author: HASTINGS, Senior Circuit Judge.

text:
    Eugene J. RUTTER et al., Plaintiffs, Counter-Defendants, Appellees v. ARLINGTON PARK JOCKEY CLUB et al., Defendant, Counter-Plaintiff, Appellant. ARLINGTON PARK JOCKEY CLUB, Third-Party Plaintiff, Appellant, v. Tracey BOUGAN, Third-Party Defendant, Appellee.
    No. 74-1022.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 20, 1974.
    Decided Feb. 4, 1975.
    Gary M. Elden, Chicago, Ill., for appellant.
    Daniel Karlin, Joseph B. Lederleitner, Chicago, Ill., for appellees.
    Before HASTINGS, Senior Circuit Judge, and STEVENS and SPRECHER, Circuit Judges.
   HASTINGS, Senior Circuit Judge.

This is an appeal from a judgment of the district court, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C., dismissing defendants’ counterclaim and third-party complaint. We reverse and remand to the district court with directions to reinstate the counterclaim and third-party complaint.

Plaintiffs were the owners of five racing horses which were brought to the Arlington Park Race Track owned by the Arlington Park Jockey Club (Club), by plaintiffs’ horse trainer, Tracey Bougan, in connection with a race. In order to secure stables for the horses, Bougan signed, as the applicant, a “1971 Stall Application,” which is included as an appendix to this opinion. A note under the signature stated that a trainer signing the application represented that his signature was authorized by and was on behalf of the horse owners. The application stated that in consideration for the Club’s provision of certain facilities and services to the applicant without charge, including “fire and police protection,” the applicant agreed that the Club would assume “no responsibility for loss or damage by fire to animals . . . located on the Premises.” The application further stated that the Club was free from liability “whether or not such injury, loss or damage is caused by the negligent acts or omissions” of the Club, its employees or agents. The applicant also agreed to indemnify the Club from any liability for damage to the applicant’s animals in connection with the use of the Club’s property. On June 3, 1971, the five horses were killed in a barn fire.

Plaintiffs brought an action against the Club for damages in the amount of $310,500 for the loss of the horses, alleging that the Club had been negligent in maintaining a fire hazard and in failing to provide adequate fire alarms and fire fighting equipment. Jurisdiction is based on diversity of citizenship and the law of Illinois is controlling.

The Club filed a third-party complaint against Bougan, alleging that if he did not have authority to sign the application as- agent for the plaintiffs then he was personally liable for whatever the plaintiffs might recover from the Club. The Club also filed a counterclaim against the plaintiffs alleging that they were bound by Bougan’s actions and therefore required to indemnify the Club from any judgment awarded to the plaintiffs.

Plaintiffs and the Club each moved for summary judgment on the Club’s affirmative defense that the stall application exculpated it from liability for the loss of the horses. The district court granted the plaintiffs’ motion for summary judgment and denied the Club’s motion. The court reasoned that since the Club had undertaken to provide fire protection, it was not clear that the intent of the agreement was to put the entire risk of fire loss on the plaintiffs. The court dismissed the Club’s third-party complaint and counterclaim, sua sponte, on the grounds that they were dependent upon the validity of the exculpation and indemnification provisions. The court granted the Club’s motion for a finding under Rule 54(b) of the Federal Rules of Civil Procedure that the two dismissals were immediately appealable. Thus, this is an appeal only from the dismissals of the third-party claim and counterclaim. However, because those dismissals were based on the same question of law as the partial summary judgment, the issue here is the same.

The question is whether, under Illinois law, a contract which provides for fire protection, but which also provides for indemnification and exculpation of the promisor from liability for fire losses, even if due to its negligence, is effective to free the promisor from liability for damages caused by fire.

Under Illinois law, courts will enforce contractual clauses exempting a party from liability for its own negligence, if it is clear from the contract that the parties’ intent was to shift the risk of loss, “unless (1) it would be against the settled public policy of the State to do so, or (2) there is something in the social relationship of the parties militating against upholding the agreement.” Jackson v. First National Bank, 415 Ill. 453, 460, 114 N.E.2d 721, 725 (1953). Our court recently reviewed the state law on this question and said:

[I]n Illinois, at least when contracts between parties of relatively equal bargaining strength are being construed, the risk that a party will be guilty of negligence is treated like any other commercial risk that may cause harm to the other party to a commercial transaction. In the evaluation of foreseeable commercial risks, Illinois seems to attach greater importance to the commercial interest in certainty than to the policy of deterring negligence. Gates Rubber Co. v. USM Corp., 7 Cir., 508 F.2d 603, 614 (1975) (Footnote omitted).

Although there are a number' of Illinois cases construing exculpatory clauses, a recent decision on the subject by the Illinois Supreme Court suggests that reference to those cases will not be useful in determining the parties’ intent in a particular case. The court said:

We have examined the authorities cited by the parties . . . and conclude that the contractual provisions involved are so varied that each must stand on its own language and little is to be gained by an attempt to analyze, distinguish or reconcile the decisions. The only guidance afforded is found in the accepted rule of interpretation which requires that the agreement be given a fair and reasonable interpretation based upon a consideration of all of its language and provisions. Tatar v. Maxon Construction Co., 54 Ill.2d 64, 67, 294 N.E.2d 272, 273-274 (1973).

In the instant case, the language is explicit that the Club is not to be liable for fire losses due to its negligence. The question is whether, as the district court suggested, the fact that the Club agreed to provide fire protection' somehow makes this otherwise explicit clause ambiguous or inconsistent.

On this question the Illinois law is also clear. The courts have repeatedly upheld exculpatory clauses relieving a party from liability for negligence in performing a contractual obligation. For example, in Morrow v. Auto Championship Racing Association, Inc., 8 Ill.App.3d 682, 291 N.E.2d 30 (1972), the defendant contracted to permit the plaintiff to participate in the defendant’s stock car race. The plaintiff signed an agreement releasing the defendant from all liability for any injury sustained at the race track. While the plaintiff was in the pits working on his car, another car in a race went out of control and careened into the pit and seriously injured him. Plaintiff sued the defendant for damages claiming negligence in conducting races at an unsafe track. The appellate court reversed a judgment for the plaintiff and held that the release was a bar to the plaintiff’s suit.

Similarly, in Owen v. Vic Tanny’s Enterprises, 48 Ill.App.2d 344, 199 N.E.2d 280 (1964), an exculpatory clause relieving defendant from liability for personal injuries contained in a gymnasium membership contract was held to bar a suit by a member who had been injured in a fall, allegedly due to the negligent maintenance of the floor adjacent to the swimming pool. See also Bers v. Chicago Health Clubs, Inc., 11 Ill.App.3d 590, 297 N.E.2d 360 (1973) (abstract only).

Further, in Halperin v. Darling & Co., 80 Ill.App.2d 353, 225 N.E.2d 92 (1967), the Illinois court said, in dicta, that if a contract clearly so stated, a party could indemnify itself for damages arising out of its own negligence in performing a service it was contractually obligated to provide. In that case a lessor of a truck agreed to maintain the truck and the lessee agreed to hold the lessor harmless from any liability arising from operation of the truck. The truck was involved in a collision when its brakes, allegedly negligently maintained, failed. The court held that the lessor was only free from damages arising from operation of the truck and not from maintenance. The court further stated that if the lessor had included damages arising from maintenance in the exculpatory clause it would have succeeded in being free from liability for the collision.

In the instant case the broad exculpatory language of the stall application expressly included loss or damage by fire to animals whether or not caused by the Club’s negligent acts or omissions to act. When there is such clear contractual language expressing the intent of the parties Illinois courts will not abrogate it. This was a contract between businessmen and it reflected good business judgment to place the risk of loss upon the party who could least expensively insure against it. It is unlikely that the Club would provide stable facilities free of charge if by doing so it incurred liability for damage to horses of substantial but unknown value. The cost of insurance would be greater for the Club than for the horse owners because the Club could not accurately predict the number and value of the horses that would be housed in its facilities from time to time.

The district court and plaintiffs cited Shelby Mutual Insurance Co. v. City of Grand Rapids, 6 Mich.App. 95, 148 N.W.2d 260 (1967), which held that a fire protection clause vitiated an exculpatory clause. This case is not, of course, an expression of Illinois law and, in our judgment, does not support the district court’s holding. In Shelby, for a stipulated charge, the city agreed to supply fire protection to a family outside the city limits. However, the contract provided that the city would not be liable for losses due to its negligence or its failure to furnish adequate fire protection. When the family notified the fire department of a fire at its home, the dispatcher refused to send any fire fighting equipment. The city argued that the exculpatory clause relieved it from liability. The court disagreed. It held that the clause released the city from liability for failure to provide adequate protection but that there would be liability if it furnished no protection. If the contract were construed as the city argued it should be, it would be entirely illusory. This is not the situation in the instant case. There is no allegation here that the Club provided no fire protection. It would not be an illusory contract to agree to provide protection but be exculpated from negligence. The contract would still require that some fire protection be rendered.

Our review of Illinois law indicates that exculpatory clauses are not invalid merely because they disclaim liability for negligent performance of a contractual obligation. Under Illinois law, however, even if the parties intended exculpation, the agreement would not be enforced if there was something in the social relationship between the parties militating against upholding the agreement or if it would be against the settled public policy of the state to do so. Jackson v. First National Bank, supra. Here the parties’ relationship was that of businessmen dealing at arm’s length. There was no relationship such as that of employer-employee or common carrier-passenger that would call for an exception to the general rule on exculpatory clauses. The district court found it unnecessary to reach the question of whether the clause was unenforceable as against public policy because of its holding that the clause was invalid since it attempted to release a party from negligent performance of a contractual duty. Since we disagree with that holding we reach the question of public policy.

The public policy issue was briefed and argued by the parties on appeal. It is plaintiffs’ contention that the exculpatory clauses violate public policy because state licensing of race tracks creates a public duty to provide fire protection. Illinois courts, however, have applied a strict test in determining when public policy interests will invalidate a contract. In Schnackenberg v. Towle, 4 Ill.2d 561, 565, 123 N.E.2d 817, 819 (1954), cert. denied, 349 U.S. 939, 75 S.Ct. 785, 99 L.Ed. 1267 (1955), the Illinois Supreme Court stated:

It has often been said that the public policy of the State is to be found in its constitution and its statutes, and when eases arise concerning matters upon which they are silent, then in its judicial decisions and the constant practice of government officials. Courts will not look to other sources to determine the public policy of a State.

See also, Bruno v. Gabhauer, 9 Ill.App.3d 345, 292 N.E.2d 238 (1972); Erickson v. Wagon Wheel Enterprises, Inc., 101 Ill.App.2d 296, 242 N.E.2d 622 (1968). The test is not satisfied merely by showing that the state regulates the business which made the contract.

Plaintiffs have not pointed out any constitutional or statutory provisions or any decisions of Illinois courts which indicate that it would violate public policy to permit race track owners to exculpate themselves from liability to horse owners for fire losses. Where the legislature has wanted to invalidate exculpatory clauses in particular kinds of contracts it has done so. In 1971, for example, statutes were enacted declaring void as against public policy exculpatory clauses in leases, Ill.Rev.Stat. ch. 80, § 91 (1973), and in construction contracts, Ul.Rev. Stat. ch. 29, § 61 et seq. (1973). In circumstances not covered by such statutes, Illinois courts have declined to find exculpatory clauses to be violative of public policy. See, e. g., Morrow v. Auto Championship Racing Association, Inc., 8 Ill.App.3d 682, 685-686, 291 N.E.2d 30, 33 (1972) (stock car racing); Erickson v. Wagon Wheel Enterprises, Inc., 101 Ill.App.2d 296, 301, 242 N.E.2d 622, 625 (1968) (horsebackriding); Owen v. Vic Tanny’s Enterprises, 48 Ill.App.2d 344, 348, 199 N.E.2d 280, 282 (1964) (gymnasium). Plaintiffs have not succeeded in demonstrating that the exculpatory clauses in the stall application are “so pregnant with evil as to be against public policy.” Schnackenberg v. Towle, supra, 4 Ill.2d at 565, 123 N.E.2d at 819.

In light of the foregoing we hold that under Illinois law the subject exculpatory and indemnification language is valid and enforceable. We reverse and remand to' the district court with directions to reinstate the counterclaim and the third-party complaint and for further proceedings not inconsistent with this opinion.

Reversed and remanded with directions.

APPENDIX

1971 STALL APPLICATION

The undersigned owner(s) of the above named horses (hereinafter called the “Applicant”), hereby make(s) application to the Principals (as this term is defined below) for a permit to use stalls and the facilities at Arlington Park (hereinafter called the “Premises”). The term “Prin-cipals” shall mean and include . The Arlington Park and Washington Park Jockey Clubs, both being divisions of Chicago Thoroughbred Enterprises, . In consideration of the granting of such stall space and of the furnishing of the use of the track for training purposes, the furnishing of water, electricity, fire and police protection and the removal of manure, garbage and various other services, all without cost or charge to the Applicant, the Applicant does hereby covenant and agree as follows:

* * * * * *

2. Cooking and smoking is prohibited in stalls or tack rooms. Applicant acknowledges and agrees that the Principals assume no responsibility for loss or damage by fire, theft or accident to persons, animals, equipment, vehicles or any other property located, on the Premises.

* * * * * *

6. Applicant agrees that neither the Principals nor the directors, officers, employees and agents of any of them, shall be liable under any circumstances for any loss or damage whatsoever, whether direct, indirect, consequential or resultant, including without limitation, death, personal injury or death of or injury to animals, and loss or damage to any property whatsoever, directly or indirectly arising out of or resulting from or connected with the use by the Applicant, owners, trainers, jockeys and their respective employees, agents and animals, of any portion of the Premises or of any property (including motor vehicles) owned, leased or controlled by the Principals, for any purpose or in any manner whatsoever, including, without limitation, racing, training or transportation, and whether or not any such injury, loss or damage is caused by the negligent acts or omissions to act on the part of any Principal or the respective directors, officers, employees and agents of any Principal. All risks involved in connection with any act or failure to act referred to in this paragraph or arising directly or indirectly from the assignment to or utilization by the Applicant of stall space or the use of any portion of the Premises are assumed solely, fully and completely by the Applicant, his jockeys, servants, employees and agents.

7. Applicant agrees to defend, protect, save harmless and indemnify the Principals, and their respective directors, officers, employees and agents, from any and all liability, suits, claims, demands, damages, fees, costs and expenses, arising out of or claimed to arise out of or resulting from or claimed to have resulted from any injury or damage to the person, animals or property of the Applicant, his agents, employees, contractors or any other party rendering any service to the Applicant, in connection with the use by the Applicant, his agents, employees, contractors or any other party rendering any service to the Applicant, of any portion of the Premises or of any property (including motor vehicles) owned, leased or controlled by the Principals, for any purpose or in any manner whatsoever, including, without limitation, racing, training, or transportation, whether or not any such injury or damage is caused by the negligent acts or omissions to act on the part of any Principal or the respective directors, officers, employees and agents of any Principal. * * * * * *

/s/ Tracey Bougan

Applicant/Trainer’s Signature

NOTE: If this Application is signed other than by the owner or owners of each of the horses named on the face side hereof, the trainer signing this Application represents that he is authorized by each such owner to sign this Application and further represents that he has signed this Application on behalf of each such owner.

      . Rule 54(b), Fed.R.Civ.P., provides in pertinent part, “When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.”

      . Our court has often in the past noted that Illinois law permits a party to indemnify itself from the consequences of its own negligence. See, e. g., Granite City Steel Co. v. Koppers Co., 7 Cir., 419 F.2d 1289, 1290 (1969); Halverson v. Campbell Soup Co., 7 Cir., 374 F.2d 810, 812-813 (1967); Spurr v. LaSalle Construction Co., 7 Cir., 385 F.2d 322, 330 (1967), all citing Bentley v. Palmer House Co., 7 Cir., 332 F.2d 107, 109-111 (1964). See also, Chicago R. I. & P. R. R. v. Chicago, B. & Q. R. R., 7 Cir., 437 F.2d 6, cert. denied, 402 U.S. 996, 91 S.Ct. 2173, 29 L.Ed.2d 161 (1971).


source: Caselaw Access Project

author: TONE, Circuit Judge.

license: Public Domain

text:
    ARVIN INDUSTRIES, INC., Plaintiff-Appellee, v. BERNS AIR KING CORPORATION, Defendant-Appellant.
    No. 74-1078.
    United States Court of Appeals, Seventh Circuit.
    Argued Oct. 2, 1974.
    Decided Feb. 13, 1975.

      Norman Lettvin, Chicago, 111., for defendant-appellant.
    Jack W. Hanley, Indianapolis, Ind., Gerald D. Hosier, Chicago, 111., for plaintiff-appellee.
    Before FAIRCHILD and TONE, Circuit Judges, and GRANT, Senior District Judge.

       Senior District Judge Robert A. Grant of the Northern District of Indiana is sitting by designation.

   TONE, Circuit Judge.

The single question we reach in this opinion is whether there is federal jurisdiction under 28 U.S.C. § 1338(a) over an action by a patent licensor against his licensee for infringement, when the license agreement is shown by the complaint to be in effect and the wrongful conduct alleged is refusal to pay royalties.

A prior action between the parties for infringement of the same patent was settled by the entry of a consent decree and the execution of a license agreement authorizing defendant to make and sell heaters embodying the invention and obligating defendant to pay royalties. Defendant paid royalties under the agreement for a short time and then discontinued manufacture and sale of the models involved in the prior action and began making and selling modified structures which it claimed were not covered by the patent. When plaintiff’s demand for royalties on the modified structures was refused, it commenced this action.

In its complaint plaintiff alleged the existence of jurisdiction under 28 U.S.C. § 1338(a), plaintiff’s ownership of the patent, the consent decree, and the existence of the patent license agreement under which “defendant agreed to pay plaintiff a royalty for each heater sold by defendant which embodies the licensed invention.” The complaint continued:

“7. Notwithstanding said license agreement, defendant has refused and continues to refuse to pay plaintiff royalties on heaters sold by defendant and known as defendant’s Model HF-22 heater.
“8. The making, using, and selling by defendant of its Model HF-22 heater, and possibly others, without payment of royalties to plaintiff, constitute acts of infringement of said Letters Patent.”

Plaintiff sought an injunction against “further infringement” and “damages for infringement.”

In its answer defendant denied the allegation of jurisdiction, denied infringement, and asserted as an affirmative defense that it was “presently licensed under [the patent] and, therefore, cannot infringe said patent.”. Defendant did not' otherwise question jurisdiction and, in fact, submitted proposed findings and conclusions after trial containing a finding of jurisdiction.

The District Court heard evidence and entered judgment in favor of plaintiff, stating its reasons in a memorandum opinion in which the issue of jurisdiction, not having been raised, was not discussed.

Defendant now argues that the case does not arise under the patent laws, and that therefore jurisdiction does not exist under 28 U.S.C. § 1338(a). Even though the issue of jurisdiction" was not raised in the District Court, we have a duty to consider and determine it. Lion Mfg. Corp. v. Chicago Flexible Shaft Co., 106 F.2d 930, 933 (7th Cir. 1939).

The beginning point for our analysis is the principle stated by Mr. Justice Holmes in American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916): “A suit arises under the law that creates the cause of action.” The plaintiff’s opening pleading is determinative. A case arises iihder the patent laws, and therefore exclusive federal jurisdiction exists, “when the plaintiff in his opening pleading . . . sets up a right under the patent laws as ground for a recovery.” Pratt v. Paris Gas Light & Coke Co., 168 U.S. 255, 259, 18 S.Ct. 62, 64, 42 L.Ed. 458 (1897). While a suit for infringement of a patent arises under the patent laws and is therefore cognizable under 28 U.S.C. § 1338(a), a suit to enforce an undertaking to pay royalties for the use of a patent arises under state law and is not within the jurisdiction of the federal courts. Albright v. Teas, 106 U.S. 613, 1 S.Ct. 550, 27 L.Ed. 295 (1883); Luckett v. Delpark, Inc., 270 U.S. 496, 510, 46 S.Ct. 397, 70 L.Ed. 703 (1926).

In a line of cases beginning with Wilson v. Sandford, 51 U.S. (10 How.) 99, 13 L.Ed. 344 (1850), the Supreme Court evolved a set of rules governing federal jurisdiction over cases which present issues of patent infringement or validity as well as issues arising under a patent license agreement. This body of law is explained and summarized in Mr. Chief Justice Taft’s opinion for the Court in Luckett v. Delpark, Inc., supra, 270 U.S. 496, 46 S.Ct. 397, 70 L.Ed. 703, and in Mr. Justice (then Judge) Minton’s opinion for this court in Laning v. National Ribbon & Carbon Paper Mfg. Co., 125 F.2d 565 (7th Cir. 1942). The principle underlying all these decisions is that the existence of federal jurisdiction is to be determined from plaintiff’s complaint. Thus, if the complaint alleges a claim for patent infringement arising under federal law, federal jurisdiction is not defeated by the defendant’s allegation of the defense of license arising under state law or the anticipation of such a defense in the complaint. Federal jurisdiction does not exist, however, when the plaintiff alleges the existence of a license and asks the court both to declare the license forfeited and to grant relief for infringement upon the forfeiture being declared. Speaking of Wilson v. Sandford, the Court in Luckett v. Delpark, Inc., 270 U.S. at 511, 46 S.Ct. at 402, said as follows:

“If in that case the patentee complainant had based his action on his patent right and had sued for infringement, and by anticipation of a defense of the assignment had alleged a forfeiture by his own declaration without seeking aid of the court, jurisdiction under the patent laws would have attached, and he would have had to meet the claim by the defendant that forfeiture of the license or assignment and restoration of title could not be had except by a decree of a court, which, if sustained, would have defeated his prayer for an injunction on the merits. But when the patentee exercises his choice and bases his action on the contract and seeks remedies thereunder, he may not give the case a double aspect, so to speak, and make it a patent case conditioned on his securing equitable relief as to the contract. That is the principle settled by Wilson v. Sand-ford, and is still the law.”

In the case at bar, plaintiff alleged in its complaint the existence of a license agreement which authorized the very use of the patent of which it complained. While the conclusion of infringement was pleaded, the facts that were also pleaded showed that there was no infringement because the defendant’s use of the patent was authorized by the agreement. The complaint thus revealed that plaintiff was not entitled to claim infringement but could only enforce its rights under the still existing license agreement. United Mfg. & Serv. Co. v. Holwin Corp., 187 F.2d 902, 905 (7th Cir. 1951). Those were rights conferred by state law, and could not be the basis for federal jurisdiction. Plaintiff does not have “pleader’s choice,” as it contends, relying on The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 33 S.Ct. 410, 57 L.Ed. 716 (1913), to sue for a violation of its federal patent rights which its own complaint shows did not occur. Cf. Thiokol Chemical Corp. v. Burlington Industries, Inc., 448 F.2d 1328, 1330-1331 (3d Cir. 1971), cert. denied, 404 U.S. 1019, 92 S.Ct. 684, 30 L.Ed.2d 668 (1972).

The Court in Luckett, in describing the kind of allegations that would have supported jurisdiction in Wilson v. Sand-ford, included the allegation of “a forfeiture by his [the plaintiff-licensor’s] own declaration without seeking aid of the court.” (270 U.S. at 511, 46 S.Ct. at 402.) Here plaintiff does not allege forfeiture by its own declaration or otherwise but, on the contrary, alleges that the license still exists. As in Wilson v. Sandford, plaintiff “alleges no (ground for an injunction unless the contract is set aside.” (51 U.S. (10 How.) at 101.) Unlike the plaintiffs in other cases discussed in Luckett, plaintiff here does not allege that the license had already been terminated for breach of a condition (as in Healy v. Sea Gull Specialty Co., 237 U.S. 479, 35 S.Ct. 658, 59 L.Ed. 1056 (1915)) or that defendant’s acts were not authorized by the license (as in The Fair v. Kohler Die & Specialty Co., supra, 228 U.S. 22, 33 S.Ct. 410, 57 L.Ed. 716; and Henry v. A. B. Dick Co., 224 U.S. 1, 32 S.Ct. 364, 56 L.Ed. 645 (1912), overruled on another point in Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917)).

It is perhaps anomalous that the existence of federal jurisdiction should turn on what a plaintiff chooses to include in his complaint rather than upon the facts that appear from the pleadings of both plaintiff and defendant. That, however, is sometimes the effect of the long-settled rule that the case arises under the law that creates the plaintiff’s cause of action and that federal jursidiction is neither created nor ousted by defenses pleaded by the defendant. As Judge Friendly said in a similar context, “precedents going back for more than a century teach that lesson.” (T. B. Harms Co. v. Eliscu, 339 F.2d 823, 824 (2d Cir. 1964).)

It appears likely that diversity jurisdiction exists in this case. Plaintiff and defendant are organized and have their principal places of business in Indiana and Illinois, respectively. If jurisdictional amount can be alleged and proved, there will be diversity jurisdiction under 28 U.S.C. § 1332. To avoid wasting the efforts that have gone into trying and deciding the case on the merits, we are vacating the judgment and remanding the case to the District Court for a determination of whether diversity jurisdiction exists. If the District Court decides there is jurisdiction, a new notice of appeal from a new judgment will return the ease to this court for determination on the merits by the same panel, without the necessity of further briefs or oral argument.

On remand, the District Court will have authority to reconsider the form of relief granted, in light of the continuing existence of the license agreement. See United Mfg. & Serv. Co. v. Holwin Corp., supra, 187 F.2d 902; see also DeForest Co. v. United States, 273 U.S. 236, 241-242, 47 S.Ct. 366, 71 L.Ed. 625 (1927); Anthony Co. v. Perfection Steel Body Co., 315 F.2d 138, 141 (6th Cir. 1963). Vacated and remanded.

      . This is but a manifestation of the general rule of federal jurisdiction that an action does not arise under federal law if the federal question is introduced by way of defense, even though the plaintiff anticipates the defense in his initial pleading. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672, 70 S.Ct. 876, 94 L.Ed. 1194 (1950).

      . Thiokol held that a licensee’s claim for a declaratory judgment that a proposed new product would not infringe the licensed patents, and that,, moreover, the patents were invalid and therefore the licensee was entitled to recover amounts already paid as royalties, did not arise under the patent laws. The court, per Judge Hastie, viewed the complaint as essentially asserting a defense to a threatened state court action, which the .court assumed would be for enforcement of the license agreement and not for infringement, and applied the rule of Public Service Comm’n v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 97 L.Ed. 291 (1952), that, in a declaratory.judgment action seeking to assert a defense to a threatened action, the existence of federal-question jurisdiction is determined by the character of the threatened action rather than the defense. Compare Beckman Instruments, Inc. v. Technical Development Corp., 433 F.2d 55 (7th Cir. 1970), which was mentioned by Judge Hastie in a footnote (448 F.2d at 1331, n. 3) and in which jurisdiction was not questioned in this court.


author: WEICK, Circuit Judge. McCREE, Circuit Judge EDWARDS, Circuit Judge

text:
    CLARK ENGINEERING AND CONSTRUCTION COMPANY, Plaintiff-Appellant, v. UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, FOUR RIVERS DISTRICT COUNCIL, et al., DefendantsAppellees.
    No. 74-1312.
    United States Court of Appeals, Sixth Circuit.
    Feb. 17, 1975.

      Charles S. Wible, Lovett, Wible & Lamar, Owensboro, Ky., for plaintiff-appellant.
    Charles R. Isenberg, Segal, Isenberg, Sales & Stewart, Thomas G. Jarrell, Louisville, Ky., for defendants-appellees.
    Before WEICK, EDWARDS and McCREE, Circuit Judges.
   WEICK, Circuit Judge.

Clark Engineering and Construction Company (Clark), a Kentucky corporation, brought suit in the District Court against the defendant labor organizations under Section 303 of the Labor Management Relations Act (LMRA) as amended, 29 U.S.C. § 187, alleging that activities of the labor organizations at a Murray State University construction project, in Murray, Kentucky, violated Section 8(b)(4) of the National Labor Relations Act (NLRA) as amended, 29 U.S.C. § 158(b)(4).

The case was tried before a jury which returned a verdict in favor of the defendant labor organizations, upon which verdict judgment was entered dismissing the complaint. . Clark appealed.

On October 16, 1969 the State of Kentucky awarded Clark a contract of over $5,000,000 for construction of a football stadium, with underground classroom facilities, on the campus of Murray State University. Clark subcontracted some of the work. A short time after being awarded the contract Clark agreed to hire members of various building trades locals at the wage scales specified in their area collective bargaining agreements. The agreements between Clark and the local unions expired on or about May 31, 1971. During the time of the activities which are the basis of Clark’s action, none of the labor organizations had a collective bargaining agreement with Clark, and no labor organization was certified by the National Labor Relations Board as the representative of Clark’s employees.

The carpenters employed by Clark continued to work under the terms of the old agreement until July 1, 1971. The United Brotherhood of Carpenters Local, however, insisted that Clark sign a letter of intent to be bound by whatever agreement might be finally reached between the Carpenters Local and the Associated General Contractors. Clark did not want to agree in advance to be bound by any agreement that the Association might enter into, and decline to sign the letter of intent. The Carpenters then began picketing at the construction site, informing Clark that they would not return to work until the letter of intent was signed.

Clark erected a single-wire fence around the entire construction site. The fence had two entrance gates, separated by about 180 feet. Gate 1 was reserved for Clark and nonunion or open shop subcontractors and their material suppliers. Gate 2 was reserved for the neutral union subcontractors and their material suppliers. Clark posted large, clearly-worded, appropriate signs at the gates. The Carpenters then complied with the notice and limited their picketing to gate 1, thereby avoiding violating Section 8(b)(4) of the NLRA. The union subcontractors’ employees began using gate 2 and resumed work. The Carpenters picketed until August 30th or 31st, 1971. They had-not settled their dispute with Clark when they stopped picketing.

On Friday, September 10, 1971 three members of the Safety Committee for the West Kentucky Building and Construction Trades Council visited the construction site, stating to Clark’s job superintendent that they had received reports of safety violations on the job. They asked the superintendent to accompany them on an inspection of the project, but he refused. No employee had previously made any complaint to him concerning working conditions. The members of the Safety Committee inspected the job and claimed to have found several safety hazards. The Trades Council began picketing at both gates on the following Monday, September 13, 1971.

The picket sign read: “This job is unsafe and unsanitary. West Kentucky Building Trades Council.” It seems to be a coincidence that on the same day two inspectors for the Kentucky Department of Labor inspected the job site and found fifteen sanitary and safety violations. The construction had been in progress for nearly two years without any complaint by the Department or by any employee.

Two of the subcontractors whose employees used gate 2 were the Tilford Plumbing & Heating Co. and Riley Electric Co. These subcontractors were responsible for plumbing and electrical work that had to be completed prior to placing of concrete by Clark’s employees. Their employees, except for Riley’s foreman, refused to work while picketing at gate 2 continued.

Picketing continued at gate 2 until September 24, 1971. The State Inspector and a member of the Safety Committee of the Labor Council testified that safety conditions had improved by September 21st; however, they also testified that there were some safety problems uncorrected. Pickets were removed on the morning of September 24th, and members of the defendant-appellee unions returned to work.

In its appeal Clark contended (1) that the District Court erred in its instruction to the jury that § 502 of LMRA provided a defense to a secondary boycott conducted by the defendant unions against neutral employers; (2) that the Court erred in its admission of incompetent evidence and in the exclusion of competent evidence; and (3) that the Court erred in denying plaintiff’s motion for a directed verdict. We reverse.

I

Section 502, in relevant part, provides:

Nothing in this chapter shall be construed to require an individual employee to render labor or service without his consent, nor shall anything in this chapter be construed to make the quitting of his labor by an individual employee an illegal act; nor shall any court issue any process to compel the performance by an individual employee of such labor or service, without his consent; nor shall the quitting of labor by an employee or employees in good faith because of abnormally dangerous conditions for work at the place of employment of such employee or employees be deemed a strike under this chapter. (Emphasis ours.) (29 U.S.C. § 143)

Only the italicized portion was claimed to be applicable to this case.

The District Court instructed the jury with respect to this section as follows:

The Defendant Unions admit the picketing at the time and place claimed; that is, at both gates between the dates of Monday, September 13 through Friday, September 24, 1971, but deny that the Unions were engaged in any unlawful or unfair labor practice as prohibited by Section 8(B)(4)[b] of the National Labor Relations Act, which I just read you.
The Defendant Unions contend that their members quit working at and picketing the Clark Engineering job site on September 13, 1971, in good faith because of dangerous working conditions at that place of employment and that they ceased such picketing and returned to their jobs after much of the dangerous conditions at the work site had been remedied.
Of course, the Plaintiff Clark claims that such contention by the Defendant Unions of dangerous working conditions was and is a false, sham claim or defense. If the Defendant Unions’ claim is believed by you to be true, then the Defendant Labor Organizations would not have violated Section 8(B)(4)[b] of the Labor Act for the reasons of the existence of Section 502 of the Labor Management Act which reads pertinent part as follows:
“Nothing in this Act shall be construed to require an individual employee to render labor or service without his consent, nor shall the quitting of labor by an employee or employees in good faith because of abnormally dangerous conditions of work at the place of employment be deemed a strike under this Act.”
However, if you, the jury, should conclude that the employees in their good faith did not believe that there existed abnormally dangerous condition at this place of employment or if you should believe that such dangerous conditions, in fact, did not exist, then this would not be a valid defense for the Defendant Unions against the claim of Mr. Clark in this lawsuit. ... (A. 137-138)
Thus, the factual issue to be determined by you in this case is:
(1) Was one of the objects of the picketing by the Defendant Unions between the period of September 13 and September 24 and [sic] object prohibited by 8(B)(4)[b] of the National Labor Relations Act, or, on the other hand, was the sole object of the Defendant Labor Organizations activities in such picketing during such period one taken in good faith because of the existence of abnormally dangerous conditions at the place of employment. (A. 140)

In our opinion the District Court erred in instructing the jury on Section 502. It was not pleaded as a defense. The Section, even if applicable, does not authorize a secondary boycott in violation of Section 8(b)(4) of the National Labor Relations Act, as amended.

Section 502 authorizes the quitting of labor by an employee or employees in good faith because of abnormally dangerous conditions of work. The section does not mention a labor union; it is addressed solely to the rights of individuals.

Clark does not question the right of “an employee or employees” to quit work under such condition. There was no proof that any employee ever made a complaint to Clark or his supervisors concerning working conditions.

What the Trades Council and the unions were attempting to do was to conduct a secondary boycott against neutral parties who were not concerned with the Council’s and unions’ controversy with Clark. The unions could picket to their hearts’ content so long as they confined their picketing to gate 1.

The distinction between employee individual rights and union acitivity with respect to § 502 was recognized and pointed out in Marble Prod. Co. v. Local 155, United Stone & Allied Workers of America, 335 F.2d 468 (5th Cir. 1964).

Section 8(b)(4) is violated only if one of the objects of a union’s activity is an object prohibited by the Section. The dual Congressional objectives were to preserve “the right of labor organizations to bring pressure to bear on offending employers in primary labor disputes and of shielding unoffending employers and others from pressures in controversies not their own.” NLRB v. Denver Bldg. & Constr. Trades Council, 341 U.S. 675, 689, 692, 71 S.Ct. 943, 953, 95 L.Ed. 1284 (1951).

Section 502 does not create an exception to this principle. Therefore, it was irrelevant to the jury’s consideration of the case.

Section 502 serves an entirely different purpose. When an employee is exposed to abnormally dangerous working conditions and quits work in good faith because of such conditions the section protects him from employer retaliation. The employee cannot be discharged, NLRB v. Knight Morley Corp., 251 F.2d 753 (6th Cir.), cert. denied, 357 U.S. 927, 78 S.Ct. 1372, 2 L.Ed.2d 1370 (1958); the employer cannot resort to a lockout, Philadelphia Marine Trade Ass’n v. NLRB, 330 F.2d 492 (3d Cir.), cert. denied, 379 U.S. 833, 841, 85 S.Ct. 65, 79, 13 L.Ed.2d 41, 47 (1964).

In Gateway Coal Co. v. UMW, 414 U.S. 368, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974), the Court held that injunctive relief was appropriate to restrain a strike pending a final arbitral decision, holding that Section 502 did not deprive the District Court of authority to enforce a contractual no-strike obligation. The Court also cited with approval Knight Morley, supra, and Philadelphia Marine Trade Ass’n, supra.

It is to be noted that these cases all involved mere work stoppages on account of alleged unsafe working conditions. In none of the cases did the labor organizations contend that they had a right to conduct a secondary boycott because of' alleged unsafe working conditions. Appellees have not cited a single case in support of such a proposition.

When a work stoppage properly results from abnormally dangerous working conditions, an employer cannot resort to the weapons available to him in an economically-motivated work stoppage. We agree with the Fifth Circuit that the very natures of the two types of work stoppage are entirely different. Marble Prod. Co. v. Local 155, United Stone & Allied Workers of America, supra.

The policy of LMRA § 502 is not involved in the present case. Clark did not have a contract with any of the defendant unions, nor did it employ the plumbers and electricians whose refusal to cross the picket lines slowed construction. Clark cannot, discharge or lock out workers whom it does not employ.

The real purpose of the strike is shown by the conduct of the labor organizations.

Union business representative Kindred, prior to the start of the picketing, told Frank Riley, President of neutral employer Riley Electric Company, that the unions were going to “shut the job down regardless of who it hurt.” Picketing was started at primary and secondary gates pursuant to this threat.

Henry Strohmeyer, foreman of Poe Steel Erection Company, a neutral employer, was asked a question whether he saw roofing nails in the entrance way to gate 2 (the neutral gate) and he answered, “Yes.” Counsel for defendants objected to the question after it was answered and the Court sustained the objection. Testimony of Strohmeyer was proffered to the effect that as he was leaving the job on one occasion a steward of appellee Teamsters Union “pulled out a knife and told him that he would get him.” The reason stated by the Court for not permitting this type of evidence was that it had not been pleaded. This issue will be discussed in the next topic.

It is obvious that the unions paid no attention to the reserved gates. We recognized and applied the reserved gate doctrine in NLRB v. Nashville Bldg. & Constr. Trades Council, 383 F.2d 562 (6th Cir. 1967). Other Circuits have followed. Markwell and Hartz, Inc. v. N.L.R.B., 387 F.2d 79 (5th Cir. 1967), cert. den. 391 U.S. 914, 88 S.Ct. 1808, 20 L.Ed.2d 653; Orange Belt District Council of Painters No. 48 v. N.L.R.B., 124 U.S.App.D.C. 53, 361 F.2d 70 (1969); N.L.R.B. v. Northern California District Council of Hod Carriers and Common Laborers, 389 F.2d 721 (9th Cir. 1968); N.L.R.B. v. Lafayette Building and Construction Trades Council, 445 F.2d 495 (5th Cir. 1971).

II

The trial court excluded evidence that roofing nails had been scattered in the entrance way to gate 2 (the neutral gate) and that threats had been made to the ironworker foreman of one of the subcontractors during the picketing by the Trades Council. Although Clark’s Amended Complaint alleged that the defendants had “induced and encouraged individuals” and had “threatened, coerced, or restrained persons,” the District Judge excluded the evidence on the ground that Clark had not pleaded “violence.” (A. 90-91.) We disagree.

The words “induce” and “encourage” appear in § 8(b)(4). As a matter of statutory construction this Court, in UMW v. Osborne Mining Co., 279 F.2d 716, 728 (6th Cir.), cert. denied, 364 U.S. 881, 81 S.Ct. 169, 5 L.Ed.2d 103 (1960), held:

. [I]t is clear that the words of the statute (29 U.S.C.A. § 187a) “induce” and “encourage” include every form of influence and persuasion whether by appeals to reason or coercion with force and violence. International Brotherhood of Electrical Workers etc. v. NLRB, 1951, 341 U.S. 694, 71 S.Ct. 954, 95 L.Ed. 1299.

As a matter of statutory construction the words “induce” and “encourage” in § 8(b)(4) include the type of activity that Clark wanted to prove; this fact is persuasive that, as a matter of pleading, such words are sufficient. Certainly the words “threatened, coerced, and restrained” should be sufficient. See Conley v. Gibson, 355 U.S. 41, 47-48, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); 2A Moore’s Fed. Prac. ¶ 8.13.

We agree with appellees that violence does not change primary picketing into illegal secondary picketing. United Steelworkers v. NLRB, 376 U.S. 492, 501, 84 S.Ct. 899, 11 L.Ed.2d 863 (1964); Bedford-Nugent Corp. v. Teamsters Local 215, 358 F.2d 21, 24 (7th Cir.), cert. denied, 385 U.S. 821, 87 S.Ct. 48, 17 L.Ed.2d 59 (1966). However, Clark does not urge that violence does have that effect.

It was the picketing at gate 2 and the coercion by force.and violence that constituted illegal secondary picketing.

If secondary boycotting can be justified whenever a claim of unsafe working conditions is made, then the Reserved Gate Doctrine can be circumvented and Section 8(b)(4) of the National Labor Relations Act nullified.

Ill

In its answer to the amended complaint the defendant unions pleaded as a defense thereto the following:

2. The Defendants, and each of them, state that the allegations contained in paragraph III of the Amended Complaint alleging Defendants, and each of them, violated Sections 8(b)(4)(i) and (ii) of the National Labor Relations Act, as amended (29 U.S.C. 158(b)(4), were contained in unfair labor practice charges brought against each of the Defendants by the Plaintiff Corporation on September 23, 1971. These charges were filed by the Plaintiff Corporation with the National Labor Relations Board, Region 25, and were dismissed by that Region on November 18, 1971. The Defendants state further that the Plaintiff Corporation appealed from the dismissal of the aforesaid charges to the Office of the General Counsel of the National Labor Relations Board on November 26, 1971, which appeal was denied by the Office of the General Counsel on January 6, 1971.

Clark filed a motion to strike said paragraph as an insufficient defense. The motion came on to be heard before District Judge Charles M. Allen, who granted the motion and ordered the paragraph stricken in a Memorandum Opinion, and an order issued subsequent thereto. Judge Allen relied on the decision in Local 290, Aircraft & Engine Maintenance etc. v. I. E. Schilling Co., 340 F.2d 286 (5th Cir. 1965) and other cases cited in his Memorandum. This order has never been vacated.

Notwithstanding the decision, the defendants included in their list of exhibits served on the plaintiff, letters from the Regional Director and General Counsel of NLRB, in support of the paragraph in their answer which had been stricken. Plaintiff filed objections to these exhibits, which objections were overruled by the District Judge who presided at the trial (not Judge Allen).

In his opening statement to the jury defendants’ counsel stated:

Now, Mr. Clark, President of Clark Engineering & Construction Company, instructed his attorney, and his attorney, in his behalf, filed unfair labor practice charges against all of these Defendants that are here today, and in his charges, he alleges that they were violating the Secondary Boycott provisions in the law.
A man from the National Labor Relations Board came down; he took affidavits; he took statements; he investigated from both sides, and a short while later a letter came to Mr. Clark and I got it, as the lawyer for these people, and the Regional Director of the National Labor Relations Board said:
“There is insufficient evidence.
We think these people didn’t break the law.”
And, I will read you the letter later, and then, Mr. Clark appealed to the General Council [sic] in Washington, of the National Labor Relations Board, and he said,
“These are the facts — ”, in a great, big, long appeal, and six months later, long after the picketing had stopped — we only picketed ten days, September 13th to the 24th, and really, not ten days, because our evidence will show the picketing stopped on about 11:30 or 12:00 o’clock that Friday, the 24th.
At any rate, the General Council [sic] of the National Labor Relations Board read all of the evidence that was submitted, and he, too, said:
“No, these Unions had a right to picket under the Section of the law that they were relying on.”
That they had a good faith apprehension of their safety; that they — uh, the dangerous conditions existed, and he said:
“We are not going to issue a complaint. We don’t think that they violated the law.”
And, there the matter rested until Mr. Clark filed suit for damages here. We say to you that the picketing that we admittedly engaged in for the ten-day period was for safety. We think we may have saved somebody’s lives. We are going to have the Safety Inspector, Mr. John Anderson, testify. He has been subpoenaed by both sides. I don’t know who is going to call him
first, but he is here and he will testify what he found, and we are confident that after you hear the evidence you will agree with the National Labor Relations Board and with us, that we have not violated the law. Thank you. (A. 30-32)

Following this statement the Court charged the jury as follows:

By the Court: Ladies and gentlemen of the jury; I want to make one thing perfectly clear to you, and that is that the mention of the fact that this matter has been considered by the National Labor Relations Board is not conclusive against Mr. Clark; it doesn’t prevent Mr. Clark from bringing a suit if he thinks he has one.
A proceeding before the Labor Board heard no witnesses. A determination was simply made from a written record by the General Council [sic] that the Union had a right to do what it did, but it is not conclusive or binding on you and you can consider it for evidentiary purposes, or you can disregard it entirely, but you must keep in mind that that decision was arrived at by him without hearing any oral testimony, or without the parties having the right to cross examine the people who were making the affidavits. (A. 32)

The Court permitted the introduction of the letters to establish the defense. The letters were pure hearsay evidence and were not admissible. But even if they were not hearsay the action of the Regional Director and the General Counsel did not constitute a defense.

It was defendants’ theory that the action of NLRB would have been res judicata if the charges had been filed, a complaint issued, and the case heard and determined by the Board on its merits. But this was not done. All that the Board did was to decide, ex parte, not to permit the charge to be filed. Such action was not admissible in the present case for any purpose.

Counsel for the unions was permitted to argue the issue to the jury, as follows:

I talk to you with some authority and with a bit of knowledge. I say this modestly, I say to you that when under the federal law a Union engages in picketing in violation of Section 8(b)4, and there is some more to it, (i)(ii)(B) and it is called secondary boycotting, that an unfair labor, practice can be filed for the National Lábor Relations Board and if the Regional Director of the National Labor Relations Board has a reasonable belief that the Unions were violating that section of the law, uh, a reasonable belief — not even, uh, you know, an absolute belief, then the Regional Director must go before the United States District Court and ask the Court to enjoin the picketing.
Such relief was asked for by Mr. Clark and on November 18, and you will take this (indicating) to your jury room and consider it, I hope, uh, the National Labor Relations Board said to Mr. Clark’s lawyer:
“The above captioned case has been carefully investigated and considered and as a result of the investigation it appears that for the reasons outlined in a previous letter to you — ”
I haven’t seen the letter.
“ — There is insufficient evidence of violation and further proceedings are not warranted at this time. I am therefore refusing to issue Complaint in this matter. Pursuant to the National Labor Relations Board Rules and Regulations you may obtain a review of this action by filing an appeal with the General Counsel of the National Labor Relations Board, Washington, D. C. and a copy with me. This appeal must contain a complete statement, setting forth the facts and reasons upon which it is based.”
Well, Mr. Wible filed the appeal and being a competent lawyer, I am confident that he, in his appeal to Washington, in his statements setting forth the facts as to why he thought the Regional Director of the National Labor Relations Board was wrong, in saying these Unions were innocent, was completely and fully substantiating.
What happened? Along comes a letter on January 6 to Mr. Wible, uh, Mr. Clark’s lawyer:
“Dear Mr. Wible;
Your appeal in the above matter has been duly considered and the appeal is denied. Under all of the circumstances and for substantially the reasons set forth in the Regional Attorney’s letter of November 10, 1971.”
I don’t have that letter; that was sent to Mr. Wible.
“Further proceedings were unwarranted. Considering the fact that the gate number two picketing — ” And this is what he is complaining of, not gate one, but just gate two:
“ — which referred only to unsafe working conditions began at exactly the same time that the safety violations were filed; terminated shortly after the Counsel was notified that the safety violations had been remedied and has not since been resumed, the evidence was deemed insufficient to establish that the picketing at gate number two was for an unlawful object as alleged.”
Now, His Honor has admonished you that this is what the General Counsel of the Board decided. He did not decide this on the basis of a trial.
The reason there was no trial was because the Board did not think that these Unions did anything illegal, but yet we are here to answer the same questions, to go through that same routine. (A. 132 — 134)

The purpose of the motion to strike was to obtain an adjudication of the sufficiency of the defense. After the defense had been stricken the defendant was precluded from offering any evidence in support of it. Seaboard Sur. Co. v. Harbison, 304 F.2d 247 (7th Cir. 1962).

The District Court erred in permitting the letters to be used as exhibits contrary to Judge Allen’s order striking the defense; it erred in its instruction to the jury to the effect that the jury could consider the action of NLRB as evidence but was not bound by it; and it erred in permitting counsel for defendants to include the defense in his opening statement to the jury, and to comment on it extensively in his closing argument to the jury, as if it were his principal defense.

In spite of all this treatment of the issue, counsel for appellee tells us that the action of the District Court at most is “harmless error.” We disagree.

We do not pass upon the claim of error that the District Court should have directed a verdict in favor of plaintiff. Upon a new trial, with the inclusion of the excluded evidence and the exclusion of the incompetent evidence, the District Court may consider such a motion anew.

The judgment of the District Court is reversed because of the inclusion of incompetent evidence, the exclusion of competent evidence, and its erroneous instructions to the jury; and the case is remanded for a new trial.

McCREE, Circuit Judge

(concurring).

I concur in the opinion of the court that the introduction into evidence of the determination of the National Labor Relations Board was error and that it was not cured by the district court’s admonition to the jury that this determination was not binding or conclusive.

Since a new trial is ordered, I wish to make an observation about the nature of and the relationship between section 502 of the Labor Management Relations Act, 29 U.S.C. § 143 and section 8(b)(4) of the National Labor Relations Act, 29 U.S.C. § 158(b)(4). Section 8(b)(4) prohibits unions from adopting specified sanctions against employers in order to achieve enumerated impermissible objects broadly described as secondary boycotts. Section 502, on the other hand, is intended to prevent employer reprisals against employees who refuse to work because of unsafe working conditions and does not, by its terms, apply to labor unions.

In instructing the jury at the new trial, the district court should focus its attention on the question whether appellant adduced evidence sufficient to prove that the union intended to effect an objective forbidden by section 8(b)(4). It is not impermissible under 8(b)(4) for a union to communicate to workers that a construction job is unsafe, when its purpose is to bring about the correction of such conditions. See Gateway Coal Co. v. United Mine Workers of America, 414 U.S. 368, 385, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974). The determination of the purpose or purposes for which picketing is undertaken is, of course, a question for resolution by the jury.

EDWARDS, Circuit Judge

(dissenting).

In my view this record reveals a hotly contested, fairly conducted trial which contains no reversible error. In this respect I agree with Judge McCree that Section 502 does allow for concerted action by employees faced with “abnormally dangerous conditions for work,” and that, assuming the conditions called for by Section 502 were present, the union’s picketing at the reserved gate to advertise those conditions did not necessarily abrogate the Section 502 defense.

Further, I consider the question posed to the jury in the trial judge’s instruction not only to be a fair statement of the issues in the case, but one which is consistent with the United States Supreme Court’s interpretation of Section 502 entered in Gateway Coal Company v. United Mine Workers of America, 414 U.S. 368, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974), on January 8, 1974, six days after the judgment was entered in our instant case. The question is quoted in full below:

(1) Was one of the objects of the picketing by the Defendant Unions between the period of September 13 and September 24 and [sic] object prohibited by 8(B)4 of the National Labor Relations Act, or, on the other hand, was the sole object of the Defendant Labor Organizations’ activities in such picketing during such period one taken in good faith because of the existence of abnormally dangerous conditions at the place of employment?

There was, of course, a considerable amount of evidence to support the jury finding of good faith and the existence of abnormally dangerous conditions at the construction site involved.

Nor do I think that any of the District Judge’s evidentiary rulings constituted reversible error.

The record shows that prior to the filing of this litigation, Clark Engineering had filed an unfair labor practice complaint before the National Labor Relations Board, which complaint had been dismissed after investigation but without hearing on recommendation of the Regional Director. Plaintiffs tendered evidence of this dismissal at the trial of this case, and the District Judge admitted it, admonishing the jury as follows:

By the Court: Ladies and gentlemen of the jury; I want to make one thing perfectly clear to you, and that is that the mention of the fact that this matter has been considered by the National Labor Relations Board'is not conclusive against Mr. Clark; it doesn’t prevent Mr. Clark from bringing a suit if he thinks he has one.
A proceeding before the Labor Board heard no witnesses. A determination was simply made from a written record by the General Council [sic] that the Union had a right to do what it did, but it is not conclusive or binding on you and you can consider it for evidentiary purposes, or you can disregard it entirely, but you must keep in mind that that decision was arrived at by him without hearing any oral testimony, or without the parties having the right to cross examine the people who were making the affidavits.

Subsequent thereto, the District Judge gave similar admonitions in relation to the same topic on two other occasions.

It seems clear to me that this material was admitted as a matter of evidence only and not as an affirmative defense, whether that be res judicata or collateral estoppel, both of which defenses had previously been ruled out by another District Judge on pretrial motion.

I do not read any of the Fifth Circuit cases relied on by appellants as holding that an administrative ruling of the Board on an unfair labor practice charge cannot be admitted as evidence for the jury’s consideration for whatever it might be worth.

The only case cited by my brothers in support of reversal for a new trial on this ground is Aircraft & Engine Maintenance, etc., Local 290 v. I. E. Schilling Co., 340 F.2d 286 (5th Cir. 1965), cert. denied, 382 U.S. 972, 86 S.Ct. 528, 15 L.Ed.2d 464 (1966).

In that case, however, evidence of the Board’s dismissal of unfair labor practice charges had presumably been admitted at trial where a jury had nonetheless found damages in favor of the employer in a case somewhat similar to our own. On appeal the union contended that the NLRB dismissal of the unfair labor practice charges “is res judicata and/or collateral estoppel to this action under Section 303(a).” Id. at 289. The Fifth Circuit very properly held that such evidence, where there had been no hearing before the NLRB, was not legal basis for vacating the jury award on grounds of either res judicata or collateral estoppel. The Fifth Circuit did not rule on the issue as a matter of evidence.

Further, there are two other Fifth Circuit cases in which the Board’s finding (after hearing) of violations of Section 8(b)(4) was held to be res. judicata in subsequent Section 303 suits for damages against the labor union there involved. See Texaco, Inc. v. Operative Plasterers and Cement Masons International Union, 472 F.2d 594 (5th Cir.), cert. denied, 414 U.S. 1091, 94 S.Ct. 721, 38 L.Ed.2d 548 (1973); H. L. Robertson & Associates, Inc. v. Plumbers Local Union No. 519, 429 F.2d 520 (5th Cir. 1970). While as indicated above I recognize the clear distinction between these cases and our instant case, I do think there is merit to appellee’s suggestion that if the Board’s adjudication, after hearing, of the existence of a secondary boycott can be considered res judicata, the Board’s dismissal of such a complaint after investigation might appropriately be considered evidence for whatever the jury found it to be worth. The federal rules generally favor admissibility of evidence. Fed.R.Civ.P. 43(a). See Rule 803(8) of the Federal Rules of Evidence, Pub. L.No. 93 — 595 (January 2, 1975).

Other of appellant’s objections appear to me to refer to matters which were within the discretion of the trial judge, or which might appropriately be considered harmless error on this record as a whole.

I believe the jury verdict in this case should be given effect and the judgment of the District Court should be affirmed.

      . 29 U.S.C. § 158(b)(4) provides:
      (b) It shall be an unfair labor practice for a labor organization or its agents—
      (4)(i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, materials, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is—
      (A) forcing or requiring any employer or self-employed person to join any labor or employer organization or to enter into any agreement which is prohibited by subsection (e) of this section;
      (B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer, or to cease doing business with any other person, or forcing or requiring any other employer to recognize or bargain with a labor organization as the representative of his employees unless such labor organization has been certified as the representative of such employees under the provisions of section 159 of this title: Provided, That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing;
      (C) forcing or requiring any employer to recognize or bargain with a particular labor organization as the representative of his employees if another labor organization has been certified as the representative of such employees under the provisions of section 159 of this title;
      (D) forcing or requiring any employer to assign particular work to employees in a particular labor organization or in a particular trade, craft, or class rather than to employees in another labor organization or in another trade, craft, or class, unless such employer is failing to conform to an order or certification of the Board determining the bargaining representative for employees performing such work:

      . Clark’s job superintendent, Owen Keelen, testified that on the same day he immediately suspended production and corrected the alleged unsafe conditions. He did not agree that the conditions were unsafe. Nevertheless, the picketing against neutral employers continued. Other inspections were made by inspectors for the Kentucky Department of Labor, and corrections were made until the inspectors finally reported that everything was in good condition. Clark offered proof of the neutral subcontractors that the working conditions were not unsafe.
      In the summer of 1971 Business Agent of the Plumbers Union Kindred met with one of the inspectors for the Kentucky Department of Labor at a convention of the Kentucky Building and Construction Trades; they discussed safety conditions at the Murray Stadium project. The Business Agent did not point out any conditions of the project which he considered to be dangerous. (A. 95-96.)


author: ALFRED T. GOODWIN, Circuit Judge:

text:
    George L. DUGGAN et al., Plaintiffs-Appellants, v. INTERNATIONAL ASSOCIATION OF MACHINISTS, a voluntary association, Defendant-Appellee.
    No. 73-1870.
    United States Court of Appeals, Ninth Circuit.
    Jan. 24, 1975.
    Certiorari Denied June 9, 1975.
    See 95 S.Ct. 2417.

      Anthony Schwab (argued), Seattle, Wash., for plaintiffs-appellants.
    Thomas K. Cassidy of Hafer, Cassidy & Price (argued), Seattle, Wash., for defendant-appellee.
    Before CHOY and GOODWIN, Circuit Judges, and BURNS, District Judge.

       The Honorable James M. Burns, United States District Judge for the District of Oregon, sitting by designation.

   OPINION

ALFRED T. GOODWIN, Circuit Judge:

A group of flight engineers, qualified for employment on piston-engine aircraft but for various reasons unable to satisfy jet-flight-engineer requirements, lost their jobs with Northwest Airlines, Inc. They sued their labor union for an alleged breach of its duty to provide fair representation in the acrimonious bargaining which plagued the airline industry for several years after the introduction of' jet aircraft. The district court dismissed the action. We affirm.

The plaintiffs concede that they are unable to allege bad faith or a hostile attitude toward their group in the defendant union’s industry-wide bargaining. The bargaining and a strike settlement resulted in substantial benefits for other members of the machinists’ union, but proved disappointing to the flight engineers. Their displeasure was exacerbated when they learned that flight engineers for two other airlines, represented by another union, had obtained substantial severance-pay awards on similar job losses.

Because the district court thought that the plaintiffs, through their former counsel, had been dilatory in the prosecution of their claim, the court granted a motion to dismiss for want of prosecution. Fed.R.Civ.P. 41(b). The court also granted a motion to dismiss on the merits for failure to state a claim upon which relief could be granted. Fed.R. Civ.P. 12(b)(6).

The correctness of both rulings has been challenged here, but because we agree that the trial court correctly dismissed the case upon the merits there is no need to venture upon the more difficult search for the minimum level of “on-again-off-again” diligence necessary to withstand a motion to dismiss for failure of prosecution. Compare Rollins v. United States, 286 F.2d 761, 764-765 (9th Cir. 1961), with Boling v. United States, 231 F.2d 926, 928 (9th Cir. 1956).

The district court purported to grant a judgment bn the pleadings under Rule 12, but more accurately can be said to have granted a summary judgment, because it considered matters outside the pleadings. This labeling error is inconsequential, as the appellants concede, because no material facts were or are in dispute. The dismissal was based solely on the failure of the plaintiffs to find a legal theory that would support their claim.

Prior to the dismissal, the plaintiffs attempted to substitute a third amended complaint for their second amended complaint. The court refused the substitution. The appellants now contend that the third amended complaint merely clarified earlier claims and that the theory it advanced — quasi-contract — had been adequately raised, under liberal federal pleading standards, by the second amended complaint. Assuming, without deciding, that the motion for leave to file a tardy amendment was well taken, the question is whether summary judgment in favor of the defendant on a claim sounding in quasi-contract is proper. Because there.is no factual dispute, and because the appellants seek summary disposition by this court, there is no need to remand. See S & S Logging Co. v. Barker, 366 F.2d 617, 623 (9th Cir. 1966).

The governing federal law emanates from the Railway Labor Act, 45 U.S.C. § 151 et seq. While decisions under the National Labor Relations Act, 29 U.S.C. § 151 et seq., do not control, they do furnish guidance. See Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 383-384, 89 S.Ct. 1109, 22 L.Ed.2d 344 (1969).

A union member covered by the National Labor Relations Act may recover against a union for breach of its duty of fair representation only when he can show that its conduct toward him has been “arbitrary, discriminatory, or in bad faith.” Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 916, 17 L.Ed.2d 842 (1967). Vaca is reference to “arbitrary” action broadened the scope of union duty, and thus undermined cases like ILWU v. Kuntz, 334 F.2d 165 (9th Cir. 1964), relied on by the appellee, which required a showing of “a bad faith motive, an intent to hostilely discriminate,” 334 F.2d at 171. See Beriault v. Local 40, etc., ILWU, 501 F.2d 258, 264 (9th Cir. 1974); Retana v. AMHEOU Local 14, 453 F.2d 1018, 1023 n.8 (9th Cir. 1972).

But Vaca v. Sipes does not improve the appellants’ prospects. They conceded, in a Memorandum in Support of a Motion for Reconsideration, that “it has become patent that IAM [International Association of Machinists] did not exhibit any hostile motivation or any arbitrary action against a certain minority of flight engineers * * *.” This concession precludes recovery under Vaca. If Vaca is said not to affect the standard of duty under the Railway Labor Act, then the pre-Vaca cases such as Hardcastle v. Western Greyhound Lines, 303 F.2d 182, 185 (9th Cir.), cert. denied, 371 U.S. 920, 83 S.Ct. 288, 9 L.Ed.2d 229 (1962), would continue to apply.

The appellants urge that despite their lack of a cause of action under Vaca they should be allowed to recover on a theory of quasi-contract. Such relief would be impermissible under the circumstances. Liability under a quasi-contract “arises where the law imposes a duty upon a person * * Schenley Distillers Corp. v. Kinsey Distilling Corp., 136 F.2d 350, 352 (3d Cir. 1943). No law imposes a duty here. If quasi-contractual relief were grounded on a duty other than that prescribed by Vaca, then this court would necessarily be creating a new duty. We would be departing from Vaca because, as the appellants concede in their brief on appeal, federal labor law furnishes the only source of duty here. We decline to depart from Vaca.

The judgment for the defendant is affirmed.


author: HEANEY, Circuit Judge.

text:
    Joseph A. SURRISI, Appellant, v. CONWED CORPORATION, Appellee.
    No. 74-1527.
    United States Court of Appeals, Eighth Circuit.
    Submitted Jan. 7, 1975.
    Decided Feb. 20, 1975.

      James T. Hansing, Thiel, Sorenson & Hansing, Minneapolis, Minn., for appellant.
    John R. Kenefick, Briggs & Morgan, St. Paul, Minn., for appellee.
    Before GIBSON, Chief Judge, and HEANEY and ROSS, Circuit Judges.
   HEANEY, Circuit Judge.

Joseph A. Surrisi appeals from a final judgment finding that his discharge from Conwed Corporation was not unlawful under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. The sole issue presented is whether the findings of the District Court are clearly erroneous. We affirm.

Mr. Surrisi was employed by Conwed Corporation (Conwed) for nineteen years, during which time he advanced from the position of salesman to national sales manager of the building products division. Conwed is a Minnesota corporation engaged in the manufacture and sale of products used primarily in the construction industry. In 1970, Conwed reorganized its top management and employed, from outside the corporation, Wilbur J. Berg to head the building products division. Mr. Berg became the appellant’s immediate superior. New policies were initiated to increase sales and Mr. Surrisi was charged with their execution. Sales did not improve as expected, however, and Mr. Surrisi was discharged from Conwed’s employ on June 30, 1972. He was fifty-two years of age.

The appellant filed suit. His complaint alleged that the discharge from his position of national sales manager of the building products division was discriminatory because of age and unlawful under 29 U.S.C. § 623(a)(1). He sought relief in the form of damages and reinstatement to his prior position. The appellee alleged that the discharge was for good cause and was not based on age. 29 U.S.C. §§ 623(f)(1) and (3). The trial court found that Mr. Surrisi had not carried his burden of proof and ruled for Conwed. It said:

There is no corroboration whatsoever in the record that Surrisi was discharged because of his age. It seems reasonable to find that the portion of Conwed’s business or territory which had been assigned to Berg had failed to register the progress anticipated, and this fact led to Berg’s dissatisfaction with the alleged failure of Surrisi to perform with success the portion of the duties assigned to him in that regard. * * * [I]t is reasonable to find that Berg concluded that Surrisi had failed to fulfill satisfactorily the business responsibility which had been assigned to him and that a change had to be made if Berg’s responsibilities to Conwed’s business were to be fulfilled. The evidence indicates that there were many other employees in the Sales Department and other divisions of Conwed’s business who were well over fifty years of age. Although Surrisi was an honest, hardworking individual who did the best that he could, he was not the type in Berg’s opinion with the ability to carry out the program he had outlined to increase their business in a certain territory.

While there is other testimony in the record, principally that of the appellant, indicating that the discharge was motivated by a desire to employ a younger man in Mr. Surrisi’s position, we cannot say that the District Court’s findings are clearly erroneous. See St. Louis Typographical Union No. 8 v. Herald Company, 402 F.2d 553, 557 (8th Cir. 1968); Federal Rule of Civil Procedure 52(a).

We note that the Age Discrimination in Employment Act of 1967 is remedial in nature. See 29 U.S.C. § 621; 1967 U.S.Code Cong. & Admin.News p. 2214. It prohibits a particularly subtle form of discrimination, and the courts must be receptive to its purposes and accord it the intended scope. See 29 U.S.C. § 626(c). Whenever an employment practice is challenged, the inquiry should focus broadly and should not be limited to a particular department or branch of the employer. See Hodgson v. First Fed. Sav. & L. Ass’n of Broward Co., Fla., 455 F.2d 818, 826 (5th Cir. 1972); Brennan v. Ace Hardware Corporation, 362 F.Supp. 1156, 1158 (D.Neb. 1973) , aff’d, 495 F.2d 368 (8th Cir. 1974). Such a broadly based inquiry was not made here: neither the appellant’s complaint nor the testimony at trial challenged Conwed’s failure to employ Mr. Surrisi in another capacity. This case does not, then, present the issue whether Conwed had ah obligation to offer the appellant continued employment in another available position commensurate with his ability, and we express no opinion thereon.

Affirmed.

      . Mr. Surrisi continued to receive full salary, to be covered by insurance and to participate in the management bonus program until November 30, 1972.

      . 29 U.S.C. § 623(a)(1) reads in relevant part:
      (a) It shall be unlawful for an employer—
      (1) to discharge any individual * * * because of such individual’s age.

      . 29 U.S.C. §§ 623(f)(1) and (3) read in relevant part:
      (f) It shall not be unlawful for an employer * * *
      (1) to take any action otherwise prohibited under subsections (a) * * * of this section * * * where the differentiation is based on reasonable factors other than age;
      * * * * * *
      (3) to discharge or otherwise discipline an individual for good cause.

      . The trial court said:
      The Court must find, on this record, that plaintiff has not sustained the burden of proof that he was discharged because of age. On the other hand, there does seem to be an element of unfairness in discharging a man fifty-two years old who had rendered faithful and, on this record, competent business services for some nineteen years without Conwed’s providing some department in the business in which Surrisi could continue to render competent and faithful service. But, of course, that is not the question before the Court.


author: CASTLE, Senior Circuit Judge.

text:
    Sergeant Edward A. HAIRSTON, Plaintiff-Appellant, v. R & R APARTMENTS et al., Defendants-Appellees.
    No. 74-1449.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 12, 1974.
    Decided Feb. 19, 1975.

      Robert G. Schwemm, Chicago, 111., for plaintiff-appellant.
    John F. Cusack, Francis X. Riley, Chicago, 111., for defendants-appellees.
    Before CASTLE, Senior Circuit Judge, and STEVENS and SPRECHER, Circuit Judges.
   CASTLE, Senior Circuit Judge.

Plaintiff Sergeant Edward A. Hairston, a black United States Marine Corps recruiting officer, filed a complaint charging the defendants with violations of the Civil Rights Act of 1866, 42 U.S.C. § 1982, and Title VIII of the Civil Rights Act of 1968 (Fair Housing Act), 42 U.S.C. §§ 3601, 3604, by refusing to permit the plaintiff to rent and occupy an apartment because of his race. The plaintiff obtained a temporary restraining order, and after a hearing, the district court permanently enjoined the defendants from discriminating against the plaintiff in the lease or occupancy of the apartment because of race. Subsequently, the district court awarded the plaintiff minimal damages and costs, but denied an award of attorney fees. It is solely from this denial that plaintiff appeals, and we reverse and remand.

Section 3612(c) of the Fair Housing Act provides that:

The court may grant as relief . . . reasonable attorney fees in the case of a prevailing plaintiff: Provided, That the said plaintiff in the opinion of the court is not financially able to assume said attorney’s fees.

The plaintiff filed an uncontested affidavit that his salary as a recruiting officer for the Marine Corps was $436.00 per month, and that he was unable to bear the expenses of this litigation. Although it is uncertain if the district court in denying the fees considered whether the plaintiff’s financial status made him unable to pay the expenses of this litigation, we think it clear that Hairston’s salary is insufficient to arm him for the cost of this suit. Hairston, however, was represented by a private legal services organization, and was not obligated to pay any fees. Looking to the policy behind § 3612(c), the district court concluded that the purpose behind the award of attorney fees was to avoid denying plaintiffs access to the courts because of burdensome expenses. Because Hairston had no burden to assume and thus no apparent obstacle to access, the court found that the proviso to § 3612(c) precluded the grant of fees.

The district court correctly ascertained the purpose behind § 3612(c), but its view too severely constricts achievement of that goal. The traditional American rule ordinarily disfavors the allowance of attorney fees, Hall v. Cole, 412 U.S. 1, 4, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973), but as the Supreme Court has noted in similar contexts, Congress has enacted provisions for attorney fees to encourage individuals injured by racial discrimination to act as “private attorneys general” by seeking judicial relief on their own initiative, thereby providing a method to forcefully vindicate a policy of equal opportunity considered to be of the highest priority. Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968); Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 209, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972); Northcross v. Memphis Board of Education, 412 U.S. 427, 93 S.Ct. 2201, 37 L.Ed.2d 48 (1973). We have explicitly held that this policy of encouraging compliance through private action underlies the provision for

reasonable attorney fees in § 3612(c). Jeanty v. McKey and Poague, Inc., 496 F.2d 1119, 1121 (7th Cir. 1974).

Awarding attorney fees where the plaintiff is unable to bear the expense of litigation even though the legal services are provided at no cost is consistent with and advances this policy. Brandenburger v. Thompson, 494 F.2d 885 (9th Cir. 1974); Fairley v. Patterson, 493 F.2d 598 (5th Cir. 1974); Lea v. Cone Mills Corp., 438 F.2d 86 (4th Cir. 1971); Miller v. Amusement Enterprises, Inc., 426 F.2d 534 (5th Cir. 1970); Stevens v. Dobs, Inc., 373 F.Supp. 618 (E.D.N.C. 1974); Note, Awards of Attorney’s Fees to Legal Aid Offices, 87 Harv.L.Rev. 411 (1973). When free legal services are provided there may be no direct barrier to the courtroom door, but if no fees are awarded, the burden of the costs is placed on the organization providing the services, and it correspondingly may decline to bring such suits and decide to concentrate its limited resources elsewhere, thereby curtailing the forceful application of the Act that Congress sought. Thus, the denial of fees in this situation indirectly cripples the enforcement scheme designed by Congress. The analysis in Brandenburger v. Thompson, supra, 494 F.2d at 889, is applicable here:

[T]he fact that the plaintiff was not obligated to pay the ACLU for its services is not a bar to an award of attorneys’ fees. All that is required is the existence of an attorney-client relationship.
The policy underlying the “private attorney general” doctrine supports this conclusion. It is true that the prospect of attorneys’ fees does not discourage the litigant from bringing suit when legal representation is provided without charge. But the entity providing the free legal services will be so discouraged, and an award of attorneys’ fees encourages it to bring public-minded suits when so requested by litigants who are unable to pay. Thus, an award of attorneys’ fees to the organization providing free legal services indirectly serves the same purpose as an award directly to a fee paying litigant. . . . (Citations and footnote omitted.)

Consequently, the grant of fees does accrue to the benefit of the plaintiff by assuring vigorous enforcement of the Fair Housing Act. So long as the plaintiff is unable to afford the cost of litigation, we see no reason to reduce the level of that enforcement by attaching significance to a formalized obligation to pay, Miller v. Amusement Enterprises, Inc., supra, 426 F.2d at 539, and thus, in light' of the purpose served by an award of fees, we find that an organization providing free legal services stands in the same position as a private attorney to whom a fee is owed. To avoid any windfall, however, the grant of fees should go directly to the organization providing the services. Brandenburger v. Thompson, supra, 494 F.2d at 889; Miller v. Amusement Enterprises, Inc*, supra, 426 F.2d at 539. Accordingly, the district court’s denial of attorney fees is reversed.

The plaintiff requested $2,375.00 in fees for services performed in the district court, and now also seeks an appropriate amount for work performed on this appeal. The district court, however, did not pass on the reasonableness of the requested fee, and there is no record before us of the amount of work expended on appeal. We therefore remand for a determination of a reasonable fee for services performed in the district court and here on appeal. Jeanty v. McKey and Poague, Inc., supra; Miller v. Amusement Enterprises, Inc., supra.

The judgment of the district court is reversed and remanded.

Reversed and remanded.

      . Attorney fees have also been granted under § 1982, though that section contains no express provision for their award or similar limiting proviso. See Lee v. Southern Home Sites Corp., 444 F.2d 143 (5th Cir. 1971); Knight v. Auciello, 453 F.2d 852 (1st Cir. 1972). Because we have concluded that the plaintiff is unable to finance the cost of the suit and therefore initially falls within § 3612(c), it is unnecessary to consider what effect, if any, that section’s restriction on financial status has on § 1982. See Jones v. Alfred H. Mayer Co., 392 U.S. 409, 416 & n. 20, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968); Hunter v. Erickson, 393 U.S. 385, 388, 89 S.Ct. 557, 21 L.Ed.2d 616 (1969); The Wilderness Society v. Morton, 495 F.2d 1026 (D.C.Cir. 1974) (en banc), cert. granted sub nom. Alyeska Pipeline Ser. Co. v. The Wilderness Society, 419 U.S. 823, 95 S.Ct. 39, 42 L.Ed.2d 47 (U.S. Oct. 15, 1974). Compare Wright v. Kaine Realty, 352 F.Supp. 222 (N.D.Ill.1972) with Warren v. Norman Realty Co., 375 F.Supp. 478 (D.Neb.1974).

      . We express no opinion, however, on that court’s holding that the eleventh amendment does not prohibit an award of attorney fees against a state official acting in his or her official capacity. Compare Jordan v. Gilligan, 500 F.2d 701 (6th Cir. 1974), cert. pending, 43 U.S.L.W. 3299 (U.S. Nov. 19, 1974).

      . The factors that should be considered in determining a reasonable fee are discussed in Waters v. Wisconsin Steel Works of International Harvester Co., 502 F.2d 1309, 1322 (7th Cir. 1974). See also Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).


author: PER CURIAM:

text:
    UNITED STATES of America, Appellee, v. Edmond Bruce NOLAND, Jr., Appellant.
    No. 74-1418.
    United States Court of Appeals, Fourth Circuit.
    Argued Jan. 9, 1975.
    Decided Feb. 10, 1975.

      J. Ronald Lynch, Alexandria, Va., and Joseph Kartiganer, New York City (T. Brooke Howard and Howard, Stevens, Lynch, Cake & Howard, Alexandria, Va., on brief), for appellant.
    Frank W. Dunham, Jr., Asst. U. S. Atty. (Brian P. Gettings, U. S. Atty., and Justin W. Williams, Asst. U. S. Atty., on brief), for appellee.
    Before RUSSELL, FIELD and WIDENER, Circuit Judges.
   PER CURIAM:

After pleading guilty to a charge of-bank robbery, 18 U.S.C. § 2113(a), Edmond Bruce Noland, Jr. was sentenced to a term of imprisonment for fifteen years. On appeal, Noland contends that his sentence should be vacated on the ground that the District Court abused its discretion in not sentencing him under the provisions of the Young Adult Offenders Act, 18 U.S.C. § 4209. We affirm.

At the time of his plea of guilty, Noland was twenty-five years of age and thus eligible for liberal treatment as a Young Adult Offender. Sentencing under the provisions of that Act is within the discretion of the District Judge, depending on whether, in his opinion, the defendant would benefit from treatment under the Youth Corrections Act, 18 U.S.C. § 5005 et seq. Our review of this sentencing decision is limited to ascertaining “whether there has indeed been an exercise of discretion.” United States v. Wilson (4th Cir. 1971) 450 F.2d 495, 498.

It is unnecessary to hold in this case that .the sentencing judge must explicitly state whether or not the defendant would benefit from sentencing as a Young Adult Offender for here the District Judge specifically considered the provisions of the Act and found that No-land would not benefit from the treatment provided thereunder. Such a finding does not require a statement of supporting reasons. See Dorszynski v. United States, 418 U.S. 424, 94 S.Ct. 3042, 41 L.Ed. 855, 1974; Cox v. United States (4th Cir. 1973) 473 F.2d 334, cert. denied 414 U.S. 869, 94 S.Ct. 183, 38 L.Ed.2d 116.

Having determined that the District Judge exercised discretion in the sentencing process, we reject as meritless Noland’s remaining contention that the fifteen year sentence for bank robbery was mechanically imposed. Accordingly, the judgment of conviction and sentence of appellant Noland is affirmed.

Affirmed.