author: BECHTLE, District Judge.

text:
    INTERIOR FINISH CONTRACTORS ASSOCIATION OF DELAWARE VALLEY v. DRYWALL FINISHERS LOCAL UNION NO. 1955.
    Civ. A. No. 85-2961.
    United States District Court, E.D. Pennsylvania.
    Dec. 4, 1985.

      Jeffrey A. Smith, Philadelphia, Pa., for plaintiff.
    E. Harris Baum, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before the court are defendant’s motion to set aside a default, defendant’s motion for assessment of attorney’s fees, plaintiff’s motion for assessment of attorney’s fees, and cross motions for summary judgment. For the reasons stated herein, defendant’s motion to set aside the default will be granted, defendant’s motion for assessment of attorney’s fees will be denied, plaintiff’s motion for assessment of attorney’s fees will be denied, plaintiff’s motion for summary judgment will be denied, and defendant’s motion for summary judgment will be granted.

FACTS

In February and March, 1983, three separate, but related, collective bargaining negotiations were ongoing contemporaneously. The negotiations were between plaintiff and defendant, between plaintiff and the Metropolitan District Council of Carpenters (the “MDC”), and between the General Building Contractors Association (the “GBCA”) and MDC.

Plaintiff, an unincorporated trade association, represented its approximately 200 members, which were all in the business of the construction of interior walls, ceilings, and ceiling systems. Defendant, a labor organization, represented plaintiff’s members’ employees who tape, spackle, and finish interior walls. The GBCA, a multi-employer association, represented its members. The MDC, another labor organization, represented the employees of plaintiff’s members who were not represented by defendant and the employees of the GBCA’s members.

Collective bargaining negotiations between plaintiff and defendant ended on April 12, 1983. Plaintiff and defendant agreed on all the noneconomic terms. They agreed also to abide by the same economic terms which plaintiff and the MDC reached at the conclusion of their ongoing negotiations.

The negotiations between plaintiff and the MDC concluded on April 27, 1983. The agreement between plaintiff and the MDC provided for a wage raise of $1.75 in the first year of the agreement (the “first year”), a wage raise of $1.75 in the second year (the “second year”), and a wage raise of $2.00 in the third year (the “third year”). The plaintiff-MDC agreement included a “Most Favored Nation Clause,” which meant that in the event that the GBCA and the MDC reached economic terms in the conclusion of their negotiations which were more favorable to the GBCA than the economic terms between plaintiff and the MDC, the agreement between plaintiff and the MDC would automatically become amended to afford the same economic terms as between the GBCA and the MDC.

On April 28, 1983, by telephone, Joseph Fiorelli (“Fiorelli”), defendant’s President and head of defendant’s bargaining unit, informed plaintiff’s counsel of the terms of the agreement between plaintiff and the MDC. Fiorelli orally accepted those terms on behalf of the defendant.

Subsequently, the written Collective Bargaining Agreement between plaintiff and defendant was drawn up and published. It was ratified by defendant’s members and executed by the parties. The agreement provided that it would run for three years from May 1, 1983 to April 30, 1986. It provided for the following wage scale:

Collective Bargaining Agreement, Article 3(j). The agreement further provided the following Most Favored Nation Clause:

It is agreed that if any terms affecting wages, hours or working conditions better than, different from, or in addition to those provided in this Agreement, or any concessions whatever are allowed by the Union to any contractor during the life of this Agreement, these better, different or additional terms or concessions shall be allowed immediately by the Union to the Employer.

Collective Bargaining Agreement, Article 2(c). No Most Favored Nation Clause, providing for a change in the level of wages under the plaintiff-defendant agreement if the level of wages under the plaintiff MDC collective bargaining agreement was changed, was included in the plaintiff-defendant collective bargaining agreement. Also, the plaintiff-defendant agreement had no provision whereby the wage structure of the plaintiff-MDC agreement was incorporated by reference. In addition, the plaintiff-defendant agreement provided for final and binding arbitration of all disputes between the parties involving interpretation of the agreement.

At the end of May or the beginning of June, 1983, the GBCA and the MDC agreed on a two year contract, providing for a $1.75 raise in the first year and a $1.75 raise in the second year, with $.10 of each raise being deferred to the sixth month of each year. In October, 1984, the GBCA and the MDC agreed upon a $.75 increase for the third year.

Meanwhile, plaintiff and the MDC reconsidered the wage increase of $2.00 for the third year of their agreement. Plaintiff informed the MDC that it intended to eliminate the third year of the agreement pursuant to the Most Favored Nation provision that drew the GBCA rate of $.75 into the plaintiff-MDC agreement. Thereupon, the MDC agreed to forego the $2.00 raise and to accept a raise of $.75 in the third year.

Plaintiff then informed Fiorelli that the agreement between plaintiff and defendant was now modified under the Most Favored Nation Clause to provide for a wage increase of a mere $.75 in the third year. Fiorelli rejected this arrangement. Several discussions followed and proved fruitless. Consequently, plaintiff filed a grievance with the American Arbitration Association seeking a declaratory judgment that plaintiff’s members were not compelled to pay the $2.00 raise.

An arbitration hearing was held on April 12, 1985, and the arbitrator, on April 25, 1985, ruled that plaintiff was bound by the collective bargaining agreement to pay the $2.00 raise.

On May 28, 1985, plaintiff, seeking relief from the arbitrator’s award, filed four documents in the United States District Court for the Eastern District of Pennsylvania: an “Application for Vacation of an Arbitration Award,” a Complaint, a proposed “Order to Show Cause,” and a proposed “Order Vacating the Arbitrator’s Award.”

Defendant did not answer plaintiff’s complaint within the twenty day period or move for an extension of time. See Fed.R. Civ.P. 12(a). Defendant’s counsel, in a letter dated June 17, 1985, asked plaintiff’s counsel for a date on which defendant should file an answer or brief. On July 5, 1985, defendant had still not filed an answer or brief. As a result, the Clerk of the Eastern District notified plaintiff’s counsel that if an answer was not filed by July 16, 1985, plaintiff may file a request with the Clerk for entry of default in accordance with Rule 55 of the Federal Rules of Civil Procedure. Additionally, the Clerk informed plaintiff’s counsel that if the request for entry of default were not filed by July 19, 1985, the court may enter an order dismissing the case for lack of prosecution.

On July 22, 1985, no answer to plaintiff’s complaint having been filed by defendant, plaintiff filed a document labeled an “Application for Default” and a supporting affidavit signed by plaintiff’s counsel.

On July 23, 1985, the Clerk entered default. On the same day, defendant was served with a copy of the “Application for Default” and the supporting affidavit. On July 24, 1985, defendant filed an Answer to plaintiff’s “Application for Vacation of the Arbitration Award” and an Answer to plaintiff’s Complaint. On the same day, defendant, through its counsel, requested that plaintiff’s “Application for Default” be withdrawn. Plaintiff refused to withdraw it.

On July 30, 1985, defendant moved to set aside the default and the default judgment and to assess attorney’s fees pursuant to Rule 11 of the Federal Rules of Civil Procedure. On August 9, 1985, plaintiff responded, opposing defendant’s motion and moving for assessment of attorney’s fees against defendant. It must be noted that no judgment by default has ever been entered in this case.

Defendant argues that the entry of default should be set aside for two reasons: (1) plaintiff did not serve defendant’s counsel “with written notice of the application for judgment at least three days prior to the hearing on such application” in violation of Rule 55(b)(2) of the Federal Rules of Civil Procedure and (2) plaintiff served the “Application for Default” upon defendant and not upon defendant’s attorney in violation of Rule 5(b) of the Federal Rules of Civil Procedure. Plaintiff counters that (1) service of notice of the application for judgment on defendant’s counsel was not necessary because there was no hearing on the application and (2) defendant “was served, by hand delivery, with a copy of the instant Motion and Brief in support thereof, on July 30, 1985.” Brief of Plaintiff at 3. DISCUSSION

1. Vacation of Default

Federal Rules of Civil Procedure 55(c) provides:

(c) Setting Aside Default. For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).

Fed.R.Civ.P. 55(c). The Third Circuit’s opinion Famese v. Bagnoasco, 687 F.2d 761 (3d Cir.1982) guides the court in determining whether to set aside the default. Famese directs the court to consider three factors in determining whether to exercise the court’s discretion and set aside the default: “(1) whether setting aside the default would prejudice the plaintiff ..., (2) whether defendant has asserted a meritorious defense,” and (3) whether the default was the result of defendant’s culpability. 687 F.2d at 764. See Medunic v. Lederer, 533 F.2d 891, 893 (3d Cir.1976).

Whether defendant has asserted a meritorious defense is the threshold issue for the court determining whether to set aside a default, as the issue is also the threshold issue for the court when determining whether to set aside a default judgment. See Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir.1984); United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir.1984). A meritorious defense is shown if the “allegations of defendant’s answer, if established at trial, would constitute a complete defense to the action.” See Tozer v. Charles A. Krouse Milling Co., 189 F.2d 242, 244 (3d Cir.1951). Defendant’s allegations must be specific and not merely “simple denials and conclusionary statements.” See 728 F.2d at 195. In the present case, defendant asserts that the third year rates agreed upon between plaintiff and defendant on April 28, 1983 were not conditioned upon future rate adjustments between plaintiff and MDC. In other words, defendant argues that the “Most Favored Nation Clause” in the contract between plaintiff and MDC was not incorporated into the contract between plaintiff and defendant. If defendant’s assertions were correct, and established at trial, they would constitute a complete defense to plaintiff’s claim. Consequently, the court finds that defendant’s answer establishes a meritorious defense.

The court turns next to whether plaintiff would be prejudiced if the default were set aside. Plaintiff does not assert that proof of plaintiff’s case “becomes more difficult with the passage of time.” Famese, 687 F.2d at 764, or that plaintiff “ ‘has been hindered since the entry of the default ...,’ by loss of evidence or otherwise.” Gross v. Stereo Component Systems, Inc. 700 F.2d 120, 124 (3d Cir.1983). See Feliciano, 691 F.2d at 657. In addition, plaintiff does not assert that the court cannot rectify any prejudice to the plaintiff by imposing terms and conditions at the time of judgment. Feliciano, 691 F.2d at 657. Therefore, the court finds that plaintiff would not be prejudiced if the default were set aside.

The court turns to the third factor. Defendant’s conduct must have been culpable conduct if the default is to stand. To be “culpable” the conduct must have been willful, intentional, reckless or in bad faith. More than mere negligence is required. The court is required to consider the extent to which defendant’s conduct is attributable to defendant and the extent to which it is attributable exclusively to defendant’s counsel. Hritz, 732 F.2d at 1183. See Poulis v. State Fire and Casualty Company, 747 F.2d 863 (3d Cir.1984).

Although defendant’s brief does not state that defendant’s true dilemma, prior to July 24, 1985, was that defense counsel was bewildered about when and how to respond to plaintiff’s four filed documents, a review of the record, in particular defense counsel’s letters, clearly implies that defense counsel did not know how and when to respond to plaintiff’s filed documents. The present issue, therefore, is whether defendant's confusion and failure to respond was willful or in bad faith. Alternatively stated, the present issue is whether the default was brought out be defendant’s culpable conduct.

The Federal Rules of Civil Procedure and Title 9 of United States Code set forth the appropriate procedure to apply to vacate an arbitration award. Rule 81(a)(3) of the Federal Rules of Civil Procedure, the proper starting point, states in pertinent part:

In proceedings under Title 9, U.S.C., relating to arbitration ... these rules apply only to the extent that matters of procedure are not provided for in those statutes.

Fed.R.Civ.P. 81(a)(3). Title 9 U.S.C. § 10 states in pertinent part:

In either of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration — [five grounds are set forth]

9 U.S.C. § 10. Title 9 U.S.C. § 6 states the procedure by which a party makes application to vacate an arbitrator’s award as follows:

Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided.

9 U.S.C. § 6. Similarly, Rule 7(b)(1) of the Federal Rules of Civil Procedure provides in pertinent part:

An application to the court for an order shall be by motion which, unless made during a hearing or trial, shall be made in writing, shall set forth the relief or order sought. The requirements of writing is fulfilled if the motion is stated in a written notice of the hearing of the motion.

Fed.R.Civ.P. 7(b)(1). In summary, after reading these statutory provisions and rules together, it is clear that a party must file a motion in order to apply to the court to set aside an arbitration. The statutes and rules do not permit a party to initiate a challenge to an arbitration award by filing a complaint or an “Application.”

In the present case, defendant was justifiably confused, the court believes, about how to respond to plaintiff’s four filed documents. In the first place, since an application to vacate an arbitration award may not be initiated by filing a complaint, defendant could not be expected to have answered plaintiff’s complaint. Second, defendant was reasonably and justifiably confused as how to respond to plaintiff’s “Application for Vacation of the Arbitrator’s Award” (the “Application”). The “Application” was not designated as a motion as it should have been. It was accompanied by confusing, unnecessary documents, the complaint and the ‘.‘Order to Show Cause.” Also, plaintiff’s “Application” was not accompanied by a supporting brief as required by Rule 20(d) of the Local Rules of Civil Procedure of the United States District Court for the Eastern District of Pennsylvania. Third, and finally, the document entitled “Order to Show Cause” was further grounds for bewilderment by the defendant. If plaintiff intended that its “Order to Show Cause” constitute a proposed order, an accompanying motion, and supporting brief, both required by the Local Rules, supra, were conspicuously absent. If, on the other hand, plaintiff intended that the “Order to Show Cause” constitute a pleading, that document was not one of the six pleadings authorized under Rule 7(a) of the Federal Rules of Civil Procedure. Briefly stated, defendant could not have known and, therefore, did not have to respond to plaintiff’s “Order to Show Cause.”

For these reasons, the defendant’s coun.sel reacted properly and the default will be vacated.

2. Assessment of Attorney’s Fees.

Rule 11 of the Federal Rules of Civil Procedure (“Rule 11”) requires that an attorney of record certify by signing every pleading, motion, or other paper

[t]hat he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

Rule 11. The rule provides, further, the authority of the court to enforce the Rule 11 certification requirement as follows:

If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee.

Rule 11.

Rule 11 was amended by Congress in 1983. Prior to the 1983 amendments, the Rule required that an attorney certify that he had “read the pleading; that to the best of his knowledge, information and belief there is a good ground to support it; and that it is not interposed for delay.” The former Rule permitted the courts to impose sanctions only where the conduct of a party or an attorney was “willful” (the “willfulness provision”). See United States v. Standard Oil of California, 603 F.2d 100 (9th Cir.1979). In 1983, Congress deleted from Rule 11 the willfulness provision and added the requirement that the party’s or attorney’s knowledge, information, and belief be formed after reasonable inquiry by the party or attorney. The new Rule 11 standard has been framed by the Second Circuit, as follows:

[sanctions shall be imposed against an attorney and/or his client when it appears that a pleading has been interposed for any improper purpose, or where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.

Eastway Construction Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir.1985).

This guideline properly focuses the court’s analysis on the nature of the conduct of the parties and the attorneys. Also, the Second Circuit’s directive correctly does not permit a showing that the attorney or party acted in subjective good faith as a defense to the imposition of sanctions.

The Second Circuit recognized, however, that Rule 11 must be limited so as not to “stifle the enthusiasm or chill the creativity that is the very lifeblood of the law.” Eastway Construction, 762 F.2d at 254. Rule 11 sanctions must be used only to streamline litigation, to prevent the waste of judicial and other legal resources and expenses, and to eliminate the misuse or wrongful manipulation of the federal court system. See Schwarzer, Sanctions Under the New Federal Rule 11 — A Closer Look, 104 F.R.D. 181 (1985).

With this background, the court turns to the motions in the present case. With respect to defendant’s motion, the court believes that defendant asserts four grounds upon which sanctions could be imposed: (1) plaintiff, with total disregard for the proper procedure to seek to vacate the arbitrator’s award outlined in Title 9 of the United States Code and the Federal Rules of Civil Procedure, initiated this lawsuit with a document entitled an “Application for Vacation of the Arbitrator’s Award;” (2) plaintiff, in disregard of the proper procedure, initiated this lawsuit with a complaint; (3) plaintiff, in disregard of the proper procedure, initiated this lawsuit with a paper designed “Order to Show Cause” and without an accompanying motion or brief; and (4) plaintiff applied for default.

With respect to plaintiff’s motion for sanctions, the court believes that plaintiff has three bases: (1) defendant should have construed plaintiff’s “Application for Vacation of the Arbitrator’s Award” as a motion under Title 9 and answered it as a motion; (2) defendant should have answered plaintiff’s Complaint; and (3) defendant should have known that plaintiff had initiated the lawsuit in federal court and should have investigated the possibility that plaintiff might seek a default.

None of the grounds offered by either party support Rule 11 sanctions in this case. With respect to defendant’s motion, Rule 11 does not purport to authorize the court to sanction a party or attorney certifying documents, the labelling of which is improper under the Local Rules, but which is grounded in law and fact and not filed for an improper purpose. Additionally, the court does not believe that plaintiff’s Application for Default violated Rule 11. With respect to plaintiff’s motion, Rule 11 does not authorize sanctions, other than the striking of a pleading, motion, or other paper, where a party or attorney signed no pleadings, motions, or other papers.

C. Motions for Summary Judgment.

Before the court considers plaintiff's challenge to the arbitrator's Opinion and Award, it is necessary that the restrictions to the court’s review be kept in mind as background. Strong public policy considerations mandate that the judicial review of an arbitration decision interpreting a collective bargaining agreement, be limited. Courts are generally without the technical and specialized knowledge of “the custom and practices of a particular factory or of a particular industry as reflected in particular agreements.” United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1959). Arbitrators, on the other hand, have that knowledge. Consequently, parties to a collective bargaining agreement, preferring to have particular disputes under the agreement resolved by a knowledgeable arbitrator, frequently agree to have those disputes submitted to arbitration. See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); Teamsters Union Local No. 115 v. DeSoto, Inc., 725 F.2d 931 (3d Cir.1984).

The arbitrator’s decision, for which the parties bargained in the agreement, is treated with great deference by the courts. As the Supreme Court has said:

[i]t is the arbitrator’s construction which was bargained for and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.

Steelworkers v. Enterprise Wheel, 363 U.S. at 599, 80 S.Ct. at 1362. See Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123 (3d Cir.1969). Nevertheless, the court is permitted to construe the agreement, without deference to the arbitrator, to determine whether the arbitrator’s award drew its essence from the collective bargaining agreement (the “essence test”). The court explained:

[a]n arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice, He may of course look for guidance from many sources yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.

Steelworkers v. Enterprise Wheel, 363 U.S. at 597, 80 S.Ct. at 1361. The Third Circuit explained the Court’s essence test in the following language:

Accordingly, we hold that a labor arbitrator’s award does “draw its essence from the collective bargaining agreement” if the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties’ intention; only where there is a manifest disregard of the agreement, totally unsupported by the principles of contract construction and the laws of the shop, may a reviewing court disturb the award.

Ludwig Honold, 405 F.2d at 1128.

With this background, the court now turns to the present case. Plaintiff contends that the arbitrator’s Award did not draw its essense from the collective bargaining agreement. In particular, plaintiff notes that the arbitrator defendant had “stated the willingness to settle for the same economic package which might be negotiated by the [MDC],” Arbitrator’s Opinion at 1, and “[defendant] elected to settle for the exact economic package negotiated by the [MDC] with [plaintiff].” Arbitrator’s Opinion at 6. Plaintiff argues that, since defendant agreed to be bound by the economic terms negotiated by MDC and plaintiff, defendant agreed also to be bound by the Most Favored Nation Clause insofar as that Clause affected the economic terms between MDC and plaintiff. As a result, plaintiff alleges, when the economic arrangement for the third year of the contract between MDC and plaintiff was adjusted downward, the economic terms for the third year of the contract between MDC and plaintiff was similarly adjusted.

The arbitrator’s Opinion is open to more interpretations than the one espoused by plaintiff. If the Award granted under any one of these interpretations draws its essence from the agreement, the court must allow the arbitrator’s decision to stand. See Steelworkers v. Enterprise Wheel, 363 U.S. at 597, 80 S.Ct. at 1361.

One viable interpretation is that whereas defendant agreed to be bound by the level of wages and benefits agreed upon by plaintiff and MDC in their collective bargaining agreement, defendant did not agree to be bound by a Most Favored Nation Clause in the contract between plaintiff and MDC. In other words, the arbitrator may have found that defendant did not agree to allow the level of the economic arrangement between plaintiff and defendant to be affected by negotiations other than those negotiations between plaintiff and MDC. Under this interpretation of the arbitrator’s Opinion, the arbitrator determined that plaintiff and defendant agreed on the level of wages and benefits as set forth in the written collective bargaining agreement between plaintiff and defendant only and plaintiff and defendant did not agree to permit the economic terms to be affected by the negotiations between parties other than plaintiff and MDC. This agreement, as construed by the arbitrator, is rationally consistent with the arbitrator’s Opinion and Award. Thus, the Award draws its essence from this agreement.

The arbitrator’s Opinion could also be interpreted as applying the parol evidence rule. Although plaintiff and defendant agreed on April 12,1983 to be bound by the same arrangement as that reached by plaintiff and MDC, including the Most Favored Nation Clause, the parol evidence rule presumes that the parties decided to waive that clause from their written complete and exclusive collective bargaining agreement, and, thus, intentionally omitted it. If the arbitrator’s Opinion is read to apply the parol evidence rule in the present case, the court holds that the arbitrator’s Award draws its essence from the collective bargaining agreement.

CONCLUSION

Accordingly, the default will be set aside, and defendant’s motion for summary judgment will be granted.

      . The record does not disclose the size, role, or function of the GBCA or disclose the nature of its members’ business.

      . The parties do not set forth in the record the function of the MDC or the nature of the work done by its members.

      . The Most Favored Nation Clause in the collective bargaining agreement between plaintiff and MDC provided:
      It is understood that if the [MDC] enters into any Agreement with any Contractor or Association engaged in commercial, industrial, or institutional construction within the area designated herein, upon more favorable terms to such other Contractor or Association than are embodied in this Agreement, this Agreement shall be amended so as to afford the party to this contract the same terms.
      Collective Bargaining Agreement between plaintiff and MDC, effective May 1, 1983 through April 30, 1986, in the Counties of Philadelphia, Bucks, Montgomery, Chester, and Delaware, Article 22.

      . Article 19 of the Collective Bargaining Agreement, between plaintiff and defendant, provided in pertinent part:
      (a) All complaints, disputes, controversies, claims or grievances (hereinafter referred to as a dispute) arising between the parties to this Agreement involving question of interpretation, application, or breach of any party of this Agreement, or arising out of the contractual relations between the parties and their respective members shall, in the first instance, be referred to a committee or committees appointed for this purpose by the parties hereto. If they are unable to resolve the dispute, it shall be referred to the Trade Board, which Board shall constitute of three (3) members appointed by the Union and three (3) members appointed by the Employer, the decision of which shall be final and binding upon the parties to this Agreement.
      (d) Should the Trade Board be unable to reach a resolution of the dispute and render a decision within forty-eight hours, either of the parties may request the American Arbitration Association to submit a panel of Arbitrators from whom the parties shall select an impartial chairman in accordance with the rules and regulations of the American Arbitration Association to hear the dispute. The decision of the impartial chairman shall be final and binding upon all parties to the proceedings and to this Agreement.

      . Plaintiff's counsel assumed that the Clerk's July 5, 1985 notice was an "official communication from the Clerk," and that the notice was served on counsel of defendant.

      . Defendant's Answer to the "Application for Vacation of the Arbitrator’s Award” and its Answer to the Complaint were filed together, affixed to the same blue backer.


source: Caselaw Access Project

author: BARRINGTON D. PARKER, District Judge.

license: Public Domain

text:
    Henry ANDERSON, Plaintiff, v. Alexander L. STEVAS, et al., Defendants.
    Civ. A. No. 85-2257.
    United States District Court, District of Columbia.
    Dec. 5, 1985.

      Henry Anderson, pro se.
    Dave Frohnmayer, Atty. Gen., of Oregon, William F. Gary, Deputy Atty. Gen. of Oregon, James E. Mountain, Jr., Sol. Gen. of Oregon, Thomas H. Denney, Asst. Atty. Gen. of Oregon, Dept, of Justice, Salem, Or., for defendants.
   MEMORANDUM ORDER

BARRINGTON D. PARKER, District Judge.

In this pro se action plaintiff seeks recovery of damages from a former Clerk and assistant clerk of the United States Supreme Court, as well as from the Attorney General of the State of Oregon, a Deputy and Assistant Attorney General, and the Solicitor General of that state.

The cause of this action is rooted, oddly enough, in a 1975 Oregon Circuit Court decree ordering the specific performance of a land sale contract. The plaintiff here was apparently on the losing end of that contract and, giving vent to his disappointment, petitioned the Oregon Supreme Court for mandamus commanding the Circuit Court to vacate its decree and to grant him a jury trial, to which he for some reason felt entitled. That petition, filed in June 1984, was denied in August 1984. A petition for rehearing was denied in September of that year.

Undaunted, plaintiff sought a writ of mandamus from the United States Supreme Court, which was denied in February 1985.

In the instant suit, plaintiff challenges what he considers to have been irregularities in the way in which his petition in the United States Supreme Court was processed and subsequently opposed. Evidently, plaintiff failed to comply with one or more Court Rules and, as a result, was notified on two occasions in the fall of 1984 that his petition could not be filed. Whatever problems the petition presented were apparently resolved in December 1984, when it was finally docketed.

When the Chief Judge of the Oregon Supreme Court was served with the petition, he informed the Court by letter of his intention not to appear in the matter. Plaintiff took this to mean that his petition in the Court would go unopposed. Naturally, he was dismayed that the Oregon Attorney General’s Office filed a brief in opposition to his petition and was even more chagrined that their response was persuasive to the Court. Accordingly, plaintiff names in his present complaint those individuals in the Attorney General’s office (“state defendants”) who prepared and submitted the brief. In addition, plaintiff charges the Clerk and an assistant clerk of the United States Supreme Court (“federal defendants”) with concealing from the Court the letter sent by the Chief Judge of the Oregon Supreme Court.

A. Claim Against the State Defendants

The gravamen of plaintiff’s complaint against the state defendants is that their submission of a brief, subsequent to the notice of nonappearance filed by the Chief Judge, was somehow unconstitutional in that it “deprive[d] plaintiff of his Constitutional rights to equal protection of the laws and due process of law.” Amended Corn-plaint II32. The state defendants have moved to dismiss on two alternate grounds. First, to the extent that plaintiff seeks recovery of damages for wrongs allegedly committed by these defendants while acting in their official capacities, the action is barred by the eleventh amendment. If, instead, plaintiff is bringing suit against these defendants in their individual capacities, the defendants are protected by immunity.

Both defendants’ theories supporting their motion to dismiss rest on solid ground. An action brought under 42 U.S.C. § 1983 that purports to seek monetary recovery from government officials in their official capacities is to be construed as a suit against the state and, hence, is barred by the eleventh amendment. Brandon v. Holt,—U.S.-, 105 S.Ct. 873, 878-79, 83 L.Ed.2d 878 (1985). See also Quern v. Jordan, 440 U.S. 332, 338-45, 99 S.Ct. 1139, 1143-47, 59 L.Ed.2d 358 (1979). If, on the other hand, the state defendants are being sued in their individual capacities, they are entitled to a qualified immunity for actions taken in good faith. See Butz v. Economou, 438 U.S. 478, 496-98, 98 S.Ct. 2894, 2905-06, 57 L.Ed.2d 895 (1978). Even the most generous reading of plaintiff’s submissions draws one to the conclusion that defendants’ allegedly wrongful conduct fell well within the scope of a qualified immunity.

Quite apart from the validity of defendants’ jurisdictional challenges, plaintiff has simply failed to state a claim upon which relief may be granted. Plaintiff misconstrued the meaning of the respondent Chief Judge’s notice of nonappearance, believing that it barred any Oregon official from opposing plaintiff’s petition. Such is clearly not the case; rather, the Chief Judge merely exercised his option under Sup.Ct.R. 27.2(b) not to file an appearance and instead to delegate litigation of the action to the State Attorney General’s Office. See Or.Rev.Stat. § 180.060(l)(d). Defendants certainly did nothing wrongful in fulfilling that statutory duty.

B. Claims Against the Federal Defendants

While they have not filed an answer to the complaint, the federal defendants are certainly entitled to the protections afforded by a qualified immunity. Butz, 438 U.S. 496-504, 98 S.Ct. at 2905-09. The Court can discern no wrongdoing of constitutional proportions with regard to the allegations that defendants mishandled plaintiff’s petition. As for the vague charges of “conspiracy,” plaintiff has “postulated] events ... of a wholly fanciful kind,” that do not merit judicial attention. Crisafi v. Holland, 655 F.2d 1305, 1308 (D.C.Cir.1981).

C. Conclusion

For the foregoing reasons, it is this 3rd day of December, 1985,

ORDERED

That the above-captioned action is dismissed with prejudice as to all defendants.

      . Because neither the Chief Judge’s letter, nor any letters sent by the Clerk’s Office to plaintiff were entered on the docket sheet maintained in connection with plaintiffs petition in the Supreme Court, plaintiff alleges that the Clerk’s Office "fabricated" or falsified the docket sheet. Plaintiff in his original complaint also charges that the state defendants conspired with the federal defendants in perfecting this deceit.

      . Plaintiffs Amended Complaint, while not citing the appropriate statutory authority, makes it clear that the state defendants are being charged under that provision of the Civil Rights Acts.

      . Service on defendants Stevas and Schade was attempted by mailing a copy of the summons and complaint to the Supreme Court. If this was meant as service upon the defendants in their official capacities, it was inadequate, for the United States Attorney has not been served as required by Fed.R.Civ.P. 4(d)(4), (5). If it was intended as service upon the defendants in their individual capacities, it remains inadequate. Defendant Stevas had left his post as Clerk of the Court some months prior to the attempted service. And while defendant Schade is still with the Court, the return receipt evidencing delivery of the summons and complaint was not signed by him, as required, but merely stamped by the mailroom. See Fed.R.Civ.P. 4(c)(2)(C)(ii); D.C. SCR Civ. 4(c)(2)(C)(ii). Because plaintiff has not effected service within the 120 days prescribed by Fed.R.Civ.P. 4(j), dismissal is appropriate for this reason alone.


author: DONALD E. O’BRIEN, Chief Judge.

text:
    RYKO MANUFACTURING CORPORATION, Plaintiff, v. DELTA SERVICES, INC., a Louisiana Corporation, and Ray J. Black, III, Individually, Defendants.
    Civ. No. 83-352-E.
    United States District Court, S.D. Iowa, C.D.
    Dec. 9, 1985.
    Edward W. Remsburg, Des Moines, Iowa, for plaintiff.
    B.R. Malbrough, New Orleans, La., for defendants.
   ORDER

DONALD E. O’BRIEN, Chief Judge.

The court has before it defendants’ motions for a preliminary injunction and to compel plaintiff to comply with this court’s order of May 24, 1985. An evidentiary hearing was held on this matter at which counsel for all parties was present. After carefully considering the briefs, oral arguments and evidence, the court grants plaintiff’s motion for a preliminary injunction in part and denies it in part. The court also grants defendants’ motion to compel plaintiff’s compliance with this court’s previous order.

I. Defendants’ Motion for a Preliminary Injunction.

In determining whether a preliminary injunction should be issued, the court is guided by Dataphase Systems, Inc. v. C L Systems, 640 F.2d 109 (8th Cir.1981), where the Eighth Circuit Court of Appeals found:

Whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on the other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.

Id., at 114. As a general rule, a movant has not established irreparable harm where damages would adequately compensate the movant for the asserted harm. See ABA Distributors, Inc. v. Adolph Coors Co., 661 F.2d 712, 714 (8th Cir.1981). Yet, irreparable injury has been characterized as loss of a movant’s enterprise. See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1205 (2d Cir.1970); Fort Smith Beepers, Inc. v. Mobilefone Service, 533 F.Supp. 685 (W.D.Ark.1981); Paschall v. Kansas City Star Co., 441 F.Supp. 349 (W.D.Mo.1977).

The defendant has presented several actions it would like to enjoin. Delta summarized its position by breaking it down into thirteen points in the final argument during the injunction hearing. For the sake of simplicity, the court will address the injunction in terms of the thirteen points in the order in which they were presented.

Point 1. Delta first requests that Ryko pay Delta its commission within three days after Delta has turned in an installation completion form. At the hearing on this motion, Tom Carlton, the national sales manager for Ryko, testified that while Ryko had been tardy in previous commission payments to Ray Black, for the last year and a half, Ryko had been averaging payments in less than five days. Black, however, testified that he is still waiting a long time for his commissions.

In applying the Dataphase factors to this problem, the court finds that the tardiness of the commissions is likely to threaten Delta’s “business enterprise” in that Delta is being denied payments that help keep the business afloat. The court finds the harm involved in delinquent commission payments to greatly outweigh any injury inflicted on Ryko if this court were to require Ryko to make prompt commission payments to Delta. Further, prompt payments would likely lead to better relations between the parties. With respect to the third factor, the probability that the movant will succeed on the merits, the court finds this action to fall under defendants’ claim that Ryko is not acting in a businesslike manner. The likelihood that plaintiff will ultimately prevail must be examined in the context of the relative injuries to the parties and the public. Dataphase Inc. v. C L Systems, Inc., 640 F.2d at 113. Where the movant has raised a substantial question and equities are otherwise strongly in his favor, the showing of success is less stringent. Id. At minimum, the instant case presents this court with a controversy. In light of the other equities involved, the court concludes that Delta has established a sufficient probability of success on the merits to be entitled to preliminary relief. Finally, as to the public interest factor, the court finds that the granting of the requested injunction would not harm the public.

Having considered the Dataphase factors, the court therefore holds that Ryko should be required to reimburse Delta in a prompt manner. The court finds that five days from receipt of the installation completion form is a reasonable time requirement and therefore orders Ryko to pay Delta within that amount of time.

Points 2, 3, 5 and 6. In Points 2, 3, 5 and 6, defendants ask the court to order plaintiff to increase efforts in helping defendants sell Ryko equipment in Louisiana. In particular, defendants ask that (1) Black be able to attend all meetings involving Ryko officials and potential buyers occurring in Louisiana, as well as all conventions or trade shows in that state, (2) Dayton Hedges be assigned sales representatives in Louisiana, and (3) Black be able to talk to more Ryko officials.

With respect to allowing Black the opportunity to attend meetings, conventions and trade shows involving Ryko in the State of Louisiana, the court finds that Black’s absence from such events is very embarrassing for Black and would injure Delta Services’ “business enterprise,” and therefore, finds that there is a threat of irreparable harm. The court also finds that the harm that would occur from allowing Black to attend such events is greatly outweighed by the harm that would occur if Black were prohibited from attending. With regard to Dataphase factors three and four, the court adopts its analysis as given in its review of Point 1 above. As a result, the court finds that Black is entitled to notification of any meeting between a Ryko official and a prospective buyer in the State of Louisiana as well as any convention and/or trade show in that state. Black also has the right to attend such meetings and events if he so desires.

With respect to defendants’ request that plaintiff be able to talk to more Ryko officials, Tom Carlton testified that only Julian Klein and Jim Nelson do not speak with Black. While Ryko at one point allowed only Carlton to speak with Black, any Ryko official except for Klein and Nelson is now able to speak with Black. Because Black can speak with all but two officials, the court is unable to find defendants irreparably harmed. A finding that there is no irreparable harm is sufficient grounds for denying a preliminary injunction. See Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d at 114 n. 9. As a result, the court denies defendants’ motion for a preliminary injunction as to that point.

Applying the Dataphase factors to defendants’ request to have Dayton Hedges become the sales representative in Louisiana, the court is again unable to find that defendants are being irreparably harmed by not being able to deal with Dayton Hedges. The court therefore denies defendants’ motion as to that point. The court reiterates its past position that it would be to both parties’ best interest to cooperate in their dealings with each other.

Points 4 and 8. Defendants further request that under the existing contract they be able to sell truck and van washes as well as participate in Ryko’s leasing program. Tom Carlton testified that other Ryko distributors who were selling such washes or participating in the leasing program have done so only after signing a new contract. It is defendants’ position that the contract now existing covers all of the above things. This is a major issue in the case on which the court is not prepared to make a ruling until after a trial on the merits.

In applying the Dataphase factors, the court finds that an injunction should not be issued on this point. First, it appears at this point that defendants could be adequately compensated by monetary damages, which would prevent the issuance of an injunction. Further, the court finds that Ryko would be harmed if it were forced to supply Delta with van and truck washes as well as allowing Delta the opportunity to participate in the leasing program in that Ryko would be forced to treat its distributors on an unequal basis. As a result, the court finds that Delta is not entitled to truck and van washes as well as participation in the leasing program. Nevertheless, the court finds that Ryko would not be harmed by being required to send Delta all information it has supplied to other distributors on the van and truck washes as well as the leasing program. The court therefore orders that Ryko supply Delta with such information.

Points 7 and 12. Delta also requests that Ryko be required to pay Delta commissions on three machines sold in the State of Louisiana by parties other than Delta. It appears to this court that any harm suffered by Delta in the sale of such machines is purely monetary and, therefore, an injunction should not issue. See ABA Distributors, Inc. v. Adolph Coors Co., 661 F.2d 712 (8th Cir.1981). Further, at this point the court is doubtful that Delta would prevail on the merits of such a claim, because the court reads the exclusive contract in dispute to not include these three machines. However, the court may find differently in light of evidence not yet presented.

Point 9. Delta requests that Ryko be ordered to comply with the shipping dates it gives Delta. Testimony at the injunction hearing indicated that Ryko had been tardy in several shipments to Delta. However, Black testified that at this point he had not been harmed by any of the delays. Furthermore, Tom Carlton testified that it is highly unlikely that any delay shall occur in the future, since the past delays were primarily caused by Ryko’s factory move, which is now completed. It is the court’s position that since defendants have not been harmed and Ryko has stated that it is unlikely that there will be any delay in shipments, an injunction should not be issued at this time. However, this court will promptly reconsider this matter should delays occur.

Point 10. Plaintiff requests that the Texaco T.B.A. program be abolished. The court finds that such a request goes to the heart of an antitrust issue presented in this case. At this point, with the evidence now before it, the court cannot find that there is a violation of any antitrust law. Further, it is the position of the court that it has no authority to anticipatorily rule that there is such a violation. Finally, the court is not at all convinced that Delta has met its burden of proof under Dataphase to grant an injunction on this issue. Primarily, the court is not convinced that the balance of harm weighs in Delta’s favor. Therefore, the court denies Delta’s motion as to that point.

Point 11. Delta requests that Ryko be required to forward all copies of correspondence and purchase orders on any machines involving Delta. The court finds its discussion regarding points 2, 3, 5 and 6 to be applicable here. As a result, the court finds that Ryko should comply with the above request forthwith.

Point 11A. Delta requests that there be some sort of accounting or statement as to who is responsible for the sales tax as to the three machines sold in Louisiana by non-Delta parties. Plaintiff’s Exhibit 1 makes it clear that the sales tax on the machines sold by Lewis Car Wash Systems, Inc. was paid by the buyer himself. However, no evidence was presented as to who was liable for the sales tax on the machines in Minden and Shreveport. A reading of the contract in dispute indicates there is a question as to whether Delta is liable for such taxes. The court finds that Ryko would be little harmed in being required to inform Delta as to who is liable for such taxes. The court therefore orders that Delta supply such information to Ryko within fourteen days of the date of this order.

Point 13. Delta requests that commissions not be further reduced pending litigation. Ryko argues that commissions were never an issue in the injunction hearing and that no evidence was presented on that question. The court is in agreement and, therefore, shall not rule on such a request.

The court notes that during the hearing plaintiff offered two exhibits (2 and 4) on which the court reserved a ruling until defendants could review them. Defendants have informed the court after their review that they have no objections and, therefore, the court admits into evidence plaintiff’s Exhibits 2 and 4.

II. Motion to Compel.

In its motion to compel Ryko’s compliance with this court’s order of May 24, 1985, Delta states that Ryko has failed to supply it with a free R7B Rollover car wash machine and Seleet-A-Cycle with coin box, freight prepaid. Ryko argues that under the “distributor incentive program,” Delta did not meet the requirements to entitle it to a machine and coin box, because it was not one of the top state distributors in sales quota for 1984. The court is not convinced by Ryko’s argument and stands by its order of May 24, 1985. The court notes that Delta was never informed of the distributor incentive program until after it had been implemented and this prevented Delta from participating in the distributor incentive program on a fair basis. The court therefore orders that Ryko abide by the court order of May 24, 1985 and immediately ship to Delta an R7B car wish machine with a Select-A-Cycle and coin box, freight prepaid.

Finally, the parties have informed the court that they will be ready for trial by February of 1986. Therefore, the Clerk of this court is directed to schedule trial in this case at the soonest available time after this date with the exception of the week of February 10, 1985.

IT IS THEREFORE ORDERED that defendants’ motion for a preliminary injunction be granted to the extent that:

1. Ryko pay Delta commissions within five days of receipt of installation completion forms.

2. Ryko inform Ray Black of any meeting between a Ryko official and prospective purchaser in the State of Louisiana. Ray Black shall have the opportunity to attend such meeting.

3. Ryko shall inform Delta of any convention or trade show that it is involved in in the State of Louisiana and Ray Black shall be allowed to attend.

4. Ryko shall forthwith supply any information concerning the truck and van wash system as well as the consumer leasing program currently offered by Ryko.

5. Ryko shall forward copies of all correspondence and purchase orders involving machines sold by Delta.

6. Ryko shall inform Delta within fourteen days of the date of this order as to who is liable for the sales tax of the Min-den and Shreveport machines sold by nonRyko distributor.

IT IS FURTHER ORDERED that plaintiff’s Exhibits 2 and 4 offered at the hearing of August 7, 1985 be admitted.

IT IS FURTHER ORDERED that defendants’ motion to compel plaintiff to comply with this court’s order of May 24, 1985 be granted and Ryko is directed to deliver Delta a free R7B Rollover car wash machine and Select-A-Cycle with coin box, freight prepaid, forthwith.

IT IS FURTHER ORDERED that the Clerk of this court schedule trial of this case the soonest available time after February 1, 1985, excluding the week of February 10, 1985.

      . While the court believes that a resolution of the disputes between the parties in this case would be better handled between the parties privately, it notes that this litigation has probably heightened hostility between Black and Ryko’s two owners, Klein and Nelson. As a result, the court will not force these people to speak with each other. However, while the court makes such a ruling, it is still of the position that the parties would be in better financial positions if they attempted to work toward harmonious relations.

      . Unlike the situation with Delta’s prompt receipt of commissions of machines it sold, the court does not find that payment here would aid defendants’ "business enterprise.”


author: RICE, District Judge.

text:
    HARTFORD ACCIDENT AND INDEMNITY COMPANY, et al., Plaintiffs, v. J.I. CASE COMPANY, Defendant.
    No. C-3-83-733.
    United States District Court, S.D. Ohio, W.D.
    Dec. 9, 1985.

      Gary W. Gottschlich, Dayton, Ohio, for plaintiffs.
    Leo F. Krebs, Dayton, Ohio, for defendant.
   DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

RICE, District Judge.

This case arises out of injuries Mrs. Rosalinda Siefring incurred when an employee of Plaintiff Riverside Transportation Services, Inc., Luke Post, lost control of a loader and collided with a parked car which then struck and injured Mrs. Siefring. The loader involved in the collision was one manufactured, by Defendant J.I. Case Company. Mrs. Seifring brought a lawsuit seeking compensation for her injuries against Riverside, and subsequently entered into a settlement agreement with that company.

Plaintiffs Riverside and Hartford Accident and Indemnity Company, Riverside’s insurer, seek either indemnification or contribution from Defendant Case based upon Case’s allegedly defective manufacture of the loader. Defendant has moved for summary judgment on both claims. (Doc. #27). For the reasons set forth below, Defendant’s motion is overruled as to Plaintiffs’ indemnity claim, but granted as to Plaintiffs’ contribution claim.

I. The Indemnity Claim.

Plaintiffs claim that the loader Case manufactured was defective so as to create a basis for indemnity either in strict liability or negligence. Under Ohio law, “[indemnity ... is the right of a person who is only secondarily liable to recover from the person primarily liable for proper expenditures paid to a third party through the violation of their common duties. A person is secondarily liable to a third party where his negligence is only passive and joins with active negligence of another to cause the injury. A person is primarily liable through active negligence or through actual knowledge of a dangerous situation and acquiescence in the continuation thereof.” Lattea v. City of Akron, 9 Ohio App.3d 118, 458 N.E.2d 868 (1982). See also Ohio Casualty Insurance Co. v. Ford Motor Co., 443 F.Supp. 80, 83 (S.D.Ohio 1977) (“It is well established under Ohio law that an implied contract of indemnity arises only in circumstances of primary and secondary or vicarious liability, and not in the circumstances of joint or concurrent tortfeasors.”).

Hartford, as Riverside’s insurer, is subrogated in its claim to Riverside’s right to indemnification. See Ohio Casualty Insurance, 443 F.Supp. at 83. Any defenses Case has against Riverside will defeat Hartford’s claim. Thus, Hartford’s claim will fail if Riverside was actively negligent.

Two bases for a finding of active negligence on Riverside’s part potentially exist. Riverside may itself have acted negligently in the events that led to Mrs. Siefring’s injuries. Alternatively, the negligence of Riverside’s employee, Luke Post, under the doctrine of respondeat superior may impute liability to Riverside as if it had been actively negligent. Harold Lucas, Riverside’s president, maintains that he specifically instructed his employees not to operate the loader on the highway. See Transcript of Deposition of Harold Lucas, March 26, 1985, at pp. 18-19. (Doc. # 33, Exhibit A). Plaintiffs, therefore, have raised a genuine issue as to whether Riverside was in itself negligent.

While Plaintiffs contend that Defendant Case has not established that Luke Post was negligent in the events that led to Mrs. Siefring’s injury, a review of the uncontroverted facts of this case indicate that no genuine issues of fact exist as to Mr. Post’s negligence. Plaintiffs do not contest the fact that the loader was without brakes at the time it was taken on the highway. See Plaintiffs’ Memorandum in Opposition to Defendant’s Motion for Summary Judgment (Doc. # 33) at 2. Ohio Revised Code § 4513.20 provides: “Every trackless trolley and motor vehicle, other than a motorcycle, when operated upon a highway shall be equipped with brakes adequate to control the movement of and to stop and hold such trackless trolley or motor vehicle____” Thus, Mr. Post’s operation of the loader without brakes on the highway violated the statute and was negligent per se. Plaintiffs have not disputed that the loss of control of the loader was the proximate cause of Mrs. Siefring’s injuries. Thus, Mr. Post was actively negligent.

However, the effect of Mr. Post’s negligence on Riverside and Hartford’s claim for indemnity depends upon whether the negligence imputed to Riverside under the doctrine of respondeat superior is active or passive. The Ohio Supreme Court has not addressed the issue of whether an employer held liable under respondeat superior is imputed with passive or active negligence. This Court believes, however, that were the Ohio Supreme Court to address this question, it would find that under the doctrine of respondeat superior, employers are imputed only with passive negligence liability for the acts of their employees.

Under Ohio law, when an employer is liable under the doctrine of respondeat superior for damages caused solely by the negligence of an employee, she is only secondarily liable to the injured party and the employee is primarily liable. Losito v. Kruse, 136 Ohio St. 183, 24 N.E.2d 705 (1940); see also Shaver v. Shirks Motor Express Corp., 163 Ohio St. 484, 495, 127 N.E.2d 355 (1955) (“Under the doctrine of respondeat superior, the agent or servant is primarily negligent for his negligence, and his principle or master is secondarily liable therefore.”). This distinction was explicated by the Court of Appeals: “Thus the doctrine of respondeat superior places liability on the employer for the employee’s negligent acts. The liability is imputed to [the defendant] and does not arise because [the defendant] and its employee are joint tortfeasors. (This is sometimes referred to as the doctrine of primary and secondary liability.)” American Insurance Group v. McCowin, 7 Ohio App.2d 62, 218 N.E.2d 746, 749 (1966) (emphasis in original). Thus, at least in relation to the injured party, Ohio courts have distinguished an employer’s liability from that of the employee, and have held that the employer can recover any loss from the employee. Losito, 136 Ohio St. 183, 24 N.E.2d 705; American Insurance Group, 7 Ohio App.2d at 65, 218 N.E.2d at 749.

This Court believes that if presented with the question, the Ohio Supreme Court would extend this secondary liability to the employer’s relationship with the employee's joint tortfeasors. In Ohio law, the doctrine of respondeat superior is based in the presumed power of an employer to control the actions of her employees. See Babbitt v. Say, 120 Ohio St.2d 177, 188-91, 165 N.E. 721 (1929); cf. Higbee Co. v. Jackson, 101 Ohio St. 75, 79, 128 N.E. 61 (1920) (“The law holds the master for what the servant does or omits in conducting the master’s business, because the master has voluntarily substituted the management and supervision of the servant for his own.”). Essentially, the doctrine of respondeat superior allocates the burden of any loss on the employer who has theoretical control over her employees rather than place that burden on an innocent injured party. This basis of liability differs from an insurer’s basis for liability, i.e., contracting to stand in the place of the party at fault. Insurance primarily protects the tortfeasor from bearing the cost of an injury. Respondeat superior primarily protects the injured party from bearing that loss.

In this respect, the doctrine of respondeat superior is based in a policy similar to that supporting an occupier of land’s duty to keep adjacent sidewalks safe. “Such liability rests on the theory that the occupier of the premises having created the potentially dangerous opening or having allowed it to exist has the non-delegable duty to see that it is kept and used at all times so as to not cause harm to passers-by.” Globe Indemnity Co. v. Schmitt, 142 Ohio St. 595, 599, 53 N.E.2d 790 (1944). In both instances, liability is founded upon a party's role in setting up the conditions precedent to the actual negligence, and not because of actual negligence by the party. Essentially, both occupiers of land and employers are under a duty to prevent negligence, in addition to their duty not to be negligent themselves.

The Ohio Supreme Court has found breach of this duty to prevent negligence by occupiers of land to be passive or secondary negligence, and therefore to not bar indemnity from active tortfeasors. See, e.g., Globe Indemnity, 142 Ohio St. at 601-04, 53 N.E.2d 790. See also Ohio Casualty Insurance, 443 F.Supp. at 83. Given the similarity in the bases of these two theories of negligence, this Court believes that the Ohio Supreme Court, were it to address the question, would adopt a rule holding employers only passively or secondarily negligent under the doctrine of respondeat superior, and therefore not barred from seeking indemnity from other tortfeasors by the negligence of their employees.

Thus, the negligence of Luke Post, Riverside’s employee, is not a bar to Riverside and Hartford’s claim for indemnity under the doctrine of respondeat superior. Since genuine issues as to material facts remain with regard to the negligence of Riverside itself, Defendant’s motion for summary judgment on the issue of indemnity must be overruled.

II. The Contribution Claim.

As an alternative to indemnification, Plaintiffs seek contribution from Case under the Contribution Among Joint Tortfeasors Act, O.R.C. § 2307.31. However, § 2307.31(B) of the Act provides: “A tortfeasor who enters into a settlement with a claimant is not entitled to recover contribution from another tortfeasor whose liability for the injury or wrongful death is not extinguished by the settlement____” O.R.C. § 2307.32(F) clarifies this requirement: “When a release or a covenant not to sue ... is given in good faith to one or more persons liable in tort for the same injury ... (1) It does not discharge any of the other tortfeasors from liability for injury ... unless its terms otherwise provide....”

The settlement agreement between Plaintiffs and Mrs. Siefring specifically releases only Riverside, Harold Lucas and Luke Post. It does not mention Case by name. Plaintiffs, however, contend that Case’s liability was extinguished, and therefore contribution is available, because the agreement provides: “This release is intended to and does hereby extinguish any claim which Claimants may have against any other persons and/or entities, whether or not identified as a party in the aforementioned lawsuit, for the acts, damages, or events in question.”

The Ohio Supreme Court, however, in Beck v. Cianchetti, 1 Ohio St.3d 231, 235, 439 N.E.2d 417, 420 (1982) specifically held that such a broad release does not satisfy O.R.C. § 2307.32(F): “We conclude that O.R.C. 2307.32 requires that a release designate by name or otherwise specifically identify a party to be released. Broad general language, such as ‘all other persons,’ is not sufficient.” See also Pakulski v. Garber, 6 Ohio St.3d 252, 255-56, 452 N.E.2d 1300, 1303 (1983) (distinguishing Beck from release of party in the specific category of “agent” in the settlement.) Thus, the broad language of this release cannot be construed as satisfying Ohio’s statutory requirement.

Thus, Plaintiffs have no basis for contribution from Case. Plaintiffs’ settlement agreement did not specifically name or identify Case as a party to be released. Under O.R.C. § 2307.31(B), Defendant is therefore not liable for contribution to Plaintiffs. Plaintiffs’ claim for contribution is entirely based upon the settlement agreement and not upon any judgment. Indeed, Mrs. Siefring’s claims against Case could not have been extinguished by the settlement agreement, since at the time the settlement was signed, the claims had already been extinguished by the statute of limitations. See O.R.C. § 2305.10. Therefore, Defendant’s Motion for Summary Judgment on the claim for contribution is granted.


author: KEENAN, District Judge:

text:
    UNITED STATES of America v. Dominic CATALDO, Defendant.
    No. S 84 Cr. 809 (JFK).
    United States District Court, S.D. New York.
    Dec. 9, 1985.

      Rudolph W. Giuliani, U.S. Atty. for the S.D. of N.Y., for the U.S.; Aaron R. Marcu, Asst. U.S. Atty., of counsel.
    Stanley A. Teitler, P.C., New York City, for defendant Dominic Cataldo; Stanley A. Teitler, Amy Adelson, Michael L. Spiegel, of counsel.
   OPINION AND ORDER

KEENAN, District Judge:

Involved herein is a motion for a mistrial and a severance on behalf of the above-named defendant who is presently in his eighth week of trial together with nine co-defendants alleged to be members and associates of the Colombo Family of La Cosa Nostra. The 51-count indictment charges the defendants with substantive violations of, and conspiracy to violate, the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c) and (d), through a wide range of criminal activity. For the reasons stated below, the Court denies the application.

In his affidavit in support of the motion for a mistrial and severance, the defendant asserts that he has just recently learned that there is a possible conflict of interest between him and the attorney representing him in the trial of this case, Michael Coiro, Esq. The possible conflict perceived by the defendant arises from three cases in which Mr. Coiro was involved.

In the first of these cases, Mr. Coiro represented Mr. Cataldo in 1972 before New York State Supreme Court Justice William Brennan, who is currently on trial in the Eastern District of New York for accepting illegal payments. United States v. Brennan, 85 Cr. 452 (Weinstein, J.). Mr. Cataldo was charged therein with robbery of watches from a warehouse at Kennedy International Airport. Justice Brennan dismissed the case on the People’s motion after suppressing an identification of the defendant by a night watchman.

In the second case at issue, Mr. Coiro represented John Donelly (an unindicted co-conspirator in the instant case) at his arraignment in 1969 on charges of illegal possession of a gun. Mr. Donelly was represented by another attorney for the remainder of the proceedings. He was convicted of the charges. The conviction was reversed, however, and Mr. Donelly pleaded guilty to a misdemeanor before Justice Brennan and received a fine.

The third case involving Mr. Coiro has been referred to in the trial of Justice Brennan in the Eastern District. It has been alleged in that trial that a Mr. Sal Polisi gave $75,000 to Mr. Coiro in 1979 to “fix” another case before Justice Brennan.

The defendant asserts that he, Mr. Coiro and Mr. Donelly may be targets of a grand jury investigation in the Eastern District of New York into “fixed” cases before Justice Brennan. The defendant claims that he has become estranged from Mr. Coiro as rumors about the Eastern District grand jury investigation have come to his attention. Mr. Cataldo asserts that recently his communications with his attorney have been limited by his fear that Mr. Coiro may be attempting to gain information from him which would assist Mr. Coiro in defending himself if he were indicted. The defendant requests a mistrial and a severance in order to retain a new attorney and allow him sufficient time to prepare for trial.

In addressing this application, the Court is mindful of two potentially conflicting policy factors. First, a defendant has a constitutional right to representation that is free from conflicts of interest. Wood v. Georgia, 450 U.S. 261, 271, 101 S.Ct. 1097, 1103, 67 L.Ed.2d 220 (1981). Second, a court must be aware of the “disruptive effect upon court calendars in complex, multi-party cases, when lawyers seek last minute severances, continuances or other strategic advantage by ‘newly discovered’ conflicts of interests.” United States v. Morando, 628 F.2d 535, 536 (9th Cir.1980); see Holloway v. Arkansas, 435 U.S. 475, 486-87, 98 S.Ct. 1173, 1180, 55 L.Ed.2d 426 (1978) (court has interest in avoiding abuses caused by untimely motion for separate counsel “for purposes of delay or obstruction of the orderly conduct of the trial”); United States v. Bentvana, 319 F.2d 916, 936 (2d Cir.), cert. denied, 375 U.S. 940, 84 S.Ct. 345, 11 L.Ed.2d 271 (1963). Of course, preservation of a defendant’s constitutional rights must take precedence over concerns for efficiency and conservation of judicial resources.

In support of his motion, the defendant cites cases in which the conflict of interest first appeared, or was first asserted, after conviction of the defendants therein. See, e.g., Cuyler v. Sullivan, 446 U.S. 335, 338, 100 S.Ct. 1708, 1713, 64 L.Ed.2d 333 (1980); United States v. Cancilla, 725 F.2d 867 (1984). In such cases, a defendant seeking to overturn his conviction must show that there was an actual conflict of interest that adversely affected his attorney’s performance at trial. Cuyler v. Sullivan, 446 U.S. 335, 348, 100 S.Ct. 1708, 1718, 64 L.Ed.2d 333 (1980).

Where, as here, the possibility of a conflict is raised before the conclusion of the trial, the trial court must “take command of the situation.” United States v. Bernstein, 533 F.2d 775, 788 (2d Cir.1976). Often, this will take the form of an evidentiary hearing

to determine whether there exists such a conflict of interest... that the defendant will be prevented from receiving advice and assistance sufficient to afford him the quality of representation guaranteed by the sixth amendment. In addition, the trial judge should see that the defendant is fully advised of the facts underlying the potential conflict and is given an opportunity to express his or her views.

United States v. Alberti, 470 F.2d 878, 881-82 (2d Cir.1972), cert. denied, 411 U.S. 919, 93 S.Ct. 1557, 36 L.Ed.2d 311 (1973); cf. United States v. Lovano, 420 F.2d 769, 773 (2d Cir.) (“The rule in this circuit is that some specific instance of prejudice, some real conflict of interest, resulting from a joint representation must be shown to exist before it can be said that an appellant has been denied the effective assistance of counsel.”), cert. denied, 397 U.S. 1071, 90 S.Ct. 1515, 25 L.Ed.2d 694 (1970).

The Court has in this case on November 22, 1985 held a conference with the defendant, Mr. Coiro, the attorney representing Mr. Cataldo for the purposes of this motion, Stanley Teitler, Esq., and the Assistant United States Attorneys. On December 9, 1985 the Court heard testimony from Mr. Coiro concerning this motion. Mr. Coiro’s testimony to the effect that he would prefer not to proceed amounts to no more than an expression of his desire. Nothing has been demonstrated to the Court which in any way would serve to inhibit effective advocacy by him on Mr. Cataldo’s behalf.

The defendant does not claim that any of the alleged incidents involving himself, Mr. Coiro, Mr. Donelly, Mr. Polisi and Justice Brennan are in any way related to the facts underlying the instant case. Rather, he baldly asserts that Mr. Coiro “could potentially misuse the attorney client relationship he has ... in order to obtain information useful to him in his own defense or to strengthen his hand in plea bargaining.” Defendant’s Memorandum of Law at 4. The defendant further asserts that Mr. Coiro “may also be unable to give impartial advice to Cataldo regarding a guilty plea in this case for fear that Cataldo would cooperate with the government against him.” Id. The Court is not aware of any desire by the defendant Cataldo to plead guilty in connection with the charges in the instant case. This is the first reference to a plea of guilty that the Court has learned of from any defendant in S 84 Cr. 809 (JFK).

As the defendant concedes, the cases involving him, Mr. Donelly, Mr. Polisi and Justice Brennan are totally unrelated to the allegations in the instant case. The defendant is charged herein with two RICO counts, one being a conspiracy count, the other substantive. Mr. Cataldo is charged with four racketeering acts as predicates to the RICO counts. The acts involve bribery of a public official on separate occasions to induce that official to arrange a transfer of Carmine Pérsico (a co-defendant in the instant case) from one federal prison to another, to prevent the commencement of a criminal prosecution against Mr. Cataldo, and to obtain his own transfer from one prison to another, as well as a reduction in his sentence of incarceration; and distribution of narcotics. None of these charges is based on facts related in any way to any incidents involving Justice Brennan.

In view of the total lack of connection between the facts of this case and the alleged incidents involving Justice Brennan, the Court finds the assertions of the defendant unconvincing. The Court is convinced that no information pertinent to Mr. Coiro’s defense of his client in this case would assist Mr. Coiro in the defense of possible charges against him based on unrelated cases.

Moreover, the defendant’s alleged concern that Mr. Coiro or he may be indicted in connection with those cases is at best speculative. Indeed, the affidavit of Mr. Teitler in support of this application reveals that he was told by the prosecutor in the Brennan case “that no charges would be brought [against Mr. Cataldo or Mr. Coiro] in the foreseeable future.” Affidavit of Stanley A. Teitler at 2.

The possibility that Mr. Coiro may use information concerning any of the three Eastern District matters obtained from the defendant in the course of this case to “strengthen his hand in plea bargaining” is so speculative that it does not rise to the level of a conflict of interest in view of the lack of any charges, now or in the foreseeable future, against Mr. Coiro as a result of his appearances before Justice Brennan. There is no need for the defendant and Mr. Coiro to confer about any of the Brennan situations insofar as the defense to the instant charges is concerned. As pointed out above, they are totally unrelated. Moreover, the defendant’s contention that his fear that Mr. Coiro may use information learned from him to the defendant’s detriment has hampered his communications with Mr. Coiro is belied by his knowing and intelligent waiver before Judge Brieant of potential conflicts arising from a similar situation.

In earlier proceedings before Judge Brieant on this case, Mr. Cataldo was questioned about his awareness of Mr. Coiro’s indictment in the Eastern District of New York in United States v. Angelo Ruggiero. The Ruggiero case is unrelated to the Brennan case or the present prosecution. The defendant stated that he was aware of Mr. Coiro’s indictment and understood the possibility of a conflict of interest. Judge Brieant asked the defendant:

Are you aware of the possibility that Mr. Coiro or any attorney so situated may be unable to give you impartial advice because he has another ongoing matter with the government at the same time and there is a possible incentive or risk that anybody so situated might be motivated to act in some fashion which would improve his relationship with the government prosecutors in his own case and possibly to your detriment? Do you understand that that risk may exist?

United States v. Cataldo, 84 Cr. 809. Transcript of Dec. 5, 1984 at 5. The defendant replied, “Yes, I understand.” Id. Judge Brieant continued,

Do you understand further that Mr. Coiro or any attorney so situated might be unwilling or unable to advise you impartially as to whether or not you should effect a disposition of this case or how this case should be handled because of the fact that he might fear that any discussion you had with the government might adversely affect his own relationships in connection with his possible difficulties in the Eastern District or elsewhere; do you understand that?

Id. at 5-6. The defendant responded, “Yes, I do.” Id. at 6. Judge Brieant further asked whether the defendant understood that Mr. Coiro might be required to focus his attention on his own defense to the detriment of the defendant and might be called to trial at any time, leaving the defendant to obtain a new attorney at the last minute. To each of these questions, the defendant responded affirmatively. Id.

Judge Brieant then asked the defendant,
Now, do you understand that you have a right to make a change in counsel at any time, providing that change does not delay the trial, and that it is your obligation to yourself to consider whether these matters might impair your constitutional right to have the effective independent representation of counsel in connection with this case due to the fact that your attorney is under indictment in federal court in a different district; do you understand that?

The defendant replied, “Yes, I do.” Finally, Judge Brieant informed the defendant as follows:

If you change your mind later, you have the right to do that providing it does not delay the actual trial of this case. There has been no trial date set yet in your case, but there will be shortly, and so, therefore, you should continue with your own interest, to keep examining into this matter and to keep fully informed and discuss with Mr. Coiro whatever you wish to, and furthermore, if you need any further or other additional information from the Court to exercise your continued right to have impartial representation, then you can ask to have a conference with the Court and the attorneys which will include the U.S. Attorney, same as we are having today, and, of course, you are free at any time to speak directly with Mr. Coiro about it; do you understand that?

Again, the defendant replied, “Yes, I understand.”

Perhaps even more telling, when Mr. Coiro was accused of attempting to “fix” a bribery case in the Eastern District, a case based on acts which form one of the predicate acts charged in this case against Mr. Cataldo, the defendant again waived any potential conflict of interest and pleaded guilty there. United States v. Cataldo, 81 Cr. 24 & 25, Transcript of March 5, 1981 at 4-6.

While the Court does not think that these prior knowing and intelligent waivers of the defendant’s right to have counsel unaffected by conflicts of interest constitute a blanket waiver of that right in the event of similar situations arising after the waivers were made, the Court believes it to be proper to consider these waivers in measuring the risk of an actual conflict of interest now. The defendant has shown a willingness, before the start of this lengthy, multidefendant trial, to be represented by Mr. Coiro, whom he knew to be under indictment in another district. This, combined with the lack of any new facts other than rumors and speculation to support the defendant’s motion, and the absence of any present indictment of Mr. Coiro or the defendant as a result of any connection with Justice Brennan, convince the Court that no conflict of interest, or reasonable possibility thereof, has recently arisen between the defendant and his counsel. The Court concludes that Mr. Coiro is fully capable of providing the defendant advice and assistance sufficient to afford him the quality of representation guaranteed by the sixth amendment. However, if the defendant insists on discharging Mr. Coiro, he may do so and he may retain Mr. Teitler or any other lawyer of his choosing but, as Judge Brieant noted, the trial of this case will not be delayed. If Mr. Cataldo wishes to have both Mr. Coiro and Mr. Teitler as his counsel, he may do so and have both of them present with him at counsel table for the remainder of the trial.

Accordingly, the motion of defendant Cataldo for a mistrial and severance is denied.

SO ORDERED.