. United States v. Roundtree, 420 F.2d 845 (5th Cir. 1969).

Affirmed.


author: CLARK, Circuit Judge:

text:
    EUTECTIC CORPORATION, Plaintiff-Appellee, v. ASTRALLOY-VULCAN CORPORATION et al., Defendants-Appellants.
    No. 74-2056.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.
    Rehearing Denied June 9, 1975.
    Howard P. Walthall, L. Drew Redden, Birmingham, Ala., for defendants-appellants.
    Robert M. Collins, Birmingham, Ala., Arthur M. Lieberman, Stephen B. Judlowe, New York City, for plaintiff-appellee.

      Before GEWIN, BELL and CLARK, Circuit Judges.
   CLARK, Circuit Judge:

Appellant Astralloy-Vulcan (Vulcan), an Alabama corporation, manufactures and sells a patented alloy under the trade name “Astralloy”. Because of its hardness, Vulcan advertises and sells Astralloy for such high-wear items as wear plates, shafts, gear teeth, bucket teeth, valve stems, scrapers, mixer blades, mining equipment, drag line buckets and dies. Eutectic Corporation engages in the manufacture and sale of various metal related materials including metallic and alloy powders and compounds to be used for hardening the surface of softer metals to give them the wear qualities necessary for the same type of machine uses served by Astralloy. Eutectic sued Vulcan and its former employees, Harold Caine and James Bear-den, alleging that the latter breached restrictive covenants contained in their employment contracts with Eutectic Corporation, and that defendant Vulcan not only induced the breaches but, together with Caine and Bearden, “pirated” other of Eutectic’s high-performing sales personnel. Bearden and Vulcan appeal from the district court’s order granting Eutectic’s motion for partial summary judgment and instituting injunctive relief. We affirm.

Caine left his employment with Eutectic in May 1972 after progressing from salesman to Vice President and National Sales Manager. In September 1972, following a series of meetings with the President of Vulcan, Caine joined that company as Vice President in Charge of Sales. Subsequently, Bearden, who had been Eutectic’s sales manager for the southeastern region of the United States, and who had been introduced to Vulcan by Caine, left his nine-year employment with Eutectic to join Vulcan and assume duties comparable to those he discharged for Eutectic in substantially the same territory. Bearden was one of eleven Eutectic personnel identified by Caine as “good performers” to be considered for employment with Vulcan, and was one of seven such former Eutectic employees hired by Vulcan to constitute the bulk of the sales force it formed under Caine.

Caine, Bearden and the other six Eutectic salesmen had all executed employment contracts with Eutectic which included non-competition and confidentiality clauses, the substance of which prohibited, for two years subsequent to employment competition with Eutectic as to customers and territories previously serviced and proscribed the use or disclosure to others of confidential business information acquired while in the employ of Eutectic.

Pursuant to Rule 56(d) the district court found the foregoing and the following material facts to be without substantial controversy. Eutectic’s salesmen and regional sales managers not only received special training in the sales technique and application of Eutectic products but also were privy to customer cards and lists containing special customer needs, and prior buying pattern histories. As Eutectic’s National Sales Manager, Caine received extensive reports regarding the totality of such customer information and regarding the performance records of Eutectic’s sales and sales supervisory personnel as well. Caine thus was aware of the better performers on Eutectic’s sales staff. During his pre-employment discussions with Vulcan, Caine advised them of the existence and pertinent provisions of his employment contract and prior position with Eutectic. After he was employed by Vulcan, Caine discussed Vulcan’s employment of at least eleven individuals Caine thought were good performers, who were then still employed by Eutectic. When former Eutectic employees began this work for Astralloy they recommended to customers that Astralloy be substituted or used in situations for which they had formerly recommended Eutectic materials. With the knowledge and consent of Vulcan and during the period prohibited by their Eutectic contracts, these employees had called on and solicited for Vulcan their former Eutectic customers.

The district court concluded that Vulcan, Caine, and Bearden utilized confidential Eutectic information to select which of Eutectic’s better salesmen to approach, that individually and collectively they induced a number of such salesmen to leave Eutectic for Vulcan; that Vulcan and Eutectic were competing for the same sales relative to wear plates, shafts, gear and bucket teeth, valve stems, scrapers, mixer blades, mining equipment, drag line buckets and dies; that Caine, Bearden and the other former Eutectic salesmen thus violated their post-employment non-competition clauses; that Vulcan had full knowledge of the Eutectic employment contracts; and that Vulcan was culpable “in hiring Eutectic employees and utilizing them to solicit competing goods within the same territories previously serviced by Eutectic (and, in many cases, to the same customers) in violation of their employment contracts”.

The district court noted that Vulcan had stated that the area of competition involved amounted to not more than 5 percent of its total business and that suitable sales representatives were available to it from a source other than Eutectic. The court concluded it was necessary “to enjoin competition [by Vulcan with Eutectic] through such [former Eutectic] employees for a period of two years and further, to enjoin in the future, any hiring by Vulcan of Eutectic employees during the period before their restrictive covenant has run.” The specific language of the injunction order is set out in the margin.

On this appeal Vulcan first challenges as contested several of the facts found to be undisputed by the trial court and asserts the existence of other disputed material facts, all of which, Vulcan argues, should have precluded summary judgment. Having posited that whether or not Vulcan and Eutectic are in competition is one such material fact in dispute, Vulcan contends that it was error for the trial court to conclude, as a matter of law, that Eutectic and Vulcan are competing. It asserts that mala fides on its part was not established. In its final three specifications, Vulcan challenges the legality and enforceability of Eutectic’s restrictive covenants, questions the trial court’s ability to grant injunctive relief when the services of the employees in question were not unique, and contends that in any case the injunctive relief granted was over broad.

It is unquestioned that on an appeal from a summary judgment, the record must be read in the light most favorable to the party opposed to the motion, Dassinger v. South Central Bell Telephone Co., 505 F.2d 672 (5th Cir. 1974), but at the same time we are “rule-bound by the material facts which are without genuine dispute . . . Fed. R.Civ.P. 56(c).”, Reedy v. Travelers Insurance Company, 500 F.2d 1117, 1118 (5th Cir. 1974). See also Sweet v. Childs, 507 F.2d 675 (5th Cir. 1975).

Whether parties have engaged in competition is normally a question of fact, and Vulcan assiduously disputed that it was competing. However, in the case at bar the equation is slightly more complex than usual. There is no factual dispute as to what products the parties sold, nor as to the intended use of these items. Rather, the contest centers upon whether these undisputed actions constituted competition. This involves a mixed question of undisputed fact and contested law which was properly treated as a candidate for summary judgment. The material facts not in dispute were sufficient to support the legal conclusion that Vulcan and Eutectic were competing in the limited areas of application the court specified. In these uses Eutectic and Vulcan are seeking to satisfy the same customer requirements (a hard metal surface to withstand high wear) albeit with different types of goods. The district court’s analysis is apt.

Both parties seek to sell goods to customers requiring shafts, wear plates, dies and the like, having a hard surface. [Vulcan] sells a specialty alloy steel which is hard per se, and thus, exhibits the requisite surface hardness. Eutectic sells alloy powders for the express purpose of surface hardening the soft underlying metals. The customer is given the choice between employing one method or the other. A similar customer choice is presented by either using Eutectic welding materials, offered to repair broken shafts, or replacing such shafts with Astralloy material. In such cases, the success of one party is the sales disadvantage of the other.

Vulcan further asserts that a dispute existed as to its intentional or knowing violation of Eutectic’s rights under employment contracts it had with the personnel hired away. It insists that something more must be shown than mere knowledge that the salesmen it employed were formerly employed in the same type of sales work by Eutectic, and that if any proof of a wrongful participation in the violation of a covenant not to compete can be inferred from this record, the existence of a bad motive on its part is at least in dispute thus making summary judgment improper. Vulcan’s point is not well taken. Proof of an evil motive or bad faith intention to injure Eutectic is not required to be shown.

The circumstances present here support the relief granted. Knowing actions were enough. Vulcan knew its former Eutectic employees were calling on the same customers formerly serviced. The undisputed facts demonstrated that Vulcan’s president knew Caine had an employment agreement with Eutectic which restricted post-employment competition. Caine, who hired Bearden for Vulcan, had signed Bearden’s contract with Eutectic for that corporation. Vulcan knew Caine had been Eutectic’s National Sales Manager, and it must have known that he was recruiting almost exclusively from the sales force of his former employer. No genuine issue of fact exists under Rule 56 as to Vulcan’s knowledge that ex-Euteetic employees were breaching contractual covenants because reasonable men could not differ as to the existence of such knowledge. Doyle v. Bethlehem Steel Corporation, 504 F.2d 911 (5th Cir. 1974).

By the express terms of the employment contracts themselves, New York law controls. Under that law the restrictive covenants, which were limited both in time (two years) and territorial extent (the area served for Eutectic), are enforceable, American Eutectic, etc., Alloys Sales Co., Inc. v. Rodriguez, 480 F.2d 223 (1st Cir. 1973); Water Services, Inc. v. Tesco Chemicals, Inc., 410 F.2d 163 (5th Cir. 1969), whether or not the services of the employees were unique. See Frederick Chusid & Co. v. Marshall Leeman & Co., Inc., 279 F.Supp. 913 (S.D.N.Y.1968).

Given the admittedly minimal impact on Vulcan’s total business, its ability to acquire salesmen from other sources, and in light of Vulcan’s representation on appeal that only three (not including either Caine or Bearden) of the former Eutectic employees remain in Vulcan’s employ, the district court’s decision to enjoin the defendants was well within the range of its discretion. Buchanan v. United States Postal Service, 508 F.2d 259 (5th Cir. 1975); Bayless v. Martine, 430 F.2d 873 (5th Cir. 1970).

Affirmed.

      . Caine’s “employment agreement” contained the following pertinent provisions:
      (5) It is our firm company policy that the following non-competitive secrecy provision constitute a part of your employment agreement—
      (a) You do covenant and agree that all business matters concerning our company or our affiliates, in which you are engaged while in our company and after you leave our company, will be treated by you in strict confidence. You expressly covenant that you will keep inviolate and never directly or indirectly use for yourself (except while you are in our employ and solely in pursuit of our activities as such employee) or use against the interests of our company, or disclose, communicate, divulge or furnish to any other person, firm or corporation any confidential information or business secrets relating to our organization, the conduct of our operations, the materials, processes, plans, designs, models, apparatus, equipment and formulations used in our manufacturing operations and experimental investigations, any commercial or technical information, improvements or things of which you may have gained knowledge or discovered, invented or perfected while in the employ of our company or any working methods or list of suppliers or customers or any ideas or processes of manufacture or any product of articles sold or distributed by us which may be communicated to you or which you may learn by your activities under this Agreement.
      * * * * * *
      (c) As we and our affiliated companies manufacture and/or sell under a variety of trademarks a specialized line of welding materials and products and a specialized line of equipment for use in welding and in connection therewith and have developed special formulations and equipment and utilize a specialized technique of sales and service concerning all of which you will, during your employment with our Company, have access to confidential information, you agree that you will not anywhere in the territory over which you will function during your employment, without prior written consent of our Company, signed by one of our Company officers, during and for a period of two (2) years after your employment with our Company, enter the employ of or render any services to any person, firm, partnership or corporation dealing in materials, products or equipment or a line of materials, products or equipment which compete with any materials, products or equipment which we and/or our affiliated companies market, or engage in any competing business on your account or become interested therein as a Director, principal, representative, employee or any other relationship or capacity.
      Bearden’s contract, which was signed on behalf of Eutectic by Caine, was substantially similar but included an additional provision prohibiting inducing fellow employees to leave Eutectic. We also note that virtually identical contracts and provisions were later adopted by Vulcan and executed by its employees.

      . Rules of Civil Procedure 56(d) provides:
      If on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly.

      . Defendants and each of them, and those in privy therewith, are hereby and in the future enjoined from directly or indirectly soliciting or hiring as an employee, representative, or otherwise, any employee of Eutectic subject to a post employment restraint on competition or post employment restriction on use of confidential information prior to two years following his termination of employment with Eutectic.
      Defendants and each of them, and those in privy therewith, to expressly include all former Eutectic employees in the employment of Astralloy or who represent Astralloy in any capacity, are hereby and for a period of two years from the date hereof enjoined from competing with plaintiff Eutectic, directly or indirectly, through any prior Eutectic employees, or through information provided thereby, in soliciting the sale of any Astralloy product for dies, wear plates, shafts, gear teeth, bucket teeth, valve stems, scrapers, mixer blades, mining equipment, and drag line buckets.

      . Vulcan also urges on this appeal that the trial court acted without having before it certain depositions which were referred to in Eutectic’s motion for admissions. The question was not presented to the trial court. At oral argument we requested counsel, who did not try the case, to consult as to the possibility of stipulating the pertinent facts. No such stipulation has been filed. We decline to reach the issue.

      . We do not know why the injunction did not follow the territorial restriction of the contract in limiting its competitive bar to the geographical area covered during Eutectic employment. However, there is nothing in the record which indicates that this broader reach of the very limited product competition prohibition results in a burden so unreasonable for Vulcan to shoulder that the sweep of the injunction is beyond the ambit of the court’s discretion. Former Eutectic employees can still sell any Vulcan product anywhere except for the specific uses expressly proscribed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Louis C. MUELLER, Defendant-Appellant.
    No. 74-2988.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.
    Brice A. Tondre, San Antonio, Tex., for defendant-appellant.
    William S. Sessions, U. S. Atty., John M. Pinckney, III, Asst. U. S. Atty., San Antonio, Tex., for plaintiff-appellee.
    Before GEWIN, AINSWORTH and MORGAN, Circuit Judges.
   PER CURIAM:

Appellant Mueller was convicted of willfully making false and incorrect entries in the business records of his employer, the Karnes City Livestock Company, Inc., in violation of 7 U.S.C. § 222 and 15 U.S.C. § 50. On appeal, he contends that his conviction must be reversed for any one of the following five reasons: (1) the trial court failed to suppress evidence obtained in violation of Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694; (2) his employer was utilized by the Packers and Stockyards Administration as an instrumentality or device for avoiding the necessity of giving the Miranda warnings; (3) there was fatal variance between the indictment and the prosecution’s evidence and theories at trial; (4) the trial judge improperly refused to instruct the jury concerning the weight of certain federal regulations admitted into evidence; (5) the prosecution made highly prejudicial remarks to the jury during cross-examination of the defendant and during final argument. Because we find these contentions unpersuasive, we affirm the jury verdict.

Mueller, a weighmaster at the stockyards, was indicted for entering false weights on seven scale tickets. He apparently cooperated with one Killen, a buyer for a cattle company, in printing exaggerated weights on tickets describing animals purchased by Killen, resulting in an overcharge to his principal.

Williams, an official of the Packers and Stockyards Administration, United States Department of Agriculture, went to the stockyards in July 1973 to investigate Killen’s activities. Williams’ power was purely investigative; he had no authority to compel answers or to arrest those he suspected of wrongdoing. He first questioned Denson, the manager of the cattle market, who indicated that he considered Mueller to be a trustworthy employee. Williams then individually interviewed both Mueller and Killen without giving them Miranda warnings, and both men admitted their involvement in the illegal scheme.

On appeal Mueller relies principally on his contention that the incriminating statements he made to Williams were inadmissible at trial since they were made without the benefit of Miranda warnings. The fallacy of this argument is that the appellant was not in custody at the time he admitted wrongdoing. This court’s recent decision in United States v. Carollo, 507 F.2d 50 (5th Cir. 1975) confirms that Mueller did not make the statements in question during a “custodial interrogation.”

In Carollo, a restaurant proprietor made incriminating statements, without having received Miranda warnings, to Special Agents of the Bureau of Alcohol, Tobacco, and Firearms, Department of the Treasury, during the course of an “administrative inspection.” The agents inspecting the restaurant questioned Carollo only after they noticed liquor bottles marked similarly to those in retail stores and became suspicious that Carollo was purchasing liquor illegally from retail merchants rather than from authorized wholesale dealers. This court, while noting that at the time of questioning an actual “criminal investigation” may have focused on Carollo, nonetheless held that a custody situation did not exist.

The circumstances of the questioning in the instant case are even less “custodial” than those in Carollo. As the district court observed in denying the motion to suppress the introduction into evidence of Mueller’s incriminating statements, the admissions emerged during the course of an “informal conversation.” The investigating agent was not a police officer and had no authority to arrest. Mueller was at liberty to depart at any time or to withhold whatever information he desired. In the circumstances, we conclude that Miranda warnings were not required.

We have examined the briefs and the record concerning Mueller’s remaining four contentions of error and find them also to be without merit.

Affirmed.

      . 7 U.S.C. § 222 provides:
      For the efficient execution of the provisions of this chapter, and in order to provide information for the use of Congress, the provisions (including penalties) of sections 46 and 48-50 of Title 15, are made applicable to the jurisdiction, powers, and duties of the Secretary in enforcing the provisions of this chapter and to any person subject to the provisions of this chapter, whether or not a corporation. The Secretary, in person or by such agents as he may designate, may prosecute any inquiry necessary to his duties under this chapter in any part of the United States.

      . 15 U.S.C. § 50 provides in part:
      Any person who shall willfully make, or cause to be made, any false entry or statement of fact in any report required to be made under sections 41 to 46 and 47 to 58 of this title, or who shall willfully make, or cause to be made, any false entry in any account, record, or memorandum kept by any corporation subject to said sections, or who shall willfully neglect or fail to make, or to cause to be made, full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the business of such corporation, or who shall willfully remove out of the jurisdiction of the United States, or willfully mutilate, alter, or by any other means falsify any documentary evidence of such corporation, or who shall willfully refuse to submit to the Commission or to any of its authorized agents, for the purpose of inspection and taking copies, any documentary evidence of such corporation in his possession or within his control, shall be deemed guilty of an offense against the United States, and shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not less than $1,000 nor more than $5,000, or to imprisonment for a term of not more than three years, or to both such fine and imprisonment.

      . Miranda v. Arizona requires that warnings be given only prior to a “custodial interrogation”, that is, “questioning initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action, in any significant way.” 384 U.S. at 444, 86 S.Ct. at 1612, 16 L.Ed.2d at 706.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Guadalupe Salazar NIETO, Defendant-Appellant.
    No. 74-2060.
    United States Court of Appeals, Fifth Circuit.
    April 4, 1975.

      Gustavo L. Acevedo, Laredo, Tex. (Court-appointed), for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., Daniel V. Alfaro, James R. Gough, Asst. U. S. Attys., Anna E. Stool, Staff Atty., Houston, Tex., for plaintiff-appellee.
    Before BROWN, Chief Judge, and MURRAH  and WISDOM, Circuit Judges.

       Senior Circuit Judge of the Tenth Circuit sitting by designation.

   PER CURIAM:

Appellant Nieto was driving a car registered to the passenger Trevino, when the car was stopped and searched without warrant by federal drug agents acting on an informer’s tip. The search produced a concealed package of cocaine, and upon denial of a motion to suppress, the cocaine was introduced as evidence in the jury trial which resulted in Nieto’s conviction for possession of cocaine with intent to distribute it in violation of 21 U.S.C. § 841(a)(1). Nieto appeals on two grounds: (1) the illegality of the search; and (2) the insufficiency of the evidence. We affirm.

We start with the proposition that all warrantless searches are suspect. Absent a warrant issued by a judicial officer upon a showing of probable cause, the search is “per se unreasonable, unless the police can show that it falls within one of a carefully defined set of exceptions based on the presence of ‘exigent circumstances.’ ” Coolidge v. New Hampshire, 403 U.S. 443, 474-475, 91 S.Ct. 2022, 2042, 29 L.Ed.2d 564 (1971). See also Chimel v. California, 395 U.S. 752, 762, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969); Katz v. United States, 389 U.S. 347, 356-358, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967); Preston v. United States, 376 U.S. 364, 367, 84 S.Ct. 881, 11 L.Ed.2d 777 (1964). Two of the narrowly defined exceptions are for a border search, Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973), and for the search of a moving automobile, Chambers v. Maroney, 399 U.S. 42, 49, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970); Brinegar v. United States, 338 U.S. 160, 69 S.Ct. 1302, 93 L.Ed. 1879 (1949); Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925); Williams v. United States, 404 F.2d 493 (5th Cir. 1968).

Nieto argues that the Almeida-Sanchez exception for border searches does not apply here, because the search was conducted outside the circumscribed zone of a border or its functional equivalent. This may be true, but the government does not rely upon the border-search exception. Instead, it invokes the Carroll exception, which itself was carefully reaffirmed in Almeida-Sanchez:

“It is settled, of course, that a stop and search of a moving automobile can be made without a warrant Carroll v. United States, 267 U.S. 132 [45 S.Ct. 280, 69 L.Ed. 543]. . . . The Court [in Carroll] recognized that a moving automobile on the open road presents a situation ‘where it is not practicable to secure a warrant because the vehicle can be quickly moved out of the locality or jurisdiction in which the warrant must be sought.’ Id., at 153 [45 S.Ct., at 285]. . . . but the Carroll doctrine does not declare a field day for the police in searching automobiles. Automobile or no automobile, there must be probable cause for the search.” 413 U.S. at 269, 93 S.Ct. at 2537.

Accordingly, this warrantless search is legal only if the seizing officer had probable cause and the car’s mobility created an exigent circumstance.

Probable cause to search exists when the facts and circumstances warrant a reasonably prudent man to believe that the vehicle contains contraband. Williams v. United States, supra, 404 F.2d at 494. Information from a reliable informant that is corroborated by other matters within the participating officer’s knowledge' can constitute sufficient probable cause to justify an arrest or search. Draper v. United States, 358 U.S. 307, 79 S.Ct. 329, 3 L.Ed.2d 327 (1959); United States v. Summerville, 477 F.2d 393 (5th Cir. 1973). And this court has also held that “probable cause can rest upon the collective knowledge of the police, rather than solely on that of the officer who actually makes the arrest,” when there is “some degree of communication between the two.” Moreno-Vallejo v. United States, 414 F.2d 901, 904 (5th Cir. 1969), cert. denied, 400 U.S. 841, 91 S.Ct. 82, 27 L.Ed.2d 76 (1970).

The relevant facts begin with a telephone call from the informant, not identified by name on this record, to drug agent Gerber. Gerber testified that shortly after noon the informant telephoned him that two Latin men, one nicknamed “Coco,” were in possession of cocaine and were traveling east on Highway 83 in a 1971 green Mercury, Texas license KCB — 165, having departed Laredo, Texas (on the Mexican border), twenty minutes earlier for Zapata, Texas; that the informant had given him reliable information on numerous previous occasions; that he immediately telephoned agent Villarreal with this information; and that when, half an hour later, a second call came from the informant that the other man in the car was nicknamed “Lupe,” Gerber telephoned Villarreal’s office again.

Agent Bowen, who ultimately discovered the cocaine in the car, testified that, within ten minutes of Gerber’s call, Villarreal relayed to him the description of the car, its occupants, and location; that he, with another agent, proceeded to the location to trail a car corresponding to the description; that, after rendezvous with Villarreal, the car was stopped not far from Zapata; that the car was driven by Nieto, nicknamed “Lupe,” with, one passenger Trevino, nicknamed “Coco,” to whom the vehicle was registered; that he searched the car without warrant, finding under the dashboard a five-inch cylindrical package wrapped in newspaper containing about 271 grams of cocaine; that pursuant to the immediately subsequent, warrantless arrest of Nieto and Trevino, he searched Nieto and found $800 in cash; and that he himself had known nothing about the reliability of the. informer.

In sum, the tip passed from the informant, whom Gerber knew to be reliable, to Gerber to Villarreal to Bowen, who searched the car. The tip was corroborated when the location, appearance, and occupants of the car were found to correspond exactly to it. The collective knowledge of this closely coordinated team of drug agents can be attributed to the seizing officer on the scene, Bowen. The automobile was said to be in motion when the tip was received and was in motion when stopped by the agents. Obtaining a warrant would have been impractical. Cf., Wood v. Crouse, 417 F.2d 394 (10th Cir. 1969). We agree with the trial court that there existed probable cause and exigent circumstances sufficient to legitimize this warrantless search.

Disputing the government’s evidence, Nieto testified that he had been unemployed, at the time of the search, for about six months; that the $800 was personal savings for a truck; that he had accompanied Trevino on this trip only for the purpose of shopping for a truck; that he had first ridden as a passenger, then later as driver, only because he had a driver’s license and Trevino did not; and that he had no knowledge of, or connection with, the cocaine.

Nieto argues that all the evidence does not show that he had the required control over the drug, citing cases where this and other courts found the facts inadequate to establish constructive possession. Montoya v. United States, 402 F.2d 847 (5th Cir. 1968); United States v. Pratt, 429 F.2d 690 (3rd Cir. 1970); Arellanes v. United States, 302 F.2d 603 (9th Cir. 1962); United States v. Sutton, 312 F.Supp. 969 (D.Ariz.1970). In all those cases, however, the defendant was no more than a passenger in a car containing contraband. In our case, Nieto was driving the car containing the highly saleable cocaine and was carrying an unusual amount of cash in view of his unemployment. Under similar facts, this court has recently upheld a finding of constructive possession. United States v. Maspero, 496 F.2d 1354, 1358-1359 (5th Cir. 1974). We reach the same result here.

Affirmed.


author: THORNBERRY, Circuit Judge:

text:
    ST. BERNARD GENERAL HOSPITAL, INC., Plaintiff-Appellant, v. HOSPITAL SERVICE ASSOCIATION OF NEW ORLEANS, INC., et al., Defendants-Appellees.
    No. 74-2186.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.
    Gibson Tucker, Jr., Jerald N. Andry, Charles A. O’Niell, Jr., New Orleans, La., for plaintiff-appellant.
    Charles W. Lane, III, Harry S. Hardin, III, New Orleans, La., for defendants-appellees.
    Before BELL, THORNBERRY and GEE, Circuit Judges.
   THORNBERRY, Circuit Judge:

This is an appeal from a judgment dismissing an antitrust complaint for want of federal jurisdiction. We reverse and remand.

The facts necessary to our decision were well stated by the district court in an unpublished opinion, from which we generously borrow for purposes of our statement of the case. The plaintiff, St. Bernard General Hospital, Inc., (“St. Bernard”), instituted this suit as a class action to recover treble damages for alleged violations of § 1 of the Sherman Act, 15 U.S.C. § 1. The defendant, Hospital Service Association of New Orleans, Inc., (“Hospital Service”), is a non-profit mutual insurance association established to provide payment in favor of subscribers for the expense of complete hospital care. Hospital Service obtained a license to use the trade name “Blue Cross” in order to sell hospitalization insurance under the Blue Cross plan in the parishes of Orleans, Jefferson, St. Charles, Plaquemine, and St. Bernard. The licensor, American Hospital Association, was originally named a defendant but was later dismissed. No appeal was taken from the order dismissing American Hospital Association.

Very basically, the Blue Cross plan involves group prepayment of hospital charges to Hospital Service with a reciprocal agreement by member hospitals to render medical services to subscribing insureds. The member hospitals are compensated by Hospital Service for the medical assistance they provide to subscribers. The universe of eligible subscribers includes not only residents of the five local parishes, but also any Blue Cross insured who holds a policy issued by another licensee of American Hospital Association. Thus, it can and does occur that a New York resident may receive treatment in a New Orleans member hospital pursuant to a Blue Cross policy issued by a New York licensee. Conversely, a New Orleans subscriber with Hospital Service is eligible for insured treatment in a New York member hospital. These non-resident claims and charges are settled through a clearing house process which is utilized by the various plans across the country on a monthly collection basis. If a subscriber is treated at a non-member hospital, Hospital Service will make the reimbursement specified by the subscriber’s policy to the insured or to the non-member hospital, if the insured has executed an assignment. The subscriber’s coverage, however, is less comprehensive when a non-member hospital performs treatment.

Hospital Service originally consisted of the Touro Infirmary, the Southern Baptist Hospital, the Mercy Hospital, and the Hotel Dieu. In the health insurance trade these are known as “participating” hospitals, and they are so termed in their contracts with Hospital Service. Today there are other “participating” hospitals in the greater New Orleans area: the Ear, Eye, Nose and Throat Hospital, the Flint-Goodridge Hospital, the Oschner Foundation, the Sara Mayo Hospital, and the West Jefferson Hospital. In order to acquire “participating” status a hospital must meet several requisites: it must be accredited, it must be operated on a non-profit basis, and it must enter into a particular kind of contract with Hospital Service. The contract requires the hospital to render medical services to subscribing insureds and entitles it to compensation from Hospital Service for the necessary and proper charges billed to the insured. In return, the “participating” hospital agrees to bear a portion' of the expense of underwriting Hospital Service if the association becomes insolvent or its reserves become inadequate. The “participating” hospitals do not exist entirely at the mercy of events, however, for each is afforded two seats on Hospital Service’s Board of Managers, and each is entitled to vote for remaining managers who are elected at large.

Hospitals like the plaintiff and its fellow class members, which operate for profit, may also become members of Hospital Service. They do so by signing a contract under which they are known as “contracting” hospitals. Presently there are ten such “contracting” hospitals, including St. Bernard, in the New Orleans area. These members have no voting rights in the election of Hospital Service’s management. On the other hand, they have no obligation to underwrite the association in case of insolvency or depleted reserves.

This lawsuit revolves around the contractual provisions between the for-profit hospitals and Hospital Service as those provisions detail the manner in which a “contracting” hospital is compensated for Blue Cross-insured treatment. The contracts provide that Hospital Service will reimburse 100% of the charges billed to the subscriber. Such reimbursement, however, may not exceed the average per diem payment or the average per case payment made to “participating” — i. e., non-profit — hospitals. Thus, the parties stipulate that for-profit hospitals like the plaintiff have been and will be required in various years to rebate to Hospital Service amounts collected from the association in excess of the average wholesale cost of services rendered at non-profit hospitals.

In its complaint, plaintiff alleged that these required rebates are fixed arbitrarily by the defendant and the “participating” members; that this so-called “premium to do business” with the defendant constitutes the product of an unlawful agreement in restraint of interstate commerce; and that the contractual scheme has injured plaintiff and its fellow for-profit hospitals by forcing them either to forfeit all profit on Blue Cross business and at times incur losses, or else pass the amount of the rebate on to the insured patient, which presumably would encourage Blue Cross subscribers to utilize only the “participating” non-profit hospitals. In its brief, plaintiff alleges more specifically a group boycott by the defendant and “participating” hospitals, which plaintiff asserts is a per se violation of Sherman Act, § 1.

The merits of the dispute were not reached below; indeed no answer was ever filed. Instead, defendant Hospital Service tendered a motion to dismiss for lack of jurisdiction or alternatively for failure to state a claim. Upon the submission of affidavits and depositions in the nature of summary judgment proof, the district court considered only the jurisdictional question. The plaintiff argued that jurisdiction should be sustained, either because for-profit hospitals render occasional services to out-of-state residents, or because hospitals must purchase drugs, equipment, and supplies from out-of-state sources in order to deliver health care at the local level. Although the complaint did not allege specific quantities or dollars-and-cents representing interstate purchases by plaintiff or any member of its class, the defendant did not attack the sufficiency of the pleadings. Rather, the defendant and the district court both took the position that whether plaintiff treated out-of-state patients or purchased products in interstate commerce was essentially immaterial to the question of Sherman Act jurisdiction.

Accordingly, relying on Page v. Work, 9th Cir. 1961, 290 F.2d 323, several recent district court cases, and a few earlier cases from other Circuits, the court ruled that its inquiry was confined to one of characterizing the precise activity upon which the alleged restraint most directly impacted. Having determined that activity to be the rendition of hospital services, the court required that the activity itself either constitute an enterprise in interstate commerce, or, if predominately intrastate, that it “substantially affect” interstate commerce. The district court then held as a matter of law “that the rendition of hospital services is a purely local activity.” Therefore, it concluded, “the practice of the defendant is allegedly restraining a local activity of the plaintiff not in interstate commerce, and the Sherman Act is inapplicable, unless the plaintiff can demonstrate that the alleged restraint of the local function ‘substantially affects interstate commerce.’ ”

Applying this latter part of its holding, but without giving any weight to plaintiff’s jurisdictional arguments, the district court rejected plaintiff’s contention with respect to treating out-of-state patients on the assumption that the likelihood that such a patient would seek treatment at a particular hospital is too incidental or “remote.” As for the argument based on drugs and supplies purchased in interstate commerce, the court stated that “[w]hat is essentially an intrastate activity is not transformed into interstate commerce by reason of such purchases, and there exists no substantial effect on interstate commerce by the indirect effect of reducing prospective purchases of supplies in interstate commerce.”

In the context of this class action involving allegedly predatory agreements imposed by Hospital Service upon ten for-profit hospitals, we reject the district court’s scheme of analysis. Specifically, we disagree with the court’s purely-local-as-a-matter-of-law premise from which all conclusions, as well as the putative absence of a “substantial effect” on interstate commerce followed. On the other hand, we are not entirely convinced that the plaintiff has made a sufficient showing to sustain Sherman Act jurisdiction. For example, plaintiff asserted neither in its complaint nor in its submissions below that defendant’s conduct has caused or will cause any member of the complaining class to cease treating patients from other states or to curtail purchases of supplies from interstate sources. As matters currently stand, plaintiff essentially contends that certain contract provisions simply prevent New Orleans area for-profit hospitals from earning a profit on Blue Cross business. Hence, we reverse the judgment below solely on the basis of its unbending legal position. On remand, all issues — including the sufficiency of the complaint for purposes of Sherman Act jurisdiction — will be open for full consideration in light of whatever amendments the parties may offer, the evidence as it develops, and the factors we mention in the following discussion.

At the outset, we note that this court has already rejected the narrow reading of Page v. Work, supra, which permeates the district court’s decision. In Lehrman v. Gulf Oil Corp., 5th Cir. 1972, 464 F.2d 26, 36, cert. denied, 409 U.S. 1077, 93 S.Ct. 687, 34 L.Ed.2d 665, we stated:

We do not accept the suggestion that Page v. Work holds, as a matter of law, that a conspiracy to restrain trade in an intrastate product cannot, as a matter of law, affect trade in another, interstate product sufficiently to trigger Sherman Act jurisdiction. The focus of the Act is to protect interstate trade from interferences of all degrees of subtlety. The concept of interstate commerce is a practical one. The interstate nerves of a local business can- be deadened swiftly by a conspiracy the object of which happens to be the intrastate aspect of a plaintiff’s business. We see no reason why the federal courts should confine themselves to protecting against interferences with interstate commerce which, quite fortuitously, turn out to have motivated the actions of a defendant. It is the effect on commerce that determines federal jurisdiction under the Sherman Act and not any notion of the “interstate culpability” of those who engage in anticompetitive practices. No matter how intrastate the objects of anticompetitive conspirators, they must take their victims’ involvement in interstate commerce as they find them.

Significantly, Lehrman, like this case, involved allegedly illegal practices perpetrated most visibly at the local level. Nevertheless, numerous businesses were victimized in that, inter alia, the defendant’s conduct reduced their ability to purchase and sell goods from interstate commerce. This factor in itself was held to constitute one alternative basis of Sherman Act jurisdiction. Concerning the defendant’s argument that, assuming some effect on interstate commerce the effect was jurisdictionally insufficient because purchased items often “came to rest” intrastate before resale, we noted that the requisite effect is nonethelsss accomplished by “a reduced or altered flow of goods into the State from without the state.” Thus, “Lehrman’s business did have an impact on interstate commerce that was not ‘insignificant or insubstantial.’ ” Id. at 35. See also Copper Liquor, Inc. v. Adolph Coors Co., 5th Cir. 1975, 506 F.2d 934, at 949. In other words, it was not de minimis.

Subsequent to Lehrman, we have had occasion to consider and reaffirm its broad jurisdictional implications for Sherman Act cases. In Battle v. Liberty National Life Ins. Co., 5th Cir. 1974, 493 F.2d 39, a class action was brought by a group of Alabama funeral homes contesting allegedly illegal burial policy arrangements whereby “authorized” funeral homes — i. e., those that entered into service contracts with the defendants— were reimbursed for a greater range of services to insureds than were the non-contracting, or “unauthorized,” homes. Although we observed that the case was not adequately developed to permit a conclusive determination of jurisdiction, we recognized that certain of plaintiffs’ allegations, if substantiated, would establish Sherman Act jurisdiction under either the “in commerce” or “substantial effect” tests. Among these allegations were: that the plaintiffs used caskets purchased out-of-state in performing services under the burial policies; that they purchased clothing, embalming fluids, and other funeral nécessities from out-of-state sources; and that they performed funeral services under the policies for residents of other states who died in Alabama. We stated that “[i]f these facts are established, it appears that such activities, when considered in the aggregate, would have a substantial impact on interstate commerce [i. e., not “insignificant or insubstantial”], and thus satisfy the jurisdictional requirement under the Sherman Act.” 493 F.2d at 48 (emphasis ours).

Besides citing Lehrman, the Battle court cited Doctors, Inc. v. Blue Cross of Greater Philadelphia, 3rd Cir. 1973, 490 F.2d 48, reversing D.C., 360 F.Supp. 693. In the case sub judice the district court relied heavily on the lower court decision in Doctors, Inc. The Third Circuit’s reversal apparently was not brought to its attention. In any event, we consider the Third Circuit’s opinion well-reasoned, its distinctions of the authorities relied on by the court below soundly-drawn, and its rationale consistent with our decisions in Lehrman and Battle. Furthermore, Doctors, Inc. is in substance indistinguishable from the instant case with the one exception that our plaintiff’s pleading is less specific in terms of allegations necessary to establish the interstate connections required for Sherman Act jurisdiction. Compare 490 F.2d at 50 nn. 3, 3a. Nevertheless, we emphasize that this case has proceeded as if the sole question were purely legal; no challenge to the sufficiency of the jurisdictional pleadings or the jurisdictional proof has been entered. Therefore, we do not believe that this one distinction should alter our conclusions.

In summary, we have not held that plaintiff St. Bernard has sustained Sherman Act jurisdiction, either for itself or for the class it seeks to represent. We have only held that, on remand, a proper view of the posture of this case in light of controlling precedent entitles the plaintiff to establish its right to a day in federal court. We do not consider our disposition to be in conflict with the very recent en banc opinion by the Fourth Circuit in Hospital Building Co. v. Trustees of the Rex Hospital, 4th Cir. 1975, No. 73-1627, 511 F.2d 678. There, with three judges dissenting, the Fourth Circuit affirmed the dismissal of a single small hospital’s Sherman Act complaint for lack of jurisdiction. We believe the court’s distinction of Doctors, Inc. likewise fully distinguishes the circumstances of this case. As the Fourth Circuit majority put it:

There is simply no significant comparison between the effect on commerce of one small hospital’s delayed expansion [which was the sole injury alleged by the plaintiff], especially when other hospitals contemplate expansion, and the vastly greater effect of the possible closing of a significant percentage of the hospitals in a metropolitan area.

In this case, of course, fully ten of the nineteen New Orleans area Blue Cross member hospitals comprise the plaintiff class. Also, we note that the Fourth Circuit announced its decision not without considerable trepidation, terming it “a rare exception to prove the rule that judgments on the pleadings in antitrust cases will ordinarily be reversed.” In view of this cautionary reminder, we are not disturbed that the logic of Hospital Building Co. argues for a result contrary to that which we have reached. Instead, we believe that our decision accords with the proposition to which we, as well as the Fourth Circuit, are firmly committed:

There is no bright line dividing cases in which the effect upon interstate commerce is sufficient to permit Congress to prohibit particular anticompetitive activity under the commerce clause from those cases in which it is not sufficient. In this area perhaps more than in most, each case must turn on its own facts.

Rasmussen v. American Dairy Association, 9th Cir. 1973, 472 F.2d 517, 526, cert. denied, 412 U.S. 950, 93 S.Ct. 3014, 37 L.Ed.2d 1003; Hospital Building Co., supra.

Reversed and remanded.

      . In Its submission to the district court and in its brief to this court plaintiff, St. Bernard, contended that at least one of these “participating” hospitals, the Oschner Foundation, in fact earns a profit from its services. Because of the nature of the district court’s ruling, discussed infra, no finding or opinion was expressed with respect to this contention. Consequently, we express none.

      . “The test of jurisdiction is not that the act complained of affect a business engaged in interstate commerce but that the conduct complained of affects the interstate commerce of such business.” 290 F.2d at 330.

      . Nankin Hospital v. Michigan Hospital Service, E.D.Mich.1973, 361 F.Supp. 1199; Doctors, Inc. v. Blue Cross of Greater Philadelphia, E.D.Pa.1973, 360 F.Supp. 693; Hospital Building Co. v. Trustees of Rex Hospital, E.D. N.C.1973, 1973 Trade Cas. ¶ 74,428.

      . Elizabeth Hospital, Inc. v. Richardson, 8th Cir. 1959, 269 F.2d 167, cert. denied, 361 U.S. 884, 80 S.ct. 155, 4 L.Ed.2d 120; Riggall v. Washington County Medical Society, 8th Cir. 1957, 249 F.2d 266, cert. denied, 355 U.S. 954, 78 S.Ct. 540, 2 L.Ed.2d 530 (1958); Spears Free Clinic and Hospital for Poor Children v. Cleere, 10th Cir. 1952, 197 F.2d 125.

      . Nor is United States v. Oregon State Medical Society, 343 U.S. 326, 72 S.Ct. 690, 96 L.Ed. 978 (1952), to the contrary. There, in a Sherman Act injunction suit brought by the government, the district court had found as fact that “[t]he sale of medical services, by Doctor Sponsored Organizations, as conducted within the State of Oregon, is not trade or commerce within the meaning of Section 1 of the Sherman Anti-Trust Law . . . .” 343 U.S. at 338, 72 S.Ct. at 698, 96 L.Ed. at 987. The Supreme Court upheld this finding as not clearly erroneous, stating, “[t]he appeal brings to us no important questions of law or unsettled problems of statutory construction. Its issues are solely ones of fact.” 343 U.S. at 330, 72 S.Ct. at 694, 96 L.Ed. at 983. In this case, by contrast, no testimony has yet been presented and no facts have been found.

      . See note 3, supra.