author: CURTIN, Chief Judge.

text:
    Nancy BONAR, on behalf of Douglas BONAR, an infant; Karen Amey, on behalf of Scott Amey, an infant; Martha Hamann, on behalf of Susan Hamann, an infant; Lynne C. Sommerstein, on behalf of Michelle L. Sommerstein, an infant; Donna Dougherty, on behalf of Richard Dougherty, an infant; Rita Evelt, on behalf of John Evelt, an infant; Individually and on behalf of all other similarly situated individuals, Plaintiffs, v. Gordon AMBACH, as New York State Commissioner of Education, Defendant.
    No. CIV-80-362C.
    United States District Court, W.D. New York.
    Dec. 28, 1984.

      Serotte, Reich & Goldstein, Buffalo, N.Y. (Bruce A. Goldstein, and Gerald P. Seipp, Buffalo, N.Y., of counsel), for plaintiffs.
    New York State Educ. Dept., Albany, N.Y. (Kenneth Pawson, Albany, N.Y., of counsel), for defendant.
   CURTIN, Chief Judge.

I.

This matter is before the court for the third time on the question of attorneys’ fees. In an order dated September 29, 1982,1 found that the plaintiffs were “prevailing parties,” in that the commencement of this action resulted in a settlement favorable to the plaintiffs. I also held that an award of attorneys’ fees pursuant to 42 U.S.C. § 1988 was proper.

Counsel then submitted affidavits outlining the time spent in preparing the case. Defendants opposed the award both in terms of the amount sought and the propriety of any award under the circumstances of this case. I declined to change my conclusion that the plaintiffs were prevailing parties, and I awarded fees to plaintiffs’ counsel. See, order of December 20, 1983, Item 80.

Counsel subsequently sought a modification of that order, requesting the court to award fees for legal work done in connection with preparing the motion. Defense counsel once again challenged the propriety of any fees. Once again, I decline to alter my conclusion that the plaintiffs “prevailed” in this lawsuit.

The parties were last in court this spring to argue the issue of additional attorneys’ fees. Since that time, the Supreme Court decided the cases of Smith v. Robinson, — U.S. -, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984); and Irving Independent School District v. Tatro, — U.S. -, 104 S.Ct. 3371, 82 L.Ed.2d 664 (1984). These cases prompted further written submissions from counsel in July. The court now decides that counsel for plaintiffs are entitled to the attorneys’ fees awarded in the order dated December 20, 1983, plus those requested for work done in preparing the motion.

Smith v. Robinson, supra, involved several diverse claims made at various times by a young learning disabled boy and his parents. The clearest statement made by the Court in Smith is that

[Wjhere the [Education of the Handicapped Act, 20 U.S.C. §§ 1400, et seq.] is available to a handicapped child asserting a right to a free appropriate public education, based either on the EHA or on the Equal Protection Clause ..., the EHA is the exclusive avenue through which the child and his parents ... can pursue their claim.

104 S.Ct. at 3470. The EHA does not have a provision for attorney’s fees. Therefore, the availability of the EHA to assert an equal protection claim precludes the use of 42 U.S.C. §§ 1983, 1988 to recover attorney’s fees on an equal protection theory.

The Court also pointed out the general agreement among courts that the EHA may not be used as the basis of an action under 42 U.S.C. § 1983. Id., 104 S.Ct. at 3468 n. 11, citing, inter alia, Quackenbush v. Johnson City School District, 716 F.2d 141, 145-47 (2d Cir.1983).

The Court was less specific in its discussion about the use of section 1983 as a means to assert due process claims in a case relating to rights secured by the EHA. The petitioners in Smith attempted to use section 1983 to mount a due process challenge to the partiality of an officer who conducted a hearing concerning the child’s educational placement. The Court did not decide the question of whether this was proper in view of the detailed procedural provisions in the EHA. However, the Court did indicate that use of section 1983 to “force agencies to provide [plaintiffs] the process they were constitutionally due” was fully consistent with the intention of Congress to deny attorney’s fees to those who succeed through resort to the procedures set forth in the EHA. 104 S.Ct. at 3470-71 n. 17.

The Court also assumed the propriety of a fee awarded by the district court for work done in connection with obtaining an order enjoining a school district from dropping the learning disabled student from an educational program without first providing a hearing.

Petitioners challenged the refusal of the School Board to grant them a full hearing before terminating Tommy’s funding. Petitioners were awarded fees against the School Board for their efforts in obtaining an injunction to prevent that due process deprivation. The award was not challenged on appeal and we therefore assume that it was proper.

Id., 104 S.Ct. at 3467 (emphasis added).

The instant case presents a question similar to that presented in Smith but not challenged on appeal. The defendant here was accused of conduct which, if continued, would have resulted in a deprivation of educational services without hearings. I have noted that the State agreed, in mid-1980, to guarantee that this would not occur “in the court setting as a result of discussions, and meetings which took place between the court and the parties” (Order of September 29, 1982, Item 68, p. 5).

When, in the Smith case, the assumed propriety of the fee award for work done to obtain an injunction preventing a program change without a hearing is viewed together with footnote 17 and the reasons for precluding reliance upon the equal protection clause, the indication is that a fee award is proper in the present case.

The centerpiece of the Court’s equal protection analysis is its finding that it is contrary to the intent of Congress to permit a litigant to go directly to federal court to assert a constitutional right to a free, appropriate education when elaborate procedural safeguards, providing for extensive participation by local authorities, can be used for the same purpose. Id., 104 S.Ct. at 3469. “Allowing a plaintiff to circumvent, the EHA administrative remedies would be inconsistent with Congress’ carefully tailored scheme.” Id. 104 S.Ct. at 3470. Then, in footnote 17, the Court states that seeking “judicial relief to force the agencies to provide [due process]” is not such a procedure in which an exemption from a fee award is indicated.

The fee awarded by the district court which the Supreme Court assumed was proper appears to have been attributable to work done in a proceeding “to force [an agency] to provide [the plaintiff] the process [he was] constitutionally due.” The clear implication is that 42 U.S.C. §§ 1983, 1988 can be used to state this kind of a due process claim and obtain an award of attorney’s fees.

This is essentially what was done here. The plaintiffs did not circumvent the procedures set forth in 20 U.S.C. § 1415. These procedures were not invoked, because defendant’s conduct made them unavailable. The only work for which fees are awarded is the work done in connection with obtaining the guarantee that the plaintiffs’ educational programs would not be summarily discontinued. This is essentially a due process claim within the purview of section 1983.

The fact that plaintiffs’ victory came about by concession rather than by court order does not compel a different result. All that is necessary is that the result obtained be the product of plaintiffs’ advocacy based upon a provision which permits an award of attorneys’ fees. Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2574, 65 L.Ed.2d 653 (1980).

I have found that plaintiffs’ advocacy resulted in what is the equivalent of an order enjoining the actions contemplated by the deféndant. See Order of September 29, 1982. I have also concluded, in light of Smith, that this is a proper case for asserting a due process claim under section 1983 and for an award of attorneys’ fees pursuant to 42 U.S.C. § 1988. Accordingly, the motion for attorneys’ fees is granted.

ÍL

The court’s order of December 20, 1983, permitted an award of $5,490.00 to attorney Bruce A. Goldstein. The same order allowed an award of $2,132.00 to attorney Gerald P. Seipp (32.8 hours at $65.00 per hour). Mr. Seipp now asks for an additional 18.4 hours for work done in connection with preparing this motion. He asks for a rate of $75.00 per hour. See Item 81.

I find that the number of hours claimed is reasonable. However, I believe that there is no basis to permit compensation at a rate higher than that recognized previously. Mr. Seipp shall be awarded a fee on the basis of an hourly rate of $65.00. Accordingly, Mr. Seipp shall be awarded an additional fee of $1,196.00.

III. Conclusion

The motion for attorneys’ fees is granted. As provided in the court’s order of December 20, 1983, Mr. Goldstein shall receive $5,490.00. Pursuant to that order and today’s order, Mr. Seipp shall receive $3,328.00. Judgment shall be entered accordingly.

So ordered.

      . The court notes that today’s order is consistent with a decision recently filed by the United States Court of Appeals for the Eighth Circuit. See, Rose v. Nebraska, 748 F.2d 1258 (1984). In fact, Rose may have gone further than the court’s ruling in the present case. Rose involved a challenge to the adequacy of Nebraska’s statutory procedure concerning appeals from decisions on the placement of handicapped children. This procedure conflicted with EHA requirements. The Eighth Circuit allowed an award of attorney's fees despite the fact that the complaint stated claims under both section 1983 and the EHA.


source: Caselaw Access Project

author: CLIFFORD SCOTT GREEN, District Judge.

license: Public Domain

text:
    LUGO, Angel and Luna, Maria by her guardian ad litem Lugo, Angel on behalf of themselves and on behalf of all others similarly Pickels, Sarah M., on behalf of Pickels, Edward and Terebieniec, Edward F., indiv. & on behalf of all others similarly situated, Interveners, v. SCHWEIKER, Richard S., Secretary, United States Department of Health and Human Services.
    Civ. A. No. 81-3797.
    United States District Court, E.D. Pennsylvania.
    Dec. 28, 1984.

      Henry J. Sommer, David L. Hill, Community Legal Services, Inc., Philadelphia, Pa., for plaintiffs.
    Steven J. Engelmyer, Asst. U.S. Atty., Philadelphia, Pa., Randolph W. Gaines, Deputy Asst. Gen. Counsel, John B. Watson, Chief, Assistance Payments, Litigation Branch, Baltimore, Md., for defendants.
   MEMORANDUM

CLIFFORD SCOTT GREEN, District Judge.

I. BACKGROUND

The Social Security Administration (“SSA” or “agency”), along with the Secretary of Health and Human Services (“Secretary”) is charged with implementing the provisions of the Social Security Act, 42 U.S.C. §§ 301-1396 (1980), as amended (“Act”). Under the Act, Supplemental Security Income (“SSI”) benefits are paid to eligible recipients. Also available under the Act are Social Security Disability Insurance (“SSDI”) benefits for recipients qualifying for that program.

Like any large government bureaucracy, SSA sometimes makes mistakes. Frequently, these mistakes result in the agency paying an eligible recipient an amount less than what is statutorily required under the Act. When a recipient is not paid all that is due him or her under the Act, the missed payments are termed an underpayment. An underpayment commonly results in cases where a recipient’s benefits have been terminated due to SSA’s erroneous assertion that the recipient was no longer disabled. Once it has been determined that a recipient has been underpaid, the Secretary must pay the amount of the underpayment to the recipient. See e.g. Drummond v. Heckler, 569 F.Supp. 304 (E.D.Pa.1983).

Also prevalent among SSA’s mistakes are situations where the agency has paid a recipient an amount more than what is statutorily required by the Act. Where a recipient is paid more than that due to him or her under the Act, the excess payments are termed an overpayment. Overpayments generally result from inaccurate estimates of a recipient’s future income, administrative computer errors, recipient errors or retroactive changes in the law. See Note, Supplemental Security Income Overpayments: Judicial Response to Administrative Decisions Which Deny Waiver of Recovery, 18 New Eng.L.Rev. 899, 901-02 (1983).

By statute, the Secretary is directed to recover overpayments of SSDI benefits. See 42 U.S.C. § 404(a)(1) (1980). Such a recovery is termed recoupment. Recoupment of an overpayment is waived, however, if the recipient is “without fault” and “the recovery would defeat the purpose of [the Act] or would be against equity and good conscience.” 42 U.S.C. § 404(b) (1980).

The Supreme Court has held that section 204(b) of the Act, 42 U.S.C. § 404(b), prohibits the Secretary from recouping an overpayment without first giving the overpaid recipient an opportunity for a hearing on the issue of whether the overpayment should be waived. Califano v. Yamasaki, 442 U.S. 682, 698, 99 S.Ct. 2545, 2556, 61 L.Ed.2d 176 (1979). See also Bonner v. Califano, 516 F.Supp. 310 (E.D.Pa.1981).

Similarly, the Secretary is statutorily directed to recoup overpayments of SSI benefits. See 42 U.S.C. § 1383(b)(1) (Supp. Y. 1981). Here too, waiver is appropriate if the recipient is “without fault in connection with the overpayment,” and the “recovery ... would defeat the purpose of [the Act], or be against equity or good conscience.” Id. This provision has also been interpreted to prohibit the Secretary from recouping an overpayment without first giving the overpaid recipient an opportunity for a hearing on the issue of whether the overpayment should be waived. See Page v. Schweiker, 571 F.Supp. 872, 879 (M.D.Pa. 1983). See also Schwingel v. Harris, 631 F.2d 192, 196-97 (2d Cir.1980).

The Secretary, by regulation defines overpayments and underpayments, not by an amount over or underpaid in a given month, but by an amount over or underpaid within a period. See 20 C.F.R. § 416.538 quoted infra. If the Secretary finds that during a period a recipient has been overpaid in a given month or number of months and underpaid in another month or number of months, she sets off the amounts to come up with an “adjusted” over or underpayment figure. The period varies with each recipient and can stretch over several years. The secretary makes this within period “adjustment” without providing the recipient an opportunity for a waiver of recoupment of the overpaid amounts.

This action was commenced as a class action against the Secretary by plaintiffs Angel Lugo and Maria Luna, on behalf of themselves and other persons who have been adversely affected by the Secretary’s regular policy which is challenged herein. Plaintiffs’ amended complaint seeks declaratory and injunctive relief, alleging that the Secretary’s failure to provide an opportunity for a hearing to determine whether a waiver of overpayment recoupment was warranted, prior to the adjustment of benefits, violated their rights under the Act and the Due Process Clause of the Fifth Amendment of the United States Constitution.

After permitting other plaintiffs to intervene, this court certified a class represented by Angel Lugo, Maria Luna, Sarah H. Pickels, on behalf of Edward Pickels, and Edward F. Terebieniec, consisting of all persons who:

(1) have been, are, or will be served by the Philadelphia regional office of the United States Department of Health and Human Services;

(2) have been or will be determined eligible for social security or SSI benefits;

(3) have been or will be entitled to payment of benefits due for prior months;

(4) have had or will have all or part of retroactive benefits withheld from prompt payment or adjusted by defendant in order to recoup previous overpayment of benefits without receiving notice and an opportunity for a hearing on the issue of waiver of said recoupment or adjustment prior to such withholding or adjusting by defendant; and,

(5) have made or will make a claim to defendant requesting the release of benefits withheld or adjusted. The class includes all persons who received notice of the adjusted/recouped amount of benefits within the four years prior to September 21, 1981, the date this action was commenced. The class does not include any person as to whom a court has already rendered a decision on the issues presented in this case.

Now pending before this court are cross-motions for summary judgment. On September 20, 1984, argument was heard on the motions. Plaintiffs argue that the overpayment-underpayment accounting procedure set forth in the Secretary’s regulations violates sections 204(b) and 1631(b)(1) of the Act, 42 U.S.C. §§ 404(b) and 1383(b)(1). Pursuant to the challenged procedure, the Secretary recoups any overpayment made to a recipient during a period from any sum owing to such a recipient as a result of an underpayment during the same period without first providing a waiver hearing with regard to the overpayment. Plaintiffs also assert that, in addition to violating the Act, the procedure outlined above violates the Due Process Clause of the Fifth Amendment of the United States Constitution. For the reasons set forth below plaintiffs’ motion will be granted; and defendant’s motion will be denied.

II. ANALYSIS

The Supreme Court has repeatedly cautioned that where a case may be decided on either constitutional or statutory grounds, the lower courts should decide the case on statutory grounds. See Califano v. Yamasaki, 442 U.S. 682, 692, 99 S.Ct. 2545, 2553, 61 L.Ed.2d 176 (1979). New York City Transit Authority v. Beazer, 440 U.S. 568, 582-83 and n. 22, 99 S.Ct. 1355, 1364 n. 22, 59 L.Ed.2d 587 (1979); Ashwander v. T.V.A., 297 U.S. 288, 347, 56 S.Ct. 466, 483, 80 L.Ed. 688 (1936) (concurring opinion). Since I conclude that the Secretary’s procedures exceed her statutory authority there is no need to reach plaintiffs’ constitutional claims.

I note here the limited standard of review presented to a court when regulations promulgated by the Secretary are challenged. Courts are generally required to give great deference to agency regulations implementing a statute; and, can only set them aside if “the Secretary exceeded [her] statutory authority or if the regulation is ‘arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with the law.’ ” Batterton v. Francis, 432 U.S. 416, 425-26, 97 S.Ct. 2399, 2405-06, 53 L.Ed.2d 448 (1977) (citations and footnotes omitted). See also Schweiker v. Gray Panthers, 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981); Santise v. Schweiker, 676 F.2d 925 (3d Cir.1982); Jackson v. Heckler, 580 F.Supp. 1077 (E.D.Pa.1984). With this principle in mind, I turn now to the Secretary’s action in this case.

The Secretary is given authority to establish social security benefits regulations and procedures by section 205(a) of the Act, 42 U.S.C. § 405(a) (1980). This section provides: “[t]he Secretary shall have full power and authority to make rules and regulations and to establish procedures not inconsistent with the provisions of [the Act]____” 42 U.S.C. § 405(a) (emphasis added). The foregoing authority is incorporated into the SSI program. See 42 U.S.C. § 1383(d)(1) (Supp. V. 1981). Thus, the Secretary has the power to promulgate regulations and establish policies regarding the recoupment of overpayments under both the social security and SSI programs, as long as those regulations and policies are not inconsistent with the Act.

Pursuant to the above authority the Secretary, by regulation, has defined underpayment and overpayment. See 20 C.F.R. §§ 416.436, 416.437 (1984). She has also established, by regulation, the way in which the amount (of underpayment or overpayment) is determined. See 20 C.F.R. § 416.538 (1984). 20 C.F.R. § 416.538 provides in pertinent part:

The amount of an underpayment or overpayment is the difference between the amount paid to a recipient for a period and the amount of payments for which such recipient actually was eligible for such period. The period with respect to a determination of the fact or amount of any overpayment or underpayment begins with the first month of any quarter for which there is a difference between the amount paid and the amount due and ends with the month immediately preceding the calendar quarter in which the initial determination of overpayment or underpayment is made____

20 C.F.R. § 416.538 (1984).

Plaintiffs assert that the Secretary’s policy of netting of overpayments and underpayments within a “period” pursuant to the above regulation is inconsistent with the Act. I agree. This inconsistency is demonstrated by viewing the effects of the Secretary’s procedure on named plaintiff Lugo.

Lugo began receiving SSI benefits when that program took effect in 1974. In 1977, he was determined not to be disabled; and, SSA terminated his benefits. After protracted litigation, both in this court and within the agency, he was notified in 1981, that he was disabled as of November, 1976. His disability made him eligible for benefits after that date. He, however, did not receive any benefits from 1977 through 1980. This failure to receive benefits when they were due resulted in an underpayment calculated by the Secretary to be $2,798.70.

Since Lugo received benefits from 1974 into 1976 when he was not due them, the Secretary also determined that Lugo had received an overpayment. She calculated the overpayment amount for those years to be $6,100.60. Instead of granting Mr. Lugo the statutorily required opportunity for a hearing to decide whether the $6,100.60 overpayment (paid during 1974 into 1976) should be waived, the Secretary, pursuant to the accounting period set forth in 20 C.F.R. § 416.538, recouped $2,798.70 of the overpayment from the underpayment (owed for 1977 through 1980) due Lugo leaving him an “adjusted” overpayment of $3,301.90. This “adjustment” leaves Lugo with the opportunity to seek waiver as to only $3301.90 of the overpayment amount, not on the full amount of $6,100.60.

As noted previously, sections 204(b) and 1631(b)(1) of the Act,' 42 U.S.C. §§ 404(b) and 1383(b)(1), require the Secretary to provide a recipient an opportunity for a waiver hearing before recouping any overpayments under the social security and SSI programs. See Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979); Page v. Schweiker, 571 F.Supp. 872 (M.D.Pa.1983); Bonner v. Califano, 516 F.Supp. 310 (E.D.Pa.1981). While the Secretary seeks to justify her action as merely an accounting procedure, it is, in fact, a recoupment without opportunity for the recipient to seek a waiver of the full amount. Since the Act requires an opportunity for a waiver hearing before recoupment, the Secretary’s action is inconsistent with the Act. The Secretary cannot use an accounting period to redefine overpayment and underpayment so as to deprive a recipient of a statutorily required opportunity for a hearing. The SSA regulation codified at 20 C.F.R. § 416.538 allows just that result. Accordingly, I hold that 20 C.F.R. § 416.-538 is inconsistent with sections 204(b) and 1631(b)(1) of the Act.

Since the Secretary is only empowered to promulgate regulations not inconsistent with the Act, it follows that she was without authority to promulgate 20 C.F.R. § 416.538. Insofar as it permits recoupment by automatic accounting adjustments, it is, therefore, invalid.

III. REMEDY

The Secretary will be enjoined from using the automatic adjustment set forth in 20 C.F.R. § 416.538 to evade the waiver determination hearing opportunity requirements of the Act. She will be directed to provide the statutorily required opportunity for waiver determination hearings before recouping overpayment by any means, including but not limited to setting off, netting or “adjusting” an amount of the overpayment against an amount of underpayment owed to a recipient.

Plaintiffs Lugo, Luna, Terebieniec and the class members they represent have all had the amount individually owed to them by SSA, as a result of an underpayment, reduced because of the Secretary’s illegal overpayment “adjustment” policy. The Secretary will be directed to pay to Lugo, Luna, Terebieniec and the class members the amount of their respective underpayments that was illegally withheld by the Secretary pursuant to 20 C.F.R. § 416.538.

APPENDIX

A. Angel Lugo

Angel Lugo began receiving SSI benefits when that program took effect in 1974. In late 1977, Mr. Lugo’s benefits were terminated, on the erroneous initial decision of SSA that he had not been disabled for any of the time that he received benefits. At the same time SSA made an implicit determination that Mr. Lugo was overpaid in the amount of all of the benefits he had received up until that time.

While Mr. Lugo appealed the termination of his SSI disability benefits, he suffered the hardships of inadequate food, clothing and shelter necessarily associated with the drastic decrease in his income for over three years, until his benefits were reinstated in 1981.

When Mr. Lugo’s benefits finally were reinstated in 1981, he was not paid all of the benefits which had been withheld from him for four years. Indeed, he was not paid any back benefit payments. Instead, he was notified that he owed an overpayment for the months of April 1974 — November 1976 of approximately $6,000 and that all of the retroactive benefits due to him had been kept by SSA to pay back that overpayment. He was also notified that he owed additional money on the overpayment.

Mr. Lugo then applied for a waiver of his total overpayment for the period before November 1976. In response to this application he received a decision and a reconsideration decision that found him to meet all of the prerequisites for a waiver of an overpayment. However, he still did not receive the benefits which had been wrongfully withheld from 1977 until 1981 on account of his earlier overpayment. Social Security waived only that portion of the 1974-76 overpayment that was over and above the amounts wrongfully withheld from 1977-1981. SSA recouped the remainder of the overpayment by withholding from plaintiff Lugo all of the payments due from 1977 to 1981, a total of $2,798.70.

B. Maria Luna

Maria Luna, the common law wife of Angel Lugo, first became entitled to SSI benefits in October 1977. However, she did not receive the benefits due her until the third quarter of 1978. Beginning in the fourth quarter of 1978 and continuing through 1980, she was paid less benefits than were due to her because of the incorrect determination that Mr. Lugo was not disabled.

When Mr. Lugo’s benefits were reinstated, the benefits due to Ms. Luna for this period were also withheld to repay overpayments and she was paid nothing, despite her request for a waiver of recoupment of any overpayment and a finding that she met the requirements for obtaining a waiver.

After this action was filed, SSA requested a voluntary remand of the case to recompute Ms. Luna’s benefits. On remand SSA decided that her benefits should not have been withheld to repay overpayments made solely to Mr. Lugo. However, a portion of the benefits due to her for the period from October of 1978 to December 1980, in the amount of $215.90, was still withheld to repay an earlier overpayment, incurred in the third quarter of 1978.

C. Edward Pickels

Edward Pickels is a recipient of SSI benefits under Title XVI of the Social Security Act. These benefits are paid to his mother, Sarah Pickels, as his representative payee. For the past several years Edward Pickels has been a student at the Cardinal Krol Center (“C-K Center”), a branch of the Don Guanella School in Springfield, Pennsylvania. In early 1981 that facility was deemed to be retroactively eligible to receive medical assistance for its students. In June, 1981, this fact was communicated to SSA. Since students at facilities receiving medical assistance are not eligible for full SSI benefits, it was determined by the Secretary that Edward Pickels had been overpaid in the amount of $3,489 for the period beginning July, 1980 and ending in August, 1981. In November, 1981, Sarah Pickels was notified that Edward’s SSI benefits would be lowered and the Secretary began recouping the overpayment from Pickels’ remaining benefits.

Sarah Pickels appealed the decision that there was an overpayment and, in the alternative, requested waiver of recoupment of the overpayment. In a post-hearing decision, dated November 29, 1982, an administrative law judge (“ALJ”) determined that, due to the change in the medical assistance status of the C-K Center, Edward Pickels was entitled only to reduced benefits. During the months of June, July, August and September of both 1981 and 1982, however, there were sufficiently long periods of absence from the C-K Center to entitle Pickels to full benefits. The ALJ recalculated the amount of overpayment by subtracting the amounts Pickels was underpaid in September, 1981 and June — September, 1982 (when full benefits were due, but only partial benefits were paid) from the amount that was overpaid in the period July, 1980 through May, 1981. The AU then ruled that recovery of this “adjusted overpayment” should be waived, since the requirements for waiver had been met in Mr. Pickels’ case.

The ALJ’s decision thus denied any opportunity for a waiver of the overpayment that occurred from July, 1980 to August, 1981 by repaying that money to SSA through an offset against benefits due in September, 1981 and June through September, 1982. Had those latter benefits not been wrongfully denied by SSA when they were originally due, Edward Pickels would have been given notice and an opportunity for a hearing on whether recoupment out of those benefits should have been waived.

On January 28, 1983, Sarah Pickels sought intervention as a named plaintiff in this action on behalf of Edward Pickels. Several months later, after that entry into this lawsuit, the Secretary determined that the ALJ did not follow SSA regulations in Pickels’ case. According to the Secretary, the ALJ erroneously recouped the overpayment from benefits owed to Pickels outside the overpayment period. Subsequently, SSA issued a lump sum check to Pickels, thereby retroactively paying the amount to which plaintiff Pickels was entitled.

D. Edward F. Terebieniec

Edward F. Terebieniec is a recipient of SSDI benefits pursuant to Title II of the Act. Plaintiff Terebieniec was found to be eligible for social security benefits due to á disability effective from June 20, 1978. By notice dated September 8, 1981, Mr. Terebieniec was notified that his benefits would be suspended effective October 1980, due to the passage of section 223(f) of the Act, 42 U.S.C. § 423(f) (1981), requiring suspension of the payment of disability benefits to any person confined in a jail as a result of a conviction of a felony. . Section 223(f), enacted in 1981, was made effective retroactive to October 1980. Because of the retroactive application of the law, Edward Terebieniec was overpaid in the amount of $966.90, representing benefits he received from October 1980 through February 1981.

On November 22, 1982, plaintiff Terebieniec was informed that he had been underpaid certain social security benefits based on a recomputation of his earnings effective December 1978. This notice indicated that the underpayment occurred during the period beginning December 1978 and ending September 1982. The underpayment totaled $126.30. Plaintiff Terebieniec was notified that' his outstanding overpayment had been adjusted by the amount of the underpayment and that an “adjusted” overpayment balance of $840.60 remained. No notice or hearing on a possibility of waiving the overpayment was offered or given prior to this offset.

Plaintiff Terebieniec filed a request for reconsideration on December 21, 1982, objecting to the adjustment of the underpayment by the overpayment. This request was denied. However, SSA later found that he met all of the requirements for a waiver of overpayment and waived the “adjusted” overpayment by a notice dated April 17, 1983.

On January 28, 1983, Mr. Terebieniec moved to intervene as a named plaintiff in this action. Shortly thereafter he also requested a hearing on his case before an ALJ. On December 14, 1983, after his intervention as a named plaintiff in this action was allowed and after certification of the plaintiff class herein was granted, the AU issued a decision sustaining Mr. Terebieniec’s position on the basis of the arguments raised by all of the plaintiffs in this case. Because the Secretary views the ALJ’s decision in Terebieniec’s case to be in conflict with her regulations and policy, Terebieniec has not received the funds due to him.

      . See 20 C.F.R. § 416.538, infra. See Appendix for the effect of the Secretary’s definition of overpayment by period rather than by month on the named plaintiffs.

      . The factual and procedural backgrounds of the named plaintiffs’ cases are set forth individually in the appendix attached to this memorandum.

      . Plaintiffs Luna and Terebieniec have also had their respective overpayment amounts "adjusted” by the Secretary pursuant to the procedure set forth in 20 C.F.R. § 416.538. See Appendix.

      . I make no finding as to whether any prior waiver determination made with respect to an illegally "adjusted” overpayment is res judicata as to a subsequent waiver determination hearing with regard to a non-adjusted overpayment.

      . Plaintiff Pickel has received, albeit tardily, the full amount owed to her son as a result of an underpayment.

      . After appeal to this court, Lugo’s case was remanded to SSA where he was ultimately found to have been disabled as of November, 1976.

      . Ms. Luna’s benefits became a part of a joint payment of SSI couple’s benefits to her and Mr. Lugo for the period that both were eligible. Lugo was designated as her representative payee.

      . Pub.L. No. 96-473, § 5(c), 94 Stat. 2265 (1981), amended by Pub.L. No. 97-123 § 6, 95 Stat. 1664 (1983), repealed by Pub.L. No. 98-21, Title III § 339(b), 97 Stat. 134 (1983).


author: KATZ, District Judge.

text:
    BALDT INCORPORATED v. AMERICAN UNIVERSAL INSURANCE COMPANY.
    Civ. A. No. 84-3577.
    United States District Court, E.D. Pennsylvania.
    Jan. 2, 1985.

      Kell M. Damsgaard, Philadelphia, Pa., for plaintiff.
    Peter A. Dunn, Media, Pa., for defendant.
   MEMORANDUM AND ORDER

KATZ, District Judge.

Plaintiff Baldt, Incorporated manufactured and sold anchor chains to the Diamond M. Company for Diamond M’s two offshore oil rigs. When Diamond M complained that the anchor chains.broke apart during use, Baldt sued in Delaware state court for a declaratory judgment and Diamond M filed a counterclaim. The counterclaim complained of four instances when the anchor chains separated because of improper welding. It also complained of the risk of future separations of the anchor chains, and possible injury to life or property. Baldt had a comprehensive General Liability Insurance Policy with the defendant, the American Universal Insurance Company. ■ After American took the position that it was not required under the policy to defend the counterclaim or to indemnify Baldt for the subsequent settlement with Diamond M, Baldt sued the defendant for its failure to defend and indemnify. The parties have filed and argued cross-motions for summary judgment on the duty to defend issue. Both sides agree that there is no genuine issue of material fact and that this issue should be decided on the existing record.

I find that under this insurance policy American Universal Insurance Company had the obligation to defend Baldt against counterclaims asserted by Diamond M in the lawsuit in Delaware state court.

The insurance policy stated:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... property damage to which this insurance applies, caused by an occurrence and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such ... property damage.

The policy defines an “occurrence” as “an accident including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

The counterclaim by Diamond M against Baldt, Inc. describes four separations of the anchor chains manufactured by Baldt. Three separations occurred while the chains were being “storm tensioned.” The other separation occurred while a chain was being “hauled” in preparation for a move of Diamond M’s oil-drilling rigs. Diamond M asserted that the separations were caused by improperly welded chain links and that, as a result of the defect, the company was forced to purchase replacement anchor chains. The counterclaim alleged that the exchange of anchor chains on the rig Eagle “took approximately five days and cost Diamond M approximately $369,914.80 in lost revenue and additional expenses.” The counterclaim also stated that a similar exchange would have to take place on the rig Hunter. Diamond M’s counterclaim contained counts for violation of the Texas Deceptive Trade Practices Act, breach of contract, breach of express warranty and breach of implied warranty.

When the allegations in a counterclaim state a claim which may potentially fall within the policy’s coverage, the insurer must defend. Charter Oak Fire Insurance Company v. Sumitomo Marine and Fire Insurance Co., Ltd., 750 F.2d 267 (3d Cir.1984); Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 152 A.2d 484 (1959). If American must defend any of Diamond M’s claims, it must defend all of them. C. Raymond Davis & Sons, Inc. v. Liberty Mutual Insurance Company, 467 F.Supp. 17 (E.D.Pa.1979).

Diamond M’s counterclaim does allege an accident resulting in property damage and therefore satisfies the requirement of an “occurrence.” The policy defines “property damage” to include “loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.” The counterclaim asserts that Diamond M lost revenues from the operation of its rigs while anchor chains were exchanged.

The question is not whether Diamond M’s claims were based on a breach of contract theory or a negligence theory, but whether the claims alleged an “occurrence.” Barber v. Harleysville Mutual Insurance Company, 304 Pa.Super. 355, 450 A.2d 718 (1982). Although the policy excludes liability assumed by the insured under any contract or agreement except as “incidental contract,” incidental contracts include “any contract or agreement relating to the conduct of the named insurer’s business.”

The defendant also argues that it had no duty to defend because of two exclusions in the policy. Exclusion M(2) states that the policy does not apply

to loss of use of tangible property which has not been physically injured or destroyed resulting from ... (2) the failure of the named insured’s products or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured____

The exclusion, however, also contains the caveat that it does not apply to loss of use

of other tangible property relating from the sudden and accidental physical injury to or destruction of the named insured’s products or work performed by or on behalf of the named insured after such products or work have been put to use by any person or organization other than an insured.

The counterclaim alleges loss of use of the rigs as a result of what can fairly be inferred was alleged to be a sudden and accidental injury to Baldt’s anchor chains after they had been put to use by Diamond M. On May 1, 1983 and June 3, 1983, the chains separated while they were being storm tensioned following the oil rig’s move to a new location. The chains broke on March 31, 1983 after they had been storm tensioned and on March 29, 1983 while being hauled in preparation for a move of the oil rig. Exclusion M(2), therefore, does not apply. American Universal contends that the damage to the anchor chains did not result from a sudden and accidental injury. The contentions of the counterclaim, however, satisfy the requirement that they allege an injury which may be within the policy. As Justice McBride said in Cadwallader, the insurance company must defend if the claim might or might not fall within the policy’s coverage. Cadwallader v. New Amsterdam Casualty Co., 396 Pa. at 589-590, 152 A.2d at 488.

The defendant also contends that Exclusion N vitiates its duty to defend. That exclusion states that the policy shall not apply

to property damage to the named insured’s products arising out of such products or any part of such products.

This exclusion also fails to excuse American Universal’s refusal to defend. Diamond M’s claims included damage to its property interests, not just to the insured’s products. Property damage includes loss of use. One of Diamond M’s claims is for loss of use of the oil rig. See Pittsburgh Bridge and Iron Works v. Liberty Mutual Insurance Co., 444 F.2d 1286, 1288 (3d Cir.1971).

For the above reasons, I grant partial summary judgment for the plaintiff on the duty to defend issue. The duty to defend, however, is broader than the duty to indemnify, Centennial Insurance Co. v. Applied Health Care Systems, Inc., 710 F.2d 1288, 1291 (7th Cir.1983), and I express no opinion as to that aspect of this case.


author: ACKER, District Judge.

text:
    UNITED STATES of America, v. Perry Don ALLISON.
    No. CR 83-AR-123-M.
    United States District Court, N.D. Alabama.
    Jan. 2, 1985.
    W.M. Beck, Sr., Fort Payne, Ala., and Charles Caldwell, Birmingham, Ala., for defendant Allison.
    Charles McGee, Fort Payne, Ala., Mike Raulston, Chattanooga, Tenn., for defendant Welden.
    Craig R. Izard, Birmingham, Ala., for defendant Satterfield.
   MEMORANDUM OPINION

ACKER, District Judge.

On December 21,1984, in response to the mandate of the Court of Appeals for the Eleventh Circuit following its opinion in United States v. Satterfield, 743 F.2d 827 (11th Cir.1984), in which the Court of Appeals reviewed this court’s decision in United States v. Welden, 568 F.Supp. 516 (1983), this court held a hearing as to what restitution should be required of defendant Perry Don Allison. The mandate had been withdrawn and the restitution determination stayed as to defendants Edward Eugene Satterfield and Carlton Welden. On motion of Allison, for the reasons discussed with counsel in open court, the hearing was continued to be reset when and if all three defendants can be heard simultaneously on the restitution question.

During the hearing on December 21, 1984, the United States took the position that the only “victim” to be considered for restitution in this case under the Victim and Witness Protection Act, 18 U.S.C. §§ 3579 and 3580, is Paulene Calloway, who was herself kidnapped by the defendants and therefore was clearly a victim of the crime for which the defendants were convicted. It is because the court disagrees with the interpretation which the United States now places on the VWPA that the court writes this opinion and enters the order which accompanies it.

The Court of Appeals in United States v. Satterfield, supra, did not question this court’s finding that the owner of the kid-' nap vehicle constitutes a “victim”, or this court’s finding that the estate of Paulene Calloway’s boyfriend, Charles Hill, who was killed during the kidnapping, constitutes a “victim’s estate”. To the contrary, the Court of Appeals at 743 F.2d at 839, n. 10, recognizes that neither the VWPA nor its legislative history gives any guidance as to who comes within the definition of “victim of the offense” under 18 U.S.C. § 3579(a)(1).

The position now taken by the United States in this case is completely inconsistent with the following clear statements contained in the Guidelines for Victim and Witness Protection promulgated by the Attorney General on July 9, 1983:

These guidelines ... are intended to apply in all cases in which individual victims are adversely affected by criminal conduct ... (emphasis supplied).
# * * # * *
A “victim” is generally defined as someone who suffers direct or threatened physical, emotional or financial harm as the result of the commission of a crime. (emphasis supplied).
* Sic * * * *
It should be noted that, because of the nature of federal criminal cases, it will be difficult to identify the victim or victims of the offense. In many cases, there will be multiple victims, (emphasis supplied).
* Sic * * # sjc
Consistent with available resources and their other responsibilities, federal prosecutors should advocate fully the rights of victims on the issue of restitution unless such advocacy would unduly prolong or complicate the sentencing proceeding.

On July 9, 1983, the Attorney General obviously recognized that an important purpose for enacting the VWPA was to expand the rights of victims as well as the definition of victims. If Congress had wanted to keep the narrow definition contained in 18 U.S.C. § 3651, it could easily have done so. Its ostentatious failure to repeat that definition in the VWPA speaks louder than words.

The Attorney General and this court are not the only commentators who agree that Congress intended for “victims of the offense” to include all who are hurt as a result of criminal activity which has been clearly demonstrated during a federal criminal trial.

At 93 Yale L.J. 504, 507 (1984) at pp. 509-511, the commentator says:

Under prior federal law, a court could order restitution only as a condition of probation and only “to aggrieved parties for actual damages or loss caused by the offense for which conviction was had”. The Act expands this authority dramatically by abolishing the probation limitation and by omitting — although without substantial comment — the restrictive “offense of conviction” provision. (emphasis supplied).
He * * * He *
Unlike the policies of the Act, the procedures adopted by Congress to advance restitution aré unclear because of the ambiguous intent of Congress in omitting the “offense, of conviction” language from the new statute. Under the former statute, the “offense of conviction” provision linked restitution to the technical offense of conviction; the final dismissal of a charge before sentencing eliminated that charge as the basis for restitutionary liability, (emphasis supplied).
He * * * * *
These arbitrary exclusions under the former statutes left victims with little or no compensation, despite the conviction of the offender on related charges and despite the Willingness of the sentencing court to compensate the victim.
Courts thus face a dilemma in interpreting the Act. If courts abolish the connection between the precise offense of conviction and the restitution order, they will expose defendants to restitutionary liability bearing no relation to the expectations which guided the defendants’ defense strategies. The adjudicatory phase would have little meaning in the sentencing phase. But to perpetuate an unmodified “offense of conviction” constraint will undercut the Act’s intent to compensate victims as completely as possible. An interpretation of the Act’ is needed which preserves the function of the adjudicatory phase in defining the liability of the defendant while still permitting comprehensive responses to the injuries of victims, (emphasis supplied).

At 70 Va.L.Rev. 1059 (1984), at p. 1061, n. 12, the commentator says of this case:

The crime resulted in the death of one victim, the sexual abuse of, physical injury to, and possible psychological injury to a second victim, and damage to automobile of a third victim. Welden 568 F.Supp. at 517. The presentence reports submitted damages totaling $599.00, all to the second victim, but failed to mention the other two victims, (emphasis supplied).

At 35 Ala.L.Rev. 529 (1984) at p. 529, the commentator says of this case:

... the court [in Welden ] could have ordered the defendants to make restitution to the woman for any medical expenses and lost wages incurred as a result of her victimization and to the estate of the man for necessary funeral expenses. The Act also empowered the court to require the defendants to reimburse the owner of the getaway car for damage to the car during the crime. (emphasis supplied).

Because the congressional intent mandates a broader definition of “victim” than the United States here urges, because the Attorney General should not retreat from his guideline requirement that “federal prosecutors should advocate fully the rights of victims” and because the federal prosecutors here do not suggest that the sentencing process is being unduly complicated or prolonged, this court finds that the estate of Charles Hill, deceased, constitutes a “victim’s estate” in this case within the meaning of “victims” in the VWPA, that Mrs. Derwin Little, the owner of the Chevrolet Malibu which was damaged, constitutes a “victim” within the meaning of the VWPA, and that the court therefore cannot avoid addressing the questions of what restitution to order to these two “victims”, as well as to the “victim” Paulene Calloway.

An appropriate separate order will be entered.

ORDER

In accordance with the Memorandum Opinion simultaneously entered, and pursuant to 18 U.S.C. § 3580(b), the court ORDERS the probation service of this court to obtain the following information for the court not contained in the present presentence report as to defendant Perry Don Allison:

1. The financial needs and earning ability of the defendant and of the defendant’s dependents.
2. The prospects for Paulene Calloway’s need for further medical or psychological treatment and rehabilitation, and the anticipated cost of any such treatment and rehabilitation.
3. The income, if any, lost by Paulene Calloway as a result of her injuries and of her attendance upon trial.
4. The difference in fair market value . of the Chevrolet Malibu owned by Mrs. Derwin Little before and after a portion of the upholstery was removed from it as evidence, together with the names and addresses of any insurance companies which paid any part of this loss, and the amounts paid.
5. The name, address, and proper designation of the personal representative of the estate of Charles Hill, deceased, and the cost of the necessary funeral and related expenses of Charles Hill, together with the names and addresses of any insurance companies which paid any such expenses or any portion thereof, and the amounts paid.

Because the court does not wish unduly to complicate or to prolong the sentencing process, the court shall expect the probation service to furnish this information to the court and to counsel for Perry Don Allison as expeditiously as possible, in no event later than 30 days from this date.


author: WEBER, District Judge.

text:
    LOVELL MANUFACTURING, A DIVISION OF PATTERSON-ERIE CORPORATION, Plaintiff, v. EXPORT-IMPORT BANK OF the UNITED STATES, et al., Defendants.
    Civ. A. No. 84-143 ERIE.
    United States District Court, W.D. Pennsylvania.
    Jan. 3, 1985.

      John W. Beatty, Knox, Graham, McLaughlin, Gornall & Sennett, Inc., Erie, Pa., for plaintiff.
    Richard M. Daly, Fried, Frank, Harris, Shriver & Kampelman, Washington, D.C., William J. Schaaf, Marsh, Spaeder, Bauer, Spaeder & Schaaf, Erie, Pa., for defendants Member Companies and the Foreign Credit Ins. Ass’n.
    Donald E. Lewis, Asst. U.S. Atty., Erie, Pa., Debra L. Kasper, J. Christopher Kohn, Robert M. Hollis, Attys., Civil Div., Dept, of Justice, Washington, D.C., for defendant Export-Import Bank of the U.S.
   OPINION

WEBER, District Judge.

This case is again before the court on renewed cross-motions for summary judgment. A narrowing of the issues has been achieved since the prior motions were decided and additional evidentiary material supplied. Thus, our earlier order and opinion dated November 9, 1984 denying summary judgment due to disputed factual issues may now be reconsidered.

In the November 9, 1984 opinion we did find the guarantee not to be unconditional, but the plaintiffs contentions of waiver and estoppel could not be summarily determined. We now believe that they can.

The issues are narrowed by plaintiffs withdrawal of its claim under the Political Risks coverage of the policies and proceeding solely under the Commercial Credit Risk coverage. Defendants on their part now concede that Foreign Credit Insurance Association (FCIA) received copies of the Ceteco letter of guaranty of July 25, 1980, upon which plaintiff bases its waiver and estoppel argument.

We held in our earlier ruling that defendants had not supplied sufficient evidence to establish that FCIA acted as the agent of Eximbank for the purposes of Commercial Credit Risk Coverage. The import of this finding was its effect on plaintiffs argument of waiver and estoppel. We held in the November 9,1984 opinion that as to the Political Risk insured by Eximbank, a governmental agency, only extraordinary circumstances, neither alleged nor present here, would support the defense of estoppel or waiver against the government. Heckler v. Community Health Services, — U.S. -, 104 S.Ct. 2218, 81 L.Ed.2d 42 (1984); Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 388, 68 S.Ct. 1, 5, 92 L.Ed. 10 (1947). As to FCIA, however, with respect to Commercial Risks, plaintiff argued that estoppel standards applicable to an ordinary private insurer would apply, because FCIA is an unincorporated association of private insurance companies. Without then deciding the status of FCIA because of the lack of sufficient evidence, we noted our agreement with this argument at that time.

Defendants’ renewed motion supplies affidavits and documents to prove the status of FCIA as an agency of Eximbank, the governmental organization operating the program, proof of which was inadequate to support the first motion.

Parenthetically, plaintiff moves to strike the affidavits on the grounds, inter alia, that neither of the affiants was listed as a witness on any pretrial narratives filed by defendants. This ground is not applicable because the pretrial narratives only govern the conduct of trial, and' have no relation to the summary judgment motions before us. The motion to strike on that ground is denied. The remainder of the motion to strike deals with the probative effect of the affidavit, with which we shall deal later.

The affidavits supplied by defendants’ renewed motion solely show the basis of the personal knowledge of the affiants and the authenticity of the documents attached. Plaintiff does not dispute their personal knowledge or the authenticity of the documents.

Defendants supply reinsurance agreements dated October 1, 1977 and September 23, 1983 which make it clear that even the Commercial Credit Risk coverage, of which defendant FCIA is sole insurer, is a heavily subsidized insurance endeavor in which the government assumes the major part of the risk involved. We therefore conclude that, in this instance, FCIA was acting as a government agent, and that the higher standard for establishing estoppel against the government applies. Federal Crop Insurance Corporation v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947); Schweiker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981). We do not find that plaintiff has shown the sort of extraordinary circumstances or affirmative misconduct that is necessary in order to establish estoppel against FCIA as a government agency. We therefore grant summary judgment in favor of defendants in this action, and dismiss the ease.


author: YERON, District Judge.

text:
    Daniel LONTHIER, Roxanne Lonthier v. NORTHWEST INSURANCE COMPANY, et al. Daniel LONTHIER, Roxanne L. Lonthier v. NORTHWEST INSURANCE COMPANY, et al.
    Civ. A. Nos. 84-1600, 84-1603.
    United States District Court, W.D. Louisiana, Lake Charles Division.
    Jan. 4, 1985.

      Jerry G. Jones, Jones, Jones & Alexander, Cameron, La., for plaintiffs.
    Randall K. Theunissen, Allen, Gooch, Bourgeois, Breaux & Robison, Lafayette, La., F. William Mahley, Ross, Griggs & Harrison, Houston, Tex., David R. Frohn and Donald C. Brown, Camp, Carmouche, Barsh, Hunter, Gray & Hoffman, Lake Charles, La., for defendants.
   YERON, District Judge.

RULING

This matter comes before the Court on the motion of the plaintiffs, Daniel and Roxanne Lonthier, to remand these consolidated actions to the Thirty-Eighth Judicial District Court in Cameron Parish, Louisiana. The two federal suits began as only one suit in state court. Daniel Lonthier sued his alleged employer’s insurers, Northwest Insurance Company and Mid-Continent Underwriters, Inc., under the Jones Act and both Lonthiers sued Sabine Towing and Transportation Co., Inc., and Union Oil Company of California under general maritime tort law. Sabine and Union each filed a separate petition for removal on the same date, producing two civil actions in federal court.

At the outset, the petitions for removal are defective on their face. All defendants who have been served must join in a petition for removal. See, e.g., Tri-Cities Newspapers, Inc. v. Tri-Cities P.P. & A. Local, 427 F.2d 325 (5th Cir.1970). Where all of the defendants do not sign the removal petition, the petition must set forth a reason, such as lack of service, for not including all of the defendants. P.P. Farmers’ Elevator Co. v. Farmers Elevator Mutual Insurance Co., 395 F.2d 546 (7th Cir.1968). Here, the Court might conclude that Union and Sabine have each joined in the other’s petition as each defendant sought to remove the case on the same day. The defendant insurers did not join in either petition, however, and neither petition gives a reason why the signatures of Northwest and Mid-Continent would not be necessary to effect removal. Both petitions therefore appear to be defective. Yet the Court need not rest on this ground, nor consider whether the plaintiff has waived this objection by failing to include it in his motion to remand, because the action is not removable in any event.

A Jones Act suit in state court cannot be removed to federal court. See, e.g., Addison v. Gulf Coast Contracting Services, Inc., 744 F.2d 494, 498 n. 3 (5th Cir.1984). The defendants contend, however, that Lonthier is not a seaman and that he therefore has no Jones Act claim. They urge that the case can be removed on the basis of diversity and on the basis of federal questions presented under the Longshoremen and Harborworkers Compensation Act and general maritime law. The defendants seek an opportunity to pursue discovery on the status issue. Yet the mere assertion that the plaintiff is not a Jones Act seaman cannot overcome the motion to remand where, as in the case here, the complaint states a claim under the Jones Act. In order to prevail on the motion to remand in this situation, the defendants must go further and prove that the allegation of Jones Act status is so baseless, colorable and false so as to constitute a fraudulent attempt to evade removal to federal court. Yawn v. Southern Ry. Co., 591 F.2d 312, 316-17 (5th Cir.1979) (FELA case); Rosario v. Waterman Steamship Corp., 158 F.Supp. 537, 538-39 (S.D.N.Y. 1957) (Jones Act). The burden of proving that the allegations were made fraudulently falls on the defendants, and any doubts should be resolved in favor of the plaintiffs. Yawn, 591 F.2d at 316.

With these standards in mind, the question naturally arises as to whether the Court should permit further discovery and withhold ruling on the motion to remand pending an evidentiary hearing on Jones Act status. District courts should not “pretry” substantive factual issues in order to make a preliminary determination as to the existence of subject matter jurisdiction on removal. See Green v. Amerada Hess Corp., 707 F.2d 201, 204-05 (5th Cir.1983) (fraudulent joinder issue); B., Inc. v. Miller Brewing Company, 663 F.2d 545, 546, 550-51 (5th Cir.1981) (same). The issue of seaman’s status goes to the substance of the plaintiff’s claim for liability under the Jones Act; the Court therefore should not withhold ruling on the motion to remand pending further discovery and an evidentiary hearing. See also Gutierrez v. Pacific Tankers, Inc., 81 F.Supp. 278 (S.D.Tex. 1948) (similar conclusion); Gunderson v. Barber Asphalt Corp., 71 F.Supp. 40 (E.D. N.Y.1947) (same). If the Court were to rule otherwise and permit extensive factual inquiry on this issue, defendants would be able to routinely try the question of Jones Act status in federal court by filing a petition for removal. Congress has granted the Jones Act plaintiff the right to pursue his claim in state court without removal to federal court and, absent proof of fraud in the allegations of Jones Act status, the plaintiff is entitled to litigate his claim, whatever its ultimate merit, in state court. In short, the Court will not try the question of seaman’s status on the motion to remand under the same standard and procedure as it would on a motion for summary judgment brought in a federal Jones Act suit. The motion to remand compels the defendant to come forward with proof that the allegation of Jones Act status is so baseless, colorable and false so as to constitute a fraudulent attempt to evade removal. Absent such proof, the case will be remanded without further delay.

Here, the defendants did not even allege in their petitions for removal that the Jones Act claim asserted in state court was baseless and therefore no bar to removal. Indeed, in paragraph six of its petition, Union alleged that “plaintiffs state claims arising out of the Jones Act and General Maritime Law, thus a federal question is presented.” Thus, on the face of the papers filed with the petitions for removal, the matter was not removable because the state court petition plainly stated a claim under the Jones Act.

But even looking beyond this deficient jurisdictional pleading to the evidence presented on the motion to remand, it does not appear that Daniel Lonthier has made a baseless, colorable and plainly false claim to seaman’s status. Resolving any factual disputes in favor of the plaintiff, it appears that Lonthier worked for Sweet Lake Construction Company, which was doing contract work for Union Oil Company in the Sweet Lake Field. The company’s work involved upkeep of the oil and gas field, placement of new pipelines, repairs on pipelines, well hook-ups, maintenance on main platforms, pipesetting, vessel cleanup and any repair work needed. Lonthier would, in the course of his daily duties, operate the UOCO # 51, a 70' X 30' self-propelled barge, apparently to transfer work crews and supplies from the Union Oil landing to the oilfield and to move them around in the field. Lonthier also ran three other crew boats from time to time between the field and the Union Oil landing. Lonthier’s other duties included maintenance work on oil and gas wells and platforms, acting as a relief pumper when Union Oil was shorthanded, and loading out oil barges for Union Oil. Lonthier normally commuted to work from his home ashore and had his meals on the main platform. He would sleep on the platform if he was required to stay overnight as a relief pumper. Lonthier was injured while assisting in the loading of an oil barge when he slipped in stepping from the barge to a dock.

On these facts, the defendants might possibly be entitled to judgment in their favor as a matter of law on a motion for summary judgment. Or they may ultimately prevail on the status issue at the trial on the merits. But those issues are not presented here. The Court cannot say on these facts that the claim of Jones Act status is so baseless, colorable and false so as to warrant removal. Daniel Lonthier’s Jones Act claim must therefore be remanded to state court.

The defendants alternatively request the Court to remand only the Jones Act claim and retain jurisdiction over the general maritime and unseaworthiness claims asserted against them. These claims are removable, however, only if they constitute “separate and independent” claims or causes of action in relation to the non-removable Jones Act claim. See, e.g., Addison, 744 F.2d at 498-99; 28 U.S.C. § 1441(c). Claims are not separate and independent under section 1441(c) where there is a wrongful invasion of a single primary right of the plaintiff arising from an interlocking series of transactions, regardless of the number of legal causes of action alleged. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951) (multiple defendants causing a single wrong); Addison, 744 F.2d at 500. Here, the Lonthiers allege that the wrongful acts of all of the defendants together caused Daniel Lonthier to slip and fall. They have therefore alleged that they have suffered a wrongful invasion of a single primary right, their mutual interest in Daniel Lonthier’s health and physical integrity, by an interlocking series of transactions, the combined wrongful acts of the defendants. Thus, the third party general maritime and unseaworthiness claims are not removable as separate and independent claims under section 1441(c).

Accordingly, the motion to remand is GRANTED.


text:
    L.D. “Bubba” HARRELL and Julia R. Harrell, Plaintiffs, v. REYNOLDS METALS COMPANY, et al., Defendants.
    Civ. A. No. 84-AR-5283-NW.
    United States District Court, N.D. Alabama, Northwestern Division.
    Jan. 4, 1985.

      William K. Hewlett, Steven K. Aldridge, Hewlett & Black, Muscle Shoals, Ala., for plaintiffs.
    C.V. Stelzenmuller, David D. Dowd, III, Thomas, Taliaferro, Forman, Burr & Murray, Birmingham, Ala., for defendants.
   MEMORANDUM OPINION

ACKER, District Judge.

The court has for consideration the motion of plaintiffs, L.D. “Bubba” Harrell and Julia R. Harrell, to remand this cause to the Circuit Court of Colbert County, Alabama, from which it was removed by defendants, Reynolds Metals Company, Milton Tirey, Paul Well, Martin Hardy, Jr., Bob Andress and Neal Bishop, who constitute all of the defendants. The court has heard oral argument and received briefs on plaintiffs’ motion to remand.

Plaintiffs are residents of the State of Alabama, as are all of the individual defendants. The defendant Reynolds Metals Company is a corporation which is not a resident of the State of Alabama. The claimed basis for removal is that the individual defendants “were fraudulently joined for the sole purpose of defeating the removal jurisdiction of the federal courts”. The defendants quickly point out that their use of the word “fraudulently” is not pejorative, but is simply a term designed to meet one of the magic tests of diversity. Their argument necessarily is that fraudulent' joinder is implied if the non-diverse defendants are due to be dismissed pursuant to their motion for summary judgment under Rule 56, F.R.Civ.P. (or Rule 56, Alabama Rules of Civil Procedure?), thus leaving only parties with diverse citizenship. Defendants assert that only after the deposition of “Bubba” Harrell was taken did they learn that there is no dispute of material fact as between plaintiffs and the individual defendants and that within the 30 day period following this “discovery” they filed their removal petition. This court believes that “fraudulent joinder” means more than having a losing case against those defendants allegedly “fraudulently joined”. The removing defendants on a “fraudulent joinder” theory have more than just a Rule 56 burden. Jett v. Zink, 474 F.2d 149 (5th Cir.1973), cert. denied, 414 U.S. 854, 94 S.Ct. 153, 38 L.Ed.2d 104 (1973); Jett v. Zink, 362 F.2d 723 (5th Cir.1966), cert. denied, 385 U.S. 987, 87 S.Ct. 600, 17 L.Ed.2d 448 (1966).

The court finds it mildly interesting that the individual defendants did not file a motion for summary judgment in the state court after allegedly learning of the non-viability of plaintiffs’ complaints against them. Perhaps subsequent discussion! in this opinion will provide an explanation. This court, of course, agrees with defendants that this court must make its own determination of whether or not parties were fraudulently joined in the state court for the sole purpose of defeating diversity jurisdiction. It is this court which must determine the existence or non-existence of its own jurisdiction, and on this question it does not defer to the state court.

This court finds it more interesting than that the individual defendants who joined in the removal petition on April 23, 1984, did not file a motion for summary judgment in the state court, the fact that they have not filed a motion for summary judgment in this court, although the success of their removal petition, on their own theory, depends upon the granting of such a motion. To deny the motion to remand would be tantamount to granting a non-existent motion for summary judgment. Eight months elapsed between the removal and the pre-trial conference which took place on December 18, 1984, without any motion for summary judgment having been filed. The defendants have created an anomaly for the court.

Plaintiffs’ motion to remand misses the real points. Defendants’ arguments also fail to address the two issues which the court deems dispositive. The parties limit themselves to the pros and cons of granting an unfiled motion for summary judgment. The court may or may not agree with the varying contentions made by the individual defendants upon which they would have the court reach the conclusion that none of the remaining causes of action asserted against them have viability. However, the court does not reach this question. It does discuss two other questions, namely, the question of the timeliness of the removal and the question of the so-called Kettelhake rule.

The Question of Timeliness

First, the court concludes that this removal petition was not timely filed. Defendants start with the concession that 28 U.S.C. § 1446 requires removal within 30 days from the date upon which a case first becomes removable. However, the court is unaware of any authority which would constitute as the triggering date for removability the revelation in a discovery deposition of some fact upon which counsel for the removing defendants exercise a value judgment which would, if their judgment ultimately proves correct, eliminate the non-diverse parties by summary judgment. The fact is that removability is triggered by 28 U.S.C. § 1446 only by service of the summons and complaint or by “receipt by the defendant ... of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained” that the case is removable. A deposition taken by defendant does not constitute any of these events. Assuming for the sake of argument that the “admissions” made by Bubba Harrell during his deposition taken on March 29, 1984, are dispositive of his claims against the individual defendants, the same facts apparently were known to defendants long before March 29,1984, and could have been included in affidavits by them accompanying a much earlier motion for summary judgmént. Why, then, did not defendants make the allegations of “fraudulent joinder” and file their removal petition long before April 23, 1984 if they thought § 1446 allowed removal? If the learning of a “fact” in a discovery deposition can set the date upon which the case first becomes removable, then why should not the same “fact” learned from an investigator’s statement taken ex parte from a potential witness trigger the removal requirement? Defendants cannot be allowed to turn on their own mental light bulb for ascertaining removability. Also, if defendants had wished to wait until all risk of their holding an erroneous belief in the efficacy of a Rule 56 motion were eliminated, they would have actually filed a Rule 56 motion in the state court and had it granted, whereupon there would certainly have been no question as to the fact of complete diversity appearing for the first time. But, would such a ruling have helped defendants to effectuate a removal? It would not have helped them, as will appear as the court examines the second and more important reason why the case must be remanded to the state court.

The Kettelhake Rule

More persuasive than the untimely filing of the removal petition as a reason for remanding this case to the state court is what happened in the state court before the removal. If the state court had, in fact, granted a motion for summary judgment in favor of all individual defendants, and if Reynolds Metals Company had thereupon attempted to remove, the removal clearly would have been precluded by the rationale of and necessary implications from American Car & Foundry Co. v. Kettelhake, 236 U.S. 311, 35 S.Ct. 355, 59 L.Ed. 594 (1915). The Supreme Court of the United States has not deviated from its Kettelhake rationale from 1915 until today despite the 1949 amendment to 28 U.S.C. § 1446. Professors Wright and Miller recognize the proposition for which Kettelhake stands and come down on the side of non-removability. These leading commentators on federal practice and procedure say:

Prior to 1949, a case did not become removable if the nondiverse party was eliminated from the case by a directed verdict, unless that party had been fraudulently joined originally to defeat removal. The federal courts drew a distinction between the state judge terminating the action as to the nondiverse party, which did not make a case removable, and the plaintiff voluntarily terminating the action as to a nondiverse party, which permitted removal. This distinction had merit in that it prevented removal when the nondiverse party was eliminated by a court order that might be reversed on appeal. It is not entirely clear whether this distinction has survived the 1949 amendment to Section 1446, which authorizes removal, if the case was not initially removable, upon “receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or had become removable.” Read literally the reference to “order” in the statute seems to overrule the pre1949 cases and permit removal when a nondiverse party is eliminated by a court order related to the merits of the dispute. It should be noted that this construction of the statute is not inevitable. It seems very doubtful that Congress intended to abolish the former distinction, although the legislative history is quite ambiguous. Most cases subsequent to the amendment have held that the distinction has survived and on balance this seems to be the proper view, (emphasis supplied).

Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3723 (1976).

Even though the individual defendants did not actually file a motion for summary judgment in the state court, Kettelhake’s reasoning nevertheless precludes removal. Why? The original complaint contained four separate counts or theories of alleged liability. In response to a motion to dismiss filed by all defendants, the Honorable Inge Johnson, Judge of the Circuit Court of Colbert County, on February 28, 1984, entered an order which (a) dismissed Count II entirely as against all individual defendants; (b) dismissed Count III entirely as to plaintiff Julia R. Harrell, and (c) dismissed Count IY entirely as against all defendants. The removal petition interprets this ruling by the state court as constituting a dismissal of the entire complaint of one plaintiff, Julia R. Harrell. In paragraph 3 of its petition for removal, Reynolds Metals Company asserts:

Respondent, Julia R. Harrell, was a plaintiff in the action when it was commenced, but her only claim in this action (for loss of consortium) was dismissed on February 29, 1984, by Order of the Circuit Court of Colbert County, Alabama. ..

The federal court was not designed to act as a court for reviewing the rulings of a state court as to issues of state law. The parties to a cause in a state court are entitled under the constitutional requirement of substantive “due process” to an appellate review of the rulings of a state court by the appropriate appellate tribunal in that state’s judicial system. Without either agreeing or disagreeing with Judge Johnson’s rulings, the theoretical but essential fact is that Judge Johnson could be wrong. The proper court for deciding whether Judge Johnson was right or wrong is the appropriate Alabama appellate court. The expedient of removal to a federal court cannot be allowed to cut off such a fundamental right of judicial review. It goes without saying that if the Supreme Court of Alabama should ultimately enter an order setting aside what Judge Johnson did and reinstating Count II, Count III or Count IV, there would be no complete diversity in this case. The compelling concepts behind Kettelhake are (1) that the diversity must either exist when the suit is filed or thereafter be created by the voluntary act of the plaintiff and not by plaintiffs involuntary act or by the act of the state court; and (2) that federal courts cannot trespass upon the orderly appellate processes of the state courts. Bubba Harrell’s “admissions” during his deposition do not constitute a “voluntary” act of the sort which permits diversity removal, much less constitute any of the triggering events in § 1446.

Because of Kettelhake, and its lineal descendents, this court finds that plaintiff did not fraudulently, i.e., deliberately, join as defendants the individual Alabama residents for the sole purpose of defeating federal jurisdiction. Plaintiffs’ claims against the individual defendants may well prove to be without merit, but their claims have sufficient legitimacy under Kettelhake in the procedural posture of this case to preclude removal.

Although plaintiffs did not point to any of the reasons above discussed for remanding this cause, this court itself points out that it has an absolute obligation to examine its own jurisdiction. 28 U.S.C. § 1447(c); Sadat v. Mertes, 615 F.2d 1176 (7th Cir.1980). One good reason for a federal court’s careful examination of its jurisdiction on removal is that a removing defendant who himself invokes federal jurisdiction can later challenge that same jurisdiction if and when he becomes unhappy with the result which he obtains at what appears to be a trial on the merits in the federal court. Belle View Apts. v. Realty Refund Trust, 602 F.2d 668 (4th Cir.1979). Therefore, the resolution of the controversies between the parties in this case will not be vulnerable to attack for want of jurisdiction if their resolution takes place in the state court, and that is where the , resolution will take place.

For the reasons discussed an order of remand will be entered.


author: KANNE, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. George J. CHIATTELLO, Defendant.
    No. HCR 83-36(7).
    United States District Court, N.D. Indiana, Hammond Division.
    Jan. 4, 1985.
    R. Lawrence Steele, Jr., U.S. Atty., Jerome Frese, Asst. U.S. Atty., Hammond, Ind., William T. Grimmer, Asst. U.S. Atty., South Bend, Ind., for plaintiff.
    Donald Y. Morano, Chicago, 111., for defendant.
   MEMORANDUM DECISION AND ORDER DENYING RELEASE PENDING APPEAL

KANNE, District Judge.

The matter is before the court on defendant’s “Emergency Application to Amend Conditions of Release Pending Appeal”. For the reasons stated below the court will treat the defendant’s motion as a request for release of a defendant pending appeal and consider it in accordance with the “Bail Reform Act of 1984” which is a part of the recently enacted “Comprehensive Crime Control Act of 1984”, Pub.L. No. 98-473.

The defendant, George J. Chiattello, was initially charged with 17 counts of related offenses centering on a conspiracy to import drugs into the United States. At the time the indictment was returned Senior United States District Judge Robert A. Grant set bond in the amount of $2,000,000 cash or corporate surety. Thereafter defendant moved for reduction of bond to $100,000 with a 10 percent cash option. Following a hearing on defendant’s motion for reduction of bond United States Magistrate Andrew P. Rodovich entered a written order denying defendant’s motion.

Immediately prior to trial the defendant moved to dismiss all charges against him on the basis that double jeopardy precluded prosecution. This motion was heard by the court and denied. The defendant then moved to stay the commencement of the trial pending appeal of the issue to the Seventh Circuit Court of Appeals. This court found that the defendant’s claim of double jeopardy was frivolous, but afforded the defendant an opportunity to seek a stay of the proceedings in the Court of Appeals. The Court of Appeals denied the request to stay and the case proceeded to jury trial.

After commencement of the trial the defendant, pursuant to a plea agreement, pled guilty to the charge of engaging in a continuing criminal enterprise. Part of the plea agreement gave the defendant the right to appeal this court’s prior denial of defendant’s motion to dismiss on a theory of double jeopardy.

On March 6, 1984, the defendant was sentenced to a term of imprisonment of 20 years, under the provisions of 21 U.S.C. § 848(a)(1), without possibility of parole. Defendant’s appeal on the issue of double jeopardy is the matter now pending before the Court of Appeals. The motion relating to defendant’s release from custody pending appeal was filed with this court on September 20, 1984.

Release of a defendant from custody pending appeal was previously governed by 18 U.S.C. § 3148, a part of the “Bail Reform Act of 1966”. However, on October 12, 1984, President Reagan signed the “Comprehensive Crime Control Act of 1984” which included the “Bail Reform Act of 1984”. Pursuant to the statutory enactment by Congress the “Bail Reform Act of 1984” became effective immediately upon the President’s signature. Thus on October 12,1984, Sections 3141 through 3151 of Title 18 were repealed and the postconviction release of defendants from custody is now controlled by a new provision found at Section 3143 of Title 18. Thus the- court will now review this matter in accordance with the requirements of 18 U.S.C. § 3143 and not the repealed 18 U.S.C. § 3148.

The enactment of Section 3143 of Title 18 eliminates the presumption favoring release of defendants on bail following conviction. Subsection (b) of Section 3143 specifically applies to defendants who have been sentenced and are pursuing an appeal thus making it applicable to the defendant herein. Title 18 U.S.C. § 3143(b) reads as follows:

Release or Detention Pending Appeal by the Defendant. — The judicial officer shall order that a person who has been found guilty of an offense and sentenced to a term of imprisonment, and who has filed an appeal or a petition for a writ of certiorari, be detained, unless the judicial officer finds—
(1) by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the community if released pursuant to section 3142(b) or (c); and
(2) that the appeal is not for purpose of delay and raises a substantial question of law or fact likely to result in reversal or an order for a new trial.
If the judicial officer makes such findings, he shall order the release of the person in accordance with the provisions of section 3142(b) or (c).

The legislative history of § 3143(b) makes it clear that the burden is on the defendant to show both that he will not flee or pose a danger and that his appeal raises a substantial question likely to result in reversal or a new trial. S.Rep. No. 225, 98th Cong., 1st Sess. 27, reprinted in 9A U.S. Code Cong. & Ad.News 1984, at pages 1, 30.

Thus after sentence and pending appeal the rule now is that a defendant must be detained unless a judicial officer finds by clear and convincing evidence that the defendant is not likely to flee or pose a danger and that the appeal. is not for the purpose of delay and raises a substantial question of law or fact likely to result in reversal or an order for a new trial.

For the purpose of this case the court will focus on subsection (b)(1) of § 3143. Further legislative history discloses the following comments:

The change in subsection (b) requires an affirmative finding that the chance for reversal is substantial. This gives recognition to the basic principle that a conviction is presumed to be correct (Emphasis added).

S.Rep. No. 225, supra.

An additional comment found in S.Rep. No. 225, p. 27, n. 86, states in part:

The advisory notes to Rule 9(c) of the Federal Rules of Appellate Procedure state that the burden of showing that the appeal appears to be frivolous or taken for delay rests with the government. The committee intends that under section 3143 the burden of showing the merit of the appeal should now rest with the defendant.

Having set the framework for review of defendant’s motion the court now turns to the facts relating to this case.

In ruling on the double jeopardy issue raised by the defendant on appeal, this court, in a pretrial hearing, found not only that the defendant was not the subject of double jeopardy, but also that such a claim was frivolous. However, it should be made clear that this court’s prior determination that defendant’s claim of double jeopardy was frivolous is not controlling as to an issue to be. decided here — that is, does defendant’s appeal on the issue of double jeopardy raise a substantial question “likely to result in reversal.”

The standard for permitting a pretrial or interlocutory appeal of a double jeopardy claim was established in Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977), and reviewed recently in Richardson v. United States, — U.S. -, 104 S.Ct. 3081, 82 L.Ed.2d 242 (1984). The Supreme Court has also indicated in United States v. MacDonald, 435 U.S. 850, 98 S.Ct. 1547, 56 L.Ed.2d 18 (1978), that the appealability of a double jeopardy claim depends upon it being at least “colorable”. However, it has been held that a double jeopardy claim must be “nonfrivolous” to warrant interlocutory appeal. United States v. Dunbar, 611 F.2d 985 (5th Cir. 1980).

The interlocutory appeal standard for double jeopardy claims is akin to the repealed § 3148 of the old “Bail Reform Act of 1966” which required that a defendant be released on bail pending appeal if the appeal was not “frivolous or taken for delay”. However, the word “frivolous” is not found in § 3143(b).

It is clear from the language of the statute itself and the legislative history that a significantly different standard is now mandated in determining whether the presumption favoring postconviction detention of a defendant has been overcome. The “likely to result in reversal” standard is clearly a much more stringent requirement with the burden now placed on a defendant. The emphasis is entirely changed from the prior standard which placed the burden on the government in establishing that an appeal was “frivolous”.

Section 3143 of the new “Bail Reform Act of 1984” reflects the congressional recognition of the basic principle that a conviction is presumed to be correct. In accordance with this basic principle a release of a defendant on appeal may be granted only if the chance for reversal is substantial and the defendant is not likely to flee or pose a danger to the community.

Congress has determined that once the presumption of innocence is gone and sentence imposed a defendant should be detained in custody unless all the requirements of subsection (b) of Title 18 U.S.C. § 3143 have been met.

The court has had the benefit of extensive information bearing on the factors to be considered under § 3143(b). This information has been provided in the hearing on defendant’s motion to dismiss on the basis of double jeopardy; the testimony of the defendant given at the time of his guilty plea; the defendant’s presentence report; and the subsequent testimony of the defendant, under oath, at co-conspirator trials. For this reason no hearing on defendant’s motion for postconvietion release is required, and defendant’s request, therefore, will be denied.

Based on all the evidence presented during this case and the trials of co-conspirators this court, under the requirements of subsection (b)(1) of Title 18 U.S.C. § 3143, finds that there is no question of law or fact likely to result in reversal.

Because of the court’s findings herein and this order, the issue of whether or not the defendant is likely to flee or pose a danger to the community under § 3143(b)(1) need not be addressed.

For the reasons stated herein defendant’s Emergency Application to Amend Conditions of Release Pending Appeal, which the court has treated as a motion for release of a defendant pending appeal, and Motion for Hearing on Defendant’s Application for Bail are hereby DENIED.

      . The method governing the release of a defendant on appeal following a conviction is a matter of procedure and does not bear on substantive rights. In Dobbert v. Florida, 432 U.S. 282, 97 S.Ct. 2290, 53 L.Ed.2d 344 (1977), the Supreme Court held that "[e]ven though it may work to the disadvantage of a defendant, a procedural change is not ex post facto." Id. at 293, 97 S.Ct. at 2298. "[T]he constitutional provision was intended to secure substantial personal rights against arbitrary and oppressive legislation, ... and not to limit the legislative control of remedies and modes of procedure which do not affect matters of substance." Beazell v. Ohio, 269 U.S. 167, 171, 46 S.Ct. 68, 69, 70 L.Ed. 216 (1965). See also James v. Twomey, 466 F.2d 718, 721 (7th Cir.1972). Statutory changes that are procedural in nature are held immediately applicable to pending cases. See United States v. Vanella, 619 F.2d 384 (5th Cir.1980), and cases cited therein.

      . A “colorable” or "nonfrivolous” double jeopardy claim still need only raise issues which appear to be genuine in order to qualify for interlocutory appeal. Now, however, a postconviction appeal based on a double jeopardy claim, like all other appeal claims, must be "likely to result in reversal” in order to authorize release of a defendant pending appeal.


author: CHARLES L. BRIEANT, District Judge.

text:
    Marvin L. TENZER, P.C., Plaintiff, v. Marc A. LEWITINN, Defendant. ZANE & RUDOFSKY, P.C., Plaintiff, v. Marc A. LEWITINN, Defendant.
    Nos. 84 Civ. 5702-CLB, 84 Civ. 6154-CLB.
    United States District Court, S.D. New York.
    Jan. 4, 1985.

      Marvin L. Tenzer, Edward Rudofsky, Zane & Rudofsky,- New York City, for plaintiffs.
    Simon V. Haberman, New York City, for defendant.
   MEMORANDUM AND ORDER

CHARLES L. BRIEANT, District Judge.

By two identical motions filed January 3, 1985 in these related actions, defendant moves for an order “disqualifying the Honorable Mr. Justice [sic] Charles L. Brieant from hearing this matter on the ground that said Honorable Charles L. Brieant was the presiding justice [sic] in the trial of Lamy Optic Industries, Inc. v. Passport International Ltd., et al. In this action plaintiffs are suing for legal fees for said representation, and it is the intention of defendant to call said Honorable Justice [sic] Brieant as a necessary witness in the trial in this action.”

The motions recite that they are made pursuant to “FRCP Rule 63, U.S.Code 28, section 144, Revised Section 455 and 455(b)(1).” The supporting affidavits of defendant set forth no facts suggesting any bias, improper relationship or stock ownership on the part of the assigned trial judge in these jury cases. Apart from describing these cases as actions to recover legal fees for representing Lewitinn in the aforementioned Lamy trial, the only fact relied upon in support of the motions is the following statement:

“Inasmuch as it is the intention of defendant Marc A. Lewitinn to call upon His Honor Justice Brieant as a witness to describe the quality of the representation, it is respectfully requested that His Honor disqualify himself.”

No memorandum of law was submitted with the motions as required by Rule 3(b) of the local Civil Rules. The citations in the notices of motion add nothing to the affidavits. Rule 63, F.R.Civ.P. provides no basis for a disqualification of a trial judge. It merely authorizes replacement of a judge under disability by another member of the Court. Section 144 of Title 28, also cited and relied on, applies only to disqualification in the event of “personal bias or prejudice.” The affidavits contain no facts or reasons for a belief that bias or prejudice exists, indeed no such assertion is made. It is illogical that a party to a civil lawsuit would call an expert witness to testify in his behalf if he believed the witness to be biased or prejudiced against him. Nothing is found in § 455 of Title 28 except the second half of § 455(b)(1) referring to “personal knowledge of disputed evidentiary facts concerning the proceeding.”

Even this provision is inapplicable. The testimony sought to be elicited involves not “evidentiary facts” within the statute, but expert opinion evidence. Any testimony as to the “quality” of legal representation furnished in a prior trial by a trial attorney calls for opinion evidence of the most subjective kind. The quality of a lawyer’s work in the pit calls for a value judgment which, like beauty, is usually in the eye of the beholder. That is particularly true in this case where the trial ended as a result of a settlement, so that it could not be said with certainty whether the plaintiff lawyers, or any of them, “won” or “lost.”

The undersigned Judge is fully employed in his capacity as a district judge administering a substantial docket of civil and criminal cases pending in the Mother Court, the oldest and busiest in the nation. He does not hold himself out as available to give expert testimony or opinion evidence in civil trials. He has not agreed with defendant Lewitinn or anybody acting in his behalf to testify in either of these cases or to express an expert opinion with respect to any matter in issue between these parties, let alone the “quality” of plaintiffs’ legal services.

Furthermore, it is common knowledge that an active district judge is prevented by Judicial Conference resolutions from engaging in another business. The expert witness, or “hired gun” is hardly ever found to give his or her opinion testimony without a fee.

Since these are diversity cases, under Rule 501, F.R.Evid., the privilege of a witness is required to be determined by New York law. New York has always recognized that opinion evidence or expert testimony of a non-party witness cannot be compelled against his will. Peo. ex rel. Kraushaar Bros. & Co., Inc. v. Thorpe, 296 N.Y. 223, 72 N.E.2d 165 (1947); cf. Kaufman v. Edelstein, 539 F.2d 811, 820 (2d Cir.1976). The undersigned will avail himself of this privilege to refuse to testify as to the quality of the services, something which is clearly a matter of opinion or expert testimony.

In considering a motion for disqualification, “[although the facts stated in the affidavit are to be taken as true, the judge may inquire into their legal sufficiency. Indeed he must do so.” Rosen v. Sugarman, 357 F.2d 794, 798 (2d Cir.1966). See also National Auto Brokers Corp. v. General Motors Corp., 572 F.2d 953, 958 (2d Cir.1978), cert. denied, 439 U.S. 1072, 99 S.Ct. 844, 59 L.Ed.2d 38 (1979).

Since, for the reasons mentioned, the affidavits and motions for disqualification are clearly insufficient on their face, the motions are each denied.

So Ordered.