author: LOUIS H. POLLAK, District Judge.

text:
    Don W. CARLSON, Irwin Feinberg, Terry E. Sheldon, Robert J. De Monte, Wendell B. Barnes, Robert J. Blake, Fred H. Field, Albert H. Schaaf, and Douglas M. Temple as trustees of Consolidated Capital Income Trust, v. ALDEN EQUITIES, INC., Medical Tower Ltd. and Olive Street Investments, Inc.
    Civ. A. No. 85-2989.
    United States District Court, E.D. Pennsylvania.
    Aug. 23, 1985.
    Schnader, Harrison, Segal & Lewis by Jerome J. Shestack, David Smith, Joseph C. Crawford, Philadelphia, Pa., for plaintiffs.
    Berger & Montague, P.C. by David Berger, Howard I. Langer, Warren D. Mulloy, Stephen D. Ramos, Philadelphia, Pa., for defendants.
   MEMORANDUM

LOUIS H. POLLAK, District Judge.

This action arises out of a loan made by plaintiffs, trustees of Consolidated Capital Income Trust, to defendants, in consideration of a promissory note secured by a Mortgage, Assignment of Rents, and Security Agreement with the Defendants Alden Equities and Medical Tower Ltd. as mortgagor. This Agreement was later modified by a Restatement and Settlement Agreement into which these parties, as well as defendant Olive Street Investments, Inc., and other parties entered.

Plaintiff has brought this action to have judgments of mortgage foreclosure and of $9,474,301.92 (plus interest, costs, and fees) for allegedly overdue loan payments entered in its favor. Jurisdiction is founded on 28 U.S.C. § 1332. Defendants have moved to dismiss this case under Federal Rule of Civil Procedure 12(b)(3), claiming that defendant Olive Street Investments, Inc., does not reside in the Eastern District of Pennsylvania, and therefore that venue in this district is improper according to 28 U.S.C. § 1391(a). Plaintiffs have responded, and defendants have filed a reply.

A. The Legal Background

28 U.S.C. § 1391(a) provides that:

A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose.

Plaintiffs in this action reside in California. Second Amended Complaint. ¶ 1. Venue is thus proper under § 1391(a) only if all defendants reside in the Eastern District. The gravamen of defendants’ Motion is that one of the defendants, Olive Street Investments, Inc. (“Olive”), does not reside in the Eastern District.

When the defendant is a corporation, as is the case here, the court must look to 28 U.S.C. § 1391(c) to determine where a defendant resides for purposes of § 1391(a). Section 1391(c) provides that:

A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

Plaintiffs acknowledge in their Second Amended Complaint, 114, that Olive is a corporation organized under the laws of Missouri; they also allege, however, that Olive has its principal place of business at 1601 Walnut Street, Philadelphia, Pennsylvania 19103. Id. According to plaintiffs, Olive may be considered a resident of the Eastern District because Olive “is doing business” in the Eastern District within the meaning of § 1391(c). Plaintiffs’ Memorandum in Opposition to Defendants Motion to Dismiss, at 5-8. Defendants deny that Olive’s activities in the Eastern District are substantial enough to qualify Olive as a resident in the Eastern District.

Before reviewing the nature and extent of Olive’s business activities in the Eastern District, it is necessary first to resolve what standard to apply to those facts. In essence, content must be given to the phrase in § 1391(c) “is doing business.” Defendants rely on Judge Troutman’s construction of this phrase in Damon Coats, Inc. v. Munsingwear, Inc., 431 F.Supp. 1303, 1308-10 (E.D.Pa.1977). In Damon Coats, the court began its analysis by noting that “Venue is determined by federal law.” Id. at 1309. See also Wright, Miller, & Cooper, Federal Practice and Procedure: Jurisdiction § 3803 at 10 (1976) (“Venue in transitory actions is wholly a matter of federal law and state venue provisions are inapplicable. This proposition is amply supported by a multitude of cases.”) (footnote omitted). The court proceeded to note, however, that there was a “split of authority” as to whether “ ‘doing business’ to a degree sufficient for jurisdiction purposes satisfies venue requirements.” ' Id. The line of authority that the court then followed was first articulated in Remington Rand, Inc. v. Knapp-Monarch Co., 139 F.Supp. 613 (E.D.Pa.1956), and later followed in Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corporation, 291 F.Supp. 252 (E.D.Pa.1968). In this approach, the court looks not to federal law but to applicable state law to decide “whether a license or certificate is required by the state to enter into [those activities that form the basis for asserting venue].” Damon Coats, 431 F.Supp. at 1309. In Pennsylvania, the relevant state law may be found at Pa.Stat. Ann. tit. 15 § 2001. Review of this statute makes clear, in Judge Lord’s words, that “more activity is needed to subject a defendant corporation to venue in a jurisdiction than would be needed to subject it to service of process there.” Philadelphia Housing Authority, 291 F.Supp. at 257.

As Judge Troutman noted, this approach is not universally followed. 431 F.Supp. at 1309. Indeed, the approach seems to diverge significantly from its original premise, that venue is a question of federal law. As Professors Wright, Miller, and Cooper have written:

There is no reason whatever to suppose that a federal statute apportioning business among the various federal courts is to be construed in the light of state law. Such a construction would lead to confusion and lack of uniformity in a statute that should have one meaning throughout the country and should not be dependent on the vagaries of state laws apportioning business among the courts of a single state.

Federal Practice and Procedure: Jurisdiction § 3803 at 12 (1976). The immediate subject of this criticism was Judge Lord’s construction in Philadelphia Housing Authority of the phrase “in which the claim arose,” a phrase which appears in § 1391(a) of the federal venue statute. The Wright-Miller-Cooper critique is, however, equally applicable to like constructions of other phrases in § 1391, such as the § 1391(c) phrase “is doing business.”

Although in one case our Court of Appeals chose not to dispute the parties’ agreement to use the same federal law for determining venue as for jurisdiction, see Fraley v. Chesapeake & Ohio Ry. Co., 397 F.2d 1, 4 (3d Cir.1968), it has not yet ruled definitively on this issue. The Fifth Circuit has provided some guidance, however, which a number of courts, as well as Professors Wright, Miller, and Cooper, have found useful. In Frazier v. Alabama Motor Club, Inc., 349 F.2d 456, 459 (5th Cir. 1965), Judge Smith stated that:

There is no exact formula under which the question [whether a corporation is doing business in a district] can be decided. To reach the proper answer, consideration must be given to such relevant factors as the general character of the corporation, the nature and scope of its business operations, the extent of the authorized corporate activities conducted on its behalf within the forum district, the continuity of those activities, and its contacts within the district.

Another factor that one might properly consider is the basic purpose behind the venue provisions, which is that venue is “primarily a matter of convenience of litigants and witnesses.” Denver R.G.W.R. Co. v. Brotherhood of R.R. Trainmen, 387 U.S. 556, 560, 87 S.Ct. 1746, 1748, 18 L.Ed.2d 954 (1967). With these factors in mind, then, I turn to an evaluation of the facts presented in this case.

B. The Merits of Defendants’ Motion

Exhibit A of plaintiffs’ Memorandum in Opposition to defendants’ Motion to Dismiss is a certification of the Secretary of State of Missouri that Olive Street Investments, Inc., was incorporated under the laws of Missouri on January 24, 1983, but that Olive’s charter was forfeited in November, 1984, for failure to pay franchise taxes, and that the forfeiture has not been rescinded as of July 2, 1985. Exhibit B is a notarized copy of the Registration Report of Olive Street Investments, Inc., filed in March, 1983 with the Secretary of State of Missouri. The Report shows that Allan Pullman is the President and sole Director of Olive, and that his address is 1601 Walnut Street, Philadelphia, Pennsylvania.

Plaintiffs have also supplied copies of two canceled checks, Exhibits 2 and 3, which were drawn on Olive’s account with Fidelity Bank in Philadelphia. These checks were made out to Consolidated Capital Companies, and at least one appears to be part of the “February Payments of the Pullman Loans” to Consolidated Capital Companies. See Exhibit 1. Carolyn Using-er, to whom the letter accompanying the February payments was addressed, has filed an affidavit, Exhibit E, stating that she is a mortgage analyst employed by the Consolidated Capital Companies, and that all of her written and telephone correspondence about payments on Olive’s promissory note has been with Mr. Pullman or his employees at 1601 Walnut Street. Two other employees of plaintiffs have filed affidavits making substantially the same claim with regard to their correspondence. See Exhibits C and D. Furthermore, the Restatement and Settlement Agreement into which the parties entered on November 5, 1984, provides that in the event of default, notice is to be given in writing either to Mr. Pullman at 1601 Walnut Street, Philadelphia, PA or to Mr. Pullman at an address in Alpine, New Jersey. Exhibit C to Second Amended Complaint, § 3.03(b).

Defendant Allan Pullman has filed an affidavit in support of Olive’s claim that Olive is not doing business in Philadelphia. In the affidavit, Mr. Pullman states that virtually all of Olive’s income is derived from a property at 915 Olive Street, St. Louis, Missouri, and that the Missouri office prepares the rent bills for that property and receives the rent payments. The affidavit concedes, however, that Olive maintains a bank account in Philadelphia, and states that “[t]hose of Olive’s letters and communications with plaintiffs that eminated [sic] from Philadelphia were generally made in conjunction with negotiations involving other corporations and other properties, which corporations or properties were located in the Eastern District of Pennsylvania.” Supplemental Affidavit of Allan Pullman, ¶ 11.

Defendants’ argument that venue is improper in the Eastern District is not persuasive. The affidavits supplied by the parties demonstrate that a central, if not the principal, place of business of the President and sole Director of Olive is in Philadelphia, that at least one significant payment to plaintiffs has been made by Olive from its Philadelphia bank account, and that the correspondence between the parties has been between California and Philadelphia. The extent of Olive’s contacts with Philadelphia and the continuing nature of those contacts establish that (1) Olive is doing business in the Eastern District of Pennsylvania within the meaning of 28 U.S.C. § 1391(c), and (2) litigation in the Eastern District will not impose an undue burden on Olive. Defendants’ Motion to Dismiss must therefore be denied.

      . Furthermore, given the relatively equal importance of establishing the propriety of personal jurisdiction as opposed to venue, both of which may be waived by defendant if not promptly asserted, it would be anomalous to apply a more rigorous test for claims of improper venue than for claims of lack of jurisdiction. Yet this is exactly the anomaly that reliance on the state venue provisions could often produce, and would produce in this case. Cf. Pa.Stat.Ann. tit. 15, § 2001 (Purdon 1965). It is not surprising, then, that many courts have applied the same minimum contacts test for venue as for jurisdiction. See cases cited in Wright, Miller, & Cooper, supra, at § 3811 n. 45.

      . Because I conclude that venue in this case is proper in the Eastern District under 28 U.S.C. § 1391(a), I need not discuss two other possible grounds disputed by the parties for finding venue in this district, (1) that the claim arose in this district, and (2) that this action may properly be characterized as one in rem subject to the venue provisions of 28 U.S.C. § 1655.


source: Caselaw Access Project

author: RAYMOND J. BRODERICK, District Judge.

license: Public Domain

text:
    Michael E. WEISBERG, et al., v. TOLL BROTHERS, INC., et al.
    Civ. A. No. 84-4848.
    United States District Court, E.D. Pennsylvania.
    Aug. 26, 1985.

      Ronald J. Smolow, Trevose, Pa., for plaintiffs.
    Alan W. Davis, Philadelphia, Pa., for defendants.
   MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

Michael E. Weisberg and three other individual plaintiffs brought this action individually and on behalf of a class of the buyers of three hundred thirty-four residential homes in Bucks, Chester, Montgomery and Philadelphia Counties, who settled on the purchase of their homes from one of the seventeen named defendants (builders of residential dwellings) between October 6, 1983 and November 19, 1984. The complaint alleges that the defendants violated the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (RESPA), by requiring the plaintiff class members to purchase title insurance from the title insurance companies selected by the defendant builders. The plaintiffs alleged that the defendants imposed this requirement as a condition of the sale of the defendants’ residential dwellings, in violation of 12 U.S.C. § 2608(a), which provides:

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

The class consists of all persons who (a) from on or after October 6, 1983 until November 19, 1984 settled on the purchase of a residential dwelling from any of the defendants; (b) purchased such dwelling with the assistance of a “federally-related mortgage loan,” as defined by RESPA; (c) obtained title insurance from a title company selected by defendants pursuant to authorization contained in the Agreement of Sale; and (d) paid their own title insurance charges. Prior to class certification pursuant to Fed.R.Civ.P. 23(c), the parties reached a settlement. On June 27, 1985 a hearing was held on plaintiffs’ motion to approve the proposed settlement pursuant to Fed.R.Civ.P. 23(e) following due notice to the members of the proposed settlement class. No class member filed any objection to the settlement, and no class member raised objections at the hearing. Although one class member wrote to the Clerk of Court requesting exclusion from the class, upon being informed that he would receive about $585 under the terms of the settlement he authorized counsel to “rescind” his request for exclusion.

In conjunction with the plaintiff’s motion for approval of the class settlement, plaintiffs’ counsel has filed a petition for an attorney’s fee and costs in the amount of $84,197.70. The parties represented to the Court at the hearing on June 27, 1985 that the negotiations which produced a settlement for the plaintiff class in the total amount of $265,000 were conducted prior to negotiations which culminated in defendants’ agreement not to oppose plaintiffs’ request for attorneys’ fees and costs so long as the amount requested did not exceed $100,000.

For the reasons that follow the Court has determined that the proposed class settlement is fair, adequate, and reasonable, and accordingly the proposed settlement agreement will be approved pursuant to Fed.R. Civ.P. 23(e). The Court also has reviewed counsel’s petition for an attorney’s fee pursuant to the standards set forth by the Third Circuit in Lindy Bros. Bldrs. Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973), and has determined that the petition of Ronald Smolow, Esquire for attorney’s fees and costs in the amount of $84,197.70 will be granted.

Approval of the Proposed Settlement

The proposed settlement agreement provides that the plaintiff class will receive a total of $265,000, payable by- the defendants in two equal installments. Upon distribution, each class member will receive an award equivalent to approximately 105% of the amount actually paid for title insurance at the time of the closing. The amounts due the individual class members range from about $513 to about $1,390. In addition to the amount of the settlement, the defendants have agreed to modify their standard Agreement of Sale so as to comply with the provisions of RESPA with respect to the purchase of title insurance. It should be noted that, as counsel for plaintiffs advised the Court at the settlement hearing, the class members suffered no actual damages as a result of the alleged violation of the statute. Even if the class members had selected their own title insurance companies, they would have paid approximately the same premium for their title insurance as was charged by the title insurance companies selected by the defendants.

The approval or disapproval of a class action settlement is left to the sound discretion of the trial court, which must determine whether the proposed settlement is fair, adequate, and reasonable. Walsh v. Great Atlantic & Pacific Tea Co., 726 F.2d 956 (3d Cir.1983). The Third Circuit has identified a number of factors as relevant to this determination:

... (1) the complexity, expense and likely duration of the litigation ...; (2) the reaction of the class to the settlement ...; (3) the stage of the proceedings and the amount of discovery completed ...; (4) the risks of establishing liability ...; (5) the risks of establishing damages ...; (6) the risks of maintaining the class action through the trial ...; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery ...; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation____

Girsk v. Jepson, 521 F.2d 153, 157 (3d Cir.1975) (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974)).

After consideration of the factors set forth in Girsh, the Court finds that the proposed settlement agreement in this case is fair, adequate, and reasonable. First, it is clear that further litigation in this case would present issues which would be costly to resolve and which could result in protracted proceedings. The case involves a claim brought under a seldom-litigated statute, and it appears that it is the first class action brought under the provisions of RESPA. The defendants could oppose class-wide relief on a number of unsettled grounds, e.g., that proof must be established that the defendants applied the allegedly unlawful practice to all members of the class as a “policy or custom”; that each class member would have to establish that he or she requested and was refused the opportunity to choose their own insurance company; and that the fact that the class members suffered no actual damages should as a matter of law, preclude the use of the class action device as a means of redressing a “technical violation” of the statute. See Shroder v. Suburban Coastal Corp., 729 F.2d 1371 (11th Cir.1984) (class action inappropriate under Truth-In-Lending Act where class members suffered no actual damages and violations of the Act were “technical” and had been corrected by defendants).

Furthermore, the expense of litigating the class issues alone, given the number of class members, defendants, and the costs of discovery on those issues, would be substantial, particularly with respect to proof of plaintiffs’ claim that each of the seventeen defendant corporate entities was in fact controlled by defendant Toll Brothers. Finally, it appears that the defendants would have asserted several novel defenses to the merits of plaintiffs’ claims, e.g., that certain “builder-bond” transactions used to finance the purchase of the residences were not, as a matter of law, “federally-related mortgage loans” within the purview of RESPA. See 12 U.S.C. § 2602(1); 24 C.R.F. § 3500.5(b). The novelty of the legal issues involved, the complexity of the class action issues, and the prospective lengthy duration and high cost of continued litigation all weigh in favor of settlement at this time. '

Second, the reaction of the class to the settlement is perhaps the most important factor to be weighed in considering the adequacy of a proposed class action settlement. As noted above, notices were served upon all class members, and no objections were received to the settlement by counsel for the parties or by the Court. The complete absence of objections from the class weighs strongly in favor of approval of the settlement.

Third, the stage of these proceedings is relatively early. Although enough preliminary litigation has occurred to identify issues which would arise should the case continue, a settlement at this time would represent a considerable saving of pretrial and trial costs.

The fourth and fifth Girsh factors — the risks of establishing liability and damages — are considerable for both plaintiffs and defendants. As noted above, the fact that the class members suffered no actual damages as a result of the defendants’ alleged violation of the statute might militate against the propriety of class-wide damages relief for the plaintiffs. The novel legal issues raised by the defendants arguably diminish the plaintiffs’ ability to establish liability and damages. However, the defendants also would face a considerable risk with respect to damages because of a treble-damages provision in 12 U.S.C. § 2608(b), which provides that any seller who requires a purchaser to buy title insurance from a particular title insurance company “shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.” Although it is unclear if such a treble damages provision should be applicable in a class action wherein the plaintiffs suffered no actual damages, the possibility of treble damages would present a significant risk to the defendants.

The risks of maintaining the class action throughout the trial is the sixth consideration cited in Girsh. As noted above, arguably meritorious issues with respect to the propriety of maintaining this case as a class action (with respect to both liability and damages) could be raised by the defendants, and, if the litigation were to continue, the class members would assume a significant risk that class-wide relief might not be available, while the defendants would be faced with the possibility of treble damages.

Seventh, the Court has considered the ability of the defendants to withstand a greater judgment. As the plaintiffs point out, discovery of the financial status of the seventeen named defendants might have revealed that certain defendants would have been unable to withstand a treble damages award. In any event, by means of the proposed settlement the plaintiffs have secured the payment of a substantial sum of money and have obviated the risks associated with obtaining a sizeable award against one or more of the defendants and thereafter discovering that such defendants could not satisfy the judgment.

Finally, the Court has evaluated the range of reasonableness of the settlement fund in light of the best possible recovery and in light of all the risks associated with litigation. The charges for title insurance paid by the three hundred and thirty-four class members totaled approximately $240,-000. Although treble damages on that amount would have resulted in a verdict of about $720,000, the defendants maintained that many “non-title-related” miscellaneous fees charged the class members by the title insurance companies must be eliminated from the calculation of damages, and that the “maximum possible verdict” would have been reduced to approximately $488,-000. In any event, given either of the projected “maximum possible verdicts,” and given all the attendant risks of litigation heretofore discussed, the Court has no hesitancy in finding that the settlement amount of $265,000 (to be distributed among class members who suffered no out-of-pocket losses) is well within the “range of reasonableness” identified by the Third Circuit in Girsh v. Jepson.

The Court finds, in accordance with the discussion set forth above, that all of the relevant considerations weigh in favor of approval of the proposed settlement in this case, and the Court therefore has no hesitancy in finding that the proposed settlement agreement is fair, adequate, and reasonable.

Petition for Attorneys’ Fees

Also before the Court is the petition for attorneys’ fees and costs filed by Ronald J. Smolow, Esquire, counsel for plaintiffs. As noted above, no opposition to Mr. Smolow’s petition has been filed either by the defendants or by any member of the plaintiff class. Mr. Smolow has submitted detailed affidavits stating that his customary hourly rate is $120 per hour and that a total of 245.6 hours was expended by him in this litigation. Mr. Smolow’s associate, Michael Landis, Esquire, has submitted affidavits showing that his customary hourly rate is $84 per hour and that 172.6 hours were expended by him in this litigation. Mr. Smolow also has submitted records showing that 41.4 hours were expended by a paralegal/law clerk at a compensation rate of $24 per hour. Pursuant to the directives set forth by the Third Circuit in Lindy Bros. Bldrs. Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973) and its ever-expanding progeny (e.g., In Re Fine Paper Antitrust Litigation, 751 F.2d 562 (3d Cir.1984)), this Court has determined that the hourly rates charged by plaintiffs’ counsel in this litigation are fair and reasonable, and that the hours expended were reasonably and necessarily expended on the litigation. Accordingly, the Court finds the total lodestar for plaintiffs’ counsels fees in the requested amount of $45,264, based upon the hourly rates submitted and the amount of time expended.

Plaintiffs’ counsel requests that a “multiplier” of 1.85 be applied to the lodestar amount, to produce a total fee request in the amount of $83,750. Counsel submits that a quality multiplier should be applied in this case on the basis, inter alia, of the following factors: the contingent nature of success at the time the suit was filed; the risks assumed in developing the case and establishing liability; and the quality of the services rendered. In accordance with the guidelines set forth for the application of quality “multipliers” in Lindy Bros. Bldrs., Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir.1976) (Lindy II), the Court has determined that the requested multiplier of 1.85 is appropriate. Plaintiffs’ counsel undertook a novel class action alleging a violation of a seldom-litigated federal statute. As noted above, a number of unsettled legal issues made the risks assumed in establishing liability and damages significant. Nevertheless, counsel was able to obtain a settlement whereby a class of 334 home buyers (who had incurred no out-of-pocket damages as a result of defendants’ alleged unlawful conduct) will be awarded sums ranging from about $513 to about $1,390. Furthermore, the defendants have agreed to modify their agreements of sale in the future to comply with the statutory provisions which they allegedly violated.

For all of the reasons set forth above, the Court has determined that the petition of Ronald Smolow, Esq., for attorneys’ fees in the amount of $83,570 will be granted. The Court also will award costs in the amount of $477.70, as it finds that the requested costs in said amount were reasonably and necessarily expended on this litigation.


author: NESBITT, District Judge.

text:
    LA TERRAZA DE MARTI, INC., a Florida corporation, Plaintiff, v. KEY WEST FRAGRANCE & COSMETIC FACTORY, INC., a Florida corporation, Defendant.
    No. 85-0983 Civ.
    United States District Court, S.D. Florida, S.D.
    Aug. 26, 1985.
    Elizabeth J. du Fresne, du Fresne & Bradley, P.A., Miami, Fla., for plaintiff.

      Richard L. Williams, Blackwell, Walker, Gray, Powers, Flick & Hoehl, Miami, Fla., for defendant.
   ORDER

NESBITT, District Judge.

THIS CASE arises out of a trademark dispute over the ownership of the mark “La-Te-Da” (the mark). The facts as alleged in the Complaint, reflect that the Plaintiff, La Terraza De Marti, Inc., is the owner and operator of a restaurant/guesthouse in Key West, Florida which has come to be known as La-Te-Da. The Defendant, Key West Fragrance & Cosmetic Factory, Inc., produces and markets colognes and perfumes. In 1983, the Defendant created a fragrance to which the name La-Te-Da was attributed. Both parties have engaged in extensive advertising of their product. Unable to reach an agreement as to the ownership and use of the mark, both parties applied to the United States Department of Commerce, Patent and Trademark Office for registration of the mark. Eventually, both the Plaintiff and the Defendant were granted a trademark. Subsequently, the Plaintiff filed the instant lawsuit alleging trademark infringement under 15 U.S.C. § 1114(1) (Count I); false designation of origin under 15 U.S.C. § 1125(a) (Count II); unfair competition/deceptive trade practice under Florida common law (Count III); and injury to business reputation and dilution of mark under Fla.Stat. § 495.141 (Count IV) .

The Defendant has filed a Motion to Dismiss Pursuant to Rule 12(b)(6) or in the Alternative Pursuant to Rule 56(b). The Defendant asserts that either the Plaintiff has failed to state a claim for relief as to Counts I, II and III or alternatively that summary judgment should be entered against the Plaintiff. In support of both aspects of the Motion, the Defendant claims that no likelihood of confusion exists, as a matter of law, between the goods of the Defendant and the services of the Plaintiff. Finally, the Defendant argues that The cause of action alleged in Count IV is preempted by the federal trademark law.

Turning first to the portion of the Defendant’s Motion brought under Rule 12(b)(6), Fed.R.Civ.P., the Court emphasizes that the Plaintiff need only allege a short and plain statement of its claim in order to overcome the Defendant’s Motion to Dismiss. See Rule 8(a), Fed.R.Civ.P. The statutes alleged as the basis of the Complaint provide in pertinent part as follows:

(1) Any person who shall, without the consent of the registrant—
(a) use in commerce any reproduction, counterfeit copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.
shall be liable in a civil action by the registrant for the remedies hereinafter provided.

15 U.S.C. § 1114(1). 15 U.S.C. § 1125(a) provides •

(a) Any person who shall affix, apply, or annex, or use in connection with any goods or services, or any container or containers for goods, a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the falsity of such designation of origin or description or representation cause or procure the same to be transported or used in commerce or deliver the same to any carrier to be transported or used, shall be liable to a civil action by any person doing business in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.

The Plaintiff has alleged in the Complaint, its ownership and the registration of the mark. The Complaint further alleges that the Defendant’s use of the mark is causing confusion or mistake in the minds of the public and dilution of the quality of the Plaintiff’s name resulting in irreparable injury to the Plaintiff's reputation and good will. As to the Count for false designation of origin, the Plaintiff has alleged that the use of the mark by the Defendant constitutes a false designation to the buying public that the Defendant’s goods originate with the Plaintiff. The Court finds that these allegations are sufficient to state a claim for relief under 15 U.S.C. § 1114(1) and § 1125(a). See McDonald’s Corp. v. Gunvill, 441 F.Supp. 71 (N.D.Ill.1977), aff'd 622 F.2d 592 (7th Cir. 1980). These same allegations also adequately support the Plaintiff’s claims of unfair competition and deceptive trade practice. Id. Accordingly, the portion of the Defendant’s Motion which asserts that Counts I, II and III of the Complaint fail to state a claim for relief is hereby DENIED.

The second portion of the Defendant’s Motion asserts that there is no likelihood of confusion, as a matter of law, between the use of the mark by the Plaintiff and the use of the mark by the Defendant. In support of this position, the Defendant points to the difference between its own product and that of the Plaintiff and asserts that this difference is sufficient to justify the entry of summary judgment against the Plaintiff. While the Defendant correctly emphasizes the likelihood of confusion test as being determinative of a claim under 15 U.S.C. § 1114(1) and § 1125(a), see E. Remy Martin & Co. v. Shaw-Ross International Imports, Inc., 756 F.2d 1525 (11th Cir.1985), it incorrectly relies on the similarity of products as the decisive factor in determining likelihood of confusion. Id.

The Eleventh Circuit Court of Appeals has consistently, and again within the last month, analyzed at least seven factors before making a determination as to likelihood of confusion. These factors are 1) the type of trademark; 2) the similarity of design; 3) the similarity of the product; 4) the identity of the retail outlets and the purchasers; 5) the similarity of advertising media used; 6) the defendant’s intent; and 7) actual confusion. Ross Bicycles, Inc. v. Cycles USA, Inc., 765 F.2d 1502 (11th Cir. 1985). The Eleventh Circuit has also stated that “in this circuit a determination of likelihood of confusion, mistake, or deception is a matter of fact.” 756 F.2d at 1529.

The Court recognizes that the Defendant’s position is that the facts relevant to an analysis of the likelihood of confusion are so clear as to enable the Court to determine the issue as a matter of law. However, in order to determine this issue as a matter of law, there must be no possibility of a likelihood of confusion. Taking into consideration all of the enumerated factors relevant to the issue of confusion, the Court finds that at this early stage of the proceedings, genuine issues of material fact exist. While the products do differ, the Court, without making a finding as to the likelihood of confusion, would emphasize the similar advertising concept used by the parties, the similar attitude evoked by each product, the same era and time period which the products and services recall, the same atmosphere which surrounds each product’s concept, and finally the fact that each product originates from and capitalizes upon the attitude and atmosphere of Key West. Although these similarities may not be sufficient to find a likelihood of confusion between the marks, the Court does find that at least genuine issues of material fact are raised, requiring a determination by a finder of fact. Accordingly, the portion of the Defendant’s Motion which requests that summary judgment be entered in favor of the Defendant is hereby DENIED.

The Court now turns to the Defendant’s final argument, i.e., that Count IV of the Complaint should be dismissed as it is preempted by federal trademark law. Essentially, the Defendant asserts that since the Plaintiff has a federally registered trademark, the state may not regulate or control the use of that mark, especially in light of the fact that federal trademark law does not recognize a cause of action for dilution of mark. Initially, the Court finds that, contrary to the Defendant’s position, the federal courts have in fact recognized dilution as a cause of action. See The Dreyfus Fund Inc. v. The Royal Bank of Canada, 525 F.Supp. 1108 (S.D.N.Y.1981); Scott v. Mego International, Inc., 519 F.Supp. 1118 (D.Minn.1981); Wells Fargo & Co. v. Wells Fargo Express Co., 358 F.Supp. 1065 (D.Nev.1973). Furthermore, many states have enacted trademark legislation, and specifically anti-dilution legislation, which the federal courts have consistently applied in conjunction with the federal trademark law. See, e.g., Victory Pipe Craftsmen, Inc. v. Faberge, Inc., 582 F.Supp. 551 (N.D.Ill.1984); The Dreyfus Fund, Inc., 525 F.Supp. at 1125; McDonald’s Corp., 441 F.Supp. at 74; Dave Grossman Designs, Inc. v. Bortin, 347 F.Supp. 1150 (N.D.Ill.1972). Finally, the Eleventh Circuit has applied the very statute that the Defendant asserts is preempted by federal trademark law. See Safeway Stores, Inc., 675 F.2d at 1167.

The Defendant principally relies on two United States Supreme Court cases in support of its preemption theory. In Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), the Court held that the construction of a state unfair competition law by a state court which resulted in providing a remedy where the federal patent law not only specifically did not provide a remedy but specifically provided for copying, interfered with federal patent law and the federal policy regarding the protection of patents. In so holding, the Court made the following reference to trademark law:

Doubtless a State may, in appropriate circumstances, require that goods, whether patented or unpatented, be labeled or that other precautionary steps be taken to prevent customers from being misled as to the source, just as it may protect businesses in the use of their trademarks, labels, or distinctive dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods.

Id. at 789 (footnote omitted). The Court’s holding and statement not only fails to support the Defendant’s contention but instead runs contrary to it.

In Park ’N Fly, Inc. v. Dollar Park and Fly, Inc., — U.S.-, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985), a case which did not construe either the Commerce Clause, the Supremacy Clause, or the Preemption Doctrine, the Court discussed the history of the Lanham Act and stated, strictly for purposes of introduction, the following:

Congress enacted the Lanham Act in 1946 in order to provide national protection for trademarks used in interstate and foreign commerce. Previous federal legislation ... reflected the view that protection of trademarks was a matter of state concern and that the right to a mark depended solely on the common law. Consequently, rights to trademarks were uncertain and subject to variation in different parts of the country. Because trademarks desirably promote competition and the maintenance of product quality, Congress determined that “a sound public policy requires that trademarks should receive nationally the greatest protection that can be given them. Among the new protections created by the Lanham Act were the statutory provisions that allow a federally registered mark to become incontestable.

Id. at 661 (citations omitted). This case, construing the provisions of the trademark law relating to incontestability, does not give any indication that the Supreme Court has interpreted the federal trademark law as preempting state legislation in the area. In light of this and in light of the frequent application of state trademark legislation, anti-dilution or otherwise, in federal courts, the Defendant’s Motion to Dismiss Count IV of the Complaint is hereby DENIED.

To recapitulate, the Defendant’s Motion to Dismiss or for Summary Judgment is hereby DENIED. However, in light of the Plaintiff’s seemingly incorrect reliance on Fla.Stat. § 495.141, rather than Fla.Stat. § 495.151, the Plaintiff shall submit a Motion to Correct the Complaint within ten (10) days of the date of the entry of this Order.

It is further ORDERED AND ADJUDGED that the Plaintiff’s Motion to Substitute Exhibits be and the same is hereby GRANTED as the Defendant has expressed its agreement to this Motion.

It is further ORDERED AND ADJUDGED that the Plaintiff’s Motion to Strike be and the same is hereby DENIED as the Defendant has subsequently filed a Statement of Material Facts.

Finally, it is ORDERED AND ADJUDGED that the Defendant shall file an answer to the Plaintiff’s Complaint within ten (10) days of the date of the entry of this Order.

      . Although the Plaintiffs Complaint relies on Fla.Stat. § 495.141 to support the cause of action alleged in Count IV, the Court finds that Fla.Stat. § 495.151 is the statute which provides a cause of action for injury to business reputation and dilution of mark. Fla.Stat. § 495.141, unlike § 495.151, is limited to the protection of registered marks or names. Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1168 n. 13 (11th Cir.1982). As the Plaintiff does not allege state registration of the mark, Fla.Stat. § 495.151 would be the applica ble statute. Therefore, for the purposes of this Order only, the Court will treat Count IV of the Complaint as alleging a cause of action under Fla.Stat. § 495.151.


author: BEAM, District Judge.

text:
    Robert L. KREBSBACH, M.D., Plaintiff, v. Margaret HECKLER, et al., Defendants.
    No. CV 85-0-651.
    United States District Court, D. Nebraska.
    Aug. 26, 1985.

      Dayton O. Rasmussen, Omaha, Neb., for plaintiff.
    Douglas Semisch, Asst. U.S. Atty., Omaha, Neb., Royce N. Harper, Asst. Atty. Gen., Lincoln, Neb., John J. Meyer, Office of Gen. Counsel, Inspector Gen. Div., U.S. Dept, of Health & Human Serv., Washington, D.C., for defendants.
   BEAM, District Judge.

This matter is before the Court upon plaintiffs request for a preliminary injunction (filing 1), defendant, Nebraska Department of Social Services’ motion to dismiss (filing 4), defendant, Secretary of the United States Department of Health and Human Services’ motion to dismiss defendants McLaughlin, Bishop, Mutual of Omaha and The Travelers (filing 5), defendants’ motion to dismiss (filing 6), and defendant, Nebraska Department of Social Services’ amended motion to dismiss or in the alternative to abstain (filing 12).

Plaintiff is a physician practicing in Omaha, Nebraska. He has been a provider of services to individuals who are covered under the federal and state Medicare and Medicaid programs. On or about March 6, 1985, plaintiff was notified by Mutual of Omaha and The Travelers, carriers under the Medicare Part B and Railroad Retirement programs, that they were suspending payment on his claims under 42 C.F.R. §§ 405.370 and 405.371(b). Plaintiff was not offered a hearing on the matter. On July 1, 1985, plaintiff filed a “Petition” alleging that he was being deprived of property without due process in violation of the Fifth and Fourteenth Amendments to the United States Constitution. Specifically, plaintiff claims that he is entitled to an administrative hearing prior to any suspension of payments and asks the Court to enjoin the suspension until such hearing occurs. Plaintiff alleges that the Court has jurisdiction pursuant to 28 U.S.C. § 1331.

Jurisdiction

Defendant, the Nebraska Department of Social Services, contends that the Eleventh Amendment bars suits against it in federal court, absent consent. It is well established that under the Eleventh Amendment a federal court may not award retroactive monetary relief against a state. Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). To the extent that plaintiff seeks a ruling as to his entitlement to reimbursement of claims submitted, therefore, the Court is without jurisdiction. However, under Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), the Eleventh Amendment does not bar prospective injunctive relief where the state is violating a claimant’s constitutional or statutory rights. The Court does have jurisdiction, then, to consider plaintiff’s claim that the continued suspension of payments without a hearing deprives him of property without due process of law.

There are certain limitations on the doctrine of Ex Parte Young. As Professor Wright has written, the traditional rule is that “[a] litigant must normally exhaust state ‘legislative’ or ‘administrative’ remedies before challenging the state action in federal court.” C. Wright, Law of Federal Courts (1983), p. 293. See Gilchrist v. Interborough Rapid Transit Co., 279 U.S. 159, 49 S.Ct. 282, 73 L.Ed. 652 (1929); Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 29 S.Ct. 67, 53 L.Ed. 150 (1908). The rationale for this rule is that it cannot be certain that a party will need judicial relief until the administrative process is complete. It is a rule of comity and equitable discretion, rather than a jurisdictional limitation.

In the instant case it cannot be said that plaintiff has exhausted his state administrative remedies. The record does not indicate that plaintiff has submitted a written request for a hearing with the Department of Social Services, as provided by 471 NAC 2-003. Therefore, plaintiff is not entitled to relief as to defendant Nebraska Department of Social Services.

The remaining defendants maintain that under Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), this Court does not have federal question jurisdiction over plaintiff’s claims. In Ringer the Supreme Court held that 42 U.S.C. § 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395Ü, precludes section 1331 jurisdiction over all claims arising under the Medicare Act.

This Court recently had occasion to examine some of the judicial penumbras left by Ringer in Archbishop Bergan Mercy Hospital v. Heckler, 614 F.Supp. 1271 (D.Neb.1985). The Court ruled that the Eighth Circuit’s decision in St. Louis University v. Blue Cross Hospital Service, 537 F.2d 283 (8th Cir.1976), survives Ringer. In St. Louis University the Eighth Circuit held that where there is no other adequate form of review available, section 405(h) does not foreclose section 1331 jurisdiction over constitutional claims. Support for St. Louis University’s continued vitality can be found in Schweiker v. McClure, 456 U.S. 188, 102 S.Ct. 1665, 72 L.Ed.2d 1 (1982). In McClure the Supreme Court examined the review procedures for reimbursement decisions made under Part B of the Medicare program and found that the procedures complied with due process requirements. The Court, in reaching that decision, obviously considered itself to have jurisdiction to review Part B procedures for due process violations. Furthermore, the Court indicated that future review might be available in the courts upon a showing of procedural impropriety. Id. at 195, 102 S.Ct. at 1670. Therefore, Ringer does not bar federal question jurisdiction over constitutional questions where there exists no other avenue of review.

In the instant case there is no review available of defendants’ refusal to provide plaintiff with a hearing regarding the suspension of reimbursements. Therefore, the Court has jurisdiction to determine whether this refusal violates plaintiff’s due process rights.

Hearing

Plaintiff contends that he is entitled to a hearing under 42 U.S.C. § 1395y(d)(3). However, payments to plaintiff were not suspended pursuant to that section. The hearing described in section 1395y(d)(3) applies when the Secretary has determined under section 1395y(d)(l) that an individual “has knowingly and willfully made, or has caused to be made, any false statement or representation of a material fact for use in an application for payment under [Medicare] or for use in determining the right to a payment under [Medicare].” The Secretary has made no such determination in plaintiffs case and has not suspended him from future participation in the program. Therefore, the hearing described in 42 U.S.C. § 1395y(d)(3) does not apply.

Plaintiffs reimbursements were suspended pursuant to 42 C.F.R. §§ 405.-370 and 405.371(b), which sections were promulgated under the Secretary’s general rule-making authority. Under 42 C.F.R. §§ 405.370-405.373 carriers must withhold payments on claims where there is reliable evidence of an overpayment or of fraud or willful misrepresentation. 42 C.F.R. § 405.371(a) contains certain procedures the carrier must follow when payments are suspended. These include prior notice to the provider and an opportunity to respond. However, under 42 C.F.R. § 405.371(b) these procedures do not apply when the carrier has reliable evidence of fraud or willful misrepresentation. In such cases the provider need not be notified prior to the suspension or given an opportunity to respond.

Plaintiff’s payments were suspended pursuant to 42 C.F.R. § 371(b). He, therefore, has no right under the Medicare Act or the appropriate regulations to a hearing while the Secretary conducts an investigation.

This absence of a hearing does not violate plaintiff’s right to due process of law. It is appropriate that the Secretary may temporarily suspend payments in order to conduct an investigation when confronted with reliable evidence of fraud. Such a suspension cannot continue indefinitely, but may be of a reasonable duration. The Court cannot say that the suspension in the instant case has exceeded a reasonable period for the Secretary’s investigation.

For the foregoing reasons plaintiff is not entitled to an immediate hearing. An order in conformance with this Memorandum will be entered contemporaneously herewith.


author: SPELLMAN, District Judge.

text:
    UNITED STATES of America, v. John GIANCARLI and Arturo Arango, Defendants.
    No. 85-255-Cr-Spellman.
    United States District Court, S.D. Florida, Miami Division.
    Aug. 26, 1985.

      Michael Zeldin, Special Atty., Dept, of Justice, Miami, Fla., for the United States.
    Melvyn Kessler, Miami, Fla., Stephen Lange, Ft. Lauderdale, Fla., for defendants.
   MEMORANDUM OPINION & ORDER DENYING THE DEFENDANT’S MOTION TO SUPPRESS EVIDENCE

SPELLMAN, District Judge.

The Defendant, pursuant to Rules 12 and 41 of the Federal Rules of Criminal Procedure and the fourth amendment to the United States Constitution, moved this Court for the entry of an order suppressing from the introduction into evidence in any hearing or the trial of the cause the cocaine, cocaine base, Acetone Hydrochloric Acid, Ammonium Hydroxide seized pursuant to an “oral search warrant.” The facts giving rise to this Motion are as follows.

In the early morning hours of April 11, 1985, DEA Agents received information that there was a cocaine lab operating out of a house in Miami, Florida. These agents determined that the exigencies of the situation necessitated immediate action. Initially they telephoned the duty Assistant United States Attorney and advised him of the facts. The Assistant United States Attorney suggested that a telephonic warrant be sought from the duty Magistrate, the Honorable Samuel A. Smargon. At about 2:40 a.m., the DEA Agent, Coleman Ramsey, telephoned the Magistrate. After two separate conversations, a search warrant was authorized. However, the Magistrate failed to place the Agent under oath before authorizing the search warrant. The following morning when the Agent made the return of the warrant, he became aware of this oversight. At this time, the Agent was sworn by the Magistrate as to the facts previously relayed and as to the return and inventory of the items seized. The Defendants moved this Court to suppress the evidence because of the Magistrate’s failure to initially swear the Agent. For the two following reasons, said motion is DENIED.

II.

The first reason for the denial of this Motion to Suppress is the recent United States Supreme Court decision, United States v. Leon, — U.S. -, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). In Leon, the officer prepared an application for a warrant to search three residences and the defendants’ automobiles for an extensive list of items. Several Deputy District Attorneys reviewed the application and issued a facially valid search warrant. Ensuing searches produced large quantities of drugs and other evidence. The defendants were indicted for federal drug offenses and filed Motions to Suppress the evidence. After an evidentiary hearing, the district court granted the Motions in part, concluding that the affidavit was insufficient to establish probable cause. Although the court recognized that the officer had acted in good faith, it rejected the government’s suggestion that the fourth amendment exclusionary rule should not apply where the evidence is seized in reasonable good-faith reliance on a search warrant. The court of appeals affirmed, also refusing the government’s invitation to recognize a good-faith exception to the rule.

The United States Supreme Court reversed and held that the exclusionary rule should not be applied so as to bar the use in the prosecution’s case-in-chief of evidence obtained by officers acting in reasonable reliance on a search warrant issued by a detached and neutral magistrate but ultimately found to be invalid. The Court determined that when law enforcement officers have acted in objectively reasonable reliance on a warrant subsequently invalidated because of the magistrate’s erroneous probable cause determination, suppression is unlikely to deter future misconduct. The Court found that “in the absence of an allegation that the magistrate abandoned his detached and neutral role, suppression is appropriate only if the officers were dishonest or reckless in preparing their affidavit or could not have harbored an objectively reasonable belief in the existence of probable cause.” Id. 104 S.Ct. at 3423.

In a companion case, Massachusetts v. Sheppard, — U.S.-, 104 S.Ct. 3424, 82 L.Ed.2d 737 (1984), the United States Supreme Court also refused to apply the exclusionary rule to a search officers conducted in objectively reasonable reliance on a warrant issued by a detached and neutral magistrate which subsequently was determined to be invalid.' In Sheppard, a police detective drafted an affidavit to support an application for an arrest warrant and a search warrant authorizing the search of the defendant’s residence. The affidavit stated that the police wished to search for certain described items. Because it was Sunday and the local court was closed, the police had a difficult time locating a warrant application form. The detective finally found a warrant form previously used in another district to search for controlled substances. The ensuing search was limited to the items listed in the affidavit. After several incriminating pieces of evidence were discovered, the defendant was charged with first-degree murder. At a pretrial suppression hearing, the trial judge ruled that despite the defective warrant, the evidence could be admitted because the police had acted in good faith in executing what they reasonably thought was a valid warrant. The Massachusetts Supreme Judicial Court held that the evidence should have been suppressed.

The United States Supreme Court reversed and remanded. The Court held that since the police officers took every step that could reasonably be expected of them and believed that all the necessary clerical changes had been made in the defective warrant form, there was an objectively reasonable basis for their mistaken belief that the search warrant authorized the search. The Court refused to apply the exclusionary rule.

The good faith exception to the exclusionary rule as set forth in Leon and Sheppard undoubtedly govern the instant case. Although search warrants shall be issued upon sworn statements attesting to probable cause, the obligation to swear the affiant befalls the court. The Agent was unaware of the lack of swearing at the time of the warrant application. His reliance upon the facial validity of the warrant was objectively reasonable. In the instant case, there is no allegation that the non-compliance was intentional. There is no indication that the defect was the result of bad faith. Thus, the evidence should be admitted in the government’s case in chief.

III.

The second reason for the denial of this Motion to Suppress is the controlling decision by the Eleventh Circuit. Prior to the pronouncements in Leon and Sheppard, the Eleventh Circuit considered the effect of a technical violation of Fed.R.Crim.P. 41(c)(2)(D) and rejected the standard articulated in United States v. Shorter, 600 F.2d 585 (6th Cir.1979). United States v. Loyd, 721 F.2d 331 (11th Cir.1983).

In Shorter, the Sixth Circuit invalidated a telephonic search warrant because the affiant seeking the warrant was not immediately placed under oath as required by the rule, but instead gave the oath after he had testified. The court cited United States v. Turner, 558 F.2d 46, 50 (2nd Cir.1977) and reasoned that the oath or affirmation requirement is “designed to insure that the truth will be told by insuring that the witness or affiant will be impressed with the solemnity and importance of his words.” Id. at 588. The court indicated that an oath relating back to statements made in the physical presence of the judicial officer may indeed comport with the constitutional requirements. However, Fed.R.Crim.P. 41(c)(2)(D), allowing the use of modern technology to make search warrants more accessible to federal agents, is a much less formal communication. The court concluded that in order to assure the accuracy of the information furnished in this less ritualistic fashion, compliance with the command that the telephonic oath be given immediately is required. The court decided that “the command of Fed.R. Crim.P. 41(c)(2)(D) speaks more of substance than procedure and must be obeyed.” Id. at 589. However, two factors cast doubt on the present vitality of this decision: the overpowering pronouncement in Leon and the unequivocal rejection in United States v. Loyd, 721 F.2d 331 (11th Cir.1983).

In Loyd, the court also confronted a technical violation of Fed.R.Crim.P. 41(c)(2)(D) and declined to adopt the Sixth Circuit position. In Loyd, the defendants claimed that marijuana seized pursuant to a telephonic search warrant should have been suppressed because the issuing magistrate did not certify the accuracy of the transcript of the taped oral warrant. The court discarded the Shorter decision and instead accepted the standard articulated by the Ninth Circuit:

[Ujnless a clear constitutional violation occurs, noncompliance with Rule 41 requires suppression of evidence only where (1) there was ‘prejudice’ in the sense that the search might not have occurred or would not have been so abrasive if the rule had been followed or (2) there is evidence of the intentional and deliberate disregard of a provision in the Rule. United States v. Loyd, 721 F.2d 331, 333 (11th Cir.1983) quoting United States v. Stefanson, 648 F.2d 1231 (9th Cir.1981).

In the instant case, this Court follows the determination set forth in Loyd. There is no allegation of “prejudice” or a suggestion that the search might not have occurred if the rule had been strictly followed. In addition, there is no evidence of an intentional disregard for the provisions of the Rule. The Agent conducted the search early in the morning due to exigent circumstances. When he returned the warrant the following day, it was only then that he first realized that the Magistrate had neglected to swear him earlier. In the absence of actual prejudice to the Defendant or bad faith on the part of the officer, suppression is not warranted.

IV.

In conclusion, the Defendant’s Motion to Suppress the evidence is DENIED. United States v. Leon and its progeny have established a good faith exception to the exclusionary rule. In addition, since Leon casts doubt upon the Sixth Circuit determination in Shorter and since the Eleventh Circuit has explicitly rejected Shorter’s per se rule invalidating warrants for such technical errors, the evidence should be admitted.


author: BARBOUR, District Judge.

text:
    Sabra R. SULLIVAN, Plaintiff, v. UNIVERSITY OF MISSISSIPPI MEDICAL CENTER, Defendant.
    Civ. A. No. J83-0762(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    Aug. 27, 1985.

      George Thomas Sullivan, Collins, Miss., for plaintiff.
    Jeffrey A. Walker, Jackson, Miss., for defendant.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on a Motion to Dismiss or for Summary Judgment filed by the Defendant, the University of Mississippi Medical Center, and a Cross-Motion for Summary Judgment filed by the Plaintiff, Sabra R. Sullivan. The Complaint is brought pursuant to 28 U.S.C. Section 1331, federal question jurisdiction; specifically the Rehabilitation Act of 1973, 29 U.S.C. Sections 794 and 794a. The Complaint alleges that the Plaintiff was hired for a nursing position at the University of Mississippi Medical Center on or about January 11, 1983, and was discharged on or about February 14, 1983, because of her handicap. The Complaint alleges a pendant state cause of action under Miss. Code Ann. § 43-6-15 (1972) based upon the same allegations. As relief, the Complaint seeks “a declaratory judgment against Defendant for all wages lost by Plaintiff due to the acts of Defendant (which the Court determines to be a request for back pay) [and] injunctive relief against Defendant prohibiting Defendant ... from discharging Plaintiff on account of her handicap ...” and for costs of court and attorney’s fees.

Since it is dispositive, only the Defendant’s Motion to Dismiss based upon Eleventh Amendment immunity will be considered by the Court.

Generally speaking, the Eleventh Amendment immunizes states and state agencies from suit in federal court, unless the state has consented to be sued, or unless Congressional legislation specifically overrides this immunity. Unless overridden by specific Congressional authority, retroactive money awards, such as the request for back pay made by the Plaintiff in the instant action, are forbidden. Furthermore, while prospective injunctive relief is not prohibited by the Eleventh Amendment, the relief sought must be against a specific named public official and not the state or one of its agencies in their own capacity.

The recent Fifth Circuit decision in Clay v. Texas Women’s University, 728 F.2d 714 (5th Cir.1984) fairly summarizes these principles. In Clay, a college student sued the Texas Women’s University, seeking monetary damages and an injunction directing the University to reinstate her as a doctoral candidate. Holding that the Eleventh Amendment precluded an award of monetary damages against the University, as an agency of the State of Texas, and that the Eleventh Amendment also barred the request for injunctive relief against the state agency itself, the district court dismissed the action. The Fifth Circuit affirmed noting:

The eleventh amendment clearly interposes a jurisdictional bar to suits against a state by private parties who seek monetary relief from the state in the form of compensatory damages, punitive damages, or monetary awards in the nature of equitable restitution, and also to suits against a state agency or state official when the monied award is to be paid from the state treasury____ Treating the defendant university as a state instrumentality entitled to invoke the jurisdictional bar of the eleventh amendment, the district court properly dismissed Clay’s claims for monetary relief____ ... [I]t must be recognized that the eleventh amendment does not foreclose claims in federal court against a state official insofar as a party seeks prospective injunctive relief against such officials on the ground that they are allegedly acting in their official capacities in a manner inconsistent with federal constitutional restraints____ However, the Supreme Court has held that states and state agencies are also immune as entities from suits for prospective injunctive relief____ (To maintain such an action, therefore, the party seeking such relief must name the individual state officials as parties to the suit)____
Clay named Texas Women’s University as the sole defendant in her action seeking monetary and injunctive relief. She did not join any of the university administrators or the members of its Board of Trustees as parties to the case. Since it is conceded for present purposes that the university is a state agency, Clay’s claims for injunctive relief are barred by the jurisdictional immunity of the eleventh amendment as interpreted by the Supreme Court in Alabama v. Pugh, supra.

Id. at 715-17 (citations omitted).

The issue was conclusively decided by the Supreme Court in the recent case, Atascadero State Hospital v. Scanlon, — U.S. -, 105 S.Ct. 3142, 87 L.Ed.2d 171 (1985). In Scanlon, the plaintiff sued Atascadero State Hospital and the California Department of Mental Health, alleging that the hospital’s failure to hire him due to his diabetic condition violated § 794 of the Rehabilitation Act of 1973. Justice Powell, writing for the majority framed the issue succinctly:

[t]his case presents the question whether States and state agencies are subject to suit in federal court by litigants seeking retroactive monetary relief under § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, or whether such suits are proscribed by the Eleventh Amendment.

Id. at-, 105 S.Ct. at 3144. After determining that California’s general waiver of sovereign immunity was not a consent to suit in federal court and that California had not consented to suit in federal court by virtue of its acceptance of federal funds under the Rehabilitation Act, the Court concluded:

We have decided today that the Rehabilitation Act does not evidence an unmistakable congressional purpose, pursuant to § 5 of the Fourteenth Amendment, to subject unconsenting States to the jurisdiction of the federal courts. The Act likewise falls far short of manifesting a clear intent to condition participation in the programs funded under the Act on a state’s consent to waive its constitutional immunity.

Id. at-, 105 S.Ct. at 3150.

The University of Mississippi Medical Center as an arm of the University of Mississippi is, for purposes of Eleventh Amendment scrutiny, an agency of the State of Mississippi. Mississippi Constitution, Article VIII, education Section 213-A; Miss.Code Ann. § 37-115-25 (1972); Jagnandan v. Giles, 538 F.2d 1166 (5th Cir. 1976); cert. denied, 432 U.S. 910, 97 S.Ct. 2959, 53 L.Ed.2d 1083 (1977); Smith v. Doehler Metal Furniture Co., 195 Miss. 538, 15 So.2d 421 (1943); Coleman v. Whipple, 191 Miss. 287, 2 So.2d 566 (1941).

For purposes of Eleventh amendment analysis, the facts in the instant care are identical with those in Clay and Scanlon and the court is of the opinion that this action is barred and the Complaint must be dismissed.

With regard to the Plaintiff’s pendant state law claims, the Court is of the opinion that the dismissal of the federal cause of action also requires dismissal of the pendant state law claims. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). The Eleventh amendment deprives a federal court of jurisdiction over a suit for injunctive relief against state officials for violation of a state law. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). The Court therefore concludes that the Plaintiff’s pendant state law claims do not survive the dismissal of her federal cause of action.

For the reasons set forth in this Opinion, the Court is of the opinion that the Plaintiff’s action is barred by the Eleventh Amendment and must be dismissed.

Although not reached due to the dismissal of the Plaintiff’s action, the Court notes that the Plaintiff’s Cross-Motion for Summary Judgment on the issue of her qualification to hold her job is factually contested by the Defendant and would therefore not be appropriately granted in any event.

Accordingly, the Complaint is dismissed at the cost of the Plaintiff.

      . Section 794 states in relevant part:
      No other qualified handicapped individual in the United States ... shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.
      Section 794a provides that:
      (a)(2) the remedies, procedures and rights set forth in Title VI of the Civil rights Act of 1964 [42 U.S.C.A. 2000d et seq.] shall be available to any person aggrieved [by violation of Section 794].

      . Plaintiff apparently suffers from and has a medical history of arthritis and cervical and lumbar fusion.

      . Compare Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976) in which the Court held that Congress in enacting Title VII relied on Section 5 of the Fourteenth Amendment, therefore overriding the Eleventh Amendment and making retroactive damage awards available against states, with Guardians Ass’n. v. Civil Service Comm’n, 463 U.S. 582, 103 S.Ct. 3221, 77 L.Ed.2d 866 (1983) in which the Court held that Title VI is an exercise of Congressional authority under the Spending Clause rather than Section 5 of the Fourteenth Amendment, and Employees v. Department of Public Health & Welfare of Missouri, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973) in which the court held that the Fair Labor Standards Act did not override the Eleventh Amendment.

      . See Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979); Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945).

      . Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974) discussed the distinction between prospective relief, which is permissible under the Eleventh Amendment, and retroactive relief which is not.

      . In Alabama v. Pugh, 438 U.S. 781, 98 S.Ct. 3057, 57 L.Ed.2d 1114 (1978) the Supreme Court ordered the State of Alabama and the State’s Department of Corrections dismissed from a lawsuit for injunctive relief, holding that the Eleventh Amendment prohibited suits directly against states and their agencies.

      . Several lower courts had held that the Eleventh Amendment bars retroactive money awards pursuant to the Rehabilitation Act against states and their agencies. See, e.g., Sanders by Sanders v. Marquette Public Schools, 561 F.Supp. 1361 (W.D.Mich.1983); Parks v. Pavkovic, 536 F.Supp. 296 (N.D.Ill.1982); Patton v. Dumpson, 498 F.Supp. 933 (S.D.N.Y.1980).