author: DAVIS, Judge:

text:
    SECURITIES AND EXCHANGE COMMISSION, Plaintiff, Securities Investor Protection Corporation, Applicant-Appellee, v. F. O. BAROFF COMPANY, INC., Defendant-Appellee. Claim of Samuel LUBIN, Claimant-Appellant.
    No. 720, Docket 73-2665.
    United States Court of Appeals, Second Circuit.
    Argued March 11, 1974.
    Decided May 29, 1974.
    Albert N. Proujansky, New York City (Jeffrey S. Tullman and Kane, Kessler, Proujansky, Preiss & Permutt, P. C., New York City, of counsel), for claimant-appellant.
    James B. Kobak, Jr., New York City (James W. Giddens and Hughes, Hubbard & Reed, New York City, of counsel), for defendant-appellee Trustee of F. O. Baroff Co., Inc. t
    Theodore H. Focht, Gen. Counsel, Securities Investor Protection Corp., Washington, D. C. (Wilfred R. Caron, Associate Gen. Counsel, and Michael E. Don, Atty., Securities Investor Protection Corp., Washington, D. C., of counsel), for appellee Securities Investor Protection Corp.

      Before MANSFIELD and TIMBERS, Circuit Judges, and DAVIS, Judge.

       Of the United States Court of Claims, sitting by designation.

   DAVIS, Judge:

We are called upon to decide a relatively narrow point, but one of some significance, under the Securities Investor Protection Act of 1970, 15 U.S.C. § 78aaa et seq. The object of that statute, and the function of the Securities Investor Protection Corporation (SIPC) it created, is to protect the public customers of securities dealers from suffering the consequences of financial instability in the brokerage industry. Securities and Exchange Commission v. Alan F. Hughes, Inc., 461 F.2d 974, 977 (2d Cir. 1972); Securities Investor Protection Corporation v. Charisma Sec’s Corp., 352 F.Supp. 302, 306 (SDNY 1972). Once a broker or dealer is found to be on the brink of collapse or in danger of failing to meet its obligations to its customers, a trustee is appointed for liquidation of the business. The firm’s clients are cushioned (within limits) from personal loss through a special fund collected by SIPC from all securities dealers registered under the 1934 Securities Exchange Act (much in the way that the Federal Deposit Insurance Corporation protects the depositors of banks). But the Securities Investor Protection Act allows only those who meet its definition of a “customer” to share in this assurance. The question posed in this case is whether a voluntary lender of securities to a failing brokerage house, who made his loan to help out the company and not for a purpose related to securities trading or investments, qualifies under the Act’s scheme.

The case comes before us on facts assumed to be true by the parties, the Bankruptcy Judge, and the District Court. On November 30, 1971, appellant Lubin delivered 7,000 shares of the common stock of Electronic Transistor Corp. to F.O. Baroff Co., Inc., a broker-dealer. Baroff opened an account in Lu-bin’s name and issued him a stock record receipt memorializing the delivery. Lubin also gave the broker a hypothecation letter, saying:

This is .your authority to use the 6,000 [sic] shs. of Electronic Transistors Corp. in my account as collateral for F.O. Baroff Company, Inc. loans.
You understand that I may revoke this authority at any time and you will agree to deliver such securities to me, free of all loans and encumbranches, except monies which may be due to F.O. Baroff Company, Inc. upon such notice.

The record is barren of positive proof as to Lubin’s motive, but in a subsequent letter to the trustee of Baroff from Lubin’s attorneys, this explanation is made: “Mr. Lubin had theretofore done a considerable amount of business with the F.O. Baroff Co., Inc. firm. He was aware that Baroff was in a cash bind and that this loan of securities was intended to help Baroff alleviate that condition. It was understood that the securities would be returned in a short period of time as soon as Baroff as [sic] able to straighten out its situation.” It is not contended that this loan of securities was made in connection with any existing or anticipated securities transactions undertaken by Lubin or on his behalf. Nor is there any suggestion of a benefit or consideration passing to him from the company. Apparently he did not have a live account with the firm at the time he made the loan.

About five weeks after this transaction, Baroff consented to an adjudication that its customers were in need of the protection of the Securities Investor Protection Act, and its liquidation commenced under a trustee’s supervision.

Lubin made claim under the Act with respect to the 7,000 loaned shares, but the trustee resisted on the ground that as to those securities Lubin was not a “customer” entitled to protection. The Bankruptcy Judge agreed with the trustee’s conclusion, both initially and on rehearing. Lubin sought review by the District Court but lost , there as well.

Appellant’s contention is simply that he falls within the literal definition of a “customer” in the 1970 statute, and is therefore entitled to its protections. The term “customer” is spelled out at section 6(c) (2) (A) (ii) of the Act, 15 U.S.C. § 78fff(c) (2) (A) (ii):

(ii) “customers” of a debtor means persons (including persons with whom the debtor deals as principal or agent) who have claims on account of securities received, acquired, or held by the debtor from or for the account of such persons (I) for safekeeping, or (II) with a view to sale, or (III) to cover consummated sales, or (IV) pursuant to purchases, or (V) as collateral security, or (VI) by way of loans of securities by such persons to the debtor, and shall include persons who have claims against the debtor arising out of sales or conversions of such securities, and shall include any person who has deposited cash with the debtor for the purpose of purchasing securities, but shall not include any person to the extent that such person has a claim for property which by contract, agreement, or understanding, or by operation of law, is part of the capital of the debtor or is subordinated to the claims of creditors of the debtor.

Lubin relies on subpart VI of this definition, “by way of loans of securities * * * to the debtor.” In the literal sense, that is what happened here; Lu-bin made a loan to Baroff of his Electronic Transistor stock. The problem is whether that fact is sufficient and dis-positive.

Judge Learned Hand has vividly admonished us not to be caught in the trap of language which seems, literally, too broad or too narrow to accommodate the patent legislative purposes. Guiseppi v. Walling, 144 F.2d 608, 624 (2d Cir. 1944) (concurring opinion), aff’d sub nom Gemsco, Inc. v. Walling, 324 U.S. 244, 65 S.Ct. 605, 89 L.Ed. 921 (1945) ; Cabell v. Markham, 148 F.2d 737, 739-740 (2d Cir. 1945), aff’d, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165 (1945). Securities legislation is no exception. See, e. g. Diskin v. Lomasney & Co., 452 F.2d 871, 874 (2d Cir. 1971). This court has already heeded the caution in reading another provision of the Securities Investor Protection Act (SEC v. Alan F. Hughes, Inc., supra, 461 F.2d at 980), and the present case supplies one more apt occasion.

The legislative history is clear that the 1970 Act was not designed to protect a lender in appellant’s class. Most of the definition of “customers”, including subpart VI, was taken from section 60e(1) of the Bankruptcy Act, 11 U.S.C. § 96(e)(1), added in 1938, which established special rules “[w]here the bankrupt is a stockbroker.” Both the legislative history of that provision and its use since enactment have stressed protection to, and equality of treatment of, the public customer who has entrusted securities to a broker for some purpose connected with participation in the securities markets. See Comment, The Bankrupt Stockbroker: Section 60e of the Chandler Act, 39 Col.L.Rev. 485 (1939); Tepper v. Chichester, 285 F.2d 309, 311 (9th Cir. 1960).

The 1970 Act carries through the same theme. The House Report states: “The primary purpose of the reported bill is to provide protection for investors if the broker-dealer with whom they are doing business encounters financial troubles.” H.Rep.No. 91-1613, 91st Cong., 2d Sess. (1970), 3 U.S. Code Congressional and Administrative News, 91st Cong., 2d Sess., p. 5255 (1970) (emphasis added). Throughout the report “investors” is used synonymously with “customers,” indicating that, in the eyes of Congress, the Act would protect capital markets by instilling confidence in securities traders. Earlier, at the hearings, Chairman Budge of the Securities and Exchange Commission pointed out that “this is not to be a bailout operation; it is to protect the public customers of the firms * * * ” (Hearings on H.R. 13308 [et al.] Before the Subcomm. on Commerce and Finance of the House Comm, on Interstate and Foreign Commerce, 91st Cong., 2d Sess. 369 (1970)). Speaking of possible losses of securities by customers, Philip A. Loom-is, then SEC General Counsel, now a Commissioner, gave examples showing that it was the trading customer who was to be protected. Similarly, a proponent of the measure on the House floor spoke of securities losses by customers of broker-dealers, obviously in the sense of trading customers. 116 Cong.Rec. 39343, 39344 (1970) (Cong. Latta).

This Congressional objective is underscored by contemporaneous events in the securities industry. The late 1960’s saw the collapse of several brokerage establishments, causing serious financial losses to their clients. Self-help efforts in the industry — such as the New York Stock Exchange Trust Fund — were either severely strained or ineffective. There was considerable concern that investors, particularly smaller ones would lose confidence in the stability of broker-dealers, and withdraw from the securities market. The President’s message endorsing the concept of insurance protection for investors in securities said that such a device “will assure the investor that the stability of the securities industry itself does not become cause for concern” (House Hearings, supra, at 345). The emphasis throughout was on the customer as investor and trader, not on others who might become creditors of the broker-dealer for independent reasons.

This is borne out by the last portion of the definition, excluding a person whose claimed property “by contract, agreement, or understanding, or by operation of law, is part of the capital of the debtor * * There is a dispute whether this exception applies to this case; appellees say that it does while the appellant urges that the securities never became part of Baroff’s “capital”. We need not decide that question, but we note that this exclusion, even if technically inapplicable in this instance, throws light on the preceding segments of the definition. To use Chairman’s Budge’s words, supra, Congress was intent on protecting “the public customers of the firms” and in avoiding “a bailout operation” for others, including those who contributed to the capital of the broker-dealer. There is no reason to think that non-investing, non-trading creditors — or gratuitous lenders acting through pure benevolence, family relationship, or friendship — were to be better off under the Act than capital-contributors.

Appellant's loan of the 7,000 Electronic Transistor shares to Baroff does not meet this criterion of intent to use the lent securities (or their proceeds if hypothecated) in some type of securities trading or investment activity. On the facts before us, the loan had nothing at all to do with conventional investment, trading or participation in the securities market. There was no actual or likely use of the shares as collateral for margin purchases by Lubin of other securities; nor were the proceeds of the American Bank and Trust loan used to facilitate securities trading by Lubin. On the contrary, his professed intention was to help Baroff out of a (hopefully temporary) cash bind. Thus, there was no reasonable expectation that the shares would be sold for Lubin’s account in the near future, and indeed, their immediate delivery to the American Bank and Trust Company as collateral for a pre-existing loan to Baroff put a formidable barrier in the way of any such sale or disposition. Consistently with Lubin’s intention, the proceeds of the American Bank and Trust loan were used, as the Bankruptcy Judge found, by Baroff without restriction in its day-today business. These are not the indicia of the fiduciary relationship between a broker and his public customer, but rather the characteristics of, at most, an ordinary debtor-creditor relationship.

Because appellant’s loan to the broker-debtor had no connection with his trading activity in the securities market, he cannot qualify by virtue thereof as a “customer” entitled to the benefits of the Securities Investor Protection Act. He is instead in the situation of a commercial bank, trade creditor, landlord, equipment lessor, or any other party who relies on the ability of a business enterprise to repay a business loan. If Lubin had chosen to support Baroff through a direct loan of cash, rather than taking the circuitous route of lending securities with permission to hypothecate so as to enable the broker to obtain cash, he would obviously be outside of the Act’s definition of “customers” which covers cash deposits only if they are “for the purpose of purchasing securities.” We can think of no reason why the Congress which passed the statute would desire to protect this loan of securities by appellant but not a straightforward cash loan made by him with the very same goal.

Accordingly, appellant is not entitled to the privileges of a “customer” under the Securities Investor Protection Act of 1970; the Bankruptcy Judge and the District Court were correct in so holding.

Affirmed.

      . The trustee-appellee has reserved the right to question the accuracy of these facts if the occasion should arise.

      . The Act contemplates that a person may be a “customer” with respect to some of his claims for cash or shares, but not with respect to others. This is made explicit in the definition of “cash customer”, but it is also implicit in the general pattern of the legislation and fits with the use of the plural in the definition of “customers” as “ * * * persons * * * who have claims on account of securities received, acquired, or held by the debtor [etc.] * * 15 U.S.C. § 78fff (c) (2) (A) (ii). .

      . Counsel for SIPC argues that the District Court, and consequently this court, lack jurisdiction to review the Bankruptcy Judge’s order. It is undisputed that Lubin did not file for review within the ten-day time limit after the first adverse (and final) decision of the Bankruptcy Judge. Lubin did ask review in timely fashion after the order upon rehearing, and it is settled that a valid reconsideration by a bankruptcy referee reopens the appeal time limit. See In re Pottasch Bros., Co., 79 F.2d 613, 616 (2d Cir. 1935). SIPC attacks the rehearing as a sham designed to provide a vehicle for review, but the transcript of the hearing on reargument before the Bankruptcy Judge shows that Lubin’s attorney raised a new matter (although it was unpersuasive to the Bankruptcy Judge). The Bankruptcy Judge, in ruling on the motion, expressly adverted to this matter and specifically reconsidered his prior decision in the light of it. The presentation and evaluation of this new point satisfies the minimum requirements for a bona fide rehearing, and thus provides an independent reviewable order.

      . The House bill was passed in lieu of the Senate version.

      . “You asked how can a customer lose, as I understand it. As I understand it, he can lose in any one of three ways. * * * “Similarly, many customers leave their securities with broker-dealers in order that they may sell them readily and quickly, without having to come around with a certificate. Those securities, if they are fully paid for, are supposed to be there and be segregated. But there is a possibility, if the broker gets into trouble, that they may not be.
      “Then there are customers who buy securities on margin. Their securities are necessarily left with the broker-dealer and used as collateral for the margin loan. But there may be a possibility that the customers’ equity is not properly protected, that the broker-dealer borrows too much or something of that kind, or even improperly diverts the securities.” Hearings on H.R. 13308 [et al.] Before the Subcomm. on Commerce and Finance of the House Comm, on Interstate and Foreign Commerce, 91st Cong., 2d Sess. 228 (1970).

      . Appellant also raises the contention that he qualified as a “cash customer” under section 6(c) (2) (A) (iii) of the Act. But this term is a further refinement of the “customer” concept as defined by the Act, and our disposition of the main point disposes of this subsidiary argument as well. One cannot be a “cash customer” unless he is a “customer”.


source: Caselaw Access Project

author: McWILLIAMS, Circuit Judge. LEWIS, Chief Judge

license: Public Domain

text:
    EDWARD B. MARKS MUSIC CORPORATION, Plaintiff-Appellant, v. COLORADO MAGNETICS, INC., d/b/a Sound Values, Inc., et al., Defendants-Appellees.
    No. 73-1395.
    United States Court of Appeals, Tenth Circuit.
    Submitted Nov. 13, 1973.
    Decided Feb. 28, 1974.
    As Modified on Rehearing May 28, 1974.

      Simon H. Rifkind, New York City (James D. Fellers, Frank A. Gregory, Fellers, Snider, Baggett, Blankenship & Bailey, Oklahoma City, Okl., and of counsel, John C. Taylor, III, Stuart Robinowitz, Sidney S. Rosdeitcher, Steven B. Rosenfeld, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Robert C. Osterberg, John S. Clark, Abeles, Clark & Osterberg, Charles B. Lutz, Jr., Speck, Philben & Fleig, Oklahoma City, Okl., on the brief), for plaintiff-appellant.
    Jerry J. Dunlap, Oklahoma City* Okl. (Charles A. Codding, Dunlap, Laney, Hessin & Dougherty, Oklahoma City, Okl., on the brief), for defendants-appellees.
    Before LEWIS, Chief Judge, and MURRAH and- McWILLIAMS, Circuit Judges.
   McWILLIAMS, Circuit Judge.

This is a so-called tape piracy ease. Edward B. Marks Music Corporation, hereinafter referred to as Marks, is an independent music publisher and, as such, is the owner of copyrights in numerous musical compositions. Marks, through its licensing agent, the Harry L. Fox Agency, Inc., has authorized various record companies to make recordings of compositions in which it, Marks, owns the copyright. The recording companies thus licensed by Marks to reproduce or record its copyrighted musical compositions have hired artists who have made recordings of the musical compositions here involved. Such recordings are then offered for sale to the general public.

Colorado Magnetics, Inc., hereinafter referred to as Magnetics, with no authorization from Marks, has also made recordings of musical compositions in which Marks owns the copyrights and has offered its recordings for sale to the general public at a price well below the retail price of the recordings produced by those recording companies licensed by Marks to record its copyrighted compositions. Magnetics’ modus operandi is to first purchase on the open market individual “hit” records thus made by those recording companies licensed by Marks to use its copyrighted compositions. Magnetics then duplicates or copies the recording with its own sound equipment on magnetic tape and offers for sale to the general public its duplicated or copied cassette tape recordings. Magnetics, of course, is able to undersell because, by simply copying the records made by others, it avoids the considerable expense incurred by the licensed recording companies in the hiring of arrangers, an orchestra, and the featured recording artists incident to their recordings.

It was in this general setting that Marks brought a copyright infringement action against Magnetics, seeking damages and injunctive relief. The gist of Marks’ complaint is that Magnetics is making an unauthorized and unlawful use of musical compositions in which it, Marks, owns the copyrights. Magnetics, by answer, denied copyright infringement, and alleged that its use of Marks’ copyrighted compositions is authorized by the so-called “compulsory license” provisions of the Copyright Law, namely, 17 U.S.C. §§ 1(e) and 101(e). Additionally, and alternatively, Magnetics alleged that Marks was guilty of certain antitrust violations which preclude it from enforcing its copyrights.

The case was initially set down for hearing on Marks’ request for a preliminary injunction. However, before such hearing was held, the parties agreed that a hearing on the merits would be combined with the hearing on the preliminary injunction. Upon trial, the only witness called was the president of Marks. Additionally, four depositions were offered, and received into evidence, the two principal owners of Magnetics having been among those thus deposed. Also, considerable documentary material was offered, and received, without objection. And this was the extent of the evidentiary matter before the trial court.

At the conclusion of the trial, the trial court asked the respective parties to submit proposed findings and conclusions. Thus the parties did and the trial court elected to adopt, virtually without change, the findings and conclusions submitted by Magnetics, all of which, needless to say, resulted in a smashing victory on all fronts for Magnetics. In this regard, we note that the Supreme Court in United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964), observed that findings and conclusions prepared by counsel and adopted, more or less verbatim, by a trial court are less helpful on review than findings and conclusions drawn with the “insight of a disinterested mind.” We agree.

In any event, the trial court specifically found that Magnetics in its use of Marks’ copyrighted musical compositions did not infringe on Marks’ copyrights and that Magnetics’ duplication of records playing Marks’ copyrighted compositions was authorized by the compulsory license provisions of 17 U.S.C. §§ 1(e) and 101(e). Alternatively, and additionally, the trial court went on to find that Marks was guilty of certain antitrust violations which precluded recovery; that because of its “misuse” of the copyrights in question Marks was es-topped; and that Marks’ “unclean hands” also barred recovery. In line with such findings and conclusions, the trial court dismissed the proceedings and awarded Magnetics its costs and attorneys’ fees. The complete findings and conclusions of the trial court are reported in Edward B. Marks Music Corp. v. Colorado Magnetics, Inc., 357 F.Supp. 280 (W.D.Okl.1973). In this regard, we note that though the trial court made written findings and conclusions, it did not render, as such, an opinion. From such judgment Marks now appeals. We reverse.

COMPULSORY LICENSE

In our view, the central issue in this case relates to the compulsory license provisions of 17 U.S.C. §§ 1(e) and 101(e). If Magnetics’ use of Marks’ copyrighted compositions falls within the ambit of that particular statutory provision, then Marks’ present action must fail. However, if Magnetics’ activities are outside the bounds of that statute, then Marks, as the copyright owner, is entitled to relief.

Although prior to 1909 a composer could obtain a copyright on his musical composition, Congress in 1909 considerably extended the copyright interest of the composer to the end that thereafter the copyright owner of a musical composition could himself control the mechanical reproduction of his composition. At the same time, fearful that by permitting a musical composition to be thus copyrighted it was permitting an absolute monopoly, Congress tacked on a proviso or exception to the statute authorizing the copyrighting of musical compositions. It is this proviso, which is a part of 17 U.S.C. § 1(e), with which we are here concerned. Such proviso reads as follows:

Provided, . . . as .a condition of extending the copyright control to such mechanical reproductions, that whenever the owner of a musical copyright has used or permitted or knowingly acquiesced in the use of the copyrighted work upon the parts of instruments serving to reproduce mechanically the musical work, any other person may make similar use of the copyrighted work upon the payment to the copyright proprietor of a royalty of 2 cents on each such part manufactured, to be paid by the manufacturer thereof; .

As indicated, Magnetics claims that its use of Marks’ copyrighted composition in its duplication of records made by others is authorized by the foregoing statutory provision, which provides for a so-called compulsory license, in lieu of an express license from the copyright owner. In this general regard, it should be noted that Magnetics did file a notice of intent as required by 17 U.S.C. § 101(e) and did make a tender, of sorts, of the 2 cent royalty called for in 17 U.S.C. § 1(e). Marks refused the tender, and then instituted the present proceeding. We need not here concern ourselves with whether the tender complied with the statute, as, in our view, Magnetics’ use of Marks’ copyrighted compositions necessarily involved in its duplication or copying of the records of others, who are themselves licensed by Marks to record, finds no sanction in 17 U.S.C. § 1(e).

At the outset, we note that we are here concerned with a proviso or exception to the statute vesting a copyright interest in the composer of a musical composition and granting him the exclusive right to determine the use to be made of his copyrighted composition. In this regard, it is the general rule that a proviso should be strictly construed to the end that an exception does not devour the general policy which a law may embody. Shilkret v. Musicraft Records, Inc., 131 F.2d 929 (2d Cir. 1942), cert. denied, 319 U.S. 742, 63 S.Ct. 1030, 87 L.Ed. 1699 (1943).

As we read the statutory provisions here under consideration, one who owns the copyright in a musical composition has, in the first instance at least, absolute control over who records his composition. He may elect not to allow anyone to record his composition. However, when the composer elects to license another to “use . . . the copyrighted work upon the parts of instruments serving to reproduce mechanically the musical work,” then the compulsory license provisions of the statute may be invoked. Specifically, the statute provides that once the composer has licensed another to reproduce by recording the composer’s composition, then, upon payment of the statutory royalty, “ . . . any other person may make similar use of the copyrighted work . ” This means, to us, that one who complies with royalty payment called for by the statute, though not having any authorization from the copyright owner, may nonetheless then “use,” not a third party’s record, but the copyrighted composition, which has been characterized as the “raw material,” in a manner “similar” to that employed by the recording company which did have authorization from the copyright owner. There is, of course, nothing in the statute which affirmatively authorizes Magnetics to duplicate and copy the recording of one licensed by the copyright owner to reproduce his composition. However, under the statute Magnetics may “use” the copyrighted composition in a manner “similar” to that made by the licensed recording company. All of which means, to us, that Magnetics may make its own arrangements, hire its own musicians and artists, and then record. It does not mean that Magnetics may use the composer’s copyrighted work by duplicating and copying the record of a licensed recording company. Such, in our view, is not a similar use.

In thus construing the statute, we believe that the legislative history of these particular statutory provisions, from 1909 down to the amendments enacted in 1971, is conflicting and indecisive. More will be said later about the 1971 amendment. We further are aware that the decisions of the several federal district courts which have been faced with this particular question are in conflict. See, for example, Fame Publishing Co., Inc. v. S & S Distributors, Inc., 363 F. Supp. 984 (N.D.Ala.1973), where that court held that a compulsory licensee under 17 U.S.C. § 1(e) acquired no right to duplicate or copy the recordings of another and that one who seeks to rely on the compulsory license provisions of 17 U.S.C. § 1(e) “must hire some musicians, take them into a studio and make his own recording.” For a contrary view, see Jondora Music Publishing Co. v. Melody Recordings, Inc., 351 F.Supp. 572 (D.N.J.1972), where that court held that the Copyright Act of 1909 did not grant to the musical composition copyright holder the power to prevent third persons from copying a particular performance of his composition where (a) with the copyright holder’s permission a performance has already been fixed on a physical object capable of reproducing it, and (b) the third person has complied with the compulsory license provisions of the Act by filing and serving notices of intention and paying statutory royalties to the copyright owner.

The only Circuit Court faced with this precise problem is the Ninth. Duchess Music Corporation v. Stern, 458 F.2d 1305 (9th Cir. 1972), pet. for rehearing and rehearing en banc denied, April 26, 1972, cert. denied, 409 U.S. 847, 93 S.Ct. 52, 34 L.Ed.2d 88 (1972), about which more will be said later. And of course the Supreme Court has not yet passed on this particular issue. In our view, the recent case of Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973), is not decisive of the present appeal. In Goldstein, the Court was concerned with the relationship between federal copyright law prior to the 1971 amendments and a California statute prohibiting the “piracy” of sound recordings by copying without permission of the recording company. The nature and extent of the interest of one having a copyright in a musical composition was not there considered.

As indicated, the Ninth Circuit has considered the meaning of 17 U.S.C. § 1(e). Duchess Music Corporation v. Stern, supra,. There was a strong dissent in Duchess. So, the majority opinion and the dissent in Duchess represent quite well the competing points of view on the meaning of 17 U.S.C. § 1(e). In Duchess, the majority held that the phrase “similar use” within the meaning of the Act of 1909 does not include the “right to copy” the recordings of others. We agree and are generally persuaded that the majority opinion in Duchess sets forth the proper interpretation of the statute.

As above indicated, in 1971 Congress amended the Copyright Law by making it possible for the first time to copyright the sound recording of a copyrighted composition, the effective date of this amendment being February 15, 1972. It is suggested that such amendment irrefutably indicates that Congress in 1971, at least, was of the view that the duplication or copying of sound recordings made prior to February 15, 1972, was lawful and in nowise inhibited by the Act of 1909. We do not think that such necessarily follows.

In the first place, we are of course not bound by Congress’ interpretation of a prior existing law. Golsen v. C. I. R., 445 F.2d 985 (10th Cir. 1971), cert. denied, 404 U.S. 940, 92 S.Ct. 284, 30 L.Ed.2d 254 (1971). Indeed, whatever merit there may be in the practice of relying on the opinion of a later Congress as to the intent of an earlier one wanes with the length of time which separates the two sessions, which in the instant case was sixty-three years. United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20 L.Ed.2d 1001 (1968). For an indication of the interpretation given the Act of 1909 by the judiciary shortly after its enactment, see Aeolian Co. v. Royal Music Roll Co., 196 F. 926 (W.D.N.Y.1912). In that case, it was held that § 1(e) of the Act providing that “any other person may make similar use of the copyrighted work” did not thereby secure the right to a subsequent user to “copy” the perforated piano rolls or records of another. The court then went on to declare that the would-be subsequent user could not avail himself of the skill and labor of the original manufacturer of the perforated roll or record by copying or duplicating the same, but had to resort to the copyrighted composition, and could not “pirate the work of a competitor who has made an original perforated roll.”

Secondly, the 1971 amendment created a copyrightable interest in the recording itself, the amendment to be effective February 15, 1972. We are here concerned with the nature and extent of the copyright interest of the composer, not the recording company. Such distinction we believe to be fundamental. Accordingly, we are not here concerned, as such, with the record, and its copying, but with the original composition and the copyright interest therein. This distinction we believe was indicated by us in Tape Head Company v. R. C. A. Corporation, 452 F.2d 816 (10th Cir. 1971). There, it was suggested by counsel that the 1971 amendment manifested an intention to grant persons situated as is Magnetics in the instant case a “carte blanche” to copy records made prior to February 15, 1972, free from any restriction, which in that case referred to state restrictions. In this general connection, however, we went on to say in Tape Head that “it is highly questionable from the authorities presented that the plaintiffs have, as a result of the Act of Congress, acquired a right to convert and use these recordings with impunity prior to February 15, 1972.” It is on this basis, then, that we are of the view that the 1971 amendment does not control the instant controversy.

ANTITRUST

As indicated, the trial court found, alternatively, that even if Marks had the right to maintain an infringement action, it was barred from obtaining any relief because of its own misconduct, particularly as concerns alleged antitrust violations. Assuming arguendo that an antitrust violation is a defense in a copyright infringement action, the record made in the trial court simply does not support its findings and conclusions. The evidentiary matter on this phase of the controversy is just too sketchy to support the trial court’s drastic and far-reaching findings of antitrust violations. Only certain aspects of this particular phase of the case need comment.

One finding of the trial court was that Marks was precluded from any recovery because it, along with the Harry L. Fox Agency, Inc., and others, had conspired to bring the present proceeding in an effort to stifle competition. This particular finding is pretty well undermined by the interpretation we have above given 17 U.S.C. § 1(e). In any event, in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), it was held that groups with common interests may, without violating the antitrust laws, use federal agencies and the courts to advocate their causes respecting resolution of their business and economic interests as opposed to their competitors. We recognize that in Trucking Unlimited the case was remanded to the trial court for, among other purposes, a factual determination as to whether the resort to the California regulatory agency was but a “mere sham” within the meaning of Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). In the instant case, however, any suggestion of sham or bad faith on the part of Marks disappears in view of our determination that Marks in fact and in law has an enforceable copyright interest in its compositions. So, as we said in Semke v. Enid Automobile Dealers Ass’n., 456 F.2d 1361 (10th Cir. 1972), the utilization of the courts in a manner which is in accordance with the spirit of the law continues to be exempt from the antitrust laws. See also Alberto-Culver Company v. Andrea Dumon, Inc., 466 F.2d 705 (7th Cir. 1972), where it was held that a good faith effort to enforce one’s copyright is not the type of exclusionary conduct condemned by § 2 of the Sherman Act.

The trial court also found that Marks was estopped from obtaining relief because of its misuse of its copyrights as concerns its pricing policies and the like. In this regard, it is argued that Ampex, for example, is a compulsory licensee and is duplicating and copying records in a manner similar to Magnetics. We do not agree that Magnetics is in a similar position to that of Ampex. Ampex has been duplicating and copying, not the recordings of the licensed recording companies, but the master tapes of the recording companies, all with the latter’s permission and for a fee and with the consent of Marks, the copyright owner. See in this latter regard Colorado Pump & Supply Co. v. Febco, Inc., 472 F.2d 637 (10th Cir. 1973), where we recognized the right of a manufacturer to select the customers to whom he will sell so long as his conduct has no monopolistic or market control purposes.

Permeating the entire “antitrust” argument of Magnetics is the belief that Marks comes into court with unclean hands to the end that it is precluded from obtaining equitable relief. The record in our view does not support this position. In this regard, the following language from Alfred Bell & Co. v. Catalda Fine Arts, Inc., 191 F.2d 99 (2d Cir. 1951), is deemed appropriate:

. We have here a conflict of policies: (a) that of preventing piracy of copyrighted matter and (b) that of enforcing the antitrust laws. We must balance the two, taking into account the comparative innocence or guilt of the parties, the moral character of their respective acts, the extent of the harm to the public interest, the penalty inflicted on the plaintiff if we deny it relief. As the defendants’ piracy is unmistakably clear, while the plaintiffs’ infraction of the antitrust laws is doubtful and at most marginal, we think the enforcement of the first policy should outweigh enforcement of the second.

In this same general connection, see also Hoehn v. Crews, 144 F.2d 665 (10th Cir. 1944), aff’d sub nom, Garber v. Crews, 324 U.S. 200, 65 S.Ct. 600, 89 L.Ed. 870 (1945), where it was noted that it is not required that one who would seek equity must himself possess “spotless hands” and that it is not “every stain” that will bar one from equitable relief.

Applying the rationale of such eases as Alfred Bell & Co. and Hoehn, we conclude that Marks is not precluded from relief because of any possible misconduct on its part. The long and short of this entire matter is that Marks owns a copyright to certain musical compositions and Magnetics seeks to use Marks’ property right without Marks’ consent and, in our view, in a manner not authorized by the compulsory license provisions of 17 U.S.C. § 1(e).

As is reflected in the trial court’s decision in Edward B. Marks Music Corp. v. Colorado Magnetics, Inc., supra, the “issue of liability” was separated for trial purposes. On the record before it, the trial court erred in entering judgment for Magnetics. Under the circumstances, it should have entered judgment for Marks. Accordingly, the judgment of the trial court is hereby reversed and the cause remanded with directions that it enter judgment for Marks on the “issue of liability.” Subsequent proceedings to determine the relief to which Marks is entitled should be consonant with the views herein expressed.

LEWIS, Chief Judge

(dissenting):

I am in complete accord with the views of Judge Lacey set forth in Jondora Music Publishing Co. v. Melody Recordings, Inc., D.C.N.J., 351 F.Supp. 572, and of Judge Byrne, dissenting in Duchess Music Corp. v. Stern, 9 Cir., 458 F.2d 1305, cert. denied, 409 U.S. 847, 93 S.Ct. 52, 34 L.Ed.2d 88. A similar conclusion has recently been reached by a Wisconsin state court. See Mercury Recording Productions, Inc. v. Economic Consultants, Inc., 42 L.W. 2406 (Wis.Cir.Ct. Feb. 12, 1974). I would affirm on this aspect of the case only.

ON REHEARING EN BANC

Judge MURRAH, a member of the three-judge panel which first heard this case, recuses on rehearing en banc. Judge McWILLIAMS, upon rehearing en banc, adheres to the majority opinion as heretofore filed on February 28, 1974, and Judges HILL, SETH, BARRETT and DOYLE now concur in that opinion. Chief Judge LEWIS, on rehearing en banc, adheres to his dissent, and Judge HOLLOWAY now joins in that dissent.

      . Act of March 4, 1909, Pub.L.No.349, Chap. 320, 35 Stat. 1075; codified at 17 U.S.C. § 1(e). Congress felt this extension to have been necessary because the Supreme Court had held that perforated piano rolls and records were not “copies” of the composition which they reproduced. White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 (1908). See 43 Cong.Rec. 3765-3767 (Mar. 3, 1909).

      . See H.R.Rep.No.2222, 60th Cong., 2d Sess. 7-8 (1909) ; Shapiro, Bernstein & Co., Inc. v. Remington Records, Inc., 265 F.2d 263 (2d Cir. 1959). However, it has been suggested that the breadth of the contemporary record industry belies any concern over monopolistic power. Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law, 87th Cong., 1st Sess. (H.R.Comm. Print 1961).

      . Nor will we at the same time permit such a general policy to be obscured by “drastic technological changes” that have arisen since the enactment of the statute. Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968).


author: PER CURIAM: GRAY, District Judge

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. MEDICAL MANORS, INC., d/b/a Community Convalescent Hospital and Community Convalescent East, Respondent.
    No. 73-1763.
    United States Court of Appeals, Ninth Circuit.
    May 15, 1974.
    Charles I. Cohen (argued), Marcel Mallet-Prevost, Asst. Gen. Counsel, NLRB, Washington, D. C., Roy O. Hoffman, Director, Region 20, NLRB, San Francisco, Cal., for petitioner.
    J. Richard Thesing (argued), of Littler, Mendelson & Fastiff, San Francisco, Cal., for respondent.
    Before BROWNING and TRASK, Circuit Judges, and GRAY, District Judge.

       Honorable William P. Gray, United States District Judge from the Central District of California, sitting by designation.

   PER CURIAM:

This case comes before the court upon the application of the National Labor Relations Board, pursuant to Section 10(e) of the National Labor Relations Act, 29 U.S.C. § 151 et seq., for enforcement of its order against Medical Manors, Inc. d/b/a Community Convalescent Hospital (Hospital West) and Community Convalescent East (Hospital East). The Board’s January 10, 1973, decision (201 NLRB No. 27) held that the hospitais violated Sections 8(a)(1) and (5) of the Act by unilaterally implementing a change in employee health insurance coverage and by refusing to bargain with an incumbent union.

The hospitals, located in Vallejo, California, are separate corporations engaged in the business of operating convalescent hospitals for profit. They are managed by a common administrator. In 1968, the Hospital and Institutional Workers’ Union, Local 250, Service Employees International Union (Union) was certified as the collective bargaining representative of separate units of housekeeping, dietary, and nursing employees at each hospital. On October 1, 1968, Hospital West entered into a collective bargaining agreement with the Union effective until July 31, 1971, and from year to year thereafter. Hospital East entered into a similar contract with the Union on June 23, 1969. Both agreements contained the identical provision for employee health insurance coverage which stated: “The Employer agrees to cover all eligible employees with a Group Health Insurance Plan . ” The Hospital East contract provided that the employer would bear the entire premium costs from the second and third years of the contract, while the Hospital West contract provided that this cost would be borne by the employer beginning the third year only. At no time during negotiations for either contract did the parties discuss any specific health insurance plan.

The hospitals implemented the insurance provision in 1970 by enrolling interested employees in a plan which was sponsored by the California Association of Employers (CAE), an organization to which the hospitals belonged and which had represented the hospitals during bargaining negotiations with the Union. However, on August 3, 1971, the hospitals were notified that their participation in the CAE health plan was being terminated as a result of the hospitals’ earlier unrelated election to withdraw from the CAE organization. Shortly after receipt of this notice, the hospitals enrolled the two employees who were then still covered by CAE insurance (a third chose to cancel) in a more beneficial Kaiser health program. This selection was made without notification to the Union, which during this period was negotiating a new contract with the hospitals. Moreover, the new contract proposals included a provision for employee selection of the Kaiser plan or another similar program at the employee’s option. The hospitals consistently rejected the contract proposals. The Union continued to negotiate unsuccessfully with the hospitals until December 1971. At that time the joint administrator of the hospitals received decertification petitions signed by a majority of workers at each unit and withdrew further recognition of the Union as the bargaining representative.

The NLRB found that the hospitals’ unilateral insurance change for two employees constituted an unfair labor practice tending to undermine employee confidence in the Union. More significantly, however, the Board concluded that this misconduct precluded the hospitals from relying upon the decertification petitions and withdrawing recognition of the Union. A mandatory bargaining order was accordingly issued by the Board.

We believe that the enrollment of two employees in the Kaiser plan during the period when insurance plans were the subject of collective bargaining did constitute a marginal violation of section 8(a)(1) and we affirm the Board’s finding on this point. However, we do not find support in the record for the Board’s second conclusion that this insubstantial technical violation vitiated the effectiveness of the decertification petitions. That is, apart from the Board’s bare conclusion that the changeover “would have a natural tendency to undermine the Union’s effectiveness as a bargaining instrument in the eyes of the employees, and its majority representative status,” evidence of a causal connection between the hospitals’ misconduct and the Union’s loss of representative status is lacking.

To be distinguished are cases such as Franks Bros. Co. v. NLRB, 321 U.S. 702, 64 S.Ct. 817, 88 L.Ed. 1020 (1943) (where the union lost its majority status as a direct result of the employer’s aggressive anti-union activities, including the firing of union members) and NLRB v. Sky Wolf Sales, 470 F.2d 827 (9th Cir. 1972) (where the employer was actively involved in the circulation of decertification petitions). In each of these cases as in NLRB v. C & C Plywood Corp., 413 F.2d 112 (9th Cir. 1969), there was “substantial evidence” to support the finding that the employer’s unfair practice contributed to the loss of majority status. Such was not the case here, and we therefore conclude that the hospitals’ refusal to bargain in December 1971 following receipt of the decertification petitions was not unlawful. We follow the lead of the Seventh Circuit in treating the refusal to bargain and appropriateness of a mandatory bargaining order as interrelated questions in this- instance. Peerless of American, Inc. v. NLRB, 484 F.2d 1108 (7th Cir. 1973) (relying heavily upon the Supreme Court’s analysis in NLRB v. Gissel Packing Co., 395 U.S. 575, 89 S.Ct. 1918, 23 L.Ed.2d 123 (1969)). We necessarily conclude that the bargaining order was inappropriate.

For the reasons stated, enforcement of the Board’s mandatory bargaining order is denied.

GRAY, District Judge

(concurring):

I agree that the enforcement of the Board’s mandatory bargaining order must be denied. However, I would deny such enforcement because I am unable to conclude that, under the circumstances, the enrollment of the two employees in the Kaiser health program constituted even a marginal violation of section 8(a)(1).

      . The hospitals assumed that the provision imposed upon them the implementation of the provision.

      . Nor apparently to any other employee apart from the three whose coverage by CAE was being terminated.

      . As pointed out by the Trial Examiner the negotiations over the contract proposals presumptively included many subjects such as “wages, hours of work, union security, shift differentials, vacations and sick leave.” With the record incomplete on overall negotiations he could not find that the rejection of the hospital plan proposals was in bad faith and thus amounted to an unlawful refusal to bargain. C.T. at 29.

       The Trial Examiner stated that the record provided no basis for denying authenticity to the signatures on the Deauthorization [sic] Petitions, “and there is no evidence that either Respondent had any responsibility for the origin or circulation of either document, In short, I take both Deauthorization Petitions to be what their language purports them to be.”


author: PELL, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. James R. HOFFA and Calvin Kovens, Defendants-Appellants.
    Nos. 73-1123, 73-1124.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 14, 1973.
    Decided May 17, 1974.

      Harvey M. Silets, Theodore A. Sinars, Carl M. Walsh, Chicago, 111., for defendants-appellants.
    James R. Thompson, U. S. Atty., Martin B. Lowery, Asst. U. S. Atty., Chicago, 111., for plaintiff-appellee.
    Before CASTLE, Senior Circuit Judge, and PELL and SPRECHER, Circuit Judges.
   PELL, Circuit Judge.

Appellants, James Hoffa and Calvin Kovens, appeal from the district court’s taxation of costs of prosecution to them. The appellants were convicted in 1964 of conspiracy and mail and wire fraud. They were sentenced to various terms of imprisonment and fined certain sums together with the costs of prosecution. Subsequent to sentencing, various appeals were taken. In 1972, within one year of the entry of the final order in the case, the Government filed a bill of costs.

Conceding that the taxation of costs is a matter of the district court’s discretion, the appellants raise three issues on appeal: (1) whether the doctrine of laches prohibits the Government from presenting its bill of costs; (2) whether costs were properly assessed for Government witnesses who were subpoenaed but did not testify; (3) whether costs were properly assessed for Government witnesses at a post-appeal hearing.

I. Laches.

The appellants first contend that since the Government presented its bill of costs more than eight years after the entry of judgment, the Government has been guilty of laches and should be es-topped from collecting these costs at this time. The appellants note that the rules for imposition of costs in criminal cases are the same as in civil cases. Bozel v. United States, 139 F.2d 153, 157 (6th Cir. 1943), cert. denied, 321 U.S. 800, 64 S.Ct. 937, 88 L.Ed. 1087 (1944); 2 Wright, Federal Practice and Procedure: Criminal § 528, at 432 (1969). All of the Federal Rules of Civil Procedure, including Rule 54(d) relating to costs, must be interpreted in light of Rule 1, which provides that the rules “shall be construed to secure the just, speedy, and inexpensive determination of every action.” (Emphasis added.) To permit the Government to recover its costs now, appellants argue, would violate the directive of Rule 1. In so arguing, the appellants rely on United States v. Pinto, 44 F.R.D. 357 (W.D.Mich.1968), in which a delay of almost four years in presenting a bill of costs was held to violate the provisions of Rule 1. As further evidence that the delay in the present case is unreasonable, the defendants point out that where local court rules have been adopted on the subject, the time limit for filing a bill of costs is typically 10 days. If 10 days is a reasonable period, appellants contend, eight years must surely be unreasonable.

Two factors cause us to find the defendants’ contention of laches unpersuasive. First, during the eight years between the entry of judgment and the filing of the bill of costs, appellants pursued a series of appeals. United States v. Pinto is clearly distinguishable since in that case there was a simple consent judgment with no appeals following. Moreover, the Government did, in the present case, file its bill within one year of the entry of the final order. Second, there was no local rule relating to the time for filing a bill of costs in existence when the judgment was entered. The cases cited by appellant dealing with delay where there is such a local rule are, therefore, inapplicable to the situation before us. We are unwilling to declare that the mere fact of an excess of time over that specified in local rules in other jurisdictions is ipso facto unreasonable. In the absence of such a local rule, the circumstances of the particular case must be considered in determining whether the delay was reasonable. While eight years is obviously a long time, nevertheless — in view of the complicated nature of the case, the series of appeals encompassing seven years, the fact that the bill was filed within one year after the final culmination of the case, the obvious situation that the costs were not going to be paid until every appellate avenue had been exhausted, and the absence of a local rule — -we are unable to say the delay violates Rule 1. Therefore, the district court did not abuse its discretion in taxing costs to appellants.

II. Witnesses.

The bill of costs assessed against the appellants includes fees for approximately 28 witnesses who were subpoenaed but who never testified. The Government acknowledges that the longstanding rule of this circuit is that a presumption exists that the testimony of such witnesses was not material and, therefore, the fees attributable to these witnesses are not chargeable.

“[W]hen witnesses are subpoenaed, but do not testify, the presumption is that their testimony was not material and that they were unnecessarily brought to court, and . . . the fees of such witnesses are not chargeable against the losing party.” United States v. Lee, 107 F.2d 522, 527 (7th Cir. 1939), cert. denied, 309 U.S. 659, 60 S.Ct. 513, 84 L.Ed. 1008 (1940).

This presumption may be rebutted by proving to the trial court that these non-testifying witnesses were, in fact, material and necessary to an issue in the case. Thus, in United States v. Lee, supra, this court affirmed the granting of such costs where the district court had acted on the basis of duly verified affidavits. Similarly, in Federal Savings & Loan Ins. Corp. v. Szarabajka, 330 F.Supp. 1202 (N.D.Ill.1971), the judge granted such costs after reviewing the depositions of the nontestifying witnesses.

Unlike Lee and Szarabajka, Government counsel here did not produce statements of the nontestifying witnesses or explain how the proposed testimony of each such witness was necessary to its case. Rather, Government counsel merely asserted, without presenting any foundation, that the testimony of all subpoenaed witnesses was necessary. Such a bald assertion is not sufficient to rebut the presumption of immateriality. The Government contends that the district judge had “intimate firsthand knowledge” of the case and, therefore, no further explanation of the necessity of the nontestifying witnesses was required. This contention is without merit for even if the busy trial judge’s memory could successfully span nearly a decade as to what witnesses’ testimony was relevant and material to an issue in the case and reasonably necessary to its disposition, Federal Savings & Loan Ins. Corp. v. Szarabajka, 330 F.Supp. 1202 (N.D.Ill.1971), we cannot conceive that he could have applied the test to witnesses who did not reach the stand.

As the matter stands on this appeal, the presumption of immateriality by the nontestifying witnesses has not been rebutted. It certainly was not rebutted, in our opinion, by the suggestion, in a district court brief filed by the Government, that perhaps these witnesses were to identify the voluminous documents gathered by the prosecution and that their testimony was ultimately deemed unnecessary. Therefore, it is necessary that we reverse the district court’s order insofar as it pertains to the costs of the 28 witnesses. This is not so much a matter of abuse of discretion as it is that we are unable to find that any real consideration was given to the question of materiality of their testimony.

The reversal projects the next question being the status of whether further proceedings in this matter are proper. The appellants argue, apparently on some sort of an equitable theory, that the order should be vacated as to the 28 witnesses and no further consideration should be given to this phase of the case. While we appreciate the desirability of terminating litigation with reasonable dispatch, we do not think that the Government, if in fact the 28 witnesses were material in the sense in which we have discussed that matter, should be deprived of the opportunity of showing this.

Accordingly, this issue will be remanded for further proceedings. This does not necessarily require an evidentiary hearing. Lee, supra. There should be a determination, however, on a factual basis, and in the absence of demonstrable facts the presumption will prevail.

III. Post-Appeal Hearing.

Finally, the defendants object to the inclusion in the bill of costs of fees relating to a hearing following the initiation of their appeals. This hearing was ordered by the United States Supreme Court [Hoffa v. United States, 387 U.S. 231, 87 S.Ct. 1583, 18 L.Ed.2d 738 (1967)] to determine whether certain evidence used by the Government at the trial tainted the proceedings. (The evidence in question was the tape from an admittedly illegal wiretap.) The appellants contend that these fees are not taxable since such fees arose as a result of appealing and amount to an additional penalty on exercising the right to appeal.

The hearing on remand was clearly a result of defendants’ appeal as well as being a phase thereof. Had Hoffa and Kovens not appealed, the hearing would not have been ordered and the costs attributable to it not incurred. While we have found no case dealing directly with this issue, the situation is somewhat analogous to that in North Carolina v. Pearce, 395 U.S. 711, 726, 89 S.Ct. 2072, 2081, 23 L.Ed.2d 656 (1969), where the Supreme Court held that due process required that “whenever a judge imposes a more severe sentence upon a defendant after a new trial, the reasons for his doing so must affirmatively appear.” The Court in Pearce noted that “[a] court is ‘without right to * * * put-a price on an appeal. A defendant’s exercise of a right of appeal must be free and unfettered. . . .’” 395 U.S. at 724. When costs are taxed to a defendant in a criminal case, the costs are part of the sentence. Barnes v. United States, 223 F.2d 891, 892 (5th Cir. 1955). By charging the appellants here with the cost of the post-judgment, appeal-connected hearing, the trial court has, without any statement of reasons, effectively increased penalties because of the appeal. Such a practice, if it is allowed, will discourage defendants from fully exercising their right of appeal.

Further, it is of significance that the sole purpose of the hearing was to determine whether the wiretap evidence, which was not admitted by the Government to be illegal until the appeals were lodged in the Supreme Court, tainted the trial proceedings from which the appeals were being taken.

In accordance with this opinion, the judgment of the district court is affirmed except (a) as to the 28 nontestifying witnesses, as to which the cause is remanded for further proceedings in accordance with this opinion and (b) as to the costs attributable to the post-convietion hearing as to which the judgment is reversed and vacated.

      . Both sides agree that Local Rule 45, recently adopted by the United States District Courts for the Northern District of Illinois, is inapplicable to the present case.

      . Rule 39(b) of the Federal Rules of Appellate Procedure is not directly applicable to the present case since the action, upon remand from the Supreme Court, was within the sole jurisdiction of the district court. Rule 39(b) is relevant, however, insofar as it indicates a general policy of not taxing the costs of the appellate processes to the defendant in cases involving the United States, unless such taxing is authorized by law.


author: J. JOSEPH SMITH, Circuit Judge:

text:
    KFC NATIONAL MANAGEMENT CORP., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 821, Docket 73-1982.
    United States Court of Appeals, Second Circuit.
    Argued March 29, 1974.
    Decided May 8, 1974.

      Jay S. Siegel, Hartford, Conn. (Siegel & O’Connor, Hartford, Conn.), for petitioner.
    Alan David Cirker, Atty., NLRB (Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Michael S. Wolly, Atty., NLRB, Washington, D. C., of counsel), for respondent.
    Before KAUFMAN, Chief Judge, and SMITH and ANDERSON, Circuit Judges.
   J. JOSEPH SMITH, Circuit Judge:

KFC National Management Corp., ordered by the National Labor Relations Board (204 N.L.R.B. No. 69) to bargain with a union certified as representative of its employees petitions for review of the order and the Board cross-petitions for enforcement. Review granted. Cross-petition for enforcement denied.

This petition for review of an unfair labor practice decision raises the troublesome question of delegation of authority in administrative decision making. The genesis of the petition, was a representation election contested by the employer, KFC, on grounds of pro-union activity of supervisory employees. The NLRB Regional Director, to whom KFC protested, conducted an ex parte investigation into the company’s claims and concluded that they had “no merit” and that therefore the union should be certified as the duly-elected bargaining representative.

Dissatisfied with both the Director’s findings and his failure to conduct an adversary hearing, KFC petitioned the Board for review. On September 7, 1972 — approximately two weeks after the petition was filed — KFC’s counsel received a brief telegram informing him that the request had been denied “as it raises no substantial issues warranting review.” The telegram was signed, “By direction of the Board.” A further petition for reconsideration was similarly telegraphically denied, “as lacking in merit”' — again “By direction of the Board.”

When KFC continued to refuse to bargain, this unfair practice charge was filed. In its answer to the complaint, KFC again pressed its objections to the election and asked for a full hearing on its claims. In addition, the company for the first time challenged the denials of review and reconsideration on the grounds that the “Board” had in fact been composed of but one Board member and two staff assistants.

In its decision on the unfair practice charge, the Board — now eoncededly composed of three official members— refused to reconsider the Director’s decision relying on its “no relitigation” rule, and categorically rejected KFC’s procedural objection as an unjustified intrusion into its decision-making process.

As part of this petition for review of the Board’s unfair practice order, KFC made a motion for a supplemental list of materials including,

All documents, papers and records, including agenda memos, case summaries, etc. of the National Labor Relations Board and particularly members Miller, Fanning, and Jenkins, their agents, employees, attorneys and assistants, and in particular any such documents, papers and records in the Review Section of the Board under the supervision of Gilbert Rosenberg, relating to consideration of the Employer’s Request for Review.
. . . . . .

On October 17, 1973, this court denied the motion, except “to the limited extent” of requiring “that the Board shall serve and file a detailed statement showing the extent and date of the participation of members Miller, Fanning and Jenkins in the consideration of the Employer’s request and motion. . . .” The Board responded with an affidavit from its Executive Secretary stating:

Member Jenkins was personally present and Chairman Miller and Member Fanning were each represented by an attorney assistant employed on his respective staff who had been authorized to cast a vote for him at the said agenda. The vote at the agenda was unanimous to deny review.

From its own argument — both written and oral — we have further learned that the authorizations referred to were quite general in nature: In the normal course of events, Board members seldom discuss individual cases with their assistants prior to these voting sessions. There is, apparently, a one-day period between the votes and the filing of decisions, but there is no evidence that the members normally review the votes cast by their staff assistants. The Board has represented — and we have no reason to doubt — that particularly difficult or significant eases receive the individual attention of the members either before or after their votes are cast by their proxies. But there is no suggestion that such was the case here: Indeed it is the Board’s position that this case — like the vast majority of review petitions — was so routine that it was well suited to this general delegation approach.

I.

The question then is whether this virtually complete delegation comports with the requirements of the National Labor Relations Act and of administrative due process in general.

Inquiry into the statutory requirements of the National Labor Relations Act should begin with a bit of legislative history. Until the Landrum-Griffin Act of 1959, the Board was directly responsible for each and every representation decision. This tremendous burden — over 10,000 cases in 1959 — prompted Congress to amend the Act to permit delegation of those decisions to the Board’s Regional Directors — -subject to discretionary review by the Board:

The Board is also authorized to delegate to its regional directors its powers under section 159 of this title to . certify the results [of bargaining elections], except that upon the filing of a request therefor with the Board by any interested person, the Board may review any action of a regional director delegated to him under this paragraph.

29 U.S.C. § 153(b).

In 1961 the Board exercised this authority by delegating representation matters subject to review by the Board on four different grounds:

(c) The Board will grant a request for review only where compelling reasons exist therefor. Accordingly, a request for review may be granted only upon one or more of the following grounds:
(1) That a substantial question of law or policy is raised because of (i) the absence of, or (ii) a departure from, officially reported Board precedent.
(2) That the regional director’s decision on a substantial factual issue is clearly erroneous on the record and such error prejudicially affects the rights of a party.
(3) That the conduct of the hearing or any ruling made in connection with the proceeding has resulted in prejudicial error.
(4) That there are compelling reasons for reconsideration of an important Board rule or policy.

29 C.F.R. § 102.67(c).

Section 102.67 makes it clear that the decision on whether or not to grant such review is also to be made by the Board. See 29 C.F.R. § 102.67 (e, f). While there is a provision for automatic consideration of cases referred to the Board by the Regional Directors, 29 C.F.R. § 102.67(h), there is no converse language in either the statute or regulations suggesting that the Regional Director, or any other non-member, can preclude Board review.

Thus as the Board concedes, it, and it alone, had to rule on KFC’s review petition. And as is further undisputed, such Board action could be taken by no fewer than two members acting as a quorum of a three-member panel. 29 U.S.C. § 153(b). Thus the real question is whether the two absent members here could legally authorize their staff assistants to vote in their place.

Here again legislative history is somewhat instructive. In 1947 a Congress concerned with excessive “institutional” decision making by the NLRB — and particularly the rather intimate relationship between the trial examiners initially deciding cases and the corps of staff attorneys advising the Board members on their review — amended the National Labor Relations Act to provide for more independent, personal adjudication.

The Board, undoubtedly aware that this portion of the Taft-Hartley Act expressed Congress’ general distrust of review attorneys, nevertheless argues that in making each assistant responsible to but one Board member, Congress intended to foster even greater delegations from member to assistant. We cannot agree. Rather we believe that the authors of Taft-Hartley were only prepared to permit the staff assistants to aid the members who were themselves to be responsible for the Board's actions. Davis, Administrative Law Treatise § 11.13 (1958). For example, while the allocation of the Board’s administrative, prosecutorial, and adjudicative functions is well discussed in the Taft-Hartley conference report, there is no suggestion that the Board members could or should delegate their “quasi-judicial” function to their staff assistants beyond that of reviewing transcripts or preparing draft opinions. 1947 U.S.Code Congressional Service pp. 1135, 1142-1143 (1947).

Here, of course, the staff assistants of two members did far more and, more importantly, they did so without guidance from the members themselves. They did not merely assist the members; they acted in their stead. In view of the rather clear congressional distrust of staff assistants — who are, of course, neither appointed by the President nor approved by the Senate, as are the Board members, 29 U.S.C. § 153(a) — we cannot say that Congress intended, or would have approved, the general proxies issued here. We hold, therefore, that the “Board’s” votes in this case fail to satisfy the two-member quorum and three-member panel requirements of the Act. 29 U.S.C. § 153(b).

II.

The Board nevertheless argues that such delegation is supported by the law of administrative decision making, most notably United States v. Morgan, 313 U.S. 409, 61 S.Ct. 999, 85 L.Ed. 1429 (1941). In order to assess this claim, we must consider the rather tortured history of that decision. We begin with the first of no less than four Morgan decisions, Morgan v. United States, 298 U. S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936). There Chief Justice Hughes— writing for a unanimous Court — examined the essentials of a valid administrative decision-making process:

The requirement of a “full hearing” has obvious reference to the tradition of judicial proceedings in which evidence is received and weighed by the trier of the facts. The “hearing” is designed to afford the safeguard that the one who decides shall be bound in good conscience to consider the evidence, to be guided by that alone, and to reach his conclusion uninfluenced by extraneous considerations which in other fields might have play in determining purely executive action. The “hearing” is the hearing of evidence and argument. If the one who determines the facts which underlie the order has not considered evidence or argument, it is manifest that the hearing has not been given.

298 U.S. 468, 480-481.

The Court then rejected a delegation theory not unlike the one advanced here:

In such a view, it would be possible, for example, for one official to hear the evidence and argument and arrive at certain conclusions of fact and another official who had not heard or considered either evidence or argument to overrule those conclusions and for reasons of policy to announce entirely different ones. It is no answer to say that the question for the court is whether the evidence supports the findings and the findings support the order. For the weight ascribed by the law to the findings — their conclusiveness when made within the sphere of the authority conferred — rests upon the assumption that the officer who makes the findings has addressed himself to the evidence, and upon that evidence has conscientiously reached the conclusions which he deems it to justify. That duty cannot be performed by one who has not considered evidence or argument. It is not an impersonal obligation. It is a duty akin to that of a judge. The one who decides must hear.

298 U.S. 468, 481.

However, the Court was quick to add —in d passage often forgotten by its critics — that this principle did not preclude every delegation of adjudicatory responsibility:

This necessary rule does not preclude practicable administrative procedure in obtaining the aid of assistants in the department. Assistants may prosecute inquiries. Evidence may be taken by an examiner. Evidence thus taken may be sifted and analyzed by competent subordinates. Argument may be oral or written. The requirements are not technical. But there must be a hearing in a substantial sense. And to give the substance of a hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determinations must consider and appraise the evidence which justifies them.

298 U.S. 468, 481-482.

Two years later in Morgan II, 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 (1938), the Court — again with Chief Justice Hughes writing for the majority — clarified Morgan I in accepting the administrator’s representations that he had made an independent review of the ease:

In the light of this testimony there is no occasion to discuss the extent to which the Secretary examined the evidence, and we agree with the Government’s contention that it was not the function of the court to probe the mental processes of the Secretary in reaching his conclusions if he gave the hearing which the law required.

304 U.S. 1, 18.

Finally, in Morgan IV, 313 U.S. 409, 61 S.Ct. 999, 85 L.Ed. 1429 (1941), a unanimous Court — this time through Justice Frankfurter — re-emphasized that once the threshold requirement of an individual decision is established, no further inquiry is justified:

[The Secretary’s] testimony shows that he dealt with the enormous record in a manner not unlike the practice of judges in similar situations, and that he held various conferences with the examiner who heard the evidence. Much was made of his disregard of a memorandum from one of his officials who, on reading the proposed order, urged considerations favorable to the market agencies. But the short of the business is that the Secretary should never have been subjected to this examination. The proceeding before the Secretary “has a quality resembling that of a judicial proceeding”. Morgan v. United States, 298 U.S. 468, 480, [56 S.Ct. 906, 911, 80 L.Ed. 1288]. Such an examination of a judge would be destructive of judicial responsibility. We have explicitly held in this very litigation that “it was not the function of the court to probe the mental processes of the Secretary”. 304 U.S. 1, 18 [58 S.Ct. 773, 776, 82 L.Ed. 1129], Just as a judge cannot be subjected to such a scrutiny, compare Fayerweather v. Ritch, 195 U.S. 276, 306-307 [25 S.Ct. 58, 67, 49 L.Ed. 193], so the integrity of the administrative process must be equally respected. See Chicago, B & Q. Ry. Co. v. Babcock, 204 U.S. 585, 593, [27 S.Ct. 326, 327, 51 L.Ed. 636].

313 U.S. 409, 422.

Thus what emerges from the Morgan quartet is the principle that those legally responsible for a decision must in fact make it, but that their method of doing so — their thought processes, their reliance on their staffs — is largely beyond judicial scrutiny.

This court and many others have consistently relied on Morgan to uphold the use of hearing examiners in developing evidence and forming preliminary decisions, the reliance on staff assistants for recommendations and draft opinions, and a variety of other procedures designed to apprise those legally responsible for administrative decisions with the critical issues and evidence in a case and to record their individual determinations. Concomitantly, the courts have consistently refused to issue subpoenas for the work product of such decision-making processes: Staff memos, expert reports, preliminary drafts, the oral testimony of the decision makers as to the basis for their opinions— all have been held to be beyond the purview of the contesting parties and the reviewing courts.

But even as the courts have upheld these various practices, they have derived from Morgan the corollary principle that once there has been a prima facie demonstration of impropriety the courts will inquire into the administrative process in order to insure that the decision making was informed, unbiased, and personal. See Citizens To Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Singer Sewing Machine Co. v. NLRB, 329 F.2d 200, 206-208 (4th Cir. 1964); S. D. Warren Co. v. NLRB, 342 F.2d 814, 816-817 (1st Cir. 1965), cert. denied, 383 U.S. 958, 86 S.Ct. 1222, 16 L.Ed.2d 300 (1966); NLRB v. Sun Drug Co., 359 F.2d 408, 413 (3rd Cir. 1966); National Nutritional Foods Association v. FDA, 491 F.2d 1141, 1145 (2d Cir. 1974). See also, T.S.C. Motor Freight Lines, Inc. v. United States, 186 F.Supp. 777, 789-790 (S.D.Tex.1960), aff’d 366 U.S. 419, 81 S.Ct. 1356, 6 L.Ed. 2d 387 (1961). Here, of course, the relevant facts have largely been admitted: The Board’s counsel conceded at oral argument that there was no claim of proof that the individual members whose votes were cast by the assistants ever considered this case. Indeed the Board further admitted — and Professor Murphy’s account suggests — that such individual consideration of routine cases is the exception rather than the rule.

Given these admissions, we believe the Board’s reliance on our decision in Eastern Air Lines, Inc. v. CAB, 271 F.2d 752 (2d Cir. 1959), cert. denied, 362 U.S. 970, 80 S.Ct. 954, 4 L.Ed.2d 901 (1959) is simply misplaced. It is true that Eastern Air Lines upheld the casting of members’ votes by their assistants, but as the opinion makes clear, the vote there was after consideration by and pursuant to instructions of the agency members in contrast to the votes at issue here.

Here there is no evidence that the Board members considered this case or instructed their assistants on how to vote. And, of course, the votes here were final, not mere tentative tallies for the purpose of issuing a press release.

In this regard it should be noted that the Board’s subsequent statement that the votes had been “authorized” does not constitute a ratification of the prior proxies: The Board in no way suggests that it has reconsidered the merits of the review petition, but rather only that it issued the staff assistants’ proxies. But it is the petitioner’s contention — and our holding — that such proxies were themselves invalid and could not be issued under the National Labor Relations Act.

III.

We hold no more than that the general proxies issued by the Board members to those not legally responsible for the review of representation decisions were invalid under both the statutory requirements of the National Labor Relations Act and the fundamental concepts of administrative due process. The members may, of course, continue to rely on their assistants for ease summaries, legal memoranda, and draft opinions. And it may be that the Board as a whole may utilize its rule-making authority to restrict further — in a general, principled manner — its review of representation cases. If the members find the individual consideration of review petitions too burdensome, they may of course, petition Congress for further relief. So long as the Board’s statutory basis and its own regulations provide for Board review of the Regional Director’s decisions, however, it is the legally appointed and approved Board members, and not their staff assistants, who must make the final decisions on whether or not to grant review.

We deny enforcement and remand for consideration of petitioner’s request for Board review of the Regional Director’s representation decision.

      . For the first time in this review petition the Board contends that petitioner is barred from raising this procedural claim because it failed to object to the “Board’s” composition at the time it sought review and reconsideration. We cannot agree. While it is true that objections to administrative procedures must be timely made with the agency, the rule is only intended to preclude parties from raising their objections for the first time in the reviewing courts. See, e. g., NLRB v. Ra-Rich Mfg. Corp., 276 F.2d 451, 455 (2d Cir. 1960) ; NLRB v. Rexall Chemical Co., 370 F.2d 363, 365 (1st Cir. 1967) ; NLRB v. Rod-Ric Corp., 428 F.2d 948, 950 (5th Cir. 1970), cert. denied, 401 U.S. 937, 91 S.Ct. 922, 28 L.Ed.2d 216 (1971).
      Here an objection was made to, and ruled upon by, the Board before it was presented to this court. Moreover, it is difficult to see how these objections could have been made earlier given the fact that following Board practice, the motions for review and reconsideration were neither presented to, nor decided by, the “Board” in person. We therefore believe that the objections first presented a few months later to the Board considering the unfair practice charge were timely.

      . “Respondent also seeks, by answer, to probe the internal processes of this Board, by alleging that, on information and belief, no quorum of the Board was present when Respondent’s Request for Review and Motion for Reconsideration in the underlying representation case were acted upon by the Board. Respondent does not, nor indeed can it, assert that the Order issued in the name of the Board denying the Request for Review and Motion for Reconsideration were not duly authorized by action taken by the Board. While quite superfluous, lest there be any doubt by any reviewing court which might consider this proceeding, we record here and now that said Orders were authorized by this panel to be issued by the Board’s Executive Secretary. Beyond that, Respondent has neither right nor privilege to inquire. Neither the mental nor internal administrative processes of an administrative agency may be probed by a party to the proceedings, and no Board Member or other official may be called upon to testify in any hearing designed as a fishing expedition into those processes. Morgan v. U. S. [United States v. Morgan], 313 U.S. 409, 422, [61 S.Ct. 999, 85 L.Ed. 1429].”
      The Board continued:
      “Whether there was a quorum of Board Member [sic] present at any formal meeting of this panel which may have been called for purposes of oral discussion of the Request for Review and Motion for Reconsideration submitted by the Respondent is, in any event, of no legal import. For this Board, like other administrative agencies, may properly act upon such matters with or without a formal meeting of its Members. Or, if the agency so chooses, its Members may decide that they would be aided by the benefit of discussions or consultations between one or more Members and/or with persons, serving on any Board Member’s staffs. It is now clear that administrative agencies, like most courts of appeals in certain cases, may decide matters by notation and with no meeting at all. As was said in TSC Motor Freight Lines, Inc. v. United States, 186 F.Supp. 777, 786; affd. in Heirin [Herrin] Transportation Co. v. United States, 366 U.S. 419 [81 S.Ct. 1356, 6 L.Ed .2d 387] (1961) :

        The statute does not specifically provide that administrative action be taken concurrently by the deciding members in a formal meeting and we decline to impose such a requirement.”

      . In Fiscal Year 1972 only 176 representation cases were decided by the Board — 1.3% of all cases filed and 7.9% of those considered by the Regional Directors. Thirty-Seventh Annual Report of the National Labor Relations Board 240 (1972).

      . This description of Board practice in the representation context will come as no surprise to those knowledgeable in labor law. In 1967, Professor William Murphy — a labor law specialist reporting on a year as “Professor-in-Residence” with the Board — described the process:
      Representation (R) cases are handled quite differently at the Board from [unfair practice] cases. . . . The Requests for Review are handled by a special unit of about ten attorneys drawn from the staffs of all five Board members. Each request for review is studied carefully by a legal assistant and a supervisor, and an oral presentation is made to a three-man panel which decides whether or not to grant review. This panel is composed of one Board member and a senior attorney from the staff of two other Board members. The Board members rotate this assignment every two months. The head of the unit notifies the Board member when he has a group of cases ready for reporting, and the panel meets two or three afternoons a week at the convenience of the Board member.
      Significantly, Professor Murphy added :
      Although the R case work of the Board is not as dramatic and newsworthy as unfair labor practices are, there are many people who consider it more important in a practical, or bread-and-butter, sense.
      Murphy, The National Labor Relations Board —An Appraisal, Proceedings of the Thirteenth Annual Labor Law Institute, Southwestern Legal Foundation Nov. 2-3, 1967, 113, 132-33 (1968).

      . In Fiscal Year 1960 the Board decided 2415 representation cases out of over 10,000 filed. Twenty-Fifth Annual Report of the National Labor Relations Board 188 (1961).

      . The Board may not employ any attorneys for the purpose of reviewing transcripts of hearings or preparing drafts of opinions except that any attorney employed for assignment as a legal assistant to any Board member may for such Board member review such transcripts and prepare such drafts. No trial examiner’s report shall be reviewed, either before or after its publication, by any person other than a member of the Board or his legal assistant, and no trial examiner shall advise or consult with the Board with respect to ex-eeptions taken to his findings, rulings, or recommendations.
      29 U.S.C. § 154(a).

      . Davis, Administrative Law Treatise § 11.13 (1958).

      . Morgan v. United States, 298 U.S. 468, 481, 56 S.Ct. 906, 80 L.Ed. 1288 (1936); Labor Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 350-51, 58 S.Ct. 904, 82 L.Ed. 1381 (1938); Edison Co. v. Labor Board, 305 U.S. 197, 228, 39 S.Ct. 206, 83 L.Ed. 126 (1938), Southern Garment Manufacturers Ass’n v. Fleming, 74 App.D.C. 228, 122 F.2d 622, 625-626 (1941, Vinson, J.); NLRB v. Baldwin L. Works, 128 F.2d 39, 47-48 (3rd Cir. 1942); Norris & Hirshberg v. SEC, 82 U.S.App.D.C. 32, 163 F.2d 689, 693 (1947), cert. denied, 333 U.S. 867, 68 S.Ct. 788, 92 L.Ed. 1145 (1948); NLRB v. Stocker Mfg. Co., 185 F.2d 451, 452-454 (3rd Cir. 1950); Utica Mutual Insurance Co. v. Vincent, 375 F.2d 129, 131-132 (2d Cir. 1967), cert. denied, 389 U.S. 839, 88 S.Ct. 63, 19 L.Ed.2d 102 (1967); Braniff Airways, Inc. v. CAB, 126 U.S.App.D.C. 399, 379 F.2d 453, 461 (1967).

      . T.S.C. Motor Freight Lines, Inc. v. United States, 186 F.Supp. 777, 787-790 (S.D.Tex. 1960), aff’d 366 U.S. 419, 81 S.Ct. 1356, 6 L.Ed.2d 387 (1961); Braniff Airways, Inc. v. CAB, 126 U.S.App.D.C. 399, 379 F.2d 453, 461 (1967); National Nutritional Foods Ass’n v. FDA, 491 F.2d 1141, 1146 (2d Cir. 1974).

      . Utica Mutual Insurance Co. v. Vincent, 375 F.2d 129, 131-134 (2d Cir. 1967), cert. denied, 389 U.S. 839, 88 S.Ct. 63, 19 L.Ed.2d 102 (1967); Braniff Airways, Inc. v. CAB, 126 U.S.App.D.C. 399, 379 F.2d 453, 461 (1967) (proper to direct a subordinate to affix the signature of an agency member to an opinion he had approved); Sisto v. CAB, 86 U.S.App.D.C. 31, 179 F.2d 47, 53-54 (1949) (agency members need not be physically present at any one particular time to hear and consider evidence).

      . North American Airlines v. CAB, 100 U.S.App.D.C. 5, 240 F.2d 867, 874 (1956), cert. denied, 353 U.S. 941, 77 S.Ct. 815, 1 L.Ed.2d 760 (1957); Air Line Pilots Ass’n, Int. v. Quesada, 286 F.2d 319, 320 (2d Cir. 1961); Davis v. Braswell Motor Freight Lines, Inc., 363 F.2d 600, 604 (5th Cir. 1966); Bank of Commerce of Laredo v. City National Bank of Laredo, 484 F.2d 284, 287 (5th Cir. 1973), cert. filed, 42 U.S.L.W. 3490 (Jan. 22, 1974) .

      . Pursuant to a policy begun at some time more than two years ago, the Board, approximately two months after the completion of oral argument, issued a “press release” announcing the route awards it was granting in the Great Lakes-Southeast Service Case. The press release expressly stated that the announcement of the awards did not constitute decisions in the case but that decisions would be entered and issued later. We construe this language to mean that the announced awards did not constitute final determinations but were tentative only, and that there were to be no definitive awards until the issuance of the Board’s formal opinion.
      . . . [L]eaving aside the fact that these votes were merely tentative, we note that the votes in question were cast only after two days of discussion by the Board when all of its members were present, and that the votes later cast by the assistants were cast in compliance with instructions given by their superiors. Accordingly, we find no improper delegation. . . .
      271 F.2d 752, 757-758.

      . We similarly find little, if any, support for the Board’s position in our more recent decision in National Nutritional Foods, Inc. v. FDA, 491 F.2d 1141 (2d Cir. 1974). While it is true that the court there held that there could be no inquiry into the decisional basis of an administrator’s ruling, the court was careful to note that the legally authorized official had in fact assumed responsibility for the decision by personally approving it. Id. at 1144, 1146. Here, by contrast, there was no such personal participation in the decision-making process.
      This distinction between National Nutritional Foods and the instant case is further supported by the fact that two of the three judges who ordered the limited inquiry here into the members’ participation, Judges Friendly and Anderson, took part in National Nutritional Foods.

      . In reaching this decision, we are not unmindful of the tremendous number of representation contests. In Fiscal Year 1972, 2228 cases reached the level of a final decision by the Regional Directors, with 176 receiving further review by the Board. Thirty-Seventh Annual Report of the National Labor Relations Board, 240 (1972).
      There would appear to be two obvious possibilities open to the Board and Congress if the Board finds individual consideration too burdensome: First, § 9(c) of the Act could be amended to make the Regional Director’s decision final; second, the quorum requirements of § 3(b) could be reduced to only one member for purposes of granting or denying review by a full three-member panel. In either case, it would be Congress — and not administrative expedience — that would be amending the nation’s labor law.

      . While the Regional Director’s opinion may well he persuasive on petitioner’s underlying claims, we cannot say that one who seeks full Board review in even such a case is clearly acting in bad faitb, so as to constitute a refusal to bargain. See, Ernie Grissom Chevrolet, Inc., 168 N.L.R.B. 1052, 1055 (1967).