author: GESELL, District Judge.

text:
    FAIC SECURITIES, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants. SECURITIES INDUSTRY ASSOCIATION, Plaintiff, v. FEDERAL DEPOSIT INSURANCE CORPORATION, et al., Defendants.
    Civ. A. Nos. 84-0959, 84-1136.
    United States District Court, District of Columbia.
    June 20, 1984.

      James E. Kaplan, Jeffrey C. Martin, Washington, D.C., for plaintiff in No. 84-0959.
    John M. Liftin, Washington, D.C., James B. Weidner, New York City, for plaintiff in No. 84-1136.

      Judith F. Ledbetter, Sandra M. Schraibman, Washington, D.C., for defendants.
    James A. Smith, John Lansdale, Jr., Washington, D.C., for FHLBB and FSLIC.
   MEMORANDUM

GESELL, District Judge.

Cross-motions for summary judgment in these consolidated cases present the questions whether regulations adopted by the Federal Deposit Insurance Corporation (FDIC) and the Federal Home Loan Bank Board (Bank Board) are authorized by the statutes which govern those agencies and whether the regulations were promulgated in accord with the requirements of the Administrative Procedure Act. Plaintiffs, an individual deposit brokerage firm and a trade association whose members engage in the deposit broker business, seek to set aside regulations intended to virtually eliminate federal deposit insurance for funds place in insured financial institutions through deposit brokers. The issues have been exhaustively briefed and the Court has had the benefit of full oral argument. For the reasons given below, the Court concludes that the challenged regulations are inconsistent with governing statutory law and must therefore be struck down.

Federal deposit insurance was developed during the Great Depression for the purpose of restoring confidence in the nation’s banks and stimulating economic growth. In 1933 the FDIC was created, and a year lator the Federal Savings and Loan Insurance Corporation (FSLIC) was established under the control of the Bank Board. Banking practices were relatively simple in that era. Depositors dealt largely with traditional banks and savings and loan associations (S & L’s) located near their homes or offices. Regulation of institutions was a manageable task, and with the tools provided by their enabling statutes the FDIC and FSLIC were successful in returning the banking system to a sound footing.

Today these' New Deal statutes must be applied to an entirely different world. Banking is no longer a simple neighborhood affair. Depositors are more sophisticated, and as a result of advances in technology they are able to shop nationwide in search of the highest return on their money and can transfer their funds electronically from one institution to another virtually instantaneously. Recent legislation easing restrictions on financial institutions has also increased competitive pressure in the banking business, with brokerage concerns and S & L’s nudging more and more into traditional banking endeavors. As a result of these changes banks and S & L’s have adopted new techniques in an effort to attract capital, and the FDIC and the Bank Board have been faced with problems heretofore unknown.

The present controversy is well in point. Within the past several years a new type of business has flourished whose members are known as “deposit brokers.” These brokers bring together many individual depositors and arrange for their separate funds to be placed in financial institutions throughout the nation which are willing to pay high rates for brokered deposits which may aggregate into the millions of dollars. The broker may simply “match” the financial institution with its customers and arrange for them to deposit their funds directly with that institution, or the broker may itself deposit the funds, indicating to the bank that the funds are actually owned by the broker’s individual customers. In either event, the broker’s customers as beneficial owners of the deposited money each receive the security of federal deposit insurance up to the statutory limit of $100,-000 per individual depositor per institution.

The deposit brokerage business provides advantages to banks as well. Smaller banks can, through deposit brokers, solicit relatively large amounts of capital to help them finance local growth and development. The FDIC and the Bank Board, however, argue that this process is also subject to considerable abuse. Banks or S & L’s bordering on insolvency can, by offering high interest rates, attract large sums in a very short period in an effort to stave off failure of the institution. Because the brokered accounts are federally insured, these agencies contend, neither the brokers nor their customers adequately investigate the institution’s financial condition before depositing their funds. The result, when the bank or S & L is unable to stave off failure, is that the potential cost to the insuring agencies of making payment on the insured accounts is significantly increased due to the last-minute influx of brokered deposits.

The past several years has seen an alarming increase in failures by banks and S & L’s, placing considerable strain on the insurance funds. In at least several of these instances the FDIC and the Bank Board have concluded that the presence of brokered deposits in failed financial institutions has unduly exacerbated demands on the insurance funds. In order to deal with this perceived threat to the integrity of the insurance funds, the FDIC and the Bank Board have promulgated regulations which would, in essence, virtually eliminate federal insurance for funds placed by or through deposit brokers. The new regulations read, in pertinent part:

Notwithstanding any other provision of this part [12 C.F.R. Part 330 (FDIC); 12 C.F.R. Part 564 (Bank Board)], funds deposited by or through a deposit broker shall be added to any other deposits placed by or through that deposit broker and insured up to $100,000 in the aggregate. This subsection shall apply to all accounts opened, added to, or renewed on or after October 1, 1984, [with certain exceptions regarding the effective date].

Brokered Deposits; Limitations on Deposit Insurance, 49 Fed.Reg. 13,003, 13,011 (April 2, 1984). Rather than limiting insurance to $100,000 per depositor per financial institution, the new regulations would lump together all funds placed in a particular institution through a single deposit broker and limit insurance to $100,000 per deposit broker. The insurance ceiling would thus not be based on beneficial ownership of the deposits or, in the case of those deposits held directly by a deposit broker’s customers, even on who is listed as the nominal depositor on the records of the financial institution, but instead on the basis of how the deposits were made. Thus an individual who deposits $10,000 in a particular institution on his own initiative, and then subsequently utilizes the services of a deposit broker to place an additional $10,000 deposit with that institution, would presumably be fully insured on the first deposit but would be at risk on the second.

Plaintiffs argue that the new regulations are inconsistent with the FDIA and the NHA, which they contend guarantee each depositor insurance up to $100,000 per institution no matter how the actual deposit is arranged. The FDIC and the Bank Board disagree with this interpretation of the statutes, and point to several statutory provisions which they argue give them authority to promulgate the challenged regulations. The Court must consider, therefore, both the extent of insurance coverage which the FDIA and the NHA were intended to provide and the extent to which Congress has given the FDIC and the Bank Board authority to alter such coverage.

The FDIA and the NHA were designed to provide stability to the banking industry by guaranteeing federal deposit insurance to depositors in qualifying institutions. As the statutes governing the FDIC and the Bank Board make clear, these agencies are required to provide such insurance. “[The FDIC] shall insure ... the deposits of all banks which are entitled to the benefits of insurance under this chapter.” 12 U.S.C. § 1811 [emphasis added]. See also 12 U.S.C. § 1821(a)(1). An insured deposit is defined as “the net amount due to any depositor” up to $100,000, § 1813(m)(l) [emphasis added], and if an institution fails the FDIC is directed to make payment on insured accounts. § 1821(f). Likewise, “[the FSLIC] shall insure the accounts of institutions eligible for insurance,” and each insured institution “shall be entitled” to insurance up to $100,000 for “the accounts of each of its members and investors.” 12 U.S.C. §§ 1725(a), 1728(a) [emphasis added]. The FSLIC is also specifically directed to make payment on insured accounts in failed S & L’s. § 1728(b).

The legislative history of the Banking Act of 1935 makes clear that the “depositor” who is entitled to the deposit insurance under the statute is the beneficial owner of the account, at least where his ownership is reflected on the books of the bank. “The law specifically makes the test the individual ownership.” Banking Act: Hearings on H.R. 5357 Before the House Comm, on Banking and Currency, 74th Cong., 1st Sess. 27 (1935) (statement of Banking Comm. Chmn. Steagall). “[T]he command seems to be clear ... where the records of the institution show for whose benefit the account is maintained the legal measure of insurance protection for each cannot be withheld.” Id., at 128 (statement of FDIC general counsel L.E. Birdzell). The National Housing Act, which is generally to be construed together with the FDIA, similarly contemplates that deposit insurance will run in favor of the owner of the deposit, although its language and statutory history are somewhat less explicit. See 12 U.S.C. § 1724(b) (defining “insured member” as “an individual, partnership, association, or corporation which holds an insured account”).

This interpretation of the statute has consistently been followed by the FDIC and by the Bank Board in administrative interpretations prior to the present controversy. See, e.g., 11 Fed.Reg. 9500 (1946) (interpretive opinion by FSLIC Legal Department):

Ownership, as so determined [by State law], will control the settlement of insurance pursuant to [the NHA] ... [O]ne trustee may, therefore, hold as trustee any number of insured accounts for any number of disclosed beneficiaries provided the accounts of such beneficiaries are carried separately.

See also 32 Fed.Reg. 10,408 (1967) (FDIC); 32 Fed.Reg. 10,416 (1967) (FSLIC):

Accounts held by agents or nominees. Funds owned by a principal and deposited in one or more deposit accounts in the name or names of agents or nominees shall be added to any individual deposit accounts of the principal and insured up to $15,000 [then the statutory ceiling] in the aggregate.

It is clear, therefore, that the statutes were intended to grant to each depositor federal deposit insurance up to the statutory ceiling regardless of the means by which that depositor placed his funds in an insured institution. The statutes, quite simply, do not take into account the manner in which deposit of the funds is arranged; they focus instead on who owns the funds.

The FDIC and the Bank Board argue, however, that the FDIA and the NHA give them the authority to deviate from the principle that each depositor is entitled to the full benefits of deposit insurance. They cite several provisions in support of this argument; primary reliance, however, is placed on amendments to the FDIA and the NHA adopted by Congress in 1966 which granted to each agency the authority to “define, with such classifications and exceptions as it may prescribe, terms used” in certain sections of the statute “[f]or the purpose of clarifying and defining the insurance coverage under” those statutes. Financial Institutions Supervisory Act of 1966, Pub.L. No. 91-151, 83 Stat. 371 (1966), amending 12 U.S.C. §§ 1728(a), 1813(m).

As the legislative history of this section of the 1966 Act makes clear, however, it was not intended to provide the FDIC and the Bank Board with any broad new grant of power. The language at issue here was offered as a floor amendment by Congressman Ashley and Senator Robertson. As their comments upon introducing the amendment make clear, it was simply intended to give the agencies additional tools necessary to prevent a single depositor from exceeding the statutory ceiling through ingenious means.

Both [the FDIC and FSLIC] have felt the need for action to make insurance coverage more explicit, and they have been working together in recent months to arrive at uniform positions on the extent and limits of insurance coverage. The two agencies have stated that these provisions would be extremely helpful to them.
... [This authority] would enable the insuring agencies to bar the use of devices such as numerous joint accounts in various combinations, multiple numbered accounts, or revocable trust accounts to obtain insurance far in excess of the limits established by Congress. With the increase in insurance coverage to $15,000 effected by this bill, the savings of the small saver or typical household can be adequately protected without permitting the use of a variety of forms of account-holding aimed primarily at increasing insurance coverage still further.

112 Cong.Rec. 26,472-73 (1966) (statement of Senator Robertson). See also 112 Cong. Rec. 25,007 (1966) (statement of Congressman Ashley) (“[T]he purpose of my amendment is to clarify the power of the insuring agencies to prevent the circumvention of the insurance limit by the device of multiple accounts in the same institution.”).

The deposit insurance statutes always limited coverage for any one depositor to the statutory ceiling. The “technical and clarifying” amendment passed in 1966 was necessary to enable the agencies to do this job fully. The amendment thus reinforced, rather than undermined, the basic principle of the statute that “the substance of beneficial ownership and not the particular legal form of the account should control.” Scott, Some Answers to Account Insurance Problems, 23 Bus. Lawyer 493, 504 (1968) (discussing 1966 legislation). They did not, however, allow the agencies to alter the basic right of each depositor to insurance up to the statutory ceiling, regardless of the means through which the account was obtained. The grant of . authority to “clarify and define” the insurance coverage provided by the statutes was not a grant to the FDIC and the Bank Board of authority to eliminate such a basic part of the statutes.

The deposit broker regulations violate this central feature of the deposit insurance statutes by depriving individual depositors of the full measure of insurance protection mandated by the statute if they place their deposits through deposit brokers. Where, as here, there is no grant of authority from Congress for the agencies to change this basic principle, the regulations are thus inconsistent with the statute and therefore not lawful.

When a court is confronted with a clear need for regulatory action under a statute which did not anticipate the condition which created the regulatory problem or provide the means for dealing with it, there is a temptation to approve good-faith agency efforts despite the agency’s apparent lack of statutory authority. But this temptation must be avoided, for it is the Congress, not the judiciary, which must act to provide the regulatory agencies with the tools they require. The Court “is neither empowered to rewrite the language of statutes which may be antiquated in dealing with the most recent technological advances, nor [is it] empowered to make a policy judgment as to whether [the regulations are] in the overall public interest. Therefore, [the Court has] no option but to set aside the regulations ... as being in violation of the statute.” American Bankers Association v. Connell, 686 F.2d 953 (D.C.Cir.1979). Accordingly, an Order granting summary judgment to plaintiffs and setting aside the challenged regulations is filed herewith.

      . Plaintiffs clearly have standing, both to assert their own interests and the interests of their clients. Under Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), the interest asserted by plaintiffs must fall "arguably within the zone of interest to be protected or regulated." 397 U.S. at 152-53, 90 S.Ct. at 829 [emphasis added]. See also Glass Packaging Institute v. Regan, 737 F.2d 1083, at 1088 (D.C. Cir.1984) (zone of interests test "requires some indicia — however slight — that the litigant before the court was intended to be protected, benefit-ted or regulated by the statute under which suit is brought,” quoting Copper & Brass Fabricators Council, Inc. v. Dep’t of the Treasury, 679 F.2d 951, 952 (D.C.Cir.1982) [emphasis added]). Here plaintiffs’ interests are clearly being regulated. Plaintiffs can also assert the rights of those who would be denied insurance coverage under the new regulations, namely the depositors themselves. "Vendors and those in like positions have been uniformly permitted to resist efforts restricting their operations by acting as advocates of the rights of third parties who seek access to their market or function.” Craig v. Boren, 429 U.S. 190, 195, 97 S.Ct. 451, 456, 50 L.Ed.2d 397 (1976) [citations omitted].

      . Federal Deposit Insurance Act (FDIA), Pub.L. No. 73-66, 48 Stat. 162 (1933); National Housing Act (NHA), Pub.L. No. 73-479, 48 Stat. 1246 (1934). The authority of the FDIC was made permanent with passage of the Banking Act of 1935, Pub.L. No. 74-305, 49 Stat. 684 (1935).

      . Some brokers, such as plaintiff FAIC Securities, Inc., specialize in "splitting” funds from large investors into $100,000 increments which are then placed in different financial institutions in order to obtain federal deposit insurance for all of the investors' funds. Other brokers, principally certain members of plaintiff Securities Industry Association, primarily serve small investors with only a few thousand dollars to invest. In either event, the amount placed by the broker in one institution typically exceeds $100,000 in the aggregate.

      . The regulations do not resolve the question of how this insurance is to be apportioned among multiple depositors in the event that deposits place in a failed bank through a single deposit broker exceed the $100,000 ceiling.

      . Resolution of these issues does not, of course, involve review of the agencies’ determination that the practice of brokering deposits poses a threat to the insurance funds which should be eliminated, and the Court accepts this conclusion as correct in the discussion which follows.

      . Under 12 U.S.C. § 1822(c), the FDIC is given discretion regarding deposits whose beneficial owner is not disclosed to the bank. Regulations currently in effect grant coverage to undisclosed owners of deposits placed by an agent or custodian if the bank’s records indicate that the deposit is held in such a capacity and if the agent or custodian itself maintains records of ownership in the regular course of business. See 12 C.F.R. 330.1(b)(2); 12 C.F.R. 564.2(b)(2).

      . Among these are 12 U.S.C. § 1819, which grants the FDIC the power “to prescribe ... such rules and regulations as it may deem necessary to carry out the provisions of this Act,” and 12 U.S.C. §§ 1730 and 1818, which grant each agency the power to prevent “unsafe and unsound” banking practices. A general rule-making provision, however, obviously grants no authority to contravene the statute itself; if Congress has determined an issue, the agency is not free to change it. The “unsafe and unsound practices” provisions likewise do not support the challenged regulations. Those statutory provisions relate to specific enforcement actions brought against individual banks, and the power to prescribe regulations which "effectuate the purposes” of those provisions clearly does not contemplate across-the-board regulations of the type at issue here. Moreover, the "unsafe and unsound practices” authority do not apply to all institutions insured by the FDIC and the FSLIC, as the deposit broker regulations purport to do.

      . H.R.Rep. No. 2232, 89th Cong., 2d Sess. 3-4 (1966), U.S.Code Cong. & Admin.News 1966, p. 3532 (Conference Report).

      . In light of this conclusion, plaintiffs' argument that the regulations were not promulgated in accord with the strictures of the Administrative Procedure Act need not be reached.


source: Caselaw Access Project

author: ASPEN, District Judge:

license: Public Domain

text:
    AMERICAN DERMATOLOGISTS’ MEDICAL GROUP, INC. and Edward B. Frankel, M.D., Plaintiffs, v. COLLAGEN CORPORATION and the American Society of Plastic and Reconstructive Surgeons, Inc., Defendants.
    No. 83 C 1556.
    United States District Court, N.D. Illinois, E.D.
    June 21, 1984.

      Steven A. Weiss, Reuben & Proctor, Chicago, 111., for plaintiffs.
    John P. Scotellaro, Bell, Boyd & Lloyd, Chicago, 111., Charles T.C. Compton, Palo Alto, Cal., for Collagen Corp.
    Allan E. Lapidus, Yedder, Price, Kaufman & Kammaholz, Chicago, 111., for American Society of Plastic and Reconstructive Surgeons, Inc.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

This antitrust case involves the refusal of Collagen Corporation (“Collagen”) to supply Dr. Edward B. Frankel (“Frankel”) with its sole commercial product, Zyderm R Collagen Implant. Frankel alleges that Collagen’s refusal to deal with him is part of the concerted actions of the American Society of Plastic and Reconstructive Surgeons, Inc. (“ASPRS”) and its members, Collagen and other physician customers, to minimize price and territorial competition in the physician resale market for ZydermR by suppressing physician advertising and refusing to supply Zyderm R to physicians who advertise and discount their services. The defendants, on the other hand, argue that Collagen’s refusal to deal with Frankel was a unilateral decision based on valid business reasons. Collagen and ASPRS have moved for summary judgment; for the reasons set forth below, their motions are denied.

In moving for summary judgment, defendants have the burden of clearly establishing that there is no genuine issue of fact material to a judgment in their favor. The issue(s) of material fact need not be resolved conclusively in favor of the party opposing summary judgment; it is enough for the opposing party to show that sufficient evidence supporting some factual dispute requires a judge or jury at trial to resolve the parties’ differing versions of truth. Cedillo v. Int’l Ass’n of Bridge & Structural Iron Workers, Local Union No. 1, 603 F.2d 7, 10-11 (7th Cir.1979). Moreover, all inferences to be drawn from the facts contained in the affidavits, exhibits and depositions are to be drawn in favor of the non-movant. Id.; see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-160, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). As a general principle, questions of motive and intent are particularly inappropriate for summary adjudication. Cedillo, 603 F.2d at 11; Moutoux v. Gulling Auto Elec tric, 295 F.2d 573, 576 (7th Cir.1961). Accordingly, many antitrust actions — “where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot” — are poorly suited for summary judgment. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962) (footnote omitted).

In support of their motions for summary judgment, defendants have submitted the affidavits of the President, Executive Vice President and past President of ASPRS and the President and Vice President of Marketing of Collagen. In their affidavits, these officers deny any concerted action between Collagen and ASPRS, and they set forth the purported business reasons for Collagen’s refusal to deal with Frankel. In particular, Collagen claims that it decided not to sell ZydermR to Frankel for two reasons: Frankel’s overall poor reputation and an earlier disciplinary action against him by the Bureau of Medical Quality Assurance (“BMQA”) of the California Department of Consumer Affairs.

Frankel responds first by presenting evidence that Collagen’s reasons for refusing to deal with him lack any factual basis. The evidence indicates that Frankel meets all of Collagen’s stated eligibility criteria for purchasing ZydermR. Moreover, it suggests that Frankel actually enjoys a good reputation in the medical community, and that the BMQA disciplinary action resulted from organized efforts to “get” Frankel because of his position on advertising by doctors. The evidence also shows that Collagen has dealt with other physicians who have been disciplined by the BMQA. This evidence casts doubt on the explanations offered by Collagen and raises factual questions as to whether Collagen’s actions really were, as it claims, “no more than the reasoned exercise of its independent business judgment.” Such contested factual questions concerning Collagen’s motives cannot be resolved by summary judgment. E.g., Bostick Oil Co., Inc. v. Michelin Tire Corp., Commercial Division, 702 F.2d 1207 (4th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 242, 78 L.Ed.2d 232 (1983).

The bulk of Frankel’s response consists of substantial evidence which tends to buttress various aspects of his allegations that ASPRS and Collagen acted together to prevent Frankel from obtaining ZydermR. The evidence shows that ASPRS has long been concerned about competition from physicians who are not ASPRS members and has fought especially hard against physicians who advertise. In fact, an investigation of ASPRS by the Federal Trade Commission (“FTC”) indicated that ASPRS may have been falsely disparaging the reputation of competent non-members as well as pressuring manufacturers of plastic surgery products not to sell their products to certain doctors. In a memorandum to the FTC, ASPRS even acknowledged its intent to pursue this latter course of conduct, a tactic quite similar to the antitrust violations alleged by Frankel in this case. Other evidence demonstrates that ASPRS, and especially ASPRS’s President, Dr. Mark Gorney (“Gorney”), felt animosity for and took actions against Frankel and his advertising.

Frankel has also submitted evidence of Collagen’s restrictions on advertising by its physician customers. Until July of 1981, Collagen required each physician with whom it dealt to agree not to advertise any product or service. After this date, Collagen replaced this total prohibition of advertising by a ban on advertising the availability of ZydermR by name. Although this ban is more limited, Frankel argues that it still effectively precludes any price advertising of Collagen’s unique product. Frankel also points to evidence that, in spite of Collagen’s offered explanation that the current restriction on advertising is designed to protect Collagen’s trademark, it is the physicians who compete with advertising doctors — rather than Collagen itself — who have pressed for compliance with Collagen’s advertising restrictions.

Other evidence relates to the relationship and interactions between Gorney and Collagen. It appears that Collagen retained the ASPRS president as a consultant in various matters, including the marketing and sales of ZydermR. Collagen in turn gave Gorney options to purchase 2,000 shares of the corporation’s common stock. Gorney and Collagen’s Vice President of Marketing admit that in at least one conversation about the types of doctors who might benefit from using ZydermR and the recent changes in Collagen’s physician agreements (which included the restrictions on physician advertising) they also discussed .Frankel in particular, including such matters as the BMQA action against Frankel and a televised debate between Gorney and Frankel about advertising by doctors.

The defendants argue that all of Frankel’s evidence taken together is insufficient as a matter of law to support a reasonable inference of concerted action between ASPRS and Collagen. They also claim that the Supreme Court’s recent decision in Monsanto Co. v. Spray-Rite Service Corp., — U.S. -, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984), requires that their motions for summary judgment be granted.

We disagree. As we have stated, there are numerous factual questions which are unresolved in this case. Frankel has presented a plausible, albeit somewhat complex, view of the facts. The inferences Frankel draws from these facts are certainly not so far-fetched that a trier of fact should not be allowed to consider them. Defendants’ protests as to the circumstantial nature of Frankel’s evidence are unavailing. Conspiracy cases almost always involve such evidence, and it was recognized long ago that circumstantial evidence may be sufficient to support a finding of a price-fixing conspiracy. E.g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610 (1939).

The Supreme Court’s ruling in Spray-Rite has less bearing on defendants’ summary judgment motions than they suggest. The Court announced the standard of proof of an antitrust conspiracy, holding that to permit the inference of conspiracy

there must be evidence that tends to exclude the possibility of independent action by the manufacturer and distributor. That is, there must be direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.

Spray-Rite, — U.S. at-, 104 S.Ct. at 1473. In opposing the motions for summary judgment, Frankel need not meet this standard of proof. Rather, he must only show that there is enough evidence so that the trier of fact might reasonably decide that he met this standard. See Cedillo, 603 F.2d at 10-11. Frankel has done this. As the Supreme Court observed in Poller, “It may be that upon all of the evidence a jury would be with the respondents. But we cannot say on this record that ‘it is quite clear what the truth is.’ ” Poller, 368 U.S. at 472, 82 S.Ct. at 491.

Accordingly, the motions of Collagen and ASPRS for summary judgment are denied. It is so ordered.

      . Collagen cites authorities which stand for the proposition that "an affirmative finding of conspiracy is not to be supported simply by label-ling a given reason pretextual.” Bruce Drug, Inc. v. Hollister, Inc., 688 F.2d 853, 856 (1st Cir.1982). This proposition is irrelevant to the instant case in its present posture. The Court need not affirmatively find that a conspiracy exists, but merely that there are factual questions concerning such a conspiracy, in order to deny the motions for summary judgment. Moreover, as outlined later in this opinion, Frankel does offer other evidence in support of his conspiracy allegations.

      . Unlike Frankel, the plaintiff in Spray-Rite was given an opportunity to present his entire case to a jury. Thus, the Court discussed the standard of proof which a plaintiff must satisfy in order to prevail ultimately, not to defeat a motion for summary judgment.

      . At the next status hearing, in addition to setting a date for the filing of a draft pretrial order, the parties should be prepared to discuss whether meaningful settlement negotiations have been held or are planned to be conducted.


author: SCOTT O. WRIGHT, District Judge.

text:
    Jay K. HARTLEY, Plaintiff, v. Camden R. FINE, Ray S. James, Richard J. King, John R. Russell, Defendants.
    No. 82-4284-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    June 21, 1984.
    John R. Lewis, Springfield, Mo., Dale C. Doerhoff, Jefferson City, Mo., for plaintiff.
    Michael Boicourt, Asst. Atty. Gen., Jefferson City, Mo., for defendants Fine, James and King.

      Alex Bartlett, Jefferson City, Mo., Paul L. Bradshaw, Springfield, Mo., for defendant Russell.
   SCOTT O. WRIGHT, District Judge.

Pending before the Court is defendant John R. Russell’s Motion for Summary Judgment. For the following reasons, defendant Russell’s motion will be denied.

This is an action brought pursuant to 42 U.S.C. § 1983 in which the plaintiff claims that he was discharged from his employment with the Missouri Department of Revenue because of his political affiliation, and that he was denied procedural due process prior to his termination. Named as defendants are Ray S. James, former Director of the Department of Revenue for the State of Missouri; Camden R. Fine, Director of the Department of Revenue’s Division of Taxation; Richard J. King, present Director of the Missouri Department of Revenue; and John R. Russell, a Missouri State Senator.

Plaintiff’s complaint makes the following allegations. On January 14, 1982, defendant Fine terminated plaintiff’s employment as Manager of the Missouri Department of Revenue’s Bureau of Compliance. Prior to his discharge, plaintiff had been an employee of the Missouri Department of Revenue for a period of eight years. During the course of his employment, plaintiff was a member of the Democratic Party. Plaintiff claims that after “the inauguration of Governor Bond, a Republican, in January, 1981, plaintiff came under pressure from certain Republican officeholders, most notably defendant Russell, a State Senator representing a constituency in the southwest Missouri area, with such pressure also being brought by all defendants and their agents, but that plaintiff resisted such pressure.” Plaintiff’s Complaint at paragraph 14.

The plaintiff contends that the following facts previously adduced by affidavit or deposition will be established at trial. Prior to August 17, 1981, there were no problems concerning plaintiff’s job performance as Manager of the Compliance Bureau. Rather, plaintiff’s last periodic evaluation form contained ratings all of which were in the “very good” category. In 1980, plaintiff received a merit increase in salary. On August 17, 1981, defendant Russell sent a letter to defendant James, then the Director of Revenue, in which Russell suggested that the plaintiff should be removed from his position or transferred. According to deposition testimony, Russell previously stated that he had instructed James to fire the plaintiff in retaliation for the firing of a Republican state employee and because there were too many Democrats in high-paying state jobs.

The plaintiff further contends that on December 1, 1981, there was a meeting involving the Governor, King, and Russell, during which the status of the plaintiff’s employment was discussed. Subsequently, James ordered the plaintiff’s superior, Bill Lane, to fire the plaintiff, but Lane refused to do so. James then removed Lane, appointed defendant Fine, and instructed Fine to remove plaintiff from his position. Thereafter, without discussing the matter with the plaintiff, Fine issued the letter terminating the plaintiff’s employment.

In response to these allegations, defendant Russell contends that his efforts to have the plaintiff removed were not based on political motives, but were instead an effort on his part to respond to complaints by constituents regarding mismanagement and inefficiency in connection with the plaintiff’s employment. Russell argues that summary judgment in his favor is appropriate because he is immune from damages by reason of legislative immunity.

The doctrine of legislative immunity is rooted in the Speech or Debate Clause of the United States Constitution and provides that legislators engaged in the sphere of legitimate legislative activity should be protected not only from the consequences of the litigation but also from the burden of defending themselves. Dombrowski v. Eastland, 387 U.S. 82, 87 S.Ct. 1425, 1427, 18 L.Ed.2d 577 (1967). The immunity afforded by the Speech or Debate Clause, however, does not extend to a state legislator. United States v. Gillock, 445 U.S. 360, 100 S.Ct. 1185, 63 L.Ed.2d 4 (1980). Nonetheless, it is well-established that members of a state legislature are afforded absolute common law immunity from damage suits brought pursuant to 42 U.S.C. § 1983. Tenney v. Brandhove, 341 U.S. 367, 71 S.Ct. 783, 95 L.Ed. 1019 (1951). See also Gorman Towers, Inc. v. Bogoslavsky, 626 F.2d 607, 613 (8th Cir.1980); Green v. DeCamp, 612 F.2d 368, 371 (8th Cir.1980).

The immunity recognized by Tenney is only absolute within its scope, however, and coverage extends only to acts done “within the sphere of legitimate legislative activity.” Tenney, supra, 71 S.Ct. at 788. In Tenney, the Supreme Court concluded that “to find that a committee’s investigation has exceeded the bounds of legislative power it must be obvious that there was a usurpation of functions exclusively vested in the judiciary or the executive.” Tenney, supra, 71 S.Ct. at 789.

Defendant Russell contends that his alleged motive in urging that the plaintiff be discharged is irrelevant in the determination of whether his acts fall within the sphere of legitimate legislative activity. The Supreme Court in Tenney noted that the “claim of unworthy purpose does not destroy the privilege. Legislators are immune from deterrents to the uninhibited discharge of their legislative duty, not for their private indulgence but for the public good.” Tenney, supra, 71 S.Ct. at 788. See also Hampton v. City of Chicago, 484 F.2d 602, 606 (7th Cir.1973) (in determining whether prosecutor’s conduct falls within scope of absolute immunity, proper focus is on character of the prosecutor’s conduct rather than his alleged motivation). Thus, it is clear that the allegation that plaintiff’s termination was politically motivated is not a factor to be considered in determining whether Russell’s conduct is entitled to legislative immunity.

The issue of political motive notwithstanding, the essential question is whether the sphere of “legitimate legislative activity” includes the conduct of a state legislator who, after conducting his own individual investigation not pursuant to any committee activity or authorization, pressures members of the State’s executive branch to discharge an employee of the executive branch.

Initially, the Court takes note of the fact that, unlike many of the cases involving legislative immunity, the instant case does not involve the conduct of a legislator acting pursuant to his duties arising out of membership in a legislative committee. Compare Tenney v. Brandhove, supra, 71 S.Ct. 783 (committee and individual members acting in sphere of legitimate legislative activity); Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 99 S.Ct. 1171, 59 L.Ed.2d 401 (1979) (members of regional planning authority’s governing board entitled to absolute immunity to extent they were acting in legislative capacity); Gorman Towers, Inc. v. Bugoslavsky, supra, 626 F.2d 607 (city directors immune with respect to enactment of zoning adjustment); and Green v. DeCamp, supra, 612 F.2d 368 (members of senate committee entitled to immunity since preparation of report was within scope of committee affairs). These decisions reflect the fact that committee investigations, “whether by standing or special committees, are an established part of representative government.” Tenney v. Brandhove, supra, 71 S.Ct. at 789. Similarly, statements and activities by legislators occurring after the dissolution of a legislative committee have been held to be outside the scope of legitimate legislative activity. See Cole v. Gray, 638 F.2d 804 (5th Cir.1981) (actions taken by state legislators during pendency of committee were protected, but actions taken after the committee dissolved were outside coverage of immunity). Accordingly, the actions taken by defendant Russell must be analyzed in light of the fact that they were not the product of a legislative committee investigation. Rather, they were the result of an individual legislator acting on his own initiative.

There is no question, however, that the legitimate legislative activity of a state senator may include individual investigation. The plaintiffs allegations in the instant case, however, suggest that Russell went beyond the scope of an ordinary investigation of constituent complaints and exercised his influence to cause the firing of a state employee. The Court attaches significance to the fact that Russell allegedly did not simply complete an investigation of employee incompetence and report his findings to the appropriate authorities; instead, it is alleged that Russell urged members of the executive branch to remove the. plaintiff from his position.

Therefore, the decisive issue is whether Russell’s alleged activities were substantially related to his duties as a legislator or whether Russell was allegedly operating in an area which exceeded his role as a state senator. The Supreme Court has stated that it is

well known, of course, that Members of the Congress engage in many activities other than the purely legislative activities protected by the Speech or Debate Clause. These include a wide range of legitimate “errands” performed for constituents, the making of appointments with Government agencies, assistance in securing Government contracts, preparing so-called newsletters to constituents, news releases, and speeches delivered outside the Congress. The range of these related activities has grown over the years. They are performed in part because they have come to be expected by constituents, and because they are a means of developing continuing support for future elections. Although these are entirely legitimate activities, they are political in nature rather than legislative, in the sense that term has been used by the Court in prior cases. But it has never been seriously contended that these political matters, however appropriate, have the protection afforded by the Speech or Debate Clause____
In no case has this Court ever treated the clause as protecting all conduct relating to the legislative process. In every case thus far before this Court, the Speech or Debate Clause has been limited to an act which was clearly a part of the legislative process — the due functioning of the process.

United States v. Brewster, 408 U.S. 501, 92 S.Ct. 2531, 2537-39, 33 L.Ed.2d 507 (1972) (emphasis original). The Court notes that the Supreme Court’s language in Brewster describing the nature of the legislative function was an analysis of the scope of the Speech or Debate Clause. Defendant Russell in the instant case, however, claims legislative immunity based not on the Speech or Debate Clause, but rather based oh common law. There is no question that the immunity afforded by the Speech or Debate Clause is not applicable to state legislators. Lake Country Estates, supra, 99 S.Ct. at 1179. Nonetheless, the language of the Supreme Court in Brewster is at least somewhat persuasive in determining the “sphere of legitimate legislative activity” as defined in Tenney. Similarly, the Supreme Court has stated that the Speech or Debate Clause has not been extended “beyond the legislative sphere,” and that simply because

Senators generally perform certain acts in their official capacity as Senators does not necessarily make all such acts legislative in nature. Members of Congress are constantly in touch with the executive branch of the government and with administrative agencies — they may cajole, and exhort with respect to the administration of a federal statute — but such conduct, though generally done is not protected legislative activity. “No argument is made, nor do we think it could be successfully contended, that the Speech or Debate Clause reaches conduct, [such as an] attempt to influence the Department of Justice, that is in no wise related to the due functioning of the legislative process.”

Gravel v. United States, 408 U.S. 606, 92 S.Ct. 2614, 2627, 33 L.Ed.2d 583 (1972), quoting United States v. Johnson, 383 U.S. 169, 86 S.Ct. 749, 751, 15 L.Ed.2d 681 (1966).

The ultimate question, however, is whether defendant Russell was “acting in the sphere of legitimate legislative activity,” that is, whether he was “acting in a field where legislators traditionally have the power to act____” Tenney, supra, 71 S.Ct. at 788-89. With respect to the hiring and firing of Department of Revenue employees, Missouri statutes make it clear that such activities are in the province of the executive branch of the state government. “The department of revenue is in charge of the director of revenue. The director shall be appointed by the Governor, by and with the advice and consent of the Senate, and shall serve at the pleasure of the Governor.” Mo.Rev.Stat. 32.010 (1978). In addition, the Director of Revenue may:

(1) Initiate, order and direct the arrangement and rearrangement of the employees, quarters, facilities and equipment in the Department of Revenue and each division of the department which is under his supervision;
(2) Employ and remove assistants, clerks, and other employees in the Department of Revenue and each of the divisions of the department which are under his supervision as the work of the Department and its divisions require, and fix their compensation within the limits of the appropriation.

Id. § 32.050.

In the instant case, the plaintiff has alleged that he was an employee of the Department of Revenue from April, 1967 to June, 1973, and from March, 1974 to January 14, 1982. From June 1, 1978, to January 14, 1982, plaintiff served as the Manager of the Bureau of Compliance, Division of Taxation of the Missouri Department of Revenue. Accordingly, the decision to continue or terminate the plaintiff’s employment was vested exclusively within the authority of the Director of Revenue, a member of the executive branch of the Missouri State government.

As previously noted, the Supreme Court has stated that to find that a legislative investigation “has exceeded the bounds of legislative power it must be obvious that there was a usurpation of functions exclusively vested in the Judiciary or the Executive.” Tenney, supra, 71 S.Ct. at 789. In the instant case, defendant Russell is alleged to have pressured members of the executive branch to terminate an employee of that branch. The authority to make such a decision, however, lies solely with those in the executive branch itself. Accordingly, the alleged actions of Senator Russell in seeking plaintiff’s discharge, although perhaps taken in response to legitimate constituent complaints, do not fall within the sphere of legislative activity.

The suggestion by Senator Russell that the plaintiff should be discharged from his long-standing employment with the Department of Revenue was not the result of any committee action nor was it in any way essential to the legitimate functions of the state legislature. Although individual investigation of government inefficiency may fall within the scope of legislative authority, the application of pressure by a legislator on the executive branch to make a decision in an area vested exclusively within the executive branch cannot be classified as legitimate legislative activity. As stated by the Supreme Court, although congressmen “are constantly in touch with the Executive Branch of the Government and with administrative agencies — they may cajole, and exhort with respect to the administration of a federal statute — but such conduct, though generally done, is not protected legislative activity.” Gravel, supra, 92 S.Ct. at 2614. Accordingly, Senator Russell’s motion for summary judgment on the basis of legislative immunity will be denied.

Senator Russell contends in the alternative that summary judgment is appropriate, arguing that there is no issue of material fact in dispute regarding his contention that plaintiff’s firing was not politically motivated.

There are stringent limitations on the use of summary judgment, and such relief should not be granted unless the movant has established his right to judgment with such clarity as to leave no room for controversy that the opponent is not entitled to recovery under any discernible circumstances. Robert Johnson Grain Co. v. Chemical Interchange Co., 541 F.2d 207 (8th Cir.1976). The Court must view the motion in the light most favorable to the party opposing the motion and give the opponent all reasonable inferences deducible at trial. Bellflower v. Pennise, 548 F.2d 776 (8th Cir.1977). Summary judgment is inappropriate where motive and intent are important or where credibility is a factor. Re Coordinated Pretrial Proceedings in Antibiotic Antitrust Actions, 538 F.2d 180 (8th Cir.1976); Goldinger v. Boron Oil Co., 375 F.Supp. 400 (D.C.Pa. 1974).

Plaintiff’s response to Russell’s motion for summary judgment sufficiently demonstrates that there are material facts in dispute. Thus, the entry of summary judgment in favor of Russell would be inappropriate. Moreover, summary judgment should not be entered in a case such as this one where the issue of the defendant’s motive is crucial. Accordingly, it is hereby

ORDERED that defendant Russell’s motion for summary judgment is denied.

      . It is important that the Senator’s investigatory actions be distinguished from his alleged attempts to force the plaintiffs termination. There is little question that legislative investigations “are an established part of representative government,” Tenney, supra, 71 S.Ct. at 783, and in general legislative investigation of government inefficiency is considered to be the exercise of proper legislative authority. The activity alleged in this case which deprives the Senator of his immunity is not his investigation of alleged incompetence within the Department of Revenue; rather, it is his alleged actions in pressuring the members of the executive branch to discharge one of its own employees that falls outside the sphere of legislative activity.

      . In Davis v. Passman, 544 F.2d 865 (5th Cir. 1977), modified on other grounds, 571 F.2d 793 (5th Cir. 1978), reversed on other grounds, 442 U.S. 228, 99 S.Ct. 2264, 60 L.Ed.2d 846 (1979), the Fifth Circuit held that the Speech or Debate Clause does not extend to a United States congressman who allegedly discharged a female employee of his own staff on account of her sex in violation of the Fifth Amendment. The Court noted that such dismissal actions are not related to the passage of proposed legislation or to other matters within the jurisdiction of Congress. 544 F.2d at 880. "When members of Congress dismiss employees they are neither legislating nor formulating legislation.” Id. While Davis may be distinguished from the instant case in that Davis is based on the Speech or Debate Clause and involves the termination of a legislator’s own staff member, nonetheless, this Court is persuaded by the Davis court’s admonition that "[pjeripheral or tangential activities of a representative must not be confused with the legislative core.” See id.


author: KEVIN THOMAS DUFFY, District Judge:

text:
    UNITED STATES of America, v. Gerasimos VINIERIS, a/k/a “Mike Vinieris” a/k/a “Captain Mike”, Defendant.
    No. 83 Cr. 0566 (KTD).
    United States District Court, S.D. New York.
    June 27, 1984.

      Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City, for the U.S.; Robert Garcia, Asst. U.S. Atty., New York City, of counsel.
    Schulman & Laifer, Brooklyn, N.Y., for defendant; Barry Schulman, Brooklyn, N.Y., of counsel.
   MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, District Judge:

Defendant Gerasimos Vinieris has brought this omnibus motion seeking several forms of relief. For the reasons that follow, defendant’s motion is granted in part and denied in part.

The twenty-four count indictment charges Vinieris with perjury before a grand jury investigating the $11 million theft at the Sentry Armored Courier Corporation (“Sentry”) in the Bronx, New York (Counts One to Twenty-one), obstruction of justice (Count Twenty-two), and transportation in interstate commerce of over $5,000 stolen from Sentry (Counts Twenty-three and Twenty-four).

On July 6, 1983, the defendant was subpoenaed before the grand jury, but refused to testify on Fifth Amendment grounds. On July 13, 1983, Judge Abraham D. Sofaer entered an order pursuant to 18 U.S.C. § 6002, granting defendant use immunity before the grand jury. Count One is based on statements made by the defendant before the immunity order became effective. Counts Two through Twenty-one are all based on allegedly false declarations made by the defendant after the order became effective. Defendant moves for discovery, dismissal of the indictment, and suppression of various evidence. I will turn to each form of requested relief seriatum. 1. Discovery

Defendant has moved for an extensive array of discovery, using boiler-plate language not necessarily relevant to the instant indictment. The government apparently has provided some discovery items including grand jury transcripts of defendant’s and his attorney’s grand jury appearances. In response to defendant’s request, the government contends that the motion should be denied in full because of defendant’s counsel’s failure to comply with “local Rule 3(e), and to confer in order to resolve any discovery issues by agreement without the intervention of the Court.” Memorandum of Law at 4. Southern District Local Criminal Rule 3 provides that attorneys must attempt to resolve discovery disputes before seeking intervention of the court. Defense counsel appears to have made some effort at discovery dispute resolution, which is mentioned in his affidavit. Therefore, the government is directed to fully comply with its discovery disclosure duties under Fed.R.Crim.Proc. 16 by disclosing any statements of the defendant, his prior record, permitting inspection of any documents or tangible objects which “are material to the preparation of his defense or intended for use by the government as evidence achieved at the trial,” and permitting inspection of reports of examinations and tests.

2. Bill of Particulars

Defendant has requested a bill of particulars with respect to the charges against him. Under the circumstances, it is apparent that the indictment and accompanying papers submitted on this motion sufficiently particularize the charges against Mr. Vinieris to permit him to develop a defense and to ascertain the charges against him. Accordingly, defendant’s motion for a bill of particulars is denied.

3. Production of Brady Material

In addition to his requests for discovery and a bill of particulars, defendant also seeks the production of all Brady material in the government’s possession. The government’s obligation to search for Brady material and to turn it over at the appropriate time is the sole responsibility of the prosecutor. Whether the government fulfills this responsibility is a matter that I can determine only after trial. See United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976).

4. Disclosure of Informant’s Identity

Under certain circumstances the identity of a government witness may be disclosed to the defense prior to trial. See Roviaro v. United States, 353 U.S. 53, 60-62, 77 S.Ct. 623, 627-628, 1 L.Ed.2d 639 (1957); United States v. Cannone, 528 F.2d 296, 300-01 (2d Cir.1975). The determination of whether such disclosure should be made depends upon the careful “balancing of the public interest in protecting the flow of information against the individual’s right to prepare his defense. Whether a proper balance renders the nondisclosure erroneous must depend on the particular circumstances of each case, taking into consideration the crime charged, the possible defenses, the possible significance of the informers’ testimony, and all other relevant factors.” Roviaro, 353 U.S. at 62, 77 S.Ct. at 629. Defendant, however, has made virtually no showing that disclosure is appropriate in this case. As was stated in Can-none, “the defense [has] made only an abstract, conclusory claim that such disclosure was necessary to its proper preparation for trial.” 528 F.2d at 301-02. In the absence of a more specific showing, defendant’s request must be denied.

5. Dismissal of the Indictment for Violation of the Immunity Order

Defendant contends that because the same grand jury that heard his immunized testimony also brought this indictment, the indictment must be dismissed. In support he cites United States v. Hinton, 543 F.2d 1002 (2d Cir.1976), in which the Second Circuit stated “[w]e believe that as a matter of fundamental fairness, a government practice of using the same grand jury that heard the immunized testimony of a witness to indict him after he testifies, charging him with criminal participation in the matters being studied by the grand jury, cannot be countenanced.” 543 F.2d at 1010; see also 18 U.S.C. § 6002.

Certain counts of the original indictment appear to run afoul of the Hinton rule. In any case, the government has consented to the dismissal without prejudice of Counts One, and Twenty-two through Twenty-four. The remaining counts in the indictment, Counts Two through Twenty-one, charge the defendant with penury arising out of his immunized grand jury testimony. The same grand jury which heard the defendant’s immunized testimony may properly indict him for perjurious statements made during his immunized appearances. See United States v. Anzalone, 555 F.2d 317, 319-20 (2d Cir.1977) (“false testimony given under use immunity may nevertheless become a predicate for a perjury or false declaration charge [returned by the investígating grand jury]”), cert. denied, 434 U.S. 1015, 98 S.Ct. 732, 54 L.Ed.2d 760 (1977). Accordingly, except for the counts that the government has consented to dismiss, defendant’s motion to dismiss the indictment for violation of the Hinton rule is denied.

6. Count Severance

Defendant’s motion sought severance of all counts not arising out of his immunized testimony. Because the government has consented to the dismissal of these counts, this aspect of defendant’s motion is moot.

7. Dismissal of Multiplicitous Counts

The defendant asserts that Counts Two through Twenty-one are multiplicitous perjury counts which all grow out of a single transaction. According to defendant, each allegedly perjurious statement stems from the question whether Vinieris knew or was aware that funds placed in his custody were from the Sentry robbery. The test of whether counts are multiplicitous, however, is not whether they arise out of a single transaction. “[Cjounts are multiplicitous if the evidence shows that exactly the same facts that would make out one violation would also make out the other.” United States v. Stanfa, 685 F.2d 85, 88 (3rd Cir.1982). Separate false declarations may constitute separate penury counts. See Gebhard v. United States, 422 F.2d 281, 289 (9th Cir.1970) (“If [the defendant] in fact told separate lies, each of which could have hindered the grand jury in its investigation, then he could properly be separately charged for each lie.”). Until the government actually submits evidence in support of the indictment, however, it is impossible to determine whether proof of the same facts will prove each of the counts. Accordingly, defendant’s motion to dismiss the indictment counts that are multiplicitous is denied without prejudice to renewal at trial. See, e.g., United States v. Stanfa, 685 F.2d at 88 (“It would have been proper for the district court to rule that it would await the close of the government’s case before deciding whether to force the government to elect between counts if there was a barrier of proof of separate offenses.”); see also United States v. Universal C.I.T. Credit Corp., 344 U.S. 218, 225, 73 S.Ct. 227, 231, 97 L.Ed. 260 (1952).

8. Target Warnings

Defendant next asserts that the government’s failure to tell Mr. Vinieris that he was a target of the grand jury investigation necessitates dismissal of the indictment. Such a warning, however, is not constitutionally mandated. See United States v. Washington, 431 U.S. 181, 189, 97 S.Ct. 1814, 1819, 52 L.Ed.2d 238 (1977) (“Because target witness status neither enlarges nor diminishes the constitutional protection against compelled self-incrimination, potential-defendant warnings add nothing of value to protection of Fifth Amendment rights.”); see also United States v. Jacobs, 547 F.2d 772, 773-75 (2d Cir.1976), cert. dismissed as improvidently granted, 436 U.S. 31, 98 S.Ct. 1873, 56 L.Ed.2d 53 (1978). In this case, defendant was advised that he could seek independent legal advice as frequently as he chose, and in fact legal counsel accompanied him to each grand jury appearance. In addition, defendant was clearly advised of his right to remain silent, to seek a grant of immunity, and of his privilege against self-incrimination. Under the circumstances, nothing more was required by the prosecutor. Accordingly, this aspect of defendant’s motion is denied.

9. Sixth Amendment Right to Counsel

Citing Massiah v. United States, 377 U.S. 201, 84 S.Ct. 1199, 12 L.Ed.2d 246 (1964), defendant contends that his Sixth Amendment right to counsel was violated by the government’s use of two alleged government agents who interrogated defendant without his counsel present. Defendant’s Sixth Amendment right to counsel, however, attaches only at “a critical stage of the prosecution.” Simmons v. United States, 390 U.S. 377, 382, 88 S.Ct. 967, 970, 19 L.Ed.2d 1247 (1968). The return of the indictment or defendant’s arraignment mark critical stages. See Brewer v. Williams, 430 U.S. 387, 398-99, 97 S.Ct. 1232, 1239, 51 L.Ed.2d 424 (1977). The defendant’s meeting with the two alleged government informants took place before the indictment or any other possible “critical stage.” Accordingly, there cannot have been any violation of the Massiah rule.

10. Prosecutorial Misconduct

The defendant contends that the prosecutor’s conduct during the grand jury proceedings was so “harsh” that it warrants dismissal of the indictment. The government has submitted a copy of the complete transcript of the grand jury proceedings involving the defendant. An examination of the entire transcript demonstrates that this aspect of the defendant’s motion is patently frivolous.

11. Statements in Violation of Miranda

In three vague sentences, the defendant contends that his Miranda rights were violated. These wholly conclusory and hearsay statements by defendant’s counsel, unsupported by any specific facts or based on his personal knowledge are insufficient as a matter of law to require a hearing. See United States v. Evans, 572 F.2d 455, 486 (5th Cir.1978) (“The burden is on the movant to make specific factual allegations of illegality, to produce evidence, and to persuade the court that the evidence should be suppressed.”), cert. denied, 439 U.S. 870, 99 S.Ct. 200, 58 L.Ed.2d 182 (1978). In the absence of specific allegations concerning violations of defendant’s Miranda rights, this aspect of defendant’s motion is denied.

12. Identification Suppression

The defendant moves to suppress an allegedly improper identification on the ground that the procedures followed were unnecessarily suggestive. See Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968); United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967). The government, however, has stated that “it does not intend to introduce any identification testimony from this witness.” Government’s Memorandum of Law at 25. In addition, the government states that if it decides subsequently to offer any identification testimony from this witness, it will notify the defendant. Id. at n. *. Under the circumstances, there is no need for a hearing on this issue, but rather, a short voir dire will be permitted outside the hearing of the jury prior to any formal identification of the defendant by this witness. See Watkins v. Sowders, 449 U.S. 341, 101 S.Ct. 654, 66 L.Ed.2d 549 (1981). Discovery of identification procedures, photographs, and documentation, is also thus unnecessary. Accordingly, this aspect of defendant’s motion is denied without prejudice to renewal at a subsequent time.

13. Warrantless Search

The defendant states in full with respect to this aspect of his motion:

On June 10, 1983, the F.B.I. searched Mr. Vinieris’ apartment in Hackensack, New Jersey without a warrant. Upon information and belief, no voluntary and knowing consent was given. It is requested that the fruits of that search be suppressed or in the alternative a hearing be held to determine the grounds for the search.

Schulman Affidavit at 29. In response, the government contends that the defendant has failed to proffer sufficient facts based upon personal knowledge which would establish any legitimate privacy interest or an illegal search and seizure. See United States v. Diezel, 608 F.2d 204, 207 (5th Cir.1979). Apparently, however, the Federal Bureau of Investigation did search an apartment in Hackensack, New Jersey, on June 10, 1983. Therefore, both the government and the defendant are ordered to provide affidavits based upon personal knowledge detailing the relevant facts concerning any such search that may have had occurred on or about that time within ten (10) days of the date of this decision.

14. Search of Defendant’s Apartment

The defendant bases his motion to suppress the fruits of a search of his apartment on the asserted fact that the search warrant that was obtained was based on the fruits of the aforementioned warrant-less search of his apartment. Because I am reserving decision on that aspect of defendant’s motion until I receive additional submissions, I also reserve decision on this aspect of defendant’s motion.

15. Miscellaneous Requests

Defendant also makes several miscellaneous requests. First he contends that the indictment should be dismissed for abuse of the grand jury’s subpoena power because subpoenas were issued for witnesses after the indictment was returned against Mr. Vinieris in this case. The only witnesses that the defendant refers to in his defense counsel’s affidavit is Mr. and Mrs. Max Crawford. Both of these individuals, however, testified before the grand jury on August 31, 1983, and the indictment was filed on September 9, 1983. No other witnesses were subpoenaed or testified in the grand jury in connection with this case after that date. Accordingly, this portion of defendant’s motion is denied.

Defendant seeks an extension of time in which to notify the government that he intends to introduce testimony relating to a defense concerning his mental condition. The government does not oppose this request; therefore, it is granted. Finally, the government has assented to defendant’s request to renew portions of this motion upon a proper showing of good cause. See Fed.R.Crim.P. 12(f).

In sum, the following portions of defendant’s motion are denied: (a) his request for a bill of particulars, (b) disclosure of witness identities, (c) dismissal of the indictment for violation of the Hinton rule, (d) severance of counts arising out of defendant’s non-immunized testimony, (e) dismissal of multiplicitous counts (without prejudice), (f) dismissal of the indictment for failure to give target warnings, (g) suppression of statements obtained in violation of Massiah or Miranda, (h) dismissal of the indictment for prosecutorial misconduct, (i) suppression of identification (without prejudice), and (j) dismissal of the indictment for abuse of the grand jury subpoena power. The following aspects of defendant’s motion are granted: (a) dismissal without prejudice of Counts One, and Twenty-two through Twenty-four of the indictment, (b) an extension of time in which to file a notice of defense, and (c) the right to renew portions of his motion upon a showing of good cause. The government is ordered to comply with its Rule 16 and Brady obligations. Finally, I reserved decision on defendant’s motion to suppress items seized from defendant’s apartment during both a warrantless search, and a search conducted pursuant to a warrant, pending affidavit submissions within ten (10) days of the date of this decision.

SO ORDERED.


author: JAMES McGIRR KELLY, District Judge.

text:
    TEMPLE UNIVERSITY v. UNITED STATES of America.
    Civ. A. No. 83-5549.
    United States District Court, E.D. Pennsylvania.
    June 29, 1984.

      Robert R. Batt, Philadelphia, Pa., for plaintiff (appellant).
    Dawn MacPhee, Asst. U.S. Atty., Philadelphia, Pa., Glenn L. Archer, Jr., Asst. Atty. Gen., Michael J. Kearns, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendant (appellee).

      . S.Rep. No. 98-23, 98th Cong., 1st Sess. 40, reprinted in [1983 No. 2] U.S.Code Cong. & Ad.News 143, 181.

   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

The parties have submitted cross motions for summary judgment contending there are no remaining issues of fact to be decided.

The specific issue in this case is whether the amounts of voluntary employee salary reductions for the years 1979 to 1982 used to purchase tax deferred annuities for the employees constitute “wages” for Social Security tax purposes, subject to the Federal Insurance Contribution Act (“FICA”). FACTS

Temple University is a non-profit educational organization described in section 501(c)(3) of the Internal Revenue Code (“Code”) and exempt from federal income tax under section 501(a) of the Code. Pursuant to its section 501(c)(3) status, Temple was permitted to establish a salary reduction retirement annuity plan of the type described in section 403(b) of the Code. This plan was in effect both before, during and after the period at issue in this case, 1979 through 1982 inclusive.

Under the plan, employees electing to participate enter into salary reduction agreements under which they agree to stated reductions in their salary for the purpose of funding in part the purchase of nonforfeitable, nontransferable annuity contracts on the employees’ behalf. The salary reduction agreement applies only to amounts earned by the participating employee subsequent to the effective date of the agreement, and only one such agreement may be executed by each employee during any year. The agreement is legally binding and irrevocable with respect to amounts earned while the agreement is in effect. In this plan, Temple’s total contribution for the purchase of section 403(b) annuities exceeds the total salary reduction amounts. Temple has made no claim with respect to the amount contributed that exceeds the employees’ salary reduction amount.

Pursuant to section 403(b) of the Code the amount contributed by Temple for the purchase of section 403(b) annuities for a participating employee’s account is excludible from the employee’s gross income for federal income tax purposes. No withholding of federal income tax by Temple is required with respect thereto.

Pursuant to Revenue Ruling 65-208, 1965-2 Cumulative Bulletin 383, Temple timely paid to the Internal Revenue Service employer FICA taxes and withheld and paid employee FICA taxes in accordance with sections 3111 and 3101 of FICA, respectively, with respect to the salary reduction amounts applied by Temple toward the purchase of section 403(b) annuities during the years 1979 through 1982, inclusive.

On April 12, 1983, subsequent to the decision of the U.S. Supreme Court in Rowan Companies v. U.S., 452 U.S. 247, 101 S.Ct. 2288, 68 L.Ed.2d 814 (1981), Temple timely filed claims for refund of employer and employee FICA taxes for each of the years 1979 to 1982, inclusive, together with statutory interest thereon, on behalf of itself and those of its employees and former employees from whom it had withheld FICA taxes with respect to salary reduction amounts in those years.

Section 3121(a) of the Internal Revenue Code defines “wages” for purposes of FICA. However, salary reduction agreements are not encompassed by section 3121(a) which provides amounts paid by an employer for the purchase of tax deferred annuities on behalf of its employees’ retirement are not considered wages subject to FICA tax. In Revenue Ruling 65-208 the Internal Revenue Service has taken the position that the salary reduction portion of an employes contributions are wages for FICA purposes. And, prior to the Supreme Court’s decision in Rowan Companies, Inc. v. United States, 452 U.S. 247, 101 S.Ct. 2288, 68 L.Ed.2d 814 (1981), it was universally held that amounts used to purchase deferred annuities for employees of Section 501(c)(3) organizations were considered wages subject to FICA tax to the extent the payments were made pursuant to salary reduction agreements. Rev.Rul. 65-208, 1965-1 C.B. 383. This result obtained because the amounts used to purchase the annuities were provided by the employees through their voluntary salary reduction, and were not funds of the employer. Thus, during the years in question, Temple University withheld FICA taxes on its payments to purchase deferred annuities on behalf of its employees. Based on Rowan plaintiff claims that payments to purchase annuities on behalf of its employees, made as a result of salary reduction agreements, are excluded from FICA taxation, regardless of the fact that the purchase of the annuities is pursuant to salary reduction agreements. I believe this to be a distinction without a difference.

Temple contends that Rowan Companies, Inc. v. United States, 452 U.S. 247, 101 S.Ct. 2288, 68 L.Ed.2d 814 (1981) is controlling. I disagree. In Rowan, the Court held that meals and lodging provided by an employer for its own convenience did not constitute “wages” for FICA purposes. However, in reaching its decision the Court noted that such meals and lodging were specifically excluded from taxable income under 26 U.S.C. § 119, and that consistent treatment should result under both the income tax withholding provisions and the FICA tax provisions. Since the meals and lodging were not subject to income tax, the Court concluded that they must also be excluded from the term “wages” for FICA tax purposes.

The Supreme Court in Rowan stated that Congress intended a consistent interpretation of the term “wages” for income tax withholding and FICA purposes, and it struck down a Treasury Regulation which did not interpret FICA wages “in a consistent or reasonable manner.”

The Rowan decision was based on the Court’s interpretation of congressional intent. If the Government’s interpretation of FICA wages “implements the congressional mandate in some reasonable manner” then it should be upheld. Rowan, 452 U.S. at 252, 101 S.Ct. at 2292. In determining whether the congressional mandate is being implemented, the court must focus, inter alia, on “the degree of scrutiny Congress has devoted to the regulation.” Id. at 253, 101 S.Ct. at 2293.

I find Rev.Rul. 65-208 to be a reasonable implementation of the Congressional mandate since it results in consistent tax treatment of “wages”.

Temple argues that Rev.Rule 65-208 is contrary to the express command of Congress. I believe plaintiff is incorrect. In the Social Security Amendments of 1983, P.L. 98-21, Congress discussed the potential impact of the Rowan decision, and decided to codify the result of Rev.Rul. 65-208. As a result, Section 3121(a)(5)(E) was added to the Internal Revenue Code, and provides wages for FICA proposes excludes:

(5) any payment made to, or on behalf of, an employee or his beneficiary—
* * its * * *
(E) under or to an annuity contract described in Section 403(b), other than a payment for the purchase of such contract which is made by reason of a salary reduction agreement (whether evidenced by a written instrument or otherwise) (emphasis added).

Under the Social Security Amendments of 1983, therefore, payments by an employer for the purchase of Section 403(b) annuities which are made under salary reduction agreements are included in wages under FICA. Additionally, Section 3121(a) was amended to include the following language:

Nothing in the regulations prescribed for purposes of chapter 24 (relating to income tax withholding) which provides an exclusion from “wages” as used in such chapter shall be construed to require a similar exclusion from “wages” in the regulations prescribed for purposes, of this chapter.

Thus, in enacting the Social Security Amendments of 1983, Congress codified Rev.Rul. 65-208, and specifically rejected the language in Rowan that the term “wages” had to be interpreted the same for income tax withholding and FICA purposes.

The legislative history of the Social Security Amendments of 1983 reflects the long standing congressional intent to narrowly restrict the forms of compensation which are excluded from the FICA wage base, and further indicates support for the Service’s position embodied in Rev.Rul. 65-208. According to the Senate Report:

Under case or deferred arrangements, certain tax-sheltered annuities, certain cafeteria plans, and eligible State deferred compensation plans, the employer contributes funds which are set aside by individual employees for individual savings arrangements, and thus, the committee believes that such employer contributions should be included in the FICA base, as is the case for IRA contributions. Otherwise, individuals could, in effect, control which portion of their compensation was to be included in the social security wage base. This would make the system partially elective and would undermine the FICA tax base.
The bill also provides that any amounts paid by an employer to a tax-sheltered annuity by reason of a salary reduction agreement between the employer and the employee would be includible in the employee’s social security wage base. The committee intended that the provision would merely codify the holding of Revenue Ruling 65-208, 1965-2 Cum.Bull. 383, without any implication with respect to the issue of whether a particular amount paid by an employer to a tax-sheltered annuity is, in fact, made by reason of a “salary reduction agreement”. (Emphasis added).

Id. at 41.

Finally, the Senate Report states with respect to the Rowan decision that:

The social security program aims to replace the income of beneficiaries when that income is reduced on account of retirement and disability. Thus, the amount of “wages” is the measure used both to define income which should be replaced and to compute FICA tax liability. Since the security system has objectives which are significantly different from the objective underlying the income tax withholding rules, the committee believes that amounts exempt from income tax withholding should not be exempt from FICA unless Congress provides an explicit FICA tax exclusion.

Id. at 42, U.S.Code Cong. & Admin.News 1988, p. 183.

An appropriate Order follows.

ORDER

AND NOW, this 29th day of June, 1984, for the reasons set forth in the foregoing Memorandum, it is hereby ORDERED that:

1. Plaintiffs Motion for Summary Judgment is DENIED.

2. Defendant’s Motion for Summary Judgment is GRANTED.

      . In conformity with Treas.Reg. ¶ 31.6402(a)-2, all of the said employees and former employees were notified by Temple of their possible right to refund of FICA taxes and were furnished consent forms on which to indicate their consent to inclusion in Temple’s refund claims. Exhibits 5, 6, 7 and 8 to the Complaint indicate which employees and former employees gave such consents.

      . Section 3121(a)(5)(E) specifically provides that payments made after December 31, 1983, to purchase Section 403(b) annuities pursuant to salary reduction agreements are wages subject to taxation for FICA purposes.

      . Section 3121(a)(5)(E), cited above, was added by Section 324(a)(2) of P.L. 98-21, and was made effective with respect to remuneration paid after December 31, 1983. As discussed below, there is currently pending a technical correction to the effective date provisions of the Social Security Amendments of 1983 which, if passed, would ensure the same result in the instant case.

      . This language was added by Section 327(b)(1) of the Social Security Amendments of 1983, P.L. 98-21, and was made effective with respect to remuneration paid after December 31, 1983.


text:
    CENTER FOR AUTO SAFETY, et al., Plaintiffs, v. Elizabeth H. DOLE, et al., Defendants. CONSOLIDATED FREIGHTWAYS, et al., Plaintiffs, v. Elizabeth H. DOLE, et al., Defendants.
    Civ. A. Nos. 83-3885, 84-0136.
    United States District Court, District of Columbia.
    June 29, 1984.
    On Motion for Attorneys’ Fees Sept. 7, 1984.

      Katherine I. Hall and Elaine N. Herskowitz, Washington, D.C., John M. Quinn, Washington, D.C., for plaintiffs in No. 83-3885.
    John Duncan Yarda, Madison, Wis., Lester B. Seidel, Washington, D.C., for plaintiffs in No. 84-0136.
    Robert D. Nesler, Dept, of Justice, Washington, D.C., for defendants.
   MEMORANDUM AND ORDER

GESELL, District Judge.

These consolidated cases challenge interim regulations promulgated by the Secretary of Transportation pursuant to the Surface Transportation Assistance Act of 1982 (STAA), Pub.L. No. 97-424, 96 Stat. 2097 (1983), as amended, designating certain highways on which longer and wider trucks may operate nationwide. 48 Fed.Reg. 14,844 (April 5, 1983). On March 27, 1984, this Court filed a Memorandum and Order denying motions for preliminary injunctions brought by plaintiffs in each case. 582 F.Supp. 1444. Plaintiffs in Civil Action No. 83-3885 (collectively “Center for Auto Safety”) have now moved for summary judgment. Defendants oppose and have moved to dismiss both cases, contending that all issues raised herein are now moot in view of new regulations published June 5, 1984, which establish “final” designations of highways. 49 Fed.Reg. 23,302 All parties have had opportunity to address these motions both in writing and in oral argument before the Court.

The final regulations have completely superceded the interim regulations, which are now a “dead letter” and have no force or effect. The final regulations are based on a different administrative record which is not before the Court. The highways designated by the final regulations differ to some degree from those in the interim regulations. Moreover, in certain respects, at least, the rationale offered by the Secretary in support of the new regulations differs significantly from that put forth in the interim regulations. Finally, the legal standards which governed the interim designations may differ from those which govern the final designations. It is clear, therefore, that the validity of the final regulations, which is not at issue in the present proceeding, presents a different case than the validity of the interim regulations.

Plaintiffs argue that the final regulations perpetuate the same legal deficiencies they contend infected the interim regulations. A variety of new and different issues will also be presented by the final regulations, however, and the mere possibility that the interim and final regulations may share some of the same general shortcomings does not keep the controversy as to the interim regulations alive. The reasoning of the Court of Appeals in a recent case which presented somewhat similar circumstances makes this clear.

The Department’s promulgation of No. 150, which rescinded No. 66, presents a new case. The Treasury’s most recent action was the product of a third rule-making proceeding; it was a different regulation, containing on its face reasoning not previously articulated by the agency as its policy. In addition, No. 150 contains substantive provisions different from those of its predecessors. Whether these differences give rise to a legal distinction between No. 150 and No. 94 remains to be seen. Any person complaining of the procedures of No. 150 should attack it by a separate action ...

Center for Science in the Public Interest v. Regan, 727 F.2d 1161, 1166 (D.C.Cir. 1984).

This is not a case which is “capable of repetition, yet evading review.” See 727 F.2d at 1167 n. 6. “Final” regulations are now in effect. Moreover, the Secretary was not only “legitimately empowered to initiate further rulemaking,” 727 F.2d at 1164-65, but issued the final regulations pursuant to a statutory requirement that she do so, albeit in an untimely fashion. There are no grounds, therefore, for continuing to litigate interim regulations no longer in effect. To do so would simply result in an advisory ruling, not the resolution of a live controversy.

The present dispute over the interim regulations is moot. If the final regulations now in effect are to be challenged, this must be done in a new, unrelated proceeding. Accordingly, plaintiffs’ motion for summary judgment is denied, defendants’ motion to dismiss Civil Action No. 83-3885 is granted, and the case is dismissed.

Plaintiffs in Civil Action No. 84-0136 do not oppose defendants’ motion to dismiss their case as moot. This motion is granted and Civil Action No. 84-0136 is also dismissed.

SO ORDERED.

ON MOTION FOR ATTORNEYS’ FEES

This case is before the Court on the motion of plaintiffs Center for Auto Safety, et al. (the Center), for an award of $19,537.50 in attorneys’ fees under the Equal Access to Justice Act, 28 U.S.C. § 2412, for their work in this litigation. The Court has considered the briefs of both sides and the supporting affidavits thereto.

The Center brought this action on December 28, 1983 alleging that interim regulations of the Department of Transportation that designated highways for extra-wide and extra-long trucks violated Sections 411 and 416 of the Surface Transportation Assistance Act of 1982, Pub.L. No. 97-424, 96 Stat. 2097 (Jan. 6, 1983). Specifically, it contended first that some of the highways designated for extra-wide trucks (102 inches in width) contained segments with lanes narrower than 12 feet wide, contravening Section 416’s limitation of highways designated for such use to those “with traffic lanes designed to be a width of twelve feet or more.” Second, it contended that highways were designated by the department for extra-long trucks without a road-by-road safety review, contravening the language of Section 411(e)(1) that the Secretary shall designate highways “that are capable of safely accommodating” the longer trucks.

In a Memorandum opinion of March 27, 1984, this Court found that the Center had shown “a significant likelihood of success on the merits” for both of these contentions. 582 F.Supp. 1444, 1448-49 (D.D.C. 1984). However, the Court denied the Center’s motion for a preliminary injunction because it had not shown irreparable injury. 582 F.Supp. at 1449-50. On June 5, 1984, the Department published final regulations superceding the interim regulations challenged by the Center. 49 Fed.Reg. 23,302. Accordingly, on June 29, 1984, this Court denied the Center’s motion for summary judgment and granted the defendants’ motion to dismiss the case as moot. This motion for attorneys’ fees followed.

The first issue is whether the Center can be considered the “prevailing party” in the litigation qualifying it for attorneys fees. The government argues that it cannot be so considered, because the Center lost all the substantive motions in the litigation, including the government’s motion to dismiss as moot in light of the new regulations. The Center contends that it prevailed in that the new regulations were substantially influenced by its lawsuit, particularly by this Court’s ruling of March 27, 1984 rejecting the government’s interpretation of Sections 411 and 416.

Plaintiffs may be considered “prevailing parties” for purposes of attorneys’ fees “if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.” Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). A dismissal based on mootness does not bar considering that the plaintiff has prevailed, as long as the fee claimant can make two showings, that it substantially received the relief sought in the lawsuit and that the lawsuit contributed to the relief. See Environmental Defense Fund v. EPA, 716 F.2d 915, 919 (D.C.Cir.1983). Cf Miller v. Staats, 706 F.2d 336, 341 (D.C.Cir.1983). This Circuit has stressed that this two-part test is applied liberally. Id.

To satisfy the first test, the plaintiff need not show that the eventual result is the one it sought, only that the result “represents, in a real sense, a disposition that furthers [its] interests.” Commissioners Court of Medina County v. United States (Medina I), 683 F.2d 435, 441 (D.C.Cir. 1982). The claimant can even vigorously oppose the final result without affecting its status as a prevailing party, as long as it can be said to benefit from the outcome in a way sought by the lawsuit. See id.; Commissioners Court of Medina County v. United States (Medina II), 719 F.2d 1179, 1181 (D.C.Cir.1983).

Accordingly, it is irrelevant that plaintiffs have filed another lawsuit challenging the final regulations that mooted their claims in the instant suit. Instead, the inquiry must be whether those final regulations furthered their interests in a way sought by the suit. With regard to Section 416’s 12-foot-wide lane requirement, those regulations acknowledge a need, as the Court recognized, to gather more precise data on the actual width of lanes and a possible need to reduce the number of roads presently designated for travel by extra-wide trucks in accordance with that data. The interim regulations acknowledged no such need. The process of redesignating roads has not been completed, so the extent of change cannot yet be determined. But the agency indicated that it was “considering a requirement that either 85 percent, 90 percent, or 100 percent of the mileage of each highway have 12-foot wide lanes.” 49 Fed.Reg. at 23,308. Even if it adopts the 85 percent figure, thousands of miles of roads will lose their designation for the extra-wide trucks. Thus the Center achieved some of the relief it sought on this issue. The fact that it has not received all the relief it sought goes not to whether it legally prevailed for attorneys’ fee purposes but to the ultimate equity of whether to award fees and how much. See Medina I, 683 F.2d at 442-43.

Similarly, with regard to the Section 411 claim, the final proposed regulation contained safety criteria absent from prior regulations, thus partly granting the relief sought by the Center, which was to force the agency to base its designation of highways capable of carrying extra-long trucks on safety criteria and not on ad hoc negotiations with state highway officials.

The second part of the test requires a showing of some causal link between the lawsuit and the relief won. The plaintiffs must show that their claims were a “causal, necessary or substantial factor” in obtaining the relief won, Medina I, 683 F.2d at 442, or that their claims “more likely than not ... contributed to defendant’s action----” Miller v. Staats, 706 F.2d at 341.

The Center plainly meets this test for the Section 416 claim of its suit. The final regulations promulgated by the Federal Highway Administration expressly state that the agency’s action in regard to Section 416 was taken to comply with the Court’s March 27 opinion. 49 Fed.Reg. 23,302, 23,306-08 (June 5, 1984). With regard to the relief won on Section 411, there is no direct indication that the action was taken as a result of the lawsuit. But the Court is directed to look at “whatever objective data are available,” including the chronological sequence of events. Medina I, 683 F.2d at 442. Given the sequence of events here, and the clear shift in the agency’s interpretation of Section 411 consistent with the Court’s March 27 Memorandum, the Court concludes that plaintiffs have shown a sufficient causal relationship between their limited success in this lawsuit and the proposed final regulations.

Thus the Court determines that the Center is the prevailing party for purposes of attorneys fees. The next issue is whether the government’s position was not “substantially justified.” 28 U.S.C. § 2412(d)(1)(A). The government has the burden of showing that its litigation position had a reasonable basis in both law and fact. This burden on the government is one of reasonableness, see Nichols v. Pierce, 740 F.2d 1249, 1259 (D.C.Cir.1984), or “slightly more stringent than one of reasonableness,” Cinciarelli v. Reagan, 729 F.2d 801, 804-05 (D.C.Cir.1984). Here, the government defends its litigation position only by noting that it won all the substantive motions in the case, which is essentially its same argument as to why the Center should not be found to have prevailed. The Center, however, does not seek fees for those aspects of the litigation that formed the basis for the government’s victory: the irreparable harm requirement and the mootness claim.

Accordingly, the Court must examine the reasonableness of the government’s litigation position as to Sections 416 and 411. It is significant that the government does not now defend its interpretation of Sections 416 and 411 during the litigation. It is clear to the Court that that interpretation was not substantially justified. The government’s reading of Section 416 flew in the face of the plain meaning of the statute. And the government defended the agency’s compliance with Section 411 even though the agency had plainly done nothing to assure that the designated highways met some type of safety standards as the section clearly required.

The government’s ultimate abandonment of its defense of the agency’s compliance with the sections does not make this a case of immediate surrender by the government where an award of attorneys fees would not be appropriate. See Del Manufacturing Co. v. United States, 723 F.2d 980, 985-86 (D.C.Cir.1983); Spencer v. NLRB, 712 F.2d 539, 555 (D.C.Cir.1983). As the court noted in Spencer, “[i]t seems clear that, if the government does not immediately accede to the plaintiff’s demand, but instead initially opposes his claims and then at some later stage ... surrenders, the United States will be liable for attorneys’ fees ....” 712 F.2d at 555 n. 58. The government in this case waited almost six months before its rulemaking of June 5, 1984 essentially conceded the lack of merit in its interpretations of Sections 411 and 416. The Court concludes that its litigation position as to these sections of the statute was not substantially justified.

The Court must now evaluate the specific fee requests of the Center to determine what fee is reasonable. The government advances only general, unfocused arguments opposing the fee sought. Nonetheless, the Court must make a careful, independent review. The starting point in this inquiry, of course, is to determine “the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 103 S.Ct. at 1939.

The number of hours claimed by the Center in their lawyers’ sworn affidavits totals 118.75 for attorney Hall, 135 for attorney Herskowitz, and 51.75 for attorney Quinn. For both Hall and Herskowitz, a 20 percent reduction was made in the hours spent on the preliminary injunction motion to account for the lack of success on the irreparable harm claim. In addition, both deducted duplicative and nonproductive hours, as well as hours spent on tasks such as photocopying and filing briefs that would normally have been handled by support staff. Considering the complexity of the issues in this case and the voluminous administrative record, the Court finds these hours more than reasonable. Attorney Quinn, who acted as a senior consultant on the case, did not report any reduction of hours spent, but the Court also finds his total reasonable.

For these hours, the Center seeks hourly rates of $75 for Quinn and Hall and $50 for Herskowitz. These rates are well under the market rates in the District of Columbia for attorneys of their skill and experience, and the Court finds them reasonable.

However, this is not the end of the matter, because where a plaintiff has won only limited results, the product of total hours reasonably spent times a reasonable rate “may be an excessive amount.” Hensley v. Eckerhart, 103 S.Ct. at 1941; see also Blum v. Stenson, — U.S.-, 104 S.Ct. 1541, 1548, 79 L.Ed.2d 891 (1984). That is the case here, because the results obtained were limited to the Center’s victory at the preliminary injunction stage on their interpretation of Sections 411 and 416, and to the agency’s subsequent response to the Court’s holding on those points.

The Center made an effort to account for this limited success by deducting from the hours spent 20 percent of Hall’s and Herskowitz’s hours on the preliminary injunction motion, as described above, and also deducting all hours spent in responding to the government’s successful motion to dismiss as moot, as well as hours spent on the consolidated case filed by Consolidated Freightways. They request reimbursement for time spent only on the Complaint, the motions for preliminary injunction and summary judgment, and this fee application. The Court finds, however, that additional hours should be deducted as follows:

First, attorney Quinn’s hours should also be reduced by 20 percent to account for the lack of success on the irreparable harm component of the preliminary injunction motion. This brings his total hours to 41.4 and his total fee allowed at $75 an hour to $3,105.

Second, the hours of both attorneys Hall and Herskowitz should be reduced to account for the failure on their summary judgment motion. These deducted hours total 38.5 for Hall and 50 for Herskowitz. (Quinn claimed no hours on this motion.)

Third, the hours of Hall should be reduced another 4.5 hours for time spent on correspondence with the Justice Department in May, as indicated in her affidavit.

Hours for attorney Hall thus total 75.75, and her fee allowed at $75 an hour will be $5,681.25. Attorney Herskowitz’s hours total 85, and her allowed fee at $50 an hour will be $4,250.

In accord with the above, the Court awards the Center as a reasonable attorney fee a total of $13,036.25. An appropriate Order is filed herewith.

      . The Court concluded, inter alia, that plaintiffs in Civil Action No. 83-3885 had demonstrated a significant likelihood of success on their claim that the interim regulations violated sections 411 and 416 of the STAA, but had failed to demonstrate irreparable injury. The Court found that plaintiffs in Civil Action No. 84-0136 had not demonstrated a likelihood of success on the merits of their claim that they were entitled to an injunction ordering the Secretary to issue final regulations within a set period.

        . Compare the language of subsection 411(e)(2) of the STAA, which refers to designation in the interim rules of those "classes of highways” which meet the requirements of subsection 411(e)(1), with the language of subsection 411(e)(3), which places no such gloss on those requirements with respect to the final rules.

      . Plaintiffs are not, of course, "deprived of the benefits of [this Court’s Memorandum of March 27, 1984], which this [Memorandum and Order] leaves intact and does not vacate.” Regan, 727 F.2d at 1168 n. 6.

      . The benefit, however, must be more than a remand for reconsideration of a decision against the claimant. See Hanrahan v. Hampton, 446 U.S. 754, 758-59, 100 S.Ct. 1987, 1989-90, 64 L.Ed.2d 670 (1980) (per curiam).