author: BLUMENFELD, Senior District Judge.

text:
    Joseph I. LIEBERMAN, Attorney General of the State of Connecticut, et al. v. FEDERAL TRADE COMMISSION.
    Civ. No. H-84-716.
    United States District Court, D. Connecticut.
    Nov. 26, 1984.

      Robert M. Langer, Asst. Atty. Gen., Hartford, Conn., Stephen P. Kilgriff, Atty. Gen., and Hubert H. Humphrey, III, Atty. Gen., St. Paul, Minn., LeRoy S. Zimmermann, Atty. Gen., and Eugene F. Waye, Atty. Gen., Harrisburg, Pa., Dennis J. Roberts, II, Atty. Gen., and Faith A. LaSalle, Atty. Gen., Providence, R.I., Thomas M. Mengler, Asst. Atty. Gen., Austin, Tex., for plaintiffs.
    W. Philip Jones, Asst. U.S. Atty., Hartford, Conn., Howard E. Shapiro, Joanne L. Levine, Sandra M. Vidas, F.T.C., Washington, D.C., for defendant.
   RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

BLUMENFELD, Senior District Judge.

This case arises on plaintiffs’ motion for summary judgment seeking a declaratory judgment that the Federal Trade Commission (“Commission”) has authority to make available to state law enforcement agencies information generated by the Commission pursuant to the premerger notification provisions of the Hart-Scott-Rodino Act. The defendant Commission has filed a cross-motion for summary judgment.

This case turns solely on an issue of law: Does the Commission have authority to disclose to state law enforcement officials information and documentary materials obtained from companies pursuant to the premerger notification provisions of the Clayton Act § 7A, 15 U.S.C. § 18a (1982), as enacted by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub.L. No. 94-435, 90 Stat. 1383 (1976) (“premerger” or “HSR” materials).

Factual Background

In January 1984, Texaco and Getty agreed to merge and filed information and documentary material with the Commission and Justice Department, as required by section 7A of the Clayton Act. Between January and March, 1984, each of the plaintiff attorneys general requested access to premerger information and documents submitted by Texaco and Getty and to memoranda by Commission staff concerning the merger. Their requests were made pursuant to the FTC Act § 6(f), 15 U.S.C. § 46(f) (as amended in 1980), which gives the Commission discretionary authority to share certain information with state and federal law enforcement agencies on a nonpublic basis for use in law enforcement proceedings.

The Commission responded to the requests in separate but essentially identical letters dated May 2, 1984. A majority of the Commission concluded that section 6(f) of the FTC Act did not authorize the Commission to share these documents with state officials because section 7A(h) of the Clayton Act prohibited the Commission from disclosing premerger materials. See Texaco, Inc., 3 Trade Reg.Rep. (CCH) ¶ 22,146 at 22,993. Since all the documents sought by the plaintiffs consisted either of premerger materials or of FTC staff memoranda of which information derived from premerger materials was deemed by the Commission to be an inextricable part, the Commission held that it was precluded from granting access to any of the documents sought, whether or not it might otherwise wish to do so. 3 Trade Reg.Rep. at 22,995. Plaintiffs’ suit followed the Commission’s denial of their requests.

This action was brought under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A) and the Declaratory Judgments Act, 28 U.S.C. § 2201. Jurisdiction is based upon 28 U.S.C. §§ 1331 and 1337.

Discussion

This case, arising on cross-motions for summary judgment, presents a pure question of statutory interpretation. It is well settled that courts have primary responsibility over questions of statutory interpretation, Lubrizol Corp. v. EPA, 562 F.2d 807, 816-17 n. 23 (D.C.Cir.1977), and that the cardinal rule for courts to follow in interpreting statutes is to ascertain congressional intent and give effect to the legislative will. Philbrook v. Glodgett, 421 U.S. 707, 713, 95 S.Ct. 1893, 1898, 44 L.Ed.2d 525 (1975). While it is elementary that the starting point in every case involving the construction of a statute is the language itself, Southeastern Community College v. Davis, 442 U.S. 397, 405, 99 S.Ct. 2361, 2366, 60 L.Ed.2d 980 (1979) (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935, 44 L.Ed.2d 539 (1975) (Powell, J., concurring); Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 330, 98 S.Ct. 2370, 2375, 57 L.Ed.2d 239 (1978); and Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 472, 97 S.Ct. 1292, 1300, 51 L.Ed.2d 480 (1977)), the court should not be loathe to probe beneath the surface in its search for underlying intent. Mohegan Tribe v. State of Conn., 483 F.Supp. 597, 602 (D.Conn.), aff'd, 638 F.2d 612, cert. denied, 452 U.S. 968, 101 S.Ct. 3124, 69 L.Ed.2d 981 (1980). When aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no rule of law which forbids its use, however clear the words may appear on superficial examination. Mohegan Tribe v. State of Conn., supra (citing Train v. Colorado Public Interest Research Group, 426 U.S. 1, 10, 96 S.Ct. 1938, 1942, 48 L.Ed.2d 434 (1976), quoting United States v. American Trucking Ass’n., 310 U.S. 534, 543-44, 60 S.Ct. 1059, 1063-64, 84 L.Ed. 1345 (1940)).

Nevertheless, the Commission argues that by its terms the statute forbids the Commission to make material acquired pursuant to section 7A available to the state attorneys general. Further, the Commission argues that its interpretation of the statute is entitled to substantial deference, and that it should be upheld so long as its interpretation is a permissible construction of the statute even if the court would read the statute differently. Chevron USA v. NRDC, — U.S. -,-- -, 104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984). While there can be no doubt that the interpretation by an agency charged with the administration of a statute is entitled to substantial deference, Blum v. Bacon, 457 U.S. 132, 141, 102 S.Ct. 2355, 2361, 72 L.Ed.2d 728 (1982), such deference is constrained by the court’s obligation to honor the clear meaning of a statute, as revealed by its language, purpose, and history. Southeastern Community College v. Davis, 442 U.S. 397, 411, 99 S.Ct. 2361, 2369, 60 L.Ed.2d 980 (1979). Moreover, thoroughness, validity, and consistency of an agency’s reasoning are factors that bear upon the amount of deference to be given an agency’s interpretation of a statute it is charged with administering. FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 37, 102 S.Ct. 38, 44, 70 L.Ed.2d 23 (1981).

In a recent case, also involving a dispute about how the Clayton Act was to be interpreted, the Supreme Court rejected the FTC’s interpretation. In that case the Court said: “In rejecting the Government’s present interpretation of Section 8, we by no means depart from our long-held policy of giving great weight to the contemporaneous interpretation of a challenged statute by the agency charged with its enforcement____ But the Government does not come to this case with a consistent history of enforcing or attempting to enforce Section 8 in accord with what it urges now.” Bankamerica Corp. v. United States, 462 U.S. 122, 103 S.Ct. 2266, 76 L.Ed.2d 456 (1983) (citations omitted). In Bankamerica, the inconsistency of the Commission’s past practice with its later attempts at enforcing section 8 in a way that it had not theretofore been enforced was critical in the Supreme Court’s decision to reject the FTC’s more recent interpretation. Similarly, in this case, the Commission is attempting to interpret and enforce section 7A(h) in a way which is inconsistent with the agency’s past practice. The Supreme Court’s decision in Bankamerica makes clear that the deference ordinarily due to an agency interpretation is not warranted in this case. See also United States v. Leslie Salt Co., 350 U.S. 383, 396, 76 S.Ct. 416, 423, 100 L.Ed. 441 (1956); Atchison, Topeka & Santa Fe Ry. v. United States, 209 F.Supp. 35, 42 (N.D.Ill.1962) (agency’s new interpretation of statute — contrary to former, longstanding view — was entitled to “no weight as an administrative determination”); and Isbrandtsen Co. v. United States, 96 F.Supp. 883, 890-91 (S.D.N.Y.1951), aff'd per curiam, 342 U.S. 950, 72 S.Ct. 623, 96 L.Ed. 706 (1952) (when agency decisions have lacked uniformity and consistency, “administrative interpretations have little weight”).

In light of the inconsistency of the Commission’s practice with regard to disclosure to state attorneys general of HSR materials, and in view of the lack of specific legislative history on the question of such disclosures, it is necessary to go beyond a mere superficial examination of the words of the statute.

The Commission argues that it properly determined that it lacked authority to disclose premerger materials to state law enforcement officials. It relies principally on the language of section 7A(h) which provides:

Any information or documentary material filed with the Assistant Attorney General or the Federal Trade Commission pursuant to this section shall be exempt from disclosure under section 552 of title 5 [the Freedom of Information Act], and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this section is intended to prevent disclosure to either body of Congress or to any duly authorized committee or subcommittee of the Congress. [Emphasis added.]

The Commission also places heavy emphasis on the House Report on Title II of the Hart-Scott-Rodino Act which describes the purposes of section 7A(h) as being to ensure:

that premerger information submitted under this section is confidential and may not be disclosed, except in judicial or administrative proceedings.

H.R.Rep. No. 1373, 94th Cong., 2d Sess., reprinted in 1976 U.S.Code Cong. & Ad. News 2572, 2638. The House Report is otherwise silent as to the underlying policy behind section 7A(h).

Lastly, the Commission cites some remarks of Representative Rodino, in which he compared the confidentiality provision of Title I with Title II of the HSR Act, as the clearest indication of congressional understanding with respect to the type of disclosure sought in this case. Title I amended the Antitrust Civil Process Act of 1962 (76 Stat. 548), which authorized the Department of Justice to investigate antitrust violations by a special form of compulsory process, the civil investigative demand (“CID”). In Title I of HSR (at 90 Stat. 1388) Congress reenacted the prohibition in the 1962 Civil Process Act (76 Stat. 550) that no documentary information provided in response to a CID “shall be made available for examination” by anyone other than the Department of Justice (or certain other specified persons) without the consent of the party providing the information (15 U.S.C. § 1313). This precluded disclosure to state officials without the consent of the party providing the information. See Illinois v. Abbott & Associates, Inc., 460 U.S. 557, 571, 103 S.Ct. 1356, 1363, 75 L.Ed.2d 281 (1983). Against this background Representative Rodino explained:

The House applied the same two confidentiality safeguards to premerger data that both the House and Senate bills applied to CID files compiled pursuant to title I of the compromise bill. These two safeguards provide that, first, the premerger data is exempt from the Freedom of Information Act, so that the Government cannot be forced to disclose it to the public, and second, the Government agencies themselves cannot discretionarity release premerger data to anyone, but can disclose it only in “judicial or administrative proceedings.” In contrast, the Senate bill made the premerger data “subject” to the Freedom of Information Act — not exempt from it. The compromise bill adopts the House provisions because premerger data compiled pursuant to title II of the compromise bill will, in essence, contain the same kind of information as a CID file compiled in a premerger investigation pursuant to title I of the compromise bill. The House conferees see no reason why this data should be exempt from the Freedom of Information Act in the one case, and subject to the act in the other.

122 Cong.Rec. 30877 (Sept. 16, 1976) (remarks of Rep. Rodino) (emphasis added). The Commission views Representative Rodino’s remarks quoted above as strong evidence that Congress intended for section 7A(h) of the Clayton Act to prohibit discretionary release of premerger data to state attorneys general under terms of strict confidentiality. However, Representative Rodino’s remarks do not reveal whether such disclosure was squarely considered in the congressional hearings. Further, to understand the purpose and import of Representative Rodino’s remarks, they must be considered in the context in which they were made. In the Senate version of Title II of the HSR Act first adopted, it was provided that HSR premerger materials would be subject to the Freedom of Information Act:

The fact of the filing of the notification required by this section and all information and documentary material contained therein shall be considered confidential under Section 1905, title 18, United States Code, until the fact of such filing or of the proposed merger or acquisition is public knowledge, at which time such notification, information, and documentary material shall be subject to the provisions of section 552(b), title 5, United States Code [Freedom of Information Act]. Nothing in this section is intended to prevent disclosure to any duly authorized committee or subcommittee of the Congress, to other officers or employees concerned with carrying out this section or in connection with any proceeding under this section.

Sen.Rep. No. 94-803, 94th Cong., 2d Sess. 67 (1976). Representative Rodino’s remarks were made in the context of comparing the Senate version of the bill, in which disclosure of premerger materials to the public could have been required pursuant to the Freedom of Information Act, to the compromise bill, which prohibited the Commission and the Justice Department from disclosing premerger material to the public. Nothing in Representative Rodino’s remarks, when taken in context, refers to nonpublic disclosure. Thus the Commission has failed to show that the question of nonpublic disclosures to state attorneys general was squarely considered by Congress, nor has it shown that such disclosures were a concern of Congress when it enacted section 7A(h) of the Clayton Act.

The plaintiffs argue that the prohibition against public disclosures found in section 7A(h) of the Clayton Act simply does not apply to nonpublic disclosures made to state attorneys general for the purposes of law enforcement activities. Their argument turns on the question of how the term “public” should be interpreted in the context of section 7A(h) of the Clayton Act.

As the plaintiffs point out, federal courts have recognized the distinction between public and nonpublic disclosure of Commission materials and information. Specifically, in Interco, Inc. v. FTC, 490 F.Supp. 39. (D.D.C.1979), the district court considered, under the pre-1980 version of section 6(f) of the FTC Act, 15 U.S.C. § 46(f), Interco’s challenge of the requests of 22 state attorneys general for access to Commission materials and information for purposes of determining if any state antitrust violations existed. Like section 7A(h) of the Clayton Act, the pre-1980 version of section 6(f) of the FTC Act did not explicitly provide for access to Commission investigative materials to state law enforcement agencies. It provided that:

The Commission shall also have the power ... (f) to make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use.

15 U.S.C. § 46(f) (1976) (emphasis added). The pre-1980 version of section 6(f) of the FTC Act, like the present version of section 7A(h) of the Clayton Act, clearly restricted the disclosure of investigative materials by the FTC. Ironically, in Interco the Commission, in interpreting the pre-1980 version of section 6(f) of the FTC Act, took the very position that it opposes in this case— that the Commission had wide discretion to release documents obtained pursuant to an investigation to state attorneys general who had given the Commission reasonable assurances that the documents would not be released to the public. In Interco, the court agreed with the Commission’s position. The court specifically recognized the distinction between “public” and “nonpublic” disclosure of Commission information. Further, the court specifically held that the release of “trade secrets” and “names of customers” to state attorneys general under commitments of confidentiality was not a “public disclosure” and thus would not violate that statute’s prohibition against making such information “public.” Interco, Inc. v. FTC, 490 F.Supp. at 44. The plaintiffs argue that the Interco analysis of the pre-1980 version of section 6(f) leaves no doubt that Commission disclosure to state attorneys general is nonpublic disclosure in the context of the Clayton Act as well as the FTC Act.

The Commission, on the other hand, would have this court disregard the Interco decision simply because its construction of the term “make public” did not involve section 7A(h) of the Clayton Act and it was not decided until three years after the enactment of section 7A(h). These distinctions are unpersuasive. This court finds itself now facing much the same question as was faced by the district court in Inter-co in 1979. One of the questions presented to the court then was whether, assuming that some of the documents in question were “trade secrets” or “customer lists” and were therefore by the plain terms of the statute then in question not to be “made public,” the release of those documents to state attorneys general under commitments of confidentiality would constitute a “public disclosure.” Here, section 7A(h) of the Clayton Act prohibits “public” disclosure of HSR materials and the question is whether nonpublie disclosure to state attorneys general under commitments of confidentiality would violate the prohibition against making such information “public.”

Both sections 7A(h) of the Clayton Act and 6(f) of the FTC Act were designed to protect the confidentiality of information provided to the Commission or the Department of Justice {e.g. trade secrets, customer lists, or commercial or financial information). As such, the plaintiffs argue, the “made public” and “make public” prohibition of each statute should be read in pari materia. There is considerable authority for the plaintiffs’ contention here.

In Northcross v. Memphis Board of Education, 412 U.S. 427, 93 S.Ct. 2201, 37 L.Ed.2d 48 (1973), the Supreme Court held that provisions of two statutes that use similar language and have a common raison d’etre should be interpreted in pari passu. More recently, the Second Circuit has held that use of the same language in various enactments dealing with the same subject matter is a strong indication that the statutes should be interpreted to mean the same thing. Hargrave v. Oki Nursery, Inc., 646 F.2d 716, 720 (2d Cir.1980). See also Oscar Mayer & Co. v. Evans, 441 U.S. 750, 756, 99 S.Ct. 2066, 2071, 60 L.Ed.2d 609 (1979) (statutes with common purpose with terms that are in haec verba should be construed similarly). Thus, the similar language and common purpose of section 6(f) of the FTC Act and section 7A(h) of the Clayton Act strongly suggest that disclosures of HSR related materials to state enforcement agencies under terms of strict confidentiality should not be construed as “public” disclosures and, consequently, should not be prohibited.

The legislative history of section 6(f) of the FTC Act subsequent to the Interco decision further supports the conclusion that disclosures to state attorneys general of Commission materials should not be prohibited as “public” disclosures. The year following Interco, the FTC Improvements Act of 1980, 94 Stat. 374, amended section 6(f) to codify the result of Interco by making explicit the Commission’s authority to share information with state law enforcement agencies. The purpose in amended section 6(f) was stated clearly in the Congressional hearings by Congressman Richardson Preyer (D.N.C.):

In section 3(a) and section 14 of the bill, amending Section 6(f) and adding a new section 21 to the FTC Act, we intended to confirm the Commission’s policy of providing documents and information on a nonpublic basis to Federal law enforcement agencies and to State attorneys general for State law enforcement purposes. This sharing of information is in the best spirit of Federal-State cooperation. It enhances the States’ ability to remedy, in a matter chosen by the State, economic activities that had adversely affected their citizens. It saves taxpayers’ money by minimizing the duplication of efforts and by reducing the time and effort necessary to conduct State investigations.
The purpose of these provisions ... is intended to prevent situations like those occurring in two recent cases. In one, Interco, Inc. against FTC, it took some 17 months of litigation before the Commission was free to disclose documents to more than 20 State attorneys general. In another, Martin Marietta Corp. against FTC, the Commission spent four months discussing the proposed disclosure with the company personnel, then was enjoined from disclosing the document for another 8 months before the Commission could disclose it.

126 Cong.Rec. 11,831 (1980).

The 1980 amendment to section 6(f) and its legislative history explicitly demonstrate Congressional intent to create a Federal-State sharing of information. Cases construing the amended section 6(f) confirm this view. See Fleming v. FTC, 670 F.2d 311, 314-15 (D.C.Cir.1982) (amendment of section 6(f) by Congress in 1980 “codified the Commission’s theretofore presumed authority and concomitant policy to share nonpublic information with state law enforcement officials”), and Jaymar-Ruby, Inc. v. FTC, 651 F.2d 506, 512 (7th Cir.1981) (the purpose of the 1980 amendment to section 6(f) “was to expedite the flow of information from federal to state law enforcement officials, in part by eliminating the judicial obstacles which had previously impeded the flow”).

In light of the above discussion, this court concludes that section 7A(h) of the Clayton Act does not prohibit disclosure of HSR materials to state attorneys general under terms of strict confidentiality. This conclusion is mandated by prior federal case law, later codified, which explicitly distinguished public disclosures from nonpublic disclosures in the context of the transfer of sensitive business information from the FTC. Interco, Inc. v. FTC, supra. Disclosure to state attorneys general of materials which, according to the plain language of the statute there in question (the pre-1980 version of section 6(f) of the FTC Act), were not to be made “public,” was specifically held to be nonpublic disclosure and not violative of the prohibition against public disclosure. Furthermore, the legislative history of the 1980 amendment to section 6(f) of the FTC Act makes it abundantly clear that the Congress felt that it was sound public policy and in the interests of the nation’s taxpayers to foster cooperation between the Commission and the states through the nonpublic sharing of information acquired by the FTC with the states.

This conclusion in no way suggests that section 6(f) of the FTC Act, as amended in 1980, amended or repealed by implication the confidentiality provisions of section 7A(h) of the Clayton Act. This court has merely followed well settled rules of statutory interpretation in order to construe the meaning of a statute in the face of a question which the Congress did not squarely consider in the enactment of the statute. The language and purpose of section 6(f) of the FTC Act are quite similar to the language and purpose of section 7A(h) of the Clayton Act. While the legislative history of section 7A(h) of the Clayton Act is silent as to whether disclosures of HSR materials to state attorneys general are public or nonpublic disclosures, the language and legislative history of the amendment to section 6(f) of the FTC Act make it abundantly clear that disclosures otherwise not to be made public could be made on a nonpublic basis to the state attorneys general under that statute. Furthermore, the public policies and interests that precipitated the amendment to section 6(f) of the FTC Act are no less applicable to section 7A(h) of the Clayton Act. Once again, this does not suggest that the amendment to section 6(f) altered any prior understanding of section 7A(h) of the Clayton Act. As the court said in Fleming v. FTC, the 1980 amendment to section 6(f) of the FTC Act codified the Commission’s theretofore presumed authority to share nonpublic information with state law enforcement officials. Similarly, section 6(f) is used in this case only as guidance as to what the unexpressed but presumed intent of Congress was in 1976 when it enacted section 7A(h) of the Clayton Act. Common sense, reasons of sound public policy, and consistent interpretation of statutes with similar language and common purpose, inexorably lead to the conclusion that it was not the intent of Congress to prohibit nonpublic disclosures of HSR materials to state attorneys general when it enacted section 7A(h) of the Clayton Act.

Having decided that section 7A(h) of the Clayton Act does not prohibit nonpublic disclosures of HSR materials to state attorneys general on a confidential basis, the question that remains is whether there is any affirmative grant of power to the Commission authorizing such disclosures. The plaintiffs point to section 6(f) of the FTC Act as authorizing such disclosure. Their point is well taken. The language of section 6(f), as amended, provides that the Commission “may disclose” commercial or financial information which is obtained from any person and which is privileged or confidential “to any officer or employee of any State law enforcement agency upon the prior certification of an officer of any such ... State law enforcement agency that such information will be maintained in confidence and will be used only for official law enforcement purposes.” Thus, the plain language of section 6(f) of the FTC Act, as amended, as well as the legislative history of the 1980 amendment, leaves no doubt that Congress intended that there be a federal-state sharing of information acquired by the FTC pursuant to its investigations. See pp. 675-676 supra.

The Commission argues, however, that section 6(f) of the FTC Act does not apply to premerger materials. Rather, the Commission held in its May 2,1984 decision and asserts in its memorandum in support of its motion in this case, that by its very terms, section 6(f) governs only treatment of information obtained by the Commission “hereunder,” that is, information obtained under the FTC Act. Since information obtained under the premerger provisions of section 7A of the Clayton Act is not, according to the Commission, obtained under the FTC Act, the Commission argues that section 6(f) of the FTC Act may not be read as a grant of authority to disclose information obtained pursuant to section 7A of the Clayton Act.

While the Commission’s reading of section 6(f) may be grammatically plausible, it is at best a strained and narrow interpretation. In response to the Commission’s reading of the term “hereunder” in section 6(f),'the plaintiffs suggest that the word “hereunder” qualifies only public disclosures, is inapplicable to a request for nonpublic disclosure of information to state attorneys general, and therefore does not restrict the Commission’s authority to disclose information to state attorneys general only to information obtained “under” the FTC Act.

Regardless of whether the word “hereunder” in section 6(f) of the FTC Act grammatically qualifies nonpublic disclosure to state attorneys general, it cannot be read to restrict disclosures of information to disclosures “under” the FTC Act as distinct from the Clayton Act. Case law construing section 5 of the FTC Act, to which section 6 is quite closely related, makes it “clear that the FTC Act was designed to supplement and bolster ... the Clayton Act.” FTC v. Motion Picture Advertising Service Co., Inc., 344 U.S. 392, 394-95, 73 S.Ct. 361, 363, 97 L.Ed. 426 (1953). Similarly, the FTC Act “has been interpreted as a complement to the Sherman and Clayton Acts.” Luria Brothers and Company v. FTC, 389 F.2d 847, 859 (3d Cir.1968). It has also been held that the “Commission is empowered to use Section 5 [of the FTC Act] to prohibit practices and remedy conditions ... which ... run counter to the public policy declared in the Sherman and Clayton Acts.” L.G. Balfour Co. v. FTC, 442 F.2d 1, 8-9 (7th Cir.1971). Thus there can be no doubt that the grant of authority to the Commission to disclose information to state attorneys general found in the FTC Act should not be construed so narrowly as to preclude the Commission from exercising that grant with respect to information obtained pursuant to the Clayton Act simply because the information was not acquired literally “under” the FTC Act. The Commission’s own past practice, as discussed at p. 672 & note 3 supra, confirms that such a narrow and restrictive reading of section 6(f) is only of recent vintage. The specific congressional grant of authority to the Commission in section 6(f) of the FTC Act to make nonpublic disclosures to state attorneys general for law enforcement purposes and under terms of strict confidentiality must be read as a grant of discretion to the Commission to share information obtained pursuant to its investigations regardless of whether the particular investigation was made under the literal authority of the FTC Act or the Clayton Act. The broad nature of the powers granted to the Commission under the FTC Act, combined with the clear message from Congress that mandated federal-state sharing of information, must be viewed as bolstering and supplementing the specific provisions of the Clayton Act and not in contradistinction from them. FTC v. Motion Picture Advertising Service Co., Inc., supra. Thus, as this court has held today that section 7A(h) of the Clayton Act does not prohibit the Commission from making nonpublic disclosures of HSR materials to state attorneys general under terms of strict confidentiality, so too does this court hold today that section 6(f) of the FTC Act is an affirmative grant of power to the FTC — that it “may disclose” such information to state attorneys general under terms of strict confidentiality and in a nonpublic fashion.

Finally, the Commission points out that pursuant to a liaison agreement between itself and the Justice Department, after learning of a proposed acquisition they decide which agency will investigate it and take necessary law enforcement action. 2 Trade Reg.Rep. (CCH) ¶ 8550 (1984). Further, the Commission submitted an affidavit of J. Paul McGrath, Assistant Attorney General of the Antitrust Division of the Department of Justice, in which Mr. McGrath asserts that it has been the longstanding view of the Department of Justice that section 7A(h) of the Clayton Act prohibits the Justice Department from diselosing to state attorneys general all files and materials obtained by the Antitrust Division under the premerger notification provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and that the Antitrust Division has adhered to this interpretation since the Act became effective. Affidavit of J. Paul McGrath, It if 3, 4. Given the longstanding practice of the Justice Department not to disclose HSR materials, the Commission argues that under this court’s construction of section 7A(h) of the Clayton Act, the confidentiality of premerger materials submitted by a corporation under section 7A of the Clayton Act would be dependent upon the fortuity of which antitrust agency was chosen to investigate a particular acquisition.

The extent to which the Justice Department has the authority to disclose investigative materials is governed by section 4F(b) of the Clayton Act, enacted as part of Title III of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, which provides:

To assist a state attorney general ... in bringing any action under this Act, the Attorney General of the United States shall, upon request by such State Attorney general, make available to him, to the extent permitted by law, any investigation files or other materials which are or may be relevant or material to the actual or potential cause of action under this Act.

15 U.S.C. § 15f(b) (1982) (emphasis added). As the Commission itself notes, section 4F directs the Attorney General of the United States to provide states with investigative files “to the extent permitted by law.” Thus the Justice Department’s authority to disclose premerger information under section 4F(b) of the Clayton Act depends in turn on the construction of section 7A(h). Today, this court has construed section 7A(h)' as not prohibiting nonpublic disclosures of HSR materials to state attorneys general. It is well settled that statutory interpretation is ultimately the function of the courts, and that courts, rather than administrative agencies, are experts in statutory construction. FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 31-32, 102 S.Ct. 38, 41-42, 70 L.Ed.2d 23 (1981). Thus, as per today’s decision, nonpublic disclosures of HSR materials to state attorneys general are permitted by law at the discretion of both the Justice Department and the Federal Trade Commission. The Commission’s position that disclosure by it would create an anomaly in federal antitrust enforcement is, therefore, without merit.

Conclusion

In conclusion, section 7A(h) of the Clayton Act does not prohibit the Federal Trade Commission from disclosing HSR materials to state law enforcement authorities. The Commission has the authority to make such nonpublic disclosures at its discretion. The plaintiffs’ motion for summary judgment is granted. The defendant Commission’s cross-motion for summary judgment is denied. Judgment shall enter in favor of plaintiffs pursuant to 28 U.S.C. § 2201.

SO ORDERED.

      . The named plaintiffs in this case are the attorneys general of the states of Connecticut, Minnesota, Pennsylvania and Rhode Island. In addition, the attorneys general of the State of Texas and the State of California have been granted permission to appear in this matter as amici curiae for the purpose of representing the interests of their respective states.

      . In order to expedite the processing of plaintiffs’ requests this action was limited to Commission-generated documents.

      . In his dissenting statement from the Commission’s decision of May 2, 1984, Commissioner Pertschuk characterized the decision as "inconsistent with the previous policy of the Commission under which HSR information had been shared with the states since at least 1979.” Similarly, in her dissent Commissioner Bailey noted that "prior to this particular instance, the Commission in Hart-Scott-Rodino matters had apparently routinely given non-public access to investigative materials to states on their request." Even the statement of the majority of the Commissioners, though pointing out that it had never expressly addressed this issue, recognized that in the past the General Counsel of the Commission, in the exercise of his authority, had released HSR materials to state attorneys general on a strictly confidential basis.

      . Section 6(f) of the FTC Act was amended in 1980. For the amended version see note 5 infra.

      . The amended version of section 6(f) provides:
      The Commission shall also have power ... (f) [t]o make public from time to time such portions of the information obtained by it hereunder as are in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use: Provided, That the Commission shall not have any authority to make public any trade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential, except that the Commission may disclose such information ... to any officer or employee of any State law enforcement agency upon the prior certification of an officer of any such ... State law enforcement agency that such information will be maintained in confidence and will be used only for official law enforcement purposes.
      15 U.S.C. § 46(f) (Supp.1980).

      . It has been suggested that the Commission could release HSR materials to States under the express authority of section 7A(h) of the Clayton Act which authorizes such release where the information “may be relevant to any administrative or judicial action or proceeding." See Dissent of Commissioner Pertschuk, 3 Trade Reg.Rep. (CCH) ¶ 22,146.

      . This court does not reach the question of what the standard of review of the Commission’s exercise of its discretion under section 6(f) is. However, it is acknowledged that the case of Fleming v. FTC, 670 F.2d 311 (D.C.Cir.1982), provides some guidance as to what that standard is.

      . This court acknowledges that in a recent case in the Western District of Texas the court was faced with substantially the same question as presented here and came to the opposite conclusion. See Mattox v. FTC, Civ. No. A 84 CA 401 (W.D.Tex. filed July 10, 1984). In Mattox, Judge Nowlin held, without elaboration, that the plain language of section 7A(h) and the legislative history of the Hart-Scott-Rodino Act prohibited disclosure by the Commission of HSR materials to the Attorney General of the State of Texas. For the reasons discussed at length above in this opinion, this court respectfully disagrees.


source: Caselaw Access Project

author: GONZALEZ, District Judge.

license: Public Domain

text:
    WILLIAM D. BRANSON, LTD., Plaintiff, v. TROPICAL SHIPPING & CONSTRUCTION CO., LTD., Defendant.
    No. 82-8393-CIV.
    United States District Court, S.D. Florida, N.D.
    Nov. 26, 1984.
    Joseph Robinson, Miami, Fla., for plaintiff.
    Robert Blanck, Hayden & Milliken, Miami, Fla., for defendant.
   ORDER

GONZALEZ, District Judge.

THIS CAUSE has come before the court upon the defendant’s motion for summary judgment (docket #23). The Court has considered the motion, and plaintiff’s memorandum in opposition, and being otherwise duly advised, it is

ORDERED AND ADJUDGED that the defendant’s motion for summary judgment be and the same is hereby GRANTED, and plaintiff shall have twenty days from entry of this order to amend its complaint in conformity with this decision.

The starting point for the court’s analysis is section 672.2-320, Florida Statutes. Fla.Stat.Ann. § 672.2-320 (West 1966). Section 672.2-320 provides in pertinent part:

(1) The term C.I.F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination....
(2) Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.I.F. destination or its equivalent requires the seller at his own expense and risk to:
(a) Put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and
(b) Load the goods and obtain a receipt from the carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and
(c) Obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for any such war risk insurance; and
(d) Prepare an invoice of goods and procure any other documents required to effect shipment or to comply with the contract; and
(e) Forward and tender with commercial promptness all the documents in due form and with any indorsement necessary to perfect the buyer’s rights.
(4) Under the term C.I.F. ... unless otherwise agreed the buyer must make payment against the tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

The contract in question provided for the shipment of tomatoes C.I.F. Bridgetown, Barbados. Upon arrival in Bridgetown, the buyer inspected the tomatoes and found them to be spoiled. Finding the shipment unsatisfactory, the buyer shipped the tomatoes back to the seller-shipper, William D. Branson, Ltd. (“Branson, Ltd.”). The question now is whether Branson, Ltd. has an action for the price of the tomatoes against the common carrier, Tropical Shipping & Construction Co. (“Tropical”).

Tropical maintains that Branson, Ltd. is not a proper plaintiff in this action. As Tropical construes section 672.2-320, the buyer in Bridgetown is the party who must sue for the price of the tomatoes. All other facts being undisputed, Tropical would be correct, for title and risk of loss under a C.I.F. shipment contract passes to the buyer upon shipment if the seller has properly performed all his obligations with respect to the goods. See Sig M. Glukstad, Inc. v. Lineas Aereas Paraguayas, 619 F.2d 457, 459 (5th Cir.1980); Fla.Stat. Ann. § 672.2-320 comments 1, 16 (West 1966).

The buyer would be the proper plaintiff if he had indeed accepted the goods. However, two facts militate against this conclusion. First, a representative of plaintiff, Mr. Charles William Branson, testified in his deposition that the buyer did not pay for the tomatoes. Deposition at 28 (deposed July 26,1984). Second, the tomatoes themselves were not only condemned by the Ministry of Health of Barbados, see plaintiff’s response to defendant’s interrogatories, no. 21 (filed January 27, 1983), but were deemed unsalvagable by the United States Department of Agriculture (“USDA”) and dumped. Deposition at 28.

Generally, the buyer must make payment against tender of the required documents in order to entitle and enable him to receive the goods. Fla.Stat.Ann. § 672.2-320 comment 1 (West 1966). The contract may provide that the buyer has no right to inspect the goods prior to payment or acceptance of the documents. Fla.Stat. Ann. §§ 672.2-320 comment 1, 672.2-512 (West 1966). In this case, however, the contract, pleadings, interrogatories and depositions indicate that payment was to await arrival of the tomatoes. In this latter situation, inspection before payment is proper since the goods are then “available for inspection.” Fla.Stat.Ann. § 672.2-513 comment 5 (West 1966).

The significance of the foregoing is that under the facts as construed in the plaintiffs favor, it appears that the buyer never accepted the shipment of tomatoes from the seller because he found them to be substantially nonconforming. The buyer’s shipment of the tomatoes back to the seller is further evidence of the buyer’s non-acceptance; and the seller’s decision to call in the USDA and dump the tomatoes is consistent with the seller’s continued dominion and control over the goods. Even section 672.2-320 recognizes the soundness of this conclusion: “The buyer must pay before inspection and assert his remedy against the seller afterward unless the nonconformity of the goods amounts to a real failure of consideration ____” Fla.Stat. Ann. § 672.2-320 comment 12 (West 1966) (emphasis added).

In summary, contrary to the defendant’s protestations, the buyer does not have an action against the common carrier for the price of the tomatoes. The more important question, however, is whether the seller, Branson, Ltd. can maintain the instant action against Tropical?

The court finds that Branson, Ltd. is not a proper plaintiff in this action. Plaintiff’s representative Charles William Branson testified in his deposition that Branson, Ltd.’s insurance company paid the seller in full for the total cost of the tomatoes. Deposition at 28. The insurance payment included Branson, Ltd.’s “cost factor” and “profit” for the sale to the buyer. The seller’s collection of the insurance proceeds was proper because it had never relinquished title to the tomatoes. Although the insurance stipulated by the C.I.F. term is for the buyer’s benefit, the facts of this case suggest that the buyer neither accepted nor enjoyed the benefits of the bargain. Because plaintiff has been made whole by its insurance company, it is abundantly clear that Branson, Ltd. no longer has an action for damages against the common carrier, Tropical. Without deciding the merits, it appears that if any person has an action against Tropical, it is Branson’s insurance company, which conceivably has a subrogation claim against the common carrier.

Simply because Tropical is not being sued by the real party in interest is not sufficient reason to dismiss this case outright. Rule 17(a), Fed.R.Civ.P., provides that “[n]o action may be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest____” Thus, although the court grants defendant’s motion for summary judgment, plaintiff shall have twenty days from entry of this order to join or substitute the real party in interest.

       The gravamen of plaintiff's complaint was that
      [Tropical's] vessel arrived at the port of destination where it and the Defendant made delivery of the said shipment, but not in like good order and condition as when shipped, delivered to and received by them, but on the contrary, seriously injured and impaired in value by reason of the matters and things stated in Schedule A, all in violation of the Defendant’s and the said vessel’s obligations and duties as common carriers of merchandise by water for hire.
      Complaint ¶ 5 (filed Sept. 3, 1982).


author: TELESCA, District Judge.

text:
    Anne SPAGNOLIA and Augustine Spagnolia, Plaintiffs, v. UNITED STATES of America, Defendant.
    No. CIV-82-1002T.
    United States District Court, W.D. New York.
    Nov. 27, 1984.
    Mousaw, Yigdor, Reeves, Heilbronner & Kroll, Rochester, N.Y. (Donald A.W. Smith, Rochester, N.Y., of counsel), for plaintiffs.
    Salvatore R. Martoche, U.S. Atty., Rochester, N.Y. (Frank P. Geraci, Asst. U.S. Atty., Rochester, N.Y., of counsel), for defendant.
   DECISION AND ORDER

TELESCA, District Judge.

HISTORY OF THE CASE

This case was tried by the Court without a jury on November 20 and 21, 1984. It was stipulated by the parties that the issue of liability would be tried first pursuant to Federal Rules of Civil Procedure 42(b). Jurisdiction of this case is conferred upon this Court pursuant to 28 U.S.C. § 1346(b).

THE FACTS

The plaintiff, Anne Spagnolia, who on April 28, 1980 was 58 years of age, and married to the plaintiff, Augustine Spagnolia, slipped and fell in the customer area of the Ridgemont Plaza Post Office and as a result thereof claimed to be injured. This decision will deal only with the question of liability and therefore no attention will be given to her injuries.

It had been raining that day and evidence revealed that as of 10:00 A.M., .34 inches of rain fell. It was necessary for Mrs. Spagnolia to walk from her parked car, approximately 60 feet, to the post office building and in so doing walked over a wet surface and possibly through some small puddles. The floor of the post office is composed of individual inlaid blocks of quarry tile, red in color, non-glazed, consisting of a vitrified clay product. The plaintiffs’ expert, architect Martin Rose, disagreed with previous testimony that it was terrazzo tile, but rather it is a quarry tile. The architect’s opinion was that this tile, although highly recommended and used for very busy pedestrian locations because of its excellent durability and ability to be kept clean, nonetheless is slippery when wet.

The plaintiff testified that she entered the post office at about 10:00 A.M. and went to Window number 2 to purchase stamps. She then walked across the post office area to a table to address her mail, and to determine the zip code of a particular address. Unable to find the zip code in the books available, she started back towards the customer window to ask for assistance. A conversation ensued, she turned, “and my feet slipped out from underneath me straight up and I fell”. No other customers were present when she fell and she didn’t see any wet spots on the floor before falling. However, as she lay on the floor, she noticed there were other footprints made by wet shoes, but no puddles of water.

She was wearing what are commonly known as “clogs”, which are shoes formed from a solid piece of wood and a partial leather covering over the forepart of the shoe. They do not have any heel support. The sole is made of a rubberized material located over the instep of the shoe and the heel is of a neolite composition. Plaintiff testified that the heel had been replaced since she purchased the shoes, but the sole had not.

Jean Baxendale, a postal window clerk, saw the plaintiff fall. She claimed that the plaintiff twisted and “seemed to fall out of her shoes” and fell to the floor. She estimated that approximately 20 to 30 other customers had come into the building earlier that day, but that the floor was dry. Gloria DiCesare Montione was the postal window clerk who had waited on the plaintiff and sold her the stamps. She testified the floor was dry prior to the accident and if it had been wet, customarily they would notify the manager who would then mop the floor. Emmanuel Bertola, the manager of the post office, did not witness the accident but was summoned to her aid by the employees after she fell. He saw the plaintiff when she was lying on the floor and called an ambulance. The plaintiff stated to Mr. Bertola, “I slipped on your slippery floor.” There was a mat located in the vestibule area (where the post office boxes were located), but no mat was located in the customer area where the plaintiff fell. He estimates that approximately 20 customers had come in that morning prior to the plaintiff entering the premises and there was no need to mop the floor because the floor was dry. Photographs were introduced showing a portable sign located in the vestibule area “Caution wet floors” which, according to Mr. Bertola, was placed out towards the entrance doors into the customer area by the maintenance people when the floors were washed. The sign was kept off to the side on this particular day because the floors had not been serviced by the maintenance people. The floors had been washed on the previous Saturday and this accident took place on Monday, a full day and a half later.

The plaintiff brought to the Court’s attention a publication of the Post Office Department “Floors Care and Maintenance” (published September, 1969) which instructs and directs post office employees concerning the maintenance of post office facilities. It states in part that “during rainy or snowy weather, give repeated attention to mopping up water tracked into entrances and lobbies. Place ‘Wet Floor’ signs — at entrances. Place safety matting in vestibules, lobbies, and employee entrances to avoid slipping hazards.” (Part II, ‘Safety’, page 3).

The plaintiff was unable to state that the floor was wet prior to the accident, but did notice when she returned home that the shawl she was wearing was wet as the result of lying on the floor of the post office subsequent to her fall. And as stated previously, she recalled (while lying on the floor) seeing other footprints left on the floor by customers who had previously used it that morning. Against this claim, all three Government witnesses testified that the floor was dry on the morning of the accident.

It is inconceivable to find that the floor of the post office was “dry” the morning of the accident as testified to by the Government’s employees. I do find, however, that there were no puddles or standing accumulations of water on the floor in the area in which the plaintiff fell that morning. Clearly, the bottoms of her shoes were wet as the result of her walk across a wet parking lot before entering the post office.

DISCUSSION

Plaintiff argues that the negligence of the defendant consisted of the failure to provide water absorbent floor mats, or to take adequate measures to prevent the accumulation of water on the floor during the rainy day when the accident occurred. Defendant has taken the position that such facts, standing alone, do not constitute negligence under New York law.

This Court is obligated to apply the law of the state where the alleged negligent acts occurred and therefore New York law applies in this case. 28 U.S.C. Section 2674.

For a time, defendant’s position was free from doubt under New York law. In Miller v. Gimbel Brothers, Inc., 262 N.Y. 107, 108-9, 186 N.E. 410 (1933), (plaintiff fell on a smooth, sloping floor which had become slippery when wet) the Court of Appeals made the observation that “the owner of a store ... cannot prevent' some water and mud being brought into an entranceway on a rainy day and he is not responsible for injuries caused thereby unless it is shown that the construction of the store is inherently dangerous or that he failed to use care to remedy conditions which had become dangerous, after actual or constructive notice of such conditions”.

That rationale was extended slightly further in Holmes v. William Hengerer Company, 303 N.Y. 677, 102 N.E.2d 836 (1951), where the plaintiff fell on a wet floor in a department store on a snowy day. On the day of the accident, the vestibule of the store was covered with a rubber mat, but there was no mat in the interior of the store where the accident occurred. Plaintiff argued “that defendant had been negligent in allowing slush to accumulate in the interior of the store, in failing to place mats inside the store or to place them in the proper places and in failing to have a porter on duty or one who properly discharged his duties”. Id., 303 N.Y. 678, 102 N.E.2d 836. The Court of Appeals affirmed a judgment which reversed a trial verdict for the plaintiff, holding that such facts failed to establish defendant’s negligence. Accord, Schultz v. United States, 203 F.Supp. 941 (E.D.N.Y.1962). See also, Scott v. United States, 158 F.Supp. 810, at 814 (N.D.N.Y.1957).

Several years later, however, the precise scope of the Miller decision was thrown into some doubt by a case involving the same defendant, Pignatelli v. Gimbel Brothers, Inc., 309 N.Y. 901, 131 N.E.2d 578 (1955). In fact, the plaintiffs in those two cases were injured in different entrances to the' same department store, under almost identical conditions. In Pignatelli, as in Miller, the plaintiff entered defendant’s store on a rainy day, and slipped on a sloped terrazzo floor between the street entrance and a revolving door. The only additional fact present in Pignatelli was apparently the fact “that defendant customarily placed rubber mats, which were kept in a cabinet in the vestibule, on the floor during a rainfall but such mats were not in place on the floor at the time plaintiff slipped”. Id., 309 N.Y. 902, 131 N.E.2d 578. Perhaps on the basis of that factual distinction, the Court of Appeals held, without any written opinion, that plaintiff had made out a prima facie case, and upheld a jury verdict for plaintiff.

These decisions created a longstanding confusion under New York law as to whether, or when, a defendant would be liable for failing to use floor mats on rainy and snowy days. In an effort to reconcile the two leading decisions, it was occasionally suggested that liability would turn on whether the defendant had been in the custom of providing the mats which were absent on the day of the accident. See, for example, Morgenstern v. F.W. Woolworth and Company, 19 Misc.2d 739, 741, 186 N.Y.S.2d 747 (S.Ct. Nassau County 1959); Scott v. U.S., supra, 158 F.Supp. at 814.

This longstanding ambiguity in New York negligence law has now been resolved by a recent decision which is controlling in the present case. In Madrid v. City of New York, 42 N.Y.2d 1039, 399 N.Y.S.2d 205, 369 N.E.2d 761 (1977), the plaintiff was injured when she fell on the wet, uncovered terrazzo floor of a hospital entrance on a rainy morning. The trial judge dismissed her complaint at the conclusion of plaintiff’s case, and the Appellate Division affirmed, citing Miller v. Gimbel Brothers, supra. In dissent, one judge outlined the evidence most favorable to plaintiff’s claim.

The plaintiff ... was injured when she slipped on the wet terrazzo floor at the inclined entrance to the clinic. On previous rainy days a mat was placed on the terrazzo floor, but it was missing on the day of the accident. Plaintiff’s expert testified that it was the usual custom to use mats on rainy days to prevent accidents and that this omission caused the accident. The record indicates that it had been raining for a considerable length of time before the accident and that when she fell, plaintiff’s suit was wet from top to bottom. The defendants had recognized the dangers involved and had followed the usual custom in such cases by placing a mat at the entrance on rainy days. [53 A.D.2d 517, at 517-18, 383 N.Y.S.2d 621.]

Nevertheless, the Court of Appeals affirmed, citing Miller v. Gimbel Brothers, reasoning that “the facts presented in this record, assessed in the light most favorable to plaintiff, fail to reveal any evidence of notice, either actual or constructive, necessary to cast respondents in damages”. 42 N.Y.2d at 1039, 399 N.Y.S.2d 205, 369 N.E.2d 761 (citations omitted). In so doing, the Court of Appeals clearly established that the failure to use mats on slippery floors on rainy days does not necessarily constitute negligence, even where the defendant customarily observes such a practice but failed to do so on the day of the accident. Therefore, plaintiff’s urging for a finding of negligence on behalf of the defendant is simply not substantiated by the law applicable to the facts of this case.

CONCLUSION

I therefore hold that the plaintiff has failed to establish actionable negligence sufficient to impute responsibility to the Government. Therefore, the plaintiff’s complaint is dismissed and I direct the Clerk to enter judgment accordingly pursuant to Fed.R.Civ.P. 58(1).

ALL OF THE ABOVE IS SO ORDERED.

      . In the Miller case, decided 22 years earlier, there also had been no mat on the floor at the time of the accident, but there was apparently no evidence that Gimbel Brothers had observed the custom of using rubber mats at that time.

      . In at least one respect, the evidence of negligence in the present action is even weaker than the plaintiffs case in Madrid, where the Court of Appeals upheld the dismissal of the complaint. In Madrid, the defendant had failed to observe its customary practice of placing a floor mat in a hospital entrance on rainy days. In the present case, however, the defendant neglected to use floor mats only in the interior of the post office; plaintiff concedes that there was a mat in the entrance to the post office, which presumably decreased the amount of moisture brought in by customers.


author: MARQUEZ, District Judge.

text:
    Orris POLING and Ruth Poling, husband and wife, v. Max T. MORGAN and Jane Doe Morgan, husband and wife, Mobile Discount Corporation; Wheel Estates Corporation; Delta Service Corporation; Gulf Homes, Inc.; Western Coach Corporation; Delta Investment Corporation; E-Z Livin’ Mobile Sales.
    No. CIV 82-761 TUC ACM.
    United States District Court, D. Arizona, Tucson Division.
    Nov. 27, 1984.

      Barry Kirschner, Stompoly & Even, P.C., Tucson, Ariz., for plaintiffs.
    Stephen C. Birringer, Phoenix, Ariz., David W. Rees, Tucson, Ariz., Richard J. Hertzberg, Phoenix, Ariz., for defendants.
   ORDER

MARQUEZ, District Judge.

This matter is before the court on defendants’ Motion for Summary Judgment.

On August 2, 1973 the plaintiffs purchased a mobile home from Jackson’s Mobile Homes. In purchasing the home, they granted a security interest to defendant Mobile Discount Corporation in exchange for a financing agreement. Mobile Discount assigned all its rights in the security agreement to the United Bank of Arizona. In its assignment Mobile Discount guaranteed the loan.

Under the purchase agreement, plaintiffs were to make 120 monthly payments to pay off the balance of the purchase money loan. After making only 15 payments, plaintiffs abandoned the mobile home and made no further payments. Mobile Discount, as guarantor, convinced the bank not to repossess as long as Mobile Discount would make the monthly payments. Mobile Discount took possession of the mobile home.

On October 14, 1976 defendant Gulf Homes sold the mobile home to third parties. Apparently that sale was unsuccessful as defendants resold the mobile home on July 3, 1978. All of the defendant corporations are controlled by the defendant Max T. Morgan. It is not clear from the record how or when Gulf Homes acquired the mobile home from Mobile Discount. In the meantime one of the defendant corporations had continued to make the monthly installment payments.

Mobile Discount also filed suit against plaintiffs for several of the installment payments made to the bank and obtained a judgment. The record also indicates that at some point defendant once again repossessed the mobile home and either sold or leased it. Finally, on July 27, 1981 one of the defendant corporations paid off the remaining balance due to the bank. Plaintiff was sent notice and on December 11, 1981 the mobile home was sold. In March of 1982, the defendants notified plaintiff that there was no deficiency after the sale.

After the state court judgment was entered, and defendants were able to force a sale of plaintiffs automobile, defendants engaged in several collection tactics to attempt to collect the outstanding balance of the judgment.

As a result of all these incidents, plaintiffs filed suit alleging the failure to follow Arizona repossession laws under the Uniform Commercial Code, fraud, unfair collections practices under the Fair Debt Collections Practices Act, and claims under RICO.

Defendants have moved for summary judgment on all claims. They argue that the U.C.C. repossession provisions are inapplicable, that the collections practices they used were not in violation of the statute and finally, that no RICO claim has been stated.

I.

Defendants assert two arguments in support of their contention that the U.C.C. repossession provisions are inapplicable. First, they argue that they are not “secured parties” under the code and second, that a consignment agreement permitted defendants to avoid the U.C.C. requirements.

A.R.S. § 47-9501 et seq. (formerly § 44-3147 et seq) sets forth the procedures that must be followed when a secured party takes possession of collateral after the debtors default. Defendants argue that under Arizona law they are not secured parties. Arizona law is applicable to this portion of the case.

Defendants contend that when they repossessed the mobile home, they were acting only as guarantors. They had concededly assigned the security interest to the United Bank prior to the repossession. Under the U.C.C. once you assign all rights as a secured party, you cease to be one.

Defendants expand the argument further. They argue that after they obtained possession of the collateral, their status did not change to that of a secured party. See, Western Coach Corp. v. Rexrode, 130 Ariz. 93, 634 P.2d 20 (1981).

In Western Coach, the Arizona court of appeals held that a guarantor, who had previously assigned his security interest to a third party, did not become a secured party by the mere repossession of the collateral. This is based on the state rule that one does not become subrogated to another’s rights until he purchases the entire interest of the third party. Dykes v. Clem Lumber Co., 58 Ariz. 176, 180, 118 P.2d 454, 455 (1941). The court concluded that the U.C.C. was inapplicable to the repossessors conduct. The debtor, at best, would have only a claim for common law conversion had the guarantors conduct been improper.

The case seems to hinge on one premise, that there can be only one secured party. The Arizona court did not cite any case in its opinion that was decided after the enactment of the code. Nor was there any consideration of the three prong statutory test for determining a secured party status § 47-9203(A).

To hold that there can only be one secured party flies in the face not only of the statutes but also modern commercial credit transactions. There was not one debt in Western Coach but two different ones. One debt contained substantial unaccrued interest while the other grew as this previously unrecoverable interest was paid. The fact that Arizona permits the guarantor to collect its money from the debtor before the entire debt is incurred is evidence that this is a separate debt.

The overall policies of the U.C.C. were designed to prevent long delays due-to litigation in commercial transactions and uncertainty in the law by providing clear relatively quick remedies. It was also designed to partially protect consumers in purchase transactions. Both of these policies fail in this case as almost seven years passed from the time of plaintiffs’ breach until the plaintiffs were no longer liable for the debt and yet there was no real judicial action involved during the delay.

Western Coach creates significant problems not only in this case but under the bankruptcy laws and may raise Due Process considerations. It is interesting to note that the defendants who advocate this interpretation of the law here, do not hesitate to take an inconsistent position, see Mobile Discount Corp. v. LuBean, 134 Ariz. 350, 656 P.2d 639 (1982) where the defendant here claimed that it was a secured party in a similar situation.

Proper consideration should be given to A.R.S. § 47-9203(A). The key question should have been whether the defendants were in possession of the security under an implied agreement with the debtor, the voluntary abandonment. See A.R.S. § 47-1201(3) (definition of agreement). It is not clear from the record whether this test would be met.

Nevertheless, no matter how incorrect this court believes the state court’s interpretation of the state statute may be, this court is required to apply it.

Accordingly, since defendant Mobile Discount assigned away their secured party status before the repossession, the act of repossession as a guarantor did not alter its status. The U.C.C. provisions with regard to a secured party’s repossession conduct are inapplicable. The only cause of action plaintiff may have under state law to recover for any improprieties after the repossession is a claim for conversion. No such claim is before the court.

As stated above, on July 27, 1981 one of the defendant corporations paid off the bank and received the assignment of the security agreement. Whether under Arizona’s subrogation principles or the U.C.C., from that point on, defendant was a secured party and the Arizona U.C.C. provisions apply.

Defendants contend that their actions were permitted under the consignment agreement portion of the contract. This agreement appears in the middle of a 55-line paragraph of very fine print. In it, plaintiffs give defendant their power of attorney to do anything it chooses with the mobile home. All proceeds were to belong to the defendants. Plaintiffs argue that it would be improper to enforce this provision as the plaintiffs are over 70 years old and the printing consists of 55 lines packed into six and a half inches. The only words in bold print are the words “Power of Attorney”. It is unnecessary to decide the issues of unconscionability or of the restatement test for determining impermissibility of fine print, Darner Motor Sales, Inc. v. Universal Underwriters Insurance, 140 Ariz. 383, 682 P.2d 388 (1984).

A.R.S. § 47-9504 dictates the manner in which repossessed collateral must be disposed of. Under A.R.S. § 47-9501(C)(2), that provision may not be waived by the parties. To give this consignment agreement the force and effect sought by defendants would amount to such a waiver. It would also result in a waiver of other non-waivable procedures and rights dictated by § 47-9501(C). The court concludes that the consignment agreement is invalid. The defendants argue that this issue is not properly before the court. There is no merit to this argument. See pretrial order part V, Contested Issues of Law at (3). Although an Arizona Superior Court has upheld such language in another case, the manner in which the agreement was presented (rather than being hidden as in this case) make that case distinguishable.

Under the theories asserted based on the U.C.C., the defendants are entitled to prevail as to the occurrences from the date of repossession to July 27, 1981. The issue of whether thé code provisions were complied with after that date is not before the court at this time. It will present factual issues for the jury to determine at trial. The defendants are therefore not entitled to prevail on their motion for summary judgment as to this issue.

II.

At the hearing on this motion with regard to the Fair Debt Collections Practices Act, counsel for plaintiff abandoned several claims. Those abandoned are: all claims concerning written letters to third parties (threat to subpoena records, implied statement that third parties were lying, statements that a confidential report was being prepared); allegations of impropriety for using false names and the use of an agent to attempt settlement of the dispute.

The motion for summary judgment is granted as to these allegations. It is not clear whether the remainder of the claims are still being pursued. This matter will be resolved at the Pre-Trial Conference.

III.

Defendants contend that there is no RICO claim because they have not been convicted of improprieties. They base this argument on a recent Second Circuit case which held such a requirement, Sedima S.P.R.L. v. Imrex Company, Inc., 741 F.2d 482 (2d Cir.1984). This court in its July 8, 1983 order on a prior motion held that it was not the function of the court to limit the application of a statute “devoid of restrictions”. The Second Circuit’s opinion does not alter this view. The motion for summary judgment as to this cause of action is denied.

IT IS ORDERED that defendant’s motion for summary judgment is granted in part and denied in part as set forth above.


author: BARBOUR, District Judge.

text:
    Walter HERRLEY, et al., Plaintiffs, v. VOLKSWAGEN OF AMERICA, INC., et al., Defendants.
    Civ. A. No. J83-0891(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    Nov. 28, 1984.

      James W. Nobles, Jr., Jackson, Miss., John W. Andrews, Tampa, Fla., for plaintiffs.
    Edward A. Moss, Holcomb, Dunbar, Connell, Chaffin & Willard, Clarksdale, Miss., for defendants.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on the motion of both Defendants to dismiss this action for lack of in personam jurisdiction pursuant to F.R.Civ.P. 12(b)(2) and for insufficiency of process pursuant to F.R. Civ.P. 12(b)(4).

On December 24, 1977, in the State of Florida, the Plaintiffs were injured when their 1965 Volkswagen left the road and rolled over. The Plaintiffs allege their injuries resulted from defects in the door latches, seats, and right front wheel assembly of the automobile and that the Defendants had failed to properly inspect, test, or provide a warning when the Defendants knew or should have known of the dangerous condition of the automobile. The Plaintiffs are resident citizens of Florida and the Defendants are foreign corporations, not registered to do business in the State of Mississippi. The Plaintiffs attempted process by serving the Secretary of State under the Mississippi long arm statute, Miss. Code Ann. § 13-3-57 (1972). Attached to the Defendants’ Motions to Dismiss are certificates from the Mississippi Secretary of State indicating that the Defendants are not qualified to do business in the State of Mississippi. The Plaintiffs submit a certificate and license application from the Mississippi Motor Vehicle Commission indicating that the Defendant, Volkswagen of America, Inc., is licensed under the Mississippi Motor Vehicle Commission Act, Miss. Code Ann. §§ 63-17-51, et seq., and that it has 12 representatives who “contact or supervise Dealers or prospective Dealers of New Motor Vehicles in Mississippi.”

Since this is a diversity action, this Court must apply the law of the State of Mississippi with regard to whether the doors to Mississippi courthouses are open to nonresident plaintiffs suing nonresident defendants who have not qualified to do business in Mississippi or appointed an agent for service of process, over a cause of action which arose outside the State of Mississippi. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In diversity cases, federal courts may assert in personam jurisdiction only if the forum state’s long arm statute applies to the defendant and if the statute comports with the due process requirements of the Fourteenth Amendment. DeMelo v. Toche Marine, Inc., 711 F.2d 1260 (5th Cir.1983). Mississippi’s long arm statute, Miss. Code Ann. § 13-3-57 (1972) provides:

Any nonresident person, firm, general or limited partnership, or any foreign or other corporation not qualified under the constitution and laws of this state as to doing business herein, ... who shall commit a tort in whole or in part in this state against a resident or nonresident of this state, or who shall do any business or perform any character of work or service in this state, shall by such act or acts be deemed to be doing business in Mississippi. Such act or acts shall be deemed equivalent to the appointment by such nonresident of the Secretary of State of the State of Mississippi, ... upon whom all lawful process may be served____

(emphasis added to indicate amendment effective July 1, 1980).

Federal courts applying Mississippi law have frequently held that Mississippi’s long arm statute, prior to the 1980 amendment, could not be utilized by a nonresident plaintiff with a cause of action arising outside of Mississippi to gain personal jurisdiction over nonresident defendants. See, e.g., Golden v. Cox Furniture Manufacturing Company, Inc., 683 F.2d 115 (5th Cir.1982); Breeland v. Hide-a-way Lake, Inc., 585 F.2d 716 (5th Cir.1978); Thompson v. F. W. Woolworth Co., 508 F.Supp. 522 (N.D.Miss.1981); F.L. Crane Company v. Cessna Aircraft Company, 73 F.R.D. 384 (N.D.Miss.1976); McAlpin v. James McKoane Enterprises, Inc., 395 F.Supp. 937 (N.D.Miss.1975); Ryan v. Glenn, 52 F.R.D. 185 (N.D.Miss.1971). In Thompson v. F.W. Woolworth Co., 508 F.Supp. 522 (N.D.Miss.1981), the court discussed the effect of the 1980 amendment to Mississippi’s long arm statute, noting:

The 1980 amendment creates a right in nonresidents to make use of the statute only where the tort is committed in whole or in part in this state. Otherwise, the statute remains the same. This amendment strengthens the court’s view that a nonresident may not use the statute as a vehicle to bring suit in the courts of this state against nonresidents or foreign corporations not qualified under the constitution and laws of this state to do business in this state when the incidents giving rise to the cause of action occur outside of Mississippi.

Id. at 523. In Thompson, a Tennessee resident sued three corporations, none of whom were qualified to do business in Mississippi, for injuries sustained in Tennessee. In holding that there was no in personam jurisdiction over the Defendants, the court stated:

It would be absurd for the court to hold that the long-arm statute, as amended, affords a Mississippi forum for any nonresident having a cause of action against a nonresident or foreign corporation not qualified to do business in Mississippi simply because that nonresident or foreign corporation happens to conduct some business in Mississippi, albeit unrelated to the cause of action. To so hold would permit a nonresident to use the Mississippi forum for any suit against a nonresident who happens to transact some business in Mississippi, regardless of whether Mississippi has any connection whatsoever to the cause of action. Obviously, this was not the intent of the Mississippi legislature in enacting Section 13-3-57.

Id. at 525. Thompson was cited with approval by the Fifth Circuit in Golden v. Cox Furniture Manufacturing Company, Inc., 683 F.2d 115 (5th Cir.1982) when it held that an Arkansas plaintiff could not obtain in personam jurisdiction over a Louisiana corporation by use of Mississippi’s long arm statute, even though the cause of action arose in Mississippi.

Most recently, in a case virtually indistinguishable from the case sub judice, this doctrine was reaffirmed by the Fifth Circuit. In Smith v. DeWalt Products Corp., 743 F.2d 277 (5th Cir.1984) the Fifth Circuit held that a Louisiana plaintiff could not acquire in personam jurisdiction over a Maryland corporation by use of Mississippi’s longarm statute for an injury which occurred in Louisiana. Applying the facts in the case at bar to the court’s rationale in DeWalt, this Court is of the opinion that:

[Tjhere does not appear to be a nexus of any kind between the activity of [Volkswagen] in Mississippi and the claims asserted by [the Plaintiffs]. There is nothing to indicate that the [car] in question was manufactured in Mississippi, that it was ever owned by a Mississippian, that it was ever sold in Mississippi or by a Mississippian, that it was ever serviced in Mississippi or by a Mississippian, or that it was ever within the territorial boundaries of the State of Mississippi. The mere fact that [Volkswagen] markets its products nationally and that some of these goods find their way into Mississippi is not a sufficient nexus to subject [Volkswagen] to in-personam jurisdiction under the “doing business” provision of the Mississippi long-arm statute.

Id. at 279-80. Accord Manookian v. A.H. Robins Company, Inc., 580 F.Supp. 877 (S.D.Miss.1984).

Although numerous, the cases cited by the Plaintiffs are all distinguishable. None of the cases deal with the precise factual situation confronting the Court. The case closest in spirit to the present controversy is Cowan v. Ford Motor Company, 719 F.2d 785 (5th Cir.1983) (Cowan III). In 1975, Earl Cowan, a Texas resident, was fatally injured while driving a Ford pickup truck in Texas. His widow, also a Texas resident, filed suit against Ford, incorporated in Delaware with its principal place of business in Michigan. After several trips through the Fifth Circuit, Cowan v. Ford Motor Co., 694 F.2d 104 (5th Cir.1982) (Cowan I); Cowan v. Ford Motor Co., 713 F.2d 100 (5th Cir.1983) (Cowan II); Cowan v. Ford Motor Co., 719 F.2d 785 (5th Cir.1983) (Cowan III) and a certification response from the Mississippi Supreme Court, Cowan v. Ford Motor Co., 437 So.2d 46 (Miss.1983), the following ruling emerged: A nonresident plaintiff who serves process on the registered agent of a nonresident defendant, qualified to do business in Mississippi, acquires in personam jurisdiction over that defendant, even though the cause of action arose outside of Mississippi. The dispositive factors in the case sub judice are that Volkswagen has not qualified to do business in Mississippi nor has it appointed an agent for service of process in Mississippi. Although this Court has questioned the wisdom of rewarding foreign corporations who do not qualify to do business in Mississippi by immunizing them from in person-am jurisdiction in cases like the one at bar, see Manookian v. A.H. Robins Company, Inc., supra, the rule of law in the Fifth Circuit clearly requires this result.

This result does not violate due process. In Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952) a case involving a suit by a nonresident of Ohio against a Philippine corporation for a cause of action arising outside of Ohio, the Supreme Court stated:

[W]e find no requirement of federal due process that either prohibits Ohio from opening its courts to the cause of action here presented or compels Ohio to do so.

Id. at 446, 72 S.Ct. at 418.

Since qualification under Miss. Code Ann. § 79-3-211 (1972) makes the corporation a Mississippi resident for jurisdictional purposes, the rule of law announced in Cowan can be reconciled with that in the DeWalt line of cases as follows: nonresident plaintiffs may not acquire in personam jurisdiction through use of Mississippi’s long arm statute over nonresident defendants, who haven’t qualified to do business in Mississippi, for causes of action which accrue outside the State of Mississippi.

The Plaintiffs argue, however, that by seeking and obtaining a license from the Mississippi Motor Vehicle Commission, that Volkswagen of America, Inc., has “qualified” to do business in Mississippi. Nothing in the Mississippi Motor Vehicle Commission Act, Miss. Code Ann. §§ 63-17-51, et seq. indicates any legislative intent to allow licensure under this Act to suffice for the qualification required by Section 79-3-211. The Mississippi Motor Vehicle Commission Act does not provide for the appointment of an agent for service of process. It simply provides a licensing mechanism for automobile manufacturers, dealers, agents and representatives. Had the Mississippi Legislature intended licensing under this Act to serve the same function as qualification under Section 79-3-211, undoubtedly they would have said so. In World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the Supreme Court held in a case similar to the one sub judice that a foreign corporation may so structure its activities to avoid a state’s exercise of in personam jurisdiction over it for an action which occurred outside of the state of the residence of the plaintiff and of the defendant corporation.

Although Mississippi’s long, six year general statute of limitations is undoubtedly attractive to the Plaintiffs in this case and to countless others, this Court is Erie-bound to conclude that in personam jurisdiction does not exist over these nonresident defendants for a cause of action accruing outside of Mississippi and brought by nonresident plaintiffs.

Accordingly, the Motions to Dismiss by the Defendants are hereby granted and this cause is dismissed with prejudice, at the cost of the Plaintiffs.

      . The Defendant, Volkswagen A.G., also asserts that service of process was ineffective as to it because the complaint was not translated into German and served as required by the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Convention), entered into force for United States February 10, 1969, 20 U.S.T. 361, T.I.A.S. No. 6638. Although the Court’s ruling moots this objection, the Court notes that the remedy would simply be to quash process and leave the case on the Court’s docket, giving the Plaintiff a reasonable time to effect proper service of process. Vorhees v. Fischer & Krecke, 697 F.2d 574 (4th Cir.1983).