author: ALFRED T. GOODWIN, Circuit Judge:

text:
    Steven OUBICHON, Appellant, v. NORTH AMERICAN ROCKWELL CORPORATION, Appellee.
    No. 71-1540.
    United States Court of Appeals, Ninth Circuit.
    July 10, 1973.

      Hillel Chodos (argued), Los Angeles, Cal, for appellant.
    Kenneth W. Anderson (argued), Stephen B. Tallent, J. Anthony Sinclitico, III, of Gibson, Dunn & Crutcher, Los Angeles, Cal., for appellee.
    Charles L. Reisehel (argued), John De J. Pemberton, Jr., Acting Gen. Counsel, Julia P. Cooper, Atty., Barbara Schlei, Legal Consultant, E. E. O. C., Washington, D. C., for amicus curiae.
    Before CHAMBERS, HAMLEY and GOODWIN, Circuit Judges.
   ALFRED T. GOODWIN, Circuit Judge:

Steven Oubiehon appeals from a judgment of dismissal of a part of his complaint and a summary judgment against the remainder in an action for damages and injunctive relief under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e.

Oubiehon, a black employee of North American Rockwell Corporation, alleged four acts of racial discrimination: (1) disciplinary suspension for marching in a C.O.R.E.-sponsored demonstration against North American on September 13, 1966; (2) exclusion from on-the-job training classes that started on March 27, 1967; (3) disciplinary action for a purportedly unauthorized entry upon company property on May 3, 1967; and (4) an interdepartmental transfer on June 13,1967.

On March 21, 1967, after the first alleged incident, Oubiehon filed an unsworn complaint with the Equal Employment Opportunity Commission (EEOC). The Commission referred him to the California Fair Employment Practices Commission (FEPC) to enable him to comply with § 706(b) of the Act, 42 U.S.C. § 2000e-5(b). The state agency rejected Oubichon’s complaint because it had previously found similar complaints by other C.O.R.E. demonstrators “not sustained.”

Oubiehon then made a timely request for the EEOC to take jurisdiction, and filed a sworn charge alleging all four incidents. While Oubichon’s case was being studied by the EEOC, Oubichon’s union filed, under a collective-bargaining agreement, grievances based on the first two alleged incidents. North American settled these grievances without admitting discrimination. North American paid Oubiehon his lost wages, and removed from his file the evidence of disciplinary measures.

In due course, the EEOC reported that it had been unable to obtain “voluntary compliance” from North American, thus clearing the way for Oubiehon to commence this action in the district court. North American moved to dismiss all portions of the complaint except those relating to the first incident.

North American contended that because only the one matter had been brought before the state agency the court lacked subject matter jurisdiction over all but the allegations concerning the C.O.R.E. protest. With respect to that incident, North American sought summary judgment on the ground that the grievance proceedings constituted an election of remedies that barred a Title VII action and rendered the case moot.

In a decision reported at 325 F.Supp. 1033 (C.D.Cal.1970), the district court granted both motions. Oubichon appeals. We reverse.

I

The dismissal was predicated on Oubi-chon’s alleged failure to comply with § 706(b) of the Act. The purpose of § 706(b) is to give state agencies an opportunity to consider discrimination complaints before federal authorities act. By contacting the California FEPC, Oubichon brought his complaint about the disciplinary action taken against the 1966 protestors within the requirement of § 706(b). Love v. Pullman Co., 404 U.S. 522, 92 S.Ct. 616, 30 L.Ed.2d 679 (1972). North American contends, however, that this single notification of the FEPC did not afford that agency an adequate opportunity to evaluate Oubichon’s complaints of later incidents.

When an employee seeks judicial relief for incidents not listed in his original charge to the EEOC, the judicial complaint nevertheless may encompass any discrimination like or reasonably related to the allegations of the EEOC charge, including new acts occurring during the pendency of the charge before the EEOC. See Danner v. Phillips Petroleum Co., 447 F.2d 159, 162 (5th Cir. 1971); Tipler v. E. I. duPont deNemours & Co., 443 F.2d 125, 131 (6th Cir. 1971); Sanchez v. Standard Brands, Inc., 431 F.2d 455, 465-467 (5th Cir. 1970); Taylor v. Safeway Stores, Inc., 333 F.Supp. 83 (D.Colo.1971); Garneau v. Raytheon Co., 323 F.Supp. 391, 393-394 (D.Mass.1971); Sciaraffa v. Oxford Paper Co., 310 F.Supp. 891, 898 (D.Me.1970); Logan v. General Fireproofing Co., 309 F.Supp. 1096, 1100 (S.D.N.C.1969); King v. Georgia Power Co., 295 F.Supp. 943, 947 (N.D.Ga.1968); Note, Developments in the Law-Employment Discrimination and Title VII of the Civil Rights Acts of 1964, 84 Harv.L.Rev. 1109, 1216-18 (1971); cf. Macklin v. Spector Freight Systems, Inc., 478 F.2d 979 (D.C.Cir. 1973). The same standard should govern when the charge is first filed with a state agency. Cf. Latino v. Rainbo Bakers, Inc., 358 F.Supp. 869 (D.Colo.1973). To force an employee to return to the state agency every time he claims a new instance of discrimination in order to have the EEOC and the- courts consider the subsequent incidents along with the original ones would erect a needless procedural barrier. Cf. Love v. Pullman Co., 404 U.S. at 527, 92 S.Ct. 616.

As the present case shows, it is not always clear whether later incidents are reasonably related to or grow out of earlier incidents on which complaint is made. Oubichon now characterizes all his allegations as describing a chain of related actions designed to punish him for offending his employer. North American, on the other hand, asserts that each occurrence is separate. It cannot be said as a matter of law that North American’s interpretation of the facts is the only acceptable one. A trial is necessary to resolve this dispute, and it follows that the district court erred in granting North American’s motion to dismiss.

Furthermore, even if Oubichon’s procedure had failed to satisfy § 706(b), dismissal was unwarranted. In cases where the state agency has been bypassed, the district court should retain jurisdiction for a period sufficient to allow the employee to seek redress through the state agency. Mitchell v. Mid-Continent Spring Co., 466 F.2d 24 (6th Cir. 1972), cert. denied, 410 U.S. 928, 93 S.Ct. 1363, 35 L.Ed.2d 590 (1972); Motorola, Inc. v. EEOC, 460 F.2d 1245 (9th Cir. 1972).

II

The district court granted summary judgment on two grounds: North American’s theory that the removal of the warning notice from Oubichon’s file and the payment of the five days’ salary he was docked rendered his claim moot; Oubichon’s resort to union grievance machinery was an election of remedies barring recourse to the courts. Both theories were wrong.

The portion of the case pertaining to the C.O.R.E. protest is not made moot by the relief Oubichon received in the union grievance procedure. Oubichon claims that the disciplinary action taken against him for demonstrating is part of a chain of incidents indicative of a policy of racial discrimination. If he can prove this allegation, he may be entitled to injunctive relief from future manifestations of the alleged policy as well as money damages for past injuries. The controversy is justiciable, and Oubichon has the requisite personal stake in attempting to prove his allegations. If he succeeds, an injunction is possible. The case is not moot. See generally Note, Policy Conflict: Should an Arbitration Award Be Allowed to Bar a Suit Under Title VII of the Civil Rights Act of 1964?, 20 U.S.L.A.L.Rev. 84, 94-97 (1972); cf. Rosenfeld v. Southern Pacific Co., 444 F.2d 1219, 1221-1222 (9th Cir. 1971).

The election-of-remedies issue is more complex. While it is generally agreed that double recovery is to be avoided, most courts and commentators have rejected the stringent view adopted by the district court here. See, e.g., Macklin v. Spector Freight Systems, Inc., supra; Rios v. Reynolds Metals Co., 467 F.2d 54 (5th Cir. 1972); Voutsis v. Union Carbide Corp., 452 F.2d 889 (2d Cir. 1971); Newman v. Avco Corp., 451 F.2d 743 (6th Cir. 1971); Bowe v. Colgate-Palmolive Co., 416 F.2d 711 (7th Cir. 1969); Meltzer, Labor Arbitration and Overlapping and Conflicting Remedies for Employment Discrimination, 39 U.Chi.L.Rev. 30 (1971); Note, Dewey v. Reynolds Metals Company: Labor Arbitration and Title VII, 119 U.Pa.L.Rev. 684 (1971); Note, Developments in the Law, supra at 1222-1228. But see Alexander v. Gardner-Denver Co., 466 F.2d 1209 (10th Cir. 1972), aff’g 346 F.Supp. 1012 (D.Colo.1971), cert. granted, 410 U.S. 925, 93 S.Ct. 1398, 35 L.Ed.2d 586 (1973).

This circuit has recently observed that “[t]here is no jurisdictional bar to invoking Title VII remedies and the arbitration process independently.” Griffin v. Pacific Martime Ass’n, 478 F.2d 1118 (9th Cir. 1973). And in Rosenfeld v. Southern Pacific Co., supra, aff’g 293 F.Supp. 1219 (C.D.Cal.1968), we upheld a decision of the district court that denied that the election-of-remedies doctrine barred a judicial action where the employee abandoned the grievance procedures before a final decision was reached.

Title VII is silent on the need to exhaust contractual remedies or the effect of resort to union grievance procedures. On the other hand, the statute is very clear in spelling out the administrative prerequisites to suit and in specifying the implications of pursuit of administrative remedies on the right to judicial relief. See, e. g., Crosslin v. Mountain States Tel. & Tel. Co., 422 F.2d 1028 (9th Cir. 1970), vacated, 400 U.S. 1004, 91 S.Ct. 562, 27 L.Ed.2d 618 (1971). The inference is strong that Congress did not intend to deny Title VII relief to employees who availed themselves of contractual remedies before coming to the courts. Cf. Voutsis v. Union Carbide Corp., 452 F.2d at 893-894; Meltzer, supra at 44.

This statutory construction is fortified by an examination of the policies underlying the election-of-remedies doctrine, Title VII, and federal labor law. Strictly speaking, the doctrine of election of remedies is not applicable in this context, for, as the Court of Appeals for the Sixth Circuit noted, “[t]he doctrine applies only where conflicting and inconsistent remedies are sought on the basis of conflicting and inconsistent rights.” Newman v. Avco Corp., 451 F.2d at 746 n. 1. See Note, Labor Arbitration and Title VII, supra at 685-86; Note, Policy Conflict, supra at 90-93.

But other concerns that are not necessarily part of the general election-of-remedies doctrine have been voiced. First, proponents of a strict éleetion doctrine have pointed to the possibility of unjust enrichment by multiple recoveries. See e. g., Bowe v. Colgate-Palmolive Co., 416 F.2d at 715. This fear cannot justify a stringent election requirement. If the employer prevails at arbitration, then no duplication would be possible. Even where the employee receives an award or a settlement as in the present case, judicial relief can be tailored to avoid duplication and windfall gains. See, e.g., Hutchings v. United States Industries, Inc., 428 F.2d 303, 314 (5th Cir. 1970); Bowe v. Colgate-Palmolive Co., supra; Note, Labor Arbitration and Title VII, supra at 695.

Second, it has been said that it would be unfair to permit the employee to overturn or even supplement arbitration awards or grievance settlements when the employer cannot do so. See, e. g., Alexander v. Gardner-Denver Co., 346 F.Supp. at 1019. However, to hold the employee to the result of the grievance proceedings might prove equally unfair. It is natural for a union member to lodge a grievance against his employer when he feels he has one. Note, Developments in the Law, supra at 1223. Indeed, bargaining agreements often make employees resort by grievance machinery mandatory. Yet, under Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), the union — not the employee —has wide control over the settlement and processing of employee grievances. The union’s presentation of the case and selection of an arbitrator may seem unsatisfactory to the employee, but the bargaining agreement nonetheless binds him by the outcome. Further, the interests of unions and of management in arbitration are not always adversary. See, e. g., Meltzer, supra at 44; Attleson, Disciplinary Discharges, Arbitration, and NLRB Deference, 20 Buffalo L.Rev. 355, 364, 377 (1971); Note, Policy Conflict, supra at 124-27. This conflict-of-interest problem is accentuated where, as in the instant case, both union and employer are accused by the grievant as coconspirators in racial discrimination. See Macklin v. Spector Freight Systems, Inc., 478 F.2d at 991-92.

Holding the employee to the union’s presentation of his grievance may also be unfair in view of other institutional deficiencies in using grievance procedures to adjudicate discrimination claims. Often, when the case proceeds to arbitration the arbitrator perceives his role as circumscribed by the narrow grant of authority given him by the private contracting parties, and he may not regard himself as competent to resolve complex issues of public law. Gould, Judicial Review of Employment Discrimination Arbitrations, in Labor Arbitration at the Quarter-Century Mark: Proceedings of the Twenty-fifth Annual Meeting of the National Academy of Arbitrators, 114, 133-34, 137 (1972); Note, Policy Conflict, supra at 132-33. Contractual provisions may differ significantly from Title VII, and the available remedies will generally vary. See Hutchings v. United States Industries, Inc., 428 F.2d at 311-313; Bowe v. Colgate-Palmolive Co., 416 F.2d at 715.

Moreover, to the degree that the procedure is, on balance, less fair to the employer, the imbalance follows from the fact that the employer cannot, under Title VII, be the victim of discrimination by an employee. See Note, Labor Arbitration and Title VII, supra at 692.

We recognize that if a workman is free to seek Title VII relief after arbitration, management may have to defend itself in two tribunals. Nonetheless, Congress presumably enacted Title VII, at least in part, because grievance-arbitration machinery had proved inadequate to protect employees from racial discrimination. Gould, Labor Arbitration of Grievances Involving Racial Discrimination, 118 U.Pa.L.Rev. 40, 55 (1969). If Congress intended Title VII to create a right and provide a remedy, it must have considered that a national policy of eliminating job discrimination is worth the incidental inconvenience to the employer.

The inconvenience is hardly overwhelming. The jurisdiction of the NLRB to hear unfair labor practice charges arising from incidents concurrently the subject of grievance arbitration is equally burdensome to employers, but this has not caused the courts to say that the employer need not defend himself before both tribunals. See Bowe v. Colgate-Palmolive Co., 416 F.2d at 714; Note, Labor Arbitration and Title VII, swpra at 692; cf. Hutchings v. United States Industries, Inc., 428 F.2d at 313 n. 9. Contra, Dewey v. Reynolds Metals Co., 429 F.2d 324, 332 (6th Cir. 1970), aff’d by an equally divided Court, 402 U.S. 689, 91 S.Ct. 2186, 29 L.Ed.2d 267 (1971).

The third reason invoked to deny judicial relief to an employee who has pursued grievance procedures is a belief that access to the courts after arbitration discourages arbitration and private settlement. See, e.g., Alexander v. Gardner-Denver Co., supra; Dewey v. Reynolds Metals Co., supra. Inasmuch as contract grievance processes have not been conspicuously successful in ending racial discrimination, however, this prediction, even if true, misses the point of the legislative purpose behind Title VII. Moreover, the opposite policy could also discourage arbitration, since employees, through their representatives, might decide to dispense with arbitration and go to the EEOC and the courts immediately if resort to arbitration were to preclude judicial relief. Note, Labor Arbitration and Title VII, supra at 694. Finally, it is doubtful that employers will reject arbitration clauses if employees can seek subsequent judicial relief. See Gould, Judicial Review of Employment Discrimination Arbitration, supra at 129-130; Note, Labor Arbitration and Title VII, supra at 693.

The most persuasive reason advanced to bar Title VII recovery to an employee who has accepted an arbitration award is the principle of estoppel. As a general proposition, parties who have freely agreed to submit their grievance to a fair and impartial tribunal having the power to decide should not seek another decision elsewhere on the same facts. Newman v. Avco Corp., 451 F.2d at 747. But Title VII cases do not lend themselves to solution by general propositions.

The purposes of Title VII and the federal labor policy of encouraging arbitration can.both be served by a rule that an employee can seek more than one remedy but may not recover twice for the same injury. Whether or not the grievance arbitration procedure has run its course, and whether or not an employee has accepted an out-of-court award or settlement, he is not barred from all Title VII relief. If a class action is proper, he may seek relief for the class he represents. If he is suing on his own behalf, he may seek such individual relief as Title VII makes available.

However, a grievant’s acceptance of an arbitration award or settlement is prima facie evidence that he has received full compensation for his individual damages. After an employee accepts an out-of-court settlement for a grievance arising out of a civil rights claim, he will have the burden of proving that what he received was not intended to be a complete settlement of his claim for money damages. If he can prove that the apparent settlement was not based on the full range of issues cognizable under Title VII, or that it was accepted only as a partial settlement because the grievance arbitration machinery was limited in its available remedies, the plaintiff may press for additional money damages. But payments accepted by a grievant in any event constitute a pro tanto satisfaction of his damage claim. With the foregoing safeguard, the supposed evils of judicial relief after arbitration largely evaporate.

The case at bar must be remanded for consideration of all the incidents alleged to be illegal acts of racial discrimination, the extent of damages, if any, and the propriety of injunctive relief.

Reversed and remanded.


source: Caselaw Access Project

author: WINTER, Circuit Judge:

license: Public Domain

text:
    Gloria JOSEPH et al., Appellees, v. Louis H. BLAIR, Mayor, City of Falls Church, Va., et al., Appellants. Patricia HOGGE, Appellant, v. MEMBERS OF the CITY COUNCIL, CITY OF HAMPTON, VIRGINIA, et al., Appellees. Edwin EMERSON, t/a Peninsula Massage Parlor, t/a Continental Massage Parlor, Appellant, v. MEMBERS OF the CITY COUNCIL, CITY OF NEWPORT NEWS, VIRGINIA, et al., Appellees.
    Nos. 73-1131, 72-2441, 72-2442.
    United States Court of Appeals, Fourth Circuit.
    Argued April 3, 1973.
    Decided July 26, 1973.
    Rehearing Denied Sept. 27, 1973.

      W. Anthony Fitch, Williamsburg, Va. (Kenneth C. Hogge, and Carmel, Gray & Ilogge, Hampton, Va., on brief), for appellants in Nos. 72-2441 and 72-2442.
    Thomas E. Glascock, City Atty., Hampton, Va., for appellee in No. 72-2441.
    P. A. Yeapanis, City Atty., Newport News, Va. (Robert M. Roylance, Asst. City Atty., Newport News, Va., on brief), for appellees in No. 72-2442.
    George S. Leonard, Washington, D. C. (LaRue Van Meter, City Atty., Falls Church, Va., and Philip N. Brophy on brief), for appellants in No. 73-1131.
    Philip J. Mirschkop, Alexandria, Va. (Joseph S. Bambacus, Richmond, Va., on brief), for appellants in No. 73-1131.
    Before BOREMAN, Senior Circuit Judge, WINTER, Circuit Judge, and BLAIR, District Judge.
   WINTER, Circuit Judge:

The scope and application of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971) and its progeny are the major questions in each of these appeals, and we therefore decide them together. The appeals arise from suits to have declared invalid and to enjoin enforcement of the ordinances of Falls Church, Norfolk, Hampton, and Newport News, Virginia, which, under sanction of criminal penalty, regulate massage parlors and, with certain exceptions, prohibit the massage of any person by another of the opposite sex. The validity of the ordinances was attacked on numerous grounds, including the claim that they violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., in that they require arbitrary sexual discrimination in the employment of massage parlor attendants, that the ordinances were in conflict with that Act and are hence inoperative under the supremacy clause of the United States Constitution, that the ordinances unlawfully discriminate on the basis of sex in violation of the equal protection clause of the fourteenth amendment, and that the ordinances violate the due process clause because they are vague and ambiguous. In No. 73-1131, Judge Merhige exercised federal jurisdiction and granted an injunction pendente lite; we affirm. In Nos. 72-2441 and 72-2442, Judge Kellam, relying mainly on Younger, declined to exercise federal jurisdiction and dismissed the suits; we reverse and remand for further proceedings.

I.

While the ordinances vary in form in certain regards which are not material here, they have as their objective the licensing and regulation of “massage parlors” and purport to prohibit the massage of any person by another of the opposite sex, except in the case of doctors, nurses, licensed physiotherapists, members of the subject’s family, and the like. The validity of the Falls Church ordinance was initially attacked by one Robert Kisley, who sued in the Circuit Court of Fairfax County, alleging that the ordinances were invalid under state and federal law because of an arbitrary classification by sex and the denial of due process and equal protection of the laws. The Circuit Court ruled against these contentions, holding the ordinances valid; and on appeal, the Supreme Court of Virginia affirmed. Kisley v. City of Falls Church, 212 Va. 693, 187 S.E.2d 168 (1972). Kisley then appealed to the Supreme Court of the United States, but that Court dismissed the appeal “for want of a substantial federal question.” 409 U.S. 907, 93 S.Ct. 237, 34 L.Ed.2d 169 (1972).

When the various suits were filed in the Eastern District of Virginia, no criminal prosecutions against any plaintiff had begun. Presumably, by reason of a temporary restraining order and the subsequent injunction pendente lite, there have been no prosecutions in Norfolk or in Falls Church. In Hampton, no prosecutions have begun, but plaintiffs alleged, and the allegation is not denied, that the City Attorney had advised “that he will prosecute violations as and when they occur.” In Newport News, prosecutions for violation of the ordinance had been instituted at the time of suit, but the prosecutions were against persons other than the plaintiffs.

II.

Judge Merhige, in granting an injunction pendente lite in No. 73-1131, concluded that Younger did not adversely affect his jurisdiction to act, since no plaintiff before him was the subject of a criminal prosecution at the time that suit was filed in his court. Judge Kel-lam, in declining to exercise jurisdiction in No. 72-2441 and No. 72-2442, concluded to the contrary. He recognized that there had been no prosecutions instituted against any plaintiff at the time that suit was filed, but he held nevertheless that application of Younger did not depend upon the existence of a pending state prosecution, and that the principle of comity stressed by Younger required that the “initial challenge to the constitutionality of a state law . . . [be made] in a state court.” Additionally, Judge Kellam thought that Younger and Boyle v. Landry, 401 U.S. 77, 91 S.Ct. 758, 27 L.Ed.2d 696 (1971), cast doubt upon the question whether a “case or controversy” existed between the plaintiffs and defendants in the suits involving the Hampton and Newport News ordinances. In summary, Judge Kellam concluded that plaintiffs should pursue a civil action in the state courts, and if they were not successful, “petition the Supreme Court of the United States for certiorari,” or alternatively, “plaintiffs may elect to present their claims as defenses in criminal proceeding's if such are instituted by the City of Hampton; again, plaintiffs may petition the United States Supreme Court for certiorari if they are unsuccessful . . ..” We agree with Judge Merhige and disagree with Judge Kellam with regard to the scope of Younger.

In Lynch v. Snepp, 472 F.2d 769 (4 Cir. 1973), we had occasion to consider the rationale and scope of Younger. There we recognized that federal courts have the power under the Civil Rights Acts and various provisions of the constitution to intercede, on the ground of violation of federal right, in the state administration of state criminal law, including the power to enjoin state proceedings. At the same time, long-standing public policy is against exercise of the power with regard to state proceedings, and Younger is an articulation of how the admitted power and this desirable policy are to be reconciled when one impinges upon the other. We expressly adopted the view of Mr. Justice Brennan, stated partially in concurrence and partially in dissent in Perez v. Ledesma, 401 U.S. 82, 120, 91 S.Ct. 674, 27 L.Ed. 2d 701 (1971), that application of the notions of comity, equity and federalism to oust or require non-exercise of federal power depends upon whether a state proceeding is pending and, if so, on the ground asserted for federal intervention. We noted Lake Carrier’s Assoc. v. MacMullan, 406 U.S. 498, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972), where it was stated: “The decisions there [Younger and Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971)] were premised on considerations of equity practice and comity in our federal system that have little force in the absence of a pending state proceeding. In that circumstance exercise of federal court jurisdiction ordinarily is appropriate if the conditions for declaratory or injunctive relief are met.” Thus, we are committed to the view, which we believe the correct one, that Younger does not apply when there is neither criminal nor civil litigation pending in a state court in which questions sought to be raised in federal litigation by the same parties or those in privity with them are present. We therefore conclude that where, as in Nos. 72-2441 and 72-2442, there was no state criminal prosecution pending against any plaintiff and no plaintiff had pending, at the time the district court dismissed the suits, any civil action in a state court in which the issues raised in the federal litigation were present or raised, Younger neither authorized nor required the non-exercise of federal jurisdiction.

Nor do we agree that there was no case or controversy between plaintiffs and defendants in Nos. 72-2441 and 72-2442. In Boyle v. Landry, plaintiffs were black citizens of Chicago who sought and obtained a declaration of the invalidity of an Illinois intimidation statute for overbreadth, and an injunction against its enforcement. The Supreme Court reversed on the ground that plaintiffs had neither alleged nor shown that they were threatened with arrest or prosecution under the statute at any time, or that they were in any jeopardy of suffering irreparable injury if Illinois was left free to prosecute in the normal manner.

By contrast, in the instant cases, plaintiffs are the owners of “massage parlors,” and masseuses employed in such establishments in Hampton and Newport News, where, it is alleged, massage is administered to persons of the opposite sex. Enforcement of the ordinance was threatened in Hampton and had begun in Newport News. The threat to plaintiffs’ continued livelihood and freedom from prosecution was real. Their request for declaratory and injunctive relief against imminent infringement of their alleged federal rights constituted “more than speculation about the future.” Boyle v. Landry, 401 U.S. at 81, 91 S.Ct. at 760; Wright, Federal Courts § 12 (1970). We have no doubt that there was a case or controversy between the parties in No. 72-2441 and No. 72-2442.

III.

In No. 73-1131, several contentions are advanced why the injunction pendente lite granted by Judge Merhige should be vacated. Only one, we think, requires extended discussion. Before proceeding to it, we state our conclusion that Judge Merhige did not abuse his discretion in granting temporary injunctive relief. West Virginia Highlands Conserv. v. Island Creek Coal Co., 441 F.2d 232 (4 Cir. 1971). Of course we do not pass on the ultimate merits of plaintiffs’ claims that the Norfolk and Falls Church ordinances violate Title VII of the Civil Rights Act of 1964, that they were in conflict with that Act and that they deny due process and equal protection, but we agree that the claims are not insubstantial and there was a sufficient basis on which the district court could conclude that plaintiffs would suffer irreparable injury if interim relief were not granted. A three-judge court was not required by 28 U.S.C. § 2283, since only the validity of local ordinances was in issue. Board of Regents of the University of Texas System v. New Left Education Project, 404 U.S. 541, 92 S.Ct. 652, 30 L.Ed.2d 697 (1972); Moody v. Flowers, 387 U.S. 97 (1967). Venue was properly in the Eastern District of Virginia, 28 U.S.C. § 1391. Since the Eastern District of Virginia is not subdivided into divisions, there was nothing improper in plaintiffs’ filing suit in Richmond.

The contention which requires some discussion is that the dismissal by the Supreme Court of the United States for want of a substantial federal question in the initial litigation instituted by Kisley is res judicata of the validity of the ordinances. The meaning of a dismissal for want of a substantial federal question has been debated, with conflicting conclusions, within the circuits. Compare Dillenburg v. Kramer, 469 F.2d 1222, 1225 (9 Cir. 1972) with Doe v. Hodgson, 478 F.2d 537 (2 Cir. 1973); and United States ex rel. Epton v. Nenna, 446 F.2d 363, 366 (2 Cir.), cert. denied, 404 U.S. 948, 92 S.Ct. 282, 30 L.Ed.2d 265 (1971). We may be committed to the view that summary dismissal for want of a substantial federal question may constitute an adjudication on the merits. In Hall v. Thornton, 445 F.2d 834 (4 Cir. 1971), we held that a district court was not obliged to request the convening of a three-judge court to pass upon the merits of an attack on the provision of the South Carolina Constitution which conditions the incorporation of a previously unincorporated area on the affirmative vote of a majority of persons eligible to vote (rather than those actually voting), when the Supreme Court of South Carolina had upheld the validity of the constitutional provision in prior litigation, the Supreme Court of the United States had dismissed for want of a federal question and, in a later case decided on the merits, the Supreme Court of the United States decided that a state law requiring more than a simple majority of those voting in an election for passage of a proposal does not offend the constitution. We conclude, however, that even if our decision in Hall commits us generally to treat summary dismissal for want of a substantial federal question as an adjudication on the merits, we should not treat the Supreme Court’s dismissal in Kisley as an adjudication on the merits. This is so because an examination of the opinion of the Supreme Court of Virginia and the representations of the parties made to us in their briefs and arguments show that at least some of the federal claims sought to be litigated in the instant case were either not raised in the Virginia suit, or were not passed upon in any substantial way by the Virginia Supreme Court. We therefore think that there was good reason for the Supreme Court to dismiss for want of a substantial federal question on the familiar principle that it will not consider questions neither raised nor considered throughout the litigation, and that this dismissal does not constitute an adjudication of plaintiffs’ claims, inter alia, that the ordinances are repugnant to Title VII of the Civil Rights Act of 1964. Tacon v. Arizona, 410 U.S. 351, 93 S.Ct. 998, 35 L.Ed.2d 346 (1973); Cardinale v. Louisiana, 394 U.S. 437, 89 S.Ct. 1161, 22 L.Ed.2d 398 (1969).

For these reasons, we affirm in No. 73-1131, and direct that the district court proceed with a trial on the merits as soon as practicable. In Nos. 72-2441 and 72-2442, we reverse the orders of dismissal and direct that the district court conduct further proceedings in accordance with the views expressed herein.

No. 73-1131 affirmed.

Nos. 72-2441 and 72-2442 reversed and remanded.

ADDENDUM

In accordance with the court’s usual practice, the foregoing opinion, before it was filed, was circulated to all members of the court for the concurrences of the panel members and the comments or suggestions of the non panel members.

Pursuant to Rule 35, F.R.A.P., a member of the court moved for rehearing in banc and requested a poll on his motion. The motion failed to gain the support of a majority of the judges entitled to vote thereon.

      . Kisley initially joined as a plaintiff with others in No. 73-1131, but Judge Merhige denied relief as to him on the ground of res judicata or collateral estoppel, and Kisley did not appeal. Since the state litigation was not a class action and the plaintiffs in No. 73-1131 were neither parties to the suit nor in privity with Kisley, Judge Merhige held that the other plaintiffs were not barred by these defenses from proceeding.

      . Prior to instituting suit in the district court, Bo-Jac, Ltd., a plaintiff in No. 72-2441 and No. 73-1131, had filed a petition in the Hampton Circuit Court seeking a temporary injunction against enforcement of the Hampton ordinance. This suit was pending when the complaint was filed in the district court. The district court stayed its proceedings pending final disposition of the litigation in the Hampton Circuit Court. When Bo-Jac, Ltd., was denied a preliminary injunction in the state court, Bo-Jac dismissed the proceedings before determination on the merits. It was thereafter that the district court declined to exercise federal jurisdiction.

      . These are not eases where the general abstention doctrine would justify dismissal. The alleged constitutional infirmities in the ordinances and their alleged transgression of the federal constitution and statutes do not depend upon any state construction of state legislative enactment. No ambiguous state law issue remains to be resolved. Wohl v. Keene, 476 F.2d 171 (4 Cir. 1973).

      . Defendants in No. 73-1131 also argue that the decision of the Virginia Supreme Court in Kisley v. City of Falls Church, 212 Va. 693, 187 S.E.2d 168 (1972), “conclusively adjudicated” the issues which plaintiffs seek to raise here. Although entitled to great respect, and perhaps completely persuasive, the decision of a state court of last resort is not binding on a federal court on a federal constitutional question raised by persons who were not parties in the state litigation. The decision was decisive with regard to the plaintiff in the state litigation, and the district court gave it that effect when it dismissed Kisley ns a plaintiff in the instant case.

      . Dillenburg and Doe were eases which were concerned with summary affirmance rather than summary dismissal by the Supreme Court. If Dillenburg is correct in treating summary affirmance without opinion as having very little preceden-tial significance, manifestly, summary dismissal has less. Doe treats summary dismissal and summary affirmance of equal binding precedential value.

      . With regard to these cases, we express no view on whether injunctive relief, if it is otherwise indicated, should be denied in No. 72-2441 because only the members of the City Council of the City of Hampton, Virginia have been joined as defendants. This is a matter for determination by the district court if xrlaintiffs press their claim for temporary or permanent injunctive relief. It has been represented to us in argument that the City Council of Hampton, Virginia performs some limited executive function, as well as a legislative function, but even if this is not established, we note that the complaint in this case seeks declaratory as well as injunctive relief. It may be that the request for declaratory relief may be granted, even though it is determined that injunctive relief should be denied for failure to join necessary defendants. In any event, there would appear to be no reason why plaintiffs, upon proper application, should not be granted leave . to amend to join other defendants who perform executive functions in Hampton. Virginia.


author: LAY, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. AN ARTICLE OF FOOD consisting of approximately 1,186,380 tablets in Bulk Drums, and 10,432 Repacked Bottles, more or less, LABELED in Part: (Drum) NUCLOMIN Lot 7056 (Bottle) Nuclomin Amino Acid Complexed Trace Minerals with Multi-Vitamins, etc., Hunt Investment, Inc., d/b/a Miller Laboratories, Inc., Appellant.
    No. 72-1626.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 17, 1973.
    Decided July 9, 1973.
    Rehearing Denied Aug. 7, 1973.

      Elliott P. Koenig, St. Louis, Mo., and Kirkpatrick W. Dilling, Chicago, 111., for appellant.
    Gregory B. Hovendon, Atty., Dept, of Justice, Washington, D. C., for appellee.
    Before MATTHES, Chief Judge, and LAY and STEPHENSON, Circuit Judges.
   LAY, Circuit Judge.

This is an appeal from an in rem proceeding brought under the Federal Food, Drug, and Cosmetic Act against a special dietary product “Nuclomin” claiming it is misbranded in violation of Section 403(a) of the Act, 21 U.S.C. § 343(a). Hunt Investment, Inc., owner of Nuclomin, intervened. Jurisdiction rests under 21 U.S.C. § 334. The district court upheld the government seizure and condemnation on the basis that several ingredients listed on the label were “either of no nutritional value per se or the quantities are so minute as not to enhance the nutritional value of the tablets.” The district court, the Honorable John K. Regan presiding, found that such label was false and misleading in that it could persuade a purchaser that the product possessed greater nutritional value than it actually did.

The basic issues on appeal include (1) whether the Food and Drug Administration (FDA) possessed the authority to prohibit the sale of a product that lists, as required by the regulations, completely safe ingredients that may be unnecessary or insignificant; (2) whether sufficient proof was presented to establish that the questioned ingredients were not needed or were included in inadequate amounts; and (3) whether the product label was in fact misleading. We affirm the trial court’s ruling.

THE FDA’S AUTHORITY

The government does not challenge the factual accuracy of the Nuclomin label; rather it claims that the label is misleading to the public because some of the ingredients are either not needed in human nutrition or are included in such insignificant amounts as to be valueless. Specifically, the government attacks the vitamin constituents choline, inositol and p-aminobenzoic acid, the mineral elements potassium, magnesium and calcium succinate, and the amino acids found in the yeast extract It is undisputed that these ingredients are consumed daily by the public and are completely safe.

Most of claimant’s arguments relate to Section 403(j), 21 U.S.C. § 343(j), relating to the misbranding of special dietary articles. This, however, overlooks the direct authority of the government to bring a condemnation suit for violation of Section 403(a) pertaining to misbranding because of the use of a misleading label. See, e.g., United States v. “Vitasafe Formula M”, 226 F.Supp. 266 (D.N.J.1964). Section 403(a), 21 U.S.C. § 343(a), clearly states that a food is misbranded if its labeling is false or misleading in any particular. Therefore, Section 403(j) is not applicable, and the broad proscription of Section 403(a) is.

The claimant asserts that it is in compliance with the applicable regulations, 21 C.F.R. §§ 125.3(a)(2) and 125.-4(a)(2), in that the product label contains a statement of the quantity of such vitamin or mineral in a specified quantity of the product and also bears a statement concerning whether the need or requirement in human nutrition has been established. However, Sections 125.3 (a) (4) and 125.4(a) (4) point out that:

“Compliance with the provisions of subparagraphs (2) and (3) of this paragraph shall not be construed as relieving any food which purports to be or is represented for special dietary use by reason of its [vitamin or mineral] property from the application of section 403(a) and 201 (n) of the act, as in the case where the need for such [vitamin or mineral] in human nutrition is not substantially supported by the opinion of experts qualified by scientific training and experience to determine such needs.”

Thus even though the Nuclomin label is technicallyaccurate and further meets the regulations’ disclosure requirements, it must also comply with Section 403(a) and not be misleading. Realizing that “the Food, Drug, and Cosmetic Act is to be given a liberal construction consistent with the Act’s overriding purpose to protect the public health,” United States v. An Article of Drug . . . Bacto-Unidisk, 394 U.S. 784, 798, 89 S.Ct. 1410, 22 L.Ed.2d 726 (1969), we hold that the FDA had the authority under Section 403(a) to seize and condemn the special dietary supplement Nuclomin.

SUFFICIENCY OF PROOF

The testimony of the government’s witnesses, Dr. Thomas D. Luckey (a professor of biochemistry at the Missouri School of Medicine and chairman of the graduate nutrition program), and Dr. Harold L. Rosenthal (a professor of physiological chemistry at Washington University Dental School who has done considerable research in the field of nutrition, primarily the metabolism of Vitamin B-12 and amino acids) and the appellant’s witness, Dr. Edward Doisy, Jr., (a nutritionist, biochemist, and nonpracticing physician) was admittedly conflicting. Nevertheless, there was substantial evidence for the trier of fact to believe that the disputed ingredients in Nuclomin were either not needed in the human diet or that the amount of the ingredient was so small that it would have no value. For example, Dr. Luckey testified that choline is not a vitamin and is not needed in the human diet because it is produced in human tissues from food. He further stated that the amount of choline in Nuclomin (50 mg.) was of no value whatsoever. The government’s expert further opined that inositol is also not a vitamin, and all three experts generally agreed that any requirement for inositol is not known. Dr. Luckey testified that p-ami-nobenzoic acid (PABA) is not required in nutrition, is not a vitamin, and is not needed by man. He further clarified that PABA is one of three constituent parts of the vitamin folic acid; however, the body is unable to take PABA and use it to make folic acid. All witnesses confirmed that potassium is a necessary nutrient, present in all cells, and contained in most all foods. The doctors disagreed on the daily requirement of potassium (from 500 mg. to 4000 mg.), however, they all felt that the 20 to 32 mg. of potassium in Nu-clomin would be of little or no value except in the most dire circumstances. Dr. Luckey and Dr. Rosenthal were in agreement that the 15-20 mg. of calcium that Nuclomin would provide per day was meaningless with respect to the recommended daily allowance of 750-800 mg. Finally, the amino acids, polypeptides and other nutritional factors in the yeast extract were concluded to be insignificant for any dietary value by Dr. Luckey, Dr. Rosenthal and Dr. Wixom (a professor of biochemistry at the School of Medicine, University of Missouri in Columbia, who is a specialist in amino acid and protein metabolism and nutrition).

In general, Dr. Luckey testified that he had never heard of anyone being deficient in choline or inositol, and if a person were in need of potassium or magnesium, a therapeutic treatment would consist of greatly higher doses than are present in Nuclomin. Dr. Rosenthal believed Nuclomin to be beneficial for its content of vitamins A, C, D, B-12, riboflavin and niacinamide, but the elements challenged by the government provided no special dietary value. On cross-examination, Dr. Rosenthal stated that even he had been confused by the Nuclomin label. On the basis of the overall record this court cannot hold the district court’s finding that the questioned ingredients were not needed or were included in inadequate amounts clearly erroneous.

WHETHER MISLEADING

The claimant urges that the FDA has failed to prove that any of Nuclomin’s customers were actually misled by the product label, relying on United States v. 119 Cases . . . “New Dextra Brand Fortified Cane Sugar”, 231 F.Supp. 551 (S.D.Fla.1963), aff’d, 334 F.2d 238 (5 Cir. 1964). This case simply held that the government failed to carry its burden of proof through its nutritional experts that the label used was misleading. Other courts have held that although admissible on the issue of whether a label is false or misleading, the fact that no purchasers have actually been misled is not a defense under the Act. United States v. Article of Food Consisting of 432 Cartons, 292 F.Supp. 839, 841 (S.D.N.Y.1968); United States v. One Device . . . The Ellis Micro-Dynameter, 224 F.Supp. 265, 268 (E.D.Pa.1963). Cf. United States v. Ninety-five Barrels—Apple Cider Vinegar, 265 U.S. 438, 44 S.Ct. 529, 68 L.Ed. 1094 (1924); United States v. Article—Consisting of 216 Cartoned Bottles, 409 F.2d 734, 740-742 (2 Cir. 1969); United States v. 47 Bottles—Jenasol RJ Formula “60”, 320 F.2d 564 (3 Cir. 1963), cert. denied, 375 U.S. 953, 84 S.Ct. 444, 11 L.Ed.2d 313; United States v. Olsen, 161 F.2d 669, 671 (9 Cir. 1947), cert. denied, 332 U.S. 768, 68 S.Ct. 79, 92 L.Ed. 353.

In several contexts the claimant has portrayed Nuclomin as a safe or harmless product and, on the basis of its other nutritionally accepted ingredients, a beneficial dietary supplement. The safety of a product, however, cannot be a basis for substantiating the legality of a seized article. Numerous authorities have held that it is immaterial to a question of misbranding whether the condemned article is inherently dangerous or harmful or whether it may in some way be beneficial. See generally United States v. Diapulse Corporation of America, 457 F.2d 25, 28 (2 Cir. 1972); Tutoki v. Celebrezze, 375 F.2d 105, 107 n. 4 (7 Cir. 1967); V. E. Irons, Inc. v. United States, 244 F.2d 34, 43-44 (1 Cir. 1957); United States v. One Device, Intended For Use As A Colonic Irrigator, 160 F.2d 194, 200 (10 Cir. 1947); United States v. Six Dozen Bottles . . . Of “Dr. Peter’s Kuriko”, 158 F.2d 667, 668-669 (7 Cir. 1947); United States v. Device Labeled “Cameron Spitler Amblyo-Syntonizer”, 261 F.Supp. 243, 245-246 (D.Neb.1966); cf. United States v. Kordel, 164 F.2d 913, 916-917 (7 Cir. 1947), aff’d, 335 U.S. 345, 69 S.Ct. 106, 93 L.Ed. 52 (1948).

In United States v. Ninety-five Barrels . . . Apple Cider Vinegar, 265 U.S. 438, 44 S.Ct. 529, 68 L.Ed. 1094 (1924), the Supreme Court found a vinegar label describing its contents as “apple cider vinegar made from selected apples” to be misleading to the public because the seized product was made from dehydrated apples rather than from fresh apples — even though the contested vinegar was similar in color, taste and consistency to vinegar processed from fresh apple cider and equally wholesome. The Court explained:

“The statute is plain and direct. Its comprehensive terms condemn every statement, design, and device which may mislead or deceive. Deception may result from the use of statements not technically false or which may be literally true. The aim of the statute is to prevent that resulting from indirection and ambiguity, as well as from statements which are false. It is not difficult to choose statements, designs, and devices which will not deceive. Those which are ambiguous and liable to mislead should be read favorably to the accomplishment of the purpose of the act. The statute applies to food, and the ingredients and substances contained therein.” Id. at 442-443, 44 S.Ct. at 531.

We accept the well reasoned opinion of the district court. The Nuclomin label defines itself as a dietary supplement and lists the challenged ingredients among known nutritional vitamins and minerals. As the district court found, this ambiguity could represent by indirection that these elements contributed some additional benefit when in fact they do not.

Judgment affirmed.

      . Section 403(a), 21 U.S.C. § 343(a), provides:
      “A food shall be deemed to be misbranded—
      “(a) If its labeling is false or misleading in any particular.”

      . The Nuelomin label reads:
      “Amino Acid Complexed Trace Mineral With Multi-Vitamins
      “A concentrated source of vitamins, minerals and other nutritional factors, plus the micronutrients asssociated with the amino acids and polypeptides as found in a special yeast extract.
      “Dosage
      “Adults, orally as a dietary supplement, two tablets per day.
      Each two tablets contain MDR.
      “Vitamins
      “Vitamin A ............................. 5000 Units 125%
      Vitamin D .............................. 1000 Units 250%
      Vitamin E .............................. 5 Units *
      Vitamin B1 ............................. 2.5 mg. 250%
      Vitamin B2 (Riboflavin) .................. 5.0 mg. 400%
      Vitamin B6 ............................. 1.5 mg. *
      Niacinamide ............................. 25.0 mg. 250%
      Panthothenic Acid (as Oal. Pan...........) .................. 25.0 mg. *
      Choline (as Bitartate) ................... 50.0 mg. *
      Inositol ................................. 50.0 mg. **
      Vitamin C .............................. 50.0 mg. 166%
      Vitamin B-12............................ 1.0 meg. *
      p-Aminobenzoic Acid ..................... 10.0 mg. **
      “Minerals
      “Copper ................................ 1.0 mg. *
      Iodine .................................. 0.075 mg. 75%
      Manganese .............................. 2.0 mg. *
      Iron .................................... 10.0 mg. 100%
      Potassium............................... 20.0 mg. *
      Zinc .................................... 2.0 mg. *
      Magnesium .............................. 20.0 mg. *
      “In associate with: “Calcium Succinate....................... 50 mg.
      “MDR: Minimum Daily Requirement.
      “* Need in human nutrition, established Requirement not determined.
      “** Need in human nutrition not established.”

      . The claimant urges that an added consideration in judging whether the Nuelomin label is misleading is that Nuelomin is distributed only to doctors for their patients, not to the general public. However, Nuelomin is not a prescription drug, therefore, nothing prevents it from being sold to the public. Moreover, licensed physicians are not exempt from the Act, and the fact that a seized article may only be sold to or used by physicians does not stay the full thrust of the Act. United States v. Ellis Research Laboratories, Inc., 300 F.2d 550, 552-553 (7 Cir. 1962), cert. denied, 370 U.S. 918, 82 S.Ct. 1558, 8 L.Ed.2d 499; United States v. Device Labeled “Cameron Spitler Ambly Syntonizer”, 261 F.Supp. 243, 246 (D.Neb.1966); cf. Upjohn Company v. Finch, 422 F.2d 944, 951-954 (6 Cir. 1970).


author: VAN OOSTERHOUT, Senior Circuit Judge.

text:
    Cleo Darlene CLARK, Appellant, v. UNITED STATES of America, Appellee.
    No. 73-1001.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 14, 1973.
    Decided Aug. 1, 1973.

      Richard P. Moore, Cedar Rapids, Iowa, filed printed brief for appellant.
    Evan L. Hultman, U. S. Atty., and Robert L. Sikma, Asst. U. S. Atty., Sioux City, Iowa, filed brief for appel-lee.
    Before MATTHES, Chief Judge, VAN OOSTERHOUT, Senior Circuit Judge, and ROSS, Circuit Judge.
   VAN OOSTERHOUT, Senior Circuit Judge.

This is an appeal by plaintiff Clark from an order of the District Court dismissing her complaint for lack of subject matter jurisdiction. The relevant facts are fully stated in the order of dismissal, Clark v. United States, 351 F.Supp. 692 (N.D.Iowa 1972), and will be only briefly summarized here.

Plaintiff is the mother of Garth Kevin Goodwin, now deceased, who served in the United States Navy from May 4, 1970, to June 3, 1970. Plaintiff’s son committed suicide on June 11,1970.

Plaintiff subsequently applied to the Veterans Administration for the proceeds of a National Service Life Insurance (NSLI) policy. The application was denied. She also applied for death benefits under 38 U.S.C.A. Part II, eh. 11, subch. V and under 10 U.S.C.A. § 1476. These two claims were also denied.

Subsequent to the denial of her three claims, plaintiff filed suit in federal district court seeking relief against the United States, the administrator of the Veterans Administration, and the Secretary of the Navy.

Count I is based upon the NSLI claim. Counts II and III are based upon other death benefits hereinabove referred to. Plaintiff concedes in brief that there is no independent jurisdictional basis for the claims stated in Counts II and III of her complaint but relies on the doctrine of ancillary jurisdiction to support Counts II and III. Thus the primary issue is whether jurisdiction exists with respect to the NSLI claim.

Plaintiff bases subject matter jurisdiction for her Count I claim on 38 U.S. C.A. §§ 784(a) and 785. Plaintiff’s son did not apply for NSLI coverage. Nonetheless, plaintiff asserted an NSLI claim based exclusively on 38 U.S.C.A. § 722(b)(1) which provides:

“Any person who . . . was qualified for insurance but who did not apply for such insurance and who is shown by evidence satisfactory to the Administrator ... to have been mentally incompetent from a service-connected disability . . . shall be deemed to have applied for and to have been granted such insurance . in an amount which, together with any other United States Government or National Service life insurance in force, shall aggregate $10,000. . . ”

Plaintiff in Count I has properly pleaded all essential elements to entitle her son to be deemed to have applied for and been granted such insurance.

We agree with the view expressed by the trial court that most determinations of veterans’ benefits by the Administrator are unreviewable by virtue of 38 U. S.C.A. §§ 211 and 785. We also agree with the trial court’s statement of the law reading: “In order for a contract to arise under § 722(b)(1) certain conditions must first be met. A basic requirement is that satisfactory evidence of the disability be presented to the Administrator” 351 F.Supp. 692, 694.

The court then goes on to say: “Although plaintiff presented evidence of the disability to the Administrator, it was found to be inadequate to establish a service-connected disability. Plaintiff thus failed to satisfy a basic condition necessary for a contract of NSLI to be deemed in force by operation of law. ...” 351 F.Supp. at 694.

We have carefully examined the record and find nothing to indicate that the trial court had before it any record of what was done at the administrative level except plaintiff’s pleading that she timely applied for NSLI and that the application was denied. The Administrator’s order of denial is not in the record before us. We discover nothing in the record which indicates whether the Administrator held an evidentiary-hearing and if so, what evidence was produced. We find no affidavit or stipulation as to the facts and are unable to determine the basis upon which the trial court made its findings of fact. So far as the record discloses, the only thing the court had before it upon which to act was the pleadings.

In this appeal, plaintiff contends the District Court erred in its conclusion that the federal courts have no jurisdiction to review the Administrator’s determination that there was no service-connected mental disability in this case. Specifically, she contends that § 785 grants the federal courts jurisdiction to review the Administrator’s decisions with respect to all insurance matters under 38 U.S.C.A. Chapter 19. Alternatively, she contends that this is a claim under contract of NSLI for which jurisdiction exists under § 784(a).

Section 785 provides:

“Except in the event of suit as provided in Section 784 of this title, or other appropriate court proceedings, all decisions rendered by the Administrator under the provisions of this chapter shall be final and conclusive on all questions of law or fact, and no other official of the United States shall have jurisdiction to review any such decisions.” (Emphasis added).

Plaintiff contends her claim falls within the italicized portion of the provision quoted above. The District Court properly recognized that “[s]everal courts have interpreted the phrase ‘or other appropriate court proceedings’ to mean that all insurance matters are judicially reviewable. . . . ” See United States v. Zazove, 334 U.S. 602, 611-612, 625-626, 68 S.Ct. 1284, 92 L.Ed. 1601 (1948); Salyers v. United States, 326 F.2d 623, 625-626 (5th Cir. 1964); Fitzgerald v. United States, 98 F.Supp. 222 (N.D.Ohio 1951); Unger v. United States, 79 F.Supp. 281 (E.D.Ill.1948). It declined to follow these cases, however, on the basis that “ ‘ [t]he weight of recent authority examining into the meaning of . Section 785, holds that Section 785 does not provide a basis for jurisdiction in cases where there is no policy of insurance in effect.’ ” McClendon v. United States, 327 F.Supp. 704, 706 (W.D.Okl.1971), and other cases cited by the trial court.

Section 785 explicitly excepts from its provisions “suit[s] as provided in § 784 of this title. . . . ” Section 784(a) provides that “ [i]n the event of disagreement as to claim . . . under contract of National Service Life Insurance ... an action . . . may be brought against the United States . . . ” 38 U.S.C.A. § 784(a) (emphasis added). Plaintiff contends that her suit involves a “claim under contract.” Again, the District Court recognized “cases which have held that a suit is upon a contract of insurance even though an Administrator has not found the satisfactory evidence required for the contract to be deemed in force by operation of law. . . . ” See United States v. Roberts, 192 F.2d 893 (5th Cir. 1951); Morris v. United States, 122 F.Supp. 155, 158 (E.D.N.C.1954); Gamez v. United States, 95 F.Supp. 656, 660 (S.D.Tex.1951). Cf. Salyers v. United States, supra, 326 F.2d at 625. See also Tupper v. United States, 270 F.2d 681 (5th Cir. 1959); Skovgaard v. United States, 92 U.S.App.D.C. 70, 202 F.2d 363, 364 (1953) (Miller, J., dissenting). The District Court, however, followed the majority view that § 784(a) authorizes suits only where a contract of insurance has been issued. Since the Administrator found no service-connected disability, it reasoned, the plaintiff failed to satisfy a basic condition necessary for a contract to be deemed established by operation of law.

For the reasons which follow, we specifically reject the view adopted by the trial court as to the meaning of both § 785 and § 784(a).

First, we find persuasive the statutory construction adopted by the cases cited above. Concerning the § 785 “other appropriate court proceedings” language, the Salyers court notes that this language was added in 1946 as part of an effort “to eliminate the finality of the decisions of the Administrator on matters of insurance.” Salyers v. United States, supra, 326 F.2d at 625, citing United States v. Zazove, supra, 334 U.S. at 611-612, 68 S.Ct. 1284. Noting the changes in the statute since 1946, the Salyers court states:

“We think the changes in text here are insubstantial and that it is still proper for the federal courts to review the Administrator’s insurance decisions in such a case as this.” Salyers v. United States, supra, 326 F.2d at 626.

Insofar as the jurisdictional implications of the § 784(a) “claim under contract” language are concerned, we agree with the holding of Morris v. United States, supra, where the court states:

“The question raised . . . is a serious one. If the refusal of the Veterans Administration to issue or reinstate a National Service Life Insurance Policy is wrongful, is there no judicial review? The statute and regulations prescribe the conditions under which policies are to be issued, and if those conditions are met, the serviceman or veteran is entitled to the policy as a matter of law. The Veterans Administration is not like a private insurer, which may issue or decline to issue policies in its absolute' discretion.” 122 F.Supp. at 158.

As the dissent in Skovgaard points out,

“[T]he . . . complaint alleges that Skovgaard had fully complied with the four requirements, after which the statute provides that the insurance applied for ‘shall be granted.’ Thus it was alleged that a contract of insurance came into being by the terms of the Act itself, even though the ministerial act of issuing a policy to evidence the insurance was never performed by the Administrator. The statute permits suit against the United States in the event of disagreement as to any claim under a contract of insurance. The governmental consent to be sued is not limited to a suit on a policy. I think it is wrong to regard a physical policy as the only contract of insurance upon which suit may be maintained and, as I have shown, the amended complaint in this case sufficiently pleaded the existence of a contract of insurance. . . . ” Skovgaard v. United States, supra, 202 F.2d at 365 (Miller, J., dissenting).

We believe the complaint in this case sets forth a claim under contract as that phrase is used in § 784(a).

Even if the above-cited cases cannot be said to be clearly correct in their conclusions, it can certainly be said that the language here in question is ambiguous. Moreover, there are, to the best of our knowledge, no reported cases dealing specifically with a claim arising under § 722(b). When faced with such uncertainty, there are at least two principles which tip the balance in favor of review-ability.

The first is simply that “[t]he statutory provisions, where ambiguous, are to be construed liberally to effectuate the beneficial purposes that Congress had in mind.” United States v. Zazove, supra, 334 U.S. at 610, 68 S.Ct. at 1290. See also Martin v. United States, 238 F.2d 245, 248 (7th Cir. 1956); United States v. Vandver, 232 F.2d 398, 402 (6th Cir. 1956); Simmons v. United States, 110 F.2d 296, 298 (4th Cir. 1940). The salutory humanitarian purpose here is to provide insurance protection for veterans who have failed to apply due to mental incompetency incurred in the service of their country. If the government is right in its contention that the Administrator’s determinations with respect to insurance matters under Chapter 19 of Title 38 are unreviewable, then the Administrator is completely free to deny coverage no matter how arbitrary or capricious his decision may be. In cases involving claims for noncontractual veterans’ benefits court review has been denied. This is so because the mandate of the legislation is clear and its validity has been upheld. 38 U.S.C.A. § 211(a); de Rodulfa v. United States, 149 U.S.App.D.C. 154, 461 F.2d 1240 (1972); Milliken v. Gleason, 332 F.2d 122 (1st Cir. 1964), cert. den., 379 U.S. 1002, 85 S.Ct. 723, 13 L.Ed.2d 703 (1965). Where, as here, there is no clear mandate denying review powers, we feel that “the beneficial purposes that Congress had in mind” can best be fulfilled by providing a forum in which arbitrary or capricious action by the Administrator may be overturned. We hold this is what Congress had in mind when it inserted the language here controverted within §§ 785 and 784(a).

The second principle which militates in favor of judicial review involves the Administrative Procedure Act. The Act provides broadly for judicial review on behalf of all those aggrieved by agency action. 5 U.S.C.A. § 702. An exception to this general rule of reviewability is made where a statute specifically precludes judicial review. Thus, 38 U.S.C. A. §§ 211(a) and 785, to the extent that they preclude judicial review, may be properly viewed as exceptions to the general rule. There is a strong presumption that administrative action is subject to judicial review. See Rusk v. Cort, 369 U.S. 367, 82 S.Ct. 787, 7 L.Ed.2d 809 (1962); Ng Fung Ho v. White, 259 U.S. 276, 42 S.Ct. 492, 66 L.Ed. 938 (1922); Brotherhood of Railroad Trainmen v. Central of Georgia Railway Co., 415 F.2d 403, 412-414 & n. 20 (5th Cir. 1969); Caulfield v. U. S. Department of Agriculture, 293 F.2d 217, 222 (5th Cir. 1961) (en banc) (Wisdom, J., Tuttle, C. J., and Rives, J., dissenting.) “[O]nly upon a showing of ‘clear and convincing evidence’ of a contrary legislative intent should the courts restrict access to judicial review.” Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967). See also Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); National Welfare Rights Organization v. Finch, 139 U.S.App.D.C. 46, 429 F.2d 725 (1970). The statutory language in the instant case appears to explicitly provide for .judicial review of the administrative determination here in question. There certainly has been no clear and convincing showing of a legislative intent to preclude review.

Plaintiff’s complaint on its face states a cause of action within the jurisdiction of the court as to Count I. Nothing in the record before us supports a determination that the trial court lacks subject matter jurisdiction as to Count I. The order dismissing Count I for want of jurisdiction is reversed. We of course express no opinion concerning the merits of plaintiff’s Count I claim.

Since the trial court dismissed Count I, it did not reach the question of whether Counts II and'III could be entertained under the doctrine of ancillary jurisdiction. We have serious doubt whether the ancillary jurisdiction doctrine applies to a situation such as presented here. However, since such issue has not been briefed, we believe the issue should initially be considered by the trial court.

Reversed and remanded.


author: THORNBERRY, Circuit Judge:

text:
    Martin Edgar TULEY, Plaintiff-Appellant, v. Louis HEYD, Jr., Criminal Sheriff, Orleans Parish, et al., Defendants-Appellees.
    No. 72-3564.
    United States Court of Appeals, Fifth Circuit.
    Aug. 3, 1973.

      Lloyd C. Melancon, New Orleans, for plaintiff-appellant.
    A. W. Wambsgans, Richard M. Mi-chalezyk, Metairie, La., Emile C. Rolfs, III, Baton Rouge, La., for Heyd and Falkenstein.
    Before GEWIN, THORNBERRY and SIMPSON, Circuit Judges.
   THORNBERRY, Circuit Judge:

Tuley appeals from summary judgment entered in this 42 U.S.C. § 1983 action in favor of defendants Heyd, the Criminal Sheriff of Orleans Parish, Louisiana, and defendant Falkenstein, the Warden of the Orleans Parish Prison. We vacate and remand.

Tuley originally sued three defendants : Warden Palkenstein, Sheriff Heyd, and Deputy Sheriff Massey. In his hand-written pro se Section 1988 complaint filed on January 23, 1968, Tu-ley made the following factual allegations :

Petitioner, a Federal prisoner at Orleans Parish Prison, awaiting prosecution for Interstate Transportation of a stolen motor vehicle, was the victim of and [sic] unprovoked attack by one Deputy Sheriff A1 Massey on the evening of Tuesday, January 16, 1968. This Deputy Sheriff, an ex-professional wrestler and boxer, weighing 250 pounds or more, did under color of law, while on duty as jailer on Tier A-l, inflict great bodily harm on this petitioner who was immediately examined by the prison doctor and later removed to Charity Hospital for examination of head injuries and distorted vision. Petitioner does still suffer from distorted vision and headaches.
There were approximately seventy inmates confined to the dayroom who witnessed this attack.

As relief the complaint sought damages only.

Upon application Tuley was permitted to proceed in forma pauperis, and a lawyer was appointed for him. His- appointed counsel died in July of 1970, and a second lawyer was appointed in May of 1971. The second appointed attorney moved to withdraw as counsel, but the motion was denied, and he still represents Tuley on this appeal. At no time has counsel for Tuley sought leave to amend the original pro se complaint.

Each of the three defendants denied each and every allegation of the complaint in his answer.

In September of 1972 defendants Heyd and Falkenstein moved to dismiss as to them on the basis that the complaint alleged no personal involvement in the beating on their part and that- as a matter of law they could not be held vicariously liable for the wrongful acts of the Deputy under Section 1983. The district court determined that neither the pleadings nor the answers to interrogatories on file indicated personal involvement on the part of Heyd or Falkenstein or showed a genuine issue as to any material fact concerning them and, treating the motion to dismiss as a motion for summary judgment under Fed.R.Civ.P. 12, it granted summary judgment for the two movants. It certified the judgment as final under Fed.R.Civ.P. 54(b).

In the terse three-page argument in his brief, counsel for appellant Tuley seems to raise two issues on this appeal: (1) whether the facts were sufficiently developed in the record to permit the conclusion that there were no genuine issues as to material facts so that summary judgment could properly be granted, and (2) whether a Deputy Sheriff’s superiors may be vicariously liable under Section 1983 for the Deputy’s wrongful acts. We agree with appellant that the record facts were not sufficiently developed to permit entry of summary judgment; we do not reach the second issue because we cannot ascertain from the record in its present state whether or in what form it is presented in this case.

A motion to dismiss for failure to state a claim upon which relief can be granted must be treated as a motion for summary judgment if matters outside the pleadings are considered.

If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such motion by Rule 56.

Fed.R.Civ.P. 12(b). The motion, considered as one for summary judgment under Fed.R.Civ.P. 56, should be granted only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

A motion for summary judgment, as distinguished from a motion to dismiss for failure to state a claim, seeks to “pierce the allegations in the pleadings,” 10 C. Wright & A. Miller, Federal Practice and Procedure § 2712 at 373 (1973); it goes beyond the pleadings and challenges the factual existence of a valid claim. Summary judgment should be granted only when it is clear factually what the truth of the matter is. Poller v. Columbia Broadcasting System, 1962, 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458. The facts may become clear when, for example, the parties stipulate them, or when the moving party files an affidavit setting forth certain facts, and the non-moving party is unable to produce any controverting affidavit or evidence. Fed.R.Civ.P. 56(e).

In this ease the parties have hardly begun to develop the facts. The record contains no affidavits, depositions, or admissions. Beyond the factual representations in the complaint, answers to interrogatories by each party are the only indications of the facts. Plaintiff’s interrogatories were directed solely toward discovery of the names and addresses of potential witnesses, the existence of any pertinent documentary or photographic evidence concerning the extent of plaintiff’s injuries, and the existence of liability insurance policies. Interrogatories served by defendants were aimed exclusively at discovery of the identities of plaintiff’s witnesses and of his name, address, marital status, educational background, and criminal record. None of the interrogatories or answers to them touch on the question of personal fault or responsibility on the part of Heyd or Falkenstein for the alleged beating. None of the answers show what offices Heyd or Falkenstein held at the time of the alleged beating, or whether a master-servant or superi- or-subordinate or principal-agent relationship existed between Falkenstein and Massey or between Heyd and Massey, or whether any other arguable basis for vicarious liability of Falkenstein or Heyd was present. Because the material facts of the lawsuit were thus wholly undeveloped in the record, summary judgment could not properly be granted.

It is a familiar principle that the label a district court puts on its disposition of a case is not binding on a court of appeals. When a district court grants a motion styled a motion to dismiss, but bases its ruling on facts developed outside the pleadings, the appellate court will review the “dismissal” as a summary judgment under the standards laid down in Fed.R.Civ.P. 56. E. g., Williams v. Pacific Maritime Association, 9th Cir. 1967, 384 F.2d 935, cert denied, 1968, 390 U.S. 987, 88 S.Ct. 1181, 19 L.Ed.2d 1290; see 5 C. Wright & A. Miller, Federal Practice and Procedure, § 1366 n. 67. In the instant case, it is apparent that the district court mislabeled its disposition in the opposite fashion; although its order is denominated a summary judgment, the court did not rely on extra-pleading matters in making its ruling. As we have noted above, there was no extra-pleading development of relevant facts in the record. The ruling was based on the failure of the complaint to allege personal involvement of Falkenstein or Heyd in the alleged beating and on the legal conclusion that vicarious liability could not be imposed under Section 1983. The district court ruled on “the formal sufficiency of the statement of the claim for relief.” 5 C. Wright & A. Miller, Federal Practice and Procedure § 1356 (1969). In these circumstances the district court’s order should be reviewed as a dismissal with prejudice rather than as a summary judgment.

Our perusal of the complaint convinces us that the Rule 12(b)(6) motion to dismiss for failure to state a claim should have been granted, but not with prejudice. In the circumstances of this case we conclude that the dismissal should have been entered — and on remand should be entered — without prejudice to plaintiff’s right to serve an amended complaint within a reasonable time, to be determined by the district court.

The inadequacy of the complaint to state a claim under Section 1983 against Heyd or Falkenstein is patent. These two defendants are not named or otherwise identified in the body of the complaint. The pleading thus not only fails to indicate any direct, personal involvement of either defendant in the alleged deprivation of civil rights, but also fails to allege any arguable basis for vicarious liability. In the caption of his original complaint Tuley has included Heyd’s name, followed by the title, “Criminal Sheriff Orleans Parish,” and Falkenstein’s name, followed by the title, “Warden, Orleans Parish Prison,” but the inclusion of these names and notations of office in the caption does not amount to an allegation that either defendant was personally involved in the beating or to a sufficient allegation of the offices held by defendants at the time of the events in question or of the nature of the relationships which existed between Heyd and Massey and between Falkenstein and Massey. See Hoffman v. Halden, 10th Cir. 1959, 268 F.2d 280, 303; Brzozowski v. Randall, E.D.Pa. 1968, 281 F.Supp. 306, 312.

Appellees would have us hold sweepingly that no claim based on vicarious liability will lie under Section 1983. This broad position is foreclosed by prior holdings of this court that the question of a sheriff’s vicarious liability under Section 1983 for acts of his deputy is controlled by state law. Madison v. Gerstein, 5th Cir. 1971, 440 F.2d 338; Lewis v. Brautigam, 5th Cir. 1955, 227 F.2d 124; see also Hesselgesser v. Reilly, 9th Cir. 1971, 440 F.2d 901. In this case, however, we have no occasion to rule on questions of vicarious liability under Section 1983, for none are presented by the pleadings at this stage.

We conclude that this case should be remanded for dismissal without prejudice to plaintiff’s right to amend within a reasonable time, rather than with prejudice, because the “federal rule policy of deciding cases on the basis of the substantive rights involved rather than on technicalities requires the plaintiff be given every opportunity to cure a formal defect in his pleading.” 5 C. Wright & A. Miller, Federal Practice and Procedure § 1356 at 612 (1969). This policy is particularly applicable in this case since the plaintiff, after appointment of two lawyers to represent him in this action, is still proceeding on the basis of his original, obviously inadequate pro se complaint, over five years after it was originally filed. We express no view on whether plaintiff in fact has and can state a meritorious claim.

The summary judgment entered below is vacated and the case is remanded with directions.

      . The district court explained the bases for its ruling from the bench as follows: From the alleged facts of the plaintiff's complaint, the movers Heyd and Falkenstein were not responsible for plaintiff’s injuries where relief under the doctrine of respondent superior is clearly inapplicable to impose vicariously liability upon the defendant, who has no personal involvement in the alleged deprivation of the plaintiff's Federally protected rights. . . . To recover money damages under the Civil Rights Act there must be a showing that the defendants personally and directly were involved in the acts, which were allegedly violative of plaintiff’s rights under Federal law.

      . An involuntary dismissal must be considered to be with prejudice unless the district court specifies that its order is entered “without prejudice.” Fed.R.Civ.P. 41(b). Of course, a summary judgment is always “with prejudice.” It “is on the merits and purports to have a res judicata effect on any later action.” 10 C. Wright & A. Muller, Federal Practice and Procedure § 2713 at 407 (1973).

      . On the question of vicarious liability under Section 1983, see generally Jennings v. Davis, 8th Cir. 1973, 476 F.2d 1271 [1973]; Roberts v. Williams, 5th Cir. 1972, 456 F.2d 819, cert. denied, 404 U.S. 866, 92 S.Ct. 83, 30 L.Ed.2d 110; Carter v. Carlson, 1971, 144 U.S.App.D.C. 388, 447 F.2d 358, rev’d on other grounds sub nom. District of Columbia v. Carter, 1973, 409 U.S. 418, 93 S.Ct. 602, 34 L.Ed.2d 613; Adams v. Pate, 7th Cir. 1971, 445 F.2d 105; Anderson v. Nosser, 5th Cir. 1971, 438 F.2d 183, 199 n. 13, modified in other respects on banc, 1972, 456 F.2d 835, cert. denied sub nom. Nosser v. Bradley, 409 U.S. 848, 93 S.Ct. 53, 34 L.Ed.2d 89; Dunham v. Crosby, 1st Cir. 1970, 435 F.2d 1177; Whirl v. Kern, 5th Cir. 1969, 407 F.2d 781, cert. denied 397 U.S. 901, 90 S.Ct. 210, 24 L.Ed.2d 177; Nesmith v. Alford, 5th Cir. 1963, 318 F.2d 110, cert. denied sub nom. Sullivan v. Nesmith, 1964, 375 U.S. 975, 84 S.Ct. 489, 11 L.Ed.2d 420.

        See also Louisiana Revised Statutes 33:1435; Nielson v. Jefferson Parish Sheriff’s Office, La.Ct.App.1970, 242 So.2d 91; Pollizzi v. Trist, La.Ct.App.1963, 154 So.2d 84; Gray v. DeBretton, 1939, 192 La. 628, 188 So.2d 722.

      . In Moor v. County of Alameda, 1963, 411 U.S. 693 n. 17, 93 S.Ct. 1785, 36 L.Ed.2d 596 the Supreme Court did not interpret Lewis and Hesselgesser as improperly importing state causes of action into federal law via 42 U.S.C. § 1988.


author: TRASK, Circuit Judge:

text:
    HMH PUBLISHING CO., INC., a Delaware corporation, and Playboy Clubs International, Inc., a Delaware corporation, Plaintiffs-Appellants, v. Douglas LAMBERT et al., Defendants-Appellees.
    No. 71-2007.
    United States Court of Appeals, Ninth Circuit.
    July 10, 1973.

      R. Dickey Hamilton (argued), Paul P, Selvin, Los Angeles, Cal, Devoe, Shadur, Plotkin, Krupp & Miller, Chicago, 111., Selvin & Cohn, Los Angeles, Cal., James T. Fousekes, Esq., San Francisco, Cal., for plaintiffs-appellants.
    Harry L. Gershon (argued), Kenneth C. Rollston, Robert L. Hitchcock, of Richards, Watson & Dreyfuss, Conrad Sol-um, of Lyon & Lyon, Los Angeles, Cal., for defendants-appellees.
    Before HUFSTEDLER, TRASK and WALLACE, Circuit Judges.
   TRASK, Circuit Judge:

This is an appeal from an action for trademark infringement and unfair competition arising from defendant-ap-pellees’ alleged infringement of plaintiff-appellants’ marks “Playboy,” “The Playboy Club” and “Playmate.” Plaintiffs’ complaint sought to enjoin the use of the names “Playgirl,” “Playgirl Club” and “Playgirl Key Club” by the appel-lees in their promotion and operation of nightclub-bars in the Los Angeles area, and to recover damages for alleged acts of unfair competition.

The case was tried without a jury and the district court entered a judgment for defendants on all counts. Jurisdiction of the district court was based on 15 U.S.C. § 1121, the Lanham TradeMark Act, 15 U.S.C. §§ 1051-1127, and on 28 U.S.C. § 1332, diversity of citizenship.

Plaintiffs are HMH Publishing Co., Inc. (HMH) and Playboy Clubs International, Inc. (PCI), corporations organized and existing under the laws of Delaware, with their principal offices and places of business in Illinois. The individual defendants, Douglas Lambert and John Andrews, are residents of California, and the corporate defendant, Playgirl Key Club, Inc., was organized and exists under its laws.

HMH publishes and distributes Playboy magazine, which had a circulation in California in 1964 of more than 325,000. HMH also owns registered trademarks and service marks including “Playboy,” “The Playboy Club,” “Playmate,” a key design and a bunny head. PCI, under a license from HMH, franchises others to use the marks of HMH including nightclub-restaurants known as “Playboy Clubs.” These clubs have over 750,000 key holders, and are widely advertised and publicized. Playboy Clubs generally conform to standards of quality and control required by the license agreement between HMH and PCI. The bunny head design is used in connection with the operation of the Playboy Clubs. In addition, attractive young women, distinctively costumed and referred to as “Bunnies,” serve food and beverages to the patrons.

A large California promotion for Playboy Club keys was begun in 1964 in anticipation of the opening of the Los Angeles Playboy Club. More than two million solicitations were mailed in California, and more than $3,600,000 was expended through the year 1964 in nationwide promotions for all PCI’s products.

Defendants Lambert and Andrews, as partners, have owned three separate nightclub-bars known respectively as “The Play Girl,” “The Play Girl #2” and “The Play Girl # 3.” The first of these clubs opened on December 31, 1964. Since March 15, 1969, defendant Playgirl Key Club, Inc. has owned and operated a nightclub-bar under the name “Playgirl Club” in Garden Grove, California. With respect to this club, the physical plant is made up of one large room with a circular bar in which “go-go dancers” perform at various times during the evening. At one end of the room was a large stage on which lounge shows are presented. There is no separate dining room or bar, and no food other than sandwiches is served.

Defendants’ nightclub is not a key or private club; admission is open to the general public. The go-go dancers and waitresses wear fringed bikinis which the trial court found bore no resemblance to the “bunny” costume. The court further found that the decor and physical surroundings of the Playgirl Club had no resemblance to a Playboy Club, and that defendants had made no effort to identify in any manner with Playboy magazine, to utilize the characteristic bunny head, or generally to operate in any way similar to the Playboy Clubs.

The district court then concluded that the name “Playgirl” is not confusingly similar to, nor would it be likely to cause confusion to members of the public with, either “Playmate” or “Playboy.” Therefore, defendants were found not to have infringed on plaintiffs’ marks nor to have engaged in any unfair competition with plaintiffs.

Appellants claim that the use of “Playgirl” and “Playgirl Club” is likely to confuse or deceive the public as to the source of the services or goods they are buying, or of the place of business they are patronizing. They contend that the district court applied an erroneous legal standard for determining the likelihood of confusion — i. e., a passing off standard that confusion was likely only if members of the public believed that the “Playgirl Club” was a “Playboy Club.” Regardless, appellants argue, it is still for this court to decide the infringement and unfair competition issues because there are no disputed factual issues, and the determination of likelihood of confusion is a conclusion of law. Finally, appellants claim the trial court erred in rejecting evidence of specific instances of actual mistake which are claimed to be relevant to the issue of confusion.

The first question is whether defendants’ use of the names “Playgirl,” “Playgirl Club” and “Playgirl Key Club”

“ ‘is likely to cause confusion or mistake or to deceive purchasers as to the source of origin of such goods or services.’ This test requires consideration of a number of factors, including the visual, verbal and intellective similarity of the marks, the class of goods to which the marks are applied, the marketing channels through which the goods are sold, and the intent of defendant in adopting the mark.” K-S-H Plastics, Inc. v. Carolite, Inc., 408 F.2d 54, 57 (9th Cir. 1969), cert. denied, 396 U.S. 825, 90 S.Ct. 69, 24 L.Ed.2d 76 (1970) (citations omitted).

Accord, Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 799-800 (9th Cir. 1970); Johnson & Johnson v. Diaz, 339 F.Supp. 60, 63 (C.D.Cal.1971). The test is not that there might be a possibility of confusion as to the source of plaintiffs’ and defendants’ business, but rather whether there is a likelihood of confusion as to source. Carter-Wallace, Inc., supra, 434 F.2d at 804.

The trial court found, and we agree, that the evidence disclosed that the type of nightclub operated by defendants is not similar to the type of nightclub licensed by plaintiffs. The trial court found further that defendants adopted the name “Playgirl” without reference to plaintiffs’ marks, and did not intend to infringe upon nor to create confusion with plaintiffs’ marks. We discern no basis upon which to hold this finding of fact clearly erroneous. It appears to this court that defendants have maintained a distinctive, recognizable difference between their marks and those of plaintiffs, and we agree with the district court that there is no likelihood of confusion as to the source of the nightclubs operated by defendants.

Appellants rely heavily on their long, and substantial advertising expenditures and promotional campaign when compared with the minimal advertising undertaken by defendants as a factor entitling them to greater protection. As this court held in Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 800 (9th Cir. 1970):

“While such relative advertising expenditure is an additional factor to be considered, it is not dispositive, for a ‘large expenditure of money does not in itself create legally protectable rights.’” (citations omitted).

Appellants attack the finding of the district court as based upon an application of an incorrect legal standard; specifically, that a passing off, rather than an infringement test was used. However, if the lower court’s conception of the law of infringement was too restrictive, the record does not relate this mistake to us. The trial court found no physical similarity between the nightclubs of defendants and plaintiffs as an element of the broader test of likelihood of confusion. We are not convinced that the trial court applied an incorrect legal standard. Nor do we, upon our own examination of the record, find any likelihood of confusion of source.

Appellants cite us to a number of cases which they claim support their theory of likelihood of confusion. This contention is answered by a reference to an earlier case in this circuit which stated:

“It is sufficient to say that we have carefully examined the cases thus cited and it is our opinion that they all are factually distinguishable from the case before us. It is elementary that in the decision of a case of this kind, involving the question of confusing similarity, each case must stand on its own facts, and prior decisions are of little assistance.” Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 160 (9th Cir.), cert. denied, 374 U.S. 830, 83 S.Ct. 1870, 10 L.Ed. 2d 1053 (1963).

Appellants urge that California law on unfair competition would provide a basis for relief under a theory of trademark dilution. We have been shown no cases which have afforded protection under the California statute in circumstances such as those before us now; we agree with the district court that plaintiffs are not entitled to relief under any theory of dilution.

The final contention of appellants is that instances of actual confusion were improperly rejected by the trial court, on grounds of relevancy and hearsay. The rejected items were in the nature of letters, envelopes and articles. There was no showing that the excluded items associated the nightclub operated by defendants with one or more of plaintiffs’ trademarks. Not only did plaintiffs fail to demonstrate that these materials offered in evidence could have had any bearing on the class of prospective purchasers of these nightclub services, but the materials tell us nothing at all about the relationship of any “Playgirl Club” operated by these defendants, with the source of Playboy Clubs. We therefore agree with the lower court’s ruling that these excluded items had no probative value on the issue of whether a patron of a Playgirl Club would be likely to be confused as to the source of origin of the services.

The judgment is affirmed.

      . The Lanham Trade-Mark Act, 15 U.S.C. § 1114, provides:
      “(1) Any person who shall, without the consent of the registrant—
      “(a) use in commerce any reproduction, . ' . copy, or colorable imitation of a registered mark in connection with the sale ... or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; . . . ”

      . Section 14330 of the California Business and Professions Code provides that:
      “Likelihood of injury to business reputation or of dilution of. the distinctive quality of a mark registered under this chapter, or a mark valid at common law, shall He a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.”

      . Further background information may be found in HMH Publishing Co. v. Brincat, 342 F.Supp. 1275 (N.D.Cal.1972); HMH Publishing Co. v. Turbyfill, 330 F.Supp. 830 (M.D.Fla.1971).

      . Appellants place importance of defendants' promotional brochure, which pictured several features arguably very similar to those found in Playboy Clubs. This evidence is more relevant to the question of defendants’ intent, and, as discussed later, we have no basis to hold the finding of the district court that defendants did not intend to infringe, clearly erroneous.

      . Infringement under the Lanham Act “likely to cause confusion” test means that the average purchaser or customer would be likely to believe that the infringer’s product “had some connection” with the product of the copyright owner. Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 155 (9th Cir. 1963).
      On the other hand,
      “Defendant’s substitution of another product in response to a request for plaintiff’s trademarked product . . without . . . notice to the purchaser ... is called palming off, passing off or substitution. Such acts are an infringement of plaintiff’s lawfully registered trademarks and are unfair competition.” Coca Cola Co. v. Dorris, 311 F.Supp. 287, 289 (E.D.Ark.1970). (citations omitted).

      . If the facts are not in dispute and the issue of confusing similarity is based solely, upon the comparison of the marks in the context of extrinsic facts, the appellate court may determine the issue of confusing similarity. Carter-Wallace Inc. v. Procter & Gamble Co., 434 F.2d 794, 799 (9th Cir. 1970); Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 152 (9th Cir.), cert. denied, 374 U.S. 830, 83 S.Ct. 1870, 10 L.Ed.2d 1053 (1963).

      . The cases cited are: Myrurgia, S.A. v. Comptoir De La Parfumerie, 441 F.2d 673 (C.C.P.A.1971); Manpower, Inc. v. Womanpower, Inc., 288 F.Supp. 132 (D.P.R.1968); and HMH Publishing Co. v. Hale, 156 F.Supp. 594 (N.D.Cal.1957). This latter case involved quite different facts than the present case, particularly the subject matter and kind of infringement alleged.

      . One California district court has refrained from giving the California statute an “overly broad application lest it swallow up all competition in the claim of protection against trade name infringement.” Coffee Dan’s Inc., v. Coffee Don’s Charcoal Broiler, 305 F.Supp. 1210, 1217 n. 13 (N.D.Cal.1969).