author: IRVING, District Judge.

text:
    Guadalupe BELTRAN, et al., Plaintiffs, v. STATE OF CALIFORNIA; United Farm Workers of America, AFL-CIO, et al., Defendants.
    Civ. No. 83-722-JLI(I).
    United States District Court, S.D. California.
    Sept. 19, 1985.

      Scott A. Wilson, Littler, Mendelson, Fastiff & Tichy, San Diego, Cal., Robert F. Gore, Nat. Right to Work Legal Defense Foundation, Springfield, Va., for plaintiffs.
    Kathy Christian, Agr. Labor Relations Bd., John Van de Kamp, Atty. Gen., State of Cal., and Carlos Alcala, Sacramento, Cal., for defendants.
   MEMORANDUM DECISION AND ORDER

IRVING, District Judge.

Presently before the court are cross-motions for summary judgment on the issue of the constitutionality of § 1153(c) of the California Labor Code. Plaintiffs, agricultural workers for Sun Harvest, Inc., contend that this section violates their first amendment free speech and associational rights, and has a disparate impact upon them, as persons of Mexican-American or hispanic origin. Defendants and the California Agricultural Labor Relations Board (ALRB) as amicus curiae, contend there is no constitutional violation and request judgment on this issue in favor of defendants. Having considered the pleadings and exhibits on file, the arguments of counsel, and for the reasons stated below, the court finds § 1153(c) of the California Labor Code unconstitutional as an abridgment of the first amendment to the United States Constitution.

I.

The statutory background and facts as stipulated to by counsel are summarized below.

A.

In amending the National Labor Relations Act (NLRA) in 1947, Congress specifically excluded “agricultural laborers” from the provisions of the Act, and left this area of labor relations to the states. See 29 U.S.C. § 152(3). Until 1975, the California State Legislature allowed labor relations with respect to this exempted area to develop under the common law of the state. In order to clarify and codify the common law as it developed, the Agricultural Labor Relations Act (ALRA) was enacted, and was in many respects parallel to the NLRA. It is a variance from the NLRA added to the ALRA which is at issue here.

Through its amendments to the NLRA, Congress essentially provided a scheme whereby employers and their employees, through a collective bargaining representative, could enter into Union Shop arrangements. That is, employees covered by a collective bargaining agreement containing a Union Shop clause must join the union, but may be terminated by the employer at the request of the union only if the employee has failed to pay dues or equivalent fees. In this regard, 29 U.S.C. § 157 provides:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.

29 U.S.C. § 158(a)(3) allows discrimination in employment by an employer with regard to union membership only if a union shop clause has been agreed upon:

[Njothing in this [Act] shall preclude an employer from making an agreement with a labor organization ... to require as a condition of employment membership therein ... Provided further, that no employer shall justify any discrimination against an employee for nonmember-ship in a labor organization ... if he has reasonable grounds for believing that membership was denied or terminated for reasons other than the failure of the employee to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership. ...

Thus, the federal scheme restricts employer discrimination against an employee solely to nonpayment by the employee of union dues and initiation fees. With the enactment of § 1153(c), the California legislature, as noted above, followed the NLRA model quite closely. However, in one major respect, the legislature apparently felt it necessary to give expanded control to the union, were there to be a union shop clause in a collective bargaining agreement. To this end, § 1152 provides:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of continued employment as authorized in subdivision (c) of section 1153.

Section 1153(c) in part provides:

Nothing in this part ... shall preclude an agricultural employer from making an agreement with a labor organization ... to require as a condition of employment, membership therein ... For purposes of this chapter, membership shall mean the satisfaction of all reasonable terms and conditions uniformly applicable to other members in good standing; provided, that such membership shall not be denied or terminated except in compliance with a constitution or bylaws which afford full and fair rights to speech, assembly, and equal voting and membership privileges for all members, and which contain adequate procedures to assure due process to members and applicants for membership.

As is apparent from the wording of the California statute, more than mere payment of dues is required: good standing by the employee, as determined by the union, is necessary in order to retain employment.

B.

In this case, plaintiffs were covered by a collective bargaining agreement entered into between the United Farm Workers and Sun Harvest, Inc., a California corporation, which contained a union shop clause as permitted by § 1153(c):

Union membership shall be a condition of employment. Each worker shall be required to become a member of Union immediately following five (5) continual days after the beginning of employment, or five (5) days from the date of signing of this agreement, whichever is later; and to remain a member of Union in good standing. Union shall be the sole judge of the good standing of its members. Any worker who ... has been determined to be in bad standing by Union pursuant to the provisions of the Union’s constitution, shall be immediately discharged____

Stipulation of Facts for purposes of summary judgment (quoting Sun Harvest— UFW Collective Bargaining Agreement, Article 2, ¶ A, February, 1976) (emphasis added).

In January 1979, this collective bargaining agreement expired, and upon failure to reach a new agreement, the UFW commenced concerted action against the employer, Sun Harvest. At the onset of the strike, the union apparently enjoyed 100% participation of Sun Harvest workers covered by the expired agreement. Each of the six plaintiffs as well supported the strike. However, each of the six plaintiffs crossed picket lines within three to six months after the strike began.

The UFW believes these actions violated its constitution which prohibits crossing picket lines, and working without authorization during a strike, and the plaintiffs were tried by UFW Ranch Committees. Each was found guilty, and subsequently expelled from the union. The UFW then requested Sun Harvest terminate plaintiffs, and Sun Harvest complied. From this point on, plaintiffs have attempted to have their constitutional claims resolved, but have been faced with a procedural nightmare.

In February 1980, the plaintiffs pursued relief both in the Superior Court for the Imperial County, and in administrative proceedings before the ALRB. In the state court action, plaintiffs sought declaratory and injunctive relief as to the constitutionality of § 1153(c); the Superior Court declined relief on the ground that exclusive jurisdiction was vested with the ALRB. Accordingly, that court did not dismiss the action, but waited for a narrowing construction of § 1153(c).

Concurrently, plaintiffs proceeded with unfair labor practice actions before the ALRB. Plaintiffs George, Michael and Donald Moses, together with Beltran and Salinas, alleged the ALRA was violated by discharging plaintiffs on a discriminatory and selective basis, without due process of law, and for conduct which occurred when there was no collective bargaining agreement. Hearings were held in October 1980, and in September 1981, a decision was rendered finding the Ranch Committee trials violated due process and were thus in violation of the ALRA.

These plaintiffs also filed unfair labor practice charges contending that § 1153(c) was overbroad in its membership requirements; the General Counsel for the ALRB denied the charges on the grounds that the state legislature did not intend to make such a discharge an unfair labor practice for reasons other than failure to pay dues and fees. In its consideration of the issue, however, the Board upheld the validity of § 1153(c) on the ground that the union rule requiring members to respect picket lines was reasonable within the meaning of § 1153(e). While rejecting plaintiffs’ contentions, the Board did find the Ranch Committee trials violated due process, and ordered reinstatement and back pay.

Plaintiff Pasillas proceeded in like fashion, and met with like results as to the formal membership requirements of the collective bargaining agreement. However, Pasillas was not afforded the same relief because it was found he had failed to exhaust internal union remedies provided in the UFW constitution. The ALRB decision is reported at 8 ALRB No. 103 (1982). All plaintiffs sought review of the ALRB’s decision by the California Court of Appeal. That court rendered a decision in Pasillas’ appeal on May 24, 1984. The court rejected Pasillas’ constitutional claim on the basis that there was no state action. Pasillas v. ALRB, 156 Cal.App.3d 312, 202 Cal.Rptr. 739 (1984). The court of appeal upheld the ALRB’s rulings on all other issues. That court denied Pasillas’ petition for rehearing by order entered June 20, 1984. The California Supreme Court denied hearing by order entered August 8, 1984. Pasillas filed a notice of appeal to the United States Supreme Court on November 1, 1984. Pasillas filed his jurisdictional statement November 6, 1984. By order entered January 14,1985, the Court dismissed the appeal for want of jurisdiction. Pasillas v. ALRB, — U.S.-, 105 S.Ct. 890, 83 L.Ed.2d 906 (1985).

On May 13, 1985, the California Court of Appeal summarily dismissed the appeals from the order of the ALRB filed by plaintiffs George, Michael and Donald Moses, with Beltran and Salinas. The court exercised its prerogative to deny the petition for review without elaboration. Moses v. ALRB, 4 Civil No. 31129, D000959 (Cal. App. May 13, 1985).

The plaintiffs met with similar problems as they pursued their Imperial County court actions; November 1980 and March 1982 motions for summary judgment were denied on the basis that exclusive jurisdiction rested with the ALRB, and review by the California Court of Appeals and Supreme Court were summarily denied.

All plaintiffs have returned to work at Sun Harvest with the exception of Pasillas.

II.

A.

Pursuant to this court’s request, the parties have submitted additional briefing on the issue of the effect of the Supreme Court’s dismissal on the matters currently before the court. Defendants United Farm Workers and ALRB contend the Supreme Court’s dismissal for want of jurisdiction is a binding determination on the merits of Pasillas’ constitutional claim, and the decision is binding precedent necessitating denial of the constitutional claims of the remainder of the plaintiffs. The court finds defendants’ arguments unpersuasive.

In determining the precedential or res judicata effect of a summary disposition by the Supreme Court, this court must determine whether the arguments determinative of the issues in the instant case were necessarily decided by the Court in reaching its decision. “[Ajlthough summary dispositions are decisions on the merits, the decisions extend only to ‘the precise issues presented and necessarily decided by those actions.’ ” Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 499, 101 S.Ct. 2882, 2888, 69 L.Ed.2d 800 (1981) (quoting Mandel v. Bradley, 432 U.S. 173, 176, 97 S.Ct. 2238, 2240, 53 L.Ed.2d 199 (1977)). In Hopfmann v. Connolly, — U.S.-, 105 S.Ct. 2106, 85 L.Ed.2d 469 (1985), the Supreme Court vacated a decision by the First Circuit that relied upon a summary dismissal for want of jurisdiction to foreclose a constitutional challenge to a Massachusetts statute. The Court distinguished a summary disposition for want of a substantial federal question, which requires a determination on the merits, from a dismissal for want of jurisdiction, stating:

[bjecause the Court dismissed the appeals for lack of appellate jurisdiction, we had no occasion to adjudicate the merits of the constitutional questions presented in the jurisdictional statements.

105 S.Ct. at 2107.

Similarly, in Pasillas, the U.S. Supreme Court dismissed the appeal for want of jurisdiction. Under the reasoning of Hopfmann, the Court had no opportunity to rule on the merits of the constitutional challenge raised by Pasillas.

Defendants argue, however, the jurisdictional defect in the appeal presented by Pasillas was the failure to demonstrate state action. The court finds this argument unpersuasive for three reasons. First, the state action arguments were presented to the Supreme Court by the defendants in their motions to that court to either dismiss or affirm. The refusal of the U.S. Supreme Court to either dismiss or affirm creates a negative implication that the Court did not necessarily decide state action was not present.

Second, and more fundamentally, a decision that no state action is present is, itself, a decision on a federal question. When the Court has ruled in the past that particular cases did not present state action, the Court has ruled on the merits-.of the case, and has not dismissed for lack of jurisdiction. See, e.g., Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982); Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982). Therefore, a determination that state action is not present does not lead to the conclusion that appellate jurisdiction is not present under 28 U.S.C. § 1257(2), and, a fortiori, a dismissal for want of jurisdiction does not necessarily involve a determination that no state action was shown.

Defendants argue the question of whether state action is present in the termination agreements is so insubstantial it renders Pasillas’ constitutional claim frivolous, depriving the Supreme Court of a legitimate federal question. This approach to federal question jurisdiction has been questioned. See Bell v. Hood, 327 U.S. 678, 682-85, 66 S.Ct. 773, 776-77, 90 L.Ed. 939 (1946). This approach is also called into doubt by the Court’s unequivocal statement in Hopfmann that a dismissal for want of jurisdiction involved no determination on the merits of the constitutional claims presented. See Hopfman, 105 S.Ct. at 2107. If the Court found the presence of state action in Pasillas’ case foreclosed by previous decisions, it could have dismissed for want of a substantial federal question, or summarily affirmed. Instead, the Court dismissed for want of jurisdiction, and this court will not give that dismissal the binding and precedential effect of a determination on the merits.

Third and finally, the court finds the Supreme Court’s summary dismissal was not a determination of the merits because an independent and adequate state ground existed for the California Court of Appeal’s decision.

28 U.S.C. § 1257(2) grants a right of appeal to the Supreme Court of the United States from the highest state court of decision:

where is drawn in question the validity of a statute of any state on the ground of its being repugnant to the Constitution, treaties or laws of the United States, and the decision is in favor of its validity.

Pasillas challenged the constitutionality of § 1153(c) in the California Court of Appeal, and his petition for review was denied by the California Supreme Court. If a state court’s decision can rest on an independent decision involving state law, then regardless of the correctness of the state court’s decision on an issue of federal law, the Supreme Court does not have jurisdiction, because the validity of the statute under the constitution of the United States is not “drawn in question,” for purposes of 28 U.S.C. § 1257(2). See generally, C. Wright & A. Miller, Federal Practice & Procedure, §§ 4019, 4029. This principle furthers the dual objectives of preventing unnecessary determinations of constitutional questions, and maintaining the allocation of judicial power between the states and the federal government.

Our only power over state judgments is to correct them to the extent that they incorrectly adjudge federal rights. And our power is to correct wrong judgments, not to revise opinions. We are not permitted to render an advisory opinion, and if the same judgment would be rendered by the state court after we corrected its views of federal laws, our review could amount to nothing more than an advisory opinion.

Herb v. Pitcairn, 324 U.S. 117, 125-26, 65 S.Ct. 459, 462-64, 89 L.Ed. 789 (1945).

When reviewing a decision based upon an independent and adequate state substantive ground, the Supreme Court will deny jurisdiction. See e.g., Enterprise Irrigation District v. Farmers Mutual Canal Co., 243 U.S. 157, 164-65, 37 S.Ct. 318, 320-21, 61 L.Ed. 644 (1917).

In Pasillas, the California Court of Appeal held that Pasillas had not exhausted his internal union remedies, as required by §§ 1153(c) and 1154(b). 156 Cal.App.3d at 360-62, 202 Cal.Rptr. at 768-70. This finding alone necessitated dismissal of his unfair labor practice charges. See id. at 362, 202 Cal.Rptr. at 770.

Therefore, the failure to exhaust intraunion remedies provides an independent ground of state law sufficient to uphold the court of appeal’s decision to affirm the ALRB's dismissal of the unfair labor practice charge filed by Pasillas. The presence of this independent and adequate state law ground provides a third ground for this court’s finding that the Supreme Court’s dismissal of Pasillas’ appeal was not a determination on the merits.

In short, this court finds a determination on the merits of Pasillas’ constitutional claims, particularly on the issue of state action, was neither presented nor necessarily decided by the United States Supreme Court’s summary dismissal of the appeal in Pasillas v. ALRB for want of jurisdiction. Therefore, this court declines to accept defendants’ contentions that the Supreme Court’s dismissal constitutes a binding decision on the merits, with res judicata effect on Pasillas’ claims, and binding precedential effect on the other plaintiffs’ claims.

Because this court finds the Supreme Court’s dismissal for lack of jurisdiction was not a decision on the merits, the court does not address the arguments raised by plaintiffs that Pasillas made an effective reservation of his federal claims pursuant to England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964).

B.

Defendants urge that even if the Supreme Court’s decision in Pasillas is not binding precedent, the California Court of Appeal’s decisions in Pasillas and Moses should preclude relitigation of the constitutional claims raised by plaintiffs in this litigation.

28 U.S.C. § 1738 mandates application of both claim preclusion, Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980), and issue preclusion, Migra v. Warren City School District Board of Education, 465 U.S. 75, 104 S.Ct. 892, 896-98, 79 L.Ed.2d 56 (1984), to federal actions brought under 42 U.S.C. § 1983. See also Trujillo v. County of Santa Clara, 766 F.2d 1368, 1372 (9th Cir.1985). In deciding the preclusive effect of the California Court of Appeals decisions in Pasillas and Moses, this court must apply the preclusion law of California. See Marrese v. American Academy of Orthopaedic Surgeons, — U.S.-, 105 S.Ct. 1327, 1331-32, 84 L.Ed.2d 274 (1985).

California law of claim preclusion prevents litigation of claims in a second suit between the same parties if the first suit resulted in a final judgment on the merits and claims sought to be litigated in the second suit were litigated, or should have been litigated in the first suit. See Los Angeles Branch NAACP v. Los Angeles Unified School District, 750 F.2d 731, 737 (9th Cir.1984). This res judicata effect applies regardless of the order in which the various proceedings were commenced. See Americana Fabrics, Inc. v. L&L Textiles, Inc., 754 F.2d 1524, 1529 (9th Cir.1985).

Pasillas is the only party to this action who was also a party to the action in Pasillas. As noted above, in its determination of Pasillas’ challenge to the ALRB’s order, the court of appeal found the unfair labor practice charges brought by Pasillas were properly dismissed by the ALRB because Pasillas failed to exhaust his intraunion remedies. See Pasillas, 156 Cal. App.3d at 362, 202 Cal.Rptr. at 770. Although generally, a decision by the court of appeal on a petition for review of an administrative decision constitutes a final decision on the merits for purposes of res judicata under California law, see Trujillo, 766 F.2d at 1377, a dismissal for failure to exhaust intra-union remedies is not a decision on the merits, but is instead a dismissal for want of jurisdiction. Holderby v. International Union of Operating Engineers, Local Union No. 12, 45 Cal.2d 843, 846, 291 P.2d 463, 466 (1955). A dismissal for want of jurisdiction is not a decision on the merits, Financial Indemnity Co. v. Superior Court, 45 Cal.2d 395, 400, 289 P.2d 233, 236 (1955), and is not entitled to preclusive effect under California principles of res judicata. Nichols v. Canoga Industries, 83 Cal.App.3d 956, 966-67, 148 Cal.Rptr. 459, 466 (1978). Therefore, the decision by the California Court of Appeal in Pasillas is not entitled to claim preclusive effect in this action.

Nor does claim preclusion attach to the decision by the court of appeal on the merits of the claims presented by Pasillas’ co-plaintiffs. California considers the parties to an action to have been the same for res judicata purposes:

when those between whom the evidence is offered were on opposite sides in the former case, and a judgment or other determination could in that case have been made between them alone, though other parties were joined with both or either.

Cal.Civ.Pro.Code § 1920.

This court is unaware of any California authority discussing the application of § 1910 to a court’s varying determination of issues involving co-plaintiffs. In the area of issue preclusion, one commentator has stated:

[preclusion should be denied in multiparty cases as to findings that were necessary to the result between some parties, but that were not necessary to the result as to the party against whom preclusion is invoked.

C. Wright & A. Miller, Federal Practice & Procedure § 4421 at 202. One of the rationales behind denying preclusion in such an instance is that appellate review of the unnecessary findings may not be available to the party who is later asserted to be precluded. See id. at 193; Restatement (Second) of Judgments § 27 comment h (1982). As noted above, Pasillas was unable to obtain review in the United States Supreme Court, possibly because of the court of appeals’ determination that he failed to exhaust his intra-union remedies; the other parties to the case, perhaps lacking the incentive of Pasillas, did not appeal. Under these circumstances, this court feels the court of appeals’ determination of the claims of Pasillas’ co-plaintiffs should not preclude Pasillas from bringing this action. The court finds that because the court of appeals determined it was without jurisdiction over Pasillas’ unfair labor practice charge, the determination made on the claims of his co-plaintiffs could not in that case have been made between Pasillas and defendants alone, and therefore, Cal.Civ. Pro.Code § 1910 does not deem Pasillas to be the “same party” as his co-plaintiffs for claim preclusion purposes. The court finds the California Court of Appeal’s decision in Pasillas should not be given claim preclusive effect in this action by Pasillas.

The determination by the court of appeals that no state action was implicated by the union shop agreement was not necessary to its decision to affirm the ALRB’s dismissal of Pasillas’ unfair labor practice charges. Therefore, issue preclusion will not attach to those findings. See Wilson v. Interlake Steel Co., 32 Cal.3d 229, 234, 185 Cal.Rptr. 280, 283, 649 P.2d 922, 925 (1982); In re Lisa R., 13 Cal.3d 636, 647, 119 Cal.Rptr. 475, 482, 532 P.2d 123, 130, cert. denied, 421 U.S. 1014, 95 S.Ct. 2421, 44 L.Ed.2d 682 (1975) (“[findings which might have been made but which were not necessary to the judgment are not conclusive on the parties... ”).

In conclusion, this court will not give any res judicata effect to the decision by the California Court of Appeals in Pasillas v. ALRB. Although the decision in that case retains the precedential effect of stare decisis, see United States v. Maine, 420 U.S. 515, 527, 95 S.Ct. 1155, 1161, 43 L.Ed.2d 363 (1975), that opinion is only persuasive authority on the issues of federal law presented in this action. See Bittaker v. Enomoto, 587 F.2d 400, 402 n. 1 (9th Cir. 1978), cert. denied, 441 U.S. 913, 99 S.Ct. 2013, 60 L.Ed.2d 386 (1979).

In Moses, the court of appeal denied the petition of plaintiffs George, Michael, and Donald Moses, Beltran, and Salinas for review of the ALRB’s decision on their unfair labor practice charges. Because of the summary nature of the court of appeal’s judgment, no determination on the merits is necessary to the court’s decision to deny review. See Tex-Cal Land Management, Inc. v. ALRB, 24 Cal.3d 335, 350-51, 156 Cal.Rptr. 1, 10, 595 P.2d 579, 588 (1979). Therefore, the decision is not entitled to either claim preclusive or issue preclusive effect in this action. See Miofsky v. Superior Court, 703 F.2d 332, 336 (9th Cir.1983) (quoting People v. Medina, 6 Cal.3d 484, 491 n. 6, 99 Cal.Rptr. 630, 634 n. 6, 492 P.2d 686, 690 n. 6 (1971)).

Nor can the determination by the ALRB of the constitutionality of § 1153(c) in U.F.W./Sun Harvest, 8 ALRB No. 103 (1982) be accorded any res judicata effect. Although in some instances findings of an administrative board may be accorded res judicata effect, see, e.g., People v. Sims, 32 Cal.3d 468, 186 Cal.Rptr. 77, 651 P.2d 321 (1982) (giving preclusive effect to Department of Social Services’ finding of fact in subsequent criminal prosecution), the ALRB’s statements regarding the constitutionality of a California statute went beyond the jurisdiction granted the ALRB by the California legislature, as the ALRB noted in its own decision. See Cal. Const. Art. III § 3.5; Leek v. Washington Unified School District, 124 Cal.App.3d 43, 53, 177 Cal.Rptr. 196, 202 (1981). Therefore, the court finds the ALRB’s dicta concerning the constitutionality of § 1153(c) should not preclude litigation of any issue in this action.

In summary, this court finds that neither the United States Supreme Court’s dismissal of the appeal in Pasillas, nor the California Court of Appeals decisions in Pasillas and Moses, nor the ALRB’s decision in U.F.W./Sun Harvest should preclude litigation by plaintiffs in this action of the issue of the constitutionality of § 1153(c).

III.

The termination of all pending litigation between the parties in other forums renders moot the arguments presented by the parties urging this court to abstain from decision.

IV.

Defendants contend there is no constitutional violation because the union shop clause entered into between the UFW and Sun Harvest is a purely private agreement, and is not “fairly attributable to the state.” Lugar v. Edmondson, 457 U.S. 922, 936-37, 102 S.Ct. 2744, 2753-54, 73 L.Ed.2d 482 (1982). If there is state action, however, then the defendants must demonstrate a compelling reason for the broad scope of § 1153(c). Buckley v. Valeo, 424 U.S. 1, 25, 96 S.Ct. 612, 637-38, 46 L.Ed.2d 659 (1976); Kolinske v. Lubbers, 712 F.2d 471, 474 (D.C.Cir.1983).

On December 8, 1983, this court orally ruled that state action is present in the agreement and its enforcement. A brief discussion of the court’s rationale is appropriate at this time.

In Railway Employers’ Department v. Hanson, 351 U.S. 225, 76 S.Ct. 714, 100 L.Ed. 1112 (1956), and the Supreme Court cases following it, state action under the Railway Labor Act (RLA) has been analyzed and some light on the state action issue may be gleaned from them. For example, in Hanson, the court found the presence of state action in a union security agreement, primarily because the RLA had a preemptive effect on state labor laws: “the federal statute is the source of the power and authority by which any private rights are lost or sacrificed, (citations omitted) The enactment of the federal statute authorizing union shop agreements is the governmental action on which the Constitution operates. ...” Id. at 232, 76 S.Ct. at 718. Neither International Association of Machinists v. Street, 367 U.S. 740, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961), nor Brotherhood of Railway Clerks v. Allen, 373 U.S. 113, 83 S.Ct. 1158, 10 L.Ed.2d 235 (1963), two later cases under the RLA, offer anything to the analysis, since the constitutional issues were not reached by the Court.

While not dispositive of the issue before the Court, the Supreme Court’s decision in Abood v. Detroit Board of Education, 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977) does contain interesting language. In that case, the Court addressed Michigan legislation allowing an “agency shop” arrangement as to governmental employees. The fact that the employer was the government removed the state action issue, but the court noted that “differences between public — and private-sector collective bargaining simply do not translate into differences in First Amendment rights.” Id. at 232, 97 S.Ct. at 1798. This was tempered by the Court’s statement that “[n]othing in our opinion embraces the ‘premise that public employers are under no greater constitutional constraints than their counterparts in the private sector’ ... or indicates that private collective-bargaining agreements are, without more, subject to constitutional constraints____” Id. at 226 n. 23, 97 S.Ct. at 1795 n. 23 (quoting Powell, J., concurring in judgment).

Most recently, in Ellis v. Railway Clerks, 466 U.S. 435, 104 S.Ct. 1883, 80 L.Ed.2d 428 (1984), airline employees contended that the allocation of certain union fees was unconstitutional, as was the rebate plan for their return, as implemented by the union. The Court reached the constitutional issue as to certain of the activities, and found them constitutionally permissible; no state action argument was apparently raised or addressed. While instructive, these cases do not aid this court’s resolution of the state action issue under the ALRA. Nor has the Supreme Court ruled on the state action issue with respect to 29 U.S.C. § 158(a)(3), the statutory parallel of California Labor Code § 1153(c). The Ninth Circuit, however, appears to have assumed the presence of state action in this regard in Seay v. McDonnell Douglas Corporation, 427 F.2d 996, 1003 (9th Cir.1970), although there is no discussion of the issue in the opinion.

Recently, in Kolinske v. Lubbers, 712 F.2d 471 (D.C.Cir.1983), a thorough analysis of state action in the context of § 8(a)(3) of the NLRA was undertaken. The court began by employing the two-step analysis for state action as stated by the Supreme Court in Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753, 2754, 73 L.Ed.2d 482 (1982). That test requires first, that the alleged deprivation must be caused by the “exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible” and second, that the person responsible for the deprivation “must be a person who may fairly be said to be a state actor.” Id.

The court in Kolinske first noted that approval or acquiesence in the actions of a private party does not justify finding state action. 712 F.2d at 478. However, when the state “has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State,” then state action will be present. Blum v. Yaretsky, 457 U.S. 991, 1004-05, 102 S.Ct. 2777, 2785-86, 73 L.Ed.2d 534 (1982). In Kolinske, an agency shop clause conditioned receipt of strike benefits on participation in the strike itself. The employee sued the union on the ground that he was merely asserting his first amendment right not to participate in the strike, yet wanted to recover benefits paid in to support the strike. The court found that based on the. neutrality of the NLRA with respect to such clauses, this acquiescence above could not be the basis of state action. Id. at 478. In its essence, it was the court’s finding that the collective bargaining agreement, although permitted by the NLRA, could not fairly be said to bear the imprimatur of the state. The Kolinske court also felt there was no governmental involvement, and thus the second prong of the test was not met. Id. at 479.

However, this case is clearly distinguishable from Kolinske. Here the parties are challenging the very statute from which the collective bargaining agreement arose, rather than the collective bargaining agreement itself. While the agreement at issue here has some bearing on the constitutional issue, it seems clear that as drafted, it is well within the parameters of § 1153(c). Plaintiff’s challenge is to the scope of the statute itself which allows such agreements to be drawn. The union, when such an agreement is entered into pursuant to § 1153(c), gains virtually unlimited power to control dissenting members through the union by-laws. The only check upon this power is by a “reasonableness” standard which is subject to review by the ALRB, as discussed below. This review, which may take years, would seem to this court to call the state itself into the role of enforcing the statutory scheme. The state, then, becomes a focal point in determining the scope of the private agreement, because it says whether the union is acting reasonably. This creates enough, it seems, to create the causal link between the state and the action of which plaintiffs complain.

Further, it simply seems that through the enforcement mechanism, the state has become so involved in the UFW’s intra-union procedures, as to allow the clause to be attributed to the state. See e.g., Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 357, 95 S.Ct. 449, 456, 457, 42 L.Ed.2d 477 (1974).

Defendants also argue there is no state action because § 1153(c) was merely the codification of existing California common law which permitted union shops in collective bargaining agreements. However, this argument misperceives plaintiffs’ allegations. Plaintiffs do not, nor could they, object to a statutory scheme allowing union shops. Rather, they do object to the breadth of the statute and potential control the state, through the statute, gives a union in such a situation. The force of the government lies behind the agreement by virtue of the broad membership portions of § 1153(c). As in Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948), California power behind the agreement, whether by statute or through common law, provides a basis for state action.

Y.

Turning to the merits of the constitutional claim, defendants must show that § 1153(c), 1) serves a compelling state interest, and 2) does so by the least intrusive means. Dunn v. Blumstein, 405 U.S. 330, 335, 343, 92 S.Ct. 995, 999, 1003, 31 L.Ed.2d 274 (1972). This has not been done.

Defendants first argue that the protection of union members’ rights are built into 1153(c) because the union rules must be reasonable under 1154(b). Reasonableness is determined initially by the ALRB, and then through appellate court review. While this does make the argument for constitutionality stronger, the chilling effect on the first amendment rights of members is substantial in that they have no guidelines as to what will finally, after perhaps many years, be deemed reasonable or unreasonable. In short, they are forced to guess, and a wrong guess may cost them their jobs. Such an infringement of protected rights, counseled by the state through enforcement of § 1153(c), is intolerable.

Defendants, in arguing the compelling interest prong of constitutional scrutiny, contend that the union shop provision is necessary due to the plight of agricultural workers. While this court agrees that union shop clauses are legal and perhaps an important way of maintaining union strength and efficacy, it is not a “union shop” clause which is at issue here, but the particular breadth which § 1153(c) allows union shop clauses to take.

Mere union strength and industrial peace are in sufficient goals to justify abridgement of rights which union members hold. The state of California, through this statute, has chosen not to invoke an objective test as that enacted in 29 U.S.C. § 158(a)(3). Rather, California has enacted a scheme that allows the union virtual control over who will be fired, until review may occur. While the NLRA provisions in § 8(a)(3) may not necessarily be the outer limits of constitutionality, the objectivity found in that statute is certainly a less intrusive means than is employed here.

Without showing a compelling need for this subjective approach, and because lesser intrusive means exist, such as detailing to a greater degree the requirements for good standing, the court finds § 1153(c), as drafted, unconstitutional as a violation of rights to free speech and association guaranteed by the first amendment.

IT IS ORDERED that plaintiffs will prepare a proposed order within ten days of entry of this decision.


source: Caselaw Access Project

author: EDWARD B. DAVIS, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Bruce Scott HARKINS, Defendant.
    No. 84-763-CR-Davis.
    United States District Court, S.D. Florida, Miami Division.
    Sept. 19, 1985.
    U.S. Atty. made no appearance on this motion.

      Bruce Scott Harkins, pro se.
   ORDER DENYING DEFENDANT’S MOTION FOR CORRECTION OF SENTENCE

EDWARD B. DAVIS, District Judge.

THIS MATTER is before the Court upon Defendant’s Motion For Correction of Sentence, pursuant to Fed.R.Crim.P. 35(a). After careful consideration, it is hereby;

ORDERED AND ADJUDGED that Defendant’s Motion for Correction of Sentence is DENIED. In January 1985, Defendant appeared before this Court and was sentenced for violation of 21 U.S.C. § 841(a)(1). A sentence of eighteen (18) months with a three (3) year special parole term was imposed pursuant to 21 U.S.C. § 841(b)(1)(B). Defendant contends that the special parole term is unconstitutional for two reasons. It is Defendant’s position that the special parole provision runs afoul of the principal of separation of powers and is violative of due process requirements.

It is true that 21 U.S.C. § 841(b)(1)(B) makes a special parole term for the controlled substance offenses mandatory, specifying only required minimums for the special parole term and leaving its maximum length to the court’s discretion. The Court is, however, unpersuaded by Defendant’s contentions regarding the alleged unconstitutionality of the special parole provision. It is well established that a sentencing statute is not unconstitutional because it fails to specify the maximum sentence. See, e.g., Earin v. Beto, 453 F.2d 376 (5th Cir.), cert. denied, 406 U.S. 909, 92 S.Ct. 1618, 31 L.Ed.2d 819 (1972). Thus, the omission of an explicit maximum term does not render the special parole provision unconstitutional. United States v. Bridges, 760 F.2d 151, 153 (7th Cir.1985); United States v. Martinez, 481 F.2d 214, 221 (5th Cir.1973), cert. denied, 415 U.S. 931, 94 S.Ct. 1444, 39 L.Ed.2d 489 (1974); United States v. Simpson, 481 F.2d 582 (5th Cir.), cert. denied, 414 U.S. 1095, 94 S.Ct. 728, 38 L.Ed.2d 553 (1973). It has repeatedly been held that leaving the determination of maximum sentences to the court does not involve an unlawful delegation of power. United States v. Bridges, 760 F.2d at 153; United States v. Jones, 540 F.2d 465, 468 (10th Cir.1976), cert. denied, 429 U.S. 1101, 97 S.Ct. 1125, 51 L.Ed.2d 551 (1977). Nor does the statute violate due process principles because of the broad range of sentencing power left to the courts. United States v. Simpson, 481 F.2d at 583-84 (statute not void for vagueness); United States v. Martinez, 481 F.2d at 221 (statute not violative of due process); United States v. Jones, 540 F.2d at 468 (same).

Defendant argues that the statute is unconstitutional because it fails to specify the maximum penalty for a parole violation during the special parole term, thereby depriving Defendant of the procedural due process safeguard of notice. In support of his argument, Defendant relies upon United States v. Tebha, 578 F.Supp. 1398 (N.D. Cal.1984) in which the district court held that 21 U.S.C. § 841(b)(1)(A) [now redesignated as 21 U.S.C. § 841(b)(1)(B)] violates due process because it fails to provide notice for the potential special parolee of what will be the precise maximum penalty for a parole violation. 578 F.Supp. at 1400. What the Tebha court fails to address, however, is that another subsection within 21 U.S.C. § 841 does provide for the maximum penalty. 21 U.S.C. § 841(c). Subsection (c) of 21 U.S.C. § 841 provides that a parole violation may subject the offender to parole revocation and reimprisonment for the entirety of the special parole term, without credit for any time already spent on special parole. Recent court decisions have expressly rejected the Tebha court’s analysis, and have concluded, instead, that the special parole provision of 21 U.S.C. § 841(b) is constitutional. United States v. Bridges, 760 F.2d at 151; United States v. Hollins, 599 F.Supp. 311 (D.D.C.1984); United States v. Lockley, 590 F.Supp. 1215 (N.D.Ga.1984); United States v. Davi, 588 F.Supp. 91 (E.D.N.Y.1984); See also Unites States v. Hernandez, 750 F.2d 1256, 1260 (5th Cir.1985); Yates v. United States, 753 F.2d 70 (8th Cir.), cert. denied, — U.S. -, 105 S.Ct. 2032, 85 L.Ed.2d 314 (1985); United States v. Sepulveda-Sepulveda, 607 F.Supp. 987, 989 (D.P.R.1985). Since the consequences of parole violation are set out in 21 U.S.C. § 481(c), Defendant’s argument must fail. In any event, Defendant is not near to commencement of his parole term, and issues concerning the consequences of a parole violation, if one were to occur, are not now ripe for decision. United States v. Bridges, 760 F.2d at 154; United States v. Hernandez, 750 F.2d at 1260.

      . In 1984, 21 U.S.C. § 841 was amended by the Comprehensive Crime Control Act of 1984. See Pub.L. 98-473, Title II, §§ 502, 503(b)(1), (2), Oct. 12, 1984, 98 Stat. 2068, 2070. Former § 841(b)(1)(A) was redesignated § 841(b)(1)(B).

      . In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh Circuit adopted as,binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.

      . 21 U.S.C. § 841(c) provides:
      A special parole term imposed under this section or section 845 or 845a of this title may be revoked if its terms and conditions are violated. In such circumstances the original term of imprisonment shall be increased by the period of the special parole term and the resulting new term of imprisonment shall not be diminished by the time which was spent on special parole. A person whose special parole term has been revoked may be required to serve all or part of the remainder of the new term of imprisonment. A special parole term provided for in this section or section 845 or 845a of this title shall be in addition to, and not in lieu of, any other parole provided for by law.


author: MENTZ, District Judge.

text:
    ASSOCIATED DREDGING COMPANY, INC. v. CONTINENTAL MARINE TOWING COMPANY, INC., et al.
    Civ. A. No. 83-5246 Section “I” (4).
    United States District Court, E.D. Louisiana.
    Sept. 19, 1985.

      Francis J. Barry, Deutsch, Kerrigan & Stiles, New Orleans, La., for plaintiff.
    Joseph T. Tynan, Poindexter, Bowers & Tynan, New Orleans, La., for defendants.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

MENTZ, District Judge.

The plaintiff, Associated Dredging Company, Inc. (Associated), filed this lawsuit against Continental Marine Towing Company, Inc., Real Towing Company, Inc., Commodore Maritime, Atlas Maritime Company, S.A., Empresa De Navegacao Aliance, S.A., ABC Insurance Company, XYZ Insurance Company, M/V MISS DEE, M/V ARABIAN CHALLENGER, and M/V AL-NAVE, for damages sustained by the dredge CAPTAIN ROY P. BENOIT when it capsized in the Mississippi River in the early morning hours on October 29, 1982, while it was being towed by the M/V MISS DEE towards Venice, Louisiana.

Empresa De Navegacao Aliance, S.A., owner of the M/V ALNAVE, and Commodore Maritime and Atlas Maritime Company, S.A., owners of the M/V ARABIAN CHALLENGER were dismissed from this case via summary judgment. The Court held a non-jury trial on August 5, 1985 and the matter was subsequently taken under submission. Having reviewed the evidence, the memoranda of counsel, and the applicable law, the Court now enters its Findings of Fact and Conclusions of Law. To the extent that overlap exists between them, the Court’s Findings and Conclusions are to be treated interchangeably.

FINDINGS OF FACT

0)

Associated Dredging Company, Inc., a Louisiana corporation with its principal place of business in Harvey, Louisiana, was, at all pertinent times, the owner of the dredge CAPTAIN ROY BENOIT, a cutterhead and jet suction dredge, official number 566143, measuring approximately fifty feet in length by thirty-six feet in width and five feet in depth. The dredge has an all steel welded hull which is divided into five compartments, with a ten foot wide open machinery space running the full length of the hull, and manhole covers over the compartments which can be made watertight if securely bolted down.

(2)

Defendant, Real Towing Company, a Louisiana corporation, was, at all pertinent times, the operator of the M/V MISS DEE.

(3)

Defendant, Continental Marine Towing Company, a Louisiana corporation, was, at all pertinent times, the owner of the M/V MISS DEE.

(4)

This litigation arises out of the capsizing of the dredge CAPTAIN ROY BENOIT. The capsizing occurred in the early morning hours of October 29, 1982, upon the navigable waters of the Mississippi River in the Eastern District of Louisiana.

(5)

On October 28, 1982, the M/V MISS DEE was manned by Captain Joseph Rivas Daigle, Jr., pilot Gerald Baker, and deckhand Kevin Breland.

(6)

On October 28, 1982, a four vessel tow was made up at Associated Dredging’s yard in Belle Chasse, Louisiana by Arnold Franklin Farmer, Roy Bergeron, Danny Harper and a deckhand. These individuals were employed by Associated Dredging aboard the dredge CAPTAIN ROY BENOIT. The tow was completed by Associated Dredging personnel prior to the arrival of the M/V MISS DEE. The tow consisted of a derrick barge attached to the towing hawser with the dredge CAPTAIN ROY P. BENOIT made up stern to stern with the derrick barge. Behind the dredge was the Q/B JANET and alongside the quarter boat was a small work boat, the M/V NELSON.

(7)

The M/V MISS DEE made up to the tow and inspected the tow before departing Associated Dredging’s yard in Belle Chasse, Louisiana.

(8)

At approximately 1900 hours on Thursday, October 28, 1982, the M/V MISS DEE departed Associated Dredging’s yard in Belle Chasse, Louisiana with the dredge CAPTAIN ROY BENOIT and the other vessels in tow.

(9)

While in tow, the dredge CAPTAIN ROY BENOIT had approximately one foot of freeboard at her bow and two to two and one-half of freeboard at her stern.

(10)

The M/V MISS DEE and her tow went through the Intercoastal Canal to the Algiers Locks where the crew of the dredge CAPTAIN ROY BENOIT inspected the tow lines and the dredge at approximately 12:30 a.m. on October 29, 1982. The crew of the dredge CAPTAIN ROY BENOIT stayed aboard the Q/B JANET during the voyage, but did not witness the accident.

(11)

The M/V MISS DEE and her tow then proceeded southbound on the Mississippi River. No other inspections of the tow were made by the Associated Dredging crew which this Court finds had assumed the obligation of inspecting and maintaining the tow.

(12)

At approximately 5:30 a.m. on the morning of October 29, 1982, two large unidentified oceangoing vessels passed the M/V MISS DEE and her tow within a few minutes of each other. These unknown vessels passed close to the tow’s starboard side and caused the dredge CAPTAIN ROY BENOIT to shift violently from port to starboard, allowing wave wash to flood the open machinery space which ran the length of the hull. The Court notes that Gerald David Baker, an unlicensed pilot, was at the wheel of the M/V MISS DEE when the dredge capsized, and finds that Mr. Baker’s lack of a required license in no way caused or contributed to the capsizing of the dredge CAPTAIN ROY BENOIT. The Court finds that Mr. Baker properly navigated the M/V MISS DEE and her tow at all times and did not receive any instructions or communications from the dredge crew although he had twice attempted to communicate with the crew of the dredge CAPTAIN ROY BENOIT.

(13)

The parties stipulated that Norman J. Dufour, Jr., a marine surveyor employed by Stickney Marine, was an expert in hull and machinery surveying. Mr. Dufour surveyed the dredge on November 8, 1982 at the Bisso Marine repair yard and noted that two manhole covers were missing on the aft port side of the dredge. He also noted that two square access hatches, each approximately four feet in length by twenty-eight inches in length, were not watertight and would allow water from wave wash to flow into the hold of the dredge CAPTAIN ROY BENOIT. Mr. Dufour also found a hole in the port bow corner of the dredge on internal inspection of the dredge. Mr. Dufour testified that this hole could not be seen from an outside inspection. Mr. Dufour also testified that if a wake or wave wash occurred, the dredge would take on water, first on the river or starboard side, and then from the shore or port side. Mr. Dufour further testified that the hole in the port bow corner would have aggravated the dredge’s taking oil water.

This Court accepts the testimony of Mr. Dufour and finds that the two manhole covers on the aft port side of the dredge, the non-watertight square access hatches, and the hole in the port bow corner of the dredge allowed wave wash from two unknown oceangoing vessels to flood the hold and the open machinery space of the dredge.

(14)

This Court finds that the wave wash created by the unknown oceangoing vessels flooded the hold, creating a loss of freeboard and an increasing loss of bouyancy which caused the dredge CAPTAIN ROY BENOIT to capsize. Plaintiffs contentions that the M/V MISS DEE improperly managed or navigated the tow are not supported by the evidence and are rejected by this Court.

CONCLUSIONS OF LAW

(1)

The Court has jurisdiction over this matter under its admiralty and maritime jurisdiction; 28 U.S.C. § 1333, and Rule 9(h) of the Federal Rules of Civil Procedure.

(2)

Associated Dredging had a contract of towage with defendants for the transportation of the dredge CAPTAIN ROY BENOIT from the Associated Dredging yard in Harvey, Louisiana to Venice, Louisiana. In a contract of towage, the owner of the barge warrants that the vessel offered for towage is sufficiently staunch and strong to withstand the ordinary perils to be encountered on the voyage. Consolidated Grain & Barge Co. v. Marcona Conveyor, 716 F.2d 1077, 1081 (5th Cir.1983). If the tow is unseaworthy by reason of weakness, decay, or leaks and such defects are not obvious to the master of the tug, the tug will be absolved from responsibility for such unseaworthiness if it is the cause of the damage complained of. This principle is commonly referred to as the warranty of seaworthiness. Kenny Marine Towing v. M/V JOHN R. RICE, 583 F.Supp. 1196, 1198 (E.D.La.1984); Massman Const. v. Sioux City & N.O. Barge Lines, 462 F.Supp. 1362, 1368 (W.D. Mo. 1979).

The owner of the tug may rely on the warranty of seaworthiness and is under no duty tomake a detailed inspection of the vessel either prior to or during the voyage itself. The M/V MISS DEE was entitled to assume that the dredge CAPTAIN ROY BENOIT was seaworthy. Massman, supra, at 1368-69; King Fisher Marine Service, Inc. v. NP SUNBONNET, 724 F.2d 1181 (5th Cir.1984).

(3)

The owner of the tug is not an insurer of his tow, but is obligated to use such care in the performance of the work as a prudent navigator would under similar circumstances. Stevens v. The White City, 285 U.S. 195, 202, 52 S.Ct. 347, 350, 76 L.Ed. 699, 703 (1932); Derby Company v. A.L. Mechling Barge Lines, Inc., 258 F.Supp. 206, 211 (E.D.La.1966), aff'd, 399 F.2d 304 (5th Cir.1984).

(4)

Unless Associated Dredging can establish a failure on the part of the M/V MISS DEE to meet this standard of care, they cannot recover. Stevens, supra, 285 U.S. at 202, 52 S.Ct. at 350. The burden of proof as to the negligence of the M/V MISS DEE is on Associated Dredging. Negligence must be shown by proof of specific acts of negligence or proof of a failure to exercise reasonable maritime skill unaided by any presumption of law. Massman, supra, 462 F.Supp. at 1374; Kenny Marine Towing, supra, 583 F.Supp. at 1199. The mere fact that the dredge CAPTAIN ROY BENOIT capsized and was damaged does not raise a presumption of fault on the part of the M/V MISS DEE. Stevens, supra; Houma Well Service, Inc. v. Tug CAPTAIN O’BRIEN, 312 F.Supp. 257, 260 (E.D.La.1970).

(5)

Associated Dredging contends that negligence on the part of the defendants’ tow, the M/V MISS DEE, caused the dredge CAPTAIN ROY BENOIT to capsize. Associated Dredging’s first theory of negligence is that the M/V MISS DEE was negligent because she failed to (1) reduce her speed when the two unknown ocean-going vessels overtook her on the river, (2) failed to allow slack in the towing hawser which would leave the tow better able to ride the excessive wakes caused by these vessels, and (3) failed to request that these overtaking vessels slow down when they were generating large wakes.

The uncontroverted testimony of Mr. Baker, the pilot of the M/V MISS DEE, established the fact that he cut the speed of the M/V MISS DEE from one-half throttle (6 m.p.h.) to one-quarter throttle (3 m.p.h.) when the first vessel passed. Mr. Baker also stated that the M/V MISS DEE could not have slowed to a speed below 3 m.p.h. or she would have lost her steerage-way. Mr. Baker further testified that he got on the radio and put out a warning that a small dredge was in tow. Mr. Baker also testified that he did not lengthen the towing hawser because it would not have had any effect on the tow’s ability to ride the wakes created by the oceangoing vessels. The Court accepts this uncontroverted testimony and holds that plaintiff has failed to carry its burden of proof and has not shown that the M/V MISS DEE failed to exercise reasonable maritime skill under the circumstances.

(6)

Plaintiff’s second theory of recovery requires that the Court first find the dredge CAPTAIN ROY BENOIT unseaworthy and then seeks to impose liability upon the M/V MISS DEE for failing to inspect the dredge and then taking her in tow.

While it may have been prudent seamanship for the crew of the M/V MISS DEE to inspect the hatches and manhole covers to insure they were secure and tight before proceeding, the M/V MISS DEE was nevertheless not an insurer of the tow. McDonough Marine Serv., Inc. v. M/V ROYAL STREET, 465 F.Supp. 928, (E.D.La.1979), affirmed, 608 F.2d 203 (5th Cir.1979), Derby Company v. A.L. Mechling Barge Lines, Inc., 258 F.Supp. 206 (E.D.La.1966), affirmed per curiam, 399 F.2d 304 (5th Cir.1968); Curtis Bay Towing Co. of Va., Inc. v. Southern Lighterage Corp., 200 F.2d 33 (4th Cir.1952).

The visual inspection of the dredge by the crew of the M/V MISS DEE failed to reveal that two of the manhole covers aboard the dredge CAPTAIN ROY BENOIT were not watertight, that a fracture existed in the port bow of the dredge, and failed to disclose the fact that the two square access hatches could not be made watertight. However, the tug was under no duty to make a detailed examination of the dredge CAPTAIN ROY BENOIT. Nat G. Harrison Overseas Corporation v. American Tug Titan, 516 F.2d 89 (5th Cir.), modified in part, 520 F.2d 1104 (5th Cir.1975). The visual inspection of the dredge made by the crew of the M/V MISS DEE was adequate and reasonable under the circumstances. Dow Chemical Co. v. M/V Gulf Seas, 428 F.Supp. 667 (W.D.La. 1977); New Orleans Coal & Bisso Towboat Co. v. United States, 86 F.2d 53 (5th Cir. 1936).

The dredge CAPTAIN ROY BENOIT was unseaworthy. Seaworthiness is a relative term which looks to such matters as the type of vessel, character of the voyage, reasonably expectable weather, and navigational conditions. May v. Hamburg-Amerikanische Packetfahrt Aktiengesellschaft, 290 U.S. 333, 346-49, 54 S.Ct. 162, 165, 78 L.Ed. 348 (1933) (The Isis); J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 596 (2d Cir.1971); Horn v. Cia de Navegacion Fruco, S.A., 404 F.2d 422, 431 (5th Cir.1968), cert. denied, 394 U.S. 943, 89 S.Ct. 1272, 22 L.Ed.2d 477 (1969). A seaworthy vessel is one which is sufficiently staunch and strong to withstand the ordinary perils to be encountered on the voyage. See South, Inc. v. Moran Towing and Transportation Co., 360 F.2d 1002, 1005 (2d Cir.1966); Walker v. Harris, 335 F.2d 185, 191 (5th Cir.1964), cert. denied, 379 U.S. 930, 85 S.Ct. 326, 13 L.Ed.2d 342 (1964).

In the instant case, weather was not a factor. The crew of the dredge CAPTAIN ROY BENOIT knew that the dredge would be heading southbound on the Mississippi River in an area of the river in which large ocean going vessels frequently navigated. The dredge either knew or should have known that these ocean going vessels create large wakes, commonly referred to as “wave wash,” which could wash over a small dredge with one to two and one-half feet of freeboard.

The dredge crew did not secure two of the aft port manhole covers on the dredge. Moreover, the dredge crew did not take any precautions to keep water from flowing into the hold of the CAPTAIN ROY BENOIT through the square access hatches. The dredge crew’s failure to properly secure the CAPTAIN ROY BENOIT rendered her unseaworthy. The capsizing occurred under circumstances and conditions which the Associated Dredging crew should have anticipated and overcome through adequate preparation of the CAPTAIN ROY BENOIT prior to her voyage. Plaintiff has failed to prove that an unforeseeable and intervening cause brought about the capsizing of the dredge and cannot escape the presumption that the CAPTAIN ROY BENOIT was unseaworthy. See Walker v. Harris, supra.

(7)

The M/V MISS DEE correctly asserted that a tug is not responsible for accidents which occur as a result of the unseaworthiness of its tow. See Ryan Walsh Stevedoring Co. v. James Marine Service, 557 F.Supp. 457 (E.D.La.1983), aff'd, 729 F.2d 1457 (5th Cir.1984). The exception to the rule, i.e., the tug is responsible if the alleged unseaworthiness is so apparent that it would be negligent for the tug to attempt to proceed is inapplicable here. See Dameron White Co. v. Angola Transfer Co., 19 F.2d 12, 14 (5th Cir.1927); Otto Candies, Inc. v. Great American Insurance Co. 221 F.Supp. 1014, 1018 (E.D. La.1963), aff'd, 332 F.2d 372 (5th Cir.1964). Plaintiff put forth no evidence which proved that the unseaworthiness of the CAPTAIN ROY BENOIT was apparent to the crew of the M/V MISS DEE. The only eyewitness testimony adduced at trial was that of Mr. Baker, the pilot of the M/V MISS DEE, who noted a slight starboard list after the second oceangoing vessel had passed. Mr. Baker testified that the dredge capsized within three minutes of his noticing the list. The Court accepts this testimony and concludes that plaintiff’s second theory of recovery is unsupported by the evidence and is without merit.

(8)

Plaintiff’s final theory of recovery involves the invocation of what is commonly referred to as the Pennsylvania Rule. See THE PENNSYLVANIA, 86 U.S. (19 Wall) 125, 22 L.Ed. 148 (1873).

In its simplest terms, that rule states that where a vessel is guilty of a statutory violation, the defaulting ship must show “not merely that her fault might not have been one of the causes, or that it probably was not, but that it could not have been”. Candies Towing Co., Inc. v. M/V B & C Eserman, 673 F.2d 91, 93 (5th Cir.1982), citing 86 U.S. (19 Wall) at 136, 22 L.Ed. at 151. See also Allied Chemical Corporation v. Hess Tankship Company of Delaware, 661 F.2d 1044 (5th Cir.1981); G. Gilmore & C. Black, The Law of Admiralty (2d ed. 1975) § 10-25 at 898.

The Court notes that Mr. Baker’s lack of a required license is a statutory violation of a regulation designed “to assure safe navigation,” which provides that an uninspected towing vessel shall be under the “actual direction and control” of a person licensed to operate that type of vessel in the particular geographic area. 46 U.S.C.S. § 405(b)(2) (Law.Coop.1972), see also, 46 U.S.C.S. § 8904 (La.Coop.1985); 46 C.F.R. § 10.16 (1984).

The Court finds that plaintiff has proven a statutory violation and agrees with plaintiff’s contention that the Pennsylvania Rule is applicable to non-collision cases such as the instant matter before the Court. See In re Seaboard Shipping Corp., 449 F.2d 132, 136, 1971 A.M.C. 2145, 2152 (2d Cir.1971), cert. denied, 406 U.S. 949, 92 S.Ct. 2038-39, 32 L.Ed.2d 337 (1972); Kernan v. American Dredging Co., 355 U.S. 426, 78 S.Ct. 394, 2 L.Ed.2d 382 (1958); The Denali, 112 F.2d 952 (9th Cir.1940).

The Pennsylvania Rule shifts the burden of proof as to causation to the statutory offender, but it does not ipso facto impose liability. Otto Candies, Inc. v. M/V MADELINE D, 721 F.2d 1034, 1036 (5th Cir.1983), citing Florida East Coast Railway Company v. Revilo Corporation, 637 F.2d 1060, 1065-66 (5th Cir.1981); Green v. Crow, 243 F.2d 401, 403 (5th Cir.1957).

Although the vessel must be manned with a competent crew, a deficiency in manning that has no causal connection to the damages at issue is not significant. Union Oil Co. of California v. M/V POINT DOVER, 756 F.2d 1223, 1229 (5th Cir.1985), citing Southern Pacific Co. v. United States, 72 F.2d 212, 215, 1934 A.M.C. 1185, 1189 (2d Cir.1934). Mr. Baker’s lack of the required license could not have been a cause of the damage to the dredge CAPTAIN ROY BENOIT. How Mr. Baker’s possession of a license could have prevented the two ocean-going vessels from wave washing the dredge is an unfathomable mystery. Although the rule of The PENNSYLVANIA imposes a strenuous burden, it does not negate the clear requirement of causation. Union Oil Co. of California, supra, 756 F.2d at 1230, citing Candies Towing v. The M/V B & C ESERMAN, 673 F.2d 91, 1983 A.M.C. 2033 (5th Cir.1982). While the defendants are guilty of a statutory violation, the violation did not have anything to do with the capsizing of the dredge CAPTAIN ROY BENOIT.

CONCLUSION

In sum, this Court rejects plaintiff's contentions that defendants were negligent in their navigation of the tow and failed to properly inspect the dredge CAPTAIN ROY BENOIT before taking her in tow. Moreover, this Court holds that the statutory violation by the defendants in having an unlicensed pilot at the wheel when the dredge capsized neither caused nor contributed to the capsizing of the dredge CAPTAIN ROY BENOIT.

For these reasons, this Court concludes that the defendants are not liable for the damages that resulted from the capsizing of the dredge CAPTAIN ROY BENOIT. As stated above, the unseaworthiness of the dredge combined with wave wash created by two large ocean-going vessels to cause the resulting damage.

Counsel for the M/V MISS DEE and her interests shall submit an appropriate judgment consistent with this opinion.

      . Plaintiffs pre-trial order contained allegations ' that these vessels created excessive wave wash which flooded the dredge’s machinery space. On January 17, 1985, this Court granted these defendants’ Motion for Summary Judgment as these defendants clearly showed that they could not have caused the wave wash complained of by Plaintiff.


author: DIANA E. MURPHY, District Judge.

text:
    UNITED STATES LIABILITY INSURANCE COMPANY, a Pennsylvania corporation, Plaintiff, v. JOHNSON & LINDBERG, P.A., Dean K. Johnson and Michael C. Lindberg, Defendant and Third-Party Plaintiff, v. CIGNA INSURANCE COMPANY, formerly INA Underwriters Insurance Company, Third-Party Defendant.
    Civ. No. 4-85-99.
    United States District Court, D. Minnesota, Fourth Division.
    Sept. 19, 1985.

      Robert E. Cattanach, and Jacqueline Shubatt, Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., for plaintiff.
    J. Michael Dady, David Donna, and James P. McCarthy, Lindquist & Vennum, Minneapolis, Minn., for defendant and third-party plaintiff.
    David Hashmall, Popham, Haik, Schnobrich, Kaufman & Doty, Minneapolis, Minn., for third-party defendant.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Plaintiff United States Life Insurance Company (USLI) brought this action against Johnson and Lindberg, P.A., Dean K. Johnson and Michael C. Lindberg (collectively Johnson and Lindberg), seeking a declaratory judgment that USLI had no obligation or liability to the defendants Johnson and Lindberg under a professional liability insurance policy. USLI alleges that Johnson and Lindberg failed to disclose in their insurance application the existence of a potential claim, that the claim at issue arose from acts committed prior to the effective date of the policy, and that the claim arose out of fraudulent acts by Johnson and Lindberg.

Defendants Johnson and Lindberg counterclaimed against USLI for breach of contract, tortious infliction of emotional distress, violation of Minnesota Unfair Claims Practices Act, and punitive damages. Defendants seek declaratory relief, expenses and attorneys fees for this litigation, and punitive damages.

Defendants and third-party plaintiffs Johnson and Lindberg also sued third party defendant CIGNA Insurance Co. (CIGNA) alleging, in the alternative to its counterclaim, that CIGNA was liable to them under a previous professional liability insurance policy and in a breach of contract. On this third-party claim, Johnson and Lind-berg seek declaratory relief and expenses and attorneys fees for this litigation.

Plaintiff USLI crossclaimed against third-party defendant CIGNA, alleging that CIGNA was responsible for defending any suit against Johnson and Lindberg and claiming that USLI was contractually or equitably subrogated to Johnson and Lind-berg’s right to recover from CIGNA for any costs USLI incurred in their defense, that USLI was an excess insurer entitled to apportionment of the costs of defendant Johnson and Lindberg, or that CIGNA was liable to USLI in quantum meruit.

Jurisdiction is alleged under 28 U.S.C. § 1332(a). The matter is now before the court on USLI’s motion to dismiss two counterclaims of defendants Johnson and Lindberg, on third-party defendant CIGNA’s motion to dismiss the third-party complaint and USLI’s crossclaim or, in the alternative, for judgment on the pleadings or summary judgment, and on the motion for summary judgment of Johnson and Lind-berg. Johnson and Lindberg seek dismissal of the complaint, a declaration of plaintiff’s obligations to Johnson and Lindberg under the insurance policy, an order in their favor on their third-party complaint against CIGNA, and attorney’s fees.

Background

This litigation should be the final chapter of the extensive litigation arising out of a fatal 1978 airplane crash. Trustees for the estates of the five airplane passengers brought a negligence action against the United States which the United States settled for almost four million dollars. On March 27, 1984, in a Memorandum Opinion and Order, this court apportioned the fault for the accident as follows: the United States 90% and the owner of the airplane, Southwest Aircraft Leasing, Inc. (Southwest) and the pilot 10%. Specifically, the court found the pilot’s estate and Southwest liable to the United States for 10 percent of the settlement and the United States liable to Southwest for 90 percent of the value of the airplane. Rauenhorst v. United States, Civil No. 4-79-241; Southwest Aircraft Leasing, Inc. v. United States, Civil No. 4-79-562. Johnson and Lindberg represented Southwest’s insurers in this litigation. No appeal was taken.

On August 14, 1984, the United States sought relief from judgment in the cases tried on the grounds of surprise, fraud and misrepresentation, and also brought an independent action for fraud. The new action sought more than fourteen million dollars in damages from attorneys and other parties involved in the investigation of the crash and the resulting litigation. United States v. Southwest Aircraft Leasing, Civil No. 4-84-864. The suit for damages alleged that defendants had wrongfully concealed a critical piece of evidence — a certain metal punch — which arguably provided the basis for an alternative theory of causation of the accident. Johnson and Lindberg were named as defendants in the independent action. This court subsequently denied the motion for relief from judgment and granted the defendants’ motion for summary judgment in the fraud action. Rauenhorst v. United States, 104 F.R.D. 588 (D.Minn.1985). The issue now before the court is who should pay the expenses Johnson and Lindberg incurred in defending the fraud action instituted by the United States. The three parties to this litigation are the candidates for ultimate liability: two carriers of professional liability insurance and Johnson and Lindberg themselves.

USLI insured Johnson and Lindberg from August 1, 1984 through August 1, 1985, the period during which the United States commenced its suit, under a “claims made” policy which obligated USLI to pay for claims “first made against the insured and reported to the Company during the policy period, arising out of any act, error, or omission of the insured in rendering ... professional services____” Claims were excluded from coverage, however, if they arose out of “dishonest, fraudulent or malicious acts, errors, or omissions” or “acts, errors, or omissions occurring prior to the effective date of the .., policy ... if the insured on such date knew or could have reasonably foreseen that [they] might be expected to be the basis of a claim or suit.”

CIGNA insured Johnson and Lindberg from August 1, 1982 until August 1, 1984, the period during which the United States apparently decided to commence suit, under a similar “claims made” policy. The CIGNA policy provided that the insured could purchase an “extended discovery period” by paying a substantial premium within thirty days of the termination of the policy. The extended discovery period permits the insured to continue coverage for claims made after the policy period but “arising out of acts, errors or omissions which took place prior to the end of the Policy period and which are otherwise covered by the Policy.” An “awareness provision” stated that coverage would also be extended to claims made after the Policy period if, during the Policy or extended discovery period, the insured gave written notice to CIGNA of an act, error or omission which would reasonably be expected to give rise to a claim and a claim subsequently arose from the reported incident.

In June 1984, while the CIGNA policy was still in effect, Michael Lindberg of Johnson and Lindberg wrote to his client that he knew of “rumors” that the United States was contemplating a motion for relief from judgment in the cases that had been tried early in 1984. Johnson and Lindberg assert that the letter evidences no more than Lindberg’s knowledge of that rumor. USLI asserts in pleadings that the letter also provides evidence that Johnson and Lindberg knew or should reasonably have known that the United States would proceed directly against Johnson and Lind-berg. Although plaintiff has had extensive formal and informal discovery, it suggests no other evidence of defendants’ alleged knowledge of the United States’ plan to bring an independent action.

On August 7, 1984, Johnson and Lind-berg completed an application for insurance with USLI. Johnson and Lindberg assert that USLI had previously been a client, that they had first discussed insurance coverage with USLI in 1983, and that the seemingly late filing of the application was the result of paperwork delays. USLI does not contest any of these assertions.

On August 14, 1985, the Department of Justice issued a press release announcing the commencement of litigation against Johnson and Lindberg and others. Johnson and Lindberg assert that they did not learn of or anticipate the direct litigation until that day. In several letters dated August 20 and August 21, Johnson and Lindberg notified USLI of the claim against them, tendered its defense, and notified USLI that they had hired counsel because liability exceeded policy limits and the United States sought punitive damages. USLI offered to pay a portion of their litigation expenses, subject to reservation of rights. Subsequently, either USLI withdrew its offer and refused tender of the defense or Johnson and Lindberg rejected USLI’s offer and demanded that it pay all of their attorney’s fees.

At some time prior to November 21, 1984, USLI apparently requested that Johnson and Lindberg notify its prior insurance carrier of the claim against them. On November 21, 1984, Johnson and Lind-berg wrote to CIGNA and gave notice of the litigation. On November 30, USLI denied coverage on the claim and commenced the litigation currently before the court. On December 5,1984, CIGNA denied liability on the claim. In February 1985 this court granted the motion of defendants, including Johnson and Lindberg, for summary judgment in the case brought by the United States.

Discussion

1. The Motions for Summary Judgment

In passing upon a motion for summary judgment, the court must view the facts in the light most favorable to the opposing party; the movant has the burden of establishing that no genuine issue of material fact exists and that the case may be decided as a matter of law. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983); Ralph’s Distributing Co. v. AMF, Inc., 667 F.2d 670 (8th Cir.1981). The opposing party is entitled to the benefit of all reasonable inferences to be drawn from the underlying facts disclosed in pleadings and affidavits. Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076 (8th Cir.1980). The opposing party may not, however, merely rest upon allegations or denials of the party’s pleadings, but must set forth specific facts showing that a genuine issue for trial exists. Burst v. Adolph Coors Co., 650 F.2d 930, 932 (8th Cir.1981).

A. USLI’s Inability to Johnson and Lindberg

Defendants Johnson and Lindberg seek summary determination of USLI’s duty to provide and pay for their defense in the United State’s fraud action. Plaintiff asserts three apparently independent and complete defenses to such liability.

It is a well-established principle of Minnesota law that an insurer’s duty to defend the insured is broader than its duty to pay a judgment rendered against the insured. E.g., Brown v. State Automobile & Casualty Underwriters, 293 N.W.2d 822, 825 (Minn.1980). See also United States Fidelity and Guaranty Co. v. Louis A. Roser Co., 585 F.2d 932, 936 (8th Cir.1978). If even part of a claim is arguably within the policy’s coverage, the insurer is obligated to defend. Prahm v. Rupp Construction Co., 277 N.W.2d 389, 390 (Minn.1979). In such situations, the cost of defense is not apportioned, but is borne entirely by the insurer. Jostens, Inc. v. CNA Insurance, Continental Casualty Co., 336 N.W.2d 544, 545 (Minn.1983). An insurer who refuses to defend the insured carries the heavy burden of demonstrating that all parts of the claim fall clearly outside the scope of policy coverage. Grain Dealers Mutual Insurance Co. v. Cady, 318 N.W.2d 247, 251 (Minn.1982).

USLI’s first defense to liability is that the policy is void because defendants’ insurance application contained fraudulent and material misrepresentations. Specifically, USLI asserts that they failed to report awareness “of the possibility that the United States was contemplating a claim of some nature based on Johnson and Lind-berg’s failure to disclose evidence.” The USLI policy application asked whether Johnson and Lindberg were aware of “any act, error or omission which might reasonably be expected to be the basis of a claim or suit.”

The parties agree that Johnson and Lind-berg had heard rumors that the United States would seek to reopen the plane crash judgment. For the purpose of defendants’ motion for summary judgment, the court accepts plaintiff’s assertions that Johnson and Lindberg knew that the United States would seek to reopen that litigation. The parties also agree that USLI is not liable to Johnson and Lindberg for costs and attorney’s fees incurred in defending the motion to reopen. Finally, the parties agree that Johnson and Lindberg could not reasonably have anticipated the United States’ suit directly against Johnson and Lindberg. At oral argument, plaintiff’s counsel conceded that “the direct action against Johnson and Lindberg was ... an unusual lawsuit.” Counsel went on to say that USLI did not assert that Johnson and Lindberg “should have known that was going to happen, but ... by their own admission, they knew something was going on and they should have told [USLI] because, as it turned out, on exactly what they knew was going on, they got sued.”

The only remaining question on Johnson and Lindberg’s first defense is whether, as plaintiff asserts, Johnson and Lindberg should have reported the anticipated motion to reopen even though they could not have reasonably anticipated the independent claim against them. Inasmuch as the parties agree that the costs of defending the motion to reopen are not covered by the insurance contract, the court fails to see why Johnson and Lindberg should have reported the Southwest case as one which, in the language of the insurance application, “might reasonably be expected to be the basis of a claim or suit” against Johnson and Lindberg. Plaintiff has failed to allege facts sufficient to make a prima facie case that Johnson and Lindberg made misrepresentations “with intent to deceive and defraud, or ... misrepresent[ ] ... the risk of loss.” Minn.Stat. § 60A.08 subd. 9 (requirement for voiding policy on grounds of misrepresentation).

As a second defense, plaintiff alleges that an express exclusion to policy coverage applies because the United States’ claim arose out of an act, error, or omission which occurred prior to the policy period and which Johnson and Lindberg knew or could reasonably have foreseen might be the basis of a claim or suit. Inasmuch as USLI has conceded that Johnson and Lind-berg could not reasonably have anticipated the fraud claim against them, this defense does not merit further discussion.

Finally, plaintiff alleges that another express coverage exclusion applies because the claim arose out of “dishonest, fraudulent or malicious acts, errors, or omissions____ committed with actual dishonest, fraudulent, or malicious purpose or intent.” In its initial pleadings, USLI argued:

In the event that the United States successfully proves its allegation that Johnson & Lindberg fraudulently failed to disclose the existence of the punch as part of the wreckage, such failure would be an intentional dishonest, fraudulent or malicious act or omission by Johnson & Lindberg. Such acts are excluded from coverage under USLI’s policy.

The United States failed to prove its allegation; this court granted summary judgment to Johnson and Lindberg. USLI now appears to argue that it should be permitted to deny coverage to Johnson and Lind-berg because the United States fraud claim was “not frivolous or unreasonable,” and USLI’s “denial of coverage under the facts available prior to [the court’s] findings was, and remains, reasonable.”

The USLI contract excludes coverage of claims arising out of “dishonest, fraudulent or malicious acts, errors, or omissions ... committed with actual dishonest, fraudulent, or malicious purpose or intent.” (emphasis added). The court finds this contract provision unambiguous. USLI may not rely on it in the face of a mere allegation of fraud, even a reasonable and non-frivolous allegation, but only where there is actual fraud. Plaintiff has not asserted facts sufficient for a showing of actual fraud, nor does plaintiff suggest that it could do so.

Plaintiff USLI has failed to set forth facts sufficient to show a genuine issue of material fact as to its liability under its insurance policy with defendants Johnson and Lindberg. Accordingly, defendants are entitled to summary judgment declaring USLI’s obligation to defend Johnson and Lindberg in United States v. Southwest Aircraft Leasing, Inc., Civil No. 4-84-864 and dismissing plaintiffs complaint in its entirety.

B. CIGNA’s Liability to Johnson and Lindberg

CIGNA, asserting that it has no liability to Johnson and Lindberg and thus no liability to USLI, seeks summary judgment on their third-party claims and crossclaims. Johnson and Lindberg seeks summary determination of CIGNA’s duty to defend them in the fraud action and awarding costs and attorney’s fees incurred in this litigation. USLI asserts that CIGNA is partially or entirely responsible for the defense of the suit against Johnson and Lindberg and therefore liable to USLI, under various theories, for any costs USLI would incur in Johnson and Lindberg’s defense.

The claims that CIGNA is liable for the defense of Johnson and Lindberg rest almost entirely on Reliance Insurance Co. v. St. Paul Insurance Cos., 307 Minn. 338, 239 N.W.2d 922 (1976). Reliance presents a fact pattern superficially similar to the one before this court: an attorney was sued for malpractice in 1971 for acts and omissions which took place in or before 1968. One insurer had provided professional liability coverage for the period in which the alleged malpractice occurred; the other for the period in which the suit was in fact brought. In Reliance, however, the attorney failed to notify either insurer until he received notice of default proceedings, eighteen months after service of the complaint. Stressing the absence of any showing of prejudice, the court held that the insurers were obligated to afford coverage under their contracts in spite of the extreme delay. USLI and Johnson and Lindberg cite Reliance for the broad proposition that “time limit provisions in a policy ... cannot be invoked by the insurer to defeat liability” unless the insurer can prove actual prejudice.

This court agrees with CIGNA that Reliance must be read less expansively to apply only to notification time limitations. In Reliance, the earlier insurer had issued an “occurrence” policy, which provided coverage for claims arising from acts or omissions which occurred during the policy period, regardless of whether the claims were made during that period. Thus, both policies covered the claim when it was asserted in 1971. The only defense to the claim was the insured’s belated notification of the insurers. In the instant case, the claim against Johnson and Lindberg did not arise during the policy period. CIGNA argues that neither the “extended discovery period” nor the “awareness provision” brings Johnson and Lindberg’s claim within the CIGNA policy’s coverage.

The “extended discovery period” provision provides that the insured

shall have the right upon payment of an additional premium within thirty (30) days of the termination [of the policy], to have issued an endorsement providing an unlimited extended discovery period covering claims first reported during the extended discovery period arising out of act, errors or omissions which took place prior to the end of the Policy period, and which are otherwise covered by the Policy. The premium shall be equal to 225% of the Named Insured’s last annual premium.

Johnson and Lindberg, citing Reliance, argue that they should be permitted to purchase this extended discovery period after the thirty days have run and thus obtain CIGNA’s coverage. The thirty day provision in this clause is qualitatively different from the time provisions at issue in Reliance. If a former insured could purchase the extended discovery period at any time, there would be no incentive whatsoever for doing so within the thirty day period. The balance of risks represented by such a provision — the insureds’ risk that they are needlessly paying a large premium and the insurer’s risk that it will incur liabilities many months or years later — is eliminated and the entire risk placed on the insurer. This court finds that Reliance does not justify the imposition of such a burden on insurers.

The “awareness provision” provides:

If, during the Policy period or the extended discovery period, the Company shall be given written notice of any act, error or omission which could reasonably expected to give rise to a claim against the insured under this Policy, any claim which subsequently arises out of such act, error or omission shall be considered to be a claim made during the Policy period or extended discovery period in which the written notice was received.

Johnson and Lindberg and CIGNA agree, and USLI has conceded, that Johnson and Lindberg were not aware and could not reasonably have expected that their conduct of the air crash litigation would give rise to a claim against them. Accordingly, the “awareness provision” also fails to bring the Johnson and Lindberg claim within CIGNA’s policy.

CIGNA’s liability to Johnson and Lind-berg is a necessary element for USLI’s crossclaims and the third-party claim against for attorney’s fees and costs. In the absence of any genuine issue of material fact as to CIGNA’s liability to Johnson and Lindberg, CIGNA is entitled to summary judgment on all crossclaims and third-party claims in this litigation.

C. USLI’s Liability for Costs and Attorney’s Fees

Johnson and Lindberg assert that they are entitled, as a matter of law, to reasonable costs and attorney’s fees incurred in this litigation. Plaintiff does not object to this assertion. The Minnesota Supreme Court has recognized a limited exception to the general rule that attorney’s fees are allowed only when authorized by statute or provided for in contract. Lanoue v. Fireman’s Fund of American Insurance Cos., 278 N.W.2d 49, 54 (Minn. 1979). Attorney fees “incurred in an attempt to force the insurer to provide indemnification, including the costs of the appeal, may be recovered if the insured is successful on the issue of breach of the duty to indemnify and if he defended the main action itself.” Brown v. State Automobile & Casualty Underwriters, 293 N.W.2d 822, 825 (Minn.1980) (citations omitted). The Minnesota Supreme Court has clearly stated that “where an insurance contract is intended to relieve the insured of the financial burden of litigation, the insured will not be required to pay the litigation costs of forcing the insurer to assure that burden.” Lanoue, 278 N.W.2d at 50.

The present case is squarely within the exception defined by the Minnesota Supreme Court. USLI improperly refused to defend Johnson and Lindberg against the United States suit. As a result of this breach of contract, Johnson and Lindberg were forced to defend themselves in that litigation and in this litigation. As a matter of law, Johnson and Lindberg are entitled to recover reasonable costs and attorney’s fees incurred in this litigation; summary judgment on this issue is appropriate.

II. The Motions to Dismiss

A. Minnesota Unfair Claims Practices Act

Defendants Johnson and Lindberg seek damages for USLI’s “unfair, deceptive, and fraudulent acts” in violation of the Minnesota Unfair Claims Practices Act (the Act), Minn.Stat. § 72A.20, subds. 12 and 12a (1984). USLI seeks dismissal, asserting that no private cause of action exists under the Act and that Johnson and Lindberg has failed to make a prima facie showing of the “general business practice” required by subd. 12.

Since this litigation began, the Minnesota Court of Appeals has held that Minn.Stat. § 8.31 subd. 3a (1984) creates a private cause of action for violations of Minn.Stat. § 72A.20, subd. 12 (1984); Morris v. American Family Mutual Insurance Company, 371 N.W.2d 620 (1985). The Court of Appeals stressed that the party asserting violation of the Act must show that “the insurer’s violation of subdivision 12 was a general business practice as opposed to an inadvertent occurrence.” Id. Cf. Minn. Stat. § 72A.20, subd. 12a (1984) (“No individual violation constitutes an unfair, discriminatory, or unlawful practice in business, commerce, or trade for purposes of section 8.31.”)

Defendants neither demonstrate nor suggest that USLI has engaged in any “unfair, deceptive, [or] fraudulent act” in addition to the one allegedly committed against them. In the absence of any facts tending to show a “general business practice,” USLI is entitled to the dismissal of count III of defendant’s counterclaim.

B. Punitive Damages

Defendants Johnson and Lindberg seek punitive damages for USLI’s “willful, wanton or reckless disregard” of their rights. The parties agree that “[p]unitive damages are not recoverable for breach of contract except in exceptional cases where the breach of contract constitutes or is accompanied by an independent, willful tort.” Olson v. Rugloski, 277 N.W.2d 385, 388 (Minn.1979). Defendants originally alleged commission of two independent torts, but defendants’ counterclaim for intentional infliction of emotional distress has been dismissed by stipulation, and the court today dismisses defendants’ claim under the Unfair Claims Practices Act. Defendants have not alleged facts sufficient to constitute the commission of any other “independent, willful tort.” See Wilson v. Colonial Penn Life Insurance Co., 454 F.Supp. 1208, 1213-14 (D.Minn.1978) (where party’s tort claims were dismissed, party was not entitled to punitive damages; bad faith motive in breaching insurance contract does not convert contract action into action sounding in tort).

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. The motion of United States Liability Insurance Company to dismiss counts III and IV of defendants’ counterclaim is granted, and they are dismissed.

2. The motion of CIGNA Insurance company for a summary judgment on all third-party claims and crossclaims in this litigation is granted, and they are dismissed.

3. Defendants’ motion for partial summary judgment dismissing plaintiff’s complaint in its entirety is granted, and it is dismissed.

4. Defendants’ motion for summary judgment on its counterclaim that USLI is obligated to pay for their defense in United States v. Southwest Aircraft Leasing, Civil No. 4-84-864, and for costs and attorney’s fees incurred in this litigation is granted.

5. Defendants’ motion for summary judgment declaring that third-party defendant is obligated to pay their defense in Civil No. 4-84-864 and for costs and attorney’s fees in this litigation is denied, and these claims are dismissed.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . Johnson and Lindberg’s second counterclaim was dismissed by stipulation of all parties.

      . Plaintiff asserts that defendants improperly seek reimbursement for costs and legal fees expended in resisting the motion of the United States pursuant to Fed.R.Civ.P. 60(b). Defendants deny that they have ever sought such payment. It is clear from the pleadings that defendants do not seek such payments in this litigation. Counsel indicated they may be able to apportion costs of the motion to reopen and the new action after this court rules.

      . Whether the policy language is ambiguous is a question of law. Columbia Heights Motors, Inc. v. Allstate Insurance Co., 275 N.W.2d 32, 36 (Minn. 1979). The court must give the contract language its plain meaning if it is unambiguous. Firemen’s Insurance Fund of Newark v. Viktora, 318 N.W.2d 704, 706 (Minn.1982). Where the language is ambiguous, however, the court must construe the policy against the insurer and in favor of the insured. E.g., Columbia Heights Motors, 275 N.W.2d at 36. Thus the result in this case would be the same if the court found the pertinent exclusion ambiguous.

      . The parties have submitted and the court has considered matters outside the pleadings, the court therefore treats CIGNA's motion as one for summary judgment. Fed.R.Civ.P. 12(b)(6) and 12(c).

      . USLI also invokes Phoenix Insurance Co. v. Sukut Construction Co., 136 Cal.App.3d 673, 186 Cal.Rptr. 513 (1982). Although Phoenix, like the case at bar, involved two “claims made” insurance policies, it is inapposite. The Phoenix court found that the claim against the insured was made, and the insured made aware of it, during the first insurance policy period.