author: ALFRED T. GOODWIN, Circuit Judge:

text:
    HANCOCK FINANCIAL CORPORATION, a Delaware corporation, Appellant, v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an instrumentality of the United States of America, as receiver for Gibraltar Savings and Loan Association, an Arizona corporation, Appellee. HANCOCK FINANCIAL CORPORATION, a Delaware corporation, Appellee, v. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an instrumentality of the United States of America, as receiver for Gibraltar Savings and Loan Association, an Arizona corporation, Appellant.
    Nos. 74-1137, 72-1327.
    United States Court of Appeals, Ninth Circuit.
    Feb. 26, 1974.

      Robert R. Thornton, Hahn, Cazier, Thornton, Hoegh & Leff, Los Angeles, Cal., Edward V. Sexton, Phoenix, Ariz., for appellant (74-1137), for appellee (72-1327).
    Daniel J. Goldberg, Associate Gen. Counsel, Fed. Sav. & Loan Ins. Corp., Washington, D. C., Bernald C. Porter, Tempe, Ariz., for appellee (74-1137), for appellant (72-1327).
    Before CHAMBERS, CARTER, and GOODWIN, Circuit Judges.
   ALFRED T. GOODWIN, Circuit Judge:

Hancock, the principal stockholder in Gibraltar Savings and Loan Association, appeals the refusal by the district court to enjoin the sale of Gibraltar’s assets by its receiver. The court dismissed the action on the ground that subject-matter jurisdiction was expressly barred by statute. We affirm.

Gibraltar, chartered by the State of Arizona, was insured by the Federal Savings and Loan Insurance Corporation (FSLIC). In 1966 the Superior Court for Maricopa County appointed the FSLIC as receiver for Gibraltar and directed it to liquidate Gibraltar’s assets. By the end of 1971, virtually all the receivership assets had been sold except a portofolio of marketable mortgages, real-estate contracts, and a few parcels of real estate, with an aggregate book value of $16.5 million. On December 15, 1971, the Superior Court entered an order permitting the FSLIC to sell these remaining assets to a savings and loan association in Phoenix. Hancock filed a petition in the Arizona Court of Appeals to stay the order of the Superior Court, but that petition was denied. Thereafter, the minority stockholders of Gibraltar filed their notice of appeal from the order of the Superior Court.

Meanwhile, on December 21, 1971, before the sale of the remaining assets could be consummated, Hancock initiated this action to enjoin the FSLIC from any further sale of Gibraltar’s assets. After the district court dismissed the complaint, it issued a temporary injunction to preserve the status quo pending appeal. (That injunction, • which brought the liquidation of Gibraltar to a standstill, must be dissolved upon the receipt of the mandate herein.)

Hancock asserts: (1) original jurisdiction under the provisions of 12 U.S.C. § 1730 (k) (1), as an action in which the FSLIC is a party; (2) original jurisdiction under 28 U.S.C. § 1337, as an action arising out of an act of Congress regulating commerce; (3) original jurisdiction under the provisions of 28 U.S.C. § 1331(a), as an action arising under the laws of the United States in which the matter in controversy exceeds $10,000; and (4) original jurisdiction under the provisions of 28 U.S.C. § 1332, as an action between citizens of different states in which the matter in controversy exceeds $10,000.

Each of Hancock’s asserted theories of federal jurisdiction has some general and superficial attraction, but all come to naught against the specific and controlling language of the proviso of 12 U.S.C. § 1730(k)(1), quoted in footnote 1. That clause states in pertinent part:

“-x- * * Provided, That any action * * * to which the Corporation is a party in its capacity as * * * receiver * * * of an insured State-chartered institution and which involves only the rights * * * 0f * * * stockholders * * * under State law shall not be deemed to arise under the laws of the United States * *

It is undisputed that the FSLIC is acting as the receiver of an insured state-chartered institution. Hancock, however, seeks to escape the consequences of this fact by arguing that its action involves more than the rights of stockholders under state law. Hancock claims to be also asserting rights under federal law. Hancock argues that the FSLIC was empowered to act as a receiver for Gibraltar under the provisions of 12 U.S.C. § 1729(c)(1). That same clause states that, if so appointed, the FSLIC shall have the same duties as are conferred upon it with respect to federal savings and loan associations. Among these duties is the duty “to proceed to liquidate its [the association’s] assets in an orderly manner * * 12 U.S.C. § 1729(b)(5). The sale of the remaining real estate assets of Gibraltar did not constitute a liquidation in an orderly manner, Hancock asserts. Hence, Hancock concludes, a question is raised under a federal statute, thereby taking the case out of the exclusionary provision of § 1730(k)(1).

While the ingenuity of the argument is commendable, it proves too much. Every receiver is obligated to liquidate the receivership assets in an orderly manner; indeed, the order of the state court appointing the FSLIC as receiver required it so to act. There is no indication that § 1729(c)(1) and (b)(5) were intended to enlarge upon this already existing obligation inherent in any receivership.

Moreover, § 1729(d) provides:

“In connection with the liquidation of insured institutions in default, the Corporation shall * * * [be] subject only to the regulation of the court or other public authority having jurisdiction over the matter.” (Emphasis added.)

The “court” or “authority” mentioned above refers to the “court of competent jurisdiction or other public authority” which rendered the “adjudication or other official determination” pursuant to which the FSLIC “is appointed [as receiver] for an insured institution for the purpose of liquidation.” 12 U.S.C. § 1724(d). Since the Superior Court of Maricopa County appointed the FSLIC as receiver, the FSLIC is subject only to the regulation of that court, and the question of what constitutes an orderly liquidation must be litigated in that court in accordance with state law. Hancock, disappointed there, has tried a horizontal appeal to the district court.

If Hancock’s logic were accepted, the proviso clause would be rendered a nullity. In every ease where the FSLIC acts as a receiver, it would have the duty to liquidate assets in an orderly manner, thereby “raising a question of federal law” and taking the case out of the exclusionary provision. We are satisfied that Congress intended no such result. Thus, we conclude that Hancock’s action against the FSLIC is barred by the first proviso clause of 12 U.S.C. § 1730(k)(1). Cf. Federal Deposit Ins. Corp. v. National Surety Corp., 345 F.Supp. 885, 888 (S.D. Iowa 1972).

We note briefly other asserted grounds for jurisdiction. One is 28 U.S.C. § 1337. That section provides as follows:

“The district court shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraint and monopolies.”

Hancock asserts that under 12 U.S.C. § 1729(c)(1) the FSLIC has a fiduciary duty to liquidate Gibraltar’s assets in an orderly manner, thereby conferring original jurisdiction under 28 U.S.C. § 1337. However, we have just held that that clause does not raise a question of federal law sufficient to take this case out of the exclusionary provision of 12 U.S.C. § 1730(k)(1). Likewise, we now hold that § 1729(e) (1) is not an “Act of Congress regulating commerce” within the meaning of § 1337 and, hence, that jurisdiction is not conferred under that statute.

Another asserted ground for jurisdiction is 28 U.S.C. § 1331(a) (federal-question jurisdiction). Since the FSLIC was created as a federally chartered corporation under the provisions of 12 U.S.C. § 1725, Hancock asserts that under the rule announced in the Pacific Railroad Removal Cases, 115 U.S. 1, 5 S.Ct. 1113, 29 L.Ed. 319 (1885) a suit against the FSLIC involves a controversy arising under the laws of the United States. However, 28 U.S.C. § 1349 was enacted in 1925 to limit the holding of the Pacific Railroad Removal Cases to corporations in which the United States is the owner of more than one half of the capital stock. Although at one time the United States owned all of the stock of the FSLIC, that stock has been retired since 1958, and at the present time there is no outstanding stock to be owned. See Acron Investments, Inc. v. Federal Savings & Loan Ins. Corp., 363 F.2d 236, 239-240 (9th Cir.), cert. denied, 385 U.S. 970, 87 S.Ct. 506, 17 L.Ed.2d 434 (1966).

In 1966 Congress enacted a special jurisdictional statute for the FSLIC: 12 U.S.C. § 1730(k) (1). If federal courts already had jurisdiction over suits involving the FSLIC pursuant to the Pacific Railroad Removal Cases and 28 U.S.C. § 1349 there would have been little need to enact much of this statute. Moreover, since 12 U.S.C. § 1730(k)(1) begins, “Notwithstanding any other provision of law * * we feel compelled to look primarily to that section in determining jurisdiction over the FSLIC. For these reasons and because of the literal wording of 28 U.S.C. § 1349, we hold that jurisdiction is not conferred over the FSLIC merely because it is a federally chartered corporation whose entire stock once was owned by the United States.

Hancock’s last asserted ground for jurisdiction, diversity under 28 U.S.C. § 1332, comes to naught also. Although we have been cited no case raising this precise issue, we hold that because the FSLIC is an agency and instrumentality of the federal government it is not a citizen of any particular state for diversity purposes. Federal Deposit Insurance Corp. v. National Surety Corp., swpra, held that the Federal Deposit Insurance Corporation, which is also chartered by the federal government and also has its principal place of business in the District of Columbia, has citizenship in no particular state for diversity purposes. We find Chief Judge Hanson’s reasoning to be persuasive:

“If federal corporations whose principal place of business is located in the District of Columbia were to be considered citizens of that District, diversity jurisdiction would be expanded to almost all suits involving federally chartered corporations. This would be a result not intended by Congress. Before 1948 all suits by or again» any federally chartered corporation were deemed to involve a federal question. In 1948 Title 28 U.S.C., Section 1349 was passed by Congress providing that a federal question is involved only in suits where over one-half of the stock of the federal corporation is owned by the United States. This Congressional attempt to limit federal court jurisdiction would be nullified by defendant’s interpretation of diversity jurisdiction which would give federal jurisdiction to almost all suits involving federally chartered corporations * * 345 F.Supp. at 888.

. We agree with the district court, then, and hold that it lacked jurisdiction over this action. The injunction pending appeal is dissolved.

Affirmed.

      . “Notwithstanding any other provision of law, (A) the Corporation shall be deemed to be an agency of the United States within the meaning of section 451 of Title 28; (B) any civil action, suit, or proceeding to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy; and (C) the Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States district court for the district and division embracing the place where the same is pending by following any procedure for removal now or hereafter in effect: Provided, That any action, suit or proceeding to which the Corporation is a party in its capacity as conservator, receiver, or other legal custodian of an insured State-chartered institution and which involves only the rights or obligations of investors, creditors, stockholders, and such institution under State law shall not be deemed to arise under the laws of the United States * *

      . We have assumed that, were it not for this proviso clause, § 1730(k) (1) would confer jurisdiction. Clause (B) of that section states that:
      “ * * * [A]ny civil action, suit, or proceeding to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy $ $ $ ’>
      We are confident that this clause was intended to constitute a grant of original jurisdiction, enabling the FSLIC to be sued in federal district court. See S.Rep.No.1482, 89th Cong., 2d Sess., 1966 U.S.Code Cong. & Admin.News, pp. 3532, 3550. We reach this conclusion in spite of some dicta in recent opinions of the Court of Appeals for the Seventh Circuit suggesting that clause (B) relates solely to removal proceedings by the FSLIC in actions in which it has been made a party. See Katin v. Appollo Savings, 460 F.2d 422, 425 n. 5 (7th Cir. 1971), cert. denied, 406 U.S. 918, 92 S.Ct. 1767, 32 L.Ed.2d 117 (1972); Federal Savings & Loan Ins. Corp. v. Krueger, 435 F.2d 633, 636 (7th Cir. 1970).

      . Although the Supreme Court has not overruled the holding of the Pacific Railroad Removal Cases, the “Court has cast doubt on its continued vitality.” Ass’n of Westinghouse Salaried Employees v. Westinghouse Elec. Corp., 348 U.S. 437, 451, 75 S.Ct. 489, 496, 99 L.Ed. 510 (1955). See also Romero v. Int’l Terminal Operating Co., 358 U.S. 354, 379 n. 50, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959); Gully v. First Nat’l Bank in Meridian, 299 U.S. 109, 113-114, 57 S.Ct. 96, 81 L.Ed. 70 (1936). Consequently, even if 12 U.S.C. § 1730(k) (1) and 28 U.S.C. § 1349 were not applicable to this case, we would not feel compelled to - hold, without further analysis, that a federal question is necessarily created by the mere presence of the FSLIC as a party to this suit.

      . The Supreme Court has made it clear that “State citizenship does not result from the mere creation of a corporation under federal law.” Fed. Intermediate Credit Bank of Columbia, S.C. v. Mitchell, 277 U.S. 213, 214, 48 S.Ct. 449, 450, 72 L.Ed. 854 (1928). See also Texas v. I.C.C., 258 U.S. 158, 160, 42 S.Ct. 261, 66 L.Ed. 531 (1922); Bankers Trust Co. v. Texas & Pac. Ry., 241 U.S. 295, 309-310, 36 S.Ct. 569, 60 L.Ed. 1010 (1916).


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    BLUE BIRD FOOD PRODUCTS CO., Appellant, v. BALTIMORE & OHIO RAILROAD COMPANY.
    Nos. 73-1684 through 73-1687.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 30, 1973.
    Decided Feb. 19, 1974.

      Robert C. Cohen, Walter W. Rabin, Meltzer & Schiffrin, Philadelphia, Pa., for appellant.
    Alan Edward Casnoff, Frederick H. Ehmann, Jr., Norman R. Bradley, Saul, Ewing, Remick & Saul, Philadelphia, Pa., for appellee.
    Before ADAMS and ROSENN, Circuit Judges, and SHERIDAN, District Judge.
   OPINION OF THE COURT

PER CURIAM.

This appeal, which brings these parties before this court for the second time, involves four actions filed by plaintiff-consignee, Blue Bird Food Products Co. (Blue Bird), against defendant-carrier, Baltimore & Ohio Railroad Company (B&O), for alleged damage to four carloads of fresh hams shipped by midwest meat packers via defendant to plaintiff in Philadelphia. The action is brought under the Car-mack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20(11). The issue presented is whether the introduction of a bill of lading with the notation,

Received, subject to the classifications and tariffs in effect on the date of the issue of this Bill of Lading, the property described below, in apparent good order, except as noted (contents and condition of contents of packages unknown) ....

is sufficient to establish the good condition of the lading at the time it was delivered by the shipper to the carrier. The district court, both in its initial opinion and on remand, held that it was not. Having considered the contentions of the parties, we affirm the judgment of the district court.

The facts necessary to our decision are as follows. The four carloads at issue were shipped from the midwest to the Philadelphia destination point pursuant to a “piggy-back” transportation operation where trailers are hauled to the destination on railroad flatcars. As developed in testimony before the district court on remand, the mode of shipment designated by the shipper in these cases required the shipper to load a trailer furnished by the carrier. The district court found as facts:

1. When the shipper was ready to load the trailer, it contacted a “spotter” (a railroad agent who is on the shipper’s premises) who backs the trailer to the shipper’s loading dock.
2. The hams were individually loaded by the shipper, one piled upon the other, so that when loading was completed, the hams extended from the front to the rear of the trailer to a height of approximately three to four feet.
3. Subsequent to loading but prior to the doors of the trailer being sealed, only the rear portion of the contents of the trailer were “open and visible” and the subject of a reasonable inspection.
4. When loading is completed the trailer is pulled away from the loading dock, the rear doors are closed and the shipper places its seal upon the doors of the trailer.
5. The seal affixed by the shipper is a small, thin metal band which locks when one end of the band is snapped into the other end.
6. The trailer is then driven to a location upon the shipper’s premises.
7. Upon notification that the plaintiff was ready to ship the load, "the railroad’s drayman was dispatched to the plant site.
8. Upon his arrival, the drayman hooks his cab to the trailer, inspects the seal, refrigeration system and the outside of the trailer.
9. This inspection revealed no evidence of visible damage to the refrigeration system or the outside of the trailer.
******
11. The trailer was then driven from the plaint [sic] site to the piggyback train for cross country transit.
12. The seals applied at origin were not broken until their arrival at the Bluebird plant in Philadelphia.
13. The tariff applicable to the shipments involved in the instant cases is Tariff 450 D of Western Trunk Lines, and the Plan under which the shipments were sent is commonly known as Plan 2]4-
14. Under Plan 2/4 it is the obligation of the shipper to load the trailer “subject to carrier’s supervision.”

As more fully set forth in our opinion in the original appeal, the lawful holder of a bill of lading makes out a prima facie case of liability for damaged goods against a carrier by proving delivery of goods in good condition, arrival of goods in damaged condition and the amount of damages. 474 F.2d at 104. In the present case, Blue Bird produced no direct evidence of the condition of the hams on delivery to the carrier. Instead, Blue Bird introduced the bills of lading under which the goods were shipped and, relying on our decision in Tuschman v. Pennsylvania Railroad, 230 F.2d 787 (3d Cir. 1956), contended that the carrier’s representation of receipt “in apparent good order” created a prima facie case of delivery of the goods in good condition. The district court, in its initial opinion, rejected this argument. It determined that when merchandise is delivered to a carrier in a sealed trailer, it is not “open and visible.” It held that in these circumstances the consignee who sues the carrier for damages to the goods cannot establish a prima facie case by means of the “apparent good order” representation in the bill of lading but instead must “establish by direct evidence that the goods were delivered to the carrier in good order.” 329 F.Supp. at 1118.

On the initial appeal, we held that the ' district court’s implicit finding that the trailer was “sealed” was clearly erroneous and remanded for further findings on that issue. In addition, we requested that the court supplement the record with findings of fact and conclusions of law on issues including:

A. Was any part of the contents of the trailer “open and visible” in light of the time and condition of its being sealed and the party responsible for such sealing?
B. Is there a custom governing the sealing of such trailers shipped under Plan 2% . . . ?

474 F.2d at 107, n. 16. On remand the district court made additional findings of fact as noted above and again concluded that Blue Bird “has failed to prove that the cargo was delivered to the [carrier] in good order.”

On this appeal, Blue Bird makes two contentions. First, it argues that the shipper’s delivery of a trailer sealed with a “small thin metal band” to the carrier’s drayman does not preclude an internal inspection of the container. Second, it argues that the carrier had an opportunity to inspect the lading prior to the sealing of the trailer, either as the goods were being loaded or after loading but before the seals were affixed.

The district court rejected Blue Bird’s first contention on the basis “that a shipper who uses any device to seal a trailer indicates to a carrier that the cargo was properly loaded; that the goods are in good order and the carrier is not obligated to inspect the cargo.”

We have carefully reviewed the record in this case and we find no error in the district court’s ruling. The record shows that the seal serves as a type of security device providing the shipper’s assurance to the consignee that the load has not been tampered with from the time it left the shipper’s premises. The practice of carriers to break the seal in case of an emergency, when requested by the shipper, or when there is a history of recurring loss with the shipper, does not, in the absence of specific shipper’s instructions, impose upon the carrier the duty to also break the seal for purposes of inspecting the contents of the trailer.

We are unable to agree with Blue Bird’s second contention. Under Plan 2¼ the shipper loads the trailer at its plant site. After loading and sealing, the railroad’s drayman is notified by the shipper to pick up the trailer. The carrier receives the trailer and assumes responsibility for the goods only after the trailer is loaded, sealed andreleased to the shipper. Any obligation of the carrier to inspect, in the absence of specific arrangements otherwise, would not commence until it takes possession of the goods.

In order that a railroad have the status and absolute liability of a common carrier with respect to a shipment, the shipper must have delivered the freight into its possession, the delivery must be for immediate transportation, and the shipper must give the carrier appropriate shipping instructions.

Republic Carloading and Distributing Co. v. Missouri Pacific R.R. Co., 302 F. 2d 381, 385 (8th Cir. 1962); see, Dugdale Packing Co. v. Atchison, Topeka and Santa Fe Ry. Co., 347 F.Supp. 1276 (W.D.Mo.1972). As heretofore noted, such inspection would not include, absent specific instructions from the shipper, breaking the seal for an interior examination of the cargo. Under the circumstances, we are unable to conclude that the carrier had any duty to inspect the cargo on the shipper’s premises prior to notification that the cargo was ready for shipment.

The judgment of the district court will be affirmed.

      . This case was first before this court on Blue Bird’s appeal from the district court’s entry of judgment, after a three day non-jury trial, for B&O. The district court’s original opinion is reported at 329 F.Supp. 1116 (E.D.Pa.1971). Our opinion on Blue Bird’s first appeal is reported at 474 F.2d 102 (3d Cir. 1973). The district court’s “Additional Findings of Fact, Discussion and Conclusions of Law” and subsequent “Memorandum Opinion and Addendum” on remand are unreported. Blue Bird Food Products Co. v. Baltimore & Ohio Ry., Nos. 70-1699, 1744, 1880, 2661 (E.D.Pa., filed June 5, June 22, 1973).

      . The cases were tried in a single proceeding and were consolidated for the purposes of appeal.

      . The facts appear in greater elaboration in our opinion on Blue Bird’s first appeal. See note 1 supra.

      . In Tuschman we stated:
      The acknowledgment by the bill of lading of the crane’s apparent good order was prima facie evidence that, as to all parts which were open to inspection and visible, the crane was in good order at the point of origin. This did not preclude the railroad from showing that the alleged damage in whole or part proceeded from some cause or causes which existed, but were not apparent when it received the crane.
      230 F.2d at 791.

      . B&O argues that even if the seal were required to be broken, and the doors opened, the manner of loading and the possible existence of a nondetectable microorganism precluded the lading from being “open to inspection and visible.” Because of our disposition of this case on other grounds, we need not rule on this contention.

      . Blue Bird argues that the tariff provides for an inspection, citing the following provision, stipulated by the parties to be relevant to the shipments under consideration:
      Where rates are provided in tariff that do not include loading or unloading, or which provide that shipper is to load or consignee to unload, such rates will be applied . . . only when shipper or consignee, as the tariff item may provide, performs the entire physical or mechanical service of such loading or unloading, subject to carrier’s supervision. [Emphasis supplied.]
      We do not find this language inconsistent with our decision. It would appear that this clause permits supervision by the carrier over the shipper’s loading practices to assure safety in transportation and avoid damage to the carrier’s property. It does not require an inspection of the condition of the goods.


author: PER CURIAM:

text:
    NATIONAL DYNAMICS CORPORATION, a corporation, and Elliott Meyer, Individually and as an officer of said corporation, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
    No. 355, Docket 73-1754.
    United States Court of Appeals, Second Circuit.
    Argued Jan. 16, 1974.
    Decided March 6, 1974.

      Jerold W. Dorfman, New York City (Friend & Dorfman, New York City, of counsel), for petitioners.
    John T. Fischbach, Federal Trade Commission, Washington, D. C. (Calvin J. Collier, Gen. Counsel, and Harold D. Rhynedance, Jr., Asst. Gen. Counsel, Federal Trade Commission, Washington, D. C., of counsel), for respondent.
    Before MOORE, FRIENDLY and ANDERSON, Circuit Judges.
   PER CURIAM:

National Dynamics Corporation (NDC) manufactures a battery additive known as VX-6. It markets the product largely through some 12,000 distributors. Some of these work on a full-time basis, but most work only part-time. The distributors are not NDC employees, but the company supplies them with sales and advertising materials with which to promote the product.

In November 1969, the Federal Trade Commission issued a complaint against NDC’s advertising practices. Broadly speaking, the charges were of two sorts: Some related to allegedly misleading claims concerning potential earnings of VX-6 distributors; others concerned the performance claims NDC made for its product. Following the leisurely course typical of FTC proceedings, this one led to a six paragraph cease and desist order issued February 16, 1973, and ended in an order denying reconsideration dated May 1,1973.

Only four of the six ordering paragraphs are challenged. Two of these, paragraphs 1 and 2, relate to the overly enthusiastic depiction of the rewards awaiting prospective distributors; one, paragraph 4, relates to representations concerning the performance of VX-6; the remaining one, paragraph 6, directs NDC to deliver a copy of the order to all present salesmen or other persons engaged in the sale of its products and to secure a signed statement acknowledging receipt.

Paragraph 1 requires NDC to cease and desist from

Representing, directly or by implication, that persons purchasing respondents’ products can or will derive any stated amount of sales, profits or earnings; or representing, directly or by implication, the past or present sales, profits or earnings of purchasers of respondents’ products unless in fact the past sales, or the profits and earnings represented, are those of a substantial number of purchasers and accurately reflect the average sales, profits or earnings of such purchasers under circumstances similar to those of the purchaser or prospective purchaser to whom the representation is made; or misrepresenting, in any manner, the past, present or future sales, profits or earnings from the resale of respondents’ products.

In the course of its attack on this paragraph, NDC says it cannot feasibly comply with the phrase “under circumstances similar to those of the purchaser or prospective purchaser to whom the representation is made” since it does not know what the circumstances of any particular purchaser may be. Apparently the Commission was endeavoring to require NDC to disclose whether the distributors whose earnings they cited worked part-time or full-time, but the language is not well adapted to carrying out this sound purpose. We likewise do not see why NDC should be limited to advertising only the average sales or earnings of its distributors rather than be permitted to state ranges for various types of distributors, provided it does not make deceptive use of unusual earnings realized only by a few. We shall not undertake to redraft the paragraph; with some good will on both sides, these problems should be readily susceptible of resolution.

Changes in paragraph 1 will require conforming changes in paragraph 2 which requires NDC to maintain records substantiating the accuracy of its representations. Beyond that, while the Commission can permissibly require NDC to keep records of the sales of distributors in various basic categories, such as part-time and full-time workers, the requirement that the records reflect the sales, profits or earnings of distributors “under circumstances similar to” purchasers or prospective purchasers is too vague. NDC also objects to the recordkeeping requirement because it claims that it cannot feasibly obtain the profit and earnings figures of its thousands of distributors. Commission counsel answers that NDC must have records showing the sales to each distributor and information concerning the permitted markup, and that this would suffice if the representations were similarly limited. We think this paragraph should be clarified as indicated. On the other hand, NDC’s argument that it was denied due process because the recordkeeping provision was not sought in the complaint, although it was proposed in complaint counsel’s appeal brief to the Commission and answered by NDC, is without merit, FTC v. National Lead Co., 352 U.S. 419, 427-428, 77 S.Ct. 502, 1 L.Ed.2d. 438 (1957), as NDC’s broader attacks even more plainly are.

Paragraph 4 of the order directs NDC to cease and desist from

Representing, directly or by implication, in any advertisement that an independent laboratory has tested any product or that any laboratory test substantiates or supports performance claims in said advertisement, unless each performance claim in said advertisement has been substantiated by a competent scientific test conducted by said laboratory or laboratories and unless such laboratory or laboratories have supplied respondents with a written report which describes, in detail, the entire test performed, including, but not limited [to], the product tested, instruments used, test procedures, data and results of such test.

NDC says this is inconsistent with the findings by the Administrative Law Judge and the Commission that the test reports in the company’s possession adequately substantiated its claims concerning the effectiveness of VX-6. However, both the Administrative Law Judge and the Commission found that NDC’s performance claims relating to the durational capacities of VX-6 were clearly unsubstantiated. The Commission further found that petitioners had expressly or impliedly represented VX-6 as laboratory-tested, without qualification, and that those representations had conveyed the misleading impression that the duration-of-effect claims were based on laboratory tests. Although petitioners contend that paragraph 4 should, at most, prohibit only unsubstantiated durational claims, the paragragh as written appears reasonably related to the misrepresentations found by the Commission. Accordingly, we find no flaw in paragraph 4, FTC v. Colgate-Palmolive Co., 380 U.S. 374, 389-390, 85 S.Ct. 1035, 13 L.Ed.2d 904 (1965).

We likewise see no merit in NDC’s objections to paragraph 6, described above. NDC’s point is that since it supplies the distributors with all the advertising materials, there is no need to send a copy of the order and obtain a receipt. But distributors may have a supply of old materials and may not confine themselves to the written word. Since the copies of the order can be delivered along with the revised advertising material, the only burden on NDC is of using certified mail so as to obtain a receipt. To impose this requirement is well within the broad power confided to the FTC in framing remedial orders.

The petition to review is denied except with respect to Paragraphs 1 and 2 of the order which are remanded to the Commission for reformulation in accordance with this opinion. No costs.

      . NDC has called our attention to the action of the FTC in approving an affidavit of compliance on a similar issue in Matter of Merlite Industries, Inc., File No. 6523049, dated March 1, 1967. Without in any way limiting the FTC to that formulation, we think it may afford a useful basis from which to start a redraft.

      . Petitioners contend that the initial complaint and proposed order did not adequately identify the issues to be litigated. However, the complaint sufficiently alleged that the performance claims had not been substantiated through adequate testing and that the product had not been “fully tested,” and paragraph 4 of the final order is a narrower version of the two portions of the proposed order dealing with representations of testing.


author: SPRECHER, Circuit Judge.

text:
    Charles Joseph KING, Jr., Plaintiff-Appellant, v. UNITED STATES of America et al., Defendants-Appellees.
    No. 73-1387.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 25, 1974.
    Decided March 13, 1974.
    Patrick L. Baude, Indiana University School of Law, Bloomington, Ind., for plaintiff-appellant; Charles J oseph King, Jr., pro se.
    Stanley B. Miller, U. S. Atty., Thomas L. Bose, Asst. U. S. Atty., Indianapolis, Ind., for defendants-appellees.
    Before PELL, STEVENS and SPRECHER, Circuit Judges.
   SPRECHER, Circuit Judge.

This appeal seeks the answer to the single narrow question: Does due process or statute require that reasons be given for the refusal of the United States Board of Parole to grant parole?

I

The plaintiff, Charles Joseph King, Jr., filed an action on July 21, 1972 for declaratory judgment in the District Court for the District of Columbia against the United States, the Attorney General, the director of the Bureau of Prisons and the chairman of the United States Board of Parole. The District of Columbia court granted the defendants’ motion to transfer the action to the Southern District of Indiana inasmuch as plaintiff was confined as a prisoner in the United States Penitentiary at Terre Haute, Indiana. 28 U.S.C. § 1404(a); Young v. United States Bureau of Prisons, 125 U.S.App.D.C. 105, 367 F.2d 331 (1966).

In his pro se complaint, plaintiff alleged that he was sentenced to 15 years in the custody of the Attorney General on November 7, 1969; that he “appeared before the U.S. Board of Parole and was sent off for 2 years without cause or reason”; and prayed that the court “issue a show cause order to the U.S. Board of Parole to show why at this time” he cannot be released on parole and otherwise to declare his. rights. He added:

“One cannot improve or correct the reason for denial if he is not aware of that reason. What sureness is there, that one year or one month from this time he will be any different. Why he was denied, there is all the cause in the world for him to become bitter when one is being denied justice.”

The defendants filed a motion to dismiss for failure to state a claim upon which relief could be granted. The district court dismissed the complaint, noting that the plaintiff “seeks a mandate from this Court ordering the respondents to show cause why petitioner was denied a parole” and concluding that “this Court will not review the decision of the Parole Board, nor will it repass on the credibility of reports and information received by the Board in making its determination.”

In his complaint and in his response to the defendants’ motion to dismiss in the district court, the plaintiff stressed that his claim was based on failure of the Parole Board to give reasons for its denial of his application for parole. He cited the due process clause of the Fifth Amendment and the Administrative Procedure Act as giving him a right to have reasons expressed. A reasonably creditable but discursive brief was filed as plaintiff’s pro se brief in this court.

We subsequently granted leave to Professor Patrick L. Baude of Indiana University Law School as amicus curiae to file a brief and present oral argument on behalf of the plaintiff. Professor Baude has argued that (1) the Fifth Amendment forbids denial of parole without a stated reason and (2) the Administrative Procedure Act requires the Parole Board to state its reasons for denying parole.

II

The district court relied upon Brest v. Ciccone, 371 F.2d 981, 983 (8th Cir. 1967) where the conclusion was that “[t]he courts have no jurisdiction and no power to . review or control the discretion of the Board of Parole in the exercise of its duties under § 4203.”

Two public bodies have taken diverse views on the question of the re-viewability of the Parole Board’s discretion. The Task Force on Corrections for the President’s Commission on Law Enforcement and Administration of Justice recommended that reasons for the board’s decision be given so that meaningful judicial review could be undertaken.

On the other hand, the Proposed New Federal Criminal Code of the National Commission on Reform of Federal Criminal Laws sets forth that “discretionary action of the Board of Parole is an administrative decision not subject to judicial review on its merits.” Section 3406 of the proposed code reads:

“The federal courts shall not have jurisdiction to review or set aside, except for the denial of constitutional rights or procedural rights conferred by statute, regulation or rule, the discretionary action of the Board of Parole regarding but not limited to the release or deferment of release of a prisoner whose maximum term has not expired, the imposition or modification of conditions of a first or subsequent parole, and the reimprisonment of parolee for violation of parole conditions during the parole period.” (Emphasis added).

We need not directly confront the problems of discretion or its abuse because the plaintiff has carefully limited his quest for reasons to the exceptions noted in the proposed code of “denial of constitutional rights or procedural rights conferred by statute.”

Even if we agree that the district court has no jurisdiction to review the Parole Board’s discretion under § 4203, it does have jurisdiction to consider at least the plaintiff’s statutory claim that the Board has disobeyed a nondiscretionary command that it provide reasons for its determination after exercising its discretion. Christian v. New York State Dept. of Labor, 414 U.S. 614, 617, n. 3, 94 S.Ct. 747, 39 L.Ed.2d 38 (1974).

28 U.S.C. § 1361 provides that:

“The district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.”

Whether the district court .has jurisdiction to consider the plaintiff’s constitutional claim in view of plaintiff’s argument that the requisite amount in controversy (28 U.S.C. § 1331) is established by the possibility of his gaining earlier freedom, need not be addressed by us in view of our disposition of plaintiff’s constitutional claim (Part IV hereof).

Before considering plaintiff’s constitutional and statutory claims, it may be helpful to review some recent administrative developments.

Ill

The Administrative Conference of the United States, created by the Administrative Conference Act (5 U.S.C. § 571), consisting in part of all of the heads of independent regulatory agencies, executive departments and other administrative agencies (§ 573(b)) and empowered to “adopt such recommendations as it considers appropriate for approving administrative procedure” (§ 575(a)(1)), adopted the following recommendation on June 9, 1972:

“A statement of reasons for the deferral or denial of parole should in all instances be given the prisoner. In some eases the Board can simply adopt as its own decision the examiner’s recommendation. The cases where this is not appropriate may well be so voluminous as to require the use of a check-list form, such as that with which the Board is now experimenting, but there should in each such case be added at least a sentence or two of individualized explanation.”

The Conference further recommended that the Parole Board “should develop a body of fully reasoned decisions — whether granting, denying or deferring parole —in typical or recurrent fact situations” in order to “serve as time-saving precedents and as the raw material for the subsequent formulation of standards.” Finally, in this area, the Conference recommended that the Board’s decision should be open to public inspection.

In the preparation leading up to the Conference’s recommendations, it developed the advantages inherent in giving reasons, as well as the “pitfalls to be avoided.”

The Parole Board has taken the position that it will experiment with giving reasons on a limited basis if doing so does not cause “extensive delays in the delivery of parole decisions to inmates, resulting in rehabilitative damage outweighing any advantages.” The Board has published a list of 27 unweighted factors which guide its decision whether to grant or deny parole, but the Administrative Conference believes that “a more specific formulation of the standards of decision should be possible after the development of a body of reasoned decisions.”

The Administrative Conference recommendations relating to the giving of reasons are the culmination of a long period of dissatisfaction with Parole Board procedure in this regard. Professor Kenneth Culp Davis has said:

“Because no one ever knows the reason for any decision of the board, no prisoner is ever told why the board has denied parole. . . . Even the most flagrant abuse of discretion is likely to go uncorrected. Withholding reasons is likely to harm the rehabilitation process.”

Several states have instituted judicially or legislatively inspired requirements of reasons for the denial of parole.

The administrative trend is toward greater procedural safeguards in the parole release hearing, including the stating of reasons for denial, but the plaintiff can succeed only if such statement is constitutionally or statutorily mandated.

IV

It is no longer necessary to draw a hard and fast line between affording the full panoply of procedural due process or giving none. Categorization of “rights” as opposed to privileges or acts of grace or clemency has ceased being a touchstone.

Full procedural due process is required during a criminal prosecution; some but not full due process must be accorded thereafter during parole revocation proceedings. Parole release proceedings have not been as clearly identified.

Morrissey v. Brewer, 408 U.S. 471, 480-482, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972) has established the benchmarks for parole revocation:

“. . ' . [T] he revocation of parole is not part of a criminal prosecution and thus the full panoply of rights due a defendant in such a proceeding does not apply to parole revocations. . Revocation deprives an individual, not of the absolute liberty to which every citizen is entitled, but only to the conditional liberty properly dependent on observance of special parole restrictions.
“. . . [D]ue process is flexible and calls for such procedural protections as the particular situation demands. .
******
“We see, therefore, that the liberty of a parolee, although indeterminate, includes many of the core values of unqualified liberty and its termination inflicts a ‘grievous loss’ on the parolee and often on others.”

The Court then determined the minimum requirements of due process, which included “a written statement by the factfinders as to the evidence relied on and the reasons for revoking parole.” 408 U.S. at 489, 92 S.Ct. at 2604. Subsequently, the Court held that parole revocation hearings could be conducted without the participation of counsel. Gagnon v. Scarpelli, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973).

The district court and circuit courts are now entering the area of what, if any, due process is required in parole release hearings. The Second Circuit Court of Appeals held in the pre-Morrissey case of Menechino v. Oswald, 430 F.2d 403, 404, 412 (2nd Cir. 1970) that a parole release interview “represents an aspect of state prison discipline, not an adjudication of rights in an adversary proceeding,” and does not entitle a prisoner to notice, hearing or “specification of the grounds and underlying facts upon which the determination was based.”

A panel of the Fifth Circuit also in a pr e-Morrissey decision in Scarpa v. United States Board of Parole, 468 F.2d 31 (5th Cir. 1972) held in effect that the interest of the prisoner is the same in a release hearing as in a revocation hearing. The panel decision was overturned by the court en banc which held that “ [i] f the Board refuses to grant parole, Scarpa has suffered no deprivations.” 477 F.2d 278, 282 (5th Cir. 1973). The Scarpa judgment was vacated by the Supreme Court and remanded for consideration of mootness. 414 U.S. 809, 94 S.Ct. 79, 38 L.Ed.2d 44 (1973).

A district court has held that due process requires the Board of Parole to disclose to the prisoner the grounds on which parole is denied. United States ex rel. Johnson v. Chairman of New York State Board of Parole, 363 F.Supp. 416 (E.D.N.Y.1973).

We have held that in-prison disciplinary proceedings leading' to the revocation of good-time credits require some “written statement of the disposition of the charge.” United States ex rel. Miller v. Twomey, 479 F.2d 701, 716 (7th Cir. 1973). On the other hand, in Farries v. United States Board of Parole, 484 F.2d 948, 949 (7th Cir. 1973), we cited Menechino v. Oswald, supra, for the proposition that “a prisoner need not be accorded a hearing on his application [for parole] or provided with a statement of reasons.” Petitioner argues that Menechino is no longer acceptable authority because it was decided before Morrissey.

Although a substantial argument can be made that some modicum of due process should attend the denial of the expectation of conditional freedom on parole inasmuch as its termination after having been granted inflicts a “grievous loss” of a “valuable liberty” (Morrissey v. Brewer, 408 U.S. 471, 482, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972)), we need not meet the constitutional challenge in view of the construction we place upon the Administrative Procedure Act in Part Y hereof.

V

The Administrative Procedure Act (APA) applies to each “agency” which means “each authority of the Government of the United States.” 5 U.S.C. § 551(1). Congress created the United States Parole Board in the Department of Justice, consisting of eight members to be appointed by the President by and with the consent of the Senate. 18 U.S.C. § 4201. There is no language in the APA exempting the Parole Board from its application.

In Hyser v. Reed, 115 U.S.App.D.C. 254, 318 F.2d 225, 236-237 (1963) Mr. Chief Justice (then Judge) Burger wrote the en banc opinion holding that § 554 of the APA did not apply to parole revocation proceedings inasmuch as that section applies by its terms "in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.” 5 U.S.C. § 554(a). The court said:

“These words limit coverage of the Administrative Procedure Act to agencies which are required by their own statute of creation to adjudicate, after hearing. Our conception of the functions of the Board, discussed in this opinion, leads us to the conclusion that the Board does not adjudicate, nor is it required to hold hearings, in the sense that those words are employed in the Administrative Procedure Act.” (Emphasis in original).

The Hyser court did not consider § 555(e) which provides as follows:

“Prompt notice shall be given of the denial in whole or in part of a written application, petition, or other request of an interested person made in connection with any agency proceeding. Except in affirming a prior denial or when the denial is self-explanatory, the notice shall be accompanied by a brief statement of the grounds for denial.”

Section 555 applies “according to the provisions thereof” and the provisions of § 555(e) apply to a “written application, petition, or other request of an interested person made in connection with any agency proceeding.” To be considered for parole a prisoner must make a written application.

The term “agency proceeding” is far broader than the “adjudication after hearing” considered in Hyser. Agency proceeding is defined to include rule-making, licensing and adjudication. Adjudication is defined as “agency process for the formulation of an order.” 5 U.S.C. §551(5), (7), (9), (12).

A parole release hearing or interview is an “agency proceeding” within the Congressional intent:

“This subsection affords the parties in any- agency proceeding, whether or not formal or upon hearing, the right to prompt action upon their requests, immediate notice of such action, and a statement of the actual grounds therefore. The latter should in any case be sufficient to apprise the party of the basis of the denial.” (Emphasis supplied).

The application of § 555(e) to parole release hearings has not been squarely adjudicated. The few opinions dealing with the applicability of the APA in addition to Hyser have either denied the application to parole release hearings of the judicial review sections (5 U.S.C. §§ 701-706), Hiatt v. Compagna, 178 F.2d 42, 45 (5th Cir. 1949), aff’d by equally divided court, 340 U.S. 880, 71 S.Ct. 192, 95 L.Ed. 639 (1950), or have approved such application, Hurley v. Reed, 110 U.S.App.D.C. 32, 288 F.2d 844, 845-846 (1961); Sobell v. Reed, 327 F.Supp. 1294, 1301-1302 (S.D.N.Y. 1971).

-We hold that § 555(e) does apply to parole release hearings and requires “a brief statement of the grounds for denial.”

We reverse the district court’s order of dismissal and remand this cause to determine whether in fact the plaintiff’s application was in writing and if so to take further proceedings consistent with this opinion.

Reversed and remanded.

      . One of defendants’ grounds for dismissal was that under 18 U.S.C. § 4202 plaintiff would not become eligible for parole until he had served one-third, or five years, of his 15 year sentence. In plaintiff’s response, however, he stated that he had been sentenced under § 4208 and was eligible for parole prior to serving one-third of the sentence.

      . 18 U.S.C. § 4203(a) provides in part: “If it appears to the Board of Parole from a report by the proper institutional officers or upon application by a prisoner eligible for release on parole, that there is a reasonable probability that such prisoner will live and remain at liberty without violating the laws, and if in the opinion of the Board such release is not incompatible with the welfare of society, the Board may in its discretion authorize the release of such prisoner on parole.”

      . Task Force Report: Corrections 86 (1967) : “Some record of the proceedings and the reasons for the hoard’s decision should be made so that, where a denial of parole is challenged in court, meaningful review is possible. Courts would presumably be concerned primarily with the adequacy of parole board procedures; experience with appellate review of sentencing decisions indicates that even if courts assumed the power to review parole decisions on the merits, reversals on the ground of an abuse of discretion would be rare.”

      . Final Report of the National Commission on Reform of Federal Criminal Laws: Proposed New Federal Criminal Code § 3406 and Comment, at 303-304 (1971).

      . Cf. 28 U.S.C. § 2255, providing for the exercise of federal jurisdiction over motions in the nature of habeas corpus by “[a] prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed, in violation of the Constitution or laws of the United States . . . . ” with Preiser v. Rodriguez, 411 U.S. 475, 500, 93 S.Ct. 1827, 1841, 36 L.Ed.2d 439 (1973), where the Supreme Court held that “when a state prisoner is challenging the very fact of duration of his physical imprisonment and the relief he seeks is a determination that he is entitled to immediate or speedier release from that imprisonment, his sole federal remedy is a writ of habeas corpus.” (All emphasis added).

      . Administrative Conference Recommendation 72-3: Procedures of the United States Board of Parole (adopted June 9, 1972), 25 Ad.L.Rev. 531, 534 (Fall, 1973).

      . A report on “Federal Parole Procedures” submitted to the Administrative Conference on January 1, 1972, included an appendix detailing a study of Parole Board files which indicated that each file submitted to the Board includes a summary prepared by the Board member or examiner who conducts the parole interview or hearing. The document summarizes the contents of the file and the impressions of the interview and concludes with a recommendation as to pa- • role, stating reasons for or against. 25 Ad.L.Rev. 459, 512 (Fall, 1973).

      . “The U. S. Board of Parole consists of eight members and employs a staff of eight examiners. It conducts about 17,000 proceedings a year relating to the grant or denial of parole, involving about 12,000 prison interviews. ...” 25 Ad.L.Rev. 531 (Fall, 1973).

      . In discussing with the Informal Action Committee of the Administrative Conference the recommendation which was later adopted by the Conference, the Chairman of the Parole Board advised the Committee that the Board was experimenting with a check-list form “for giving reasons, through the caseworker, to inmates denied parole.” The check-list contained prepared reasons, both in the generic terms of the statutory criteria as well as in more specific terms, and a category headed “Other” for different or special reasons. 25 Ad.L.Rev. 517, 525 (Fall, 1973).

      . 25 Ad.L.Rev. 531, 534 (Fall, 1973). The recommendation also provided that the prisoner’s name could be deleted “to avoid a clearly unwarranted invasion of privacy.”

      . “Giving reasons for denying parole is desirable for both rehabilitational and legal reasons. A prisoner may feel less resentful of a negative decision if he knows the reasons for it, and in planning his activities in the institution he ought to understand clearly what will help him to obtain an early parole. When the nature of his crime is such that early parole is not likely in any event, he should be protected from unrealistic hopes that can only lead to disappointment and bitterness. All this is the job of a prison counselor in any case, but the Parole Board can make that job much easier by formally stating its reasons.
      “Prom the legal standpoint, requiring a statement of reasons makes it possible to check abuse or error. There is no way to discover if the Board is denying parole for an unconstitutional or improper reason if the Board never gives reasons for its decisions. It is not to impugn the good faith or competence of the Board to suggest the pos-

      . See note 12 on page 1341. sibility that in some eases it might rely on reasons for denying parole that the courts would feel were improper or unconstitutional if they knew of them.” Johnson, “Federal Parole Procedures,” report submitted to the Administrative Conference of the United States on January 1, 1972, 25 Ad.L.Rev. 459, 484-85 (Fall, 1973).
      12 “There are three pitfalls to be avoided in the giving of reasons. First, it would be disastrous to introduce any further delay into parole decision-making. One of the most frequent criticisms of the Board today is that it keeps prisoners in suspense for too long. It would be better not to give reasons at all than to give them and spend weeks or months drafting them. Second, it is vital that the reasons be written to give the prisoner a fair and candid statement of why he is not being paroled, and not merely to satisfy the courts. Nothing would be gained by giving reasons if the Board retained a legal staff to draft them with an eye to justifying the decision in the event of litigation. The Board must state why it is denying parole, and not necessarily how it feels the denial might be most persuasively justified in court. Third, the reasons must be reasonably specific. It does no good to tell a prisoner he is being denied parole because he is a danger to society unless he is told why he is so regarded, and whether there is anything he can do to convince the Board otherwise.” 25 Ad.L.Rev. 459, 485 (Fall, 1973).

      . Memorandum dated February 16, 1972 by the Chairman of the Parole Board, 25 Ad.L.Rev. 517, 525 (Fall, 1973). Senator Percy has suggested that giving reasons would not delay the delivery of a decision if the decision were required within a short time and detailed reasons were required within a longer period of time. Percy, “Blueprint for a Criminal Justice System,” 119 Cong.Rec.No. 47 (March 27, 1973).

      . Rules of the United States Board of Parole (1971) pp. 14-16; 25 Ad.L.Rev. 496-97 (Fall, 1973):
      “The following factors are considered by the Board in its decision making.
      “A. Sentence Data
      1. Type of sentence
      2. Length of sentence
      3. Recommendations of Judge, U. S. Attorney and other responsible officials
      “B. Facts and Circumstances of the Offense
      1. Mitigating and aggravating factors
      2. Activities following arrest and prior to confinement, including adjustment on bond or probation, if any
      “C. Prior Criminal Record
      1. Nature and pattern of offenses
      2. Adjustment to previous probation, parole and confinement
      3. Detainers
      “D. Changes in Motivation and Behavior
      1. Changes in attitude toward self and others
      2. Reasons underlying changes
      3. Personal goals and description of personal strengths or resources available to maintain motivation for law-abiding behavior
      “E. Personal and Social History
      1. Family and marital
      2. Intelligence and education
      3. Employment and military experience
      4. Leisure time
      5. Religion
      6. Physical and emotional health
      “F. Institutional Experience
      1. Program goals and .accomplishments in areas:
      (a) Academic
      (b) Vocational education, training or work assignments
      (c) Recreation and leisure time use
      (d) Religion
      (e) Therapy
      2. General adjustment:
      (a) Inter-personal relationships with staff and inmates
      (b) Behavior, including misconduct
      3. Physical and emotional health, and treatment
      “G. Community Resources, Including Release Plans
      1. Residence; live alone, with family, or others
      2. Employment, training, or academic education
      3. Special needs and resources to meet them
      “H. Use of Scientific Data and Tools
      1. Psychological and psychiatric evaluations
      2. Pertinent data from the uniform jia-role reporting system
      3. Other statistical data
      4. Standardized tests”

      . Administrative Conference Recommendation 72-3: Procedures of the United States Board of Parole (adopted June 9, 1972), 25 Ad.L.Rev. 531 (Fall, 1973).

      . Davis, Discretionary Justice: A Preliminary Inquiry 128, 131 (1969). See also, Gaylin, No Emit, Harper’s Magazine 86 (November, 1971), wherein the author claims knowledge of routine parole being granted to Jehovah’s Witnesses between 1967-1970 and denied to other war resisters because the Witnesses were considered to be “True Cos.”

      . New Jersey: Monks v. New Jersey State Parole Board, 58 N.J. 238, 249, 277 A.2d 193, 199 (1971). Michigan and Wisconsin: Dawson, The Decision to Grant or Deny Parole : A Study of Parole Criteria Law and Practice, 1966 Wash.U.L.Q. 243, 302. Illinois: Ill.Rev.Stats.1973, c. 38, § 1003-3-5 (f) . (Commentary: “This section requires the Board to state the basis of its decision in its own records and in notice to the applicant.”).

      . We have applied the same conclusion to parole release hearings. Ganz v. Bensinger, 480 F.2d 88 (7th Cir. 1973).

      . The 12,000 annual parole interviews are commonly called “hearings” although they average only 10-15 minutes each and the only persons present are the member or examiner, a stenographer, the inmate and his institutional counselor. 25 Ad.L.Rev. 459, 468 (Fall, 1973).

      . The majority of the en banc court also held that the full panoply of due process protections does not attach “every time the government takes some action which confers a new status on the individual or denies a request for a different status.” 477 F.2d 278, 282. This does not take account of the Morrissey standard that some if not all procedural requirements may be available to the prisoner.

      . In that case we reversed the summary dismissal of a pro se petition for mandamus where a federal prisoner claimed that his parole was denied because of religious discrimination.

      . “Exemptions from the . . . Administrative Procedure Act are not lightly to be presumed.” Marcello v. Bonds, 349 U.S. 302, 310, 75 S.Ct. 757, 762, 99 L.Ed. 1107 (1955) ; Brownell v. Tom We Shung, 352 U.S. 180, 185, 77 S.Ct. 252, 1 L.Ed.2d 225 (1956). See also Renegotiation Board v. Bannercraft Clothing Co., Inc.,_ U.S._ , _, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974).

      . Report submitted to the Administrative Conference of the United States on January 1, 1972, “Federal Parole Procedures,” 25 Ad.L.Rev. 459, 480 (Fall, 1973).

      . The holding in Hyser that an order denying parole is not an “adjudication required by statute to be determined on the record” within the meaning of § 554(a) did not purport to consider whether such an order is an “adjudication” as defined in § 551(7). If, as we hold, the Board is an “agency” as defined in § 551(1), we think the statutory definitions of “adjudication” and “order” lead inescapably to the conclusion that a parole release hearing is an agency proceeding.

      . S.Doc.No.248, 79th Cong., 2d Sess. 206, 265 (1946).

      . In Washington v. Hagan, 287 F.2d 332, 334 (3rd Cir. 1960), the court in holding that a parolee was not entitled to counsel at a parole revocation hearing simply said “Nor can we believe that the Administrative Procedure Act, 5 U.S.C. § 1005 [now § 555], was ever intended to cover this kind of a case.” The right to counsel appears, however, not in § 555(e), but in § 555(b). Professor Davis has taken the position that § 555(b) applies to Parole Board release hearings (Davis, Administrative Law Treatise 376 (1970 Supp.) and that § 555(e) also does (Davis, Discretionary Justice: A Preliminary Inquiry 129 (1969)).

      . If the district court finds that the plaintiff’s application was in writing and that 5 U.S.C. § 555(e) therefore applies, the district court may seek to determine the matter of its timing in order to insure that this requirement will not delay the delivery of parole hearing decisions.


author: ALDISERT, Circuit Judge.

text:
    UNITED STATES of America, Appellant, v. George J. WILSON, Jr.
    No. 73-1444.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 17, 1973.
    Decided Sept. 21, 1973.
    Rehearing Denied Jan. 15, 1974.
    Certiorari Granted May 28, 1974.
    See 94 S.Ct. 2603.

      Robert E. J. Curran, U. S. Atty., Michael B. L. Hepps, Asst. U. S. Atty., Philadelphia, Pa., Edward R. Korman, Dept. of Justice, Washington, D. C., for appellant.
    Philip D. Lauer, Gus Milides, Easton, Pa., for appellee.
    Before KALODNER, ALDISERT and GARTH, Circuit Judges.
    OPINION SUR PETITION FOR PANEL REHEARING
   ALDISERT, Circuit Judge.

We have before us a paper, filed by the United States-appellant, which we shall treat as a petition for rehearing, which seeks, inter alia, panel rehearing of an order entered on September 21, 1973, dismissing this appeal on the ground that the order of the district court was not appealable under 18 U.S.C. § 3731.

An indictment, returned on October 28, 1971, charging the defendant with violation of 29 U.S.C. § 501(c), embezzling funds of a labor organization, alleged that the defendant converted $1,233.15 of the monies of the International Brotherhood of Electrical Workers, Local 367, to use in paying for a portion of the expenses of his daughter’s wedding reception at the Easton Hotel. Defendant, business manager of the Union, allegedly converted the money by way of a check signed by two officers of the Union, Robert Schaefer and Robert L. Brinker.

The F.B.I. began an investigation of this case and other cases involving the defendant in April of 1968, and continued it through June of 1970. The investigation concerning the subject of this indictment was completed by the F.B.I. by June of 1969, after which evaluations were made by the Organized Crime Strike Force and by the United States Attorney’s Office. These evaluations resulted in a delay which caused the indictment to be returned October 28, 1971, three days prior to the running of the statute of limitations.

Prior to trial defendant filed a motion to dismiss the indictment on the basis of prosecutorial pre-indictment delay. Two pre-trial hearings were held, and the defendant established that the two signatories to the check were no longer available: Brinker had died, and Schaefer was terminally ill. The court denied defendant’s motion, and the case proceeded to trial. After the jury returned a verdict of guilty, defendant filed motions for arrest of judgment, judgment of acquittal and a new trial. The district court ordered that the ease be dismissed pursuant to F.R.Cr.P. 48(b) concluding that the prosecutorial pre-indictment delay had substantially prejudiced the defendant’s right to a fair trial under the due process clause of the Fifth Amendment. See, United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971). The government appealed; we dismissed the appeal by judgment order.

In its “petition” the government argues that our dismissal of the appeal and our reliance on United States v. Sisson, 399 U.S. 267, 90 S.Ct. 2117, 26 L.Ed.2d 608 (1970), overlook the clearly expressed intent of Congress to authorize an appeal from all post-conviction orders except where prohibited by the double jeopardy clause. We disagree.

After the Supreme Court’s decision in Sisson Congress amended 18 U.S.C. § 3731. That section presently provides:

In a criminal case an appeal by the United States shall lie to a court of appeals from a decision, judgment, or order of a district court dismissing an indictment or information as to any one or more counts, except that no appeal shall lie where the double jeopardy clause of the United States Constitution prohibits further prosecution.

This amended section does no more than establish the double jeopardy clause as the only bar to appeals by the United States from a dismissal of an indictment or information. However, it is well established-that the double jeopardy clause bars ap appeal by the government from an acquittal. Price v. Georgia, 398 U.S. 323, 327, 90 S.Ct. 1757, 26 L.Ed.2d 300 (1970) . Since we find that the legal effect of the district court’s “dismissal” was a directed verdict of acquittal, the following language from Sisson remains applicable:

Quite apart from the statute, it is, of course, well settled that an acquittal can “not be reviewed, on error or otherwise, without putting [the defendant] twice in jeopardy and thereby violating the Constitution.
[I]n this country a verdict of acquittal, although not followed by any judgment, is a bar to a subsequent prosecution for the same offence,” United States v. Ball, 163 U.S. 662, 671, 16 S.Ct. 1192, 41 L.Ed. 300 (1896).

399 U.S. at 289-290, 90 S.Ct. at 2129. (Footnote omitted.) “[T]he trial judge’s disposition is an ‘acquittal’ if it is ‘a legal determination on the basis of facts adduced at the trial relating to the general issue of the case. . . . ’” United States v. Jorn, 400 U.S. 470, 478 n. 7, 91 S.Ct. 547, 27 L.Ed.2d 543 (1971) . This necessarily requires a careful review of the entire record in each case.

While there may be occasions where an appeal may lie from a district court’s dismissal of an indictment or information because further prosecution is not barred in the double jeopardy clause, we cannot agree that this is such a case. Here the record indicates that defendant filed posttrial motions for arrest of judgment, judgment of acquittal, and' for a new trial. The district court, in reaching its legal determination, relied on facts adduced at trial relating to the general issue of the case:

The Court takes notice of the facts brought out in the testimony of the ease concerning the potential testimony of Mr. Schaefer. . . . During the trial (N.T. 133-134) the defendant indicated that he never involved himself with bookkeeping or the internal affairs of the office. Finally, Mr. Wilson stated that he ordered no one to write the check in question (N.T. 164-165).
On the [government's side, it was established that the bill from the wedding reception was sent to the defendant’s home address and not to the union (N.T. 62). . . . Other testimony established that Mr. Wilson controlled the union (N.T. 17), and that Mr. Schaefer and Mr. Brinker were office help who owed their jobs to the defendant (N.T. 80,181).
The Court finds that the unreasonable delay was substantially prejudicial to the case of Mr. Wilson in that the only witness who could explain the circumstances of the check became terminally ill during the period of unreasonable delay. Although the government contends that this is only a showing of potential or speculative prejudice, there is an absolute certainty as a signer of all checks that Mr. Schaefer would add testimony of utmost importance to the trial.

The district court granted the relief sought, but labelled it as a dismissal of the indictment. However, we have been admonished to “be guided in determining the question of appealability . . not by the . . . [label] the court gave [its decision] but by what in legal effect it actually was. . . .” United States v. Sisson, supra, 399 U.S. at 279 n. 7, 90 S.Ct. at 2124.

The government argues that our dismissal of this appeal is in conflict with our holding in United States v. Pecora, 484 F.2d 1289 (3 Cir. 1973) and the Seventh Circuit’s recent case of United States v. Esposito, 492 F.2d 6 (1973) cert. denied, 414 U.S. 1135, 94 S.Ct. 879, 38 L.Ed.2d 760. Although the court in Esposito held that the order of the district court was appealable under amended Section 3731, it stressed:

For jeopardy purposes the question to be decided is whether the trial court “bottomed” his order “on factual conclusions not found in the indictment” or “on the basis of evidence adduced at trial.” United States v. Sisson, 399 U.S. 267, 288, 90 S.Ct. 2117, 26 L.Ed.2d 608 (1970). If the court’s order “arresting judgment” is based upon evidence produced at trial, it is in the nature of an acquittal and is not appealable under the double jeopardy clause.
A review of the record here shows that the trial judge did not base his order on the evidence adduced at trial.

(492 F.2d at 8.) Thus, the critical distinction between Esposito and the case sub judice is that here the district court did bottom its decision on evidence adduced at trial.

In United States v. Pecora, supra, we held that an order of the district court granting defendant’s motion to dismiss based upon stipulated facts for the purpose only of attacking the validity of an indictment was appealable. There we emphasized that “[e]ntering into the stipulation of facts for the purpose only of attacking the validity of the indictment did not constitute the waiver [of defendant’s right to a jury trial] .” and that “[t]he district court . . . [did not determine] the character of . evidence [actually entered into the record]

Under the totality of the circumstances of this case, considering that defendant filed pre-trial motions to dismiss, that following two pre-trial hearings the motions to dismiss the indictment were denied, that he was forced to defend the indictment after a jury had been impaneled and sworn, and that the “dismissal” was entered following post-trial motions for judgment of acquittal or arrest of judgment after the district court based its legal determination on facts adduced at trial relating to the general issue of the case, we cannot say that its dismissal did not operate as an acquittal.

Accordingly, the “petition” for panel rehearing will be denied.

Before SEITZ, Chief Judge, and KALODNER, VAN DUSEN, ALDI-SERT, ADAMS, GIBBONS, ROSENN, HUNTER, WEIS and GARTH, Circuit Judges.

ORDER

Appellant’s petition for rehearing having been submitted to the judges who participated in the decision of this court and to all other available circuit judges of the circuit in regular active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court in banc, the petition for rehearing is denied. The petition for writ of mandamus to compel the district court to vacate the order of dismissal and enter a judgment of conviction is denied.

ROSENN, Circuit Judge, would grant the petition for rehearing.

      . Federal Rule of Appellate Procedure 40(b) provides that the petition for rehearing shall be in the form prescribed by Rule 32(a). Rule 32(a) requires that the petition have a cover and that the title of the document appear thereon. Here there was neither a cover nor a title, and the paper was bound with masking tape. The paper which originally requested “rehearing or rehearing en banc” concludes: “It is, therefore, respectfully submitted that the petition for rehearing en banc be granted or, the alternative that a writ of mandamus issue.” We express no little distress that the United States Attorney and the “Department of Jusiice Office of the Solicitor General” not only have failed to respect the requirements of F.R.A.P. 40(b), but have attempted to combine, in one instrument, a petition for rehearing with an original petition for mandamus. Finding no authority for such a bizarre procedure, we expressly condemn such attempt., To the extent that the paper is designed to servo as a petition for mandamus, the prayer of the petition will be denied.

      . The new amendment applies only to criminal cases begun in any district court on or after its effective date, January 2, 1971. Here the indictment was returned on October 28, 1971.


text:
    In re Albert Chernick, Bankrupt. Albert CHERNICK, Appellant, v. UNITED STATES of America, Appellee.
    No. 73-1751.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 25, 1974.
    Decided March 20, 1974.
    Charles G. Levy, Chicago, Ill., for appellant.
    James R. Thompson, U. S. Atty., Paul F. Stack, Asst. U. S. Atty., Chicago, Ill., for appellee.
    Before KILEY, Senior Circuit Judge, SPRECHER, Circuit Judge, and JAMESON, Senior District Judge.

       Senior District Judge William J. Jameson of the District of Montana is sitting by designation.

   SPRECHER, Circuit Judge.

This appeal involves the effect of a 1968 default judgment on the section 17(c)(2) proceeding to determine dischargeability of the debt underlying the judgment.

■This is Chernick’s third bankruptcy proceeding. The first was in 1956 and is not involved in this case. The second petition was filed by Chernick and his wife Lois in 1962. The United States filed claims in the 1962 proceeding for losses resulting from six federally insured loans made to the Chernicks by various savings institutions. The Cher-nicks were given a general discharge in 1964.

In 1967 the Chernicks were indicted for violations of federal law in submitting false applications for three of the loans scheduled in the 1962 proceeding and another loan obtained in 1966.. On June 18, 1969, Chernick pled guilty to one count involving a 1962 loan. His wife pled guilty to all four counts.

On July 31, 1968, the United States filed a civil complaint dealing with all six loans scheduled in the 1962 bankruptcy. The complaint charged that for each loan the Chernicks had submitted “false, fictitious and fraudulent” credit applications which failed to list several outstanding obligations, including other FHA loans. It also alleged that the banks relied on the false statements in granting the loans. The complaint alleged that the Government had paid the lending institutions $6,851.26 following the Chernicks’ failure to repay the loans.

The Chernicks were served with summons but failed to appear or answer. On September 28, 1968, the district judge entered a default judgment in the amount of $25,702.52 plus costs of $44.-60. The amount of the judgment was calculated by doubling the amount of the original losses and adding a $2,000 forfeiture for each of the six counts.

In 1972 Chernick again filed a petition in bankruptcy. An amendment to the petition listed the United States as a creditor in the amount of the 1968 default judgment. As creditors have been required to do since the 1970 amendment, the Government filed an application to determine whether the debt was dischargeable under section 17(a)(2). The Government relied on the complaint and judgment in the 1968 suit as proof that the loans were “liabilities . . . for obtaining money or property on credit ... in reliance upon a materially false statement in writing respecting his financial condition made . . . with intent to deceive. ...” 11 U.S.C. § 35(a)(2). The referee in bankruptcy denied the United States’ application and discharged the debt. On review, the district court held the referee’s order was erroneous, but did not decide whether the debt was dischargeable.

The significance of the 1968 judgment becomes apparent in the context of the pre-1970 practice of determining the dis-chargeability of specific debts in collateral proceedings following the general discharge in bankruptcy under section 17(a)(2). A creditor might sue a discharged bankrupt in state court; the bankrupt would plead the discharge as a defense. The plaintiff then had the burden of proving that the claim was excluded under section 17 and was not discharged by the bankruptcy. Harrison v. Donnelly, 153 F.2d 588 (8th Cir. 1946). Since Chernick had been granted a general discharge in the 1962 bankruptcy, the United States’ suit in 1968 was an attempt to have its claim found nondis-chargeable because of the false credit applications. Chernick could have used the 1962 general discharge as a defense, but he failed to answer. While the default judgment re-established Chernick’s liability, it also established fraud on his part and the nondischargeability of the Government’s claim.

The referee refused to consider the 1968 judgment as res judicata in the 17(c)(2) proceeding. He said, “[T]he law after the 1970 amendment is that a debtor is barred by res judicata or collateral estoppel at a hearing on dis-chargeability for fraud only if he contested and actually litigated the fraud issue in the previous case.” Reference to the authorities he cites, however, shows that the authors always are discussing a pre-bankruptcy case brought to settle liability on the claim. E. g., 1A Collier on Bankruptcy 1650.1 (14th ed. 1973). The 1968 suit against Chernick was a post-bankruptcy case in which liability had already been established but exclusion from discharge had not. By awarding damages to the United States, the judgment made the claim nondischargeable and thus settled the identical issue the referee had before him in the 17(c)(2) proceeding.

The district court was correct in concluding that the 1968 judgment was res judicata. He should then have remanded the case to the referee for an examination of the 1968 suit or looked at the record himself. Our examination of the 1968 complaint and judgment convinces us that the effect of that case is a determination that the United States’ claim is not discharged. The district court order is affirmed and the case is remanded to the referee for entry of an order that the debt of $25,747.12 is not dischargea-ble.

Affirmed.

      . Effective Dec. 18, 1970, 11 U.S.C. § 35(c) (2) provides in jjart:
      A creditor wlio contends that his debt is not discharged under clause (2), (4), or (8) or subdivision (a) of this section must file an application for a determination of dischargeability within the time fixed by the court pursuant to paragraph (1) of subdivision (b) of section 32 of this title and, unless an application is timely filed, the debt shall be discharged.

      . The complaint was based on 31 U.S.C. § 231, “liability of persons making false claims,” which provides for double damages and forfeitures. A 1966 loan was charged in count 6, but the judgment covered only the 1962 loans alleged in counts 1-5 and 7.

      . See note 1, supra.

      . In looking at the entire record of the default case, we are following the pre-1970 practice of bankruptcy courts when they elected to determine the dischargeability of a particular debt. If the debt had been reduced to judgment before the bankruptcy, the court discerned the character of the debt from the entire record in the other court. Harrison v. Donnelly, 153 F.2d 588 (8th Cir. 1946); see also Robertson v. Interstate Securities Co., 435 F.2d 784 (8th Cir. 1971); Martin v. Rosenbaum, 329 F.2d 817 (9th Cir. 1964); In re Johnson, 323 F.2d 574 (3d Cir. 1963); In re Stark, 50 F.2d 260 (S.D. N.Y.1931).
      This procedure was appropriate before 1970 because the bankruptcy court did not have exclusive jurisdiction to determine dischargeability; it could accept findings of other' courts on issues relevant to dischargeability. The practice may be improper under the 1970 amendment if the bankrupt wishes to contest factual or legal findings of the other court. Here Chernick cannot contest those issues because he waived the right to do so in a court that in 1968 had jurisdiction to determine dischargeability of the debt in a post-bankruptcy case.