author: MERHIGE, District Judge.

text:
    In re DALKON SHIELD PUNITIVE DAMAGES LITIGATION.
    Civ. A. No. 84-0484-R.
    United States District Court, E.D. Virginia, Richmond Division.
    July 22, 1985.

      Murray J. Janus, Stephen W. Bricker, Bremner, Baber & Janus, Richmond, Va., for plaintiffs.
    Alexander H. Slaughter, J. Waller Harrison, Barbara Ann Williams, McGuire, Woods & Battle, Richmond, Va., James Dabney Miller, King & Spalding, Washington, D.C., Griffin B. Bell, King & Spalding, Atlanta, Ga., William R. Cogar, Mays, Valentine, Davenport & Moore, Richmond, Va., for defendants.
   MEMORANDUM

MERHIGE, District Judge.

Pending before this Court is a motion by A.H. Robins Company, Inc. (“Robins”) to certify a nationwide class action. The proposed class action would determine whether Robins is liable — for punitive damages — to plaintiffs throughout the nation arising out of their use of the Daikon Shield (an intrauterine contraceptive device) and, if liable, the extent of such liability. The issue presently before the Court in relation to this motion concerns collateral estoppel: specifically, the collateral estoppel effect on Robins of the decision by the Court of Appeals for the Ninth Circuit in In re Northern District of California Dalkon Shield IUD Products Liability Litigation, 693 F.2d 847, 850-52 (9th Cir.1982), (hereinafter “Daikon Shield”), cert. denied, 459 U.S. 1171, 103 S.Ct. 817, 74 L.Ed.2d 1015 (1983). That decision reversed a district court’s certification one year earlier, see Daikon Shield, 526 F.Supp. 887, 896-900 (N.D.Cal.1981), of a class virtually identical to the class that Robins asks this Court to certify.

The parties have thoroughly briefed and vigorously argued the issue, and the matter is now ripe for disposition.

BACKGROUND.

The story of the products liability litigation arising out of the Daikon Shield is a long one, and it need not be recounted in any detail here. With respect to the collateral estoppel issue, however, the following facts provide some helpful background.

The nationwide punitive damages class was first certified conditionally by the district court, which raised sua sponte the issue of certifying such a class. See Dalkon Shield, 521 F.Supp. 1188, 1192 (N.D.Cal.1981). The legal basis for a nationwide punitive damages class was the so-called “limited fund” theory and Fed.R.Civ.P. 23(b)(1)(B). That subsection provides for class certification where:

the prosecution of separate actions by individual class members would create a risk of adjudication with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests____

and where the prerequisites enumerated in Fed.R.Civ.P. 23(a) for maintaining a class action are also met. The district court had concluded that the threat of massive punitive damages awards to some early-prevailing class members would preclude any punitive damage awards to later-prevailing class members, due to the actual or constructive bankruptcy of Robins, or due to the possibility that a court could rule that the punitive damages already assessed had sufficiently punished Robins. See Dalkon Shield, 521 F.Supp. at 1193. Accordingly, the district court believed that Robins had only a “limited fund” from which to pay out punitive damage awards, making appropriate the certification of a nationwide punitive damages class under 23(b)(1)(B).

The day following the district court’s conditional certification of a class action on its own motion, Robins also moved to certify a nationwide punitive damages class action. See 526 F.Supp. at 895. See id. Five months later, the district court granted Robins’ motion, and denied motions from Daikon Shield plaintiffs throughout the nation to decertify the class of the national ■ significance of its order and the other factors making interlocutory appeal appropriate, the district court then certified, for interlocutory review, its order certifying the class action.

The Court of Appeals for the Ninth Circuit reversed the district court across the board. It concluded that class action treatment was inappropriate because the prerequisites for any class action, set out in Fed.R.Civ.P. 23(a), had not been satisfied. See Dalkon Shield, supra, 693 F.2d at 850-51. It also concluded that the district court had erred in finding that a 23(b)(1)(B) class action was appropriate. In that regard, the Court of Appeals focused chiefly on the lack of sufficient evidence — or even of a preliminary fact-finding inquiry — concerning Robins’ actual assets, insurance, settlement experience, and continuing exposure. Id. at 852. It is this decision that gives rise to the assertions that Robins is collaterally estopped from seeking again a nationwide punitive damages class in the Daikon Shield cases.

THE PARTIES’ ARGUMENTS.

Robins contends that the Ninth Circuit decision does not preclude .it from certifying a nationwide punitive damages class here. Robins’ primary line of argument is, first, that the Ninth Circuit did not actually determine that a nationwide punitive damages class of Daikon Shield plaintiffs fails to meet the prerequisites of rule 23(a). Robins then acknowledges that the Ninth Circuit determined that the Rule 23(b)(1)(B) requirements were not met; however, Robins argues, that determination should not be binding against it here because it had no full and fair opportunity to litigate the existence of a limited fund so as to satisfy the requirements of 23(b)(1)(B), and because the factual and legal circumstances relevant to the Ninth Circuit’s 23(b)(1)(B) determination have changed radically. Robins also argues that the Ninth Circuit did not determine that a nationwide punitive damages class action could never be maintained in the Daikon Shield litigation; rather, so it argues, the Ninth Circuit only held that — on the record before it — such a class was inappropriate. Finally, Robins argues that even if collateral estoppel would ordinarily apply, it should not apply here because of the adverse effects it could have on the public interest.

Plaintiffs attack virtually all of the points Robins raises against collateral estoppel. The Court need not address each point Robins has raised, however, because it has concluded that: (i) the Ninth Circuit determined that a nationwide punitive damages class in the Daikon Shield litigation fails to meet the prerequisites of Rule 23(a); (ii) the Ninth Circuit’s determination with respect to the Rule 23(a) prerequisites is effective for purposes of collateral estoppel even though the panel also determined that a class action was inappropriate because it failed to meet the requirements of Rule 23(b)(1)(B); (iii) Robins had a full and fair opportunity to litigate the 23(a) prerequisites; (iv) the Ninth Circuit’s determination with respect to those prerequisites has not been undermined by any dramatic changes in the relevant legal or factual circumstances; and (v) the public interest does not justify ignoring the collateral estoppel effects of the Ninth Circuit’s determination.

DISCUSSION.

I. General Principles of Collateral Estoppel.

Collateral estoppel requires that at least four elements be satisfied before an order pertaining to an issue in one action can preclude a party to that action from re-litigating the issue in another proceeding: first, that the issue sought to be precluded must be the same as that involved in the prior action; second, that the issue must have been actually litigated; third, that it must have been determined by a valid and final judgment; and fourth, that the determination must have been essential to the prior judgment. See In re Piper Aircraft Distribution Systems Antitrust Litigation, 551 F.2d 213, 218-19 (8th Cir.1977). Collateral estoppel analysis has been applied to the issue of whether a class action can be maintained. See id. The parties do not dispute this, nor do they dispute that the Ninth Circuit’s order meets the “valid and final judgment” requirement. Cf. id. at 219-20 (class action determination entered in action that plaintiff later dismissed voluntarily pursuant to Fed.R.Civ.P. 41(a)(1) is not final for collateral estoppel purposes).

II. Issues in Ninth Circuit as Compared to Issues Here.

Robins initially argues that collateral estoppel does not apply because the Ninth Circuit did not determine that a nationwide punitive damages class based on the existence of a limited fund could never be maintained in the Daikon Shield Litigation. Rather, Robins contends, the Ninth Circuit only determined the question based on the record before it, while the class certification issue here arises with a different set of plaintiffs. Thus, Robins argues, the issues presented here are not the same as those presented in the Ninth Circuit.

Robins’ argument is not persuasive. The class certification issues in this case are virtually the same as those before the Ninth Circuit: whether a nationwide Daikon Shield punitive damages class meets the prerequisites of Rule 23(a) and the requirements of Rule 23(b)(1)(B). The fact that Robins now raises the same issues in a set of lawsuits that different plaintiffs have brought elsewhere does not, in and of itself, change the nature of the issues involved for collateral estoppel purposes. Indeed, to hold that it does would be to impose a mutuality requirement for collateral estoppel. Mutuality is not, however, a requirement of collateral estoppel — especially where, as here, collateral estoppel is raised in a defensive situation. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329, 99 S.Ct. 645, 650, 58 L.Ed.2d 552 (1979).

III. The Ninth Circuit’s Decision as to Rule 23(a) Prerequisites.

Robins urges that the Ninth Circuit did not determine that a nationwide Daikon Shield punitive damages class fails to meet the prerequisites of Rule 23(a). Robins points out that the Court of Appeals considered three of the four prerequisites of Rule 23(a) — commonality, typicality, and adequacy of representation. Robins then correctly notes that, in the Court of Appeals’ decision, not one of those three pre,requisites was unequivocally found to be unsatisfied by a nationwide Daikon Shield punitive damages class. Robins concludes that the Court of Appeals could not have decided that the Rule 23(a) prerequisites were not met.

The fallacy of Robins’ argument is that it ignores other language in the Ninth Circuit decision. The Court of Appeals itself appears to have acknowledged that the proposed punitive damages class did not present such problems with any one of the prerequisites of Rule 23(a) that the prerequisite was clearly not met. Rather, it found that the cumulative effect of the substantial problems with commonality, typicality, and adequacy of representation precluded such a class from meeting the Rule 23(a) prerequisites:

We are not necessarily ruling out the class action tool as a means for expediting multi-party product liability actions in appropriate cases, but the combined difficulties overlapping from each of the elements of Rule 23(a) preclude certification in this case.

Dalkon Shield, supra, 693 F.2d at 851 (emphasis added). The Court has no doubt that this language should receive its plain meaning: that the Court of Appeals found that a nationwide Daikon Shield class action restricted to punitive damages only fails to meet the prerequisites of Rule 23(a). This reading is confirmed by another passage, which appears in the opinion’s conclusion:

The Court erred in certifying the Rule 23(b)(1)(B) nationwide punitive damages class [because of the procedural irregularities in certifying such a class and because of inadequate evidence on the limited fund issue]. Even if further proceedings were had on those issues, however, the case would still fail to meet Rule 23(a)’s preliminary requirements of commonality, typicality, and adequacy of representation. Therefore, rule 23(b)(1)(B) class action [cannot be maintained].

Id. at 857 (emphasis added).

Robins argues that such language is mere dicta. It contends that “the Ninth Circuit ... reversed the district court’s class certification ... primarily because of the failure to hold a hearing on the existence of a limited fund.” It is true, of course, that one reason for the Ninth Circuit’s reversal was problems with the district court’s determination of a limited fund. But that is no basis for this Court to conclude that the Ninth Circuit did not also determine that the proposed class failed to meet Rule 23(a) prerequisites. The language throughout the opinion is consistent with such a finding.

IV. Effect of Fact that Ninth Circuit’s Determination Rested on Limited Fund Grounds as well as on Rule 23(a) Grounds.

Although Robins does not raise this point, the fact that the Ninth Circuit reversed the district court’s nationwide punitive damages class certification on two separate grounds could be considered as undermining the collateral estoppel effect of both determinations. Either determination, taken alone, is arguably not “necessary” for the decision and should therefore not receive collateral estoppel effect, so the argument would run. Indeed, there is authority for the position that where a decision is based on alternative grounds, each of which would suffice in and of itself to sustain the decision, redetermining either ground should not be precluded. See, e.g., Halpern v. Schwartz, 426 F.2d 102, 106 (2d Cir.1970) (explaining the rationale for such a position). This position is against the grain of traditional authority, which remains vital in many recently decided cases. See 18 C. Wright, A. Miller, and E. Cooper, Federal Practice and Procedure, § 4421, at 204, 204 n. 20 (1981) (citing cases). But the recently issued Restatement (Second) of Judgments has also adopted this position in certain circumstances. See Restatement (Second) of Judgments, § 27, Comment i (1981). Another authority suggests that it might be appropriate to give collateral estoppel effect to an alternative finding only if it can be readily determined that such a finding reflects a “careful process of decision.” 18 C. Wright, A. Miller, and E. Cooper, Federal Practice and Procedure, § 4421, at 208 (1981).

This Court need not decide which of these competing positions is appropriate, however. Even the treatise authorities that generally question the preclusive effect of alternative holdings acknowledge that, where a finding in the first instance has been reviewed on appeal, the appellate finding is entitled to preclusive effect. See Restatement (Second) of Judgments, § 27, Comment o; 18 C. Wright, A. Miller, and E. Cooper, Federal Practice and Procedure, § 4421, at 208 (1981) (“Appellate review would automatically satisfy” the standard that a particular finding reflects a careful process of decision).

The Court also notes that giving alternative holdings preclusive effect has been held to be “particularly appropriate” when the original action and the action in which preclusion is sought were pending simultaneously. The possible preclusive effects in such situations are readily foreseeable while the first action is being litigated. See Winters v. Lavine, 574 F.2d 46, 67-68 (2d Cir.1978). Here, Robins certainly knew that the class certification determination by the Ninth Circuit could have preclusive effect against Robins in the thousands of other Daikon Shield cases pending around the Country.

V Robins’ Opportunity to Litigate Rule 23(a) Prerequisites in the Ninth Circuit.

Robins does not contend that it lacked a full opportunity to litigate the prerequisites of Rule 23(a) in the Ninth Circuit. Its contentions with respect to opportunity to litigate relate solely to the question of the existence of a limited fund. The prerequisites were necessarily addressed at all stages of the class certification proceedings and the Court has no reason to believe that Robins lacked a full and fair opportunity to litigate that issue.

VI. Changes in Factual and Legal Circumstances Relevant to Rule 23(a) Prerequisites.

Collateral estoppel does not apply where the factual or legal circumstances relevant to the issue actually decided in the prior litigation have changed dramatically. See IB J. Moore, Moore’s Federal Practice, ¶ 0.448, at 839 (1983). Robins’ central argument based on changed circumstances relates to the Ninth Circuit’s determination regarding a limited fund, not the 23(a) requirements. Nevertheless, Robins does suggest that one of the circumstances underlying the 23(a) determination — adequacy of representation — has changed substantially. Robins suggests that because new attorneys are involved in this suit, the issue of adequacy of representation is different.

The Court has great respect for plaintiffs’ counsel appearing before it in these eases. However, it must reject Robins’ conclusion that this represents any change in circumstances so as to render collateral estoppel inapplicable. The Ninth Circuit focused on the unwillingness of plaintiffs’ attorneys already involved to serve as lead counsel, the problems of having newly appointed counsel that would be willing to litigate as vigorously as counsel of plaintiffs’ own selection, and the difficulty of imposing unwanted counsel upon plaintiffs. It is evident that these problems have not changed; counsel for Daikon Shield plaintiffs throughout the country have filed affidavits indicating their opposition to the proposed class action. The mere fact that new counsel are involved in this case simply does not constitute the sort of “dramatic change” in relevant factual circumstances that would warrant circumvention of the Court of Appeals’ determination.

VII. Potentially Adverse Impact of the Previous Determination on the Public Interest.

Robins’ final argument is that the potentially adverse impact on the public interest of the prior determination makes collateral estoppel inappropriate here, even if it otherwise applies. There is, to be sure, authority for the view that collateral estoppel should not preclude relitigation of an issue where:

there is a clear and convincing need for a new determination of the issue (a) because of the potential adverse impact of the determination on the public interest or the interests of persons not themselves parties in the initial action____

Restatement (Second) of Judgments § 28(5). The rationale behind this exception is that “there are instances in which the interests supporting a new redetermination of an issue ... outweigh the resulting burden on the other party and on the courts.” Restatement (Second) of Judgments, § 28, Comment g. But this exception is very limited:

... litigation to establish an exception in a particular case should not be encouraged. Thus it is important to admit an exception only when the need for a redetermination of the issue is a compelling one.

Id. In short, the “public interest” exception to collateral estoppel should not be lightly invoked.

Robins has not cited any cases supporting its view that under the circumstances here it is in the public interest to allow relitigation of the issue. Robins has submitted an argument, however: that class certification, if granted, would be in the public interest by facilitating the termination of thousands of lawsuits over the Daikon Shield that are pending throughout the United States. Robins contends that “the possibility of an award of substantial punitive damages” is the “primary difficulty” in resolving Daikon Shield claims. Despite Robins’ assertion that plaintiffs have not disputed this point, plaintiffs strenuously argue that the threat of “substantial punitive damages” has facilitated, not hindered, the resolution of Daikon Shield claims.

It is unclear to the Court what the net effect of a punitive damages class certification would be on the ultimate termination of the Daikon Shield litigation. It is true, of course, that once the total amount of Robins’ punitive damages liability is determined with certainty, Robins may be better able to estimate its Daikon Shield-related liabilities. This, in turn, may facilitate Robins’ ability to make reasonable and acceptable settlement offers on pending claims for compensatory damages. The net effect may be to hasten the ultimate termination of the entire Daikon Shield litigation.

On the other hand, it may take a substantial period of time before the extent of Robins’ punitive damages liability to various classes or subclasses of plaintiffs is determined. In the meantime, at least, the resolution of many claims may be delayed. Further, once that issue is resolved, final resolution of many lawsuits may be further delayed: Robins’ incentive to promptly resolve Daikon Shield lawsuits may be diminished rather than enhanced once the uncertainty of the extent of liability is removed.

Thus, it is unclear whether the combined effect of a nationwide punitive damages class action would facilitate or hinder the ultimate termination of the Daikon Shield litigation. Even assuming that earlier termination would transpire, the Court must also consider whether earlier termination by means of a nationwide punitive damages class action would be in the public interest. If it were accompanied by greater overall unfairness to plaintiffs, or by greater overall litigation expenses, the “public interest” would not necessarily be well served. In view of both the uncertainty in whether earlier termination would transpire and the uncertainty about whether earlier termination would be in the “public interest,” the Court must conclude that Robins has failed to show the requisite “clear and convincing” need for redetermination.

Although Robins has not made the argument, the Court is aware of the possibility that precluding relitigation of the class action question, which was before the Ninth Circuit, may adversely affect both Daikon Shield plaintiffs not participating in these proceedings and Robins employees and the communities in which they live. In the event of Robins’ bankruptcy through a series of substantial punitive damage awards, for example, both groups could be adversely affected. Robins has indicated, in response to this Court’s order, that punitive damage claims totaling in excess of 13 billion dollars remain pending.

At this point in the Daikon Shield litigation, however, this Court cannot, absent speculation, conclude that Robins’ bankruptcy will occur. It is even more speculative that such an eventuality would have an overall adverse impact — on either Daikon Shield plaintiffs, or Robins employees and their communities — that would justify relitigation of the class action issue. In this regard, the Court also notes that not a single Daikon Shield plaintiff has come forward in support of a nationwide punitive damages class action. This suggests that plaintiffs themselves are not currently concerned about the prospect of being shortchanged on punitive damages. In short, the Court perceives no “clear and convincing need” for relitigation due to the potentially adverse effects of the prior decision on the public interest or on plaintiffs who did not participate in the initial class action determination.

The Court would be remiss, however, if it were to fail to comment that, in its view, there is an obvious danger that amongst the thousands of plaintiffs whose cases are still to be litigated are some who, because of proceedings which precede theirs may capture a hollow victory. There persists in the Court’s mind the admonition of the Chief Justice in another context that “One vehicle can carry only a limited amount of baggage.” While the instant ruling is required under the Court’s view of the law, it encourages counsel for the parties, including those who are not presently before it, to exercise the talent and ingenuity demanded of those of our profession to devise, within the framework of the law, a procedure which will fairly and expeditiously conclude this massive litigation. While an expeditious conclusion is an appropriate goal, it must, if necessary, be subordinated to a conclusion of these matters in a manner which renders justice to all of the parties. The Court stands ready to assist, within its appropriate role, to the end that all litigants receive the benefits of a system of justice which is capable of meeting any challenge. It can, must, and will be accomplished.

CONCLUSION.

For the reasons discussed aboye, collateral estoppel precludes this Court from reconsidering the issue of whether a nationwide punitive damages class action in the Daikon Shield litigation can be maintained.

An appropriate order will issue.

      . The proposed class would deal only with Robins’ liability for punitive damages. Robins does not seek to certify here a class action to determine its liability for compensatory damages.

      . The district court certified a class consisting of "all persons who have asserted claims for punitive damages against A.H. Robins Company relating to the Daikon Shield____’’ Daikon Shield, 526 F.Supp. at 921.
      Here, the proposed class is slightly broader. Robins seeks to certify a class consisting not only of all persons who have asserted claims for punitive damages, but of "all persons who allege injury arising out of the use of the Daikon Shield, or who may allege such injury in the future " (emphasis added).

      . For a brief history, see the district court’s opinion in Dalkon Shield, 526 F.Supp. at 892-893.

      . The order certified two classes. The class relevant here was the nationwide punitive damages class. The district court had also certified a statewide class on all issues of liability. The order establishing both classes was certified for interlocutory appeal.

      . Robins does not attempt to avoid collateral estoppel based on the slight differences between the proposed class here and the class at issue in the Ninth Circuit, and the corresponding argument that the issues are not the same as a result.

        See supra note 2.

      . It is to be kept in mind that the instant issue is limited solely to that which was before the Ninth Circuit. Nothing in the Court’s opinion is intended to, nor should it be construed as addressing the propriety of certifying or refusing to certify a class on either compensatory or compensatory and punitive damages.

      . Although it is plaintiffs who raise the collateral estoppel doctrine here, their invocation of the doctrine is "defensive,” and "offensive”: they seek to estop Robins from getting the relief it seeks (rather than seek to obtain relief against Robins, which would be "offensive” collateral estoppel). See Parklane Hosiery v. Shore, supra, 439 U.S. at 329, 99 S.Ct. at 650.

      . The fourth prerequisite is numerosity. See Fed.R.Civ.P. 23(a). Apparently no one has ever questioned that the numerosity requirement is satisfied.

      . See Robins' Memorandum in Opposition to the Application of Collateral Estoppel, at 10.

      . Swann v. Board of Education, 402 U.S. 1, 11, 91 S.Ct. 1267, 1273, 28 L.Ed.2d 554 (1970).


source: Caselaw Access Project

author: BUA, District Judge.

license: Public Domain

text:
    UNITED STATES of America ex rel. Max CERDA, Petitioner, v. Jim GREER, Warden, et al., Respondents.
    No. 84 C 10919.
    United States District Court, N.D. Illinois, E.D.
    July 22, 1985.
    Max Cerda, pro se.
    Neil F. Hartigan, Atty. Gen. of Illinois by Scott Graham, Asst. Atty. Gen., Chicago, 111., for respondents.
   MEMORANDUM ORDER

BUA, District Judge.

Following a jury trial in the Circuit Court of Cook County, Max Cerda was found to be guilty of the murders of Ralph and Isaac Negron and for the attempted murder of Yolanda Guieterrez. The Illinois Appellate Court affirmed the conviction. People v. Cerda, No. 83-629 (Ill.App. 1st Dist. August 4, 1983). Cerda, (“petitioner”) has moved for a writ of habeas corpus pursuant to 28 U.S.C. § 2254.

Petitioner’s action was filed in the United States District Court for the Southern District of Illinois, East St. Louis Division. Petitioner raised seven issues which challenged his conviction for two counts of murder and one for attempted murder. Respondents answered the petition and moved for dismissal of the cause. The district court granted respondents’ motion on six claims, but denied the motion concerning petitioner’s claim that his confession was involuntary under the fifth amendment to the United States Constitution. Petitioner was then transferred to Stateville Correctional Center and his case was transferred to this Court. Presently before this Court is respondents’ motion for summary judgment on petitioner’s remaining claim, that his confession was involuntary under the fifth amendment. For the reasons stated herein, respondents’ motion for summary judgment is granted.

I. FACTS

On April 22, 1979, Ralph and Isaac Negron were shot and killed and Yolanda Guieterrez was shot and injured. On April 23, 1979, at approximately 1:00 a.m., Max Cerda was arrested at his home and taken to the police station for his alleged involvement in the above incident. He gave a written confession 17 hours later. Cerda was 16 years old at the time.

Cerda claims that his confession was involuntary under the fifth amendment. He argues that the police questioned him repeatedly over a 17-hour period and wore him down before he admitted that he was present at the crime and had a weapon. He also claims that during the 17-hour period he was not allowed to talk to his parents.

II. DISCUSSION

The Supreme Court has repeatedly emphasized the “high measure of deference” to which state court factual findings are entitled under 28 U.S.C. § 2254(d). See Sumner v. Mata, 455 U.S. 591, 598, 102 S.Ct. 1303, 1307, 71 L.Ed.2d 480 (1982). The Illinois Appellate Court determined that petitioner’s fifth amendment rights were not violated by the conduct of the police prior to petitioner’s confession. The Illinois Appellate Court noted that:

The record discloses that during the seventeen-hour period in which the defendant was in custody prior to giving his written statement, he was read his Miranda rights at least five times and was interviewed four times by either an Assistant State’s Attorney or a police officer. None of the four interviews lasted for a period of more than thirty-five minutes. The interviews took place at 4:00 a.m., 9:00 a.m., 12:00 a.m., and 6:00 p.m. At 7:00 a.m. an Assistant State’s Attorney read the defendant his Miranda rights but did not interview him at this time. In addition, at approximately 5:30 a.m., the defendant accompanied two police officers when they went to locate the house of one of the co-offenders implicated by the defendant.
The record also discloses that the defendant’s mother was present when the defendant was arrested in his home at 1:00 a.m. The defendant also saw his mother the next afternoon when she brought food to him.
At the times when the defendant was read his Miranda rights and agreed to talk with investigators, he stated that he understood his rights and that he realized that the events that had occurred were of a serious nature.

People v. Cerda, No. 83-629 at 14 (III.App. 1st Dist. August 4, 1983).

In this case, petitioner has not even attempted to demonstrate that the state proceedings were anything less than full and fair or show how those findings were not supported by the record. In fact, petitioner has failed to respond to respondents’ motion for summary judgment. Petitioner contends that his confession was involuntary under the fifth amendment. Therefore, because the petition does not allege any discrepancies regarding the facts found by the Illinois courts, the sole issue before this Court is whether the state court finding that petitioner’s confession was voluntary, findings which must be presumed to be correct, are supported by the record.

The prosecution has the burden of showing that petitioner’s confession was voluntarily given. Lego v. Twomey, 404 U.S. 477, 489, 92 S.Ct. 619, 626, 30 L.Ed.2d 618 (1972). It is well-settled that the test for determining the voluntariness of a suspect’s confession is whether the “totality of the circumstances” demonstrates that the accused made the decision to confess of his own free will. Pikes v. Alabama, 352 U.S. 191, 77 S.Ct. 281, 1 L.Ed.2d 246 (1957); Holleman v. Duckworth, 700 F.2d 391, 396 (7th Cir.1983).

The Supreme Court has recognized a number of factors to be considered in determining voluntariness. Included are: 1) the degree of compulsion exerted over the defendant (see Brown v. Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682 (1936)); 2) the use of fear (see Malinski v. New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029 (1945)); 3) the duration of questioning (see Spano v. New York, 360 U.S. 315, 79 S.Ct. 1202, 3 L.Ed.2d 1265 (1959)); 4) threats made against the defendant (see Lynumn v. Illinois, 372 U.S. 528, 83 S.Ct. 917, 9 L.Ed.2d 922 (1963)); and 5) the age of the accused (see Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224 (1948)).

The issue is whether the petitioner’s confession was voluntary in light of the factual setting and the above-mentioned factors which are to be considered. In Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224 (1948), a 15-year-old suspect was questioned for five hours by two policemen at a time. He was not orally advised of his right to remain silent and was held incommunicado for five days. The confession that followed such treatment was held to be involuntary. In Gallegos v. Colorado, 370 U.S. 49, 82 S.Ct. 1209, 8 L.Ed.2d 325 (1962), a 14-year-old suspect was held in detention for five days without access to his mother. The Supreme Court stated that a 14-year-old, no matter how sophisticated, is unlikely to have any conception of what will confront him when he is made accessible to the police. “We deal with a person who is not equal to the police in knowledge and understanding of the consequences.” Id. at 54, 82 S.Ct. at 1212.

The present case, though in some ways similar, stands in stark contrast to the Supreme Court decisions which petitioner relies on. Unlike the suspects in the Haley and Gallegos cases, Cerda, though still a youth, was 16 years of age at the time of his arrest. In the 17 hours of confinement, Cerda suffered no physical harm and was not mistreated in any way. He was informed of his Miranda rights five times. Cerda made it clear that he understood his rights and knowingly waived his right to counsel. In addition, he was visited by his mother and given food. He was able to seek parental advice. Although questioned at four different times the length of questioning never exceeded 35 minutes. Considering the seriousness of the crime, the duration of questioning was certainly not unreasonable.

Petitioner’s counsel argued before the appellate court that lack of sleep and continued questioning wore the petitioner down until he finally confessed. This Court disagrees. The record indicates that petitioner had ample time between questioning to sleep. The record also indicates that petitioner was never compelled to confess. The only sign of coercion by the police was one officer allegedly warning Cerda to tell the truth or he would “get his ass kicked.” People v. Cerda and Esquivel, No. 79 C 3828, Transcript at 261-62 (Criminal Court, Cook Co., Ill. Aug. 15, 1980). Such a warning does not constitute the degree of coercion necessary to negate an otherwise voluntary confession. See Brown v. Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682 (1936).

In summary, it is true that the petitioner, being only 16 years of age, was probably scared and possibly intimidated by the police. The record, however, shows that the police did not compel the petitioner to confess through either the use of threats or fear. Neither does the record support petitioner’s argument that he confessed out of weariness due to lack of sleep and frequent questioning. Accordingly, based upon a review of the trial court’s record and considering the totality of the circumstances surrounding his confession, this Court holds that the State met its burden of showing that the petitioner voluntarily waived his Miranda rights and that his subsequent confession was voluntarily made.

CONCLUSION

For the reasons stated above, respondent’s motion for summary judgment is granted. Accordingly, the petition for a writ of habeas corpus is hereby dismissed.

IT IS SO ORDERED.

      . The factual background of the case is set out fully in the Illinois Appellate Court’s opinion at
        People v. Cerda, No. 83-629 (III.App. 1st Dist. August 4, 1983).


author: HARPER, District Judge.

text:
    Jay WEBB and Judy Webb, and Roy Webb and Mickey Webb, Plaintiffs, v. R. ROWLAND & COMPANY, INC., Douglas C. Gast, Randall Moore, William Brandt, and Paul L. Matecki, Defendants.
    No. 85-1272C (A).
    United States District Court, E.D. Missouri, E.D.
    July 22, 1985.
    Kenton E. Knickmeyer, Nicholas H. Ores, St. Louis, Mo., for plaintiffs.
    Joseph F. Devereux, Jr., Timothy R. Barrett, Kevin F. O’Malley, Gary S. Godwin, St. Louis, Mo., for defendants.
   MEMORANDUM AND ORDER

HARPER, District Judge.

This matter is before the Court on the motion of defendants, R. Rowland & Company, Inc., Douglas C. Gast and Paul L. Matecki, to compel arbitration. Plaintiffs’ complaint enumerates several federal and state security law violations as well as a host of assorted common law causes of action. Subsequent to defendants’ motion, plaintiffs filed an amended complaint adding a count seeking damages under the Racketeer Influenced and Corrupt Orga- . nizations Act (RICO), 18 U.S.C. § 1961 et seq.

By their motion, the moving defendants seek an order compelling arbitration for not only the state-law claims, but also the federal-law claims against them. Alternatively, said defendants seek arbitration for the state-law claims and a stay of judicial proceedings on the federal-law claims pending the completion of the arbitration. Plaintiffs’ federal-law claims, Counts II and III, arise under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and the rules promulgated thereunder, 17 CFR 240.10b-5. This Court recognizes jurisdiction of this matter pursuant to 15 U.S.C. § 78aa; 28 U.S.C. § 1331, and pendent jurisdiction of the state-law claims.

Each plaintiff signed a Customer’s Agreement providing that “[a]ny controversy between you and the undersigned * * arising out of or relating to this agreement of the performance or breach thereof shall be settled by arbitration.” (Defendants’ Exhibit A). It is this provision defendants want to enforce by their motion to compel arbitration.

Although section 3 of the Federal Arbitration Act permits a party to compel arbitration of any “issue referable to arbitration under an agreement in writing for such arbitration,” 9 U.S.C. § 3, an exception to this statute has been established for certain federal claims. In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953) (Wilko), the Supreme Court held that an agreement to arbitrate issues arising under the Securities Act of 1933 is invalid and unenforceable against an investor. Id. at 438. The Eighth Circuit Court of Appeals in Surman v. Merrill Lynch, Pierce, Fenner & Smith, 733 F.2d 59 (8th Cir.1984) (Surman) (a case originating in this Court), expressed a view that Wilko also applies to claims arising under the 1934 Securities Exchange Act or regulations promulgated thereunder. Thus, as to plaintiffs' federal securities claims, 10(b) and Rule 10b-5, this Court must retain its jurisdiction.

Concerning plaintiffs’ state-law claims, the recent Supreme Court opinion of Dean Witter Reynolds, Inc. v. Byrd, — U.S. ---, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (Byrd) offers controlling guidance. In Byrd, the Supreme Court decided the issue of “whether to compel arbitration of pendent state-law claims when the federal court will in any event assert jurisdiction over a federal-law claim.” The Court held “that the [Federal] Arbitration Act requires district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel.” Id. at ---, 105 S.Ct. at 1241. Thus, as to plaintiffs’ state-law claims, this Court may exercise no discretion but must order those claims into arbitration at defendants’ behest.

Notably, Byrd also holds that “neither a stay of [arbitration] proceedings, nor joined proceedings, is necessary to protect the federal interest in the federal-court proceedings, and that the formulation of collateral-estoppel rules affords adequate protection to that interest.” Id. at ---, 105 S.Ct. at 1243. This is not to say that the judicial proceeding, as to the federal claims, may not be stayed pending completion of arbitration. As such, this Court concludes that the interests of the parties and judicial efficiency would best be served by staying plaintiffs’ federal-law claims against defendants pending resolution of the state-law claims.

This Court appreciates receiving Defendants’ Exhibit D (Judge Limbaugh’s memorandum and order in Causes No. 83-159C(5) and 83-1356C(5), filed 5/3/85.) Although Judge Limbaugh ordered certain 10(b) and Rule 10b-5 claims into arbitration, there is no indication from his memorandum that he considered the Eighth Circuit’s view in Surman of Wilko’s applicability to claims arising under the 1934 Securities Exchange Act. This Court, also on 5/3/85, in Cause No. 85-334C (A), has previously recognized and followed the view of Surman on this matter.

Accordingly, plaintiffs and said defendants, R. Rowland & Company, Inc., Douglas C. Gast and Paul L. Matecki, are ordered to initiate arbitration of the matters raised by Counts V (violations of § 409.411 RSMo.), VI (conspiracy to violate § 409.411 RSMo.), VIII (excessive trading of securities account), IX (conspiracy resulting from excessive trading of securities account), XI (fraudulent misrepresentation), XIII (breach of fiduciary duty), XV (negligence), XVI (common law duress), and XVII (breach of bailment duty) of the complaint within thirty days of the date of the entry of this order, or have said claims dismissed for failure to prosecute.

It is further ordered that matters raised by Counts II (violations of 15 U.S.C. § 78j(b) and 17 CFR 240.10b-5) and III (conspiracy to violate 15 U.S.C. § 78j(b) and 17 CFR 240.10b-5) of the complaint, and Count XVIII (18 U.S.C. § 1964) of the amended complaint, be stayed pending resolution of the arbitration of Counts V, VI, VIII, IX, XI, XIII, XV, XVI and XVII.


author: CRABB, Chief Judge.

text:
    Kirby TUCKER, Plaintiff, v. Walter DICKEY, Gordon Abrahamson, Dennis Nitschke, and James Sherer, Defendants.
    No. 84-C-653-C.
    United States District Court, W.D. Wisconsin.
    July 23, 1985.

      Kirby Tucker, pro se.
    Sue Kanner, Madison, Wis., for defendants.
   CRABB, Chief Judge.

This is a civil case in which plaintiff seeks monetary damages, injunctive and declaratory relief for alleged violations of his rights under the Fourth and Fourteenth Amendments. The case is before the court on the parties’ cross motions for summary judgment. There is jurisdiction over plaintiff’s constitutional claims under 42 U.S.C. § 1983 and 28 U.S.C. § 1343.

Defendants have submitted a brief and proposed findings of fact and conclusions of law in support of their motion for summary judgment. In a letter dated March 9, 1985, plaintiff indicated that he was unable to put together a brief and proposed findings of fact without help. I construe this letter as a request for the appointment of counsel. Although I do not believe that appointment of counsel is necessary either to assist plaintiff in presenting his arguments on the cross motions for summary judgment or to aid the court in ruling on those motions, I will give consideration to plaintiff’s request after resolving the motions.

From the uncontroverted proposed findings of fact submitted by defendants, I find that there is no dispute as to the following facts.

FACTS

At all material times, plaintiff was an inmate confined at Dodge Correctional Institution, Waupun, Wisconsin.

At all material times, defendants were employees of the State of Wisconsin, Department of Health and Social Services. Defendant Dickey was the Administrator of the Division of Corrections; defendant Abrahamson was the Superintendent of Dodge Correctional Institution; and defendants Nitschke and Sherer were correctional officers at Dodge Correctional Institution.

On June 7, 1984, certain inmates at Dodge Correctional Institution were told to give urine samples in connection with a study being undertaken by the Division of Corrections. The purpose of the study was to determine whether illicit drugs were being used in Wisconsin correctional institutions and, if so, by how many inmates. The Division intended to use this information to assist it in dealing with the drug problem. The inmates participating in the study were chosen at random from a computer listing. Fifteen percent of the inmates confined in Wisconsin correctional institutions were selected to participate in the study. Defendant Dickey believed that in order to achieve reliable results and a truly random sample it was necessary for every inmate selected to participate.

Plaintiff was one of the inmates selected at random to provide a urine specimen. At approximately 5:00 a.m. on June 7, 1984, defendant Sherer entered plaintiff’s cell, awakened him, and gave plaintiff a container and a photocopy of a statement from defendant Dickey. The statement read as follows:

Be advised and assured that the urine sample taken on 6-7 1984 at DCI is for research purposes and will be anonymous. No disciplinary or punitive action will be taken against any inmate because of the results obtained, /s/ Walter J. Dickey

Defendant Sherer told plaintiff that a urine sample would have to be supplied. Plaintiff refused to give a urine sample, and defendant Sherer threatened that if plaintiff refused to do so he would be given a conduct report for disobeying orders.

As a consequence of plaintiff’s refusal to give a urine sample, he was issued a conduct report (No. 37928) charging him with violating Wis.Adm.Code § HSS 303.24, Disobeying Orders. On June 8, 1984, defendant Nitschke decided to treat the conduct report as a major offense. Defendant Nitschke indicated on the conduct report that treatment as a major offense was justified under Wis.Adm.Code § HSS 303.68(c). On June 8, 1984, plaintiff was given a copy of the conduct report and a “Notice of Major Disciplinary Hearing Rights and Waiver of Formal Hearing.”

On June 18, 1984, a disciplinary hearing was held on the conduct report against plaintiff. At the hearing, plaintiff read a “Statement to Disciplinary Committee,” in which he stated inter alia that defendant Sherer “informed me that I would have to give a urine sample” and that defendant Sherer “said that he would have to give me a ticket for not giving a urine sample because he had orders from the captain.” The disciplinary hearing committee members found plaintiff guilty of disobeying orders and sentenced him to “5 nights room confinement.” The disciplinary committee gave as its reason for its finding of guilt that plaintiff “acknowledged that he refused to give a urine sample as told by the officer.”

Plaintiff appealed the decision to defendant Abrahamson. In his appeal, plaintiff contended that it was improper for inmates to be ordered to provide urine samples for research purposes and that he had not been given a direct order. On June 25, 1984, defendant Abrahamson affirmed the finding of guilt and the disposition.

In a letter dated June 12, 1984, to Governor Anthony S. Earl, plaintiff expressed his concerns regarding the propriety of taking urine samples from inmates for research purposes and the fact that his conduct report had been treated as a major offense. Plaintiff sent copies of the letter to defendants Dickey and Abrahamson. In a letter dated July 6, 1984, defendant Dickey responded to plaintiffs letter of June 12. Defendant Dickey advised plaintiff of the purpose of the urine samples, and that refusal of an inmate to provide a sample is considered a violation of Wis.Adm.Code § HSS 303.24 that creates a risk of serious disruption. In a letter dated July 8, 1984, plaintiff repeated to defendant Dickey the concerns expressed in his June 12 letter.

OPINION

Plaintiff was granted leave to proceed in forma pauperis on two claims: (1) the claim that plaintiffs right to privacy under the Fourth Amendment and as a matter of substantive due process was violated by the order to provide a urine sample and by the penalty he received for refusing to provide one; and (2) the claim that plaintiffs due process rights were violated at his disciplinary hearing because of the inadequacy of the hearing record and the insufficiency of the reasons given for treating the charge against plaintiff as a major offense. Defendants contend for various reasons that the alleged conduct did not violate any of plaintiffs constitutional rights, and that even if plaintiffs rights were violated, defendants are not liable. I turn first to the right of privacy issues.

Right of Privacy

Defendants contend that an order to a prisoner to submit to urinalysis does not infringe improperly on any interest protected by the Fourth Amendment or the substantive due process right to privacy, although they seem to concede that the taking of a urine sample is a “search” for Fourth Amendment purposes, just as the taking of a blood sample is a search. Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966); Storms v. Coughlin, 600 F.Supp. 1214, 1217-18 (S.D.N.Y.1984).

Defendants contend, however, that as a prisoner plaintiff had no legitimate expectation of privacy in his person that would be protected by the Fourth Amendment. In making this argument, defendants rely on Hudson v. Palmer, — U.S. ---, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984), in which the Supreme Court held that prisoners have no “legitimate” or “justifiable” or “reasonable” expectation of privacy in their prison cells. Id. 104 S.Ct. at 3199-3201. Reasoning that any “subjective expectation of privacy that a prisoner might have in his prison cells. Id. 104 S.Ct. at 3199-01. riding needs of security in the prison context, id. at 3200-01, the Court deferred to the need of prison officials for “[ujnfettered access” to prison cells in order to prevent inmates from concealing weapons, drugs and other contraband. Id. at 3200. The Court concluded, “A right of privacy in traditional Fourth Amendment terms is fundamentally incompatible with the close and continual surveillance of inmates and their cells required to ensure institutional security and internal order.” Id. at 3201.

Defendants suggest that it is logical to extend the holding of Hudson to the instant case, pointing out that the same concern with drug use that led to the urine sampling program in the instant case was identified as a serious concern in Hudson. Id. at 3200. However, neither Hudson nor any justifiable interpretation of the Fourth Amendment warrants such an extension. Hudson neither held nor implied that prisoners have no justifiable expectation of privacy in their persons, see id. at 3216 n. 31 (Stevens, J., dissenting); United States v. Caldwell, 750 F.2d 341, 343 n. 2 (5th Cir.1984) (body cavity searches) (dicta); Storms v. Coughlin, 600 F.Supp. at 1223-24, and the rationale of the case does not justify a finding that plaintiff lacked any legitimate expectation of privacy in the instant case.

First, the relationship between institutional security and a study to determine the extent and nature of drug use in prisons is considerably less direct and immediate than the relationship between security and the search of an inmate’s cell for contraband. Second, while there is an “inherent diminution” in the privacy of a person’s surroundings when incarcerated, the “body undergoes no such fundamental change when incarcerated. The surroundings become less private; the body remains the same.” Storms v. Coughlin, 600 F.Supp. at 1224. The Supreme Court has asserted repeatedly that “prisons are not beyond the reach of the Constitution.” Hudson v. Palmer, 104 S.Ct. at 3198; see also Bell v. Wolfish, 441 U.S. 520 at 545, 99 S.Ct. 1861 at 1877, 60 L.Ed.2d 447 (1979); Jones v. North Carolina Prisoners' Labor Union, 433 U.S. 119, 129, 97 S.Ct. 2532, 2539, 53 L.Ed.2d 629 (1979); Wolff v. McDonnell, 418 U.S. 539, 555-56, 94 S.Ct. 2963, 2974, 41 L.Ed.2d 935 (1974). That being so, prisoners must retain at least some limited protection against highly intrusive searches.

It is more difficult to define the extent of the privacy rights retained by prisoners, given the important interest in institutional security and the deference courts must afford to prison officials. See Bell v. Wolfish, 441 U.S. at 547, 99 S.Ct. at 1878. In Wolfish, the Court held that the basic test is one of “reasonableness." Id. at 559, 99 S.Ct. at 1884. The reasonableness test requires in each case

a balancing of the need for the particular search against the invasion of personal rights that the search entails. Courts must consider the scope of the particular intrusion, the manner in which it is conducted, the justification for initiating it, and the place in which it is conducted.

Id. This reasonableness inquiry must be conducted in a spirit of “wide-ranging deference” to prison officials “in the adoption and execution of policies and practices that in their judgment are needed to preserve internal order and to maintain institutional security.” Id. at 547, 99 S.Ct. at 1878.

However, there are limits to the general rule of deference that Wolfish establishes. In Beckett v. Powers, 494 F.Supp. 364 (W.D.Wis.1980), I held that Wolfish requires deference only if:

(1) the practice serves the needs of the institution for security, order and discipline; (2) the practice reflects an informed judgment of prison administrators; and (3) the practice is not an exaggerated response to legitimate institutional needs. Thus, the Wolfish rule of deference does not preclude all judicial review of prison practices. However, it does mean that when the prison practice has a security purpose, there is a heavy burden on those challenging the practice.

Id. at 367 (emphasis original) (citations omitted). The question whether deference is required has a crucial effect on the burden of proof. If deference is not required, the government bears the burden of proof, although in the prison context it need show only that the search was reasonable. See United States v. Lilly, 576 F.2d 1240, 1244-45 (5th Cir.1978). However, if deference is required, a heavy burden falls on the plaintiff. Beckett v. Powers, 494 F.Supp. at 367. Of course, on a motion for summary judgment, the burden is on the movant to establish that it is entitled to judgment in its favor as a matter of law. Thus, it must show that plaintiff could make no factual showing that would support his claims.

Under Wolfish and Beckett, the first question that must be answered is whether the urine sampling had a security purpose. Defendants contend that it did because its purpose was to produce a study that would be used in dealing with the drug problem in Wisconsin prisons. I am willing to accept the proposition that drugs are a major security problem in prisons both in Wisconsin and throughout the country. See Hudson v. Palmer, 104 S.Ct. at 3200; Storms v. Coughlin, 600 F.Supp. at 1220 (taking judicial notice of seriousness of drug problem). However, the relationship of the urine sampling program to institutional security must be more closely examined. According to defendant Dickey’s affidavit, sampling was to be anonymous, and no prosecutorial action was to be taken based on the results of the samples. Thus, the sampling program would not contribute directly to prison security by apprehending drug users and deterring drug use. Instead, it would contribute only indirectly by improving the usefulness of a study on which future policy decisions would be based.

In this respect, the sampling program at issue in the instant case is different from two sampling programs whose constitutionality has been upheld in reported cases. In Storms, the court upheld a random sampling program that was used to apprehend drug users against a challenge that the program was per se unconstitutional, although it found unconstitutional some aspects of the way in which the program was applied. Storms v. Coughlin, 600 F.Supp. at 1220-24. In Hampson v. Satran, 319 N.W.2d 796 (N.D.1982), heavily relied on by defendants, the court upheld a similar program, although it is not clear from the opinion whether the sampling was random. In both cases, the relationship between the testing program and security was clear and direct.

In the instant case, whether defendants had a substantial security purpose for demanding plaintiff’s urine sample depends on whether the testing program itself had a security purpose. Defendants assert that the Division of Corrections intended to use the results of the program in dealing with the drug problem, but they do not offer any information as to how gathering information on the extent of drug use would be used to improve institutional security. It is possible to conceive of ways in which such information might be useful; for example, such a study would have at least academic interest for prison officials, although academic interest alone would not constitute a security purpose and would not justify such an intrusive procedure. However, I do not intend to engage in speculation about what security related purpose the study may have had, or simply assume from defendant Dickey’s assertions that the study did have a security purpose. Presumably defendants would be in the best position to inform the court concerning the purpose of the study, but they have been content with stating that they wanted one without saying specifically how the study related to security. Thus, I can make no factual finding concerning the security purpose for compelling plaintiff to give a sample.

The next factor that must be considered in the Wolfish analysis is the “scope of the particular intrusion” on personal rights. Bell v. Wolfish, 441 U.S. at 559, 99 S.Ct. at 1884. In Storms v. Coughlin, 600 F.Supp. at 1218-20, Judge Haight found that being forced to give a urine sample was comparable in intrusiveness to a blood test or a body cavity search. I cannot improve on Judge Haight’s analysis.

I find urinalysis analagous to a blood test. Although it involves no forced penetration of body tissues, as does a blood test, it does involve the involuntary extraction of bodily fluids. In that sense, if not literally, it is an “intrusion beyond the body’s surface.” Schmerber [v. California], 384 U.S. [757,] 769 [86 S.Ct. 1826 at 1835, 16 L.Ed.2d 908], Further, the “interests in human dignity and privacy,” id., at 769-70 [86 S.Ct. at 1835], which concerned Justice Brennan in Schmerber are plainly implicated when an inmate is forced to perform in the presence of a prison guard what is ordinarily regarded as a private bodily function. In a way in which having blood extracted could never be, being forced under threat of punishment to urinate into a bottle held by another is purely and simply degrading.
Urinalyses are entitled to the same level of scrutiny accorded body cavity searches. It may, perhaps, be debated whether one type of search offends “human dignity and privacy,” Schmerber, 384 U.S. at 770 [86 S.Ct. at 1835], more than the other, but the difference is a matter of degree, not kind. Both are degrading. It is this basic offense to human dignity, rather than any particular style of causing offense, which sets this type of search apart from traditional types.

Id. at 1218, 1220.

Given the conclusion that the need for the sampling program was relatively less than in the cases in which similar programs have been upheld, and that the scope of the intrusion on plaintiff’s privacy was significant, more importance attaches to the question whether the decision to conduct mandatory sampling was entitled to deference. I accept defendants' assertion that the practice reflected an informed decision because it is undisputed that defendant Dickey decided to undertake the mandatory testing program only after giving some consideration to the need for a mandatory testing program.

However, for the same reason that it is difficult to tell whether there was a substantial security purpose for the mandatory testing, it is difficult to tell whether the testing was an “exaggerated response” to the problem. Beckett v. Powers, 494 F.Supp. at 367. To the extent that there was a security purpose for the testing program, and to the extent that a truly random sample was necessary for the study to serve its security purpose, mandatory testing was reasonable and not an “exaggerated response.” Yet, it is precisely those points on which defendants have provided only assertions in place of evidence. I conclude that there are factual disputes which make it impossible to decide on a motion for summary judgment whether the decision to make the testing mandatory was entitled to deference. Therefore, I am unable to grant summary judgment to either party on the issue whether the testing program as a whole was unconstitutional.

Moreover, even if mandatory testing was constitutional, there may have been a violation of plaintiff’s rights if the manner of conducting the test was unreasonable. Schmerber v. California, 384 U.S. at 768, 86 S.Ct. at 1834; Storms v. Coughlin, 600 F.Supp. at 1221-24. There is no dispute about the manner in which the testing was conducted in the instant case. No prior notice was given to plaintiff that a test was to be conducted. No prior effort was made to inform plaintiff that the tests were to be conducted, that procedures were in place to ensure anonymity, that test results were not to be used in disciplinary proceedings, or that the purpose of the tests was research. Instead, defendant Sherer entered plaintiff’s cell at or around 5:00 a.m., a time when it might be anticipated that most inmates would be sleeping, awakened plaintiff, and handed him a slip of paper with a photocopy of a statement from defendant Dickey that the tests would be anonymous and would not be used for disciplinary proceedings. It was only when plaintiff resisted giving the sample that he was told it would be mandatory.

Defendants have offered no justification for this manner of proceeding. Prior notice would have reduced the fears of inmates that the sampling would not be anonymous, and could have been used to explain the purpose of the testing program to the prisoners, to inform them that a substantial number of their fellow inmates would also be giving samples, and to inform them of the mandatory nature of the testing and the reasons for mandatory testing. It is noteworthy that in both the eases in which random sampling was upheld, inmates were given prior notice of the existence of the testing program. Storms v. Coughlin, 600 F.Supp. at 1216; Hampson v. Satran, 319 N.W.2d at 797 (inmates notified a day in advance that they would be tested). If North Dakota found it feasible to notify inmates a day in advance of testing when the results were to be used for disciplinary purposes, it is difficult to conceive of a reason why advance notice could not have been given in the instant case. Defendants have offered none.

The lack of advance notice was compounded by the manner in which the sampling was conducted. Plaintiff was awakened from sleep, handed a container and a note explaining the proceedings in a very cursory fashion, and told to urinate into the container. There does not appear to have been any reason for conducting the sampling in such a fashion, which could only heighten the offensiveness of an already offensive and intrusive procedure. Defendants have had ample opportunity to explain the manner in which the testing was conducted, but have not attempted to do so. Therefore, there is at least a genuine issue of fact concerning whether the manner in which the testing was conducted violated plaintiffs constitutional rights.

However, I do not believe that it would be appropriate to grant summary judgment for the plaintiff. First, questions of reasonableness are usually determined at trial rather than on a motion for summary judgment. Second, there is insufficient evidence in the record concerning who was responsible for the manner in which the test was conducted apart from defendant Sherer. It may be inferred that defendant Dickey had some responsibility, inasmuch as it appears that defendant Dickey was responsible for the implementation of the testing program as a whole. It might also be inferred from defendant Abrahamson’s position as warden of the institution that had some knowledge of the manner in which such an unusual procedure was carried out. Cf. Duncan v. Duckworth, 644 F.2d 653 (7th Cir.1981). However, such inferences are clearly insufficient to establish personal responsibility as an undisputed fact, and personal responsibility is a requirement for liability under 42 U.S.C. § 1983. Adams v. Pate, 445 F.2d 105 (7th Cir.1971). he

Defendants argue next that even if plaintiffs constitutional rights were violated, defendants are immune from liability for any injuries suffered by plaintiff under the doctrine of good faith or qualified immunity. Under Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), government officials are entitled to immunity from damages “insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Id. at 818, 102 S.Ct. at 2738. Insofar as possible, judges are to determine in advance of trial whether the law that an official was found to have violated was “clearly established at the time an action occurred.” Id.

Defendants contend that there were no cases prior to June 1984 that clearly established that the mandatory testing program violated plaintiffs constitutional rights. It is true that in June 1984, there were no reported eases dealing with a urine testing program for research purposes of the type involved in the instant case. In what was apparently the only reported case dealing with a urine testing program used for disciplinary purposes, a state supreme court had held the program constitutional. Hampson v. Satran, 319 N.W.2d 796. However, prior to 1984 it was “clearly established” that highly intrusive searches of the type involved here must meet the “reasonableness” test of Bell v. Wolfish, 441 U.S. at 559, 99 S.Ct. at 1884. Because of the lack of evidence in the record concerning the purpose of the mandatory testing program, I cannot tell whether it met the Wolfish standard in the instant case. Moreover, if the mandatory testing lacked a security purpose, it may have been so unreasonable that the defendants should have known that it would violate “clearly established” rights. Also, it is possible that defendants should have known that the manner of taking the sample would violate plaintiffs rights. Accordingly, on the present record I must deny defendants’ motion for summary judgment on plaintiff’s damages claim.

Due Process

Plaintiff was granted leave to proceed against defendants Dickey, Abraham-son, and Nitschke on claims that they either participated in or acquiesced in violations of his right to due process in connection with the hearing on the disobeying orders charge against plaintiff. Petitioner contends that the hearing violated due process in several respects.

First, plaintiff contends that his right to call witnesses was violated. Defendants point out that none of them directly participated in the alleged events that culminated in plaintiff’s not being allowed to call witnesses. Defendants also point out that plaintiff failed to raise this issue in his appeal to defendant Abrahamson, or in his letters to defendant Dickey and Governor Earl. The concept of respondeat superior liability does not apply to actions under 42 U.S.C. § 1983, and consequently plaintiff must show that each of the defendants was personally involved in any violation of his right to due process in order to recover damages. Adams v. Pate, 445 F.2d 105 (7th Cir.1971). Since there appears to be no genuine factual dispute concerning the personal involvement of the defendants, defendants will be granted summary judgment on this claim.

Plaintiff contends next that his due process rights were violated by defendants’ failure to justify the treatment of the disobeying orders charge as a major offense. Defendants contend in response that the due process clause is not implicated in a decision to treat a charge as a minor or major offense. In resolving this dispute, I must examine the applicable regulations, as the Supreme Court has held that an interest protected by the due process clause may derive from a state statute or regulation if the regulation combines mandatory language with “specific substantive predicates.” Hewitt v. Helms, 459 U.S. 460, 472, 103 S.Ct. 864, 871, 74 L.Ed.2d 675 (1983). Under Wis.Adm.Code § HSS 303.-68(3), certain violations are always treated as major offenses. Under Wis.Adm.Code § HSS 303.68(4), the security director is to decide whether to treat other offenses as a major or as a minor offense. Section HSS 303.68(4) provides as follows:

An alleged violation of any section other than ones listed in sub. (3) may be treated as either a major or minor offense. The security director shall decide whether it should be treated as a major or minor offense____ In deciding whether an alleged violation should be treated as a major or minor offense, the security director shall consider the following criteria and shall indicate in the record of disciplinary action the reason for the decision based on these criteria: ...

(emphasis supplied).

These provisions give the security director discretion in making the decision to treat the alleged offense as major or minor. However, the mandatory language of the final sentence prohibits the security director from treating as major one of the offenses not listed as major under § HSS 303.68(3) unless the director indicates in the record that he has considered the criteria, and gives reasons for his decision based on the criteria. Therefore, plaintiff had a limited liberty interest in defendant Nitschke’s compliance with those requirements.

The only indication in the record concerning defendant Nitschke’s reasons for treating the alleged offense as a major offense is a notation by defendant Nitschke in the conduct report, “Justify Major 303.-68(3)(c).” Apparently the reference is to current Wis.Adm.Code § HSS 303.68(4)(c), which provides that the creation of a “risk of serious disruption at the institution or in the community” is one of the criteria that would support a decision to treat a violation as a major offense. This notation indicates that defendant Nitschke did consider the enumerated criteria and gave a reason for his decision based on the criteria, albeit in a very cursory fashion. It would appear that this notation satisfies due process, since the purpose of requiring the security director to give reasons is not to justify his decision, but simply to ensure that he relies on the specified criteria, and not on other criteria not permitted by the regulation. Although I share plaintiffs scepticism concerning whether his refusal to give a urine sample created a “risk of serious disruption,” it was within defendant Nitschke’s discretion to make the decision he did.

Finally, plaintiff contends that the statement of reasons for finding him guilty was inadequate. When an inmate is found guilty on disciplinary charges, the hearing body must provide a sufficiently detailed statement of its reasons in order for a reviewing court to determine whether its actions were arbitrary and capricious. Wolff v. McDonnell, 418 U.S. 539, 565, 94 S.Ct. 2963, 2979, 41 L.Ed.2d 935 (1974); Chavis v. Rowe, 643 F.2d 1281, 1287 (7th Cir.1981). Ordinarily, this requires the hearing body to do more than give a conclusory statement that it accepts the conduct report or that it disbelieves the inmate. Instead, it must indicate specifically what evidence it relies on and why it discounts the inmate’s evidence. Redding v. Fairman, 717 F.2d 1105, 1114-15 (7th Cir.1983). However, if the inmate’s testimony does not contradict the report, then the hearing body’s statement of reasons does not need to be as detailed. Id. at 1115-16.

The disciplinary committee gave as its reason for the decision that plaintiff had “acknowledged that he refused to give a urine sample as told by the officer.” At times plaintiff has contended that he was not given a direct order by defendant Sherer. However, in a “Statement to Disciplinary Committee” which plaintiff read at his hearing and which he attached to his complaint, plaintiff stated that defendant Sherer “informed me that I would have to give a urine sample” and that defendant Sherer “said he would have to give me a ticket for not giving a urine sample because he had orders from the captain.” Under Wis.Adm. Code § HSS 303.24(l)(a), any inmate who disobeys a “verbal or written order from any staff member” is guilty of the offense of disobeying orders. On the basis of plaintiff’s statement, the disciplinary committee could have found that plaintiff had admitted refusing to obey an order, and the statement of reasons adequately reflects that finding. Accordingly, defendants will be granted summary judgment on this claim as well.

Appointment of Counsel

Under 28 U.S.C. § 1915(d), when a party has been granted leave to proceed in forma pauperis the court may request an attorney to represent the party. Section 1915(d) does not require that counsel be appointed for every person who is unable to pay a lawyer, and Congress has not provided the funds necessary to compensate a lawyer who might agree to represent plaintiff. There are not enough lawyers who can absorb the costs of representing persons on a voluntary basis to permit appointment of counsel for all who request it. However, appointment of counsel may not be denied for lack of funds; the request must be considered in light of the circumstances of each case. Maclin v. Freake, 650 F.2d 885 (7th Cir.1981).

Factors that should be considered include whether the plaintiff’s claims have colorable merit, the plaintiff’s ability to investigate the facts and present the case, the nature of the evidence (and whether counsel would be necessary to elicit the truth), and the complexity of the legal issues involved. Id.; McKeever v. Israel, 689 F.2d 1315, 1320-21 (7th Cir.1982).

In the instant case, plaintiff’s right of privacy claims clearly have sufficient merit to survive a motion for summary judgment. The factual issues remaining in this case concern primarily defendants’ reasons for initiating the testing program and for the manner in which the testing was conducted, as well as the responsibility of the individual defendants. Pretrial discovery would undoubtedly be of substantial benefit in eliciting the facts relevant to these issues. Plaintiff has failed even to attempt such discovery up to this point, and his letter of March 9, 1985, indicates that he may have insufficient understanding of legal and procedural matters to do so effectively. Finally, the legal issues involved are novel, although not extraordinarily complex. It is probable that both plaintiff and the court would benefit if all parties were represented by counsel. Accordingly, I will grant plaintiffs motion for appointment of counsel.

ORDER

IT IS ORDERED that:

(1) plaintiffs motion for summary judgment is DENIED.

(2) defendants’ motion for summary judgment is DENIED with respect to plaintiff’s Fourth Amendment and right of privacy claims, and GRANTED with respect to plaintiff’s due process claims;

(3) plaintiff’s motion for appointment of counsel is GRANTED.

      . Defendants did not propose any findings of fact with respect to the reasons for the disciplinary committee’s finding or concerning the plaintiff’s statement to the committee. However, plaintiff attached to the complaint copies of the disciplinary committee’s decision and of his statement. Defendants have not disputed the accuracy of those documents, and indeed they relied on the documents in their brief. Thus, it appears that there is no dispute as to the contents of the committee’s statement of reasons or of plaintiff’s statement to the committee.


author: LASKER, District Judge.

text:
    UTICA MUTUAL INSURANCE COMPANY, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANIES, Defendant and Third-Party Plaintiff, v. Philip TURNER, Hoffman, Kavanaugh Securities Corporation and Lon Roy Kavanaugh, Jr., Third-Party Defendants.
    No. 81 Civ. 5605(MEL).
    United States District Court, S.D. New York.
    July 23, 1985.

      Hendler & Murray, P.C., New York City, for defendant and third-party plaintiff.
    Gaston, Snow, Beekman & Bogue, New York City, for third-party defendant Lon Roy Kavanaugh, Jr.; Martin P. Unger, Catherine A. Ludden, New York City, of counsel.
   LASKER, District Judge.

Lon Roy Kavanaugh, Jr., a third party defendant in this action, moves for an award of attorney’s fees from defendant and third party plaintiff Fireman’s Fund Insurance Companies (“Fireman”). The motion is made pursuant to Federal Rule of Civil Procedure 11 and the inherent power of this Court. For the reasons set forth below, the motion is denied.

I.

Utica Mutual Insurance Company (“Utica”) brought this action against Fireman to recover payment on a fidelity bond issued by Fireman. Utica’s claim was for reimbursement of bond trading commissions in the amount of $802,000 paid by it to Kavanaugh. Kavanaugh had been retained by Philip Turner, Utica’s investment manager between 1976 and 1979, to act as broker-dealer in a series of “adjusted trading” transactions utilized to replace tax-exempt municipal bonds in Utica’s investment portfolio with higher yield investment securities.

Fireman declined to make payment under the bond and Utica filed its complaint against Fireman alleging, inter alia, that Turner and Kavanaugh acted in concert to defraud Utica. Fireman then filed a third party indemnity claim against Turner, Kavanaugh, and Kavanaugh’s company.

Kavanaugh contended that there existed no evidence of any conspiracy between Turner and himself to defraud Utica and, at the close of discovery, he moved for summary judgment to dismiss the third party complaint against him. Fireman opposed the motion by relying upon Utica’s allegation of a Turner-Kavanaugh conspiracy to defraud Utica in order to assert that there was a fact question as to whether such a conspiracy existed. In addition, Fireman pointed to Kavanaugh’s allegation that he relied upon Turner’s implied and apparent authority as Utica’s investment manager and to Utica’s claim that Kavanaugh and Turner acted in concert, to argue that a further fact question existed “as to whether, in the circumstances, Kavanaugh reasonably relied on Turner’s claim of authority and whether he made sufficient inquiry to determine the actual scope of Turner’s authority.” See Fireman’s Statement Pursuant to Civil Rule 3(g) of the United States District Court for the Southern and Eastern Districts of New York dated Feb. 24, 1984, reprinted in, Kavanaugh's Notice of Motion, filed Sept. 11, 1984, at Exhibit C. The latter argument was accepted as a basis for denying Kavanaugh’s motion. See Utica Mutual Insurance Co. v. Fireman’s Fund Insurance Companies, No. 81 Civ. 5605(MEL) (S.D.N.Y. Mar. 14, 1984) (endorsement).

Soon afterwards, the action proceeded to trial. Following the close of Fireman’s case, Kavanaugh’s motion to dismiss the third party claim against him was granted on the grounds that Fireman had not established by a preponderance of evidence Kavanaugh’s bad faith and there existed no evidence of a conspiracy between Turner and Kavanaugh. See Trial Transcript, at 778-79. Although in reaching this decision, we did not expressly pass upon the question whether, in light of the unusual nature of the “adjusted trading” bond transactions, Kavanaugh made sufficient inquiries to ascertain the scope of Turner’s authority as the agent of Utica, we did agree with Fireman that the transactions were certainly “unusual.” See id. at 775-79.

Utica’s complaint was ultimately dismissed on the ground that Utica was barred from recovery because it had failed to comply with the notice provisions of Fireman’s fidelity bond. This holding was affirmed on appeal. See Utica Mutual Insurance Co. v. Fireman’s Fund Insurance Companies, 748 F.2d 118 (2d Cir.1984). As a protective measure, Fireman also appealed the dismissal of its third party indemnity claim against Kavanaugh but the Court of Appeals found it unnecessary to address this issue because the claim was predicated on Fireman being held liable to Utica under the fidelity bond. See id. at 120, 124 & n. 7. In addition, the Court of Appeals declined to award Kavanaugh his costs and attorney’s fees incurred on appeal because it did not agree with Kavanaugh that Fireman’s appeal was frivolous. See id. at 120 & 124.

II.

Kavanaugh argues he is entitled to attorney’s fees because Fireman acted in bad faith in maintaining its third party claim after discovery had been completed in this case. He points out that two and one half years of discovery failed to produce any credible evidence supporting the allegation that he was involved in a conspiracy with Turner to defraud Utica. Kavanaugh emphasizes that as the basis for maintaining its third party action and opposing his summary judgment motion, Fireman relied solely on the conspiracy allegation in Utica’s complaint and it did not even attempt to present evidence at trial to support its indemnity claim.

Fireman answers that it acted in good faith in pursuing its claim against Kavanaugh because evidence adduced at trial and through discovery revealed that Kavanaugh’s company carried out the disputed bond transactions; that Kavanaugh admitted that the “adjusted trading” program was an anamolous activity; that Kavanaugh made no attempt to determine from other Utica officials whether Turner was in fact authorized to conduct the “adjusted” trades; and that Kavanaugh stated to Turner that Turner’s letter to Kavanaugh authorizing Kavanaugh to undertake the trades would be “kept in strict confidence.” Fireman also notes that since Utica presented expert testimony at trial to establish the “adjusted trading” was an unlawful activity, it might have been possible to recover against Kavanaugh on the theory that he performed no legitimate activity for Utica, or on an indemnity theory had Fireman been found liable to Utica. Fireman asserts further that a reasonable basis existed for maintaining Kavanaugh’s status as a third party defendant for the trial because Kavanaugh’s summary judgment motion was denied after all discovery in the case had been completed.

III.

Under the “American Rule” governing the allocation of litigation costs, the presumption is against an award of attorney’s fees to a prevailing party. However, among the exceptions to the rule are cases in which a plaintiff brings or maintains an action without adequate factual basis and in bad faith. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975); Tedeschi v. Smith Barney, Harris Upman & Co., 757 F.2d 465, 466 (2d Cir.1985) (per curiam); Nemeroff v. Abelson, 704 F.2d 652, 654 (2d Cir. 1983). The Court of Appeals for this Circuit has held that in order to find bad faith there must be “clear evidence” that the claim is “entirely without color and made for reasons of harassment or delay or for other improper purposes.” Browning Debenture Holders’ Committee v. DASA Corp., 560 F.2d 1078, 1088 (2d Cir.1977); see also Eastway Construction Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir.1985).

To determine whether a claim is “colorable” for the purpose of establishing whether or not bad faith exists, “[t]he question is whether a reasonable attorney could have concluded that facts supporting the claim might be established, not whether such facts actually had been established. ” Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir.1980) (emphasis in original); see also id., 704 F.2d at 658-59 n. 4 (“A colorable claim must be based upon some evidence from which an attorney can reasonably expect to build a case.”) The inquiry is not confined to an examination of the strength of the claim at the time the action is commenced, but continues throughout the course of the litigation. Even if a sufficient factual basis exists to support an initial pleading, attorney’s fees may nonetheless be awarded against the party asserting the claim if “during the litigation and prior to dismissal [of the claim], sufficient facts become available [to the party] to demonstrate that a failure at that point to withdraw the action necessarily amounted to bad faith.” Nemeroff v. Abelson, supra, 620 F.2d at 350-51; see also id., 704 F.2d at 655.

While Federal Rule of Civil Procedure 11 also mandates awards of attorney’s fees, the Rule is directed at attorneys or parties who sign pleadings, motions and other papers without reasonable belief that the papers are well grounded by fact or warranted by existing law. See generally Eastway Construction Corp., supra, 762 F.2d at 253-54. The focus of inquiry under the Rule is therefore the attorney’s and/or party’s reasonable belief at the time the pleading, motion or other paper was filed, not at some later date when developments during discovery or at trial reveal no basis for this belief. This view is borne out by the Notes of the Advisory Committee on Rules which state that “[t]he court is expected to avoid using the wisdom of hindsight and should test the signer’s conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted.” Fed.R.Civ.P. 11, Notes of Advisory Committee on Rules (emphasis added); but see Schwarzer, Sanctions Under the New Federal Rule 11 — A Closer Look, 104 F.R.D. 181, 189 (1985) (“To persist in claims or defenses beyond a point where they could no longer be considered well-grounded in fact may violate [Rule 11.]”) (footnote omitted); Kobak & Barrett, Amended Rule 11 and Antitrust Litigation, N.Y.L.J., July 22, 1985, at 4, cols. 4-5. We accordingly conclude that the determination whether Kavanaugh is entitled to recover attorney’s fees is limited to an evaluation of whether Fireman’s decision to commence and maintain its suit against him falls within the bad faith exception of the “American Rule.”

IV.

As discussed above, a fact question determined to exist at the time Kavanaugh’s summary judgment motion was denied was whether Kavanaugh sufficiently inquired into the scope of Turner’s apparent authority and whether Turner could reasonably rely upon Turner’s representations. The issue of whether Kavanaugh was under an obligation to inquire into the scope of Turner’s authority as Utica’s agent is based upon the principle that a third party must inquire into a corporate agent’s apparent authority to bind a corporation in transactions of an “extraordinary” nature. See Ford v. Unity Hospital, 32 N.Y.2d 464, 470, 472-73, 299 N.E.2d 659, 664, 346 N.Y.S.2d 238, 244 (1973) (“The mere creation of an agency for some purpose does not automatically invest the agent with ‘apparent authority’ to bind the principal without limitation____”) (citations omitted); Lee v. Jenkins Brothers, 268 F.2d 357, 365 (2d Cir.), cert. denied, 361 U.S. 913, 80 S.Ct. 257, 4 L.Ed.2d 183 (1959) (company president “only has authority to bind his company by acts arising in the usual and regular course of business but not for contracts of an ‘extraordinary’ nature.”) (footnote omitted); see also General Overseas Films, Ltd. v. Robin International, Inc., 542 F.Supp. 684, 690 (S.D.N.Y.1982), aff'd mem., 718 F.2d 1085 (2d Cir.1983) .

Apparent authority bars a corporation from disavowing the transactions of its authorized agent and, as the Court of Appeals for this Circuit has explained:

Apparent authority is essentially a question of fact. It depends not only on the nature of the contract involved, but the officer negotiating it, the corporation’s usual manner of conducting business, the size of the corporation and the number of its stockholders, the circumstances that give rise to the contract, the reasonableness of the contract, the amounts involved, and who the contracting third party is, to list a few but not all of the relevant factors.

Lee v. Jenkins Brothers, supra, 268 F.2d at 370 (footnote omitted); see also id. at 366.

Denial of Kavanaugh’s summary judgment motion was premised upon this question of fact. A finding that the “adjusted trading” transactions were indeed “extraordinary,” within the meaning of the cases cited, might have established the absence of Turner’s apparent authority to bind Utica, and, as discussed below, might have obliged Kavanaugh to indemnify Fireman. Although our determination at the close of Fireman’s case that the “adjusted” trades were “unusual” was in itself not enough to prevent the dismissal of Fireman’s third party claim against Kavanaugh, the finding is sufficient to preclude awarding Kavanaugh attorney’s fees under the bad faith exception to the “American Rule.”

The underlying issue framed by our disposition of Kavanaugh’s motion for summary judgment was whether the “adjusted” trades were “extraordinary” so as to raise doubts about Turner’s apparent authority; to defeat Kavanaugh’s contention that he relied upon Turner’s authority as Utica’s investment manager in executing the transactions; and to establish a possible basis for Kavanaugh’s liability to Fireman. While the finding of the “adjusted” trades to be “unusual” did not render them as “extraordinary” within the meaning of the cases, the finding does demonstrate that Fireman could reasonably have concluded that its claim against Kavanaugh “might be established” and that its decision not to withdraw its claim against Kavanaugh before the claim was dismissed did not amount to bad faith. See Nemeroff v. Abelson, supra, 620 F.2d at 348, 350-51; id., 704 F.2d at 658-59.

We are not unmindful that no evidence or totally insufficient evidence of a TurnerKavanaugh conspiracy to defraud Utica was introduced at trial and that this fact served as the basis for dismissing Fireman’s claim against Kavanaugh. See Trial Transcript, at 779. In addition, we recognize the reasons why Kavanaugh believes himself entitled to attorney’s fees in light of our finding no evidence of a Turner-Kavanaugh conspiracy to defraud Utica. See id. However, because Fireman acted reasonably in maintaining its claim against Kavanaugh in an effort to show that the “adjusted” trades were “extraordinary,” and that therefore Kavanaugh had an obligation to check on Turner’s authority, we find that Fireman’s conduct does not constitute conduct warranting an award of attorney’s fees.

Kavanaugh’s motion is denied.

It is so ordered.

      . In further support of its contention, Fireman submitted an additional memorandum in the form of a letter dated March 1, 1984. See Kavanaugh's Notice of Motion, at Exhibit D.