author: MATTHEWS, Senior District Judge. ROBB, Circuit Judge

text:
    Lorraine EVANS, Appellant, v. SHERATON PARK HOTEL et al. Lorraine EVANS v. SHERATON PARK HOTEL et al., Hotel & Restaurant Employees and Bartenders International Union, Appellant.
    Nos. 73-1342, 73-1442.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 17, 1974.
    Decided Sept. 12, 1974.

      Robb, Circuit Judge, concurred in part and dissented in part and filed opinion.

      Whitworth Stokes, Washington, D. C., for appellant in No. 73-1342 and appel-lee in No. 73-1442.
    Jonas Ben Katz, Cincinnati, Ohio, with whom Benjamin Gettler, Cincinnati, Ohio, and Samuel Levine were on the brief for appellant in No. 73-1442 and appellee, Hotel & Restaurant Employees and Bartenders International Union in No. 73-1342. Louis Ginberg, Mark H. Grünewald and Ronald I. Tish, Washington, D. C., entered appearances for appellant in No. 73-1442. Ronald I. Tish, Washington, D. C., also entered an appearance for appellee Sheraton Park Hotel.
    Before McGOWAN and ROBB, Circuit Judges, and MATTHEWS, Senior District Judge for the United States District Court for the District of Columbia.

       Sitting by designation pursuant to 28 U.S.C. § 294(d).

   MATTHEWS, Senior District Judge.

Appellant Lorraine Evans, a regular banquet waitress employed at the Sheraton Park Hotel (Hotel) and a member of Local 507, Hotel and Restaurant Employees and Bartenders international Union (Waitresses Local 507), brought this action under the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., against the Hotel, Waitresses Local 507, the Joint Executive Board, Hotel and Restaurant Employees and Bartenders International Union (Joint Board), the Hotel and Restaurant Employees and Bartenders International Union (International), and Local 781 Hotel and Restaurant Employees and Bartenders International Union (Waiters Local 781) seeking injunctive relief, back pay and damages.

After extensive pretrial proceedings, the District Court held that maintenance of the two sex-segregated Locals constituted a per se violation of the Civil Rights Act, 42 U.S.C. § 2000e-2(c), and, no bona fide occupational qualifications having been shown by defendants, 42 U.S.C. § 2000e-2(a) and (c) had been violated. The District Court awarded Mrs. Evans (1) $1,100 as a result of the discrimination in assignments to receptions (all defendants being jointly and severally liable) ; (2) $500 for harassment (against the hotel only); and (3) her costs and nominal attorney’s fee of $1,000.

In No. 73-1342, Mrs. Evans has appealed the amounts awarded as not being adequate or proper.

International, appellant in No. 73-1442, raises three issues: (1) whether the International may be joined in a civil action brought by an aggrieved party under 42 U.S.C. § 2000e-5(e) where the International was not named as a respondent in the charge filed by the aggrieved party with the Equal Opportunity Employment Commission (EEOC); (2) whether the mere existence of Waiters Local 781 and Waitresses Local 507 within the International Union constituted a per se violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq.; and (3) whether the awards of $1,100 damages and $1,000 attorney’s fee for which all defendants are jointly and severally liable were clearly inadequate and an abuse of discretion by the District Court.

I

JOINDER OF INTERNATIONAL

After the original complaint was filed in District Court against the Hotel, Joint Board, and Waitresses Local 507, the Hotel filed a motion to dismiss for failure to join indispensable parties, namely, the International and Waiters Local 781. The District Court granted the motion, without prejudice, but thereafter vacated its order and allowed appellant Evans to file an amended complaint naming the two unions as parties defendant. International then proceeded with a motion for summary judgment (as to it), asserting the lack of a jurisdictional prerequisite to bringing a civil action against International in that International was not a party named or charged in the complaint filed with the EEOC. The EEOC, having been permitted earlier to participate as Amicus Curiae in this case, filed a brief opposing International’s motion.

In a Memorandum and Order dated March 22, 1972, the District Court denied the motion. Having already held the International to be an indispensable party, the Court believed summary judgment to International would mean that the entire ease would be stopped in its tracks. Noting that several courts had allowed additional defendants to be brought into a case despite the fact that the defendant was not named as a respondent in the administrative proceeding before the EEOC, the District Court reasoned:

“Charges of discrimination filed with the EEOC are frequently initiated by complainants, without aid of counsel, who have no way of ascertaining the identities of all the parties who may become parties to the subsequent litigation. Even if the complainant were represented by counsel, it is unrealistic to expect that the complainant could accurately anticipate all potential parties to the subsequent litigation arising out of the claim. This is particularly true where, as in the instant case, one of the parties, the chartering International, is not highly visible, and it required court action to determine whether or not the International was an indispensable party. Title VII is a broad and humanitarian Act which seeks to encourage parties to attempt conciliation before they resort to court action but it does not seek to foreclose claimants from their legal remedies because of technical pleading requirements at the administrative stage.”

Appendix, p. 14, 4 EPD PP 7727.

We think International, in the present case, meets the conditions of Rule 19(a), Federal Rules of Civil Procedure, which provides:

“A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties * * *

In accordance with its constitution, International had chartered Waiters Local 781 and Waitresses Local 507, and by its constitution, only International had the power to alter, suspend or terminate operation of these locals. Although neither the by-laws of Waiters Local 781 nor Waitresses Local 507 specifically prohibited membership to persons of the opposite sex, as a matter of practice and as their respective names imply, only men were admitted to Waiters Local 781 and only women were admitted to Waitresses Local 507.

Plaintiff’s complaint sought general injunctive relief against sex discrimination in her employment opportunities and specific relief against maintenance of sexually segregated locals. It becomes readily apparent that specific in-junctive relief against maintenance of sexually segregated locals necessitated International’s presence. Further, any general injunctive relief granted to plaintiff against the Sheraton Hotel and Waitresses Local 507 only for the purpose of eliminating sex discrimination in her employment opportunities would be akin to rather ineffective symptomatic relief, leaving the root (sexually segregated locals) to continue. While money damages was an available remedy to compensate for any past illegal discrimination, we conclude that without International complete relief could not be accorded appellant Evans by way of injunctive relief necessary to prevent future discrimination.

The United States Court of Appeals for the Fifth Circuit, speaking through Judge Carswell, said in Schutten v. Shell Oil Company, 421 F.2d 869, 873 (1970):

“Subdivision (a) of Rule 19 categorizes those persons whose joinder is desirable from the standpoint of complete adjudication and elimination of relitigation. If there are no procedural or jurisdictional bars to joining such a party, Rule 19 requires that he be joined.”

We turn then to the question of whether failure to charge International before the EEOC is a jurisdictional bar to its joinder.

Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(e) (1970) provides that if after a charge of discrimination is filed, the EEOC is unable to achieve compliance with the Act, within a specified time “a civil action may * * * be brought against the respondent in the charge.” Courts have generally interpreted this provision to mean that a charge must be filed against a party with the EEOC before court action can b.e commenced against the party. Mickel v. South Carolina State Employment Service, 377 F.2d 239 (4th Cir. 1967); Miller v. International Paper Co., 408 F.2d 283 (5th Cir. 1969); Bowe v. Colgate-Palmolive Company, 416 F.2d 711 (7th Cir. 1969); Cox v. United States Gypsum Company, 409 F.2d 289 (7th Cir. 1969); Marlowe v. Gen. Motors Corp., 6 FEP Cases 1083 (6th Cir. 1973); Norman v. Missouri Pacific Railroad, 414 F.2d 73 (8th Cir. 1969).

The rule was circumvented in Waters v. Wisconsin Steel Wks. of Internat’l Harvester Co., 427 F.2d 476 (7th Cir. 1970), cert. denied sub nom. United Order American Bricklayers v. Waters, 400 U.S. 911, where in a civil action alleging racial discrimination based for jurisdictional purposes on the Civil Rights Act of 1866, 42 U.S.C. § 1981 as well as Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-15, plaintiffs’ complaint included a local union as party defendant which had not been a party charged before the EEOC. Plaintiffs were allowed to sue the local union directly under § 1981, having shown a reasonable excuse for failure to exhaust EEOC remedies, and the Seventh Circuit did not consider the district court’s ruling concerning the applicability of Rule 19, Fed.R.Civ.P. However, recently in LeBeau v. Libby-Owens-Ford Company, 484 F.2d 798 (7th Cir. 1973), where a Title VII action had been dismissed on the ground that the International union was a Rule 19 indispensable party, which could not be joined because it was not a party charged before the EEOC, the Seventh Circuit held that the International, in the circumstances there presented, was not an indispensable party. Consequently, it affirmed the dismissal of the action as to International on the ground that International was not named as a respondent before the EEOC, and it reversed the judgment dismissing the suit against LOF and Local 19, finding a misapplication of Rule 19.

While there appears to be no Circuit opinion directly in point, several district courts have permitted joinder of parties, who had not been previously charged before the EEOC. Bremer v. St. Louis Southwestern Railroad Company, 310 F.Supp. 1333 (E.D.Mo.1969); Torockio v. Chamberlain Mfg. Co., 51 F.R.D. 517 (W.D.Pa.1970); Reyes v. Missouri-Kansas-Texas Railroad Company, 53 F.R.D. 293 (D.Kan.1971); Pegues v. State Employment Service, 57 F.R.D. 102, 5 FEP Cases 289 (N.D.Miss.1972). The rationale of these decisions is persuasive.

In Bremer, it was the court, sua sponte, who noted the absence of certain parties, and although neither had been charged before the EEOC, the court ordered them joined as necessary parties under Rule 19. In. the interest of uniformity, consideration of time, effort and expense involved in duplication, and with the possibility of inconsistent results, the court thought the entire matter should be disposed of in one proceeding.

The defendant sought joinder of the international union in Torockio and the court ordered it joined (under Rule 21) although the international had not been charged before the EEOC, reasoning that the Civil Rights Act of 1964 should not deprive defendants of their very valuable rights under the Federal Rules of Civil Procedure to have a resolution of all facts of the dispute in one proceeding.

The procedure in Reyes was quite similar to the case herein. There the defendant had moved to dismiss the action for failure to join a local union (a party not charged before the EEOC) as a necessary party under Rule 19. The court denied defendant’s motion and allowed plaintiff to file an amended complaint naming the local union — relying exclusively on Bremer.

In Pegues, the district judge ordered that the Secretary of Labor be made a party defendant in the Title VII action under Rule 19. The ruling was pursuant to the defendant’s motion to dismiss for failure to name the Secretary as an indispensable party. Inasmuch as the relief sought allegedly would violate regulations promulgated by the Secretary prescribing policies and procedures with which all state employment agencies must comply in order to receive federal funds, the court found that, in the absence of the Secretary, complete relief could not be accorded those already parties in the action, and his absence would leave the employment service subject to substantial risk in incurring multiple or otherwise inconsistent obligations by reason of the interest that the Secretary had in that litigation. The court stated simply that the Secretary was subject to the process of the court and could be made a party without depriving the court of jurisdiction over the subject matter.

The stormy legislative history of Title VII renders the intent of Congress in its administration far from clear. The two-fold purpose of bringing a charge before the EEOC is to give notice to the charged party and to provide a means for voluntary compliance and conciliation, expeditiously and inexpensively. Bowe v. Colgate-Palmolive Company, 416 F.2d 711, 719 (7th Cir. 1969). A complaint under Title VII cannot bypass the EEOC. The effect of a contrary holding would be virtually to elminate the Commission established by Congress to encourage fair employment practices. “Of course, the legislative compromise changed the concept from an enforcing-adjudicatory administrative agency to one in which the agency would conciliate, leaving the ultimate, final sanction to be judicial enforcement. As a part of the scheme such judicial enforcement was to be initiated by and at the hands of individual working grievants.” Jenkins v. United Gas Corporation, 400 F.2d 28, 31-32 (5th Cir. 1968). And, there are restrictions both in time and pre-conditions for court action.

However, we are not convinced that the value of conciliation supersedes the value of enforcement, to the end that after a charge has been processed before the EEOC and court action commenced, the district court is powerless to order joinder under Rule 19(a) and is further required to dismiss the action under the indispensable party provisions of Rule 19(b). Where, as here, the chartering International was an obscure party, requiring court action to determine whether or not its presence in the action was necessary for complete relief among those already parties, to deny joinder under 19 (a) would cripple the rights of the charging party as well as those of the party charged. Further, dismissal of the action under 19(b) would frustrate the intent of Congress in this type of case. Surely the means devised cannot be more important than the end envisioned.

We do not believe that the procedures of Title VII were intended to serve as a stumbling block to the accomplishment of the statutory objective. To expect a complainant at the administrative stage, usually without aid of counsel, to foresee and handle intricate procedural problems which could arise in subsequent litigation, all at the risk of being cast out of court for procedural error, would place a burden on the complainant which Congress neither anticipated nor. intended.

Appellant Evans filed a Charge of Discrimination with the EEOC against the Hotel which was her employer, Waitresses Local 507, and the Joint Board alleging violations of the Civil Rights Act of 1964. She was timely advised by the Commission of its failure to obtain voluntary compliance and of her right to file suit. She then brought this action, naming the same parties as those charged before the EEOC in her complaint. It is our conclusion that appellant Evans exhausted her administrative remedies as anticipated by Congress.

It was through the motion of defendant Hotel that the absence of International was brought to the attention of the District Court, and joined thereafter pursuant to Rule 19. We hold this action by the District Court within its jurisdiction and proper under the circumstances presented.

II

UNIONS SEGREGATED ON THE BASIS OF SEX

At all times pertinent to this litigation, appellant International maintained in the District of Columbia Waiters Local 781 and Waitresses Local 507. These locals supplied banquet waiters and waitresses to a number of establishments in the city, including 20 to 25 employed at the Sheraton Park Hotel, although the Hotel employed about twice as many regular banquet waiters as waitresses. Each local was represented at the Hotel separately by a different shop delegate who dealt with and presented grievances in the first instance to the banquet captain, who represented the Hotel.

While waiters and waitresses were all paid the same hourly rates for participation in varying types of duties, these rates varied according to the nature of the work. Alternating shifts, each composed of males and females, worked either breakfasts and lunches, or dinners, receptions and dances. Miscellaneous duties such as coffee breaks, setups and cleanups and the side jobs of filling salt and pepper shakers were performed at lower or even non-paying hourly rates.

A significant and substantial portion of total compensation came from dividing an obligatory 16 percent gratuity among the waiters and waitresses participating in a particular function. The most lucrative work involved serving bar and food receptions because the number of waiters and waitresses required for these functions was relatively small, while the bill and resulting gratuity received were relatively high.

The Hotel records disclosed that waiters as a group worked more hours than waitresses and received larger total hourly compensation and larger gratuities. The District Court found that this difference reflected decisions by the Hotel banquet captain, himself a member of Waiters Local 781, to assign waiters rather than waitresses to lucrative receptions, as well as other discrimination against waitresses, and that the favoritism shown regular banquet waiters over regular banquet waitresses was made possible because the locals segregated by sex were maintained and recognized. The District Judge stated:

“The discrimination in reception assignments is a classic example of the abuse inherent in maintaining and recognizing separate female and male locals for co-workers performing the same duties. It is inevitable in such a situation that not only will controversy and suspicion arise between males and females, but that the more dominant group, in this ease the males, will gain privileges of various kinds. The failure of Local 507 to support plaintiff’s justifiable official complaints concerning uneven and unfair assignments demonstrates the inability of a Janus-headed union to safeguard sex equality.”

Appendix, p. 25, 5 FEP Cases 393, 395 (1972).

The District Court concluded that maintenance of the two sex-segregated locals constituted a per se violation of 42 U.S.C. § 2000e-2(c), and no bona fide occupational qualification having been shown, defendants’ practices in this case violated 42 U.S.C. § 2000e-2(a) and (c), citing United States v. International Longshoremen’s Association, 460 F.2d 497, 4 FEP Cases 719 (4th Cir.), cert. denied, 409 U.S. 1007, 93 S.Ct. 439, 34 L.Ed. 2d 300 (1972). ILA is a case strikingly similar to the case at bar. There, the Fourth Circuit held that racially segregated unions constituted per se violation of 42 U.S.C. § 2000e-2(c) (2). Appellant International would distinguish ILA on the ground that the Court’s underlying basis for holding that the maintenance of racially segregated locals constitutes a per se violation of Title VII was the Supreme Court’s decision in Brown v. Board of Education, 347 U.S. 483, 74 S.Ct. 686, 347 U.S. 483 (1954), hence, ILA is limited to racial segregation. There being no Brown in the area of sex segregation, International says there is no reason to assume that the principles applicable to the effects of racial segregation apply to the effects of sex segregation.

We do not agree. The unions in ILA were segregated on the basis of race. The unions here were segregated on the basis of sex. The precise statute (42 U.S.C. § 2000e-2(c)(2)) involved in ILA is the one involved here. It specifically prohibits discrimination based on race, color, religion, sex, or national origin.

Moreover, in Frontiero v. Richardson, 411 U.S. 677, 687, 93 S.Ct. 1764, 1770, 36 L.Ed.2d 583 (1973), Mr. Justice Brennan noted that:

“[Ojver the past decade, Congress has itself manifested an increasing sensitivity to sex-based classifications. In Tit. VII of the Civil Rights Act of 1964, for example, Congress expressly declared that no employer, labor union, or other organization subject to the provisions of the Act shall discriminate against any individual on the basis of ‘race, color, religion, sex, or national origin.’ Similarly, the Equal Pay Act of 1963 provides that no employer covered by the Act ‘shall discriminate . . . between employees on the basis of sex.’ And § 1 of the Equal Rights Amendment, passed by Congress on March 22, 1972, and submitted to the legislatures of the States for ratification, declares that ‘ [e] quality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex.’ Thus, Congress itself has concluded that classifications based upon sex are inherently invidious, and this conclusion of a coequal branch of Government is not without significance to the question presently under consideration.” (Emphasis in the original.)

Such recognition by the Supreme Court should quell any doubts that Congress, in enacting Title VII found classifications based on sex inherently invidious. We think the District Court correctly held that maintenance of unions segregated on the basis of sex constitutes a per se violation of 42 U.S.C. § 2000e-2(c).

Having found intentional unlawful employment practices, 42 U.S.C. § 2000e-5(g) vests in the District Court discretionary authority to order, as part of the affirmative action necessary to obviate such unlawful employment practices, that the party responsible pay to the aggrieved person back pay damages calculated to restore such person to’ his or her rightful economic place. “The demand for back pay is not in the nature of a claim for damages, but rather is an integral part of the statutory equitable remedy, to be determined through the exercise of the court’s discretion * * Johnson v. Georgia Highway Express, Inc., 417 F.2d 1122, 1125, 2 FEP Cases 231 (5th Cir. 1969). In a case such as the one presented here, where employee initiative and choice are factors in the job assignment process, it seems that, consistent with traditional rules of jurisprudence, the burden of proof is on the claimant to establish her damages.

Our review of the record shows that from the evidence submitted the District Court was able to fix with a reasonable degree of accuracy, though not with exactitude, the approximate amount of Mrs. Evans’ damages. We conclude that the District Court did not abuse its discretion in awarding Mrs. Evans $1,100 to be paid jointly by all defendants and $500 to be paid by the Hotel.

Ill

ATTORNEY’S FEES

Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(k) provides:

“In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the Commission or the United States, a reasonable attorney’s fee as part of the costs, and the Commission and the United States shall be liable for costs the same as a private person.”

Pursuant to this authority, the District Court concluded that “[i]n addition to the damages specified, plaintiff will be awarded her costs and nominal attorney’s fees of $1,000.” Appendix, p. 6, 5 FEP Cases 396.

Mr. Whitworth Stokes, attorney for Mrs. Evans, then filed a motion for reconsideration of the court’s ruling. He did not seek a specified amount for attorney’s fees; however, he submitted to the District Court:

1. His affidavit as the attorney employed by plaintiff in this action;
2. An itemized expense schedule;
3. An exhibit (3% pages) showing in chronological order the daily time spent by him, excepting from this the time for his services in the course of amending the complaint, unsuccessful motions for summary judgment, and the motion for reconsideration; and
4. A memorandum of points and authorities in support of his motion.

In his affidavit, Mr. Stokes listed hours as spent by him from April 28, 1971, to December 4, 1972. In addition, the expenses recorded include: a legal assistant $701.25; a consulting fee of $360 to a statistical expert; and a law student $70 for research, totalling $1,131.25. In a responsive order, dated December 27, 1972, the District Court stated that “[t]he award of attorney’s fees has been reconsidered and remains the same.” Appendix, p. 36.

Appellant Evans has appealed the award of nominal attorney’s fees of $1,000, claiming that it is inconsistent with the statute which contemplates reasonable fees, is inadequate in light of the difficulty of the case and the relief obtained, and constitutes an abuse of discretion by the trial judge.

Arguing that the $1,000 award is adequate, appellant International’s position is that the Act gives the court discretion as to whether attorney’s fees will be allowed, and if allowed, the amount thereof, and that a clear abuse of discretion not having been shown here, the award made should stand.

As both appellants recognize, when the question presented is the reasonableness of attorney’s fees awarded by the court, abuse of discretion is the standard of review. Most recently this principle has been applied by the Fifth Circuit in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 7 FEP Cases 1 (1974), a Title VII class action.

In Johnson the attorneys, requesting fees in the amount of $30,145.50 for alleged 659.5 billable hours covering more than four years of litigation, submitted to the District Court: (1) a schedule of fees based on affidavits of counsel as to their time spent on the matter; (2) affidavits from the five attorneys employed by plaintiffs in the action; (3) three exhibits showing in chronological order the daily time spent by three of plaintiffs’ attorneys; and (4) a memorandum of law in support of the motion. After a hearing, the District Judge determined that reasonable attorneys’ fees in the area for the job performed were $13,500. He based this amount on a finding of 60 man days of work at $200 per day, consisting generally of six to seven productive hours, to-talling $12,000, and allowed the two trial attorneys each $250 per day for three trial days, totalling $1,500. In making this award the District Judge said he was aware of the accomplishments of some of plaintiffs’ attorneys, but that some of the services were rendered by attorneys at a time when they had been at the bar only a few years, and there was a relatively standard practice within that community with respect to the age and experience of attorneys and the compensation involved therein.

On appeal, the Fifth Circuit vacated the judgment and remanded to the District Court for reconsideration. Judge Roney, speaking for the Court, pointed out that as part of its obligation to make Title VII work, the Fifth Circuit has liberally applied the attorney’s fees provision of Title VII, recognizing the importance of private enforcement of civil rights legislation. In reviewing .the award under the abuse of discretion standard, the difficulty which the Court had with the District Court order was that the judgment did not elucidate the factors which contributed to the decision and upon which it was based. In particular, the Court saw no correlation between the judgment to the facts and figures submitted by plaintiff, nor to the minimum fee scale in the community; there was no differentiation made by the District Court between experienced and non-experienced attorneys; and, the order left unexplained between 239.5 to 299.5 of the 659.5 hours claimed. “Whether they reflected duplicated effort among the attorneys, improperly charged hours, time deemed unessential, or were merely overlooked is not answered in the order.” 488 F.2d 717, 7 FEP Cases 3.

Thus, the Court set up the following guidelines to better enable District Courts to arrive at just compensation:

1. Time and labor required.
2. The novelty and difficulty of the questions.
3. The skill requisite to perform the legal service properly.
4. The preclusion of other employment by the attorney due to acceptance of the case.
5. The customary fee.
6. Whether the fee is fixed or contingent.
7. Time limitations imposed by the client or the circumstances.
8. The amount involved and the results obtained.
9. The experience, reputation and ability of the attorneys.
10. The “undesirability” of the case.
11. The nature and length of the professional relationship with the1 client.
12. Awards in similar cases.

488 F.2d 717, 718, 719, 7 FEP Cases 3, 4.

The same type of evidence was submitted in the present case by appellant Evans’ attorney regarding the fee claim as that submitted in Johnson. Yet, in the Memorandum constituting his findings of fact and conclusions of law, the District Judge herein said nothing whatsoever reflecting on his determination of the amount of the fee. His sole reference to the matter was that plaintiff would be awarded “nominal attorney’s fees of $1,000.”

We align ourselves with the guidelines set out by the Fifth Circuit in Johnson. We believe that a meaningful review requires a record that elucidates the factors that contributed to the fee decision and upon which it was based. Certainly it is not conducive to an appropriate appellate review where, as here, the reviewing tribunal is completely in the dark as to what the trial judge found concerning the time and labor involved, the rate of compensation, and the aspects he may have deemed of significance. Accordingly, we remand the case to the District Court for reeon-sideration of its award of attorney’s fees.

Two other observations need to be made in connection with the remand of this case on the fee issue.

First, the District Court refused to certify the case as a class action. The correctness of this ruling is not involved in this appeal. However, in awarding attorney’s fees in a Title VII action to a successful plaintiff, we cannot perceive any real distinction between a class discrimination based on sex and an individual discrimination based on sex. “[Discrimination [based on sex] is by definition a class discrimination. If it exists, it applies throughout the class. This does not mean, however, that the effects of the discrimination will always be felt equally by all the members of the * * * class. * * * But although the actual effects of a discriminatory policy may thus vary throughout the class, the existence of the discriminatory policy threatens the entire class.” Hall v. Werthan Bag Corporation, 251 F. Supp. 184, 186 (M.D.Tenn.1966). Moreover, Title VII is so structured that enforcement of nondiscrimination in employment is left largely to private action, and “[w]hether in name or not, the suit is perforce a sort of class action for fellow employees similarly situated.” Jenkins v. United Gas Corporation, 400 F.2d 28, 33 (5th Cir. 1968).

In addition, while recognizing the merger of Waitresses Local 507 and Waiters Local 781, we also take cognizance of the fact that this merger did not take place until after appellant Evans complained to the EEOC and her subsequent institution of this lawsuit. Although the merger rendered injunc-tive relief unnecessary, we believe the lawsuit acted as a catalyst, prompting the defendant unions to take action in compliance with the requirements of Title VII. Parham v. Southwestern Bell Telephone Co., 433 F.2d 421 (8th Cir. 1970); Dobbins v. Local 212, International Bro. of Elec. Wkrs., 292 F.Supp. 413 (S.D.Ohio, W.D.1968). Further, Mrs. Evans prevailed in her contentions of discrimination based on sex prior to the May 1972 merger. In this regard she performed a valuable public service in bringing this action, entirely consistent with the intent of Congress. Newman v. Piggie Park Enterprises, 390 U. S. 400, 401-402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968). We think the trial court was correct in recognizing Mrs. Evans’ entitlement to an attorney’s fee but to satisfy the statutory mandate a fee award must be reasonable. In remanding this case, we express no opinion as to the correctness of the amount of attorney’s fees awarded.

CONCLUSION

We affirm the judgment of the District Court except for the award of attorney’s fees. We vacate that award and remand the case for reconsideration of the attorney’s fees in the light of this opinion, and for the entry of an order fixing a reasonable fee which reflects the considerations which led to it.

So ordered.

ROBB, Circuit Judge

(concurring in part, dissenting in part):

I concur in Parts I and II of the majority opinion, but I would affirm the award of an attorney’s fee.

In the exercise of his discretion the experienced district judge set a fee which he considered reasonable. He was of course familiar with the time-honored guidelines set out in the majority opinion and I must presume that he took them into consideration. I see no indication that he abused his discretion, or any reason to call upon him for an explanation. A district judge should not be treated as a special master who must give detailed explanation of his discretionary conclusions.

      . None of the other defendants have appealed.

      . Only in Norman v. Missouri Pacific Railroad, supra, was the question raised of joining indispensable parties — and then as an ancillary contention of the defendant Railroad at the appellate level. The Eighth Circuit did not depart from the general interpretation that a charge must be filed against a party with the EEOC before court action can be commenced against the party. But it suggested a procedure whereby indispensable parties could be joined and the administrative requirements of Title VII could still be met. Since the proscription charged in the complaint in Norman was a continuing one, the Court said if, on remand, the District Court determined any parties to be indispensable, the plaintiff could then .file a complaint before the EEOC embracing these alleged indispensable parties and administrative steps taken to process the complaints to the stage where the District Court would order a joinder; thus, through this procedure, the administrative requirements of Title VII would be met, all i>arties would be afforded a hearing, and the court could fashion full relief as was warranted under the evidence. 414 F.2d 84-85.

      . The district court had disposed of plaintiffs’ Title VII count against the local by holding that the local could not be joined as a defendant since plaintiffs had not previously charged it with discriminatory practices before the EEOC. The court further held the action against Harvester should also be dismissed since the local and individual white bricklayers could be adversely affected if plaintiffs’ action continued, thereby making the local and the bricklayers parties which were needed for just adjudication under Rule 19.

      . The record indicates that although AYaiters Local 781 and International were not formally charged before the EEOC, they had actual notice of the charges and subsequent Commission investigation.

      . .On May 18, 1972, the membership of Locals 507 and 781 were combined into Waiters and Waitresses Union Local 781.

      . 42 U.S.C. § 2000e-2. Unlawful employment practices — Employer practices al It shall be an unlawful employment practice for an employer—
      (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s * * * sex * * *; or
      (2) to limit, segregate, or classify bis employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s * !! * sex * * *.
      Labor organization practices
      (c) It shall be an unlawful employment practice for a labor organization- — ■
      (1) to exclude or to expel from its membership, or otherwise to discriminate against, any individual because of his v ¡|! ¡¡- H* •!* •
      (2) to limit, segregate, or classify its membership, or applicants for membership, or to classify or fail or refuse to refer for employment any individual, in any way which would deprive or tend to deprive any individual of employment opportunities, or would limit such employment opportunities or otherwise adversely affect his status as an employee or as an applicant for employment, because of such individual’s * * * sex * * * ; or (3) to cause or attempt to cause an employer to discriminate against an individual in violation of this section.

      . The question before the Court was whether certain statutes, requiring a servicewoman to prove that her husband was dependent upon her for over one-half of his support before she could obtain certain benefits which a servio,eman was allowed to claim for his wife without regard to whether she was in fact dependent upon him for any part of her support, constituted an unconstitutional discrimination against servicewomen in violation of the Due Process Clause of the Fifth Amendment.

      . In Paragraph II of her amended complaint filed September 28, 1971, Mrs. Evans stated that she was bringing this action on her own behalf and on behalf of other persons similarly situated pursuant to Rule 23 (b) (2), Federal Rules of Civil Procedure. Mrs. Evans moved on June 2, 1972, for an order declaring the case maintainable as a class action. In a Memorandum and Order filed .Tune 29, 1972, the District Court denied the motion.

      . Employer unlawful employment practices include discrimination on the basis of sex “against any individual with respect to his compensation, terms, conditions, or privileges of employment” and classifying employees on the basis of sex “in any way which would deprive * * * any individual of employment opportunities or otherwise adversely affect his status as an employee.” 42 U.S.C. § 2000e-2(a). Labor organizations unlawful employment practices include discrimination on the basis of sex, “[classifying] its membership or applicants for membership, or to classify .or fail or refuse to refer for employment any individual, in any way which would deprive or tend to deprive any individual of employment opportunities, or would limit such employment opportunities or otherwise adversely affect his status as an employee or as an applicant for employment, because of such individual’s * * * sex,” or “to cause or attempt to cause an employer to discriminate against an individual in violation of this section.” 42 U.S.C. § 2000e-2(c).

      . The Fifth Circuit has further held that a charging party may even be aggrieved by employment practices to which he is not immediately subject. Carr v. Conoco Plastics, Inc., 423 F.2d 57 (5th Cir. 1970), aff’d on the opinion of the District Court, 295 F.Supp. 1281 (N.D.Miss.1969).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    UNITED STATES of America v. Thomas E. GOWER, Appellant.
    No. 24829.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Dec. 16, 1971.
    Decided July 25, 1974.

      Timothy N. Black, Washington, D. C. (appointed by this Court), for appellant.
    Stephen W. Grafman, Asst. U. S. Atty., with whom Thomas A. Flannery, U. S. Atty., at the time the brief was filed, John A. Terry, and Donald T. Bucklin, Asst. U. S. Attys., at the time the brief was filed, were on the brief, for appellee.
    Before FAHY, Senior. Circuit Judge, and LEVENTHAL and MacKINNON, Circuit Judges.
   PER CURIAM:

This case involved an appeal from a conviction, after trial by the court, of a violation of 22 D.C.Code § 2001(a)(1) for possession and sale of obscene photographs and films. The photographs and film showed nude males and females engaged in explicit sexual intercourse, fellatio, cunnilingus and masturbation. The principal issue on appeal to this court was that the Constitution precluded punishment for private sales of such materials to a willing adult purchaser.

This court affirmed the conviction without opinion, noting in its per cur-iam judgment:

[A] constitutional claim based on privacy in the handling of obscene materials, see Stanley v. Georgia, 394 U.S. 557 [89 S.Ct. 1243, 22 L.Ed.2d 542] (1969), cannot fairly be advanced by a person, like appellant, engaged in the business of selling hard core pornography to the public, albeit warily and to selected members of the public.

That approach has recently been endorsed by the Supreme Court in Miller v. California, 413 U.S. 15, 93 S.Ct. 2607, 37 L.Ed.2d 419 (1973), and companion cases. However, the Supreme Court granted appellant’s petition for certiora-ri, vacated the judgment of this court, and remanded for reconsideration in light of its June, 1973 obscenity decisions. We have received supplemental memoranda from the parties addressing the question of the impact of those decisions on this case.

I.

Appellant now argues on remand that the statute under which he was convicted, 22 D.C.Code § 2001(a)(1), does not conform to the constitutional requirement of Miller, supra, that “no one will be subject to prosecution for the sale or exposure of obscene materials unless these materials depict or describe patently offensive ‘hard core’ sexual conduct specifically defined by the regulating state law, as written or construed.” 413 U.S. at 27, 93 S.Ct. at 216. (emphasis added). The language of the statute nowhere specifies the type of conduct to which Miller refers. The question therefore arises whether it may be so limited by the authoritative construction of the District of Columbia Court of Appeals. At present, we have no such authoritative construction. Federal courts are to decide questions of state law not yet decided by the highest state court. In the present case, however, we see no reason to undertake a definite interpretation of § 2001(a)(1), which may have a short life in the light of subsequent D.C.C.A. opinions. It suffices for us to say that we are convinced that the statute will receive a limiting construction that will maintain its application to the facts of this case.

The materials in this case were “[p]atently offensive representations of ultimate sexual acts” and “[pjatently offensive representations . of masturbation.” See Miller, 413 U.S. at 25, 93 S.Ct. at 2615.

Appellants are entitled to the benefit of any constitutional principle stated in Miller, see Hamling v. United States, 418 U.S. 87, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974). But we are convinced beyond a reasonable doubt that this case, tried to the court and not to a jury, would have reached exactly the same result if the case had been begun after Miller and conducted strictly in accordance with its instruction. We do not have the kind of doubt as to the application of Miller which eventuated in our remand order of June 28, 1974, in Huffman & Pryba v. United States, 163 U.S.App.D.C., 502 F.2d 419.

II.

Appellant’s original brief in this court contested the validity of the seizure of materials from appellant at the time of arrest. That argument was rejected on the authority of Huffman v. United States, 152 U.S.App.D.C. 238, 470 F.2d 386 (1971). In that opinion, this court held that although failure to hold a hearing prior to issuance of a warrant for seizure of allegedly obscene materials raised First Amendment questions, this would not require exclusion of the material seized for bona fide evidentiary purposes. This view was confirmed by the Supreme Court in Heller v. New York, 413 U.S. 483, 93 S.Ct. 2789, 37 L.Ed.2d 745 (1973).

Appellant now urges us to find that the holding in Roaden v. Kentucky, 413 U.S. 496, 93 S.Ct. 2796, 37 L.Ed.2d 757, requires vacation of the appellant’s conviction on count 6 of the indictment. Although there was a warrant authorizing the search of appellant's bookstore, the materials which formed the basis of conviction on count 6 were obtained outside the bookstore when appellant removed them from the trunk of his car. Roaden held that a warrantless seizure of sexually explicit films pursuant to an arrest was unreasonable under the Fourth Amendment, particularly in light of First Amendment considerations, and such materials should be governed by normal exclusionary rules.

This question is not insubstantial. We do not here decide that appellant would prevail on the issue if we were to reach the merits, for the Government might well be able to demonstrate the necessity of seizing the materials at the time of arrest or never. Because the sentence on count 6- is concurrent with the other sentences, however, this issue need not be reached, following the practice authorized in United States v. Hooper, 139 U.S.App.D.C. 171, 432 F.2d 604 (1970).

The conviction on count 6 will be vacated. The judgment is otherwise affirmed.

So ordered.

      . United States v. Gower, 316 F.Supp. 1390 (D.D.C.1970).

      . Judgment, December 30,1971.

      . (a)(1) It shall be unlawful in the District of Columbia for a person knowingly—
      (A) to sell, deliver, distribute, or provide, or offer or agree to sell, deliver, distribute, or provide any obscene, indecent, or filthy writing, picture, sound recording, or other article or representation ;
      (B) to present, direct, act in, or otherwise participate in the preparation or presentation of, any obscene, indecent, or filthy play, dance, motion picture, or other performance;
      (C) to pose for, model for, print, record, compose, edit, write, publish, or otherwise participate in preparing for publication, exhibition, or sale, any obscene, indecent, or filthy writing, picture, sound recording, or other article or representation;
      (D) to sell, deliver, distribute, or provide, or offer or agree to sell, deliver, distribute or provide any article, thing, or device which is intended for or represented as being for indecent or immoral use;
      (E) to create, buy, procure, or possess any matter described in tlie preceding sub-paragraphs of this paragraph with intent to disseminate such matter in violation of this subsection;
      (F) to advertise or otherwise promote the sale of any matter described in the preceding subparagraphs of this paragraph ; or
      (G) to advertise or otherwise promote the sale of material represented or held out by such person to be obscene.

      . Cooper v. Goodwin, 155 U.S.App.D.C. 449, 478 F.2d 653, 657 (1973) (Leventhal, J., concurring); M.A.P. v. Ryan, 285 A.2d 310 (D.C.App.1971).

      . In Kaplan v. United States, 311 A.2d 506 (D.C.App.1973) a conviction under § 2001(a)(1), which had been upheld at 277 A.2d 477 (D.C.App.1971), was reaffirmed on remand from the Supreme Court, but the particular issue under discussion was not presented in that case.


text:
    LABORERS’ INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO, LOCAL 478, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 73-1819.
    United States Court of Appeals, District of Columbia Circuit.
    Argued June 3, 1974.
    Decided July 10, 1974.

      Thomas J. Pilaeek, North Miami Beach, Fla., for petitioner.
    Patrick Hardin, Associate Gen. Counsel, N. L. R. B., with whom John S. Irving, Deputy Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Robert G. Sewell, Atty., N. L. R. B., were on the brief, for respondent.
    Before BAZELON, Chief Judge, and TAMM and LEVENTHAL, Circuit Judges.
   PER CURIAM:

The facts of the case are fully developed in the Decision and Order of the National Labor Relations Board. In brief, members of the Union, laborers at a construction site, went on strike after the employer terminated the temporary appointment of Mr. Davis as assistant foreman, a position that had been created a month earlier when the employer learned of the likely delay in the arrival from another local of the papers certifying the standing of Mr. Wilson, whom the employer had engaged as foreman. The employer concluded that the job did not warrant two supervisors, and Mr. Davis returned to the job of laborer. Next morning the strike began. When advised by the Union that the strike would end if Davis were reappointed assistant foreman, the employer promptly made the appointment. Wilson was subsequently discharged since two supervisors were not required for the job.

The Board held that the Union, by insisting upon the reappointment of Davis, violated the proscription of § 8(b)(1)(B) of the National Labor Relations Act (Act), 29 U.S.C. § 158(b)(1)(B), which prohibits a union from restraining or coercing an employer “in the selection of his representatives for the purpose[s] of . . . the adjustment of grievances.” At the hearing before the Administrative Law Judge the Union offered to show that the laborers struck because they objected to racially discriminatory treatment of the black laborers by foreman Wilson, and were willing to continue with him as foreman only if Mr. Davis, a black, served as his assistant and a “buffer.” The Administrative Law Judge excluded the proferred evidence, ruling that it was irrelevant to a determination of the § 8(b)(1)(B) violation. The Union’s sole contention on appeal is that the Board erroneously ruled evidence of racial discrimination irrelevant. The issue is sharpened by the concession of Union counsel at oral argument that but for the alleged racial discrimination, the facts as the Board found them establish a § 8(b) (1) (B) violation.

The Union argues that the prohibition of § 8(b)(1)(B) must yield to the right of workers to be free of racial discrimination in their employment. The Board responds that the employees may fully assert their right to non-discriminatory treatment, through legal remedies as well as self-help measures protected by Section 7 of the Act, so long as they protest the discriminatory treatment and do not demand the removal or appointment of a particular management “representative.” In short, the Board says that protest must be directed, at least in the ordinary case, at the alleged discriminatory conduct, rather than the identity of the supervisor whose conduct is challenged.

We believe the Board’s principle is a reasonable harmonization of Sections 7 and 8, and that the principle was properly applied in this case. At oral argument, the union counsel assailed the Board’s approach by asserting that the Board would find a § 8(b)(1)(B) violation whenever a union protested discriminatory conduct and the employer responded by replacing the offending supervisor. This does not follow, at least if the employer’s replacement of the supervisor represents an independent exercise of his judgment as to the person who would best carry out the employer’s obligation to refrain from discriminatory treatment.

Our holding is fully consistent with Western Addition Community Organization v. NLRB, 158 U.S.App.D.C. 138, 485 F.2d 917 (1973), cert. granted, 415 U.S. 913, 94 S.Ct. 1407, 39 L.Ed.2d 466 (1974), which held that the mandate of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., must be taken into account in construing the NLRA. We reaffirm that approach, see Southern Steamship Co. v. NLRB, 316 U.S. 31, 47, 62 S.Ct. 886, 86 L.Ed. 1246 (1942). In Western Addition the court confronted the need to reconcile § 7 protection of “concerted activity” (even by a minority of employees) with the principle of union exclusive representation embodied in § 8 of the Act; and the court, in light of the policies rooted in Title VII, held minority action protesting racially discriminatory treatment protected by § 7. Here, the Board fully permits employees to engage in § 7 concerted activity challenging alleged discrimination but holds that the specific prohibition of § 8(b)(1)(B) limits the demands that the employees, in the exercise of their rights of concerted activity, may make of their employer. While in Western Addition the court had to reconcile two rather generally-drawn statutory provisions, in the case at bar we confront a specific Congressional limitation on a union’s use of coercive economic power. Its specificity limits judicial leeway.

Affirmed.

      . Laborers’ International Union of North America, AFL-CIO, Local 478 (International Builders of Florida, Inc.) and L.R. Wilson, 204 NLRB No. 32 (June 22, 1973).

      . The laborers’ action began as a wildcat strike, but the union supported the workers, and the union agrees on this appeal that the laborers’ actions may be imputed to the union.

      . In its brief the Board states that this case does not present the question whether § 8(b)(1)(B) protects the employer’s “deliberate selection of a supervisor so imbued with racial attitudes as to create a discriminatory condition of employment by his mere presence on the job.”

      . See also Gulf States Utilities Co. v. FPC, 411 U.S. 747, 757-760, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973); McLean Trucking Co. v. United States, 321 U.S. 67, 79-80, 64 S.Ct. 370, 88 L.Ed. 544 (1944); Northern Natural Gas Co. v. FPC, 130 U.S.App.D.C. 220, 226-228, 399 F.2d 953, 959-961 (1968); City of Pittsburgh v. FPC, 99 U.S.App.D.C. 113, 126, 237 F.2d 741, 754 (1956).


text:
    UNITED STATES of America v. Walter C. POWELL, Appellant.
    No. 73-2098.
    United States Court of Appeals, District of Columbia Circuit.
    Argued May 23, 1974.
    Decided Sept. 16, 1974.
    Andrew T. A. MacDonald, Washington, D.C. (appointed by this Court), for appellant.
    Donald E. Robinson, Jr., Asst. U. S. Atty., with whom Earl J. Silbert, U. S. Atty., John A. Terry and Barry W. Levine, Asst. U. S. Attys., were on the brief, for appellee.
    Before ROBINSON and ROBB, Circuit Judges and WEIGEL, District Judge for the District of Northern California.

      Sitting by designation pursuant to 28 U.S.C. § 292(d).

   PER CURIAM:

The appellant Powell was tried and convicted on an indictment alleging that in violation of 18 U.S.C. § 751(a) he escaped from Saint Elizabeths Hospital where he had been lawfully committed to custody by order of court. The case was tried to the court without a jury on stipulated facts. The facts were:

1. In 1970 Powell was tried in the District Court on felony charges and found not guilty by reason of insanity.

2. Following his acquittal and after a hearing to determine his mental condition at that time he was committed to Saint Elizabeths, a hospital for the mentally ill, pursuant to 24 D.C.Code § 301(d). See Bolton v. Harris, 130 U.S. App.D.C. 1, 395 F.2d 642 (1968).

3. On November 21, 1972 he escaped from Saint Elizabeths.

The District Court found Powell guilty and sentenced him to imprisonment for a term of twenty months to five years. The only question presented by this appeal is whether an escape from Saint Elizabeths Hospital in the circumstances of this case constitutes an escape within the meaning of the Federal Escape Act, 18 U.S.C. § 751(a). The part of that section pertinent to the appellant’s case provides:

(a) Whoever escapes . . . from any custody under or by virtue of any process issued under the laws of the United States by any court, judge, or magistrate, or from the custody of an officer or employee of the United States pursuant to lawful arrest, shall, if the custody or confinement is by virtue of an arrest on a charge of felony, or conviction of any offense, be fined not more than $5,000 or imprisoned not more than five years, or both ....

The appellant contends that his escape did not violate the Act. We are constrained to agree:

As we read the statute Powell could be convicted and sentenced for escape only if he was in custody “by virtue of an arrest on a charge of felony, or conviction of any offense”. His acquittal by reason of insanity was not a “conviction”. See Cameron v. Mullen, 128 U.S.App.D.C. 235, 387 F.2d 193 (1967). The government argues however that he was in custody by virtue of his original arrest on the felony charge. We are not persuaded by this argument.

We think the arrest of the appellant on the felony charge was terminated and the arrest lost its legal vitality when he was acquitted by reason of insanity. Thereafter his custody was pursuant to the provisions of 24 D.C.Code § 301(d). This interpretation of the statute is confirmed by the legislative history of 18 U.S.C. § 751(a) and its predecessor, 18 U.S.C. § 753h as amended by Pub.L. No. 74-233, 74th Cong., 1st Sess., Aug. 3, 1935. The 1935 amendment broadened the statute to cover an escape from custody “by virtue of an arrest”. The report of the House Committee on the Judiciary and subsequent discussion on the floor of the House make it clear that the purpose of this amendment was simply to make escape from custody before trial and conviction a criminal offense. See H.R.Rep.No.803, 74th Cong., 1st Sess., pp. 1-2 (1935); 79 Cong.Rec. 8573. There is no indication that Congress intended the phrase “by virtue of an arrest” to mean that a defendant would remain under arrest and subject to prosecution for escape after he was acquitted.

If any doubt about this construction of the escape statute remains it is dispelled by 24 D.C.Code §§ 301(h) and (i). Section 24-301(i) provides:

When a person has been ordered confined in a hospital for the mentally ill pursuant to this section and has escaped from such hospital, the court which ordered confinement shall, upon request of the Government, order the return of the escaped person to such hospital.

Section 24-301 (h) provides:

The provisions of this section shall supersede in the District of Columbia the provisions of any Federal statutes or parts thereof inconsistent with this section.

Obviously Congress recognized that if a man is insane and by definition not responsible for his acts he should not be subject to criminal prosecution for leaving the mental hospital where he is confined. Thus, the escape statute applicable to Powell was 24 D.C.Code § 301 (i), and not 18 U.S.C. § 751(a).

The judgment is reversed with directions to dismiss the indictment.

It is so ordered.


author: TAMM, Circuit Judge: EDWARDS, Circuit Judge

text:
    LEBANON VALLEY RADIO, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Lebanon Broadcasting Company, Intervenor.
    No. 73-1356.
    United States Court of Appeals, District of Columbia Circuit.
    Argued April 23, 1974.
    Decided Sept. 13, 1974.

      Edwards, Circuit Judge, dissented and filed opinion.
    Theodore Baron, Washington, D. C., for appellant.
    Daniel M. Armstrong, Counsel, Federal Communications Commission, with whom John W. Pettit, Gen. Counsel, at the time the brief was filed, Joseph A. Marino, Associate Gen. Counsel, Federal Communications Commission, were on the brief, for appellee. Philip V. Per-mut, Counsel, Federal Communications Commission also entered an appearance for appellee.
    William M. Barnard, Washington, D. C., with whom Arthur H. Schroeder, Washington, D. C., was on the brief, for intervenor.
    Before EDWARDS, United States Circuit Judge for the Sixth Circuit, and TAMM and WILKEY, Circuit Judges.

       Sitting by designation pursuant to 28 U.S.C. § 291(a).

   TAMM, Circuit Judge:

. This case is before the court on appeal from an order of the Federal Communications Commission (“Commission”) denying review of a decision of the Commission’s Review Board (“Board”) which denied the application of Lebanon Valley Radio, Inc. (“Lebanon Valley”) for a construction permit for a new broadcast station. Finding the Commission’s action erroneous, we reverse.

I

The protracted administrative history of this case began in March, 1965 when hearings were commenced on Lebanon Valley’s application. The hearings were conducted on various dates until February, 1968 when the record was closed. Thereafter, on February 26, 1969, Hearing Examiner Irion released his Initial Decision, in which he concluded that Lebanon Valley was financially and technically qualified, and accordingly, recommended a grant of Lebanon Valley’s application. However, shortly after that decision, the Board granted a petition, filed January 17, 1969 by Radio Cantonsville, Inc., a competitor of Lebanon Valley, to enlarge the issues in the Lebanon Valley proceeding. Lebanon Valley Radio, Inc., 16 FCC2d 937 (1969). Radio Cantonsville had alleged, inter alia, that Lebanon Valley no longer intended to construct its proposed station on its initially specified site, and in fact, had purchased a different site while allowing its option on the initial site to expire. Lebanon Valley maintained, to the contrary, that it fully intended to utilize the initially specified site for its transmitter and, while its original option on that site may have expired on January 11, 1969, it had, in any event, obtained a valid one-year extension of that option on January 22, 1969.

Although the assertions of both parties were conflicting, the Board noted that: “If, as [Radio Cantonsville] contends, the land purchased by [Lebanon] Valley’s principals is to be utilized as a site for its proposed station, and its presently specified site is to be abandoned, [Lebanon] Valley’s failure to inform the Commission of these developments could reflect adversely on its qualifications to be a Commission licensee.” Id. at 938. The Board found that Radio Cantonsville’s allegations also raised the following additional issues which warranted further inquiry:

First, there is now considerable doubt as to whether [Lebanon] Valley actually proposes to construct its transmitter at the site specified in its application. Second, the allegations of the owner of the site that he was badgered and harassed into extending [Lebanon] Valley’s option and that he was assured that a radio tower would not be placed on his land during the 1-year period of the extension raise a question of whether the proposed transmitter site is still available. Finally, the affidavits relied on by petitioner in its reply conflict, in all material respects, with assertions in [Lebanon] Valley’s opposition.

Id. at 939 (footnote omitted). For the above reasons, the Board found that “a substantial question is presented concerning [Lebanon Valley’s] conduct and whether it has engaged in misrepresentation or conduct lacking in candor in its dealings with the Commission.” Id. Thus, the proceeding was remanded to the hearing examiner for resolution of the following issues:

(1) To determine whether the transmitter site proposed by Lebanon Valley Radio, Inc., is still available for the effectuation of its proposal.
(2) To determine whether Lebanon Valley Radio, Inc., proposes to construct a broadcast transmitter on the site proposed in its application.
(3) To determine whether Lebanon Valley Radio, Inc., failed to amend or attempt to amend its application within 30 days after substantial changes were made, as required by section 1.65 of the Commission’s rules, and, if so, the effect on its qualifications to be a Commission licensee.
(4) To determine, in light of the evidence adduced under issues (1), (2), and (3) above, whether Lebanon Valley Radio, Inc., has engaged in misrepresentation or conduct lacking in candor in its dealings with the Commission and, if so, the effect on its qualifications to be a Commission licensee ....

Id. at 939-40.

On remand, Hearing Examiner French ordered that Lebanon Valley’s application be denied on the grounds that: “(1) Lebanon Valley has not established that its transmitter site is still available, and (2) in its dealings with the Commission Lebanon Valley has engaged in misrepresentations and conduct lacking in candor.” Lebanon Valley Radio, Inc., FCC Docket No. 15835 at 19 (issued April 30, 1970), J.A. at 61. These ultimate conclusions were premised upon Examiner French’s disposition of the remand issues. Issue one, site availability, was resolved against Lebanon Valley on a finding that the one-year option extension was acquired by misrepresentation and thus, Lebanon Valley would probably not prevail if it attempted to exercise the option. Consequently, Examiner French concluded that Lebanon Valley failed to establish that the site was still available. Whether Lebanon Valley still proposed to construct its transmitter on the site, issue two, was deemed moot in light of the disposition of issue one. As to issue three, whether Lebanon Valley failed to comply with certain Commission rules, Examiner French found in favor of Lebanon Valley because there was no record evidence that Lebanon Valley intended to change its site and thus, no necessity for Lebanon Valley to amend its application. Issue four, whether Lebanon Valley made misrepresentations or engaged in conduct lacking in candor in its dealings with the Commission, was resolved against Lebanon Valley. The examiner concluded that Lebanon Valley had misrepresented to the Commission that it had obtained a valid one-year extension of its option, that much of the testimony of Lebanon Valley’s principals was evasive and lacked candor and, that the one-year extension was obtained by misrepresentation and deceit, which the Commission could not condone.

Lebanon Valley filed exceptions to Examiner French’s decision and also petitioned the Board to reopen the record to reflect a June 22, 1970 decision of the Court of Common Pleas of Lebanon County, Pennsylvania, which decreed specific performance on Lebanon Valley’s one-year option agreement. After that decision was affirmed on October 15, 1970 by the Pennsylvania court, en banc, Lebanon Valley again petitioned the Board to reopen the record to reflect that action. The Pennsylvania court’s decisions and their relevance to the case sub judice will be more fully discussed infra.

On June 7, 1972, the Board, with one member vehemently dissenting, denied Lebanon Valley’s application on the sole ground that Lebanon Valley had misrepresented and engaged in conduct lacking in candor in its dealings with the Commission. Lebanon Valley Radio, Inc., 35 FCC2d 243 (1972), J.A. at 2. Although the Board did grant Lebanon Valley’s petitions to reopen the record to reflect the Pennsylvania court’s decisions, which in the Board’s own words “conclusively resolved the question of the legal validity of the option extension . . ,”, and necessitated that issue one be resolved in favor of Lebanon Valley, it nevertheless held that issue four must be resolved against Lebanon Valley and accordingly, affirmed Examiner French’s denial of Lebanon Valley’s application. Id. The Board specifically cited a few instances of allegedly inconsistent testimony by Lebanon Valley’s principals in support of Examiner French’s credibility findings. These instances, the Board asserted, fell “far short of the standard of integrity and truthfulness expected by the Commission from prospective licensees.” Id. at 260, J.A. at 25. Moreover, the Board held that its conclusion that testimony of Lebanon Valley’s principals “was unworthy of belief and manifestly designed to mislead the Commission is fully sustained by the record in this proceeding.” Id. The Board concluded that the Pennsylvania court decisions, while dispositive of issue one, were irrelevant to issue four because they were merely rulings as a matter of law made without credibility findings and concerned issues and testimony not before the Commission. On March 6, 1973, the Commission ordered that Lebanon Valley’s application for review of the Board’s order be denied. Lebanon Valley Radio, Inc., FCC Docket No. 15835 (adopted March 2, 1973), J.A. at 1.

We think the absence of substantial supportive record evidence compounded by an unreasonably myopic analysis of the Pennsylvania court’s opinions, is fatal to the Board’s decision. Consequently, the Commission’s denial of Lebanon Valley’s petition for review of that decision must be reversed.

II

The Communications Act of 1934, as amended, not only allows, but unequivocally requires the Commission to consider an applicant’s character. 47 U.S.C. § 308(b) (1970). Furthermore, it is axiomatic that an applicant’s misrepresentations to the Commission, indubitably a reflection on one’s character, can result in the applicant’s disqualification, which, if reasonable, will not be disturbed by the courts. FCC v. WOKO, Inc., 329 U.S. 223, 67 S.Ct. 213, 91 L.Ed. 204 (1946); WEBR, Inc. v. FCC, 136 U.S.App.D.C. 316, 420 F.2d 158 (1969); Crowder v. FCC, 130 U.S.App.D.C. 198, 399 F.2d 569, cert. denied, 393 U.S. 962, 89 S.Ct. 400, 21 L.Ed.2d 375 (1968); Lorain Journal Co. v. FCC, 122 U.S. App.D.C. 127, 351 F.2d 824 (1965), cert. denied sub nom., WWIZ, Inc. v. FCC, 383 U.S. 967, 86 S.Ct. 1272, 16 L.Ed.2d 308 (1966); Charles P. B. Pinson, Inc. v. FCC, 116 U.S.App.D.C. 106, 321 F.2d 372 (1963). Thus, the Commission contends that the Board’s decision “against Lebanon Valley is not arbitrary or capricious, that it is supported by substantial evidence and should therefore be affirmed.” Appellee’s Br.. at 18. Ostensibly, the Commission’s argument is premised upon the significant deference due Examiner French’s credibility determinations. While we agree that an examiner’s credibility determinations are entitled to significant weight, we do not find them controlling in this ease; nor do we find other substantial evidence warranting affirmance of the Board’s decision.

The Board found that “the conduct of Lebanon Valley’s principals at the hearing [failed] to meet the standard of integrity and truthfulness expected by the Commission from its licencees and [potential] licencees.” Lebanon Valley Radio, Inc., supra, 35 FCC2d at 258-59, J.A. at 23. In support of this conclusion, the Board cited Lebanon Valley’s principals’ allegedly untruthful account of a meeting between them and the then owners of the site in question, a meeting which resulted in the one-year option extension. The “untruthfulness” of Lebanon Valley’s principals was substantiated with reference to their allegedly inconsistent statements and Examiner French’s credibility findings, which, based on conduct, demeanor and manner of testifying, ultimately held the owners of the site to be more believable than Lebanon Valley’s principals. As previously mentioned, the Pennsylvania court’s decisions were simply disregarded as irrelevant to issue four.

We, however, think the Pennsylvania court’s decisions are relevant. The decisions resolved an action for specific performance on the option agreement brought by Lebanon Valley against the then owners of the site in question, the Martins. The Martins asserted that the option could not be enforced because they were harrassed and pressured into signing it and false representations were made to them as to what would be erected on the land. Id. at 265, J.A. at 33 (Board Member Nelson, dissenting).Notably, the Martins’ defense was also the substance of their testimony before the Commission, testimony that Examiner French found more believable than Lebanon Valley’s principals’ testimony. Finding that “‘[t]here was no harrassment on the part of plaintiff’s [Lebanon Valley’s] officers . . . [and] no fraud or mistake in procurement of the extension of the option,’ ” id. at 265-66, J.A. at 34, the court granted the requested specific performance. Subsequently, the court, en banc, affirmed this decision, stating, inter alia: The evidence leads us to the conclusion that lurking in the shadows is the established radio station which wants to prevent more competition . . . . ” Lebanon Valley Radio, Inc. v. Martin, Equity No. 14 at 5 (October 15, 1970) (en banc), J. A. at 78. We think the Board’s failure to take proper notice of the relevance of these decisions was erroneous and unreasonable.

The Board stated that the court did not make “credibility findings.” Granted that the court did not make “credibility findings,” per se, nevertheless, it did specifically address the harrassment and misrepresentation issues and concluded, based upon sworn testimony, contrary to Examiner French’s “credibility findings.” For the board to dismiss such findings merely because they are not la-belled as “credibility findings” is to exalt form over substance. This we cannot condone.

The Board also supported its decision with reference to various allegedly inconsistent statements of Lebanon Valley’s principals. Having dutifully examined those statements, we find the Board’s characterization of most of them highly questionable, and the remainder of minor significance overall. Perhaps the few remaining inconsistencies were best explained by the Board’s dissenting member when he stated: “ ‘confusion as to details ... is not uncommon in the stories of entirely honest witnesses.’ ” Lebanon Valley Radio, Inc., supra, 35 FCC2d at 270, quoting NLRB v. Regal Knitwear Co., 140 F.2d 746 (2d Cir. 1944), aff’d, 324 U.S. 9, 65 S.Ct. 478, 89 L.Ed. 661 (1945), J.A. at 41.

In sum, although cognizant of the deference due a hearing examiner’s credibility findings, we think the instant case presents an extraordinary situation in which substantial questions are raised concerning the validity of the examiner’s credibility findings. The Board’s resolution of the questions raised is not supported by substantial record evidence, and thus, the Commission’s denial of Lebanon Valley’s application for review is error. We reverse and remand the case to the Commission for further proceedings consistent with this opinion. We presume the Commission will proceed expeditiously so that this proceeding may reach a final conclusion before it enters its second decade.

Reversed and remanded.

EDWARDS, Circuit Judge

(dissenting).

With all respect to the views of my brethren, I feel that reversal means our reevaluation of credibility findings which were made on substantial evidence by the Examiner and the Board. I would affirm.

      . Lebanon Valley Radio, Inc., 35 FCC2d 272 (1969); Joint Appendix at 3 (hereinafter J.A.).

      . Lebanon Valley Radio, Inc. v. Martin, Equity No. 14 (October 15, 1970) (en banc), J. A. at 74.

      . Lebanon Valley Radio, Inc., 35 FCC2d 243, 259 (1972), J.A. at 23.

      . Approaching the issue differently, interve-nor argues, inter alia, that “[t]here is no paradox in concluding that even though Lebanon Valley now has the site it did not intend that result and misrepresented its true intent to the Commission.” Intervenor’s Br. at 7. We think this argument not only misconstrues the Board’s decision, but also contradicts the evidence of record and defies logic and common sense.

      . Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).


author: TIMBERS, Circuit Judge: HAYS, Circuit Judge

text:
    In the Matter of QUEENS BOULEVARD WINE & LIQUOR CORP., d/b/a Gold Star Wine & Liquor, Debtor-Appellee, v. Anita BLUM et al., Petitioner-Landlord-Appellants.
    No. 179, Docket 73-1512.
    United States Court of Appeals, Second Circuit.
    Argued Nov. 29, 1973.
    Decided June 11, 1974.
    Hays, Circuit Judge, filed dissenting opinion.
    Robert M. Rosen, Garden City, N.Y. (Goldson, Rosen & Goldson, Garden City, N.Y., on the brief), for debtor-appellee.
    Jerome I. Lessne, New York City, (Leonard Holland, and Dreyer & Traub, New York City, on the brief), for appellants.
    Before MOORE, HAYS and TIMBERS, Circuit Judges.
   TIMBERS, Circuit Judge:

On this appeal from an order entered in a Chapter XI proceeding in the Eastern District of New York, Orrin G. Judd, District Judge, denying a landlord’s petitions and granting a debtor’s petition for review of an order of a referee in bankruptcy, the sole question is whether, under the circumstances of this case, a bankruptcy court is required, pursuant to Sections 70(b) and 302 of the Bankruptcy Act, 11 U.S.C. §§ 110(b) and 702 (1970), to enforce a conditional limitation in a commercial lease which authorized the landlord to terminate the lease in the event its tenant should file a petition for an arrangement under Chapter XI of the Act. The district court held that the bankruptcy court was not so required. We affirm.

I.

The facts are not in dispute and may be briefly summarized.

The debtor-appellee, Queens Boulevard Wine & Liquor Corp. (Queens), owns and operates a retail liquor store in Forest Hills, New York. On April 28, 1970, it entered into a seven year lease with appellant, Carol Management Company (Carol), for the premises at 103-05 Queens Boulevard. The lease was on the New York Real Estate Board’s standard form for stores. It included, as Article 16(b), a bankruptcy clause. This clause was amended by a typewritten addendum, Article 63. The bankruptcy clause, as amended, permitted the landlord to terminate the lease within a reasonable period after institution of bankruptcy proceedings by or against its tenant upon the condition that there be no forfeiture if obligations under the lease should remain unaffected by the bankruptcy proceedings and if the tenant should continue to comply with the terms of the lease, including prompt payment of rent. The lease further provided that the landlord, at its option, could apply any or all of its tenant’s $8000 security against rent due.

By March 22, 1972, Queens had failed to pay the rent due on March 1. Carol instituted a summary proceeding in the Queens County Civil Court seeking a judgment of eviction and rent arrears. On the same day, Queens filed a petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C. § 701 et seq. (1970). It listed debts of approximately $370,000 and assets of approximately $73,500.

Upon Queens’ application, the referee on March 27 entered an order continuing it temporarily in possession and, pending a final decree, staying the commencement and continuation of suits to enforce liens against it. This included Carol’s state court summary proceeding.

Thereafter, pursuant to Carol’s demands and the referee’s order, Queens offered on April 4 to pay all rent then due subject to obtaining a surety bond which its creditors required in order to stay its adjudication as a bankrupt. The landlord found this to be satisfactory.

While arrangements for obtaining the bond were underway, however, Carol received an offer to lease the store at a higher rent. By a letter dated April 21, it therefore served on Queens a notice of termination of the lease.

On May 11, having obtained the required bond, Queens tendered to Carol a certified check for the full amount of the rent then due for the months of March, April and May. Carol rejected this tender. It pressed its application to have the March 27 stay vacated and to regain immediate possession of the premises.

In an opinion filed on June 20, the referee held, among other things, that Carol had not waived its option under Article 16(b) by its demands for rent and by its April 21 letter it had effectively terminated the lease. The referee nevertheless ordered that Queens continue in possession and directed it to pay a sum equal to the rent as compensation for use and occupancy.

The parties filed cross petitions for review of this order. Carol sought immediate' possession. Queens sought a declaration that the termination clause was invalid. While these petitions were pending, Queens’ creditors tentatively accepted a plan of arrangement. The plan contemplates that Queens will remain in possession of the leased premises throughout the term of the lease. Confirmation ,of the plan has been adjourned pending determination of the instant petitions for review.

As a result of an infusion of outside capital, Queens presently is operating at a profit of approximately $2000 per week. It has continued prompt payments to Carol for use and occupancy of the store. In addition, pursuant to an order of the referee, it has paid to the trustee $1000 per week (such payments having totalled more than $50,000 to date) to be applied toward payment of its debts if the plan of arrangement is accepted and confirmed.

II.

Section 70(b) of the Bankruptcy Act, 11 U.S.C. § 110(b) (1970), made applicable here by Section 302 of the Act, 11 U.S.C. § 702 (1970), provides in pertinent part that:

“an express covenant that the bankruptcy of a specified party . shall terminate the lease or give the other party an election to terminate the same shall be enforceable.”

Carol contends that the statute requires us to reverse the district court and to award it immediate possession of the premises. Queens, on the other hand, maintains that Carol’s conduct prior to its April 21 notice of termination was inconsistent with its subsequent attempt to invoke Article 16(b) and that Carol therefore is estopped from terminating the lease. In the alternative, Queens argues that a bankruptcy court, in the exercise of its inherent equitable powers, may refuse to enforce a valid termination clause if the circumstances warrant.

Courts traditionally have not favored lease forfeitures. They often have strained to construe forfeiture clauses narrowly or to find them not an “express” convenant within the requirement of the statute. See generally 4A Collier, Bankruptcy jj70.44[3], at 544-46 (14th ed. 1971). Even when such a lease covenant has been found to be valid on its face, courts have created two exceptions to mitigate the harsh consequences of what otherwise would be the absolute mandate of Section 70(b). First, some courts have held that a landlord, by conduct evidencing an intent to affirm the lease, may waive the right to terminate or be estopped from asserting it. Speare v. Consolidated Assets Corp., 360 F.2d 882, 887 (2 Cir. 1966); Davidson v, Shivitz, 354 F.2d 946, 948 (2 Cir. 1966); Matter of Frazin & Oppenheim, 183 Fed. 28 (2 Cir. 1910). Secondly, at least two courts have held and others have suggested that they are empowered to refuse enforcement of similar lease provisions on the ground that termination would work a substantial injustice to the lessee and would serve only to frustrate the basic reorganization purpose of Chapter X. Weaver v. Hutson, 459 F.2d 741 (4 Cir.), cert. denied, 409 U.S. 957 (1972); In re Fleetwood Motel Corp., 335 F.2d 857 (3 Cir. 1964). Cf. In re Yale Express System, Inc., 362 F.2d 111, 117 (2 Cir. 1966); In re Penn Central Transportation Co., 347 F.Supp. 1351, 1353 (E.D.Pa.1972).

In the instant case, the referee found, and the district court accepted the finding, that there was no waiver. We may not upset such a finding unless it is clearly erroneous. In re Simon v. Agar, 299 F.2d 853 (2 Cir. 1962). True, the most common indices of waiver are absent here. At no time prior to invoking its right to terminate did Carol accept payment of rent. B.J. M. Realty Corp. v. Ruggieri, 338 F.2d 653, 654 (2 Cir. 1964). Nor did it delay unreasonably in giving notice of termination. Geraghty v. Kiamie Fifth Avenue Corp., supra, 210 F.2d at 98. Carol’s conduct prior to April 21 nevertheless strongly suggests that it was willing to accept payment of rent arrears, to forgive Queens’ default and to continue under the lease.

Carol’s immediate response to the order staying the state summary proceeding was a letter to Queens dated March 31 indicating complete awareness of its right to terminate but refraining from doing so. Thereafter, on April 4, a hearing was held on Queens’ application to continue in possession. Carol again made specific reference to its Article 16(b) right but stated its position as follows:

“We, of course, are looking for our rent for the months of March and April, and also we want to have our rent secured for any other months in the lease.
* * -X*
It is our request now that the stay [of the state eviction proceedings] be lifted, or else that the money be paid.”

Pursuant to these demands and in view of Queens’ willingness to comply, the referee ordered immediate payment of the rent. Carol agreed to accept payment. Because of its inability to secure the required surety bond, however, Queens temporarily was adjudicated a bankrupt and thus was unable to comply with the order. On April 7, in response to Queens’ application for a stay of the bankruptcy adjudication, Carol once again demanded that the rent be paid or that the stay of eviction proceedings be vacated.

These demands strongly indicate that Carol initially was concerned primarily with being paid and that it intended to accept tender of the rent. Relying on this, Queens, its creditors and their attorneys worked assiduously to obtain the necessary indemnity and to formulate a satisfactory plan of arrangement. It was not until these negotiations were well underway that Carol, on April 21, sent its notice of termination; and it did so then only because it had found a new tenant willing to pay a higher rent. Moreover, Carol was entitled throughout to set off against Queens’ sizeable security deposit its claims for rent that was due, but did not do so despite its agreement to accept payment. And under Article 63 of the lease, Carol continued to be bound even in the event of a bankruptcy adjudication as long as the rent was’ paid. The cumulative effect of these facts lends weight to Queens’ es-toppel argument. We do not rest our decision on this ground, however, for we find persuasive those cases relied upon by the district court which hold a lease termination provision to be unenforceable when compelling equitable and policy considerations so require.

In re Fleetwood Motel Corp., supra, involved a Chapter X reorganization of a publicly owned hotel corporation. In refusing to order a debtor from possession pursuant to a lease forfeiture provision similar to the instant one, the court held that the validity of the clause on its face under Section 70(b), without more, was insufficient to justify enforcement. The court proceeded to consider whether forfeiture was reasonable when balanced against competing public interest considerations and whether it was consistent with the purposes of the Act. It concluded that, since termination would result in a windfall surrender to the landlord of the corporation’s only -assets (the hotel and its fixtures), would vitiate the reorganization proceedings and would cause an unnecessary loss to the investing public, enforcement of the forfeiture clause would be inequitable and would be inimical to the purposes of Chapter X.

In Weaver v. Hutson, supra, upon facts similar to those in Fleetwood, the court also refused on equitable grounds to enforce a lease termination provision. The court in Weaver looked beyond the validity of the forfeiture provision on its face. It considered the effects of enforcement upon the debtor and the public, and whether termination would be consistent with the purposes of the Act. In denying rehearing, the court summarized the basis of its decision:

“The fundamental bases [sic] of decision throughout was that the Landlords’ insistence upon a forfeiture was highly unconscionable and inequitable in the circumstances — a demand for blood. The conclusion generally was that as a court of equity the bankruptcy court had the discretion and power to refuse enforcement of [the forfeiture provision], . . . Furthermore, we declined forfeiture in the circumstances as defeating the reorganization aims of Chapter X.” 459 F.2d at 745.

We recognize that Fleetwood and Weaver are distinguishable on their facts from the instant case. Queens is not a publicily held corporation. The benefit to the landlord here, in terms of a substantially higher rental income, is different from that in Fleetwood and Weaver where the landlords stood to acquire substantial tenant assets. Despite these and other factual differences, we find the rationale of those cases to be applicable here.

The purpose of a Chapter XI arrangement, as with a Chapter X reorganization, is to preserve a viable business enterprise where possible and especially when that will be in the “best interest of . . . creditors.” 11 U.S.C. § 766 (1970). See In re Peoples Loan & Investment Co., 410 F.2d 851 (8 Cir. 1969). Cf. 9 Collier, Bankruptcy If 9.17, at 281 (14th ed. 1972). In determining whether to enforce the lease termination here, therefore, we must consider not only the interests of the landlord but also those of the debtor and its creditors. Possession by Queens will not prejudice Carol, which is protected by a sizeable security deposit, except to deny it a windfall in the form of increased rent to which we hold it is not equitably entitled. Enforcement of the forfeiture, on the other hand, would destroy a now profitable debtor by depriving it of its most valuable asset — its location. It also would needlessly injure trade creditors and those outside investors who have furnished capital which has resulted in Queens’ rehabilitation. In our view, these individuals stand on no less significant a footing than did the shareholders of the debtors in Weaver and Fleetwood.

Our decision clearly is distinguishable from and in no way inconsistent with those eases which have upheld a termination clause such as that in the instant case. E. g., Finn v. Meighan, supra, 325 U.S. at 301; Model Dairy Co., Inc. v. Foltis-Fischer, Inc., 67 F.2d 704, 706 (2 Cir. 1933). Cf. B.J.M. Realty Corp. v. Ruggieri, 326 F.2d 281, 282 (2 Cir. 1963). In none of these eases would forfeiture have “seriously impaired”, let alone totally frustrated, an arrangement by depriving the debtor of an asset absolutely necessary to its continued viability. Compare Finn v. Meighan, supra, 325 U.S. at 302. Nor would relief from forfeiture in any of these eases have caused no harm whatsoever to the landlord. And in none of these cases did the landlord reject tender of the full amount of the rent due before any court had adjudicated its rights under the lease.

Our decision does not deprive Section 70(b) of its statutory effect in those cases to which it is applicable. Bankruptcy forfeiture provisions are necessary for the protection of landlords and generally are enforceable. We hold only that, under the particular circumstances of this case, termination of Queens’ lease would be grossly inequitable and contrary to the salutary purpose of Chapter XI.

Affirmed.

HAYS, Circuit Judge

(dissenting):

I dissent.

The applicable federal statute, 11 U. S.C. § 110(b), states clearly that a covenant like the one used here is enforceable. The courts have created two exceptions to this rule. The first is where the landlord has waived his rights. There is no waiver here. The second is where enforcement would run" contrary to a strong public interest. Smith v. Hoboken R.R., Warehouse & S.S. Connecting Co., 328 U.S. 123, 66 S.Ct. 947, 90 L.Ed. 1123 (1946); Weaver v. Hutson, 459 F.2d 741 (4th Cir. 1972), cert. denied, 409 U.S. 957, 93 S.Ct. 288, 34 L.Ed.2d 227 (1973); In re Fleetwood Motel Corp., 355 F.2d 857 (3d Cir. 1964). Smith, the only such case decided by the Supreme Court, is clearly distinguishable from the instant case. It involved important considerations under the Interstate Commerce Act and a degree of public interest with which this case cannot compare.

Weaver and Fleetwood Motel, even if they were correctly decided, are also distinguishable in that forfeiture in those cases would have created a windfall to the landlords by virtue of improvements on the leased properties. This fact was especially important because the debtors were publicly held and forfeiture would have resulted in loss to innocent shareholders. In both cases the SEC appeared on behalf of the shareholders. This underscores the public interest involved in those cases. There is nothing approaching that degree of public interest in this ease.

To affirm here would essentially deprive section 110(b) of any force. The claim that a liquor store involves the public interest is frivolous. The interest of the creditors is no different from what it would be in any bankruptcy proceeding. There is no windfall to the landlord here other than higher rent from a new tenant, and this “windfall” is present in every case like this because the landlord would never terminate the lease unless he could relet at a higher rent. If section 110(b) does not apply here, it is hard to imagine a case where it would apply.

      . Article 16(b) of the lease provides :
      “If at the date fixed as the commencement of the term of this lease or if at any time during the term hereby demised . . . Tenant make an assignment for the benefit of creditors or petition for or enter into an arrangement this lease, at the option of Landlord, exercised within a reasonable time after notice of the happening of any one or more of such events, may be cancelled and terminated >1

      . Article 63 of the lease provides:
      “Notwithstanding the provisions of Article ‘16’ hereof, in the event no relief is requested in any of the bankruptcy proceedings set forth in Article ‘16’ hereof to dis-affirm this lease, or to reform the same, . . . and provided, further, that all rent, additional rent and other charges due from Tenant under this lease are paid promptly when due, . . . this lease shall not be terminated as provided in Article ‘16’ hereof, but shall continue in full force and effect.”

      . When Queens found itself unable immediately to obtain the surety bond, the referee adjudicated it to be a bankrupt. On April 11, however, the referee modified this order and granted Queens leave to continue in possession subject to its posting the indemnity bond.

      . Carol’s continued acceptance of payments for “use and occupancy” does not constitute acceptance of “rent”. Matter of Wil-Low Cafeterias, Inc., 95 F.2d 306, 309 (2 Cir.), cert. denied, 304 U.S. 567 (1938).

      . Geraghty v. Kiamie Fifth Avenue Corp., 210 F.2d 95 (2 Cir. 1954) (Ch. XI); Finn v. Meighan, 325 U.S. 300, 302-03 (1945) (Ch. X).

      . Since Chapters X and XI both contemplate the continued viability of the debtor, the fact that Weaver and Fleetwood arose in the context of Chapter X proceedings does not diminish their relevance here.

      . Carol’s attempt to vacate the stay of state eviction proceedings is not inconsistent with its demands for payment of rent. Under Section 751(1) of the N.Y. Real Property Actions and Proceedings Law (McKinney 1963), payment of rent is a valid defense to an action for eviction and rent arrears.

      . The fact that the SEC appeared oil behalf of the shareholders in Fleetwood and Weaver and not in the instant case is but another distinction between a Chapter X reorganization and a Chapter XI arrangement. The SEC has certain statutory responsibilities under the former, none under the latter.