author: SPRECHER, Circuit Judge. PELL, Circuit Judge

text:
    VOYAGER 1000, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.
    No. 73-1222.
    United States Court of Appeals, Seventh Circuit.
    Argued June 7, 1973.
    Decided Nov. 14, 1973.

      Karl J. Stipher, Indianapolis, Ind., for petitioner.
    Howard E. Shapiro, Chief, Appellate Section, U. S. Dept, of Justice, Warren L. Sharfman, Robert L. Toomey, Civil Aeronautics Board, Washington, D. C., for respondent.
    Before PELL and SPRECHER, Circuit Judges, and CAMPBELL, Senior District Judge.

       Senior District Judge William J. Campbell of the Northern District of Illinois is sitting by designation.

   SPRECHER, Circuit Judge.

Petitioner, Voyager 1000, seeks review of Order 73-3-1 issued by the Civil Aeronautics Board on March 1, 1973, directing petitioner to cease and desist from engaging in “air transportation” in violation of Section 401(a) of the Federal Aviation Act. Section 401(a) of the Act states that “[n]o air carrier shall engage in any air transportation unless there is in force a certificate [of public convenience and necessity] issued by the Board authorizing such air carrier to engage in such transportation.” 49 U. S.C.A. § 1371(a) (emphasis added). The issue presented on appeal is whether the Board’s determination that Voyager was operating as an air carrier engaged in air transportation is supported by substantial evidence and a reasonable basis in law. Las Vegas Hacienda, Inc. v. C.A.B., 298 F.2d 430, 433-434 (9th Cir. 1962). We affirm the Board’s order.

I

In September, 1964, Voyager was founded as an Indiana non-profit corporation. The founding members’ plan was to organize a private flying club which would acquire an aircraft for recreational travel for a membership limited to 1000. Each member was required to pay an initiation fee of $125 ($200 per family membership) and monthly dues of $4, although in some instances these amounts were waived or reduced. The membership having reached 1,000 within a year, a second club, Voyager 2000, was formed and subsequently merged into Voyager 1000.

In early 1968 when the membership stood at 2,460, the club’s cash resources were seriously depleted. The directors decided that a substantially larger dues paying membership was necessary to provide sufficient operating funds to keep the club on a healthy financial footing. The initial goal was set at 5,000 members; in September, 1970, the goal was increased to 20,000.

Membership drive activities included the following:

(a) Familiarization with Voyager programs and facilities was proffered by means of open houses held in early 1968 in Indianapolis, Fort Wayne, Evansville, and Terre Haute, Indiana, and Columbus, Ohio. Newspapers in Indianapolis, Louisville and Cincinnati carried advertisements. When a Boeing jet was acquired, open houses to inspect this craft and “hear the Voyager 1000 story” were also held; these too were widely publicized. From June to September 1970, published announcements included lists of upcoming Voyager flights, stressed that the only initial outlay would be the advance payment of six months due ($36) because the initiation fee was being waived, and stated that application forms would be available at the open house.

(b) Articles describing Voyager activities were prepared for publication in newspapers and magazines such as Time and Travel Weekly. During the last three months of 1970, from three to six commercials per week were broadcast over a Cincinnati radio station. In the spring of 1971, a full page advertisement was placed in Holiday Magazine.

(c) Existing Voyager members were offered the inducement of $10 in scrip redeemable in Voyager services for each “bonus membership” they procured.

(d) Brochures describing flight programs in detail — dates, flight numbers, departure times, and fares — were mailed to non-members appearing on purchased commercial mailing-house lists and on large organization membership lists such as the Indiana State Teachers Association. For example, in the spring of 1972 Voyager had 100,000 copies of the “Europe ’72 Program” brochure printed, more than seven times the then current membership.

(e) In early 1971, college students at Purdue University, Ball State Teachers College and Marion College were offered a one-year membership for $10. Free flights were offered to the individuals enrolling students.

(f) As part of the membership drive, the initiation fee and monthly dues were the subject of some variation, being waived or reduced in connection with particular programs. At the time of this proceeding, the cost of joining was $10 per membership and $7 per months.

(g) Throughout the period of the membership drive, advertisements appeared regularly in eight newspapers in Indiana, Ohio, and Kentucky with a combined circulation in excess of one million copies. These advertisements contained a selected listing of flights available to “Voyager Members Only” detailing dates and price per person. They also invited inquiry about membership, giving a phone number or containing a mail-in coupon. Many advertisements included the cost of membership.

This total effort resulted in approximately 12,100 new memberships, from 2,400 members in 1968 to 14,500 members in December, 1971. Since most memberships are owned by families, this represents an estimated 43,000 individuals eligible for Voyager flights.

As a result of increased membership, Voyager employs over 80 individuals, operates seven aircraft (a Boeing 720 jet, two Lockheed Electras, two DC-7’s and two Martin 404’s), and maintains its own terminal at Weir Cook International Airport in Indianapolis.

Voyager's flight program is extensive. Flights are announced from five to six months in advance and by flight time are generally filled to capacity. Although the Voyager program tends to concentrate on weekend trips and destinations which are novel, longer trips and more customary destinations are also available. Voyager operated 200 flights from March, 1970 to May, 1971 and 156 flights between July, 1971 and April, 1972.

Although concededly secondary to travel, there is also a social aspect to the club. Voyager conducts a series of parties planned around travel themes. Announcements are sent to members sometimes in combination with flight schedules; they include a reservation form and often encourage members to bring guests.

Participation in Voyager flights, parties and corporate elections is limited to members whose dues are paid up. Immediately upon payment of the fee necessary to become a member, an individual is eligible for all Voyager activities and could conceivably take a Voyager flight scheduled for that same day if passage was available.

On November 16, 1971, the Director of C.A.B.’s Bureau of Enforcement (B. O.E.) docketed a complaint against Voyager alleging that Voyager was operating as a common carrier for compensation or hire without authority from the Board in violation of § 401(a) of the Act. The alleged aspects of common carriage included Voyager’s mass media campaign for new members and the lack of eligibility qualifications for membership other than the payment of fees and dues. Following evidentiary proceedings, the Administrative Law Judge issued his initial decision with order attached on June 22, 1972, dismissing the petition for enforcement and the complaint. The B.O.E. petitioned for discretionary review of the initial decision, and the Board undertook review. On March 1, 1973, the Board issued its decision reversing the Administrative Law Judge.

II

Economic and safety regulation of air transportation is provided by the Federal Aviation Act. Engaging in air transportation is conditioned upon obtaining the appropriate economic authority from the Civil Aeronautics Board (49 U.S.C. §§ 1371-1387) and safety authority from the Administrator of the Federal Aviation Agency (49 U.S.C. §§ 1421-1431). Voyager 1000 has operated since 1968 under Part 123 of the Federal Aviation Regulations entitled “Certificate and Operations: Air Travel Clubs Using Large Airplanes.” 14 C.F.R. §§ 123.1-53 (1973). Part 123 basically tailors the commercial operator certification and safety standards of Part 121 (14 C.F.R. § 121.1 et seq.) to air travel club (A.T.C.) characteristics. 33 Fed. Reg. 12887 (1968). Economic authority is not required for the issuance of an operating certificate under Part 123: Certification of a person by the F.A.A. as an air travel club under Part 123 does not authorize operations as an air carrier in air transportation. 14 C.F.R. § 123.1(c).

An air travel club is, by definition, a “person who engages in the carriage by airplanes of persons who are required to qualify for that carriage by payment of an assessment, dues, membership fee, or other similar type remittance.”

14 C.F.R. § 123.1(b). An air travel club differs from commercial operators in that the operations are nonprofit, air schedules are sporadic, and aircraft are operated for a relatively small number of hours. 33 Fed.Reg. 12887 (1968).

Although the reasons for requiring safety regulation of air travel clubs are well defined, the reasons for allowing their operation outside the economic regulatory scheme in the first instance have not been clearly articulated. Apparently at the outset these clubs were so small and the members were so intimately related that their operations were simply not relevant in any respect to commercial aviation. During the 1960’s, however, the F.A.A. noted the growth of a different kind of organization.

“During the past few years, a number of travel clubs have been formed for the purpose of providing their members with long-distance travel usually on large (over 12,500 lbs. takeoff weight) aircraft. In most cases, these clubs operate on the basis that the members share the expenses of the travel by an assessment, dues, membership fee, or similar payment to the club.”

32 Fed.Reg. 10311 (1967). When the F.A.A. was considering applying the safety standards of Part 121 to A.T.C.’s, the C.A.B. probably participated, as it normally does, in the making of the proposed rule by communicating its opinions and suggestions. These communications have not been disclosed. In the present proceeding, the B.O.E. avoided setting out its concept of the proper basis for distinguishing A.T.C.’s from common carriers.

“The Bureau takes no position on what criteria should be used to distinguish between valid private flying clubs and common carriers, for purposes of the Board’s jurisdiction.” Record at 827.

In 1971, the F.A.A. was of the opinion that air travel club operations constituted private carriage:

“It is of the opinion [sic] of the FAA that as long as air travel club aircraft are owned by the club members on a non-profit basis, solely for the carriage of its members on pleasure trips, these aircraft should be regarded as private carriage versus common carriage by commercial operators.”

However, no attempt was made to set out the underlying reasons why such operations were not considered to present competition injurious to the regularly scheduled airlines except to note that A. T.C.’s do not transport for compensation or hire.

“As air travel clubs are a non-profit organization, they are not allowed to fly passengers or cargo for hire. Therefore, they are not required to, or allowed to secure from the CAB a Certificate of Convenience and Necessity, as required by commercial operators.”

Clearly this is an insufficient rationalizing principle since the effect of being non-profit is that A.T.C’s provide transportation at a price which does not include a profit factor. What could present stronger competition to the commercial airlines?

Because the Act ultimatley defines air transportation as “carriage by aircraft as a common carrier,” the Board’s determination that Voyager is an air carrier engaged in air transportation (which, in the absence of a certificate of public convenience and necessity, is in violation of Section 401(a) of the Act) is based on its finding that Voyager is operating as a common carrier. Although the Act itself does not further define common carriage, this term is of an ancient legal vintage. Narrowing the broad range of possibly applicable definitions are the stated purposes underlying the regulatory functions of the C.A. B.

“The Civil Aeronautics Board is under an affirmative statutory duty to exercise its regulatory powers over ‘air transportation’ so as to foster sound economic conditions, promote economical and efficient service at reasonable charges, and avoid destructive competitive practices. The legislative history of the Act emphasizes the importance attached by the Congress to the achievement of these purposes. Obviously the economic regulation contemplated by the statute can be effective only if the commercial activity to which it is made applicable — ‘air transportation’ — represents a reasonably discrete market in practical business terms.”

Thus the Board’s attempt to define common carriage is an attempt to delineate that market which is the object of the regulatory scheme — “the furnishing of transportation by air to the general public on a commercial basis.” Las Vegas Hacienda, 298 F.2d at 436.

We would agree that “the typical travel club operation is in all practical respects no different from a charter flight conducted by a commercial operator . . . .” (Supra note 8), at least for the limited purpose of appraising their competitive impact on commercial airlines. The market served by Voyager is strikingly similar to the charter flight market.

The recent opinion by the Second Circuit in Saturn Airways, Inc. v. C.A.B., 483 F.2d 1284 (1973) upholding the Board’s promulgation of regulations pro^ viding for a new type of charter, the Travel Group Charter (T.G.C.) is instructive. Inasmuch as charter trips are provided by supplemental air carriers pursuant to a certificate of public convenience and necessity (49 U.S.C. § 1371(d)(3)), the question involved in Saturn was not one of common carriage status. Nevertheless, the validity of the Board’s authorization of T.G.C.’s was determined by reference to the importance of the distinction between individually ticketed and group fare markets and the appropriate line to be drawn between the two.

“The supplemental air carriers, once known as ‘non-scheduled’ or ‘irregular’ air carriers, are meant to provide a supplementary service to that of the scheduled or trunkline carriers, who offer individually ticketed, regularly scheduled service to the general public. Since the supplemental are not subject to the economic rigors attendant upon a regularly scheduled, individually ticketed service, for they essentially fly when they desire and nearly always carry a full planeload of passengers, the air fares for comparable routes on charter flights can be significantly less than those offered by the scheduled air carriers. Congress in providing for certification of the supplemental recognized the potential problem of competition and the real possibility that if not carefully controlled they would supplant, rather than supplement, the regularly scheduled service. See generally American Airlines, Inc. v. CAB, supra, 125 U.S. App.D.C. 6, 365 F.2d 939, at 944-945. Individually ticketed, regularly scheduled service is the mainstay of an efficient air transportation system, and a critical necessity in any sophisticated economy. Congress realized that it must be preserved. Accordingly, the legislative history and language of the statute itself manifest a congressional’ intent that although the Board should have the power of definition, it should never permit ‘individually ticketed service to be offered to the general public under the guise of charter.’ Sen.Rep. No. 688, 87th Cong., 1st Sess. 13 (1961).” (483 F.2d at 1287-1288).

The court concluded that the T.G.C. regulations, “where individual travelers without a community of interest apart from transportation are organized by a third party and . . . charter an aircraft on a pro rata basis” (483 F.2d at 1287), adequately preserve the distinction between group and individually ticketed markets where differences such as the following are required: (1) charter travelers are liable for a pro rata share of the cost which share is subject to variation depending upon the final load factor; (2) the group must be formed and members must have paid 25 percent of the minimum charter price not later than three months prior to the scheduled departure time; (3) participants must pay the total remaining balance of the flight fare not later than two months prior to the departure date; (4) the deposit and balance payments are with certain exceptions non-refundable; (5) the flight may be cancelled up to 45 days prior to departure due to passenger defaults; and, (6) participants must depart and return as a group subject to predetermined trip duration restrictions. 483 F.2d at 1292; See 14 C.F.R. §§ 372a.l-.50.

The distinguishing factors cited by the court are ones which eliminate from charter service those members of the traveling public who require transportation on short notice without risk of cancellation or restrictions on return accommodations. The Board’s determination in the instant case revolved around the relevant characteristics of petitioner’s operation which failed to eliminate from A.T.C. service members of the individually ticketed market.

The cases setting forth the principles applicable to the determination of common carrier status interpret the Act as “bringing within the regulatory scheme all those who compete in the commercial market in the business of offering air transportation to the public generally.” Las Vegas Hacienda, 298 F.2d at 434. To ascertain whether a particular operation is so competing, the critical determination is whether the operation is one which holds itself out “as ready and willing to undertake for hire the transportation of passengers or property from place to place, and so invites the patronage of the public.” Transocean Air Lines, Inc., Enforcement Proceeding, 11 C.A.B. 350, 352 (1950). In the instant ease, the Board examined both the nature of the “membership drives” and the extent of qualifications for membership as they relate to a “holding out to the public or a segment of the public.”

“The breadth of the activities contemplated under the term ‘common carrier’ reflects the great variety of recognized means whereby the ‘holding out’ may be accomplished. The most obvious method of a holding out which may result in common carriage is advertising through magazines, newspapers, posters, brochures, and the like. Should the evidence disclose that a carrier has advertised its services in such manner as to solicit business from the general public, the necessary implication arises that it has held itself out as being in readiness to carry for all who might apply. Nevertheless, the lack of advertising is not in itself determinative of whether there has been a holding out since a holding out may take place through other methods.

“. . . [T]he requisite holding out may be evinced by any means which communicates to the public that a transportation service is indiscriminately available. A reputation gained through merely serving the public indiscriminately may be sufficient in itself to inform the public that the carrier will carry for all who apply within the limits of its facilities.

“Furthermore, it is clear that a carrier need not undertake to serve all the public in order to be considered a common carrier, but may limit its transportation services to a class or segment of the general public so long at it expresses a willingness to provide transportation for all within this class or segment indiscriminately.” Transocean Air Lines, 11 C.A.B. 352-53 (footnotes omitted).

Regarding the propriety of the membership drives, Voyager argued that its advertisements were announcements to members coupled with invitations to join, that advertising is permissible so long as its thrust is to acquaint nonmembers with the advantages of membership, that solicitation of new members generally is proper so long as such solicitation is not designed to sell individual flights to members of the public, and that in any event there was no evidence that such advertising diverted passengers from common carrier flights.

With respect to the qualifications for membership, petitioner argued that it does not hold itself out as willing to carry all passengers but only members; that Voyager membership does not constitute a segment of the general public because the fees represent a real and substantial investment and are an absolute prerequisite to participation; that the members have a legal interest in the club’s assets until dissolution, and the social aspects of the club differentiate the membership from the traveling public; and, that as a practical matter the members do not receive individually ticketed service.

Concerning the contention that the membership drive activities constituted a “holding out”, the Administrative Law Judge concluded as follows:

“The Bureau reads the advertising program as being directed to members of the public generally and as inviting them to fly Voyager as though it were a commercial enterprise. . . .
“The respondents deny that this was the purpose, either overt or covert, and the evidence sustains them. The adds [sic] clearly stated that the trips were available only to Voyager members. Insofar as their placement was part of a campaign to increase the membership that was the exercise of a legitimate right as long as the original purpose of the club was not being changed. The listing of prospective flights and the costs can be fairly read as an effective device to illustrate the advantages of being a member. It was certainly effective as part of the expansion plan. If in its concept Voyager was a private club engaging in private carriage, as it clearly was, simply increasing, the number of members does not add an insidious noted [sic].”

The Administrative Law Judge further concluded that advertising directed to prospective members does not constitute solicitation of the general public; Voyager advertisements contained “an element of selectiveness in that they were addressed to persons travel-minded in the manner of the original Voyager members.”

In assessing the qualifications for Voyager membership in terms of their effectiveness in differentiating members from the general public, the Administrative Law Judge found that although

“there is little or no screening of an applicant beyond the payment of initiation fee and dues there is a built-in screening by the mere fact of application for membership. By such application, particularly after exposure to explanations of the purposes of the club, an applicant, inferentially but effectively, declares an affinity with the existing members.”

Furthermore, the Administrative Law Judge viewed the financial outlay as real and substantial when viewed in the aggregate.

The Board reversed the initial decision of the Administrative Law Judge on the basis of the legal significance of the facts as found. The eases and the purposes underlying the regulatory scheme support the Board’s decision.

The fact that petitioner believed that it was engaged in private carriage and had no intention of violating the law is not determinative of the question.

Petitioner’s claims of uniqueness, capacity to provide faster and more convenient service, and ability to offer air travel to individuals unable to afford commercial rates all relate to the question of whether a certificate or exemption should issue and not to the determination of common carrier status. See Las Vegas Hacienda, 298 F.2d at 438-439.

The question of the propriety of mass media advertisements can not be resolved simply by determining whether the ads solicit members, as those in the instant case clearly did. We would agree with the Administrative Law Judge that an increase in the membership does not necessarily result in a transformation from private to public carriage. Rather, the proper inquiry is whether the ads solicit prospective members where the membership is defined in such a manner as to be undifferentiated from the traveling public at large. Thus the fact that the ads are addressed “To Members Only” is not dispositive.

The Administrative Law Judge cites the membership fees and dues and the declared affinity, by virtue of application for membership, with “persons travel-minded in the manner” of the existing members as providing sufficient differentiation from the general public. The Board found the financial outlay to be “relatively insignificant, particularly when viewed in light of the fare bargains it buys.” Since the avowed purpose of Voyager is group travel, the affinity involved in Voyager membership is a common interest in travel. To employ affinity in this manner begs the question.

Insofar as the affinity only relates to travel, the nature of the travel services provided must be differentiated from the individually ticketed market. Here, members were eligible to fly as soon as they joined and there was no prescribed waiting period between making reservations and flying. The record is void of criteria which would indicate sufficient differentiation between Voyager services and individually ticketed services.

There was substantial evidence and a reasonable basis in law for the Board’s finding that “ [d] espite the various labels Voyager attaches to itself and to various aspects of its method of operation, it is ‘furnishing transportation by air to the general public on a commercial basis’ . . . and hence it engaged in ‘air transportation’ within the meaning of the act.”

Order enforced.

PELL, Circuit Judge

(concurring).

I concur in the foregoing opinion although I do so with considerable reluctance. My disinclination, however, arises from no feeling that a legally incorrect result has been reached. Indeed, Judge Sprecher’s well reasoned opinion leaves little area, it seems to me, for disagreement with the legal premises it sets forth and applies.

It is somewhat ironical, and perhaps to be deplored, that in a society which generally encourages competitive free enterprise a service is to be stifled which a substantial segment of citizenry of the Midwest portion of the country found to be highly desirable in making available travel by air which might not otherwise have been enjoined by them, and which travel has been conducted in full compliance with governmental safety requirements.

While this travel presumably was ordinarily for pleasure rather than, business reasons, the right of such movement is one that has received Supreme Court recognition.

“This Court long ago recognized that the nature of our Federal Union and our constitutional concepts of personal liberty unite to require that all citizens be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement.” Shapiro v. Thompson, 394 U.S. 618, 629, 89 S.Ct. 1322, 1329, 22 L.Ed.2d 600 (1969).

While the further movement of the Voyager members is perforce restricted by our upholding of the administrative determination here involved, we are unable to say that it is not supported by substantial evidence, nor that it is an unconstitutionally unreasonable application of the guidelines laid down by the Congress. That body has as a policy matter legislated where competing interests are involved. It is our function in the judiciary not to make the law but only to determine what it is and whether it exceeds constitutional limitations either as stated or as applied.

      . The Federal Aviation Act of 1958, 72 Stat. 731, 49 U.S.C. § 1301 et seq. (1970) [hereinafter cited as the Act].

      . Section 1006 of the Act delineates the limits of judicial review of C.A.B. orders, providing in pertinent part that “findings of facts by the Board or Administrator, if supported by substantial evidence, shall be conclusive.” 49 U.S.C. § 1486(e).

      . Under the Indiana Not-For-Profit Corporation Act of 1971 (Bums Ind.Stat.Ann., §§ 25-501 to -566 (Cum.Supp.1972)), in the event of dissolution all assets in excess of obligations to creditors and lenders escheat to the state. Burns Ind.Stat.Ann. § 25-533.

      . This approach resulted in 1,600 members by May 1, 1969, with bonus memberships coming in on an average of 25 a day.

      . During the 12 months prior to the institution of this proceeding, Voyager carried some 24,000 members.

      . Membership confers certain rights similar to those held by shareholders of a business corporation including the right to notice of elections and rights to nominate and vote on directors.

      . A . commercial operator is defined as “a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier . . . . ” 14 C.F.R. § 1.1 (emphasis added).

      . “From a safety standpoint, when a passenger has, in any manner, paid for his carriage aboard a large aircraft the FAA believes that the applicable safety standards should not depend on a distinction as to whether that passenger is carried for ‘compensation or hire’ or is ‘sharing expenses' with other passengers. The average passenger certainly is not aware that the method by which he pays for his carriage determines the level of safety that the operator of the aircraft is required to maintain. Except for the method of payment, the typical travel club operation is in all practical respects no different from a charter flight conducted by a commercial operator, and the FAA believes that the level of safety required by Part 121 should be maintained.” 32 Fed.Reg. 10311 (1967).

      . Opinion Letter from F.A.A. to Voyager 1000, Aug. 2, 1971. Record at 629.

      . Id.

      . Section 101 of the Act defines “air carrier” as
      “any citizen of the United States who undertakes, whether directly or indirectly or by a lease or other arrangement, to • engage in air transportation . . .”
      49 U.S.C. § 1301(3). “Air transportation” is defined as “interstate, overseas, or foreign air transportation . . . ” (49 U.S.C. § 1301(10)), terms which are respectively defined as
      “the carriage by aircraft of persons or property as a common carrier for compensation or hire ... in commerce Í»
      between states, between states and Territories or possessions, and between the United States and any other place. 49 U.S.C. § 1301(21) (emphasis added).

      . Las Vegas Hacienda, Inc. v. C. A. B., 298 F.2d 430, 432-433 (9th Cir. 1962) (footnotes omitted).

      . The court’s analysis quite properly demonstrated the limitations on the Board’s affirmative statutory duties. The desired result is not to remove all operations which compete with commercial airlines but rather to regulate only those operations which affect the economic soundness of regularly scheduled point-to-point air transportation. The economic stability of commercial airlines is to be preserved not for the benefit of the airlines per se but only insofar as that stability is necessary to the maintenance of an adequate national and international transportation system.

      . The record shows that in a typical month, November, 1971, out of 15 Voyager destinations only two such destinations were advertised by travel agents. In conversations with travel agents, petitioner found that its elapsed time was less than half that of the best common carrier service in five of eight examples.

      . In 1971, Voyager conducted a survey of its membership based on a random selection of 200 members. Every fiftieth member on the Master Membership files who was current in dues payment was selected and a questionnaire was sent to him or her. Among other things, the totals showed that the average time between joining and traveling was 5½ months. The survey does not provide information on individuals who had stopped paying dues. The record does not show the average time between making reservations and flying.

      . As a practical matter the fees become part of the transportation cost which in total amounts to less than commercial fares.

      . It is not clear how the establishment of a prior affinity among Voyager’s members would help petitioner’s ease. The C.A.B. has recently begun experimenting with the discontinuance of the affinity group concept due to the fact that it discriminates against individuals not belonging to groups which are charterworthy. 37 Fed.Reg. 20808 (1972).


source: Caselaw Access Project

author: WISDOM, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. John C. HENDERSON and Terry Harry Nelson, Defendants-Appellants.
    No. 72-2363
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Dec. 17, 1973.

      Ian F. Gaston, Mobile, Ala., (Court-Appointed) for Henderson.

      Donald M. Briskman, Mobile, Ala., (Court-Appointed), for Nelson.
    Charles S. White-Spunner, U. S. Atty., Irwin W. Coleman, Jr., Asst. U. S. Atty., Mobile, Ala., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   WISDOM, Circuit Judge:

John C. Henderson and Terry H. Nelson bring separate appeals from their convictions at a joint trial of robbing a federally insured bank, in violation of 18 U.S.C. § 2113(d). Henderson advances four grounds for the reversal of his conviction; Nelson asserts two. We affirm both convictions.

The Bank of Brewton in Brewton, Alabama, was robbed on June 8, 1971. At the time of the robbery, the only persons in the bank were Mrs. Bernie May Benton, the Acting Manager of the Bank, and Mrs. Verdi Adkisson, a teller. According to the testimony of both women, two men armed with pistols entered the bank at about 12:13 p. m. on June 8. One of the men stood guard by a big window near the front door, underneath the bank camera; the other went to the teller’s cages behind the counter, going first to the one where Mrs. Benton stood, then to the one between that cage and the cage where Mrs. Adkisson stood, and then to Mrs. Adkisson’s cage. At each cage this man either took the cash in the drawers himself, or forced the women in the cages to take the money out of the drawers and to stuff it into a bag he was carrying. When Mrs. Adkisson was taking money out of one of the drawers at her cage, she activated the bank camera, which then took a short movie of the remaining moments of the robbery. After he had finished collecting the money, the robber behind the counter forced the two women into the vault of the bank, where he told them to remain until three minutes had elapsed. The entire robbery, according to the testimony of both women,. lasted only four to six minutes. An audit of the bank revealed that the robbers had taken about $20,000 from the Bank.

After the robbery, thhe FBI and the Brewton police used photographic identification procedures to identify the robbers. On the day of the robbery, FBI agents showed both Mrs. Benton and Mrs. Adkisson about one hundred photographs of persons suspected of bank robbery by the FBI. The photographs did not include a picture of either defendant, and neither Mrs. Benton nor Mrs. Ad-kisson identified either defendant from those photographs. Shortly after the robbery, both women were shown the movie taken by the bank camera. The film was of extremely poor quality, however, and did not aid the women or the law enforcement officers in identifying the criminals. Within a week after the robbery, the Brewton police showed both Mrs. Adkisson and Mrs. Benton a second photographic spread. This spread consisted of about 10 photographs. Again, pictures of the defendants were not included in this spread, and neither of the women identified the robbers from the spread.

O.n June 19 Mrs. Benton and Mrs. Ad-kisson identified the defendants from a third photographic spread. On that day, both women were asked to come to police headquarters in Brewton, where FBI agents showed each of them two stacks consisting of six or seven photographs each. Pictures of Nelson and of Henderson were included in these stacks; and both women identified the two as the men who had robbed the bank on June 8. The FBI agents did not tell Mrs. Benton that they had any suspects, and did not indicate to her in any way that they thought the spread included pictures of men they suspected. Mrs. Adkisson apparently had been told that the police had suspects in the case; she was not, however, told when she was shown the spread that it included pictures of the men the police suspected.

At a preliminary hearing held June 25, 1971, the two women identified the two men in person. In the time since the women had first identified the men, photographs of Nelson and Henderson had appeared in the local paper and in the Mobile Press Register identifying them as the men suspected of the Brew-ton robbery. Both women admitted at trial that they had seen those pictures before the June 25 hearing. At the hearing, both Henderson and Nelson were wearing T-shirts. They were the only two men in the room so attired; all the other men were wearing coats and ties. Mrs. Benton positively identified both Nelson and Henderson as the two bank robbers. Mrs. Adkisson positively identified Nelson. She was not positive about Henderson, but thought that he was one of the two.

At trial both women positively identified both Henderson and Nelson as the bank robbers. The trial judge held a hearing out of the presence of the jury to inquire into the circumstances of Mrs. Adkisson’s identification of the defendants. At that hearing, and later before the jury, Mrs. Adkisson testified that her failure to identify Henderson positively at the hearing had been the result of the fact that the defendant’s hair had been darker on the day of the preliminary hearing than it had been on the day of the robbery; she said that by the time of the trial its color had been changed back to the color it had been at the robbery. Neither defendant requested an in camera hearing to inquire into the circumstances of Mrs. Benton’s identification of the defendants, and therefore no such hearing was held.

The principal point raised by both appellants concerns the propriety of the identification procedures followed by the FBI and the Brewton police. Under Simmons v. United States, 1968, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247, and the cases following Simmons decided by this Court, e. g., United States v. Sutherland, 5 Cir. 1970, 428 F.2d 1152; United States v. Hughes, 5 Cir. 1969, 418 F.2d 1222; United States v. Rogers, 5 Cir. 1972, 455 F.2d 407, the standard for determining whether identification evidence is admissible is whether the police procedures used in obtaining the identification were “so impermissibly suggestive as to create a substantial risk of misidentification”. Both defendants argue that that standard was met in this case.

We cannot agree. Under our decision in Sutherland, the Simmons standard becomes a double test; the district courts are to determine separately (1) whether the procedures followed were “impermissibly suggestive”, and then (2) whether, being so, they created “a substantial risk of misidentification”. To make these determinations, the district courts, under Sutherland, are to conduct in camera hearings to inquire into the circumstances of challenged identification procedures. Here, the district court complied with Sutherland by conducting such a hearing when the propriety of the procedures surrounding Mrs. Adkisson’s identification of the defendants was challenged; he was not asked to conduct a hearing concerning the circumstances of Mrs. Benton’s identification. He concluded on the basis of that hearing that the procedures followed here were not impermissible under Simmons and Sutherland. On review, we cannot say that that conclusion was erroneous. To be sure, there were at least two facts indicating either that the procedures followed were “suggestive”, or that they “created a risk of misidentification”: the fact that Mrs. Adkisson was told that the police had suspects before she examined the photographs on June 19, and the fact that both witnesses saw newspaper pictures identifying the two men as the men suspected of the robbery before the preliminary hearing. But it would have been proper for the district judge to conclude that these did not establish that the procedures were impermissibly suggestive, or that they did not establish that those procedures create a substantial risk of misidentification. He did not err, therefore, in admitting the identification evidence.

Henderson asserts three other grounds for reversal. First, he argues that the failure of the trial judge to sever the trials of the two defendants constitutes reversible error. He asserts he was prejudiced by the failure to sever by two events at trial. The first was the offer by Nelson’s attorney to introduce the photographic spread from which Nelson had been identified. That spread consisted of snapshots of men in ordinary street clothes; the spread that included Henderson’s, on the other hand, was a group of police mugshots. Henderson’s counsel feared that if Nelson introduced the spread containing his photograph, the jury would infer from the fact that Henderson did not introduce the spread containing his photograph that Henderson had “something to hide”. He objected therefore to the introduction of Nelson’s spread, but the trial judge overruled the objection. The second event was Henderson’s attempt to introduce the movie taken at the robbery into evidence. Nelson did not want the movie introduced, and it was excluded on his objection.

We cannot find substantial prejudice in either of the events cited by Henderson; neither would have justified a severance. Henderson’s counsel did not at the time either of these events took place move for a severance; the only motion made for a severance was made before trial, on grounds other than those Henderson now argues required a severance. The grant or denial of a severance is within the discretion of the trial judge, Opper v. United States, 1954, 348 U.S. 84, 95, 75 S.Ct. 158, 99 L.Ed. 101; Tillman v. United States, 5 Cir., 1969, 406 F.2d 930, 934-935. We cannot say that the trial judge abused his discretion in failing to order severance sua sponte here.

Henderson’s third objection is to the trial judge’s refusal to permit the movie of the robbery to be introduced. We cannot find reversible error here. The judge stated that he found the film “so unsatisfactory that I couldn’t ma[k]e anything out of it”. We have viewed the movie in camera, too, and we agree with the trial judge.

Henderson’s final point is that the trial judge erred in refusing to hold that evidence of certain prior convictions was inadmissible. Henderson never took the stand, and so the convictions in question were never introduced. Henderson contends he was prejudiced by the judge’s failure to rule the convictions inadmissible, because he asserts that that failure placed him in a dilemma, having either to refrain from taking the stand, or to take the stand and risk the introduction of evidence of his prior convictions. We doubt that Henderson may raise this contention on this appeal, because although the matter is disputed, it does not appear from the record that he ever made any pretrial motion to suppress evidence of the earlier convictions. But, even assuming he may raise the question, it is settled in this circuit that a defendant is not entitled to a prospective ruling on the admissibility of impeachment evidence before he takes the stand. United States v. Saitta, 5 Cir. 1971, 443 F.2d 830, 831; United States v. Bedgood, 5 Cir. 1972, 453 F.2d 988. It is the defense counsel’s responsibility to evaluate the law and plan his strategy based upon his evaluation; the defendant must take the stand before he is entitled to a ruling on the admissibility of impeachment evidence.

Nelson’s second point on appeal concerns the photographic spread his counsel sought to present to the jury. Although the trial judge held the evidence admissible, it seems clear from the record that the photographs never were actually shown the jury. Nelson claims this prejudiced his case, because the jury’s inspection of the spread was important to its evaluation of the two witnesses’ ability to identify him as one of the men who robbed the bank. While we cannot deny that the photographic spread might have been germane to the jury’s determination of that issue, we cannot say that the fact that the jury never actually saw the photographic spread was sufficiently prejudicial to require reversal. The record discloses that Nelson’s counsel, after the trial judge had initially ruled the photographs admissible, never renewed his request to show the photographs to the jury, and never made any effort to see that the jury actually saw the photographs..

Both convictions are affirmed.


author: PER CURIAM.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CORRY FOAM PRODUCTS CO., Firestone Foam Products Co., a Division of Firestone Tire & Rubber Co., Respondent, Cross-Petitioner.
    No. 73-1262.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 17, 1973.
    Decided Dec. 27, 1973.
    Judith Wilkenfeld, N. L. R. B., for petitioner; Peter G. Nash, Gen. Coun., John S. Irving, Deputy Gen. Coun., Patrick Hardin, Associate Gen. Coun., Elliott Moore, Asst. Gen. Coun., Robert G. Sewell, Atty., N. L. R. B., Washington, D. C., on brief.
    Walter B. Connolly, Jr., Akron, Ohio, for respondent; Charles A. Powell, III, Birmingham, Ala., on brief; Lange, Simpson, Robinson & Somerville, Birmingham, Ala., of counsel.

      Before PHILLIPS, Chief Judge and EDWARDS and McCREE, Circuit Judges.
   PER CURIAM.

The National Labor Relations Board seeks enforcement of its order finding respondent company to have violated Section 8(a)(5) and (1) of the National Labor Relations Act, as amended, (61 Stat. 136, 73 Stat. 519, 29 U.S.C. § 151 et seq.) (1972), by refusing to bargain with the union previously certified by the Board as the exclusive bargaining representative of the company’s over-the-road truck drivers following a National Labor Relations Board election.

Respondent in its cross-petition for review contends that enforcement should be denied because its refusal to bargain was justified by the facts that the Board had chosen an inappropriate collective bargaining unit and that an episode in the course of the election had, in any event, unfairly prejudiced the outcome of the vote.

As to the bargaining unit issue, respondent contends that the undisputed fact that there had been two prior Board elections held concerning this plant, at each of which the Board had found an appropriate bargaining unit which included production, maintenance and truck drivers in one bargaining unit (both of which elections had been lost by the union concerned) served to demonstrate that the Board’s choice of a unit consisting only of all of the over-the-road truck drivers of the company (as petitioned for by the Teamsters’ Union in this instance) was arbitrary and an abuse of its discretion.

It is, of course, clear that Congress has vested specific authority to determine appropriate bargaining units in the National Labor Relations Board. Section 9(b) of the Act provides that the Board:

“shall decide in each case whether, in order to assure to employees the fullest freedom in exercising the rights guaranteed by this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof. . . . ” 29 U.S.C. § 159(b) (1970).

It is also true that the Supreme Court has declared that:

“The issue as to what unit is appropriate for bargaining is one for which no absolute rule of law is laid down by statute, and none should be by decision. It involves of necessity a large measure of informed discretion, and the decision of the Board, if not final, is rarely to be disturbed.” Packard Motor Car Co. v. N. L. R. B., 330 U.S. 485, 491, 67 S.Ct. 789, 793, 91 L.Ed. 1040 (1947).

It is well established “that in reviewing the Board’s determination under Section 9(b), a court is merely to consider whether the designated unit is an appropriate unit, and not whether it is the appropriate unit or if another unit may have been more suitable.” Michigan Hospital Service v. N. L. R. B., 472 F.2d 293, 294 (6th Cir. 1972) (Emphasis in original).

We would note that in this instance the Board is following a craft unit designation consistent with the specific language of the Act rather than merely defining a unit consistent with the extent of organization and the union’s desire. Nor do we think that the mere fact that the plant seniority system occasioned some overlap and interchange between production workers and truck drivers defeats the appropriateness of the unit. Although there are many instances where plant units, including truck drivers, have been found appropriate by the Board and upheld by the courts, it certainly is true that historically over-the-road truck driving is a recognized craft within the meaning of the statute. See American Bread Co. v. N. L. R. B., 411 F.2d 147 (6th Cir. 1969), citing with approval, Mc-Mor-Han Trucking Co., Inc., 166 NLRB 700 (1967) and Ballentine Packing Co., Inc., 132 NLRB 923 (1961); N. L. R. B. v. St. John’s Associates, Inc., 392 F.2d 182 (2d Cir. 1968); Pacemaker Mobile Homes, 194 NLRB No. 122 (1971); Western Wirebound Box Co., 191 NLRB No. 126 (1971); Tallahassee Coca Cola Bottling Co., Inc., 168 NLRB 1037 (1967) , enf’d, N. L. R. B. v. Tallahassee Coca Cola Bottling Co., Inc., 409 F.2d 201 (5th Cir. 1969).

As to the election issue, respondent relies directly upon the National Labor Relations Board’s Milchem doctrine (Milchem, Inc., 170 NLRB 362 (1968) ). In this case the Board held that where a known company representative or union representative invaded the immediate area where a Board election was being conducted, and engaged in prolonged conversation with those waiting to vote, on complaint the Board would deem such conduct prejudicial to the laboratory conditions needed for Board elections without inquiring into the nature of the conversations. Here the record clearly demonstrates that respondent’s superintendent of the truck drivers unit was on the scene of the Board-conducted election at the door of the warehouse as the election took place and talked with the drivers as they went in to vote. The record also shows that the union won the election by a vote of 6-4 and, of course, has no desire to protest the violation of the Milchem rule by a company representative. We now have, as the Board did, the company’s contention that the superintendent should be treated as if he were a union adherent or representative because of a conversation quoted from him after the election to the effect that his father had been a union man and that he thought the union could help the drivers. As the Board found, however, there is no evidence at all in the record that he had indicated any such attitude during the election or prior thereto. Further, we note that in the Milchem case the Board’s opinion called for “a sense of realism” in interpreting and applying its rule. Thus we find no merit in cross-petitioner’s second issue.

For the reasons stated above, the order of the National Labor Relations Board will be enforced.

      . Highway and Local Motor Freight Employees Local Union No. 667, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers.

      . At oral argument this court was informed that as a matter of Board regulation, the Board employee who had conducted this election was prohibited from testifying. No issue is presented on this score and in the circumstances of this case, we can hardly see how his evidence could have changed the result. Nonetheless, we express some apprehension about the operation of any such regulation. Understandable as may be the desire of the Board to have its personnel charged with' conducting elections busy at that task rather than testifying about past elections, there may well be situations where in the interests of justice remand for the taking of just such testimony will be required absent an opportunity for a complaining party to secure the Board employee’s testimony by deposition or other suitable means.


author: FAIRCHILD, Circuit Judge.

text:
    The SCOTCH WHISKY ASSOCIATION et al., Plaintiffs-Appellees, v. BARTON DISTILLING COMPANY (now known as Barton Brands, Inc.), Defendant-Appellant.
    No. 71-1631.
    United States Court of Appeals, Seventh Circuit.
    Argued Oct. 27, 1972.
    Decided Nov. 12, 1973.

      Edgar Bernhard, Merrill A. Freed, Selwyn Zun, Robert W. Gettleman, Chicago, 111., for defendant-appellant.
    Beverly W. Pattishall, Robert M. New-bury, David C. Hilliard, Chicago, 111., for plaintiffs-appellees.
    Before HASTINGS, Senior Circuit Judge, and FAIRCHILD and PELL, Circuit Judges.
   FAIRCHILD, Circuit Judge.

Two of plaintiffs are producers of Scotch whisky in Scotland, marketed throughout much of the world, including Panama and the Canal Zone. Plaintiff Association was formed to promote the interests of distillers and merchants in Scotland. Defendant Barton is a Delaware corporation which produces and markets alcoholic beverages in the United States and elsewhere. One of defendant’s products is Scotch whisky sold under the trademark House of Stuart. This action concerns a product distributed under the “House of Stuart Blended Scotch Whisky” label in Panama, which reached the Canal Zone as well.

In 1964, as amended in 1965, defendant made an agreement appointing a Panamanian corporation, Diers & Ull-rich, its exclusive distributor in Panama. Defendant supplied Diers & Ullrich with House of Stuart labels and bottles, shipped from the United States, and vatted Scotch malts, shipped from Scotland; Diers & Ullrich mixed the Scotch malts with locally produced spirits and sold the product under the House of Stuart label. It appears without dispute that the House of Stuart label indicates that the product has its origin in Scotland, and that when applied to the Diers & Ullrich product there was a false designation of origin.

15 U.S.C. § 1125(a), part of the Lan-ham Trademark Act of 1946, provides in part that one who affixes or uses in connection with any goods a false designation of origin and causes the goods to enter into commerce shall be civilly liable to a person doing business in the locality falsely indicated.

Plaintiffs alleged that defendant conspired in the use of labels indicating origin in Scotland on spurious Scotch whis-ky, but the district court found no more than that defendant knew, or should have known, of the practice of Diers & Ullrich. The district court, 338 F.Supp. 595, concluded that the use of the label was a false designation of the place of origin in violation of 15 U.S.C. § 1125(a) and certain provisions of the International Convention of Paris for the Protection of Industrial Property; and that defendant was responsible for the use of the label. Judgment was entered enjoining defendant from using the words “Scotch whisky” or its House of Stuart trademark or otherwise indicating origin in Scotland in connection with a product similar to the one involved, and awarded plaintiffs reasonable attorneys’ fees.

On appeal, defendant contends: (1) that the district court lacked jurisdiction over the subject matter; (2) that under the circumstances an injunction was unnecessary and should not have been issued; and (3) that the award of attorneys’ fees was unwarranted.

(1) Jurisdiction.

The essence of defendant’s position is that the goods bearing the challenged label were produced in Panama and caused to enter into the commerce of Panama, not the interstate or foreign commerce “which may lawfully be regulated by Congress.” See 15 U.S.C. § 1127, so defining “commerce” and providing “The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce . . . . ”

It is true that it was the labels and bottles supplied by defendant which were transported from within the United States to Panama. Although defendant’s agreement gave it the power to control the ingredients of the product, and thus defendant was properly charged with responsibility for the blending and labeling, this process did not happen within the United States. We think, however, that so literal a concept of entering into commerce is untenable. No principle of international law bars the United States from governing the conduct of its own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed. Congress has the power to prevent unfair trade practices in foreign commerce by citizens of the United States, although some of the acts are done outside the territorial limits. The question is whether Congress intended the Act to apply to a situation of this type. Steele v. Bulova Watch Co., 344 U.S. 280, 285-286, 73 S.Ct. 252, 97 L.Ed. 252 (1952).

In Steele, the Supreme Court construed another section of the act, 15 U. S.C. § 1114(1), which creates a civil cause of action against one who uses an infringing mark “in commerce.” The Court upheld a broad concept of “commerce.”

Steele was a United States citizen who registered the trademark “Bulova” in Mexico. He imported parts from the United States and assembled and sold watches in Mexico. Plaintiff Bulova Watch Company manufactured, advertised, and sold watches in the United States and elsewhere, using a trademark registered in the United States. Defective spurious Bulova watches filtered back to the United States and were brought to jewelers for repair by dissatisfied owners. In deciding that the Act applied, the Court considered both the purchase of parts in the United States, and the advent of some watches in the United States, as well as the adverse reflection Steele’s goods could have on plaintiff’s reputation both in the United States and elsewhere.

Defendant correctly points out that there are factual differences between Steele and the case at bar. Steele personally sold watches in Mexico under an infringing mark while defendant sold mislabeled whisky in Panama only vicariously; Steele’s Bulova trademark was ultimately nullified by Mexican decree while here it has not been demonstrated that Diers & Ullrich violated any Panamanian law; some of Steele’s watches did come into the United States and damage the American owner of the trademark in this country while the Diers & Ullrich product appears to have reached only Panama and the Canal Zone, and damaged the Scotch plaintiffs only in those markets. None the less, viewing the entire course of business and the responsibility found on the part of defendant, we think the “commerce” involved began with defendant’s acts in the United States and continued to the ultimate distribution of the whisky.

In Steele, the Supreme Court emphasized the invalidation of the Mexican trademark registration because of the danger otherwise of affront to Mexican sovereignty: the extraterritorial application of the United States trademark laws would nullify the affirmative grant of trademark protection within Mexico by the Mexican government. However, in the case at bar no such conflict is present. First, although the Panamanian government has apparently not prohibited the sale of local spirits under the designation of “Scotch whisky,” it has taken no affirmative action to protect either the United States licensor or the Panamanian distributor in doing so. Moreover, the injunction is directed only against the United States licensor which acts only vicariously in Panama where Diers & Ullrich is not prohibited by the injunction from continuing to manufacture and market adulterated whisky.

Although there is no evidence that the adulterated Scotch whisky filtered into the United States, defendant concedes that sales of the product (though few) were made in the Canal Zone. Title 4, section 471 of the Canal Zone Code provides that the trademark laws of the United States have the same force and effect in the Canal Zone as in the continental United States.

We note that had the defendant made the same arrangements with an American licensee who packaged the mislabeled House of Stuart Scotch Whisky in the United States and shipped it to Panama, there would be no question but that the defendant caused the mislabeled goods to enter commerce. The purpose underlying the Lanham Act, to make actionable the deceptive use of false designations of origin, should not be evaded by the simple device of selecting a foreign licensee. Steele, p. 287, 73 S.Ct. 252.

Defendant argues that Vanity Fair Mills, Inc. v. T. Eaton, 234 F.2d 633 (2d Cir., 1956), cert. denied 352 U.S. 871, 77 S.Ct. 96, 1 L.Ed.2d 76 (1956), reh. denied 352 U.S. 913, 77 S.Ct. 144, 1 L.Ed. 2d 120 (1956), precludes extraterritorial application of the Lanham Act here. However, in Vanity Fair the defendant was a foreign national who acted in his home country under a presumably valid trademark registration in that country. Vanity Fair, supra, at p. 642. Defendant also cites George W. Luft Company v. Zande Cosmetic Company, 142 F.2d 536 (2d Cir., 1944), cert. denied 323 U.S. 756, 65 S.Ct. 90, 89 L.Ed. 606 (1944); however, in Luft, the defendants had obtained a registered and valid trademark from a foreign country and the decision in Luft preceded enactment of the Lanham Trademark Act as well as the interpretation of it in Steele.

We conclude that a cause of action was established under the Lanham Act and that the district court had jurisdiction. It is unnecessary to discuss plaintiffs’ reliance on the Convention of Paris for the Protection of Industrial Property and its implementation by 15 U.S.C. § 1126(b).

(2) Injunctive Relief.

Defendant concedes that it is generally within the sound discretion of a court of equity to grant or deny an injunction against conduct which has ceased before the trial has taken place. It contends, however, that there was an abuse of discretion here, where, after the commencement of this action, but two years before trial, it took steps to halt the practice complained of and eventually severed relations with Diers & Ullrich.

The amended agreement with Diers & Ullrich was dated April 21, 1965 and the action was brought April 8, 1969. Defendant had not exercised its rights to inspect and control the Diers & Ullrich product at least up to the time of an apparently ineffective request in the summer of 1968. In 1966 and later there were events which should reasonably have caused defendant to inquire about the practice. The district court found that defendant knew or should have known of the spurious product, and that the spurious product was produced as late as July, 1969.

We are unable to say that there was an abuse of discretion in granting an injunction.

(3) Attorneys’ fees.

The district court awarded reasonable attorneys’ fees to plaintiffs, to be assessed after any right of appeal has been exhausted or expired. The general rule in American courts is that attorneys’ fees are not ordinarily recoverable in the absence of a statute or enforceable contract providing therefor. Fleisehmann Corp. v. Maier Brewing, 386 U.S. 714, 717, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967). Limited exceptions are noted at p. 718-719, 87 S.Ct. 1404. See also Mills v. Electric Auto-Lite, 396 U.S. 375, 392, 90 S.Ct. 616, 24 L.Ed.2d 593. Exceptions were listed by this court in Walker v. Columbia Broadcasting System, Inc., 443 F.2d 33, 35-37.

The present case does not fall within any of the exceptions. We do not view it as presenting “overriding considerations of justice” (See Fleisehmann and Mills) nor an instance of a defense maintained in bad faith, vexatiously, wantonly, or for oppressive reasons (See Walker).

In so far as the judgment appealed from awarded attorneys’ fees, it is reversed, and in all other respects, affirmed. Costs on appeal awarded to plaintiffs-appellees.


author: COFFIN, Chief Judge.

text:
    John J. LEONARD et al., Plaintiffs-Appellees, v. UNITED STATES POSTAL SERVICE et al., Defendants-Appellees. Appeal of UNITED STATES of America et al.
    No. 73-1270.
    United States Court of Appeals, First Circuit.
    Heard Nov. 8, 1973.
    Decided Jan. 17, 1974.
    David M. Cohen, Atty., Dept, of Justice, with whom Irving Jaffee, Acting Asst. Atty. Gen., James N. Gabriel, U. S. Atty., and Leonard Schaitman, Atty., Dept, of Justice, was on brief, for appellants.
    Stephen E. Alpern, Atty., U. S. Postal Service, with whom Louis A. Cox, Gen. Counsel, and Harvey Letter, Asst. Gen. Counsel, Washington, D. C., were on brief, for U. S. Postal Service, and others, appellees.
    Jeffrey W. Kobrick, Boston, Mass., with whom Piroska Soos, Boston, Mass., was on brief, for John J. Leonard, appel-lee.
    Before COFFIN, Chief Judge, Mc-ENTEE and CAMPBELL, Circuit Judges.
   COFFIN, Chief Judge.

Plaintiff John Leonard applied to the Postal Service for a job as a mail handler and took a competitive examination. He passed the examination and was selected for a position. In the course of completing various forms plaintiff came across a question about “arrests”. In response to this question he answered that he had once been arrested for “being in the company of a person who was ... in possession of marijuana” and for “conspiring to violate [the Massachusetts drug laws]” but he also stated that the charges had been dismissed. This revelation caused the Postal authorities to withdraw the offer of employment. After a letter of protest to the Postmaster in Boston proved fruitless, plaintiff brought suit in the United States district court, alleging that the denial of employment by the Postal Service on the basis of his arrest record denied him due process of law and equal protection of the laws under the United States Constitution.

While this case was pending in the district court, the Postal Service entered into a Stipulation of Settlement with the plaintiff which provided that plaintiff would be offered employment and given a partial back pay award of $3,000; that henceforth the Postal Service would not inquire into or consider a job applicant’s record of arrests not leading to conviction unless the job applied for is designated as “sensitive” under Executive Order 10450, or unless the charges are currently pending; and that certain actions would be taken to implement the new policy. In its Order dated June 6, 1973, 360 F.Supp. 449, the district court granted permission to the Postal Service to enter into settlement of the case “upon the advice of its own counsel and against the advice of the United States Attorney via the United States Department of Justice”. The court found authority in 39 U.S.C. § 2008(c) for settlement of litigation and claims by the Postal Service without interference by the Department of Justice. After denial of its motion for reconsideration the Department of Justice appeals to this court.

After passage in 1970 of the Postal Reorganization Act, P.L. 91-375, 39 U. S.C. § 101 et seq., the Postal Service emerged as “an independent establishment of the executive branch of the Government”, 39 U.S.C. § 201. The Act exempts the Service from all federal laws dealing with “public or Federal contracts, property, works, officers, employees, budgets, or funds . . . ” with the exception of certain specific provisions, 39 U.S.C. § 410(a). The Act also specifically empowers the Postal Service to, inter alia, sue or be sued, to “determine the character of, and necessity for, its expenditures”, and to “settle and compromise claims by or against it”, 39 U.S.C. § 401. Under § 1001 of the Act the Service sets its own appointment and promotion policies and under § 2003 there is established in the Treasury a Postal Service Fund, available to the Service without fiscal-year limitation for the payment of all expenses incurred by the Postal Service under the Act. The profile that appears from this restructuring is that of a governmental agency vested with considerable autonomy to carry out its mission, but subject to certain statutes of general application by specific reference.

The provisions of the Act regarding control over and settlement of litigation reflect, in our view, a somewhat uneasy and unresolved tension between the dependent and independent aspects of the new Service. Nothing in the Act expressly makes applicable, or expressly creates an exemption to, the general rule, codified in 28 U.S.C. §§ 516, 519, that the conduct and supervision of litigation involving the United States or an agency thereof is reserved to the Attorney General, except where “otherwise authorized by law”. However, 39 U.S. C. § 409(d) provides that the Department of Justice “shall furnish” to the Postal Service “such legal representation as it may require”. This provision is made subject to the general section of the Act governing cooperation with other government agencies, which states that “[t]he furnishing of property and services under this section shall be under such terms and conditions . as the Postal Service and the head of the agency concerned shall deem appropriate.” 39 U.S.C. § 411.

There are also provisions which specifically provide that the Attorney General bring suit on behalf of the Postal Service in certain limited circumstances. Thus, under 39 U.S.C. § 2605 “[t]he Postal Service shall request the Attorney General to bring a suit” to recover monies paid out by the Service on account of mistake, fraud, collusion or misconduct. 39 U.S.C. § 3008 authorizes the Service to request the Attorney General to seek a district court order directing compliance with a Postal Service order prohibiting mailing of offensive matter to particular addressees, and 39 U.S.C. § 3011 provides that the Service “may request” the Attorney General to commence a civil action against anyone using the mails to transport sexually oriented advertising in violation of § 3010. The present case does not fall into any of these special categories.

In the matter of settlement of litigation 39 U.S.C. § 401(8) empowers the Service to “settle and compromise claims by or against it” and 39 U.S.C. § 2008(c) states that the Service “is authorized to make such expenditures and to enter into such contracts, agreements, and arrangements, upon such terms and conditions and in such manner as it deems necessary, including the final settlement of all claims and litigation by or against the Postal Service.” [Emphasis added.] The Reorganization Act also contains certain provisions concerning settlement of litigation concerning tort claims.

The question presented in this case is a rather narrow one. We must decide whether the Postal Service has the power to settle litigation, despite objection by the Department of Justice, where the subject matter of the litigation is not encompassed within the terms of 39 U.S.C. §§ 2605, 3008, and 3011; is not a tort claim; and involves substantive questions within the scope of the Service’s independent authority.

While we need not determine all of the contours of the authority given to the Service in 39 U.S.C. § 2008(c), we reject the theory put forward by the Justice Department that this section is no more than a device to avoid problems during audits by the Comptroller General and does not give any independent power to settle litigation. The language of § 2008(c) is not so limited in terms, and the legislative history pointed out to us does not indicate that the section was meant to have a reading not in accord with its literal language. Nor do we accept the view that 39 U.S. C. § 409(d) gives the Justice Department authority in all instances to control the conduct of litigation, including complete power over settlement terms. The “shall furnish” language and the fact that this section is subject to the provisions of § 411, which speaks of “cooperation”, indicates to us that, at least under the circumstances presented here, § 409(d) does not give the Attorney General veto power over a settlement approved by the Service.

Having said this, we need not go farther and attempt a definitive interpretation of the allocation of powers between the Postal Service and the Department of Justice under 28 U.S.C. §§ 516 and 519 and under 39 U.S.C. §§ 409 and 411, for all purposes. Nor need we try to delineate the outer limits of the power of the Postal Service to settle claims in litigation against it. The terms of the Vsettlement reached here between the Service and the plaintiff concerned matters of only parochial interest, matters which, but for the fact that a suit had been brought, would clearly have been policy decisions within the sole prerogative of the Postal Service. The funds for payment of the back pay award are to come from the special Postal Service Fund and the hiring policies to be implemented affect only those aspects of personnel management committed to independent Postal Service control.

Under these circumstances we think that we should be guided by language from the opinion of the Supreme Court in S & E Contractors, Inc. v. United States, 406 U.S. 1, 13, 92 S.Ct. 1411, 1418, 31 L.Ed.2d 658 (1972) wherein it was said that, “[njormally, where the responsibility for rendering a decision is vested in a coordinate branch of Government, the duty of the Department of Justice is to implement that decision and not to repudiate it.” It was the intent of the Congress to create an independent Postal Service. It would be anomalous to hold that decisions normally committed wholly to the independent discretion of the Service are made subject to Department of Justice veto power when incident to litigation. Whatever the general power of the Attorney General to supervise ’itigation, including settlement thereof, we think that here, in light of the provisions and purposes of the Postal Reorganization Act, sections 409, 411 and 2008(c) of that Act mean that an exception to this general rule is “authorized by law”.

Affirmed.

      . See, e. g., The Gray Jacket, 5 Wall. (72 U.S.) 342, 18 L.Ed. 646 (1866); FTC v. Guignon, 390 F.2d 323 (8th Cir. 1968); Sutherland v. International Ins. Co. of New York, 43 F.2d 969 (2d Cir.), cert. denied, 282 U.S. 890, 51 S.Ct. 103, 75 L.Ed. 785 (1930).

      . A related provision, 39 U.S.C. § 2601(a), provides that tire Postal Service may collect debts; collect and remit fines, penalties and forfeitures; adjust accounts, and prescribe penalties for failure to render accounts; and may refer to the General Accounting Office uncollectible debts for collection. But the section goes on to say that “This subsection does not affect the authority of the Attorney General in cases in which judicial proceedings are instituted.”

      . Under the provisions of 39 U.S.C. § 409(c) the Tort Claims Act is made applicable to all tort claims arising out of activities of the Postal Service. Under the Tort Claims Act the Attorney General has considerable authority over settlement of claims, 28 U.S.C. §§ 2672, 2677. However, 39 U.S.C. § 2603 provides that the Postal Service has the authority to settle a claim “for damage to persons or property resulting from the operation of the Postal Service [found] to be a proper charge against the United States, and . not cognizable under section 2672 of title 28 . . . . ”

      . Although we allowed the Postal Service to speak through its own attorneys at oral argument of this case, we did this only because of the peculiar circumstances presented. See The Gray Jacket, 5 Wall. (72 U.S.) 370, 18 L.Ed. 646 (1866). But we did not intend this in any way to indicate our judgment on the general question of whether the Service may represent itself in court without the approval of the Attorney General. Indeed, the question of representation in court, as distinct from the question of power to settle litigation, is not presented in this case and we intimate no view upon it.

      . The Justice Department argues that the explicit powers given to the Attorney General under 39 U.S.C. §§ 2605, 3008 and 3011, and under the Tort Claims Act (made applicable to the Postal Service by 39 U.S.C. § 409(c)), make untenable the position of the Postal Service that it has general power to settle litigation in which it is involved. We think that the provisions listed above go no further than perhaps to create certain specific exceptions to any authority which the Service may have over settlement of litigation. Consistent with this view, 39 U.S.C. § 2603 (giving the Postal Service authority to settle certain tort claims) may be seen as creating an exception to an exception.

      . A broad reading of § 2008(c) is also consistent with the terms of 39 U.S.C. § 401(8).

      . See New York v. New Jersey, 256 U.S. 296, 308, 41 S.Ct. 492, 65 L.Ed. 937 (1921), The Confiscation Cases, 7 Wall. (74 U.S.) 454, 457-458, 19 L.Ed. 196 (1868), Castell v. United States, 98 E.2d 88, 91 (2d Cir. 1938); Halbach v. Markham, 106 F.Supp. 475, 480 (D.N.J.1952); cf. FTC v. Claire Furnace Co., 274 U.S. 160, 174, 47 S.Ct. 553, 71 L.Ed. 978 (1927); FTC v. Guignon, 390 F.2d 323, 330 (8th Cir. 1968). These cases may establish the proposition that where the Attorney General has supervision and control over a particular litigation he is empowered to settle that litigation. But we have had no case pointed out to us, nor have we been able to discover any, where it has been held that the Attorney General can block a settlement agreed to by a government agency involved in that litigation. Such an action on the part of the Attorney General would not further the policy interest in giving him power to screen out cases which should not burden the federal courts. See FTC v. Claire Furnace Co., supra. And, at least in some circumstances, it would violate the spirit of S & E Contractors, Inc. v. United States, 406 U.S. 1, 13, 92 S.Ct. 1411, 31 L.Ed.2d 658 (1972).

      . FTC v. Guignon, 390 F.2d 323 (8th Cir. 1968), because it did not deal with the power of the Justice Department to block settlement of litigation by the agency involved, and because it was concerned with a statutory scheme under the Federal Trade Commission Act quite distinct from that we deal with today, is readily distinguishable.

      . While the general authority of the Postal Service to independently set its own employment policies is subject to a number of exceptions, notably as regards veteran preference, 39 U.S.C. § 1005(a)(2), and adverse terminations and suspensions, 39 U.S.C. § 1005(a)(1), none of these exceptions encompass the present case either directly or by necessary implication.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Steven Harry EASTWOOD, Defendant-Appellant.
    No. 73-2417
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Dec. 27, 1973.
    Rehearing Denied Jan. 25, 1974.

      Joseph Neves Marcal, III, New Orleans, La., for defendant-appellant.
    Gerald J. Gallinghouse, U. S. Atty., Mary Williams Cazalas, Asst. U. S. Atty., New Orleans, La., for plaintiff-ap-pellee.
    Before BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

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

   PER CURIAM:

Appellant and co-defendant Bruno were convicted under 21 U.S.C.A. § 841(a) (1) for unlawful possession with intent to distribute a controlled substance — approximately 100,000 tablets of d-methamphetamine hydrochloride. Appellant seeks to have his conviction reversed challenging the District Court’s exercise of its discretion in (1) refusing to ask the prospective jurors a question requested by appellant’s counsel on voire dire, (2) declining to declare a mistrial after government witnesses violated the Court’s sequestration order, and (3) denying appellant’s motion for severance after counsel for co-defendant raised the issue of entrapment. We affirm.

Voire Dire

In selecting the jury, the District Court requested that any juror who did not think that he or she could decide the case without bias or prejudice should so inform the Court. One of the prospective jurors then stated that

“I am a counselor at Walker School and I am running two therapy groups this year. Our school is very heavy on the problem of dope and I don’t think that I could render a proper decision. This is what I work with day in and day out, addicts, kids and we try to watch pushers and this kind of stuff.”

The Court immediately excused this juror.

Following this incident, counsel for co-defendant requested the Court to ask the prospective jurors

“Have you or anyone in your immediate family, to your knowledge, ever taken an amphetamine tablet, nodose pill or any other type of diet pill or stay-awake tablet?”

The Court denied the request after the Assistant United States Attorney objected.

The scope of the examination of prospective jurors on voire dire is committed to the sound discretion of the District Court. But, of course, a refusal to inquire into a particular subject which affects the basic fairness of the trial is not accepted. Ham v. South Carolina, 1973, 409 U.S. 524, 93 S.Ct. 848, 35 L.Ed.2d 46; United States v. Gassaway, 5 Cir., 1972, 456 F.2d 624. See also F.R.Crim.P. 24(a).

Since we do not believe that the refusal to propound the requested inquiry could affect the basic fairness of appellant’s trial where the District ' Court posed careful though general questions pertaining to the possibility of bias to the prospective jurors, we conclude that the District Court did not abuse its wide discretion in conducting the voir dire. Ham, siopra.

Sequestration

At the beginning of the trial, the District Court declared that “all witnesses in this case will stay out in the hall until called. Do not discuss this case with anyone except the lawyers. Particularly, do not discuss it among yourselves, between one another.”

Later the same morning, a member of the jury was seen talking in the hall with a federal narcotics agent, who was to be a government witness in the case. The juror told the Court that he had worked with the agent four years earlier and did not know that he was now a narcotics agent. The juror was dismissed and replaced by one of the alternates.

Appellant’s counsel instructed one of his own witnesses to sit in the hall and observe whether any of the government’s witnesses conversed. The witness reported back that there had been some conversation and appellant’s counsel relayed this information to the Court.

After placing the parties involved under oath, the Court inquired into the incidents. The incidents involved Danny Valliere and Bill Burandt, government witnesses who had pleaded guilty after originally having been indicted along with appellant. -

An employee of the Clerk’s office who was an acquaintance of Valliere’s saw Valliere in the hall and asked him why he wasn’t in the courtroom. Valliere said he was not allowed in the courtroom while other witnesses were testifying. As this clerk’s employee entered the courtroom, Valliere admits having said “you can let me know what’s going on.” He insisted that this was simply a figure of speech. There was no testimony that Valliere ever talked to this employee after he entered the courtroom.

Valliere’s wife had been observed in the courtroom over a two day period. When asked whether she had discussed the proceedings with her husband she replied

“not in detail. I told him, like I told him who was there . . . and I told him that they were picking the jury .... I didn’t tell him what was being said in the courtroom.”

Valliere testified that he did not discuss the courtroom proceedings with his wife.

When Burandt finished testifying and left the courtroom, he encountered Val-liere in the hall and apparently said “I can’t talk here.” The two proceeded down the hall where they encountered the Assistant United States Attorney who was trying the case. The three then ate lunch together. The Assistant United States Attorney testified that he discussed Valliere’s future testimony with him but Burandt’s previous testimony was not mentioned.

Valliere admitted that he was aware of the sequestration rule before any of these incidents occurred. After the Court heard testimony on these incidents, appellant moved for a mistrial. The Court denied the motion- noting

“Well I don’t like any of it. These witnesses are critical witnesses, and they must be separated, and that means separate in every sense of the word, and they have not been kept separated. The wife has been coming in here and sitting and listening to evidence and this, I think, should have been avoided and must be avoided from now on.
However, I don’t think that there is enough to grant a mistrial. I don’t think any harm has been done, because I don’t think there was enough talk.”

At the outset, the determination of whether to sequester witnesses at all is a matter for the District Court’s discretion. See United States v. Ruacho-Acuna, 5 Cir., 1971, 440 F.2d 1199. The appropriate remedy for breach of a sequestration order is also committed to the sound discretion of the trial court. Holder v. United States, 1893, 150 U.S. 91, 14 S.Ct. 10, 37 L.Ed. 1010.

Whether to declare a mistrial is also a matter within the District Court’s discretion. United States v. Pritchard, 5 Cir., 1969, 417 F.2d 327. We think that the District Court in the sound exercise of its discretion could fairly conclude that none of these incidents considered individually or in their totality provided sufficient opportunity for prejudice to warrant a mistrial.

Severance

At the commencement of the trial, appellant’s counsel informed the Court that he might make a motion for severance at a latter date if it appeared that code-fendant’s strategy of defense might prejudice appellant. Appellant did not intend to raise a defense of entrapment but rather intended to maintain, and did so maintain, that he had never intended to engage in an actual sale of narcotics but was instead under the impression that he was a party to a mere bogus sale —“a rip-off.”

In his opening argument, counsel for co-defendant implied that appellant and co-defendant may have been “induced” to come to New Orleans by the prospect of the illegal narcotics transaction proposed by a government agent. Appellant made and the Court denied a motion for severance at this time.

Shortly thereafter counsel for co-defendant suggested that the Government had “entrapped” co-defendant into participating in the transaction. Appellant alleges that counsel for co-defendant further emphasized the possibility of entrapment in his cross-examination of Burandt by focusing on the number of times that a Government agent had approached the witness concerning the possibility of a narcotics sale as well as the continual escalation of the number of pills that the agent desired to obtain.

Appellant also points out that the prosecutor referred to the statement concerning “inducement” in counsel for co-defendant’s opening argument in the process of cross-examining co-defendant.

When co-defendant finally took the stand, his testimony did not support a defense of entrapment. While counsel for co-defendant mentioned entrapment, the record suggests that he did not really pursue it as a line of defense. An entrapment instruction was not given.

The disposition of an F.R. Crim.P.Rule 14 motion for severance rests with the sound discretion of the District Court. See United States v. Perez, 5 Cir., 1973, 489 F.2d 51. This ordinarily requires a clear showing of “the most compelling prejudice against which the trial court cannot protect.” Perez, supra. See United States v. Martinez, 5 Cir., 1972, 466 F.2d 679; United States v. Levrie, 5 Cir., 1971, 445 F.2d 429. The failure to grant a severance merely because one co-defendant is relying on a defense of entrapment while another is not does not of itself constitute an abuse of discretion. United States v. Russo, 5 Cir., 1972, 455 F.2d 1225. Appellant has not approached the clear showing of prejudice that is required to establish that the District Court abused its discretion in denying the motion for severance.

We find no merit in the contention that appellant’s conviction was not supported by the evidence.

This case well illustrates the broad discretion necessarily vested in the District Court concerning so many important determinations in the course of a trial. We find no abuse of that discretion.

Affirmed.

      . In Hamm, the Supreme Court held that a state trial Judge did not violate the defendant’s constitutional rights by refusing to ask the jury whether they might be prejudiced against people with beards.

      . The sequestration instruction had been requested both by government and defense counsel,

      . It has frequently been held that a decision not to disqualify a witness from testifying because he breached a sequestration order was not an abuse of discretion. Holder, supra; Easley v. United States, 5 Cir., 1958, 261 F.2d 276; United States v. Suarez, 5 Cir., 1973, 487 F.2d 236 (1973).
      Breach of a sequestration order may be remedied by the contempt power or by comment by the Court to the jury. Holder, supra; Brasswell v. Wainwright, 5 Cir., 1972, 463 F 2d 1148.

      . See also United States v. Robinson, 1970, 139 U.S.App.D.C. 286, 432 F.2d 1348, 1351. “At the very least, it must be demonstrated that a conflict is so prejudicial that the differences are irreconcilable, and ‘that the jury will unjustifiably infer that this conflict alone demonstrates that both are guilty’.”
      See also Baker v. United States, 10 Cir., 1964, 329 F.2d 786, cert. denied, 379 U.S. 853, 85 S.Ct. 101, 13 L.Ed.2d 56.

      . Appellant requested no curative instructions “in the hope the jury would overlook this.” Appellant’s brief at 30.


author: KILEY, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Miklos POLESTI, Defendant-Appellant.
    No. 73-1294.
    United States Court of Appeals, Seventh Circuit.
    Argued June 11, 1973.
    Decided Aug. 21, 1973.

      Ronald P. Alwin, Chicago, 111., for defendant-appellant.
    James R. Thompson, U. S. Atty., William T. Huyck and Terry M. Gordon, Asst. U. S. Attys., Chicago, 111., for plaintiff-appellee.
    Before KILEY and SPRECHER, Circuit Judges, and ESCHBACH, District Judge.

       Honorable Jesse E. Esehbach of the United States District Court for the Northern District of Indiana, sitting by designation.

   KILEY, Circuit Judge.

Appellant, Miklos Polesti, was convicted by a jury of conspiracy to possess, and possession of, a large number of cartons of Scotch whiskey stolen from interstate commerce in violation of 18 U.S.C. § 659. We affirm.

The first contention made by Polesti is that there was no probable cause basis for his warrantless arrest. We see no merit in the contention.

Sergeant Curin of the Chicago Police Department was notified by the B&O Railroad that a “load of scotch” had disappeared from their yards over the weekend. Five minutes later, Sergeant Curin was given the same information by an FBI agent, and he relayed it to Chicago Police Sergeant Welch. An unidentified informant then called Welch to advise that Glenn Hickman was in possession of a stolen load of scotch and would be transporting it by tractor-trailer to the area of 2100 North Ash-land Avenue in Chicago. Welch informed Curin of this call and subsequently surveillance was established of 2100 North Ashland Avenue. The police observed, in the surveillance, a tractor-trailer, followed by an automobile, pull into the premises at 2100 North Ash-land. The trailer was detached on the premises, and the tractor, accompanied by the automobile, departed and proceeded to a place where trucks were rented.

Later that same day Sergeant Welch entered the Ashland Avenue premises, noticed a gap in the back doors of the parked trailer, peeked in and saw a yellow carton with letters “J&B” on it. When Sergeant Curin came to relieve him, Welch advised him of what he had seen inside the trailer. As the surveillance continued that day, Curin saw a small panel truck pull into the premises, and two men emerge and unload some debris. A small boy who accompanied them crawled under the trailer, and Cur-in heard the boy shout that there was a “bunch of yellow cartons” in the trailer.

Two days later officers on surveillance saw the driver of the tractor-trailer — on the day the trailer was left at the premises — drive an automobile onto the premises and after a brief stay drive out again. Several minutes later they saw another automobile pull onto the premises with three occupants including Polesti. These three conversed with the driver of the other automobile and then left. Subsequently two rented trucks pulled into the premises and the three men commenced to load cartons from the trailer onto the rented trucks. Polesti was stacking the cases of scotch on the rented truck.

At this point the police arrested the men. We hold that there was ample knowledge on the part of the police for a probable cause arrest and that the danger of loss of the evidence justified the warrantless arrest.

Polesti next contends that he was denied his right to compulsory process of witnesses when the district court denied his motion, at the suppression hearing, which sought to enforce a subpoena duces tecum directed at the investigative report of Chicago Police Sergeant Welch. We hold that the ruling was not erroneous. The report was in possession of the government, and Sergeant Welch was a prospective government witness. The subpoena was expressly excluded under 18 U.S.C. § 3500.

We also find no merit in Poles-ti’s contention that his in-custody statement violated his privilege against self-incrimination and deprived him of a fair trial. After his arrest, and en route to the police lockup, Polesti, in a conversation with an FBI agent, remarked that “his prior conviction was on appeal and he felt that he was dead on this one.” The court over objection permitted the FBI agent to testify that Polesti said, “Pm dead on this one.” Polesti had been given a Miranda warning when arrested and nevertheless volunteered the unsolicited statement. There was no error in admitting the statement in evidence.

Polesti next contends that the court committed reversible error in charging the jury that it was not necessary to prove that defendants knew that the property was stolen from interstate shipment and that it was sufficient if defendants knew that the property was stolen. In support of his contention Polesti relies upon the Second Circuit decision in United States v. Vilhotti, 452 F.2d 1186 (2nd Cir. 1971), cert. denied, 406 U.S. 947, 92 S.Ct. 2051, 32 L.Ed.2d 335 (1972). There the court held that it was essential that proof of knowledge of theft from interstate commerce be proven by the government. That holding, however, is opposed to the holding of the Ninth Circuit in United States v. Roselli, 432 F.2d 879 (9th Cir. 1970), cert. denied, 401 U.S. 924, 91 S.Ct. 883. 27 L.Ed.2d 828 (1971).

This court has consistently affirmed conspiracy convictions where knowledge of the interstate element was not part of the trial court’s conspiracy instructions. United States v. Battaglia, 394 F.2d 304 (7th Cir. 1968); United States v. Cerone, 452 F.2d 274 (7th Cir. 1971), cert. denied, 405 U.S. 964, 92 S.Ct. 1168, 31 L.Ed.2d 240 (1972); United States v. Waverley Thompson, 476 F.2d 1196 (7th Cir.) (Slip Op. No. 72-1138, March 8, 1973). In Thompson this court found “extremely persuasive” the reasoning of the Ninth Circuit in Roselli. We rely upon the consistent decisions of this court in agreement with the Roselli rule in holding that the giving of the instruction was not reversible error.

Finally we see no merit in Poles-ti’s claim that the district court committed reversible error in giving an instruction to the effect that “ [possession of property recently stolen, if not satisfactorily explained” ordinarily justifies a reasonable inference, “in light of surrounding circumstances,” in evidence that the possessor knew the property was stolen. United States v. Dilella, 354 F.2d 584 (7th Cir. 1965). Furthermore, Polesti’s right against self-inerimination was not violated by the instruction since the court’s instruction told the jury that the defendant never has the burden of calling witnesses or producing evidence, and that it was the jury’s “exclusive province” to determine whether the evidence warranted the inference from the possession. United States v. Zemke, 457 F.2d 110, 114 (7th Cir. 1972).

For the foregoing reasons the judgment of the district court is affirmed.