author: BUA, District Judge.

text:
    Eric VAN GELDER; and Eric Van Gelder on his own behalf and on behalf of all other shareholders of the Rookery, Inc., Plaintiff, v. Lamar S. TAYLOR, Jr.; James B. Kee; and the Rookery, Inc., a Georgia corporation, Defendants.
    No. 85 C 5295.
    United States District Court, N.D. Illinois, E.D.
    Nov. 13, 1985.

      Michael Hawkins, Chicago, Ill., for plaintiff.
    Terence J. Moran, Schiff, Hardin & Waite, Chicago, Ill., for defendants.
   ORDER

BUA, District Judge.

Before the Court is defendants’ motion to dismiss for lack of personal jurisdiction and improper venue or, in the alternative, to transfer this case to the United States District Court for the Middle District of Georgia pursuant to 28 U.S.C. §§ 1404(a) and 1406(a). For the reasons stated herein, defendants’ motion to dismiss is denied and the motion to transfer is granted.

I. FACTS

Plaintiff Eric Van Gelder filed a two-count complaint against defendants. Count 1 has been brought by Van Gelder individually and purports to state a claim of fraud against the individual defendants, Taylor and Kee. Count 1 alleges that the individual defendants fraudulently induced plaintiff to invest in defendant corporation, The Rookery, Inc. Count 2 has been brought by Van Gelder as a shareholder’s derivative action on behalf of The Rookery, Inc., a Georgia corporation, and purports to state a claim for breach of fiduciary duty to The Rookery, Inc. and to Van Gelder by defendants Taylor and Kee. Count 2 alleges that Taylor and Kee wrongfully and fraudulently used their fiduciary positions to utilize corporate assets and facilities for their own personal gain to the detriment of both defendant corporation and plaintiff, as a minority shareholder of the corporation.

For jurisdictional purposes, the citizenship of the parties must be established. Plaintiff is a citizen of the State of Illinois, defendants Taylor and Kee are both citizens of the State of Georgia, and defendant The Rookery, Inc. is a corporation duly organized and existing under the law of the State of Georgia with its principal place of business in Macon, Georgia.

Plaintiff’s claims arise out of a business venture entered into by Van Gelder, Taylor and Kee. Taylor and Kee allegedly solicited Van Gelder to invest $30,000 in The Rookery, Inc. in return for one third of the stock in said corporation. Taylor and Kee were each to own one third of the same stock to constitute the remaining stockholders. It is alleged that Taylor and Kee also' solicited Van Gelder to invest for the group $15,000 as a down payment for the purchase of the Georgia building in which The Rookery, Inc. conducts its retail business and to invest $7,500 for attorneys’ fees. Van Gelder argues that he was to be reimbursed by the two individual defendants for their pro rata share of these latter two expenses. The control of The Rookery, Inc. is vested in Taylor and Kee through their control of the shareholder’s meetings and the Board of Director’s meetings.

The remedies plaintiff seeks in Count 1 are: (1) a rescission of the agreement between the parties relative to his purchase of the one-third interest in The Rookery, Inc.; (2) a judgment for Van Gelder against each of the individual defendants for the amounts of money loaned and advanced to them, and; (3) punitive damages. The remedies plaintiff seeks in Count 2 are: (1) an issuance of a summons to each individual defendant requiring them to appear in this Court to answer the complaint; (2) an appointment of a receiver to seize all property of The Rookery, Inc. and all shares of The Rookery, Inc. standing in the names of the individual defendants, pursuant to Rule 66 of the Federal Rules of Civil Procedure, to hold and preserve the shares until a final determination of the cause is made; and (3) an accounting for all sums of money, profits, and gains which Taylor and Kee have made as a result of the alleged conspiracy against Van Gelder.

II. DISCUSSION

In this case, federal subject matter jurisdiction is based solely on diversity of citizenship. In diversity cases, a federal district court has jurisdiction over the persons of the defendants only if a court of the state in which the federal court is sitting would have personal jurisdiction. Snyder v. Smith, 736 F.2d 409, 415 (7th Cir.1984); Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1212 (7th Cir. 1984); Lakeside Bridge & Steel v. Mountain State Construction Co., 597 F.2d 596, 598 (7th Cir.1979); cert. denied, 445 U.S. 907-08, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980). As such, Illinois law will govern the determination as to whether this Court has personal jurisdiction over the defendants. Welles Product Corp. v. Plad Equipment Co., Ltd., 563 F.Supp. 446, 448 (N.D.Ill.1983).

Under Illinois law, foreign defendants are subject to the jurisdiction of state and federal courts in Illinois only if they have committed any of the acts specified in the Illinois Long Arm Statute. Ill. Rev.Stat. ch. 110, § 2-209(a). Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 427 N.E.2d 1203 (1981). Commission of one or more of those specified acts will support jurisdiction over the persons of the defendants only as to causes of action arising from the commission of those acts. Ill.Rev.Stat. ch. 110, § 2-209(c). For specification as to the acts which submit a person to the jurisdiction of the state, the Illinois Long Arm Statute ch. 110, § 2-209 provides in pertinent part:

Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person ... to the jurisdiction of the courts of this State as to any cause of action arising from the doing of such acts:
(1) The transaction of any business within this State;
(2) The commission of a tortious act within this State;

A plaintiff bears the burden of proving that a court has personal jurisdiction over defendants, i.e., that defendants have committed acts that fall within the Illinois Long Arm Statute. Kutner v. DeMassa, 96 Ill.App.3d 243, 247, 51 Ill.Dec. 723, 421 N.E.2d 231 (1st Dist.1981).

Proper venue under Illinois law lies “in the county in which the transaction or some part thereof occurred out of which the cause of action arose.” Ill.Rev.Stat. ch. 110, § 2-101(2).

A. Count 1

Count 1 is an action for fraud. Subject matter jurisdiction is conferred upon this Court through diversity of citizenship: plaintiff Van Gelder is a citizen of the State of Illinois whereas all defendants are citizens of the State of Georgia.

The existence of personal jurisdiction over defendants is, however, questionable. Plaintiff argues that the Illinois Long Arm Statute applies insofar as the business transactions and the tortious act of fraud occurred in Illinois. In support of this argument, plaintiff alleges that the negotiations inducing plaintiff to invest in The Rookery, Inc. were made in Illinois. An affidavit has been submitted by plaintiff in support of this allegation. Conversely, defendants allege that the Illinois Long Arm Statute is inapplicable insofar as all negotiations and transactions were made in Georgia. Therefore, defendants conclude that any purported tortious act would have necessarily occurred in Georgia. Three affidavits have been submitted by defendants in support of these allegations.

Although personal jurisdiction is questionable, this Court need not determine the issue. This Court finds that transfer under 28 U.S.C. § 1404(a) is proper. When transferring an action under § 1404(a), the transferor court is not first required to establish personal jurisdiction over the movant. Coats Co., Inc. v. Vulcan Equipment Co., ínc., 459 F.Supp. 654, 659 (N.D.Ill.1978).

§ 1404(a), governing transfer for the convenience of parties and witnesses, is designed to prevent waste of time, energy, and money, as well as to protect litigants, witnesses, and the public against inconvenience and expense. Cunningham v. Cunningham, 4m F.Supp. 632 (N.D.Ill.1979). § 1404(a) provides in pertinent part:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district where it might have been brought.

Transfer, rather than dismissal, is the proper remedy if the convenience of parties and witnesses and the interest of justice describe a more appropriate forum elsewhere. Stinnett v. Third National Bank of Hampden County, 443 F.Supp. 1014, 1017 (D.Minn.1978).

In order to meet the requirements of § 1404(a), the movant must establish (1) that venue is proper in the transferor district; (2) that the transferor court has the power to transfer the case (the transferee district is one in which the case could have been brought); and (3) that the transfer is for the convenience of parties and witnesses in the interest of justice. Hotel Constructors, Inc. v. Seagrave Corp., 543 F.Supp. 1048, 1050 (N.D.Ill.1982). The first requirement is met since plaintiff is a citizen of Illinois. Likewise, the second requirement is met under 28 U.S.C. § 1391 since all defendants reside in the Middle District of Georgia.

The question of transfer thus turns upon the third requirement. To support a motion to transfer, the movant must show a “clear balance of inconvenience” in the transferor district over the transferee district. Hotel Constructors, Inc. v. Seagrave Corp., 543 F.Supp. 1048, 1050 (N.D.Ill. 1982); see also SEC v. First National Finance Corp., 392 F.Supp. 239, 240 (N.D.Ill. 1975). In determining whether the movant has met this burden, the Court must consider the factors specifically enumerated in § 1404(a), i.e., the convenience of parties, witnesses, and the interest of justice, while simultaneously giving weight to the plaintiff’s choice of forum.

1. Plaintiffs Choice of Forum

Under the common law doctrine of forum non conveniens, plaintiff’s choice of forum was an overriding factor entitled to considerable weight in determining whether to transfer a case. However, the significance of this choice has diminished since the enactment of § 1404(a). Nor-wood v. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 546, 99 L.Ed. 789 (1955); Hotel Constructors, supra, 543 F.Supp. at 1050. Moreover, plaintiff’s choice of forum has diminished value where the forum chosen lacks any significant contact to the underlying cause of action. Environmental Services, Inc. v. Bell Lumber and Pole Co., 607 F.Supp. 851 (N.D.Ill.1984); Cunningham v. Cunningham, 477 F.Supp. 632, 634 (N.D.Ill.1979). In such a case, plaintiff’s choice of forum becomes but one of many factors to be considered by the Court in determining convenience in a § 1404(a) transfer. General Signal Corp. v. Western Electric Co., 362 F.Supp. 878, 880 (N.D.Ill.1973). Where the forum is not conclusively the place where the cause of action arose, a plaintiff’s choice of forum is given equal consideration along with other factors in determining whether to grant a motion for change of venue. Hotel Constructors, supra, 543 F.Supp. at 1051; Environmental Services, Inc., supra, 607 F.Supp. at 853.

In the present case, it is questionable whether this forum has significant contacts to the underlying cause of action. Plaintiff argues that the transactions between the parties occurred in Illinois and that, therefore, the cause of action for fraud and for the shareholders derivative suit lies in this forum. Conversely, defendants contend that all business transactions occurred in Georgia and that any possible cause of action exists there.

Given that plaintiff has submitted a rather conclusory affidavit stating that all business negotiations occurred in Illinois with no supportive details, and given that defendants submitted three affidavits enumerating specific details as to numerous negotiations all occurring in Georgia, the Court believes that it is more likely that the contract was negotiated in Georgia. In addition, it seems undisputed that Georgia is the situs of the contract’s performance. As such, Illinois is not conclusively the place where the cause of action arose. Plaintiff’s choice of forum therefore becomes but one of many factors to consider in determining whether to grant a motion to transfer under § 1404(a).

2. Convenience of the Parties and Witnesses

The convenience and fairness of a transfer under 1404(a) are measured according to the private interests of the litigants and the public interests of the court. Private interest factors include the location of witnesses and evidence, the power of courts to compel attendance of witnesses, and the relative abilities of parties to bear the financial costs of trial. Public interest factors in a diversity case include familiarity with the state law to be applied and a desirability of having local controversies decided at home. Mutual of Omaha Ins. Co. v. Dolby, 531 F.Supp. 511 (E.D.Pa. 1982). In the present case, private and public interests would be best served by transferring this case to Georgia.

The private interests of the litigants indicate that Georgia is a more convenient forum to bring this suit. To begin with, it appears that potential witnesses and evidence are located in Georgia. For example, an attorney was present during the business negotiations in Georgia and drew up the contract between the parties. Since the attorney is a citizen of the State of Georgia, this Court lacks the power to compel his attendance as a witness. Moreover, all corporate records for The Rookery, Inc. would be located in Georgia, the location of the corporation’s principal place of business, management decisions, and board of directors’ meetings. These records are necessary for the ultimate determinations as to whether plaintiff was fraudulently induced to invest in a one-third share of the corporation and whether the individual defendants breached their fiduciary duty to the corporation and to plaintiff as a minority shareholder. Given that Georgia is the place of the contract’s performance, the individual defendants alleged use of corporate assets for personal gain would have necessarily occurred in Georgia. And finally, affidavits submitted by the defendants state that plaintiff traveled often to Georgia to conduct the negotiations involved. Plaintiff’s prior contacts with Georgia suggest that requiring him to return there would not be unduly burdensome.

The public interests of the court also indicate that Georgia is a more convenient forum in which to bring this action. For numerous reasons, the controversy appears to be local to Georgia: (1) a Georgia corporation is the subject of the dispute at hand; (2) it appears most likely that the negotiations resulting in the formation of this contract occurred in Georgia; and (3) Georgia is the place of the contract’s performance. One factor in determining whether to transfer a case under § 1404(a) is the desirability of having local controversies tried at home. Mutual of Omaha Ins. Co. v. Dolby, 531 F.Supp. 511 (E.D.Pa.1982); Prather v. Raymond Const. Co. Inc., 570 F.Supp. 278 (M.D.Ga.1983). The Middle District of Georgia is more familiar with the Georgia law, which will be applicable, as discussed infra.

3. Interest of Justice

The final factor to be considered under § 1404(a) is whether it would be in the interest of justice to transfer the case to a more convenient forum. In ruling on a request for change of venue on the ground of interest of justice, a court is required to consider accessibility to sources of proof, availability of compulsory process for the attendance of unwilling witnesses, public interests and policy as well as private interests of the litigants, and all other practical problems that make trial of a case easy, expeditious and inexpensive. Jacobs v. Lancaster, 526 F.Supp. 767 (W.D.Okl.1981); ROC, Inc. v. Progress Drillers, Inc., 481 F.Supp. 147 (W.D.Okl.1979); Bartolacci v. Corp. of Presiding Bishop of Church of Jesus Christ of Latter Day Saints, 476 F.Supp. 381 (E.D.Pa.1979). These factors have been considered above and all point to Georgia as a more appropriate forum for litigation.

Under the interest of justice standard governing discretionary transfers of civil actions, appropriate weight is to be given to the desirability of having a federal judge of the proposed transferee district interpret a contract made in the state in which the transferee court sits, especially where the contract specifies that it is to be interpreted in accordance with such state’s laws. Vaughn v. American Basketball Ass’n., 419 F.Supp. 1274 (S.D.N.Y.1976). Under Illinois conflict of law principles, the law of the state of the contract’s making governs if there is no clear place of performance for the contract. Environmental Services, Inc. v. Bell Lumber and Pole Co., 607 F.Supp. 851, 855 (N.D.Ill.1984); Hotel Constructors, Inc. v. Seagrave Corp., 543 F.Supp. 1048, 1052 (N.D.Ill. 1982) ; P.S. & E., Inc. v. Selastomer Detroit, Inc., 470 F.2d 125, 127 (7th Cir.1972). Georgia is the place of the contract’s performance, and the evidence submitted indicates that Georgia is the state of the contract’s making. Moreover, The Rookery, Inc. is duly incorporated under Georgia laws. Hence, Georgia law should be applicable, and it would be in the interest of justice to have a Georgia judge decide the case.

The motion to transfer Count 1 to the Middle District of Georgia is granted under 28 U.S.C. § 1404(a).

B. Count 2

Count 2 is a shareholder’s derivative action. Subject matter jurisdiction is conferred upon the Court through diversity of citizenship. Plaintiff Van Gelder is the real party in interest aligned against the two individual defendants and the defendant corporation. As a general rule, the plaintiff stockholder in a stockholder’s derivative suit is “at best the nominal plaintiff.” Liddy v. Urbanek, 707 F.2d 1222, 1224 (11th Cir.1983) (citing Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1970)). The corporation is the real party in interest, regardless of the fact that the corporate management has failed to pursue the action. Liddy, supra, 707 F.2d at 1224; Rosier v. Lumbermens Mutual Casualty Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947). However, the corporation is initially named as a defendant to insure the presence of the corporation as an indispensable party. Once joined and present before the court, the corporation is then realigned, if necessary, according to its real interests. Liddy, supra, 707 F.2d at 1224; Smith v. Sperling, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d 1205 (1957). The corporation should be realigned as a plaintiff in a stockholder’s derivative suit when it is the real party in interest which stands to benefit from a successful suit. Liddy, supra, 707 F.2d at 1224; see Schmidt v. Esquire, Inc., 210 F.2d 908 (7th Cir.), cert. denied, 348 U.S. 819, 75 S.Ct. 31, 99 L.Ed. 646 (1954).

An exception to this general rule exists. The corporation properly remains a defendant in a stockholder’s derivative action whenever the corporate management is “antagonistic” to the plaintiff shareholder. The test of “antagonism” between the corporation and the stockholder is found in Smith v. Sperling, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d 1205 (1957).

There will be, of course, antagonism between the stockholder and the management where the dominant officers and directors are guilty of fraud or misdeeds. But wrongdoing in that sense is not the sole measure of antagonism. There will be antagonism whenever the management is aligned against the stockholder and defends a course of conduct which he attacks.

See also, Liddy v. Urbanek, 707 F.2d 1222, 1224 (11th Cir.1983); Walden v. Elrod, 72 F.R.D. 5, 15 (W.D.Okla.1976). It would appear that this case falls within the exception provided. Antagonism exists between the corporate management and the plaintiff shareholder. As such, The Rookery, Inc. was properly named a defendant in the action, and diversity exists to establish subject matter jurisdiction.

Venue, however, is improper in this Court. 28 U.S.C. § 1401 provides that any civil action by a stockholder on behalf of his corporation may be prosecuted in any judicial district where the corporation might have sued the same defendants. In other words, in a shareholder’s derivative action, a plaintiff stockholder can sue only in a district in which the corporation for whose benefit the action was brought might sue the objecting defendants.

Where the corporation can sue for venue purposes is governed by 28 U.S.C. § 1391. Where jurisdiction is founded only on diversity of citizenship, venue is proper in a judicial district where all plaintiffs or all defendants reside or where the claim arose. As such, venue in this Court is improper insofar as not one of the three requirements of § 1391 is satisfied within this district. Under § 1401, the beneficiary corporation becomes the plaintiff for venue purposes in a shareholder’s derivative action. Thus, the Middle District of Georgia is the district in which venue is proper in the present case. It is in Georgia that all plaintiffs and all defendants reside and in Georgia that the claim arose.

It must be noted that there is a clear line between the party who is the plaintiff for jurisdictional purposes and the party who is the plaintiff for venue purposes. The words “may be brought in any district,” as used by § 1401 providing that a shareholder’s derivative suit may be brought in any district in which suit against the defendants might have been brought by the beneficiary corporation, have a venue, rather than a jurisdictional, connotation. Saltzman v. Birrell, 78 F.Supp. 778, 784 (S.D.N.Y.1948); Braunstein v. Devine, 136 F.Supp. 156 (D.Mass. 1955); Industrial Waxes, Inc. v. International Rys. of Central America, 193 F.Supp. 783 (S.D.N.Y.1961).

In a shareholder’s derivative action, where diversity of citizenship exists between the stockholder and defendants, diversity need hot also exist between the beneficiary corporation and defendants. Saltzman, 78 F.Supp. at 784. § 1401 presupposes the existence of federal jurisdiction, and nothing in the statute suggests the need of double diversity. Id. “Such a construction would not execute the policy of the statute which is designed to facilitate the bringing of stockholder’s suits.” Id. at 784. Consequently, the beneficiary corporation may be viewed as plaintiff for venue purposes in a shareholder’s derivative suit but not necessarily as' plaintiff for jurisdictional purposes. As such, there is no conflict in viewing Van Gelder as plaintiff to establish jurisdiction and The Rookery, Inc. as plaintiff to establish venue.

Given that venue is improper in this Court, Count 2 must be transferred to the Middle District of Georgia under 28 U.S.C. § 1406. § 1406 governs the cure or waiver of defects in laying venue. The section provides that a district court of a district in which is filed a case laying venue in the wrong district or division shall dismiss, or if it be in the interest of justice, transfer the case to a district or division in which it could have been brought.

Normally, if venue is not proper in the district court where the action is initiated, transfer to a proper district or division is preferred over dismissal. Phillip Gall and Son v. Garcia Corp., 340 F.Supp. 1255 (E.D.Ky.1972). Transfer is generally considered to be more “in the interest of justice” than dismissal for improper venue and, therefore, any doubts should be resolved in favor of preserving the action, particularly where it appears that venue is proper in the transferee court. Nation v. U.S. Government, 512 F.Supp. 121 (S.D. Ohio 1981); De La Fuente v. I.C.C., 451 F.Supp. 867 (N.D.Ill.1978). It has been established that venue is proper in the transferee court for Count 2. Moreover, the interest of justice would be best served by transfer rather than dismissal. Therefore, the motion to transfer Count 2 to the Middle District of Georgia is granted under §§ 1401 and 1406.

Again, this Court need not establish personal jurisdiction over the parties. A district court has the authority to transfer an action to another court if venue is improper in the transferor court even though it lacks personal jurisdiction over the defendants. Rixner v. White, 417 F.Supp. 995 (D.N.D.1976).

III. CONCLUSION

For the reasons stated above, defendant’s motion to transfer this action to the United States District Court for the Middle District of Georgia is granted.

IT IS SO ORDERED.


source: Caselaw Access Project

author: MOODY, District Judge.

license: Public Domain

text:
    Francis N. HASKINS, Daniel E. Noble, and Irma Rodriguez, on behalf of themselves and all other persons similarly situated, v. Wayne A. STANTON, in his official capacity as Administrator of the Indiana Department of Public Welfare; John Seffrin, Ph.D., in his official capacity as a member of the State Board of Public Welfare; Arvella Stanton, in her official capacity as a member of the State Board of Public Welfare; Marion Hilger, in her official capacity as a member of the State Board of Public Welfare; Robert Watson, in his official capacity as a member of the State Board of Public Welfare; James Burnett, in his official capacity as a member of the State Board of Public Welfare; Allen E. Greene, in his official capacity as the Director of the State Food Stamp Division; John D. Kelley, in his official capacity as Director of the Lake County Department of Public Welfare; Francisco Gonzalez, in his official capacity as a member of the Lake County Board of Public Welfare; Oliver Dixon, in his official capacity as a member of the Lake County Board of Public Welfare; Dozier Allen, in his official capacity as a member of the Lake County Board of Public Welfare; John Bowman, in his official capacity as a member of the Lake County Board of Public Welfare; and Dolores B. Decker, in her official capacity as a member of the Lake County Board of Public Welfare.
    Civ. No. H 80-392.
    United States District Court, N.D. Indiana, Hammond Division.
    Nov. 14, 1985.

      Ivan E. Bodensteiner, Myrna Hart, Project Justice & Equality, Valparaiso University School of Law, Valparaiso, Ind., Judith M. Haller, Legal Services Program of Greater Gary, Inc., Gary, Ind., for plaintiffs.
    Gary L. Shaw, Deputy Atty. Gen., Indianapolis, Ind., Dora A. Arechiga, County Representative, Lake County DPW, Gary, Ind., for defendant.
   MOODY, District Judge.

ORDER

This matter is before the Court on the Report and Recommendation of the United States Magistrate filed with this Court on September 25, 1985 following a hearing on the plaintiffs’ Motion for Preliminary Injunction which the Magistrate conducted on March 28 and 29, 1985. The parties were granted until October 21, 1985 to file written objections to the Report and Recommendation and the plaintiffs have filed such objections.

The Report and Recommendation, as well as the findings contained therein, were prepared pursuant to the provision of 28 U.S.C. § 636(b)(3) and Local Rule M-3. The findings and recommendations were filed with this Court and mailed to the parties. Under § 636(b)(1)(C) the district court is required to conduct a de novo determination where objections to the Magistrate’s report have been filed by the parties. 28 U.S.C. § 636(b)(1)(C). Makich v. Allen, 603 F.2d 1247, 1252 (7th Cir.1972). The Court has made an independent review of the file and the proposed findings and recommendations of the Magistrate. For reasons discussed below, the Motion for Preliminary Injunction is GRANTED.

I.

The plaintiffs in this case are four classes of persons including:

Class A: All current and future food stamp applicants who qualify for expedited service;
Class B: All current and future food stamp applicants who qualify for regu-. lar service;
Class C: All eligible current and future food stamp recipients who apply for recertification;
Class D: All current and future food stamp applicants and recipients who are Hispanic and belong to households which contain no adults fluent in English as a second language.

These plaintiffs allege that the Administrator of the Indiana Department of Welfare, the members of the State Board of Public Welfare, the Director of the State Food Stamp Division, the Director of the Lake County Department of Public Welfare, and the members of the Lake County Board of Public Welfare are violating the Food Stamp Act of 1977, 7 U.S.C. §§ 2011-2025. The alleged violations include administrative mismanagement as well as six substantive violations of the Food Stamp Act. The six substantive claims are:

(1) Failure to effectively supervise and monitor the performance of Lake County in the taking and processing of food stamp applications and in handling recertifications for food stamp benefits. [Complaint, ¶¶ 38 and 39]
(2) Failure to accept and encourage the filing of an application on the same day a household initially contacts the Lake County Food Stamp Office. [Complaint, 1ÍTT 40, 41 and 42]
(3) Failure to identify and provide eligible households, that complete the initial application process, an opportunity to participate in the food stamp program in violation of the applicable federal time limits. [Complaint, ¶¶143, 44, 45, 46 and 47]
(4) Failure to process applications for re-certification in a timely fashion and thus have failed to provide eligible households with uninterrupted food stamp benefits. [Complaint, 111148 and 49]
(5) Failure to enforce federal and state regulations under the Food Stamp Act toward some persons in Lake County, Indiana, while enforcing those same regulations toward other eligible applicants in Lake County and elsewhere in the state in violation of the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. [Complaint, ¶1¶ 50 and 51]
(6) Failure -to provide bilingual personnel and printed material to low income households who speak a language other than English.

II.

Congress enacted the Food Stamp Program “to promote the general welfare, to safeguard the health and well-being of the Nation’s population by raising levels of nutrition among low-income households.” 7 U.S.C. §§ 2011 et seq. The program provides eligible households with food stamp coupons which the recipient households may use to purchase food at grocery stores certified by the United States Department of Agriculture. 7 U.S.C. § 2016. See also, 7 U.S.C. § 2012(g). The U.S.D.A. pays 100% of the program’s benefits and at least 50% of the administrative costs of the program. 7 U.S.C. § 2013(a); 7 C.F.R. §§ 2771 et seq. The Indiana State Department of Public Welfare supervises the Food Stamp Program in Indiana and pays any administrative expense that the U.S. D.A. does not cover. In Lake County, the Lake County Department of Public Welfare administers the Food Stamp Program locally with funds provided by the Indiana D.P.W. and the U.S.D.A.

The U.S.D.A. has promulgated regulations to govern the operation of the Food Stamp Program, including standards for the timely processing of applications and reapplications for food stamps. 7 C.F.R. §§ 272.2(a)(2), 273.10(g)(1) and (2). These timeliness regulations require a State agency to provide eligible households with an authorization and the opportunity to obtain their food stamp allotments within 30 days after they initially file a properly completed application for food stamp benefits. 7 C.F.R. §§ 273.2(g)(1) and (2). If the household causes a delay in determining food stamp eligibility, the State agency may take an additional 30 days to determine eligibility. 7 C.F.R. § 273.2(h).

Some households, because of their urgent needs, are eligible for expedited services entitling them to receive their benefits within five days of their initial application. 7 C.F.R. § 273.2(i). The State agency is required to design its application procedures to identify applications that are eligible for such expedited service. 7 C.F.R. § 272.2(i)(2)(i) and (II). Households with zero net income and destitute households qualify for such expedited service. 7 C.F.R. 2(i)(1)(i) and (II). Eligible households, whether entitled to expedited or normal processing, must apply periodically for recertification. 7 C.F.R. § 273.10(f).

The regulations also give households the right to file a food stamp application on the same day they first contact the food stamp office during office hours and require the state agency to document the date the application was first filed by recording the date on the application. 7 C.F.R. § 273.-2(c). The State agency must also provide bilingual program information and certification materials, and staff or interpreters if the estimated number of low-income households (single language minority) in a project area or area served by a certification office reaches a specified level. 7 C.F.R. § 272.4(b)(2) and (3). In some geographic regions the State agency must provide both bilingual program information and bilingual staff or interpreters. 7 C.F.R. § 272.4(b)(3). In other regions the number of low-income single language minority households is small enough that bilingual program materials alone are sufficient or that no bilingual information at all is required. 7 C.F.R. § 272.4(b)(2). The State agency is charged with the responsibility of developing estimates of the number of low-income single-language minority households and ensuring that certification offices provide the requisite bilingual service. 7 C.F.R. § 272.4(b)(5) and (6). The regulations also charge the State with responsibility for proper administration of the Food Stamp Program and require the State to have a system for monitoring and improving its administration of the program. 7 C.F.R. § 275.1(a).

The regulations also provide methods by which to identify and correct deficiencies in the State’s administration of the Food Stamp Program. 7 C.F.R. § 275.2. The State must establish a continuing performance reporting system to monitor program administration and operation. The reporting system must include the collection, analysis, and evaluation of data as well as planning, implementing, and monitoring of corrective action and reporting to the Food and Nutrition Service on program performance. 7 C.F.R. § 275.2(a). Corrective action planning is the process by which State agencies, with FNS approval, determine appropriate action to reduce or eliminate deficiencies in program operations. 7 C.F.R. § 275.16(a). The State agency is required to establish a system for monitoring and evaluating corrective action and to ensure that the corrective action is implemented and achieves the anticipated results within the time frames specified by the FNS. 7 C.F.R. § 275.19. When a corrective action plan fails to correct deficiencies, the State agency must reevaluate the deficiency and develop and implement new corrective actions. 7 C.F.R. § 275.19(c).

The regulations address the availability of and limits on injunctive relief for the FNS but do not provide comparable guidelines for situations in which the plaintiffs are private individuals such as in the case at bar. 7 C.F.R. § 276.5. The FNS may not seek injunctive relief to require Food Stamp Act compliance until it has first notified the State agency of the determination of noncompliance and has provided the State agency with a specific period of time to correct deficiencies. 7 C.F.R. § 276.5(b).

The Food Stamp Act contains an error rate reduction program that requires the Secretary of Agriculture to reduce a State agency’s federally funded share of administrative costs if a State agency’s payment error rate reaches a specified level. 7 U.S.C. § 2025(d)(2). “Payment error rate” is the value of all food stamp allotments issued to ineligible households or overissued to eligible households. 7 U.S.C. § 2025(d)(1); 7 C.F.R. § 275.25(c)(2). Although the error rate reduction program is a method of quality control for some aspects of the State agency’s operation, the error rate reduction program does not address problems of delays in processing applications or insufficient bilingual services. Therefore, whether the State agency was meeting these error rate reduction goals has no relation to whether the State agency was meeting the timeliness and bilingual services provisions of the Act.

At the hearing, Michael L. Madalon, the Director of the Lake County DPW, testified that the overall quality control error rate for Lake County was 6.1% for fiscal year 1984. The overall quality control error rate is an estimate of the combined active case error, payment error, underissuance error, and negative case error rates. 7 C.F.R. § 275.25(c). These error rates do not measure compliance with the Food Stamp Act standards for timeliness of processing or for bilingual services, the deficiencies of which the plaintiffs complain. Instead, they gauge the rate of overissuances and underissuances of allotments and the number of applicants improperly denied or granted benefits. 7 C.F.R. § 275.25(c)(1)(5). Therefore, the testimony as to the quality control error rates is irrelevant in determining whether the defendants have violated the timeliness and bilingual services requirements of the Food Stamp Act.

III.

To obtain a preliminary injunction, the plaintiffs must show (1) that they have no adequate remedy at law or will suffer irreparable harm if the injunction is denied; (2) that the plaintiffs have a reasonable likelihood of success on the merits; (3) that the harm they will suffer is greater than the harm the defendants will suffer if the injunction is granted; and (4) that the injunction will not harm the public interest. ON/TV of Chicago v. Julien, 763 F.2d 839 (7th Cir.1985).

A. Irreparable harm, or inadequate remedy at law

The Magistrate made no conclusion of law as to whether the plaintiffs would suffer irreparable injury by a denial of the preliminary injunction. The plaintiffs request the Court to conclude that the plaintiffs have no adequate remedy at law and will suffer irreparable injury unless preliminary equitable relief is granted.

The Supreme Court has recognized the importance of a welfare recipient’s right to assistance and the immediacy of that need. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). Many members of the plaintiff classes are persons who have zero income. Alternative sources of food have also run dry. Evidence was adduced at the hearing to establish that because of insufficient poor relief funds, payments to vendors in Calumet Township are so many months behind that food vendors will no longer accept food vouchers from Calumet Township, where many of the plaintiffs reside. The Calumet Township Trustee has been unable to provide other forms of assistance such as utility and medical payments which might otherwise make available more household dollars and thereby make food stamp delays and benefit interruptions less harmful. Many of the plaintiffs in this case are persons and households in the grip of poverty. In light of this testimony, it is reasonable to conclude that, unless a preliminary injunction issues to prevent delays and interruptions in food stamp benefits, the plaintiffs may be deprived of food. The deprivation of this basic human need is extremely serious and is quite likely to impose lingering, if not irreversible, hardships upon recipients. Smith v. Miller, 665 F.2d 172, 177 (7th Cir.1981).

The Food Stamp Act requires every participating state to adopt a program for granting fair hearings and prompt determinations of claims by households aggrieved by the action of the State agency. 7 U.S.C. § 2020(e)(10); Tyler v. Mmes. Pasqua & Toloso, 748 F.2d 283, 286 (5th Cir.1984). The Indiana DPW has adopted a fair hearing procedure which complies with 7 U.S.C. § 2020(e)(10). Indiana Food Stamp Manual, § 1000. Even if this fair hearing is effective and provides a remedy for some of the plaintiffs, it applies only to reductions or termination of benefits. Therefore, it does nothing to redress the State’s violations that are preventing households from obtaining timely review of their initial food stamp application. In light of the evidence that the denial of a preliminary injunction may deprive many low-income households of their sole source of food, the court concludes that the plaintiffs have sufficiently shown that they would suffer irreparable injury by a denial of preliminary injunction.

B. Likelihood of success on the merits

The Magistrate found that the defendants were violating several provisions of the Food Stamp Act by their improper administration of the Indiana Food Stamp Program. Specifically, evidence at the hearing established:

(1) that the defendants have violated 7 U.S.C. § 2020(e)(2) and (6) and 7 C.F.R. § 273.2(c)(1) by refusing to permit persons requesting food stamp assistance to file an application form for participation in the food stamp program on the same day that contact with the food stamp office was first made and had violated 7 C.F.R. § 273.2(c)(2) by failing to encourage households to file food stamp applications on the same day they first contact the food stamp office;
(2) that the defendants have violated 7 U.S.C. § 2020(e)(6) and (9) and 7 C.F.R. § 273.2(i)(3) by failing to provide food stamp coupons to zero net income households and destitute households within five days after the date of application and have violated 7 C.F.R. § 273.2(i)(2) by failing to design their food stamp application figures to identify households eligible for such expedited service;
(3) that the defendants have violated 7 U.S.C. § 2020(e)(4) and (6) and 7 C.F.R. § 273.14 by failing to process recertifications in a timely fashion and by failing to provide uninterrupted food stamp benefits to eligible households no later than one month after the receipt of the household’s last food stamp allotment;
(4) that the defendants have violated 7 U.S.C. § 2020(e)(3) and (6) by failing to complete certification of and provide an allotment retroactive to the period of application to any eligible household within 30 days of its filing of an application.

The Magistrate made Conclusions of Law as to the violations stated above and the parties have not objected to these conclusions. The Court accepts these Conclusions of Law and the Findings of Fact on which these Conclusions are based. These violations also demonstrate that the defendants , have violated 7 C.F.R. § 276.-1(a)(3) which requires state agencies to “be responsible for efficiently and effectively administering the Food Stamp Program by complying with the provisions of the [Food Stamp] Act, the regulations issued pursuant to the Act, and the FNS [Food and Nutrition Service]-approved State Plan of Operation.”

The plaintiffs have a great likelihood of success on the merits on their claims that the defendants have violated the statutes and regulations cited above. In addition, the Court finds that the plaintiffs have established a great likelihood of success on the merits of their claim that the defendants have violated 7 U.S.C. § 2020(e)(1)(B) by failing to use appropriate bilingual personnel in administering the Federal Food Stamp Program in Lake County and on their claim that the defendants have violated 7 C.F.R. § 272.4(b) by failing to develop estimates of the number of low-income single-language minority households in each project area and certification office.

In response to the Plaintiffs’ Interrogatories, Defendant Lake County DPW stated that it does not keep records of the total number of food stamp recipient households in Lake County in which the head of the household has a Spanish surname. County Defendant’s Response to Plaintiffs’ Revised Interrogatories, August 9, 1984, Response No. 3. The County also admitted that it did not keep records of the total number of food stamp recipient households in Lake County in which the adults are fluent only in Spanish. Response to Revised Interrogatories, August 9, 1984, Response No. 4. The County also admitted that it did not keep records of the total number of food stamp applicant households headed by a person with a Spanish surname or records of the total number of food stamp applicant households in which the adults were fluent only in Spanish. Response to Revised Interrogatories, Response No. 7. The County also admitted that it had no method or system for identifying food stamp households in which the adults are not fluent in English and that it has taken no steps toward implementing such a method or system. Response to Revised Interrogatories, Response Nos. 9 and 10.

Title 7 C.F.R. § 272.4(b)(6) requires the State agency to develop estimates of the number of low-income single-language minority households by using census data and knowledge of project areas and areas serviced by certification offices. If these information sources prove inadequate, the regulations require each certification office to record the number of single-language minority households that visit the office over a six-month period. The purpose of requiring the State agency to estimate the number of single-language minority households is to determine the extent to which each certification office and project area must provide bilingual services as specified in 7 C.F.R. § 272.4(b)(2) and (3). Because Lake County DPW has not been making these estimates, it is likely violating § 272.-4(b)(2) and (3) by failing to provide sufficient bilingual certification materials and staff or interpreters.

Because the State defendants have not developed the requisite single-language minority household estimates and have permitted the other violations of the Food Stamp Act to continue, it is likely that the plaintiffs will succeed on the merits of their claim that the defendants have violated 7 U.S.C. § 2020(a) and 7 C.F.R. §§ 271.4 and 275 by failing to adequately supervise and monitor the performance of the county departments.

C. Comparison of potential harm to plaintiffs and defendants

The harm the plaintiffs would suffer by the denial of a preliminary injunction is far greater than the harm the defendants will suffer by the grant of injunctive relief in this case. Temporary injunctive relief against the defendants in this case would merely require them to perform acts which the Federal Food Stamp Act requires of the State as a condition of the State’s receipt of food stamp benefits. Therefore, injunctive relief would impose no burden other than that already imposed by federal law.

The Court recognizes that granting injunctive relief may cause an increase in administrative work and may require changes in State agency personnel and procedures to correct the violations of the Food Stamp Act. This inconvenience cannot and does not outweigh the rights and needs of low-income households who are eligible for relief but whose relief has been blocked or delayed by defects in the Indiana DPW’s application procedures.

D. Public interest

The Food Stamp Act was enacted “to promote the general welfare, to safeguard the health and well-being of the nation’s population by raising levels of nutrition among low-income households” by “alleviatpng] hunger and malnutrition.” 7 U.S.C. § 2011. Congress has given the interest of the public foremost consideration in placing certain conditions and restrictions on the States’ participation in the program. The statute itself is a declaration of how the Food Stamp Program should be run in order to best serve the public interest. Therefore, the public interest will be best served in the case at bar by granting injunctive- relief to order the defendants to fulfill the statutory mandates of Congress in the Food Stamp Act.

IV.

Because the plaintiffs have established that preliminary injunctive relief is appropriate, defendants are hereby ORDERED:

(1) to permit persons requesting food stamp assistance to file an application form for participation in the food stamp program on the same day that such persons first contact the food stamp office in person or by telephone (7 U.S.C. §§ 2020(e)(2) and (6) and 7 C.F.R. § 273.2(c)(1));
(2) to encourage households to file food stamp applications on the same day that such households first contact the food stamp office (7 C.F.R. § 273.2(c)(2));
(3) to provide food stamp coupons to zero net income households and destitute households within five days after the date of application (7 U.S.C. §§ 2020(e)(6) and (9) and 7 C.F.R. § 273.2(i)(3));
(4) to design their food stamp application procedures to identify households eligible for five-day expedited service (7 C.F.R. § 273.2(i)(2));
(5) to process recertification applications in a timely fashion and to provide uninterrupted food stamp benefits to eligible households within one month after the receipt of the household’s last food stamp allotment (7 U.S.C. §§ 2020(e)(4) and 7 C.F.R. § 273.14);
(6) to complete certification of and provide an allotment retroactive to the period of application to any eligible household within 30 days of its filing of an application (7 U.S.C. §§ 2020(e)(3) and (6));
(7) to use appropriate bilingual personnel in administering the Food Stamp Program in Lake County (7 U.S.C. §§ 2020(e)(1)(B));
(8) to provide Program informational materials in appropriate languages in project areas with less than 2,000 low-income households, if approximately 100 or more of those households are of a single-language minority (7 C.F.R. § 272.4(b)(2)(i));
(9) to provide Program informational materials in appropriate languages in project areas with 2,000 or more low-income households if approximately 5 percent or more of those households are of a single-language minority (7 C.F.R. § 272.4(b)(2)(h));
(10) to provide each individual certification office with bilingual certification materials and with a bilingual staff person or interpreter if that office provides services to an area containing approximately 100 single-language minority households (7 C.F.R. § 272.4(b)(3)(i)). Bilingual staff persons or interpreters shall be assigned to each certification office which services such areas.
(11) to provide each project area with bilingual certification materials and with a bilingual staff person or interpreter if that project area has a total of less than 100 low-income households if a majority of those households are of a single-language minority (7 C.F.R. § 272.4(b)(3)(h)).

It is further ORDERED that the State defendants shall establish a continuing performance reporting system to monitor program administration and program operations. 7 C.F.R. § 275.2(a). The continuing reporting system shall include all data necessary to establish compliance with this Order. In addition, the State is hereby ORDERED to submit a corrective action plan to the Court within 60 days. The report shall outline steps the State defendants have taken to establish and implement procedures by which they can ensure continued compliance with this Order and with federal statutes and regulations governing the Food Stamp Act.

Failure to comply strictly with the terms of this Order may result in a finding of contempt against the violating parties. Other courts have imposed severe and burdensome penalties in contempt cases involving deprivation of welfare recipients’ rights. See, e.g. Smith v. Miller, 665 F.2d 172 (7th Cir.1981) in which a Court of Appeals upheld district court order that applications not timely granted or denied be automatically approved and Fortin v. Commissioner of Massachusetts Department of Public Welfare, 692 F.2d 790 (1st Cir. 1982) in which a Court of Appeals upheld district court order requiring State Department of Public Welfare to pay $100.00 fine to each eligible applicant whose eligibility determination is delayed up to 30 days and an additional $100.00 for every 60-day period of delay thereafter. The defendants are granted a 120-day period during which to implement the terms of this Order. Thereafter, this Court will entertain Petitions for Civil Contempt if it is established that the defendants have violated this Order.


author: SPRIZZO, District Judge:

text:
    INTERNATIONAL FILM EXCHANGE, LTD., et al., Plaintiffs, v. CORINTH FILMS, INC., et al., Defendants.
    No. 80 Civ. 6564 (JES).
    United States District Court, S.D. New York.
    Nov. 14, 1985.

      Shapiro Spiegel Garfunkel Rubin & Driggin, New York City (Nathan Shapiro and Lawrence Florio, of counsel), for plaintiffs.
    Coudert Bros., New York City (Michael J. Calvey and R. David Jacobs, of counsel), for defendants.
   OPINION & ORDER

SPRIZZO, District Judge:

Plaintiffs International Film Exchange, Ltd. (“IFEX”) and others brought an action seeking damages for copyright infringement with respect to the foreign film classic, “Ladri Di Biciclette” (“The Bicycle Thief;” hereinafter the “Film”). Defendants Corinth Films, Inc. (“Corinth”) and others counterclaimed for infringement, alleging that they, and not plaintiffs, are entitled to the exclusive United States distribution rights to the Film. Both sides have moved for summary judgment, pursuant to Fed.R.Civ.P. 56, to dismiss the respective claims and have raised numerous and complex issues with respect to their alleged copyrights in the Film. Although this action is brought under the Revised Copyright Act of 1976, 17 U.S.C. §§ 101— 810 (1982), the operative facts of this action took place while the Copyright Act of 1909, 17 U.S.C. §§ 1-810 (1976 ed.) (superseded 1976), was still effective, and the parties’ claims to rights in an original, Italian-language Film must be determined in accordance with that statute.

BACKGROUND

In 1948, the Film was published in Italy under the name and ownership of Produzioni de Sica (“PDS”), an Italian limited liability company apparently controlled by the Film’s director, Vittorio de Sica. In August of 1967, defendant Feiner entered into a contract with PDS for the rights to theatrical, non-theatrical and television exploitation in the United States of an English-language dubbed version of the Film. The contract was to run for a period of ten years. See Exhibits Accompanying Plaintiffs’ Rule 56(b) Motion to Dismiss Counterclaim (“Plaintiffs’ Exhibits”), at A. In 1970, that contract was amended to include the right to distribute an Italian-language version of the Film, with or without subtitles. See Plaintiffs’ Exhibits, at B. The 1970 contract also extended Feiner’s distribution rights through 1992. See id. Feiner, in turn, granted exclusive licenses to defendants Corinth (for non-theatrical distribution) and Jacobs (for theatrical distribution). See Answer to Amended Complaint and Amended Counterclaim, at ¶¶ 23-24. Subsequently, Corinth assumed Jacobs’ license and now claims the exclusive distribution rights to the Film in the United States.

In 1974, PDS went bankrupt. Italfilm acquired all “rights of economic utilization” to the Film pursuant to a deed of assignment executed by PDS’s liquidator on September 26, 1974. See Plaintiffs’ Exhibits, at H. However, by the terms of that deed, excepted from the transfer were “rights previously acquired by third parties, provided they are duly approved by the competent Italian authorities with respect to the monetary regulations in force.” See id., at H, H 2. Shortly thereafter, Italfilm assigned all rights to the Film to GFC. In October of 1974, plaintiffs GFC and IFEX entered into a series of agreements, the effect of which was to grant IFEX an exclusive license to create and distribute a subtitled version of the Film for a period of twelve years, beginning in 1977. See Exhibit E to Defendants’ Notice of Motion. In 1977, IFEX, in turn, granted an exclusive ten-year license to the Film to MacMillian Films, Inc. (“MacMillian”). In 1982, soon after MacMillian was acquired by Films Incorporated, MacMillian was renamed Brandon.

DISCUSSION

Defendants claim that plaintiffs have no valid rights to the Film. They argue that pursuant to the bankruptcy decree, Italfilm took the rights to the Film subject to the preexisting rights of Feiner. Plaintiffs dispute this, arguing that since defendants failed to obtain the Italian Government authorization required by Currency Law No. 476, see note 5, supra, the grant to Feiner is void and of no effect. See Second Amended Complaint, at ¶! 19.

However, since it appears clear that the Film is now in the public domain, and that neither party may properly claim any proprietary rights in the Film, it is not necessary to resolve these issues. It is undisputed that the date of publication of the Film was December 6, 1948. See Plaintiffs 3(g) Statement, at 1116. Under the 1909 Act, statutory copyright protection attached and endured for twenty-eight years from the date of first publication with notice. See 17 U.S.C. § 24 (1976) (1909 Act) (superseded). Thereafter, an application for renewal of copyright would have had to have been filed with the Copyright Office within one year prior to the expiration of the original term of copyright in order to extend the copyright protection afforded by the statute. See Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643, 644, 63 S.Ct. 773, 87 L.Ed. 1055 (1943); Tobani v. Carl Fisher, Inc., 98 F.2d 57, 59 (2d Cir.), cert. denied, 305 U.S. 650, 59 S.Ct. 243, 83 L.Ed. 420 (1938); Tobias v. Joy Music, Inc., 204 F.Supp. 556, 558 (S.D.N.Y.1962). Thus, the initial term of copyright in the Film expired December 6, 1976, and an application for a valid renewal would have had to have been filed between December 6, 1975 and December 6, 1976.

It is undisputed that neither of the defendants ever filed for a renewal of copyright for the Film during that period. Plaintiff IFEX applied for and received a renewal certificate from the Copyright Office on November 29, 1976. See Exhibit K to Declaration of R. David Jacobs. However, since this renewal application was made in the name of IFEX, it was not effective to validly extend the copyright term. A mere licensee, as opposed to an assignee, cannot validly renew a copyright in its own name. Bartok v. Boosey & Hawkes, Inc., 523 F.2d 941, 948 n. 11 (2d Cir.1975). As a consequence, the Film irrevocably entered the public domain upon the expiration of the initial term of copyright. See, e.g., Silverman v. Sunrise Pictures Corp., 273 F. 909, 912 (2d Cir.1921), cert. denied, 262 U.S. 758, 43 S.Ct. 705, 67 L.Ed. 1219 (1923); Classic Film Museum Inc. v. Warner Bros., Inc., 453 F.Supp. 852, 854-55 (D.Me.1978), aff'd, 597 F.2d 15 (1st Cir.1979); see also 2 M. Nimmer, supra, 9.05[B], at 9-57.

Nor can there be any question that IFEX was at best a licensee. A transfer of anything less than a totality of a work is a license and not an assignment. See First Financial Marketing Services Group., Inc. v. Field Promotions, Inc., 286 F.Supp. 295, 298 (S.D.N.Y.1968); Key Maps, Inc. v. Pruitt, 470 F.Supp. 33, 38-39 (S.D.Tex.1978); 3 M. Nimmer, supra, § 10.-01[A], at 10-4 to 10-5. IFEX was granted the exclusive distribution rights to the Film for a set term of years (twelve) and for a limited geographical area (United States and Canada). See Exhibit E to Defendants’ Notice of Motion. Courts have deemed such qualified transfers to be licenses. See, e.g., Hirshon v. United Artists Corp., 243 F.2d 640, 643 (D.C.Cir.1957) (transfer of rights for a three-year term constitutes a license); First Financial, supra, 286 F.Supp. at 298 (grant of exclusive rights within a limited territory operates as a license).

Although the license from GFC to IFEX states that IFEX acquired the “rights of renewal” to the Film, see Exhibit 6 to Plaintiffs’ Affidavit at U 2, this can only be reasonably interpreted as granting IFEX a right to secure a renewal of copyright in the name of the author. See, e.g., Rossiter v. Vogel, 134 F.2d 908, 911 (2d Cir.1943); Rose v. Bourne, supra note 10, 176 F.Supp. at 610. Indeed, section 24 of the 1909 Act explicitly states that, except in certain limited circumstances, not applicable here, a copyright may only be validly renewed in the name of the author. See 17 U.S.C. § 24 (1976) (1909 Act), supra note 8; Tobias, supra, 204 F.Supp. at 559.

The only other issue arguably raised by the motions is whether any party has any valid derivative-work copyright interest in either a dubbed or subtitled version of the Film. Under the 1976 Act, derivative works are independently copyrightable. See 17 U.S.C. § 103 (1982) (1976 Act). A derivative work can be a translation of a pre-existing work. See 17 U.S.C. § 101 (1982) (1976 Act); see also Brecht v. Bentley, 185 F.Supp. 890 (S.D.N.Y.1960). Therefore, valid copyrights may still exist with respect to any English-language, dubbed, or subtitled versions of the Film, even if, as the Court has found, the underlying Film itself is in the public domain. See Harry Fox Agency, Inc. v. Mills Music, Inc., 543 F.Supp. 844, 849 (S.D.N.Y. 1982), rev’d on other grounds, 720 F.2d 733 (2d Cir.1983); rev’d sub. nom. Mills Music, Inc. v. Snyder, — U.S. -, 105 S.Ct. 638, 83 L.Ed.2d 556 (1985). Russ Berrie & Co., Inc. v. Jerry Eisner Co., Inc., 482 F.Supp. 980, 985 (S.D.N.Y.1980). However, it is unclear from the papers submitted to this Court to what extent, if any, either party is claiming infringement of either a dubbed or subtitled version of the Film as a derivative work. These issues therefore cannot be resolved by summary judgment.

CONCLUSION

All claims of copyright infringement based on the original Italian-language version of the Film are dismissed. Summary judgment, however, is denied with respect to any claims of infringement concerning derivative versions of the original Italian-language version of the Film made by the parties, if, indeed, such claims are being asserted.

IT IS SO ORDERED.

      . Plaintiff IFEX is a New York corporation engaged, inter alia, in the business of exploiting foreign film productions in the United States. Joined as voluntary plaintiffs are Brandon Films, Inc. ("Brandon”) and Films Incorporated, both licensees of IFEX. Joined as involuntary plaintiffs are G.F.C. General Film Company, Ltd. ("GFC"), a Liechtenstein corporation, Italfilmexport, S.R.L. ("Italfilm”), an Italian limited liability company, Michael Arthur Productions (“Arthur”), a Swiss partnership, P.A.T. Produzioni Associata Televisive, S.R.L. ("PAT”) and PAT International, S.P.A. ("PAT International”), both Italian business entities. GFC is IFEX’s licensor and Italfilm is GFC’s predecessor in title. PAT, PAT International, and Arthur were joined, along with Films Incorporated, by plaintiff IFEX in response to a motion, made by defendants pursuant to Fed.R.Civ.P. 19. Defendants had contended that they would be exposed to a risk of multiple liability without the joinder of Filins Incorporated, PAT, PAT International, and Arthur, and that thus they were indispensable parties within the meaning of Rule 19(a). Since these parties have been joined by plaintiffs, the Court, therefore, denies defendants’ Rule 19 motion as moot.
      Defendants also object to what they refer to as "the transmutation of GFC and [Italfilm] from voluntary to involuntary plaintiffs without permission from the Court.” See Defendants’ Reply Memo at 4. It seems that in plaintiffs’ prior pleading, GFC and Italfilm were not listed as involuntary plaintiffs. See Amended Complaint. However, in their second amended complaint, plaintiffs stated that Vittorio Balini, upon whose authority GFC and Italfilm were joined to this action, was, in effect, without such authority. See Second Amended Complaint at ¶ 5(c). Therefore, pursuant to Fed.R.Civ.P. 19(a) and the “involuntary plaintiff” doctrine established' by the Supreme Court in Independent Wireless Telegraph Co. v. Radio Corp. of America, 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357 (1926), plaintiffs named these entities as involuntary plaintiffs. Defendants allege that plaintiffs violated Fed.R.Civ.P. 15(a) by filing the second amended complaint without obtaining leave of the Court. However, on March 30, 1984, the Court orally granted permission for plaintiffs to file a second amended complaint, partly as a result of defendants' continued objections that indispensable parties were still missing from this action. Since the Court has now determined that the Film is in the public domain, see infra, the propriety of joining the aforesaid parties as involuntary plaintiffs need not be decided.

      . In addition to Corinth, others named as defendants in this action are John Poole and Peter Meyers, President and Vice-President of Corinth, respectively, Arnold Jacobs (“Jacobs"), an individual doing business as A. Jay Film Co., and Richard Feiner and Company, Inc. (Feiner”). All do business in New York.

      . While the 1976 Act generally became effective on January 1, 1978, section 304(b) of the new Act, 17 U.S.C. § 304(b) (1982) (1976 Act), dealing with renewal of copyrights, was made effective upon the date of enactment, October 19, 1976. See Pub.L. No. 94-553, § 102, 90 Stat. 2541, 2598-99 (1976). However, section 304(b) only applies to renewal registrations made between December 31, 1976, and December 31, 1977, and merely provides for an extension of the renewal term. See 17 U.S.C. § 304(b) (1982) (1976 Act). Here, however, the renewal registration on the Film had to be made prior to December 6, 1976, and therefore the renewal issue is governed by the 1909 Act.

      . Prior to bankruptcy, PDS changed its name to Produzioni del Secolo. See Defendants' Memo at 4 n. 4. Italfilm was the highest bidder in an auction held by an Italian Bankruptcy Court and was awarded the rights to the Film pursuant to a decree from the Bankruptcy Court. See Plaintiffs' Exhibits, at H.

      . The parties submit that the bankruptcy decree referred to Italian Currency Decree-Law No. 476 of June 6, 1956, Gazetta Ufficiale della República Italiana 6 (February 1, 1965), which states that contracts between residents of Italy and foreign parties may not be made without proper authorization by the Italian Ministry of Foreign Trade. See Plaintiffs’ Exhibits, at J, art. 2.

      . These issues are complicated by the fact that the 1967 agreement between PDS and Feiner expressly states that the agreement is made in New York and "shall be governed in accordance with the laws of the State of New York." See Plaintiffs' Exhibits, at A, ¶ 12. Unless unreasonable, the parties’ choice of law, as expressed in their contract, governs that contract. See, e.g., CBS, Inc. (CBS Records Division) v. Tucker, 412 F.Supp. 1222, 1226 n. 5 (S.D.N.Y.1976); Fleischmann Distilling Corp. v. Distillers Co., Ltd., 395 F.Supp. 221, 229 (S.D.N.Y.1975).

      . Under American copyright laws, the fact that the Film was first published in Italy does not diminish its copyrightability here. "For domestic copyright purposes generally there is no significance in where a work is published. If [a] work is published anywhere in the world, it is ‘published,’ with all of the consequences that flow therefrom." 3 M. Nimmer, Nimmer on Copyright § 17.04[D], at 17-17 (1985) (footnote omitted). One such consequence of publication with notice is the termination of protection under common law copyright. See, e.g., Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 28 S.Ct. 722, 52 L.Ed. 1086 (1908); G. Ricordi & Co. v. Haendler, 194 F.2d 914 (2d Cir.1952).

      . Section 24 of the 1909 Act provided:
      Sec. 24. Duration; Renewal and Extension The copyright secured by this title shall endure for twenty-eight years from the date of first publication, whether the copyrighted work bears the author’s true name or is published anonymously or under an assumed name: Provided, That in the case of any posthumous work or of any periodical, cyclopedic, or other composite work upon which the copyright was originally secured by the proprietor thereof, or of any work copyrighted by a corporate body (otherwise than as assignee or licensee of the individual author) or by an employer for whom such work is made for hire, the proprietor of such copyright shall be entitled to a renewal and extension of the copyright in such work for the further term of twenty-eight years when application for such renewal and extension shall have been made to the copyright office and duly registered therein within one year prior to the expiration of the original term of copyright: And provided further, That in the case of any other copyrighted work, including a contribution by an individual author to a periodical or to a cyclopedic or other composite work, the author of such work, if still living, or the widow, widower, or children of the author, if the author be not living, or if such author, widow, widower, or children be not living, then the author’s executors, or in the absence of a will, his next of kin shall be entitled to a renewal and extension of the copyright in such work for a further term of twenty-eight years when application for such renewal and extension shall have been made to the copyright office and duly registered therein within one year prior to the expiration of the original term of copyright: And provided further, That in default of the registration of such application for renewal and extension, the copyright in any work shall determine at the expiration of twenty-eight years from first publication.
      17 U.S.C. § 24 (1976) (1909 Act) (emphasis in original).

      . The renewal certificate lists IFEX as the “Proprietor of copyright in a work made for hire,” and designates PDS as the author of the Film. See Exhibit K to Declaration of R. David Jacobs.

      . Indeed, it would be illogical to construe this license as a grant to IFEX of the renewal expectancy itself (i.e., the 28-year term), see Fred Fisher, supra, 318 U.S. at 645, 63 S.Ct. at 773, as this would plainly contradict the terms of the license, which clearly state that the license was for a term of 12 years. See Exhibit 6 to the Plaintiffs Affidavit, at ¶ 6. Thus, in this case, it is important to distinguish between a right of renewal and a right to secure a renewal. Compare Rose v. Bourne, 176 F.Supp. 605, 609 (S.D. N.Y.1959), aff'd, 279 F.2d 79 (2d Cir.), cert. denied, 364 U.S. 880, 81 S.Ct. 170, 5 L.Ed.2d 103 (1960).

      . One such circumstance occurs when the renewal claimant is the current proprietor of a work copyrighted by an employer for whom such work was made for hire. See 17 U.S.C. § 24 (1976) (1909 Act), supra note 8. In this situation, the current proprietor of the work may apply for a renewal in its own name. See Shapiro, Bernstein & Co., Inc. v. Bryan, 36 F.Supp. 544, 545 (S.D.N.Y.1940), aff'd, 123 F.2d 697 (2d Cir.1941). Although, IFEX did, in fact, place this designation under its name on the renewal application, see Exhibit K to Declaration of R. David Jacobs, it is clear that IFEX had no right to claim that status.
      Plaintiff has not even alleged that the Film was indeed a work made for hire within the meaning of the 1909 Act. See Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 914 (2d Cir.1974). Moreover, the original registration of the Film shows PDS as the author and not as an employer for whom a work was made for hire, see Exhibit J to Declaration of R. David Jacobs, and there is no evidence indicating the existence of any employer-employee relationship at the time of the Film’s creation from which IFEX’s renewal status could derive. See Epoch Producing Corp. v. Killiam Shows, Inc., 522 F.2d 737, 743-45 (2d Cir.1975). Most importantly, under section 24 of the 1909 Act, only a current proprietor can claim a renewal in a work made for hire. Under no possible construction of the facts alleged can IFEX, a mere licensee, be regarded as a current proprietor of the copyright. See Public Ledger v. New York Times, 275 F. 562 (S.D.N.Y.1921), aff’d, 279 F. 747 (2d Cir.), cert. denied, 258 U.S. 627, 42 S.Ct. 383, 66 L.Ed. 798 (1922); see also Egner v. E.C. Schirmer Music Co., 139 F.2d 398, 399 (1st Cir. 1943), cert. denied, 322 U.S. 730, 64 S.Ct. 947, 88 L.Ed. 1565 (1944); Van Cleef & Arpels, Inc. v. Schechter, 308 F.Supp. 674, 677 (S.D.N.Y.1969); cf. Geisel v. Poynter Products Inc., 295 F.Supp. 331, 337 (S.D.N.Y.1968).

      . The 1976 Act affords no copyright protection to works that have entered the public domain prior to January 1, 1978. See Pub.L. No. 94-553, § 103, 90 Stat. 2541, 2599 (1976). As this opinion makes clear, the Film entered the public domain on December 6, 1976, when the initial term of copyright expired.

      . It is clear that the affidavits as presently filed by the parties do not support such a claim. Although defendants have claimed that the plaintiffs have been marketing an English-language dubbed version of the Film, thereby infringing their copyright, see Defendants’ Reply Memo at 15, they have done so only in their brief, not in their counterclaim or affidavits. Similarly absent is an allegation that plaintiffs’ dubbed version was copied from defendants’ derivative work, and thus is not an independent translation of the original work. See 1 M. Nimmer, supra, § 3.04, at 3-16 (copyright in a derivative work merely protects against copying the original material added in the derivative work). Indeed, there has been no showing that a dubbed version of the Film even exists. Plaintiffs dispute the existence of a dubbed version of the Film, contending that they only distribute an English-subtitled version. See Plaintiffs’ Reply Memo at 8-9.
      Moreover, the catalogue advertising the Film submitted to the Court as an exhibit indicates only a subtitled version of the Film. See Exhibit M to Defendants’ Notice of Motion. No evidence of a dubbed, English-language version of the film has ever been presented to this Court. In view of the rather uncertain posture of these claims, they cannot be properly disposed of by summary judgment on the papers presently submitted to the Court.

      . By written Order, dated June 21, 1985 and filed on June 26, 1985, the Court "determined that there exist triable issues of fact with respect to the parties’ competing claims ... with respect to certain derivative works,” and directed the parties to file a Pre-Trial Order on or before July 29, 1985, and to be prepared to proceed to trial of the derivative-work claims on August 1, 1985. Upon counsel’s representations that the parties had settled any remaining disputes, the Court filed an Order of Discontinuance on July 29, 1985, with leave for either party to restore the case to the active trial calendar within ninety days. By Order dated October 28 and filed October 30, 1985, the Court directed "that upon the subjoined consent of the attorneys [dated October 22, 1985] ... the requirements of the parties to file a Stipulation of Discontinuance and exchange releases is hereby extended to December 23, 1985."