author: HAMLEY, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff Appellee, v. Jeffrey Karl SCHULZ, Defendant-Appellant.
    No. 72-2645.
    United States Court of Appeals, Ninth Circuit.
    March 6, 1973.
    Rehearing Denied March 27, 1973.

      James G. Seely, Jr. (argued), San Francisco, Cal., for defendant-appellant.
    James H. Daffer, Asst. U. S. Atty. (argued), Chester G. Moore, III, Michael Field, Asst. U. S. Attys., James L. Browning, Jr., U. S. Atty., San Francisco, Cal., for plaintiff-appellee.
    Before HAMLEY, BROWNING and WRIGHT, Circuit Judges.
   HAMLEY, Circuit Judge:

Jeffrey Karl Schulz appeals from a judgment of conviction for failing to report for induction in violation of 50 U. S.C. App. § 462(a). We affirm.

Schulz’ Local Board 19, Napa, California, classified him I-A on August 31, 1966. On October 13, 1966, the board ordered him to report for a pre-induction physical examination on November 1, 1966. Schulz reported and was found acceptable for military service.

On February 26, 1970, the local board ordered Schulz to report for induction on March 17, 1970. Of the eight men called for that month, Schulz was the sixth in order of priority. He did not report on that date. On August 18, 1970, the local board mailed Schulz a continuing duty order with a reporting date of September 9, 1970. Again he did not report. On October 8, 1971, the local board mailed Schulz another continuing duty order, with a reporting date of November 9, 1971. Once more Schulz did not report. It is for this last failure to report that Schulz was prosecuted and convicted.

Schulz’ only defense is that the February 26, 1970, induction order is invalid because he was prematurely called. He asserts that his call was premature because, on February 26, 1970, there were at least three other registrants of his draft board who had a higher induction priority (lower lottery number) than Schulz and who were fully available for induction except for the fact that they had not been physically examined on February 2, 1970, as they should have been under the applicable regulation. Schulz contends that the by-passing of these higher priority registrants for physical examinations resulted from a violation of the regulation (32 C.F.R. § 1628.11(b) (1970)) which sets forth the order in which men are to be called for physical examinations.

Under this regulation, registrants, other than volunteers, are to be called for physical examination in the order of their liability for induction. Prior to January 1, 1970, the order of liability for induction was based on the oldest-first system. Beginning on that date, the order of liability was determined by the random selection system, such that the lower the lottery number the greater the induction liability.

Despite this change effective January 1, 1970, Schulz’ local board did not call men for physical examinations in lottery-number order until April, 1970, but, until then, called men for physical examinations in the oldest-first order in force prior to January 1, 1970. The result was that, on February 26, 1970, when the local board ordered Schulz to report for induction on March 17, 1970, there were eight registrants of that board with higher induction priorities who would have then been subject to induction but for the fact that they had not been called for physical examinations under the system which became effective January 1, 1970.

Since at least United States v. Baker, 416 F.2d 202, 204 (9th Cir. 1969), this court has recognized order-of-call defenses in Selective Service cases such as this. Ordinarily these defenses involve instances in which, it was asserted, higher-priority registrants would have been available for induction ahead of the defendant, were it not for improper processing of those registrants by the local board.

In United States v. Smith, 443 F.2d 1278 (9th Cir. 1971), we undertook to specify the elements which must be present to establish such a defense. We said:

“A registrant may rely upon improper processing of higher priority registrants in defending a criminal prosecution if he can establish (1) that his local board violated a specific regulation, and (2) that the result was to delay significantly the time when higher priority registrants became fully acceptable for induction.” 443 F.2d, at 1280

The Government argues that, notwithstanding the facts recited above concerning the processing of Schulz and the eight other registrants, there was here no violation of a regulation nor any significant delay in the processing of the higher priority registrants.

As indicated above, Schulz contends that the local board violated 32 C.F.R. § 1628.11(b), because it did not call higher-priority registrants for physical examinations “in the order of their liability for service” which, after December 31, 1969, was by lottery number instead of oldest first. But the Government calls attention to the fact that this regulation qualifies this required local board procedure by the words “so far as is practicable.”

In an effort to establish a factual basis for the contention that it was not practicable for the Napa local board to switch over from the oldest-first to the lottery system prior to April, 1971, the Government called Mrs. Jessie Lee as a witness. In late 1969 and early 1970, Mrs. Lee was executive secretary of the San Mateo, California local board, which had a roster of thirty-six thousand active registrants. Until shortly before the trial in July, 1972, and for some time prior thereto, she had been an administrative assistant with the Regional Council’s Office for Selective Service.

Mrs. Lee explained that in switching to the lottery system it was necessary for a local board to take the file of each active registrant, determine the date of birth of the registrant, and then place on the file the random sequence number as established at the December, 1969, drawing of lottery numbers. Mrs. Lee testified that for her San Mateo local board it was necessary to close the local board office for four days in order to accomplish this change-over.

Mrs. Lee had no familiarity with the switch-over problem of the Napa local board. On the basis of her expertise, she was asked to estimate how much work would have been required for the Napa local board to make this switchover, Mrs. Lee was unable to provide an estimate.

Mrs. Lee testified that h.er San Mateo local board construed the State Director of Selective Service’s instructions on the Physical Examination Calls on Local Board for January, February and March, 1970, as authorizing local boards to continue calling registrants for physical examinations on the oldest-first basis through those months. The instruction on the Physical Examination Call dated January 7, 1970, reads:

“In filling the attached requisition for pre-induction processing the local board will first order registrants who were born after January 1, 1944 and on or before December 31, 1950. The balance of the requisition will be filled out by ordering registrants born after December 31, 1950, the oldest first. “REGISTRANTS AVAILABLE FOR PHYSICAL EXAMINATION WILL BE SELECTED IN ACCORDANCE WITH SECTION 1628.11 OF SELECTIVE SERVICE REGULATIONS.”

The collateral registrants here in question were in the first category described in these instructions, and all in that category had been assigned lottery numbers in the December, 1969, drawing. The instructions did not advise the local board to call registrants in that category for physical examinations in the oldest-first order. While the instructions did not expressly advise that those in this category were to be called for examination according to lottery number, this was implicit in the final sentence, quoted above, referring to section 1628.11 of the Selective Service Regulations. Giving application to that regulation, the conclusion is compelled that local boards were instructed to call registrants in the first category for physical examination in the order of their liability for service (by lottery number) “so far as practicable.” Mrs. Lee testified that no local board in California ordered any physical examination on a lottery-number basis before April 1, 1970.

Thus Mrs. Lee, and local boards who entertained her view of the meaning of these instructions, were mistaken in believing local boards had been given blanket authorization to continue physical examination calls in order of oldest-first through March, 1970.

Mrs. Lee also testified that no local board in Northern California ordered any physical examinations on a lottery-number basis before April 1, 1970. On cross-examination, however, Mrs. Lee conceded that she had no personal knowledge to support this statement. She had merely assumed that this was the case apparently on the basis of the instructions on the Physical Examination Calls and possibly a memorandum issued by the State Director instructing the larger local boards to close for a few days in March of 1970 in order to make the change to the lottery system.

We are forced to conclude from what is said above that the Government did not prove that the Napa local board acted pursuant to instructions from the State Director in failing to call the eight collateral registrants for physical examinations by February 2, 1970, and did not prove that it was not practicable for the Napa board to so call them by that date.

This brings us to the Government’s alternative contention that, even if there was improper processing of higher-priority registrants, the order-of-call defense, as outlined in United States v. Smith, 443 F.2d 1278, 1280 (9th Cir. 1971), was not established because the result of such impropriety was not to delay significantly the time when higher priority registrants became fully accept^ able for induction.

All eight of the collateral registrants became fully acceptable for induction on March 11, 1970, and all were mailed orders to report for induction on March 23, 1970. Thus Schulz’ original induction order of February .26, 1970 (to report for induction on March 17, 1970), preceded the availability of the collateral registrants for induction by not more than two weeks. In all likelihood, then, the impropriety of the local board’s procedure resulted in Schulz being sent an induction order one month prematurely, namely in February instead of March, 1970.

The trial court erred in failing to recognize that, under the circumstances, of this case, the local board acted improperly, even though the initial induction order was entered only one month prematurely. In our view, however, the trial court’s failure to acquit on this ground was harmless error.

It is true that the Smith and Baker opinions contain some language tending to indicate that the failure to acquit where there is any prematurity whatever in issuing the initial induction order is reversible error. However, in neither of those cases was the question of harmless error presented or discussed. In our case that issue is plainly before us, although couched in terms of whether the delay in processing other registrants was “significant,” rather than in the familiar term “harmless error.”

In terms of its effect upon Schulz, the improper processing by the board, as we have seen, resulted in issuing the initial induction order (to report for induction on March 23, 1970) one month prematurely. But the prematurity of this initial order did not prejudice Schulz in the slightest. He was not prosecuted for failing to report on that date, but for failure to report on November 9, 1971, under a continuing duty order. Schulz’ period of military service was not enlarged. He makes no claim that, by reason of the prematurity of the initial order, he was deprived of the right to file a conscientious objector application. Nor is there any showing of intentional discriminatory treatment or favoritism.

The order-of-call defense is just and proper when kept within reasonable bounds. But when it extends to the examination of local board procedures affecting collateral registrants twice or more removed from the defendant (not involved here) or takes account of relatively minor delays where no substantial prejudice is shown, it loses its force as an instrument of equity and becomes a hollow technicality. See United States v. Brudney, 463 F.2d 376, 378 (9th Cir. 1972); United States v. Griglio, 467 F.2d 572 (1st Cir. 1972). We so view Schulz’ order-of-call defense in the context of this case.

Affirmed.

      . 32 C.F.R. § 1628.11(b) (1970) reads in pertinent part:
      “In complying with such Physical Examination Call . . . , the local board shall mail an Order To Report For Armed Forces Physical Examination . . . to registrants who have been classified in Class I-A, Class I-A-O, and Class I-O . . . The local board shall, so far as is practicable, select and order to report for armed forces physical examination such registrants who are nonvolunteers in the order of their liability for service.”

      . While apparently not called in lottery number order, all eight of these challenged registrants received pre-induction physical examinations on March 11, 1970, and all were mailed orders to report for induction on March 23, 1970.

      . We also indicated, in Smith, that even where no regulation has been violated, if there has been intentional delay, discriminatory treatment, or favoritism, a defense may be established. Smith, 443 F.2d at 1280.

      . However, as indicated in note 2, above, all eight of the collateral registrants here in question took their physical examinations on March 11, 1970, but apparently not on a lottery-number basis.

      . In United States v. Baker, 416 F.2d 202, 205 (9th Cir. 1969), we held that where an order of call issue is presented in a case such as this, the Government has the burden of proof to justify by affirmative evidence the by-passing of the other registrants.

      . Except as to its bearing on the question of harmless error, to be discussed below, we disregard the fact, noted at the outset of this opinion, that Schulz was convicted of failing to report for induction on November 9, 1971, under a continuing duty order.


source: Caselaw Access Project

author: EUGENE A. WRIGHT, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Walter C. ROBSON, DefendantAppellee.
    No. 72-3114.
    United States Court of Appeals, Ninth Circuit.
    April 13, 1973.

      Stephen V. Wilson, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellant.
    Clyde R. Maxwell (argued), Los Angeles, Cal., for defendant-appellee.
    Before DUNIWAY and WRIGHT, Circuit Judges, and RENFREW, District Judge.

       Of the Northern District of California.

   EUGENE A. WRIGHT, Circuit Judge:

The government has appealed from an order of the district court suppressing certain exhibits. Respondent taxpayer was indicted on three counts of income tax evasion [26 U.S.C. § 7201] charging him with willfully failing to report more than $100,000 in taxable income for the calendar years 1965,1966, and 1967.

During the trial below the government attempted to introduce into evidence three handwritten transcripts of some of respondent Robson’s business records taken by an Internal Revenue Agent in the office of Robson’s accountant with Robson’s approval. Respondent moved to suppress these exhibits, but the motion was untimely. The court indicated that while it agreed with respondent on the merits of his motion it could not order suppression at that time since such an order would not preserve the government’s right to appeal. At the court’s suggestion, respondent moved for a mistrial, followed by a motion for suppression. Both motions were granted, and the government’s right to appeal under 18 U.S.C. § 3731 was preserved.

Inquiry into respondent’s tax matters dated from a telephone call to the local IRS office in March 1968. The caller, a young woman who stated that she was engaged to Robson in 1967, reported that he might be guilty of income tax evasion. She indicated the kind of business practice used and described some assets owned by Robson, including a boat, two automobiles and two lots. She also gave the names of banks where he did business. The informant indicated that she was filing a claim for a reward should any back taxes be assessed against and collected from respondent as a result of her information.

According to established IRS procedure, this information was taken over the phone by a special agent of the Intelligence Division assigned to receive such intelligence information items from the public. The information item was subsequently evaluated by another agent in the Intelligence Division to determine if the item had potential for an Intelligence Division criminal investigation. In light of the fact that there were no prior information items in the files with respect to Robson, and also because the information given by the informant was vague on several key points, this agent decided that the item did not warrant a criminal investigation by the Intelligence Division. Again according to established procedures, the information item was then forwarded to the Audit Division for its evaluation.

The Audit Division evaluated this information item in light of respondent’s returns for the years in question and apparently decided that an audit was in order to determine the existence of any additional tax liability. After the referral to the Audit Division, the informant called in again.

This time she related that Robson had bragged that he had embezzled approximately $80,000 from one business during the previous year. She also indicated that by her estimate Robson had taken approximately $250,000 over the last three years. This information was not acted upon by Intelligence Division, but was instead simply forwarded to Audit Division to be added to the previous item.

Agent Larry Koba of the Audit Division was assigned the Robson case. His assignment was to examine Robson’s tax affairs for the relevant years in order to determine the correct tax liability. His instructions were no different than those given him in examining any other return. Specifically, he was given no special instructions regarding fraud.

On June 24, 1968, Agent Koba wrote to Robson indicating that the latter’s tax returns for 1965 and 1966 had been assigned to Koba for examination. Koba asked Robson to call and to arrange for a mutually convenient time for Koba to examine the books and records used by Robson in the preparation of his returns. Subsequently Robson’s accountant, Mr. Gillmore, called Koba to arrange for an appointment.

The record discloses that Agent Koba at no time informed Robson of his Fifth and Sixth Amendment rights. Nor was Robson informed by Agent Koba of the criminal potential inherent in his investigation, or of Robson’s right under the Fourth Amendment to demand a warrant before submitting his records for examination.

After auditing the records, Koba concluded that Robson had received over $100,000 in income that had not been reported in his returns. Pursuant to standing orders to refer any case to the Intelligence Division upon the discovery of an indication of fraud during the course of an audit, Agent Koba referred the Robson case to the Intelligence Division. That Division then conducted a criminal investigation, and this prosecution ensued.

During the trial below, the government attempted to introduce into evidence three handwritten transcripts of Robson’s business records taken by Agent Koba during the course of his examination of the records. The district court granted respondent’s motion to suppress, on the following reasoning:

The reason I am granting the motion, Mr. Wilson, is that it appears to me from the evidence in this case — and I take the word from a question asked by you — that the audit, the civil audit, stemmed solely from, for no other reason but, the investigative report and the conduct of the special agents in notifying the Revenue agents of the possible tax fraud of Mr. Robson. The proximate causation, the sole causation, the only reason, and not a single other reason, why there was a civil audit of Mr. Robson stemmed solely from the acts of the special agent.
At that time the Government had one of two choices to make. The Government could have gone ahead and conducted an audit and would have at that time been limited in its remedies to civil relief. But if the Government did not want to limit its remedy to civil relief, it then had an obligation to inform the taxpayer and the taxpayer’s agents of his right to refuse the examination of his books.
The government, under the facts of this case, did not have the right to exercise its options after the fact. The option had to be exercised before there was an examination of Mr. Robson’s books.
If the Revenue agents had examined the books as a result of another practice or procedure or there had been another cause or there had been another reason why the books were audited, my ruling, of course, would have been different. But when the sole cause of the audit is a result of the efforts of the special agents, then the Revenue agent is acting as the agent of the special agent and the Fourth Amendment and Fifth Amendment rights of the defendant have been violated, primarily the Fourth Amendment.

On the facts of this case, there are four possible grounds for the suppression of these exhibits: (1) under the Fifth and Sixth Amendments because Robson was not warned of his Miranda-type rights; (2) under the Fifth Amendment because the IRS agents violated due process by not following their internal regulations directing them to give certain warnings to taxpayers suspected of criminal violations; (3) under the Fourth Amendment because Robson's consent to the search was induced by trickery, deceit, or misrepresentations of Agent Koba; or (4) under the Fourth Amendment because Robson’s consent to the search was not a “knowing and voluntary” waiver of his right to demand a warrant.

FIFTH AND SIXTH AMENDMENTS

Miranda-Type Warning

In Kohatsu v. United States, 351 F.2d 898 (9th Cir. 1965), we held that where agents of the Intelligence Division had properly identified themselves and disclosed their purpose to audit tax returns, they were under no duty to advise the taxpayer of his Fifth Amendment rights or of the criminal nature of the investigation. We reaffirm that holding, and refuse to follow the only circuit to adopt a contrary view, the Seventh.

This court has repeatedly refused to extend the Miranda rule beyond its stated limits. Simon v. United States, 421 F.2d 667 (9th Cir. 1970). As we stated in Simon:

“Absent custody in the conventional sense, we have declined to fault a government agent and reverse a conviction for failure to give a Miranda type warning unless the facts clearly demonstrated that the appellant was ‘deprived of his freedom by the authorities in any significant way.’ ” Id. at 668.

Here respondent was not deprived of his freedom in any way and accordingly we hold that Agent Koba was under no duty to inform respondent of his Miranda-type rights, including the fact that the investigation could have potential criminal consequences. The fact that Agent Koba had an informant’s tip suggesting possible tax evasion in no was distinguishes the instant case. Feichtmeir v. United States, 389 F.2d 498 (9th Cir. 1968).

FIFTH AMENDMENT

Due Process

On October 3, 1967, approximately one year before Agent Koba initiated his investigation, the Internal Revenue Service issued News Release No. 897, which stated in relevant part as follows:

In response to a number of inquiries the Internal Revenue Service today described its procedures for protecting the Constitutional rights of persons suspected of criminal tax fraud, during all phases of its investigations.
Investigation of suspected criminal tax fraud is conducted by Special Agents of the IRS Intelligence Division. This function differs from the work of Revenue Agents and Tax Technicians who examine returns to determine the correct tax liability.
Instructions issued to IRS Special Agents go beyond most legal requirements to assure that persons are advised of their Constitutional rights.
On initial contact with a taxpayer, IRS Special Agents are instructed to produce their credentials and state: “As a special agent, I have the function of investigating the possibility of criminal tax fraud.”
If the potential criminal aspects of the matter are not resolved by preliminary inquiries and further investigation becomes necessary, the Special Agent is required to advise the taxpayer of his Constitutional rights to remain silent and to retain counsel.

Respondent would have us say that Koba was acting as an agent of the Intelligence Division at the time of his initial contact with Robson and during the audit of his records. Assuming arguendo that the failure of the IRS to follow its procedures designed to protect the rights of taxpayers amounts to a violation of due process under the principle of United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954), we find nothing in the record before us indicating that Koba was an agent of the Intelligence Division.

Koba made the same type of civil audit that he conducted in all cases, regardless of the initial impetus for the audit. He had no instructions from the Intelligence Division, had no interim conferences with its representatives, and was under no obligation to report to it unless his audit uncovered an indication of fraud. In short, the investigation conducted by Koba was completely independent of the Intelligence Division, except for the fact that the informant’s tip that led to the audit originally came from that Division. That fact, however, in the context of this investigation, is meaningless.

Every informant’s tip received by the IRS comes through the Intelligence Division. However, not every tip results in an Intelligence Division investigation. Such is the case here. The Intelligence Division concluded that the information in the tip did not warrant a criminal investigation, and none was conducted. The resulting investigation conducted by Koba was of no greater scope than a routine civil audit to determine tax liability.

Accordingly, we conclude that the trial court was in error in concluding from these undisputed facts that Koba was an agent of the Intelligence Division. Having decided that, we hold that there was no violation of due process in Koba’s failure to give the warnings required of special agents of the Intelligence Division.

FOURTH AMENDMENT

Deceit, Trickery, and Misrepresentation

It is a well established rule in this and other circuits that a consent search is unreasonable under the Fourth Amendment if the consent was induced by the deceit, trickery or misrepresentation of the Internal Revenue agent. Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647 (1921); United States v. Bland, 458 F.2d 1 (5th Cir. 1972); United States v. Jaskiewicz, 433 F.2d 415 (3rd Cir. 1970); United States v. Prudden, 424 F.2d 1021 (5th Cir. 1970); Spahr v. United States, 409 F.2d 1303 (9th Cir. 1969); Cohen v. United States, 405 F.2d 34 (8th Cir. 1968); Kohatsu v. United States, supra; United States v. Sclafani, 265 F.2d 408 (2nd Cir. 1959).

Respondent urges that the failure of Agent Koba to advise Robson or his accountant that the true purpose of his audit was to verify an informant’s tip as to the crime of tax evasion constituted deceit and trickery sufficient to vitiate Robson’s consent to the search of his records. We disagree.

In applying the principle first announced in Gouled v. United States, supra, we have consistently held that the failure of an IRS agent, be he Special or Revenue, to warn a taxpayer that an audit may have potential criminal ramifications does not render the search unreasonable. Spahr v. United States, supra; Kohatsu v. United States, supra; accord, United States v. Bland, supra; United States v. Stamp, 458 F.2d 759 (D.C. Cir. 1971); United States v. Striding, 437 F.2d 765 (6th Cir. 1971); United States v. Jaskiewicz, supra; United States v. Prudden, supra; Cohen v. United States, supra.

However, the IRS agent must not affirmatively mislead the taxpayer into believing that the investigation is exclusively civil in nature and will not lead to criminal charges. Cohen v. United States, supra. The record undisputedly disclosed that Agent Koba did not represent his audit to be simply “civil” in nature. In fact, Agent Koba did not indicate to Robson that he intended to conduct a “civil” audit; rather, he told Robson that his tax returns “have been assigned to me for examination.” We therefore find that Agent Koba made no affirmatively misleading statements concerning the potential consequences of his audit.

Respondent would have us hold, however, that Koba’s silence as to the criminal potential of his audit was an affirmative misrepresentation of the true nature of the audit. As the Fifth Circuit recently stated in United States v. Prudden, supra, 424 F.2d at 1032:

“Silence can only be equated with fraud where there is a legal or moral duty to speak or where an inquiry left unanswered would be intentionally misleading.”

None of these factors was present here. As noted above, Agent Koba was under no duty to mention the possible criminal consequences of his audit, and the record discloses no intimation that Koba was ever queried as to the scope of his investigation.

We therefore hold that Robson’s consent to the search of his records was not induced by Agent Koba’s deceit, trickery, or misrepresentation, and that the exhibits cannot be suppressed on that theory.

FOURTH AMENDMENT

Waiver of Right to Demand Warrant

It is undisputed that Agent Koba did not inform Robson of his Fourth Amendment right to demand a warrant before making his records available for audit. It is also undisputed that Robson, through his agent Gillmore, did affirmatively consent to Koba’s search of his records. The question we must decide is whether Robson’s consent amounted to a “knowing and voluntary” waiver of his right to demand a warrant.

At the outset we note our reaffirmanee today of the holding of Kohatsu v. United States, supra, that the fruits of an IRS agent’s search need not be suppressed because of his failure to warn the taxpayer of his Fifth Amendment right not to disclose anything that might incriminate him. A fortiori, one might conclude that Agent Koba’s failure to warn respondent simply that he had a right to demand a warrant also would not dictate suppression. That is the result we reach.

This circuit has often considered the question of the waiver of a right to demand a warrant in the criminal search context. Bustamonte v. Schneckloth, 448 F.2d 699 (9th Cir. 1971), cert. granted, 405 U.S. 953, 92 S.Ct. 1168, 31 L.Ed.2d 230 (1972); Schoepflin v. United States, 391 F.2d 390 (9th Cir. 1968); Cipres v. United States, 343 F.2d 95 (9th Cir. 1965). We said in Cipres v. United States, supra at 97, that:

“ . . . [A] waiver cannot be conclusively presumed from a verbal expression of assent. The court must determine from all the circumstances whether the verbal assent reflected an understanding, uncoerced, and unequivocal election to grant the officers a license which the person knows may be freely and effectively withheld. . . ."

The factual situation in this case is different from that in the foregoing cases, and we think that the rule quoted is not applicable here where there really was no search in the usual sense in which that word is used. We base our decision on the distinction we have recognized elsewhere between an administrative and a criminal search. United States v. Thriftimart, 429 F.2d 1006 (9th Cir. 1970); United States v. Schafer, 461 F.2d 856 (9th Cir. 1972); United States v. Alfred M. Lewis, Inc., 431 F.2d 303 (9th Cir. 1970).

Agent Koba’s search is almost identical to the administrative searches involved in Thriftimart and Lewis, to the extent that Fourth Amendment rights are involved. In those cases we upheld searches of business premises by agents of the Food and Drug Administration which uncovered unsanitary conditions leading to criminal charges against the defendants under the Federal Food, Drug and Cosmetic Act. The defendants argued that since they were not warned they had a right to refuse entry absent the showing of a warrant and since there was no proof they knew they had such a right, the consent given was not an “uncoerced, and unequivocal election to grant the officers a license which the person knows may be freely and effectively withheld.”

We held for the first time in Thriftimart that an administrative search is to be treated differently than a criminal search. The primary reason for this distinction was held to be:

“In a criminal search the inherent coercion of the badge and the presence of armed police make it likely that the consent to a criminal search is not voluntary. Further, there is likelihood that confrontation comes as a surprise for which the citizen is unprepared. ...” 429 F.2d at 1009.

We found that these circumstances were not present in an administrative search, and accordingly we held that:

“ . . . [T]he absence of coercive circumstances and the credibility of a consent given to an inspection justify a departure from the Schoepflin rule in eases of administrative inspection. Here, the managers were asked for permission to inspect; the request implied an option to refuse and presented an opportunity to object to the inspection in an atmosphere uncharged with coercive elements. The fact that the inspectors did not warn the managers of their right to insist upon a warrant and the possibility that the managers were not aware of the precise nature of their rights under the Fourth Amendment did not render their consent unknowing or involuntary. . . . Their manifestation of assent, no matter how casual, can reasonably be accepted as waiver of warrant.” 429 F.2d at 1010. [Footnotes omitted.]

We find this reasoning persuasive in disposing of the instant case. In the context of Fourth Amendment rights, respondent had nothing to gain by demanding a warrant. The audit of his records was inevitable. Further, his consent was given in a totally noncoercive atmosphere. Respondent was asked by letter to call Agent Koba to arrange for an appointment for an examination of his books.

We hold therefore that Robson’s consent to the search of his records can reasonably be accepted as a waiver of warrant, even though the record does not disclose that Robson was aware of the precise nature of his Fourth Amendment rights.

We conclude that the district court' erred in ordering suppression of the three exhibits. Accordingly, the order of the district court is reversed and the cause is remanded to that court for further proceedings.

      . The books in themselves were complete. Agent Koba concluded, however, that Robson’s disbursements greatly exceeded his acknowledged receipts for the years in question. On the basis of this information, Koba made the calculation of the additional tax due.

      . United States v. Dickerson, 413 F.2d 1111 (7th Cir. 1969).

      . Cf. Mathis v. United States, 391 U.S. 1, 88 S.Ct. 1503, 20 L.Ed.2d 381 (1968).

      . The Fourth Circuit has so held in United State v. Heffner, 420 F.2d 809 (1970).

      . See also, United States v. Hammond, 413 F.2d 608 (5th Cir. 1969); Kohatsu v. United States, supra.


author: GEWIN, Circuit Judge:

text:
    Anthony VAN DE WALLE, Plaintiff-Appellee, v. AMERICAN CYANAMID COMPANY, Defendant-Appellant.
    No. 72-2406.
    United States Court of Appeals, Fifth Circuit.
    April 23, 1973.
    Rehearing Denied May 18, 1973.

      Ralph S. Johnson, New Orleans, La., for defendant-appellant.
    Charles R. Maloney, New Orleans, La., for plaintiff-appellee.
    Before GEWIN, SIMPSON and RO-NEY, Circuit Judges.
   GEWIN, Circuit Judge:

Late one Sunday evening in August 1970 Anthony Van De Walle was grievously injured in an accident which occurred while he was en route from his home to his place of employment. Alleging that his accident arose in the course of his employment, Van De Walle brought this diversity suit against his employer, American Cyanamid Company, seeking total and permanent disability benefits under the Louisiana Workmen’s Compensation Act. After a bench trial the district court awarded a substantial judgment in favor of Van De Walle from which American Cyanamid appeals. Since we cannot agree with the district court’s application of the controlling law in reaching its decision that the accident which befell Van De Walle occurred in the course of his employment, we reverse.

On the date of his accident Van De Walle had completed approximately three years of service as a draftsman at American Cyanamid’s chemical manufacturing plant in Waggaman, Louisiana. His residence was located in Violet, Louisiana, and he customarily drove the thirty-five miles to appellant’s plant in his own ear. Because the chemical manufacturing done at the Waggaman plant had a deleterious impact on the equipment used in the process, the plant could not function continuously for more than twelve months or so without undergoing a major overhaul. When a major overhaul became necessary, American Cyanamid would begin an operation known as a “turnaround” during which particular units of the plant would be temporarily shut down so that the equipment could be serviced and repaired.

As soon as a turnaround commenced, the plant’s employees were required to switch from their regular eight hour a day work schedule to an around-the-clock format under which each employee was on duty for a twelve hour shift. The scheduling of shifts was somewhat flexible in that each worker was informally consulted as to what hours he would prefer. Since American Cyanamid classified any work performed in addition to the requisite forty hours a week as overtime, part of each twelve hour shift in a turnaround was overtime work for which an employee was entitled to be paid at the standard time and a half rate. Once begun, a turnaround continued until all essential maintenance work was completed, usually a period of from seven to ten days. Thus turnarounds were in a sense extraordinary procedures of uncertain duration, but they were planned in advance and of necessity occurred with some regularity.

Ordinarily Van De Walle worked eight hours of the day, five days of the week, from Monday through Friday. But on the Friday preceding the Sunday evening in question, American Cyanamid began another turnaround at its Waggaman plant. Although Van De Walle’s vacation had been scheduled to start after he finished work on Friday, he decided to forego it and accordingly arranged with his immediate supervisor and a co-employee named Gonzales to return at midnight to begin a twelve hour shift lasting until noon Saturday. On Saturday Van De Walle agreed to continue working the midnight to noon shift; however, he also made a special arrangement with Gonzales whereby he would relieve Gonzales an hour early on Sunday night at 11:00 p. m. As a result of the turnaround and his understanding with Gonzales, Van De Walle was en route to the Waggaman plant on Sunday night. A flat tire forced him to stop his car while crossing a river bridge, and while repairing it, he was struck by another vehicle sustaining serious injuries.

At the time of Van De Walle’s accident, American Cyanamid had in effect a policy of paying its personnel a travel allowance for unscheduled emergency trips to the plant. This policy was described in a “Standard Practice Instruction” which clearly stated that each employee was expected to provide his own transportation to and from the plant for his normal work schedule and for all previously scheduled overtime. Trips to and from the plant in a privately owned automobile were compensable if an individual was called in an emergency by his supervisor or department head and asked to report to the plant during off-scheduled hours. Although American Cyanamid did not pay its employees a travel allowance for trips to and from the plant during turnarounds and in spite of Gonzales’ testimony that he did not turn in a travel voucher for his trips to the plant during this turnaround, the district court concluded that a turnaround was the kind of emergency contemplated by the “Standard Practice Instruction” and that under it Van De Walle had been entitled to travel expenses for his Sunday night trip to the plant. On this basis, and because Van De Walle would not have been on his way to work when the accident occurred but for the turnaround, the district court decided that the accident did arise in the course of his employment and awarded judgment in Van De Walle’s favor.

Under the Louisiana Workmen’s Compensation Act a worker is entitled to compensation if he is accidentally injured during the course of employment. As stated in the leading case of Kern v. Southport Mill, an employee is covered by the Act if when injured he was “then engaged about his employer’s business and not merely pursuing his own business or pleasure.” From these broad guidelines Louisiana courts have fashioned a more specific rule to the effect that an accident occurring while the employee is en route to or from work is not usually considered as within the course of his employment. This rule is apparently grounded upon the premise that the employment relationship is usually suspended from the time the employee quits work to go home until he resumes his job the following day; during the off hours he is on his own.

But this rule is not without at least one well-established and pertinent exception which arises when the rule’s underlying premise is absent. If the employer has assumed an interest in the transportation of his workmen to and from work because it serves some useful purpose of his other than simply having employees on the job, then the employment relationship is no longer confined to the job premises and may extend to travel to and from home. Thus the cases hold that when an employee is routinely furnished transportation to or from work as part of the employment agreement, he is covered by the Act if an accident befalls him during transportation. The agreement to furnish transportation indicates that the worker is still on his master’s business while traveling to and from work. This exception to the usual rule is available not only when the employer provides transportation as such but also when he pays a travel allowance in lieu thereof, and it matters not whether the transportation agreement is expressly stated or is merely implicit in the working arrangement. But in no event is the exception applicable when the employment relationship does not encompass travel to and from work and the employer receives no special benefit from it. For the Act’s purpose is to protect workers from the hazards that accompany their job and not to insure them against the common perils of life.

Turning to the matter at hand, after carefully considering the record and the contentions of the parties, we are forced to conclude that we would abort the purpose of Louisiana’s Workmen’s Compensation Act were we to permit its coverage to be extended to Van De Walle’s accident. It is undisputed that when injured he was en route to work. Based on its determination that under company policy Van De Walle was due a travel allowance for his trip, the district court held that his injuries were compensable under the exception to the general rule concerning travel to and from work. But American Cyanamid’s “Standard Practice Instruction” without qualification states that a travel allowance is to be paid only for unscheduled emergency trips to and from the plant, and Van De Walle’s Sunday night shift had been previously scheduled in informal discussions with his supervisor and Gonzales. Although the turnaround then in effect was undoubtedly not the routine operation, it was neither unfamiliar nor unexpected, and it can hardly be characterized as an “emergency” as that term is commonly used. The turnaround did nothing more than provoke a temporary change in the hours which the employees worked. It did not create an exception to the normal company policy under which employees were expected to provide their own transportation to and from work. The district court’s ruling to the contrary was plain error.

The only difference between the trip to the plant on which Van De Walle was injured and those he made while the plant was on its normal schedule is that the former was made on Sunday night. We cannot perceive any significance in this difference. Van De Walle was not entitled to travel expenses for his trip, and it was of no special unusual benefit to his employer. Turnarounds at the plant occurred at certain intervals when overhauling and repairs were necessary and the practice was considered a usual and normal requirement in the operation of the plant. Van De Walle was simply on his way to work, albeit at an odd hour. In these circumstances his case falls within the general rule that injuries sustained while en route to or from work are not within the course of employment. The judgment of the District Court is vacated and the case is remanded with directions to enter judgment for the appellant.

Vacated and remanded with directions.

      . LSA-R.S. 23-1021 et seq.

      . LSA-R.S. 23-1031.

      . 174 La. 432, 141 So. 19, 21 (1932).

      . Boutte v. Mudd Separators, Inc., 236 So.2d 906, 908 (La.App. 3d Cir. 1970).

      . Gardner v. Industrial Indemnity Co., 212 So.2d 452, 455 (La.App. 1st Cir. 1968).

      . Welch v. Travelers Insurance Co., 225 So.2d 623, 626 (La.App. 1st Cir. 1969). Accord Boutte v. Mudd Separators, Inc., 236 So.2d 906, 908 (La.App. 3d Cir. 1970) and Gardner v. Industrial Indemnity Co., 212 So.2d 452, 455 (La.App. 1st Cir. 1968).

      . Gardner v. Industrial Indemnity Co., 212 So.2d 452, 457 (La.App. 1st Cir. 1968).

      . Gardner v. Industrial Indemnity Co., 212 So.2d 452, 455 (La.App. 1st Cir. 1968), citing with approval Tavel v. Bechtel Corp., 242 Md. 299, 219 A.2d 43.

      . The district court found that:
      “The situation of a ‘turn around’ had an emergency atmosphere about it in that it was not a regular, everyday procedure. It was a procedure that may last three days, four days, five days, six days, seven days or ten days. There was no particular designated amount of time alloted for this ‘turn around’. . . .
      * * * * *
      The court finds that the ‘turn around’ activity that was being followed by the defendant, as interpreted by their own ‘standard practice instruction’ should have covered the travel allowance for the plaintiff as an emergency trip. The ‘turn around’ situation at the Fortier plant is such that it should fit the definition of ‘emergency’ as used within the standard practice instructions.”


author: MULLIGAN, Circuit Judge:

text:
    FEDERAL TRADE COMMISSION, Petitioner, v. PepsiCo, INC., Respondent.
    No. 803, Docket 73-1381.
    United States Court of Appeals, Second Circuit.
    Argued March 13, 1973.
    Decided April 3, 1973.

      Gerald Harwood, Atty., Washington, D. C. (James T. Halverson, Acting Gen. Counsel, Harold D. Rhynedance, Jr., Asst. Gen. Counsel, Vincent Tricarico, Atty., F. T. C., Washington, D. C., of counsel), for petitioner.
    Edward F. Howrey, Washington, D. C. (Howrey, Simon, Baker & Murchison, Washington, D. C., Mudge, Rose, Guthrie, Alexander & Mitchell, New York City, John J. Kirby, Jr., Milton Black, James G. Frangos, Thomas R. Esposito, New York City, Richard T. Colman and G. Joseph King, Washington, D. C., of counsel), for respondent.
    Before HAYS, MULLIGAN and OAKES, Circuit Judges.
   MULLIGAN, Circuit Judge:

This is an original action by the Federal Trade Commission (Commission) for a preliminary injunction and other relief pursuant to the All Writs Act (28 U.S.C. § 1651(a)). The Supreme Court has held in FTC v. Dean Foods Co., 384 U.S. 597, 86 S.Ct. 1738, 16 L.Ed.2d 802 (1966), that the Courts of Appeals have jurisdiction to issue preliminary injunctions to prevent the consummation of mergers upon, a showing that effective remedial orders would otherwise be virtually impossible, thus rendering a final divestiture decree after a Commission determination, futile. The stated purpose of the petition here is to preserve the status quo pendente lite of Rheingold Corporation (Rheingold) in aid of this Court’s jurisdiction under Section 11(c) of the Clayton Act (15 U.S.C. § 21(c)) and Section 5(c) of the Federal Trade Commission Act (15 U.S.C. § 45(c)), to review final orders of the Federal Trade Commission. The Commission urges that the acquisition by PepsiCo, Inc. (PepsiCo) of 83% of the stock of Rheingold will eventually be determined to violate Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act. The Commission further takes the position that its ability to enter an effective order will “probably” be gravely impaired unless Rheingold’s separate existence is maintained and the independence of its present management preserved.

I

PepsiCo is primarily engaged in the manufacture and distribution of beverage concentrates and syrups and the production and distribution of soft drinks (soft drink business). PepsiCo is a diversified company and is engaged in other services and sales not here pertinent. The soft drink business of PepsiCo essentially consists of manufacturing soft drink concentrates, bottled either by PepsiCo or its franchised independent bottlers. Its products are merchandised under the trade names Pepsi-Cola, Diet Pepsi-Cola, Patio, Teem and Mountain Dew. In 1971, PepsiCo had net sales of $1.3 billion and a net income after taxes of about $63 million. In that year it was the second largest seller of soft drink concentrates nationwide, occupying 16.3% of the market. The Coca Cola Company heads the soft drink industry with an estimated 42% share of the market in 1971.

Rheingold is primarily engaged in the manufacture and distribution of beer which accounts for about 70% of its sales. It also manufactures and distributes soft drink concentrates and syrup and produces and merchandises soft drinks. Its soft drink business constitutes about 30% of its sales but accounts for 75% of its profits. Rheingold is a franchised independent bottler for PepsiCo in southern California, Puerto Rico, Mexico, and Florida. In 1971 Rheingold had net sales of about $230 million, making a net profit after taxes of about $4 million. Rheingold acquired the Grapette Company, a soft drink concentrate manufacturer, in August, 1970, changing its name to Flavette. Flavette then purchased two small soft drink companies, Dr. Wells and Mason & Mason. Flavette, excluding Mason & Mason’s root beer, also utilized independent franchised bottlers and serves a geographic area containing some 50 million people. Since 1970 Flavette has franchised some 81 independent bottlers.

The soft drink concentrate business is presently highly concentrated and growing, with total sales increasing from $353 million in 1967 to $450 million in 1971. Coca Cola and PepsiCo combined to control some 58.3% of the business. The top four companies in 1971, account for 70.6% of the industry. The Federal Trade Commission takes the position that the soft drink business is not easily entered. Soft drinks are made from concentrates which are typically sold and distributed by franchised bottlers who are responsible for the promotion of the business in the franchised territory and who normally own the facilities for bottling and canning the concentrate. New entrants face the barrier of competing against well-established brands which are prolifically advertised. It is estimated that an annual expenditure of $50 million for advertising expenses over a 5 to 8 year period is necessary to establish a new product on a nationwide scale. The Commission also argues that obtaining adequate bottling and canning facilities plus the acquisition of technical know-how present barriers for prospective entrants into the business.

PepsiCo first published its offer to purchase 1,600,000 shares of common stock of Rheingold on October 25, 1972. This offer was later amended to purchase all shares in excess of 1,600,000 if they were tendered before the close of business on November 16, 1972. On November 15, the Federal Trade Commission commenced complaint proceedings, urging that the acquisition violated Section 7 of the Clayton Act (15 U.S.C. § 18) as well as Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45). The Commission did not seek at this point to enjoin the tender offer. PepsiCo and the Commission then entered into the negotiation of a hold-separate agreement. The Commission agreed in the interim not to file any action requiring PepsiCo to hold Rheingold assets separate until December 4, 1972 and PepsiCo agreed not to assume or exercise actual control over Rheingold if its tender offer proved successful. The offer was successful and PepsiCo now owns 83% of the shares of Rheingold which it acquired for a cash investment of some $57 million. On December 1, 1972, the Commission withdrew its complaint for the purpose of entering into a consent order. PepsiCo made an offer on January 15, 1973 subsequently modified on January 30, 1973, but the proposal was rejected by a 3-2 vote of the Commission. The matter was returned to the adjudicatory process on February 7, 1973 and PepsiCo notified the Commission on March 2, 1973 that it was terminating the hold-separate agreement of November 16, 1972.

II

As a result of the 5-4 holding of the Supreme Court in FTC v. Dean Foods Co., supra, we are placed in the unenviable position of predicting whether there has been a violation of the antitrust laws involved without the benefit of any agency determination or a record which would provide the derailed economic and corporate data normally available in comparable litigation. It is established, however, that the first test which we must apply is whether or not the Commission has established a “reasonable probability” that the respondent is in violation of the statute. FTC v. OKC Corp., 1970 CCH Trade Cas. ¶ 73,288 (5th Cir., July 8, 1970); see United States v. Ingersoll-Rand Co., 320 F.2d 509, 523-524 (3d Cir. 1963); United States v. IT&T, 306 F.Supp. 766, 774 (D.Conn.1969), appeal dismissed, 404 U. S. 801, 92 S.Ct. 20, 30 L.Ed.2d 34 (1971); United States v. Atlantic Richfield Co., 297 F.Supp. 1061, 1067 (S.D.N.Y.1969); cf. Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962).

In our view, the Federal Trade Commission has sustained its burden with respect to this aspect of the case. This is basically a horizontal merger since PepsiCo in acquiring Rheingold has purchased a subsidiary (Flavette) competing with PepsiCo in the soft drink business. Flavette’s share of the national soft drink non-cola market is about 1% and about .3% if cola drinks are included. Anti-trust concern here is prompted by the undoubted fact that PepsiCo stands Number 2 in the national soft drink market where four companies control 70.6% of the business. The Supreme Court in a series of eases, United States v. Continental Can Co., 378 U.S. 441, 461-462, 84 S.Ct. 1738, 12 L.Ed.2d 953 (1964); United States v. Aluminum Co. of America, 377 U.S. 271, 279, 84 S.Ct. 1283, 12 L.Ed.2d 314 (1964); United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 365 n. 42, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963), and our own Court recently in Stanley Works v. FTC, 469 F.2d 498, 507-508 (1972), have held that even slight aggregations are viewed with suspicion in a highly concentrated market. In Stanley Works, four leading companies dominated only 50% of the market. The acquisition by a company, which controlled 1% of the market, of a competitor with a market share of 22 to 24% was found to be in violation of Section 7 of the Clayton Act and not de minimis.

There are two other factors which weigh the balance here in the Commission’s favor. The number of bottlers has steadily declined from 5,400 in 1948 to 2,300 in 1971 as the result of combinations. Moreover between 1958 and 1972 PepsiCo has acquired ten bottlers which were previously its independent franchisees.

We have examined the opinions of the Supreme Court since the 1950 amendment to Section 7 of the Clayton Act and recall as a practical consideration Mr. Justice Stewart’s comment in his dissenting opinion in United States v. Von’s Grocery Co., 384 U.S. 270, 301, 86 S.Ct. 1478, 1495, 16 L.Ed.2d 555 (1966): “The sole consistency that I can find [in the Supreme Court cases] is that in litigation under § 7, the Government always wins.” We appreciate that the Commission here need not establish any actual anti-competitive effects but only an incipiency. The reasonable probability of establishing probable as distinguished from actual competitive injury, is in our view predictable here in light of the concentration of the industry and the difficulty of new entry which requires bottling facilities and huge advertising outlays.

III

The Commission seeks a preliminary injunction which will effectively prevent PepsiCo from exercising and assuming control over Rheingold until the issuance of a final order in the administrative proceeding. The exercise of this control, in the view of the Commission, is incompatible with the preservation of Rheingold as an entity having the capabilities and resources for becoming an important competitor through Flavette in the production and sale of soft drink concentrates. The agency urges that PepsiCo will be primarily interested in the sale of its own cola concentrates and to the extent that it is interested in selling non-cola drinks it will be faced with a conflict between pushing its own PATIO line and the Flavette brands. Moreover, the Commission is concerned that PepsiCo will dispose of the beer business of Rheingold and that this would deprive Flavette of the benefit of Rheingold’s total resources in its efforts to establish itself as a “toehold” competitor in the soft drink concentrate industry. While granting that Flavette’s business is a small part of Rheingold’s overall operation, the Commission believes that its competitive potential rests upon Rheingold’s full resources and therefore a divestiture limited to disposing of the offending lines of commerce alone could not provide effective relief. Admitting that PepsiCo will be harmed at this stage of the proceeding if it is required to refrain from exercising control of Rheingold, the Commission has advised that it will set up an expedited time schedule ensuring that all administrative proceedings, including the Commission’s final decision, will be concluded by September 10, 1973. It therefore urges this Court to enjoin PepsiCo from taking any steps to assume or exercise control of Rheingold, from taking any other action which will change or influence the present directors or management of Rheingold, diminish its operations, change its corporate structure or dispose of any of its assets.

Under FTC v. Dean Foods Co., supra, the Supreme Court has held that an injunction can issue only if the Commission can show that “an effective remedial order, once the merger was implemented, would otherwise be virtually impossible, thus rendering the enforcement of any final decree of divestiture futile.” 384 U.S. at 605, 86 S.Ct. at 1743 (emphasis added). While the Commission has persuaded us that there is a reasonable probability that the merger here will violate Section 7 of the Clayton Act, we are totally unpersuaded that a remedial divestiture order will ultimately be “virtually impossible” of achievement. The Commission is proceeding on the premise that divestiture of the entire Rheingold company will be the only effective remedy. On the contrary we see no reason why such drastic relief at least at this stage, should be presumed appropriate. Assuming that the Commission is successful in its adjudicatory proceeding, whether the divestiture should be total or partial must depend upon the facts in each case. It is clear here that the only offending assets are the subsidiary businesses of Flavette and Mason & Mason which represent a minor though profitable segment of Rheingold’s business.

The Commission’s major if not sole argument that total divestiture is necessary, is that Flavette will need the total resources of Rheingold plus the expressed determination of its incumbent management to break into the soft drink industry. The record before us gives scant support, if any, to the proposition that the present Rheingold management has that capacity. Rheingold’s share in the beer market is declining. It lost money in 1972 on its beer operation and projects a loss of between $2 million and $7 million in 1973. No final budget plan has been developed in fact for the 1973 brewery operation. We have examined affidavits before us which indicate that Rheingold’s cash position is precarious. Rheingold’s earnings per share have declined from $1.84 in 1970 to $1.25 in 1971 and are estimated at $.45 per share in 1972. In December, 1972, Rheingold announced the omission of its regular quarterly cash dividend. Rheingold has emphasized its beer business and Flavette is not prospering. Fíavette has incurred losses of more than a half million dollars from the time of its acquisition by Rheingold in the fall of 1970 to December 31, 1972. Its share in the total soft drink concentrate market has declined from .5% in 1968 to .3% in 1971.

The Commission in oral argument suggested that the present management of Rheingold was contemplating the acquisition of another regional beer manufacturer, Piéis, as a possible means of increasing its business. It is somewhat anomalous that the Commission should cite an obvious horizontal merger, which it admittedly has not studied, as a basis for preserving Rheingold. The Commission also cites as persuasive the statement of Rheingold’s Chairman on the Flavette acquisition that combination of selling beer and soft drinks “provides Rheingold with a good deal of clout in the supermarkets.” The antitrust significance of this sort of “clout” also seems to have escaped the agency which is charged with the enforcement of Section 3 as well as Section 7 of the Clayton Act.

We must balance the equities when a supplicant seeks injunctive relief and we find that PepsiCo has invested $57 million in acquiring an 83% interest in a company, including substantially all of the stock of a management which the Commission insists remain at the helm. PepsiCo is opposed to a Piels acquisition as imprudent and detrimental to the interests of PepsiCo as well as the minority stockholders of Rheingold. We of course cannot predict whose business judgment is sounder but the Commission is in no better position. It did not seek to enjoin the acquisition of the shares by PepsiCo and in view of the fait accompli of 83% control and the staggering investment made, we are not persuaded that we should deprive PepsiCo of its corporate managerial responsibilities particularly when incumbent management has divested itself of its stock interests.

While it is elementary that PepsiCo’s intentions in acquiring Rheingold are not to be considered in determining whether a Section 7 Clayton Act violation occurred, it is helpful to examine them now in light of the extraordinary relief which is sought. PepsiCo very probably has no interest in the beer business and in fact urges that its acquisition was motivated by Rheingold’s diversion of the income from the soft drink bottling business to salvage its beer business, to the detriment of its PepsiCo franchises in Puerto Rico, Mexico City and California. PepsiCo argues that Rheingold was not properly expanding and exploiting certain territorial markets which could be profitable to PepsiCo. PepsiCo further urges that it will make capital investments and operational changes which will maximize the earnings potential not only of Rheingold but Flavette. PepsiCo states flatly that third parties have already indicated an interest in purchasing Flavette. We therefore do not find that Flavette’s viability as a competitor in the soft drink business will be at all assured by the perpetuation of Rheingold as it is presently constituted and managed. Nor are we persuaded that the separation of Flavette if it is eventually ordered, will be virtually impossible of achievement.

While we are fully aware of the fact that there may well be a difference between promise and performance, any doubt in our mind is dissipated by PepsiCo’s willingness to enter into a hold-separate agreement to preserve and protect the Rheingold concentrate and domestic soft drink bottling assets so that the Commission and this Court, in the event that a violation of Section 7 shall be found, will be able to order effective divestiture relief. To this end PepsiCo has advised that the Flavette subsidiaries and the Mason & Mason root beer concentrate operations will be operated as a separate identifiable business entity, that the presently utilized trademarks and trade names will be preserved and protected by that entity and will be continued to be used by it to identify the products involved. In the event of a divestiture order, the business entity will have assets, facilities and equipment and a sales and distribution system equal to that which it had before the acquisition of PepsiCo. Even if divestiture of the franchised bottling operation in the United States is ordered, PepsiCo has agreed that assets, facilities and equipment, sales and distribution systems will be equal to or better than before the PepsiCo acquisition. Moreover, PepsiCo has announced its agreement to continue to sell Flavette through Rheingold bottlers and to guarantee that Flavette sales will increase at at least the industry rate during the pendency of the complaint. Realistically in view of the necessity of Rheingold to deal with labor problems, the banking industry and the business community during this crucial period, it would appear to us to be totally inequitable to prevent PepsiCo from now guiding and operating this company when long range decisions vitally affecting its stockholders must be made. At the same time we see no great hardship in requiring PepsiCo to continue the Rheingold beer operation and to maintain its assets until such time as the expedited administrative proceedings are terminated,

In the light of all the circumstances, we conclude that no preliminary injunction should issue here on the condition that the proposed hold-separate agreement be promptly entered into by the parties. We add two further conditions :

First, that the proposed escape clause giving PepsiCo the unilateral option of terminating the agreement on 30 days’ prior written notice to the Commission be eliminated.

Second, that the new management agree not to divest Rheingold of its beer business or assets or any part thereof pending the resolution of the expedited action promised by the FTC for its administrative proceedings. The Commission and PepsiCo are directed to enter into such an agreement and the temporary restraining order of this Court will be thereupon dissolved.

Jurisdiction is retained for the purpose of enabling any of the parties to this proceeding to apply to this Court for such orders and directions as may be necessary for the construction or carrying out of this order, for the modification of any provisions thereof, and for the enforcement of and compliance therewith and punishment for violations thereof.

      . Section 7, 15 U.S.C. § 18 provides in relevant part:
      No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

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

      . Since Rheingold is also a franchised bottler of PepsiCo there are vertical dimensions here as well. PepsiCo states that pursuant to a 1968 consent order negotiated with the Commission, Docket No. 8606, PepsiCo is permitted to purchase its own franchised bottlers even though they are engaged in the concentrate business. In view of our disposition of this matter, the point is not material.

      . At this stage of the proceedings there is no indication of any particular geographic market (section of the country) in which PepsiCo and Rheingold through Flavette are actually competing. Moreover, the “line of commerce” or product market may eventually be narrowed in litigation. The complaint of the FTC in its definitional paragraph defines soft drinks and concentrates to include all non-alcoholic carbonated beverages. Whether cola drinks are sufficiently non-interehangeable in terms of price, quality and use so as to constitute a separate relevant product market, is a question which has not been determined or even briefed, yet both parties make reference to a non-cola market. On the basis of the complaint, we can only assume that the geographic market is nationwide, that the product market is all carbonated soft drinks and that Flavette’s share is .3%.

      . We are not unaware that the Merger Guidelines of the United States Department of Justice define a highly concentrated market as one in which the shares of the four largest firms amount to approximately 75% or more. However, this action has been initiated by the Federal Trade Commission, not the Department of Justice. It is further noted that the top four companies which controlled 66.3% of the business in 1965 controlled 70.6% of the industry in 1971.

      . The particular significance of Section 5 of the Federal Trade Commission Act as a basis for relief here is not apparent either from an examination of the complaint or the brief of the Commission before us. It may eventually articulate its views. See FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972). In the meantime we assume that the violation of Section 7 of the Clayton Act also constitutes a violation of Section 5. Stanley Works v. FTC, supra, 469 F.2d at 499 n. 2.

      . The Commission’s brief seems to argue that all it must establish is that an ultimate effective order will probably be effectively impaired unless Rheingold’s separate existence and incumbent management is preserved. The Supreme Court has placed a much greater burden on the Commission. It must establish no probability here but “virtual impossibility.” In view of the extraordinary nature of the remedy proposed, the burden is justifiably imposed.

      . While complete divestiture is “simple, relatively easy to administer, and sure” (United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 331, 81 S.Ct. 1243, 1252, 6 L.Ed.2d 318 (1961)), it is not necessarily the most appropriate means for restoring competition. A primary concern is whether the offending line of commerce, if disassociated from the merged entities, can survive as a viable, independent entity. See, e. g., OKC Corp. v. FTC, 455 F.2d 1159 (10th Cir. 1972) (partial divestiture inappropriate since the offending line of commerce could not survive independently). See also Comment, Divestiture of Illegally Held Assets: Observations on its Scope, Objective, and limitations, 64 Mich.L.Rev. 1574, 1587-1588 (1966). Many other factors, however, are relevant and must be considered. United States v. Reid Roller Bit Co., 274 F.Supp. 573, 584-592 (W.D.Okl.1967) (partial divestiture appropriate).

      . United States v. Ingersoll-Rand Co., supra, 320 F.2d at 525; United States v. Atlantic Richfield Co., supra, 297 F.Supp. at 1073-74.


author: PER CURIAM.

text:
    UNITED STATES of America, Appellee, v. Edward HURSE, Appellant.
    No. 72-1266.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 16, 1972.
    Decided April 20, 1973.

      Samuel Raban, St. Louis, Mo., for appellant.
    Robert B. Schneider, Asst. U. S. Atty., St. Louis, Mo., for appellee.
    Before MATTHES, Chief Judge, ROSS, Circuit Judge, and VAN PELT, Senior District Judge.

       Senior District Judge for the District of Nebraska sitting by designation.

   PER CURIAM.

This case involves an appeal from a conviction, upon a jury verdict, of guilty to a charge of possession of an unregistered shotgun, in violation of 26 U.S.C. §§ 5861(d), 5871 (1970). Prior to his trial, appellant filed a motion to suppress, pertaining to a shotgun seized by the police, on the ground that the police lacked probable cause to make an entry into appellant’s quarters to arrest him, the arrest having taken place without a warrant. During the suppression hearing, the police testified that a reliable informant had delivered to them heroin allegedly purchased from appellant; the informant also told them that appellant had answered the door with a shotgun. The motion was overruled. The appellant’s request for the name of the informant, on the ground that his testimony was favorable to appellant, was denied. The prior appeal resulted in remand by this court. The order of remand directed the district court to hold a hearing on the probable cause issue, and stated, in part: “[T]he identity of the informant should be disclosed to the court and the court should satisfy itself on the issue of probable cause for the initial entry.”

Pursuant to this order, the district court conducted an evidentiary hearing in camera at which the informant was examined by the district judge in the absence of all persons except an official court reporter, who reported the informant’s testimony and thereafter transcribed the same. The testimony of the informant was sealed and transmitted to this court.

The informant testified at the in camera hearing that he did not enter the building where appellant was residing, that he did not purchase narcotics that evening from appellant, and that he had had no contact with the police involved in the raid after the time they sent him to appellant’s home.

In order to resolve the conflict in testimony between the informant and the officers, a further proceeding, which in effect was a supplemental suppression hearing, was held by the court for the purpose of examining the police officers who were present at the scene of the arrest and seizure. At this hearing the attorneys for appellant were present and were afforded the opportunity to, and they did in fact, examine and cross-examine the five police officers who testified.

The appellant, however, was not personally present at this hearing. A colloquy between the judge and appellant’s attorneys led the court to believe that counsel for the appellant were not “raising the issue of the defendant not being present . . . .” After the hearing the district court filed a memorandum and supplemental findings in which the court concluded, “that the police officers had probable cause to believe that a felony [sale of narcotics] had just been committed and had probable cause to make the initial entry to the premises . for the purpose of demanding admission to defendant’s apartment . in order to arrest him.” The findings were certified to this court for action in accordance with its opinion.

In his second appeal, appellant argued, among other things, that the district court committed prejudicial error in holding the supplemental evidentiary hearing and taking the testimony of the police officers in his absence. This court concluded that “this supplemental suppression hearing was a critical stage of the proceedings and that the defendant was entitled to be personally present” and entered an “Order of Remand For Limited Purpose”. The purpose of the order was to provide an evidentiary hearing, at which appellant would be present, and for a certification of findings and conclusions by the district court to this court.

In accordance with this order, the district court conducted another evidentiary hearing of the police officers in the presence of appellant and his counsel. The court examined seven police officers who had participated in the seizure and arrest [including one person, Glen Vaughn, who was no longer with the police force]. Each person testifying was excluded from the courtroom prior to testimony. Although in each case the testimony exhibited minor, non-material variations from the prior testimony, the testimony of each at the hearing was consistent with their past statements.

The district court filed a written memorandum and supplemental findings. In it he made express findings that the police officers gave marked money to the informant, who entered the building in which appellant’s apartment was located and later returned with five clear gelatin capsules containing heroin. The court also found that the informant stated that he had purchased heroin from appellant and that appellant was armed. The court then held:

“Upon the whole record, including the in camera proceedings and the supplemental proceedings, the court finds and concludes that the police officers had probable cause to believe that a felony had just been committed and had probable cause to make the initial entry to the premises . for the purpose of demanding admission to defendant’s Apartment . . in order to arrest him.”

An attempt was made to impeach the testimony of one police officer. The trial judge specifically stated that he believed the testimony of that officer and that the attempted impeachment had failed. The findings and conclusions were then certified to this court.

Appellant has filed an additional brief raising the same general issue previously presented as to probable cause and in addition claims he did not have a fair and impartial trial because of the trial court’s action “calling and examining its own witnesses and cross-examining the defendant’s witnesses.”

In considering these findings and conclusions of the court below, we recognize that the district court has the discretion to weigh the credibility of the witnesses and to determine from the evidence on the record as a whole whether these officers had probable cause to make the initial entry and subsequent arrest. Miller v. United States, 354 F.2d 801 (8th Cir. 1966). As we stated in United States v. Shoemaker, 429 F.2d 530, 531 (8th Cir. 1970), “issues of credibility must be resolved by triers of fact and not by this court.”

We hold that the district court’s findings are supported by substantial evidence, and that the court correctly denied the motion to suppress. There was more than ample evidence from which the court could and did make findings that the events took place in the manner testified to at the original suppression hearing. In addition, the court carefully considered the inconsistencies and variations in the testimony of the officers before making its findings. The findings made by the court support its holding that the police officers had probable cause to believe that a crime had been committed. Cf. Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L. Ed.2d 637 (1969).

We find nothing improper in the trial judge’s examination of witnesses. Cf. Miller v. United States, supra. He was under explicit directions from this court and it was only natural that he endeavored to procure a complete record in which all relevant facts were disclosed. We are appreciative of his meticulous findings.

We have examined the other issues raised by appellant and find them to be insubstantial. The judgment of conviction is affirmed.

      . United States v. Hurse, 453 F.2d 128 (8th Cir. 1971).

      . At this hearing the defense called a St. Louis Police Department Criminologist and the Records Clerk Supervisor of the St. Louis Police Department. The Criminologist’s testimony, where pertinent, is supportive of the findings of the District Court. The Supervisor was called for the purpose of introducing into evidence the police report of the seizure and arrest.


author: AINSWORTH, Circuit Judge:

text:
    BOYD CONSTRUCTION COMPANY, Plaintiff-Appellee-Cross Appellant, v. T. L. JAMES & COMPANY, INC., Defendant-Appellant-Cross Appellee.
    No. 72-1582.
    United States Court of Appeals, Fifth Circuit.
    April 17, 1973.

      William S. Stone, New Orleans, La., Dorrance Aultman, Hattiesburg, Miss., for defendant-appellant-cross appellee.
    Vardaman S. Dunn, Jackson, Miss., for plaintiff-appellee-cross appellant.
    Before AINSWORTH and GODBOLD, Circuit Judges, and RUBIN, District Judge.
   AINSWORTH, Circuit Judge:

This diversity action stems from a dredging subcontract between plaintiff Boyd Construction Company and defendant T. L. James & Company, Inc. The District Judge decided that James delayed an unreasonable time in completing the subcontract and awarded damages to Boyd. The District Judge denied, as unsupported by the evidence, James’s counterclaims (1) for additional quantum meruit compensation due to the difficulties of dredging the materials encountered and (2) for standby costs. James appeals from the award in favor of Boyd and from the denial of its counterclaims. Boyd cross-appeals and contends that the District Judge’s award was inadequate. We affirm.

Boyd obtained the prime contract from the United States Corps of Engineers involving a channel on the Verdigris River near Tulsa, Oklahoma. This necessitated excavation of some 10,700,000 cubic yards at Boyd’s bid price of 21 cents per cubic yard. Boyd’s equipment proved inadequate to handle the last million cubic yards. After James assured Boyd that it could clear this remaining area in three months, Boyd hired James to bring in its dredge. As compensation, Boyd agreed to pay a price of 38 cents per cubic yard plus a lump sum of $27,700 for mobilization and demobilization of the dredging equipment. Additionally, Boyd agreed to pay “James $96.00 per hour for each and every hour of stand-by time which is caused as a result of being shut-down by or because of Boyd or its operation or by the owner, except where such shut-down is caused by James.”

The central issue in this ease revolves around the length of time taken by James to complete the work. On November 18, 1968, James began work. The work was not completed until July 19, 1969.

In the absence of a written contractual provision as to the time for completion, the law implies a reasonable time. See generally 1 A. Corbin, Corbin on Contracts § 96 (1963); 3 A. Corbin, Corbin on Contracts § 593 (1960); 1 W. Jaeger, Williston on Contracts § 38 (3d ed. 1957). The District Judge found that James continued for “a period of four months more than was reasonably required,” thereby entitling Boyd to damages of $50,000.

In reviewing factual determinations, we do not retry the case. See Williams v. Nat’l Surety Corp., 5 Cir., 1958, 257 F.2d 771, 772-773. According to Rule 52(a), Federal Rules of Civil Procedure, “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” After reviewing the record we are not left with a definite and firm conviction that any mistake has been committed. See Chaney v. City of Galveston, 5 Cir., 1966, 368 F.2d 774, 776.

James’s main contention is that the material dredged was different from that specified in the contract. According to the contract, “the material to be dredged shall consist primarily of sand, silt and some clay and shall not include the removal or dredging of any rock, boulders or other solid objects.” Each day of the dredging James’s field engineer estimated the composition of the dredged material. At the trial this data was summarized according to what was found during two separate periods:

Sand Gravel Clay Silt Stone
November 18, 1968— March 8,1969 23.4 33.6 26.6 10.1 6.3
March 8,1969— July 19, 1969 51.8 8.9 21.1 17.8 0.4

During the first period when 416,459 cubic yards were dredged, 60.1 per cent of the material was sand, silt, and clay, and during the second period when 695,706 cubic yards were dredged, 90.7 per cent was sand, silt, and clay. Accordingly, the composition met the contractual provision that the material would consist “primarily” of sand, silt, and clay. Clay accounted for only 26.6 per cent in the first period and 21.1 per cent in the second period, so it met the contractual limitation of “some” clay. Stone accounted for 6.3 per cent in the first period and 0.4 per cent in the second period, so there may be some doubt about this material. The District Judge was persuaded that the contract provision was only intended as assurance that the job would not abound in the removal of solid objects and that the quantity of stone dredged was no more than might be reasonably expected on such a project. We cannot say that this conclusion was clearly erroneous.

Gravel is not expressly mentioned in the contract, so the contract is ambiguous on the question whether it is a prohibited substance. The contract was drafted by James’s counsel after a thorough inspection by its engineers at the site where the gravel was visible. The District Court properly found that Boyd did not misrepresent the nature of the work. Therefore, the contractual ambiguity should be construed against James. See generally 3 A. Corbin, Corbin on Contracts § 559 (1960); 4 W. Jaeger, Williston on Contracts § 621 (3d ed. 1961). Accordingly, the composition of the dredged material provides neither an excuse for James’s delay nor a basis for James’s counterclaim.

James further contends that it was entitled to standby time when it was allegedly ordered to wait until the water height in the river subsided before dredging the last “plug” of dirt. Though there is conflicting evidence on this point, there is adequate evidence in the record to support the District Judge’s finding that James elected to wait for its own convenience so as to facilitate dismantling and loading its dredging equipment. Since the contract states that standby payments are not available when the delay was caused by James, this counterclaim was also properly denied.

There is no merit to James’s concern over dredging some 100,000 cubic yards more than the 1,000,000 cubic yards specified in the contract. As the express language of the contract says, a million cubic yards was the minimum figure. “There shall be a minimum of one million cubic yards of dredging.” Furthermore, he was paid at the contract price of 38 cents per cubic yard for the additional dredging.

The final question concerns the quantum of Boyd’s damages for the delay of four months. Boyd’s summary on appeal reflects expenses as follows:

Four months payroll $ 19,246.03
Four months rent — dragline 15,000.00
Four months rent — Cat. D6 7,622.00
Four months rent — Cat. D8 14,420.00
Four months salary — Project Manager 6,243.42
Total payroll and rent 62,531.45
Add 10% — Overhead 6,253.14
Total Four Months Cost $ 68,784.59

The District Judge disallowed the items pertaining to the 10 per cent overhead and the Project Manager’s salary. Then he evidently rounded off the balance to $50,000. We cannot say this calculation was clearly erroneous.

Affirmed.


author: MATTHES, Chief Judge.

text:
    UNITED STATES of America, Appellee, v. William ECHOLS, a/k/a Steve Page, Appellant.
    No. 72-1577.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 16, 1973.
    Decided April 20, 1973.

      Allen I. Harris, St. Louis, Mo., for appellant.
    Richard K. Coffin, Sp. Atty., U. S. Dept. of Justice, St. Louis, Mo., for appellee.
    Before MATTHES, Chief Judge, and ROSS and STEPHENSON, Circuit Judges.
   MATTHES, Chief Judge.

We are again confronted, as we were in United States v. Burton, 475 F.2d 469 (8th Cir. 1973), 1973, with a controversy over the warrantless search of the luggage of an airline passenger and the question whether contraband found incident thereto was improperly admitted into evidence.

A three-count indictment charged that appellant, also known as Steve Page, (1) knowingly delivered to Trans World Airlines (TWA), a common carrier, a travel bag containing a Smith & Wesson model 19-2 .357 magnum loaded revolver and a box of cartridges for shipment in interstate commerce from Los Angeles, California to St. Louis, Missouri, in violation of 18 U.S.C. § 922(e); (2) knowingly and intentionally possessed with intent to distribute 200.45 grams of cocaine in violation of 21 U.S.C. § 841(a)(1); and (3) unlawfully, knowingly and intentionally possessed 18.17 grams of marihuana in violation of 21 U.S.C. § 844(a).

The undisputed evidence on the motion to suppress, which was considered both before and during trial, revealed these relevant and operative facts.

On February 2, 1972, at approximately 9:50 a.m. (PST), appellant, using the assumed name of Steve Page, purchased in Los Angeles, California a one-way ticket for TWA Flight # 136 which was .scheduled to depart from Los Angeles at 9:55 a.m. and arrive in St. Louis at approximately 3:05 p.m. (CST). Appellant was unable to produce any identification upon the request of the ticket agent. Thereupon the latter informed the TWA Public Relations Representative of appellant’s failure to furnish identification. The TWA representative would not permit appellant to board Flight # 136 because appellant’s behavior comported with the Federal Aviation Administration security profile and for the additional reason that he could not produce identification. Appellant informed the TWA representative that a brown “Lark” travel bag had already been placed on the aircraft for transportation to St. Louis. Appellant produced the baggage check number and the representative made a record thereof.

David M. Gentry, Director of Customer Service for TWA, accompanied Flight # 136 in order to provide service to passengers in flight and after deplaning. The flight departed from Los Angeles and arrived in St. Louis as scheduled. Gentry and Terry Vaughn, TWA Customer Service Agent at St. Louis, discovered appellant’s unclaimed luggage bearing the claim check number which had been furnished to Gentry. The unclaimed travel bag was opened by Vaughn for the alleged purpose of identifying the owner so that the bag could either be returned to him or held for his arrival in St. Louis. Upon opening the travel bag, the magnum revolver and box of cartridges described in the indictment were found in the tie compartment. Thereupon, a deputy United States marshal was alerted and upon ex-animation he, too, observed the revolver and cartridges and seized both.

In the meantime, appellant, sometime before 12:25 p.m. (PST), surrendered his ticket for Flight # 136, secured a refund, and purchased a ticket under his correct name for TWA Flight # 194. On this occasion, appellant produced two identification cards.

Flight # 194 arrived at the St. Louis airport at approximately 5:35 p.m. (CST). After deplaning, appellant was met in the air terminal area by a deputy United States marshal and placed under arrest.

On February 3, 1972, appellant was taken to the office of the United States marshal in the United States Court House in St. Louis for processing and investigatory purposes. While on an elevator, one of the deputy marshals, who was carrying a bathrobe belonging to appellant, discovered that the robe contained a rather sizeable bulge. Upon further exploration, the deputy marshal found plastic bags containing cocaine and marihuana, the subjects of Counts I and II, in the lining of the bathrobe. An analysis revealed a quantity of 187.-65 grams of high purity cocaine, possessing a strength of 14.17%, an additional 12.8 grams of very pure cocaine of 63.5% strength, 17.45 grams of marihuana, and .72 grams of hashish. A special agent of the Bureau of Narcotics and Dangerous Drugs testified that the cocaine had a value of approximately 1200,000.

The district judge sentenced appellant to the custody of the Attorney General or his authorized representative for treatment and study pursuant to 18 U. S.C. § 4208(b) and ordered that the Director of the Bureau of Prisons furnish the court with the result of the study within three months in order that the court might consider further disposition of the case.

As long ago as 1921, in Burdeau v. McDowell, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048, the Supreme Court ruled that the provision of the fourth amendment forbidding unreasonable searches and seizures applied only to governmental action, and not the actions of private individuals. The holding in Burdeau has been recently cited with approval in Coolidge v. New Hampshire, 403 U.S. 443, 487, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971). Appellant, conceding that his travel bag was opened and searched by an agent of the airline, seeks to circumvent the private label by contending that the TWA employee was acting at the behest or in the capacity of a federal official.

Our recent case of United States v. Burton, supra, in which this court confirmed the private character of an airline search', is dispositive of the present case. In that case, defendant purchased an airline ticket and, at the same time, checked two bags for flight. The ticket agent, suspicious because defendant fit the security profile, and the weight distribution of one of his bags seemed unusual, searched the bag and found a gun. A federal marshal was notified, and defendant arrested.

In Burton, we recognized the general rule that searches of packages or luggage by airline employees are invulnerable to fourth amendment attack so long as the search is conducted by the carrier for its own purposes and without the instigation or participation of government agents. Clayton v. United States, 413 F.2d 297 (9th Cir. 1969), cert. denied, 399 U.S. 911, 90 S.Ct. 2204, 26 L.Ed.2d 565 (1970); Wolf Low v. United States, 391 F.2d 61 (9th Cir.), cert. denied, 393 U.S. 849, 89 S.Ct. 136, 21 L.Ed.2d 119 (1968); Gold v. United States, 378 F.2d 588 (9th Cir. 1967); Corngold v. United States, 367 F.2d 1 (9th Cir. 1966); United States v. Blum, 329 F.2d 49 (2d Cir.), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1045 (1964). In the present case the search of appellant’s travel bag was conducted solely by a TWA employee for the purpose of obtaining idéntifieation of the owner of the luggage. The employee was acting pursuant to a TWA regulation authorizing the precise conduct in which he was engaged. There is not a scintilla of evidence that any government agent requested that the search be made, was present when the travel bag was opened, or had any knowledge concerning the activity until after the gun had been discovered. In sum, we hold that the district court properly denied appellant’s motion to suppress and permitted the magnum revolver, ammunition, and packages of drugs to be introduced into evidence.

There remains for consideration the contention that the government failed to show that appellant possessed an intent to distribute the cocaine. 21 U.S.C. § 841(a)(1). This claim is without substance and does not merit extensive discussion.

’ Confronted with an identical question, the Fifth Circuit reasoned, “The question of the validity of the inference turns on whether the amount of cocaine was such as will support an inference of intent to distribute as distinguished from mere possession for personal use.” United States v. Mather, 465 F.2d 1035, 1037 (5th Cir. 1972). In that case, the court decided that possession of 197.75 grams of cocaine worth $2,500 delivered was sufficient to justify the inference. Here, appellant possessed 199.73 grams worth $200,000. The record does not reveal whether appellant was an addict, nor could his counsel enlighten us on this matter at oral argument. See also United States v. Ortiz, 445 F.2d 1100 (10th Cir.), cert. denied, 404 U.S. 993, 92 S.Ct. 541, 30 L.Ed.2d 545 (1971); United States v. Cerrito, 413 F.2d 1270 (7th Cir. 1969), cert. denied, 396 U.S. 1004, 90 S.Ct. 554, 24 L.Ed.2d 495 (1970).

We conclude that the case was in all respects properly decided and hence we affirm.