author: MORAN, District Judge.

text:
    The PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, Plaintiff-Counterdefendant, v. CURT BULLOCK BUILDERS, INC., a Nevada corporation, Defendant-Counterclaimant.
    No. 84 C 3387.
    United States District Court, N.D. Illinois, E.D.
    Dec. 30, 1985.

      Guenther M. Philipp, Roger Pascal, J. Mark Fisher, Terence J. Moran, Schiff, Hardin & Waite, Chicago, Ill., for plaintiffcounterdefendant.
    Charles C. Hall, Young, Welsch, Young & Hall, Danville, Ill., Edward Y. Donovan, Henehan, Donovan & Isaacson, Ltd., Chicago, Ill., for defendant-counterclaimant.
   MEMORANDUM AND ORDER

MORAN, District Judge.

This diversity action presents the question of whether a creditor protecting its interests under a loan agreement also could be liable to the debtor in tort if another creditor caused unnecessary economic harm while both were in the process of collection.

Prudential, the plaintiff here, and the First Midwest Bank of Danville, Illinois (formerly the Second National Bank), which is not a party to these proceedings, each loaned defendant Bullock Builders over two million dollars — plaintiff in 1979 and the bank in 1983. By January 1984 both were uneasy about Bullock’s financial health. They pressed for changes in management and for security interests in Bullock’s assets to put their loans on a sounder footing.

Initially it appeared that a plan satisfactory to all parties had been worked out. Two officers of Bullock were replaced and terms of the proposed security interests were discussed. However, at a meeting on March 26, 1984, Bullock Builders flatly refused to collateralize either loan. Prudential and the bank responded by finding Bullock in default under the respective loan agreements, even though it was not behind in its payments, and announcing acceleration of each loan. Bullock was also a depositor of the bank. Allegedly it had previously sought and received assurances that the bank would not exercise its right of setoff. Nevertheless, the bank at once set the loan amount off against the Bullock checking account. As a result, several Bullock checks were returned for insufficient funds. Negotiations continued, however. In late June and early July, Bullock again seemed near to granting its lenders security interests, but again negotiations broke down. In August, the bank terminated its financing plan for customers of Bullock Builders.

Meanwhile, Prudential filed this suit, seeking a judgment for the loan principal. The bank filed a similar suit in state court. In both actions Bullock filed counterclaims alleging that the accelerations of the loans were not justified, and further, that Prudential and the bank had wrongfully conspired to cause it economic injury. This court has already granted summary judgment to Prudential on its claim. Bullock had violated terms of its loan agreement with Prudential, for example, by allowing working capital to fall below the required minimum, and so was in default. However, the counterclaim remained open. Prudential Insurance Company of America v. Curt Bullock Builders, Inc., No. 84 C 3387 (N.D.Ill. Dec. 24, 1984).

An assortment of motions is presently before the court. Prudential seeks summary judgment on the counterclaim and also moves under Rule 54(b) of the Federal Rules of Civil Procedure for entry of final judgment on its claim. Bullock Builders opposes both the grant of summary judgment and the Rule 54(b) motion, arguing first that no judgment should be entered while its counterclaim is viable, and, secondly, that the amount of the judgment should not include 13 per cent interest and attorneys’ fees. Each side has also moved to strike most of the other side’s affidavits.

The order in which each of these motions will be discussed is dictated by their practical consequences. Since existence of the counterclaim is a significant obstacle to granting entry of final judgment, the analysis turns first to the counterclaim to see if that obstacle can be removed. The initial step in that analysis will be to determine if Bullock’s complaint still states a claim after our earlier judgment for Prudential. Finding that it does, the discussion then must turn to the affidavits, to see what evidence can be considered in the motion for summary judgment. Those preliminaries will show the key issue to be whether Prudential could be found vicariously liable for the bank’s conduct. An examination of that issue indicates that a genuine issue of fact exists as to whether the bank was Prudential’s agent or conspired with it. Summary judgment would therefore be premature. The analysis then shifts to the Rule 54(b) motion, finding that despite the counterclaim, final judgment can be entered for Prudential on the loan principal and interest. However, inspection of the loan documents reveals that Prudential is not entitled to attorneys' fees.

I. THE COUNTERCLAIM

Bullock Builders’ complaint is not easily deciphered, but it appears to allege that Prudential conspired with the bank as its agent to drive Bullock Builders out of business. It maintains that Prudential and the bank wrongfully accelerated their loans as one of the acts to further the conspiracy. It also complains that the bank, acting for Prudential, first promised not to use its setoff right, and then exercised it, without warning, making both the bank and Prudential liable, apparently on a promissory estoppel theory. Further, since the setoff was wrongful because of the promise, dishonor of the checks was also wrongful. Also, the bank, as Prudential’s agent, wrongfully deprived Bullock of working capital by luring it away from a potential lender, with promises of a loan on more favorable terms that were never fulfilled.

Prudential argues that it is entitled to summary judgment essentially for two reasons. First, it contends that after this court's previous decision Bullock’s complaint no longer states a claim. This court found Bullock in default, so therefore Prudential did not wrongfully accelerate the loan. There was no tortious conduct, but rather conduct justified by the need to protect an economic interest. Secondly, even if there was wrongful conduct, Prudential cannot be liable for it. Except for acceleration of the loan — which was not wrongful — all the acts complained of were taken by the bank, not Prudential. The bank was not Prudential’s agent and it did not conspire with the bank, so there is no claim against Prudential.

A. Issues Remaining in the Counterclaim

The counterclaim, however, is not so easily extinguished. A finding that Bullock was in default does not insulate its creditors from all liability. Under Illinois law a lender can have a right to collect from a corporation under the terms of a loan agreement and nevertheless commit a tort or breach of contract. Bank Computer Network Corp. v. Continental Illinois National Bank, 110 Ill.App.3d 492, 442 N.E.2d 586, 66 Ill.Dec. 160 (1st Dist.1982). In that case, as here, a corporation was both a depositor with and a debtor to its bank. The corporation fell behind in its payments. The bank, however, made no effort to collect and instead engaged in negotiations with the depositor for an extension of the loan, and for additional loans, over several weeks. The depositor, however, was reluctant to give collateralized personal guarantees for the new loans. When the negotiations broke down, the bank immediately took a setoff for the loan against the corporate checking account, dishonoring several checks in the process. In the resulting litigation the bank’s motion for summary judgment was denied. The court held that the depositor had a claim under promissory estoppel. The bank had impliedly promised not to enforce its rights at once by its failure to demand payment and its negotiations. It was estopped by those actions from offsetting the account until the depositor had a reasonable time to find other funds with which to pay the loans. 110 Ill.App.3d at 497-500, 442 N.E.2d at 591-592, 66 Ill.Dec: at 165-166. The bank here could similarly be found estopped by the claimed promise not to use its setoff rights. Further, if the bank had no immediate right of setoff, then the resulting dishonor of checks was wrongful and liability would be imposed for the damages proximately caused by the dishonor. Ill.Rev.Stat. ch. 26, II 4-402; Coles County National Bank v. First National Bank & Trust Co. of Tuscola, 20 Ill.App.3d 23, 312 N.E.2d 643 (4th Dist.1974) (abstract). In appropriate circumstances a creditor with a loan that is due can nevertheless accelerate wrongfully.

The allegation that Bullock was misled from finding alternative loan sources also could serve as a ground for liability. One of the court’s concerns in Bank Computer was that the bank’s offers of loans could have caused the debtor to forego actively seeking other sources of capital, which it could have used to pay off its debts. 110 Ill.App.3d at 498, 442 N.E.2d at 591, 66 Ill.Dec. at 165. If Bullock indeed had found another willing lender, then it could have been misled to its damage by the bank’s actions.

Prudential could be found liable for such breach of promise and wrongful dishonor either on an agency or conspiracy theory even if the bank was not at all times following Prudential’s orders. A principal is liable for the torts of his agent which are committed either at his orders or within the scope of the agency. CFTC v. Premex, Inc., 655 F.2d 779, 784 n. 10 (7th Cir.1981); Gomien v. Wear-Ever Aluminum, Inc., 50 Ill.2d 19, 276 N.E.2d 336 (1971). A conspirator is responsible for the acts of each co-conspirator, whether or not he knew in advance of the precise methods which would be used for the common goal. Old Security Life Insurance Co. v. Continental Illinois National Bank, 740 F.2d 1384 (7th Cir.1984). The complaint expressly alleges conspiracy and refers to the' bank as Prudential’s agent. It therefore states a claim against Prudential by way of either agency or conspiracy.

The counterclaim, then, continues to state viable causes of action under Illinois law, despite this court’s earlier ruling. Prudential is correct, however, in noting that these causes rest on conduct of the bank: its alleged promise of additional loans, followed by no loan, and its alleged promise of no setoff, followed by acceleration, setoff and dishonor of checks. If Prudential is not vicariously liable for the bank’s acts, then Prudential is not liable, regardless of whatever liability the bank might have. Plaintiff is still entitled to summary judgment if defendant has failed to create a genuine issue of material fact on the question of conspiracy or agency.

We turn, then, to a consideration of whether there is a material issue of disputed fact respecting the bank’s purported wrongdoing and Prudential’s vicarious liability for any such wrongdoing. Prudential does not rely particularly upon a defense of the bank and the relationship between the bank and Bullock. Rather, its motion rests upon Prudential’s own relationships with the bank and with Bullock.

B. The Affidavits

That determination of possible vicarious liability cannot proceed without first determining what evidence this court is entitled to examine. Plaintiff has moved to strike several affidavits which describe what was done or said during the many meetings and telephone calls involving Bullock,- the bank and Prudential. Defendant has moved to strike affidavits of Prudential employees and bank employees which deny any agency relationship between Prudential and the bank. Under Fed.R.Civ.P. 56(e), both point out, affidavits submitted in connection with a motion for summary judgment are restricted to matters which would be admissible in evidence. Plaintiff argues that some statements are inadmissible, first of all, because they contain argument or are conclusory. Cf. Cohen v. Ayers, 449 F.Supp. 298 (N.D.Ill.1978), affd 596 F.2d 733 (7th Cir.1979). Still others are subject to the motion to strike because they are “conduct or statements made in compromise negotiations” barred by Rule 408 of the Federal Rules of Evidence. Defendant’s motion attacks some of plaintiff’s affidavits by echoing the same grounds. Plaintiff also seeks to block others, such as those containing remarks by bank officers, as hearsay.

It is true that affidavits- submitted in conjunction with summary judgment proceedings must generally comply with the rules of evidence. However, in applying these rules the court must not lose touch with a basic principle of summary judgment: to view the evidence strictly against the movant and favorably toward the party opposing the motion. Miller v. Solem, 728 F.2d 1020 (8th Cir.), cert. denied, — U.S. -, 105 S.Ct. 145, 83 L.Ed.2d 84 (1984); 10A Wright, Miller and Kane, Federal Practice and Procedure: Civil, § 2738 (2d ed. 1983). The goal remains the determination of whether a material issue -of fact exists.

Under those circumstances, the argumentative and conclusory nature of some affidavits is easily handled. The court is free to disregard inadmissible argument or conclusion in an affidavit, whether a motion to strike has been filed or not. U.S. v. Occi Co., 758 F.2d 1160 (7th Cir.1985). When admissible facts and inadmissible statements occur in the same affidavit, the court need not strike the entire affidavit but rather may rely on the facts and disregard the rest. Cohen, 449 F.Supp. at 321. This court will apply its own judgment to each affidavit, accordingly-

The Rule 408 challenge is less easily resolved. At stake are a few acts and statements by Prudential at various meetings which might tend to show an agency or joint relation between Prudential and the bank. Rule 408 is designed to foster full and free discussion in negotiations in order to encourage out-of-court settlements, eliminating much of the concern with technicalities which riddled the common law rule, and should be interpreted with that policy in mind. Ramada Development Co. v. Rauch, 644 F.2d 1097 (5th Cir.1981); 2 Weinstein and Berger, Weinstein’s Evidence, H 408[01]. Thus the admission of any statement made during, or any document prepared for, any kind of conciliation effort at least raises a Rule 408 issue. See Occi, 758 F.2d at 1165 n. 6; EEOC v. Air Line Pilots Ass’n, 489 F.Supp. 1003, 1008 n. 4 (D.Minn.1980). On the other hand, the rule does not apply to exclude evidence in at least some situations which may be relevant in this case. A claim must actually be in dispute at the time of the negotiations, and the conduct or statement must relate to that claim. A mere effort to buy time in which to pay an obligation, even though the validity of the obligation is later disputed, is not an attempt to compromise a disputed claim and so does not implicate Rule 408. In re B.D. International Discount Corp., 701 F.2d 1071, 1074 n. 5 (2d Cir.1983). See also Deere & Co. v. International Harvester Co., 710 F.2d 1551, 1556-1557 (Fed.Cir.1983). Bullock apparently did not actively dispute that it was in default under the loan until Prudential and the bank decided to accelerate.

Further, Rule 408 specifically allows an exception for items used to prove a consequential material fact in issue other than the claim’s validity or its amount. So, for example, even the fact of a settlement has been admitted to impeach a witness, Hennepin County v. A.F.G. Industries, Inc., 726 F.2d 149, 153 (8th Cir.1984). Statements made during negotiations were admitted in this circuit to prove notice, with a comment in the opinion that the Rule 408 objection was “ridiculous.” Breuer Electric Manufacturing Co. v. Toronado Systems, Inc., 687 F.2d 182, 185 (7th Cir.1982). In the case at bar, the portions of the affidavits which refer to conduct and statements at the various meetings in which the parties attempted to resolve the dispute are offered to show the relation between Prudential and the bank, not to dispute the claim. At least in the era before the federal rules, questions of agency, ownership or control were considered collateral matters on which evidence from settlements could be considered. Lloyd v. Thomas, 195 F.2d 486 (7th Cir.1952); Weinstein, ¶ 408[05].

Considered in the light of the policy goals which underlie summary judgment, which give the benefit of doubtful questions to the non-moving party, the evidence from the meetings should be considered for purposes of this motion. When evidence that may implicate Rule 408 is offered for a purpose other than impugning the validity of the claim, a court must balance the weight of the policy considerations behind the rule against the need for the evidence. John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 632, 635 (3d Cir.1977); Reichenbach v. Smith, 528 F.2d 1072, 1075 (5th Cir.1976). For example, in a dispute over possible construction defects, a report listing alleged defects prepared for negotiations was inadmissible for the purpose of proving those defects. It probably would have been admissible to prove the party’s notice of the claimed defects, but other means existed to prove notice, so concern for the policy prevailed. Ramada, 644 F.2d at 1107. However, in a case involving defective design of an airplane, evidence of a settlement with a firm not a party to the suit was admitted to show possible witness bias. The court commented that a possible relation to other parties was a matter “not within the core of the public policy that the rule against admission of compromises was designed to vindicate.” McShain, 563 F.2d at 635 and n. 6. In the case at bar, at this stage of the litigation, the policy favoring the non-moving party at summary judgment would appear to outweigh the Rule 408 policy when the evidence is offered for a purpose outside the core of that policy.

Plaintiff’s hearsay challenge to statements of bank officials included in the affidavits also raises a difficult question. Affidavits cannot contain hearsay, but they may include statements which would be admissible at trial under one of the exceptions to hearsay. Pfeil v. Rogers, 757 F.2d 850 (7th Cir.1985). If the bank was an agent or co-conspirator, then statements by bank officials are not hearsay but, rather, admissions of a party opponent, as long as they were made during the existence of the agency or conspiracy and within its scope. Fed.R.Ev. 801(d)(2)(D) and (E). But the existence of an agency or conspiracy is precisely what is at issue here. The inquiry seems circular. To determine the issue of agency or conspiracy, this court must first determine admissibility of the affidavits, but it cannot determine admissibility without first making a determination on agency or conspiracy.

However, the circle can be broken. The law of evidence postpones ruling on the out-of-court statements of an alleged agent or co-conspirator until there is proof of the agency or conspiracy from outside these statements. U.S. v. Silver-man, 771 F.2d 1193 (9th Cir.1985); U.S. v. Young, 736 F.2d 565 (10th Cir.1984), rev’d on other grounds, — U.S.-, 105 S.Ct. 1038, 84 L.Ed.2d 1 (1985). Proof of agency depends on the law of agency. Since in Illinois, as elsewhere, the existence of an agency relation depends on the words or actions of the principal, Spiegel v. Sharp Electronics Corp., 125 Ill.App.3d 897, 466 N.E.2d 1040, 81 Ill.Dec. 238 (1st Dist.1984), the fact of agency cannot be proved by statements of the agent. Therefore, the reputed statements by bank officials in the various affidavits supplied by Bullock Builders cannot come in to prove that the bank was Prudential’s agent. Cf. U.S. v. Bensinger Co., 430 F.2d 584 (8th Cir.1970). Similarly, there must be independent evidence of a conspiracy and Prudential’s connection to and knowing participation in it before the material is admissible under the rubric for co-conspirators. Cf. Silverman, 771 F.2d at 1196-1198 (standard is “substantial evidence of a slight connection”); U.S. v. Mankani, 738 F.2d 538 (2d Cir. 1984).

Where agency is not in dispute, however, out-of-court statements by an agent are admissible under Rule 801(d)(2)(D). The affidavits supplied by Bullock Builders also include descriptions of the words and actions of Joan Vilim, a vice-president and investment manager for Prudential’s loan division, and Mark Fisher, counsel for Prudential. No dispute exists about the fact of their agency. Material in the affidavits about what Vilim and Fisher said and did, therefore, can be used on this summary judgment motion. If it raises a genuine issue on the question of Prudential’s relation with the bank, summary judgment cannot be granted.

C. Agency and Conspiracy

Bullock’s case for vicarious liability is thin, even including the material from settlement negotiations. However, it does meet the standard for surviving a summary judgment motion since there is just enough evidence to suggest an agency, conspiracy, or, possibly, joint venture relationship between Prudential and the bank.

Prudential points out that no document in this transaction expressly makes First Midwest Bank a general agent for all transactions with Bullock. It also offers affidavits from both Joan Vilim and Harold Moe, president of the bank, denying that the bank was Prudential’s agent. However, under Illinois law an agency relation need not be based on express appointment or acceptance. It can be inferred from circumstantial evidence, including the situation occupied by the parties, their acts and other relevant circumstances. Milwaukee Mutual Insurance Co. v. Wessels, 114 Ill. App.3d 746, 449 N.E.2d 897, 70 Ill.Dec. 550 (2d Dist.1983); Szymkowski v. Szymkowski, 104 Ill.App.3d 630, 432 N.E.2d 1209, 60 Ill.Dec. 310 (1st Dist.1982).

Among the circumstances relevant to proof of agency during a particular transaction is the relationship between the parties before the transaction. In Kalman v. Bertacchi, 57 Ill.App.3d 542, 373 N.E.2d 550,15 Ill.Dec. 204 (1st Dist.1978), an attorney who had previously represented clients in negotiations for a legal dispute reached a settlement for them. The clients later tried to reject the settlement by denying the attorney’s authority. The court found that since the attorney had represented these clients to the same party, for the same general transaction, the earlier representation raised a strong presumption that the attorney continued as their agent. 57 Ill.App.3d at 548-549, 373 N.E.2d at 556,15 Ill.Dec. at 210. First Midwest Bank was Prudential’s agent for collection under the original loan agreement. The bank thus was at least a special agent of Prudential’s, with limited authority, before the crucial events in March. A trier of fact could reasonably infer that the bank continued as Prudential’s agent throughout the period of its dealings with Bullock.

Also relevant to proof of agency is the conduct of the parties. Where one instructs another to act, with the knowledge of the nature of the act, and that party acts consistent with the instructions, Illinois law may find an agency relation and liability in spite of later denial. St. Ann’s Home for the Aged v. Daniels, 95 Ill.App.3d 576, 420 N.E.2d 478, 51 Ill.Dec. 64 (1st Dist.1981). See also Ray v. Winter, 67 Ill.2d 296, 367 N.E.2d 678, 10 Ill.Dec. 225 (1977); Illinois v. Parsons Co., 122 Ill.App.3d 590, 461 N.E.2d 658, 78 Ill.Dec. 74 (2d Dist.1984). According to an affidavit from Randy Bullock, president of Bullock Builders, at the meeting of March 26, Mark Fisher told him that Prudential and the bank were going to offset the checking account of Bullock Builders. Specifically, Fisher allegedly said, “and we are going to set off your money.” Richard Shakman, controller of Bullock Builders, heard the same words, according to his affidavit. Since Prudential was not and is not a bank, it could not exercise a right of setoff on its own. If the statement was in fact made, Prudential must have anticipated at least the full cooperation of the bank. Bullock also maintains in his affidavit that Vilim told him by telephone on August 3 that she would tell bank officials to cut off the customer financing plan which the bank offered to Bullock customers. The plan was in fact cut off on August 7. A trier of fact could infer, in both instances, that an order was given and the bank obeyed, making the bank Prudential’s agent.

Conspiracy also can be inferred from surrounding circumstances. A conspiracy exists when two or more persons combine for the purpose of accomplishing, through concerted action, either an objective which is itself unlawful or a legal object by means which are unlawful. Dymek v. Nyquist, 128 Ill.App.3d 859, 469 N.E.2d 659, 83 Ill. Dec. 52 (1st Dist.1984). While driving a firm out of business is not necessarily an unlawful object, some means which might be used to pursue that end are unlawful, and if the firm is injured by a combination of persons using such means, it has an action against them for conspiracy. Compare De L’Ogier Park Development Corp. v. First Federal Savings & Loan Ass’n of Berwyn, 6 Ill.App.3d 807, 286 N.E.2d 583 (1st Dist.1972), with James C. Wilborn & Sons, Inc. v. Heniff 95 Ill.App.2d 155, 237 N.E.2d 781 (1st Dist.1968). The fact of agreement to combine may be deduced from evidence of sufficient concerted action. Dymek, 128 Ill.App.3d at 866, 469 N.E.2d at 665, 83 Ill.Dec. at 58. Again according to Randy Bullock, Joan Vilim stated to him, on January 25, 1984, that the bank and Prudential, together, wanted control of a management committee that would operate the company. Also according to Bullock, Vilim and Mark Fisher made demands identical to those of the bank at a meeting on March 16. Further, at the crucial meeting of March 26, attended by Fisher, both the bank and Prudential announced decisions to accelerate their respective loans at 4:55 p.m. Apparently both Prudential and the bank also filed suit against Bullock Builders on the same day— Prudential here, and the bank in state court. A trier of fact again could reasonably infer that Prudential and the bank were in combination for a common goal.

Prudential argues that the bank’s behavior is explained by its need to protect its own loan. As the two major creditors of Bullock Builders, Prudential and the bank needed to coordinate their efforts. Both were unsecured creditors with a common interest. Any arrangement which favored one over the other would have been a voidable preference should Bullock file for bankruptcy, as eventually occurred. Legally, however, the bank’s parallel interest is irrelevant to the question of the nature of its agency relationship with Prudential. Tomaso v. Plum Grove Bank, 130 Ill. App.3d 18, 473 N.E.2d 588, 85 Ul.Dee. 220 (1st Dist.1985). In that case the court found that one lender had acted as agent for another with the debtor, even though no documentary evidence of the relation existed. The proof of agency came from the conduct of both lenders. A trier of fact could decide which inference best explains the conduct of the lenders in the case at bar, but this court cannot choose among reasonable inferences for summary judgment.

Nor would Prudential’s explanation automatically preclude its vicarious liability. Surprisingly, Bullock does not suggest the theory that Prudential and the bank were engaged in a joint venture against it. A joint venture is the association of two or more persons to carry out a single enterprise for profit, Bachewicz v. American National Bank & Trust Co., 126 Ill.App.3d 298, 466 N.E.2d 1096, 81 Ill.Dec. 294 (1st Dist.1984). If a joint venture were found, the law of partnership would govern. Prudential would then be liable for the acts of its fellow venturer, the bank, done in the course of the enterprise, whether or not unlawful acts were involved. See, e.g., FDIC v. Braemoor Associates, 686 F.2d 550 (7th Cir.1982). The legal existence of a joint venture does not depend on a formal agreement. It can be inferred from circumstances which indicate mutual intent to carry out an enterprise together. One looks for a community of interest, a proprietary interest in the subject matter and a common right to determine policy toward it, and a sharing of profits and losses. Palin Manufacturing Co. v. Water Technology, Inc., 103 Ill.App.3d 926, 431 N.E.2d 1310, 59 Ill.Dec. 553 (1st Dist.1982). An inference of at least some of these factors, from the evidence here, would not seem unreasonable.

When reasonable persons can disagree on the inferences to be drawn from a set of facts, summary judgment cannot be granted. This court admits that it is troubled by the number and frequency of Randy Bullock’s affidavits seemingly appearing as needed to meet legal theories. Summary judgment, however, is not the place to evaluate credibility. A trier of fact could conclude that Bullock Builders’ two principal creditors were merely coordinating their conduct to avoid stepping on each other’s toes. It could, however, also reasonably find, from the prior and subsequent agency relationship, plus the words, acts and circumstances, that the bank was Prudential’s agent with authority to deal generally with Bullock Builders. Alternatively, it could find that Prudential and the bank were in concerted action against Bullock Builders for a common object, as joint venturers or perhaps conspirators. A genuine issue of fact presently exists on Prudential’s vicarious liability.

It may still be possible to resolve this claim by summary judgment at a later time. The court notes that there have been no requests for discovery or for depositions on this claim. Evidence beyond affidavits would be helpful in determining whether genuine factual issues exist. Prudential’s current motion essentially moves for summary judgment on two grounds: that its conduct has been found not wrongful, and that it cannot be liable for the bank’s acts. However, as the above discussion shows, this court’s prior finding does not control the outcome of the counterclaim and a genuine issue of fact exists on the question of Prudential’s vicarious liability. However, Prudential may yet be able to show that even if it would be liable for the bank’s acts, nevertheless that conduct was not wrongful. On the grounds given for the current motion, and on the evidence properly before the court, however, summary judgment must be denied.

II. ENTRY OF FINAL JUDGMENT

Prudential has also moved for entry of final judgment on its claim on the loan. Final judgment ordinarily is not entered until all claims in a case have been decided, so that, for example, any setoffs can be calculated into the award. However, under Fed.R.Civ.P. 54(b) a party with a favorable judgment may move for its entry even though other claims remain outstanding. A major purpose of the procedure is to allow for timely appeal of a separable issue. However, Rule 54(b) is also used when economic considerations are paramount. A party with a right to a money judgment ought to be able to collect it, unless there is a sound reason for delay. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1,100 S.Ct. 1460, 64 L.Ed.2d 1 (1980).

Bullock Builders opposes the motion in part because it hopes for a setoff from its counterclaim. This court has today found that the counterclaim should remain alive. That decision, however, does not determine the outcome of the motion for final judgment. Even if the claim outstanding is a counterclaim, judgment on the original claim may be granted. Curtiss-Wright, 446 U.S. at 9, 100 S.Ct. at 1465. Though the presence of a counterclaim which could yield a setoff against the judgment weighs significantly against granting the motion, Architectural Floor Products Co. v. Don Brann & Associates, Inc., 551 F.Supp. 802 (N.D.Ill.1982), that is only one of several factors a court should consider. The relationship between the adjudicated claim and the counterclaim, for example, also is important, as are equitable factors such as delay, economic hardship to a party, solvency considerations, expense, and so forth. Bank of Lincolnwood v. Federal Leasing, Inc., 622 F.2d 944 (7th Cir.1980); Stearns v. Consolidated Management, Inc., 747 F.2d 1105 (7th Cir. 1984).

A counterclaim, or any other unadjudicated claim, generally is not a barrier to entry of final judgment if it could properly have been severed and tried separately. The “significance [of counterclaims] for Rule 54(b) purposes turns on their interrelationship with the claims on which certification is sought,” and as in severance questions that interrelationship is analyzed factually and legally. Curtiss-Wright, 446 U.S. at 9, 100 S.Ct. at 1465. The factual analysis depends not on whether there are any facts in common between the adjudicated and the unadjudicated claim, but rather whether the factual issues “at the heart of” the claims are sufficiently distinct. International Union of Electrical, Radio and Machine Workers v. Westinghouse Electric Corp., 631 F.2d 1094, 1099 (3d Cir.1980), cert. denied 452 U.S. 967,101 S.Ct. 3121, 69 L.Ed.2d 980 (1981). See also Purdy Mobile Homes, Inc. v. Champion Home Builders, 594 F.2d 1313 (9th Cir. 1979). Here, virtually the only facts in common between claim and counterclaim are the existence of the loan and the fact of acceleration. Cf. Local P-171, Amalgamated Meat Cutters v. Thompson Farms Co., 642 F.2d 1065, 1070 (7th Cir. 1981). The legal analysis is an evaluation of the extent to which the inquiry into applicable law for each claim would involve duplication of effort if done separately. Cf. Instituto Nacional de Comercialización Agrícola v. Continental Illinois National Bank, 576 F.Supp. 991, 1006 (N.D.Ill.1984). Prudential’s claim sounds in contract, Bullock’s counterclaim in tort, requiring separate legal inquiries to determine liability. Even though the outstanding claim is a counterclaim, it is sufficiently distinct from Prudential’s claim that the motion could be granted.

Certification therefore is appropriate here if the equitable factors favor Prudential. Typically they do, when the party seeks to certify a judgment on a promissory note. The lender, having established his right to collect, has an interest in a prompt enforceable judgment. Bank of Lincoln-wood, 622 F.2d at 951. When the debtor’s financial position is precarious, the weight of that interest is increased, since waiting until the trial is over may make the right to collect worthless. Id. at 949, 951; cf. Brann, 551 F.Supp. at 809. In the instant ease, Prudential has a right to collect and Bullock Builders has filed in bankruptcy. There is no just reason for delay. Enforcement of the judgment is stayed by the bankruptcy but it will be a claim payable pursuant to Bullock’s plan of reorganization, the parties having indicated that the automatic stay has been modified to permit this court’s consideration of the pending motions. Establishing the amount of the claim now will facilitate the progress of the bankruptcy action. Any setoff Bullock might receive can be handled separately when and if Bullock wins a judgment. Entry of final judgment will be granted.

That decision requires this court to determine the amount of the judgment. Plaintiff’s claim for its money judgment has three components:, the loan principal, interest, and the attorneys’ fees incurred in the process of collection, including this lawsuit. Prudential’s right to the principal of $1,458,000 follows from this court’s prior holding. Interest is set by the promissory note at an original rate of 10.5 per cent, with a clause that increases the rate to 13 per cent when “the principal shall have become due and payable.” Under paragraph 7 of the loan agreement, a default makes the principal due and payable. Since March 26, 1984, Prudential has calculated the interest at the higher rate, and as of May 15 $107,123 of interest was outstanding. Following the acceleration, Bullock made two payments at the old rate, which Prudential accepted. Bullock now attempts to argue, without citing any authority, that the new rate is a penalty rate which should not now be imposed because Prudential has waived its right to it. Like Prudential, this court does not understand the argument. Absent some indication of accord and satisfaction, one is normally free to accept partial payment of a debt without abandoning all claim to the rest.

Plaintiffs assertion that it is entitled to over $90,000 in attorneys’ fees as part of its judgment, however, is another matter. In Illinois, a party is entitled to attorneys’ fees only when a statute or contract specifically directs them. Kerns v. Engelke, 76 U1.2d 154, 390 N.E.2d 859, 28 Ill.Dec. 500 (1979); Rhodes v. Uniroyal, Inc., 101 Ill.App.3d 328, 427 N.E.2d 1380, 56 Ill.Dec. 834 (3d Dist.1981). Since no statute is involved here, the right to fees would have to be found in the terms of the loan, either in the promissory note itself or in the loan agreement which accompanied it.

Surprisingly, there is no term in either document which gives plaintiff a recovery of attorneys’ fees on default and collection. To have a contractual right to attorneys’ fees in Illinois, that right must be specifically mentioned in the contract. General promises to pay “costs,” “expenses,” or the like, are not promises to pay attorneys’ fees. Singleton v. County of Cook, 53 Ill.App.3d 994, 369 N.E.2d 227, 11 Ill.Dec. 773 (1st Dist.1977) (“loss, damage, or expense”); Reese v. Chicago, Burlington & Quincy Railroad, 5 Ill.App.3d 450, 283 N.E.2d 517 (2d Dist.1972), affd 55 U1.2d 356, 303 N.E.2d 382 (1973) (“costs”). The principle extends to provisions in contracts which describe remedies following default. In Qazi v. Ismail, 50 Ill.App.3d 271, 272, 364 N.E.2d 595, 596, 7 Ill.Dec. 434, 435 (1st Dist.1977), the court found that attorneys’ fees were not covered by a clause which read, “In case of any legal action arising out of the above default the party in violation will be responsible for all costs and consequences.” The clause in Bullock Builders’ note covers only “the expenses arising in connection with the enforcement by holder hereof of any of its rights under this note.” Under the strict construction Illinois requires, that clause does not include attorneys’ fees.

Prudential also argues a promise to pay attorneys’ fees on default from another phrase in the loan agreement by which Bullock agreed to pay “all out-of-pocket expenses arising in connection with this transaction, including all stamp and other taxes which may be determined to be payable with respect to the execution and delivery of the note, and the reasonable fees and expenses of your special counsel in connection with this agreement and the note.” But this assertion also cannot survive strict construction. Under Illinois law a reference to attorneys’ fees somewhere in the document is not enough. In Thread and Gage Co. v. Kucinski, 116 Ill.App.3d 178, 451 N.E.2d 1292, 71 Ill.Dec. 925 (1st Dist.1983), the document included a confession of judgment clause with a promise to pay attorneys’ fees. The plaintiff had taken legal action but had not proceeded by way of confession of judgment. The court found that he had no right to attorneys’ fees. The clause in question here does not appear in a section which deals with default but rather a section called “Miscellaneous.” Giving the words their ordinary meaning, the promise refers to attorneys’ fees for drafting the agreement and note, not the collection on default. What Illinois law seems to require is standard form book boilerplate, i.e., “if this note is turned over to an attorney for collection, to pay all costs and expenses, including attorneys’ fees.” Inexplicably, such a phrase never found its way into either the note or the 21-page loan agreement. As a result, attorneys’ fees cannot be part of the judgment.

CONCLUSION

For the foregoing reasons, plaintiff’s and defendant’s motions to strike affidavits are granted in part and denied in part during the course of this memorandum. Plaintiffs motion for summary judgment on defendant’s counterclaim is denied. Plaintiff’s motion for entry of final judgment on its claim is granted for principal and interest, $1,565,123, but not for attorneys’ fees.

      . Defendant has also filed for leave to amend its counterclaim by eliminating the allegations of wrongful acceleration and recharacterizing the theories of recovery. While the amendments defendant has submitted are still not models of pleading clarity, apparently Bullock now claims that the bank and Prudential conspired to tortiously interfere with defendant’s business expectancy; that the bank as agent for Prudential intentionally damaged defendant’s business reputation by wrongful dishonor of defendant’s checks; that Prudential is liable on a promissory estoppel claim for the wrongful setoff by its agent, the bank; and further that Prudential, through its agent, the bank, induced deposits before the setoff by misrepresentation. Such amendment would appear to be withih the broad scope of Fed.R.Civ.P. 15(a), which allows amendment freely in the interests of justice. Twohy v. First National Bank of Chicago, 758 F.2d 1185 (7th Cir.1985); see also Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984), cert. denied, — U.S.-, 105 S.Ct. 1758, 84 L.Ed.2d 821 (1985). Recasting the same facts into new or additional legal theories is normally an appropriate amendment. Musikiwamba v. Essi, Inc., 760 F.2d 740 (7th Cir.1985); 6 Wright and Miller, Federal Practice and Procedure: Civil § 1474 n. 98 (1971). This court need not decide that question today, however. Plaintiff delayed three months before responding to the motion to amend, but defendant has also not appeared to request that it be granted.
      The proposed amendments may nevertheless be used as an aid in construing Bullock's original complaint. The federal policy of liberal amendment of pleadings, and the policy of liberal construction of pleadings, share a common rationale: to maximize the opportunity for a claim to be decided on its merits. Musikiwamba, 760 F.2d at 753; Wright and Miller, supra, § 1471. Flexibility in construction of pleadings is particularly appropriate on a motion for summary judgment. Cf. WIXT Television, Inc. v. Meredith Corp., 506 F.Supp. 1003 (N.D.N.Y. 1980).


source: Caselaw Access Project

author: GRIESA, District Judge.

license: Public Domain

text:
    Stanley Milton GLICKMAN, Plaintiff, v. UNITED STATES of America, Sidney Gottlieb, in his individual and in his official capacities, Richard Helms, in his individual and in his official capacities, John Does, unknown agents of the Central Intelligence Agency, Defendants.
    No. 83 Civ. 2458.
    United States District Court, S.D. New York.
    Dec. 30, 1985.

      James I. Meyerson, New York City, for plaintiff.
    Jane E. Booth, U.S. Atty’s. Office, for defendants.
   OPINION

GRIESA, District Judge.

Plaintiff Stanley Glickman brings this lawsuit against defendant United States of America and against defendants Richard Helms and Sidney Gottlieb, in their individual capacities and in their official capacities as former officials of the CIA. Also named in the complaint are John Doe defendants, unknown agents 'of the CIA. Plaintiff seeks to recover for an alleged administration of lysergic acid diethylanide (“LSD”) to plaintiff and a subsequent failure to treat plaintiff or to inform him of the drugging. Plaintiff has set forth several common law tort claims against the United States, and several Bivens claims (causes of action against officials implied by the courts to remedy violations of constitutional rights) against the individual defendants. Jurisdiction of this court is invoked pursuant to 28 U.S.C. § 1346(b) (jurisdiction for tort claims against the United States) and 28 U.S.C. § 1331 (federal question jurisdiction).

The United States moves under Fed.R. Civ.P. 12(b)(1) to dismiss the complaint as against it for lack of subject matter jurisdiction, or, in the alternative, for summary judgment pursuant to Fed.R.Civ.P. 56. Helms and Gottlieb move under Fed.R. Civ.P. 12(b)(2) and (3) to dismiss the complaint as against them for lack of jurisdiction over the person or for improper venue.

The motions are denied. As will be described, the denial of certain of the motions is occasioned by an inadequate factual record at the present time. As to these motions, their denial is without prejudice to renewal at a later time.

The complaint alleges that the CIA had a program to test experimental drugs on American citizens without their knowledge. It is alleged that both defendant Gottlieb and defendant Helms were in the CIA and were involved in the planning and execution of this program. The complaint further alleges that in October 1952 plaintiff was pursuing a promising career as an artist in Paris, having had one of his works accepted for exhibition at the Metropolitan Museum of Art in New York City. It is alleged that one evening he was drinking coffee at The Select Cafe, and encountered a group of Americans who insisted on buying him a drink, despite his repeated refusals. The complaint alleges that plaintiff believes that the Americans were agents of the United States Government, and that the group may have included defendant Gottlieb. It is alleged that plaintiff finally agreed to have a cordial, which was obtained for him by one of the Americans. The complaint alleges that it is believed that the persons who gave plaintiff the drink inserted in it the drug L.S.D. The complaint alleges that surreptitious drugging of plaintiff was done as part of the CIA program to test, on unwitting persons, the effects of L.S.D. as a potential weapon, a program initially named “Bluebird,” later renamed “Artichoke,” and ultimately named “MKULTRA.”

It is alleged that this program was designed and set in operation from the United States, specifically Washington, D.C. and New York, New York.

According to the complaint, following plaintiff’s taking the drug, plaintiff experienced various distortions of his mind, including a sense of unusual powers, a warping of distance, a melding of colors, and difficulty in speech. The complaint alleges that plaintiff was taken to a hospital in Paris by agents of the United States Government, where he was given drug treatment, including experimental electroshock treatment. The complaint alleges that plaintiff has never fully recovered from this experience, continues to suffer severe mental distress, and is unable to pursue his chosen occupation.

According to the complaint, the United States Government has continued to hide the fact of its wrongdoing to plaintiff, and has never offered to assist or treat him.

The complaint alleges nine causes of action. The first four are against the United States. These are under the Federal Tort Claims Act, 28 U.S.C. § 2671 et seq. The first alleges negligence, the second invasion of privacy, the third intentional infliction of emotional distress, and the fourth deceit.

The remaining causes of action are against Gottlieb, Helms and unknown United States Government agents. They are brought under various provisions of the United States constitution, pursuant to the decision in Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). The fifth cause of action alleges violation of the right of privacy guaranteed by the Fourth Amendment; the sixth alleges violation of the First Amendment rights of free speech and association; the seventh alleges unreasonable search and seizure in violation of the Fourth Amendment; the eighth alleges deprivation of life, liberty and property without due process of law, in violation of the Fifth Amendment; and the ninth alleges cruel and unusual punishment in violation of the Eighth Amendment.

The complaint requests compensatory and punitive damages, and also a declaratory judgment.

One set of motions is made by the United States. Another set of motions is made by Gottlieb and Helms.

Motions by the United States

Scope of Administrative Claim.

Under the Federal Tort Claims Act (“FTCA”), no claim may be sued upon that was not presented first at the appropriate agency.

Plaintiff submitted an administrative claim to the CIA dated December 22, 1981. The claim stated:

Upon information and belief, on or about the above dates [10/1/52-11/30/52] these unknown agents of the Central Intelligence Agency administered and caused to be administered to me unknown quantities of L.S.D., or a like substance, without my knowledge or consent, and further, without my consent, administered to me a series of electric shocks.

The United States contends that this claim relates only to the tort of battery, and that the claim does not assert the theories relied upon in the causes of action in the complaint. According to the Government, this means that the case against the Government must be dismissed, because the United States has not waived its sovereign immunity for batteries committed before 1974. 28 U.S.C. § 2680(h). The statute was amended in 1974 to allow claims for certain types of batteries, but as of 1952 there was a blanket exception for this type of tort.

The United States reads the administrative claim too narrowly. The Fifth Circuit has stated that an administrative claim is sufficient if it “brings to the Government’s attention facts sufficient to enable it thoroughly to investigate its potential liability and to conduct settlement negotiations with the claimant,” and that if legal theories are implicit in what is stated in an administrative claim, those theories can be pursued in a litigation. Rise v. U.S., 630 F.2d 1068, 1071, (5th Cir.1980).

In the present case, plaintiff’s administrative claim is a sufficient basis for the complaint in this lawsuit against the United States. Although the literal language of the administrative claim does not expressly speak of a covert CIA plan to infringe the rights of citizens, or of the various legal theories relied upon in the complaint, such claims are necessarily implicit in what is stated in the administrative claim.

It would be particularly inappropriate in the present case to take a narrow view of the administrative claim, since what is alleged is a highly unusual secret plan to experiment with unwary citizens and to cover the tracks of the alleged agency actions. See Sims v. CIA, 642 F.2d 562 (D.C. Cir.1980). Whatever the facts are, they are in the control of defendants. When the administrative claim was presented to the CIA, it was sufficient to allow the CIA to investigate the matter and evaluate the merits of the claim. No more detailed administrative claim was required.

The “Foreign Country” Exception.

The FTCA excludes liability for “any claim arising in a foreign country.” 28 U.S.C. § 2680(k). This exception rests on a congressional unwillingness to subject determinations of United States Government liability to foreign law. United States v. Spelar, 338 U.S. 217, 221, 70 S.Ct. 10, 12, 94 L.Ed. 3 (1949). Under the FTCA, liability is determined “in accordance with the law of the place where the act or omission occurred.” 28 U.S.C. § 1346(b). It has been said, as well, that the provision rests on the idea that the United States usually should not be burdened with the difficulty of obtaining witnesses and evidence in foreign countries. Burna v. United States, 240 F.2d 720, 722 (4th Cir.1957).

Defendant contends that plaintiff’s claims against the United States arose in France, where he claims to have been drugged and electro-shocked. Although the briefs submitted do not discuss the legal standard for determining where the claim arose, and the decisions interpreting § 2680(k) are few, see Sami v. United States, 617 F.2d 755, 762 (D.C.Cir.1979), the following rule emerges from the cases. For purposes of the FTCA, a claim arises where the tortious act or omission occurs, not where the injury is felt. A claim arises in the United States, and thus is not barred by § 2680(k), where the act or omission occurs in the United States but the injury is sustained in a foreign country. See, e.g., Beattie v. United States, 756 F.2d 91, 96 (D.D.C.1985); Sami, supra p. 762; Leaf v. United States, 588 F.2d 733 (9th Cir.1978).

The CIA program to administer drugs to unwitting persons obviously originated in the United States, even though certain activities to implement the program were carried out in foreign countries. The complaint so alleges. Consequently, the claim here is not excluded by the “foreign country” exception.

The “Discretionary Function” Exception

The United States next relies upon the “discretionary function” exception in the FTCA. 28 U.S.C. § 2680(a).

The leading Second Circuit case interpreting § 2680(a) recognizes that this exception could swallow the general rule of waiver of sovereign immunity, since all government employees exereise some discretion in the discharge of their duties. Caban v. United States, 671 F.2d 1230, 1232 (2d Cir.1982). Various tests have been developed by the courts over the years to aid in drawing the line between protected and unprotected activities. Ca-ban concluded that § 2680(a) means that the Government should be immune from liability for “activities that require the alleged tortfeasor to consider and weigh competing policies in arriving at his decision.” 671 F.2d at 1233. The purpose of the provision, in Caban’s view, is to preserve the separation of power between the branches of government. This test “protects courts from ‘involve[ment] in making ... decisions] entrusted to other branches of the government,’ ... and especially from questions involving ‘not negligence but social wisdom, not due care but political practicability, not reasonableness but economic expediency,’____” 671 F.2d at 1233.

In United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984), the Supreme Court stated that § 2680(a) “plainly was intended to encompass the discretionary acts of the Government acting in its role as a regulator of the conduct of private individuals.” 104 S.Ct. at 2765 (footnote omitted). The Court concluded that this emphasis on protection for regulatory activities “suggests an underlying basis for the inclusion of an exception for discretionary functions in the Act: Congress wished to prevent judicial ‘second-guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.” 104 S.Ct. at 2765. In Varig, a suit against the United States for failing to inspect certain aspects of an airplane was held barred by § 2680(a), because “[decisions as to the manner of enforcing regulations directly affect the feasibility and practicality of the Government’s regulatory program____ 104 S.Ct. at 2768.

In the case at bar, the United States asserts that § 2680(a) bars plaintiff’s claims because “any decision concerning the implementation of a drug experimentation program would necessarily involve considerations of public policy.” Reply Brief at 8. However, this assertion really does not reckon with the extraordinary nature of the allegations made by plaintiff in this case. What plaintiff is alleging is conduct of such a serious and malevolent nature as to be beyond any reasonable discretion on the part of a Government agency. Plaintiff is alleging something which does not involve normal regulatory activities or the weighing of policy factors within the scope of proper governmental power, but rather something which goes beyond the constitutional powers of the Government, and seriously violates the constitutional rights of a citizen. It cannot be said that Congress meant to withdraw this kind of allegation from judicial scrutiny under the “discretionary function” exception.

Other Contentions of the United States.

The United States asserts that the third cause of action for intentional infliction of emotional distress is barred. The United States raised this point at a hearing, but the matter has not been addressed in the papers. This question will be deferred until a later point in the proceedings.

Plaintiff’s fourth cause of action is based on the theory of misrepresentation and deceit. It is barred by the express language of 28 U.S.C. § 2680(h). The fourth cause of action is dismissed.

The United States makes a brief contention that a declaratory judgment cannot be entered against the United States in this suit. Disposition of this issue should await fuller briefing.

One point not raised on the motion of the United States relates to punitive damages. The statute specifically prohibits an award of punitive damages in an action under the FTCA. 28 U.S.C. § 2674. On its own motion, the court dismisses the claim for punitive damages against the United States.

Individual Defendants

Both of the named individual defendants — Gottlieb and Helms — move to dismiss for lack of personal jurisdiction or improper venue.

Gottlieb was served in December 1983 at his home in Virginia. Helms was served in October 1983 at his home in Washington D.C.

Plaintiff asserts personal jurisdiction on the basis of two sections of the New York long-arm statute. Plaintiff relies on CPLR § 302(a)(1), which provides for jurisdiction over a defendant who “transacts any business within the state” out of which the cause of action arises. Plaintiff also relies on § 302(a)(3), which provides for jurisdiction over a defendant who “commits a tortious act without the state causing injury ... within the state,” if the defendant fulfills certain other conditions, such as engaging in a persistent course of conduct in the state.

As already described, the complaint alleges that the CIA’s drug testing program was designed and set in operation from Washington, D.C. and New York, New York. The affidavit of plaintiff’s attorney asserts that the information thus far obtained about the drug program indicates that there was substantial activity relating to the program in New York.

Both Gottlieb and Helms have submitted affidavits. Gottlieb asserts that, at the time of the alleged incident in 1952, he was Chief of the Chemical Branch of the Technical Services Staff Unit for the CIA. He alleges that his office was in Washington, D.C., where he made “all policy decisions.” He asserts that he had “no significant contacts in New York” in 1952. He states that he “made no more than six trips per year to New York to observe scientists and researchers” doing work for the CIA. Gottlieb left the CIA in 1973. He now resides and works in Virginia. He asserts that he now transacts no business in New York and does not derive any revenue from any activities in New York.

The Helms affidavit mistakenly speaks of the incident complained of by plaintiff as occurring in 1954. Helms goes on to state that in 1954 he had “no significant contacts with New York.” Helms alleges that at the time of the alleged incident he was an officer in the CIA, with his office in Washington, D.C. He says that he made “all policy decisions” in his Washington office, and never made any decisions at the CIA office in New York.

Both the Gottlieb and Helms affidavits are obviously carefully constructed to avoid the real issues here. Gottlieb does not deny playing a leading role in the drug testing program, with which he is charged by plaintiff. He admits making up to six trips to New York per year during the relevant time period. Yet, he does not state in any detail what it was he was doing in New York, or elsewhere, on this program. His denial of “significant contacts with New York” in 1952, is of no assistance, since one has no idea of his definition of “significant.”

The Helms affidavit is equally unsatisfactory. Helms does not deny a role in the drug testing program, but neither does he provide any real information as to what he did or did not do in connection with this program in New York or elsewhere. His denial of “significant contacts with New York” solves nothing.

Plaintiff is entitled to develop the factual record further, before there is any decision on the jurisdictional question.

As to venue, the relevant statute provides for venue where all of the defendants reside or where the claim arose. It appears that Gottlieb and Helms do not reside in New York, so that venue is proper in New York only if the claim arose here.

The Supreme Court has called “occasionally fictive” the assumption that a claim may arise in only one judicial district. Leroy v. Great Western Corp., 443 U.S. 173, 185, 99 S.Ct. 2710, 2717, 61 L.Ed.2d 464 (1979). If it is unclear where a claim arose, “a plaintiff may choose between those two (or conceivably even more) districts that with approximately equal plausibility — in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff) — may be assigned as the locus of the claim.” 443 U.S. at 185, 99 S.Ct. at 2717 (emphasis in original). The cases are in substantial agreement that a claim may be said to arise wherever some substantial operative facts giving rise to the claim occurred. See cases cited at 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure 11 3806 n. 24 (1985 Supp.).

The complaint alleges substantial operative facts occurring in New York. There is no sufficient denial of this by defendants. Consequently, venue in this district is proper.

Conclusion

The motion of the United States to dismiss the claims against it is denied, except that the Fourth Cause of Action and the claim for punitive damages against the United States are dismissed.

The motions of defendants Gottlieb and Helms to dismiss for lack of personal jurisdiction are denied, without prejudice to renewal after a fuller development of the facts. The motions of these defendants to dismiss for improper venue are denied.

So ordered.


author: NANGLE, Chief Judge.

text:
    Mary D. FRANKLIN, Plaintiff, v. ITT WEAVER, Defendant.
    No. 84-2755C(1).
    United States District Court, E.D. Missouri.
    Dec. 30, 1985.

      Joanne D. Martin, St. Louis, Mo., for plaintiff.
    Donald J. Meyer, Clayton, Mo., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

Plaintiff Mary D. Franklin brought this action pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. Plaintiff alleges that she was discharged from employment with defendant on account of her race and sex and was treated differently than similarly situated white and male employees.

This case was tried to this Court sitting without a jury. This Court having considered the pleadings, the testimony of the witnesses, the documents in evidence, and the stipulations of the parties, and being fully advised in the premises, hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure. Fed.R. Civ.P. 52.

FINDINGS OF FACT

1. Plaintiff Mary D. Franklin is a black female resident of the State of Missouri and was at all times relevant herein a citizen of the United States.

2. Defendant ITT Weaver is a manufacturing company which in February and March of 1984 had its principal place of business at 2210 Howard Street, St. Louis, Missouri.

3. Plaintiff was employed by ITT Weaver from October 19, 1980 until October 22, 1982, when she was laid off.due to lack of work. During this period, she worked primarily as a grinder of ground rod clamps. Plaintiff received favorable evaluations and was commended for her attendance record.

4. As a result of her layqff, plaintiff performed no work for defendant for over one year. Consequently, in accordance with the provisions of the labor agreement between defendant and the union, defendant terminated plaintiff on October 22, 1983.

5. On February 15, 1984, Franklin was rehired by ITT Weaver as a grinder and placed on the standard 30 day probation period for new employees provided for in the labor agreement between ITT Weaver and the union.

6. As a grinder of ground rod clamps, plaintiff’s duties included using a grinder to remove excess metal from cast clamps. Between October, 1982 and February, 1984, the quota for grinders increased from 350 clamps per hour to 510 clamps per hour.

7. Franklin’s lead person was Johnny Clerkley, a black male. His duties included instructing the grinders in their work and bringing pans filled with unground clamps to the grinders. Due to the manufacturing process, some clamps required more grinding and, consequently, more time to grind. Clerkley did not examine the clamps and did not supply Franklin with clamps requiring more grinding. On average, Franklin’s clamps did not differ from the clamps provided to other grinders.

8. Franklin’s immediate supervisor was Henry C. (“Hank”) Price, a black man. Each day Price completed a “management document”. On this form, Price recorded the daily performance of the employees he supervised. Daily performance was measured by the number of hours worked and the number of hours earned, a figure obtained by dividing the number of pieces ground by the hourly standard. Price compiled the daily figures to obtain a weekly average. Weekly figures were recorded in percentage terms. When the hours earned equalled the hours worked, the employee received a 100% weekly average. Price considered as adequate any employee who met 100% twice during the probationary period. During plaintiff’s employment, she produced weekly averages of 96.1%, 92.9%, 91.7%, 98.2%, and 90.2%. Plaintiff did not achieve a weekly average of 100% or better during any week of her probationary period.

9. During the relevant period, Allen Clark, a white male, served as plant superintendent. As one of his duties, Clark evaluated the weekly performance of grinders. Periodically, Clark prepared a spreadsheet listing each grinder’s weekly production. Price considered 100% production during one of the first three weeks of probation to be satisfactory performance. For her first four weeks, Franklin’s production figures were 88%, 88%, 92%, and 119%. Since Clark used different data than Price, Clark’s performance figures do not match those of Price. Due to a one week delay in obtaining data, Clark did not have the 119% figure before him when he agreed to terminate Franklin. On the basis of the performance figures Clark did consider, plaintiff did not satisfy Clark’s evaluation standard for probationary employees.

10. As a standard practice, Price completed probationary reports for new employees. By checking the appropriate box on the form, Price could indicate that various aspects of performance were above average, average, or below average. Plaintiff's report indicates that she performed below average with regard to the quality and quantity of her work during each week of probation. During the week ending February 18, 1984, Price commented that “Franklin is working very hard, performance for this week is 92%.” For the week ending February 25, 1984, Price commented that “Franklin’s performance is below 100%.” The following week Price commented “below 100%, told Mary Franklin performance must improve.” No other weekly comments were made. On March 14, 1984, Price completed the probationary, form and recommended dismissing Franklin. Clark concurred in this recommendation, adding his comments to the form: “Employee has not had performance over 100%, performance below standard, agree.” Plaintiff was terminated on March 15, 1984.

11. Twenty-two grinders were employed in the department where Franklin worked during her probationary period. Fourteen were female, nine black. During plaintiff’s probation, three white male grinders were also probationary employees. Each of these employees satisfied the above standards established by Price and Clark. During the relevant period, a white female grinder did not meet these standards and was terminated on the same day as plaintiff.

12. On March 9, 1984, Charles Wochner, the plant manager, authorized the hiring of six additional grinders due to an increase in production. The personnel department hired six additional grinders who began work on days between March 16 and March 23, 1984. None of these additional grinders filled the position left open by the termination of plaintiff. Plaintiff was replaced by Louise Washington, a black female.

13. Defendant’s decision to terminate plaintiff was not based on race or sex and was not affected in any way by racial or sexual bias on the part of employees of ITT Weaver.

14. Plaintiff was not treated differently than other white or male grinders on account of plaintiff’s race or sex.

CONCLUSIONS OF LAW

This Court has subject matter jurisdiction of this case pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 2000e-5(f)(3). Defendant is an employer as defined in 42 U.S.C. § 2000e(b).

In a Title VII cause of action, plaintiff has the initial burden of proving by a preponderance of the evidence a prima facie case of discrimination. If plaintiff is successful, defendant must then articulate a legitimate non-discriminatory reason for its actions. In order to sustain this burden, defendant need only present evidence which raises a genuine issue of fact as to whether it discriminated against plaintiff. The burden of producing evidence then shifts back to plaintiff, who must show by a preponderance of the evidence, that defendant’s explanation was merely a pretext for discrimination within the meaning of the statute. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Tate v. Weyerhaeuser Co., 723 F.2d 598, 602 (8th Cir.1983); Washington v. Dayton Hudson Corp., 610 F.Supp. 1120 (E.D.Mo.1985). Once defendant responds to plaintiffs proof of offering evidence of the reason for its actions, the presumption “drops from the case” and the Court must then determine whether there was discrimination within the meaning of Title VII. United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983). The ultimate “ ‘factual inquiry’ in a Title VII case is ‘whether the defendant intentionally discriminated against the plaintiff’.” Id. at 715, 103 S.Ct. at 1482 citing Texas Department of Community Affairs, 450 U.S. at 253, 101 S.Ct. at 1093. Plaintiff always retains the burden of persuasion with respect to this ultimate factual issue. The division of intermediate evidentiary burdens serves merely to allow the court to evaluate more easily the evidence as it bears on the critical issue of discrimination. Id.

The elements of a prima facie case in a Title VII cause of action vary according to the particular claim that a plaintiff asserts. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 n. 13, 93 S.Ct. 1817, 1824 n. 13, 36 L.Ed.2d 668 (1973). On all of plaintiff’s claims herein she asserts disparate treatment as a basis for recovery. Disparate treatment occurs where “[t]he employer simply treats some people less favorably than others because of their race.” International Brotherhood of Teamsters v. United States, 431 U.S. 324,' 335 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396 (1977). In the context of terminations, a prima facie case of disparate treatment requires plaintiff to show: 1) she was a member of a protected class; 2) she was capable of performing the job; and 3) she was discharged from the job. Johnson v. Bunny Bread Company, 646 F.2d 1250, 1253 (8th Cir.1981).

Plaintiff alleges that she was terminated on the basis of her race and sex. In the opinion of this Court, plaintiff fails to establish a prima facie case with respect to this claim. The evidence establishes that plaintiff was not performing her job adequately. See Findings of Fact Nos. 8, 9, and 10. It should be noted that plaintiff’s supervisor told her that her performance was inadequate and gave her an opportunity to improve. See Findings of Fact No. 10. Alternatively, assuming that plaintiff established a prima facie case, plaintiff failed to satisfy defendant’s standards for production. Thus, defendant presents a legitimate non-discriminatory reason for plaintiff’s discharge. See Findings of Fact Nos. 8, 9, and 10. Plaintiff did not establish that this explanation served as a pretext or that plaintiff’s race played any part in defendant’s decision to terminate her. See Findings of Fact Nos. 11 and 13. On the day of plaintiff’s termination, a white female was terminated for failing to meet the same performance standards. See Findings of Fact No. 11. Furthermore, the grinder position left open by plaintiff’s termination was filled by a black female. See Findings of Fact No. 12.

Plaintiff was well represented by her appointed counsel whose thorough preparation and trial presentation surpassed the work of many more experienced attorneys. This Court compliments her on her professional attitude in responding to the appointment of this Court. Nevertheless, the evidence established that plaintiff was unable to perform her duties adequately.

Accordingly, plaintiff’s claim that she was discriminated against on the basis of her race and sex is dismissed and judgment is entered in favor of the defendant.

      . Plaintiff presented conflicting evidence as to whether she was given more "bad work”, that is, clamps requiring more grinding, than other grinders were given. The Court does not credit her testimony. See Findings of Fact No. 7.


author: HUDSPETH, District Judge.

text:
    EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. EL PASO NATURAL GAS COMPANY, El Paso Products Company and El Paso Company, Defendants.
    No. EP-83-CA-108.
    United States District Court, W.D. Texas, El Paso Division.
    Dec. 31, 1985.
    Joseph H. Mitchell, Regional Atty., Tela Gatewood, Supervisory Trial Atty., and Alicia G. Burkman, Trial Atty., E.E.O.C., Dallas Dist. Office, Dallas, Tex., for plaintiff.
    Kenneth R. Carr, Kurt G. Paxson, Grambling & Mounce, and Harold H. Young, Jr., Asst. Gen. Counsel, El Paso Natural Gas Co., El Paso, Tex., for defendants.
   MEMORANDUM OPINION AND ORDER

HUDSPETH, District Judge.

This is an action pursuant to the Age Discrimination in Employment Act, 29 U.S.C. § 623 et seq. The issue presented is whether a company policy requiring the pilots of corporate aircraft to cease flying operations at age 60 is a violation of the Age Discrimination in Employment Act, or, whether it is, as the Defendants contend, a bona fide occupational qualification. The trial was bifurcated, and the issue of liability alone was tried to the Court without a jury. The Court’s findings of fact and conclusions of law with respect to the issue of liability are included in this opinion.

A. Factual Background.

Defendant El Paso Natural Gas Company is a Delaware corporation doing business in the State of Texas and in the Western District of Texas. Its principal office is located in the City of El Paso, Texas. It is engaged in the business of operating natural gas pipelines in interstate commerce, and at all times relevant to this lawsuit it has employed more than 20 employees. Defendant, The El Paso Company, is the parent company of El Paso Natural Gas Company and it maintains its principal office in El Paso, Texas. It is engaged in the production and distribution of petrochemical products, fibers, textiles and other products and services in interstate commerce, and at all times relevant to this lawsuit it has employed more than 20 employees. Defendant El Paso Products Company was at all times prior to January 1, 1984 a subsidiary of The El Paso Company. It is a Texas corporation with its principal office located in Odessa, Texas. It is engaged in the production and distribution of petrochemicals and agricultural chemicals in interstate commerce, and at all times relevant to this lawsuit it has employed more than 20 employees. Plaintiff Equal Employment Opportunity Commission is an agency of the United States Government charged with the enforcement of the Age Discrimination in Employment Act. It is authorized to bring the present action by 29 U.S.C. § 626(b) as amended by Section 2 of Reorganization Plan No. 1 of 1978, 92 Stat. 3781.

The Defendants maintain a fleet of corporate aircraft for the purpose of providing air transportation to the executives, personnel and business guests of the El Paso Natural Gas Company and its affiliated companies. The Defendants’ aircraft fleet consists of two single-engine propeller airplanes used in pipeline patrol; four twin-engine turboprop airplanes known as Cheyenne IIs; two twin-engine jet airplanes known as Falcon 20s, and one Gulf-Stream II, a somewhat larger twin-engine jet airplane. At the time of the trial, the Defendants employed 19 pilots to operate the corporate aircraft fleet. The bases of operation included El Paso, Midland and Houston, Texas. As the name implies, the pipeline patrol aircraft were used simply to fly over the pipeline system to check for any problems. The turboprop aircraft (Cheyenne IIs) are used to fly passengers to domestic destinations within 1,000 miles of El Paso, Texas. The Falcon 20 jet aircraft are used to transport passengers to destinations throughout the United States and occasionally into Canada, Mexico, or other Latin-American countries. The Gulf-Stream II heavy jet operates internationally, including occasional use in transoceanic flights. The Defendants require their pilots to hold Class I medical certificates, meaning that the pilots must undergo a physical examination every six months. Those pilots who operate the jet aircraft are additionally required to undergo simulator training twice a year, and the twin-engine turboprop pilots are required to undergo simulator training annually. The duties of the companys’ pilots include flying days and nights, visual and instrument, doing their own weather checking and fuel computation, and frequently landing at airports with which the pilot is not familiar.

Since they began their flying operations, the Defendants have followed a policy of requiring their corporate pilots to cease flying operations upon reaching the age of 60. If a nonflying position for which the pilot is qualified is available within the company organization at the time he reaches his sixtieth birthday, the pilot is given the opportunity to transfer to the nonflying position. If he declines to accept the transfer, or if no position is available for which the pilot is qualified, he is retired. Since the institution of this policy, a total of seven corporate pilots have reached the age of 60 and have been required to cease flying operations.

B. Is Defendants’ Age 60 Rule a Bona Fide Occupational Qualification?

The Age Discrimination in Employment Act, 29 U.S.C. § 623 et seq., protects workers between the ages of 40 and 70 from discrimination on the basis of age. It is undisputed that the Plaintiff has shown a prima facie case of violation of the Age Discrimination in Employment Act by showing that Defendants require their corporate pilots to retire from flying status when they reach their sixtieth birthday. The burden shifted to the Defendants to establish by a preponderance of the evidence that their policy constituted a bona fide occupational qualification.

Title 29, United States Code, Section 623(f) provides in pertinent part as follows:

“It shall not be unlawful for an employer, employment agency, or labor organization—
“(1) to take any action, otherwise prohibited ... where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business____”

The “particular business” involved in this ease is not the entire spectrum of corporate business, but rather the specific “business” of the operation of corporate aircraft by the Defendants’ corporate pilots. In other words, “particular business” means the specific job or position from which the protected individual is excluded by virtue of his or her age. Trans World Airlines, Inc. v. Thurston, — U.S.-, 105 S.Ct. 613, 622, 83 L.Ed.2d 523 (1985). The regulations promulgated by the Equal Employment Opportunity Commission under the Age Discrimination in Employment Act correctly state the burden of proof when an employer relies upon the bona fide occupational qualification (BFOQ) exception to the Act. Title 29, CFR § 1625.6(b) provides as follows:

“An employer asserting a BFOQ defense has the burden of proving that (1) the age limit is reasonably necessary to the essence of the business, and either (2) that all or substantially all individuals excluded from the job involved are in fact disqualified, or (3) that some of the individuals so excluded possess a disqualifying trait that cannot be ascertained except by reference to age. If the employer’s objective in asserting a BFOQ is the goal of public safety, the employer must prove that the challenged practice does indeed effectuate that goal and that there is no acceptable alternative which would better advance it or equally advance it with less discriminatory impact.”

This analysis is consistent with that approved by the Fifth Circuit, see Usery v. Tamiami Trail Tours, Inc., 531 F.2d 224 (5th Cir.1976), and the United States Supreme Court, see Western Airlines v. Criswell, — U.S. -, 105 S.Ct. 2743, 86 L.Ed.2d 321 (1985). In the instant case, the Defendants contend that the age limit on pilots is reasonably necessary to the safe operation of its corporate aircraft, and that it is impossible or highly impractical to deal with pilots over the age of 60 on an individual or case-by-case basis. The proof offered by Defendants in an effort to sustain their burden proceeded along two distinct but parallel lines. First, the Defendants contend that they are entitled to rely upon the determination by the Federal Aviation Administration that pilots of commercial aircraft not be permitted to fly after attaining the age of 60. Second, the Defendants offered expert witnesses of their own in an effort to prove that it is “impossible or highly impractical” to deal with older pilots on an individualized basis.

1. The Federal Aviation Administration’s Age 60 Rule for Commercial Airline Pilots.

In 1959, the Federal Aviation Administration adopted the predecessor to the rule now codified at 14 CFR § 121.383(c), which provides in pertinent part as follows:

“No person may serve as a pilot on an airplane engaged in operations under this part if that person has reached his 60th birthday.”

The genesis of the age 60 rule lay in the Administration’s concern about two primary factors: The introduction of jet aircraft into commercial aviation, with the increased speeds at which these anticipated aircraft would operate, and the aging of the overall commercial pilot population. Pursuant to the recommendation of a committee appointed by the Administrator to study the matter, the so-called “age 60” rule was adopted. The rule has remained intact for over 25 years, and remains in force today, despite frequent reconsideration and review. For example, in 1979 Congress enacted Public Law 96-171, 93 Stat. 1285, which directed the National Institutes of Health in consultation with the Secretary of Transportation to conduct a special study to determine whether the age 60 rule was medically warranted. In response to this legislation, the Director of the National Institutes of Health assigned primary responsibility to the National Institute on Aging, which assembled a panel of experts to study the matter. In 1981, the Panel issued its report, which contained the following conclusions and recommendations:

“The Panel attaches no special medical significance to age 60 as a mandatory age for retirement of airline pilots. It finds, however, that age-related changes in health and performance influence adversely the ability of increasing numbers of individuals to perform as pilots with the highest level of safety and, consequently, endanger the safety of the aviation system as a whole. Moreover, the Panel could not identify the existence of a medical or performance appraisal system that can single out those pilots who would pose the greatest hazard because of early, or impending, deterioration in health or performance.
“THE PANEL THEREFORE RECOMMENDS:
“(1) that the present age limit for air carrier pilots in command and first officers be retained.”

The Panel further recommended that the Federal Aviation Administration itself engage in a systematic program of collection of medical and performance data necessary to allow it to consider relaxation of the age 60 rule. Pursuant to the recommendation of the Panel, the Federal Aviation Administration issued in 1982 an advance notice of proposed rule making, soliciting information that might allow it to relax the existing age 60 rule. 47 Fed.Reg. 29782 (July 8, 1982). Hundreds of comments were received. After considering these comments, the FAA withdrew its advance notice of proposed rule making. 49 Fed.Reg. 14692 (April 12, 1984). In its notice of withdrawal, the FAA made the following statement:

“The FAA is convinced that to maintain the highest standards of safety for Part 121 operations, as airlines are required to do, airline pilots should not be permitted to serve past age 60. This is based on the findings made by the FAA in 1959 that were supported by the NIA study and by a number of comments. Those findings are that advanced age does indeed adversely affect the level of .safety for Part 121 operations and that currently no medical or performance tests are available which afford a sufficiently reliable basis for predicting or precluding those adverse effects in any individual case.”

In other words, the Federal Aviation Administration determined that the age 60 rule should be continued without change.

The FAA rule requiring retirement of commercial airline pilots at age 60 is, of course, relevant evidence in support of the Defendants’ BFOQ defense in the instant case. Western Airlines v. Criswell, supra, 105 S.Ct. at 2764. The extent to which the rule is probative turns upon the congruity between the occupations of commercial airline pilot and corporate pilot. Western Airlines v. Criswell, supra; Johnson v. Mayor and City Council of Baltimore, — U.S. -, 105 S.Ct. 2717, 2727, 86 L.Ed.2d 286 (1985). In this case, the Defendants argue that there is complete and utter congruity between the two occupations. The Court agrees. There is no substantial difference between the work performed by commercial airline pilots and the corporate pilots employed by the Defendants in this case. The Defendants’ pilots transport significant numbers of passengers over long distances in various kinds of aircraft, including jet aircraft. If anything, the duties imposed upon the Defendants’ corporate pilots are more onerous than those undertaken by airline pilots. For example, the Defendants’ pilots are expected to be ready to fly at any time of the day or night with little advance warning. They are frequently asked to fly into and out of unfamiliar airports, and, unlike airline pilots, they are required to handle their own weather checking and fuel computations. Under the circumstances, the Defendants are entitled to rely upon the expertise of the Federal Aviation Administration and apply the age 60 rule to their own pilots as a bona fide occupational qualification. Western Airlines v. Criswell, supra; Gathercole v. Global Associates, 727 F.2d 1485, 1488 (9th Cir.1984), cert. denied — U.S. -, 105 S.Ct. 593, 83 L.Ed.2d 702 (1984).

2. The Expert Testimony.

In Usery v. Tamiami Trail Tours, Inc., supra, the Fifth Circuit adopted a two-pronged test for determining the validity of a BFOQ defense in cases in which the duties of the employees concerned involved the safe transportation of passengers. First, the job qualification established by the employer must be reasonably necessary to the safe transportation of passengers. Usery v. Tamiami Trail Tours, Inc., supra at 236. Second, the employer must establish either that all or substantially all persons over the age limit would be unable to perform safely and efficiently the duties of the job involved, or that it is impossible or highly impractical to deal with the older employees on an individualized basis. Usery v. Tamiami Trail Tours, Inc., supra at 235. The two-pronged test adopted by the Fifth Circuit has recently been specifically approved by the Supreme Court. Western Airlines v. Criswell, supra, 105 S.Ct. at 2753. In the instant case, the Court finds that the Defendants have sustained their burden of proving by a preponderance of the evidence that the age limit they have imposed upon corporate pilots is reasonably necessary to the safe operation of corporate aircraft, and that it is impossible or highly impractical to deal with pilots over the age of 60 on an individual basis.

In their case in chief, the Defendants presented the testimony of four expert witnesses with outstanding credentials. Three of the experts were medical doctors; the remaining expert was a psychologist. These experts all testified that aging pilots, in common with all other human beings, experience physiological and psychological deterioration that at some point will affect their ability to fly safely. Furthermore, these experts were unanimous in testifying that a medical and/or psychological appraisal system does not yet exist that would be capable of singling out those individual pilots who would pose a safety hazard because of deterioration in health or overall ability to perform

The Plaintiff attempted to counter the Defendants’ expert testimony by calling four expert witnesses of its own: three medical doctors and a psychologist. Although the Plaintiff’s experts also possessed impressive credentials, the Court found their testimony less convincing than that of the Defendants’ experts for a number of reasons. For example, Dr. Mohler admitted that he had personally supported the age 60 rule for pilots while employed by the FAA, but has been “converted” to opposition around 1979. The Court notes that this is approximately the same time that Dr. Mohler became the most popular plaintiffs’ witness in age discrimination cases involving the age 60 rule. As another example, the Plaintiff’s psychologist, Dr. Horn, agreed in significant respects with the testimony of Dr. Arbit that psychological testing programs do not exist which are capable of determining with accuracy the ability of an individual to fly an airplane. As the finder of fact, the Court is placed in the unenviable but not unusual position of giving some expert testimony greater weight and credit than other expert testimony opposing it. Having weighed the testimony and judged its credibility, the Court finds that the Defendants have carried their burden of establishing by a preponderance of the evidence that it is impossible or at least highly impractical to deal with pilots over 60 years of age on an individualized basis. In reaching this conclusion, the Court is mindful of the statement of the Supreme Court in its opinion in Western Airlines v. Criswell, supra, 105 S.Ct. at 2754:

“When an employer establishes that a job qualification has been carefully formulated to respond to documented concerns for public safety, it will not be overly burdensome to persuade a trier of fact that the qualification is 'reasonably necessary’ to safe operation of the business. The uncertainty implicit in the concept of managing safety risks always makes it ‘reasonably necessary’ to err on the side of caution in a close case. The employer cannot be expected to establish the risk of an airline accident ‘to a certainty, for certainty would require running the risk until a tragic accident would prove that the judgment was sound.’ ”

Having concluded that the Defendants have carried their burden of showing that their age 60 rule for corporate pilots is a bona fide occupational qualification, the Court finds that judgment should be entered in favor of the Defendants with respect to the issue of liability. In view of this decision, the bifurcated trial comes to an end, and a hearing on the merits will not be necessary with respect to remedies.

It is therefore ORDERED that judgment be, and it is hereby, entered in favor of the Defendants, and that the Plaintiff take nothing by its suit.

It is further ORDERED that the Plaintiff pay the costs of suit herein incurred.

      . The Equal Employment Opportunity Commission represents only six of those seven pilots in the present litigation. The seventh pilot, Joe H. Hamlin, brought his own suit under the Age Discrimination in Employment Act long before the present litigation commenced. See Hamlin v. El Paso Company, et al., No. MO-79-CA-63, Midiand-Odessa Division, Western District of Texas. Hamlin’s case was tried to' a jury, and he lost. No appeal was taken.

      . A reference to Part 121 of the Federal Air Regulations, which pertains to the operations of commercial air carriers.

      . Dr. James Goddard; Dr. William Kannel, and Dr. Charles Billings.

      . Dr. Jack Arbit.

      . Dr. Elliot Snyder; Dr. Stanley R. Mohler, and Dr. Robert A. Bruce.

      . Dr. Jim Horn.

      . Dr. Mohler was the plaintiffs primary expert witness in a number of reported cases. See e.g., Hoefelman v. Conservation Commission of the Missouri Department of Conservation, 718 F.2d 281 (8th Cir.1983); Tuohy v. Ford Motor Co., 675 F.2d 842 (6th Cir.1982). Dr. Mohler was also the plaintiff’s principal expert witness in the unreported case from this District, Hamlin v. El Paso Company et al., No. MO-79-CA-63 (W.D. Tex.)