text:
    UNITED STATES of America, Plaintiff-Appellee, v. William E. BLAKE et al., Defendants-Appellants.
    No. 72-3817.
    United States Court of Appeals, Fifth Circuit.
    Nov. 27, 1973.

      James D. Harris, Jr., Montgomery, Ala. (court-appointed), for Blake.
    Joe F. Lassiter, Greenville, S. C. .(Court-appointed), for Swartz.
    Maurice J. Walsh, Carl M. Walsh, Chicago, 111., for Maggio.
    Ira DeMent, U. S. Atty., D. Broward Segrest, Kenneth Vines, Asst. U. S. Attys., Montgomery, Ala., for plaintiff-appellee.
    Before BROWN, Chief Judge and RONEY and GEE, Circuit Judges.
   BROWN, Chief Judge:

Will the real United States Merchant Marine please sail forward.

Appellants have been convicted on seven counts of mail fraud (18 U.S.C.A. § 1341) and one count of conspiracy (18 U.S.C.A. § 371) in the operation of an alleged non-profit organization called the United States Merchant Marine (USMM). Lest we be misled, as the trial court and jury found USMM’s subscribers to have been, the USMM here has no relation to the real United States Merchant Marine. While we accept the jury’s finding that the scheme was fraudulent, and conclude the evidence if credited was sufficient to implicate them, the appellants Joseph J. Maggio and William E. Blake were denied a fair trial by the improper admission into evidence of certain telephone business records. Furthermore, we view the evidence as insufficient to support a conviction of appellant James F. Swartz. All three convictions are reversed and we remand for a new trial of Maggio and Blake.

The USMM was the realization of a long-awaited dream of Woodrow Wilson, Jr., a director of the corporation with the corporate endowed personal title of Commandant. Wilson was not present at the trial since as a fugitive he was making an extended stay in Mexico. The purpose of the USMM was to provide a national computerized registration headquarters in Washington, D. C. for boatowners across the country to facilitate the location of stolen boats and motors.

The corporation conducted mass mailings to boatowners, notifying them that the USMM Office of Marine Registry was presently accepting applications for small craft, boats and motors. The fees were $5.00 for both a boat and motor or $3.00 separately. The cover letter and application, emblazoned with a convincing ensign very similar to that of the United States Coast Guard, listed its Washington, D. C. office as the “Headquarters Building.” To top off its nautical flavor the transmittal letter was signed by William E. Blake, with the seagoing title of Chief of Operations. The application form bore only one possible indication that the USMM was not a governmental agency. A statement at the bottom of the application form, in small type, stated that “This form does not exempt applicant from Federal, State or Local Regulations.” Testimony was elicited from witnesses who had received applications, that they had returned them under the impression that it was a govermentally related agency and that registration was mandatory.

In viewing the evidence most favorable to the Government, we discern ample grounds on which the jury could have found the existence of a scheme to fraudulently induce registration. The adoption of the title United States Merchant Marine, use of nautical titles for the officers, 56placement of an ensign on the letterhead, and a Washington, D. C. address as “Headquarters” are all indications that the enterprise was established with the purpose of misleading people by instilling the belief that the USMM was a governmental agency with mandatory registration. The only question left to be answered is whether Mag-gio, Blake, and Swartz were properly shown to have been knowing and willing participants in the USMM scheme.

Maggio

Joseph Maggio was an employee of National Systems and Service, Inc., of Rockford, Illinois, which contracted with USMM to perform the mass mailings.. However, additional evidence was presented which indicated that Maggio was more closely associated with the activities of USMM. He was listed by Commandant Woodrow Wilson as a reference in renting the USMM headquarters, he acquired a bulk mailing permit in the name of USMM, he contacted the International Marine Boating Industry in Chicago claiming he represented the United States Coast Guard, he was seen at the “Headquarters” in Washington, and telephone records were produced at trial showing an extensive number of calls made between Maggio’s home in Rockford and the USMM “Headquarters.” This is the rub and nearly everything wrong that could have gone wrong in the proffer and receipt of the telephone records into evidence took place.

Because it is pertinent to the error in admission of evidence the other side of Maggio’s picture revealed a classic case for jury resolution. On his theory, he was the wholly innocent independent contractor who was merely performing the common service indigenous to today’s mass mailings of unsolicited pieces sometimes referred to as junk.

The records belonged to the Chesapeake & Potomac Telephone Company which services the Washington, D. C. area. The records consisted of numerous pages of printouts which listed calls made to and from the headquarters number in Washington and Maggio’s Illinois home phone. In response to a subpoena the C&P records were produced at trial by John W. Davis, Manager of the South Central Bell office in Montgomery, Alabama, site .of the trial and 800 miles from the place where the records were kept. Davis testified that he had obtained the records from his Security Manager, Howard H. Rice, who testified subsequently that he had received the records through the mails from the C&P Telephone Company’s office in Washington, D. C.

While Davis stated that the records were similar to those kept by South Central Bell, there was no one present at the trial to explain the system under which the records were made, point out any possible errors, or allow the defense the opportunity to cross-examine. What was allowed at this trial was the admission of business records under the sponsorship of an employee of a subsidiary of a large corporation who had no knowledge as to the record’s preparation. In view of the critical significance of all evidence bearing upon the extent of Maggio’s activities in connection with the operation of USMM as well as the impressive nature and bulk of these records, we find that the Court’s procedure for allowing the records into evidence as failing to comply with the proper rules for authentication of business records.

Liberal as we are to the fullest use of 28 U.S.C.A. § 1732, there are two prerequisites both of which are to be demonstrated to permit admission of business records. First, the Federal Business Records Act states that the offeror must establish that the records were kept in the regular course of business. Louisville & Nashville Railroad Co. v. Knox Homes Corp., 5 Cir., 1965, 343 F.2d 887; United States v. Barson, 5 Cir., 1970, 434 F.2d 127, 128. Secondly, testimony must be given by a custodian adequately authenticating the record’s accuracy and explaining the efforts employed to ensure this accuracy. United States v. Dawson, 2 Cir., 1968, 400 F.2d 194, 198-199, cert. denied, 1969, 393 U.S. 1023, 89 S.Ct. 632, 21 L. Ed.2d 567; Bridger v. Union Railway Co., 6 Cir., 1966, 355 F.2d 382, 391-392.

It is the circumstances under which the records are recorded, kept, maintained and used that gives the reliability essential to the law’s conclusion that without any independent recollections by those who made the succession of entries they are reliable, precisely because the business relies on them for important business judgments. This principle of business acceptance was recognized by our Court in Missouri Pacific Railroad Co. v. Austin, 5 Cir., 1961, 292 F.2d 415, when we stated:

“In the approach of the Model Act trustworthiness comes from a record (1) regularly made in the course of a business, (2) if it is a part of the regular course of that business to record the event or transaction at or near the time of its occurrence. Most frequently the inquiry concerns the regularity of the making of that record in a particular business.

292 F.2d at 422.

While the trial court does have wide discretion in determining the admissibility of documents as business records, United States v. Middlebrooks, 5 Cir., 1970, 431 F.2d 299, 302, cert. denied, 400 U.S. 1009, 91 S.Ct. 569, 27 L. Ed.2d 622; McDaniel v. United States, 5 Cir., 1965, 343 F.2d 785, 788, cert. denied, 382 U.S. 826, 86 S.Ct. 59, 15 L.Ed. 2d 71, there must be minimal authentication proof to give them reliability.

Over the pointed objection of Maggio’s counsel' not a single legal or factual theory was urged to suggest the admissibility of records whose only claim to authenticity came from the marks on them and the corporate relationship between the local voucher’s employer and Chesapeake & Potomac Telephone Company. We cannot view this obvious error as harmless and therefore Maggio’s conviction cannot stand.

Blake

A review of the trial record shows that there was enough evidence on which the jury could have found that Blake was a participant in the scheme.' However, the C&P telephone records admitted at trial also contained listings of calls from the USMM headquarters to a phone in Indiana registered to appellant Blake. While Blake’s attorney did not preserve the error by objection, the impressive number of C&P telephone records, 10 from USMM to Blake and 136 to Maggio, and the nature of the crime being a conspiracy in which Maggio had so much to do, we cannot reject the possibility that the erroneous impression created by the records did not affect Blake. Therefore, he must be afforded the benefit of a new trial.

Swartz

We find the evidence to be insufficient to justify the conviction of appellant Swartz in the perpetration of the scheme. While the name James Swartz appears on the Articles of Incorporation for USMM, there is only dubious evidence identifying the James Swartz on trial as the same James Swartz whose name appears on the incorporation document. The weakness of the Government’s ease is revealed by the fact that the Government handwriting expert could not even make a comparison of signatures since the Government electrostatic copy of the Articles was of such a poor quality. Only one Government witness identified the appellant at trial and that was John Toner, an employee of the National Bureau of Lathing and Plastering which officed in the same building as USMM. Toner stated that he had seen the appellant in the building where the USMM headquarters were located — but never in the USMM offices. At most all of the Government’s ease suggests is that Swartz rented some office furniture and hired a secretary — who could not identify the appellant at the trial as the man who had hired her.

The most convincing evidence that the appellant was connected with USMM was a record of 11 telephone calls between May and August of 1972. One call from the USMM headquarters went to the appellant’s home and 10 calls were made to or from his place of business, Metro Cable Corporation. While these calls are sufficient to identify the appellant as USMM’s Swartz, there was no other proof that the appellant was a participant in the conspiracy of mail fraud. No evidence was produced which proved that Swartz had any knowledge of the solicitation letter sent out by USMM. Even viewing the facts most favorable to the Government, the case was insufficient to justify a conviction of the appellant James Swartz.

Since Swartz did not file a motion for new trial, we reverse with directions to dismiss the indictment as to him. United States v. Musquiz, 5 Cir., 1971, 445 F.2d 963; United States v. Restano, 5 Cir., 1971, 449 F.2d 485.

Reversed with directions in part; reversed and remanded in part.

      . The term “United States Merchant Marine” is one which broadly covers the field of American Flag merchant vessels, their operation, regulation, documentation, transfer and availability for service in times of national emergency. Its role is epitomized at the top mast by the United States Merchant Marine Academy at Kings Point, New York, 46 U.S.C.A. § 1126 et seq., and the award of medals, 46 U.S.C.A. § 249. Various statutory provisions relating to the United States Merchant Marine include : (1) 46 U.S.C.A. § 1101 Merchant Marine Act, 1936
      Declaration of policy states: “It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine.”

        (2) 46 U.S.C.A. § 1126 et seq.
      United States Merchant Marine Academy to be maintained by the Secretary of Commerce at Kings Point, New York.
      (3) 46 U.S.C.A. § 249
      Merchant Marine distinguished service and meritorious service medals.
      (4) 3 U.S.C.A. § 301 The President
      E. O. No. 10661 — Empowers the Secretary of Commerce to designate those persons who may be permitted to receive instruction at the United States Merchant Marine Academy.
      (5) 14 U.S.C.A. § 211 Appointment of Officers
      The President may appoint permanent commissioned officers of the Regular Coast Guard from among licensed officers of the USMM.
      (6) 50 App.U.S.C.A. § 456
      Deferments and exemptions from training and service for midshipmen of the USMM Reserve.
      (7) 44 U.S.C.A. § 1907 Established library of USMM Academy as designated depository of Government publications along with U. S. Military Academy, U. S. Naval Academy, U. S. Air Force Academy, and the U. S. Coast Guard Academy.

      . Wilson was subsequently tried and convicted and this Court affirmed on appeal. United States v. Wilson, 5 Cir., 1973, 487 F.2d 510.

      . Indeed it was located in an office building known as “Headquarters Building.”

      . In addition to bestowing the title of Commandant on Woodrow Wilson, the other officers, equivalents of corporate vice-presidents, held the various titles of “Vice-Commandant, USMM, Supplies and Accounts “Vice-Commandant, USMM, Operations “Chief of Operations, USMMand “Chief Supplies and Accounts, USMM.”

      . The incriminating entries in the telephone records were summarized in a letter from Government counsel in response to the request made from the bench. He inspected the exhibits after the trial with Mr. Blake’s attorney, James D. Harris, Jr. The exhibits not only contained records from the Chesapeake & Potomac Telephone Company but also records from the Illinois Bell Telephone Company and the Indiana Bell Telephone Company which were properly authenticated at the trial.
      “Briefly summarized the telephone records reveal the following: Government Exhibit 52 contains the telephone records of the Chesapeake and Potomac Telephone Company for the listing of the United States Merchant Marine (Area Code 202 785-4587) beginning April 24, 1972, through November 21, 1972. The telephone records have been marked in pencil to indicate calls to Joe Maggio, (M) ; calls to William Blake, (B) ; calls to Metro Cable Company, (MC) and calls to James Swartz, (S). According to my tabulations the records reflect during the time period mentioned above 136 telephone calls from the United States Merchant Marine to appellant Maggio, 10 telephone calls to appellant Blake, 6 telephone calls to Metro Cable and 1 telephone call to appellant Swartz.”
      “Government Exhibit 49 is the records of the Illinois Bell Telephone Company for telephone No. 815 398-8726 with appellant Joe Maggio shown as the subscriber. These records show the telephone calls made from Mr. Maggio’s number beginning May 24, 1972, through October 10, 1972, and show a total of 55 telephone calls to the United States Merchant Marine (shown in pencil on the records as USMM) and 6 telephone calls to the number subscribed to by William Blake (B).”
      “Government Exhibit 50 is records of the Illinois Bell Telephone Company pertaining to No. 633-5500 which is shown as the number of the Rockford Community TV, Inc. and also Metro Cable Company. Exhibit 50 covers the time period beginning June 13, 1972, through August 8, 1972, ■ and show a total of 4 telephone calls to the United States Merchant Marine (USMM).”
      “Government Exhibit 54 is the records of the Indiana Bell Telephone Company pertaining to 879-5038 with William E. Blake as the subscriber and covering a period beginning April 28, 1972, and ending October 21, 1972. These records reflect 3 telephone calls to the United States Merchant Marine (USMM) and 3 telephone calls to appellant Maggio (M).”

      . 28 U.S.C.A. § 1732
      (a) In any court of the United States and in any court established by Act of Congress, any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence, or event, shall be admissible as evidence of such act, transaction, occurrence, or event, if made in regular course of any business, and if it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence, or event or within a reasonable time thereafter.

      . As evidence of Blake’s connection to the conspiracy, the Government raised the facts that Blake was shown as a director of USMM in the Articles of Incorporation and held the title of Director of Operations. He signed a request to open a bank account with Riggs Bank in Washington, D. C., for the USMM and personally signed a check to the USMM. His name was affixed to the letter of solicitation sent out for registrations. There were telephone records of calls made between April and September of 1972 from Blake’s phone in Indiana to the USMM headquarters. Finally, the mysterious Woodrow Wilson informed the rental agent that the headquarters would be used by William E. Blake of 2921 Jackson Street, Michigan City, Indiana.

      . As summarized in note 5, supra, there were other calls to and from Blake’s residence besides the 10 calls in the records óf C&P. A total of 6 calls were in the records of Illinois Bell Telephone Company as having been made by Maggio to a number subscribed to by Blake. Additionally, the records of the Indiana Bell Telephone Company showed 3 calls to USMM by Blake and 3 calls to Mag-gio by Blake. The latter two records are not challenged on appeal since they were properly authenticated at trial by representatives from Illinois and Indiana.


source: Caselaw Access Project

author: JOSEPH S. LORD, III, District Judge.

license: Public Domain

text:
    Lois SILVERLIGHT and Irwin Silverlight v. James HUGGINS and Government of the Virgin Islands. Appeal of GOVERNMENT OF the VIRGIN ISLANDS. Brendan CONROY v. GOVERNMENT OF the VIRGIN ISLANDS, Appellant in No. 73-1009, et al. Denise I. GARCIA, etc., et al. v. MANNASSAH BUS LINES, INC., et al. v. GOVERNMENT OF the VIRGIN ISLANDS, Appellant in No. 73-1010.
    (D. C. Civil Action No. 39-1972)
    (D. C. Civil Action No. 21-1972)
    (D. C. Civil Action No. 262-1971)
    Nos. 73-1008 to 73-1010.
    United States Court of Appeals, Third Circuit.
    Argued April 10, 1973.
    Decided Nov. 27, 1973.

      Ronald H. Tonkin, Atty. Gen. of the Virgin Islands, Henry L. Feuerzeig, Asst. Atty. Gen. of the Virgin Islands, St. Thomas, V. I., for appellant.
    Norman Schulaner, Nichols & Silver-light, Christiansted, St. Croix, V. I., for appellees Lois Silverlight and Irwin Sil-verlight in Appeal No. 73-1008, and William H. Evans, James A. Evans, Jr. and Elliott Layfield, d/b/a Jebco Services, and Reginald Whyte in Appeal No. 73-1010.
    Alexander A. Farrelly, Birch, De Jongh & Farrelly, St. Thomas, V. I., for appellees Eugene H. Smith, d/b/a Smitty’s Mechanical and Rental, in Appeal No. 73-1009, and Denise I. Garcia, et al. in Appeal No. 73-1010.
    John E. Stout, Grunert, Stout, Hymes & Mayer, St. Thomas, V. I., for appellee Brendan Conroy in Appeal No. 73-1009.
    Before ADAMS, GIBBONS, Circuit Judges, and LORD, District Judge.
   OPINION OF THE COURT

JOSEPH S. LORD, III, District Judge.

These are interlocutory appeals from orders of the District Court of the Virgin Islands of the United States, 347 F.Supp. 895, denying the motions of the Government of the Virgin Islands (“Government”) to dismiss the claims asserted against it in three actions under the 1971 Virgin Islands Tort Claims Act, 33 V.I.C. §§ 3408-3413. The issues before us involve the application of the Tort Claims Act to these actions where the incidents giving rise to claims against the Government arose before November 15, 1971, the effective date of the Act.

Lois Silverlight was allegedly involved in an accident with a Government-owned vehicle on August 27, 1970. Brendan Conroy’s claim grew out of an alleged accident on October 20, 1971. Denise Garcia claims to have been injured while alighting from a bus on October 24, 1969, for which she filed suit against various defendants (not including the Government) on June 22, 1971. Several of the Garcia defendants have asserted third-party plaintiff actions against the Government for contribution or indemnification. The Silverlight and Conroy actions and the third-party complaints in Garcia under the 1971 Tort Claims Act were all filed after the enactment date of November 15, 1971.

The 1971 Tort Claims Act is a general waiver of sovereign immunity and assumption of liability for torts caused by employees of the Government. The district court concluded that the 1971 Act, which is silent as to retrospective or prospective application, had been enacted in response to the legal and constitutional infirmity of the prior practice whereby the sovereign immunity of the Virgin Islands was waived on an individual basis pursuant to special legislation. That special legislation procedure was struck down as a denial of equal protection and a violation of 48 U.S.C. § 1471 in Thomas v. Government of Virgin Islands, 333 F.Supp. 961 (D.V.I.1971), on September 2, 1971, some two and a half months before the enactment of the new Tort Claims Act. The district court concluded that the new Act was designed to cure the failure of the pre-existing scheme to compensate tort victims and was therefore not subject to the presumption against retroactivity. Rather, the court said, curative legislation is often presumed to operate retroactively in the absence of contrary intent. The court concluded that the curative objectives of the legislature would be implemented by applying the 1971 Tort Claims Act retroactively. We hold that the conclusions of the district court as to retroactivity are sound, considering the history of the 1971 Tort Claims Act.

In May, 1971, before the decision in Thomas, supra, Governor Melvin H. Evans wrote a letter to the Legislature of the Virgin Islands expressing his doubts as to the continued legality of the existing procedure of passing special acts. One month later, Governor Evans submitted to the legislature Bill #5117 which was to become the 1971 Tort Claims Act. His accompanying message voiced his desire to eliminate the then current but questionable practice of special bills and to waive sovereign immunity in all tort liability actions against the Government. While the bill was pending before the legislature, on September 2, 1971, the district court struck down the special act procedure, as Governor Evans had feared. Thomas, supra. Shortly thereafter, on October 6, 1971, the bill was presented to the legislature by Peter O'Dea of the Office of the Attorney General, with an explanation of why the decision in Thomas necessitated its enactment. The Act was passed and signed into law by the Governor on November 15, 1971.

Curative legislation is legislation designed to rectify a governmental scheme which has failed in purpose, and is generally intended to operate on past transactions. Fullilove v. U. S. Casualty Co. of New York, 129 So.2d 816, 824 (La.App.1961) (also concerning retroac-tivity of a tort claims statute); See also Frazier v. Goddard, 63 F.Supp. 696, 697 (E.D.Okl.1945). The Virgin Islands scheme of selectively compensating tort victims failed in its purpose when it was found illegal and unconstitutional in Thomas. The legal and constitutional deficiencies could be eradicated in one of two ways, either by doing nothing, thereby leaving all tort victims with no redress against the Government, or by waiving immunity in general for all persons with claims, which the legislature did on November 15, 1971. It is obvious to us that the Government was sincerely concerned that its damaged citizens not remain uncompensated. This concern is evident from the reasons given for the introduction of the bill and the speed with which it was enacted after the Thomas decision. There is no apparent motive to exclude from the sweep of this concern persons whose cause of action arose before the enactment of the 1971 Act but who had not yet filed suit at the time Thomas was decided. Therefore, we conclude that the statute was curative in nature and intended to apply to causes of action accruing before the date of its enactment.

The Government raises the additional argument that a waiver of sovereign.immunity is not to be implied. But that is not the question here; the Government has now explicitly waived its immunity to tort claims. The application of that general waiver to a limited number of additional plaintiffs is not the sort of interference with the sovereign which must be cautiously avoided. As Justice Cardozo said in Anderson v. John L. Hayes Construction Co., 243 N. Y. 140, 147, 153 N.E. 28, 29-30 (1926), cited with approval by the Supreme Court in United States v. Yellow Cab Company, 340 U.S. 543, 554, 71 S.Ct. 399, 406, 95 L.Ed. 523 (1951): “The exemption of the sovereign from suit involves hardship enough, where consent has been withheld. We are not to add to its rigor by refinement of construction where consent has been announced.” There is no reason why a statute which waives sovereign immunity in general cannot be interpreted to waive immunity as to previously accrued causes of action. We hold that this statute does accomplish such waiver.

While holding the statute retroactive in application, the district court failed to consider the extent of retroactivity. However, implicit in the district court’s orders denying the motions to dismiss, including that of the third-party defendants, is a holding that the Act has unrestricted retroactive application. In order to determine whether those interlocutory orders should be affirmed or reversed, we must decide how far back in time the Act reaches. With little guidance on this question either from the court below, or from counsel on either side, we look to the provisions for the time of filing claims of the 1971 Tort Claims Act itself. The same bases for imposing a reasonable statute of limitations on actions arising after the date of the Act apply to restrict its retroactive effect to a similarly reasonable period of time. Furthermore, appellees apparently concede these provisions as the applicable limitation to their actions. Appel-lees’ brief pp. 32-33.

Section 3409 of 33 V.I.C. provides that an action to recover damages for injury to property or for personal injury against the Government shall be filed within ninety days of the accrual of such claim. In the alternative, a notice of intention to file a claim shall be filed within ninety days, and a claim filed within two years of accrual of such claim. However, even if no notice or claim has been filed within ninety days, the court in its discretion may allow suit to be brought within two years if (1) there is a reasonable excuse for failure to file sooner, (2) the Government or the appropriate subdivision had actual knowledge of the facts constituting the claim within ninety days after the accrual of such claim, and (3) the Government has not been substantially prejudiced by the failure to give notice within ninety days.

Plaintiff Silverlight filed suit seventeen months after her alleged accident. Plaintiff Conroy filed suit three months and four days after his claim arose. As to these two claimants we remand to the district court to determine whether their actions should be allowed to proceed based on the criteria outlined above.

As to plaintiff Garcia, her claim arose on October 24, 1969, over two years before the enactment of the Tort Claims statute. Defendants and third-party plaintiffs, William H. Evans, James A. Evans, Jr., Elliott Layfield, d/b/a Jebco Services and Reginald Whyte seek to hold the Government liable for contribution and indemnification, regardless of the validity of plaintiff Garcia’s claim against the Government. They cite Keleket X-Ray Corp. v. United States, 107 U.S.App.D.C. 138, 275 F.2d 167, 168-169 (1960) and Kantlehner v. United States, 279 F.Supp. 122, 128 (E.D.N.Y.1967) for the proposition that a suit against the sovereign for contribution or indemnification may be maintained even after the statute of limitations has barred an action by the plaintiff against the government, and that such action for contribution or indemnification does not accrue until the third-party plaintiff is held liable to the plaintiff. However, these cases involved situations in which the plaintiff at one time had a valid cause of action against the sovereign, which was barred only by plaintiff’s failure to file suit in time. The court in Keleket specifically distinguished cases in which the sovereign could not have been sued by plaintiff at any time. Similarly, in Newport Air Park, Inc. v. United States, 419 F.2d 342, 347 (C.A. 1, 1969), the court made it clear that “ * * * contribution cannot be had from the government when the government was under no tort liability to the injured party.”

Here we are not concerned with a claim against the sovereign which once existed, but became time-barred. Rather, because we hold the waiver of immunity retroactive only to causes of action which accrued within two years before November 15, 1971, Denise Garcia never had a valid cause of action against the Government. If plaintiff Garcia could not have sued the Government directly, defendants as third-party plaintiffs are barred from maintaining an action against the Government for contribution or indemnification.

The third-party claims of William H. Evans, James A. Evans, Jr., Elliott Lay-field, d/b/a Jebco Services, and Reginald Whyte will be remanded to the district court with directions to dismiss. The claims of Lois and Irwin Silverlight and Brendan Conroy will be remanded for consideration in light of this opinion.

Reversed in part and remanded for further proceedings in light of this opinion.

      . These doubts were based primarily on the Attorney General’s interpretation of Smith v. Government of Virgin Islands, 375 F.2d 714 (C.A. 3, 1967), in which the court held that the proscription against special acts in 48 U.S.C. § 1471 applied to the Virgin Islands.

      . (Comments by Peter O’Dea, Office of the Attorney General, after reading of Bill No. 5117.)
      “ * * * Senator Maduro and members of the Legislature, this bill was prepared by the Office of the Attorney General some time before Judge Christian entered a decision in a case, about two months ago, where he held specifically that the practice of the Legislature in passing special bills allowing individuals named therein to bring actions against the Government of the Virgin Islands in cases involving torts, were no longer, in his opinion, valid. The ease that he ruled on, however, he made an exception so that that particular case can go forward, and he would not apply his ruling to that case. Now, even before he entered this decision, about two months ago, as I said, our office had started working on such a bill, because in an earlier case cited some two years ago by the Third Circuit [sic]. The Third Circuit also hinted at the fact they do not think that this type of special legislation was valid. However, as I said, the Third Circuit only hinted at the point. Judge Christian nailed it down without any hesitation. So that we are now faced with a situation that all that — in the future the court will strike down special bills. And for that reason basically this bill has been prepared. The bill itself is patterned after the Federal Tort Claims Law.”
      (Cited in Appellees’ brief, pp. 7-8.)

      . Judge Christian made the Thomas decision prospective only:
      “To require these plaintiffs, who relying on the customary practice, obtained the consent of the Legislature to now wait upon the enactment of a valid general consent statute would be to cause them unnecessary hardship.” [Emphasis added.]
      333 F.Supp. at 965.
      Judge Christian was powerless to cure the problems of unequal treatment by special laws except by forbidding any such acts; he could not effectuate a general waiver. Only the legislature could, and in response to hi? apparent entreatment, they did.

      . We leave to the district court to determine whether an application or petition for a private bill within ninety days, even though denied, should be considered as a substitute for a notice of intent to file suit within the terms of the Tort Claims statute.


author: HILL, Circuit Judge.

text:
    Ferrin C. HARMAN and Henry Clay, Plaintiffs-Appellants, v. DIVERSIFIED MEDICAL INVESTMENTS CORPORATION, a Colorado corporation, et al., Defendants-Appellees. DIVERSIFIED MEDICAL INVESTMENTS CORPORATION, a Colorado corporation, Third Party Plaintiff, v. David L. DOOLEY, Third Party Defendant.
    No. 73-1299.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Sept. 14, 1973.
    Decided Nov. 27, 1973.

      John B. Ogden, Oklahoma City, Okl., for plaintiffs-appellants.
    Robert S. Baker, Oklahoma City, Okl. (Dan A. Rogers, Tulsa, Okl., on brief for John E. Schroyer; Robert J. Emery, Oklahoma City, Okl., on brief for Chromalloy, Friedman, Zlotnick and Mullins), for defendants-appellees.
    Before PHILLIPS, HILL and DOYLE, Circuit Judges.
   HILL, Circuit Judge.

This appeal results from the dismissal of appellants’ complaint and the granting of summary judgment for the defendants on their cross-claim in the United States District Court for the Western District of Oklahoma. After reviewing the submissions included in the record of this diversity cáse, we conclude that the many factual issues present in this case render the entry of summary judgment inappropriate here.

The record reveals some uncontrovert-ed facts. Appellants Harman and Clay, as the controlling stockholders and managing officers of Perpetual Royalty Corporation, entered into an agreement with Diversified Medical Investments Corporation (DMIC) to transfer all of the outstanding stocks and assets of that company to DMIC in exchange for 240,000 shares of DMIC stock. After the completion of that exchange, DMIC halted trading in these shares by instructing its transfer agent to withhold action on any requests for changes of ownership involving the 240,000 shares in question. As a result, Harman and Clay filed the instant complaint alleging that DMIC and others had represented that the stock they were to receive under this agreement would be “free-trading” fully marketable stock, and that it would enjoy a specific range of market values. Defendants cross-claimed that as a result of various misrepresentations by the appellants, there had been no meeting of the minds in regard to this contract and requested rescission.

As we have stated as recently as in Ando v. Great Western Sugar Co., 475 F.2d 531 (10th Cir. 1973),.no margin exists for the disposition of material factual issues by the use of summary judgment; that procedure cannot serve as a substitute for the trial of cases and does not require the parties to dispose of litigation by the use of affidavits. In reviewing such action by the district court, the pleadings and other documentary evidence are to be construed liberally and in favor of the party opposing such motions. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed. 2d 176 (1962). If any issue as to a material fact dispositive of right or duty remains, the case is not ripe for disposition by summary judgment and the parties are entitled to a trial. Fischer Constr. Co. v. Fireman’s Fund Ins. Co., 420 F.2d 271 (10th Cir. 1969).

Though findings of fact would appear to be unnecessary in a case that contains no material questions of fact, the district court specifically found that DMIC made no representations of fact concerning the stock to appellants and that no meeting of the minds ever existed in regard to this contract. Both the dismissal of the complaint and the granting of summary judgment must be reversed if these conclusions are controverted by the evidence.

First, the agreement in question was negotiated in large measure by one David Dooley, an officer and director of DMIC. However, the evidence indicates Dooley’s true role has yet to be ascertained. He had at least furnished estimates of the value of Perpetual’s holdings to other potential buyers previous to these negotiations, and there is also evidence that he was paid a 40,000 share commission by Harman and Clay to complete the sale to DMIC. Dooley made representations to both the appellants and DMIC during the negotiations, and a factual issue arises as to whose agent he was during such time.

Additionally Clay, in his deposition, testified that Farr, the president of DMIC, and Peterson, an attorney listed as DMIC’s securities specialist in a DMIC brochure, both assured him that the stock he was to receive would be fully marketable. Harman, Clay and Dooley indicated that it was understood by both parties that appellants would have to sell portions of this stock to pay the debts of Perpetual so as to transfer the company free of obligations as required by the agreement, although that requirement did not appear in the written agreement in June, 1970. These facts are totally inconsistent with a finding that the agreement included no statements concerning the transferability of this stock.

Further it raises important doubts as to the exact terms of this alleged contract. Originally the parties signed a reorganization agreement in June, 1970. This agreement included a statement that DMIC would assume all the obligations of Perpetual. It also included covenants by Harman and Clay that Perpetual owned 25,000 acres of royalties, had a net worth of $250,000, and that they had not agreed to pay any finder’s fee in regard to this sale. Harman and Clay indicated that this agreement was later found to be insufficient, and the parties effectuated a statutory merger on much the same basis in December, 1970. Testimony from Harman, Clay and Dooley indicates that it was made clear to DMIC that the true holdings of Perpetual had not been legally determined and that any estimate of those holdings was not guaranteed by Harman or Clay. Thus facts are asserted that would establish a possible later understanding that formed the actual agreement between the parties.

These as well as many other assertions concerning the agreement are evident in the record. Further, the depositions most critical to these facts were taken by defendant Chromalloy American Corporation and not by DMIC. Chromalloy’s purpose in taking such testimony was not to discover the true agreement between the parties but only to discover Chromalloy’s alleged role in those transactions. As such, the questioning was not calculated to fully present all the assertions of the plaintiffs in regard to representations by other defendants. On such a limited record that nevertheless contained serious disputes as to factual matters, the district court was not justified in taking this drastic summary action.

Therefore the orders of dismissal and summary judgment are hereby vacated, and the case is remanded to the district court for further proceedings consistent herewith.


author: LAY, Circuit Judge.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. WAL-MART STORES, INC., Respondent.
    No. 73-1246.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 16, 1973.
    Decided Dec. 4, 1973.
    William H. Bruckner, Lincoln, Neb., for respondent.
    Marjory Gofreed, Atty. N.L.R.B., Washington, D. C., for petitioner.
    Before LAY and BRIGHT, Circuit Judges, and EISELE, District Judge.

       G. Thomas Eisele, District Judge for the Eastern District of Arkansas, sitting by designation.

   LAY, Circuit Judge.

The sole issue presented is whether there exists substantial evidence on the record as a whole to support the Board’s finding that Wal-Mart Stores, Inc., violated §§ 8(a)(1) and (3) of the National Labor Relations Act by discharging an employee, Connie Kreyling, in order to discourage her attempts at unionization of the store.

Wal-Mart operates a chain of discount stores in Arkansas and Mississippi. Corporate headquarters are in Benton-ville, Arkansas. In January, 1971, shortly before the opening of the WalMart store in Mexico, Missouri, Connie Kreyling was hired as the office cashier for that store. Her principal duty was •to reconcile the store’s cash flow. Each day she would count the cash receipts from the previous day, balance the cash registers, fill out bank deposit slips and prepare a daily cash report. She generally finished with the cash report by 2 p. m. The rest of her day was spent on other office work, for example, processing and preparing invoices, filing, helping with the payroll, and preparing monthly charge account statements. She also assisted Judy Overstreet, who was in charge of the service desk, whenever necessary. On Saturdays, after first preparing the daily cash report for Friday, she prepared a weekly cash summary, which was then mailed to the home office. Frequently, Kreyling had to work overtime (an average of 2x/% hours per week) to finish her duties.

During the period of her employment, Kreyling received three small wage increases. On January 26, 1972, she and store manager Robert Haines flew to company headquarters for a training session on new office equipment. On the return trip, Haines told her that she was doing an excellent job and that “he was lucky to have found a cashier like [her].” Less than two weeks later, on Monday, February 7, 1972, she was discharged.

In late 1971, Kreyling met with a union organizer to discuss unionizing the Wal-Mart store in Mexico. She subsequently asked other Mexico employees how they felt about a union. The general counsel concedes that there is no evidence indicating that management knew of these conversations. In January, 1972, Kreyling signed a union authorization card. There is no evidence that the company knew of this.

The examiner found that on Saturday, February 5, manager Haines was unusually “rough” on Judy Overstreet. At about 4 p. m. Overstreet told assistant manager Baker (but not Haines) that she was quitting at the end of the day. On that same day Kreyling completed the weekly cash report at approximately 5 p. m., at which time Haines took it to the post office. When he returned, both Overstreet and Kreyling had left work.

Over the weekend, Kreyling told her husband of her unhappiness with Haines’ treatment of Overstreet. On Sunday afternoon, with his wife’s approval, Mr. Kreyling called five other Mexico employees to tell them of the Ov-erstreet episode. He asked them whether they would be willing to sign union authorization cards. Some of the calls were quite lengthy. There is no direct evidence indicating that management knew of these phone calls.

At about 7:30 a. m. on Monday, February 7, Haines called Overstreet to ask her to return to work (Haines testified that he did. not know until he called her that she had decided to quit; he testified that he called simply to ask her to come in early). Overstreet reluctantly told Haines she would be in; immediately thereafter, however, she called Krey-ling to say that she was still quitting and asked her to so inform Haines.

Kreyling reported for work at 8 a. m. Monday and was immediately discharged by Haines. He told her that her production had not increased in the last six months and her attitude was poor. Her termination notice was dated Saturday, February 5. Haines told Kreyling that he would give her a good reference wherever she went.

Kreyling had never been specifically informed that her performance was unsatisfactory. She was never given a written reprimand. Four “notices of verbal reprimand” were placed in her file by Haines but she was never told they were there. Kreyling testified she never understood she was being reprimanded.

Haines testified that he had been looking for a replacement for Kreyling for quite some time. He testified to receiving criticism from the home office chiefly because (a) his weekly cash summaries were continually submitted late and (b) his office payroll was running higher than the norm for other Wal-Mart stores. Haines attributed both of these problems to Kreyling’s slow production. He said he decided to fire Kreyling on Saturday, February 5, while on his way to the post office to ma* the weekly cash summary, which was again late. When he returned to the store, however, Kreyling had left. He said he wrote her termination notice at that time and planned to give it to her Monday morning.

Kreyling was replaced by Wanda Durham, who had been hired on January 11, 1972, and had received no training as cashier. Haines testified that he hired her with the intention of using her to replace Kreyling.

Notwithstanding the lack of direct evidence establishing management’s knowledge of Kreyling’s union activities, the administrative law judge found that “Haines learned through some undisclosed source that Mr. Kreyling had called store employees on Sunday * * * and that [Haines] determined to disrupt any possible interest in the Union by immediately discharging the employee responsible, Connie Krey-ling.”

There exists substantial evidence on the record as a whole to sustain the administrative law judge’s finding that the respondent company’s avowed reasons for discharging Kreyling were pretextual. With this fact established, we find that it was reasonable for the trier of fact to infer that the company had discharged Kreyling for engaging in union activity. Although there exists no direct evidence of the company’s knowledge, it has long been held that the element of knowledge may be proved by circumstantial evidence from which a reasonable inference may be drawn. See, e. g., NLRB v. Long Island Airport Limousine Service Corp., 468 F.2d 292 (2d Cir. 1972); Santa Fe Drilling Co. v. NLRB, 416 F.2d 725 (9th Cir. 1969); NLRB v. Lawson Printers, Inc., 408 F.2d 1004 (6th Cir. 1969). Here the inference is not based purely on speculation. There are several evidential factors the administrative law judge weighed from which an inference of knowledge of union activity can be drawn: (1) Kreyling’s long satisfactory work record, (2) the periodic raises given to her, (3) Haines’ praise of Krey-ling that she was doing “an excellent job” some two weeks before her discharge, (4) the abrupt discharge without prior warning, (5) proof that Krey-ling had worked several hours overtime without criticism from Haines, (6) Haines’ admission that the quality of her work was good and that “she always got the work out,” (7) the timing of the discharge, immediately following Krey-ling’s and her husband’s efforts to interest others in organizing a union, (8) proof of anti-union animus as reflected in statements made shortly after Krey-ling’s discharge, (9) the pretextual statements by Haines as to why Krey-ling was discharged, and (10) the store’s location in a “real small town” and a total of only 34 employees within the store.

Where different inferences might be drawn from the evidence, this court cannot, under the standard of review required by the Supreme Court, reach a different result simply because we might disagree with the findings of the Board. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). In determining whether there exists substantial evidence on the record as a whole we must view the inherent strengths and weaknesses of the inferences drawn by the Board. Here we think the inference of company motivation and knowledge is a strong one.

Each case must, of course, stand on its own facts. In NLRB v. Century Broadcasting Corp., 419 F.2d 771 (8th Cir. 1969) (Lay, J., dissenting), the majority ruled that the trial examiner’s inference of knowledge, drawn from the fact that the company failed to produce any witnesses, was impermissible. In the present case, however, the finding is made from the evidence surrounding the pretextual discharge.

In Amyx Industries, Inc. v. NLRB, 457 F.2d 904 (8th Cir. 1972), this court refused to enforce the Board's finding of a discriminatory discharge for the lack of proof of knowledge. We observed :

,[M]ere coincidence in time between the employee’s union activities and his discharge does not raise an inference of knowledge on the part of the employer without some direct or persuasive circumstantial evidence of knowledge. Id. at 906.

However, there the evidence did not support a finding of pretextual discharge. In Amyx there was substantial evidence that the employee’s work had not been satisfactory. Thus, in Amyx there was no evidential premise from which to draw an inference of knowledge of union activity other than the examiner’s decision not to credit the company’s avowed reason for discharge. In the instant case, in addition to the trial judge’s refusal to credit Haines’ testimony, there exists substantial evidence as set forth earlier which demonstrates that the company’s reasons for discharge were pre-textual. This we think is the material difference.

The issue is whether knowledge of Kreyling’s union activity is a reasonable inference to be drawn from the facts surrounding an obvious pretextual discharge. The fundamental test is whether there is a rational connection between the facts proved and the fact that is to be inferred. We find there is. As the Second Circuit Court of Appeals has observed :

More important, there is no good reason why the two factual propositions —employer knowledge of general Union activity and employer anti-Union motivation in discharging a particular employee — need be proved by different types of evidence. As to each, direct evidence may not be obtainable and circumstantial evidence and “inferences of probability drawn from the totality of other facts,” * * * are perfectly proper.

NLRB v. Long Island Airport Limousine Service Corp., 468 F.2d 292, 295 (2d Cir. 1972).

We conclude on the present record that there was sufficient evidentiary support to sustain the essential elements of a discriminatory discharge under §§ 8(a)(1) and (3) of the Act. See also NLRB v. UNECO, Inc., 433 F.2d 974, 976 (8th Cir. 1970); Sterling Aluminum Co. v. NLRB, 391 F.2d 713, 717 (8th Cir. 1968).

The Board’s petition for enforcement of its order is granted.

It is so ordered.

      . Additionally, the Board found that WalMart violated § 8(a) (1) through enforcement of an overly-broad no-solicitation rule. Wal-Mart did not except to this finding and it is conceded that this issue is not now before us.

      . The administrative law judge explained his decision as follows:
      I do not believe Haines’ story that he decided on the way to the post office Saturday at 5 p. m. to discharge Kreyling because of her work performance. Nothing unusual had happened that day; there was no last straw that suddenly made her alleged unsatisfactory performance intolerable. Haines had never shown any indication that he might take such drastic action as discharge for a condition which he had tolerated without complaint for a year. All in all, I find his stated reason for discharging Kreyling so inadequate and unbelievable as to throw doubt on all his testimony.
      Having found that Haines did not decide to fire Kreyling on Saturday, it follows that he filled out her separation notice on Monday morning when he arrived at the store. His telephone call to Overstreet that morning was, I find, not to ask her to come in early but to reconsider her decision to quit, since without her, he would have no experienced office help at all. If Haines had really decided on Saturday to discharge Kreyling, it is unlikely that he would have' waited until Monday morning to ask Overstreet to come in early that day, since he could have done it anytime that weekend. I find, however, that Haines learned on Saturday evening from his assistant manager, that Overstreet had quit, and was not disturbed by her decision until he learned over the weekend that he was going to have to discharge Kreyling.
      It was only because Overstreet could not be induced to return, that Haines had to fall back on the only employee he had who might be considered at all qualified for the work of office cashier — Wanda Durham. Haines’ sudden reliance on Durham was not, I find, planned but was wholly inadvertent. She had been hired as a saleslady, had never been asked to train for an office job, and had never been told that she was being considered for office work at the store. Not even on Saturday, when according to Haines, he had decided to discharge Kreyling, did he ask Durham to transfer to the cashier’s job on Monday. I am satisfied that Haines had no intention of using Durham in the office until he unexpectedly found himself with no experienced office workers on Monday morning.
      I conclude from the foregoing findings of fact and the inferences I have drawn from them, that Haines learned on Sunday or early Monday morning that Connie Krey-ling was thinking and talking about representation of the employees by a union, and that he decided to discharge her only upon learning of her interest in a union. Since the reasons which Haines gave for her discharge seem untrue and wholy [sic] pretextual, I conclude that the real reason she was terminated was to rid the store of a union adherent.

      . After her discharge Kreyling obtained authorization cards and solicited other employees to sign them. On February 24, company representatives openly stated that they “most certainly” did not want a union in the store. On February 24, the union filed a petition with the Board for a representation election. Because of the pendency of the charges in this case, the election has not yet been held.


author: SETH, Circuit Judge.

text:
    ART NEON CO. et al., Appellees, v. The CITY AND COUNTY OF DENVER, a municipal corporation, and Anthony H. Jansen, Appellants, Gump Glass Co., Intervenor-Appellee.
    No. 73-4404.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Oct. 17, 1973.
    Decided Nov. 29, 1973.
    Rehearing Denied Jan. 17, 1974.

      Earl T. Thrasher, Denver, Colo. (Max P. Zall, and Robert M. Kelly, Denver, Colo., with him on the Brief), for appellants.
    Alan A. Armour of Hoffman, Gold-stein, Armour & Lonnquist, P. C., Denver, Colo., for appellees.
    Davis, Graham & Stubbs, Denver, Colo., and Gibson, Dunn & Crutcher, Los Angeles, ’ Cal., on the Brief for amicus curiae, Combined Communications Corp.
    Before SETH and DOYLE, Circuit Judges, and TALBOT SMITH, District Judge .

       Of the Eastern District of Michigan, sitting by designation.

   SETH, Circuit Judge.

The City and County of Denver, Colorado, and Anthony H. Jansen, the defendants, appeal from the judgment of the United States District Court, 357 F. Supp. 466 for the District of Colorado, which held that portions of the Denver Municipal Code relating to zoning, and more particularly to nonconforming signs, violate the Fifth Amendment of the United States Constitution. Enforcement of the provisions was enjoined. The action was commenced by Art Neon Co., other sign companies, and retail businesses seeking to have portions of the zoning ordinance declared invalid.

Denver is a municipal corporation organized as a “home rule” city, and defendant, Anthony H. Jansen, is the City Zoning Administrator charged with the enforcement of the zoning ordinances, of which Denver Rev.Mun.Code § 613 (1971), the “Permitted Signs” section with which we are here concerned, is a part.

Plaintiffs-appellees, Art Neon Co., Advance Neon Co., Gordon Neon Co., and Epcon, Inc. are engaged in fabricating, installing, repairing, leasing and selling neon, steel, and plastic signs and other advertising displays in Denver. Other appellees are owners or operators of businesses in Denver which lease and have had installed on their premises outdoor advertising signs from appellee sign companies and others. Two appel-lees own their own signs.

It is apparent from the foregoing that the appellees are connected in a variety of ways with outdoor advertising, and direct their attack on provisions for termination of nonconforming signs in the “Permitted Signs” section of Denver’s Zoning Ordinance, Rev.Mun.Code § 613 (1971), and particularly sections 613.5-5(4) and .5(4) (a) thereof, which provide:

“.5-4. Termination of Non-Conforming Signs.
******
“.5-5(4). By Amortization. The right to maintain a non-conforming sign shall terminate in accordance with the following schedule: •
Any sign which on the Shall be terminated date the sign became non- within the following pe-conforming would cost the nod after the sign be-followlng amount to re- came non-conforming: place:
$0 to $3,000 ............ 2 years
3.001 to 6,000 ........... 3 years
6.001 to 15,000 ......... 4 years
15.001 or more ........... 5 years
“.5-5(4) (a). The right' to maintain a flashing, blinking, fluctuating, animated or portable sign shall terminate within 30 days after such sign became non-conforming.”

It appears that the effective date of the “Permitted Signs” section of Denver’s Zoning Ordinance was March 19, 1971, and that thereafter the appellees’ outdoor advertising signs became, in varying respects, “nonconforming.” They commenced this suit asserting that the “Permitted Signs” section was in violation of various provisions of the United States Constitution, including Article I, § 10 (impairment of the obligation of contracts), Amendment V (deprivation of property without due process of law and taking of private property for public use without compensation), Amendment I (restriction on freedom of expression), and Amendment XIV, § 1 (deprivation of equal protection of the laws and of property without due process of law).

After considering whether to abstain from hearing the case, and instead to allow the courts of the state of Colorado to first pass on the claims presented, the district court decided to hear only one issue. This was:

“Whether the requirement that certain existing signs owned by plaintiffs be terminated over the periods prescribed by the ordinance is a valid exercise of the municipal police power or an unconstitutional taking of private property without compensation having been made therefor; or is an unconstitutional impairment of the obligation of certain contracts relating to the leasing of signs owned by plaintiffs.” 357 F.Supp. at 467.

The district court, relying on United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218, and Reetz v. Bozanich, 397 U.S. 82, 90 S.Ct. 788, 25 L.Ed.2d 68, declined to exercise pendent jurisdiction over the state law claims and held that these “myriad problems should be left for state court determination.” 357 F.Supp. at 467. As to the issue above stated, the trial court held “ . . . that the present Denver ordinance does not provide for the payment of just compensation.” The court further ruled that the provisions relating to nonconforming signs were in violation of the Fifth Amendment and enjoined enforcement.

The zoning control sought to be exercised by Denver over signs is through a classification according to types which may be displayed in various zoning districts. Signs are not prohibited, but a close limitation is placed on the types permitted. The provision of the ordinance which is in issue is a part of a city wide zoning plan under which the typical property use controls are established. There is no doubt that a general zoning ordinance may be enacted by the City of Denver. Such ordinances are a proper exercise of the police power. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303; Gorieb v. Fox, 274 U.S. 603, 47 S.Ct. 675, 71 L.Ed. 1228; Green v. Castle Concrete Co., 509 P.2d 588 (Colo.).

As to the scope of police power generally, the Court in Berman v. Parker, 348 U.S. 26, 75 S.Ct. 98, 99 L.Ed. 27, said:

“ . . . An attempt to define [the police power’s] reach or trace its outer limits is fruitless, for each case must turn on its own facts .
“Public safety, public health, morality, peace and quiet, law and order— these are some of the more conspicuous examples of the traditional application of the police power to municipal affairs. Yet they merely illustrate the scope of the power and do not delimit it.”

Zoning ordinances, including provisions relating to signs, are basically prospective in their application, and this aspect presents no serious problems today. However, there are usually nonconforming uses which present substantial problems. These uses are necessarily inconsistent with the purposes of zoning, Wasinger v. Miller, 154 Colo. 61, 388 P. 2d 250, and are not intended to be perpetual. Thus there usually comes a time when such exceptions are sought to be ended. These terminations are in further exercise of the police power, and are sought to be accomplished in several ways. See City of Los Angeles v. Gage, 127 Cal.App.2d 442, 274 P.2d 34.

The ordinance here requires that nonconforming signs must be removed or brought into conformance within a specified period of time after they become nonconforming. This is referred to as “amortization,” but in reality it is no more than notice to the owner and user of the sign that they have a period of time to make whatever adjustments or other arrangements they can. This is probably not a proper use of the word “amortization,” and so used it contains no connotation of compensation or a requirement therefor. This method is generally regarded as a proper exercise of the police power, although there are strong opinions to the contrary. Some of the more recent cases which have considered the issue include E. B. Elliott Advertising Co. v. Metropolitan Dade County, 425 F.2d 1141 (5th Cir.); Markham Advertising Co. v. Washington, 73 Wash.2d 405, 439 P.2d 248.

The decision to terminate nonconforming uses, and the method to be used, is made by the appropriate legislative body. It is reached by a comparison or balancing of the burden or loss which will be placed on the individual by the ordinance with the public good sought to be achieved. See Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348; Board of Supervisors v. Miller, 170 N.W.2d 358 (Iowa). Such a legislative decision under the police power is prima facie a valid factual determination. The parties attacking such an ordinance have to meet a heavy burden. See Green v. Castle Concrete Co., 509 P. 2d 588 (Colo.), and Board of County Comm’rs v. Simmons, 494 P.2d 85 (Colo.).

It is obvious that in the balancing process some loss or burden will fall on a sign owner or user. It is not required that the nonconforming property concerned have no value at the termination date. The plan need not be so constructed. The many and varied valid exercises of police power in other areas So demonstrate the impact on the individual. See Goldblatt v. Hempstead, 369 U. S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130; United States v. Central Eureka Mining Co., 357 U.S. 155, 78 S.Ct. 1097, 2 L.Ed. 2d 1288; Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348; Mugler v. Kansas, 123 U.S. 623, 8 S.Ct. 273, 31 L.Ed. 205. The legislative determination must only meet the test of “reasonableness,” that is, the plan for termination must be “reasonable.” Standard Oil Co. v. Marysville, 279 U.S. 582, 49 S.Ct. 430, 73 L.Ed. 856; National Advertising Co. v. Monterey, 1 Cal.3d 875, 83 Cal.Rptr. 577, 464 P.2d 33 (Cal.). This is not a test of concept of “just compensation.” The Court in United States v. Central Eureka Mining Co., 357 U.S. 155, 78 S.Ct. 1097, 2 L.Ed.2d 1288, said: “[T]he mere fact that the regulation deprives the property owner of the most profitable use of his property is not necessarily enough to establish the owner’s right to compensation.” And further in Miller v. Schoene, 276 U.S. 272, 48 S.Ct. 246, 72 L.Ed. 568: “[W]here the public interest is involved preferment of that interest over the property interest of the individual, to the extent even of its destruction, is one of the distinguishing characteristics of every exercise of the police power which affects property.”

In the application of the reasonableness test to the legislative determination, the courts have used a variety of factors, and combinations thereof. These include the nature of the nonconforming use, the character of the structure, the location, what part of the individual’s total business is concerned, the time periods, salvage, depreciation for income tax purposes, and depreciation for other purposes, and the monopoly or advantage, if any, resulting from the fact that similar new structures are prohibited in the same area. Where signs are concerned, the courts usually also mention the fact that the use is also of public streets since the message is directed to the passerby.

When these factors are applied to the portion of the Denver ordinance here concerned, we must conclude that it is basically reasonable. The “amortization” method has been established by the authorities as a proper method to terminate nonconforming uses. It is clearly applicable to signs and is an aspect of the balancing of the public good against individual harm as part of the city’s overall zoning plan and ordinance.

In this connection, the opinion in St. Louis Poster Advertising Co. v. St. Louis, 249 U.S. 269, 39 S.Ct. 274, 63 L. Ed. 599 is very significant. The ordinance there concerned regulated the size and location of billboards. Reliance was therein placed on Cusack Co. v. Chicago, 242 U.S. 526, 37 S.Ct. 190, 61 L.Ed. 472, which dealt with an outright prohibition of billboards “in residence districts of a city,” 242 U.S. at 530, 37 S.Ct. 190, 191, 61 L.Ed. 472, rather than a city wide regulation as in the case at bar. But the St. Louis case in permitting the full scope of the ordinance leads us to also hold that the Denver “Permitted Signs” ordinance, City and County of Denver, Rev.Mun.Code §§ 613.5-5(4) and 613.5-5(4)(a) (1971), is a valid, reasonable, nonarbitrary, and nondiscriminatory enactment under that city’s police powers. It does not deprive the users of advertising signs, whether they be lessees or owners, of such use. It does not force the concerns which manufacture and supply such signs to terminate their businesses. It does, however, closely regulate the types of signs which may be used and, as we have held, this is proper.

There is, however, a portion of the ordinance which we cannot hold to be reasonable. This is the provision for different periods of amortization for signs having different “replacement” costs measured at the date they become nonconforming. The plaintiffs have attacked the validity of these categories. The replacement cost of the signs is not related to any of the relevant factors in the reasonableness tests, and presents no valid basis for different treatment of different signs ranging from three to five years. It has no bearing on the landowner’s problem, nor on the sign owners’ situation nor on the city’s position. The most that can be said for replacement cost is that it could indicate, as of the date used, the size or complexity of a sign, but this is no real help. When the categories so constructed are removed, we are left with the five-year maximum period for removal of all nonconforming signs in the ordinance, and this period, as we have stated, is a valid one. The ordinance with the remaining five-year timé limit is thus valid.

The ordinance contains a special category (.5-5(4)(a)) which states in part: “The right to maintain a flashing, blinking, fluctuating, animated, or portable sign shall terminate within 30 days after such sign became non-conforming.” This we hold to also be a reasonable regulation. The balancing relates to such signs in a somewhat different way in that the apparent movement created by the sign can be stopped and the signs brought into conformity without destroying entirely the usefulness of the sign. Certainly its effectiveness is much diminished, and its value reduced, but when this is compared to the extreme character of these signs, with the demonstrated relationship to safety, we must hold the method and the time to be reasonable.

The matter of preemption by the Federal Highway Beautification Act, 23 U.S.C. § 131, or by the Colorado Highway Sign Act, Colo.Rev.Stat.1971, Perm.Supp. § 120-5-28, has been argued by the parties, but we find no such preemption. Nor do we find therein any example or standard binding in any way on the city.

The parties have also discussed the case of Almota Farmers Elevator & Warehouse Co. v. United States, 409 U. S. 470, 93 S.Ct. 791, 35 L.Ed.2d 1, as it relates to improvements on leaseholds. The Court in its opinion states the issue therein decided concerns valuations in eminent domain proceedings. The case is very significant in that field, but in our view of the legal .concepts here involved, it is not helpful.

On the impairment of contracts issue urged by the plaintiffs, the question is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end. Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413. As the opinion of the Court pointed out in the same case:

"... [W]here the protective power of the state is exercised in a manner otherwise appropriate in the regulation of a business it is no objection that the performance of existing contracts may be frustrated by the prohibition of injurious practices,
“In all such cases the question becomes, therefore, one of reasonableness, and of that the legislature is primarily the judge.”

We have already held that the ordinance is a reasonable one in other aspects, and it does not, under Article I, § 10, cl. 1 of the United States Constitution, impair the obligation of contracts.

Much has been written about the distinctions between governmental acts which are within the police power and those which are within just compensation requirements under eminent domain. It will not serve any useful purpose to add to the literature on the subject. Like so many subjects, it makes some difference where you start into the problem or where you get hold of it initially. The section here challenged is part of the city’s zoning ordinance, and is part of the aim or purpose of zoning. It is not much different from the provisions prohibiting changes in nonconforming structures, or prohibitions against use if once discontinued, and similar limitations on the use of property. These prohibitions are also an established part of zoning and generally upheld. Zoning from its inception has been grounded as a legislative function on the police power, and has been so sustained by the courts. The particular issue before us of elimination of nonconforming uses is well within an overall zoning plan which is not challenged, and the legislative body has decided it is an essential part thereof. It is of general application under a plan adjusted to different conditions in each zone, and not directed to particular tracts or signs. It is a bona fide use restriction. The challenged provision does not prohibit the use of signs, but requires conformance to specified types in specified places. Further in view of the traditional place where such regulations are found, the fact this subject is an integral part of zoning to accomplish its legitimate purposes, and the broad nature of its application leads us to place the issue in the police power category and not in eminent domain as the trial court apparently did.

The judgment of the trial court is reversed, and the. case is remanded for further proceedings in accordance with this opinion.


author: PER CURIAM:

text:
    NATIONAL ASSOCIATION OF BROADCAST EMPLOYEES AND TECHNICIANS, A.F.L.-C.I.O., C.L.C. and Association of Film Craftsmen, Local No. 531-NABET, Plaintiffs-Appellants, v. INTERNATIONAL ALLIANCE OF THEATRICAL STAGE EMPLOYEES, etc., et al., Defendants-Appellees.
    Nos. 71-2054, 71-2870.
    United States Court of Appeals, Ninth Circuit.
    Nov. 27, 1973.
    Paul M. Posner (argued), Posner & Newman, Beverly Hills, Cal., for plaintiffs-appellants.
    Richman & Garrett, J. Reich, Brun-dage, Neyhart, Miller, Ross & Reich, Richard Hungate, Youngman, Hungate & Leopold, Los Angeles, Cal., Edw. Rior-dan, Rosenfeld, Meyer & Susman, Beverly Hills, Cal., Bruce A. Bevan, Jr., Mu-sick, Peeler & Garrett, Los Angeles, Cal., for defendants-appellees.
    Before CARTER and HUFSTEDLER, Circuit Judges, and JAMESON, District Judge.

       Honorable W. J. Jameson, United States Senior District Judge for the District of Montana, sitting by designation.

   PER CURIAM:

The National Association of Broadcast Employees and Technicians (NABET) and its Local No. 531, the Association of Film Craftsmen, brought these actions against the International Alliance of Theatrical Stage Employees (IATSE), 13 of its affiliated locals, and ten distributors and producers of motion pictures. In Count I they seek treble damages under Section 4 of the Clayton Act (15 U.S.C. § 15), alleging a conspiracy in restraint of trade in violation of the Sherman Anti-Trust Act (15 U.S.C. § 1). In Count II they allege a state claim for breach of contract, relying upon the doctrine of pendent jurisdiction. The district court entered orders dismissing the complaints for failure to state a claim. We affirm.

In summarizing their contentions, appellants state that they have alleged “the existence of a combination of business and labor interests” which has “restrained trade and stifled competition in the production, sale and distribution of motion pictures”. They contend that “All participants in the combination, the unions and producers and distributors alike, are liable under the Sherman Act to NABET for the injury done to its members as a direct result of defendants’ concerted activities) to unlawfully exclude NABET from the industry.”

We conclude that the conduct alleged in Count I was activity of the appellee unions in their own lawful self interest, protected under the Clayton Act, 15 U.S.C. § 17, 29 U.S.C. § 52, the Norris-LaGuardia Act, 29 U.S.C. § 102, and the Labor Management Relations Act and therefore immune from the antitrust laws.

The right of a union to protect employees’ job opportunities and wages from job and wage competition of members of other unions has been recognized repeatedly by the Supreme Court. See, e. g., Federation of Musicians v. Carroll, 391 U.S. 99, 106-110, 88 S.Ct. 1562, 20 L.Ed.2d 460 (1968) and cases there cited. Union activities having as their objective the preservation of jobs and guarding against encroachment of a rival union are immune from the anti-trust laws.

It is true, as appellants contend and appellees concede, that the immunity of unions for violation of the anti-trust laws is not automatic or absolute. A union is not exempt when it has “participated with a combination of business men who had complete power to eliminate all competition among themselves and to prevent all competition from others,” Allen Bradley Co. v. Union, 325 U.S. 797, 809, 65 S.Ct. 1533, 1540, 89 L.Ed. 1939 (1945), or where the union, “by agreement with one set of employers, insists on maintaining in other bargaining units specified wage standards ruinous to the business of those employers”, Ramsey v. Mine Workers, 401 U.S. 302, 313, 91 S.Ct. 658, 665, 28 L.Ed.2d 64 (1971).

This is not an action where a non-union group complains that a union has conspired with its business competitors to restrain trade or stifle competition in the industry or market. Nor is it alleged that the members of appellant unions are employees of companies against whom a conspiracy is aimed by competing business interests. Rather it is alleged that the “intent, purpose and effect” of the “combination or conspiracy has been to substantially prohibit the employment of NABET member technicians” in the motion picture industry and to deprive NABET and its members of the ability and right to bargain freely, all for the purpose of maintaining IATSE and its local unions “as the sole and dominant representative of technical employees in the motion picture industry”. Under these allegations the appel-lee unions were acting in their own self-interest rather than conspiring with non-business groups to create a monopoly among fellow conspiratory business interests.

This court has held in two prior cases that similar allegations of violations of the Sherman Act by IATSE unions were insufficient to avoid immunity under the labor laws—Schatte v. International Alliance, 182 F.2d 158, 167 (1950), cert. denied, 340 U.S. 827, 71 S.Ct. 64, 95 L.Ed. 608 (1950), reh. den., 340 U.S. 885, 71 S.Ct. 194, 95 L.Ed. 643 (1950) and Conference of Studio Unions v. Loew’s, Inc., 193 F.2d 51, 54-55 (1951), cert. denied, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687 (1952). We adhere to the principles followed in those cases.

Upon dismissal of Count I the district court properly dismissed Count II under the doctrine of pendent jurisdiction. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 16 L.Ed. 2d 218 (1966).

Affirmed.

      . Plaintiffs were given two opportunities to amend their complaints, after which the district court dismissed with prejudice.

      . In further explanation of the nature of the action, appellants state that:
      “The Complaint charges not that the unions acting in concert with the distributors and producers sought to preserve their jobs; rather the defendant labor unions are charged with conspiring with non-labor groups to prevent NABET members from negotiating for and/or entering into employment with the defendant producers.”

      . The Court “has recognized that a legitimate aim of any national labor organization is to obtain uniformity of labor standards and that a consequence of such union activity may be to eliminate competition based on differences in such standards.” Mine Workers v. Pennington, 381 U.S. 657, 666, 85 S. Ct. 1596, 14 L.Ed.2d 626 (1965).

      . In Bradley, the plaintiffs were manufacturers of electrical equipment who had alleged that the unions conspired with contractors and manufacturers who had “united with one another to • monopolize all the business in New York City, to bar all other business men from that area, and to charge the public prices above a competitive level”. 325 U.S. at 809, 65 S.Ct. at 1540. The union, the Court held, “aid[ed] and abet[ted] business men to do the precise things which that [the Sherman] Act prohibits”. Id. at 801, 65 S.Ct. at 1536.

      . In Ramsey the plaintiffs were coal mine operators who “accused respondent United Mine Workers of America of violating the Sherman Act by conspiring with various coal producers to drive petitioners out of business”. 401 U.S. at 304, 91 S.Ct. at 660.

      . The court held in these cases that plaintiffs had not alleged injury to “their business or property” by reason of any violation of the anti-trust laws, saying in Conference of Studio Unions v. Loew’s Inc., “They [plaintiff unions] are not in the business of producing motion pictures; they do not exhibit motion pictures; they neither compete with the Majors nor purchase from them. In fact, they are not employees of the companies whom it is alleged the appellees intend to destroy. The damage alleged to have been suffered by appellants does not flow from any injury to the competitive situation of the motion picture industry, that is, their injury has not arisen from the acts allegedly perpetrated against the Independents.” 193 F.2d at 54.

      . The subsequent cases upon which appellants rely are all factually distinguishable.