author: McNAUGHT, District Judge.

text:
    Robert B. TURNER, et al., Plaintiffs, v. JOHNSON & JOHNSON, et als, Defendants.
    Civ. A. No. 79-2259-Mc.
    United States District Court, D. Massachusetts.
    Dec. 5, 1985.

      Joseph S. Iandiorio, Waltham, Mass., Daniel R. Shulman, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, Minn., Joseph M. Alioto, San Francisco, Cal., Jerry Cohen, Cohen & Burg, P.C., Boston, Mass., for plaintiffs.
    Frederick T. Davis, Patterson, Belknap, Webb & Tyler, New York City, Herbert Weissblum, Riemer & Braunstein, Boston, Mass., for defendants.
   MEMORANDUM AND ORDERS

ON MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT, MOTION FOR A NEW TRIAL, AND MOTION UNDER RULE 59(e) TO AMEND THE VERDICT

McNAUGHT, District Judge.

This civil action was instituted November 13, 1979. On October 22, 1982,1 dismissed those claims based upon federal anti-trust law. On June 28, 1985, I made factual findings from the bench, resolving the claim under Massachusetts General Laws c. 93A in favor of the defendants. The plaintiffs alleged that they were induced into signing an Agreement on June 17, 1976 by affirmative misrepresentations and non-disclosures in negotiations leading to the Agreement. On June 28th also, the jury returned a verdict against the defendants Johnson and Johnson, Charles M. Hartman, and Gene E. Hollen in the amount of $4,000,000. On July 3, 1985, judgment was entered in the amount of $4,000,000, with $2,705,078 in pre-judgment interest under Massachusetts General Laws c. 231, § 6B. The totality of the judgment was $6,705,078.

The defendants have moved for judgment notwithstanding the jury verdict, or in the alternative, for a new trial. They have asked also for amendment of the verdict to eliminate the award of pre-judgment interest.

Plaintiffs have contended, and the jury by its verdict has agreed, that statements on the part of defendants Charles M. Hartman and Gene E. Hollen fraudulently induced the plaintiffs into signing the Agreement of June, 1976, and that therefore the corporate defendant is responsible for damages causally related to the inducement. The jurors answered affirmatively the following interrogatories: (1) Did the defendants make misstatements during the negotiation leading to the June 16, 1976 Agreement? (2) If a misrepresentation was made, was it made by Mr. Hartman or Mr. Hollen? (3) Did a misstatement pertain to a material matter? (4) Did the defendants intend the plaintiffs to rely on the misrepresentation? (5) Did the plaintiffs rely justifiably on the misrepresentation? and (6) Were the plaintiffs damaged thereby? I charged the jury that if the plaintiffs were entitled to damages, those damages would consist of the difference in value between the sum which was received by the plaintiffs for the assets of American Medical Equipment Corporation on June 17, 1976 and the fair value thereof. As recited hereinbefore, the jury decided upon a figure of $4,000,000.

In support of the motion for judgment notwithstanding the verdict, defendants have argued that the plaintiffs have failed to meet “their heavy burden” of proving by clear and convincing evidence that the defendants made material misrepresentations or that there was reasonable reliance by the plaintiffs on such misrepresentations. They contend that there was nothing in the evidence establishing any non-disclosures which were actionable wrongs, and argue that there was insufficient evidence to support the jury’s finding as to damages.

Plaintiffs, by a letter dated September 10, 1985, sent copies of an order and opinion dated July 26, 1985 entered by Judge Freedman, in the case of A.F.M. Corporation v. Corporate Aircraft Management, Civil Action 626 F.Supp. 1533 (D.Mass.1985). They called specifically to my attention the comments of Judge Freedman at pages 1549-51 of his opinion concerning the relationship between a jury verdict on common law counts and the court’s determination of a claim under Chapter 93A of the Massachusetts General Laws. There, as here, the Court’s “findings of fact (were) inconsistent with the jury’s general verdicts ... ”. Judge Freedman stated in Footnote 20 that the inconsistency should not be taken as intimating that a judgment notwithstanding the verdict is appropriate. The standard for granting a judgment notwithstanding the verdict under Fed.R.Civ.P. 50(b), said he, is that without weighing the credibility of the witnesses, there can be but one reasonable conclusion. He cited Brady v. Southern Railroad, 320 U.S. 476, 479-80, 64 S.Ct. 232, 234-35, 88 L.Ed. 239 (1943), and concluded that “it is often possible for there to be two reasonable conclusions as to an appropriate verdict.” I am aware of, and accept, the proposition that the jury has the power to find the facts on issues submitted for their determination, and that inconsistency between their factual findings and my own on the issues submitted to me for determination, plays no part in resolving the question presented on a motion for judgment notwithstanding the verdict. I thought that I had made that clear at the time that I issued my findings on the claim under Chapter 93A.

The plaintiffs in their “Response to Defendants’ Post-Trial Motions” described the issues as being (1) whether the evidence adduced by the plaintiffs was sufficient for the jury to return a verdict in plaintiffs’ favor on the fraud claim, and (2) whether the evidence supported the jury’s damage award. Defendants phrase the issues a bit differently. They inquire whether there is evidence in the record to support the jury’s findings that the statements of Messrs. Hartman and Hollen fraudulently induced the plaintiffs into signing the Agreement of June 17, 1976. They insist that the terms of the Agreement and the evidence of its negotiation compel the conclusion that there is no such evidence.

One matter may be disposed of summarily. There is no evidence that any of the statements characterized as misrepresentations by the plaintiffs were made by Mr. Hollen. The verdict as against him, therefore, must be set aside and judgment must be entered in his favor. It is so ORDERED.

Since we are determining whether a motion for judgment non obstante veredicto should be allowed, the evidence presented to the jury must be viewed in that light most favorable to the plaintiffs. Defendants are correct in their contention (page 4 of their Memorandum of Law in Support) that we do not simply search the record to see if plaintiffs have adduced any evidence on each of the elements they must prove. A scintilla is not enough. Liberty Leather Corp. v. Callum, 653 F.2d 694 (1st Cir.1981). We start our search for substantial evidence, noting as in the past, that since the plaintiffs are asserting that they were fraudulently induced into signing the Agreement, they are not barred by the parol evidence rule from pursuing that claim. The central issue is whether there was a sufficiency of evidence of fraudulent representations which induced these businessmen to enter into the Agreement in question.

In my instructions to the jury, I recited my understanding of the alleged misrepresentations. (Tr. Vol. 14, p. 26 ff) Plaintiffs alleged misrepresentations to the following effect: (1) J & J would promote the sale of the Meditemp thermometer, would offer it to customers, and would educate health care professionals on how to use them; (2) J & J had no interest in any other thermometer except for an option on the part of Arbrook to acquire what was called an “IVAC-type” thermometer; (3) J & J had a policy that they would not agree to royalties for inventors where those royalties were based on international sales; (4) J & J (under a duty to disclose) made material non-disclosures, failing to tell plaintiffs that a thermometer being developed by Arbrook had a time and temperature feature, that it infringed upon a Meditemp patent, that J & J intended to “manipulate the outcome of a patent proceeding which it created”, and that J & J intended to suppress Meditemp so that it would not be competition for Survalent (the thermometer being developed by Arbrook).

The plaintiffs in their “Response” call the attention of the Court to the following, as evidence which would permit the jury to find that the defendants made material misrepresentations to induce plaintiffs to enter into the Agreement of June 17, 1976. First, as to the alleged misrepresentation contained in the J & J promise to promote the sale of the thermometer, offer it to customers and educate people in the health

care field, plaintiffs (Resp. p. 14) assert: “Plaintiffs testified that defendants made such a misrepresentation; and, again, under cross-examination, Mr. Fine admitted the misrepresentation ... Its falsity was easily inferable by the jury from the evidence that J & J did not promote and develop the product,____” J & J answers that this could not be a misrepresentation relied upon by the plaintiffs; that on March 12, 1976, three months before the Agreement was signed, the plaintiffs knew that J & J intended to proceed with two thermometers. Plaintiff Ramsey’s notes (Defendants’ Exhibit 260) read in part that Mr. Johnston was concerned about J & J’s purchase “for the shelf”. There is definitely a reference to “2 new units”. Furthermore, on April 13 of that year, J & J sent a “letter of intent” stating that the ultimate agreement would contain express provisions that Johnson & Johnson should not be obligated to deliver any best efforts in the marketing of Meditemp. A draft of the agreement dated May 3, 1976, and all succeeding drafts (to be found in the Agreement as Section 12.1) specifically provided that J & J had no obligation to market Meditemp, nor to use its best efforts. The alleged misrepresentation with respect to promoting the Meditemp thermometer (claimed to have been relied upon by plaintiffs) is directly contradicted by the terms of the Agreement between the parties. Query: Were this the sole basis for the claim of fraud in the inducement, under the law of the Commonwealth of Massachusetts, would judgment have to be entered for the defendants? Defendants cite New England Foundation Co., Inc. v. Elliot A. Watrous, Inc., 306 Mass. 177, 27 N.E.2d 756 (1940) as authority for an affirmative answer. There is no question that under the plain terms of this contract, Johnson & Johnson could acquire and market any electronic thermometer that it wished. Plaintiffs’ only right was to receive a maximum of four guaranteed payments. On the other hand, the fact that the Agreement is plain and contains such a provision does not “conclusively establish that no false representations were made to induce the (sale of the assets of AMEC)”, to borrow phraseology employed in New England Foundation Co., Inc., supra, 27 N.E.2d at 758.

Plaintiffs are correct when they contend that a jury could find (although based upon evidence which I did not accept in making my findings and conclusions on the Chapter 93A aspect of the case) that the defendants promised that they would do everything possible to develop and promote the Meditemp. The plaintiffs themselves did indeed testify that such a representation was made, and Mr. Roger S. Fine’s testimony (see esp. Vol. 12, p. 95) that plaintiffs were told that defendants had every intention of doing everything they reasonably could to make Meditemp a success and “expected them to rely on it”, added to a possible basis for a factual finding to that effect. The jury then might infer reliance upon the representation despite the contradictory portion of the Agreement — as an inducement to enter into the sale of the assets. They may have inferred (and whether mistakenly or not, they were entitled to do so) that defendants inserted a “best efforts” clause, explaining it away to the sellers as just “language” required by way of policy, when in fact defendants were misstating their intention (an intention to obtain the Meditemp and put in on the shelf).

Was there evidence which would permit the jury to find that defendants represented falsely that they had no interest in any thermometer other than the Meditemp, with the exception of an “IVAC-type” thermometer? Once again, the answer is “Yes”. “Survalent”, the thermometer of electronic type being pursued by a J & J subsidiary, was referred to as such by the defendants in May of 1976, or at least so the jury could have found, and plaintiffs were told not to be concerned about it. The jury may have accepted the contention of the plaintiffs that “IVAC-type” was a misdescription of Survalent; that it led the plaintiffs to conclude that the Survalent did not have a pulse rate timer, and that Meditemp was unique in that respect, when in fact it was not. This, they could find, acted also to induce entry into the Agreement. All the while, they may have concluded, J & J instigated an interference involving the time-temperature claim, intending to promote the Survalent, rather than Meditemp.

As for the alleged “policy” against agreeing to royalties on international sales, the testimony of the plaintiffs was enough for a finding in that regard, if the jurors accepted it. They obviously did.

With respect to the alleged “nondisclosures”, if the jury made the affirmative findings requested of them (and on which there appears to have been a sufficiency of substantial evidence to do so) the “nondisclosures” almost follow logically. If the Survalent was described falsely as “IVACtype”, the jury could find that there was a failure to disclose the feature which was allegedly so important. If the jurors found an intention to put the Meditemp on the shelf after obtaining it, they could find a failure to disclose the intention (and so forth).

Once again, although I did not personally accept testimony of the plaintiffs as to misrepresentations allegedly made by defendants, the jurors could and must have done so. They could have found justifiable reliance on the misrepresentations if they so wished — that plaintiffs would have refused to sign the Agreement had they been aware of the true intentions of the defendants. At any rate I cannot rule that reasonable men could not have relied reasonably on the misrepresentations, if they were made.

As for the element of reasonable reliance, it was for the jury to determine what was or was not reasonable. They were informed that a misrepresentation, to be actionable, would have to be material, and that a matter is material if in the absence of it, a reasonably prudent person would act differently. Although defendants argue that logic militated here against a conclusion of reasonableness, the jury did not have to accept the argument. As reasonable persons, they could have arrived at another conclusion.

Instructing the jury on the issue of damages, I stated that if there was a finding in favor of the plaintiffs, the jurors should award the difference between the value of the assets of AMEC and the amount that was paid for them. The jury assessed the damages at four million dollars. Defendants in their memorandum contend that the award is based upon pure conjecture, and insist that it must be vacated for “insufficiency of evidence”. Both parties call to the attention of the Court in their supporting papers the opinion of Robert Turner that the assets were worth $8,300,000 at the time of their sale to Johnson & Johnson, and the opinion of Dewayne Scheer of $10,000,000. It is true, as defendants argue that Mr. Turner was a distinctly interested witness, but that fact does not negate consideration by the jury of the opinion that he had to offer. Mr. Scheer’s opinion was recited after he reviewed a damage schedule and an offering prospectus. It is a fact that Mr. Scheer faced a number of obstacles in offering his opinion. Certain of his testimony was not allowed to be heard by the jury. This must have caused him to “shift ground” to some degree, and he conceded that the figure at which he ultimately arrived reflected an opinion adopted by him during the morning break in his testimony. The jury did not have to ignore what he had to offer, however.

And these were not all of the figures which the jury could take into account. There was the possibility that the plaintiffs could have realized, by way of a maximum, the sum of $1,271,000 from the sale of their business. There was the “offer” composed by Mr. Johnston in 1975 in which he apparently suggested that the plaintiffs should look for a total cash requirement of $735,-000. Johnson and Johnson agreed to pay minimum royalties of $300,000, after having paid close to a million dollars at the closing. In February of 1980 Mr. Hartman sent a memorandum to a Mr. Ventrella on the subject matter of “Proposed Negotiations Concerning the Sale of the MEDITEMP Brand Digital Fever Thermometer Business”. In part he wrote: “We would inform them that our asking price for the business is $3,000,000 (3mm)”. (Plaintiff Exhibit 715)

The figure decided upon by the jurors was not, necessarily, the subject of speculation. It could well be that they took into consideration the figures that have been mentioned all along through the negotiations to the point where Mr. Hartman wrote his memorandum, and “applied” them in a fashion to the opinions offered by Mr. Turner and/or Mr. Scheer. They may have made adjustments to those sums which seemed reasonable, considering and making allowances for the interest or bias of the people who offered the figures.

In the light of the evidence presented, as a whole, I cannot rule as a matter of law that the jury based its determination upon conjecture. I shall not, therefore, set aside the verdict ór order a new trial.

Finally, there remains for consideration, the matter of defendants’ motion under Rule 59(e) to amend the verdict which was entered July 3, 1985, to eliminate the inclusion of pre-judgment interest. On this score, the defendants are correct. The judgment should be in the amount of $4,000,000 with interest on that amount from June 28, 1985, the date on which the jury returned the verdict in favor of the plaintiffs. As Judge Skinner ruled in Rokowsky v. Gordon, 531 F.Supp. 435 (D.Mass.1982), since this matter is governed by substantive Massachusetts law, in tort actions other than those enumerated in General Laws, c. 231, § 6B, interest runs from the time that damages are liquidated by award or verdict. This was an action other than those enumerated in that chapter and section. As in Rokowsky, this is an instance in which the plaintiff alleged fraud in the inducement of a contract.

As noted by defendants on December 20, 1983, a new section 6H was added to chapter 231, providing in part that: “in any action in which damages are awarded, but in which interest on said damages is not otherwise provided by law”, pre-judgment interest is to be added from the date of the commencement of the action. Section 3 provided, however, that the new section 6H would apply only to actions commenced on or after the effective date of the Act. This action was begun in 1979.

The motion to amend the judgment is allowed.


source: Caselaw Access Project

author: SPELLMAN, District Judge.

license: Public Domain

text:
    Lucien LOUIS, et al., Plaintiffs, v. Alan NELSON, et al., Defendants.
    No. 81-1260-CIV.
    United States District Court, S.D. Florida, Miami Division.
    Dec. 6, 1985.
    Ira Kurzban, Miami, Fla., for plaintiffs.
    Patricia Kenny, Asst. U.S. Atty., Miami, Fla., for defendants.
   MEMORANDUM OPINION AND ORDER CONCERNING PLAINTIFFS’ ENTITLEMENT TO ATTORNEYS’ FEES, COSTS AND EXPENSES PURSUANT TO THE EQUAL ACCESS TO JUSTICE ACT

SPELLMAN, District Judge.

THIS CAUSE came before the Court on the plaintiffs’ Motion for Attorneys’ Fees, Costs, and Expenses under the Equal Access to Justice Act. For the reasons detailed below, this Court finds that the plaintiffs are entitled to an award of attorneys’ fees, costs, and expenses allocable to their efforts in litigating their claims before this Court and the United States Court of Appeals for the Eleventh Circuit. By separate Order, this Court shall schedule a hearing to determine the amount that shall be awarded.

The Equal Access to Justice Act (“EAJA”) provides that:

a court shall award to a prevailing party ... fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A).

Thus, in order to grant an award of attorneys’ fees, this Court must find that the plaintiffs were the prevailing parties within the meaning of the Act, that the govern-merit’s position was not substantially justified and that there are no other special circumstances that would make an award unjust. All of the requirements for an award of attorneys’ fees have been met here.

THE PLAINTIFFS WERE THE ‘PREVAILING PARTIES’

The Supreme Court has observed that “plaintiffs may be considered ‘prevailing parties’ for attorneys’ fees purposes if they succeed on any significant issue in the litigation which achieves some of the benefit the parties sought in bringing suit.” Hensley v. Eckerhardt, 461 U.S. 424, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983), (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978)). There can be no doubt in this case that the plaintiffs succeeded on a significant issue.

This case began in response to implementation by the INS of a new policy of accelerated exclusion proceedings and detention without parole of all Haitian refugees. In essence, the litigation had two primary goals. First, the plaintiffs sought to stop the mass exclusion hearings which were being held without counsel. And second, plaintiffs sought to obtain the release from detention of class members pending the determination of their political asylum applications, thereby restoring to full force and effect the prior policy of parole pending individual exclusion proceedings.

After a lengthy trial, this Court held that the new detention policy was adopted in violation of the Administrative Procedure Act (“APA”) and that plaintiffs’ continued incarceration pursuant to this policy was unlawful. Louis v. Nelson, 544 F.Supp. 973, 993-97 (S.D.Fla.1982). Ten days later, this Court declared the new detention policy “null and void”, and ordered the release of class members “forthwith” pursuant to a carefully drafted release plan. Louis v. Nelson, 544 F.Supp. 1004, 1006-07 (S.D. Fla.1982). Thus, the plaintiffs effectively obtained both of the goals they set out to achieve. As a direct result of this litigation, the defendants stopped the accelerated mass exclusion hearings and class-members were released from indefinite incarceration. These results were affirmed by the Eleventh Circuit panel. See Jean v. Nelson, 711 F.2d 1455, 1510 n. 63 (11th Cir.1983). The en banc court dismissed the defendant’s appeal of this Court's decision on the APA issue, thus leaving the results plaintiffs obtained undisturbed. See Jean v. Nelson, 727 F.2d 957, 962 (11th Cir.1984), aff'd in part, — U.S. -, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985).

The fact that plaintiffs did not “prevail” on their claim that the new policy violated their fifth amendment rights to equal protection does not mean that they cannot be considered “prevailing parties” for attorneys’ fees purposes. Plaintiffs need not prevail on every issue to be considered a prevailing party. For purposes of attorneys’ fees, “[t]he result is what matters.” Hensley, 103 S.Ct. at 1940. Plaintiffs merely pursued alternative litigation theories in attacking the INS’ new detention policy.

THE GOVERNMENT’S POSITION ON THE APA ISSUE WAS NOT SUBSTANTIALLY JUSTIFIED

The government has the burden of proving that its position “had a reasonable basis both in law and fact.” H.R.Rep. No. 1418, 96th Cong., 2d Sess. 10, U.S.Code Cong. & Admin.News 1980, pp. 4953, 4989; 5. Rep. No. 253, 96th Cong., 1st Sess. 6 (1979). The Eleventh Circuit has emphasized that the legislative history of the Equal Access to Justice Act requires “the government to make a strong• showing to demonstrate that its action was reasonable.” S. & H. Riggers & Erectors, Inc. v. O.S.H.R.C., 672 F.2d 426, 430 (5th Cir.1982) (citations omitted) (emphasis supplied by the court). See also Environmental Defense Fund, Inc. v. Watt, 722 F.2d 1081, 1085 (2d Cir.1983). The government has not and, indeed, cannot make the requisite showing here.

On August 5, 1985, the Equal Access to Justice Act was amended with regard to the “position of the United States” when determining substantial justification. Under the amendment, which applies to pending cases, the government must not only show substantial justification with regard to its litigating position, but also “the action or failure to act by the agency upon which the civil action is based.” Pub.L. No. 99-80, 11 2(c)(2)(d). Under the facts of this case, the distinction makes little difference. See Ashburn v. United States, 740 F.2d 843, 846 n. 1 (11th Cir.1984) (noting that in a typical case there is no real difference between action of agency and litigation position). The INS made a determination that its new detention policy did not have to comply with the rulemaking requirements of the Administrative Procedure Act. When this was challenged in Court, attorneys from the United States Attorney’s Office and the Department of Justice argued that the INS was correct. The position taken by the INS and the position taken by the government attorneys in defending the INS’ actions were essentially the same. And these positions were unreasonable.

The INS was well aware prior to this litigation that the courts in this jurisdiction had consistently rejected INS’ claim that the APA did not apply to changes of substantive policy regarding Haitian refugees. National Council of Churches v. Egan, No. 79-2959-Civ-HOEVELER, Slip, op. at 3 (S.D.Fla. Aug. 3, 1979) (preliminary injunction entered, not appealed); Sannon v. United States 460 F.Supp. 458, 466-67 (S.D.Fla.1978), remanded to be vacated as moot, 566 F.2d 104 (S.D.Fla.1978).

Indeed as early as March 20, 1981, the INS Acting General Counsel wrote a memorandum summarizing the legal requirements applicable to the defendants’ detention policy and mass exclusion hearings. Citing the Sannon case as authority, he advised the INS that “[a]ny change in regulations which takes rights or privileges away from aliens will most likely require a 60-day notice and comment period, and a 30-day delayed effective date ...” Legal Memorandum by INS Acting General Counsel Paul Schmidt, Px94. But even though the INS was apparently aware that it needed to comply with the APA, the defendants intentionally refused to do so. As this Court found:

They admitted to the Court that they made a conscious decision not to promulgate a rule pursuant to the Administrative Procedure Act. The evidence shows that they never seriously undertook the difficult task of drafting a set of guidelines concerning which aliens would be placed in detention. Instead, INS issued general instructions to its field officers to start detaining excludable aliens who do not establish a prima facie claim for admission.

Louis v. Nelson, 544 F.Supp. at 981.

In light of prior precedent and the advice of counsel, INS’ refusal to comply with the APA was not reasonable; nor was the position of the United States Attorney’s Office in defending these actions by claiming that the change in policy was not a rule subject to the rulemaking requirements of the APA. This Court rejected the government’s claims in its opinion, finding that the change in policy was “clearly” a rule subject to the rulemaking requirements of the APA. Louis v. Nelson, 544 F.Supp. at 997. The Eleventh Circuit found that defendants were not likely to succeed on this issue and denied their request for a stay. Jean v. Nelson, 683 F.2d 1311, 1312 (11th Cir.1982). After hearing the case, the Eleventh Circuit panel completely rejected the government’s arguments that the new policy was not a rule to which the APA rulemaking requirements applied and affirmed the decision of this Court. Jean v. Nelson, 711 F.2d at 1483.

The government’s factual position in this litigation was also without merit. The defendants repeatedly denied that there was a new detention policy for Haitians, claiming that the district directors still had complete discretionary authority to parole individuals or, alternatively, that the directors were merely enforcing the statute. See also Jean v. Nelson, 711 F.2d at 1469-70 (discussing conflicting testimony at trial by Administration officials as to whether there was a policy change). It was only well into the litigation that the defendants admitted what had been obvious — that there was a detention policy and that they had instituted this policy without complying with rulemaking procedures. Since the plaintiffs had consistently maintained that there was a detention policy, the defendants’ unreasonable factual position unnecessarily prolonged the litigation of this matter.

Finally, the defendants have not demonstrated any special circumstances which would make an award unjust. Indeed, considering the extraordinary efforts of plaintiffs’ counsel and the excellent results they achieved, it would be unjust to deny an award of attorneys’ fees.

THE PROPER STANDARD

The issue of attorneys’ fees in this case is complicated, however, by the fact that the government’s legal position — that the INS’ actions did not violate the equal protection guarantee of the fifth amendment — must be considered reasonable in light of the fact that the Eleventh Circuit, sitting en banc, actually agreed with the government on this point. Even though the Supreme Court found that the circuit court should not have reached the constitutional issue, the government was certainly “justified” for EAJA purposes in defending against the claim that the INS’ actions violated the equal protection guarantee.

In Hensley, the Supreme Court emphasized that counsel should not be penalized for pursuing, in good faith, alternative claims for relief. Although the Court observed in a footnote that the standard it set forth is “generally applicable in all cases in which Congress has authorized an award of fees to a ‘prevailing party,’ ” 103. S.Ct. at 1939 n. 7, this Court is of the opinion that these principles must be modified to some degree for fee awards under the Equal Access to Justice Act. Unlike the Civil Rights Attorney’s Fees Awards Act, which allows prevailing parties in suits brought under specified civil rights statutes to recover “a reasonable attorney’s fee as part of the costs.” 42 U.S.C. § 1988, the Equal Access to Justice Act mandates the award of attorneys’ fees unless “the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). Thus, under the Equal Access to Justice Act, a prevailing party in a suit against the government cannot be awarded fees when the government’s position was reasonable.

In Matthews v. United States, 713 F.2d 677 (11th Cir.1983), the Eleventh Circuit articulated the standard to be used in an Equal Access to Justice Act claim when a plaintiff prevails in some but not all its claims against the United States. Adopting the approach of the Third Circuit in Goldhaber v. Foley, 698 F.2d 193, 197 (3d Cir.1983), the Court noted that neither the terms of the Act nor its legislative history addressed this situation. It therefore began its analysis by looking to the underlying purpose of the Equal Access to Justice Act. If found:

The governing principle of the Act is that the “United States should pay those expenses which are incurred when the government presses unreasonable positions during litigation.” The central purpose of the Act is “to eliminate any barrier to litigation challenging unreasonable government conduct presented by the specter of attorney’s fees____ Because the Equal Access to Justice Act contemplates deterring only unreasonable positions,” it would contravene the purposes of the Act to require the government to bear the expense of defending even its reasonable positions. Following the Third Circuit, we adopt the position “that the United States is only responsible for that portion of the expenses attributable to its unjustified positions.”

713 F.2d at 683-684 (citations omitted).

Thus, when reviewing a claim for attorneys’ fees under the EAJA, the Court must take into account not only the results obtained but also the reasonableness of the government’s positions on each of the disputed claims. As discussed above, the Court finds that the government was not substantially justified in its position on the APA claim. By prevailing on this claim, the plaintiffs obtained virtually all the relief they requested, a factor that should weigh heavily in the determination of the fee award. On the other hand, because the government did not act unreasonably in defending against the claim that the INS’ actions violated the equal protection guarantee of the fifth amendment, any fee award must also be reduced accordingly.

The Supreme Court observed in Hensley that when a lawsuit involves a “common core of facts” or “related legal theories” as this case did, “[m]ueh of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide hours expended on a claim by claim basis.” 103 S.Ct. at 1940. This observation is particularly apt here. Determining the amount of time spent on each claim would be particularly onerous in this case, given the interrelated nature of the facts and theories and the number of attorneys involved in the various aspects of the litigation. The Court notes that there was considerable overlap between the APA and the equal protection claim. The preliminary issues were essentially the same. For example, for both claims plaintiffs had to establish that they had standing, that this Court had subject matter jurisdiction, that they were entitled to proceed as a class, that a “final” INS order was not required, that they had exhausted administrative remedies, that the detention policy was not committed to agency discretion and that the political question doctrine did not apply.

Even at trial, the presentation of the equal protection issue overlapped to some degree with the APA claim. Defendants argued that there had not been a change in detention policy and that INS officials continued to have the same discretion to grant parole. Plaintiffs’ Exhibit 1, for example, was offered to prove both that the defendants had a policy and that this policy discriminated against Haitians.

This Court does not think it is appropriate to further protract the matter by attempting to identify which specific hours and expenses should be eliminated from a fee award because they are attributable to the equal protection claim and not the APA claim. Rather, one of the factors the Court will consider in determining the ultimate fee award in this case is that the government was not unreasonable in defending against the equal protection claim. Any award will be adjusted downward accordingly. The Court is of the opinion that the percentage of total attorney time that should be attributed to each claim can be approximated.

The Court will conduct a hearing to determine the total number of hours that can be considered “reasonably expended” on the litigation and a reasonable hourly rate for the attorneys involved. In addition to the downward adjustment discussed above, the Court will consider whether the fees should be enhanced for any reason pursuant to 28 U.S.C. 2412(d)(2), including the excellent results achieved by plaintiffs’ counsel, the limited availability of qualified counsel for this kind of litigation, and the delay in payment of this award.1 ******

      . The background to this litigation is discussed in this Court’s opinion, Louis v. Nelson, 544 F.Supp. 973, 978-81 (S.D.Fla. 1982), and in the Eleventh Circuit's panel opinion, Jean v. Nelson, 711 F.2d 1455, 1464-74 (11th Cir.1983).

      . Indeed, shortly after this case was filed the government conceded that the exclusion orders entered at such hearings were invalid and therefore said orders were vacated. Thus, plaintiffs were the prevailing party on this aspect of the litigation and, in light of the government's action, its position was not substantially justified.

      . The complaint, filed on June 16, 1981, asserted seven causes of action. Count I challenged the commencement of preliminary interviews for Haitian refugees without the presence of counsel or notice of the right to counsel; Count II challenged the legality of the new detention policy, which was not promulgated pursuant to the rule-making requirements of the APA; Count III challenged the failure to advise class members of their procedural rights at exclusion hearings; Count IV challenged the denial of access to counsel; Count V challenged the denial of public exclusion hearings; Count VI challenged the denial of the right to apply for political asylum; and Count VII challenged the lawfulness of the new Haitian program in its entirety under the equal protection clause. In a Memorandum Opinion and Order dated February 24, 1982, this Court dismissed Counts I, III, V, and VI in their entirety and Counts IV and VII in part. It retained jurisdiction over Count II, Count IV insofar as it alleged that Haitians in detention had first amendment rights of access to counsel and that the Haitian Refugee Center had a claim of access to those persons in detention; and Count VII insofar as it alleged that the detention policy was applied in a discriminatory fashion. Louis v. Meissner, 532 F.Supp. 881 (S.D.Fla.1982).

      . The relief obtained by the plaintiffs mooted many of the issues raised in the complaint. Plaintiffs were released from detention and indirectly obtained counsel or notice of the right to counsel, thereby ensuring that class members would have notice of their procedural rights at exclusion hearings (Count III), including the right to apply for political asylum (Count VI). As a result of this lawsuit, defendants stopped their practice of preventing lawyers from contacting Haitians at closed exclusion hearings (Count I). With the release of class members, plaintiffs have had access to counsel and counsel have had access to class members (Count IV). Also as a direct result of this litigation, the INS promulgated new parole regulations which are facially neutral and which require parole decisions to be made without regard to race or nationality. See 8 CFR § 212.5 (1985).

      . The Eleventh Circuit panel that originally heard this matter found that the defendants discriminated against the plaintiff class in the enforcement of the new detention policy and that plaintiffs were therefore denied equal protection. Jean v. Nelson, 711 F.2d at 1509. The Eleventh Circuit, sitting en banc, however, held that excludable aliens have no constitutional rights with respect to their applications for admission, asylum, or parole. Jean v. Nelson, 727 F.2d 957 (11th Cir.1984) (en banc). The Supreme Court held that the en banc court should not have reached the constitutional issue because under the statutes and regulations now in effect, parole decisions must be made without regard to race or national origin. Jean v. Nelson, 105 S.Ct. at 2998.

      . This Court was well aware that after it found that the new policy was violative of the APA that "[t]echnically ... [it] need not go further in order to resolve plaintiffs’ other claims for relief." Louis, 544 F.Supp. at 997. However, the Court chose to review the equal protection claim in the interests of "judicial economy and fairness." Id. at 997-98.

      . According to the Court:
      In [certain] cases the plaintiff's claims for relief will involve a common core of facts or will be based on related legal theories. Much of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.
      Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee. Normally this will encompass all hours reasonably expended on the litigation, and indeed in some cases of exceptional success an enhanced award may be justified. In these circumstances the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit. Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not sufficient reason for reducing a fee. The result is what matters.

        Hensley v. Eckerhart, 103 S.Ct. at 1940 (citation and footnote omitted).

      . Because the litigation before the Supreme Court concerned only the equal protection claim, the plaintiffs are not entitled to compensation under the EAJA for their efforts in that Court. However, the plaintiffs have pointed out that the government apparently changed its litigation position as the case progressed. Before the Supreme Court, the government argued that the INS was precluded by statute and regulations from making nationality-based distinctions. Based upon this representation, the Court found that it was unnecessary to reach the constitutional issues. At trial, however, the government argued to the contrary — that nationality can be a factor in determining whether an alien is paroled.
      This Court recognizes that if the government had taken the position it now takes during the trial, the constitutional claims may not have needed to be litigated. The Court will therefore consider the government’s apparent change in position in adjusting the final fee award.


author: ASPEN, District Judge:

text:
    UNITED STATES of America, Plaintiff, v. BOARD OF EDUCATION OF the CITY OF CHICAGO, Defendant.
    No. 80 C 5124.
    United States District Court, N.D. Illinois, E.D.
    Dec. 9, 1985.
    Neil H. Koslowe, Sp. Litigation Counsel, Dept, of Justice, Washington, D.C., for plaintiff.
    Robert C. Howard, Robert M. Weissbourd, James Bradtke, Hartunian, Futterman & Howard (Chartered), Hugh R. McCombs, Jr., David Narefsky, Denise L. Jarrard, Isham, Lincoln & Beale, Chicago, 111., for defendant.
   MEMORANDUM ORDER

ASPEN, District Judge:

In this Memorandum Order we resolve the issues raised by the parties concerning the Remedial Order and the 1985 Bilingual Transition Funds. In compliance with the request in our October 15,1985 opinion, the parties have worked out an agreement as to much of the structure of the Remedial Order. We discuss below primarily what was not agreed upon.

A. The Remedial Order

After carefully reviewing the Board’s proposed Remedial Order and the parties’ comments, the Court endorses the general format of the proposed order. In addition, except for the amendments discussed below, the Court adopts the Board’s proposed order as written. As described later, the Board shall prepare a revised Remedial Order for our signature.

1. Paragraphs l(i) and l(j)

The United States’ objections to paragraphs l(i) and l(j) are overruled, with one minor qualification. The Board is correct that the United States failed to give appropriate priority consideration in FY 1983, and that the Yates Bill did not discharge the United States’ duties for that year. At the same time, the United States is correct that the Yates appropriation counts for something, although it is somewhat disingenuous for the Executive Branch to rest on this laurel when it vigorously opposed the Yates Bill and acted in bad faith by doing so. Nevertheless, the Remedial Order’s declarations should reflect that at least the Legislative Branch of the United States provided funds in 1983, and that the Executive Branch obeyed Congress’ order to provide' those funds directly to the Board. Accordingly, 11 l(i) should be amended by inserting in the last line, following “fiscal 1983,” “except for the amount appropriated for and provided to the Board under the so-called ‘Yates Bill.’ ”

As for ¶ l(j), we disagree with the United States that the rhetoric is “excessive.” The complete record of the case more than adequately supports that declaration.

2. Title IV

For reasons stated in the October 15 opinion, “equitable fair share” of FY 1984 funds to which the Board is entitled shall be $1.5 million, to be provided directly (the method the United States prefers) to the Board within 30 days, or as expeditiously as possible pursuant to applicable regulations, if any. This award is in addition to the FY 1984 amount granted to the DACs and SEA serving the Board, as well as the amount of FY 1983 excess Title IV funds. Because the United States has wisely opted to provide Title IV funds directly, and because it had already agreed to provide the excess 1983 Title IV funds to the Board, it shall provide those funds directly as well.

In reaching this share determination, we reject the Board’s renewed arguments for a bigger piece of the Title IV pie. The amount ordered above is, we think, the “maximum” level of funding available without undue harm to other grantees. We also reject the United States’ arguments that the Magnet Schools program caps the Board’s share at $1.2 million. There Congress determined by statute the “maximum level” available. Congress set no such ceiling in Title IV. However, the Magnet Schools program is not altogether irrelevant to Congress’ general notion of an equitable maximum share a local school district deserves out of a nationwide pie. Our share determination is roughly within the parameters of this very fuzzy indication of Congressional intent and gives the Board a goodsized piece of the Title IV pie, while maintaining the national character of the program. It is not inconsistent with any indication of Congressional intent.

We do not think a reprogramming is necessary, as a matter of law or even as a matter of comity with Congress, in order for the Secretary to provide funds directly to the Board. As we held in the October 15 opinion, the Congressional history does not indicate that Congress mandated indirect funding; nor did it “direct” or “earmark” it by Committee Report. See Conclusion 6.10. Rather, it simply indicated without disapproval in committee reports how the Secretary had been spending the funds. This language is not the same as language in other reports where Congress “directed,” “urged,” or “recommended” that money be spent in a certain way. Only in the latter context has the Secretary historically reprogrammed as a matter of comity. Accordingly, we agree with the Board that the funds shall be provided within 30 days whether or not the Secretary decides to ask Congress for reprogramming.

In arguing that a reprogramming is necessary, the Secretary’s reliance on our October 15 opinion at page 151 and on the Second Appeal is misplaced. In our opinion, we were discussing reprogramming of certain excess fund accounts, within a context where a reprogramming request had historically been made as a matter of comity, if not law. Here, the committee reports contain no “directions” to the Secretary, so that a reprogramming request is not necessary even as a matter of historical practice. As such, our order is also consistent with the Second Court of Appeals opinion. In full recognition of the Seventh Circuit’s teachings about respect for our co-equal branch of government and deference to its general policy decisions, we gave the Secretary the option — which he accepted — to provide funds directly, a less intrusive course (and one that frees more funds for other grantees) which the Court of Appeals would endorse, assuming, of course, we are correct on the scope and pipeline issues. Nothing in the Second Opinion or in our October 15 opinion compels us to delay relief to the Board so that the Secretary can make a reprogramming request to Congress that is not even compelled by his past practices or by law.

In light of this order, sub-paragraphs (a)-(d) on pages 5-6 of the proposed Remedial Order are not relevant for fiscal year 1984 Title IV funds and should be deleted. As for future years, to the extent indirect funding is provided, we agree with the United States that those sub-paragraphs should not be etched in stone at this time. The parties should cooperate as to such administrative mechanics and try to reach a proper procedure by stipulation. We agree with the Board that it should have a large say about where the money goes, but so should the United States. The Consent Decree envisioned the parties working together as partners, rather than as prepetual adversaries, and we should not be required to decide administrative mechanics where the parties are acting in good faith. We hope we will not be requested to resolve these mechanics for the parties in future years.

We strongly disagree with the United States’ proposal that an administrative procedure should take place for the FY 1984 funds before they are provided in order to verify the eligibility and cost efficiency of the Board’s projects. Both we and Judge Shadur have determined that the Board’s Title IV projects are statutorily eligible, contain reasonable costs and materially aid the success of the desegregation plan. See October 15 opinion, “Chapter 2”; also Findings 676-84. The Secretary essentially proposes to reinvent the wheel, to do what we have already done. While the Secretary normally should make these determinations in the first instance, Judge Shadur and this Court did so because the Secretary steadfastly refused to do so for so long. The Secretary has had the relevant information since March 1984 and only now proposes to make this determination. We cannot countenance more delay in the provision of funding. Continued delay harms not only Chicago’s children, but public school children in other cities, whose funding remains uncertain pending resolution of this case. Resolution and certainty have a value, and our opinion as a court of equity is that this concern is now extremely urgent. Thus, we will write no formal administrative process — with its attendant delays — into the Remedial Order for the provision FY 1984 funds. As for future years, once the application and priority process gets on track in accordance with the October 15 opinion, a normal administrative process will be in place.

This is not to say we do not want the Secretary’s input on how the Board will be spending the money. As the Board concedes, the Secretary, must play a role in monitoring the Board’s expenditure of federal funds. Accordingly, the Proposed Remedial Order should be amended to reflect this policy: The Board and the Secretary shall informally work together in deciding which Title IV projects to fund. In any event, within thirty days the Board shall provide the Secretary and the Court with an outline as to how it plans to spend its Title IV funds. That is, the outline shall describe how much money will be spent on which of its projects. The Board shall also cooperate with the Secretary in completing relevant forms and providing information that the Secretary needs. If he chooses, the Secretary may within 20 days thereafter object or otherwise comment, and the Court may then order some changes in how the Board is spending the money. If the parties can agree to an alternative monitoring process instead of the one just proposed, they may include it in the revised draft Remedial Order or substitute it later by amendment.

3. The Discretionary Fund

For the reasons stated in the October 15 opinion, the Board’s equitable fair share of Discretionary Funds is $1.5 million, to be provided within 30 days or as expeditiously as possible pursuant to applicable regulations, if any. For reasons stated above, we reject the United States’ proposal for a formal administrative process with respect to FY 1984 funds. The second paragraph of part 3 of the Board’s proposed order (page 8) shall therefore remain intact, with the following addition: The Board and the Secretary shall make every good faith effort to agree to which “model” programs shall receive funding. The Board shall also cooperate with the Secretary in providing relevant information the Secretary requires. In any event, within thirty days the Board shall report to the Court which model programs it will fund, and how much money each will receive. The Secretary may file any objections within twenty days thereafter as to which programs the Board has chosen or the amount of funds devoted to each.

5. Follow-Through

The total Follow-Through share shall remain $1.0 million, of which $273,541 has already been provided, leaving a balance of $726,459. The remainder of the Board’s proposed paragraph 4 (pages 8-9) shall remain intact, except that its second paragraph shall contain an addition of the type discussed above, which requires the Board to file a report within thirty days and to cooperate with the United States in completing forms and providing information; the United States may file relevant objections within twenty days thereafter.

6. Excess Funds

The proposed paragraphs concerning the Excess Funds shall remain as written. For reasons stated below we agree with the United States that the lower figure for funds in “Category la” shall be used.

We have carefully examined the parties’ arguments concerning excess funds in the Office of Civil Rights (“OCR”) and Departmental Management (“DM”) accounts. We will consider each account in turn, but note at the outset that we will take a slightly different approach than that taken by the parties. We disagree with the Board that the language of the two statutes unambiguously favors its claim of entitlement to these funds. So we must turn to the legislative history. But we disagree with both sides that the meager legislative history is at all helpful. Frankly, we think we are faced with no clear indication of Congressional intent as to the scope of these accounts. But a decision must be made, and for the following reasons we decide that the Board is not presently entitled to the funds restrained in these accounts. Accordingly, they are to be placed in “Category 3” as defined in the October 15 opinion, and dealt with as prescribed in that opinion,

a. Office of Civil Rights

The relevant statutory provision says:

(c) Authority of Assistant Secretary
In addition to the authority otherwise provided under this section, the Assistant Secretary for Civil Rights, in carrying out the provisions of this section, is authorized—
(3) to enter into contracts and other arrangements for audits, studies, analyses, and other services with public agencies and with private organizations and persons, and to make such payments as may be necessary to carry out the compliance and enforcement functions of such Office.
20 U.S.C. § 3413(c)(3) (emphasis added). The Board seizes upon the underlined phrase and relies upon the following syllogism in arguing that the statute authorizes the Secretary to pay the Board funds from this account:
(1) The Secretary may make “necessary” “payments” in order to “carry out compliance and enforcement functions of” the OCR;
(2) One of the “functions” of the OCR is to enforce the Nation’s civil rights laws and, thus, consent decrees like the one in this case.
(3) The Secretary may therefore make “payments” to the Board which are “necessary” to help it “comply” with the consent decree and the civil rights laws.

While this reasoning is plausible and seductive, it is overly simplistic. Contrary to the Board’s assertions, the language is not unambiguous. The statute authorizes payments for carrying out “compliance and enforcement functions of the OCR.” (Emphasis added.) This language can be construed in different ways. As the Board suggests, the OCR can in theory “enforce” or foster “compliance” with the civil rights laws simply by giving money to the Board. On the other hand, enforcement might mean something narrower: it might simply encompass tasks that the OCR itself must perform in order to help local agencies meet civil rights standards. That is, “enforcement” of laws, in this case, the civil rights laws, does not necessarily or usually mean the giving of money to the party subject to enforcement; rather, it might only mean, among other things, the giving of advice, help, admonishments or threats by the OCR. Under this conception of enforcement, the power to make any payments would mean that the OCR can spend money to carry out these functions, but not just hand money to the Board. Thus, the Board's syllogism begs the question. Even if one of the “functions” of the OCR is to “enforce” the civil rights laws, we still must ask whether giving the Board, a local agency, some of the OCR’s money is a species of “enforcement” Congress contemplated.

Similarly, the statutes’ authorization to “make necessary payments” does not unambiguously imply an authority to give money directly to a local school board to pay for the operating costs of a desegregation plan. It could merely be a broad, catch-all provision for making any of a number of administrative payments that are “necessary” to the office as it performs its duties. The context of the statute illustrates this point. The rest of the section clearly focusses on costs of administering the OCR itself and the costs of paying for materials and services which would let the OCR itself enforce the civil rights laws. Nothing in the statute in clear terms authorizes the making of grants to local school boards. This omission is telling. The other statutes we have dealt with in this ease which authorize grants to local school boards do so explicitly and clearly. See, e.g., 20 U.S.C. § 1441 (handicapped research grants); 20 U.S.C. § 3221 et seq. (bilingual education grants).

It is clear then that in authorizing the Secretary to make “payments” to local agencies, Congress’ usual practice is to say so in no uncertain terms. Given this track record, we think it unlikely that Congress would have intended that § 3413(c)(3) give the Secretary authority to make the type of broad grant the Board is seeking. The phrase the Board relies on is buried among other provisions which focus on the functioning of the OCR itself. We are skeptical that Congress would delegate such broad open-ended grant-making authority in this vague fashion when it did not do so in other related contexts.

Having determined that the statute’s language is ambiguous, we would customarily look to the legislative history to divine Congress’ intent. But the sparse legislative history cited by the parties provides few, if any, clues as to Congressional intent. Most of the cited reports merely track the statute’s language, or have inconclusive variations. Both parties’ arguments concerning this history are valiant but failed tries at infusing meaning where none exists. The shallow, murky history simply does not suggest that Congress considered or intended that this money be spent directly on local agencies. In all probability, Congress never even thought about it. If the history means anything, its meaning flows not from what Congress said, but from what it did not say. If Congress did in fact intend that the Secretary have an extremely broad, catch-all authority to make grants to local school boards, one might fairly expect that it would clearly say so — at least in the committee reports if not in the statute itself. But it did not say so, and this failure argues against a reading that delegates such a broad, open-ended authority to the Secretary.

In the final analysis, we think we must resolve these ambiguities against the Board and hold that § 3413(c)(3) does not authorize the Secretary to grant the Board money directly to pay for its desegregation plan. If the Board were correct, § 3413(c)(3) gives the Secretary extraordinarily broad grant-making authority. Absent strong evidence of intent to the contrary, we do not believe that Congress would bury such an open-ended provision in a clause of a subsection of an act that is primarily administrative. When Congress gives the Secretary power to grant money to local school boards for certain projects or operating costs, it usually says so clearly. It has not said so here either in the statute or its history, and, as such, we conclude that the Board has not met its burden of showing entitlement to the funds restrained in this account absent a reappropriation.

In so holding, we do not adopt the intimations of the United States that the OCR account is purely administrative in the sense that it authorizes only overhead expenses for such things as rent, salaries and travel. As the Board points out, Congress has approved of OCR’s past practice of using its money to pay third parties to give technical aid to school boards implementing desegregation plans. See S.Rep. 98-247, 98th Cong. 1st Sess. 163 (Sept. 28, 1983); H.R.Rep. 98-357, 98th Cong. 1st Sess. 130 (Sept. 16, 1983). In fact, Congress has encouraged the Secretary to do more of this. But we disagree with the Board that this practice of indirect assistance necessarily implies that a direct grant is proper under the statute as well. There is a significant difference between the contracts the Secretary has made and the direct grant the Board seeks: the first is a delegation of a duty the OCR would otherwise perform itself tor one of “its compliance or enforcement functions”; the second is simply a grant of money. Only the first “payment” is consistent with the narrower definitions of “compliance and enforcement” and “necessary” we discussed and adopted earlier. The statute authorizes payments “to carry out ... functions of [the OCR].” The money spent on technical assistance is money spent to perform a function of the office, albeit one that was delegated to a third party by contract. But whether it gives technical assistance itself or contracts that task out, the OCR is spending the money to “carry out” a function “of it,” to do what it must do: enforce compliance with the civil rights laws. This is quite different from handing that same money over to a local school district to pay directly for the operating costs of desegregation. As we held above, we need a clearer signal from Congress that such a payment is authorized before reading such broad authorization into the statute’s ambiguous language.

b. Departmental Management

The same analysis applies here as well. That statute in dispute, 20 U.S.C. § 3488, says:

Subject to any limitation on appropriations applicable with respect to any function or office transferred to the Secretary or the Department, there are authorized to be appropriated for fiscal year 1980 and each succeeding fiscal year such sums as may be necessary to carry out the provisions of this chapter and to enable the Secretary to administer and manage the Department. Funds appropriated in accordance with this section shall remain available until expended.

(Emphasis added). The “chapter” referred to is the Department of Education Reorganization Act. Pub.L. 96-88 (Oct. 17, 1979). One of “the provisions of this Chapter” is 20 U.S.C. § 3475(a), which says:

We have carefully examined the Board’s arguments and the legislative history (which again is inconclusive) and conclude largely for the reasons stated above that these sections, like § 3413, do not give the Secretary carte blanche authority to make direct grants to local educational agencies of funds appropriated to the Departmental Management account. Section 3475 is, we think, merely a general overall delegation of power to the Secretary to, in effect, do business as the Secretary. Section 3488 too is primarily administrative in scope. We do not think the statute’s language or the legislative history reveal Congressional intent to authorize a grant of the kind the Board seeks.

(a) Subject to the provisions of the Federal Property and Administrative Services Act of 1949 [40 U.S.C.A. 471 et seq.\ the Secretary is authorized to make, enter into, and perform such contracts, grants, leases, cooperative agreements, or other similar transactions with Federal or other public agencies (including State and local governments) and private organizations and persons, and to make such payments, by way of advance or reimbursement, as the Secretary may determine necessary or appropriate to carry out functions of the Secretary or the Department.

c. Appendix to Remedial Order

In light of the foregoing, the Appendix to the Remedial Order should take the form of the alternative proposed by the United States. That is, the excess funds in the OCR and DM accounts should fall into Category 3, but continue under restraint.

7. Other Paragraphs

The remaining paragraphs of the Board’s proposed order shall remain intact, except as follows. The second footnote on page 17 should be amended to reflect the apparently undisputed fact that the United States gave the Board priority with respect to FY 1985 Magnet School funds.

8. Conclusion

Within three days the Board shall submit a revised draft Remedial Order consistent with the discussion above. Pursuant to the stipulation of the parties, the Order will be stayed seven days from the date of our signature so that the parties may attempt to resolve the issues concerning a stay and interim relief pending appeal. It is so ordered.

B. 1985 Bilingual Transition Funds

a. We reaffirm that in light of our holdings in our October 15, 1985 opinion concerning the scope and pipeline issues, the Board is virtually certain to succeed in showing that it is entitled to “priority treatment” concerning the Bilingual Transition Funds. As for the “fair share” of funds to which the Board is entitled, both parties make valid points in their Position Papers with respect to this program. On the one hand, the Board is correct that under our resolution of the pipeline issue “priority treatment” begins at the beginning of the administrative pipeline, and that the Secretary’s discretionary decision to allocate $54 million of the $77 million in Transition Funds to “continuation grants” is not insulated from review. On the other hand, the United States is probably correct that this decision is proper under the Second Court of Appeals opinion and 1115.1 of the Consent Decree. We emphasized several times in the October 15 opinion that 1115.1 elevates the Board to but one priority among many, and that the Second Opinion affords the Secretary leeway to set other priorities which effectively diminish the pool of otherwise available funds. Accordingly, absent evidence of intent to hurt the Board, we are not likely to tamper with the Secretary’s decision to devote $54 million to continuation grants.

b. As for the Board’s “equitable fair share” of the remaining $22 million, we admonish both parties not to latch on to any rigid percentages, like the 14% figure both sides were using in their papers. Granted, in the fuzzy area of equitable balancing, it is tempting to grab for some measure of certainty. But the equitable fair share of funds will vary from program to program, and our estimate of what happened to be a 10-14% share in other programs is no all-purpose percentage. Without knowing more about this program, we hesitate to make even rough guesses about the Board’s share. Nevertheless, we think that the Board is unlikely to recover the full $8 million it has laid claim to. At the same time, the United States is asking for too great an amount to release. A release of $2.5 million, which leaves $5.5 million under restraint would protect both parties pending a resolution of this issue. This leaves under restraint about 7% of the original $77 million, or 25% of the $22 million of new grants, which is likely to cover the ultimate amount awarded to the Board.

c. As for the Secretary’s proposal for an administrative review process, this program stands on a different footing from the ones discussed above. In contrast to the situation with the various FY 1984 funds, here we have made no determinations about the cost, relevance or eligibility of all of the Board’s Bilingual Transition programs. Further, the delays have not been as long here. The Secretary’s review — if done in good faith — would not duplicate work the Court has already done. We also welcome the Secretary’s experience and expertise. Giving the Secretary such a chance would also be consistent with comity policies expressed by the Court of Appeals in the first appeal. Accordingly, we think that it would be fair and efficient to allow (before the court hearing) the United States to evaluate the Board’s application for 1985 Bilingual Transition Funds under a “priority” system which would be consistent with our October 15 opinion. The Secretary may apply this priority without waiving its rights to appeal issues in that opinion. However, for the reasons stated above at 5, we do not want to inject undue bureaucratic delay into this process. The Secretary has had the Board’s application for Bilingual Funds since June, but never made a “priority determination.” Even after the October 15 opinion, the Secretary has apparently done nothing. Given this conduct (or, really, lack of conduct), as well as the Secretary’s recalcitrant posture throughout this case, we are not inclined to indulge the Secretary with an excessive length of time to mull over the Board’s application. Following the date of this order, the Secretary may take 30 days to assess the Board’s application under a “priority” analysis, and, among other things, shortly thereafter give his views on the statutory eligibility of the Board’s proposed projects and the reasonableness of the Board’s projected costs. The Secretary may state his conclusions in writing, which can be made part of the record of the Bilingual proceedings. However, the Secretary’s actions in this regard shall not, unless the parties agree otherwise, delay progress of the Court proceedings.

d. We agree with the Board’s statement of the relevant issues for the Bilingual proceedings. See Board Memorandum titled “Release of the Fiscal 1985 Bilingual” etc., at 2. At this point, we do not think extensive discovery is needed, but any necessary discovery should be expedited. The parties should try to stipulate to as many relevant facts as possible. As for timing, under the Agreed Order dated November 21, 1985, the parties shall submit an agreed discovery schedule within three days of this order.

C. Conclusion

We reaffirm our status hearing date previously set for Friday, December 20, 1985, at 11:00 a.m. At that hearing, the parties shall report on the 1985 Bilingual proceedings as well as the status (and, we hope, a stipulation) of now-deleted paragraph 12 of the Remedial Order, concerning stay issues and interim funding. It is so ordered.

      . We observe that the United States’ proposal of a $1.2 million share was not unreasonable and was made in good faith. We applaud the government’s cooperation in the aftermath of the October 15 opinion.

      . Indeed, the delay and uncertainty have gotten to the point where members of Congress outside of the Illinois delegation have written the Court to urge a quick resolution. A copy of this correspondence and the Court’s response has been furnished by the Court to the parties.

      . If the Board is spending money on ineligible projects or in an inefficient manner, we could order it to modify its practices. However, since the Board’s Title IV needs greatly exceed the funding it will receive, we think it highly unlikely that any of the United States’ objections, if meritorious, would result in a reduction of the Board's total share. Rather, the most we foresee doing is telling the Board, for example, to spend money on one project over another or on a certain activity within a project.
      All of this does not mean that we want or expect to see objections. As the order shall reflect, we expect the parties to work together to decide which projects to fund. Given the magnitude of the Board’s needs, the parties should easily be able to agree on several eligible projects and should be able to decide how much funding to devote to these projects. As indicated above, the parties should work together so as not to require the Court to oversee each and every mechanic of implementing the Consent Decree.

      . The meaning of "compliance function” is similarly ambiguous.

      . The other sub-sections state that the Assistant Secretary is authorized
      (1) to collect or coordinate the collection of data necessary to ensure compliance with civil rights laws within the jurisdiction of the Office for Civil Rights;
      (2) to select, appoint, and employ such officers and employees, including staff attorneys, as may be necessary to carry out the functions of such Office, subject to the provisions of Title 5 governing appointments in the competitive service and the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates;
      ******
      (4) notwithstanding any other provision of this chapter, to obtain services as authorized by section 3109 of Title 5, at a rate not to exceed the equivalent daily rate payable for grade GS-18 of the General Schedule under section 5332 of such title.
      20 U.S.C. § 3413(c)(1), (2), (4).

      . In its Reply Appendix at 43, the Board says that the “United States sets forth no persuasive authority to demonstrate that it cannot use these excess office funds for the purposes suggested by the Board." This misstates the burden. The Board must show by persuasive authority that it can use the excess funds for its purposes. As- it concedes, the Second Court of Appeals Opinion was clear that ¶ 15.1 cannot by itself disturb statutory intent. While the Board's arguments about the OCR account are forceful, we think that the evidence supporting the Board’s position is ambiguous and sparse. Since it carries the burden of persuasion, we must resolve our strong doubts against its position.

      . See S.Rep. 98-247 at 164. That Report also notes that the OCR is moving from contract-based to in-house operation of its technical assistance activities.

      . Indeed, the fact that Congress endorsed the Secretary’s giving of technical assistance cuts against the Board’s position at least as much as it helps it. Arguably, if Congress intended that the funds also be given directly to local school boards, it would have said so. Its silence suggests that it did not intend — or at least did not consider — this use of the funds.

      . The parties' dispute over paragraph 9 of the Remedial Order (which provides that ¶ 15.1 applies for five more years) is not urgent. If circumstances change dramatically, this paragraph can be amended. We think five years is proper from this vantage point, given the past conduct of the United States.

      . We recognize that the Secretary probably did not have the Consent Decree in mind when he split the Bilingual Funds into continuation and transition accounts. Our October 15 opinion makes clear that he should have factored the Consent Decree into this decision. Nevertheless, we think it unlikely that his ultimate decision was unreasonable under ¶ 15.1 as construed by the Seventh Circuit. The $22 million is enough for present purposes to guarantee the Board an equitable fair share of the total pool of Bilingual Funds.

      . Given other recent signs from the Secretary, we do not think such an administrative review would be futile. Of course, we expect that the Secretary will apply a meaningful priority to the Board's application, one consistent with the October 15 opinion. As we note in the text, he may do so while reserving his rights to challenge that opinion on appeal.

      . Of course, the Court will make the final decisions in this regard as part of its inherent and ongoing power to enforce the Consent Decree.

      . We are not unmindful that an appeal is just around the corner, which is the top priority for the parties. Nevertheless, at the same time, we should try to resolve the bilingual issues as expeditiously as possible.


author: RICE, District Judge.

text:
    Catharine C. REPP, Plaintiff, v. HOLIDAY INNS, INC., Defendant.
    No. C-3-85-246.
    United States District Court, S.D. Ohio, W.D.
    Dec. 9, 1985.
    David C. Greer, Dayton, Ohio, for plaintiff.
    D. Jeffrey Ireland, Dayton, Ohio, for defendant.
   DECISION AND ENTRY OVERRULING DEFENDANT’S MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO TRANSFER (DOC. # 7)

RICE, District Judge.

Plaintiff, age seventy-six, is a resident of Dayton, Ohio. While en route to Florida in March of 1984, Plaintiff stopped at a Holiday Inn in Chattanooga, Tennessee. While a paying guest of this Holiday Inn, Plaintiff slipped and fell on the premises. Plaintiff now seeks to litigate that injury pursuant to the diversity jurisdiction of this Court, Holiday Inn, Inc., being a Tennessee corporation. Defendant has filed a Motion to Dismiss or, in the Alternative, to Transfer (Doc. # 7), arguing that it is not subject to personal jurisdiction in Ohio, and, even if it is, that the instant case should be transferred to the Eastern District of Tennessee, Southern Division (Chattanooga).

The dispute in this case is whether in personam jurisdiction may be had over Defendant based either upon the Ohio long arm statute, Ohio Rev.Code § 2307.382, or based upon Ohio's general jurisdiction over Defendant. Ohio Rev.Code § 2307.382 provides, in pertinent part, that:

[A] court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person’s:
(1) transacting any business in this state;
(4) causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engaged' in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;
(B) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.

The Sixth Circuit has developed a three part test to determine whether the application of the Ohio long arm statute provides sufficient contact between a non-resident Defendant and the foreign state so as to support personal jurisdiction. That test provides:

First, the defendant must purposefully avail himself of the privilege of acting in the foreign state or causing a consequence in the foreign state. Second, the cause of action must arise from the defendant’s activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the foreign state to make the exercise of jurisdiction over the defendant. reasonable.

Welsh v. Gibbs, 631 F.2d 436, 440 (6th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1517, 67 L.Ed.2d 816 (1981); In-Flight Devices Corp. v. VanDusen Air, Inc., 466 F.2d 220, 226 (6th Cir.1972).

Upon a challenge by Defendant, the burden shifts to Plaintiff to demonstrate the propriety of in personam jurisdiction over Defendant. If the issue is to be resolved by the Court solely on the basis of pleadings and materials attached thereto, the Plaintiff need only make a prima facie case of jurisdiction in order to avoid a motion to dismiss. Welsh, 631 F.2d at 438. If the party seeking dismissal on jurisdictional grounds submits affidavits, the non-moving party may not rest upon allegations or denials in her pleadings, but must respond, by affidavit or otherwise, by setting forth specific facts showing that the Court has jurisdiction. Weller v. Cromwell Oil Company, 504 F.2d 927, 929 (6th Cir.1974).

As an initial matter, the Court agrees with Defendant that, notwithstanding Plaintiff’s focus upon Ohio Rule of Civil Procedure 4.3, this Court must necessarily focus upon the Ohio long arm statute in order to determine the propriety of jurisdiction herein. The Court also observes that Subparagraph (A)(1) of the long arm statute, when read in conjunction with Subparagraph (B), requires that the cause of action complained of by Plaintiff arise from the Defendant’s “transacting any business in this state.” Berning v. B.B.C., Inc., 575 F.Supp. 1354, 1356 (S.D.Ohio 1983). This being said, the Court is of the opinion that such a relationship between Plaintiff’s injury and Defendant’s transaction of business in this state has been satisfied, and that Plaintiff has made out a prima facie case of jurisdiction.

There is little question that Defendant maintains a substantial corporate presence in the State of Ohio. The extent of this presence is documented by the annual reports attached to the affidavit of Plaintiff’s counsel. (Doc. # 15, Greer affidavit, ¶ 5). There is also little question that Defendant engages in substantial advertising within Ohio in order to build its reputation to potential consumers as a reputable national hotel chain. This type of activity in Ohio leads to certain business benefits, both within the state of Ohio, and outside of it. The affidavit of Plaintiff is an indication of how successful Defendant has been in pursuing national business and prominence. Plaintiff is well aware of Defendant Holiday Inns, Inc., both by virtue of its substantial corporate presence in Ohio, and by virtue of advertising which it engages in in Ohio in order to persuade Ohio consumers as to the reliability and desirability of temporary stays in Defendant’s hotel facilities throughout the country. (Doc. # 15, Repp affidavit, ¶ 4). Plaintiff attests that she saw, in Ohio, such commercials run by Defendant, and that she made plans to stay in a Tennessee Holiday Inn before leaving Ohio for a vacation trip to Florida. The Court finds it reasonable to accept that Defendant’s presence and activity in Ohio was a competent producing cause of Plaintiff’s decision to use one of Defendant’s out-of-state facilities, and that, in fact, Plaintiff was engaging in the very type of conduct which Defendant’s activity in Ohio sought to encourage.

Thus, even if Plaintiff’s slip and fall did not literally occur in Ohio, but rather in Defendant’s Chattanooga, Tennessee facility, the relationship between Defendant’s activity in Ohio and the injury complained of by Plaintiff is apparent. This case is thus distinguishable from this Court’s earlier decision in Berning. At issue in Berning was a breach of contract stemming from a contract which had been struck outside of Ohio and which contemplated business to be raised outside of Ohio for corporations which were not Ohio corporations. Although Defendant was found to be transacting business in Ohio by virtue of sales which it made of its products within Ohio, this Court found that “[t]he instant dispute, however, has absolutely no bearing on the activities of Defendant in [Ohio].” 575 F.Supp. at 1357. Unlike the situation in Berning, Defendant’s activities in Ohio in the instant case do have a relationship to Plaintiff’s injury outside of Ohio. Given the commercial benefits pursued by Defendant in engaging in its activities in Ohio, commercial benefits which it in fact reaped when Plaintiff specifically sought to stay in a Holiday Inn when she left Ohio, the Court finds that Defendant has a substantial enough connection with Ohio to make the exercise of personal jurisdiction over it reasonable.

Turning briefly to the other bases of jurisdiction raised by Plaintiff, this Court cannot accept that Plaintiff’s injury can be said to have occurred in Ohio on the basis that her damages for pain, suffering and medical expenses have occurred in Ohio. The Court passes no judgment upon Plaintiff’s theory of general jurisdiction in this case, pursuant to the recent invocation of that doctrine in Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), given the specific act jurisdiction available to Plaintiff under the Ohio long arm statute.

Having concluded that personal jurisdiction is available over Defendant, the Court also overrules that portion of Defendant’s motion which seeks to transfer the instant case to the Eastern District of Tennessee, Southern Division. Plaintiff is seventy-six years old, lives here in Dayton, and is in poor health. (Doc. # 15, Repp affidavit, 11 2,11). Plaintiff’s witness to the accident of which she complains, as well as her medical witnesses, are located here in the Dayton area. Id. at 11 s 7, 9, 10). It is certainly less inconvenient for Defendant to litigate this case in the forum of Plaintiff’s choosing than for Plaintiff to pursue this action in the Eastern District of Tennessee. In short, this Court does not believe a transfer under 28 U.S.C. § 1404(a) would be in the interest of justice, and therefore declines to transfer the instant case as requested by Defendant.

In summary, Defendant’s Motion to Dismiss or, in the Alternative, to Transfer is overruled in its entirety.


text:
    UNITED STATES of America, Plaintiff, v. William B. PERRY, Defendant.
    No. CR-3-82-04.
    United States District Court, S.D. Ohio, W.D.
    Dec. 9, 1985.
    James A. Wilson, Asst. U.S. Atty., Dayton, Ohio, for plaintiff.
    David Fuchsman, Dayton, Ohio, for defendant.
   DECISION AND ENTRY OVERRULING MOTION FOR CORRECTION OF SENTENCE

RICE, District Judge.

Defendant appeared in this Court on June 10, 1982 for a probation revocation hearing. This Court found Defendant to have violated the terms of the probation granted to him on November 26, 1973. Defendant’s probation was revoked as a result. He was sentenced by this Court to a five year sentence, which was reduced to eighteen months. On October 26, 1982, this Court issued an order granting Defendant’s Motion for Reduction of Sentence, and directed that Defendant be released from confinement on November 10, 1982. On November 19, 1982, Defendant appeared in open Court with his counsel. The remainder of the execution of the June 10, 1982 sentence was suspended at that time, and Defendant was placed on probation for a period of five years:

The parties agree that 18 U.S.C. § 3651 does not permit suspension of a sentence after a period of incarceration of more than six months. Defendant’s contention in the instant Motion for Correction, which alleges a violation of 18 U.S.C. § 3651 by this Court’s November 19, 1982 order, focuses upon the proper calculation of his six-month period. Defendant alleges that, by the time of his release on November 10, 1982, he had served in excess of six months in custody in connection with the offense for which the June 10, 1982 sentence was imposed. 2Defendant then cites 18 U.S.C. § 3568 as authority for the proposition that his intermittent confinement from late 1981 through November 10, 1982 ought to have been included in calculating the six-month period during which probation was permissible under 18 U.S.C. § 3651. Obviously, were this period of confinement considered, this Court’s November 19, 1982 order of probation would not have complied with the six-month limit of 18 U.S.C. § 3651, as Defendant would have served in excess of six months in jail at the time of institution of probation.

As the Court does not accept Defendant’s interpretation of 18 U.S.C. § 3568, it cannot find Defendant’s position tenable. The pertinent portion of 18 U.S.C. § 3568 provides as follows:

The sentence of imprisonment of any person convicted of an offense shall commence to run from the date on which such person is received at the penitentiary, reformatory, or jail for service of such sentence. The Attorney General shall give any such person credit towards service of his sentence for any days spent in custody in connection with the offense or acts for which sentence was imposed.

The courts which have construed this provision have held that it is not the province of the sentencing court to compute sentences and to apply credit where it is due. Rather, as specifically provided by the statute, this task is an administrative function to be performed by the Attorney General, the Department of Justice and the Bureau of Prisons. United States v. Carmen, 479 F.Supp. 1, 2 (E.D.Tenn.1979), aff'd, 601 F.2d 587 (6th Cir.1979).

In United States v. Clayton, 588 F.2d 1288 (9th Cir.1979), the appellant Clayton relied on 28 U.S.C. § 3568 in challenging a district court order that she serve six months in jail, that the remainder of her sentence be suspended, and that she then serve five years on probation. Appellant’s argument was that the six months in custody, when coupled with the time which she had already served in jail for the original offense, violated the six-month limitation of 18 U.S.C. § 3651. The Ninth Circuit first observed that, as stated supra, it is not the function of the district court to compute sentences and to apply credit. Rather, it construed 18 U.S.C. § 3568 as follows:

[T]he mandate and operative scheme implicit in [18 U.S.C. § 3568] provides that the available credit shall be applied after whatever sentence is imposed and not before sentence. Thus, the court must first impose sentence before any “credit” may be realized. 588 F.2d at 1292 (quoting United States v. Lewis, 447 F.2d 1262 (D.C.Cir.1971)).

With this construction of 18 U.S.C. § 3568, the Clayton court concluded that the appellant’s probation sentence was valid under 18 U.S.C. § 3651, even though appellant had served time in jail prior to the six months of confinement which had been ordered by the district court. 588 F.2d at 1292. This focus on the time imposed by the district court itself in determining whether 18 U.S.C. § 3651 has been violated indicates that there was no such violation by this Court in its November 19, 1982 order, which placed Defendant on probation within six months of his initial order of confinement by this Court on June 10, 1982.

The rationale of the Clayton decision in its attempt to harmonize 18 U.S.C. §§ 3568 and 3651 is laid bare in the decision in United States v. Lewis, 447 F.2d at 1262, the opinion quoted by the Clayton court in arriving at its own conclusion. Lewis involved the logical extension of Defendant’s position herein: that if a defendant has already spent six months in custody, there can be no lawful order of probation under 18 U.S.C. § 3651. The appellant in Lewis, relying upon the credit provision of 18 U.S.C. § 3568, contended that, as he had already spent seven months in jail prior to the date of his sentencing, he could not be sentenced to further confinement under a District of Columbia statute authorizing a maximum jail sentence of six months. The Lewis court rejected this argument. It held that 18 U.S.C. § 3568, by providing that the Appellant’s seven months in custody was the concern of the Attorney General “does not in any way affect the right or duty of the court to impose sentence under the D.C.Code, the Youth Corrections Act or any other applicable statute.” Id. at 1265.

In short, while Defendant’s confinement prior to June 10, 1982 may be relevant to the calculation of his sentence, such credit is a concern of the Attorney General and the prison system after the imposition of a sentence by this Court. As the November 19, 1982 order of this Court and Defendant’s earlier release from custody were valid under the time provisions of 18 U.S.C. § 3651, Defendant’s Motion to Correct Sentence is not well taken insofar as it seeks to invalidate the November 19, 1982 order of this Court. Insofar as the motion seeks that Defendant be given credit for the time which he spent in confinement prior to June 10, 1982, Defendant has not alleged that he has sought or exhausted relief through the administrative procedures available to him within the prison system itself. United States v. Carmen, 479 F.Supp. at 2. As such, this relief sought by Defendant is premature, and must be denied. Id.

      . Defendant alleges that he was confined on December 3, 1981 through January 25, 1982 and then again from April 11, 1982 through November 10, 1982. Even though he drew an additional thirty day jail sentence during this period, Defendant contends that he had already served in excess of six months on the date upon which he was placed on parole.

      . Defendant also contends that this Court's November 19, 1982 order placing Defendant on probation was violative of 18 U.S.C. § 3651 in that Defendant was about to be released on parole at that time. Under 18 U.S.C. § 3651, an order of probation is warranted when, among other things, the district court is "satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby.” Thus, plainly, the interest of the defendant is only one of several factors to be considered in the exercise of the district court’s discretion under 18 U.S.C. § 3651. This Court remains persuaded that, notwithstanding any imminent parole expected by Defendant, that its order of probation on November 19, 1982 reflected the criteria for such an order set forth in 18 U.S.C. § 3651.


author: SWEET, District Judge.

text:
    ASHLEY MEADOWS FARM, INC., Plaintiff, v. AMERICAN HORSE SHOWS ASSOCIATION, INC., Defendant.
    No. 82 Civ. 5691 (RWS).
    United States District Court, S.D. New York.
    Dec. 11, 1985.
   MEMORANDUM OPINION

SWEET, District Judge.

Plaintiff Ashley Meadows Farm, Inc. (the “Farm”) has moved for reargument under Rule 3(j), Civil Rules United States District Courts for the Southern and Eastern Districts of New York, after the rendering of the September 30, 1985, 617 F.Supp. 1058, opinion of the court holding that the Farm’s evidence of injury was inadequate as a matter oflaw to allow it to proceed to trial under Section 16 of the Clayton Act. The motion to reargue was submitted on November 1, 1985, and is now denied.

To be entitled to reargument under Local Rule 3(j), the Farm must demonstrate that the court overlooked controlling decisions or factual matters that were put before the court on the underlying motion. It is the primary position of the Farm that it has established its claim to a trial seeking injunctive relief against the practice by the defendant American Horse Shows Association, Inc. (the “Association”) under its Mileage Rule and Rule Amendment. The Farm seeks to hold horse shows on dates other than those now authorized, dates that are alleged to be more advantageous to the Farm. No proof of economic injury has been proffered, except as noted below.

The Farm first urges that Zenith Radio Corp. v. Hazeltine Research Co., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), as a matter of law, provides the requisite nexus between the violations it has alleged and its future injury and that the court misread Zenith. As stated in the September 30 opinion, the court found that while the Farm’s reading of Zenith “finds some support in the language used” by the Supreme Court, that language had to be read in light of the factual predicate to the Court’s conclusion on the plaintiff’s right to injunctive relief. In Zenith, the Supreme Court first restored the district court’s finding that defendant’s conduct had in fact injured the plaintiff by reducing its profits. Since defendant’s conduct had not terminated, future injury in fact due to the continuing of profits was “inherent” in the conduct. Injunctive relief was appropriate, therefore, because financial injury resulting from past conduct was expected to continue. That proposition, which actually supports the Association’s position here, is all that one can take from the passage in Zenith so often cited by the Farm.

Unlike the Zenith plaintiff, which had been wholly denied access to the Canadian market by defendants’ refusal to issue a license, the Farm simply alleges that the levels of its show profits, derived from an industry in which it actively participates, are affected by the Association’s rules, but no evidence is offered in support of this limited allegation. In addition, the Farm offers no evidence to support its ultimate claim that its total revenues have been affected adversely.

The Farm asserts now, however, for the first time on reargument, that it can amplify its unsupported allegation with the opinions of its “expert” witnesses. The issue here would require a factual demonstration of the Farm’s contention that some dates are more “competitively advantageous” than others, and that the Farm’s financial position would improve in the absence of the Association’s scheduling rules. At the very least, the Farm must account for the effects of the attraction of exhibitors to other shows on the dates the Farm’s shows are held that would result if the rules were enjoined. This is a point on which even the most sophisticated proof of injury in fact sometimes falters. See, e.g., Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir.1981), affirming Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co. Ltd., 467 F.Supp. 841 (N.D.Calif.1979) (defendants’ motion for judgment n.o.v. granted where record contained insufficient evidence to determine the impact on plaintiff of customer choice in a “boycottless” world); R.S.E., Inc. v. Pennsy Supply, Inc., 523 F.Supp. 954 (M.D.Pa.1981) (judgment n.o.v. granted where plaintiff failed to account for competitors’ reaction to enlarged market share projected by plaintiff’s economist; study inadequate to support amount of damage, let alone to satisfy the higher measure of proof required to show fact of injury).

It is the Farm’s view that it can avoid the complexity of demonstrating that its revenues would increase in the future because it asks only for injunctive relief, having chosen to abandon its damage claims. However, individual injury, whether past or future, remains the crux of a private action, and where a plaintiff is unable “to cite to any contemporaneous damages from which a reasonable inference of future damages could be drawn,” the “significant threat” of injury that would entitle it to injunctive relief has not been shown. Machovec v. Council for the Nat’l Reg. of Health Serv. Providers in Psych., Inc., 616 F.Supp. 258 (E.D.Va.1985); Merit Motors, Inc. v. Chrysler Corp., 569 F.2d 666 (D.C. Cir.1977). See also Van Dyk Research Corp. v. Xerox Corp., 631 F.2d 251 (3d Cir.1980).

Moreover, unsupported testimony of proposed expert witnesses is not sufficient to create standing. The Farm’s “experts” propose to agree with the allegations of the complaint. Without substantial factual support, however, no compilation of expert opinions would lend any weight to the Farm’s claims, and the record here contains no such facts. See Merit Motors, supra; American Bearing Co. v. Litton Industries, Inc., 540 F.Supp. 1163 (E.D.Pa.1982), aff'd, 729 F.2d 943 (3d Cir.), cert. denied, — U.S. -, 105 S.Ct. 178, 83 L.Ed.2d 112 (1984). Thus the Farm remains without a basis from which it might show that it will suffer loss or injury if the Association’s rules are not enjoined. It would appear that the Farm wishes in effect to reargue its theory that the Mileage Rule is a per se antitrust violation, a purpose inappropriate to this motion.

For the foregoing reasons, the Farm’s motion is denied.

IT IS SO ORDERED.