author: GIBBONS, Circuit Judge.

text:
    Peter J. BRENNAN, Secretary of Labor, Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION and Hanovia Lamp Division, Canred Precision Industries, Respondents.
    No. 73-1131.
    United States Court of Appeals, Third Circuit.
    Argued June 13, 1974.
    Decided Aug. 14, 1974.

      Harlington Wood, Jr., Asst. Atty. Gen., Walter H. Fleischer, Michael H. Stein, Attys., Carla A. Hills, Asst. Atty. Gen., Stephel F. Eilperin, Atty., Dept, of Justice,-Washington, D. C., for petitioner; William J. Kilberg, Solicitor of Labor, Benjamin W. Mintz, Associate Solicitor for Occupational Safety and Health, Michael H. Levin, Counsel for Appellate Litigation, Helen Schuitmaker, Atty., of counsel.
    Allen H. Sachsel, Appellate Counsel, Occupational Safety and Health Review Comm., Washington, D. C., for respondents.
    Before STALEY, GIBBONS and WEIS, Circuit Judges.
   OPINION OF THE COURT

GIBBONS, Circuit Judge.

This ease presents the issue of the proper scope of review of an adjudicatory final order of the Occupational Safety and Health Review Commission when the Secretary of Labor petitions for review or enforcement pursuant to § 11(b), 29 U.S.C. § 660(b) of the Occupational Safety and Health Act of 1970. Pub.L. 91-596, 1970 U.S.Code Cong, and Admin.News, p. 5177, 29 U.S.C. § 651 (The Act). The order in question reversed a decision by the Administrative Law Judge holding that Hanovia Lamp Division, Canrad Precision Industries, had on August 6, 1971 committed a serious violation of § 5 of the Act, 29 U.S.C. § 654(a). That subsection obliges each employer to furnish to each of his employees employment and a place of employment which are free from recognized hazards likely to cause them death or serious physical harm. Section 5(b) of the Act mandates that each employer shall comply with occupational safety and health standards promulgated under the Act. Thus the Act imposes on employers both a duty to provide employment free from recognized hazards (the general duty clause) and a duty to comply with specific standards promulgated by rule. Only the general duty clause is in issue in this case. Section 17 of the Act, 29 U.S.C. § 666, provides for civil penalties for violations of a § 5 duty. Civil penalties for serious violations are mandatory. 29 U.S.C. § 666(b). Penalties for violations determined to be not of a serious nature are discretionary. 29 U.S.C. § 666(c). Serious violations are defined as those where:

“there is a substantial probability that death or serious physical harm could result from a condition which exists, or from one or more practices, means, methods, operations, or processes which have been adopted or are in use, in such place of employment unless the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation.” 29 U.S.C. § 666 (j).

Section 9 of the Act, 29 U.S.C. § 658, authorizes the Secretary of Labor or his authorized representative to issue a written citation to any employer believed to have violated any duty prescribed by § 5. By Section 10, 29 U.S.C. § 659, the Secretary is authorized following the issuance of a § 9 citation, to notify the employer of the penalty proposed to be assessed. The employer may acquiesce in the proposed assessment or, pursuant to § 10(c), 29 U.S.C. § 659(c) notify the Secretary that he intends to contest the citation. If, as in this case, the employer serves notice of a contest:

“the Secretary shall immediately advise the Commission of such notification, and the Commission shall afford an opportunity for a hearing (in accordance with section 554 of Title 5 but without regard to subsection (a)(3) of such section). The Commission shall thereafter issue an order, based on findings of fact, affirming, modifying, or vacating the Secretary’s citation or proposed penalty, or directing other appropriate relief . . . .” 29 U.S.C. § 659(c).

Section 11 of the Act provides for judicial review of a § 10(c) order by a petition to the United States Court of Appeals for the circuit in which the violation is alleged to have occurred or where the employer has its principal office. The petitioner may be either a person adversely affected or aggrieved by a § 10(c) order, 29 U.S.C. § 660(a), or the Secretary, 29 U.S.C. § 660(b). On a Secretary’s petition “the provisions of subsection (a) of this section [11] shall govern such proceedings to the extent applicable.” 29 U.S.C. § 660(b). Thus whether the petitioner is the Secretary or a person adversely affected or aggrieved, this court is bound by the provisions of § 11(a) including the sentence :

“The findings of the Commission with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive.” 29 U.S.C. § 660(a). See also 5 U.S.C. § 706(2).

In this case the employer contested the Secretary’s citation for a serious, violation throughout the administrative proceedings, but it has filed no response to the Secretary’s petition for review. The Commission has, however, responded in defense of its order, and the litigation- is obviously a part of the ongoing conflict between the Commission and the Secretary as to their respective roles in the enforcement of the Act. See, e. g., Brennan v. Occupational Safety & Health Review Commission (Pearl Steel Erection Company), 488 F.2d 337 (5th Cir. 1973); Brennan v. Occupational Safety & Health Review Commission (Brent Towing Co., Inc.), 481 F.2d 619 (5th Cir. 1973). Unlike the Brent Towing case, however, the employer here has not withdrawn its contest of the Secretary’s citation. Thus we conclude that there is a continuing case or controversy warranting judicial review even though Hanovia has not responded to the petition for review.

The citation which produced the challenged order arose from the Secretary’s investigation of an incident at Hanovia’s Newark, New Jersey laboratory. Han-ovia tests, manufactures and sells high energy lamps and associated equipment. On August 6, 1971 Orville Galligher, a laboratory technician, electrocuted himself while conducting an experiment. The Secretary’s investigation and citation followed. When Hanovia contested the citation a hearing was held before an administrative law judge pursuant to 29 U.S.C. § 661 (i), who made findings that:

“9. The [Secretary's] inspection disclosed that on, August 6, 1971 the late Orville L. Galligher was working in proximity to high voltage with the cover on the service box open and wires tapped into the service box. In addition thereto, the terminals of the capacitators in the workplace referred to, were not covered and metal parts were not grounded.
16. On August 6, 1971, Hanovia failed to furnish its employee, the late Orville L. Galligher, employment and a place of employment free from recognized hazards that were causing or likely to cause death or serious physical harm to its employee, when it allowed him to work in proximity to, and with, high voltage, with the cover of the service box open, with wires tapped into the service box; with the terminals of the capacitators not covered; and metal parts ungrounded, in a workplace as shown in Plaintiff’s Exhibit # 2; and Galligher was left to work alone, without proper supervision.
17. The respondent alleges and the Judge believes that the late Mr. Gal-ligher personally installed those conditions that made the workplace hazardous.
21. It would take at least 45 minutes of work for the late Mr. Galligher to have created the condition which constituted the employment hazard. In addition thereto, the materials used in creating the hazardous condition was transported from the respondent’s other premises some distance away, in the stockroom at 100 Chestnut Street. He would have had to travel through the corridor and would have had to sign a requisition for the equipment used.”
(Tr. at 22, 23, 24, 106, 117, 118, 119, 186. See Appendix at 26-28.)

The Administrative Law Judge made a conclusion of law that:

“5. Hanovia violated the General Duty Clause of the Act (Section 5(a) (1) thereof), by providing its late employee Galligher employment and a place of employment that contained recognized hazards that were likely to cause death or serious physical harm in a manner described in Findings # 9 and # 16 . . .
(Decision of the Administrative Judge at 10. See Appendix at 31.)

Hanovia never contested that the condition described in Finding # 9 was a recognized hazard. There is expert testimony by the Secretary’s compliance officer that the described condition is “a classical, fundamental, basic illustration as to what not to do, and it couldn’t have been done better had you tried.” (Tr. at 24). Indeed Dr. Otto Lienhard, Hanovia’s Research Director in charge of lamp engineering and Mr. Galligher’s supervisor, testified:

“Q So what was your reaction to this hazardous condition ?
A I was shocked, because I hadn’t expected anything like that.” (Tr. at 136).

The evidence is also undisputed that Galligher, an experienced technician, had worked for Hanovia for 21 years, including 14 years with high voltage equipment, that during his entire 21 years he had an accident-free record, had worked under Lienhard’s supervision for 10 years, and had never been observed by Lienhard to do anything unreliable or unsafe. The record establishes unequivocally that Hanovia did not know that Galligher had set up the test equipment in the manner described in Finding # 9. In reviewing the Administrative Law Judge’s decision, Commissioner Burch wrote for the Commission:

“The only question that remains is whether or not respondent could with the exercise of reasonable diligence, know of the presence of the violation. The Secretary maintains that the violation could not have taken place if the decedent had been adequately supervised. We find no merit to this argument. While close supervision may be required in some cases to avoid accidents, it is unrealistic to expect an experienced and well-qualified laboratory technician to be under constant scrutiny. Such a holding by the Commission, requiring that each employee be constantly watched by a supervisor, would be totally impractical and in all but the most unusual circumstances, an unnecessary burden.
The hazardous condition in this case resulted from circumstances over which respondent had no control. As we have often stated, just as each violation need not result in an accident, neither does the mere fact that an accident occurred indicate that there was a violation.” (Decision of the Commissioner at 3. See Appendix at 37).

Although neither the Commission opinion nor the Administrative Law Judge’s decision refer to it, there is evidence in the record suggesting the possibility that on August 6, 1971 Mr. Galligher was, unknown to his employer, under some unusual emotional stress.

The Secretary points to testimony by its compliance officer as to six steps which, had they been taken, might have prevented Mr. Galligher’s electrocution. Hanovia might have (1) provided a lock-out system for the service box power source; (2) provided enclosures for energized terminals; (3) required that testing technicians work in teams of two; (4) had a supervisor frequently inspect progress of testing operations; (5) provided a detailed and comprehensive written manual for lab technicians performing electrical tests; and (6) appointed a competent person as safety manager to enforce safe practices and establish accountability for safety. (Petitioner’s brief at 5). Since the evidence establishes that it was Galligher who in violation of universally recognized safety standards set up the test apparatus which produced the hazardous condition, it is difficult to see the significance of steps (1) and (2). Likewise, since Galligher’s violation of universally recognized safety standards with which a technician of his experience must have been familiar created the hazard, it is difficult to attach significance to steps (5) and (6) in the context of the violation charged. The real thrust of the Secretary’s petition is that the additional supervision and attendance suggested by steps (3) and (4) was required by the general duty clause of § 5(a)(1), 29 U.S.C. § 654(a)(1). He contends that in rejecting the contentions that Galligher should have been more closely supervised and should not have been left to work alone the Commission misinterpreted § 5(a) as a matter of law. The Commission, on the other hand, contends that its conclusion, that constant supervision of a laboratory technician of Galligher’s experience and record would be impractical and an unnecessary burden, is a finding of fact amply supported by substantial evidence in the record as a whole.

It is appropriate to distinguish at the outset the issue whether the Secretary, acting pursuant to § 6 of the Act, 29 U.S.C. § 655, might impose by rule, standards of continuous supervision and team work for employees in high voltage laboratories. If such a rule were challenged the enigmatic standard for judicial review of rule making under the Act set forth in § 6(f), 29 U.S.C. § 655 probably would apply. See, e. g., Dry Color Manufacturers’ Association, Inc. v. Department of Labor, 486 F.2d 98 (3d Cir. 1973); Associated Industries of New York State Inc. v. United States Department of Labor, 487 F.2d 342 (2d Cir. 1973). See also Morton v. Delta Mining, Inc., 495 F.2d 38 (3d Cir. 1974). We may also distinguish the separate problem of a conflict between the Secretary and the Commission as to the proper interpretation of a safety standard, which may involve the statutory allocation of the rule making power (in the Secretary) and the adjudicatory function (in the Commission). See, e.g., Brennan v. Southern Contractors Service, 492 F.2d 498 (5th Cir. 1974); Brennan v. Occupational Safety & Health Review Commission (Gerosa, Inc.), 491 F.2d 1340 (2d Cir. 1974). Citations under § 10 for violation of the general duty clause involve administrative adjudications rather than rule making, and petitions for review in general duty clause cases involve more or less traditional standards for reviewing adjudications under a statute. Section 11(a), 29 U.S. C. § 660, states that we must afford to the Commission’s fact-finding the same deference as to the fact-finding of such agencies as the National Labor Relations Board. See, e.g., Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951); N.L.R.B. v. Princeton Inn Company, 424 F.2d 264 (3d Cir. 1970). But aside from findings of fact it seems clear that we can set aside Commission adjudicatory conclusions which we find to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). See, e.g., Brennan v. Occupational Safety & Health Review Commission (Interstate Glass Co.), 487 F.2d 438, 442 (8th Cir. 1973); Brennan v. Occupational Safety & Health Review Commission (Bill Echols Trucking Co.), 487 F.2d 230 (5th Cir. 1973). This being so, our starting point must be the scope of the duty imposed by the general duty clause of the Act, § 5(a)(1), 29 U. S.C. § 654, in the context of the hazard in question.

The statute imposes the duty of furnishing “employment and a place of employment . . . free from recognized hazards . . . .”29 U.S.C. § 654(a)(1). Textually this language might be construed as imposing strict liability for a serious violation on an employer for the mere existence of a “recognized hazard” such as the hazards set forth in Finding # 9. Certainly these are “recognized” by any industry utilizing high voltage electricity. But Congress apparently did not intend to impose strict liability in this sense. The purpose clause of the Act declares it to be the congressional purpose “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions.” 29 U.S. C. § 651(b) (emphasis added). The italicized language suggests that the duty imposed by § 5(a)(1) must be a duty which is capable of achievement. Moreover the definition of serious violations in § 17(k) of the Act, 29 U.S.C. § 666(j) is qualified by the requirement that the employer “with the exercise of reasonable diligence, know of the presence of the violation.” Thus we do not construe the general duty clause of § 5(a)(1) as imposing strict liability for a § 17 penalty for the results of idiosyncratic, demented, or perhaps suicidal self-exposure of employees to recognized hazards. On the other hand we agree with the Secretary that the general duty clause imposes a statutory duty to attempt to prevent hazardous conduct by employees.

In National Realty & C. Co. Inc. v. Occupational Safety & Health Review Commission, 489 F.2d 1257 (D.C.Cir. 1973) Judge Skelly Wright addresses the extent of an employer’s obligation under the general duty clause to prevent such conduct. Recognizing that it is impossible to eliminate totally all hazardous conduct by employees, he recognizes, as well, that the employer has a duty at least to suppress such conduct in foreseeable instances. We borrow his language :

“This seeming dilemma is, however, soluble within the literal structure of the general duty clause. Congress intended to require elimination only of preventable hazards. It follows, we think, that Congress did not intend unpreventable hazards to be considered ‘recognized’ under the clause. Though a generic form of hazardous conduct, such as equipment riding, may be ‘recognized,’ unpreventable instances of it are not, and thus the possibility of their occurrence at a workplace is not’ inconsistent with the workplace being ‘free’ of recognized hazards.
Though resistant to precise definition, the criterion of preventability draws content from the informed judgment of safety experts. Hazardous conduct is not preventable if it is so idiosyncratic and implausible in motive or means that conscientious experts familiar with the industry, would not take it into account in prescribing a safety program. Nor is misconduct preventable if its elimination would require methods of hiring, training, monitoring, or sanctioning workers which are either so untested or so expensive that safety experts would substantially concur in thinking the methods unfeasible. . . . The record must additionally indicate that demonstrably feasible measures would have materially reduced the likelihood that such misconduct would have occurred.” (footnotes omitted) 489 F. 2d at 1266-1267.

In National Realty the District of Columbia Circuit reversed the Commission’s decision and order finding a serious violation in equipment riding on a construction site because the Secretary had not established by evidence what additional feasible safety steps the employer might have taken, and the record, therefore, lacked substantial evidence of the violation. Thus the court interpreted the general duty clause, as a matter of law, as imposing the duty of adopting demonstrably feasible measures for materially reducing the likelihood of a particular employee misconduct. It then reviewed the record for substantial evidence that there were such measures, and found none. Since the Secretary had not carried his burden the Commission order was reversed.

This case differs from National Realty in two respects. In National Realty the Commission had upheld the Secretary’s citation whereas here it was vacated. In National Realty there was no evidence bearing upon the existence of feasible measures for reducing the employee misconduct in question. Here-there is testimony by the Secretary’s expert that the employer could have had two technicians in attendance during the test, and that Galligher’s supervisor could have examined the progress of the test more frequently. The Administrative Law Judge attached significance to this testimony, making a finding (Finding # 16) of a serious hazard that “Gal-ligher was left to work alone, without proper supervision.” The Commission did not, however, accept this finding.

As to the degree of supervision, there is evidence that Galligher was in fact supervised by Lienhard, a competent supervisor, at least daily, and that such supervision had in the past sufficed to preserve Galligher’s accident free record and his regular compliance with industry standards for the avoidance of electrical hazards. The Secretary’s expert, while suggesting closer supervision, made no showing as to the appropriateness of any more frequent supervision than daily. He did suggest that the laboratory set-up for every test be first inspected by a supervisor before being energized, but he offered no testimony as to the feasibility of such a step when periodic or routine tests are conducted by experienced technicians. Thus we conclude that the Commission’s rejection of the Secretary’s contention respecting closer supervision is supported by substantial evidence on the record as a whole.

The Commission opinion does not deal with the suggestion by the Secretary’s expert that Galligher should not have been left to work alone. If this suggestion were made without any testimony supporting its feasibility we would be inclined to hold, as did Judge Wright in National Realty, that the Secretary had simply not met his burden. But there is direct testimony by the expert:

“Well, I happen to know that many major companies engaged in this type of research have specific rules and regulations written down that their test technicians must follow, and almost always they require two people in attendance on this type of experiment or test procedure.” (Tr. 30) (emphasis added).

This, we think, is some evidence that the two-person requirement for high voltage testing is a feasible measure for materially reducing the likelihood of employee disregard of recognized electrical hazards. The Commission, unfortunately, did not deal with this phase of the case at all, and we think that in the first instance, the question of whether the Secretary has met his burden should be answered by the Commission. Since the general duty clause is so broad, the evidence to support a charge of violation should be specific and detailed. National Realty & C. Co. Inc. v. Occupational Safety & Health Review Commission, supra.

Under the statutory framework the Secretary is charged with enforcement, the Commission with adjudication, and this court with judicial review. At the adjudicatory stage an administrative law judge conducts a hearing and makes a determination embodied in a report. That report becomes a final order of the Commission unless within 30 days a Commission member directs that it shall be reviewed by the Commission. 29 U. S.C. § 661 (i). Such a direction was made in this case. This court is not authorized to review reports of an administrative law judge which have not become final orders of the Commission. 29 U.S.C. § 660(a), (b). We do not deem it appropriate in such a statutory framework to substitute our review of the administrative law judge’s decision with respect to the two-person requirement for that of the Commission. This is not a case, such as Brennan v. Occupational Safety & Health Review Commission (John J. Gordon Co.), 492 F.2d 1027 (2d Cir. 1974), where on the record only one factual conclusion is possible, and a reversal of the administrative law judge may be set aside as an abuse of discretion. Moreover, since the amount of the penalty is a matter within the Commission’s discretion, assuming a serious violation such discretion should be exercised by the Commission in the first instance. See Brennan v. Occupational Safety & Health Review Commission (Interstate Glass Co.), supra, 487 F.2d at 440.

Because the Commission simply did not deal with a significant issue in the case, its decision and order will be vacated and the case will be remanded for further proceedings.

      . The reference to 5 U.S.C. § 554 is to the section of the Administrative Procedure Act specifying the method of conducting adjudicatory hearings.

      . The expert did suggest a dual lock system for power sources with one key controlled by a second person. That would not have prevented Galligher, once the power source was unlocked, from setting up the test in the manner which caused his death.


source: Caselaw Access Project

license: Public Domain

text:
    Benjamin SPOCK et al., Appellees, v. Bert A. DAVID, Commander, Fort Dix Military Reservation, and James R. Schlesinger, Secretary of Defense, Appellants.
    No. 73-1995.
    United States Court of Appeals, Third Circuit.
    Argued June 14, 1974.
    Decided Aug. 14, 1974.
    As Amended Sept. 23, 1974.

      David Kairys, Kairys & Rudovsky, Philadelphia, Pa., for appellees.
    Jonathan L. Goldstein, U. S. Atty., Richard W. Hill, Asst. U. S. Atty., Newark, N. J., for appellants.
    Before STALEY, GIBBONS and WEIS, Circuit Judges.
   OPINION OF THE COURT

GIBBONS, Circuit Judge.

This case is before us on an appeal from a final order of the district court which granted injunctive relief protecting plaintiffs’ first amendment rights from interference by the military authorities at the Fort Dix Military Reservation. The ease was before us in October, 1972 on an appeal from the denial of a preliminary injunction, which we reversed. Spock v. David, 469 F.2d 1047 (3d Cir. 1972). At that time two categories of plaintiffs were before us. Spock and Hobson were candidates of the Peoples Party for President and Vice President of the United States in the election to be held on November 7, 1972. Jenness and Pulley were candidates for the same offices of the Socialist Workers Party. They had been denied permission to conduct a political meeting or to distribute political literature on the Reservation. We referred to those plaintiffs and the Socialist Workers Party as the candidates. Ginaven, Misch, Hardy and Stanton were individual political activists who in the past had distributed leaflets within the Fort Dix Military Reservation, and who had, as a result of that activity, received from the commanding officer of that base letters ejecting them from Fort Dix and barring their reentry. We referred to Ginaven, Misch, Hardy and Stanton collectively as the barred pamphleteers. In reversing the district court we remanded for the entry of a preliminary injunction directing the defendants to cease from interfering with the political campaigning by the candidate-plaintiffs between the date of our opinion and November 7, 1972. We directed that the ease be set down for a final hearing promptly to dispose of the candidate-plaintiffs’ claim for injunctive relief after November 7, 1972, and of the claims for injunctive relief of the barred pamphleteer-plaintiffs.

On remand the district court proceeded in compliance with our mandate. It granted the candidate-plaintiffs preliminary injunctive relief pending the November, 1972 election, and set the matter down for final hearing. On December 4, 1972 the defendants filed an answer which affirmatively pleaded that the district court lacks subject matter jurisdiction. At the outset of the final hearing the parties stipulated that the proofs taken in connection with the hearing on the preliminary injunction would be incorporated as a part of the record at final hearing. It appeared that candidate-plaintiffs, Jenness and Pulley, were not of age to be eligible under the Constitution to serve as President and Vice President and their complaint was dismissed. They do not appeal. The only additional testimony offered and received at the final hearing dealt with the jurisdictional amount requirement. 28 U.S.C. § 1331.

The district court, with the identical factual record before it on the merits of the first amendment claim as was before us in Spock v. David, supra, properly treated that decision as law of the case on the first amendment issue. The defendants on this appeal are in the apparent dilemma of seeking to have us overrule Spock v. David on the merits while at the same time pressing the contention that there is no federal jurisdiction. This panel is also bound by the law of the case on essentially the same record. This being so we will not repeat the discussion of the merits of the claim. See Spock v. David, 469 F.2d at 1053-1056.

At the time of final hearing the candidate-plaintiffs, Spock and Hobson, though defeated in the presidential race of 1972, desired to continue political activity on the Fort Dix Military Reservation, and the barred pamphleteers desired to distribute their literature on that base. Thus the dispute over jurisdictional amount was not moot. When the case was before us on the appeal from the denial of a preliminary injunction we indicated that the only basis for federal jurisdiction was 28 U.S.C. § 1331, and that the jurisdictional amount requirement of that section must be met. We pointed out:

“Section 1331 refers both to sum and to value. In cases in which there is an adequate remedy at law, the recovery of damages, the jurisdictional amount must be determined by reference to the sum of those damages. In cases where there is no adequate remedy at law, the measure of jurisdiction is the value of the right sought to be protected by injunctive relief.” 469 F.2d at 1052.

We did not find it necessary, in passing upon the claim for preliminary injunc-tive relief, to detail the methods by which the right to convey a political message might be valued for purposes of § 1331. Jurisdictional amount had not then been traversed by an affidavit or answer in the district court, and we could not say as a legal certainty that the plaintiffs would never be able to establish their jurisdictional claim. Looking at the value of the right to campaign for the offices of President and Vice President, we concluded that it was more likely than not that the district court would hold that this right had a value in excess of $10,000, and we ordered a preliminary injunction. We were less certain about the ability of the pamphleteer-plaintiffs to succeed at final hearing, and declined to order a preliminary injunction.

At final hearing the plaintiffs, while continuing to urge, as they had before this court, that free speech is by definition worth more than $10,000 and that such an allegation ought not be subject to denial, and while continuing to rely on 28 U.S.C. § 1331, introduced testimony which the district court found “clearly indicates that the amount in controversy exceeds the $10,000 jurisdictional requirement of 28 U.S.C. 1331.” Appendix at 288a (Memorandum of District Court).

That testimony established the cost of getting the plaintiffs’ political message to the 28,000 people living in Fort Dix by those alternative means which would remain available to them were the challenged bar orders to remain in effect. The testimony was that the alternative means comprised paid advertisements on television and radio stations which broadcast to that viewing area, paid advertisements in print media which the military authorities permitted to circulate on the reservation and direct mail. A full page advertisement in an edition of Time magazine which accepted regional advertising for New Jersey would have cost $12,125.00 in black and white and $18,790.00 in color. Local radio advertising which could be received at Fort Dix would cost $1,116.00 a week. A direct mailing would cost between $3,500.00 and $4,000.00 per 1000 soldiers. The testimony suggested that none of the alternatives would be likely to be as effective a means of communication to the target population as the rallies and the pamphlets prohibited by the military defendants.

The defendants do not challenge the testimony that the cost of alternative means of communication of the political messages sought to be transmitted would far exceed $10,000. They contend that all this undisputed evidence, on which the district court relied in finding the requisite jurisdictional amount, is irrelevant. Their attack is frontal and total. They urge that first amendment rights are incapable of valuation, and that absent a new congressional enactment, there is no federal forum whatsoever for the protection of those rights against deprivations by federal officials. In a footnote they suggest, citing Arnold, The Power of State Courts to Enjoin Federal Officers, 73 Yale L.J. 1385 (1964), that state courts similarly lack power to enjoin federal officers. Their position, in short, is that no court may entertain a civil suit against a federal officer to enjoin his interference with the exercise of rights protected by the first amendment. If the defendants’ frontal and total attack were to succeed they would, of course, have no interest in anything we might have said in Spock v. David, supra, on the merits of the first amendment claim, since they would be free to do as they pleased regardless. But we are past that point. In Spock v. David, 469 F.2d at 1051, we expressly declined to follow Goldsmith v. Sutherland, 426 F.2d 1395 (6th Cir.), cert. denied, 400 U.S. 960, 91 S.Ct. 353, 27 L.Ed.2d 270 (1970). The rights here in issue are intangible, but they are no more incapable of valuation in money than is pain and suffering, or reputation, or the intangible value of a proper selective service classification, or the intangible value of the right to be tried by a civilian rather than a military tribunal. See Sedivy v. Richardson, 485 F.2d 1115 (3d Cir. 1973). We have approved valuation of the good will of a trademark, for jurisdictional amount purposes, by looking at the amount spent in advertising the mark. Schering Corporation v. Sun Ray Drug Co., 320 F.2d 72, 76 (3d Cir. 1963). The testimony that means of communication alternative to those of which the plaintiffs would be deprived by the continuance of the challenged bar orders would cost in excess of $10,000 was sufficient, for purposes of § 1331, to quantify the value of the rights here sought to be protected. The finding of the district court that such alternative means would cost in excess of $10,000 is amply supported by the record.

The defendants urge that the plaintiffs did not offer proof of the cost of relatively inexpensive alternative techniques of communication such as opening a storefront in Wrightstown, New Jersey, adjacent to one of the entrances to the reservation, and that the district court did not discuss such alternatives. But the defendants offered no evidence as to the availability or cost of the suggested alternatives, or as to their communicative effectiveness compared to the barred activities. They cannot on appeal suggest that the district court’s finding, based on the evidence which was presented, was clearly erroneous. There is federal question jurisdiction under § 1331.

Since on the record made in the district court jurisdictional amount was the only matter not governed by the law of the case announced in Spock v. David, supra, we affirm. While we have not repeated in this opinion the discussion of the merits of the first amendment claim set forth in our earlier opinion, we deem it appropriate to note that nothing said there and nothing set forth in the district court’s injunction should be construed as limiting the authority of the military officials at Fort Dix to restrict access by non-military personnel generally to any part of the reservation, or to issue bar notices to and evict persons from even the open areas of the reservation for unlawful activities.

The judgment of the district court will be affirmed.

      . The Socialist Workers Party remains a plaintiff.

      . See Cortright v. Resor, 325 F.Supp. 797, 810 (E.D.N.Y.), rev’d on other grounds, 447 F.2d 245, 250-251 (2d Cir. 1971), cert denied, 405 U.S. 965, 92 S.Ct. 1172, 31 L.Ed.2d 240 (1972).

      . The injunction provides :
      “2. Defendants are permanently directed to cease and are permanently enjoined from: (1) interfering with political campaigning by the plaintiffs Spock, Hobson, and Socialist Workers Party, or with the distribution of campaign literature on their behalf within the unrestricted areas of the Fort Dix Military Reservation; and (2) interfering with distribution of literature by the plaintiffs, Ginaven, Misch, Hardy and Stanton, within the unrestricted areas of the Fort Dix Military Reservation. This injunction shall not apply, however, to the areas designated as restricted by the military command at Fort Dix.
      3. The right of the candidate plaintiffs to campaign and the right of the candidate and pamphleteer plaintiffs to distribute literature shall be subject to such restrictions as to time, place and numbers of persons involved as shall be shown by defendants to be necessary to prevent interference with the military mission of the Base and the flow of military and civilian traffic.
      4. Defendants shall make no requirement of prior submission or approval of the contents of any communication distributed by plaintiffs.
      5. Defendants are further enjoined from enforcing Fort Dix Regulation 210-27 inso far as it requires prior submission and approval of materials to be distributed on the Base. In addition, defendants are enjoined from enforcing Fort Dix Regulation 210-26 insofar as it prohibits political speeches on Fort Dix by the prevailing plaintiffs.
      6. Defendants are enjoined from issuing bar notices and letters to plaintiffs based on the constitutionally protected activity described in this order. The order of this Court shall not be construed to prevent defendants from issuing bar notices and evicting persons from Fort Dix for other unlawful activity.”
      Appendix at 291a-92a (Final Order of the District Court).


author: CRAVEN, Circuit Judge:

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. STONE & THOMAS, Respondent.
    No. 73-2167.
    United States Court of Appeals, Fourth Circuit.
    Argued June 4, 1974.
    Decided Sept. 10, 1974.

      Jay E. Shanklin, Atty., N. L. R. B. (Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Harding, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Charles P. Donnelly, Atty., N. L. R. B., on brief), for petitioner.
    Eugene B. Schwartz, Cleveland, Ohio (Edward J. Simerka and Schwartz, Ein-hart & Simerka, Cleveland, Ohio, on brief), for respondent.
    Before CRAVEN, RUSSELL and FIELD, Circuit Judges.
   CRAVEN, Circuit Judge:

The National Labor Relations Board has petitioned this court for enforcement of its order to bargain issued against respondent, Stone & Thomas. Because of a possible violation of the Savair rule, we deny enforcement and remand to the Board to redetermine whether the offer of the Union to reduce the initiation fee was illegal within the meaning of sections 7 and 8 of the Act.

I.

Sometime prior to the election the Union promised the employees in the unit that if the Union won the election the initiation fee would be reduced from $50 to $1.

Savair held that an election must be set aside upon a showing that the union in the course of its organizing campaign had promised to waive initiation fees for employees who signed “authorization” cards prior to the election. The Savair Court reasoned that by extending the offer only to those who signed before the election, the union could “paint a false portrait of employee support during its election campaign,” 414 U.S. at 277, 94 S.Ct. at 499, thereby interfering with the employees’ right under section 7 of the Act to “refrain from any or all [union] activities.”

By way of contrast, the Court in dictum pointed out that union interests could legitimately be served by offering the waiver to all employees — whether they sign up before or after the election. 414 U.S. at 272-274, n. 4, 94 S.Ct. 495. “It is well established that an ‘unconditional’ offer to waive initiation fees, where the waiver offer is left open for some period of time after the election, is not coercive and does not constitute an unfair labor practice.” 414 U.S. at 283, 94 S.Ct. at 502 (White, J., dissenting). The Board has since followed that distinction. B. F. Goodrich Tire Co., 209 NLRB No. 182, 85 LRRM 1529 (April 18, 1974).

The problem here is an ambiguity in the Union’s preelection offer. Affidavits from employees submitted by the Company to the Board contained the inconclusive statement that a union official “stated that' the initiation fee for warehouse employees would be reduced to $1.00 if the union won the election.”

Yet, the Union in a statement filed with the Board asserted that :

Petitioner made and authorized no such offer to the assembled workers. An offer to take in all assembled workers at a reduced initiation fee is the only offer that was made and the offer was not tied in any way to the results of the election.

Respondent’s Brief at 18-19 (emphasis added).

We cannot tell on this record whether the offer was unlawfully selective. Certainly there is left open the possibility that an offer was made in violation of the Savair rule. On remand the Board will redetermine whether the election may have been coerced by an unfair labor practice in light of Savair.

We have considered the Company’s other objections to the election and find them to be wholly without merit.

II.

The Board is empowered under section 9(b) of the Act to decide in each case the unit appropriate for collective bargaining, which determination “involves of necessity a large measure of informed discretion and ... is rarely to be disturbed.” Packard Motor Co. v. NLRB, 330 U.S. 485, 491, 67 S.Ct. 789, 793, 91 L.Ed. 1040 (1947). In reviewing the Board’s choice among alternative, appropriate units, we ask not whether the choice was the “right” one but whether the Board abused its discretion or proceeded in a manner violative of the Act. NLRB v. Quaker City Life Ins. Co., 319 F.2d 690 (4th Cir. 1963).

In selecting a unit of warehouse employees, the Board followed its previously declared criteria in determining the appropriateness of the unit: (1) the geographical separation of the warehouse from the retail store operations; (2) the degree of separate supervision of the warehouse employees’ functions; and (3) the relative lack of integration among the warehouse employees and those engaged in other functions. A. Harris & Co., 116 NLRB 1628, 1632 (1958).

In certifying the warehouse unit the Board neither abused its discretion nor proceeded in a manner violative of the Act.

Enforcement denied. Remanded.

      . NLRB v. Savair, 414 U.S. 270, 94 S.Ct. 495, 38 L.Ed.2d 495 (1973). Savair was decided December 17, 1973, some nine months after the Board considered and rejected the Company’s protest of the election on the ground of reduced initiation fee offer to employees.

      . International Brotherhood of Teamsters, etc., Local 697.

      . 29 U.S.C. §§ 157, 158.


author: PER CURIAM.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Thomas GRIFFIN and Catherine Tucker, Defendants-Appellees.
    No. 73-2207.
    United States Court of Appeals, Sixth Circuit.
    Argued April 17, 1974.
    Decided Aug. 21, 1974.
    Certiorari Denied Dec. 9, 1974.
    See 95 S.Ct. 626.

      Larry Whitney, Dept, of Justice, for plaintiff-appellant; Ralph B. Guy, U. S. Atty., Detroit, Mich., James J. Tansey, Atty., Dept, of Justice, Washington, D. C., on brief.
    Marshall C. Hill, Detroit, Mich., for defendants-appellees.
    Before PHILLIPS, Chief Judge, and WEICK and EDWARDS, Circuit Judges.
   PER CURIAM.

Federal Narcotics Agents in the City of Detroit who had, by dint of surveillance and two prior lawful arrests, developed probable cause for the search of appellee Griffin’s apartment determined to do so.' An agent was dispatched to procure a search warrant, while other agents were dispatched to Griffin’s apartment to “secure” it. Promptly on their arrival, and after receiving no reply to their knock, they “secured” the apartment by forcibly entering it, discovering a considerable quantity of narcotics and related paraphernalia in plain view. At this point appellee Tucker came into the apartment and was arrested. Another agent was then dispatched to “expedite” the procurement of a search warrant.

The (now conceded to be) illegal entry took place at approximately 5 p. m. The search warrant was returned to the apartment and at approximately 9 p. m. a thorough search was made. It is conceded by appellant that the affidavit upon which the search warrant was procured did not contain any facts discovered as a result of the illegal entry.

On these facts the government contended before the District Court that appellees’ motion to suppress should be denied because of exigent circumstances. They argued that the narcotics which they had reason to believe were there could readily have been disposed of. But as the District Judge ascertained by questioning, there was no proof that anyone was in the apartment, and on the contrary, they had good reason to believe from prior surveillance of it that nobody was. Holding that there were no exigent circumstances to excuse the warrantless entry, the District Judge granted the motion to suppress evidence.

Before this court the government changed its position. It now argues that the exclusionary rule should not have been applied in this case because the discovery of these materials under the circumstances of this case was inevitable without any reference to the illegal entry. In this regard the government relies principally upon a recent case in the New York Court of Appeals, People v. Fitzpatrick, 32 N.Y.2d 499, 346 N.Y.S.2d 793, 300 N.E.2d 139, cert. denied, 414 U.S. 1050, 94 S.Ct. 554, 38 L.Ed.2d 338 (1973), where the court stated:

“[T]he inevitable discovery factor ‘permits- the government to remove the taint from otherwise poisoned fruit by establishing that the unlawful act from which it resulted was not a sine qua non of its discovery’.” People v. Fitzpatrick, supra at 506, 346 N.Y.S.2d at 797, 300 N.E.2d at 142, quoting with approved Maguire, How to Unpoison the Fruit, 55 J.Crim.L.C. & P.S. 307, 313.

The District Judge was clearly right in finding that the government had not established exigent circumstances to warrant the forcible entry without search warrant. This case did not involve hot pursuit. Nor did the government present proofs which established its theory that the evidence it sought was in danger of destruction. Hence, we have no need to pass upon what effect, if any, such facts if established, might have upon the normal requirement of a search warrant.

We also believe the government’s reliance upon the Fitzpatrick case is misplaced. In Fitzpatrick the court held that the police had lawfully arrested Fitzpatrick. They had a clear legal right to search the closet where they had arrested Fitzpatrick and they then had both the present intention and the present capability of doing so.

None of these factors is present in our current fact situation and hence we have no need to determine our attitude toward the rationale of Fitzpatrick. Absent “exigent circumstances,” the police clearly may not force entry to a home without a search warrant simply because they think they have probable cause to believe evidence of crime may be found therein. Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367, 92 L.Ed. 436 (1948); United States v. Jeffers, 342 U.S. 48, 72 S.Ct. 93, 96 L.Ed. 59 (1951); Vale v. Louisiana, 399 U.S. 30, 90 S.Ct. 1969, 26 L.Ed.2d 409 (1970).

We hold that absent any of the narrowly limited exceptions (See Katz v. United States, 389 U.S. 347, 357, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967)) to the search warrant requirement, police who believe they have probable cause to search cannot enter a home without a warrant merely because they plan subsequently to get one. The assertion by police (after an illegal entry and after finding evidence of crime) that the discovery was “inevitable” because they planned to get a search warrant and had sent an officer on such a mission, would as a practical matter be beyond judicial review. Any other view would tend in actual practice to emasculate the search warrant requirement of the Fourth Amendment.

The judgment of the District Court is affirmed.

      . Compare United States v. Rubin, 474 F.2d 262 (3d Cir.), cert. denied sub nom. Agran v. United States, 414 U.S. 833, 94 S.Ct. 173, 38 L.Ed.2d 68 (1973). This circuit has never had occasion to pass on the holding of the Rubin case.


author: PHILLIPS, Chief Judge.

text:
    G & J INVESTMENT CORP., Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    No. 74-1252.
    United States Court of Appeals, Sixth Circuit.
    Argued June 17, 1974.
    Decided Aug. 20, 1974.

      Walter F. McQuade, Miami, Fla., for appellant; Daniel C. George, George & McQuade, Miami, Fla., on brief.
    John G. Manning, Tax Div., Dept, of Justice, for appellee; Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Elmer J. Kelsey, George G. Wolf, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief.
    Before PHILLIPS, Chief Judge, and CELEBREZZE and PECK, Circuit Judges.
   PHILLIPS, Chief Judge.

G & J Investment Corp. (taxpayer) appeals from a decision of the United States Tax Court upholding the Commissioner’s determination of income tax deficiencies in the amounts of $5,000 and $5,500 for the years 1967 and 1968, respectively. We affirm.

For a comprehensive statement of the facts, reference is made to the Tax Court opinion prepared by Judge Theodore Tannenwald, Jr. 42 P-H Tax Ct. Mem.'1049 (1973).

The question before us is whether taxpayer was entitled to a separate corporate surtax exemption for the years in question under § 1551 of the Internal Revenue Code of’1954, 26 U.S.C. § 1551.

Section 11 of the Internal Revenue Code allows each corporation an exemption for its first $25,000 of taxable income from the 26 per cent surtax. The first $25,000 of taxable income to a corporation is subject to only the normal tax of 22 per cent, whereas corporate income in excess of $25,000 is subject to a 48 per cent rate. Consequently, the overall tax liability of a business would be less if its income were divided among several corporations.

In order to discourage the tax-motivated use of multiple corporations by what is essentially a single business, § 1551 of the Code denies the surtax exemption to a corporation which receives property from another corporation where 1) the transferee corporation was created for the purpose of receiving the property or was not actively engaged in business at the time of the transfer, ahd 2) the transferor corporation and the transferee corporation are under common control. This provision applies to deny the surtax exemption unless the transferee corporation, which taxpayer was in the instant case, establishes by the clear preponderance of the evidence that the securing of the surtax exemption was not “a major purpose” of the transfer.

In the present case, taxpayer was incorporated in 1961 by Gerald D. Keller, his wife and his nephew. In 1962 Dade County Restorium, Inc. (Restorium), of which Mr. Keller was then the sole owner, transferred certain property, primarily a nursing home, to taxpayer in exchange for a $165,000 non-interest bearing demand note. Contemporaneously, taxpayer leased back to Restorium the acquired property for a monthly rental. This leaseback arrangement continued from 1962 to 1971.

On appeal, taxpayer contends that the Tax Court erred in determining that taxpayer did not establish by a “clear preponderance of the evidence” that the securing of a corporate surtax exemption was not “a major purpose” of taxpayer’s formation and the transfer by Restorium of property to taxpayer. Taxpayer asserts that the purposes of its formation were to limit liability, aid in securing insurance and assist in obtaining financing.

Upon full consideration of the record, the briefs and oral arguments, the court is of the view that the contentions of taxpayer are without merit and that the Tax Court’s findings are not clearly erroneous. Rule 52(a), Fed.R.Civ.P. Although there may be some evidence in the record which supports taxpayer’s asserted reasons for its creation, taxpayer has not carried its burden of demonstrating by a “clear preponderance of the evidence” that the securing of the surtax exemption was not “a major purpose” of the transfer of the nursing home in question. Beacon Auto Radiator Repair Co. v. Commissioner, 52 T.C. 155, 160-61 (1969); Note, Multiple Incorporation to Obtain Additional Accumulated Earnings Credits and Surtax Exemptions, 44 Minn.L.Rev. 485, 503 (1960).

In rejecting taxpayer’s contentions, we hold that the evidence supports the Commissioner for the reasons stated by the Tax Court. 42 P-H Tax Ct. Mem. at 1052. Further, there is evidence in the record that the separate incorporation of taxpayer and leaseback of the real estate used by Restorium in its nursing home business conformed to a pattern employed by Mr. Keller since 1957 in eleven nursing homes which he controlled. Mr. Keller testified that for each of the eleven nursing homes there was a real estate and equipment holding company which leased a nursing home and its facilities to a separate operating company. This is additional evidence from which to infer intent on the part of Mr. Keller to evade the payment of federal income taxes by the creation of the taxpayer corporation.

Affirmed.


author: PER CURIAM:

text:
    Larry P. et al., Plaintiffs-Appellees, v. Wilson RILES et al., Defendants-Appellants.
    No. 72-2509.
    United States Court of Appeals, Ninth Circuit.
    Aug. 16, 1974.

      Daniel E. Collins, III (argued), Deputy City Atty.,' San Francisco, Cal., for defendants-appellants.
    Michael S. Sorgen (argued), of San Francisco Neighborhood Legal Assistance Foundation, San Francisco, Cal., for plaintiffs-appellees.
    Before KOELSCH and DUNIWAY, Circuit Judges, and ANDERSON, District Judge.

       The Honorable J. Blaine Anderson, United States District Judge for the District of Idaho, sitting by designation.

   OPINION

PER CURIAM:

This is an appeal from an order granting, in part, a motion for a preliminary injunction. 28 U.S.C. § 1292(a) (1) gives us jurisdiction. The district judge’s Order and Memorandum, which embodies his findings of fact and conclusions of law, are reported in P. v. Riles, N.D.Cal., 1972, 343 F.Supp. 1306. We affirm.

As will be seen from that report, the district judge granted only a part of the requested relief, and narrowly limited what he granted. 343 F.Supp. at 1314-1315.

“It is well settled that the granting of a temporary injunction, pending final hearing, is within the sound discretion of the trial court; and that, upon appeal, an order granting such an injunction will not be disturbed unless .contrary to some rule of equity, or the result of improvident exercise of judicial discretion. Meccano, Ltd. v. John Wanamaker, 253 U.S. 136, 141 [40 S.Ct. 463, 64 L.Ed. 822]; Love v. Atchison Railway, supra [8 Cir., 185 F. 331] p. 331; and cases there cited. Especially will the granting of the temporary writ be upheld, when the balance of injury as between the parties favors its issue. Amarillo v. Southwestern Telephone Co. (C.C.A.), 253 F. 638, 640.”

Prendergast v. N. Y. Tel. Co., 1923, 262 U.S. 43, 50-51, 43 S.Ct. 466, 469, 67 L.Ed. 853. Accord: Deckert v. Independence Shares Corp., 1940, 311 U.S. 282, 290, 61 S.Ct. 229, 85 L.Ed. 189. In Washington Capitols Basketball Club, Inc. v. Barry, 9 Cir., 1969, 419 F.2d 472, 475-476, we said: “On an appeal from such an order [granting a preliminary injunction] it is the responsibility of this court to decide only the question as to whether or not the granting of the order was an abuse of discretion. An abuse of discretion has been defined as a ‘plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as they are found.’ Bowles v. Quon, 154 F.2d 72, 73 (9th Cir. 1946).” Id. at 476.

In reviewing the district court’s order, we also apply the principles stated by us in Sierra Club v. Hickel, 9 Cir., 1970, 433 F.2d 24, 33, aff’d, 1972, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636: “In order to obtain such relief [viz. a preliminary injunction], . . . the plaintiff must establish a strong likelihood or ‘reasonable certainty’ that he will prevail on the merits at a final hearing. [Citations]. .

In addition, before such a writ should issue, the applicant must show that it will suffer irreparable injury. The court must balance the damage to both parties. [Citation.]” See also Allison v. Froehlke, 5 Cir., 1972, 470 F.2d 1123, 1126. We also have in mind that, as we said in Tanner Motor Livery, Ltd. v. Avis, Inc., 9 Cir. 1963, 316 F.2d 804 at 808, 809.

“It is so well settled as not to require citation of authority that the usual function of a preliminary injunction is to • preserve the status quo ante litem pending a determination of the action on the merits. The hearing is not to be transformed into a trial of the merits of the action upon affidavits, and it is not usually proper to grant the moving party the full relief to which he might be entitled if successful at the conclusion of a trial. This is particularly true where the relief afforded, rather than preserving the status quo, completely changes it. * * * * • # *
We are not to be understood as stating that the foregoing principles are hard and fast rules to be rigidly applied to every case regardless of its peculiar facts. The infinite variety of situations in which a court of equity may be called upon for interlocutory injunctive relief requires that the court have considerable discretion in fashioning such relief.”

Our review of the record convinces us that the district court’s findings of fact are fully supported by the record thus far made. Those findings also convince us that the order appealed from was well within the district judge’s discretion, and that it is in accord with the principles stated by us in Sierra Club v. Hick-el, swpra. Although the relief granted does to a limited extent change the status quo, the facts of the case, and the carefully limited relief granted, are justified by the “peculiar facts” of this case. Tanner Motor Livery, Ltd. v. Avis, Inc., supra, does not require reversal.

On the basis of the findings of fact, and substantially for the reasons stated by the district judge, the order appealed from should be affirmed. We express no opinion as to the ultimate merits of the case.

Affirmed.


text:
    Louis B. GINSBERG and Grace Ginsberg, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    No. 74-1089.
    United States Court of Appeals, Sixth Circuit.
    Aug. 29, 1974.

      Bennet Kleinman, Gary D. Greenwald, Kahn, Kleinman, Yanowitz & Arnson, Cleveland, Ohio, on brief, for appellants.
    Scott P. Crampton, Asst. Atty. Gen., Tax Div., U. S. Dept, of Justice, Washington, D. C., Meyer Rothwacks, Michael L. Paup, David English Carmack, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief, for appellee.
    Before PHILLIPS, Chief Judge, and WEICK and ENGEL, Circuit Judges.
   PHILLIPS, Chief Judge.

Mr. and Mrs. Louis .B. Ginsberg (taxpayers) appeal from a decision of the United States Tax Court upholding the Commissioner’s determination of federal income tax deficiencies in the aggregate amount of $29,049.52 for the taxable years 1966 through 1968. We affirm.

For a comprehensive statement of the facts, reference is made to the Tax Court opinion prepared by Judge Theodore Tannenwald, Jr., 32 CCH Tax Ct. Mem. 1019 (1973).

The question before us is whether a trust created by Mr. Ginsberg for the benefit of his minor daughter is a bona fide partner in the family business within the meaning of Int. Rev. Code of 1954, § 704(e). If the trust is held to be a bona fide partner, it would be taxable on its share of the partnership’s income. On the other hand, if the trust is determined not to be a bona fide partner, taxpayers are taxable on the entire partnership income for the years in question.

With respect to § 704(e) of the Code, this court in Krause v. Commissioner, 497 F.2d 1109 (6th Cir. 1974), aff’g, 57 T.C. 890 (1972), stated:

“Section 704(e) of the Code provides, in effect, that a person may be recognized as a partner for income tax purposes ‘if he owns a capital interest in a partnership in which capital is a material income-producing factor.’ (Emphasis added.) That section was enacted to prevent taxpayers from using the family partnership as a means of splitting family income and thus circumventing the progressive tax rate structure of the federal income tax. The legislative history of the section shows that Congress wanted the Commissioner and the courts to inquire into the question of whether the donee or the purchaser actually owns the purportedly transferred interest; and, in cases where the trans-feror retained incidents of ownership, it was the Congressional intent that he be taxable on the partnership’s income. H.Rep.No.586, 82d Cong., 1st Sess., p. 33; S.Rep.No.781, 82d Cong., 1st Sess., pp. 39-40; 2 U.S.Code Cong. & Adm.News, pp. 1781, 1813-15 & 1969, 2008-2010. Further, the Commissioner specifically implemented this Congressional purpose in Treas.Reg. § 1.704-1 (e) (1) (iii). This court recognized the Congressional purpose in Ballou v. United States, 370 F.2d 659, 661-662 (1966).”

In the present case, Mr. Ginsberg owned as a sole proprietorship prior to 1958 a metal parts manufacturing business which operated under the name of Bonn Machine & Tool Company (Bonn). On January 1, 1958, he executed separate trust and partnership instruments. By a declaration of trust, Mr. Ginsberg attempted to transfer 15 per cent of the assets of Bonn to himself as sole trustee of a trust for the benefit of his then ten year old daughter. By a partnership agreement, Mr. Ginsberg (as trustee) agreed with himself (as an individual) to operate the Bonn business as a partnership. Mr. Ginsberg’s stated purpose was to create a “nest egg” for his daughter, but the record does not reveal that a gift tax return was filed.

In holding that the trust was not a bona fide partner in Bonn, the Tax Court found the following factors which evidenced that Mr. Ginsberg had imper-missibly retained incidents of ownership over the purportedly transferred property: (1) Mr. Ginsberg “was the donor, sole trustee (with broad powers of management and protected by broad exculpatory clauses) and only other partner.” (2) There was no evidence that Mr. Ginsberg “ever actively represented the trust as an independent factor in the management and operations of the business.” (3) There was no evidence that the trust “was ever held out as a partner to customers or creditors of the partnership or banks with which the partnership did business or by the filing of any certificate of doing business.” (4) “The partnership agreement did not provide for any right in the trust to sell its partnership interest and that right was severely limited under Ohio law. . ” Further, the trust could withdraw from the partnership but “without allowance for good will, trade names, patents or other tangible assets.” 32 CCH Tax Ct. Mem. at 1023-24.

Upon full consideration of the record, the briefs and oral arguments, this court is of the view that the Tax Court’s findings are not clearly erroneous, Fed.R. Civ.P. 52(a), but to the contrary are supported amply by the evidence. Further, we hold that the above facts, considered together in the context of this case, are sufficient as a matter of law to make taxpayers taxable on the entire income of the partnership.

We have recognized that “[t]he bona fides of a family partnership, particularly one involving minor children who contribute no services, is subject to close scrutiny and is a question of fact to be determined under the particular circumstances of each case.” Ballou, supra at 662. Accordingly, we reject taxpayers’ attempt to distinguish the facts in Bal-lou from those in the present case on the grounds that the partnership agreement in Ballou expressly prohibited the donor in his capacity as trustee from performing any services for the partnership and that the trust therein was not free to transfer the partnership assets without consent of the other partners. These factual differences do not distinguish Ballou materially from the present case in which there is no evidence that the donor taxpayer in his capacity as trustee ever performed services for the partnership and the assets of the trust could be transferred only with great difficulty under limited circumstances and at a considerable sacrifice of good will. As in Ballou, the transfer of the property to the trust in this case did not effectively diminish taxpayers’ control over the property.

The decision of the Tax Court, being entirely consistent with our opinions in Krause and Ballou, supra, is affirmed.


text:
    VICKERS MOTORS, INC., Petitioner, v. Harry W. WELLFORD, U. S. District Judge and Aaron C. Brown, Jr., U. S. Magistrate, Respondents.
    No. 74-1695.
    United States Court of Appeals, Sixth Circuit.
    Sept. 12, 1974.

      Tom Mitchell, Jr., Memphis, Tenn., for petitioner.
    Thomas F. Turley, U. S. Atty., Memphis, Tenn., for respondents.
    Before McGREE, MILLER, and LIVELY, Circuit Judges.
   ORDER.

We consider an application for an order staying all proceedings in Civil Action No. 73-2312 in the United States District Court for the Western District of Tennessee pending final determination of a Petition for Writs of Mandamus & Prohibition filed in this court and also referred to this panel for disposition. Respondents have indicated that they do not intend to respond to the petition.

Petitioner is the defendant in Civil Action No. 73-2312 captioned American Honda Motor Co., Inc. v. Vickers Motors, Inc., pending before respondent Harry W. Wellford, U.S. District Judge, in the United States District Court for the Western District of Tennessee. On May 24, 1974 the judge entered an “ORDER ON DISCOVERY MOTIONS,” referring discovery motions, objections thereto, motions to compel production, and motions for protective orders to respondent Aaron C. Brown, Jr., U. S. Magistrate, “ . . . for a hearing and recommendation as to appropriate orders and relief under the circumstances.” Petitioner seeks an order directing the judge to decide the discovery motions without any reference, and prohibiting the magistrate from proceeding further under the order of reference. Petitioner also seeks to stay the order of reference pending determination of his petition for mandamus and prohibition.

At the outset, we consider whether mandamus and prohibition may be employed to test the power of a district judge to refer for “hearing and recommendation” motions relating to discovery. Our authority, if it exists, must be found in the “All Writs” Statute 28 U.S. C. § 1651(a):

The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.

Although the extraordinary remedy of mandamus is proper when a court has clearly exceeded or refused to exercise its jurisdiction, it should not issue as a substitute for appeal to review interlocutory orders that do not deprive “the parties of a trial before the court on the basic issues involved in the litigation.” Compare La Buy v. Howes Leather Co., 352 U.S. 249, 77 S.Ct. 309, 1 L.Ed.2d 290 (1957) where a reference to a master was made on the merits, with Will v. United States, 389 U.S. 90, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967), where mandamus was held not to lie to test a pretrial discovery order in a criminal case.

Accordingly, the challenged order of reference, even if erroneous — a question we do not decide — involved no clear abuse of judicial power because 28 U.S.C. § 636(b)(2) authorizes rules to permit magistrates to furnish “assistance to a district judge in the conduct of pretrial or discovery proceedings in civil actions.” Whether the local rule, or its application here, is “ . . . inconsistent with the Constitution and laws of the United States,” 28 U.S.C. § 636(b)(2) is reviewable on appeal appropriately taken from a final judgment or other order. See Wingo, Warden v. Wedding, 418 U.S. 461, 94 S.Ct. 2842, 41 L.Ed.2d 879 (1974).

The Petition for Writs of Mandamus and Prohibition is hereby denied and no stay will issue.


text:
    Arthur Gene CASE, Plaintiff-Appellant, v. D. J. McDUFFIE, INC., Defendant-Appellee.
    No. 74-1656
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 14, 1974.
    Owen J. Bordelon, Jr., Gretna, La., for plaintiff-appellant.
    Donald V. Organ, New Orleans, La., for defendant-appellee.
    Before BELL, SIMPSON and MORGAN, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York.et al., 5 Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

On January 23, 1973, appellant was injured while working as a “floor hand” on a drilling barge owned and operated by appellee. The crew was “working over” a pre-existing oil well, and was pulling pipe out of the hole when the accident occurred. The pipe is removed in sections, which are unscrewed from each other and then racked. On this occasion, when the particular length of pipe was separated from the rest of the pipe, instead of coming straight up it snapped away, swung across the rig and struck appellant above his right eye.

Appellant brought suit for damages in the district court under the Jones Act and the general maritime law. At the close of all the evidence, the court granted appellee’s motion for a directed verdict. We reverse and remand for a new trial because the court erred in directing a verdict on the issue of unseaworthiness.

The question of a vessel’s seaworthiness is ordinarily one of fact. See, Rivers v. Angf. A/B Tirfing, 450 F.2d 12 (5th Cir. 1971); United States Lines Company v. Williams, 365 F.2d 332 (5th Cir. 1966); Jefferson v. Taiyo Katun, 310 F.2d 582 (5th Cir. 1962). The question must be submitted to the jury if “. . . fair-minded men, viewing all the facts and the inferences that may be drawn from the facts, can differ over whether the ship and its gear are reasonably fit for service. . . .” Lundy v. Isthmian Lines, Inc., 423 F.2d 913, 915 (4th Cir. 1970). In order to meet this burden, a plaintiff need only show “. that the device in question failed under conditions when it should have functioned properly.” Oliveras v. American Export Isbrandtsen Lines, Inc., 431 F.2d 814, 816 (2nd Cir. 1970). Proof of precisely how or why the failure occurred is unnecessary. See, Gibbs v. Kiesel, 382 F.2d 917 (5th Cir. 1967); Vega v. The Malula, 291 F.2d 415 (5th Cir. 1961). In Vega a sheave fell on and injured a longshoreman when a pin unaccountably slipped out of a cargo block. Describing the accident as “. . .a classic case of patent unseaworthiness . . . ” this court said:

The event occurred. . . . The block failed while being used for a normal expected purpose. How the pin happened to slip out is of no real legal significance. No matter how much care was used either by the owner, the ship’s crew, or the deceased crew member immediately responsible for its maintenance, the failure of the block under normal expected use visits on the vessel owner an .unremitting liability based on the breach of the absolute duty. (citations omitted) Vega, supra, pp. 419-420.

Here, appellant’s proof clearly showed that the pipe failed to come out of the hole in the normal manner. This presents a question of fact as to the vessel’s seaworthiness, a question which the jury should have been allowed to resolve.

Reversed and remanded.


author: JOHN R. BROWN, Chief Judge:

text:
    Jacob Traber BURNS, Plaintiff-Appellant, v. David L. ANDERSON and United States Fidelity & Guaranty Company, Defendants-Appellees.
    No. 74-2498
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 11, 1974.

      Garic K. Barranger, Covington, La., for plaintiff-appellant.
    Harold B. Carter, Jr., New Orleans, La., for defendants-appellees.
    Before BROWN, Chief Judge, and THORNBERRY and AINSWORTH, Circuit Judges.

      Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I.

   JOHN R. BROWN, Chief Judge:

The question on this appeal is whether a district court may dismiss a personal injury diversity suit where it appears “to a legal certainty” that the claim was “really for less than the jurisdictional amount.”

The suit grew out of an auto accident in which plaintiff Burns’ automobile was struck amidships by that of defendant Anderson. Burns’ principal injury was a broken thumb. .He brought the action in the Eastern District of Louisiana, claiming $1,026.00 in lost wages and medical expenses and another $60,000.00 for pain and suffering. After a pre-trial conference and considerable discovery, the District Court dismissed for want of jurisdiction. Plaintiff appeals.

The test for jurisdictional amount was established by the Supreme Court in St. Paul Mercury Indemnity Co. v. Red Cab Co. There, the Court held that the determinant is plaintiff’s good faith claim and that to justify dismissal it must appear to a legal certainty that the claim is really for less than the jurisdictional amount. There is no question but that this is a test of liberality, and it has been treated as such by this Court. This does not mean, however, that Federal- Courts must function as small claims courts. The test is an objective one and, once it is clear that as a matter of law the claim is for less than $10,000.00, the Trial Judge is required to dismiss.

In the instant case, the District Judge dismissed only after examination of an extensive record. This record included the testimony of three doctors who treated Burns, as well as his own deposition. The accident occurred on May 26. The evidence is without contradiction that by the middle of August only very minimal disability remained. By December, even this minor condition had disappeared. Burns’ actions speak even more strongly than the medical testimony. In his deposition he testified that he took a job as a carpenter’s assistant on June 21 or 22 — less than a month after the accident. He did heavy manual labor for the remainder of the summer with absolutely no indication of any difficulty with his thumb. It is equally clear that any pain he suffered was not of very great magnitude or lasting duration. Burns admitted that by the end of July there was no pain whatsoever. As a matter of fact, the evidence reveals that the only medication he ever received was a single prescription on the day of the accident fo-r Empirin, a mild aspirin compound. Nor did his special damages take him a significant way down the road to the $10,000.-00 minimum. His total medical bills were less than $250.00. Although he claims $800.00 in lost wages, it is difficult to see how this could have amounted to even $300.00 at Burns’ rate of pay that summer.

The point of this fact recitation is that it really does appear to a legal certainty that the amount in controversy is less than $10,000. This is no Plimsoll case, where dismissal was based on “bare bones pleadings” alone. The present situation differs from that case also in that this dismissal was fo-r lack of subject matter jurisdiction not for failure to state a claim. Here the Trial Court examined an extensive record and determined as a matter of law that the requisite amount in controversy was not present. Indeed, had the case gone to trial and had the jury returned an award of $10,000, a Gorsalitz-girded Judge would have been compelled as a matter of law to- order a remittitur. He would have inescapably found that the verdict was “so inordinately large as obviously to exceed the maximum of the reasonable range within which the jury may properly operate.” Of course, we decline to make any more precise determination of plaintiff’s loss since to do so-might prejudice his right to a trial in another court.

Neither are we affected by plaintiff’s plaintive plea that he is being deprived of a jury trial. The question in this case is not whether Burns is entitled to a trial by jury but rather where that trial is to be. We ho-ld only that the case cannot be tried in the Federal Court because competence over it has not been granted to that Court by Congress.

Affirmed.

      . St. Paul Mercury Indemnity Co. v. Red Cab Co., 1938, 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845, 848.

      . Id.

      . See Bell v. Preferred Life Assurance Society, 1943, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15; Horton v. Liberty Mutual Ins. Co., 1961, 367 U.S. 348, 81 S.Ct. 1570, 6 L.Ed.2d 890.

      . E. g. Jones v. Landry, 5 Cir., 1967, 387 F.2d 102; Mas v. Perry, 5 Cir., 1974, 489 F.2d 1396; Miami Beach Yacht Corp. v. Terro Corp., 5 Cir., 1972, 461 F.2d 770; Anderson v. Moorer, 5 Cir., 1967, 372 F.2d 747; Burks v. Texas, 5 Cir., 1954, 211 F.2d 443. Of course there have been situations where the pain, suffering and other intangible factors were so slight that no substantial evidence could be offered to support a verdict for as much as the jurisdictional amount. Starks v. Louisville & Nashville R.R. Co., 5 Cir., 1972, 468 F.2d 896; Matthiesen v. Northwestern Mutual Ins. Co., 5 Cir., 1961, 286 F.2d 775; Leehans v. American Employers Ins. Co., 5 Cir., 1959, 273 F.2d 72.

      . Burns was making the minimum wage, $1.-65 an hour. Four forty-hour work weeks at this wage grosses $264.00.

      . Cook & Nichol, Inc. v. Plimsoll Club, 5 Cir., 1971, 451 F.2d 505.

      . Gorsalitz v. Olin Mathieson Chemical Corp., 5 Cir., 1970, 429 F.2d 1033, 1046.