author: JOHN W. PECK, Circuit Judge.

text:
    D. C. ELECTRONICS, INC., Plaintiff-Appellant, v. NARTRON CORP. and Norma Rautiola, Defendants-Appellees.
    No. 74-1554.
    United States Court of Appeals, Sixth Circuit.
    Feb. 21, 1975.

      Henry W. Gleiss, Globensky, Gleiss, Henderson & Bittner, St. Joseph, Mich., Grant J. Gruel, Grand Rapids, Mich., Howard A. Tullman, Levy & Erens, Roger L. Price, Jay Erens, Chicago, 111., for plaintiff-appellant.
    Thomas H. Truitt, Truitt & Fabrikant, David R. Berz, Washington, D. C., Charles S. Fax, for defendants-appellees.
    Before WEICK, EDWARDS and PECK, Circuit Judges.
   JOHN W. PECK, Circuit Judge.

The sole issue presented by the parties to this appeal is whether a district judge can, in the exercise of his discretion, invalidate a notice of dismissal filed by the plaintiff under Rule 41(a)(l)(i), Federal Rules of Civil Procedure, prior to service “by the adverse party of an answer or of a motion for summary judgment ft

The factual background underlying this case and the issues raised in this appeal date from October 25, 1973, when plaintiff-appellant, D. C. Electronics, and another corporation (Meridian Industries, Inc.) filed an antitrust action against defendants-appellees, Nartron Corporation and Norman Rautiola, its president, alleging violations of Sections 1 and 2 of the Sherman Antitrust Act and Section 7 of the Clayton Antitrust Act. Plaintiffs sought and were granted a temporary restraining order, and a hearing was scheduled on plaintiffs’ request for a preliminary injunction. At the scheduled hearing, Meridian dismissed its action against Nartron with prejudice, D. C. Electronics withdrew its request for a preliminary injunction, and the district court dissolved the temporary restraining order.

On November 16, 1973, appellant and appellees entered into a written stipulation extending the date for appellees to answer or otherwise plead to January 10, 1974. Approximately two months later, on January 7, 1974, appellant filed a “Motion to Dismiss and Notice of Motion” pursuant to Rule 41(a)(2), Federal Rules of Civil Procedure. On January 8, 1974, appellant abandoned its “Motion to Dismiss” and filed, in lieu of said motion, a notice of voluntary dismissal pursuant to Rule 41(a)(l)(i), Fed.R.Civ.P. It is undisputed that at the time the notice of dismissal was filed, appellees had not served an answer or a motion for summary judgment. Subsequently, on January 9, 1974, appellees served and filed an answer to the complaint, affirmative defenses and a counterclaim.

Appellees challenged the voluntary dismissal, and after a hearing the district court held that the notice of voluntary dismissal was ineffective because the case had progressed too far to allow dismissal, and ordered the notice of voluntary dismissal vacated. Appellant perfected the present appeal from that order.

Rule 41(a) of the Federal Rules of Civil Procedure provides as follows:

“(a) Voluntary Dismissal: Effect Thereof.
“(1) By Plaintiff; by Stipulation. Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim. “(2) By Order of Court. Except as provided in paragraph (1) of this subdivision of this rule, an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff’s motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.” (Emphasis supplied.)

Thus Rule 41(a) provides three distinct and separate methods whereby an action may be voluntarily dismissed. Significantly, while Rule 41(a)(2) contemplates the exercise of judicial discretion and the issuance of a court order in response to a motion by plaintiff, and Rule 41(a)(l)(ii) permits dismissal by the filing of a stipulation agreed to by all the parties who have appeared in the action, Rule 41(a)(l)(i), the rule pursuant to which appellant proceeded, provides for dismissal of an action upon the unilateral filing of a notice of dismissal with the Clerk of Court and without the necessity of further agreement by any other party or further order of the court. Scam Instrument Corp. v. Control Data Corp., 458 F.2d 885, 888 (7th Cir. 1972); Miller v. Reddin, 422 F.2d 1264, 1266 (9th Cir. 1970); Hyde Construction Co. v. Koehring Co., 388 F.2d 501, 507 (10th Cir.), cert. denied, 391 U.S. 905, 88 S.Ct. 1654, 20 L.Ed.2d 419 (1968); American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963).

Appellees argue that since the-purpose of Rule 41(a)(l)(i) “is to facilitate the voluntary dismissal of an action, but safeguard abuse of the right by limiting its application to an early stage of the proceedings,” Engelhardt v. Bell & Howell Co., 299 F.2d 480, 482 (8th Cir. 1962), courts are vested with the discretion to determine whether a particular case has progressed to a point at which voluntary dismissal is no longer proper, even though an answer or motion for summary judgment has yet to be filed. We do not agree.

Prior to the adoption of the Federal Rules, the plaintiff’s right to voluntary dismissal in actions at law in the federal forum was, by virtue of the Conformity Act of 1872, controlled by state statutes. “In some states [plaintiff could dismiss] until issue had been joined, in other until the trial began, in still other until the case was submitted to the jury, and in some until the verdict was returned.” 9 Wright & Miller, Federal Practice and Procedure, Civil § 2363, at 151 (1971). The right to dismiss an equitable action was a matter of federal practice subject to a number of qualifications, the most important of which was the requirement that permission of the court be secured in order that defendant’s rights be protected. 5 J. Moore, Federal Practice, U 41.02 [3] (2d ed. 1974). Rule 41(a)(1), as originally conceived, further limited plaintiff’s once absolute right of dismissal to the period before defendant filed an answer, and brought needed standardization to federal practice. Subsequent practical experience with the new rule prompted a 1948 amendment to the effect that a motion for summary judgment would also cut off the right of notice dismissal. Although Rule 41 has been amended three times since 1948, it has not been broadened to include other motions or pleadings which would bar a dismissal by notice.

Courts and commentators alike have apprehended that the purpose of the rule is to limit the right of dismissal to an early stage of the proceedings. Engelhardt v. Bell & Howell Co., supra; Littman v. Bache & Co., 252 F.2d 479, 480 (2d Cir. 1958); Sheldon v. Amperex Electronic Corp., 52 F.R.D. 1, 6 (E.D.N.Y. 1971); 5 J. Moore, Federal Practice, 1f 41.02 [1], at 1019 (2d ed. 1974); 9 Wright & Miller, Federal Practice and Procedure, Civil § 2363, at 151 (1971). The drafters of Rule 41(a)(l)(i), however; did not attempt to effectuate their purpose by phrasing the rule in vague terms or, as in Rules 41(a)(l)(ii) and 41(a)(2), by calling for judicial involvement or the exercise of judicial discretion. Undoubtedly conscious of the incalculable paths which litigation may follow, the drafters employed precise language to define an “early stage” of a proceeding.

Despite the clear and unambiguous language of the rule, however, “several courts have dealt with the question of whether the advanced nature of the proceedings should operate, ipso facto, to bar a plaintiff’s right to dismiss voluntarily.” Sheldon v. Amperex Electronic Corp., 52 F.R.D. at 6. Harvey Aluminum Inc. v. American Cyanamid Co., 203 F.2d 105 (2d Cir.), cert. denied, 345 U.S. 964, 73 S.Ct. 949, 97 L.Ed. 1383 (1953), is the case most often cited for the proposition that a federal court has discretion to determine the propriety of a notice of dismissal. In Harvey, a notice of dismissal was filed after the merits of the controversy had been joined at an extensive hearing on a request for a preliminary injunction. At the conclusion of the hearing the district court had denied the motion for a preliminary injunction on the grounds “that the plaintiffs’ chances of success on the ultimate trial were ‘remote, if not completely nil.’ ” 203 F.2d at 107. The Second Circuit, noting the amount of research and preparation by defendants, and mindful of the fact that the merits had been raised at the preliminary hearing, rejected literal application of the rule. “Consequently, although the voluntary dismissal was attempted before any paper labeled ‘answer’ or ‘motion for summary judgment’ was filed, a literal application of Rule 41(a) 1 to the present controversy would not be in accord with its essential purpose of preventing arbitrary dismissals after an advanced stage of a suit has been reached.” 203 F.2d at 108. The appellate court ordered the notice of dismissal vacated.

Harvey, though not specifically rejected, was limited to its particular factual setting by the Second Circuit in Littman v. Bache & Co., supra. In Littman, the plaintiff filed a notice of dismissal after defendant’s motion to transfer was granted but before defendant filed an answer or motion for summary judgment. Distinguishing Harvey on the basis of whether the issue had been joined, the Second Circuit reversed an order vacating the notice of dismissal. The court said:

“The merits of the controversy were never before the court. To be sure, both parties were familiar with the subject matter of the litigation, but this was clearly insufficient to deprive plaintiff of his right to a voluntary dismissal.” 252 F.2d at 481.

Thus the Harvey rationale is without validity where the merits of the controversy have not been raised before the filing of an answer or motion for summary judgment. As a practical matter, according to Professors Wright and Miller, “most cases have refused to [find that the merits have been considered] and have reached the result the language of the rule seems to require.” 9 Wright & Miller, supra at 157 — 158.

In the instant case we note that the merits of the controversy were not before the court in their entirety due to the fact that appellant aborted the preliminary hearing after a short period of time, and the court did not rule on the motion for preliminary injunction. Thus even if Harvey were still good law, it would not apply to the facts before us. However, the far more persuasive argument presented by appellant, and the basis for our decision here, is that Rule 41(a)(l)(i) is clear and unambiguous on its face and admits of no exceptions that call for the exercise of judicial discretion by any court. Other than to determine, should the question arise, whether an answer or a motion for summary judgment has in fact been filed prior to the filing of a notice of dismissal, a court has no function under Rule 41(a)(l)(i). The notice of dismissal filed with the clerk

"... itself closes the file. There is nothing the defendant can do to fan the ashes of that action into life and the court has no role to play. This is a matter of right running to the plaintiff and may not be extinguished or circumscribed by adversary or court. There is not even a perfunctory order of court closing the file. Its alpha and omega was the doing of the plaintiff alone. He suffers no impairment beyond his fee for filing.” American Cyanamid Co. v. McGhee, 317 F.2d at 297.

Appellees urge that such a position leaves a defendant defenseless against the whim and caprice of the plaintiff. Not so. The defendant can protect himself by merely filing an answer or motion for summary judgment. Furthermore, built into Rule 41(a) is the overall provision that the plaintiff can but once voluntarily dismiss without prejudice. Thus, plaintiff’s ability to harass defendant by the filing and dismissing of successive actions involving the same claim or claims is limited and can be cut off completely by the diligence required in the filing of an answer or motion for summary judgment.

Finally, we observe that commentators have urged for some time that all voluntary dismissals should be discretionary with the court. Despite this urging, Rule 41(a)(l)(i) has remained virtually unchanged (through a number of amendments to other parts of Rule 41) since 1938. If subsequent practical experience should prove that the rule is unfair as presently constituted, the power of change rests with the rule making body, not the courts.

The judgment of the district court is reveised and the case is remanded for further proceedings consistent with this opinion.

      . Act of June 1, 1872, c. 225, § 5, 17 Stat. 197, Rev.Stat. § 914, repealed by Act June 25, 1948, c. 646, § 39, 62 Stat. 992.
      At common law plaintiffs right to dismiss his action without prejudice was absolute at any time before judgment. Ex parte Skinner v. Eddy Corp., 265 U.S. 86, 44 S.Ct. 446, 68 L.Ed. 912 (1924).

      . Ex parte Skinner v. Eddy Corp., 265 U.S. 86, 44 S.Ct. 446, 68 L.Ed. 912 (1924); Barrett v. Virginian Ry., 250 U.S. 473, 30 S.Ct. 540, 63 L.Ed. 1092 (1919); see note 1, supra.

      . Prior to the Harvey decision, the Second Circuit was committed to a literal reading of Rule 41(a)(l)(i). Kilpatrick v. Texas & P. Ry., 72 F.Supp. 632 (S.D.N.Y.1947), rev’d, 166 F.2d 788 (2d Cir. 1948).

      . See Sheldon v. Amperex Electronic Corp., 52 F.R.D. 1, 6 (E.D.N.Y. 1971).

      . American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963).

      . 1962 Duke L.J. 285 (1962); 63 Yale L.J. 738 (1954); 5 J. Moore, Federal Practice fl 41.02 [3], at 1031 (2d ed. 1974).


source: Caselaw Access Project

author: COFFIN, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America, Appellant, v. Thomas Michael GOLON, Defendant-Appellee.
    No. 74-1299.
    United States Court of Appeals, First Circuit.
    Argued Dec. 4, 1974.
    Decided Jan. 28, 1975.
    Certiorari Denied May 27, 1975.
    See 95 S.Ct. 1999.

      Robert B. Codings, Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., and Benjamin Jones, Asst. U. S. Atty., were on brief, for appellant.
    Norman S. Zalkind, Boston, Mass., with whom Eric D. Blumenson and Zalkind & Zalkind, Boston, Mass., were on brief, for defendant-appellee.
    Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.
   COFFIN, Chief Judge.

The facts of this case as found by the district court, United States v. Golon, 378 F.Supp. 516 (D.Mass.1974), are undisputed. Appellee Thomas Michael Golon was classified as a conscientious objector by his draft board in 1970, and was ordered to perform 24 months of alternate service in civilian work contributing to the national health, safety or interest. Appellee began work in late 1970 at the Metropolitan State Hospital in Waltham, Massachusetts, but continued his employment there only until April 4, 1971. The State Selective Service Headquarters wrote appellee on April 19 concerning this unauthorized termination of his employment, and appellee responded with a request for reassignment. The state headquarters sent two additional létters inquiring about appellee’s prospective civilian employment, but received no response to these. In July, 1971, appellee started a non-profit food store, relying, according to his testimony, on conversations with a Selective Service official and others which indicated that it might be possible to fulfill his service obligation in this way.

On August 23, 1972, the State Selective Service Board assigned appellee to work at Massachusetts General Hospital to complete his obligation, but he did not report. The State Selective Service Headquarters was notified on October 5 of the failure to report, and informed the United States Attorney of the alleged violation the next day. After having the FBI interview appellee, the U.S. Attorney’s office requested copies of relevant Selective Service documents on July 21, 1973. These documents were received in October, reviewed by an Assistant U. S. Attorney on December 10, and an indictment was obtained December 19 for failure to perform the alternate service. 50 U.S.C. Appendix §§ 456(j), 462. Appellee was arraigned on January 7, 1974, and pleaded not guilty. After a hearing, the district court dismissed the indictment on July 30 on the ground that the government’s prosecution of the case had not been conducted as expeditiously as mandated by 50 U.S.C. Appendix § 462(c) and that appellee had been prejudiced thereby.

Section 462(c), which was enacted as part of the Military Selective Service Act of 1967, provides:

“The Department of Justice shall proceed as expeditiously as possible with a prosecution under this section, or with an appeal, upon the request of the Director of Selective Service System or shall advise the House of Representatives and the Senate in writing the reasons for its failure to do so.”

The determination whether the “expeditiously as possible” requirement of the statute was brought into play in this case by a sufficient “request” by the Director of Selective Service requires reference to the letter sent to the U.S. Attorney by the State Selective Service Headquarters on October 6, 1972. Since appellee has pointed to no other letter or communication from Selective Service making the request required by § 462(c), this letter must be viewed as constituting whatever request was made. The letter was one reporting appellee for prosecution as a violator:

“This headquarters, having carefully reviewed the entire file folder of the subject registrant and finding no procedural errors, and having processed him under the provisions of section 1660.9 of the regulations herewith reports the subject for prosecution under Section 12 of the Military Selective Service Act for violation of the provisions of section 6(j) of that act . ..”

Appellee argues that this was the request for expeditious prosecution contemplated by the statute, while the government contends that a more specific invocation of § 462(c) by a special request from the Director is necessary to bring it into operation. Before proceeding to the merits of this issue, we shall deal with two preliminary points raised by appellee.

It is argued, first of all, that by failing to present to the district court the argument that there was no “request” the government has foreclosed that line of attack here. Incontestably, it would have been better and more fair to the district court to have enabled it to pass upon the issue directly, and sound policies often dictate that we refuse to consider issues raised in the first instance on appeal. Here, however, we think it inappropriate to halt at the threshold. In briefing the Motion to Dismiss below, neither party focused on the § 462(c) argument among the multiplicity of issues mentioned in the motion. The district court first denied the motion, United States v. Golon, 378 F.Supp. 513 (D.Mass.1974); this was done without discussion of the specific issues raised by appellee with regard to delay (due process, Sixth Amendment speedy trial, § 462(c)). After this initial disposition, the district court held a hearing on the matter, and dismissal was granted. The issue relating to the nature of the request required by § 462(c) was not discussed either in memoranda or at the hearing, which was limited to appellee’s testimony as to his conduct. We would be inclined to view this somewhat disorganized presentation of the issues to the district court as sufficient in itself to justify our consideration of the “request” issue. In addition, there are more salient factors which also support that re-suit. The issue is one which is presented on the face of the statute, which specifically requires a request. And we are loath to pass over a question, squarely before us, which is almost certain to be presented in identical terms in other cases.

Appellee contends, secondly, that the district court’s determination that § 462(c) was applicable is one of fact which cannot be overturned unless clearly erroneous, likening it to a finding of consent. We disagree. The issue is strictly a legal one, posing the question whether § 462(e) comes into play in every case where a state board reports a registrant for prosecution or is triggered only by a specific request from the national Director of Selective Service.

The parties put forward radically different conceptions of the “request” referred to in § 462(c). Appellee contends that Congress intended that the prosecution of all draft cases be speeded up, and that in reporting an alleged violator for prosecution the Selective Service System fulfills the requirements of the statute. This position draws support from statements such as that by the House Armed Services Committee that enactment of the provision would “create a sense of urgency in the Department of Justice in respect to violations of the Selective Service Act.” House Report No. 267, 90th Cong., 1st Sess., 1967 U.S.Code Cong. & Admin.News at p. 1333. The section was described in the House Report as a response to “the apparent failure of the Attorney General to prosecute many alleged violations of the Selective Service Act despite the requests of the Director of Selective Service.” Id. The government agrees, as it must, that Congress sought to give the Director greater control over the prosecution of alleged draft violators, but it argues that an across-the-board command that all alleged violators be speedily prosecuted was not the mechanism chosen. It argues that Congress was aware that all draft cases are referred to the Justice Department by the Selective Service System, and that therefore an interpretation which labels the initial referral a § 462(c) request has the effect of rendering the request requirement surplusage. All the provisions of the statute may be given effect, it is argued, if the section is interpreted as creating a two-stage procedure. After the referral or report, the U.S. Attorney investigates and decides whether to seek an indictment. If the Director of Selective Service is displeased with the handling of a particular matter, he may make a specific request for expeditious prosecution and thereby bring the section into play. The legislative history which most strongly supports this interpretation is found in the House Committee’s section-by-section analysis of the bill:

“The provisions . . . would require the Department of Justice to institute as expeditiously as possible prosecution and judicial proceedings of violations of the Draft Act in instances in which a specific request for such action has been made by the Director of Selective Service or in the absence of such prosecution by- the Attorney General, a complete report in writing to the House of Representatives and the Senate.” House Report No. 267, U.S.Code Cong. & Admin.News, 1967, at p. 1349. [Emphasis supplied.]

After carefully considering the language of § 462(c) and the policies underlying it as reflected in the legislative history of the 1967 Act, we have concluded that the section must be read to require a specific request beyond the standard referral for prosecution. Congress was well aware of the role of the Selective Service System as the originat- or of draft-violation investigations by U.S. Attorneys, and thus would have realized that considering the original violation report a “request” would have the effect of bringing all draft cases within § 462(c). Although foggy in some respects, the language of the section, the reports, and the commentary in the Senate and House make such prominent reference to the “request” requirement that the argument that § 462(c) applies to all alleged violations is seriously undermined.

There is no question but that Congress felt that draft cases should in general be more vigorously pursued. It took two steps to accomplish this purpose. Section 462(a) had given priority to prosecution of draft cases on court dockets where requested by the Attorney General. By deleting the prerequisite of such a request, Congress elevated all draft cases, after indictment, to a position of priority. And in § 462(c), it gave added authority to the Director to call for prosecution where he might feel there was untoward reluctance to seek indictment by the Justice Department. But there is no substantial support for the conclusion that Congress intended to strip away entirely the prosecutorial discretion reposed in the Justice Department and insist that an indictment be sought in every referred case, no matter what the result of the investigation of the case. It is true that even under § 462(c) final authority rests with the Justice Department, which may choose to report to Congress on its reasons for not prosecuting if that is its decision. But this fact is but another indication that the section is a remedy which must be specially invoked by the Director of Selective Service. In 1971, the U.S. Attorney for Massachusetts presented 84 referred cases to a grand jury, and declined prosecution on 220; in 1972, 99 were presented and 189 declined; and in 1973, 80 were presented and 236 declined. We cannot accept the suggestion that Congress anticipated or intended that a full report be made to the Senate and House of Representatives in each of the “declined” cases. Not only would such an interpretation indicate a massive and sustained violation of § 462(c) by the U.S. Attorney, but the apparent failure of Congress to respond to this flagrant nonfiling of explanatory letters would be inexplicable.

As our discussion above indicates, we believe that Congress intended to enhance the influence of the Director of Selective Service in prosecution matters by giving him the power to spotlight individual cases of possible Justice Department abuse, not by requiring the Department to prosecute all cases referred or explain its failure to do so. In addition to the House Report, cited above, and the Conference Report, 1967 U.S.Code Cong. & Admin.News at p. 1361, the amendment of § 462(a) in the 1967 Act defeats any suggestion that the imposition of the “request” requirement was inadvertent or viewed as inconsequential. Before 1967, as noted above, subsection (a) directed that courts advance draft cases for immediate hearing upon the request of the Attorney General. The 1967 amendment eliminated the requirement of a request and provided for the advancement of all selective service cases. The considered elimination of a request requirement from subsection (a) of § 462 is not easily reconciled with an interpretation of subsection (c) which has the effect of making meaningless another request provision inserted at the same session.

We have carefully examined the two published cases of which we are aware which shed any light on § 462(c). Appellee relies heavily upon United States v. Daneals, 370 F.Supp. 1289 (W.D.N.Y. 1974), in which a district court dismissed a number of indictments for selective service violations for reasons including what it found to be the failure of the government to comply with § 462(c). That court did measure delay for purposes of the statute from the time the cases were referred to the U.S. Attorney, but the underlying decision that the referrals constituted adequate requests for expeditious prosecution is only an implicit one. It is unarticulated and unexplained, and therefore offers no persuasive authority for the position argued for by appellee. Moreover, Daneals involved a number of grand jury abuses, and these figured in the district court’s decision to dismiss. And the court refused to dismiss the indictments with prejudice, leaving open the question “whether or not the failure of the government to proceed expeditiously in these cases was serious enough to prevent any indictment in particular cases.” 370 F.Supp. at 1301.

The other case relied upon by appellee, United States v. Dyson, 469 F.2d 735 (5th Cir. 1972), is of no more assistance to him. The case does not discuss any of the issues directly relevant here — it deals with post-indictment delay in applying § 462(a), and § 462(c) is mentioned but not explained or applied.

Since we have determined that the mandate of § 462(e) does not apply to this case due to the lack of an adequate request by the Director of Selective Service, we need not decide whether the section, when applicable, inures to the benefit of a defendant and justifies dismissal of the indictment when a prosecutor has failed to comply. Nor need we consider whether the statute requires greater expedition than that guaranteed by the Sixth Amendment or whether delay in selective services cases subject to the statute is measured from referral to the U.S. Attorney.

Although there was a delay of 32 months in this case between the alleged violation and indictment, and 14 months between referral to the U.S. Attorney and indictment, appellee has demonstrated no violation of his Sixth Amendment right to a speedy trial. Delay is measured for purposes of the Sixth Amendment from the time one is accused of a crime, United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971), and appellee became an “accused” when indicted on December 19, 1973. There has been no claim of unconstitutional delay since that time.

Reversed.

      . We are advised that a number of cases involving the interpretation of § 462(c) have been decided or are now pending in the District of Massachusetts.

      . Because of our resolution of the other issues, we need not decide whether a specific request made by the State Selective Service Headquarters is that of the Director of Selective Service for purposes of § 462(c).


author: PER CURIAM.

text:
    Maudra NEVILLES et al., Appellants, v. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION and Union Electric Company, Appellees.
    No. 74-1733.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 14, 1975.
    Decided March 3, 1975.

      Stuart Cofman, St. Louis, Mo., for appellants.
    William H. Ferrell, St. Louis, Mo., for Union Elec.
    Mollie W. Neal, Washington, D. C., for E.E.O.C.
    Before BRIGHT, ROSS and STEPHENSON, Circuit Judges.
   PER CURIAM.

This appeal is from an order denying a motion filed by Ms. Nevilles and the other appellants, to enjoin, set aside and to intervene in an action between appellees, the Equal Employment Opportunity Commission (EEOC) and Union Electric Company (Company). We affirm the denial of that motion.

In December 1968, a local official in the International Brotherhood of Electrical Workers (Union) filed a complaint with EEOC alleging that the Company’s maternity leave policies were discriminatory on the basis of sex, in violation of 42 U.S.C. § 2000e — 2. After investigation and unsuccessful attempts at conciliation, the EEOC filed suit against the Company on April 26, 1973, under 42 U.S.C. § 2000e — 5(f)(1) and (3).

During the course of the suit the Union local was kept informed of its progress by EEOC. Extensive discovery was conducted by both .sides and on March 12, 1974, the parties agreed to the entry of a consent decree. The decree required the Company to revise its recruitment, hiring, promotion and transfer procedures to eliminate sex discrimination. It also contained provisions concerning maternity leave, including a week of sick leave with pay and maternity leave of absence without pay on the same terms and conditions as for other physical disabilities. It prohibited the company from requiring employees to take leave before a reasonable time prior to delivery date, and made certain adjustments in seniority for employees who had once been terminated because of pregnancy but subsequently rehired. Finally, the Company was required to pay $62,500, which was to be disbursed to employees and former employees whose employment had been terminated in the past because of pregnancy.

On May 16, 1974, more than two months after the consent decree was entered, the appellants, employees and former employees of the Company who are also Union members, filed their motion. They alleged that their rights and interests were affected by the consent decree, they were not given formal notice of the litigation, and that they were not adequately protected or represented in the suit. Specifically, they objected to the adjustments to seniority and the amount of money awarded. The motion requested that the operation of the consent decree be enjoined, the decree set aside, and that they be allowed to intervene in the lawsuit. On June 21, 1974, there was a hearing on the motion, and.it was denied on July 26, 1974.

Under 42 U.S.C. § 2000e-5(f)(1), an aggrieved employee has an absolute right to intervene in a civil action brought by the EEOC. EEOC v. Missou-

ri Pacific Railroad, 493 F.2d 71, 74 (8th Cir. 1974). However, Fed.R.Civ.P. 24(a) interposes as a condition precedent that the application to intervene must be timely. It is true that in some situations intervention may be proper even though a judgment has been entered. Kozak v. Wells, 278 F.2d 104, 109 (8th Cir. 1960) (dictum). But the question of timeliness is to be determined by the trial judge in his discretion from all the circumstances; unless he abuses that discretion, his decision will not be disturbed on review. NAACP v. New York, 413 U.S. 345, 365-366, 93 S.Ct. 2591, 37 L.Ed.2d 648 (1973). Among the factors the judge should consider are: how far the proceedings have gone when the movant seeks to intervene, NAACP v. New York, supra, 413 U.S. at 367-368, 93 S.Ct. 2591; Iowa State University Research Foundation v. Honeywell, Inc., 459 F.2d 447, 449 (8th Cir. 1972), prejudice which resultant delay might cause to other parties, Diaz v. Southern Drilling Corp., 427 F.2d 1118, 1125 — 1126 (5th Cir.), cert. denied, 400 U.S. 878, 91 S.Ct. 118, 27 L.Ed.2d 115 (1970); Kozak v. Wells, supra, 278 F.2d at 109, and the reason for the delay, Iowa State University Research Foundation v. Honeywell, Inc., supra, 459 F.2d at 449.

In this case judgment was entered more than two months before appellants sought to intervene. In order to grant the motion of the twelve appellants it would have been necessary to withhold from all other employees, at least temporarily, the considerable relief afforded by the consent decree. To excuse their failure to intervene earlier the appellants state they were not notified of the action. However, the burden was on them to demonstrate that they had no notice of the action and that this was sufficient reason for waiting for over a year from commencement of suit, and over two months after entry of judgment, before they moved to intervene. The evidence established that the Union to which appellants belong was kept informed of the status of the suit throughout and of the provisions of the proposed consent decree. It also appeared that other employees of the company were aware of the suit. Finally, appellants never alleged in the court below that they did not know of the suit, although they have now so stated on appeal. Their motion, the memorandum in support thereof, and oral argument on the motion rely on the fact that they were not given formal notice by the litigants. The district court could reasonably have determined that appellants did not allege or prove that they had no knowledge of the suit during its pendency which would justify the delay in filing their motion. NAACP v. New York, supra, 413 U.S. at 366-367, 93 S.Ct. 2591.

We find no abuse of discretion in denial of the appellants’ motion. The judgment of the district court is affirmed.

      . EEOC v. Union Electric Co., No. 73C 260(4) (E.D.Mo., filed Apr. 26, 1973). EEOC’s complaint also alleged racial discrimination. The racial aspects are not at issue here.

      . About one hundred women (including some of the appellants) were included in the class amongst whom the monetary award was to be distributed. In addition, a large number would also benefit in the future from the provisions of the consent decree which were designed to end racial and sexual inequality in the Company.


author: ROBERT P. ANDERSON, Circuit Judge:

text:
    David DeMATTEIS, Plaintiff-Appellant, v. EASTMAN KODAK COMPANY, Defendant-Appellee.
    No. 320, Docket 74-1708.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 5, 1974.
    Decided Feb. 6, 1975.

      Joan de R. O’Byrne, Rochester (Michael Nelson, Rochester, on the brief), for appellant.
    James H. Morgenstern, Rochester (Nixon, Hargrave, Devans & Doyle, Rochester, on the brief), for appellee.
    Before KAUFMAN, Chief Judge, and ANDERSON and FEINBERG, Circuit Judges.
   ROBERT P. ANDERSON, Circuit Judge:

David DeMatteis, the appellant, filed a charge on or about February 26, 1972 with the Equal Employment Opportunity Commission (the Commission), in which he alleged that the Eastman Kodak Co. (Kodak), for which he, a white man, had worked more than thirty years, forced him into premature retirement solely because he had sold his house, located in a neighborhood inhabited primarily by white Kodak employees, to a black fellow-employee. Kodak, it is claimed, thereby violated § 703 of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2.

“It shall be an unlawful employment practice for an employer — (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, col- or, religion, sex, or national origin . 42 U.S.C. § 2000e-2(a).

The Commission informed DeMatteis in a letter dated May 8, 1973 that it had determined, after conducting an investigation, that there was not reasonable cause to believe that DeMatteis’ charge against Kodak, alleging a violation of the Act, was true, that it had therefore “dismissed” his charge, and that he had the right “. . as set out under Section 706 [of the Act]” to commence a civil suit on the Title VII claim in the United States District Court.

Section 706 provides:

“If a charge filed with the Commission . is dismissed by the Commission . the Commission shall so notify the person aggrieved and within ninety days after the giving of such notice a civil action may be brought against the respondent named in the charge ... by the person claiming to be aggrieved . . . .” 42 U.S.C. § 2000e-5(f)(l).

After he received the Commission’s determination and notice of dismissal of his charge against Kodak and of his statutory right to file a civil action in the United States District Court, DeMatteis retained counsel. Although the 90-day limitation from May 8, 1978, the date of the determination and dismissal, had not run out, counsel did not then bring such an action, but decided that DeMatteis was required first to procure from the Commission a so-called “Notice of Right to Sue” as mentioned in 29 C.F.R. § 1601.25b and § 1601.25c which, among other things, provide:

“At any time after the expiration of one hundred and eighty (180) days from the date of the filing of a charge or upon dismissal of a charge at any stage of the proceedings, an aggrieved person may demand in writing that a notice issue pursuant to § 1601.25, and the Commission shall promptly issue a notice, and provide copies of the charge to all parties.” § 1601.25b(c).

DeMatteis never applied for such a notice before he received the findings and determination of the Commission on May 8, 1973. Moreover, counsel may have failed to note that, in the over-all scheme of the regulations, § 1601.25 was designed to take effect “after failure of conciliation.” There was no consideration given to conciliation in the present case, as that stage in the procedures was never reached.

At any rate in the middle of July, 1973, counsel asked the Commission for a notice of right to sue and promptly received the Commission’s regular form letter which stated that the recipient had 90 days “from the receipt of this Notice” to commence a civil action in the United States District Court. Counsel for DeMatteis assumed-from the regulation and the wording of the notice of right to sue that the running of the statute of limitations, i. e. the 90 days within which he could bring the action on his Title VII claim, began on the day when he received the notice of right to sue. Counsel did not bring the suit until October 3, 1973 which was long after the 90-day period of limitation provided by the statute as commencing with the letter and notice of May 8, 1973 but well within the 90-day period which began July 26, 1973, as mentioned in the right to sue letter.

In his complaint, seeking a declaratory judgment and damages, DeMatteis alleged that Kodak’s action, as outlined above, deprived him of rights secured by the Thirteenth and Fourteenth Amendments to the Constitution, and resulted in specific violations of (1) Title VII of the Civil Rights Act, (2) 42 U.S.C. § 1983, and (3) 42 U.S.C. § 1981.

The district court dismissed appellant’s complaint in its entirety on the grounds that the Title VII claim was not timely because filed more than 90 days after receipt of the Commission’s determination that reasonable cause did not exist; that the complaint did not allege facts constituting “State Action,” requisite for a claim under 42 U.S.C. § 1983; and that DeMatteis as a white person lacked standing under 42 U.S.C. § 1981.

Title VII

The commencement of the action within the applicable 90-day statutory limitation is a jurisdictional fact. See, e. g., Archuleta v. Duffy’s Inc., 471 F.2d 33 (10 Cir. 1973); Choate v. Caterpillar Tractor Co., 402 F.2d 357 (7 Cir. 1968); Genovese v. Shell Oil Co., 488 F.2d 84 (5 Cir. 1973). The issue presented in this case is whether the limitations period began to run from receipt of the notice on May 8, 1973 of the Commission’s determination that there was “not reasonable cause to believe that the charge was true” and the dismissal of the charge, as the trial court held, or from the later receipt of the notice of right to sue on July 26, 1973, as the appellant claims.

We find that the issuance of the notice of the right to sue in the present case is irrelevant; since DeMatteis’ claim was completely and finally decided by the Commission at the end of the investigative phase. The statute, § 2000e-5(b), explicitly provides,

“If the Commission determines after such investigation that there is not reasonable cause to believe that the charge is true, it shall dismiss the charge and promptly notify the person claiming to be aggrieved and the respondent of its action.”

The Commission filed its extensive and thorough findings and determination on May 7, 1973 and notified both DeMatteis and Kodak of its action on May 8, 1973. Moreover, in that notice it specifically advised DeMatteis of his statutory right to institute a civil action in the appropriate United States District Court under § 706 of Title VII of the Civil Rights Act of 1964, as amended.

The above quoted portion of the statute, § 2000e-5(b), is implemented by 29 C.F.R. § 1601.19b, entitled “Determination as to reasonable cause” which in pertinent part provides,

“(a) If the Commission determines that . . . there is not reasonable cause to believe that a charge is true, the Commission shall dismiss the charge
(b) The Commission shall promptly notify the aggrieved person . and the respondent of its determination under paragraph (a) of this section. The determination is final when issued: therefore, requests for reconsideration will not be granted.” (There follows a provision that the Commission may on its own motion reconsider its determination at any time after prompt notice to the parties; but no such motion was ever considered in this case.)

The foregoing regulations were a sub-division of subpart “B” of the Procedural Regulations entitled “Investigation of a Charge.” There is no mention or reference in them to a second notice or any “Notice of a Right to Sue,” which of course is not mentioned in haec verba anywhere in the statutes.

The sub-division immediately following the investigation phase is “Procedure to Rectify Unlawful Employment Practices” and there follow other sub-divisions, all having to do with the Commission’s duties under the statute, once it has found that there is reasonable cause to believe that the charge is true, “to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation and persuasion.” This is the Commission’s raison d’etre; and to accomplish its purpose the scope of its duties is broad and its procedures are flexible, but it has no powers of enforcement; and in cases of unlawful employment practices it must itself or through the Attorney General seek the aid of the federal courts. Under these circumstances, efforts at conciliation, adjustment or settlement may become very protracted and often it has been difficult for the aggrieved party or the respondent to know exactly when the proceedings by or before the Commission have terminated.

The statutes and the regulations provide certain time limits after which a party can presume that the administrative proceedings have ended and that he could seek relief in the federal court. In order to make definite and certain that the Commission’s proceedings and recourse to administrative remedies had terminated, the Commission invented and put into the regulations § 1601.25 which provided for the “Notice-of-Right-to-Sue.” This comes under the sub-division of sub-part “B” of the Procedural Regulations entitled “Procedure After Failure of Conciliation” — a portion of the regulations having nothing whatever to do with the present case, which was terminated at the investigative stage. The purpose of the notice of right to sue was definitely to fix a time when the administrative remedies had ended and when the 90-day statute of limitations for bringing a suit in the federal court began to run. It applies only to dismissals of charges or other terminations of the administrative proceedings which took place after the effort at conciliation and only in cases in which the Commission had found there was reasonable cause to believe that the charges were true.

There was never any need for such a signal in the case before us. The parties on May 8, 1973 received definite and precise notice that the administrative proceedings had been completed and, in the express words of the regulation, that “the determination . . . [was] final when issued; [and] therefore requests for reconsideration . . . [would] not be granted.” § 1601.19b.

The statute, 42 U.S.C. § 2000e-5, provides for but one 90-day limitation for the bringing of actions and that is in sub-section (f)(1). There are described therein four sets of circumstances which, if any one of them occurs, mandate a notification by the Commission (or by the Attorney General, as the case may be) to the person aggrieved; and he (or in certain situations others) may bring a civil action on the charge against the respondent in the appropriate United States District Court “within ninety days after the giving of such notice” by the Commission. The first of these sets of circumstances is the dismissal of a charge filed with the Commission pur-, suant to sub-section (b) of the statute, which clearly includes and applies to the present case. Sub-section (b) requires the Commission to give notice of the dismissal promptly to the aggrieved person. This duty was fully complied with in this case, and the 90-day statute of limitations within which DeMatteis could bring his action started to run on May 8, 1973. The jurisdiction of the United States District Court to hear and consider De-Matteis’ suit depended upon its being brought within that 90-day limitation period.

The effect of a contrary holding would be that in all subsection (b) cases of dismissal by the Commission, after investigation and a determination that there is not reasonable cause to believe that the charge is true (which constitutes a complete and final disposition of the case by the Commission), followed by the required prompt notice to the aggrieved, the 90-day statute of limitations running from the date of the notice could be extended indefinitely until the aggrieved, weeks or months later, asked the Commission to issue to him a second or “Right to Sue” notice, to start another 90-day limitation period running. The Commission has no such regulatory power.

“The jurisdiction of the federal courts is carefully guarded against expansion by judicial interpretation . . . ” American Fire & Casualty Co. v. Finn, 341 U.S. 6, 17, 71 S.Ct. 534, 542, 95 L.Ed. 702 (1951). Arbitrarily to supplant the “notice” prescribed by the statute with that specified in the regulation, would permit an administrative agency to extend the jurisdiction of the district court. This, of course, it should not do. The regulation, to the extent that it has that effect, should be declared invalid. Espinoza v. Farah Manufacturing Co., 414 U.S. 86, 94-95, 94 S.Ct. 334, 38 L.Ed.2d 287 (1973).

Accordingly, the judgment of the district court dismissing the appellant’s claim under 42 U.S.C. § 2000e-2 is affirmed.

42 U.S.C. § 1983:

DeMatteis contends that because Kodak provides social, cultural, athletic, and medical facilities for its employees, and extends to them various benefits, such as banking services and insurance coverage, it thereby exerts considerable influence in the community, but none of the means by which it allegedly does so involves the exercise of powers traditionally reserved exclusively to the state. Appellant does not claim that Kodak exercises any direct control over the activities of the general public. Its reliance on Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946), is therefore misplaced. A private party violates 42 U.S.C. § 1983 only to the extent its conduct involves state action. See Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974); cf. Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176-177, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972). Because the allegations of the complaint are insufficient to support a finding of state action in this case, we affirm that part of the district court’s order dismissing appellant’s § 1983 claim.

42 U.S.C. § 1981:

Appellant also seeks relief under 42 U.S.C. § 1981, which provides: “All [parties] . . . shall have the same right ... to make and enforce contracts ... as is enjoyed by white citizens . . . ” (Emphasis added.) The district court dismissed the claim on the ground that a white person does not have standing to sue under that section of the Civil Rights Act.

The Supreme Court has held, however, in Sullivan v. Little Hunting Park, 396 U.S. 229, 90 S.Ct. 400, 24 L.Ed.2d 386 (1969), that a white person who has been “ . . . punished for trying to vindicate the rights of [non-white] minorities . ” has standing to sue under § 1981. Id. at 237, 90 S.Ct. at 404. DeMatteis contends that Kodak “forced” him into retirement solely because he had sold his house to a black person.

His retirement was precipitated, according to the complaint, by deteriorating health which Kodak’s vindictive conduct served to exacerbate. Appellant also contends that he has suffered economic loss in that his retirement was “premature.” Such “punishment” to appellant’s legally cognizable interests was allegedly in reprisal for his part in vindicating the right of a black fellow-employee “ . to make ... [a] contract[ ] . ” similar to that which whites in the neighborhood have freely been able to make. DeMatteis therefore has standing to sue under 42 U.S.C. § 1981.

We reverse that part of the district court’s order which dismissed the claim and remand for further proceedings not inconsistent with this opinion.

      . Appellant, who was 63 years of age when he filed the charge with the Commission, alleges in essence that Kodak denied him medical treatment and facilities to which he was entitled, and that it also denied him the necessary equipment and supplies for the performance of his work, thereby resulting in unfair evaluations, that it refused to take disciplinary action against co-workers and supervisors who harassed him, that it compelled him to return to work “contrary to his physical and mental well-being.” He contends that, as a result of such actions, his “physical and mental well-being deteriorated, certain pre-existing illnesses were exacerbated and finally, [he] contracted additional debilitating physical conditions, thus causing his early retirement and constructive discharge.”

      . Section 703(a) provides:

      . On May 8, DeMatteis received a formal notice, labeled “Determination,” and an accompanying letter. The Commission discussed the merits of appellant’s charge in the “Determination;” and although the accompanying letter which DeMatteis received, has not been included in the record on this appeal, he conceded during oral argument that it was substantially similar to the following letter which was sent to Kodak at the same time:
      “We have investigated the charge of discrimination in employment . This Commission has determined that there is no reasonable cause to believe that the matter alleged in the charge constitutes an unlawful employment practice under Title VII of the Civil Rights Act of 1964, as amended.
      Therefore, we have dismissed the charge and the complainant has been notified in accordance with the Commission’s Regulations of this determination and of his statutory right to institute a civil action in United States District Court under Section 706 of Title VII . . . .” (Emphasis added.)

      . The Notice of Right to Sue reads as follows:
      “This charge has been dismissed for the following reason: [an “X” then appears in the box labelled ‘No Reasonable Cause’]
      If you want to pursue your charge further, you have the right to sue the respondent(s) named in this case in the United States District Court for the area where you live. If you decide to sue, you must do so within ninety (90) days from the receipt of this Notice; otherwise your right is lost.” (Emphasis added.)

      . The holding in Beverly v. Lone Star Lead Construction Corp., 437 F.2d 1136 (5 Cir. 1971), on which the appellant relies, is not adverse to our decision in the present case. Beverly stands for the proposition that an actual finding by the Commission that there is no reasonable cause to believe that a violation of Title VII has occurred, will not defeat the jurisdiction of the federal court. It also emphasizes the fact that the aggrieved is entitled to “statutory notice” of a determination by the Commission and his right to bring a civil action for the same complaint in the appropriate United States District Court. It should be noted in Beverly that the first notice the aggrieved had of the Commission’s holding of no reasonable cause to believe that his charge was true was received by him about 42 days after the determination. In the same letter he was notified he had a right to bring a civil action in the United States District Court within 30 days thereafter, which he did. There was no question of when the statute of limitation began to run.

      . When any of the three sets of circumstances referred to in sub-section (f)(1) of 42 U.S.C. § 2000e-5, other than dismissal under sub-section (b), has occurred after some efforts at conciliation have been made, the Commission has the statutory duty under (f)(1), on its own initiative, to inform the aggrieved party of the status of his case in the light of the provisions of that statutory sub-section. At this point, under the regulation, § 1601.25c(d), however, the aggrieved party is left formally to request the Commission for a notice of right to sue — a procedure the operative effect of which is to place in the hands of the aggrieved party the approximate time when he wants the notice to be issued and the 90-day period of the statute of limitations to start running.

      . “Dismissal,” under the provisions of the statute, (f)(1), precedes and is not dependent upon the aggrieved party’s application for notice thereof. Although sub-section (f)(1) does not specify how soon after “dismissal” the Commission must notify the party, it is clear that the duty to provide the notice which commences the running of the statute of limitations arises automatically and without any action by the claimant.

      . Appellant was allegedly “forced” into premature retirement on or about November 1971. Suit was not filed in the district court until October 1973. Kodak moved the court below to- dismiss appellant’s § 1981 claim on the ground that it was not timely filed because the applicable period of limitations was one year. Although the district court did not pass on this issue, the statute of limitations question has been raised on the appeal.
      Congress has not provided a federal statute of limitations for actions brought under 42 U.S.C. § 1981. In situations where Congress has created federal statutory rights and does not provide a limitations period, federal courts borrow the state statute of limitations applicable to the most similar state cause of action, U.A.W. v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966) — a principle applicable to federal civil rights actions. Ortiz v. LaVallee, 442 F.2d 912 (2 Cir. 1971).
      This court has held that the applicable statute of limitations in a federal civil rights action brought in New York is the three years provided by N.Y.C.P.L.R. § 214(2) — liability based on a statute. Thomas Kaiser v. Cahn, 510 F.2d 282, at 285 (2 Cir. 1974); see Romer v. Leary, 425 F.2d 186 (2 Cir. 1970).
      Because suit was filed within three years of the accrual of the cause of action, the claim brought under 42 U.S.C. § 1981 is not barred by the statute of limitations. We do not address appellant’s claim that the filing of the Title VII charge with the Commission served to toll the statute of limitations on the § 1981 claim.

      . Sullivan, a white person, alleged that he had been expelled from a corporation which operated community recreational facilities solely because he had leased his house and assigned his membership share in the corporation to a black person. He sued for injunctive relief and damages under 42 U.S.C. §§ 1981 and 1982. The Supreme Court held that “Sullivan has standing to maintain this action.” 396 U.S. at 237, 90 S.Ct. at 404. Although the Court referred explicitly to § 1982 in setting out the rationale for its position, see, 396 U.S. at 237, 90 S.Ct. 400, it did not limit its holding on the standing issue to that section of the Civil Rights Act.
      We need not rest upon the Supreme Court’s disposition of the § 1981 claim in Sullivan v. Little Hunting Park, however, in holding, as we do, that a white person who has suffered injury to some legally cognizable interest as a result of “ . . . trying to vindicate the rights of [non-white] minorities . . . ” has standing to sue for a violation of 42 U.S.C. § 1981. Sections 1981 and 1982 of Title 42 are both derived from § 1 of the Civil Rights Act of 1866. Words which are common to both those sections, therefore, must be construed consistently. Sanders v. Dobbs Houses, Inc., 431 F.2d 1097 (5 Cir. 1970); Waters v. Wisconsin Steel Works, 427 F.2d 476 (7 Cir. 1970); WRMA Broadcasting Co., Inc. v. Hawthorne, 365 F.Supp. 577, 580 (M.D. Ala.N.D.1973). Section 1982, to which the Supreme Court specifically made reference in discussing the standing issue in Sullivan, provides, as does § 1981, that all persons shall have the same statutory rights “ . . .as [are] enjoyed by white citizens The standing of white persons to sue under either section of the Civil Rights Act depends critically upon this clause. Consistency therefore requires that white persons be accorded standing to sue under both § 1981 and § 1982 in circumstances similar to those present in Sullivan.


author: VAN OOSTERHOUT, Senior Circuit Judge.

text:
    PAUL E. KUMMER REALTY COMPANY, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    No. 74-1277.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 13, 1974.
    Decided Feb. 24, 1975.
    Martin A. Rosenberg, Clayton, Mo., for appellant.
    Arthur D. Bailey, Atty., Tax Div., Dept, of Justice, Washington, D. C., for appellee.
    Before VAN OOSTERHOUT, Senior Circuit Judge, HEANEY, Circuit Judge, and MEREDITH, Chief District Judge.

       The Honorable James H. Meredith, Chief Judge, Eastern District of Missouri, sitting by designation.

   VAN OOSTERHOUT, Senior Circuit Judge.

This is a timely appeal by the taxpayer, Paul E. Kummer Realty Company, a corporation, from decision of the Tax Court upholding the determination by the Commissioner of a deficiency in income tax due from the taxpayer for the fiscal year ending March 31, 1967, in the amount of $25,439.21. A detailed statement of the pertinent facts and the basis of the decision is set out in Tax Court Memo. 1974-44, reported at P — H Memo paragraph 74,044. The deficiency arises solely out of the disallowance in part of deductions taken by the taxpayer for compensation paid by the corporation during the fiscal year 1967 to Paul H. Kummer and Edgar H. Rummer. The deduction taken for each of the Rummers just named aggregated $50,688.51 of which $17,960.00 was salary and $32,-728.51 was bonus. The Commissioner, pursuant to § 162(a)(1), allowed $24,-000.00 as the deduction for compensation for services rendered by each of the two Rummers and disallowed as an expense deduction the remaining $26,688.51 paid to each of them. Such disallowance resulted in the deficiency claimed and awarded. The deduction for compensation paid Paul E. Rummer in the amount of $12,477.13 was allowed and is not involved on this appeal.

Upon taxpayer’s petition, the Tax Court reviewed the Commissioner’s determination. An evidentiary hearing was held, much of the evidence was stipulated, but some oral evidence was received.

Taxpayer is a Missouri corporation incorporated in 1947. Taxpayer took over the real estate and related business previously operated by Paul E. Rummer as sole proprietor. At the time of the incorporation and ever since Paul E. Rummer and his sons Paul H. and Edgar H. owned all of the stock of the taxpayer and constituted the directors and officers of the corporation. At the outset, Paul E. Rummer owned 55 shares of stock and each of the sons owned 5 shares. From time to time the sons acquired additional stock through purchase from or gift by their father. During fiscal 1967 the father owned 11% of the stock and each of the sons owned 44%%.

Taxpayer was engaged in the sale and management of real estate and rental property for its own account and for others, land development, loan placement, the sale of insurance and the preparation of income tax returns. From 1954 through fiscal 1966 each of the three Rummers received equal salaries and bonuses. The basic salary paid each in 1954 was $7,420.00. By 1966 the basic salary of each was $17,160.00. The salary and bonus of the three Rummers were fixed in May of each year for the ensuing year. The average salary and bonus paid to each of the three Rummers for the 1954 to 1966 period was $14,788.00.

In 1954 taxpayer purchased a 55 acre tract of land for $57,000.00, most of which was developed and sold as residential lots. All but two lots were sold pri- or to 1967. A five acre commercial tract remained. An option was granted for the sale of this tract in April 1966. The sale under the option was completed in October 1966 resulting in a profit of $106,722.00. The value of the commercial property was enhanced by reason of taxpayer’s residential development and similar projects by others in the area. The sale arose from a response to a “for sale” sign posted on the property.

Prior to 1967 each of the three Rummers received identical salaries and bonuses. The bonus arrangement provided that each was to receive 20% of the net pre-tax profits if such profits exceeded $15,000.00. In May 1966 shortly after the granting of the option on the commercial tract, the taxpayer’s directors, consisting of the three Rummers, made and passed a resolution reading in pertinent part:

RESOLVED, that in order to encourage officers of said corporation, to wit: Paul E. Rummer, Paul H. Rummer and Edgar H. Rummer in their desire and efforts in the promotion of the business and welfare of said Corporation, they be paid, in the event the total gross income * * * should equal or exceed $15,000.00 as additional compensation to each of the aforementioned officers of, Paul E. Rummer, 8%%; Paul H. Rummer, 33%%; Edgar H. Rummer, 33%% of the company’s net profits * * *.

By the foregoing resolution, the bonuses paid officers were increased from 60% to 75% of the company’s net profits. The Tax Court upheld the Commissioner’s determination in a well-reasoned opinion. The Tax Court decision is based upon ultimate findings of fact reading:

1. Amounts paid to Paul H. Rummer and Edgar H. Rummer in excess of $24,000 each during the corporation’s taxable year ended March 31, 1967, constituted unreasonable compensation for past and current services rendered by them to the corporation.
2. Amounts paid to Paul H. Rummer and Edgar H. Rummer in excess of $24,000 each during the taxable year ended March 31, 1967, were in essence distributions of corporate earnings as dividends to the Rummers.

If either of such findings are supported by substantial evidence, ‘ the Tax Court’s opinion is entitled to be affirmed. The Commissioner offered no witnesses on the issue of the reasonableness of the compensation paid. Taxpay-' er’s evidence in support of the reasonableness of the compensation paid is not strong. The Tax Court is the judge of the credibility of witnesses and is not compelled to accept the testimony of a witness even if it is not contradicted. Charles Schneider & Co. v. Commissioner of Internal Revenue, 500 F.2d 148, 155 (8th Cir. 1974), cert. denied, 420 U.S. 908, 95 S.Ct. 826, 42 L.Ed.2d 837 (1975). After a careful review of the record, we cannot say that the Tax Court’s determination on the issue of reasonable compensation deductible is clearly erroneous.

In any event, the Government has made a strong case in support of its contention that the amount of the salary found to be excessive was in essence a distribution of corporate earnings as dividends to the Rummers. Substantial evidence supports such finding and the finding standing alone supports the Tax Court’s decision.

Recently in Charles Schneider & Co. v. Commissioner of Internal Revenue, supra, we set out the standards governing the deductibility of bonus payments to insiders in a closely held corporation. Among other things, we there stated:

Generally speaking, the fact that compensation is based on a contingent compensation agreement, if fixed pursuant to a free bargain, is an element tending to show reasonableness. Bank of Palm Beach v. United States, 476 F.2d 1343, 1348 [201 Ct.Cl. 325] (Ct.Cl. 1973); Irby Constr. [Irby Constr. Co. v. United States] supra [290 F.2d 824, 154 Ct.Cl. 342], at 827. However, where the corporation is controlled by the very employees to whom the compensation is paid, special scrutiny must be given to such salaries, for there is a lack of arm’s length bargaining as required by Treasury Regulation § 1.162 — 7(a)(2). Hammond Products [Hammond Lead Products v. Commissioner of Internal Revenue] supra [7 Cir., 425 F.2d 31], at 33. Heil Beauty Supplies, Inc. v. Commissioner of Internal Revenue, 199 F.2d 193, 194 (8th Cir. 1952); Hampton Co., T.C.Memo 1964 — 150, 23 CCH Tax Ct.Mem. 899, 902 (June 1, 1964). Cf. Miller Box, Inc. v. United States, 488 F.2d 695, 707 (5th Cir. 1974). In these circumstances payments under these arrangements may be distributions of earnings rather than payments of compensation for services rendered; even if they are reasonable, they would not be deductible. Irby Constr., supra [290 F.2d], at 827. A bonus-type contract which is reasonable with a nonstockholder employee may be unreasonable if made with a large stockholder, since the incentive of the bonus would presumably not be needed to call forth the stockholder’s best efforts. Id.; Northlich, Stolley, Inc. v. United States, 368 F.2d 272, 278, 177 Ct.Cl. 435 (Ct.Cl.1966). See Hampton Corp., supra, at 902. [500 F.2d at 152-53.]

We also held, citing supporting authorities, that the absence of dividends to stockholders out of available profits justifies an inference that some of the purported compensation really represented a distribution of profits as dividends. In our present case no dividends were ever paid and the bonus payments made from year to year kept the corporate tax at a low level. It is undisputed that the salary and bonus payments were fixed by the recipients. Under such circumstances, the payments made are subject to close scrutiny.

It is also significant that the net pretax profits distributed to the three Rummers were almost identical to the percentage of stock held by each of them. Louisville Chair Co. v. United States, 296 F.2d 621, 622 (6th Cir. 1961); Doernbecher Mfg. Co. v. Commissioner of Internal Revenue, 95 F.2d 296, 297—98 (9th Cir. 1938). The total amount distributed pursuant to the 1966 bonus plan was $73,-639.15, of which $8,182.13 was disbursed to Paul E. Kummer and $32,728.51 to each of the two sons. The amounts received by each of the Kummers when expressed as a percentage of the total amount distributed as bonus payments were Paul E. Kummer 11.11%, Paul H. Kummer 44.44%, and Edgar H. Kummer 44.44%. In the case of the sons, Paul and Edgar, these percentages are within six one-hundredths of a percentage point of their respective stockholdings.

We hold that the Tax Court’s findings are supported by substantial evidence and are not induced by any erroneous view of the applicable law.

Affirmed.


author: HEANEY, Circuit Judge.

text:
    John E. GOODRICH, Appellant, v. SUPREME COURT OF the STATE OF SOUTH DAKOTA et al., Appellees.
    No. 74-1182.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 13, 1974.
    Decided March 7, 1975.

      Charles Poches, Jr., Fort Pierre, S. D., for appellant.
    Marvin Truhe, Asst. Atty. Gen., Pierre, S. D., for appellees.
    Before MATTHES, Senior Circuit Judge, HEANEY and STEPHENSON, Circuit Judges.
   HEANEY, Circuit Judge.

John E. Goodrich appeals from an order of the United States District Court for the District of South Dakota denying his application to temporarily enjoin the defendants from continuing with a disbarment proceeding investigating the charge that Goodrich was guilty of unprofessional conduct and dismissing the complaint.

The appellant is an attorney who, at the time of his complaint, was admitted to practice in the State of South Dakota. His suit, brought under 42 U.S.C. § 1983, alleged that the state’s disbarment procedure and the evidentiary hearing held before an appointed referee did not comport with his constitutional right to due process. The District Court had jurisdiction pursuant to 28 U.S.C. § 1343(3). See Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946).

Whether a federal court should intervene in an ongoing state judicial proceeding investigating the conduct of an attorney under authority of the Civil Rights Act is controlled by principles of federal-state comity. Before exercising its equitable power to enjoin the state proceeding, the District Court must find the plaintiff threatened with great and immediate irreparable injury that cannot be eliminated by his defense to the state proceeding. Younger v. Harris, 401 U.S. 37, 46, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Here, Goodrich neither alleged in his complaint nor argued orally the presence of extraordinary circumstances warranting federal intervention. As stated by the Supreme Court in Douglas v. City of Jeannette, 319 U.S. 157, 63 S.Ct. 877, 87 L.Ed. 1324 (1942):

* * * Congress, by its legislation, has adopted the policy * * * of leaving generally to the state courts the trial of criminal cases arising under state laws, subject to review by this Court of any federal questions involved. Hence, courts of equity in the exercise of their discretionary powers should conform to this policy by refusing to interfere with or embarrass threatened proceedings in state courts save in those exceptional cases which call for the interposition of a court of equity to prevent irreparable injury which is clear and imminent * * *.

Id. at 163, 63 S.Ct. at 881 (Citations omitted.)

The denial of the requested temporary injunction was proper. Mitchum v. Foster, 407 U.S. 225, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1972); Younger v. Harris, supra; cf., Polk v. State Bar of Texas, 480 F.2d 998 (5th Cir. 1973).

Subsequent to the dismissal of the case by the District Court, and before the matter was heard by this Court, the Supreme Court of South Dakota, upon review of the referee’s findings of fact and conclusions of law, permanently disbarred Goodrich from the practice of law. That court considered and expressly decided, adversely to Goodrich, the identical due process issues previously raised before the District Court. Notwithstanding this prior decision of the state court, Goodrich argues that he has a right to a federal determination of his constitutional claims and requests that the cause be remanded to the District Court for that purpose.

The appellant seeks to relitigate in the federal court the identical due process claims previously decided by the state court. His request for- remand must, accordingly, be denied. The issues previously decided are res judicata and cannot again be litigated in the federal court. See Mastracchio v. Ricci, 498 F.2d 1257 (1st Cir. 1974); PI Enterprises, Inc., et al. v. Cataldo, 457 F.2d 1012 (1st Cir. 1972); Phillips v. Shannon, 445 F.2d 460 (7th Cir. 1971); Howe v. Brouse, 422 F.2d 347 (8th Cir. 1970); Ames v. Vavreck, 356 F.Supp. 931 (D.Minn.1973). Had Goodrich chosen not to present his constitutional claims as a defense to the disbarment proceeding, we would be faced with a different case. See Lombard v. Board of Education of City of New York, 502 F.2d 631 (2nd Cir. 1974); Ney v. California, 439 F.2d 1285 (9th Cir. 1971); Jenson v. Olson, 353 F.2d 825 (8th Cir. 1965). Moreover, the facts do not require us to decide whether 42 U.S.C. § 1983 can be used as a removal provision reserving to a state defendant the right to a federal determination of his constitutional claims under England v. Louisiana Medical Examiners, 375 U.S. 411, 422 n. 13, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964).

For the reasons stated, we affirm the denial of the temporary injunction and deny the appellant’s request for a remand.

      . The complaint against the South Dakota State Bar Association and Kermit A. Sande, South Dakota Attorney General, was dismissed for failure to state a claim upon which relief could be granted. Since the requested temporary injunction against the South Dakota Supreme Court was denied, no consideration was given to the appellant’s motion to amend his complaint to state a cause of action against the justices individually. The appellant does not directly challenge this action of the District Court and we express no views thereon.

      . The referee, who was appointed by the State Supreme Court, recommended that Goodrich be permanently disbarred.

      . A more detailed account of the procedural history of this case is found in the District Court’s Memorandum and Order filed February 14, 1974, Civ. 73-3036(CD).

      . The principles of equity, comity, and federalism that limit the power of the federal courts to intervene in ongoing state criminal proceedings may be less restrictive when the proceeding sought to be enjoined is civil in nature. Mitchum v. Foster, 407 U.S. 225, 244, 92 S.Ct. 2151, 32 L.Ed.2d 705 (Burger, J. concurring). State disbarment proceedings are, however, quasi-criminal in nature, In Re Ruffalo, 390 U.S. 544, 551, 88 S.Ct. 1222, 20 L.Ed.2d 117 (1968), and the appellant has offered no reason why the principles of Younger v. Harris, 401 U.S. 137, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), should not be fully applicable.

      . The opinion of the Supreme Court of South Dakota is reported at 216 N.W.2d 557, cert. denied, 419 U.S. 1092, 95 S.Ct. 686, 42 L.Ed.2d 685 (1974).

      . Appellant Goodrich does not delineate his theory of relief on remand. We assume that he can amend his complaint to state a cause of action under 42 U.S.C. § 1983.

      . The correctness of giving res judicata effect to issues previously decided by a state court in § 1983 actions has been questioned. See Prieser v. Rodriguez, 411 U.S. 475, 509 n. 14, 93 S.Ct. 1827, 36 L.Ed.2d 439 (1973) (Brennan, J. dissenting); Moran v. Mitchell, 354 F.Supp. 86 (E.D.Va.1973); McCormack, Federalism and Section 1983: Limitations on Judicial Enforcement of Constitutional Claims, Part II, 60 Va.L.Rev. 250 (1974).

      . In Jones v. Hulse, 391 F.2d 198 (8th Cir.), cert. denied, 393 U.S. 889, 89 S.Ct. 206, 21 L.Ed.2d 167 (1968), we declined to entertain an action alleging violations of 42 U.S.C. § 1983 where the claims raised had been previously decided by the state court on the ground that federal courts are without jurisdiction to review, in an appellate capacity, state courts. It is clear from the cases cited in Jones, however, that where the federal action is brought under 42 U.S.C. § 1983, the federal court does have jurisdiction to consider the constitutional claims not previously decided by the state court. 28 U.S.C. § 1343(3). See Jenson v. Olson, 353 F.2d 825 (8th Cir. 1965); Hanna v. Home Ins. Co., 281 F.2d 298 (5th Cir. 1960), cert. denied, 365 U.S. 838, 81 S.Ct. 751, 5 L.Ed.2d 747 (1961).

      . Although the District Court dismissed the appellant’s complaint, it is clear from the record, the briefs and the oral argument that Goodrich voluntarily submitted his due process claims to the State Supreme Court for decision. See Trial Lawyers Assoc, v. N. J. Supreme Court, 409 U.S. 467, 93 S.Ct. 627, 34 L.Ed.2d 651 (1973) (per curiam).


author: CUMMINGS, Circuit Judge.

text:
    ALTMAN CAMERA CO., INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 73-2121.
    United States Court of Appeals, Seventh Circuit.
    Heard Nov. 19, 1974.
    Decided Feb. 26, 1975.

      Lester Asher and Stephen B. Rubin, Chicago, 111., for intervenor.
    Arthur B. Muchin, Chicago, 111., for petitioner.
    Elliott Moore and Joseph E. Mayer, N.L.R.B., Washington, D. C., for respondent.
    Before SWYGERT and CUMMINGS, Circuit Judges, and WYZANSKI, Senior District Judge.

       Senior District Judge Charles E. Wyzanski, Jr. of the District of Massachusetts is sitting by designation.

   CUMMINGS, Circuit Judge.

Altman Camera Co., Inc. has petitioned us to review and set aside an order requiring the Company to bargain with the Union and to cease and desist from unfair labor practices. The Board has cross-applied for enforcement of its order. The Board’s decision and order are reported in 207 NLRB No. 143.

The Company operates a retail photographic equipment store in downtown Chicago. It sells merchandise to customers over the counter and by mail order. During the relevant period, the Company employed 67 persons in selling and related jobs.

In late August 1971, five Company employees discussed the possibility of representation by the Union. On August 26, they spoke to Union Representative Bonnie Cummings about organizing the store. Cummings suggested that the employees should be asked to sign authorization cards designating the Union as their bargaining representative. He gave these employees authorization cards to be signed by their co-workers.

On August 31, the same five employees organized a meeting of their associates and urged them to sign the authorization cards. Two days later, the employees were addressed by Cummings and two other union officials.

At a meeting on September 9, Cummings explained the purpose of the authorization cards was for proof of a majority in order to obtain voluntary recognition by the Company or otherwise to support a petition for an election. By that date, the Union had obtained 41 signed authorization cards from the 67 employees in this bargaining unit. Thirty-four cards were needed for a majority-

On September 9, the Union filed an unfair labor practice charge with the Board alleging that the Company had violated Section 8(a)(3) and (1) of the Act by discharging employee Walter Mueller because of his union activities. On the next day, the Union requested the Company to recognize it as the sales employees’ bargaining unit’s exclusive bargaining representative. Upon the Company’s refusal, on September 10 the Union filed a petition for a representation election, and an election was scheduled to be conducted on November 4.

On October 26 and November 1, the Union filed additional charges with the Board alleging that the Company had engaged in unlawful surveillance, had threatened its employees with reprisals for their union activities and had unlawfully refused to recognize and bargain with the Union, in violation of Section 8(a)(1) and (5) of the Act. On November 2, the Board’s Regional Director canceled the November 4 election pending investigation of the Union’s charges. On or about November 6, four company employees circulated an anti-union petition among the Company’s employees, and 48 of them signed the petition.

Both the administrative law judge and the Board decided that the Company had not discriminatorily discharged employee Walter Mueller in violation of Section 8(a)(3) and (1) of the Act. However, both found that the Company had violated Section 8(a)(1) of the Act by interrogating its employees concerning their union sympathies, by promising them benefits for refraining from such activities, and by threatening them with loss of benefits and possible loss of jobs if the Union became their collective bargaining representative. Unlike the administrative law judge, the Board also found that the Company violated Section 8(a)(5) and (1) of the Act by refusing to bargain with the Union and concluded that a bargaining order was the appropriate remedy for the unfair labor practices found. Consequently, the order of the Board requires the Company to cease and desist from unfair labor practices and to bargain with the Union as well as to post appropriate notices.

Section 8(a)(1) Violations

We have reviewed the findings of the administrative law judge and are satisfied that in the relevant period Supervisors Winkler and Ernas coercively interrogated six employees about the union movement. The administrative law judge was also justified in finding that each of the six and four additional employees were subjected to threats or inducements by those supervisors and Supervisor Ross. Promises of benefits were also made to five employees by Ernas and Ross. Since there was no specific repudiation by the Company of these supervisors’ conduct, it was responsible for these acts of its agents. National Labor Relations Board v. Urban Telephone Corporation, 499 F.2d 239, 243-244 (7th Cir. 1974); National Labor Relations Board v. Drives, Incorporated, 440 F.2d 354, 363 (7th Cir. 1971); National Labor Relations Board v. Kaiser Agricultural Chemicals, 473 F.2d 374, 384 (5th Cir. 1973). Even if President Ralph Altman had instructed his managers as to what was acceptable anti-union action, the Company had to assume the risk that some supervisors would improperly conduct the anti-union campaign. Hendrix Mfg. Co., Inc. v. National Labor Relations Board, 321 F.2d 100, 104 (5th Cir. 1963). The situation would have been different if Mr. Altman had apprised the employees of instructions to his supervisors not to make promises or threaten the employees or had repudiated his supervisors’ improper conduct. Instead, Altman’s two speeches to his employees stating that he intended to correct his past mistakes, although not found to constitute unfair labor practices, buttressed his supervisors’ prophecies of better working conditions, so that the Company was correctly held responsible for its supervisors’ misconduct. See Section 2(13) of the National Labor Relations Act (29 U.S.C. § 152(13)).

Majority Support of Union

The administrative law judge and the Board upheld the validity of 37 of the 41 authorization cards submitted from the 67-employee unit. The Company contends that there was no violation of Section 8(a)(5) of the Act because twelve of these 37 cards were improperly solicited and, therefore, the Union lacked a majority of valid cards.

As to ten of the twelve employees (Gulati, Erlien, Abrams, Schmidt, Markiewicz, Vohra, Garrison, Goldblatt, Keister and Narea), it was permissible on this record for the Board to find that they were not told that the card was to be used solely for the purpose of obtaining an election or only for informational purposes or as not obligating them to the Union. Since the cards unambiguously stated that signers were authorizing the Union “to act as * * * [their] collective bargaining agent” and the Company did not show that the card’s plain language was “deliberately and clearly canceled by a union adherent with words calculated to direct the signer to disregard and forget the language above his signature” (National Labor Relations Board v. Gissel Packing Co., 395 U.S. 575, 606, 89 S.Ct. 1918, 1936, 23 L.Ed.2d 547), the cards were properly counted.

As to employee Lurey, before signing his card he attended a union meeting where the employees were told that dues and initiation fees would not commence until the Union signed a collective bargaining agreement with the Company. This was not an improper inducement of Lurey. National Labor Relations Board v. Savair Mfg. Co., 414 U.S. 270, 272-274, n. 4, 94 S.Ct. 495, 38 L.Ed.2d 495. The refusal of the administrative law judge and the Board to credit the Company’s contention that Lurey was promised perpetual freedom from dues was permissible on the record, especially since the card itself stated, “NO DUES payable until a contract is signed * * * ” (emphasis added). The Company’s Cross-Exception 25 to the findings of the administrative law judge is sufficient to raise this question before the Board; consequently, we do not rely on the waiver provision of Section 10(e) of the Act, as urged by the Board’s brief.

Finally, as to employee Morgan, the Company asserts that it was error to count his card because he allegedly would not have turned it in except for the pressure placed upon employees by union representatives at a meeting to turn their cards in before they adjourned. Since Morgan attended all the meetings where the alternative uses of the cards were discussed, the decision of the administrative law judge, as adopted by the Board, that Morgan’s card was validly executed is supported by substantial evidence in the record. As in the case of Lurey’s card, we do not accept the invitation of counsel for the Board to rely on Section 10(e) to uphold the validity of Morgan’s card.

For these reasons, the Board was entitled to count the twelve cards challenged by the Company, so that the Union possessed a majority of valid authorization cards on September 10 when it unsuccessfully requested the Company to recognize and bargain with it.

Appropriateness of Bargaining Order

Relying primarily upon our decision in Peerless of America, Inc. v. National Labor Relations Board, 484 F.2d 1108 (7th Cir. 1973), the Company urges that the bargaining order was inappropriate. However, the tests established in National Labor Relations Board v. Gissel Packing Company, 395 U.S. 575, 89 S.Ct. 1918, 23 L.Ed.2d 547, have been satisfied. There the Court indicated that a bargaining order would be appropriate where the employer’s unfair practices are so pervasive and coercive that it is the only effective means of remedying them or where less substantial unfair labor practices only permit a slight chance of a fair election.

As the Board found, the Company had embarked upon a course of “flagrantly coercive conduct” through the anti-union campaign of Supervisors Winkler, Ernas and Ross, so that it was unlikely that an election would produce more reliable results for employees than the cards they had signed. National Labor Relations Board v. Kostel Corporation, 440 F.2d 347, 353 (7th Cir. 1971).

The administrative law judge conceded that “This case is a classic one for a GisseJ-type remedy [bargaining order].” He refused to recommend such a remedy because some of the pro-union employees had left the Company’s employ, others were disenchanted by the union representatives’ manner and tactics, and because employee Moy testified that employees were fearful that the Union was trying to avoid a secret ballot. However, the anti-union petition was not signed by the 48 employees until two. days after the previously set election date of November 4th. The election had been postponed on November 2 by the Regional Director because of the Company’s alleged unfair labor practices so that, he thought, the holding of a fair election would be impossible. The administrative law judge, the Board and this Court subsequently sustained the charges of serious unfair labor practices. In such a context, the anti-union petition does not denigrate from the propriety of a bargaining order. Similarly, the largely subjective factors relied on by the administrative law judge are overborne by the reasonable inferences drawn by the Board as to the impact of the Company’s unfair labor practices.

Unlike Peerless, supra, these unfair labor practices could not be deemed marginal. They arguably succeeded in luring employees from their September 10 pro-union stand. Gruber’s Super Market, Inc., supra, n. 2, is likewise distinguishable. In that case there was no anti-union animus, nor had Gruber’s conduct resulted in its employees’ losing interest in the Union.

The Board’s order will be enforced in its entirety.

      . Warehouse and Mail Order Employees Union, Local No. 743, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. On May 24, 1974, this Court granted the Union’s motion to intervene, and the Union filed a brief and participated in the oral argument.

      . Since Mueller was discharged before the Union made a recognition demand, his card was not considered valid in the computations of the administrative law judge or the Board. The Board also found it unnecessary to pass upon the General Counsel’s contention that the administrative law judge erroneously invalidated the cards signed by employees Kudlick, Hilliard and Moy because the 37 cards validated by the administrative law judge constituted a majority of the unit.

      . See also National Labor Relations Board v. Gruber’s Super Market, Inc., 501 F.2d 697 (7th Cir. 1974).

      . The Board applied the analysis required by Gissei in deciding to overturn the finding of the administrative law judge that the loss of support was not caused by the Company’s pervasive unfair labor practices. The Board, while rejecting the subjective approach to the question employed by the administrative law judge, indicated that there was substantial evidence even under such an analysis that the Company’s misconduct had undermined union support to an extent where an election would not be reliable in determining the employees’ wishes. The Board said:
      “As found above, Respondent on September 10 wrongfully refused to recognize and bargain with the Union and thereupon embarked upon a course of flagrantly coercive conduct designed to dissipate and undermine the Union’s majority. In view of this finding, which is based on the objective test set forth in Gissei Packing, we disavow the Administrative Law Judge’s reliance on subjective considerations to determine why many employees repudiated the Union. It is not our intention to read the minds of the employees in an effort to ascertain whether, as found by the Administrative Law Judge, any loss of their support for the Union was attributable to the ‘organizing tactics of the union representatives.’ However, even assuming the propriety of that approach, the record contains strong evidence that the loss of support was indeed to a considerable extent the result of Respondent’s unlawful conduct. Thus, as noted above, there was testimony that some employees felt that Respondent was being ‘squeezed’ by the Union and should be given another chance and that the petition disavowing the Union stemmed from the employees’ dissatisfaction with the postponement of the election by the Regional Director because of Respondent’s unfair labor practices.
      “In view of the foregoing, we conclude that the employees’ majority designation of the Union as expressed in their authorization cards provides a more reliable measure of the employees’ true desires than would be provided by an election. Accordingly, in order to protect the employees’ statutory rights and interests, we find that Respondent’s refusal to bargain violated Section 8(a)(5) and (1) of the Act and we shall issue a bargaining order.”
      The Board’s analysis satisfies the dictates of both Gissei and Peerless. Cf. Walgreen Co. v. National Labor Relations Board, 509 F.2d 1014 at 1017-1018 (7th Cir. 1975).