author: BARBOUR, District Judge.

text:
    Cecil D. ALLEN, et al., Plaintiffs, v. JEFFERSON LINES, INC., Defendant.
    Civ. A. No. J84-0699(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    June 6, 1985.

      James C. Lockard, Cy Faneca, Biloxi, Miss., H. Alva Brumfield, Baton Rouge, La., for plaintiffs.
    John C. Henegan, Jackson, Miss., for defendant.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This cause is before the Court on the Motion of Defendant Jefferson Lines, Inc. (“Jefferson Lines”) to Dismiss the Complaint filed by Plaintiffs Cecil D. Allen, et al (“Allen”), claiming that this Court lacks personal jurisdiction over it.

FACTS

Allen was injured on December 6, 1981, while a passenger on a Jefferson Lines bus travelling between Little Rock and Fort Smith, Arkansas. He claims that the negligence of Jefferson Lines caused the collision resulting in his injuries. Allen had bought a ticket from another bus line in Brookhaven, Mississippi, for a trip from Brookhaven to Oklahoma. Jefferson Lines is a common carrier and provided connecting service only between Little Rock and Fort Smith.

These and the following facts were set forth by Affidavit of Daniel F. Prins, president of Jefferson Lines attached to the Motion to Dismiss. No countering evidence was presented by Plaintiffs through affidavit or otherwise and, in fact, Plaintiffs agreed with the facts as set forth in Prins’ Affidavit. According to the Affidavit, Jefferson Lines:

(1) is a common carrier authorized by the Interstate Commerce Commission to provide interstate bus services for passengers and goods;
(2) has been granted authority from the Interstate Commerce Commission to originate and/or terminate its bus services within Mississippi although it has never exercised this authority;
(3) has never applied for a permit or certificate with the Mississippi Public Service Commission to engage in intrastate operations within Mississippi nor has it ever engaged in any such intrastate operations;
(4) has never qualified to do business in Mississippi nor filed any documentation with the Secretary of State of the State of Mississippi;
(5) has never paid any corporate franchise or income tax to the state;
(6) has no ticket agents, representatives, offices, employees, telephone listings, mailing addresses, bank accounts, lines of credit or property of any form whatsoever located in Mississippi;
(7) does not advertise or solicit business or negotiate or execute contracts in Mississippi;
(8) is permitted to pass through Mississippi from or to points of origin and/or termination in other states in conjunction with its chartered services but not with any regular passenger routes; and
(9) travelled in excess of 31,000 miles across Mississippi between 1981 and 1983.

Specifically, Jefferson Lines asserts that it is not “doing business” in Mississippi for purposes of Miss.Code Ann. §§ 13-3-57 (Supp.1984) and 79-1-27 (Supp.1984) since:

(1) The nature of its business in Mississippi — providing interstate chartered passenger service across the state — is limited and irregular;
(2) There is no causal connection between Allen’s cause of action against Jefferson Lines — the negligent provision of regular passenger service in Arkansas— and the activities of Jefferson Lines in Mississippi; and
(3) The assertion of jurisdiction over Jefferson Lines offends traditional notions of fairness and substantial justice.

Allen maintains that Jefferson Lines is “doing business” in Mississippi since Jefferson Lines travelled approximately 31,-979 miles across Mississippi between 1981 and 1983, conducting its chartered bus services. This, Allen claims, reveals that Jefferson Lines has conducted continuous business activities in Mississippi which are sufficient to support the exercise of personal jurisdiction, even assuming that his cause of action did not arise from the activities of Jefferson Lines in Mississippi. In essence, Allen claims that since Jefferson Lines is “doing business” in Mississippi, this Court may assume personal jurisdiction over Jefferson Lines under Miss.Code Ann. §§ 13-3-57 and 79-1-27.

LAW

According to Smith v. DeWalt Products Corporation, 743 F.2d 277, 278 (5th Cir.1984), the reach of federal jurisdiction over a non-resident defendant is measured by a two step inquiry:

1. The law of the forum state must provide for the assertion of jurisdiction; and
2. The exercise of jurisdiction under state law must comport with the dictates of the Fourteenth Amendment due process clause.

To determine whether Mississippi — the law of the forum state — provides for the assertion of jurisdiction entails an analysis of Miss.Code Ann. §§ 13-3-57 (Supp.1984) and 79-1-27 (Supp.1984). Section 13-3-57 provides in pertinent part:

Any ... foreign ... corporation not qualified under the constitution and laws of this state as to doing business herein, who shall make a contract with a resident of this state to be performed in whole or in part by any party in this state, or who shall do any business or perform any character of work or service in this state, shall by such act or acts be deemed to be doing business in Mississippi....

Section 79-1-27 provides:

Any corporation claiming existence under the laws of any other state or of any other country foreign to the United States, found doing business in this state, shall be subject to suit here to the same extent that corporations of this state are, whether the cause of action accrued in this state or not.

Arrow Food Distributors, Inc. v. Love, 361 So.2d 324, 327 (Miss.1978), dictates that §§ 13-3-57 and 79-1-27 must be harmonized to support “the state’s avowed policy ... to ‘open the door’ of our Mississippi courts to foreign corporations found doing business in this state to sue and be sued on all bona fide causes of action.”

Yet, merely “doing business” in Mississippi is not sufficient to support the exercise of personal jurisdiction. Before personal jurisdiction may be assumed under the “doing business” provision of § 13-3-57, the business in Mississippi of the non-resident defendant must be of a “systematic and on-going nature”, the plaintiff’s cause of action must be incident to that business activity and the assertion of jurisdiction must not offend notions of fairness and substantial justice. Aycock v. Louisiana Aircraft, Inc., 617 F.2d 432, 435 (5th Cir.1980); Arrow Food Distributors v. Love, 361 So.2d at 326-27. Contrary to Allen’s contention, there is no authority for the proposition that Mississippi would construe its statute as permitting service on a non-resident defendant whose only activities in Mississippi are part of an interstate transaction. See, e.g., Walker v. Saveli, 335 F.2d 536, 543 (5th Cir.1964).

In this case, Jefferson Lines is not “doing business” in Mississippi of a systematic and ongoing nature. Jefferson Lines has no ticket agents, representatives, employees, offices, telephone listings, mailing addresses, bank accounts, lines of credit or property located in Mississippi. Nor does Jefferson Lines advertise or solicit business or negotiate or execute contracts in Mississippi. Jefferson Lines’ charter services merely pass through Mississippi. Compare Aycock v. Louisiana Aircraft, Inc., supra (non-resident defendant was subject to jurisdiction where it was the authorized distributor of aircraft and parts in Mississippi; where it sent salesmen into Mississippi to demonstrate and sell aircraft; where it delivered planes to customers in Mississippi and serviced planes in Mississippi and entered into contracts with Mississippians); Arrow Food Distributors Inc. v. Love, supra (non-resident defendant was subject to jurisdiction where it sold foodstuffs in Mississippi continuously since 1951; where its sales in Mississippi averaged $2,000 to $3,000 per week; where its salesmen came to Mississippi to solicit orders and orders were shipped by trucks into Mississippi) with Smith v. DeWalt Products Corporation, supra (non-resident defendant was not subject to jurisdiction where its saw was not manufactured in Mississippi, the saw was never owned by a Mississippian; its saws were never sold in Mississippi or by a Mississippian; its saws were never serviced in Mississippi or by a Mississippian; the saw was never within Mississippi and the non-resident defendant maintained no offices, employees or representatives in Mississippi and did not negotiate or execute any contracts in Mississippi).

Moreover, Allen’s cause of action does not accrue from, nor is it incident to, the activities of Jefferson Lines in Mississippi. In fact, there is no nexus of any kind between the activities of Jefferson Lines and Allen’s cause of action against Jefferson Lines. Jefferson Lines provides only interstate charter services across Mississippi. Although Jefferson Lines is authorized by the Interstate Commerce Commission to provide regular passenger service in Mississippi, it has never done so nor has it applied with the Mississippi Public Service Commission to engage in intrastate commerce. Consequently, Allen’s cause of action, which arises out of the alleged negligence of Jefferson Lines in providing regular passenger service in Arkansas, has no causal connection with the providing of interstate charter services across Mississippi by Jefferson Lines. See, e.g., Smith v. DeWalt Products Corporation, 743 F.2d at 279-80.

Since this Court finds that Mississippi law does not provide for the assertion of personal jurisdiction over Jefferson Lines under the facts of this case, there is no need to determine the alternative Motion of Jefferson Lines for Change of Venue to Arkansas.

Accordingly, this Court finds that the Motion of Defendant Jefferson Lines, Inc. to Dismiss for a lack of personal jurisdiction is well taken and should be granted.


source: Caselaw Access Project

license: Public Domain

text:
    Eddie GOODLOE, et al., Plaintiff, v. The MADISON COUNTY BOARD OF ELECTION COMMISSIONERS, et al., Defendants.
    Civ. A. No. J83-0843(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    June 6, 1985.

      Jere Krakoff, Nausead Stewart, Lawyers’ Committee for Civil Rights Under Law, Jackson, Miss., for plaintiff.
    Bill Allain, W.D. Coleman, R. Lloyd Arnold, Jackson, Miss., John W. Christopher, J.R. Fancher, Jr., Canton, Miss., for defendants.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This action was filed by Eddie Goodloe and Walter Johnson, unsuccessful constable candidates in the November 8, 1983 elections in Madison County, Mississippi. James Wells is also a Plaintiff, being an adult, black resident of Madison County. James Wells brings his claims on his behalf and on behalf of all others similarly situated.

The Defendants are the Madison County Board of Election Commissioners, the Registrar of Madison County, the Secretary of State of the State of Mississippi and the two successful candidates for the office of constable in Madison County, George Summerlin and Mike McGowan.

This Court held a hearing on December 29, 1983, and determined that the requested preliminary injunction should not issue pursuant to the Order and Memorandum Opinion issued by this Court on August 21, 1984. 590 F.Supp. 1182 (D.C.Miss.1984). That Order dismissed the claims of the Plaintiffs pursuant to 42 U.S.C. § 1983 and set for hearing the claims stated under Section 2 of the Voting Rights Act of 1965, 42 U.S.C.1973(a).

Pursuant to the stipulation of the parties entered September 26, 1984, this Court is requested to determine the merits of this action based on the stipulation and all evidence previously admitted in the December 29, 1983, hearing which includes depositions, written exhibits and the testimony of the Plaintiff, James Wells. There is no serious factual dispute concerning the events which transpired occasioning this lawsuit and the parties have expressly requested this Court to forego a hearing of this matter as it would add nothing to this Court’s ability to resolve the issues presented. Accordingly, the following constitutes the findings of fact and conclusions of law with respect to this controversy.

On November 9,1983, the Madison County Board of Election Commissioners met to certify the local elections which had been held the previous day. It was brought to the attention of the Board of Election Commissioners that four voters had submitted absentee ballots notarized by Mildred Branch which were marked when the notary was not present. Clearly, these ballots were obtained pursuant to Miss. Code Ann. § 23-9-605(2) (Supp.1984) which requires the elector to mail an appropriate application to the registrar. Miss. Code Ann. § 23-9-613 (Supp.1984) requires that an elector receiving an absentee ballot pursuant to subsection 2 of section 23-9-605 shall appear before an official authorized to administer oaths and mark the ballot in secret but in the presence of such an official. See generally, Welch v. McKenzie, 592 F.Supp. 1549, 1551-52 (S.D.Miss.1984).

A blanket challenge to all absentee ballots notarized by Mildred Branch, numbering approximately 250, was lodged as a result of the four affidavits by electors stating that they had not executed their ballots in the presence of the notary, Mildred Branch. It is admitted by the Defendants that virtually all of the absentee ballots notarized by Mildred Branch were cast by black voters residing within District One of the county. On November 15, 1983, the Board of Election Commissioners invalidated all of the absentee ballots notarized by Mildred Branch in the District One constable races and declared George Summerlin and Mike McGowan the winners in those races. The Plaintiff Johnson was defeated by Summerlin by a margin of 100 votes. The Plaintiff Goodloe was defeated by his opponent McGowan by a margin of 180 votes. These figures are the results certified by the Board of Election Commissioners which do not account for the Branch ballots which were voided. Both candidates, Goodloe and Johnson, are black. The Plaintiff elector Wales is also black. The above tabulation clearly shows that Goodloe and Johnson may have won the election had the Branch ballots not been invalidated by the Board of Election Commissioners. No case by case determination was made as to the validity of any of the absentee ballots notarized by Mildred Branch except for the four ballots with respect to which the Chancery Clerk had affidavits of the electors stating that their ballots had not been voted in the presence of the notary. No notification was given to any of the electors that their absentee ballots were questioned and no systematic determination was made regarding the questioned ballots. The Board of Election Commissioners did not interview the electors nor did they call Mildred Branch to inquire as to which ballots were voted in her presence.

The elections were certified, declaring McGowan and Summerlin winners of the two constable posts in District One of Madison County, Mississippi.

There is no indication that intentional discrimination played any role whatsoever in the decision made by the Board of Election Commissioners. They were faced with an administrative dilemma with respect to the challenged ballots. Their resolution to this problem was the invalidation of all ballots carrying the notary seal of Mildred Branch. This Court finds that this resolution was not reached with the purpose of undermining the democratic system of electing public officials nor with any intent to discriminate against the black candidates or voters involved.

In the previous Order and Memorandum Opinion issued by this Court it was determined that the constitutional claims brought pursuant to 42 U.S.C. § 1983 were to be dismissed. The reason as outlined in that opinion was the lack of any intentional discrimination. The Plaintiffs by their Motion to Amend filed August 30, 1984, point out that the analysis of this Court was under the equal protection rather than due process clause of the Constitution of the United States. The result is the same in this case under either analysis. The fundamental fairness of the electoral process was not seriously undermined by the method the Board of Election Commissioners chose to resolve the problem created by the Branch ballots. See Duncan v. Poythress, 657 F.2d 691, 700-704 (5th Cir.1981). What has confronted this Court is an unfortunate situation involving the confusion about and misuse of absentee ballots. The Board of Election Commissioners was faced with a difficult problem and chose an avenue which resulted in the effective disenfranchisement of votes without any clear indication of whether those votes were cast in accordance with state absentee balloting procedures or whether they were not so cast. This action is not one which undermines the fundamental fairness of the election process. This event did result in the denial of the right to vote to a large number of black citizens in District One. Additionally, the invalidation of these ballots by the Board of Election Commissioners may have resulted in the certification of the white candidates Summerlin and McGowan as winners in spite of the fact that the majority of the validly cast ballots were cast for the two black candidates who are Plaintiffs in this action, Goodloe and Johnson.

The states have broad power to regulate the conduct of both federal and state elections. See generally, Roudebush v. Hartke, 405 U.S. 15, 92 S.Ct. 804, 31 L.Ed.2d 1 (1972); Oregon v. Mitchell, 400 U.S. 112, 91 S.Ct. 260, 27 L.Ed.2d 272 (1970). This Court has specifically found with respect to the constitutional claims brought by the Plaintiffs that there has been no jeopardization of the integrity of the electoral process. Nevertheless, this Court is faced with the more difficult question of whether pursuant to Section 2 of the Voting Rights Act of 1965, 42 U.S.C. § 1973(a) the actions of the Board of Election Commissioners in invalidating the Branch ballots resulted “in a denial or abridgment of the right ... to vote.” 42 U.S.C. § 1973(a). Section 2 on its face is broad enough to cover practices which are not permanent structures of the electoral system but nevertheless operate to dilute or diminish the vote of blacks. Where a practice is such that it involves a series of events or episodes the same factors used when assessing a permanent structural barrier are not necessarily involved. S.Rep. No. 417, 97th Cong., 2d Sess. 30, reprinted in 1982 U.S.Code Cong. & Ad. News 177, 207. The relevant inquiry is whether the practice before this Court operated to deny the minority an equal opportunity to participate and to elect candidates of their choice. Id.

It is the finding of this Court that the series of events leading up to and including the invalidation of the Branch ballots was a practice within the meaning of Section 2. See Goodloe v. Madison County Board of Election Commissioners, 590 F.Supp. 1182, 1184 (S.D.Miss.1984). This Court further finds that this practice operated to deny the black voters who cast these absentee ballots an equal opportunity to participate and elect candidates of their choice. Accordingly, a violation of Section 2 is found to exist in the failure of the Board of Election Commissioners to make a case by case or otherwise rational as opposed to arbitrary determination of which ballots were properly voted. Consistent with this, this Court shall issue an injunction requiring the Board of Election Commissioners to convene and make a determination within 45 days of this date as to which of the absentee ballots notarized by Mildred Branch were properly cast by the electors, if any. While this Court shall enter judgment consistent with Rule 58, it retains jurisdiction for the limited purpose of issuing any orders which may be necessary to grant complete relief to the Plaintiffs should it be found that the result of the election is altered by counting the ballots, if any, validly voted for Goodloe and Johnson.

      . Section 2 of the Voting Rights Act as amended in 1982 states as follows:
      No voting qualification or prerequisite to voting or standard, practice or procedure shall be imposed or implied by any State or political subdivision in a manner which results in a denial or abridgment of the right of any citizen of the United States to vote on account of race or color, or in contravention of the guarantees set forth in 1973(b)(f)(2) of this title as provided in sub-section (b) of this section.
      A violation of subsection (a) of this section is established if, based on the totality of circumstances, it is shown that the political processes leading to nomination or election in the State or political subdivision are not equally open to participation by members of a class of citizens protected by sub-section (a) of this section in that its members have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice. The extent to which members of a protected class have been elected to office in the State or political subdivision is one circumstance which may be considered: provided, That nothing in this section establishes a right to have fnembers of a protected class elected in numbers equal to their proportion in the population.
      42 U.S.C. § 1973.


author: BUA, District Judge.

text:
    AIR LINE PILOTS ASSOCIATION INTERNATIONAL, Plaintiff, v. UNITED AIR LINES, INC., Defendant.
    No. 85 C 4765.
    United States District Court, N.D. Illinois, E.D.
    June 7, 1985.

      Cohen, Weiss and Simon, New York City, Michael E. Abram, Katz, Friedman, Schur & Eagle, Chicago, Ill., for plaintiff.
    Joel H. Kaplan, Valerie J. Hoffman, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., for defendant.
   ORDER

BUA, District Judge.

Before the Court is the defendant’s motion to strike the plaintiff’s prayer for injunctive relief in a labor dispute. For the reasons stated herein, defendant’s motion is denied.

I. FACTS

Plaintiff Air Line Pilots Association, International (“ALPA”) filed this suit for injunctive relief under the Railway Labor Act, as amended, 45 U.S.C. § 151 et seq. (“RLA”). The suit alleges that various conduct, of defendant, United Air Lines, Inc. (“United”) interfered with the collective bargaining negotiations between the parties resulting in a strike against United by ALPA. ALPA is the collective bargaining representative under the RLA for captains, first officers and second officers employed by United.

ALPA commenced its strike on May 17, 1985. The strike followed the parties’ exhaustion of the mandatory negotiation and mediation procedures under the RLA and expiration of the 30-day statutory cooling-off period. 45 U.S.C. § 156. As its last official act immediately prior to the commencement of the cooling-off period, the National Mediation Board (“NMB”) proffered its services to arbitrate the dispute. On the same day of the proffer, United rejected the arbitration proffer and the NMB officially terminated its services. ALPA did not accept the NMB proffer. The reasons for this nonacceptance are disputed.

The complaint alleges that United has engaged in a course of conduct both before and during the strike consisting of pervasive violations of basic rights of striking pilots under the RLA. ALPA seeks preliminary and permanent injunctive relief against United’s unlawful conduct. The principal issue between the parties turned on rates to be paid to new hire pilots (the so-called “two tier” wage issue). While the parties have worked out a compromise on the two-tier wage issue, there remains the issue of a back-to-work agreement and United’s alleged unlawful conduct in relation to that agreement and its underlying negotiations.

II. DISCUSSION

The key issues raised by the defendant’s motion are (1) whether ALPA must accept the NMB proffer before going into court to obtain injunctive relief, even though United rejected the proffer, and (2) if so, did ALPA fail to make every reasonable effort to settle the dispute, before and during the strike, when it did not accept the NMB proffer.

It is well settled that a party seeking injunctive relief under the Railway Labor Act must comply with Section 8 of the Norris-La Guardia Act. 29 U.S.C. § 108. Brotherhood of Railroad Trainmen, Enterprise Lodge, No. 27 v. Toledo, P. & W. R.R., 321 U.S. 50, 64 S.Ct. 413, 88 L.Ed. 534 (1944) (“Toledo R.R. ”). Section 8 of the Norris-La Guardia Act provides:

No restraining order or injunctive relief shall be granted to any complainant who has failed to ... make every reasonable effort to settle such dispute either by negotiation or with the aid of any available governmental machinery of mediation or voluntary arbitration.

This provision is almost identical to Section 2, First, of the RLA, which imposes on all parties the duty to make every reasonable effort to settle the dispute. 45 U.S.C. § 152, First. Since Section 8 is congruent with the RLA, the party seeking injunctive relief under the RLA should be held to Section 8’s requirements. Local 553, Transport Workers v. Eastern Air Lines, 695 F.2d 668, 679 (2d Cir.1982).

The Supreme Court in Toledo R.R., supra, held that Section 8 would bar a complainant from injunctive relief if he had not submitted the dispute to arbitration. Toledo R.R., supra, 321 U.S. at 63, 64 S.Ct. at 420; Elgin, Joliet and Eastern Railway Company v. Brotherhood of Railroad Trainmen, 302 F.2d 540 (7th Cir.), cert. denied, 371 U.S. 823, 83 S.Ct. 42, 9 L.Ed.2d 63 (1962). In Toledo R.R., the railroad, which sought the injunctive relief, refused to agree to arbitration while the union agreed to arbitrate the dispute. In reversing an injunction issued in the railroad’s favor, the Supreme Court held:

Arbitration under the Railway Labor Act was available, afforded a method for settlement Congress itself has provided, and until respondent accepted this method it has not made “every reasonable effort to settle” the dispute, as Section 8 requires.

321 U.S. at 65, 64 S.Ct. at 421.

United interprets Toledo R.R. as an absolute bar to injunctive relief where the complainant fails to accept proffered arbitration. ALPA counters that Toledo R.R. does not apply in a case where, as here, the complainant’s opponent has already rejected proffered arbitration, especially in light of Brotherhood of Ry. and S.S. Clerks v. Florida East Coast Ry. Co., 384 U.S. 238, 86 S.Ct. 1420, 16 L.Ed.2d 501 (1966) (“Florida East Coast”). While neither Toledo R.R. nor Florida East Coast are directly on point, the Court rejects United’s broad interpretation of Toledo R.R. and adopts a more flexible interpretation of the “clean hands” requirement to arbitrate embodied in Section 8. Therefore, the Court holds that where, as here, its opponent has rejected proffered arbitration after both sides complied with the other requirements of the Railway Labor Act, a complainant will not be barred from obtaining injunctive relief merely because it failed to accept the arbitration proffer.

The Court finds support for its flexible interpretation of Section 8 in the language of Florida East Coast. In that case, while the parties were still under a collective bargaining agreement, they rejected arbitration after exhaustion of negotiation and mediation efforts. Thereafter, the union commenced a lawful strike. In a footnote, the Supreme Court pointed out that the case was not governed by Toledo R.R. and its bar to injunctive relief because both the union and the employer had rejected proffered arbitration prior to the strike. Flor ida East Coast, supra, 384 U.S. at 247 n. 8, 86 S.Ct. at 1425 n. 8.

While the language in footnote 8 in Florida East Coast is arguably dicta, it provides a strong indication of how the Supreme Court would interpret Toledo R.R. and Section 8 in this case. This flexible interpretation of Section 8 and narrower interpretation of Toledo R.R. also finds support in Piedmont Aviation, Inc. v. ALPA, 416 F.2d 633 (4th Cir.1969). In that case, both parties to the labor dispute either rejected or did not respond to proffered arbitration. The Fourth Circuit Court of Appeals distinguished Toledo R.R. from the case before it on the same grounds which the Supreme Court discussed in footnote 8 in Florida East Coast. In so holding, the Fourth Circuit pointed out:

The second distinction between this case and Toledo lies in the fact that here the union has not accepted arbitration, while in Toledo it did. The materiality of this distinction is suggested by Brotherhood of Ry. & S.S. Clerks v. Florida E.C. Ry., 384 U.S. 238, 247 n. 8 [86 S.Ct. 1420, 1425 n. 8, 16 L.Ed.2d 501] (1966). There the Court noted that neither party accepted arbitration before the strike, but nevertheless it allowed the employer conditional relief to which it would not have been entitled had the Toledo rule been applied.

416 F.2d at 638-39.

In light of Florida East Coast and Piedmont Aviation, the Court holds that ALPA was not required to accept the NMB’s proffer of arbitration after United had rejected it. This conclusion is consistent with notions of fairness and common sense embodied in the rule that a mere formality or the requirement to do that which is futile should not bar a litigant from the relief it seeks. In addition, this conclusion falls within a common sense definition of “reasonable efforts” to settle disputes under the RLA and Section 8 of the Norris-La Guardia Act. It would be an empty gesture and not commensurate with common sense to require the complainant to accept the proffer as a “reasonable effort” when the effort is doomed to failure by virtue of the opponent’s rejection of the proffer. Therefore, the Court will not require a complainant to accept a proffer, which its opponent has already rejected, in order to comply with the reasonable efforts requirement of Section 2, First of the RLA, and Section 8 of the Norris-La Guardia Act.

Finally, even if a broader interpretation of Toledo R.R. should prevail, the Court finds that ALPA has satisfied the reasonable efforts requirement by its negotiation prior to and during the strike. These continuing efforts are best evidenced in the settlement of the two-tier wage issue. ALPA has met repeatedly at the bargaining table, has attempted to work out a compromise, and has achieved a compromise on the. two-tier wage issue. These actions point to a continuing desire to make reasonable efforts to settle the dispute under Section 8 of the Norris-La Guardia Act and Section 2, First, of the RLA. Local 553, supra, 695 F.2d at 679.

III. CONCLUSION

For the reasons stated above, defendant’s motion to strike the plaintiff’s prayer for injunctive relief is denied.

IT IS SO ORDERED.


author: ALLEN SHARP, Chief Judge.

text:
    UNITED STATES of America, Plaintiff, v. David ANDERSSON, Defendant.
    No. S Cr 84-43.
    United States District Court, N.D. Indiana, South Bend Division.
    June 7, 1985.

      R. Lawrence Steele, Jr., U.S. Atty., William Grimmer, Asst. U.S. Atty., South Bend, Ind., for plaintiff.
    David B. Weisman, South Bend, Ind., for defendant.
   MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

This case is before this court on defendant’s motion to dismiss filed April 22, 1985. This court heard oral argument on the issues addressed in defendant’s motion and plaintiff’s response brief on May 10, 1985. Both parties having briefed the issues, this motion is now ripe for ruling.

I.

Defendant contends that venue is improperly laid in the Northern District of Indiana, and that the preferred and proper venue is the Northern District of Illinois. Defendant concedes that under 18 U.S.C. § 3237(a) venue may lie in the Northern District of Indiana.'

The Indictment in this case charges the defendant with conspiracy to mail and reproduce material involving the sexual exploitation of minors in violation of 18 U.S.C. § 2252. Count I of the Indictment charges that the materials were mailed by a co-conspirator in the Northern District of Indiana to the defendant in Illinois. The defendant then reproduced the materials and mailed them back to the co-conspirator in Indiana, retaining copies. The Indictment also charges the defendant with mailing material in Illinois to the co-conspirator in Indiana.

The major thrust of defendant’s argument is, since the alleged activities predominantly took place in Illinois, then proper and preferred venue lies in Illinois. Both parties cite United States v. Langford, 688 F.2d 1088 (7th Cir.1982), cert. den., 461 U.S. 959, 103 S.Ct. 2433, 77 L.Ed.2d 1319 (1983), as supporting authority for their respective positions.

In the Langford case, the defendant was charged under the predecessor statute of 18 U.S.C. § 2252, which included in its elements the requirement that the materials be obscene. The “obscene” requirement is no longer in the new statute. The case in Langford was brought in the jurisdiction of the “sending” state and not the “receiving” state. The defendant in that case argued that the venue was improper because the community standard to be applied should be that standard found in the “receiving” state and not the standard of the “sending” state. There were three “reeeiving” states and thus, three different “community standards” to be applied under defendant’s theory, and only one “sending” state. The court in Langford determined that the venue was properly brought in the “sending” state. However, the court did not find that jurisdiction in the “sending” state was the preferred venue. Rather, the court specifically held at 1096:

Congress’ decision to allow cases such as the one at bar to be venued in either the sending or receiving jurisdiction demonstrates that § 2252 was intended to protect the inhabitants of the sending jurisdiction from being the situs of the production and distribution of pornographic materials to the same extent that it protects the receiving community from the receipt of those materials. The sending jurisdiction’s interest in assuring that it is not the point of origination of obscene materials, justifies our conclusion that venuing the action in the sending jurisdiction did not violate the defendant’s right to due process. Further, the venuing of the action in the sending jurisdiction forwards the interest in judicial economy by limiting the number of trials and in reality affords the defendant consistent treatment under the law because all of the visual material will not be judged separately under the potentially inconsistent standards of each of the receiving jurisdictions.

In this particular case, there are only two states involved in the alleged activity, and the requirement concerning the “obscene” nature of the material is no longer a concern under the current statute. Therefore, this court does not need to concern itself with the application of a particular community standard in determining venue. Even if this court had to consider the same, it appears that the bulk of the materials in question originally were sent from Indiana.

Based on the specific language in 18 U.S.C. § 3237(a) this case was properly venued in the Northern District of Indiana.

II.

Defendant contends that the statute 18 U.S.C. § 2252 is overly broad, difficult or impossible to interpret and impermissibly vague. The defendant contends that the statute, as is, violates the First, Fifth and Sixth Amendments to the Constitution.

The predecessor statute was specifically held to have clear language and found not to be constitutionally vague. United States v. Fogarty, 663 F.2d 928, 929 (9th Cir.1981), rehrg. and rehrg en banc denied (9th Cir.1982). The statute here in question, 18 U.S.C. §* 2252, was amended in 1984 as part of the Comprehensive Crime Control Act of 198k, Pub.L. No. 98-292, 98 Stat. 204, by omitting the requirement of obscenity before violation of the statute occurs. The concern and response to the proliferation of child pornography in this nation has evidenced itself in many forms, including new legislation in most states and as recently demonstrated in the amended federal legislation.

The Supreme Court of the United States has recently addressed this issue and held that a New York statute very similar to the one now in question was constitutional and that an obscenity standard did not have to be applied to a definable class of material such as child pornography. New York v. Ferber, 458 U.S. 747, 102 S.Ct. 3348, 73 L.Ed.2d 1113 (1982). In the Ferber case, the court held:

When a definable class of material [child pornography] such as that covered by [the New York statute] bears so heavily and pervasively on the welfare of the children engaged in its production, we think the balance of competing interests is clearly struck and that it is permissible to consider these materials as without the protection of the first amendment. * * * * * *
[t]he test for child pornography is separate from the obscenity standard enunciated in Miller [v. California, 413 U.S. 15, 93 S.Ct. 2607, 37 L.Ed.2d 419], but may be compared to it for the purpose of clarity. The Miller formulation is adjusted in the following respects: A trier of fact need not find that the material appeals to the prurient interest of the average person, it is not required that sexual conduct portrayed be done so in a patently offensive manner, and the material at issue need not be considered as a whole. Id. at 764, 102 S.Ct. at 3358.

The Langford court in applying the predecessor statute of § 2252 said:

Ferber makes it clear that Congress could have prohibited the mailing of material depicting minors engaged in sexually explicit conduct without including obscenity as an element of the crime, by simply prohibiting the mailing of “works that visually depict sexual conduct by children below a certain age.” Id. [458 U.S.] at 764, 102 S.Ct. at 3358. However, since Congress did require proof of obscenity as an element of § 2252 and the appellant was convicted under the community standards set forth in Miller we review the appellant’s case under Miller’s obscenity guidelines. Langford, at 1093.

This court agrees with the reasoning in the Langford opinion and its application of the Ferber holding to the amended statute 18 U.S.C. § 2252. Since the amendment, this court does not have to apply the Miller test of obscenity to the statute.

As the court in Fogarty, supra, found the language of the predecessor statute clear language, this court finds the language of 18 U.S.C. § 2252 as amended clear language. In applying the very strong standard to be proven in the determination of the First Amendment over-breadth doctrine violation as fully discussed by the court in Ferber when applying the standard set forth in Broadrick v. Oklahoma, 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973), this court finds that 18 U.S.C. § 2252 is not substantially over-broad.

Defendant also contends that 18 U.S.C. § 2252 violates the Eighth Amendment proscription of cruel and unusual punishment but cites no authority demonstrating the same. It is the duty of the Congress and not the courts to determine the type of punishment and the amount of fine or sentence to be imposed. The defendant has not shown this court that the Congress acted in a manner which violates the Eighth Amendment.

CONCLUSION

This court hereby finds that this case is properly venued in Indiana, and that 18 U.S.C. § 2252 is not constitutionally vague, is not overbroad and does not violate the First, Fifth, Sixth or Eighth Amendments to the Constitution.

Accordingly, it is the order of this court that the defendant’s motion to dismiss be and is hereby DENIED. SO ORDERED.

      . 18 U.S.C. § 3237(a) reads as follows:
      § 3237. Offenses begun in one district and completed in another.
      (a) Except as other wise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, maybe inquired of and prosecuted in any district in which such offense was begun, continued, or completed.
      Any offense involving the use of the mails, transportation in interstate or foreign commerce, or the importation of an object or person into the United States is a continuing offense and, except as otherwise expressly provided by enactment of Congress, may be inquired of and prosecuted in any district from, through, or into which such commerce, mail matter, or imported object or person moves.

      . 18 U.S.C. § 2252 reads as follows:
      § 2252. Certin activities relating to material involving the sexual exploitation of minors (a) Any person who—
      (1) knowingly transports or ships in interstate or foreign commerce or mails, for the purpose of sale or distribution for sale, any obscene visual or print medium, if—
      (A) the producing of such visual or print medium involves the use of a minor engaging in sexually explicit conduct; and
      (B) such visual or print medium depicts such conduct; or
      (2) knowingly receives for the purpose of sale or distribution for sale, or knowingly sells or distributes for sale, any obscene visual or print medium that has been transported or shipped in interstate or foreign commerce or mailed, if—
      (A) the producing of such visual or print medium involves the use of a minor engaging in sexually explicit conduct; and
      (B) such visual or print medium depicts such conduct; shall be punished as provided in subsection (b) of this section.
      (b) Any person who violates this section shall be fined not more than $10,000, or imprisoned not more than 10 years, or both, but, if such person has a prior conviction under this section, such person shall be fined not more than $15,000.00, or imprisoned not less then two years nor more than 15 years, or both. (Added Pub.L. 95-225, § 2(a), Feb. 6, 1978, 92 Stat. 7.)


author: MacMAHON, District Judge.

text:
    RICHARD FEINER AND COMPANY, INC., Plaintiff, v. POLYGRAM CORPORATION and King Features Entertainment, Inc., Defendants.
    No. 84 Civ. 9271 (LFM).
    United States District Court, S.D. New York.
    June 7, 1985.
    Cooper Cohen Singer & Ecker by Thomas E. Hommel, New York City, for defendants.
    Daniel J. Brooks, New York City, for plaintiff.
   OPINION

MacMAHON, District Judge.

Defendants, PolyGram Corporation (“Poly Gram”) and King Features Entertainment, Inc. (“King”), move for an order staying this action because of the pendency of a related action in the Supreme Court of the State of New York, County of New York.

FACTS

Defendants are corporations engaged in the business of licensing and distributing television productions. Plaintiff Richard Feiner And Company, Inc. (“Feiner”) is the copyright owner of a series of 120 Laurel and Hardy comedy short film subjects, collectively referred to as “Laughtoons.” By agreement dated August 27, 1982 (“Distribution Agreement”), Feiner granted Poly-Gram the exclusive right to distribute Laughtoons to television stations in the United States from the date of the agreement to September 1, 1987. The Distribution Agreement contained a provision entitling Feiner to automatically terminate the agreement if PolyGram failed to achieve gross sales of $200,000 by December 31, 1983 or $400,000 by December 31, 1984.

Feiner contends that beginning in March 1983, PolyGram abandoned its contractual obligations under the Distribution Agreement and was seeking to divest itself of its television distribution business in the United States. After failing to receive assurances that PolyGram would perform under the agreement, Feiner notified PolyGram in September 1983 that it was terminating the agreement. PolyGram asserts that Feiner did not have any right to terminate because by September 1983 PolyGram had exceeded the amount of minimum sales required by the agreement. Thus, despite Feiner’s notices of termination, PolyGram agreed to assign all of its rights under the Distribution Agreement to King on October 5,1983.

On February 15, 1984, PolyGram commenced an action against Feiner in the Supreme Court of the State of New York, County of New York, seeking a declaration of rights and duties of the parties under the Distribution Agreement and a preliminary injunction preventing Feiner from interfering with PolyGram’s distribution rights and publicly stating that the agreement had been terminated. On April 2, 1984, Hon. Robert E. White denied Poly-Gram injunctive relief finding that there remained questions of fact as to whether Feiner was entitled to terminate the agreement.

On December 26, 1984, Feiner commenced the instant suit against PolyGram and King, which, in essence, seeks a declaration that PolyGram’s distribution rights were terminated in September 1983, and that any subsequent exploitation of these rights by PolyGram or King would infringe Feiner’s copyright. The basis for federal jurisdiction in this action is 28 U.S.C. § 1338(a) which confers on federal district courts original and exclusive jurisdiction over actions involving copyright, patent and trademark claims. In seeking to stay the instant action, defendants contend that the legal issue here is essentially a question of state contract law and is currently pending in state court.

DISCUSSION

In Colorado River Water Construction District v. United States, 424 U.S. 800, 817-18, 96 S.Ct. 1236, 1246-47, 47 L.Ed.2d 483 (1976), the Supreme Court held that in certain limited cases, presenting extraordinary circumstances, an exception existed to the “virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.” In such cases, a federal suit may be stayed or dismissed due to the presence of a concurrent state court proceeding. Id. The Court recently emphasized that such a stay presumes that the “parallel state-court litigation will be an adequate vehicle for the complete and prompt resolution of the issues between the parties.” Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 28, 103 S.Ct. 927, 943, 74 L.Ed.2d 765 (1983). The Court further noted that it would be “a serious abuse of discretion” to grant the stay if there were “any substantial doubt” as to the adequacy of the state proceeding. Id.

Defendants argue that the issues relevant to the instant action are essentially issues of state contract law and that it is only after their resolution that the question of Feiner’s copyright arises. Feiner’s claim of copyright infringement, however, is exclusively within this court’s jurisdiction. State courts are preempted from resolving issues with respect to rights which are equivalent to rights arising under copyright laws. See 17 U.S.C. § 301. Therefore, if Feiner prevails in state court on the state contract issue, it will have to return to federal court to obtain relief on its copyright claims — the very situation described as an “abuse of discretion” in Moses H. Cone, supra. We therefore conclude that a stay of the instant action would be improper because the state court lacks jurisdiction to adjudicate Feiner’s federal claim. Arizona v. San Carlos Apache Tribe, 463 U.S. 545, 560, 103 S.Ct. 3201, 3210, 77 L.Ed.2d 837 (1983); Silberkleit v. Kantrowitz, 713 F.2d 433 (9th Cir.1983).

Even if we were to assume the existence of the discretionary power to stay the instant action, there is no showing of requisite “exceptional circumstances” which would justify the stay. Colorado River, supra, enunciated four instances in which a stay was appropriate: (1) the state court first acquires jurisdiction over the res which is the subject of the federal suit; (2) the federal forum is inconvenient; (3) it is desirable to avoid piecemeal litigation; or (4) the state court first obtained jurisdiction.

The first two instances are not relevant here. There was no assumption by either court of jurisdiction over any res or property; nor is there any contention that the federal forum was any less convenient to the parties than the state forum. The avoidance of piecemeal litigation actually counsels against the stay, for Feiner’s copyright claims can only be resolved in federal court. Finally, although the state court was the first to acquire jurisdiction, an overly mechanistic application of this factor is not appropriate especially as there has been almost no progress in the state proceeding. See Moses H. Cone, supra, 460 U.S. at 21-22, 103 S.Ct. at 939-40.

In Moses H. Cone, supra, the Court stressed the importance of two additional factors: (1) the presence of federal law issues; and (2) the probable inadequacy of the state-court proceeding to protect federal rights. The confluence of these two factors in the instant action overcomes the fact that the state court action was commenced before the federal action.

We conclude that there is no sufficient basis for the entry of a stay. The state court is an inadequate forum in which to litigate Feiner’s copyright claims, and, moreover, it lacks a potentially necessary party (King) and has been dormant since the denial of the preliminary injunction on April 2, 1984. See, e.g., ABCKO Music, Inc. v. Beverly Glen Music, Inc., 554 F.Supp. 410, 413 (S.D.N.Y.1983).

Accordingly, defendants’ motion for an order staying this action is denied in all respects.

So ordered.


author: McLAUGHLIN, District Judge.

text:
    Ina M. KING, Plaintiff, v. The NEW YORK TELEPHONE COMPANY, INC., and the Telephone Traffic Union (New York), Defendants.
    No. 84 CV 0810.
    United States District Court, E.D. New York.
    June 7, 1985.

      Flamhaft, Levy, Kamins, Hirsch & Booth, Brooklyn, N.Y., for plaintiff; Harold J. Johnson, Brooklyn, N.Y., of counsel.
    Bernard Yaker, Robert J. Karlebach, New York City, for defendant New York Telephone Co.
    Calamari & Calamari, New York City, for defendant Telephone Traffic Union— New York; Andrew M. Calamari, New York City, of counsel.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action under § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185. Plaintiff alleges wrongful discharge by defendant New York Telephone Company (the “Company”) and breach of the duty of fair representation by defendant Telephone Traffic Union (New York) (the “Union”). Both defendants have moved for summary judgment, Fed.R.Civ.P. 56, claiming the action is untimely. For the reasons developed below, the motions are granted.

Facts

The undisputed material facts are as follows. From May, 1967 until January 18, 1982, plaintiff was employed by the Company and represented by the Union. She was discharged on January 18, 1982 because of excessive absence due to illness. Shortly thereafter, on February 19, 1982, plaintiff demanded that the Union institute a grievance proceeding in her behalf.

Pursuant to a collective bargaining agreement between defendants, a four-step procedure exists for resolving employee grievances. Article XV of the agreement provides that if the grievance procedure does not resolve the employee’s claim, the Union may submit the claim to arbitration. In order to take advantage of this provision, however, the Union must make a written demand therefor within 30 days after receipt of the Company’s written reply to a step-four grievance.

On October 1, 1982, the Company denied plaintiff’s step-four grievance. Six months later, on April 27, 1983, Union officials requested that the Union Executive Board seek arbitration of plaintiff’s case. Plaintiff did not learn of this request for arbitration until the Union sent her a letter on June 28, 1983.

After numerous inquiries to Union officials about the arbitration, plaintiff met with them on August 2, 1983. At that meeting she and the Union signed letters, dated July 29, 1983, demanding arbitration. The demand was refused in a letter to the Union from the Company dated August 25, 1983. Plaintiff claims that the Union did not notify her of this letter until October 6, 1983, and that the Company never notified her directly of its refusal to arbitrate. This action was commenced on February 24, 1984.

Discussion

The parties agree that the actions against both the Company and the Union under § 301 of the LMRA are governed by a six-month statute of limitations. DelCostello v. International Brotherhood of Teamsters, 462 U.S. 2281, 103 S.Ct. 2281, 2293-94, 76 L.Ed.2d 476 (1982); Assad v. Mount Sinai Hospital, 725 F.2d 837, 838 (2d Cir.1984) (per curiam). The claims against both accrue “no later than the time when [plaintiff] knew or reasonably should have known that [a breach of the duty of fair representation] had occurred.” Santos v. District Council of New York City, 619 F.2d 963, 969 (2d Cir.1980); see Hungerford v. United States, 307 F.2d 99, 102 (9th Cir.1962) (claim accrues “when the claimant discovers, or in the exercise of reasonable diligence should have discovered, the acts constituting the alleged [violation]”).

Plaintiff would have the Court believe that her claims accrued on October 6, 1983, the date she learned that the Company refused to arbitrate her grievance. The complaint itself, however, and plaintiffs own affidavit in opposition to this motion, disclose that plaintiff knew or reasonably should have known well before that date of the Union’s breach of its duty.

After being fired on January 18, 1982, plaintiff “immediately complained to the union.” Affidavit of Ina King j] 5. On February 19, 1982, she demanded that the Union begin a grievance proceeding. Complaint U 36. Plaintiff goes on to state that it was not until the meeting on August 2, 1983, 19 months after she was fired, that she learned “that during the period February 19, 1982 through October 1, 1982 the union handled my grievance with the company on a four (4) step basis.” King Affidavit j[ 6. Curiously, however, paragraph 48 of the complaint alleges that on June 28, 1983, the Union wrote to plaintiff informing her of its intention to demand arbitration — an obvious indication that the grievance procedure was completed, and that the 30-day period in which to demand arbitration had to have commenced no later than that date.

The Union had breached its duty of fair representation in November, 1982, when the 30-day period to demand arbitration expired. Drawing all reasonable inferences in favor of plaintiff (the party opposing summary judgment), the absolute latest date on which she knew, or in the exercise of reasonable diligence should have known, that her claims against the Union and the Company accrued was August 2, 1983. On that date she became aware that her step-four grievance had been denied October 1, 1982, 10 months earlier.

In Metz v. Tootsie Roll Industries, Inc., 715 F.2d 299 (7th Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 976, 79 L.Ed.2d 214 (1984), the Court affirmed the dismissal of plaintiff’s complaint, holding that:

At some point prior to the six month statutory period, the appellant should have realized that the Union was taking no action on her behalf. The appellant cannot be allowed to sit back and claim a lack of notice in light of circumstances such as these. Since the alleged violation, which consisted of union inactivity, should have been discovered by a reasonably diligent claimant prior to the statutory period, the [Santos] test is satisfied.

Id. at 304. In light of plaintiff’s allegation that she immediately complained to the Union upon being fired in January, 1982, her failure to inquire into the status of her grievance until mid-1983 is inexcusable.

Even assuming plaintiff did not know of the Union’s breach until August 2, 1983, her time to commence this action expired February 2, 1984, three weeks before the complaint was filed. Accordingly, I hold that this action is untimely against both the Uniqn and the Company. Metz v. Tootsie Roll Industries, Inc., supra, 715 F.2d at 306.

For the foregoing reasons, defendants’ motions for summary judgment are granted. The Clerk of the Court is directed to enter judgment for defendants, and to dismiss plaintiff’s complaint.

SO ORDERED.


author: SPRIZZO, District Judge:

text:
    Leonard DARVIN, on behalf of himself and all other persons similarly situated, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, Roger E. Anderson, Karl D. Bays, Dr. Andrew F. Brimmer, James J. Doyle, Mary Garst, Dr. Arthur G. Hansen, Warren J. Hayford, J. Patrick Kaine, Joseph B. Lanterman, Archie R. McCardell, Brooks McCormick, Louis W. Menk, Graham J. Morgan, Keith R. Potter, Dr. John T. Rettaliata, Edson W. Spencer, Ben H. Warren, Morgan Stanley & Co. Incorporated, Continental Illinois Corporation and Morgan Guaranty Trust Company of New York on behalf of itself and all others similarly situated, Defendants.
    No. 81 Civ. 2168 (JES).
    United States District Court, S.D. New York.
    June 10, 1985.
    Wolf, Haldenstein, Adler, Freeman & Herz, New York City, for plaintiff; Daniel W. Krasner, Fred Taylor Isquith, of counsel.
    Cravath, Swaine & Moore, New York City, for defendants Roger E. Anderson, Karl D. Bays, James J. Doyle, Mary Garst, Dr. Arthur G. Hansen, Warren J. Hayford, J. Patrick Kaine, Joseph B. Lanterman, Archie R. McCardell, Brooks McCormick, Graham J. Morgan, Keith R. Potter, Dr. John T. Rettaliata, Edson W. Spencer and Ben H. Warren and Intern. Havester Co.; Rory O. Millson, Richard M. Breslow, of counsel.
    Davis Polk & Wardwell, New York City, for defendant Morgan Stanley & Co. Inc.; Dennis Glazer, of counsel.
   OPINION & ORDER

SPRIZZO, District Judge:

Plaintiff Leonard Darvin purchased 500 shares of common stock in defendant International Harvester Co. (“Harvester”) on the open market in December 1980. He sold 500 shares in February 1981 for a loss, a few days after Harvester disclosed losses of $96.4 million for the first quarter of fiscal 1980. Plaintiff sues for damages pursuant to section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), Rule 10b-5, 17 C.F.R. § 240.10b-5, and common law, alleging that a Harvester prospectus issued on October 16, 1980 with respect to preferred stock, along with other statements by defendants, misrepresented the true financial condition of Harvester and caused a fraud on the market which artificially inflated the price of Harvester stock.

Plaintiff has moved to have the action certified as a class action and to be named class representative pursuant to Fed.R. Civ.P. 23. The proposed class would include all purchasers of Harvester equity securities who bought their stock between October 16, 1980, when the allegedly fraudulent prospectus was issued, and February 19, 1981, when Harvester disclosed its first quarter 1980 losses, excepting defendants herein and those who purchased preferred stock pursuant to the October 16, 1980 offering.

In order to certify the action as a class action, the Court must find that (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims and defenses of plaintiff are typical; and (4) plaintiff will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a). The Court must also find that common questions of law or fact predominate over individual issues, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Fed.R. Civ.P. 23(b)(3).

The Court finds that plaintiff would not be a suitable class representative and would not adequately protect the interests of the class because, inter alia, there are unique defenses which defendants can assert against him, especially with respect to his credibility, and because plaintiff has demonstrated a serious lack of familiarity with the suit.

To illustrate these problems, the Court need only point to a few examples. One of the alleged misrepresentations in the October 16, 1980 prospectus is the statement that Harvester forgave a loan of $1,796,240 to defendant McCardell based on Harvester’s performance in fiscal 1979. Plaintiff claims that, in fact, the loan forgiveness was motivated by McCardell’s belief that Harvester’s prospects were bleak and his concern that if Harvester went bankrupt he would have to repay the loan. Plaintiff alleges that the forgiveness was excessive and unreasonable in amount, and that the company received no valuable consideration in return. See Amended Complaint (“Complaint”) n 18, 23(h), 25(g), 26.

However, at his initial deposition plaintiff testified that he started to think of selling his Harvester stock in January 1981 because the news regarding the company was “turning a bit negative,” and that one of the first indications of this was when McCardell asked that his loan be forgiven. See Darvin Deposition at 27-28. Plaintiff testified that he was sure he was not aware of the loan forgiveness when he purchased his stock. See id. at 28. He subsequently stated that he wasn’t sure when he learned of McCardell’s loan, and that it might not have had anything to do with his decision to sell. See id. at 28-29. Later, plaintiff testified that he wanted to correct his previous statement, in that he did know of the loan to McCardell when he purchased his stock, but did not know that it had been forgiven, and that the news of forgiveness “had a very negative impact” on him. See id. at 61-62.

When confronted with the October 16, 1980 prospectus which disclosed both the loan and the fact that the loan had been forgiven, plaintiff changed his testimony again and stated that when he purchased he knew the company had taken steps to forgive the loan, but believed this was done because of McCardell’s outstanding performance, and only later discovered that his performance had in fact been “very negative” and that the loan had been forgiven so that McCardell would not have to pay for stock he had previously purchased. See id. at 62-63. He testified that this was one of the factors which made him decide Harvester was “deteriorating.” See id. at 65-66. See also id. at 145-48, 173-74.

This type of inconsistent testimony could create serious problems with respect to plaintiff’s credibility and could become the focus of cross examination and unique defenses at trial, to the detriment of the class. These credibility problems are a basis for denying plaintiff’s motion to be named class representative. See, e.g., Kline v. Wolf, 702 F.2d 400, 402-03 (2d Cir.1983), affg in relevant part, 88 F.R.D. 696, 699-700 (S.D.N.Y.1981); Panzirer v. Wolf, 663 F.2d 365, 368 (2d Cir.1981), vacated as moot sub nom. Price Waterhouse v. Panzirer, 459 U.S. 1027, 103 S.Ct. 434, 74 L.Ed.2d 594 (1982); Cohen v. Laiti, 98 F.R.D. 581, 582-83 (E.D.N.Y.1983); Weisman v. Darneille, 78 F.R.D. 669, 671 & n. 4 (S.D.N.Y.1978); Goldberg v. Taylor Wine Co., 27 Fed.R.Serv.2d 1298, 1300 (E.D.N.Y.1979), affd, 636 F.2d 1201 (2d Cir.1980).

Moreover, plaintiff repeatedly stated that his memory regarding the complaint and his dealings in Harvester stock were poor. See, e.g., id. at 30, 55; cf. id. at 100-03, 112-13, 124. His deposition demonstrates that his personal knowledge of many of the facts pleaded in the complaint is extremely limited or nonexistent. See, e.g., id. at 247-61. Plaintiff was also unsure of who he purported to represent should the suit be certified as a class action. See id. at 56-57, 162. This uncertainty and inconsistency, which are characteristic of plaintiff’s deposition testimony and which indicate plaintiff’s unfamiliarity with the action, illustrate his inadequacy to act as class representative. See, e.g., Weisman, supra, 78 F.R.D. at 671; Greenspan v. Brassier, 78 F.R.D. 130, 133-34 (S.D.N.Y.1978).

Finally, plaintiff’s failure to fully comply with reasonable discovery requests, as demonstrated by his refusal to answer relevant questions at both sessions of his deposition, indicate that he is not suitable to fulfill the fiduciary obligations of a class representative. See, e.g., Kline, supra, 702 F.2d at 403, affg, 88 F.R.D. at 700; Norman v. Arcs Equities Cory., 72 F.R.D. 502, 506 (S.D.N.Y.1976).

It follows that plaintiff’s motion to certify the suit as a class action and to be named class representative must be denied.

It is SO ORDERED.

      . In addition to Harvester, defendants are Morgan Stanley & Co., lead underwriter of the issuance of preferred stock pursuant to the October 16, 1980 prospectus; Morgan Guaranty Trust Co. and Continental Illinois Corp., lending banks to Harvester; Archie R. McCardell, chief executive officer and chairman of Harvester’s board of directors; Warren J. Hayford, president and chief operating officer of Harvester; Keith R. Potter, vice chairman of Harvester’s board; Brooks McCormick, director and chairman of Harvester’s executive committee; Roger E. Anderson, director of Harvester and chairman of the board of defendant Continental Illinois; and Karl D. Bays, Dr. Andrew F. Brimmer, James J. Doyle, Mary Garst, Dr. Arthur G. Hansen, J. Patrick Kaine, Joseph B. Lanterman, Louis W. Menk, Graham J. Morgan, Dr. John T. Rettaliata, Edson W. Spencer, and Ben H. Warren, directors of Harvester.

      . Plaintiffs previous motion for class action certification was denied without prejudice by the Court due to plaintiff’s failure to respond to proper questions at his deposition. Plaintiff has now been re-deposed, and has renewed the motion for class certification.

      . A class action brought by those who did purchase pursuant to that prospectus and its accompanying registration statement is also pending before this Court. See Weinberger v. International Harvester Co., 81 Civ. 1859 (JES).

      . Therefore, the Court need not address the parties’ other arguments with respect to the requirements of Rule 23.

      . A further example of the means in which plaintiff’s credibility can be attacked is that he originally testified that he had no recollection of whether or not he had ever seen or read the October 16, 1980 prospectus — the primary document which he alleges in his complaint was fraudulent. See Darvin Deposition at 30. He then stated that if he had read the prospectus, he would probably have done so before he purchased stock, although he couldn’t be sure, see id. at 31, and then testified that he believed he had read the relevant portions before he purchased. See id. At his continued deposition two years later plaintiff stated without question or hesitation that he had reviewed the entire prospectus prior to his purchase. See, e.g., id. at 97, 109.

      . The Court rejects the suggestion that plaintiffs status as a sophisticated investor is, in and of itself, sufficient to warrant denial of his application to represent the class, provided plaintiffs interests are not antagonistic to those of the class. See, e.g., Koenig v. Smith, 88 F.R.D. 604, 607 (E.D.N.Y.1980); Mersay v. First Republic Corp., 43 F.R.D. 465, 470 (S.D.N.Y.1968); Leist v. Tamco Enterprises, Inc., No. 80 Civ. 4439— CLB, slip op. at 5-7 (S.D.N.Y. March 16, 1982).


author: La PLATA, District Judge.

text:
    Alice GRADY, Plaintiff, v. DAYTON HUDSON CORPORATION, a Minnesota corporation, d/b/a J.L. Hudson Company, Defendant.
    No. 84-CV-3081-DT.
    United States District Court, E.D. Michigan, S.D.
    June 10, 1985.
    John C. Talpos, Troy, Mich., for plaintiff.
    Scott A. Alies, Mt. Clemens, Mich., for defendant.
   ORDER REMANDING ACTION TO WAYNE COUNTY CIRCUIT COURT

La PLATA, District Judge.

On May 29, 1984, Plaintiff, Alice Grady, filed a lawsuit in the Wayne County Circuit Court against Defendant, Dayton Hudson Company, alleging that she sustained injuries as a result of a slip and fall incident that occurred at Defendant’s Pontiac Mall outlet. Under 28 U.S.C. § 1446(b), Defendant, which is incorporated and has its principal place of business in the State of Minnesota, caused the matter to be removed to this Court.

On May 9, 1985, the action was mediated by a three person panel, which rendered an evaluation of Five Thousand ($5,000.00) Dollars. In light of the mediation award, Defendant filed a request with this Court for a remand to the Wayne County Circuit Court.

Under 28 U.S.C. § 1332, a federal court has original jurisdiction over a cause if it is between citizens of different states and the amount in controversy, exclusive of costs and interest, exceeds $10,000.00. See, generally, Wright, Law of Federal Courts, § 24 (3d ed. 1976). In 1958, Congress increased the jurisdictional amount from $3,000.00 to the current amount, with the design to reduce congestion in federal courts. See Lynch v. Household Finance Corp., 405 U.S. 538, 550, 92 S.Ct. 1113, 1121, 31 L.Ed.2d 424 (1972).

In Nelson v. Keefer, 451 F.2d 289 (3d Cir.1971), three individuals filed an action against defendants for injuries allegedly sustained in an automobile accident. In view of the fact that each plaintiff had incurred only an insignificant amount of damages, the district judge concluded that the amount in controversy did not reach the $10,000.00 level and, thus, dismissed the matter for lack of subject matter jurisdiction. In upholding the lower court’s dismissal of the case, the Third Circuit Court of Appeals reasoned:

Nor can we bring ourselves to believe that the congressional mandate can be thwarted by the simple expedience of inflating the complainant’s ad damnum clause. It is a phenomenon of both state and federal trial courts that the majority of actual recoveries by verdict and settlement are less than the jurisdictional amount, there has been no reduction in private civil litigation, including tort cases, and that the “reason for this unfortunate result is the inflexibility of the applicable ‘good faith-legal certainty’ test.” We agree. But “the fault is not in our stars, but in ourselves.” Because the federal judiciary has been too timid to execute the congressional mandate in personal injury actions, we have all contributed to clogging dockets, monopolizing trial rooms, and committing the expense and energies of our system to a plethora of cases which do not belong in federal courts.

In Burns v. Anderson, 502 F.2d 970 (5th Cir.1974), the Fifth Circuit Court of Appeals affirmed the dismissal by the District Court of a personal injury case where the plaintiff’s sole injury was a fractured thumb. Similarly, in Gill v. Allstate Insurance Co., 458 F.2d 577, 579 (6th Cir. 1972), the Court upheld the power of a trial judge to dismiss a case where the amount in dispute, in actuality, was for a sum less than the jurisdictional requirement. See, also, Nenoff v. Thompson, 480 F.2d 1221 (6th Cir.1973)).

As the above-cited cases indicate, a court can look behind the complaint to ascertain the good faith value of the claim presented. In his one volume treatise on federal law, Professor Wright expressed the following view:

Even in the simpler situations here discussed, the rules for measurement of the amount in controversy are complex. This is because of the two contradictory goals that the rules seek to achieve. The amount in controversy cannot be made dependent on the amount the plaintiff will ultimately recover. To do so would make jurisdictional turn on a guess by the trial court as to the final outcome, or would require a preliminary trial on jurisdiction that would duplicate the regular trial on the merits, or would demand a wasteful jurisdictional dismissal, after the case has been fully heard on the merits, because the final award was less than the jurisdictional amount. All these considerations argue in favor of looking to the amount claimed, rather than the amount that will be recovered. At the same time, jurisdiction cannot be determined solely by what the plaintiff has asked for. To do so would destroy the jurisdictional amount requirement, and would permit the party to create jurisdiction by a wholly frivolous claim. In short, the court should not entertain the suit if the claim for the jurisdictional amount is entirely without merit, but the court should not decide the merits of the case in making that determination. (Emphasis supplied) Wright, Law of Federal Courts, § 33 at 127 (3d ed. (1976).

A review of the file in this case, particularly Plaintiffs Answers to Defendant’s Interrogatories, reveals that Plaintiff missed two days of work as a result of the slip and fall accident, incurring a total wage loss of $112.00. Her medical expenses, including medication, amounted to $358.00. Plaintiff’s injury essentially was that of a strained lower back. In an interrogatory answer, she conceded that the injury is not permanent.

While this Court does not question the good faith of plaintiff’s attorney in asserting in state court that the amount in controversy in this case exceeded $10,-000.00, it concludes, to a legal certainty, based in part on the $5,000.00 mediation award, that Plaintiff’s claim does not satisfy the jurisdictional requirement. It is of note that had Defendant not removed the cause to federal court, in all likelihood the case would have been remanded by the circuit court to the applicable district court within that circuit. See M.G.C.R. 4.003(A) [formerly G.C.R. 1963, 707.1]; Riggs v. Szymanski, 62 Mich.App. 610, 233 N.W.2d 670, 672 n. 7 (1975).

WHEREFORE, IT IS HEREBY ORDERED that this matter be remanded to the Wayne County Circuit Court.

So ordered.


author: ELFVIN, District Judge.

text:
    E.I. duPONT de NEMOURS AND COMPANY, Plaintiff, v. Christopher J. DAGGETT, as Regional Administrator of the United States Environmental Protection Agency, Defendant.
    No. CIV-85-626E.
    United States District Court, W.D. New York.
    June 10, 1985.

      Daniel M. Darragh, Buffalo, N.Y., for plaintiff.
    Joseph M. Guerra, III, Asst. U.S. Atty., Buffalo, N.Y., for defendant.
   MEMORANDUM and ORDER

ELFVIN, District Judge.

In this action jurisdictionally premised upon 28 U.S.C. § 1331 plaintiff seeks to challenge the constitutionality of 42 U.S.C. § 6934, section 3013 of the Resource Conservation and Recovery Act (“RCRA”), as well as the validity of an administrative order issued thereunder April 29, 1985 which directs plaintiff to develop and to submit to the United States Environmental Protection Agency (the “EPA”) an evaluation plan with respect to groundwater monitoring wells at a landfill site, known as Neeco Park, in Niagara Falls, N.Y. Plaintiff has moved for a preliminary injunction staying the effective date of the April 29th order, restraining defendant and the EPA from undertaking their own investigative and monitoring actions at the site — admittedly owned and operated by the plaintiff— and enjoining the accrual of any civil penalties under 42 U.S.C. § 6934(e) that eventually might be assessed due to plaintiff’s non-compliance with said order.

In opposition to such motion defendant has asserted that the statutory scheme in question and the issuance of the April 29th order do not violate plaintiff’s right to due process of law and that this Court lacks jurisdiction at this juncture to review the validity or enforceability vel non of such order. He has argued that plaintiffs due process rights are protected by its ability to challenge the propriety of said order in a subsequent action under subsection 6934(e) to compel compliance with the instant order or with any subsequent order issued under subsection 6934(d) requiring plaintiff to reimburse the EPA for the costs of the carrying out of the terms of the instant order itself or through a selected agent. In addition, the EPA has contended that pre-enforcement judicial review of the administrative order is not available; plaintiff does not contest such assertion.

Subsection 6934(a), entitled “Authority of Administrator,” provides as follows:

“If the Administrator [of the EPA] determines, upon receipt of any information, that—
(1) the presence of any hazardous waste at a facility or site at which hazardous waste is, or has been, stored, treated, or disposed of,
or
(2) the release of any such waste from such facility or site

may present a substantial hazard to human health or the environment, he may issue an order requiring the owner or operator of such facility or site to conduct such monitoring, testing, analysis, and reporting with respect to such facility or site as the Administrator deems reasonable to ascertain the nature and extent of such hazard.”

Subsection (c) requires the recipient of an order issued by the Administrator to submit within thirty days a proposal for carrying out the mandated monitoring, testing, analysis and reporting. After the recipient has complied with a subsection (a) order it is afforded an opportunity to confer with the EPA regarding the resultant proposal and the EPA may then require that the monitoring, analysis and reporting be undertaken as proposed or in accordance with modifications thereto made or acquiesced in by the EPA. Subsection (d)(1) states:

“(1) If * * * the Administrator deems any such action carried out by an owner or operator to be unsatisfactory, * * * he may—
(A) conduct monitoring, testing, or analysis (or any combination thereof) which he deems reasonable to ascertain the nature and extent of the hazard associated with the site concerned, or
(B) authorize a State or local authority or other person to carry out any such action, and require, by order, the owner or operator referred to in subsection (a) * * * of this section to reimburse the Administrator or other authority or person for the costs of such activity.”

Subsection (e) authorizes the Administrator to bring a civil action in federal district court to compel compliance with any order that had issued under section 6934 and provides jurisdiction for the court to require compliance with an administrative order and “to assess a civil penalty of not to exceed $5,000 for each day during which such failure or refusal occurs.”

Plaintiffs instant request for preliminary injunctive relief is based upon its contention that the sanction provided for in subsection (e) “coupled with the absence of any specific review procedure denies it its due process rights because DuPont would be coerced into foregoing its legal challenge to the Order.” Affidavit of Daniel M. Darragh, Esq., at paragraph 5. Plaintiff states that it has the constitutional right to contest the validity of the administrative order without having to face the possibility of substantial penalties if the challenge to the order eventually is rejected. The EPA has agreed that under the statute plaintiff could not elect to comply with the EPA order and subsequently attempt to recoup all or some of its expenses incurred in complying in an action against the government alleging and establishing that the ordered action had been excessive or unnecessary. However, the EPA has argued that should plaintiff refuse to comply with the April 29th order the plaintiff could raise as a defense to any future EPA action under subsection (e) that the order had been arbitrary or capricious and, in defense to any imposition of a fine and or reimbursement, that it had disobeyed the order due to its good faith belief that such had been invalid. Accordingly, the EPA contends, due process requirements are satisfied by the discretionary nature of the daily fines that can be imposed under subsection 6934(e) and by plaintiff’s ability to challenge and to obtain judicial review of the propriety of the administrative order during an enforcement action that might be instituted by the EPA.

Initially it is noted that, although both parties have construed section 6934 to preclude judicial review of an administrative order that has been issued thereunder except in the context of an action brought by the EPA seeking enforcement under subsection (e), such construction is not compelled by the language of the statute or its legislative history. The statute does not expressly declare that an issued order shall not be deemed final agency action or otherwise be non-reviewable under the judicial review provisions of the Administrative Procedure Act. In addition, the cases relied upon by the EPA for the proposition that the order in question is not subject to review have not dealt with section 6934 but with sections of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601 et seq., which address orders issued in instances of imminent and substantial danger to public health or the environment. See Lone Pine Steering Comm, v. United States E.P.A., 600 F.Supp. 1487 (D.N.J.1985); Aminoil, Inc. v. United States E.P.A., 599 F.Supp. 69, 71 (C.D.Dal. 1984); J.V. Peters & Co., Inc. v. Ruckelshaus, 584 F.Supp. 1005 (N.D.Ohio 1984). The courts in these cases have found that, although subsection 106(a) of CERCLA does not expressly prohibit pre-enforcement review of administrative orders, the structure of such statute and its legislative history demonstrate that Congress did not intend to permit such judicial review due to the need for prompt and effective action responsive to emergency situations endangering public health and the environment. However, the legislative history regarding section 6934 of RCRA indicates that such section had been intended to be “clearly divorced from the imminent and substantial endangerment test” and to serve as “a preventative tool whose trigger is unrelated to the timeframe in which an injury may occur. An actual hazard need not exist.” Cong.Rec. 3357 (February 20, 1980). Therefore, the “emergency” rationale for precluding review under section 106(a) of CERCLA is absent with respect to section 6934. Neither the language nor the legislative history of this section clearly necessitates a finding that Congress had intended to foreclose pre-enforcement review of such EPA orders. Although the structure of the statute is somewhat similar to that of other environmental laws that have been construed so as to bar preenforcement review despite the possible accrual of substantial civil penalties — see e.g., Bethlehem Steel Corp. v. E.P.A., 669 F.2d 903 (3d Cir.1982) (section 120 of the Clean Air Act) — , a finding of unavailability of timely judicial scrutiny of the April 29th order is crucial to plaintiff’s instant due process challenge to section 6934. Timeliness in this regard means that plaintiff must have, as it will, adequate opportunity to be heard prior to any substantial impingement upon or derogation of its rights or property.

Having considered the affidavits, memoranda and arguments submitted by the parties, this Court finds that plaintiff presently is not entitled to the preliminary relief sought by the instant motion. It is well established in this Circuit that a party seeking a preliminary injunction

“must make ‘a showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.’ ” Bell & Howell: Mamiya Co. v. Masel Supply Co., 719 F.2d 42, 45 (2d Cir.1983) (quoting from Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979)).

In the case at bar plaintiff has not sufficiently demonstrated how it would suffer any irreparable harm were it to refuse to comply with the April 29th order. Should the EPA commence an enforcement action regarding such order or a subsequent order for reimbursement, plaintiff would have the opportunity to challenge its validity therein. Moreover, the assessment of a civil penalty against plaintiff for noncompliance is discretionary under subsection (e) of section 6934. The EPA has asserted and this Court agrees that, even if either of such orders was to be upheld in the enforcement action, the cognizant court, in addressing the issue of reimbursement or of a civil penalty, could consider plaintiff’s reasons for its failure to have complied with the respective administrative order and whether any challenge to its validity had been made by plaintiff in good faith. Therefore there exists no basis upon which this Court could find that plaintiff would necessarily suffer irreparable harm absent preliminary injunctive relief. Inasmuch as such relief “can and should be predicated only on the basis of a showing that the alleged threats of irreparable harm are not remote or speculative but are actual and imminent” — State of New York v. Nuclear Reg. Com’n, 550 F.2d 745, 755 (2d Cir.1977) — , plaintiff’s motion for a preliminary injunction staying the effective date of the April 29th Order and enjoining the accrual of any civil penalties or liability for reimbursement shall be denied.

Similarly, plaintiff’s request for an injunction preventing the EPA from itself performing or having a contractor perform the monitoring required by the April 29th order shall be denied. Although counsel for the EPA had indicated at oral argument May 23rd that the EPA would take such action upon plaintiffs refusal to comply with the terms of the order and despite the fact that the pursuit of such a course of action is not expressly authorized by subsection 6934(d), plaintiff has not alleged or established what irreparable harm it might suffer as a result of the EPA’s threatened action.

Accordingly, it is hereby ORDERED that plaintiff’s motion for a preliminary injunction is denied.

      . 42 U.S.C. § 6903(5) defines "hazardous waste” as “a solid waste, or combination of solid wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may (A) cause, or significantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness; or (B) pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of, or otherwise managed.”

      . During oral argument before this Court May 23, 1985 counsel for the EPA asserted that inaction or a refusal to comply with an administrative order would be considered by the EPA to be "unsatisfactory” action, thereby authorizing the EPA to carry out monitoring, etc. under this provision and to order at a later date the EPA be reimbursed therefor by the plaintiff as the owner or operator. Such reimbursement order, if not complied with, could then be the subject of an enforcement proceeding under subsection (e).

      . The statute readily lends itself to such an interpretation and, inasmuch as such avoids unconstitutionality, this Court so construes it.

      . Counsel for the EPA stated unequivocally that the EPA would not institute a subsection (e) proceeding to enforce the April 29th order and declined strenuously this Court’s invitation to construe the instant proceeding as an enforcement action.


author: EDWARD WEINFELD, District Judge.

text:
    LAND OF LINCOLN SAVINGS AND LOAN, Plaintiff, v. PARR SECURITIES CORP., et al., Defendants.
    85 Civ. 3441 (EW).
    United States District Court, S.D. New York.
    June 10, 1985.
    Bernstein Litowitz Berger & Grossman, New York City, Hogan & Hartson, Washington, D.C., for plaintiff; Max W. Berger, Daniel L. Berger, New York City, Sherwin J. Markman, John C. Keeney, Jr., Martha L. Roadstrum, James G. Middlebrooks, Washington, D.C., of counsel.
    Gaston Snow Beekman & Bogue, New York City, for defendants Sec. Pacific Clearing & Services Corp.; Catherine A. Ludden, of counsel.
   EDWARD WEINFELD, District Judge.

Plaintiff Land of Lincoln Savings & Loan (“Land of Lincoln”) seeks to recover, inter alia, three “Freddie Mac” and five “Ginnie Mae” certificates totalling $3,780,000 allegedly registered in its name and previously held for safekeeping by its custodian, defendant Parr Securities Corp. (“Parr”). Plaintiff claims that Parr wrongfully transferred the eight certificates to co-defendant Security Pacific Clearing & Services Corp. (“SPCSC”) as collateral for a debt owed by Parr to SPCSC, the alleged transfer occurring by means of assignments bearing the forged signature of plaintiff’s officer responsible for its financial affairs. The fact of forgery of the certificates does not appear to be disputed. Parr has entered into a consent judgment with the Securities and Exchange Commission (“SEC”) in which Parr admits it converted to its own use some $6.8 million of plaintiff’s certificates by pledging them to SPCSC.

Land of Lincoln now moves for a preliminary injunction enjoining SPCSC from selling, transferring, or otherwise disposing of the certificates registered in plaintiff’s name pending a decision on the merits of its claims. It further moves to enjoin nominal defendant Chemical Bank, the transfer agent for the certificates, from transferring their record ownership. Upon argument of the motion the Court directed that the status quo with respect to the eight certificates be maintained pending submission of further papers and disposition by the Court.

Since it filed the instant motion, Land of Lincoln learned that the three Freddie Mac certificates registered in its name were re-registered into book entry or street name on May 6, 1985, pursuant to an application for transfer from SPCSC, and thereafter sold. It acknowledges that the Freddie Mac certificates are beyond the injunctive powers of this Court. It maintains, however, that the remaining five Ginnie Mae certificates were still within the control of SPCSC or one of its affiliates at the time the Court imposed the stay on May 7, 1985 and urges the Court to enjoin any further negotiation of these securities by SPCSC.

Land of Lincoln contends it is entitled to preliminary injunctive relief against SPCSC under sections 8-311 and 8-315 of New York’s Uniform Commercial Code (“UCC”). Section 8-311 provides that an owner of a certificated security may assert the ineffectiveness of an unauthorized indorsement against “any purchaser other than a purchaser for value and without notice of adverse claims who has in good faith received a new, reissued or re-registered certificated security on registration of transfer.” Section 8-315 provides that if the owner may assert the ineffectiveness of the unauthorized indorsement against the purchaser under section 8-311, then the owner may “reclaim or obtain possession of that security or new certificated security.” This right to reclaim or obtain possession, the section further provides, “may be specifically enforced and the transfer of a certificated ... security enjoined and a certificated security impounded pending the litigation.”

In this case, Land of Lincoln has failed to show a likelihood of success on the merits of its claim against SPCSC insofar as it seeks to recover actual possession of the five Ginnie Mae certificates. It appears that SPCSC no longer retains possession or control of the certificates. Counsel for SPCSC states in her affidavit dated May 23,1985 that the certificates “are no longer owned by or controlled by SPCSC,” that they “were re-registered, sold, and transferred to a third party on or before May 6, 1985,” and that these “transactions were fully settled on a cash basis on May 6, 1985.” At argument, the Court directed her and counsel for all parties to ascertain the precise status of the certificates and advise the Court thereof. In view of this specific direction, defense counsel’s subsequent representation that the transactions in fact were fully settled on May 6, 1985 and that SPCSC no longer retains possession or control over the securities carries considerable weight. In any event, nothing has been presented by plaintiff to warrant rejection of the representation by counsel for SPCSC.

Land of Lincoln also has failed to show it is likely to suffer irreparable harm if injunctive relief is not granted before a decision on the merits can be rendered. In addition to the relief described earlier, section 8-315 of the UCC also provides that if the transfer of the certificates to SPCSC was wrongful for any reason, plaintiff may recover damages against SPCSC, provided the latter was not a “bona fide purchaser.” A “bona fide purchaser” is one who takes delivery of a certificated security for value, in good faith, and without notice of any claim that the transfer is wrongful or that a particular adverse person is the owner of or has an interest in the security. Since plaintiff asserts that SPCSC had notice of Parr’s wrongdoing and plaintiff’s adverse claim to the securities and thus was not a “bona fide purchaser,” plaintiff would be entitled to recover damages against SPCSC pursuant to section 8-315 in the event it prevails upon its claim. In that circumstance, Land of Lincoln would not be deprived of an effective remedy against SPCSC were the latter to dispose of any certificates it may still have within its control or possession, unless SPCSC were unable to satisfy a potential money judgment against it.

Plaintiff has provided no evidence that SPCSC is or would be financially unable to do so. It argues that “there is no indication that Security Pacific would be able to satisfy a money judgment, particularly where over $4 million is at risk” and further avers that defendant’s involvement in litigation arising from the collapse of two other securities firms “creates legitimate uncertainty concerning the future resources of Security Pacific.” These statements, however, are unsupported by any detailed evidence of the size of the potential losses, if any, that SPCSC may incur in those matters or of its financial condition generally. Although such financial information is readily available to the public, not a single evidentiary fact has been submitted by plaintiff that raises a question as to the ability of SPCSC, a subsidiary of the nation’s seventh largest bank holding company,I. to satisfy a potential $4 million judgment. Land of Lincoln has failed to discharge its burden of showing irreparable harm.

Accordingly, Land of Lincoln’s motion for a preliminary injunction is denied.

So ordered.

      . Securities & Exchange Comm'n v. Parr Securities Corp., No. 85 Civ. 3451, Consent Judgment at pp. 3-4 (S.D.N.Y. May 6, 1985).

      . Gibson aff. of May 7, 1985 at If 7; plaintiffs reply brief at p. 3.

      . See N.Y.U.C.C. § 8-311(a) (McKinneys Supp. 1984).

      . Id. at § 8-315(2), (3).

      . Ludden aff. at U 3.

        . See Bell & Howell: Mamiya Co. v. Masel Supply Co., 719 F.2d 42, 45 (2d Cir.1983).

      . N.Y.U.C.C. § 8-315(l)(d) (McKinneys Supp. 1984).

      . Id. at § 8-302(1), (2).

      . Plaintiffs reply brief at p. 7; see Dolan aff. of May 23, 1985 at fl 4.

      . Plaintiff’s reply brief at pp. 8-9.

      . See id. at exhibit B.