author: JAMES R. MILLER, Jr., District Judge.

text:
    James J. REYNOLDS v. BETHLEHEM STEEL CORPORATION, et al.
    Civ. A. No. M-83-115.
    United States District Court, D. Maryland.
    July 30, 1984.

      John O. Hennegan and Romadka, Gont-rum, Hennegan & Foos, Baltimore, Md., for plaintiff.
    Douglas D. Connah, Jr., Barbara E. Schlaff, Elizabeth C. Honeywell and Vena-ble, Baetjer & Howard, Baltimore, Md., for defendants.
   MEMORANDUM AND ORDER

JAMES R. MILLER, Jr., District Judge.

The plaintiff, James J. Reynolds, initiated this action against seven defendants alleging, inter alia, violations of the Employee Retirement Income Security Act, 29 U.S.C. § 1132 (ERISA). Bethlehem Steel, one of the defendants, filed a motion to dismiss which was granted as to the common law breach of contract and fraud claims. This court determined that those claims were preempted by ERISA (Paper No. 18).

The defendants (Paper No. 20) and the plaintiff (Paper No. 21) have filed motions for summary judgment to which each party has replied. No hearing is necessary on the motions (Local Rule 6(E)).

I. Factual Background

The plaintiff, an employee of Bethlehem Steel Corporation from May 12, 1942 to January 31, 1982, by virtue of his employment and participation in the pension plan, became entitled to certain benefits under the Pension Plan of Bethlehem Steel Corporation (The Plan). Under the terms of The Plan, an employee can, under certain circumstances, elect to receive a lump-sum payment at the time of retirement in lieu of periodic payments.

Prior to retiring, the plaintiff filed an application for lump sum benefits. Under the terms of The Plan, “[a] lump sum payment may be made to [a] participant only ... if the application is accompanied by evidence, satisfactory to the General Pension Board of the good health of the participant ...” (Paper No. 5, Attachment, Pension Plan § 3.12). Mr. Reynolds had provided the appropriate medical documents at the time of his application (Paper No. 20, Kempken affidavit f 24, and Ex. F). Those documents showed that Mr. Reynolds suffered from carcinoma of the vocal cord in 1977, but his doctor had stated he was in good health at the time of his application (Paper No. 20, Ex. F).

Mr. David Kempken, Secretary to the General Pension Board, sent the plaintiff’s medical records for evaluation to Dr. John D. Bealer, Bethlehem’s Corporate Medical Director (Paper No. 20, Kempken affidavit, 11 25). On December 12, 1981, Dr. Bealer informed Mr. Kempken that the plaintiff was not in good health for the purpose of the lump sum pension payment (Paper No. 20, Ex. G). On December 23, 1981, the plaintiff received a mistakenly sent form letter stating his lump sum payment was approved (Paper No. 20, Ex. H).

On January 12, 1982, Mr. Reynolds applied for his pension (Paper No. 20, Reynolds Dep. at 59), and he retired on January 31, 1982 (Paper No. 20, Reynolds Dep. at 29). The error, granting his lump sum payment, was discovered during the processing of Mr. Reynolds’ pension papers. He was notified by David Kempken on February 9,1982, that based on the medical information he had submitted he was not in good health for the purposes of a lump sum pension distribution (Paper No. 20, Ex. I). That letter informed Mr. Reynolds that he could request review by the General Pension Board (Paper No. 20, Ex. I).

On February 17, 1982, he wrote to Mr. Kempken indicating his disagreement and attaching a copy of a letter from his physician stating that there was no evidence of cancer at the present time (Paper No. 20, Reynolds Dep. Ex. 7). The plaintiff requested a review of the lump sum payment decision.

Pursuant to Plan regulations governing resolutions of disputes of good health, (Paper No. 20, Ex. D, Lump Sum Regulations at 6-7), Mr. Kempken sent Mr. Reynolds’ medical records to an independent agency, Aetna Life Insurance Co., for review to determine eligibility for the lump sum payment (Paper No. 20, Kempken affidavit, 03).

On March 9, 1982, Dr. Malcolm Hunt of Aetna’s Medical Department (Aetna) by letter informed Dr. John Bealer of Bethlehem’s Medical Department that Mr. Reynolds did not qualify medically for the lump sum payment (Paper No. 20, Ex. L). Dr. Hunt’s letter, however, requested further pathology and chemotherapy reports, a review of which “might result in allowing coverage ...” (Paper No. 20, Ex. L).

David Kempken then wrote to Mr. Reynolds requesting that he provide that medical information (Paper No. 20, Ex. M). The plaintiff’s doctor submitted the requested pathology and chemotherapy reports to Kempken who forwarded them to Aetna (Paper No. 20, Ex. N).

Based on the additional medical information, Aetna again concluded that Mr. Reynolds was not eligible for lump sum payment (Paper No. 20, Ex. P).

On April 2, 1982, Mr. Kempken advised the plaintiff that he was not eligible for lump sum payment and that he would receive his pension in the regular monthly payments (Paper No. 20, Ex. Q). Soon thereafter, the plaintiff requested a detailed statement of the reasons for the decision that he was not in good health (Paper No. 1, Ex. H). Mr. Kempken responded that “for a further explanation as to the medical reasons for that determination you should have your personal physician write or phone Dr. J.D. Bealer ...” (Paper No. 1, Ex. I).

The plaintiff’s doctor wrote to Dr. Bealer on April 28, 1982, requesting “favorable consideration of Mr. Reynolds ...” (Paper No. 1, Ex. J). That letter was answered by David Kempken indicating that Dr. Bealer had reviewed the information in the plaintiff’s doctor’s letter, but that it provided no reason to alter the decision to deny lump sum payment (Paper No. 1, Ex. K). The plaintiff’s doctor again wrote to Dr. Bealer. This time he requested specific reasons why Mr. Reynolds was considered to be not in good health (Paper No. 1, Ex. L).

Finally, plaintiff’s counsel wrote to Mr. Kempken demanding the lump sum payment. In response to that letter, in October, 1982, Kathleen Mills, General Counsel for Bethlehem Steel, set forth the history of Mr. Reynolds’ case and extended to Mr. Reynolds the option of reinstatement to employment without prejudice to his right to retire voluntarily at a time in the future (Paper No. 20, Attachment A to Memorandum). Mr. Reynolds declined that offer of reinstatement (Paper No. 20, Attachment B to Memorandum) and further declined to receive his monthly pension payments (Paper No. 20, Reynolds Dep. at 33-35).

II. Legal Analysis

On cross motions for summary judgment, all parties assert that they are entitled to summary judgment on the issues of 1) whether the “good health” standard used by The Plan violates public policy; and 2) whether the denial of the lump sum payment was arbitrary and capricious. In addition, the plaintiff requests summary judgment on the basis of equitable estop-pel. Finally, the defendants request summary judgment on the issues of whether Bethlehem Steel and certain other defendants are proper parties to this suit and on whether the ERISA notice requirements, 29 U.S.C. § 1133, are applicable in this action.

A. Public Policy

The “good health” standard adopted by The Plan defines good health as “a state of physical and mental well-being from a medical point of view that includes the absence of a disease or condition that, from a medical standpoint, may result in a significant shortening of life expectancy.” (Paper No. 20, Ex. B & Ex. C at 2 #7). According to the defendants, The Plan adopted the good health standard as one method of assuring the fiscal soundness of The Plan.

“ERISA’s purpose is to secure guaranteed pension payments to participants by insuring the honest administration of fiscally sound plans.” Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d 911, 914 (2nd Cir.), cert. denied, 459 U.S. 1039, 103 S.Ct. 454, 74 L.Ed.2d 607 (1982). Reliance on actuarial assumptions in funding The Plan is required. See 29 U.S.C. § 1082(c)(3); H.R.Rep. No. 93-1280, 93rd Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad.News 4639, 5038, 5065. The defendants aver that the good health standard was adopted based on actuarial assumptions built into the funding of The Plan (Paper No. 20, Kempken affidavit, at 2-3, HU 6 & 10). That standard prevents retirees who would not achieve the same longevity as the average Bethlehem pensioner, but whose shorter lives had been factored into The Plan funding method, from taking assets from The Plan which were not accounted for under the funding assumptions and thereby depleting The Plan’s assets (Paper No. 20, Kempken affidavit at 2-3, H 6).

Despite the plaintiff’s contention that the good health standard amounts to “coldblooded wagering on the part of The Plan” (Paper No. 21 at 6), and that it creates a discriminatory scheme, this court is convinced that the standard, on its face, does not violate public policy. In fact, it conforms to the purpose behind ERISA to secure fiscally sound plans.

In Pompano v. Michael Schiavone & Sons, Inc., the Second Circuit noted the actuarial implications of granting lump sum payments indiscriminately: 1) Plan assets might have to be sold to pay lump sum amounts; 2) free availability could complicate long term investment strategy; 3) such payments could invalidate long term mortality assumptions. 680 F.2d at 915.

The requirement that a retiree demonstrate good health appears to this court to be related to the actuarial assumptions upon which The Plan funding is based and appears designed to contribute to the fiscal soundness of The Plan.

B. Application of the Standard as Arbitrary and Capricious

The plaintiff asserts that the decision to deny Mr. Reynolds’ lump sum payment request was arbitrary and capricious because: 1) the defendants first approved but then rescinded the lump sum payment; 2) the defendants failed to develop fully the evidence regarding the plaintiff’s health; and 3) the evidence supported a finding of good health.

The plaintiff first argues that under The Plan’s regulations he was required to elect, prior to retirement, whether he wanted a lump sum or monthly retirement payments. He states that in view of the fact that he could not rescind that election unilaterally, The Plan’s unilateral rescission of its initial, erroneous approval of the lump sum payments was per se arbitrary and capricious. This court does not agree.

The Plan administrator, in this ease the General Pension Board, has a fiduciary duty under ERISA to administer The Plan in accordance with the provisions set forth in The Plan document. 29 U.S.C. § 1104(a)(1)(D). One of those provisions is that no lump sum payments be made absent a finding of good health (Paper No. 20, Ex. A, Pension Plan § 3.12 at 24). Regulations adopted by the General Pension Board further define the procedures to follow in determining eligibility for lump sum payments (Paper No. 20, Ex. O). Under the regulations governing requests for lump sum payments, the Corporate Medical Director’s opinion on good health “shall be deemed to be satisfactory to the General Pension Board.” (Paper No. 20, Ex. D at 4). Thus the Board, on the recommendation of Dr. Bealer, the Corporate Medical Director, had determined on December 18, 1981, that Mr. Reynolds was not in good health (Paper No. 20, Ex. G).

David Kempken’s letter of December 23, 1981 indicating that he had approved the application for lump sum payment (Paper No. 20, Ex. H) was contrary to the Board’s decision. It was also a clerical error (Paper No. 20, Kempken affidavit, H 26 at 6). Failure to correct the error would have been a breach of the General Pension Board’s fiduciary duty to administer The Plan according to its terms. Thus, correction of the error was not per se arbitrary and capricious. See, e.g., Nass v. Staff Retirement Plan, 515 F.Supp. 950, 990 (S.D.N.Y.), aff'd, 671 F.2d 492 (2d Cir. 1981).

Second, the plaintiff asserts that the decision made to deny Mr. Reynold’s lump sum payment request was arbitrary and capricious, because the defendants failed to develop fully the evidence regarding the plaintiff’s health.

The plaintiff asserts, and it is not disputed, that defendants’ physicians never examined him or contacted his physician personally. But, as this court has detailed in the factual background of this case, the General Pension Board, its doctor, and Aet-na reviewed the reports of plaintiff’s own doctor and in fact asked for and received additional information from the plaintiff’s doctor before reaching a final decision to deny the lump sum payment {see supra, Section I). In addition, Mr. Reynolds admitted in his deposition that there was no additional relevant medical information that he could have provided to The Plan (Paper No. 20, Reynolds Dep. at 43-44).

Thus, the plaintiff’s own deposition testimony and the record before this court contradict the plaintiff’s argument that the decision to deny the lump sum payment was made on an incomplete record.

Third, the plaintiff asserts that the decision to deny him lump sum benefits was arbitrary and capricious, because the evidence presented to The Plan supported a finding of good health. “To determine whether the action was arbitrary or capricious, [the court] must first decide whether the trustees’ decision was supported by substantial evidence.” Horn v. Mullins, 650 F.2d 35, 37 (4th Cir.1981). The court, if it finds that the trustees’ decision is supported by substantial evidence, may not second guess the trustees’ judgment. Seafarer’s Pension Plan v. Sturgis, 630 F.2d 218, 221 (4th Cir.1980). It is the plaintiff’s burden to prove that the trustees’ actions were arbitrary and capricious. See Bayles v. Central States, Southeast and Southwest Areas Pension Fund, 602 F.2d 97, 99 (5th Cir.1979).

The record reflects that in September 1977, Mr. Reynolds was diagnosed as having squamous cell carcinoma of the vocal cord. He began treatment of a full-course of radiation and Hydren in October, 1977. From December, 1977 to February, 1982 his checkups were all cancer negative (Paper No. 20, Ex. N). The record of his disease and apparent recovery were supplied to The Plan by Mr. Reynolds’ physician, and it was on that information that Aetna based its non-eligibility decision which the Board accepted.

The medical information was evaluated by Aetna in accordance with the guidelines set forth in Aetna’s “Manual of Medical Selection.” The Manual contains a method of assessing the mortality risks associated with health-related factors (Paper No. 20, Kempken affidavit at 4, U 14). It designated a range of “debit points” for various medical conditions (Paper No. 20, Kempken affidavit at 4, 1115). A debit point total of over 150 requires a finding that the person is not in good health (Paper No. 20, Kempken affidavit at 4, H 16).

In the case of Mr. Reynolds, Aetna first identified and coded the type of tumor as an M-2 tumor (Paper No. 22, attachment 3; and Kempken Dep. at 113-115). Next, Aet-na applied the M-2 code to the Tumor Rating Table (Paper No. 22, attachment 4; and Kempken Dep. at 115). The Table yielded a special class (SRC) rating of 10 x 6. The SRC rating was then translated into debit points using the SRC Table (Paper No. 22, Ex. 2 & Kempken Dep. at 116). The debit points amounted to 180 (Paper No. 22, Kempken Dep. at 116).

It appears to this court that the debit point system was used accurately and the medical evidence applied correctly within the system. Thus, The Plan’s finding that Mr. Reynolds was not in good health was supported by substantial evidence.

Clearly the plaintiff does not like the system adopted by The Plan, but this court, having found that such a system does not violate public policy, concludes that the system was applied fairly in this case.

The plaintiff requests the court to look beyond the record and hear additional testimony of his physician regarding the plaintiffs good health. In effect the plaintiff is requesting de novo review of The Plan’s decision. This the court cannot do. “A federal court is to focus on the evidence before the trustees at the time of their final decision and is not to hold a de novo factual hearing on the applicant’s eligibility.” Wardle v. Central States Pension Plan, 627 F.2d 820, 824 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981); see also Carter v. Central States Pension Plan, 656 F.2d 575, 578 (10th Cir.1981); Phillips v. Kennedy, 542 F.2d 52, 55 n. 10 (8th Cir.1976). Following the Fourth Circuit’s admonition, this court will not second-guess the decision of the Board. Seafarer’s Pension Plan v. Sturgis, 630 F.2d at 221.

C. Estoppel Theory

The plaintiff argues, it seems, that even if The Plan’s decision was not arbitrary and capricious, it should be estopped from denying the lump sum payment.

Mr. Reynolds asserts that he retired on January 31, 1982, in reliance on the payment of the lump sum retirement benefits, and that if he had known at that time that the lump sum payment would not be forthcoming, he would have elected to work until October, 1982, by which date he asserts he would have qualified under the defendants’ criteria for good health. He asserts that he has suffered financial harm as a result of the denial of the lump sum payment.

“The principle of estoppel permits recovery when ‘a representation of fact made to a party who relies thereon with the right to so rely may not be denied by the party making the representation if such denial would result in injury or damage to the relying party.’ ” Haeberle v. Board of Trustees, 624 F.2d 1132, 1139 (2d Cir.1980) citing 1 Williston on Contracts, § 139 at 600 (3rd ed. 1957) (pension case); see also Traveler’s Indemnity Co. v. Rosedale Passenger Lines, Inc., 450 F.2d 975, 977 (4th Cir.1971) (insurance case citing Maryland law).

The defendants argue that the plaintiff has failed to prove either element of equitable estoppel — reliance or harm.

From a review of Mr. Reynolds’ deposition, it is unclear whether he relied on the representation. For example, this exchange occurred early in the deposition:

Q Was this, in fact, your application to receive your pension as a lump sum payment?
A Yes.
Q What was the date on which you made that application? The date is on the letter. You can refer to the letter.
A 12/3/81.
Q On 12/3/81 had you made a definite decision to retire on the date referred to in the initial sentence, which, I believe, was January 31st of 1982?
A That’s right.
Q Why had you decided to retire on January 31st, 1982?
A Because if I had waited after January 31st of 1982, the lump sum pension payment would have dropped as the months went by. In other words, they were cutting back the percentage.
Q So, at that point you had decided to retire whether or not you got the lump sum payment?
A Yes, I was going to retire.

(Paper No. 20, Reynolds Dep. at 26-27). Later in the deposition he modified that statement by saying, “if I hadn’t gotten the lump sum before, I probably would have stayed working, yes.” (Paper No. 20, Reynolds Dep. at 35).

Although it is unclear whether Mr. Reynolds relied on the statement that the lump sum payment was approved when he made his initial decision to retire, it is clear that in October, 1982, when Bethlehem offered him an opportunity to return to work without prejudice to his right to retire voluntarily at some later time, his reliance on the lump sum approval ended. In his deposition Mr. Reynolds affirmatively answered the following question: “Was it your decision at that time [Oct. 1982] that you didn’t want to go back to work whether or not you ever got the lump sum payment.” (Paper No. 20, Reynolds Dep. at 49).

Therefore, assuming Mr. Reynolds relied at all on the erroneous approval of the lump sum payment, such reliance ended on October, 1982, when he decided not to return to work and “reactivate” the possibility of receiving the lump sum payment at a later time.

The defendants also argue that Mr. Reynolds was not harmed, if in fact he did rely on the erroneous approval letter. Misleading a person to his prejudice or causing him to alter his position to his detriment is an essential element of equitable estoppel. See, e.g., General Cigar Co. v. Lancaster Leaf Tobacco Co., 323 F.Supp. 931, 939 (D.Md.1971); Southern General Insurance Co. v. O’Keefe, 275 F.Supp. 107, 110 (D.Md.1967).

The plaintiff categorizes the harm he suffered as “financial difficulties” caused “by refusing to accept monthly pension payments for the duration of the litigation.” (Paper No. 22 at 19). In his deposition he stated “I have had to use all of our savings to keep things going ... (Paper No. 20, Reynolds Dep. at 76). I am using all of my savings that I could have been getting interest on by them denying me this. I am just using up all of my money____ [I am also losing] the interest on my lump sum money.” (Paper No. 20, Reynolds Dep. at 77).

Those statements are not helpful in determining the extent of harm, if any, suffered by Mr. Reynolds during the six months (April-October) he may have relied on the erroneous letter. Issues of fact remain as to the extent of reliance and the extent of harm. Summary judgment is not appropriate on the estoppel issue.

To clarify the issue of harm, it is the opinion of this court that if Mr. Reynolds was harmed by relying on the erroneous approval letter, the harm should be calculated only during the time span in which the reliance occurred. If reliance occurred, it occurred between January 31, 1982, the date of retirement, and October 1, 1982, the date Mr. Reynolds decided against reinstatement.

In addition, even if Mr. Reynolds had received the lump sum payment, that payment would not have been made to him until March, 1982. Therefore, the time span in which the harm can be calculated is April 1, 1982 to October 1, 1982.

D. Statutory Penalty

The defendants request summary judgment on the issue of whether David Kempken, the Secretary to the General Pension Board, is liable for the statutory penalty of $100 per day for failure to supply certain information requested by a beneficiary of The Plan. 29 U.S.C. § 1132(c). The law requires every employee benefit plan to “provide adequate notice in writing to any participant or beneficiary whose claim for benefits under The Plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant.” 29 U.S.C. § 1133(1).

The penalty provision states:

“(c) Any administrator who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court’s discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.”

29 U.S.C. § 1132(c).

The plaintiff asserts that Kempken’s failure to inform him at the time of the denial of the 180 debit point rating and of the procedure and medical data used to calculate that rating violated the notice of provision of the statute.

The Second Circuit considered the statutory notice provision in a lump sum payment case and decided that 29 U.S.C. § 1133 was not applicable. The court reasoned that “the thrust of [ERISA] is the safeguarding of benefits____ Neither the Act nor its legislative history comments on the mode or manner in which benefits should be paid.” Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d at 916. The Pompano court held that a denial of a lump sum payment was not equivalent to the denial of benefits. “Rather it was only the requested mode of distribution of these benefits that was denied____” Id. at 915 (emphasis in original). “[T]he denial of the particular method of payment requested in this case did not ... constitute a denial of a ‘claim for benefits,’ and thus did not necessitate written notice and fair review under either § 1133(1) or (2).” Id. at 916.

This court agrees with the Pompano decision and finds that, in this case, the statutory notice provision is not applicable, and, therefore, the Secretary to the General Pension Board is not liable under the penalty provision of the statute.

E. Proper Party to the Suit

The defendant, Bethlehem Steel, seeks summary judgment on the issue of whether the General Pension Board and its Secretary, David Kempken, are agents of Bethlehem Steel. When this court ruled on Bethlehem Steel’s motion to dismiss, it held that if a principal/agent relationship ultimately was proved, Bethlehem Steel could be considered a proper party to this action (Paper No. 18 at 7).

Those courts which have considered whether an employer is a proper party in a suit such as this one, brought pursuant to 29 U.S.C. § 1132, look first to whether an administrator of the pension plan has been appointed. If so, the administrator is the proper party, not the employer, unless the employer.has controlled or influenced the administrator’s decisions in regard to awarding pension benefits. See, e.g., Crawford v. Armour Co. Salaried Pension Plan, 3 EBC 2335, 2337 (W.D.Pa. 1982) (Paper No. 9, attachment); Foulke v. Kempken, No. C82-1220A, slip op. at 3 (N.D.Ohio 1982) (unpublished) (Paper No. 5, attachment); Boyer v. J.A. Majors Co. Employees Profit Sharing Plan, 481 F.Supp. 454, 458 (N.D.Ga.1979).

An administrator, the General Pension Board, has been appointed for The Plan. Therefore, the plaintiff herein must show that, through an agency relationship, Bethlehem Steel influenced or controlled the Board’s decision to deny him the lump sum payment.

Defendant Kempken avers that only he and the General Pension Board were responsible for the pension decision challenged herein (Paper No. 20, Kempken affidavit, 11 36). At his deposition he described the relationship between Bethlehem Steel and the General Pension Board.

Although Bethlehem Steel sponsors and funds the pension plan, (Paper No. 20; Ex. C to Memorandum, Kempken Dep. at 85), The Plan is administered by the General Pension Board. The Board’s duties include establishing rules and regulations, determining eligibility and authorizing payment of benefits. (Id. at 86-87). Mr. Kempken is an employee of Bethlehem Steel and some members of the General Pension Board are employees of Bethlehem Steel. (Id. at 87-89). In addition, the Bethlehem corporate medical department makes the initial decision on “good health” (Paper No. 32, Kempken Dep. at 69-70).

The plaintiff asserts that those facts prove that the General Pension Board and its Secretary were agents of Bethlehem Steel and as such Bethlehem Steel exerted influence and control over the Board’s decision not to award the lump sum payment. This court does not agree.

Initially, the court notes that Aetna, an independent agency, recommended to the Board the final decision to deny Mr. Reynolds the lump sum payment. Although it is unclear whether the General Pension Board or Bethlehem Steel paid for Aetna’s services, (Paper No. 22, Kempken Dep. at 35), the plaintiff has not disputed the independent contractor status of Aetna. Therefore, the Board’s ultimate decision to deny the lump sum payment was not influenced by Bethlehem Steel.

As to the argument that Bethlehem employees provide services to The Plan, this court notes that under The Plan the General Pension Board is required to make decisions regarding the award of benefits. Although Bethlehem’s medical director may make the initial recommendation to grant or deny the lump sum payment, it is the Board which reviews and accepts or rejects that decision (Paper No. 20, Ex. A., Pension Plan § 7.1; Ex. D Plan Regulations at 3-4). The plaintiff has produced no evidence to indicate that the Board was unduly influenced or controlled by Bethlehem when it accepted the initial determination of the medical director that Mr. Reynolds was not in good health.

Finally, as to the facts that Bethlehem employees sit on the Board and that David Kempken is a Bethlehem employee, it is clear that ERISA allows an employer to name the fiduciaries of The Plan. 29 U.S.C. § 1102(a)(2). “A named fiduciary may be a person whose name actually appears in the document, or may be a person who holds an office specified in the document, such as the company president.” H.R.Conf.Report, No. 93-1280, 93rd Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Ad.News at 5078. Thus, Congress recognized that named fiduciaries could wear two hats.

Congress, to protect beneficiaries and participants of The Plan, built into the law very specific fiduciary duties which the named fiduciaries must perform. See 29 U.S.C. §§ 1104, 1105, 1106, 1109. Criminal penalties may be imposed, 29 U.S.C. § 1131, or civil actions may be brought for violations of a fiduciary’s duties. 29 U.S.C. § 1132.

The plaintiff does not argue that the General Pension Board is illegally constituted. This court will not conclude that the fact that the Board members and the Secretary are employees of Bethlehem Steel leads to the conclusion that they acted as agents of Bethlehem Steel, under the influence and control of the employer, when they decided to deny Mr. Reynolds the lump sum payment.

Three trustees of the Pension Trust also request summary judgment on the proper party issue. Mr. Kempken averred that the trustees played no part in the decision to deny Mr. Reynolds the lump sum payment (Paper No. 20, Kempken affidavit H 36).

Under The Plan, the trustees appear to manage and control the assets for the benefits of the participants (Paper No. 20, Ex. A §§ 8.1 & 8.2), and the General Pension Board administers the day to day operation of The Plan and makes the final decision as to whether to award or deny lump sum payments (Paper No. 20, Ex. A, § 7.1).

The plaintiff has set forth no facts that establish that the trustees had any input into or any power to make the decision to deny the lump sum payment. Therefore, they will be dismissed as defendants in this suit.

Accordingly, it is this 30th day of July, 1984, by the United States District Court for the District of Maryland, ORDERED:

1. That plaintiff’s motion for partial summary judgment (Paper No. 21) is DENIED.

2. That defendants’ motion for summary judgment (Paper No. 20) is GRANTED.

3. That the following are dismissed as defendants in this suit: Bethlehem Steel Corp. and Trustees Dunbar, Burkley and Hanily.

4. That the only remaining issue for adjudication is the equitable estoppel issue.

      . The defendants are 1) Bethlehem Steel Corporation, plaintiffs employer; 2) The Pension Trust of Bethlehem Steel, the employee benefit plan; 3-5) Messrs. Dunbar, Burkley and Hanily, trustees of the pension plan; 6) The General Pension Board, administrator of the pension plan; 7) D.W. Kempken, Secretary to the General Pension Board.

      . Although only Bethlehem Steel filed a motion to dismiss the common law counts, such dismissal is applicable to all defendants.

      . Defendants’ Reply (Paper Nos. 23 & 24); Plaintiff’s Reply (Paper No. 22).

      . "A lump sum payment may be made to such a participant only if application therefore is made after the applicant has attained the age of 55 years, and if the application is accompanied by evidence, satisfactory to the General Pension Board of the good health of the participant and the spouse, if any, of the participant." (Paper No. 20, Ex. A, Pension Plan § 3.12).

      . Under the terms of the pension plan, good health means "a state of physical and mental well-being from a medical point of view and includes the absence of disease or condition that, from a medical standpoint, may result in a significant shortening of life expectancy." (See Paper No. 20, Ex. B and Ex. C at 2).

      . It appears that the debit point system factors in the length of time a person has been cancer-free. The longer that span of time, the lower the debit point rating. Thus, it is true that if Mr. Reynolds had waited until it had been 5 years from the date of the tumor's removal, a debit point rating of 150 would have been assigned and he would have been eligible for the lump sum payment (see Paper No. 22, Ex.’s 2, 3 & 4 — Aetna calculation tables).
      The tumor was successfully treated in December, 1977 (Paper No. 20, Ex. N). Thus, retirement in December, 1982 rather than January 31, 1982 might have yielded Mr. Reynolds the result he wished.

      . See note 6, supra, which explains how, at a later date, Mr. Reynolds could have been found eligible for the lump sum payment.

      . In Pompano the court did not "imply that the form which payment takes may never be such as to constitute a substantive denial of ERISA benefits.” 680 F.2d at 916. In this case, as in Pompano, the plaintiff clearly is entitled to benefits and will receive pension benefits. That Mr. Reynolds disputes the mode of payment does not implicate the statutory penalty provision. He, in fact, was given notice of the denial, the reason for the denial, and an opportunity to challenge that decision administratively (Paper No. 20, Ex. I). Even if the statutory penalty provision applied in this case, it appears that adequate notice was given in compliance with 29 U.S.C. § 1133.

      . At his deposition, Mr. Kempken stated that there was no relationship between Aetna and Bethlehem Steel and that Aetna was paid 130.00 per review unless there were extenuating services requiring a higher fee (Paper No. 22, Kempken affidavit at 35).


source: Caselaw Access Project

author: DAUGHERTY, District Judge.

license: Public Domain

text:
    Deelah A. MADDOX, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. CIV-81-71-D.
    United States District Court, W.D. Oklahoma.
    Dec. 28, 1984.

      Jim Grennan, Oklahoma City, Okl., for plaintiff.
    David L. Russell, U.S. Atty. by Paul Richards and Charles Waters, Assts., Oklahoma City, Okl., Frank V. Smith, III, Acting Regional Atty. by Mary K. Biester, Asst. Regional Atty., Dept, of Health and Human Services, Dallas, Tex., for defendant.
   MEMORANDUM OPINION

DAUGHERTY, District Judge.

POSTURE OF THE CASE

The Plaintiff has brought this action pursuant to 42 U.S.C. § 405(g), seeking judicial review of the final administrative decision of the Defendant Secretary that the Plaintiff is not entitled to a period of disability or disability insurance benefits under Title II of the Social Security Act. The Secretary filed her Answer, accompanied by the certified transcript of the administrative record of the case upon which her decision was based, and both sides have fully briefed the case, which is thus submitted for decision on the pleadings and the briefs of the parties.

Plaintiff filed her application for disability benefits under Title II and for supplemental security income benefits under Title XVI on September 6,1978, alleging disability due to emphysema, asthma, grand mal seizures, and abdominal hernia (Tr. 52). These claims were denied administratively, both initially and on reconsideration (Tr. 86-93). Upon Plaintiffs request, an Administrative Law Judge (ALJ) of the Social Security Administration considered her claim de novo and conducted a full hearing on January 8, 1980 (Tr. 25-51), at which the Plaintiff and her doctor, A.A. Cooperman, D.O., appeared. The ALJ issued a recommended decision on March 6, 1980, denying her claim for disability benefits (Tr. 14-19). On the same day, the ALJ issued a decision allowing the claim for supplemental security income (Tr. 315). For each of these decisions, the ALJ had to determine whether the Plaintiff was disabled, and the standard for that determination is the same under both Title II and Title XVI, but the two determinations depend on her being disabled at different dates. So, for purposes of the supplemental security income decision, the ALJ determined that the Plaintiff was disabled as of the date of her application on September 6, 1978, but for the purposes of her disability benefits, he found that she was not disabled as of the date on which she last met the special earnings requirement, which both sides agree is March 31, 1965.

The Plaintiff then asked the Appeals Council to review the recommended denial of the disability benefits, but this request was denied on November 17, 1980 (Tr. 4-5), and the AU’s recommendation became the final decision of the Secretary, of which the Plaintiff sought judicial review in this suit. When the Court received the administrative record transcript, it found that it could not get even a general sense of the testimony at the AU’s hearing, as the transcript thereof was based on a largely inaudible electronic recording, and therefore the Court remanded the case to the Secretary. The Appeals Council, finding that it could not reconstruct the transcript of the hearing, vacated its decision and remanded the matter to another AU for a second hearing (Tr. 312). The second AU held a new hearing on January 14, 1982 (Tr. 317-410), which was attended not only by the Plaintiff and her physician but also by her attorney and a doctor acting as medical advisor to the Secretary, Robert A. Schneider, M.D. (Tr. 317). The second AU found the Plaintiff disabled on March 31, 1965 and recommended a decision in her favor (Tr. 301-07). The Appeals Council reviewed the findings sua sponte, found them unsupported by substantial evidence, and found that the Plaintiff was not disabled on March 31, 1965, and denied her disability benefits (Tr. 296-300). The Plaintiff now seeks judicial review of this final decision.

ISSUE

The only issue before the Court is whether the final decision of the Secretary as to disability benefits is supported by substantial evidence. This issue is complicated somewhat, however, in that the decision of the Appeals Council rejected the recommendation of the AU, who actually heard the testimony of the witnesses and who based his recommendation squarely on the opinion of Dr. Cooperman, Plaintiff’s physician, that if pulmonary function studies had been done on the Plaintiff on or before March 31, 1965, the level of severity of her impairment would have met the criteria of the medical listing in 20 C.F.R. Part 404, Subpart P, App. 1, § 3.03 A (1984). Hence, in large part, the question is whether there is substantial evidence to support the Appeals Council’s finding that Dr. Cooper-man’s testimony had been impeached and was entitled to little weight.

LAW AND REGULATIONS

A person claiming entitlement to Social Security disability insurance benefits .has the burden of establishing that he was disabled on or before the date on which he last met the statutory earnings requirement. McMillin v. Gardner, 384 F.2d 596 (Tenth Cir.1967); Stevens v. Mathews, 418 F.Supp. 881 (W.D.Okla.1976); Dicks v. Weinberger, 390 F.Supp. 600 (N.D.Okla. 1974); See Johnson v. Finch, 437 F.2d 1321 (Tenth Cir.1971). For the purposes of Plaintiff’s claims, “disability” means inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than twelve months. 42 U.S.C. §§ 416(i)(1), 423(d)(1)(a) (1976).

The scope of the Court s review authority is narrowly limited by 42 U.S.C. § 405(g). The Secretary’s decision must be affirmed if supported by substantial evidence. Gardner v. Bishop, 362 F.2d 917 (Tenth Cir.1966); Stevens v. Mathews, supra. Substantial evidence is more than a scintilla. It is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971); Stevens v. Mathews, supra. However, substantial evidence is less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency’s finding from being supported by substantial evidence. Consolo v. Federal Maritime Commission, 383 U.S. 607, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966); Stevens v. Mathews, supra.

The credibility issue is well framed by a quotation in Plaintiff’s brief (Plaintiff’s Brief in Rebuttal, March 25, 1984), quoting from Beavers v. Secretary of Health, Education and Welfare, 577 F.2d 383 (Sixth Cir.1978):

He [the Secretary] should and does have more leeway in making findings and then rejecting the findings of an Administrative Law Judge than does an appellate court in reviewing the decisions of a trial judge or jury. Nevertheless, his conclusion must not be based on less than substantial evidence, a test which is imprecise, but probably affords as much clarity as is possible.
If the Appeals Council concludes that it must disagree with the credibility findings of an Administrative Law Judge, then it may do so, but only if there is substantial evidence undercutting the reliability of the testimony, evidence which “a reasonable mind might accept as adequate to support a conclusion” that the Administrative Law Judge was wrong about the credibility of the witnesses, in spite of the advantage of having heard the testimony and lived with the case. Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 39 S.Ct. 206, 83 L.Ed. 126 (1938).

The Secretary’s regulations, none of which have been challenged by the Plaintiff, describe the series of steps which the Secretary follows in evaluating the facts material to the disability issue. 20 C.F.R. § 404.1520(a) (1984). In the case of the Plaintiff, as the Plaintiff passed the first step due to the fact that she had not worked since March 31, 1965, the issue was whether her impairment was “severe.” To be disabled, the Plaintiff’s impairment must have been “severe,” § 404.1520(c), which in turn means “impairment(s) which significantly limits your physical or mental ability to do basic work activities,” § 404.-1520(c), cf. § 404.1521(a), including such physical functions as walking, sitting, lifting, and pushing, § 404.1521(b)(1). Of particular significance in the instant case is the use of the medical listing of impairments, as the second AU found disability solely on the basis that the Plaintiff met the listing (Tr. 306), while the Appeals Council found that the listing was not met and also that the record was devoid of other evidence of any severe impairment (Tr. 299) as of March 31, 1965. If an impairment meets the duration requirement and meets or equals a listed impairment, then the impairment is “considered severe enough to prevent a person from doing any gainful activity,” § 404.1525(a), and the claimant is considered disabled without the Secretary’s going to the next step and considering the age, education, and work experience of the claimant, § 404.1520(d).

THE ADMINISTRATIVE FINDINGS

The second AU found the Plaintiff disabled since March 1, 1965, based on findings (Tr. 306) that:

2. The claimant has the following impairment: chronic asthmatic bronchitis.
3. Since March 1, 1965 the claimant’s impairment has been attended by findings meeting the criteria of section 3.03(A), Appendix 1, Subpart P, Regulations No. 4.

The entire discussion supporting these findings is as follows (Tr. 306):

At the hearing both Dr. Cooperman and Dr. Schneider testified that the claimant has a severe chronic asthmatic condition at the present time and both are in agreement that pulmonary function studies as far back as 1970 indicate that the claimant’s pulmonary impairment met the medical listing at that time. Dr. Schneider testified that there is no objective evidence to indicate that the claimant met the listings in 1965. On the other hand, Dr. Cooperman testified that he has been treating the claimant since 1960 or 1961 and that her condition at that time was such that she would have met the listings in 1965.
The hearing record contains no reports of blood gas studies or pulmonary function studies made prior to 1970; however, the record does show a number of hospitalizations prior to that time and the progressive nature of the disease is well known. These factors, combined with the testimony of Dr. Cooperman, which has not been refuted, provide a reasonable basis for a retrospective projection of the claimant’s condition, at such a level of severity as to meet applicable listings, to a date prior to March 31, 1965. It is, accordingly, the conclusion of the Administrative Law Judge that as of March 1,1965 [sic] the claimant’s asthma was attended by findings meeting the criteria of the medical listing at section 3.03A, Appendix 1, Subpart P, Regulations No. 4 and that since that time the claimant’s disease has persisted at the same, or a greater, level of severity through the present time. The claimant is therefore considered to have been disabled since March 1, 1965 [sic].

The Appeals Council, on the other hand, found that as of March 31, 1965, the only medically determinable impairment of the Plaintiff was bronchial asthma (Tr. 300, Finding No. 3). The Appeals Council also found:

4. The evidence fails to demonstrate severe and persistent subjective symptoms that would have prevented the claimant from engaging in substantial gainful activity on or before March 31, 1965.

The Appeals Council thus found that her condition was not significantly limiting and, therefore, was not a severe impairment which disabled her within the meaning of the Social Security Act. In support of these findings, the Appeals Council noted four brief hospitalizations during the years 1961-63; that she quickly responded to conservative treatment and was discharged as improved on each occasion (Tr. 296-97); that she continued to respond well to conservative treatment during brief, not too frequent hospital stays thereafter (Tr. 297); that the pulmonary function studies done on her in 1970,1978 and 1979 failed to meet the listing (Tr. 297-98); that Dr. Cooper-man’s testimony that, in his opinion, the Plaintiff would have met the listing in 1965 was inconsistent with the objective evidence, particularly in light of the undisputed fact that her disease is of a progressive nature, and therefore was entitled to little weight (Tr. 299); and that the record did not establish that her work-related functions were significantly limited as of March 31, 1965 and was void of any clinical findings suggesting the required severity of impairment (Tr. 299).

THE FACTS

The Court has carefully studied the record in this ease and has found it very useful to construct the following table of the data obtained in the various pulmonary function studies which relate to the relevant listing:

TABLE
Pulmonary Function Studies on Deelah A. Maddox
VC-l or FEV-1
Study Coopera(liters (I,)) MBC or MVV (L./min.) Doctor Date/ Page tion Noted Height Noted Listing (1984) Before After Bronchodilation Listing (1984) Before After Bronchodilation
Lowell Tr. 94 4-16-70 Tr. 101 Good 5'7" Tr. 95 1.3 .60 (VC-1) 1.51 (VC-1) 42 23 (MBC) 51 (MBC)
Bynum Tr. 127 12-11-78 Tr. 130 Very Poor 5 '5%" 1.2 .70 (VC-1) 1.80 (VC-1) 40 29 (MBC) 37 (MBC)
Gismondi Tr. 149 5-31-79 Tr. 154 Fair 5 '61/4" 1.2 .9 (FEVp 1.7 (FEV-|) 41 20 (MVV) 50 (MW)
Cooperman Tr. 185, 286 8-14-79 Tr. 185 Not Noted 5 '6V4" 1.2 .945 (FEV-1) 1.28 (FEV-1) 41 34 (MW) 45 (MW)
Cooperman Tr. 184, 287 11-16-79 Tr. 184 Not Noted 5'6" 1.2 1.49 (FEV-1) 1.76 (FEV-1) 41 25 (MW) 40 (MW)

The medical listing for respiratory system impairments is found at 20 C.F.R. Part 404, Subpart P, App. 1, §§ 3.00-3.12. Impairments for asthma are subdivided in § 3.03 into categories of “chronic asthmatic bronchitis” (§ 3.03 A) and “episodes of severe attacks” (§ 3.03 B). The Plaintiff obviously has never been close to meeting the listing for episodic asthma, which requires six severe attacks per year, and such attacks must be well documented, see § 3.00 C. Consequently, the AU could find that the Plaintiff met the listing only if she met the one for “chronic asthmatic bronchitis,” § 3.03 A, which the regulation says must be evaluated under the criteria for chronic obstructive airway disease in § 3.02. § 3.02 requires two tests, MVV (maximum ventilatory volume) and FEV i (forced expiratory volume for one second duration), and § 3.02 further requires that both tests result in values which are “equal to, or less than, the values specified in Table I, corresponding to the person’s height.” Thus, the table above contains the listed values for FEV i and MVV corresponding to the height noted in each of the studies in the record herein. The accuracy of the studies depends upon the subject’s giving full cooperation, and if cooperation is less than full, the reported value will be less than the correct value but more likely to appear to meet the listed value, so the regulation requires that the subject’s cooperation and ability to understand the directions be noted on the test report, § 3.00 D. Finally, in interpreting the reports of the Plaintiff’s pulmonary function studies, it should be noted that, as the Plaintiff’s reported values before bronchodilation were always less than 80 percent of predicted normal values, the regulation required that the tests be repeated after bronchodilation. § 3.00 D. Hence, although the Court’s table states the reported values obtained from tests made before bronchodilation, the only relevant values are those obtained after bronchodilation.

In light of these observations, it will be seen immediately that none of the five tests reported values which met the listing for chronic asthmatic bronchitis. Hence, the fact that both Dr. Cooperman and Dr. Schneider testified that the Plaintiff met the medical listing at the time of the test in 1970 by Dr. Lowell (Tr. 383) should have been disregarded by the ALJ as opinion testimony which was contrary to the evidence on which it was based and to the only objective evidence in the record. Even the Court is competent to read and compare columns of numbers and to find that neither witness could be competent to state that the Plaintiff met the listing in 1970, based on the Lowell study. However, based on this demonstrably wrong assumption, the AU went on to rely on Dr. Coo-perman’s testimony that, based on his treatment of the Plaintiff commencing in 1960 or 1961, she would have met the listings in 1965, in his opinion. (Tr. 360, 366-67).

The AU cites in support of this opinion the fact of the early hospitalizations and the progressive nature of the disease. Presumably the AU means that the disease progresses from better to worse. Both Dr. Cooperman (Tr. 368) and Dr. Schneider (Tr. 385) testified that the Plaintiff’s disorder is a progressive one, meaning that it progresses from better to worse, and that pulmonary function figures would be higher numbers in earlier years. Hence, the AU could not possibly conclude, on the basis of the 1970 studies and the progressivity of the disease, that the Plaintiff would have met the listing in 1965.

Besides the progressivity of the disease, the only fact cited by the AU in support of his conclusion that the Plaintiff would have “met” the listings in 1965 is the fact of “a number of hospitalizations prior to” 1970. The Appeals Council examined the Plaintiff’s hospitalizations in detail in its discussion. It apparently considered the most significant hospitalizations to be those prior to March 31, 1965, noting that on each of these four occasions she quickly responded to conservative treatment and was discharged as improved. (Tr. 296-97). The skimpy documentation in the record of those' hospitalizations supports the Appeals Council, see Exhibit 25 (Tr. 166) and Exhibit AC-1 (Tr. 188-94). During her hospitalization of May 18-24, 1961, she was diagnosed as having status asthmaticus with right upper lobar pneumonia (Tr. 188-89). In her hospitalization on September 19-24, 1961, she was diagnosed as having acute status asthmaticus (Tr. 190), and her physician’s progress notes suggest that this was partially emotionally induced and that she was discharged with improvement (Tr. 191). During her hospitalization of October 20-24, 1962, she was diagnosed as having an acute exacerbation of status asthmaticus (Tr. 192), and progress notes say that she was responsive to therapy and also note an “emotional etiology for exacerbation” (Tr. 193). During her hospitalization of September 11-17, 1963, she was diagnosed with acute status asthmaticus with a nonproductive cough, which responded satisfactorily to therapy (Tr. 166, 194). This record is void of any clinical findings that might support the AU’s conclusion that the Plaintiff had met the listings beginning in 1965 and continuing to the present. The documentation of the Plaintiff's hospitalizations in 1966 and 1967 is much better and does show that she had a serious condition but does not support the conclusion that she would have met the listing in 1965.

The AU stated, as partial grounds for finding “a reasonable basis for a retrospective projection” that the Plaintiff met the listing, that the testimony of Dr. Cooper-man “has not been refuted” (Tr. 306). However, the Appeals Council found that Cooperman’s testimony was inconsistent with the evidence and was challenged when Dr. Schneider testified that Plaintiff’s condition in the early 1960’s could not be surmised with any degree of accuracy without objective evidence (Tr. 299). The Court agrees with the Appeals Council. Dr. Coo-perman did in fact indicate that pulmonary function studies were used mainly to confirm clinical impressions and were not really needed to predict the severity of a condition and could even be anticipated from clinical observations (Tr. 366-67, 373), and Dr. Schneider considered this preposterous and ridiculous (Tr. 388-89), thus refuting Dr. Cooperman and supporting the Appeals Council. Indeed, Dr. Schneider’s view is obviously embodied in the regulation, as the regulation makes meeting this particular listing of impairment turn solely on the laboratory results and not at all on clinical findings. This undercuts the AU’s findings and the credibility of Dr. Cooperman.

The Appeals Council’s consideration of the short duration of the hospitalizations and the Plaintiff’s quick response to conservative treatment (Tr. 297, 298), together with the reports of the pulmonary function studies and other evidence, shows that it did consider the available objective evidence. That evidence further undermines Dr. Cooperman’s credibility. The pre-1965 documentation in the record fails to note any objective findings of what the regulations call “signs,” § 404.1528(b), but Dr. Cooperman testified at the January 14, 1982 hearing before the second ALT that he had observed certain objective signs 17 years or more previously, including retraction of intercostal tissue [i.e., muscles between the ribs, used in breathing], cyanosis or blue coloring, and spatulation or configuration or clubbing of the fingers (Tr. 371, 375). These signs have been mentioned by counsel for the Plaintiff as objective medical findings which support the second ALT and undercut the Appeals Council. As noted by counsel for the Secretary, however, the credibility of Dr. Cooperman’s testimony is directly undercut by a positive observation in the report of Dr. Lowell on his pulmonary function studies done in 1970, that “There is no hepatomegaly, clubbing, pedal edema, or adenopathy.” (Tr. 95, emphasis added). Further, Dr. Schneider testified that objective signs that should have been observed and noted but which he did not find either in the record or in the testimony of Dr. Cooperman at the second hearing would include wheezing, a prolonged expiratory phase, and a very flat diaphragm (Tr. 386, 395, 397, 403-404). However, somewhat in support of Dr. Cooper-man, the Court’s study of the record shows that as early as November 2, 1965, although that is after the critical date, a M. Grosthwait, M.D., of Midwest City Memorial Hospital noted “moderate wheezing and respiratory rales heard throughout all lung fields ... Dilitation became uneasy and retraction of the intercostal accessory muscles of respiration.” (Tr. 195) Dr. Crosth-wait also noted in his history a (subjective) claim of cyanosis, and the next year, Dr. Eskridge at St. Anthony Hospital, in progress notes dated 8-27-66, seventeen months after the critical date, noted an observation of cyanosis (Tr. 205). Also, a radiographic report dated November 4, 1965, noted a depressed diaphragm and hy-peraeration of the lung fields (Tr. 199), and a radiology report at St. Anthony Hospital from the August, 1966 hospitalization noted hyperaeration (Tr. 208). But the Court has seen nothing in the record which would relate these specific signs back to March 31, 1965 or elaborate on their degree of severity. Moreover, the history notes of Dr. Moorman Prosser, M.D., a psychiatrist, dated April 27, 1966 (Tr. 201-02) and Dr. Prosser’s letter to Dr. Cooperman (Tr. 203) are not a picture of a disabled person. For example, in his notes is found the following:

Rx 2 If you insist on divorce
Get calmed down — It’s making me wheeze
Get a job
Pay your *****
Then do as you can best * * *
Mother: She never would take care of herself & makes herself sick—
Goes out in nite air — stays out too late — gets too tired—

Likewise the report of consultation, dated August 28,1966, of Dr. Singleton, to whom Dr. Eskridge referred the Plaintiff for asthma treatment at the time of her first pregnancy, says (Tr. 206):

“Pt. 2 mo pregnant & adm. c asthma. Onset @ 2 wks of ago. She has some wheezing perennially & worse in summer. Worse in the last 2 mo. and very bad for one wk. She has been treated by Dr. Cushing and uses Aminaphylline supp., T — al, Asthmanephrine spray and some other tab. c temporary relief. She was given ? [7?] Adrenaline this AM by LDO & sent to SA.
BP 130/80 P108 Lungs are hyperreso-nant and there is generalized insp. & exp. wheeze. Heart — .”

Finally, counsel for the Plaintiff has mentioned emphysema and asserted that the Plaintiff meets § 3.04 of the category of impairments in Appendix 1, which relates to diffuse pulmonary fibrosis. And, Dr. Cooperman testified that the Plaintiff was “emphysemie” in the early 1960’s (Tr. 357), which he suggests refers to a terminal stage (Tr. 377-78). But Dr. Schneider testified that although blood gas studies have been available for use for a long time, there were no such studies or other objective findings of gas diffusion impairment in the record (Tr. 406-10), and he was not satisfied with Dr. Cooperman’s discussion of his x-rays, which if properly serialized could show the progress of emphysema (Tr. 401). Evidently, neither the second AU nor the Appeals Council considered the evidence regarding emphysema to be important, as both focused solely on the asthma question, even though the Plaintiff’s application had claimed emphysema as well as asthma. The Appeals Council did note, however, that Plaintiff’s claims of seizures, female problems and emotional problems were either mild or well controlled (Tr. 299).

Of course, the AU could not find that the Plaintiff actually met the listings in 1965. Rather, he found that she had “findings meeting the criteria of the medical listing ... [which have] persisted at the same, or a greater, level of severity through the present time.” (Tr. 306). If this is treated as a finding of equivalence to the listed impairment, rather than a meeting of the listing, the Court still finds that the reversal by the Appeals Council is supported by substantial evidence. Statements by physicians that a claimant is disabled or unable to work are not binding on the Secretary, 20 C.F.R. § 404.1527. Likewise, a listing is not met merely because a physician diagnoses a claimant as having a listed impairment; a claimant must also have the findings shown in the listing of that impairment. § 404.1525(d). The Secretary considers and compares the symptoms, signs, and laboratory findings available regarding a claimant’s impairment, § 404.1526(a), but a claimant’s statement of symptoms alone is not enough to establish even an impairment, § 404.1528(a), and signs not only must be observed but must be shown by medically acceptable clinical diagnostic techniques, § 404.1528(b). Finally the Secretary may consider the medical opinions of physicians, including those like Dr. Schneider who are hired by the Secretary to aid in determining whether medical equivalence is present, § 404.-1526(b).

Moreover, although the burden of proof is on the claimant in the administrative proceeding and therefore the Secretary’s denial may be upheld on the basis of a substantial lack of evidence, there is affirmative evidence in the record which additionally supports the Secretary in the instant case. First, the Plaintiff brought to term a pregnancy in 1966 and a second pregnancy in 1967, which, in the opinion of Dr. Schneider (Tr. 387, 398), would normally be very good tests and challenges to the respiratory system. Second, after Dr. Lowell, based on his April, 1970, pulmonary function tests on the Plaintiff, reported in a letter to a rehabilitation counselor that the Plaintiff “would be able to engage in sedentary or light work activities on a regular basis” (Tr. 95), the Plaintiff attended Oscar Rose Junior College for two-and-a-half years, carrying a relatively heavy load at least her first two semesters, including laboratory work of four hours per day at a hospital, according to the Plaintiff’s own testimony (Tr. 346-47). Third, in May, 1979, after the Plaintiff filed her claim for disability benefits and 14 years after the last date on which she met the special earnings requirements, Dr. Gismondi did his pulmonary function studies on her and, after bronchodilation, found both her FEV i and MW values to be well above the listed values (see table above) and expressed the opinion that her “chronic obstructive pulmonary disease, a marked degree with moderately severe bronchoconstriction [was] responsive to bronchodilators” and that she “should be able to do light to sedentary work quite well and perhaps better once she is treated of her bronchoconstriction ... [if she has] a clean environment away from irritants and probably also away from patients.” (Tr. 151). These favorable results and opinions are confirmed by the results of Dr. Cooperman’s own studies in August and November of 1979, and, combined with the lack of documentation regarding emphysema, would seem to call into question the first AU’s allowance of supplemental security income benefits, which appears to have been based primarily on the testimony of Dr. Cooper-man {cf Tr. 17-18 with Tr. 316), and they certainly add a substantial basis for finding that the impairment of the Plaintiff in 1965 was not severe.

Hence, the Court concludes that the Appeals Council’s findings that on March 31, 1965, the last date on which the Plaintiff met the special earnings requirement, the medically determinable impairment which the Plaintiff had was bronchial asthma, rather than chronic asthmatic bronchitis as the second ALJ found; that this condition did not significantly limit her ability to work and was therefore not “severe” within the meaning of the regulations, and therefore that she was not “disabled” within the meaning of the Social Security Act, are supported by substantial evidence in the record. As the decision of the Appeals Council is the final decision of the Secretary, it is therefore affirmed.

      . Hereinafter, the notation "Tr." with a number indicates a reference to a page in the transcript of the record of administrative proceedings filed by the Secretary herein.

       “Vital capacity, one second” (VC-1) and “one second forced expiratory volume” (FEV-1 or FEVj) seem to be the same test even though Dr. Schneider testified otherwise (Tr. 392), apparently being confirmed by the fact that the regulation only mentions FEV^ cf. App. 1, § 3.00D with Dr. Bynum’s pulmonary studies form (Tr. 130).

       “Maximum breathing capacity” (MBC) and “maximum ventilatory volume” (MVV) are the same test.


author: BALLANTINE, District Judge.

text:
    Mary Ann PITTMAN, Plaintiff, v. AMERICAN GREETING CORPORATION, Defendant.
    No. C 83-0001-L(B).
    United States District Court, W.D. Kentucky, Louisville Division.
    March 13, 1985.
    Jack Wheat, John Dodson, Louisville, Ky., for plaintiff.
    George J. Moscarino, Cleveland, Ohio, Lively Wilson, Louisville, Ky., for defendant.
   MEMORANDUM

BALLANTINE, District Judge.

This copyright infringement and unjust enrichment action is before the Court on cross-motions of the parties for summary judgment and on the motion of the plaintiff to hold in abeyance pending a ruling on her motion to compel. For the reasons hereinafter set out, plaintiffs motions will be denied and defendant’s motions will be granted.

On December 11, 1984, the Court entered an order granting plaintiff an extension of time to January 11, 1985, to respond to defendant’s motion for summary judgment. On January 11, 1985, instead of responding to the pending motion, plaintiff moved to compel answers to certain interrogatories and to hold defendant’s motion in abeyance pending ruling on her motion. On February 5, 1985, plaintiff responded to defendant’s motion and on March 1, 1985, unencumbered by compliance with the local rules, plaintiff filed a reply to defendant’s reply memorandum.

Defendant markets a line of greeting cards and related products consisting of a cast of characters whose names reflect certain desserts or otherwise sugar and fruit-oriented foods. These characters live in a realm known as Strawberryland and are tagged with such names as Strawberry Shortcake, Raspberry Tart, and the character in issue, Angel Cake.

In March, 1981, plaintiff submitted about 40 rough sketches to Carl Goeller, who was the individual charged with responsibility for the editorial copy which appeared on defendant’s cards, stationery and the like. Goeller had no responsibility for the development of characters depicted on defendant’s products.

The development of the characters on defendant’s products was the responsibility of a group called Those Characters From Cleveland (TCFC).

Upon receipt and examination of plaintiff’s submissions, Goeller concluded that they were not suitable for defendant’s purposes and returned them to plaintiff. The sketches were not shown to any of the TCFC personnel before they were returned to plaintiff.

At plaintiff’s deposition it was stipulated that the only character which plaintiff contended was infringed was her character called Little Angel Food Cake.

The affidavits accompanying defendant’s motion establish that in February, 1981, TCFC prepared a list of proposed new characters for Strawberryland, including Angel Cake. That list was submitted to defendant’s legal department for trademark clearance. After submission to an outside firm for a trademark search, TCFC was notified that Angel Cake had been cleared for use except on food products.

In February, 1981, TCFC’s creative consultant, Muriel Fahrion, was assigned to prepare drawings of Angel Cake. As drawn by Fahrion, Angel Cake was depicted as having lavender hair tied about with a gold hair ribbon. She was depicted in a light blue or green smock-like garment worn over a white blouse, the sleeves of which are bunched and, arguably at least, may be said to resemble wings. Beneath the smock Angel Cake’s bloomers extend to about her knees. She wears green and white striped stockings and lavender shoes.

Plaintiff’s creation, Little Angel Food Cake, is depicted with a halo unattached to her head, and readily identifiable wings. She is clad in a garment resembling a toga and footwear described by plaintiff as Roman sandals which appear to be laced up to about the knees.

We turn to the issues presented by defendant’s motion.

I.

The United States Court of Appeals for the Sixth Circuit has recently addressed similar issues in Wickham v. Knoxville Intern. Energy Exposition, 739 F.2d 1094 (6th Cir.1984). In that case the court was confronted with a claim that defendants, promoters of an exposition in Knoxville, had utilized copyrighted drawings of a tower prepared by plaintiff. In affirming a summary judgment for defendant, the court wrote:

“This Court recognizes that granting summary judgment, particularly in favor of a defendant, is a practice to be used sparingly in copyright infringement cases. See Arnstein v. Porter, 154 F.2d 464 (2d Cir.1946). 3 M. Nimmer, Nim-mer on Copyright, [Section] 12.10 (rev’d 1983). However, a court may compare the two works and render a judgment for the defendant on the ground that as a matter of law a trier of fact would not be permitted to find substantial similarity. (Citations omitted.)
Reduced to most fundamental terms two elements are necessary to plaintiffs case in a copyright infringement action: ownership of the copyright by the plaintiff and copying by the defendant. (Citations omitted.) In order to prove copying by the defendant, the plaintiff must prove access as well as substantial similarity. (Citation omitted.) Thus, copying is an essential element of infringement and substantial similarity between the plaintiffs and defendants’ works is an essential element of copying. * * * * * * * * * *
Similarity is determined by a comparison of plaintiff’s and defendants’ works. ‘[A]n appellate court may reverse a lower court’s grant of summary judgment to the defendant based upon a finding of lack of substantial similarity if the appellate court, upon a comparison of the two works, concludes that absence of substantial similarity is not so clear as to warrant such a conclusion as a matter of law.’ 3 Nimmer, supra, at [Section] 12.-12.” 739 F.2d at 1097.

Assuming that plaintiff owned a copyright to Little Angel Food Cake, she must establish the second element of infringement, that is, copying. As the Wickham court noted, to establish copying plaintiff must prove access and substantial similarity-

The only evidence of access is found in a letter from Goeller to plaintiff in which he stated:

“Thanks for letting us review these suggestions for additional characters for our line.
We’ve reviewed them with our Marketing and Licensing people and they don’t feel any of these characters are strong enough to add to our ‘stable’.
Thanks for thinking of us ... and good luck with them elsewhere.”

In his affidavit appended to defendant’s motion for summary judgment and in his deposition Goeller denies ever showing the sketch to anyone at TCFC:

“Q What did you do with Ms. Pittman’s ideas after you received them?
A After I received, I looked at them, decided they weren’t for us, and returned them.
Q Did you have your marketing and licensing people review her ideas?
A No, I did not.
Q Have you ever stated differently? A Yes, in my rejection letter I said that we had reviewed those with our marketing and licensing people.
Q Was your statement in Plaintiff’s Exhibit 8 untrue?
A It was untrue, yes, from the standpoint that I did not show them to any people in marketing or licensing.” (Goel-ler Deposition, p. 13.)
“15. I recall that, when I looked at Mrs. Pittman’s submission in 1981, I immediately observed that the artwork lacked professional quality and that the written material did not appear to contain any new ideas. As a result, I did not look at most of her character suggestions but only glanced at a small number of them.
16. At no time did I show or send Mrs. Pittman’s submission to or discuss it or any part of it with any person connected with TCFC. Mrs. Pittman’s submission did not leave my department until I returned it to her by mail.
17. Pursuant to company policy, I made no copies of Mrs. Pittman’s submission. On or about March 11, 1981, I returned to her by mail all of the items she had submitted.
18. Pursuant to my practice, I sent Mrs. Pittman a note when I returned her submission. The note was dated March 11, 1981 and signed by me. A copy of the note is attached hereto as Exhibit C2. While the note stated, ‘We have reviewed them [her submission] with our Marketing and Licensing People and they don’t feel any of these characters are strong enough to add to our stable,’ that statement was not strictly true because I do not recall reviewing the submission with any one else. Rather, I had concluded, based on my familiarity with American Greetings’ products and marketing and licensing activities, my 13 years with American Greetings, and my 28 years of professional experience in the greeting card industry, that Mrs. Pittman’s submissions were of no interest to the company.” (Goeller Affidavit, paragraphs 15 through 18.)

Recognizing that on a motion for summary judgment all disputes of fact must be viewed in the light most favorable to the non-moving party, and assuming for the moment that Goeller’s letter creates a. material issue as to access, plaintiff nevertheless simply cannot establish substantial similarity between her sketch and Fahrion’s sketch. While the Court’s attempted description of the sketches may lack clarity, the Court would note that plaintiff’s sketch is in the nature of a Renaissance concept of an angel while Fahrion’s sketch represents a cloyingly sweet child.

Rather than attempt to find descriptive terms, the Court attaches hereto photocopies of the two sketches. It is obvious to the Court that there is, in the language of Judge Taylor, "a virtual absence of similarity of specific features.” Wickham v. Knoxville Intern. Energy Exposition, 555 F.Supp. 154, 155 (E.D.Tenn.1983).

The Court concludes that defendant is entitled to summary judgment on Count I of plaintiff’s complaint.

II.

Count II of plaintiff’s complaint sounds in unjust enrichment and alleges that defendant either solicited or accepted her submission of confidential ideas and that defendant benefitted from its use of those ideas. Plaintiff seeks compensation for defendant’s alleged unjust enrichment.

An unjust enrichment claim is based on plaintiff’s assertion that defendant has appropriated her idea. In Official Airlines Sched. Inform. Serv. v. Eastern Air Lines, 333 F.2d 672 (5th Cir.1964), the court articulated the elements necessary to establish a right to relief: “[T]he essential elements which a plaintiff is required to establish as a prerequisite to a right to relief in a case of this character____generally are: (1) the idea must be novel; (2) the disclosure of the idea must be made in confidence, and (3) the idea must be adopted and made use of by the defendant.”

The Court is convinced that plaintiff cannot satisfy the criteria quoted above. Her main obstacle is the question of novelty. Plaintiff candidly admits that the depiction of angels with wings and halos is an ancient practice (Plaintiff’s deposition, p. 93-95).

On March 4 or March 5, 1981, plaintiff sent Goeller a number of black and white sketches of proposed characters to be added to the Strawberryland cast. The impetus for plaintiff’s submission was an article in the February 15, 1981 edition of the Courier-Journal. Plaintiff took Goeller’s name from The Writer’s Market, a trade journal aimed at the freelance writing market. Goeller, who had no participation in the artistic portion of defendant’s operation, nevertheless concluded that plaintiff’s drawings were lacking in professional quality and intellectual originality.

It is further established that prior to the time that plaintiff submitted her drawings to Goeller, defendant, acting through TCFC, had begun developing the concept of Angel Cake. In February, 1981, Fahrion had been directed to prepare preliminary drawings of Angel Cake (Fahrion Deposition p. 43-44).

The affidavit of Tom Jacobs, a senior editor of TCFC, establishes that in January and February, 1981, “brainstorming” sessions with a view to expanding the larder of Strawberryland were being held. It was from one of those sessions that Angel Cake emerged, accompanied by the now-discarded cat Divinity.

In Stevens v. Continental Can Co., 308 F.2d 100 (6th Cir.1962), the court addressed the common law concept of a property right in intellectual material:

“In general, it may be said that property rights may exist in copyrighted material (such as literary and musical compositions), architectural designs, mechanical or scientific inventions, advertising slogans, original paintings and works of art. (Citations omitted.) We find no case, however, where anything as simple as combining into a decorative scheme for picnic cups and plates, a wood grain background (already in use and well known) with cattle brands (long in use as a decoration on packages for merchandising) was held to be an original artistic scheme, work of art or a work of such novelty as to vest in its author a common law or statutory copyright or property right. Assuming, however, that such a decorative design creates a property right, it will not be accorded protection against use by others if it is not original with the person asserting the right to such protection or if such design is already in use and within public knowledge. * * * * [i]n order for a recovery to be obtained for such a disclosure, the matter communicated must possess the quality of novelty in the legal sense. So here, the fact that plaintiff announced to defendant’s agent that she was disclosing her design to him in confidence would not impose a duty upon defendant to pay her if the design was neither new nor novel. (Citations omitted.) She was a volunteer in talking of her design to defendant’s agent who made no promise and did not, for defendant, agree to use her claimed original idea. Her idea or design was already in use and within public knowledge; we will not, nor could a jury, imply an agreement by defendant to pay her for using an allegedly novel design which was not such in fact.” 308 F.2d at 103.

It does not require a background in art appreciation to recognize that the fanciful depiction of angels has long been employed by artists. There is simply no novelty attaching to plaintiff’s drawings and defendant’s motion for summary judgment as to Count II will be granted.

An appropriate order has been entered this 13th day of March, 1985.

      . Angel Cake is sometimes accompanied by a lavender skunk named Soufflé.

      . A letter from Goeller to plaintiff is discussed below.

      . Originally, Angel Cake was to be accompanied by a cat named Divinity. The cat was abandoned in favor of the olent Soufflé.

      . A second depiction of Angel Cake shows her playing a harp under the adoring gaze of Soufflé.

      . The Court will not extend this memorandum to an unreasonable length by reciting the litany of proposed new characters. It is enough to note that if produced they would create a pedo-dontist’s nightmare.


author: TELESCA, District Judge.

text:
    PANTS ‘N’ STUFF SHED HOUSE, INC., Plaintiff, v. LEVI STRAUSS & CO., Defendant.
    No. Civ-84-1375T.
    United States District Court, W.D. New York.
    April 25, 1985.

      Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Nixon, Hargrave, De-vans & Doyle, Rochester, N.Y., for plaintiff; Lewis Kaplan, New York City, John Stuart Smith, Rochester, N.Y., of counsel.
    Harter, Secrest & Emery, Rochester, N.Y., Heller, Ehrman, White & McAuiffe, San Francisco, Cal., for defendant; Kenneth A. Payment, Rochester, N.Y., Robert J. Vizas, San Francisco, Cal, of counsel.
   DECISION and ORDER

TELESCA, District Judge.

1. Introduction

This is an antitrust action brought by a Rochester based retailer (and sometime wholesaler) of sportswear, against a clothing manufacturer which refuses to allow its products to be sold by anyone at wholesale. Defendant has moved to dismiss the action on various grounds, and has moved to strike several paragraphs in the complaint as irrelevant and prejudicial. Plaintiff has moved for a preliminary injunction compelling defendant to continue supplying it at least as many pair of blue jeans as it sold to plaintiff between November, 1983 and November, 1984.

By this decision, I deny plaintiff’s motion for a preliminary injunction, along with defendant’s motion to strike certain paragraphs from the complaint and defendant’s motion to dismiss for lack of standing. Pursuant to Fed.R.Civ.P. 12(b), I am converting defendant’s motion to dismiss plaintiff’s Sherman Act Section 1 claim into a motion for summary judgment, and ordering that the parties submit affidavits, deposition testimony, and other relevant evidence by June 1,1985. Defendant’s motion to dismiss plaintiff’s Sherman Act Section 2 claim is granted.

II. Facts

Levi Strauss & Company (Levi) grew from a small family owned business at the end of World War II to the nation’s largest apparel manufacturer today. It claims that the “cornerstone” of this growth has been Levi’s long-standing publicly announced policy of selling only to retailer customers of suitable quality. Levi refers to this as its “customer selection” policy; plaintiff refers to this as Levi’s “customer restriction” policy.

Plaintiff, Pants ‘N’ Stuff Shed House, Inc. (Shed House) was founded in 1969 in Rochester, New York by Seymour and Sam Tesler. It grew from one retail store in the Rochester area to over 20 retail clothing stores in New York, Pennsylvania and Vermont. Levi products have been the mainstay of Shed House’s retail business since 1970.

Shed House is also in the business of selling clothing at wholesale. It entered the wholesale business during the 1970’s, allegedly as a result of Levi’s refusal to accept returns of overstocked merchandise or to cancel orders. Thereafter Shed House dealt in wholesaling on a regular basis and became heavily dependent on the income from it, to such an extent that it claims it is likely to be forced out of business if Levi is permitted to cut off Shed House’s supply of goods for its wholesale business.

Since World War II, Levi has developed its “retailer only” distribution policy by selecting retail outlets for its merchandise and eliminating any wholesalers. It claims to derive several benefits from this distribution system, including improved brand image through selection of distribution channels, improved flow of information from retailers concerning current market demands, and increased retailer good will. It has diligently attempted to avoid any wholesaling of its products by others. Recently, it has developed a “light signature” surveillance technique, encoding numbers on its jeans which enable it to trace the source of any jeans found at an unauthorized retail location.

If the light signature program discovers a pair of jeans at an unauthorized retail location (in Levi’s parlance, a light signature “hit”), the source of the jeans is then identified. Although Levi officials have indicated that one or two light signature “hits” would arouse only curiosity or suspicion, a pattern of light signature hits results in Levi’s termination of shipments of jeans to the retailer identified as the source of the jeans, or else a reduction in shipments to the level identified by Levi as sufficient to satisfy the retail needs of that retailer. Levi also threatens to and does terminate its own salespeople who knowingly sell to retailers who “divert” merchandise.

There is no indication in the record thus far that anyone other than Levi’s employees and agents operates the light signature system or takes any enforcement action against a retailer suspected of diverting Levi products. Rather, the record indicates that Levi salespeople are directed to visit unauthorized retailers occasionally, purchase a pair of Levi’s jeans if that retailer is selling them, and send the jeans to Levi or its agent for identification of their source.

In June, 1983, Levi’s national sales manager for the Jeanswear Division wrote to Shed House, saying that Levi had discovered goods sold to Shed House in unauthorized accounts and therefore was suspending sales to it. By August, 1983, Levi resumed sales, but imposed a ceiling on the quantity of jeans it would sell to Shed House in order to prevent Shed House from selling Levi jeans at wholesale. According to Shed House, both Levi and Shed House ignored the ceiling from August, 1983 until October, 1984 when Levi again threatened to cut off Shed House because goods sold to Shed House were being retailed elsewhere. After Shed House informed Levi that it would bring this lawsuit unless an amicable resolution were reached, Levi terminated all sales to Shed House. Levi later agreed to meet Shed House’s retail needs during this litigation.

DISCUSSION

I. Sherman Act, Section 1

The nub of plaintiff’s complaint, and the basis for its preliminary injunction motion, is its contention that Levi’s anti-diversion policy and its actions in this lawsuit violate Section 1 of the Sherman Act. 15 U.S.C. Section 1. Section 1 of the Sherman Act prohibits any “contract, combination ... or conspiracy in restraint of trade ...”. Because it requires that there be a “contract, combination ... or conspiracy”, Sherman Act Section 1 does not proscribe independent action by a manufacturer; a manufacturer generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984); United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468 (1919).

Plaintiff relies on cases such as United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960) and Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), and argues that a “combination” may come about if a manufacturer announces its policies to its customers and then secures its customers’ acquiescence in those policies by threats of termination or other coercive tactics. The facts as brought out on plaintiff’s preliminary injunction motion, however, do not indicate to me that this case can be analogized to Parke, Davis or Albrecht. Accordingly, I am denying plaintiff’s motion for a preliminary injunction on the ground that it does not raise sufficiently serious questions going to the merits to make them a fair ground for litigation. Jackson Dairy Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979). Because this factual information was outside of the complaint, however, I am not granting defendant’s motion to dismiss. Rather, pursuant to Fed.R.Civ.P. 12(a), I am treating the motion as one for summary judgment. All parties are directed pursuant to Rule 12(b) to present all material made pertinent to such a motion by June 1, 1985.

In both Parke, Davis and Albrecht, unlike the present case, there were other parties with whom the manufacturer had conspired in an effort to force a retailer to comply with fixed prices. Shed House’s reliance upon Parke, Davis in particular is misplaced. The unauthorized “combination” with retailers is described by the Supreme Court as follows:

With regard to the retailers’ suspension of advertising, Parke, Davis did not rest with the simple announcement to the trade of its policy in that regard followed by a refusal to sell to the retailers who would not observe it. First it discussed the subject with Dart Drug [a large retailer which earlier had been cut off by Parke, Davis for advertising and selling Parke, Davis products at prices below the suggested minimum retail prices]. When Dart indicated willingness to go along the other retailers were approached and Dart’s apparent willingness to cooperate was used as the lever to gain their acquiescence in the program. Having secured those acquiescences Parke, Davis returned to Dart Drug with the report of that accomplishment. Not until all this was done was the advertising suspended and sales to all the retailers resumed. In this manner Parke, Davis sought assurances of compliance and got them, as well as the compliance itself. It was only by actively bringing about substantial unanimity among the competitors that Parke, Davis was able to gain adherence to its policy. It must be admitted that a seller’s announcement that he will not deal with customers who do not observe his policy may tend to engender confidence in each customer that if he complies his competitors will also. But if a manufacturer is unwilling to rely on individual self-interest to bring about general voluntary acquiescence which has the collateral effect of eliminating price competition, and takes affirmative action to achieve uniform adherence by inducing each customer to adhere to avoid such price competition, the customers’ acquiescence is not then a matter of individual free choice prompted alone by the desirability of the product. The product then comes packaged in a competition-free wrapping — a valuable feature in itself — by virtue of concerted action induced by the manufacturer. The manufacturer is thus the organizer of a price-maintenance combination or conspiracy in violation of the Sherman Act.

362 U.S. at 46-47, 80 S.Ct. at 512-13.

In the present case, however, I have seen no evidence to date that Levi either conspired with anyone else, or used anyone else’s compliance as a “lever”, in its efforts to force Shed House to comply with Levi’s announced anti-diversion policy. Rather, it appears from the facts brought out so far that Levi brings stringent measures to bear against a retailer individually when Levi learns that the retailer has been diverting Levi’s merchandise, which is a permitted practice under Monsanto, supra. Thus, the evidence indicates that Levi falls within the “limited dispensation which [Colgate] confers”. United States v. Parke, Davis & Co., supra, 362 U.S. at 46, 80 S.Ct. at 512, citing Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 626, 73 S.Ct. 872, 890, 97 L.Ed. 1277 (1953).

I invite the parties to bring to my attention in their summary judgment motion papers any information already filed with this Court, or any further information, regarding the extent to which Levi contracted, combined, or conspired with any person [other than a member of its own sales force] in its efforts to force Shed House to adhere to its anti-diversion policy.

II. Sherman Act, Section 2

Plaintiff also alleges in its complaint (although not on its preliminary injunction motion) that Levi violated Sherman Act Section 2 by conspiring with its dealers to monopolize the manufacture and sale of jeans or submarkets thereof. Levi responds that Shed House has failed to allege either a specific intent to destroy competition or monopolize, or a dangerous probability of successfully monopolizing a relevant market, both of which are unquestionably elements of an “attempted monopolization” claim. Nifty Foods Corp. v. Great Atlantic & Pacific Tea Company, 614 F.2d 832, 841 (2d Cir.1980). Shed House argues, however, that these elements are not required in a “conspiracy to monopolize” claim, but that such a claim requires allegations only of (1) a conspiracy, (2) directed at an appreciable part of interstate commerce, and (3) undertaken with the specific intent of achieving monopoly power. United States v. Consolidated Laundries Corp., 291 F.2d 563, 573 (2d Cir.1961). Shed House also argues that, to the extent it is required to do so, it has sufficiently alleged a “relevant market”, i.e., the manufacture and sales of jeans, as well as a specific intent of monopolizing that market or submarkets thereof.

I agree with Levi that Shed House has failed to sufficiently allege a dangerous probability of success, and that Shed House’s Sherman Act Section 2 claim ought to be dismissed for that reason. The Second Circuit may have implied that an allegation of a dangerous probability of success was not required in United States v. Consolidated Laundries Corp., supra, but I believe that such an allegation is now required. See, Levitch v. Columbia Broadcasting System, Inc., 495 F.Supp. 649, 668 (S.D.N.Y.1980), aff'd., 697 F.2d 495, 496 (2d Cir.1983); Consolidated Terminal Systems, Inc. v. I.T.T. World Communications, Inc., 535 F.Supp. 225, 229 (S.D.N.Y.1982). Shed House does allege in paragraph 7 of its complaint that Levi is the leading and dominant manufacturer of jeans in the United States, and that Levi’s share of sales of jeans approximates, on information and belief, 25% of that market. Nevertheless, the allegation of a 25% market share is insufficient to state a claim that there is a dangerous probability of successful monopolization. See, Levitch, supra, 495 F.Supp. at 668 (allegation of a one-third market share held insufficient as a matter of law to state a claim of dangerous probability of successful monopolization); see also, World Arrow Tourism Enterprises v. Trans-World Airlines, 582 F.Supp. 808, 811-12 (S.D.N.Y.1984) (allegation that defendant together with two other airlines dominated the market for air transportation between the United States and Italy is legally insufficient allegation of market share to state a Section 2 claim). Accordingly, Levi’s motion to dismiss plaintiff’s Section 2 claim is granted.

III. Defendant’s Motion to Strike Complaint Paragraphs

Levi has also moved under Fed.R. Civ.P. 11 to strike paragraphs “Eight” through “Eleven” of Shed House’s complaint as irrelevant and prejudicial. These paragraphs are grouped under the subheading “Levi’s Retail Price Maintenance Programs”, and allege that Levi has (since at least 1970) attempted to stabilize the resale prices of its jeans by various means, many of which were the subject of a Federal Trade Commission proceeding instituted in May, 1976 and terminated with a consent order.

Although Levi has argued that these allegations are irrelevant and prejudicial, Levi itself has already relied on, inter alia, the transcripts from the F.T.C. proceeding in support of its position in the instant litigation. Under the circumstances, I am hard-pressed to find that the F.T.C. proceedings, and Levi’s past practices addressed in those proceedings, are irrelevant in this case. If the presence of these paragraphs in the complaint leads to discovery requests from Shed House which Levi believes to be overbroad, Levi should bring this to the attention of the Magistrate who has the responsibility to monitor discovery.

IV. Standing

Levi has also moved to dismiss the complaint on grounds that Shed House lacks standing to challenge a policy which allegedly causes artificially high retail prices, when Shed House is not a retail customer affected by any high retail prices which would result from Levi’s conduct. The policy being challenged, however, although it is alleged to have the effect of stabilizing prices at an artificially high level, is a policy of limiting retail outlets by refusing to allow retailers to sell to other retailers. Shed House, which has sold to other retailers and would like to continue to do so, is directly harmed by such a policy. Accordingly, Levi’s motion to dismiss for lack of standing is denied.

CONCLUSION

From the facts before me thus far, it appears that Levi Strauss and Company has independently enforced its policy of selling its products only to retailers who resell to the general public. Such independent action by a manufacturer is not prohibited by Section 1 of the Sherman Act, since “a manufacturer of course generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently”. Monsanto, supra, 104 S.Ct. at 1469. Accordingly, I deny Shed House’s request for a preliminary injunction which would compel Levi to continue to supply Shed House sufficient quantities of jeans so that Shed House could in turn sell jeans to other retailers. I will not dismiss this action, however, until Shed House has had an opportunity to submit whatever proof it can find in support of its claim that Levi was not acting independently when it took action against Shed House for wholesaling Levi’s jeans.

ALL OF THE ABOVE IS SO ORDERED.

      . Shed House also sues under the Donnelly Act, New York General Business Law Section 340 et seq., which it alleges is broader than the Sherman Act because it prohibits “arrangements” in restraint of trade as well as combinations or conspiracies. The parties have not fully briefed this Court on the Donnelly Act, and I do not address it in this decision. For the benefit of the parties, I note that should summary judgment later be granted to defendant on the Sherman Act Section 1 issue, the Donnelly Act claim most likely would be dismissed without prejudice to its being refiled in state court. Should summary judgment not be granted to defendant, the Donnelly Act claim would then be addressed by this Court.