author: CUMMINGS, Circuit Judge. STEVENS, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Willie Alro KELLY, Defendant-Appellant.
    No. 73-1935.
    United States Court of Appeals, Seventh Circuit.
    Argued April 5, 1974.
    Decided July 9, 1974.

      Larry T. Miller, Robert J. Schmoll, Jr., Fort Wayne, Ind., for defendant-appellant.
    John R. Wilks, U. S. Atty., Fort Wayne, Ind., for plaintiff-appellee.
    Before FAIRCHILD, CUMMINGS and STEVENS, Circuit Judges.
   CUMMINGS, Circuit Judge.

A two-count indictment was returned against defendant, charging him with distributing heroin on April 12 and May 1, 1973, in violation of 21 U.S.C. § 841(a)(1). The jury found him guilty on both counts. He was given a 10-year sentence on Count I, plus a 3-year special parole term. An identical concurrent sentence was imposed on Count II.

The only issue raised on appeal is whether a portion of the court’s instruction 7, which was based on 21 U.S.C. § 885(b), was improper. Instruction 7 provided in pertinent part:

“In the absence of proof that a person is the duly authorized holder of an appropriate registration issued under the law involved in this case, he shall be presumed not to be the holder of such registration.”

Defendant attacks the presumption contained in the instruction and the fountainhead statute, claiming it violates his Fifth Amendment rights. However, we have twice held to the contrary with respect to an analogous provision of the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 360a, now repealed). United States v. Rowlette, 397 F.2d 475 (7th Cir. 1968); United States v. Reiff, 435 F.2d 257 (7th Cir. 1970), certiorari denied, 401 U.S. 938, 91 S.Ct. 929, 28 L.Ed.2d 217. We adhere to those rulings.

As Judge Castle pointed out in Row-lette, the exception for authorized dealers may be equated with affirmative defenses. The percentage of heroin defendants who can make a plausible claim of registration is undoubtedly so low that it would be a substantial waste of resources to require the Government to prove non-registration in every case. It would be readily within defendant’s knowledge whether he had obtained an annual registration from the Attorney General, so that he could be fairly expected to adduce such proof. As noted in Rowlette, the Fifth Amendment is not violated because defendant’s exempt status could easily be established from a source independent of his own testimony.

Defendant relies on Leary v. United States, 395 U.S. 6, 29-54, 89 S.Ct. 1532, 1548, 23 L.Ed.2d 57. Following Tot v. United States, 319 U.S. 463, 63 S.Ct. 1241, 87 L.Ed. 1519, the Court there held that a presumption is valid in a criminal case only when the fact presumed “is more likely than not to flow from” the fact on which the presumption is based. 395 U.S. 36, 89 S.Ct. 1548. Defendant’s reliance is misplaced for two reasons. Most important, the presumption in Leary went to the burden of persuasion; here only the burden of going forward with the evidence is shifted. Second, we understand the Leary opinion to be limited to so-called elements of the offense, and not to prevent Congress from creating affirmative defenses as to which the defendant bears the burden of going forward. Tot, on which Leary relied, was distinguished on this basis in Leland v. Oregon, 343 U.S. 790, 799, 72 S.Ct. 1002, 96 L.Ed. 1302. Leland held that it did not offend due process for the state to require defendants to prove insanity beyond a reasonable doubt, because sanity was not an element of the offense. Leland dealt with the burden of persuasion, and there is some current debate whether it was overruled sub silentio in In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368, with the focus in large part on whether sanity is an element of various offenses. See the conflicting opinions and collected authorities in United States v. Greene, 489 F.2d 1145 (D.C.Cir. 1973).

We need not join that debate. We refer to Leland only to indicate the distinction between elements of an offense and affirmative defenses. Even if Leland has been undercut with respect to the burden of persuasion, no doubt has been cast on its conclusion that the burden of going forward as to insanity is on defendant. 343 U.S. at 799, 72 S.Ct. 1002. And see Justice Frankfurter, joined by Justice Black, dissenting, id. at 804, 72 S.Ct. at 1010. More generally, we know of no authority suggesting that the state must disprove unlikely defenses in every case without waiting for defendant to raise them as issues. This is the distinction drawn in Rowlette by equating affirmative defenses to the principle established in McKelvey v. United States, 260 U.S. 353, 357, 43 S.Ct. 132, 134, 67 L.Ed. 301, that if a defendant comes within “an exception made by a proviso or other distinct clause,” he must set it up and establish it as a defense.

We do not mean to avoid the issue by hiding behind conclusory labels. Unless defendant distributed the heroin he possessed, the crime charged has not been committed. Similarly, unless he failed to register with the Attorney General, the crime has not been committed. The labels “element” and “affirmative defense” alone do not tell us why distribution is an element of the offense which the Government must always prove, whereas non-registration is not an element and need be proved only if the defendant first offers evidence of the affirmative defense of registration. Allocating the burden of going forward is generally a matter for the legislature, although the due process clause may impose some limits on legislative discretion in this area. Constitutionally, it is immaterial whether Congress chose to state a rule and its exception in one clause or in separate clauses.

The legislative intent here is quite clear. The burden of going forward with the evidence as to registration is explicitly placed on defendants. Once it is recognized that the legislature can create affirmative defenses, no plausible contention can be made that registration with the Attorney General cannot be so treated. The widespread illicit sales of narcotics support this Congressional technique of winnowing the illegitimate from the legitimate distributors of drugs. More importantly, there is no unfairness in this presumption for the reasons stated in the fourth paragraph of this opinion.

Judgment affirmed.

STEVENS, Circuit Judge

(concurring).

In my judgment, the distinction between an element of an offense and an affirmative defense is not unclear. Nor do I find anything confusing about differentiating between a requirement that an inculpatory fact must be proved and a requirement that an exculpatory fact need not be negated. Therefore, except for the portion of the opinion expressing concern about “hiding behind conclusory labels,” I join in Judge Cummings’ opinion.

      . 21 U.S.C.A. § 841(a)(1) proscribes the distribution of controlled substances such as heroin “Except as authorized by this sub-chapter” through registration with the Attorney General and pursuant to order forms he prescribes (21 U.S.C.A. §§ 822 and 828).

      . 21 U.S.C.A. § 885(b), on which this instruction was based, provides:
      “In the absence of proof that a person is the duly authorized holder of an appropriate registration or order form issued [by the Attorney General] under this subchap-ter, he shall be presumed not to be the holder of such registration or form, and the burden of going forward with the evidence with respect to such registration or form shall be upon him.”


source: Caselaw Access Project

author: LUMBARD, Circuit Judge: HAYS, Circuit Judge PER CURIAM:

license: Public Domain

text:
    DIAPULSE CORPORATION OF AMERICA, also known as the Diapulse Manufacturing Corporation of America, a corporation, Plaintiff-Appellant, v. FOOD AND DRUG ADMINISTRATION OF the DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, Defendant-Appellee.
    No. 620, Docket 73-2593.
    United States Court of Appeals, Second Circuit.
    Argued March 4, 1974.
    Decided May 9, 1974.
    Supplemental Opinion June 18,1974.
    Copal Mintz, New York City, for plaintiff-appellant.
    Donald Etra, Dept, of Justice, Washington, D. C. (Irving Jaffe, Acting Asst. Atty. Gen., Edward J. Boyd, U. S. Atty., Leonard Schaitman, Atty., Dept, of Justice, Washington, D. C., on the brief), for defendant-appellee.
    Before LUMBARD, HAYS, and OAKES, Circuit Judges.
   LUMBARD, Circuit Judge:

Claiming that the Food and Drug Administration (FDA) was unlawfully withholding material to which it was entitled under the Freedom of Information Act, 5 U.S.C. § 552, by charging unlawful fees, Diapulse Corporation of America instituted this action in the Eastern District of New York on September 4, 1973. On September 17, Judge Dooling granted the FDA’s motion for summary judgment on the ground that there had been no improper refusal of access to records which the Act requires be disclosed. Since we find that the fees the FDA required of Diapulse were not authorized, we vacate and remand.

I.

This appeal brings before us yet another skirmish between Diapulse and the FDA over Diapulse’s marketing of a diathermy unit. Previously we have upheld a condemnation order entered against the device under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-392, after a jury had found that the device was mislabeled and that 49 claims made for it were misleading. United States v. Diapulse Manufacturing Corp. of America, 389 F.2d 612 (2d Cir.), cert. denied, 392 U.S. 907, 88 S.Ct. 2059, 20 L.Ed.2d 1365 (1968). Later we affirmed preliminary and permanent injunctions against shipment of the device in interstate commerce unless the FDA approved the labeling for the machine. United States v. Diapulse Corp. of America, 457 F.2d 25 (2d Cir. 1972); United States v. Diapulse Corp. of America, 485 F.2d 677 (2d Cir. 1973) (affirmed without opinion), cert. denied, 416 U.S. 938, 94 S.Ct. 1938, 40 L.Ed.2d 288 (1974). Finally the government has brought criminal contempt charges, which were scheduled to go to trial in April against Diapulse for violating both injunctions. According to Diapulse’s complaint, it hopes that the material it seeks will show that the FDA has engaged in a wide range of discriminatory enforcement activities against it.

The facts surrounding Diapulse’s efforts to gain access to material in the FDA’s files are not disputed. On June 11, 1973, Jesse Ross, the president of Diapulse, sent a letter to the Acting Commissioner of the FDA which demanded in eight paragraphs a broad range of FDA documents which referred to Diapulse. Although the regulations of the Department of Health, Education, and Welfare (HEW), of which the FDA is an operating agency, say that it is the Department’s policy that requests for information be answered within ten days, 45 C.F.R. § 5.51(c) (1973), Ross had to write two follow-up letters, before he received a reply on July 27 from David M. Link, the Director of the FDA’s Office of Medical Devices. Link stated that thousands of documents, not all subject to disclosure under the Freedom of Information Act, would have to be searched to answer Ross’ request and, therefore, Link asked that Ross narrow his request. To aid Ross, Link enclosed a copy of the FDA’s proposed public information regulations, 37 Fed.Reg. 9128 (1972); and suggested Ross contact Robert Kennedy of the Officer of Medical Devices for assistance in gathering material. Link also said that search fees would depend on who had to do the search and that Diapulse might have to pay the salary of the person who did the searching.

On August 7, Ross telephoned Kennedy and said that he would like to start by examining the “factory jackets” relating to the Diapulse device and Dia-pulse Corporation. The factory jackets are the records the FDA has concerning a particular company and they contain a wide variety of documents including inspection reports, letters of inquiry and answers, and various internal memoran-da. Kennedy told Ross that he would have to collect and remove from the factory jackets any material not subject to disclosure under the Act prior to Ross’ examination. Kennedy also told Ross that the inspection would take from four to six days and a fee of $103.60 per day would be charged as reimbursement for the agency’s cost. He also said that a letter of intent to pay the fee was necessary before they could proceed. When Ross objected to paying the fee, Kennedy suggested that he discuss the matter with Ruth Cockerham, the FDA’s Freedom of Information Officer. In a letter to Cockerham dated August 7, Ross requested a waiver of the payment requirement on the ground that Diapulse could not afford to pay. On August 22 Charles H. Dick, the FDA’s Assistant Commissioner for Pub-lie Affairs, in reply to Ross’ request said that the FDA’s proposed regulations provided for a waiver of search and copying fees upon adequate showing that the person making the request was indigent and that there was a strong public interest justification for disclosure. Dick concluded by saying that more complete information concerning Diapulse’s financial status would be necessary before a decision concerning its waiver request could be made.

Instead of responding to this letter by sending financial information concerning Diapulse, Ross on August 30 sent a letter to Alexander M. Schmidt, the Commissioner of the FDA, requesting more material in addition to that previously demanded. Schmidt replied under date of September 4, the same day Diapulse instituted this case. He maintained that the FDA had acted properly in its enforcement efforts against Dia-pulse. Concerning Ross’ request for information, Schmidt, referred to the proposed regulations already sent, the proposals contained in Link’s letter, and the statement in Dick’s letter regarding waiver of fees, saying the letters and regulations “need no further comment.”

II.

The issue before us is whether the FDA could lawfully charge Diapulse a fee of $103.60 a day for the cost of Kennedy examining the material in the factory jackets and deleting material exempt from the disclosure requirements of the Freedom of Information Act. Not before us is a question of whether any of the material Ross and Diapulse sought is actually subject to disclosure under the Act. See generally EPA v. Mink, 410 U.S. 73, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973); Rose v. Department of Air Force, 495 F.2d 261 (2d Cir. 1974). Thus far, the FDA has not actually refused to let Ross examine any particular document.

We must first consider the FDA’s claim that Diapulse is barred from raising the issue because of a failure to exhaust administrative remedies. The Department of Health, Education, and Welfare has promulgated regulations which provide for administrative review of denials of requests *for information, 45 C.F.R. §§ 5.80-.85 (1973). Under these regulations a person whose request for information has been denied has thirty days to seek review. In this case the review would be by the Commissioner of the FDA, as head of an operating agency. Under amendments to 45 C.F.R. § 5.82, effective August 17, 1973, the Assistant Secretary of HEW for Public Affairs must concur in any decision on review which denies a request for information.

It is clear that Diapulse has not sought formal review of the validity of the fees by the Commissioner of the FDA. It is also clear, however, by his letter of September 4 that the Commissioner supported the position his subordinates had taken on this issue, but there is no indication that the Assistant Secretary for Public Affairs has approved FDA’s stand on fees. We are thus faced with the question of whether Diapulse’s failure to exhaust administrative remedies within HEW bars judicial review at this time.

We have little doubt that as a general matter persons requesting information should exhaust administrative remedies prior to seeking judicial review. See Tuchinsky v. Selective Service System, 418 F.2d 155, 158 (7th Cir. 1969); cf. Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974). See generally Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638 (1938). But the doctrine of exhaustion of administrative remedies is subject to exceptions, and “ [application of the doctrine to specific cases requires an understanding of its purposes and of the particular administrative scheme involved.” McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969). Among the purposes for the doctrine that the Supreme Court recited in McKart are avoiding premature interruption of the administrative process, allowing the agency to develop the necessary factual record, giving the agency the first opportunity to exercise its discretion or to apply its expertise, and promoting efficiency by letting the administrative process carry through to its conclusion. Id. at 193-194.

Here, of course, there is no administrative proceeding to interrupt since Diapulse has chosen not to seek administrative review of the validity of the fees the FDA staff proposed. Since the issue here is whether the proposed fees were legally authorized, there is no need for the agency to develop a detailed factual record for purposes of decision, nor is there any area for the exercise of discretion. And, on this legal question of authorization, agency expertise is of little help to a reviewing court. See Mc-Kart, supra, 395 U.S. at 197-198.

Allowing judicial review here will not unduly disrupt the scheme of administrative review that HEW has promulgated. The plan was undoubtedly designed to deal with the general sort of Freedom of Information Act problem arising from the refusal of the agency staff to allow a member of the public to examine material. Such cases often combine factual and legal questions. While many of the usual reasons for requiring exhaustion may not be present, since review in the district courts under 5 U.S.C. § 552(a)(3) is de novo, courts nevertheless should allow agencies the opportunity to review denials of requests and to correct their errors prior to allowing judicial review.

Here, however, we are presented with a legal question on which the Commissioner of the FDA has already issued his opinion. There is no chance, therefore, that the FDA will correct any possible error in denying Diapulse access to the factory jackets unless the fees are paid. Whether the Assistant Secretary for Public Affairs of HEW would support the FDA position on this matter is problematic, but that officer was added as a reviewing authority only by recent amendments. It seems likely that neither of the parties to this case were aware of the amendments since counsel for the FDA quotes from the unamended regulations. To require exhaustion of a source of review which neither side knew about when judicial review has proceeded this far would be overly harsh and wasteful. We, therefore, conclude that on the facts of this particular case exhaustion of administrative remedies was not necessary.

III.

Turning to the merits, we think that it is clear that an attempt to condition Ross’ examination upon payment of unlawful fees would be the sort of improper withholding of material that 5 U.S.C. § 552(a)(3) gives the district courts jurisdiction to enjoin. Section 552(a)(3) allows agencies to charge “fees to the extent authorized by statute” in making records available to persons under that provision. The House Report accompanying the Act makes it clear that 31 U.S.C. § 483a (then 5 U.S. C. § 140) was authority for agencies to charge search and copying fees where information is requested. H.R.Rep.No. 1497, 89th Cong., 2d Sess. (1966), in 2 [1966] U.S.Code Cong. & Admin.News, pp. 2418, 2425-2426. See also Reinoehl v. Hershey, 426 F.2d 815 (9th Cir. 1970); Attorney General's Memorandum on the Public Information Section of the Administrative Procedure Act, in 20 Ad.L.Rev. 263, 293-95 (1968). Section 483a provides that it is the sense of Congress that the furnishing of documents and other services to those not engaged in government business should be self-sustaining to the fullest extent possible. Heads of agencies are authorized to prescribe “by regulation” fees for such services after taking into account the direct and indirect cost to the government, value to the recipient, the public interest served, and other pertinent considerations. The issue here is whether the FDA has promulgated regulations which authorize the $103.60 a day charge that FDA officials attempted to charge Diapulse.

It is noteworthy that the FDA staff in its correspondence with Ross only cited the FDA’s proposed regulations. Those regulations authorize, among others, the following fees:

Search for records and deletion of nondisclosable data: $4 per hour. Where a substantial amount of time is spent by higher salaried professional, managerial, or program personnel in searching for or producing requested documents or in deleting non-disclosa-ble data and information, special rates not to exceed the cost to the agency of such services will be determined and charged ....

37 Fed.Reg. 9132. On the other hand, the regulations then in effect provide:

(a) Certain routine information is provided to the general public at no charge; however, special informational services involving more than routine investigation and allocation of staff time are subject to fees as necessary to recover costs to the Government.
(b) Charges for special services regarding Food and Drug Administration records are as follows:
(1) Search for records: $3 per hour . . .-.

21 C.F.R. § 2.115 (1973).

For different reasons, both parties agree that the $3 per hour search fee authorized by § 2.115(b)(1) is not applicable to this case. The fee sought to be charged in this case was not a fee for searching for the factory jackets in the sense of finding them, rather the fee was for (in the words of the proposed regulation) “deletion of nondisclosable data.” We think that this is a reasonable distinction and we see no reason to quarrel with the agency’s interpretation of its regulation.

The FDA, however, argues that the fee for deletion of material it tried to charge was authorized by 21 C.F.R. § 2.-115(a), quoted above. We disagree. That provision is most naturally read as a statement of a general policy that fees will be charged for special services; § 2.115(b) authorizes fees for these services. The FDA’s interpretation of § 2.-115(a) would turn it into general authority to charge any fee for any service it renders to a private citizen. We think that the requirement of 31 U.S.C. § 483a that fees be authorized by regulation requires that the regulations be more specific than this. Similarly, we think the HEW regulation, 45 C.F.R. § 5.60 (1973), is too vague to support the fees at issue here. We, therefore, conclude that the fees the FDA attempted to charge were not authorized.

Accordingly, the judgment of the district court is vacated and the case is remanded for further proceedings consistent with this opinion including directing that the FDA furnish material to which ' Diapulse is entitled under the Freedom of Information Act without charging unauthorized fees for the segregation of nondisclosable material.

HAYS, Circuit Judge

(dissenting):

I dissent as to Part III of the opinion of the court.

As the majority recognizes, we examine this case against the background of a strong Congressional policy that the providing of services for private citizens by government agencies should be self-sustaining. 31 U.S.C. § 483a (1970).

To carry out this Congressional policy and to satisfy the requirements of 5 U. S.C. § 552(a)(3) (1970) the FDA promulgated 21 C.F.R. § 2.115 (1973), which provides that:

“special informational services involving more than routine investigation and allocation of staff time are subject to fees as necessary to recover costs to the Government.”

The regulation then specifies the fees charged for certain services. The parties and the court agree that none of the fees applies to this case. On its face this regulation would seem to effectuate the Congressional policy and satisfy the statute. But the majority finds the regulation not sufficiently specific. I disagree.

First, the regulation creates none of the problems for which legislation is usually attacked as vague. The regulation did not place appellant in jeopardy by failing to inform him as to what conduct is permitted or prohibited. Nor did it deter protected conduct by its ov-erbreadth. Certainly I find no authority for extending the “void for vagueness” doctrine to a regulation governing search fees.

Second, I cannot see how the FDA could have made the regulation specific enough to apprise appellant of what fee he would be charged. The type of personnel necessary to cull disclosable documents from agency files will differ from case to case. In some cases the task may be straightforward and can be performed by unskilled personnel with simple instructions. In others it may involve delicate, complex judgments which only agency officials can-exercise.

The majority contrasts sections 2.115 with the new 21 C.F.R. § 4.20(b)(1), 37 Fed.Reg. 9132 (1972), and apparently implies that the latter meets its standard of specificity and proves that a more specific regulation is possible. With all deference, I think it proves the contrary. The new regulation would not have advised appellant with any greater clarity what it would cost to obtain the files he wanted. He would still have had to inquire of the FDA what the cost would be. Despite the new regulation, the agency’s response would have been the same, for it is not denied that the FDA sought to charge appellant only the reasonable costs of conducting the search.

I would find that the FDA properly insisted upon reasonable fees pursuant to section 2.115, and on that basis I would affirm.

ON MOTION BY THE FOOD AND DRUG ADMINISTRATION TO AMEND OPINION.

PER CURIAM:

On May 9, 1974, we filed an opinion in this case, 500 F.2d at 75. We held there that Diapulse did not have to exhaust administrative remedies to seek judicial review of its claim that the fees the F.D.A. attempted to charge it for segregating material exempt from disclosure under the Freedom of Information Act, 5 U.S.C. § 552, were not authorized. We said that the Commissioner of the F.D.A., who as head of an “operating agency” reviewed denials of requests for information, had already expressed his opinion on the subject. We recognized that recent amendments to the review procedures required the Assistant H.E.W. Secretary for Public Affairs to concur in any denial of requests for information, but said that since the counsel for F.D.A. quoted from the unamended regulations, it was probable that the parties had not known of this additional source of administrative review and that, therefore, it would be “harsh and wasteful” to require exhaustion of this source when judicial review had proceeded so far. On the merits we held, Judge Hays dissenting, that the fees attempted to be charged were unauthorized.

In a letter dated May 22, counsel for the F.D.A. challenged for the first time the proposition that the Commissioner of the F.D.A. reviews requests for information under the Act and asks that we amend the opinion in some unspecified manner. The argument is that although the F.D.A. is an operating agency, it is also part of the Public Health Service, 45 C.F.R. § 5.3. Review of information requests to operating agencies is to their heads, but review of requests to the Public Health Service is to the Assistant H.E.W. Secretary for Health. Therefore, it is claimed that the Assistant Secretary for Health was the reviewing officer for the F.D.A. Counsel for Diapulse, who argued in his reply brief that the Commissioner was the reviewing officer, reiterates this contention in a letter dated May 24.

We need not decide this issue. The question before us is whether Diapulse had to exhaust its administrative remedies, not what those remedies were. In the opinion, we pointed out that in the circumstances of this case, exhaustion served a limited purpose and that we would not require exhaustion of all possible administrative remedies when there appeared to be a misunderstanding concerning what remedies were available. This continuing confusion about review procedures within the H.E.W. only reinforces this point. We have reached the merits on a strictly legal question of interpreting a regulation. At this late date it would serve no good purpose to require Diapulse to exhaust administrative remedies. Therefore, while acknowledging that we may have erred on the question of review procedure because we were not properly advised by the F.D.A., we reaffirm our holding that exhaustion is not required here and our decision on the merits, subject, of course, to the dissent of Judge Hays.

      . It might also be contended that judicial review should be barred since Diapulse did not pursue the possibility that the FDA would waive the fees. As noted above, one requirement for waiver was indigency. It seems unlikely that Diapulse would meet the FDA’s standard for indigency since it has apparently been able to pay the costs of litigating the instant case. Furthermore, there is no reason why Diapulse should be required to disclose its financial affairs to the FDA for the purpose of gaining a waiver of the fees prior to being allowed to challenge the validity of the fees.

      . Since we have determined that the fees sought to be charged for deletion of material exempt from disclosure were not authorized, we do not have to pass upon Diapulse’s argument that no agency can charge a fee for deletion of such material.


author: KILEY, Senior Circuit Judge.

text:
    Virgil D. FOSTER, Appellant, v. NATIONAL STARCH AND CHEMICAL COMPANY, a corporation, Appellee.
    No. 73-1411.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 24, 1974.
    Decided June 24, 1974.

      Lance Callis, Granite City, 111., for appellant.
    Burton C. Bernard, Granite City, 111., for appellee.
    Before KILEY, Senior Circuit Judge, CUMMINGS, Circuit Judge, and HOFFMAN, Senior District Judge.

       Senior District Judge Julius J. Hoffman of the Northern District of Illinois is sitting by designation.

   KILEY, Senior Circuit Judge.

Plaintiff Foster, an employee of Blaw-Knox Company, an independent contractor, sued National Starch and Chemical Company in an Illinois state court for damages for an injury he sustained while working on the National Starch premises. National Starch removed the diversity suit to the district court, which granted its motion for summary judgment. Foster has appealed. We affirm.

In 1968 National Starch contracted with Blaw-Knox for construction of a “polymeric amine” plant on National Starch property in Meredosia, Illinois. Foster did welding work on the job for Blaw-Knox. After having worked for about a month, Foster, while welding a drip drain pipe, stepped back to permit an assistant to clean the weld, fell backwards over cement blocks, and sustained serious and permanent injuries. He filed his complaint in the district court alleging that National Starch was liable because in the construction contract it retained right to exercise control over the construction project. National Starch’s motion and the summary judgment against Foster followed.

I.

Foster contends the judgment is erroneous because National Starch retained sufficient control in the contract over the premises and work to be done to render it liable for violation of its duty to provide him with a safe place to work. He argues that the evidence of National Starch’s right to control, taken most favorably for him, presents a genuine issue of material fact precluding summary judgment.

This court in 1970 in Craig v. Olin Mathieson Chemical Corporation, 427 F.2d 962, held that although a landowner owes the common law duty to warn employees of an independent contractor of hidden dangers, on the land, of which he knows but of which employees are ignorant, the landowner is not liable for an employee’s injuries where the employee was experienced in his particular work and was aware of an obvious dangerous condition. The holding was an application of the Illinois law at that time, Calvert v. Springfield Light Co., 231 Ill. 290, 293, 83 N.E. 184, 185 (1907), when Illinois courts had not adopted Restatement Rule § 414.

In the case before us, the concrete blocks over which Foster stumbled were not a hidden danger, but one that was, or clearly should have been, obvious to Foster. We see no genuine issue of material fact as to the liability of National Starch. Accordingly, National Starch was not liable, as a matter of law, under our decision in Craig. National Starch however concedes here that recent Illinois cases, Weber v. Northern Illinois Gas Company, 10 Ill.App.3d 625, 295 N.E.2d 41 (1973); Hill v. Natural Gas Pipeline Company of America, 11 Ill.App.3d 555, 297 N.E.2d 243 (1973), and Pasko v. Commonwealth Edison Company, 14 Ill.App.3d 481, 302 N.E.2d 642 (1973), have broadened the rule of Calvert, supra, and Nowicki v. Union Starch and Refining Company, 54 Ill.2d 93, 296 N.E.2d 321 (1973), by adoption of Restatement of Torts (Second) § 414. And the parties agree that under current Illinois law liability of National Starch depends upon the degree of control it retained under the contract. Weber v. Northern Illinois Gas Company, supra. It is the right retained and not the exercise of the right that is vital. Id.

Under the rule in Restatement of Torts (Second), mere retention by National Starch of a general right “to order the work stopped or resumed, to inspect its progress or receive reports, to make suggestions or recommendations which need not be followed, or to prescribe alterations and deviations” cannot render National Starch liable. Pasko v. Commonwealth Edison Company, 14 Ill.App.3d 481, 302 N.E.2d 642, 648; Weber v. Northern Illinois Gas Company, supra; see Hill v. Natural Gas Pipeline Company of America, supra. Under the rule, National Starch is not subject to liability unless it retained control to the degree that it interfered with the freedom of Blaw-Knox to do the work in its own way. Pasko, supra, 14 Ill.App.3d at 468, 302 N.E.2d 642.

The construction contract gave Blaw-Knox construction and supervisory control although National Starch reserved some generalized control. The only specific rights reserved by National Starch are: to add instructions, require additional work or serious changes or alterations or direct omissions of parts of the work, authorize additional overtime, and inspect the work with minimum interference.

National Starch had no power to forbid the work as dangerous, as in Weber. Its right of inspection was insufficient control; that merely entitled National Starch to see that the work was done according to plan. It could not direct how the work should be done; it owned none of the equipment used by Blaw-Knox; and the only employees on the site were inspectors. It reserved no rights that in any way affected the freedom of Blaw-Knox to do the work in its own way. Hill v. Natural Gas Pipeline Company of America, supra.

The grant of summary judgment for National Starch is not erroneous.

Affirmed.

      . Amine is a basic compound derived from ammonia by replacement of the hydrogen with hydrocarbon or other “radicals.”

      . The holding in Nowicki is not definitive. It can be read as reaffirming the common law duty of a landowner and also as anticipating the Restatement Rule.

      . § 414. Negligence in Exercising Control Retained by Employer — One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by Ms failure to exercise Ms control witli reasonable care.

      . Foster contends, without basis in the record, that the district court held that liability of a landowner to an employee of an independent contractor could arise only on a showing of actual control. We find nothing in the district court’s Order and Summary Judgment to support such a contention. Furthermore, the transcript of March 16, 1973 does not support Foster’s contention.


author: SPRECHER, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. LAMARS DAIRY, INC., et al., Defendants-Appellees.
    No. 73-1889.
    United States Court of Appeals, Seventh Circuit.
    Argued April 9, 1974.
    Decided July 10, 1974.
    Irving Jaffe, Acting Asst. Atty. Gen., William Kanter and Barbara L. Herwig, Attys., Dept, of Justice, Washington, D. C., David J. Cannon, U. S. Atty., Milwaukee, Wis., for plaintiff-appellant.
    Roy J. Josten, Racine, Wis., for def endants-appellees.
    Before SWYGERT, Chief Judge, SPRECHER, Circuit Judge, and NO-LAND, District Judge.

       District Judge James E. Noland of tlie Southern District of Indiana is sitting by designation.

   SPRECHER, Circuit Judge.

This appeal from the denial of plaintiff's motion for summary judgment is before the court as an appeal from an interlocutory order under 28 U.S.C. § 1292(b).

Pursuant to the Agricultural Adjustment Act, 7 U.S.C. § 601 et seq., the Secretary of Agriculture promulgated Federal Milk Order No. 30, 7 C.F.R. Part 1030. From the effective date of the order in 1968 until sometime in 1971, defendants made payments into the producer settlement fund. The federal milk market administrator thereafter determined that defendants were “handlers” **and were in violation of the order by refusing to make payments into the fund.

On August 28, 1972, the United States brought suit to enforce the order under the authority of 7 U.S.C. § 608a(6). Defendants answered the complaints with several affirmative defenses based on constitutional claims and an additional defense that the administrator had incorrectly determined them to be handlers. Plaintiff moved for summary judgment.

The district judge denied the motion because he believed there was a material issue of fact involving defendants’ classification as handlers. .

The definitive interpretation of the Agricultural Adjustment Act’s enforcement scheme is the Supreme Court’s opinion in United States v. Ruzicka, 329 U.S. 287, 67 S.Ct. 207, 91 L.Ed. 290 (1946). The Ruzickas defended against a § 608a(6) suit on the ground that the administrator’s inspection of their accounts and tests of their products had been faulty and improper. The Supreme Court held that a defendant could not resist a claim under § 608a(6) without, having pursued its administrative remedies and judicial review of the administrative decision under § 608c(15).

Lower courts almost without exception have followed Ruzicka by refusing to allow § 608a(6) defendants to raise any issues — even constitutional challenges— that have not been tried in § 608c(15) proceedings.

Defendants attempt to distinguish their case from Ruzicka on the ground that the Ruzickas admitted they were handlers, while defendants do not. Other courts have rejected such a distinction. United States v. Country Lad Foods, Inc., 327 F.Supp. 395 (N.D.Ga.1971); United States v. Sterling Davis Dairy, 18 A.D. 780 (D.N.J.1959); United States v. Hinman Farms Products, Inc., 156 F.Supp. 607 (N.D.N.Y.1957). The many reasons listed in Ruzicka for the necessity of administrative exhaustion apply as strongly to a defense of incorrect classification as to a defense of improper inspection of accounts.

There are only two cases where a judge denied or postponed the granting of a § 608a(6) injunction without exhaustion under § 608c (15). One is United States v. Tapor-Ideal Dairy Co., 175 F.Supp. 678 (N.D.Ohio 1959). The defendant allegedly owed money not to a marketing pool but directly to a cooperative. Its defense was accord and satisfaction, since the cooperative had accepted a check tendered by defendant as payment in full. The judge said he could decide issues “so long as they are strictly of a legal nature, require no special understanding of the milk industry, and the assumption of jurisdiction would not hinder or adversely affect the orderly administration of the program.” 175 F.Supp. at 682. None of the above characterizations is true of defendants’ claim that they are not handlers.

The second case is actually a series of cases under the name United States v. Brown. The first opinion appears at 211 F.Supp. 953 (D.Colo.1962). Defendants denied they were handlers because they “owned” 10 percent of their producers’ cows. The district court postponed ruling on the government’s motion for summary judgment to allow defendants to begin proceedings under § 608c(15). The court again postponed adjudication during pending administrative proceedings at 217 F.Supp. 285 (D.Colo.1963), aff’d, 331 F.2d 362 (10th Cir. 1964). The judge expressed the opinion that the Secretary was not entitled to injunctive relief because defendants’ status as handlers was a matter of considerable doubt. Finally the Secretary ruled that defendants were handlers. The district judge consolidated the § 608c(15)(B) review with the § 608a(6) suit and agreed with the Secretary that defendants were subject to the order. 23 A.D. 1323 (D.Colo.1964), aff’d, 367 F.2d 907 (10th Cir.1966), cert. denied, 387 U.S. 917, 87 S.Ct. 2028, 18 L.Ed.2d 969 (1967).

The Brown cases illustrate the folly of deviating from the statutory enforcement scheme under the Agricultural Adjustment Act. The same district judge who had so many doubts as to the applicability of the Act to defendants became totally convinced defendants were handlers, once he had the benefit of the Secretary’s opinion. Meanwhile, years passed without defendants’ paying into the fund.

The only forum open to defendants for adjudication of their affirmative defenses is a hearing before the Secretary of Agriculture under § 608c (15). The district judge erred in considering those defenses in the § 608a(6) proceeding. Therefore the order of the district court is vacated and the case is remanded for further proceedings.

Vacated and remanded.

      . 7 C.F.R. § 1030.13 states in part: “ ‘Handler’ means: (a) Any person in his capacity as the operator of one or more pool plants.

      . The several district courts of the United States are vested -with jurisdiction specifically to enforce, and to prevent and restrain any person from violating any order, regulation, or agreement, heretofore or hereafter made or issued pursuant to this chapter, in any proceeding now pending or hereafter brought in said courts.

      . (A) Any handler subject to an order may-file a written petition with the Secretary of Agriculture, stating that any such order or any provision of any such order or any obligation imposed in connection therewith is not in accordance with law and praying for a modification thereof or to be exempted therefrom. He shall thereupon be given an opportunity for a hearing upon such petition, in accordance with regulations made by the Secretary of Agriculture, with the approval of the President. After such hearing, the Secretary shall make a ruling upon the prayer of such petition which shall be final, if in accordance with law.
      (B) The District Courts of the United States in any district in which such handler is an inhabitant, or has his principal place of business, are vested with jurisdiction in equity to review such ruling, provided a bill in equity for that purpose is filed within twenty days from the date of the entry of such ruling. Service of process in such proceedings may be had upon the Secretary by delivering to him a copy of the bill of complaint. If the court determines that such ruling is not in accordance with law, it shall remand such proceedings to the Secretary with directions either (1) to make such ruling as the court shall determine to be in accordance with law, or (2) to take such further proceedings as, in its opinion, the law requires. The pendency of proceedings instituted pursuant to this subsection (15) shall not impede, hinder, or delay the United States or the Secretary of Agriculture from obtaining relief pursuant to section 608a(6) of this title. Any proceedings brought pursuant to section 608a (6) of this title (except where brought by way of counterclaim in proceedings instituted pursuant to this subsection) shall abate whenever a final decree has been rendered in proceedings between the same parties, and covering the same subject matter, instituted pursuant to this subsection (15). (Emphasis added.)

      . United States v. Yadkin Valley Dairy Cooperative, Inc., 315 F.2d 867 (4th Cir. 1963); United States v. Ideal Farms, Inc., 262 F.2d 334 (3d Cir. 1958); United States v. Turner Dairy Co., 166 F.2d 1 (7th Cir.), cert. denied, 335 U.S. 813, 69 S.Ct. 29, 93 L.Ed. 368 (1948); United States v. Abbotts Dairies, 315 F.Supp. 571 (E.D.Pa.1970); United States v. Farm Dairy Cooperative, Inc., 298 F.Supp. 769 (N.D.W.Va.1969); United States v. Mosby, 221 F.Supp. 624 (S.D.Miss.1963); United States v. Sanitary Dairy Products, Inc., 211 F.Supp. 185 (W.D.La.1962); United States v. Mills, 185 F.Supp. 709 (D.Md.1960).
      The same rule of exhaustion of administrative remedies is employed in criminal proceedings under the Act (Panno v. United States, 203 F.2d 504 (9th Cir. 1953)) and in suits against the government for injunctive or declaratory relief (Uelmen v. Freeman, 388 F.2d 308 (7th Cir. 1967), cert. denied, 390 U.S. 1026, 88 S.Ct. 1413, 20 L.Ed.2d 283 (1968); Hygeia Dairy Co. v. Benson, 151 F.Supp. 661 (S.D.Tex.1957)).


author: ELY, Circuit Judge:

text:
    In re HOTEL TELEPHONE CHARGES.

    No. 73-1107.
    United States Court of Appeals, Ninth Circuit.
    June 19, 1974.

      See also, Jud.Pan.Mult.Lit., 341 F.Supp. 721, 374 F.Supp. 1402.
    E. Judge Elderkin (argued), of Bro-beck, Phleger & Harrison, San Francisco, Cal., for appellants.
    Joseph W. Cotchett (argued), of Cotehett & Hutchinson, San Mateo, Cal., for appellee.
    Before ELY, TRASK, and WALLACE, Circuit Judges.

       Consolidated with; Hafif v. Hilton Hotels Corp., (two cases); Colson v. Fairmont Hotel Co., Inc.; Colson v. Radisson Denver Corp.; Hicks v. Hilton Hotels Corp.; Colson v. Hilton Hotels Corp. (five cases); Colson v. Hotel Waldorf-Astoria Corp.

   OPINION

ELY, Circuit Judge:

This appeal is from an Order allowing the appellees’ consolidated actions to be maintained as a class action under Rule 23, Federal Rules of Civil Procedure. Permission to appeal the interlocutory Order was granted pursuant to 28 U.S. C. § 1292(b).

The first action in this case was filed in the Central District of California, and shortly thereafter, ten similar actions were filed in nine other districts. The Judicial Panel on Multi-District Litigation ordered the consolidation of all the actions in the Central District of California. The complaints allege a nationwide conspiracy among forty-seven hotel chains and approximately six hundred individual hotels to increase room rates in violation of federal antitrust laws and state laws. The appellants allegedly acted in concert to add a surcharge for telephone services to the quoted room rate. The appellees further alleged that such a charge, generally amounting from one to three percent of the quoted room rate, was labeled a tax or otherwise confusingly mislabeled. On the basis of these allegations, the ap-pellees seek recovery for themselves and for all other hotel guests similarly surcharged, a class consisting of an estimated forty million persons. The parties agree that the claim of the average class member would be about $2.00 per person in the event of recovery. Settlements on behalf of the class have been reached with a few of the defendants, and settlement orders setting out the terms of the agreements and providing for their submission to the class have been entered in the Northern District of Illinois.

Here, the controlling issue is whether the District Court correctly applied Rule 23(b)(3) in determining that the actions were appropriate for class action treatment. Rule 23(b)(3) requires that common questions of law or fact predominate over any individual questions, and that a class action be superior to other available methods for the fair and efficient adjudication of the controversy. While these two requirements are to some extent interrelated, they are not co-extensive and each requirement must be met. See LaMar v. H. & B. Novelty Loan Co., 489 F.2d 461 (9th Cir., 1973). We are firmly convinced that, in these cases, the appellees did not make an adequate showing of proof as to either element of Rule 23(b)(3).

I. Common Questions Do. Not Predominate Over Individual Questions

Two types of claims have been brought by the appellees: (1) claims that the appellants conspired to violate the federal antitrust laws; (2) pendent state claims primarily based on statutory or common law fraud.

The state fraud claims raise individual issues as to whether each of the six hundred hotels falsely represented or concealed the nature of the charge, as to individual reliance on any alleged misrepresentation, and as to the specific amount of damage suffered by each member of the class as the result of the alleged misrepresentation. The appel-lees argue that these individual questions can be conveniently dealt with by allowing them to recover if it is proved that the appellants did participate in a “fraudulent scheme,” thereby fusing the separate elements of a fraud action into a single conspiracy issue. That same argument was made in Cotchett v. Avis Rent-A-Car System, Inc., 56 F.R.D. 549 (S.D.N.Y.1972), a case which also involved an alleged conspiracy fraudulently to impose a surcharge on customers. In Cotchett the court wrote:

“ . . . [T]he second, third, and fourth stated claims . . . allege active concealment, failure to disclose, fraud, and reliance. . . . [Tjhese allegations raise such individualized questions of law and of fact as to overwhelm whatever kernel of common issues might be involved; with 500,000 to 1,500,000 plaintiffs and over 100 (not all as yet identified) defendants, involving individual dealings, the questions of knowledge of the surcharge, reliance on the alleged misrepresentation, methods of concealment, and failure to disclose to each plaintiff, an adjudication of the ‘common’ question of conspiracy would not advance matters very far at all.” Id. at 552.

Our case involves millions more plaintiffs, hundreds more defendants, and an even greater variety of alleged misrepresentations and surcharge amounts than Cotchett, supra. Without eliminating or eroding the traditional or statutory elements of a fraud action, there is no possibility that common questions can predominate over individual ones in these claims. See Advisory Committee’s Note, Proposed Rules of Civil Procedure, 39 F.R.D. 69, 103 (1966), wherein the Committee noted that a class action treatment may be unsuitable in a fraud case if there are material variations in the representations made or in the kinds or degrees of reliance by the plaintiffs. See also Simon, Class Actions — Useful Tool or Engine of Destruction, 55 F.R.D. 375 (1972).

The appellees’ Sherman Act claims, while charging hundreds of hotels with similar conduct, nonetheless raise individual questions that could require decades of litigation. The appellees’ allegation that a conspiracy existed to violate the antitrust laws does not insure that common questions will predominate. Advisory Committee’s Note, supra at 103. In order substantially to establish each hotel’s involvement in a conspiracy to violate the antitrust laws, each hotel’s knowing participation would be a requisite element of proof. Furthermore, since the surcharges varied from hotel to hotel, the amount of each defendant’s surcharge would necessarily require individual treatment, as would the period in which each hotel’s surcharge was in effect. And while the amount of each hotel’s surcharge might constitute prima facie evidence of the amount of damage, the appellants might rebut that evidence by showing what the cost of each hotel’s telephone service charge would have been in a competitive market. See Pollack, The “Injury” and “Causation” Elements Of a Treble Damage Antitrust Action, 57 Nw.L.Rev. 691, 692 (1963); Timberlake, The Legal Injury Requirements And Proof of Damages In Treble Damage Actions Under The Antitrust Laws, 30 Geo.Wash.L. Rev. 231 (1961-62). For a discussion of the statutory limitations within which plaintiffs must establish their damages, see Malina, Fluid Class Recovery As a Consumer Remedy In Antitrust Cases, 47 N.Y.L.Rev. 477, 492 (1972). After the basis for computing damages had been individually determined for each defendant, each member of the class seeking recovery would then be required to prove that he patronized the hotel while the surcharge was in effect and that he absorbed the cost of the surcharge. Furthermore, it would then be necessary to compute the amount of damages due the class member. In a class of forty million, assuming only ten percent of these unknown class members came forward with claims, and assuming the proof of each claim required only ten minutes, approximately one hundred years would yet be required to adjudicate the claims. Unless the court is to allow the procedural device of the class action to wear away the substantive requirements to maintain a private antitrust cause of action, this suit raises far too many individual questions to qualify for class action treatment.

The appellees have argued that many of the individual questions arising from the damage claims can be solved by allowing damages in the form of fluid recovery, relying on Bebchick v. Public Utilities Commission, 115 U.S.App.D.C. 216, 318 F.2d 187 (1963), cert. denied 373 U.S. 913, 83 S.Ct. 1304, 10 L.Ed.2d 414 (1963); In Re Antibiotics Antitrust Actions, 333 F.Supp. 278 (S.D.N.Y.1971); and Daar v. Yellow Cab Co., 67 Cal.2d 695, 63 Cal.Rptr. 724, 433 P.2d 732 (1967). Both Bebchick and Daar are inapposite, as neither case involved a statutory basis for recovery as do the federal' antitrust laws. Furthermore, Bebchick was not even brought as a class action, and Daar arose under a state class action statute with requirements that differ from Rule 23. As for In Re Antibiotic Antitrust Actions, that case involved the approval and administration of a settlement by the District Court, rather than the actual recovery of gross damages for the class as a whole. We agree with the decision reached in Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973), that allowing gross damages by treating unsubstantiated claims of class members collectively significantly alters substantive rights under the antitrust statutes. Such enlargement or modification of substantive statutory rights by procedural devices is clearly prohibited by the Enabling Act that authorizes the Supreme Court to promulgate the Federal Rules of Civil Procedure.

The District Court in this case has relied on the “imagination” of appellees’ counsel to provide solutions that will, at some point in the future, prevent these individual issues from splintering the action into thousands of individual trials requiring years to litigate. Thus far the appellees have not been able to demonstrate to our satisfaction that the individual questions will not overwhelm the common questions, unless some of the required elements or allowed defenses in respect to the alleged claims are eliminated or impaired. The issues raised by the apparent existence of numerous individual questions must be resolved before a class is certified, even if certification is conditional. Conditional certification is not a means whereby the District Court can avoid deciding whether, at that time, the requirements of the Rule have been substantially met. The purpose of conditional certification is to preserve the Court’s power to revoke certification in those cases wherein the magnitude or complexity of the litigation may eventually reveal problems not theretofore apparent. But in this case the District Court seemed to brush aside one of the requirements of Rule 23(b)(3) by stating that at this time “analysis of the individual versus common question issue would be for the Court to act as a seer.” However difficult it may have been for the District Court to decide whether common questions predominate over individual questions, it should not have sidestepped this preliminary requirement of the Rule by merely stating that the problem of individual questions “lies far beyond the horizon in the realm of speculation.”

II. The Present Class Action Is Not the Superior Method of Adjudication.

In attempting to satisfy the second requirement of Rule 23(b)(3), the appel-lees argue that maintaining individual actions is not economically feasible in this case. They contend that the suit must therefore proceed as a class action, regardless of its unmanageability. Furthermore, they maintain that if they are not allowed to proceed with their class action suit, the appellants will go “unpunished” for their alleged antitrust violations.

Despite the appellees’ arguments, the desirability of allowing small claimants a forum to recover for large-scale antitrust violations does not eclipse the problem of unmanageability. Eisen v. Carlisle & Jacquelin, supra. Some actions have been dismissed on the basis of manageability problems alone, particularly in eases involving large numbers of plaintiff class members. See Schaffner v. Chemical Bank, 339 F.Supp. 329 (S.D.N.Y.1972); City of Philadelphia v. American Oil Co., 53 F.R.D. 45 (D.N.J.1971). In structuring this suit to include over six hundred defendants and millions of plaintiffs, the appellees have virtually insured that the litigation would be intolerably time-consuming and, because of the legal nature of the claims, involve a great variety of individual questions. As the Court noted in Morris v. Burchard, 51 F.R.D. 530, 535 (S.D.N.Y.1971), “It cannot be lightly overlooked that as a class gets larger it may transform a litigation into a gigantic burden on the Court’s resources beyond its capacity to manage or effectively control.” See Hackett v. General Host Corp., 1972 Trade Cases ¶ 73,879 (E.D.Pa.1970), app. dismissed, 455 F.2d 618 (3d Cir. 1972), cert. denied 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972); United Egg Producers v. Bauer International Corp., 311 F.Supp. 1375 (S.D.N.Y.1970); Ward v. Luttrell, 292 F.Supp. 165 (E.D.La.1968); Simon, Class Actions — Useful Tool or Engine Of Destruction, supra. In light of the fact that the proposed class action is likely to consume decades of judicial time, the potential benefit to the class should be carefully weighed against the burden the actions would place upon the federal courts. The average individual recovery in this case is estimated to be only two dollars. Even trebled, the amount of recovery would be entirely consumed by the costs of notice alone. Nor could such administrative costs be minimized by notice by publication or random notice, since the individual class members aré known and their addresses available in the appellants’ records, thus requiring actual notice. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), Eisen v. Carlisle & Jacquelin, supra. In view of the nonexistent, or miniscule, recoveries that are likely to accrue to the supposedly intended beneficiaries, it is not surprising that most of the named plaintiffs are attorneys acting as counsel for themselves. Considering that this action has been primarily generated and financially supported by the lawyers who possibly stand to realize astronomical fees, and not by the individuals whose potential claims in any event are de minimis, we find the Court’s conclusion in Berley v. Dreyfus Co., 43 F.R.D. 397, 398 (S.D.N.Y.1967) applicable here:

“ . . .we think that subpara-graph (b)(3) read as a whole reflects a broad policy of economy in the use of society’s difference-settling machinery. One method of achieving such economy is to avoid creating lawsuits where none previously existed. This is in part why ‘the extent and nature of any litigation . . . already commenced’ is pertinent to the required finding. If a class of interested litigants is not already in existence the court should not go out of its way to create one without good reason.” (Footnotes omitted.)

Whenever the principal, if not the only, beneficiaries to the class action are to be the attorneys for the plaintiffs and not the individual class members, a costly and time-consuming class action is hardly the superior method for resolving the dispute. See Free World Foreign Cars, Inc. v. Alfa Romeo, 55 F.R.D. 26 (S.D.N.Y.1972); Cotchett v. Avis Rent-A-Car System, Inc., 56 F.R.D. 549 (S.D.N.Y.1972).

The appellees’ attorneys have asserted that burdening the already strained judicial resources with this class action, which promises no real benefit to class members, is nonetheless justified on the ground that allowing the suit will serve to “punish” and “deter” antitrust violations. But the Congressional scheme does not contemplate that private attorneys are to act as prosecutors to force antitrust violators to disgorge their illegal profits in the general interest of society at large. The antitrust laws focus on the compensation of parties actually injured, presupposing that a plaintiff can prove that he was in fact injured as a proximate result of an antitrust violation. Hawaii v. Standard Oil Co. of California, 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972). The fact that the injured plaintiff is allowed treble damages does not change the basic nature of the private antitrust action as an action intended to compensate. When, as here, there is no realistic possibility that the class members will in fact receive compensation, then monolithic class actions raising mind-boggling manageability problems should be rejected. If, as appellees maintain, the suit would not be litigated except as a class action which would provide plaintiffs’ attorneys with lucrative incentives, then “that decision of the legal marketplace may be the best reflection of a public consciousness that the time of the lawyers and of the court should best be spent elsewhere.” Hackett v. General Host Corp., supra, 455 F.2d at 626. We agree with the Second Circuit’s observation in Eisen v. Carlisle & Jacquelin, supra, that it is for the Congress to provide a solution if existing remedies do not adequately compensate consumers damaged by individually small, but illegal, charges. Judges should not significantly tamper with legislative enactments simply to satisfy their own individual notions as to sound public policy.

In view of the following factors: (1) the predominance of individual questions over common questions; (2) the unmanageability of the litigation in terms of time, administrative costs, and complexity; (3) the minimal recovery it promises the potential individual class members; and (4) the initiation and financial maintenance of the suits primarily by attorneys acting in a dual capacity as named plaintiffs and counsel for the plaintiffs, we hold that the requirements of Rule 23 have not been met and that, consequently, the District Court’s class certification was erroneous. Our conclusion in this respect renders it unnecessary to reach other issues presented in the appeal.

Reversed.

      . While appellees alleged that all the appellants sought to disguise the surcharge as a local tax, they then further alleged that the charges were variously labeled “Tx Tms”, “Em Tx”, “Sundries”, “Misc.”, “In Tms”, or “GMS.” Moreover, some defendants charged a flat fee, while others charged varying percentages of the room rate.

      . The appellees allege a far wider conspiracy than heretofore alleged in massive class actions. See Eisen v. Carlisle & Jacquelin, 52 F.R.D. 253 (S.D.N.Y.1971) (two alleged conspirators) ; West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710 (S.D.N.Y.1970) (six alleged conspirators) ; In Re Antibiotic Antitrust Actions, 333 F.Supp. 278 (S.D.N.Y.1971) (five alleged conspirators) ; Minnesota v. United States Steel Corp., 44 F.R.D. 559 (D.Minn.1968) (six alleged conspirators); Philadelphia v. American Oil Co., 53 F.R.D. 45 (D.N.J.1971) (twelve alleged conspirators); Illinois v. Harper & Row Publishers, Inc., 301 F.Supp. 484 (N.D.Ill.1969) (eighteen alleged conspirators).

      . In Cherner v. Transitron Electric Corp., 201 F.Supp. 934 (D.Mass.1962), distribution costs in administering the damage fund were $25.47 per claimant, excluding attorneys’ fees, and $33.80 per claimant including those fees. See Comment, Managing the Large Class Action, 87 Harv.L.Rev. 426, 430 n. 31 (1973).

      . As we stated in In re Multidistrict Vehicle Air Pollution M.D.L. No. 31, 481 F.2d 122, 130 (9th Cir. 1973) :
      “Insofar as the common weal was injured the federal government was the proper party to seek redress .... If the Government did not prosecute its action with sufficient vigor, the remedy lies in executive or legislative reform, not in judicial overreaching.”

      . This opinion was written prior to the Supreme Court’s decision in Eisen v. Carlisle & Jacquelin, 417 U.S. 150, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), which affirmed Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973). We see nothing in the Supreme Court’s new opinion that is inconsistent with our decision here. To the extent that we have relied on the Second Circuit’s opinion in Eisen, the Supreme Court’s affirmance of that decision strengthens our own.


author: HILL, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Robert D. POMMERENING and Cletus A. Reding, Defendants-Appellants.
    Nos. 73-1937, 73-1938.
    United States Court of Appeals, Tenth Circuit.
    July 1, 1974.
    Rehearing Denied Aug. 5, 1974.

      Alfred M. Carvajal, Albuquerque, N. M., for defendants-appellants.
    Victor R. Ortega, U. S. Atty., Albuquerque, N. M., for plaintiff-appellee.
    Before PICKETT, HILL and DOYLE, Circuit Judges.
   HILL, Circuit Judge.

Appellants were indicted by a federal grand jury in the State of New Mexico for bribing a government official in violation of 18 U.S.C. § 201(b)(1), and committing perjury before a grand jury of the United States in violation of 18 U.S.C. § 1623(a). Subsequently appellants were convicted by a jury on all counts of the indictment.

The following evidence was adduced at trial. In the fall of 1971 appellants began negotiating with Ford Marketing Corporation for the Dick Russell Ford dealership in Clovis, New Mexico. To purchase this dealership appellants needed to borrow $200,000. Rafael Gomez was therefore taken into the partnership, the apparent purpose being that his minority status would assist them in obtaining a Small Business Administration (SBA) minority loan. It was soon learned, however, that appellants could not qualify for a minority program loan because Gomez’ interest in the enterprise was only ten percent.

While seeking this minority loan appellants met Moses L. Sanchez, the minority enterprise representative for SBA in New Mexico. After talking to Sanchez appellants began looking for a bank which would make them a loan guaranteed by the SBA. Ultimately appellants applied with First National Bank of Clovis for the $200,000 loan. The bank officer who processed appellants’ application testified that appellants behaved as if they already had approval for this loan from Sanchez. On October 29, after the bank tentatively approved the loan, appellants hand carried the loan papers to the SBA office in Albuquerque.

Appellants out of their own funds paid Ford $25,000 as a down payment for the dealership. On November 1, 1971, Ford turned over operation of the dealership to appellants. Two weeks later, when appellants still had not heard SBA’s decision on their loan application, Ford executives began pressing them for the rest of the money.

Sometime prior to November 16, 1971, the following events took place. Sanchez and appellants were discussing SBA loans when the conversation changed to Sanchez’ favorite outdoor activities: hunting and fishing. Sanchez mentioned that he was thinking of buying a new Chevrolet four-wheel drive Blazer for his forthcoming elk hunt and was wondering what type of trade-in he could expect on a car he presently owned. A short time later appellant Pommerening asked one of his salesmen to locate a 1972 Chevrolet Blazer with four-wheel drive. Once this was done appellants purchased the Blazer with a corporate check of Dick Russell Ford, Inc. Appellant Reding picked up the Blazer on November 16, 1971, and delivered it to Sanchez at his home in' Albuquerque. Sanchez paid no money for the Blazer.

On the day following delivery of the Blazer, Sanchez requested the SBA district director for New Mexico, Clifford Hawley, to expedite appellants’ loan application. Hawley immediately dispatched William Glennon, the loan officer assigned to the case, from Albuquerque to Clovis by plane to investigate the loan application. Following Glennon’s trip to Clovis, the loan was recommended for approval by Glennon without extensive credit investigation. It was approved by the chief finance officer on December 6, 1971. On January 6, 1972, appellants concluded the Ford dealership purchase.

In August, 1972, Moses Sanchez resigned from his SBA position following the commencement of a bribery investigation into his activities by the United States Attorney’s office and the FBI. Shortly after Sanchez’ resignation FBI Special Agent Frank Haines visited appellants’ Ford dealership, which by now was called Big Country Ford, to trace the 1972 Chevrolet Blazer. Haines asked Pommerening if he could look at records of the Blazer sale, but Pommer-ening suggested he come back later after the records were found. Because there was no sale Pommerening and Reding, with the assistance of Big Country Ford’s bookkeeper, Brian Ballew, prepared a phony invoice reflecting a sale to an “A. Jenkins” for $5,034.05 in cash. This false information was turned over to Haines. Pommerening also told Haines that the Blazer had been ordered by an unknown contractor and delivered to an Albert Jenks or an A. Jenkins for cash. Later Haines received other documents from Pommerening concerning the Blazer sale; all of these furnished copies were false records which had been prepared by Pommerening’s daughter-in-law under the direction of Pommeren-ing and Ballew.

On November 20, 1972, Pommerening and Reding appeared before a grand jury in Albuquerque investigating possible bribery violations by Sanchez. They brought with them subpoenaed corporate books and records containing the false pages previously furnished to the FBI. Pommerening and Reding both testified that the Blazer was sold and delivered in Albuquerque by Reding to Albert Jenks for $5,034.05 in cash, and that such sum went into the corporate treasury. Red-ing identified a false invoice as being the sale document and Pommerening demonstrated to the grand jury where the money was taken into income in the books. Later Haines returned to Big Country Ford and secured additional documents, including a deposit slip showing that only $269.33 in cash had been deposited in the corporate account at the time of the Blazer transaction.

On January 17, 1973, a new subpoena was served on appellants. That night a fire broke out in the immediate area of the subpoenaed records at Big Country Ford. Clovis firemen extinguished the fire before any records were damaged. The bookkeeper, Ballew, ultimately testified for the government under a grant of immunity. He testified that the fire at Big Country Ford on January 17 was an attempted arson arranged by appellants to destroy the false records. Sanchez had put Pommerening, Reding and Ballew in touch with an arsonist called “Vince”. Appellants paid Vince $3,000 for the attempted arson.

On January 21, 1973, Pommerening came to Albuquerque with the subpoenaed records in a corporate automobile. The automobile containing the records was allegedly stolen that night from the basement of an Albuquerque motel. Ballew testified that Pommerening arranged with Sanchez to have the car stolen and the records destroyed. Because the genuine records and original false records were never located, although the automobile was recovered, the government used copies previously obtained by the FBI to prove its case.

Following a lengthy trial appellants were convicted on the bribery and perjury counts. Appellants were sentenced to five years on each count, such sentences to run concurrently. In addition, each appellant was ordered to pay one-half the costs of prosecution.

On appeal numerous grounds for reversal are proffered. The first alleged basis for reversal is that the federal bribery statute, 18 U.S.C. § 201(b), is unconstitutionally vague since men of common intelligence must guess as to its meaning and differ as to its application. Connally v. General Constr. Co., 269 U.S. 385, 46 S.Ct. 126, 70 L.Ed. 322 (1926).

Title 18 U.S.C. § 201(b) provides in part:

Whoever, directly or indirectly, corruptly gives, offers or promises anything of value to any public official or person who has been selected to be a public official, or offers or promises any public official or any person who has been selected to be a public official to give anything of value to any other person or entity, with intent—
(1) to influence any official act; (Emphasis added).

Appellants contend that 18 U.S.C. § 201(b) is unconstitutionally vague because the words “corruptly”, “value”, and “influence” are not defined; as a result the statute does not inform those subject to it what acts must be avoided. We do not find the ambiguity in § 201(b) which appellants attribute to it. The words “corruptly”, “value”, and “influence” are applied in their ordinary, everyday sense. It is obvious from reading § 201(b) that Congress intended to prohibit individuals from giving government employees, while they are acting in their official capacity, compensation in return for special favors. Clearly a person of common intelligence would understand from reading § 201(b) that giving compensation to a government official in exchange for preferential treatment is not allowed. The ordinary person would therefore understand that giving a $5,000 automobile to a government official, in exchange for that official’s influence in expediting a loan application, constitutes corruptly giving of something of value to influence an official act. See United States v. Bishton, 150 U.S.App.D.C. 51, 463 F.2d 887 (1972); United States v. Irwin, 354 F.2d 192 (2d Cir. 1965), cert. den’d, 383 U.S. 967, 86 S.Ct. 1272, 16 L.Ed.2d 308 (1966).

Appellants next challenge their perjury convictions. It is their position they committed no perjury by testifying before the grand jury from falsified corporate records because it was the United States attorney rather than themselves who “used” the records. Title 18 U.S.C. § 1623(a) prohibits a person from using false records in a grand jury proceeding; since the United States attorney subpoenaed the corporate records, so the argument goes, and appellants merely answered those questions relating to the records which were asked by the United States attorney, appellants did not “use” the books in a manner prohibited by law. We cannot agree with appellants’ rather legalistic argument. Even if we accept appellants’ definition of “use” as “meaning to employ for the attainment of some purpose or end, to avail one’s self of . . . ”, 91 C.J.S. Use, at 517, it is clear that appellants altered the corporate records so that under the United States Attorney’s examination the records would show no wrongdoing by appellants. When appellants appeared before the grand jury they brought along false records which would cover up their bribery. They relied upon these false documents in answering the United States attorney’s questions; we believe such conduct is tantamount to using records before the grand jury in a manner prohibited by law and thus reject appellants’ perjury argument.

Appellants next challenge the sufficiency of the indictment. They argue the bribery count does not state with sufficient certainty the essential elements of the crime so that appellants know what they are charged with; thus appellants could not adequately prepare their defense. We disagree; the bribery count specifies appellants as giving the bribe, Sanchez as receiving the bribe, the SBA as employing Sanchez, the 1972 Chevrolet Blazer as the thing of value given, the cost of the Blazer as approximately $5,000, the $200,000 loan involved in the bribe, and the influencing of an official act as the reason for the bribe. The indictment follows closely 18 U.S.C. § 201(b) and is correct, specific and sufficiently detailed to enable appellants to adequately prepare their defense. See Stephens v. United States, 347 F.2d 722 (5th Cir. 1965), cert. den’d, 382 U.S. 932, 86 S.Ct. 324, 15 L.Ed.2d 343.

Appellants also attack the sufficiency of the perjury counts because the allegations state that appellants gave Moses Sanchez a bribe in exchange for Sanchez’ assistance in violation of 18 U. S.C. § 201. Under 18 U.S.C. § 201, there is no crime unless the gift is with the intent to influence an official act. Assistance from a public official, appellants suggest, is not the same as “influencing” an official act. Since perjury is defined as a false “material” declaration, appellants could have answered the questions falsely and still not be guilty of perjury because their answers were not material to the crime of bribery. Their answers may have been material to eliciting assistance from Sanchez, but not to the crime of influencing an official act. We believe the government correctly answers this argument when it states that materiality of false declarations is sufficiently charged if the facts alleged show such statements were material. LaSalle v. United States, 155 F.2d 452 (10th Cir. 1946). The facts show unequivocally that appellants’ false statements were material to the crime charged, and hence the perjury charges are sufficiently alleged.

Appellants’ most plausible argument is that all counts should be dismissed because they are based on evidence unlawfully obtained. Specifically, FBI Agent Harris took documents from appellants without advising them of their constitutional privileges as mandated in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966). Secondly, appellants were not advised of their constitutional rights prior to their grand jury testimony. The result was that both the documents and grand jury testimony were used to convict appellants of the bribery and perjury charges. Appellants’ position is that by the time the grand jury convened they were virtual defendants; obviously the United States attorney was looking for the briber as well as the bribee. Consequently appellants were subjected to an unreasonable search and seizure as prohibited by the Fourth Amendment and were forced to incriminate themselves which is prohibited by the Fifth Amendment.

Without deciding whether appellants had standing to assert constitutional rights relating to production of corporate records, we still find appellants’ argument to be without merit. At this point a review of the record is necessary. The government’s initial investigation, which began in August, 1971, did not involve appellants but rather centered around the bribery activities of Sanchez, minority enterprise representative of the SBA in New Mexico. Pursuant to this investigation, Haines cheeked with appellants on September 22, 1972, to obtain information on the 1972 Blazer automobile Sanchez was driving. Appellants responded to Haines’ request to look at the sale documents by supplying him with a false invoice reflecting a sale to an “A. Jenkins”. Appellant Reding told Haines the Blazer had been ordered by an unknown contractor and had been delivered to an A. Jenkins. On several other occasions appellants supplied Haines with false documents. On November 20, 1972, appellants told the grand jury essentially what they told Haines. The government attorney then permitted appellants to leave with their records without having them impounded. The investigation to locate the unknown contractor continued until January 3, 1973, when Haines discovered through other witnesses that false documents had been used.

Appellants’ principal argument is that by the time a grand jury was convened they were prime targets of the investigation. As a result they were virtual defendants who were entitled to their constitutional rights. We disagree ; the evidence is very clear that when the grand jury was convened in November, 1972, Sanchez was the person being investigated. The United States attorney felt appellants could give the grand jury information which would be useful in making a case against Sanchez. While appellants could have claimed privilege against self-incrimination when asked questions which demanded an incriminatory answer if' answered truthfully, the government had no duty to warn appellants of their constitutional rights in absence of any indication that it might bring charges against them. Robinson v. United States, 401 F.2d 248 (9th Cir. 1968). Appellants through fraud and deception led the government down a blind path for months and at the time of the grand jury investigation the government was still searching for “A. Jenks”, as the briber. Appellants were called as witnesses to testify about “A. Jenks’ ” connection with the Chevrolet Blazer transaction, but they were not at that time suspects. They were grand jury witnesses and as such were not entitled to warnings of their right to remain silent and right to counsel. United States v. DiMichele, 375 F.2d 959 (3d Cir. 1967), cert. den’d, 389 U.S. 838, 88 S.Ct. 54, 19 L.Ed.2d 100. Besides, at that time appellants were not under duress or compulsion which might constitute custodial interrogation, hence they were not entitled to Miranda warnings. United States v. Morado, 454 F.2d 167 (5th Cir. 1972), cert. den’d, 406 U.S. 917, 92 S.Ct. 1767, 32 L.Ed.2d 116; see United States v. Davis, 456 F.2d 1192 (10th Cir. 1972).

Appellants also suggest that failure to give them a Miranda warning bars their perjury prosecution for false testimony before the grand jury. The law is well settled, however, that even if appellants were entitled to a Miranda warning, failure to give the warning does not entitle them to commit perjury. Our legal system provides other methods for challenging the government’s right to ask questions. Bryson v. United States, 396 U.S. 64, 90 S.Ct. 355, 24 L.Ed.2d 264 (1969); see Cargill v. United States, 381 F.2d 849 (10th Cir. 1967), cert. den’d, 389 U.S. 1041, 88 S.Ct. 781, 19 L.Ed.2d 831 (1968); United States v. Winter, 348 F.2d 204 (2d Cir. 1965), cert. den’d, 382 U.S. 955, 86 S.Ct. 429, 15 L.Ed.2d 360.

Appellants contend prejudicial error was committed when they were prohibited from cross-examining Ballew in connection with his apparent alcoholic and drug problems. As we have pointed out on another occasion, however, cross-examination should be limited to subjects which are relevant to the issues. Examination of “collateral matters rests largely within the discretion of the trial court, and its ruling will not be disputed unless it appears that there has been a clear abuse of this discretion and an injustice done.” Marteney v. United States, 218 F.2d 258, 265 (10th Cir. 1954), cert. den’d, 348 U.S. 953, 75 S.Ct. 442, 99 L.Ed. 745 (1955). We find no abuse of discretion. Appellants intended to ask questions relating to specific acts occurring anywhere from four years to six months before the bribery. They were unable to show, however, that at any time pertinent to this case Ballew was suffering from the effects of alcoholism or drug addiction. Under these circumstances we do not believe the trial court’s refusal to allow this line of ques1 tioning constitutes an injustice warranting reversal.

Error also allegedly resulted when the trial court denied appellants’ requested instructions pertaining to essential elements of the crime of perjury. Specifically, appellants contend they were entitled to a perjury instruction relating to giving of incorrect testimony because of “surprise, confusion, haste, inadvertence, honest mistake as to facts, carelessness, or negligence”; secondly, an instruction should have been given to the effect that a defendant cannot be found guilty of perjury “if a question is vague or ambiguous when asked and evokes an untrue answer born of misunderstanding.” While appellants are entitled to have presented instructions relating to their theory of defense for which there is any foundation in the evidence, United States v. Hagen, 470 F.2d 110 (10th Cir. 1972), cert. den’d 412 U.S. 905, 93 S.Ct. 2291, 36 L.Ed.2d 970, it is clear that in the present case there is no evidence to reasonably support appellants’ proffered instructions. There is absolutely no evidence that appellants made incorrect statements to the grand jury because of misunderstanding, surprise, confusion, haste, and so forth. In fact, the evidence shows conclusively that appellants set out to perpetrate a deliberate fraud upon the grand jury. We believe the trial court was correct in denying these instructions.

The next alleged basis for error is that the government should not have been permitted to bring out the fact that appellants submitted false financial statements in regard to their application for an SB A guaranteed bank loan. In particular, the government should not have been allowed to raise the issue of appellants’ prior bankruptcies because it tended to show appellants’ bad character and tendency toward the perjury charge. Since appellants did not testify their character was never placed in issue, hence the government was precluded from making it an issue. The evidence abundantly demonstrates, however, that appellants’ false financial statements and bankruptcies were offered to establish the necessity and motive for the bribe. That is, through bribery appellants gained speedy approval of their loan application without being subjected to a thorough background check. They received a favorable response which most likely would not have been forthcoming had the SB A or Ford Marketing Corporation known of their prior voluntary bankruptcies. The general rule is that evidence of unconventional conduct is admissible if material to the crime charged. Welch v. United States, 371 F.2d 287 (10th Cir. 1966), cert. den’d, 385 U.S. 957, 87 S.Ct. 395, 17 L.Ed.2d 303. Unquestionably evidence of the false financial statements and appellants’ bankruptcies is material since it establishes the circumstances and motive for the bribe.

Appellants charge the trial court with error in failing to inform them of its proposed action upon requested instructions prior to counsel’s arguments to the jury. Rule 30, F.R. Crim.P., states in part that “[t]he Court shall inform counsel of its proposed action upon the requests prior to their arguments to the jury . . . . ” Appellants suggest this rule is mandatory and failure to strictly adhere to it is grounds for reversal. The reasoning behind this, appellants argue, is to assure that counsel may intelligently argue their case to the jury. The same argument was proffered in Whitlock v. United States, 429 F.2d 942 (10th Cir. 1970), and we held that the trial court’s procedure would not constitute reversible error unless the party “was unduly and unfairly prevented from making his argument to the jury or was substantially misled by the court’s actions or inaction in formulating his arguments.” Whitlock, at 946. In the case before us, no objection to the procedure was made during the course of the trial and appellants do not allege they were misled by the court’s action. They cite no specific prejudice and we discover none in the record; thus we find no reversible error.

After a guilty verdict was returned the court ordered appellants to pay certain costs of prosecution; the total cost for each appellant was $6,948.33. Appellants challenge the court’s authority to assess costs against them for: (1) witnesses who did not testify in the case; (2) the marshal’s per diem expenses and costs of boarding prisoner witnesses; (3) expenses of government agents who testified only to the reproductions of copies of exhibits; and (4) stenographic transcript expenses of grand jury testimony and expenses incurred in copying grand jury testimony furnished appellants under Jencks Act demand.

Appellants first challenge the court’s authority to assess costs against them for witnesses who did not testify in, the case. Generally speaking costs in criminal prosecutions are dependent wholly upon statutory provisions. 20 Am.Jur.2d, Costs, § 100, at 79. If a statute does not expressly allow the taxing of costs against a defendant for witnesses who did not testify there is no judicial authority for doing so. In disposing of this issue we must therefore look to 28 U.S.C. § 1918(b), which states that “[w]henever any conviction for any offense not capital is obtained in a district court, the court may order that the defendant pay the costs of prosecution.” The judicial rule developed pursuant to 28 U.S.C. § 1918(b) and its predecessors is that the taxing of costs in a criminal case is discretionary with the district court. United States v. Lee, 107 F.2d 522 (7th Cir. 1939), cert. den’d, 309 U.S. 659, 60 S.Ct. 513, 84 L.Ed. 1008; United States v. Bodine Produce Co., 206 F.Supp. 201 (D.Ariz.1962). This general rule is tempered, however, by the requirement that when witnesses are subpoenaed, but do not testify, it will be presumed that their testimony is not material and that they were unnecessarily brought to court. Thus, in the absence of equitable reasons, the costs of such witnesses should not be charged against the losing party. United States v. Lee, supra; United States v. Miller, 223 F. 183 (S.D.Ga.1915). In the present case the government submitted a Bill of Costs to the court and appellants filed their objections to the cost bill. The court, without holding a hearing to consider the equities of the cost bill, assessed costs against appellants for witnesses who did not testify at trial. We believe a hearing should be held on the question so the government can present its case supporting the taxing of costs against appellants. If the court concludes the nontestifying witnesses’ testimony was not material or no equitable reasons exist for assessing costs to appellants, then the government’s cost bill on this subject should be denied.

The next contention is that charging appellants for the marshal’s $400 per diem expenses and $408 lodging expenses for two prisoner witnesses is not authorized by statute. We agree. Title 28 U.S.C. § 1921 enumerates the charges of marshals that may be taxed as costs. Sums expended for per diem expenses and prisoners’ lodging do not come within this provision. These sums should be regarded as expenses of administration of justice assessed by the United States. United States ex rel. Griffin v. McMann, 310 F.Supp. 72 (E.D.N.Y.1970). The government replies, however, that 28 U.S.C. § 1920(3) is broad enough to provide for the marshal’s actual expenses in bringing imprisoned witnesses to trial, since it reads:

A judge or clerk of any court of the United States may tax as costs the following: . . .
(3) Fees and disbursements for printing and witnesses.

The government suggests that under 28 U.S.C. § 567 the marshal is authorized expenses for transporting prisoners, subsistence and so forth. Since no fee or travel expense is disbursed to the prisoners, the government’s expense in getting them to trial is the “disbursement” authorized by § 1920(3). We cannot accept this reasoning. Statutes relating to taxable costs are to a degree penal in character. As a result, they must be strictly construed and items to be taxed must be within the express language of the statute. See Braun v. Has-senstein Steel Co., 23 F.R.D. 163 (D.S. D.1959). We do not find, upon reading § 1920(3), where per diem expenses for marshals and lodging expenses for prisoners are authorized in criminal cases.

The next objection concerns the taxing of costs for the travel and subsistence of two FBI agents sent down from Washington, D. C., to authenticate blown-up photographs of records used by the government in its case against appellants. Only one of the agents testified. With respect to the testifying agent it appears his testimony was relevant and thus we cannot say the court abused its discretion in allowing as part of the taxable costs the agent’s travel and subsistence expenses. Whether the nontestifying agent’s testimony is material, thereby warranting the assessment of his costs against appellants, can be determined at the hearing.

Error is alleged in allowing costs for the stenographic transcript of grand jury testimony of witnesses not testifying at trial; also in allowing costs to be assessed against appellants for copies of the grand jury testimony furnished them under Jenck’s Act demand. We believe the trial court’s taxing of costs in this area was not an abuse of discretion. Under 28 U.S.C. § 1920(2) costs of stenographic transcripts obtained for use in the case may be charged to the losing party. The transcripts were properly obtained for use in the case and hence their costs may be taxed to appellants.

Numerous other grounds for reversal are raised by appellants, but we find these to be totally without merit.

The conviction in each case is affirmed, but that portion of the controversy in each case pertaining to the assessment of costs is remanded with directions to the trial judge to conduct an ev-identiary hearing and make appropriate findings and conclusions in accordance herewith.

      . 18 U.S.C. § 1623(a) Whoever under oath in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined not more than $10,000 or imprisoned not more than five years or both.