author: BECHTLE, District Judge.

text:
    PROVIDENT NATIONAL BANK v. CALIFORNIA FEDERAL SAVINGS & LOAN ASSOCIATION.
    Civ. A. No. 85-1963.
    United States District Court, E.D. Pennsylvania.
    Dec. 12, 1985.

      William A. Slaughter, Philadelphia, Pa., for plaintiff.
    J. Justin Blewitt, Jr., Los Angeles, Cal., for defendant.
   MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before the court is defendant’s motion to dismiss plaintiff’s complaint on the grounds that this court lacks jurisdiction over the subject matter of the complaint and jurisdiction over the person of the defendant and plaintiff’s motion for sanctions. For the reasons stated herein, defendant’s motion will be denied and plaintiff’s motion will be dismissed as moot. FACTS

Plaintiff, Provident National Bank, is a national banking association with its principal place of business in the Commonwealth of Pennsylvania. Defendant, the California Federal Savings and Loan Association, is a Federal Savings and Loan Association, federally chartered under the Home Owners’ Loan Act of 1933. See 12 U.S.C. § 1461 et seq. Defendant has 138 branch offices in California, 37 branch offices in Florida, 13 branch offices in Georgia, and 6 branch offices in Nevada. A substantial amount of defendant’s business is conducted in those four states, California, Florida, Georgia, and Nevada.

A smaller amount of defendant’s business is conducted in Pennsylvania. Defendant had on December 31, 1984, 631 depositors with Pennsylvania addresses of a total number of 953,390 depositors. Defendant's Pennsylvania depositors number only .066% of defendant’s total number of depositors. In addition, the Pennsylvania depositors contributed a mere $10,000,-000.00 to defendant’s $14 billion of total deposits, or .071% of defendant’s total deposits. Moreover, on December 31, 1984, a mere $10,000,000.00 of defendant’s total outstanding loans of $12 billion could be traced to Pennsylvania residents. In other words, only .083% of defendant’s total outstanding loans on December 31, 1984 were to Pennsylvania residents.

On January 8, 1985, plaintiff agreed to sell a Negotiable Certificate of Deposit (the “Certificate”) to Asset Management Fund for Savings Institutions, Inc. in the amount of $5 million at a rate of $8.30%'. The Certificate was to have a term of 61 days, beginning on January 9, 1985 and maturing on March 11, 1985. It was to be delivered, physically, on January 9, 1985, by Manufacturers Hanover Bank, defendant’s transfer agent for all negotiable instruments in the United States, to State Street Boston Securities Service Corporation.

The offer, acceptance, negotiation, and arrangement of the sale of the Certificate was done on January 8, 1985 in a telephone call between P. Louis Johnson (“Johnson”), defendant’s Vice President Corporate Savings, and Mark McEntee (“McEntee”), an employee of Lehman Management Co., Inc. At the time of the phone call, Johnson was physically located in California, and McEntee was in New York. At the end of the phone conversation, Johnson agreed to send McEntee a letter confirming the conversation and, at McEntee’s request, to send a copy of that letter to Provident Institutional Management Corporation in Pennsylvania.

On January 9, 1985, the confirmation letter was sent to McEntee and a copy of that letter was sent to Provident Institutional Management Corporation in Pennsylvania.

Plaintiff provided the funds on January 9, 1985 for the purchase of the Certificate. The Certificate was not delivered on January 9, 1985. In fact, the Certificate had not been delivered on February 25, 1985, 47 days after the scheduled delivery date.

At the maturity of the Certificate, defendant made a repayment. Plaintiff asserts in this lawsuit, however, that defendant’s repayment was inadequate, or, in other words, defendant failed to repay plaintiff $54,180.56. Plaintiff seeks a recovery of damages in the amount of $54,180.56 plus interest and costs.

In its present motion to dismiss, defendant argues (1) that this court, a Federal District Court, lacks diversity jurisdiction because, as a federally chartered savings and loan association, defendant is not a citizen of any state for diversity jurisdiction purposes and (2) that this eourt, sitting in Pennsylvania, cannot assert general jurisdiction over the person of the defendant because the defendant has not had continuous and systematic business contacts with Pennsylvania at any time. Defendant contends, and plaintiff concedes, that this court cannot assert specific jurisdiction because plaintiff’s claim does not arise out of or relate to defendant’s contacts with Pennsylvania.

DISCUSSION

1. Subject Matter Jurisdiction.

The Home Owners’ Loan Act of 1933 created the Federal Home Loan Bank Board (the “Board”), 12 U.S.C. § 1464, and authorized the Board “to provide for the organization, incorporation, examination, operation and regulation” of Federal Savings and Loan Associations and “to issue charters therefor____” 12 U.S.C. § 1464(a)(1). Defendant has been chartered by the Board.

National banks may be subject to a federal court’s diversity jurisdiction pursuant to 28 U.S.C. § 1348. See Trent Realty Associates v. First Federal Savings and Loan Association, 657 F.2d 29 (3d Cir.1981). Other federally charted corporations, such as defendant, may also fall without the court’s diversity jurisdiction. Wright, Miller & Cooper in Federal Practice and Procedure explains as follows:

When ... federally chartered corporations [, other than national banks,] are involved, three situations should be distinguished for the purpose of determining whether a federal court has diversity jurisdiction. 1) If a corporation is federally chartered and more than one half of its capital stock is owned by the United States, then federal question jurisdiction exists, provided, of course, that any requisite amount in controversy is met. 2) If a corporation is federally chartered and more than one half of its capital stock is not owned by the United States, but the corporation’s activities are localized in a particular state, it is deemed a citizen of the state in which these activities take place. Consequently, the federal courts may exercise diversity jurisdiction, assuming, of course, the opposing party is a citizen of a state other than that in which the corporation performs most of its activities and the requisite amount in controversy exists. 3) If more than one half of the corporation’s capital stock is not owned by the United States and the corporation’s activities are distributed among several states, then federal question jurisdiction does not exist, and “the general rule * * * [followed] is that the citizenship of a federal corporation created to operate in one or more states is national only. Such a corporation has no state citizenship for jurisdictional purposes unless Congress so enacts.” [Footnotes Added]

Wright, Miller & Cooper, Federal Practice and Procedure, Jurisdiction 2d § 3627 (1984) (Quoting Burton v. U.S. Olympic Committee, 574 F.Supp. 517 (C.D.Pa. 1983).)

In the present case, on this record, defendant’s business activity appears to be localized in California. The record reflects that, on December 31, 1984, defendant had 138, or 71%, of its branch offices in California and had a substantial amount of its deposits and outstanding loans in California. Consequently, defendant, the court finds, is a citizen of California for diversity jurisdiction purposes.

Defendant does not contend that plaintiff’s claim does not satisfy the statutorially required jurisdictional amount.

As a result, briefly stated, the court holds that it has subject matter jurisdiction over the instant lawsuit.

2. Jurisdiction Over the Person of the Defendant.

Turning to defendant’s second argument, that this court cannot assert personal jurisdiction over the defendant, it is appropriate to set forth briefly the frequently repeated principals of personal jurisdiction. The plaintiff has the burden of establishing a sufficient jurisdictional facts upon which the court can exercise jurisdiction. Compagnie des Bauxites de Guiñee v. L’Union, 723 F.2d 357, 362 (3d Cir.1983); Gehling v. St. George’s School of Medicine, Ltd., 773 F.2d 539 (3d Cir.1985). Before a forum may assert jurisdiction over a nonresident defendant in that jurisdiction over the nonresident defendant is authorized by a so-called “long-arm statute” of the forum. Under Pennsylvania’s long-arm statutes a court, sitting in Pennsylvania, “may exercise jurisdiction over a nonresident defendant to the fullest extent allowed by the Constitution of the United States ...,” id., § 5322(b), where plaintiff’s cause of action arose from nonresident’s “transacting business” within the forum, 42 Pa.Cons.Stat. Ann. § 5322, or where the nonresident defendant has been “carrying on ... a continuous and systematic part of its general business” within Pennsylvania. Id. § 5301(a)(2)(iii). See Johnson v. Summa Corporation, No. 84-2844, Slip Op. (E.D.Pa. October 3, 1985) (Ditter, J.).

The extent to which the long-arm statute may reach, however, is limited by the due process clause of the United States Constitution. A long-arm statute may not authorize a court to assert personal jurisdiction over a nonresident defendant unless the nonresident defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940)). In Pennsylvania, the reach of the long-arm statutes are coextensive with the extent permitted by the due process clause of the United States Constitution. See Commodore Business Machines v. JST Distributing Co., 596 F.Supp. 409 (E.D.Pa.1984).

The court, after International Shoe, has explained that there are two types of personal jurisdiction. On one hand, where plaintiff’s claim arose out of or is related to defendant’s contacts with the forum, the court, sitting in the forum, can exercise jurisdiction over the nonresident defendant, if the defendant has minimum contacts with the forum. Helicopteros Nationales de Columbia v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 (3d Cir. 1984). This type of personal jurisdiction is called specific jurisdiction. Id. On the other hand, where plaintiff’s claim did not arise out of or is related to defendant’s contacts with the forum, the court can exercise jurisdiction over the nonresident defendant if the defendant’s contacts with the forum is continuous and substantial. Helicopteros, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); See Johnson v. Summa Corporation, supra; Strick v. A.J.F. Warehouse Distributors, Inc., 532 F.Supp. 951 (E.D.Pa.1982). This type of jurisdiction is called general jurisdiction. Id.

The Third Circuit has clarified that the continuous and substantial standard is a higher threshold that the minimum contacts standard:

If the claim pursued arises from non-forum related activity, the plaintiff must demonstrate that in other respects the defendant has maintained “continuous and substantial” forum affiliations. International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3rd Cir.1981). Obviously this is a much higher threshold to meet for the facts required to assert this “general” jurisdiction must be “extensive and persuasive.” Id. at 890 (Gibbons, J., dissenting).

Reliance Steel Products v. Watson, Ess, Marshall, 675 F.2d 587, 588-89 (3d Cir. 1982). In Gehling v. St. George’s School of Medicine, Ltd., 773 F.2d 539 (3d Cir. 1985), the Third Circuit held that plaintiff had failed to establish that the nonresident defendant, a School of Medicine whose principal place of business was in Grenada, West Indies, had continuous and substantial business activity in Pennsylvania. The nonresident defendant advertised in non-Pennsylvania newspapers with international circulation, drew a small portion of its student body from Pennsylvania, derived a small percentage of its revenues and income from Pennsylvania, and conducted a joint international program with a Pennsylvania educational institution.

In Helicópteros, the Supreme Court held that a court, sitting in Texas, could not assert personal jurisdiction over a foreign corporation in a wrongful death action arising out of a helicopter crash in Peru. In that case, the Court held that the continuous and substantial threshold was not met even though defendant’s agent had solicited helicopter services in Texas, the contract for helicopter services was negotiated in Texas, defendant had purchased $4,000,-000.00, or 80% of its helicopters and spare parts between 1970 and 1977 from a Texas company, defendant regularly sent employees to Texas to be trained as pilots and to ferry helicopters back to South America, and defendant was paid compensation for services by checks of substantial amounts of money drawn on a Texas bank.

In the instant case, defendant asserts that its contacts with Pennsylvania are so insufficient that it would be contrary to the traditional notions of fair play and substantial justice for this court to exercise general jurisdiction over the defendant. In particular, defendant highlights that defendant has a mere .066% of its total depositors in Pennsylvania who account for a mere .071% of defendant’s total deposits; that defendant loans only .083% of its total loans to Pennsylvania residents; and that Pennsylvania households make up a mere .10% of the total number of households which have a loan, deposit, or other relationship with defendant. Defendant points out also that it is not registered to do business, maintains no office or other place of business, has no employees or agents, has no mailing address, has no bank accounts other than a zero-balance account, has no lawsuits other than this one, pays no taxes, and does no advertising in Pennsylvania.

Arguing to the contrary, plaintiff contends that proof that a Savings and Loan has $10,000,000.00 in deposits and $10,000,-000.00 in loans in Pennsylvania, has 631 Pennsylvania depositors, and has some type of banking relationship with 708 Pennsylvania households establishes that defendant has substantial and continuous business affiliations with Pennsylvania.

The court believes that plaintiff has satisfied its burden of proof. Plaintiff here has presented a case for the exercise of this court’s general jurisdiction superior to the case presented by plaintiff in Helicópteros. Plaintiff, in the instant case, has established dollar figures which are greater than those established in Helicópteros. Also, plaintiff here relies on total deposit and loan matters central to the conduct of the defendant’s business. A Federal Savings and Loan Association, such as the defendant, is in the business of lending and borrowing money. The defendant in Helicópteros, however, was in the business of “providing helicopter transportation for oil and construction companies in South America.” Helicópteros merely purchased equipment and know-how from companies in Texas. It did not conduct its business of helicopter transportation services in Texas. Accordingly, the Helicópteros defendant had a lesser expectation of being hauled into court in Texas and a weaker ability to marshall resources to conduct a fair defense than the instant defendant’s expectation and ability.

The court believes, also, following the Third Circuit’s guidance in Gehling, supra, that defendant’s proposed statistics of minute percentages of its deposits, loans, and depositors is an irrelevant statistic. In Gehling, the Third Circuit cited approvingly Galentz v. Fosdick, 320 Pa.Super. 38, 466 A.2d 1049 (Pa.Super.Ct.1983). In Gal entz, the Pennsylvania Superior Court had found it irrelevant that only a small percentage of defendant trucking company’s income was derived from its Pennsylvania activities and had affirmed the exercise of general jurisdiction over a nonresident defendant. Similarly, the Third Circuit in Gehling held that the statistic that defendant derived only a small percentage of defendant’s total income from Pennsylvania was irrelevant.

Similarly, this court believes that the percentage of defendant’s Pennsylvania-related deposits, loans, and depositors as compared to defendant’s total deposits, loans and depositors is an irrelevant statistic. The absolute amount of defendant’s Pennsylvania-related deposits, loans and depositors may be large enough to show that defendant has conducted substantial business activity in Pennsylvania, although the percentage is minute. Moreover, the court notes that the absolute figures of defendant’s deposit, loans and customers in Pennsylvania represent defendant’s business activities directly and solely in Pennsylvania.

For these reasons, the court believes that the figures produced by plaintiff of $10,-000,000.00 of deposits, $10,000,000.00 of loans and approximately 700 customers in Pennsylvania constitute proof that defendant has engaged in substantial business activity in Pennsylvania. Additionally, the court construes defendant’s refusal to disclose to plaintiff in discovery the figures of defendant’s business activities in Pennsylvania prior to 1984 as an admission that defendant has engaged in continuous business activity in Pennsylvania.

Having decided that this court has general jurisdiction over the defendant, the court need not consider whether it has specific jurisdiction over the defendant.

CONCLUSION

Accordingly, defendant’s motion to dismiss will be denied. Plaintiff’s motion for sanctions will be dismissed as moot.

      . The record created by the parties does not indicate the identities of Asset Management Fund or Savings Institutions, Inc. The court does not know whether Asset Management Fund has any relationship with plaintiff or defendant or whether Savings Institutions, Inc. has any relationships with plaintiff or defendant. The court presumes, however, on this incomplete record, for purposes of this motion only, that Asset Management Fund is a vehicle by which defendant buys certificates of deposits, and Savings Institutions, Inc. is a vehicle by which plaintiff sells certificates of deposits.

      . The record states that Manufacturers Hanover Bank’s address is 40 Wall Street, New York, New York.

      . The record states that State Street Boston Securities Service Corporation’s address is at 50 Broadway, New York, New York.

      . The record does not reflect whether Provident Institutional Management Corporation was related in any way to plaintiff or Asset Management Fund. Consequently, the record does not indicate whether defendant could have known that funds for the purchase of the Certificate ultimately came from plaintiff. Defendant had no direct contact with plaintiff concerning the sale of this Certificate until the institution of the lawsuit.

      . The record does not reflect whether the Certificate was ever delivered to plaintiff or whether the $5,000,000.00 loan proceeds were ever delivered to defendant. The court presumes, for purposes of this motion, that the Certificate was eventually delivered to plaintiff and that defendant received the loan proceeds on January 9, 1985.

      . Title 28 U.S.C. § 1332 provides, in pertinent part:
      The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,-000, exclusive of interest and costs, and is between—
      (1) citizens of different States;
      28 U.S.C. § 1332(a)(1). Plaintiff makes no claim such that this court may exercise subject-matter jurisdiction under any other statute.

      . 28 U.S.C. § 1349.

      . Feuchtwanger Corp. v. Lake Hiawatha Federal Credit Union, 272 F.2d 453 (3d Cir.1959); Elwert v. Pacific First Federal Savings and Loan Association, 138 F.Supp. 395 (D.Or.1956).

      . See Feuchtwanger Corp. v. Lake Hiawatha Federal Credit Union, 272 F.2d 453 (3d Cir.1959).

      . Plaintiff does not claim that the cause of action arose from defendant’s transaction of business in Pennsylvania. Therefore, 42 Pa. Cons.Stat.Ann. § 5322 is not a basis upon which the court can assert long-arm jurisdiction over the defendant.

      . Plaintiff has, also, moved pursuant to Rule 37(b) of the Federal Rules of Civil Procedure, for a sanction taking as established the facts forming the basis of personal jurisdiction. Plaintiff asserts that defendant has failed to respond to plaintiff's interrogatories concerning jurisdiction and its refusal to comply with the court's Order of July 31, 1985 directing that such interrogatories be answered. In particular, plaintiff has noted that defendant continues to refuse to supply any information concerning the extent of its business or its borrowing or lending activity in Pennsylvania for any time earlier than 1984 or concerning its borrowings from Pennsylvania financial institutions. See Insurance Corporation of Ireland, Ltd v. Compagnie des Bauxties de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982).
      Plaintiffs motion is now moot, however, because the court holds that defendant’s activities in Pennsylvania are substantial and believes that defendant does not now contend that defendant’s activities in Pennsylvania were not continuous.


source: Caselaw Access Project

author: ROETTGER, District Judge.

license: Public Domain

text:
    Ignatius WALLACE and Rochelle Vana, Plaintiffs, v. TOWN OF PALM BEACH, a Florida Municipal Corporation; Joseph Terlizzese, Chief of Police for Town of Palm Beach, Florida; Charles Warwick, Robert Grace and Paul Ilyinsky, in their capacities as present or former members of the Town Council of the Town of Palm Beach, Florida; Defendants.
    No. 83-8268-CIV.
    United States District Court, S.D. Florida, Fort Lauderdale Division.
    Dec. 16, 1985.

      James K. Green, Green, Eisenberg & Cohen, West Palm Beach, Fla., David Lipman, Miami, Fla., for plaintiffs.
    Maureen A. Hackett, John Randolph, Johnston, Sasser, Randolph & Weaver, West Palm Beach, Fla., for defendants.
   ORDER

ROETTGER, District Judge.

INTRODUCTION

Plaintiffs’ suit attacks as unconstitutional a Palm Beach ordinance, which requires an identification card to be issued to certain groups of employees, viz, domestic servants, taxi drivers, retail clerks, hotel, res„taurant, and bar employees, etc.

STATEMENT OF THE CASE

Plaintiffs, IGNATIUS WALLACE (“Wallace”) and ROCHELLE VANA (“Vana”), brought an action in this Court under 42 U.S.C. § 1983 to declare invalid and enjoin enforcement of Article V, Sections 17-92 and 17-94, Town of Palm Beach Code, a registration ordinance enacted by Defendant, TOWN OF PALM BEACH (“Palm Beach”). In addition, Plaintiffs seek damages, attorneys fees and costs. Plaintiffs urge that the ordinance impermissibly infringes on rights secured to them under the United States Constitution: 1) the commerce clause (Article 1, § 8), 2) the equal protection clause of the Fourteenth Amendment, 3) the Fourth Amendment guarantee against unreasonable search and seizure, 4) the right of privacy, 5) the right to travel, and 6) the privileges and immunities of United States citizenship.

Plaintiff, IGNATIUS WALLACE, is an adult black male citizen of the United States and a resident of West Palm Beach, Florida. Plaintiff, ROCHELLE VANA, is an adult white female citizen of the United States and a resident of West Palm Beach, Florida.

Defendant, TOWN OF PALM BEACH, is a Florida municipal corporation located within the Southern District of Florida. Defendant, JOSEPH TERLIZZESE (“Terlizzese”), is Chief of Police of the Town of Palm Beach. Defendants, CHARLES WARWICK (“Warwick”), ROBERT GRACE (“Grace”) and PAUL ILYINSKY (“Ilyinsky”), were members of the Town Council when this action was filed, but were dismissed by Plaintiffs.

At all material times, and in all their actions involved in this case, Defendants were acting under color of law and under color of their authority as public officials and public employees.

FINDINGS OF FACT

1. On February 25, 1983, Wallace applied for employment with the Breakers, a hotel located in the Town of Palm Beach. On March 2, 1983, Wallace was offered a job delivering ice at the minimum wage and advised that he was required to register with the Chief of Police.

2. Wallace went to register with the Chief of Police but was “anguished” about the fingerprint and photograph requirements and objected to the information regarding race on the identification card. Wallace was previously fingerprinted in the armed services, for purposes of employment with the Palm Beach School Board, and on a misdemeanor charge. Wallace claimed he did not have the $4.00 fee for the identification card so he refused to register and subsequently declined the employment.

3. Wallace next found part-time employment two (2) months later, but he did not secure full-time employment until six (6) months prior to trial. He now works as a television technician for a video supply company in Atlanta and earns more than the minimum wage. Wallace asserts he still desires employment in Palm Beach. The Court concluded at trial that Wallace’s testimony almost totally lacked credibility, except for some personal data.

4. Vana and her husband moved from Indiana to West Palm Beach to seek employment in Palm Beach, as well as for other personal reasons. On the day after she arrived in Florida, Vana was hired as a waitress by the Sailfish Club of Florida, Inc. in Palm Beach at an annual salary of $12,000.00 to $14,000.00. After working at the Club for six (6) months, Vana first learned of the registration requirement when her husband was advised by his Palm Beach employer to comply with the ordinance. The Sailfish Club constitutes a “place handling liquor, beer or wine” within the meaning of Section 17-92, Town of Palm Beach Code.

5. On April 18, 1983, Vana and her husband went to register with the Chief of Police. Vana filled out the registration form but became so upset she began to cry and refused to be fingerprinted or sign the form, exclaiming, “This is America, not Russia!” Vana explained her acute reaction to the fingerprint procedure as a result of her husband’s experience in Czechoslovakia; hówever, her husband made no objection and completed the registration procedure. Despite her stated revulsion to the fingerprint requirement, Vana willingly had submitted to being fingerprinted previously for purposes of employment both as a probation and parole officer and with the School Board. Vana testified that she did not object so much to the information requested but as to who had it (the police) and where she had to go to provide the information (the police station).

6. Testifying she feared arrest for not registering, Vana quit her job at the Sailfish Club on May 8, 1983, after securing employment as a waitress at Burdines in West Palm Beach. Vana told the Sailfish Club she left because the hours were better at Burdines. Vana is now employed full-time as a high school teacher and part-time as a waitress in Burdines earning more money than she made at the Sailfish Club. Vana asserts she still desires employment in a Palm Beach restaurant. The court found serious credibility contradictions in her testimony, as set forth in Findings 5 and 6.

7. Palm Beach is unique in its extremely high concentration of wealth and afflu-

ence, not only among its homes, but also in its businesses. This international resort area experiences a predictable population variation from 10,000 in the summer to 44,000 in the winter. Seasonal residents often travel with their domestic servants from out-of-state to winter in Palm Beach. A drive along the ocean, window-shopping on Worth Avenue, or a. stroll through the lobby of the Breakers Hotel attests to wealth that is probably higher per capita than anywhere else in this country. Palm Beach is also unique in the many dignitaries who visit and reside in the town. The Breakers Hotel, world-renowned, as well as one of the nation’s few five-star hotels, typically accommodates 900 to 950 guests in its 570 rooms, and serves as the site of major charity balls which attract affluent attendees. (The court can’t help but notice that the one charity ball in America attended by the Prince of Wales and Princess Diana was held at the Breakers despite its not being the tourist “season”.) The hotel is the largest employer in the town, operating with a base management staff of 800 to 850 and a total staff of as many as 1,200 employees. The Breakers has an agreement with Dartmouth College, which sends 25 to thirty (30) students every winter to work during the season.

8. Chief Terlizzese maintains that Palm Beach has a low crime rate by design, not by accident, and he credits that to the large police department, a Crime Watch program, the registration ordinance, the great number of security guards and security systems, and the community support of the police department. There are 102 employees in the local police department. Palm Beach’s neighborhood Crime Watch program, the first in Palm Beach County, boasts the highest number of citizen participants in the county with 800 to 900 calls per year.

9. The Breakers Hotel employs 28 full-time employees on its own hotel security force and follows other security measures and careful employment practices, including maintaining guest safes in each room, checking references of applicants for employment, and issuing a picture identification card to employees in addition to the identification card issued by the Town. The Breakers advances the $4.00 town registration fee to employees if they lack those funds.

10. The major crime in Palm Beach is burglary and theft of property, which results in the loss of $2,500,000.00 to $5,000,-000.00 per year. The employee is a prime suspect in many theft cases, especially where there is no forced entry. Because the FBI provides the services of their fingerprint department to assist local law enforcement agencies only in solving major crimes, the Palm Beach Police Department is on its own in solving local burglaries and thefts.

11. In an attempt to reduce its crime rate and pursuant to authority granted by the state enabling act, Fla.Stat. § 166.021, Municipal Home Rule Powers Act, Palm Beach in 1958 enacted Article V, Sections 17-92 and 17-94 of the Town of Palm Beach Code. The ordinance superseded a similar one enacted in 1939. In accordance with § 17-92, it is the official policy and custom of the Town to require certain employees to register with the Chief of Police, be fingerprinted and photographed. Section 17-94 provides for the issuance of identification cards to the registrants and requires that the identification card be carried on the person at all times as evidence of registration and produced on reasonable notice.

12. To comply with the registration requirement of § 17-92, the applicant must complete a form with the following information: name, employer, occupation, date of birth, height, weight, social security number, local address, race, sex, hair, eyes, place of birth, next of kin, date issued, signature. The identification card expires two (2) years from the date it is issued. A registration fee in the amount of $4.00 is required of all applicants.

13. The Palm Beach Police Department issues the identification card if the applicant meets the threshhold requirements: (1) falls within the type of occupation regulated under § 17-92, (2) produces evidence of employment, and (3) following a computer check on fingerprints, the police department determines there are no current outstanding arrest warrants.

14. The police department obtains other information about the past criminal records of applicants and will provide the information to other law enforcement agencies, but gives the employer only the assurance that there are no outstanding arrest warrants. Any employer can send $15.00 to the Florida Department of Law Enforcement in Tallahassee to check the criminal background of an employee and receive a printed rap sheet of convictions. The Breakers both verifies its personnel records in this way, as well as utilizes — and supports — the Palm Beach i.d. procedure. However, where the police department can immediately obtain this information, as well as information on pending investigations which is unavailable to the employer, a private employer may wait six to eight weeks (or 15-60 days) which is simply too long because of the seasonal nature of the tourist industry.

15. The identification cards are issued at the rate of 300 per month in the summer and approximately 800 per month during the season. 10.9% of the identification cards are issued to residents of Palm Beach.

16. An employee is notified of the registration requirement either by his employer at the time of employment or by word of mouth. A police officer who becomes aware that an employee has not registered will warn him to do so before issuing a citation. Formerly, it was permissible for police officers to conduct random checks of identification cards, but that practice ceased in the 1960’s and is no longer condoned. Chief Terlizzese admits that the ordinance is rarely enforced, and never enforced separate from other criminal activity or traffic violations.

EXAMPLES OF BENEFITS OF IDENTIFICATION CARDS

17. One local department store had T'/<> inventory “shrinkage” in one year. The store manager requested assistance from the Palm Beach police, who urged compliance by the 32 employees with registration for the i.d. cards. One clerk was revealed as a heroin addict by the- registration process and employment was terminated; two others suddenly moved elsewhere and the annual “shrinkage” dropped to 2%.

18. The fingerprints on the cards led to the solution of two rape-murders in West Palm Beach because only Palm Beach, through its i.d. card system, had prints of the murderers.

The defendant proffered that 30 or 40 large (for Palm Beach) employers had called to express support for the present ordinance.

POLICE POWER

“In construing the validity of the ordinance in question, we must (1) assume that a valid ordinance was intended [and] (2) construe the ordinance to be legal, if possible to do so, and strive to so construe it as to give reasonable effect to its provisions.” City of Miami v. Kayfetz, 92 So.2d 798, 801 (Fla.1957). Governments are given broad discretion in their internal affairs, “there being a peculiar propriety in permitting the inhabitants of a City through its proper officials to determine what rules are necessary for their own local government”. Id. Therefore, in most instances, courts must refrain from interfering with the daily operation of a municipality to resolve conflicts which do not directly and sharply implicate constitutional values. See Epperson v. Arkansas, 393 U.S. 97, 104, 89 S.Ct. 266, 270, 21 L.Ed.2d 228 (1968).

“Municipalities may enact laws in furtherance of the public health, safety and welfare, to the extent authorized by the states,” and where a local government has the power to enact an ordinance, the legislative decision is presumptively constitutional. Miami Herald Pub. Co. v. City of Hallandale, 734 F.2d 666, 673 (11th Cir. 1984); rev’d in part on other grounds, 742 F.2d 590 (11th Cir.1984).

In considering whether or not the ordinance is reasonable, the test is not whether the decision of the Town Council appears wise or unwise, but whether it is rationally related to the public health, morals, safety or general welfare and promotes a legitimate municipal objective. Kayfetz, 92 So.2d at 801. Plaintiffs bear the burden to demonstrate that the challenged ordinance is so irrational that it serves no legitimate municipal interest.

The Town Council recognized that Palm Beach attracts a great many professional criminals and fraud artists who prey on the wealthy and that burglary and theft of property, the major crime in Palm Beach, accounts for the annual loss of between $2,500,000.00 and $5,000,000.00. However, the FBI is unavailable to assist the local police department in solving this type of property crime. Worse, fingerprint samples taken around the country are no longer submitted automatically to the FBI lab in Washington (apparently for peculiar reasons best known to the Congress). Consequently, fingerprints lifted at crime locations in Palm Beach or West Palm Beach or Fort Lauderdale may not be retrievable by law enforcement officers investigating a crime, even though the perpetrator’s fingerprints have been taken at some point in time by another police department. Furthermore, the employee is a prime suspect in many theft cases.

The purpose of Palm Beach’s registration ordinance was to assist in identifying and apprehending criminals. In addition, the Town posits that a fugitive will be deterred from moving into Palm Beach because of his reluctance to be fingerprinted. See, Service Machine & Shipbuilding Corp. v. Edwards, 466 F.Supp. 1200, 1205 (W.D.La.1979), rev’d, 617 F.2d 70 (5th Cir. 1980), aff'd, 449 U.S. 913, 101 S.Ct. 310, 66 L.Ed.2d 142 (1980). The Town’s stated objectives are within the scope of authority delegated to the Town by the state and, therefore, the Town under its police power, has the authority to enact reasonable regulations to control crime.

Plaintiffs have not met their burden to overcome the presumption that this ordinance is reasonable. This court holds that the Town Council’s enactment of the ordinance was a reasonable exercise of its broad police powers in that the registration requirement bears a rational relationship to the Town’s legitimate interest in controlling crime.

COMMERCE CLAUSE

Plaintiffs attack the ordinance on the ground that it unduly restricts the free movement of labor in interstate commerce.

Article 1, Section 8 of the United States Constitution provides “The Congress shall have Power ... To regulate Commerce ... among the several States ...” U.S. Const, art. I, § 8, cl. 3.

Edwards v. California, 314 U.S. 160, 172-73, 62 S.Ct. 164, 166, 86 L.Ed. 119 (1941) established that the transportation of persons is “commerce” within the meaning of the Commerce Clause (high influx of migrants into California is commerce). In accord, Service Machine & Shipbuilding Corp. v. Edwards, 617 F.2d 70, 73 (5th Cir.1980), aff'd, 449 U.S. 913, 101 S.Ct. 310, 66 L.Ed.2d 142 (1980). “The movement of laborers across state or national boundaries constitutes commerce ...” United States v. Hanigan, 681 F.2d 1127, 1130 (9th Cir.1982), reh’g and reh’g in banc denied (1982), cert. denied, 459 U.S. 1203, 103 S.Ct. 1189, 75 L.Ed.2d 435 (1983) (movement of undocumented alien laborers across national boundary is commerce).

“The Commerce Clause has ... been interpreted ... not only as an authorization for congressional action, but also, even in the absence of a conflicting federal statute, as a restriction on permissible state regulation.” Hughes v. Oklahoma, 441 U.S. 322, 99 S.Ct. 1727, 60 L.Ed.2d 250 (1979). However, “not every exercise of state authority imposing some burden on the free flow of commerce is invalid ... Although the Commerce Clause acts as a limitation upon state power even without congressional implementation .... ‘in the absence of conflicting legislation by Congress, there is a residuum of power in the state to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce or even, to some extent, regulate it.’ ” Southern Pacific Co. v. Arizona, ex rel. Sullivan, 325 U.S. 761, 767, 65 S.Ct. 1515, 1519, 89 L.Ed. 1915 (1945) quoted in Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 350-51, 97 S.Ct. 2434, 2445, 53 L.Ed.2d 383 (1977). “Congress has not preempted state and local laws in the area of crime control. Thus, this court must examine the challenged ordinance to determine whether [it] ... run[s] afoul of the commerce clause ...” Service Machine & Shipbuilding Corp., 617 F.2d at 73.

The appropriate standard for reviewing a local law affecting interstate commerce was stated in Hughes, 441 U.S. at 336, 99 S.Ct. at 1736, as follows:

Under the general rule we must inquire
(1) whether the challenged statute regulates evenhandedly with only ‘incidental’ effects on interstate commerce, or discriminates against interstate commerce either on its face or in practical effect;
(2) whether the statute serves a legitimate local purpose; and, if so,
(3) whether alternative means could promote this local purpose as well without discriminating against interstate commerce. The burden to show discrimination rests on the party challenging the validity of the statute;..

See also, Service Machine & Shipbuilding Corp., 617 F.2d at 73.

When discrimination against commerce is demonstrated, the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake.

Hunt, 432 U.S. at 353, 97 S.Ct. at 2446 in Hughes, 441 U.S. at 336, 99 S.Ct. at 1736.

The ordinance at issue is similar to a Louisiana workers registration ordinance that was declared unconstitutional in Service Machine & Shipbuilding Corp., 617 F.2d, as repugnant to the Commerce Clause. In Service Machine, St. Mary parish enacted an ordinance requiring workers who changed employment or who travelled into the parish seeking employment to register and obtain an identification card at a cost of $10.00. The district court upheld the ordinance. On appeal, the Fifth Circuit reversed, holding that even if the registration was applicable to all seeking employment, the registration system was unconstitutional because the local benefits of crime prevention were outweighed by the burden on interstate commerce in light of the availability of alternatives with a lesser impact on interstate activities. Id.

Under the first prong of Hughes, 441 U.S. at 336, 99 S.Ct. at 1736, the Court must determine whether the ordinance regulates evenhandedly, or discriminates against interstate commerce. "[T]he Supreme Court has found discrimination under laws that favor residents vis-a-vis nonresidents, where there is no reason, apart from origin, to treat them differently.” Service Machine & Shipbuilding Corp., 617 F.2d at 74. In Service Machine & Shipbuilding Corp., 617 F.2d at 74, the registration ordinance was found to discriminate in favor of local residents by requiring registration of non-residents seeking their first employment but not of residents applying for their first jobs.

Palm Beach’s registration ordinance must be distinguished from the ordinance enacted by St. Mary parish in that the former requires registration of all those seeking employment in certain occupations in Palm Beach and applies to resident and non-resident alike. Testimony at trial concerning the ‘incidental’ effects on interstate commerce revealed the following: (1) Vana and her husband moved from Indiana to West Palm Beach to seek employment in Palm Beach. (2) Wallace moved from West Palm Beach to Atlanta, Georgia seeking full-time employment. (3) The Breakers regularly employs 25 to 30 students from Dartmouth College in New Hampshire during the winter season. (4) Seasonal residents often travel accompanied by their domestic servants from out-of-state to winter in Palm Beach.

Therefore, this court finds that Palm Beach’s registration ordinance does not discriminate against interstate commerce either on its face or in its practical effect but regulates evenhandedly, with only ‘incidental’ effects on interstate commerce.

Concluding that the ordinance does not discriminate against interstate commerce does not end the inquiry under the commerce clause. The criteria for determining the' validity of a state statute which “regulates evenhandedly with only ‘incidental’ effects on interstate commerce”, was set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970):

Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits____ If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.

See also, Service Machine & Shipbuilding Corp., 617 F.2d at 75.

This standard is basically the same as the test stated by the court in Hughes ... but gives more deference to the local interests since it assumes that the chalIfenged law does not discriminate against interstate commerce. In applying this standard, a court must examine the benefits that supposedly result from the local law, and not rely merely on the assertion of an accepted local interest.

Service Machine & Shipbuilding Corp., 617 F.2d at 75.

Palm Beach, like St. Mary parish, “hoped that the ordinance would deter criminals from entering the [Town] as well as aid in their apprehension.” Id. While the Town’s interest is legitimate, the court must look to the benefits that are claimed to flow from the challenged local law. See, Id. at 74.

Putative Local Benefits

Although it is difficult to quantify, the court finds that a definite local benefit arises in deterring crime, exemplified by the local department store with an annual inventory shrinkage of 7% which dropped to 2% after the 32 employees were sent to register. In addition, the information available to the police department through the registration program assisted in solving two rape-murders in West Palm Beach, the murder of Ralph Walker in Palm Beach and the matter of David Kennedy’s death at the Brazilian Court Hotel.

Burden on Commerce

The court finds that the Town’s objectives then must be balanced against the burdens on interstate commerce.

The registration system here, as in Service Machine, 617 F.2d at 75, creates impediments to the free flow of commerce.

First, the information required on the registration form goes beyond that explicitly authorized by the ordinance and creates a burden on interstate commerce. In Service Machine, 617 F.2d at 75-76, the Court said that applicants may refrain from interstate movement if they are required to divulge personal information. The court found the registration procedure intimidating to those who do not want to reveal former incarceration, residence in a mental institution, covert cohabitation, illegitimacy or race. Id. The Palm Beach identification form must be distinguished from the one found by the Court of Appeals to be offensive in Service Machine in the following respects: it does not require nicknames and aliases, drivers license number and issuing state, home and business telephone numbers, former residences for the past five years, last place of employment, voter registration, and names and addresses of spouse, parents, brothers and sisters. See Id. at 75. However, the court finds that the information did create a burden on Plaintiff, Wallace.

Second, the four dollar ($4.00) registration fee creates a burden on interstate commerce. In Service Machine, 617 F.2d at 76, the ten dollar ($10.00) registration fee was found to create a definite burden on the movement of migrant labor. Palm Beach’s registration fee must be distinguished from the $10.00 fee imposed on low income agricultural workers who travel to harvest crops. Although the Breakers will advance the fee — subject to reimbursement from wages — the court finds that the fee did create a burden, albeit small, on Plaintiff, Wallace.

Alternatives With a Lesser Impact on Interstate Activities

“Where the local interest involved could plainly have been promoted with a lesser impact on interstate activities, the state regulation has been held to violate the Commerce Clause.” United States Brew ers Association, Inc. v. Healy, 692 F.2d 275, 279, (2d Cir.1982), aff'd, 464 U.S. 909, 104 S.Ct. 265, 78 L.Ed.2d 248 (1983).

This court finds that “the putative local benefits could be accomplished by less burdensome schemes". Service Machine, 617 F.2d at 75-76.

At trial, Plaintiff’s expert, Dr. Sheley, suggested numerous less drastic alternatives in lieu of the present registration system. The most plausible alternative is that the current public registration system be converted to a voluntary, private registration system whereby an employer could mandate registration as a condition of employment. The employer could require that employees register, be fingerprinted, photographed and possess identification cards issued by the employer or by a private security company. The records of such registration could be kept by the employer or the private security agency, but this would remain a private matter between employer and employee — not a requirement of law.

The Breakers already utilizes an extensive security program of screening its prospective employees and runs its own ID process, issuing photo identification cards which must be carried on the employee at all times. This system is additional to the municipal i.d. card.

However, under a voluntary system, the police department may be precluded from using the information provided by the applicants to solve local burglaries and thefts, unless the police are able to secure the information from the employer. Although a voluntary private registration system may replace the current one mandated by law, the confidential information previously available only to law enforcement agencies will remain unavailable to private employers.

In the instant case, although the ordinance is even-handed on its face, it may not stand because the burden it imposes on commerce is excessive in relation to the legitimate local interests in light of the alternatives available to the Town. This court finds Sections 17-92 and 17-94 invalid as repugnant to the Commerce Clause of the U.S. Constitution and enjoins enforcement thereof.

Despite the obvious benefits to Palm Beach and its many visitors, as well as its residents — and the benefits sometimes to neighboring citizens — this court is bound by Service Machine and therefore must hold that Palm Beach’s registration ordinance places an impermissible burden on interstate commerce in violation of the Commerce Clause. Consequently, it is unnecessary to address the merits of the other constitutional challenges advanced by Plaintiffs.

Judgment to be entered for Plaintiffs.

APPENDIX A

ARTICLE V. REGISTRATION OF CERTAIN OCCUPATIONS

Sec. 17-92. Required.

Every person employed in any nightclub, any place handling liquor, beer or wine in any form, places of amusement, hotels, rooming houses, apartment houses, delivery services, restaurants, bath clubs, bath houses, solariums; all retail sales clerks, lawn maintenance gardeners, janitors, caddies, newspaper delivery boys over the age of seventeen (17) years, domestic servants, taxicab drivers, vending machine operators, and charter boat operators in the town are required to register within forty-eight (48) hours from the time of their employment, in a book of registration kept by the chief of police, and to be also fingerprinted and photographed. (Code 1958, § 21-32)

Sec. 17-93. Duty of employer.

Any person employing any of the persons described in section 17-92, shall require such employees to register within forty-eight (48) hours from the time of their employment as hereinabove required. (Code 1958, § 21-33)

Sec. 17-94. Identification cards.

Identification cards shall be issued to each person registering in accordance with this article, and such identification card shall be carried on the person obtaining the same at all times. Such identification card shall be sufficient evidence of registration as required hereby. In the event such registration card shall be lost or cannot be produced upon reasonable notice, such person shall promptly re-register and secure a new card from the chief of police. (Code 1958, §§ 21-33, 21-34)

      . Article V, Sections 17-92 and 17-94, Town of Palm Beach Code, is appended hereto as Appendix A.

      . Wallace testified he is a permanent resident of West Palm Beach, although he was residing in Atlanta, Georgia for the six months prior to trial.

      . Vana’s stepson lives in this area.

      . Vana testified that the registration reminded her of the booking process, although there was no testimony she had ever been arrested and booked.

      . One of the mansions alone has art objects valued at about $50,000,000 and some mansions hire as many as 17 people in and around the grounds.

      . Testimony of Chief Terlizzese. Dr. Joseph Sheley, a criminologist qualified as an expert in Service Machine, testified that none of the representative communities he researched have a similar ordinance, including, Aspen, Colorado; Bar Harbor, Maine; Carmel, California; and Hilton Head, South Carolina. However, 17 of the 27 municipalities in Dade County, including Miami Beach, have similar ordinances, per Miami Herald review of presently pending State Legislative action.

      . The collection of pictures in the lobby of the Breakers Hotel shows the guests who frequent the town and attend the charity balls and parties in the course of a season include presidents, vice-presidents, cabinet members, senators, royalty, ambassadors, heads of industry and enter- ■ tainment figures.

      . Plaintiff’s expert did not comment on the dollar figure but testified that the crime rate is not extraordinary and in no sense is it high as compared with national figures.

      . The identification card is appended as Appendix B.

      . The applicant is supposed to have evidence of employment from the employer, but, if he does not, the police department verifies the information with the employer.

      . Approximately 30 registrants per year have outstanding warrants, 80% of which are traffic or misdemeanor warrants.

      . Consequently, 89.1% of the identification cards are issued to non-residents of Palm Beach. The Court received imprecise testimony that there were "scores" of applicants from out-of-state. (This was the "gut" feeling of John Pauly, Jr., a part-time employee of Plaintiff's counsel who reviewed 5,692 cards from February, 1983 through November, 1984). The evidence lacked trustworthiness.

      . Chief Terlizzese encourages employers to comply by talking to civic groups and through periodic news stories. Chief Terlizzese testified that the police department has cited employers on about four (4) occasions for not complying (with § 17-93 which is directed at employers).

      . The ordinance would be enforced in connection with a traffic or other arrest or if the employee was previously warned and failed to comply (Testimony of Chief Terlizzese).

      . In Service Machine & Shipbuilding Corp., 617 F.2d at 75, the Court read out the ordinance’s facial discrimination against interstate commerce by making the regulation applicable to all seeking employment in the parish in order to give effect to the savings clause. The Court found the registration system could not withstand commerce clause scrutiny and proceeded to analyze the ordinance under Pike as if it regulated evenhandedly with only incidental effects on interstate commerce.

        . Two employees vanished rather than come in for an identification card and the third, a heroin addict, was terminated.

      . In the rape-murders, there were latent fingerprints at the scene and the only fingerprint cards available were the ones given by ID card applicants working in Palm Beach.

        . Palm Beach's identification card includes the following information that is the same as that required in Service Machine: name, height and weight, social security number, local address, race, sex, hair, and occupation. The following information was required by Palm Beach but not by St. Mary parish in Service Machine: employer, date issued, eyes, date and place of birth, next of kin, signature.


author: SIMMONS, District Judge.

text:
    Andrew DOBY, Jr., Plaintiff, v. JONES & LAUGHLIN STEEL INCORPORATED, Defendant.
    Civ. A. No. 84-1121.
    United States District Court, W.D. Pennsylvania, Civil Division.
    Dec. 16, 1985.

      Wendell Freeland, Craig A. McClean, Pittsburgh, Pa., for plaintiff.
    John C. Unkovic, John B. Bechtol, Pittsburgh, Pa., for defendant.
   MEMORANDUM AND ORDER

SIMMONS, District Judge.

Andrew Doby, Jr., a former employee of Defendant, Jones & Laughlin Steel Incorporated’s, (“J & L”), Aliquippa Works in Aliquippa Pennsylvania, alleges that he was discharged in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”). Defendant now moves for Summary Judgment asserting that Plaintiff has failed to, and cannot, adduce evidence sufficient either to establish a prima facie case'of age discrimination or to rebut Defendant’s proffered legitimate reasons for his termination. Both parties have submitted extensive evidentiary materials, including depositions and affidavits of parties and witnesses, which present all facts provable at trial.

I. The Facts

The undisputed facts of record may be summarized as follows: Plaintiff worked at J & L’s Aliquippa Works and held a non-union salaried job. He worked in the Island department as a turn foreman and supervised union represented production and maintenance employees who were engaged both in handling scrap which was used in the steelmaking process and in loading finished steel for shipment (Ahlborn Affidavit, ¶9).

Between 1946 and 1970, J & L employed no fewer than 12,000 employees at its Aliquippa Works which was, until recently, an integrated steel making facility (Alhborn Affidavit, 112). But, through the 1970’s, the level of operations at the Aliquippa Works gradually declined (Ahlborn Affidavit, ¶ 2). The spate of imports, shifting markets and erratic market demand made the Aliquippa Works increasingly uncompetitive and subject to sharp swings in operating levels (Ahlborn Affidavit, II2). Between 1970 and 1981 the competitive position of the Aliquippa Works weakened as the domestic steel market shrank (Ahlborn Affidavit, 11 2).

In 1982, business conditions reduced operating levels at the Aliquippa Works to their lowest leyels since the Great Depression. J & L was thus forced to respond to the depressed condition of the industry and the particularly severe problems facing the Aliquippa Works.

In 1982, J & L took many actions to save the Aliquippa Works. Relevant to this case, J & L evaluated whether the manning levels in all areas of the plant were in balance with the operating levels at which the plant might reasonably be expected to operate in the future. In early 1982, J & L believed that while the severely depressed operating levels at the Aliquippa Works were not permanent, the plant would not return to mid-1981 operating levels in the foreseeable future (Ahlborn Affidavit If 4-5). Accordingly, J & L implemented a reduction in force among its hourly and salaried work force.

In April, May and June, J & L placed approximately 72 salaried employees on “layoff-recall unlikely” (Ahlborn Affidavit, 11 5). Defendant maintains that all layoff decisions, at that time and later, were based on job performance and skills, and care was taken to insure that the layoff decisions were not discriminatorily based (Ahlborn Affidavit, 117). In May of 1982, Plaintiff was laid off from the Island department and was placed on “layoff-recall unlikely” (Ahlborn Affidavit, ¶ 13).

The Aliquippa Works layoffs were extremely large in both the hourly and salaried work forces. In July, 1981, 6,772 hourly paid employees were actively at work in the plant and only 264 were on layoff. By October, 1982, only 2,464 hourly employees were scheduled to work, while 4,458 were laid off. (Ahlborn Affidavit, ¶ 8)

The reduction in force among salaried employees was also quite large. As of April 1, 1982, before the layoff at issue in this lawsuit, a total of 936 salaried employees, excluding superintendant level jobs, were permanently assigned to the 18 Aliquippa operating departments. By the end of 1982, 254 salaried employees had been placed on “layoff-recall unlikely” status. In 1983, 54 additional salaried employees were placed on “layoff-recall unlikely” status. (Ahlborn Affidavit, ¶ 8).

In sum, Plaintiff is but one of the more than 300 salaried employees J & L was forced to lay off in 1982 and 1983. He was placed on layoff in a reduction-in-force which resulted in an absolute reduction in the number of hourly and salaried employees working in their respective departments.

With respect to Plaintiffs individual situation, immediately prior to the reduction in the salaried work force which began in the Spring of 1982, there were eight (8) turn foremen working in the Island department (Ahlborn Affidavit ¶ 10). In April of 1982, the Island Department Manager was requested to rank his turn foremen according to work performance, and he ranked Plaintiff as one of the foremen least necessary for the continued operation of the department (Ahlborn Affidavit ¶111). Consequently, when J & L found it necessary to lay off Island Department employees, Plaintiff was laid off on May 13, 1982 (Ahlborn Affidavit, H 13). By October of 1982, there were only two (2) turn foremen, ages 50 and 54, remaining of the eight (8) who had been working in the Island Department prior to the beginning of the layoff (Ahlborn Affidavit ¶ 15).

Immediately prior to his layoff, Plaintiff had been temporarily transferred to the Aliquippa Works billet conditioning operation as a turn foreman because there was a temporary need for his services in the billet conditioning operation and the Island department could spare him because of a lack of work (Ahlborn Affidavit, 1112). When the decision was made to reduce permanently the work force in the Island Department, Plaintiff was called back to the Island Department and, on May 13,1982, was laid off and placed upon the “recall unlikely” list (Ahlborn Affidavit, 1113).

Based only upon allegations that two “trainees” came into the billet conditioning operations as turn foremen the week after Plaintiff was laid off (Doby Deposition of 6/8/84 at 39), Plaintiff filed a charge of age discrimination with the Equal Employment Opportunity Commission (“EEOC”) on November 9, 1982 (Doby Deposition of 6/8/84 at 27). His EEOC charge, however, was dismissed (Doby Deposition of 6/8/84 at 33). Plaintiff subsequently brought the present action.

II. Discussion

In deciding J & L’s Motion for Summary Judgment, the Court must resolve any doubts as to the existence of genuine issues of fact against the moving party and must view all reasonable inferences in the light most favorable to the party opposing the motion. U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981); Ness v. Marshall, 660 F.2d 517, 519 (3d Cir.1981); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), Cert. Denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). Although the Third Circuit has emphasized that summary judgment is a drastic remedy, see Hollinger, 667 F.2d at 405, courts must grant the motion where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The establishment of prima facie case of age discrimination does not necessarily defeat a motion for summary judgment. Graham v. F.B. Leopold Company, Inc., 602 F.Supp. 1423 (W.D.Pa.1985): Pierce v. New Process Co., 580 F.Supp. 1543 (W.D.Pa.), Aff'd Mem., 749 F.2d 27 (3d Cir.1984); Keller v. Bluemle, 571 F.Supp. 364 (E.D.Pa.1983), Aff'd without opinion, 735 F.2d 1349 (3d Cir.1984); Fick v. Canterbury Coal Co., 568 F.Supp. 927 (W.D.Pa. 1983).

The Defendant’s burden in seeking summary judgment must be considered in light of the intermediate and ultimate burdens of proof provided for under the ADEA. The Act bars employers from discharging or otherwise discriminating against any individual, age forty to seventy, because of his age, but provides that is is not unlawful to discharge or otherwise discipline an individual for good cause. 29 U.S.C. §§ 623(a)(1), 623(f)(3).

Because of thé similarity in language and purpose between the ADEA and Title VII, Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq, employees (or former employees, as in the present action) alleging age discrimination are generally held to the same requirements for burden and allocation of proof as those alleging race or sex discrimination. See Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); Massarsky v. General Motors Corp., 706 F.2d 111 (3d Cir.1983); Smithers v. Bailar, 629 F.2d 892 (3d Cir.1980). Therefore, in accordance with McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), the order of proof in this ADEA case requires that Plaintiff establish a prima facie case of age discrimination by proving that: 1.) he is within the protected age group of 40-70 years; 2.) he was subject to adverse employment action; 3.) he was qualified for the positions in question; and 4.) younger employees were treated more favorably. Proof of these facts raises a rebuttable presumption of discrimination which Defendant may counter by presenting a legitimate, non-discriminatory reason for the employment action. Burdine, 450 U.S. at 254, 101 S.Ct. at 1094.

In the present case, it is undisputed that Plaintiff, age 40, was a member of the protected class and was the object of adverse action. Plaintiff’s position, at layoff, was temporarily filled by two younger employees. Further while there is some dispute about Plaintiff’s qualifications for the position at issue, for purposes of this motion this Court concludes that Plaintiff has sufficiently met his burden of showing that he was qualified, thereby establishing a prima facie case.

Defendant must therefore show some “legitimate, non-discriminatory” reason for the layoff decision. Burdine, 450 U.S. at 254, 101 S.Ct. at 1094; Massarsky v. General Motors Corp., 706 F.2d at 118. The test for this intermediate burden of production is whether the employer sets forth admissible evidence permitting the trier of fact rationally to conclude that the employment decision was not motivated by discrimination. Burdine, 450 U.S. at 257, 101 S.Ct. at 1095. J & L’s burden is light and the evidence need only raise a factual issue on the motivation for the Plaintiff’s lay off. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094-95. See also Massarsky, 706 F.2d at 118.

This Court finds that the Defendant employer has met its burden of production. J & L has presented clear, legitimate, nondiscriminatory reasons for the layoff of Plaintiff. It is undisputed that the reduction in force at J & L’s Aliquippa Works was quite large. As of April 1, 1982, before Plaintiff’s layoff, a total of 936 salaried employees, excluding superintendant level jobs, were permanently assigned to the 18 Aliquippa operating departments. By the end of 1982, 254 salaried employees had been placed on “layoff-recall unlikely” status. In 1983, 54 additional salaried employees were placed on “layoff-recall unlikely” status (Ahlborn Affidavit, 11 8).

In sum, Plaintiff is but one of more than 300 salaried employees J & L was forced to lay off in 1982 and 1983. He was placed on layoff in a reduction-in-force which resulted in an absolute reduction in the number of hourly and salaried employees working in their respective departments.

Defendant has unequivocally rebutted the presumption of discrimination, and Plaintiff must show that Defendant’s reason for the layoff is a pretext, or that evidence exists proving Defendant’s discriminatory intent. Graham v. F.B. Leopold Co., Inc., 602 F.Supp. at 1425; McClain v. Mack Trucks, Inc. 532 F.Supp. 486, 489 (E.D.Pa.1982). See also Nicholson v. Western Electric Co., 555 F.Supp. 3, 8 (M.D.N.C.1982), Aff'd without op., 701 F.2d 167 (4th Cir.1983). (“The defendant has met it’s burden of articulation. In order for the Plaintiff to survive a motion for summary judgment, he must produce some evidence which would support his claim that Defendant’s stated reasons are pretexts and that the actual intent of the Defendant is to discriminate against him because of his age, race or sex”) (emphasis in original).

Plaintiff’s intermediate burden to prove pretext merges with his ultimate burden to persuade the court that “but for” the employer’s unlawful discrimination, he would not have been discharged. See Burdine, 450 U.S. at 256, 101 S.Ct. at 1095; Keller v. Bluemle, 571 F.Supp. at 369.

Plaintiff must only introduce sufficient evidence to create a genuine factual issue concerning the existence of a legitimate justification for the action. Massarsky, 706 F.2d at 118. In Keller v. Bluemle, 571 F.Supp at 369, the court delineated the process by which a plaintiff shows pretext:

In order to avoid summary judgment, plaintiff must adduce facts raising a genuine issue for trial whether defendants proffered reasons for his dismissal were pretexts for age discrimination____
Plaintiff may carry this burden directly by adducing evidence such as age-biased statements by his superiors which might persuade the court that a discriminatory purpose more than likely motivated his employer. See United States Postal Service Bd. of Governors v. Aikens [460] U.S. [711], 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403, quoting Burdine 450 U.S. at 256, 101 S.Ct. at 1095. He may carry this burden indirectly by showing that the employer’s proffered explanation for his dismissal should not be believed. Burdine at 256, 101 S.Ct. at 1095.

Plaintiff has presented no such direct or circumstantial evidence, nor any other evidence which challenges in anyway J & L’s evidence. Rather, Plaintiff has alleged only that two younger employees worked temporarily in the billet conditioning operation after his layoff and J & L agrees that this is true. This fact, standing alone, is insufficient to establish Plaintiff’s claim. In Nash v. Jacqueline Cochran, Inc., 548 F.Supp. 676 (S.D.N.Y.1983), a case quite similar to the present action, plaintiff challenged the decision to terminate him as opposed to another employee who had less service and was not in the protected age group. In granting summary judgment on behalf of the employer, the court noted in language which squarely meets the contentions of the Plaintiff in this case:

All that plaintiff has established is that he was within the protected age group, whereas Ms. Hudson is not. This is insufficient to establish his claim. To allow this case to go to the jury would permit a determination [sic] be made on the basis of guess or speculation. Indeed, were a jury to return a verdict in favor of plaintiff, the Court would be constrained to grant judgment n.o.v.

548 F.Supp. at 681 (footnotes omitted). Accord, LaMontagne v. American Convenience Products, Inc., 36 FEP cases 913,-920 (7th Cir.1984); Pace v. Southern Railway System, 701 F.2d 1383, 1390 (11th Cir.) cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983); Marshall v. Hills Bros., 432 F.Supp. 1320, 1325 (N.D.Cal. 1977)

Further, the record demonstrates that one of the two younger employees, trainee Minsinger, worked in the billet conditioning operation for seventeen weeks as a mechanical engineer and that he worked on projects which required skills that Plaintiff did not possess. (Johnson Deposition at 16, 17, 28-29, 37-38). Mr. Minsinger did not work as a turn foreman in the billet conditioning operation, the job at which Plaintiff had worked temporarily (Johnson Deposition at 18, 46).

The other employee, turn foreman Brennan worked in the electric furnace department at J & L’s Pittsburgh Works and, as such, he possessed skills that J & L needed to retain. Thus, as J & L’s electric furnace at its Pittsburgh Works was idled for varying periods of time, supervisory employees such as Mr. Brennan were given other temporary assignments so that they would be available to return to the Pittsburgh Works for the renewed operation of the electric furnace. It was for this reason only that Mr. Brennan was assigned temporarily to the Aliquippa Works billet conditioning operation for various periods in 1982 and 1983 (Ahlborn Affidavit, 1118).

Thus, not only has J & L demonstrated its legitimate, non-discriminatory reasons for Plaintiff’s layoff, it has also articulated reasons for the temporary assignments of both Messrs. Minsinger and Brennan to the billet conditioning operation.

It is further clear and undisputed that Plaintiffs permanent job in May of 1982 was that of turn foreman in the Island department (Doby Deposition of 6/8/84 at 29-30; Ahlborn Affidavit, 11 9). It is also undisputed that of the eight (8) turn foremen in the Island department, layoffs reduced that force to two (2), one of the turn foremen remaining being age 50 and the other age 54 (Ahlborn Affidavit H15). Thus, it is clear that with respect to Plaintiff’s permanent J & L job, no younger employee remained in the Island department after the layoffs were completed and no evidence of any kind exists from which the trier of fact could reasonably conclude that Plaintiff was laid off from the Island department because he was 40 years old.

This Court therefore holds, as a matter of law, that Plaintiff has failed to show either that Defendant’s legitimate nondiscriminatory reason was a pretext, or that Defendant had a discriminatory intent in laying off the Plaintiff. Plaintiff “may not rest on the allegations of his pleadings or upon bare assertions, conclusory allegations, suspicions or doubts, but must, by affidavit or otherwise set forth specific facts showing that there is a genuine issue for trial.” Graham v. F.B. Leopold Co., Inc., 602 F.Supp. at 1426 (emphasis in original), quoting Ness v. Marshall, 660 F.2d 517, 519 (3d Cir.1981). See also Nash v. Jacqueline Cochran, Inc., 548 F.Supp at 680. “[Tjhere must be some basic evidentiary fact to permit the trier of fact to draw a reasonable inference of intent to discriminate”. Id.

III. Conclusion

Although Plaintiff has had more than a fair opportunity for full discovery, he has not adduced any evidence to show that there is a genuine issue of material fact that “but for” his age, he would not have been laid off. While Plaintiff is “entitled to every favorable inference,” he is not entitled to build a case on the “gossamer threads of whimsey, speculation and conjecture.” Keller v. Bluemle, 571, F.Supp. at 371, quoting Manganaro v. Delaval Separator Co., 309 F.2d 389, 393 (1st Cir. 1962). Accordingly, Defendant’s Motion for Summary Judgment will be granted.

An appropriate Order will be issued.

      . With respect to Plaintiff’s permanent J & L position, no younger employees remained in the department after the layoffs. Plaintiff alleges he was replaced by younger employees, in an entirely different department in which he was temporarily assigned.


author: REGAN, District Judge.

text:
    TRAILWAYS LINES, INC., Plaintiff, v. TRAILWAYS, INC. JOINT COUNCIL, Defendant.
    No. 85-1249C(B).
    United States District Court, E.D. Missouri, E.D.
    Dec. 16, 1985.
    Leonard Singer, Kansas City, Mo., for plaintiff.
    Stephen Domesick, Boston, Mass., for defendant.
   MEMORANDUM OPINION AND ORDER

REGAN, District Judge.

This is an action to vacate an arbitration award which requires plaintiff (Trailways Lines, Inc., hereafter Trailways) to cease enforcing its “no-beards” policy prohibiting those of its garage employees who have some contact with the public from wearing beards. Defendant (Trailways, Inc. Joint Council, hereafter union) has counterclaimed for enforcement of the award. Both parties have moved for summary judgment.

This is the second time the same union had chosen to arbitrate the issue of the reasonableness of Trailway’s no-beards policy pursuant to the same collective bargaining agreement. The first award, rendered August 8, 1984 by Arbitrator David Lande, held that the policy was “reasonable” and sustained the right of Trailways to enforce it. The second award, rendered by Arbitrator Peter Maniscalco under date of February 28, 1985, was based on his conclusion that the “no-beards” policy was “unreasonable”, and so was not enforcible. The facts and circumstances involved in both arbitration proceedings were identical in all material respects.

The major thrust of Trailways’ motion for summary judgment is that the Lande award, which, by the specific terms of the labor contract, is “final and binding” upon the parties, is res judicata and precludes the union from again grieving and obtaining an award from Arbitrator Maniscalco which is contrary to and cannot be reconciled with (and which ignores the finality and binding effect of) the earlier, Lande, award.

By way of background: Trailways is an interstate motor carrier of passengers and freight throughout the United States. The business in which it is engaged is highly competitive, with substantial competition being furnished not only from national motor carriers such as Greyhound Bus Lines and various regional bus lines but also from airlines (particularly since they were deregulated) and from the rail system. In the view of Trailways management not only the appearance of its equipment but the appearance of its personnel who have any contact with the public, creates an “image” which may affect its ability to attract and keep the maximum number of customers to use its facilities. For that reason it adopted (and has for years maintained) its “no beards” policy as part of its growing standards applicable to all employees who in the course of their employment have some contact with the public. It is the reasonableness of this no-beards policy within the meaning of Section 144 of the national collective bargaining agreement which was the subject of both grievances submitted to arbitration by the union.

This collective bargaining agreement, effective as of April 1, 1983, was the first national collective bargaining agreement between Trailways and the union. Prior thereto, their agreements were negotiated on a regional basis on behalf of the local unions having jurisdiction in such region. Section 144 of the national agreement provides as follows:

“STANDARDS OF APPEARANCE— The employees shall comply with the reasonable standards of personal appearance regulations issued by [Trailways] and such reasonable amendments as shall be adopted by [Trailways] not contrary to or in conflict with the terms of this Agreement.” A further provision of the national agreement, stressed by Trailways, is Section 132(b) which states that “[Trailways] shall continue to enjoy those past practices which previously were observed in individual Seniority Units.”

Preliminary to his decision on the merits, Arbitrator Lande first held that the union’s grievance required a construction of Section 144 of the national contract, that Section 144 permitted a grievance “as to the reasonableness of any issued standard of public appearance, including the no-beards policy here in issue”, and that such a grievance “is resolvable ultimately in arbitration.”

Prior to arriving at his conclusion as to the reasonableness of Trailways “no beards” rule within the purview of Section 144, Arbitrator Lande took specific note of the “obvious” concern of Trailways with the issue of “image” and its “understandable” desire, as a business matter, to project that certain “image” which in its opinion will most favorably impact upon the balanee sheet ... in these times of intense “competition.” Arbitrator Lande then ruled:

“The arbitrator may be inclined to disagree with the [“no beards”] rule, and to believe that its rationale, however good-faith-generated and business-related, is inaccurate in the context of present-day society. The arbitrator may believe that on balance, the employer might better serve its own interests by ascertaining that its customers are not as disturbed by the appearance of beards as it may believe and by accommodating the apparent zeal of a segment of the bargaining unit to sport beards. But the arbitrator is not an officer of Trailways, and may not substitute his own judgment or that of the bargaining unit or the union, where, as here, he can not find that the rule or its application in the particular circumstances here relevant rises to the status of unreasonable”.

Having so ruled, Arbitrator Lande specifically held that as applied to garage employees who have some indeterminate public contact the no-beards rule was not unreasonable (and hence, by clear and necessary implication) that Trailways had not violated the labor agreement. On the basis of this ruling, Arbitrator Lande made the following award:

“The grievance of the garage employees of Trailways Southeastern respecting their objection to the reasonableness of existing standards and rules of personal appearance which preclude the wearing of beards except in specified circumstances of medical necessity is denied.”

Dissatisfied with the result of the Lande arbitration, the union (represented by the same attorney who had prosecuted the earlier arbitration proceeding) obtained arbitration of the grievance of two garage mechanics employed at the St. Louis garage who had involuntarily shaved their recently grown beards to avoid possible disciplinary action.

The following issue formulated by the union was submitted to arbitration before Arbitrator Maniscalco:

“Did the Company (Trailways) violate the Collective Bargaining Agreement when, in March, 1984, it required employees Anders and Christopher, mechanics in the St. Louis garage, to shave off their beards? If so, what should be the remedy?”

Unquestionably, the basic issue submitted by the union to arbitration in both proceedings, namely, whether the “no-beards” policy is unreasonable within the meaning of Section 144 of the National Contract, and the right of Trailways to apply the policy to its garage employees who have some contact with the public, is identical.

Arbitrator Maniscalso’s decision on this issue, rendered seven months after the Lande award, was stated in his Opinion as follows:

“We therefore find, that the absolute no-beard rule imposed by [Trailways] violates the Collective Bargaining Agreement under 144 of the National Contract as it applies to the Collective Bargaining Unit employees of [Trailways] because it was unreasonable in light of the fact that the employer presented no proof of the public’s real attitude and reaction as well as proof of any demonstrable relationship between those attitudes and the positive public image the Company wished to portray."

It is thus apparent that the thrust of Arbitrator Maniscalco’s decision is that irrespective of management’s good-faith business judgment as to the desirability of its no-beards policy, the policy (without proof of the effect of the policy on the grievants) is prima facie unreasonable, thereby placing an almost impossible burden upon the employer to prove by the preponderance of the evidence that its business judgment as to the favorable impact of a no-beards policy upon its ability to cope with competition has a substantial objective, factual, evidentiary basis. On the other hand, the earlier decision of Arbitrator Lande focused on the prerogative of management to adopt policies and rules not on their face unreasonable which in the judgment of management could reasonably be deemed by it to further the company’s image in the face of intense competition.

As the “remedy” for Trailway’s violation of the Collective Bargaining Agreement by its requirement that the two St. Louis garage employees Anders and Christopher shave off their beards, Arbitrator Maniscalco made the sweeping pronouncement that “[Trailways] shall forthwith cease to enforce its grooming policy as it applies to an absolute no-beard requirement by employees covered by the National Agreement employed at garage facilities of the Company”, with the exception that “[Trailways] has the right to require employees so effected (sic) to maintain a neat and well trimmed beard.”

Stated otherwise, the “remedy” prescribed by Arbitrator Maniscalco for requiring St. Louis employees, Anders and Christopher, to shave off their beards was to abrogate Trailways’ no-beards policy as to all its garage employees throughout the United States including those employed in its Southeastern Region as to whom Arbitrator Lande had sanctioned the policy.

In this situation we consider the res judicata or preclusive effect of Arbitrator Lande’s decision (as distinguished from its precedential effect) upon the union and (conceivably) upon Arbitrator Maniscalco. We have not been cited to, and are not aware of, any definitive ruling of the Court of Appeals for the Eighth Circuit on the precise issue here involved in this very sensitive area of labor arbitration law.

In McGraw-Edison, Wagner Division v. Local 1104, International Union Electrical Workers, 767 F.2d 485 (8 Cir.1985), the Eighth Circuit ruled, adversely to the employer, its claim that a subsequent award should be vacated on the ground it was “inconsistent” with an earlier award, noting that although both arbitrators construed the same contract language in reaching inconsistent results, each proceeding involved a different union and a different contract. In that situation, it is difficult to perceive how the second arbitrator (and the second union) could be bound by the first construction of the language, and the District Court (583 F.Supp. 239, 247) explicitly so held. Here, however, as we have noted (and as Arbitrator Maniscalco impliedly conceded), the prior arbitral proceeding necessitated the construction of the identical contract provision (Section 144) of the same national labor contract between the same employer and the same union, in deciding the merits of a grievance involving the same issue under essentially the same facts and circumstances.

We have carefully read the cases cited by the union in support of the validity of the Maniscalco award. None of them (other than Connecticut Light & Power Co. v. Local 120, I.B.E.W., 718 F.2d 14 (2 Cir. 1983), discussed infra) is factually comparable. Other than W.R. Grace & Co. v. Rubber Workers, Local 739, 461 U.S. 757, 103 S.Ct. 2177, 76 L.Ed.2d 298 (discussed infra) and Connecticut Light & Power Co., no cited case involved the preclusive effect of a first arbitral decision.

Instead, in virtually all of the cited cases one or the other of the parties sought to sidestep its obligations to submit any grievance to arbitration, and the essential issue was either whether a court could enjoin a second arbitrator in advance from deciding the new grievance or whether the court had the authority to compel a party to submit the matter to arbitration as against the contention that a second arbitrator would lack jurisdiction to hear the grievance. No question of the arbitrator’s jurisdiction is presented in the instant proceeding. So, too, there is no contention that the second arbitrator is bound by the rationale of previous decisions or their precedential effect (as was contended in McGraw Edison, supra).

It is, of course, true that the question of the interpretation of a collective bargaining agreement is a question for the arbitrator. However, the real issue is whether, once an arbitrator, acting within the scope of his authority, has interpreted the later contract which specifically provides that the decision is “final and binding” upon the parties, the losing party is entitled to obtain a valid and binding contrary interpretation of the same contract from another arbitrator simply because the latter disagrees with the “final and binding” interpretation theretofore made by the first arbitrator.

In W.R. Grace & Co., supra, the Supreme Court assumed, but did not discuss or definitively rule, the binding effect of the prior award. The Court of Appeals for the Fifth Circuit, in 652 F.2d 1248 (1981) (whose decision ruling this case was affirmed) had also assumed that the prior award was binding upon a subsequent arbitrator when the issue involves the same facts and contract provision, if it was within “the jurisdiction and authority” of the prior arbitrator. In enforcing the later award, the Supreme Court (after pointing out that the conclusion of the second arbitrator “that he was not bound by the [earlier] award was based on his interpretation of the bargaining agreement defining the arbitrator’s jurisdiction and his perceived obligation to give a prior award a preclusive effect ”) held that “(b)ecause the authority of arbitrators is a subject of collective bargaining, just as is any other contractual provision, the scope of the arbitrator’s authority is itself a question of contract interpretation that the parties have delegated to the arbitrator. [The second arbitrator’s] conclusions that the [first arbitrator] acted outside his jurisdiction in denying an award to which an employee admittedly was entitled under the specific terms of the collective bargaining agreement simply because the first arbitrator believed it was inequitable to penalize the employer for following an erroneous court decision for which the employee was not responsible and that this (lack of jurisdiction) deprived the first award of precedential effect under the contract draw their essence from the provisions of the collective bargaining agreement”, and so the later award may not be vacated.

In the present case, as we have noted, there is and can be no question but that Lande acted within his jurisdiction in interpreting Section 144 of the labor contract and in ruling that Trailways’ no-beards policy was “reasonable.” What Maniscalco held in his one-sentence sole reference to the Lande award was simply that “the conclusion (therein) that Section 144 of the “National Contract may bear a ‘reasonable’ relation to the employer’s marketing decision [and] that therefore, the rule and its application here cannot be deemed ‘unreasonable’ is in this Arbitrator’s opinion a minority view.”

In effect, what Arbitrator Maniscalco said was that he disagreed with Lande’s decision on its merits, preferring to follow what he perceived to be “the better [or “majority”] arbitral view.” He neither discussed nor referred to the “final and binding” provision of the contract, but ruled the merits of the matter de novo, without regard to the fact that the underlying circumstances had not changed in the seven-month period since the Lande award was rendered.

In Local 616, International Union of Electrical, Radio and Machine Workers v. Byrd Plastics, Inc., 428 F.2d 23, 26 (3 Cir.1970), the Court stated:

“A clause stating that a decision of an arbitrator is ‘final and binding’ is no doubt intended to establish a principle similar to that of res judicata, and to bar reconsideration of the disputes, fully decided on the merits.” What was held in that case was that because the dismissal of the complaint was based on a procedural error, and not “on the merits”, reconsideration of the grievance was not barred.

On the other hand, where as here, the prior decision involved the interpretation on its merits of the identical contract provision of the same contract between the same company and the same union, it is self-evident in our judgment that “every principle of common sense, (labor) policy and labor relations demands that (the ruling) stand until it is annulled by the parties by a newly worded contract provision.” And on that premise the great majority of arbitrators have considered themselves bound by the earlier decision where there has been no change in the facts and circumstances. In W.R. Grace & Co., supra, the second arbitrator, the Fifth Circuit and the Supreme Court all ruled the controversy on the express assumption that such was the law as applied to the preclusive effect of the first award.

In Connecticut Light & Power Co., supra, 718 F.2d 14, the Second Circuit was confronted with determining the validity of an award requiring the employer to cease and desist certain practices which had been specifically sanctioned by a later award. The second arbitrator had refused to defer to the first award because in his judgment its interpretation of the applicable contract provision was “analytically unsound.” In this situation the Court deemed it necessary to select whichever of the two diametrically opposite arbitral interpretations “most nearly conforms to the intent of the parties.” The Court then selected the later award because it was “better reasoned” and "the more persuasive.”

We do not agree with this approach, the effect of which is to require the Court to act as an umpire. The better course, in our view, is to refuse to sustain a later contrary award which for no legal reason ignores the “final and binding” provision of the contract as applied to a prior award which draws its essence from the contract. It is interesting to note that in Paragraph 2 of its counterclaim seeking judgment requiring Trailways to comply with the order of Arbitrator Maniscalco that Trailways cease enforcing its no-beards policy nationwide, the union quotes and specifically relies on Section 202(g) of the National Contract which mandates that the decision of the arbitrator shall be final and binding on the parties.

As we have noted supra, Arbitrator Maniscalco gave no consideration whatever to the Lande award other than to state that it represents the “minority” view, nor did he even refer to or construe the “final and binding” provision of the contract. It may be speculated that he believes that no decision is final and binding unless it follows what he believes to be the “majority” view even if it draws its essence from the collective bargaining agreement. We add that the awards cited by Arbitrator Maniscalco in his Opinion as representing the “majority” view (including his own decision in Missouri Public Service Company, 77 L.A. 973, do not involve “image” either as affected by competition or as affected by the type of intense competition such as Trailways faces. In our judgment, Arbitrator Maniscalco was simply dispensing his own brand of industrial justice.

We are also of the opinion that where, as here, an arbitrator (as Lande) has definitively construed a provision of the collective bargaining agreement, such construction becomes part of the existing labor agreement, and hence is subject to the provision thereof (Section 202(g)) that an arbitrator “shall have no power to alter or amend the provisions of (the) contract in any respect.” Arbitrator Maniscalco wholly failed even to consider or rule this issue.

We also hold that Arbitrator Maniscalco exceeded his authority in providing a “remedy” which was not warranted by the terms of the submission. The sole issue for his determination was whether Trailways was justified in ordering the two grievants to shave their beards and if not, what should be the remedy for the employer’s breach of contract. In every award called to our attention, the remedy was limited to what the arbitrator reasonably believed would restore the grievants to the position they would have been in but for the employer’s breach of contract. Here, however, Arbitrator Maniscalco completely ignored the issue as formulated by the union and issued a cease and desist order applicable nation-wide to all garage employees including those expressly covered by the Lande award.

It follows from the foregoing that the motion of the union for summary judgment enforcing the award should be and it is HEREBY DENIED. The motion of Trailways for summary judgment vacating the award should be and it is HEREBY SUSTAINED. Judgment will be entered in accordance herewith.

      . The policy was modified several years ago in compliance with a decision of the District Court of Colorado in EEOC v. Trailways, 530 F.Supp. 54, 59 (1981), a Title VII racial discrimination case, which required Trailways to "slightly” modify the policy by making accommodation for persons who can provide a medical certificate that they are afflicted with an ailment which medically requires abstinence from shaving and whose (neatly trimmed) beard is worn at the shortest length which will satisfy the medical need of the employee. There is no contention that either grievant has such an ailment.

      . In Section 132(a), a similar right is granted to the employees “to enjoy those past practices which were enjoyed by them in individual Seniority Units."

      . The grievance arbitrated before Arbitrator Lande was filed by the union on behalf of all garage employees in the Southeastern Region. The St. Louis garage (apparently) is in another region.

      . Nothing in the Court’s opinion indicates that the contract contained a "final and binding” provision.