author: BRYAN, Senior Circuit Judge: BOREMAN, Senior Circuit Judge

text:
    WILSON CLINIC & HOSPITAL, INC., Appellee, v. BLUE CROSS OF SOUTH CAROLINA et al., Appellants.
    No. 73-1148.
    United States Court of Appeals, Fourth Circuit.
    Argued Oct. 2, 1973.
    Decided March 14, 1974.
    Boreman, Senior Circuit Judge, dissented and filed opinion.

      Jean A. Staudt, Atty., U. S. Dept, of Justice (Harlington Wood, Jr., Asst. Atty. Gen., of South Carolina, John K. Grisso, U. S. Atty., Kathryn H. Baldwin, Atty., U. S. Dept, of Justice, on brief), for appellants.
    Benny R. Greer, Darlington, S. C. (Greer & Chandler, Darlington, S. C., on brief), for appellee.
    Before BOREMAN and BRYAN, Senior Circuit Judges, and WINTER, Circuit Judge.
   BRYAN, Senior Circuit Judge:

The Medicare program, administered by the Secretary of Health, Education and Welfare, under the Insurance for the Aged Act, 42 U.S.C. § 1395 et seq., provides, so far as imported into this case, for reimbursement of a hospital for services furnished to persons of 65 years and upwards. Id. § 1395, Parts A and C. Hospital cost reports are submitted and accounts settled periodically. Id. § 1395g. Upon this appeal, the question is whether in the instances here there was an evidentiary hearing before the Secretary withheld the amount of alleged overpayments from later accruals, and if not, was such recoupment illegal as a deprivation of Fifth Amendment due process.

On the allegation of want of due process, appellee-hospital here obtained an injunction from the District Court disallowing this adjustment. The Secretary’s intermediary appeals.

We think the Secretary is altogether innocent of the charge, for the fact is that his action did in truth and practicality give the hospital generous opportunity for, and accorded it, a full hearing on the amount, if any, owing in reimbursement. Indeed, more was given than due process required.

Under the program the hospital is known as the “provider of services”. Id. § 1395x(u). At agreeable times, the provider’s 12-month costs are laid before the Secretary or his intermediary. An intermediary is a representative of the Secretary, appointed on the mutual selection of the latter and the provider. Id. § 1395h. Its function is to verify the amounts earned by the provider for services. In this instance the provider is the appellee Wilson Clinic & Hospital, and appellant Blue Cross of South Carolina is the intermediary.

The claim in suit is Blue Cross’ demand for recovery of overpayments it contends were made to Clinic during 1966-69. Initial audits showed Clinic entitled to $31,000 more than the costs it had reported, and documents accepting these figures as final had been executed between Blue Cross and Clinic.

Accountings for 1970 and 1971 reflected excesses paid to Clinic of $16,303 and $4,232, respectively. Prompted by these results, 1966-69 statements were again reviewed; they disclosed Clinic as over-refunded by $25,551.00. Notice was given Clinic on September 22, 1972 of the intermediary’s intention to suspend future reimbursements until the overages were recouped.

Clinic had filed the instant suit on September 20, 1972 to confirm the accounts as agreed for the years 1966-69 and to restrain the intermediary from any withholding of funds. The cause was heard on Blue Cross’ motion to dismiss, supported by the unrefuted affidavit of Blue Cross’ General Manager to the facts just related.

The District Court granted the injunction and also directed restoration to Clinic of the sums earlier retained. The Court was of opinion that while Blue Cross could reopen the agreements , it could not withhold indemnification from Clinic without first affording it an evidentiary hearing on the right of the suspension.

I. Reopenings are contemplated generally by the Act. To begin with, it impliedly, if not expressly, envisages the canvassing of all payments to a provider. See: Id. § 1395g; § 1395f(b); § 1395h (a)(2)(B). Obviously, this tutelage embraces the power and duty to reopen settlements.

Moreover, the Secretary is instructed to issue regulations for the making of “suitable retroactive corrective adjustments” whenever the indemnity of the provider appears “inadequate or excessive”. Id. § 1395x(v) (1) (A) (ii). He did so in a regulation effective May 27, 1972, 20 CFR 405.499g , expressly permitting the intermediary to reopen a determination of the amount of a program reimbursement. Thus the intent of Congress to endow the Secretary with ample reopening powers is quite evident.

Indisputably, the United States can always retrieve moneys misunderstandingly outlaid. Even aside from the Act now in suit, the District Court was quite sound in declaring that, agreements non obstante, sums mistakenly paid to Clinic could be recaptured. It is underwritten by United States v. Wurts, 303 U.S. 414, 415-416, 58 S.Ct. 637, 82 L.Ed. 932 (1938) and Wisconsin Central Railroad Co. v. United States, 164 U.S. 190, 212, 17 S.Ct. 45, 41 L.Ed. 399 (1896). The corollary is included: that the Government may offset overpayments against current or subsequent obligations. Gratiot v. United States, 15 Pet. (40 U.S.) 336, 10 L.Ed. 759 (1841).

II. However, the District Court erred in vitiating, on the ground that there was no prior evidentiary hearing on the redeterminations, Blue Cross’ threat of withholdings. Decision was rested on Coral Gables Convalescent Home, Inc. v. Richardson, 340 F.Supp. 646 (SDFla. 1972). There no hearing whatsoever was obtainable and the intermediary’s computation was absolute. For that reason alone Coral Gables sustained the provider’s right to attack at once in court the intermediary’s reckoning.

Apparently to avoid the vulnerability in Coral Gables, the Secretary on May 27, 1972 disseminated overall regulations. 42 U.S.C. §§ 1395hh and 1395x(v)(l) (A). Inasmuch as the reopenings were put into effect (May 3, 1972) before the effectuation of the new regulations on May 27, 1972, they did not control the reopenings here. However, in respect to the redeterminations themselves, the new promulgations were applicable. They outline, as will appear immediately, the steps to be pursued in ascertaining the sums owing the provider.

Regulation 405.491 requires that, after receiving the provider’s cost report and analyzing it, the intermediary notify the provider of any reimbursements due. This figure is declared to be the basis for any corrective action, including the suspension of further payments. Contemporaneously, the provider is informed of its right to a hearing on the determination, regulation 405.492 allowing the provider to request a hearing if dissatisfied with the intermediary’s tally. Subsequent regulations spell out the procedure for the hearing and for the review of the intermediary’s conclusions by disinterested but knowledgeable hearing officers. 405.492 to 405.499i.

Instantly, the historic events demonstrate that, at the time the injunction issued, Clinic was not aggrieved by lack of a single syllable of due process. As noted previously, Clinic had been tendered and enjoyed every demand of due process as to notice and related incidents precedent to the determination of reimbursement. These events without contradiction, were enumerated in the affidavit filed with the motion to dismiss and considered by the Court without objection. The affiant’s narrative follows:

“On June 6, 1972, a conference was held at Wilson Clinic where the proposed adjustments by Provider Reimbursement were explained to Wilson Clinic. A copy of the adjustment and the revised cost reports and hearing procedures were explained to Wilson Clinic at that time. The hospital’s CPA and attorney requested additional time to review the adjustments. Twenty-one (21) days were granted for Wilson Clinic to provide any additional data to negate or modify the proposed adjustments by Provider Reimbursement.
“On July 28, a conference was held at the Provider Reimbursement Department where the attorney and CPA for Wilson Clinic submitted additional data. Some of the adjustments were revised as a result of this additional data.
“The CPA representing Wilson Clinic requested that he have until August 2 to further review the adjustments. This request was granted.
“The CPA did not show up on August 2, 1972.
“On August 7,' 1972, forms and instructions for the hearing procedure were provided to Wilson Clinic. . . .
“On August 24, 1972, Wilson Clinic was advised of an overpayment due for September 30, 1966; on August 28, 1972, Wilson Clinic was advised of an overpayment due for September 30, 1967; and August 29, 1972, Wilson Clinic was advised of an overpayment due for September 30, 1968; on August 31, 1972, Wilson Clinic was advised of an overpayment due for the year ended September 30, 1969; on September 6, 1972, Wilson Clinic was advised of an overpayment due for the year ended September 30, 1970; and on September 7, 1972, Wilson Clinic was advised of an overpayment due for the year ended September 30, 1971.
“In each of these it was stated that payment of the balances was due upon receipt of this notice and that Provider Reimbursement must automatically deduct from future remittances if payment were not reached within thirty (30) days.” (Accent added.)

After the suit was filed by Clinic on September 20, 1972, nothing further was done by intermediary in the way of suspensions. On October 3, 1972 the hospital provider formally asked for a hearing on the amount of its entitlement to reimbursement. It did not further prosecute this request, by refutation of the findings of overpayments or otherwise.

Finally, the decisive question before the court then is whether the administrative procedures, as pursued by the intermediary, afforded due process for determination of Clinic’s reimbursements.

To start with, the Act directs the Secretary in compensating the provider to make “necessary adjustments on account of previously made overpayments or underpayments”. 42 U.S.C. §• 1395g. In participating in the program, of course, Clinic subjected itself to this method of initial reconciliation. Nowhere does the statute condition the Secretary’s exercise of this power upon a judicial hearing. But the statute apart, the Secretary may take this action under the aegis of administrative law, and reliance is not here placed exclusively upon the words of the statute.

Admittedly, however, such interlocutory adjustments, administratively made, will not be sustained unless they are accomplished with due process. This obligation is obeyed here in the scrupulous practice of notice, hearing, and advice of the right of review in fact for the determination and adjustment of the reimbursement. In sum, the intermediary’s conduct fully accorded the provider administrative due process.

Judicial precedent requires no more. First, Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), vouches this position. There State- welfare payments had been discontinued without first giving the recipient notice of the proposed termination. On his application the District Court enjoined the indicated action because “only a pre-termination evidentiary hearing would satisfy the [due process clause] command”. Id. 261, 90 S.Ct. 1016. Affirming, Goldberg instructed in these opinion excerpts:

“The constitutional issue to be decided, therefore, is the narrow one whether the Due Process- Clause requires that the recipient be afforded an evidentiary hearing before the termination of benefits.” p. 260, 90 S. Ct. p. 1016.
“We also agree with the District Court, however, that the pre-termination hearing need not take the form of a judicial or quasi-judicial trial. Accordingly, the pre-termi-nation hearing has one function only: to produce an initial determination of the validity of the welfare department’s grounds for discontinuance of payments in order to protect a recipient against an erroneous termination of his benefits. . . . Thus, a complete record and a comprehensive opinion, which would serve primarily to facilitate judicial review and to guide future decisions, need not be provided at the pre-termination stage”, pp. 266-267, 90 S.Ct. p. 1020.
“ ‘The fundamental requisite of due process of law is the opportunity to be heard.’ Grannis v. Ordean, 234 U.S. 385, 394 [34 S.Ct. 779, 783, 58 L.Ed. 1363] (1914). The hearing must be‘at a meaningful time and in a meaningful manner.’ Armstrong v. Manzo, 380 U.S. 545, 552 [85 S.Ct. 1187, 1191, 14 L.Ed.2d 62], (1965). In the present context these principles require that a recipient have timely and adequate notice detailing the reasons for a proposed termination, and an effective opportunity to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally.” pp. 267-268, 90 S.Ct. p. 1020.

As is evident, the procedure ordained in Goldberg is the pattern traced by the Secretary.

In summary, we find no basis for the injunction and the District Court should vacate it. Nothing we say is intended to adjudicate any other point or to preclude Clinic from obtaining a review of the present computations of reimbursement, if that relief is now obtainable under the regulations*

Vacated and cause remanded.

BOREMAN, Senior Circuit Judge

(dissenting):

With due regard for the majority and its opinion I feel compelled to note my disagreement. Preliminarily, I am concerned with the breadth or scope of review of the district court’s award of the temporary injunction as envisioned and assumed in the majority opinion. In reviewing such interlocutory decisions restraint is to be exercised:

“[Ljimited review is necessitated because the grant or denial of a preliminary injunction is almost always based on an abbreviated set of facts, requiring a delicate balancing of the probabilities of ultimate success at final hearing with the consequences of immediate irreparable injury which could possibly flow from the denial of preliminary relief.”

United States Steel Corp. v. Fraternal Association of Steelhaulers, 431 F.2d 1046, 1048 (3 Cir. 1970). The record before us is not complete; as noted in the majority opinion, “[t]he cause was heard on Blue Cross’ motion to dismiss.” As discussed below, on the basis of the material now before us, I think Clinic has established a prima facie case and is entitled to the benefits and protection of a temporary injunction pending an opportunity for both parties to fully develop the ease on its merits.

The majority has chosen to approach and treat this ease as though it had been tried on the merits. I am not persuaded that this is a proper exercise of judicial restraint. “It must be borne in mind that the parties did not submit the case to the trial court on its merits. It can not be gainsaid that the questions of law and fact to be ultimately determined in the action are grave and difficult.” Benson Hotel Corp. v. Woods, 168 F.2d 694, 697 (8 Cir. 1948). The instant case clearly presents a situation calling for application of the rule that an appellate court reviewing an interlocutory injunction should not “go any further into the merits of the case than is necessary to decide the matter upon appeal.” 9 J. Moore, Federal Practice fí 110.25 [1], at 269-70 (2 ed. 1973 revision) (footnote omitted).

The majority has undertaken to resolve the question of whether Blue Cross could reopen the settlement agreement which it had previously entered into with the Clinic. While I recognize, as does the majority, “that the point may later . have to be decided,” I do not believe that question is properly before us at this time. The fact that a speedy determination of a question “is of the utmost importance to all of the parties” does not justify deciding it on an interlocutory appeal. Ex parte National Enameling and Stamping Co., 201 U.S. 156, 162, 26 S.Ct. 404, 406, 50 L.Ed. 707 (1906). An interlocutory appeal “cannot be equated with an appeal from a final disposition on the merits.” Industrial Bank of Washington v. Tobriner, 132 U.S.App.D.C. 51, 405 F.2d 1321, 1323-1324 (1968). “The only questions which arise under the special or limited appeal from an interlocutory decree granting a preliminary injunction are those which are necessarily involved by the allowance of the injunction pendente lite.” City of Owensboro v. Cumberland Telephone and Telegraph Co., 174 F. 739, 747 (6 Cir. 1909); see also 7 J. Moore, Federal Practice jj 65.21 (2 ed. 1973 revision).

Another consideration makes a decision on that issue at this time particularly inappropriate. Although the district judge stated that he did “not doubt the authority of the defendants to recover amounts erroneously paid to the providers under the Act . . . ,” that point was not appealed by Clinic. Blue Cross, in whose favor such a decision would operate, originally argued that question on appeal, but subsequently conceded that, in the absence of a cross-appeal by Clinic, the “sole issue before this Court is ‘whether the Provider [Blue Cross] can withhold current medicare payments due the Hospital before an evi-dentiarly hearing is held on the matters in dispute.’ ” If Clinic chooses to wait until the record is fully developed to appeal from such a final decision it should be allowed to do so. Since Clinic has not briefed or argued this question on appeal I shall refrain from expressing any opinion with respect to the conclusion reached by the majority on what is presently nothing more than an abstract proposition of law.

Because of the majority’s ultimate disposition of this appeal, I feel compelled to discuss the merits of Clinic’s due process claim. The procedures adopted by the Secretary do provide for a hearing by an impartial decision maker at some point in time. Whether this hearing is to be a pre-termination of benefits hearing or a post-termination of benefits, hearing is not established. Applying the regulations to the facts recited by the majority, Clinic was informed on August 7, 1972, of the administrative appeal procedure. Clinic had sixty days to appeal Blue Cross’ decision to an impartial decision maker. Commencing on August 24, 1972, Clinic began receiving notices of final reimbursements claimed to be due; each notice stated that if remittance of claimed overpayments was not received in thirty days Blue Cross would automatically suspend payments of amounts currently due Clinic. Obviously the date of suspension was in no way tied to a final decision by an impartial decision maker. There is nothing in the regulations to guarantee that the hearing would be of a pre-termination of benefits nature. The question then becomes whether, under the circumstances of this case, due process mandates a pre-termination hearing.

Blue Cross cites Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), (which, on its facts, called for a hearing prior to termination of benefits) for the proposition that “some governmental benefits may be administratively terminated without affording the recipient a pre-termination evidentiary hearing.” 397 U.S. at 263, 90 S.Ct. at 1018. Apparently the majority has relied on this statement in holding that the procedure involved here did meet the requirements of due process, albeit a post-termination of benefits hearing was probable. I am of the opinion that a close reading of Goldberg indicates that a pre-termination hearing is required to satisfy due process under the facts as developed in this record.

In Goldberg the Court stated:

“The extent to which procedural due process must be afforded the recipient . . . depends upon whether the recipient’s interest in avoiding that loss outweighs the governmental interest in summary adjudication. [Consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as the private interest that has been affected by governmental action.” 397 U.S. at 262-263, 90 S.Ct. at 1017 (citations omitted).

The Court established what has been called a “balancing” or “weighing” test. Morrissey v. Brewer, 443 F.2d 942 (8 Cir. 1971); Caulder v. Durham Housing Authority, 433 F.2d 998 (4 Cir. 1970). In Goldberg the recipients’ need for welfare benefits and the Government’s interest in providing for the dignity and well being of all its citizens were balanced or weighed against the countervailing governmental interest in protecting public revenues. The Court observed that the recipients involved were probably judgment proof, thus creating a compelling interest of the Government to make sure that public revenues were not lost on ineligible recipients. Nevertheless, the Court held that, in balancing the interests, the recipients’ “brutal needs” and the Government’s interest in a continuing viable program outweighed the countervailing governmental interest in protecting public funds.

Goldberg does not leave us with the cold statement that some benefits can be terminated only with a pre-termination hearing while others require only a post-termination hearing. A balancing test is provided whereby the circumstances of each case can be analyzed and weighed to determine whether due process is served by the hearing procedure to be employed. The majority here merely recites the facts and procedures involved in concluding that due process was satisfied but without the analysis or weighing as called for in Goldberg.

Although incomplete, the record does indicate that Clinic received approximately one-third of its income for current operations from the Medicare program. Any reduction or suspension of estimated monthly payments for current services being rendered under the program would naturally lead to substantial cutbacks in supplies and services. Although the effect of such suspension might not be as severe as was the effect of withdrawal of payments on recipients in Goldberg the withholding of funds from Clinic would substantially affect the very means by which it operates. Naturally the ones to suffer would be those elderly persons in need of medical treatment. The Government’s interest in providing continuing complete and competent medical service and care for the elderly would be frustrated. The interest that counseled the creation of Medicare counsels as well its uninterrupted continuation for those who should receive it. Thus, as in Goldberg, there appear to be valid and compelling reasons to continue providing payments to Clinic unless a pre-termination of benefits hearing determines otherwise. Con-cededly the interests here involved might not reach the “brutal needs” of the welfare recipients in Goldberg yet the balance should tip in Clinic’s favor since there has been no showing here, as there was in Goldberg, that the countervailing governmental interest in protecting public funds is present. In Goldberg the recipients were judgment proof and once money was disbursed to ineligibles by the Government there was little or no chance of ever regaining amounts which had been paid. The trial judge succinctly described the situation present here in his order denying a motion to stay the injunction:

“There has been no showing in this case that irreparable damage will be done .... As pointed out in the previous Order of the Court, it appears inconceivable that even if plaintiff [Clinic] should withdraw from the Medicare Program that its assets would be squandered or depleted to the extent that the defendant [Blue Cross] could not properly be reimbursed.”

Thus, on the merits, the balancing test of Goldberg leads me to conclude that a pre-termination of benefits hearing was essential here in order to satisfy due process requirements.

As before stated, it is my view that the case is not properly before us for a decision on the merits. Faced with an incomplete record and concerned with an order denying a motion to dismiss a complaint seeking temporary injunctive relief, I conclude that the reasoning of this court in Caulder v. Durham Housing Authority, 433 F.2d 998 (4 Cir. 1970) (Winter, J.), should control:

“Both Goldberg and Escalera [Esca-lera v. New York City Housing Authority, 425 F.2d 853 (2 Cir. 1970)] also recognize the possibility that in some instances the right to procedural due process must bend to a compelling governmental interest in summary adjudication. ‘The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.’ . . . We do not foreclose this possibility here. But this case was decided on motion to dismiss, and governmental interests, if any, competing with plaintiff’s apparent rights have not been developed in this record. If there are compelling competing governmental interests, they may be developed on remand and weighed by the district court, which may then decide the effect to be given them.” 433 F.2d at 1004 n. 3 (emphasis added, citation omitted).

Finally, in its brief, Clinic objects to Blue Cross’ failure to comply with 20 C.F.R. § 405.370(b). That section provides in part:

“A suspension shall be put into effect only after . . . the intermediary or carrier [Blue Cross] has determined that the suspension of payments, in whole or in part, is needed to protect the program against financial loss.”

Absent the determination that suspension is necessary to protect public funds, Clinic contends that Blue Cross should be prevented from suspending future payments until a pre-termination hearing could be held. The majority refuses to consider this contention, noting that the matter was raised for the first time on appeal. It is apparent, however, from its denial of Blue Cross’ motion to stay that the district court did consider the point:

“There has been no showing in this case that irreparable damage will be done . . . . [I] t appears inconceivable that even if plaintiff [Clinic] should withdraw from the Medicare Program that its assets would be squandered or depleted to the extent that the defendant could not properly be reimbursed.”

Even if Clinic did not raise the point below, clearly the judge took cognizance of it. If the case is to be treated on appeal as ripe for consideration on the merits there would appear to be no valid policy reason to support the majority’s refusal to consider the point. The language in the Secretary’s own regulation is clear. Suspension shall be put into effect only after a determination that it is needed to protect the program. Clearly this requirement has not been met and Blue Cross should, therefore, be enjoined from suspending payments.

“An agency of the government must scrupulously observe rules, regulations, or procedures which it has established. When it fails to do so, its action cannot stand and courts will strike it down. This doctrine was announced in United States ex rel. Ac-cardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954). There, the Supreme Court vacated a deportation order of the Board of Immigration because the procedure leading to the order did not conform to the relevant regulations. The failure of the Board and of the Department of Justice to follow their own established procedures was held a violation of due process.” United States v. Heffner, 420 F.2d 809, 811-812 (4 Cir. 1969) (Winter, J.) (Bryan, J., dissenting).

Having concluded that, under the circumstances Clinic had a right to a hearing prior to the suspension of future payments, I note Blue Cross’ contention that this action should be dismissed because of the alleged failure of Clinic to exhaust the administrative remedies. On August 24,1972, Blue Cross informed Clinic that unless the disputed overpay-ments were repaid within thirty days the amounts would be automatically deducted from future payments due. On September 20, 1972, prior to formally requesting an administrative hearing, Clinic filed this suit seeking injunctive relief. Blue Cross insists that in the absence of a previous request for a hearing this suit was premature and should be dismissed. I do not agree. The notice of intent to suspend future payments until the disputed amount was recovered by Blue Cross and regulations respecting such suspensions do not provide for an extension of time beyond the thirty days when a hearing is requested. It was the announced intention of Blue Cross to initiate the suspension of payments process after thirty days without regard to or mention of a request for a hearing. I find no administrative procedure whereby Clinic could protect its right to a pre-termination hearing. Only by enjoining such suspension of payments by Blue Cross, pending a hearing, could Clinic protect its rights. The very fact that Clinic subsequently formally requested a hearing within the allowable time period demonstrates that this action was not instituted for the purpose of by-passing the administrative process. I would affirm.

      . In their brief appellees suggest that this is not an issue. However, the District Court ruled upon it; the appellant argues it; and the appellees intimate that the point may later have to be decided. In this posture of the record, we think the issue should be resolved.

      . For the issuance of regulations generally, see infra § II, par. 2.

      . The regulations are referred to by the number of the embodying section of 20 CFR.

      . In the District Court Clinic did not charge Blue Cross with a failure to meet any condition for suspension. Now, however, in brief Clinic for the first time makes the point that no finding was made by the intermediary that suspension was “needed to protect the program”. For support, reference is made to regulation 405.370(b) reciting in substance that no suspension shall be effectuated without such a finding. We do not think we should consider on appeal a non-jurisdictional point not made before the District Court. Preferred Risk Mut. Ins. Co. v. Thomas, 372 F.2d 227, 232 (4 Cir. 1967); United States v. Ferguson, 368 F.2d 324, 325, n. 1 (4 Cir. 1966); McGowan v. Gillenwater, 429 F.2d 586, 587 (4 Cir. 1970).

      . Blue Cross was enjoined and restrained from withholding funds currently due the Clinic “pending the evidentiary hearing on the merits of this case.”

      . The vice of attempting to make a final disposition of a case upon a motion for a temporary injunction was considered in Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 60 S.Ct. 517, 84 L.Ed. 774 (1940).
      We think the court committed serious error in thus dealing with the case upon motion for temporary injunction. The question before it was not whether the act was constitutional or unconstitutional; was not whether the Commission had complied with the requirements of the act, if valid, but was whether the showing made raised serious questions, under the federal Constitution and the state law, and disclosed that enforcement of the act, pending final hearing, would inflict irreparable damages upon the complainants.

        Id. at 316, 60 S.Ct. at 520.

      . Blue Cross initially asserted that reopening was authorized by 20 C.F.B.. § 405.499g. It is clear that if that regulation is found to be controlling the three year statute of limitation set forth therein may bar recovery of at least a part of the amount in dispute. The record in this interlocutory appeal is not sufficiently complete to resolve this issue. This demonstrates the danger of making a final determination at this stage of the proceedings.


source: Caselaw Access Project

author: KILEY, Senior Circuit Judge. PELL, Circuit Judge

license: Public Domain

text:
    SPIEGEL, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
    No. 73-1233.
    United States Court of Appeals, Seventh Circuit.
    Argued Oct. 31, 1973.
    Decided March 18, 1974.
    Pell, Circuit Judge, dissented and filed opinion.

      Jacob A. Stein, Washington, D.C., Patrick W. O’Brien, Chicago, 111., for petitioner.
    Harold D. Rhynedance, Jr., Asst. Gen. Counsel, William A. E. Doying, Atty., Federal Trade Commission, Washington, D.C., for respondent.
    Before KILEY, Senior Circuit Judge, and PELL and SPRECHER, Circuit Judges.
   KILEY, Senior Circuit Judge.

The Federal Trade Commission ordered petitioner, Spiegel, Inc., to cease and desist from engaging in deceptive trade practices and unfair competition in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(c). Spiegel petitions to have the order reviewed and set aside. We deny the petition and direct enforcement of the Commission’s order.

Spiegel is a catalogue retailer of, among other things, clothing, household appliances and kitchenware, with principal office and place of business in Chicago, Illinois. During the relevant period prior to November, 1971, it shipped its merchandise, when sold, from Chicago into several of the United States. In its sales efforts it advertised for credit customers in circulars to “established” and “new” customers, and seasonal cata-logues to “new” customers. The Commission’s complaint, issued November 8, 1971, alleged that Spiegel’s advertising practices were deceptive and unfair in violation of the Act, and that the complaint was “in the public interest.”

The cease and desist order followed upon Spiegel’s answer denying deception, a pre-hearing stipulation of facts, a limited evidentiary hearing before a Commission hearing officer, appeals to the Commission by both parties, and the Commission’s adoption, with modifications, of the hearing officer’s decision.

The complaint alleged that the statements contained in circulars and seasonal catalogues which offered “free trial” or “percent off” of merchandise represented directly or by implication that the offers were available “without condition of restriction;” that “in truth and in fact” the offers of shipment to the “new” customers were conditioned upon the offerees qualifying for credit under Spiegel criteria; and that no shipments were made under the offers to the “established . . . credit customers” unless the amount of the purchases, added to the pre-existing credit charges of the purchaser, was less than the total credit amount Spiegel had previously allowed the customer.

The complaint charged that Spiegel’s use of these alleged “false, misleading and deceptive statements” had the “capacity and tendency” to mislead the public into purchasing Spiegel’s merchandise in reliance upon the truth of the statements “all to the prejudice and injury of the public and of [Spiegel’s] competitors,” and constituted unfair and deceptive practices and unfair competition in violation of the Act.

Spiegel’s answer denied that the complaint was in the public interest, stated that the advertising followed the custom and usage of the trade, stated the alleged unlawful practices had been abandoned, and denied deception and injury to customers or competition.

The Commission’s Final Order directed Spiegel to desist from its “free trial” or “percent off” advertising practices as to prospective and established customers, unless it “conspicuously disclose [d] in immediate conjunction” with the offers that they are subject to Spie-gel’s credit approval; disclosed at the top of questionnaires requesting information about credit that the questionnaire is an application for credit; and disclosed any condition or restriction rendering an offeree ineligible to qualify for the offer. Finally, the order directed Spiegel to desist from representing directly or by implication that a free trial offer or price reduction is without condition when such condition exists.

I.

There is no merit in Spiegel’s contention that the order should be set aside as too trivial for Commission attention because there was no proof of injury to the public or to Spiegel’s competitors.

Protection of the public is essential to justify filing a Section 5 complaint. FTC v. Klesner, 280 U.S. 19, 27, 50 S.Ct. 1, 74 L.Ed. 138 (1929). However, proof of actual injury is unnecessary to support a Commission cease and desist order.

Significant in the examiner’s decision, adopted by the Commission, are the statements that “an advertisement must be truthful .... To comply with the Federal Trade Commission Act, an advertisement must be akin to a passport for the complete truthfulness of the statements contained therein;” and that where, as here, the offers are conditioned, “unsophisticated clues to the conditions should be as obvious on the face of the advertisement as the inducing offers themselves.”

The moral tone of those statements is implicit in Justice Cardozo’s language in FTC v. Algoma Co., 291 U.S. 67, 78-79, 54 S.Ct. 315, 320, 78 L.Ed. 655 (1934):

Fair competition is not attained by balancing a gain in money against a misrepresentation of the thing supplied. The courts must set their faces against a conception of business standards so corrupting in its tendency. The consumer is prejudiced if upon giving an order for one thing, he is supplied with something else. Federal Trade Comm’n v. Royal Milling Co., 288 U.S. 212, 216, [53 S.Ct. 335, 77 L.Ed. 706]; Carlsbad v. W. T. Thackeray & Co., 7 Cir., 57 F. 18. In such matters, the public is entitled to get what it chooses, though the choice may be dictated by caprice or by fashion or perhaps by ignorance. Nor is the prejudice only to the consumer “A method inherently unfair does not cease to be so because those competed against have become aware of the wrongful practice.” Federal Trade Comm’n v. Winsted Hosiery Co., 258 U.S. 483, 494, [42 S.Ct. 384, 385, 66 L.Ed. 729], The careless and the unscrupulous must rise to the standards of the scrupulous and diligent. The Commission was not organized to drag the standards down. (Footnote omitted.)

The primacy of truthfulness in advertising was made explicit in FTC v. Colgate-Palmolive, 380 U.S. 374, 85 S.Ct. 1035, 13 L.Ed.2d 904 (1965), wherein the Supreme Court held that it was a deceptive practice to convey to television viewers the impression that they were watching an actual experiment when they were viewing only a simulation, notwithstanding the fact that the experiment had been conducted off-camera and the product had performed as represented. The Court stated, at 388-389, 85 S.Ct. at 1044:

We find an especially strong similarity between the present case and those cases in which a seller induces the public to purchase an arguably good product by misrepresenting his line of business, by concealing the fact that the product is reprocessed, or by misappropriating another’s trademark. In each the seller has used a misrepresentation to break down what he regards to be an annoying or irrational habit of the buying public — the preference for particular manufacturers or known brands regardless of a product’s actual qualities, the prejudice against reprocessed goods, and the desire for verification of a product claim. In each case the seller reasons that when the habit is broken the buyer will be satisfied with the performance of the product he receives. Yet, a misrepresentation has been used to break the habit and, as was stated in Algoma Lumber, a misrepresentation for such an end is not permitted.

The Ninth Circuit, citing Colgate-Palmolive, has held that “[deception itself is the evil the statute is designed to prevent.” Floersheim v. FTC, 9 Cir., 411 F.2d 874 (1969). That holding is faithful to the Supreme Court decisions.

The promise of an unconditional “free trial” or “percent off,” when both are conditional, is not in the public interest. A good society depends upon promises being kept. And individuals in society have a right to be told the truth, so that their choices among products, or, as in this case, among offers, can be understandingly made. If sellers in our society are free to compete for consumers’ patronage with others by unfair advertising, not only is the consumers’ right violated, but our commitment to fair competition becomes a pretense. The courts “must set their faces” against those practices which are harmful to the public interest.

The record here contains ample proof of the need to protect the public interest. Spiegel’s catalogues were distributed in interstate commerce and its advertisements inserted in numerous metropolitan newspapers. Between 1969 and July 1970, approximately three million circulars offering price discounts were distributed. Spiegel distributed two million “free trial” offers annually. Net sales by “hot merchandise” cata-logues were estimated at $27,000,000 in 1969 and 1970, and $30,000,000 in 1971.

We hold that the complaint was justified and that the Commission did not waste its time with trivia in considering the alleged deceptive and unfair practices.

II.

Spiegel argues that the Commission’s order is not supported by the evidence. We need not discuss the circular and catalogue statements at length in disposing of the argument. Suffice to say that the statements are clearly designed to attract credit customers to Spiegel’s offers. For example, a multipaged circular is sent with a typewritten invitation to the “Dear Customer” to try the nineteen “outstanding values . at our risk.” “[Y]ou can order any or all of these values on 30-DAY FREE TRIAL .... All we require is that your order be for $10 or more .... We’ll rush your merchandise to you.” “[R]emember, you’re not buying . . . merely trying.” In the margin of the first page in large type is the following: “SEND NO MONEY. TRY ANY OF THESE VALUES 30 DAYS FREE.” There is no statement in the circular itself of any condition or restriction, other than the $10 minimum. In another free trial offer there are small print statements of credit qualifications, such as “subject to [Spiegel’s] acceptance.”

The Commission did not find that Spiegel stated the offers were unconditional. It found that the conditions were not stated or located in such a way that customers, without undue difficulty, would understand that the “free trial” and “percent off” offers were not truly free but were conditioned on the customer meeting Spiegel’s credit criteria. As Spiegel states it, the alleged deceptive factor was in the placement and print size of the conditions, not the lack of statement of conditions.

We have examined the circulars and catalogues in the record containing similar statements, and we hold that the evidence gives substantial support to the Commission’s finding of a “capacity and tendency” to mislead the public. The testimony of Spiegel’s vice-president that its advertisements lack “even the capacity to injure” does not compel a finding different from the Commission’s.

III.

There is no merit in Spiegel’s contention that there is a fatal variance between the complaint’s allegation of failure to disclose conditions on the face of the advertisements and the Commission’s finding that placement of the conditions was “far removed” from the allure of the advertisement. We find no variance. And this court’s Wrisley Co. v. FTC, 7 Cir,, 113 F.2d 437, 442 (1940), does not support Spiegel.

IV.

Spiegel has not persuaded us that three of the four paragraphs in the order “violate the stipulation” entered into by the parties at the request of the hearing examiner, and consequently bear the “badge of unfairness.” Nor is the order, in our opinion, “vague and ambiguous.”

The thrust of the four paragraphs in the Commission’s order is a requirement that the credit conditions, relating to both prospective and established customers, be stated “clearly and conspicuously in immediate conjunction with” the offer in order that the prospects not be misled by positioning conditions where the average person in Spie-gel's market would be likely to overlook them. The order is reasonably related to the violations found.

V.

We do not share Spiegel’s concern that the Commission’s order will effectively “ban” free trial offers. We refer to the apt statement of the Supreme Court in Colgate-Palmolive, supra, 380 U.S. at 390, 85 S.Ct. at 1045: “We think it inconceivable that the ingenious advertising world will be unable, if it so desires, to conform to the Commission’s insistence that the public be not misinformed.” In any event, unfair and deceptive advertisements cannot be justified on the basis that they are needed either as a service to the consumer or to meet competition in the market.

VI.

The original hearing examiner, at Spiegel’s request, issued twelve subpoenas duces tecum against competitors of Spiegel. The succeeding examiner sua sponte quashed the subpoenas. Spiegel argues that the ruling deprived it of evidence bearing on the nature and extent of the order to be entered; and that the evidence sought would have shown Spiegel’s conduct to have been exemplary viz-á-viz its competitors, since it alone of its competitors in the market stated credit conditions. It further claims the evidence was relevant to show it could believe its offers reasonable in light of its competitors’ advertisements.

We hold that the ruling was not erroneous. The evidence sought was of no avail to Spiegel. Even if its competitors were more deceptive, the evidence was irrelevant. We note again the Cardozo statement, 291 U.S. at p. 79, at 54 S.Ct. at p. 320 of Algoma, that “the Commission was not organized to drag the standards down.” See also the Sixth Circuit’s statement in Collier & Son Corp. v. FTC, 427 F.2d 261, 276 (1970): “The purpose of Commission orders is not to put those employing deceptive acts or practices in pari delicto with each other.” That Spiegel’s competitors were worse does not require that Spiegel be permitted to continue the deception found by the Commission.

For the reasons given, the Commission’s order is affirmed, and we direct its enforcement.

PELL, Circuit Judge

(dissenting).

If for no other reason, the order of the FTC should be set aside by this court because of the utter triviality of the matter involved. I therefore respectfully dissent.

The FTC conceded the correctness of the general rule that detriment to the public interest must be shown. Here, by issuing its order, the FTC has in effect found there was detriment to the public interest in the situation of deadbeats being deceived into thinking that they are going to receive a free trial of, or a discount on, merchandise which they could not realistically purchase on either a cash or a deferred basis. It is difficult to imagine a less egregious affront to the public interest.

As early as 1924, only nine years after the FTC had begun to operate, it was stated that

“[t]he Commission is handling too many cases, and that it should exercise a greater discretion in selecting those cases which involve questions of public importance. It does not seem necessary that public funds should be’ employed to prosecute cases . involving trivial or merely technical offenses, in which the public interest is not always easy to discern.” G. Henderson, The Federal Trade Commission 337 (3d ed. 1927).

Similarly, the Hoover Commission noted in 1949 that

“in the selection of cases for its formal dockets, the Commission has long been guilty of prosecuting trivial and technical offenses and of failing to confine these dockets to cases of public importance.” Commission on the Organization of the Executive Branch of the Government, 81st Cong., 2d Sess., Task Force Report on Regulatory Commissions, app. N, 128 (Comm, Print 1949).

Most recently, The President’s Advisory Council on Executive Organization, in its report entitled “A New Regulatory Framework” (January 1971), stated:

“Much of the criticism of the FTC is aimed at its disproportionate attention to comparatively trivial matters — resulting largely from the breadth of its mandate and compounded by inherent deficiencies of the collegial form of organization. Preoccupation with minutiae over the years has created a ‘jack of all trades — master of none’ profile for the FTC.” Id. at 87.

In S. Buchsbaum & Co. v. Federal Trade Commission, 160 F.2d 121 (7th Cir. 1947), this court, in holding that the findings and conclusion of the Commission that the petitioner had been guilty of deceptive acts was not supported by substantial evidence, made the following pertinent comment, at 123-124:

“[E]ven though there be no proof of actual deception required, there must be a showing that the acts and, practices sought to be proscribed are detrimental to the public interest in order to satisfy the statutory requirement that the proceeding be in the public interest. 15 U.S.C.A. § 45(b). Here the Commission made no finding that the deception, if any, had ever resulted in or had any tendency to result in detriment to the purchasing public. We find nothing in the findings to support the conclusion that the acts and practices are ‘all to the prejudice and injury of the public.’ ” (Emphasis added.)

Putting the most blatant possible interpretation on the advertising material of Spiegel, and assuming, arguendo, that the most astute and sophisticated reader would be unable to find any clue in the material that would impose any qualification or condition on the enjoyment of a free trial or a discount, whether that reader be an adult or a child, financially responsible or irresponsible, honest or dishonest, I cannot conceive that the public would be misled into thinking that these merchandising gimmicks were intended for any persons except a member of the prospective and potential purchasing public under circumstances in which Spiegel expected eventually either to receive the purchase price or the return of the merchandise. The inference that Spiegel intended to deal with financially irresponsible persons is scarcely supportable from the bare fact of a free trial offer or a discount possibility.

This is not a case where we are deal-' ing with hidden charges which would vitiate the supposed discount, nor one where the applicant was supposedly getting a free trial but was actually re-, quired to keep the goods once they reached his possession. In fact, the parties stipulated that credit approval was the only restriction or condition qualifying these offers.

However, it is not necessary to decide the case on the above hypotheses. The basic evidence does not seem to be in dispute here, and that evidence in my opinion is totally lacking in substantiality to support a finding of deceptive advertising detrimental to the public. It is true that the statements that “All orders are subject to Spiegel Credit Approval” appeared on the catalogue rather than in equal size type with the reference to discounts and free trials. However, I know of no prohibition of the use of an eyecatcher as long as the rest of the advertising material puts the eye-catcher in proper perspective.

Under any interpretation of the advertising material, it is clear that one cannot partake either of the free trial period or the discount without filling out and signing the order form. It is necessary for the prospective free trial user or discount applicant, if a new customer, to give detailed information about marital status, income, financial obligations, nature of employment, and similar factual data for credit evaluation. In varying language, the order form makes it clear that all orders are subject to acceptance by Spiegel. As to established credit customers, I cannot conceive that they were not already aware of the fact that a favorable credit rating is required and that if they are delinquent they will not be the beneficiary of further unpaid-for utilization of Spiegel merchandise.

In his conclusion, the trial examiner stated that the practices had the capacity to mislead members of the purchasing public into the purchase of substantial quantities of Spiegel products. I wholly fail to comprehend this, as the only ones who received the products were those who passed muster on credit. It is not an uncommon trait for people to overextend themselves in credit purchasing, but there is nothing about this advertising to cause this natural human tendency to exceed its present liberal boundaries. Protection against our human frailties may be arguably a worthwhile object of civilization, but in this country, absent deception or misleading representations, we are still free to determine such matters for ourselves.

The trial examiner emphasized that advertising must be truthful, but again I fail to find that, reasonably construed, the advertising in question is otherwise. Also, the trial examiner specifically stated in reaching his conclusion that the advertising was deceptive and unfair that he did not do so on a basis of demonstrated injury to purchasers.

The Chairman of the Federal Trade Commission viewed this case, and its in-consequentiality, as I do, and I adopt and agree with his statement in dissent as being the proper dispositive basis of the case:

“I cannot agree that consumers would fail to appreciate that Spiegel’s free-trial offers necessarily were subject to acceptance by Spiegel. The nature and amount of information obtained by Spiegel on its application forms, in my opinion, puts the consumer on notice that Spiegel has established criteria which prospective customers must meet prior to receiving the merchandise on a free-trial basis. It seems to me unlikely that a consumer would conclude that the information provided on the application form was irrelevant to Spiegel in deciding whether or not to provide the consumer with the offered merchandise.
“Of course, it is arguable that some few prospective customers who sent in filled-in application forms may not have fully understood the conditional nature of the offer. Also, I appreciate that economic injury is not always a condition precedent to an order under Section 5. However, in the circumstances of this ease where no economic loss of any consequence appears and where no testimony was received with respect to consumers’ understanding of the import of the application forms or whether Spiegel’s disclosures were in fact sufficient, the entry of an order is not warranted.”

Finally, and in any event, the order entered by the Commission is far too broad and is unjustified by this particular velitation.

For the reasons set out in this dissent, I would set aside the order of the Commission.

      . Sec. 5(a) (6) : “The Commission is empowered and directed to prevent persons, partnerships, or corjiorations . . . from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce.” [15 U.S.C. § 45(a)(6).]

      . Sec. 5(a)(1) : “Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are declared unlawful.” [15 U.S.C. § 45(a) (1).]

      . The Commission is both prosecutor and judge under § 5(45) of the Act, FTC v. Klesner, 280 U.S. 19, 27, 50 S.Ct. 1, 74 L. Ed. 138 (1929).

      . Commission Chairman Kirkpatrick dissented on the ground that the advertisements adequately notified the customers of the conditions and that where no substantial economic loss “appears” and no testimony of consumer misunderstanding was received, the order was not “warranted.”

      . See also Exposition Press, Inc. v. FTC, 295 F.2d 869, 873 (2nd Cir. 1961).

      . The parties at the hearing stipulated that the sole issue before the examiner was whether Spiegel’s advertisements of “free trial” offers or “percent off” offers are unfair or deceptive because of the manner in which customers are notified of Spiegel’s requirement of credit approval in order to obtain the benefit of such offers.

      . I do not dissent from that portion of the majority opinion dealing with Spiegel’s inability to demonstrate that other mail order houses engage in the same type of inducement advertising but with less candor than Spiegel does. If a law violation exists, securing compliance with the law often follows selective prosecution of one among many violators. There is no indication here of other than a normal process of selectivity.
      This phase of the case was again brought to my attention after the compilation of the dissent by the receipt by my wife of a mailed offer from a nationally known merchandiser. On the envelope was the word in one inch letters, “FREE!” Inside, also in large letters, was reference to a free 14 day home trial of kitchen equipment. At the bottom of the backside of the “Free Trial Certificate,” and nowhere else in the several sheets extolling the merchandise and referring to the privilege of free trial, small type stated, “All orders subject to credit acceptance or request for prepayment by our National Sales Office.” •
      I read the challenged order in this case as relating only to the consuming public and not as being based upon injury to competitors, although that was also charged in the complaint. If this latter aspect had been involved, it would appear that the Subpoenas Duces Tecum should not have been quashed.


author: MURPHY, District Judge. ELY, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Wallace A. SHACKELFORD, Defendant-Appellant.
    No. 73-1053.
    United States Court of Appeals, Ninth Circuit.
    Feb. 20, 1974.
    Certiorari Denied June 3,1974.
    See 94 S.Ct. 2647.
    Ely, Circuit Judge, dissented and filed opinion.

      Fredrie F. Kay (argued), Asst. Federal Public Defender, Tucson, Ariz., for defendant-appellant.
    William C. Smitherman, U. S. Atty., Tucson, Ariz., for plaintiff-appellee.
    Before MERRILL and ELY, Circuit Judges, and MURPHY, District Judge.

       Honorable Thomas F. Murphy, Senior United States District Judge, Southern District of New York, sitting by designation.

   OPINION

MURPHY, District Judge.

Defendant appeals his conviction after a jury trial in the District of Arizona for a violation of the Hobbs Act, 18 U. S.C. § 1951, in that he attempted to obstruct and delay Trans World Airlines’ flights in interstate commerce by an attempted $270,000 extortion.

The principal issue on appeal raises the recurring question of the quantum of proof the prosecution must offer to overcome an insanity defense. At trial the defense of insanity was grounded on the testimony of a psychiatrist. Defendant did not testify. The Government relied on its extensive cross-examination of defendant’s psychiatric expert and offered no expert testimony in rebuttal but only that of lay witnesses.

It is appellant’s submission that the law in this Circuit is “that when a defendant introduces psychiatric testimony sufficient to support a finding of insanity and where the Government relies entirely on lay witnesses to prove sanity, the Government has failed to carry its burden of proof as a matter of law.” (Appellant’s Opening Brief, pp. 30, 31). He relies on United States v. Cooper, 465 F.2d 451 (9th Cir. 1973), and Buatte v. United States, 330 F.2d 342 (9th Cir.) (Buatte I), rehearing denied, 331 F.2d 848 (9th Cir. 1964) (per cur-iam).

We reject this argument and affirm.

Neither Buatte I nor Cooper supports such a contention. It is true that in Cooper Judge Hufstedler, writing for the majority, did state:

“We held in Buatte v. United States * * * that when the defendant introduces expert psychiatric testimony that is sufficient to support a finding of insanity and when the Government relies entirely on lay witnesses to prove sanity, the Government has failed to carry its burden of proof, as a matter of law.” United States v. Cooper, supra, 465 F.2d at 453. (Emphasis supplied.)

This sentence was immediately qualified and explained by the Judge as follows:

“To sustain Cooper’s conviction, the Government must accomplish two feats: (1) it must find a way to destroy Dr. Polos’ testimony to eliminate Buatte I, and (2) after razing Dr. Po-los’ testimony, it must find enough affirmative evidence of Cooper’s sanity to prove that he was sane beyond a reasonable doubt. The Government did not succeed on either count.” Id. at 453.

A fair reading of these consecutive statements makes it clear that the Judge purposely inserted the adverb “entirely” in the first sentence to emphasize that if the psychiatric testimony was not destroyed or razed by cross-examination, rebuttal lay witnesses could not sustain the burden then cast on the Government to prove that defendant was sane beyond a reasonable doubt.

If further evidence is needed, we are confirmed in our analysis by the reaffirmation in Judge Hufstedler’s opinion of “the principal stated in Ingman: ‘a jury may, of course, reject expert opinion if it finds that the opinion was based on an incorrect view of the facts.’ ” Cooper, supra, at 454.

In Buatte I, Judge Pope scrupulously reviewed the psychiatric evidence of the defense and added: “What confirms the strength of this testimony is the fact that the defendant had a record of service, both in the Navy and in the Army, showing severe mental impairment.” Buatte I, supra, 330 F.2d at 344. He then reviewed these independent records, and observed:

“This account of the testimony relating to defendant’s insanity is sufficient to disclose that the evidence on that point was substantial and reasonably impressive. When that evidence was received, there was presented to the Government an obligation to meet the requirement stated in Davis v. United States, 165 U.S. 373, 378, 17 S.Ct. 360, 41 L.Ed. 750, as follows: ‘[Wjhile it was true that every man is presumed to be sane, yet whenever by the testimony the question of insanity is raised then the fact of sanity, as any other essential fact in the case, must be established to the satisfaction of the jury beyond a reasonable doubt’.” Id. at 344-345 (fn. omitted).

The evidence in the case posed difficulties for the Government, he said, since the defendant’s mental breaks into insanity would occur at irregular intervals, that is, they would be interspersed between more or less lucid intervals. The Government then was confronted with the most difficult task of showing “that at the time of the commission of the crime * * * the defendant was in what might be called by laymen a ‘lucid interval’. Under these circumstances it would not suffice to produce a witness to testify that a few hours before the commission of the offense the accused was acting in an apparently normal manner. What was required was some evidence that he was legally sane during the short period when the killing occurred.” Id., at 345. He then reviewed the testimony of the witnesses which the Government called in rebuttal, including the opinion of a psychiatrist who, unfortunately for the Government, expressed his opinion ambivalently, i. e., that the defendant “ ‘might well have known the difference’ between right and wrong on April 7.” Id. at 346.

The conclusion of the court, based upon its analysis of the evidence, was that

“[o]n this record we are compelled to hold that the Government failed to produce sufficient evidence to support a finding of sanity .by the jury. There is a complete absence of evidence to show defendant was sane at the critical time, namely, the period when defendant was at the tent where the killing occurred.” Id. at 347.

The above vividly demonstrates that Buatte is not authority for the proposition proffered by the appellant.

The rationale of Buatte I was further developed when the Government petitioned for rehearing. Buatte v. United States, 331 F.2d 848 (9th Cir. 1964). The Government asked that if the judgment was to be reversed, it be remanded for a new trial rather than with instructions to acquit. “The appellee undertook in its petition to indicate the additional evidence which it might produce upon a new trial and which it asserted would be adequate to support a conviction of the appellant.” 331 F.2d at 848. (The opinion does not disclose what this evidence was.) The court denied the petition with this observation: “ * * * [the court] is of the view that a new trial would serve no purpose and that neither the types of evidence listed in the appellee’s petition nor any other conceivable evidence would suffice to satisfy the requirement set forth in Davis v. United States, 165 U.S. 373, 17 S.Ct. 360, 41 L.Ed. 750.” Id. We get the impression from this that the Buatte I panel felt that the critical time, namely, the period when the defendant was at the tent where the killing occurred, was so short and without witnesses that it would not be possible, medically or otherwise, to prove that it was during a lucid interval.

In any event, the phrase came back to plague a different panel when Buatte appealed another conviction, this time for assault with intent to commit murder on the person of the brother of the young girl killed in Buatte I. In Buatte v. United States, 350 F.2d 389 (9th Cir. 1965), this Court was confronted with the argument that the above quoted statement was binding on the trial court. It held, however, “We do not consider this statement as a decisional ruling that, in another criminal case arising out of the same general incident, but involving another victim, the Government 'would necessarily be incapable of sustaining its burden of proof on the insanity issue.” 350 F.2d at 394 n. 5.

Judge Wright, in his dissent in Cooper, correctly interpreted the law in this and other circuits when he stated, “No rule of law requires the government to offer expert medical testimony in every case in which a defendant has a psychiatrist testify for him. The need for expert testimony depends upon the facts of the case.” Cooper, supra, 465 F.2d at 455. This was, in part, a quotation from our opinion in United States v. Ingman, 426 F.2d 973, 976 (9th Cir. 1970). We also said in Ingman: “If a defendant raises the defense of insanity and offers evidence in its support, the presumption that every man is sane disappears. The prosecution then has the burden of proving the fact of sanity beyond a reasonable doubt. * * * But ‘[t]he nature and quantum of evidence of sanity which the Government must produce to sustain its burden and take the case to the jury will vary in different cases.’ ” 426 F.2d at 976.

No case that we have been able to find or any that has been called to our attention holds, as a matter of law, that the Government must meet defendant’s psychiatric testimony with psychiatric testimony of its own. United States v. Handy, 454 F.2d 885 (9th Cir. 1971), cert, denied, 409 U.S. 846, 93 S.Ct. 49, 34 L.Ed.2d 86 (1972), as Judge Wright pointed out in Cooper, does not hold to the contrary, since the Government, in Handy, had presented expert psychiatric evidence. In both McKinney v. United States, 487 F.2d 948 (9th Cir. 1973) and United States v. De Arman, 453 F. 2d 409 (9th Cir. 1971), we specifically rejected this same argument. See, Mims v. United States, 375 F.2d 135, 143-144 (5th Cir. 1957) and its progeny; Blake v. United States, 407 F.2d 908 (5th Cir. 1969); United States v. Pitts, 428 F.2d 534 (5th Cir.), cert, denied, 400 U.S. 910, 91 S.Ct. 154, 27 L.Ed. 2d 149 (1970); United States v. Collier, 453 F.2d 1173 (5th Cir. 1972). See also Dusky v. United States, 295 F.2d 743 (8th Cir. 1961) (Blackmun, J.), cert, denied, 368 U.S. 998, 82 S.Ct. 625, 7 L.Ed.2d 536 (1962).

THE GOVERNMENT’S PRIMA FACIE CASE

The Government’s case in chief, which the defendant does not dispute proved that on April 13, 1972 the defendant telephoned Trans World Airlines, Inc. (TWA) and threatened an employee who took the call that unless he was paid $270,000, TWA would lose a plane. He gave instructions as to the denominations of the money and that the money should be put in a suitcase and delivered to a bar, which he identified by name and address. This plan had been conceived at least a day or two before, since he had offered a barmaid $10,000 to receive the suitcase, and had given her instructions to remove the contents of the suitcase, place it in an empty Budweiser beer case and then give the suitcase to a taxi driver for delivery to some other address. The F.B.I. was notified, a package was prepared to simulate the $270,000, and delivery was made to the bar as demanded. After the barmaid told defendant that there were some suspicious men at the bar, he placed another call to the airline in which he said, “I am calling about the 270. It appears we have a stake-out. You’d better get it off. There is only 24 hours left.” As a result of the first call the airline instituted emergency measures: no air freight would leave Tucson for a 24-hour period — all flights were delayed, while all passengers were checked with a device which would indicate the presence of metal in any suitcase.

DEFENDANT’S PROFESSIONAL EVIDENCE OF INSANITY

Dr. Clymer, who had been practicing psychiatry for four years, testified that he examined defendant twice, first on April 13, 1972 for 90 minutes, and on May 15, 1972 for 45 minutes; that he performed a negative neurological examination of defendant, but had not had any outside tests performed; and that he had seen some unidentified F.B.I. reports.

He was then asked, without further ado:

“Q. Now, based on your examination of Mr. Shackelford and the facts of the case as you knew them can you give an opinion based upon reasonable medical certainty regarding the state of his sanity at the time of the alleged conduct in this case?” (Tr. 130)

There was an objection, and the question was rephrased:

“Q. All right. The question is whether or not the defendant was sane or insane at the time of the alleged conduct as a result of mental disease or defect, in that he lacked substantial capacity to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law?
“A. I believe he was insane at the time and did not fully appreciate the wrongfulness of his act and also was not able to conform his behavior and acts to the law.
“Q. And in that regard do you feel he lacked substantial capacity to do those things?
“A. At the time of the act, yes.” (Tr. 131)

The doctor’s entire direct examination covers six pages of the typewritten transcript (pp. 125-131).

This short-handed approach to the serious problem of insanity as a defense may well have been “trial strategy” by the Public Defender. Although he had the doctor testify on direct that he examined the defendant at the request of the prosecutor, Mr. Hoffman, he refrained throughout the trial from acknowledging the fact that the court had also approved the engagement of a psychiatrist to examine the defendant at defendant’s request. In fact, he failed to call such doctor as a witness even though the doctor had twice examined the defendant.

David Hoffman, the Government prosecutor, met the challenge of such abbreviated defense with devastating effect and “razed” the doctor’s “expert opinion” parroted from Wade.

The doctor, not having been asked on direct what mental illness defendant had, said on cross-examination that his diagnosis was schizophrenia, latent type, and without defining that illness gave its characteristics:

“A. First of all I could define schizophrenia. Schizophrenia is a mental illness that has three basic characteristics, that in examining a person one would want to look for. The first one is called basically a thinking disorder, difficulty in thinking and placing thoughts in a logical sequence and coming up with a logical conclusion. The second feature is flattening of affect, affect means emotional response; as an example, in the person with schizophrenia they seem very unemotional and seem to lack a certain depth of feeling. Less often, speaking about the third feature in schizophrenia, is the bizarre behavior, mannerisms or gestures that the person might indulge in. More frequently perhaps the first two features, the basic thinking disorder and the flattened affect are customary features. Latent type, as listed by the diagnostic manual, which is sort of the standard diagnostic book, means that the symptoms are not present at the time or are not manifestly present at the time, but that on close examination some of the features can be detected. So in effect schizophrenia would describe a person as having these basic features of schizophrenia latent, meaning not grossly schizophrenic or, in other words, psychotic at the time on examination.” (Tr. ‘ 133)

He then admitted, however, that when a person was latent in his schizophrenia, he would appear for all intents and purposes to be a normal person and would appreciate wrongfulness and be able to control his conduct. Only when the schizophrenia became active would his ability be impaired. He agreed that when a person becomes an active schizophrenic, as the defendant was, in his opinion, on the 13th of April, that the type is called “paranoid.”

Thus, the issue was presented to the jury whether the defendant was, on the date in question, an active schizophrenic of the paranoid type. The doctor admitted that he was furnished with no history of any prior mental illness, and that the defendant had no prior emotional problems but enjoyed good health, and that he had lived and worked in Tucson for a period of 17 years without any problems of any kind other than going broke once, and that for the last 5 years to the date of trial he had been in the! electrical business for himself.

Upon being pressed by the prosecutor, the doctor agreed that there were three factors that were the basis for his diagnosis, namely, (1) the defendant’s long history of drinking, (2) his failures in marriage and business, and (3) the possibility of defendant having had auditory hallucinations. He agreed that the information on defendant’s drinking came from the defendant, as also the information concerning his marriages and one business failure. He testified that the defendant told him he had been married five times. Marriage No. 1 lasted four years; marriage No. 2 lasted ten years — six good and four bad; marriage No. 3 lasted two weeks — defendant said that the woman married him because she thought he had money; and marriage No. 4 he said he just couldn’t take, but how long it lasted the jury was not told, nor was it told about his present marriage, although the doctor knew that he was married since 1969 but didn’t ask the defendant whether it was failing. He agreed with the prosecutor that he could not see any evidence of paranoia with respect to any one of the marriages. But he considered the total picture reflected a paranoid schizophrenic because that type generally has difficulty in establishing and maintaining close interpersonal relationships. The only factors with respect to his difficulties in business were one failure and the fact that he had worked for a number of people.

With reference to auditory hallucinations, the doctor admitted that the defendant denied hearing any voices but in the past there might have been sounds he would hear in the house, and not knowing the reasons for such sounds he would look around and ascertain what the cause of the sounds or noises were. From that the doctor said that there was a possibility that he was having auditory hallucinations, but he quickly conceded that he, also, would look around the house if he heard a noise that was unfamiliar to him.

The doctor, probably realizing that these three factors were far from sufficient for a sound diagnosis, testified that there were additional factors, namely, that defendant was aloof when being examined and appeared to be withdrawn, that he was unable to develop any rapport with him, and that defendant was vague on details.

The prosecutor then brought out that the defendant knew he was being examined by a doctor appointed at the request of the prosecution because the doctor told him, and that the vagueness in details referred only to the fact that defendant couldn’t recall the name of the other psychiatrist who had examined him. The doctor was also confronted with the statement in his written report that the defendant told his story in a straightforward, detailed fashion.

Since the report of the doctor indicated that he had given the defendant a mental status evaluation by asking him to give the meaning of three proverbs, the prosecutor pressed him on the answers that the defendant gave to, “A bird in the hand is worth two in the bush,” “All that glitters is not gold,” and “The golden hammer beats down the iron door.” The doctor agreed that the defendant gave the meanings of the first two correctly but the answers did not represent abstract thinking but concrete thinking, and that defendant did not know the meaning of the last proverb. The doctor also admitted that he did not know the extent of the defendant’s education, but agreed that education would have some relevancy in assaying an answer.

The doctor admitted that, after his first 90-minute examination of the defendant, he asked the prosecutor to seek a continuance of the trial because he had not then obtained sufficient information to give a diagnosis. When the continuance was obtained the doctor never performed any other tests, nor did he ask for time to have an alcohol tolerance level test.

Finally, the doctor said that there was yet another factor that he relied upon, namely, that defendant had amnesia as to the events of the crime. Upon being pressed by the prosecutor to explain why the defendant was rather specific in all of the details of the day before and of his drinking, including the names and addresses of the four different bars that he had visited on the 12th and 13th of April, and could remember all other events, including the various marriages and various business relationships, but drew a blank only with regard to the events of the crime itself, the doctor replied that he believed the history as given to him by the defendant with regard to his drinking but did not believe he had stopped at the various bars he said he did on April 12th and 13th.

On the issue whether defendant at the critical time, i.e., on the day of the crime, moved from sanity to insanity or from latent schizophrenia to paranoid schizophrenia because of his drinking, the following from his cross-examination is most revealing:

“Q. You are at best guessing as to the effects of alcohol and [on] Mr. Shackelford, is that correct? You haven’t performed any tests, you don’t know how much alcohol he ingested, and you really have no idea what his tolerance for alcohol is, do you ?
“A. I have no first-hand data as to his tolerance for alcohol, correct.
“Q. So you are guessing what the effects of that ingestion of alcohol might have been on that date?
“A. I feel it is an educated guess.
“Q. But a guess?
“A. That is correct.”

He could not explain why he accepted defendant’s statement that he had amnesia as to the events during the commission of the crime and had no amnesia in recalling other events so closely related. He also admitted that the defendant gave two dates for the onset of the amnesia, namely, April 11th, and later on, April 12th. Finally, the doctor had grave difficulty in explaining how a person who did not have substantial ability to understand what he was doing because of mental illness could nevertheless be as suspicious as the defendant was, particularly when it was discovered that he was being watched during the extortion plot, and was nevertheless able to devise a very secretive means by which to conceal the receipt of the money. The best answer that the doctor could give was that the defendant was “a good paranoid.”

Defendant also introduced the testimony of a lay witness, an attorney, who had an attorney-client relationship with the defendant about two weeks before April 13, 1972. The attorney said that he could not get through to the defendant during a conference they had had and that in his opinion the defendant on that day was not of sound mind. He drew this impression because he said that during the conference in which he was trying to explain that a promissory note had defenses of limited application, the defendant kept insisting that the landlord was in some kind of a conspiracy against him. On cross-examination he admitted that he had never seen the defendant under the influence of liquor, that he couldn’t describe any bizarre actions of the defendant, and that that conference indicated not that the defendant didn’t understand what he was trying to explain to him but rather that defendant insisted on going over other points that had no relevancy to the promissory note.

In rebuttal, the Government called two witnesses. A barmaid who had seen the defendant during a week or two before the crime testified that although defendant had a considerable number of drinks on five or six occasions, he always acted normally in conversation and in expression, that he was responsive, that he would smile at appropriate times, that he would be emotional or unemotional, depending on the circumstances, and that he was particularly emotional when he learned that the F.B.I. had arrested his confederate. The other witness was the F.B.I. Agent, who spoke to defendant after his arrest. He testified that after advising defendant of his rights, he told the Agent, even though he then appeared to be under the influence of alcohol, that he had been visiting the bar for the last three days with his confederate and that he was not involved in the extortion plot.

We have analyzed, perhaps to the point of prolixity, defendant’s expert’s evidence of insanity, in order to demonstrate that it was not supported by objective facts but on the contrary by information furnished by the defendant and to show that the doctor’s opinion was severely shaken by the rigorous and thorough cross-examination. Shackel-ford’s only lay witness did not provide any adequate evidence that the defendant was acting erratic and peculiar prior to the extortion. On the other hand, the Government lay witnesses who were in a position to observe the defendant during and immediately subsequent to the crime testified unswervingly to his sanity.

The issue before us is whether the Government presented sufficient evidence to take the sanity issue to the jury. “The quantum and nature of the proof the Government must offer to take the case to a jury varies in different situations and to some degree depends upon the quantum and nature of proof the defendant offers.” United States v. Westerhausen, 283 F.2d 844, 852 (7th Cir. 1960). On the record before this Court, and with an eye towards the rule that the evidence must be viewed in the light most favorable to the Government, we hold that the motion for acquittal was properly denied because reasonable men would not necessarily retain a reasonable doubt about defendant’s sanity at the time of the crime. United States v. Julian, 440 F.2d 779, 780 (9th Cir. 1971).

A jury after being properly instructed on the law regarding sanity, “may, of course, reject expert opinion if it finds that the opinion was based on an incorrect view of the facts.” United States v. Ingman, supra, 426 F.2d at 977. The record in this case amply supports the jury’s verdict that the defendant was sane beyond a reasonable doubt. It took the jury only 25 minutes.

The appellant’s second argument, namely, that the Government failed to prove a necessary element of the crime, is without substantial merit.

In order to satisfy the statute, 18 U.S.C. § 1951, the effect on interstate commerce need only be to a minimal degree. United States v. Addonizio, 451 F.2d 49 (3rd Cir.), cert, denied, 405 U.S. 936, 92 S.Ct. 949, 30 L.Ed.2d 812 (Douglas, J., dissenting on other grounds), rehearing denied, 405 U.S. 1048, 92 S.Ct. 1309, 31 L.Ed.2d 591 (1972).

United States v. Hyde, 448 F.2d 815 (5th Cir. 1971), cert, denied, 404 U.S. 1058, 92 S.Ct. 736, 30 L.Ed.2d 745 (1972), reaffirmed that “all of the Hobbs Act cases agree that the court should determine whether the facts alleged meet the statutory requirement of affecting interstate commerce.” 448 F. 2d at 839. Here the court, by its own questions of the principal witness for the airline, ascertained that as a result of the defendant’s telephone call there was “a 24-hour delay in any of the cargo” and that “passengers were delayed from getting on board the aircraft not only at our station (Tucson) but other stations too.” To be sure, there was no testimony that said, in so many words, that X or Y or Z TWA plane leaving Tucson that day had, as its destination, Los Angeles, Chicago, New York, or Paris, but the Government should not be penalized for its failure to belabor the obvious. We were told many years ago, in Commonwealth v. Peckham, 68 Mass. (2 Gray) 514, 515 (1854), “Jurors áre not to be presumed ignorant of what everybody else knows, and they are allowed to act upon matters within their general knowledge without any testimony on those matters.” We will go one step further and hold that district judges are not to be presumed to be ignorant of what everybody else knows. Mr. Justice Frankfurter, referring to the Justices in his court, in Watts v. Indiana, 338 U.S. 49, 52, 69 S.Ct. 1347, 1349, 93 L.Ed. 1801 (1949), said, “And there comes a point where this Court should not be ignorant as judges of what we know as men.”

Judgment affirmed.

ELY, Circuit Judge

(dissenting):

I respectfully dissent. My disagreement with my Brothers rests upon my interpretation of United States v. Cooper, 465 F.2d 451 (9th Cir. 1973), United States v. Ingman, 426 F.2d 973 (9th Cir. 1970), and Buatte v. United States, 330 F.2d 342 (9th Cir. 1964). I concede that there are factual distinctions between these three cases and the case at hand. I cannot, however, bring myself to the conclusion that the factual differences are of such significance as to warrant the majority’s holding that Cooper, Ingman, and Buatte are not controlling. I would reverse.

      . The indictment was filed on April 19, 1972.

      . See 2 Wigmore on Evidence, § 686, at 812 (3d ed. 1940) ; Rule 705, Proposed Rules of Evidence for the United States Courts and Magistrates (not yet approved by Congress), Rule 705, H.R.5463, 93rd Cong., 1st Sess. (1973).

      . This was inaccurate. On cross the doctor correctly testified that he was actually appointed by the court to examine the defendant. We take judicial notice that the practice in the District of Arizona, as in most districts, is for the court to appoint a psychiatrist to examine one charged with a crime. Of., 18 U.S.O. § 4244.

      . In the record on appeal the criminal docket entries reveal that on May 9th an order was entered for the transportation of defendant to the office of Marshall W. Jones M.D. On May 11th there was filed an authorization for expert witness (Marshall W. Jones, M. D., psychiatrist). Another entry on June 8th records the filing of an order directing the United States Marshal to transport the defendant to Dr. Marshall W. Jones, M.D., for examination. During a recess at the trial and shortly before summation, the prosecutor offered to the court an additional Instruction on the ground that “The doctor who was appointed by defense counsel was not called as a witness,” and after some colloquy the court commented that since there was available a witness who could testify and he was not called, the Government was entitled to the requested Instruction. The court subsequently charged the jury without objection:
      “If it is peculiarly within the power of either the prosecution or the defense to produce a witness who could give material testimony on an issue in the case, failure to call that witness may give rise to an inference that his testimony would be unfavorable to that party. However, no such conclusion should be drawn by you with regard to a witness who is equally available to both parties, or where the witness’ testimony would be merely cumulative.” (Tr. 200)
      The reporter’s transcript of the trial does not include the summations of counsel, but we can surmise, correctly we think, that the Government argued to the jury that the doctor who examined the defendant at defendant’s request would have testified that he was sane.

      . Wade v. United States, 426 F.2d 64 (9th Cir. 1970) (en banc).

      . Not too many years ago this was called Dementia Praecox. Dorland, The American Illustrated Medical Dictionary, 1333 (22nd ed. 1952).

      . We can think of two multimillionaires, J. Paul Getty and Lewis Rosensteil, and two famous actresses, Elizabeth Taylor and Gloria Swanson, each of whom have been married five times.


author: PER CURIAM: OAKES, Circuit Judge

text:
    GOLDMAN, SACHS & CO., et al., Petitioners, v. Honorable David N. EDELSTEIN, U.S. D.J., and The Franklin Savings Bank in the City of New York, Respondents.
    No. 982, Docket 74-1298.
    United States Court of Appeals, Second Circuit.
    Argued March 8, 1974.
    Decided March 20, 1974.
    Oakes, Circuit Judge, dissented and filed opinion.

      William Piel, Jr., New York City (Michael M. Maney, Philip L. Graham, Jr., Alan M. Reinke, Sullivan & Cromwell, New York City, of counsel), for petitioners.
    Robert S. Stitt, New York City (George W. Taliaferro, Jr., Thacher, Proffitt & Wood, New York City, of counsel), for respondent Franklin Savings Bank.
    Before MOORE, MANSFIELD and OAKES, Circuit Judges.
   PER CURIAM:

On Friday, March 8, 1974, we heard the petition of Goldman, Sachs & Co. pursuant to 28 U.S.C. § 1651 and Rule 21, F.R.A.P., for a writ of mandamus directing Chief Judge Edelstein to stay an order entered on March 5, 1974, for the non-jury trial of Franklin Savings Bank v. Levy, et al. (71 Civ. 882) {“Franklin” herein) until completion of the jury trial of Welch Foods, Inc., et al. v. Goldman, Sachs & Co. (70 Civ. 4811) (“Welch” herein). Both cases raise identical claims based on substantially the same proof against Goldman, Sachs and are two of fifteen similar cases pending in the Southern District of New York which were consolidated for pretrial discovery purposes by the Judicial Panel on Multidistrict Litigation pursuant to 28 U.S.C.§ 1407.

Welch was the earliest case filed. It asserts by far the largest claim and from the outset has been treated by the court and by the parties as the “bellwether” case for trial. The record reveals that for many months prior to February 26, 1974, all parties in the consolidated cases proceeded on that basis, with discovery in Welch being conducted on a more accelerated schedule than in the other cases. Although the court, at a pretrial session on December 18, 1973, offered the possibility that Franklin might proceed first this suggestion was not seriously pursued. Throughout that hearing and indeed until toward the close of a further pretrial hearing held on February 26, 1974, the parties and the court, by their frequent references to procedures to be followed in presenting evidence to the jury, made it abundantly clear that Welch was to be tried first. Toward the close of the February 26, 1974, hearing, however, the judge announced for the first time that Franklin would be tried first before him without a jury. Defense counsel thereupon urged that, since a prior non-jury trial might have the effect of collaterally estopping Goldman, Sachs from exercise of its right to a jury trial of the same issues in Welch, the court should adhere to the schedule which had been previously understood by all. When the district court by memorandum opinion dated March 4, and entered on March 5, 1974, denied a stay in Franklin, defendants sought emergency relief here.

Regardless which party first demanded a jury trial in Welch, petitioners are clearly entitled as a matter of right to a jury trial of the issues in that ease. See Rule 38(d), F.R.Civ.P.; 5 Moore, Federal Practice f[ 38.45; Yates v. Dann, 223 F.2d 64, 66 (3d Cir. 1955) (“Such a demand was made by the plaintiff. It therefore ‘operated as a demand by the defendant also unless withdrawn by his consent, which was not given. Bass v. Hoagland, 5 Cir., 1949, 172 F.2d 205, 209, certiorari denied 1949, 338 U. S. 816, 70 S.Ct. 57, 94 L.Ed. 494.”).

Ordinarily one who asserts the important right to a jury trial in timely fashion is entitled to a stay of an earlier non-jury resolution of the issues which might collaterally estop exercise of his right to have them decided by the jury. Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959); Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). However, in the context of this ease, where identical issues are the subject of both jury and non-jury trials in different suits, some doubt arises, by reason of views expressed by us recently in Crane Co. v. American Standard, Inc., 490 F.2d 332 (2d Cir. 1973), p. 343 n. 15, as to whether a prior non-jury trial of the same issues in one case will estop a jury resolution of them in another.

Mandamus, of course, is an extraordinary remedy, available only where, in aid of appellate jurisdiction, it is necessary to compel the district court to exercise authority when it is its duty to do so and to confine it to the lawful exercise of its lawful jurisdiction. See Schlagenhauf v. Holder, 379 U.S. 104, 85 S.Ct. 234, 13 L.Ed.2d 152 (1964); United States v. United States District Court for the S.D.N.Y., 334 U.S. 258, 68 S.Ct. 1035, 92 L.Ed. 1351 (1948). However, the Supreme Court, in Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 511, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959), removed any doubt regarding the propriety of using mandamus to protect a litigant’s right to a jury trial of issues, citing Judge Frank’s decision in Bereslavsky v. Caffey, 161 F.2d 499 (2d Cir. 1947). Indeed, in its later decision in Dairy Queen v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962), the Court implied that it is our duty to grant mandamus in aid of that right, stating (at p. 472, 82 S.Ct. at p. 897): “Our decision [in Beacon Theatres Inc. v. West-over, supra] reversing that case not only emphasizes the responsibility of the Federal Courts of Appeals to grant mandamus where necessary to protect the constitutional right to trial by jury but also limits the issues open for determination here by defining the protection to which that right is entitled in cases involving both legal and equitable claims.”

Here we are confronted with unique and exceptional circumstances which in our view warrant the issuance of emergency relief. For the district court to proceed with the non-jury trial of Franklin threatens destruction of Goldman, Sachs’ important collateral right to a jury trial. Aside from the fact that this alone might well have entitled it to appeal directly from the denial of a stay under the doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), no rational basis has been shown for not adhering to the anticipated order of trials or at least permitting the jury trial of the Welch case to proceed simultaneously with the non-jury trial of Franklin, a procedure frequently used in similar cases. See, e. g., Richland v. Crandall, 262 F.Supp. 538 (S.D.N.Y. 1967).

In order to foreclose the potential destruction of the defendant’s right to a jury trial in Welch, we on Friday, March 8, 1974, issued an order, entered on March 11, 1974, directing the district court to proceed first with the trial of Welch or in the alternative to consolidate Welch and Franklin for simultaneous trial.

This decision confirms the substance of the views expressed by us in open court upon the hearing of the petition.

OAKES, Circuit Judge

(dissenting.):

I dissent. The granting of this petition for mandamus is an improper and unwarranted interference with docketing in the district court.

The purported basis for granting this petition is to preserve petitioner’s right to a jury trial in the Welch case even though in the Franklin case it has been waived. Were petitioner’s right to a jury trial in the Welch case actually in danger I would certainly countenance the remedy of mandamus to preserve that right, but such is not the case here.

No court has ever held, nor in my view will ever hold, that on the facts presented here petitioner would be foreclosed from litigating the facts before the jury in Welch. The only basis for petitioner’s fear is dictum in a footnote, totally unnecessary to the decision, in Crane Co. v. American Standard, Inc., 490 F.2d 332 (2d Cir. 1973), p. 343 n. 15. As the majority states, mandamus is still an extraordinary remedy, available only when it is necessary to compel the district court to do its duty. Were the footnote in Crane the law in this circuit, then the district court presumably might be under a duty to take measures to safeguard petitioner’s right to a jury trial in Welch, which otherwise would not be threatened. Yet no one has suggested that such is the law in this circuit. The majority goes no farther than to say that “some doubt arises” as to the applicability to these facts of the heretofore accepted and salutary rule that one who timely requests the right to a jury trial will not be collaterally estopped from exercising it by earlier resolution of the issues in a non-jury trial. Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S. Ct. 894, 8 L.Ed.2d 44 (1962); Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959); Rachal v. Hill, 435 F.2d 59 (5th Cir. 1970), cert, denied, 403 U.S. 904, 91 S. Ct. 2203, 29 L.Ed.2d 680 (1971). That “doubt” is in any event not sufficient to subject the district court to a duty to rearrange its schedule or to order a consolidation.

If indeed there were “doubt,” it should be resolved, something the majority does not do, finding that just the “potential” harm to petitioner is sufficient to warrant granting the petition. Had the district court actually collaterally estopped petitioner in Welch, which would not have been likely in light of its refusal to stay Franklin upon arguments identical to those presented here, then the issue would properly be before this court, and this court could reflect upon the footnote in Crane with sufficient repose and study to reach a reasoned decision. Here the court rushed to judgment, writing an opinion only thereafter, upon a petition alleging at best the most hypothetical of questions — hypothetical because there is no indication that the district court would have held petitioner collaterally estopped in Welch.

As it is, this decision is, to my view, an improper interference with the district court docket and the exercise of discretion on the part of a trial judge under Fed.R.Civ.P. 42. The mischief to the work of the district court in granting the writ in this way is hard to calculate from our point of vantage; the jury case may take much longer to pre-try — discovery in the jury case may delay the trial of the non-jury case far too long; if the cases are consolidated, (1) the jury case may take much longer to try and thereby subject the opposing party in the non-jury case (Franklin) to much additional expense; (2) there may be prejudice to the opposing party in the jury case (Welch) from the evidence adduced in the non-jury case; and (3) the judge’s instructions may be made more confusing to the jury as well as more difficult to draft. Moreover, here there are 15 cases involving the same party defendant in this jurisdiction alone and others apparently pending outside the jurisdiction; the order of the majority can in no event affect those other cases pending in other circuits.

I therefore voted, and hereby reaffirm that vote, to deny the petition.