author: HAROLD A. ACKERMAN, District Judge.

text:
    In the Matter of the Petition of Romulo DE ROMA.
    Civ. No. 84-4130.
    United States District Court, D. New Jersey.
    Jan. 14, 1985.

      Vincent Agresti, Newark, N.J., for plaintiff.
    Edward Weiss, I.N.S. Newark, N.J., for defendant.
   OPINION

HAROLD A. ACKERMAN, District Judge.

Romulo de Roma became a citizen of the United States through naturalization on order of this Court on December 12, 1983. The District Director of Immigration and Naturalization at Newark, New Jersey, hereinafter referred to as I.N.S., now moves to have said order of this Court, insofar as it relates to Mr. de Roma, reopened and held in abeyance, to have the petition for naturalization of Mr. de Roma restored to a pending status, to have a further determination on the merits of petitioner’s qualifications for naturalization made, and to have said order vacated in the event Mr. de Roma is found ineligible for naturalization.

This motion is brought pursuant to Section 340(j) of the Immigration and Nationality Act, 8 U.S.C. § 1451(j) and Rule 60(b) of the Federal Rules of Civil Procedure.

Mr. de Roma’s naturalization was based on the Nationality Act of 1940, as amended on March 27, 1942, 56 Statutes 176 et seq. The application of this Act to Filipino World War II veterans has a complex history which provides the relevant background to the instant action. This history was very thoroughly described in the case of In the Matter of Petitions for Naturalization of 68 Filipino War Veterans, 406 F.Supp. 931 (N.D.Cal.1975) at pages 934-936 which I now quote:

“On March 27, 1942, Sections 701-705 were added to the Nationality Act of 1940 by the Second War Powers Act of 1942, ch. 199, 56 Stat. 176 et seq., as amended. Section 701 exempted alien servicemen who served outside the continental limits of the United States from certain of the usual requirements for naturalization, including those of a period of residence in the United States and literacy in English. As amended by subsequent acts of Congress, it was ultimately specified that all petitions filed under Section 701 had to be filed no later than December 31, 1946. Section 702 provided for the naturalization overseas of persons eligible for naturalization under Section 701 who, while serving honorably in the military or naval forces of the United States, were not within the jurisdiction of any court authorized to naturalize aliens. Section 705 directed the Commissioner of Immigration and Naturalization, with the approval of the Attorney General, to make such rules and regulations as were necessary to carry into effect the provision of the act. “Pursuant to the act, officers of the INS were sent to overseas military posts to effect the naturalization of eligible members of the United States armed forces. Between 1943 and 1946, these officers traveled from post to post through England, Iceland, North Africa, and the islands of the Pacific, naturalizing thousands of foreign nationals. In the Phillippines, of course, naturalization of alien servicemen was impossible during the Japanese occupation. However, with the liberation of the Philippines, implementation of the act commenced, following resolution of two preliminary problems of statutory interpretation concerning the eligibility of Filipino servicemen under Sections 701-702.
“In early August of 1945 the INS designated Mr. George H. Ennis, Vice Consul of the United States at Manila, to naturalize aliens pursuant to Section 702. “Pursuant to Section 10(a) of the Philippine Independence Act of 1934, ch. 84, 48 Stat. 463, the Philippines were to become a fully independent, self-governing country on July 4, 1946. Apparently fearful that large numbers of Filipinos would be naturalized and emigrate to the United States on the eve of independence, an unidentified official of the Philippine Government conveyed to the United States Department of state the Philippine Government’s concern that Filipinos who had always been domiciled in the Philippines were being naturalized by Vice Consul Ennis. Based on this concern, on September 13, 1945, the Commissioner of the INS wrote to the Attorney General requesting that the authority previously granted to Vice Consul Ennis to naturalize aliens be revoked, and that no new naturalization officer be named. The Attorney General approved this request on September 26, 1945, and the authority of Vice Consul Ennis was immediately revoked. However, notice of that revocation did not reach Ennis until late October, 1945, for he continued to naturalize aliens until October 26, 1945. It was not until August, 1946, that another naturalization agent, Mr. P.J. Philips, was appointed for the Philippines. Approximately 4,000 Filipinos were naturalized by Mr. Philips under Section 702 between August and December 31,1946, when the act expired. Thus, contrary to the express intentions of Congress, Filipinos eligible for naturalization under Section 702 were denied the opportunity to take advantage of the act for a period of approximately nine months.”

Turning now to the matter before me, the United States Department of the Army certified to the INS on March 10, 1980, that Mr. de Roma served in the Philippine Commonwealth Army in an active duty status from August 22, 1944 to September 26, 1945. Mr. de Roma contends that his service ended March 18, 1946, but, for purposes of this motion, I do not need to decide that disputed fact.

By affidavit, Mr. de Roma asserts that on May 30,1946, he proceeded to the office of Commissioner Paul McNutt in Manila to apply for citizenship, but he was advised that Commissioner McNutt had been withdrawn.

The INS alleges that these facts establish that Mr. de Roma was not in active service at the time he attempted to apply for citizenship, and thus, it was due to inadvertence and mistake that Mr. de Roma’s naturalization petition was granted.

As the specific review of Mr. de Roma’s original naturalization petition has not been described, I have no way of knowing how this mistake occurred or whether Mr. de Roma qualified on some other statutory basis.

A number of cases have been brought where Filipino World War II veterans have attempted to estop the government from opposing their naturalization petitions because of the cut-off date of December 31, 1946 provided for in Section 701 of the Nationality Act of 1940, since the government, by withdrawing its examiner from the Philippines had effectively denied Filipino Veterans the opportunity to apply before the cut-off date.

In INS v. Hibi, 414 U.S. 5, 94 S.Ct. 19, 38 L.Ed.2d 7 (1973) the Supreme Court refused to estop the government from relying on the December 31, 1946 expiration date and denied respondent Hibi’s petition for naturalization.

Subsequently in 68 Filipino War Veterans, supra, a Northern District of California court found a majority of the 68 Filipino veterans eligible for naturalization under Section 701 of the Nationality Act because, unlike Hibi, they had demonstrated that they had attempted to apply for naturalization during the statutory period but had been unable to do so due to the government’s withdrawal or they convinced the Court that they would have applied had the officer not been withdrawn. These petitioners, the Court found, had been denied due process, an issue not raised or decided in Hibi. The government sought appeal of this case, but subsequently withdrew the appeal.

Most recently, in the Southern District of California, although the petitioner failed to prove that he made a reasonable inquiry or application for naturalization during the pertinent period, the Court found that the petitioner was still eligible for naturalization because the inquiry or application required of him would have been futile, since at that time, the INS was erroneously turning away applicants, who, like petitioner, were veterans of the Philippines Commonwealth Army. See In Re Petition for Naturalization of Candelario Triol, slip opinion, (filed July 27, 1984, S.D.Cal.).

These cases persuade me that, were Mr. deRoma before me on a petition for naturalization, I would have a duty to inquire into the details of his knowledge of the INS examiner’s presence, or lack thereof, in the Philippines at the time of his active duty in the Army.

This matter comes before me, however, not in the guise of an alien seeking citizenship, but in the guise of the INS seeking to reopen and possibly revoke that citizenship. It is beyond peradventure that the “right to acquire American citizenship is a precious one, and that once citizenship has been acquired, its loss can have severe and unsettling consequences,” and because of this, the government carries a heavy burden of proof in a proceeding to divest a naturalized citizen of his citizenship. Fedorenko v. United States, 449 U.S. 490, at 505, 101 S.Ct. 737, at 746, 66 L.Ed.2d 686 (1980) citing Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961); Chaunt v. United States, 364 U.S. 350, 81 S.Ct. 147, 5 L.Ed.2d 120 (1960); Baumgartner v. United States, 322 U.S. 665, 64 S.Ct. 1240, 88 L.Ed. 1525 (1944) and Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 87 L.Ed. 1796 (1943).

Because the INS is attacking this precious right with little explanation other than they made some mistake in processing Mr. de Roma’s application, the exact nature of which is not entirely clear from their papers, I turn first to the procedural method the INS is using to attack the judgment of naturalization.

On its face, 8 U.S.C. Section 1451 provides two methods by which the government may attack a judgment of naturalization. Subsection (a) is the first and reads in pertinent part as follows: “(a) Concealment of material evidence; refusal to testify. It shall be the duty of the United States attorneys for the respective districts, upon affidavit showing good cause therefor, to institute proceedings in any court specified in subsection (a) of section 1421 of this title [8 U.S.C.A. § 1421(a) ] in the judicial district in which the naturalized citizen may reside at the time of bringing suit, for the' purpose of revoking and setting aside the order admitting such person to citizenship and cancelling the certificate of naturalization on the ground that such order and certificate of naturalization were illegally procured or were procured by concealment of a material fact or by willful misrepresentation.”

The affidavit showing good cause has been held to be an indispensible procedural prerequisite to suit under this section. See United States v. Zucca, 351 U.S. 91, 76 S.Ct. 671, 100 L.Ed. 964 (1956). No statute of limitations is involved and the time within which the action must be commenced is not circumscribed. The standard of proof required to denaturalize a naturalized citizen is strict, and the burden of proof is on the government to prove its case by clear, unequivocal and convincing evidence. Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961).

The second method, apparently authorized under subsection (j) of 8 U.S.C. § 1451, is the method by which the INS now brings this action. Subsection (j) reads: “Power of court to correct, reopen, alter, modify or vacate judgment or decree. Nothing contained in this section shall be regarded as limiting, denying or restricting the power of any naturalization court, by or in which a person has been naturalized, to correct, reopen, alter, modify, or vacate its judgment or decree naturalizing such person, during the term of such court or within the time prescribed by the rules of procedure or statutes governing the jurisdiction of the court to take such action.”

This language ostensibly allows a summary procedure under Federal Rule of Civil Procedure 60(b) within one year of the entry of the original judgment. If the motion under Rule 60(b) were granted, the parties would be placed back in the position they were in prior to the granting of the order or naturalization; that is, the burden would shift to Mr. de Roma to prove his qualifications for citizenship.

I note that Section (j) only ostensibly authorizes a denaturalization action under the instant circumstances because I do not accept the assumption made in some cases that 8 U.S.C. § 1451(j) was enacted in order to overrule the holding in Bindzyck v. Finucane, 342 U.S. 76, 72 S.Ct. 130, 96 L.Ed. 100 (1951). See, for example, Simmons v. United States, 452 F.2d 1110, 1114 (2d Cir.1971). Bindzyck held that Section 338 of the Nationality Act of 1940, the precursor to the present Section 1451(a), was the exclusive procedure to be used for revoking naturalizations on the ground of fraud or illegal procurement. My reading of the only subsequent Supreme Court decision touching on this issue, United States v. Zucca, 351 U.S. 91, 76 S.Ct. 671, 100 L.Ed. 964 (1956), leads me to believe that Bindczyck is still good law in many respects. See Zucca, Page 95 at footnote 8, 76 S.Ct. page 674 at footnote 8.

There is, however, no need to reach the issue of whether the INS legally may bring this action under the method they have chosen, for I find that even under the theory of law under which the INS proceeds, the motion to reopen the order of naturalization should be denied.

As noted in In re Campbell’s Petition, 326 F.2d 101 (2d Cir.1964), section (j) is a grant of power to the Court to reopen its naturalization judgments, but it is stated in permissive terms.

It is well settled that motions for relief under Rule 60(b) are addressed to the discretion of the Court. See, for example, Greco v. Reynolds, 416 F.2d 965 (3d Cir. 1969); England v. Doyle, 281 F.2d 304 (9th Cir.1960).

In considering how I should exercise my discretion, I find that to allow the precious right of American citizenship to be revoked by such a summary procedure as is sought here would debase the value of the right of that citizenship and raise serious doubts in any citizen’s mind that the law is in accord with the dictates of humanity and justice.

The exercise of my discretion in this way is in accord with the few other courts who have considered this issue. See Petition of Zabala, 573 F.Supp. 665 (E.D.N.Y.1983); In re Campbell’s Petition, supra., Petition of Arevalo, 352 F.Supp. 215 (D.Hawaii 1972); but see Petition of Cardines, 366 F.Supp. 700 (D.Guam 1973).

Once citizenship has been granted, a naturalized citizen may not be deprived of his status without due process. This is especially true where the attack on the citizenship is due to the government’s mistake, and not due to a misrepresentation or omission on the part of the petitioner.

I note that the vast majority of cases I have found concerning denaturalization arise out of an intentional omission or misrepresentation by the petitioner of a fact, which, if known by the INS, might have denied the petitioner citizenship. See, for example, Arevalo, supra., Petition of Field, 117 F.Supp. 154 (S.D.N.Y.1953); and In re Bartkiu, 199 F.Supp. 762 (E.D.Pa. 1961).

The history of the denaturalization provision found today in Section (a) demonstrates that Congress formulated a carefully safeguarded method for denaturalization because of their experience with the evils inherent in widely diverse .naturalization procedures. Prior to the act of 1906 containing the first detailed denaturalization procedure, elections were influenced by irregular denaturalizations geared by government officials. See Bindczyck at 81-83, 72 S.Ct. at 133-134. Although no such evils are even intimated by this action today, there are still sufficient reasons for requiring the government to proceed under the safeguards established by Congress. The affidavit of good cause, for example, as noted in United States v. Minerich, 250 F.2d 721 (7th Cir.1958), allows the experienced judge to detect a reckless categorization or noncritical selection of candidates for denaturalization.

An affidavit of good cause, along with an adequate hearing would be an important step in making a fair determination on this matter. As the scanty record before me now stands, I have little more than the INS’s unsworn statement that they made a mistake in analyzing Mr. de Roma’s petition. This is not a sufficient basis on which to revoke a person’s citizenship. The record is inadequate concerning details of what the statutory and factual basis of Mr. de Roma’s naturalization was, how the alleged mistake was uncovered and why the INS has decided to expend their limited resources on this matter.

If the government wishes to proceed further to invalidate Mr. de Roma’s judgment of naturalization, it must resort to a plenary action under 8 U.S.C. § 1451(a).


source: Caselaw Access Project

author: MAGNUSON, District Judge.

license: Public Domain

text:
    James F. BOYER, Plaintiff, v. CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY, a Delaware corporation, Defendant.
    Civ. No. 3-83-1123.
    United States District Court, D. Minnesota, Third Division.
    Jan. 14, 1985.

      Louis E. Jungbauer, Minneapolis, Minn., for plaintiff.
    Jeffrey Schmidt, Minneapolis, Minn., for defendant.
   MEMORANDUM ORDER

MAGNUSON, District Judge.

A hearing was held before the undersigned on January 11, 1985 upon plaintiff’s motion for an order prohibiting mention of his felony conviction at trial. ’ Louis E. Jungbauer, Esq., appeared on behalf of the plaintiff. Jeffrey Schmidt, Esq., appeared on behalf of defendant.

Plaintiff James Boyer is a former railroad switchman for the defendant Chicago and North Western Transportation Company who allegedly sustained permanent back injuries on May 8, 1982. In connection with that injury, Boyer filed the present Federal Employers’ Liability Act claim pursuant to 45 U.S.C. § 51 et seq. In 1981 Boyer pled guilty to possession of cocaine with intent to distribute. Plaintiff now seeks an order preventing the defendant from raising the issue of his conviction at trial.

Federal Rule of Evidence 609(a) states that:

For the purpose of attacking the credibility of a witness, evidence that he has been convicted of a crime shall be admitted if elicited from him or established by public record during cross examination but only if the crime (1) was punishable by death or imprisonment in excess of one year under the law under which he was convicted, and the court determines that the probative value of admitting this evidence outweights its prejudicial effect to the defendant, or (2) involve dishonesty or false statement, regardless of the punishment.

The Eighth Circuit Court of Appeals has previously ruled that a conviction on a narcotics charge is not a crime involving dishonesty or false statement within the meaning of Subdivision 2 of Rule 609(a). United States v. Hastings, 577 F.2d 38, 41 (8th Cir.1978). Thus, for Boyer’s cocaine conviction to be admissible against him at trial it must meet the requirements of Rule 609(a)(1).

Rule 609(a)(1) sets forth two distinct requirements, both of which must be met before a conviction may be introduced against a witness. The first requirement is that the conviction must be for a crime which was punishable by death or imprisonment in excess of one year. Boyer’s cocaine conviction satisfies this requirement. The second requirement set forth in Rule 609(a)(1) is that the trial court must make an affirmative determination that the probative value of admitting the conviction outweighs its prejudicial effect to the defendant. It is the second requirement which is more problematic in this case.

The language of Rule 609(a)(1) speaks of “prejudicial effect to the defendant”. Clearly, when this rule was drafted the primary concern of the drafters was the potential prejudice of criminal convictions used against defendants in criminal cases. A number of courts and commentators have even suggested that the balancing test in Rule 609(a)(1) does not apply to civil cases. See e.g. S. Salzburg & K. Redden, Federal Rules of Evidence Manual, 365 (3d ed. 1982). The Eighth Circuit Court of Appeals in Czajka v. Hickman, 703 F.2d 317, 319 (8th Cir.1983) refused to decide whether the balancing test of Rule 609(a)(1) applied to civil cases. Similarly, in Shows v. M/V Red Eagle, 695 F.2d 114, 119 (5th Cir.1983) the Fifth Circuit also avoided the issue of whether the 609(a)(1) balancing test applied in civil cases.

Both the Eighth and the Fifth Circuits, in the context of refusing to decide whether the 609(a)(1) balancing test applied in civil cases, did hold that the Rule 403 balancing test which provides that “relevant evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice....” did apply any time a criminal conviction was introduced in civil cases. Czajka, 703 F.2d 317, 319 (8th Cir. 1983). Shows, 695 F.2d 114, 119 (5th Cir. 1983);

It is important to note that the language used in the Rule 403 is different from that used in Rule 609. Fed.R.Ev. 403 states that:

Although relevant, evidence may , be excluded if its probative value is substantially outweighed by the danger of unfair prejudice____

Id. Rule 609(a)(1) predicates the admission of a prior criminal conviction upon a finding by the district court that:

the probative value of admitting this evidence outweighs its prejudicial effect
....

While the syntax of the two tests appears to be similar, the Fifth Circuit Court of Appeals has accurately pointed out that the Rule 403 balancing test provides less protection against the admission of prior convictions. Shows, 695 F.2d 114, 119 (5th Cir., 1983). A court applying the Rule 403 balancing test would admit more convictions than under the more stringent test of Rule 609 of the Federal Rules of Evidence.

This court, in keeping with the position of both the Fifth and the Eighth Circuits, will also avoid making any decision on whether the Rule 403 balancing test or the Rule 609 balancing test applies to this case. Instead, the court finds that even under the less stringent Rule 403 balancing test Boyer’s conviction must be excluded. This case is very similar to Shows where the Fifth Circuit Court of Appeals indicated that it was reversible error to admit a prior conviction for ármed robbery in a Jones Act suit. In Shows the district court failed to engage in any balancing test, a problem normally cured by a remand. The Fifth Circuit refused to remand stating:

We decline to remand for the limited purpose of such a hearing because the balancing exercise could properly come out only in favor of an exclusion of the evidence. There is not enough here on the admission side of the scale to have a meaningful balancing exercise under Rule 403.

Id. The facts of this case are very similar to the situation in Shows and this court finds the reasoning of the Shows court to be persuasive.

The attention of the jury in the present case should properly focus on the conduct of the plaintiff and the defendant with respect to the accident which gave rise to the plaintiff’s claim. Admitting Boyer’s conviction could only serve to poison the minds of the jurors by arousing their punitive instincts thereby diverting their attention from the issues that are central to this action.

For the reasons stated above, IT IS ORDERED that:

1. Plaintiff’s motion to exclude mention of plaintiff’s prior cocaine conviction is granted.


author: SKINNER, District Judge.

text:
    In re ATLANTIC FINANCIAL MANAGEMENT, INC., SECURITIES LITIGATION. UNITRODE PROFIT SHARING PLAN and Profit Sharing Trust Fund, et al., Plaintiffs, v. ATLANTIC FINANCIAL MANAGEMENT, INC., et al., Defendants. BECKER PARIBAS INCORPORATED, Defendant/Third Party Plaintiff, v. Walter B. GATES, et al., Third Party Defendants.
    M.D.L. No. 584. Civ. A. Nos. 83-0321-T, 82-2962-T, 82-3330-T, 82-2745-T, 82-2604-C and 83-402-T.
    United States District Court, D. Massachusetts.
    Jan. 15, 1985.
    Henry F. Minnerop, Judith Welcom, Brown, Wood, Ivey, Mitchell & Petty, New York City, and John A.D. Gilmore and Charles R. Dougherty, Hill & Barlow, Boston, Mass., for Becker Paribas Incorporated, defendant/third party plaintiff.
    Peter G. Hermes, Peabody & Arnold, Boston, Mass., for third party defendants Walter B. Gates, George M. Berman and Alan R. Shoolman (83-321-T).
    Fernande R.V. Duffly, Warner & Stack-pole, Boston, Mass., for third party defendants Ruth Mann Horowitz and Robert L. Horowitz (82-2745-T).

      Harriet H. Onello, Boorstein & DelVecchio, and Paul R. Gupta, Sherin & Lodgen, Boston, Mass., for third party defendants Therese Higgins and Thomas E.J. deWitt (83-402-T).
    John J. O’Connor, Jr., Roche, Carens & DeGiacomo, Boston, Mass., for third party defendant Herbert J. Myers (82-2962-T).
    Brian M. Hurley, Rackemann, Sawyer & Brewster, Boston, Mass., for third party defendant Suzanne Scribner (82-2604-C).
    Harold W. Potter, Jr., Sherburne, Powers & Needham, Boston, Mass., for third party defendant Peter G. Casabonne (82-3330-T).
   MEMORANDUM AND ORDER

SKINNER, District Judge.

Becker Paribas Incorporated (“Becker”), an investment broker, has been named one of six defendants in six related securities actions brought by purchasers of common stock in AZL Resources, Inc. The plaintiff purchases are pension plans or inter vivos trusts. Becker in turn has brought third party actions or counterclaims for contribution under Fed.R.Civ.P. 13 and 14(a) against the fiduciaries of these plaintiffs individually (the “Fiduciaries”). The Fiduciaries have moved to dismiss Becker’s contribution claims pursuant to Fed.R.Civ.P. 9(b), 12(b)(2), and 12(b)(6), and to impose sanctions under Rule 11.

I. Factual Background.

The defendants in these related suits, in addition to Becker, are Atlantic Financial Management, Inc. (“Atlantic”), a registered investment advisor; Tuton, Dilanni & Draizin, Inc. (“TDD”), a brokerage firm affiliated with Atlantic; and Messrs. Tuton, Dilanni and Draizin, the principals of Atlantic and TDD (together, the “Atlantic defendants”).

From 1979 through 1981, the plaintiffs entered into contracts with Atlantic for investment advice and management of the plaintiffs’ portfolios. From late 1980 through May 1982, Atlantic purchased large amounts of common stock for the plaintiffs’ accounts issued by AZL Resources, Inc. (“AZL”) and other enterprises engaged in the risky and speculative business of oil and gas drilling.

Atlantic, Tuton and Dilanni caused the purchases to be handled through TDD. Becker, under a correspondent clearing agreement with TDD, acted as clearing broker for these purchases. Becker furnished confirmations of all transactions and monthly statements to each plaintiff reflecting the purchases of stock for the plaintiff’s account.

The AZL and other speculative stocks dominated the portfolios built by Atlantic, accounting for between a quarter and nine-tenths of the stock purchases Atlantic directed for the plaintiffs. Market prices of these stocks, especially AZL, plummeted in early 1982, and the plaintiffs’ losses ranged between $100,000 and $2,500,000.

II. Plaintiffs’ claims against Becker.

A. Breach of fiduciary duty and negligent management (Counts IV and X).

Plaintiffs allege that the various defendants, including Becker, failed to exercise the required high degree of care in the selection of investments for the plaintiffs, in violation of their fiduciary duty.

B. Violation of Section 10(b) of the Securities Exchange Act of 193) and SEC Rule 10b-5 (Count VIII).

Plaintiffs allege that Becker knew of the unsuitability of the investments for the plaintiffs and knew of the conflict of interest between the plaintiffs and the other defendants. They allege that Becker wrongfully failed to disclose these material facts to the plaintiffs and thus aided and abetted the fraudulent conduct of the other defendants.

C. Common Law Fraud (Count IX).

Plaintiffs allege that the conduct of Becker which constituted violation of Section 10(b) and Rule 10b-5 also was common law fraud.

III. Becker’s Claims Against the Fiduciaries.

Becker claims that if it is held liable to the plaintiffs, it is entitled to contribution from the various Fiduciaries. The basis for contribution is that the Fiduciaries were each liable to their respective plans and trusts in the following respects:

A. Breach of fiduciary duty and negligence in permitting the undue concentration of the investment and the investment in unsuitable stocks.

B. By failing to correct the overconcentration and by continuing to employ the defendant Atlantic after learning of its bad investment policy, the Fiduciaries substantially assisted in the violation of Section 10-b and Rule 10b-5.

IV. Merits of the Motions to Dismiss the Counterclaims and Third Party Claims for Contribution.

The viability of a claim for contribution depends upon three elements: (1) the existence of “overlapping liability” of two persons; (2) support in the controlling body of substantive law for distribution of the burden of loss between the two; and (3) the availability of a procedural avenue for advancing the claim between them. Shapiro v. Miami Oil Producers, Inc., 84 F.R.D. 234, 239 (D.Mass.1979).

In this case, Becker and the Fiduciaries may have overlapping liability to the plaintiff plans and trusts. If Becker is found to be liable for the wrongs alleged in the complaint, the Fiduciaries could be held liable for failure to protect their beneficiaries from the wrongs committed by Becker. The liability would be “overlapping” because for the same loss, even though, as Judge Keeton says in the above-cited case, the theoretical basis for liability may be different in each case. There are also ample procedural devices in the federal rules for resolving the claims between them, and there are any number of cases permitting contribution in cases involving securities. See, e.g., Huddleston v. Herman & MacLean, 640 F.2d 534, 556-557 and nn. 37-38 (5th Cir.), modified, 650 F.2d 815 (5th Cir. 1981), aff’d in part, rev’d in part on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L. Ed.2d 548 (1983). Contribution in fiduciary cases is probably available under M.G.L. c. 231B. See Wolfe v. Ford Motor Co., 386 Mass. 95, 100, 434 N.E.2d 1008 (1982); Comment, “Joint Tortfeasors”, 43 B.U.L.Rev. 417, 419 (1963).

The problem comes in identifying any controlling body of law which permits a wrongdoer to exact contribution from the victim. The Fiduciaries here were the legal owners of the trust properties which are the subject of these cases. Even though they are not beneficial owners, they were not only the nominal but the actual principals to whom the defendants owed a duty of disclosure in addition to their duty toward the beneficiaries. This is not a case where illegal acts were generated by the Fiduciaries, and the liabilities of the adviser and broker are derivative. The liability of the defendant Becker is based on breach of a duty to disclose information. The Fiduciaries’ liability would be based on their imprudent reliance on the defendants, including Becker. See Morgan, Olmstead, Kennedy & Gardner, Inc. v. Schipa, et al., 585 F.Supp. 245 (S.D.N.Y.1984), rejecting defendants’ claims that plaintiffs’ failure to discover defendants' fraud supports counterclaim for set-off and defenses of in pari delicto and failure to mitigate damages.

To impose contribution in this setting is in effect to graft a theory of comparative fault onto securities law. Comparative fault has no place in the law of fraud, in Section 10(b) and Rule 10b-5 litigations or in cases involving a fiduciary relationship. Cf Stratton Group, Inc. v. Sprayregen, 466 F.Supp. 1180, 1185 (S.D. N.Y.1979) (contribution will lie only between “joint participants” in securities fraud); Morgan, Olmstead, Kennedy & Gardner, Inc. v. Schipa, supra. These branches of the law, insofar as they apply to transactions in securities, are designed to insure that knowledgeable professionals, such as the defendants, take reasonable steps to protect investors no matter how improvident they may be. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195, 96 S.Ct. 1375, 1382, 47 L.Ed.2d 668 (1976). Becker’s theory of contribution turns this basic principle on its head.

In my opinion, the Fiduciaries’ motions to dismiss should be allowed and the third party complaints and counterclaims against the Fiduciaries dismissed.

This conclusion is not affected by the fact that some of the Fiduciaries are trustees under ERISA. Becker is not bringing a claim under ERISA and is not barred by 29 U.S.C. § 1132(a). ERISA trustees are not totally shielded by 29 U.S.C. § 1105(d)(1) from liability for general oversight of the administration imposed by 29 U.S.C. § 1104, even though they were not named fiduciaries, and their duty is not delegable. In view of the opinions expressed above, I need not elaborate on the convolutions of ERISA at this point, except to say that the amicus brief of the Secretary of Labor contains a sound analysis of the problem.

While I disagree with Becker’s arguments in support of its third party complaints and counterclaims, I do not find that Becker interposed them without warrant, and so deny the motion for imposition of sanctions under Fed.R.Civ.P. 11.

ORDER

The third party complaints and counterclaims of Becker against the Fiduciaries in all of the referenced eases are DISMISSED for failure to state a claim upon which relief may be granted.

      . For the purposes of these motions, I take the facts as alleged by Becker to be true. The following summary adopts Becker’s allegations.


author: PRADO, District Judge.

text:
    Ruth REDENBAUGH, Plaintiff, v. VALERO ENERGY CORPORATION, Defendant.
    Civ. A. No. SA-83-CA-2088.
    United States District Court, W.D. Texas, San Antonio Division.
    Jan. 21, 1985.

      Norman B. Smith, Greensboro, N.C., L. Bruce Fryburger, San Antonio, Tex., for plaintiff.
    Shelton E. Padgett, Manitzas, Harris & Padgett, Inc., San Antonio, Tex., for defendant.
   ORDER

PRADO, District Judge.

The matter before the Court is Plaintiffs Motion for Reconsideration of the Court’s Order of November 7, 1984, granting Defendant’s Motion for Dismissal or Summary Judgment of Plaintiff’s State Tort Claim. Although still reluctant to exercise pendent jurisdiction over a state tort claim upon which Texas courts have not spoken, this Court will decline pendent jurisdiction for an additional reason — lack of subject matter jurisdiction.

Several district court opinions have expressed concern over the incompatibility of purely equitable federal remedies with state legal claims and remedies. One such opinion by the Honorable John L. Kane, Jr., United States District Judge for the District of Colorado, offers a concise analysis for determining whether to exercise pendent jurisdiction in Title VII cases. The case of Haroldson v. Hospitality Systems, Inc., 596 F.Supp. 1460 (D.Colo.1984), presents issues very similar to the case at hand. Both Haroldson and the instant case are before federal courts under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. In addition, both plaintiffs allege state tort claims for which they seek compensatory and punitive damages and jury trials.

In determining whether to exercise pendent jurisdiction over related state claims, a two-step analysis must be utilized. First, a constitutional inquiry requires the existence of a substantial federal claim. If such is present, then both the federal and state claim must arise from a common nucleus of operative facts before a constitutional exercise of jurisdiction over the state claims is available to the Court. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Where the exercise of jurisdiction is proper under the Gibbs test, the Court must proceed to the second level of analysis and determine whether the statute upon which the federal claim is based negates the exercise of pendent jurisdiction. See Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978); Aldinger v. Howard, 427 U.S. 1, 96 S.Ct. 2413, 49 L.Ed.2d 276 (1976). See generally Comment, Aldinger v. Howard and Pendent Jurisdiction, 77 COL.L.REV. 127 (1977).

In Haroldson, Judge Kane concluded that while a Title VII claim meets the Gibbs constitutional test, the exercise of pendent jurisdiction over related state claims fails the statutory test of Aldinger and Owen. Haroldson v. Hospitality Systems, 596 F.Supp. 1460, 1461 (D.Colo.1984). The legislative intent to impliedly limit federal jurisdiction over state claims is evidenced by the limited equitable relief created for Title VII claims. Id; see also Jong-Yul Lim v. International Institute of Metropolitan Detroit, Inc., 510 F.Supp. 722, 725 (E.D.Mich.1981); cf. Hannon v. Continental National Bank, 427 F.Supp. 215, 218 (D.Colo.1977) (adjudication of state claims circumvents scope of available remedies under Age Discrimination in Employment Act).

Judge Kane also found that a serious conflict with the federal policy underlying Title VII was forced upon the court when pendant state claims necessitated procedural complications at trial. See Haroldson, supra at 1461. Compare id. (procedural differences negate subject matter jurisdiction over pendant claims) with Brown v. Blue Cross, 33 FEP 316, 317 (E.D.Mich. 1982) (pendent jurisdiction exists but not exercised due to procedural complexities if state claims heard). The addition of state claims with their corresponding proofs of damages expands the issues and frustrates the express intent of Congress to expedite Title VII claims. Id; accord Hughes v. Marsh Instrument Company, 28 FEP 702 (N.D.Ill.1981). This intent is further frustrated when a jury demand is filed.

This Court agrees with the foregoing analysis of Judge Kane and, therefore, DENIES plaintiff’s motion to reconsider its previous order of dismissal of plaintiff’s state claim.


author: BECHTLE, District Judge.

text:
    John RODGERS v. SUN REFINING AND MARKETING COMPANY.
    Civ. A. No. 84-2429.
    United States District Court, E.D. Pennsylvania.
    Jan. 23, 1985.

      John R. O’Donnell, Philadelphia, Pa., for plaintiff.
    William J. Taylor, Thomas A. Masterson, Jr., Philadelphia, Pa., for defendant.
   MEMORANDUM AND FINAL ORDER

BECHTLE, District Judge.

John Rodgers, plaintiff, instituted these proceedings under the Petroleum Marketing Practices Act (“PMPA”), 15 U.S.C. § 2801, et seq., on May 18, 1984, seeking injunctive relief to prevent the defendant, Sun Refining and Marketing Company (“Sun”) from terminating his dealer franchise contract. The termination was sought because of plaintiff’s repeated practice of running out of product due to faulty re-ordering practices. The subject of the franchise relationship is a Sunoco gasoline service station located at Swedesford and Morehall Roads, Malvern, Pennsylvania, in the Eastern District of Pennsylvania. The court held hearings on the prayer for injunctive relief on November 2, 5,13, and 14 and December 3, 1984. On November 14, 1984, following completion of testimony and argument, the court rendered a bench ruling denying the relief plaintiff sought. However, since the franchise contract entered into on November 10, 1981, had run its three year term during the court proceedings, the court’s Order denying plaintiff relief also allowed plaintiff, until November 28, 1984, to submit to Sun a satisfactory proposal respecting a means to remedy the precise dispute at issue, in order to allow the plaintiff to seek renewal of the franchise relationship for an additional term, which he asked for. The plaintiff has complied with the conditional Order by submitting to Sun a written plan for a renewal period that plaintiff asserts will satisfy the complaints of Sun, which assertion the court concludes is justified. Sun has refused to accept, reject, or even consider the proposal on the merits, relying entirely upon its belief that the claimed and proven failure to comply with the franchise requirements in the past (during the previous but now expired franchise term) justifies, without more, a refusal by Sun to renew the franchise for an additional period. What must be understood here is that the court did not rule that the plaintiff’s failures resulted in a termination of the franchise contract because that question was rendered moot by reason of the expiration of the contract term.

The legislative history of the statute governing this case, S.Rep. No. 95-731, 95th Cong., 2d Sess. 3, reprinted in 1978 U.S. Code Cong. & Ad.News 873, 874, fairly read, tells us that the provisions pertinent to this proceeding establish protection for franchisees from arbitrary or discriminatory termination or nonrenewal of their franchises. It is intended to preclude the termination of a franchise contract or the refusal to renew a franchise at the expiration of a franchise term unless the termination or nonrenewal is based on a ground provided for in the legislation and is executed in accordance with certain notice provisions.

At the heart of the dispute between the plaintiff and Sun is a relatively finite factual circumstance as follows. Under the arrangement between the plaintiff and Sun, the plaintiff was to order fuel forty-eight hours in advance from the local terminal. Thereafter, the local terminal had that notice period, plus the twelve hour shift following the notice period to deliver the fuel. The plaintiff has three 6,000 gallon underground tanks at the station. One of these tanks is for leaded fuel and the other two tanks hold 6,000 gallons of “economy” unleaded fuel and 6,000 gallons of “ultra” unleaded fuel respectively. During the original franchise term that has now expired, plaintiff, apparently experiencing financial difficulties, would wait until the levels of his underground tanks would drop to levels at or below 1500 gallons for the unleaded fuel and 800 gallons or below with respect to leaded fuel. This waiting was necessary because, presumably, plaintiff needed the receipts from the sales of fuel sold to these levels in order to have enough money to pay the driver the price of the 8500 gallons of delivered fuel that had been ordered. This was plainly too close a tolerance with the consequence that the plaintiff would run out of fuel before the delivery arrived. The evidence at the trial demonstrated that on numerous occasions, clearly in excess of twenty and probably more, plaintiff ran out of various types of these fuels and had to post “out of gas” signs on his fuel tanks. Indeed, some fuel levels measured as low as 514 gallons (P-14), 806 gallons (P-5), 506 gallons and 320 gallons (P-8). In one instance the gallonage were as low as 79 gallons (P-9). Plaintiff’s need to post “out of gas” signs on his tanks was found by the court to be a proper concern of Sun. Indeed, there is correspondence prior to the time the parties entered into the franchise contract on November 10, 1981, that suggests Sun had this concern prior to entering into the contract; however, no particular gallonage requirement or level requirement for reordering was ever added into the franchise contract to protect Sun during the contract period.

Sun sought termination based upon these episodes of running out of product. The defendant has no other complaints against this franchisee. A fact of major significance concerning plaintiff’s proposal to cure fuel outages is Sun’s insistence to deliver only a full truck load of fuel (8500 gallons) and the accompanying insistence that the plaintiff accept the entire load. Sun, for economic reasons important only to itself, will not deliver less than 8500 gallons of fuel. With these facts facing this plaintiff seeking renewal and in response to the court’s requirement to submit a proposal for a contract provision to remedy the circumstance of running out of product, plaintiff filed with the court his proposal on December 3, 1984. Plaintiff is willing to be contractually bound to substantially raise the levels of his “ultra” and “leaded” fuel storage tanks to the highest levels that will still allow enough room in the tanks to comply with the defendant’s insistence that he accept 8500 gallons and no less. This was a dramatic change from the plaintiff’s previous ordering practice that resulted in outages. Plaintiff, under the new proposal, would maintain 3,000 gallons in each of the two tanks that contain unleaded product and 2,000 gallons in the leaded tank, as opposed to the previous level of 1500 gallons or less in the unleaded tanks and 800 gallons or less in the leaded tank.

This proposed franchise change was proffered by the plaintiff and is represented to be a workable requirement to avoid running out of product. It is clear that for causes beyond the plaintiff’s control (weather, truck breakdowns, strikes, etc.), the plaintiff cannot be held responsible under the Petroleum Marketing Practices Act if such events cause a failure in the franchisee’s obligations to the franchisor. See 15 U.S.C. § 2801(13)(B).

I. Burden of Proof

A franchisor, such as Sun in this case, who wishes to refuse renewal of a franchise has the burden of proving compliance with all the statutory requirements of PMPA. 15 U.S.C. § 2805(c). Under that section, the franchisee, such as plaintiff here, has the burden of proving the non-renewal of the franchise relationship, which he has done. Thereafter, the franchisor bears the burden of going forward with evidence to establish an affirmative defense that such non-renewal was permitted under § 2802(b).

Under § 2802(b) there are two groups of grounds upon which a franchisor can rely in establishing a right to non-renew. The first group found in § 2802(b)(2) includes five subjects and applies to terminations and non-renewals. The second group, subsection (3) of § 2802(b), contains four subjects and applies only to non-renewals.

II. As to § 2802(b)(2)

Of the five subjects covered in this section, only three are pertinent to this case. They are §§ 2802(b)(2)(A), (B), and (C) as follows:

(2) For purposes of this subsection, the following are grounds for termination of a franchise or nonrenewal of a franchise relationship:
(A) A failure by the franchisee to comply with any provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship, if the franchisor first acquired actual or constructive knowledge of such failure—
(i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if notification is given pursuant to section 2804(a) of this title; or
(ii) not more than 60 days prior to the date on which notification of termination or nonrenewal is given, if less than 90 days notification is given pursuant to section 2804(b)(1) of this title.
(B) A failure by the franchisee to exert good faith efforts to carry out the provisions of the franchise, if—
(i) the franchisee was apprised by the franchisor in writing of such failure and was afforded a reasonable opportunity to exert good faith efforts to carry out such provisions; and
(ii) such failure thereafter continued within the period which began not more than 180 days before the date notification of termination or nonrenewal was given pursuant to section 2804 of this title.
(C) The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable, if such event occurs during the period the franchise is in effect and the franchisor first acquired actual or constructive knowledge of such occurrence—
(i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if notification is given pursuant to section 2804(a) of this title; or
(ii) not more than 60 days prior to the date on which notification of termination or nonrenewal is given, if less than 90 days notification is given pursuant to section 2804(b)(1) of this title.

Sections 2802(b)(2)(D) and (E) are not applicable to this case.

Under § 2802(b)(2)(A), the refusal to renew is justified if the franchisee fails to comply with the provision of the franchise which is both “reasonable and of material significance” to the franchise relationship. Here, out of the franchise relationship that expired on November 9, 1984, came unacceptable episodes of plaintiff running out of fuel from causes within his control. A requirement by Sun that such a practice not be permitted to happen in any renewal period would be a reasonable request by Sun of, as the court found, a matter of material significance to the franchise relationship. The difficulty with defendant’s position here, however, is that at this time the plaintiff is offering, as a binding provision of a renewal franchise contract, a procedure that in plaintiff’s opinion will prevent running out of product. Despite this, Sun refuses renewal. Sun has the burden of going forward with the evidence to show that plaintiff, during a renewal period, will fail to comply with this reasonable proposed provision covering something of a material significance. The provision is both facially reasonable in view of the record in this case, and the plaintiff’s opinion as an experienced franchisee that it will succeed in any renewal period. It should be noted that this opinion has not been opposed by any evidence of Sun. Accordingly, Sun has not met its burden of proof that it is justified in resisting non-renewal under subsection (A).

The essence of the plaintiff’s obligation under § 2802(b)(2)(B) is that he must exert good faith efforts to carry out the provisions of the franchise. Since we are talking about renewal, a possible application of this ground to Sun’s refusal to renew could be that the plaintiff is currently either failing to exercise good faith to arrive at a reasonable accommodation to Sun’s needs concerning running out of fuel in the future, or, that the plaintiff will fail during the renewal period to exercise good faith to carry out any provision of the franchise governing running out of fuel. However, Sun has come forward with no evidence to support a conclusion that either or both of these interpretations showing a lack of good faith by the plaintiff currently exists or would exist during a renewal period. Sun has not met its burden of proof under subsection (B) and renewal cannot be resisted on this ground.

Subsection (C) of § 2802(b)(2) is somewhat of a catch-all provision that allows flexibility to the franchisor to point to events that aré not capable of precise description or identification until they occur, but which would be relevant to the relationship and would be events of such a type that by virtual definition non-renewal would be “reasonable.” This subsection must be read together with § 2802(c) which sets forth in considerable detail twelve examples of the types of events that would be not only relevant but of such magnitude that termination or non-renewal would be deemed reasonable virtually without question. These examples include fraud or criminal conduct; declaration of bankruptcy; mental and physical disability of the franchisee for three months or longer; loss of right of the franchisor of possession of the leased premises; condemnation of all or part of the franchise premises; loss of franchisor’s trademark privileges without fault of the franchisor; destruction of the franchise premises; failure by the franchisee to operate for seven days or longer; adulteration, mislabeling, or misbranding by franchisee of fuels; franchisee’s knowing failure to obey federal, state or local laws; or conviction of franchisee of any felony involving moral turpitude. These events are plainly of the type that by mere occurrence would justify, without more, a termination or non-renewal of the relationship by the franchisor. It should be noted, however, that even with matters as serious and as plainly objectionable as the conduct represented by these examples, in view of the Act’s specific intent to benefit franchisees, § 2802(c) has been held not to be a per se termination rule favoring franchisors. See Sun Refining and Marketing Company v. Rago, 741 F.2d 670 (3d Cir. 1984). In view of the intent of the Act to protect franchisees from both termination and non-renewal, we construe this authority to extend to non-renewal circumstances as represented by the record in the case before us with the same binding effect as cases involving termination.

Assuming that the plaintiffs experience of running out of fuel, as far as being a relevant event is concerned, is the type of event contemplated by § 2802(c), non-renewal is not reasonable here. (Indeed, there is serious doubt as to whether or not that particular event could have been the basis of a termination of the since expired franchise in view of Sun’s knowledge of the practice before entering into the franchise and an election in the face of such knowledge not to include a running out of fuel provision as a provision of the franchise contract.) In order for Sun to consider the history of running out of fuel as a reasonable basis not to renew for the future, there must be some evidence that plaintiff is unwilling to change his ways or unwilling to be legally bound in a manner that will result in a change of procedures that would avoid running out of fuel. The plaintiff has not insisted upon his right to repeat the past, indeed, he has offered a provision for a new franchise, that Sun refuses to address, that facially appears to be workable, and carries with it plaintiff’s opinion that remains unanswered by Sun, that the plan will work. That evidence is buttressed by the mathematical reality of plaintiff’s underground tank capacity that plaintiff can do no more to conform to Sun’s method of allowing plaintiff to reorder Sun’s product for sale at the franchise premises. Accordingly, the running out of fuel is clearly relevant to the franchise relationship in any renewal period. However, there is no evidentiary support for Sun’s position that the fear of such event occurring in the future makes it a reasonable ground to refuse to renew.

III. As to § 2802(b)(3)

Under subsection (3) of § 2802(b), there are four grounds for non-renewal of a franchise relationship. The only ground pertinent to this case is that set forth in subparagraph (A) of § 2802(b)(3), which reads as follows:

(3) For purposes of this subsection, the following are grounds for nonrenewal of a franchise relationship:
(A) The failure of the franchisor and the franchisee to agree to changes or additions to the provisions of the franchise, if—
(i) such changes or additions are the result of determinations made by the franchisor in good faith and in the normal course of business; and
(ii) such failure is not the result of the franchisor’s insistence upon such changes or additions for the purpose of preventing the renewal of the franchise relationship.

The other three subsections do not apply to the parties in this case but cover circumstances where the franchisor receives bona fide customer complaints; the failure by the franchisee to operate a clean, safe, and healthful premises; and an election in good faith by the franchisor to convert the premises, replace them, or sell the premises, or similar dispositive steps taken by the franchisor to abandon the franchise premises.

The substance of § 2802(b)(3)(A) is that a franchisor is not required to renew if the parties cannot come to terms for the new franchise. The franchisor, however, in refusing to come to terms, can only do so as a result of decisions made in good faith and in the normal course of business and the failure to come to terms cannot be the result of franchisor’s insistence upon changes or additions where the underlying purpose is to prevent renewal. Here, it is plain that there must be a change in the franchise relationship to protect Sun from the running out of fuel by plaintiff. Plaintiff is willing to make such a change in the contract and has submitted a proposal for Sun’s consideration. Sun refuses to consider the proposal. Sun’s position was best stated at the hearing of December 3, 1984, at pages 20 and 21:

THE COURT: All right.

If Mr. Rodgers’ plan will work and he will not run out of product, do you have a position whether it will or will not work?
MR. TAYLOR: Your Honor, I have no position.
THE COURT: All right. If you have no position, how can it be reasonable to refuse renewal in the face of a plan that would appear to solve the problem? There has to be a reason. Reasonable means based on reason.
I want to know what is your reason, if he has solved the running-out-of-product question. You are not telling me that, Mr. Taylor.
MR. TAYLOR: Your Honor, I think what I am saying is this. I think there is a point at which we don’t have to consider any further proposals from Mr. Rodgers. I think we are at that point. I think we have satisfied our obligation under the statutory requirement under this Act. I think we are beyond the point where we have to consider any further proposals from this gentleman. That is what my position is, Judge Beehtle.

This arbitrary refusal to consider the proposed change in the franchise relationship is by definition a failure to exercise good faith and the very type of circumstance that the Act is intended to protect a franchisee against. Further, the fact that the franchisor is not merely insisting on changes or additions that are pretextual, but rather, does not want to consider any changes or additions at all, leaves this court the easy course of concluding and finding that such failure to consider the proposed terms can only be for the purpose of preventing renewal of the franchise relationship.

Again, Sun has the burden of going forward with the evidence to establish that in refusing to renew § 2802(b)(3)(A) its determinations arise out of an atmosphere and a position of good faith and not as a result of a determination to simply prevent renewal of the franchise. Sun has failed to meet its burden of proof in this respect and accordingly the plaintiff must prevail.

Furthermore, Sun has not demonstrated to the satisfaction of the court that any of the elements set forth in § 2805(e)(1) prevent the plaintiff from seeking the relief sought in this case.

An appropriate Order will be entered.

FINAL ORDER

AND NOW, TO WIT, this 23rd day of January, 1985, IT IS ORDERED as follows:

1. The previous preliminary injunction entered by the court on December 3, 1984, preventing the defendant from changing the franchise relationship between the plaintiff and the defendant is hereby rendered as a final injunction; and

2. The defendant is hereafter, until further Order of court, enjoined from interfering in any way with the franchise relationship between the plaintiff and the defendant and the same shall continue hereafter for an additional three (3) year term under the same terms and conditions as governed the franchise relationship between the parties that expired on November 10, 1984, and as extended by stipulation of the parties to the date of this Final Order; and in addition, plaintiff shall be required to conform to each and every term of the proposal presented to Sun as Exhibit “C” to Plaintiff’s Motion to Amend His Complaint, filed with the court on December 12, 1984; and

3. The court shall retain continuing jurisdiction of this civil action.

      . The parties also operate under an accompanying lease' arrangement for the premises.

      . See N.T. 30 (Hearing of November 14, 1982).

      . See N.T. 1-8 (Hearing of December 3, 1984) and Exhibit "C" to Plaintiff’s.Motion to Amend His Complaint, filed December 12, 1984.

      . See N.T. 8-10 (Hearing of December 3, 1984).

      . This arrangement allows the mixture of the economy and the ultra brands to provide a variety of grades from the vantage point of octane content. The ultra brand, during some of the relevant periods of this case, was also referred to as "super," but they are, for our purposes, one and the same.

      . See D-l; dated September 4, 1981.

      . See D-6; the former contract entered into on November 10, 1981.

      . See N.T. 13-20 (Hearing of December 3, 1984).

      . See N.T. 5, 6 (Hearing of December 3, 1984).

      . See paragraph 7(d)(i), (ii) and (iii) of Exhibit “C” to Plaintiffs Motion to Amend His Corn-plaint.

      . See N.T. 5-7 (Hearing of December 3, 1984).

      . See D-l; dated September 4, 1981.

      . See N.T. 41-43 (Hearing of November 14, 1984).


author: CONTI, District Judge.

text:
    Doris ROBERTSON, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. C-80-3901 SC.
    United States District Court, N.D. California.
    Jan. 24, 1985.
    John MacMorris of Langer, Murray & MacMorris, San Francisco, Cal., for plaintiff.
    Joseph Russoniello, U.S. Atty., Northern District, California, San Francisco, Cal., for defendant.
   ORDER RE MOTIONS FOR SUMMARY JUDGMENT

CONTI, District Judge.

Plaintiff brings this action pursuant to sections 205(g) and 1631(c)(3) of the Social Security Act (“Act”), 42 U.S.C. §§ 405(g) and 1383(c)(3), to obtain judicial review of a final decision of the Secretary of Health and Human Services (“Secretary”) denying her claims for disability insurance benefits, disabled widow’s insurance benefits, and supplemental security income benefits based on disability. Plaintiff does not contest the portion of the Secretary’s decision holding that plaintiff is not entitled to disabled widow’s insurance benefits. The Secretary’s findings must be supported by substantial evidence and the Secretary must have applied the proper legal standards in denying plaintiff’s claims. Delgado v. Heckler, 722 F.2d 570, 572 (9th Cir. 1983) . If the Secretary’s findings are not supported by substantial evidence or are based upon a legal error, the Secretary’s denial of benefits must be set aside. Kail v. Heckler, 722 F.2d 1496, 1497 (9th Cir. 1984) . The matter is currently before the court on plaintiff’s and the Secretary’s cross-motions for summary judgment.

The term “disability” is defined by section 223(d)(1)(A) of the Act as the “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment” lasting at least one year. 42 U.S.C. § 423(d)(1)(A). The impairment must be “of such severity that [the claimant] is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy.” 42 U.S.C. § 423(d)(2)(A). The claimant has the initial burden of establishing that he is unable to do his previous work, but once the claimant has made such a showing the burden shifts to the Secretary to show that there is other substantial gainful activity that the claimant can perform. Bonilla v. Secretary of HEW, 671 F.2d 1245, 1246 (9th Cir.1982); Hall v. Secretary of HEW, 602 F.2d 1372, 1375 (9th Cir.1979). Under certain “medical-vocational guidelines” (“grids”) promulgated by the Secretary, see Appendix 2 of Subpart P, 20 C.F.R. § 404.1501 et seq., a claimant will be found capable of “other substantial gainful employment” if he meets certain age, educational, skill and exertional requirements.

Plaintiff filed applications for the three types of benefits she sought on June 12, 1979, alleging that she became unable to work, due to a back injury and angina, in October 1969, which was later amended to October 1, 1970. Plaintiffs applications were denied initially and on reconsideration by the Social Security Administration after a finding that plaintiff was not disabled. On May 20, 1980 the Administrative Law Judge (“AU”) also found that plaintiff was not disabled. The decision of the AU was adopted as the final decision of the Secretary by the Appeals Council on September 3, 1980.

Plaintiff then sought judicial review of the Secretary’s decision with this court. In an order dated April 2, 1981 the court affirmed the Secretary’s decision. Plaintiff appealed this court’s affirmance of the Secretary’s decision to the Ninth Circuit. On April 15, 1982 the Ninth Circuit reversed the April 2, 1981 order of this court and remanded the case to the Secretary for further administrative action.

Pursuant to Ninth Circuit’s remand, the Appeals Council on May 28, 1982 vacated its denial of plaintiff’s request for review and remanded the case to an AU. On February 10, 1983 plaintiff, her attorney, and two vocational experts appeared before the AU. On October 31, 1983 the AU issued two recommended decisions in which he found that plaintiff was not entitled to disability insurance benefits, supplemental security income benefits, or disabled widow’s insurance benefits. The decisions by the AU became the final decisions of the Secretary when they were modified and adopted as modified by the Appeals Council on July 6, 1984.

The parties frame the issue before the court solely as whether plaintiff’s previous skilled work as a licensed vocational nurse provided her with skilled or semiskilled skills which are transferable to sedentary work occupations, which the Secretary determined that plaintiff has the residual functional capacity to perform. The parties agree that if plaintiff acquired such transferable skills she is not disabled, and if she did not then she is disabled. The parties focus on the above issue based on the following medical-vocational guidelines within 20 C.F.R. Part 404, Subpart P, Appendix 2, Table No. 1: under the rubric of sedentary work, in accordance with either the “advanced age” or “closely approaching advanced age” categories (see 20 C.F.R. § 404.1563(c) and (d)), if plaintiff has skilled or semiskilled skills which are transferable she is not disabled (Rules 201.07 and 201.15), and if plaintiff does not have such transferable skills she is disabled (Rules 201.06 and 201.14).

At the post-remand hearing before the AU, two vocational experts, Dr. Leonard Newman and Mr. Dale Stoop, testified as to the transferability of plaintiff’s skills. Dr. Newman testified that plaintiff was without any transferable skills from her previous work which could be applied to alternative sedentary or light work activities. Mr. Stoop, on the other hand, testified to the contrary. Plaintiff argues that the Secretary’s ultimate reliance on Mr. Stoop’s testimony was ill-founded because Mr. Stoop’s definition of skill was erroneous as a matter of law, and thus the Secretary’s decision was based upon an improper legal standard and therefore may not stand, pursuant to Kail v. Heckler, 722 F.2d at 1497. Plaintiff acknowledges that if Mr. Stoop’s definition of skill was correct as a matter of law, then the Secretary’s decision ¡was based upon the substantial evidence, pursuant Delgado v. Heckler, 722 F.2d at 572.

The court concludes, as will be discussed below, that the Secretary’s reliance on Mr. Stoop’s testimony resulted in the application of an improper legal standard, because such testimony was flawed by the fact that Mr. Stoop implemented the wrong definition of skill. Furthermore, the substantial evidence supports the testimony of Dr. Newman stating that plaintiff did not have transferable work skills. Consequently, the decision of the Secretary must be reversed.

Mr. Stoop characterized plaintiff’s transferable skills as: “the ability to learn and apply and use technical training”; “[t]he ability for working with and relating to people, obtaining their trust and confidence, building rapport”; “[t]he ability to be able to pay close attention to details with the exactness and precision that’s necessary to maintain charts and distribute medications”; and “finger dexterity and manual — manual dexterity, and eye/hand coordination.” Mr. Stoop testified that these alleged skills of plaintiff could be transferred to the following alternative jobs: home companion, medical assistant, ward clerk, appointment clerk, hospital admissions clerk, insurance verifier, and laboratory aide.

Mr. Stoop testified that he relied on a definition of skill as the ability to pay close attention to detail, as well as finger and manual dexterity, in arriving at the list of alternative jobs that he determined plaintiff’s skills could be transferred to. This definition of skill is inaccurate, as will be discussed below. Furthermore, Mr. Stoop acknowledged that if the definition of skill did not include manual dexterity and the ability to pay close attention, which it does not, then plaintiff did not have transferable skills. This acknowledgment by Mr. Stoop undercuts the Secretary’s finding that plaintiff had transferable work skills (such as keeping appropriate patient charts, recording vital signs and changing dressings, using medical equipment, and administering medications), because the Secretary relied on Mr. Stoop’s erroneous testimony in reaching this conclusion.

Mr. Stoop confused the definition of skill with that of trait or aptitude. Social Security Ruling 82-41, which is binding upon all components of Social Security Administration (see 20 C.F.R. § 422.408), in referring to “alertness and close attention ... coordination and dexterity,” states in Ruling 82-41(2)(d) that “[tjhese descriptive terms are not intended ... to illustrate types of skills, in and of themselves,” but rather that “the terms describe work traits (aptitudes or abilities) rather than acquired work skills.” Ruling 82-41(2)(d) further states that “[i]t is the acquired capacity to perform the work activities with facility (rather than the traits themselves) that gives rise to potentially transferable skills.” Ruling 82(2)(a) defines a skill as follows:

A skill is knowledge of a work activity which requires the exercise of significant judgment that goes beyond the carrying out of simple job duties and is acquired through performance of an occupation which is above the unskilled level.... It is practical and familiar knowledge of the principles and processes of an art, science or trade, combined with the ability to apply them in practice in a proper and approved manner. This includes activities like making precise measurements, reading blueprints, and setting up and operating complex machinery. A skill gives a person a special advantage over unskilled workers in the labor market.

It is clear from the above the Mr. Stoop was more accurately describing plaintiff’s work traits or aptitudes, and not plaintiff’s work skills that may or may not be transferable. Thus, his testimony that plaintiff’s work skills were transferable was erroneous and so was the Secretary’s reliance on his testimony.

Furthermore, the substantial evidence supports^ the testimony of Dr. Newman. Dr. Newman has been recognized as a vocational expert since 1972 by the Social Security Office of Hearings and Appeals. Dr. Newman evaluated plaintiff as possessing the following skills:

[Plaintiffs] skills ... involve direct patient care for individuals who are ill or injured or convalescent and may also be handicapped, in various hospitals and clinics, convalescent hospitals and so forth.
[Plaintiff] is trained to take — record vital signs including temperature, blood pressure, so on. May apply dressings, give enemas, douches, rubs to the patient and will observe and chart their — their behavior or activities and may as well under supervision of a registered nurse or a physician, assemble and utilize oxygen and other medically required things such as tracheotomy tubes and so on.
[Plaintiff] will of course bathe, dress and assist patients in walking and ambulation as needed.

Dr. Newman testified that plaintiff’s skills are only transferable within the health services industry. He concluded that there exist no other occupations either in a lateral positions or positions requiring lesser skill that demand any less exertion than that of plaintiff’s previous employment as a licensed vocational nurse, and thus that plaintiff had no transferable skills to light or sedentary work. Upon a review of the record, the court finds the testimony of Dr. Newman persuasive.

Therefore, because the Secretary relied on improper legal standards in ascertaining whether plaintiff has transferable skills, and because the substantial evidence establishes that plaintiff does not have such skills, the decision of the Secretary cannot be affirmed. Reversal is more appropriate than remand in this case, as this litigation has been ongoing for many years, and a rehearing would simply delay plaintiff’s receipt of benefits. See Lewin v. Schweiker, 654 F.2d 631, 635 (9th Cir.1981).

In accordance with the foregoing, it is hereby ordered that:

(1) plaintiff’s motion for summary judgment is granted;

(2) the Secretary’s motion for summary judgment is denied; and

(3) the Secretary’s decisions denying plaintiff’s eligibility for disabled widow’s benefits, disability insurance benefits, and supplemental security income benefits are reversed, and plaintiff is hereby entitled to the latter two types of benefits.


author: DOUMAR, District Judge.

text:
    Mary B. KEITH, Plaintiff, v. Margaret M. HECKLER, Secretary of Health & Human Services, Defendant.
    Civ. A. No. 84-9-NN.
    United States District Court, E.D. Virginia, Newport News Division.
    Jan. 25, 1985.

      Stephen M. Smith, Joseph Smith, Ltd., Hampton, Va., for plaintiff.
    Larry W. Shelton, Asst. U.S. Atty., Norfolk, Va., for defendant.
   OPINION AND ORDER

DOUMAR, District Judge.

The plaintiff, Mary B. Keith, by counsel, brought this suit pursuant to 42 U.S.C. Section 405(g) seeking review of the Secretary’s final decision denying her supplemental social security benefits. The matter is before the Court on the Secretary’s motion to dismiss the action, and the opposition motion of the plaintiff. The Court DISMISSES the action for the reasons below.

I.

42 U.S.C. § 405(g) not only grants but delineates the requisites for federal district court jurisdiction over this subject matter. The section requires commencing a civil action for judicial review within 60 days of any final decision of the Secretary made after a hearing. At bar, the Secretary’s motion challenges federal jurisdiction, asserting that this action was not filed within 60 days. The plaintiff argues the action was timely filed.

The relevant chronological events are noted below:

(a) April 26, 1983 — AU decision mailed to plaintiff. Her application for benefits is denied.

(b) June 21, 1983 — “Final Decision” of Secretary rendered. Social Security Appeals Council sends on June 21, 1983 by properly addressed, certified mail, a form letter dated June 10, 1983 to the plaintiff upholding AU’s decision. Letter indicates plaintiff’s right to judicial review within 60 days.

(c) July 27, 1983 — Plaintiff’s attorney sends a “physical capacities evaluation” completed by Dr. Phillips to Appeals Council apparently seeking reopening of the Secretary’s final decision of June 21, 1983.

(d) August 20, 1983 — Expiration of 60 day time limit from June 21, 1983, date of mailing of notice.

(e) November 4, 1983 — Appeals Council sends plaintiff’s attorney a letter noting his of July 27, 1983, yet deciding no new evidence exists to vacate the “Final Decision”.

(f) December 30, 1983 — The plaintiff's attorney seeks judicial review and a complaint is “lodged” with the Clerk of Court. Complaint not recorded as “filed” because filing fee not paid, and attorney is notified by Clerk of defect.

(g) January 3,1984 — 60 days runs from the date of the November 4, 1983 Appeals Council Letter, (e), supra.

(h) January 20,1984 — This action is recorded as “filed” by Clerk upon receipt of filing fee, 77 days after November 4, 1983 Appeals Council letter denying reconsideration, and 7 months after original “Final Decision”.

As can be seen from the sequence of events, the original “Final Decision” of the Social Security Administration (SSA) was rendered June 21, 1983. The critical date for filing a civil complaint seeking review of the SSA decision was August 20, 1983. The instant complaint was filed on January 20,1984. However, plaintiff’s counsel sent to the SSA a “physical capacities evaluation” completed by a doctor, well within the 60 day judicial review filing deadline. See (c), supra. The SSA did not respond to the July 27, 1983 correspondence until months later, on November 4, 1983, well outside the 60 day time limit. The plaintiff’s attorney did not file a court action by August 20, 1983 apparently waiting to hear from the SSA.

The letter of the plaintiff’s attorney did not request an extension of time to request reopening nor did the SSA ever indicate it would reopen the denial of benefits. The Court can only presume that the intention of counsel was to obtain some change in the original SSA decision.

In any case, on November 4, 1983, the SSA sent the following letter to counsel:

Dear Mr. Smith:
Re: Ms. Mary B. Keith, 6 Crestwood Circle, Hampton, VA 23669 After the Appeals Council denied the request for review in this case, it received a physical evaluation dated July 11, 1983 from James Phillips, M.D.
The Appeals Council has given careful consideration to the physical capacities evaluation provided by Dr. Phillips but decided that the new evidence does not provide a basis for changing the prior conclusion reached by the Council on June 10, 1983 [mailed June 21, 1983]. In view of the above, the Appeals Council kas decided that there is no basis for vacating its previous action in this case. Accordingly, the decision dated April 26, 1983, stands as the final decision of the Secretary on the claimant’s application dated August 27, 1982.
Sincerely,
/s/ David G. Danziger
David G. Danziger
Member, Appeals Council

(emphasis added).

The statute involved, 42 U.S.C. § 405(g), provides in part as follows:

(g) Judicial review. Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow____

The statute provides that in order to obtain a review, a civil action must be commenced within 60 days after the mailing to him of the final decision or within any extension the secretary may allow.

Under the pertinent regulations, the issue is whether the letter of July 27, 1983 constituted or created an extension or whether the letter of November 4, 1983 created a new “final decision.”

Under the narrow supplemental Social Security benefit regulations permitting reopening, a claimant may in effect be able to extend or toll the 60 day judicial review time frame laid out in 42 U.S.C. § 405(g). This obtains if the SSA vacates an otherwise final decision by (1) granting an “Extension of time to file action in Federal District Court”, 20 C.F.R. 416.1482 (1984), or (2) by reopening an otherwise final decision under the following federal regulations:

§ 416.1482. Extension of time to file action in Federal district court.
Any party to the Appeals Council’s decision or denial of review, or to an expedited appeals process agreement, may request that the time for filing an action in a Federal district court be extended. The request must be in writing and it must give the reasons why the action was not filed within the stated time period. The request must be filed with the appeals Council, or if it concerns an expedited appeals process agreement, with one of our offices. If you show that you had good cause for missing the deadline, the time period will be extended. To determine whether good cause exists, we use the standards explained in § 415.411. § 416.1487. Reopening and revising determinations and decisions.
(a) General. Generally, if you are dissatisfied with a determination or decision made in the administrative review process, but do not request further review within the stated time period, you lose your right to further review. However, a determination or a decision made in your case may be reopened and revised____
******
More importantly, 20 C.F.R. § 416.-1488 (1984), entitled “Conditions for Reopening” reads in part:
A determination, revised determination, decision, or revised decision may be reopened—
(a) Within 12 months of the date of the notice of the initial determination for any reason;
(b) Within two years of the date of the notice of the initial determination if we find good cause, as defined in § 416.-1489, to reopen the case; ____
******

(emphasis added). In this case it does not appear that the plaintiff’s attorney ever requested an extension of time pursuant to § 404.982, nor that the Secretary or anyone acting for her extended the time.

The plaintiffs original application was filed August 27, 1982. The language of § 416.1488 states that the SSA may reopen a case for any reason so long as it is sought within 12 months of the initial determination. The operative word in section 416.1488 is “may”. The clause does not state that the SSA shall reopen the case. Therefore, reopening of the decision was in the discretion of the SSA. Though counsel properly could have sought to reopen within 12 months, the 60 day judicial review time was continuing to run by without an SSA response. Cf. Friddle v. Heckler, 720 F.2d 24 (8th Cir.1983). On November 4, 1983, the SSA declined to vacate the prior decision. No reopening nor an extension by regulation or statute was effectuated in any way.

The rule is well settled that the letter of November 4, 1983 indicating that a prior final decision will not be vacated or reopened does not constitute a new “final decision”, and the critical date runs from the earlier date. Califano v. Sanders, 430 U.S. 99, 108, 97 S.Ct. 980, 985, 51 L.Ed.2d 192 (1977); Teague v. Califano, 560 F.2d 615, 618 (4th Cir.1977); Easley v. Finch, 431 F.2d 1351, 1353 (4th Cir.1970); Parker v. Sec. of HHS, 543 F.Supp. 1041 (E.D.N.Y. 1982); Brantley v. Califano, 478 F.Supp. 613 (M.D.Ga.1979); Gross v. Celebrezze, 246 F.Supp. 66 (D.C.Ind.1965); Kinyoun v. Ribicoff 194 F.Supp. 528 (W.D.Mo.1961). As the Supreme Court decided in Sanders, supra:

[A]n interpretation that would allow a claimant judicial review simply by filing — and being denied — a petition to reopen his claim would frustrate the congressional purpose, plainly evidenced in § 205(g), [42 U.S.C. § 405(g)] to impose a 60-day limitation upon judicial review of the Secretary’s final decision on the initial claim for benefits. 20 C.F.R. § 404.951 (1976). Congress’ determination so to limit judicial review to the original decision denying benefits is a policy choice obviously designed to forestall repetitive or belated litigation of stale eligibility claims.

403 U.S. at 108, 97 S.Ct. at 986. Admittedly, in Sanders the petition to reopen or reconsider was requested several years after the original final decision and well outside the judicial review time frame. However, theoretically, there is no difference between Sanders and the case at bar. Congress established a reasonable time constraint which must be followed to deny multiple claims on essentially the same application. Under any other construction, there would never be any “final decision”, so long as a claimant filed or kept filing “reconsiderations”, and the 60-day judicial review time frame would be undermined. As the Fourth Circuit stated in Teague, supra, 560 F.2d at 618, § 405(g) “does not permit judicial review of agency decisions refusing to reopen a claim proceeding.” Thus, the time within which the plaintiff should have “commenced” his judicial suit was August 20, 1983.

II.

Even if the Appeals Council’s refusal to vacate its prior decision was viewed as the final decision or triggering date, the result would still be the same.

The suit was first received by the Court on December 30, 1983, or 56 days after the refusal to vacate. The required $60.00 filing fee did not accompany the complaint. The Clerk’s Office therefore “lodged” the complaint and notified plaintiff’s counsel by phone of the fee deficiency. A clerk’s notation on the cover letter which counsel sent to the Clerk’s Office indicates that the Clerk’s Office called counsel December 30, 1983 and January 6, 1984, requesting that the fee be paid.

Counsel paid the fee on January 20,1984, seventy-seven days after the reconsideration denial, and the action was recorded as filed on that date.

The issue of whether the Clerk’s receipt of the complaint, without the $60.00 filing fee constituted commencement of the action will be determined without reference to SSA regulations, save for the 60-day judicial review time limit of 42 U.S.C. § 405(g).

Rule 3 of the Federal Rules of Civil Procedure states as follows:

A civil action is commenced by filing a complaint with the court.

Rule 5(e) of the Federal Rules of Civil Procedure states as follows:

The filing of pleadings and other papers with the court as required by these rules shall be made by filing them with the clerk of the court____

The following statement appears at 2 Moore’s Federal Practice, § 3.04, at 3-18:

Question has arisen as to whether an action is properly commenced where the complaint is delivered to the clerk without payment of the filing fee. Although some earlier decisions held that payment of the fee is a prerequisite to filing of the complaint, [footnote omitted] in the more recent cases it has been held that payment of the fee is not required to commence an action.

Id. For this “recent cases” proposition, Moore’s cites the following:

The Supreme Court’s decision in Parissi v. Telechron, Inc. (1955) 349 U.S. 46, 75 S Ct 577, 99 L ed 867, dealing with a closely analogous situation, supports the conclusion that payment of the filing fee is not a prerequisite to commencing an action. In Parissi, a notice of appeal and appeal bond were received by the clerk of the district court, within the prescribed 30 days for appeal. The appellant inadvertently neglected to pay the five dollar filing fee until after the 30 days had elapsed. The Court of Appeals dismissed the appeal as untimely. The Supreme Court reversed. It held “that untimely payment of the § 1917 fee did not vitiate the validity of petitioner’s notice of appeal.”
The court in both Anno [Anno v. United States, 113 F.Supp. 673, 125 Ct.Cl. 535 (1953)] and Turkett [Turkett v. United States, 76 F.Supp. 769 (N.D.N.Y.1948) ] relied to some extent on cases holding that failure to pay the filing fee within the prescribed time for appeal constituted a jurisdictional defect. Mondakota Gas Co. v. Montana-Dakota Utilities Co. (CA9th, 1952) 194 F.2d 705; Smith v. Johnston (CA9th, 1940) 109 F.2d 152. The court in Parissi expressly disapproved the Mondakota Gas case.
In Bolduc v. United States (D Me 1960) 189 F.Supp. 640, the complaint was filed before the running of the statute of limitations, but the filing fee was not paid. The court refused to enter a summary judgment as it felt that Anno and Turkett had been repudiated by Parissi. Therefore, the complaint was held to be filed as of the date the complaint was first received by the clerk.
* * * * He *

Moore’s, supra, note 6 at 318-319. The Supreme Court’s per curiam, one page opinion in Parissi, supra, was based on 28 U.S.C. § 1917, which details fees payable on appeals taken from district courts. The statute reads:

§ 1917. District courts; fee on filing notice of or petition for appeal.
Upon the filing of any separate or joint notice of appeal or application for appeal or upon the receipt of any order allowing, or notice of the allowance .of, an appeal or of a writ of certiorari $5 shall be paid to the clerk of the district court, by the appellant or petitioner.

Moore’s notes the Parissi case and the Bolduc case which was decided subsequent to Parissi.

Bolduc is significant and enlightening. There the complaint was “lodged” within the two year Federal Tort Claims Act statute of limitations. However, the action was not recorded as “filed” until the Clerk received the filing fee, which occurred outside the limitations period. Bolduc, supra, at 641. Accordingly, the defendant filed a summary judgment motion alleging that the action was barred as filed too late. The Court examined 28 U.S.C. § 1917 (appeal fees), supra, and compared it with 28 U.S.C. § 1914 (district court filing fees), which presently reads in full:

§ 1914. District court; filing and miscellaneous fees; rules of court.
(a) The clerk of each district court shall require the parties instituting any civil action, suit or proceeding in such court, whether by original process, removal or otherwise, to pay a filing fee of $60 except that on application for a writ of habeas corpus the filing fee shall be $5.
(b) The clerk shall collect from the parties such additional fees only as are prescribed by the Judicial Conference of the United States.
(c) Each district court by rule or standing order may require advance payment of fees.
(d) This section shall not apply to the District of Columbia.

Following this comparison, the Court in Bolduc held:

The Court is unable to find any significant variation between the statutory language which was applicable in the Parissi case and that which is applicable here. Nor can this Court perceive any cogent consideration of policy that would distinguish the present case in principle from the Parissi case.
Only one further comment is necessary. 28 U.S.C. § 1914(c) provides: “Each district court by rule or standing order may require advance payment of fees. This District has no such rule or standing order. In view of the Parissi case, there is some question as to whether even such a rule or order would affect the outcome of this case. Without such a rule or standing order, the Parissi case seems clearly controlling.
For the reasons stated, the Court will enter a nunc pro tunc order according to the complaint a filing date as of the date the complaint was received in the Clerk’s Office; ...

Bolduc, supra, at 642. (Emphasis added).

Critical to the determination of this case is the fact that the Local Rules of Practice in the Eastern District of Virginia do provide for advance payment of filing fees pursuant to 28 U.S.C. § 1914(c). Therefore, we find a significant and dispositive difference between the Bolduc case and the instant case. Here, there is a local rule promulgated pursuant to the statute; whereas, in the Bolduc case, no such rule was in place. Local Rule 16(B) states:

RULE 16
COSTS NONRESIDENTS NOTICE OF APPEAL
******
(B) Payment in Advance: All fees and costs due the Clerk shall be paid in advance except (1) in actions brought on behalf of seamen, (2) where a party has been authorized to proceed in forma pauperis, or (3) where a party is otherwise exempt by law.
******

Local Rules of Practice, United States District Court for the Eastern District of Virginia. (Effective July 1, 1982). Clearly, Local Rule 16 requires the advance payment of district court filing fees; hence, unlike the situation in Bolduc, the Clerk here properly refused to record the complaint as filed without the payment of the fee. The instant plaintiff was neither proceeding in forma pauperis, as a seaman, or under any recognized exemption.

Interestingly, the local rules do not mention advance payment of fees on taking an appeal to the Court of Appeals for the Fourth Circuit, nor does 28 U.S.C. § 1917 sanction local rules for advance payment thereof. The provision of 28 U.S.C. § 1914(c) authorizing the local prepayment rule in the district courts is not paralleled in the appeal fee statute, 28 U.S.C. § 1917, this being the single most important factor adduced by the Court.

The Court believes that the Parissi Supreme Court decision is properly applicable to appeals from the District Court under 28 U.S.C. § 1917, and not to cases construing payment of district court fees under 28 U.S.C. § 1914. We must disagree with the statement in Bolduc that Parissi “seems clearly also to repudiate the doctrine of the Turkett and Anno cases ...” Bolduc, supra, at 641. Parissi in a one-page per curiam decision only held that lack of the fee with a notice of appeal did not warrant dismissal, and stated that: “Anything to the contrary in such cases as Mondakota Gas Co. v. Montana-Dakota Utilities Co., 9th Cir.1952, 194 F.2d 705, we disapprove.” Parissi expressly overruled cases holding that the fee is a positive prerequisite to proper “filing” of an appeal, such as Mondakota, supra (notice of appeal, fee issue); Smith v. Johnston, 109 F.2d 152 (9th Cir. 1940) (in forma pauperis, notice of appeal and fee issue); however, we feel it did not repudiate Anno v. United States, 113 F.Supp. 673, 125 Ct.Cl. 535 (1953) (district court filing fee required to commence action, pursuant to 28 U.S.C. § 1914); Turkett v. United States, 76 F.Supp. 769, (N.D. N.Y.1948) (district court filing fee required in advance to commence action, pursuant to 28 U.S.C. § 1914 predecessor and local rule); cf. Oil Well Supply Co. v. Wickwire, 52 F.Supp. 921 (E.D.Ill.1943) (fee is condition precedent to commencement of action in Illinois state court where advance fee payment statute in force).

Besides the important difference in the statutory language of 28 U.S.C. § 1914, which permits the prepayment local rule, and § 1917, which does not, the Court makes note of significant policy considerations. Authorizing the commencement of the district court action without the required fee would breed countless administrative and procedural woes, and give to the Clerk’s Office an element of discretion where none was intended. The Clerk’s office could be converted into a part-time credit institution, spending significant energy collecting fees as well as extending credit. See Turkett, supra at 770.

Prior to the date of a complaint’s “filing”, jurisdictional and procedural deadlines abound. Upon the proper “filing” in the district court, these various limitations often are moot. Therefore, when an appeal is taken from a case already legitimately filed and considered, it is understandable that the lack of the $5.00 fee with a notice of appeal should not cause dismissal of the appeal under 28 U.S.C. § 1917. See Parissi, supra.

In the Eastern District of Virginia, the complaint must be accompanied by the filing fee to achieve filed status, with the exceptions noted in Local Rule 16(B). The complaint in this matter was not properly “filed” within the time frame required. Thus, for the reasons set forth in Parts I and II of this opinion, this action is DISMISSED with prejudice.

IT IS SO ORDERED.

      . Some decisions involving timeliness of Court filings by Social Security claimants have examined whether the time frames run from mailing or receipt of the SSA notice. See Whipp v. Weinberger, 505 F.2d 800 (6th Cir.1974); Chiappa v. Califano, 480 F.Supp. 856 (S.D.N.Y.1979). However, such a determination is not required here as there is no such "close call”.

      . July 27, 1983
      Social Security Administration
      55 West Queens Way
      Suite 200
      Hampton, Virginia 23669
      RE: Mary B. Keith [ XXX XX XXXX ]
      Gentlemen:
      I am enclosing herewith Physical Capacities Evaluation relative to the claimant in the above-styled Social Security matter by Dr. James Phillips.
      Thank you for your courtesy, I am Yours very truly,
      JOSEPH SMITH, LTD.
      /s/ Stephen M. Smith (by kmh)
      Stephen M. Smith
      SMS/kmh
      Enclosure

      . In Austin v. Reynolds Metals Company, 327 F.Supp. 1145 (E.D.Va.1970), Judge Merhige held that in a Title VII suit, 42 U.S.C. 2000e-5(e), a complaint, though lacking a filing fee, would nonetheless be considered "filed", where the letters of the plaintiffs made clear that the plaintiff sought to proceed in forma pauperis. Austin did not mention the Parissi case, 28 U.S.C. § 1914(c), or Local Rule 16(B) yet is in accord with this decision.

      . See 42 U.S.C. § 405(g).