author: LAMBROS, District Judge.

text:
    ROCCO WINE DISTRIBUTORS, INC., Plaintiff, v. PLEASANT VALLEY WINE CO., Defendant.
    No. C 81-2142.
    United States District Court, N.D. Ohio, E.D.
    Aug. 31, 1984.
    Peter J. Krembs, Gruber, Moriarty, Fricke & Jaros, Cleveland, Ohio, for plaintiff Rocco Wine Distributors, Inc.

      Louis A. Colombo, Marc D. Flink, Baker & Hostetler, Cleveland, Ohio, for defendant Pleasant Valley Wine Company.
   LAMBROS, District Judge.

This is a diversity action alleging injury to plaintiff due to defendant’s violation of various sections of the Ohio Alcoholic Beverages Franchise Act (the Act), Ohio Revised Code §§ 1333.82 thru 1333.87, breach of an oral contract and intentional interference with business relations. Presently before the Court is defendant’s motion to dismiss or for summary judgment. As defendant’s motion presents matters outside the pleadings, it shall be considered as one for summary judgment. Fed.R.Civ.P. 12(b).

The undisputed facts of this ease are that plaintiff Rocco Wine Distributors, Inc. (Rocco) is, and at all times was, an Ohio corporation in the business of selling and distributing alcoholic beverages. Defendant Pleasant Valley Wine Co. (Pleasant Valley) is a wine manufacturer incorporated under the laws of the State of New York.

Rocco is the successor corporation to King Distributing Company (King), which succeeded Ascot Distributing Company. Rocco’s president and sole owner was a principal in both predecessors.

On March 1, 1977 King entered into a written franchise agreement (agreement) with Pleasant Valley in which the supply and distribution of “Great Western” wines was arranged. The agreement required King to furnish Pleasant Valley with monthly sales records; stated that it would expire on February 28, 1978; and provided that the agreement and its provisions could not be changed or waived except in writing.

Rocco succeeded King and continued to perform under the agreement. The agreement expired on February 28, 1978. Both parties, however, continued to perform as they had when the written agreement was in effect.

On May 1,1978, Pleasant Valley’s national sales manager wrote to Rocco and gave notice that Rocco’s distributorship agreement with Pleasant Valley would be terminated as of July 31, 1978 due to Rocco’s declining sales of Great Western wines in 1977 and 1978. Thereafter numerous telephonic and written discussions were held and a trial agreement was worked out. The parties continued to perform until November 13, 1978 when Pleasant Valley terminated Rocco by phone, citing continuing poor sales.

From the inception of the written agreement until the date of termination, Rocco satisfied the monthly sales report requirement of the agreement by submission of monthly depletion reports. These reports indicated, among other things, inventory levels and “sales current month.” Submission of depletion reports was customary in this business. See Consolo Depo. at 48-49.

In December of 1978, Rocco filed suit in this Court alleging that Pleasant Valley had violated the Sherman Act and the Ohio Alcoholic Beverages Franchise Act. This Court granted defendant’s motion to dismiss for failure to state a claim upon which relief could be granted and dismissed the pendant state claim for lack of jurisdiction; the federal question having been terminated. The instant action was commenced in state court on October 1,1981 and removed to this Court on Pleasant Valley’s petition.

Rocco’s amended complaint is divided into three counts. The first alleges violations of the Ohio Revised Code in that no written agreement was executed after expiration of the original agreement and that the ultimate termination of Rocco’s distributorship was without notice, without just cause and in bad faith. Count two alleges that the termination was a breach of the parties’ oral contract. Count three alleges that defendant acted to “hinder plaintiff’s attempts at compliance with its agreement to increase sales;” interfered with plaintiff’s business; and damaged plaintiff’s reputation.

Pleasant Valley has denied any wrongdoing.

I

In Rocco’s first count, Rocco complains of termination in violation of O.R.C. §§ 1333.82, 1333.84 and 1333.85. Those sections require at least sixty-days written notice of termination; that the termination be for “just cause;” and that the notice set forth the “reasons” for termination. Additionally O.R.C. § 1333.83 requires that franchise agreements be in writing.

The Act provides that a party who violates any of these provisions is liable to a party “injured by such violation” for all reasonable damages which are the “proximate result” of the violation. O.R.C. § 1333.87.

Rocco argues that termination on or about November 13, 1978 was without advance notice, in writing or otherwise, and that this placed Rocco in precisely the position the notice provision intended to avoid. Rocco further argues that the written notice did not contain all of the reasons for termination now claimed by Pleasant Valley. Pleasant Valley contends that its notice of May 12, 1978 complied with the Act and that the termination date was suspended pending the result of Rocco’s trial period. It would then follow that the original written notice sufficed to comply with the Act on November 13, 1978. Rocco admits that had it been terminated, on July 31, 1978 there would have been sufficient notice, but that a new sixty-day written notice was required prior to the November 13, 1978 termination.

It is apparent to this Court that the purpose of requiring sixty-days advance written notice of termination is to fully apprise the party being terminated of the termination, and to afford that party an opportunity to put his affairs in order so that the termination does not cause such immediate harmful impact as to paralyze the franchisee. Further, the sixty-day period permits the parties, as in the instant case, an opportunity to come to some other terms by which to preserve their relationship. The notice must be in writing, and reasons for termination stated, so that there is no misunderstanding as to the justification for termination.

In this case it is undisputed that Rocco was put on notice of its precarious position by the written notice of May 12, 1978. That notice was well within the time frame for notice provided for by the Act. Additionally, that notice informed Rocco that it was being terminated because “calendar year 1977 showed a tremendous decrease for the previous year and; to date, 1978 is running behind 1977.” That Pleasant Valley now states additional reasons for termination which did not appear in the written notice is clearly irrelevant as the cause shown in the written notice would alone be sufficient to terminate Rocco. See Caral Corp. v. Taylor Wine Co., Inc., No. C-l-80-215 (S.D.Ohio July 15, 1980) (Hogan, J.) at 11-12. Thus Pleasant Valley satisfied the requirements of O.R.C. § 1333.85 with respect to providing written notice at least sixty-days before termination and setting forth the reason for termination.

It is apparent to this Court however that whether Pleasant Valley’s termination notice of May 12, 1978 would comply with the Act’s requirements for the termination of November 13, 1978 must be determined in congruence with the terms of the trial agreement entered into by the parties.

Pleasant Valley claims that the trial agreement was for a three month period from August through October, 1978 and that sales for these three months had to be greater than sales for the same three months in 1977. Based on the depletion reports, Rocco failed this test.

While there are indications to the contrary, Rocco claims that the terms of the agreement were that Rocco would have to show an increasing trend in sales in 1978 over 1977, and perhaps 1976, based on sales as evidenced by other than depletion reports and on a differing method of computation.

If the terms of the agreement were as Pleasant Valley has alleged, the effect of the May 12 notice would have a substantially different effect as to the November 13 termination than if the terms were as Rocco has alleged.

Additionally, while the failure to execute a written franchise agreement subsequent to February 28, 1978 is a violation of the writing requirement of the Act, O.R.C. § 1333.83, whether Rocco is entitled to recover for this violation or any other putatively violative act turns on Rocco’s satisfying the injury requirement of O.R.C. § 1333.87.

Further, the written notice complies with the Act’s requirement of “good faith.” Good faith, in this context, focuses on coercion and intimidation by way of express or implied threats of termination. Excello Wine Co. v. Monsieur Henri Wines, Ltd., 474 F.Supp. 203 (S.D.Ohio 1979). There is nothing in the pleadings or supporting materials to indicate that Pleasant Valley attempted to, or did, coerce or intimidate by notifying Rocco of its intent to terminate.

On a motion for summary judgment it is not within the Court’s province to determine whose factual claim is correct but rather to determine, first, whether there exist any genuine issues of material fact for trial. Watkins v. Northwestern Ohio Tractors Pullers Assoc., Inc., 630 F.2d 1155, 1158 (1980). In this respect the movant has the burden of proof and all evidence and inferences must be considered in a light most favorable to the nonmovant. United States v. Diebold, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam); Watkins, Supra.

As a determination of compliance with the Act’s notice requirement turns on facts which are in dispute, and there exists a factual issue as to the existence of any injury to Rocco as a proximate result of the failure to execute a written agreement, Pleasant Valley’s motion for summary judgment on Rocco’s first count must be denied.

II

Because there exist genuine issues of material fact as to the terms of the oral agreement between Rocco and Pleasant Valley, as noted above, Pleasant Valley’s motion for summary judgment on count two of Rocco’s amended complaint must be denied.

III

Count three of Rocco’s amended complaint, alleging business interference, is premised primarily on the actions of Pleasant Valley’s representative taking a holiday order to a competitor, and on Pleasant Valley’s inquiries into a replacement distributor for Rocco.

Upon a review of the pleadings and supporting materials, this Court finds that there exist genuine issues of material fact as to whether or not Pleasant Valley was obligated to refrain from contacting and obtaining an order from one of Rocco’s previous customers, and then taking that order to a competing distributor, and whether or not these actions were within Pleasant Valley’s business judgment.

Additionally, as the pleadings and supporting materials indicate that Pleasant Valley contacted a possible replacement for Rocco during the trial period, any putatively illegal act would turn on the particular terms of the oral agreement. Again, if the terms were as Pleasant Valley has alleged the effect of such contact would be substantially different than if the terms were as Rocco alleged. Any such contact during the period between receipt of the written notice and the stated July 31, 1978 termination, however, would not be illegal. Rather, this would be a matter of sound business discretion.

Consequently, there exist genuine issues of material fact as to Rocco’s third count and Pleasant Valley’s motion for summary judgment is denied.

IV

In sum, Pleasant Valley’s moti.on for summary judgment is denied. Counsel for both parties shall submit to the Court a joint settlement status report within thirty (30) days. Thereafter, this action shall proceed to trial on the merits to be preceded by a summary jury trial.

IT IS SO ORDERED.


source: Caselaw Access Project

author: RAYMOND J. BRODERICK, District Judge.

license: Public Domain

text:
    UNITED STATES of America v. John MARTORANO.
    Crim. No. 84-0032.
    United States District Court, E.D. Pennsylvania.
    Sept. 4, 1984.

      David E. Fritchey, Sp. Atty., Philadelphia Strike Force, U.S. Dept, of Justice, Philadelphia, Pa., for plaintiff.
    Raymond M. Brown, Brown, Brown, & Furst, Newark, N.J., for defendant.
   MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

A jury has found the defendant, John Martorano, guilty on Count Three of Indictment No. 84-00032, charging him with knowingly making false statements and concealing facts in relation to a document required by the Employee Retirement Income Security Act of 1974 (ERISA), in violation of Title 18 U.S.C. § 1027. Section 1027 provides in pertinent part:

Whoever, in any document required by title I of the Employee Retirement Income Security Act of 1974 ... to be published, or kept as part of the records of any employee welfare benefit plan ... or certified to the administrator of any such plan, makes any false statement or representation of fact, knowing it to be false, or knowingly conceals, covers up, or fails to disclose any fact the disclosure of which is required by such title or is necessary to verify, explain, clarify or check for accuracy and completeness any report required by such title to be published or any information required by such title to be certified [shall be guilty of a crime].

Count Three of the Indictment alleged that the defendant knowingly made false statements and concealments of fact in a “utilization report” dated April 9, 1981, which the defendant signed and submitted to the Teamsters Local 837 Health and Welfare Fund.

The defendant has moved for a judgment of acquittal pursuant to Rule 29 of the Federal Rules of Criminal Procedure, or, in the alternative, for a new trial pursuant to Rule 33, on the ground that the evidence produced at trial was insufficient to support a guilty verdict. At oral argument, the defendant also contended, as he had unsuccessfully in his pre-trial motions, that § 1027 does not as a matter of law apply to him or to the conduct with which he is charged. For the reasons which follow, the defendant’s motion for a judgment of acquittal, or in the alternative for a new trial, will be denied.

On a motion for judgment of acquittal, the Court is “required to view the evidence in the light most favorable to the prosecution and to draw all reasonable inferences therefrom in the prosecution’s favor.” United States v. Ashfield, 735 F.2d 101, 106 (3d Cir.1984), citing Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). Viewing the evidence in this light, the trial court is obliged to uphold the verdict unless no rational jury could conclude beyond a reasonable doubt that the government has proved all the elements of the offense charged. Id; see also Burks v. United States, 437 U.S. 1, 16-17, 98 S.Ct. 2141, 2149-2150, 57 L.Ed.2d 1 (1978); United States v. Doan, 710 F.2d 124, 126-27 (3d Cir.1983). On the other hand, a motion for a new trial on the ground that the verdict is against the weight of the evidence is directed to the sound discretion of the trial court, which may weigh the evidence but may set aside a verdict and grant a new trial only if it determines that the verdict constitutes a miscarriage of justice. United States v. Phifer, 400 F.Supp. 719, 723 (E.D.Pa.1975), affd 532 F.2d 748 (3d Cir. 1976). The Court must also grant a new trial if there is a reasonable probability that trial error could have had a substantial influence on the jury’s decision. See Government of Virgin Islands v. Bedford, 671 F.2d 758, 762 (3d Cir.1982); United States v. Mastro, 570 F.Supp. 1388, 1390 (E.D.Pa.1983). In the present case, the evidence was amply sufficient to support the jury’s verdict under both the Rule 29 standard and the Rule 33 standard, and the defendant’s legal arguments are without merit.

Sufficiency of the Evidence

The defendant contends that the evidence produced by the government was insufficient to support a guilty verdict. Four essential elements must be proved beyond a reasonable doubt before a defendant may be found guilty under 18 U.S.C. § 1027: (1) that the defendant made a false statement or representation of fact, or concealed, covered-up, or failed to disclose a fact; (2) that the defendant did so knowingly; (3) that the false statement or representation of fact was made in a document required by Title I of ERISA to be published, or kept as part of the records of any employee welfare benefit plan, or certified to the administrator of any such plan, and any concealment, cover-up, or failure to disclose was of a fact the disclosure of which is required by Title I or is necessary to verify, explain, or check for accuracy and completeness any information required by such title to be published or certified; and (4) that the employee welfare benefit plan in question was an employee welfare benefit plan within the meaning of and subject to Title I of ERISA, 29 U.S.C. §§ 1002 and 1003. See United States v. S & Vee Cartage Co., Inc., 704 F.2d 914 (6th Cir.), cert. denied — U.S.-, 104 S.Ct. 343, 78 L.Ed.2d 310 (1983). It was undisputed in this case that the Local 837 Health & Welfare Fund was an employee welfare benefit plan within the meaning of and subject to Title I of ERISA.

In April of 1981 the defendant was the sole shareholder, director, and sole officer of Amma Health Center, Inc. (AMMA). AMMA was a medical services provider which provided outpatient medical services to the members of Local 837 pursuant to a contract between AMMA and the Local 837 Health & Welfare Fund (Fund). At the request of the Fund administrator, the defendant submitted a “utilization report” to the Fund dated April 9, 1981 (Ex. G-13). This report, submitted on AMMA’s letterhead and signed by the defendant, purported to be a “utilization report for out-patient services” provided by AMMA to Local 837 members for the period October, 1978 through December, 1978, and for the period January, 1979 through December, 1979.

The April 9, 1981 “utilization report” stated that AMMA’s “annual net profit” for the calendar year 1979 was $39,-305.21. This figure was calculated by first subtracting an entry labelled “Total dollar value of services rendered” ($162,471) from the total amount of premiums paid by the Fund to AMMA in 1979 ($234,623.50). From this result ($72,152.50) was subtracted an entry labelled “Cost of Administration (14%)” ($32,847.29), to arrive at an “Annual Net Profit” of $39,305.21. The

evidence showed, however, that the “total dollar value” figure was not an actual cost figure, and that in fact AMMA’s actual expenditures to doctors and clinics for medical services provided to Fund members in 1979 was $30,402.75. (Ex. G-50, Tr. 46-122). The government introduced evidence showing that AMMA’s annual net profit for 1979 was actually $86,339. (Tr. 46-131). Clearly, the jury rationally could have concluded that beyond a reasonable doubt the defendant’s representation of AMMA’s “annual net profit” as $39,305.21 in the April 9, 1981 utilization report was a “false statement or representation of fact” within the meaning of 18 U.S.C. § 1027.

The second element of the offense requires that the false statement, representation, or concealment of fact be made knowingly. An act of failure to act is done knowingly if done voluntarily and intentionally, and not because of mistake or accident. United States v. S & Vee Cartage Co., Inc., 704 F.2d at 919; United States v. Tolkow, 532 F.2d 853, 859 (2d Cir.1976). Proof of specific intent is not required to establish a violation of § 1027. United States v. S & Vee Cartage Co., Inc., 704 F.2d at 919; United States v. Tolkow, 532 F.2d at 858. Furthermore, as this Court instructed the jury, the government need not prove that the defendant was aware of any legal duties imposed upon him by ERISA, or that he was aware of the Fund’s reporting requirements under ERISA, or that he intended to violate any law. United States v. Tolkow, 532 F.2d at 858.

In his requested jury instructions, the defendant contended that in order to establish a violation of § 1027 the government must prove that the defendant was aware of any legal duties imposed upon him by ERISA with respect to the submission of information contained in the “utilization reports” which he submitted to the Fund. Such a contention has been expressly rejected, see United States v. Tolkow, 532 F.2d at 858, and this Court .properly denied the defendant’s requested jury instruction.

In his post-trial motion the defendant contends that there was insufficient evidence of “fraudulent concealment as defined within 18 U.S.C. § 1027.” However, § 1027 makes no mention whatsoever of “fraudulent concealment”, and there is no basis upon which to conclude that a violation of § 1027 requires proof of fraud or actual reliance upon any false statement or concealment of fact. The statute requires only that the false statement of fact or representation of fact be made “knowingly”. 18 U.S.C. § 1027; United States v. S & Vee Cartage Co., Inc., 704 F.2d at 919.

At the time the defendant submitted the April 9, 1981 “utilization report” he was the sole shareholder, director, and sole officer of AMMA. There was ample evidence introduced at trial from which the jury rationally could have concluded beyond a reasonable doubt that the defendant knew that AMMA’s actual annual net profit for 1979 was not the figure which he reported on the April 9, 1981 utilization report, and that therefore the defendant “knowingly” made a false statement or representation of fact within the meaning of 18 U.S.C. § 1027.

The third element necessary to establish a violation of 18 U.S.C. § 1027 requires that the false statement or false representation of fact be made in a document required by Title I of ERISA to be published, or kept as part of the records of any employee welfare benefit plan, or certified to the administrator of any such plan. Similarly, any concealment, cover-up, or failure to disclose must be of a fact the disclosure of which is required by Title I, or is necessary to verify, explain, clarify, or check for accuracy and completeness any report required by such title to be certified. Thus a knowing false statement of fact falls within the proscription of § 1027 if made in a document required by Title I of ERISA to be (a) published, (b) kept as part of the records of any employee welfare benefit plan, or (c) certified to the administrator of such a plan.

Title 29 U.S.C. § 1023(a)(1)(A) provides that an annual report shall be published and filed with the Secretary of Labor for every employee welfare benefit plan subject to the ERISA statutes. 29 U.S.C. § 1023 also sets forth the information which must be included in the published annual report of an employee welfare benefit plan. Section 1023(e) provides

If some or all of the benefits under the plan are purchased from and guaranteed by an insurance company, insurance service, or other similar organization, a report under this section shall include a statement from such insurance company, service, or other similar organization coverning the plan year and enumerating—
(1) the premium rate or subscription charge and the total premium or subscription charges paid to each such carrier, insurance service, or other similar organization and the approximate number of persons covered by each class of such benefits; and
(2) the total amount of premiums received, the approximate number of persons covered by each class of benefits, and the total claims paid by such company, service, or other organization; dividends or retroactive rate adjustments, commissions, and administrative service or other fees or other specific acquisition costs paid by such company, service, or other organization; any amounts held to provide benefits after retirement; the remainder of such premiums; and the names and addresses of the brokers, agents, or other persons to whom commissions or fees were paid, the amount paid to each, and for what purpose____

In 29 U.S.C. § 1029 Congress authorized the Secretary of Labor to require, inter alia, that any information required to be submitted to him or filed with him pursuant to § 1023 (i.e., the annual report) must be submitted on “such forms as he may prescribe.” The Secretary has by regulation prescribed that the annual report shall be submitted on a “Form 5500” and its attached schedules (e.g., Schedule A, “Insurance Information”). 29 U.S.C. § 2520.103-l(b)(l). The Form 5500 annual report and its supporting schedules clearly are documents required to be “published” within the meaning of 18 U.S.C. § 1027, and any false statement of fact or representation of fact knowingly made in the Form 5500 or an attached schedule therefore is proscribed by 18 U.S.C. § 1027.

29 U.S.C. § 1027 concerns the “retention of records” with respect to the ERI-SA reporting requirements, and describes the kind of documents which must be “kept as part of the records of any employee welfare benefit plan” within the meaning of 18 U.S.C. § 1027. 29 U.S.C. § 1027 provides in pertinent part

Every person subject to a requirement to file any description or report or to certify any information therefor under this subchapter ... shall maintain records on the matters of which disclosure is required which will provide in sufficient detail the necessary basic information and data from which the documents thus required may be verified, explained, or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than six years after the filing date of the documents based on the information which they contain, or six years after the date on which such documents would have been filed____

Any false statement of fact or concealment of fact knowingly made in a document required to be “kept” under this section (even if such document itself may not be required to be “published”) falls within the purview of the criminal statute, 18 U.S.C. § 1027.

Finally, 18 U.S.C. § 1027 also proscribes any false statement of fact or representation of fact knowingly made in any document “required to be certified to the administrator” of any employee welfare benefit plan. 29 C.F.R. § 2520.103-5 is entitled “Transmittal and certification of information to plan administrator for annual reporting purposes,” and provides, inter alia, that “an insurance carrier or other organization which provides funds from its general asset account for the payment of benefits under a plan” shall, upon request of the plan administrator, provide “such information as it contained within the ordinary business records of the insurance carrier or other organization and is needed by the plan administrator” to file the annual report. See 29 C.F.R. § 2520.103-5(d). Any false statement of fact or representation of fact knowingly made in any document “required to be certified to the administrator” of any employee welfare benefit plan is proscribed by 18 U.S.C. § 1027.

In this case, AMMA indisputably was “an insurance company, insurance service, or other similar organization” providing benefits to the Fund within the meaning of 29 U.S.C. § 1023(e). Therefore, the insurance information set forth in 29 U.S.C. § 1023(e) was required to be included in the Fund’s annual report (i.e., the Form 5500 and Schedule A) for 1979. Although this Court submitted to the jury the issue of whether the April 9, 1981 utilization report is a “document” required to be “published or kept” within the meaning of 18 U.S.C. § 1027, it is apparent that the April 9, 1981 utilization report is as a matter of law such a “document” within the meaning of the criminal statute. In any event, the jury rationally concluded beyond a reasonable doubt that the April 9, 1981 “utilization report” was a document within the purview of 18 U.S.C. § 1027. This Court has concluded that there was ample evidence from which the jury could rationally have concluded that each of the essential elements necessary to establish a violation of 18 U.S.C. § 1027 with respect to Count Three was proven beyond a reasonable doubt.

Applicability of 18 U.S.C. § 1027 to the Defendant

At oral argument the defendant contended, as he had in his pre-trial motions, that 18 U.S.C. § 1027 does not, as a matter of law, apply to a medical services provider such as AMMA. The primary basis for this contention apparently is the fact that three of the four reported cases involving prosecutions brought under 18 U.S.C. § 1027 have dealt with fiduciaries of employee benefit funds. See United States v. Tolkow, 532 F.2d 853 (2d Cir.1976); United States v. Santiago, 528 F.2d 1130 (2d Cir.), cert. denied, 425 U.S. 972, 96 S.Ct. 2169, 48 L.Ed.2d 795 (1976); United States v. McCrae, 344 F.Supp. 942 (E.D.Pa.1972).

In United States v. S & Vee Cartage Co., Inc., 704 F.2d 914 (6th Cir.), cert. denied, — U.S. -, 104 S.Ct. 343, 78 L.Ed.2d 310 (1983), the Sixth Circuit expressly rejected the contention that § 1027 applies only to fund fiduciaries, and held that employers who committed any of the proscribed conduct in § 1027 could be held criminally responsible. The court stated

We find the arguments of appellants to be unimpressive. The statute, 18 U.S.C. § 1027, provides in broad language, unequivocally and without limitation, that “[wjhoever” knowingly makes any false statement or conceals facts in any documents required by Title I of the Employee Retirement Income Security Act of 1974 (E.R.I.S.A.) to be published, or kept by an employee benefit plan or certified to the administrator of any such plan, may be held criminally culpable. No differentiation is made between an employer or a fiduciary of an employee benefit or welfare fund ... “Whoever” clearly is sufficiently broad to include employers as well as fiduciaries. We conclude that appellants, as an “employer”, are included within the provisions of § 1027.

United States v. S & Vee Cartage Co., Inc., 704 F.2d at 916, 917. See also Southwest Areas Pension Fund v. CRST, 641 F.2d 616, 619 n. 1 (8th Cir. 1981).

Similarly, in this case this Court has no difficulty in concluding that the “whoever” language of § 1027 is sufficiently broad to include medical services providers such as the defendant. As noted in S & Vee Cartage Co., “[t]he only relevant limitation found in § 1027 deals with the type of documents containing false statements.” 704 F.2d at 917. As discussed above, § 1027 expressly covers false statements made in documents required by Title I of ERISA to be published, kept as part of the records of an employee welfare benefit plan, or certified to the administrator of such a plan. Documents containing information from insurance carriers or “other similar organizations” are included in these categories with respect to employee welfare benefit plans. Thus, it is clear that insurance carriers or “other similar organizations” such as AMMA are not excluded from the proscriptions of § 1027.

For all of the reasons set forth above, the defendant’s motion for a judgment of acquittal or, in the alternative, for a new trial will be denied.


author: KISER, District Judge.

text:
    Theodore R. THOMPSON, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
    Civ. A. No. 83-0192-D.
    United States District Court, W.D. Virginia, Danville Division.
    Sept. 10, 1984.

      Louis P. McFadden, Jr., Meade, Tate & Meade, Danville, Va., for plaintiff.
    Jennie L. Montgomery, Asst. U.S. Atty., Roanoke, Va., Mariann E. Schick, Labor Law Division, U.S. Postal Service, Philadelphia, Pa., for defendant.
   MEMORANDUM OPINION

KISER, District Judge.

In this action Plaintiff, Theodore R. Thompson, a former employee of the United States Postal Service (the Service), seeks a review of a decision of the Merit Systems Protection Board (MSPB) upholding his removal from government Service. Because the Plaintiff has also alleged discrimination as a basis for his termination of employment, this is what has been considered by the courts as a “mixed case” and is, therefore, properly before this Court. 5 U.S.C. § 7703(b)(2); see Hayes v. United States Government Printing Office, 684 F.2d 137 (D.C.Cir.1982). Trial was held on May 21 and 22,1984. At the close of the Plaintiff’s ease, the Court granted the Defendant’s motion to dismiss Plaintiff’s complaint of handicap discrimination. The parties have submitted final argument in the case, and thus it is now ripe for disposition.

The facts in the case are briefly as follows. The Plaintiff had been an employee of the Service since 1970 before he was removed on October 4, 1982. The Plaintiff was charged with theft of mail matter. The removal action was taken as a result of an investigation by the agency’s postal inspectors, who were summoned to the Martinsville Post Office to investigate whether the Plaintiff was malingering an injury. At trial, Inspector Posey indicated there was no evidence to show that Plaintiff was in fact malingering an injury.

However, while watching the Plaintiff, the Postal Inspectors observed the Plaintiff taking various items from the mails, including cigarettes and magazines. At the time the Plaintiff was being observed, he was working as a “throwback” clerk. Although the Plaintiff contends that he was not familiar with this position, the Plaintiff’s past duties as a carrier, I feel, were of the nature that he would be able to perform as such a clerk. At this point, the Inspectors began to “test” the Plaintiff with items placed in the mail system over a period of approximately two weeks. Fifteen test items were placed in the mail system by Postmaster Abernathy and the Postal Inspectors. On September 15, 1982, the Plaintiff was observed opening a third class envelope which had no indication of return address and taking two Kennedy half dollars which had been marked by the Inspectors.

As the Plaintiff was leaving work on September 15, he was stopped by the Inspectors and admitted taking certain items for his personal use. On September 23, 1982, he received a letter from G.E. Han-kins, Superintendent of Postal Operations at the Martinsville Post Office, informing the Plaintiff of the Service’s proposal to remove him from the Postal Service. The reason for this proposed action was that he was charged with theft of mail matter. The Plaintiff was removed from his position effective October 4, 1982.

I.

This Court must sit as an appellate body to review the decision of the MSPB to determine if, within the confines of the standards of review set forth at 5 U.S.C. § 7703(c), the decision is lawful. It is well settled that the decision of the agency must be sustained unless the Court shall determine that the agency’s actions are “(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule, or regulation having been followed, or (3) unsupported by substantial evidence.” 5 U.S.C. § 7703(c).

Judicial review of MSPB decisions is “very narrow” and is to be based exclusively on the administrative record. See, e.g. Romero v. Department of the Army, 708 F.2d 1561, 1563 (10th Cir.1983); Doe v. Hampton, 566 F.2d 265, 272 (D.C.Cir.1977). In this case, the Plaintiff challenges the decision as follows: (1) the action taken against the Plaintiff was not shown to have promoted the efficiency of the Service; (2) the penalty was inappropriate as the MSPB failed to consider relevant factors surrounding the incident; (3) the MSPB failed to properly consider the disparate treatment given Plaintiff as opposed to other employees; and (4) the MSPB acted unlawfully in finding that Plaintiff’s claimed defense of entrapment failed.

A.

The Plaintiff alleges that the MSPB failed to find and articulate properly that there was a nexus between the Plaintiff’s acts and the promotion of the “efficiency of the Service.” An employee may be removed by an agency only for such cause as will promote the efficiency of the Service. See 5 U.S.C. § 7513. This statute requires simply that the Service have a rational basis for discharging the employee. Risner v. United States Dept. of Transportation, 677 F.2d 36 (8th Cir.1982). To establish the nexus between the Plaintiff’s misconduct and the efficiency of the Service, the agency must show that “the misconduct adversely affects the effective performance of the employee or his co-employees.” Bonet v. United States Postal Service, 712 F.2d 213, 214-15 (5th Cir. 1983). Further, in the Fourth Circuit it has been held that:

There is, of course, some conduct with respect to which the ‘nexus between the dismissed employee’s activities and the efficiency of the Service’ is ‘obvious on the face of the facts.’ Typical of conduct which carries on its face prejudice to the Service ... are falsification of work records or expense accounts, theft of government property, assault on one’s supervisor at work, and insubordination. All of these are without question related to the faithful and loyal performance of his duties by an employee and are work-related. Phillips v. Bergland, 586 F.2d 1007, 1011 (4th Cir.1978). (citations omitted).

In this case, the Plaintiff admitted taking certain items from the mails for his own personal gain, clearly a work-related incident which affects the Plaintiff’s performance. This misconduct was the cause of his termination. In fact, the Plaintiff pled guilty to a criminal offense related to this incident.

The Postal Service is charged with ensuring that mail is properly delivered. The public has placed its trust in this agency and has every right to expect that letters and packages will reach their proper destinations. Although the matters taken in this case may have been “test” items, it was clear that substantial evidence supports the fact that the Plaintiff breached his fiduciary duty on more than one occasion and this breach carries on its face prejudice to the service.

B.

The Plaintiff next challenges whether the penalty of removal amounts to an abuse of discretion based on the circumstances in this case. The Plaintiff submits that the agency's failure to consider the nature and seriousness of the offense and whether the taking of certain mail matter was common practice renders the affirmation of the agency’s penalty arbitrary and capricious. It is well established that under civil service law the penalty for employee misconduct is left to the sound discretion of the agency. The Court will defer to the agency’s choice of penalty unless its severity appears “totally unwarranted” in light of relevant factors. See, e.g., Miguel v. Department of the Army, 727 F.2d 1081 (Fed.Cir.1984); Brewer v. United States Postal Service, 647 F.2d 1093, 1098, 227 Ct.Cl. 276 (1981), cert. denied, 454 U.S. 1144, 102 S.Ct. 1005, 71 L.Ed.2d 296 (1982). In two situations courts will not uphold the punishment imposed by the agency. The first test for an invalid penalty is whether or not the sanction exceeds the range of permissible punishment specified by statute or regulation. Under the second test, courts disapprove discipline which is so harsh and unconscionably disproportionate to the offense that it amounts to an abuse of discretion by the agency. See, e.g. Power v. United States, 531 F.2d 505, 209 Ct.Cl. 126 (1976).

It is undisputed that removal is a sanction in the range of permissible punishment in this case. However, it is the Plaintiff’s contention that the MSPB erred in upholding the Plaintiff’s removal from service when the agency failed to consider relevant factors unique to this case including the contention that the taking of undeliverable third-class mail was common practice at the Martinsville Post Office. However, under the facts presented to the MSPB, I believe that the Plaintiff’s removal should be upheld. Two of the Plaintiff’s witnesses had left the service at Martins-ville in 1975 and 1980, and thus were not in a position to know what the common practice was at the Martinsville Post Office. At best, the evidence as to this point is contradictory. Although under the facts of this case, I may have imposed another penalty, I cannot hold that the penalty is “totally unwarranted” in this case.

C.

The Plaintiff also contends that he was treated differently than other employees and such disparate treatment renders the penalty of removal an abuse of discretion. However, the Plaintiff failed to demonstrate that any other employee had taken mail matter for his own personal use, as did the Plaintiff. The Plaintiff did show that a white employee, Glenn Holland, had “trashed” certain deliverable mail which was recovered by other employees. Although I find such behavior intolerable, I also find it distinguishable from the actions of the Plaintiff who converted mail to his own use.

D.

Finally, I concur with the decision of the MSPB that the Plaintiff’s entrapment argument must fail. In this case, the Plaintiff was not induced to remove the items — he took them of his own free will.

Therefore, in conclusion, the decision of the MSPB affirming the removal of Theodore R. Thompson is affirmed.

II.

The Plaintiff's second claim is that he was discriminated against on the basis of his race in violation of § 717(c) of the Civil Rights Act of 1964 [42 U.S.C. § 2000e-16(c)]. In order to prevail in this claim, Thompson must prove that the Defendant intentionally discriminated against him. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981).

In light of the historic difficulties faced by plaintiffs trying to overcome employer’s assertions of legitimate business purposes for their actions, the Supreme Court has stated that proof of a prima facie case of discrimination raises a rebuttal presumption in the plaintiff’s favor. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). To create this presumption, Thompson must prove that (1) he belongs to a racial minority, (2) he was discharged or demoted, (3) at the time of the discharge or demotion he was performing his job at a level that met his employer’s legitimate expectations, and (4) following his discharge or demotion, he was replaced by someone of comparable qualifications outside the protected class. Burdine, supra, 450 U.S. at 254, 101 S.Ct. at 1094.

The Defendant articulated a non-discriminatory reasons for Plaintiff’s termination— his theft of mail matter. The Supreme Court has recently noted that when the defendant offers evidence of a reason for the plaintiff’s dismissal, the McDonnellBurdine presumption “drops from the case” and “the factual inquiry proceeds to a new level of specificity.” United States Postal Service Board v. Aikens, 460 U.S. 711, 715, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983). At this point in the proceedings, therefore, the question is whether the Plaintiff has proven intentional discrimination by showing that a discriminatory reason more likely motivated the employer or by showing that the employer’s proffered explanation is unworthy of credence, Bur-dine, supra, 450 U.S., at 256, 101 S.Ct. at 1095, or a mere “pretext”.

No credible evidence was presented to the Court which directly proves that the Plaintiff’s discharge was motivated by racial discrimination. Some of Plaintiff’s own witnesses testified that there was no racial discrimination at the Martinsville Post Office. While there was some testimony to the contrary, I did not find those witnesses as credible because they were also having difficulties with their superiors over job performance. Indeed, the Plaintiff has not tried to establish direct proof of intentional discrimination. Instead, he has sought to prove that the asserted reason for his discharge was a mere pretext, and that different treatment was given to white employees who committed equally serious offenses. The evidence presented does not support either of these contentions.

A.

Thompson contends that the failure of the Postal Service to consider various mitigating factors and lesser penalties is proof that the articulated reason for Thompson’s discharge was pretextual. The mitigating factors cited include the Plaintiff’s inexperience at this particular job, the widespread practice of removing third rate undeliverable mail for personal use, and the reasonable dilemma encountered by the Plaintiff faced with money in mail that would normally be thrown out. These factors are relevant to my review of the MSPB decision, as explained above. But the fact remains that the offense committed by the Plaintiff is an act which violates federal criminal statutes, and Postal Service regulations provide for removal as a penalty for this offense.

The Plaintiff cites several cases for the proposition that the Postal Service’s failure to consider less restrictive penalties is proof that the articulated reason was pretextual. McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 273, 96 S.Ct. 2574, 49 L.Ed.2d 493 (1976), does not support this proposition. That case simply held that employees of one color cannot be discharged for one offense while retaining employees of another color found guilty of the same offense. Id. at 284, 96 S.Ct. at 2580. The applicability of McDonald to Thompson’s second argument will be discussed below. The other case cited by Plaintiff, Robinson v. Lorillard Corp., 444 F.2d 791 (4th Cir.1971), is easily distinguishable. Robinson involved a seniority system that had a discriminatory impact. The Fourth Circuit Court of Appeals held that:

The test is whether there exists an overriding legitimate business purpose such that the practice is necessary to the safe and efficient operation of the business. Thus, the business purpose must be sufficiently compelling to override any racial impact; the challenged practice must effectively carry out the business purpose it is alleged to serve; and there must be available no acceptable alternative policies or practices which would better accomplish the business purpose advanced, or accomplish it equally well with a lesser differential racial impact. Id. at 798.

Applying this test to the Postal Service policy that makes theft a removal offense, I find that this policy does not have a differential racial impact when applied uniformly or when applied to the circumstances of this case. The Postal Service has a strong interest in protecting items entrusted to it by its customers. A violation of this fiduciary duty by an agent or employee of the Postal Service is treated harshly, and theft is considered among the most serious offenses. This policy is not unreasonable on its face, and the reasonability of a particular application of this policy, based upon mitigating factors, is more appropriately challenged through the MSPB.

B.

Plaintiff asserts that the Postal Service’s removal policy is not applied uniformly. He contends that the harsher treatment he received, when compared with the treatment given a similarly situated white employee, is proof that the agency’s reasons are pretextual and their actions based upon prohibited discriminatory factors.

As a matter of law, this contention is sound. Proof of disparate treatment between a white and a black employee who are similarly situated can be sufficient to establish pretext. McDonald, supra, 427 U.S. at 283-84, 96 S.Ct. at 2580-81. But the Plaintiff has not established the facts necessary to bring his case within the McDonald rule. There is no evidence that any other postal employee, black or white, has received different treatment when discovered by postal supervisors removing items from the mail for their personal use. Thompson’s argument that everyone else was doing the same thing is of no avail. He was the one who was caught, and he was punished accordingly. The fact that other employees were not caught is not a legitimate defense, and it cannot lead to the conclusion that his punishment was pretextual.

The Plaintiff tries to compare his punishment to that of a white employee, Glenn Holland, who repeatedly received suspensions for insubordination and obstruction of mail, which are potentially removable offenses. The record shows that the lower penalties were issued under the MSPB’s practice of “progressive discipline”. Holland, frustrated over his receipt of additional work shortly before he was scheduled to leave, apparently “trashed” some mail in the sight of other employees.

Postal authorities concluded that Holland’s act was committed in the heat of passion, and that no permanent damage was done. The Postal Service argues that Thompson’s deliberate act of opening mail and stealing the money found inside is not only distinguishable, but goes to the heart of the Postal System's fiduciary duty to its customers.

I agree with the Defendant that the offenses and respective punishments of these two employees are significantly different, and that the McDonald presumption is not applicable to this case. While an employer might act reasonably in firing or retaining an employee for either insubordination or theft, it seems obvious that the employee who commits theft is more likely to be fired. Insubordination may interfere with the workings of the business, but theft, especially from a customer, affects the basic trustworthiness of the employee and his ability to deal honestly with the valued items of customers. The disparate treatment afforded these two employees does not warrant an inference that Thompson’s discharge was discriminatorily motivated.

In conclusion, I must dismiss the Plaintiffs claim of racial discrimination.

An appropriate order will issue.

The Clerk is directed to send certified copies of this Memorandum Opinion to all counsel of record.

      . The record reveals that the Plaintiff has been found guilty of obstruction of the mail as a result of this act.


author: EDWARD C. REED, Jr., District Judge.

text:
    Tom HAY, Plaintiff, v. WELLS CARGO, INC., Teamsters, Chauffeurs, Warehousemen and Helpers Local Union No. 533, Jack Herzig, William Calmette, John Rettagliata, Frank Collins, John Jenkins and Albert Leniz, Defendants. TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS LOCAL UNION NO. 533, Frank Collins, John Jenkins, Albert Leniz and Edward Greeley, Counterclaimants, v. Tom HAY, Counterdefendant. WELLS CARGO, INC., Jack Gerzig, William Calmette & John Rettagliata, Counterclaimants, v. Tom HAY, Counterdefendant.
    No. CV-R-82-410-ECR.
    United States District Court, D. Nevada.
    Sept. 11, 1984.

      Patrick James Martin, Reno, Nev., for plaintiff.
    Clark J. Guild, Jr., Reno, Nev., for Wells Cargo, Inc. and Jack Herzig, William Calmette and John Rettagliata.
    Paul H. Lamboley, Reno, Nev., for Teamsters, et al.
   ORDER ON MOTION TO DISMISS

EDWARD C. REED, Jr., District Judge.

Defendant Teamsters Union Local 533 (Union) has filed a motion to dismiss plaintiff’s first, second and third claims for relief. Document # 18. The Wells Cargo defendants have joined in this motion. See “Motion to Dismiss or in the Alternative Motion for Summary Judgment” (Document # 22) at 2. Pursuant to this Court’s Order of March 27, 1984, the Union’s motion to dismiss is treated as a motion for summary judgment. Document # 27.

First Claim for Relief (Age Discrimination (Federal law))

29 U.S.C. § 626(d) provides:

No civil action may be commenced by an individual under this section until 60 days after a charge alleging unlawful discrimination has been filed with the Commission. Such a charge shall be filed—
(1) within 180 days after the alleged unlawful practice occurred; or
(2) in a case to which section 633(b) of this title applies, within 300 days after the alleged unlawful practice occurred, or within 30 days after receipt by the individual of notice of termination of proceedings under State law, whichever is earlier.
Upon receiving such a charge, the Commission shall promptly notify all persons named in such charge as prospective defendants in the action and shall promptly seek to eliminate any alleged unlawful practice by informal methods of conciliation, conference, and persuasion.

29 U.S.C. § 633(b) provides:

In the case of an alleged unlawful practice occurring in a State which has a law prohibiting discrimination in employment because of age and establishing or authorizing a State authority to grant or seek relief from such discriminatory practice, no suit may be brought under section 626 of this title before the expiration of sixty days after proceedings have been commenced under the State law, unless such proceedings have been earlier terminated: Provided, That such sixty-day period shall be extended to one hundred twenty days during the first year after the effective date of such State law. If any requirement for the commencement of such proceedings is imposed by a State authority other than a requirement of the filing of a written and signed statement of the facts upon which the proceeding is based, the proceeding shall be deemed to have been commenced for the purposes of this subsection at the time such statement is sent by registered mail to the appropriate State authority.

Thus, to bring an action under ADEA, a plaintiff in a “deferral” state such as Nevada must observe two time requirements. First, he must comply with 29 U.S.C. § 626(d)(2), which requires that he file a charge alleging discrimination with the EEOC within 800 days of the alleged unlawful practice. Second, he must comply with 29 U.S.C. § 626(e), which incorporates the statute of limitations from the Portal-to-Portal Act under 29 U.S.C. § 255. The limitations period under § 255 is three years in the case of a willful violation; otherwise it is two years. See Kanzanzas v. Walt Disney World Co., 704 F.2d 1527, 1528 (11th Cir.) (outlining similar procedure to be followed in non-deferral state) (dictum), cert. denied — U.S. -, 104 S.Ct. 425, 78 L.Ed.2d 360 (1983). Therefore, even though plaintiff may have filed his claim in federal court within the three year limitations period of §§ 626(e) and 255 the claim is still subject to.dismissal if the time requirements for filing a charge under § 626(d) are not met. The record contains no indication that such a charge has ever been filed. Since it appears that plaintiff has failed to file a charge with the EEOC within 300 days of his termination, as required by § 626(d)(2), his claim is barred unless a reason for equitable modification of the limitations period appears. See Benima v. Smithsonian Institution, 471 F.Supp. 62, 65-66 (D.Mass.1979); Bengochea v. Norcross, Inc., 464 F.Supp. 709, 711-12 (E.D.Pa.1979).

Equitable Modification of Limitations Period

The Ninth Circuit has indicated that § 626(d)’s requirements are subject to equitable modification. Naton v. Bank of California, 649 F.2d 691, 696 (9th Cir.1981).

Two kinds of equitable modification have been recognized: (1) equitable tolling, which often focuses on the plaintiff’s excusable ignorance of the limitations period and on lack of prejudice to the defendant, ... and (2) equitable estoppel, which usually focuses on the actions of the defendant ____

Id. (citations omitted). See also Abbott v. Moore Business Forms, 439 F.Supp. 643, 646 (D.N.H.1977) (Factors to be considered in determining the appropriateness of tolling include: lack of actual notice of the filing requirement; lack of constructive knowledge; diligence in pursuing one’s rights; absence of prejudice to the defendant; and plaintiff’s reasonableness in remaining ignorant of the notice requirement.). Having evaluated all of the relevant factors as they apply to the plaintiff's case, we find no basis for the application of either type of equitable modification in this case.

In the first place, we note that plaintiff does not contend that the defendants themselves misled him as to the nature of his rights or the limitation periods to which his age discrimination claim was subject. Therefore, there is no basis for application of the doctrine of equitable estoppel.

With respect to equitable tolling, we note initially that plaintiff was aware of the possibility that he was the victim of age discrimination as early as March 9, 1981, when he filed a claim with NERC on the basis of age discrimination. Reply Memorandum in Opposition to Motion to Dismiss (Document # 20), Exh. C at 2. Therefore, the § 626(d)(2) limitations period can be considered to have begun to run from that point.

In ADEA suits, the applicable limitations period is activated once the employee knows or should know that an unlawful employment practice has been committed. Aronsen v. Crown Zellerbach, 662 F.2d 584, 593 (9th Cir.1981), cert. denied 459 U.S. 1200, 103 S.Ct. 1183, 75 L.Ed.2d 431 (1983).

Plaintiffs affidavit, read in the light most favorable to him, indicates that he may have been misled or confused as to how to protect his rights by virtue of the failure of the various agencies that he visited to respond to his grievance or to give him correct information as to how to proceed. Reply Memorandum in Opposition to Motion to Dismiss (Document # 20), Exh. B at 2-3 [hereinafter cited as Reply Memorandum Exh. B]. It is clear, however, that by early June of 1981, plaintiff was aware that the agencies that he had contacted up to that point would not help him. He should then have taken notice that he would have to do something else in order to protect his rights. His response in the face of this development, however, was to devote his attention to his personal affairs until March of 1982, id. at 3-6, and he made only sporadic and ineffective attempts to pursue his age discrimination claim during that period. Id. at 4-5. Such conduct is not sufficient to toll ADEA filing periods. Moon v. Aeronca, Inc., 541 F.Supp. 747, 751-52 (S.D.Ohio 1982). Preoccupation with one’s personal affairs cannot be a basis for tolling a limitations period. Kocian v. Getty Refining and Marketing Co., 707 F.2d 748, 753 (3d Cir.), cert. denied — U.S.,- 104 S.Ct. 164, 78 L.Ed.2d 150 (1983). It is instructive to compare plaintiff’s situation with that of a litigant who fails to comply with, for example, a rule governing the time for filing a notice of appeal. Such situations are governed by a similar standard. In re Estate of Butler’s Tire & Battery Co., 592 F.2d 1028, 1033 (9th Cir.1979). See also Usery v. Weiner Bros., Inc., 70 F.R.D. 615, 617 (D.Conn.1976) (Excuse that defendant could not devote time to litigation because of pressing business was “frivolous.”). Cf. Andrews v. Jacoby, 39 Cal.App. 382, 178 P. 969, 970 (1919) (Noting that “most men could plead their business as an excuse” for not devoting sufficient attention to litigation in which they are involved.).

Plaintiff alleges that “[a]t no time was I advised by my Union, by Union counsel, or Nevada Equal Rights Commission that there were limits for filing complaints.” Reply Memorandum Exh. B, supra, at 6. However, he does not allege, and we do not find, that this could be construed as “misleading conduct of the defendants that] induced the plaintiff the delay filing [a charge].” Naton, 649 F.2d at 696. The fact that he continued to make efforts, albeit feeble ones, to seek help from various agencies shows that he was aware that he still might have a claim.

The plaintiffs failure to act diligently in protecting his ADEA rights was unfortunately combined with a similar failure on the part of his attorney. By late summer of 1982, plaintiffs attorney was apprised of the “details” concerning plaintiffs age discrimination claim. Reply Memorandum Exh. B, supra, at 6. Equitable tolling is inappropriate when plaintiff has consulted counsel during the statutory period. Counsel are presumptively aware of whatever legal recourse may be available to their client, and this constructive knowledge of the law’s requirements is thereby imputed to an ADEA claimant. Leite v. Kennecott Copper Corp., 558 F.Supp. 1170, 1174 (D.Mass.) (citing cases), affd. table. 720 F.2d 658 (1st Cir.1983). Cf N.L.R.B. v. Sequoia District Council of Carpenters, 568 F.2d 628, 633 (9th Cir. 1977) (“In ‘our system of representative litigation ... each party is deemed bound by the acts of his lawyer-agent ____’ ”). No justification has been offered for the attorney’s (and by imputation, the plaintiff’s) total failure to file a charge with the EEOC as required by § 626(d).

We further conclude that the filing of a complaint in this Court should not toll the time for filing a charge with the EEOC. It is apparent that Congress sought to preclude premature resort to the courts by encouraging the prompt resolution of age discrimination complaints at the administrative level. Edwards v. Kaiser Aluminum & Chemical Sales, Inc., 515 F.2d 1195, 1198 (5th Cir.1975). Congress also apparently felt that additional filing time in deferral states (such as Nevada) could be allowed without compromising this policy. However, the conciliation process cannot begin at all until the charge is filed; the filing of a complaint in this Court does nothing to facilitate that process and in fact is likely to impede it. That the delay caused by the filing of a premature complaint in this Court actually frustrates Congress’ desire for prompt administrative resolution is well illustrated by the present case. It is now approximately four years since the conduct complained of took place; but because plaintiff, through his attorney, has bypassed the administrative process, the EEOC has had no opportunity during that period to attempt to resolve the problem. Its ability to do so at this point is essentially lost. Defendant Wells Cargo has been prejudiced by the denial of an opportunity to conciliate plaintiff’s age discrimination claim that it would have had had plaintiff complied with § 626(d).

Since it is clear that the plaintiff and his attorney have allowed more than 300 days to lapse without filing a charge with the EEOC, plaintiff’s federal age discrimination claim is barred, and his first claim for relief should be dismissed.

Stay of Federal Proceedings

Plaintiff contends that no State proceeding was commenced within the meaning of § 633(b), and that therefore he is entitled to have his federal claims held in abeyance in this court “pending disposition of [his] complaint by the State.” Response to Memorandum in Support of Motion to Dismiss (Document # 32) at 2. Oscar Mayer & Co. v. Evans, 441 U.S. 750, 99 S.Ct. 2016, 60 L.Ed.2d 609 (1979), cited by plaintiff in support of this contention, teaches that a plaintiff may not bring suit under ADEA until he has resorted to state administrative proceedings, but that he is not required to commence the state proceedings within the time limits specified by state law. 441 U.S. at 753, 99 S.Ct. at 2070. However, the plaintiff in that case apparently had complied with the filing requirements of § 626(d). See 441 U.S. at 754, 99 S.Ct. at 2070. Thus, the plaintiff’s failure in the present case to comply with § 626(d) distinguishes his case from Oscar Mayer.

The present state of the record does not enable us to determine, as a matter of law, whether a state proceeding has been commenced. Assuming, however, that such a proceeding was in fact commenced, then plaintiff would have had 30 days from the date he received notice of the termination of the proceedings in which to file a charge with the EEOC. 29 U.S.C. § 626(d)(2). Plaintiff states that he received a letter from NERC rejecting his age discrimination claim (see Exh. G to Document #20) shortly after March 11, 1981. Reply Memorandum Exh. B, supra at 2-3. For the purposes of this Order, it is sufficient to note that any tolling of the subsequent 30-day limitations period to which plaintiff might conceivably have been entitled ceased by the end of - the summer of 1982, when plaintiffs attorney was provided with the “details” of plaintiffs case. Id. at 6. As discussed above, from that point on, the attorney’s presumptive knowledge of the statute’s requirements was imputed to the plaintiff. Thus, if a state proceeding is regarded as commenced under § 633(b), the 30-day period in which a charge could have been filed under § 626(d) has long since lapsed.

Even if, as plaintiff contends, NERC’s rejection of plaintiff’s age discrimination claim means that a state proceeding was not in fact commenced, the time for filing a charge with the EEOC has nevertheless also lapsed. While we have neither found, nor been cited to, any cases that would assist us in resolving this issue, we reject the proposition that the fact that a state age discrimination proceeding is not commenced under § 633(b) means that an employee may bring an age discrimination complaint to federal court long after the filing periods mandated by § 626(d) have passed. The terms of ADEA itself do not contain a “time requirement for the commencement of proceedings under state law.” Curto v. Sears, Roebuck & Co., 552 F.Supp. 891, 895 (N.D.Ill.1982). However, ADEA’s status as federal legislation militates against adopting a rule that would allow a plaintiff to effectively nullify § 626(d)’s limitations period by initiating a parallel state administrative proceeding where, as here, over 300 days have elapsed without justification. As a practical matter, such an interpretation would render meaningless the limitations period of § 626(d), and we decline to adopt it. Instead, we hold that under ADEA, the existence of a state remedy has relevance only to the extent that it determines whether the 300-day filing period of § 626(d)(2) applies, rather than the 180-day period of § 626(d)(1). In other words, the controlling event is the filing of a charge with the EEOC. Filing of a claim with a state agency must occur within the period established in § 626(d) if it is to have any relevance with respect to the federal proceedings. Thus, in a deferral state, if 300 days elapse before a plaintiff files a charge under § 626(d)(2), his claim is barred, and cannot be resurrected by the subsequent initiation of a state proceeding under § 633(b). Cf. Avakian v. Trinity Memorial Hospital, 514 F.Supp. 1297, 1299 (E.D.Wise. 1981) (Federal rights preserved where plaintiff filed with both federal and state agencies within 300 days.).

Second Claim for Relief (Age Discrimination (State law))

Under Nevada law, any person injured by an unlawful employment practice may seek relief from a state district court. NRS 613.420. However, such relief must be sought within 180 days of the date of the act complained of. NRS 613.430. If administrative relief is sought from a state agency, the limitation period is tolled during the pendency of the administrative proceeding. Id. In the present case, plaintiff filed a complaint with the Nevada Equal Rights Commission, but since the Commission refused to process the complaint, its pendency before the Commission was extremely short. Accordingly, NRS 613.430’s 180-day limitations period cannot be regarded as having been tolled for more than a few days on the basis of pendency.

Nevada follows the general rule that limitations periods in actions of this type are subject to equitable tolling. Copeland v. Desert Inn Hotel, Nev., 673 P.2d 490, 492 (1983). However, as discussed above, the record in the present case clearly demonstrates that between June of 1981 and March of 1982, plaintiff was tending to personal business rather than attempting to protect his ADEA rights. Even if the few occasions on which he attempted to telephone various agencies for assistance are regarded as having tolled the limitations period, the conclusion is inescapable that the 180-day limitations period provided for in NRS 614.430 lapsed sometime in late 1981 or early 1982. Therefore, state age discrimination is time barred, defendants are entitled to a dismissal of plaintiffs second claim for relief.

We are aware that the courts are reluctant to decide equitable tolling issues in the context of a motion for summary judgment. Aronsen v. Crown Zellerbach, 662 F.2d at 595. In the present case, however, the undisputed facts compel the conclusion that the limitations period on plaintiffs federal and state age discrimination claims should not be tolled. No purpose would be served by conducting a trial on this issue. Defendants are entitled to a dismissal of these claims as a matter of law.

We are also aware that courts are sometimes reluctant to punish a client for the action of his lawyer. However, where it is possible that such a plaintiff may obtain relief from his attorney, it is inappropriate to deprive a defendant of his right to the dismissal of a stale claim. Link v. Wabash R.R. Co., 370 U.S. 626, 634 n. 10, 82 S.Ct. 1386, 1390 n. 10, 8 L.Ed.2d 734 (1962); Healey v. Transportacion Maritima Mexicana, S.A., 662 F.2d 1275, 1282 n. 13 (9th Cir.1980). In the present case, we are also influenced by the fact that it may be possible for plaintiff to litigate the merits of his age discrimination claim in the context of his fair representation claim. See Order on “Motion to Dismiss or in the Alternative Motion for Summary Judgment,” issued today in this case.

Third Claim for Relief (Fair Representation)

Under DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), fair representation suits are subject to 29 U.S.C. § 160(b)’s limitations period. The Ninth Circuit, however, has held that Del-Costello is not to be applied retroactively. Barina v. Gulf Trading & Transp. Co., 726 F.2d 560, 562-63 (9th Cir.1984). Plaintiffs fair representation claim accrued on either February 26 or 26, 1981, when his discharge was upheld by a labor-management arbitration panel. Motion to Dismiss (Document # 18), Exh. A (Supplemental Agreement, Art. 45, § 1(a); Exh. B (minutes of arbitration panel); Affidavit of Paul H. Lamboley. Under the law in effect at that time, state law would have been the source of the applicable limitations period, 726 F.2d at 562, and DelCostello’s six-month limitations period is inapplicable.

Plaintiff has accused his employer of secretly conspiring with the Union to deny him of his right to fair representation. Such conduct, if proven, closely resembles fraud. We therefore conclude that plaintiffs fair representation claim against both the Union and Wells Cargo is subject to the three year limitations period established under NRS 11.190(3)(d) for actions for relief “on the ground of fraud ____”, and that his claim was timely filed.

IT IS, THEREFORE, HEREBY ORDERED that the motion to dismiss plaintiffs first and second claims for relief is granted.

IT IS FURTHER ORDERED that the motion to dismiss plaintiffs third claim for relief is denied.

      . Plaintiff states in his affidavit that in October, 1981, he contacted Mr. Lamboley (the attorney for defendant Union) "for advice on the way to proceed further in the matter involving my discharge and the later hearing by Joint Council No. 38. Mr. Lamboley seemed very indifferent and offered me no help.” Reply Memorandum in Opposition to Motion to Dismiss (Document #20), Exh. B at 4. Plaintiff does not contend, however, that Mr. Lamboley made any misrepresentations to him, or that his conduct lulled the plaintiff into thinking that nothing further needed to be done in order to protect his rights, and there is in fact no claim that Mr. Lamboley was under any duty to do anything other than what he did. It does not appear that by virtue of his representation of the Union, Mr. Lamboley was obligated to give legal advice to individual Union members.

      . Under these circumstances, we need not reach the issue of whether the Union, Union counsel, or the agencies were under a duty to disclose the existence of a limitations period to the plaintiff.
      Plaintiff suggests that "[t]his court has power to review the failing of the agencies to properly treat Mr. Hay’s complaint." Reply Memorandum in Opposition to Motion to Dismiss (Document #20), Exh. A at 1. Without reaching the issue of whether or not this statement is accurate as a matter of law in an abstract sense, we note that none of the agencies involved have been named as parties to this suit. It would therefore be inappropriate at this point to evaluate the adequacy of their handling of plaintiffs age discrimination claim.

      . Originally, § 626(d) required the filing of a notice of intent to sue with the Secretary of Labor. That was the procedure that the Oscar Mayer plaintiff followed. In 1978, § 626(d) was amended to require the filing of a charge with the EEOC, rather than a notice of intent to sue.

      . The version of NRS 613.430 in effect at the time that the alleged discriminatory conduct took place provided that a complaint could be filed with either the Nevada Equal Rights Commission or the Labor Commissioner. See 1977 Nev.Stat. 1609.

      . Barina was a "hybrid § 301/fair representation" action. Such an action involves an allegation that (1) the union violated its duty of fair representation during the grievance proceeding and that (2) the terms of the settlement violated the collective bargaining agreement, thus rendering the employer liable under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. 726 F.2d at 561-62.
      In a typical "hybrid” case, under the law prevailing at the time plaintiff’s fair representation claim accrued, the "§ 301” claim would have been subject to a six-year limitations period as ”[a]n action upon a contract ... founded upon an instrument in writing ____”, NRS 11.-190(l)(b), while the fair representation claim would have been subject to a three-year limitations period as ”[a]n action upon a liability created by statute____”, NRS 11.190(3)(a). See 726 F.2d at 562.


author: JOHN A. REED, Jr., District Judge.

text:
    Juan Carlos de la FUENTE, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. No. 84-580-Civ-Orl-11.
    United States District Court, M.D. Florida, Orlando Division.
    Sept. 12, 1984.
    Bernard H. Dempsey, Jr., Michael C. Sasso, Manuel Socias of Dempsey & Slaughter, Orlando, Fla., for plaintiff.
    Jeffrey Tinley, Asst. U.S. Atty., Orlando, Fla., Gerald B. Leedom, Elizabeth Sullivan, Attys., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendant.
   ORDER

JOHN A. REED, Jr., District Judge.

This action was brought by the plaintiff pursuant to Section 7429 of the Internal Revenue Code of 1954 (26 U.S.C.) for judicial review of jeopardy assessments of federal income taxes. The assessments of tax, penalties and interest, in the total amount of $1,001,125.30, were made May 21, 1984, pursuant to Section 6861 of the Internal Revenue Code of 1954. The plaintiff timely requested administrative review (26 U.S.C. § 7429(a)) and timely commenced this action by the filing of his Complaint on August 1, 1984. Upon motion filed by the plaintiff (26 U.S.C. § 7429(c)), the hearing in this matter was continued to September 6, 1984.

At the conclusion of the September 6-7, 1984 hearing, having heard and considered the testimony, other evidence and arguments and submission of counsel, the Court determined and ruled, on the following grounds, that the making of the assessments was and is reasonable under the circumstances and that the amounts so assessed were and are appropriate under the circumstances.

A. Jurisdiction

This Court has jurisdiction over this matter pursuant to the provisions of 28 U.S.C. § 1346(e) and Section 7429 of the Internal Revenue Code of 1954.

B. Circumstances of Jeopardy

The issues before the Court in an action under Section 7429 are whether the making of the assessments is “reasonable under the circumstances” and whether the amounts so assessed or demanded are “appropriate under the circumstances.” 26 U.S.C. § 7429(b)(2). The judicial review contemplated by Section 7429 does not constitute a final determination of the taxpayer’s ultimate tax liability. The determination “will have no effect upon the determination of the correct tax liability in a subsequent proceeding.” S.Rep. 94-938, 94th Cong., 2d Sess. 359, 365 (1976), U.S.Code Cong. & Admin.News 1976, pp. 2897, 3789, 3795.

The burden of proof in this proceeding with respect to the first issue — whether the making of the assessments is reasonable under the circumstances — is upon the United States. The defendant has sustained its burden of proof on this issue.' At the time of the assessments, the plaintiff was on trial in this Court pursuant to grand jury indictment for eight serious drug-related felonies. At the time of his arrest, February 24, 1984, large amounts of cash and travelers checks were found in his residence.

Further, the evidence discloses that the plaintiff had not filed tax returns for the two years covered by the assessments at issue (1981 and 1982), and, in fact, the plaintiff had not filed federal income tax returns since the year 1972. In addition, evidence at the hearing concerning real property transactions makes reasonable the inference that the plaintiff was the beneficial owner of real properties titled in the name of a nominee, i.e., his sister.

Lastly, on the question of the reasonableness of the Internal Revenue Service’s determination that circumstances of jeopardy existed here, the. Court considers relevant the plaintiff’s own testimony at his initial bond hearing that he had no bank accounts in his own name. Coupled with the evidence of his dealing in large amounts of cash, the absence of bank accounts is an additional circumstance which may be considered in determining whether the plaintiff was seeking to hide or conceal assets.

C. Appropriateness of the Amounts Assessed

Under Section 7429, the Court is also to determine whether, under all the circumstances, the amounts assessed are “appropriate under the circumstances.” The burden of proof with respect to this issue is upon the taxpayer, and, as indicated, the Court’s determination does not constitute a final determination of the taxpayer’s tax liability for the years covered by the assessments.

The circumstances under which the Internal Revenue Service had to determine the amount of the plaintiff’s unpaid liabilities include the significant facts, first, that the taxpayer himself had provided no returns for the years at issue and, second, that he had provided no other additional information from which the Internal Revenue Service might determine a more accurate computation of tax due. In that context, the Internal Revenue Service reasonably relied on the evidence at the taxpayer’s criminal trial.

Moreover, apart from the foregoing, the methodology used by Revenue Agent Margaret Stalla in computing the liabilities was both reasonable and logical. Basing her computations on evidence introduced at the plaintiff’s criminal trial, she estimated the taxpayer’s income from sales of marijuana and cocaine and then applied a reasonable “net profit” estimate, intended to provide the taxpayer with the benefit of expenses and costs which might be offset against his gross receipts in computing taxable income. Her method and the amounts determined by her are appropriate under the circumstances, and the plaintiff has not sustained his burden of showing that the amounts were otherwise.

D. Conclusion

Consistent with the foregoing, the Court determines that the making of the jeopardy assessments against the plaintiff are reasonable under the circumstances and that the amounts so assessed are appropriate under the circumstances. This action will be dismissed, but without prejudice to the rights of the plaintiff to contest the asserted tax liability by way of any available remedy, including a petition to the Tax Court or an appropriate suit for refund in district court or the United States Claims Court.

      . Specifically, approximately $97,000 in cash and $10,000 in travelers checks were found. For purposes of the plaintiffs criminal trial, this Court suppressed that material, by an Order entered May 1, 1984.

      . The Court’s consideration of the state of the title to various parcels of real property is in connection only with the Court’s evaluation of the circumstances surrounding the making of the assessments. The inference of assets being titled in the name of a nominee of the plaintiff is not intended to constitute any final determination of the precise ownership of the properties or the relative priorities of the interests of the taxpayer, the Government or any other party in and to those properties. Those are issues which are not before the Court in this proceeding.